**United States Court of Appeals for the Federal Circuit**

03-7227

ADAM J. NATALI,

> Claimant-Appellant,

v\.

ANTHONY J. PRINCIPI, Secretary of Veterans Affairs,

> Respondent-Appellee.

[Michael L. Calhoon]{.underline}, Baker Botts L.L.P., of Washington, DC,
argued for claimant-appellant.

[James D. Colt]{.underline}, Trial Attorney, Commercial Litigation
Branch, Civil Division, United States Department of Justice, of
Washington, DC, argued for respondent-appellee. With him on the brief
were [Peter D. Keisler]{.underline}, Assistant Attorney General; [David
M. Cohen]{.underline}, Director; and [James M. Kinsella]{.underline},
Deputy Director. Of counsel on the brief were [Richard J.
Hipolit]{.underline}, Deputy Assistant General Counsel; and [Ethan G.
Kalett]{.underline}, Attorney, United States Department of Veterans
Affairs, of Washington, DC. Of counsel was [Nancy Kim]{.underline}, and
[Joseph Trautwein]{.underline}, Attorneys, United States Department of
Justice.

Appealed from: United States Court of Appeals for Veterans Claims

Chief Judge Kenneth B. Kramer

**United States Court of Appeals for the Federal Circuit**

03-7227

ADAM J. NATALI,

> Claimant-Appellant,

v\.

ANTHONY J. PRINCIPI, Secretary of Veterans Affairs,

> Respondent-Appellee.
>
> \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
>
> DECIDED: July 19, 2004
>
> \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Before BRYSON, GAJARSA, and DYK, [Circuit Judges]{.underline}.

BRYSON, [Circuit Judge]{.underline}.

Adam J. Natali appeals from a decision of the Court of Appeals for
Veterans Claims ("the Veterans Court"). The court affirmed a decision of
the Board of Veterans' Appeals denying Mr. Natali's claim that a 1945
Veterans Administration rating decision contained clear and unmistakable
error ("CUE"). Because Mr. Natali has not shown that any error in the
process leading to the 1945 rating decision would have altered the
result in this case, we affirm the decision of the Veterans Court.

I

Mr. Natali served on active duty in the United States Army from November
1940 until November 1944. Upon his enrollment, Mr. Natali was given a
physical examination that included an assessment of his vision. The
report from the physical

examination noted that Mr. Natali had 20/70 vision in both eyes,
corrected to 20/20 in his left eye and 20/30 in his right eye. The
report did not include any indication of further eye problems.

Sometime in 1944, Mr. Natali began experiencing additional vision
problems. In September 1944, he was hospitalized for headaches, blurring
of vision, and progressive bilateral loss of vision. A report from an
ophthalmologic examination shortly thereafter noted that Mr. Natali had
experienced residual headaches following a 1939 fall, that he had quit
school at age 18 because he could not read well, and that his head had
begun hurting again after a 1941 automobile accident that occurred
during his period of service. The report noted that Mr. Natali's vision
had gradually declined following the automobile accident and that he had
quit driving nine months before the examination because he could not see
at night. Mr. Natali was diagnosed with astigmatism mixed, bilateral
with diplopia (double vision). A Veterans Administration rating board in
November 1944 granted Mr. Natali a service-connected disability rating
of 60 percent pursuant to Veterans Regulation No. 1(a), Part I,
Paragraph 1(a), for "defective vision, 20/200 bilateral (vision on
induction, zero percent)," and stated that his vision was
"\[a\]ggravated by service in the WW II."

In December 1944, Mr. Natali was reexamined in connection with his
discharge from service. The examination report indicated a diagnosis of
"amblyopia, bilateral," due to "astigmatism, myopic, bilateral, severe."
In February 1945, the rating board began reexamining the question
whether Mr. Natali's eye condition was service connected. A rating board
memorandum indicated that the rating board's action was "deferred
pending receipt of additional clinical records hereinafter requested"
because "\[t\]he evidence in file is insufficient to show whether or not
veteran's eye condition was aggravated by the accident which occurred
November 2, 1941 . . . ." A May 1945 rating board memorandum noted that
"\[t\]he veteran alleges an injury to his head in 1939 due to a fall,
also that his head was injured in an auto-accident in 1941 and that his
vision has gradually become less since the latter accident," but that
"\[t\]he clinical records covering hospitalization from November 2, 1941
until January 28, 1942 on account of injuries sustained in the
auto-accident in November 1941 have been carefully checked" and that
"\[n\]o head injury other than a laceration of the scalp is noted in the
records." The rating board memorandum concluded that "\[a\] check of the
entire record fails to disclose any disease or injury during service to
which an aggravation can be attributed," and that "\[t\]he Board is
inclined to the view that the increased impairment of vision noted at
the time of the veteran's discharge from service is due solely to
Natural Progress and was not aggravated by military service."

In an August 1945 letter, the rating board informed Mr. Natali that his
claim had been "further reviewed based upon report of examination
conducted of you at this facility on December 7, 1944 and a review of
all the records in your case" and that "it has now been determined that
your defective vision is due to structural defects of the eye." The
letter explained that those defects were of "congenital or developmental
origin," that Mr. Natali was "not shown to have suffered from any
disease or injury during service which may be considered as having
aggravated that condition," and that "\[t\]he increase in loss of vision
in service is considered to be the result of natural progress and not
the result of military service." A contemporaneous rating board
memorandum proposed severing service connection for Mr. Natali's
disability based on the December 1944 examination.

In a decision dated October 8, 1945, the rating board severed service
connection for Mr. Natali's eye problems. The rating board based its
ruling on a conclusion that the November 1944 decision contained CUE.
The rating board determined that Mr. Natali had "amblyopia expanopsia,
bilateral, due to high error refraction and astigmatism, mixed,
bilateral" and that his "condition . . . is due to a defect in the form
and structure of the eye, held to be of a congenital or developmental
origin and there is no evidence of any superimposed disability during
service which could have caused or aggravated the congenital condition."
The rating board noted that its conclusion was based in part on the
December 1944 discharge examination.

Since 1945, Mr. Natali has undergone several medical examinations in an
effort to show that the rating determination of October 1945 was
incorrect. He has offered evidence of examinations in February 1987,
December 1997, and September 1998 to show that he did not have
amblyopia.

In October 1998, Mr. Natali filed a claim with a regional office of the
Department of Veterans Affairs in which he argued that the 1945 rating
board decision contained clear and unmistakable error. The regional
office denied Mr. Natali's claim on the ground that the 1945 rating
decision was "shown to have been proper based on the evidence of record
available at that time and the rules in effect at that time."

Mr. Natali appealed the regional office decision to the Board of
Veterans' Appeals, which upheld the regional office's determination that
the 1945 severance decision did not contain CUE. The Board found that
the November 1944 medical evidence showed that Mr. Natali suffered from
amblyopia expanopsia, bilateral, due to a high error of refraction, that
the condition had existed all of Mr. Natali's life, and that it was not
aggravated during his military service. The Board also found that the
December 1944 medical examination showed that Mr. Natali "suffered from
sever\[e\] astigmatism, myopic, with bilateral amblyopia due to this
condition." The Board noted that the 1945 rating board had before it
evidence that Mr. Natali had injured his head in 1939; that the head
injury had contributed to his automobile accident in 1941; and that no
clinical records from November 1941 to January 1942 noted any head
injury other than a laceration of the scalp. The Board concluded that
based on that evidence, the 1945 rating board found that Mr. Natali's
eye condition was attributable to a congenital or developmental defect
and that the increased impairment he experienced was due to the natural
progression of that disorder, rather than aggravation during military
service.

The Board then determined that although Mr. Natali had "submitted
extensive medical evidence to support his conclusion that the rating
determination of October 1945 was incorrect," the evidence obtained
after the 1945 decision could not be used to show that the 1945 decision
contained CUE. In concluding that the 1945 rating board did not commit
CUE, the Board explained that "\[t\]he \[December 1944\] discharge
evaluation performed by the service medical board clearly indicates that
\[Mr. Natali's\] condition existed prior to service and was not
aggravated in service."

Mr. Natali appealed the Board's decision to the Veterans Court. He
argued that it was clear and unmistakable error for the 1945 rating
board to consider evidence that was not before the 1944 rating board in
determining that the 1944 rating decision contained CUE. Mr. Natali also
argued that the 1945 rating board committed CUE by not applying the
presumption that his eye condition did not exist when he enrolled in the
Army and not applying the presumption that any condition he may have had
when he entered the military was aggravated by service.

The Veterans Court affirmed the Board's decision. [Natali v.
Principi]{.underline}, No. 01-515 (Vet. App. June 17, 2003). The court
declined to find CUE based on the fact that the 1945 rating board had
considered the December 1944 evaluation. The court explained that
"\[a\]lthough revisions based on CUE clearly were limited to evidence
that had been before the \[rating board\] at the time of the previous
decision, new-and-material-evidence and severance decisions clearly were
not so limited." Accordingly, the court concluded that even if the 1945
rating board should not have considered the December 1944 evaluation as
part of a CUE determination, the error was not outcome determinative in
light of all the evidence that Mr. Natali's eye condition was not
service connected.

II

On appeal to this court, Mr. Natali argues that the 1945 rating board
committed CUE by failing to apply certain presumptions in favor of Mr.
Natali. At the time of the rating board's decision, Veterans' Regulation
No. 1(a), Part I, paragraphs I(b) and (d), provided:

> \(b\) . . . every person employed in the active military or naval
> service shall be taken to have been in sound condition when examined,
> accepted, and enrolled for service except as to defects, infirmities,
> or disorders noted at time of the examination, acceptance, and
> enrollment, or where clear and unmistakable evidence demonstrates that
> the injury or disease existed prior to acceptance and enrollment and
> was not aggravated by such active military or naval service.
>
> . . . .
>
> \(d\) . . . a preexisting injury or disease will be considered to have
> been aggravated by active military service as provided for therein
> where there is an increase in disability during active service unless
> there is a specific finding that the increase in disability is due to
> the natural progress of the disease.

38 U.S.C. § 724, notes (1940 & Supp. V 1941-1946).[^1] Mr. Natali argues
that Veterans' Regulation No. 1(a) set forth two presumptions that the
1945 rating board was required to rebut before severing his service
connection: (1) the presumption that his eye condition did not exist
before he enrolled in the Army; and (2) the presumption that, if his eye
condition existed prior to his enrollment, any worsening of that
condition was due to his military service.

We recently held in [Wagner v. Principi]{.underline}, 370 F.3d 1089,
1097 (Fed. Cir. 2004), that the presumption of soundness embodied in the
regulation at issue here requires the government to show, by clear and
unmistakable evidence, that the veteran's disability existed prior to
service and that the pre-existing disability was not aggravated during
service. [See also]{.underline} [Atkins v. Derwinski]{.underline}, 1
Vet. App. 228, 231-32 (1991) (under Veterans' Regulation No. 1(a), Part
I, paragraph (b), "\[f\]irst, the Secretary must prove by clear and
unmistakable evidence that \[the condition\] existed prior to
appellant's military induction. Second, if the Secretary can demonstrate
that \[the condition\] existed prior to service, he must also prove by
clear and unmistakable evidence that the \[condition\] was not
aggravated in service."). As provided by Veterans' Regulation No. 1(a),
Part I, paragraph (d), the government can rebut the presumption of
in-service aggravation if it can show that there was no increase in
disability during service or that any increase in disability was due to
the natural progress of the preexisting condition. [Wagner]{.underline},
370 F.3d at 1096.

Mr. Natali contends that the 1945 rating decision failed to rebut the
presumptions of sound condition and aggravation. According to Mr.
Natali, the rating board's decision cannot be upheld because the rating
board failed to make specific findings that Mr. Natali's condition
existed before he enrolled in the service and that the increase in the
degree of Mr. Natali's disability was due to the natural progress of the
disease. In fact, however, the rating board found that Mr. Natali's eye
condition was "clearly shown by the service records and the examination
conducted by the Veterans Administration subsequent to discharge to be
of congenital or developmental origin," that it was "due to a defect in
the form and structure of the eye, held to be of a congenital or
developmental origin," and that there was "no evidence of any
superimposed disability during service which could have caused or
aggravated the congenital condition." Although those findings were not
phrased in the language of the regulation, we interpret them to be fully
equivalent to factual findings that Mr. Natali's disability both
preexisted his military service and was not aggravated by that service.
Moreover, Mr. Natali's contention that the 1945 rating board did not
make the requisite finding that his eye condition was the result of the
natural progress of the condition rather than aggravation during his
military service is unconvincing in light of the statement in the rating
board's August 1945 letter to Mr. Natali stating that "\[t\]he increase
in loss of vision in service is considered to be the result of natural
progress and not the result of military service." Finally, although the
rating board did not expressly state that it had made its findings based
on "clear and unmistakable evidence," the board's statement that the
evidence of preexisting condition was "clearly shown" and the board's
statement that there was "no evidence of any superimposed disability
during service which could have caused or aggravated the congenital
condition" demonstrates that the rating board understood that its
findings on those issues needed to satisfy a high standard of proof.

Contrary to Mr. Natali's contention, the fact that the rating board did
not specifically advert to the presumptions of soundness and
aggravation, and did not specifically recite the applicable standard of
proof for rebutting those presumptions, does not require that we hold
the rating board's decision to constitute clear and unmistakable error
as a matter of law. Such recitations have not been required for rating
decisions that predated the Veterans' Benefits Amendments of 1989, Pub.
L. No. 101-237, 103 Stat. 2062 (1988), which added the statutory
provision mandating that decisions denying benefits include a statement
of the reasons for the decision. [Id.]{.underline} § 115(a), currently
codified at 38 U.S.C. § 5104(b). In [Pierce v. Principi]{.underline},
240 F.3d 1348, 1355-56 (Fed. Cir. 2001), for example, we recognized that
in 1945 the rating board was not required to set forth in detail the
factual bases for its decisions, and that in the absence of evidence to
the contrary, the rating board is presumed to have made the requisite
findings. The court in [Pierce]{.underline} explained that:

> In view of (i) the presumption of validity that attaches to final RO
> decisions, (ii) the fact that, in 1945, an RO was not required to set
> forth its findings of fact in its decision, and (iii) the court's
> determination that the requisite finding on the "feasible and advised"
> requirement was consistent with the evidence of record, the court
> correctly presumed that the RO made the required finding.

[Id.]{.underline} at 1356.[^2]

The Board of Veterans' Appeals found that the 1945 rating decision was
consistent with the evidence of record at the time, noting that "\[t\]he
discharge evaluation performed by the service medical board clearly
indicates that this condition existed prior to service and was not
aggravated in service." The Veterans Court agreed, finding that the
medical evidence before the 1945 rating board supported the rating
decision. In light of the presumption of validity that applies to the
rating board's decision and the decision of the Board and the Veterans
Court that the rating board's findings were consistent with the evidence
of record, we hold that the Veterans Court properly declined to hold
that the 1945 rating board committed CUE by failing to discuss the
presumptions of soundness and aggravation in its written decision.

III

Mr. Natali also argues that the 1945 rating board erred when it ruled
that the November 1944 rating board decision contained CUE, because the
1945 rating board considered evidence that was not before the 1944
rating board. In particular, Mr. Natali argues that it was improper for
the 1945 rating board to consider the December 1944 medical evaluation
in determining that the November 1944 decision contained CUE.

The regulations in effect at the time provided:

> \(a\) No rating board will reverse or amend, except upon new and
> material evidence, a decision rendered by the same or any other rating
> board, or by any appellate authority, except where such reversal or
> amendment is clearly warranted by a change in law or by a specific
> change in interpretation thereof specifically provided for in a
> Veterans' Administration issue:
>
> Provided, That a rating board may reverse or amend a decision by the
> same or any other rating board where such reversal or amendment is
> obviously warranted by a clear and unmistakable error shown by the
> evidence in file at the time the prior decision was rendered . . .
>
> Provided, further, That where the severance of service connection is
> considered warranted on the facts of record the case file . . . will
> be forwarded without rating to the director of the service concerned
> in central office, for review, accompanied by a full and clear
> statement of the underlying reasons and facts.

38 C.F.R. § 2.1009(a) (1945).

The regulation provided two alternative ways for a rating board to
modify a rating decision (including severing service connection). First,
the board could modify the rating decision after considering "new and
material evidence." Second, the board could modify the rating decision
upon finding CUE based on "the evidence in file at the time the prior
decision was rendered."[^3]

The 1945 rating board stated that the 1944 rating decision was "held to
involve clear and unmistakable error." Therefore, the 1945 rating board
should not have relied on the December 1944 evaluation, as that
evaluation was not part of the record before the rating board when it
made the November 1944 rating decision.

Although the 1945 rating board improperly relied on the December 1944
medical evaluation in severing service connection for Mr. Natali's eye
condition, that error does not constitute CUE unless it would have been
outcome determinative. [Cook v. Principi]{.underline}, 318 F.3d 1334,
1344 (Fed. Cir. 2002) (en banc); [accord]{.underline} [Bustos v.
West]{.underline}, 179 F.3d 1378, 1381 (Fed. Cir. 1999). That is, the
error must have been one "that would manifestly change the outcome of a
prior decision." [Bustos]{.underline}, 179 F.3d at 1381.

The Veterans Court held that, even if it was error for the 1945 rating
board to consider the December 1944 medical evaluation in making its CUE
determination, the error would not have made a difference in the rating
board's decision. Although Mr. Natali challenges the court's conclusion
in that regard, we discern no basis to overturn the court's ruling,
particularly in view of the fact that the December 1944 medical
evaluation did not reflect a new diagnosis of Mr. Natali's eye condition
but simply confirmed the earlier diagnosis. Alternatively, if the 1945
rating board had based its severance decision on new and material
evidence rather than on CUE, it would have been entirely appropriate for
the board to consider new evidence such as the December 1944 medical
evaluation. Thus, the selection of new and material evidence as the
vehicle for correcting the rating error would have had no apparent
effect on the rating board's ultimate decision of the severance issue.

The only difference between a decision based on CUE and a decision based
on new and material evidence would be the effective date of the
severance decision. A decision based on CUE would be effective as of the
date of the earlier ruling that is being overturned, while a decision
based on new and material evidence would be effective as of the date of
the new decision. The effective date of the 1945 decision would have no
impact on this case, however, as there is no evidence indicating (and
Mr. Natali does not argue) that Mr. Natali has lost any benefits
attributable to the period between the 1944 rating decision and the 1945
severance decision. Accordingly, the severance decision of the 1945
rating board would have been the same if the board had invoked new and
material evidence rather than CUE. For that reason, we agree with the
Veterans Court that any error in the rating board's decision that the
November 1944 rating contained CUE was not outcome determinative. We
therefore uphold the decision of the Veterans Court that Mr. Natali has
not established grounds for overturning the 1945 rating board decision.

[AFFIRMED]{.underline}.

[^1]: The regulations on which Mr. Natali relies were later enacted,
    without material change, as statutes, 38 U.S.C. §§ 1111, 1153, which
    read as follows:

    > § 1111. Presumption of sound condition
    >
    > For the purposes of section 1110 of this title, every veteran
    > shall be taken to have been in sound condition when examined,
    > accepted, and enrolled for service, except as to defects,
    > infirmities, or disorders noted at the time of the examination,
    > acceptance, and enrollment, or where clear and unmistakable
    > evidence demonstrates that the injury or disease existed before
    > acceptance and enrollment and was not aggravated by such service.
    >
    > § 1153. Aggravation
    >
    > A preexisting injury or disease will be considered to have been
    > aggravated by active military, naval, or air service, where there
    > is an increase in disability during such service, unless there is
    > a specific finding that the increase in disability is due to the
    > natural progress of the disease.

[^2]: We do not decide whether the failure to discuss the presumptions
    in a rating decision made after the enactment of the Veterans'
    Benefits Amendments of 1989 would mandate a finding of CUE.

[^3]: The Veterans Court concluded that the regulation provided the
    rating board with a third procedure for modifying a rating decision
    when the modification involved severing service connection. The
    court relied on the language in the regulation providing that "where
    the severance of service connection is considered warranted on the
    facts of record the case file . . . will be forwarded without rating
    to the director of the service concerned in central office, for
    review, accompanied by a full and clear statement of the underlying
    reasons and facts." The court concluded that "\[a\]lthough revisions
    based on CUE clearly were limited to evidence that had been before
    the \[rating board\] at the time of the previous decision,
    new-and-material-evidence and severance decisions clearly were not
    so limited."

    We do not agree with the Veterans Court that the quoted clause
    provided an independent, third procedure for severing service
    connection. Instead, we read the quoted language to refer to
    requirements that had to be met when either of the first two
    procedures was employed to sever service connection. Thus, in our
    view, the regulation provided that a rating board could modify a
    rating decision or sever service connection if either (1) the rating
    board concluded that new and material evidence required that result,
    or (2) the rating board concluded, based on the evidence of record
    at the time of the original rating decision, that the original
    decision constituted clear and unmistakable error. The government
    agrees with that characterization of the regulation.

    Our disagreement with the Veterans Court on this issue does not
    affect the outcome of this case, however, because---as we discuss
    below---the decision of the rating board would not have been
    affected if it had used new and material evidence as the basis for
    its severance ruling, as the regulation clearly permitted it to do.