Dennis M. Thun v. James B. Peake

UNITED STATES COURT OF APPEALS FOR VETERANS CLAIMS

NO . 05-2066

DENNIS M. THUN , APPELLANT ,

V.

JAMES B. PEAKE , M.D.,

SECRETARY OF VETERANS AFFAIRS, APPELLEE.

On Appeal from the Board of Veterans' Appeals

(Argued September 19, 2007 Decided April 23, 2008 )

Kenneth M. Carpenter, of Topeka, Kansas, for the appellant.

Jeffrey J. Schueler, with whom Tim McClain, General Counsel; R. Randall Campbell,

Assistant General Counsel; and Mary Ann Flynn, Principal Deputy Assistant General Counsel, all

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

Before GREENE, Chief Judge, and HAGEL and SCHOELEN, Judges.

GREENE, Chief Judge: Veteran Dennis M. Thun appeals, through counsel, a June 22, 2005,

decision of the Board of Veterans' Appeals (Board) that determined that his disability rating for his

service-connected post-traumatic stress disorder (PTSD) did not warrant referral for extraschedular

consideration under 38 C.F.R. § 3.321(b)(1) (2007). Record (R.) at 1-19. Mr. Thun argues that the

Board misinterpreted § 3.321, and thus, failed to apply the law correctly when evaluating his claim

for an increased rating. Because we find no error in the Board's conclusion that Mr. Thun's asserted

inability to advance at his place of employment and to receive a higher salary did not constitute

marked interference with employment that rendered his 70% disability rating inadequate, thereby

warranting extraschedular consideration, the June 2005 Board decision will be affirmed.

I. BACKGROUND

Mr. Thun served in the U.S. Marine Corps from April 1966 to April 1968, including combat

service in Vietnam. R. at 23. In January 2000, a VA regional office (RO) awarded him service

connection for PTSD and assigned a 10% disability rating. R. at 77-79. In July 2001, the RO

increased his disability rating to 30%. R. at 119-24. Mr. Thun appealed that rating to the Board and

argued that his circumstances should be considered for an extraschedular rating. R. at 100-03. He

asserted that his PTSD symptoms prevented him from advancing or being promoted at his job as a

senior systems programmer. R. at 173. After two Board remands, the RO increased his disability

rating to 70% and found that his situation did not warrant referral for extraschedular consideration.

R. at 399-406, 414-18. Mr. Thun again appealed to the Board, and in June 2005 the Board denied

him any further increase in his disability rating and found that referral for extraschedular

consideration was not warranted. Concerning Mr. Thun's employment history, the Board found that

[t]he evidence of record shows that [Mr. Thun] has not had marked interference with

obtaining or retaining employment. He has maintained steady, full-time, gainful

employment since discharge from service, and has worked at his current job since

May 1986.

R. at 18. It is that Board determination that Mr. Thun appeals to the Court.

II. ARGUMENTS

Mr. Thun asserts that, in deciding that his case did not warrant extraschedular consideration,

the Board failed to consider, as marked interference with his employment, that the salary he receives

from his job was substantially limited by his service-connected PTSD. He stated to the Board that

less-experienced coworkers were promoted before him, thus receiving higher salaries, and argued

that his PTSD symptoms strained his relationships with his direct managers and prevented his own

promotion. He maintains that this evidence established a significant disparity between his current

income (including his VA benefits) and the income he believes he could receive, but for the severity

of his service-connected disability. He contends this disparity is a loss of earning capacity sufficient

to trigger extraschedular consideration. Mr. Thun further asserts that the Board erred when it found

that marked interference with employment is limited to circumstances in which the claimant's

disability impacts the claimant's ability to obtain or retain employment. The Secretary argues that

the Board had a plausible basis for concluding that extraschedular consideration was not warranted.

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III. LAW

Veterans with disabilities resulting from personal injury or disease contracted during active

service and in the line of duty are entitled to service-connected benefits. See 38 U.S.C. § 1110. To

determine the level of compensation benefits due to a veteran, Congress has granted the Secretary

the authority "to adopt and apply a schedule of ratings of reductions in earning capacity from

specific injuries or combination of injuries," based upon the average impairments of earning capacity

resulting from such injuries in civil occupations. 38 U.S.C. § 1155. Using this authority, the

Secretary has established the rating schedule in a series of regulations located in part 4 of title 38

of the Code of Federal Regulations, that is "primarily a guide in the evaluation of disability resulting

from all types of diseases and injuries encountered as a result of or incident to military service."

38 C.F.R. § 4.1 (2007); see 38 C.F.R. § 3.321(a) (titled "Use of rating schedule"). Once a disability

has been found to be service connected, VA applies the criteria established in diagnostic codes

(DCs) contained in the rating schedule to assign a percentage of disability that "represent[s] as far

as can practicably be determined the average impairment in earning capacity resulting from such

diseases and injuries and their residual conditions in civil occupations." 38 C.F.R. § 4.1; see 38

C.F.R. § 3.321(a). The ultimate percentage of disability rating assigned to a veteran is "considered

adequate to compensate for considerable loss of working time from exacerbations or illnesses

proportionate to the severity of the several grades of the disability." 38 C.F.R. § 4.1.

Generally, evaluating a disability using either the corresponding or analogous DCs contained

in the rating schedule is sufficient. See 38 C.F.R. §§ 4.20 ("Analogous ratings"), 4.27 ("Use of

diagnostic code numbers") (2007). Indeed, Congress has instructed VA to readjust the schedule of

ratings when needed to maintain its relation to the particular average impairment in earning capacity

presented by certain disabilities. See 38 U.S.C. § 1155; 38 C.F.R. § 3.321(b)(1). Because the

ratings are averages, it follows that an assigned rating may not completely account for each

individual veteran's circumstance, but nevertheless would still be adequate to address the average

impairment in earning capacity caused by disability. However, in exceptional cases where the rating

is inadequate, it may be appropriate to assign an extraschedular rating based on the following

guidance:

To accord justice, therefore, to the exceptional case where the schedular evaluations

are found to be inadequate, the Under Secretary for Benefits or the Director,

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Compensation and Pension Service, upon field station submission, is authorized to

approve on the basis of the criteria set forth in this paragraph an extra[]schedular

evaluation commensurate with the average earning capacity impairment due

exclusively to the service-connected disability or disabilities. The governing norm

in these exceptional cases is: A finding that the case presents such an exceptional or

unusual disability picture with such related factors as marked interference with

employment or frequent periods of hospitalization as to render impractical the

application of the regular schedular standards.

38 C.F.R. § 3.321(b)(1). When either a claimant or the evidence of record suggests that a schedular

rating may be inadequate, the Board must specifically adjudicate the issue of whether referral for

an extraschedular rating is warranted. See Colayong v. West, 12 Vet.App. 524, 536 (1999). The

Board may determine, in the first instance, that a veteran has not presented evidence warranting

referral for extraschedular consideration, provided that it articulates the reasons or bases for that

determination. See 38 U.S.C. § 7104(d)(1); Colayong, 12 Vet.App. at 536-37; Bagwell v. Brown,

9 Vet.App. 337, 339 (1996). As with all Board decisions, the Board's decision on referral for an

extraschedular rating must be "adequate to enable a claimant to understand the precise basis for the

Board's decision, as well as to facilitate review in this Court." Allday v. Brown, 7 Vet.App. 517, 527

(1995). The Board's assignment of a degree of disability under the rating code and its determination

of whether an extraschedular rating is appropriate are factual determinations that the Court reviews

under the "clearly erroneous" standard of review set forth in 38 U.S.C. § 7261(a)(4). See Johnston

v. Brown, 10 Vet.App. 80, 84 (1997); Cromley v. Brown, 7 Vet.App. 376, 378 (1995); Gilbert v.

Derwinski, 1 Vet.App. 49, 53 (1990).

IV. ANALYSIS

Our review of this appeal presents two questions: (1) What standard must be met to require

referral of a claim to the Under Secretary for Benefits or the Director, Compensation and Pension

Service for a determination of whether an extraschedular rating under 38 C.F.R. § 3.321 is

appropriate? and (2) did the Board properly apply that standard to Mr. Thun's claim?

A. Required Showing for Referral for Application of § 3.321

The determination of whether a claimant is entitled to an extraschedular rating under

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§ 3.321(b) is a three-step inquiry, the responsibility for which may be shared among the RO, the

Board, and the Under Secretary for Benefits or the Director, Compensation and Pension Service.

The threshold factor for extraschedular consideration is a finding that the evidence before VA

presents such an exceptional disability picture that the available schedular evaluations for that

service-connected disability are inadequate, a task performed either by the RO or the Board (if an

appeal is filed). See Fisher v. Principi, 4 Vet.App. 57, 60 (1993) ("[R]ating schedule will apply

unless there are 'exceptional or unusual' factors which render application of the schedule

impractical."); 38 C.F.R. § 3.321(b)(1); VA Adjudication Procedure Manual pt. III, subpart iv, ch.

6, sec. B(5)(c) (instructing VA adjudicators to submit claims for extraschedular consideration if "the

schedular considerations are considered inadequate for an individual disability"); see also Floyd v.

Brown, 9 Vet.App. 88, 95 (1996) (Board may consider whether extraschedular referral is required).

Therefore, initially, there must be a comparison between the level of severity and symptomatology

of the claimant's service-connected disability with the established criteria found in the rating

schedule for that disability. Under the approach prescribed by VA, if the criteria reasonably

describe the claimant's disability level and symptomatology, then the claimant's disability picture

is contemplated by the rating schedule, the assigned schedular evaluation is, therefore, adequate, and

no referral is required. See VA Gen. Coun. Prec. 6-1996 (Aug. 16, 1996) [hereinafter G.C. Prec.

6-96], para. 7 (when service-connected disability affects employment "in ways not contemplated by

the rating schedule" § 3.321(b)(1) is applicable). However, in the second step of the inquiry, if the

schedular evaluation does not contemplate the claimant's level of disability and symptomatology and

is found inadequate, the RO or Board must determine whether the claimant's exceptional disability

picture exhibits other related factors such as those provided by the regulation as "governing norms."

38 C.F.R. § 3.321(b)(1) (related factors include "marked interference with employment" and

"frequent periods of hospitalization"). When an analysis of the first two steps reveals that the rating

schedule is inadequate to evaluate a claimant's disability picture and that picture has attendant

thereto related factors such as marked interference with employment or frequent periods of

hospitalization, then the case must be referred to the Under Secretary for Benefits or the Director

of the Compensation and Pension Service for completion of the third step–a determination of

whether, to accord justice, the claimant's disability picture requires the assignment of an

extraschedular rating.

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We cannot agree with Mr. Thun's argument that an inadequacy in the rating schedule can be

established solely by showing an asserted gap between his income (including his VA benefits) and

the income of similarly qualified workers in his field. This argument is based on the faulty

proposition that a schedular rating for a service-connected disability is not adequate unless it

compensates the veteran for the actual individualized income that is not realized but for that

disability. We observe that the VA schedule for disability ratings dates back to VA Regulation

No. 3, promulgated by a 1933 Executive order.1 See Exec. Order No. 6091, Mar. 31, 1933 ("The

ratings shall be based, as far as practicable, upon the average impairments of earning capacity

resulting from such injuries in civil occupations."). An explanatory statement attached to the 1933

Executive order specifically noted that the rating schedule being created was in contrast to the 1924

World War Veterans' Act which evaluated disabilities based on the average impairment of earning

capacity in occupations similar to that of the injured man at the time of enlistment.2 See id.; World

War Veterans' Act of 1924, Pub. L. No. 242, 43 Stat. 607. Unlike the World War Veterans' Act,

under VA's rating schedule since 1933, the actual wages or income earned by a particular veteran

are not considered relevant to the calculation of the average impairment of earning capacity caused

by a disability. Indeed, given that the average impairment in earning capacity is the standard, within

the current rating schedule, many veterans receiving benefits may experience a greater or lesser

impairment of earning capacity than average as a result of their disability. However, extraschedular

consideration cannot be used to undo the approximate nature that results from the rating system

based on average impairment of earning capacity authorized by Congress. See 38 U.S.C. § 1155

(granting Secretary authority to adopt schedule based upon the average impairments of earning

capacity). Accordingly, we hold that, when the RO or Board evaluates whether the criteria in the

rating schedule adequately correspond to the symptomatology and severity of a claimant's disability,

1

Prior to the 1958 codification of title 38 of the U.S. Code, the laws and rules governing veterans benefits were

contained in various public laws and in Executive orders promulgated by the President pursuant to his authority under

Pub. L. No. 73-2 (1933).

2

Under the W orld W ar Veterans' Act, two veterans could receive different compensation for identical

disabilities based upon the income they received in their occupation prior to service. This consideration of occupational

factors was criticized during the time that it was used for rating veterans' disabilities as being too subjective, overly

complex, and difficult to apply to veterans who had never held a civil occupation. See William P. Dillingham, Federal

Aid to Veterans 1917-1941, U. F LA . P RE SS (1952).

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§ 3.321(b)(1) does not contemplate or require a calculation of the income that may not have been

realized because of a service-connected disability.3

B. The Board's Application of § 3.321(b)(1)

Here, the Board found that the medical evidence of record does not show that Mr. Thun's

disability picture was unusual or exceptional in nature as to render his 70% schedular rating

inadequate. R. at 18. In addition to its findings noted previously, the Board also considered that Mr.

Thun had maintained "full time, gainful employment since his discharge from service," and found

that his asserted difficulties at work were "squarely contemplated by the rating criteria supporting

a 70[%] rating." Id. (finding that Mr. Thun's symptoms of impaired judgment and inability to

maintain work relationships were contemplated under 38 C.F.R. § 4.130, DC 9411 (2007)). The

Board further concluded that there was no evidence that Mr. Thun had frequent hospitalizations or

that he had "marked interference with obtaining and retaining employment." Id.

Mr. Thun argues that the Board's determination that he has not experienced marked

interference with obtaining or retaining employment was not a proper basis for finding the schedular

rating to be adequate. We agree with Mr. Thun that requiring that there be evidence of interference

with "obtaining or retaining" employment exacts a higher standard than is required for a finding of

"marked interference with employment" under § 3.321(b)(1). Indeed, difficulty in obtaining or

retaining employment is an element considered for establishing a rating of total disability based on

individual unemployability (TDIU). See 38 C.F.R. §§ 4.15, 4.16 (b) (2007) (all veterans who are

unemployable by reason of service-connected disability shall be rated totally disabled). To require

the same showing to establish one factor for review in determining entitlement to extraschedular

consideration would create an impermissible overlap between these two concepts and implies that

they are sui generis in name only. See Kellar v. Brown, 6 Vet.App. 157 (1994) (evaluations

regarding employability in § 4.16 and interference with employment contained in § 3.321(b)(1) are

different metrics); Stanton v. Brown, 5 Vet.App. 563, 564-70 (1993) (issue of extraschedular rating

is separate from issue of TDIU rating); see also G.C. Prec. 6-96, para. 9 (claimant's assertion of

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Evidence of a claimant's lost income, for example, due to time missed from work because of a service-

connected disability, might be relevant, after the RO or Board has found the rating schedule to be inadequate, in the

second or third steps of the analysis described above, but unequivocally is not part of the threshold inquiry into the

adequacy of the rating schedule.

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unemployability does not inherently represent assertion that schedular ratings are inadequate

pursuant to § 3.321(b)(1)). Consistent with VA regulations and Court precedent, extraschedular

consideration may be warranted for disabilities that present a loss of earning capacity that is less

severe than one where the veteran is totally unemployable. See Kellar, supra; Moyer v. Derwinski,

2 Vet.App. 289, 293-94 (1992); 38 C.F.R. § 3.321(b)(1). Therefore, the Board's reasoning–that Mr.

Thun's disability did not warrant extraschedular consideration because he did not establish an

inability to obtain or retain employment–was error.

However, contrary to Mr. Thun's argument, the Board's error did not prejudice his claim

because the Board's decision not to refer his case for extraschedular consideration was not based

solely on that finding. As discussed previously, in cases regarding whether extraschedular referral

is warranted, the threshold determination is whether the disability picture presented in the record is

adequately contemplated by the rating schedule. Here, the Board made such a finding. The Board

found that Mr. Thun's disability picture was not so unusual or exceptional in nature as to render his

70% schedular rating inadequate. Mr. Thun's condition was evaluated as a mental disability

pursuant to 38 C.F.R. § 4.130, DC 9411, the criteria of which was found by the Board to specifically

contemplate the level of occupational and social impairment caused by his disability. Id. VA has

explained4 that "[a]lthough certain symptoms must be present in order to establish the diagnosis of

PTSD . . . it is not the symptoms, but their effects, that determine the level of impairment." See

Mauerhan v. Principi, 16 Vet.App. 436, 443 (2002) (citing 61 Fed. Reg. 52,695, 52,697

(Oct. 8, 1996) and holding that § 4.130 '"is a reasonable and permissible construction of 38 U.S.C.

§ 1155'").

In an August 2003 VA medical examination, the examiner recorded Mr. Thun's symptoms

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The supplementary information for the October 1996 amendment to the schedule for mental disorders stated:

Ratings are based primarily upon the average impairment in earning capacity, that is, upon the

economic or industrial handicap which must be overcome and not from individual success in

overcoming it (see 38 CFR § 4.15). Defining levels of disability for mental disorders in terms of an

individual's earnings would be inconsistent with that principle and, furthermore, would not take into

account other variables that might affect earnings, such as the presence and severity of other

service-connected or non-service-connected disabilities, differences in the prevailing wage in different

localities, part time employment, etc. For these reasons, it is not feasible to evaluate mental

disabilities based on the veteran's earnings.

61 Fed. Reg. 52,697 (1996) (italics added).

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and opined that they "are extremely distressing to [Mr. Thun] and cause impairment in his ability

to work." R. at 271. The Board acknowledged that he experienced significant difficulties at work

but found that those difficulties "are squarely contemplated by the rating criteria supporting a 70[%]

rating . . . with no unusual factors." R. at 18; see 38 C.F.R. § 4.130, DC 9411, 9440. Indeed, the

very effects of Mr. Thun's PTSD symptoms that he asserts have kept him from receiving a

promotion–including impaired judgment and inability to maintain effective working

relationships–are criteria described as occupational impairments that are used for evaluating mental

disorders under DC 9411, rather than earmarks of an exceptional or unusual disability picture with

marked interference with employment. See Brief at 17; R. at 16, 98; 38 C.F.R. § 4.130, DC 9440

(70% rating warranted for PTSD that causes occupational impairment with deficiencies in most

areas). The Board's observations in comparing the disability picture asserted by Mr. Thun with the

expressed impairments in earning capacity contemplated by DC 9411 reveal that his experiences are

congruent with the average impairment in earning capacity represented by a 70% disability rating

for PTSD. Thus, based on the evidence of record, the Board's finding that Mr. Thun's disability

picture cannot be characterized as an exceptional case, so as to render the schedular evaluations

inadequate, is not clearly erroneous. See Gilbert, supra. Consequently, the Board did not err in

concluding that Mr. Thun was not entitled to referral for an extraschedular rating. Id.

Accordingly, based on our discussion and holdings above, because the threshold

determination for a referral for extraschedular consideration was not met, the Board's error in

requiring a showing that Mr. Thun's PTSD markedly interfered with his obtaining or retaining

employment was nonprejudicial to Mr. Thun's increased rating claim. The Board's decision will,

therefore, be affirmed. See Soyini v. Derwinski, 1 Vet.App. 540, 546 (1991) (declining to remand

for reasons-or-bases deficiency when doing so would place unnecessary burdens on VA and would

be of no benefit to appellant); see also 38 U.S.C. § 7261(b)(2) (requiring Court to take due account

of rule of prejudicial error); Conway v. Principi, 353 F.3d 1369, 1374-75 (Fed. Cir. 2004).

V. CONCLUSION

Upon consideration of the foregoing analysis, the record on appeal, and the parties'

pleadings, the June 22, 2005, Board decision is AFFIRMED.

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