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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