Eddie D. Ray v. Robert L. Wilkie ( 2019 )

UNITED STATES COURT OF APPEALS FOR VETERANS CLAIMS
No. 17-0781
EDDIE D. RAY, APPELLANT,
V.
ROBERT L. WILKIE,
SECRETARY OF VETERANS AFFAIRS, APPELLEE.
On Appeal from the Board of Veterans' Appeals
(Argued September 5, 2018 Decided March 14, 2019)
Barbara J. Cook, with whom April Donahower, was on the brief both of Providence,
Rhode Island, for the appellant.
Amanda Radke, with whom Angela-Marie C. Green, Appellate Attorney; James M. Byrne,
General Counsel; Mary Ann Flynn, Chief Counsel; and Edward V. Cassidy, Jr., Deputy Chief
Counsel, all of Washington, D.C., were on the brief for the appellee.
Before SCHOELEN, ALLEN, and TOTH, Judges.
ALLEN, Judge, filed the opinion of the Court. TOTH, Judge, filed an opinion concurring
in part and concurring in the judgment.
ALLEN, Judge: In July 2014, the Board of Veterans' Appeals (Board) referred U.S. Army
veteran Eddie D. Ray's claim for a rating of total disability on the basis of individual
unemployability (TDIU) to what is today the Director, Compensation Service, for extraschedular
consideration. The Board found that "[w]hile [an October 2011] VA examiner indicated that the
Veteran was able to perform sedentary employment, the record suggests that the Veteran may not
be able to obtain such employment as it is inconsistent with his education and occupational
background."1 The Director then denied the veteran an extraschedular TDIU rating, and the matter
returned to the Board.2 Though in July 2014 the Board found extraschedular referral warranted
and though no new evidence had been submitted since its July 2014 decision, in a February 15,
2017, decision, the Board found that the veteran's "service-connected disabilities do not render
1
Record (R.) at 1478.
2
Rawle at 45.
him unable to secure and follow a substantially gainful occupation consistent with his education
and special training" and denied him an extraschedular TDIU rating.3 Nowhere in its decision did
the Board explain what it understood the phrase "unable to secure and follow a substantially gainful
occupation,"4 a phrase that VA has refused to define since this Court's inception, to mean. Nor did
the Board explain why referral for extraschedular consideration was warranted in July 2014 but an
extraschedular rating wasn't warranted in February 2017.
We are called on to answer two questions in this appeal, which is timely and over which
the Court has jurisdiction.5 First, what is the effect, if any, of the Board's determination to refer a
case for extraschedular consideration under 38 C.F.R. § 4.16(b) when the Board later reviews the
Director's decision not to award an extraschedular TDIU rating? Second, does VA's refusal to
define key terms in § 4.16(b) make the Board's statement of reasons or bases inadequate, and if so,
should the Court interpret those terms itself?
First, we hold that the Board's initial finding that extraschedular referral is warranted is a
factual one but is necessarily based on a evidentiary threshold that is lower than that for the
decision to award an extraschedular rating. If the Board refers a claim to the Director for
extraschedular consideration and the Director denies an extraschedular rating, the Board's earlier
decision to refer the claim doesn't automatically bind the Board to grant an extraschedular rating;
however, if the Board denies an extraschedular rating, it must provide adequate reasons or bases
for deviating from its earlier referral decision. Second, we hold that VA's refusal to define key
terms in 38 C.F.R. § 4.16(b) frustrates judicial review and, after concluding that we needn't defer
to the Secretary's interpretation of the regulation, we interpret it ourselves. Because the Board
failed to explain why the evidence was sufficient to support referral but insufficient to support the
award of an extraschedular rating, and because VA's refusal to define the relevant regulatory terms
frustrates judicial review, we remand this matter to the Board for readjudication consistent with
this opinion.
3
Rawle at 8.
4
The regulation uses the phrases "substantially gainful employment" and "substantially gainful occupation." These
phrases are synonymous. Ortiz-Valles v. McDonald, 28 Vet. App. 65, 70 (2016).
5
See 38 U.S.C. §§ 7252(a), 7266(a).
2
I. FACTS AND PROCEDURAL HISTORY
The veteran served honorably from November 1966 to November 19696 and is service
connected for several disabilities with a combined disability rating of 50%. 7 In September 2005,
the veteran filed a claim for an increased rating due to TDIU.8 That claim was denied in January
2006 and the denial continued in July of that year.9
In January 2011, the veteran submitted a VA Form 9, stating he couldn't work because of
his disabilities.10 In March 2012 the veteran's claim for TDIU was denied.11 The veteran timely
disagreed with that decision,12 and VA continued its denial in November 2012.13 The veteran then
perfected an appeal to the Board.14
In a July 2014 decision, the Board remanded the issue of entitlement to TDIU to a regional
office (RO) for referral under § 4.16 to the Director for extraschedular consideration.15 In short,
the Board referred the TDIU issue for extraschedular consideration. The Director denied
entitlement to TDIU in March 2015,16 and the RO continued its denial that same month. The
veteran then perfected an appeal to the Board, which also denied him an extraschedular rating
because his "service-connected disabilities do not render him unable to secure and follow
substantially gainful employment consistent with his education and special training."17 This appeal
followed.
6
Rawle at 4761, 4771-72.
7
Rawle at 1610-11.
8
R. at 2320-21.
9
Rawle at 2288-92 (Jan. 2006 rating decision), 2249-56 (July 2006 rating decision).
10
Rawle at 1914-17.
11
R. at 1599-1615.
12
Rawle at 1589-91.
13
R. at 1529-64.
14
Rawle at 1521-27.
15
R. at 1459-81.
16
Rawle at 45-48.
17
R. at 8.
3
II. ANALYSIS
A. Is a Referral Decision Under 38 C.F.R. § 4.16(b) a Factual Finding?
Typically, VA compensates veterans for their service-connected disabilities through its
rating schedule, which is designed to reflect the average impairment in earning capacity that a
veteran with a certain type of disability would experience.18 But, in certain circumstances, VA can
determine that a veteran is unemployable as a result of his or her service-connected disabilities
even when he or she hasn't met the requirements for a 100% rating.19 In those instances, 38 C.F.R.
§ 4.16(a) and (b) kick in. Section 4.16(a) addresses schedular TDIU, which applies where a veteran
has a single disability rated at 60% or more, or two disabilities rated collectively at 70% or more
where one of them is rated at least 40% or more.20 The veteran doesn't argue he's entitled to TDIU
under subsection (a). Instead, this appeal is about § 4.16(b).
That section reads, in full:
It is the established policy of the Department of Veterans Affairs that all veterans
who are unable to secure and follow a substantially gainful occupation by reason
of service-connected disabilities shall be rated totally disabled. Therefore, rating
boards should submit to the Director, Compensation Service, for extra-schedular
consideration all cases of veterans who are unemployable by reason of service-
connected disabilities, but fail to meet the percentage standards set forth in
paragraph (a) of this section. The rating board will include a full statement as to the
veteran's service-connected disabilities, employment history, educational and
vocational attainment and all other factors having a bearing on the issue.[21]
In Wages v. McDonald, this Court held that the Director's decision with respect to
extraschedular consideration "is no different than an RO's decision in terms of its effect on the
Board' statutory jurisdiction and the Board's standard of review." 22 Thus, under § 4.16(b), VA
adjudicators, including the Board,23 should refer claims to the Director for "all veterans who are
unable to secure and follow a substantially gainful occupation" because of their service-connected
disabilities.24 Then, the Director can either award or deny an extraschedular rating. If the Director
18
See 38 C.F.R. § 4.1 (2018).
19
See Withers v. Wilkie, 30 Vet. App. 139, 144 (2018).
20
38 C.F.R. § 4.16(a) (2018).
21
38 C.F.R. § 4.16(b).
22
27 Vet. App. 233, 238 (2015).
23
See Bowling v. Principi, 15 Vet. App. 1, 10 (2001) (holding that § 4.16(b) applies to the Board).
24
38 C.F.R. § 4.16(b). We note that neither the RO nor the Board is permitted to decide in the first instance whether
4
denies an extraschedular TDIU rating, the claim returns to the Board, which reviews the denial
without deference to the Director just as the Board would review the RO's denial without deference
to the RO.25 The Board then decides whether to award or deny an extraschedular rating.26 It's this
three-step process that's at issue here.
In July 2014, the Board remanded the veteran's TDIU claim so an RO could refer it for
extraschedular consideration, stating that
additional development is required before the remaining issue [of TDIU] is decided.
The Veteran does not current [sic] meet the schedular criteria for the assignment of
TDIU. However, a review of the record shows that the Veteran may be prevented
from physical labor by limitations resulting from his service-connected ventral
hernia. While the [October 2011] VA examiner indicated the Veteran was able to
perform sedentary employment, the record suggests that the Veteran may not be
able to obtain such employment as it is inconsistent with his education and
occupational background.[27]
The veteran argues the Board's 2014 referral decision was a binding factual finding that the Board
impermissibly changed when it denied him an extraschedular rating in 2017. 28 The Secretary
argues the Board's 2014 referral decision "does not equate to a factual finding, but instead indicates
simply [] that evidence of record warrants referral to the Director[.]"29 We don't entirely agree with
either position as both the veteran's and the Secretary's arguments would lead to absurd results.
If the veteran is right that the decision to refer a claim for extraschedular consideration is
a binding factual finding, then the Director would be little more than a rubberstamp. Put simply, it
can't be the case that when the Board refers a claim to the Director for extraschedular consideration
and the Director denies an extraschedular rating, the Board then must award an extraschedular
rating anyway because of its initial referral decision. Such a reading of § 4.16(b) would make the
Director superfluous as any claim that reached the Director from the Board would inevitably be
granted by the Board when returned to it. We have an obligation to avoid such an absurd result30
an extraschedular rating is warranted, only whether the facts presented warrant referral to the Director. See Floyd v.
Brown, 9 Vet. App. 88, 95 (1996).
25
Wages, 27 Vet. App. at 238.
26
Id.
27
R. 1478 (emphasis added).
28
See Appellant's Brief (Br.) at 10-12.
29
Secretary's Br. at 8.
30
See Atencio v. O'Rourke, 30 Vet. App. 74, 83 (2018) (noting that absurd results are "something courts should avoid
5
and to shy away from any interpretation that makes the additional language mere surplusage. 31
Nor is the veteran correct that 38 C.F.R. § 20.1303 applies here. That regulation states that a
"previously issued Board decision will be considered binding . . . with regard to the specific case
decided."32 Here, the "previously issued Board decision" in 2014 was a referral decision. The
Board's decision to refer the TDIU issue and its decision to award a rating are different and distinct
decisions such that the Board isn't precluded from denying an extraschedular rating after referring
a claim for extraschedular consideration. And, it's for those same reasons that the "law of the case"
doctrine doesn't apply.33
But, on the other hand, the Secretary also can't be right that the referral decision isn't a
factual finding as it clearly involves the application of a legal standard, § 4.16(b), to the facts of a
given claim. Additionally, this Court, in an en banc opinion, Pederson v. McDonald, has held that
the Board's referral denials are factual decisions to be upheld absent clear error.34 We can think of
no principled reason why the decision not to refer a claim for an extraschedular determination is a
factual one but a decision to refer a claim is not. Thus, and given the en banc Court's determination
in Pederson,35 not only do we disagree with the Secretary's argument, but even if we wanted to we
couldn't agree.
B. Does Referral Under 38 C.F.R. § 4.16(b) Require the Board to Award an Extraschedular
Rating?
Having dispensed with the parties' arguments, we turn to the question of what effect, if any,
does the Board's determination to refer a case for extraschedular consideration under 38 C.F.R.
§ 4.16(b) have when the Board later reviews the Director's decision not to award an extraschedular
TDIU rating? We conclude that the decision to refer a claim for extraschedular consideration is a
in statutory and regulatory interpretation"); see also, e.g., United States v. Wilson, 503 U.S. 329, 334 (1992) ("[A]bsurd
results are to be avoided."); Timex V.I., Inc. v. United States, 157 F.3d 879, 886 (Fed. Cir. 1998) (applying "the canon
that a statutory construction that causes absurd results is to be avoided if at all possible").
31
See Sharp v. United States, 580 F.3d 1234, 1238 (Fed. Cir. 2009) (noting that the canon against surplusage requires
the Court to avoid an interpretation that results in portions of text being read as meaningless); see also Duncan v.
Walker, 533 U.S. 167, 174 (2001).
32
38 C.F.R. § 20.1303 (2018).
33
See Johnson v. Brown, 7 Vet. App. 25, 26 (1994) (the law of the case doctrine "preclude[s] reconsideration of
identical issues" when "a case is addressed by an appellate court, remanded, [and] returned to the appellate court").
34
27 Vet. App. 276, 286 (2015) (en banc).
35
See Bethea v. Derwinski, 2 Vet. App. 252, 254 (1992) ("Only the en banc Court may overturn a panel decision.").
6
factual finding that doesn't bind the Board when it later decides whether to award an extraschedular
rating. This is so because the decisions to refer and to award a rating are fundamentally different.
As we explain, the referral decision could affect the later "award" decision in a case-specific way,
but there's no categorical relationship between these two distinct determinations.
While the plain text of § 4.16(b) certainly doesn't explain how the referral and rating award
decisions are different, "[w]hen assessing the meaning of a regulation, words should not be taken
in isolation but rather read in the context of the regulatory structure and scheme."36 We review the
interpretation of regulations without deference to the Board. 37 Bearing in mind the regulatory
structure and scheme VA has created to award extraschedular TDIU ratings, we hold that the initial
extraschedular referral decision under § 4.16(b) addresses whether there's sufficient evidence to
substantiate a reasonable possibility that a veteran is unemployable by reason of his or her service-
connected disabilities.38 The Director then performs his or her duties and, if the Director denies an
extraschedular rating, the Board then, reviewing that decision without deference39 and bearing in
mind the benefit of the doubt standard, 40 decides whether the preponderance of the evidence
nevertheless shows that a veteran is unemployable by reason of his or her service-connected
disabilities.41
VA's own internal guidelines support such a reading of § 4.16(b). The M21-1 provides that
referral is appropriate, in part, when "there is evidence that the Veteran may be unable to secure or
follow a substantially gainful occupation because of a service-connected disability."42 Of course,
the M21-1 isn't binding on the Board43 but an interpretation of § 4.16(b) that is in line with VA's
36
Atencio, 30 Vet. App. at 82 (citing King v. Shinseki, 26 Vet. App. 484, 488 (2014)).
37
See id.; see also Tropf v. Nicholson, 20 Vet. App. 317, 320 (2006).
38
In Stanton v. Brown, 5 Vet. App. 563, 570 (1993), the Court seemed to implement a similar standard. There, the
Court held that a veteran who had given lay testimony (but nothing more) regarding his inability to seek or maintain
employment had "presented a well-grounded claim for a total disability rating under section 4.16(b)." Thus, our
holding merely elaborates on the standard used in Stanton.
39
Wages, 27 Vet. App. at 239 (the Director's decision to deny an extraschedular rating "is simply a decision that is
adopted by the RO and reviewed de novo by the Board").
40
See 38 U.S.C. § 5107(b); Gilbert v. Derwinski, 1 Vet. App. 49, 53 (1990).
41
See Ortiz v. Principi, 274 F.3d 1361, 1365 (Fed. Cir. 2001).
42
VA ADJUDICATIONS PROCEDURES MANUAL (M21-1), pt. III, subpt. iv, ch. 6, § B (emphasis added).
43
See, e.g., Gray v. Sec'y of Veterans Affairs, 875 F.3d 1102, 1108 (Fed. Cir. 2017), cert. granted, 139 S. Ct. 451
(2018).
7
practice lends support to our analysis. An interpretation of § 4.16(b) requiring different evidentiary
standards at different times in the extraschedular process finds support in other areas of the law.
For example, in McClendon v. Nicholson, this Court held that a veteran need only show "some
indication" of a disability to trigger VA's duty to obtain a medical examination. 44 But "some
indication" is a standard far lower than that required for the ultimate determination whether a
veteran's disability is related to his or her service. Similarly, in general civil litigation, a party
seeking a preliminary injunction need only show he or she is "likely" to win on the merits. 45 Yet
when that party seeks a permanent injunction, the evidentiary threshold changes and he or she
must show ultimate success on the merits.46
One final point on this issue. The Board's obligation to provide an adequate statement of
reasons or bases to support its decision 47 also applies when the Board reviews the Director's
decision not to grant an extraschedular TDIU rating. 48 Thus, the Board must ensure that it
adequately explains its reasoning when a factual finding made at the referral stage comes out
differently at the review stage. Some factors that may affect the Board's ability to reach a different
result or the adequacy of its discussion of reasons or bases include, but are not limited to, the
certainty or complexity of factfinding in the initial referral decision and to the extent to which the
record has changed since the referral decision. Thus, the referral decision can still be relevant at
the award stage in certain circumstances. For example, where the Board finds referral appropriate
because "it is beyond dispute" that a veteran was unemployable because of his service-connected
disabilities, more explanation might be needed for a contrary finding than where the Board's
referral finding is more equivocal. It's also possible that no amount of explanation may overcome
the Board's initial finding.
Here, since the Board's decision didn't explain why the factual finding it made at the referral
stage came out differently at the review stage, remand is warranted.49 On remand, the Board must
ensure that it explains its different factual determinations at the referral and review stages.
44
20 Vet. App. 79, 83 (2006).
45
See, e.g., Reebok Int'l Ltd. v. J. Baker, Inc., 32 F.3d 1552, 1555 (Fed. Cir. 1994).
46
See, e.g., Apple Inc. v. Samsung Electrs. Co., Ltd., 809 F.3d 633, 639 (Fed. Cir. 2015).
47
Allday v. Brown, 7 Vet. App. 517, 527 (1995).
48
See 38 U.S.C. § 7104(d)(1); see also Frost v. Shulkin, 29 Vet. App. 131, 139 (2017); Allday, 7 Vet. App. at 527;
Gilbert, 1 Vet. App. at 56-57.
49
See Tucker v. West, 11 Vet. App. 369, 375 (1998).
8
Although we're remanding this matter to the Board because of its inadequate reasons or
bases regarding its contradictory extraschedular determinations, we must also address the
ambiguity of the phrase "unable to secure and follow substantially gainful employment." "Without
a definition of the phrase or, at the very least, a list of factors that VA adjudicators should consider
in making that determination, there is no standard against which VA adjudicators can assess the
facts of a veteran's case," 50 thus leading to insurmountable reasons or bases errors in Board
decisions.
C. Interpreting "Substantially Gainful Employment"
"Expert discretion is the lifeblood of the administrative process, but '[u]nless we make the
requirement for administrative action strict and demanding, expertise, the strength of modern
government, can become a monster which rules with no practical limits on its discretion.'" 51
Although "the law does not demand perfect consistency in administrative decision-making,"52
"overly ambiguous standards almost inevitably lead to inconsistent application."53
In Ferraro v. Derwinski, a case almost as old as this Court, the Court noted that
"'[s]ubstantially gainful employment' is a term of art which . . . has no concrete definition." 54 The
Court left "the development of such a definition to the Secretary and urge[d] that he establish a
clear definition for this term," explaining that "[t]his would be helpful, not only as an aid to
veterans, but also as an aid to VA decision-makers and to this Court in future decisions."55 The
Court's encouragement has gone unheeded for 27 years.
The Court next addressed this issue in Moore v. Derwinski.56 There, the Court stated that
"there is a need for the Secretary to clarify the regulations concerning unemployability."57 But the
Court was "not yet prepared to impose a Court-created rule upon" the Board and "suggest[ed] to
50
Cantrell v. Shulkin, 28 Vet. App. 382, 390–91 (2017).
51
Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 167 (1962) (quoting New York v. United States,
342 U.S. 882, 884 (1951) (Black, J., dissenting)) (emphasis omitted)).
52
South Shore Hosp., Inc. v. Thompson, 308 F.3d 91, 103 (1st Cir. 2002).
53
King v. LaMarque, 464 F.3d 963, 966 (9th Cir. 2006).
54
1 Vet. App. 326, 333 (1991).
55
Id.
56
1 Vet.App. 356 (1991).
57
Id. at 359.
9
the Secretary that there is much that could be borrowed from" federal appellate decisions
interpreting a similar term, substantial gainful activity, found in Social Security regulations. 58
Then, in 2000, the Court, after looking to Social Security regulations for guidance, defined the
term but limited its definition to the facts of the particular case.59
VA is aware of the problems created by the lack of defined terms in § 4.16(b). In September
1987, the U.S. General Accounting Office, now the Government Accountability Office (GAO),
examined VA's TDIU rating process, concluding that the lack of defined terms in § 4.16 could
lead to inconsistent outcomes and give "the appearance of arbitrary and inequitable decision[-
]making."60 Similarly, in June 2015, the GAO again investigated VA's TDIU analysis, concluding
that "VA's procedures do not ensure that [TDIU] benefit decisions are well-supported."61
Despite this issue's appearance before the Court so often, the Court's repeated
encouragement, and the GAO findings, the Court again recently declined to define "substantially
gainful employment" "without first allowing VA to take a position on the matter,"62 noting that
"[i]t is VA's responsibility to define the terms contained within its regulations and the Court
encourages it do so."63 Yet, from Ferraro in 1991 to Ortiz-Valles in 2016 to the matter before us
today, VA has refused to provide an adequate definition. The lack of any articulable standards by
which veterans' extraschedular TDIU claims are judged renders the Board's reasons or bases here
inadequate.64 But this isn't the Board's fault. The regulation simply provides no guidance to either
veterans or VA's own adjudicators, an inadequacy of VA's TDIU regulations that, as just discussed,
58
Id.
59
See Faust v. West, 13 Vet. App. 342, 355 (2000) ("In view of the fact that the Secretary has yet to issue a clear
definition of substantially gainful employment, despite the Court's encouragement to that effect . . . , today we
articulate such a definition for the purpose of dealing with the facts of this case.").
60
U.S. GEN. ACCOUNTING OFFICE, IMPROVING THE INTEGRITY OF VA'S UNEMPLOYABILITY COMPENSATION PROGRAM
at 18, 42 (Sept. 21, 1987).
61
U.S. GEN. ACCOUNTABILITY OFFICE, VA CAN BETTER ENSURE UNEMPLOYABILITY DECISIONS ARE WELL
SUPPORTED, GAO 15-464 (June 2015).
62
Ortiz-Valles, 28 Vet. App. at 72.
63
Id.
64
See King, 464 F.3d at 966.
10
has been well identified.65 Thus, today, we step in and interpret the meaning of being "unable to
secure and follow substantially gainful employment."
This isn't a revolutionary exercise. Indeed, unless they must defer to the promulgating
agency, courts regularly define regulatory terms when they're ambiguous.66 Recently, this Court
did just that when faced with an ambiguous term in Diagnostic Code 7522.67
We begin our analysis by looking to the language of the regulation.68 If, from the language
of the regulation, the plain meaning of the phrase "unable to secure and follow substantially gainful
employment" is clear, then that meaning controls, and our inquiry is finished.69 But, if the language
is ambiguous, then we may define the phrase unless we "must defer to the agency's interpretation
of its regulation unless that interpretation is inconsistent with the language of the regulation, is
otherwise plainly erroneous, or does not represent the agency's considered view on the matter."70
The language of § 4.16(b) is ambiguous. The regulation instructs "that all veterans who are
unable to secure and follow a substantially gainful occupation" because of their service-connected
disabilities will "be rated totally disabled" without defining what either "a substantially gainful
occupation" is or what it means to be "unable to secure and follow" such an occupation.71 Section
4.16(a) provides that "substantially gainful employment" is employment that is not "marginal"
with "marginal" defined as employment producing an annual income below the Federal poverty
threshold for one person.72 But this is, at best and as we discuss below, an incomplete definition.
65
See supra note 61.
66
See, e.g., Young v. United Parcel Serv., 135 S. Ct. 1338, 1353-54 (2015); Christopher v. SmithKline Beecham Corp.,
567 U.S. 142, 155 (2012); see also Elgin Nursing v. U.S. Dep't of Health & Human Servs., 718 F.3d 488, 494 (5th
Cir. 2013) ("Unfettered by DHHS's interpretation of the [regulation at issue], we apply the traditional tools of textual
interpretation to determine its fair meaning[.]").
67
See Williams v. Wilkie, 30 Vet. App. 134, 138 (2018) ("Although DC [Diagnostic Code] 7522 requires a 'deformity'
for a compensable rating, VA has not expressly defined this term. The Court will therefore assign the ordinary meaning
of this word.").
68
See Cantrell v. Shulkin, 28 Vet. App. 382, 389 (2017) (citing Good Samaritan Hosp. v. Shalala, 508 U.S. 402, 409
(1993)).
69
See Tropf v. Nicholson, 20 Vet. App. 317, 320 (2006).
70
Cantrell, 28 Vet. App. at 390; see also Auer v. Robbins, 519 U.S. 452 (1997).
71
38 C.F.R. § 4.16(b).
72
38 C.F.R. § 4.16(a).
11
Thus, the plain language of the regulation insufficiently guides us as to the proper meaning of
§ 4.16(b)'s terms.
Having concluded that the phrase is ambiguous, we turn first to the Secretary's views. In
his supplemental brief, he defined substantially gainful employment as "employment that produces
income exceeding the amount established by the U.S. Department of Commerce, Bureau of the
Census, as the poverty threshold for one person." 73 This interpretation of § 4.16(b) merits no
deference. First, the Secretary has not once, neither in his briefs nor at oral argument, asked for
deference, a waivable argument.74 Second, even if we construe the Secretary's oral argument as
seeking deference, this Court will "generally not entertain arguments raised by counsel at oral
argument for the first time."75 Third, even if the issue of deference had been raised, we review the
Board's decision, and there's no indication that the Board adopted or was even aware of any
definition along the lines the Secretary presented to the Court. Fourth, it's unclear what we would
defer to. At oral argument, the Secretary's counsel referenced the M21-1 as a possibly defining the
terms in § 4.16(b).76 But the Board didn't cite the M21-1, and even if it had, the M21-1 isn't binding
on the Board.77 If we decided to defer to the nonbinding M21-1, we would be undermining the
Federal Circuit's holding in Gray, because the M21-1 would effectively bind the Board as we'd be
required to defer to it and thus judge the Board against its provisions.78 Fifth, VA may arguably be
73
Secretary's Supplemental Br. at 10.
74
See Mass. Mut. Life Ins. Co. v. United States, 782 F.3d 1354, 1369 (Fed. Cir. 2015); Norvell v. Peake, 22 Vet. App.
194, 201 (2008).
75
Sellers v. Wilkie, 30 Vet. App. 157, 166 (2018); see also McFarlin v. Conseco Servs., LLC, 381 F.3d 1251, 1263
(11th Cir. 2004) ("A party is not allowed to raise at oral argument a new issue for review."); Pieczenik v. Dyax Corp.,
265 F.3d 1329, 1332-33 (Fed. Cir. 2001) ("It is well settled that an appellant is not permitted to make new arguments
that it did not make in its opening brief."); Norvell, 22 Vet. App. at 201 ("This Court and the U.S. Court of Appeals
for the Federal Circuit have repeatedly discouraged parties from raising arguments that were not presented in an initial
brief to the Court.").
76
Oral Argument at 42:39-43:09, Ray v. Wilkie, U.S. Vet. App. No. 17-0781 (oral argument held Sept. 5, 2018). VA's
M21-1 part IV, subpart ii, chapter 2, section F.1.c defines substantially gainful employment as
[e]mployment at which non-disabled individuals earn their livelihood with earning comparable to
the particular occupation in the community where the veteran resides. It suggests a living wage.
Substantially gainful employment is competition (not protected) employment and with earning
exceeding the amount established by the U.S. Department of Commerce, U.S. Census Bureau, as
the poverty threshold for one person.
77
See Gray, 875 F.3d at 1108.
78
See Overton v. Wilkie, 30 Vet. App. 257 (2018).
12
owed deference under Skidmore v. Swift & Co.,79 but applying Skidmore here wouldn't change the
outcome. Under Skidmore, we're required to consider VA's "body of experience and informed
judgment"80 by considering "the thoroughness evident in [the Agency's] consideration, the validity
of its reasoning, its consistency with earlier and later pronouncements, and all those factors which
give it power to persuade, if lacking power to control."81 But Skidmore deference (to the degree it
truly is "deference"), unlike Auer deference, isn't controlling.82 And the Secretary's "interpretation"
offered here—an interpretation our concurring colleague accepts at face value83—shares many of
the same features as the one the Supreme Court recently rejected after conducting a Skidmore
analysis. In Young, the Department of Labor promulgated guidance on the proper meaning of
"other persons" as used in the Pregnancy Discrimination Act.84 The Supreme Court analyzed the
agency's proffered interpretation under the Skidmore framework, concluding that its interpretation
didn't merit special consideration because it was "a position about which [its] previous guidelines
were silent" and was "inconsistent with positions for which the Government has long advocated,"
and because the agency failed to "explain the basis of its guidance."85 Here, similar inconsistencies
and lack of rationale plague the Secretary's definition.
Elsewhere, VA has stated that TDIU adjudicators "must consider a number of factors,
including the frequency and duration of periods of incapacity or time lost from work due to
disability, the veteran's employment history and current employment status, and the veteran's
annual income from employment, if any."86 Thus, VA's own interpretation is inconsistent, and
neither the M21-1 nor the Secretary's proffered definition fully encapsulates the entire TDIU
analysis—that is, whether a veteran is "unable to secure and follow substantially gainful
employment" because of his or her service-connected disabilities.87 Instead, they merely address
79
323 U.S. 134 (1944).
80
Id. at 140.
81
Id.
82
Id. ("[T]he rulings, interpretations, and opinions of [the Agency] . . . [are] not controlling upon the courts.").
83
See post at 23.
84
135 S. Ct. at 1351.
85
Id. at 1352.
86
VA Gen. Coun. Prec. 5-2005, at ¶5 (Nov. 25, 2005).
87
This inconsistency, overlooked by our concurring colleague, matters because "[a]n agency interpretation of a
relevant provision which conflicts with the agency's earlier interpretation is 'entitled to considerably less deference'
13
one component of that analysis: the economic requirement. That requirement is straightforward:
To receive an extraschedular TDIU rating, a veteran must have an earned annual income that
doesn't exceed the Federal poverty threshold for one person. 88 But the economic requirement,
standing alone, isn't enough. Were this the only requirement, the regulation's command that
adjudicators "include a full statement as to the veteran's service-connected disabilities,
employment history, educational and vocational attainment and all other factors having a bearing
on the issue" 89 would make no sense because none of that information would be needed to
determine whether a veteran's earned annual income exceeds the federal poverty threshold. Thus,
the M21-1 and Secretary have offered, at best, incomplete interpretations of § 4.16(b).
The Secretary argues this incompleteness is an intentional and beneficial feature of the
regulation. In his view, § 4.16(b) is designed to be "flexible" and "intentionally broad."90 But that
"flexibility" means that neither veterans nor this Court understand what the regulation means.
Thus, the Secretary's position is untenable and wouldn't be entitled to deference because, as we’ve
said, it's "the equivalent of 'because I say so'" 91 or "we know it when we see it." 92 Further,
"vagueness is especially unhelpful when it comes to TDIU, where individual assessment is
crucial."93 The GAO aptly illustrated the effect of this vagueness:
VA procedures do not ensure that Individual Unemployability benefit decisions are
well-supported. For example, contrary to federal internal control standards, the
guidance on determining unemployability is incomplete for ensuring consistency.
In discussion groups with GAO, VA's rating specialists said they disagreed on the
factors they need to consider when determining unemployability, and had difficulty
separating allowable from non-allowable factors. Some specialists said these
challenges create the risk that two raters could examine the same evidence and
reach an opposite decision to approve or deny a claim.[94]
than a consistently held agency view." I.N.S. v. Cardoza-Fonseca, 480 U.S. 421, 446 n.30 (1987) (quoting Watt v.
Alaska, 451 U.S. 259, 273 (1981)).
88
38 C.F.R. § 4.16(a).
89
38 C.F.R. § 4.16(b).
90
Secretary's Supplemental (Supp.) Br. at 14-15.
91
Hood v. Brown, 4 Vet. App. 301, 303 (1993).
92
Cantrell, 28 Vet. App. at 390 ("Essentially the Secretary is asking the Court to defer to a 'we know it when we see
it' definition of employment in a protected environment and to trust that the hundreds of VA adjudicators across the
country will uniformly and consistently apply that undefined term without guidance from the Secretary.").
93
Withers, 30 Vet. App. at 148.
94
U.S. GOV'T ACCOUNTABILITY OFFICE, GAO 15-464, VA CAN BETTER ENSURE UNEMPLOYABILITY DECISIONS ARE
14
Thus, we are left with an undefined and ambiguous regulatory phrase that we interpret as we would
any other statute or regulatory phrase.
Ideally, VA, with its expertise, would have interpreted the phrase at some point afterthis
Court first encouraged it to do so in 1991, but it hasn't. So, we provide guiding principles to frame
the proper inquiry for extraschedular TDIU. 95 As we noted above, the Court has defined
"substantially gainful employment" before.96 Thus, we look to what the Court did there and draw
upon existing TDIU caselaw and the litany of cases in which the Court has encouraged VA to
adopt a complete definition.
"[E]ntitlement to TDIU is based on an individual's particular circumstances." 97 We
recognize, as both the Secretary and veteran agree,98 that with respect to "substantially gainful
employment" § 4.16(b) includes an economic component: a veteran's income must be lower than
the Federal poverty threshold.99 But there's also no question that being "unable to secure and follow
a substantially gainful employment" includes a non-economic component. "When the Board
conducts a TDIU analysis, it must take into account the individual veteran's education, training,
and work history."100 "The question is whether the veteran is capable of performing the physical
and mental acts required by employment, not whether the veteran can find employment."101 As to
mental abilities in particular, the Court has cited specific examples, such as a lack of social skills102
and workplace stress.103 "[W]e note that a determination whether a person is capable of engaging
WELL SUPPORTED, (2015).
95
We note that both VA and veterans have means with which to change any definition or guidelines we provide today.
VA can engage in notice-and-comment rulemaking under 38 U.S.C. § 501(a) and veterans may petition for rulemaking
under 5 U.S.C. § 553(e) and appeal any denial to the Federal Circuit. See Gray, 875 F.3d at 1109.
96
See Faust, 13 Vet. App. at 355.
97
Rice v. Shinseki, 22 Vet. App. 447, 452 (2009); see also 38 C.F.R. § 4.15 (2018).
98
See Appellant's Supp. Br. at 7; Secretary's Supp. Br. at 10.
99
See Ortiz-Valles, 28 Vet. App. at 71 (noting that "substantially gainful employment" is employment "capable of
producing income that is more than marginal—i.e., with income that exceeds the amount published by the U.S.
Department of Commerce for the poverty threshold for one person").
100
Pederson, 27 Vet. App. at 286.
101
Van Hoose v. Brown, 4 Vet. App. 361, 363 (1993) (emphasis in original).
102
Gleicher v. Derwinski, 2 Vet. App. 26, 28 (1991).
103
Washington v. Derwinski, 1 Vet. App. 459, 465 (1991).
15
in a substantially gainful occupation must consider both that person's abilities and his employment
history."104
To apply meaning to § 4.16(b), we, just as the Court did in Faust,105 choose to look to
comparable Social Security regulations, specifically 20 C.F.R. §§ 404.1510 and 404.1572. Social
Security regulations define "substantially gainful activity" as "work that—(a) [i]nvolves doing
significant and productive physical or mental duties; and (b) [i]s done (or intended) for pay or
profit."106 These regulatory provisions clarify elsewhere that work can be substantial "even if it is
done on a part-time basis or if [claimants] do less, get paid less, or have less responsibility than
when [they] worked before," and that work is gainful "if it is the kind of work usually done for pay
or profit, whether or not a profit is realized."107 These regulations serve as useful guides for us in
crafting our own principles for the unique nature of the veterans benefits system. To be sure, the
Court has previously declined to order VA to adopt Social Security definitions.108 And, to be clear,
we don't adopt Social Security's regulations as VA regulations. To the extent we discuss them, we
look to them only for "appropriate guidance," as the Court has done before.109
Thus, after canvassing this Court's TDIU caselaw, relevant Social Security regulations, and
the parties' arguments, we interpret the phrase "unable to secure and follow a substantially gainful
occupation" in § 4.16(b) to have two components: one economic and one noneconomic. The
economic component simply means an occupation earning more than marginal income (outside of
a protected environment) as determined by the U.S. Department of Commerce as the poverty
threshold for one person. As for the noneconomic component, the Secretary himself states that
"determining eligibility for TDIU requires more than determining the presence or absence of
employment producing income exceeding any particular threshold," and "the ultimate inquiry is
instead on the individual claimant's ability to secure or follow that type of employment."110 Thus,
in order to fully clarify our interpretation that the regulation has both an economic and
104
Faust, 13 Vet. App. at 355.
105
Id.; see also Moore, 1 Vet. App. at 359.
106
20 C.F.R. § 404.1510 (2018).
107
20 C.F.R. § 404.1572(a), (b) (2018).
108
See, e.g., Withers, 30 Vet. App. at 148-49; Beaty v. Brown, 6 Vet. App. 532, 538 (1994); Moore, 1 Vet. App. at 359.
109
Faust, 13 Vet. App. at 355.
110
Secretary's Supp. Br. at 11.
16
noneconomic component, we also provide guidance as to the meaning of a veteran's ability to
"secure and follow" such employment.
In determining whether a veteran can secure and follow a substantially gainful occupation,
attention must be given to
x the veteran's history, education, skill, and training;111
x whether the veteran has the physical ability (both exertional and nonexertional) to perform
the type of activities (e.g., sedentary, light, medium, heavy, or very heavy)112 required by
the occupation at issue. Factors that may be relevant include, but are not limited to, the
veteran's limitations, if any, concerning lifting, bending, sitting, standing, walking,
climbing, grasping, typing, and reaching, as well as auditory and visual limitations;113 and
x whether the veteran has the mental ability to perform the activities required by the
occupation at issue. Factors that may be relevant include, but are not limited to, the
veteran's limitations, if any, concerning memory, concentration, ability to adapt to change,
handle work place stress, get along with coworkers, and demonstrate reliability and
productivity.114
By discussing these potentially relevant factors, we don't create a checklist that must be
run completely through in every case. Instead, discussion of any factor is only necessary if the
evidence raises it.115
We recognize that this is the first occasion in which the Court has interpreted "unable to
secure and follow a substantially gainful occupation" under § 4.16 and provided guidance on what
it means to "secure and follow" said employment. But a "central tenet of administrative law [is]
that a reviewing court may not affirm an administrative agency's actions on a reasoned basis
different from the rationale actually put forth by the agency."116 This rule is absolute. Courts are
111
Pederson, 27 Vet. App. at 286; VA Gen. Coun. Prec. 5-2005, at ¶5.
112
See 20 C.F.R. § 404.1567 (2018).
113
See, e.g., Van Hoose, 4 Vet. App. at 363.
114
Gleicher, 2 Vet. App. at 28; Washington, 1 Vet. App. at 465.
115
See Dela Cruz v. Principi, 15 Vet. App. 143, 149 (2001); Schafrath v. Derwinski, 1 Vet. App. 589, 593 (1991).
116
Pub. Media Ctr. v. F.C.C., 587 F.3d 1322 (D.C. Circuit 1978); see Gulf States Utils. Co. v. FPC, 411 U.S. 747,
764 (1973); SEC v. Chenery Corp., 332 U.S. 194, 196 (1947) (Chenery II); SEC v. Chenery Corp., 318 U.S. 80, 95
(1943) (Chenery I).
17
"powerless to affirm [an] administrative action by substituting what it considers to be a more
adequate or proper basis. To do so would propel the court into the domain which Congress has set
aside exclusively for the administrative agency."117 Thus, we set aside the decision on appeal and
remand this matter to the Board to provide reasons or bases that comport with this opinion and to
develop any further evidence required.118
In pursuing his case on remand, the veteran is free to submit additional evidence and
argument, including the arguments raised in his briefs to this Court.119 The Board must consider
any such evidence or argument.120 The Court reminds the Board that "[a] remand is meant to entail
a critical examination of the justification for the decision." 121 The Board must proceed
expeditiously.122
D. Our Concurring Colleague's Concerns
Our concurring colleague takes issue with our decision to interpret "substantially gainful
employment." He argues that, by providing an interpretation about an ambiguous regulation that
the Court has pleaded with VA to define for 25 years, our decision "sweeps beyond the Court's
limited, but essential, role of interpreting laws written by other branches of Government and
instead directs the substantive content of the regulation itself."123
First, as our colleague himself notes, "this Court retains the authority to provide the final
interpretation of [VA] regulations" and has "the obligation to do so in certain circumstances."124
Section 7261, title 38, U.S. Code, lays out our scope of review. It commands us to "interpret
constitutional, statutory, and regulatory provisions" "to the extent necessary to [our] decision[.]"125
Our congressional mandate is clear. It's our duty to review the Board's decisions and "determine
117
Chenery II, 332 U.S. at 198.
118
See Turner v. Shulkin, 29 Vet. App. 207, 220 (2018).
119
Kutscherousky v. West, 12 Vet. App. 369, 372-73 (1999) (per curiam order); see also Clark v. O'Rourke,
30 Vet. App. 92, 97 (2018).
120
Kay v. Principi, 16 Vet. App. 529, 534 (2002).
121
Fletcher v. Derwinski, 1 Vet. App. 394, 397 (1991).
122
38 U.S.C. §§ 5109B, 7112.
123
Post at 24 (emphasis in original).
124
Post at 23.
125
38 U.S.C. § 7261(a)(1).
18
the meaning or applicability of the terms of an action of the Secretary[.]" 126 Indeed, judicial
interpretation has been a cornerstone of the American legal system since the foundation of the
Republic.127 "The Judiciary has a responsibility to decide cases properly before it, even those it
'would gladly avoid.'"128
Our colleague fails to address the inconsistencies in VA's proffered interpretation. He
would have us adopt, without deferring to, the Secretary's interpretation because "it represents the
most natural reading" of the regulation.129 He claims, without support, that such a definition has
"distinct benefits" because it "complements" the definition of "marginal employment" the Court
articulated in Ortiz-Valles and "is consistent with VA's historical practice of adjudicating
TDIU."130 But, as we noted above, the Secretary's proffered interpretation in this appeal—which,
it begs repeating, only came about after more than 25 years of judicial prodding and VA inaction—
is actually inconsistent with previous VA guidance.
The Secretary has interpreted being "unable to secure and follow substantially gainful
employment" in this appeal as "employment that produces income exceeding the amount
established by the U.S. Department of Commerce, Bureau of the Census, as the poverty threshold
for one person."131 Yet, he's previously interpreted § 4.16(b) to require adjudicators to "consider a
number of factors, including the frequency and duration of periods of incapacity or time lost from
work due to disability, the veteran's employment history and current employment status, and the
veteran's annual income from employment, if any."132 This is an inconsistency in VA's "historical
practice of adjudicating TDIU" that neither our colleague nor the Secretary can explain because,
as we explained above, the Secretary's interpretation is absurd. 133 It reads out the regulation's
126
Id.; see also Plaut v. Spendthrift Farm, Inc., 514 U.S. 211, 221 (1995) ("The power of '[t]he interpretation of the
laws' [is] 'the proper and peculiar province of the courts.'" (citations omitted)).
127
See Marbury v. Madison, 5 U.S. 137, 177 (1803) ("It is emphatically the province and duty of the judicial
department to say what the law is").
128
Zivotofsky v. Clinton, 566 U.S. 189, 194-95 (2012) (quoting Cohens v. Virginia, 19 U.S. 264, 404 (1821)).
129
Post at 23.
130
Id.
131
Secretary's Supp. Br. at 10.
132
VA Gen. Coun. Prec. 5-2005, at ¶5 (Nov. 25, 2005).
133
Our colleague notes that the Secretary's proffered interpretation is consistent with the M21-1. See post at 23. But,
as we stated above, the Board didn't cite the M21-1, and even if it had, the M21-1 isn't binding on the Board. See
Gray, 875 F.3d at 1108. The fact that line adjudicators are bound by the M21-1 is irrelevant to us here as we review
19
command that adjudicators "include a full statement as to the veteran's service-connected
disabilities, employment history, educational and vocational attainment and all other factors
having a bearing on the issue"134 as none of that information is needed to determine whether a
veteran's earned annual income exceeds the Federal poverty threshold. Our colleague fails to
explain how the Secretary's interpretation is viable in the context of the entire regulation, instead
focusing only on its economic means testing component.135 Were he and the Secretary correct, all
veterans across the Nation earning less than the Federal poverty line would be entitled to
extraschedular TDIU benefits without any analysis of whether they can "secure and follow a
substantially gainful occupation" despite their service-connected disabilities. The only test would
be an income-based one. That simply makes no sense. We reject entirely such a limited
interpretation.136
Notably, our colleague's views are inconsistent. On the one hand, he warns that our decision
is a "restructure[ing] of [the way] VA adjudicates TDIU to bring it into alignment with the
framework used by the Social Security Administration."137 On the other, he writes that "many of"
the factors we elucidate today "are already presumably captured by the open-ended inquiry that
VA regulations and our caselaw already impose on the Board[.]"138 Both can't be true. Either our
decision is a restructuring of the TDIU framework or it merely identifies relevant factors that Board
members already implicitly consider. If the former, it's the result of 25 years of VA inaction. If the
latter, then our decision is sound as adjudicators, claimants, and this Court can only benefit from
further clarity.139
the decisions of the Board, not line VA adjudicators. See 38 U.S.C. § 7252(a).
134
38 C.F.R. § 4.16(b).
135
See McCuin v. Sec'y of Health and Human Servs., 817 F.2d 161, 169 (1st Cir. 1987) ("In interpreting statutes and
regulations, courts must try to give them a harmonious, comprehensive meaning, giving effect, when possible, to all
provisions.").
136
See, e.g., Atencio, 30 Vet. App. at 83 (courts should avoid interpreting regulations to lead to an absurd result).
137
Post at 21.
138
Post at 25.
139
See Allday, 7 Vet. App. at 527; Gilbert, 1 Vet. App. at 56-57; see also Chenery II, 332 U.S. at 196-97 ("If the
administrative action is to be tested by the basis upon which it purports to rest, that basis must be set forth with such
clarity as to be understandable."); Int'l Longshoremen's Assoc. v. Nat'l Mediation Bd., 870 F.2d 733, 735 (D.C. Cir.
1989) ("The basis for an administrative decision, of course, must be clear enough to permit effective judicial review.").
20
Our colleague also oversimplifies and recasts our holding regarding what are, in his terms,
"a set of mandatory factors" the Board must consider in making TDIU determinations.140 As we
explained above, "[b]y discussing these potentially relevant factors, we don't create a checklist that
must be run completely through in every case. Instead, discussion of any factor is only necessary
if the evidence raises it."141 Finally, our colleague overlooks one crucial fact: VA is free to revise
its regulations as it sees fit if it disagrees with our interpretations. Indeed, recently VA has done
just that.142
Our decision here is simple: VA refused to define key regulatory terms for over 25 years,
this frustrates judicial review of this appeal, and we have, therefore, interpreted § 4.16(b) after
conducting all required deference analyses. We break no new ground. We simply engage in a
routine act of regulatory interpretation.
III. CONCLUSION
The Court SETS ASIDE the Board's February 15, 2017, decision and REMANDS the
matter to the Board for further adjudication.
TOTH, Judge, concurring in part and in the judgment: I join the Court's decision on the
effect of the Board's referral for extraschedular consideration. The treatment of the issue is cogent,
faithful to the substance of applicable regulations, and provides a useful development of the
framework that should allow for more consistent adjudication of TDIU. I respectfully decline,
however, to join the Court in its definition of "substantially gainful employment."143 Instead of
merely defining an ambiguous term, the Court restructures how VA adjudicates TDIU to bring it
into alignment with the framework used by the Social Security Administration. The approach taken
140
Post at 23 (emphasis in original).
141
Supra at 17.
142
See, e.g., Department of Veterans Affairs, Extra-Schedular Evaluations for Individual Disabilities, 82 Fed.
Reg. 57,830 (Dec. 8, 2017) (abrogating Johnson v. McDonald, 28 Vet. App. 136 (2016)).
14338 C.F.R. § 4.16 mentions both "substantially gainful employment" and "substantially gainful occupation." In
Ortiz-Valles v. McDonald, we held these terms to be interchangeable in substance as regards their use in § 4.16. I
therefore discuss only "substantially gainful employment" with the understanding that it covers both discrete terms.
28 Vet. App. 65, 70 (2016).
21
by the Social Security Administration might be more sensible, or just, but it is not one that we can
impose on VA absent a clear indication that Congress intended this approach.
All administrative law involves the separation of powers, and few cases demonstrate this
fact more plainly than this one. Indeed, this case may serve as a cautionary tale for why
administrative agencies should at least attempt to define their own ambiguous terms rather than
leaving a blank slate for a court to supply its own meaning. As the majority notes, we first asked
VA for a definition of "substantially gainful employment" in Ferraro v. Derwinski, 1 Vet. App.
326, 333 (1991), and repeated this request over the years in a series of cases. See Moore v.
Derwinski, 1 Vet. App. 326 (1991); Faust v. West, 13 Vet. App. 342, 355 (2000); Ortiz-Valles v.
McDonald, 28 Vet. App. at 70.
Unmoved by our repeated requests, VA doubled down in its initial briefing, contending
that it need not provide a definition for "substantially gainful employment," as the criteria
established in § 4.16 are "intentionally broad and intended to allow VA adjudicators 'in the
judgment of the rating agency' the ability to determine whether the facts of any case establish
individual unemployability due to service connected disabilities." Sec's Br. at 15. Indeed, this was
largely the same position that VA forwarded a year ago in a different TDIU case, Cantrell v.
Shulkin, 28 Vet. App. 382, 393 (2017). In Cantrell, the Agency contended that it need not provide
a definition for what it meant to work "in a protected environment" to allow "the factfinder to make
a determination on a case-by-case basis." Id. at 390. In response, we took VA to task for asking
the Court to defer to a standard-less, "we know it when we see it" definition. Id.
One cannot help notice a recurring theme: VA promulgates broad, open-ended regulations
containing undefined terms and then ignores this Court's entreaties to develop working definitions
for such terms. As justification, VA points to the fact-specific nature of the overall adjudication
itself, as though this somehow prevents the Agency from formulating interpretations of specific
terms within the regulation. But although the factors that render someone unable to work may be
manifold and open-ended, that doesn't mean that specific terms such as "substantially gainful
employment," "marginal employment," or "protected environment" must remain as moving
targets, bending to the discretion of factfinders. These terms are readily capable of definition,
regardless of how open-ended the overall adjudication may be.
As a matter of comity, courts grant executive agencies the opportunity to first explain how
they interpret their own regulations and generally defer to such interpretations when they represent
22
agency expertise, have a working history within the agency, and are consistent with the regulation's
language. See Auer v. Robbins, 519 U.S. 452 (1997). For a fuller explanation, see Aditya Bamzai,
The Origins of Judicial Deference to Executive Interpretation, 126 Yale L. J. 908 (2018). To be
sure, there are many complex issues related to agency deference that remain unsettled, as
evidenced by the fact that the Supreme Court recently took a case to address some of these
questions, Kisor v. Wilkie, 869 F.3d 1360 (Fed. Cir. 2017), cert. granted, No. 18-15, 2018 U.S.
LEXIS 7219 (Dec. 10, 2018). But this much is certain: when an agency makes no attempt over the
course of decades to define specific terms, the usual interplay between court and agency breaks
down. Rather than treating its regulations as closely held property, VA would do well to recognize
that this Court retains not only the authority to provide the final interpretation of its regulations,
but the obligation to do so. See 38 U.S.C. § 7261(a)(1); Perez v. Mortgage Bankers Ass'n, 135 S.
Ct. 1199, 1222-23 (2015) (Thomas, J., concurring). VA can either participate in this process or
not, but it cannot wish it away.
I agree, then, with my colleagues that Auer deference is not warranted here because at no
point did the Agency present an actual interpretation of "substantially gainful employment" that
had any bearing on its adjudication of Mr. Ray's case. When pressed by this Court to provide a
definition, VA eventually did so; specifically, the Secretary proposed the phrase to mean
"employment that produces income exceeding the amount established by the United States
Department of Commerce, Bureau of the Census, as the poverty threshold for one person." Sec's
Supp. Br. at 10. Notably, this definition is consistent with the standard set out in the M21-1, which
binds line adjudicators and which the Secretary cited in his supplemental brief. Id. at 11 n.3; see
M21-1, pt. IV, sbpt. ii, ch. 2, sec. F.1.c.
The majority rightfully explains why we cannot confer Auer deference to this proposed
definition, but it never explains why the definition is unpersuasive even under the more demanding
(to an agency) persuasiveness standard spelled out in Skidmore v. Swift & Co., 323 U.S. 134, 140
(1944). For my part, I find this definition persuasive as it represents a natural reading of
"substantially gainful employment" and coheres with the overall structure and context of § 4.16.
This definition, furthermore, has distinct benefits: it is clear, it complements the definition of
"marginal employment" set out in § 4.16(a), and it is consistent with VA's historical practice of
adjudicating TDIU. As a clearly identifiable marker, it puts to rest any confusion about what
"substantially gainful employment" might mean for an individual factfinder.
23
Rejecting VA's narrow definition, the Court takes a broader approach and attempts to
reduce to a single definition what it means to be "unable to secure or follow a substantially gainful
occupation." In so doing, it looks "to comparable Social Security regulations" for "appropriate
guidance," ante at 16, and then proceeds to list a set of mandatory factors that "attention must be
given to." Id. These factors are taken directly from Social Security regulations, particularly from
20 C.F.R. §§ 404.1510, 404.1560-404.1569a, and 404.1572.
But there are a few problems with this approach. Outside of the term "substantially
gainful," nothing in that phrase is actually ambiguous—it's merely open-ended. As a matter of
plain language, to be "unable to secure or follow" an "occupation" or "employment" means only
that a veteran is not able to work—a wholly straightforward matter for a factfinder, who need
merely find evidence that the veteran is not working. Rather than resolving a textual ambiguity,
the Court proposes a definition designed to account for all the possible reasons why a veteran might
not be able to work. This approach might fit better if we focused on the phrase "as a result of" in
4.16(a) or "by reason of" in 4.16(b), which is the proximate cause language linking the veteran's
disability to the inability to work. But even focusing on the proximate cause language is
problematic because that language does not present an interpretive ambiguity; it merely states a
required showing that the disability—and not other factors—be the discrete cause of the veteran's
inability to get or keep a job. The proximate cause requirement may be open-ended in that it
accounts for any number of factors, but it does not comprise a textual ambiguity.
Which gets to the deeper concern I have about our proposed definition: it seems out of
proportion to any interpretive problem presented by the text of the regulation. In its scope, it rings
more legislative than judicial in nature as it sweeps beyond the Court's limited, but essential, role
of interpreting laws written by other branches of government and instead directs the substantive
content of the regulation itself. Before our ruling, the Board faced an open-ended regulation
adjudicating TDIU; now it must consider the same regulation in light of veteran's ability to do
"heavy" or "very heavy" work, "get along with coworkers," "adapt to change," and so forth. Ante
at 17.
The sweeping nature of our definition might fit better if we held the current regime of
TDIU adjudication to be arbitrary as a result of a lack of meaningful standards, but that isn't the
case. Broad statutes or regulations sometimes require a court to interpret and reduce an open-ended
provision into a framework that allows for consistent adjudication. But as far as I can tell, while
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the Court has repeatedly chided VA for leaving material terms undefined, it has never claimed that
TDIU adjudications under § 4.16 are standard-less or arbitrary. While open-ended, the framework
contains a set of straightforward elements: TDIU is warranted when a veteran is "unable to secure
or follow a substantially gainful occupation as a result of service-connected disabilities." 38 C.F.R.
§ 4.16(a). Thus, a TDIU claimant must show that he or she is (1) unable to secure or follow, (2) a
substantially gainful occupation or employment, (3) as a result of, (4) service-connected
disabilities (or disability). Pederson v. McDonald, 27 Vet. App. 276, 286 (2015) (en banc).
Basically, TDIU amounts to a showing of whether a veteran's service-connected disabilities, and
not other factors, render the veteran unable to work. Id.
Notably, many of the factors mandated by the Court are already presumably captured by
the open-ended inquiry that VA regulations and our caselaw already impose on the Board—namely
to address all relevant matters raised in a veteran's case. The difference, I believe, is that under the
plain language of § 4.16, adjudicators must account for how a disability affects a veteran's ability
to work based on the evidence of record rather than a court-imposed set of factors. To reduce all
conceivably relevant factors into a comprehensive, catch-all, definition effectively recasts the
substance of the regulation into a creation of this Court; it converts an otherwise open-ended but
straightforward inquiry of whether a veteran's disability is the proximate cause of his or her
inability to work into something akin to a multi-point inspection evaluating a variety of factors
whose relevance to any case is uncertain.
I respectfully decline to join the section of Court's opinion defining "substantially gainful
employment" as I believe that it goes beyond interpreting the text of a regulation drafted by a
separate branch of government and instead grafts on substantive factors that do not derive from
the regulation itself. To me, this falls closer to an exercise of legislative than judicial authority.
Because courts possess no such legislative authority, we cannot impose on agencies our own
notions of what laws and procedures we deem best. See Vermont Yankee Nuclear Power Corp. v.
NRDC, Inc., 435 U.S. 519, 549 (1978).
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