42 U.S.C. § 406 — Representation of claimants before Commissioner

(a) Recognition of representatives; fees for representation before Commissioner. (1) The Commissioner of Social Security may make rules governing who can act as a non-attorney representative for claimants. These representatives must show good character, a good reputation, the skill to serve claimants well, and the general ability to advise and help them. Any attorney in good standing, admitted to practice before a state's highest court, the U.S. Supreme Court, or a federal court, can represent claimants without extra qualification. But the Commissioner, after notice and a hearing, may (A) refuse to recognize, or disqualify, an attorney representative who has been disbarred or suspended from any court or bar, or barred from a federal program or agency, and (B) refuse to recognize, or disqualify, a non-attorney representative who has been disbarred or suspended as an attorney. A representative who was disqualified or suspended for overcharging a fee cannot represent claimants again until they fully repay the claimant, and even then only if the Commissioner allows reinstatement. The Commissioner may also suspend or bar, after notice and a hearing, any representative or attorney who breaks the Commissioner's rules or violates this section. The Commissioner may set, by rule, the maximum fee that can be charged for services on a Social Security claim; any agreement that breaks these rules is void. When the Commissioner makes a favorable decision on a claim, and the claimant had an attorney, the Commissioner must set a reasonable fee for that attorney — following the rules described above — except where paragraph (2)(A) applies instead. (2)(A) For a claim of past-due benefits, if (i) the claimant and representative give the Commissioner a written fee agreement before the Commissioner decides the claim, (ii) the fee is no more than the smaller of 25% of the past-due benefits or $4,000, and (iii) the decision favors the claimant, then the Commissioner must approve that agreement, and the stated fee becomes the maximum fee (subject to paragraph (3)). The Commissioner can raise the $4,000 figure over time, but only as fast as increases to Social Security benefit amounts under section 415(i), and must publish any increase in the Federal Register. (B) "Past-due benefits" here does not include any benefits that kept being paid under section 423(g) or (h). (C) If one agreement covers past-due benefits under both this program and Supplemental Security Income (subchapter XVI), and both claims get a favorable decision, the Commissioner can only approve the agreement if the combined fee doesn't exceed the normal cap. (D) When the Commissioner approves a fee agreement under (A), the claimant and representative must get written notice of: the dollar amount of past-due benefits and how much goes to the claimant, the maximum fee allowed, and how to ask for a review under paragraph (3). (3)(A) The Commissioner must allow, by regulation, a review of the maximum fee if — within 15 days of the notice in (2)(D) — the claimant or the judge who decided the case asks to lower it, or the representative asks to raise it. Before deciding, the Commissioner must give the claimant, the representative, and the judge a chance to submit written views. A judge can only ask to lower the fee based on evidence that the representative did a poor job, or that the fee is clearly too high for the work done. (B) If the claimant or representative asked for the review, the same judge who decided the case reviews it (or another person the Commissioner picks, if that judge isn't available or wasn't a judge). If the judge asked for review, a different person — the Commissioner or another judge — reviews it. (C) After review, the reviewer confirms or changes the maximum fee amount. That decision becomes final and cannot be reviewed again. (4) If the claimant gets past-due benefits and an attorney represented them, the Commissioner must pay the attorney, out of those past-due benefits, an amount equal to the maximum fee — up to 25% of the past-due benefits — subject to subsection (d) (the assessment described below). (5) Anyone who tries to defraud, mislead, or threaten a claimant, or who knowingly charges more than the maximum fee (or agrees to), commits a misdemeanor. The penalty is a fine up to $500, up to one year in prison, or both, for each offense. The Commissioner must keep an electronic record of who represents each claimant. (b) Fees for representation before court. (1)(A) When a court rules in favor of a claimant who had an attorney, the court may award a reasonable fee — up to 25% of the claimant's past-due benefits — as part of the judgment. The Commissioner then certifies that fee for payment to the attorney out of those past-due benefits (not on top of them), subject to the assessment in subsection (d). No other fee can be charged for that court representation. (B) "Past-due benefits" again excludes benefits continued under section 423(g) or (h), and is calculated before any reduction under section 1320a-6(a). (2) An attorney who charges or collects more than the court-allowed amount for that representation commits a misdemeanor — a fine up to $500, up to a year in prison, or both. (c) Notification of Options for Obtaining Attorneys. When the Commissioner sends a claimant notice of an unfavorable decision, the Commissioner must also tell the claimant how to find an attorney, and that free legal-aid organizations may be available to qualifying claimants. (d) Assessment on Attorneys. (1) Whenever an attorney's fee is certified for payment from a claimant's past-due benefits under (a)(4) or (b)(1), the Commissioner charges the attorney an assessment. (2)(A) The assessment equals the attorney's fee (before this assessment reduces it) multiplied by a percentage set in (B), capped at the greater of $75 or an adjusted amount. That $75 cap adjusts each year the same way Social Security benefit amounts adjust, based on the higher of $75 or the prior year's adjusted amount, rounded down to the nearest dollar (never below $75). (B) The percentage is 6.3% for years before 2001. For years after 2000, it's whatever rate the Commissioner sets to fully recover the cost of determining and certifying attorney fees, but never more than 6.3%. (3) The Commissioner may collect this assessment by subtracting it from the fee before paying the attorney. (4) The attorney cannot ask the claimant to reimburse the assessment, directly or indirectly. (5) Collected assessments go to the Social Security trust funds (Old-Age and Survivors Insurance, and Disability Insurance). (6) These assessments can only be collected and spent to the extent Congress provides for in appropriations. Money appropriated this way stays available until spent, for running this program and related laws. (e) Extension of Fee Withholding and Assessment Procedures to Qualified Non-Attorney Representatives. (1) The Commissioner must extend the fee-withholding and assessment rules above to non-attorney agents and other representatives too. (2) A non-attorney representative only qualifies if they meet all of these: (A) they have a bachelor's degree, or the Commissioner accepts equivalent training and work experience; (B) they passed a Commissioner-written exam on Social Security law and recent agency and court decisions; (C) they carry professional liability insurance (or equivalent) that the Commissioner finds adequate to protect claimants from malpractice; (D) they passed a criminal background check; and (E) they keep up with required continuing education, including ethics training, that meets standards the Commissioner sets. (3)(A) The Commissioner may charge representatives reasonable fees to cover the cost of administering these requirements. (B) Those fees go to the Social Security trust funds, or to the general Treasury as miscellaneous receipts, as the Commissioner allocates. (C) These fees, too, can only be collected and spent to the extent Congress provides in appropriations, and stay available until spent.