I-1-2-12.Fee Agreements — Evaluation Policy
Last Update: 5/6/20 (Transmittal I-1-95)
A. Statutory Conditions for Approval
The following statutory conditions must be met for a representative to obtain the Social Security Administration's (SSA) approval to charge and collect a fee under the fee agreement process:
The representative or the claimant files the agreement with SSA before the date of the first favorable decision the representative worked toward achieving.
The representative and the claimant both signed the fee agreement.
Representatives may use stamped or photocopied signatures in lieu of their actual signatures on a fee agreement and may submit a photocopy (or fax) of the original fee agreement. A fee agreement stamped only with a representative's firm's name is not acceptable, because SSA only recognizes the appointment of individuals as representatives.
If the representative's signature is illegible and the decision maker has a question about the representative's identity, the decision maker may contact the representative for clarification.
If, at the time the decision maker is prepared to issue a favorable decision, he or she realizes that the claimant or representative did not sign the agreement, the decision maker must disapprove the agreement because both did not sign it.
If a claimant attempts to appoint a firm or other entity, and a representative accepts the appointment on behalf of the firm (e.g., by signing a form SSA-1696-U4 “Appointment of Representative” or a fee agreement that contains an appointment provision), SSA recognizes that representative in his or her individual capacity as the claimant's appointed representative.
If the claimant appoints one representative and submits a fee agreement signed by that individual and others, the decision maker must approve the fee agreement if all other conditions for approval are met and none of the exceptions in subsection B, below, applies.
If someone other than the appointed representative signs the fee agreement on behalf of the firm or corporation, the decision maker must disapprove the fee agreement, because the appointed representative did not sign the fee agreement.
The fee specified in the agreement does not exceed whichever is less:
25 percent of the claimant's past-due benefits
The specified dollar amount in the bullets above is established pursuant to section 206(a)(2)(A)(ii)(II) of the Social Security Act (Act). This amount may be increased by the Commissioner of Social Security. The increased limit is effective based on the date the decision maker acts on the fee agreement, not on the date the fee agreement was signed or filed or the date of the determination or decision on the claim for benefits.
In concurrent claims, the maximum SSA will approve for both titles under the fee agreement process is 25 percent of the combined past-due benefits of both titles or the $6,000 figure (or other specified dollar amount pursuant to the Act). SSA will approve the lesser of the two (i.e., 25 percent of the total past-due benefits or $6,000).
Our decision is favorable to the claimant.
The claim results in past-due benefits.
The decision maker's approval or disapproval of a fee agreement is limited to whether the agreement meets the statutory conditions and is not otherwise excepted. Approval of the agreement is contingent on whether the claim results in past-due benefits.
In certain situations, we cannot approve a fee agreement, even though the language in the agreement meets the statutory requirements listed in subsection A, above. The agreement is excepted from the fee agreement process in the following situations:
The claimant appointed more than one representative, and not all appointed representatives signed a single fee agreement.
“Single fee agreement” is defined as one agreement signed by all parties, including all representatives, whether they work for the same or different entities or for themselves. Therefore, if the claimant appoints a different representative after other representatives have already submitted a fee agreement, the parties must resubmit the existing agreement amended with the additional representative's signature or a new agreement signed by all of the appointed representatives.
This exception does not apply if the representative(s) who did not sign the fee agreement waived charging and collecting a fee.
The claimant discharged a representative or a representative withdrew from the case before SSA favorably decided the claim.
This exception does not apply if there is one or more additional representatives on an otherwise valid fee agreement, and the former representative waived charging and collecting a fee.
The representative died before SSA issued the favorable decision.
When the representative dies before SSA issues a favorable decision and the claimant or representative submitted an otherwise valid fee agreement, the decision maker will:
disapprove the fee agreement, and
notify the parties, including the deceased representative's estate, that the agreement is disapproved. However, just as the remaining representatives may file fee petitions for their services provided on the claim, the estate of the deceased representative may file a fee petition for the services performed by the deceased representative.
The representative is suspended or disqualified from representing claimants before SSA.
A state court declared the claimant legally incompetent and the claimant's legal guardian did not sign the fee agreement.
If SSA determined that the claimant is mentally incapable of managing his or her funds or is in the process of evaluating the claimant's mental capability, the effectuating component will defer sending notice regarding the amount of the fee under the fee agreement until SSA has selected a representative payee.
C. Considerations Related to the Statutory Conditions for Approval and the Exceptions
1. Multiple Fee Agreements in File from Same Representative(s)
The decision maker will act on the most recently signed fee agreement SSA received before the date of the favorable decision, even if a prior agreement in the file meets the requirements for approval.
2. Agreement Provisions That Will Not Cause SSA to Disapprove a Fee Agreement
The decision maker will not disapprove a fee agreement solely because it contains a provision stating that:
The representative has the right to seek review of the amount that otherwise would be the maximum fee under section 206(a)(2)(A) of the Act.
The representative may request administrative review (under section 206(a)(3)(A) of the Act) of the amount of the fee if the past-due benefits do not exceed a certain amount.
The authorized fee does not include any out-of-pocket expenses (e.g., costs involved in obtaining copies of medical reports or state sales tax, etc.).
A named third party will pay the representative a fee equal to the lesser of 25 percent of the past-due benefits or $6,000 (or other specified dollar amount pursuant to the Act), and the claimant and any auxiliary beneficiary will have no financial liability for paying the authorized fee.
The representative will charge interest on the unpaid balance of the authorized fee.
The representative will share the authorized fee with another person who referred the case.
3. Provisions or Situations That Will Cause SSA to Disapprove a Fee Agreement
a. Fee Amount
The following are examples of agreement provisions that are inconsistent with the statutory condition that the fee specified in the agreement does not exceed the lesser of 25 percent of the past-due benefits or $6,000. SSA will disapprove a fee agreement containing a provision that:
The claimant will pay a minimum fee.
An agreement specifies that the representative's fee will be 25 percent of past-due benefits or $6,000, whichever is less, except that if 25 percent of past-due benefits does not exceed $1,500, the representative's fee will be $1,500. This constitutes an agreement that the least the claimant will owe is $1,500. Such an agreement is not consistent with the statutory provisions for approval.
If 25 percent of the past-due benefits exceeds $6,000, the representative will receive a fee of $6,000 and retains the right to petition for an additional fee.
Do not confuse “petition” with “request administrative review.” Whereas a representative retains the right to request administrative review under the fee agreement process, he or she may not substitute the fee petition process for the fee agreement process after SSA issues a favorable decision. See Hearings, Appeals and Litigation Law manual I-1-2-1.
b. Unappointed Representative
If a representative and claimant both signed the form SSA-1696-U4 (or equivalent statement) and the fee agreement, and a person other than the appointed representative (e.g., a paralegal working under the supervision of the appointed representative) actually attended the hearing as the claimant's sole advocate, the decision maker will request an appointment form signed by the claimant and the person who attended the hearing. If that person did not sign the fee agreement, the decision maker will disapprove the fee agreement. The decision maker will do this because the representative may not delegate to an unappointed assistant the authority to undertake tasks that require making significant decisions regarding the case, such as appearing as the claimant's advocate in a hearing before an ALJ. This task requires making decisions about presenting evidence, cross-examining witnesses, arguing facts and law, and appealing any adverse ruling. Whoever performs such tasks is, by definition, a representative, and must be appointed as such by the claimant. Only an individual whom the claimant has appointed, and whom SSA has accepted as the claimant's representative, has the authority to perform such tasks as they relate to the claimant's representation.
If the paralegal in the above scenario had signed the fee agreement, the ALJ approved the fee agreement and the claimant was entitled to past-due benefits, the paralegal would share the authorized fee (but not receive direct payment).
4. Factors Not to Consider
a. Representative's Hours and Services
The number of hours the representative spends on a claim and the representative's specific services are not conditions for approval of a fee agreement. Therefore, the decision maker may not request this information when making the initial determination on the fee agreement.
b. Death of Claimant Before Decision Issued
If a represented claimant dies before the decision maker completes action in the matter the claimant engaged the representative to handle, the decision maker will presume, absent evidence to the contrary, that the representative's authority continues. Therefore, if a claimant or representative submitted a fee agreement before the claimant's death, and the decision maker issues a favorable decision after the claimant's death, the decision maker will approve the fee agreement if it meets all statutory requirements for approval and is not otherwise excepted from the fee agreement process.
c. Death of Claimant or Representative After Decision Issued
When a claimant or representative submitted a valid fee agreement and either party dies after a decision maker issues a favorable decision, the decision maker will approve the fee agreement if he or she did not do so at the time of the favorable decision. The decision maker will notify the parties, including the survivors or deceased's estate, of the fee agreement approval.
D. Actions for Which SSA Cannot Approve a Fee Agreement
Section 206(a)(2)(A) of the Act provides that the fee agreement process applies in a claim of entitlement to past-due benefits. Workers' compensation offsets and other similar actions are adjustments of benefit amounts to which entitlement has already been established. Consequently, the fee agreement process does not apply to this category of actions.