TN 17 (03-05)

GN 03940.037 Title II - FO and PC Processing of Fee Agreements on Claims Involving Mental Capability - General

A. Policy

When SSA issues a decision favorable to the claimant, SSA will approve a fee agreement that meets the statutory requirements of the Act and is not otherwise excepted, even though the claimant's mental capability (i.e., the claimant's ability to manage his/her funds) is at issue. Refer to GN 00502.020, Determining Capability – Adult Beneficiaries.

In these situations, SSA defers authorizing a fee until resolving the capability issue and, if appropriate, until selecting a representative payee for the claimant. This allows SSA to keep a substantial number of fee agreements in the process, but protects a potentially incapable claimant's right to request administrative review of a fee by sending notice of the fee amount and of the right to request administrative review to his/her representative payee.

SSA assigns high priority to claims requiring a determination of mental capability and selection of a representative payee. Most cases should be decided when SSA issues the notice of favorable decision; therefore, this policy will not unduly delay the fee authorization.

B. Procedure

1. Field Office (FO) Actions

a. Mental Capability Development and/or Payee Selection Incomplete

If the issues of mental capability and/or payee development are pending when you effectuate the favorable decision and you are paying the claimant current benefits directly pending resolution of the capability issue and/or representative payee selection, take the following actions:

  • approve the fee agreement, assuming it meets the statutory requirements of the Act and is not otherwise excepted (see MSOM MCS 009.009 for coding instructions;

EXCEPTION: For claims decided at the hearing or Appeals Council review level, code the decision on the fee agreement made by the ALJ or AAJ. You are not the decision maker at these levels.

  • document your determination on a Form SSA-553 or other processing center (PC) or FO prescribed form;

  • withhold 25 percent of past-due benefits when the representative is eligible for and did not waive direct payment;

  • prepare an incomplete notice using a neutral language paragraph (i.e., language that advises the parties you are deferring a fee authorization) (see GN 03940.075 for paragraphs);

  • annotate the development worksheet and establish an alert by annotating the route sheet, instructing the processing center (PC) to authorize a fee after SSA resolves the issue of mental capability and/or payee selection (see MSOM MCS 008.004 for coding instructions).

b. Mental Capability Development and/or Payee Selection Complete

If you have resolved the issue of mental capability and representative payee selection, if appropriate, by the time you effectuate the favorable decision, follow the general case processing instructions in MSOM MCS 009.009 , Check/Notice (NOT2); MSOM MCS 008.004 , Development Worksheet (DW01), and MSOM MCS 014.006 , BCF/Remarks/Notice (BCRN). Ensure that you take the following actions:

  • approve the fee agreement, if it meets the statutory requirements of the Act and is not otherwise excepted;

EXCEPTION: For claims decided at the hearing or Appeals Council review level, code the decision on the fee agreement made by the ALJ or AAJ. You are not the decision maker at these levels.

  • document your determination on a Form SSA-553 or other prescribed form; and

  • withhold up to 25 percent of past-due benefits when the representative is eligible for direct payment.

If you resolve the issue of mental capability and, if appropriate, select a representative payee for the claimant after effectuating the favorable decision (see GN 03940.037B.1.a.), when forwarding the completed development to the PC, annotate the route slip re-alerting the PC that they must authorize a fee and advise the parties (i.e., the claimant if capable or, if incapable, his/her representative payee) and the representative.

2. PC Actions

a. Mental Capability Development and/or Payee Selection Incomplete

When the FO forwards a favorable decision in accordance with GN 03940.037B.1.a., take the following actions:

  • establish a diary (same diary as you establish for capability/payee selection process); and

  • send a notice advising the parties of the determination on the fee agreement. If the FO decision maker approved the fee agreement, include neutral language regarding the fee (see GN 03940.075 for paragraphs).

b. Mental Capability Development and/or Payee Selection Complete<