UNITED STAT ES COURT OF AP P EALS FOR VETERANS CLAIMS
N O

. 05-0355(E)
A N G E L V AZ Q U E Z -F L O R E S , A P P E L L

A N T ,
V

. E R I C K. S H I

N S E K I , S E C R E TA R Y O F V E TE R

A N S A F F A I R S , A P P E L L E E

.
On Appea l from the B oard of Veter ans' Appea ls (Argued May

9, 2012 Dec ided J uly 31, 2012)

Kathy Lieberman , of Washington, D.C., for the appe llant.
Debra L. Bernal , w it

h w h o m W

ill A. Gunn , Gene ral Counsel; R. Randall Campbell , Assistant Gene ral Counsel; and Carolyn F. W ashington , Deputy Assistant Gene ral Counsel, wer e on the brief, all from Washing ton, D.C., for the a ppellee.
Be fore KASOL D, Chief Judge , and HAG ELand GREENE, Judges

. KASOL D, Chief Judge : Veter an Ange l Vazquez-Flore s applies t hroug h counsel pursuant to the Equal Acc ess to Justice Act (EAJA), 28 U.S.C. § 2412(d), for an awa rd of attorney fee s and

ex penses in the amount of $29,560.92 for 179.4 hours of attorney work and $865.40 in ex p en s es
. The Secre tary challeng es Mr. Vazquez-Flore s' s EAJA application in part asser ting sub s t antial justification and, alterna tively , unrea sonable fee s. Sin gl e- j u dg e dispositi on was rende red in a Dec ember 16, 2011, memorandum decision; howeve r, rec onsideration was g rante d at Mr. VazquezFlore s' s reque st, and this matter was assig ned for panel decision. The panel hear d oral arg ument on May 9, 2012. The Dec ember 16 memorandum decision will be withdrawn and this decision issued in its stead. For the rea sons set forth below, Mr. Vazquez-Flore s' s EAJA application will be g rante d in part.I. F ACTUAL AND P ROCEDURAL HISTORY PRIOR TO E AJA AP P LICATION

M r. Vazquez-Flore s appea led a Fe bruar y 1, 2005, Boa

rd of Veter ans' Appea ls (B o ar d ) decision that denied benef its for his neuropsy chiatric disorder, including as seconda ry to a service

connec ted rena l disability , beca use it was not service connec ted, and denied an incre ased disability rating for his service -conne cted nephrolithiasis, including an extraschedular rating

. On appea l, Mr. Vazquez-Flore s argued that the Boa rd (1) provided an inadequa te statement of rea sons or bases with reg ard to his claim for benef its for his neuropsy chiatric disorder, (2) err ed in finding that he was adequately notified how to substantiate his claim for an incre ased disability rating for his nephrolithiasis, and (3) provided an inadequate statement of rea sons or bases with reg ard to its denial of an inc rea sed disability

rating , including a

n extraschedular

rating , for his nephr olithiasis. On J anuar

y 30, 2008, the Court held that the Boa rd (1) provided an inadequa te statement of

rea sons or bases for its decision with reg ard to Mr. Vazquez-Flore s' s claim for benef its for neuropsy chiatric disorder, and (2) clea rly err ed in finding that the Secre tary had provided adequate notice with reg ard to Mr. Vazquez-Flore s' s claim fo r an incre ased disability rating for his nephrolithiasis beca

use the notice lacke d specific ity tied to the requirements for a higher rating as ref lected in t h e assi g ned diag nostic code. Vazquez-Flores v. Peak e , 22 Vet.App. 37 (2008). The Boa rd decision was set aside and the matters rema nded for further adjudication. Id

. The Court did
not addre ss Mr. Vazquez-Flore s' s argument that the Boa rd provided an inad eq uate statement of

rea sons or bases with re gar d to its denial of an incre ased disability rating , including an extraschedular

rating , for his nephr olithiasis. The Secre tary appea led that part of the Court's decision that held that the Boa rd clea rly err ed in finding that the Secre tary had provided adequate notice with reg ard to Mr. Vazquez-Flore s' s claim for a n incre ased disability

rating for ne phrolithiasis. On appea l, the U.S. Court of Appea ls for the Fe dera l Circuit (F eder al Circuit) deter mined that specific notice how to s ubstantiate an incre ased disability rating claim was not require d – i.e., only g ener al notice how to substantiate the claim was require d – and rema

nded the matter for further revie w. Vazquez-Flores v. Shinseki , 580 F.3d 1270 (F ed. Cir. 2009). On rema nd, the Court clar ified that its J an u ary 30, 2008, decision with reg ard to Mr. V a zq u ez-Flore s' s claim for benef its for a neuropsy chiatric disorder was not appea led by the Se c r e ta r y

2and rema ined the decision of the Court on that matter. Vazquez-Flores v. Shinseki , 24 Vet.App. 94

(2010). Apply ing the Fe dera l Circuit's decision that the Secre tary is require d to provide only g ener al notice how to substantiate an incre ased disability rating claim, the Court found that the Secre tary ' s notice was incomplete. Howeve r, the Court also found that the notice err or was h ar m l es s and aff irmed that part of the Boa rd decision that denied an incre ased schedula r rating for Mr. VazquezFlore s' s neuropsy chiatric disorder. Although Mr. Vazquez-Flore s argued in his initial brief that t h e Boa rd provided an inadequate statement of r easons or bases with re g ard to its denial of a n incre ased disabilit y

rating , including an extraschedular rating , for his nephrolithiasis, the Court did not addre ss this issue in its J anuar y 2 0 0 8 decision. Moreove r, t his issue was not ag ain briefed after remand from the Feder al Circuit and the Court ag ain did not addre ss this part of Mr. Vazquez-Flore s' s initial argument in its final decision on the merits. Rather, th e Court sua sponte noted that possible entitlement to an extraschedular rating for nephrolithiasis was inext rica bly intertwined with the claim for benef its for both disabiliti es. Thus, in light of the Court's rema nd of his claim for benef

its for a neuropsy chiatric disorder, the C o u rt al s o rema nded the issue of Mr. Vazquez-Flore s' s possible entitlement to an extraschedular rating for his nephrolithiasis. The Court also sua sponte found that the Boa rd failed
to addre ss entitlement to total disability based on individual unemploy ability (TDI U), which had not been argued by Mr. Vazquez-Flore s but rea sonably had been raised by the rec ord, and rema nded this matter for further adjudication. Id

.

II. P ARTIES' ARG UMENTS WITH RE GA RD TO THE EAJA AP P LICATION M r. Va z q u ez -F lores argues that he is entitled to EAJA fee s and expenses for all the tim e

rea sonably spent on the case
. He arg ues that he was a preva iling party beca use he preva iled befor e the Court on his claim for benef its for his neuropsy chiatric disorder. Moreove r, he argues that when the Court set aside part o f t h e Boa rd decision and rema

nded the matters on appea l, the leg al rela tionship of the parties was chang ed, making him a preva iling party

. Additionally , he argues that all his arguments befor e the Court and Fe dera l Circuit wer e rea sonable and deser ving of attorney fee s and expenses, even though his arg uments rela ted to his claim for incre ased b en ef its for nephrolithiasis were not the basis for a rema nd of that matter.

3The Secre tary ag ree s that Mr. Vazquez-Flore s is a preva iling party , and does not contest the

EAJA application with reg ard to fee s and expense s rela ted to the claim for benef its for a neuropsy chiatric disorder. Although the Secre tary initially argued that he was substantially justified with reg ard to the claim for incre ased benef its for nephrolithiasis and incorporated that argument in a suppl emental memorandum of l aw, his overa ll position i s that Mr. Vazquez-Flor es' s succe ss (or lack of succe ss) in h i s ar gu m en ts should be a signific ant consideration when assessing the

rea sonablene ss of hi s EAJ A application. More specifica lly , the S ecr etar y argues t hat none of Mr. Vazquez-Flore s' s arguments rela ted to his claim for benef its for nephrolithiasis should be awa rded EAJA fees bec ause none of his arguments were the basis for r emand. I n response to a reque st for supplemental briefing , both parties argued that the "spe cial ci rc u mstances" exception for denying an EAJA application require s some deg ree of fra ud or b ad faith on the part of the applicant, which eac h p ar t y al s o ar g ued was not prese nt in this case
. Additionally , prior to o ra l ar gu m en t, the Secre tary asked the Court to take judicial notice of an alternative position taken in another case pending befor e the Court in which the Secre tary argued that the Court should extend the specia l circ umstances exception to include situations wher e appellant' s

succe ss on the claim was independe nt of couns el' s arguments. He did not, howeve r, chang e his argument in this case
. Acc ording ly , other than to g rant the Secre tary ' s motion to take judicial notice of an alterna

tive position on t h e i s s ue, the specia l circ umstance exception will not be further discussed.

III. DISCUSS ION

A. Whether a P arty is a P revailing P arty is a Threshold Deter m ination
. EAJA fees may

be awa rded only when the applicant is a preva iling party

. See 28 U.S.C. § 2412(d)( 1)(A) , (1)( B) , (2)( B) ; Scarborough v. Principi , 541 U.S. 4 0 1 , 4 07-08 (2004); Owens v. Brown , 10 Vet.App. 65, 66 (1997). Prevailing party status is a threshold deter mination that bars any and all EAJA awa

rds if not met. See Hensley v. Eck erhart , 461 U.S. 424, 433 (1983). An appellant is considere d a preva iling party upon either "( 1) the ultimate rec eipt of a benef it that was soug ht in bri ng ing the litigation, i.e., the awa rd of a benef

it, or (2) a court rema

nd predic ated upon administrative err or." Zuberi v

. Nicholson , 19 Vet.App. 541, 544 (2006); but see Buck hannon Bd.

4& Care Home, Inc. v. W

. Va. Dep't of

Health & Human Res. , 532 U.S. 598 (2001) (" cata ly st theory "

– which perta ins to a situation in which a defe ndant voluntarily acts in response to the litigation that

ac h i ev es t h e result soug ht by the plaintiff – is not basis for preva iling party status); Ake rs v. Nicholson , 409 F.3d 1356, 1360 (F ed. Cir. 2005) (holding that a rema nd due to an intervening Court decision did not rende r the a ppellant a pr evailing party for EA J A purposes)

. To be a preva iling party and to be broug ht acr oss the threshold and be entitled to "r easona ble" attorney fee s and expenses, the appellant need only preva il "on any signific ant i s s u e i n l itigation which achieves some of t he benefit the parties soug ht in bring ing suit". Hensley , 4 6 1 U.S. at 433 (stating that preva iling party status is a "g ener ous formula t i on that bring s the pl aintiff only acr oss the statutory threshold" ); Sumner v. Principi , 15 Vet.App. 256, 261 (2001) (en banc) (" [I ]n order to attain pre vailing- party

status, a par

ty is require d to rec eive a t least some re lief on the mer its of his claim." (interna l quotation mar ks omitted)). Thus, it is well settled that an a ppellant is considere d

a "pr evailing party " (1) when he preva ils on a claim as a result of administrative err or, but does not preva il on unrela ted claims within the same suit, see Hensley , 461 U.S. at 434, or (2) even when an appellant' s succe ss in the suit was not related to the w ork of his a ttorney or not proportional to the total number of attorney work hours expended, id. Other wi s e stated, even when only a part of a Boa rd decision is rema

nded based on administrative err or, an appellant meets t h e t h reshold require ment for a

n EAJA award. Her e, Mr. Vazquez-Flore s was a p re vailing party in his appea l beca use t he decision of t he Boa rd was set aside and the matters on appea l rema nded for further adjudication predic ated, in part,

o n administrative err or. See Sumner , 15 Vet.App. at 261 (citing Buck hannon , 532 U.S. at 6 0 3 (a "r emand does not constitute some relief on t h e m er i t s ' unless that rema nd is predic ated upon administrative err or" )); see also Hensley , supra
. Specifica lly , his claim for benef its for a neuropsy chiatric disorder was re m an ded beca use the Boa

rd provided an inadequa te statement of

rea sons or bases. Simi larly , his c laim f or benef its for nephrolithiasis was rema nded, in part, based on the fa ilure of the B oard to a ddress possible entitlement to TDI U.

B. Su bstantial Ju stifi cation Depends on the Totality of Circum stances. Once an EAJA applicant alleg es that the Secre tary ' s position was not substantially justified, the burde n shifts to the Secreta ry to demonstrate that his position was substantially justified at the

5administrative and litigation stag es. See Pierce v. Underwood , 487 U.S. 5 5 2 , 5 6 5 (1988) (" [A]

position can be justified even though it is not corr ect, and

. . . it can be substantially (i.e., for the most part) justified if a rea sonable person could think it corr ect, that is, if it has a rea sonable basis in law and fa ct.); Locher v. Brown , 9 Vet.App. 535, 537 (1996); Stillw ell v. Brow n , 6 Vet.App. 291, 301 (1994) (the Secre tary ' s p o s i t i o n is substantially justified "' if a rea sonable person could think it

corr ect, that is, if it has a rea sonable basis in law and fac t'" (quoting Pierce v. Underwood , 487 U.S. 552, 56 6 n
. 2 (1988))). Substantial justification is based on the totality of circ umstances, which includes consideration of , inter alia, "me rits, conduct, rea sons g iven, and consistency with judicia l
prec edent and VA policy with respe ct to such position, and action or failure to act, as ref lected in the

rec ord on appea l and the filings of the parties befor e the Court." W hite v. Nicholson , 412 F.3d 1314, 1317 (F ed. Cir. 2005) (" The totality of circ umstances, by its very descr iption, does not exclude any valid issue from conside ration." ). The S ecr etar

y does not asser

t substantial justification with reg ard to Mr. Vazquez-Flore s' s claim for benef

its for neuro p s y ch iatric disorder. And, to the extent he maintains that he was substantially justified with reg ard to the incre ased rating claim for nephrol i t hiasis, that argument fails. To be sure, the Secre tary succe eded in demonstrating that inadequa te notice was not prejudicia l such that he prevai l ed i n h is litigation position on that issue. Simi larly , the Court's

rema nd of possible entitlement t o an extraschedular rating associate d with Mr. Vazquez-Flore s' s service -conne cted nephrolithiasis was due to the fac t it was inext rica bly i n t er t wi ned with

rea dj u d i ca t i o n of possible entitlement to benef its for a neuropsy chiatric disorder, as opposed to administrative or litigation err or, or lack of substan tial justification at either the administrative or litigation stag es. Neve rtheless, the Court sua sponte noted that the rec ord rea sonably raised the issue whether Mr. Vazquez-Flore s' s nephrolithiasis rende red him unemploy able and wh et h er h e was entitled to TDI U, and further noted that the Boa rd failed to addre ss these issues, war ranting rema

nd. VazquezFlores v. Shinseki , 24 Vet.App. 94 (2010); see also Roberson v. Principi, 251 F.3d 1378 (F ed. Cir. 2001) (Secr etar

y must consider TDI U when a veter an makes a claim for the highe st rating possible and submits evidenc e of a medical disability and of unemploy ment); Carpenter v. W

est , 11 Vet.App. 140, 146-47 (1998) (B oard must revie w all issu es re as o n ab l y raised by liberal reading of appeal)

.

6Thus, rema nd of Mr. Vazquez-Flore s' s claim for in cr ea s ed benef its for nephrolithiasis was predic ated, at least in part, on administrative err or, defe ating the Secre tary ' s contention that he was substantially

justified at the administrative stag e. See Stillwell , supra
. C. Reasonableness is Based i n Par t on Su cce ss of the Ar gum ents P rese nted. I t is well settled that only rea sonable fee s and expenses may be awa rded u n d er E AJ A, 28 U.S.C. § 2412(d) ; Us s er y v. B r own , 10 Vet.App. 51, 53 (1997) (" Once it is deter mined that a claimant is entitled to an EAJA awar d, the Court still must determine what is a ' rea sonable' fee .") , and that an applicant has the burden of demonstrating the rea sonablene ss of his reque st for an EAJA

awa rd, Blum v. S t en s o n , 465 U.S. 886, 897 (1984). Although "[t]he Court [gene rally ] has wide discretion in the award of attorney fee s under the EAJA," Chesser v. W est , 11 Vet.App. 497, 501 (1998), there are limit ations. For example, when an appellant is succe ssful on one claim as a result of administrative err or, but not succe ssful as to other, distinct claims involved in the same litigation, work spent solely on the unsucce ssful claims is not e ntitled to an EAJA aw ard. Hensley , 461 U.S.
at 434-35. Simi larly , in additi o n t o gener al rea sonablene ss of the hours spent, there are specific fac tors for considera

tion whe n assessing the rea sonablene ss of an EAJA awa rd. See id. at 430 n.3 (listing fac tors); McD onald v. Nicholson , 21 Vet.App. 257, 263-64 (2007) (per suasive argument of Secre tary ); Ussery , 10 Vet.App. at 53 (listing of fac tors). Moreove r, even though an appellant is a preva iling party and has prese nted arguments that are "inter rela ted, nonfrivolous, and raised in g ood faith," it may "sa

y littl e about whether the expenditure of counsel' s time was rea sonable in rela tion to the succe ss achieve d." Id . at 436. 1. Reasonableness of Hours Bill ed on a Claim for Benefits for a Ne uropsychiatri c Disorder Mr. Vazquez-Flore s' s briefing and argument with reg ard t o his claim for benef its for neuropsy chiatric disorder wer e helpful, persua sive, and succe ssful in demonstrating administrative

err or below that war

rante d rema

nd. There fore , the C ourt will awa rd reasonable atto rn ey fees and
expenses di re ct ly incurre d in his appea l of the Boa rd' s denial of benef

its for a neuropsy chiatric disorder. See B lum, supra

. 2. Reasonableness of Hours Bill ed on a Claim for Increased Benef its for Nephrolith iasis In reg ard to his incre ased rating claim for nephrolithiasis, Mr. Vazquez-Flore s orig inally argued that the Boa

rd (1) err ed by finding that he was adequately notif i ed how to substantiate his

7claim for an incre ased disability rating , and (2) provided an inadequa te statement of rea sons or bases with reg ard to its denial of a n incre ased disability

rating , including an extrasche dular rating. In its J anuar y 2008 decision, the Court did not discuss Mr. Vazquez-Flore s' s rea sons-or-ba ses ar g ument, and rema nded his incre ased rating claim beca use of insufficient notice. Upon clar ification by the Fe d er al C ircuit as t o the s cope of notice the Secre tary is require d to provide, the Court deter mined that the Boa

rd err ed in finding the Secre tary ' s notice adequate, but it further found that the err or was not prejudicia l. Howeve r, the Court rema nded the Boa

rd' s denial of an incre ased rating for nephrolithiasis beca

use it found that entitlement to an extraschedular rating was inext rica bly intertwined with the rema nd of the claim for benef

its for neuropsy chiatric disorder. The Court also sua sponte found tha t the Boa rd fa iled to addre ss entitlement to total disability based on indivi dual unemploy ability (TDIU), which rea sonably was not raised by M r
. Vazquez-Flore s but had been raised by the re cord, a

nd rema nded this matter for

further adjudication. Although Mr. Vazquez-Flores o ri g inally asser ted a rea sons-or-ba ses err or in the Boa rd' s denial of an incre ased schedula r disability rating , including an extraschedular rating , for his nephrolithiasis, this a

rg ument was not a ddresse d in a ny of the judicial de cisions on this case
. Wit h reg ard to the Boa

rd' s statement in support of its denial of an incre ased schedula r disability rating for nephrolithiasis, it is presumed that the Boa rd' s decision fac ilitated judicial revie w and otherwise was adequate with reg ard to that matter. See Maggitt v. W est , 202 F.3d 1370 at 1380-81 (F ed. Cir. 2000) (in context of aff

irming Boa

rd decision on an issue, noting that argument not addre ssed is presumed considere d and reje cted) ; Allday v. Brown , 7 Vet.App. 517, 527 (1995) (B oard' s statement "must be adequate to enable a cla imant to understand the precise ba sis for the B oard' s decision, as we ll as to fac ilitate reviewin this C ourt" ). Howeve r, beca

use the Court sua sponte noted that the matter of entitl em en t to an extraschedular rating was inext rica bly intertwined with the rema nd of the claim for benef its for a neuropsy chiatric disorder and rema nded the matter on that basis, no deter mination – presumptive or

o t h erw ise – was rende red with reg ard to the Boa rd' s statement reg arding an extraschedular ratin g. What is clea

r, is that the Court did not rely on Mr. Vazquez-Flore s' s argument that the Boa rd' s statement on this issue was inadequate, and never found, imp l i ci t l y o r expli citly , that the Boa rd inadequately addre ssed this issue. Simi larly , althoug h the Court rema nded the matter of entitlement

8to TDI U based on administrative err or, such err or was found sua sponte by the Court. I n eff ect,

rema nd of Mr. Vazquez-Flore s' s claim for benef its for nephrolithiasis is due solely to the intervening decisions of the Court with reg ard to err or and inext rica ble intertwining , which intervening decisions

– but for the fac t Mr. Vazquez-Flore s preva iled on his arg uments with reg ard to his claim for benef its for neuropsy chiatric disorder, and there fore the litigation as a whole – would not war rant preva iling party status or an EAJA awa rd. Cf. Ake rs , 409 F.3d at 1360 (hol d i n g t h at a rema nd due to an interv en i n g Court decision di d not rende r t he appellant a prevailing party for EAJ A purposes); see also McCormick v. Principi , 16 Vet.App. 407, 411 (2002) (noting that the Court should not "r evisit at the EAJA stag e the log ic of the me rits decision" ). Under such circ umstances, wher e the argu me n ts p r e s e n te d b y M r
. Vazquez-Flore s with reg ard
to his claim for benef

its for nephrolithiasis wer e either reje cted or otherwise not the basis for rema nd, and whe re the Court did not f ind a dminist rative e rror

with reg ard to this claim base d on any of Mr. Va z q u ez -F l ores' s arg

uments, we do not find an EAJA awa rd for the arguments prese nted to b e

rea sonable. Hensley , McCormick , and Chesser , all supra
. D. Calculation of

Hours and Expenses S pent on Each Clai m on App eal On behalf of his primary attorney , Ms. Kathy L iebe rm an , M r. Vazquez-Flore s reque sts $20,434.81 in EAJA fee s for 130.1 hours spent on the case and $307.33 for expenses. Ms. L ieber man billed 6.7 hours for work on the claim for benef its for a neuropsy chiatric disorder. Both the hours and
expenses claimed are rea sonable on their fac e and will be awa rded. Another 40.1 hours wer e spent

on rese arc h, draf

ting, an d p reparing for the oral arg ument, but it is not clea r what part of the effort applied to Mr. Vazquez-Flore s' s argum ent rela ted to his claim for benef its for a neuropsy chiatic disorder and what part applied to the arg ument rela ted t o his cl ai m for benef its for nephrolithiasis. The time billed will be apportioned equally , and 20.1 hours will be awa rded. See Elcyzy n v. Brown , 7 Vet.App. 170, 177-78 (1994) (appor tioning hours spent on argument and prepa ration there of); see also Blum and Chesser , both supra
. Ms. L ieber

man also billed 30.2 hours for g ener al case manag ement. This time does not appea r

unrea sonable on its fa ce, and the full time bill ed for this wor k will be awa

rded. See Elcyzy n , supra (ac tions such as revie wing the recor d , interviewing the client and undertaking proce dural tasks are "ine x tricably linked to the prepa ration of t h e entire case and there is no basis for an equitable

9apportionment" ). Over all, 57 hours will be awa rded for the time that can be attributed to work spent

on the arguments rela ted to g ener al case manag ement and the claim for benef its for nephrolithiasis. Additionally , Ms. L ieber man billed $307.33 in expenses, but failed t o d elineate the amount of
expenses rela ted to Mr. Vazquez-Flore s' s unsucce ssful argum en t t o the Fe dera l Circuit and the amount of expenses cha

rg ed followinghis appea l to the Feder al C ircuit. Consequently , half of the
reque sted expenses will be awa rded: $153.66. On behalf of his second attorney , Richard J ames, Mr. Vazquez-Flore s reque sts $8,260.71 in EAJA fee s for 49.3 hours spent on the case and $558.07 for expenses. Howeve r, Mr. J ames' s entire billing i s for work on the m atter appea led t o the Feder al C ircuit an d for which the arg uments wer e not succe ssful. Consequently , no EAJA compensa tion shall be awa rded. See Hensley and Blum , both
supra.

IV. CONCLUSION Upon considera

tion of the fore g oing, the Secre tary ' s motion for judicial notice is g rante d and the appe llant's EA J A application is GRANTED I N PART in the amount of $9,106.65 for 57 hours of attorne y

work a nd $153.66 in expenses.

10