Butts: EAJA Award for a JMR Resulting from a Federal Circuit Decision

Butts v. McDonald, Case Number 14-3019(E), decided June 3, 2016 involved an attorney fee request under EAJA.

This case involved a JMR that resulted after the Federal Circuit issued an opinion overturning a CAVC decision regarding 38 CFR 3.321(b)(1) and reference to multiple or individual disabilities when evaluating for a higher rating pursuant to 3.321.  The appealed from Board decision was issued between the CAVC decision and the CAFC decision reversing the CAVC decision.

The parties to Butts agreed the CAFC decision applied and entered into a JMR.  The veteran’s attorney then sought fairly modest attorney fees.  The question centered on whether the Secretary’s position was substantially justified.

The decision was a barnburner.  It was an en banc decision with multiple dissenting opinions.  The majority awarded EAJA fees.

The majority noted the Secretary bore the burden of demonstrating its position was substantially justified.  It noted the Secretary’s seeming only argument in favor its position was that the general scheme of the rating schedule assigns scheduler ratings on a disability by disability basis.  The majority also notes the Board decision does not explicitly reference the CAVC decision, however, it counts in terms of substantial justification the fact the Board was acting in accord with existing judicial precedent.  The majority then notes that compliance with precedent does not relieve the Court of its duty to evaluate the reasonableness of the Secretary’s position.  The majority focuses on the totality of the circumstances.  It noted the the dissent argues the CAVC decision demonstrates the Secretary’s position was reasonable, but notes a CAVC error in deferring to the Secretary’s interpretation of a regulation does not end the matter and that cannot be the dispositive factor.  The majority also expresses the profound opinion that if compliance with precedent was a bar to EAJA fees, veterans with limited means would face even greater difficulty obtaining counsel to bring valid challenges to existing case law.

Judge Kasold wrote a concurring and dissenting opinion that focused on the right to appeal to the CAFC and stated the a decision by the CAVC should not operate to prevent EAJA fees.

Various dissenting opinions were written.  Perhaps the most academic and vigorous was by the Judge Bartley who is concerned the Board’s reliance on a CAVC decision could be considered not substantially justified.  Judges Lance and Moorman also wrote a powerful dissent that seemed at its base to be truly antagonistic to EAJA fee awards in general.

This decision is important because it defends EAJA fees and thus preserves the ability for veterans to obtain counsel.  If EAJA fees were not available or seriously curtailed, then the simple truth is that attorneys could not afford to take these cases and veterans would  be left making pro se arguments.  However, this decision also shows a deep split in the judges of the CAVC and an apparent dislike of EAJA fees by some members of the dissenting group.

Decision by Judge Davis, joined by Judge Hagel, Schoelen and Greenberg.  A concurring and dissenting opinion by Judge Kasold.  Dissenting were Judges Lance, Pietsch, Bartley, and Moorman.

Noah: Earlier Effective Dates and Constitutional Due Process Arguments

Noah v. McDonald, Case Number 2015-0334, decided June 10, 2016 is a decision involving the request for an earlier effective date based on a misleading VA letter to the veteran and the related constitutional Due Process arguments implicated. 

The veteran applied for service connection of PTSD in 1981 and sent a misleading notice of the time required to submit evidence necessary to complete his PTSD application. The letter stated more information was needed about his Vietnam experiences and that the VA “must have postservice medical evidence to support your claim.”  It also stated “Please reply within 30 days.  If we have no reply within 60 days, we will assume that you have withdrawn your claim.”

The veteran did not respond to the VA’s letter.  He submitted a new claim in 2007, was granted service connection for PTSD, and assigned a rating of 2007.  He appealed the effective date.  He argued he understand the 1982 letter has requiring him to send in medical evidence showing he had PTSD and that if he didn’t within 60 days they would close his file.  Due to financial issues, he was unable to find and submit the “required” evidence within 60 days.  He stated if he had known he really had 1 year, he could have gotten the required evidence by using a medical clinic.  A 2011 private psychologist opined he had PTSD in 1981 and 1982.

The veteran argued the Court should find the Board erred in not considering whether his claim should be equitably tolled.  He also, after urging by the Court, that there was a due process failure by the government. 

The Court found it lacked authority to equitably toll the deadline to submit evidence by the veteran, but they reached farther and issued a decision that did consider the Constitutional due process implications of the VA’s misleading notice to the veteran.

Initially, the Court reiterated that a veteran’s entitlement to disability benefits is a property interest protected by the Due Process Clause.  The Court then considered whether Due Process Clause factors enunciated in Matthews v. Eldridge by the U.S. Supreme Court applied to this case.  First, the Court found the “special beneficence afforded to our nation’s veterans cannot tolerate notice that misleads the potential receipt of benefits”.  Second, the Court found the the erroneous deprivation of the veteran’s right to benefits was great as a result of the VA’s practices.  The Court noted, “This is not a matter of whether a claimant is properly charged with knowledge of the relevant law.  Rather, VA provided Mr. Noah inaccurate and misleading notice that gave him significantly less time than the law allowed to respond to VA’s request for information.”  Finally, the Court noted the government’s interest and burdens and stated “once VA assumed the responsibility of providing notice of the time to submit evidence, it is unclear to the Court how any requirement that VA provide accurate information imposes a fiscal or  claimant with accurate information.”

The Court then considered whether the veteran detrimentally relied on the VA’s misleading notice.  The Court noted the Board disregarded the evidence on detrimental reliance because they found the veteran was subject to the one year abandonment provision in statute 38 CFR 3.158.  The Court found because the 1982 notice letter failed to satisfy procedural due process requirements and thus if the veteran was successful in demonstrating he relied to his detriment on the notice, his December 1981 claim remained pending and unadjudicated.  As a result, the Court vacated the Board’s decision and remanded the case to the Board to weigh the evidence and assess the evidence and determine whether the veteran relied to his detriment on the misleading notice. 

Judge Lance wrote a concurring opinion stating he agreed the case should be remanded for assessment of detrimental reliance, but stated he would exercise judicial restraint and not discuss the Due Process arguments until further appeal.

This case is a nice explication and application of a Constitutional Due Process argument to a misleading notice by the VA.  It is likely many such old notices exist and can be used to argue an earlier effective date.  Special review of the veteran’s efforts to show detrimental reliance should be used as a template for future advocates.

Decision written by Judge Schoelen and joined in by C.J. Hagel.  Concurring opinion by J. Lance.

Warren: Systemic Therapy for Skin Conditions or the VA Really Can't Read its Own Regulations

Warren v. McDonald, Opinion Number 13-3161, decided May 10, 2016 involves the consideration of the phrase “systemic therapy such as corticosteroids or other immunosuppressive drugs” in relation to skin conditions.

The veteran was service connected for a skin condition and granted a 10% rating under Diagnostic Code 7806.  He argued that he deserved a higher rating because he was orally taking Lamisil for his skin condition that qualified as “systemic therapy such as corticosteroids or other immunosuppressive drugs”.

The Board denied saying “only systemic therapy such as a corticosteroid or immunosuppressive drug is contemplated by the DC 7806, and Lamisil does not qualify as either.”

The Court remanded saying “Because ‘systemic therapy’ which is the type of therapy that creates compensability, is connected to the phrase ‘corticosteroids or other immunosuppressive drugs’ by ‘such as,’ those drug types do not constitute an exhaustive list of all compensable systemic therapies, but rather serve as examples of the kind and degrees of treatments used to justify a particular disability rating.  Consequently, the types of systemic treatments that are compensable under DC 7806 are not limited to ‘corticosteroids or other immunosuppressive drugs.’  Compensation is available for all systemic therapies that are like or similar to corticosteroids or other immunosuppressive drugs.” Id. at *4-5

The Secretary also argued his interpretation was consistent with practice, an alleged fact that was debunked by the Court by referencing the M21-1MR.

The Court remanded the case because the Board did not determine whether Lamisil is a systemic therapy like or similar to a corticosteroid or other immunosuppressive drugs.  Id. at *6.

Judge Bartley concurred simply clarifying that she believes the term systemic therapy is restricted to immunosuppressive drugs of which corticosteroid drugs are one example.

This case is but one example of the VA restrictively interpreting what is otherwise a plainly written regulation.

RRDecided by Chief Judge Hagel and Judges Pietsch and Bartley.

Threatt: Equitable Tolling Continued, Again or Moving Closer to a Bright Line Test

The Court issued an order in Threatt v. McDonald, Case Number 15-0835, on May 17, 2016 involved equitable tolling.

This involved a 2003 decision by the Board that prompted the veteran to write a letter to his U.S. Representative asking the representative to forward the letter to the Board showing dissatisfaction with the result and asking the Board to send him a copy of his service military medical records and duty stations.  A flurry of VA to veteran and veteran to VA letters (again via his representative) resulted. 

Years later the veteran ultimately appointed an attorney who appealed a subsequent decision to the Court.  When the attorney got the c-file she discovered the various letters from the veteran to the Board. She immediately appealed the 2003 decision to the Court.  The attorney argued the 2015 notice of appeal should be considered timely because his May 2003 correspondence to the RO constituted a timely misfiled appeal of the February 2003 decision.

The Court noted the Federal Circuit has found a veteran who misfiles the notice of appeal with the RO within the 120 day appeal period has pursued his judicial remedies and the 120 day period is tolled.  Additionally, a motion to reconsider to the Board tolls the 120 day period and the veteran receives a new 120 day period when the Board issues a denial of the motion or new decision.

The Court noted here the veteran submitted to the Board within 120 days a written statement disagreeing with the decision. The VA acted on the letter determining it was correspondence rather than a motion and reinformed the veteran of his appellate rights.  The Court noted this began a new 120 day period.  The veteran then submitted another letter to his RO stating his intent to appeal the 2003 decision to the CAVC.

The Secretary argued the filings were defective because they came from the veteran’s U.S. Representative.  The Court summarily rejected this argument.  The Secretary also argued the appellant didn’t meet the diligence requirement of equitable tolling.  Importantly, the Court then found prior case law “directly contradict the Secretary’s statements regarding diligence in briefing and set forth a clear rule that the due diligence requirement is satisfied as a matter of law by the timely misfiling of a notice of appeal.  The Court discerns no compelling reason to deviate from this rule.”

There was a conference by Judge Pietsch.  She wrote that she feared the ramifications of the decision and argued the due diligence conclusion should have been case specific rather than a bright line test.  She showed a deep suspicion of allowing late notice of appeals without requiring some action by the veteran, noting that he effectively filed a notice of appeal in 2003 but did nothing until over a decade later.

This order is helpful to veterans as it seems to move the Court toward a bright line test in equitable tolling that reduces the requirement of due diligence. 

Decided by Judges Bartley and Greenberg, and concurred in by Judge Pietsch.

Ortiz-Valles: Marginal Employment and IU

Ortiz-Valles v. McDonald, Opinion Number 14-2540, decided May 20, 2016 involves the consideration of marginal employment in reference to entitlement to individual unemployability (IU).

The veteran sought IU and at least one VA examiner discussed his back pain and while placing severe restrictions on the veteran stated he was able to work from a sitting position, and is thus able to “obtain and secure a financial rewarding job, at least in a part-time fashion.”  The RO and Board found the veteran wasn’t entitled to IU.

At the Court the veteran argued the Board failed to address whether he was only capable of marginal employment and specifically that the Board failed to explain how his capacity for only part-time sedentary employment with work restrictions would not preclude him from substantial gainful employment.

The Secretary argued a consideration of marginal employment only came into play if a veteran was employed—it allows the VA to determine if the employment results in below the poverty level pay and thus is marginal.

The Court found “the only logical reading of the [IU] regulation compels the conclusion that a veteran might be found unable to secure or follow a substantially gainful occupation when the evidence demonstrates that he or she cannot secure or follow an occupation capable of producing income that is more than marginal—i.e., with income that exceeds the amount published by the U.S. Department of Commerce, Bureau of Census, as the poverty threshold for one person.”  Id. at *6-7.  “There is no language in the regulation that limits VA’s obligation to evaluate evidence suggesting that a veteran is capable of securing or following only marginal employment to cases of employed veterans.”  Id. at *7.

The Court remanded with instructions to the Board to state whether the veteran “would be able to obtain or maintain a substantially gainful occupation—or, put another way, whether [the veteran] is capable of more than marginal employment.”  Id. at *8.  The Court explicitly did not define the term “substantially gainful occupation” explaining the VA should first be allowed to take a position on the matter.

This case demonstrates that entitlement to IU is always a battle and that the exact definition of substantial gainful employment is still fluid.

Decided by Chief Judge Hagel and Judges Schoelen and Greenberg

Stabb: VA Reimbursement for Care at Non-VA Facilities

Stabb v. McDonald, Opinion Number 14-0957, decided April 8, 2016 involves a case where a veteran was treated for a heart attack and stroke at a non-VA hospital and then sought for the VA to pay for such care.

The Board denied the request stating the veteran was ineligible for reimbursement under 38 USC Section 1725 because he was covered by Medicare and that a claim must be denied as a matter of law.  The Board stated that while the veteran only sought the portion of expenses not covered by Medicare, the fact not all medical expenses for his treatment were covered is not relevant.

The Court noted that Section 1725(b)(3)(B) states the veteran is personally liable if they have “no entitlement to care or services under a health care plan contract.  “Thus, subection 1725(b)(3)(B) appears to contemplate a situation when coverage under a health-plan contract would wholly extinguish a veteran’s financial liability.”  ID. at *5.  “Therefore, it is clear from the plain language of the statute that Congress intended VA to reimburse a veteran for that portion of expenses not covered by a health-plan contract.”  Id. at *6.

The Court then note that the VA’s regulation is at odds with the amended statute and thus the statute rules.  As a result, the Court found expenses not covered by Medicare should be reimbursed by the VA.

While this case might not apply to most VA attorney’s daily practice, it offers a view into winning a statutory interpretation case and offers significant benefit to veterans.  When they need emergency treatment and receive it at a non-VA hospital, the VA should reimburse them for any expenses not paid by Medicare.  The cases logic should also cover deductibles and co-payments required by private insurance.

Opinion by Judge Greenberg, joined in by Judges Lance and Pietsch.

McKinney: Presumption of Soundness, Adequate Medical Examinations without resorting to Speculation and the Duty to Assist

McKinney v. McDonald, Opinion Number 13-2273, decided March 11, 2016 involves a claim for bilateral hearing loss and a respiratory condition related to asbestos.  This decision has everything in it including a discussion of the presumption of soundness, whether an examination is adequate and whether the examiner would have to resort to speculation, and the VA’s duty to assist.

The veteran’s entrance examination did not note defective hearing but an audiology note showed a hearing problem at 400 hertz that the Navy considered to be minor and causing no significant limitation.  The veteran developed hearing loss which he associated with artillery fire and noise from helicopters.  The VA denied noting his entrance hearing loss, stating he was not owed a presumption of soundness, and relying on a medical examination that stated without an exit examination showing his hearing it would be speculative to connect his hearing loss.

The Court determined that because the hearing loss noted on his entrance examination did not meet the VA’s definition of a disability under 38 CFR Section 3.385 that the veteran was entitled to the presumption of soundness.  The Court noted the presumption of soundness is owed unless an entrance examination “noted” a defect, infirmity or disorder.  The court reiterated that a history of a condition does not constitute a notation of a pre-existing condition for the purposes of the presumption of soundness.

While accepting that hearing loss was noted on the entrance examination, the court determined that hearing loss did not meet the VA’s definition of a hearing disability and, therefore, the hearing loss was not a defect which would prevent the application of the presumption of soundness. The Court reached this conclusion by noting that 3.385 states that impaired hearing is not a disability for compensation purposes unless the audiometric threshold is 40 db or greater—here the threshold was 35 db.

The Court also determined the VA’s examination was inadequate because she did not provide a rationale for concluding that an audiology test from the veteran’s separation was needed—the court stated it was unclear if her opinion that she would have resort to speculation reflected the limits of her knowledge or the knowledge of the wider medical community.  Id. at *17.  The Court also took the examiner for task for failing to consider the veteran’s testimony that he first noticed hearing loss during service or shortly after discharge.

Regarding the respiratory issue, the veteran submitted private medical statements linking his respiratory condition, asbestosis, to asbestos exposure.  However, the VA rejected them because they were made several years prior to his application for benefits and also stated there was no current of a current diagnosis of asbestosis.  The Court noted the VA was to consider all respiratory problems, not just asbestosis.  The Court agreed with the veteran that the VA gave inadequate reasons or bases for summarily rejecting the 1996 medical reports because they were not sufficiently proximate to the date of the claim.  Id. at *21.  The Court also noted the Board relied on an inadequate VA examination which did not mention the prior diagnosis of asbestosis.  The Court also found the VA did not fulfill its duty to assist.  The veteran filed out an authorization for Dr. Attiah records related to asbestos exposure.  The VA sent a request for the records to a hospital but then received a form stating the hospital did not have the records but recommended the VA call his office at the number the veteran had already provided to the VA.  The VA simply did not call that number or attempt to gain those records in any other way, which the Court considered “particularly glaring because the Board found that the only evidence in the record that Mr. McKinney was diagnosed with asbestosis was evidence from 1996.  Yet, the 2003 referral sheet from Methodist Charlton Medical Center indicates that the referring physician attributed Mr. McKinney’s current respiratory disorder to ‘apparent exposure to asbestos.’”  Id. at *26.

A dissent by Judge Bartley expressed her opinion that because defective hearing was not listed on the entrance examination, it is unfair to consider that a defect.  She worried “Permitting retrospective interpretation of an entry examination allows VA to transform the test result not identified at the time of entry as out of the ordinary into noting at the time of entry, thereby perverting the statutory requirements.  This retrospective interpretation will create troubling effects: Men and women entering service would be deemed fully fit to fight and die, with the entry examiner indicting nothing preexisting; but after service those men and women, now veterans, would be informed that they were less than whole at entry, that there was preexistence, and that they have a significant handicap in pursuing disability benefits, i.e., the presumption of soundness, in most cases, would not apply.

Decision by Judge Schoelen and joined by Judge Davis, concurrence by Judge Bartley.