Military-Veterans Advocacy v. Sec'y of Veterans Affairs

• Decision Date: 30 July 2021
• Docket Number: 2019-1600, 2019-1680, 2019-1685, 2019-1687
• Citation: 7 F.4th 1110
• Parties: MILITARY-VETERANS ADVOCACY, Petitioner v. SECRETARY OF VETERANS AFFAIRS, Respondent National Organization of Veterans' Advocates, Inc., Petitioner Paralyzed Veterans of America, Intervenor v. Secretary of Veterans Affairs, Respondent Carpenter Chartered, Petitioner v. Secretary of Veterans Affairs, Respondent Phillip Boyd Haisley, National Veterans Legal Services Program, Petitioners v. Secretary of Veterans Affairs, Respondent
• Court: U.S. Court of Appeals — Federal Circuit

7 F.4th 1110

MILITARY-VETERANS ADVOCACY, Petitioner

v.SECRETARY OF VETERANS AFFAIRS, Respondent

National Organization of Veterans' Advocates, Inc., Petitioner

Paralyzed Veterans of America, Intervenor

v.Secretary of Veterans Affairs, Respondent

Carpenter Chartered, Petitioner

v.Secretary of Veterans Affairs, Respondent

Phillip Boyd Haisley, National Veterans Legal Services Program, Petitioners

v.Secretary of Veterans Affairs, Respondent

2019-1600, 2019-1680, 2019-1685, 2019-1687

United States Court of Appeals, Federal Circuit.

Decided: July 30, 2021

Robbie Manhas, Orrick, Herrington & Sutcliffe LLP, Washington, DC, argued for petitioner Military-Veterans Advocacy. Also represented by Melanie L. Bostwick ; John B. Wells, Law Office of John B. Wells, Slidell, LA.

Michael Bern, Latham & Watkins LLP, Washington, DC, argued for petitioner National Organization of Veterans’ Advocates, Inc. and intervenor Paralyzed Veterans of America. National Organization of Veterans’ Advocates, Inc. also represented by Genevieve Patricia Hoffman, Roman Martinez, Barrett Tenbarge.

Linda E. Blauhut, Paralyzed Veterans of America, Washington, DC, for intervenor Paralyzed Veterans of America.

Kenneth M. Carpenter, Law Offices of Carpenter Chartered, Topeka, KS, argued for petitioner Carpenter Chartered.

Alex Schulman, Paul Hastings LLP, Washington, DC, argued for petitioners Phillip Boyd Haisley, National Veterans Legal Services Program. Also represented by Stephen Blake Kinnaird ; Barton F. Stichman, National Veterans Legal Services Program, Washington, DC.

Sosun Bae, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for respondent in 2019-1600, 2019-1687. Also argued by William James Grimaldi in 19-1680, David Pehlke in 2019-1685. 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; David J. Barrans in 2020-1687, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC.

Before Reyna, Clevenger, and Chen, Circuit Judges.

Chen, Circuit Judge.

In 2017, Congress enacted the Veterans Appeals Improvement and Modernization Act (AMA) to reform the administrative appeals system of the Department of Veterans Affairs (VA). See Pub. L. No. 115–55, 131 Stat. 1105 (2017) (codified at scattered sections of 38 U.S.C.). The AMA replaced the existing VA appeals system, which had shepherded all denials of veteran disability claims through a one-size-fits-all appeals process. Under the AMA, claimants may now choose between three procedural options in response to an unfavorable initial decision: (1) filing a supplemental claim based on additional evidence, (2) requesting higher-level review within the VA based on the same evidentiary record, and (3) filing a notice of disagreement (NOD) to directly appeal to the Board of Veterans Appeals (Board). Pursuant to its notice-and-comment rulemaking authority, the VA promulgated a series of regulations to implement the AMA. See VA Claims and Appeals Modernization , 84 Fed. Reg. 138 (Jan. 18, 2019) (Final Rule). Several veterans’ service organizations, a law firm, and an individual (collectively, Petitioners) filed four separate petitions raising thirteen rulemaking challenges to these regulations under 38 U.S.C. § 502.¹

Before oral argument, we requested supplemental briefing on whether Petitioners have standing to challenge the regulations identified in their petitions. We conclude that two veterans’ service organizations, MVA and PVA, have demonstrated associational standing based on claimed injuries to their members to collectively bring three of their seven challenges. Because we conclude that no Petitioner has demonstrated standing to raise any of the remaining challenges, we dismiss the petitions with respect to those challenges.

The three regulations for which MVA and PVA have standing to challenge all relate to supplemental claims—one of the three review lanes established by the AMA. Specifically, 38 C.F.R. § 14.636(c)(1)(i) limits when a veteran's representative may charge fees for work on supplemental claims; 38 C.F.R. § 3.2500(b) bars the filing of a supplemental claim when adjudication of the same claim is pending before a federal court; and 38 C.F.R. § 3.155 excludes supplemental claims from the intent-to-file framework. We hold that all three regulations are invalid for contravening the unambiguous meaning of their governing statutory provisions. Accordingly, we grant-in-part and dismiss-in-part MVA's and PVA's petitions in Appeal Nos. 19-1600 and 19-1680, and we dismiss the remaining two petitions in Appeal Nos. 19-1685 and 19-1687 in their entirety.

BACKGROUND

I

Congress enacted the AMA in 2017 to reform the existing VA administrative appeals system, which was, by all accounts, "broken," marked by lengthy delays, and plagued with a formidable backlog of cases. See H.R. Rep. No. 115–135, at 5–8 (2017) ("The current backlog for appeals exceeds 470,000 claims and is growing."). Under the previous appeals system, often described as the "legacy system,"² veteran disability claimants had only one pathway to seek administrative review of an unsatisfactory initial decision on their disability claim from the agency of original jurisdiction (AOJ). This one-size-fits-all-claims pathway was long and complicated, regardless of the extent or nature of the claimant's disagreement with the initial decision. Claimants initiated an appeal by filing a NOD to the AOJ's decision, and after an elaborate set of steps, could have their claim reviewed by the Board.³

More problematic, however, was the "continuous evidence gathering and readjudication of the same matters" that caused appeals to "churn" in the system. See S. Rep. 115–126, at 29 (2017) (Jennifer S. Lee, Deputy Under Secretary for Health and Policy Services) ("Veterans and VA adjudicators are ... engaged in continuous evidence gathering and repeated readjudication of the same appeal. This cycle of evidence gathering and readjudication means that appeals often churn for years between the Board and the [AOJ] to meet complex legal requirements, with little to no benefit flowing to the Veteran."). Because the legacy system permitted claimants to submit new evidence at virtually any time prior to a final Board decision—including at the Board hearing—nearly half of the appeals before the Board resulted in a remand to the AOJ for additional development and readjudication. The VA, moreover, had a statutory duty to assist the claimant in obtaining evidence in support of the appeal throughout the entire appeals process. The introduction of new evidence at the Board would often result in a remand to the AOJ for readjudication of the claim in light of that evidence. Collectively, these features resulted in a protracted administrative appeals system in which claimants waited "an average [of] five years for a final decision" from the Board, which was expected to increase to "an average [of] ten years for a final appeals decision by the end of 2027." See H.R. Rep. No. 115–135, at 5.

As relevant here, the AMA sought to reduce inefficiencies of the legacy appeals system by introducing several statutory reforms. These amendments reflect Congress's goal of streamlining the administrative appeals system while still protecting claimants’ due process rights. See id. ("To help ensure that veterans receive timely appeals decisions in the future ... [t]he new appeals procedures created by this bill would reduce [the] VA's workload and help ensure that the process is both timely and fair."); see also S. Rep. No. 115–126, at 27 ("[T]he current system allows for repeated revisions and resubmissions of claims while maintaining an effective date for benefits based upon the original filing date of the claim. ... The proposed changes are intended to significantly streamline the appeal process, which would allow appeals to be finalized in a shorter period of time with fewer employees.").

Central to the AMA's many reforms, claimants may now choose from three procedural lanes to obtain review of their claim within one year of the initial decision (in contrast to the legacy system's single pathway for appeal to the Board). 38 U.S.C. § 5104C(a)(1). Claimants may use only one lane at a time. § 5104C(a)(2)(A). Each lane has varying limitations on the submission of new evidence and the VA's duty to assist the claimant in obtaining such evidence.

The first lane is the filing of a supplemental claim, which allows a claimant to submit additional evidence to an AOJ for "readjudication" of the claim. §§ 5104C(a)(1)(B), 5108. The second lane is a request for "higher-level review" made within one year of the AOJ's decision. §§ 5104B(b)(1)(B), 5104C(a)(1)(A). This lane offers review of the claim by a higher-level claims adjudicator at the AOJ that is based on the same evidentiary record as the initial claim (i.e., the claimant may not submit new evidence), and the VA has no duty to assist during the review. §§ 5104B(d), 5103A(e). The third lane is a direct appeal to the Board,⁴ which a claimant initiates by filing a NOD within one year of the AOJ's initial decision. As with the legacy appeals system, this lane permits claimants to submit additional evidence and request a Board hearing, if they wish. Unlike the legacy system, however, claimants must specify in the NOD their intention to add to the record and submit the additional evidence within a certain time frame (i.e., within 90 days of the NOD's filing or the Board hearing). In another departure from the legacy system, wherein the VA's duty to assist continued while a claim was on appeal before the Board, the VA has no duty to assist during a Board appeal under the AMA's modified procedures. § 5103A(e).

Should one lane of review prove unsuccessful, claimants may sequentially pursue another...