US Laws, Codes, Statutes & Cases

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[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
  January 24, 2002 and December 19, 2002]
[CITE: 42USC406]

 
                 TITLE 42--THE PUBLIC HEALTH AND WELFARE
 
                       CHAPTER 7--SOCIAL SECURITY
 
  SUBCHAPTER II--FEDERAL OLD-AGE, SURVIVORS, AND DISABILITY INSURANCE 
                                BENEFITS
 
Sec. 406. Representation of claimants before Commissioner


(a) Recognition of representatives; fees for representation before 
        Commissioner

    (1) The Commissioner of Social Security may prescribe rules and 
regulations governing recognition of agents or other persons, other than 
attorneys as hereinafter provided, representing claimants before the 
Commissioner of Social Security, and may require of such agents or other 
persons, before being recognized as representatives of claimants that 
they shall show that they are of good character and in good repute, 
possessed of the necessary qualifications to enable them to render such 
claimants valuable service, and otherwise competent to advise and assist 
such claimants in the presentation of their cases. An attorney in good 
standing who is admitted to practice before the highest court of the 
State, Territory, District, or insular possession of his residence or 
before the Supreme Court of the United States or the inferior Federal 
courts, shall be entitled to represent claimants before the Commissioner 
of Social Security. The Commissioner of Social Security may, after due 
notice and opportunity for hearing, suspend or prohibit from further 
practice before the Commissioner any such person, agent, or attorney who 
refuses to comply with the Commissioner's rules and regulations or who 
violates any provision of this section for which a penalty is 
prescribed. The Commissioner of Social Security may, by rule and 
regulation, prescribe the maximum fees which may be charged for services 
performed in connection with any claim before the Commissioner of Social 
Security under this subchapter, and any agreement in violation of such 
rules and regulations shall be void. Except as provided in paragraph 
(2)(A), whenever the Commissioner of Social Security, in any claim 
before the Commissioner for benefits under this subchapter, makes a 
determination favorable to the claimant, the Commissioner shall, if the 
claimant was represented by an attorney in connection with such claim, 
fix (in accordance with the regulations prescribed pursuant to the 
preceding sentence) a reasonable fee to compensate such attorney for the 
services performed by him in connection with such claim.
    (2)(A) In the case of a claim of entitlement to past-due benefits 
under this subchapter, if--
        (i) an agreement between the claimant and another person 
    regarding any fee to be recovered by such person to compensate such 
    person for services with respect to the claim is presented in 
    writing to the Commissioner of Social Security prior to the time of 
    the Commissioner's determination regarding the claim,
        (ii) the fee specified in the agreement does not exceed the 
    lesser of--
            (I) 25 percent of the total amount of such past-due benefits 
        (as determined before any applicable reduction under section 
        1320a-6(a) of this title), or
            (II) $4,000, and

        (iii) the determination is favorable to the claimant,

then the Commissioner of Social Security shall approve that agreement at 
the time of the favorable determination, and (subject to paragraph (3)) 
the fee specified in the agreement shall be the maximum fee. The 
Commissioner of Social Security may from time to time increase the 
dollar amount under clause (ii)(II) to the extent that the rate of 
increase in such amount, as determined over the period since January 1, 
1991, does not at any time exceed the rate of increase in primary 
insurance amounts under section 415(i) of this title since such date. 
The Commissioner of Social Security shall publish any such increased 
amount in the Federal Register.
    (B) For purposes of this subsection, the term ``past-due benefits'' 
excludes any benefits with respect to which payment has been continued 
pursuant to subsection (g) or (h) of section 423 of this title.
    (C) In any case involving--
        (i) an agreement described in subparagraph (A) with any person 
    relating to both a claim of entitlement to past-due benefits under 
    this subchapter and a claim of entitlement to past-due benefits 
    under subchapter XVI of this chapter, and
        (ii) a favorable determination made by the Commissioner of 
    Social Security with respect to both such claims,

the Commissioner of Social Security may approve such agreement only if 
the total fee or fees specified in such agreement does not exceed, in 
the aggregate, the dollar amount in effect under subparagraph 
(A)(ii)(II).
    (D) In the case of a claim with respect to which the Commissioner of 
Social Security has approved an agreement pursuant to subparagraph (A), 
the Commissioner of Social Security shall provide the claimant and the 
person representing the claimant a written notice of--
        (i) the dollar amount of the past-due benefits (as determined 
    before any applicable reduction under section 1320a-6(a) of this 
    title) and the dollar amount of the past-due benefits payable to the 
    claimant,
        (ii) the dollar amount of the maximum fee which may be charged 
    or recovered as determined under this paragraph, and
        (iii) a description of the procedures for review under paragraph 
    (3).

    (3)(A) The Commissioner of Social Security shall provide by 
regulation for review of the amount which would otherwise be the maximum 
fee as determined under paragraph (2) if, within 15 days after receipt 
of the notice provided pursuant to paragraph (2)(D)--
        (i) the claimant, or the administrative law judge or other 
    adjudicator who made the favorable determination, submits a written 
    request to the Commissioner of Social Security to reduce the maximum 
    fee, or
        (ii) the person representing the claimant submits a written 
    request to the Commissioner of Social Security to increase the 
    maximum fee.

Any such review shall be conducted after providing the claimant, the 
person representing the claimant, and the adjudicator with reasonable 
notice of such request and an opportunity to submit written information 
in favor of or in opposition to such request. The adjudicator may 
request the Commissioner of Social Security to reduce the maximum fee 
only on the basis of evidence of the failure of the person representing 
the claimant to represent adequately the claimant's interest or on the 
basis of evidence that the fee is clearly excessive for services 
rendered.
    (B)(i) In the case of a request for review under subparagraph (A) by 
the claimant or by the person representing the claimant, such review 
shall be conducted by the administrative law judge who made the 
favorable determination or, if the Commissioner of Social Security 
determines that such administrative law judge is unavailable or if the 
determination was not made by an administrative law judge, such review 
shall be conducted by another person designated by the Commissioner of 
Social Security for such purpose.
    (ii) In the case of a request by the adjudicator for review under 
subparagraph (A), the review shall be conducted by the Commissioner of 
Social Security or by an administrative law judge or other person (other 
than such adjudicator) who is designated by the Commissioner of Social 
Security.
    (C) Upon completion of the review, the administrative law judge or 
other person conducting the review shall affirm or modify the amount 
which would otherwise be the maximum fee. Any such amount so affirmed or 
modified shall be considered the amount of the maximum fee which may be 
recovered under paragraph (2). The decision of the administrative law 
judge or other person conducting the review shall not be subject to 
further review.
    (4) Subject to subsection (d) of this section, if the claimant is 
determined to be entitled to past-due benefits under this subchapter and 
the person representing the claimant is an attorney, the Commissioner of 
Social Security shall, notwithstanding section 405(i) of this title, 
certify for payment out of such past-due benefits (as determined before 
any applicable reduction under section 1320a-6(a) of this title) to such 
attorney an amount equal to so much of the maximum fee as does not 
exceed 25 percent of such past-due benefits (as determined before any 
applicable reduction under section 1320a-6(a) of this title).
    (5) Any person who shall, with intent to defraud, in any manner 
willfully and knowingly deceive, mislead, or threaten any claimant or 
prospective claimant or beneficiary under this subchapter by word, 
circular, letter or advertisement, or who shall knowingly charge or 
collect directly or indirectly any fee in excess of the maximum fee, or 
make any agreement directly or indirectly to charge or collect any fee 
in excess of the maximum fee, prescribed by the Commissioner of Social 
Security shall be deemed guilty of a misdemeanor and, upon conviction 
thereof, shall for each offense be punished by a fine not exceeding $500 
or by imprisonment not exceeding one year, or both. The Commissioner of 
Social Security shall maintain in the electronic information retrieval 
system used by the Social Security Administration a current record, with 
respect to any claimant before the Commissioner of Social Security, of 
the identity of any person representing such claimant in accordance with 
this subsection.

(b) Fees for representation before court

    (1)(A) Whenever a court renders a judgment favorable to a claimant 
under this subchapter who was represented before the court by an 
attorney, the court may determine and allow as part of its judgment a 
reasonable fee for such representation, not in excess of 25 percent of 
the total of the past-due benefits to which the claimant is entitled by 
reason of such judgment, and the Commissioner of Social Security may, 
notwithstanding the provisions of section 405(i) of this title, but 
subject to subsection (d) of this section, certify the amount of such 
fee for payment to such attorney out of, and not in addition to, the 
amount of such past-due benefits. In case of any such judgment, no other 
fee may be payable or certified for payment for such representation 
except as provided in this paragraph.
    (B) For purposes of this paragraph--
        (i) the term ``past-due benefits'' excludes any benefits with 
    respect to which payment has been continued pursuant to subsection 
    (g) or (h) of section 423 of this title, and
        (ii) amounts of past-due benefits shall be determined before any 
    applicable reduction under section 1320a-6(a) of this title.

    (2) Any attorney who charges, demands, receives, or collects for 
services rendered in connection with proceedings before a court to which 
paragraph (1) of this subsection is applicable any amount in excess of 
that allowed by the court thereunder shall be guilty of a misdemeanor 
and upon conviction thereof shall be subject to a fine of not more than 
$500, or imprisonment for not more than one year, or both.

(c) Notification of options for obtaining attorneys

    The Commissioner of Social Security shall notify each claimant in 
writing, together with the notice to such claimant of an adverse 
determination, of the options for obtaining attorneys to represent 
individuals in presenting their cases before the Commissioner of Social 
Security. Such notification shall also advise the claimant of the 
availability to qualifying claimants of legal services organizations 
which provide legal services free of charge.

(d) Assessment on attorneys

                           (1) In general

        Whenever a fee for services is required to be certified for 
    payment to an attorney from a claimant's past-due benefits pursuant 
    to subsection (a)(4) or (b)(1) of this section, the Commissioner 
    shall impose on the attorney an assessment calculated in accordance 
    with paragraph (2).

                             (2) Amount

        (A) The amount of an assessment under paragraph (1) shall be 
    equal to the product obtained by multiplying the amount of the 
    representative's fee that would be required to be so certified by 
    subsection (a)(4) or (b)(1) of this section before the application 
    of this subsection, by the percentage specified in subparagraph (B).
        (B) The percentage specified in this subparagraph is--
            (i) for calendar years before 2001, 6.3 percent, and
            (ii) for calendar years after 2000, such percentage rate as 
        the Commissioner determines is necessary in order to achieve 
        full recovery of the costs of determining and certifying fees to 
        attorneys from the past-due benefits of claimants, but not in 
        excess of 6.3 percent.

                           (3) Collection

        The Commissioner may collect the assessment imposed on an 
    attorney under paragraph (1) by offset from the amount of the fee 
    otherwise required by subsection (a)(4) or (b)(1) of this section to 
    be certified for payment to the attorney from a claimant's past-due 
    benefits.

              (4) Prohibition on claimant reimbursement

        An attorney subject to an assessment under paragraph (1) may 
    not, directly or indirectly, request or otherwise obtain 
    reimbursement for such assessment from the claimant whose claim gave 
    rise to the assessment.

                   (5) Disposition of assessments

        Assessments on attorneys collected under this subsection shall 
    be credited to the Federal Old-Age and Survivors Insurance Trust 
    Fund and the Federal Disability Insurance Trust Fund, as 
    appropriate.

                 (6) Authorization of appropriations

        The assessments authorized under this section shall be collected 
    and available for obligation only to the extent and in the amount 
    provided in advance in appropriations Acts. Amounts so appropriated 
    are authorized to remain available until expended, for 
    administrative expenses in carrying out this subchapter and related 
    laws.

(Aug. 14, 1935, ch. 531, title II, Sec. 206, 49 Stat. 624; Aug. 10, 
1939, ch. 666, title II, Sec. 201, 53 Stat. 1362, 1372; Aug. 28, 1950, 
ch. 809, title I, Sec. 109(b)(1), 64 Stat. 523; Pub. L. 85-840, title 
III, Sec. 309, Aug. 28, 1958, 72 Stat. 1034; Pub. L. 89-97, title III, 
Sec. 332, July 30, 1965, 79 Stat. 403; Pub. L. 90-248, title I, 
Sec. 173, Jan. 2, 1968, 81 Stat. 877; Pub. L. 101-239, title X, 
Sec. 10307(a)(1), (b)(1), Dec. 19, 1989, 103 Stat. 2484, 2485; Pub. L. 
98-369, title VI, Sec. 2663(l)(1), July 18, 1984, 98 Stat. 1171; Pub. L. 
101-508, title V, Sec. 5106(a)(1), Nov. 5, 1990, 104 Stat. 1388-266; 
Pub. L. 103-296, title I, Sec. 107(a)(4), title III, 
Sec. 321(f)(3)(B)(i), (4), Aug. 15, 1994, 108 Stat. 1478, 1541, 1542; 
Pub. L. 106-170, title IV, Sec. 406(a), (b), Dec. 17, 1999, 113 Stat. 
1911, 1912.)


                               Amendments

    1999--Subsec. (a)(4). Pub. L. 106-170, Sec. 406(a)(2)(A), (b), 
struck out ``(A)'' after ``(4)'', substituted ``subsection (d) of this 
section'' for ``subparagraph (B)'', and struck out subpar. (B) which 
read as follows: ``The Commissioner of Social Security shall not in any 
case certify any amount for payment to the attorney pursuant to this 
paragraph before the expiration of the 15-day period referred to in 
paragraph (3)(A) or, in the case of any review conducted under paragraph 
(3), before the completion of such review.''
    Subsec. (b)(1)(A). Pub. L. 106-170, Sec. 406(a)(2)(B), inserted ``, 
but subject to subsection (d) of this section'' after ``section 405(i) 
of this title''.
    Subsec. (d). Pub. L. 106-170, Sec. 406(a)(1), added subsec. (d).
    1994--Subsec. (a)(1), (2)(A). Pub. L. 103-296, Sec. 107(a)(4), 
substituted ``Commissioner of Social Security'' for ``Secretary'' 
wherever appearing, ``before the Commissioner'' for ``before him'' in 
two places, ``Commissioner's'' for ``Secretary's'' in two places, and 
``the Commissioner shall, if the'' for ``he shall, if the'' in par. (1).
    Subsec. (a)(2)(C). Pub. L. 103-296, Sec. 321(f)(4)(A)(ii), added 
subpar. (C). Former subpar. (C) redesignated (D).
    Pub. L. 103-296, Sec. 107(a)(4), in subpar. (C) as added by Pub. L. 
103-296, Sec. 321(f)(4)(A)(ii), substituted ``Commissioner of Social 
Security'' for ``Secretary'' in two places.
    Subsec. (a)(2)(D). Pub. L. 103-296, Sec. 321(f)(4)(A)(i), 
redesignated subpar. (C) as (D).
    Pub. L. 103-296, Sec. 107(a)(4), in subpar. (D) as redesignated by 
Pub. L. 103-296, Sec. 321(f)(4)(A)(i), substituted ``Commissioner of 
Social Security'' for ``Secretary'' in two places in introductory 
provisions.
    Subsec. (a)(3)(A). Pub. L. 103-296, Sec. 321(f)(4)(B), substituted 
``paragraph (2)(D)'' for ``paragraph (2)(C)'' in introductory 
provisions.
    Pub. L. 103-296, Sec. 107(a)(4), substituted ``Commissioner of 
Social Security'' for ``Secretary'' wherever appearing.
    Subsec. (a)(3)(B), (4), (5). Pub. L. 103-296, Sec. 107(a)(4), 
substituted ``Commissioner of Social Security'' for ``Secretary'' 
wherever appearing.
    Subsec. (b)(1). Pub. L. 103-296, Sec. 321(f)(3)(B)(i), designated 
existing provisions as subpar. (A) and added subpar. (B).
    Subsec. (b)(1)(A). Pub. L. 103-296, Sec. 107(a)(4), in subpar. (A) 
as designated by Pub. L. 103-296, Sec. 321(f)(3)(B)(i), substituted 
``Commissioner of Social Security'' for ``Secretary''.
    Subsec. (c). Pub. L. 103-296, Sec. 107(a)(4), substituted 
``Commissioner of Social Security'' for ``Secretary'' in two places.
    1990--Subsec. (a). Pub. L. 101-508 designated existing provisions as 
par. (1), substituted ``Except as provided in paragraph (2)(A), 
whenever'' for ``Whenever'' in fifth sentence, substituted pars. (2) to 
(4) for ``If as a result of such determination, such claimant is 
entitled to past-due benefits under this subchapter, the Secretary 
shall, notwithstanding section 405(i) of this title, certify for payment 
(out of such past-due benefits) to such attorney an amount equal to 
whichever of the following is the smaller: (A) 25 per centum of the 
total amount of such past-due benefits, (B) the amount of the attorney's 
fee so fixed, or (C) the amount agreed upon between the claimant and 
such attorney as the fee for such attorney's services.'', and inserted 
``(5)'' before ``Any person who''.
    1989--Subsec. (a). Pub. L. 101-239, Sec. 10307(a)(1), inserted at 
end ``The Secretary shall maintain in the electronic information 
retrieval system used by the Social Security Administration a current 
record, with respect to any claimant before the Secretary, of the 
identity of any person representing such claimant in accordance with 
this subsection.''
    Subsec. (c). Pub. L. 101-239, Sec. 10307(b)(1), added subsec. (c).
    1984--Pub. L. 98-369 substituted ``Secretary'' and ``Secretary's'' 
for ``Administrator'' and ``Administrator's'', respectively, wherever 
appearing.
    1968--Subsec. (a). Pub. L. 90-248 provided for fixing of attorneys 
fees for claimants and for certification of amount for payment out of 
past-due benefits.
    1965--Pub. L. 89-97 designated existing provisions as subsec. (a) 
and added subsec. (b).
    1958--Pub. L. 85-840 struck out provisions which required attorneys 
to file a certificate of their right to practice.
    1950--Act Aug. 28, 1950, substituted ``Administrator'' for ``Board'' 
and ``Administrator's'' for ``Board's''.
    1939--Act Aug. 10, 1939, substituted the provisions of this section 
for former provisions relating to overpayments during life, now covered 
by section 404 of this title.


                    Effective Date of 1999 Amendment

    Pub. L. 106-170, title IV, Sec. 406(d), Dec. 17, 1999, 113 Stat. 
1913, provided that: ``The amendments made by this section [amending 
this section and enacting provisions set out as a note under this 
section] shall apply in the case of any attorney with respect to whom a 
fee for services is required to be certified for payment from a 
claimant's past-due benefits pursuant to subsection (a)(4) or (b)(1) of 
section 206 of the Social Security Act [this section] after the later 
of--
        ``(1) December 31, 1999, or
        ``(2) the last day of the first month beginning after the month 
    in which this Act is enacted [Dec. 1999].''


                    Effective Date of 1994 Amendment

    Amendment by section 107(a)(4) of Pub. L. 103-296 effective Mar. 31, 
1995, see section 110(a) of Pub. L. 103-296, set out as a note under 
section 401 of this title.
    Amendment by section 321(f)(3)(B)(i), (4) of Pub. L. 103-296 
effective as if included in the provisions of the Omnibus Budget 
Reconciliation Act of 1990, Pub. L. 101-508, to which such amendment 
relates, except that amendment by section 321(f)(3)(B)(i) applicable 
with respect to favorable judgments made after 180 days after Aug. 15, 
1994, see section 321(f)(5) of Pub. L. 103-296, set out as a note under 
section 405 of this title.


                    Effective Date of 1990 Amendment

    Amendment by Pub. L. 101-508 applicable with respect to 
determinations made on or after July 1, 1991, and to reimbursement for 
travel expenses incurred on or after Apr. 1, 1991, see section 5106(d) 
of Pub. L. 101-508, set out as a note under section 401 of this title.


                    Effective Date of 1989 Amendment

    Section 10307(a)(3) of Pub. L. 101-239 provided that: ``The 
amendments made by this subsection [amending this section and section 
1383 of this title] shall take effect June 1, 1991.''
    Section 10307(b)(3) of Pub. L. 101-239 provided that: ``The 
amendments made by this subsection [amending this section and section 
1383 of this title] shall apply with respect to adverse determinations 
made on or after January 1, 1991.''


                    Effective Date of 1939 Amendment

    Section 201 of act Aug. 10, 1939, provided that the amendment made 
by that section is effective Jan. 1, 1940.


                          GAO Study and Report

    Pub. L. 106-170, title IV, Sec. 406(c), Dec. 17, 1999, 113 Stat. 
1912, provided that:
    ``(1) Study.--The Comptroller General of the United States shall 
conduct a study that--
        ``(A) examines the costs incurred by the Social Security 
    Administration in administering the provisions of subsection (a)(4) 
    and (b)(1) of section 206 of the Social Security Act (42 U.S.C. 406) 
    and itemizes the components of such costs, including the costs of 
    determining fees to attorneys from the past-due benefits of 
    claimants before the Commissioner of Social Security and of 
    certifying such fees;
        ``(B) identifies efficiencies that the Social Security 
    Administration could implement to reduce such costs;
        ``(C) examines the feasibility and advisability of linking the 
    payment of, or the amount of, the assessment under section 206(d) of 
    the Social Security Act (42 U.S.C. 406(d)) to the timeliness of the 
    payment of the fee to the attorney as certified by the Commissioner 
    of Social Security pursuant to subsection (a)(4) or (b)(1) of 
    section 206 of such Act (42 U.S.C. 406);
        ``(D) determines whether the provisions of subsection (a)(4) and 
    (b)(1) of section 206 of such Act (42 U.S.C. 406) should be applied 
    to claimants under title XVI of such Act (42 U.S.C 1381 et seq.);
        ``(E) determines the feasibility and advisability of stating 
    fees under section 206(d) of such Act (42 U.S.C. 406(d)) in terms of 
    a fixed dollar amount as opposed to a percentage;
        ``(F) determines whether the dollar limit specified in section 
    206(a)(2)(A)(ii)(II) of such Act (42 U.S.C. 406(a)(2)(A)(ii)(II)) 
    should be raised; and
        ``(G) determines whether the assessment on attorneys required 
    under section 206(d) of such Act (42 U.S.C. 406(d)) (as added by 
    subsection (a)(1) of this section) impairs access to legal 
    representation for claimants.
    ``(2) Report.--Not later than 1 year after the date of the enactment 
of this Act [Dec. 17, 1999], the Comptroller General of the United 
States shall submit a report to the Committee on Ways and Means of the 
House of Representatives and the Committee on Finance of the Senate on 
the study conducted under paragraph (1), together with any 
recommendations for legislation that the Comptroller General determines 
to be appropriate as a result of such study.''

                  Section Referred to in Other Sections

    This section is referred to in sections 423, 1320a-6, 1383, 1395ff, 
1395ii of this title; title 30 section 923.