Littlejohn v. U.S.

• Decision Date: 05 March 2003
• Docket Number: No. 01-16265.,01-16265.
• Citation: 321 F.3d 915
• Parties: Gary LITTLEJOHN, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

321 F.3d 915

Gary LITTLEJOHN, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.

No. 01-16265.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted October 9, 2002.

Filed March 5, 2003.

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Thomas M. Witte, Fair Oaks, CA, for the plaintiff-appellant.

Greg Addington, Assistant United States Attorney, Reno, NV, for the defendant-appellee.

Appeal from the United States District Court for the District of Nevada; David Warner Hagen, District Judge, Presiding. D.C. No. CV-99-00451-DWH.

Before: D.W. NELSON, BEEZER and WARDLAW, Circuit Judges.

OPINION

BEEZER, Circuit Judge:

In August 1998, the Department of Veterans Affairs ("VA") awarded Gary Littlejohn disability benefits for disabilities stemming from a series of strokes. In a subsequent action under the Federal Tort Claims Act ("FTCA"), 28 U.S.C. §§ 1346, 2671-2680, Littlejohn alleged negligence on the part of two VA physicians who treated him before he began suffering grand mal seizures in connection with the strokes.

Before the district court, Littlejohn argued that the two administrative decisions of the VA relating to his disability claims (the "Rating Decisions") were entitled to claim and issue preclusive effect in his FTCA action. The district court disagreed. After a bench trial, the district court entered judgment for the government. Littlejohn timely appeals. We have jurisdiction under 28 U.S.C. § 1291, and we affirm.

I

In September 1996, Littlejohn, a veteran, was examined at the VA Medical Center in Reno, Nevada ("VA Reno"). He complained of intermittent tingling and numbness in his hands and arms, as well as dizziness. Littlejohn also complained of memory loss and intermittent diplopia (double vision). Littlejohn was scheduled for a neurological consultation, which took place on September 27, 1996.

At that consultation, Littlejohn was examined by Dr. John Eaton, a neurologist. Dr. Eaton concluded that Littlejohn did not suffer from any neurological diseases. Two weeks later, Littlejohn was hospitalized after suffering grand mal seizures. An MRI revealed that Littlejohn had suffered a series of strokes.

In December 1996, Littlejohn filed a disability claim with the VA, requesting benefits based on disabilities traceable to the stroke incident. He claimed entitlement to benefits under 38 U.S.C. § 1151 ("§ 1151"). This statute provides for VA disability payments if claimants can show their disabilities are:

caused by hospital care, medical or surgical treatment, or examination furnished the veteran ... in a[VA] facility... and the proximate cause of the disability... was ... carelessness, negligence, lack of proper skill, error in judgment, or similar instance of fault on the part of the [VA] in furnishing the hospital care, medical or surgical treatment, or examination; or ... an event not reasonably foreseeable ....

38 U.S.C. § 1151(a)(1).

The VA issued a Rating Decision in August 1998 (the "1998 Rating Decision"). The 1998 Rating Decision reviewed the evidence submitted by Littlejohn and referred to an earlier review of the case conducted by Dr. R.F. Riordan, the Regional Office Medical Officer. Dr. Riordan expressed the opinion that Littlejohn did not receive quality medical care or a correct, timely diagnosis from VA Reno's doctors. Dr. Riordan concluded that the effect of this failure on Littlejohn's disability was indeterminable, but was probably considerable. Based on the record before her, the examiner resolved all reasonable doubts in Littlejohn's favor and concluded that he was entitled to benefits under § 1151.

One month after the 1998 Rating Decision was issued, Littlejohn claimed entitlement to further disability payments, alleging his disability was now total. He also claimed entitlement to an earlier effective date for his award, going back to the time of his seizures.

The VA issued another Rating Decision in August 1999 (the "1999 Rating Decision"), which specifically recognized that Littlejohn's earlier claim was granted because VA medical staff should have done more testing and such testing might have prevented Littlejohn's strokes or allowed for earlier treatment. In this 1999 Rating Decision, the VA granted portions of Littlejohn's request for greater benefits, but denied his request related to the award's effective date. In making these determinations, the examiner again found that a number of Littlejohn's disabilities resulted from VA hospitalization or medical treatment.

In addition to his disability claims, Littlejohn filed a claim with the VA under the FTCA, alleging negligence on the part of two VA physicians and requesting damages of $5,000,000. The VA denied this claim through non-action. Littlejohn then filed an FTCA action in the district court, with his operative complaint requesting damages in excess of $2,000,000.

Littlejohn moved for summary judgment on the issue of liability under the FTCA, arguing that the VA's Rating Decisions have preclusive effect, establishing liability for negligence under his FTCA claim. The district court denied the motion. A bench trial followed. During the trial, Littlejohn moved for a directed verdict on the issue of liability, again arguing the preclusive effect of the VA's Rating Decisions. This motion was taken under submission until the end of trial.

Following trial, the district court entered findings of fact, conclusions of law and judgment for the government. The court did not make an express ruling on the directed verdict motion. The district court ultimately concluded that Littlejohn's VA physicians were not negligent under the FTCA and their treatment of Littlejohn was not a proximate cause of his stroke-related disabilities. On appeal, Littlejohn claims that the district court must give claim or issue preclusive effect to the VA's Ratings Decisions.¹

II

Claim preclusion and issue preclusion are related doctrines used to protect the finality of decisions and prevent the proliferation of litigation. Amadeo v. Principal Mut. Life Ins. Co., 290 F.3d 1152, 1160 (9th Cir.2002). The two doctrines are based on the same general principle: After a claim or issue is properly litigated, that should be the end of the matter for the parties to that action. Although the two doctrines are related, they protect distinct values and may be used in different ways. See, e.g., Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 n. 5, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979). Littlejohn invokes both doctrines in this appeal. The district court's application of the two doctrines involves a mixed question of law and fact, which we review de novo. A & A Concrete, Inc. v. White Mountain Apache Tribe, 781 F.2d 1411, 1414 (9th Cir.1986).

A

Littlejohn contends that FTCA liability is established by the VA's Rating Decisions under traditional claim preclusion principles. We disagree. Littlejohn's claim preclusion argument fails because the VA could not assert its FTCA causation defense in the disability benefit proceedings. We further hold that claim preclusion is incompatible with the statutory purposes underlying the veterans' disability and FTCA statutory schemes.

1.

Claim preclusion prevents the relitigation of claims previously tried and decided.² Clark v. Bear Stearns & Co., 966 F.2d 1318, 1320 (9th Cir.1992). It bars the subsequent application of all defenses that could have been asserted in a previous action between the same parties on the same cause of action, even if such contentions were not raised. Id. Traditionally four factors are considered when determining whether successive lawsuits involve the same "cause of action":

(1) whether rights or interests established in the prior judgment would be destroyed or impaired by the prosecution of the second action;

(2) whether substantially the same evidence is presented in the two actions;

(3) whether the two actions involve infringement of the same right; and

(4) whether the two actions arise out of the same transactional nucleus of facts.

Id. at 1320. This cause of action analysis is unnecessary, however, when a ground of recovery or defense could not have been asserted in the prior action. See id. at 1321. In such cases, the defense or ground of recovery falls outside the scope of claim preclusion. Id.; see also Brown v. Felsen, 442 U.S. 127, 131, 99 S.Ct. 2205, 60 L.Ed.2d 767 (1979).

Littlejohn primarily contends that his disability claim and his FTCA claim involve the same cause of action. We find it unnecessary to reach this argument because Littlejohn's claim preclusion argument falters on a more fundamental level: The VA was unable to raise its causation defense in Littlejohn's disability benefit proceedings.³

The structure of the disability benefit process prevented the VA from raising a causation defense at that time. Disability hearings are ex parte and non-adversarial. See Manio v. Derwinski, 1 Vet.App. 140, 144 (1991); see also Forshey v. Principi, 284 F.3d 1335, 1355 (Fed.Cir.), cert. denied, ___ U.S. ___, 123 S.Ct. 110, 154 L.Ed.2d 33 (2002). Evidence presented in a § 1151 benefits hearing is limited to information presented by the claimant and certain types of information discovered by the VA. See 38 C.F.R. §§ 3.103, 3.159, 3.328. The VA is not authorized to develop evidence for the purpose of challenging the claimant, but rather is required to "assist a claimant in developing the facts pertinent to [his or her] claim." 38 C.F.R. § 3.103.⁴ When a medical issue is obscure, complex or sufficiently controversial however, an independent medical examiner may be consulted. 38 C.F.R. § 3.328.

This claimant-friendly system provides no opportunity for the VA to develop and offer evidence of the kind that eventually proved the undoing of Littlejohn's FTCA claim.⁵ Claim preclusion is inappropriate.

This conclusion is not altered by Littlejohn's argument that refusing to apply claim preclusion in this FTCA action results in impermissible judicial review of the VA's...