Perciavalle v. McDonough ( 2023 )

Case: 22-1491 Document: 40 Page: 1 Filed: 07/25/2023
United States Court of Appeals
for the Federal Circuit
______________________
ROCCO V. PERCIAVALLE,
Claimant-Appellant
v.
DENIS MCDONOUGH, SECRETARY OF
VETERANS AFFAIRS,
Respondent-Appellee
______________________
2022-1491
______________________
Appeal from the United States Court of Appeals for
Veterans Claims in No. 17-3766, Chief Judge Margaret C.
Bartley, Judge Amanda L. Meredith, Judge Coral Wong Pi-
etsch, Judge Grant Jaquith, Judge Joseph L. Falvey Jr.,
Judge Joseph L. Toth, Judge Michael P. Allen, Judge Scott
Laurer, Judge William S. Greenberg.
______________________
Decided: July 25, 2023
______________________
CESAR LOPEZ-MORALES, Orrick, Herrington & Sutcliffe
LLP, Washington, DC, argued for claimant-appellant. Also
represented by MELANIE L. BOSTWICK; KENNETH
DOJAQUEZ, Carpenter Chartered, Topeka, KS.
MEEN GEU OH, Commercial Litigation Branch, Civil Di-
vision, United States Department of Justice, Washington,
DC, argued for respondent-appellee. Also represented by
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2 PERCIAVALLE v. MCDONOUGH
BRIAN M. BOYNTON, MARTIN F. HOCKEY, JR., PATRICIA M.
MCCARTHY; BRIAN D. GRIFFIN, ANDREW J. STEINBERG, Of-
fice of General Counsel, United States Department of Vet-
erans Affairs, Washington, DC.
______________________
Before MOORE, Chief Judge, DYK and REYNA, Circuit
Judges.
DYK, Circuit Judge.
Rocco V. Perciavalle appeals a decision of the Court of
Appeals for Veterans Claims (“Veterans Court”) affirming
the denial of Mr. Perciavalle’s claim by the Board of Veter-
ans’ Appeals (“Board”). This case involves the question of
whether the Veterans Court, having determined that the
Board erred in failing to properly interpret a veteran’s
claim, correctly determined that no remand to the Board
was required, either because the interpretation error was
harmless or because, according to some members of the
Veterans Court, there was no error in the first place. We
affirm in part, vacate in part, and remand.
BACKGROUND
I
Mr. Perciavalle served in the Army from 1962 to 1964.
While in the Army, Mr. Perciavalle injured his left knee,
which required surgery. In 1966, Mr. Perciavalle submit-
ted a claim for compensation for his knee injury to the De-
partment of Veterans Affairs (“VA”). A physician
evaluated Mr. Perciavalle, who reported “[w]eakness and
feeling of instability of left knee.” J.A. 124. The VA
awarded Mr. Perciavalle a 10 percent disability for medial
menisectomy under Diagnostic Code (“DC”) 5259 for “[c]ar-
tilage, semilunar, removal of, symptomatic.” 38 C.F.R.
§ 4.71a (1966). At the time of the 1966 examination, Mr.
Perciavalle’s left knee exhibited a range of motion from 0
to 145 degrees.
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PERCIAVALLE v. MCDONOUGH 3
In 1971, Mr. Perciavalle underwent another orthopedic
examination of his left knee, seeking an increased disabil-
ity rating. The x-ray showed that “[t]he joint space is ques-
tionably narrowed medially and there does appear to be
some slight blunting of the tibial spines. On one view there
is a question of nodular irregularity of the medial condyle
of the femur.” J.A. 116. The physician noted “normal” ex-
tension of the knee with a flexion to 135 degrees, no quad-
riceps atrophy or weakness, no swelling or tenderness, but
observed that Mr. Perciavalle had “very slight instability
of [the] joint laterally.” J.A. 119. The VA reviewed the ex-
amination report and found that it did not warrant an in-
crease in Mr. Perciavalle’s disability rating. Mr.
Perciavalle did not appeal that decision, and it became fi-
nal.
In 2015, Mr. Perciavalle requested that the VA Re-
gional Office (“RO”) reopen the 1971 rating decision for
clear and unmistakable error (“CUE”). Mr. Perciavalle
contended that he was entitled to two separate disability
ratings, one for a slight instability of the left knee under
DC 5257 1 and another based on the 1971 examination for
limitation of motion of flexion and discomfort secondary to
arthritis under DC 5003-5260. Mr. Perciavalle argued that
he was entitled to the second disability rating because the
1971 x-ray “clearly show[ed] degenerative changes in the
veteran’s left knee” as compared to the 1966 examination,
which resulted in a range of motion decrease of 10 degrees
1 As noted above, Mr. Perciavalle was originally
granted service connection for medial menisectomy under
DC 5259. Mr. Perciavalle’s CUE claim argues that this
original rating should have been changed from DC 5259 to
DC 5257. He sought corrective action as to the failure to
assign a second rating based on the 1971 examination un-
der DC 5003-5260 for limitation of motion of flexion and
discomfort secondary to arthritis.
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4 PERCIAVALLE v. MCDONOUGH
of flexion between 1966 and 1971. J.A. 114. At the time of
the 1971 rating decision, the Code of Federal Regulations
provided DC 5257 for “[k]nee . . . [r]ecurrent subluxation or
lateral instability,” DC 5003 for “[a]rthritis, degenerative,
hypertrophic, or osteoarthritis,” and DC 5260 for “[l]eg,
limitation of flexion of.” 38 C.F.R. § 4.71a (1971). The reg-
ulations allowed for the combination of two or more disa-
bility ratings, 38 C.F.R. § 4.25 (1971), 2 but required the
“[a]voidance of pyramiding:”
The evaluation of the same disability under various
diagnoses is to be avoided . . . . Both the use of man-
ifestations not resulting from service-connected
disease or injury in establishing the service-con-
nected evaluation, and the evaluation of the same
manifestation under different diagnoses are to be
avoided.
38 C.F.R. § 4.14 (1971).
II
In order to understand Mr. Perciavalle’s claim, a de-
scription of law in regard to pyramiding is required. In
1964 (before the 1971 RO decision in Mr. Perciavalle’s
case), our predecessor court, the Court of Claims, consid-
ered the issue of pyramiding in Wolf v. United States, 168
Ct. Cl. 24 (1964). That case did not involve a claim for vet-
erans’ benefits. Rather, the veteran claimed that he was
entitled to disability retirement. In this context, the
2 38 C.F.R. § 4.25 establishes a combined ratings ta-
ble that allows for the combination of two or more disabili-
ties to ascertain an overall disability rating. See 38 C.F.R.
§ 4.25 (1971) (explaining that “[t]o use the combined rat-
ings table, the disabilities will first be arranged in the exact
order of their severity, beginning with the greatest disabil-
ity and then combined with use of the table as hereinafter
indicated” and then describing use of the table).
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PERCIAVALLE v. MCDONOUGH 5
Claims Court looked to the VA “Schedule for Rating Disa-
bilities.” Id. at 32. At the time of the Wolf opinion, the
schedule contained § 4.14 regarding pyramiding. See
Schedule for Rating Disabilities, 29 Fed. Reg. 6718, 6719
(May 22, 1964). 3 The veteran had part of his small intes-
tine and parts of his large intestine resected (that is, re-
moved). See Wolf, 168 Ct. Cl. at 27. The question was
whether he “should . . . have been rated a disability per-
centage on each resection,” id. at 30, i.e., whether he was
entitled to separate ratings for the resection of his small
intestine and the resection of his large intestine, which
were listed under separate diagnostic codes. The Court of
Claims held that the veteran was entitled to a 40 percent
rating for the veteran’s resection of the small intestine and
a 20 percent rating for the resection of the large intestine.
Id. at 32. The court explained that
Respecting defendant’s argument that to rate both
would amount to pyramiding, it seems clear that
the manifestations of plaintiff’s intestinal resec-
tions are separate and distinct. We can find noth-
ing in the record which teaches us that resection of
the small intestine produces the same symptoms as
resection of the large intestine. . . . Clearly, the
small intestine performs a different function than
the large. In other words, each of the resections
produces a different manifestation.
3 The Wolf opinion refers to the “Veterans Admin-
istration Schedule for Rating Disabilities, 1957 edition.”
168 Ct. Cl. at 29 n.6. The VA’s Schedule for Rating Disa-
bilities, originally effective in 1946, was added to the Code
of Federal Regulations in 1964 at Title 38, Chapter I, Part
4, where it presently remains (as amended). The pyramid-
ing provision in the 1964 regulation and the “Schedule for
Rating Disabilities” appear to have been the same.
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6 PERCIAVALLE v. MCDONOUGH
Id. at 31.
In 1994, well after the 1971 RO decision, the Veterans
Court considered the issue of pyramiding in Esteban v.
Brown, 6 Vet. App. 259 (1994), in the context of veterans’
benefits. In that case, a veteran had requested an in-
creased disability rating for residuals of a head injury in-
cluding scars, injury to facial muscles, and disfigurement.
Id. at 259. The Veterans Court held that the veteran was
entitled to three separate ratings—a “10% rating for disfig-
urement under DC 7800 with an additional 10% rating for
tender and painful scars under DC 7804 and a third 10%
rating for facial muscle injury interfering with mastication
under DC 5325.” Id. at 262. The Veterans Court held that
the separate ratings were permissible under 38 C.F.R.
§ 4.14 because “none of the symptomatology for any one of
these three conditions is duplicative of or overlapping with
the symptomatology of the other two conditions.” Id. That
is, the conditions did not constitute the “same disability” or
the “same manifestation” under the regulation. Id. at 261(quoting 38 C.F.R. § 4.14).
In 1997, the VA’s General Counsel issued a preceden-
tial opinion citing Esteban and holding that “[a] claimant
who has arthritis and instability of the knee may be rated
separately under diagnostic codes 5003 and 5257,” J.A.
104, the very combination involved here.
III
In 2015, the RO denied Mr. Perciavalle’s CUE claim to
reopen the 1971 RO decision, reasoning that “[t]he decision
not to grant a separate evaluation . . . was properly based
on the available evidence of record and the rules in effect
at the time the issue was considered.” J.A. 110. The RO
further explained that the 1997 VA General Counsel opin-
ion “was not in effect at that period of time.” J.A. 110.
Mr. Perciavalle filed a Notice of Disagreement. In re-
sponse, the RO issued a Statement of the Case in May 2017
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PERCIAVALLE v. MCDONOUGH 7
explaining that, while a “General Counsel opinion, dated
July 1, 1997, [which] stems from a [1994 Veterans Court]
decision . . . allow[s] us to assign separate evaluations [for
two different knee disability codes, p]rior to this court de-
cision and General Counsel Opinion, separate evaluations
were not assigned.” J.A. 106. In August 2017, Mr. Per-
ciavalle sent an informal letter to the Board. The letter
stated that “there is no bar to the retroactive effect of
Esteban,” but “[w]e are not arguing the 1997 General Coun-
sel opinion or any VA rules after the 1971 rating decision.
We contend that the law has always permitted that a sep-
arate evaluation can be applied . . . .” J.A. 74–75. Mr. Per-
ciavalle “contend[ed] that corrective action should be taken
under the provisions of 38 CFR § 3.105(a) to correctly apply
the law that was in existence at the time of the July 22,
1971, rating decision.” J.A. 75.
The Board concluded that the 1971 rating decision did
not contain CUE, reasoning that “[t]he Veteran has not
provided any evidence that, in July 1971, VA interpreted
the rating schedule to allow for separate ratings . . . . In-
stead, the Veteran contends that a more recent interpreta-
tion of VA regulations should have retroactive effect.” J.A.
70. The Board explained, “[b]ecause a later interpretation
of an existing regulation cannot constitute CUE and that
is the only basis on which the Veteran asserts CUE, the
Veteran’s motion must be denied as a matter of law.” J.A.
71.
Mr. Perciavalle appealed to the Veterans Court. After
a panel decision, the Veterans Court elected to review the
case en banc. The en banc court issued a fractured deci-
sion. A majority of the en banc court (six of nine judges)
held that the Board erred in construing Mr. Perciavalle’s
CUE claim as a claim based on the retroactivity of later
legal authorities (Esteban and the 1997 General Counsel
opinion). A different majority (six of nine judges), however,
voted to affirm the judgment. Three judges, in an opinion
by Judge Allen, voted to affirm on the theory, contrary to
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8 PERCIAVALLE v. MCDONOUGH
the majority that found error in the Board decision, that
there was no error. Three other judges (in two separate
opinions: one by Judge Toth and another by Judges Laurer
and Jaquith) found that, although the Board erred in con-
struing Mr. Perciavalle’s claim as one based on retroactiv-
ity, the error was harmless. Mr. Perciavalle appeals. We
have jurisdiction under 38 U.S.C. § 7292(a).
DISCUSSION
Section 5109A of Title 38 of the U.S. Code provides a
mechanism for a claimant to challenge a final decision by
the RO. “At any time, a veteran may ask the . . . regional
office to revise a final benefits decision on grounds of ‘clear
and unmistakable error.’” George v. McDonough, 142 S. Ct.
1953, 1958 (2022) (quoting 38 U.S.C. § 5109A). By regula-
tion, “[c]lear and unmistakable error is a very specific and
rare kind of error,” 38 C.F.R. § 3.105(a)(1)(i); id.§ 20.1403(a), 4 that “does not include the otherwise correct
application of a statute or regulation where, subsequent to
the decision being challenged, there has been a change in
the interpretation of the statute or regulation.” id.
§ 3.105(a)(1)(iv); see also id. § 20.1403(e) (similar). Under
38 U.S.C. § 5109A(a), “[i]f evidence establishes [clear and
unmistakable] error, the prior decision shall be reversed or
revised.” Claimants must show that “[e]ither the correct
facts, as they were known at the time, were not before the
4 Two regulations describe clear and unmistakable
error: 38 C.F.R. § 3.105 and § 20.1403. Section 20.1403 ap-
plies to decisions by the Board, while § 3.105 applies to de-
cisions by the agency of original jurisdiction—here, the RO.
The language of the two is virtually identical. Section
3.105 was updated in 2019, but as noted by the Veterans
Court, no party contends that the change in language be-
tween the 2019 version and the prior version makes any
substantive difference here. For convenience, we cite to the
current version of the regulation.
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PERCIAVALLE v. MCDONOUGH 9
adjudicator or the statutory or regulatory provisions extant
at the time were incorrectly applied.” Willsey v. Peake, 535
F.3d 1368, 1371 (Fed. Cir. 2008) (citation omitted).
In a decision rendered after the Veterans Court deci-
sion had been issued, the Supreme Court affirmed that
CUE is a “narrow category” of claims, George, 142 S. Ct. at
1959, that could include, “for example, the VA’s failure to
apply an existing regulation to undisputed record evi-
dence.” Id. A later change in the law (including a later
invalidation of the law), however, cannot constitute the ba-
sis of a CUE claim. Id. at 1959–60. “[T]he correct applica-
tion of a binding regulation does not constitute ‘clear and
unmistakable error’ at the time a decision is rendered, even
if that regulation is subsequently invalidated.” Id. at 1960.
That is, a CUE claim must be evaluated by the law as it
existed at the time the challenged decision was rendered.
See id.; see also 38 C.F.R. § 3.105(a)(1)(iii) (“Review for
clear and unmistakable error in a prior final decision of an
agency of original jurisdiction must be based on the eviden-
tiary record and the law that existed when that decision
was made.”).
I
In reviewing the decision of the Veterans Court, we are
confronted with an odd situation—the majority decision of
the Veterans Court on the question of relief is comprised of
three separate opinions. First, Judge Allen, joined by
Judges Meredith and Falvey, concurred in the judgment,
but (contrary to the majority that found error in the Board
decision) on the basis that the Board did not err. Second,
Judge Toth concurred in the judgment, finding that, alt-
hough the Board had erred in construing Mr. Perciavalle’s
claim as one based on retroactivity, the error was harmless
as a matter of law under George v. McDonough, 991 F.3d
1227 (Fed. Cir. 2021), and the non-precedential Steele v.
McDonough, 856 F. App’x 878 (Fed. Cir. 2021), because the
alleged CUE was a legal error that had not yet been
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10 PERCIAVALLE v. MCDONOUGH
“identified as erroneous by a court decision or VA publica-
tion” in 1971. J.A. 37. Third, Judges Laurer and Jaquith
found the Board’s error to be harmless on a different the-
ory. The Laurer and Jaquith opinion found that “the evi-
dence in 1971 does not compel the conclusion that [the] VA
clearly and unmistakably erred in not awarding a separate
evaluation for left knee arthritis,” J.A. 29, because none of
the evidence clearly supported an arthritis diagnosis.
Thus, they found that Mr. Perciavalle did not provide “evi-
dence of arthritis confirmed by x-ray.” J.A. 30.
We first address the Allen opinion, which (contrary to
the majority that found error in the Board’s decision) held
that there was no error in the Board’s decision. The gov-
ernment defends the Allen opinion’s holding that the Board
did not err by arguing that the Veterans Court lacked ju-
risdiction to make a contrary determination that the Board
erred. This view was not articulated or adopted in the Al-
len opinion, and the government’s lack of jurisdiction the-
ory is untenable. The Board denied Mr. Perciavalle’s claim
“as a matter of law,” J.A. 71, and the Veterans Court re-
viewed this denial de novo, following Andrews v. Principi,
18 Vet. App. 177, 182 (2004), aff’d sub nom. Andrews v. Ni-
cholson, 421 F.3d 1278 (Fed. Cir. 2005), and Phillips v.
Brown, 10 Vet. App. 25, 30 (1997). The government urges
that 38 U.S.C. § 7261(c), which prohibits the Veterans
Court from conducting a de novo review of factual findings,
prohibited the Veterans Court from reviewing the CUE
claim de novo. That is, the government argues that the
Board’s determination that Mr. Perciavalle’s claim was
based on a retroactive application of later-developed law is
a factual finding that the Veterans Court could not review
de novo. But even if it were so, the Veterans Court essen-
tially concluded that any such finding by the Board would
be clearly erroneous given the clarity of Mr. Perciavalle’s
position before the Board, a determination well within the
Veterans Court’s authority. 38 U.S.C. § 7261(a)(4) (“[I]n
the case of a finding of material fact adverse to the claimant
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PERCIAVALLE v. MCDONOUGH 11
[the Veterans Court shall] hold unlawful and set aside or
reverse such finding if the finding is clearly erroneous.”).
There was no legal error in the Veterans Court majority
opinion finding that the Board erred in interpreting Mr.
Perciavalle’s claim.
There is an argument that the Veterans Court erred in
counting the Allen opinion in the majority on the issue of
relief when the Allen opinion’s position on error had al-
ready been rejected by a majority of the court. But we need
not resolve that issue. The Allen opinion in any event
rested on an erroneous legal principle. It read the veteran’s
claim as based on retroactivity, but concluded that it did
not matter whether the claim was based on a retroactivity
theory because in order to state a claim of CUE, the veteran
was required to set forth in his initial pleading a full-
fledged legal argument as to why, in 1971, the RO erred in
rejecting his claim. See J.A. 40 (requiring “an allegation
about how, in the context of the body of law that existed in
1971, the 1971 RO could not have plausibly interpreted the
rating schedule and anti-pyramiding regulations in his
case to preclude the separate ratings appellant sought”).
The Allen opinion would have required Mr. Perciavalle to
either “attempt to analyze the regulations’ plain language
to show how the RO’s interpretation was clearly and un-
mistakably wrong,” J.A. 41, or “produce[] a contemporane-
ous interpretation that reconciled the regulations in his
favor,” J.A. 42.
This assertion ignores the fact that the “VA’s duty to
sympathetically read a veteran’s pro se CUE motion to dis-
cern all potential claims is antecedent to a determination
of whether a CUE claim has been pled with specificity.”
Andrews v. Nicholson, 421 F.3d 1278, 1283 (Fed. Cir.
Case: 22-1491 Document: 40 Page: 12 Filed: 07/25/2023
12 PERCIAVALLE v. MCDONOUGH
2005). 5 Here, Mr. Perciavalle’s CUE claim set forth the rel-
evant facts and regulations. Under a sympathetic reading
of Mr. Perciavalle’s claim, the VA was required to “deter-
mine all potential claims raised by the evidence, applying
all relevant laws and regulations.” Roberson v. Principi,
251 F.3d 1378, 1384 (Fed. Cir. 2001) (emphasis added).
The Allen concurrence erred in requiring Mr. Perciavalle
to set forth a legal argument with supporting authority in
order to state a CUE claim.
II
The other two opinions that represented the views of
the majority of the Veterans Court as to relief rested on a
determination that the Board’s decision, even if erroneous,
was harmless error. Under the statute, the Veterans Court
must “take due account of the rule of prejudicial error.” 38
U.S.C. § 7261(b)(2). Under Shinseki v. Sanders, 556 U.S.
396, 406 (2009), the Veterans Court must “apply the same
kind of ‘harmless-error’ rule that courts ordinarily apply in
civil cases.” The harmless error analysis is a “case-specific
application of judgment, based upon examination of the
record.” Id. at 407. In its consideration of harmless error,
however, if “additional findings of fact are necessary re-
garding matters open to debate, the proper action for the
Veterans Court is to remand to the Board for consideration
5 Even though Mr. Perciavalle was assisted by a non-
attorney representative in filing his CUE claim, we have
explained that “[a]lthough aides from veterans’ service or-
ganizations provide invaluable assistance to claimants
seeking to find their way through the labyrinthine corri-
dors of the veterans’ adjudicatory system, they are not gen-
erally trained or licensed in the practice of law.” Comer v.
Peake, 552 F.3d 1362, 1369 (Fed. Cir. 2009) (internal quo-
tation marks and citation omitted). Thus, “limited assis-
tance [from a non-attorney representative] is insufficient
to disqualify [a claimant] as a pro se claimant.” Id.Case: 22-1491 Document: 40 Page: 13 Filed: 07/25/2023
PERCIAVALLE v. MCDONOUGH 13
of those facts in the first instance.” Tadlock v. McDonough,
5 F.4th 1327, 1337–38 (Fed. Cir. 2021).
Here, the government argues that this court should
make its own determination of harmless error and affirm
the Veterans Court because the error was harmless. But
we have no authority to review, much less determine, the
facts in veterans’ cases, see 38 U.S.C. § 7292(d)(2), and we
have specifically held that we lack authority to make a fact-
based determination of harmless error, see, e.g., Conway v.
Principi, 353 F.3d 1369, 1375 (Fed. Cir. 2004); Wood v.
Peake, 520 F.3d 1345, 1351 (Fed. Cir. 2008).
We instead consider whether the view of the Veterans
Court judges who relied on harmless error is sustainable.
In this respect, the Toth opinion contains plain error.
Judge Toth reasoned that CUE claims were impermissible
“wherever the alleged legal error or disputable question of
law was resolved by a court decision or official Agency pub-
lication (such as a General Counsel precedential decision)
issued after the decision the veteran seeks to collaterally
attack became final.” J.A. 36. The Toth opinion goes fur-
ther, explaining that “where [an error] has yet to be iden-
tified as erroneous by a court decision or VA publication” it
cannot be CUE. J.A. 37. But the language of the regula-
tion itself can establish the existence of CUE. It is clear
from the Supreme Court’s recent decision in George that
the correct CUE inquiry is simply whether the original de-
cision was a “correct application of a binding regulation” or
law, regardless of later changes in the law or later decisions
by the agency or a court. 142 S. Ct. at 1960. The CUE
regulation does not prohibit CUE claims simply because
the law at issue was the subject of a later decision. In
short, a legal error may be clear for the purpose of CUE
despite the fact that there was no preceding court or agency
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14 PERCIAVALLE v. MCDONOUGH
decision on the precise legal question. Thus, the Toth opin-
ion is based on legal error. 6
Finally, Mr. Perciavalle contends that the Laurer and
Jaquith opinion contains legal error because it made an ap-
pellate fact finding, contrary to Tadlock, that Mr. Per-
ciavalle’s medical records did not support a disability
rating of limitation of motion secondary to arthritis, i.e.,
that the Board’s error in reading Mr. Perciavalle’s claim
was harmless. We need not decide the question, because
the Allen and Toth opinions contain error. These errors in
the opinions representing four of the six affirming judges
are sufficient to support reversal.
CONCLUSION
The Veterans Court did not err in concluding that the
Board incorrectly interpreted Mr. Perciavalle’s CUE claim.
The Veterans Court did err, however, in affirming the
Board. We vacate and remand to the Veterans Court with
directions to remand the case to the Board to address the
question of a CUE in the 1971 decision consistent with this
opinion.
AFFIRMED-IN-PART, VACATED-IN-PART, AND
REMANDED
COSTS
Costs to appellant.
6 As noted by the Veterans Court majority finding
error in the Board decision, Wolf, 168 Ct. Cl. 24, was a prior
relevant decision regarding pyramiding, J.A. 23, which Mr.
Perciavalle now contends favors his position.