Shorette: The VA's Stinking Fiduciary Process

Shorette v. McDonough, Case Number 23-7775, decided September 20, 2024 delves into the abuses of the VA Fiduciary Program.

The petitioner was the spouse of a veteran who had served as her husband’s VA fiduciary and was removed by the VA.  From 2008 until 2018 she had served and allocated approximately $3,000 per month toward family expenses for the veteran’s dependents.  However, she was removed after a medical record suggested she was misusing the veteran’s funds.  When a successor fiduciary was appointed, no benefits were allocated for his dependents and family expenses.

Three years later, in 2021, the VA determined their had been no misuse of funds and did not restore the wife as the fiduciary and ignored her appeal, as guardian under state court order, of VA’s appointment of a paid fiduciary.  Finally, the VA’s inaction resulted in a request that the Court order the VA to o (1) issue a decision regarding her entitlement to be reinstated as representative payee for Mr. Shorette, (2) address her complaints that his then-current fiduciary was violating a July 2010 fiduciary agreement in which VA approved monthly expenses to support the veteran's family, and (3) release the withheld funds.  Id. at *1.

After an oral argument, the Court ordered the VA to process the NOD.  Additionally, the petitioner tried to resolve the familial expenses issue with the VA.  Finally, in December 2023, the petitioner filed another petition because the VA ignored her requires for the VA’s fiduciary file, still had not process her 2018 NOD, and had not address the familial expenses issue.  As to the familial expenses issue, the VA argued that the paid fiduciary had all control. 

Next, the VA found the surviving spouse and veteran were estranged because they did not live together and thus could not be treated as a spouse fiduciary, which is less cumbersome.  In fact, they did not live together because the veteran was a nursing home.

At the same time the VA in response to one argument stated “the fiduciary must provide evidence that reimbursement is warranted before VA will authorize a reimbursement of funds.”

The Court then noted that at oral argument

“VA admittedly erred in 2018 when it determined that Mrs. Shorette misused the veteran's funds, and the undisputed facts reflect that VA compounded that error over the next 6 years by ignoring Mrs. Shorette's complaints and failing to ensure that the prior paid fiduciary was fulfilling his duties to assess the welfare and overall financial situation of the veteran's dependents. In that regard, counsel for the Secretary could not offer any reason why the fiduciary budget for familial expenses was reduced from roughly $3,200 per month to zero, other than an unfounded allegation that the petitioner refused to comply with a field examination, and counsel was unable or unwilling to say that VA will not investigate Mrs. Shorette if she reimbursed herself with those funds that would not have accumulated in the veteran's managed account but for VA's or the prior fiduciary's errors.”

Id. at *7.

The Court ordered the Secretary to file a memorandum explaining why the VA will not make a preemptive decision that it will not initiate a misuse determination or seek to remove the spouse as fiduciary if she reimburses herself the amount of familial expenses that was in the initial budget but was never paid.

While the entire VA claims process can be byzantine, the VA’s fiduciary program makes the rest of the VA look like quick and accurate justice.  The fiduciary program is simply the worst process I’ve ever heard of at the VA.  It should reiterate that any veteran who can, should avoid it if possible.  I am frankly shocked that the Veteran’s Court did not go further in its order and direct more forceful action.

Per Curiam decision by Chief Judge Bartley, Meredith and Laurer.

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Cooper: Appealing a Board Remand?

Cooper v. McDonough, Case Number 23-5963, decided September 18, 2024 is an opinion by the Court affirming prior case law stating a Board remand cannot be appealed to the Court.

The veteran’s claims were first remanded by the Court and then the Board so that the agency of original jurisdiction could obtain an addendum opinion from a medical provider. 

While case law made clear that typically remands could not be appealed, the veteran argued that the passage of the AMA dramatically changed the legal landscape and allowed for remands to be appealed. He essentially argued because under the AMA system RO decisions that were the result of a Board remand are not automatically returned to the Board, the Board decision itself represents a final decision, which confers jurisdiction onto the Court.

The Court determined that “[h]owever extensive the changes to VA's claims processing regime effectuated by the AMA may be, none directly implicates the factors governing how this Court assesses its jurisdiction, namely: (1) whether a ruling constitutes a decision per section 7252; (2) whether it is "final" per section 7266; and (3) whether it is adverse. Hence, although Mr. Cooper contends that we need to reframe our inquiry to assess finality solely through the veteran's right to "one review on appeal to the Secretary" under section 7104, it's not clear how even the most sweeping changes to VA's claims processing regime could transform the nature of an administrative remand order in such manner as to render it capable of satisfying those three requirements.”  Id. at *7.

The Court acknowledged a concern about excessive or unnecessary Board remands and stated “if a claimant believes that VA is unlawfully avoiding or unreasonably delaying issuing a final decision on a claim, the appropriate avenue for relief is to file a petition for extraordinary relief under the All Writs Act.”  Id. at *8.

This was a novel try to use the AMA to argue a larger change.  It appears the case will be appealed to the Federal Circuit.

Decision by Judge Toth and joined by Greenberg and Laurer.

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Laska: SMC(t), plain meaning, and the VA's attempt to impose a higher burden on veterans

Laska v. McDonough, Case Number 22-1018, decided September 6, 2024 concerned whether a veteran should receive SMC(t) for a traumatic brain injury and the VA’s attempt to read into the regulation a requirement for regular aid and attendance.  The Court rejected the VA’s attempt to make SMC(t) harder to get than was outlined in the statute passed by Congress.

Initially, special monthly compensation provide for compensation where service connected disabilities result in additional hardships above and beyond those contemplated by the VA’s rating schedule.  The veteran’s attorney provided both a PO box and street address on the appointment form.  The Board denied an appeal in a September 2021 decision and listed only the physical address and not the P.O. box.  The veteran appointed a VSO in January 2022 for another claim, which caused the attorney to lose access to the electronic claims file.  The attorney’s access was restored in September 2023 when the veteran appointed him again and counsel filed the NOA in December 2023. 

 The statute governing SMC(t) states it should be granted “when a veteran (1) is in need of regular aid and attendance for service-connected residuals of TBI; (2) is not eligible for compensation under subsection (r)(2); and (3) in the absence of such "regular aid and attendance," would require hospitalization, nursing home care, or other residential institutional care. 38 U.S.C. § 1114(t).”  Id. at *5. 

The regulation promulgated by the VA states that aa higher level of care is needed for "personal health-care services provided on a daily basis in the veteran's home by a person who is licensed to provide such services under the regular supervision of a licensed healthcare professional." 

 The veteran argued the VA erred in denying the claim for SMC(t) for a lack of a higher level of care because the plain language of the statute does not require it and the VA’s regulation exceeds the statute.  The VA argued that the statute was not clear on its face and the regulation was a valid definition of the level of care required for SMC(t).

 The Court was faced with statutory interpretation and determined:

 “Section 1114, as a whole, can logically be read to give the same meaning to "regular aid and attendance" in both subsection (l) and the first requirement of subsection (t), as modified with the third requirement of needing "hospitalization, nursing home care, or other residential institutional care" in the absence of regular aid and attendance. Unlike the Secretary's strained interpretation of the text and structure of section 1114(t), this reading comports with the plain language of subsection (t) and harmonizes that provision with the rest of the statute.”

Id. at *11.

The Court also stated that while the plain language was clear, the legislative history also supported their conclusion.  They noted “According to the Senate Committee, veterans with TBI not only need assistance with tasks they can no longer perform, but also someone to facilitate tasks they cannot keep up with. Id. And the Senate Committee made clear that such assistance can be provided by a family member rather than a licensed health-care professional.”  Id. at *12.  The also noted: “nothing in section 1114(t)'s legislative history reflects that Congress intended to impose a higher-level care requirement for SMC(t). To the contrary, that legislative history confirms our plain language and structural analysis that the level of care required for SMC(t) is the need for regular aid and attendance under (r)(1).”  Id

The Court concluded: “section 1114(t) specifies that the requisite level of care for entitlement to SMC(t) is the need for regular aid and attendance and the Secretary's implementing regulation, § 3.352(b)(2), requires the higher-level care described in 1114(r)(2). Thus, the regulation exceeds its authorizing statute and must be set aside as invalid.”

This is an important decision for anyone that has ever been denied a SMC(t) rating and should open the door to greater assistance.  It also demonstrates the VA’s willingness to impose higher burdens than those imposed by Congress.

Decision by Chief Judge Bartley and joined in by Judges Falvey and Laurer. 

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Burgan: Presumption of Regularity in Mailinbg

Burgan v. McDonough, Case Number 23-7869, decided August 23, 2024 is a decision by the Veterans Court regarding the presumption of regularity related to the filing of a notice of appeal.

The veteran’s attorney provided both a PO box and street address on the appointment form.  The Board denied an appeal in a September 2021 decision and listed only the physical address and not the P.O. box.  The veteran appointed a VSO in January 2022 for another claim, which caused the attorney to lose access to the electronic claims file.  The attorney’s access was restored in September 2023 when the veteran appointed him again and counsel filed the NOA in December 2023. 

As to whether the veteran had rebutted the presumption, the Court noted “an error in addressing the mail is not alone sufficient to rebut the presumption; rather the error must impact delivery.” Id. at *8.  Reviewing the Domestic Mail Manual guidance on dual addresses, i.e., those containing both a P.O. box and a street address, the Court noted no requirement that both must be provided for the mail to be deliverable. Rather, this guidance states that the priority is for the USPS to deliver the mail to the address directly above the city and the state in the address, and “the party addressing the mail must therefore use the ZIP Code for whichever location is listed immediately about the city and state.” Id. at *9. The Court found that, since appellant provided no authority for the position that omitting the P.O. box or ZIP code for the P.O. box affected delivery and the Board addressed it to his proper street address and ZIP code, he did not meet the burden of demonstrating the omission was consequential to delivery sufficient to rebut the presumption.  Ultimately, the Court found the NOA was untimely and granted the Secretary’s motion to dismiss.

Decision by Judge Pietsch, Greenberg and Meredith. 

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Rorie: Judicial Deference post-Loper Bright

Rorie v. McDonough, Case Number 22-5377, decided August 16, 2024 is a decision by the Veterans Court regarding judicial deference and stare decisis.

The case involves an assertion of an earlier effective date.  There were two arguments.  One, pre-March 2015, a medical professional examination report served as an informal claim pursuant to 38 C.F.R. 3.157(b) and Pacheco v. Gibson.  However, Pacheco also prevented the claim and that was the focus of the Court—how the U.S. Supreme Court’s decision in Kisor v. Wilkie impacted Pacheco.  The veteran argued: “because the Court in Pacheco employed a preKisor deference analysis under Auer to interpret § 3.157(b), we must reevaluate our interpretation of § 3.157(b) using a Kisor-compliant deference analysis.”  Id. at *2.

The Court held that Kisor does not require the Court to revisit Pacheco.  It also noted:

“the Supreme Court overruled the Chevron doctrine that had outlined a framework for judicial deference to administrative agency's views of ambiguous statutes. Significantly, the Supreme Court made clear that its decision did not upset earlier decisions that had relied on the Chevron doctrine. In other words, principles of stare decisis generally required courts to adhere to such earlier decisions that had been rendered under the then-required Chevron framework. We see no principled reason that the same rule of stare decisis does not hold sway in the context of the Supreme Court's change from Auer to Kisor deference in terms of ambiguous regulations. And, as we will explain in detail, to the extent this Court's recent decision in LaBruzza v. McDonough proceeded along a different path, we conclude that it is irreconcilable with the logic of Loper Bright Enterprises v. Raimondo. So, we conclude that we remain bound by Pacheco.”

Id. at *3.

This was an innovative attempt to apply new Supreme Court case law to achieve a more pro-veteran friendly framework of established case law.  However, the Court clearly wants to avoid re-litigating what it perceives to be finally litigated decisions.

Decision by Judge Allen and joined in by Judge Favley with a concurrence by Judge Toth. 

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Phillips: Narrowing of TDIU Effective Dates post-AMA

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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Banschbach: Separate Ratings for Paralysis, neuritis, and neuralgia.

Banschbach v. McDonough, Case Number 22-6609, decided July 26, 2024 is a decision by the Veterans Court regarding different and separate nerve ratings.

The veteran is service connected for paralysis of the ilio-inguinal nerve under diagnostic code 8530 as a residual of his in-service hernia repair.  The appeal concerned the Board’s failure to address reasonably raised issues of separate ratings for neuritis of his left ilio-inguinal nerve under diagnostic code 8630 and for neuralgia of his left ilio-inguinal nerve under diagnostic code 8730.  The VA argued the paralysis rating encompassed neuritis and neuralgia symptoms, so separate ratings for all three conditions are prohibited by the rule against pyramiding.

The Court determined “the relevant diagnostic codes should not be read to prohibit separate ratings for paralysis, neuralgia, and neuritis,” and determined as a result that “it is premature to consider what role, if any, the rule against pyramiding may play in this case” because  the record raised the issue.  Id. at *2.

The Court found it “discern[ed] nothing in the rating schedule or related regulations that prohibits consideration of separate ratings for neuritis or neuralgia of a peripheral nerve when a veteran is rated for paralysis of the same nerve under § 4.124a. If VA wishes that to be the case, it has regulatory power at its disposal to enact such a change.”  Id. at *8.

This case has important implications and raises the possibility of multiple ratings for paralysis, neuritis and neuralgia that could lead to real benefits for veterans.

Decision by Judge Toth and joined in by Judges Pietsch and Falvey. 

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