Ortiz v. McDonough

Decision Date28 July 2021
Docket Number2020-1911
Citation6 F.4th 1267
Parties Geraldo P. ORTIZ, Claimant-Appellant v. Denis MCDONOUGH, Secretary of Veterans Affairs, Respondent-Appellee
CourtU.S. Court of Appeals — Federal Circuit

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

Ashley Akers, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for respondent-appellee. Also represented by Jeffrey B. Clark, Elizabeth Marie Hosford, Robert Edward Kirschman, Jr.

Before Newman, Taranto, and Chen, Circuit Judges.

Taranto, Circuit Judge.

The Department of Veterans Affairs (VA) awarded veteran Geraldo Ortiz benefits for a service-connected disability based on posttraumatic stress disorder (PTSD), acting pursuant to a regulatory change that lightened his previous evidentiary burden. The dispute before us concerns the starting date for the benefits awarded, i.e. , the effective date of the award. We conclude that the regulatory change that enabled Mr. Ortiz to obtain the benefits was a "liberalizing" one, entitling Mr. Ortiz to the earlier effective date, and hence the larger award, that he seeks.

Mr. Ortiz had first claimed service-connected disability benefits based on PTSD, under 38 U.S.C. § 1110, in 1997. But VA denied the claim because Mr. Ortiz did not provide corroborating evidence, as required by the PTSD regulation, 38 C.F.R. § 3.304(f), that the events identified as leading to his PTSD occurred in his military service. That decision became final. Years later, in 2010, the Secretary of Veterans Affairs amended § 3.304(f) by adding what is now subsection (f)(3) to state an exception to the corroborating-evidence requirement in circumstances like those of Mr. Ortiz. On May 22, 2012, more than a year after the regulatory change took effect, Mr. Ortiz moved to reopen his claim, invoking the newly lightened proof requirement. Within months, VA reopened his claim and granted the claim, rating him 100 percent disabled and making the benefits effective as of May 22, 2012, the date VA received the request to reopen.

Mr. Ortiz contended that the effective date should have been one year earlier (May 22, 2011). For that contention, he relied on 38 C.F.R. § 3.114(a), which implements 38 U.S.C. § 5110(g) and provides that when compensation "is awarded or increased pursuant to a liberalizing law, or a liberalizing VA issue approved by the Secretary or by the Secretary's direction" and the "claim [for compensation] is reviewed at the request of the claimant more than 1 year after the effective date of the law or VA issue," the effective date is "1 year prior to the date of receipt of such request." 38 C.F.R. § 3.114(a)(3). Mr. Ortiz argued that § 3.304(f)(3) was a "liberalizing" law or VA issue, entitling him to the extra year of benefits. The Board of Veterans’ Appeals and then the Court of Appeals for Veterans Claims (Veterans Court) rejected his request for an earlier effective date. While accepting that Mr. Ortiz's claim was granted "pursuant to" § 3.304(f)(3), they concluded that § 3.304(f)(3) was not a "liberalizing" measure.

We reverse. We conclude that the addition of § 3.304(f)(3) in 2010 was "liberalizing" under § 3.114(a). It is sufficient to come within § 3.114(a) ’s "liberalizing" category that § 3.304(f)(3) reduced a veteran's affirmative burden of production to establish an element of entitlement to compensation. In these circumstances, the correct effective date for Mr. Ortiz's benefits is May 22, 2011, rather than May 22, 2012.1

I
A

The precedents that the parties principally debate are Spencer v. Brown , 17 F.3d 368 (Fed. Cir. 1994), and Routen v. West , 142 F.3d 1434 (Fed. Cir. 1998). In those decisions, this court did not directly interpret and apply the effective-date "liberalizing" regulation at issue here, 38 C.F.R. § 3.114(a), to answer an effective-date question, as no such question was presented. Rather, the court relied on 38 U.S.C. § 5110(g) and 38 C.F.R. § 3.114(a) to draw an inference about a circumstance in which a new original claim is not barred by the otherwise-governing statutory finality protections that attach to rejection of an earlier claim. It is useful, therefore, to begin with a summary of the statutory and regulatory provisions that provide a general rule of finality for claim-rejecting VA decisions but allow for exceptions, including the exception recognized in Spencer and Routen .

Statutes and regulations governing veterans benefits expressly state general rules of finality for VA decisions. That is so for a decision by a VA regional office (or agency of original jurisdiction) unless timely appealed to the Board. See 38 U.S.C. § 7105(c) ("If no notice of disagreement is filed in accordance with this chapter within the prescribed period, the action or determination shall become final and the claim will not thereafter be reopened or allowed, except as may otherwise be provided by regulations not inconsistent with this title."); 38 C.F.R. §§ 20.1104, 3.104(a), 3.2600. And it is also so for a Board decision unless timely appealed to the Veterans Court. See 38 U.S.C. § 7104(b) ("Except as provided in section 5108 of this title, when a claim is disallowed by the Board, the claim may not thereafter be reopened and allowed and a claim based upon the same factual basis may not be considered."); 38 C.F.R. § 20.1100.

As the above-quoted statutes make clear, however, exceptions are authorized. One exception, not invoked in the present case, is for "clear and unmistakable error" in the original decision. 38 U.S.C. §§ 5109A(a), 7111 ; see also 38 C.F.R. § 20.1400. A decision reversing or revising the earlier decision on that basis "has the same effect as if the decision had been made on the date of the prior decision," 38 U.S.C. §§ 5109A, 7111, so the effective date of an award of benefits previously "denied due to clear and unmistakable error" is as early as "the veteran's filing of the original claim," Sears v. Principi , 349 F.3d 1326, 1331 (Fed. Cir. 2003) ; see also 38 C.F.R. § 3.400(k). A second exception, which was invoked in the present case, is for "reopening" based on "new and material evidence." 38 U.S.C. § 5108 ; 38 C.F.R. § 3.156(a).2 In general, the earliest effective date for an award on a reopened claim is the date of the request for reopening, not the date of the original claim. See Sears , 349 F.3d at 1331 ; 38 C.F.R. § 3.400(q)(r).3

This court concluded in Spencer that, in Routen ’s words, there is also a "third" path around an otherwise-final claim rejection—namely, a new original claim—if certain statutory or agency-adopted changes have been made since the earlier rejection. Routen , 142 F.3d at 1438, 1442. The court in Spencer quoted with approval the Veterans Court's reasoning:

When a provision of law or regulation creates a new basis of entitlement to benefits, as through liberalization of the requirements for entitlement to a benefit, an applicant's claim of entitlement under such law or regulation is a claim separate and distinct from a claim previously and finally denied prior to the liberalizing law or regulation. The applicant's later claim, asserting rights which did not exist at the time of the prior claim, is necessarily a different claim.

Spencer , 17 F.3d at 372 (quoting Spencer v. Brown , 4 Vet. App. 283, 288–89 (1993) ( Spencer CAVC ); alteration and internal quotation marks omitted). This court agreed with the Veterans Court that the finality protection of § 7104(b) " ‘does not preclude de novo adjudication of a claim, on essentially the same facts as a previously and finally denied claim, where an intervening and substantive change in law or regulation created a new basis for entitlement to a benefit.’ " Id. (quoting Spencer CAVC , 4 Vet. App. at 289 ).

In ruling that the statute allows a new original claim based on certain changes of law, notwithstanding the otherwise-prescribed finality of an earlier claim's rejection, this court and the Veterans Court in Spencer , as well as this court in Routen , relied on what they found to be a necessary implication of a statutory effective-date provision, 38 U.S.C. § 5110(g), implemented by 38 C.F.R. § 3.114(a). Routen , 142 F.3d at 1441 (relying on statute and regulation); Spencer , 17 F.3d at 371 (relying on statute); Spencer CAVC , 4 Vet. App. at 287–89 (relying on statute and regulation). The decisions in those cases do not directly apply those provisions, which merely prescribe an effective date for certain awards of compensation; there was no effective-date issue in those cases because there were no awards in those cases at all. Rather, the courts in those cases discerned in the effective-date statute (and regulation) an implied presupposition that a new original claim must sometimes be available, modifying the otherwise-applicable statutory (and regulatory) guarantees of finality of an earlier decision. The court in Routen itself stressed that very difference—between direct application of the effective-date provisions (which was not at issue) and the scope of an implied statutory modification to allow a new original claim (which was). See 142 F.3d at 1441.

B

Unlike Spencer and Routen , the present case involves an effective-date question requiring direct application of the regulation adopted to implement the statute.

Section 5110(g), one of the subsections of the statutory provision titled "Effective dates of awards," dates back to 1962. Addressing a change-of-law situation, it provides that, "[s]ubject to the provisions of section 5101" (concerning "claims and forms"),

where compensation ... is awarded or increased pursuant to any Act or administrative issue, the effective date of such award or increase shall be fixed in accordance with the facts found but shall not be earlier than the effective date of the Act or administrative issue. In no event shall such award or increase be retroactive for more than one year from the date of application
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