Happy President's Day

"I cannot omit to mention the obligations this Country is under, to that meritorious Class of veteran …,  who have been discharged for inability … on an annual pension for life, their peculiar sufferings, their singular merits and claims to that provision need only be known, to interest all the feelings of humanity in their behalf: nothing but a punctual payment of their annual allowance can rescue them from the most complicated misery, and nothing could be a more melancholy and distressing sight, than to behold those who have shed their blood or lost their limbs in the service of their Country, without a shelter, without a friend, and without the means of obtaining any of the necessaries or comforts of Life; compelled to beg their daily bread from door to door! suffer me to recommend those of this description, belonging to your State, to the warmest patronage of your Excellency and your Legislature.”

            --from General George Washington’s Letter of Farewell to the Army, June 8, 1783

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Gumpenberger: Attorney Fees when a Debt is Invalidated

Gumpenberger v. Wilkie, Case Number 17-0092, decided February7, 2019 considers the award and amount of attorney fees when an attorney assists a veteran by getting a debt caused by overpayment invalidated. 

This is a case that on the surface might only be interesting to a small group, but has larger ramifications in that it impacts whether veterans will be able to retain assistance in disputing debts.

Mr. Gumpenberger assisted a veteran and was successful in invalidating an overpayment debt.  The question was whether Mr. Gumpenberger should be paid an attorney fee equal to 20% of the full amount of the invalidated debt or 20% of the amount recouped by the VA while the debt was still valid but then refunded upon debt invalidation.  The Court determined: “the total amount of the invalidated debt does not constitute a ‘past-due benefit awarded’ for purposes of section 5904(d)(1).”

In January 2009, the RO determined the veteran was a fugitive felon due to an outstanding warrant from 1992.  The RO proposed to discontinue the veteran’s disability compensation benefits retroactive to December 2001 (the date the benefits were awarded).  Within a month, the trial court that issued the warrant cancelled and the VA was notified of the cancellation.  Several months later, the RO issued a decision implementing the proposed discontinuation of benefits during the period while the warrant was outstanding, resulting in a debt of $199,158.   That debt was to be recouped by withholding a portion of the veteran’s monthly benefit.

In 2013, while Mr. Gumpenberger represented the veteran, the Board found the overpayment debt invalid because the veteran was not aware of the outstanding warrant until the VA notified him of it and therefore was not a fugitive felon for VA purposes.  Therefore, the Board waived the entire debt.  However, the VA had already recouped $65,464 from the veteran which would be returned to the veteran.  An internal worksheet showed the “net effects of award as of generation” as $199,158 but the VA found the attorney was only entitled to receive 20% of the erroneously collected amount ($65,464) rather than the entire invalidated debt amount of $199,158. 

The Court began by stating “The dispute in this case arises from the parties' disagreement over the meaning of the phrase "total amount of any past-due benefits awarded on the basis of the claim" as regards a direct-pay fee agreement under section 5904(d).”  Id. at *4.  It then explains “Mr. Gumpenberger principally argues that the phrase encompasses non-cash benefits such as the change in fugitive felon status that resulted in the

invalidation of the overpayment debt in this case, thereby entitling him to 20% of the $199,158.70 debt invalidated by the Board.  As support for his interpretation, Mr. Gumpenberger relies on the U.S. Court of Appeals for the Federal Circuit's decisions in Snyder v. Nicholson, 489 F.3d 1213 (Fed. Cir. 2007), and Jackson v. McDonald, 635 Fed.App'x. 858 (Fed. Cir. 2015) (nonprecedential); VA's definitions of "benefit" and "claim" in 38 C.F.R. § 20.3(e) and (f); and the RO's initial characterization, in decisional documents, of the benefit awarded in this case.”  Id. at *4.

It also noted: “The Secretary asserts that the total amount of the invalidated overpayment debt does not constitute a "past-due" benefit awarded to Mr. Graham because the $199,158.70 debt was not unpaid and owed to the veteran when the debt was invalidated. Instead, the Secretary contends that the "past-due" benefit awarded to Mr. Graham was the $65,464 that was erroneously recouped during the course of the appeal and then paid to Mr. Graham upon invalidation of the debt.”  Id. at *4.  The Court then adopted the Secretary’s argument.

Specifically, the Court distinguished this case from the Snyder decision.  It stated:

the Federal Circuit also made an additional important conclusion about what constitutes a past-due benefit in the first place—namely, it held that the "'total amount of any past-due benefits awarded on the basis of the claim' is the sum of each month's unpaid compensation—as determined by the claimant's disability rating—beginning on the effective date and continuing through the date of the award." Id. at 1218. Thus, the Federal Circuit essentially equated past-due with unpaid, meaning that, for there to be payment of attorney fees out of the past-due benefits awarded on the basis of the claim, there must first be an award of past-due benefits that were unpaid or owed to the claimant

from which those fees could be paid.

Id. at *6.  The Court then considered Jackson decision and determined

Taken together, Snyder and Jackson teach that, for the purposes of determining an agent's

or attorney's fee under a direct-pay fee agreement, "the total amount of any past-due benefits awarded on the basis of the claim" does not depend on the amount ultimately payable to the claimant. Instead, the amount of "benefits awarded on the basis of the claim" is determined by VA when the claim is granted and is not affected by an impediment to payment like the statutory bar in Snyder or the veteran's death in Jackson. Section 5904(d)(1) also makes clear, however, that the source of an agent's or attorney's fee under a direct-pay fee agreement is "the total amount of any past-due benefits," which, per Snyder, means the total amount of benefits that were "unpaid" or owed to the claimant. 489 F.3d at 1218 (emphasis added). In other words, attorney fees can only be paid, pursuant to a direct-pay fee agreement under section 5904(d)(1), out of those benefits that were past-due

Id. at *7.

The Court then applied its findings to the case at hand to say that Gumpenberger’s theory of the case is that past-due benefits awarded in an action challenging an overpayment of debt is the total amount of the overpayment regardless of the amount collected.  It then decided that argument is flawed because it attempts to read the term “past-due” out of the statute.  Id. at *7.  It explained: “To hold otherwise would be to ignore Congress's clear mandate that the fees to be paid to an agent or attorney pursuant to a valid direct-pay fee agreement must come from past-due benefits awarded, not merely the benefits awarded, on the basis of the claim.”  Id. at *8.

The Court acknowledged the result is an attorney might not be paid for these cases but instead argues that direct-pay fee agreements might not be appropriate in these types of cases.  Id. at *10.  However, the Court demonstrates a willful ignorance of economics and legal practice in this pronouncement.  The truth is most veterans are unable to pay an hourly rate and the risks of a non-direct-fee agreement are great.  The likely result is that attorneys will either take these cases out of a sense of duty on what is likely to be a pro bono basis or will simply not take these cases when the client is unable to pay a significant retainer and hourly rate.  The Court’s failure to grapple with Congress’ desire to increase attorney representation in cases is disappointing and will likely result in debt repayment cases not being taken by attorneys until a significant amount has been recouped.

The decision was by Judge Bartley and joined in by Judges Pietsch and Toth.

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Skaar: Class Action Certifications and Limited Remands

Skaar v. Wilkie, Case Number 17-2574, is a February 1, 2019 order related to a motion for class certification for veterans who were present at the 1966 cleanup of plutonium dust at Palomares, Spain.  Recognizing the significances of this decision, this was an en banc decision, meaning it was made not by a smaller panel of the Court but by the entire court.  The motion was not granted, but the case remanded to the Board under a relatively new procedure called a limited remand.

The veteran sought class certification through his counsel, which would allow for a decision and class action against the VA that would prevent each individual veteran exposed to plutonium dust at Palomares, Spain from having to re-litigate the same issues.  Substantively, among other things they were attacking the methodology the VA used to estimate ionizing radiation doses for Palomares veterans and arguing that method is not sound scientific evidence.

The Court noted:

Before the Board issued its April 2017 decision, the appellant had expressly challenged the methodology VA used to measure radiation exposure under 38 C.F.R. § 3.311.  Yet, the Board failed to adjudicate or address that argument whatsoever. The Board is required to "adjudicate all issues reasonably raised" by the record and, of course, those that are expressly raised. Brannon v. West, 12 Vet.App. 32, 35 (1998); see also Urban v. Principi,

18 Vet.App. 143, 145 (2004).  The Board did not do that here, and that failure is error. See Robinson v. Peake, 21 Vet.App. 545, 552 (2008) (the Board is required to consider all issues raised either by the claimant or by the evidence of record).  Moreover, without an adequate statement of reasons or bases from the Board, we cannot effectively and efficiently review the instant appeal, including deciding the motion for class certification.

Id. at *1.

As a result the Court ordered a limited remand to the Board to provide a supplemental statement of reasons or bases to address the appellant’s argument that the methodology to reach estimated radiation doses was not sound scientifically. The Court also created timelines for the decision and states that it is retaining jurisdiction over the matter.  This decision created a jurisdictional problem with the Court in that prior case law suggested that decisionmaking could not be simultaneously at the Board and Court.  See Cleary v. Brown, 8 Vet.App. 305, 308 (1995).  As a result, the Court determined

To the extent Cleary could be read to prohibit the Court from ever retaining jurisdiction over a remand to the Board, we clarify that the Court may, in certain circumstances, retain jurisdiction over limited remands to the Board.  It is also worth noting that, unlike Cleary, where there was nothing left to review of the original Board decision, here the decision is still pending at the Court and what we require from the Board is not a new decision, but a supplemental statement of reasons or bases pertaining to a claim it already

decided.

Id. at *3.

The Court concluded by trying to limit the holding and stated:

We do not here attempt to lay out the circumstances in which we will employ such limited remands; however, this particular case involves a situation where the Court does not need to vacate the Board decision on appeal—a distinguishing characteristic in both Mayfield and Sellers. Instead, we require a supplemental statement of reasons or bases from the Board concerning the appellant's expressly raised challenge to § 3.311, without which we cannot meaningfully consider the appellant's class certification motion. Soliciting a supplemental response from the Board, without vacating the decision on appeal, for the discrete purpose of evaluating a class certification motion arising from that appeal—an issue of first impression at the Court—is undoubtedly a unique circumstance. Accordingly, the Court deems it appropriate under the facts of this case to retain jurisdiction while ordering a limited remand.

Id. at *3.

C.J. Davis wrote a concurrence emphasizing the usefulness of a limited remand and that the Court has “broad discretion to define the scope of its remand authority—limited or general.”  He seemed to want to clarify the groundwork for a determination that the Court had this power.

Judge Schoelen also wrote a concurrence to emphasize her view that a limited remand should be rarely used and laying out the circumstances when it is appropriate.  She explains:

the considerable time that has already been invested in litigation before the en banc Court, coupled with the harm that could potentially befall a sizeable class of veterans, takes what would be a common legal error and escalates it to an extraordinary circumstance that I believe warrants a limited remand. Stated differently, I respectfully believe the dissent is too myopic in seeing this as a "common" error, and that the Court must look at the situation as a whole, not just at the discrete legal error that necessitates remand. Thus, I concur that overruling Cleary and exercising procedural authority that we retain by nature of our existence as a Federal appellate court is the proper course of action, and any precedent we set today should make clear when it is appropriate to use a limited remand to clear up something such as a reasons-or-bases error.

Id. at *5.

She then presented a two part test to determine when a limited remand should be used: “(1) As a threshold matter, the case must concern a precedential matter (i.e., the case is being considered before a panel of Judges or the en banc Court), and (2) once the Court

determines that threshold has been met, it must decide whether some extraordinary circumstance is present.”

Judges Pietsch, Meredith and Falvey dissented.  The dissent focuses on the statutory circumscribed limits on the Court’s authority and determines the limited remand cannot be used by the Court.

The use of class actions in VA benefits is one of first impression how such class actions are used and whether they are useful will be watched in the years to come.  However, it is clear from this order that some members of the Court are willing to embrace larger powers necessary to manage a class action case whereas at least three members are opposed to the use of such powers.  This is just the first salvo in what will be long-term development of this area of the law.

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