Lewis v. McDonough

110 F.4th 1273

• Court: Court of Appeals for the Federal Circuit
• Decided: August 1, 2024
• Docket: 23-1298
• Status: Published

Opinion

Case: 23-1298 Document: 34 Page: 1 Filed: 08/01/2024

United States Court of Appeals for the Federal Circuit ______________________

NORAH R. LEWIS, SR., Claimant-Appellant

v.

DENIS MCDONOUGH, SECRETARY OF VETERANS AFFAIRS, Respondent-Appellee ______________________

2023-1298 ______________________

Appeal from the United States Court of Appeals for Veterans Claims in No. 21-2201, Judge Joseph L. Toth. ______________________

Decided: August 1, 2024 ______________________

SEAN A. RAVIN, Miami, FL, argued for claimant-appel- lant.

EVAN WISSER, Commercial Litigation Branch, Civil Di- vision, United States Department of Justice, Washington, DC, argued for respondent-appellee. Also represented by BRIAN M. BOYNTON, MARTIN F. HOCKEY, JR., PATRICIA M. MCCARTHY; EVAN SCOTT GRANT, Y. KEN LEE, Office of Gen- eral Counsel, United States Department of Veterans Af- fairs, Washington, DC. ______________________

Before LOURIE, SCHALL, and TARANTO, Circuit Judges. Case: 23-1298 Document: 34 Page: 2 Filed: 08/01/2024

SCHALL, Circuit Judge. Norah R. Lewis, Sr. appeals the December 12, 2022 de- cision of the United States Court of Appeals for Veterans Claims (“Veterans Court”) in Lewis v. McDonough, No. 21-2201, 2022 WL 17576398 (Vet. App. Dec. 12, 2022). In that decision, the Veterans Court affirmed the March 22, 2021 decision of the Board of Veterans’ Appeals (“Board”) that sustained the decision of the Department of Veterans Affairs (“VA”) Regional Office (“RO”) reducing Mr. Lewis’s disability rating for post-traumatic stress dis- order (“PTSD”) from 70 percent to 30 percent. For the rea- sons stated below, we affirm. BACKGROUND I Mr. Lewis is a U.S. Army veteran who receives service- connected disability compensation for combat-related PTSD, due to his experiences in the Korean War. In 2009, the VA increased his disability rating for PTSD from 30 percent to 70 percent. Lewis, 2022 WL 17576398, at *1. Subsequently, however, following a recommendation made in July 2015, in a rating decision dated July 21, 2016, the RO reduced his rating back to 30 percent. J.A. 162. In its decision, the RO informed Mr. Lewis that, based upon evi- dence from a rating decision dated July 9, 2015, a VA ex- amination dated September 12, 2015, and VA outpatient treatment records dated October 2, 2015, it had determined that the severity of his disability most closely approxi- mated the criteria for a 30 percent disability evaluation. J.A. 163. Mr. Lewis timely appealed the RO decision to the Board. The Board issued a decision on Mr. Lewis’s appeal in April of 2018, sustaining the RO’s decision. The Board’s decision was vacated by the Veterans Court, however, and the case remanded to the Board, after Mr. Lewis and the VA Secretary (“Secretary”) agreed that the Board needed to issue a new decision because it had failed to address ma- terial evidence favorable to Mr. Lewis. Lewis, 2022 WL Case: 23-1298 Document: 34 Page: 3 Filed: 08/01/2024

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17576398, at *1. In November of 2019, the Board issued a second decision. After Mr. Lewis again appealed to the Veterans Court, though, the court again granted the par- ties’ joint motion to vacate and remand, this time because the Board had failed to comply with the prior remand or- der. Id. II On remand to the Board for the second time, Mr. Lewis raised an argument that he had not previously presented. He contended that the July 2016 rating decision imple- menting the reduction in his disability compensation from 70 percent to 30 percent was void ab initio. Id. According to Mr. Lewis, this was so because, when the RO found im- provement in his condition and reduced his compensation, it had failed to make a finding required by 38 C.F.R. § 3.344(a). Section 3.344(a) provides that, for ratings that have remained unchanged for five years or more, “though material improvement in the physical or mental condition is clearly reflected[,] the rating agency will consider whether the evidence makes it reasonably certain that the improvement will be maintained under the ordinary condi- tions of life.” 38 C.F.R. § 3.344(a); see also id. § 3.344(c) (indicating that § 3.344(a) applies to “ratings which have continued for long periods at the same level (5 years or more)” and not “disabilities which have not become stabi- lized and are likely to improve”); Hanser v. McDonough, 56 F.4th 967, 971 (Fed. Cir. 2022) (interpreting the paren- thetical phrase “(5 years or more)” in § 3.344(c) to be defi- nitional). Mr. Lewis concluded his argument to the Board on the July 2016 rating reduction with the following state- ment: [T]he question before the Board is not whether Mr. Lewis’[s] PTSD has improved or whether any pur- ported improvement would be sustained under the ordinary conditions of life. Rather, the question be- fore the Board is whether the [RO], in its July 2016 decision reducing benefits made a finding that any purported improvement would be sustained under Case: 23-1298 Document: 34 Page: 4 Filed: 08/01/2024

the ordinary conditions of life. Here, it is clear that the [RO] made no such finding, and nothing in its decision could be reasonably read as such a finding. Because of this, regardless of the relative merit one may ascribe to a finding of improvement in Mr. Lewis’[s] condition, because the [RO] did not make the required finding, its decision is void ab initio and must be reversed. Once benefits are re- stored, the VA remains free to initiate new proceed- ings aimed at reducing Mr. Lewis’[s] benefits, but it must do so within the confines of the strict pro- cedural safeguards that have been established in law. J.A. 47. In its March 2021 decision, the Board began by stating that the record showed that Mr. Lewis’s PTSD “materially improved under the ordinary conditions of life so as to war- rant a reduction from 70 percent to 30 percent for [his] ser- vice-connected disability.” J.A. 21. Next, the Board examined and summarized the October 2009 private exam- ination that led to Mr. Lewis’s 70 precent rating and the seven medical examinations of Mr. Lewis that were con- ducted by the VA thereafter in April 2011, September 2011, December 2014, May 2015, September 2015, November 2015, and April 2016. J.A. 22–26. Stating that the issue before it was whether the RO was proper in reducing Mr. Lewis’s evaluation at the time the RO proposed to reduce the evaluation in July 2015 and at the time the RO reduced the evaluation in July 2016, the Board found that the rec- ord of multiple VA examinations and VA treatment records from 2011 to 2016 showed improvement in Mr. Lewis’s con- dition. The Board concluded: Thus, by the time of the April 2016 VA examina- tion, the improved symptoms had been shown for five years, which the Board finds is indicative of sustained improvement under the ordinary condi- tions of life, as the improved symptoms were main- tained during this five-year period of time, which Case: 23-1298 Document: 34 Page: 5 Filed: 08/01/2024

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the Board finds would be indicative of a disability being maintained under the ordinary conditions of life. J.A. 32–33. Accordingly, the Board found that the disability rating reduction to 30 percent, which was effectuated by the rat- ing decision of July 2016, was in accordance with the re- quirements of 38 C.F.R. § 3.344(a). It therefore refused to restore the 70 percent evaluation. J.A. 33. III On appeal to the Veterans Court, Mr. Lewis repeated the argument that he had made to the Board—that the July 2016 rating decision was procedurally deficient. Mr. Lewis stated: “Although the [RO] found that Mr. Lewis’s condition had improved, it did not find, as required by [38 C.F.R.] § 3.344(a) that there had been ‘material im- provement’ that was ‘reasonably certain . . . [to] be main- tained under the ordinary conditions of life.’” J.A. 425 (third alteration in original). The Veterans Court rejected Mr. Lewis’s argument and affirmed the decision of the Board. The court stated that “[n]othing in the text of § 3.344 suggests that the RO has a requirement to issue certain findings in reduction cases.” Lewis, 2022 WL 17576398, at *2. The court explained that § 3.344 “guides the Agency as to how to approach a rating reduction case,” in that it tells the VA what to review in the record, limits the types of evidence it may use in making a decision and provides for certain considerations to be taken into account (“whether the evidence makes it reasonably certain that the improvement will be maintained under the ordinary conditions of life”). Id. “But,” the court stated, “there is no language in § 3.344 commanding the RO to is- sue those findings first lest the reduction have no effect.” Id. Finding that the Board had made the required findings in its decision, the Veterans Court affirmed the Board’s de- cision. Id. at *3. Mr. Lewis timely appealed. Case: 23-1298 Document: 34 Page: 6 Filed: 08/01/2024

DISCUSSION I On appeal, as he did before the Board and the Veterans Court, Mr. Lewis argues that the July 2016 rating decision was void ab initio. Mr. Lewis posits that the plain lan- guage of 38 C.F.R. § 3.344 makes it clear that a rating de- cision in effect for five or more years at the same level, like his 70 percent rating, can only be reduced if certain proce- dural safeguards are met. Among these and relevant to this case, he states, is the requirement of 38 C.F.R. § 3.344 that a “rating agency will consider whether the evidence makes it reasonably certain that the improvement will be maintained under the ordinary conditions of life.” Appel- lant’s Br. 15 (quoting 38 C.F.R. § 3.344(a) (emphasis added)). 1 Mr. Lewis continues that the plain language of the regulation requires that the rating agency “will con- sider,” and that consideration can only be demonstrated by making the necessary finding in a rating decision. “Requir- ing that the rating agency consider a factor without requir- ing that agency to make that finding on the record would render the regulatory command meaningless.” Id. In mak- ing this argument, Mr. Lewis relies on Brown v. Brown, 5 Vet. App. 413, 417–19, 421–22 (1993), and Stern v. McDonough, 34 Vet. App. 51, 59 (2021), which he argues stand for the proposition that an RO decision can be

1 It is undisputed that the term “rating agency” in 38 C.F.R. § 3.344 refers to a VA regional office. See 38 C.F.R. § 3.104(a) (“A decision of a VA rating agency is binding on all VA field offices as to conclusions based on the evidence on file at the time VA issues written notifica- tion in accordance with 38 U.S.C. [§] 5104. A binding agency decision is not subject to revision except by the Board of Veterans’ Appeals, by Federal court order, or as provided in §§ 3.105, 3.2500, and 3.2600.”); see also Oral arg. at 15:02–16:00 (May 8, 2024) (counsel for the govern- ment acknowledging that “rating agency” refers to the RO). Case: 23-1298 Document: 34 Page: 7 Filed: 08/01/2024

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rendered void ab initio for failure to make specific findings pursuant to 38 C.F.R. § 3.344. The Secretary argues that nothing in the text of § 3.344 or any related regulation requires that a rating decision be based exclusively on statements in the RO’s decision with- out reference to the Board’s subsequent findings and deci- sion. The Secretary acknowledges that 38 C.F.R. § 3.105(e) requires that a rating decision reducing a disability evalu- ation for a service-connected disability set forth “all mate- rial facts and reasons” and that the VA notify the veteran of the proposed reduction in evaluation. The Secretary also acknowledges that § 3.344 sets forth certain requirements regarding stabilization of disability evaluations. The Sec- retary states, however, that “Mr. Lewis cites no authority suggesting that, if the RO’s proposed notice and reduction decision are deficient, a subsequent decision by the [B]oard that affirms the reduction and provides adequate reasons and bases would not be sufficient to cure such a defect.” Appellee’s Br. 11. The Secretary therefore urges us to af- firm the decision of the Board. II Our jurisdiction to review decisions of the Veterans Court is limited. We may review the validity of a decision with respect to a rule of law or interpretation of a statute or regulation that was relied upon by the Veterans Court in making its decision. 38 U.S.C. § 7292(a). However, ex- cept with respect to constitutional issues, we may not re- view challenges to factual determinations or challenges to the application of a law or regulation to the facts of a case. Id. § 7292(d)(2). In reviewing a Veterans Court decision, we decide “all relevant questions of law, including inter- preting constitutional and statutory provisions,” and we set aside any interpretation thereof “other than a determi- nation as to a factual matter” relied upon by the Veterans Court that we find to be “(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; (B) contrary to constitutional right, power, privilege, or im- munity; (C) in excess of statutory jurisdiction, authority, or Case: 23-1298 Document: 34 Page: 8 Filed: 08/01/2024

limitations, or in violation of a statutory right; or (D) with- out observance of procedure required by law.” Id. § 7292(d)(1). We have jurisdiction over Mr. Lewis’s appeal because it raises an issue of regulatory interpretation. We review questions of regulatory interpretation de novo. Cavaciuti v. McDonough, 75 F.4th 1363, 1366 (Fed. Cir. 2023). III Two regulations are at issue in this case. The first is 38 C.F.R. § 3.105(e). It provides in relevant part as follows: Where the reduction in evaluation of a service-con- nected disability or employability status is consid- ered warranted and the lower evaluation would result in a reduction or discontinuance of compen- sation payments currently being made, a rating proposing the reduction or discontinuance will be prepared setting forth all material facts and rea- sons. The second regulation at issue is 38 C.F.R. § 3.344(a). It sets forth certain requirements that must be met before the VA reduces a disability rating. As noted above, as rel- evant to this appeal, § 3.344(a) states that “though mate- rial improvement in the physical or mental condition is clearly reflected[,] the rating agency will consider whether the evidence makes it reasonably certain that the improve- ment will be maintained under the ordinary conditions of life.” 38 C.F.R. § 3.344(a). Thus, in its decision reducing Mr. Lewis’s disability rating for PTSD from 70 percent to 30 percent, pursuant to § 3.105(e) the RO was required to set forth “all material facts and reasons” for the reduction. See Breland v. McDonough, 22 F.4th 1347, 1352 (Fed. Cir. 2022) (“Section 3.105(e) plainly states that prior to implementing a disa- bility rating reduction that would ‘result in a reduction or discontinuance of compensation payments currently being made,’ all material facts and reasons for such a reduction Case: 23-1298 Document: 34 Page: 9 Filed: 08/01/2024

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must be laid out.”) (quoting 38 C.F.R. § 3.105(e)). This in- cluded “all material facts and reasons” bearing on the re- quirement in § 3.344(a) that the VA “consider” whether the improvement it had found in Mr. Lewis’s condition would be “maintained under the ordinary conditions of life.” It is undisputed that, in its July 2016 rating decision, the RO failed to state any “facts and reasons” bearing upon the question whether the improvement in Mr. Lewis’s condi- tion that it had found would “be maintained under the or- dinary conditions of life.” As seen, it is for this reason that Mr. Lewis argues that the decision of the RO was void ab initio and that his 70 percent rating should be reinstated, effective the date it was reduced. We do not agree. While it is undisputed that the RO failed to make the findings required by § 3.105(e), it also is undisputed that, in its March 2021 decision, the Board did make those findings. Then, as set forth in Part II of the BACKGROUND section above, the Board’s decision examined at length the record of Mr. Lewis’s pertinent medical his- tory, beginning in 2009 and continuing through 2016. And based upon that examination, the Board found that the RO’s reduction of Mr. Lewis’s disability rating was fully supported by the record. And, the Board also found that the fact that Mr. Lewis’s improved symptoms were main- tained during the relevant five-year period of time was “in- dicative of a disability being maintained under the ordinary conditions of life.” J.A. 32–33. Indeed, at oral ar- gument, counsel for Mr. Lewis acknowledged that if the RO had made the findings the Board did, Mr. Lewis would not have asserted that the July 2016 RO decision was void ab initio. Oral arg. 5:12–40 (May 8, 2024) (“If you cede that the Board’s decision contained all that information . . . and the rating decision did not contain that information . . . if you were to switch them then you might find . . . or believe that that rating decision shouldn’t be void ab initio because it complies with all the requirements of 3.105(e) and 3.344(a).”). Case: 23-1298 Document: 34 Page: 10 Filed: 08/01/2024

Contrary to Mr. Lewis’s argument, Brown and Stern do not broadly stand for the proposition that an RO decision is rendered void because of the RO’s failure to make find- ings under § 3.105(e) and § 3.344. In Brown, the Veterans Court held that the Board’s decision failed to comply with the requirements of § 3.344(a) and other regulations appli- cable to rating reductions. 5 Vet. App. at 419–20. In that case, the Board had also erred by requiring, in a reversal of the burden of proof, that the veteran prove by a prepon- derance of evidence that he was entitled to an unreduced rating. Id. at 421–22. Accordingly, the Veterans Court set aside the Board’s decision reducing the veteran’s rating as “not in accordance with law.” Id. at 422. In Stern, the Vet- erans Court reversed the Board’s decision and reinstated an original disability rating where, similar to Brown, the Board had failed to make a finding necessary for the lawful reduction of a disability rating. 34 Vet. App. at 59. In do- ing so, the Court discussed the role of the regulations per- taining to rating reductions, stating: [T]he Court has held that reversal and reinstate- ment is the appropriate remedy where VA has not provided the procedural protections afforded in § 3.105(e), because failure to afford notice and an opportunity to present additional evidence as out- lined in that regulation “deprive[s a veteran] of the regulatory process that VA created to help veterans adjust to a reduction in disability compensation payments and to submit evidence or argument to contest such an action.” Id. at 56 (quoting Murphy v. Shinseki, 26 Vet. App. 510, 516 (2014)). Thus, as the Veterans Court correctly ob- served in Mr. Lewis’s case, “Brown held, and Stern reaf- firmed, that, if the Board fails to make the required findings under § 3.344, the [RO’s] reduction is void ab ini- tio.” Lewis, 2022 WL 17576398, at *3. In short, neither Brown nor Stern held that the Board’s findings cannot cure a deficiency in an RO decision. Case: 23-1298 Document: 34 Page: 11 Filed: 08/01/2024

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The Board is an appellate body within the VA that has jurisdiction under 38 U.S.C. § 7104 to review decisions made under 38 U.S.C. § 511(a). Disabled Am. Vets. v. Sec’y of Vets. Affs., 327 F.3d 1339, 1346 (Fed. Cir. 2003). As we have explained, “[t]ogether, §§ 511(a) and 7104(a) dictate that the Board acts on behalf of the Secretary in making the ultimate decision on claims and provides ‘one review on appeal to the Secretary’ of a question ‘subject to decision by the Secretary’ under § 511(a).” Id. at 1347. The Board con- ducts de novo review of RO proceedings based on the entire record. Disabled Am. Vets. v. Sec’y of Vets. Affs., 419 F.3d 1317, 1319 (Fed. Cir. 2005) (first citing 38 U.S.C. § 7104(a); and then citing Donovan v. West, 158 F.3d 1377, 1381 (Fed. Cir. 1998)). Accordingly, what the Board did here was fully consistent with the role assigned to it in the statutory scheme and as required by the pertinent regulations: it made the ultimate decision regarding Mr. Lewis’s disabil- ity rating based on the entire record and taking into ac- count the requirements of § 3.105(e) and § 3.344(a). In doing so, it satisfied the VA’s duty to follow the procedural protections in place for ratings reductions. CONCLUSION For the foregoing reasons, we affirm the decision of the Veterans Court affirming the decision of the Board. AFFIRMED COSTS No costs.