Phillips v. McDonough, Case Number 22-2575, decided July 30, 2024 is a decision by the Veterans Court regarding the impact of the AMA on Rice and TDIU.
The Court ordered a panel review to “to address how this Court's existing precedent about TDIU—chiefly Rice v. Shinseki, 22 Vet.App. 447, 452 (2009)— interacts with the claims system in our new Veterans Appeals Improvement and Modernization Act (AMA) world.” Id. at *1-2.
The Court determined “that Rice remains viable in AMA but that the different choices created by AMA for seeking review of adverse decisions can make dealing with TDIU more complicated.” Id. at *2. And, “reaffirm the central holding of Rice: TDIU is not a separate claim, it is a rating option available whenever a claimant attempts to get service connection or a higher rating from VA and the record includes evidence of unemployability.” Id. at *2.
The Court explained: “TDIU can come up basically any time VA is rating a disability, VA may need to address it as part of separate claim streams when it is rating different disabilities. Put another way, TDIU is not its own separate benefit that VA can grant or deny unmoored from the underlying service-connection claim or rating. See Harper, 30 Vet.App. at 360; see also Rice, 22 Vet.App. at 454. Instead, TDIU is part of that underlying claim—as an option for a potential rating—and the eventual effective date depends on the specific claim VA is then adjudicating.” Id. at *9.
However, the Court foreclosed the veterans argument for an earlier effective date stating: “What Mr. Phillips appears to want is for TDIU to be its own unique "super claim." Not a standalone claim when raising the issue, but its own solo claim when figuring out effective dates. The problem is, that's simply not what TDIU is. TDIU is a potential rating for the veteran's disability. If you don't qualify for a 100% rating but you can't work, TDIU may be an option. Thus, the Board needed to, and did, consider TDIU when it rated Mr. Phillips's disabilities. But when the case got to the Board, there was no separate standalone TDIU claim with its own effective date going back to 2002.” Id. at *11.
The court admitted TDIU was reasonably raised as part of his 2002, 2009 and 2021, but then states “That Mr. Phillips put TDIU in play as part of his other claims but did not receive a decision resolving TDIU for all of them at the same time is a product of the choices built into the AMA system. This choice is a feature, not a bug, of the system. "Central to the AMA's many reforms, claimants may now choose from three procedural lanes to obtain review of their claim within one year of the initial decision (in contrast to the legacy system's single pathway for appeal to the Board)." Id. at *11. The Court admitted under the legacy system that TDIU likely would have been in play as of 2002. Id. But, then stated: “In the end, that is not the case we have here. We're dealing with the AMA world. In this world, Mr. Phillips's claims stemmed from his April 2021 application. By his own choice, the only disability he brought to the Board was his request for a higher rating for PTSD before April 2021 when he filed an NOD seeking to appeal his PTSD rating effective date and TDIU but not his skin rating. The potential effective date for that increased rating was controlled by his April 2021 application. And one option for that higher rating—and it's the option he ultimately won with— was TDIU. Thus, the potential effective date for TDIU was also controlled by his April 2021 claim.” Id. at *13.
Chief Judge Bartley wrote a well-reasoned and impassioned dissent. She noting “the majority's take on TDIU post-AMA would require veterans to appeal rating decisions they actually agree with to protect their earliest effective date for TDIU, clogging an already overstretched VA claims process and harming veterans who may not know to file protective appeals. Therefore, I respectfully dissent.” Id. at *13. She essentially argued the majority ignored the intent of Rice, which “that an assertion of unemployability within 1 year of a decision that grants service connection and assigns an initial evaluation abates that decision's finality, potentially affording veterans entitlement to TDIU as part of their initial award of benefits. In other words, a veteran's potential earliest effective date for TDIU was the date of the claim for service connection, id. at 453, and not, as VA believed prior to Rice, limited to 1 year before the veteran submitted the TDIU application. The Court's holding was to expand VA's prior understanding of TDIU as only being raised when the formal TDIU application was filed—and it was corrective of VA's then-prevalent view that TDIU was unable to be raised by the evidence of record when a veteran filed a claim for service connection.” Id. at *14.
She then states the majority “turns TDIU into an ordinary individual increased evaluation claim and fails to reckon with TDIU's unique characteristics under the governing regulation, 38 C.F.R. § 4.16. In so doing, the majority limits a claimant’s potential recovery and sanctions a claim prosecution view for TDIU that gives outsize impact to a claimant's inexpert medical and vocational decision about which service-connected disability or disabilities are causing or contributing to unemployability, which evaluation decision to appeal, and which lane to choose.” Id. at *14-15. She explained: “But let's be clear: this result is contrary to the Court's intent in Rice and to Congressional intent in creating the AMA system to streamline an already burdened system while maintaining a paternalistic process designed to maximize veterans benefits.” Id. at *15. She argues: “the majority does not explain how or why AMA, a process and procedure change, would result in such dramatic substantive entitlement changes when there has been no change to the entitlement requirements of 38 C.F.R. § 4.16, the TDIU regulation.” Id. She then notes: “This precedent will apply to unemployable veterans who had no warning that they should have appealed each and every initial and increased evaluation decision for every one of their service-connected conditions, irrespective of their agreement with those decisions. As noted earlier, these veterans most likely assumed that since § 4.16 remained untouched by the AMA, its process and procedure changes would not affect TDIU entitlement. Unfortunately, this decision tells these veterans that they were wrong. Five years after AMA's effective date veterans find out, with the issuance of this decision, that the rules of engagement regarding TDIU and TDIU effective dates have changed.” Id. at *16.
This case is a dramatic sea change in the law that will narrow the availability of TDIU under the AMA system without warning to veterans or advocates. It will create more appeals and more burden on the VA and complication for advocates who have to tease out claim streams and maintain due to the possibility of TDIU. I can only hope the advocates who took this case are willing to invest in appealing it to the Federal Circuit.
Decision by Judge Falvey and joined in by Judge Allen. Dissent by Chief Judge Bartley.
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