Smith v. Principi

UNITED STATES COURT OF APPEALS FOR VETERANS CLAIMS

NO . 01-547

SHANNON D. SMITH , APPELLANT ,

V.

ANTHONY J. PRINCIPI,

SECRETARY OF VETERANS AFFAIRS, APPELLEE.

Before KRAMER, Chief Judge, and FARLEY,

HOLDAWAY, IVERS, STEINBERG, and GREENE, Judges.

ORDER

In a panel opinion dated April 16, 2002, the Court denied the appellant's application for fees

and expenses pursuant to Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412(d), finding that the

position of the Secretary was substantially justified. Smith v. Principi, 16 Vet.App. 71 (2002). On

May 7, 2002, the appellant filed a motion for reconsideration and an alternative motion for a full

Court decision.

On consideration of the foregoing and the record on appeal, it is

ORDERED by the panel that the appellant's motion for reconsideration is denied. It is further

ORDERED by the en banc Court that the appellant's motion for a full Court decision is

denied.

DATED: 23 August, 2002 PER CURIAM.

STEINBERG, Judge, dissenting: I voted to grant the appellant's motion for a full-Court

decision as to this application for attorney fees and expenses under the Equal Access to Justice Act,

28 U.S.C. § 2412 (d) (EAJA), because I believe that the opinion of the panel here, Smith (Shannon)

v. Principi, 16 Vet.App. 71 (2002), is inconsistent with this Court's opinion in Cycholl v. Principi,

15 Vet.App. 355, 359-361 (2001), as well as with other well-established EAJA precedent in this

Court's caselaw on the substantial-justification question.1 I also believe that the opinion is ill advised

1

U.S. V ET . A PP . R. 35( C ) ("[o]rdinarily [motions for full-Court decision] will not be granted unless such action

is necessary to secure or maintain uniformity of the Court's decisions"); see also I N TERN AL O PERATING P RO CED U RES V.

(a)(3), 10 Vet.App. CDXXVI (1997).

for the reasons set forth in Chief Judge Kramer's dissenting opinion. Smith (Shannon), 16 Vet.App.

at 77 (Kramer, C.J., dissenting).

A. Board Decision and the VCAA

The February 6, 2001, decision of the Board of Veterans' Appeals (Board or BVA) on appeal

in this case made reference to the Veterans Claims Assistance Act of 2000 (VCAA)2 in only the

following five sentences:

On November 9, 2000, the President signed into law the [VCAA].

Among other things, this law eliminates the concept of a well-

grounded claim [and] redefines the obligations of the VA with respect

to the duty to assist. The [regional office] has not had the opportunity

to review the veteran's claim in conjunction with the new legislation.

However, the Board finds that all pertinent records are on file and the

veteran has been informed of the requirements for an earlier effective

date. Accordingly, the Board finds that the veteran has not been

prejudiced by this decision. Bernard v. Brown, 4 Vet.App. 384

(1993).

Smith (Shannon), 16 Vet.App. at 76 (quoting BVA decision). The VCAA eliminated the well-

grounded-claim requirement in former section 5107 of title 38, U.S. Code, and, inter alia, amended

38 U.S.C. § 5103 ("Notice to claimants of required information and evidence") and added 38 U.S.C.

§ 5103A ("Duty to assist claimants"). Specifically, section 5103(a) contains two discrete notification

requirements in two separate sentences. The first sentence provides:

Upon receipt of a complete or substantially complete application, the

Secretary shall notify the claimant and the claimant's representative,

if any, of any information, and any medical or lay evidence, not

previously provided to the Secretary that is necessary to substantiate

the claim.

38 U.S.C. § 5103(a). The second sentence then provides:

As part of that notice, the Secretary shall indicate which portion of

that information and evidence, if any, is to be provided by the

claimant and which portion, if any, the Secretary, in accordance with

section 5103A of this title and any other applicable provisions of law,

will attempt to obtain on behalf of the claimant.

2

Pub. L. No. 106-475, 114 Stat. 2096 (Nov. 9, 2000).

2

Ibid. These separate requirements are not fungible. They are just as distinct from each other as

though they were provisions in separate subsections or paragraphs. The Board's consideration and

discussion of the first sentence does not satisfy its obligation to consider and discuss the second

sentence, any more than would discussion of pre-VCAA 38 U.S.C. § 5107(a) (regarding the well-

grounded-claim threshold and VA's duty to assist) have provided an adequate discussion of

subsection (b) of that section (regarding the benefit of the doubt).

B. Holdings in Cycholl and Prior EAJA Caselaw

In Cycholl, supra, the Court expressly rejected the Secretary's assertion that the Board was

substantially justified in not discussing the potential applicability of the VCAA, including the section

5103(a) notice requirements, in a BVA decision issued after the VCAA's enactment. Cycholl,

15 Vet.App. at 358-359. The Court specifically discussed the Secretary's argument that the Board's

misfeasance was substantially justified "because '[t]he basis for the remand . . . involved the Court's

recent decision in Holliday v. Principi"'.3 Id. at 360. The Court concluded in Cycholl that, for four

reasons, the Board could not have been substantially justified in its failure to discuss the VCAA's

new chapter 51 adjudication requirements and provisions: (1) At the time of the Board's

November 29, 2000, decision in Cycholl, the Court's caselaw was very well established that, under

Karnas v. Derwinski,4 a remand was required for the Board to consider the application of a newly

enacted law that was potentially applicable (on the latter score, see point (3), below); (2) section

7104(a) of title 38, U.S. Code, requires the Board to consider, and section 7104(d)(1) requires the

Board to discuss,5 "all . . . potentially applicable provisions of law and regulation", Schafrath v.

Derwinski, 1 Vet.App. 589, 593 (1991); see also Weaver v. Principi, 14 Vet.App. 301, 302 (2001)

(per curiam order); (3) under ZP v. Brown and Elcyzyn v. Brown,6 the Board cannot be substantially

3

Holliday v. Principi, 14 Vet.App. 280, 286 (2001), mot. for recons. denied, 14 Vet.App. 237 (per curiam

order), mot. for full Court review denied, 15 Vet.App. 21 (2001) (en banc order).

4

In Karnas v. Derwinski, the Court held that "where the law or regulation changes after a claim has been filed

or reopened but before the administrative . . . appeal process has been concluded, the version mo[re] favorable to [the]

appellant should . . . apply unless Congress provided otherwise or permitted the [Secretary] to do otherwise and the

Secretary did so". Karnas, 1 Vet.App. 308, 313 (1991).

5

Specifically, section 7104(a) provides in pertinent part: "Decisions of the Board [of Veterans Appeals

(Board)] shall be based on the entire record in the proceeding and upon consideration of all evidence and material of

record and applicable provisions of law and regulation." 38 U.S.C. § 7104(a). Section 7104(d)(1) provides that each

Board decision "shall include . . . a written statement of the Board's findings and conclusions, and the reasons or bases

for those findings and conclusions, on all material issues of fact and law presented on the record". 38 U.S.C.

§ 7104(d)(1); see e.g., Allday v. Brown, 7 Vet.App 517, 527 (1995) (holding that section 7104(d)(1) requires that

statement of reasons or bases "must be adequate to enable a claimant to understand the precise basis for the Board

decision, as well as to facilitate review in this Court").

6

ZP v. Brown, 8 Vet.App. 303, 304 (1994) (per curiam order) (citing Elcyzyn, infra, and holding that

Secretary's position was not substantially justified in failing "to provide an adequate statement of reasons or bases in its

denial of the appellant's . . . claim . . . long after the Court had clearly articulated the parameters of the reasons or bases

requirement in Gilbert v. Derwinski, 1 Vet.App. 49, 56-57 (1990)"); Elcyzyn v. Brown, 7 Vet.App. 170, 176 (1994)

3

justified for EAJA purposes when it fails to comply with applicable Court opinions such as Karnas,

supra; and (4) the Board, at the time of its February 6, 2001, decision in Cycholl, was bound by

precedent opinions of the Department of Veterans Affairs (VA) General Counsel (GC)7, and two

days before the BVA decision there the GC had issued VA Gen. Coun. Prec. 11-00 (Nov. 27, 2000)

[hereinafter G.C. Prec. 11-00] holding that "all of the [VCAA]'s provisions apply to claims filed on

or after "November 9, 2000, as well as to claims filed before then but not finally decided as of that

date." Cycholl, 15 Vet.App. at 360 (quoting G.C. Prec. 11-00).

A closer examination of these conclusions from Cycholl demonstrates why the Board in the

instant case lacked substantial justification:

[T]he VA General Counsel issued a precedent opinion that concluded

"that all of the [VCAA]'s provisions apply to claims filed on or after

November 9, 2000, as well as to claims filed before then but not

finally decided as of that date." [G.C. Prec. 11-00]. Under section

7104(c) of title 38, the Board is bound by, inter alia, "the precedent

opinions of the chief legal officer of the Department." See 38 U.S.C.

§ 311 (General Counsel is VA's "chief legal officer"); Herlehy v.

Principi, 15 Vet. App. 33, 34 (2001) (per curiam order) (citing

section 7104(c) for proposition that "Board is bound by VA General

Counsel precedential opinions"). Because the November 29, 2000,

Board decision in this case failed to discuss the applicability of the

VCAA to this claim, and because the Board was bound by G.C. Prec.

11-00, which concluded that the VCAA was applicable to such

claims, the Board failed to abide by section 7104(c). Furthermore, the

Board's failure to follow section 7104(c) and G.C. Prec. 11-00

constituted a failure to "consider[] . . . [all] applicable provisions of

law", as required by 38 U.S.C. § 7104(a), and also rendered

inadequate the Board's statement of reasons or bases. See ZP, supra

(Court awarded EAJA fees and expenses upon finding Secretary's

position at administrative stage not substantially justified where Court

on merits had vacated BVA decision on appeal based on Board's

failure to provide adequate statement of reasons or bases pursuant to

38 U.S.C. § 7104(d)(1) for the Board's denial of rating-increase claim,

and Court cited, inter alia, Gilbert[ v. Derwinski, 1 Vet.App. 49, 57

(1990),] which had been decided over nine months before Board

(holding that Secretary's position was not substantially justified in failing to follow "relevant statutory provisions as

interpreted by precedential decisions of the Court", namely Colvin v. Derwinski, 1 Vet.App. 171, 174 (1991), and

Gilbert, supra).

7

See 38 U.S.C. § 7104(c); Cycholl v. Principi, 15 Vet.App. 355, 360 (2001) (citing Herlehy v. Principi,

15 Vet.App. 33, 34 (2001) (per curiam opinion)); see also 38 C.F.R. § 20.901(c) (2001).

4

decision vacated by the Court); see also Elcyzyn, supra (to same

effect).

Cycholl, 15 Vet.App. at 360. Here, in contrast, the panel opinion appears to be setting up a scenario

in which, as long as the Board merely mentions the VCAA, the Board's failure, in violation of both

sections 7104(a) and 7104(d)(1), to consider and discuss at all a particular VCAA provision, such

as the second section 5103(a) notice requirement, will be considered substantially justified for EAJA

purposes. Such a suggestion constitutes a major departure from the Court's EAJA caselaw, as

embodied, for example, in Cycholl, ZP, and Elcyzyn, all supra.

C. Deficiencies in Panel Opinion

Notwithstanding the above caselaw, the divided panel opinion in the instant case excuses the

Secretary's failure to comply with three distinct statutory requirements, 38 U.S.C. § 7104(a) (Board

required to consider all applicable provision of law and regulation), 38 U.S.C. § 7104(d)(1) (Board

required to discuss all such applicable provisions in the reasons or bases for its decision and do so

adequately)8, and 38 U.S.C. § 7104(c) (Board bound by precedent opinions of VA's GC). The

majority's stated rationale for excusing this conceded noncompliance is that "the law as it existed at

the time of the Board's February 6, 2001, decision [in the instant case] was unclear about the scope

and extent of the application of the VCAA"; "[i]t was not until this Court's decision in Holliday [,

supra,] on February 22, 2001, that the uncertainty surrounding the issue of which claims the VCAA

would apply to was, by and large, removed"; and "[t]o require the Board to have known to discuss

at more length all provisions of the VCAA in deciding the appellant's relatively simple claim would

in effect require the Board to be prescient . . . as to what this Court would [later] hold [in Holliday,

supra]". Id. at 76. All three of these rationales are invalid. The question is not what the VCAA

notice requirements meant at that time but whether all the VCAA's provisions were considered and

discussed in the Board's decision, as was then required by applicable law and precedent. See, e.g.,

Weaver, supra. The Holliday opinion held only that that case and similar cases needed to be

remanded so that the BVA could consider the VCAA's applicability in the first instance, a holding

very much in line with G.C. Prec. 11-00, which predated the Board decision at issue.

The majority's opinion states correctly the following standard for measuring the

reasonableness (the primary criterion for determining whether the Secretary's position at the

administrative stage is substantially justified for EAJA purposes9) of the BVA's actions:

8

See supra note 5.

9

In Stillwell v. Brown, this Court articulated the following test for determining substantial justification under

28 U.S.C. § 2412(d)(1)(A), (B):

VA must demonstrate the reasonableness, in law and fact, of . . . the action or failure to act by . . . VA

in matters before . . . VA, including merits, conduct, reasons given, and consistency with judicial

precedent and VA policy with respect to such . . . action or failure to act, as reflected in the record on

appeal and the filings of the parties before the Court.

5

In determining reasonableness, the Court's focus must be upon the

law in effect at the time the government adopted its position in the

case for as the [U.S.] Supreme Court stated, our concern is "not what

the law now is, but what the government was substantially justified

in believing it to have been."

Id. at 77 (citations omitted). Against this standard, the Board was totally unjustified in failing to

discuss both of the notice requirements in the VCAA-amended section 5103(a) including, of course,

the notice requirements in the second sentence.10 Regarding the applicability of the VCAA, the law

binding on the BVA at the time of its February 6, 2001, decision in this case was the GC precedent

opinion issued more than two months earlier than the BVA decision and holding that all provisions

of the VCAA, including both new section 5103(a) notice requirements, were applicable to cases

pending on the date of the VCAA's enactment. No decision of this Court was necessary in order for

the Board to be required to follow that GC opinion; the face of the statute itself required that the

Board follow that GC precedent opinion, 38 U.S.C. § 7104(c). Indeed, the Board's obligation in this

respect is made totally clear by the following statement made by the Secretary very recently in a

pleading filed in response to a Court order in another case, Matlock v. Principi, 16 Vet.App. 188

(2002), under 28 U.S.C. § 2412(d)(1)(A), (B), regarding the binding nature of this GC opinion:

[G.C. Prec.] 11-200 . . . has been binding on VA, including the [regional offices] and

the Board, since that time [its issuance 'on November 27, 2000'] . . . . and was also

in effect [on March 29, 2001,] and bound the Board as it rendered [on that date] the

decision . . . on appeal . . . . All sections of the VCAA were applicable to [the

appellant's] claims.

Secretary's July 23, 2002, Response (in Matlock, supra) at 5,6.

In the instant case, however, the Board's discussion of the VCAA extended only to the

amendments regarding well-grounded claims and VA's duty to assist. The discussion ignored

completely the second sentence in section 5103(a)'s notice requirements regarding the duty of the

Secretary to inform the claimant about which information and evidence the Secretary would "attempt

Stillwell, 6 Vet.App. 291, 302 (1994).

10

The Court recently issued an opinion holding that the Board's failure to comply with the notice requirement

in the second section 5103(a) sentence, although there was compliance with the first sentence (through "two documents

the Secretary sent to the appellant noting which evidence would be useful to support the appellant's attempt to reopen

his claim"), was remandable error. Quartuccio v. Principi, 16 Vet.App. 183, 187 (2002) (vacating BVA decision and

remanding where Secretary failed to comply with notice requirements of section 5103(a), as amended by VCAA, and

38 C.F.R. § 3.159(b), as amended by 66 Fed.Reg. 45,620, 45,630 (Aug. 29, 2001), and where BVA failed to enforce

compliance with these new requirements).

6

to obtain" and which was "to be provided by the claimant", 38 U.S.C. § 5103(a).11 See Quartuccio

v. Principi, 16 Vet.App. 183, 187 (2002). The Court has held heretofore that such an omission has

rendered the Secretary's position lacking in substantial justification, see Cycholl, ZP, and Elcyzyn,

all supra, and should have done so here.

D. Conclusion

For the above reasons, the Court should consider the case en banc, and I respectfully dissent

from the denial of the appellant's motion for such consideration.

11

Chief Judge Kramer's dissenting opinion persuasively concluded as to compliance with the first section

5013(a) requirement:

Specifically, the Board's finding of fact that "the veteran has been informed of the

requirements for an earlier effective date" (Shannon D. Smith, BVA 99-01319, at

11 (Feb. 6, 2001)) is not supported by any evidence set forth in the BVA decision

regarding any notice provided to the appellant. Indeed, the Board made no express

statement of supporting evidence in conjunction with its finding, and the decision

contains no implicit evidentiary support, which a discussion of relevant evidence

in the factual background section may have provided. As the Secretary conceded

in the joint motion for remand, the Board's "discussion is not thorough enough to

indicate with certainty that the provisions of the VCAA have been met, specifically

with respect to notice . . . [.]" (Motion at 3). Accordingly, because the Board failed

to provide an adequate statement of reasons or bases and because our case law as

to the reasons-or-bases requirement was clear at the time of the BVA decision, see

38 U.S.C. § 7104(d)(1); Allday[, supra]; Gilbert[, 1 Vet.App. at 57], in my view,

the Secretary's position at the administrative stage, that "the veteran ha[d] been

informed of the requirements for an earlier effective date" (Smith, BVA 99-01319,

supra), was not substantially justified. See ZP v. Brown, 8 Vet.App. 303, 304

(1995) (per curiam order). I would therefore hold that an award of attorneys fees

is warranted in this case.

Smith (Shannon), 16 Vet.App. 71, 77 (2001) (Kramer, C.J., dissenting)

7