UNITED STATES COURT OF APPEALS FOR VETERANS CLAIMS

NO. 05-0355(E)

ANGEL VAZQUEZ-FLORES, APPELLANT,

V.

ERIC K. SHINSEKI,

SECRETARY OF VETERANS AFFAIRS, APPELLEE.

On Appeal from the Board of Veterans' Appeals

(Argued May 9, 2012 Decided July 31, 2012)

Kathy Lieberman, of Washington, D.C., for the appellant.

Debra L. Bernal, withwhom Will A. Gunn, General Counsel; R. Randall Campbell, Assistant

General Counsel; and Carolyn F. Washington, DeputyAssistant General Counsel, were on the brief,

all from Washington, D.C., for the appellee. 

Before KASOLD, Chief Judge, and HAGEL and GREENE, Judges.

KASOLD, Chief Judge: Veteran Angel Vazquez-Flores applies through counsel pursuant

to the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412(d), for an award of attorney fees and

expenses in the amount of $29,560.92 for 179.4 hours of attorney work and $865.40 in expenses. 

The Secretary challenges Mr. Vazquez-Flores's EAJA application in part asserting substantial

justification and, alternatively, unreasonable fees. Single-judge disposition was rendered in a

December 16, 2011, memorandum decision; however, reconsideration was granted at Mr. VazquezFlores's request, and this matter was assigned for panel decision. The panel heard oral argument on

May 9, 2012. The December 16 memorandum decision will be withdrawn and this decision issued

in its stead. For the reasons set forth below, Mr. Vazquez-Flores's EAJA application will be granted

in part. 
I. FACTUAL AND PROCEDURAL HISTORY PRIOR TO EAJA APPLICATION

Mr. Vazquez-Flores appealed a February 1, 2005, Board of Veterans' Appeals (Board)

decision that denied benefits for his neuropsychiatric disorder, including as secondary to a serviceconnected renal disability, because it was not service connected, and denied an increased disability

rating for his service-connected nephrolithiasis, including an extraschedular rating. On appeal, Mr.

Vazquez-Flores argued that the Board (1) provided an inadequate statement of reasons or bases with

regard to his claim for benefits for his neuropsychiatric disorder, (2) erred in finding that he was

adequately notified how to substantiate his claim for an increased disability rating for his

nephrolithiasis, and (3) provided an inadequate statement of reasons or bases with regard to its denial

of an increased disability rating, including an extraschedular rating, for his nephrolithiasis.

On January 30, 2008, the Court held that the Board (1) provided an inadequate statement of

reasons or bases for its decision with regard to Mr. Vazquez-Flores's claim for benefits for

neuropsychiatric disorder, and (2) clearly erred in finding that the Secretary had provided adequate

notice with regard to Mr. Vazquez-Flores's claim for an increased disability rating for his

nephrolithiasis because the notice lacked specificity tied to the requirements for a higher rating as

reflected in the assigned diagnostic code. Vazquez-Flores v. Peake, 22 Vet.App. 37 (2008). The

Board decision was set aside and the matters remanded for further adjudication. Id. The Court did

not address Mr. Vazquez-Flores's argument that the Board provided an inadequate statement of

reasons or bases with regard to its denial of an increased disability rating, including an

extraschedular rating, for his nephrolithiasis. 

The Secretary appealed that part of the Court's decision that held that the Board clearly erred

in finding that the Secretary had provided adequate notice with regard to Mr. Vazquez-Flores's claim

for an increased disability rating for nephrolithiasis. On appeal, the U.S. Court of Appeals for the

Federal Circuit (Federal Circuit) determined that specific notice how to substantiate an increased

disability rating claim was not required – i.e., only general notice how to substantiate the claim was

required – and remanded the matter for further review. Vazquez-Flores v. Shinseki, 580 F.3d 1270

(Fed. Cir. 2009). 

On remand, the Court clarified that its January 30, 2008, decision with regard to Mr.

Vazquez-Flores's claim for benefits for a neuropsychiatric disorder was not appealed bytheSecretary

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and remained the decision of the Court on that matter. Vazquez-Flores v. Shinseki, 24 Vet.App. 94

(2010). Applying the Federal Circuit's decision that the Secretary is required to provide only general

notice how to substantiate an increased disability rating claim, the Court found that the Secretary's

notice was incomplete. However, the Court also found that the notice error was harmless and

affirmed that part of the Board decision that denied an increased schedular rating for Mr. VazquezFlores's neuropsychiatric disorder.

Although Mr. Vazquez-Flores argued in his initial brief that the Board provided an

inadequate statement of reasons or bases with regard to its denial of an increased disability rating,

including an extraschedular rating, for his nephrolithiasis, the Court did not address this issue in its

January 2008 decision. Moreover, this issue was not again briefed after remand from the Federal

Circuit and the Court again did not address this part of Mr. Vazquez-Flores's initial argument in its

final decision on the merits. Rather, the Court sua sponte noted that possible entitlement to an

extraschedular rating for nephrolithiasis was inextricably intertwined with the claim for benefits for

both disabilities. Thus, in light of the Court's remand of his claim for benefits for a neuropsychiatric

disorder, the Court also remanded the issue of Mr. Vazquez-Flores's possible entitlement to an

extraschedular rating for his nephrolithiasis. The Court also sua sponte found that the Board failed

to address entitlement to total disability based on individual unemployability (TDIU), which had not

been argued byMr. Vazquez-Flores but reasonably had been raised by the record, and remanded this

matter for further adjudication. Id.

II. PARTIES' ARGUMENTS WITH REGARD TO THE EAJA APPLICATION

Mr. Vazquez-Flores argues that he is entitled to EAJA fees and expenses for all the time

reasonably spent on the case. He argues that he was a prevailing party because he prevailed before

the Court on his claim for benefits for his neuropsychiatric disorder. Moreover, he argues that when

the Court set aside part of the Board decision and remanded the matters on appeal, the legal

relationship of the parties was changed, making him a prevailing party. Additionally, he argues that

all his arguments before the Court and Federal Circuit were reasonable and deserving of attorneyfees

and expenses, even though his arguments related to his claim for increased benefits for

nephrolithiasis were not the basis for a remand of that matter.

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The Secretary agrees that Mr. Vazquez-Flores is a prevailing party, and does not contest the

EAJA application with regard to fees and expenses related to the claim for benefits for a

neuropsychiatric disorder. Although the Secretary initially argued that he was substantially justified

with regard to the claim for increased benefits for nephrolithiasis and incorporated that argument in

a supplemental memorandum of law, his overall position is that Mr. Vazquez-Flores's success (or

lack of success) in his arguments should be a significant consideration when assessing the

reasonableness of his EAJA application. More specifically, the Secretary argues that none of Mr.

Vazquez-Flores's arguments related to his claim for benefits for nephrolithiasis should be awarded

EAJA fees because none of his arguments were the basis for remand.

In response to a request for supplemental briefing, both parties argued that the "special

circumstances" exception for denying an EAJA application requires some degree of fraud or bad

faith on the part of the applicant, which each party also argued was not present in this case. 

Additionally, prior to oral argument, the Secretary asked the Court to take judicial notice of an

alternative position taken in another case pending before the Court in which the Secretaryargued that

the Court should extend the special circumstances exception to include situations where appellant's

success on the claim was independent of counsel's arguments. He did not, however, change his

argument in this case. Accordingly, other than to grant the Secretary's motion to take judicial notice

of an alternative position on the issue, the special circumstance exception will not be further

discussed.

III. DISCUSSION

A. Whether a Party is a Prevailing Party is a Threshold Determination.

EAJA fees may be awarded only when the applicant is a prevailing party. See 28 U.S.C. §

2412(d)(1)(A), (1)(B), (2)(B); Scarborough v. Principi, 541 U.S. 401, 407-08 (2004); Owens v.

Brown, 10 Vet.App. 65, 66 (1997). Prevailing party status is a threshold determination that bars any

and all EAJA awards if not met. See Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). An appellant

is considered a prevailing party upon either "(1) the ultimate receipt of a benefit that was sought in

bringing the litigation, i.e., the award of a benefit, or (2) a court remand predicated upon

administrative error." Zuberi v. Nicholson, 19 Vet.App. 541, 544 (2006); but see Buckhannon Bd.

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& Care Home, Inc. v. W. Va. Dep't of Health & Human Res., 532 U.S. 598 (2001) ("catalyst theory"

– which pertains to a situation in which a defendant voluntarily acts in response to the litigation that

achieves the result sought by the plaintiff – is not basis for prevailing party status); Akers v.

Nicholson, 409 F.3d 1356, 1360 (Fed. Cir. 2005) (holding that a remand due to an intervening Court

decision did not render the appellant a prevailing party for EAJA purposes).

To be a prevailing partyand to be brought across the threshold and be entitled to "reasonable"

attorney fees and expenses, the appellant need only prevail "on any significant issue in litigation

which achieves some of the benefit the parties sought in bringing suit". Hensley, 461 U.S. at 433

(stating that prevailing party status is a "generous formulation that brings the plaintiff only across

the statutory threshold"); Sumner v. Principi, 15 Vet.App. 256, 261 (2001) (en banc)("[I]n order to

attain prevailing-party status, a party is required to receive at least some relief on the merits of his

claim." (internal quotation marks omitted)). Thus, it is well settled that an appellant is considered

a "prevailing party" (1) when he prevails on a claim as a result of administrative error, but does not

prevail on unrelated claims within the same suit, see Hensley, 461 U.S. at 434, or (2) even when an

appellant's success in the suit was not related to the work of his attorney or not proportional to the

total number of attorney work hours expended, id. Otherwise stated, even when only a part of a

Board decision is remanded based on administrative error, an appellant meets the threshold

requirement for an EAJA award.

Here, Mr. Vazquez-Flores was a prevailing party in his appeal because the decision of the

Board was set aside and the matters on appeal remanded for further adjudication predicated, in part,

on administrative error. See Sumner, 15 Vet.App. at 261 (citing Buckhannon, 532 U.S. at 603 (a

"remand does not constitute some relief on the merits' unless that remand is predicated upon

administrative error")); see also Hensley, supra. Specifically, his claim for benefits for a

neuropsychiatric disorder was remanded because the Board provided an inadequate statement of

reasons or bases. Similarly, his claim for benefits for nephrolithiasis was remanded, in part, based

on the failure of the Board to address possible entitlement to TDIU.

B. Substantial Justification Depends on the Totality of Circumstances. 

Once an EAJA applicant alleges that the Secretary's position was not substantially justified,

the burden shifts to the Secretary to demonstrate that his position was substantially justified at the

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administrative and litigation stages. See Pierce v. Underwood, 487 U.S. 552, 565 (1988) ("[A]

position can be justified even though it is not correct, and . . . it can be substantially (i.e., for the most

part) justified if a reasonable person could think it correct, that is, if it has a reasonable basis in law

and fact.); Locher v. Brown, 9 Vet.App. 535, 537 (1996); Stillwell v. Brown, 6 Vet.App. 291, 301

(1994) (the Secretary's position is substantially justified "'if a reasonable person could think it

correct, that is, if it has a reasonable basis in law and fact'" (quoting Pierce v. Underwood, 487 U.S.

552, 566 n.2 (1988))). Substantial justification is based on the totality of circumstances, which

includes consideration of, inter alia, "merits, conduct, reasons given, and consistency with judicial

precedent and VA policy with respect to such position, and action or failure to act, as reflected in the

record on appeal and the filings of the parties before the Court." White v. Nicholson, 412 F.3d 1314,

1317 (Fed. Cir. 2005) ("The totality of circumstances, by its very description, does not exclude any

valid issue from consideration.").

The Secretary does not assert substantial justification with regard to Mr. Vazquez-Flores's

claim for benefits for neuropsychiatric disorder. And, to the extent he maintains that he was

substantially justified with regard to the increased rating claim for nephrolithiasis, that argument

fails. To be sure, the Secretary succeeded in demonstrating that inadequate notice was not

prejudicial such that he prevailed in his litigation position on that issue. Similarly, the Court's

remand of possible entitlement to an extraschedular rating associated with Mr. Vazquez-Flores's

service-connected nephrolithiasis was due to the fact it was inextricably intertwined with

readjudication of possible entitlement to benefits for a neuropsychiatric disorder, as opposed to

administrative or litigation error, or lack of substantial justification at either the administrative or

litigation stages.

Nevertheless, the Court sua sponte noted that the record reasonably raised the issue whether

Mr. Vazquez-Flores's nephrolithiasis rendered him unemployable and whether he was entitled to

TDIU, and further noted that the Board failed to address these issues, warranting remand. VazquezFlores v. Shinseki, 24 Vet.App. 94 (2010); see also Roberson v. Principi, 251 F.3d 1378 (Fed. Cir.

2001) (Secretary must consider TDIU when a veteran makes a claim for the highest rating possible

and submits evidence of a medical disability and of unemployment); Carpenter v. West, 11 Vet.App.

140, 146-47 (1998) (Board must review all issues reasonably raised by liberal reading of appeal). 

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Thus, remand of Mr. Vazquez-Flores's claim for increased benefits for nephrolithiasis was

predicated, at least in part, on administrative error, defeating the Secretary's contention that he was

substantially justified at the administrative stage. See Stillwell, supra. 

C. Reasonableness is Based in Part on Success of the Arguments Presented.

It is well settled that only reasonable fees and expenses may be awarded under EAJA,

28 U.S.C. § 2412(d); Ussery v. Brown, 10 Vet.App. 51, 53 (1997) ("Once it is determined that a

claimant is entitled to an EAJA award, the Court still must determine what is a 'reasonable' fee."),

and that an applicant has the burden of demonstrating the reasonableness of his request for an EAJA

award, Blum v. Stenson, 465 U.S. 886, 897 (1984). Although "[t]he Court [generally] has wide

discretion in the award of attorney fees under the EAJA," Chesser v. West, 11 Vet.App. 497, 501

(1998), there are limitations. For example, when an appellant is successful on one claim as a result

of administrative error, but not successful as to other, distinct claims involved in the same litigation,

work spent solely on the unsuccessful claims is not entitled to an EAJA award. Hensley, 461 U.S.

at 434-35. Similarly, in addition to general reasonableness of the hours spent, there are specific

factors for consideration when assessing the reasonableness of an EAJA award. See id. at 430 n.3

(listing factors); McDonald v. Nicholson, 21 Vet.App. 257, 263-64 (2007) (persuasive argument of

Secretary); Ussery, 10 Vet.App. at 53 (listing of factors). Moreover, even though an appellant is a

prevailing party and has presented arguments that are "interrelated, nonfrivolous, and raised in good

faith," it may "say little about whether the expenditure of counsel's time was reasonable in relation

to the success achieved." Id. at 436.

1. Reasonableness of Hours Billed on a Claim for Benefits for a Neuropsychiatric Disorder

Mr. Vazquez-Flores's briefing and argument with regard to his claim for benefits for

neuropsychiatric disorder were helpful, persuasive, and successful in demonstrating administrative

error below that warranted remand. Therefore, the Court will award reasonable attorney fees and

expenses directly incurred in his appeal of the Board's denial of benefits for a neuropsychiatric

disorder. See Blum, supra. 

2. Reasonableness of Hours Billed on a Claim for Increased Benefits for Nephrolithiasis

In regard to his increased rating claim for nephrolithiasis, Mr. Vazquez-Flores originally

argued that the Board (1) erred by finding that he was adequately notified how to substantiate his

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claim for an increased disability rating, and (2) provided an inadequate statement of reasons or bases

with regard to its denial of an increased disability rating, including an extraschedular rating. In its

January 2008 decision, the Court did not discuss Mr. Vazquez-Flores's reasons-or-bases argument,

and remanded his increased rating claim because of insufficient notice. Upon clarification by the

Federal Circuit as to the scope of notice the Secretary is required to provide, the Court determined

that the Board erred in finding the Secretary's notice adequate, but it further found that the error was

not prejudicial. However, the Court remanded the Board's denial of an increased rating for

nephrolithiasis because it found that entitlement to an extraschedular rating was inextricably

intertwined with the remand of the claim for benefits for neuropsychiatric disorder. The Court also

sua sponte found that the Board failed to address entitlement to total disability based on individual

unemployability(TDIU), which reasonablywas not raised byMr. Vazquez-Flores but had been raised

by the record, and remanded this matter for further adjudication. 

Although Mr. Vazquez-Flores originally asserted a reasons-or-bases error in the Board's 

denial of an increased schedular disability rating, including an extraschedular rating, for his

nephrolithiasis, this argument was not addressed in any of the judicial decisions on this case. With

regard to the Board's statement in support of its denial of an increased schedular disability rating for

nephrolithiasis, it is presumed that the Board's decision facilitated judicial review and otherwise was

adequate with regard to that matter. See Maggitt v. West, 202 F.3d 1370 at 1380-81 (Fed. Cir. 2000)

(in context of affirming Board decision on an issue, noting that argument not addressed is presumed

considered and rejected); Allday v. Brown, 7 Vet.App. 517, 527 (1995) (Board's statement "must be

adequate to enable a claimant to understand the precise basis for the Board's decision, as well as to

facilitate review in this Court"). 

However, because the Court sua sponte noted that the matter of entitlement to an

extraschedular rating was inextricably intertwined with the remand of the claim for benefits for a

neuropsychiatric disorder and remanded the matter on that basis, no determination – presumptive or

otherwise – was rendered with regard to the Board's statement regarding an extraschedular rating. 

What is clear, is that the Court did not rely on Mr. Vazquez-Flores's argument that the Board's

statement on this issue was inadequate, and never found, implicitly or explicitly, that the Board

inadequately addressed this issue. Similarly, although the Court remanded the matter of entitlement

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to TDIU based on administrative error, such error was found sua sponte by the Court. In effect,

remand of Mr. Vazquez-Flores's claim for benefits for nephrolithiasis is due solely to the intervening

decisions of the Court with regard to error and inextricable intertwining, which intervening decisions

– but for the fact Mr. Vazquez-Flores prevailed on his arguments with regard to his claim for benefits

for neuropsychiatric disorder, and therefore the litigation as a whole – would not warrant prevailing

party status or an EAJA award. Cf. Akers, 409 F.3d at 1360 (holding that a remand due to an

intervening Court decision did not render the appellant a prevailing party for EAJA purposes); see

also McCormick v. Principi, 16 Vet.App. 407, 411 (2002) (noting that the Court should not "revisit

at the EAJA stage the logic of the merits decision").

Undersuch circumstances, where the arguments presented byMr. Vazquez-Flores with regard

to his claim for benefits for nephrolithiasis were either rejected or otherwise not the basis for remand,

and where the Court did not find administrative error with regard to this claim based on any of Mr.

Vazquez-Flores's arguments, we do not find an EAJA award for the arguments presented to be

reasonable. Hensley, McCormick, and Chesser, all supra. 

D. Calculation of Hours and Expenses Spent on Each Claim on Appeal

On behalf of his primary attorney, Ms. Kathy Lieberman, Mr. Vazquez-Flores requests

$20,434.81 in EAJA fees for 130.1 hours spent on the case and $307.33 for expenses. Ms. Lieberman

billed 6.7 hours for work on the claim for benefits for a neuropsychiatric disorder. Both the hours and

expenses claimed are reasonable on their face and will be awarded. Another 40.1 hours were spent

on research, drafting, and preparing for the oral argument, but it is not clear what part of the effort

applied to Mr. Vazquez-Flores's argument related to his claim for benefits for a neuropsychiatic

disorder and what part applied to the argument related to his claim for benefits for nephrolithiasis. 

The time billed will be apportioned equally, and 20.1 hours will be awarded. See Elcyzyn v. Brown,

7 Vet.App. 170, 177-78 (1994) (apportioning hours spent on argument and preparation thereof); see

also Blum and Chesser, both supra. 

Ms. Lieberman also billed 30.2 hours for general casemanagement. This time does not appear

unreasonable on its face, and the full time billed for this work will be awarded. See Elcyzyn, supra

(actions such as reviewing the record, interviewing the client and undertaking procedural tasks are

"inextricably linked to the preparation of the entire case and there is no basis for an equitable

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apportionment"). Overall, 57 hours will be awarded for the time that can be attributed to work spent

on the arguments related to general case management and the claim for benefits for nephrolithiasis. 

Additionally, Ms. Lieberman billed $307.33 in expenses, but failed to delineate the amount of

expenses related to Mr. Vazquez-Flores's unsuccessful argument to the Federal Circuit and the

amount of expenses charged following his appeal to the Federal Circuit. Consequently, half of the

requested expenses will be awarded: $153.66. 

On behalf of his second attorney, Richard James, Mr. Vazquez-Flores requests $8,260.71 in

EAJA fees for 49.3 hours spent on the case and $558.07 for expenses. However, Mr. James's entire

billing is for work on the matter appealed to the Federal Circuit and for which the arguments were

not successful. Consequently, no EAJA compensation shall be awarded. See Hensley and Blum, both

supra.

IV. CONCLUSION

Upon consideration of the foregoing, the Secretary's motion for judicial notice is granted and

the appellant's EAJA application is GRANTED IN PART in the amount of $9,106.65 for 57 hours

of attorney work and $153.66 in expenses.

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