Disabled American Veterans v. Gober

• Decision Date: 08 December 2000
• Parties: (Fed. Cir. 2000) DISABLED AMERICAN VETERANS, and NATIONAL ORGANIZATION OF VETERANS' ADVOCATES, INC., and PARALYZED VETERANS OF AMERICA, and VIETNAM VETERANS OF AMERICA, INC., Petitioners, v. Hershel W. Gober, ACTING SECRETARY OF VETERANS AFFAIRS, Respondent. 99-7061,-7071,-7084,-7085 DECIDED:
• Court: U.S. Court of Appeals — Federal Circuit

Page 682

234 F.3d 682 (Fed. Cir. 2000)

DISABLED AMERICAN VETERANS and NATIONAL ORGANIZATION OF VETERANS' ADVOCATES, INC. and PARALYZED VETERANS OF AMERICA and VIETNAM VETERANS OF AMERICA, INC., Petitioners, v. Hershel W. Gober, ACTING SECRETARY OF VETERANS AFFAIRS, Respondent.

99-7061,-7071,-7084,-7085

United States Court of Appeals for the Federal Circuit

DECIDED: December 8, 2000

Rehearing Denied: January 2, 2001.

Appealed from: Department of Veterans Affairs

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

Stephen L. Purcell, Disabled American Veterans, of Washington, DC, argued for petitioner, Disabled Veterans of America. With him on the brief was Ronald L. Smith

Michael P. Horan, Paralyzed Veterans of America, of Washington, DC, argued for petitioner, Paralyzed Veterans of America.

Michael E. Wildhaber, The Law Office of Wildhaber & Associates, of Washington, DC, argued for petitioner, Vietnam Veterans of America, Inc.

Kenneth M. Carpenter, National Organization of Veterans' Advocates, Inc., of Topeka, Kansas, argued for petitioner, National Organization of Veterans' Advocates, Inc.

Matthew P. Reed, Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, DC, argued for respondent. On the brief wereDavid W. Ogden, Assistant Attorney General; David M. Cohen, Director; Kathryn A. Bleecker, Assistant Director; and Tara A. Hurley, Attorney. Of counsel on the brief wereDonald E. Zeglin, Deputy Assistant General Counsel; and Michael J. Timinski, Attorney, Department of Veterans Affairs, of Washington, DC.

Before MAYER, Chief Judge, MICHEL, and SCHALL, Circuit Judges.

SCHALL, Circuit Judge.

Disabled American Veterans ("DAV"), National Organization of Veterans' Advocates, Inc. ("NOVA"), Paralyzed Veterans of America ("PVA"), and Vietnam Veterans of America, Inc. ("VVA") (collectively "Petitioners") challenge the validity of certain regulations promulgated by the Department of Veterans Affairs ("VA") and codified at 38 C.F.R. §§ 20.1400-20.1411.¹ The regulations at issue constitute the rules of practice for seeking revision of a decision of the Board of Veterans' Appeals ("Board") on the ground of clear and unmistakable error ("CUE") under 38 U.S.C. § 7111. Petitioners challenge the rules as having been issued without compliance with the rulemaking procedures required by 5 U.S.C. § 553. They also challenge the rules as arbitrary and capricious and as contrary to various statutory provisions, including parts of § 7111. Petitioners bring their challenge under 38 U.S.C. § 502.

We hold that the rule codified at 38 C.F.R. § 20.1404(b) is invalid because, in conjunction with the rule codified at 38 C.F.R. § 20.1409(c), it operates to prevent Board review of any CUE claim that is the subject of a motion that is denied for failure to comply with the filing and pleading requirements of the rule codified at 38 C.F.R. § 20.1404(b). That is contrary to the requirement of 38 U.S.C. § 7111(e) that a CUE claim "shall be decided by the Board on the merits." However, we hold that the other rules challenged by Petitioners are valid because they were issued in compliance with applicable rulemaking procedures and are not arbitrary, capricious, or contrary to law.

BACKGROUND

I.

A final decision of a VA regional office ("RO") is subject to collateral attack by a claim of CUE. See Bustos v. West, 179 F.3d 1378, 1380 (Fed. Cir. 1999). A claim of CUE has been governed by regulation since 1928. See Smith v. Brown, 35 F.3d 1516, 1524-25 (Fed. Cir. 1994) (providing a history of the evolution of regulations describing CUE review). The regulation currently codified at 38 C.F.R. § 3.105(a) provides, in pertinent part, that "[p]revious determinations which are final and binding . . . will be accepted as correct in the absence of clear and unmistakable error. Where evidence establishes such error, the prior decision will be reversed and amended." In Smith, we held that CUE review under section 3.105(a) applies to review of RO decisions and not decisions of the Board. Smith, 35 F.3d at 1526-27.

In 1997, Congress enacted Pub. L. No. 105-111, 111 Stat. 2271 (1997) (codified at 38 U.S.C. §§ 5109A, 7111), entitled "An Act To amend title 38, United States Code, to allow revision of veterans benefits decisions based on clear and unmistakable error" (the "Act"). The Act has two sections: Section 1(a), codified at 38 U.S.C. § 5109A, which relates to CUE review of RO decisions; and Section 1(b), codified at 38 U.S.C. § 7111, which relates to CUE review of Board decisions. See 111 Stat. at 2271-72.

Section 5109A is a codification of 38 C.F.R. § 3.105(a). It allows RO decisions to be subject to CUE review. See Donovan v. West, 158 F.3d 1377, 1383 (Fed. Cir. 1998) (noting that "[a]lthough more detailed than [38 C.F.R. § 3.105(a)], the basic substantive provision in [38 U.S.C. § 5109A] is the same as that in the regulation"); see also H.R. Rep. No. 105-52, at 2-3 (1997) (noting that the bill, H.R. 1090, which became Pub. L. No. 105-111, would codify 38 C.F.R. § 3.105(a)); S. Rep. No. 105-157, at 4 (1997) (stating that a purpose of the bill was to "codify, in statute, the [CUE challenge] currently specified by regulation").

Section 1(b) of the Act (codified at 38 U.S.C. § 7111) was enacted in response to our holding in Smith. Section 7111 allows Board decisions to be subject to CUE review. See Donovan, 158 F.3d at 1383; see also H.R. Rep. No. 105-52, at 2. It represents an "exten[sion] [of] the principle underlying [38 C.F.R. § 3.105(a)] to [Board] decisions." H.R. Rep. No. 105-52, at 2. In addition, when passing the Act, Congress looked to the decisions of the United States Court of Appeals for Veterans Claims that have defined CUE. See H.R. Rep. No. 105-52, at 2-3; S. Rep. No. 105-157, at 3 (both citing Russell v. Principi, 3 Vet. App. 310, 313 (1992) (en banc), and Fugo v. Brown, 6 Vet. App. 40, 43-44 (1993)); Bustos, 179 F.3d at 1380-81 (noting that the legislative history of the Act "cites favorably to the Court of Appeals for Veterans Claims' interpretation of the CUE standard"). The Act "codified . . . the Court of Appeals for Veterans Claims' long standing interpretation of CUE." Bustos, 179 F.3d at 1381.

Section 7111, which is the basis for the rules in this case, provides as follows:

(a) A decision by the Board is subject to revision on the grounds of clear and unmistakable error. If evidence establishes the error, the prior decision shall be reversed or revised.

(b) For the purposes of authorizing benefits, a rating or other adjudicative decision of the Board that constitutes a reversal or revision of a prior decision of the Board on the grounds of clear and unmistakable error has the same effect as if the decision had been made on the date of the prior decision.

(c) Review to determine whether clear and unmistakable error exists in a case may be instituted by the Board on the Board's own motion or upon request of the claimant.

(d) A request for revision of a decision of the Board based on clear and unmistakable error may be made at any time after that decision is made.

(e) Such a request shall be submitted directly to the Board and shall be decided by the Board on the merits, without referral to any adjudicative or hearing official acting on behalf of the Secretary.

(f) A claim filed with the Secretary that requests reversal or revision of a previous Board decision due to clear and unmistakable error shall be considered to be a request to the Board under this section, and the Secretary shall promptly transmit any such request to the Board for its consideration under this section.

38 U.S.C. § 7111.

II.

On May 19, 1998, the VA published a notice of proposed rulemaking to implement 38 U.S.C. § 7111 and invited comments on the proposed rules. 63 Fed. Reg. 27534-541 (May 19, 1998). Comments were received from DAV, NOVA, PVA, and VVA, as well as from other members of the public. On January 13, 1999, the VA published the proposed final rules. 64 Fed. Reg. 2134-41 (Jan. 13, 1999). The rules had an effective date of February 12, 1999, id. at 2134, and were codified in a new subpart O of part 20 of title 38 of the Code of Federal Regulations. Id. at 2139. The new subpart O sets forth Rules 1400 to 1411, codified at 38 C.F.R. §§ 20.1400-20.1411. Id. at 2139-41.

On February 12, 1999, the VA issued an "interim final rule," amending 38 C.F.R. § 20.1405(a). 64 Fed. Reg. 7090-91. Rule 1405(a) was amended to require the VA to notify a claimant's representative, attorney, agency, or organization whenever the claimant files a CUE claim "to encourage representatives' participation in CUE motions." Id. at 7091. This "interim final rule" became effective on February 12, 1999, and comments regarding the rule were required to be submitted by March 15, 1999. Id. at 7090. The rules, with this modification, became effective on February 12, 1999.²

DAV filed a petition for review with this court on March 1, 1999, challenging the validity of the rules codified at 38 C.F.R. §§ 20.1400(b), 20.1404(b), and 20.1405(f). NOVA filed a petition for review on March 18, 1999, challenging the validity of the rules codified at 38 C.F.R. §§ 20.1401(a), 20.1403(a),(b)(2),(c)-(e), and 20.1406(b). PVA filed a petition for review on April 14, 1999, challenging the validity of the VA's rulemaking procedure, and specifically challenging the validity of the rules codified at 38 C.F.R. §§ 20.1401(a), 20.1403(a)-(e), 20.1404(a)-(b), 20.1405(b)-(c),(e)-(f), 20.1406(a)-(b), 20.1407, 20.1409(c),(d), and 20.1411(a)-(d). VVA filed a petition for review on April 14, 1999, challenging the validity of the rules codified at 38 C.F.R. §§ 20.1402, 20.1405(e)-(f), and 20.1411(b)-(d). All four petitioners seek review of the challenged rules pursuant to 38 U.S.C. § 502.³

After DAV and NOVA filed their petitions, the VA filed a motion to dismiss NOVA's petition as untimely in light of Fed. Cir. R. 47.12(a) (Mar. 4, 1999)....