Freund and Mathewson: Illegally Closed Legacy Appeals and a Class Certification Rejected

Freund and Mathewson v. McDonough, Case Number 21-4168, decided October 20, 2022 concerned the VA’s wrongful closing out of legacy appeals to the Court and the request for a class action.  The Court acknowledged the VA had a problem illegally closing out legacy appeals, but refused to grant class certification.

After the passage of the AMA, the result was two appeals processes before the Board.  The first is the older or legacy cases.  The second are those from the AMA process.  This case involved legacy cases. 

In legacy cases, the VA responds to a notice of disagreement by issuing a statement of the case.  The SOC triggers a requirement that the veteran file a Form 9 usually within 60 days (though that date can be longer, 1 year after the mailing of the notification of the VA decision being appealed).  The VA system is automated and called VACOLS.  VACOLS automatically flags and closes all legacy appeals on the first day of the month following 65 days after the SOC was failed or following one year after the notice of the AOJ decision was mailed if the veteran has not submitted a Form 9.  The VA does not give notice that the appeal is closed out.

At issue, the veterans did submit a Form 9, but the case was still closed out due to the VACOLS automated closure function.  The Court stated:

“The problem is that it became clear during the course of these proceedings that VA knew that there were claimants whose claims had been erroneously closed through the use of the VACOLS sweeping function. VA maintained that this was not really a problem because as soon as VA learned of an erroneous closing, it would automatically reactivate the appeal at issue. But there did not appear to be any comprehensive plan for identifying such claimants, a problem magnified by the lack of notice of the closing in the first place. And, as we will discuss below, the Secretary came perilously close to misleading the Court by suggesting that he was engaged in proactive steps to address the problem such that it negated any need for the Court's intervention. That was clearly not so, but it took the Court's sustained efforts over many months of inquiries as to whether this action is moot to have the Secretary admit as much. To the Secretary's credit, and as we also describe below, after oral argument the Secretary informed the Court of plans to address the issue, suggesting that the Agency had finally begun to meaningfully grapple with the serious problem this action had brought to light. We trust the Secretary will continue to follow through with the plans he presented to the Court.”

Id. at *3.  Despite this finding, the Court dismissed the case!

The Court again noted that VACOLS did not capture or notice the timely Form 9 and automatically terminated an appeal without notice to the veteran.  The petitioners asked for a class certification of all similarly situated veterans (those whose legacy appeal was closed despite a timely Form 9). 

After oral argument of the case, the Court asked the VA to present more facts and in fact it turned out that “69.8% of 5,456 closed legacy appeals with which a Substantive Appeal was filed were improperly closed.”  Id. at *11.

The Court then determined it had jurisdiction over the case.  It then turned to mootness and standing.  As to mootness, the Court found the claims were moot because the VA had since the filing reactivated the appeals.  The Court also recognized the “inherently transitory” exception to mootness and noted

“we are bound by Godsey, which means that the inherently transitory exception to mootness could possibly allow us to reach the merits of the petition on a class basis if we could certify a class. And we will assume, without deciding, the class-claims here would qualify as ones that are inherently transitory. But we stress that petitioners can only benefit from this exception to mootness if the Court certifies a class. That is, if a class is not appropriate, an exception to mootness based on the existence of a class is irrelevant, but found it was not applicable because the certification of the class was not appropriate.”

Id. at *18.

As to the question of class certification, the Court denied for two reasons.

“The first proceeds on the basis that petitioners' proposed class definition includes an implicit requirement that a class member have been subject to the closure of an administrative appeal without notice. In that case, the Court concludes that the named petitioners are not members of the class they seek to represent and are therefore inadequate representatives of such a class. The second ground takes the class definition literally—meaning there is no requirement that class members have been subject to no-notice closure. Proceeding under that assumption, the Court concludes that petitioners have not met their burden to present common questions capable of class-wide resolution. Under either view of the class definition, certification is not appropriate.”

Id. at *19.

The Court ends by flippantly concluding that the Secretary has taken some action and it is “better late than never.”  Id. at *23

I find this decision inexplicable.  It denies in part because the named parties represent people who could not be in the class because they ultimately discovered the appeals had been wrongfully closed.  This seems to require the identification of a class representative that cannot exist.  This case will be appealed to the Federal Circuit; meanwhile it is clear the Veteran’s Court both recognizes “the Secretary came perilously close to misleading the Court” and yet remains unwilling to do anything about it or illegally closed cases.

Meanwhile, if you have a legacy appeal to the Board and are still waiting, you should find out if it was illegally closed by VACOLS.  The Secretary will correct it, but only if you mention it to them.

Decision by Judge Allen and joined in by Judges Meredith and Laurer.

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Smith: Substitution Before the Court

Smith v. McDonough, Case Number 18-4730, decided October 17, 2022 is an order of the Court denying substitution and dismissing the case.

The appeal was from a Board decision denying the veteran specially adapted housing (SAH) benefits.  Unfortunately, the veteran died after the case was appealed, but before it was briefed.  His adult daughter filed a motion to be substituted in the veteran’s place, but the court denied the motion.

The veteran was prescribed pool therapy by the VA and used a VA pool until it became unavailable.  He sought VA funding for the pool, but ultimately he built his own pool, taking out a mortgage to finance it.  He then filed the claim seeking reimbursement of the costs. 

As a result of the veterans death during the case, an adult daughter sought to substitute into the case.  The Secretary argued the Board decision should be vacated and the appeal dismissed because the adult daughter was an eligible accrued-benefits claimant.  The Secretary argued before someone can be substituted into an appeal, the VA must determine the person is eligible as an accrued benefits claimant under Section 5121 and the relevant caselaw only allows substitution for accrued benefits, not for non-accrued benefits.

The daughter never actually filed an accrued-benefits application with the VA, but maintained she was an eligible accrued benefits recipient and could be substituted.  The daughter argued three reasons why she should be substituted. 

“First, she asserts that she can be substituted under the Court's substitution doctrine as explained in Breedlove.  She claims that 38 U.S.C. § 5121A, which informed the Court's decision in Breedlove, allows substitution in "a claim for any benefit under a law administered by the Secretary," 38 U.S.C. § 5121A (emphasis added), if the substitute-claimant is eligible to receive accrued benefits under 38 U.S.C. § 5121.  And she argues that she is eligible to receive accrued benefits under section 5121 because she bore the expenses of Mr. Smith's last sickness and burial.”  Id. at *3.

“Second, Ms. Hicks argues that she can be substituted for Mr. Smith through nunc pro tunc relief under the body of law that we routinely applied before we decided Breedlove. She notes that, although parties rarely seek nunc pro tunc relief instead of substitution under Breedlove and section 5121A, Breedlove did not overrule the prior body of law, and we have not held that substitution is unavailable in claims for one-time benefits.  She asserts that she satisfies the pre-Breedlove test for nunc proc relief and that this is a proper basis for the Court to substitute her as appellant.”  Id. at *3-4.

“Third, Ms. Hicks contends that she can be substituted under Rule 43(a)(2) of the Court's Rules of Practice and Procedure because she is the personal representative of Mr. Smith's estate.  She notes that Rule 43(a)(2) allows substitution by "'the personal representative of the deceased party's estate [. . .] to the extent permitted by law'" and asserts that she is permitted by law to substitute because of her standing as a person who would receive part of any benefits awarded to Mr. Smith's estate.  Once she is substituted as the personal representative of Mr. Smith's estate, Ms. Hicks contends, the estate can, under 38 C.F.R. § 36.4406(c), receive reimbursement of any undisbursed SAH benefits.”  Id. at *4.

The Secretary argued “substitution under section 5121A and Breedlove applies only to periodic benefits and that SAH is a nonperiodic benefit. Thus, he asserts, substitution is not warranted here regardless of Ms. Hicks's eligibility as an accrued benefits claimant. What's more, the Secretary argues, Ms. Hicks never applied for a VA determination of her eligibility as an accrued benefits claimant. Because of this, the Secretary argues, Ms. Hicks does not qualify to be substituted. The Secretary also argues that nunc pro tunc relief is unavailable to Ms. Hicks because she lacks standing.”  Id. at *4-5.

The Court noted the burden is on the party seeking substitution and then found that the adult child failed to show she is an eligible accrued benefits claimant under Section 5121, which is a prerequisite for substitution under Breedlove.  Id. at *5.

The Court determined that substitution under Breedlove requires a moving party to apply for a VA determination of eligibility as an accrued-benefits claimant by submitting the application to the VA. 

The Court also rejected the application of nunc pro tunc case law to cases involving death prior briefing. 

Finally, the Court also rejected the use of its own Rule 43 as a source of substitution as it determined it was simply the procedural mechanism for substitution and not the underlying substantive law allowing for substitution. 

Judge Greenberg wrote a compelling dissent in which it was clear that he considered the adult daughter as eligible to be substituted because she bore the expenses of her father’s last sickness.  He pointed out that Breedlove did not require a claimant to file an application for accrued benefits within one year of death in order to be substituted.  He wrote “The Court should have clarified today that, under Breedlove, claimants had one year to file a motion to substitute with the Court and that nothing has to be filed with VA. This would have been consistent with Breedlove's holding that 38 U.S.C. § 5121A does not apply to the Court.”  Id. at *9-10.

While limited to only the question of substitution and a narrow reading of 5121A and Breedlove, Judge Greenberg gets it right.  Meanwhile, the Court’s decision requiring an application for accrued benefits conflates the idea of substitution and an application for accrued benefits, and lends support to the VA’s policy of trying to discourage (or even ignore) substitution requests in an attempt to force every claimant into an accrued benefits application—which is more restrictive as it gives away the right to submit never evidence.  The Court’s decision also fundamentally ignores that the VA’s lengthy claims process and high track record of getting it wrong simply means that many veteran, especially those not survived by a spouse, will die before the denial is meaningfully adjudicated.  The result is the VA can truly deny until a veteran dies.  This decision only reinforces that cynical conclusion.

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Bonds: Scope of a Claim versus Scope of a Pleading

Bonds v. McDonough, Case Number 20-4899, decided October 5, 2022 discusses the effective date for a disability claim that was originally filed as an Section 1151 claim.

Section 1151 basically creates a VA disability compensation option for VA medical malpractice.  It provides compensation for “additional disability resulting from VA medical treatment.” 

In this case, the veteran had filed a Section 1151 claim in September 2013, but also filed a later disability claim.  When the later disability claim was granted with a later effective date, he sought the effective date of the Section 1151 claim (September 2013).  The Board denied and the Secretary argued “an impenetrable barrier separates 1151 claims from service-connection claims brought under 38 U.S.C. §§ 1110 and 1131, such that the former can never encompass the latter.”  The veteran argued that Delisio applied (where a claim for a disability can encompass a claim for the causal condition of that disability).

The Court avoided the Secretary’s question by noting it did not answer the question of whether the veteran had presented an informal claim for diabetes (the court noted VA regulations in March 2015 created standardized forms and ended the concept of informal claims).  The Court stated: “Properly framed, the question here does not turn on the scope of a claim—that is, whether Mr. Bonds's claim under section 1151 can be read to incorporate a claim for service connection for diabetes—but assesses whether the September 2013 filing presents an informal claim for service connection for diabetes that is distinct from any claim under section 1151.”

The Court noted the Board had not made factual findings on this matter, declined to do so in the first instance and remanded the case.

The Court also referenced Shea and Sellers and noted the Federal Circuit had created markers for determining whether a pro se filing sufficiently identified the benefit sought.  The Court noted “Eschewing strict formalism, the Federal Circuit applied a "flexible standard" in which a claimant can identify a benefit sought by using "language that points to records mentioning such a condition in a way that, sympathetically read, is properly understood as seeking benefits for such a condition." Using this flexible standard, the Federal Circuit held that, "where a claimant's filings refer to specific medical records, and those records contain a reasonably ascertainable diagnosis of a disability, the claimant has raised an informal claim for that disability."  Id. at *6-7.

However, the Court also noted the limitations of Shea found in Sellers, which “requires a measure of specificity between the claim-stating document and the condition identified in the medical records such that generalized statements of intent to receive "all possible benefits" fall short of identifying the benefit sought as including conditions noted in a claimant's medical records.”  Id. at *7.

Related to the case at hand, “the Board limited its analysis to noting that 1151 claims are distinct from service connection claims without considering whether Mr. Bonds's 2013 filing raised an informal claim for service connection for diabetes in addition to his expressly raised 1151 claim. Although the Board acknowledged that the appellant "did identify as a diabetic" in that 2013 filing, R. at 12, the Board did not discuss whether that reference alone or in conjunction with the medical records identified in that document could constitute an informal claim.” Id. at *8.

The Court also limited its holding by stating:

“To be clear, our holding is a narrow one. We take no position on the Board's assertion that Anderson and prior caselaw stand for the proposition that an 1151 claim cannot encompass an 1110 claim. Indeed, Anderson does not factor in determining whether Mr. Bonds filed a separate, informal claim for service connection for diabetes. Nor do we address whether an 1151 claim can encompass a service-connection claim based on the causal-chain rule in DeLisio. We hold only that VA must determine the total number and type of claims raised in a claim-stating document and referenced evidence before addressing the scope of each individually raised claim. Moreover, even if a claim-stating document only explicitly identifies one claim, VA must search that document liberally for other less explicitly stated claims.”

Judge Toth wrote a concurring clarifying he believed an express explanation of the difference between the scope of a pleading and scope of a claim was important.  “I join the panel opinion in full and write separately only to highlight a somewhat obvious point—that the scope of a claim includes the pleadings but also extends to cover matters identified through evidence obtained over the development of the claim.”  Id. at *10.

He noted case law makes clear that assessing the scope of a pleading “centers on the language of the pleading and extends to various medical records to which the pleadings refer. Shea, 926 F.3d at 1369. Significantly, matters obtained during discovery generally do not factor in assessing the scope of a pleading.”  Id. at *10.  However, assessing the scope of a claim one the duty to assist attaches is different.  “In these cases, the scope of the claim includes not only issues raised in the pleadings but also the entire evidentiary record as the case develops over time.”  Id. at *10.  Judge Toth then explained:

“Assessing the scope of a pleading is thus an antecedent consideration to evaluating whether the Secretary complied with the duty to assist in developing a claim or whether the Board failed to address an issue reasonably raised by the evidence of record. DeLisio tracks this sequence neatly: its central holding is that a pending claim for a specific disability can encompass a claim for the causal condition of that disability where the evidence developed during the case shows a connection to service for the causal disability. 25 Vet.App. at 53. In these cases, the fact that the claimant failed to plead the causal condition does not defeat the possibility of compensation for it as the scope of the claim expands to "reasonably encompass" the causal disability such that "no additional filing is necessary to initiate a claim for benefits for the causal disease or disability."

Id. at *11.

This case is an example of the Court refusing to making a decision, but overall I appreciate Judge Toth’s explanation or distinction between the scope of the pleadings and scope of the claim.

Per Curiam decision (Judges Allen, Meredith and Toth).  Concurrence by the Judge Toth.

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Stevenson: Unhealed Wounds and Section 1151

Stevenson v. McDonough, Case Number 20-4870, decided October 4, 2022 discusses an unhealed wound and the availability of a Section 1151 claim.

Section 1151 basically creates a VA disability compensation option for VA medical malpractice.  It provides compensation for “additional disability resulting from VA medical treatment.”  The question in this case was whether additional disability requires persistence of a disability for a particular time period.  The court determined “that under section 1151 "additional disability" need not persist for any particular time period, and that additional disability that resolves during the pendency of a claim for section 1151 benefits does not foreclose entitlement to section 1151 compensation so long as the other requirements for entitlement under that section are met.”  Id. at *2.

The veteran developed acute gall bladder inflammation and underwent an emergency gall bladder removal.  The veteran developed pain at the incision site.  The painful scar was treated with trigger point injections and ablation.  The wound ultimately reopened and developed MRSA.

The veteran filed a Section 1151 claim and during the course of the claim the wound healed with treatment.  The VA acknowledged a reopened wound was a known complication especially in a veteran with diabetes.  The veteran essentially sought compensation for the period the wound was open and as it required home health nursing care and pain and suffering.  The RO and Board determined there was no additional disability and essentially relied on the fact the wound did heal with time.

The Court focused on the plain meaning of the term “additional disability” and determined “the plain meaning of "additional disability" as used in section 1151 is "more" or "added" "functional impairment in earning capacity." No language in section 1151 pertains to the duration of the "more" or "added" functional impairment in earning capacity.”  Id. at *8.  As a result, the Court remanded the claim for further development as the Board erred in failing to consider the open wound as demonstrating additional disability under section 1151 during the pendency of the claim.

This decision is a helpful expansion of the understanding of a Section 1151 claim.

Decision by Chief Judge Bartley and joined in by Judges Toth and Laurer.

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