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Veterans Justice Group, LLC v. Secretary of Veterans Affairs

United States Court of Appeals, Federal Circuit

April 7, 2016


Petition for review pursuant to 38 U.S.C. § 502.

Douglas J. Rosinski, Douglas J. Rosinski, Esq. Inc., Columbia, SC, argued for petitioner in 2015-7021.

Kenneth M. Carpenter, Law Offices of Carpenter Chartered, Topeka, KS, argued for petitioner in 2015-7025.

Francesco Valentini, Wilmer Cutler Pickering Hale and Dorr LLP, Washington, DC, argued for petitioners in 2015-7061. Also represented by Carl John Nichols; Barton F. Stichman, National Veterans Legal Services Program.

Martin F. Hockey, Jr., Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for respondent. Also represented by Robert E. Kirschman, Jr., Benjamin C. Mizer; David J. Barrans, Brian D. Griffin, Office of General Counsel, United States Department of Veterans Affairs.

Thomas James Reed, Widener University, Wilmington, DE, for amicus curiae Warriors Helping Warriors, Inc. in 2015-7021.

Angela K. Drake, The Veterans Clinic at the University of Missouri School of Law, Columbia, MO, for amici curiae Angela K. Drake, Brian Clauss, Yelena Duterte, Hugh McClean, Laurie Forbes Neff, Patricia E. Roberts, Susan Saidel, Stacey-Rae Simcox, Aniela K. Szymanski, Michael Joel Wishnie in 2015-7021.

Brian Berliner, O'Melveny & Myers LLP, Los Angeles, CA, for amicus curiae Mazon: A Jewish Response to Hunger. Also represented by Jason Alan Orr, Dimitri Portnoi, Catalina Joos Vergara in 2015-7061.

Before Prost, Chief Judge, Wallach and Taranto, Circuit Judges.

Wallach, Circuit Judge.

In related petitions, [1] the American Legion ("American Legion"), the National Organization of Veterans' Advocates, Inc. ("NOVA"), and the Veterans Justice Group, LLC ("VJG") (collectively, "Petitioners"), challenge the validity of regulations issued in 2014 by the Department of Veterans Affairs ("VA" or "Secretary") pursuant to its notice-and-comment rulemaking authority. See Standard Claims and Appeals Forms, 79 Fed. Reg. 57, 660 (Dep't of Veterans Affairs Sept. 25, 2014) ("Final Rule").[2] The Final Rule amends the VA's adjudication and appellate regulations to require that all claims and appeals originate on standard VA forms. See id. at 57, 678. For the reasons set forth below, we deny the petitions and hold the Final Rule valid because it accords with applicable rulemaking procedures and is not arbitrary, capricious, an abuse of discretion, or otherwise contrary to law.


To understand the issues relevant to this appeal, we discuss, in turn, the VA's prior regulation, the Final Rule, and the general arguments in the Petitions for Review.

I. Prior Regulation

A. Claim Initiation

Veterans are entitled to compensation "[f]or disability resulting from personal injury suffered or disease contracted in line of duty, or for aggravation of a preexisting injury suffered or disease contracted in line of duty . . . during a period of war." 38 U.S.C. § 1110 (1998). For veterans to receive compensation under the laws administered by the VA, "[a] specific claim in the form prescribed by the Secretary . . . must be filed." Id. § 5101(a)(1). The VA's prior regulation implemented this authority by providing that "[a]ny communication or action, indicating an intent to apply for . . . benefits[, ] . . . may be considered an informal claim." 38 C.F.R. § 3.155(a) (2014) (emphasis added) ("Prior Regulation"). Under the Prior Regulation, a veteran could establish a claim's effective date (i.e., when the claimant begins to receive compensation) by filing an informal claim, so long as a formal application was received by the VA "within [one] year from the date [the formal application form] was sent to the claimant." Id.

B. Appeal

If a claimant perfected an informal claim by filing a formal application within the one-year time period, a VA Agency of Original Jurisdiction, typically a VA regional office ("RO"), considered the claim, gave notice to the claimant of its decision, and informed the claimant of his or her right to appeal. See 38 U.S.C. § 5104 (1998); 38 C.F.R. § 3.103(b)(1) (2014). An appeal could be initiated by filing a Notice of Disagreement ("NOD"), see 38 U.S.C. § 7105(a) (1998), and unless the requested benefit was granted or the NOD withdrawn, the VA would issue a "statement of the case" ("SOC") summarizing the reasons for the VA's decision on each issue, id. § 7105(d)(1). Following issuance of the SOC, the "claimant [would] be afforded a period of sixty days from the date of the [SOC] to file a formal appeal" with the Board of Veterans' Appeals ("Veterans Board"). Id. § 7105(d)(3). The statute provides that the "appeal should set out specific allegations of error of fact or law, such allegations related to specific items in the [SOC]." Id.

The NOD is required to be: (1) filed within one year of the mailing of notice of the RO's decision; and (2) in writing. Id. § 7105(b)(1). In addition to these statutory requirements, the VA required an NOD to "be in terms which [could] be reasonably construed as disagreement with [the RO's decision] and a desire for appellate review, " although "special wording [was] not required." 38 C.F.R. § 20.201 (2014). However, if the RO's notice of decision decided multiple issues, under the Prior Regula- tion the claimant was required to specify which agency determinations he or she sought to appeal. Id.

II. Final Rule

In September 2014, the VA promulgated the Final Rule, which sought to "strike a balance between standardizing, modernizing, and streamlining" the claim initiation and appellate process, while providing "claimants . . . with a process that remains veteran-friendly and informal." Final Rule, 79 Fed. Reg. at 57, 664.

Although the Final Rule incorporated a majority of the amendments originally proposed by the VA in 2013, it altered the proposed rule in one important respect. See Standard Claims and Appeals Forms, 78 Fed. Reg. 65, 490, 65, 492 (Dep't of Veterans Affairs Oct. 31, 2013) ("Proposed Rule"). Under the Proposed Rule, submission of an informal claim––e.g., a narrative submission–– would no longer serve as an effective date placeholder that could later be perfected by the filing of a formal claim. See id. at 65, 495 (altering the Prior Regulation's definition of "claim" under 38 C.F.R. § 3.1(p) to exclude informal communications). Instead, an "incomplete claim" would provide the effective date placeholder function formerly provided by an informal claim, if perfected by the filing of a standard application form within one year. Id. at 65, 494. However, in contrast to the flexible nature of the prior "informal claim" system, under the Proposed Rule, a submission would be considered an "incomplete claim" only if a claimant filled out, completely or incompletely, an online application via the VA's web-based electronic claims application system, but "d[id] not transmit the online application for processing." Id. Otherwise, claims would be considered received as of the date they were filed on a standard paper application form.

When it published the Proposed Rule in 2013, the VA explained it was "facing an unprecedented volume of compensation claims" resulting in "unacceptable delays at every phase of [the] process for adjudicating claims and appeals." Id. at 65, 492. The VA received fifty-three comments in response to the Proposed Rule. While some commenters expressed approval of the agency's attempt to bring increased clarity and efficiency, others expressed concern with certain aspects of the Proposed Rule, including the VA's proposed interpretation of "incomplete claim, " which some perceived as unnecessarily parochial.

In lieu of the Proposed Rule's "incomplete claim" concept, the Final Rule establishes an "intent to file"[3] process, which allows claimants to establish the effective date of an award in any of three ways. First, under the Final Rule, an intent to file may be established by saving an electronic application within a VA web-based electronic claims application system before submitting it for actual processing. 38 C.F.R. § 3.155(b)(1)(i) (2015). Second, a claimant may submit a VA standard form ("VAF 21-0966") in either paper or electronic form. Id. § 3.155(b)(1)(ii); Final Rule, 79 Fed. Reg. at 57, 666. Third, a claimant may establish intent to file by communicating orally with certain designated VA personnel "either in person or by telephone, " who will document the claimant's intent. Final Rule, 79 Fed. Reg. at 57, 666; see 38 C.F.R. § 3.155(b)(1)(iii) (2015). So long as a formal application is filed within one year of the submission, the VA will deem the effective date to be the date the "intent to file" submission was received.

Lastly, the Final Rule specifies that, where the RO "provides, in connection with its decision, a form identified as being for the purpose of initiating an appeal, an NOD would consist of a completed and timely submitted copy of that form." Final Rule, 79 Fed. Reg. at 57, 679; see 38 C.F.R. § 20.201(a)(1) (2015). The Final Rule further clarifies the "VA will not accept as [an NOD] an expression of dissatisfaction . . . that is submitted in any other format, including on a different VA form." Final Rule, 79 Fed. Reg. at 57, 679; see 38 C.F.R. § 20.201(a)(1) (2015).

III. Petition for Review

Petitioners contend the Final Rule departs from the "paternalistic, veteran friendly, and non-adversarial nature of veterans benefits adjudication." VJG (15-7021) Br. 1 (internal quotation marks omitted).[4] Petitioners timely filed this appeal pursuant to 38 U.S.C. § 502, which provides this court with jurisdiction to review the Final Rule. See 38 U.S.C. § 502 (2012). "[U]nder 38 U.S.C. § 502, we may review [the] VA's procedural and substantive regulations, and the process by which those regulations are made or amended." Paralyzed Veterans of Am. v. Sec'y of Veterans Affairs, 345 F.3d 1334, 1339 (Fed. Cir. 2003) (citation omitted).


I. Standard of Review

Petitions under 38 U.S.C. § 502 are reviewed under the Administrative Procedure Act ("APA"), as codified in 5 U.S.C. § 706. See Nyeholt v. Sec'y of Veterans Affairs, 298 F.3d 1350, 1355 (Fed. Cir. 2002). Under § 706, we must "hold unlawful and set aside agency action" we find "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2) (2012). "This review is highly deferential to the actions of the agency." Nat'l Org. of Veterans' Advocates, Inc. v. Sec'y of Veterans Affairs, 260 F.3d 1365, 1372 (Fed. Cir. 2001) (internal quotation marks and citation omitted).

II. The Final Rule Is a "Logical Outgrowth" of the Proposed Rule

"The APA's rulemaking provisions generally require that notice of proposed rules be published in the Federal Register and that 'interested persons' be given the 'opportunity to participate in the rule making through submission of written data, views, or arguments.'" AFL-CIO v. Chao, 496 F.Supp.2d 76, 83 (D.D.C. 2007) (quoting 5 U.S.C. ยง 553(c)). Although the APA does not explicitly address the relationship the notice of proposed rulemak-ing must have to the final rule, it provides some guidance when it states that agencies must publish in their notice of ...

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