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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