Shinseki v. Sanders

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Authorship: Lisa Ehrlich

Contents

[edit] Briefs and Documents

Docket: 07-1209

Issue: Whether courts must presume the failure of the Department of Veterans’ Affairs to give notice to benefits’ claimants to be prejudicial.

Merit briefs

Amicus Briefs

Oral Argument: Transcript

Decision: Reversed and Remanded; Vacated and Remanded in an opinion by Justice Breyer

[edit] Pre-Argument Articles

[edit] Argument Preview

The Veterans Claims Assistance Act (VCAA) requires the Secretary of Veterans Affairs to provide veterans who seek disability benefits with notice of any additional information or evidence required to prove their claims. On Monday, December 8, in No. 07-1209, Peake v. Sanders, the Court will consider which party – the Department of Veterans Affairs or, alternatively, the claimant – bears the burden of showing prejudice when the VA fails to provide the notice required by the VCAA.

Background

This case stems from two veterans’ attempts to receive disability benefits from the Veterans Administration. One respondent, Woodrow Sanders, served in the Army from 1942 to 1945. Mr. Sanders asserts that during his service a bazooka exploded near him, burning the right side of his face and injuring his right eye. In 1948, he submitted a disability claim to the VA regional office, which denied the claim the following year. In 1991, Sanders sought to reopen his claim, relying on statements from two ophthalmologists. The VA reopened the claim and obtained additional evidence, including a report from a VA optometrist, but again ultimately denied the claim.

Mr. Sanders appealed the decision to the Veterans Court, arguing that – contrary to 38 U.S.C. § 5103(a) of the VCAA – the VA failed to provide him with notice regarding who was responsible for obtaining the evidence necessary to substantiate his claim. The notice required by the VCAA can be divided into four elements: (1) notice of what information or evidence is necessary to substantiate the claim; (2) notice of what subset of the necessary information or evidence, if any, that the claimant is to provide; (3) notice of what subset of the necessary information or evidence, if any, that the VA will attempt to obtain; and (4) a general notification that the claimant may submit any other evidence that he has that may be relevant to the claim. In Mayfield v. Nicholson (2005), the Veterans Court held that although the first type of notice error was presumed prejudicial, the claimant was responsible for proving prejudice from the other types of notice errors. The Veterans Court held that because Mr. Sanders had not alleged either a “first-element” notice error nor any specific prejudice resulting from the VA’s alleged failure to provide notice, he had not met his burden and affirmed the denial. Mr. Sanders appealed to the U.S. Court of Appeals for the Federal Circuit.

On appeal, the Federal Circuit reversed. Reasoning that the VCAA was intended to be particularly pro-claimant and therefore obligated the VA to assist veterans claiming benefits, it held that all VCAA-notice errors should be presumed prejudicial, requiring reversal unless the VA can show that the error did not affect the essential fairness of the adjudication. The VA can show this by demonstrating: (1) that any defect was cured by actual knowledge; (2) that a reasonable person could be expected to understand from the notice what was needed; or (3) that a benefit could not have been awarded as a matter of law. The Federal Circuit disagreed with the Veterans Court precedent deeming certain elements of the required notice more substantial than others. The court reasoned that allowing the VA to remedy the errors with post-decisional notices cannot satisfy the specific notification duties imposed by Congress on the VA, and presuming no prejudice does just that. Finding that the interpretation of the Veterans Court conflicted with the uniquely pro-claimant system constructed by Congress in the VCAA, the Federal Circuit held all types of notice errors would be presumed prejudicial.

Respondent Patricia Simmons served in the Navy from 1978 to 1980. In 1980 she filed an application for disability benefits for hearing loss in her left ear that was caused by her constant exposure to a noisy work environment. The regional office denied her claim on the ground that her disability was not sufficiently severe, and the Board affirmed. In 1998, Simmons asked the regional office to amend her claim to include a claim based on hearing loss in her right ear, which the regional office denied as unconnected to her service. The regional office sent Simmons a notice purporting to outline the evidence required, but the Veterans Court found that the letter failed to comply with the notice requirements because it did not inform Simmons of the evidence and information necessary to support her claim, specifically (1) that an increase in severity of her service-related condition (the left-ear hearing loss) was required to maintain a secondary claim of right-ear hearing loss; and (2) what types of evidence or information were needed, or could be submitted to establish that claim. The VA appealed to the Federal Circuit, which issued its decision on the same day as its decision in Sanders above, and affirmed, holding that in light of Sanders, the Veterans Court properly placed the burden on the Secretary to prove that the notice was not prejudicial.

The Veterans Administration filed a petition for certiorari to the United States Supreme Court seeking review of both decisions. The petition was granted on June 16, 2008.

Petition for Certiorari

The VA articulates three justifications for granting the petition. First, the VA argues that the Federal Circuit’s decision conflicts with the decisions of other circuits interpreting materially identical language in the APA. 38 U.S.C. § 7621(b)(2) requires the Veterans Court to “take due account of the rule of prejudicial error,” which the government argues parallels and draws upon the Administrative Procedure Act’s (APA) prejudicial-error provision. The VA argues that other courts of appeals have interpreted this provision to require the party seeking to overturn an administrative decision to establish that the error was prejudicial, even when the error involves a failure to provide the required notice. To support this argument, the VA points to Congress’s use of a phrase already having an established meaning under the APA (passed in 1946), along with the use of the definite article “the” and the legislative history, to conclude that Congress in the VCAA intended to adopt the APA’s interpretation of the burdens. Finally, because the Federal Circuit has exclusive jurisdiction to review decisions of the Veterans Court, the VA notes that a circuit split relating specifically to VCAA-notice errors cannot develop.

Second, the VA argues that there is no basis for creating a unique rule of prejudicial error applicable only to VA adjudications. The VA challenges the Federal Circuit’s characterization of the VCAA as overhauling the VA claims system to make it even more claimant-friendly; in any event, it emphasizes, even if the VCAA seeks to help veterans in the non-adversarial administrative process, that is irrelevant when determining where to place the burden of demonstrating prejudice in the ensuing adversarial judicial process. Finally, it disputes the Federal Circuit’s reliance on the harmless error standard established by the Supreme Court in Kotteakos v. United States and O’Neal v. McAninch, reasoning that those criminal cases deal with a potential loss of liberty rather than an administrative adjudication of entitlement to monetary benefits.

Third, the VA contends that the question presented is important and warrants review because the Federal Circuit’s rule will greatly increase the number of remands, with the resulting additional notice and re-adjudications “divert[ing] resources from the adjudication of meritorious claims” and placing further strain on the VA’s “already-burdened claims-administration process.”

Opposing certiorari, the respondents advance five arguments. Respondent Sanders argues that O’Neal’s harmless error standard applies equally to criminal and civil contexts, and that the rule of prejudicial error cannot be divorced from the VA’s uniquely pro-claimant system.

Respondent Simmons also reiterates the importance of the pro-claimant system and makes three other arguments. First, she argues that the APA’s prejudicial error rule is flexible and context-specific. Simmons challenges the VA’s characterization of the APA rule as unanimously placing the burden of proving prejudice on the party asserting the error, pointing to the flexibility of the direction for courts to take “due account” of the rule, and instances of courts being “cautious,” proceeding “gingerly,” and shifting the burden in applying the rule. Second, Simmons argues that the consequences of the Federal Circuit approach are not problematic: of the more than eight hundred thousand benefits claims filed each year, only 4644 are ultimately appealed every year, so the risk of overwhelming the system is minimal. Third and finally, Simmons argues that the cases are inappropriate vehicles for the question.

Merits Briefing

In its brief on the merits, the VA makes three main arguments. First, it argues that Section 7216(b)(2) should be construed consistently with Section 706 of the APA, which is materially identical and which has been interpreted as placing the burden on the party raising the claim. Relying on the principle that when judicial interpretations have settled the meaning of an existing statutory provision, repetition of the same language in a new statute indicates the intent to incorporate those interpretations, the VA argues that the Court should not read the similar language of Section 7261(b)(2) to establish a new rule. Indeed, the VA continues, the legislative history also demonstrates Congress’s understanding that Section 7216(b)(2) would incorporate the APA meaning.

Second, the VA argues that the Federal Circuit erred in creating what it characterizes as a “unique rule of prejudicial error applicable only to VA adjudications.” Contrary to the Federal Circuit’s belief, the enactment of the VCAA did not substantially overhaul the administration of the VA benefits system: instead, the VCAA was enacted to overturn an earlier Veterans Court decision regarding claim processing and neither mentioned nor changed the language of Section 7261(b)(2). Nor does the non-adversarial nature of VA proceedings justify placing the burden on the VA, as the proceedings become adversarial when they reach the Veterans Court. The VA also again challenges the Federal Circuit’s reliance on Kotteakos and O’Neal, deeming them inapplicable because they deal with the loss of liberty rather than purely economical benefits.

Third, the VA argues that a presumption of prejudice from VCAA notice errors is unwarranted for two reasons. As an initial matter, the collaborative and repetitive nature of the VA claims system means that VCAA notice errors do not automatically produce prejudice, as claimants will have several opportunities to learn what evidence is required before they reach the Veterans Court. Moreover, a claimant is in a better position than the VA to establish prejudice from a notice error because she will know whether there was actual notice or more information on her condition is available.

Respondent Sanders makes three principal arguments in support of the Federal Circuit’s decision. First, he argues that Section 7261(b)(2)’s reference to “the rule of prejudicial error” should be interpreted in light of the federal common law’s harmless error rule, which places the burden of persuasion for non-technical errors on respondents. Second, Sanders argues that the “due account” clause of Section 7261(B)(2) and the VCAA’s pro-claimant nature militate in favor of interpreting the burden to fall on the VA: if the record is undeveloped as a result of notice errors, the veteran will be unable to introduce into evidence on appeal information necessary to prove prejudice. Third, notice is a substantial right, the violation of which gives rise to presumed prejudice, and the burden on the government is neither unfair nor insurmountable. Indeed, he emphasizes, the notice problem cannot be cured through subsequent procedures, while a series of recent cases demonstrate that the VA can in fact show that a notice error is not prejudicial. Finally, Sanders reiterates, any doubts regarding how to interpret the VCAA should be resolved in the veteran’s favor.

Respondent Simmons makes two main arguments in defense of the Federal Circuit’s decision. First, she argues that the purpose and structure of the statute point in favor of allocating the burden to the VA: the overall structure of the benefits scheme consistently imposes obligations on the VA rather than the claimant, notice plays an important role in the entire system, and the VA is better equipped to bear the burden. Second, Simmons challenges both the VA’s contention that Section 7261(b)(2) ratified a uniform interpretation of the APA and the underlying presumption that the APA prejudicial error rule has only one uniform interpretation. She emphasizes that the VA cites only four pre-1988 cases that purport to interpret the APA rule as the VA would, indicating a distinct lack of uniformity for Congress to ratify. Instead, like Sanders, she argues that Section 7261(b)(2) refers to the federal common law’s harmless error rule. Moreover, the text of the APA does not support the cut-and-dry interpretation advanced by the VA, and in any event the language need not be interpreted identically when the overall statutory schemes are not identical. Finally, the background presumption in favor of claimants in the VA system counsels against placing the burden on the veterans.

[edit] Oral Argument Recap

Based on the briefs filed, the heart of the issue before the Court was which party should bear the burden of showing prejudice when the VA fails to provide the notice required by the VCAA. While the briefing focused largely on the statutory history and interpretation, at oral argument the Justices were most interested in how the veterans claims system actually works.

Assistant to the Solicitor General Eric Miller began with highlighting how the Veterans Court prejudicial errors statute is written in language essentially identical to that of the APA’s prejudicial error provision, which had a set meaning when Congress passed the Veterans’ statute. Chief Justice Roberts immediately pushed back on this interpretation, stating, “You basically have four cases in the courts of appeals to support that proposition, right?” While Mr. Miller attempted to explain his other evidence, the Justices moved onto their main focus, the actual functioning of the veterans claims system, and the different practical effects of notice errors and remands.

After some discussion between the Justices about whether “burden” was the proper term in an administrative proceeding, and how such a burden functioned, Justice Breyer seemed sympathetic to Mr. Miller’s position: “When I read this case, I thought the

Veterans Affairs is absolutely common sense on this,” but implored him to provide a way to “get there legally.” Mr. Miller struggled for a bit, returning to the discussion of the meaning of burden, but then pointed out that he was simply asking for the veteran, by the time he or she got all the way to the Veterans Court, to be able to explain the effect of the error. He then went into a lengthy discussion of respondent Simmons’s history to illustrate how she received the information about evidence required when her claim was denied, and the steps she could have taken then to remedy it.

Justice Stevens pressed Mr. Miller on how many veterans were actually assisted by counsel during the proceedings, and at which stages, particularly when notice errors tend to happen. Mr. Miller conceded that most were not represented by counsel at the beginning, but were assisted by veterans’ service organizations such as the American Legion. Justice Souter then turned to a question about incentives, pointing out that placing the burden on the VA here would provide extra incentive to make sure veterans got the proper notice in the first place. Mr. Miller pushed back, stating they already had such incentives, but eventually conceded that there could be some extra motivation from the placement of the burden.

The respondents split their argument time, and Mr. Meade, arguing for respondent Simmons, went first. He actually made it through two of his three introductory points before Justice Alito questioned him on his assertion that under the government's rule the veteran would need to engage in a speculative exercise, identifying what evidence would have been developed had the veteran been notified, and had he received the full assistance of the agency. If there is no chance of winning, what is the purpose of a remand? Mr. Meade stated that with a remand the veteran will have the opportunity, required by the notice statute, to go through the process of developing the case in conjunction with the VA, with all the information necessary to present his strongest claim produced in a collaborative manner with the agency from the beginning.

Justice Kennedy questioned the necessity of remand if the veteran finds out about the missing information at the next step, a hearing. Mr. Meade responded that a hearing only happens if the veteran requests it, and therefore is unsatisfactory as a remedy. Justice Breyer then questioned whether this issue would be imperative in many cases since the veteran will likely explain why the lack of notice was problematic anyway. Mr. Meade responded that presumptions are helpful to deal with the typical case, in which there is a first element notice error and the veteran does not even know what evidence he needs to put forward; the high likelihood of prejudice thus favors a general rule that the burden should be on the government. Mr. Meade concluded by reminding the Court that Congress had specifically set up the statute and notice requirements to help all veterans, not just those whose claims appeared meritorious on their face.

Mr. Lippman, arguing on behalf of respondent Sanders, began by returning to an earlier question of Justice Breyer, and distinguished O’Neal’s grave doubt standard by pointing to the lack of a complete record in veteran cases with notice errors. Justice Breyer pushed back, indicating that he agreed with the original Veterans Court holding that only first level notice errors should result in a presumption of prejudice, repeatedly stating that the Veterans Court had a much better understanding of the processes actually at issue than the Supreme Court, and perhaps they should defer to that interpretation. Mr. Lippman responded that putting in the extra evidence for why other notice errors were prejudicial would violate a statute forbidding the introduction of new evidence on the appeal.

Justice Alito responded that this appeared to be an argument for an irrefutable presumption of prejudice for the veteran, and Mr. Lippman turned back to the three possibilities of demonstrating prejudice set out by the Federal Circuit. He pointed out that the third prong allowed the government to prove there would not be any evidence that could prove the claim as a matter of law, which would not require the veteran to submit new evidence at the appellate stage. The argument ended with a short technical discussion of where the different level notice errors appeared in the statute and regulations.

In his rebuttal, Mr. Miller began with a point about the detailed statement of the case a veteran receives after he loses his claim, but was sidetracked by Justice Souter into a long colloquy of when the veteran first has the ability to retain counsel. Justice Souter stated the veteran may be hurt by the notice error, and never retain counsel after receiving the statement of the case, and therefore never receive benefits he may be entitled to. Mr. Miller ended with a plea to not overwhelm the already burdened Veterans Administration with non-meritorious remands.

[edit] Opinion Analysis

The Court rejected, by a vote of six to three, the Federal Circuit’s “harmless-error” framework for the review of claims decisions by the Department of Veterans Affairs. Holding that the “harmless-error” framework conflicts with the statutory requirement that the Veterans Court take “due account of the rule of prejudicial error,” the Court - in an opinion by Justice Breyer - concluded that the Veterans Court should apply a harmless-error analysis similar to that applied in other civil cases. Thus, the majority explained, veterans will bear the burden of demonstrating that the VA’s errors made a substantive difference on the outcome of their claims cases.

Justice Souter filed a dissenting opinion that was joined by Justices Stevens and Ginsburg. The dissent argued that the framework established by the Federal Circuit - which requires the Veterans Court to presume that a notice error was prejudicial unless the claimant has actual knowledge that cures the defect or is ineligible for benefits as a matter of law - provides the VA with an incentive to perform its obligation to claimants.

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