Case Name: Marvin O. JOHNSON, Appellant, v. Robert A. McDONALD, Secretary of Veterans Affairs, Appellee
Court: United States Court of Appeals for Veterans Claims
Jurisdiction: United States
Decision Date: 2016-07-05
Citations: 28 Vet. App. 136
Docket Number: No. 10-1785(E)
Parties: Marvin O. JOHNSON, Appellant, v. Robert A. McDONALD, Secretary of Veterans Affairs, Appellee.
Judges: Before HAGEL, Chief Judge, and KASOLD, LANCE, DAVIS, SCHOELEN, PIETSCH, BARTLEY, GREENBERG, and MOORMAN, Judges.
Reporter: West's Veterans Appeals Reporter
Volume: 28
Pages: 136–158

Head Matter:
Marvin O. JOHNSON, Appellant, v. Robert A. McDONALD, Secretary of Veterans Affairs, Appellee.
No. 10-1785(E).
United States Court of Appeals for Veterans Claims.
Argued Sept. 22, 2015.
Decided July 5, 2016.
Kenneth M. Carpenter, of Topeka, Kansas, for the appellant.
Jessica M. Schwartz, Appellate Attorney, of Washington, D.C., with whom Leigh A. Bradley, General Counsel; Mary Ann Flynn, Assistant General Counsel; Kenneth A. Walsh, Deputy Assistant General Counsel, all of Washington, D.C., were on the pleading, for the appellee.
Before HAGEL, Chief Judge, and KASOLD, LANCE, DAVIS, SCHOELEN, PIETSCH, BARTLEY, GREENBERG, and MOORMAN, Judges.
. Judge Moorman is a recall-eligible judge who has been recalled to further service by the Chief Judge. See 38 U.S.C. § 7257(b)(1); U.S. Vet.App. Misc. Nos. 12-15 (Sept. 1, 2015), 02-16 (Feb. 1, 2016).

Opinion:
HAGEL, Chief Judge:
Veteran Marvin 0. Johnson applies through counsel for an award of attorney fees and expenses in the amount of $27,153.25 pursuant to the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412(d). The Court has jurisdiction pursuant to 28 U.S.C. § 2412(d)(2)(F) to award reasonable attorney fees and expenses. Mr. Johnson filed his EAJA application within the 30-day period set forth in 28 U.S.C. § 2412(d)(1)(B), and his application satisfies that section's content requirements. See Scarborough v. Principi, 541 U.S. 401, 408, 124 S.Ct. 1856, 158 L.Ed.2d 674 (2004). The Secretary filed a response in which he does not contest that Mr. Johnson is a prevailing party but argues that the Secretary's position was substantially justified. Mr. Johnson filed a reply to the Secretary's response. This case was submitted for en banc review in July 2015, and oral argument was held on September 22, 2015. For the reasons stated below, the EAJA application will be granted in the amount of $27,088.65.
I. BACKGROUND
In May 2010, the Board of Veterans' Appeals (Board) issued a decision denying, inter alia, referral for extraschedular con-sidei'ation of Mr. Johnson's service-connected right-knee disability and rheumatic heart disease. Mr. Johnson appealed to this Court and, in an en banc decision, a majority of the Court rejected Mr. Johnson's argument that 38 C.F.R. § 3.321(b)(1) requires the Board to consider the collective impact of multiple service-connected disabilities in determinations regarding extraschedular consideration. Johnson v. Shinseki, 26 Vet.App. 237, 243-45 (2013) (en banc) (Johnson I), rev'd sub nom. Johnson v. McDonald, 762 F.3d 1362 (Fed.Cir.2014) (Johnson II). In doing so, a majority of the Court concluded that § 3.321(b)(1) was ambiguous, deferred to the Secretary's interpretation of the regulation as not requiring the Board to consid er whether a veteran is entitled to referral for extraschedular consideration of his service-connected disabilities on a collective basis, and affirmed the Board's decision. Johnson I, 26 Vet.App. at 243-45, 248; id. at 248 (Moorman, J., concurring) (giving the Secretary a "high degree of deference").
Mr. Johnson appealed to the U.S. Court of Appeals for the Federal Circuit (Federal Circuit), which reversed this Court's decision and remanded the case for further adjudication. Johnson II, 762 F.3d at 1366. The Federal Circuit held that "[t]he plain language of § 3.321(b)(1) provides for referral for extra-schedular consideration based on the collective impact of multiple disabilities" and specifically found "no policy justification for interpreting § 3.321(b)(1) in the way that the [Secretary] advocates." Id. at 1365-66. This Court then remanded Mr. Johnson's case to the Board for it to assess the collective impact of his service-connected disabilities in determining whether such impact warranted extraschedular consideration. Johnson v. McDonald, No. 10-1785, 2014 WL 6634223, at *1 (U.S.Vet.App. Nov. 24, 2014) (memorandum decision) (Johnson III). Mr. Johnson's EAJA application followed.
In his application, Mr. Johnson argues that he is a prevailing party because the remand of his appeal to the Board was predicated on a finding of administrative error, and he alleges that the Secretary's position was not substantially justified. The Secretary does not dispute that Mr. Johnson is a prevailing party, but he does argue that the application should be denied because his position was substantially justified at both the administrative and litigation stages of Mr. Johnson's case.
The Secretary asserts that his position at the administrative stage was substantially justified because his interpretation and application of § 3.321(b)(1) followed his longstanding interpretation of the regulation, as embodied in the instructions in the VA Adjudication Procedures Manual (M21-1MR). The Secretary contends that the M21-1MR instructs VA adjudicators to refer claims for extraschedular consideration based on individual disabilities and further asserts that this interpretation previously had not been questioned by the Court, such that his interpretation reflected compliance with then-current law and, therefore, that he was substantially justified pursuant to Clemmons v. West, 12 Vet.App. 245 (1999).
In asserting the reasonableness of his position at the litigation stage, the Secretary relies on the same justifications noted above, and additionally notes that a total of seven substantive pleadings addressing the parties' differing interpretations of § 3.321(b)(1) were filed with this Court, which he contends reflects confusion surrounding the language of the regulation; and a majority of the Judges on the Court's en banc panel in Johnson I upheld his interpretation of the regulation.
In reply, Mr. Johnson notes that the Board's statement of reasons and bases contains no indication that when it reviewed his disabilities individually the Board considered the instructions set forth in the M21-1MR. Mr. Johnson also contends that, contrary to the Secretary's assertion that confusion surrounds the language of § 3.321(b)(1), the Federal Circuit found the language of the regulation unambiguous, noting that the Secretary " 'cannot manufacture an ambiguity in language where none exists in order to redefine the plain language of a regulation'" and that " 'simply saying something is ambiguous does not make it so.' " Reply at 4-5, 9 (citation omitted) (quoting Johnson II, 762 F.3d at 1366).
Mr. Johnson further contends that the Secretary's reliance on his own interpreta tion of § 3.821(b)(1) is not a basis for demonstrating substantial justification when the Secretary's interpretation ultimately was a misinterpretation of the plain language of an unambiguous regulation, which provides, and has always provided, that when assessing whether extraschedu-lar consideration is warranted, the Secretary must consider the collective impact of a veteran's service-connected disabilities. Finally, Mr. Johnson contends that, because the Federal Circuit determined that the Secretary's interpretation contravened the plain language of § 3.321(b)(1), this Court's decision in Johnson I upholding the Secretary's interpretation of the regulation is not a basis for demonstrating substantial justification.
Mr. Johnson asserts in his supplemental brief that many of this Court's previous decisions on substantial justification failed to properly apply a totality of the circumstances analysis and instead relied on only a few factors. He urges the Court to revisit these cases and clarify the standard. In response, the Secretary reiterates points made in his earlier EAJA brief. He also discusses the cases cited in Mr. Johnson's supplemental brief and asserts that those cases reflect a consideration of various factors that is in accordance with the law. The Secretary additionally argues that Mr. Johnson had only one symptomatic disability, such that a collective-impact discussion would be illogical, and further argues that the Board's failure to explain why the collective impact of Mr. Johnson's disabilities was not considered for extraschedular rating is, at best, a reasons-and-bases error, which is not enough to counter the factors that are favorable to the Secretary.
II. ANALYSIS
A. Applicable Law
EAJA fees may be awarded when the applicant is a prevailing party and the Secretary's position was not substantially justified. See 28 U.S.C, § 2412(d)(1)(A), (1)(B), (2)(B); Scarborough, 541 U.S. at 407-08, 124 S.Ct. 1856; Owens v. Brown, 10 Vet.App, 65, 66 (1997). "The appellant has the burden of demonstrating prevailing-party status under the EAJA." Rollins v. Principi 17 Vet.App. 294, 298 (2003). "Prevailing-party status is established either through a merits-stage remand predicated upon the Court's finding of error or a concession of error by the Secretary." Vahey v. Nicholson, 20 Vet.App. 208, 211 (2006). A merits-stage remand is predicated upon administrative error when such error is explicitly or implicitly the basis for the remand. See Davis v. Nicholson, 475 F.3d 1360, 1364 (Fed.Cir.2007).
If prevailing party status is established, the "government has the burden of showing that its position was substantially justified in order to avoid paying the attorney fees and expenses" of the prevailing party. Olney v. Brown, 7 Vet.App. 160, 162 (1994). "In order to prevail, the Secretary must show substantial justification for both his administrative and litigation positions." Locher v. Brown, 9 Vet.App. 535, 537 (1996) (emphasis added). "The government can establish that its position was substantially justified if it demonstrates that it adopted a reasonable, albeit incorrect, interpretation of a particular statute or regulation." Patrick v. Shinseki, 668 F.3d 1325, 1330 (Fed.Cir.2011).
The Federal Circuit has "repeatedly made clear that the substantial justification inquiry requires an analysis of the 'totality of the circumstances' surrounding the government's adoption of a particular position." Id. at 1332. Although there is no exhaustive list of relevant factors, this Court previously outlined the pertinent considerations: "[M]erits, conduct, reasons given, [] 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." Stillwell v. Brown, 6 Vet.App. 291, 303 (1994).
Moreover, although none of these factors is dispositive, see id. at 302 (explaining that substantial justification is not determined by a single-factor approach), the Federal Circuit has explained that, when "the government interprets a statute in a manner that is contrary to its plain language and unsupported by its legislative history, it will prove difficult to establish substantial justification," Patrick, 668 F.3d at 1331. Indeed, even "[t]he fact that [this Court] ha[s] previously upheld the [Secretary's] erroneous interpretation of [a statute] does not [] resolve the substantial justification inquiry." Id. at 1332.
"Once it is determined that a claimant is entitled to an EAJA award, the Court still must determine what is a 'reasonable' fee." Ussery v. Brown, 10 Vet.App. 51, 53 (1997); see also 28 U.S.C. § 2412(d)(2)(A) (Court must determine what amount constitutes reasonable attorney fees); McDonald v. Nicholson, 21 Vet.App. 257, 263-64 (2007) ("In determining reasonableness, the Court will consider whether the hours claimed are (1) unreasonable on their face; (2) otherwise contraindicated by the factors for determining reasonableness itemized in Hensley [v. Eckerhart ], 461 U.S. [424, 430 n. 3, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983)], or Ussery[, 10 Vet.App. at 53]; or (3) persuasively opposed by the Secretary."); Chesser v. West, 11 Vet.App. 497, 501 (1998) ("The Court has wide discretion in the award of attorney fees under the EAJA.").
B. Prevailing Party Status
The record supports the parties' agreement that Mr. Johnson is a prevailing party because he ultimately secured a merits-stage remand predicated upon a Court finding of administrative error in the Secretary's interpretation and application of § 3.321(b)(1). Johnson III, 2014 WL 6634223, at *1; see also Davis, 475 F.3d at 1364; Vahey, 20 Vet.App. at 211.
C. Substantial Justification
1. Administrative Position
The Secretary contends that his position at the administrative stage was substantially justified in part because he has consistently and long applied his erroneous interpretation of § 3.321(b)(1). This contention, however, is baldly presented and belied by the fact that, at the merits stage of this case, the Secretary acknowledged that prior Board decisions might be contrary to this interpretation, see Appellee's June 15, 2012, Memorandum of Law at 8, Johnson I, 26 Vet.App. 237 (No. 10-1785); and was otherwise unable to confirm a consistent VA practice regarding his interpretation of § 3.321(b)(1). Moreover, the Secretary's argument of a consistent and longstanding interpretation finds little support in the majority decision in Johnson I, which was predicated on the majority's view that the regulation was ambiguous—a view subsequently rejected by the Federal Circuit—and deference to the Secretary's proffered interpretation, without the majority finding that it was longstanding or consistently applied. See Johnson I, 26 Vet.App. at 243-44 (majority opinion).
The Secretary also cannot find support in the fact that, prior to Johnson I, the Court had not issued a precedential decision on the Secretary's interpretation of § 3.321(b)(1). Silence is neither an indication that the Secretary was correct nor a tacit approval of the Secretary's interpretation. Cf. Carpenter v. Principi, 15 Vet.App. 64, 70 (2001) (noting that "the Court's silence on the reasonableness of a fee agreement cannot be said to be an implicit holding that the agreement was, in fact, reasonable").
Additionally, the Secretary's contention that his erroneous interpretation of § 3.321(b)(1) is embodied in the M21-1MR is a far stretch from the manual's actual wording. Indeed, during oral argument, the Secretary was unable to point to language in the M21-1MR that restricts referrals for extraschedular consideration to disabilities on an individual basis. Oral Argument at 29:23-31:18, Johnson v. McDonald, U.S. Vet.App. No. 10-1785(E) (oral argument held Sept. 22, 2015), http:// www.uscourts.cavc.gov/oral_arguments_ audio.php. Moreover, although the M21-1MR directs referral for extraschedular consideration when the rating schedule is inadequate to rate an individual disability, it does not preclude referral for extrasche-dular consideration based on the veteran's collective disabilities. See M21-1MR, pt. III, subpt. iv, § 6.B(10)(a) (directing rating officials to consider possible entitlement "due to disability" and providing no indication that "disability" is limited to an individual disability, which would be the case if "a disability" had been used instead of "disability").
Similarly unavailing are the Secretary's related contentions that his interpretation was substantially justified because he was relying on then-current law and that Clemmons, 12 Vet.App. at 245, stands for the proposition that reliance on then-current law means a position is substantially justified. As to the Secretary's first contention, he does not establish that he was relying on then-current law or that then-current law required a disability-by-disability analysis; indeed, simply stating that the Board applied then-current law does not make it so. Cf. Johnson II, 762 F.3d at 1366 (" '[Sjimply saying something is ambiguous does not make it so.' " (quoting Johnson I, 26 Vet.App. at 254)). Here, the Board never addressed the scope of § 3.321(b) and instead applied the regulation in a manner wholly contrary to the plain wording of the regulation.
As to the second contention, to the extent that Clemmons ever stood for the proposition that the Secretary was always substantially justified because he was following current law, it is no longer valid; succinctly stated, no one factor establishes substantial justification—it is predicated on the totality of the circumstances. See Patrick, 668 F.3d at 1332 ("The fact that the Veterans Court had previously upheld the VA's erroneous interpretation of [a statute] does not . resolve the substantial justification inquiry."). Moreover, unlike the appellant's claim in Clemmons, Mr. Johnson's claim was decided by the Board when there was no precedential caselaw supporting the Secretary's view and the only caselaw explicitly addressing the scope of § 3.321(b)(1) was Judge Stein-berg's concurrence in Brambley v. Principi, which proffered an interpretation of the regulation directly contrary to the Secretary's position. See 17 Vet.App. 20, 26 (2003) (Steinberg, J., concurring).
Nor does the record support the Secretary's contention that the Board was substantially justified in not addressing all Mr. Johnson's disabilities because only his right-knee disability was symptomatic. The Board remanded Mr. Johnson's left-knee disability claim for consideration of medical records, addressing the severity of that disability, that were not previously considered and also remanded the issue of entitlement to a total disability rating based on individual unemployability because such entitlement is predicated on a veteran's complete disability picture. Record at 22. Additionally, the Federal Circuit noted that the Board had "denied Mr. Johnson's claim for extra-schedular consideration of the combined impact of his service-connected rheumatic heart disease and right knee disability." Johnson II, 762 F.3d at 1363. Succinctly stated, the Board's decision suggests that collective impact was either argued or reasonably raised by the record, see Robinson v. Peake, 21 Vet.App. 545, 552-54 (2008) (requiring the Board to "consider all issues either raised by the claimant or by the evidence of record"), aff'd sub nom. Robinson v. Shinseki 557 F.3d 1355 (Fed.Cir.2009), and the Secretary fails to demonstrate otherwise, see Olney, 7 Vet.App. at 162.
Finally, we note that the Secretary's arguments in support of his interpretation were soundly rejected by the Federal Circuit which, as noted above, found the Secretary's interpretation of § 3.321(b)(1) contrary to the regulation's plain language and inconsistent with the regulation's purpose, and found "no policy justification for interpreting § 3.321(b)(1) in the way that the [Secretary] advoeate[ed]." Johnson II, 762 F.3d at 1365-66.
In sum, as discussed above, we find little, if any, persuasive value in the factors set forth by the Secretary in support of his argument that he was substantially justified in his interpretation and application of § 3.321(b)(1). Indeed, the factors he presents do not overcome the significant hurdle imposed by the fact that the Board's interpretation and application of § 3.321(b)(1) were contrary to the plain language of that regulation and without policy support. See Patrick, 668 F.3d at 1331. After considering the factors set forth by the Secretary, we hold that the Secretary has not met his burden of demonstrating that his position at the administrative stage was substantially justified based on the totality of the circumstances. See id. at 1332; Olney, 7 Vet.App. at 162.
2. Litigation Position
Because the Secretary has not met his burden of demonstrating that he was substantially justified in his interpretation and application of § 3.321(b)(1) at the administrative stage, we need not address whether he was substantially justified at the litigation stage. See Cycholl v. Principi, 15 Vet.App. 355, 361 (2001) (the Court need not address the Secretary's position at the litigation stage where the Secretary failed to carry his burden of demonstrating that his position was substantially justified at the administrative stage).
D. Fee Award
Although the Secretary does not contest the reasonableness of the fees claimed, they may be awarded only if reasonable, and Mr. Johnson has the burden of demonstrating their reasonableness. See 28 U.S.C. § 2412(d) (Court must determine what amounts constitute reasonable attorney fees); Ussery, 10 Vet.App. at 53; Penny v. Brown, 7 Vet.App. 348, 352 (1995) (holding that only reasonable and necessary expenses that are customarily charged to a client may be awarded under EAJA). Here, Mr. Johnson's EAJA application states that one attorney provided 30.9 hours of work, but the itemized statement of fees and expenses reflects only 30.52 hours. Accordingly only 30.52 hours will be awarded. See Perry v. West, 11 Vet.App. 319, 329 (1998); McDonald, 21 Vet.App. at 263-64.
The remainder of the EAJA application appears reasonable on its face and will be awarded. In sum, of the $27,153.25 Mr. Johnson requested, the Court will award $27,088.65.
III. CONCLUSION
Upon consideration of the foregoing, Mr. Johnson's EAJA application is GRANTED in the amount of $27,088.65.
HAGEL, Chief Judge, filed the opinion of the Court, in which DAVIS, SCHOELEN, and GREENBERG, Judges, joined, and in which KASOLD, Judge, joined as to Parts I and II A-C.
KASOLD, Judge, filed an opinion concurring in part and dissenting in part.
BARTLEY, Judge, filed a dissenting opinion in which LANCE, PIETSCH, and MOORMAN, Judges, joined.