E8-19674. Authorization of Representative Fees

AGENCY:

Social Security Administration.

ACTION:

Notice of proposed rulemaking.

SUMMARY:

We propose to revise our rules regarding payment of representative fees to allow representatives to charge and receive a fee from third parties without requiring our authorization in certain instances. We also propose to eliminate the requirement that we authorize fees for legal guardians or court-appointed representatives who provide representational services in claims before us if a court has already authorized their fees. We are proposing these revisions to reflect changes in representatives' business practices, and in the ways in which claimants obtain representation, and to make more efficient the way we process representative fees.

DATES:

To make sure that your comments are considered, we must receive them no later than September 25, 2008.

ADDRESSES:

You may submit comments by any one of four methods—Internet, facsimile, regular mail, or hand-delivery. Commenters should not submit the same comments multiple times or by more than one method. Regardless of which of the following methods you choose, please state that your comments refer to Docket No. SSA-2008-0030 to ensure that we can associate your comments with the correct regulation:

1. Federal eRulemaking portal at http://www.regulations.gov. (This is the most expedient method for submitting your comments, and we strongly urge you to use it.) In the “Comment or Submission” section of the webpage, type “SSA-2008-0030”, select “Go”, and then click “Send a Comment or Submission.” The Federal eRulemaking portal issues you a tracking number when you submit a comment.

2. Telefax to [phone].

3. Letter to the Commissioner of Social Security, P.O. Box 17703, Baltimore, MD 21235-7703.

4. Deliver your comments to the Office of Regulations, Social Security Administration, 922 Altmeyer Building, 6401 Security Boulevard, Baltimore, Maryland 21235-6401, between 8 a.m. and 4:30 p.m. on regular business days.

All comments are posted on the Federal eRulemaking portal, although they may not appear for several days after receipt of the comment. You may also inspect the comments on regular business days by making arrangements with the contact person shown in this preamble.

Caution: All comments we receive from members of the public are available for public viewing on the Federal eRulemaking portal at http://www.regulations.gov. Therefore, you should be careful to include in your comments only information that you wish to make publicly available on the Internet. We strongly urge you not to include any personal information, such as your Social Security number or medical information, in your comments.

FOR FURTHER INFORMATION CONTACT:

Marg Handel, Supervisory Social Insurance Specialist, Office of Income Security Programs, Social Security Administration, 6401 Security Boulevard, Baltimore, MD 21235-6401, [phone]. For information on eligibility or filing for benefits, call our national toll-free number, 1-800-772-1213 or TTY 1-800-325-0778, or visit our Internet site, Social Security Online, at http://www.socialsecurity.gov.

SUPPLEMENTARY INFORMATION:

Electronic Version

The electronic file of this document is available on the date of publication in the Federal Register at http://www.gpoaccess.gov/​fr/​index.html.

Explanation of Changes

Authority

We may issue regulations to administer the Social Security Act (Act). 42 U.S.C. 405(a), 902(a)(5), and 1383(d)(1). Specifically, we may issue regulations allowing attorneys and non-attorneys to represent claimants before us. We also may set the maximum fees for those services. 42 U.S.C. 406(a)(1) and 1383(d)(2). Based on this authority, we are proposing new rules to revise our current regulations on fees paid to claimant representatives found in part 404 subpart R and part 416 subpart O.

Current Regulations on Fees Paid by Third Parties

We require all representatives to obtain our approval before charging or receiving a fee for representational services. 20 CFR 404.1720 and 416.1520. We also prohibit representatives from charging or receiving fees that are more than the amount we approve regardless of whether the fee is charged to, or received from, claimants or third parties. 20 CFR 404.1720(b)(3) and 416.1520(b)(3). However, under our long-standing interpretation of these regulations, if certain criteria are met, we need not approve a fee if a nonprofit organization pays the fee out of funds provided by a government entity. Social Security Ruling (SSR) 85-3.

Proposed Changes

We propose to revise our current policy and allow representatives, in certain cases, to be paid fees for providing representational services without requiring our authorization. The primary reason that we set maximum fees is to protect claimants and beneficiaries. Our current regulations carry out this purpose. Nevertheless, when a party other than a claimant or beneficiary incurs the liability for the cost of the representative's services, there is little risk that the individual may be charged an unreasonable fee. Often third parties, such as insurance companies, have provided claimants representation and have paid the representatives' fees without any liability to the claimants. We do not believe that we need to continue approving fee arrangements between representatives and third parties when the amount of claimants' benefits will not be affected.

Similarly, there is no reason to require legal guardians or court-appointed representatives to obtain our approval for fee arrangements if a court has already authorized their fees. Because courts, when authorizing guardians' fees, generally consider the wards' best interests and have reviewed and approved the legal guardian's accounting, there is little risk to the beneficiary that the fee approved is unreasonable. Thus, under our current subregulatory instructions, we do not require legal guardians or court-appointed representatives to obtain our approval for fee arrangements if a court has already authorized their fees for representation before us, regardless of who bears the liability for paying the fee.

We propose to define “legal guardian or court-appointed representative” as “a court-appointed person, committee, or conservator who is lawfully invested with the power and charged with the duty of taking care of and managing the property and rights of an individual who is considered incapable of managing his or her own affairs” in §§ 404.1703 and 416.1503.

In both of the situations addressed in these proposed rules, eliminating the requirement that we review these fee arrangements would not adversely affect the interests of our beneficiaries and would allow our resources and the resources of the representatives to be used to serve claimants and beneficiaries in other ways. However, to ensure that the interests of our beneficiaries are not adversely affected, we are including criteria in proposed §§ 404.1720(e) and 416.1520(e) that are similar to the criteria we currently have in SSR 85-3. Under these proposed regulations, our approval would not be necessary when the fees are paid by a third party, the claimant is free from any liability for a fee, and the representative waives the right to charge and collect a fee. As we previously noted, our approval of the fee request would also not be necessary where a court has already authorized the fee in cases where legal guardians or court-appointed representatives provide representational services in claims before us. Our experience has been that these criteria adequately ensure that the cases where our prior approval of a fee is not needed are limited to ones where claimants and beneficiaries are already protected from unreasonable attorney fees.

We also propose to make minor conforming changes to paragraph (b)(3) in §§ 404.1720 and 416.1520.

Please note that in another proposed rule document that we are publishing separately, Revisions to Rules on Representation of Parties, RIN 0960-AG56, we propose different revisions to §§ 404.1703, 404.1720, 416.1503, and 416.1520. When we publish any final rules following the public comment period, we will coordinate revisions to these sections.

Lastly, SSR 85-3 explains that we do not need to authorize a representative's fee if the fee is paid by a nonprofit organization or an agency out of funds provided or administered by a government entity and not paid by the claimant or beneficiary. The proposed rules would codify this policy. In accordance with our usual practice, we will rescind SSR 85-3 as obsolete if and when we adopt these rules in final.

Clarity of These Rules

Executive Order 12866, as amended, requires each agency to write all rules in plain language. In addition to your substantive comments on these proposed rules, we invite your comments on how to make them easier to understand.

For example:

• Have we organized the material to suit your needs?
• Are the requirements in the rules clearly stated?
• Do the rules contain technical language or jargon that isn't clear?
• Would a different format (grouping and order of sections, use of headings, paragraphing) make the rules easier to understand?
• Would more (but shorter) sections be better?
• Could we improve clarity by adding tables, lists, or diagrams?
• What else could we do to make the rules easier to understand?

When Will We Start To Use These Rules?

We will not use these rules until we evaluate the public comments we receive on them, determine whether they should be issued as final rules, and issue final rules in the Federal Register. If we publish final rules, we will explain in the preamble how we will apply them, and summarize and respond to the public comments. Until the effective date of any final rules, we will continue to use our current rules.

Regulatory Procedures

Executive Order 12866, as Amended

We have consulted with the Office of Management and Budget (OMB) and determined that these proposed rules meet the criteria for a significant regulatory action under Executive Order 12866, as amended. Therefore, they were reviewed by OMB.

Regulatory Flexibility Act

We certify that these proposed rules will not have a significant economic impact on a substantial number of small entities. These proposed rules do not place significant costs on small entities because they will relieve some small entities of the need to obtain SSA approval of a fee. It is anticipated that the cost to small entities will either be minimal, or it will result in cost savings as a result of increased efficiency. Therefore, a regulatory flexibility analysis as provided in the Regulatory Flexibility Act, as amended, is not required.

Paperwork Reduction Act

We are proposing revisions to our rules on obtaining approval for charging a fee for representing claimants. These proposed rules contain public reporting requirements that must be approved by OMB. The chart below lists these sections, describes their content, and provides their burden. We previously accounted for these public reporting burdens in the Information Collection Requests for the various forms the public uses to submit the information to SSA. Consequently, we are inserting a 1-hour placeholder burden in these sections.

Regulation sections and description	Number of respondents	Frequency of response	Average burden per response (minutes)	Estimated annual burden (hours)
404.1720; 416.1520				1
The representative submits to us a form we prescribe waiving the right to charge and collect a fee

We have submitted an Information Collection Request to OMB for clearance. We are soliciting comments on the burden estimate; the need for the information; its practical utility; ways to enhance its quality, utility and clarity; and on ways to minimize the burden on respondents, including the use of automated collection techniques or other forms of information technology. You can call, e-mail or write to the addresses/phone numbers listed below to request a copy of the Information Collection Request package or to comment.

Office of Management and Budget, Attn: Desk Officer for SSA, Fax Number: 202-395-6974, E-mail address: [e-mail].

Social Security Administration, Attn: Reports Clearance Officer, 1333 Annex Building, 6401 Security Blvd., Baltimore, MD 21235, Fax: [phone], E-mail address: [e-mail].

You can submit comments on the paperwork burdens associated with this rule for up to 60 days after publication of this notice; however, they will be most useful if received within 30 days of publication. This does not affect the deadline for the public to comment to SSA on the proposed regulations. These information collection requirements will not become effective until approved by OMB. When OMB has approved these information collection requirements, SSA will publish a notice in the Federal Register.

(Catalog of Federal Domestic Assistance Program Nos. 96.001, Social Security-Disability Insurance; 96.002, Social Security-Retirement Insurance; 96.004, Social Security-Survivors Insurance; and 96.006, Supplemental Security Income)

List of Subjects

20 CFR Part 404

• Administrative practice and procedure; Blind; Disability benefits; Old-Age
• Survivors, and Disability Insurance; Penalties; Reporting and recordkeeping requirements; Social Security

20 CFR Part 416

• Administrative practice and procedure; Penalties; Reporting and recordkeeping requirements; Supplemental Security Income (SSI)

Dated: May 27, 2008.

Michael J. Astrue,

Commissioner of Social Security.

Editorial Note:

This document was received at the Office of the Federal Register on August 20, 2008.

For the reasons set out in the preamble, we propose to amend 20 CFR parts 404 and 416 as set forth below:

PART 404—FEDERAL OLD-AGE, SURVIVORS AND DISABILITY INSURANCE (1950- )

Subpart R—[Amended]

1. The authority citation for subpart R of part 404 continues to read as follows:

Authority: Secs. 205(a), 206, 702(a)(5), and 1127 of the Social Security Act (42 U.S.C. 405(a), 406, 902(a)(5), and 1320a-6); sec. 303, Pub. L. 108-203, 118 Stat. 493.

2. Amend § 404.1703 by adding a definition for “legal guardian or court-appointed representative” in alphabetical order to read as follows:

§ 404.1703

Definitions.

* * * * *

Legal guardian or court-appointed representative means a court-appointed person, committee, or conservator who is lawfully invested with the power and charged with the duty of taking care of and managing the property and rights of an individual who is considered incapable of managing his or her own affairs.

* * * * *

3. Amend § 404.1720 by revising paragraph (b) heading and (b)(3) and by adding paragraph (e) to read as follows:

§ 404.1720

Fee for a representative's services.

* * * * *

(b) Charging and receiving a fee under the fee petition process. * * *

(3) Subject to paragraph (e) of this section, a representative must not charge or receive any fee unless we have approved it, and a representative must not charge or receive any fee that is more than the amount we approve.

* * * * *

(e) When we need not authorize a fee. We do not need to authorize a fee when:

(1) A non-profit organization, a Federal, State, county, or city government agency, or a third party that is a business entity independent of your representative pays from its funds the representative fees and expenses and both of the following conditions apply:

(i) You (including any auxiliary beneficiaries) are free of any liability to pay a fee or any expenses, or any part thereof, directly or indirectly, to the representative or someone else; and

(ii) The representative submits to us a form we prescribe waiving the right to charge and collect a fee and any expenses from you and the auxiliary beneficiaries, if any, directly or indirectly, in whole or in part; or

(2) A court authorizes a fee for your representative who, in your case, is your legal guardian or a court-appointed representative.

PART 416—SUPPLEMENTAL SECURITY INCOME FOR THE AGED, BLIND, AND DISABLED

Subpart O—[Amended]

4. The authority citation for subpart O of part 416 continues to read as follows:

Authority: Secs. 702(a)(5), 1127 and 1631(d) of the Social Security Act (42 U.S.C. 902(a)(5), 1320a-6 and 1383(d)); sec. 303, Pub. L. 108-203, 118 Stat. 493.

5. Amend § 416.1503 by adding a definition for “legal guardian or court-appointed representative” in alphabetical order to read as follows:

§ 416.1503

Definitions.

* * * * *

Legal guardian or court-appointed representative means a court-appointed person, committee, or conservator who is lawfully invested with the power and charged with the duty of taking care of and managing the property and rights of an individual who is considered incapable of managing his or her own affairs.

* * * * *

6. Amend § 416.1520 by revising paragraph (b) heading and (b)(3) and by adding paragraph (e) to read as follows:

§ 416.1520

Fee for a representative's services.

* * * * *

(b) Charging and receiving a fee under the fee petition process. * * *

(3) Subject to paragraph (e) of this section, a representative must not charge or receive any fee unless we have approved it, and a representative must not charge or receive any fee that is more than the amount we approve.

* * * * *

(e) When we need not authorize a fee. We do not need to authorize a fee when:

(1) A non-profit organization, a Federal, State, county, or city government agency, or a third party that is a business entity independent of your representative pays from its funds the representative fees and expenses and both of the following conditions apply:

(i) You are free of any liability to pay a fee or any expenses, or any part thereof, directly or indirectly, to the representative or someone else; and

(ii) The representative submits to us a form we prescribe waiving the right to charge and collect a fee and any expenses from you if any, directly or indirectly, in whole or in part; or

(2) A court authorizes a fee for your representative who, in your case, is your legal guardian or a court-appointed representative.