TN 21 (08-17)
GN 03920.050 Releasing Withheld Funds for Representatives’ Fees
A. Releasing withheld funds when there is an authorized fee
When the processing center (PC) or field office (FO) processes the authorized fee under the fee petition process, fee agreement process, or court order, they will:
pay representatives, who are eligible to receive direct payment, the amount of the authorized fee available for payment, minus the user fee; and
release any excess past-due benefits (PDBs) to the claimant or other parties following agency priority rules, except for cases involving an unresolved (or possible) dual fee (i.e., administrative and court-awarded fees), a request for administrative review, a pending windfall offset computation, overpayment recovery or any pending development that precludes the release of payment. For a description of a dual fee, see GN 03920.060A.4.
NOTE: The law requires that we charge an assessment or “user fee” when we make direct payments to defray administrative costs.
Representatives ineligible for direct payment must collect their fees directly from the claimant.
B. Releasing withheld funds when there is no authorized fee or eligibility for direct payment
The PC or FO releases any withheld PDBs to the claimant or other parties, if all appointed representatives:
did not file a fee agreement or a fee petition with us or the court, and we issued the 20-day closeout letter after following the procedures described for administrative decisions in GN 03930.090 or for court decisions in GN 03930.091; or
waived the fee or direct payment of the fee; or
are ineligible for direct payment.
C. Paying fees to appointed representatives eligible for direct payment
We pay all or part of the representative’s authorized fee, up to twenty-five percent of the PDBs (i.e., not to exceed 25 percent) from the claimant’s and auxiliary beneficiaries’ or Title XVI eligible spouse’s withheld past-due benefits.
In a Title XVI claim, reimburse the State agency for any interim assistance before you release the authorized fee to a representative. For Title XVI claims involving an Interim Assistance Reimbursement (IAR) agreement, refer to GN 03920.033B.2.b. and SI 02101.001B.6.
In the fee petition process, although the authorized fee may exceed 25 percent of the total past-due benefits, only pay up to 25 percent as required by law.
In a dual fee situation (i.e., authorization of both administrative and court-awarded fees), although the court fee and the administrative fee combined may exceed 25 percent of the PDBs, only pay up to 25 percent, as required by law.
D. Calculating the fee shares and the user fee
This section explains how to calculate the authorized fee and user fee under each fee authorization process.
1. Fee authorized under the fee petition process
Under the fee petition process, pay the fee we authorize, minus the user fee, to each of the eligible representatives whose appointment was in effect when we issued, or the court issued, the favorable decision. If the authorized fee exceeds the withheld amount, the PC for Title II fees and the FO for Title XVI fees apportion (i.e., prorate) the withheld amount among the eligible representatives.
The chart in this section shows, step-by-step how to determine the amount of past-due benefits to release to more than one representative eligible for direct payment under the fee petition process.
List and add the amount(s) for each representative. Deduct amounts each representative holds in an escrow or trust account from his or her individual fee.
Equals the total authorized fees not held in escrow or trust account.
$3,540 – $0.00 for D. Smith
+$2,360 – $0.00 for N. Jones
Divide the amount of each representative's
authorized fee not held in escrow or trust by the total authorized fee from Step 1 and round to the nearest dollar to find each representative's percentage of the total authorized fee not held in escrow or trust.
$3,540/$5,900=.60 (60%) for D. Smith
$2,360/$5,900=.40 (40%) for N. Jones
List the total withheld PDB amount. (Assume the total PDB amount is $22,400)
$5,600 (PDBs $22400 x .25%=$5600)
Determine each representative's share of the withheld amount by multiplying the withheld amount (from Step 3) by each representative's percentage (from Step 2).
Repeat for each representative.
$5,600 X .60 = $3,360 for D. Smith
$5,600 X .40 = $2,240 for N. Jones
Add each representative's share of the withheld amount (from Step 4) to ensure that it corresponds to the withheld amount (from
$3,360 for D. Smith
+$2,240 for N. Jones
Calculate each representative’s share of the user fee and subtract it from each representative's share of the withheld amount.
In this example, we capped the user fee at $91.
For the applicable user fee cap, see GN 03920.019.
$5,600 x .063 > $91.00; therefore,
user fee is $91.00
$91.00 x .60 = $54.60 user fee for D. Smith
$3,360 – $54.60 = $3,305.40
$91.00 X .40 = $36.40 user fee for N. Jones
$2,240 – $36.40 = $2,203.60
Release the remaining share of the withheld amount minus the user fee (from Step 6) to each representative.
$3,360 - $54.60 = $3,305.40 for D. Smith
$2,240 - $36.40 = $2,203.60 for N. Jones
Determine the remaining authorized fee each representative must collect from the claimant. Deduct each representative’s share of the withheld amount (Step 4) from their authorized fee not held in escrow or trust (Step 1) to determine the amount each representative must request from the claimant.
NOTE: Each representative must look to the claimant for payment of the portion of the authorized fee that we could not pay from the claimant's withheld PDB amount. The representative cannot charge or collect the user fee from the claimant.
$3,540 – $3,360 = $180 authorized fee for D. Smith (which must be collected from the claimant),
$2,360 – $2,240 = $120 authorized fee for N. Jones (which must be collected from the claimant).
2. Fee authorized under the fee agreement process
Under the fee agreement process, do not consider individual work when you authorize representatives’ fees. Split the authorized fee in equal shares to each appointed representative without regard to his or her services. For example, if the claimant appointed two representatives, authorize half of the total fee under the terms of the fee agreement to each representative. However, if a representative waived his or her fee, do not consider that representative in our fee calculations and do not apportion him or her a share of the authorized fee. For example, if there are two appointed representatives and one waived his or her fee, pay the entire fee to the representative who did not waive his or her fee.
NOTE: When multiple representatives are appointed and a third party entity will pay the fee for one or more of the representatives who waive their right to a fee from the claimant(s), these rules apply unless any of the conditions in GN 03920.010 are not met.
a. Review if all of the following conditions apply
The claimant appoints multiple representatives;
We correctly approve the fee agreement for a representative or multiple representatives as prescribed in GN 03940.003; and
There is only a single fee agreement that all representatives who are requesting a fee signed (whether the representatives work for the same or different entities or for themselves).
b. If all the conditions apply and the fee agreement is approved calculate a total fee amount as follows
Divide the total authorized fee amount by the number of appointed representatives who signed a single fee agreement, and who did not waive their fee;
Authorize an equal share of the fee (as calculated based on an approved fee agreement) to each appointed representative who did not waive his or her fee;
Directly pay the authorized fee to each appointed representative eligible for direct payment (to determine direct payment eligibility, see GN 03920.017B); and
Release shares authorized to representatives who are not eligible for direct payment to the claimant.
NOTE: Do not withhold any PDBs when all appointed representatives waive their fee. Release all PDBs to the claimant.
c. Change in conditions
If any of the conditions described in GN 03920.050D.2.a. in this section change after our calculations or payment of the fee (e.g., the fee agreement is rescinded) and the situation no longer meets these conditions:
Request the representatives submit fee petitions, and
Request a refund of any shares we paid, if applicable, following the instructions in GN 03920.051.
Representatives who did not waive their fee and who wish to receive a fee, must either sign on a single fee agreement (to receive equal shares), or each representative must submit a fee petition.
NOTE: Consider former representatives (i.e., those who have withdrawn, revoked, or sanctioned) in our calculations if they did not waive their fee. Authorize these representatives the appropriate shares of the fee, but release these shares of the withheld funds to the claimant.
EXAMPLE 1: The claimant appointed three representatives, A, B, and C, from the same entity. Representative C waived the right to a fee, and representatives A and B signed and submitted a single fee agreement. Pay representatives A and B (who are eligible for direct payment) one-half (equal shares) each of the total fee we authorized.
EXAMPLE 2: The claimant appointed four representatives, A, B, C, and D, from the same entity. Representatives B, C, and D waived their right to a fee, and representative A submitted a signed fee agreement. Pay A the entire fee we authorize.
EXAMPLE 3: The claimant appointed representative X from “Disability Associates” and representatives Y and Z from “Robust Disability Advocacy.” Representatives Y and Z signed a single fee agreement. Representative X signed her own fee agreement. Disapprove both fee agreements and ask all representatives to file fee petitions.
EXAMPLE 4: The claimant appointed representative A from “Full Disability Benefits” and representatives B and C from “We Get You Approved” disability firms. All representatives signed a single fee agreement. Representative A and B waived their rights to a fee. Pay representative C the entire fee amount.
EXAMPLE 5: In the same scenario as Example 4, representatives A and B waived their right to a fee. Representative C is a non-attorney ineligible for direct payment. Authorize the full fee to representative C and release all the past-due benefits to the claimant because representative C is not eligible for direct payment. Representative C must collect her fee from the claimant.
EXAMPLE 6: In the same scenario as Example 4, all representatives waived their right to a fee. Release all past-due benefits to the claimant.
3. Fees authorized by the court
Follow the proration steps in GN 03920.050D.1, when a court authorizes fees to multiple representatives. Make direct payment of authorized fees only to representatives who are eligible and registered for direct payment, as described in GN 03920.060E.
4. Dual fees are authorized
For a description of dual fees, refer to GN 03920.060A.4.
Pay administrative fees and the court fees in the order the component or office responsible for issuing the payment receives the fee authorizations. For example, if the office receives the court awarded fee first, pay the court fees first. Withhold a maximum of 25 percent of PDBs for direct payment of the fee whether we authorized it, a court authorizes it, or both.
If we receive the authorizations for the administrative fee and the court fee simultaneously, follow the proration steps described for the fee petition process in GN 09320.050D.1.
E. Direct payment of the fee and the “user fee” or “assessment”
When we pay the representative’s authorized fee directly, the law requires that we charge an assessment or “user fee” to the representative to defray administrative costs. This applies to payments for both Title II and Title XVI claims. Representatives cannot charge or collect this assessment (user fee) from the claimant.
For further information on direct payment, refer to GN 03920.017C.
For further information on the assessment, refer to GN 03920.019; and for cases involving court fees, refer to NOTE 1 in GN 03920.017D.5.
Refer to processing instructions in SM 00834.000 and MS SPECPAYSYS 001.001.
F. Releasing excess withheld funds to the claimant and auxiliary beneficiaries in Title II claims
If there are funds remaining after the PC certifies direct payment of the representative's fee from Title II PDBs, the PC releases the excess funds to the claimant and any auxiliary beneficiaries.
1. When to prorate excess funds
We provide instructions to prorate excess funds when the primary beneficiary lives in the same or different households.
a. Primary claimant lives with auxiliary beneficiary(ies)
Do not prorate the excess funds if the primary beneficiary lives in the same household with all auxiliaries entitled on the record.
b. Primary claimant does not live with auxiliary beneficiary(ies)
Prorate the excess funds if the primary claimant does not live in the same household with all of the auxiliary beneficiaries entitled on the record.
For proration procedures, see GN 03930.070.
2. Dual fee authorization cases
In dual fee authorization cases, the PC must ensure that they certified direct payment of both the administrative and the court authorized fees to the representatives (up to 25 percent of past-due benefits) before they release any remaining past due benefits to the claimant and any auxiliary beneficiaries. Pay the authorized fees in the order we receive them.
For additional information regarding court decisions, see GN 03920.017B.5. and GN 03920.017C.4.
G. Releasing excess withheld funds to the claimant and eligible spouse in Title XVI claims
The FO releases the remaining underpayment to the claimant and the spouse after the FO reimburses any interim assistance reimbursement (IAR) payments, pays the representative's fee from past-due Title XVI benefits, and recovers any outstanding overpayments.
For additional information on calculating Title XVI past-due benefits payable, see GN 03920.033B.
For information on the effect overpayments have on past-due benefits, see GN 03920.031D.
For recovery of a Title XVI overpayment from retroactive Title II benefits after we applied windfall offset to the Title II retroactive benefits, see SI 02220.021.