George v. McDonough

• Decision Date: 16 March 2021
• Docket Number: 2019-1916,2020-1134
• Citation: 991 F.3d 1227
• Parties: Kevin R. GEORGE, Claimant-Appellant v. Denis MCDONOUGH, Secretary of Veterans Affairs, Respondent-Appellee Michael B. Martin, Claimant-Appellant v. Denis McDonough, Secretary of Veterans Affairs, Respondent-Appellee
• Court: U.S. Court of Appeals — Federal Circuit

991 F.3d 1227

Kevin R. GEORGE, Claimant-Appellant

v.Denis MCDONOUGH, Secretary of Veterans Affairs, Respondent-Appellee

Michael B. Martin, Claimant-Appellant

v.Denis McDonough, Secretary of Veterans Affairs, Respondent-Appellee

2019-1916

2020-1134

United States Court of Appeals, Federal Circuit.

Decided: March 16, 2021

Kenneth M. Carpenter, Law Offices of Carpenter Chartered, Topeka, KS, argued for claimant-appellant Kevin R. George.

Amy F. Odom, Chisholm Chisholm & Kilpatrick, Providence, RI, argued for claimant-appellant Michael B. Martin. Also represented by April Donahower, Zachary Stolz.

Tanya Koenig, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for respondent-appellee. Also represented by Eric P. Bruskin, Jeffrey B. Clark, Martin F. Hockey, Jr., Robert Edward Kirschman, Jr. ; Brian D. Griffin, Andrew J. Steinberg, Office of General Counsel, United States Department of Veterans Affairs, Washington, DC.

Before Lourie, Chen, and Stoll, Circuit Judges.

Chen, Circuit Judge.

Kevin R. George and Michael B. Martin (collectively, Appellants) are military veterans whose respective claims for disability benefits were denied several decades ago in final decisions by the Department of Veterans Affairs (VA). More recently, Appellants each filed a motion for revision of those denial decisions, alleging that the VA in those decisions had committed clear and unmistakable error (CUE). The VA's denials had been based in part on a straightforward application of a then-existing regulation, 38 C.F.R. § 3.304(b) ("Presumption of soundness"), that was years later overturned. In Appellants’ view, the VA's reliance on a now-invalidated regulation in its denials of Appellants’ original claims establishes CUE.

The United States Court of Appeals for Veterans Claims (Veterans Court) affirmed the Board of Veterans’ Appeals’ (Board) denials of Appellants’ CUE motions, reasoning that the VA did not commit a clear and unmistakable legal error when it faithfully applied the version of the presumption of soundness regulation that existed at the time of the denials. Because Jordan v. Nicholson and Disabled American Veterans v. Gober establish that a legal-based CUE requires a misapplication of the law as it was understood at that time, and cannot arise from a subsequent change in interpretation of law by the agency or judiciary, we affirm . See Jordan v. Nicholson , 401 F.3d 1296 (Fed. Cir. 2005) ; Disabled Am. Veterans v. Gober , 234 F.3d 682 (Fed. Cir. 2000) ( DAV ), overruled in part on other grounds by Nat'l Org. of Veterans’ Advocates, Inc. v. Sec'y of Veterans Affairs , 981 F.3d 1360, 1373 (Fed. Cir. 2020) (en banc).

BACKGROUND

These companion appeals involve similar facts and legal issues. Before discussing the details of each case, we first address the statutory presumption of soundness at issue in both appeals.

A. Statutory Presumption of Soundness

The statutory presumption of soundness recites:

[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. § 311 (1970) (now codified as 38 U.S.C. § 1111 )¹ (emphasis added). Under this standard, a veteran is presumed to have been in sound condition at entry to service as to disorders that are not identified on the veteran's entrance medical examination. The presumption, however, can be rebutted by "clear and unmistakable evidence" that the disorder "existed before acceptance and enrollment and was not aggravated by service." Id .

In 1970, the VA's implementing regulation for § 1111 did not require clear and unmistakable evidence of lack of aggravation by service for rebuttal. See 38 C.F.R. § 3.304(b) (1970).² In other words, for the VA to rebut the presumption of soundness, the 1970 version of § 3.304(b) required only clear and unmistakable evidence that the disorder "existed prior [to service]." Id. This version of the regulation prevailed until 2003, when the VA invalidated the regulation for conflicting with the language of § 1111, see VA Gen. Counsel Prec. 3–2003 (July 16, 2003) (2003 OGC opinion), and subsequently amended the regulation to require evidence of both preexisting condition and no aggravation, see 70 Fed. Reg. 23,027, 23,028 (May 4, 2005).

We confirmed the correctness of the VA's changed understanding of the statute in Wagner v. Principi , 370 F.3d 1089 (Fed. Cir. 2004). There, we began our statutory analysis by acknowledging that § 1111 ’s "rebuttal standard is somewhat difficult to parse" and "on its face ... appears to be somewhat self-contradictory." Id. at 1093. After a careful examination of the statutory history, we determined that Congress intended for the presumption of soundness to apply "even when there was evidence of a preexisting condition, [so long as] the government failed to show clear and unmistakable evidence that the preexisting condition was not aggravated" by service. Id. at 1096. Wagner thus held that the VA must show "clear and unmistakable evidence of both a preexisting condition and a lack of in-service aggravation to overcome the presumption of soundness." Id.

B. Mr. George's Appeal

Mr. George served in the U.S. Marine Corps from June to September 1975. His medical entrance examination made no mention of any psychiatric disorders. Yet, a week after enlistment, Mr. George suffered a psychotic episode requiring extended hospitalization and was diagnosed with paranoid schizophrenia

. Two months into his service, a military medical board confirmed the schizophrenia diagnosis and found Mr. George unfit for duty. The medical board determined that his condition had preexisted service because he had experienced "auditory hallucinations, paranoid ideas of reference, and delusions" prior to enlistment. J.A. 53–54. The medical board also determined that his condition was aggravated by service, observing that he "now appeared quite disturbed" and was "withdrawn [and] tearful." Id. At his time of discharge, however, a physical evaluation board concluded that his condition was not aggravated by service, finding that Mr. George "essentially appear[ed] in his preenlistment state" and that his schizophrenia was "in remission." J.A. 55.

In December 1975, Mr. George filed a disability benefits claim, contending that his schizophrenia

was aggravated by service. The VA regional office (RO) denied his claim for lack of service connection, which the Board affirmed in September 1977. While the Board did not specifically cite the statutory presumption of soundness or the implementing regulation, it concluded that his schizophrenia "existed prior to military service" and "was not aggravated by his military service." J.A. 60. Mr. George did not appeal the Board's decision, which became final.

Years later, in December 2014, Mr. George requested revision of the 1977 Board decision based on CUE, asserting that the Board had failed to correctly apply 38 U.S.C. § 1111. Mr. George argued that he had been improperly denied the presumption of soundness because his "entrance examination to service was negative for any preservice mental disorder" and the record "[did] not clearly and unmistakably indicate that [his] schizophrenia

was not aggravated by service." J.A. 66–67. If not for the 1977 Board's purported failure to "rebut both prongs of the presumption," Mr. George alleged that he would have been granted service-connected benefits for schizophrenia. J.A. 67 (emphasis added).

The Board, in 2016, denied Mr. George's request, finding no CUE in the 1977 Board decision. Relevant to this appeal, the Board observed that, as of 1977, 38 C.F.R. § 3.304(b) did "not require[ ] clear and unmistakable evidence that the disability was not aggravated by service" to rebut the presumption of soundness. J.A. 73. While acknowledging that the 2003 OGC opinion and Wagner later invalidated § 3.304(b) for conflicting with the statute, the Board concluded that "judicial decisions that formulate new interpretations of the law subsequent to a VA decision cannot be the basis of a valid CUE claim." J.A. 74. Thus, any purported failure by the 1977 Board to find that Mr. George's schizophrenia

was not clearly and unmistakably aggravated by service "cannot be considered to be CUE." Id. Mr. George appealed to the Veterans Court.

A divided panel of the Veterans Court affirmed, concluding that Wagner ’s interpretation of § 1111 could not retroactively apply to establish CUE in the 1977 Board decision. See George v. Wilkie , 30 Vet. App. 364, 373 (2019) (" Wagner does not change how [ § 1111 ] was interpreted or understood before it issued."). Instead, citing this court's decisions in DAV and Jordan , the Veterans Court determined that the 1977 Board was required to apply the law existing at the time , namely, the 1977 version of 38 C.F.R. § 3.304(b). Because that version of § 3.304(b) required only clear and unmistakable evidence that an injury preexisted service to rebut the presumption of soundness, the Veterans Court concluded that the 1977 Board's alleged failure to also demonstrate clear and unmistakable evidence of no aggravation did not constitute CUE. Id. at 374–75.

The Veterans Court next considered a trio of cases involving a CUE claim filed by a widow, Mrs. Patrick, seeking death and indemnity compensation benefits. See Patrick v. Principi , 103 F. App'x 383 (Fed. Cir. 2004) ( Patrick I ); Patrick v. Nicholson , 242 F. App'x 695 (Fed. Cir. 2007) ( Patrick II ); Patrick v. Shinseki , 668 F.3d 1325 (Fed. Cir. 2011) ( Patrick III ). As relevant here, Patrick II concluded that Wagner could form the basis for a CUE claim attacking a final VA decision that had relied on the now-invalidated version of § 3.304(b), because...