Scott v. McDonald

United States Court of Appeals
for the Federal Circuit
______________________
CURTIS SCOTT,
Claimant-Appellant
v.
ROBERT A. MCDONALD, SECRETARY OF
VETERANS AFFAIRS,
Respondent-Appellee
______________________
2014-7095
______________________
Appeal from the United States Court of Appeals for
Veterans Claims in No. 12-1972, Chief Judge Bruce E.
Kasold.
______________________
Decided: June 18, 2015
______________________
JENNIFER LIBRACH NALL, Baker Botts, LLP, Austin,
TX, argued for claimant-appellant. Also represented by
CHRISTOPHER GRANAGHAN, DAVID B. WEAVER, JEFFREY S.
GRITTON, Vinson & Elkins LLP, Austin, TX.
WILLIAM JAMES GRIMALDI, Commercial Litigation
Branch, Civil Division, United States Department of
Justice, Washington, DC, argued for respondent-appellee.
Also represented by JOYCE R. BRANDA, ROBERT E.
2 SCOTT v. MCDONALD
KIRSCHMAN, JR., CLAUDIA BURKE; Y. KEN LEE, AMANDA R.
BLACKMON, Office of General Counsel, United States
Department of Veterans Affairs, Washington, DC.
______________________
Before DYK, MAYER, and REYNA, Circuit Judges.
DYK, Circuit Judge.
Curtis Scott appeals from the decision of the United
States Court of Appeals for Veterans Claims (“Veterans
Court”) denying his claim for service connection for hepa-
titis C. We affirm.
BACKGROUND
Scott served on active duty for training in the United
States Marine Corps Reserve from January to July 1972.
On November 18, 1999, Scott tested positive for hepatitis
C. He applied for disability benefits on February 4, 2005,
alleging that he contracted hepatitis C in service. His
primary theory was that he was infected with hepatitis C
when he received air-gun inoculations during his military
service. The Department of Veterans Affairs (“VA”)
regional office (“RO”) denied Scott’s claim for service
connection on September 20, 2005.
On April 24, 2006, Scott appealed to the Board of Vet-
erans’ Appeals (“Board”) and requested an evidentiary
hearing before the Board. See 38 C.F.R. § 20.700(a) (right
to a hearing). Scott was incarcerated at the time of his
appeal to the Board. On December 6, 2007, the RO sent a
letter to Scott, “acknowledg[ing] [his] request for a Video
Conference hearing before the Board,” and “request[ing]
that [Scott] provide us with the date [Scott is] expected to
be released from [his] incarceration so we may schedule
[his] video conference hearing accordingly.” J.A. 575.
Scott responded to the RO on December 13, 2007, reiterat-
ing his request for a hearing and informing the Board
SCOTT v. MCDONALD 3
that his “minimum expiration parole date for release is
January 13, 2017,” and his “next parole review date is
scheduled for March of 2009.” J.A. 573. On January 14,
2008, the RO notified Scott that his hearing had been
scheduled for March 14, 2008, in Houston, Texas. Scott,
who was still incarcerated on the scheduled hearing date,
failed to appear for the hearing.
On March 23, 2008, Scott requested a rescheduled
hearing because he “could not appear for [his] hearing
because of [his] incarceration.” J.A. 826. The Board
denied Scott’s request, finding that Scott had “not shown
good cause for failing to appear for [his] hearing,” but
made no mention of Scott’s incarceration. J.A. 683. The
Board subsequently denied Scott’s claim for service con-
nection, noting that Scott “failed to report for his sched-
uled hearing in March 2008” and that the Board denied
his request to reschedule it. J.A. 677.
On appeal to the Veterans Court, Scott, who by this
time was represented by counsel, did not raise the hear-
ing issue. The Veterans Court vacated and remanded to
the Board due to an inadequate medical examination,
without mentioning the hearing issue. In remanding to
the RO, the Board noted the hearing issue but that Scott
“has not renewed his request” for a hearing. J.A. 221. On
November 18, 2011, the RO continued the service connec-
tion denial without mentioning the hearing issue. Scott
again appealed to the Board via a re-certification of
appeal form which checked “YES” in answer to “WAS
HEARING REQUESTED?”, but Scott did not raise the
hearing issue with the Board. J.A. 183. The Board
affirmed, again noting that Scott “has not renewed his
request” for a hearing. J.A. 16.
On appeal to the Veterans Court, on July 26, 2013,
Scott raised the hearing issue for the first time since his
March 23, 2008, request for a rescheduled hearing. The
4 SCOTT v. MCDONALD
Veterans Court affirmed, holding that Scott “did not raise
this [hearing] issue in either proceeding,” referring to
Scott’s prior appeal to the Veterans Court and his current
appeal before the Board. J.A. 1–2. The Veterans Court
held that raising the hearing issue at this late stage
“amounts to an effort to engage in undesirable piecemeal
litigation, and [Scott] provides no compelling basis to
permit it.” J.A. 2. Scott appeals. We have jurisdiction
pursuant to 38 U.S.C. § 7292(a). We review legal deter-
minations of the Veterans Court de novo. Moffitt v.
McDonald, 776 F.3d 1359, 1364 (Fed. Cir. 2015).
DISCUSSION
I
The Supreme Court has recognized the importance of
issue exhaustion with respect to administrative tribunals.
In United States v. L. A. Trucker Truck Lines, Inc., 344
U.S. 33 (1952), the Court held that “orderly procedure and
good administration require that objections to the pro-
ceedings of an administrative agency be made while [the
agency] has opportunity for correction in order to raise
issues reviewable by the courts,” such that “as a general
rule . . . courts should not topple over administrative
decisions unless the administrative body not only has
erred but has erred against objection made at the time
appropriate under its practice.” Id. at 37. 1 But Scott
1 See also Hormel v. Helvering, 312 U.S. 552, 556
(1941) (“Ordinarily an appellate court does not give con-
sideration to issues not raised below. . . . And the basic
reasons which support this general principle applicable to
trial courts make it equally desirable that parties should
have an opportunity to offer evidence on the general
issues involved in the less formal proceedings before
SCOTT v. MCDONALD 5
argues that the Supreme Court’s decision in Sims v. Apfel,
530 U.S. 103 (2000), precludes application of the issue
exhaustion doctrine in the context of veterans benefits
because proceedings before the VA are non-adversarial in
nature.
We addressed this issue even before the Supreme
Court’s decision in Sims, in Maggitt v. West, 202 F.3d
1370 (Fed. Cir. 2000). We articulated a case-by-case
balancing test for issue exhaustion in the VA system:
“The test is whether the interests of the individual weigh
heavily against the institutional interests the doctrine
exists to serve.” Id. at 1377 (citing McCarthy v. Madigan,
503 U.S. 140, 146 (1992)). We remanded to the Veterans
Court to determine, inter alia, “whether invocation of the
exhaustion doctrine [was] appropriate” with respect to the
veteran’s request to reopen his claim for service connec-
tion based on constitutional and statutory arguments that
he had not raised before the Board. Id. at 1378–79.
Thereafter, in Sims, the Supreme Court addressed is-
sue exhaustion in the context of Social Security Admin-
istration (“SSA”) benefits. The Court noted that “SSA
regulations do not require issue exhaustion.” 530 U.S. at
108. When that is so, “the desirability of a court imposing
a requirement of issue exhaustion depends on the degree
to which the analogy to normal adversarial litigation
applies in a particular administrative proceeding.” Id. at
109. A plurality of the Court concluded that “[t]he differ-
ences between courts and agencies are nowhere more
pronounced than in Social Security proceedings,” such
that “a judicially created issue-exhaustion requirement is
inappropriate.” Id. at 110, 112. But the majority also
recognized that “it is common for an agency’s regulations
administrative agencies entrusted with the responsibility
of fact finding.”).
6 SCOTT v. MCDONALD
to require issue exhaustion in administrative appeals.
And when regulations do so, courts reviewing agency
action regularly ensure against the bypassing of that
requirement by refusing to consider unexhausted issues.”
Id. at 108 (citations omitted). Justice O’Connor’s concur-
rence also made clear that Sims does not apply, and
exhaustion is required, where applicable statutes or
regulations impose an exhaustion requirement. See id. at
113 (O’Connor, J., concurring). Thus, in light of Sims, we
must determine the extent to which statutes or agency
regulations require issue exhaustion in the veterans
benefits context.
In previous veterans’ cases we have considered issue
exhaustion in three specific contexts and have held that
the statutes and regulations require issue exhaustion in
appropriate circumstances. First, in an appeal from the
RO to the Board, 38 C.F.R. § 20.202 specifically requires
that the errors by the RO be identified either by stating
that all issues in the statements of the case are being
appealed or by specifically identifying the issues being
appealed. 2 See Robinson v. Shinseki, 557 F.3d 1355,
2 Section 20.202 provides, in relevant part:
If the Statement of the Case and any prior Sup-
plemental Statements of the Case addressed sev-
eral issues, the Substantive Appeal must either
indicate that the appeal is being perfected as to all
of those issues or must specifically identify the is-
sues appealed. The Substantive Appeal should
set out specific arguments relating to errors of fact
or law made by the agency of original jurisdiction
in reaching the determination, or determinations,
being appealed. To the extent feasible, the argu-
ment should be related to specific items in the
Statement of the Case and any prior Supple-
SCOTT v. MCDONALD 7
1361 (Fed. Cir. 2009) (“We . . . do not suggest that under
the regulations the veteran is entirely relieved of his or
her obligation to raise issues in the first instance before
the VA where the record is being made. The regulations
quite clearly impose such an obligation even in direct
appeals . . . .” (citing 38 C.F.R. § 20.202)).
Second, where the alleged error was made by the
Board, we have held that the statute, 38 U.S.C. § 7252(a),
requires issue exhaustion before the Board in appropriate
circumstances. 3 See Ledford v. West, 136 F.3d 776, 779–
80 (Fed. Cir. 1998) (Under § 7252, “the [Veterans C]ourt’s
jurisdiction is premised on and defined by the Board’s
decision concerning the matter being appealed,” and
“while the doctrine of exhaustion of administrative reme-
dies is not jurisdictional,” exhaustion is normally re-
quired.). Thereafter, in Maggitt, we held that exhaustion
mental Statements of the Case. The Board will
construe such arguments in a liberal manner for
purposes of determining whether they raise issues
on appeal, but the Board may dismiss any appeal
which fails to allege specific error of fact or law in
the determination, or determinations, being ap-
pealed.
38 C.F.R. § 20.202; see also 38 U.S.C. § 7105(d)(3) (“The
appeal [to the Board] should set out specific allegations of
error of fact or law, such allegations related to specific
items in the statement of the case. The benefits sought on
appeal must be clearly identified.”).
3 Section 7252(a) provides: “The Court of Appeals
for Veterans Claims shall have exclusive jurisdiction to
review decisions of the Board of Veterans’ Appeals. . . .
The Court shall have power to affirm, modify, or reverse a
decision of the Board or to remand the matter, as appro-
priate.” 38 U.S.C. § 7252(a).
8 SCOTT v. MCDONALD
was not required in all cases, distinguished Ledford, and
concluded that “[n]othing in the statutory scheme provid-
ing benefits for veterans mandates a jurisdictional re-
quirement of exhaustion of remedies which would require
the Veterans Court to disregard every legal argument not
previously made before the Board.” See 202 F.3d at 1376–
77. As noted above, “the test is whether the interests of
the individual weigh heavily against the institutional
interests the doctrine exists to serve.” Id. at 1377 (citing
McCarthy, 503 U.S. at 146).
In Bernklau v. Principi, 291 F.3d 795 (Fed. Cir. 2002),
decided after Sims, we upheld the Veterans Court’s
application of issue exhaustion to arguments that the
veteran had failed to raise before the Board, holding that
Maggitt did not require an explicit balancing of interests
in the individual case. See id. at 799, 801–02. We held
that new arguments for an earlier effective date based on
past events allegedly supporting an informal claim for
individual unemployability “TDIU” were properly rejected
as not raised before the Board. See id. at 800–02. 4
4 Scott relies on cases from other circuits which
held that issue exhaustion did not apply to various agency
proceedings. But none of these cases involved a statute or
regulation that specifically imposed an issue exhaustion
requirement. See Alaska Survival v. Surface Transp. Bd.,
705 F.3d 1073, 1081 (9th Cir. 2013) (declining to apply
issue exhaustion to an appeal from the Surface Transpor-
tation Board because the “administrative process lacks an
adversarial component” with no mention of a statute or
regulation requiring otherwise); Vaught v. Scottsdale
Healthcare Corp. Health Plan, 546 F.3d 620, 630 (9th Cir.
2008) (“No ERISA statute precludes courts from hearing
objections not previously raised . . . nor does any ERISA
statute or regulation require claimants to identify all
SCOTT v. MCDONALD 9
Third, in an appeal from the Veterans Court to this
court we have held that 38 U.S.C. § 7292(a) requires issue
exhaustion at the Veterans Court level. 5 In Belcher v.
West, 214 F.3d 1335 (Fed. Cir. 2000), we explained that
“38 U.S.C. § 7292(a) speaks directly to the requirement of
issue exhaustion.” Id. at 1337 (citing Sims, 530 U.S. at
106–09). In Belcher, the veteran raised an argument for
the first time on appeal to this court that the Veterans
Court failed to follow a VA regulation relating to service
connection. Id. at 1336. We declined to consider the
argument, holding that we lacked jurisdiction to hear it
because it was not addressed by or presented to the
Veterans Court. Id. at 1337.
The statutes and regulations thus impose a require-
ment of issue exhaustion in appropriate circumstances.
While the requirement of exhaustion is relatively strict in
issues they wish to have considered on appeal.”); Coalition
for Gov’t Procurement v. Fed. Prison Indus., Inc., 365 F.3d
435, 463 (6th Cir. 2004) (“In considering whether the
district court properly imposed an issue exhaustion re-
quirement in the case sub judice, we initially observe that
such a requirement exists in neither [the agency’s] organ-
ic statute nor its regulations.”).
5 Section 7292(a) provides, in relevant part:
After a decision of the [Veterans Court] is entered
in a case, any party to the case may obtain a re-
view of the decision with respect to the validity of
a decision of the Court on a rule of law or of any
statute or regulation . . . or any interpretation
thereof (other than a determination as to a factual
matter) that was relied on by the Court in making
the decision.
38 U.S.C. § 7292(a).
10 SCOTT v. MCDONALD
proceedings before the Veterans Court, we have concluded
that the non-adversarial nature of proceedings before the
VA mandates a less strict requirement, as we now dis-
cuss.
II
In view of the non-adversarial nature of proceedings
before the Board, it is appropriate in the first and second
situations listed above that the Board and the Veterans
Court give a liberal construction to arguments made by
the veteran before the Board, as is specifically required by
§ 20.202 of the regulations in the case of appeals from the
RO to the Board. “In various decisions we have made
clear that the Board has a special obligation to read pro se
filings liberally.” Robinson, 557 F.3d at 1358–59. In
Robinson, we held that this obligation extends to cases in
which the veteran is represented by counsel. See 557 F.3d
at 1359–60. This obligation extends to all proceedings
before the Board. It follows from the test articulated in
Maggitt. See 202 F.3d at 1377.
Our prior cases have illuminated what is required by
a liberal construction. In Roberson v. Principi, 251 F.3d
1378 (Fed. Cir. 2001), the Veterans Court affirmed the
Board’s service-connection denial because the veteran had
failed to allege TDIU. Id. at 1382. We held, in the con-
text of clear and unmistakable error (“CUE”) claims, that
the VA must “fully and sympathetically develop the
veteran’s claim to its optimum before deciding it on the
merits.” Id. at 1384 (quoting Hodge v. West, 155 F.3d
1356, 1362 (Fed. Cir. 1998)). Thus, “[o]nce a veteran
submits evidence of a medical disability and makes a
claim for the highest rating possible, and additionally
submits evidence of unemployability, the ‘identify the
benefit sought’ requirement of 38 C.F.R. § 3.155(a) is met
and the VA must consider TDIU.” Id.
SCOTT v. MCDONALD 11
In Comer v. Peake, 552 F.3d 1362 (Fed. Cir. 2009), we
held that where the veteran made a claim for service
connection and record evidence supported total disability
based on TDIU benefits, the Board was required to con-
sider that evidence as a TDIU claim even though the
veteran had not specifically raised a TDIU claim. See id.
at 1366–69. Comer held that the requirement to liberally
construe a veteran’s arguments extended to arguments
that were “not explicitly raised” before the Board. Id. at
1366.
Similarly, in Robinson, we held that where the veter-
an made a claim for service connection and record evi-
dence supported secondary service connection, the Board
was required to consider that evidence as a claim for
secondary service connection even though the veteran had
not specifically raised secondary service connection. See
Robinson, 557 F.3d at 1361–62; see also Rivera v.
Shinseki, 654 F.3d 1377, 1382 (Fed. Cir. 2011) (“In light of
the Board’s obligations to read veterans’ submissions
liberally and to consider the full context within which
those submissions are made, we conclude that section
7105(d)(3) does not impose such a[n explicit statement]
requirement, at least in the context of a case involving the
single factual question of the sufficiency of the veteran’s
evidence to reopen a claim.”).
Roberson, Robinson, and Comer thus require the Vet-
erans Court to look at all of the evidence in the record to
determine whether it supports related claims for service-
connected disability even though the specific claim was
not raised by the veteran. They also require that veter-
ans’ procedural arguments be construed liberally, but
those cases do not go so far as to require the Veterans
Court to consider procedural objections that were not
raised, even under a liberal construction of the pleadings.
12 SCOTT v. MCDONALD
There is a significant difference between considering
closely-related theories and evidence that could support a
veteran’s claim for disability benefits and considering
procedural issues that are collateral to the merits. As to
the former, the veteran’s interest is always served by
examining the record for evidence that would support
closely related claims that were not specifically raised. As
to procedural issues, that is not always the case. A veter-
an’s interest may be better served by prompt resolution of
his claims rather than by further remands to cure proce-
dural errors that, at the end of the day, may be irrelevant
to final resolution and may indeed merely delay resolu-
tion. Under such circumstances, the failure to raise an
issue may as easily reflect a deliberate decision to forgo
the issue as an oversight. Having initially failed to raise
the procedural issue, the veteran should not be able to
resurrect it months or even years later when, based on
new circumstances, the veteran decides that raising the
issue is now advantageous. For this reason, absent
extraordinary circumstances not apparent here, we think
it is appropriate for the Board and the Veterans Court to
address only those procedural arguments specifically
raised by the veteran, though at the same time giving the
veteran’s pleadings a liberal construction.
In short, we hold that the Board’s obligation to read
filings in a liberal manner does not require the Board or
the Veterans Court to search the record and address
procedural arguments when the veteran fails to raise
them before the Board. Under the balancing test articu-
lated in Maggitt, the VA’s institutional interests in ad-
dressing the hearing issue early in the case outweigh
Scott’s interests in the Veterans Court’s adjudication of
the issue.
A review of Scott’s pleadings to the Board confirms
that Scott did not raise the hearing issue in his current
appeal to the Board. The regulations do not require that
SCOTT v. MCDONALD 13
the Board or the Veterans Court address the veteran’s
argument that the Board erred in not providing him with
a hearing.
AFFIRMED
COSTS
No costs.