370 F.3d 1089 (Fed. Cir. 2004), 02-7347, Wagner v. Principi

Docket Nº:02-7347.
Citation:370 F.3d 1089
Party Name:Ronald W. WAGNER, Claimant-Appellant, v. Anthony J. PRINCIPI, Secretary of Veterans Affairs, Respondent-Appellee.
Case Date:June 01, 2004
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit

Page 1089

370 F.3d 1089 (Fed. Cir. 2004)

Ronald W. WAGNER, Claimant-Appellant,

v.

Anthony J. PRINCIPI, Secretary of Veterans Affairs, Respondent-Appellee.

No. 02-7347.

United States Court of Appeals, Federal Circuit

June 1, 2004

Ronald L. Smith, Disabled American Veterans, of Washington, DC, argued for claimant-appellant.

Ashley N. Bailey, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for respondent-appellee. With her on the brief were Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director; and Deborah A. Bynum, Assistant Director. Of counsel

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on the brief was David J. Barrans, Attorney, Department of Veterans Affairs, of Washington, DC. Of counsel were Donald E. Zeglin and Renée L. Szybala, Attorneys, Department of Veterans Affairs, of Washington, DC.

Before NEWMAN, LOURIE and DYK, Circuit Judges.

DYK, Circuit Judge.

Appellant Ronald W. Wagner ("Wagner") appeals from the decision of the Court of Appeals for Veterans Claims affirming the Board of Veterans Appeals' ("BVA") denial of disability benefits based on alleged aggravation of a right knee disorder during service. Wagner v. West, No. 99-419, 2000 WL 33155867 (Vet.App. Oct. 19, 2000). Because the incorrect legal standard was applied to rebut the presumption of soundness under 38 U.S.C. § 1111, we vacate and remand for further consideration under the correct standard.

BACKGROUND

This case involves a claim for disability benefits for the veteran's right knee disorder. Title 38, section 1111 of the United States Code provides that:

[E]very veteran shall be taken to have been in sound condition when examined, accepted, and enrolled for service, except as to defects, infirmities, or disorders noted at the time of the examination, acceptance, and enrollment, or where clear and unmistakable evidence demonstrates that the injury or disease existed before acceptance and enrollment and was not aggravated by such service.

38 U.S.C. § 1111 (2000) (emphasis added). Mr. Wagner served on active duty in the United States Navy from 1964 to 1968. The medical examination report dated February 25, 1964, the day Mr. Wagner enlisted, listed no preexisting defects or diseases. Subsequent in-service medical examinations conducted in 1964, 1965 and 1966 showed that Mr. Wagner complained of pain and a loss of mobility in his right knee. These medical records contained statements from Mr. Wagner indicating that he injured his right knee playing high school football prior to his enlistment. However, there was evidence that this preexisting injury was aggravated during service. For instance, two service medical records from 1965 stated that Mr. Wagner sustained a blow to his right knee in October 1964 and a medical record from 1966 indicated "episodes of 'dislocation' " occurring during service in Vietnam. (J.A. at 60.)

On March 24, 1995, Mr. Wagner filed a claim for disability compensation for service-connected posttraumatic stress disorder to the Veterans Administration ("VA") regional office ("RO"). In a statement in support of this claim filed on April 17, 1995, Mr. Wagner added additional claims for service connection and aggravation for a right knee disorder. In a 1996 rating decision, the RO concluded that the claims for service connection and aggravation for the right knee disorder were not well-grounded.1 The RO stated that the record showed "some problem in service with a right knee condition with evidence indicating pre service football injury," but that there was "no evidence of any chronic knee condition at separation from service or on the first VA examination, post service." (J.A. at 169.)2

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On review, the BVA concluded that Mr. Wagner's claim for service connection for his right knee disorder claim was in fact well-grounded, but it ultimately denied service connection and aggravation. In re Wagner, No. 96-39 652, slip op. at 14-15 (Bd.Vet.App. Nov. 30, 1998). The BVA stated that Mr. Wagner was entitled to a presumption of soundness under section 1111 because his entrance examination did not report a right knee disorder. Id. at 14. However, the BVA found that this presumption had been rebutted because statements in Mr. Wagner's in-service medical records established by clear and unmistakable evidence that he had injured his right knee playing football prior to entering service. Id. The BVA thus denied the claim for service connection. The BVA also denied Mr. Wagner's aggravation claim, finding that "the preponderance of the evidence demonstrates that the pre-existing right knee disorder was not aggravated by active duty." Id. at 15. Accordingly, the BVA denied service connection and service connected aggravation for the right knee disorder.

Subsequently, the Court of Appeals for Veterans Claims affirmed. Wagner v. West, 2000 WL 33155867, slip. op. at 8. That court explained that under 38 C.F.R. § 3.304(b),3 the implementing regulation for section 1111, the presumption of soundness can be rebutted solely by "clear and unmistakable evidence that an injury or disease existed prior to service." Id. at 5. Applying this standard, the Court of Appeals for Veterans Claims held that "the presumption of soundness was rebutted by clear and unmistakable evidence consisting of Mr. Wagner's own admissions during medical evaluations ... that his knee injury existed prior to his enlistment." Id. at 6. The Court of Appeals for Veterans Claims further rejected Mr. Wagner's aggravation claim. It held that Mr. Wagner was not entitled to a presumption of aggravation under 38 U.S.C. § 1153 because there was no evidence that the right knee disorder increased in severity during service.4 Id. at 7. The court found that the BVA's finding--that Mr. Wagner's preexisting condition was not aggravated by service--was not clearly erroneous. Id.

Mr. Wagner timely appealed to this court. Following argument, the court ordered supplemental briefing on the issue of statutory construction. Wagner v. Principi, No. 02-7347 (Fed.Cir. Mar. 23, 2004).

DISCUSSION

I

Under 38 U.S.C. § 7292, we have jurisdiction to review decisions of the Court of Appeals for Veterans Claims on issues of law, but not with respect to fact

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issues or issues of application of law to fact. See Szemraj v. Principi, 357 F.3d 1370, 1374-75 (Fed.Cir. 2004) (citing Forshey v. Principi, 284 F.3d 1335, 1338 (Fed.Cir. 2002) (en banc)). "We review the appellant's claim of legal error in the decision of the Court of Appeals for Veterans Claims without deference." Id. at 1372.

Here the appellant made two claims. The first claim was for a service-connected right knee disorder. This claim was rejected because the BVA and the Court of Appeals for Veterans Claims held that the presumption of soundness under section 1111 had been rebutted by clear and convincing evidence that Mr. Wagner's right knee condition existed prior to his entry into service. The second claim was for aggravation of a preexisting right knee disorder. The BVA and the Court of Appeals for Veterans Claims also rejected this claim, finding that the presumption of aggravation under section 1153 did not apply because there was no evidence of in-service aggravation.

On appeal to this court, Mr. Wagner urges that the Court of Appeals for Veterans claims erred by misconstruing section 1111. That statute permits the government to overcome the presumption of soundness "where clear and unmistakable evidence demonstrates that the injury or disease existed before acceptance and enrollment and was not aggravated by such service. " 38 U.S.C. § 1111 (emphasis added). Thus the appellant contends that, in order to rebut the presumption of soundness, the government must show clear and unmistakable evidence of both a preexisting disability and a lack of in-service aggravation of that disability.

After Mr. Wagner filed this appeal, the General Counsel for the VA issued an opinion construing section 1111 to require clear and convincing evidence of both preexisting disability and lack of aggravation during service in order to rebut the presumption of soundness. Vet. Aff. Op. Gen. Couns. Prec. 3-2003 (July 16, 2003), available at http://www.va.gov/ogc/docs/PREC3-2003.doc. In light of the General Counsel's opinion, the government now concedes that the Court of Appeals for Veterans Claims applied the wrong standard in determining if the presumption of soundness had been rebutted in this case. Thus, the initial question before us is whether, as the government contends, we should remand the case without addressing the merits of this appeal.

II

Our decision in SKF USA Inc. v. United States, 254 F.3d 1022 (Fed.Cir. 2001), provides guidance on this issue. There we held that the question of whether to remand when an agency makes a voluntary remand request associated with a change in agency interpretation hinges upon whether the agency's interpretation is entitled to deference under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). Id. at 1029. We explained that:

If there is a step one Chevron issue--that is, an issue as to whether the agency is either compelled or forbidden by the governing statute to reach a different result--a reviewing court ... has considerable discretion. It may decide the statutory issue, or it may order a remand....

Where there is no step one Chevron issue, we believe a remand to the agency is required, absent the most unusual circumstances verging on bad faith. Under Chevron, agencies are entitled to formulate policy and make rules "to fill any gap left, implicitly or explicitly, by Congress."

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Id. at 1029-30 (quoting Chevron, 467 U.S. at 843, 104 S.Ct. 2778). Mr. Wagner contends that this is a step one Chevron issue because section 1111 is clear on its face and urges that we should exercise our discretion...

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