           UNITED STATES COURT OF APPEALS FOR VETERANS CLAIMS


                                     NOS. 95-1068 AND 99-1250

                              HUGH D. COX , APPELLANT /PETITIONER ,

                                                   V.


                                   ANTHONY J. PRINCIPI,
                   SECRETARY OF VETERANS AFFAIRS, APPELLEE/RESPONDENT ,

                                   SAMUEL MOSLEY , INTERVENOR.


                      Before FARLEY, STEINBERG, and GREENE, Judges.

                                              ORDER

        In an earlier opinion, dated October 6, 2000, in this case, the Court reversed a June 22, 1999,
decision of the Board of Veterans' Appeals; directed the Secretary to honor the 38 U.S.C. § 5904(d)
fee agreement and pay the appellant the sum of $3,381.60, to which the Court found him to be
entitled by law; and dismissed as moot the petitioner's petition for a writ of mandamus. Cox v.
Gober, 14 Vet.App. 148, 154 (2000) [hereinafter Cox v. Gober]. On November 7, 2000, the
Secretary filed a motion for reconsideration or, in the alternative, for a full-Court review.

         The Secretary makes the following primary arguments: (1) The Court seemed to hold in Cox
v. Gober that decisions of the Comptroller General are binding upon the Department of Veterans
Affairs (VA), and any such holding violates the Constitutional separation of powers; (2) the
decisions of the Comptroller General cited by the Court are inapposite to the instant case and should
not be relied upon even as persuasive authority; and (3) the Court failed to address the Secretary's
contention that sovereign immunity prevents VA from making any payment to the appellant in this
case. Motion for Reconsideration (Mot.) at 2-11. On December 11, 2000, the Court stayed
proceedings in this case pending the outcome of a motion for reconsideration, or, in the alternative,
for a full-Court review, filed in Snyder v. Gober, 14 Vet.App. 154 (2000) [hereinafter Snyder I]. For
the reasons set forth below, the Court will lift the stay in this matter and proceed to act on the motion
for reconsideration. Concurrent with issuance of this order, the Court also issues an opinion (Snyder
v. Principi, __ Vet.App. ___, Nos. 98-2219 and 99-1164 (November 14, 2001) [hereinafter Snyder
II]) denying the Secretary's motion for reconsideration in Snyder I, supra.

        The Secretary's three primary arguments in his motion for reconsideration of Cox v. Gober
are identical to the first three arguments made in his motion for reconsideration in Snyder I. These
arguments are fully addressed in parts II.A., B., and C. of the Court's opinion in Snyder II, and for
the reasons set forth there, we find them equally unpersuasive here. Therefore, the Court will grant
the Secretary's motion for reconsideration, and will reaffirm all parts of the October 6, 2000, opinion
in Cox v. Gober, with the exception of the part relating to the Secretary's first contention above,
specifically part III. of Cox v. Gober, 14 Vet.App. at 152-53, which will be superceded by part I. of
this order, although the result remains the same. Cf. Douglas v. Derwinski, 2 Vet.App. 435, 437
(1992) (en banc) (reaffirming panel opinion in Douglas v. Derwinski, 2 Vet.App. 103 (1992), except
for one part). In addition, the Secretary makes one additional argument not addressed in Snyder II.
The Court will address that point and reject it in part II. of this order.

                                      I. Replacement Analysis
         The relevant background for this case is stated in full in Cox v. Gober, 14 Vet.App. at 149-
151, and will not be repeated here. The Secretary concedes, and the Court agrees, that the fee
agreement entered into by the appellant and the veteran that is the subject of this appeal meets the
requirements of section 5904(d), thus entitling the appellant attorney to payment of 20% of the
amount of past-due benefits awarded to the veteran. Record (R.) at 73 (VA's December 4, 1992,
letter to the appellant stating that he was "entitled to a fee of 1/5 of past due benefits."); cf. In the
Matter of Fee Agreements of Smith, Cox, and Wick, 4 Vet.App. 487, 499 (1993) (In re Smith)
(holding that the Secretary was under no obligation to withhold and pay 20% of past-due benefits
where the fee agreement did not meet the requirements of § 5904(d)). It is also undisputed that the
entire award of past-due benefits was mistakenly paid by the Secretary directly to the veteran. See
R. at 73. The Secretary argues, however, that VA, its error notwithstanding, has no legal authority
to pay the appellant the 20% fee because all past-due benefits have already been paid to the veteran.

        It is the Secretary's position that once all past-due benefits have been paid in a particular
claim, there are no funds remaining from which VA has the legal authority to make a disbursement
to the attorney. He argues that the appellant may be paid only out of the past-due benefits
specifically designated for payment to the veteran. Because that fund has been depleted, the
Secretary contends, in reliance on VA Gen. Coun. Prec. 27-92 (Dec. 9, 1992), that there is no remedy
for the Court to apply. However, as set forth in Snyder II, __ Vet.App. at ___, slip op. at 12, and as
is inherent in 38 U.S.C. § 5904(d)(2)(A)(i) and in 38 C.F.R. § 20.609(h) (2000), the Secretary is
obligated to withhold and pay the agreed-upon fee directly to the attorney and that duty also creates
a corresponding right for the attorney to collect that fee. See In re Smith, 4 Vet.App. at 495-96; In
the Matter of Fee Agreement of Smith, 5 Vet.App. 307, 308 n.3 (1993) (en banc order denying en
banc review) (Steinberg, J., dissenting). Thus, in the case of a 20% contingency fee agreement, the
veteran and the attorney each have a separate entitlement; the veteran is entitled to 80% of a fixed
amount (i.e., the past-due benefits awarded), and the attorney is entitled to 20% of that fixed amount.

        The attorney's entitlement to his fee is no more "depleted" than would a veteran's right to VA
benefits be depleted had VA erroneously paid his benefits to some other veteran. Surely, the second
veteran would be the recipient of an overpayment, and unless and until VA recouped the money from
the second veteran, VA funds for the payment of benefits would be diminished, but that in no way
would eliminate VA's obligation to pay the first veteran the benefits to which he is entitled. Whether
or not the Secretary decides to try to recoup the erroneous payment is an entirely different matter.
See 38 U.S.C. § 5314 (authorizing the Secretary to recoup overpayments made to a benefits recipient
by offsetting future payments).


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         The Secretary concedes in his supplemental memorandum that VA has authority to seek
recoupment from the veteran of the money wrongfully paid to him, but argues that VA has the
authority to pay the attorney only from the funds that it might happen to recover from the veteran.
Supplemental Memorandum at 12-14. This argument is based upon VA Gen. Coun. Prec. 27-92,
which concluded that "VA has no legal authority to pay attorney fees when payment of the complete
amount of past-due benefits has been made to the claimant." However, as we hold today in Snyder
II, the fact of an erroneous payment to a veteran is immaterial to the Secretary's responsibility to
make a payment to which there is lawful entitlement. See Snyder II, __ Vet.App. at __, slip op. at
9 (citing 2 Comp. Gen. 102, 106 (1922) (establishing that, where Veterans' Bureau made erroneous
payment to person not entitled thereto and where another person is clearly entitled to that payment,
it is "duty" of Director of Veterans' Bureau to "make payment to the rightful claimant . . . irrespective
of recovery by the government of the amount erroneously paid . . . even though it involves the
government in a double payment, provided, of course, there has been no contributing negligence or
other fault chargeable to the person claiming the payment"); 66 Comp. Gen. 617, 619 (1987) (same,
as to payment to Army construction contractor); 37 Comp. Gen. 131, 133 (1957) (same, as to
payment of death gratuity under Servicemen's and Veterans' Survivor Benefits Act); 19 Comp. Gen.
104, 105 (1939) (same, as to Social Security Act payment)). The Gen. Coun. Prec. 27-92 is plainly
in conflict with the holding in Snyder II and therefore cannot stand. See Snyder II, __ Vet.App. at
__, slip op. at 9 ("Secretary's historic reliance on VA Gen. Coun. Prec. 27-92 . . . is plainly in conflict
with our holding here and hence is invalid").

                           II. Secretary's Additional Argument
      The Secretary argues, in a section of his motion entitled "This Court Misinterpreted
Controlling Precedent on Sovereign Immunity" (emphasis added), inter alia, that Cox v. Gober:

        [A]ttempt[ed] to distinguish two decisions of the United States Court of Appeals for
        the Eighth Circuit, Pittman v. Sullivan, 911 F.2d 42 (8th Cir. 1990)[,] and Russell v.
        Sullivan, 887 F.2d 170 (8th Cir. 1989). These cases relied on Ruckelshaus[ v. Sierra
        Club, 463 U.S. 680 (1983),] to support a conclusion that the United States is not
        liable for payment of attorney fees when such an award would have to be made from
        general agency funds as opposed to the past-due benefits from which it should have
        been paid.

                 This Court distinguished Russell and Pittman stating that those cases were
        decided based upon the "finding that payment of attorney fees was committed by
        statute to the responsibility of the Secretary of Health and Human Services and was
        not subject to judicial review." Cox [v. Gober, 14 Vet.App. at 154]. That analysis
        is incorrect. It is true that both Pittman and Russell held that payment of attorney
        fees for work done at the administrative level was subject to the discretion of the
        Secretary of HHS and was not reviewable. However, inherent in the holdings of both
        cases is the view that attorney fees could be awarded for work in court. Pittman,
        911 F.2d at 46; Russell, 887 F.2d at 171-72. . . .



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               Thus, while the Eighth Circuit in Russell did find that the district court lacked
       jurisdiction to decide the attorney-fee question in that case because the district court
       had no authority to review administrative-fee-payment decisions of the Secretary of
       HHS, it did not rely on Ruckelshaus for this proposition. Instead, the court went on
       to decide that, based upon Ruckelshaus, there was an additional basis for denying
       payment of attorney fees, stating:

               Finally, as the district court noted, even assuming it had jurisdiction
               in this case, there is no waiver of immunity that allows the Secretary
               to pay this fee. Since no funds are left for payment to Russell,
               ordering the Secretary to pay [the attorney's] award would require
               payment out of general social security funds. The United States is not
               liable for such a payment absent a specific waiver of sovereign
               immunity. See Ruckelshaus v. Sierra Club, [supra].

       Russell, [887 F.2d] at 172.

Mot. at 7-9.

          The Secretary also cites language from Pittman, 911 F.2d at 46, to the same effect. He then
quotes further language from Pittman, supra, about the directive of the Social Security
Administration's Programs Operating Manual System that provides that attorneys are to paid first
in cases of mistaken release of funds and that recoupment efforts from the claimant are to commence
thereafter. The Eighth Circuit rejected this concept (or, rather, stated in dictum that it would reject
this concept if the case were not disposed of on other grounds) on the ground of a lack of waiver of
sovereign immunity. Ibid. The Secretary states that this supports the notion that, even if the Court
believes that 38 C.F.R. § 20.609(h) "creates a legal debt and therefore provides authority for VA to
pay [the withheld funds] out of other funds", the Secretary may not do so because of the lack of a
waiver of sovereign immunity. Mot. at 10. The Secretary concludes by stating that "[t]he absence
of any discussion by the panel of the above authority provides yet another reason for reconsideration
. . . of the panel's decision." Mot. at 11.

        As to the Secretary's statement about "[t]he absence of any discussion by the panel of the
above authority", a simple scan of Cox v. Gober will reveal considerable discussion of these cases.
See Cox v. Gober, 14 Vet.App. at 153-54. Although the Secretary might not agree with our
interpretation of these cases, we trust that, in the future, his counsel will be more prudent in
characterizing the content of our opinions.

        As to the merit of the Secretary's contention regarding these cases, the Secretary is, no doubt,
aware that Eighth Circuit caselaw is not binding on this Court. The Secretary's attempts to place
greater weight on this caselaw because, he claims, it interpreted Supreme Court precedent, are
unpersuasive. Neither opinion cited Ruckelshaus for the proposition on which the Secretary relies,
namely, that he is prevented from making any payment to the attorney because of a lack of a waiver


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of sovereign immunity. Rather, both opinions cite Ruckelshaus for the general proposition that the
United States is not liable for a payment absent a specific waiver of sovereign immunity. See
Pittman, 911 F.2d at 46; Russell, 887 F.2d at 172. That theory is not in dispute. Even if the Eighth
Circuit had interpreted Ruckelshaus in the manner described by the Secretary, it would not make
those opinions binding on this Court.

        Second, the Secretary's interpretation of this Eighth Circuit caselaw relies on his
interpretation of sovereign immunity in the context of this case, i.e., that he has no authority to pay
attorney fees out of other funds. However, as set out in part II.B.1.c. of Snyder II, __ Vet.App. at
___, slip op. at 7-10, this interpretation is incorrect. The Court is not ordering the Secretary to pay
the attorney fee out of other funds but rather out of the withheld amount, which amount has remained
undisturbed in the Secretary's compensation and pension account. The amount erroneously released
did not come from the withheld past-due benefits, because such a release of funds would violate the
Secretary's obligations to withhold this amount. As detailed in Snyder II, __ Vet.App. at ___, slip
op. at 13, the full amount of the withheld past-due benefits is available to be paid, and the Secretary's
sovereign-immunity arguments lack merit. Therefore, the Secretary's interpretation of this Eighth
Circuit precedent is equally lacking in merit.

        Finally, the Secretary's substantive arguments as to the Eighth Circuit caselaw are off base.
The Secretary states that Cox v. Gober incorrectly interpreted the Eighth Circuit precedent, because
"inherent in the holdings of both cases is the view that attorney fees could be awarded for work in
court." Mot. at 8. However, neither Pittman nor Sullivan involved fees for work in court, see
Pittman, 911 F.2d at 46; Sullivan, 887 F.2d at 171, and, therefore, any statement they might make
on this point is dictum. In both cases, the fee at issue was for work done at the administrative level,
and the Eighth Circuit noted in each case, as this Court accurately stated in Cox v. Gober, that "the
payment of attorney fees was committed by statute to the responsibility of the Secretary of Health
and Human Services and was not subject to judicial review." Cox v. Gober, 14 Vet.App. at 154.
The Secretary's argument fails to take account of the fundamental difference between the situations
described in Pittman and Sullivan and the situation in this case. As the Court explained in Cox III,
both Pittman and Sullivan involved cases where the payment of attorney fees was a matter of
discretion and was not subject to judicial review, whereas, in the instant situation, "38 C.F.R. §
20.609(h) leaves no such discretion to the Secretary in the payment of the attorney fees involved in
the instant matter." Cox v. Gober, 14 Vet.App. at 154. Therefore, the Court rejects the Secretary's
arguments regarding this Eighth Circuit caselaw.

        Upon consideration of the foregoing, it is

       ORDERED that the Secretary's motion for reconsideration is granted. All parts of the
October 6, 2000, opinion are reaffirmed, with the exception of part III., 14 Vet.App. at 152-53,
which is superceded by part I. of this order. In all respects, the result remains the same.

DATED:          November 14, 2001                               PER CURIAM.



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