VA May Face Sanctions for Denying Veteran Benefits

(CN) - The Federal Circuit gave the Department of Veteran Affairs 60 days to show why it should not be sanctioned for denying veteran benefits.

Previously, veterans seeking benefits filed claims with a regional VA office, which processed the claims and decided whether to grant the benefits. If the veteran disagreed with the regional board's decision, the Board of Veterans' Appeals reviewed the claim and made a final decision.

Federal law requires the benefits system for veterans to be pro-claimant, laying out procedural and appellate rights for veterans seeking adjudication. VA officials tasked with approving or denying benefits must actively look for ways to improve the cases of veterans both at the regional level and in the appellate process.

In 2011, however, the VA issued an "immediately-effective" rule that applied the pro-claimant procedures only to regional VA office dealings, stripping veterans of assistance within Board of Veterans' Appeals hearings. The National Organization of Veterans Advocates (NOVA) petitioned the Federal Circuit to review the rule, arguing that the VA implemented it without a mandatory notice-and-comment period required by the Administrative Procedures Act.

The VA twice asked the Federal Circuit for more time to file its explanation, claiming the second time that it planned to repeal the rule. In fact, the department promised both NOVA and the appeals court that it would not apply the provisions of the new rule at all prior to publishing the repeal in the Federal Register.

After claiming that it wanted the published appeal to become effective before responding, the VA won a third extension. NOVA then submitted evidence that the VA had been ignoring its promises to not enforce the rule, at least 60 cases in a single month alone.

Writing for a three-judge panel of the Federal Circuit last week, Judge S. Jay Plager said that "the VA's conduct in this matter troubles the court on multiple levels."

"First, VA's conduct did not involve an isolated mistake," Plager wrote. "Starting on March 5, 2012, VA began representing in court filings and in other communications with NOVA that it would immediately stop applying the 2011 rule. VA also made various representations implying that the Board was not applying the rule. In spite of these representations, NOVA identified 60 cases in which the invalid 2011 rule may have been applied-and that was just in the month of March. Thirty of these cases expressly refer to the invalid 2011 rule, and many if not all of these 30 cases declare that the rule renders [pro-claimant assistance requirements] inapplicable. We are only left to wonder how VA was able to represent to us in its May supplemental reply that it was not aware of 'any instance' in which the Board applied the 2011 rule after March 5th."

Even after the VA repeatedly promised to deal with any mistakes NOVA found, "it appears that VA has failed to honor its commitments," Plager added.

"As a consequence, VA's conduct resulted in harm to NOVA, its attorneys and this court," the ruling continues. "Each has been required to divert resources from other important activities in order to address conduct that should never have happened in the first place. Worse yet, VA's conduct has potentially harmed not just plaintiff NOVA's organization but the very individuals it represents and that VA is tasked with assisting."

The panel also had blistering words for the VA's response to its own mistakes.

"VA's conduct troubles the court because, rather than remedy harm caused by its broken promises, VA attempted to shift the burden to others such as NOVA, attorneys assisting veterans (oftentimes on a pro-bono basis), or to the harmed veterans themselves," Plager wrote. "In particular, VA indicated in a letter to NOVA dated Nov. 5, 2012 that the routine appellate (or post-decisional, in the case of Board reconsiderations) process was the most appropriate venue for resolving affected cases. VA indicated in its 2011 rule addendum that motions for reconsideration and appeals provided 'adequate avenues of relief to any claimants who may have been adversely affected by the repealed rule.' The usual procedural processes, initiated by the claimant, for relief from erroneous decisions may be appropriate under usual circumstances; here they are not." (Parentheses in original.)

Plager added: "VA's commitments required VA to ensure that its statements to NOVA and this court were true and that the invalid rule was not being applied; only by doing so could VA avoid harming the parties involved. The unwarranted denial of benefits means real-world consequences to veterans. Promises of hypothetical relief do not pay for food or provide needed medical care."

While acknowledging its power to impose sanctions, the circuit noted that sanctions come at a cost to all parties. As an alternative, the panel ordered the VA to come up with a plan to identify and rectify the harms it caused by implementing the rule - and explain why the plan will make sanctions unnecessary - within 60 days.

"We expect that the government will choose to confer with NOVA regarding its proposed plan so that any plan submitted to the court fully addresses the harms caused by the government's conduct and minimizes the need for further orders by this court," Plager concluded.

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