Johnson: 38 C.F.R. § 3.321, When Disabilities means Disability

Marvin O. Johnson v. Eric K. Shinseki, Opinion Number 10-1785, decided March 27, 2013, by a then full panel of judges interprets 38 C.F.R. § 3.321 and determined the regulation did not require the VA to consider multiple service-connected disabilities on a collective basis but only a single disability basis. 

3.321 reads:

To accord justice, therefore, to the exceptional case where the 

schedular evaluations are found to be inadequate, the Under 

Secretary for Benefits or the Director, Compensation and 

Pension Service, upon field station submission, is authorized to 

approve on the basis of the criteria set forth in this paragraph 

an extra-schedular evaluation commensurate with the average 

earning capacity impairment due exclusively to the service-

connected disability or disabilities. The governing norm in these 

exceptional cases is: A finding that the case presents such an 

exceptional or unusual disability picture with such related 

factors as marked interference with employment or frequent 

periods of hospitalization as to render impractical the 

application of the regular schedular standards.

Note the regulation seems to allow consideration of the entire disability picture.  However, the VA advanced an interpretation of the regulation stating it only meant one disability at a time.  The majority of the court seemed to think the VA interpretation was a stretch.  However, they relied on case law giving the agency substantial deference in interpreting its regulations, and thus determined that while the VA interpretation was a stretch—it was plausible. 

The decision resulted in several opinions.  A concurrence by Judge Moorman suggested he was deeply uncomfortable with the result and suggested a lower level of deference to VA interpretations of regulations in light of the pro-veteran nature of the VA.

Chief Judge Kasold penned a dissent that can justly be called a tour de force.  It persuasively argues the regulation is not ambiguous by reference to the promulgating history and VA materials and practice.  He also heads off any argument that the regulation as interpreted to mean the entire disability picture and not just a single disability can be implemented and would not result in a crush of new claims.

Judges Davis and Bartley wrote a separate dissent again hammering away at the opinion that the regulation is not ambiguous. 

Some might question the purpose of evaluating multiple disabilities under § 3.321 when § 4.16 (TDIU) is available to a veteran.  Section 3.321(b)(1) provides an alternative method of referring a case for extraschedular consideration when a claimant demonstrates an “exceptional or unusual disability picture with such related factors as marked interference with employment or frequent periods of hospitalization as to render impractical the application of regular schedular standards.”  Section 4.16(b) requires evidence of unemployability, while § 3.321(b)(1) requires only “marked interference with employment,” which is a somewhat less severe standard.  In other words, a claimant need not demonstrate total unemployability to obtain a § 3.321(b) extraschedular disability rating.

This decision eliminates a route of compensation from the veteran who is still working, but must deal with marked interference with employment or frequent periods of hospitalization from the use of extraschedular considerations when it is multiple disabilities that disable the veteran.

Based on the splintered nature of the decision, it seems likely the case will be the subject of an appeal.