260 F.3d 1365 (Fed. Cir. 2001), 00-7095, Nat'l Org of Veterans Adv v. Secretary of Veterans Affairs

Docket Nº:00-7095, -7096, -7098
Citation:260 F.3d 1365
Party Name:NAT'L ORG. OF VETERANS ADVOCATES v SECR'Y NATIONAL ORGANIZATION OF VETERANS' ADVOCATES, INC., Petitioner, and DISABLED AMERICAN VETERANS, Petitioner, and PARALYZED VETERANS OF AMERICA, Petitioner, v. SECRETARY OF VETERANS AFFAIRS, Respondent.
Case Date:August 16, 2001
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit
 
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Page 1365

260 F.3d 1365 (Fed. Cir. 2001)

NAT'L ORG. OF VETERANS ADVOCATES v SECR'Y NATIONAL ORGANIZATION OF VETERANS' ADVOCATES, INC., Petitioner,

and

DISABLED AMERICAN VETERANS, Petitioner,

and

PARALYZED VETERANS OF AMERICA, Petitioner,

v.

SECRETARY OF VETERANS AFFAIRS, Respondent.

00-7095, -7096, -7098

United States Court of Appeals, Federal Circuit

August 16, 2001

Appealed from: Department of Veterans Affairs

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[Copyrighted Material Omitted]

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

Stephen L. Purcell, Disabled American Veterans, of Washington, DC, argued for petitioner Disabled American Veterans. 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.

Russell A. Shultis, Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, DC, argued for respondent Secretary of Veterans Affairs. On the brief were David M. Cohen, Director; Deborah A. Bynum, Assistant Director; and John J. Field, Attorney. Of counsel on the brief were Donald E. Zeglin; and David J. Barrans, Attorneys, Department of Veterans Affairs, of Washington, DC. Of counsel were Stephen A. Bergquist, and Thomas O. Gessel, Attorneys, Department of Veterans Affairs; and Thomas B. Fatouros, Trial Attorney, Department of Justice.

Before CLEVENGER, SCHALL, and DYK, Circuit Judges.

DYK, Circuit Judge.

National Organization of Veterans' Advocates, Inc., ("NOVA"), Disabled American Veterans ("DAV"), and Paralyzed Veterans of America ("PVA") (collectively, "petitioners"), challenge the validity of a regulation promulgated by the Department of Veterans Affairs, 38 C.F.R. § 3.22 (2000).1 That regulation, as revised in January 2000, restricts the award of dependency and indemnity compensation ("DIC") benefits to survivors2 of deceased veterans to cases where the veteran (during his or her lifetime) had established a right to receive total service-connected disability

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compensation for the period of time required by the governing statute, 38 U.S.C. § 1318 (1994),3 or would have established such right but for clear and unmistakable error by the Department of Veterans Affairs in adjudicating the veteran's claim. We conclude that the revised regulation is inconsistent with another regulation, 38 C.F.R. § 20.1106, that interprets a virtually identical veterans' benefits statute, 38 U.S.C. § 1311(a)(2). We further conclude that the agency has failed to explain its rationale for interpreting these virtually identical statutes in conflicting ways. We therefore remand this case to the Department of Veterans Affairs for further consideration.

BACKGROUND

Initially it is useful to briefly review the statutory scheme governing the award of DIC benefits to survivors of deceased veterans.

Under chapter 13 of title 38, United States Code, the Department of Veterans Affairs is authorized to pay DIC benefits to survivors of a deceased veteran whose death is due to a disability incurred during the veteran's military service ("service-connected disability").4 Section 1310(a), enacted in 1958, provides in pertinent part that "[w]hen any veteran dies after December 31, 1956, from a service-connected or compensable disability, the [Department of Veterans Affairs] shall pay [DIC benefits] to such veteran's surviving spouse, children, and parents." 38 U.S.C. § 1310(a); see also 38 C.F.R. § 3.5(a). Where the veteran's death is service-connected, survivors may also be entitled to increased DIC benefits, if certain requirements are met. Section 1311 provides in pertinent part that survivors may receive increased benefits:

[I]n the case of the death of a veteran who at the time of death was in receipt of or was entitled to receive . . . compensation for a service-connected disability that was rated totally disabling for a continuous period of at least eight years immediately preceding death.

38 U.S.C. § 1311(a)(2) (emphasis added). In other words, section 1311 entitles survivors of a veteran (who dies from a service-connected total disability) to receive DIC benefits even if the veteran did not receive compensation for that disability during his or her lifetime.

A different statute is involved here. Section 1318 of title 38 governs the award of DIC benefits when the veteran's death is not service-connected. This statutory prescription is comparatively recent. Before 1978, payment of DIC benefits was limited by section 1310(a) to survivors of service members who died on active duty or veterans who died post-service as a result of service-connected disabilities.

In 1978, however, Congress, by enacting section 1318, provided for the payment of DIC benefits to the survivors of a veteran whose death was not caused by a service-connected disability, but who, at the time of death, "was in receipt of (or but for the receipt of retired or retirement pay was entitled to receive)" compensation for a service-connected disability that was rated 100 percent disabling for 10 years immediately preceding death, or for five years continuously from the date of the veteran's discharge. Veterans' Disability Compensation and Survivors' Benefits Act of 1978, Pub. L. No. 95-479, 92 Stat. 1560, 1564 (1978). That provision was codified in 38

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U.S.C. § 410(b)(1) (1976 & Supp. II 1978), a predecessor statute to 38 U.S.C. § 1318. In 1979, the Department of Veterans Affairs issued 38 C.F.R. § 3.22 to implement section 410(b)(1). 44 Fed. Reg. 22,716, 22,718 (Apr. 17, 1979). Subsection (a) of that regulation provided, in pertinent part, that:

Benefits . . . shall be paid to a deceased veteran's surviving spouse . . . or children in the same manner as if the veteran's death is service-connected when the following conditions are met:

(1) The veteran's death was not caused by his or her own willful misconduct; and

(2) The veteran was in receipt of (or but for the receipt of military retired pay was entitled to receive) compensation at time of death for service-connected disability that either:

(i) Was continuously rated totally disabling . . . for a period of 10 or more years immediately preceding death; or

(ii) Was continuously rated totally disabling . . . from the date of the veteran's discharge or release from active duty for a period of not less than 5 years immediately preceding death.

38 C.F.R. § 3.22(a) (1979).

In 1981 the General Counsel of the Department of Veterans Affairs issued an opinion that concluded, in pertinent part, that "38 U.S.C. § 410(b)(1) (1976) does not provide a basis for finding entitlement to survivors' benefits where a veteran, at death, had been in receipt of compensation for total disability but not for the requisite duration solely because of [Department of Veterans Affairs] error in the rating assigned." O.G.C. Prec. Op. 2-81, at 2 (May 21, 1981). In other words, that opinion barred survivors from receiving DIC benefits in cases where the agency's error deprived a totally disabled veteran from receiving his or her statutorily prescribed benefits for the requisite five- or ten-year period.

In response to that General Counsel opinion, Congress in 1982 amended 38 U.S.C. § 410(b)(1). That amended statute (as currently codified at 38 U.S.C. § 1318) states in pertinent part that DIC benefits would be awarded to survivors of a deceased veteran (whose death was not service-connected) where that veteran died:

[N]ot as the result of the veteran's own willful misconduct, and who was in receipt of or entitled to receive . . . compensation at the time of death for a service-connected disability rated totally disabling if

(1) the disability was continuously rated totally disabling for a period of 10 or more years immediately preceding death; [or]

(2) the disability was continuously rated totally disabling for a period of not less than five years from the date of such veteran's discharge or other release from active duty.

38 U.S.C. § 1318(b) (Supp. V 1999) (emphasis added). The legislative history accompanying section 1318 made clear that the purpose of the 1982 amendment was "to provide that the requirement that the veteran have been in receipt of compensation for a service-connected disability rated as total for 10 years prior to death (or for 5 years continuously from the date of discharge) is met if the veteran would have been in receipt of such compensation for such period but for a clear and unmistakable error regarding the award of a total-disability rating." Explanatory Statement of Compromise Agreement, 128 Cong. Rec. H7777 (1982), reprinted in 1982 U.S.C.C.A.N. 3012, 3013 (emphasis added).

In sum, sections 1311 and 1318 both prescribe circumstances under which survivors of deceased veterans may receive

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DIC benefits. And both statutes provide that survivors may obtain benefits (or increased benefits) in cases where the deceased veteran was "entitled to receive" compensation for a totally disabling injury preceding death. Yet the Department of Veterans Affairs has promulgated implementing regulations for those statutes that interpret the virtually identical language of the statutes in conflicting ways. It is to those implementing regulations that we now turn.

The Language and Judicial Interpretations of 38 C.F.R. § 20.1106

As noted above, 38 U.S.C. § 1311 addresses the DIC benefits payable to survivors of a veteran whose death is due to a service-connected disability. Subsection (a)(2) of § 1311 states, in pertinent part, that the DIC benefits may be increased:

[I]n the case of the death of a veteran who at the time of death was in receipt of or was entitled to receive . . . compensation for a service-connected disability that was rated totally disabling for a continuous period of at least eight years...

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