Lorio: DIC and SBP Payments

Lorio v. Collins, Case Number 22-1323, decided March 6, 2025 concerns whether the VA had authority to withhold DIC payments to prevent concurrent receipt of Survivor Benefit Plan (SBP) and DIC benefits. 

Appellant began receiving SBP in 1994, which is a subsidized insurance plan that provides annuity payments to survivors of military retirees, and in 2015 was granted DIC effective 1994.  At the time, a surviving spouse could not receive both SBP and DIC.  However, in 2008 Congress mandated certain notice requirements where recoupment of benefits is proposed subject to the DIC-SBP offset. 

“This Court previously addressed SBP in Roberts v. McDonald, where the Court reviewed a Board determination that VA had properly withheld a portion of retroactive DIC benefits based on receipt of SBP payments. 27 Vet.App. 108 (2014). The Board relied on 38 C.F.R. § 3.658 as the withholding authority but the Secretary conceded that this was incorrect and proffered that VA's DIC withholding authority stemmed from 38 U.S.C. § 5314, 38 C.F.R. §§ 1.911(a), 1.912a(a), and a 2010 memorandum of understanding (MOU)4 between VA and DOD. Roberts, 27 Vet.App. at 110. The Court remanded the appeal, concluding that reliance on inapplicable authority deprived Ms. Roberts of reasonable notice and fair process.” Id. at *3.

“As relevant here, the Court also concluded that section 5314 and §§ 1.911(a) and 1.912a did not appear to apply because they involved overpayment of VA benefits, not DOD benefits. Id. at 112-13. And to the extent that the Secretary relied on a DOD regulation to support VA's authority to withhold benefits, the Court indicated that "the regulation appears to contemplate written authorization from the SBP annuitant before there is a reduction in DIC to satisfy an SBP annuity overpayment." Id. at 113 (citing DOD Financial Management Regulation, vol. 7B, ch. 46, paras. 460402, 460701 (July 2011)). As will be discussed, Roberts has implications for the Court's resolution of Ms. Lorio's case.”  Id. at *3-4.

After being granted DIC, “Ms. Lorio through counsel appealed to the Board, challenging the RO's withholding of retroactive DIC benefits and arguing that VA did not properly provide notice of the SBP overpayment and DIC withholding. In January 2019, the Board remanded the withholding issue, agreeing that Ms. Lorio was not properly notified prior to VA's withholding of DIC benefits. The Board again remanded the issue in October 2019, finding that Ms. Lorio had not been provided proper notice of and an opportunity to dispute the withholding and because the RO failed to comply with prior Board remand directives.”  Id. at *5.

“In her principal brief, Ms. Lorio argued that the Board clearly erred in determining that VA had authority to withhold retroactive DIC benefits and forward those benefits to DOD.   Although she acknowledged that she's not entitled to receive both DIC and SBP benefits for the same period, she argued that, because a statute pertaining to DOD, 10 U.S.C. § 1450(c)(1), prohibits receipt of SBP (rather than DIC), the Secretary of the Army, not the VA Secretary, is responsible for recouping erroneously paid SBP benefits, id. at 11 (citing 10 U.S.C. §§ 1450(c), 1453(a)). Ms. Lorio further asserted that the legal authority identified by the Board—section 5301 of title 38, the Appropriations Clause, and the VA-DOD MOU—did not provide VA with authority to withhold DIC benefits. Ms. Lorio argued that the proper remedy was remand for the Board to provide section 1450(c)(3)-compliant notice to ensure proper accounting of the SBP overpayment, id. at 14-22, noting that the current accounting didn't address whether SBP premium refunds were reimbursed or the varying tax consequences of SBP and DIC payments.”  Id. at *6.

Ultimately, the Court remanded.  It explained:

“In sum, the Court concludes that the Board failed to provide Ms. Lorio adequate notice and fair process prior to rendering its November 2021 decision, and that the matter must be remanded. Upon readjudication, the Board must provide legal authority for the withholding and process undertaken in Ms. Lorio's case, consider in the first instance evidence secured by the Secretary during this appeal, consisting of Ms. Lorio's April 1994 SBP application and Ms. Lauver's declaration, and the parties' competing arguments regarding the import of that evidence. The Board must also independently review Ms. Lauver's accounting with specific attention to any discrepancies identified and address the parties' competing arguments regarding whether the accounting should address the differing tax consequences of SBP and DIC payments.”  Id. at *13.

Decision by Judges Bartley, Meredith, and Jaquith.

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Shorette: The VA Fiduciary Program and Sanctions

Shorette v. McDonough, Case Number 23-7775, resulted in a February 6, 2025 order dismissing the motion for extraordinary relief. 

Without fully detailing the past history of the case, 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.  Ultimately, the VA found there had been no misuse and funds, but still did not restore the wife as the fiduciary and ignored her appeal.

Ultimately a 2024 order granted much of what the spouse wanted, but this order finalized the rest of the case.  The petitioner had asked for sanctions against the Secretary.  The Court did not sanction the Secretary stating:

“Upon consideration of the foregoing, the Court will exercise restraint and will not impose sanctions. In that regard, although the Secretary's August 8, 2024, response and the P&F analyst's declaration could have been—indeed, should have been—clearer, the Court accepts counsel's representation, as an officer of the Court, that VA did not intentionally provide false information to the Court. Further, given counsel's explanations that VA viewed that information as nuanced and proactively attempted to clarify those nuances at oral argument, the Court concludes that it is not clear and convincing that VA failed to comply with an order of the Court.”

Id. at *6-7.

Judge Bartley wrote a concurrence stating:

“I agree, although reluctantly, that sanctions are not warranted in this matter. I write separately to emphasize that VA's actions regarding Ms. Shorette have been inconsistent with its mission to care for veterans and their families. It goes without saying that VA doesn't err when it investigates misuse-of-funds allegations, but VA went far beyond that here. It refused to reinstate a spouse-fiduciary once misuse allegations were determined to be unfounded and for many years deprived Ms. Shorette of benefit payments that it acknowledges she was entitled to receive. Based on the records before the Court, it is understandable why Ms. Shorette would conclude that VA's actions were punitive and retaliatory in nature—intent on punishing her for challenging their misuse-of-funds determination, for demonstrating that she had not misused funds, for proving that she had appealed her removal as a spouse-fiduciary and the subsequent appointment of a paid fiduciary, for proving that she was entitled to reinstatement as spouse-fiduciary, and for achieving at least some success in petitioning this Court. In conclusion, it is clear that VA's Veterans Benefits Administration Pension and Fiduciary Service requires substantially more thorough oversight to ensure, among other things, that it is not wasting government funds retaliating against the veterans and family members it is sworn to protect and assist.”

Id. at *7.

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 also concerned that the Secretary would not level sanctions in this case, if not here—when.

Per Curiam decision by Judges Bartley, Meredith and Laurer.

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Ley and the Doctrine of Equitable Estoppel

Ley v. McDonough, Case Number 23-1547, decided January 2, 2025 concerns whether the doctrine of equitable estoppel or constitutional principles can lead to an earlier effective date than that provided by 38 USC 5110.

The veteran was granted service connection for chronic lymphocytic leukemia (CLL) and given an effective date based on the veteran’s application for benefits with a 1 year look back pursuant to 38 CFR 3.114, which led to an effective date of January 29, 2015.

The Court then summarized the veteran’s position as: “Appellant does not contest the Board's analysis of the effective date to which he is entitled under section 5110. Instead, appellant raises two nonstatutory bases on which he maintains he is entitled to an effective date before January 29, 2015, for the award of service connection for CLL. One of appellant's arguments is that VA is equitably estopped from enforcing section 5110's effective date limits because the Agency's actions, in particular the alleged withholding of information from him about CLL, prevented him from filing a claim any earlier than he did. Appellant's other argument is that section 5110's effective date limitations are unconstitutional as applied to his situation because VA actively interfered with his right of access to the benefits system when Agency medical personnel failed to properly inform him of a CLL diagnosis before January 2016.”  Id. at *2.

The Court then determined: “Neither of appellant's contentions are persuasive. First, appellant's equitable estoppel argument is directly foreclosed under Taylor, in which a majority of the en banc Federal Circuit unambiguously held that "equitable estoppel is not available to override the claim-filing effectivedate limits of [section] 5110." Even if we agreed with appellant as a general matter about equitable estoppel, we are bound by the Federal Circuit's majority opinion in Taylor. Second, as we explain below, Taylor does not establish a binding rule about as-applied constitutional challenges under section 5110. However, we independently reach the same conclusion as the Taylor plurality did—that section 5110 is potentially subject to an as-applied constitutional challenge. Nevertheless, appellant can't prevail because his right-of-access claim falls well short of the kind of extraordinarily rare circumstance that could justify a court ordering the assignment of an effective date outside the parameters Congress set forth in section 5110. Because both of appellant's grounds for circumventing section 5110 are unsuccessful, and he has abandoned any other grounds for challenging the Board decision on appeal, we will affirm the Board's December 8, 2022, decision finding that appellant is not entitled to an effective date before January 29, 2015, for service connection for CLL.”  Id. at *2-3.

Judge Jaquith wrote a powerful dissent in which he agreed with the Court’s analysis of Taylor and 38 USC 5110, but determined “I disagree with the majority's conclusion that section 5110 is not unconstitutional as applied to Mr. Ley, so I respectfully dissent. In my view, a VA doctor's decision to deceive a patient about the nature and extent of his disability is (and should be) the kind of extraordinarily rare circumstance that justifies ordering the assignment of an effective date outside the parameters of section 5110.”  Id. at *22-23.

Judge Jaquith wrote: “ The majority embraces the Board's characterization of the veteran's allegation of the doctor's conduct as a "misdiagnosis" and acknowledges that the veteran also argued that the doctor deliberately withheld information and failed to properly inform him; but the majority asserts that its analysis and conclusion are the same under each formulation.157 In my view, if the hematologist "knew appellant should be diagnosed with CLL and chose not to convey that diagnosis to him,"158 that hematologist—a VA doctor—foreclosed VA's use of section 5110 as a sword to cut off, from the effective date for his claim, the years until the veteran was told the truth (by a forthcoming VA doctor) about the serious nature of his disability.”  Id. at *23.

This is an odd case built on exceptional facts.  Still, I hope it is appealed to the Federal Circuit and they find the extraordinarily rare circumstances they discussed in Taylor, includes what happened here.

Decision by Chief Judge Allen and joined by Judge Falvey, dissent by the Judge Jaquith.

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Sellers and the Presumption of Regularity

Sellers v. McDonough, Case Number 23-4114, decided December 20, 2024 involves whether a notice of appeal filed in July 2023 from a June 1996 Board decision was untimely. 

The VA filed a motion to dismiss the appeal as untimely.  The veteran noted he had not received the notice of the June 1996 Board decision until July 2023 when his current counsel reviewed the record.

The question was whether the VA had fulfilled its notice obligations, specifically the duty to notify the veteran of the Board decision when it had actual knowledge the address the Board used was not his current address even though it was the address on file with the VA at the time. 

The Court held: “Our decision today is a narrow one. As we will explain in more detail below, we assume that Davis controls the situation we face and, that under Davis, VA only has an obligation to search for additional and plausible addresses that existed at the time of the Board's decision. So for the purposes of this decision, we assume–without deciding–that the Board satisfied its notice obligations under Davis at the time it mailed its June 1996 decision because there were no other plausible addresses in the file beyond the address the Board used to mail the decision to appellant. That does not end the matter, however, because we also conclude that under the unique facts of this case, the Board bound itself to greater notice obligations than Davis required. Specifically, the Board directed VA to continue to search for addresses that would afford appellant actual notice of the June 1996 decision. And because VA failed to satisfy those greater notice obligations, the presumption of regularity does not resolve the question about whether this appeal is timely. Instead, the relevant legal principle is that an agency may elect to provide a claimant more process than the law requires. The Board did so in 1996, and VA did not comply with those additional procedural protections. So on that narrow basis, we will deny the Secretary's motion to dismiss appellant's appeal.”  Id. at *2.

The case offers a good summary of the presumption of regularity and VA’s notice obligations. 

Order by Chief Judge Allen as well as Judges Pietsch and Bartley. 

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Heller: Advancing on the Docket Before the Board, Suicidal Ideation, and a Writ of Mandamus

Heller v. McDonough, Case Number 24-3504, decided November 21, 2024 concerns a request for a writ of mandamus to compel the Board to grant a motion to advance on the docket.

A case before the Board can take approximately 3 years for a decision.  However, a veteran can seek to be advanced on the docket if an appellant is seriously ill or is under severe financial hardship.  In this case, the veteran sought to have his case advanced on the docket arguing his suicidal ideation constituted serious illness.  The Board denied the request.

As a result, his attorney filed a writ of mandamus to the Court. Initially, the Court determined a denial of a motion to advance on the docket is a not an appealable issue.  However, a writ of mandamus operates as a vehicle to request the Court to compel the VA to do something.  Specifically,

“with the All Writs Act (AWA), Congress also empowered courts (including this Court) to issue writs in aid of their statutory jurisdiction. See 28 U.S.C. § 1651(a). In exercising this authority, we must be mindful that it is not a separate source of jurisdiction. Instead, we can use it to fill gaps in our appellate jurisdiction when, absent a writ, our prospective jurisdiction would be frustrated. See Love v. McDonough, 35 Vet.App. 336, 342 (2022) (per curiam order), aff'd, 100 F.4th 1388 (Fed. Cir. 2024); see also Roche v. Evaporated Milk Ass'n, 319 U.S. 21, 26 (1943) (noting that the "function of mandamus in aid of appellate jurisdiction is to remove obstacles to appeal"). What this means is that we can't use the AWA to independently decide legal disputes that don't facilitate a Board decision. See Love, 35 Vet.App. at 342. But we can use our AWA authority to remedy unreasonable delay.”

Id. at *6.

The Court then noted:

“Before we may issue a writ, we need to make sure three conditions are met: (1) a petitioner must show a lack of adequate alternative means to obtain the desired relief, thus ensuring that the writ is not used to replace the appeals process; (2) a petitioner must show a clear and indisputable right to the writ; and (3) the Court must be convinced, given the circumstances, that issuing the writ is warranted. See Cheney v. U.S. Dist. Ct., 542 U.S. 367, 380-81 (2004). And in the delay Case: 24-3504 Page: 6 of 12 Filed: 11/21/2024 7 context, our consideration is also informed by the six "TRAC factors." Martin, 891 F.3d at 1344 (citing Telecomms. Rsch. & Action Ctr. v. FCC (TRAC), 750 F.2d 70, 79 (D.C. Cir. 1984)).”

Id. at *6-7.

The Court then assessed the TRAC factors and determined:

“Troubled by suicidal ideation and financial difficulties, Mr. Heller asked the Board four times to advance his case on the docket; Congress said the Board could do so when a veteran has a serious illness or financial hardship. Each time, he was met with conclusory denials. With no likelihood of success at the Board, and an AOD appeal off the table, we find that Mr. Heller has shown he lacks adequate alternate means to have his case decided more quickly. See Cheney, 542 U.S. at 380-81. And because Mr. Heller has multiple records showing severe suicidal ideation, at times with a plan or an intent and an assessment of moderate to high risk of suicide, in addition to unemployment and a long period with no VA action on his appeal, we conclude that the TRAC factors clearly favor Mr. Heller and that he has shown a clear and indisputable right to a writ. See id. Finally, although mandamus is a drastic remedy, the Court is convinced that issuing a writ is warranted here. Thus, the Court will grant Mr. Heller's petition and order the Board to issue a decision within 30 days of the date of this order.”

 

Id. at *11.

This is an important case for two reasons.  First, it clarifies that a denial of a motion to advance on the docket is not an appealable issues.  Second, it offers a pathway to remedy such denial.  However, I suspect the Court will be loath to expand the impact of this case and issue more writs.  In short, this was an exceptional case driven by significant facts.  My only hope is that the Board is now more cognizant of the potential of suicidal ideation constituting serious illness.

Per Curiam decision by Judges Meredith, Toth, and Falvey.

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Spigner: New Evidence Time Lines in Appeals to the Board

Spigner v. McDonough, Case Number 22-2636, decided November 7, 2024 concerns a particular rule stating the Board cannot consider new evidence submitted prior to the hearing.

The AMA adding layers of complication to an already complicated system.  The oddest one might be that when a veteran appeals to the Board and requests a hearing, the Board will only consider new evidence submitted at the hearing or within 90 days after the hearing.  This is odd because many times a veteran will submit a memorandum with their notice of disagreement or before the hearing.  Any new evidence submitted at that time cannot be considered by the Board.  However, if that new evidence is submitted within 90 days of the hearing, the Board can consider it.

In this case, new evidence was submitted but the Board did not consider it because it was not submitted within the 90 days after the hearing.  The odd thing about this case was that the Board had rescheduled a hearing on its own accord.  The new evidence was submitted after and within 90 days of the originally scheduled hearing. 

The Court remanded the case arguing under this odd set of facts the Board erred in not considering the new evidence.  “The Court holds that because the Board sua sponte rescheduled the August 2021 hearing, that is, the Board rescheduled the hearing without a request from the appellant, and because the Board's rescheduling is not consistent with withdrawal referred to in 38 C.F.R. § 20.704(d), the rescheduling here was not "subject to" § 20.704(d). Therefore, § 20.302(c) controls as to the evidentiary record before the Board; and because § 20.302(c) provides that where a hearing "is not rescheduled subject to § 20.704(d)," the Board decision should have been based on evidence submitted by the appellant or his or her representative within 90 days following the date of the scheduled hearing. The Court concludes that in the Board's March 2022 decision, the Board erred by refusing to consider the appellant's September 2021 evidentiary submission. Accordingly, the Court will set aside that Board decision and remand the matters for proceedings consistent with this decision.”

This is an odd case on an unusual set of facts.  While illustrating a particularity of the law, I am not sure that it has much other import.

Decision by Judge Greenberg and jointed by Judges Bartley and Jaquith.

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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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