Scott v. McDonald

United States Court of Appeals

for the Federal Circuit

______________________

CURTIS SCOTT,

Claimant-Appellant

v.

ROBERT A. MCDONALD, SECRETARY OF

VETERANS AFFAIRS,

Respondent-Appellee

______________________

2014-7095

______________________

Appeal from the United States Court of Appeals for

Veterans Claims in No. 12-1972, Chief Judge Bruce E.

Kasold.

______________________

Decided: June 18, 2015

______________________

JENNIFER LIBRACH NALL, Baker Botts, LLP, Austin,

TX, argued for claimant-appellant. Also represented by

CHRISTOPHER GRANAGHAN, DAVID B. WEAVER, JEFFREY S.

GRITTON, Vinson & Elkins LLP, Austin, TX.

WILLIAM JAMES GRIMALDI, Commercial Litigation

Branch, Civil Division, United States Department of

Justice, Washington, DC, argued for respondent-appellee.

Also represented by JOYCE R. BRANDA, ROBERT E.

2 SCOTT v. MCDONALD

KIRSCHMAN, JR., CLAUDIA BURKE; Y. KEN LEE, AMANDA R.

BLACKMON, Office of General Counsel, United States

Department of Veterans Affairs, Washington, DC.

______________________

Before DYK, MAYER, and REYNA, Circuit Judges.

DYK, Circuit Judge.

Curtis Scott appeals from the decision of the United

States Court of Appeals for Veterans Claims (“Veterans

Court”) denying his claim for service connection for hepa-

titis C. We affirm.

BACKGROUND

Scott served on active duty for training in the United

States Marine Corps Reserve from January to July 1972.

On November 18, 1999, Scott tested positive for hepatitis

C. He applied for disability benefits on February 4, 2005,

alleging that he contracted hepatitis C in service. His

primary theory was that he was infected with hepatitis C

when he received air-gun inoculations during his military

service. The Department of Veterans Affairs (“VA”)

regional office (“RO”) denied Scott’s claim for service

connection on September 20, 2005.

On April 24, 2006, Scott appealed to the Board of Vet-

erans’ Appeals (“Board”) and requested an evidentiary

hearing before the Board. See 38 C.F.R. § 20.700(a) (right

to a hearing). Scott was incarcerated at the time of his

appeal to the Board. On December 6, 2007, the RO sent a

letter to Scott, “acknowledg[ing] [his] request for a Video

Conference hearing before the Board,” and “request[ing]

that [Scott] provide us with the date [Scott is] expected to

be released from [his] incarceration so we may schedule

[his] video conference hearing accordingly.” J.A. 575.

Scott responded to the RO on December 13, 2007, reiterat-

ing his request for a hearing and informing the Board

SCOTT v. MCDONALD 3

that his “minimum expiration parole date for release is

January 13, 2017,” and his “next parole review date is

scheduled for March of 2009.” J.A. 573. On January 14,

2008, the RO notified Scott that his hearing had been

scheduled for March 14, 2008, in Houston, Texas. Scott,

who was still incarcerated on the scheduled hearing date,

failed to appear for the hearing.

On March 23, 2008, Scott requested a rescheduled

hearing because he “could not appear for [his] hearing

because of [his] incarceration.” J.A. 826. The Board

denied Scott’s request, finding that Scott had “not shown

good cause for failing to appear for [his] hearing,” but

made no mention of Scott’s incarceration. J.A. 683. The

Board subsequently denied Scott’s claim for service con-

nection, noting that Scott “failed to report for his sched-

uled hearing in March 2008” and that the Board denied

his request to reschedule it. J.A. 677.

On appeal to the Veterans Court, Scott, who by this

time was represented by counsel, did not raise the hear-

ing issue. The Veterans Court vacated and remanded to

the Board due to an inadequate medical examination,

without mentioning the hearing issue. In remanding to

the RO, the Board noted the hearing issue but that Scott

“has not renewed his request” for a hearing. J.A. 221. On

November 18, 2011, the RO continued the service connec-

tion denial without mentioning the hearing issue. Scott

again appealed to the Board via a re-certification of

appeal form which checked “YES” in answer to “WAS

HEARING REQUESTED?”, but Scott did not raise the

hearing issue with the Board. J.A. 183. The Board

affirmed, again noting that Scott “has not renewed his

request” for a hearing. J.A. 16.

On appeal to the Veterans Court, on July 26, 2013,

Scott raised the hearing issue for the first time since his

March 23, 2008, request for a rescheduled hearing. The

4 SCOTT v. MCDONALD

Veterans Court affirmed, holding that Scott “did not raise

this [hearing] issue in either proceeding,” referring to

Scott’s prior appeal to the Veterans Court and his current

appeal before the Board. J.A. 1–2. The Veterans Court

held that raising the hearing issue at this late stage

“amounts to an effort to engage in undesirable piecemeal

litigation, and [Scott] provides no compelling basis to

permit it.” J.A. 2. Scott appeals. We have jurisdiction

pursuant to 38 U.S.C. § 7292(a). We review legal deter-

minations of the Veterans Court de novo. Moffitt v.

McDonald, 776 F.3d 1359, 1364 (Fed. Cir. 2015).

DISCUSSION

I

The Supreme Court has recognized the importance of

issue exhaustion with respect to administrative tribunals.

In United States v. L. A. Trucker Truck Lines, Inc., 344

U.S. 33 (1952), the Court held that “orderly procedure and

good administration require that objections to the pro-

ceedings of an administrative agency be made while [the

agency] has opportunity for correction in order to raise

issues reviewable by the courts,” such that “as a general

rule . . . courts should not topple over administrative

decisions unless the administrative body not only has

erred but has erred against objection made at the time

appropriate under its practice.” Id. at 37. 1 But Scott

1 See also Hormel v. Helvering, 312 U.S. 552, 556

(1941) (“Ordinarily an appellate court does not give con-

sideration to issues not raised below. . . . And the basic

reasons which support this general principle applicable to

trial courts make it equally desirable that parties should

have an opportunity to offer evidence on the general

issues involved in the less formal proceedings before

SCOTT v. MCDONALD 5

argues that the Supreme Court’s decision in Sims v. Apfel,

530 U.S. 103 (2000), precludes application of the issue

exhaustion doctrine in the context of veterans benefits

because proceedings before the VA are non-adversarial in

nature.

We addressed this issue even before the Supreme

Court’s decision in Sims, in Maggitt v. West, 202 F.3d

1370 (Fed. Cir. 2000). We articulated a case-by-case

balancing test for issue exhaustion in the VA system:

“The test is whether the interests of the individual weigh

heavily against the institutional interests the doctrine

exists to serve.” Id. at 1377 (citing McCarthy v. Madigan,

503 U.S. 140, 146 (1992)). We remanded to the Veterans

Court to determine, inter alia, “whether invocation of the

exhaustion doctrine [was] appropriate” with respect to the

veteran’s request to reopen his claim for service connec-

tion based on constitutional and statutory arguments that

he had not raised before the Board. Id. at 1378–79.

Thereafter, in Sims, the Supreme Court addressed is-

sue exhaustion in the context of Social Security Admin-

istration (“SSA”) benefits. The Court noted that “SSA

regulations do not require issue exhaustion.” 530 U.S. at

108. When that is so, “the desirability of a court imposing

a requirement of issue exhaustion depends on the degree

to which the analogy to normal adversarial litigation

applies in a particular administrative proceeding.” Id. at

109. A plurality of the Court concluded that “[t]he differ-

ences between courts and agencies are nowhere more

pronounced than in Social Security proceedings,” such

that “a judicially created issue-exhaustion requirement is

inappropriate.” Id. at 110, 112. But the majority also

recognized that “it is common for an agency’s regulations

administrative agencies entrusted with the responsibility

of fact finding.”).

6 SCOTT v. MCDONALD

to require issue exhaustion in administrative appeals.

And when regulations do so, courts reviewing agency

action regularly ensure against the bypassing of that

requirement by refusing to consider unexhausted issues.”

Id. at 108 (citations omitted). Justice O’Connor’s concur-

rence also made clear that Sims does not apply, and

exhaustion is required, where applicable statutes or

regulations impose an exhaustion requirement. See id. at

113 (O’Connor, J., concurring). Thus, in light of Sims, we

must determine the extent to which statutes or agency

regulations require issue exhaustion in the veterans

benefits context.

In previous veterans’ cases we have considered issue

exhaustion in three specific contexts and have held that

the statutes and regulations require issue exhaustion in

appropriate circumstances. First, in an appeal from the

RO to the Board, 38 C.F.R. § 20.202 specifically requires

that the errors by the RO be identified either by stating

that all issues in the statements of the case are being

appealed or by specifically identifying the issues being

appealed. 2 See Robinson v. Shinseki, 557 F.3d 1355,

2 Section 20.202 provides, in relevant part:

If the Statement of the Case and any prior Sup-

plemental Statements of the Case addressed sev-

eral issues, the Substantive Appeal must either

indicate that the appeal is being perfected as to all

of those issues or must specifically identify the is-

sues appealed. The Substantive Appeal should

set out specific arguments relating to errors of fact

or law made by the agency of original jurisdiction

in reaching the determination, or determinations,

being appealed. To the extent feasible, the argu-

ment should be related to specific items in the

Statement of the Case and any prior Supple-

SCOTT v. MCDONALD 7

1361 (Fed. Cir. 2009) (“We . . . do not suggest that under

the regulations the veteran is entirely relieved of his or

her obligation to raise issues in the first instance before

the VA where the record is being made. The regulations

quite clearly impose such an obligation even in direct

appeals . . . .” (citing 38 C.F.R. § 20.202)).

Second, where the alleged error was made by the

Board, we have held that the statute, 38 U.S.C. § 7252(a),

requires issue exhaustion before the Board in appropriate

circumstances. 3 See Ledford v. West, 136 F.3d 776, 779–

80 (Fed. Cir. 1998) (Under § 7252, “the [Veterans C]ourt’s

jurisdiction is premised on and defined by the Board’s

decision concerning the matter being appealed,” and

“while the doctrine of exhaustion of administrative reme-

dies is not jurisdictional,” exhaustion is normally re-

quired.). Thereafter, in Maggitt, we held that exhaustion

mental Statements of the Case. The Board will

construe such arguments in a liberal manner for

purposes of determining whether they raise issues

on appeal, but the Board may dismiss any appeal

which fails to allege specific error of fact or law in

the determination, or determinations, being ap-

pealed.

38 C.F.R. § 20.202; see also 38 U.S.C. § 7105(d)(3) (“The

appeal [to the Board] should set out specific allegations of

error of fact or law, such allegations related to specific

items in the statement of the case. The benefits sought on

appeal must be clearly identified.”).

3 Section 7252(a) provides: “The Court of Appeals

for Veterans Claims shall have exclusive jurisdiction to

review decisions of the Board of Veterans’ Appeals. . . .

The Court shall have power to affirm, modify, or reverse a

decision of the Board or to remand the matter, as appro-

priate.” 38 U.S.C. § 7252(a).

8 SCOTT v. MCDONALD

was not required in all cases, distinguished Ledford, and

concluded that “[n]othing in the statutory scheme provid-

ing benefits for veterans mandates a jurisdictional re-

quirement of exhaustion of remedies which would require

the Veterans Court to disregard every legal argument not

previously made before the Board.” See 202 F.3d at 1376–

77. As noted above, “the test is whether the interests of

the individual weigh heavily against the institutional

interests the doctrine exists to serve.” Id. at 1377 (citing

McCarthy, 503 U.S. at 146).

In Bernklau v. Principi, 291 F.3d 795 (Fed. Cir. 2002),

decided after Sims, we upheld the Veterans Court’s

application of issue exhaustion to arguments that the

veteran had failed to raise before the Board, holding that

Maggitt did not require an explicit balancing of interests

in the individual case. See id. at 799, 801–02. We held

that new arguments for an earlier effective date based on

past events allegedly supporting an informal claim for

individual unemployability “TDIU” were properly rejected

as not raised before the Board. See id. at 800–02. 4

4 Scott relies on cases from other circuits which

held that issue exhaustion did not apply to various agency

proceedings. But none of these cases involved a statute or

regulation that specifically imposed an issue exhaustion

requirement. See Alaska Survival v. Surface Transp. Bd.,

705 F.3d 1073, 1081 (9th Cir. 2013) (declining to apply

issue exhaustion to an appeal from the Surface Transpor-

tation Board because the “administrative process lacks an

adversarial component” with no mention of a statute or

regulation requiring otherwise); Vaught v. Scottsdale

Healthcare Corp. Health Plan, 546 F.3d 620, 630 (9th Cir.

2008) (“No ERISA statute precludes courts from hearing

objections not previously raised . . . nor does any ERISA

statute or regulation require claimants to identify all

SCOTT v. MCDONALD 9

Third, in an appeal from the Veterans Court to this

court we have held that 38 U.S.C. § 7292(a) requires issue

exhaustion at the Veterans Court level. 5 In Belcher v.

West, 214 F.3d 1335 (Fed. Cir. 2000), we explained that

“38 U.S.C. § 7292(a) speaks directly to the requirement of

issue exhaustion.” Id. at 1337 (citing Sims, 530 U.S. at

106–09). In Belcher, the veteran raised an argument for

the first time on appeal to this court that the Veterans

Court failed to follow a VA regulation relating to service

connection. Id. at 1336. We declined to consider the

argument, holding that we lacked jurisdiction to hear it

because it was not addressed by or presented to the

Veterans Court. Id. at 1337.

The statutes and regulations thus impose a require-

ment of issue exhaustion in appropriate circumstances.

While the requirement of exhaustion is relatively strict in

issues they wish to have considered on appeal.”); Coalition

for Gov’t Procurement v. Fed. Prison Indus., Inc., 365 F.3d

435, 463 (6th Cir. 2004) (“In considering whether the

district court properly imposed an issue exhaustion re-

quirement in the case sub judice, we initially observe that

such a requirement exists in neither [the agency’s] organ-

ic statute nor its regulations.”).

5 Section 7292(a) provides, in relevant part:

After a decision of the [Veterans Court] is entered

in a case, any party to the case may obtain a re-

view of the decision with respect to the validity of

a decision of the Court on a rule of law or of any

statute or regulation . . . or any interpretation

thereof (other than a determination as to a factual

matter) that was relied on by the Court in making

the decision.

38 U.S.C. § 7292(a).

10 SCOTT v. MCDONALD

proceedings before the Veterans Court, we have concluded

that the non-adversarial nature of proceedings before the

VA mandates a less strict requirement, as we now dis-

cuss.

II

In view of the non-adversarial nature of proceedings

before the Board, it is appropriate in the first and second

situations listed above that the Board and the Veterans

Court give a liberal construction to arguments made by

the veteran before the Board, as is specifically required by

§ 20.202 of the regulations in the case of appeals from the

RO to the Board. “In various decisions we have made

clear that the Board has a special obligation to read pro se

filings liberally.” Robinson, 557 F.3d at 1358–59. In

Robinson, we held that this obligation extends to cases in

which the veteran is represented by counsel. See 557 F.3d

at 1359–60. This obligation extends to all proceedings

before the Board. It follows from the test articulated in

Maggitt. See 202 F.3d at 1377.

Our prior cases have illuminated what is required by

a liberal construction. In Roberson v. Principi, 251 F.3d

1378 (Fed. Cir. 2001), the Veterans Court affirmed the

Board’s service-connection denial because the veteran had

failed to allege TDIU. Id. at 1382. We held, in the con-

text of clear and unmistakable error (“CUE”) claims, that

the VA must “fully and sympathetically develop the

veteran’s claim to its optimum before deciding it on the

merits.” Id. at 1384 (quoting Hodge v. West, 155 F.3d

1356, 1362 (Fed. Cir. 1998)). Thus, “[o]nce a veteran

submits evidence of a medical disability and makes a

claim for the highest rating possible, and additionally

submits evidence of unemployability, the ‘identify the

benefit sought’ requirement of 38 C.F.R. § 3.155(a) is met

and the VA must consider TDIU.” Id.

SCOTT v. MCDONALD 11

In Comer v. Peake, 552 F.3d 1362 (Fed. Cir. 2009), we

held that where the veteran made a claim for service

connection and record evidence supported total disability

based on TDIU benefits, the Board was required to con-

sider that evidence as a TDIU claim even though the

veteran had not specifically raised a TDIU claim. See id.

at 1366–69. Comer held that the requirement to liberally

construe a veteran’s arguments extended to arguments

that were “not explicitly raised” before the Board. Id. at

1366.

Similarly, in Robinson, we held that where the veter-

an made a claim for service connection and record evi-

dence supported secondary service connection, the Board

was required to consider that evidence as a claim for

secondary service connection even though the veteran had

not specifically raised secondary service connection. See

Robinson, 557 F.3d at 1361–62; see also Rivera v.

Shinseki, 654 F.3d 1377, 1382 (Fed. Cir. 2011) (“In light of

the Board’s obligations to read veterans’ submissions

liberally and to consider the full context within which

those submissions are made, we conclude that section

7105(d)(3) does not impose such a[n explicit statement]

requirement, at least in the context of a case involving the

single factual question of the sufficiency of the veteran’s

evidence to reopen a claim.”).

Roberson, Robinson, and Comer thus require the Vet-

erans Court to look at all of the evidence in the record to

determine whether it supports related claims for service-

connected disability even though the specific claim was

not raised by the veteran. They also require that veter-

ans’ procedural arguments be construed liberally, but

those cases do not go so far as to require the Veterans

Court to consider procedural objections that were not

raised, even under a liberal construction of the pleadings.

12 SCOTT v. MCDONALD

There is a significant difference between considering

closely-related theories and evidence that could support a

veteran’s claim for disability benefits and considering

procedural issues that are collateral to the merits. As to

the former, the veteran’s interest is always served by

examining the record for evidence that would support

closely related claims that were not specifically raised. As

to procedural issues, that is not always the case. A veter-

an’s interest may be better served by prompt resolution of

his claims rather than by further remands to cure proce-

dural errors that, at the end of the day, may be irrelevant

to final resolution and may indeed merely delay resolu-

tion. Under such circumstances, the failure to raise an

issue may as easily reflect a deliberate decision to forgo

the issue as an oversight. Having initially failed to raise

the procedural issue, the veteran should not be able to

resurrect it months or even years later when, based on

new circumstances, the veteran decides that raising the

issue is now advantageous. For this reason, absent

extraordinary circumstances not apparent here, we think

it is appropriate for the Board and the Veterans Court to

address only those procedural arguments specifically

raised by the veteran, though at the same time giving the

veteran’s pleadings a liberal construction.

In short, we hold that the Board’s obligation to read

filings in a liberal manner does not require the Board or

the Veterans Court to search the record and address

procedural arguments when the veteran fails to raise

them before the Board. Under the balancing test articu-

lated in Maggitt, the VA’s institutional interests in ad-

dressing the hearing issue early in the case outweigh

Scott’s interests in the Veterans Court’s adjudication of

the issue.

A review of Scott’s pleadings to the Board confirms

that Scott did not raise the hearing issue in his current

appeal to the Board. The regulations do not require that

SCOTT v. MCDONALD 13

the Board or the Veterans Court address the veteran’s

argument that the Board erred in not providing him with

a hearing.

AFFIRMED

COSTS

No costs.