Case: 19-1916 Document: 49 Page: 1 Filed: 03/16/2021
United States Court of Appeals for the Federal Circuit ______________________
KEVIN R. GEORGE, Claimant-Appellant
v.
DENIS MCDONOUGH, SECRETARY OF VETERANS AFFAIRS, Respondent-Appellee ______________________
2019-1916 ______________________
Appeal from the United States Court of Appeals for Veterans Claims in No. 16-2174, Chief Judge Margaret C. Bartley, Judge Amanda L. Meredith, Senior Judge Robert N. Davis. -------------------------------------------------
MICHAEL B. MARTIN, Claimant-Appellant
DENIS MCDONOUGH, SECRETARY OF VETERANS AFFAIRS, Respondent-Appellee ______________________
2020-1134 ______________________ Case: 19-1916 Document: 49 Page: 2 Filed: 03/16/2021
Appeal from the United States Court of Appeals for Veterans Claims in No. 18-124, Chief Judge Margaret C. Bartley. ______________________
Decided: March 16, 2021 ______________________
KENNETH M. CARPENTER, Law Offices of Carpenter Chartered, Topeka, KS, argued for claimant-appellant Kevin R. George.
AMY F. ODOM, Chisholm Chisholm & Kilpatrick, Provi- dence, RI, argued for claimant-appellant Michael B. Mar- tin. Also represented by APRIL DONAHOWER, ZACHARY STOLZ.
TANYA KOENIG, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washing- ton, DC, argued for respondent-appellee. Also represented by ERIC P. BRUSKIN, JEFFREY B. CLARK, MARTIN F. HOCKEY, JR., ROBERT EDWARD KIRSCHMAN, JR.; BRIAN D. GRIFFIN, ANDREW J. STEINBERG, Office of General Counsel, United States Department of Veterans Affairs, Washington, DC. ______________________
Before LOURIE, CHEN, and STOLL, Circuit Judges. CHEN, Circuit Judge. Kevin R. George and Michael B. Martin (collectively, Appellants) are military veterans whose respective claims for disability benefits were denied several decades ago in final decisions by the Department of Veterans Affairs (VA). More recently, Appellants each filed a motion for revision of those denial decisions, alleging that the VA in those de- cisions had committed clear and unmistakable error (CUE). The VA’s denials had been based in part on a straightforward application of a then-existing regulation, Case: 19-1916 Document: 49 Page: 3 Filed: 03/16/2021
GEORGE v. MCDONOUGH 3
38 C.F.R. § 3.304(b) (“Presumption of soundness”), that was years later overturned. In Appellants’ view, the VA’s reliance on a now-invalidated regulation in its denials of Appellants’ original claims establishes CUE. The United States Court of Appeals for Veterans Claims (Veterans Court) affirmed the Board of Veterans’ Appeals’ (Board) denials of Appellants’ CUE motions, rea- soning that the VA did not commit a clear and unmistaka- ble legal error when it faithfully applied the version of the presumption of soundness regulation that existed at the time of the denials. Because Jordan v. Nicholson and Dis- abled American Veterans v. Gober establish that a legal- based CUE requires a misapplication of the law as it was understood at that time, and cannot arise from a subse- quent change in interpretation of law by the agency or ju- diciary, we affirm. See Jordan v. Nicholson, 401 F.3d 1296 (Fed. Cir. 2005); Disabled Am. Veterans v. Gober, 234 F.3d 682 (Fed. Cir. 2000) (DAV), overruled in part on other grounds by Nat’l Org. of Veterans’ Advocates, Inc. v. Sec’y of Veterans Affairs, 981 F.3d 1360, 1373 (Fed. Cir. 2020) (en banc). BACKGROUND These companion appeals involve similar facts and le- gal issues. Before discussing the details of each case, we first address the statutory presumption of soundness at is- sue in both appeals. A. Statutory Presumption of Soundness The statutory presumption of soundness recites: [E]very veteran shall be taken to have been in sound condition when examined, accepted, and en- rolled for service, except as to defects, infirmities, or disorders noted at the time of the examination, acceptance, and enrollment, or where clear and un- mistakable evidence demonstrates that the injury Case: 19-1916 Document: 49 Page: 4 Filed: 03/16/2021
or disease existed before acceptance and enrollment and was not aggravated by such service. 38 U.S.C. § 311 (1970) (now codified as 38 U.S.C. § 1111)1 (emphasis added). Under this standard, a veteran is pre- sumed to have been in sound condition at entry to service as to disorders that are not identified on the veteran’s en- trance medical examination. The presumption, however, can be rebutted by “clear and unmistakable evidence” that the disorder “existed before acceptance and enrollment and was not aggravated by service.” Id. In 1970, the VA’s implementing regulation for § 1111 did not require clear and unmistakable evidence of lack of aggravation by service for rebuttal. See 38 C.F.R. § 3.304(b) (1970). 2 In other words, for the VA to rebut the presumption of soundness, the 1970 version of § 3.304(b) required only clear and unmistakable evidence that the disorder “existed prior [to service].” Id. This version of the regulation prevailed until 2003, when the VA invalidated the regulation for conflicting with the language of § 1111, see VA Gen. Counsel Prec. 3–2003 (July 16, 2003) (2003
1 For ease of reference, we hereafter refer to the stat- utory presumption of soundness as 38 U.S.C. § 1111. 2 Specifically, 38 C.F.R. § 3.304(b) (1970) stated: The veteran will be considered to have been in sound condition when examined, accepted and en- rolled for service, except as to defects, infirmities, or disorders noted at entrance into service, or where clear and unmistakable (obvious or mani- fest) evidence demonstrates that an injury or dis- ease existed prior thereto. Only such conditions as are recorded in examination reports are considered as noted. Id. (emphasis added). This language remained unchanged from the time of Mr. Martin’s 1970 regional office decision to Mr. George’s 1977 Board decision. Case: 19-1916 Document: 49 Page: 5 Filed: 03/16/2021
GEORGE v. MCDONOUGH 5
OGC opinion), and subsequently amended the regulation to require evidence of both preexisting condition and no ag- gravation, see 70 Fed. Reg. 23,027, 23,028 (May 4, 2005). We confirmed the correctness of the VA’s changed un- derstanding of the statute in Wagner v. Principi, 370 F.3d 1089 (Fed. Cir. 2004). There, we began our statutory anal- ysis by acknowledging that § 1111’s “rebuttal standard is somewhat difficult to parse” and “on its face . . . appears to be somewhat self-contradictory.” Id. at 1093. After a care- ful examination of the statutory history, we determined that Congress intended for the presumption of soundness to apply “even when there was evidence of a preexisting condition, [so long as] the government failed to show clear and unmistakable evidence that the preexisting condition was not aggravated” by service. Id. at 1096. Wagner thus held that the VA must show “clear and unmistakable evi- dence of both a preexisting condition and a lack of in-ser- vice aggravation to overcome the presumption of soundness.” Id. B. Mr. George’s Appeal Mr. George served in the U.S. Marine Corps from June to September 1975. His medical entrance examination made no mention of any psychiatric disorders. Yet, a week after enlistment, Mr. George suffered a psychotic episode requiring extended hospitalization and was diagnosed with paranoid schizophrenia. Two months into his service, a military medical board confirmed the schizophrenia diag- nosis and found Mr. George unfit for duty. The medical board determined that his condition had preexisted service because he had experienced “auditory hallucinations, par- anoid ideas of reference, and delusions” prior to enlistment. J.A. 53–54. The medical board also determined that his condition was aggravated by service, observing that he “now appeared quite disturbed” and was “withdrawn [and] tearful.” Id. At his time of discharge, however, a physical evaluation board concluded that his condition was not Case: 19-1916 Document: 49 Page: 6 Filed: 03/16/2021
aggravated by service, finding that Mr. George “essentially appear[ed] in his preenlistment state” and that his schizo- phrenia was “in remission.” J.A. 55. In December 1975, Mr. George filed a disability bene- fits claim, contending that his schizophrenia was aggra- vated by service. The VA regional office (RO) denied his claim for lack of service connection, which the Board af- firmed in September 1977. While the Board did not specif- ically cite the statutory presumption of soundness or the implementing regulation, it concluded that his schizophre- nia “existed prior to military service” and “was not aggra- vated by his military service.” J.A. 60. Mr. George did not appeal the Board’s decision, which became final. Years later, in December 2014, Mr. George requested revision of the 1977 Board decision based on CUE, assert- ing that the Board had failed to correctly apply 38 U.S.C. § 1111. Mr. George argued that he had been improperly denied the presumption of soundness because his “entrance examination to service was negative for any preservice mental disorder” and the record “[did] not clearly and un- mistakably indicate that [his] schizophrenia was not ag- gravated by service.” J.A. 66–67. If not for the 1977 Board’s purported failure to “rebut both prongs of the pre- sumption,” Mr. George alleged that he would have been granted service-connected benefits for schizophrenia. J.A. 67 (emphasis added). The Board, in 2016, denied Mr. George’s request, find- ing no CUE in the 1977 Board decision. Relevant to this appeal, the Board observed that, as of 1977, 38 C.F.R. § 3.304(b) did “not require[] clear and unmistakable evi- dence that the disability was not aggravated by service” to rebut the presumption of soundness. J.A. 73. While ac- knowledging that the 2003 OGC opinion and Wagner later invalidated § 3.304(b) for conflicting with the statute, the Board concluded that “judicial decisions that formulate new interpretations of the law subsequent to a VA decision Case: 19-1916 Document: 49 Page: 7 Filed: 03/16/2021
GEORGE v. MCDONOUGH 7
cannot be the basis of a valid CUE claim.” J.A. 74. Thus, any purported failure by the 1977 Board to find that Mr. George’s schizophrenia was not clearly and unmistakably aggravated by service “cannot be considered to be CUE.” Id. Mr. George appealed to the Veterans Court. A divided panel of the Veterans Court affirmed, con- cluding that Wagner’s interpretation of § 1111 could not retroactively apply to establish CUE in the 1977 Board de- cision. See George v. Wilkie, 30 Vet. App. 364, 373 (2019) (“Wagner does not change how [§ 1111] was interpreted or understood before it issued.”). Instead, citing this court’s decisions in DAV and Jordan, the Veterans Court deter- mined that the 1977 Board was required to apply the law existing at the time, namely, the 1977 version of 38 C.F.R. § 3.304(b). Because that version of § 3.304(b) required only clear and unmistakable evidence that an injury preexisted service to rebut the presumption of soundness, the Veter- ans Court concluded that the 1977 Board’s alleged failure to also demonstrate clear and unmistakable evidence of no aggravation did not constitute CUE. Id. at 374–75. The Veterans Court next considered a trio of cases in- volving a CUE claim filed by a widow, Mrs. Patrick, seek- ing death and indemnity compensation benefits. See Patrick v. Principi, 103 F. App’x 383 (Fed. Cir. 2004) (Pat- rick I); Patrick v. Nicholson, 242 F. App’x 695 (Fed. Cir. 2007) (Patrick II); Patrick v. Shinseki, 668 F.3d 1325 (Fed. Cir. 2011) (Patrick III). As relevant here, Patrick II con- cluded that Wagner could form the basis for a CUE claim attacking a final VA decision that had relied on the now- invalidated version of § 3.304(b), because “[Wagner’s] inter- pretation of § 1111 . . . did not change the law but ex- plained what § 1111 had always meant.” Patrick II, 242 F. App’x at 698. The Veterans Court determined that it was not bound by the Patrick cases, which contradicted the reasoning of DAV and Jordan. George, 30 Vet. App. at 374–75. Patrick Case: 19-1916 Document: 49 Page: 8 Filed: 03/16/2021
II, the main case supporting Mr. George’s position, was nonprecedential and issued after DAV and Jordan, and Patrick III, the only precedential opinion in this line of cases, pertained to attorneys’ fees under the Equal Access to Justice Act (EAJA) and did not directly address whether Wagner supports a basis for CUE. The Veterans Court also determined that permitting retroactive application of Wagner’s statutory interpreta- tion would contravene the law on finality of judgments. While recognizing that “CUE is a statutorily permitted col- lateral attack on final VA decisions,” the court observed that “Mr. George’s appeal of the denial of benefits for schiz- ophrenia was not open for direct review when Wagner was decided,” and to hold that a judicial pronouncement of the law retroactively applies to final decisions closed to direct review would undermine long-standing principles of final- ity and res judicata. George, 30 Vet. App. at 372–73, 376 (citing Harper v. Va. Dep’t of Taxation, 509 U.S. 86 (1993) and James B. Beam Distilling Co. v. Georgia, 501 U.S. 529 (1991)). CUE instead requires “the application of the law as it was understood at the time of the [underlying] deci- sion,” and such an application of law “does not become CUE by virtue of a subsequent interpretation of the statute or regulation.” George, 30 Vet. App. at 373. 3
3 The Veterans Court majority also concluded that even assuming Wagner retroactively applies to support al- legations of CUE in final VA decisions, Mr. George failed to demonstrate that this alleged error, based on the evi- dence extant in 1977, would have manifestly changed the outcome of the 1977 Board’s decision to deny him benefits for schizophrenia. George, 30 Vet. App. at 377–78. Because we conclude that the error alleged is outside the scope of CUE, as discussed infra, we need not reach this alternative holding. Case: 19-1916 Document: 49 Page: 9 Filed: 03/16/2021
GEORGE v. MCDONOUGH 9
A dissenting judge opined that Wagner merely pro- vided an “authoritative statement” of what § 1111 has al- ways meant and thus should not be understood as implementing a “new understanding or interpretation” of that statute. Id. at 379. The dissent further concluded that the 1977 Board’s failure to abide by § 1111’s true meaning “constituted an undebatable and outcome-determinative misapplication of the law,” which is “precisely” the type of error CUE was designed to remedy. Id. at 383. C. Mr. Martin’s Appeal Mr. Martin served in the U.S. Army from August 1965 to February 1966, and from June 1968 to August 1969. At entry to service, Mr. Martin reported never having had “asthma,” “shortness of breath,” or “hay fever,” J.A. 13, and his medical examination reported his lungs and chest as “normal,” J.A. 15. During his second period of service, in November 1968, he sought treatment at an allergy clinic for a stuffy nose, sneezing, itchy eyes, and nocturnal wheezing. Contrary to his entrance examination, Mr. Mar- tin reported a childhood history of asthma with similar symptoms. A note from his personal physician, dated Jan- uary 1969, confirmed that Mr. Martin had started treat- ment for asthma as a child and had been “treated for this problem intermittently since that time.” J.A. 10. A medi- cal examiner diagnosed and treated Mr. Martin for “rhini- tis and asthma, mixed infectious-allergic, with dust-mold and ragweed sensitivity.” J.A. 11. By discharge, however, his separation examination did not report any asthma or related symptoms. Shortly thereafter, in October 1969, Mr. Martin filed a claim for service-connected disability benefits for asthma. In support of his claim, Mr. Martin underwent a VA medi- cal examination in December 1969, which noted that he had “made a good adjustment” following in-service treat- ment, but upon returning home after discharge, had expe- rienced wheezing and shortness of breath during the Case: 19-1916 Document: 49 Page: 10 Filed: 03/16/2021
ragweed season. J.A. 21. Mr. Martin was diagnosed with “[a]sthma due to sensitivity of ragweed class.” J.A. 24. The RO denied Mr. Martin’s claim in February 1970 for lack of service connection. The RO found that following Mr. Martin’s November 1968 treatment at the allergy clinic, there was “no further showing of complaints relative to asthma in service and [the] separation examination was negative.” J.A. 26. While acknowledging that Mr. Martin had reported asthma symptoms in his December 1969 med- ical examination four months after service, the RO con- cluded that: “In view of the pre-service history of asthma[,] it is held that the solitary exacerbation in service with a subsequent asymptomatic period of better than a year does not establish aggravation.” J.A. 25–26. Mr. Martin did not appeal the RO decision. In July 2013, Mr. Martin requested revision of the 1970 RO decision based on CUE, contending that the RO had failed to correctly apply “both” prongs of 38 U.S.C. § 1111. J.A. 27–28. As with Mr. George’s case, the Board denied the request, finding no CUE in the 1970 RO decision be- cause the regulation in force at that time did not require clear and unmistakable evidence of no aggravation. J.A. 39–40. Citing George, the Veterans Court affirmed the Board’s decision: The denial of service connection in George, like the RO’s denial here, predated the Federal Circuit’s de- cision in Wagner v. Principi . . . . George held that Wagner does not apply retroactively to final deci- sions and affirmed the Board’s finding that the VA decision did not contain CUE. The Court must reach the same conclusion here and affirm the Board’s . . . finding that the February 1970 rating decision does not contain CUE. Martin v. Wilkie, No. 18-0124, 2019 WL 3449689, at *3 (Vet. App. July 31, 2019) (citations omitted). Case: 19-1916 Document: 49 Page: 11 Filed: 03/16/2021
GEORGE v. MCDONOUGH 11
Both Mr. George and Mr. Martin timely appealed to this court. We have jurisdiction under 38 U.S.C. § 7292. DISCUSSION Our jurisdiction to review decisions of the Veterans Court is prescribed by statute. Scott v. Wilkie, 920 F.3d 1375, 1377–78 (Fed. Cir. 2019). We may “review and de- cide any challenge to the validity of any statute or regula- tion or any interpretation thereof” and “interpret constitutional and statutory provisions, to the extent pre- sented and necessary to a decision.” 38 U.S.C. § 7292(c). We review claims of legal error in a decision of the Veterans Court without deference. See Szemraj v. Principi, 357 F.3d 1370, 1374–75 (Fed. Cir. 2004). A motion for revision based on “clear and unmistakable error” is a statutorily authorized collateral attack on a final decision of the Board or RO that, if successful, results in a “reversed or revised” decision having “the same effect as if [it] had been made on the date of the [original] decision.” See 38 U.S.C. §§ 7111, 5109A. 4 In other words, a meritori- ous CUE claimant may be entitled to benefits retroactive to the date of the original claim. CUE, however, is a “very specific and rare type of error,” Cook v. Principi, 318 F.3d 1334, 1345 (Fed. Cir. 2002) (en banc), and must be based on “the record and the law that existed at the time of the prior adjudication in question,” such that “[e]ither the cor- rect facts, as they were known at the time, were not before the adjudicator or the statutory or regulatory provisions ex- tant at the time were incorrectly applied,” see Willsey v. Peake, 535 F.3d 1368, 1371 (Fed. Cir. 2008) (emphases added) (citing Russell v. Principi, 3 Vet. App. 310, 313–14 (1992) (en banc)). CUE must also be an “undebatable”
4 38 U.S.C. § 7111 governs CUE arising from a Board decision whereas § 5109A governs CUE arising from an RO decision. Case: 19-1916 Document: 49 Page: 12 Filed: 03/16/2021
error that would have “manifestly changed the outcome at the time it was made.” Willsey, 535 F.3d at 1371. A Appellants first contend that their CUE claims do not seek to retroactively apply a changed interpretation of the law and, instead, are simply premised on the VA’s pur- ported failure to correctly apply the statute as written. Ap- pellants assert that § 1111’s meaning is plain and unambiguous, regardless of the VA’s contrary interpreta- tion set forth at the time in § 3.304(b). Rather than estab- lish a “new” interpretation of § 1111, Appellants argue that Wagner “merely provided an authoritative statement of what [§ 1111] had always meant,” including at the time of Appellants’ respective VA decisions. See Martin Appel- lant’s Br. 8 (internal quotation marks omitted) (citing Riv- ers v. Roadway Exp., Inc., 551 U.S. 298, 313 n.12 (1994)). This reasoning, Appellants contend, comports with our nonprecedential decision in Patrick II, where we permitted a CUE claim to proceed based on the argument that the VA had “misapplied § 1111.” See Patrick II, 242 F. App’x at 698. We disagree with Appellants’ argument because it overlooks the significance of the VA’s regulation that ex- isted at the time of the original decisions and fails to ac- count for our caselaw. Jordan, in view of DAV, squarely forecloses Appellants’ argument that Wagner’s later-in- time interpretation of § 1111 can serve as the basis for CUE. DAV upheld, over rulemaking challenge, the validity of CUE regulation 38 C.F.R. § 20.1403(e), which expressly states that CUE “does not include the otherwise correct ap- plication of a statute or regulation where, subsequent to the Board decision challenged, there has been a change in the interpretation of the statute or regulation.” See DAV, Case: 19-1916 Document: 49 Page: 13 Filed: 03/16/2021
GEORGE v. MCDONOUGH 13
234 F.3d at 695–98 (emphasis added). 5 In analyzing the regulation’s specific carve-out of subsequent, changed in- terpretations as a basis for CUE, we clarified that “[t]he new interpretation of a statute can only retroactively [a]ffect decisions still open on direct review, not those deci- sions that are final.” Id. at 698. This limit on CUE, we explained, is consistent with Congress’ intent that “changes in the law subsequent to the original adjudica- tion . . . do not provide a basis for revising a finally decided case.” Id. at 697–98. DAV thus established that CUE must be analyzed based on the law as it was understood at the time of the original decision and cannot arise from a subse- quent change in the law or interpretation thereof to attack a final VA decision. Jordan subsequently applied DAV’s understanding of CUE to the statutory presumption of soundness. There, in
5 38 C.F.R § 20.1403 governs CUE in Board deci- sions, whereas 38 C.F.R. § 3.105 governs CUE in RO deci- sions. We note that in 2019, § 3.105 was amended to include subsection (a)(1)(iv), which mirrors the language of § 20.1403(e). See VA Claims and Appeals Modernization, 84 Fed. Reg. 138 (Jan. 18, 2019) (final rule). In promulgat- ing § 3.105(a)(1)(iv), the VA explained that “no substantive changes [were] intended to the existing law governing re- vision of final [RO] decision based on CUE,” see VA Claims and Appeals Modernization, 83 Fed. Reg. 39,818, 39,820 (Aug. 10, 2018) (notice of proposed rulemaking), and the purpose of the amendment was to “conform[]” the regula- tion governing CUE in final RO decisions with the existing regulation governing final Board decisions, 84 Fed. Reg. at 142. Mr. Martin acknowledges that the substance of § 3.105(a)(1)(iv) applies to his appeal, see Martin Appel- lant’s Reply Br. 6 n.2, and makes no attempt to distinguish DAV and Jordan based on the governing CUE regulation (§ 20.1403 vs. § 3.105) or statute (§ 7111 vs. § 5109A). Case: 19-1916 Document: 49 Page: 14 Filed: 03/16/2021
1983, the Board denied Mr. Jordan’s benefits claim for lack of service connection under then-governing 38 C.F.R. § 3.304(b)—the same version of the regulation that was ap- plied to Appellants’ original claims. See Jordan, 401 F.3d at 1297. Mr. Jordan never appealed the Board’s decision, which became final. Several years later, in 1999, Mr. Jor- dan filed a CUE claim asserting that the 1983 Board had “misinterpreted provisions in 38 U.S.C. § 1111.” Id. Like Appellants, Mr. Jordan claimed that § 1111’s presumption of soundness had not been rebutted because the 1983 Board had failed to establish that his preexisting condition was not aggravated by service. The Board denied his CUE claim, and Mr. Jordan then appealed to the Veterans Court. While his Veterans Court appeal was pending, the VA issued its 2003 OGC opinion invalidating 38 C.F.R. § 3.304(b) for conflicting with § 1111. Nevertheless, the Veterans Court found no CUE because, as DAV held, CUE “does not include the otherwise correct application of a statute or regulation” where there has been a subsequent “change in the interpretation of [that] statute or regula- tion.” Id. On appeal before us, Mr. Jordan argued that there was no subsequent change in interpretation because 38 C.F.R. § 3.304(b) was “void ab initio” for being contrary to § 1111’s “facially apparent meaning.” Id. We rejected that argument because “the accuracy of the regulation as an interpretation of the governing legal standard does not negate the fact that [§ 3.304(b)] did provide the first com- mentary on section 1111, and was therefore the initial in- terpretation of that statute,” which subsequently changed with the issuance of the 2003 OGC opinion. Id. Here, as in Jordan, Appellants’ argument that their CUE claims are not premised on a “change in the law” fails to appreciate that 38 C.F.R. § 3.304(b) provided the initial interpretation of § 1111, regardless of any inaccuracies subsequently reflected in Wagner. Section 3.304(b) estab- lished the VA’s controlling interpretation of § 1111’s rebut- tal standard at the time of Appellants’ VA decisions, and it Case: 19-1916 Document: 49 Page: 15 Filed: 03/16/2021
GEORGE v. MCDONOUGH 15
would make little sense for the Board’s and RO’s “otherwise correct application” of this then-binding regulation to con- stitute adjudicative error, let alone CUE. See 38 C.F.R. §§ 20.1403(e), 3.105(a)(1)(iv). Indeed, Appellants do not dis- pute that VA adjudicators, at the time of their original Board and RO decisions, were bound by § 3.304(b). See also 38 U.S.C. § 7104(c) (“The Board shall be bound in its deci- sions by the regulations of the Department . . . .”). And contrary to Appellants’ assertion that § 1111’s language is plain and unambiguous, Wagner found the language of § 1111’s rebuttal standard “somewhat difficult to parse” and “self-contradictory” “on its face.” See 370 F.3d at 1093. That Wagner was the first judicial interpretation of § 1111 by this court does not lead to a contrary result. Jor- dan does not differentiate between new agency interpreta- tions and new judicial interpretations, and instead, refers to both the 2003 OGC opinion and Wagner as evidence of a change in interpretation of § 1111. See Jordan, 401 F.3d at 1298. Jordan, moreover, determined that granting CUE claims premised on a changed interpretation of law— whether based on Wagner or the 2003 OGC opinion—would fail to “give adequate weight to the finality of judgments,” given that “[t]he Supreme Court has repeatedly denied at- tempts to reopen final decisions in the face of new judicial pronouncements.” Id. at 1299; see also DAV, 234 F.3d at 698 (concluding that new statutory interpretations cannot, through a CUE motion, retroactively affect decisions that are final). We thus cabined the reach of CUE motions to exclude retroactive application of a new judicial or agency pronouncement to a final VA decision on a benefits claim. Even though Jordan precludes CUE claims based on retroactively applying either our interpretation in Wagner or the VA’s interpretation in the 2003 OGC opinion, Appel- lants nonetheless urge us to follow the contrary reasoning of the Patrick cases and hold that Wagner can serve as the basis for their CUE claims. Specifically, Patrick II, in a nonprecedential decision, distinguished Jordan as Case: 19-1916 Document: 49 Page: 16 Filed: 03/16/2021
purportedly addressing only “whether a change in the reg- ulatory interpretation of a statute had retroactive effect on CUE claims, not whether our interpretation of the statute in Wagner had retroactive effect on CUE claims.” See Pat- rick II, 242 F. App’x at 698. Because Mrs. Patrick’s CUE claim was premised on our interpretation of § 1111 in Wag- ner, and not on the VA’s changed regulatory interpretation of § 1111, Patrick II determined that Jordan’s “limited holding” did not apply to bar Mrs. Patrick’s claim. Id. Sub- sequently, Patrick III summarized Patrick II’s reasoning in dicta and reversed the denial of Mrs. Patrick’s application for EAJA fees, explaining that the lower court had failed to consider “the fact that the government had adopted an in- terpretation of [§ 1111] that was wholly unsupported by ei- ther the plain language of the statute or its legislative history” in assessing whether the government’s position was substantially justified. See Patrick III, 668 F.3d at 1334. We conclude, as the Veterans Court did, that we are not bound by the Patrick cases to reach a holding contrary to DAV and Jordan. Patrick II is a nonprecedential deci- sion that issued after DAV and Jordan. Indeed, we ex- pressly denied a motion to reissue Patrick II’s nonprecedential decision as precedential. See Patrick v. Shinseki, No. 06-7254 (Fed. Cir. Aug. 21, 2007), ECF No. 26. And Patrick III, though precedential, does not directly address whether Wagner can serve as a basis for CUE. While Patrick III summarizes Patrick II’s reasoning in the background section and in a footnote, its description of Pat- rick II in dicta does not elevate it to binding precedent. See Fed. Cir. R. 32.1(d) (“The court . . . will not give one of its own nonprecedential dispositions the effect of binding prec- edent.”). B Appellants next argue that the Veterans Court miscon- strued principles of finality and retroactivity in Supreme Case: 19-1916 Document: 49 Page: 17 Filed: 03/16/2021
GEORGE v. MCDONOUGH 17
Court decisions, such as Harper and Beam. When properly read, Appellants contend, these cases “support the retroac- tive application of judicial pronouncements in cases that are open to collateral attack,” Martin Appellant’s Br. 19, or, if not, are otherwise “irrelevant” to their CUE claims given Rivers’s pronouncement that a judicial construction of a statute is an authoritative statement of what that stat- ute has always meant, George Appellant’s Br. 22. We dis- agree. Nothing in these cases supports Appellants’ contention that a new judicial pronouncement retroactively applies to final decisions, even those subject to a collateral attack, such as a request to revise a final Board or RO decision for CUE. See Routen v. West, 142 F.3d 1434, 1437 (Fed. Cir. 1998) (explaining that “basic principles of finality and res judicata apply to . . . agency decisions” that have not been appealed and have become final). Instead, Harper adopted a rule consistent with Beam that new judicial pronounce- ments are to be given “full retroactive effect in all cases still open on direct review” but not in final cases already closed. See Harper, 509 U.S. at 96 (emphasis added); see also, e.g., Beam, 501 U.S. at 529 (“Retroactivity in civil cases must be limited by the need for finality; once suit is barred by res judicata . . . , a new rule cannot reopen the door already closed.” (citation omitted)); Reynoldsville Casket Co. v. Hyde, 514 U.S. 749, 758 (1995) (“New legal principles, even when applied retroactively, do not apply to cases already closed.”); DAV, 234 F.3d at 698 (“[t]he new interpretation of a statute can only retroactively [a]ffect decisions still open on direct review, not those decisions that are final,” and is therefore not a basis for CUE); Jordan, 401 F.3d at 1299 (recognizing that “new judicial interpretations” of a statute generally apply only to “pending cases”). While Rivers states that “[a] judicial construction of a statute is an authoritative statement of what the statute meant before as well as after the decision of the case giving rise to that construction,” 511 U.S. at 312–13, it never Case: 19-1916 Document: 49 Page: 18 Filed: 03/16/2021
holds that judicial constructions of statutes should be ret- roactively applied to final decisions, such as the VA deci- sions at issue here. Instead, Rivers cites to Harper, which expressly limits retroactivity of judicial decisions to pend- ing “cases still open to direct review.” See id. at 312 (citing Harper, 509 U.S. at 97). And DAV likewise cites Harper for support in upholding the validity of 38 C.F.R. § 20.1403(e), which states that CUE does not arise from “the correct application of the statute or regulation as it was interpreted at the time of the decision.” DAV, 234 F.3d at 697. C Our determination that Wagner cannot serve as the ba- sis for Appellants’ CUE claims accords with the legislative intent behind the CUE statutes, 38 U.S.C. §§ 7111 and 5109A. Neither statute addresses subsequent changes in law, interpretations of law, or otherwise defines CUE. In- stead, these statutes merely provide that a prior decision shall be revised for CUE “[i]f evidence establishes the er- ror.” See id. §§ 7111(a), 5109A(a). Upon revision, the stat- utes then authorize retroactive benefits from the effective date of the original decision. See id. §§ 7111(b), 5109A(b). The statutory history, however, is more instructive. Prior to their statutory enactment, CUE had been solely an administrative practice governed by VA regulation for sev- eral decades, dating back to 1928. DAV, 234 F.3d at 686. Congress enacted §§ 7111 and 5109A in 1997 to “codify [the] existing regulation[]” governing CUE in RO decisions and extend those principles to Board decisions as well. See H.R. Rep. No. 105–52, at 1 (1997). These statutes “made no change in the substantive standards” governing CUE and “merely codified the prior regulation” provided in 38 C.F.R. § 3.105, see Donovan v. West, 158 F.3d 1377, 1382 (Fed. Cir. 1998), and the Veterans Court’s “long standing interpretation of CUE,” see Bustos v. West, 179 F.3d 1378, 1381 (Fed. Cir. 1999). We therefore look to the pre-codified Case: 19-1916 Document: 49 Page: 19 Filed: 03/16/2021
GEORGE v. MCDONOUGH 19
version of § 3.105 and established CUE standards to un- derstand Congress’ intent in enacting the CUE statutes. As an initial matter, we observe that the VA’s CUE reg- ulation predates the enactment of the Veterans’ Judicial Review Act, Pub. L. No. 100-687, 102 Stat 4105 (1988), which, for the first time, permitted judicial review of VA decisions. Because § 3.105 predates judicial review, this regulation and the VA’s administrative practice, before 1988, could not have contemplated CUE would arise from a new judicial interpretation of a statute. More importantly, as of the CUE doctrine’s statutory codification in 1997, § 3.105’s preamble provided that revi- sion of a final RO decision based on CUE was available “ex- cept where” the alleged error was based on “a change in law or Department of Veterans Affairs issue, or a change in in- terpretation of law or a Department of Veterans Affairs is- sue (§ 3.114).” 6 38 C.F.R. § 3.105 (1997) (emphases added); see also Russell, 3 Vet. App. at 313 (“[C]hanges in the law subsequent to the original adjudication . . . do not provide
6 We do not construe § 3.105’s reference to § 3.114 to be limiting. We nonetheless observe that the substance of § 3.114 comports with our above understanding of CUE. As of 1997, § 3.114 pertained, in relevant part, to the effec- tive date of awards pursuant to liberalizing laws. It ex- plained that where an award is made pursuant to a “liberalizing law” or “liberalizing VA issue,” the effective date of that award “shall not be earlier than the effective date of the act or administrative issue” itself. See 38 C.F.R. § 3.114(a) (1997). Thus, even where a subsequent law lib- eralizes benefits that were unavailable under a prior un- derstanding of the law, the effective date of those benefits cannot be earlier than the effective date of the liberalizing law itself. Likewise, here, our understanding of CUE pre- cludes Wagner’s interpretation of § 1111 from providing retroactive benefits predating Wagner itself. Case: 19-1916 Document: 49 Page: 20 Filed: 03/16/2021
a basis for revising a finally decided case.”). Given that § 3.105 plainly excluded a “change in law” or “change in in- terpretation of law” from CUE, we conclude that by codify- ing this regulation, Congress did not intend for CUE to go so far as to attack a final VA decision’s correct application of a then-existing regulation that is subsequently changed or invalidated, whether by the agency or the judiciary. 7 In other words, the VA does not commit clear and unmistak- able error in a benefits claim decision when it faithfully ap- plies a regulation as it existed at the time of decision, even if that regulation is later revised or invalidated. Accordingly, we reject Appellants’ theory as to the scope of CUE and hold that our interpretation of § 1111 in Wagner cannot be the basis for Appellants’ CUE claim. CONCLUSION We have considered Appellants’ remaining arguments but find them unpersuasive. For the reasons set forth above, we affirm the Veterans Court’s decisions. AFFIRMED COSTS No costs.
7 We note that the VA reached this conclusion in its 1994 OGC opinion, VA Gen. Counsel Prec. 9-94 (Mar. 25, 1994), which addressed whether Veterans Court decisions invalidating VA regulations or statutory interpretations have retroactive effect through CUE. As with our decision today, the VA also interpreted § 3.105’s preamble to ex- clude changes in interpretation of law by judicial precedent as a basis for CUE. See id. at 2 (“[I]t is our view that section 3.105(a) provides no authority . . . for retroactive payment of benefits when the [Veterans Court] invalidates a VA in- terpretation or regulation.”).