Court Opinion

ID: 817349
Source: CourtListenerOpinion
Date Created: 2013-02-01 01:49:44.846323+00
Date Added: 2024-06-11T15:36:36.612415
License: Public Domain

UNITED STATES COURT OF APPEALS FOR VETERANS CLAIMS

                                                    No. 08-3287

                                          LARRY D. ERVIN , Appellant,

                                                           v.

                                              ERIC K. SHINSEKI,
                                   Secretary of Veterans Affairs, Appellee.

                              On Appeal from the Board of Veterans' Appeals

(Argued December 8, 2010                                                            Decided March 9, 2011)

         Kenneth M. Carpenter, of Topeka, Kansas, for the appellant.

       James R. Drysdale, with whom Will A. Gunn, General Counsel; R. Randall Campbell,
Assistant General Counsel; and Richard Mayerick, Deputy Assistant General Counsel, all of
Washington, D.C., were on the brief for the appellee.

         Before MOORMAN, DAVIS, and SCHOELEN, Judges.

         DAVIS, Judge: On July 19, 2010, this Court set aside a June 18, 2008, Board of Veterans'
Appeals (Board) decision to the extent it denied the appellant, Larry D. Ervin, service connection
for a chronic acquired psychiatric disorder that had been variously diagnosed. Ervin v. Shinseki, U.S.
Vet. App. No. 08-3287 (mem. Dec. July 19, 2010). The Court also affirmed the Board's denial of
service connection for post-traumatic stress disorder (PTSD). Id. at 4-5.
         On July 13, 2010, before the Court issued that decision, VA published final notice of its
amendment to 38 C.F.R. § 3.304(f), and the regulation became immediately effective and expressly
applicable to cases pending before VA on July 13, 2010. 75 Fed. Reg. 39,843-52 (2010).1 The
amendment is "liberalizing" in that it allows, in some circumstances, for a noncombat veteran's lay
testimony to establish the occurrence of a claimed stressor so long as a psychiatrist or psychologist

         1
           On July 15, 2010, VA issued a correction to the effective date noted in the final rule from July 12, 2010, to
July 13, 2010. 75 Fed. Reg. 41,092 (July 15, 2010). In subsequent references to the final rule, the Court will use the
correct effective date of July 13, 2010.
confirms that the testimony is sufficient to support a PTSD diagnosis and that symptoms are related
to that stressor. 75 Fed. Reg. at 39,843. In light of the promulgation of this rule, the appellant filed
a motion for single-judge reconsideration or, in the alternative, referral for a panel decision.
Accordingly, the panel is now presented with the question whether, given that the Secretary clearly
intended that the newly amended 38 C.F.R. § 3.304(f) be applicable to cases pending before VA, the
Court should apply the amendment to Mr. Ervin's claim because it was pending before this Court
on July 13, 2010. For the reasons that follow, the Court will withdraw the July 19, 2010, single-
judge decision and issue this opinion in its stead. The Court will set aside the June 18, 2008, Board
decision and remand Mr. Ervin's claim for VA to consider the newly amended regulation.

                                        I. BACKGROUND
        Larry D. Ervin served on active duty in the U.S. Navy from April 1970 to December 1970.
Mr. Ervin claims that while he was in basic training, he was on a tower that fell, causing him to
plunge into deep water and nearly drown. He contends that this incident was extremely traumatic.
Record (R.) at 73. After service, he applied for service connection for PTSD. Following an appeal
of VA's denial of that claim, the Board, on June 18, 2008, found that
        the veteran has not submitted sufficient evidence to allow for verification of his
        claimed stressors. The Board again notes that a noncombat veteran's testimony alone
        does not qualify as credible supporting evidence of occurrence of an in-service
        stressor as required by 38 C.F.R. § 3.304(f). The diagnoses of service-related PTSD
        are unsupported by the record, based as they were on unreliable and unverified
        information provided by the veteran. The Board is not required to accept a veteran's
        uncorroborated account of his military experiences or the opinions of psychiatrists
        or psychologists that are based on such an uncorroborated history provided by the
        veteran.

R. at 20 (citation omitted).
        Until the 2010 amendment to § 3.304(f)(3), lay testimony alone was insufficient to confirm
the existence of a claimed in-service stressor for a noncombat veteran. 38 C.F.R. § 3.304(f) (2009);
see Sizemore v. Principi, 18 Vet.App. 264, 269-70 (2004). The amended version of 38 C.F.R.
§ 3.304(f)(3)(2010), however, now provides that
            [i]f a stressor claimed by a veteran is related to the veteran's fear of hostile

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         military or terrorist activity and a VA psychiatrist or psychologist, or a psychiatrist
         or psychologist with whom VA has contracted, confirms that the claimed stressor is
         adequate to support a diagnosis of posttraumatic stress disorder and that the veteran's
         symptoms are related to the claimed stressor, in the absence of clear and convincing
         evidence to the contrary, and provided the claimed stressor is consistent with the
         places, types, and circumstances of the veteran's service, the veteran's lay testimony
         alone may establish the occurrence of the claimed in-service stressor. For purposes
         of this paragraph, "fear of hostile military or terrorist activity" means that a veteran
         experienced, witnessed, or was confronted with an event or circumstance that
         involved actual or threatened death or serious injury, or a threat to the physical
         integrity of the veteran or others, such as from an actual or potential improvised
         explosive device; vehicle-imbedded explosive device; incoming artillery, rocket, or
         mortar fire; grenade; small arms fire, including suspected sniper fire; or attack upon
         friendly military aircraft, and the veteran's response to the event or circumstance
         involved a psychological or psycho-physiological state of fear, helplessness, or
         horror.

75 Fed. Reg. at 39,852 (to be codified at 38 C.F.R. § 3.304(f)(3)). This final rule stated that it
expressly applies to an application for service connection for PTSD that
         [(A.)] Is received by VA on or after July 13, 2010;
         [(B.)] Was received by VA before July 13, 2010 but has not been decided by a VA
         regional office as of that date;
         [(C.)] is appealed to the Board of Veterans' Appeals (Board) on or after July 13,
         2010;
         [(D.)] Was appealed to the Board before July 13, 2010 but has not been decided by
         the Board as of that date; or
         [(E.)] Is pending before VA on or after July 13, 2010 because the Court of Appeals
         for Veterans Claims (Veterans Court) vacated a Board decision on the application
         and remanded it for readjudication.

75 Fed. Reg. 39,843 (emphasis added).
         If the Court determines that VA should consider the applicability of this 2010 amendment
to Mr. Ervin's claim, the Board's rationale for denying service connection on June 18, 2008, would
be inadequate because the amended regulation provides that a veteran's noncombat testimony alone
can be credible supporting evidence of an in-service stressor.2

         2
           The Court makes no decision as to whether the factual basis for the appellant's claim of PTSD falls within the
ambit of the revised regulation. That factual determination would first have to be made by the Board upon a remand.

                                                           3
                              II. ARGUMENT OF THE PARTIES
       Mr. Ervin argues that VA's amended regulation applies to his claim, and that, therefore, his
lay testimony may now be sufficient to establish the occurrence of an in-service stressor. Citing
Karnas v. Derwinski, 1 Vet.App. 308 (1991), he contends that, where a regulation changes after a
claim has been filed or reopened but before the administrative or judicial appeal process has been
concluded, the version more favorable to appellant should apply.             Appellant's Motion for
Reconsideration at 3. He acknowledges that subsequent cases modified the holding in Karnas;
however, he avers that those cases dealt with whether a new law could be applied retroactively where
the law did not expressly mention retroactivity. Appellant's Motion for Reconsideration at 3-4
(citing Kuzma v. Principi, 341 F.3d 1327 (2003); Dyment v. Principi, 287 F.3d 1377 (2002); and
Bernklau v. Principi, 291 F.3d 795 (2002)). He contends that, in this case, VA clearly intended that
the 2010 amendment would have specific retroactive effect to certain pending claims, and thus, the
Court should apply the law in effect at the time it renders its decision (i.e., here the 2010 amendment
to § 3.304(f)). Consequently, he argues that the Court should remand this case for readjudication
based on a liberalizing change in the law favorable to his claim.
       The Secretary responds that, to the extent that it is relevant here, Karnas has been overruled,
and thus Mr. Ervin's contention that Karnas applies is without merit. Secretary's Response at 2
(citing Kuzma, supra). The Secretary argues that Kuzma held that laws cannot be applied
retroactively unless the express language of the law requires it. Here, he argues that regarding
appeals pending before the Court, VA has provided plain authoritative direction in the 2010
amendment that retroactivity does not apply. Specifically, he urges the Court to read the specific
omission of "cases pending before the Court" from the language in the 2010 amendment regarding
"Applicability Date" as a signal of the Secretary's intent not to provide a retroactive effect to such
claims. The Secretary insists that the new regulation is only to be applied if the Court were to have
first found remandable error based on the pre-amendment regulation.

                                          III. ANALYSIS
       In determining whether the 2010 amendment applies to cases pending before the Court,
precedent from the U.S. Supreme Court and the U.S. Court of Appeals for the Federal Circuit

                                                  4
(Federal Circuit) guides our analysis. In Kuzma, the Federal Circuit expressly overruled Karnas to
the extent that its application would conflict with binding authority from the Federal Circuit or the
Supreme Court. See Tarver v. Shinseki, 557 F.3d 1371, 1377 (Fed. Cir. 2009). Whatever remains
of Karnas, the caselaw is clear that a regulation is not to be applied retroactively unless the
regulation is intended to be retroactive. See Kuzma, 341 F.3d at 1328 ("'congressional enactments
and administrative rules will not be construed to have retroactive effect unless their language
requires this result.'" (quoting See Landgraf v. USI Film Prods., 511 U.S. 244, 272 (1994))).
Therefore, when a veteran's claim implicates a statute or regulation enacted during the pendency of
that claim, the first task is to determine whether the statute or regulation expressly speaks to its
temporal reach. See Landgraf, 511 U.S. at 280. It is only where the statute or regulation contains
no such express command that a court must determine whether the new statute or regulation "would
have retroactive effect." Id. A statute or regulation will have an impermissible retroactive effect if
its application "would impair rights a party possessed when he acted." Id.
       If VA did expressly speak to the temporal reach of the regulation, then the Court should apply
the regulation as indicated by the language of the regulation. If VA did not expressly speak to the
temporal reach of the regulation, then the question is whether the application of the regulation would
have an impermissible retroactive effect. See id. at 280. Especially relevant here, where the intent
for retroactive application is clear in a law that has changed favorably for an appellant, appellate
courts are directed "'to apply the law in effect at the time it renders its decision,'" unless doing so
would result in manifest injustice. Id. at 264 (quoting Bradley v. Sch. Bd. of City of Richmond, 416
U.S. 696, 711 (1974)); see also Plaut v. Spendthrift Farm, Inc., 514 U.S. 211, 226 (1995); Thorpe
v. Hous. Auth. of City of Durham, 393 U.S. 268, 282 (1969). Importantly, "[this rule] applies with
equal force where the change is made by an administrative agency acting pursuant to legislative
authorization." Id. at 282.
       Here, if the Court deems the Secretary's intent for retroactive application to be clear, then the
Court has clear directive from the Supreme Court to apply the favorable regulation to cases pending
when the regulation was promulgated. The question, therefore, centers around the Secretary's intent.
       In the instant case, the Secretary's intent can be determined by the language in the final rule
because the Secretary expressly spoke to the temporal reach. In the final rule, the Secretary stated

                                                  5
that the amended regulation would apply to applications for service connection for PTSD that were
pending at VA on the effective date of the amended regulation, July 13, 2010, whether the cases
were pending at the regional office (RO), pending at the Board, and not yet decided by the Board or
pending at the RO or Board after a remand from the Court. 75 Fed. Reg. at 39,843. In addition, the
Secretary concedes that the regulatory history "expressly contemplates retroactive application of the
amendment." Oct. 1, 2010, Secretary's Response at 3. Although the Secretary expressly made the
regulation retroactive to cases pending at VA, he now argues to this Court that certain pending cases,
such as those pending before the Court, are not eligible for the application of the regulation. As
support, he argues that the regulation itself does not expressly state that it applies to cases pending
before the Court on July 13, 2010. See 75 Fed. Reg. at 39,843. However, the Court does not take
the rule's silence with respect to cases pending at the Court to mean that the amendment does not
apply to cases before the Court. Instead, the absence of language in the final rule concerning cases
pending at the Court supports the understanding that the Secretary believed he lacked authority to
dictate to the Court that a certain case or group of cases be remanded for application of the
regulation. In this regard, both parties agreed at oral argument that the Secretary cannot regulate the
Court's treatment of its pending cases. See 38 U.S.C. § 501(a) (providing that "[t]he Secretary has
authority to prescribe all rules and regulations which are necessary or appropriate to carry out the
laws administered by the Department and are consistent with those laws"). Therefore, while the
omission of reference to the Court in the regulation may have been purposeful, no intent can be read
from this other than the Secretary's tacit acknowledgment of the statutory confines of his authority.
       A conclusion that the amended regulation applies to cases pending before the Court on the
effective date of the final rule is consistent with the Secretary's position in Kakuk v. Shinseki, No.
2010-7023, 2011 U.S. App. Lexis 2594 (Fed. Cir. Feb. 9, 2011) (nonprecedential order), which
involved a final rule that expressly stated that it, too, applied to cases pending at VA on the date of
publication of the final rule and was silent as to its application to cases pending at a court. There,
the Secretary filed a motion to vacate the decision of this Court and to direct this Court to remand
the matter to the Board and RO for consideration of a final rule affording a presumption of service
connection for Parkinson's Disease based upon exposure to herbicides. Kakuk, 2011 U.S. App. Lexis
2594, at *1. The Federal Circuit granted the Secretary's motion. Id. at *2. Significantly, the final

                                                  6
rule was promulgated on August 31, 2010, while the appeal was pending at the Federal Circuit. The
final rule contained the following description regarding its application:
       Applicability Date: This final rule shall apply to claims received by VA on or after
       the date of publication of the final rule in the Federal Register and to claims pending
       before VA on that date. Additionally, VA will apply this rule in readjudicating
       certain previously denied claims as required by court orders in Nehmer v. Department
       of Veterans Affairs, No. CV-86-6161 TEH (N.D. Cal.) (Nehmer).

75 Fed. Reg. 53,202 (Aug. 31, 2010). Accordingly, language in the final rule expressly stated that
it applied to claims pending on the date of the rule, and the absence of language in the final rule
specifically concerning its application to cases pending at the court did not detract from application
of the regulation to all pending cases, including those pending at the courts.
       The Secretary next argues that the new regulation applies to decisions pending before the
Court only in cases where the Court finds remandable error based on the pre-amendment regulation.
Secretary's Response at 3. The Secretary's argument is based solely on the rule's language that "[t]his
final rule applies to an application for service connection for PTSD that . . . is pending before VA
on or after July 13, 2010[,] because the Court of Appeals for Veterans Claims (Veterans Court)
vacated a Board decision on the application and remanded it for readjudication." See 75 Fed. Reg.
39, 843. However, the regulation contains no express requirement that the Court find an error based
on the pre-amendment regulation and the Court finds no reason to imply such a prerequisite. Simply
because a Board decision was "vacated" does not necessarily imply that vacatur resulted from error.
See Gordon v. Principi, 15 Vet.App. 124 (2001) (vacatur and remand for Board to consider in first
instance applicability of regulation and to make any required factual determinations as to whether
the appellant meets the requirements of the regulation); see also Gordon v. Principi, 17 Vet.App.
221, 224 (2003) (denying the application for attorney fees and expenses under the Equal Access to
Justice Act, 28 U.S.C. § 2412(d) (EAJA), based on holding that disposition of underlying merits
decision was not predicated upon administrative error, and therefore, the appellant was not an EAJA
prevailing party).
       The regulatory history or supplementary information accompanying the final rule, while
silent as to cases pending before the Court, provides some insight into the Secretary's intent. See
75 Fed. Reg. 39,843-852. Specifically, in revising § 3.304(f), the Secretary identified that

                                                  7
"[i]mprove[d] timeliness, consistent decision-making, and equitable resolution of PTSD claims are
the intended results of the revised regulation." 74 Fed. Reg. 42,617, 42,618 (2009) (emphasis
added). From this stated purpose, this Court can discern that equity is a main goal of this newly
amended regulation. Therefore, the Secretary's litigation position that the regulation is to apply to
claims pending before the Board and to those remanded by the Court for error based on the prior
regulation, but not to those pending before this Court on July 13, 2010, is inconsistent with the stated
purpose of the amendment. See 74 Fed. Reg. at 42,618. In effect, the Secretary's interpretation
would deprive hundreds of veterans the benefit of the more liberal PTSD evidentiary standards while
others could benefit merely because of their place in the appeals process. Applying the amended
regulation to cases pending at the Court at the time of the promulgation in July 2010, however, is
consistent with the stated purpose of the new rule.
        In addition, the regulatory history included a discussion of the "Applicability Date," which
sheds light on the concerns of the Secretary at the time of the rule's promulgation. 75 Fed. Reg.
39,850-51. There, the Secretary responded to commenters who "suggested that the rule should be
applied retroactively to claims that were finally denied by VA before the effective date of the
regulation [(July 13, 2010)]." Id. at 39,851 (emphasis added). The Secretary stated: "We do not
adopt these suggestions." Id. Significant, however, is the reason proffered by the Secretary. The
asserted reason in the regulatory history is based on the Secretary's interpretation of when a claim
is "finally" decided as discussed in Cook v. Principi, 318 F.3d 1334, 1339 (Fed. Cir. 2002) (en banc).
The Secretary stated:
        Congress has provided that, once a decision on a claim for veterans benefits becomes
        "final," "the claim will not thereafter be reopened or allowed, except as may
        otherwise be provided by regulations not inconsistent with [title 38, U.S. Code]." 38
        U.S.C. [§] 7105(c). There are only two exceptions to this statutory rule of finality.
        Cook , [318 F.3d at 1339]. The Secretary must reopen a previously denied claim if
        new and material evidence is submitted, and a final VA decision is subject to revision
        based on clear and unmistakable error. 38 U.S.C. [§§] 5108, 5109A, and 7111.
        Whether a final decision involves clear and unmistakable error is determined under
        the law that was in effect when the decision was made. Russell v. Principi, 3 Vet.
        App. 310, 313-14 (1992) (en banc). This rule was not and will not have been in effect
        for a claim that was finally denied before the rule's effective date. Therefore, VA will
        not apply the rule to claims that were finally denied before the effective date of the
        rule unless new and material evidence is submitted.

                                                   8
75 Fed. Reg. 39,851 (emphasis added).
         Our caselaw also establishes that a claim is not finally decided where the appellant files a
timely appeal from a Board denial of the claim. See e.g., May v. Nicholson, 19 Vet.App. 310, 317
(2005) (noting that "a CUE [clear and unmistakable error] claim (or any collateral attack) cannot lie
as to a decision that is still open to direct review" and that "'finality' for the purposes of the
availability of judicial review is not the same 'finality' that enables an appellant to file a CUE claim
or other collateral attack" (emphasis omitted)). Cases currently pending on appeal before the Court
are not final until "the expiration of the time allowed for filing . . . a [N]otice of [A]ppeal" from the
Court's decision in the case or at a later date if a timely appeal is taken. 38 U.S.C. § 7291(a). Mr.
Ervin's case was on appeal before this Court on July 13, 2010, when the new regulation was
promulgated. In such cases, the Board decision is not final and the claim is pending.3 Accordingly,
whether the claim was pending before VA on remand from the Court on or after July 13, 2010, or
the claim was pending on appeal before this Court on July 13, 2010, under both circumstances, the
claim has not yet been "finally" decided when the regulation was promulgated. To the extent the
Secretary relies on the concept of finality to restrict application of the amended regulation, the
argument is without merit.
         The Court notes that despite a procedural similarity, this case is distinguishable from the
circumstances in Bernklau, supra, which addressed section 3(a) of the Veterans Claims Assistance
Act of 2000 (VCAA) (pertaining to VA's duties to notify and to assist). Both cases involve a
proceeding that was complete before the Agency, but which was on appeal at the Court at the time
the new law or regulation was enacted or promulgated. In Bernklau, the Federal Circuit concluded
that section 3(a) of the VCAA, Pub. L. No. 106-475, 114 Stat. 2096, 2096-2097, did not apply

         3
            W here, however, proceedings before VA are complete (i.e., the Board has issued a decision) and the claimant
had not yet filed a notice of appeal to this Court from the final Board decision at the time of enactment of the new law
(i.e., the notice of appeal is filed within 120 days of Board decision but after the enactment of new law), the Board
decision is final and the Court cannot remand for application of the new law if the new law was not intended to be given
retroactive effect. See Hayslip v. Principi, 364 F.3d 1321, 1326 (Fed. Cir. 2004) (holding that this Court erred in
remanding claim for application of section 3(a) of the VCAA). Our discussion of finality above is not inconsistent with
Hayslip because of the procedural distinction between the two cases – in Hayslip the discussion of the finality of the
Board decision hinged on whether a notice of appeal had been filed at the time of the enactment of the VCAA and here
there is no dispute that the regulation was promulgated after the notice of appeal had been filed. In any event, regardless
of this distinction, Hayslip is not helpful because here, as discussed below, we are dealing with a regulation that was
intended to be given retroactive effect.

                                                            9
retroactively to require that proceedings that were complete before VA and were on appeal to this
Court be remanded for readjudication under the new statute. 291 F.3d at 806. The Federal Circuit
reasoned that section 3(a), unlike section 4 of the VCAA (pertaining to the elimination of the well-
grounded claim requirement), was not intended by Congress to be given retroactive effect. Id. The
Federal Circuit noted that section 7 of the VCAA specifically required only the application of section
4 to pending claims, and the Federal Circuit noted that no provision of the VCAA deals specifically
with whether section 3(a) of the VCAA "should apply to non-final proceedings on direct appeal."
Id. at 805. The Federal Circuit concluded that there was "no clear direction by Congress to apply
section 3(a) of the VCAA retroactively to open proceedings." Id. at 806. The Federal Circuit,
therefore, applied the "normal rules of statutory construction" and the judicial principle that requires
a court to avoid retroactivity. Id.
        Unlike section 3(a) of the VCAA, the regulatory history accompanying the July 2010
provisions at issue here expressly speaks to the provision's temporal reach, and, as conceded by the
Secretary, "expressly contemplate[s] retroactive application of the amendment." Given the stated
purpose of the amendment, and given that the Secretary has clearly stated that the amendment to 38
C.F.R. § 3.304(f) applies retroactively to cases pending at VA on or after July 13, 2010, the Court
concludes that the Secretary's intent for retroactive application is clear and the Court will follow the
Supreme Court's directive to apply the law in existence at the time of our decision. See Landgraf,
Bradley, and Thorpe, all supra. Accordingly, the Court will set aside the Board decision and remand
the matter for consideration by the Board of the amended version of § 3.304(f). The Court notes that
where, as here, the evidence includes a current diagnosis of PTSD but the Board denied the claim
because there was no corroboration of the asserted stressor in service, a remand is warranted.
        In so holding, the Court is not persuaded by the Secretary's contention that, because he
promulgated the regulation, we should afford deference to his current position before the Court. The
Secretary's interpretations of his rules and regulations will only be given deference as long as they
are not inconsistent with the regulation or otherwise plainly erroneous. Smith v. Nicholson, 451 F.3d
1344, 1349 (Fed. Cir. 2006). The Secretary may not attempt to subvert the plain language of the
regulation simply by adopting a litigating position contrary to it. See Auer v. Robbins, 519 U.S. 452,
462 (1997) (holding that agency positions adopted in response to litigation, or those adopted as a

                                                  10
"'post hoc rationalization' advanced by an agency seeking to defend past agency action against
attack" are not entitled to deference from the Court (quoting Bowen v. Georgetown Univ. Hosp., 488
U.S. 204, 212 (1988))); Martin v. Occupational Safety & Health Review Comm'n, 499 U.S. 144, 156
("'[L]itigating positions' are not entitled to deference when they are merely appellate counsel's 'post
hoc rationalizations' for agency action, advanced for the first time in the reviewing court."). The
plain language of the final rule regarding applicability does not limit the new regulation to those
cases before this Court that have been remanded because of error, and the Secretary cites nothing in
support of such interpretation. Because the Secretary fails to distinguish his litigation position from
a mere post hoc rationalization, the Court will not afford the Secretary's position deference here.
         Finally, because we have determined that the Secretary's intent to give a general retroactive
application to the regulation is clear, the three-part test prescribed in Princess Cruises, Inc. v. United
States – used for determining whether a regulation would have an impermissible retroactive effect
if applied to cases pending at the time a regulation was promulgated – is not for application. See
397 F.3d 1358 (Fed. Cir. 2005);4 see also Rodriguez v. Peake, 511 F.3d 1147 (Fed. Cir. 2008)
(holding that application of three-part test in Princess Cruises was appropriate to determine whether
the amended regulation, which did not speak to the temporal reach of the regulation and which
eliminated claims for dependency and indemnity compensation benefits under the "hypothetical
entitlement" theory, has an impermissible retroactive effect, and holding that the amended regulation
did not have an unlawful retroactive effect under that test and, therefore, appling it to cases pending
at VA at the time the amended regulation took effect).
         Additionally, while the Court recognizes the questions raised by the parties with regard to
the continuing viability of the Court's holding in Karnas, supra, the Court concludes that reaching
that issue in this case is unnecessary. The Court applies Landgraf, Bradley, and Thorpe in deciding
that the newly amended regulation applies to Mr. Ervin's claim; consequently, the Court need not

         3
           The Federal Circuit provided guidance in Princess Cruises where the lawmaker's intent regarding retroactivity
was unclear. In determining whether the regulation at issue has an impermissible retroactive effect, the test in the
Princess Cruises considers (1) the nature and extent of the change in law, (2) the degree of connection between the
operation of the new rule and a relevant past event, and (3) familiar considerations of fair notice, reasonable reliance,
and settled expectations. 397 F.3d at 1364-67. The intent of the Secretary to provide retroactivity, however, to this
regulation is clear and thus the considerations set forth by the Federal Circuit in Princess Cruises are not relevant here.

                                                            11
resolve the parties' dispute regarding Karnas.

                                      IV. CONCLUSION
       On consideration of the foregoing, the July 19, 2010, Court decision is WITHDRAWN and
this opinion is issued in its stead. The Court SETS ASIDE the Board's June 18, 2008, decision and
REMANDS Mr. Ervin's service-connection claim for PTSD for further development and
readjudication consistent with this opinion.

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