Rita L. Dicarlo v. R. James Nicholson

UNITED STATES COURT OF APPEALS FOR VETERANS CLAIMS

NO . 03-0629

RITA L. DICARLO , APPELLANT ,

V.

R. JAMES NICHOLSON ,

SECRETARY OF VETERANS AFFAIRS, APPELLEE.

On Appeal from the Board of Veterans' Appeals

(Argued April 28, 2005 Decided May 10, 2006 )

Robert V. Chisholm, of Providence, Rhode Island, for the appellant.

Alice M. Szynklewski, with whom Tim S. McClain, General Counsel; R. Randall Campbell,

Assistant General Counsel; and Carolyn F. Washington, Deputy Assistant General Counsel, were

on the brief, all of Washington, D.C., for the appellee.

Before KASOLD, HAGEL, and LANCE, Judges.

KASOLD, Judge: Veteran Rita DiCarlo appeals through counsel that part of a December 1,

2002, decision of the Board of Veterans' Appeals (Board) finding that a September 1973 rating

decision was final. The Court notes that Ms. DiCarlo does not appeal the Board's denial of her

request for revision on the basis of clear and unmistakable error (CUE) in the 1973 regional office

(RO) decision.1 The parties each filed briefs, and the appellant filed a reply brief. Thereafter, the

Court heard oral arguments in the case. For the reasons stated below, the Court will set aside the

December 2002 Board decision and dismiss this appeal.

1

Although a request for revision on the grounds of CUE is frequently referred to as a "CUE claim" or a "claim

of CUE," the Court will use the statutory and regulatory language, as appropriate. See 38 U.S.C. §§ 5109A, 7111;

38 C.F.R. §§ 3.105, 20.1400 (2005).

I. BACKGROUND

Ms. DiCarlo served in the U.S. Army from March 1965 to November 1966. Record (R.) at

16. She was first diagnosed in May 1966 with "depressive reaction, mild to moderate." R. at 45.

That diagnosis was revised in October 1966 to "emotionally unstable personality – manifested by

poor impulse control, low tolerance for frustration." R. at 49.

In November 1966, Ms. DiCarlo submitted a claim for service connection listing

"psychiatric" among the conditions for which she had received treatment while in service. R. at 74.

The Secretary scheduled a VA medical examination, but Ms. DiCarlo failed to report for the

examination. In February 1967, based upon a lack of medical evidence, the RO denied her claim for

service connection. R. at 83. This decision was never appealed.

In 1973, Ms. DiCarlo sought to reopen her claim for, inter alia, a "mental disorder incurred

during service due to stress of military service." R. at 89. Her application for compensation noted

that she was hospitalized for acute mental breakdown from May to August of 1967. R. at 90; see

also R. at 85. In August 1973, Ms. DiCarlo received a "special neuropsychiatric examination" that

resulted in the diagnosis of an "emotionally unstable personality, associated with hysterical and

antisocial features." R. at 98-99. The neuropsychiatrist observed that "[a]s far as can be determined,

she has never actually had any serious mental problems other than her own personality difficulties,"

and he described her as "a typically unstable, immature, acting-out girl, who is in no way psychotic

or neurotic." R. at 99. A September 1973 RO rating decision informed Ms. DiCarlo that her nervous

condition was not a disability for which compensation may be paid, and that her claim for

compensation was denied. R. at 123. Ms. DiCarlo did not appeal the September 1973 decision.

In January 1977, Ms. DiCarlo filed a claim to reopen her nervous condition claim. R. at

125-26. Based upon the submission of private medical records (R. at 139-41) and a VA medical

examination (R. at 139-40), a 1979 RO rating decision granted Ms. DiCarlo service connection for

schizophrenia and assigned a 50% disability rating effective November 9, 1978 (R. at 160-61). Ms.

DiCarlo appealed, seeking an earlier effective date. R. at 164. Although a 1981 Board decision is

not in the record on appeal, it is referred to in a 1983 Board decision as having addressed the finality

2

of the September 1973 RO decision and determined that it was final.2 The 1981 Board decision also

affirmed the determination by the RO that November 9, 1978, was the correct effective date for the

award of service connection for Ms. DiCarlo's nervous disorder. R. at 210. The Board Chairman

subsequently granted Ms. DiCarlo's motion for reconsideration. The 1983 Board decision on

reconsideration determined that the 1981 Board decision had erred in its determination of the

effective date for Ms. DiCarlo's disability rating and granted a new effective date of January 25,

1977, the date of the claim to reopen. R. at 210-11. The 1983 Board decision also determined that

the 1981 Board decision correctly determined that the 1973 RO decision was final. Id.

In 1994 Ms. DiCarlo's representative submitted a letter to the RO alleging CUE in the 1973

RO decision denying service connection and arguing that the RO failed to obtain records from a state

mental health facility. R. at 389-91. The representative argued that had those records been obtained

in 1973, service connection would have been granted. Id. The RO, however, determined that it did

not have jurisdiction to consider a request for revision on the basis of CUE in the 1973 RO decision

because it believed that decision had been subsumed by the 1983 Board decision. R. at 401. Ms.

DiCarlo appealed this determination to the Board. R. at 407.

In November 2001, the Board found, inter alia, that the RO did have jurisdiction to adjudicate

a request for revision on the basis of CUE claim in the 1973 RO decision. R. at 467-78. The Board

also directed the RO to determine upon remand whether the 1973 decision was final. The Board

cited to the then-recent United States Court of Appeals for the Federal Circuit decision in Hayre v.

West, 188 F.3d 1327 (Fed. Cir. 1999), that had newly found that a decision was not final if it

contained grave procedural error. R. at 477-78. Subsequently, in July 2002, the RO determined that

the 1973 decision was final and that there was no CUE in that decision.

In her appeal to the Board in 2002, Ms. DiCarlo asserted that she had never received notice

advising her of the September 1973 rating decision denying her claim for service-connected benefits;

the Board construed this assertion to be an argument against the finality of the 1973 claim. R. at

2

The 1983 Board decision replaced the 1981 Board decision that subsumed the 1979 RO decision, see

38 U.S.C. § 7103(a); Link v. West, 12 Vet.App. 39, 45 (1998) (once a case is reconsidered by Board, reconsideration

decision constitutes final decision of Board and previous Board decision is nullified) (citing Smith (George) v. Brown,

8 Vet.App. 546, 550 (1996) (en banc)); see also Herndon v. Principi, 311 F.3d 1121, 1125 (Fed. Cir. 2002) (holding

that a Board affirmance of an RO decision subsumes that decision); 38 C.F.R. § 20.1104 (2004).

3

507; see R at 7-8. The 2002 Board determined, however, that Ms. DiCarlo had received a September

1973 letter that notified her of the 1973 rating decision. The Board then determined that the 1973

rating decision was final because there was no grave procedural error and because Ms. DiCarlo had

not timely filed a Notice of Disagreement (NOD). In addition, the Board found that the statutory and

regulatory notice requirements were not applicable in this instance because Ms. DiCarlo had asserted

a request for revision on the basis of CUE and that there was no CUE in the September 1973 rating

decision that denied service connection for a nervous condition.

II. APPLICABLE LAW AND ANALYSIS

Ms. DiCarlo asserts on appeal that the 1973 claim is not final because the Secretary never

provided her with a copy of the 1973 RO decision and because the September 1973 notice letter,

which she now concedes that she did receive, did not contain sufficient detail concerning the rating

decision. Appellant's Brief at 8-11. Ms. DiCarlo also asserts that the Veterans Claims Assistance

Act of 2000 (VCAA), Pub. L. No. 106-475, 114 Stat. 2096 (Nov. 9, 2000), applies to the issue of

whether an RO decision is final. The Secretary asserts that the determination of finality can only be

raised through a request for revision on the basis of CUE in the 1983 Board decision.

Although Ms. DiCarlo's argument that the 1973 RO decision remains unadjudicated is

modified from the argument presented below, and the matter could be remanded to the Board for

consideration, see Maggitt v. West, 202 F.3d 1370, 1377-78 (Fed. Cir. 2000) (if Court has

jurisdiction over the claim, issues presented for the first time on appeal may be addressed,

disregarded, or remanded back to the Board for further development), the overall issues have been

briefed by the parties and remain the same – was the 1973 RO decision final and could the Board

in 2002 properly readdress the issue of the finality of the 1973 RO decision. Accordingly, the Court

will proceed to address them.

A. Res Judicata

"Principles of finality and res judicata apply to agency decisions that have not been appealed

and have become final." Cook v. Principi, 318 F.3d 1334, 1337 (Fed. Cir. 2002) (en banc); Routen

v. West, 142 F.3d 1434, 1437-38 (Fed. Cir. 1998) (applying finality and res judicata to agency

decisions when the requirements of statutory and legal exceptions are not met); Strott v. Derwinski,

4

1 Vet.App. 114, 117 (1991) (determining that the rules of issue and claim preclusion can form "a

rational basis for a jurisdictional date denying judicial review to some and granting it to others" and

that "'issue and claim preclusion' . . . historically called 'res judicata' . . . means that decisions once

made are not subject to reexamination except for compelling reasons").

Traditionally, the principles of finality include two subdoctrines: (1) "Claim preclusion,"

which addresses the preclusive effect of a judgment upon the subsequent relitigation of a claim or

cause of action, see Bissonnette v. Principi, 18 Vet.App. 105, 110-11 (2004) (holding that res

judicata prevents relitigation of a claim that was previously the subject of a valid and final decision

of this Court); Link v. West, 12 Vet.App. 39, 44 (1998) ("Under the principle of res judicata, 'once

there is a final decision on the issue of [CUE] . . . that particular claim of [CUE] may not be raised

again.'" (quoting Russell v. Principi, 3 Vet.App. 310, 315 (1992) (en banc))), and (2) "issue

preclusion," which addresses the preclusive effect of a judgment upon the relitigation of an issue of

fact or law, see Bissonnette, 18 Vet.App. at 110 (describing collateral estoppel as "dealing with 'how

a judgment can prevent relitigation of an issue of fact or law'" (citation omitted)).

The concept of res judicata requires that there be only one valid decision on any adjudicated

issue or claim; that decision is the only appropriate target for any future collateral attack on that issue

or claim. Cf. Hazan v. Gober, 10 Vet.App. 511, 520-21 (1997) (holding that where an unappealed

final decision is determinative of an issue, an appellant is collaterally estopped from "relitigating the

same issue based upon the same evidence, albeit for a different purpose"). Except as provided by

law, when a case or issue has been decided and an appeal has not been taken within the time

prescribed by law, the case is closed, the matter is ended, and no further review is afforded. See

Leonard v. Nicholson, 405 F.3d 1333, 1337 (Fed. Cir. 2005) ("'The purpose of the rule of finality

is to preclude repetitive and belated readjudications of veterans' benefits claims.'" (quoting Cook,

318 F.3d at 1339)); Bissonnette, 18 Vet.App. at 112 ("In essence, the res judicata precedent ensures

that a litigant may have his or her day in Court, but not two or three."); see also Hazan, supra.

B. Exceptions to Finality and the Unadjudicated Claim

Within the veteran-friendly administrative setting, there are numerous exceptions to the rule

of finality and application of res judicata. See generally Smith (William) v. Brown, 35 F.3d 1516,

1520-21 (Fed. Cir. 1994) (discussing several statutory provisions for vitiating the finality of a Board

5

decision); see also Astoria Fed. Savs. & Loan Ass'n v. Solimino, 501 U.S. 104, 107-08 (1991)

("suitability [of administrative estoppel] may vary according to the specific context of the rights at

stake, the power of the agency, and the relative adequacy of agency procedures"). A prior decision

can be revised based on CUE. See 38 U.S.C. §§ 5109A, 7111; Cook, supra. The Chairman of the

Board may grant reconsideration of a Board decision, see 38 U.S.C. § 7103(a); Wachter v. Brown,

7 Vet.App. 396, 397 (1995), and the Board may, regardless of any motion for reconsideration, sua

sponte correct obvious errors, see 38 U.S.C. § 7103(c); Smith (William), supra; Hazan, 10 Vet.App.

at 522. Additionally, a claim that has been denied or not granted in full can be reopened based on

new and material evidence, which will result in a new decision on the matter. See 38 U.S.C.

§§ 5108, 7104; Cook, supra; Jackson v. Nicholson, 19 Vet.App. 207, 210 (2005).

Closely associated with the exceptions to finality is the unadjudicated claim, or, otherwise

stated, a claim for which a decision has never been rendered or become final. This occurs when "the

time for appealing either an RO or a Board decision did not run where the [Secretary] failed to

provide the veteran with information or material critical to the appellate process." Cook, 318 F.3d

at 1340 (discussing Tablazon, Hauck, Kuo, and Ashley, all infra). In Cook, the Federal Circuit

observed that this Court has tolled the period of time for a claimant to act after an RO decision,

leaving the case in a nonfinal status when the Secretary has failed to (1) notify a claimant of the

denial of a claim, see Hauck v. Brown, 6 Vet.App. 518, 519 (1994), (2) mail a claimant a copy of the

Board decision pursuant to 38 U.S.C.§ 7104(e), see Ashley v. Derwinski, 2 Vet.App. 307, 311

(1992), (3) provide notice to the claimant of appellate rights, see In re Fee Agreement of Cox,

10 Vet.App. 361, 375 (1997), vacated on other grounds, 149 F.3d 1360 (Fed. Cir. 1998), or (4)

issue the claimant a Statement of the Case, see Tablazon v. Brown, 8 Vet.App. 359, 361 (1995); Kuo

v. Derwinski, 2 Vet.App. 662, 666 (1992). See also Andrews v. Nicholson, 421 F.3d 1278, 1284

(Fed. Cir. 2005) ("when the VA violates Roberson [v. Principi, 251 F.3d 1378 (Fed. Cir. 2001),] by

failing to construe the veteran's pleadings to raise a claim, such claim is not considered

unadjudicated but the error is instead properly corrected through a CUE motion").

It should also be noted that a claim may remain in an unadjudicated state due to the failure

of the Secretary to process it. In such instances, the appropriate procedure for a claimant to press

a claim believed to be unadjudicated (and for which there is no final decision that arguably failed

6

to consider the claim) is to pursue a resolution of the original claim, e.g., seek issuance of a final RO

decision with proper notification of appellate rights and initiate an NOD. See 38 U.S.C. §§ 5104,

7105. If the Secretary fails to process the claim, then the claimant can file a petition with this Court

challenging the Secretary's refusal to act. See Costanza v. West, 12 Vet.App. 133, 134 (1999).

However, none of the above scenarios results in a freestanding "finality claim." Although

Ms. DiCarlo's counsel asserted at oral argument that Ms. DiCarlo is making a "finality claim" rather

than a claim for revision based on CUE, the Court cannot endorse the existence of such a creature.

See also Appellant's Brief at 12 (arguing that the notice provisions of 38 U.S.C. § 5103 apply

because she is not making a claim for revision based on CUE). There is no section in title 38 that

creates a procedure for making a freestanding challenge to the finality of a prior decision.

Accordingly, an attack on a final decision must be raised through a valid procedure.

Furthermore, the conclusion that a prior decision is final is not a conclusion that the prior

decision is correct, which can be rebutted by a showing of error in the prior decision. Although a

final decision enjoys a presumption of correctness, finality and correctness are different concepts.

See Bingham v. Nicholson, 421 F.3d 1346, 1349 (Fed. Cir. 2005) ("Even if [a] decision to deny a

claim [is] based on an incomplete or erroneous analysis of law or fact . . . , while unfortunate, it still

would be an adjudication of that claim to which the rule of finality attaches."); Fugo v. Brown,

6 Vet.App. 40, 43-44 (1993) (explaining that the mere existence of error is not a sufficient basis for

altering a final decision). Finality is merely a measure of procedural maturity. It distinguishes

processes that have been completed from those that have not. Cf. Cook, 318 F.3d at 1339 ("The

purpose of the rule of finality is to preclude repetitive and belated readjudication of veterans' benefits

claims.").

C. Application of Res Judicata and Finality

In this case, the 1983 Board decision constitutes a final decision on the issue of the proper

effective date for the award of Ms. DiCarlo's service-connected psychiatric condition, a claim that

was first advanced in 1973. The 1983 decision also determined that a 1981 Board decision had

concluded correctly that the 1973 RO decision "was final and subject to revision only by the filing

of a reopened claim." R. at 211. Thus, the 1983 Board decision is binding and readjudication of that

7

same issue is precluded, except through one of the prescribed means. See 38 U.S.C. §§ 5108,

5109A, 7103, 7104, 7111; Andrews, Cook, Jackson, Hazan, and Wachter, all supra.

The 2002 Board, however, directly addressed the finality of the 1973 RO decision without

considering whether the issue had been properly presented. The Board in 2002 conducted its review

outside the context of CUE in the 1983 Board decision, outside the reopening of the claim, outside

a reconsideration by the Board Chairman, outside an exercise by the Board of its authority to sua

sponte correct an obvious error in the record, and outside any claim that the 1983 Board decision

itself remained in an unadjudicated status.3 A final Board decision can only be revisited if one of

the statutory exceptions to finality is satisfied, and, in this instance, the 1983 Board decision contains

the only valid determination on the issue of the finality of the 1973 decision. See Cook, 318 F.3d

at 1337; see also Hazan, 10 Vet.App. at 520-22; Strott, supra. Accordingly, the 2002 Board erred

in addressing the issue and its determination on that issue must and will be set aside. See 38 U.S.C.

§§ 7103, 7104, 7111; Cook, supra; Routen, 142 F.3d at 1437-38; Hazan and Strott, both supra.

In light of our disposition in this matter, Ms. DiCarlo's argument that the VCAA applies to

the issue of finality in an RO decision is moot, and the Court will not address that argument. See

Dunn v. West, 11 Vet.App. 462, 467 (1998) (where issue becomes moot, Court is divested of

jurisdiction to consider it). Without expressing any opinion on the merits of such action, we simply

note that Ms. DiCarlo remains free to request a revision on the basis of CUE in the 1983 Board

decision that determined the 1973 RO decision was final or to bring any other appropriate action

upon her underlying claim. See Andrews, supra.

III. CONCLUSION

The 2002 Board erred when it reviewed the finality of the 1973 RO decision outside of the

context of a statutory exception to finality because the 1983 Board decision was a final decision on

the issue of the proper effective date for the award of Ms. DiCarlo's service-connected psychiatric

condition. Accordingly, that part of the 2002 Board decision that found the 1973 RO decision to be

final is SET ASIDE, and the appeal is DISMISSED.

3

The Court notes that a Board's correction of obvious error pursuant to 38 U.S.C. § 7103(c) would have

necessitated a correction in the 1983 Board decision rather than a review of the 1973 RO decision.

8