Review of Recent Veterans Law Decisions of the Federal Circuit

69 Am. U. L. Rev. 1343 (2020).

* Director of the Veterans Clinic, University of Missouri School of Law.

** Assistant Professor of Law and Director of the Veterans Legal Clinic, UIC John Marshall Law School.

*** Director of the Veterans Law Institute and Veterans Advocacy Clinic, Stetson University College of Law.

The authors would like to thank law students Justin Brickey at the University of Missouri School of Law, Rebecca Klonel at Stetson University College of Law, and Derek Centola and the staff of the American University Law Review for including a discussion of veterans law and the Federal Circuit in its 2019 Federal Circuit Symposium. And, a special thanks to Professor Andrew Popper who was a patient and wonderful moderator at the Symposium’s panel on veterans law.

The last in-depth review of veterans law cases decided by the Federal Circuit was published by the American University Law Review in 2015. Since that time, the Federal Circuit has substantially changed procedural rules applicable to veterans cases, including authorizing the use of the class action device and clarifying the correct standard to use when challenging agency delay and inaction. In an important case with wide application to administrative law generally, the Federal Circuit addressed the issue of proper deference for agency regulations and policies. The Supreme Court granted certiorari in Kisor v. Wilkie and reaffirmed principles articulated in Auer v. Robbins and Bowles v. Seminole Rock & Sand Co., articulating a new three-step analysis. With regard to substantive developments in the area of veterans law, the Federal Circuit reversed a prior 2008 decision and provided final and effective relief for “Blue Water” Navy Veterans who have long fought for Agent Orange-related benefits. It is a remarkable time to be a veterans advocate, and we are pleased to provide this update.

Introduction

In order to appreciate the significance of the cases discussed below, a brief overview of federal veterans benefits law is beneficial. There are three key features of this unique area of law to understand.

First, veterans benefits law is the creature of a robust federal statutory and regulatory scheme. It is unlike any other adjudicatory system. Indeed, “the contrast between ordinary civil litigation . . . and the system that Congress created for the adjudication of veterans benefits claims could hardly be more dramatic.”¹ The system is uniquely pro-claimant.² Proceedings before the United States Department of Veterans Affairs (VA) are informal and nonadversarial.³

Second, the VA is statutorily obligated to help the veteran by developing evidence to support the claim and by giving the veteran the benefit of the doubt in deciding the claim.⁴ The statutory “duty to assist” includes providing a medical examination and/or obtaining a medical opinion whenever such proof is necessary to make a decision on the claim.⁵ Most significantly, in evaluating the evidence, the VA must give the veteran the benefit of the doubt.⁶ By its very terms, this evidentiary standard is far more lenient than other standards, including “to a reasonable degree of medical certainty,” “beyond a reasonable doubt,” or “by a preponderance of the evidence.”

Third, the VA struggles with high error rates that lead to substantial delays for veterans. Prior to the 2017 Veterans Appeals Improvement and Modernization Act (Appeals Modernization Act),⁷ benefits appeals took seven years on average, according to the VA’s own statistics.⁸ One in fourteen veterans died while waiting for the resolution of his or her appeal.⁹ Numerous reports by the Office of the Inspector General have documented a myriad of problems in the system, including the use of incompetent medical examiners for claims involving traumatic brain injuries (TBI)—the signature wound of the War on Terror;¹⁰ lost and missing claims documents;¹¹ and erroneous adjudication of military sexual trauma claims.¹²

I. Brief Background on the Court of Appeals for Veterans Claims

Prior to 1988, decision making in the Department of Veterans Affairs was a two-tiered administrative system. Decisions rendered by the VA’s Board of Veterans Appeals (“the Board” or “Board”) were not subject to judicial review. The Federal Circuit described this era in Gardner v. Brown¹³ as one of “splendid isolation,” where Board decisions were free from judicial scrutiny.¹⁴

The rationale underlying this freedom from judicial review was based on the premise that the VA claims adjudication process should remain nonadversarial in nature.¹⁵ Congress was concerned that adding judicial review to the VA’s decisions (and, by implication, attorneys to press veterans’ claims) would add an element of antagonism into the system. This fear loomed large in every discussion Congress had regarding changes in the system.¹⁶ Congressional conversation on this subject lasted for over thirty-five years.¹⁷ Finally, the general public’s concerns about the VA’s failing adjudication system led to a compromise which allowed for the creation of a federal court with the power to review the Board’s decisions.¹⁸

In 1988, President Reagan signed the Veterans’ Judicial Review Act¹⁹ into law, creating the United States Court of Appeals for Veterans Claims (CAVC) as an Article I court.²⁰ Currently, the CAVC has a total of nine judges, each of whom serve for a fifteen-year term.²¹

The CAVC has exclusive jurisdiction to review decisions of the Board.²² Specifically, the court may: (1) decide all relevant questions of law; (2) interpret constitutional, statutory, and regulatory provisions; (3) determine the meaning or applicability of the terms of an action of the Secretary of Veterans Affairs (“the Secretary”); (4) compel action of the Secretary unlawfully withheld or unreasonably delayed; (5) hold unlawful and set aside decisions, findings, conclusions, rules and regulations adopted by the Secretary or the Board that are arbitrary and capricious, an abuse of discretion, contrary to constitutional right, or in excess of statutory authority, among other things; and (6) hold unlawful and set aside or reverse clearly erroneous findings of material fact made by the VA.²³

Limited appellate jurisdiction over CAVC decisions lies in the Federal Circuit. The Federal Circuit has exclusive jurisdiction to review and decide any challenge to the validity or interpretation of any statute or regulation and to interpret constitutional and statutory provisions related to veterans’ claims.²⁴ The Federal Circuit also has the authority to set aside regulations and interpretations which are arbitrary, capricious, an abuse of discretion, or otherwise unlawful.²⁵

However, the Federal Circuit cannot review challenges to a factual determination or to a law or regulation as applied to the facts of a particular case, unless it presents a constitutional issue.²⁶ The Federal Circuit does have the authority to affirm, modify, remand, or reverse a decision of the CAVC.²⁷

The Federal Circuit does not often make decisions in the area of veterans law. However, when it does, the decision often impacts hundreds of thousands of veterans. The Federal Circuit’s decisions can overturn decades of case law in one fell swoop.

II. Auer Deference Survives

Since the 2010 term, only one veterans law case, Kisor v. Wilkie,²⁸ has been decided by the Supreme Court of the United States. In Kisor, the question presented to the Court was whether it should overrule Auer v. Robbins²⁹ and Bowles v. Seminole Rock & Sand Co.³⁰ The Court did not overrule Auer or Seminole Rock;³¹ instead it developed a more thorough test to help courts review agency interpretation of the agency’s own regulations.³² In her opinion, Justice Kagan acknowledged that, in the past, the Supreme Court sent mixed messages regarding Auer deference and clarification and guidance was in order.³³

Before discussing the details of the Kisor opinion, Section II.A of this Article will explain the history of Auer and Seminole Rock deference. Then, Section II.B will discuss Kisor’s framework for future cases involving issues relating to agency regulations.

A. The History of Auer Deference

Bowles v. Seminole Rock & Sand Co. preceded the Supreme Court’s decision in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc.³⁴ by approximately four decades but did not offer any specific explanation for the circumstances requiring deference to an agency’s interpretation of its own ambiguous regulation.³⁵ In the most common explanation of the Seminole Rock standard, an agency interpretation of its own regulation is controlling unless its reading is plainly erroneous or inconsistent with the regulation.³⁶

In 1997, the Supreme Court reaffirmed the Court’s view of Seminole Rock in Auer. In Auer, the petitioners were sergeants and lieutenants of the St. Louis police force who were seeking payment for overtime pay under the Federal Labor Standards Act.³⁷ The St. Louis Board of Police Commissioners argued that the petitioners were not entitled to overtime pay because they fell under the “bona fide executive, administrative, or professional” employee exemption in the federal statute.³⁸ Under the Department of Labor’s regulations, exempt status is also measured by whether the employee is paid on a salary-basis.³⁹ The officers argued they were not truly salaried employees, because their income could be reduced based on disciplinary infractions.⁴⁰

The Secretary of Labor, in an amicus curiae brief, interpreted the salary-basis test articulated in the regulation to deny exempt status where employees are covered by a policy that permits disciplinary or deductions in pay as a practical matter.⁴¹ The Secretary of Labor explained that if an actual practice or an employment policy created a significant likelihood of a pay cut, the exemption would not apply.⁴² The Court, with Justice Scalia writing, found that because this test is a creature of the Secretary of Labor’s own regulations, its interpretation is controlling unless plainly erroneous or inconsistent with the regulation.⁴³

Since Auer, courts have followed Justice Scalia’s roadmap with regard to agency interpretation of its own regulations.⁴⁴ Specifically, courts will defer to the agency’s interpretation of its own ambiguous regulation, unless the interpretation is clearly erroneous.⁴⁵ However, since 2011, the Supreme Court has signaled increasing skepticism about the future of Auer.⁴⁶ Kisor created the perfect storm for the Court to reconsider the two-decade Auer precedent.

B. Kisor Fails to Overturn Auer

The Supreme Court’s most recent foray into reexamining Auer arose in the context of a veteran’s claim for disability compensation. In Kisor, the Court was presented with the Secretary of the VA’s interpretation of an ambiguous regulation, 38 C.F.R. § 3.156(c)(1), and the meaning of the word “relevant” in the context of the case.⁴⁷ The regulation provides, “at any time after VA issues a decision on a claim, if VA receives or associates with the claims file relevant official service department records that existed and had not been associated with the claims file when VA first decided the claim, VA will reconsider the claim . . . .”⁴⁸ Significantly, the regulation allows for the effective date of the award of the benefits to date back to the submission of the original claim if relevant official service department records are associated with the file.⁴⁹

The claimant, James Kisor, originally filed a claim for benefits in 1982 for post-traumatic stress disorder (PTSD).⁵⁰ At that time, the VA denied his claim because he lacked a diagnosis.⁵¹ In 2006, Mr. Kisor reapplied and presented two new service records and a current diagnosis.⁵² The VA granted the claim but established the effective date for payment as 2006, not 1982.⁵³ Mr. Kisor argued that the effective date should be 1982, not 2006, because the records existed and were not associated with his claim file at the VA. Mr. Kisor’s reading of the regulation required the earlier effective date. Reviewing his argument, the Board found that the later associated service records were not “relevant” because they did not relate to the reason for the 1982 denial.⁵⁴ Here, the agency’s interpretation of the regulation came directly from the Board’s decision.⁵⁵

At the Federal Circuit, the court determined Auer deference appl