Reizenstein v. Shinseki

United States Court of Appeals for the Federal Circuit
2009-7012

RANDALL D. REIZENSTEIN,

Claimant-Appellant,

v.

ERIC K. SHINSEKI, Secretary of Veterans Affairs,

Respondent-Appellee.

Kenneth M. Carpenter, Carpenter, Chartered, of Topeka, Kansas argued for
claimant-appellant.

Martin F. Hockey, Jr., Assistant Director, Commercial Litigation Branch, Civil
Division, United States Department of Justice, of Washington, DC, argued for
respondent-appellee. With him on the brief were Michael F. Hertz, Acting Assistant
Attorney General, Jeanne E. Davidson, Director, and Tara K. Hogan, Trial Attorney. Of
counsel were Michael J. Timinski, Deputy Assistant General Counsel, and Dana
Raffaelli, Attorney, Office of the General Counsel, United States Department of
Veterans Affairs, of Washington, DC.

Appealed from: United States Court of Appeals for Veterans Claims

Judge Lawrence B. Hagel
 United States Court of Appeals for the Federal Circuit
2009-7012

RANDALL D. REIZENSTEIN,

Claimant-Appellant,

v.

ERIC K. SHINSEKI, Secretary of Veterans Affairs,

Respondent-Appellee.

Appeal from the United States Court of Appeals for Veterans Claims in 06-1925, Judge
Lawrence B. Hagel.

__________________________

DECIDED: September 29, 2009
__________________________

Before NEWMAN, MAYER, and PROST, Circuit Judges.

Opinion for the court filed by Circuit Judge PROST. Dissenting opinion filed by Circuit
Judge MAYER.

PROST, Circuit Judge.

Randall Reizenstein appeals the July 16, 2008 decision of the United States

Court of Appeals for Veterans Claims (“Veterans Court”) holding that 38 C.F.R.

§ 3.343(a) does not apply to assignments of retrospective staged ratings that include a

temporary total disability rating. For the reasons set forth below, we affirm. Although

we agree with the Veterans Court that § 3.343(a) is directed to prospective ratings, this

does not mean that the VA is excused from providing its reasons for all changes in

disability ratings, whether prospective or retrospective.
 I. BACKGROUND

Mr. Reizenstein served on active duty in the United States Marine Corps from

May 1968 to May 1970, the United States Army from November 1974 to July 1977, and

the United States Navy from December 1980 to February 1981. During his time in the

Marine Corps, he served in Vietnam.

In 1996, Mr. Reizenstein filed a claim for benefits for post-traumatic stress

disorder (“PTSD”). A Department of Veterans Affairs (“VA”) regional office denied his

claim in 1997 because it found that there was “no confirmed diagnosis of posttraumatic

stress disorder which would permit a finding of service connection.” In March 1998, Mr.

Reizenstein was admitted to a VA medical center. Upon his discharge, he was

diagnosed with, among other conditions, alcohol dependence, “post-traumatic stress

disorder by history,” dysthymia, and personality disorder. In August 1998, he filed a

Notice of Disagreement with the 1997 regional office decision. Several months later,

the regional office assigned him a 30% disability rating effective November 7, 1996. Mr.

Reizenstein filed another Notice of Disagreement, and proceedings on his claim

continued for several years. In March 2006, the Board of Veterans’ Appeals (“Board”)

issued a decision awarding Mr. Reizenstein the following retrospective staged rating:

November 7, 1996–December 1, 1996: 30%
December 2, 1996–March 21, 1998: 50%
March 22, 1998–May 5, 1999: 100%
May 6, 1999–present: 30%

The Board’s decision to grant a temporary period of total disability beginning on

March 22, 1998, was based on its finding that Mr. Reizenstein’s condition appeared to

have become more severe as of the date that he was admitted to the hospital. Although

the treatment record for Mr. Reizenstein’s hospital stay gave a primary diagnosis of

2009-7012 2
alcohol dependence and did not indicate a PTSD diagnosis, the Board noted that the

record “did not exclude the possibility” that Mr. Reizenstein’s condition was caused at

least in part by PTSD and decided to resolve any doubt about the cause of his condition

in his favor. The Board’s decision to limit the total disability stage to between March 22,

1998 and May 5, 1999 was based on a May 6, 1999 VA mental health treatment note

that stated that the severity of Mr. Reizenstein’s condition had abated. Specifically, the

note reported that Mr. Reizenstein denied depression, reported normal sleep patterns,

and was neatly groomed. The Board also found that subsequent medical records did

not support giving Mr. Reizenstein a rating of greater than 30% for any period of the

staged rating occurring after May 6, 1999.

On appeal to the Veterans Court, Mr. Reizenstein alleged several errors in the

Board’s decision. First, he argued that the Board failed to provide an adequate

statement of the reasons and bases for its decision not to award a total disability rating

for each of the periods of the staged rating for which a lesser rating was given. He also

challenged the Board’s decision to begin his total disability rating on March 22, 1998.

Finally, he asserted that the Board improperly reduced his total disability rating on May

5, 1999, without providing the examination required by 38 C.F.R. § 3.343(a), which

provides in relevant part:

Total disability ratings, when warranted by the severity of the condition
and not granted purely because of hospital, surgical, or home treatment,
or individual unemployability will not be reduced, in the absence of clear
error, without examination showing material improvement in physical or
mental condition.

The Veterans Court found that the Board adequately stated the reasons and

bases underlying the staged rating award. Reizenstein v. Peake, 22 Vet. App. 202,

2009-7012 3
209-11 (2008). Additionally, it concluded that the Board did not violate § 3.343(a)

because that regulation only applies to prospective reductions of total disability ratings,

and not to retrospective staged ratings such as the one given to Mr. Reizenstein. Id. at

209. In the Veterans Court’s view, the text and history of § 3.343(a) demonstrated that

it was enacted to protect veterans who were reliant on the compensation accompanying

their total disability rating for day-to-day expenses from arbitrary reductions in their

rating without adequate evidence of improvement. Id. at 207. The Veterans Court

concluded that applying § 3.343(a) to staged ratings would not advance that purpose

because staged ratings provide retrospective, lump sum payments that are made after

the period for which the compensation was owed. Id. at 209. Additionally, the Veterans

Court explained that

[r]equiring VA to ‘halt adjudication’ after assigning a temporary total
disability rating as part of a staged rating to obtain a new medical
examination would discourage the use by VA of staged ratings that include
a period of temporary total disability and would often result in
compensation being paid to a claimant at a higher level than he might
otherwise be entitled to for a period of time.
Id.

Mr. Reizenstein appeals the Veterans Court’s decision with respect to the

applicability of § 3.343(a). We have jurisdiction under 38 U.S.C. § 7292.

II. DISCUSSION

We review interpretation of regulations by the Veterans Court de novo and
may set aside any regulation or interpretation of a regulation that we find
to be arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law; contrary to a constitutional right, power, privilege, or
immunity; in excess of statutory jurisdiction, authority, or limitations, or in
violation of a statutory right; or without observation of a procedure required
by law.

2009-7012 4
Smith v. Nicholson, 451 F.3d 1344, 1347 (Fed. Cir. 2006). Absent a constitutional

issue, our jurisdictional statute, 38 U.S.C. § 7292, prohibits us from reviewing a

challenge to a factual determination or a challenge to a law or regulation as applied to

the facts of a particular case. 38 U.S.C. § 7292(d)(2).

As a threshold matter, we note that Mr. Reizenstein does not—and, because of

our limited jurisdiction, likely cannot—argue on appeal that the May 6, 1999 VA

treatment note is insufficient to support a conclusion that he was not totally disabled as

of that date. Instead, his argument is that regardless of the sufficiency of the evidence,

the VA is prohibited by regulation from ending the total disability period of his staged

rating without complying with 38 C.F.R. § 3.343(a). Our review is confined to the

narrow issue of whether § 3.343(a) applies to periods of total disability assigned as part

of a retrospective staged rating. We are not asked to review any other of the panoply of

statutory and regulatory provisions relating to VA ratings decisions, whether prospective

or retrospective. The evidentiary protections afforded thereby remain in place.

Mr. Reizenstein presents the issue on appeal as a conflict between the VA’s

regulation, § 3.343(a), and staged ratings, which he characterizes as a “judicially

created rule of law.” According to Mr. Reizenstein, the staged ratings “rule of law” was

created by the Veterans Court in Fenderson v. West, 12 Vet. App. 119 (1999). In that

case, the Veterans Court recognized that “separate ratings can be assigned for

separate periods of time based on facts found.” Id. at 126 (quoting the VA’s

supplemental brief in that case). In Mr. Reizenstein’s view, the Veterans Court erred by

relying on the “staged ratings rule of law” to excuse the VA from compliance with

§ 3.343(a). Additionally, Mr. Reizenstein asserts that the Veterans Court incorrectly

2009-7012 5
followed its own “rule of law” instead of deferring to the VA’s regulation as required by

Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).

In response, the government asserts that Mr. Reizenstein frames the appeal

incorrectly. According to the government, the use of staged ratings is not a “rule of law”

that was created in Fenderson. Instead, the government characterizes the use of

staged ratings as a practice that the VA has followed for many years in order to assign

“the most precise disability rating—one that accounts for the possible dynamic nature of

a disability while the claim works its way through the adjudication process.” O’Connell

v. Nicholson, 21 Vet. App. 89, 93 (2007). In support of this position, the government

points out that the court in Fenderson noted that the VA’s brief acknowledged the use of

staged ratings. See Fenderson, 12 Vet. App. at 126. We agree with the government

that the use of staged ratings is more properly viewed as a VA practice than as a

Veterans Court “rule of law.” See 38 C.F.R. § 4.1; see also Meeks v. West, 216 F.3d

1363, 1365 (Fed. Cir. 2000). Accordingly, we also conclude that Mr. Reizenstein’s

argument about Chevron deference is without merit. This follows because once the

“rule of law” is properly recognized as a VA practice, it becomes clear that the Veterans

Court was not applying its own “rule of law,” but rather was adopting the agency’s

interpretation of the applicability of its own regulation. The remaining question, then, is

whether the VA’s interpretation that § 3.343(a) does not apply to retrospective staged

ratings is permissible.

“[T]he agency’s construction of its own regulations is ‘of controlling weight unless

it is plainly erroneous or inconsistent with the regulation.’” Cathedral Candle Co. v.

U.S. Int’l Trade Comm’n, 400 F.3d 1352, 1364 (Fed. Cir. 2005) (quoting Bowles v.

2009-7012 6
Seminole Rock & Sand Co., 325 U.S. 410, 414 (1945)). “That generous degree of

deference is due to an agency interpretation of its own regulations even when that

interpretation is offered in the very litigation in which the argument in favor of deference

is made.” Id. In cases in which the agency offers its interpretation for the first time in its

briefs during litigation, the agency is entitled to deference so long as there is “no reason

to suspect that the interpretation does not reflect the agency’s fair and considered

judgment on the matter in question.” Id. (quoting Auer v. Robbins, 519 U.S. 452, 462

(1997)).

Mr. Reizenstein challenges the government’s claim to deference on two grounds.

First, he argues that the VA’s position that § 3.343(a) does not apply to total disability

ratings that are awarded as part of a staged rating is merely the VA’s post-hoc

rationalization for its decision to reduce his rating without providing the requisite

examination. As such, Mr. Reizenstein argues, deference is inappropriate. See Bowen

v. Georgetown Univ. Hosp., 488 U.S. 204, 213 (1988) (“Deference to what appears to

be nothing more than an agency’s convenient litigating position would be entirely

inappropriate.”). Second, Mr. Reizenstein asserts that the VA’s interpretation is

inconsistent with the plain language and clear intent of the regulation and is thus

impermissible even if deference is given.

We disagree with Mr. Reizenstein’s assertion that the VA’s interpretation is not

entitled to deference because it is merely a litigation position. In order to defeat the

VA’s claim to deference, Mr. Reizenstein must give us a “reason to suspect that the

interpretation does not reflect the agency’s fair and considered judgment on the matter

in question.” Cathedral Candle, 400 F.3d at 1364 (quoting Auer, 519 U.S. at 462). He

2009-7012 7
attempts to do so by citing a portion of the Veterans Court’s decision in O’Connell in

which the court noted that the government’s counsel stated at oral argument, “in a stark

departure from his brief,” that “§§ 3.343 and 3.344 apply whenever a rating is reduced,

including in the staged-ratings context.” 21 Vet. App. at 92. However, that case

involved the VA’s interpretation of 38 C.F.R. § 3.105(e) in the context of a staged rating

and the court specifically pointed out that “Mr. O’Connell raises no argument with

respect to the manner in which the Board applied §[] 3.343” and that it “need not decide

that precise issue here.” Id. Given that the opinion expressed by the attorney at oral

argument was contrary to the position the VA took in its briefs and was unnecessary to

the issue being decided, we decline to view it as preventing us from concluding that the

VA’s current position is its considered and legitimate interpretation of § 3.343(a). See

Abbott Labs. v. United States, 573 F.3d 1327, 1332-33 (Fed. Cir. 2009).

Mr. Reizenstein also points out that the government’s brief before the Veterans

Court in this case requested a remand to “consider and address the potential

applicability of § 3.343 in the first instance.” Instead of remanding, the Veterans Court

asked the VA to submit a memorandum regarding the history of § 3.343(a) and the VA’s

practice in applying it. Reizenstein, 22 Vet. App. at 206. In its memorandum, the VA

explained its view that § 3.343(a) only applies to prospective total disability ratings and

does not apply to total disability ratings that are part of a retrospective staged rating. Id.

The memorandum also included a statement in support of the VA’s position from

Bradley Flohr, Assistant Director of Policy for the Compensation and Pension Service.

Id. In light of the VA’s supplemental memorandum, we conclude that the position

presented to the Veterans Court and to us on appeal is the product of the VA’s “fair and

2009-7012 8
considered judgment” and is accordingly entitled to deference. Cathedral Candle, 400

F.3d at 1364 (quoting Auer, 519 U.S. at 462).

As mentioned above, the VA’s interpretation of its own regulations is “controlling

unless plainly erroneous or inconsistent with the regulation.” Auer, 519 U.S. at 461

(quotation marks omitted). This deference “is broader than deference to the agency’s

construction of a statute, because in the latter case the agency is addressing

Congress’s intentions, while in the former it is addressing its own.” Cathedral Candle,

400 F.3d at 1363-64. In this case, the VA’s interpretation of § 3.343(a) satisfies this

deferential standard of review.

The regulation provides as follows:

§ 3.343 Continuance of total disability ratings.

(a) General. Total disability ratings, when warranted by the severity of the
condition and not granted purely because of hospital, surgical, or home
treatment, or individual unemployability will not be reduced, in the absence
of clear error, without examination showing material improvement in
physical or mental condition. Examination reports showing material
improvement must be evaluated in conjunction with all the facts of record,
and consideration must be given particularly to whether the veteran
attained improvement under the ordinary conditions of life, i.e., while
working or actively seeking work or whether the symptoms have been
brought under control by prolonged rest, or generally, by following a
regimen which precludes work, and, if the latter, reduction from total
disability ratings will not be considered pending reexamination after a
period of employment (3 to 6 months).

38 C.F.R. § 3.343(a) (emphasis added). The government argues that the language of

the regulation, including the use of the word “continuation” in the title and “reduced” in

the text, suggests that the regulation was intended to be applied to existing ratings that

are reduced on a prospective basis. We conclude that the text of the regulation does

not unambiguously answer the question of whether the regulation applies in the context

2009-7012 9
of a staged rating where the VA looks backwards and, in a single ratings decision,

retroactively assigns specific ratings to discrete time periods.

We further conclude that the government’s interpretation of the regulation is

reasonable. The government explains that the purpose of § 3.343(a) is to protect

veterans who are dependent on the monthly compensation that accompanies their total

disability rating from a sudden and arbitrary reduction in their benefits that could

jeopardize their ability to pay for day-to-day necessities. Applying this regulation in the

context of a retrospective staged rating, however, would not advance this purpose

because the benefits for the past periods of disability are distributed in a lump sum that

is paid on top of the veteran’s on-going disability compensation, if any. In other words,

the money awarded for a staged rating is compensation for a past period of disability

and is independent of the veteran’s entitlement to continuing benefits, and is thus

significantly less likely to be the veteran’s only source of funds for paying current and

on-going expenses. The government’s reasoning with respect to the applicability of

§ 3.343(a) is consistent with its interpretations of other regulations that govern

procedural requirements for reductions in ratings or compensation. See, e.g.,

O’Connell, 21 Vet. App. 89 (holding that 38 C.F.R. § 3.105(e), which provides for notice

and an opportunity for the veteran to submit evidence prior to a reduction in

compensation, did not apply in the staged ratings context); VA General Counsel Opinion

1-2007 (explaining that 38 C.F.R. § 3.105(e) did not apply to a retroactive reinstatement

of a total disability based on individual unemployability rating).

Additionally, the government points out that applying § 3.343(a) to retrospective

staged ratings could result in dramatic overcompensation and might discourage the VA

2009-7012 10
from awarding total disability awards as part of staged ratings for conditions for which

the rating decision is flexibly based on the totality of the evidence. See, e.g., 38 C.F.R.

§ 4.126 (evaluation of disability from mental disorders). This is because the VA would

be unable to end a period of total disability in a staged rating unless there happened to

have been a medical examination that satisfied § 3.343(a). Absent a qualifying medical

examination, the VA would be compelled to compensate the veteran for that time as if

he was totally disabled even if the evidence otherwise showed that a total disability

rating was not warranted. For example, in this case, the Veterans Court found that if it

adopted Mr. Reizenstein’s position, “it is possible that he would be overcompensated at

a 100% rating for as many as 9 years.” Reizenstein, 22 Vet. App. at 209 n.4. The VA

reasonably concluded that in the absence of the special concern about taking away the

livelihood of a totally disabled veteran who is dependent on his monthly compensation,

the extra protection provided by § 3.343(a) was not necessary, given that veterans who

are dissatisfied with their staged ratings can, as Mr. Reizenstein has done in this case,

challenge the VA’s decision to end the period of total disability. 1 See id. at 209-11

(concluding that the Board adequately stated the reasons and bases for Mr.

Reizenstein’s staged rating); see also 38 U.S.C. § 7105 (providing for notices of

disagreement and appeals).

It is important to note that the inapplicability of § 3.343(a) does not give the VA

license to arbitrarily terminate periods of total disability that are assigned as part of a

1
We disagree with the dissent’s suggestion that we are “ignoring”
§ 3.343(a) in order to promote what we have chosen to be the policy goals of the
regulation. Contrary to the dissent’s characterization of the case, it is the VA that has
made a policy choice in this case.

2009-7012 11
staged rating. Rather, in cases such as this in which the Board awards a staged rating

with a temporary period of total disability, 38 U.S.C. § 7104(d)(1) requires that the Board

provide “a written statement of the Board’s findings and conclusions, and the reasons or

bases for those findings and conclusions, on all material issues of fact and law

presented on the record.” This statement must “contain clear analysis and [a] succinct

but complete explanation[],” Gilbert v. Derwinski, 1 Vet. App. 49, 57 (1990), of the

decision to terminate a temporary period of total disability. In this case, the Veterans

Court concluded that the Board’s reliance on the May 6, 1999 VA treatment note and a

subsequent examination provided an adequate basis for its decision to end Mr.

Reizenstein’s period of total disability as of May 6, 1999.

III. CONCLUSION

Because the VA’s interpretation of the applicability of § 3.343(a) is not “plainly

erroneous or inconsistent with the regulation,” Seminole Rock, 325 U.S. at 414, we

affirm the Veterans Court’s decision that § 3.343(a) does not apply to the total disability

stage of Mr. Reizenstein’s retrospective staged rating.

COSTS

Each party shall bear its own costs.

AFFIRMED

2009-7012 12
 United States Court of Appeals for the Federal Circuit
2009-7012

RANDALL D. REIZENSTEIN,

Claimant-Appellant.

v.

ERIC K. SHINSEKI, Secretary of Veterans Affairs,

Respondent-Appellee.

Appeal from the United States Court of Appeals for Veterans Claims in 06-1925, Judge
Lawrence B. Hagel.

MAYER, Circuit Judge, dissenting.

I respectfully dissent because the Court of Appeals for Veterans Claims has

impermissibly failed to apply 38 C.F.R. § 3.343(a) to Reizenstein’s retroactive staged

ratings. The text of the regulation is clear: “[t]otal disability ratings . . . will not be

reduced, in the absence of clear error, without examination showing material

improvement in physical or mental condition.” This rule is neither permissive, optional,

or discretionary, nor does it state any exception for staged ratings.

After requesting supplemental briefing from the Department of Veterans Affairs,

the Veterans Court accepted its litigation inspired position that section 3.343(a) does not

apply to staged ratings because “the concept of a staged rating necessitates that some

incremental time periods are rated as less than total based on the evidence of record,”

and because staged ratings are applied retrospectively while section 3.343(a) is

prospective in nature. In support of its conclusion, the court cited not the current section

3.343(a), but the title of its March 27, 1934, ancestor, Instruction 3, Paragraph 5 of
Veterans Regulation Number 3, which read “Continuance of total disability ratings

heretofore made.” It reasoned that the presence of the word “heretofore” suggests that

the regulation was intended only for prospective ratings (the only kind that existed at the

time) and carried forward this limitation to today’s regulation, which bears a different

title. Reizenstein v. Peake, 22 Vet. App. 202, 207 (2008).

Prospective or retrospective, the regulation is as clear as it is functional, and I do

not see anything that allows this court to ignore the unambiguous language that total

disability ratings will not be reduced outside prescribed conditions. The nature of

applying staged ratings retrospectively in no way disables the board from complying

with section 3.343(a) by applying a 100% rating where warranted and maintaining the

rating until such time as there has been an examination showing material improvement

in physical or mental condition. This is consistent with the need for retroactive ratings

in the first place: a retroactive rating is granted by standing in the position of a veteran

on the date of his claim, then looking forward from that point.

The majority says that the department is not excused from providing its reasons

for all changes in disability ratings, regardless of whether the change is prospective or

retrospective. I agree, and that is precisely what is required by section 3.343(a)

because the reasons would necessarily include a medical examination. The majority

should apply this holding to Ronald Reizenstein’s situation as well.

Furthermore, I cannot agree with the majority’s reasoning that a regulation can

be ignored when its application would not further the policy goals judges decide were

intended by the promulgation of the regulation. This makes a mockery of the literal text

2009-7012 2
and invites the judiciary to cherry-pick among policies purportedly the source of the

regulation even though the text speaks for itself.

Of course we must defer to an agency’s interpretation of its own regulations,

unless the interpretation is “plainly erroneous or inconsistent with the regulation.”

Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 414 (1945). But, surely, ignoring

the regulation is inconsistent with the regulation.

2009-7012 3