Bowling and Appling: Insanity as a Bar to Benefits, Class Actions, and Judicial Notice

Bowling v. McDonough, Opinion Number 18-5263 and Appling v. McDonough, Opinion Number 19-0602, were decided March 29, 2021 and were consolidated cases involving whether a character of discharge involving insanity was a bar to service connection.  Specifically, the veterans argued the definition of "insanity" in 38 C.F.R. § 3.354(a) is unconstitutional because it denies claimants due process of law.  “The Court holds that appellants have not met their burden to demonstrate that § 3.354(a) denies claimants due process or is constitutionally invalid.”  Id. at *2.

The Court noted:

The sole dispute in this case is the validity of 38 C.F.R. § 3.354(a). 5 Appellants argue that VA's definition of "insanity," as stated in § 3.354(a), "violates constitutional due process of law" because it "results in arbitrary and inconsistent outcomes," Bowling Br. at 4; see Reply Br. at 1 (asserting that § 3.354(a) "creates an unnecessary risk of arbitrary and inconsistent decision making"), and because it "fails to provide adequate notice" to claimants as to the evidence needed to support a finding of insanity. They assert that this is so because congressional intent in enacting the Servicemen's Readjustment Act of 1944, ch. 268 § 300, 58 Stat. 284, 286, now codified at 38 U.S.C. § 5303(b), the statute underlying § 3.354(a), was to implement "a dramatically liberalizing change" that would "severely limit the number of people denied benefits," yet large numbers of former servicemembers with psychiatric disorders are denied VA benefits based on VA's character of discharge determinations.

Id. at *10 (internal citations omitted).  The veteran’s argued the regulatory definition of insanity is narrower than intended by congress and that VA examiners lack a clear understanding of how to render an opinion regarding insanity due to a lack of training.  Id. at *10.  They also argue the regulation does not provide adequate notice to claimants as to how to support a claim of insanity.  Id. at *11.

The Court summarized the veteran’s argument as:

Ultimately, appellants contend that, because (1) the number of decisions granting access to VA benefits varies among individual adjudicators; (2) VA examiners lack access to training on how to apply VA's definition of "insanity"; and (3) the definition is so vague that claimants lack guidance as to what evidence is necessary to support a claim of insanity, VA's attempts to apply § 3.354(a) result in arbitrary and inconsistent outcomes. Bowling Br. at 4, 15, 19-21; Reply Br. at 9. And because "the essence of due process of law is that the government must act in a way that is reasonably predictable and consistent," Bowling Br. at 23, they assert that § 3.354(a) "does not provide due process of law.

Id. at *11.

The Court determined that “While appellants may be correct that § 3.354 is not a model of clarity, they have not demonstrated that VA is incapable of applying § 3.354(a) or that the regulation fails to provide fair notice of the factors by which insanity may be established, except by way of speculation based on the extrarecord opinion evidence that the Court may not consider.”  Id. at *16-*17.

The Court then rejected many constitutional arguments as undeveloped or relying on data that could not be considered by the Court, stating: “In summary, appellants have not met their burden to demonstrate that VA is incapable of applying § 3.354(a) fairly or that claimants lack adequate notice of how to succeed under the regulation.”  Id. at *19.

An important issue in this case was that the Court also considered taking judicial notice of evidence, specifically numerical data related to denials, and referenced FRE 201.  However, the Court dodged taking judicial notice of this data by saying:

Here, appellants ask that we take notice of evidence that, at least in some cases, includes numeric data or references historical events, which could potentially qualify as factual evidence that is not reasonably disputed.  But they do not rely on this evidence to establish facts not subject to reasonable dispute. Rather, they ask the Court to take judicial notice of the evidence and then draw inferences from it to support their arguments.  Although the evidence may cite certain facts or figures or report on past events, it does not show—in a manner that is not subject to reasonable dispute—that the number of servicemembers barred from VA benefits signifies that more are denied access to benefits than Congress intended, that the reason servicemembers are barred from VA benefits is because VA adjudicators are applying § 3.354(a) in an arbitrary and capricious manner, or that claimants receive inadequate notice of the evidence necessary to support their claims.

Id. at *16-*17 (internal citations omitted).

The Court also considered the Appellant’s motion for class certification and denied on that the class motion would be moot if they did not succeed on the merits.  However, the Court went further and alternatively argued that the class would not have met the Court’s necessity or superiority requirements.  The Court noted: “Given that any determination that a regulation is unconstitutional would be binding on VA, appellants must explain why a precedential decision would not be adequate in this instance to overcome the presumption against certifying a class.”  Id. at *7.

This case represents an early foray into class actions before the Court.  It will almost certainly be appealed to the Federal Circuit.  I find the Court’s judicial notice analysis to be interesting as it truly seems to be the fulcrum on which the case loses on the merits.  It seems that issue will likely appear in front of the Federal Circuit and offer some law on the application of FRE 201 by the Veterans Court.

Opinion by C.J. Bartley and joined by Judges Meredith and Falvey.

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