Stolasz - Anderson v. Nicholson , 19 Vet. App. 355 ( 2005 )

UNITED STATES COURT OF APPEALS FOR VETERANS CLAIMS
NO . 04-0217
THEODORE J. STOLASZ, APPELLANT ,
AND
NO . 04-0344
WILLLIAM J. ANDERSON , APPELLANT ,
V.
R. JAMES NICHOLSON ,
SECRETARY OF VETERANS AFFAIRS, APPELLEE.
On Appeal from the Board of Veterans' Appeals
(Argued August 30, 2005 Decided October 19, 2005 )
Ronald L. Smith and Landon Overby (non-attorney practitioner), with whom Leslie C. Rogall,
all of Washington, D.C., were on the brief for the appellants.
Kenneth A. Walsh, with whom Tim S. McClain, General Counsel; R. Randall Campbell,
Assistant General Counsel; Carolyn F. Washington, Deputy Assistant General Counsel; and
Catherine A. Chase, all of Washington, D.C., were on the brief in case No. 04-0217, for the appellee.
Tim S. McClain, General Counsel; R. Randall Campbell, Assistant General Counsel; and Brian
Rippel, Deputy Assistant General Counsel, all of Washington, D.C., were on the brief in case
No. 04-0344, for the appellee.
Before HAGEL, LANCE, and SCHOELEN, Judges.
SCHOELEN, Judge: The appellant, Theodore J. Stolasz, through counsel, seeks review of
a November 21, 2003, Board of Veterans' Appeals (Board or BVA) decision that denied his claim
for separate disability ratings for each ear for service-connected bilateral tinnitus. Stolasz Record
(Stol. R.) at 1-9. Also before the Court is the appellant, William J. Anderson, who, through counsel,
seeks review of a December 23, 2003, BVA decision that denied his claim for separate disability
ratings for each ear for service-connected bilateral tinnitus. Anderson Record (Ande. R.) at 1-7. The
appellants and the Secretary filed briefs. On August 30, 2005, the Court heard oral argument in this
consolidated case. These appeals are timely, and the Court has jurisdiction over the cases pursuant
to 38 U.S.C. §§ 7252(a) and 7266. The issue on appeal in both cases is whether a June 2003
amendment to regulation 38 C.F.R. § 4.87 (2004), Diagnostic Code (DC) 6260, prohibiting separate
disability ratings for bilateral tinnitus, may be applied to the claims that were pending at the
Department of Veterans Affairs (VA) at the time the June 2003 amendment was promulgated, so as
to preclude the assignment of separate disability ratings for bilateral tinnitus.
As a preliminary matter, the Court notes that the appellants' briefs present arguments with
respect only to the Board's denial of separate disability ratings for bilateral tinnitus. Accordingly,
the Court deems all other appealable issues to be abandoned. See Ford v. Gober, 10 Vet.App. 531,
535 (1997) (holding claims not argued on appeal are deemed abandoned); Bucklinger v. Brown,
5 Vet.App. 435, 436 (1993). For the reasons that follow, the Court will reverse the Board decisions
and remand the matters for further proceedings consistent with this opinion.
I. RELEVANT BACKGROUND
A. Appellant Stolasz
Appellant Stolasz served honorably on active duty in the U.S. Air Force from July 1963 to
July 1967. Stol. R. at 16. In May 2001, he applied for disability compensation for hearing loss.
Stol. R. at 10. In September 2001, he was diagnosed with tinnitus and hearing loss by a VA medical
examiner. Stol. R. at 124. "Tinnitus" is "noise in the ears such as ringing, buzzing, roaring, or
clicking." DORLAND 'S ILLUSTRATED MEDICAL DICTIONARY 1725 (27th ed. 1988).
In September 2001, a VA regional office (RO) granted service connection for hearing loss
and tinnitus, and assigned a 10% disability rating for tinnitus, effective May 2001.
Stol. R. at 127-30. In June 2002, while the matter was pending on appeal to the BVA, the appellant
argued, inter alia, that he should receive separate 10% disability ratings for each ear for bilateral
tinnitus pursuant to 38 C.F.R § 4.25(b) (2002). Stol. R. at 174-77.
In May 2003, the VA General Counsel's Office issued a precedent opinion in which it
concluded that separate disability ratings for bilateral tinnintus were prohibited under the versions
of DC Code 6260, as in effect prior to June 1999, and as amended on that date. VA General Counsel
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Precedent Opinion 2-2003 (May 22, 2003) [hereinafter G.C. Prec. 2-2003]. Subsequently, in June
2003, an amendment to DC 6260 was promulgated. The June 2003 amendment provided that
separate disability ratings for each ear for bilateral tinnitus were prohibited.
In November 2003, the Board issued a decision denying separate 10% disability ratings for
each ear for bilateral tinnitus. Stol. R. at 1-12. To conclude that, as a matter of law, separate
schedular ratings could not be assigned for bilateral tinnitus, the Board relied on the June 2003
amendment to DC 6260 and G.C. Prec. 2-2003. Stol. R. at 11.
B. Appellant Anderson
Appellant Anderson served on active duty in the U.S. Navy from June 1959 to May 1961.
Ande. R. at 11. In September 1997, he filed a claim for entitlement to service connection for
tinnitus. Ande. R. at 14. In December 1997, Mr. Anderson was diagnosed with tinnitus and hearing
loss, both of which a VA medical examiner opined were related to service. Ande. R. at 20. In
February 1998, the RO granted service connection for tinnitus, rated 10% disabling, effective
September 25, 1997. Ande. R. at 26-28.
In August 2000, Mr. Anderson was examined by a VA medical examiner who concluded that
he suffered from tinnitus that the appellant characterized as a constant "buzzing." Ande. R. at 32.
In December 2002, the RO continued the 10% disability rating assigned for his tinnitus. Ande.
R. at 36-39. The Board issued a decision in December 2003 that denied Mr. Anderson's claim for
separate 10% disability ratings for each ear for tinnitus. Ande. R. at 1-7. As in Mr. Stolasz's case,
to conclude that, as a matter of law, separate disability ratings for each ear for bilateral tinnitus were
prohibited, the Board relied on the June 2003 amendment to DC 6260 and G.C. Prec. 2-2003. Ande.
R. at 7.
II. ANALYSIS
A. Applicable Law Regarding Evaluation of Tinnitus
By statute, the Secretary has the authority to "adopt and apply a schedule of ratings of
reductions in earning capacity from specific injuries or combination of injuries." 38 U.S.C. § 1155(2000). Pursuant to that authority, the Secretary has adopted a schedule of ratings for ear disorders.
The diagnostic code for tinnitus is set forth in 38 C.F.R. § 4.87, DC 6260. In 1998, a 10% rating was
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warranted for "persistent" tinnitus if the disease was the result of a head injury, concussion, or
acoustic trauma. See 38 C.F.R. § 4.87, DC 6260 (1998). In June 1999, the Secretary amended DC
6260 to provide a 10% disability rating for "recurrent" tinnitus. 64 Fed. Reg. 25, 202 (1999)
(codified at 38 C.F.R. § 4.87, DC 6260 (2000)). The June 1999 amendment also eliminated the
requirement that the tinnitus must be the result of a head injury, concussion, or acoustic trauma. Id.In June 2003, the Secretary added a note (Note 2) to the end of DC 6260 stating that only a single
evaluation may be assigned for recurrent tinnitus "whether the sound is perceived in one ear, both
ears, or in the head." 68 Fed. Reg. 25, 822 (2003) (codified at 38 C.F.R. § 4.87, DC 6260 (2004)).
The regulation stated that it would become effective on June 13, 2003. Id.Also relevant to the appellants' claims is 38 C.F.R. § 4.25(b), the regulation that provides the
general rule for rating disabilities arising from a single disease entity. This regulation provides that
each service-connected disability arising from a single disease entity is to be rated separately, and
the ratings combined, unless otherwise provided by the Secretary. See Colayong v. West,
12 Vet.App. 524, 531 (1999); Esteban v. Brown, 6 Vet.App. 259, 261 (1994).
In Smith (Ellis) v. Nicholson, 19 Vet.App. 63 (2005), the Court reversed a Board decision that
denied the veteran separate 10% disability ratings for bilateral tinnitus under the pre-June 2003
versions of DC 6260. The Secretary argued that the Board decision was consistent with VA's
longstanding interpretation of DC 6260 that no more than one 10% disability rating may be assigned
for tinnitus. Id. at 69-70. In support of this argument, the Secretary pointed to the introductory
language to the proposed and final rule amending DC 6260 and to G.C. Prec. 2-2003. Id. These
documents stated that the amendment to DC 6260 did not represent a substantive change but merely
restated VA's standard practice of granting only a single 10% disability rating for bilateral tinnitus.
Id. at 69. Thus, the Secretary argued that VA's longstanding interpretation of DC 6260 had always
prohibited separate ratings for bilateral tinnitus. Id.The Court in Smith reviewed the text of the pre-June 2003 versions of DC 6260 and
concluded that VA's interpretation of DC 6260 was inconsistent with the plain meaning of DC 6260,
which listed tinnitus as a disease of the ear, thereby making the provisions of § 4.25(b) applicable.
Id. at 74-77. Furthermore, the Court noted that the rating schedule contained no exception to
§ 4.25(b) regarding tinnitus. Id. at 75. The Court also concluded that because the introductory
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language explaining the proposed amendment misstated the law regarding § 4.25(b), the Secretary's
interpretation was entitled to no deference. Id. at 77. The Court held that "the plain reading [of the
pre-June 2003 versions of DC 6260] and application of § 4.25(b) required the assignment of dual
ratings for bilateral tinnitus." Id. at 78. The Court also expressly invalidated G.C. Prec. 2-2003 to
the extent that the General Counsel's opinion precluded the Board from assigning dual ratings for
bilateral tinnitus under the pre-June 2003 versions of DC 6260. Id.
B. Retroactivity and the BVA's Application of the June 2003
Version of DC 6260 to Appellants' Claims
The Court is required to decide whether the June 2003 amendment to DC 6260 may be
applied to the appellants' rating-increase claims for bilateral tinnitus that were pending at VA when
the June 2003 amended regulation went into effect. The question of whether to grant retroactive
application of law is a question of statutory interpretation. See Mason Gen. Hosp. v. Sec'y of Health
& Human Servs., 808 F.2d 1220, 1224 (6th Cir. 1987); Daughters of Miriam Cntrs. for the
Aged v. Matthews, 590 F.2d 1250, 1259 (3rd Cir. 1978); Retail, Wholesale and Dep't Store Union
v. NLRB, 466 F.2d 380, 390 (D.C. Cir. 1972). Matters involving statutory interpretation are
questions of law that the Court reviews de novo. Debeaord v. Principi, 18 Vet.App. 357, 363
(2004). An administrative agency does not have any particular expertise concerning the issue of
retroactivity. Mason, supra; Daughters, supra. The extent to which a regulation should be given
retroactive effect is governed by principles of law that have been developed by the courts. Mason,
supra; Daughters, supra.The U.S. Supreme Court has held that "retroactivity is not favored in the law," and therefore,
"congressional enactments and administrative rules will not be construed to have retroactive effect
unless their language requires this result." Bowen v. Georgetown Univ., 488 U.S. 204, 208 (1988).
A regulation is not retroactive merely because it is applied in a case arising from conduct antedating
the regulation's enactment. Landgraf v. USI Film Prods., 511 U.S. 244, 269 (1994). Rather, a
regulation is deemed to have retroactive effect when it "would impair rights a party possessed when
he acted, increase a party's liability for past conduct, or impose new duties with respect to
transactions already completed." Landgraf, 511 U.S. at 280; see id. at 282 (holding that application
of the compensatory and punitive damages provisions in the Civil Rights Act of 1991 to conduct
occurring before the effective date of the law would operate retroactively because it would impose
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new legal burdens and increase liability for past conduct); Rodriguez v. Nicholson, 19 Vet.App. 275,
287 (2005) (holding that application of an amendment to 38 C.F.R. § 3.22 that barred hypothetical
entitlement to 38 U.S.C. § 1318 claims, which was promulgated while the appellant's dependency
and indemnity compensation (DIC) claim was pending at VA, would have a retroactive effect
because it would take away the appellant's substantive right to DIC benefits that existed at the time
the regulation was promulgated).
The appellants argue that the Board's application of the June 2003 version of DC 6260 to
their claims constituted an impermissible retroactive application of the June 2003 amendment
under Landgraf and Rodriguez because the amendment extinguished rights to separate ratings for
bilateral tinnitus that they had at the time that they filed their claims. Appellants' Supplemental
Brief (Suppl. Br.) at 10-11. The Secretary counters that there was no impermissible retroactive
effect in applying the 2003 version of DC 6260 to the appellants' claims because the amendment
to DC 6260 did not extinguish any substantive right. See Secretary's Suppl. Br. at 3-4. The
Secretary argues that at the time the appellants filed their claims, VA did not recognize entitlement
to separate disability ratings for bilateral tinnitus. Id. The Secretary contends that the right to
separate disability ratings for tinnitus did not exist until after the appellants' BVA decisions were
on appeal to this Court, when the decision in Smith was issued. Id. He states that "only by creating
a fiction that the holdings in Smith applied at the time [the a]ppellants' claims were pending prior
to June 2003," would application of the June 2003 amendment have retroactive effect. Id. The
Secretary asserts that the instant cases are in sharp contrast to Rodriguez, where the substantive
right at issue – the right to "hypothetical" entitlement to DIC claims under 38 U.S.C. § 1318 – was
in existence at the time that VA amended the regulation that extinguished that right. Id.The Secretary's argument is unavailing. Smith involved the Court's construction of VA
regulations DC 6260 and 38 C.F.R. § 4.25(b). The theory underlying judicial interpretation of a
statute is that a Court's interpretation of a statute "explain[s] its understanding of what the statute
has meant continuously since the date when it became law." Rivers v. Roadway Express, 511 U.S.
298, 312 (1994) (holding that the Supreme Court's 1989 interpretation of the phrase "make and
enforce contracts" in the Civil Rights Act of 1866 was the authoritative interpretation of what that
phrase meant prior to a legislative change in 1991). Thus, the Secretary is not accurate in stating
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that Smith created a right to separate disability ratings for each ear for bilateral tinnitus that did not
exist prior to the Court's decision in that case. Rather, Smith decided what the pre-June 2003
versions of DC 6260 have always meant.
Additionally, the Secretary's contention that the appellants' substantive right to separate
disability ratings for each ear for bilateral tinnitus did not exist prior to the Court decision in Smith
fails to take into account a fundamental principle of American jurisprudence that, while statutes
operate prospectively, judicial decisions operate retrospectively. Rivers, 511 U.S. at 311.
Therefore, the holding in Smith represents this Court's controlling interpretation of the pre-June
2003 versions of DC 6260 and must be given full retroactive effect in all cases that are still open
on direct review, such as the appellants', regardless of whether the events involved predated the
Court's announcement of the rule of law. Rivers, supra; Harper v. Va. Dep't of Taxation, 509 U.S.
86, 95 (1993) (holding that the Supreme Court rule of law that invalidated a state practice of giving
preferential tax treatment to state employees and not to federal employees was a controlling
statement of Federal law that should have been applied retrospectively); James B. Beam Distilling
Co. v. Georgia, 501 U.S. 529, 544 (1991) (holding that a Supreme Court ruling invalidating excise
tax that favored Georgia-grown alcoholic products applied retrospectively to all others not barred
by procedural requirements or res judicata); Brewer v. West, 11 Vet.App. 228, 232-33 (1998)
(holding that retroactive effect must be given to Court opinions regarding elements of a
well-grounded claim).
In view of the Court's interpretation in Smith, supra, of DC 6260 and its relationship to
38 C.F.R § 4.25(b) as allowing for separate ratings for bilateral tinnitus, the Court holds that the
appellants had a substantive right, at the time that their claims were filed and pending before VA,
when the June 2003 amendment to DC 6260 became effective. To apply the June 2003
amendment to the appellants' claims would take from the appellants a substantive right that existed
at the time the June 2003 regulation became effective. Accordingly, VA's application of amended
DC 6260 to the appellants' claims had a "retroactive effect." See Landgraf, supra, Rodriguez,
supra.
Having concluded that the Board's application of the June 2003 version of DC 6260 to the
appellants' claims had a retroactive effect, the Court must decide whether VA had the power to
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promulgate a rule with retroactive effect. As a general rule, a statutory grant of rulemaking
authority to an administrative agency does not encompass the power to promulgate retroactive
rules unless that power is conveyed by Congress expressly. Bowen, 488 U.S. at 208 (holding
invalid a 1984 Heath and Human Services cost-limit regulation for medicare reimbursement made
retroactive to July 1981 because the agency had no express power to enact such a retroactive
regulation). In Rodriguez, supra, this Court held that VA's general rulemaking authority, found
in 38 U.S.C. § 501, does not provide the Secretary of Veterans Affairs with express authority to
promulgate a retroactive regulation. See also VA G.C. Prec. 7-2003, at para. 24 (Nov. 19, 2003)
(holding that the Secretary lacks general authority to make a restrictive regulation apply
retroactively except to the "extent [that] doing so will benefit rather than burden claimants").
Rodriguez noted that "even the slightest retroactive effect would be questionable." Rodriguez,
supra. Here, the retroactive effect would be substantial, not slight, as application of the June 2003
amendment to the appellants' claims took away a right, then in existence, to separate disability
ratings for each ear for bilateral tinnitus. Based on the foregoing, the Court holds that the
Secretary's retroactive application of the June 2003 amendment to DC 6260 to the appellants'
claims was improper, and we will thus reverse the Board determinations and remand the matters
for readjudication consistent with this opinion.
CONCLUSION
On the basis of the foregoing analysis, the Court AFFIRMS the November 21, 2003, Board
decision with regard to Mr. Stolasz's claim for entitlement to an initial compensable rating for
bilateral hearing loss; REVERSES the November 21, 2003, Board decision to the extent that it
determined that Mr. Stolasz was not entitled to separate disability ratings for each ear for his
service-connected bilateral tinnitus; and REMANDS that matter for expeditious issuance of a
decision consistent with this opinion. With regard to Mr. Anderson, the Court REVERSES the
December 23, 2003, Board decision that Mr. Anderson was not entitled to separate disability
ratings for each ear for his service-connected bilateral tinnitus and REMANDS that matter for
expeditious issuance of a decision consistent with this opinion.
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