Monk: CAVC’S CLASS ACTION AUTHORITY

Monk v. Shulkin, docket no. 2015-7106 (Fed. Cir. Apr. 26, 2017)

HELD: “[T]he Veterans Court has the authority to certify a class for a class action and to maintain similar aggregate resolution procedures.”

SUMMARY: In 2013, Mr. Monk was denied VA benefits based on his “other-than-honorable” discharge. He appealed that decision and, at the same time, applied for a discharge upgrade with the Board of Correction of Naval Records (BCNR). In 2015, the VA regional office informed Mr. Monk that it would not make a decision on his appeal until it received the BCNR’s decision. Mr. Monk petitioned the CAVC to order the Secretary to act on his appeal, as well as the appeal of “similarly situated veterans.” He asked the Court to certify a class under a class action to be comprised of veterans who had not received a decision within 12 months of filing a Notice of Disagreement and who had also demonstrated medical or financial hardship.

While the petition was pending at the Veterans Court, the BCNR upgraded Mr. Monk’s discharge to honorable. The CAVC denied the petition and rejected the request for class certification, stating that it “does not have the authority to entertain class actions.”

Mr. Monk appealed to the Federal Circuit – and VA subsequently awarded full disability benefits. Because of this, the Secretary argued that Mr. Monk’s appeal was moot. However, the Federal Circuit determined that the grant of benefits did not moot the legal question of whether the CAVC has the “authority to entertain class actions” since this “question exists independently of Mr. Monk’s disability award and it persists in the context of the appeal raised by Mr. Monk.” The Court stated that “where the relief sought is forward-looking, a claim is not moot if it is capable of repetition and yet evades review.” The Court noted that “veterans face, on average, about four years of delay between filing an NOD and receiving a final Board decision,” and that there are thousands of veterans still awaiting decisions on their appeals.

The Court held that the CAVC has the authority to certify and adjudicate class action cases “under the All Writs Act, other statutory authority, and [its] inherent powers.” The Federal Circuit stated that the All Writs Act “unquestionably applies to the Veterans Court” and noted that it “has provided authority to aggregate cases in various contexts.”

With respect the “other statutory authority,” the Federal Circuit noted that the Veterans Judicial Review Act (VJRA, the statute that created the Veterans Court) vested the CAVC “with authority to review Board decisions adverse to veterans,” and noted that there “is no indication that Congress intended such review authority to not include class actions.” The Court further noted that 38 U.S.C. § 7264(a) “authorizes the Veterans Court to create the procedures it needs to exercise its jurisdiction” – and that “[o]ther tribunals have relied on statutes with similar language . . . to aggregate claims and create class action procedures.” Based on this statute, the Federal Circuit held that “the Veterans Court may prescribe procedures for class actions or other methods of aggregation.”

The Federal Circuit recognized the CAVC’s reliance on its own earlier decision that held that it lacked class action authority. That decision, Harrison v. Derwinski, 1 Vet.App. 438 (1991) was based on the Court’s understanding that (1) its jurisdiction was limited to review of final Board decisions, (2) it was statutorily precluded from making factual findings in the first instance, and (3) each person adversely affected by a Board decision was required by statute to file a Notice of Appeal with the CAVC. This decision further recognized that the CAVC has “previously declined to permit class actions because to do so would be unmanageable and unnecessary.”

The Federal Circuit disagreed that the CAVC’s authority was so limited in light of its statutory authority to “compel action of the Secretary unlawfully withheld or unreasonably delayed” (quoting 38 U.S.C. § 7261(a)(2)). The Federal Circuit noted that “there was legislative history that the focus should be on individual claimants, but still found “no persuasive indication that Congress intended to remove class action protection for veterans when it enacted the VJRA.” The Court added that “[c]lass actions can help the Veterans Court exercise that authority by promoting efficiency, consistency, and improving access to legal and expert assistance by parties with limited resources.”

The Federal Circuit bolstered its decision by pointing out the ways in which class actions would help the CAVC achieve its goal of “reviewing VA’s delay in adjudicating appeals,” as well as increase “its prospects for precedential opinions” and “serve as lawgiver and error corrector simultaneously, while also reducing the delays associated with individual appeals.” In advancing the use of “class actions to promote efficiency, consistency, and fairness in its decisions,” the Federal Circuit stated that the CAVC was similar to the “EEOC or bankruptcy courts that have adopted class action mechanisms to promote similar concerns.” The Court thus held that the CAVC “has authority to certify a class for class action or similar aggregate resolution procedure,” but declined to address whether certification was appropriate in this case or the nature of procedures the CAVC may adopt for class actions.

FULL DECISION

Eicher: POST-9/11 GI BILL EDUCATION BENEFITS

Eicher v. Shulkin, docket no. 15-1896 (Apr. 19, 2017)

HELD: “Post-9/11 GI Bill education benefits cannot be used to pay for a nonaccredited program at a foreign educational institution taken by distance learning” and the Court cannot grant benefits on the basis of equitable estoppel. Only the Secretary “has the power to grant equitable relief where administrative error leads to a denial of benefits.”

SUMMARY: Veteran James Eicher applied for VA education benefits to take an online Masters program through a foreign institution. The veteran corresponded with VA and the University via email, requesting an update on the status of his application. In an email, a VA representative stated that the “program was approved” and that a letter with information regarding the approval had been sent. The letter stated that such programs “are approved for in-resident training only” and required in-person attendance “in a formal classroom setting.” The veteran submitted a second electronic application, and received a letter from VA notifying him that he was entitled to “benefits for an approved program of education or training.” The letter instructed him to have his school certify his enrollment before he could get paid.

After VA received the University’s enrollment certification, which showed that the program was taken by distance learning, it denied Mr. Eicher’s request for payment, stating that “distance learning is not approved for GI Bill payment at foreign schools.”

Mr. Eicher appealed to the Board of Veterans’ Appeals, which denied his request, reiterating that “Post 9/11 GI Bill ‘benefits cannot be used to pay for a nonaccredited program at a foreign educational institution taken via distance learning.” The Board noted that “38 U.S.C. § 503 provides for equitable relief when there has been administrative error,” but stated that Mr. Eicher would need to petition the Secretary for such relief. The Board found that it “lacked jurisdiction to consider the Secretary’s exercise of authority to award equitable relief under section 503.”

On appeal, Mr. Eicher asked the Veterans Court to grant relief on the basis of equitable estoppel, arguing that he relied, to his detriment, on VA communications. Alternatively, he argued that the Board failed to adequately explain its decision because it failed to discuss the regulation pertaining to requesting equitable relief and “whether a recommendation to the Secretary for consideration of equitable relief was warranted.” The Secretary argued that the CAVC cannot apply equitable estoppel to grant monetary awards against the government and that the Board is not required to discuss the issue of recommendation for relief under section 503.

The Court briefly discussed the history of the Post 9/11 GI bill and the statutory definitions of “program of education” and “independent study.” The Court found that the Board correctly determined that Mr. Eicher was not enrolled in an approved course of study since he completed the program online, and that the relevant statutes and regulations “make clear that Post 9/11 GI Bill education benefits cannot be used to pay for a nonaccredited program at a foreign educational institution taken by distance learning.”

With respect to the equitable estoppel argument, the Court held that even if it were inclined to grant such relief, it could only do so with statutory authority, as the Appropriations Clause of the Constitution “precludes the judiciary from ordering an award of public funds to a statutorily ineligible claimant on the basis of equitable estoppel.” The Court added that even if VA’s email to the University was misleading, “erroneous advice given by a government employee cannot be used to estop the government from denying benefits.”

The Court noted that the Secretary does have the authority under 38 U.S.C. § 503 to grant equitable relief, but found that both the Court and the Board lack jurisdiction to review the Secretary’s refusal to grant such relief. In two footnotes, the Court noted its “confusion” as to why the Board member did not mention the Chairman’s authority to recommend equitable relief to the Secretary. However, the Court determined that the Board was not required to discuss the recommendation process – and that its failure to do so did not amount to a remandable reasons-or-bases error.

In his dissent, Judge Greenberg pointed out that the relevant regulation does not mention “distance learning” and that the definition of “independent study” is one that “is offered without any regularly scheduled, conventional classroom or laboratory sessions” – and does not expressly encompass online courses. (“A veteran is not engaged in ‘independent study’ merely because he attends a course online.”)

Judge Greenberg rejected the Board’s characterization of Mr. Eicher’s online course as “independent study” stating that “independent study is only barred if the educational institute is non accredited” and adding that VA’s interpretation of its regulation as barring distant learning “is utterly inconsistent with the statutory context of congressional limitations on independent study.”

FULL DECISION

Cantrell: TDIU, EMPLOYMENT "IN A PROTECTED ENVIRONMENT"

Cantrell v. Shulkin, docket no. 15-3439 (Apr. 18, 2017)

HELD: VA has not defined “employment in a protected environment” for purposes of entitlement to TDIU, but factors to consider include “the magnitude of a veteran’s job responsibilities and the degree of accommodation necessary for successful, full-time work.” VA adjudicators must consider the combined impact of a veteran’s multiple service-connected disabilities in determining whether referral for extraschedular consideration is warranted.

SUMMARY: Veteran Eric Cantrell was service connected for ulcerative colitis, among other conditions. He requested a total disability rating based on individual unemployability (TDIU) based on evidence of chronic loose stools and abdominal discomfort that “made it difficult for him to stand or be away from the bathroom for prolonged periods of time.” He reported having 6-10 bowel movements a day – when he was feeling well – and up to 16-20 bowel movements a day during his monthly episodes of “pouchitis” that lasted three to four days.

Mr. Cantrell was employed as a park ranger and was able to “work around his condition by knowing the location of every restroom in the park and by avoiding eating anything at work during pouchitis episodes.” He stated that he was only able to maintain his job “because of the many accommodations made by his employer, including being assigned only to duty stations near restrooms, not being required to remain at emergency scenes, and always having another ranger on call for him in case he needed to leave work early for medical reasons.” He had to leave work early about three times per month, and was unable to work at all about two to three times per month.

To support his claim, he submitted a private vocational assessment, which noted that his condition resulted in 10 to 15 bathroom breaks per day, lasting 20 minutes each, and that his current job was “tantamount to a ‘protected employment’ situation” because no typical employer would allow “a worker to take three and one third (3 1/3) hours per workday/work shift for bathroom break purposes.” The vocational expert determined that Mr. Cantrell’s need for bathroom breaks rendered him “totally unemployable for any competitive occupation.”

The Board denied TDIU, finding that Mr. Cantrell’s employment was substantially gainful. The Board discounted the private vocational expert’s opinion that his job was “in a protected environment,” because it found that the symptoms he reported to the vocational expert were inconsistent with his prior statements. The Board further found that Mr. Cantrell’s employment was not “in a protected environment” because he had “substantial responsibilities” and his employer’s accommodations enabled him to work full time.

On appeal to the Court, Mr. Cantrell argued that the Board provided an inadequate explanation for its determination that his job did not qualify as “in a protected environment.” He noted that VA did not define employment “in a protected environment,” but argued that “‘employment in a protected environment’ exists when a veteran ‘is only able to work because his employer protects him from termination.’” The Secretary argued that VA intentionally chose “not to define ‘employment in a protected environment,’ leaving it to the discretion of the factfinder on [a] case-by-case basis.” The appellant strongly objected to the Secretary’s position, arguing that “without an articulated standard for employment ‘in a protected environment,’ he cannot discern and the Court cannot determine whether the factors the Board considered in this case were appropriate.” The Court agreed with Mr. Cantrell.

The Court first discussed the relevant regulation, C.F.R. § 4.16, which provides that a veteran may be entitled to TDIU when his service-connected conditions render him unable to secure or follow substantially gainful employment. The regulation states that “marginal employment is not gainful employment,” and defines marginal employment as employment that either (1) results in earned annual income below the Census Bureau’s poverty threshold or, when a person’s income exceeds the poverty threshold, (2) on a facts-found basis, including “employment in a protected environment such as a family business or sheltered workshop.”

The Court determined that the meaning of “in a protected environment” is not clear from the plain language of the regulation, but declined to defer to the Secretary’s “we know it when we see it” definition that would essentially rely on hundreds of VA adjudicators to “uniformly and consistently apply that undefined term without guidance.” The Court stated that without a definition, “there is no standard against which VA adjudicators can assess the facts of a veteran’s case to determine whether he or she is employed in a protected environment.” The Court held that “absent an articulated standard for employment ‘in a protected environment’ that is capable of consistent application by VA and meaningful review by this Court, we cannot defer to the Secretary’s decision not to define that term in § 4.16(a).”

The Court discussed VA’s historical difficulties in implementing this regulation, adding that it “has little confidence that VA has or will be able to determine employment ‘in a protected environment’ in a consistent manner without further guidance from the Secretary.”

The Court stated that “the magnitude of a veteran’s job responsibilities and the degree of accommodation necessary for successful, full-time work might be appropriate facts to consider in determining whether a veteran is employed in a protected environment,” but VA’s failure to define this phrase made it impossible for the Court “to meaningfully assess the propriety of the Board’s reliance on the factors it cited in this case.” However, the Court declined to define the phrase, stating that it is VA’s responsibility to define its own regulation, and remanded this case back to the Board to provide an adequate statement of reasons or bases for its decision.

The Court also determined that the Board provided an inadequate explanation for its rejection of the private vocational expert’s opinion. The Board’s assessment of this opinion focused on the vocational expert’s estimate of the amount of time the veteran spent in the restroom each day. The Board determined that the veteran’s reports to the vocational expert were “inconsistent with the rest of the record” because the veteran never stated that “he spends nearly half of his work shift in the restroom.” The Court found, however, that the record contains no other evidence regarding the amount of time spent in the restroom each day – and “thus no statements that may be inconsistent” with the vocational expert’s opinion. The Court concluded that “the Board failed to identify a proper foundation in the record for its adverse credibility determination.”

The Court further determined that the Board erred by denying referral for consideration of entitlement to TDIU on an extraschedular basis. The Court reiterate that the extraschedular referral determination requires the Board to “consider the collective impact of multiple service-connected disabilities whenever that issue is expressly raised by the claimant or reasonably raised by the record,” and determined that the issue was reasonably raised, citing evidence that Mr. Cantrell “could not stand or walk without difficulty as a result of multiple service-connected disabilities.” The Court added that “the Board’s approach in this case improperly focused on individual symptoms, rather than the collective impact of those symptoms on the veteran’s disability picture.” The Court thus rejected the Board’s determination that referral for extraschedular consideration was not warranted because “the Board considered only whether Mr. Cantrell had symptoms not listed in the respective evaluation criteria for each service-connected disability and not whether those disabilities collectively caused an exceptional disability picture not contemplated by the rating schedule.”

Judge Lance wrote a concurring opinion, stating his belief that “a claimant’s income – and, specifically, whether a claimant receives the same pay as similarly situated coworkers who are not disabled – is also a factor relevant to whether the claimant is employed in a protected environment.” Judge Lance noted that disability ratings are based on “the average impairments in earning capacity.” Therefore, “[i]f a claimant’s disabilities do not result in lost income, then there is no loss of earning capacity, and an award of TDIU would not be appropriate.” The concurrence also noted that the Americans with Disabilities Act requires employers to make reasonable accommodations for employees with disabilities – and that where such accommodations are made pursuant to the ADA, “a TDIU award would, in effect, constitute a second paycheck on the back of the taxpayer.”

While the language of this decision is quite useful for claimants who are employed “in a protected environment” and who are seeking entitlement to TDIU, the ultimate remedy in this case was simply a remand for the Board to provide an “adequate explanation” for its decision. I believe the facts of this case and the law should have been sufficient to warrant reversal.

FULL DECISION