Tarver v. Shinseki , 557 F.3d 1371 ( 2009 )

United States Court of Appeals for the Federal Circuit
2007-7119
FRANCES D. TARVER,
Claimant-Appellee,
v.
ERIC K. SHINSEKI, Secretary of Veterans Affairs,
Respondent-Appellant.
.
Zachary M. Stolz, Chisholm, Chisholm & Kilpatrick, of Washington, DC, argued
for claimant-appellee. Of counsel was Robert V. Chisholm, of Providence, Rhode
Island.
Allison Kidd-Miller, Trial Attorney, Commercial Litigation Branch, Civil Division,
United States Department of Justice, of Washington, DC, argued for respondent-
appellee. With her on the brief was Jeanne E. Davidson, Director. Of counsel on the
brief were David J. Barrans, Deputy Assistant General Counsel, and Y. Ken Lee,
Attorney, Office of the General Counsel, United States Department of Veterans Affairs,
of Washington, DC.
Appealed from: United States Court of Appeals for Veterans Claims
Judge Alan G. Lance, Sr.
United States Court of Appeals for the Federal Circuit
2007-7119
FRANCES D. TARVER,
Claimant-Appellee,
v.
ERIC K. SHINSEKI, Secretary of Veterans Affairs,
Respondent-Appellant.
Appeal from the United States Court of Appeals for Veterans Claims
in 04-0283, Judge Alan G. Lance, Sr.
___________________________
DECIDED: March 5, 2009
___________________________
Before NEWMAN, BRYSON, and LINN, Circuit Judges.
BRYSON, Circuit Judge.
This case requires us to revisit an issue we addressed recently, albeit in a
somewhat different context. At issue is a regulation promulgated by the Department of
Veterans Affairs governing entitlement to benefits for the surviving spouses and children
of disabled veterans. The question before us, which is closely akin to the question that
was presented to us in Rodriguez v. Peake, 511 F.3d 1147 (Fed. Cir. 2008), is whether
that regulation should be given retroactive effect with respect to a spousal claim filed
before the regulation was issued.
I
The surviving spouse, children, and parents of a deceased veteran may qualify
for dependency and indemnity compensation (“DIC”) if the veteran died from a service-
connected or compensable disability. 38 U.S.C. § 1310. In addition, the surviving
spouse and children may qualify for DIC if the veteran received, or was “entitled to
receive,” benefits for a service-connected disability that was rated totally disabling for
the 10-year period preceding the veteran’s death. 38 U.S.C. § 1318(b).
In 1990, the General Counsel of the Department of Veterans Affairs (“DVA”)
issued a precedential opinion directed to the question whether a survivor may pursue a
claim under section 1318(b) even though in an earlier adjudication the DVA had
established an effective date for the veteran’s total disability benefits that was less than
10 years before the veteran’s death. DVA Op. Gen. Counsel Prec. 68-90 (July 18,
1990). The opinion concluded that survivors did not have an unrestricted right to initiate
or reopen disability proceedings in order to show that the veteran’s total disability
benefits should have been granted as of a date early enough to enable the survivors to
qualify for DIC benefits. Based on the legislative history of that portion of section 1318,
the opinion interpreted the words “entitled to receive” to mean that a survivor could
challenge a prior final disability decision only if the survivor could show clear and
unmistakable error in the DVA’s earlier adjudication as to the veteran’s total disability
claim. Thus, the opinion concluded that in order to state a claim under section 1318, a
survivor had to show either (1) that the deceased veteran actually received qualifying
benefits; or (2) that he or she would have been “entitled to receive” such benefits but for
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the DVA’s having committed clear and unmistakable error in adjudicating a previous
claim by the veteran.
In a series of cases in 1997 and 1998, the Court of Appeals for Veterans Claims
(“the Veterans Court”) rejected the General Counsel’s interpretation of section 1318 and
held that DIC claimants may establish their entitlement to benefits under section 1318
by proceeding on a “hypothetical entitlement” theory. See Green v. Brown, 10 Vet. App.
111 (1997); Carpenter v. West, 11 Vet. App. 140 (1998); Wingo v. West, 11 Vet. App.
307 (1998). In Green, for example, the court held that even though the veteran’s claim
for total disability benefits had been denied and the denial had become final, the
surviving spouse could use any available evidence to “demonstrate that the veteran
hypothetically would have been entitled to receive a different decision” on the prior
disability claim. 10 Vet. App. at 118. The Secretary of Veterans Affairs did not appeal
the Veterans Court’s decisions in Green, Carpenter, and Wingo, notwithstanding the
apparent conflict between those decisions and the DVA’s stated understanding of
section 1318 expressed in the earlier General Counsel opinion. Instead, on January 21,
2000, the DVA promulgated a rule, now codified at 38 C.F.R. § 3.22, that had the effect
of overruling the Green line of cases. The new rule interpreted section 1318(b) to
authorize the payment of DIC benefits only in cases in which the veteran had actually
obtained total service-connected disability compensation for the period required by the
statute or would have obtained benefits for that period but for clear and unmistakable
error by the DVA. See 65 Fed. Reg. 3388 (Jan. 21, 2000).
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II
Mrs. Tarver filed a section 1318 claim shortly after the death of her husband,
Fred L. Tarver, in June 1999. The DVA had previously established that Mr. Tarver’s
combined disability rating was 70%. His rating had been increased as of May 11, 1990,
at which time he was given a TDIU rating (total disability based on individual
unemployability) and began to receive total disability benefits. Because Mr. Tarver did
not receive total disability benefits for a period of 10 years immediately prior to his
death, Mrs. Tarver was not entitled to DIC benefits on that basis. Instead, she invoked
the hypothetical entitlement approach that had been endorsed by the Veterans Court in
Green. Under that approach, she argued, Mr. Tarver’s TDIU rating should have been
awarded as of an earlier date that would have resulted in his receiving total disability
benefits for more than 10 years before his death in 1999.
Both the DVA’s regional office and the Board of Veterans’ Appeals denied Mrs.
Tarver’s section 1318 claim on the basis of newly promulgated rule 3.22. She appealed
to the Veterans Court, which ruled that the Board had erred in applying the current
version of rule 3.22 rather than the version that was in effect when Mrs. Tarver filed her
claim for benefits. The court therefore vacated the decision of the Board and remanded
for further consideration of Mrs. Tarver’s allegations insofar as they pertained to her
husband’s hypothetical entitlement to disability benefits for the 10 years preceding his
death. The government then took this appeal.
III
In Rodriguez v. Peake, we addressed the question whether the 2000 amendment
to rule 3.22 should be given retroactive effect to a claim filed before the amended rule
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became effective. We analyzed that question under the three-part test outlined in
Princess Cruises, Inc. v. United States, 397 F.3d 1358, 1362-63 (Fed. Cir. 2005), and
determined that it was appropriate to give the amended rule retroactive effect as applied
to Mrs. Rodriguez’s claim. 511 F.3d 1147, 1156 (Fed. Cir. 2008).
In the Rodriguez case, Mrs. Rodriguez had filed her DIC claim not only before
the amended rule was issued, but also before the Veterans Court’s decision in Green
was issued. In that respect, Rodriguez differs from this case, in that Mrs. Tarver’s claim
was filed before the amended rule was issued, but after the Veterans Court’s decision in
Green. With respect to Mrs. Rodriguez’s claim, we stated that although Green “injected
new hope into her case,” Mrs. Rodriguez neither relied on that decision nor had a
settled expectation of success at the time she filed her claim. Id. For that reason,
among others, we held that it was not impermissible to apply the new regulation to her
claim, even though she filed her claim before the regulation was adopted.
The parties agree that this case is distinguishable from Rodriguez only in that
Mrs. Tarver filed her DIC claim after Green had been decided. She contends that
because she filed her claim after the decision in Green, she had reason to expect that
she would be able to succeed on her hypothetical entitlement theory. We now consider
whether the distinction between the two cases warrants an outcome different from that
in Rodriguez.
A
The timing of Mrs. Tarver’s claim is irrelevant to the first Princess Cruises
factor—the nature and extent of the change in the law. 397 F.3d at 1364-65; see also
Parkdale Int’l v. United States, 475 F.3d 1375, 1378-79 (Fed. Cir. 2007). In Rodriguez,
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we held that the change in the law governing DIC claims was not significant because
the amended regulation merely reinstated the DVA’s earlier interpretation of section
1318. 511 F.3d at 1154. Our analysis of that factor did not turn on the filing date of
Mrs. Rodriguez’s claim because we assumed that Green applied retroactively and that,
therefore, Mrs. Rodriguez “and others like her had a cognizable claim for DIC benefits
under the ‘hypothetical entitlement’ approach.” Rodriguez, 511 F.3d at 1153; see, e.g.,
SKF USA, Inc. v. United States, 512 F.3d 1326, 1330 (Fed. Cir. 2008) (“[J]udicial
interpretations of existing statutes and regulations are routinely given retroactive
application.”). Accordingly, Rodriguez is controlling as to the first factor.
B
The second Princess Cruises factor is “the degree of connection between the
operation of the new rule and a relevant past event.” 397 F.3d at 1365-66. In
determining whether the statute or regulation at issue has a significant nexus to relevant
past events, we have frequently looked to whether the rule affects “primary conduct,”
i.e., the conduct that gave rise to the suit or claim at issue. Rodriguez, 511 F.3d at
1155; Parkdale Int’l, 475 F.3d at 1379; Princess Cruises, 397 F.3d at 1366; Goodyear
Tire & Rubber Co. v. Dep’t of Energy, 118 F.3d 1531, 1538 (Fed. Cir. 1997). Although
rules affecting secondary conduct, such as conduct in the course of pursuing or
litigating a claim, are not immune from retroactivity challenges, such rules “may often be
applied in suits arising before their enactment without raising concerns about
retroactivity.” Landgraf v. USI Film Prods., 511 U.S. 244, 275 (1994); accord Plaut v.
Spendthrift Farm, Inc., 514 U.S. 211, 229 (1995) (“Rules of pleading and proof can . . .
be altered after the cause of action arises.”). The application of such rules is informed,
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however, by equitable considerations such as the posture of the case and the extent to
which the parties have relied to their prejudice on the superseded rule. See, e.g.,
Valerio v. Crawford, 306 F.3d 742, 766 (9th Cir. 2002) (circuit rule on consideration of
uncertified issues); TwoRivers v. Lewis, 174 F.3d 987, 995-96 (9th Cir. 1999) (tolling
statute); see also Martin v. Hadix, 527 U.S. 343, 359 (1999) (noting that, in Landgraf,
the Supreme Court “took pains to dispel the suggestion that concerns about retroactivity
have no application to procedural rules”).
Like the claimant in Rodriguez, Mrs. Tarver is “unable to point to anything she
would have done differently had she known the effect of the 2000 amendment when she
filed her claim.” 511 F.3d at 1155. In order to prevail on her claim for section 1318(b)
benefits, Mrs. Tarver had to demonstrate that her husband had a service-connected
disability that was rated totally disabling for the 10 years immediately preceding his
death. Mrs. Tarver does not seriously dispute the DVA’s assertion that there is nothing
she (or her husband) could have done between 1997, when Green was decided, and
2000, when the Secretary amended rule 3.22, that would have affected her eligibility for
DIC benefits. If Mrs. Tarver’s husband had known of the impending rule change when
he filed his application for disability benefits, he might have brought his claim earlier or
prosecuted it more vigorously in the first instance. But, of course, Mrs. Tarver’s
husband had no settled expectation of success on a hypothetical entitlement approach
prior to the Veterans Court’s first pronouncement on that issue in 1997. Accordingly,
Mr. Tarver’s failure to conform his conduct to the requirements of amended rule 3.22
cannot be attributed to the change in the law occasioned by that rule.
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Our decision in Rodriguez also considered the effect of the amended rule on the
law at the time Mrs. Rodriguez filed her claim. 511 F.3d at 1155. Since Green had not
yet been decided, we concluded that the second factor favored giving the amended rule
retroactive effect. Id. (“Rodriguez did not rely to her detriment on the prior state of the
law.”). In this case, by contrast, amended rule 3.22 changed the legal standards from
those that were applicable when Mrs. Tarver’s claim was filed. The change, however,
related only to the scope of a survivor’s right to raise a collateral challenge to the
agency’s initial assessment of the disability. Concerns about retroactivity are at their
nadir when the rule change in question is directed only to the scope of collateral review
of a prior adjudication. See, e.g., Horning v. Dist. of Columbia, 254 U.S. 135, 139
(1920) (applying newly enacted harmless error statute, which changed the standard
under which prior judgments were evaluated, to pending case); Lindh v. Murphy, 521
U.S. 320, 341 (1997) (Rehnquist, J., dissenting). In any event, even assuming that the
second factor provides some support for Mrs. Tarver, the countervailing Princess
Cruises factors weigh heavily against finding that according the regulation retroactive
effect would be improper. See, e.g., Parkdale Int’l, 475 F.3d at 1379.
C
Finally, we take account of the third of the Princess Cruises factors—the “familiar
considerations of fair notice, reasonable reliance, and settled expectations.” Princess
Cruises, 397 F.3d at 1365-66.
In the section of our opinion in Rodriguez in which we analyzed the third factor,
we adverted to the significance of the fact that Mrs. Rodriguez filed her claim prior to the
Veterans Court’s decision in Green. 511 F.3d 1155-56. That observation, however,
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was not the sole basis for our decision. We also traced the “history” of the DVA’s
interpretation of section 1318, beginning with the issuance of the 1990 precedential
opinion and through the various appeals to the Veterans Court, and found the DVA’s
position to be sufficiently consistent that it would not be unfair to charge Mrs. Rodriguez
with “notice of the Department’s interpretation of the ‘entitled to receive’ language.” We
further concluded that the DVA’s unwavering opposition to hypothetical entitlement
claims dispelled any suggestion that the Secretary’s decision not to take appeals from
Green, Carpenter, or Wingo was a sign of acquiescence in the Veterans Court’s
interpretation of section 1318(b). Id.Mrs. Tarver’s claim was filed against the same background of the DVA’s decade-
long commitment to interpreting section 1318 to foreclose claims based on the
hypothetical entitlement theory. Under these circumstances, any expectation that the
statutory interpretation set forth in Green was not subject to change through
administrative action would have been objectively unreasonable. See, e.g., Parkdale
Int’l, 475 F.3d at 1380 (advance notice of policy change sufficient to undermine
petitioner’s claim of reasonable reliance). We therefore conclude that the third factor
weighs against Mrs. Tarver’s position.
IV
Finally, we reject Mrs. Tarver’s argument that general principles of retroactivity
must give way in veterans’ cases to the “benefit of the doubt” doctrine. In Karnas v.
Derwinski, 1 Vet. App. 308, 313 (1991), the Veterans Court stated that “where the law
or regulation changes after a claim has been filed or reopened but before the
administrative or judicial appeal process has been concluded, the version most
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favorable to appellant should and we so hold will apply unless Congress provided
otherwise or permitted the Secretary . . . to do otherwise and the Secretary did so.” In
Kuzma v. Principi, 341 F.3d 1327, 1329 (Fed. Cir. 2003), however, we expressly
overruled Karnas to the extent that its application would conflict with binding authority
from this court or the Supreme Court.
It would be inconsistent with our precedents in Princess Cruises and Rodriguez
to hold the amended rule inapplicable to Mrs. Tarver’s claim on the ground that it was
filed before the amended rule took effect but after the Veterans Court’s decision in
Green. We therefore hold that the “benefit of the doubt” doctrine does not apply in this
case, and that amended rule 3.22 must be applied to Mrs. Tarver’s claim.
Each party shall bear its own costs for this appeal.
REVERSED.
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