I-1-2-49.Incorrectly Approved Fee Agreement

Last Update: 5/8/20 (Transmittal I-1-96)

A. Effectuating Component Actions

1. Referral Procedures

Occasionally, an Office of Hearings Operations (OHO) or Appeals Council (AC) decision maker may incorrectly approve a fee agreement when the agreement does not meet the requirements of the Social Security Act or an exception to the fee agreement process applies, as described in the Hearings, Appeals and Litigation Law (HALLEX) manual I-1-2-12. Processing center (PC) and field office (FO) personnel may not reverse a fee agreement decision made by an OHO or AC decision maker. When the PC or FO authorizer responsible for effectuating a favorable or partially favorable decision by an OHO or AC decision maker concludes that the decision maker incorrectly approved a fee agreement, the authorizer will take the following actions:

  • Process the claim to payment;

  • Withhold 25 percent of past-due benefits if the representative is eligible for direct fee payment;

  • Request an “incomplete notice” to the claimant, deferring action on the fee agreement;

  • Prepare a protest memorandum, addressed to the Regional Chief ALJ (RCALJ) if the decision maker was from OHO, or the Chair of the Appeals Council (Chair of the AC) if the decision maker was from the AC; and

  • Send the memo with a copy of the decision, the appointment(s) of representative(s), the fee agreement, the order approving the fee agreement, and any relevant documents, to the RCALJ (for OHO decisions) or Office of Appellate Operations (OAO) staff (for AC decisions).

NOTE:

As explained in HALLEX I-1-2-44 C, if a decision maker in a National Hearing Center (NHC) incorrectly approves a fee agreement, the RCALJ that supervises the hearing office (HO) that transferred the case to the NHC will handle the administrative review of the fee agreement approval. However, for administrative efficiency, in the Program Operations Manual System (POMS) GN 03940.090D, the PC and FO are instructed to send protest memos to the RCALJ of the region where the claimant is currently residing. While the impact should be minimal, if the receiving RCALJ does not have jurisdiction over the matter, the receiving office will forward the protest memo to the RCALJ with jurisdiction and notify the PC or FO of the transfer.

For detailed information about the PC or FO process for incorrectly approved fee agreements, see POMS GN 03940.025C.4. (title II instructions) or GN 03940.046F (title XVI instructions).

If the effectuating component does not receive a response within 45 days, it will:

  • Follow up with the RCALJ (for OHO actions) or OAO staff (for AC actions), by fax, email, or telephone, and

  • Diary the claim for another 15 days.

2. Procedures After OHO or the AC Acts on Referral

  • If OHO or the AC reverse the fee agreement determination, the PC or FO will diary the case for receipt of a fee petition and fee authorization from OHO or the AC.

  • If OHO or the AC affirm the fee agreement determination, the PC will follow standard procedures for processing an approved fee agreement.

B. OHO and AC Actions

If a PC or FO authorizer refers a case to OHO or the AC because he or she believes the decision maker incorrectly approved a fee agreement, the following individuals have authority to review the issue:

  • For hearing level cases, the RCALJ who has jurisdiction over the claimant's servicing HO or, if issued by an NHC decision maker, the RCALJ who has jurisdiction over the HO that transferred the case to the NHC (see the NOTE in subsection A above); or

  • For AC cases, the Chair of the AC.

Within 30 days, the RCALJ or Chair of the AC will review the disputed action to determine whether the agreement meets the provisions in section 206(a)(2)(A) of the Social Security Act (and is not excepted from the fee agreement process). These procedures are set forth in HALLEX I-1-2-12.

If the RCALJ or Chair of the AC concludes the decision maker incorrectly approved a fee agreement, he or she will:

  • Issue an order to the claimant disapproving the fee agreement, advising that if the representative intends to charge and collect a fee, he or she must file a fee petition;

  • Send a copy of the order disapproving the fee agreement to the representative with a cover letter; and

  • Send a copy of the corrective action to the respective PC or FO and the decision maker who signed the prior order (see HALLEX I-1-2-96 for a list of PC email addresses).

Refer to HALLEX I-1-2-112 for sample language for the order disapproving the fee agreement and the cover letter to the representative.

If the RCALJ or Chair of the AC affirms the fee agreement approval, he or she will advise the PC or FO by memorandum to process the representative's fee under the fee agreement process. Refer to HALLEX I-1-2-113 for sample language for the memorandum.