MISLEADING NOTICE VIOLATES DUE PROCESS

Noah v. McDonald, docket no. 15-0334 (June 10, 2016)

HELD: When VA sends “affirmatively misleading notice” to a claimant, that notice does not “satisfy the requirements of procedural due process guaranteed by the Fifth Amendment to the U.S. Constitution.”

SUMMARY: In December 1981, Mr. Noah filed a claim for service connection for PTSD. In January 1982, VA sent him a letter regarding additional information that was needed. The letter stated “Please reply within 30 days. If we have no reply within 60 days, we will assume that you have with[]drawn your claim.” Mr. Noah did not respond to this request.  

In December 2007, Mr. Noah filed another claim for service connection for PTSD. The RO granted the claim in 2009, effective the date of the 2007 claim. Mr. Noah appealed the effective date.

In an October 2011 statement, Mr. Noah explained that he had attempted to get medical evidence to support his 1981 claim, but he believed – based on VA’s letter – that if he did not submit the evidence within 60 days, VA would close his file. He was not able to get a medical appointment for approximately 90 days and could not afford to see a private psychiatrist – so he became discouraged and gave up. He stated that had he known that he actually had one year to submit the evidence, he would have waited for the appointment with the psychiatrist and would have been able to submit that evidence.

Mr. Noah later submitted a letter from a private psychiatrist stating that he was suffering from PTSD in 1981 and 1982. VA denied the earlier effective date and Mr. Noah appealed to the Board. At the Board, Mr. Noah’s counsel conceded that he had “abandoned” his 1981 claim, but argued that he “had a constitutional right not to be misled by VA’s letter.”

The Board acknowledged that in 1981, 38 C.F.R. § 3.158 provided that a claim will be considered abandoned if requested evidence is not submitted within one year after the date of the request. The Board acknowledged that VA’s letter was “misleading,” but concluded that “even though Mr. Noah might have believed he had no more than 60 days to submit medical evidence . .  . , he remained subject to the 1-year abandonment provision in effect at the time.”

At the Court, Mr. Noah first argued that he was entitled to equitable tolling of the one-year period to submit evidence, and that equitable tolling might apply in situations such as his where a due process violation is alleged. The Court disagreed and held that “the one-year period in 38 U.S.C. § 3003(a) to submit evidence following VA’s notification of the evidence necessary to complete the application [for benefits] cannot be construed as a statute of limitations and, therefore, is not subject to equitable tolling.”

With respect to Mr. Noah’s due process argument, the Court held that VA’s act of providing the claimant with misleading notice violated his due process right to accurate notice and the “right to be heard,” which the Court described as his “right to have his claim for disability benefits adjudicated.” The Court held that VA’s 1982 notice letter “failed to satisfy the requirements of procedural due process guaranteed by the Fifth Amendment to the U.S. Constitution.”

However, the Court also found that in order to prevail in an argument for an earlier effective date based on the due process violation, the claimant must “demonstrate that he relied to his detriment on the misleading notice.” The Court acknowledged that Mr. Noah did not apply for benefits for PTSD again until 2007, but also noted his explanation for why he stopped pursuing benefits back in 1982. The Court remanded this appeal to the Board to determine whether Mr. Noah relied to his detriment on the misleading notice. If so, then his 1981 claim is “pending and unadjudicated,” and he may be entitled to an earlier effective date for an award of benefits.

FULL DECISION

CHAMPVA, 38 U.S.C. § 1781

Holle v. McDonald, docket no. 14-1235 (June 10, 2016)

HELD: Eligibility for CHAMPVA requires enrollment in Medicare Part B, subject to only one exception, and the enrollment requirements cannot be construed as a statute of limitations that would be subject to equitable tolling.

SUMMARY: The appellant in this case is the spouse of a veteran who was in receipt of a total disability rating based on individual unemployability for his service-connected PTSD. In 2002, she applied for benefits through the Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA). The following month, she received a letter informing her of her eligibility and explaining how to apply. In 2005, she was awarded Social Security disability benefits. She was enrolled in Medicare Part A as of December 1, 2004, and Part B as of June 1, 2009. She was subsequently informed by VA that she was not eligible for CHAMPVA during the period that she was not enrolled in Medicare Part B – and that she would receive an invoice for any benefits received during that ineligibility period.

She appealed that decision, asserted that she had had a stroke that caused memory loss and impacted her daily living, and that her husband could not assist her because of his PTSD. While sympathetic to her situation, the Board denied the appeal because the eligibility criteria for CHAMPVA require enrollment in Medicare Part B.

On appeal to the Veterans Court, Mrs. Holle argued that she is entitled to “equitable tolling” of the 2004 deadline to enroll in Medicare Part B. The Court examined the language of the statute authorizing the CHAMPVA program, 38 U.S.C. § 1781, noting that it requires enrollment in Medicare Part B unless the applicant was 65 years old as of June 5, 2001, and was not enrolled in Medicare Part B as of that date. Mrs. Holle did not satisfy this exception to the requirement – and the Court thus held that the Board properly interpreted the statute regarding CHAMPVA eligibility.

Regarding the equitable tolling argument, the Court noted that “equitable tolling is a tool used to grant relief when a potential appellant fails to file suit within a statutory limitations period.” Because this situation did not involve the question of a timely appeal to a court – but instead dealt with enrollment requirements – the Court held that equitable tolling did not apply. The Court stated that it “may not award equitable relief,” but noted that “the Secretary, in appropriate cases, may provide equitable relief,” which is entirely discretionary and not reviewable by the Court. 

FULL DECISION

EQUAL ACCESS TO JUSTICE ACT (EAJA)

Butts v. McDonald, docket no. 14-3019(E) (June 3, 2016)

HELD: VA's compliance with existing Court precedent "does not relieve the Court of its duty to evaluate the reasonableness of the Secretary’s regulatory interpretation and his conduct at the administrative level.” therefore, “the Secretary may be required to pay EAJA fees despite following [Court] precedent.” 

SUMMARY: In Johnson v. Shinseki (Johnson I), 26 Vet.App. 237 (2013) (en banc), the Court held that 38 C.F.R. § 3.321(b)(1) was ambiguous and deferred to the Secretary’s interpretation that limited extraschedular consideration to individual disabilities, as opposed to multiple conditions. The Federal Circuit reversed this decision in Johnson v. McDonald (Johnson II), 762 F.3d 1362 (Fed. Cir. 2014), concluding that the plain language of the regulation was unambiguous and that it “provides for referral for extra-schedular consideration based on the collective impact of multiple disabilities.” Johnson II, 762 F.3d at 1365-66.

While Johnson I was on appeal to the Federal Circuit, the Board of Veterans’ Appeals issued the decision in Mr. Butts’ case, denying referral for extraschedular consideration for his service-connected disabilities. Mr. Butts filed his Notice of Appeal in September 2014 – after the Federal Circuit issued Johnson II. The parties subsequently agreed to a joint motion for partial remand (JMPR) because the Board’s adverse extraschedular determination did not comply with 38 C.F.R. § 3.321. The Court granted the JMPR and Mr. Butts’ attorney filed an application for fees under the Equal Access to Justice Act (EAJA).  

The Secretary disputed the EAJA application, arguing that Mr. Butts was “not a prevailing party because the JMPR was based on a change in precedent, rather than Board error.” Mr. Butts argued that “he is a prevailing party because the JMPR was implicitly based on the Board’s failure to properly apply § 3.321(b)(1), as Johnson II ‘did not create a new interpretation of the regulation, but simply explained what the regulation has always said.’”

The Court first noted that it is the appellant’s burden to show “prevailing-party status under the EAJA,” and that a joint motion for remand “may confer prevailing-party status if the JMR contains an explicit or implicit admission of error.” *4 (citing Thompson v. Shinseki, 24 Vet.App. 176, 178 (2010)). It is the Secretary’s burden to show “that his position was substantially justified at both the administrative and litigation stages.” *5 (citing Locher v. Brown, 9 Vet.App. 535, 537 (1997)).

The Court found that the language of the JMPR “explicitly concedes error” because it stated that the Board’s decision did not comply with § 3.321. Because of this language, the Court determined that Mr. Butts was a prevailing party for EAJA purposes. *7.

The Secretary argued that his position was substantially justified because the Board was bound to comply with Johnson I when it issued its decision. *8. The Court rejected this argument, noting that the Board never mentioned Johnson I in its decision. The Court added that the fact that the Court had previously upheld the Secretary’s “erroneous interpretation” of the regulation in Johnson I did not resolve the substantial-justification question. *9. Instead, the Court must examine the “totality of the circumstances” surrounding the government’s position and assess “the reasonableness of the Secretary’s regulatory interpretation and his conduct at the administrative level.” *9. The Court found that, in Johnson I, the majority had “simply erred when it deferred to the Secretary’s interpretation” – and that the majority’s error did not make the Secretary’s error “reasonable . . . under the totality of the circumstances.” Id. The Court thus held that “under the EAJA’s totality-of-the-circumstances analysis, the Secretary may be required to pay EAJA fees despite following precedent.” *10.

The Court found further support for its holding in the Federal Circuit’s determination “that there was ‘no logic’ and no policy support for [the Secretary’s] interpretation that § 3.321(b)(1) applied only to service-connected disabilities on a disability-by-disability basis ‘and not also on the collective impact of all of the veteran’s disabilities.’” *11.

The Court reiterated the Federal Circuit’s finding that the plain language of the regulation was consistent with 38 U.S.C. § 1155, which authorizes the Secretary to adopt and apply a rating schedule, adding that the Secretary’s interpretation was not supported by the regulation’s history. *12.

The Court also noted that while VA was bound by Johnson I, the Secretary could have sought a stay in any cases that would involve the application of Johnson I while that decision was on appeal to the Federal Circuit. *14-15. The Court concluded that the only factor in favor of substantial justification was the Board’s obligation to comply with Johnson I. That factor was outweighed by

(1) the Secretary’s failure to abide by the plain wording of § 3.321(b)(1) … (2) the fact that the Secretary had no policy basis for his proffered interpretation; (3) the fact that [Johnson I] was a mixed decision and on appeal while the Secretary continued to misapply § 3.321(b)(1); and (4) the fact that the Secretary had the option of staying the case pending a decision on appeal. *15.

FULL DECISION