Karen Gordon v. James B. Peake

UNITED STATES COURT OF APPEALS FOR VETERANS CLAIMS
NO . 03-0181 (E)
KAREN GORDON , APPELLANT ,
V.
JAMES B. PEAKE , M.D.
SECRETARY OF VETERANS AFFAIRS, APPELLEE.
BETH GORDON SAMARGIN , INTERVENOR.
On Appeal from the Board of Veterans' Appeals
(Decided November 21, 2008)
Glenn R. Bergmann, of Bethesda, Maryland, for the appellant.
Tim S. McClain, General Counsel; R. Randall Campbell, Assistant General Counsel; Edward
V. Cassidy, Jr., Deputy Assistant General Counsel; and Christine D. Senseman, all of Washington,
D.C., for the appellee.
Before KASOLD, LANCE, and SCHOELEN, Judges.
SCHOELEN, Judge, filed the opinion of the Court. LANCE, Judge, filed a dissenting
opinion.
SCHOELEN, Judge: This case is before the Court on the appellant's September 5, 2007,
application for an award of attorney fees and expenses pursuant to the Equal Access to Justice Act
(EAJA), 28 U.S.C. § 2412(d), for $11,945.79 in attorney fees and $103.43 in expenses for a total of
$12,049.22. For the reasons set forth below, the Court will grant in part the EAJA application.
I. BACKGROUND
In September 1943, veteran Edward E. Gordon purchased a $10,000 National Service Life
Insurance (NSLI) policy. Record (R.) at 17. The veteran died in August 1995. R. at 64. On
September 11, 1995, the intervenor, Beth Gordon Samargin, the veteran's daughter, filed a claim for
the proceeds of his NSLI policy on behalf of her minor children (Aline and Kristiana). R. at 63. On
October 13, 1995, appellant Karen Gordon, another one of the veteran's daughters, filed a claim
seeking a portion of the proceeds of the veteran's NSLI policy on behalf of her two children (Kelin
and Hunter). R. at 91-93. On October 20, 1995, the regional office (RO) and insurance center issued
an administrative decision that disallowed Ms. Gordon's claim. R. at 95. The RO determined that
the proceeds of the NSLI policy were payable to Aline and Kristiana in accordance with the veteran's
December 1992 beneficiary designation. Id. Ms. Gordon appealed the RO decision. R. at 406. In
January 1999, the Board granted Ms. Gordon's claim for equal shares on behalf of her sons.
R. at 172-79. Ms. Samargin appealed the January 1999 Board decision to this Court. R. at 180-82.
Ms. Gordon was not a party to the appeal. In February 2000, pursuant to a joint motion of the
parties, the Court remanded this appeal to the Board for consideration of Fagan v. West, 13 Vet.App.
48 (1999), which was issued subsequent to the January 1999 Board decision. R. at 192-96.
In January 2001, the Board issued a decision finding that Ms. Gordon's minor children were
not among the beneficiaries of the veteran's NSLI policy. R. at 214-21. In May 2001, Ms. Gordon,
through counsel, appealed that decision to the Court. Ms. Samargin was not a party to the appeal.
On June 28, 2001, the Secretary moved, unopposed, to remand the matter for consideration of the
applicability of the Veterans Claims Assistance Act of 2000 (VCAA), Pub. L. No. 106-475, 114 Stat.
2096, in accordance with this Court's decision in Holliday v. Principi, 14 Vet.App. 280 (2001).
R. at 237-41. On September 26, 2001, the Court granted the Secretary's motion. R. at 236.
On October 17, 2002, the Board issued the decision here on appeal. R. at 1-12. The Board
found that there was clear and convincing evidence of the veteran's intent to change his beneficiaries.
However, it concluded that there was no evidence that the veteran had performed an overt act
reasonably designed to effectuate his intent to change his beneficiary. R. at 11.
In its decision, the Board further concluded that VA had provided the appellant with
VCAA-compliant notice. On appeal to the Court, the appellant argued that VA failed to fulfill its
2
notice obligations under 38 U.S.C. § 5103(a). The Secretary countered that because an NSLI
beneficiary claimant is not a "claimant" within the meaning of 38 U.S.C. §§ 5100 and 5103(a), VA
did not have a duty to provide Ms. Gordon with any section 5103(a) notice. Alternatively, he argued
that the appellant was adequately notified of her rights under the VCAA and any notice error was
not prejudicial. The Court rejected the Secretary's argument and held that VA was obligated to
provide NSLI beneficiary claimants with section 5103(a) notice. Gordon v. Nicholson,
21 Vet.App. 270, 275-80 (2007). Additionally, the Court held that VA failed to provide the
appellant VCAA notice as to the information and evidence necessary to substantiate her claim, and
that this error was prejudicial. Id. at 280-83.
II. ANALYSIS
This Court has jurisdiction to award reasonable attorney fees and expenses pursuant to
28 U.S.C. § 2412(d)(2)(F). Here, the appellant's September 2007 EAJA application was filed within
the 30-day EAJA application period set forth in 28 U.S.C. § 2412(d)(1)(B). It also satisfies the
requisite EAJA "application-content specifications," because it contains the following: (1) An
allegation that the petitioner is a prevailing party; (2) a showing that he is a party eligible for an
EAJA award because his net worth does not exceed $2,000,000; (3) an allegation that the position
of the Secretary was not substantially justified; and (4) an itemized fee statement. See
28 U.S.C. § 2412(d)(1)(A), (1)(B), and (2)(B); Scarborough v. Nicholson, 541 U.S. 401 (2004).
A. Substantial Justification
Once an EAJA applicant alleges that the Secretary's position lacked substantial justification,
the burden shifts to the Secretary to show that the Government's position was substantially justified
at both the administrative and litigation stages of the matter. See Locher v. Brown, 9 Vet.App.
535, 537 (1996). The Court must determine whether the Government's position was "justified in
substance or in the main – that is, justified to a degree that could satisfy a reasonable person."
Pierce v. Underwood, 487 U.S. 552, 565 (1988). Thus, "a position can be justified even though it
is not correct," and should be considered substantially justified "if a reasonable person could think
it correct, that is, if it has a reasonable basis in law and fact." Id. at 566 n.2. In Stillwell v. Brown,
3
6 Vet.App. 291, 302 (1994), this Court announced a test for evaluating whether VA's position was
substantially justified in the administrative and judicial phases:
VA must demonstrate the reasonableness, in law and fact, of the position of the VA
in a matter before the Court, and of the action or failure to act by the VA in a matter
before the VA, based upon the totality of the circumstances, including merits,
conduct, reasons given, and consistency with judicial precedent and VA policy with
respect to such position, and action or failure to act, as reflected in the record on
appeal and the filings of the parties before the Court.
Id.There are a number of factors that have a bearing upon the reasonableness of the VA's
administrative and litigation positions. One such factor is the evolution of VA benefits law, which
has often resulted in new, different, or more stringent requirements for adjudication. Stillwell,
6 Vet.App. at 302; see also Bowey v. West, 218 F.3d 1373, 1376-77 (Fed. Cir. 2000) (holding that
substantial justification shall be determined on the basis of the law in existence at the time that the
Government adopted its position); Bonny v. Principi, 18 Vet.App. 218, 221 (2004) (stating that "in
judging reasonableness during the administrative proceedings, the Court looks to the relevant,
determinative circumstances, including the state of the law at the time of the Board decision");
Moore v. Gober, 10 Vet.App. 436, 440 (1997) (holding the same).
Cases before this Court may involve issues of first impression containing good faith
arguments made by the Government that are eventually rejected by the Court. Stillwell, 6 Vet.App.
at 302-03; Carpenter v. West, 12 Vet.App. 316, 320 (1999). Arguments presented in a case of first
impression are more likely to be considered substantially justified than those where the Court
determines that the Secretary ignored existing law. See Johnson (Leamon) v. Principi, 17 Vet.App.
436 (2004) (holding that Secretary's position at the administrative level in promulgating and applying
a regulation was substantially justified); Carpenter, supra (holding that it was not unreasonable for
the Secretary not to have foreseen Court's expansion of 38 U.S.C. § 1318 caselaw). However, "[a]
lack of judicial precedent adverse to the government's position does not preclude a fee under the
EAJA." Felton v. Brown, 7 Vet.App. 276, 281 (1994) (quoting Ramon-Sepulveda v. INS, 863 F.2d
1458, 1459 (9th Cir.1988)).
4
In cases of first impression the Court must determine whether the issue presented "close"
questions, and whether the Secretary sought an unreasonable interpretation or resolution of the
matter. See Felton, 7 Vet.App. at 282 (citing Marcus v. Shalala, 17 F.3d 1033, 1038 (7th Cir. 1994)
(finding that Government's contention that the questions involved were "close" was controverted by
the U.S. Supreme Court's statements that the Government policies were "manifestly contrary to
statute" and "made little sense" and by the "strong disapproval" of relevant regulations by several
circuits of the U.S. courts of appeals)). Other factors to be considered include whether "the statutory
scheme to be considered is complex, or . . . the analysis required, even for a straightforward statute,
is 'exceptional.'" Golliday v. Brown, 7 Vet.App. 249, 255 (1994) (citing Stillwell, 6 Vet. App. at
303); see also Pottgieser v. Kizer, 906 F.2d 1319, 1324 (9th Cir. 1990) (same).
Here, as to the Secretary's administrative position, the Board found that the Secretary sent
the appellant notice that satisfied the VCAA notice requirements. R. at 6. The Board concluded that
VA had informed the appellant "which information and evidence that the appellant was to provide
to VA and which information and evidence that the VA would attempt to obtain on behalf of the
appellant." Id. The Court held that the Board erred when it relied on a variety of postdecisional
documents to support its conclusion that VA had provided the appellant with VCAA-compliant
notice. Gordon, 21 Vet.App. at 282. The Secretary argues that his administrative position was
reasonable because "the BVA was following the law and deemed that Appellant had adequate notice
and opportunities to participate effectively in her appeal." Secretary's Response at 16. In this vein,
the Secretary notes that the decision of the U.S. Court of Appeals for the Federal Circuit in
Mayfield v. Nicholson, 444 F.3d 1328 (Fed. Cir. 2006), which held that the Board could not rely on
postdecisional documents to find VCAA- compliant notice, had not yet been issued when the Board
issued the decision in this case.
Although Mayfield was decided after the Board decision in this case, the Court agrees with
the appellant that the Secretary reads the Court's opinion in this case too narrowly. See Appellant's
Reply at 5 (arguing that "[b]ecause the Court's remand was not based solely on the intervening
decision in Mayfield, but, rather, on the Secretary's failure to provide adequate notice, Mayfield does
not render the Board's position substantially justified"). In addition to holding that the Board erred
in relying on postdecisional documents to find VCAA-compliant notice, the Court also held that
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"Ms. Gordon never received any notice directed to satisfying the requirements of section 5103(a)."
Id. (emphasis added). The Court further held that "nothing in the record relied upon by the Board
indicates that Ms. Gordon was ever adequately informed of what evidence was necessary to
substantiate her NSLI beneficiary claim." Appellant's Reply Br. at 5. Thus, contrary to the
Secretary's argument, the Court's decision in this case was not based solely on the Board's unlawful
reliance on postdecisional documents. Given the totality of circumstances, the Court finds that the
Secretary's administrative position was not reasonable in law or fact.
The Court also finds that the Secretary's litigation position was not substantially justified.
The Secretary argues that his litigation position was substantially justified because this case involved
an issue of first impression. He states that the Court should find his litigation position substantially
justified "[g]iven the sophisticated nature of the issues involved, the legitimate differences of opinion
on the legal issues, and the evolving case law." Secretary's Reply at 10-11.
On appeal to the Court, the Secretary argued that because the VCAA does not apply to NSLI
claims, VA did not have a duty to provide Ms. Gordon with any section 5103(a) notice. This
position is inconsistent with the Board's October 2002 decision here on appeal and the position that
the Secretary took in 2001 when he sought a remand of this case so that the Board could consider
the application of the VCAA to this case. The crux of the Secretary's argument in his 2005 brief was
that a person claiming to be a beneficiary under an NSLI policy is not a "claimant" within the
meaning of section 5100, because the proceeds of the NSLI policy are not "benefits" within the
meaning of the statute and instead are merely proceeds, resulting from a contract between the veteran
and VA. Gordon, 21 Vet.App. at 277. The Secretary attempted to make a distinction between
veterans who apply for NSLI policies and beneficiaries who seek proceeds under the policies. Id.
The Court rejected the Secretary's argument, concluding that the Secretary's interpretation
violated the plain meaning of the statute. The Court held that the plain language in section 5100
broadly defines "claimant" as an "individual applying for, or submitting a claim for, any benefit
under the laws administered by the Secretary." Id. at 277-78. The Court found that the "statute
clearly applies to any benefit that a claimant seeks and makes no distinction that would exclude
certain types of 'benefits.'" Id. at 278. The Court refused "to draw the distinction urged by the
Secretary," finding that such a distinction had "no basis in the statutory language of section 5103(a)."
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Id. Accordingly, the Court held that "while there is a difference in the nature of the 'benefits' flowing
to the veteran and his beneficiary, . . . both [the] veteran and beneficiary are 'claimants' seeking
'benefits' within the meaning of section 5100. " Id.
The Court also found that the Secretary's argument ignored the plain language of section
5103(b). Id. at 279-80. The Court held that if the Secretary were correct, that section 5103(a) notice
did not apply to NSLI beneficiary claims, there would be no need for the section 5103(b)(2)
exception.1 Gordon, supra. The Court held that "[a]fter examining the plain meaning of sections
5100, and 5103, it is clear that Congress intended that a 'claimant for VCAA purposes includes an
individual seeking the proceeds of a deceased veteran's NSLI policy." Gordon, 21 Vet.App. at 280.
The Court also observed that its merits decision was consistent with other decisions issued
by the Court regarding the VCAA and the proper construction of the word "claimant" as used in the
statute. For example, in Livesay v. Principi, 15 Vet.App. 165, 170 (en banc),2 the Court recognized
that a "claimant" within the meaning of section 5100 includes a person applying for or seeking
benefits under part II ("GENERAL BENEFITS") or III ("READJUSTED AND RELATED
BENEFITS") of title 38. Gordon, 21 Vet.App. at 278; see also Lueras v.Principi, 18 Vet.App.
435, 439 (2004) (holding VCAA does not apply to claims for waiver of overpayment of pension
benefits under chapter 53 because an applicant for waiver of overpayment is not seeking benefits
under chapter 51; rather the applicant is requesting a waiver of recovery of indebtedness). The Court
noted that the NSLI benefit program is located in part II ("GENERAL BENEFITS") of title 38. Id.Thus, we concluded that "when viewed within the context of title 38, NSLI-beneficiary claimants
are 'claimants' within the meaning of section 5100." Id.The Court is mindful that there was a dissent in the underlying merits decision. See Gordon,
21 Vet.App. at 283-90 (Lance, J., dissenting). However, the Court concludes that this is not a
1
Section 5103(b)(2) provides that the one-year time limit within which a claimant has to
provide evidence to the Secretary after section 5103(a) notice is provided does not apply to
"government insurance claims."
2
The Court notes that Livesay was decided by this Court prior to the Court's 2001 remand
to the Board for the purpose of having the Court consider the effect of the VCAA on the appellant's
claim.
7
dispositive factor in the Court's consideration of whether the Secretary's litigation position was
substantially justified. See Ozer v. Principi, 16 Vet.App. 475, 479 (2002). The Court concludes that
the statutory question involved was not a complex or close one, or that the statutory provisions were
confusing or in need of substantial interpretation. Given the plain meaning and clarity of the
statutory provision in question, as stated by the Court in its underlying merits opinion, and the
Court's rejection of the Secretary's argument as contrary to the plain meaning of the applicable
statutory provisions, the Court concludes that, based on the totality of circumstances, the Secretary's
litigation position that VA did not have duty to provide Ms. Gordon with any section 5103(a) notice
did not have a "reasonable basis in law and fact" and was not substantially justified.
The Secretary also argued that the appellant was adequately notified of her rights under the
VCAA and any notice error was not prejudicial because she had actual knowledge of the information
or evidence that she needed to submit in support of her claim. The Secretary's litigation position on
the adequacy of the VCAA notice is identical to its administrative position that the Court has held
was not substantially justified. For the reasons discussed earlier in this decision, the Court finds that
the Secretary's litigation position has no reasonable basis in fact or law and is therefore not
substantially justified. With regard to the issue of prejudicial error, the Court in its merits decision
found that there was no evidence in the record to support the Secretary's argument that the appellant
had actual knowledge of the evidence and information to submit in support of her claim. The Court
finds that there was no reasonable basis in fact or law to support the Secretary's argument that the
appellant was not prejudiced by the VA's failure to provide her with section 5103(a) notice.
B. Reasonableness of Fee
Although the Secretary has not disputed other aspects of Ms. Gordon's EAJA application,
the Court nevertheless may only award reasonable fees and expenses. 28 U.S.C. § 2412(d);
Ussery v. Brown, 10 Vet.App. 51, 53 (1997) ("Once it is determined that a claimant is entitled to an
EAJA award, the Court still must determine what is a 'reasonable' fee."); see also
McDonald v. Nicholson, 21 Vet.App. 257, 263 (2007) ("In determining reasonableness, the Court
will consider whether the hours claimed are (1) unreasonable on their face; (2) otherwise
contraindicated by the factors for determining reasonableness itemized in Hensley v. Eckerhart, 461
U.S. 424, 430 n.3 (1983), or Ussery v. Brown, 10 Vet.App. 51, 53 (1997); or (3) persuasively
8
opposed by the Secretary."); Chesser v. West, 11 Vet.App. 497, 501 (1998) ("The Court has wide
discretion in the award of attorney fees under the EAJA."). Moreover, it is Ms. Gordon's burden to
demonstrate the reasonableness of her request for fees and other expenses. See Blum v. Stenson,
465 U.S. 886, 897 (1984) (stating that the appellant bears the burden of demonstrating that the
number of hours expended are reasonable).
In this instance, the $103.43 claimed for copying, faxing, postage, and phone calls is
reasonable on its face. However, the claimed 80.2 hours of attorney work is not. The initial brief
presents routine arguments as to the adequacy of notice and the Board's statement of reasons or
bases, yet 26.7 hours were spent in its preparation, without sufficient explanation for the more than
three days of work spent in its preparation. In contrast, the reply brief addresses a novel issue raised
by the Secretary, and it was researched and briefed in 13.2 hours. Similarly, it took about 7 hours
to research and prepare a supplemental brief in response to the Court's request for additional briefing
with regard to changes in the law. The time spent on the reply and supplemental briefs is plausibly
reasonable on its face. However, given the routine issues and arguments presented in the initial
brief, the 26.7 hours spent in its preparation appear excessive; 15 hours is plausibly reasonable to
research and prepare the initial brief, and this will be awarded. See McDonald and Chesser, both
supra; Baldridge v. Nicholson, 19 Vet.App. 227, 238 (2005) ("'[T]he adversary should not be
required to pay for more than the normal time the task should have required.'" (quoting
Ramos v. Lamm, 712 F.2d 546, 554 (10th Cir. 1983))); see also Hensley, 461 U.S. at 434 ("[A]n
applicant for EAJA fees must treat the government as though it were a private client by exercising
the same kind of billing judgment that an attorney would use in preparing a billing statement for a
private client.").
Additionally, the record on appeal in the underlying merits case is not large (255 pages), yet
11.7 hours were spent preparing and reviewing it and the underlying claims file, without any
explanation of the need for such time-consuming effort. Given the relatively small size of the record
and the routine nature of the issues, 6 hours to review and identify the issues is plausibly reasonable
and will be granted. See McDonald and Chesser, both supra; see also Hensley and Baldridge, both
supra. Further, 1.8 hours was spent preparing a response to a show cause order associated with the
failure of Ms. Gordon's prior attorney to comply with these Court's rules and will not be approved
9
because the response was due, at a minimum, to attorney representation issues. Cf. Hensley,
16 Vet.App. at 489-99 (rejecting reimbursement for time spent on motions for extended time due
to inefficient workload management); see also Chesser, surpa. The time spent on other matters
appears reasonable on its face and will be approved in full. Accordingly, of the $11,945.79 claimed,
$9,085.95 will be approved for 61 hours at the claimed rate of $148.95 per hour.
The dissent takes the position that EAJA fees may not be granted in this case, in part, because
he argues that "Congress intended that the federal government take a 'hands off' approach to the
insurance[,] business." However, he fails to note that NSLI is not private insurance, but was, in fact,
"set up by Congress [for the Government] to provide life insurance coverage to members of the
United States military forces." Young v. Derwinski, 1 Vet.App. 70, 71(1990); see also National
Service Life Insurance Act of 1940, 54 Stat. 1008. However, our dissenting colleague's main
contention is that because the legal dispute in the NSLI proceedings before VA is one between the
appellant and Ms. Sarmagin, the purported beneficiary under the policy, the Secretary's role in the
NSLI proceedings is merely that of a neutral stakeholder.3 For this reason, the dissent argues that
Ms. Gordon's appeal of the October 17, 2002, Board decision to this Court is not a civil action
"brought against the Government" within the meaning of the EAJA.4 See 28 U.S.C. § 2412(d)(1)(A).
The majority disagrees with the dissent that the Secretary is a "neutral stakeholder" in NSLI
proceedings. A stakeholder is a disinterested third party who holds money or property, the right to
3
In taking the position that EAJA does not apply to appeals to this Court involving NSLI
claims, the dissent does not take into account that NSLI proceedings do not necessarily involve
disputes between two parties over the proceeds of an NSLI policy. See, e.g., Lee v. West, 13
Vet.App. 388 (2000) (involving a claim for an earlier effective date for the payment of monthly
disability benefits under the total disability insurance provision of the appellant's NSLI policy);
Saunders v. Brown, 4 Vet.App. 320 (1993) (involving a challenge to the statutory requirement that
application for Service Disabled Veterans Insurance, a form of NSLI, be made within two years after
the date of award of service connection).
4
Our dissenting colleague argues that the EAJA would not be applicable to this case if the
underlying action had been brought in Federal district court pursuant to 38 U.S.C. § 1984 (2008).
Assuming arguendo this is correct, it nevertheless is inapposite. The issue is whether a prevailing
party may recover EAJA fees for actions brought before this Court, not what is or is not permitted
before other courts.
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which is disputed between two or more parties. BLACKS LAW DICTIONARY 823, 1412 (7th ed. 1999).
Such a stakeholder, who is uncertain as to which of the competing parties is entitled to the property,
may file an interpleader suit to have a Federal district court determine who should receive the
property and avoid multiple liability. See Fed. R. Civ. P. 22.
Unlike a "neutral stakeholder" who sits back and awaits a decision directing to whom it must
pay benefits, the Board is the decisionmaker, determining which of the parties is entitled to the
proceeds of the NSLI policy. See 38 U.S.C. § 38 C.F.R. § 20.101 (a) (14) (2008) (noting that the
Board has jurisdiction to decide matters arising under the National Service Life Insurance program);
38 C.F.R. § 8.30 (2008) (noting that the regulations governing appeals to the Board "will be followed
in connection with appeals to the Board of Veterans ['] Appeals involving questions pertaining to
the . . . disallowance of claims for insurance benefits."). Here, it is the Board's October 17, 2002,
decision regarding the appellant's NSLI beneficiary claim that is subject to judicial scrutiny. The
dissent cites In re Perry, 882 F.2d 534, 539-40 (1st Cir. 1989), for its language that EAJA is not
applicable in Occupational Safety and Health Review Commission (OSHRC) cases when the
OSHRC acts as a purely adjudicative entity. However, Ms. Gordon, like any other claimant who
comes before this Court, seeks review of an adverse Board decision denying her claim. She has
challenged a Board decision that she considers unreasonable in an effort to vindicate her rights to
the proceeds of Mr. Gordon's NSLI policy. As such, her EAJA application is permitted by the plain
language of the EAJA statute and is consistent with its purpose of removing the obstacle of attorney
fees that might otherwise prevent an individual from challenging unreasonable governmental action.
Comm'r, INS v. Jean, 496 U.S. 154, 163 (1990).5 There is no basis to exempt her appeal from the
EAJA.
5
The dissent also argues that EAJA should not apply to NSLI cases because they do not
involve "broad reaching public policy implications." Assuming arguendo that the EAJA is only
applicable in such cases, we note that the underlying precedential opinion resolves the issue of
congressionally imposed notice requirements for NSLI claims – itself a public policy issue.
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IV. CONCLUSION
In this matter, the Court holds that the Secretary was not substantially justified in his
arguments either at the administrative and litigation levels. On the basis of the foregoing analysis,
the petitioner's application for attorney fees and expenses is GRANTED IN PART, in the amount
of $9,189.38.
LANCE, Judge, dissenting: I must respectfully dissent from the majority's decision to award
EAJA fees in this matter. As an initial note, while the majority cites Ozer v. Principi, 16 Vet.App.
475, 479 (2002) to support its contention that "a dissent in the underlying merits decision" "is not
a dispositive factor in the Court's consideration of whether the Secretary's litigating position was
substantially justified," Ozer did not rest on those grounds. The Court in Ozer found that the
dissenting opinion supported the conclusion that the Secretary's position was justified. Id. While
a dissenting opinion may not be a decisive factor, it is nonetheless a factor that the majority fails to
consider. Instead, the majority brushes off the problems raised by construing an NSLI dispute as a
"claim" without any analysis, as it did in the merits decision. In fact, the majority fails to cite to a
single case where the Secretary's position was found to be not substantially justified after a divided
panel decision or to present any useful framework for deciding when to discount a dissent.
Nonetheless, my primary objection to granting the EAJA application in this case is my belief that
EAJA was intended to apply only to claims against the Government and not to disputes between
private parties where the Government is merely a stakeholder.
I. THE PLAIN LANGUAGE OF THE EAJA STATUTE
The question of whether section 2412(d)(1)(A) applies in the context of NSLI proceedings
is one of statutory interpretation. "Statutory interpretation begins with the language of the statute
the plain meaning of which we derive from its text and its structure." Myore v. Nicholson, 489 F.3d
1207, 1211 (Fed. Cir. 2007) (quoting McEntee v. MSPB, 404 F.3d 1320, 1328 (Fed. Cir. 2005)). "In
evaluating whether Congress has directly spoken to the question at issue, the starting point is to
examine the language and structure of the statute itself." Sursely v. Peake, 22 Vet.App. 21, 24
(2007) (citing Good Samaritan Hosp. v. Shalala, 508 U.S. 402, 409 (quoting Chevron U.S.A.,
12
Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842 (1984))). "'[E]ach part or section [of a
statute] should be construed in connection with every other part or section so as to produce a
harmonious whole.'" Meeks v. West, 12 Vet.App. 352, 354 (1999) (alteration in original) (quoting
2A N. SINGER, SUTHERLAND ON STATUTORY CONSTRUCTION § 46.05 (5th ed. 1992));
see Sweitzer v. Brown, 5 Vet. App. 503, 505 (1993); see also Gardner v. Derwinski, 1 Vet. App. 584,
586 (1991) ("Determining a statute's plain meaning requires examining the specific language at issue
and the overall structure of the statute."), aff'd sub nom. Gardner v. Brown, 5 F.3d 1456 (Fed. Cir.
1993), aff'd, 513 U.S. 115 (1994); Johnson v. Brown, 9 Vet.App. 369, 371 (1996) ("[I]f 'the plain
meaning of a statute is discernible, that plain meaning must be given effect.'" (quoting
Tallman v. Brown, 7 Vet.App. 453, 460 (1995))); Smith v. Derwinski, 2 Vet.App. 429, 431 (1992)
("[W]hen a reviewing court 'find[s] the terms of a statute unambiguous, judicial inquiry is complete
except in rare and exceptional circumstances.'" (second alteration in original) (quoting
Demarest v. Manspeaker, 498 U.S. 184 (1991))).
EAJA requires that the civil action for which fees are sought be "brought against the United
States." See 28 U.S.C. § 2412(d)(1)(A) ("[A] Court shall award to a prevailing party other than the
United States fees and other expenses . . . incurred by that party in any civil action . . ., including
proceedings for judicial review of agency action, brought by or against the United States
. . . ."(emphasis added)). In the instant case, the Secretary's role in NSLI proceedings is that of a
"neutral stakeholder." Gordon v. Nicholson, 21 Vet.App. 270, 283 (2007) (Lance, J., dissenting).
In essence, the legal dispute here was one between the appellant (Ms. Gordon on behalf of her two
children, Kelin and Hunter) and the other purported beneficiary under the policy (Ms. Samargin on
behalf of her minor children, Aline and Kristiana). Id. at 273. In such an NSLI proceeding, there
is generally no civil action "brought against" the Government. Therefore, based on the plain
language of section 2412(d)(1)(A), in this context an award of attorney's fees would be inappropriate.
II. THE LEGISLATIVE HISTORY OF EAJA
A review of the legislative history of EAJA confirms that NSLI proceedings were not the type
of action Congress intended to be covered under EAJA. "Concerned that the Government, with its
vast resources, could force citizens into acquiescing to adverse Government action, rather than
13
vindicating their rights, simply by threatening them with costly litigation, Congress enacted the
EAJA, waiving the United States' sovereign immunity and general statutory immunity to fee awards
and creating a limited exception to the 'American Rule' against awarding attorneys fees to prevailing
parties." Pierce v. Underwood, 487 U.S. 552, 575 (1988) (citing S. REP. NO . 96-253, at 1-6 (1979)).
"Under the American Rule, each party pays its own attorney's fees; a prevailing party cannot recover
attorney's fees from a losing party absent express statutory authority or bad faith unless the litigation
involves a common fund or confers a substantial benefit on an ascertainable group." Johnson v. U.S.
Dep't of Hous. and Urban Dev., 939 F.3d 586 (1991) (citing Alyeska Pipeline Serv.
Co. v. Wilderness Soc'y, 421 U.S. 240, 247 (1975)).
Congress prefaced EAJA with a statement purpose: "The bill rests on the premise that certain
individuals . . . may be deterred from seeking review of, or defending against, unreasonable
governmental action because of the expense involved in securing the vindication of their rights."
H.R. REP. NO . 96-1418, at 5 (1980) (emphasis added). "The exception created by [EAJA] focuses
primarily on those individuals for whom cost may be a deterrent to vindicating their rights."
Id. at p.10. As with the plain language of the statute, the legislative history makes clear that the crux
of the EAJA's applicability is the party against whom the adversarial dispute lies. As noted above,
the adversarial nature of disputes arising over NSLI proceeds pertains to the purported beneficiaries;
not the Government. Therefore, the Secretary, in the context of an NSLI proceeding, is not an
adverse party, as intended by Congress. "That a plaintiff has prevailed against one party does not
entitle him to fees from another party, let alone a nonparty." Kentucky v. Graham, 473 U.S. 159, 168
(1985) (refusing to hold that a suit against a Government official in his or her personal capacity can
lead to imposition of fee liability pursuant to 42 U.S.C. § 1988) (citing Hensley v. Eckerhart,
461 U.S. 424 (1983)).
Additionally, EAJA
rests on the premise that a party who chooses to litigate an issue against the
Government is not only representing his or her own vested interest but is also
refining and formulating public policy. An adjudication or civil action
provides a concrete, adversarial test of Government regulation and thereby
insures the legitimacy and fairness of the law. An adjudication, for example,
may show that the policy or factual foundation underlying an agency rule is
erroneous or inaccurate, or it may provide a vehicle for developing or
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announcing more precise rules . . . . Where parties are serving a public
purpose, it is unfair to ask them to finance through their tax dollars
unreasonable Government action and also bear the costs of vindicating their
rights.
H.R. REP. NO . 96-1418, at 10 (1980) (emphasis added). The italicized language demonstrates that
it is unlikely that Congress intended for NSLI proceedings to be included under EAJA's statutory
umbrella. A claimant's goal in an NSLI proceeding is solely to protect his or her own vested interest,
i.e., entitlement to proceeds under the NSLI policy. There will not normally be any broadly reaching
public policy implications because, as noted above, the Government's interest in the matter is merely
that of a disinterested stakeholder.6 Should one claimant prevail over another purported beneficiary,
it will not affect Government policy nor the public fisc. See In re Perry, 882 F.2d 534, 539-40
(1st Cir. 1989) (noting that "petitioners' suit did not — indeed, could not— assist in refining and
formulating public policy, an important consideration in assessing EAJA's reach") (comparing
Boudin v. Thomas, 732 F.2d 1107, 1114 (2nd Cir. 1984) (stating that Congress did not intend that
EAJA apply to habeas petitions that are "dedicated to vindicating individual rights based on the
Constitution rather than refining rules and policy")).
Otherwise stated, the taxpayer is generally unaffected by which claimant ultimately prevails
in an NSLI dispute because the remedy will be uniquely tailored to that individual claimant; i.e., an
award of proceeds available under the policy. Conversely, the public fisc will be adversely affected
should this Court extend EAJA to the NSLI proceeding context. This is so because taxpayer dollars
will ultimately be spent funding litigation between two private parties whose outcome will solely
6
I would also note that the McCarran-Ferguson Act provides that "the continued regulation
and taxation by the several States of the business of insurance is in the public interest, and that
silence on the part of the Congress shall not be construed to impose any barrier to the regulation or
taxation of such business by the several States." 15 U.S.C. § 1011. In passing this Act, Congress
noted that "[f]rom its beginning, the business of insurance has been regarded as a local matter, to be
subject to and regulated by the several States." Report of the House Judiciary Committee on the
McCarran-Ferguson Act, S. 340, Feb. 13, 1945, 1945 U.S. Code Congressional Service, p. 670. In
essence, Congress intended that the Federal Government take a "hands off" approach to the insurance
business declaring that "the continued regulation and taxation by the several States of the business
of insurance is in the public interest." Id. at 672. The fact that Congress has explicitly kept the
Federal Government out of life insurance regulation to the extent possible supports the proposition
that there is little, if any, pubic policy to be refined by NSLI litigation.
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affect their alleged and respective interests. Should an NSLI claimant obtain a remand at this Court,
an award pursuant to EAJA will necessarily be implicated, regardless of the fact that the underlying
issue or dispute involves the Secretary only in a nominal capacity.
III. THE SECRETARY'S ROLE IS ADJUDICATORY NOT ADVERSARIAL
If the Court were to hold that EAJA does not apply in this matter, it would not be alone in
this interpretation. As noted above, in a dispute arising over NSLI proceeds, the Secretary is tasked
with resolving any controversy that arises between alleged beneficiaries, and he must assign the
proceeds accordingly. Thus, the Secretary's role in this context is more akin to that of an adjudicator
than an adversary and awarding EAJA fees in this case would be the equivalent of ordering a Federal
district court judge to pay a party's legal fees after a decision is reversed on appeal.
In Perry, the United States Court of Appeals for the First Circuit addressed the question of
"whether a purely adjudicative governmental entity, like OSHRC [(the Occupational Safety and
Health Review Commission)], might ever be held to suffer a fee award under EAJA."
882 F.2d at 535. Recognizing "that the Secretary, through OSHA [(the Occupational Safety and
Health Administration)] promulgates safety and health standards for businesses" and "it is the
OSHRC . . . which is given the task of 'carrying out adjudicatory functions under [title 29],'" Perry,
while distinguishable, is nonetheless instructive with regard to EAJA awards when the
administrative body's role is "purely adjudicative." Id. at 536. The First Circuit observed that EAJA
was designed to encourage parties to vindicate their rights against the Government, not other private
parties. Id. at 539. The First Circuit then reasoned:
We are hard-pressed to find that this purpose was addressed in any way to
unreasonable adjudicatory action; elsewise, we would expect Congress to have
extended EAJA well beyond litigation to which the United States was a party. After
all, if EAJA was designed to ameliorate adjudicators' excesses, then reason dictates
that private litigants battling with each other should be able to recover attorneys' fees
from a federal court or other adjudicative body whenever one of them successfully
appeals an unreasonable order or mindless decision. Yet, even petitioners do not
contend that the Act sweeps so broadly. The requirement of party status-that the civil
action must be one "by or against the United States," 28 U.S.C. § 2412(d)(1)(A)—is,
we think, powerful evidence of an intent to exempt "pure" adjudicators from EAJA's
embrace.
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Id. (emphasis in original). The First Circuit concluded:
[W]e have been able to find no clear indication of a congressional intent to extend
EAJA liability to purely adjudicative entities. Although the wording of the Act
seems to leave the question open, the legislative purpose and history strongly suggest
that Congress did not have adjudicatory functions in mind when enacting EAJA or
when later amending it. And, any doubt must be resolved in favor of nonapplicability
since courts are duty bound to construe stingily waivers of the federal government's
sovereign immunity.
Id. at 545.
In the instant case, the dispute resolved by the Court was the scope of the Secretary's duty to
assist purported NSLI beneficiaries under section 5103(a). Appellant Gordon won only a procedural
victory; the Court's merits decision did not get her NSLI proceeds. Rather, it merely instructed the
Secretary to provide her with notice of how to defeat Ms. Samargin's claim to the proceeds.
Arguably, the Secretary will also have to provide Ms. Samargin with similar notice. See Gordon,
21 Vet.App. at 289 (Lance, J., dissenting). Thus, the scope of the majority opinion deals more with
how the parties will be able to defeat each other's claims on remand rather than with how to defeat
a litigating position of the Government exercised through the Secretary. To the extent that the
Secretary can be viewed as an "adjudicator" between competing claims for insurance proceeds, Perry
weighs in favor of concluding that an award of EAJA fees and expenses in this context is
inappropriate.
IV. SOVEREIGN IMMUNITY
The Government is immune from claims for attorneys fees, except to the extent that it has
waived such immunity. Ruckelshaus v. Sierra Club, 463 U.S. 680, 685 (1983). "Waivers of
immunity must be 'construed strictly in favor of the sovereign,' McMahon v. United States, 342 U.S.
25, 27 (1951), and not '[enlarged] . . . beyond what the language required.'" Id. at 685-86 (quoting
E. Transp. Co. v. United States, 272 U.S. 675, 686 (1927)). Unlike Richlin Security
Service Co. v. Chertoff, where the Supreme Court noted that it did not need to resort to the sovereign
immunity canon of construction absent any ambiguity, here both the statutory language and
legislative history are sufficiently ambiguous that it would be appropriate for the Court to employ
the sovereign immunity canon. 128 S.Ct. 2007, 2019 (2008). Narrowly construing section
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2412(d)(1)(A), the Court should conclude that an award pursuant to EAJA is not appropriate in the
NSLI context. See Ardestani v. INS, 502 U.S. 129, 137 (1991) ("Once Congress has waived
sovereign immunity over certain subject matter, the Court should be careful not to 'assume the
authority to narrow the waiver that Congress intended.'") (quoting United States v. Kubrick, 444 U.S.
111, 118 (1979)); Perry, 882 F.2d at 544 ("[S]tatutes which, like EAJA, constitute a surrender of
federal sovereign immunity must be construed narrowly; consequently, the government's immunity
cannot be overridden except where a plain congressional intent to do so can be shown."). As the
dispute in this matter is not comparable to any in which EAJA fees are available, the Court must err
against awarding public funds to fuel a purely private dispute that serves no public purpose.
V. EAJA WOULD NOT BE APPLICABLE IF THIS ACTION
HAD BEEN BROUGHT IN FEDERAL DISTRICT COURT
One final strike against awarding EAJA fees in this matter is that the Government would
never have been liable for such fees if the case had been brought in Federal district court. "Unlike
the traditional nonadversarial claims that the Secretary adjudicates, disputes over NSLI proceeds may
also be brought in Federal district court, a distinctly adversarial forum." Gordon, 21 Vet.App. at 286
(citing Young v. Derwinski, 1 Vet.App. 70, 72 (1990) (holding that section 1984 jurisdiction is not
exclusive)); see also 38 U.S.C. § 1984(a).
It is not contested that attorney fees and costs are generally available in cases appealed to the
Court where an appellant otherwise meets the requirements for such an award. See Federal Courts
Administration Act of 1992 (FCAA), Pub. L. No. 102-572, 106 Stat. 4513 (Oct. 29, 1992) (amending
section 2412(d)(2)(f) to add the Court to EAJA's definition of "court"); see generally
38 U.S.C. § 2412(d)(1)(A), (1)(B), (2)(B); Scarborough v. Principi, 541 U.S. 401, 407-08 (2004).
Under 38 U.S.C. § 5904(d)(1), "[w]hen a claimant and an agent or attorney have entered into a fee
agreement . . . , the total fee payable to the agent or attorney may not exceed 20[%] of the total of
any past-due benefits awarded on the basis of the claim." Where such a fee agreement is entered,
it "shall not prevent an award of fees and other expenses under section 2412(d)." FCAA § 506(c),
106 Stat. at 4513. However, "when an attorney receives fees under both a qualifying fee agreement
and the EAJA for the same work, the EAJA fees go first to reimburse the client for what he or she
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had paid under the fee agreement." Shaw v. Gober, 10 Vet.App. 498, 503 (1997) (citing
Curtis v. Brown, 8 Vet.App. 104, 108-109 (1995)). It is clear from both the statutes and the caselaw
interpreting them that Congress explicitly intended to make EAJA applicable in situations where fee
agreements had been entered into pursuant to section 5904(d)(1).
Section 1984(g), in contrast, provides, in pertinent part, that the district court "shall determine
and allow reasonable fees for the attorneys of the successful party or parties . . . not to exceed 10[%]
of the amount recovered and to be paid by the Department out of the payments to be made under the
judgment." No provision extends the EAJA umbrella to cover the provision of section 1984 as
FCAA § 506(c) does in the case of an ordinary contingency fee agreement. There is also no caselaw
interpreting or applying section 2412 in cases involving section 1984 in the district courts. Rather,
it appears that the mechanism by which an attorney may be compensated in such situations is
governed exclusively by section 1984(g). Section 1984(g) is not a fee shifting statute, in that it does
not authorize the prevailing party to recover fees from the losing party. See Gisbrecht v. Barnhart,
535 U.S. 789, 803 n.12 (2002). Rather, "it authorizes fees payable from the successful party's
recovery." Id. at 802. Accordingly, the decision of the majority creates a nonsensical situation
where the Government's potential liability for attorney fees depends on the forum chosen even
though the claim itself is the same.7
This leads me to the belief that the effect of this holding may be to end the adjudication of
such claims in the VA system. Under 38 U.S.C. § 1984(a), the Secretary has the power to remove
7
I also note that it makes very little sense for Congress to provide that fees are limited to 10
percent of the proceeds if the case is brought in Federal district court, but that an attorney can receive
20 percent of the proceeds if the matter is litigated through VA. This incongruity suggests that the
Court was incorrect in its decision that VA has jurisdiction over such disputes. See Young, supra.
If Congress had truly intended VA to exercise concurrent jurisdiction over NSLI claims, it is highly
probable that it would have gone to some effort to harmonize the fee provisions so that beneficiaries
who choose to use the VA system would not end up paying more to their attorneys than those who
proceed in Federal district court. Nonetheless, while jurisdiction may be raised at any time, Fugere
v. Derwinski, 972 F.2d 331, 334 n.5 (Fed. Cir. 1992), Young cannot be overturned by another panel
of this Court. Bethea v. Derwinski, 2 Vet.App. 252, 254 (1992) (panel decisions constitute binding
precedent unless overturned by en banc opinion of this Court or by decision of the U.S. Court of
Appeals for the Federal Circuit or U.S. Supreme Court). Accordingly, further discussion of this
issue is beyond the scope of the issues currently before the panel.
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such actions to Federal district court through a bill of interpleader once it becomes apparent that
there is a dispute over NSLI proceeds. By exercising this power, the Secretary can — in effect —
recapture the sovereign immunity that the majority ignores and free himself from the ethical
minefield of being required to simultaneously advise both sides as to how to defeat each other's
claims before acting as a neutral adjudicator. See Gordon, 21 Vet.App. at 289 (Lance, J.,
dissenting); cf. ABA Model Rules of Prof'l Conduct R. 1.7 (2007) (Conflict of Interest: Current
Clients), R. 1.8 (2007) (Conflict of Interest: Current Clients: Specific Rules); ABA MODEL CODE
OF JUDICIAL CONDUCT Canon 3 ("A Judge Shall Perform the Duties of a Judicial Office Impartially
and Diligently."). Accordingly, the majority's attempt to awkwardly graft nonadversarial rules —
both on the merits and the fee proceeding — onto a proceeding that is inherently adversarial may
result in all these matters being driven to the adversarial forum better suited for actions where the
Secretary is merely a stakeholder.
VI. CONCLUSION
In sum, it is clear, based on the language of § 2412(d)(1)(A), the legislative history
surrounding its enactment, and the fee provision governing suits on insurance brought pursuant to
section 1984, that EAJA was not intended to apply to attorneys fees and costs stemming from
administrative adjudications over NSLI proceeds. Simply stated, the public fisc is not a treasure
chest to be used to fund purely private litigation in which the Government claims no stake.
Accordingly, I must dissent from the majority's conclusion that EAJA fees may be awarded in this
case.
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