Kеnneth M. CARPENTER, Appellant, v. Anthony J. PRINCIPI, Secretary of Veterans Affairs, Appellee.
No. 99-794.
United States Court of Appeals for Veterans Claims.
Decided June 21, 2001.
Argued Jan. 17, 2001.
III. CONCLUSION
On consideration of the foregoing, the Secretary‘s motion is granted and this appeal is DISMISSED for lack of jurisdiction.
Michael E. Wildhaber, of Washington, DC, for the appellant.
Edward V. Cassidy, with whom Leigh A. Bradley, General Counsel; Ron Garvin, Assistant General Counsel; and Michael A. Leonard, Deputy Assistant General Counsel, were on the brief, all of Washington, DC, for the appellee.
Before KRAMER, Chief Judge, and FARLEY, HOLDAWAY, IVERS, STEINBERG, and GREENE, Judges.
FARLEY, Judge, filed the opinion of the Court. STEINBERG, Judge, filed an opinion concurring in part and dissenting in part. KRAMER, Chief Judge, filed a dissenting opinion.
This is an appeal from the April 6, 1999, decision of the Board of Veterans’ Appeals (BVA or Board) which found that the total attorney fees charged by the appellant, attorney Kenneth M. Carpenter, for his representation of veteran Victor S. Weatherspoon, were “excessive and unreasonable.” The BVA reduced the appellant‘s fee to 20% of the past-due benefits awarded to his client. The Board also concluded that the appellant was legally bound to refund to Mr. Weatherspoon the fees awarded to him pursuant to the Equal Access to Justice Act (EAJA),
I. BACKGROUND
The veteran served on active duty in the United States Army from July 1979 to September 1980. Record (R.) at 13. VA denied his claim for service connection for a nervous disorder in May 1981. R. at 35. In February 1993, Mr. Weatherspoon sought to reopen his service connection claim. R. at 79. In February 1994, he filed a VA Form 22a with the regional office (RO) appointing the appellant, Kenneth M. Carpenter, as his representative. R. at 46. The RO awarded the veteran service connection for bipolar affective disorder with chronic undifferentiated schizo
In February 1995, the appellant filed, on behalf of the veteran, a claim for an earlier effective date for his service connection award on the basis of clear and unmistakable error (CUE) in the March 1981 RO decision. R. at 49-51. In April 1995, the RO determined that there was no CUE in the May 1981 RO decision and the Board affirmed. R. at 53-56, 76-86.
On May 1, 1997, the appellant filed a Notice of Appeal with this Court on behalf of the veteran. On the same date he filed with the Court a copy of a fee agreement entered into between him and the veteran. The agreement provided in pertinent part:
2. SCOPE AND DUTIES. Client [the veteran] hires Attorney [the appellant] to provide legal services in connection with appeal to U.S. Court of Veterans Appeals [now the U.S. Court of Appeals for Veterans Claims (Court)]. Attorney shall provide the following services: All services necessary to prosecute appeal to the [Court]. As a result of a decision by the [Court], the veteran‘s case may be remanded and the Board of Veterans’ Appeals previous decision vacated. In the event of a court-ordered remand this agreement shall include representation of the veteran by the Attorney at both the Board of Veterans’ Appeals as well as any Regional Office of the Department of Veterans Affairs....
3. CONTINGENT FEE (DEPARTMENT OF VETERANS AFFAIRS CASES). Client agrees to pay a fee equal to thirty percent (30%) of the total amount of any past-due benefits awarded to Client, to include veteran, dependent or survivor benefits; on the basis of the Client‘s claim with the Department of Veterans Affairs.... This representation is undertaken upon the following conditions:
....
c. The services contemplated under this contract before the [Court], Federal Circuit Court of Appeals, Board of Veterans’ Appeals, or Department of Veterans affairs Regional Office relate specifically to the claim or claims previously decided by the Board of Veterans’ Appeals.
....
4. EQUAL ACCESS TO JUSTICE ACT (EAJA) FEES. It is understood that in actions before the [Court], an application for attorney fees, costs and expenses may be filed on behalf of Client under EAJA in order to reimburse Client for attorney fees, costs and expenses which were required to be paid to protect Client from unreasonable governmental action. The recovery of reasonable attorney fees, costs and expenses for work performed on behalf of Client at the Court may be ordered. In the event of such Court-ordered award, such attorney fees, costs and expenses shall be payable directly to Attorney. It is understood and agreed that any attorney fees awarded under EAJA shall be the sole and exclusive property and entitlement of Attorney, for the services rendered to the Client for representation before the Court.... Attorney agrees that in the event the Court grants an award of benefits, if there is ultimate successful recovery of past-due benefits for Client, an offset will be made against the entitlement paid under the Attorney/Client Contingent Fee Contract of Attorney‘s percentage of past-due benefits, in the amount of the sum of the attorney fees awarded by the Court under the provisions of EAJA. Client agrees that in the event the Court
remands veteran‘s case, no offset will be made against the entitlement paid under the Attorney/Client Contingent Fee Contract of Attorney‘s percentage of past-due benefits in the amount of the sum of the attorney fees awarded by the Court under the provisions of EAJA, if there is ultimate successful recovery of past-due benefits for Client.
R. at 89-90.
By letter dated May 1, 1997, the appellant also sent a copy of this fee agreement to the Board. The appellant‘s letter stated that the fee agreement was being submitted to the Board “in the event of a remand from thе [Court].” R. at 88. On July 3, 1997, the Deputy Chief Counsel for Legal Affairs of the BVA, by direction of the Chairman of the BVA, sent a letter to the appellant acknowledging receipt of the fee agreement. R. at 95. The letter also stated:
As we have previously discussed with you, paragraph 4 of your agreement, relating to fees under the [EAJA], appears to provide that fees awarded under EAJA will not be offset against your client‘s fees if the [Court] remands Mr. Weatherspoon‘s case and past-due benefits are awarded. This provision appears to be in violation of § 506(c) of Pub.L. No. 102-572 (Oct. 29, 1992), which provides that, when an attorney receives fees for the same work under both
28 U.S.C. § 2412(d) and38 U.S.C. § 5904 , the attorney shall refund the smaller amount to the client. The law does not appear to provide an exception where a case is remanded from the Court.If you receive an EAJA fee and your client is awarded past-due benefits, we will take appropriate steps to review your fee agreement for reasonableness.
Id.
In February 1998, the Court granted the parties’ joint motion for remand of the veteran‘s claim for an earlier effective date. R. at 110. On May 8, 1998, the Court awarded the veteran $2,473.17 in attorney fees and expenses pursuant to EAJA. See R. at 137. In August 1998, the Board found that there was CUE in the May 6, 1981, RO decision and awarded the veteran an effective date of January 20, 1981, for his service-connected psychosis. R. at 116-26. In September 1998, the RO implemented the Board‘s decision and awarded the appellant $206,017.00 in past-due benefits. R. at 128-29, 141-42.
In a letter dated November 17, 1998, the Office of the Chairman of the BVA notified the appellant that because his fee agreement did not provide that his contingent fee be offset by the EAJA award, the Board was being directed to review his fee agreement for reasonableness pursuant to
In the BVA decision here on appeal, the Board found that the 30% contingency fee charged by the appellant was excessive and unreasonable and therefore reduced
II. JURISDICTIONAL ISSUES
The appellant proposes several different theories in arguing that the Board‘s decision should be vacated because the Board lacked jurisdiction to review his fee agreement. First, he contends that the fee agreement reviewed by the Board was initiated pursuant to
A. Section 5904(c) and Section 7263
(2) A person who, acting as agent or attorney in a case referred to in paragraph (1) of this subsection, represents an appellant before the Department or the Board of Veterans’ Appeals after the Board first makes a final decision in the case shall file a copy of any fee agreement between them with the Board at such time as may be specified by the Board. The Board, upon its own motion or the request of either party, may review such fee agreement and may order a reduction in the fee called for in the agreement if it finds that the fee is excessive or unreasonable. A finding or order of the Board under the preceding sentence may be reviewed by the United States Court of Appeals for Veterans Claims under section 7263(d) of this title.
(c) A person who represents an appellant before the Court shall file a copy of any fee agreement between the appellant and that person with the Court at the time the appeal is filed. The Court, on its own motion or on the motion of any party, may review such fee agreement.
(d) In reviewing a fee agreement under subsection (c) of this section or under section 5904(c)(2) of this title, the Court may affirm the finding of the Board and may order a reduction in the fee called for in the agreement if it finds that the fee is excessive or unreasonable.
The fee agreement at issue in this matter was entered into after the Board made a final decision in the veteran‘s case and was filed with this Court at the time the appeal was filed. The agreement not only addressed representation before this Court, but also specifically provided for representation before the Board and the Department of Veterans Affairs in the event this Court remanded the veteran‘s claim. In contemplation of that possibility,
The fact that this Court had the opportunity to review the fee agreement pursuant to
Additionally, the Board was free to review the entire fee agreement properly before it, and was not required to limit its review to only that portion that pertained to work before the BVA.
B. Reasonableness vs. Eligibility
The appellant contends that, even if the Board did have jurisdiction to review this fee agreement pursuant to
As the appellant points out, the jurisdiction of the Board and the Court to review fee agreements pursuant to
An attorney can be eligible to collect a fee pursuant to a fee agreement and still pursue an award of statutory fees on his client‘s behalf. See Venegas v. Mitchell, 495 U.S. 82, 86-87, 110 S.Ct. 1679, 109 L.Ed.2d 74 (1990) (the attorney fee provision of the Civil Rights Act,
C. The Jurisdiction of the Court
The jurisdiction of the Court of [Appeals for Veterans Claims] is specifically defined by statute at
In re Wick, 40 F.3d at 370; see also
“[F]ee agreements are properly before the court ... when it reviews decisions of the Board concerning an agreement or on any other matter decided by the Board.” In re Wick, 40 F.3d at 371. Befоre this Court is an April 6, 1999, decision of the Board regarding the reasonableness of the fee called for in a fee agreement between the appellant and the veteran. That decision was appealed to this Court by the appellant. Thus, this Court has jurisdiction over the April 6, 1999, BVA decision pursuant to
III. THE REASONABLENESS OF NO OFFSET FOR EAJA FEES
The fee agreement at issue in this matter stated that in the event the Court ordered an award of benefits, the attorney‘s fee would be offset by any fees awarded to the veteran pursuant to EAJA. However, if the Court remanded the claim, the agreement stated that no such offset would be made. Since the veteran‘s claim was indeed remanded, pursuant to the fee agreement no offset of the fee was to be made.
Relying upon section 506(c) of the Federal Courts Administration Act of 1992 (FCAA), the Board found that when an attorney receives fees for the same work under both
Although the applicability of § 506(c) of the FCAA is “doubtful” with respect to a fee agreement reviewed pursuant to
[E]ven if section 506 does not apply to a fee agreement, such as is involved in this case, that does not provide, under section 5904(d), for direct payment by the Secretary of a contingent fee of 20% or less of past-due VA benefits, the policy underlying the proscription in section 506 against double payment for the same legal work is inherent in the policy against an “unreasonable” fee embodied in sections
Shaw, 10 Vet.App. at 504. Thus, a fee agreement allowing an attorney to collect and retain both an EAJA fee as well as a fee from the client for the same work is “unreasonable” pursuant to
In Shaw, the fee agreement at issue, like the fee agreement in this matter, stated that there would be no offset of an EAJA award where the Court remanded the claim. The Court held that the fee agreement was ” ‘unreasonable’ on its face to the extent it may be read as precluding an offset where the Court remands with a direction that the BVA award benefits that the Court finds are required as a matter of law.” 10 Vet.App. at 505. However, the Court also held that “the double-payment proscription would have no application to the payment of fees under the EAJA and under the fee agreement where the legal work done in connection with those fees is
The concept that work performed before this Court and on remand to the Board and VA is not necessarily the “same work” was the subject of this Court‘s decision in Fritz v. West, 13 Vet. App. 190 (1999). In Fritz, the Court again considered the reasonableness of a provision in a fee agreement that no offset of an EAJA award would be made where the Court remanded the claim. On the merits of the veteran‘s appeal, the Court had granted the parties’ joint motion for remand, vacated the Board‘s decision, and remanded the claim for readjudication. 13 Vet.App at 191. The Court held that the fee agreement was not unreasonable on its face pursuant to Shaw, supra, because the fee agreement did not preclude an offset where the Court reverses and remands for an award of benefits. Id. at 194. The Court noted that “[u]nder Shaw, an attorney generally may retain an entire contingency-fee amount if the representation provided before the BVA/VA subsequent to the attorney‘s work before the Court involves obtaining more relief from the department than what the appellant received from the Court.” Id. The Secretary had argued that the EAJA award required an offset because “inasmuch as the contingent fee contemplates a single sum in payment for services provided both before the Court and in any post-remand proceedings before VA, it is not clear to what extent the contingency fee may be duplicative of the EAJA award for services before the Court only.” Id. The Court rejected this argument. Relying upon this Court‘s decision in In re Mason, (13 Vet.App. 79 (1999)) the Court held:
[W]here the attorney claims the contingency fee for the representation provided in this Court, it would appear that any EAJA award for such representation would result in an offset against the contingency fee owed under the agreement. On the other hand, if the attorney claims the contingency fee for the representation provided before the BVA/VA, resulting in an award of benefits beyond the relief awarded by the Court, it would appear that no offset would be required.
13 Vet.App. at 194. The Court, in Fritz, therefore held that the attorney-fee-offset provisions in the fee agreement were not objectionable in the context of that case. Id. Thus, it appears that we have by our decisions in Shaw and Fritz crafted a narrow interpretation of the term “work,” leaving open an opportunity for the subversion of the very purpose of EAJA.
“Congress passed the EAJA in response to its concern that persons ‘may be deterred from seeking review of, or defending against, unreasonable governmental action because of the expense involved in securing vindication of their rights.” Sullivan v. Hudson, 490 U.S. 877, 883, 109 S.Ct. 2248, 104 L.Ed.2d 941 (1989). “The objective of EAJA is to eliminate financial deterrents to individuals attempting to defend themselves against unjustified government action. Veterans are among the types of individuals the statute was intended to help.” Abbs v. Principi, 237 F.3d 1342, 1347 (Fed.Cir.2001) (quoting H.R.
The compensation the appellant agreed to accept for his services was “thirty percent (30%) of the total amount of any past-due benefits awarded to Client ... on the basis of the Client‘s claim with the Department of Veterans Affairs.” R. at 90 (emphasis added). He agreed “to provide legal services [to the veteran] in connection with [his] appeal to the [Court].” R. at 89. The fee agreement specifically provided that the work to be performed would include “[a]ll services necessary to prosecute appeal to the [Court and] ... [i]n the event of a court-ordered remand this agreement shall include representation of the veteran by the Attorney at both the Board of Veterans’ Appeals as well as any Regional Office of the Department of Veterans Affairs.” Id.
The portion of the agreement discussing the contingency fee repeatedly described the payment as it pertained to the veteran‘s “claim or claims,” and made no differentiations as to work to be performed before the Court, Board, or VA. In the EAJA portion of the fee agreement, however, the agreement did make such differentiations. Although the cost to the veteran of the 30% fee would be deferred by any amount awarded by the Court pursuant to EAJA in the event the Court awarded past-due benefits, the agreement carved out an exception where, in the event the Court remanded the claim, the 30% fee would actually be supplemented by any EAJA fee awarded. The Court did remand the veteran‘s claim, and past-due benefits were awarded on remand. Thus, the appellant collected a fee equal to 30% of the past-due benеfits plus the EAJA fee awarded to the veteran. This, of course, resulted in no greater cost to the veteran; however, it stripped the veteran of his right pursuant to EAJA to have his legal fees paid, at least in part, by the United States.
IV. THE REASONABLENESS OF THE 30% CONTINGENCY FEE
The Court, like the Board, is vested with the power to review feе agreements; however, the Court has concluded that it “should intrude upon such a free and voluntary contract only upon the invitation of the parties or where the fee agreement is patently unreasonable on its face.” Lewis, 5 Vet.App. at 154 (emphasis added); see also In re Mason, 12 Vet.App. 135, 136-38 (1999) (Nebeker, Chief Judge, concurring.). In an attempt to entice attorneys to represent veterans,
[i]n a very real sense, the parties to a review of a fee agreement are the claimant on the one hand and the attorney on the other. Rather than performing as an advocate, the BVA serves in a quasi-judicial role. Under these circumstances, when review of a fee agreement is statutorily authorized, we think it appropriate, indeed necessary, that the BVA provide notice to the claimant as well as to the claimant‘s attorney of its intention to review a fee agreement and of its ultimate decision.
Nagler v. Derwinski, 1 Vet.App. 297, 304 (1991).
The record in this matter indicates that the appellant was advised that the Board‘s review of the fee agreement was initiated because of a concern that the appellant was attempting to retain both the contingency fee and the EAJA fee awarded to the veteran. In the July 3, 1997, letter, Thomas D. Roberts, Deputy Chief Counsel for Legal Affairs, concluded: “If you receive an EAJA fee and your client is awarded past-due benefits, we will take appropriate steps to review your agreement for reasonableness.” R. at 96. In his letter of November 17, 1998, Mr. Thomas wrote:
Because your fee agreement does not provide that your contingent fee payment from past-due benefits is to be offset by an EAJA award concerning your Court work, we are asking the Board to review your fee agreement with Mr. Weatherspoon for reasonableness on its own motion, pursuant to
38 U.S.C. § 5904(c)(2) .
R. at 141. On the record before the Court, at no time was the appellant advised that the fee agreement was going to be reviewed for reasonableness of the 30% contingency fee.
As demonstrated in Part III of this opinion, the Board‘s concern about the lack of an EAJA offset was legitimate and its review in that regard proper. An artfully or inartfully drafted contingency fee agreement which would circumvent the letter and spirit of EAJA would be “patently unreasonable on its face.” However, the Board‘s actual review of the fee agreement and its ultimate decision were far more expansive than that directed by the Chairman or described in the letters to the appellant.
The Board found that the 30% contingency fee provided for by the fee agreement was excessive and unreasonable and therefore reduced the fee to 20% of past-due benefits awarded. In determining that the 30% contingency fee was unreasonable, the Board stated:
A review of the record demonstrates that the extent and type of services the attorney performed since March 1997 included negotiating and assisting in drafting a joint motion for remand, writing a letter dated February 26, 1998, to the Adjudication Officer at the RO, and writing a June 2, 1998[,] five-page document with additional argument in support of the veteran‘s appeal and submitting it to the Board. It is also very likely that in the months between the March 1997 Board decision and the August 1998 Board decision, the attorney had several contacts with the veteran. However, in the additional arguments from the attorney, contained in the letter dated December 11, 1998, the attorney does not itemize or otherwise indicate that any other legal services were performed to justify fees over $60,000.00.
R. at 6. The appellant argued that there was no factual or legal basis to conclude that his fee was unreasonable; the Board disagreed, stating:
As noted above, there is no evidence of legal services provided after the March
1997 Board decision which justify such an excessive fee. There is no evidence of record as to the number of hours the attorney and his staff worked on this case from March 1997 to August 1998. In his December 1998 letter, the attorney has not alleged that he and his staff worked an inordinate amount of hours on this case. In assessing the reasonableness of his fee, the Board notes that if an attorney were to charge $200 per hour for legal services, it would require 309 hours of work to constitute a fee of $61,800.00. The evidence available of the legal services the attorney provided the veteran between the final Board decision in March 1997 and the August 1998 Board decision does not justify a fee of $61,805.10, and the Board finds that the fee is “excessive and unreasonable.”
R. at 7. Noting that VA regulations provide that a fee of 20% of past-due benefits is presumed reasonable, the Board then concluded that, in this matter, “[a]lthough the evidence does not demonstrate that the attorney and his staff spent a great deal of time on this case between March 1997 and August 1998, the other factors in determining whether fees are reasonable support a determination that a fee of 20 percent of past-due benefits is reasonable.” Id.
Pursuant to
- The extent and type of services the representative performs;
- The complexity of the case;
- The level of skill and competence required of the representative in giving the services;
- The amount of time the representative spent on the case;
- The results the representative achieved, including the amount of any benefits recovered;
- The level of review to which the claim was taken and the level of the review at which the representative was retained;
- Rates charged by other representatives for similar services; and
- Whether, and to what extent, the payment of fees is contingent upon the results obtained.
The Court reviews the Board‘s decisions regarding the reasonableness of a fee agreement de novo. See In re Vernon, 8 Vet.App. at 459 (“[I]n conducting a review of a fee agreement, a finding by the Board regarding the excessiveness or unreasonableness of the fee is entitled to no deference.“).
The appellant argues that the Board improperly interpreted
Turning to the Board‘s reduction of the fee from 30% to 20% of past-due benefits, it is apparent to the Court that the Board was struck by the total amount of the fee and focused primarily on the number of hours the attorney and his staff spent on this case. Although the number of hours spent is one factor to be considered in determining whether a fee is reasonable, particularly where an agreement calls for an hourly fee, it is not the only or indeed the primary factor in the case of a contingency fee agreement. An attorney taking a case on a contingent basis may earn a large fee for very few hours; however, that same attorney also takes the risk that he will receive no fee, regardless of the number of hours spent on a case. In essence, the attorney agrees to share the risk of not prevailing on the clаim with his client. Based upon nothing more than a lack of evidence that the appellant spent an “inordinate” amount of time on this matter, the Board determined that the appellant‘s fee should be reduced to 20% of the past-due benefits awarded. In doing so, the Board erred.
There is simply no basis in the record for the Board‘s reduction of the appellant‘s fee from 30% to 20%. On the contrary, as the Board explained in support of its decision not to reduce the 20% fee even lower, several of the
V. CONCLUSION
Upon consideration of the foregoing, the April 6, 1999, decision of the Board is AFFIRMED IN PART and REVERSED IN PART.
STEINBERG, Judge, concurring in part and dissenting in part:
I concur in the Court‘s affirmance of the April 6, 1999, decision of the Board of Vеterans’ Appeals (Board or BVA) as to whether or not there should be an offset of
I. Deficient Court Processes
First, the Court either glosses over or ignores entirely a number of important issues (for example, the analysis of pertinent analogous authority, such as the attorney-fee jurisprudence in the federal courts pertaining to the EAJA and Social Security Act (SSA)) that should be part of the basis for judicial decisionmaking in this case. The absence of such an approach is particularly regrettable when the Court is sitting en banc. Equally deficient is the process of the majority here in issuing an en banc opinion that overrules past precedent (1) without briefing from the parties (including possible amicus curiae) on whether that precedent should be abandoned and on certain issues not addressed in the opinion; (2) without en banc oral argument; and (3) without a conference of the full Court.1 I have long decried this practice,2 and find it most unfortunate that the Court is continuing down the path that most recently led to the overruling by the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) in D‘Amico v. West, 209 F.3d 1322, 1327 (Fed.Cir.2000), of this Court‘s misguided and conclusory holdings in Laruan v. West, 11 Vet.App. 80 (1998) (en banc).3
2. Fair Process
Assuming that the Court has jurisdiction to review the Board decision on appeal, I would vacate the Board decision on the reasonableness of the 30% contingency fee and remand this matter on a pure fair-process ground. The majority notes that “[o]n the record before the Court, at no time was the appellant advised that the fee agreement was going to be reviewed for reasonableness of the 30% contingency fee.” Ante at 77. Notwithstanding the Court‘s implicit recognition that the Board‘s decision to reduce the 30% contingency attorney fee in this case was made without the attorney‘s being afforded adequate notice on that issue,15 the majority never substantively addresses the ramifications of such a deficiency.
3. Merits of Board‘s Reduction
Although I would not reach this issue because I would vacate for consideration of the fairness of the process (again, assuming Court jurisdiction over the merits), the majority does reach this issue—albeit prematurely—and reverses the Board‘s decision reducing the attorney‘s contingency fee from 30% to 20%. I believe that this result is plainly and demonstrably wrong. The facts outlined in part II.B., above, illustrate that the following conclusion in the Court‘s opinion dramatically overstates the quality and effect of the attorney‘s representation:
[S]everal of the
38 C.F.R. § 20.609(e) [(2000)] factors actually support the conclusion that the appellant‘s 30% contingency fee is not “excessive and unreasonable,” e.g., the case was complex; the attorney was quite competent; [and] he achieved a great deal of success for his client. . . .
Ante at 79 (emphasis added). That outline of the facts shows very clearly that a reduction of the 30% fee is not only reasonable (albeit essentially not for the reasons stated by the Board) but is required under VA‘s regulation.18 This is so (1) because
In this regard, the Court‘s analysis not only fails to consider adequately each of the factors set forth in the VA regulation but fails to consider at all the VJRA legislative history in terms of fee-reasonableness review and the factors that federal courts have prescribed for assessing the reasonableness of contingency-fee agreements in Social Security cases, where a court may order that a fee up to 25% be paid out of a past-due benefits award.21 For example, the U.S. Court of Appeals for the Sixth Circuit (Sixth Circuit) concluded in assessing the reasonableness of a
Deductions should generally fall into two categories: 1) those occasioned by improper conduct or ineffectiveness of counsel; and 2) situations in which counsel would enjoy a windfall because of either an inordinately large benefit award or from minimal effort expended.
Rodriquez v. Bowen, 865 F.2d 739, 746 (6th Cir.1989) (en banc) (emphasis added).22 The Sixth Circuit then went on to amplify the second category, in terms that resonate as to the facts of the instant case, as follows: “Where a case has been submitted on boilerplate pleadings, in which no issues of material fact are present and where no legal research is apparent, the benchmark twenty-five percent of awards [sic] fee would obviously be inappropriate.” Id. at 747.
It seems almost impossible to believe that Congress intended the extraordinary “reasonableness” review, authorized to be conducted by the BVA and this Court to protect veterans—even if they do not request such protection—to be any less comрrehensive than the provision to protect Social Security recipients on which the contingent-fee provisions of
Because the grounds stated by the majority (relating to the case‘s complexity, the competency of the attorney‘s work, and the success that he achieved) are without foundation on the facts of this case, the only remaining basis under VA‘s regulation (
Furthermore, this is exactly the kind of case for which I believe that a BVA sua sponte review under
Finally, I want to stress that I would not deprive the appellant of a reasonable attorney fee despite the foregoing analysis of the nature of the representation provided before the Board. Under VA regulations, a 20% contingency fee is generally presumed to be reasonable (
4. Basis for Reversal
A concluding jurisdictional matter: I am concerned about the Court‘s stating that its reversal of the Board‘s 30%-to-20% reduction is made “pursuant to
D. EAJA Offset/“Same Work”
As to the majority‘s concern about our prior caselaw on the offset question, I would, as noted in part II.A., above, prefer that the Court adhere to a full adversarial process with the participation of the parties before the Court overrules our prior precedent. However, I do tend to agree with the Court that the sentences that it quotes from Fritz v. West, 13 Vet.App. 190, 194 (1999), ante at 74-75—the first reference as a characterization of Shaw v. Gober, 10 Vet.App. 498 (1997)—that seemed to draw the line at the attorney‘s work involving “obtaining more relief from the Department than what the appellant received from the Court” may be overbroad and should be reexamined. However, the analysis should proceed from an allocation of the hours worked by the attorney between Court and VA representation, as I now tend to believe was correctly argued by the Secretary in Fritz, supra, and, if that allocation does not result in a total offset, only then must a comparison be made of the “work” done at the two stages to see if it is essentially “the same“—as my analysis will show that it clearly was here.
The majority, instead, chooses to adopt a one-size-fits-all holding “that the representation of a claimant in pursuit of a claim at all stages of the adjudication pro-
It is especially problematic, therefore, that the Court‘s opinion eschews any analysis of the nature of the actual work performed by the attorney before the Court in comparison to the work performed before the BVA and merely, ipse dixit, declares them “the same” as a matter of law “for the purposes of EAJA” because the work here and below relate to the “same claim“. Ante at 72. This conclusion seems to me to read “same work” out of the statute; that is, the result reached would be the same if Congress had just provided for an offset whenever EAJA fees are awarded and a contingency fee is paid in connection with the same claim. But the statute does not say that. Moreover, Congress did not say that in the virtually identical SSA language enacted in 1985 in the EAJA extension and amendments in which section 3 expressly prohibited “the claimant‘s attorney [from] receiv[ing] fees for the same work under both [SSA direct-payment provision from a past-due award] and [the EAJA unless] . . . the claimant‘s attorney refunds to the claimant the amount of the smaller fee.” 31
The opinion‘s principal stated justification for the interpretive leap of equating “same work” with “same claim” seems to be a citation to Brown v. Gardner,32 but Gardner has applicability only when there is some interpretive doubt.33 I
Nevertheless, I do tend to agree with the Court‘s conclusion as to offset here and that generally EAJA fees should be offset when only a remand is won here. Hence, I believe that the fee-agreement provision in question is invalid in that it attempts to make a blanket offset applicable to every non award remand and that such a blanket approach violates
Again, I stress that the one-size-fits-all holding laid down by the majority is largely unnecessary to achieve the policy result that the majority apparently seeks (of not letting attorneys—by virtue of cleverly drafted fee agreements—escape offset, i.e., recover double payment for the same work).37 It is certainly unnecessary on the facts of this case, and one would think that the majority, in accordance with the maxim in Best v. Principi,38 would want to determine first whether the case can be decided on a more narrow basis. Accordingly, although I would agree with the majority that the total amount of the EAJA award in this case for the merits representation (putting to one side the two hours reimbursed for fees for fees) should be offset against the permissible fee paid by the veteran under the fee agreement, I believe that the one-size-fits-all holding reached by the Court (requiring total EAJA offset in all cases) is unsustainable on the face of the statutory language and especially in light of the dearth of analysis and authority provided for it in the majority opinion.
III. Conclusion
For the foregoing reasons, I am unable to join in the opinion of the Court, although I agree generally with the result reached on the facts of this case on the EAJA-offset question. As to the Board‘s decision reducing the 30% contingency fee to 20%, I disagree with the Court‘s reversal of that portion of the Board decision.
KRAMER, Chief Judge, dissenting:
I cannot concur in the majority opinion because it fails to address several requisite issues. Although I am not in agreement with several matters in Judge Steinberg‘s separate opinion, I note that he and I are in substantial agreement as to many of the matters discussed in this opinion.
First, the majority holds that the Court has jurisdiction under
Second, in the BVA decision here on appeal, the Board determined in the first instance that the appellant was eligible under
Third, I am concerned that the majority, without adequate analysis as to why it is appropriate, appears to reverse the Board in the context of
Fourth, the majority makes a holding that overrules previous Court precedent, see Fritz v. West, 13 Vet.App. 190, 194-95 (1999), as to the meaning of “same work” in the context of whether to offset the attorney fees with the fees awarded under the
The bill clarifies that an EAJA award in Soсial Security cases is not precluded by the fee provision in the Social Security Act,
42 U.S.C. § 406(b) . The bill also prohibits attorneys from collecting both EAJA fees and § 406(b) fees in the same case. In the situation of dual entitlement, the attorney must refund the amount of the smaller fee to the claimant.. . . .
This provision and related ones, when read together, allow a court or the Secretary to authorize payment of attorney fees and related expenses under the [EAJA], notwithstanding the provisions in the Social Security Act. However, an attorney collecting attorney fees under the EAJA would have to use such fees
to reduce the liability, if any remains, of the claimant for any portion of the past-due benefits. Courts and the Secretary would be expected to scrutinize such awards to ensure that the attorney is reducing the liability of the claimant so that the claimant is the primary beneficiary of the EAJA award. . . . .
It is the Committee‘s intent . . . that the EAJA award should be used as a set off to reduce the payment which the claimant would otherwise owe the attorney. Thus, under the amendment an attorney for a Social Security . . . claimant would be precluded from receiving both EAJA and Social Security Act fees. Without this amendment it was argued, “double dipping” was possible. Such double payments are inappropriate and deprive[] the plaintiff of the benefits intended by EAJA. Because the Committee is aware of the important function served by counsel in these cases, the Committee permits the attorney to seek recovery under both authorizations. The attorney, however, may keep the larger fee, but must return the amount of the smaller fee to the claimant.
Fifth, in determining error in the BVA reduction of the contingent attorney fee from 30% to 20%, the majority has not addressed fully either the applicable VA regulation,
Finally, I firmly believe that attorneys make significant contributions to this Court‘s review of appeals from BVA decisions. That said, the issues generated by the statutory scheme, through which appellants’ attorneys are compensated, over time have become increasingly complex and have resulted in a substantial degree of confusion. See
Luke C. MILEY, Petitioner,
v.
Anthony J. PRINCIPI, Secretary of Veterans Affairs, Respondent.
No. 99-1087.
United States Court of Appeals for Veterans Claims.
June 27, 2001.
Before KRAMER, Chief Judge, and HOLDAWAY and GREENE, Judges.
ORDER
PER CURIAM:
The petitioner, Luke C. Miley, filed through counsel a petition for extraordinary relief in the nature of a writ of mandamus. On September 8, 1999, the Court dismissed that petition after the petitioner notified the Court of his agreement with the Secretary that the petition had been mooted because the Secretary had provided the requested relief.
The petitioner filed a timely application for attorney fees and expenses under the
The petitioner appealed to the U.S. Court of Appeals for the Federal Circuit (Federal Circuit). On March 12, 2001, the Federal Circuit issued an opinion in this case in which it held that this Court had erred by holding, in this case and in others (including Weierbach, supra ), that the catalyst theory did not allow for an inference of causation based on temporal coincidence. Miley v. Principi, 242 F.3d 1050, 1054-55 (Fed.Cir.2001). The Federal Circuit vacated this Court‘s February 1, 2000, order and remanded the EAJA application to this Court for a determination, “under the correct standard, whether [the petitioner‘s] fee application should be granted.” Id. at 1055.
On May 29, 2001, while this appeal was still pending before this Court on remand from the Federal Circuit, the Supreme Court of the United States held in Buckhannon Bd. and Care Home v. West Virginia Dep‘t of Health and Human Resources “that the ‘catalyst theory’ is not a permissible basis for the award of attorney‘s fees under the [
Notes
(e) Fees permitted. Fees permitted for services of an attorney-at-law or agent admitted to practice before the Department of Veterans Affairs must be reasonable. They may be based on a fixed fee, hourly rate, a percentage of benefits recovered, or a combination of such bases. Factors considered in determining whether fees are reasonable include:
(1) The extent and type of services the representative performed;
(2) The complexity of the case;
(3) The level of skill and competence required of the representative in giving the services;
(4) The amount of time the representative spent on the case;
(5) The results the representative achieved, including the amount of any benefits recovered;
(6) The level of review to which the claim was taken and the level of the review at which the representative was retained;
(7) Rates charged by other representatives for similar services; and
(8) Whether, and to what extent, the payment of fees is contingent upon the results achieved.
Whenever a court renders a judgment favorable to a claimant under this subchapter who was represented before the court by an attorney, the court may determine and allow as part of its judgment a reasonable fee for such representation, not in excess of 25 percent of the total of the past-due benefits to which the claimant is entitled by reason of such judgment, and the Commissioner of Social Security may, notwithstanding the provisions of section 405(i) of this title, but subject to subsection (d) of this section, certify the amount of such fee for payment to such attorney out of, and not in addition to, the amount of such past-due benefits.
134In our meetings to resolve the differences between the Senate-passed and House-passed versions of S. 11, the House committee expressed concern that the cap as articulated in the Senate bill could result in veterans being able to retain effective counsel. To quote an old cliche: “You get what you pay for.” Certainly, if we are going to give veterans real access to judicial review, we must give them access to good, qualified attorneys. I believe that allowing attorneys to charge reasonable fees will accomplish that goal and was convinced by the position of the House that its provisions on this point are preferable to the highly restrictive provisions of the Senate-passed measure [limited to a $500 flat fee].
Additionally, I believe that, along with finally granting veterans the right to obtain judicial review, we should grant them as much latitude as possible to make determinations about their representation. I also note that the compromise included provisions that allow either the BVA or the Court of Veterans Appeals to review a fee agreement for “reasonableness“—either upon a request from a party or on the Board‘s or Court‘s own initiative. This should provide protection against any overreaching on the part of attorneys.
(C) FEE AGREEMENTS. -
Section 5904(d) of title 38, United States Code , shall not prevent an award of fees and other expenses undersection 2412(d) of title 28, United States Code .Section 5904(d) of title 38, United States Code , shall not apply with respect to any such award but only if, where the claimant‘s attorney receives fees for the same work under bothsection 5904 of title 38, United States Code , andsection 2412(d) of title 28, United States Code , the claimant‘s attorney refunds to the claimant the amount of the smaller fee.
