Gumpenberger: Fee on recouped debt; 38 U.S.C. § 5904(d)(1)

Gumpenberger v. Wilkie, 31 Vet.App, 33 (Feb. 7, 2019) 

HELD: In representing a veteran in an appeal challenging a debt owed to VA, the representative is only entitled to a fee based on the amount of the invalidated debt that was actually recouped – not on the entire amount of the invalidated debt.




Snyder v. Sec’y of VA, 858 F.3d 1410 (Fed. Cir. June 8, 2017)

HELD: A veteran’s surviving spouse can seek to recover a disputed attorney fee after the veteran’s death pursuant to 38 U.S.C. § 5121.

SUMMARY: Attorney Keith Snyder began representing veteran Larry Beck pursuant to a February 2001 fee agreement that called for the payment of 20% of any past-due benefits awarded. Less than a year after entering into the agreement, Attorney Snyder asked the Board of Veterans’ Appeals to revoke his representation, stating that “irreconcilable differences” made his “continued representation of Mr. Beck . . . not possible,” and asked the Board to cancel his fee agreement immediately.

Two years later, VA granted the veteran’s appeal, and awarded past-due benefits at the 100% disability rate, retroactive to June 1992. Despite the fact that Attorney Snyder had terminated representation two years earlier, he still sought attorney fees pursuant to the fee agreement. He presented a copy of that fee agreement to the VA Regional Office (RO), which determined that he was entitled to an attorney fee of over $41,000 and withheld that fee from the past-due benefits award.

The veteran appealed this decision and sought to recover the withheld attorney fee. In November 2005, the Board remanded this matter back to the RO to readjudicate the issue of whether Mr. Snyder was entitled to the attorney fee. In December 2006, while the appeal was still pending, Mr. Beck passed away.

His widow filed an accrued benefits claim, seeking to recover the disputed fee. The RO denied the accrued benefits claim, and Mrs. Beck appealed to the Board. In 2008, the Board dismissed the veteran’s appeal pursuant to 38 C.F.R. § 20.1302 (extinguishing appeal upon veteran’s death) and remanded Mrs. Beck’s claim back to the RO.

The RO again determined that Mrs. Beck “could not recover the disputed attorney fee because her husband’s claim ceased to exist upon his death.” Mrs. Beck again appealed this decision, and the Board requested a VA General Counsel precedent opinion.

In December 2015, VA’s Office of the General Counsel issued an opinion, stating:

A claim, pending at the time of a veteran’s death, challenging an attorney’s entitlement to payment of attorney fees . . . may provide a basis for an accrued benefits claim under [38 U.S.C. §] 5121, because such a claim concerns entitlement to periodic monetary benefits allegedly due and unpaid to the veteran at the time of death.

While this appeal was pending at the Board, Attorney Snyder petitioned the Federal Circuit to review the General Counsel Precedent Opinion pursuant to 38 U.S.C. § 502, which authorizes the Federal Circuit to review agency actions that must be published in the Federal Register and VA’s rulemaking under the Administrative Procedures Act (APA), unless “such review is sought in connection with an appeal” to the Board. If that is the case, then the laws under chapter 72 – relating to Board appeals – apply.

The Secretary argued that the Federal Circuit lacked jurisdiction over this petition “because Mr. Snyder seeks review of VA action in connection with his case before the Board.” The Secretary also argued that the Federal Circuit lacked jurisdiction to review General Counsel Precedent Opinions issued in response to a Board request.

The Court rejected both arguments – yet denied the petition.

The Federal Circuit first noted that General Counsel Precedent Opinions must be published in the Federal Register and are binding on the Board. The fact that this opinion was issued in response to a Board request did not change the Court’s conclusion, since there is nothing in the relevant statute that limits the Court’s “review to only some precedential General Counsel opinions.” The only limitation would be “if Mr. Snyder sought review of the opinion in connection with his appeal.” However, the Court determined that Mr. Snyder sought review under 38 U.S.C. § 502, which applies to the General Counsel Precedent Opinion.

The Secretary argued that this position would be inconsistent with the Federal Circuit’s holding in Paralyzed Veterans of Am. v. Sec’y of Veterans Affairs, 308 F.3d 1262 (Fed. Cir. 2002). The Court rejected this argument, citing an earlier case, Splane v. West, 216 F.3d 1058 (Fed. Cir. 2000), which held that the Court had jurisdiction to review precedential opinions issued in response to a Board request. The Court stated that “[w]hen two cases decided by our court are in apparent conflict, we adopt the first in time and follow it.”

Turning its review to the General Counsel Precedent Opinion, the Court determined that it would have reached the same conclusion as the General Counsel. The Court explained that 38 U.S.C. § 5904 “provides for the payment of attorney fees from ‘past-due benefits awarded on the basis of the claim’ in which the attorney represented the veteran” and which are deducted from veteran’s past-due benefits award. Section 5121 “provides for the recovery of ‘[p]eriodic monetary benefits … due and unpaid’ at the time of a veteran’s death based on ‘existing ratings or decisions or those based on evidence in the file at date of death.’” Because attorney fees are deducted from a past-due benefits award, a dispute over such fees constitutes a dispute over the award. An accrued benefits claimant can seek to recover those fees because her clam is one “of entitlement to periodic monetary benefits allegedly due and unpaid to the veteran.” The fact that 38 C.F.R. § 20.1302 requires an appeal to be dismissed upon a veteran’s death is irrelevant to a claim for accrued benefits.

The Court upheld the General Counsel Precedent Opinion, stating: “If the evidence on file at the date of the veteran’s death shows entitlement to due and unpaid periodic monetary benefits, an accrued benefits claimant can pursue those benefits under § 5121.”



Parrott v. Shulkin, docket no. 2016-1450 (Fed. Cir. Mar. 13, 2017)

HELD: Where an attorney works in multiple locations, the correct method for calculating attorney fees is the local Consumer Price Index (CPI) approach, which is based on the cost of living where the legal services were actually performed, and the EAJA application should apportion the attorney’s “time to those locations and use[] the CPI for each locality.”

SUMMARY: The Equal Access to Justice Act (EAJA) provides for an hourly rate of $125 – and allows for an adjustment to this rate to reflect the increased cost of living. The increase is based on one of two calculations: the national Consumer Price Index (CPI) or the local CPI. The national approach focuses on the “national scope of the statutory cap and the ease of computation,” whereas the local approach focuses on where an attorney works and has an office.

In this case, Ms. Parrott’s attorney has his principal office in Dallas, Texas, with additional offices in San Francisco, California and Little Rock, Arkansas. The attorney worked on Ms. Parrott’s case at all three offices. In the EAJA application, he calculated the attorney fee using the CPI rate for Washington, DC. He asserted that this was consistent with the Court’s prior holding in Mannino v. West, 12 Vet.App. 242, 243 (1999), which applied “the local cost-of-living increase actually experienced … where work was performed nationally but always before the Court in Washington, DC.” The Secretary objected to the EAJA application, asserting that the appropriate rate was the CPI for Dallas, the location of the attorney’s principal office.

The CAVC disagreed with both parties, and determined that the fairer approach was to “use the local CPI to calculate the hourly rate for each of the three locations in which [the attorney] performed work and to then review [the attorney’s] itemized billing statement and apportion each billing entry to the firm office where the work resulting in the entry was performed.” Because this approach would require the Court “to seek additional information” from the appellant and her attorney and to “calculate four separate hourly rates,” the Court declined to take on this task and instead ruled that the attorney was entitled to the statutory $125 hourly rate.

On appeal to the Federal Circuit, the attorney argued that the “EAJA does not mandate a particular method for computing attorney fees,” and because statutory ambiguity should be construed in the veteran’s favor, he should be allowed to use the CPI approach that yields the highest fee. This “optimal yield” approach would allow the attorney to use the CPI for Washington, DC. The Secretary argued that the local CPI approach is more consistent with the language of the EAJA and produces fairer results. The Secretary resisted the “optimal yield” approach, noting that the EAJA is not a veterans benefits statute. He further argued that because the EAJA “represents a waiver of sovereign immunity … [it] should be strictly construed in the government’s favor.”

The Federal Circuit examined the language of the statute, discussed the relevant case law, and determined that “the local CPI approach, where a local CPI is available … is more consistent with EAJA than the national approach.” The Court held that the CAVC did not err in ruling that the local CPI approach was the correct calculation method, and that it correctly determined that the attorney’s EAJA application should have apportioned his time to the different locations of his offices and used the CPI’s for each locale.

The Federal Circuit disagreed with the proposed “optimal yield” approach, finding nothing in the statute that would permit a claim for “the highest fee.” The Court found that this approach “runs afoul of the statutory text and EAJA’s prohibition against windfalls.” The Court added that the doctrine of resolving interpretive doubt in the veteran’s favor does not apply to EAJA because EAJA is not a veterans benefits statute.

Finally, the attorney argued that the decision to award the statutory rate of $125 per hour was an abuse of discretion because the CAVC did not permit him to resubmit a corrected EAJA application. The Federal Circuit determined that it lacked jurisdiction “to review all discretionary actions” of the CAVC, and stated that its “jurisdiction attaches when the Veterans Court commits an abuse of discretion rising to the level of legal error.” The Court found that the CAVC “did not interpret any law or regulation in declining to permit [the attorney] to resubmit a corrected EAJA application.” Rather, the CAVC simply determined that the requested fee was not reasonable and “used its broad discretion” to calculate what it deemed an appropriate fee. The Court found no legal error in the CAVC’s ruling.



Bly v. McDonald, docket no. 15-0502(E) (Oct. 7, 2016), overruled, Bly v. Shulkin, docket no. 17-1287 (Fed. Cir. Mar. 2, 2018)

HELD: The 30-day appeal period to file an EAJA application is subject to equitable tolling, but the person seeking equitable tolling must show (1) that he has pursued his rights diligently and (2) that extraordinary circumstance prevented timely filing.  

SUMMARY: On January 5, 2016, the Court granted the parties’ joint motion for remand. In its order, the Court stated “this order is the mandate of the Court,” meaning that the Court’s judgment became “final.” On February 5, 2016 – 31 days after the Court’s order – Mr. Bly submitted his application for attorney fees under the Equal Access to Justice Act (EAJA). Because an EAJA application must be filed within 30 days of the Court’s final judgment, the Court ordered Mr. Bly to show cause as to why his application should not be dismissed.

Mr. Bly contended that the application was timely, and alternatively argued that the deadline should be equitably tolled. The Court sent this case to panel to determine whether equitable tolling applies to EAJA applications and, if so, what standard should be applied.

The parties agreed that equitable tolling applies to EAJA applications, but disagreed on the appropriate standard to apply to determine whether equitable tolling is warranted in these cases. Mr. Bly argued that the Court should adopt a standard in which it only asks “whether a veteran would be financially harmed without tolling and whether the Government would be prejudiced by tolling.” The Secretary asserted that the Court should apply the same standard as the general test for equitable tolling, which inquires as to “whether an extraordinary circumstance prevented the timely filing despite due diligence.”

The Court first determined that Mr. Bly’s EAJA application was untimely, rejecting his argument that “final judgment had not entered and he still had time to appeal.” The Court found this argument to be “incorrect as a matter of law,” since the EAJA statute defines “final judgment” to include “an order of settlement” and the Court’s rules provide that judgment is effective when the Court “order states that it constitutes the mandate of the Court.” The Court’s order, in Mr. Bly’s case, expressly stated that “this order is the mandate of the court.” U.S. Vet.App. R. 41(b). In addition to the EAJA statute and the Court’s own rules, the Court also pointed to its precedential caselaw stating that “an order granting a joint motion for remand . . . is final and not appealable.”

Next, the Court determined that “the doctrine of equitable tolling may be applied to the 30-day time limit for filing an EAJA application.” The Court rejected Mr. Bly’s arguments regarding the standard to apply, finding that applying his proposed standard “would essentially swallow the statutory rule that an EAJA application is due within 30 days of final judgment.” The Court explained that to base an equitable tolling determination on the question of whether a veteran would be financially harmed if the EAJA petition were dismissed, could apply to “virtually every case where an EAJA application is untimely filed.” The Court found that Mr. Bly had not shown extraordinary circumstance or due diligence to warrant equitable tolling.

Finally, Mr. Bly had also argued that dismissing his EAJA application would result in a potentially smaller retroactive award to the veteran, if the veteran is awarded benefits on remand. This is because any contingent attorney fee would have been offset dollar for dollar by the EAJA amount, resulting in a higher award for the veteran. The Court rejected this argument, noting that the Secretary and the Court both have the authority to review attorney fee agreements for reasonableness. The Court expressly directed the Secretary to consider the holding in this case when assessing the reasonableness of any potential attorney fees that result on remand.

Judge Greenberg concurred with the portion of the decision that held that the 30-day EAJA filing period is subject to equitable tolling, but dissented from the holding that equitable tolling was not warranted in this case. He emphasized the importance of encouraging lawyers to represent veterans and noted that the application was only one day late and there was “no evidence of prejudice to the Secretary as a result of that delay.” Judge Greenberg stated that “[p]enalizing an attorney for filing 1 day late where there is no prejudice to the Government, not only unnecessarily penalizes the veteran, but also may have chilling effects on worthy veterans obtaining adequate representation.”