TN 17 (03-05)

GN 03940.041 Fee Agreements - Incorrectly Applied Fee Cap

A. Policy

Occasionally SSA receives an allegation from a representative or claimant that SSA applied an incorrect fee cap. The assertion usually involves the Commissioner's decision to increase the fee cap, which he/she may do from time to time. For example, the Commissioner increased the fee cap from $5,300 to $6,000 for fee agreements approved on or after June 22, 2009.

When the Commissioner increases the cap, the increased cap does not automatically apply to all fee agreements; the fee agreement must contain language that provides for the increased cap. Refer to GN 03940.003A.3. for guidance on fee agreement language.

When SSA applies an incorrect fee cap and the representative or claimant advises SSA of the mistake, SSA will correct the error. SSA will not treat the communication from the party as a request for administrative review.

During periods of transition to a higher fee cap, situations similar to the following may occur:

EXAMPLE 1: A fee agreement with language consistent with a $6,000 cap was in file and approved by the decision maker at the time of the favorable determination. The technician incorrectly capped the fee at $5,300. The representative advises SSA that the fee agreement provided for a fee cap of $6,000.

EXAMPLE 2: A fee agreement with a $5,300 cap was in file and approved by the decision maker at the time of the favorable determination. There was no other agreement in file. The technician incorrectly capped the fee at $6,000 and paid an amount in excess of $5,300 to the representative. The claimant advises SSA that the fee agreement provided for a fee cap of $5,300.

NOTE: Refer to GN 03920.040 when the past-due benefits amount increases or decreases after the date SSA notifies the claimant and the representative of the authorized fee amount.

B. Procedure

1. Lower Fee Cap Incorrectly Applied

When it is determined that SSA applied a lower fee cap than SSA should have applied (such as in GN 03940.041A. Example 1) and the representative received direct payment of the fee from the claimant's withheld past-due benefits, take the following actions:

  1. Compute the correct fee amount.

  2. Pay the representative the additional fee amount (not to exceed 25 percent of past-due benefits) minus the user fee, unless the excess fee withholding has already been released to the claimant (and/or auxiliaries).

  3. Send correct fee language to all parties (representative, claimant and the decision maker). Include administrative review rights in the notice. Supply inadvertent release language if the remaining past-due benefits withheld have already been released to the claimant (and/or auxiliaries).

2. Higher Fee Cap Incorrectly Applied

When it is determined that SSA applied a higher fee cap than should have been applied (such as in GN 03940.041A. Example 2) and the representative received direct payment of the fee from the claimant's withheld past-due benefits, take the following actions:

  1. Compute the correct fee amount.

  2. Compute the assessment (if applicable) based on the correct fee amount. The beneficiary is entitled to receive any excess assessment that was withheld from the representative’s direct payment. Input a Payment History Update System (PHUS) correction with a negative 076 event to annotate the proper user fee amount.

  3. Send corrected fee language to all parties (representative, claimant and the decision maker). Include administrative review rights in the notice.

  4. Refer to GN 03970.025, Direct Payment Errors, and GN 03920.051C, Excess Representative Fee Payments, for guidance on recovering the excess fee payment and refunding money to the claimant.


To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/0203940041
GN 03940.041 - Fee Agreements - Incorrectly Applied Fee Cap - 03/11/2015
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