Viterna v. McDonough ( 2023 )

Case: 22-1061 Document: 34 Page: 1 Filed: 04/20/2023
United States Court of Appeals
for the Federal Circuit
______________________
MICHAEL R. VITERNA,
Claimant-Appellant
v.
DENIS MCDONOUGH, SECRETARY OF VETER-
ANS AFFAIRS,
Respondent-Appellee
______________________
2022-1061
______________________
Appeal from the United States Court of Appeals for
Veterans Claims in No. 19-2940, Judge Joseph L. Toth.
______________________
Decided: April 20, 2023
______________________
KENNETH M. CARPENTER, Law Offices of Carpenter
Chartered, Topeka, KS, argued for claimant-appellant.
NATHANAEL YALE, Commercial Litigation Branch, Civil
Division, United States Department of Justice, Washing-
ton, DC, argued for respondent-appellee. Also represented
by BRIAN M. BOYNTON, CLAUDIA BURKE, PATRICIA M.
MCCARTHY; NATHAN KROES, CHRISTA A. SHRIBER, Office of
General Counsel, United States Department of Veterans
Affairs, Washington, DC.
______________________
Case: 22-1061 Document: 34 Page: 2 Filed: 04/20/2023
2 VITERNA v. MCDONOUGH
Before DYK, LINN, and CHEN, Circuit Judges.
DYK, Circuit Judge.
Michael R. Viterna appeals a decision of the United
States Court of Appeals for Veterans Claims (“Veterans
Court”). The Veterans Court affirmed a Board of Veterans’
Appeals (“Board”) decision affirming the Department of
Veterans Affairs (“VA”) determination that it would not
pay Mr. Viterna attorneys’ fees because he was not owed
such fees under his agreement with his client. Mr. Viterna
argues that the VA does not have the statutory authority
to interpret and apply the agreement. We affirm.
BACKGROUND
I
Before 1988, Congress barred attorneys from charging
more than $10 per claim to represent claimants before the
VA. See Stanley v. Principi, 283 F.3d 1350, 1355 (Fed. Cir.
2002). In 1988, Congress enacted the Veterans’ Judicial
Review Act (“Review Act”), Pub. L. No. 100–687, 102 Stat.
4105 (1988). That statute “allow[ed], for the first time, ju-
dicial review of VA decisions.” Mil.-Veterans Advoc. v. Sec’y
of Veterans Affs., 7 F.4th 1110, 1135 (Fed. Cir. 2021).
“[R]ecognizing the importance of retaining legal counsel in
both judicial proceedings and administrative appeals,”
Congress relaxed “the [then-]existing limitations on attor-
neys’ fees.” Id. In doing so Congress viewed the existence
of written fee agreements as critical.
Congress provided that when there is an agreement
stating that the fee “is to be paid to the . . . attorney . . .
directly from any past-due benefits awarded on the basis of
the claim,” 38 U.S.C. § 5904(d)(2)(A)(i), the VA will dis-
burse fees directly to the attorney up to a maximum of 20%
of the proceeds from “past-due benefits awarded on the
Case: 22-1061 Document: 34 Page: 3 Filed: 04/20/2023
VITERNA v. MCDONOUGH 3
basis of the claim.” Id. § 5904(d)(1). 1 See Ravin v. Wilkie,
956 F.3d 1346, 1349–50 (Fed. Cir. 2020); Scates v. Principi,
1 Subsection 5904(d) was previously codified at
§ 3404(d). See Review Act, Pub. L. No. 100–687, § 104, 102
Stat. at 4108–09. The current provision reads in full:
(d) Payment of fees out of past-due benefits.—(1)
When a claimant and an agent or attorney have en-
tered into a fee agreement described in paragraph
(2), the total fee payable to the agent or attorney
may not exceed 20 percent of the total amount of
any past-due benefits awarded on the basis of the
claim.
(2)(A) A fee agreement referred to in paragraph (1)
is one under which the total amount of the fee pay-
able to the agent or attorney—
(i) is to be paid to the agent or attorney by
the Secretary directly from any past-due
benefits awarded on the basis of the claim;
and
(ii) is contingent on whether or not the mat-
ter is resolved in a manner favorable to the
claimant.
(B) For purposes of subparagraph (A), a claim shall
be considered to have been resolved in a manner
favorable to the claimant if all or any part of the
relief sought is granted.
(3) To the extent that past-due benefits are
awarded in any proceeding before the Secretary,
the Board of Veterans’ Appeals, or the United
States Court of Appeals for Veterans Claims, the
Secretary may direct that payment of any fee to an
agent or attorney under a fee arrangement
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4 VITERNA v. MCDONOUGH
282 F.3d 1362, 1366 (Fed. Cir. 2002). Attorneys were re-
quired to file fee agreements with the Board, which could
“review such a fee agreement and . . . order a reduction in
the fee called for . . . if [it] finds that the fee is excessive or
unreasonable.” Review Act, Pub. L. No. 100–687, § 104(a),
102 Stat. at 4108 (codified as amended at 38 U.S.C.
§ 5904(c)(3)(A)).
Between 1988 and 2006, attorneys were only allowed
to charge fees for representing claimants in VA proceedings
after the Board “first [made] a final decision in the case.”
Mil.-Veterans Advoc., 7 F.4th at 1135 (citation omitted). In
2006, Congress amended § 5904 to allow attorneys to
charge for VA representation earlier in the process—as
soon as a claimant had filed a Notice of Disagreement
(“NOD”) seeking review of an adverse regional office
(“R.O.”) decision. See Veterans Benefits, Health Care, and
Information Technology Act of 2006, Pub. L. No. 109–461,
§ 101(c), 120 Stat. 3403, 3407 (codified at 38 U.S.C.
§ 5904(c)(1)). This change was effective June 20th, 2007.
See Pub. L. No. 109–461, § 101(h), 120 Stat. at 3408; Cam-
eron v. McDonough, 1 F.4th 992, 994–96 (Fed. Cir. 2021). 2
Under the current statute, the Secretary of Veterans
Affairs “may, upon the Secretary’s own motion or at the re-
quest of the claimant, review a fee agreement filed pursu-
ant to [§ 5904(c)(2)] and may order a reduction in the fee
called for in the agreement if the Secretary finds that the
fee is excessive or unreasonable.” 38 U.S.C. § 5904(c)(3)(A).
described in paragraph (1) be made out of such
past-due benefits.
2 Congress has subsequently permitted fee-based
representation even earlier in the administrative process,
but that change is not relevant here. See Mil.-Veterans Ad-
voc., 7 F.4th at 1136.
Case: 22-1061 Document: 34 Page: 5 Filed: 04/20/2023
VITERNA v. MCDONOUGH 5
Such determinations are reviewable by the Board. See id.
§§ 5904(c)(3)(B), 7104(a).
II
In this case, Pauline O. Pitts, the surviving spouse of a
U.S. Army veteran, filed for dependency and indemnity
compensation from the VA in 2001. After the R.O. denied
the claim, Ms. Pitts filed an NOD, which the agency re-
ceived on October 17, 2005. After further proceedings not
relevant here, Ms. Pitts appealed the denial of her benefits
to the Board, which after a remand continued the denial.
In 2012, Ms. Pitts employed Mr. Viterna to represent
her before the VA. The following year, she and Mr. Viterna
signed a fee agreement, which was filed with the VA. The
agreement provided that Mr. Viterna was owed 20% of any
past-due benefits Ms. Pitts recovered, less certain ex-
penses. By its terms, the agreement did not apply to the
2001 claim, because it was “only effective as to those claims
for which a notice of disagreement (NOD) has been filed
after June 20th, 2007,” Joint Appendix (“J.A.”) 61, and the
NOD covering that claim had been filed in 2005. This pro-
vision of the agreement was apparently designed to take
account of the prevailing statute limiting attorneys’ fees for
work performed as to NODs filed before June 20th, 2007
for which there was no first final Board decision. Mr.
Viterna asserts that the date in this limitation was an “un-
intentional drafting error.” J.A. 7. Because Mr. Viterna’s
services were performed after the Board made a first final
decision in this case, there was no statutory bar to his re-
ceiving fees as to this claim. In 2014, Mr. Viterna secured
past-due benefits on Ms. Pitts’ dependency and indemnity
claim, which related back to the NOD filed in 2005.
By regulation, the agency with original jurisdiction
over a claim “shall determine whether an . . . attorney is
eligible for fees” drawn from past-due benefits. 38 C.F.R.
§ 14.636(c)(4). Here, the agency of original jurisdiction (the
R.O.) informed Mr. Viterna that it would not pay him 20%
Case: 22-1061 Document: 34 Page: 6 Filed: 04/20/2023
6 VITERNA v. MCDONOUGH
of Ms. Pitts’ past-due benefits because her NOD in the case
had been filed in 2005, and their fee agreement only cov-
ered NODs filed after June 20th, 2007. 3 Mr. Viterna ap-
pealed, arguing that, despite the agreement, he was
entitled to a fee. The Board affirmed.
Mr. Viterna then appealed to the Veterans Court. He
argued that Congress only gave the VA the power to assess
whether a fee agreement was valid and if its terms were
excessive or unreasonable—not whether the agreement
covered the claim at issue in the first place. The court dis-
agreed. It held that “the [VA] has the authority to review
a fee agreement for the purposes of determining whether it
applies to the claim for which it is being proffered because
that is a predicate act necessarily implied by the [VA’s] ex-
plicit statutory responsibilities.” J.A. 6; see also J.A. 5 (“Be-
fore VA can determine whether an agreement is valid or
whether an attorney is eligible for fees . . . the Agency must
ascertain whether the agreement even applies to the spe-
cific claim to which it is purported to apply.”).
Mr. Viterna appeals. We have jurisdiction under 38
U.S.C. § 7292, and we review statutory interpretations by
the Veterans Court without deference. See Stanley, 283
F.3d at 1354.
DISCUSSION
Mr. Viterna argues that the VA could not refuse to pay
him pursuant to the agreement because it lacks the power
to ensure that its attorney fee withholdings “compl[y] with
the provisions of . . . § 5904(d).” Appellant’s Br. 11; see also
Appellant’s Br. 13. We disagree.
3 At about this same time, Ms. Pitts wrote to the VA
noting that she was dissatisfied with Mr. Viterna’s perfor-
mance and requesting that it no longer recognize him as
her attorney.
Case: 22-1061 Document: 34 Page: 7 Filed: 04/20/2023
VITERNA v. MCDONOUGH 7
The VA will only pay fees pursuant to agreements be-
tween attorneys and clients in which “the total amount of
the fee payable to the . . . attorney [under the agreement]
. . . is to be paid . . . by the [VA] directly from any past-due
benefits awarded on the basis of the claim.” 38 U.S.C.
§ 5904(d)(2)(A) (emphasis added). Subsection 5904(d) also
provides that “the total fee payable to the . . . attorney may
not exceed 20 percent of the total amount of any past-due
benefits awarded on the basis of the claim.” Id. § 5904(d)(1)
(emphasis added).
In other words, the VA may draw on past-due benefits
to pay attorneys what they are owed under agreements
that cover “the claim” that resulted in the award of “past-
due benefits.” Id. To accomplish that task, the VA must
determine whether an agreement covers claims that re-
sulted in the past-due benefits. Here, as the Veterans
Court found, there was no qualifying agreement between
Mr. Viterna and Ms. Pitts providing for a payment of a fee
for the claim in question. The agreement provided only
that Ms. Pitts had agreed to pay Mr. Viterna for claims
with NODs filed after June 20th, 2007, and no such claim
had resulted in the award of past-due benefits.
Mr. Viterna admits that Ms. Pitts’ claim was not cov-
ered by their contract. See Oral Arg. at 3:50–4:15. But he
argues that because their agreement was valid under
§ 5904—in that it was contingent on securing benefits,
charged a reasonable and permissible fee, and covered
work in a period permitted by Congress—the VA cannot
decline to pay him out of the claim award. See Appellant’s
Br. 9–10. We disagree.
Subsection 5904(d) only permits the VA to pay attor-
neys’ fees on the basis of agreements that require payment
from “past-due benefits awarded on the basis of the claim,”
38 U.S.C. § 5904(d)(1), (d)(2)(A)(i), and as the Veterans
Court found, the agreement here did not apply to the claim
that resulted in past-due benefits. The fact that Mr.
Case: 22-1061 Document: 34 Page: 8 Filed: 04/20/2023
8 VITERNA v. MCDONOUGH
Viterna’s agreement could have validly resulted in pay-
ment as to other claims is irrelevant. As Mr. Viterna con-
ceded at oral argument, if a lawyer had a fee agreement
with a veteran concerning a toe arthritis disability and suc-
ceeded in getting compensation for post-traumatic stress
disorder, the fee agreement would not call for compensa-
tion out of the PTSD award. See Oral Arg. at 1:27–2:00.
The same is true here.
Our decision here is supported by our prior ruling in
Scates v. Principi. 282 F.3d 1362 (Fed. Cir. 2002). In that
case, a veteran in the midst of claim proceedings replaced
his attorney with a veterans organization, which success-
fully pursued his claim. See id. at 1363–64. Though the
relevant fee agreement on its face provided that the VA
would pay the attorney 20% of any past-due benefits, we
read the agreement to mean that the VA would only pay
the full amount if the attorney represented the veteran un-
til the end of the case. Id. at 1365. We therefore agreed
with the VA that the attorney was not automatically owed
the full 20% of past-due benefits. Id. at 1366–68. While
some may argue as to whether Scates was based on the con-
tract under § 5904(d) or the statutory provision concerning
reasonableness, now codified at § 5904(c)(3)(A), we read
the decision as based on the fee agreement provision codi-
fied at § 5904(d). See Scates, 282 F.3d at 1368.
The Secretary is therefore charged with both determin-
ing whether the fee is payable under the qualifying attor-
ney fee agreement and ensuring that the fee is reasonable. 4
4 At the time Scates was decided, § 5904 gave the au-
thority to review the reasonableness of fees in the first in-
stance to the Board. See 38 U.S.C. § 5904(c)(2) (2005). In
2006, Congress gave the authority to review fees for rea-
sonableness to the Secretary more generally. See Pub. L.
No. 109–461, § 101(d), (e)(3), 120 Stat. at 3407–08 (codified
at 38 U.S.C. § 5904(c)(2)–(3)).
Case: 22-1061 Document: 34 Page: 9 Filed: 04/20/2023
VITERNA v. MCDONOUGH 9
See 38 U.S.C. § 5904(c)(3), (d); see also Ravin, 956 F.3d at
1350–51 (holding that the VA is not required to withhold
attorneys’ fees if an attorney failed to comply with regula-
tions requiring timely filing of fee agreements with the
agency).
Our decision is only that the VA correctly interpreted
§ 5904(d) in declining to pay Mr. Viterna a fee out of past-
due benefits on a claim excluded from his agreement with
Ms. Pitts. We have not addressed whether the VA has the
authority to reform the contract on a theory of mutual mis-
take, an issue that may be governed by federal law, see
Scates, 282 F.3d at 1369–70, because Mr. Viterna has not
sought that relief here. See Oral Arg. at 19:10–40.
AFFIRMED
COSTS
No costs.