John Peterson v. Douglas A. Collins

• Court: Court of Appeals for the Seventh Circuit
• Decided: March 16, 2026
• Docket: 25-1004
• Status: Published
• Author: Kolar

Opinion

In the

United States Court of Appeals For the Seventh Circuit ____________________ No. 25-1004 JOHN PETERSON, Plaintiff-Appellant, v.

DOUGLAS A. COLLINS, Secretary of Veterans Affairs, and DEPARTMENT OF VETERANS AFFAIRS, Defendants-Appellees. ____________________

Appeal from the United States District Court for the Central District of Illinois. No. 2:21-cv-02293 — Colin S. Bruce, Judge. ____________________

ARGUED SEPTEMBER 17, 2025 — DECIDED MARCH 13, 2026 ____________________

Before SCUDDER, PRYOR, and KOLAR, Circuit Judges. KOLAR, Circuit Judge. Dr. John Peterson was employed as a pain-management physician at the Veterans Administration Illiana Health Care System (“VAIHCS”) in Danville, Illinois. After concerns arose in 2020 regarding his standard of care, he was placed on summary suspension and ultimately re- moved from his position. He appealed the removal through the Veterans Administration Disciplinary Appeals Board, 2 No. 25-1004

which denied his appeal. Peterson then filed this action in fed- eral court, seeking judicial review of the Appeals Board’s final decision and claiming he was subject to procedures that were arbitrary and capricious and violated his Fifth Amendment right to due process. Finding otherwise, the district court af- firmed the Appeals Board’s ruling and dismissed the action. On appeal, Peterson maintains that the Appeals Board fol- lowed arbitrary procedures and that he was denied his due process rights to contest his removal. But the record shows otherwise: Peterson was given advance notice, multiple op- portunities to be heard and submit evidence, and months to prepare for his hearing before the Appeals Board. Because Pe- terson provides no basis for concluding that these procedures were inadequate, we affirm. I. Background Peterson began his employment as a pain-management physician at VAIHCS in 2016. In early 2020, however, VAIHCS placed Peterson on summary suspension due to con- cerns that his practice “d[id] not meet the accepted standards of practice and potentially constitute[d] an imminent threat to patient welfare.” The suspension letter—dated January 17, 2020, and signed by the VAIHCS Director—informed Peter- son that his suspension was effective immediately and that a comprehensive review of his treatments was underway. The letter advised Peterson of his right to provide information re- garding the cited concerns within fourteen days, but he did not do so. Though the letter stated that the comprehensive re- view would be completed within thirty days, VAIHCS granted itself multiple thirty-day extensions due to the COVID-19 pandemic and to comply with its internal policies. It ultimately completed the review on September 14, 2020. No. 25-1004 3

The next day, the Acting Chief of Staff of VAIHCS, Dr. Gerson Teran, prepared a memorandum balancing the aggravating and mitigating factors of the allegations against Peterson, which arose from his alleged mismanagement of patients’ opioid and benzodiazepine prescriptions. Teran’s memo ulti- mately proposed that Peterson be removed from duty. On September 17, the Clinical Executive Board at VAIHCS con- vened and recommended to the VAIHCS Director that Peter- son be removed. Peterson received formal notice that the Clinical Executive Board had recommended his removal and the permanent rev- ocation of his clinical privileges on October 13, 2020. The “Proposed Removal” described the charges against him: one charge of “failure to provide appropriate medical care,” sup- ported by twenty-one instances of conduct falling below the standard of care, and one charge of “failure to follow instruc- tion,” for an alleged incident in which Peterson interacted with a patient while on suspension. It further advised Peter- son of his rights to attorney representation, to review evi- dence, and to reply to the charges within seven days. The ev- idence on which the decision was based, or “evidence file,” was attached to the Proposed Removal. The Proposed Re- moval was signed by VAIHCS’s Specialty Service Chief. Peterson’s attorney requested ninety days to review the charges and prepare a response, but VAIHCS—required by statute to issue a final decision within fifteen days of the Pro- posed Removal—denied the request. Peterson filed no writ- ten reply to the charges and, on November 4, received a Re- moval Decision letter adopting the Proposed Removal. Peterson appealed his removal to the Appeals Board, and a hearing was scheduled for January 6, 2021. Peterson 4 No. 25-1004

immediately submitted a waiver of the Appeals Board’s stat- utory deadline to render a decision, indicating he would need more time to prepare, and the Appeals Board moved the hear- ing to February 24. The Appeals Board also granted Peter- son’s request to call an expert witness but denied his request for discovery of VAIHCS internal documents. Peterson then requested, and was granted, two further postponements of the hearing date after claiming difficulty in finding an expert. The Appeals Board’s grant of Peterson’s second request set June 2 as the new hearing date and May 17 as the deadline to name an expert but kept March 8 as the deadline for Peterson to submit other motions and non-expert exhibits. Though the record is unclear, Peterson appears to have identified his ex- pert on May 17, and requested for the hearing to be pushed back, for the third time, to June 30. But the Appeals Board de- nied this request, noting the three prior extensions and con- cluding “[t]here is time for the expert witness … to review the evidence file prior to the hearing.” For reasons that remain opaque, Peterson’s expert was un- able to review the evidence file and prepare a report in time for the June 2 hearing. In lieu of an expert report, Peterson himself prepared a 154-page Rebuttal responding to each of the Proposed Removal’s specifications. Peterson’s Rebuttal was submitted to the Appeals Board at 7:30 PM on June 1— the night before his hearing was scheduled to take place. At the hearing, Peterson moved to enter the Rebuttal as an exhibit, but the Appeals Board denied his request, noting an objection from the agency—the Department of Veterans Af- fairs was defending VAIHCS’s decision before the Appeals Board—that the timing of Peterson’s submission gave it no time to review the document prior to the hearing. Peterson No. 25-1004 5

instead attempted to read from the Rebuttal during question- ing by his attorney. The agency’s attorney objected again, and the Appeals Board instructed Peterson that he could refer to the evidence file and his notes (including the Rebuttal), but he could not read directly from the document. Peterson then re- fused to answer any further questions from his attorney. Members of the Appeals Board, wanting more testimony from Peterson, then questioned him directly, allowing him thirty seconds per question to review the evidence file and the Rebuttal before answering. The Appeals Board issued its decision on July 15, sustain- ing both charges against Peterson, with an accompanying re- port detailing the Appeals Board’s findings sustaining ten out of the twenty-one “failure to provide adequate care” allega- tions, plus the one “failure to follow instruction” allegation. The Appeals Board also sustained the penalty of removal and revocation, noting briefly that “the sustained charges are se- rious” and that it had reviewed VAIHCS’s discussion of ag- gravating and mitigating factors. The report also discussed the procedures used in reaching its decision. It noted one procedural error—the Proposed Re- moval was signed by the VAIHCS Chief of Specialty Service rather than the Acting Chief of Staff, as required by the Veter- ans Health Administration Handbook (“Handbook”). But it concluded the error was harmless, as the Acting Chief of Staff had been part of the Clinical Executive Board that voted on Peterson’s removal. The report then explained the Appeals Board’s decision to exclude the Rebuttal from evidence, not- ing that by the time Peterson submitted it, the deadline to sub- mit evidence had long passed and the agency lacked advance opportunity to review the document. The report concluded 6 No. 25-1004

that “the [Appeals Board] gave [Peterson] ample opportunity to prepare for the hearing and respond to the charges.” On October 12, 2021, the Deputy to the VA Undersecretary for Health approved the Appeals Board’s decision to remove Pe- terson; this marked the agency’s final decision on Peterson’s appeal. Peterson then filed suit against the Secretary of Veterans Affairs and the Department of Veterans Affairs. He argued that the Appeals Board’s decision to exclude his Rebuttal, its weighing of aggravating and mitigating factors, and various procedures taken in tension with the Handbook were arbi- trary and capricious and violated due process. Peterson then moved “in support of complaint for judicial review,” effec- tively a motion for summary judgment, and defendants cross- moved for summary judgment in opposition. The district court granted the defendants’ motion, affirm- ing the Appeals Board’s decision. The court found (1) the Ap- peals Board’s exclusion of the Rebuttal justified in light of the document’s untimeliness and the opportunities Peterson had been afforded to refer to it when providing testimony; (2) the Appeals Board’s consideration of aggravating and mitigating factors sufficient—if only “barely”—since the Appeals Board had cited at least one aggravating factor (the seriousness of charges) and noted the more thorough analyses performed by VAIHCS prior to the Appeals Board’s review; (3) Peterson failed to demonstrate that any harm resulted from the agency’s diversions from the letter of the Handbook, finding his arguments either undeveloped or unpersuasive; and (4) the Appeals Board’s procedures gave Peterson adequate due process, noting that he had been represented by counsel, per- mitted to retain an expert, and afforded multiple extensions. No. 25-1004 7

II. Discussion A physician employed by the VA can challenge a major adverse action, such as a suspension or discharge, under 38 U.S.C. § 7462. The statute allows employees to seek judicial review and overturn a final agency action that is “arbitrary, capricious, an abuse of discretion, or otherwise not in accord- ance with law.” 38 U.S.C. § 7462(f)(2)(A). “Arbitrary and ca- pricious” is a deferential standard when reviewing agency ac- tion; “[u]nder it, we will disturb an agency’s determination only if it lacks a ‘rational basis.’” Dubnow v. McDonough, 30 F.4th 603, 610 (7th Cir. 2022) (quoting White Eagle Co-op. Ass’n v. Conner, 553 F.3d 467, 474 (7th Cir. 2009)). On appeal, Peter- son presents the same arguments for review under § 7462(f)(2)(A) that he pursued below. We review those chal- lenges anew without deferring to the district court’s assess- ment. Id. at 609. A. Exclusion of the Rebuttal The Appeals Board’s exclusion of Peterson’s Rebuttal was neither arbitrary nor capricious. It is undisputed that the Ap- peals Board communicated the deadlines for submitting ex- hibits into the record and granted three extensions for Peter- son to obtain an expert. But Peterson failed to meet these deadlines, and instead—despite having over six months be- tween his effective removal and his hearing before the Ap- peals Board—submitted his own 154-page Rebuttal the even- ing before the hearing. In both the hearing and its later report, the Appeals Board explained that this timing gave the agency no time to review the voluminous Rebuttal before the hearing, preventing it from being included in the evidence file. This reasoned application of the Appeals Board’s procedural rules satisfies the obligation to provide a “rational basis” for its 8 No. 25-1004

decision. Id. at 610; see also Settling Devotional Claimants v. Cop- yright Royalty, 797 F.3d 1106, 1122 (D.C. Cir. 2015) (holding that administrative tribunal “reasonably declined to consider … methodological evidence given its untimely presenta- tion”). Moreover, while the Appeals Board ruled that Peterson could not circumvent its evidentiary ruling by simply reading the Rebuttal into the record, it allowed him to consult the doc- ument and any other notes (including the evidence file) when answering questions. Peterson contends that this arrange- ment “severely restricted” his ability to use the Rebuttal at the hearing but makes no attempt to explain how or why. Instead, Peterson cites to Doe v. Lieberman, another physician-removal case in which a district court held that the Appeals Board had acted arbitrarily and capriciously by excluding “arguably relevant” evidence and “fail[ing] to give any reason justifying the exclusion.” 2021 WL 4476748, at *8 (D.D.C. Sept. 30, 2021). But we do not find Doe persuasive here. For one, unlike the plaintiff in Doe, Peterson has not explained what made the Rebuttal even “arguably relevant” to the proceedings, or even if it included evidence that was not already contained in the file. But more importantly, unlike in Doe, the Appeals Board did give Peterson a reasoned basis for its exclusion. That is all that is required under the arbitrary-and-capricious standard, whatever the decision’s effect may be. See Dubnow, 30 F.4th at 610. It is also worth noting that the Appeals Board is just that: an appellate body. The Appeals Board hearing was neither Pe- terson’s first chance to submit evidence, nor an unfettered op- portunity to expand the evidentiary record. By applying an No. 25-1004 9

even-handed and clearly communicated deadline, the Ap- peals Board acted well within its bounds as an appellate body. B. Aggravating and Mitigating Factors We turn next to Peterson’s challenge to the Appeals Board’s analysis of aggravating and mitigating factors sup- porting the harsh penalty of removal and revocation. Peterson argues that the Appeals Board’s decision was deficient be- cause it failed to consider the twelve factors articulated in Douglas v. Veterans Administration, 5 M.S.P.B. 313 (1981). Those factors include “[t]he nature and seriousness of the offense … [in] relation to the employee’s duties, position, and responsi- bilities,” “the employee’s past disciplinary record,” “[the] consistency of the penalty with those imposed upon other em- ployees,” and “the adequacy and effectiveness of alternative sanctions to deter such conduct,” among others. Douglas, 5 M.S.P.B. at 332. We have yet to decide whether the Douglas factors are binding on the Appeals Board. But even assuming they were, a thorough accounting of the Douglas factors was conducted in Peterson’s case. Prior to Peterson’s Proposed Removal, Teran’s September 2020 memo walked through each of the twelve Douglas factors in justifying the proposal that Peterson be removed from employment. The Proposed Removal and the Removal Decision also contained abridged discussions of Douglas factors, focusing on the seriousness of the offense, Pe- terson’s responsibilities as a seasoned provider in regular con- tact with patients, and lack of rehabilitation potential. As the district court observed, the Appeals Board’s formal consideration of aggravating and mitigating factors was less substantive. The Appeals Board’s report noted only the 10 No. 25-1004

seriousness of the offense in upholding the penalty of removal and revocation and noted no potentially mitigating factors. The Appeals Board did, however, refer to the discussions of aggravating and mitigating factors in the Removal Decision, Proposed Removal Order, and Teran’s memo. And under the arbitrary-and-capricious standard, we are to “uphold a deci- sion of less than ideal clarity if the agency’s path may reason- ably be discerned.” Motor Vehicle Mfrs. Ass’n of the U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (quotation omitted). Here, the Appeals Board’s reference to the fulsome analysis of the Douglas factors in the preceding documents provides a discernible path the agency took to upholding the penalty against Peterson. We thus conclude that the Appeals Board’s analysis of aggravating and mitigating factors in re- viewing Peterson’s penalty was sufficient. C. Violations of the Handbook Apart from his challenges to the Appeals Board’s proce- dures and reasoning, Peterson also argues that VAIHCS acted arbitrarily and capriciously by violating various provisions of the Handbook in the course of his removal proceeding. These purported violations include: (1) failing to complete a com- prehensive review of his charges within thirty days of his sus- pension, (2) failure of the Chief of Staff or Acting Chief of Staff to sign his removal letter, and (3) not providing Peterson with a complete copy of all evidence upon which the charges were based. But Peterson has failed to either identify a genuine vi- olation of the Handbook or develop a theory of how he was harmed by these purported violations. Starting with Peterson’s assertion of improper delay: sec- tion 1100.19 of the Handbook does state that, following a sum- mary suspension, “the comprehensive review… should be No. 25-1004 11

accomplished within 30 calendar days.” But the Handbook also provides an exception to this deadline “where the com- prehensive review cannot be accomplished in 30 days,” re- quiring only that “the circumstances should be documented with an expectation of when the comprehensive review will be completed.” Here, while VAIHCS did not complete its re- view within the initial thirty-day timeframe, it sent letters to Peterson each month explaining the reasons for the delay (generally, due to COVID-19) and setting a new deadline within thirty days. Peterson makes no argument that VAIHCS was required to do more under section 1100.19. Peterson’s other claims about violations of the Handbook are undeveloped. He maintains that the Proposed Removal was arbitrary and capricious because it was signed by the Chief of Specialty Service, not the Chief or Acting Chief of Staff as required by the Handbook. But as the Appeals Board observed, the Acting Chief of Staff (Teran) was involved with the removal process and officially voted to remove Peterson from his position. Thus, whatever procedural error VAIHCS committed in having the Chief of Specialty Service sign the Proposed Removal was harmless. See Zero Zone, Inc. v. United States Dep’t of Energy, 832 F.3d 654 (7th Cir. 2016) (“[W]e will not invalidate an agency decision based on procedural error unless the errors alleged could have affected the outcome.” (quotation omitted)); Doran v. Wilkie, 768 F. App’x 340, 354 (6th Cir. 2019) (“[O]ur review of administrative agency deci- sions is subject to harmless-error analysis[.]”). Finally, Peterson briefly argues that he failed to receive a complete copy of all the evidence against him, as required by the Handbook. But the Proposed Removal included the evi- dence file that VAIHCS relied upon in making the charges 12 No. 25-1004

against him, and even Peterson’s complaint states that he re- ceived this evidence file—containing over 2,000 pages—in November 2020. While Peterson faults VAIHCS for omitting evidence covering “the entire term of [his] treatment of some patients,” he does not identify any specific evidence that he believes VAIHCS relied on but did not attach to the Proposed Removal. D. Due Process Alternatively, Peterson argues that the combined effect of the Appeals Board’s and VAIHCS’s procedural decisions de- nied him due process in the revocation of his federal employ- ment. A public employee facing termination has due process rights to certain pre-deprivation procedures, including “no- tice of the proposed deprivation, a statement of reasons, and an opportunity to be heard in response.” Bradley v. Village of University Park, 929 F.3d 875, 882 (7th Cir. 2019) (quoting Bd. of Regents v. Roth, 408 U.S. 564, 569–70 (1972)). 1 Contrary to Peterson’s arguments, each of these require- ments was met here. Peterson was given initial notice of the concerns over his standard of care when he was placed on summary suspension, notice of the Clinical Executive Board’s decision to recommend his removal, and notice of the appeal- able Removal Decision. When a decision was made following the comprehensive review, the Proposed Removal gave Pe- terson a statement of the reasons for the removal and gave

1 We observe that Peterson’s due process challenge goes to his re- moval from federal employment; he does not raise a separate challenge to the procedures he received (or lack thereof) prior to his near-ten-month suspension leading up to the removal. That challenge would be subject to the balancing test established in Gilbert v. Homar, 520 U.S. 924 (1997). No. 25-1004 13

him an initial opportunity to be heard by filing a reply within seven days. The Appeals Board gave Peterson even more pro- cess, providing him with a hearing to present testimony, call witnesses, and even granting multiple extensions for him to produce an expert in his defense. Peterson supplies no basis to conclude that these proce- dures were insufficient to meet due process requirements. While the exclusion of his lengthy Rebuttal and refusal to pro- vide a fourth extension to prepare his expert may have made his defense more difficult, Peterson was given months to pre- pare for his Appeals Board hearing and numerous opportu- nities to reply to the charges against him. III. Conclusion For the reasons stated above, the judgment of the district court is AFFIRMED.