Trial News

The Federal Circuit has upheld a Department of Veterans Affairs rule concerning the calculation of disability benefits for people with multiple disabilities. The decision allows the VA to make disability benefits eligibility calculations without considering the cumulative impact of a claimant’s multiple disabilities, denying many veterans a disability rating that represents their true level of impairment. (Nat’l Org. of Veterans’ Advocates, Inc. v. Sec’y of Veterans Aff., 2019 WL 2571392 (Fed. Cir. June 24, 2019).)

The VA processes service-related disability claims for veterans under 38 U.S.C. §1155, including determining the degree to which a veteran’s earning capacity has been reduced due to disability. The VA adopted implementing regulations under 38 C.F.R. §3.321(b)(1) that set forth a methodology for calculating benefits eligibility. The VA benefits secretary or director could, under §3.321(b)(1), approve “an extra-schedular evaluation commensurate with the average earning capacity impairment due exclusively to the service-connected disability or disabilities.” In cases with an “exceptional or unusual disability picture,” the VA could look to factors including “marked interference with employment or frequent periods of hospitalization” to find the application of the standard “schedular evaluations” to be “insufficient.” Though §3.321(b)(1) included references to “disabilities” and “evaluations” in the plural, in practice, the VA considered the impact of multiple disabilities individually rather than collectively.

In 2013, Marvin Johnson, a U.S. Army veteran, challenged the VA’s interpretation of §3.321(b)(1), asserting that “the plain language . . . requires the . . . VA to consider the combined effect of all of a veteran’s service-connected disabilities.” Johnson argued that the VA should have considered the combined effects of his service-connected rheumatic heart disease and degenerative knee disabilities in determining his disability rating. The Veterans Court upheld the VA Board’s decision in which it found that the language of §3.321(b)(1) was ambiguous, and therefore deference should be given to the VA’s interpretation. But on appeal in 2014, the Federal Circuit disagreed, finding the language of §3.321(b)(1) to unambiguously require the VA to consider the collective impact of all of a veteran’s disabilities, which may be “greater than the sum of each individual disability’s impact.” (Johnson v. McDonald, 762 F.3d 1362 (2014).)

The VA responded to Johnson by revising §3.321 in 2017 to prohibit the VA from considering the cumulative or “synergistic” impact of multiple disabilities. The VA stated in its rulemaking notice that the revisions were intended to clarify that “extraschedular evaluations” that look beyond the agency’s general ratings schedule in exceptional cases are “available only for an individual service-connected disability but not for the combined effect of more than one service-connected disability.” The current text of §3.321(b)(1) contains no references to “disabilities” or “evaluations” in the plural—instead, the VA arranges disabilities according to severity and determines the percent efficiency for the highest rated disability. Then this percent efficiency is reduced by any additional disabilities, in order of declining severity, to determine an overall disability rating.

The National Organization of Veterans’ Advocates (NOVA) petitioned for review of the final rule, contending that the VA’s rulemaking was arbitrary and capricious. The revised rating methodology does not properly account for the “synergistic effect of multiple disabilities,” according to NOVA. In addition, NOVA contends that in revising §3.321(b)(1), the VA did not explain “why it was not feasible or desirable to take account of the synergistic effect of multiple disabilities.”

The Federal Circuit disagreed, finding that the VA adequately explained the reason for the regulatory revision and that the revised regulation is not “on its face arbitrary and capricious.” The court found that the VA’s rule accounts for multiple disabilities, just not in the manner that NOVA feels is best. The court acknowledged that “there may be situations in which the rules may not account for the unique facts of every single case,” but posited that the disability rating calculation methodology under revised §3.321(b)(1) is more easily administered, more efficient, and will lead to less subjective determinations. The court did leave room for challenges based on the facts of an individual veteran’s case, saying that its holding “should not be read to preclude an as-applied challenge that application of the amended regulation in an exceptional case yields a result so patently unfair as to make the rule’s application arbitrary and capricious.”

Although NOVA’s claim was unsuccessful, Executive Director Diane Boyd Rauber said that “NOVA is currently evaluating options to move forward and is committed to ensuring that the VA adjudication process remains fair and veteran-focused, so that veterans receive every benefit they have earned under the law.”

Robert Chisholm, a former NOVA president and 20-year member whose Providence, R.I., firm focuses on representing disabled veterans, said he was “proud of the organization for challenging the VA’s regulation on behalf of America’s veterans.” He added that the court was leaving the door open for truly exceptional cases and that “extraschedular ratings remain the subject of much litigation.” Chisholm noted that “the Court of Appeals for Veterans Claims is actually considering these ratings en banc at the end of August in Long v. Wilkie. We may be able to better opine on what constitutes a ‘truly exceptional case’ after that decision.”