In re the Fee Agreement of SMITH

1 Vet. App. 492, 1991 U.S. Vet. App. LEXIS 103, 1991 WL 197752

• Court: United States Court of Appeals for Veterans Claims
• Decided: October 7, 1991
• Docket: No. 91-619
• Status: Published

Opinions

STEINBERG, Associate Judge, concurring, filed separately.

PER CURIAM.

This matter relating to attorney fees arises out of the proceedings in the appeal to this Court in Jones v. Derwinski, 1 Vet.App. 210 (1991), in which the Court vacated the Board of Veterans’ Appeals (BVA or Board) decision and remanded the case for readjudication.

Prior to the enactment of the Veterans’ Judicial Review Act (VJRA), Pub.L. No. 100-687, Div. A, 102 Stat. 4105 (1988), an attorney or agent who represented a claimant seeking benefits in proceedings before the Veterans’ Administration (now the Department of Veterans Affairs) (Department or VA), the BVA, or both, was limited to a maximum fee of $10. 38 U.S.C. § 3404(c) (1982); see also Walters v. National Association of Radiation Survivors, 473 U.S. 305, 105 S.Ct. 3180, 87 L.Ed.2d 220 (1985). (Hereafter in the opinion, we will refer only to representation by, and fee agreements in connection therewith involving, “attorneys,” but all such references apply equally to “agents” as to representation and fee agreements.) Section 104(a) of the VJRA repealed the $10-fee limitation and amended the attorney-fee provisions by revising subsection (c) and adding a new subsection (d) to § 3404 (subsequently renumbered as § 5904) of title 38, U.S.Code. VJRA, Pub.L. No. 100-687, § 104(a), §§ 401, 403, 102 Stat. at 4108, 4122.

Attorney William G. Smith seeks review of a decision by the BVA Chairman disapproving of his fee agreement with his client, veteran McArthur Jones. Smith included as one of the issues to be raised in Jones’ substantive appeal the disapproval of the fee agreement by the BVA Chairman. Because we hold that the Chairman has no power to review attorney-fee agreements for representation at the administrative level and that, therefore, such a decision may not form the basis of an appeal to this Court, the matter is dismissed. We also note that review in this Court of Board fee agreement decisions must be initiated by a Notice of Appeal (NOA) which complies with U.S.VetApp.R. 3 and is filed by an aggrieved party.

I. BACKGROUND

A complete statement of the facts and background pertaining to the underlying appeal are set forth in the Court’s opinion in Jones v. Derwinski. All citations in this opinion to briefs, memoranda, or the record on appeal refer to those documents as filed in that case. In that opinion we stated: “[The] attorney-fee issues have been separated from the substantive appeal and re-docketed in a separate case, In the Matter of the Fee Agreement of William G. Smith in Case Number 90-58, U.S.Vet.App. No. 91-619 (Notice of Appeal filed Feb. 2, 1990), as an appeal by the appellant’s attorney, William G. Smith, Esquire, from the BVA’s decision on the fees provided for in the fee agreement between the attorney and the appellant.” Jones, at 212.

The claim of the appellant was initially denied by the BVA on January 26, 1988, reopened by the veteran on February 1, 1988, and denied by the VA Regional Office (RO) on August 23, 1988. On December 12, 1988, a VA Form 2-22a appointing William Smith, Esquire, as the veteran’s attorney was executed by the veteran and attorney Smith and, apparently, filed with the RO. Br. of Appellant at Exhibit C. On that same date, a Notice of Disagreement with the RO decision was filed by the attorney. R. at 111. The RO held a personal hearing on February 16, 1989, at which the attorney represented the veteran and stated that he would be submitting a fee agreement between him and the veteran and that it would satisfy the attorney-fee provisions of 38 U.S.C. § 7263(c) (formerly 4063(c)). R. at 117. On February 20,1989, the attorney filed with the BVA the appellant’s substantive appeal and the fee agreement.

The fee agreement provided: “[T]he veteran agrees to pay a fee of no less than 20% of the past due benefits that may be awarded in this case. In the event that no past due benefits are paid, the veteran agrees to pay a fee of $1,000. In no event shall the fee be less than the sum of $1,000.” R. at 130. The agreement entitled the veteran “to all services [at the administrative level including] a personal hearing, an appeal to the Board[ ], and an appeal to the Court of Veterans Appeals.” Id.

On September 20, 1989, the BVA Chairman sent a letter to the attorney stating that the BVA was “unable to approve the fee agreement” because it was not in compliance with § 104(a), § 401, and § 403 of the VJRA. R. at 131. Three weeks later, on October 10, the BVA issued a decision denying the reopened claim, and a timely appeal of the October 10 BVA decision to this Court followed with the filing of an NO A on February 2, 1990.

On March 13, 1990, the attorney filed with the Court a separate, second fee agreement between him and the veteran. The fee agreement called for the attorney “to provide legal services in connection with appeal to [the] Court of Veterans Appeals.” Attorney-Client Fee Contract at 1 (filed Mar. 13, 1990). The agreement provided for a “fixed fee of $1,000” and “in addition to the fixed fee ... a fee equal to 20% of the total amount of any past-due benefits awarded” plus “all costs and expenses incurred by Attorney.” Id. at 1-2 (emphasis added).

While this matter was pending here on the attorney-fee questions, the BVA on May 23, 1991, decided Mr. Jones’ underlying case, which the Court had remanded to the Board on April 10, 1991, in Jones. The Board, in McArthur Jones, BVA 89-09213 (May 23,1991), awarded the veteran’s claim for service connection for his chronic pros-tatitis. See Jones, BVA 89-09213 at 3. On remand from the Board’s May 23, 1991, decision, the VARO denied Mr. Jones a compensable disability rating. On July 10, 1991, Mr. Smith filed a motion in this Court for an award of interim benefits. That motion was denied on August 16,1991; but the Court ordered the following: that the Secretary file, within 30 days of initiation, a report with the Clerk of the Court on the status of any BVA appeal initiated from the RO decision or file, within 14 days of assumption, a report on whether the BVA has assumed jurisdiction over the RO decision pursuant to 38 C.F.R. § 19.5(a) and § 19.106(a).

Also, while this matter was pending here on the attorney-fee questions, Mr. Smith on June 4, 1991, filed a motion for a protective order directing the Secretary, pending further order of the Court, to set aside and not pay out to Mr. Jones 20% of the past-due benefits to be awarded to Mr. Jones as a result of the BVA’s May 23, 1991, decision in his underlying case. On July 26, 1991, the Court denied Mr. Smith’s motion on the grounds that he had not demonstrated irreparable injury and had failed to seek the requested relief from the Secretary in the first instance. Mr. Smith also filed on June 4, 1991, an application for a bill of costs, asking the Court to tax certain costs against the Secretary of Veterans Affairs in light of the appellant having prevailed before the Board in its May 23, 1991, decision. The latter motion will not be dealt with in this opinion.

II. ANALYSIS

A. Statutory Background and Construction

We begin our analysis with a discussion of the authority of the Board and the Court under 38 U.S.C. § 5904 and § 7263 to review and regulate the payment of attorney fees.

Section 5904(c)(2) requires an attorney representing a claimant before the Department or the BVA, or both, to file with the BVA, in those instances where a fee is authorized by § 5904(c)(1), a copy of any fee agreement in connection with such representation. The BVA “may review such a fee agreement, and may order a reduction in the fee called for in the agreement if the Board finds that the fee is excessive or unreasonable.” 38 U.S.C. § 5904(c)(2). A finding or order of the BVA, with respect to the fee, is reviewable by the Court under 38 U.S.C. § 7263(d). Section 7263(d) expressly authorizes the Court, in reviewing such a fee agreement, to “affirm the finding or order of the Board and ... order a reduction in the fee ... if it finds that the fee is excessive or unreasonable.” 38 U.S.C. § 7263(d).

As to representation before the Court, § 7263(c) requires that “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.” 38 U.S.C. § 7263(c). “The Court, on its own motion or the motion of a party, may review such a fee agreement” and “order a reduction in the fee called for in the agreement if it finds that the fee is excessive or unreasonable.” 38 U.S.C. § 7263(c), (d). Since the question of Jones’ entitlement to benefits is still pending before the Secretary, we do not deem review of the fee agreement for representation in this Court to be ripe for decision. Accordingly, we will not, despite the invitation of Judge Steinberg to do so, undertake resolution of the issues relating to that contract.

In summary, § 7263 provides this Court with the authority to affirm or reduce BVA decisions as to fee agreements submitted to the BVA under § 5904(c)(2) for representation before VA/BVA as well as to review originally and directly those submitted to the Court under § 7263(c) for representation before the Court. The BVA is authorized to review those fee agreements submitted to it under § 5904(c)(2) for representation before VA, the BVA, or both, but only after the representation has actually been undertaken before VA or BVA. See Nagler and Jones v. Derwinski, 1 Vet.App. 297, 302, 303 (1991).

B. Reviewability of BVA Chairman Decision

In this case, the action challenged on appeal was taken by the BVA Chairman, not the Board. Under 38 U.S.C. § 7252(a) and § 7266(a) (formerly § 4052 and § 4066), this Court may review an action of the BVA Chairman when the Chairman has acted on behalf of the Board and has statutory authority to so act. We find no such authority for the Chairman to act for the Board on attorney-fee agreements, and hence, the attorney’s appeal must be dismissed. We further note that no authority could be provided to the Chairman by the proposed VA Regulation, published by the Secretary of Veterans Affairs on August 18, 1989, providing that the Chairman’s ruling on a motion for review of a fee agreement “will constitute a final decision of the Board with respect to the motion.” Proposed VA Regulation, 54 Fed. Reg. 34,353 (1989) (to be codified at 38 C.F.R. § 20.609(i)) (proposed Aug. 18, 1989). That is because review of fee agreements for VA/BVA representation is a matter reposed by the statute in the Board itself and not in the Secretary, as had been proposed in the Senate-passed version of S. 11. See 134 Cong.Rec. S16651 (daily ed. Oct. 18, 1988) and 134 Cong.Rec. H10345 (daily ed. Oct. 19, 1988).

Although 38 U.S.C. § 5904(c)(2) assigns to the “Board” the responsibility to issue a “finding or order of the Board” with respect to a fee “called for in the agreement,” up to this point, review of fee agreements has been carried out by the Chairman generally following the above-cited pending proposed BVA regulations published in August 1989.

Section 7101(a) (formerly § 4001) of title 38, U.S.Code, provides that the Board is “under the administrative control and supervision” of the Chairman. Section 7102(c) (formerly § 4002) and § 7103(a), (b) (formerly § 4003) of title 38, U.S.Code, provide the procedure by which the Board is to make its determinations. These provisions distinguish between “any proceeding initiated before the Board[,]” which is to be decided, by majority vote, by a “section of the Board” to which the proceeding is “assigned ... by the Chairman” (38 U.S.C. § 7102(c)), and a reconsideration of a decision of a Board section which may be ordered by the Chairman acting alone but must then be heard and decided, by majority vote, by “an expanded section of the Board” (38 U.S.C. § 7103(b)).

The statute also assigns to the Chairman certain other specific functions: to assign Board members to Board sections (§ 7102(a)(1)), to designate chief members of sections (id.), to designate temporary members of the Board (§ 7101(c)), to designate acting members of the Board (§ 7102(a)(2)), and to designate Board members to hold hearings (§ 7102(b)). Hence, for example, the Chairman would have the authority to assign review of fee agreements to a single three-member Board section, and to assign himself and/or the Vice-Chairman to serve thereon, so as to maintain consistent interpretation and application of the law and regulations.

However, based on the entire statutory scheme and its delineation between functions assigned to the Chairman and those assigned to the Board, we hold that neither the Chairman’s “administrative control and supervision” authority under § 7101(a) nor any other authority authorizes him to carry out other functions specifically assigned to the Board by statute, specifically here the fee-agreement review function under § 5904(c)(2).

There being no authority reposed in the Chairman to review this or any other fee agreement on behalf of the Board, the September 20, 1989, decision of the Chairman is not a lawful exercise of the Board’s review authority under § 5904(c)(2). We hold that the ultra vires action of the Chairman must be treated as though it had never been taken. Manhattan Gen. Equip. Co. v. Comm’r, 297 U.S. 129, 134, 56 S.Ct. 397, 399, 80 L.Ed. 528 (1936) (action promulgating regulation not in harmony with authorizing statute makes regulation “a mere nullity”). See also United States v. Larionoff, 431 U.S. 864, 872 n. 12, 97 S.Ct. 2150, 2156 n. 12, 53 L.Ed.2d 48 (1977) (same); Dixon v. United States, 381 U.S. 68, 74, 85 S.Ct. 1301, 1305, 14 L.Ed.2d 223 (1965) (same). Thus, there was no decision to be appealed to this Court.

We note for future guidance that in order to obtain review in this Court of fee-agreement decisions by the Board, an aggrieved party must comply with the requirements of 38 U.S.C. § 7266 and U.S.Vet.App.R. 3. Section 7266(a) provides in pertinent part: “In order to obtain review by the Court of Veterans Appeals of a final decision of the Board of Veterans’ Appeals, a person adversely affected by that action must file a notice of appeal with the Court.” Thus, an NOA under § 7266(a) by a party aggrieved by a BVA finding or order is the appropriate and indispensable procedure to obtain review here of a BVA decision on a fee agreement. Under Rule 3(c) of the Rules of Practice and Procedure of this Court, such an NOA must, among other things include the name of the party or parties taking the appeal and designate the Board decision appealed from. In this case, the attorney could not have complied with the § 7266 NOA requirements because, as we hold above, there was no valid final BVA decision from which he could have appealed.

The purported appeal of attorney Smith regarding that decision is, therefore, DISMISSED.