Buffington: Effective Date after a Period of Active Duty

Buffington v. Wilkie, Case Number 17-4382, decided July 12, 2019 considers 38 C.F.R. 5304(c) and how it governs the effective date for a service connected veteran after his rating has been discontinued after a period of active duty.

Several years after multiple periods of active duty, the veteran requested his benefits be reinstated.  The benefits were reinstated, but the VA determined by law it was only permitted to make payments retroactive to 1 year prior to the date we receive such a request.

The veteran argued “38 U.S.C. § 5304(c) is clear—VA must ‘withhold

or suspend a veteran's benefits only 'for any period for which such person receives active service pay.’”  Id. at *3. 

However, 38 C.F.R. Section § 3.654(b)(2) provides:

Payments, if otherwise in order, will be resumed effective the day following release from active duty if claim for recommencement of payments is received within 1 year from the date of such release: otherwise payments will be resumed effective 1 year prior to the date of receipt of a new claim. Prior determinations of service connection will not be disturbed except as provided in [38 C.F.R.] § 3.105.

Compensation will be authorized based on the degree of disability found to exist at the time the award is resumed. Disability will be evaluated on the basis of all facts,

including records from the service department relating to the most recent period of active service. If a disability is incurred or aggravated in the second period of service, compensation for that disability cannot be paid unless a claim therefor is filed.

Id. at *6.

The Court followed a Chevron analysis.  First asking "whether Congress has directly

spoken to the precise question at issue."  And, only secondarily asking whether the agency's interpretation is based on a permissible construction of the statute.  The Court

determined the statutory language of Sections 1110 and 5304 do “not address the effective date for the discontinuation of benefits or, as relevant here, the effective date and terms for the recommencement of benefits.”  Id. at *8.  “In sum, Congress did not

speak to the precise question at issue: Whether the Secretary may predicate the effective date for the recommencement of benefits on the date of the veteran's claim.”  Id.

It then determined “[b] ecause there is a gap in the statute, the Court must now turn to step two of the Chevron analysis, "whether the agency's answer is based on a permissible construction of the statute." Id. at *8.  The Court then reasoned:

the Secretary promulgated § 3.654(b)(2) pursuant to Congress's express delegation to establish "forms of application." 38 U.S.C. § 501(a)(2). Although Congress chose to govern the date that VA benefits shall be discontinued upon a veteran's return to active duty, 38 U.S.C. § 5112(b)(3), Congress was silent regarding when and how VA shall resume the payment of benefits after a veteran's release from active duty. The Secretary filled the gap left by Congress and, therefore, contrary to the appellant's contention, his regulation is necessary and appropriate to carry out the laws administered by the Department. See 38 U.S.C. § 501(a).

Id. at *11.

The Court also determined equitable tolling based on misleading notice as to the 1- year period is not relevant in this case because  

§ 3.654(b)(2) is not a bar to VA benefits and does not contain a statute of limitations that may be equitably tolled. Rather, the  regulation governs the date VA benefits may be resumed following release from active duty, which is dependent on when the veteran files a claim to recommence payment of benefits. In that regard, it operates similar to effective-date provisions for awards of VA benefits, which the Federal Circuit in Andrews unequivocally held may not be equitably tolled.

Id. at *13.

 Judge Greenberg wrote a succinct dissent in which he stated

The Secretary may only prescribe rules and regulations that are "necessary and appropriate to carry out the laws administered by the Department." 38 U.S.C. § 501(a). The statute already delineates the period for which veterans may not receive VA benefits – while they are on active duty. 38 U.S.C. § 5304(c). Section 3.654(b) does not merely "create a mechanism by which VA manages compensation benefits when veterans return to active duty," as the majority states, ante at 9, it also creates an unnecessary and inappropriate impediment to a veteran receiving benefits he has already established entitlement to. The fact that VA could have adopted a regulation that prescribed the procedure of reinstating benefits without including an effective date provision is dispositive of whether 38 C.F.R. § 3.654(b) is a "necessary or appropriate" regulation. The Secretary has exceeded his statutory authority here at the expense of service-connected veterans who were called back to active duty.

Id. at *17.

The decision was by Judge Meredith and joined by Falvey.  It will be interesting to see if the case is appealed and, if so, how Judge Greenberg’s dissent influences the Federal Circuit.

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Quinn: Opportunity for a Board Hearing after Remand and Further Development by the RO

Quinn v. Wilkie, Case Number 17-4555, decided July 11, 2019 considers the right to a Board hearing after the Board had previously remanded and the case been developed further by the RO.

The statute at issue in this case is 38 USC Section 7107(b) and states “[t]he Board shall

decide any appeal only after affording the appellant an opportunity for a hearing.”  The Court noted that this issue was not specifically addressed by Cook v. Wilkie, 908 F.3d 813 (Fed. Cir. 2018) ("Cook II"), but that case law is relevant.

The Court explained:

In Cook II, the Federal Circuit had to determine whether a claimant who had been afforded a Board hearing and then appealed an adverse decision to this Court was entitled to another hearing after we vacated the Board's decision on appeal and remanded the matter.  The Federal Circuit held that section 7107(b) unambiguously entitles a claimant "to an opportunity for an additional Board hearing in these circumstances.”

Id. at *5  The Court explained it would use Cook II as a guide in this case.

The Court pivoted to the word “any” in Section 7107(b) and explained:

We see no reason to deviate from how the Federal Circuit interpreted the plain meaning of "any," even if we were at liberty to do so:

As the Supreme Court has recently observed, "the word 'any' naturally carries 'an

expansive meaning.'" When coupled with a singular noun in an affirmative context, "any" typically "refer[s] to a member of a particular group or class without distinction or limitation" and "impl[ies] every member of the class or group." In [section] 7107(b), the word "any" modifies the singular "appeal" in an affirmative context, i.e., the statute imposes a positive duty on the Board to provide an opportunity for a hearing before it decides any appeal. Accordingly, the phrase "any appeal" indicates that the Board is not free to curate which appeals are entitled to "an opportunity for a hearing." The Board must provide such an opportunity before it decides every appeal.

Id. at *5-6.

The Court then turned to the word “appeal” and determined the text supplied an answer and reasoned:

An appeal is "[a] proceeding undertaken to have a decision reconsidered by a higher authority; esp[ecially], the submission of a lower court's or agency's decision to a higher court for review and possible reversal." BLACK'S LAW DICTIONARY (10th ed. 2014); see Cook II, 908 F.3d at 818 (citing this same dictionary definition). Using this definition, the Federal Circuit in Cook II determined that when this Court vacated a Board decision and remanded the matter for a new Board decision, the Board was deciding an "appeal." Id. (reasoning that, in those circumstances, "on remand the Board must review the RO’s decision anew in accordance with the Veterans Court's instructions" (emphasis added)).

The same is true in the factual situation before us.

Id. at *6.

The Court also declined to follow the Secretary’s lead and “insert the words "on the merits" into the statute – to insert them would limit a right to a hearing to matters that constitute a final decision on the merits that would allow an appeal to this Court. See O.A. at 24:50-26:30. Congress did not limit the right to hearing in that way. In fact, Congress was expansive in providing a right to a hearing in "any" situation in which the Board "decide[s] an appeal."  Id. at *7.

Finally, the Court, apparently looking to cut off a potential regulatory change by the VA, determined:

The statute also makes plain that the right to an opportunity for a hearing is not one that is within the discretion of VA.   Congress used the mandatory word "shall" in connection with the right to an opportunity for a hearing before the Board "decide[s] any appeal." Absent a textual reason to believe otherwise, something not present here, the word "shall"

leaves no room for discretion.

Id. at *7.

The Court then pivoted to the question of prejudicial error and in part the Secretary’s assertion the appellant could have submitted written evidence.  The Court determined:

The argument that the opportunity to submit relevant information in writing is equivalent to the opportunity to present it at a Board hearing cannot be squared with the fact that

Congress specifically codified Board hearing rights because of the unique benefits of that

opportunity. See id. at 344 (citing internally to part III.A. of the opinion, in which we discussed the "history and role of the personal hearing in Board adjudications"). In particular, in this case a hearing would have provided the appellant the ability to address and respond to any specific Board member questions relating to the new evidence and testimony she was submitting. And there is also the intangible, but nonetheless important, point that an adjudicator would be able to observe the demeanor of a veteran at a hearing, which reading a written submission would not allow.

Id. at *9.

It is important to note that the statute on which this claim is based, 38 USC Section 7107, was amended by Veterans Appeals Improvement Modernization Act of 2017 and thus this case is specifically going to govern cases that are not subject to VAIMA.

Secondarily, the Court considered an exhaustion issue raised by the Secretary.  Specifically, “[t] he Secretary argues that the appellant raised the argument of entitlement to a second hearing under section 7107(b) for the first time on appeal because she did not reassert her request to the Board directly, implicating the law of issue exhaustion.  He

urges us to decline to hear the appellant's arguments. Id. However, the appellant did all that was required to raise the issue. After all, she requested a hearing and was told no.”  Id. at *1-2.

Decision by Judge Allen and joined in by Judge Schoelen and Pietsch.

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Atilano: Board Hearings without the Veteran

Atilano v. Wilkie, Case Number 18-1051, decided July 3, 2019 affirmed a Board decision that stated a Board hearing can be cancelled if the veteran is not in attendance even if the veteran’s representative and an expert witness are there.

The veteran’s attorney requested a hearing before the Board's central office in Washington, D.C., to present testimony from Dr. Elaine Tripi, a licensed psychologist

and certified rehabilitation counselor. A hearing date was set but a motion to change the time was granted. 

On the day of the hearing, counsel the certified rehabilitation counselor appeared at the Board's offices without the veteran.  The Board member declined to hold the hearing without the veteran stating that the claimant’s participation was legally required.  The record was held open for 60 additional days so the expert could submit a report in writing and counsel could do the same with respect to argument.  In her duly submitted written report, the expert opined the veteran was, by reason of his PTSD and in light of his educational and occupational history, unable to hold substantially gainful employment between 1995 and 2010.  She also stated that, if permitted to testify, she would have defended any challenged conclusions and answered any relevant questions asked by the Board member.

Counsel wrote that the veteran had been unable to attend the scheduled hearing because he was severely disabled and that he believed VA was required to hold the hearing despite the veteran's absence. Counsel further argued that the veteran was prejudiced by the Board member's actions because a written report was inferior to oral testimony.

The Court noted the issue on appeal is "whether an appellant must be present at his or her hearing in order for his or her legal representative to elicit sworn testimony from witnesses before the Board."  Id. at *6.

The Court reasoned:

The Board shall decide any appeal only after affording the appellant an opportunity for a hearing." 38 U.S.C. § 7107(b). A "hearing" is defined as the "opportunity to be heard, to present one's side of a case, or to be generally known or appreciated." WEBSTER'S NINTH NEW COLLEGIATE DICTIONARY 559 (1990) [WEBSTER'S NINTH];

see, e.g., WEBSTER'S NEW WORLD DICTIONARY, THIRD COLLEGE EDITION 622 (1988) ("an opportunity to speak, sing, etc.; chance to be heard"). A leading legal dictionary likewise explains that, in the administrative context, the term "consists of any confrontation, oral or otherwise, between an affected individual and an agency decision-maker sufficient to allow [the] individual to present his case in a meaningful manner." BLACK'S LAW DICTIONARY 721 (6th ed. 1990). The rest of the sentence in subsection (b) clarifies that the opportunity to speak to, be heard by, become known to, or present a case before the Board member is not general in nature but is "afford[ed]"

to "the appellant."

Id. at *7.

The Court also referenced 38 U.S.C. § 7107(d)(1)(A)(ii), which states: "The Board shall also determine whether to provide a hearing through the use of the facilities and equipment described in subsection (e)(1) or by the appellant personally appearing before a Board member." (emphasis added). There can't be any dispute about what the italicized language means: "to come formally before an authoritative body" and to do so "in person" and "for oneself."  Id. at *7.

The Court concluded:

In short, the overall statutory structure ofsection 7107 confirms that an appellant  exercising the right to a Board hearing must participate in that hearing. The appellant has the choice whether to do so by appearing personally in the presence of the Board member or by participating remotely via video conference or other electronic means, but there is no provision allowing an appellant to invoke the right to a hearing but decline to participate.

Id. at *8.

The decision was by Judge Toth and joined in by Judges Pietsch and Meredith.  While I understand and am sympathetic to the veteran’s position, I also understand the Court’s reasoning and believe this case has limited impact on the presentation of a veteran’s case. 

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Casey: Attorney Fees, Administrative Error and Reduction

Casey v. Wilkie, Case Number 18-1051, decided June 26, 2019 provides a definitive answer to a question that has plagued practitioners for some time.  What happens when the VA forgets to pay withhold the 20% attorney fee and pays the veteran the whole award?  Frequently, the VA will then pay the attorney their 20% and create an overpayment as to the veteran that can serve to reduce their monthly benefit. Many attorneys have argued that such an overpayment is the result of administrative error and would not stand up in Court.  Well, it appears that conventional wisdom was wrong.

The case focused on 38 U.S.C. Section 5112(b)(10) which provides: "The effective date of a reduction or discontinuance of compensation, dependency and indemnity compensation, or pension by reason of an erroneous award based solely on administrative error or error in judgment shall be the date of last payment." 

The Court ultimately concluded:

VA's recoupment of attorney fees mistakenly paid to an accrued benefits recipient as part of the one-time payment of an accrued benefits award does not result in a "reduction." Therefore, section 5112(b)(10) doesn't apply to defeat the proper creation of an overpayment here. Correspondingly, because there was no "reduction," we need not consider whether there was an erroneous award based solely on administrative error.

Id. at *2.

First, the Court noted that the fact the appellant in this case (a surviving spouse) was receiving DIC (an ongoing monthly benefit) was incidental to the question of an overpayment.  Id. at *5-6.

Second, the Court turned to the language of the statute and determined

The question is whether the one-time lump sum payment could later be "reduced." Contrary to the appellant's argument, VA can't diminish a one-time accrued-benefits payment in size or amount retroactively. What VA paid, it paid; VA can't change the past. What it can do is recover any excessive amount it paid. Nor is a grant of benefits diminished in size or amount simply because the total benefit must be apportioned and paid to two parties. The fact that VA could recover part of an excessive payment made by mistake doesn't mean that the initial grant itself was reduced. Because neither the payment nor the initial grant of appellant's accrued benefits was reduced, we hold that section 5112(b)(10) doesn't apply here.

Id. at *8.

The Court also looked toward legislative intent to support its ruling.  It reasoned

The second sentence's structure hints that Congress sought to balance inequities inevitably born by two innocent populations, faultless recipients of running awards and taxpayers. Let's start with benefits recipients. Recipients of running awards, who receive monthly benefits checks, may depend solely or mostly on their VA benefits to live month-to-month, and Congress seemingly thought it unjust for these people to take on liability for returning past overpayments that had been accruing monthly because of mistakes they didn't make or cause. However, these concerns that Congress seemingly had in mind at the time of section 5112(b)(10)'s enactment don't translate well into the context of one-time accrued benefits payments. With a one-time payment, which often represents years' worth of accrued benefits, there's no (or certainly less) chance that overpayment recovery could unjustly impact a recipient's day-to-day finances. In other words, recipients of one-time payments aren't similarly situated to recipients of running award payments. Thus, they don't require the same protections, and it doesn't appear to us that Congress was crafting section 5112(b)(10) to protect one-time payment recipients. Nevertheless, section 5112(b)(10)'s inapplicability to a recipient of a one-time, accrued benefits payment such as the appellant doesn't mean that Congress left those recipients totally unprotected; they can still seek waivers, a subject to which we return in a moment.

Id. at *12.

The Court opined that its result in this case might seem harsh, but that the appellant could still seek a waiver.  My only response to the suggestion of a waiver is to say that the waiver process is largely within the Secretary’s discretion and its process makes applying, fighting or and finally receiving benefits a walk in the park as compared to a marathon. 

The decision was by Judge Allen, joined in by Chief Judge Davis and Judge Meredith.  I hope this case is appealed to the Federal Circuit.  It seeks to turn an actual reduction into nothing and create a situation where the VA’s own mistake can only be corrected by its own benevolence.  It also does not realize that a veteran who just received a lumpsum award after years of waiting will oftentimes have already spent the money and not be able to simply repay it.  Finally, it allows the VA to create a wedge between attorney and client.

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