George: CUE in Light of a Change in the Law as to the Presumption of Soundness

George v. Wilkie, Case Number 16-2174, decided January 4, 2019 considers CUE in a prior decision in light of a change in the law.

The veteran sought service connection for schizophrenia in 1975 and was denied service connection.  The denial stated it pre-existed service and there was no permanent aggravation during service. 

In 2014, the veteran filed a motion to revise the prior opinion on the basis of clear and unmistakable evidence (CUE).  Specifically, it was alleged the VA had filed to apply 38 USC 311 (the presumption of soundness) in the first decision as the VA had not rebutted the presumption of sound condition with clear and unmistakable evidence that the condition was not aggravated by service.  The VA admitted the Board did not discuss the soundness statute or explain how CUE existed that the veteran’s condition had pre-existed service and was not aggravated.  But, the Board determined the VA nonetheless considered the evidence and the allegation of evidence was really just a simple disagreement as to the weight of evidence.  Id. at *3. 

The Court discussed  CUE and the presumption of soundness especially in light of Wagner v. Principi, 370 F.3d 1089 (Fed. Cir. 2004).  Wagner determined the presumption of soundness must be rebutted solely by clear and unmistakable evidence and that the evidence must show both preexistence and no in-service aggravation of the condition.  Id. at *6. 

The Court then framed the issue as the competing theories of finality and retroactivity.  It then determined:

we find that the Federal Circuit's announcement in Wagner in 2004 of what section 1111 means cannot defeat the finality of a 1977 Board decision, see Harper, 509 U.S. at 97. This is so because consideration of CUE requires the application of the law as it was understood at the time of the 1977 decision, see Willsey, 535 F.3d at 1373; Russell, 3 Vet.App. at 314, and Wagner does not change how section 311 (now section 1111) was

interpreted or understood before it issued.

Id. at *10.  The Court explained that:

In 1977, the Board was required to apply the law as it existed at that time, including § 3.304(b), requiring the Secretary to rebut the presumption of soundness with only clear and unmistakable evidence that an injury or disease existed before service. See 38 C.F.R. § 19.1 (1977) ("In its decisions, the Board is bound by the regulations of the Veterans Administration, instructions of the Administrator and precedent opinions of the chief law officer."). Consequently, it is not clear how the Board could have ignored this regulation or why the Board would have been required to find clear and unmistakable evidence of aggravation in 1977. This regulatory interpretation of the statutory presumption of soundness, requiring the Secretary to rebut the presumption only with clear and unmistakable evidence that a disability preexisted service, prevailed until 2003.

Id. at *11.  Thus, the Court determined “Because we find that Wagner does not apply retroactively to final decisions, we conclude that the 2016 Board correctly stated the law as it existed in 1977.” Id. at *12.  It appears this might have been different if the decision in this case had been open for direct review when Wagner was decided.  Id. at *14. 

The Court then concluded that in the alternative “the 2016 Board did in fact assess Mr. George's CUE allegation as to both preexistence and aggravation and Mr. George fails to establish that the 2016 Board erred in concluding that the 1977 Board's errors as to each prong would not have manifestly changed the outcome of its 1977 decision.”  Id. at *15.  The Court relied on the evidence of conflicting evidence as to pre-existence and aggravation, and determined the veteran did not carry his burden of demonstrating a manifestly changed outcome.  Id. at *16

Judge Bartley wrote a persuasive dissent attacking the majorities understanding of Wagner as containing a new understanding or interpretation of the soundness statute and arguing the conclusion that there was no CUE was error because “had the Board properly

applied the statutory presumption of soundness in September 1977 and not analyzed Mr. George's claim as one for service connection based on aggravation of a preexisting mental disorder, it would have had no choice but to grant him service connection.”  Id. at *17.

Judge Bartley argued

Wagner did not, as my colleagues suggest, contain a new understanding or interpretation of section 1111 that would need to be applied retroactively in order for Mr. George to prevail on his CUE motion. Rather, the Federal Circuit's judicial construction of section 1111 in Wagner provided "an authoritative statement of what the statute meant before as well as after the decision of the case giving rise to that construction."  Although the Federal Circuit's statement of the law differed from VA's pre-2003 interpretation of section 1111 set forth in 38 C.F.R. § 3.304(b), Wagner's implicit rejection of that interpretation did not constitute a change in law. Instead, Wagner recognized that VA had "misinterpreted the will of the enacting Congress" and reaffirmed "what the statute has meant continuously since the date when it became law."

Id. at *17-18 (internal citations omitted).

As to the merits, Judge Bartley argued “the Board misapplied the law extant in 1977 because it did not afford Mr. George the presumption of soundness even though it failed to find a lack of in-service aggravation of schizophrenia by clear and unmistakable evidence” and, in fact, appears to have improperly applied the law regarding a claim for aggravation under 38 U.S.C. § 353, which places the burden to prove aggravation on the veteran.  Id. at *20.  Finally, she determined that had the Board properly applied the presumption of soundness in its first decision, it would have granted service connection for schizophrenia.  Id. at *21.  She also focused on the fundamental fairness of this case and reminded us that:

The language of section 311 in September 1977 was the same language in section 1111 in June 2004 that the Federal Circuit in Wagner described as "clear" and susceptible of only one interpretation. 370 F.3d at 1093. The only reason that Mr. George was deprived of the benefit of the presumption of soundness clearly envisioned and expressed by Congress was that a VA regulation, which was "inconsistent with the statute" and "impose[d] a requirement not authorized by [the statute]," dictated a different result. VA Gen. Coun. Prec. 3-2003 (July 16, 2003). Because, under Rivers and Patrick III and VI, the version of section 311 extant in September 1977 meant what the Federal Circuit in Wagner said that Congress clearly intended it meant, VA's failure to abide by that

statutory command constituted an undebatable and outcome-determinative misapplication of the law. Because CUE was designed to remedy precisely this type of error, see Joyce v. Nicholson, 19 Vet.App. 36, 48 (2005); Russell v. Principi, 3 Vet.App. 310, 313-14 (1992) (en banc), I cannot agree with my colleagues that, before the Wagner decision in 2004, VA's failure to rebut the statutory presumption of soundness by a showing of clear and unmistakable evidence that a condition both preexisted service and was not aggravated by service could not constitute CUE.

Id. at *23.

The majority opinion leads to a harsh result where CUE is ineffective to challenge a past decision where case law has since interpreted a statute as being broader than the VA’s interpretation.  I believe Judge Bartley’s dissent is persuasive and would expect that this case will be appealed to the Federal Circuit and would hope for a better result there.

As a side note, the majority argued secondarily that it was concerned about the impact of allowing such CUE claims:

The impact of allowing judicial decisions interpreting statutory provisions issued after final VA decisions to support allegations of CUE would cause a tremendous hardship on an already overburdened VA system of administering veterans benefits. Each judicial interpretation of a statute which changes a previously accepted meaning of the statute could spawn hundreds of allegations of CUE in prior final decisions. As a result of a deluge of CUE motions, VA's limited resources would be diverted from processing claims and hearing appeals to evaluating allegations of CUE based on new statutory interpretations.

Id. at *14.  Frankly, I would expect this argument from C.J. Davis.  However, I believe Judge Bartley persuasively argues

The circumstances of Wagner and this case are relatively narrow—both cases involve application of a plain language judicial interpretation of a statute to a claim that was denied on the basis of a VA regulation that clearly conflicted with that statute. But even if the Rivers's theory of judicial construction would apply more broadly in the veterans' benefits CUE context, I have no reservations about requiring VA to remedy decades-old

errors that prohibit otherwise deserving veterans and their dependents from receiving the benefits to which they are statutorily entitled. I simply cannot endorse a CUE regimen that is so willing to exchange justice for administrative efficiency.

Id. at *19-20.  This line of argument focused on the VA’s hardship is deeply troubling to me as a practitioner as it only supports VA conclusion and never cuts in favor of helping a veteran.  Furthermore, arguments to the Court for broader forms of class relief or specific writs in old cases (hardship faced by the veteran) are often not met with grants.  Thus, it appears the Court is more willing to weigh the VA’s hardship than the group the VA is supposed to serve.

Decision by Chief Judge Davis and joined in by Judge Meredith with Judge Bartley dissenting.

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