Court Opinion

ID: 3039032
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:59:53.491032+00
Date Added: 2024-06-11T07:37:56.711231
License: Public Domain

FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

AMERICAN FEDERATION OF                 
GOVERNMENT EMPLOYEES, AFL-CIO
LOCAL 2152, EDWIN D. SAVLOV,
M.D.,
       Plaintiffs-Appellants/Cross-          Nos. 04-16607
                         Appellees,               04-16692
                 v.                            D.C. No.
ANTHONY J. PRINCIPI, Secretary of           CV-02-00379-ECR
Veterans Affairs, ROBERT H.                    OPINION
ROSWELL, M.D., VA Under
Secretary for Health,
       Defendants-Appellees/Cross-
                       Appellants.
                                       
        Appeal from the United States District Court
                 for the District of Nevada
        Edward C. Reed Jr., District Judge, Presiding

                   Argued and Submitted
          June 14, 2006—San Francisco, California

                     Filed October 2, 2006

 Before: Mary M. Schroeder, Chief Judge, Susan P. Graber,
         Circuit Judge, and Kevin Thomas Duffy,*
                   Senior District Judge.

                   Opinion by Judge Duffy

  *The Honorable Kevin Thomas Duffy, Senior District Judge for the
Southern District of New York, sitting by designation.

                             17197
                  AMERICAN FEDERATION v. PRINCIPI                  17201

                             COUNSEL

Kevin M. Grille, Assistant General Counsel, American Feder-
ation of Government Employees, ALF-CIO, Chicago, Illinois,
for the plaintiffs-appellants/cross-appellees.

Greg Addington, Assistant United States Attorney, Reno,
Nevada, for the defendants-appellees/cross-appellants.

                              OPINION

DUFFY, Senior District Judge:

  Plaintiffs-Appellants/Cross-Appellees American Federation
of Government Employees, AFL-CIO (“AFGE”), and
Dr. Edwin Savlov (collectively “Appellants”) brought this
action to challenge Defendants-Appellees/Cross-Appellants’
(“Appellees” or “VA”)1 exemption from arbitration of a griev-
ance that had been filed under the negotiated grievance proce-
dure of a collective bargaining agreement. Ruling on cross-

  1
    Anthony Principi and Dr. Robert Roswell were the designated officials
for the U.S. Department of Veterans Affairs. Principi was the Secretary of
Veterans Affairs and has been replaced by the Hon. R. James Nicholson.
Roswell was the VA Under Secretary for Health and has been replaced by
the Hon. Jonathan B. Perlin, M.D., Ph.D.
17202           AMERICAN FEDERATION v. PRINCIPI
motions for summary judgment, the district court accepted
one reason given by the VA, but found that an alternate rea-
son would not have justified the exemption from arbitration.
Appellants appealed and the VA cross-appealed the district
court’s rejection of the alternate ground asserted as a basis for
an exemption from arbitration. The VA also appeals the dis-
trict court’s earlier denial of a motion to dismiss for lack of
subject matter jurisdiction.

                      BACKGROUND

   Dr. Savlov was a VA physician who filed a grievance
alleging unlawful discrimination based upon his age and gen-
der. Dr. Savlov spent approximately seventy percent of his
time providing primary care services, in the form of compen-
sation and pension examinations (“C&P examinations”), and
approximately thirty percent of his time performing surgeries.
The basis of the grievance was the allegation that Dr. Savlov
was removed from surgical duties at the age of seventy-six,
and his “specialty pay” for surgery was discontinued, even
though, allegedly, a female physician of approximately the
same age, who had also been removed from surgical duty,
continued to receive specialty pay. Dr. Savlov was denied
specialty pay from 2000, when he was removed from surgical
duty, until 2002, when he retired and ceased all work for the
VA. He estimates that he was denied a total of approximately
$46,000 in specialty pay, which he allegedly should have
received in addition to his pay for his primary care duties.

   Title VII of the Civil Service Reform Act of 1978
(“CSRA”), codified at 5 U.S.C. §§ 7101 - 7135, governs labor
management and relations for non-postal federal employees.
The CSRA authorizes collective bargaining with certain fed-
eral employees. The CSRA also directs that a collective bar-
gaining agreement (“CBA”) “shall provide procedures for the
settlement of grievances.” 5 U.S.C. § 7121(a)(1). “[A]ny
grievance not satisfactorily settled under the negotiated griev-
ance procedure shall be subject to binding arbitration which
               AMERICAN FEDERATION v. PRINCIPI           17203
may be invoked by either the exclusive representative or the
agency.” Id. at § 7121(b)(1)(C)(iii) (emphasis added). The
grievance procedure in this case was the product of a CBA
that the union, as labor’s “exclusive representative,” negoti-
ated with the VA pursuant to 5 U.S.C. § 7114(a)(4).

  The United States Court of Appeals for the District of
Columbia’s (“D.C. Circuit”) decision in Colorado Nurses
Ass’n v. FLRA, 851 F.2d 1486 (D.C. Cir. 1988), questioned
whether the CSRA applied to the labor rights of VA medical
professionals. In response to the Colorado Nurses decision,
Congress enacted 38 U.S.C. § 7422 as part of the Department
of Veterans Affairs Labor Relations Improvement Act of
1991 in an effort to grant VA medical professionals the title
5 collective bargaining rights enjoyed by other federal
employees.

    While VA medical professionals now enjoy collective bar-
gaining rights, including a grievance procedure, these rights
are restricted by three significant exemptions designed to
ensure adequate patient care and to prevent conflicts with sta-
tutorily established pay scales. The rights to grievance proce-
dures provided by a CBA do not extend to three statutorily
exempted types of disputes, relevantly including “any matter
or question concerning or arising out of (1) professional con-
duct or competence . . . or (3) the establishment, determina-
tion, or adjustment of employee compensation under this
title.” Id. § 7422(b). Section 7422(d) provides that whether a
matter concerns or arises from one of the exemptions of
§ 7422(b) “shall be decided by the Secretary and is not itself
subject to collective bargaining and may not be reviewed by
any other agency.” 38 U.S.C. § 7422(d).

   After exhausting the procedures of the negotiated grievance
process, AFGE Local 2152, acting on Dr. Savlov’s behalf,
sought to have the grievance resolved by a labor arbitrator, in
accordance with the terms of the CBA. Before the dispute was
finally submitted to the arbitrator, VA Under Secretary Ros-
17204           AMERICAN FEDERATION v. PRINCIPI
well issued a “decision paper,” under the authority of 38
U.S.C. § 7422(d),2 determining that the grievance was exempt
from the terms of the CBA because the grievance involved
issues of “professional conduct or competence” and because
it “concerns or arises out of a matter or question of the estab-
lishment, determination, or adjustment of compensation under
Title 38.” After issuing its decision paper, the VA moved for
the arbitration to be dismissed with prejudice, based upon the
exemptions defined by § 7422(b). The arbitrator dismissed the
case without prejudice to give Appellants an opportunity to
seek judicial review. Plaintiffs filed no exceptions to the arbi-
trator’s decision and filed this action, claiming that the VA
had “misused, misapplied and violated 38 U.S.C. § 7422(b)
and (d).”

   The district court ruled on the parties’ cross-motions for
summary judgment and found that the VA misapplied the
exclusion based on “the establishment, determination, or
adjustment of employee compensation,” 38 U.S.C.
§ 7422(b)(3), but was exempted from arbitration because it
had correctly applied the “professional conduct or compe-
tence” exemption under 38 U.S.C. § 7422(b)(1). Plaintiffs
filed a timely notice of appeal, and the VA cross-appealed,
arguing that the district court erred: (1) in rejecting the VA’s
argument that the matter was exempt from arbitration because
it involved an “adjustment of employee compensation” under
38 U.S.C. § 7422(b); and (2) in rebuffing the VA’s claim that
the D.C. Circuit is the exclusive forum for judicial review of
this dispute.
  2
  A 1992 memorandum of the VA Secretary delegated the authority to
make § 7422(d) determinations to the VA Under Secretary.
                  AMERICAN FEDERATION v. PRINCIPI               17205
                           DISCUSSION

A. The District Court Had Subject Matter Jurisdiction Over
The Dispute

  1.     Standard of Review

   The district court properly denied the VA’s motion to dis-
miss for lack of subject matter jurisdiction. Our review of the
district court’s subject matter jurisdiction is de novo. See, e.g.,
Campos v. Nail, 940 F.2d 495, 496 (9th Cir. 1991). The dis-
trict court based its assertion of jurisdiction on 28 U.S.C.
§ 1331, which authorizes original jurisdiction in federal dis-
trict courts over disputes arising out of the application of fed-
eral law. See Gallo Cattle Co. v. U. S. Dep’t of Agric., 159
F.3d 1194, 1198 (9th Cir. 1998) (“[A] federal court has juris-
diction pursuant to 28 U.S.C. § 1331 over challenges to fed-
eral agency action as claims arising under federal law, unless
a statute expressly precludes review.”). The VA argues that
the district court’s jurisdiction over this case was precluded
by § 7422(e) of title 38, which provides:

          A petition for judicial review or petition for
       enforcement under section 7123 of title 5 in any case
       involving employees described in section 7421(b) of
       this title or arising out of the applicability of chapter
       71 of title 5 to employees in those positions, shall be
       taken only in the United States Court of Appeals for
       the District of Columbia Circuit.

The VA argues that § 7422(e) applies to this case and limits
the forum in which judicial review could have been sought by
Appellants because the § 7422(d) determination denied the
applicability of the grievance procedure and, therefore, the
applicability of chapter 71 of title 5 to Dr. Savlov.3 Appellants
  3
   Dr. Savlov was a member of one of the categories of employees listed
in § 7421(b).
17206           AMERICAN FEDERATION v. PRINCIPI
argue that § 7422(e) limits jurisdiction only over petitions
arising “under section 7123 of title 5.” Section 7123 of title
5 relates to judicial review of orders of the Federal Labor
Relations Authority (“FLRA”), and no such order was ever
issued in this case because judicial review was sought instead
of an appeal to the FLRA. An appeal of the arbitrator’s dis-
missal to the FLRA would have been fruitless because the
FLRA constitutes a different agency and cannot rule on the
propriety of the VA’s use of § 7422(d). See U.S. Dep’t of Vet-
erans Affairs, 57 F.L.R.A. 681 (2002).

   “We review de novo the district court’s construction or
interpretation of a statute. Our analysis begins with the lan-
guage of the statute.” United States v. Davidson, 246 F.3d
1240, 1246 (9th Cir. 2001) (citation and internal quotation
marks omitted). The parties vigorously dispute the statutory
construction and legislative history of § 7422(e). The VA
argues that several possible readings of § 7422(e) grant the
D.C. Circuit exclusive jurisdiction over disputes that do not
involve an FLRA order, but we reject the VA’s alternate read-
ings of the statute and affirm the district court’s assertion of
jurisdiction.

  2.    The VA’s First Proposed Reading of § 7422(e)

    [1] A “petition for review” is a phrase associated with judi-
cial review of an administrative decision. Section 7123(a) of
title 5 authorizes judicial review for “[a]ny person aggrieved
by any final order of the [FLRA].” A “petition for enforce-
ment” is a petition, filed by the reviewing administrative
agency, such as the FLRA, which seeks judicial enforcement
of an order. Both parties agree that, under the best reading of
the statute, both of the terms “petition for judicial review” and
“petition for enforcement” are modified by the phrase “under
section 7123 of title 5.” The parties disagree on how this
phrase is modified by the remaining phrase, “in any case
involving employees described in section 7421(b) of this title
or arising out of the applicability of chapter 71 of title 5 to
                  AMERICAN FEDERATION v. PRINCIPI                  17207
employees in those positions.” The VA argues that the clause
“or arising out of the applicability of chapter 71 of title 5 to
employees in those positions” has independent meaning and
that the D.C. Circuit has exclusive jurisdiction over any
appeal challenging the VA’s application of “chapter 71 of title
5 to employees in those positions.” The VA argues that juris-
diction is therefore limited to the D.C. Circuit for review of
any petition for review or enforcement “under section 7123 of
title 5 in any case involving [VA health care professionals]”
or any petition “arising out of the applicability of chapter 71
of title 5 to employees in those positions.”4

   [2] We do not agree with the VA’s proposed reading of the
statute. Section 7422(e) limits jurisdiction to the D.C. Circuit
only with respect to a “petition for judicial review or petition
for enforcement under section 7123 of title 5.” To read the
statute as suggested by the VA would expand the statute’s
reach beyond its plain meaning. The meaning of the language
“or arising out of the applicability of chapter 71 of title 5 to
employees in those positions” can be determined by the con-
text, which is that this clause refers to a petition involving
such issues. The types of petitions that are jurisdictionally
limited are specified in the first clause of the sentence, which
refers to “petitions for review or petitions for enforcement
under section 7123 of title 5.” The VA argues that the opening
phrase “a petition for review or petition for enforcement” is
actually modified by two independent phrases, the first being
“under section 7123 of title 5 in any case involving employees
described in section 7421(b) of this title” and the second mod-
ifying phrase being “or arising out of the applicability of
chapter 71 of title 5 to employees in those positions.” The
problem with the VA’s reading is that it divorces the phrase
“petition for review or petition for enforcement” from the
words “under section 7123 of title 5” even though that section
  4
   This appeal appears to be the first time the VA has proposed this read-
ing. We address a proposed alternate reading of the statute, which was
argued by the VA before the district court, in the next section.
17208           AMERICAN FEDERATION v. PRINCIPI
clearly refers to and defines the types of orders that may serve
as the basis for such petitions, and despite the fact that these
clauses are not grammatically separated in a way to indicate
that any of the subsequent text in § 7422(e) refers to petitions
not brought under § 7123. The plain language of § 7422(e)
refers only to petitions for review or petitions for enforcement
under § 7123 of title 5. Section 7123 of title 5, in turn, specifi-
cally references petitions for review and petitions for enforce-
ment as means to challenge or enforce certain FLRA orders.
Moreover, the types of petitions for judicial review are limited
by § 7123 and would have precluded judicial review of an
FLRA order in the instant case.

   [3] Although all parties would agree that § 7422(e) was not
intended to prevent all forms of judicial review, they disagree
about whether any meaningful review could take place under
the VA’s construction of the statute. Because § 7422(d) pro-
hibits review by any other agency, it is undisputed that the
FLRA would not have had jurisdiction over the dismissal of
the arbitration in this case. Accordingly, the D.C. Circuit
would have affirmed the FLRA’s dismissal and never reached
the merits of the arbitration in light of § 7123(a), which pro-
hibits judicial review of a petition for review of an FLRA
decision that involves the award of an arbitrator “unless the
order involves an unfair labor practice under section 7118 of
this title.” 5 U.S.C. § 7123(a)(1). Because no unfair labor
practice under § 7118 was involved in this case, as a practical
matter, an appeal from the arbitrator’s decision would be
immune from any form of substantive agency or judicial
review.

   [4] The VA asserts that the statutory construction adopted
by the district court, and urged by Appellants, renders the
phrase “or arising out of the applicability of chapter 71 of title
5 to employees in those positions” superfluous because that
clause is preceded by a clause referring to petitions brought
under § 7123 of title 5 “in any case involving employees
described in section 7421(b) of this title.” 38 U.S.C. § 7422(e)
                AMERICAN FEDERATION v. PRINCIPI            17209
(emphasis added). Although at first blush, the phrase “in any
case” appears to cover any FLRA cases involving such
employees, a closer reading of the section shows that the
words “or arising out of the applicability of chapter 71 of title
5” clause does not have independent meaning but modifies
the phrase “under section 7123 of title 5 in any case involving
employees described in section 7421(b) of this title.” We do
not believe that such a reading renders the phrase “arising out
of the applicability of chapter 71 of title 5 to employees in
those positions” superfluous because the phrase is merely a
description of a type of FLRA order that can only be reviewed
in the D.C. Circuit as opposed to other courts that may other-
wise have had jurisdiction. See 5 U.S.C. § 7123(a) and (b)
(authorizing petitions for review of FLRA orders “in the
United States court of appeals in the circuit in which the per-
son resides or transacts business” and petitions for enforce-
ment in “any appropriate United States court of appeals”);
Preminger v. Principi, 422 F.3d 815, 821 (9th Cir. 2005)
(“Section 502 gives the Federal Circuit exclusive jurisdiction
to review challenges to most actions by the Secretary of Vet-
erans’ Affairs.”). Moreover, the statute does not provide for
exclusive jurisdiction over petitions for review or enforce-
ment “in any case” involving a § 7123 order involving
§ 7421(b) employees or “in any case” arising out of the appli-
cability of chapter 71 of title 5 to such employees. Instead, the
statute’s drafters placed the phrase “in any case” after a
description of the types of petitions whose review would be
jurisdictionally limited (i.e., petitions for review or enforce-
ment under 5 U.S.C. § 7123). Therefore, based on the plain
language of the statute, we conclude that § 7422(e) does not
grant exclusive jurisdiction to the D.C. Circuit over petitions
involving § 7421(b) employees or the applicability of chapter
71 or title 5, unless those petitions also arise from an FLRA
order as described in 5 U.S.C. § 7123. Because no such order
was issued in this case, we find that the district court properly
asserted jurisdiction.
17210           AMERICAN FEDERATION v. PRINCIPI
  3.    The VA’s Second Proposed Reading of § 7422(e)

   [5] The VA’s admittedly “second best construction” of the
statute suggests that the various canons of statutory construc-
tion, including the doctrine of the last antecedent, should con-
trol our reading of the statute. Under the doctrine of the last
antecedent, qualifying phrases are to be applied to the words
or phrase immediately preceding the qualifier and are not to
be construed as modifying more remote phrases. See
Bingham, Ltd. v. United States, 724 F.2d 921, 926 (11th Cir.
1984). The VA argues that, applying the doctrine of the last
antecedent, “under section 7123 of title 5” modifies only the
words “petition for enforcement” and not the words “petition
for judicial review.”

   We find this argument unpersuasive. The implication of the
VA’s argument is that any petition for review involving a
§ 7142(b) employee, irrespective of the subject matter, would
have to be litigated in the D.C. Circuit. This reading is incon-
sistent with our reading of the text, as discussed above, as
well as the statutory framework and history of § 7422(e).

   [6] Nothing in the text of § 7422(e), or case law addressing
judicial review of VA actions, suggests that Congress
intended to grant exclusive jurisdiction to the D.C. Circuit
over all petitions for review brought by VA professionals in
any context. See, e.g., Preminger, 422 F.3d at 821 (discussing
the Federal Circuit’s exclusive jurisdiction over most actions
of the VA Secretary). When, as in this case, the doctrine of
the last antecedent is inconsistent with the plain language and
the legislative history of the statute, a court must adhere to a
logical plain reading of the statute. See May Trucking Co. v.
Or. DOT, 388 F.3d 1261, 1268 (9th Cir. 2004) (holding that
the doctrine of the last antecedent only applies “where no con-
trary intention appears”); Nw. Forest Res. Council v. Glick-
man, 82 F.3d 825, 833 (9th Cir. 1996) (“[W]e are not
inflexible in our application of the doctrine of last antecedent,
and have recognized that the principle must yield to the most
                AMERICAN FEDERATION v. PRINCIPI             17211
logical meaning of a statute that emerges from its plain lan-
guage and legislative history.”). Section 7422(e), plainly
refers to both a “petition for judicial review” and a “petition
for enforcement” in connection with the phrase “under section
7123 of title 5.” Moreover, 5 U.S.C. § 7123(a) provides that
“[a]ny person aggrieved by any final order of the Authority
other than [certain exceptions] . . . may . . . institute an action
for judicial review.” Section 7123(c) goes on to provide that
“[u]pon the filing of a petition under subsection (a) of this
section for judicial review or under subsection (b) of this sec-
tion for enforcement, . . . the court . . . shall have jurisdiction
of the proceeding.” We conclude that Congress must have
used the term “petition for judicial review” and the term “peti-
tion for enforcement” in the phrase “petition for judicial
review or petition for enforcement under 7123” in the sense
those terms are used in 5 U.S.C. § 7123 and therefore
intended that petitions for review be treated in the same fash-
ion as petitions for enforcement vis-à-vis § 7422(e). We turn
now to the legislative history of § 7422(e) and conclude that
it is also inconsistent with the grammatical constructions
offered by the VA.

  4.   The Legislative History of § 7422(e)

   [7] While we base our conclusion that § 7422(e) does not
provide exclusive jurisdiction over this case to the D.C. Cir-
cuit on the plain language of the statute, we examine the legis-
lative history to ensure that our reading comports with
Congress’ intent and to demonstrate that the alternative gram-
matical readings offered by the VA are inconsistent with the
logical meaning of the language in light of the section’s his-
tory. We find that the legislative history of § 7422(e) reveals
that it was developed independently of § 7422(d) and that the
two subsections are concerned with entirely different subject
matters.

   Although § 7422 was not enacted until 1991, its origins lay
in a congressional bill proposed in 1990. The original, 1990
17212           AMERICAN FEDERATION v. PRINCIPI
version of § 7422(d) provided only one exemption from arbi-
tration and review by other agencies of grievances involving
issues of professional conduct or competence. The 1990 ver-
sion also precluded administrative review by any other agency
and precluded review of the VA Secretary’s determination by
any court. See H.R. Rep. No. 101-466 at 55 (1990) (proposed
as new 38 U.S.C. § 4108(b)(2)). The 1990 House version of
§ 7422(e) also contained almost identical language to the final
1991 version, discussed above, and thereby provided for judi-
cial review of certain petitions by the D.C. Circuit. The doctor
and the union representing him argue that this development
shows that Congress intended to treat § 7422(d) review dis-
tinctly from § 7422(e) review. Moreover, Plaintiffs-
Appellants suggest that the subsequent removal of the phrase
“by any court” from § 7422(d), before it was passed in 1991,
shows that Congress intentionally removed the limits of judi-
cial review of § 7422(d) except to the extent that § 7422(e)
provides for the D.C. Circuit’s exclusive review of FLRA
orders involving certain employees or subject matter related
to those employees.

   The Explanatory Statement of the House-Senate conferees
discussed the deletion of any form of judicial review of
§ 7422(d) determinations under a heading entitled “Review of
Secretary’s Collective Bargaining Determinations.” 137
Cong. Rec. 8802 (1991). By contrast, the Explanatory State-
ment discussed the adoption of what would become § 7422(e)
under the separate heading of “Jurisdiction for Certain
Cases.” To further support the significance of this deletion,
Appellants cite the comments of the bill’s principal sponsor
and then Chairman of the Veterans’ Affairs Committee, Sena-
tor Cranston, who said:

    Although the compromise agreement does not pro-
    vide for independent agency review of the Secre-
    tary’s negotiability decisions based on a professional
    conduct or competence interpretation, the prohibi-
    tion against court review of such decisions has been
                AMERICAN FEDERATION v. PRINCIPI            17213
    eliminated. . . . [P]rofessional conduct or compe-
    tence would be reviewable by a court of competent
    jurisdiction — most likely a Federal district court.
    . . . [T]he compromise agreement does provide for a
    check on the Secretary’s exercise of discretion in this
    area, which is of critical importance to maintaining
    a situation of good faith bargaining.

137 Cong. Rec. 8296 (Apr. 17, 1991) (emphasis added). The
VA argues that Senator Cranston’s statement was not a clear
expression of legislative intent because he stated that judicial
review would “most likely” be conducted by a district court.
It is also true that remarks made by Senator Cranston regard-
ing this bill recognize that the “statute as enacted is a compro-
mise between potentially conflicting purposes.” Nat’l Fed’n
of Fed. Employees Local 589 v. F.L.R.A., 73 F.3d 390, 394
(D.C. Cir. 1996). The VA also suggests that we reject Appel-
lants’ argument regarding the “structure of the predecessor
statute” because there is no legislative history for the pre-
decessor. Despite these objections by the VA, we find that the
changes between the 1990 proposal and the final 1991 law
support Plaintiffs-Appellants’ view and further support our
rejection of the VA’s alternate grammatical constructions of
§ 7422(e).

  B.   The VA Permissibly Excluded Its Decision From
  Review By An Arbitrator Or Any Other Agency

   Having concluded that the district court had jurisdiction to
hear this matter we turn now to the grant of summary judg-
ment. Our review of the district court’s decision to grant sum-
mary judgment is de novo. See, e.g., Universal Health Servs.,
Inc. v. Thompson, 363 F.3d 1013, 1019 (9th Cir. 2004). The
district court’s decision, granting summary judgment to the
VA, was based upon the agency’s application of 38 U.S.C.
§ 7422(b) and (d). Generally, we give great deference to
agency interpretations involving statutes under which the
agency operates. In the instant case, however, that interpreta-
17214           AMERICAN FEDERATION v. PRINCIPI
tion is not entitled to the full level of deference typically
afforded administrative decisions pursuant to Chevron,
U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S.
837, 842-43 (1984), because the agency’s decision was issued
in the form of an opinion letter and not as the result of a for-
mal proceeding. See Christensen v. Harris County, 529 U.S.
576, 587 (2000) (holding that an agency’s interpretations
under such circumstances are “entitled to respect . . . but only
to the extent that those interpretations have the power to per-
suade” (citations and internal quotations omitted)).

   [8] The Plaintiff doctor and the union representing him
challenge the district court’s conclusion that the VA had
exempted itself properly from arbitration because resolution
of Savlov’s grievance would involve issues of “professional
conduct or competence.” Section 7422(c) defines “profes-
sional conduct or competence” as meaning either “(1) Direct
patient care” or “(2) Clinical competence.” Appellants argue
that this exclusion applies only to a “genuine health care
determination,” and not to a case alleging discrimination, but
the VA challenges this extra-statutory standard and advocates
a more expansive reading of the statute. The parties dispute
whether the statute’s text, legislative intent, and policy con-
siderations favor consideration of the VA’s anticipated
defenses as a basis for exempting the VA from arbitration and
administrative review.

   Appellants contend that the instant grievance is based on
allegations of discrimination and therefore an allegation that
the decision was not based upon “direct patient care” or “clin-
ical competence.” Appellants’ claim, that the basis of the dis-
continuation of Savlov’s specialty pay was age and gender
discrimination, is supported by his allegations that younger
physicians continued to receive surgical duties and that a
female surgeon of similar age was also reassigned from surgi-
cal duties but continued to receive specialty pay for surgery
that she was not performing. The non-discriminatory reasons
offered by the VA can be found in the decision paper issued
                   AMERICAN FEDERATION v. PRINCIPI                    17215
by the VA Under Secretary in this case, and include: (1) the
“specific patient care needs” created by a decrease in the sur-
gical workload and a substantial backlog of C&P examina-
tions, which Dr. Savlov was competent to perform; (2) the
increasingly limited surgical privileges held by Dr. Savlov as
a result of a privileging process that serves as an “indicator of
a physician’s competence to perform particular surgical proce-
dures”;5 and (3) the fact that reassignment of another surgeon
to address the backlog of compensation and pension examina-
tions would have affected the availability of surgeons that
were competent to perform a fuller range of surgical proce-
dures needed by VA patients. 6

   The CBA clearly was intended to cover grievances related
to discrimination. See 1997 Master Agreement Between the
Department of Veterans Affairs and the American Federation
of Government Employees (describing three types of suits,
including discrimination suits, that may be filed “under the
statutory procedure or the negotiated grievance procedure but
not both”). The CBA also specifies that disputes regarding the
scope of § 7422(b) exemptions would be resolved in accor-
dance with the “VA Partnership Council’s Guide to Collective
Bargaining and Joint Resolution of 38 USC Section 7422
Issues,” which provides:

      [T]he definition of professional conduct and compe-
      tence has often been the subject of dispute between
  5
     Apparently the “peer review” committee at the hospital in which Dr.
Savlov worked had severely limited the types of surgical procedures he
could perform.
   6
     Apart from his declining surgical qualifications and his competence to
help with backlogged primary care, Dr. Savlov was often tardy and had
been counseled on other issues. Appellants object to these facts to the
extent they may not have all been before the Under Secretary when he
made his determination. We find it unnecessary to review each of these
facts because the facts that were undisputedly before the Under Secretary
at the time of his decision are sufficient to establish that the determination
was within the VA’s discretion.
17216          AMERICAN FEDERATION v. PRINCIPI
    labor and management. The Secretary has decided
    that VA will apply the exception to bargaining based
    on professional conduct or competence “narrowly
    to matters clearly and unequivocally involving
    direct hand-on patient care or clinical compe-
    tence.” Therefore, labor and management parties
    must be mindful of the fact that many matters affect-
    ing the working conditions of Title 38 employees
    affect patient care only indirectly and therefore
    should be subject to bargaining.

    No contract or arbitration should attempt to define
    the care which is given to patients. Nor should a con-
    tract or arbitration define the professional qualifica-
    tions for positions or whether particular employees
    meet those qualifications.

(emphasis in original).

   [9] Although Dr. Savlov and the union may have relied
upon indications by the VA that it would not claim an exemp-
tion in discrimination cases, we agree with the district court,
which found that the VA’s prior statements do not prevent the
VA from arguing for an application of § 7422(b) exemptions
in such cases. The VA argues that the resolution of the dis-
crimination claims in this case would give rise to defenses
based upon the VA’s view of patient care and the relative
competence of the hospital’s employees in connection with
those services. We find it unnecessary to discuss the legisla-
tive history, cited by Appellants, indicating that the “profes-
sional conduct or competence” exemption ought to be
narrowly applied, because the instant grievance involves
issues that plainly fall within a narrow construction of the
exemption. We find that the grievance is related to “direct
patient care” because the grievance challenged the ability of
the VA to provide adequate patient care by reducing the back-
log of C&P examinations and by ensuring that the hospital’s
available surgeons were competent to perform a wide array of
                AMERICAN FEDERATION v. PRINCIPI            17217
surgical procedures. In addition, the grievance challenged the
VA’s determination of Savlov’s relative clinical competence,
as compared to the clinical competence of other doctors, with
respect to their ability to perform certain surgical procedures
and C&P examinations.

   [10] Appellants argue that the VA’s unproven defenses
ought not serve as the basis for a § 7422(b) exemption
because a completely unfounded, factually incorrect defense
concerning or arising from an issue of patient care could pre-
vent further substantive review of a grievance. Appellants
also argue that the VA could prevent any meaningful develop-
ment of an administrative record for judicial review by effec-
tively ending the factual inquiry into a grievance at the time
of the VA’s determination that the grievance falls within one
of § 7422(b)’s exemptions. We find Appellants’ arguments
unpersuasive for two reasons.

   First, a holding for Appellants would result in an equally
troubling result. Decisions that are clearly related to patient
care could be challenged in arbitration or other agency forums
by grievants who simply craft the language of their com-
plaints to avoid mention of “direct patient care” or “clinical
competence.” Congress has entrusted the VA Secretary with
the sole authority to determine whether a § 7422(b) exemp-
tion applies to a grievance, and the language of the statute
does not limit the VA’s application of such exemptions to
cases that explicitly raise such issues on the face of the griev-
ance. See 38 U.S.C. § 7422(d) (“[W]hether a matter or ques-
tion concerns or arises out of [a § 7422(b) exemption] shall be
decided by the Secretary and is not itself subject to collective
bargaining and may not be reviewed by any other agency.”).

   Second, even if a record had been developed by an arbitra-
tor who determined that the VA’s proffered defenses were
pre-textual, the VA still would have the right to declare itself
exempt from any adverse determinations by an arbitrator or
other agency. See AFGE, Local 446 v. Principi, 404 F. Supp.
17218          AMERICAN FEDERATION v. PRINCIPI
2d 14, 25 (D.D.C. 2005) (“[T]he matter [of a § 7422(b)
exemption] may be raised at any stage of the FLRA proceed-
ings, even if the result is to reverse an arbitration award.”
(emphasis added)).

   Appellants also argue that a finding by the arbitrator that
the discontinuance of Savlov’s specialty pay and surgical
duties was not the result of unlawful discrimination would
require only that the arbitrator determine whether the VA’s
motive was discriminatory and not whether the purported rea-
sons were sound decisions vis-à-vis patient care. We find this
argument disingenuous because a determination of the VA’s
motives necessarily would involve an examination of the
legitimacy of the non-discriminatory reasons offered by the
VA to justify the adverse action. Therefore, we conclude that
the reasons offered by the VA have the “power to persuade”
us that the VA’s application of the “professional conduct or
competence” exemption was not beyond the VA’s discretion
in this case.

  In light of our conclusion that Dr. Savlov’s claim was
exempt from arbitration or further review by any agency
because it related to “professional conduct or competence,” as
defined by § 7422(c), we find it unnecessary to address the
VA’s claim that the district court erred by denying the appli-
cability of the exemption based on “the establishment, deter-
mination, or adjustment of employee compensation.”

  AFFIRMED.