PREC 14-96    Payment of Attorney Fees from proceeds of a National Service Life Insurance Policy     Citation: Vet. Aff. Op. Gen Couns. Prec. 14-96, VAOPGCPREC 14-96, 1996

QUESTIONS PRESENTED:

     b.  Where the proceeds of a NSLI policy are payable to the beneficiary in monthly installments, may the Secretary withhold a portion of each payment to the beneficiary for purposes of direct payment of attorney fees?

HELD:

a.  The statutory and regulatory provisions applicable to payment of attorney fees from past-due benefits, codified at 38 U.S.C. § 5904(c) and (d), and 38 C.F.R. § 20.609(h), do not distinguish payment of attorney fees in insurance cases from other types of benefit appeals.  The Secretary may, therefore, directly pay attorney fees from the proceeds of a National Service Life Insurance (NSLI) policy payable in a lump sum, whenever the requirements for direct payment of attorney fees from past-due benefits contained in 38 U.S.C. § 5904(c) and (d) are met.

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b.  The Secretary may directly pay attorney fees from the proceeds of a NSLI policy payable in monthly installments only from the past-due installments which accrued between the date the policy matured and the date of the decision granting the proceeds to the beneficiary, provided all other requirements for the direct payment of attorney fees from past-due benefits contained 38 U.S.C. § 5904(c) and (d) are met.