Perciavalle: CUE, No Change of Law and Pyramiding

Perciavalle v. Wilkie, Case Number 2022-1491, decided July 25, 2023 was before the Federal Circuit and considers CUE and the prohibition on pyramiding in the context of knee disabilities.

In 1966 the veteran was service connected for a left knee injury and granted a rating of 10% under DC 5259, which covers removal of cartilage from the knee.  In 1971 he sought an increase but was denied and did not appeal.  In 2015, he filed a motion to revise the 1971 decision based on CUE.  He argued he should have been rated under DC 5257 for slight instability of the knee and separately under DC 5003-5260 for limitation of motion of flexion and discomfort (pain) secondary to arthritis.   He explained that an x-ray report obtained during a 1971 VA examination clearly indicated arthritis in his left knee that decreased his range of motion and other evidence in 1971 showed instability.

VA denied the CUE motion stating in 1971 a policy was not in place allowing separate ratings for instability and limited motion. 

Now for some background, ordinarily different ratings for the same disability are not allowed as that would constitute pyramiding (awarding compensation for the same impairment under various diagnostic codes).  However, in the case of Esteban v. Brown, 6 Vet.App. 259 (1994), the Veteran’s Court “recognized that separate ratings were permissible for different diagnoses of the same disability as long as the conditions diagnosed shared no symptomology.”  So, separate ratings under different diagnostic codes can be awarded for the same disability if “none of the symptomatology for any one of the conditions was duplicative of or overlapping with the symptomatology of the other [diagnostic code ratings].” 

Three years after Estaban, the “VA’s General Counsel issued a guidance opinion specifically interpreting the ratings schedule as allowing separate ratings for the conditions at issue here—arthritis and instability in the same knee. VA Gen. Coun. Prec. 23-97 (July 1, 1997).”  The agency determined that, since "the plain terms of DC 5257 and 5003 suggest that those codes apply either to different disabilities or to different manifestations of the same disability, the evaluation of knee dysfunction under both codes would not amount to pyramiding under section 4.14. VA recognized that it was the first time the agency assumed an official position on the matter, as the opinion acknowledged that it was aware "of no formal position taken by the Veterans Benefits Administration on this issue" before then.”

Turning back to Perciavalle, the Board found the veteran’s CUE argument foreclosed by the existence of 38 C.F.R. Section 20.1403(c), which states CUE cannot be premised on a change in the interpretation of a statute or regulation.  The Board focused on the anti-pyramiding regulation and a finding that that not until Esteban was § 4.14 interpreted to permit separate ratings for distinct, non-overlapping symptomatology of the same underlying injury. It also found that VA did not issue its General Counsel opinion permitting separate ratings for arthritis and instability until 1997.

The Veterans Court initially reviewed favorably to the veteran, but an en banc panel found that while the Board erred in failing to properly interpret the veteran’s claim, no remand was required because the interpretation error was harmless.

The Federal Circuit began by noting the ability to revise a decision based on CUE, but such a claim must be evaluated by the law as it existed at the time of the challenged decision.  Id. at *8-9.

The Federal Circuit then noted the Veterans Court’s decision is odd in that it was comprised of seemingly opposed concurrences.  Three judges found no error by the Board.  Another judge found that although the Board erred the error was harmless because the alleged CUE was a legal error that had not yet been identified as error by a court decision or VA publication as of the date of the underlying decision.  Two judges found the Board erred but it was harmless because none of the evidence in 1971 supported an arthritis rating.

The Federal Circuit found the initial three judges rested on an erroneous legal principal.  The Court noted: “It read the veteran’s claim as based on retroactivity, but concluded that it did not matter whether the claim was based on a retroactivity theory because in order to state a claim of CUE, the veteran was required to set forth in his initial pleading a fullfledged legal argument as to why, in 1971, the RO erred in rejecting his claim….   

The Allen opinion would have required Mr. Perciavalle to either “attempt to analyze the regulations’ plain language to show how the RO’s interpretation was clearly and unmistakably wrong,” J.A. 41, or “produce[] a contemporaneous interpretation that reconciled the regulations in his favor,” J.A. 42.  This assertion ignores the fact that the “VA’s duty to sympathetically read a veteran’s pro se CUE motion to discern all potential claims is antecedent to a determination of whether a CUE claim has been pled with specificity.”  Andrews v. Nicholson, 421 F.3d 1278, 1283 (Fed. Cir. 2005).  Here, Mr. Perciavalle’s CUE claim set forth the relevant facts and regulations. Under a sympathetic reading of Mr. Perciavalle’s claim, the VA was required to “determine all potential claims raised by the evidence, applying all relevant laws and regulations.” Roberson v. Principi, 251 F.3d 1378, 1384 (Fed. Cir. 2001) (emphasis added). The Allen concurrence erred in requiring Mr. Perciavalle to set forth a legal argument with supporting authority in order to state a CUE claim.”  Id. at *12.

As to the belief the Board’s decision though error was harmless, the Court stated looked more closely at the harmless error rule.  It noted: “In its consideration of harmless error, however, if “additional findings of fact are necessary regarding matters open to debate, the proper action for the Veterans Court is to remand to the Board for consideration of those facts in the first instance.”  Id. at *12-13.  As to the Toth opinion, the Federal Circuit noted: “a legal error may be clear for the purpose of CUE despite the fact that there was no preceding court or agency decision on the precise legal question.”

This is an important decision that upholds the boundaries of 38 C.F.R. 20.1403(c) and also puts into play many decisions involving knee disabilities where the evidence supported an instability rating many years ago, but it was denied in favor of simply a limited motion rating.

Decision by Judge Dyk and joined in by Chief Judge Moore and Reyna.

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Cavaciuti: Federal Circuit Forecloses EAJA Fees for Writs of Mandamus

Cavaciuti v. McDonough, Case Number 2022-1531, decided August 3, 2023 was a case before the Federal Circuit concerning attorney fees under EAJA.

The Equal Access to Justice Act allows attorneys to represent veteran’s before the Veterans Court and Federal Circuit and only charge a fee if they win and then the U.S. government has to pay that fee.  It opens access to veterans to appeal decisions and without it, VA appeals would grind to a halt as most veteran’s would not be able to afford an attorney.  This is important because the vast majority of appeals to the Veterans Court result in remands, which means the VA had messed up in the decision making process.

This case specifically concerns a writ of mandamus to the Veterans Court.  Specifically, the VA was refusing to do what they clearly should and the veteran had to file a special type of motion asking the Veterans Court to force the VA to do it.  Ultimately, the Court didn’t have to rule on the motion because the VA finally did what it was supposed to do.  The VA asked to have the motion or writ rendered moot and close it.  The veteran argued the case was not moot

The veteran argued “the Veterans Court erred in not considering whether or not the terms of his relief were incorporated into the court’s previous dismissal order. He adds that the court also erred in not considering whether or not the VA made an admission of liability, or if its change in conduct was voluntary. Cavaciuti further argues that the court’s dismissal order materially changed the parties’ legal relationship by requiring the government to provide Cavaciuti relief. That material change, and the fact that the VA’s change in conduct was not voluntary, he asserts, distinguishes this case from one falling within the rejected catalyst theory.”  Id. at *5.

The government essentially argued the key to gaining EAJA fees is being a prevailing party and that dismissal of the order did not amount to a court-ordered change in the parties’ legal relationship that conferred prevailing party status. Instead, the government contends, this appeal relies on the catalyst theory, which “aptly describes Mr. Cavaciuti’s claim in this case,” but that does not convey prevailing party status.”  Id. at *5.

The Court affirmed the Veterans Court’s denial of EAJA fees and reasoned: “Crucially for the present case, an award of a benefit by the agency alone, even if prompted by the litigation, is insufficient without a judicial imprimatur. The Supreme Court has held that the catalyst theory is an improper basis for establishing an appellant as a prevailing party under the EAJA in the absence of a judicially sanctioned change in the legal relationship of the parties.”  Id. at *6.

It further reasoned:

“Here, there was no such judicial change in the legal relationship between the parties. The Veterans Court did not award any benefits or remand any claims because of Cavaciuti’s writ of mandamus petition. Rather, the court dismissed the petition as moot because the VA voluntarily changed its position and granted Cavaciuti entitlement to TDIU. The court’s dismissal order did not evaluate the merits of Cavaciuti’s petition, nor did it materially alter the parties’ legal relationship.

***

Regarding Cavaciuti’s argument concerning the lack of voluntariness of the government’s change in conduct, this is just another way of stating the catalyst theory rejected by the Supreme Court. The Court held in Buckhannon that an analysis of a defendant’s subjective motivations for changing its conduct—in particular, the desire to avoid a litigation loss—was legally insufficient to create prevailing-party status. The Court instead required a judicial action changing the legal relations of the parties. In this case, the VA implemented the Board’s TDIU decision, as requested by Cavaciuti following settlement discussions rather than based on any court order. Moreover, the fact that the government’s representations about the nature of the relief it was providing would estop it in the future from changing course does not render the Veterans Court’s dismissal a judicial imprimatur sufficient to make Cavaciuti the prevailing party. The government’s conduct merely created a future opportunity for a judicial order if the government did not live up to its representations.”

Id. at *7.

This was an excellent attempt to argue that the VA should pay EAJA when a court filing is necessary to get them to do what they are supposed to do.  However, the Supreme Court’s rejection of the catalyst theory seems to foreclose this possibility.

Decision by Judge Lourie and joined by Judges Dyk and Taranto.

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Grounds: The Federal Circuit Considers Bars to Veteran Eligibility for VA Benefits

Grounds v. McDonough, Case Number 2022-1607, decided July 14, 2023 was a case before the Federal Circuit concerning eligibility for benefits as a veteran.

The veteran served in the Army from 1969 until 1972 and then was charged with being AWOL.  To avoid a trial by court-martial, he requested a discharge from the Army “for the good of the service.”  He was in fact discharged “for the good of the service” and under conditions other than honorable.” 

When he applied for veteran’s benefits, he was denied because his multiple periods of AWOL constituted a pattern of willful and persistent misconduct and thus the discharge was considered “dishonorable” for the purposes of VA benefits.

The veteran argued that section 5303(a) does not bar him from receiving VA benefits because (1) he was never convicted for any AWOL offense and (2) his AWOL periods did not run 180 days or longer. Thus, the Veterans Court’s finding that Mr. Grounds’ AWOL offenses amounted to willful and persistent misconduct under section 3.12(d)(4) is inconsistent with section 5303(a).

The Federal Circuit agreed that Section 5303(a) does not bar the veteran from obtaining VA benefits.  But, the Federal Circuit found section 5303(a) was not the basis for the denial of benefits.  The Court explained: “Instead, the Board’s decision was grounded on, entirely appropriately, a regulation – specifically, section 3.12(d)(4). As we held in Garvey, 972 F.3d at 1334, “[s]ection 5303 . . . is not the exclusive test for benefits eligibility.” There we further held, expressly, that section 3.12(d)(4) is a permissible additional prohibition on eligibility for benefits. See id. at 1341. Mrs. Grounds does not challenge the validity of section 3.12(d)(4), see Appellant’s Brief at 5 (“Mrs. Grounds’s appeal is not a challenge to the validity of the Secretary’s regulation at 38 C.F.R. § 3.12(d).”); see also Oral Arg. at 13:7-14 (“I’m not challenging the validity of the regulation.”), and we are bound to follow Garvey. Accordingly, the Board did not err in finding Mr. Grounds ineligible for benefits pursuant to section 3.12(d)(4).”  Id. at *5.

The Court further explained: “An additional reason Mr. Grounds is not eligible is that he does not meet the statutory definition of “veteran” for benefits purposes. As we observed in Garvey, 972 F.3d at 1334, “[a] former servicemember is ineligible for benefits unless he or she is a ‘veteran’ as defined in 38 U.S.C. § 101(2).” “To be a ‘veteran’ under section 101(2), a former servicemember must have been discharged ‘under conditions other than dishonorable.’” Id. (quoting 38 U.S.C. § 101(2)). Mr. Grounds, however, was not discharged “under conditions other than dishonorable,” because section 3.12(d)(4) provides that “[a] discharge or release because of . . . [w]illful and persistent misconduct” is a discharge under “dishonorable conditions.” See also J.A. 36 (showing Mr. Grounds being discharged “[u]nder conditions other than Honorable”).”  Id. at *5.

This decision helps explain the bars to eligibility to VA benefits. 

Decision by Judge Stark and joined by Judges Reyna and Stoll.

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Wright: Can Dependent Status Be Re-established After Use of DEA Benefits

Wright v. McDonough, Case Number 20-2154, decided August 4, 2023 involves a narrow question of entitlement to a dependent allotment for a child of a totally disability veteran when that child has exhausted their DEA benefits before finishing their schooling. 

The veteran’s daughter exhausted her DEA benefits, but was still in school and he sought her to continue as a dependent as a full-time student until her graduation date.  The VA took the position that once a child elects Chapter 35 benefits (DEA) the decision is final and the VA cannot add them back to the veteran’s award.

The Court looked not only at the relevant statute, but its history (including hearings).  The Court ultimately looked to the plain meaning of the statute and found “the statute is clear that subsection (1) prohibits certain payments to adult children, and subsection (2) prohibits certain payments to those who receive payments because of their relationship to that adult child, including a veteran parent. Moreover, because the appellant's arguments that § 21.3023 is "inconsistent with [section] 3562 as well as . . . [section] 1115(1)(F)" and that the Board misapplied that regulation both rest on the incorrect notion that the section 3562 bar to payments applies only to the eligible person, those contentions also must fail.”  Id. at *19.

As to what benefits are barred, the Court found “the bar in subsection (2) applies to a veteran parent who may receive payments by reason of having an adult child. Thus, it is the first clause of the definition of compensation that is pertinent to subsection (2)—"a monthly payment made by the Secretary to a veteran because of service-connected disability." 38 U.S.C. § 101(13) (emphasis added). That means subsection (2) bars the veteran from receiving "increased rates" or "additional amounts" of monthly payments of disability compensation that would otherwise be paid because of his or her adult child.”  Id. at *21.

As to whether the bar to benefits could be lifted, the Court found it could not begin again. 

The Court ultimately held:  “To summarize the above statutory interpretation, the Court concludes that the section 3562(2) bar to payments (1) is triggered when an adult child begins an educational program intended to lead to an educational, professional, or vocational objective at a secondary school, (2) applies to a permanently and totally disabled veteran parent who may otherwise receive payments because his or her adult child is attending an educational institution, (3) prohibits the payment of "additional" monthly compensation to the veteran parent under section 1115(1)(F), and (4) is permanent.”  Id. at *27.

Decision by Judge Meredith and joined by Chief Judge Bartley and Judge Pietsch. 

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Mayfield (Substitution Before the Court)

Mayfield v. McDonough, Case Number 21-8176, decided July 28, 2023 is an order involving substitution after a veteran has died during the appeal.

In Breedlove v. Shinseki, 24 Vet.App. 7, 20–21 (2010) (per curiam order), the court found it had discretion to permit a movant to be substituted for an appellant who dies during the pendency of an appeal in this Court, provided that there is either a determination by VA or a concession by the Secretary that the movant is an eligible accrued-benefits claimant.   The VA typically conditions its position regarding a substitution motion filed on how the regional office rules on a movant's parallel request for substitution filed with the Agency. As a consequence, the RO's ruling is usually dispositive.

This case involves a question arising from Breedlove, what happens when the moving party is dissatisfied with the RO’s denial for a request for substitution.  Can they seek to have the Court directly review the propriety of the RO's ruling.  The Court determined it generally will not grant a motion for substitution unless the VA first determines that the movant is the appropriate party to step into the appellant's shoes.  It then explains, a would-be substitute dissatisfied with the RO's determination must challenge it through the administrative appeals process and cannot short-circuit that process by challenging it directly to the Court first.

Underneath this determination is a long-running and very much disputed battle regarding substitution, the proper forms required for substitution (as opposed to seeking accrued benefits), and the Court’s inherent powers to control a case before it. 

I would expect this order to result in an appeal to the Federal Circuit.

Order by Judge Toth and joined in by Judges Meredith and Laurer. 

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Duran: Regulatory Interpretation, Agency Deference, and Pro-Veteran Canon

Duran v. McDonough, Case Number 20-5759, decided July 20, 2023 involves how to properly rate Parkinson’s disease. 

In this case, the Board replaced a 30% rating the veteran had been receiving under DC 8004 with a combined 50% rating for three distinct Parkinson's manifestations evaluated under different DCs.  These three ratings accounted for only some of his confirmed Parkinson's manifestations.  The Court noted “This appeal raises a narrow question about the proper reading of DC 8004: When some manifestations of Parkinson's disease are rated as compensable and total more than 30% under DCs other than DC 8004, but some manifestations remain that are not rated as compensable, do the ratings under the other DCs replace or combine with DC 8004's minimum 30% rating?” Id. at *1-2.

The veteran argued “compensable ratings under other DCs should be added to DC 8004's minimum 30% rating so long as additional ascertainable Parkinson's manifestations exist that are not otherwise compensable under the rating schedule. Based on the relevant text and regulatory context and the broader policies governing VA's rating scheme, we agree with [the veteran] on the regulation's plain meaning.”  Id. at *2.

Judge Toth wrote a detailed decision that focused on the plain reading of the regulation and focusing on the language of the regulation found:

“By virtue of having a diagnosis of Parkinson's disease with at least one ascertainable manifestation, Mr. Duran is entitled to a minimum 30% under DC 8004. Even when ascertainable manifestation ratings under other DCs combine for a total rating in excess of 30%, the basis for the minimum rating under DC 8004 remains as long as there is at least one ascertainable manifestation of Parkinson's disease that is not compensable under any other DC.  Thus, when VA assigns compensable ratings for Parkinson's manifestations that total more than 30% under DCs other than DC 8004, those other ratings do not replace the minimum 30% rating under DC 8004 provided that some manifestations remain that are not rated as compensable.”

Id. at *7.

As to this case, it then explained:

“Here, the Board found that Mr. Duran's Parkinson's disease manifested itself in at least eight ways. It concluded that three of those manifestations were entitled to separate compensable ratings that totaled 50% and that two were already compensated as parts of other conditions. That left three remaining manifestations that were not compensable under other DCs pertaining to the bodily systems involved: constipation, a chewing and swallowing condition, and a speech condition. Even in isolation, any of these three ascertainable manifestations warranted the minimum 30% rating under DC 8004. That means the Board should not have replaced the 30% rating under DC 8004 in this case. We therefore reverse the Board's discontinuance of that rating.”

Id. at *8.

Judge Jaquith wrote a concurring opinion to advance his belief that the pro-veteran canon applies to this case.  He argued that even if the preamble, DC 8004 and the note with $.25(b) make clear the veteran deserves separate ratings, the pro-veteran canon should still be considered because regulatory interpretation requires interpretation of words in the context and the context of the law as a whole should include the pro-veteran canon.  He argued that “the pro-veteran canon is part of the context within which we ascertain plain meaning.”  Id. at *16.

He also agreed with Judge Allen’s concurrence that even if the regulation was truly ambiguous, the Board’s decision was not owed deference because it is clear that is not the VA’s authoritative policy as to Parkinson’s disease.  Id. at *17.

Judge Allen also wrote a concurrence explaining he agreed with the result, but not the reasoning of Judge Toth.  Judge Allen wrote he believed the regulation was ambiguous and then stated “because the Secretary has not identified any official, authoritative agency position to which the Court can properly defer in terms of resolving the ambiguity before us, I would search for the best reading of the ambiguous regulation. That endeavor necessarily considers the pro-veteran canon of construction, the application of which removes any doubt here about the proper interpretation of 38 C.F.R. § 4.124a, DC 8004.”  Id. at *19-20.

Judge Allen found an ambiguity and then rejected the VA’s reliance on the Board decision itself as the source of any Kisor/Auer deference.  Id. at *22.  He also noted that the pro-veteran canon of interpretation is particularly helpful here “because both parties' interpretations of the regulatory structure are plausible.”  Id. at *23. Judge Allen then argued as to his interpretation of the pro-veteran canon that “Utilizing the pro-veteran canon to decide between two plausible interpretations does not mean the individual veteran automatically wins.  Rather, in my view, the canon means that the Court should adopt an interpretation of an ambiguous statute or regulation that is categorically favorable to veterans as a group.  There will be situations in which there is no universal pro-veteran meaning and, in such cases, the canon has no application. Here, there is no question that reading § 4.124a, DC 8004, as appellant suggests benefits all veterans seeking compensation for Parkinson's disease who manifest ascertainable but noncompensable Parkinson's residuals when VA has already assigned a separate compensable rating or ratings for Parkinson's manifestations that total more than 30% under diagnostic codes other than 8004.”

This is simply a fascinating case.  One judge ruled based solely on the plain language of the regulation whereas another found an ambiguity, but still favored the veteran.  Another, wrote a powerful concurrence essentially arguing that no regulation interpretation can occur absent rooting it in the pro-veteran canon.

I fully expect the VA to appeal this case and look forward to the Federal Circuit’s decision.  I would guess that it will be upheld and hope Judge Jaquith’s reasoning carries the day.

Decision by Judge Toth with separate concurrences by both Judge Allen and Jaquith.

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