Held: Attorney Fees for CUE Claims

Held v. McDonough, Case Number 21-8048, decided November 14, 2023 involves a narrow question, whether an attorney can be awarded an attorney fee for a CUE claim where there has not been a NOD filed. 

In a clear statutory interpretation case, the Court held that the VA’s attorney fee regulation was at odds with the statute and the regulation was not enforceable.  The Court explained:

“To summarize what follows, we will reverse the Board's decision that appellant is barred from receiving fees as a matter of law and remand this matter for further proceedings concerning whether agent fees are warranted under the fee agreement between appellant and the veteran. At the time of the December 2019 RO decision on the veteran's CUE motion, 38 U.S.C. § 5904(c)(1) provided that "a fee may not be charged, allowed, or paid for services of agents and attorneys with respect to services provided before the date on which a claimant is provided notice of the agency of original jurisdiction's [(AOJ's)] initial decision under section 5104 of this title with respect to the case."

The parties agree—and the Court concurs—that under section 5904(c)(1), the "initial decision . . . with respect to the case" refers to the February 2017 RO decision concerning the veteran's PTSD rating, the decision in which the veteran later asserted CUE was present. The parties also agree—and the Court concurs—that notice of that February 2017 decision was provided under 38 U.S.C. § 5104. So, everything that Congress required under section 5904(c)(1) to warrant a fee was in place when the RO granted the veteran's CUE motion in December 2019. This would appear to be an open and shut statutory case for awarding a fee. And it should have been as far as the statute was concerned.”

Id. at *2.

The Court then asked: “So, why are we here? The answer is that the Board skipped over the statute Congress enacted. Instead, the Board relied on a regulation, 38 C.F.R. § 14.636(c)(2)(ii), to deny the fees appellant sought. That regulation adds requirements to what Congress included in section 5904(C)(1) as that statute existed in December 2019 when VA granted the veteran's CUE motion.”  Id. at *3.

The Court also noted that limiting attorney fees for CUE claims makes no sense as:

“It is clear that navigating the VA benefits system can be a complicated endeavor. And there is no question that it is particularly difficult to overcome a final unappealed decision. The evolution of section 5904 reflects congressional recognition of the importance of allowing veterans to obtain representation and for their representatives to charge fees, including in the context of reopening matters, especially those involving CUE motions. Further, the caselaw makes clear that limiting fees for work performed by representatives in CUE matters to only those cases in which an NOD had been filed on or before June 2007 would preclude payment of fees in most CUE cases—an outcome the Secretary acknowledged during oral argument.  There is no doubt that this would be detrimental to veterans because it would deter representatives from taking cases involving CUE motions. Indeed, in many cases involving CUE, an NOD would not have been filed because the "sole purpose of a CUE [motion] is to provide a VA claimant with an opportunity to challenge a decision that is otherwise final and unappealable."”

Id. at *11.

This was a clear decision of the Court finding the VA’s regulations conflicted with the empowering statute and the Court calling the VA on that.

Decision by Judge Allen and joined by Judges Falvey and Jaquith. 

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Kriner: A New Form Driven VA World Allowed

Kriner v. McDonough, Case Number 20-0774, decided October 25, 2023 involves what constitutes an intent to file. 

This was a remand from the Federal Circuit, which remanded since the Veterans Court did not support a legal conclusion that a March 2015 submission by the deceased veteran, if an ITF, could not change into accrued benefits for the surviving spouse. 

The Court noted: “the question for the Court is whether Mr. Kriner’s March 2015 submission to VA is an intent to file a claim—a question the Court didn’t explicitly answer in February 2021.  Appellant argues that the March 2015 submission is an intent to file.6 She also contends that she can substitute into the intent to file to then perfect a claim for benefits. The Secretary disagrees and points the Court to VA’s rationale behind creating the intent to file rules explained in the Federal Register.  To resolve the dispute, we must analyze VA’s intent-to-file regulation—38 C.F.R. § 3.155. The Court determines that the Board didn’t err when it reviewed the March 2015 submission and concluded that Mr. Kriner didn’t submit an intent to file and didn’t have a claim pending at the time of his death.”  Id. at *2.

This is an interesting question because it argued the veteran filed a letter that should be read as an ITF and then when he died, his wife filed a request for DIC and accrued benefits, she argued she wanted her deceased husband’s accrued benefits.  The Board denied and looked at the letter and said it was not an ITF but a request to reinstate non-service connected pension benefits.  The Court affirmed the Board decisions and found the letter was an informal communication and not a claim for benefits.  It also stated it was at best an ITF, but since it did not have the necessary form requirements and form, he died without a pending claim.  The Federal Circuit heard and remanded for a determination of whether the letter was a qualifying ITF.

The surviving spouse argued the form complied with the ITF rules, whereas the Court determined section 3.155(b)(1)  must file an ITF in one of the three enumerated methods: (1) Saved electronic application; (2) Written intent on a prescribed intent to file a claim form; or (3) Oral intent communicated to designated VA personnel and recorded in writing.  Id. at *15.  The Court then determined the veteran’s letter did not fall within an enumerated method of filing an ITF—essentially, it was not on the proper form.

This case demonstrates that the VA with the Veterans Court’s agreement is now incredibly form driven and being transformed from one focused on the veteran and instead one focused on the four-corners of a piece of paper—the right piece of paper at that.

Judge Jaquith’s concurrence writes in support of a non-form driven VA.  I hope it serves as a template for the appeal to the Federal Circuit.

Decision by Judge Laurer and joined in by the Toth.  Concurrence by Judge Jaquith. 

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Terry: More than One Administrative Review within 1 Year is Allowed

Terry v. McDonough, Case Number 20-7251, decided October 19, 2023 involves whether a veteran can file more than one administrative review request in response to and within one year of an AOJ decision provided the requests are not pending concurrently.

The Court held that “subsection 5104C(a) plainly provides that a claimant may file more than one administrative review request within 1 year of an initial AOJ decision on a claim, provided that such an administrative review request is not pending concurrently with another administrative review request.”  Id. at *2.  As a result, the Board erred when it construed the NOD as an appeal from a decision from a supplemental claim as opposed to the underlying AOJ decision.

Factually, the veteran had a long-standing claim before the VA and opted into the AMA and requested a HLR decision.  On April 16, 2019, a RO decision denied service connection for the issues.  In June 2019, the veteran filed a supplemental claim and attached documents to the form.  In September 2019, in a supplemental claim decision, the RO notified the veteran his claim remained denied because no new and relevant evidence had been submitted.  On April, 14 2019 the veteran filed a NMOD seeking review of the issues and identifying the April 16, 2019 decision as the one he sought review of.  In a June 2020 decision, the Board found the claim was denied because their was no new and relevant evidence, the April 16, 2019 RO decision had become final because it was not appealed.

The VA argued the law only allowed one administrative review request in response to a decision and that the subsequent review (in this case a NOD) could only be from the most recent agency decision.

The Court concluded: “Ultimately, when we read subsection 5104C(a) as a whole, we see that Congress provided that a claimant is able to select a second administrative review option with respect to a decision on the claim, so long as the 1-year period from that decision has not run and the second administrative review option does not run concurrently with the first administrative review option.”  Id. at *15.

The Court also considered the VA’s fear of simultaneous actions with respect to the same underlying request for benefits, “[i]n other words, the Secretary appears to be concerned that Mr. Terry could conceivably file administrative reviews of both the April 2019 HLR decision on the merits and the September 2019 decision that new and relevant evidence had not been submitted in connection with the supplemental claim.”  Id. at *14.  The Court noted that “subsection 5104C(a)(2)(A), …  prevents claimants from taking simultaneous actions "with respect to the same claim or same issue within the claim."  A "claim" is a request for "a determination of entitlement or evidencing a belief in entitlement, to a specific benefit." 38 C.F.R. § 3.1(p).”  Id.

The VA also argued the Court’s interpretation could lead to inequity among veterans who receive a quick HLR decision and those for whom an HLR decision takes more than one year.  Incredibly, the Secretary argued to the Court that “he would be encouraged to delay rendering decisions in response to actions take under subsection (a) until" the 1-year period following an AOJ decision had expired.”  Id. at *14-15.  The Court noted this incredible self-serving argument by the Secretary and stated “The Secretary's suggestion that VA would intentionally delay adjudicating thousands of requests for administrative review under the AMA simply to avoid the uncommon instance in which an administrative review is adjudicated within a year of an initial AOJ decision is stunning.….  It is difficult to comprehend that under a uniquely pro-claimant system, or indeed any system of adjudication, an agency would arbitrarily delay adjudication in order to avoid an outcome that Congress has expressly provided for by statute.”  Id. at *15.

This is an important decision that helps round out the contours of the AMA.  It also demonstrates that the VA actually wrote in a brief it would likely delay decisions unnecessarily in order to avoid the application of this rule.  This demonstrates the depravity of the VA, to do it silently is one thing—to write that you are going to do it is incredible.  I hope the Veterans Court remembers this is how the Secretary behaves.

Decision by Judge Pietsch and joined by Judges Greenberg and Allen. 

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Kernz: The Veteran's Court Eviscerates the Concept of Jurisdiction

Kernz v. McDonough, Case Number 20-2365, decided October 4, 2023 involves whether a Board letter constituted an appealable decision over which the Court had jurisdiction. 

The veteran filed an NOD from a 2016 decision.  A December 2019 SOC continued the denial.  The veteran then opted into the AMA in January 2020 with a VA Form 10182.  The Board informed him in a letter that his 10182 was not timely.  The veteran filed an appeal with the CAVC, which led to the Board to send the veteran a letter saying the prior rejection as untimely was an error and his appeal was being docketed.  However, the veteran argued under Cerullo, the Board could not take away jurisdiction from the Court once the Court had jurisdiction.  The Secretary filed a motion to dismiss and the veteran sought class certification.

The en banc court in a split decision dismissed the appeal as moot and denied the request for class certification. 

The Court found the case was moot because he received the relief he sought (docketing of his appeal).  The Court declined to decide whether the letter was an appealable decision.  The Court declined to apply Cerullo noting the Board erred when it failed to seek permission to take corrective action because the action was prejudicial as it gave the veteran all that he sought. 

Dissents by Chief Judge Bartley and Judge Greenberg and Jaquith focused the case away from mootness but the Board overstepping its jurisdiction and acting in disregard of the veteran’s exercise of his right to judicial review. 

This decision illustrates the depths the VA will go to avoid a class action.  It is clear that the Board for some time was improperly rejecting valid notices of disagreements and the veteran sought to serve as a class action to force the Board to address that practice.  The VA disregarded the Court and simply mooted the case by taking an action that at least three judges agree the Board did not have authority to undertake.  The result is that now the Court has given permission to the VA to solve any hard appeal by simply going back to the Board to “fix” the error.  Whether the Court realizes it or not, it is working to make itself meaningless.  I can only hope this case is appealed to the Federal Circuit and that they understand the VA cannot be trusted to unilaterally decide when the Courts have jurisdiction over a case.

The case was heard by an en banc court and the opinion written by Judge Allen.  Judge Jaquith’s dissent, which would have granted class action is powerful and should serve as a template for appealing to the Federal Circuit.

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Perciavalle: CUE, No Change of Law and Pyramiding

Perciavalle v. Wilkie, Case Number 2022-1491, decided July 25, 2023 was before the Federal Circuit and considers CUE and the prohibition on pyramiding in the context of knee disabilities.

In 1966 the veteran was service connected for a left knee injury and granted a rating of 10% under DC 5259, which covers removal of cartilage from the knee.  In 1971 he sought an increase but was denied and did not appeal.  In 2015, he filed a motion to revise the 1971 decision based on CUE.  He argued he should have been rated under DC 5257 for slight instability of the knee and separately under DC 5003-5260 for limitation of motion of flexion and discomfort (pain) secondary to arthritis.   He explained that an x-ray report obtained during a 1971 VA examination clearly indicated arthritis in his left knee that decreased his range of motion and other evidence in 1971 showed instability.

VA denied the CUE motion stating in 1971 a policy was not in place allowing separate ratings for instability and limited motion. 

Now for some background, ordinarily different ratings for the same disability are not allowed as that would constitute pyramiding (awarding compensation for the same impairment under various diagnostic codes).  However, in the case of Esteban v. Brown, 6 Vet.App. 259 (1994), the Veteran’s Court “recognized that separate ratings were permissible for different diagnoses of the same disability as long as the conditions diagnosed shared no symptomology.”  So, separate ratings under different diagnostic codes can be awarded for the same disability if “none of the symptomatology for any one of the conditions was duplicative of or overlapping with the symptomatology of the other [diagnostic code ratings].” 

Three years after Estaban, the “VA’s General Counsel issued a guidance opinion specifically interpreting the ratings schedule as allowing separate ratings for the conditions at issue here—arthritis and instability in the same knee. VA Gen. Coun. Prec. 23-97 (July 1, 1997).”  The agency determined that, since "the plain terms of DC 5257 and 5003 suggest that those codes apply either to different disabilities or to different manifestations of the same disability, the evaluation of knee dysfunction under both codes would not amount to pyramiding under section 4.14. VA recognized that it was the first time the agency assumed an official position on the matter, as the opinion acknowledged that it was aware "of no formal position taken by the Veterans Benefits Administration on this issue" before then.”

Turning back to Perciavalle, the Board found the veteran’s CUE argument foreclosed by the existence of 38 C.F.R. Section 20.1403(c), which states CUE cannot be premised on a change in the interpretation of a statute or regulation.  The Board focused on the anti-pyramiding regulation and a finding that that not until Esteban was § 4.14 interpreted to permit separate ratings for distinct, non-overlapping symptomatology of the same underlying injury. It also found that VA did not issue its General Counsel opinion permitting separate ratings for arthritis and instability until 1997.

The Veterans Court initially reviewed favorably to the veteran, but an en banc panel found that while the Board erred in failing to properly interpret the veteran’s claim, no remand was required because the interpretation error was harmless.

The Federal Circuit began by noting the ability to revise a decision based on CUE, but such a claim must be evaluated by the law as it existed at the time of the challenged decision.  Id. at *8-9.

The Federal Circuit then noted the Veterans Court’s decision is odd in that it was comprised of seemingly opposed concurrences.  Three judges found no error by the Board.  Another judge found that although the Board erred the error was harmless because the alleged CUE was a legal error that had not yet been identified as error by a court decision or VA publication as of the date of the underlying decision.  Two judges found the Board erred but it was harmless because none of the evidence in 1971 supported an arthritis rating.

The Federal Circuit found the initial three judges rested on an erroneous legal principal.  The Court noted: “It read the veteran’s claim as based on retroactivity, but concluded that it did not matter whether the claim was based on a retroactivity theory because in order to state a claim of CUE, the veteran was required to set forth in his initial pleading a fullfledged legal argument as to why, in 1971, the RO erred in rejecting his claim….   

The Allen opinion would have required Mr. Perciavalle to either “attempt to analyze the regulations’ plain language to show how the RO’s interpretation was clearly and unmistakably wrong,” J.A. 41, or “produce[] a contemporaneous interpretation that reconciled the regulations in his favor,” J.A. 42.  This assertion ignores the fact that the “VA’s duty to sympathetically read a veteran’s pro se CUE motion to discern all potential claims is antecedent to a determination of whether a CUE claim has been pled with specificity.”  Andrews v. Nicholson, 421 F.3d 1278, 1283 (Fed. Cir. 2005).  Here, Mr. Perciavalle’s CUE claim set forth the relevant facts and regulations. Under a sympathetic reading of Mr. Perciavalle’s claim, the VA was required to “determine all potential claims raised by the evidence, applying all relevant laws and regulations.” Roberson v. Principi, 251 F.3d 1378, 1384 (Fed. Cir. 2001) (emphasis added). The Allen concurrence erred in requiring Mr. Perciavalle to set forth a legal argument with supporting authority in order to state a CUE claim.”  Id. at *12.

As to the belief the Board’s decision though error was harmless, the Court stated looked more closely at the harmless error rule.  It noted: “In its consideration of harmless error, however, if “additional findings of fact are necessary regarding matters open to debate, the proper action for the Veterans Court is to remand to the Board for consideration of those facts in the first instance.”  Id. at *12-13.  As to the Toth opinion, the Federal Circuit noted: “a legal error may be clear for the purpose of CUE despite the fact that there was no preceding court or agency decision on the precise legal question.”

This is an important decision that upholds the boundaries of 38 C.F.R. 20.1403(c) and also puts into play many decisions involving knee disabilities where the evidence supported an instability rating many years ago, but it was denied in favor of simply a limited motion rating.

Decision by Judge Dyk and joined in by Chief Judge Moore and Reyna.

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Cavaciuti: Federal Circuit Forecloses EAJA Fees for Writs of Mandamus

Cavaciuti v. McDonough, Case Number 2022-1531, decided August 3, 2023 was a case before the Federal Circuit concerning attorney fees under EAJA.

The Equal Access to Justice Act allows attorneys to represent veteran’s before the Veterans Court and Federal Circuit and only charge a fee if they win and then the U.S. government has to pay that fee.  It opens access to veterans to appeal decisions and without it, VA appeals would grind to a halt as most veteran’s would not be able to afford an attorney.  This is important because the vast majority of appeals to the Veterans Court result in remands, which means the VA had messed up in the decision making process.

This case specifically concerns a writ of mandamus to the Veterans Court.  Specifically, the VA was refusing to do what they clearly should and the veteran had to file a special type of motion asking the Veterans Court to force the VA to do it.  Ultimately, the Court didn’t have to rule on the motion because the VA finally did what it was supposed to do.  The VA asked to have the motion or writ rendered moot and close it.  The veteran argued the case was not moot

The veteran argued “the Veterans Court erred in not considering whether or not the terms of his relief were incorporated into the court’s previous dismissal order. He adds that the court also erred in not considering whether or not the VA made an admission of liability, or if its change in conduct was voluntary. Cavaciuti further argues that the court’s dismissal order materially changed the parties’ legal relationship by requiring the government to provide Cavaciuti relief. That material change, and the fact that the VA’s change in conduct was not voluntary, he asserts, distinguishes this case from one falling within the rejected catalyst theory.”  Id. at *5.

The government essentially argued the key to gaining EAJA fees is being a prevailing party and that dismissal of the order did not amount to a court-ordered change in the parties’ legal relationship that conferred prevailing party status. Instead, the government contends, this appeal relies on the catalyst theory, which “aptly describes Mr. Cavaciuti’s claim in this case,” but that does not convey prevailing party status.”  Id. at *5.

The Court affirmed the Veterans Court’s denial of EAJA fees and reasoned: “Crucially for the present case, an award of a benefit by the agency alone, even if prompted by the litigation, is insufficient without a judicial imprimatur. The Supreme Court has held that the catalyst theory is an improper basis for establishing an appellant as a prevailing party under the EAJA in the absence of a judicially sanctioned change in the legal relationship of the parties.”  Id. at *6.

It further reasoned:

“Here, there was no such judicial change in the legal relationship between the parties. The Veterans Court did not award any benefits or remand any claims because of Cavaciuti’s writ of mandamus petition. Rather, the court dismissed the petition as moot because the VA voluntarily changed its position and granted Cavaciuti entitlement to TDIU. The court’s dismissal order did not evaluate the merits of Cavaciuti’s petition, nor did it materially alter the parties’ legal relationship.

***

Regarding Cavaciuti’s argument concerning the lack of voluntariness of the government’s change in conduct, this is just another way of stating the catalyst theory rejected by the Supreme Court. The Court held in Buckhannon that an analysis of a defendant’s subjective motivations for changing its conduct—in particular, the desire to avoid a litigation loss—was legally insufficient to create prevailing-party status. The Court instead required a judicial action changing the legal relations of the parties. In this case, the VA implemented the Board’s TDIU decision, as requested by Cavaciuti following settlement discussions rather than based on any court order. Moreover, the fact that the government’s representations about the nature of the relief it was providing would estop it in the future from changing course does not render the Veterans Court’s dismissal a judicial imprimatur sufficient to make Cavaciuti the prevailing party. The government’s conduct merely created a future opportunity for a judicial order if the government did not live up to its representations.”

Id. at *7.

This was an excellent attempt to argue that the VA should pay EAJA when a court filing is necessary to get them to do what they are supposed to do.  However, the Supreme Court’s rejection of the catalyst theory seems to foreclose this possibility.

Decision by Judge Lourie and joined by Judges Dyk and Taranto.

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Grounds: The Federal Circuit Considers Bars to Veteran Eligibility for VA Benefits

Grounds v. McDonough, Case Number 2022-1607, decided July 14, 2023 was a case before the Federal Circuit concerning eligibility for benefits as a veteran.

The veteran served in the Army from 1969 until 1972 and then was charged with being AWOL.  To avoid a trial by court-martial, he requested a discharge from the Army “for the good of the service.”  He was in fact discharged “for the good of the service” and under conditions other than honorable.” 

When he applied for veteran’s benefits, he was denied because his multiple periods of AWOL constituted a pattern of willful and persistent misconduct and thus the discharge was considered “dishonorable” for the purposes of VA benefits.

The veteran argued that section 5303(a) does not bar him from receiving VA benefits because (1) he was never convicted for any AWOL offense and (2) his AWOL periods did not run 180 days or longer. Thus, the Veterans Court’s finding that Mr. Grounds’ AWOL offenses amounted to willful and persistent misconduct under section 3.12(d)(4) is inconsistent with section 5303(a).

The Federal Circuit agreed that Section 5303(a) does not bar the veteran from obtaining VA benefits.  But, the Federal Circuit found section 5303(a) was not the basis for the denial of benefits.  The Court explained: “Instead, the Board’s decision was grounded on, entirely appropriately, a regulation – specifically, section 3.12(d)(4). As we held in Garvey, 972 F.3d at 1334, “[s]ection 5303 . . . is not the exclusive test for benefits eligibility.” There we further held, expressly, that section 3.12(d)(4) is a permissible additional prohibition on eligibility for benefits. See id. at 1341. Mrs. Grounds does not challenge the validity of section 3.12(d)(4), see Appellant’s Brief at 5 (“Mrs. Grounds’s appeal is not a challenge to the validity of the Secretary’s regulation at 38 C.F.R. § 3.12(d).”); see also Oral Arg. at 13:7-14 (“I’m not challenging the validity of the regulation.”), and we are bound to follow Garvey. Accordingly, the Board did not err in finding Mr. Grounds ineligible for benefits pursuant to section 3.12(d)(4).”  Id. at *5.

The Court further explained: “An additional reason Mr. Grounds is not eligible is that he does not meet the statutory definition of “veteran” for benefits purposes. As we observed in Garvey, 972 F.3d at 1334, “[a] former servicemember is ineligible for benefits unless he or she is a ‘veteran’ as defined in 38 U.S.C. § 101(2).” “To be a ‘veteran’ under section 101(2), a former servicemember must have been discharged ‘under conditions other than dishonorable.’” Id. (quoting 38 U.S.C. § 101(2)). Mr. Grounds, however, was not discharged “under conditions other than dishonorable,” because section 3.12(d)(4) provides that “[a] discharge or release because of . . . [w]illful and persistent misconduct” is a discharge under “dishonorable conditions.” See also J.A. 36 (showing Mr. Grounds being discharged “[u]nder conditions other than Honorable”).”  Id. at *5.

This decision helps explain the bars to eligibility to VA benefits. 

Decision by Judge Stark and joined by Judges Reyna and Stoll.

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