Hedgepeth: An Incorrect Reduction and Severance of TDIU and PTSD

Hedgepeth v. Wilkie, Opinion No. 17-0794, decided November 7, 2018 concerns the reduction of a PTSD rating from 70% to 0% and concerns law related to rating reductions in general, reduction of TDIU, and severance of service connection.

The veteran had been service connected and granted a rating of 70% for PTSD as well as entitlement to TDIU, but the VA subsequently reduced the 70% PTSD rating to 0% due to a change in diagnosis from PTSD to personality disorder and also reduced the veteran’s TDIU. 

This case reveals several areas of law related to reductions.  First, it discusses simple rating reductions.  Second, reductions of TDIU.  Third, severance of service connection.

Regarding simple ratings reductions, the Court noted “the Board must determine whether the reduction of the veteran's disability rating was proper and must not phrase the issue in terms of whether the veteran was entitled to an increased rating, including whether the veteran was entitled to restoration of a previous rating.”  Id. at *6.  The Court also discussed protections under 38 C.F.R. § 3.344(a) including the fact that the relied upon examinations cannot be less full and complete than the examinations resulting in the rating to be reduced and that the VA must be aware of disease subject to temporary or episodic improvement and not base reduction on any one examination.  Section 3.344 also discussed a change of diagnosis and states caution must be exercised as to whether the change is based on progression, error, or possible a new disease independent of the service connected disability.  Id.  The Court also noted that the VA must prove reductions by a preponderance of the evidence and the evidence must show an actual improvement in the veteran’s ability to function under the ordinary conditions of life and work.  Id. at *7. 

The Court then focused on TDIU reductions and referred to Section 3.343, which states TDIU will not be reduced:

in the absence of clear error, without examination showing material improvement in physical or mental condition.  Examination reports showing material improvement must be evaluated in conjunction with all the facts of record, and consideration must be given particularly to whether the veteran attained improvement under the ordinary conditions of life, i.e., while working or actively seeking work or whether the symptoms have been brought under control by prolonged rest, or generally, by following a regimen which

precludes work, and, if the latter, reduction from total disability ratings will not be considered pending reexamination after a period of employment (3 to 6 months).

. . . .

(c) Individual unemployability. (1) In reducing a rating of 100 percent serviceconnected disability based on individual unemployability . . . caution must be exercised in such a determination that actual employability is established by clear and convincing evidence. . . . (2) If a veteran with a total disability rating for compensation purposes based on

individual unemployability begins to engage in a substantially gainful occupation . . . the veteran's rating may not be reduced solely on the basis of having secured and followed such substantially gainful occupation unless the veteran maintains the occupation for a period of 12 consecutive months.

Id. at *7

The Court then focused on the law related to severance of service connection beginning by stating it “will be severed only where evidence establishes that it is clearly and unmistakably erroneous (the burden of proof being on the Government)." 38 C.F.R. § 3.105(d) (2018).”  Id. at*8.  The Court further notes a change in diagnosis may be lead to severance if the “proper medical authority certifies that, in the light of all accumulated evidence, the diagnosis on which service connection was predicated is clearly erroneous. This certification must be accompanied by a summary of the facts, findings, and reasons

supporting the conclusion.”  Id. at *8.

Here, the VA argued the law on reductions and severance did not apply because it “reattributed” the veteran’s psychological symptoms to a non-service connected disability. Id. at *5.  The Court rejected this argument saying:

The applicable laws and regulations do not provide, as the Secretary attempts to argue, for an avenue of "reattribution" of symptoms from a service-connected condition to a non-service connected condition in order to reduce or eliminate VA benefits, and, significantly, in his brief, the Secretary cites to no such laws, regulations, or caselaw supporting his "reattribution" argument. Finding that the avenue for elimination of service-connected benefits of "reattribution" of symptoms exists would allow for the Board to circumvent the protections set up by Congress and VA to safeguard against the very thing that has occurred in this case – VA's elimination of a longstanding award of benefits without following the proper procedural steps and overcoming the heightened burden on the government to ensure that the elimination of benefits was warranted.

Id. at *9.

The Court continued to explain that

the Board chose the avenue of a rating reduction to eliminate the veteran's award of benefits by reducing his protected rating from 70% to 0%, and discontinuing his TDIU award effective after April 1, 2016. In doing so, the Board committed two separate errors. First, the Board failed to properly apply §§ 3.343 and 3.344, which, respectively, require VA to find clear and convincing evidence of employability before discontinuing TDIU and "material improvement" of symptoms before reducing a disability rating.  Second, the Board failed to apply to the appellant's case the statutes, regulations, and caselaw

governing severance of service connection.

Id. at *10.

Regarding the reduction of the PTSD rating, the Court first noted all medical evidence showed the veteran’s mental health symptoms had not improved and explained that “although the Board attempted to frame its decision in terms of the § 3.344 requirement of "material improvement," a review of the Board's reasoning reveals that, actually, the Board's "reduction" of the appellant's rating from 70% to 0% was based on the medical evidence of record showing a change of diagnosis from PTSD to a personality disorder.”  Id. at *10.  It then explained the Board should have discussed whether the veteran’s change in diagnosis was related to a progression of an earlier diagnosis, error, or a new disease.  Id. at *11. 

Regarding TDIU, the Court stated the Board failed to consider or apply Section 3.343.  It noted the  

Board improperly framed the issue on appeal as "entitlement" to non-schedular TDIU after April 1, 2016, since "the [v]eteran did not satisfy the schedular requirements for TDIU beginning April 1, 2016, because of the RO's rating reduction for the [v]eteran's psychiatric disability." R. at 14. A review of the record shows that the issue on appeal should have properly been framed as discontinuance of TDIU effective from April 1, 2016.  VA's framing the issue as one of entitlement to TDIU rather than discontinuance of benefits is significant because, by doing so, VA wrongly shifted the burden of proof from VA to the appellant.

Id. at *11.

The Court also considered whether the VA should have applied laws related to severance of service connection and answered affirmatively that the VA had failed.  The Court explained:

the Board clearly based the elimination of VA benefits in this case on medical evidence showing a change of diagnosis from PTSD to personality disorder.  Under these circumstances, the applicable law and regulations require VA to initiate and conduct severance of service connection proceedings before eliminating service-connected VA benefits.  The Board may not, without going through the proper channels of severance, perform a de facto severance by attempting to apply the regulations governing rating reductions while also finding that the "reduction" is based upon a change of diagnosis rather than material improvement of symptoms.

Id. at *13.

The Court further found the reductions were void and remanded for reinstatement of the ratings.  It further stated “If VA wishes to pursue the matter of severance of benefits for service-connected PTSD, it must initiate a proper severance proceeding through the proper procedural channels and meet the high standard of proof placed upon VA in such proceedings.”  Id. at *14.

This case shows the increasing tendency of the VA to reduce ratings and how they will defend this mistaken reductions to extreme lengths.

The opinion was by Senior Judge Moorman and joined in by Judges Greenberg and Toth. 

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