January 01, 2014

Representing Veterans: How the VA May Be Liable for Your Attorney Fees

Just after the Civil War, Congress by statute prohibited lawyers from representing military veterans in their claims for benefits from the United States while charging a fee for the lawyer’s services. A modified form of that prohibition continues today. 38 U.S.C. § 5904(c). A lawyer may not charge a veteran, or other claimant such as a surviving spouse or child, a fee for services related to an initial claim for benefits from the Department of Veterans Affairs (VA). Id. Under the current law, however, legal fees may be charged for representing a veteran after the VA first decides the claim. Fees may also be available for representing a claimant in an appeal to a court from a final administrative decision. In some circumstances, the VA is liable for the veteran’s legal fees. The purposes of this article are to describe when and under what circumstances the VA must pay fees to the appellant’s lawyer for an appeal to a court; explain how, when, and where a claim for fees may be filed; and, hopefully, encourage senior lawyers and others to help meet the legal needs of veterans, their dependents, and survivors.

Statutory Basis for Attorney Fees

Congress most recently amended the law in 2006. An attorney may now charge a fee for representing a veteran in connection with a claim pending with the VA if two conditions are met. The services for which a fee is charged must be for work performed (1) after a VA regional office first decided the claim, and (2) after the date on which a notice of disagreement with that decision was filed. Pub. L. No. 109-461, § 101(d)(1) (codified at 38 U.S.C. § 5904(c)(1)). For example, a lawyer may now assist a veteran with an administrative appeal to the Board of Veterans’ Appeals (the Board) from the denial of a claim by the VA regional office and charge a fee for that representation. And, if the Board remands the claim to the regional office, the lawyer may continue representing the client on remand and charge for that service. Lawyers seeking to practice before the VA, however, must be admitted to practice by the VA. 38 U.S.C. § 5904(a).

A second exception to the limitation on attorney fees related to VA claims, and the one relevant to this article, is that a lawyer may charge a fee for representing a veteran or other appellant before the U.S. Court of Appeals for Veterans Claims (CAVC) and for further representation in an appeal to the U.S. Court of Appeals for the Federal Circuit. Two statutes make this clear. The last sentence in 38 U.S.C. § 5904(c)(1) states that it does not restrict “fees charged, allowed, or paid for services provided with respect to proceedings before a court.” In addition, fees and expenses are expressly made available from the government by a fee-shifting statute, the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412. The VA may be liable for attorney fees even if the veteran was not charged a fee by the lawyer.

Many lawyers, including those in public interest law firms and other organisations, choose to represent veterans on a pro bono basis and therefore do not charge fees to these clients. Although clients receiving legal services on a pro bono basis are not charged fees, the government may still be liable for fees under the EAJA if the statutory criteria are satisfied. If the client is not charged a fee, then the lawyer may retain fees recovered under the EAJA. If, however, the client is being charged a fee, any money recovered under the EAJA belongs to the client and must be applied first to reduce the amount owed to the lawyer or refunded to the client if a fee was paid in advance.

Winning an appeal to the CAVC does not automatically entitle the client or lawyer to fees from the VA. What follows describes the elements of a successful fee application in a case where the lawyer is representing the veteran on a pro bono basis in an appeal to the CAVC.

A successful fee application begins with the engagement or retainer agreement. The agreement should state expressly that the lawyer will file a claim for fees with the CAVC if the requisite conditions are satisfied. The agreement must make clear the client agrees that, in exchange for the lawyer’s services, the client assigns to the lawyer the client’s rights under 28 U.S.C. § 2412 to claim attorney fees and expenses from the government. In addition, the agreement should clearly inform the client that any fees recovered from the VA will not reduce the amount of any disability compensation or other money to which the client is entitled from the VA. When representation is provided to the client pro bono, it is suggested that the agreement include an express power of attorney authorizing the lawyer to endorse and negotiate a check payable to the client if the check is exclusively in payment of attorney fees and expenses awarded under the EAJA.

Who May Apply?

The application process is relatively simple. Not every party who has litigated against the United States is entitled to an award of attorney fees and expenses. The first qualification is success on the merits. EAJA authorizes a “prevailing party” to recover attorney fees from the government, unless the court finds the government’s position “was substantially justified.” 28 U.S.C. § 2412(d)(1)(A). An applicant is a prevailing party for EAJA purposes if that party established “entitlement to some relief on the merits of his claims, either in the trial court or on appeal.” Hanrahan v. Hampton, 446 U.S. 754, 757 (1980). An appellant attains prevailing party status when the appeal achieves “some form of ‘judicially sanctioned change in the legal relationship of the parties.’” Cycholl v. Principi, 15 Vet. App. 355, 357 (2001) (quoting Sumner v. Principi, 15 Vet. App. 256, 260–61 (2001)). An appellant is a prevailing party in a case “where the plaintiff secures a remand requiring further agency proceedings because of alleged error by the agency . . . without regard to the outcome of the agency proceedings where there has been no retention of jurisdiction by the court.” Halpern v. Principi, 384 F.3d 1297, 1306 (Fed. Cir. 2004) (quoting Former Emps. of Motorola Ceramic Prods. v. United States, 336 F.3d 1360, 1366 (Fed. Cir. 2003)).

For example, when an appellant and the VA agree to terms for a settlement, the appellant is a prevailing party for EAJA purposes. In practice, the CAVC has awarded EAJA fees when the case resulted in one of three possible outcomes: merits settlement, reversal of the Board decision, or remand to the Board. The remand may result either from a CAVC decision on the merits or a joint motion for remand (JMR) filed by the parties and granted by the court. In other words, the CAVC has found the appellant to be the “prevailing party” in those circumstances.

In a JMR, the VA and the appellant agree that an administrative error necessitated remand of at least one issue in the case. For example, if the parties agree that the Board failed to provide sufficient reasons or bases for its conclusion, 38 U.S.C. § 5107, they can agree to file a JMR that the CAVC will typically grant. The appellant is a prevailing party because he or she succeeded in overturning the Board’s decision. Whether the appellant succeeds in agency proceedings on remand is irrelevant to the claim for EAJA fees. Kelly v. Nicholson, 463 F.3d 1349, 1354 (Fed. Cir. 2006). For similar reasons, when the court reverses the Board’s decision, the appellant is the prevailing party, having successfully overturned the Board’s decision. One exception, however, in which a remand to the Board may not establish prevailing-party status is when the remand results from a change in law that occurred after the Board issued its decision. See Thompson v. Shinseki, 24 Vet. App. 176, 181 (2010); Coleman v. Nicholson, 21 Vet. App. 386, 389 (2007) (case citations omitted).

A claim for fees filed by a prevailing party will nonetheless be denied if the CAVC finds the position taken by the government was “substantially justified” in both the administrative proceedings before the VA and before the court. 28 U.S.C. § 2412(d)(2)(D). Alleging in the application the absence of substantial justification is initially sufficient. Once an applicant claiming fees and expenses alleges the absence of substantial justification, the burden shifts to the VA to establish that its position was substantially justified at both the administrative and judicial stages. Cullens v. Gober, 14 Vet. App. 234, 237 (2001) (en banc); see Locher v. Brown, 9 Vet. App. 535, 537 (1996). A good-faith argument by the government in a case of first impression, for example, may convince the court that the VA was substantially justified in its litigating position. E.g., Jandreau v. Shinseki, 23 Vet. App. 12, 17–18 (2009); Hart v. Shinseki, 23 Vet. App. 9 (2009). The appellant will have an opportunity to rebut any government argument that its administrative and litigating positions were substantially justified in a reply to the VA’s response in opposition to the application. See U.S. Vet. App. R. 39(a)(2).

The second qualification for a fee award is economic. For individuals, an application must assert that the appellant claiming fees had a net worth of $2 million or less on the date the appeal was filed. 28 U.S.C. § 2412(d)(2)(B)(i). The net-worth statement in the application must be supported. There are two easy ways to provide that support. An appeal to the CAVC generally requires a $50 filing fee. An appellant may qualify for a waiver of the filing fee by establishing in forma pauperis status. This is accomplished by filing a declaration of financial hardship in lieu of the filing fee. U.S. Vet. App. R. 24. By simply referencing filing of the declaration in the fee application, the applicant will satisfy the maximum-net-worth requirement of the EAJA. Bazalo v. Brown, 9 Vet. App. 304, 309 (1996) (en banc). If the appellant paid the filing fee, then an affidavit from the appellant attesting that his or her net worth was less than $2 million will be sufficient. Neither notarization of the affidavit nor inclusion of other records, such as tax returns or a financial statement, with the fee application is required. If the appellant pays the filing fee, it is recommended that the attorney obtain the net-worth affidavit from the client promptly thereafter because the application will be due shortly after the appeal is concluded.

In addition to awarding attorney fees for time spent pursing relief before the court, the CAVC will award fees for time expended preparing the EAJA application and supporting affidavit of lead counsel, discussed below. Any time claimed for preparing the fee application must be included in the application. U.S. Vet. App. R. 39(a).

How to Apply

Application and Affidavit

To apply for EAJA fees, you must file an application and a supporting affidavit by lead counsel within 30 days after judgment in the action becomes final. 28 U.S.C. § 2412(d)(1)(B). When those 30 days begin to run depends on several factors. 38 U.S.C. § 7291. In the case of a JMR, the CAVC judgment is final on the date the court grants the joint motion. Bowers v. Brown, 8 Vet. App. 25, 27 (1995) (holding that in the case of a JMR, no separate judgment will be entered, and the 30-day period for filing an EAJA application “commences to run the day following the entry of the order which ‘constitutes the mandate’ under Rule 41(b)”). The timing of the EAJA application is significantly different when the CAVC decides the appeal in either a memorandum, i.e., a one-judge, or a panel decision. In either circumstance, the judgment will issue 21 days after the date of the decision, if no motion for reconsideration, rehearing, panel decision, or en banc review is filed. See U.S. Vet. App. R. 35. Entry of judgment begins the 60-day period during which either party may appeal to the Federal Circuit. U.S. Vet. App. R. 36. When the 60-day appeal period expires and neither party has appealed, only then does the 30-day period for filing a fee application begin to run. If there is an appeal to the Federal Circuit or a petition for certiorari to the Supreme Court, the application must await conclusion of those proceedings. 38 U.S.C. § 7292. No extensions of time are available for submitting an EAJA application.

The EAJA application must contain a number of elements in addition to the assertion that your client is a “prevailing party” and that the VA’s position was not “substantially justified.” The application should state the date the CAVC judgment became final, how you determined that date, and the date by which a timely application must be filed. Fees may not be awarded if the CAVC finds that “special circumstances make an award unjust.” 28 U.S.C. § 2412(d)(1)(A). It is desirable to include a statement to the effect that the applicant is unaware of any such special circumstances. In addition, you must state the amount of fees and expenses you are seeking.

The amount of fees claimed should be supported by an affidavit signed by the lead attorney in the appeal. U.S. Vet. App. R. 39(f). Although the rule applies strictly only to cases in which more than one attorney worked on the appeal, attaching an affidavit to every application is recommended. The affidavit does not need to be notarized. The rules require that the affidavit “shall be in tabular form with entries listed in chronological order and depict the work done on the case on each date, identifying the representative who did the work, and must be signed by the lead representative, who will be responsible for its accuracy and completeness.” Id. Reporting time in tenths of an hour is recommended. See Sperry v. Shinseki, 24 Vet. App. 1, 6 (2010) (granting fees based on affidavit with entries that were “appropriate, detailed, [and] well-documented”).

Conducting a proper review of the record before the agency served by the VA can consume many hours, for which fees may be claimed. These records may range in length from a few hundred pages to many thousands. The CAVC allows fees for reviewing the record. In Perry v. West, the court granted fees for 20 hours expended to review fewer than 600 pages. 11 Vet. App. 319, 329 (1998). In another case, the CAVC granted fees for six hours spent reviewing 255 pages. Gordon v. Peake, 22 Vet. App. 265, 273 (2008). Most recently, the court held it was reasonable for an attorney to claim 8.3 hours to review a record of 844 pages. Sperry, 24 Vet. App. at 7.

If fees are claimed for the work of more than one person, all time must be integrated chronologically. U.S. Vet. App. R. 39(f). There is no requirement that a lawyer have entered an appearance in the appeal in order to recover fees for time expended by that lawyer. If you chose to deduct or reduce time expended on the appeal, you should list that time in a column adjacent to the related time entry. Time expended but shown to have been deducted or reduced helps establish that you exercised “billing judgment” in claiming fees from the government and that the amount claimed is “reasonable.” See 28 U.S.C. § 2412(b) (providing that “a court may award reasonable fees”); Baldridge v. Nicholson, 19 Vet. App. 227, 234 (2005) (citing Hensley v. Eckerhart, 461 U.S. 424, 434 (1983)) (“[A]n applicant for EAJA fees must treat the government as though it were a private client by exercising the same kind of billing judgment that an attorney would use in preparing a billing statement for a private client.”). Time spent preparing and seeking an extension of time due to your needs is not reimbursable under the EAJA. See Hensley v. Principi, 16 Vet. App. 491, 499 (2002) (reducing attorney-time hours where, “had the appellant’s counsel more efficiently managed his workload,” extensions of time might not have been necessary). Hensley v. Principi suggests that extensions shown to have resulted from the appellee’s conduct may be reimbursable. See id. Likewise, secretarial time does not qualify for reimbursement.

If you seek reimbursement for expenses, they must be itemized in the affidavit as well. For example, the affidavit should have separate entries for fees to access legal research databases, if claimed. Other expenses typically claimed are the costs to review the administrative record, including travel expenses, postage, and photocopying. Expenses for travel to participate in oral argument may also be claimed. If the attorney or the client paid the filing fee to the court, that fee should be claimed as an expense. If the client paid the filing fee and that fee is recovered from the VA, the client must be reimbursed by the lawyer.

Calculating Fees

The standard rate for calculating attorney fees under the EAJA is $125 per hour, adjusted for inflation. 28 U.S.C. § 2412(d)(2)(A)(ii). Higher fees will be awarded for those working in locales with a high cost of living, and current rates approach $200 per hour in many large cities. To calculate the appropriate hourly rate, the statutory rate of $125 is adjusted by the Consumer Price Index (CPI) for your area. The CAVC and Federal Circuit prefer that a fee application use one hourly rate for the entire case. See Chiu v. United States, 948 F.2d 711 (Fed. Cir. 1991); Elcyzyn v. Brown, 7 Vet. App. 170, 181 (1994). The CAVC holds “that the appropriate cost of living index in determining whether a higher attorney fee under the EAJA is justified is the national CPI-ALL index or the CPI-ALL index for the region or local area where the services were performed.” Elcyzyn, 7 Vet. App. at 181.

The CPI that should be used for an EAJA fee application can be found on the website for the Bureau of Labor Statistics (BLS) at www.bls.gov. On the BLS website, select “Subjects,” then “Consumer Price Index,” and finally “CPI Databases.” Then select “Top Picks” in the row labeled “All Urban Consumers.” On the next page, select your area and press “Retrieve Data.” To find the appropriate CPI for your calculation, select the rate listed under the month and year you prepared the opening brief or JMR. This will be considered the midpoint for the fee calculation. If no CPI is listed for that month, use the CPI from the closest prior month. For example, if you are located in the San Francisco area and you wrote the opening brief in March 2013, your CPI is 242.677 from the CPI listed under February 2013. Next determine the CPI for March 1996 by going to “Change Output Options” near the top of the page, selecting 1996 in the “From” dropdown box, and pressing the blue “GO” button. Find the CPI for March 1996 from the page then displayed (152.9 for the San Francisco area). With this information, you can calculate the cost-of-living adjusted hourly rate for the fee application using the following formula:

$125 x (CPI at midpoint/CPI for March 1996) = cost-of-living adjusted hourly rate for fee application

Reply and Payment

The VA has 30 days to file a response to your EAJA fee application. U.S. Vet. App. R. 39(a)(1). If no response is filed, the CAVC may decide the application at any time. The court may award fees in the full amount claimed but may also review the application and deduct any amount it finds unreasonable. See 28 U.S.C. § 2412(d)(2)(A); Perry v. West,11 Vet. App. 319, 327 (1998). If the VA does file a response and contests the fees you claimed, the parties are required to consult in good faith in an attempt to resolve any dispute. U.S. Vet. App. R. 39(a)(1). If no resolution is reached, then you have 30 days to file an optional reply to the VA’s response. U.S. Vet. App. R. 39(a)(2). If the CAVC grants your application, even in part, after the VA files a response in opposition, you may, not later than 20 days after the court grants your application, file a supplemental fee application. U.S. Vet. App. R. 39(b). The supplemental application is limited to attorney fees and expenses in connection with the defense of the original application. Id. A VA response to the supplemental application and an appellant’s reply are also allowed. U.S. Vet. App. R. 39(b)(1)(2).

If the VA contested the fees you requested, it may take additional time, three months or more, for the court to determine the appropriate amount to be awarded and issue an order. If you have not received the fee awarded within three months after the CAVC’s order, you should contact counsel for the VA to determine the status of payment.

Practical Considerations

The VA is more likely to contest time entries in excess of three hours on one day for any given task. See Andrews v. Principi, 17 Vet. App. 319, 322 (2003) (deciding that a significant reduction in hours billed was warranted where the attorney listed the time billed in increments in excess of three hours with vague descriptions of what occurred during those hours). If you merely report that you spent five hours on one day preparing your opening brief, for example, the VA will likely protest. Account for the time you spent preparing a pleading, such as the opening brief, according to each task performed. For example, your five-hour block of time may break down into two hours reviewing the administrative record, one hour conducting legal research, and two hours drafting the argument. Drafting the summary of the argument, issues, and conclusion should also be accounted for separately. Significant amounts of time may also be consumed preparing the tables of authorities and especially the table of record citations. This time should also be separately tracked.

An application for attorney fees and expenses should be filed even if the attorney is providing representation on a pro bono basis and does not intend to keep the fees awarded. One of the purposes of the EAJA is to deter the government from using its considerable resources to simply overpower private citizens through litigation. EAJA fees may always be donated to one of the many worthy charities serving the needs of veterans.

A comprehensive treatment of EAJA claims filed in the CAVC is available in the Veterans Benefits Manual. See Veterans Benefits Manual § 19.7 (Barton F. Stichman et al. eds., 2013 ed.).