On March 14, 2019, the United States Court of Appeals for Veterans Claims (CAVC) issued a precedential decision in a case regarding entitlement to a total disability rating based on individual unemployability (TDIU). Precedential means that this decision will be persuasive for VA when deciding subsequent cases with similar fact patterns. In its decision, the Court outlined certain standards for VA to uphold when adjudicating the issue of TDIU. Specifically, it clarified the meaning of the phrase “unable to secure and follow substantially gainful employment”, which is a determining factor in deciding whether a veteran is entitled to TDIU. Therefore, the Court’s decision in Ray v. Wilkie will have a significant effect going forward for veterans seeking TDIU benefits.
CCK discusses the outcome of the Ray case and what it means for veterans
CCK discussed the wide-ranging impact of the Court’s precedential decision and how it will affect Veterans Law moving forward. CCK noted the importance of the Court’s decision in finally establishing standards for VA so that not only will adjudication be more consistent, but also veterans applying for TDIU will know what to expect. This precedential decision finally gives more of a road map so veterans can be treated fairly throughout the VA system and no longer hides standards from veterans, adjudicators, and representatives. This increased structure and transparency will better help veterans obtain the disability benefits to which they are rightfully entitled.
Factual and Procedural History of Ray v. Wilkie
Mr. Ray served honorably in the United States Army from November 1966 to November 1969 and is service-connected for several conditions with a combined disability rating of 50 percent. In September 2005, he filed a claim for a total disability rating based on individual unemployability (TDIU), stating that he could not work due to his service-connected conditions. However, the Regional Office (RO) denied his claim and he continued to appeal to the Board of Veterans’ Appeals. In July 2014, the Board remanded the issue of entitlement to TDIU for referral under 38 CFR § 4.16(b) to the Director of Compensation Services for extraschedular consideration. The Director denied TDIU in March 2015 and the RO implemented the Director’s decision that same month. Mr. Ray again appealed to the Board, which also denied him an extraschedular TDIU rating.
The Board found that his service-connected conditions did not render him “unable to secure and follow substantially gainful employment” consistent with his education and special training. Importantly, Mr. Ray had a high school education and completed one semester of college. He worked in jobs involving construction until September 2004 when his disabilities prevented him from continuing. At that time, Mr. Ray did obtain some training in typing and office skills, but his record is unclear as to whether he was successful in gaining those skills. Following the Board’s denial, CCK stepped in to appeal to Court on the Veteran’s behalf.
CCK appeals Board denial of TDIU and presents oral argument at the CAVC
CCK successfully appealed to the CAVC the Board decision that denied entitlement to TDIU on an extraschedular basis. On September 5, 2018, CCK delivered an oral argument regarding this matter at the CAVC in Washington, D.C. Specifically, CCK argued that the Board’s 2014 decision to refer the issue of TDIU represented a binding factual finding that the Board impermissibly changed when it later denied Mr. Ray an extraschedular TDIU rating in February 2017. In other words, the Board originally found that Mr. Ray was eligible for TDIU under 38 CFR § 4.16(b). Therefore, it should not be allowed to go back on this finding and subsequently deny entitlement to TDIU on an extraschedular basis.
Court issues precedential decision and sends Veteran’s case back to the Board
On appeal, the Court was required to answer two important questions: (1) What is the effect, if any, of the Board’s determination to refer a case for extraschedular consideration under 38 CFR § 4.16(b) when the Board later reviews the Director’s decision not to award an extraschedular TDIU rating; and (2) Does VA’s refusal to define key terms in § 4.16(b) make the Board’s statement of reasons or bases inadequate, and if so, should the Court interpret those terms itself? Here, the Court’s answers to these questions not only affect Mr. Ray’s case specifically, but also Veterans Law as a whole, as the ambiguous language of 38 CFR § 4.16(b) has long impacted veterans’ pursuit of TDIU benefits. While VA instructs that all veterans who cannot secure and follow substantially gainful employment are entitled to a total rating (i.e. 100 percent), it does not define what that means. In using such broad, ambiguous terms, VA has been able to highly individualize TDIU assessment and thereby inconsistently adjudicate veterans’ claims for benefits under 38 CFR § 4.16.
In response to the first question at hand, the Court found that the Board’s initial decision to refer TDIU under § 4.16(b) “addresses whether there’s sufficient evidence to substantiate a reasonable possibility that a veteran is unemployable by reasons of his or her service-connected disabilities.” If the Director of Compensation then denies an extraschedular TDIU rating, on review of that decision, the Board must ensure that it adequately explains its reasoning when a factual finding at the referral stage comes out differently at the review stage. Therefore, the referral decision is not categorically binding, but depending on how specific the referral decision was and whether the record has changed since then, it is “possible that no amount of explanation may overcome the Board’s initial finding.”
Regarding the second question, the Court noted that ideally, VA would have interpreted the phrase “unable to secure and follow substantially gainful employment.” However, since VA has refused to provide an adequate definition over the years, the Court decided to interpret the phrase itself. Importantly, this is the first occasion in which the Court has interpreted this phrase and provided guidance on what it means to “secure and follow” said employment. Here, the Court found that the phrase “unable to secure and follow a substantially gainful employment” in § 4.16(b) has both an “economic” and “noneconomic” component. Economic refers to the veteran’s ability to earn more than a marginal income as determined by the federal poverty threshold for a single person. The noneconomic component involves what to assess in determining if a veteran can actually work. The Court concluded that attention must be given to the following:
- Veteran’s history and education, skills, and training;
- Whether the veteran has the physical ability (both exertional and nonexertional) to perform the type of activities (e.g. sedentary, light, medium, heavy or very heavy) required by the occupation at issue – including limitations on lifting, bending, sitting, standing, walking, etc., and auditory/visual limits; and
- Whether the veteran has the mental ability to perform the activities required by the occupation at issue – including limitations on memory, concentration, ability to adapt to change, handle work place stress, get along with coworkers, and demonstrate reliability and productivity.
In regards to the above-mentioned factors, the Court emphasized that they do not constitute a checklist. Instead, a factor only needs to be considered if raised by the evidence of record.
In line with these findings, the Court remanded Mr. Ray’s case because the Board failed to explain why the factual finding it made in the referral stage came out differently at the review stage. On remand, the Board must ensure that it explains its different factual determinations at each stage and readjudicate Mr. Ray’s claim for TDIU benefits.
Bailiff: All rise! Oyez, oyez, oyez! The United States Court of Appeals for Veterans Claims is now in session. The Honorable Mary J. Schoelen presiding. All of the business before this court draw near and you shall be heard. God bless the United States and this honorable court. Please be seated.
Judge Schoelen: Good morning. My name is Judge Schoelen, to my right is Judge Allen, to my left is Judge Toth. We’re here today to hear the case of Eddie D. Ray v. Robert L. Wilkie, Secretary of Veterans Affairs, Docket Number 170781. Would counsel for each party please note their appearance for the record?
Barbara Cook: Good morning. Barbara Cook from the law firm of Chisholm Chisholm & Kilpatrick, for the veteran, Eddie Ray. With me at counsel table is April Donahower, also of the firm. Thank you.
Amanda Radke: Good morning, Your Honors. Amanda Radke, on behalf of the Secretary and with me at counsel table is Ed Cassidy.
Judge Schoelen: Thank you. Would the appellant’s counsel wish to reserve any time for rebuttal?
Barbara: I would, Your Honor. I’d like to reserve ten minutes, please.
Judge Schoelen: Thank you. You may begin when ready.
Barbara: Thank you. Good morning, Your Honors, and may it please the court. In its 2014 decision, the Board found the record suggests that the veteran may not be able to perform sedentary employment as it is inconsistent with his education and occupational background. That’s on page 1,478 of the record. Under the Secretary’s own definition, a fact-finding disqualifies as a fact-finding because according to the Secretary, a fact-finding occurs whenever the Board makes a determination as it did here, that requires the exercise of judgment, and that is what the Board did here. The Secretary also says that fact-finding occurs when the Board makes a determination of the fact that is supported by evidence. Those are both at page 9 of the supplemental pleading. The statement is not equivocal. There are really two parts to this sentence. The first part indicates what the Board found unclear with the effect of its very explicit finding that sedentary employment is inconsistent with the veteran’s vocational and educational background.
Judge Allen: Can I ask a question? So, here’s the– let me just tell you how I look at this scenario generically and then I want to ask this question. So, we have time one, which is the time at which the Board is making the decision about whether to refer to the Director, okay? Then we have the Director doing something, and then if the Director’s decision is adverse to the veteran, we return to the Board at time two. Are you with me now with the time one, time two issue.
Barbara: So far, yes. Thank you, Judge.
Judge Allen: So, the Board makes– let’s just say it’s a factual determination at time one. The factual determination is because of the effect on employment as you’ve described to send it to the Director, okay? What impact does the Board’s finding at time one, to trigger it to refer? What continuing role does that factual finding have in your view, in the process from where back at the Board at time two?
Barbara: The continuing impact is that facts are facts, and they don’t become untrue simply because it’s a different time or because the case is being assessed, if the case is being assessed, under a different standard. And that’s particularly true in this case where nothing was added to the record that could justify a different view of the evidence.
Judge Allen: So, is it really the same fact? Here’s what I mean, right, what if one looked at it this way, and I’m not saying I am, I’m just questioning. At time one, when making the referral decision, the Board only has to clear, in my hypothetical, of one-foot fence in order to justify sending it to the Director. In other words, that’s as high as the Board needs to go, right? Couldn’t it be the case that when it comes back to the Board at time two, that now with the Board considering not whether to refer it but whether to essentially grant it de novo, that the Board, in my hypothetical, has to clear a two-foot fence? So, the mere fact that it cleared a one-foot fence at time one, doesn’t tell us anything about whether it could jump over two-foot fence at time two. Are you with me with what I’m saying?
Barbara: I am, Judge Allen, and I appreciate the point. I’m not sure that I’m as adept at making a direct analogy with the fence, except that I would say that the facts that allowed the Board to jump over the one-foot fence are still true. They’re not untrue anymore. They are still true. It’s still affirmative evidence in support of the case. No matter if it’s a three-inch fence or a one-foot fence, it’s still affirmative evidence that supports the veteran’s entitlement.
Judge Schoelen: What if we agree with you that a factual finding was made, but sort of getting at Judge Allen’s point, that it’s a finding of a lower threshold. That it’s just that there may be unemployability because I think they used ‘suggests’ and ‘may’ and things like that in their statement. And that after the Director does whatever the Director does, when the Board is reviewing the denial by the Director, that that is a higher threshold of whether the veteran is actually unemployable and entitled to TDIU, as opposed to whether the veteran is entitled to a referral for an analysis.
arbara: Right, but the–
Judge Schoelen: Which means that the ultimate conclusion could be different, but the finding that he met this, ‘there may be evidence of unemployability’, might be a different assessment, a different test than what the test is done later.
Barbara: Well, the test, first of all, is always, “Is he unemployable?” I mean, that’s the ultimate test. But second, he still — those underlying facts remain true. He still lacks competitive keyboarding skills. He still has problems following instructions and maintaining regular attendance. He still has no transferable skills from his prior work. Those are the facts that underlie the Board’s 2014 decision to refer the Director- to refer to the Director. And so those don’t change. And it’s because they don’t change have not been challenged, are not at question that there’s no basis then, no rational basis for the Board to change its mind.
Judge Toth: Ms. Cook, I don’t think anybody here, I don’t want to speak for my colleagues, but will challenge that contention that it’ s evidence of at least the agency’s state of mind at one point in time. I think what we’re pushing this more on is do they have any preclusive effect, or that is it a fact-finding that is later binding, as opposed to just say you felt this way at one point in time. Explain why you feel differently and that would be evidence of some discontinuity.
Barbara: In fact, here the Board did not explain why it felt differently. But feeling differently looking at the same set of facts is truly the height of arbitrariness. That’s what was going on in Bailey, which we cited in our opening brief, and there the court recognized that the Board had made certain findings in a 1988 decision. And then looking at the almost, not even totally identical but almost identical facts, made a different decision about a different condition that had to do with whether there was traumatic arthritis.
Judge Toth: One of the things I’m struggling with and I mean Judge Allen touches upon this with the sort of time one and then it goes to the Director and time two is, I mean in doctrine of Administrative Law. In Administrative Law, we only review final agency actions, right? And so, the idea’s either agencies are delivered the bodies they can– it’s a process they can sort of start somewhere and end up somewhere very differently. We review time two. We review the reasons and bases for the ultimate decision. Now, the fact that it may have been inconsistent in getting there, can be evidence but again, I’m curious about the preclusive effect. You’re saying that at the end of time one, that at the referral, certain rights and obligations sort of lock, that that reflects the consummation of the agency’s decision-making process at least to that point. And I’m just curious as to what argument would you have for why that would be preclusive or is it just that’s an evidentiary snapshot at that point in time, that those facts were made?
Barbara: I think there’s two things. One is the Board’s own regulation 20.1303 that says, “The previously issued Board decision will be considered binding with regard to this specific case decided.” But second is just the overall concept of fairness, that when a claimant reads a Board decision and sees that the Board agrees that he lacks the skills to do sedentary employment, then he should have a right to rely on that. He should not be then surprised that on day one he lacked the skills, but on day two suddenly he has the skills even though there’s no new evidence.
Judge Allen: So, the problem with this is that this system doesn’t make any sense. If in fact, that were the case, right? In other words, if the thing the Board does, to again to stick with my way of thinking about it, if the thing the Board does at time one is exactly the same thing the Board does at time two, the whole system seems sort of bizarre that we go beyond, right? Because the Board then, to use Judge Toth’s term, ‘locks in’ at time one and everything else after that is almost as if you’re in a communist country and you’re the communist party says the legislature passes the law. Well, maybe but it’s all set when the communist party gives them the thing. Here with all be said at time one.
So, my point is maybe it’s not the same question. So maybe we could look at this not like your reaction that at time one, when the Board makes a referral decision, it’s deciding whether the facts are such at a certain level of certainty. In other words, hypothetically in my view, a thirty percent likelihood that these facts exist, okay? Then when it’s looking after the Director makes a determination and it looks de novo as if the Director were an agency of regional jurisdiction, it now is applying the traditional standard of essentially, is are the facts in equipoise, right? Because then the system makes a little bit more sense because what the Board is doing at time one is actually quite different than what it’s assessing at time two. So, what’s wrong with looking at it that way?
Barbara: Because I think it runs counter to both the regulation and to the sense of fairness that I just described. And it doesn’t mean that in every case this is going to be the situation. It could be that the Director or rather– in this case, the Board sent the case back to the Appeals Management Center. And they could have developed additional facts. And in fact, they have a requirement to submit a report to the Director that includes details about the veteran’s educational, vocational background, and all of the relevant factors. So that could have been done. They could have added to the record at that point. And then the Director makes his decision, and now it’s back at the Board with additional facts. And so, then the Board of course is not bound by what it found before. But when it’s looking at the exact same facts, even if before it was a thirty percent likelihood and now it’s a fifty percent likelihood, it’s still affirmative evidence and to say that it has no impact whatsoever, seems totally arbitrary to me.
Judge Schoelen: If I can get back to something you mentioned responding to me and I think ties in with Judge Allen’s question of maybe it’s different test or a different threshold. You said the ultimate test is still unemployability. If the Board at step one is finding the veteran unemployable such that he would be entitled to extraschedular TDIU, what is the role of the Director?
Barbara: Well in this case, again had the regional– the Appeals Management Center added facts to the record, he could have addressed those facts.
Judge Schoelen: Is the Director bound by the Board’s assessment of unemployability in its referral action?
Barbara: No. I don’t believe so, Judge Schoelen.
Judge Schoelen: Okay. So if the Board– I mean if the Director can find something different, but then the Board because they referred it at step one, when it comes back around after a Director denies it since he is not bound by the Board, what is– it’s kind of getting into Judge Allen’s point, what’s the point then of referring if the Director isn’t bound by it but if he does something different it’s going to still be granted by the Board because they initially referred it, therefore, they must have found him unemployable.
Barbara: Well, I mean there is a question as to whether there is any necessity for the Board to be referring cases to the Director. I believe it was Judge Castle something of the case in Wages, noted the unnecessary nature of this, and there’s reason to believe that he was right. That Judge Steinberg’s descent in Floyd was really accurate. That the Board has jurisdiction over the entire case and what we’ve learned since Floyd was decided, is that TDIU is a piece of the increased rating claim. And so, because of that change in our reinterpretation of the law, there is some question about whether the Board needs to refer. And in fact, I can submit them as supplemental for you. There are individual Board decisions, there not in this record, but there are individual Board decisions where the Board does not refer just makes the 4.16(b) assessment on its own at this point, based on the law that I just sort of generally described. It’s not an issue here because in fact the Board already made the referral and so there’s no basis for complaining at this point about the fact that–
Judge Schoelen: It just seems to me that in every single case that the Board refers to the Director and the Director denies extraschedular TDIU, then the veteran would automatically if their case would go back to the Board because they didn’t receive all the relief they sought, would automatically then receive TDIU. So, it’s like this, as Judge Allen said, it makes no sense kind of ‘do loop’.
Barbara: Right. I just would again say that I don’t think that’s necessarily true because there can be new facts added to the record. But here, there were not. He was still not competitive at keyboarding. And as the M21 itself acknowledges, if you’re not competitive, that’s not substantially gainful employment.
Judge Toth: Before you sit down, the second issue here is regardless of this first point about what the referral decision means later. If you were going to sit down and write a definition of substantially gainful employment or substantially gainful occupation, we’re going to treat them as the same, what would your definition be?
Barbara: First, it would have three components, three broad components: First it would be– it would recognize that it’s a vocational term. Sellers recognized if vocational evidence is relevant. The Connors single judge decision I submitted recognizes that vocational evidence is the only competent evidence on the issue of employment issues. So first, it would be a vocational concept. Second, it would include the dictionary of occupational titles definitions. Not its job descriptions, which are as Withers pointed out, defunct. But the definitions themselves are still valid to explain the physical aspects of work. Third, it would incorporate non-exertional components including things like concentration, memory, reliability, productivity, social skills, ability to handle stress, things of that nature. So, have those three components and none of that of course exists at this point which is– and yet if the Board had used any one of those definitions, it would have recognized that Mr. Ray is not able to do work.
Judge Toth: I mean I appreciate why you’d want lots of factors in the definition but just so I understand, I mean the language in 4.16(b) is, “All veterans who are unable to secure and follow is substantially gainful occupation.” So why would, I mean why would you need that language within the substantially gainful occupation? I mean, that could be a very simple definition if you look at the Census Department and then you can use these factors in terms of whether a person is able to secure and follow that aspect of the definition, but I just want to see why in the occupational definition you would need this complexity?
Barbara: Because employability is a complex issue. Its nuance– I see my time is almost up.
Judge Schoelen: Dawn, please add five minutes.
Judge Toth: Whether someone is able, right? I mean, why not just sort of shift it to that aspect of the definition.
Barbara: I may be misunderstanding your question, Judge Toth —
Judge Toth: You know we define terms, right?
Judge Toth: And so, if we’re adjudicating cases based on what is a substantially gainful occupation, why not have a simple definition for that, and then dump all of the sort of factual complexities of that case in the different aspects on to whether a veteran is able to secure and follow that. You see what I’m saying?
Barbara: I actually don’t, and I’m sorry Judge Toth, because to me in terms of– if what you’re saying is the one piece of it whether it’s substantially gainful? Yes, that already is a relatively, and I say relatively simple definition because it’s income based but it also gets into complex questions in terms of whether there’s a protected work environment, whether it’s marginal employment. But–
Judge Toth: What advantage is there to the complexity, right? Meaning, as far as if we’re just to say the Census, non-marginal by the Census Department where that number is and they’re not protected, that’s at least we’ve made something simple here.
Barbara: Right, but that’s just the economic test. We still need to know what the physical and mental acts required by employment are. How does one decide whether a person is able to work, to obtain, or to find or to obtain and follow substantially gainful employment given the person’s limits unless you know what the test is? If I tell the security guard don’t let anyone in the building who is over 6 feet tall, or who’s tall. Don’t let any tall people in. They don’t know what that means unless I say I mean it’s over 6 feet. It has to be defined. And that’s a very simple explanation but– and I wonder if it’s helpful to think of it in terms of the way VA handles post-traumatic stress disorder which is a medical term and is very complex.
And so, even though the regulation just says, if you have PTSD, you can get benefits. But the analysis of what happens, how that works, what are the symptoms that go into that, are complex and so they term them not to lawyers, but to doctors and to the DSM in order to define what PTSD is. And so, it is here. What it takes to work is just by definition complicated because as we’ve seen the Secretary has long insisted that the dictionary is enough, but it’s not because it doesn’t tell us anything about what the person is required to do in a general sense, not in a specific job but in a general sense, when they’re not sitting. And it doesn’t take into account those non-exertional things like concentration. And so, it’s a complicated topic which is why there have to be definitions to explain. Definitions based on the fact that it is a work term of art that explain both the physical and mental as well as non-exertional components of work because otherwise, the Board is just guessing and that is what we saw. That’s what we’ve seen post-Cantrell for example. That the Board is floundering. They don’t know and that’s what occurred in this case. They didn’t understand, they didn’t appreciate the significance of what they were saying. That when they say he can’t do physical work, that means he can’t bend. That means he cannot work. If they understood what that meant– if they understood that it was a vocational concept, they would understand that the inability to be competitive is by definition- by definition that excludes the veteran from work. That even the M21 says that.
Judge Schoelen: Can this court impose your dream definition on the VA?
Barbara: Yes, without question. The court has the authority under 7261 to define the terms in the statute or regulation. It has the authority to compel action of the Secretary unreasonably without a delay.
Judge Schoelen: Usually when we define terms, we look to common meanings, we look to things like that. Do we have the authority to import concepts from other agencies, for example?
Barbara: Yes. In the absence of the Secretary defining the term, yes, I believe the court does because the alternative is that we have a system where no one knows what any of the terms mean, and so a doctor uses the term and the Board uses the term and the claimants are using the same term, but nobody knows whether they mean the same thing. That’s exactly what was that issue with Cantrell.
Judge Allen: Well, and don’t courts do that all the time?
Barbara: As far as I know Judge Allen, yes, they do. I mean I don’t know how else to define or to manage a system and manage is the wrong term but just to review what is going on and to ensure that the process is fair and everybody’s on notice about what the rules are.
Judge Schoelen: Thank you.
Barbara: Thank you.
Judge Schoelen: You may begin.
Amanda: May it please the court. The Board’s referral to the Director could not be a factual finding that the veteran is unemployable by reason of service-connected disabilities for two reasons: First, because the Board is precluded from making initial extraschedular TDIU determination under 4.16(b), and second, because the Board’s language and its referral was equivocal and speculative and cannot amount to being a finding of fact. It does not make sense under 4.16(b) for the Board to be required to make a factual finding that the veteran’s unemployable before referring the case.
Judge Allen: So, what does the Board do then in my nomenclature at time one when it makes this referral decision? What’s it doing? If it’s not making a factual determination, what is it?
Amanda: The Board when determining whether to refer a case is analyzing whether referral is warranted. This court in Anderson versus–
Judge Allen: Hold on, I need to understand that right because, and this is not a criticism. You just told me that when the Board is referring something what it’s doing is deciding whether to refer it? I agree, but that’s not helpful, right? Is it making a determination by taking a legal standard and applying it to a set of facts? I mean, it’s got to be doing that, right? It’s got to be applying by a legal standard is to a set of what it determines to be facts at that point in time, right?
Amanda: Yes. It is analyzing whether the evidence is sufficient for referral which is done for the limited purpose of determining whether referral is warranted. However, this court has held that the implied findings in the act of referring are not binding on the Director and are not binding on the Board because it is the Director who is the one who makes the initial merits determination. It would not make sense in a context of 4.16(b) to require that the Director be the one that makes the initial merits determination and also have the Board when referring the case be making a finding of fact that the veteran is actually unemployable by reason of service-connected disabilities. If the Board made that finding a fact before referring, it would be finding that the criteria for TDIU is met.
Judge Allen: I agree with that. That it couldn’t be that once the Board said something at the beginning that it is set for all the time because then, we’re just going to do steps for no reason at all, right? But and this is going to what Judge Toth was saying, that doesn’t necessarily mean that what the Board does at that first referral stage, becomes totally irrelevant later. Or maybe that is the Secretary’s position. That after making the referral determination, it’s like it never happened, we’re just in a new story.
Amanda: It’s the Secretary’s position that the analysis performed during the referral is not later binding on the Director and not binding on the Board if the case would return to the Board.
Judge Allen: So, let’s just take a hypothetical, and I’m not saying this is particularly in this case. Let’s just assume we have a situation in which the Board says in its decision about referring at time one, the veteran cannot type, right? Cannot type. The Director adds no new evidence at all to the package and determines that in fact the veteran is able to engage in office work including keyboarding, and it comes back to the Board. Does the fact that the Board found or said at time one that the veteran cannot type, have any bearing at all about when the Board is considering the issue at time two when the Director has said the person can do keyboarding?
Amanda: It’s the Secretary’s position that the analysis performed- all the analysis performed when referring the case is not later binding on the Board. So even in that hypothetical, no, that would not be binding on the Board. However, in this case, that’s not the language that the Board used.
Judge Allen: No, no, no, no, no. I’m not– I’m trying– I think what we’re trying to do is get conceptual with what’s going on with this situation. I’m not saying that there is anything wrong with this, but it is sort of odd, right, that if we have the Board saying we find as a matter of fact that he can’t type in this situation, and then later sustaining the Director because the Director said he can. There is something odd about that. It strikes me. As odd as it is to say that once the Board finds it, nothing else can ever change right, because that doesn’t make sense either to me. So, try to help me understand why it’s okay to say that the Board can find a fact at time one and then go entirely the other way with no new evidence.
Amanda: It’s the Secretary’s decision that at referral that isn’t a finding of fact. It’s just in its threshold analysis performed just for the limited purpose of determining whether a referral is warranted. That is because this court has interpreted that the Board does not have the authority to make that initial merits determination as that is the Director’s authority. So, when determining to refer a case, the Board cannot be making factual findings that would relate to the merits of a TDIU determination because that is the Director’s job.
Judge Allen: Just one follow up on that. Then, let’s assume that a Board declined to refer, and the veteran appealed. I’m pretty sure that I have seen some briefs from the Secretary that say you need to affirm court because this is a factual finding that you need to defer to unless it’s clearly erroneous. So, is that now not correct anymore?
Amanda: No. The Board is allowed to deny TDIU under 4.16(b) initially if it finds that referral is not warranted. So, if referral is not warranted then the Board would then have to deny TDIU on the merits. So, it has to be making first this threshold determination about whether a referral is warranted. If–
Judge Allen: Well, that’s what we’re referring. I mean, that’s what we review when the Board denies referral, right?
Judge Allen: It’s their decision not to refer.
Judge Allen: So, if when they decide to refer, they’re not making a factual finding. Wouldn’t the other side to the coin be that they’re not making a factual finding when they decline to refer?
Amanda: I disagree with that. The Board is looking to whether the evidence warrants referral but that is just for the limited purpose of determining whether a referral is warranted as this court held in Anderson. Likewise, the issue in Anderson was there– Mr. Anderson was arguing that the DRO, when referring the case made favorable factual findings that could not then be overturned but this court held that no, those findings were implied were not binding on the Director and not binding on the Board because it is the Director who makes the initial merits determination. The Board or ROs only performing a limited analysis done for the purpose of determining whether referral is warranted.
So, when the Board is– perceives a TDIU case under 4.16(b) and it’s performing an analysis. The analysis initially is ‘does this warrant referral?’, if it does not warrant referral then the Board would be able to deny TDIU on the merits. At which, of course, would be an appealable decision to this court. If the Board decides referral is warranted then it goes to the Director and it is the Director who makes that initial merits determination regarding TDIU. If the Director determines ‘no’ then it goes back to the Board, for the Board to have the [inaudible] review of the Director’s decision and the Board can decide either grant or like in this case deny. Those factual findings are just implied findings that are only done for that limited purpose of determining whether a referral is warranted.
Judge Schoelen: Implied findings?
Amanda: That was the language used in the court in Anderson that’s why I’m using that “implied findings” in quotations, air quotes.
Judge Schoelen: Well maybe in that — I don’t remember the facts in Anderson but was there something not explicit or is it the nature of these findings that makes them implied?
Amanda: It was based on what Mr. Anderson’s arguing in that case, that the DRO when referring the case was making findings, because the fact that were favorable that could not bend the overturned. This court specifically said, “No, those are– that analysis is done for the limited purpose of determining whether the referral is warranted.”
Judge Schoelen: Is it your position that in 4.16(b) where it says, “Rating Board should submit to the Director for extraschedular consideration, all cases of veterans were unemployable.” That unemployable doesn’t mean unemployable?
Amanda: No. 4.16(b) still would not require that the Board actually find that the veteran is unemployable by reason of service-connected disabilities before referring a case because that would be the merits determination. When determining whether to refer the Board is going to be looking at that question, but looking at it at a lower evidentiary standard which would not meet the criteria to grant TDIU which would be at least as likely is not.
Judge Schoelen: So, how do we read that sentence when we’re supposed to construe similar terms to mean the same thing. Are you offering some sort of construction idea of what we should be doing there? To say that when the Rating Board is submitting a case of a veteran who’s unemployable, he’s not per se unemployable for TDIU purposes.
Amanda: The Secretary’s current policy regarding referral is to require that the Board in RO refer cases. The evidence could reasonably substantiate the claim.
Judge Schoelen: That’s nice but how do we interpret at the court what this language says because I could read this to say when the Board or an agency or an AOJ submits it to the Director that they have found a veteran is unemployable. So, you know, that means he’s unemployable and it’s the Secretary’s policy that all veterans were unemployable to get TDIU.
Amanda: When reading 4.16(b) as a whole, is not as clear cut it’s just that one clause of one sentence to refer the cases in– of all cases about veterans who are unemployable. Because 4.16(b) also states that when referring cases, Ratings Board need to submit statements of all relevant factors bearing on the issue of TDIU. And they’re submitting it to the Director for extraschedular consideration. So, if 4.16(b) requires first that the Director be the one that makes the initial merits determination and also requires the Director to be considering this on the first instance and be considering all this evidence then it does not make sense for 4.16(b) to also be requiring that the Board be first making a factual finding that it is at least as likely as not that the criteria for TDIU is met.
Judge Schoelen: Couldn’t it mean that the– since the Director is not bound by the Rating Board or the Boards’ determination that they do mean that the veteran is unemployable and eligible for TDIU. They just don’t have the authority to give it and so, the Director can agree with them or can disagree with them. But that doesn’t mean that they didn’t make that a hundred percent determination as opposed to the one-foot mixing, Judge Allen’s metaphors, determination.
Amanda: That’s a possibility but the Secretary disagrees with that based on how this court has interpreted what 4.16(b) means and in that hypothetical referral to the Director would serve absolutely no purpose because if the Director disagrees with the Board then it goes back to the Board for de novo reviews. So, there would be no purpose for referral to the Director if the Board was already making this initial TDIU merits determination.
Judge Schoelen: There’s some language, I think in Wages that hypothesizes about some value that disallows the agency that kind of keep a handle on who’s awarding TDIU and how many we’re giving out. So, there is some value in the hypothetical that I have laid out.
Amanda: The language in Wages about the purpose of the Director is something the Secretary does agree with.
Judge Schoelen: Does not?
Amanda: Does. Yes, agree with, but in the case of the Board being required to be making this factual finding first. That’s actually finding that the criteria for TDIU is met and then referred to the Director. The Director then still that those purposes laid out in wages such as whether TDIU actually reflects the average of earning impairment whether for the Director to assess whether any changes need to be made and how to use uniformity would also no longer exist because the Board would be making that merits determination. So, maybe the Director agrees with the Board, the Director would grant first but if the Director disagrees then it goes back to the Board.
Judge Allen: Does the Director — doesn’t publish any, or even internally, any reasons for the decision? When it gets referred to the Director and Director decides whether guaranteed it or not does the Director give reasons for the decision?
Amanda: I believe this court held that the Director in that case because they are stepping into the role of the RO is required to list reasons or bases for their decision. I’m not–
Judge Toth: Which the Board then reviews in explaining ultimately the agency’s decision?
Amanda: The Board would review that not as evidence because it’s a de novo review but the Board would review the Director’s reasons or bases.
Judge Toth: That is correct.
Amanda: And then have de novo review of the Director’s decision.
Judge Allen: In response to Judge Schoelen, you said something that was interesting. You said that the Secretary’s current position is and then I couldn’t write it all down but reasonably certain or something, right? Do you remember saying–
Amanda: Whether the evidence could reasonably substantiate a claim for TDIU is — that’s the Secretary’s current position right now and the guidance given to adjudicators to determine when to refer a case.
Judge Allen: And is that M21?
Amanda: That language is in the M21 is the guy who sets given, yes.
Judge Allen: So, okay. Well, then that’s good to know where it is. Number 2, right, it seems to me that that’s the lower evidentiary threshold that we’ve all been talking about. Do you agree?
Judge Allen: But now, third though, is that understanding of the Secretary as contained in the M21-1, but binding on the Board?
Amanda: No. That’s not binding on the Board however this is right now the Secretary’s policy. The M21 is not binding on the Board.
Judge Allen: What — right —
Amanda: That is the guidance given to the adjudicators at the RO.
Judge Allen: Right. Do we know does the Board follow that? In other words, here again is the conundrum we are with after Gray and DAV and Overton and Birkin and all of these other cases, right? Which is– so, the Secretary is a considerate position which might make sense, right? We’ve all said the lower evidentiary threshold, right? It’s great. But any individual Board member need not follow that, right?
Amanda: It would not be — the Board would not be required to follow what’s in the M21.
Judge Allen: Well, but what else is there that would tell the Board member this different evidentiary threshold. Can you point me anything other than M21-1?
Amanda: I cannot.
Judge Allen: Right. Because probably it doesn’t exist, right?
Amanda: But that is that the Secretary’s policy is–
Judge Allen: Yeah, but it’s not binding on the Board, right?
Amanda: No, it’s not binding on the Board however is still–
Judge Allen: So, what is that mean to say that it’s the Secretary’s policy?
Amanda: That, that is what the Secretary has articulated right now.
Judge Allen: For whom?
Amanda: For the RO adjudicators in the M21.
Judge Allen: Right. And so, is there anything out there that would tell the Board what their supposed to do at step 1?
Amanda: At this time, no, however, the Board still would not be making a factual finding that the criteria for TDIU has been met. The Board would still be looking to whether referral is warranted. In this case the Board did find referral as warranted, referred the case. So–
Judge Allen: Do we know what standard the Board utilized at time one in this case?
Amanda: We do not but that is not an issue in this case because the Board did refer and so even if the Board wasn’t required to refer, it did which was a favorable outcome to the veteran.
Judge Allen: Yeah, but what if the Board member, in this case, felt, “You know, in order to refer I have to be eighty percent certain that this guy can’t work.” In other words, imposed a higher threshold than they will use at time two. If the Board member had done that at time one that would clearly have an implication when it then said later applying a lower threshold, now you lose. Wouldn’t you agree?
Amanda: No, because under this court’s current interpretation of the step 1 is referral and step 2 is grant. The Board’s cannot be making a factual finding that the veteran is unemployable by reason of service-connected disabilities at step 1. So, even if the Board use the wrong standard when referring and use a higher standard that’s still under this court’s case law cannot be a factual finding.
Judge Schoelen: Well, not being able to actually awarded and making that finding are seems to me two different things like the Board could think, “Boy, this guy can’t work,” no matter what kind of job there is out there, this guy is going to be unemployable but I can’t give them the money. I’ve to send it to this other guy in Washington to do it. That seems to me that just because they are not empowered to award the benefit does not mean that they do not have the ability to find somebody as unemployable. Do they have a legal preclusion of finding that they are unemployable?
Amanda: Yes. Based on this court’s case law because it would not makes sense to allow the Board to make that merits determination then refer the case for it to go back, it would be so the three steps are elements in 4.16(b) would be, you don’t meet the schedular criteria in A, you have a referral to the Director and you have a finding a fact that the veteran is unemployable by reason of service-connected disabilities. If we go, we have step 1 which is we’re working in B so we don’t need the schedular criteria we then skip over to step 3 which is a factual finding that the veteran’s unemployable by reason of service-connected disabilities. Step 2 is missing, you need referral to the Director and this court has held it’s the Director who makes the initial merits determination not the Board. And in this case, the language the Board used though was not anywhere near it. An eighty percent or even a fifty percent which would be required for a grant determination said that the records suggest that the veterans may not be able to perform sedentary employment. That cannot arise in this case to being finding a fact in any which way you look at it.
Judge Allen: Should we then in articulating what the Board does at the first step, the referral step? Should the court then adopt a holding that utilizes that type of language? Right, so for example, the– and I’m not suggesting to use this exact language but in McLendon right, that all the evidence in the case that there might be something. This sort of sounds like what you’re saying about the Board. In other words, a lower threshold to say that the evidence suggests unemployability. Now, we send it and then when it comes back, we’re no longer concerned with suggesting or concerned with the equipoise, does it get to even. Would that be your understanding of how this should work?
Amanda: That’s the Secretary’s understanding of how this– how referral under 4.16(b) and in the extraschedular TDIU grant would work. Right now, under the current law, yes.
Judge Allen: Well, yes, I mean but remember, right? Because the Secretary’s determined to do what he wanted to do in this context to the M21-1 and not binding on the Board so that last caveat you should just know. I mean, the question that I’m asking is if we write an opinion saying, “This is the way it works,” then your point about right now only matters until you decide to do a regulation, right? So, this is your chance to let us know in the absence of a regulation what would you want that has to be, do you want the lower evidentiary threshold versus getting to the even at time two?
Amanda: Yes. The Secretary interprets 4.16(b) to be requiring a lower evidentiary threshold than what is required to grant that is what the Secretary’s interpretation of this regulation is at this moment and there is at the moment no attempts for rule making on 4.16(b).
Judge Toth: So, I think what we’re struggling with generally is certainly what I’m struggling with is normally with administrative agencies there’s sort of the monolithic, meaning the decision is made on one point and then the decision is explained and the court reviews that decision. Here it seems we’ve got the decision made at was it three steps? Judge Allen, right? Two different sorts of bodies within an agency. I was just trying to sort of figure– wrap my head around this. First, I mean, are the Board or the Director making the decision based on the same factors? Judging the same, doing the same analysis based on the same considerations.
Amanda: When the Board’s referring a case, it refers the case to the Director and the Director will have before it the same facts that were before the Board. The Director is making that initial merits determination of whether it’s at least is likely as not.
Judge Toth: Okay, and then finally when it goes back to the Board?
Amanda: The Board would then have what was before the Director and possibly any additional development that might have been undertaken at the RO or Appeals Management Center.
Judge Toth: But are they making the determination again as to whether to award TDIU based on the same factors, is the M21 binding on the Director but not binding on the Board, meaning they would be adjudicating it conceivably differently.
Amanda: When referring the case, the Board’s going to be looking into–
Judge Toth: No, I’m not interested in that step 1 and that would be even assuming the pleading stage as lower. I’m talking about now at merits this otherwise– what then would the Board be reviewing if not on merits determination, right?
Amanda: Yes, the Board is reviewing a merits determination. It’s just like the Board’s review of the RO’s decision. So, the RO or just a regular service connection claims going to be making findings that the veteran doesn’t meet the criteria for service connection for “X” disability and the Board has then over review of that decision. So, it’s going to be looking at the same evidence the RO was looking at and it could come to a different interpretation or a different finding based of that same evidence, oftentimes, there is development in those cases, so it might be looking at new evidence.
Judge Toth: Is it considering what the Director– trying to figure out the mechanics of it, meaning the– after referral it would go to the Director, does the Director serves that an office that decides either they send it to an RO for a new adjudication?
Amanda: The Director is an office that would decide it, that is the Director’s office.
Judge Toth: Okay. So, because you said RO. So, and then because if you know the 2017 decision, it goes the Board may– has their analysis up to referral call and then back to them, nothing real in between as to what exactly the Director looked at my understanding is the Board is reviewing the agency’s decisions and providing the reasons and bases for those decisions. And here it seems to be like the Board’s just reviewing its own sort of thought process with no consideration for the Director did and the reasons are good, bad — that the Director made any decision.
Amanda: Given that the Board is reviewing the Director’s determination to de novo. The Board is going to be looking at all of the evidence of record. So, in this case, the Director found that the criteria for TDIU wasn’t warranted. This court has held that the Director’s decision is not evident. The Board isn’t required to address or layout the Director’s decision or rely on the Director’s decision. It’s just performing a review of that denial and in this case, the Board reviewed the evidence of record and determined that the weight of the evidence doesn’t demonstrate that TDIU is met, the criteria for TDIU has been met.
Judge Allen: Before you end, could you talk a little bit about your position with respect to the definition of the term substantially gainful– yes, that’s the one.
Judge Schoelen: Just a moment. Dawn, could you add three minutes please?
Amanda: While 4.16 doesn’t explicitly define substantially gainful employment, substantially gainful employment can be generally understood to meet employment that produces income above the poverty threshold and employment that’s not in a protected work environment. This isn’t a mysterious, unknowable concept that leaves the Board grasping for straws and in the dark about what this means. The Board has been able to adjudicate these claims for years understanding that the primary factors that they’re looking at is whether or not the veteran is capable of employment that earns a living wage.
The factors of substantially gainful employment are intentionally broad, that’s because as this court’s recognized the TDIU determination must be individualized and we want to allow adjudicators to determine weighing all these factors whether a veteran’s capable of obtaining or maintaining substantially gainful employment on a case-by-case basis. While appellant wants this court to adopt certain definitions and frameworks that other agencies are using, the Secretary believes that this would be contrary to the intent and purpose of 4.16. The Secretary specifically looked into adopting a more specific term for substantially gainful employment and later rescinded that proposed rulemaking, finding that that proposed rulemaking did not serve its purpose. That was a policy decision made by the Secretary.
Judge Allen: So, what do we do though with the situation then in which we have a source of law regulation that uses a term that does not have, at least appear to have, a definition that would be– first of all binding on the adjudicators that are the Veterans Law Judges. And also, leave the appellant without necessarily knowing this is what I need to do to get within what might be the definition that a particular person is going to use.
Amanda: I would disagree that having a lack of a specific definition would leave an appellant unable to figure out what evidence to submit in order to get to a grant.
Judge Allen: Why would one know that, right? Because one would be assuming that you know what’s going to be important to the VLJ, right? I mean if there is no binding definition of this term, right?
Amanda: This term has generally been understood by this court, by the Board, by the Secretary, by even appellant to mean employment that produces income above the poverty threshold and that’s not in a protective work environment. Those are factors that are there. It’s a broad definition, it’s a negative definition but it’s still something that a veteran’s able to look at and understand what they would need to demonstrate in order to show that they cannot obtain or maintain substantially gainful employment. There is a general council presidential decision which is binding on the Board that does explain that substantially gainful employment refers to the inability to pursue the means of earning a reasonable living. So, there is some guidance that is binding on the Board as the general counsel presidential opinion is binding. If there are no further questions? The Secretary respectfully requests that the court affirms the Board’s decision as the Board’s referral could not have been a finding of fact, that the veteran was unemployable by reason of service-connected disabilities.
Judge Schoelen: Ms. Cook?
Barbara: If I could address the second point, initially. The Secretary continues to insist that this economic test is the only test that’s necessary and yet repeatedly recognizes that assessing TDIU requires knowing whether someone is capable of earning that income test. The whole concept of capabilities, abilities, limitations on abilities, those all relate to the vocational concepts, to the concept of what is required to do the physical and mental acts needed for substantially gainful work. No one can adjudicate whether the persons’ limits impact or don’t impact the ability to do work unless we know what work requires. That’s the simple fact.
This is not unmanageable because as we know Social Security does it but also what’s unmanageable is having the thousands of adjudicators across the country just guessing about whether a person’s ability to sit in or to not be able to walk for more than ten feet. Is that relevant, is it not? They don’t know because they don’t have these vocational concepts to go to. This is not introducing a new adjudicatory factor into the regulation as was the concern in Withers because the word is right there in the regulation and yet there is been no guidance as this court has recognized for over twenty-five years at this point.
Going back to Halstead was the first case where the court referred to the confusing tapestry of 4.16 and has consistently suggested, encourage, etc. the Secretary to adopt a rule and that is why we are asking that the court now tell the Secretary that it is time to adopt a rule because there is a need for clarity and there is a need for standards so that everyone’s operating under the same system. In terms of the first issue about the binding nature of the Board’s findings, I would point out that the Federal Circuit in Thun made it very clear that the analysis under 3.321 which is conformable is a merits analysis. They use that term, they say it is a merits analysis. It is not just an initial—there’s nothing that limits and nothing that does limit the adjudicators to just finding a plausible basis that they’re taking the evidence, they’re putting it together, they’re making a recommendation to the Director.
Judge Allen: But just saying something is a merits determination, right? Doesn’t necessarily answer this question, right? So, in general civil litigation in order to get a preliminary injunction a trial court has to determine among other things that there is a likelihood of success on the merits, right? That is clearly a merits determination by its name but once you get to the permanent injunction phase, the trial court isn’t bound anymore because it only decided that you were likely to prevail on the merits and now, you’re actually deciding whether you prevail on the merits, right? So, they’re both merits determinations but they’re not the same, follow me here?
Barbara: I do follow you, Judge Allen. I understand the point but I do think that there is– I think we have to appreciate the difference between civil litigation and re-adjudication in terms of the burden of proof and the standard of proof which is as you know very liberal. This is nonetheless affirmative evidence that is really my point, is it they’re not just saying, “Well, he claimed it,” and that’s enough. At least we do not know, I mean that’s part of the problem also is that we do not know what standard they applied. We do not know if they use the thirty percent or an eighty percent standard of likelihood of success because they do not say but that aside it is affirmative evidence and that’s what the Board was looking at. Look at this vocational evidence and said, “He doesn’t have the skills.” That didn’t change, that fact didn’t change, he still did not have the skills. So, unless there’s additional evidence that comes in, that justifies the Board changing its mind then there is really– I do not see a reason why it’s acceptable for the Board and they want to say this evidence would win and on day 2 this evidence, you would lose. It’s a lower evidentiary threshold, yes, but it’s still affirmative evidence and without anything that rebuts it, there is not a reasoned basis for the Board to do the 180 that it did in this case. It’s clear based on the pleadings and the errors the Board made that the case should go back. The Board ignored evidence, ignored significant facts, did not explain why it changed its mind. Never defined the term sedentary work in violation at this point of Withers if not, 7104.
But given the fact that the facts have not changed in 2014, he is still not competitive at keyboarding, which is the clerical job, the Board said, “He can to this clerical job, a job he is not competitive at, he can do a job even though he doesn’t have the ability to bend, even though he has limitations on walking.” The contradicted evidence shows that under any rational definition of substantially gainful employment, he cannot work and we ask the Court to reverse the Board’s denial but if the court remands, we do ask that the favorable findings of the Board made in 2017 be retained. And we ask that the court order either adopt the definition that we have suggested or that it order VA to define the term in a binding way on its adjudicators based on authoritative vocational concepts. Thank you.
Judge Schoelen: Thank you. The case will be submitted for decision. The court is now adjourned. We’ll come down and greet counsel.
Bailiff: All rise.