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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