NOVA v. Secretary, Case Number 2020-1321, decided September 20, 2022 is a Federal Circuit case that discusses the VA’s attempt to change the knee replacements diagnostic code to exclude partial knee replacements.
This is a case I am well acquainted with as I was the attorney who argued and won the underlying case of Hudgens v. McDonald, 823 F.3d 630 (Fed. Cir. 2016), which found that the veteran’s partial knee replacement qualified for a higher rating under Diagnostic Code 5055.
Hudgens argued that Diagnostic Code 5055 applied to both partial and total knee replacements and guaranteed a minimum 30% rating. The VA argued it only applied to total knee replacements and went so far as to publish a new rule or guidance limiting the code to total knee replacements while the case was pending. The Federal Circuit agreed with my arguments that Diagnostic Code 5055 was at a minimum ambiguous and that any ambiguity should be read in favor of the veteran and that no deference was owed to the VA’s own interpretation. The result was a win for Mr. Hudgens. However, the VA used the rule or guidance it had issued during Hudgens to deny future cases.
This case involved a challenge to that rule or guidance. In this case, the Court determined the VA’s rule or guidance excluding partial knee replacements from Diagnostic Code 5055 was arbitrary and capricious and that Hudgens was controlling as to the interpretation. The Secretary essentially argued the Court was not bound by Hudgens because the VA had issued the rule or guidance, which clarified Diagnostic Code 5055. The Court determined:
We reject this circular argument. We are evaluating whether the Guidance constitutes a valid interpretation of DC 5055. The Guidance itself inserted the explanatory note into DC 5055. J.A. 1–3. The Secretary would have us hold that the Guidance articulates the only reasonable reading of DC 5055 because the Guidance itself says so. See generally Resp’t’s Br. 29–31. That cannot be correct. Indeed, the Secretary’s argument contravenes a basic tenet of administrative law. Agencies must “use the same procedures when they amend or repeal a rule as they used to issue the rule in the first instance.” Perez v. Mortg. Bankers Ass’n, 575 U.S. 92, 101 (2015); see 5 U.S.C. § 551(5). The VA promulgated DC 5055 following notice-and-comment rulemaking procedures in 1978. Updating the Schedule for Rating Disabilities, 43 Fed. Reg. 45,348, 45,348–50 (Oct. 2, 1978). Therefore, the Secretary cannot have amended DC 5055 without going through notice-and-comment.
Id. at *9.
While a vindication of my arguments in Hudgens and subsequent cases where I obtained a Diagnostic Code 5055 rating for veteran’s with partial knee replacements, the case also helpfully addresses the pro-veteran canon. The pro-veteran canon states that interpretative doubt must be resolved in favor of the veteran. The Court confirmed the holding in Hudgens, that “[e]ven if the government’s asserted interpretation of DC 5055 is plausible, it would be appropriate under [the pro-veteran canon] only if the [regulatory] language unambiguously supported the government’s interpretation.” Id. at *15.
This is a total vindication of Hudgens and should prompt any veteran who has had a partial knee replacement to seek a rating under Diagnostic Code 5055, which guarantees a minimum 30% rating. If you are one of these veterans, please consider seeking help now. You may call me at 803-748-1292.
Decision by Judge Prost and Newman with dissent by Judge Cunningham.
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