Perciavalle v. McDonough

101 F.4th 829

James J. PERCIAVALLE, Claimant-Appellant v. Denis MCDONOUGH, Secretary of Veterans Affairs, Respondent-AppelleeRobert J. Fleming, Jr., Respondent

2023-1117

United States Court of Appeals, Federal Circuit

Decided: May 9, 2024

Appeal from the United States Court of Appeals for Veterans Claims in No. 20-5340, Judge Grant Jaquith.

Kenneth M. Carpenter, Law Offices of Carpenter Chartered, Topeka, KS, argued for claimant-appellant.

Ashley Akers, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for respondent-appellee. Also represented by Brian M. Boynton, Patricia M. McCarthy, Loren Misha Preheim; Jonathan Krisch, Christa A. Shriber, Office of General Counsel, United States Department of Veterans Affairs, Washington, DC.

Before Taranto, Stoll, and Stark, Circuit Judges.

Taranto, Circuit Judge.

In 2006, veteran Robert Fleming began applying to the Department of Veterans Affairs (VA), under Title 38 of the United States Code, for disability benefits for service-connected injuries. In May 2016, Mr. Fleming entered into a contingent-fee agreement with James Perciavalle for the latter to serve as his accredited representative before VA. Under the agreement, the fee was to be 20% of "arrearages awarded to [Mr. Fleming] as a result of [Mr. Perciavalle]'s representation before [VA] for [Mr. Fleming's] service connected conditions," and VA was authorized to retain 20% of arrearages to ensure payment of the fee. J.A. 50.

In March 2017, a VA regional office awarded Mr. Fleming past-due benefits—the bulk consisting of compensation reflecting an increased disability rating for service-connected post-traumatic stress disorder (PTSD), and a small portion consisting of special monthly compensation (SMC). VA then ruled that Mr. Perciavalle was statutorily barred from receiving fees on the non-SMC portion of the award. The bar was the version of 38 U.S.C. § 5904(c)(1) that preceded its amendment by the Veterans Benefits, Health Care, and Information Technology Act of 2006, Pub. L. No. 109-461, § 101, 120 Stat. 3403, 3405-09 (the "Act") (enacted Dec. 22, 2006). Mr. Perciavalle is undisputedly barred from receiving the non-SMC fees if the pre-Act version, rather than the post-Act version, applies to this matter. VA found the pre-Act version applicable based on the date on which Mr. Fleming had filed a particular notice of disagreement with the regional office regarding his PTSD benefits.

On Mr. Perciavalle's appeal, the Board of Veterans' Appeals affirmed the fee denial, agreeing with the regional office that the pre-Act version of the fee provision, not the post-Act version, applies here. The United States Court of Appeals for Veterans Claims (Veterans Court) affirmed the Board's decision. Perciavalle v. McDonough, No. 20-5340, 2022 WL 3016250 (Vet. App. July 29, 2022) (Decision). We now conclude that the Veterans Court relied on an incorrect legal standard in determining which version of § 5904(c)(1) applies, and we also conclude that the post-Act version is the applicable one, based on the material facts that are not in dispute. We therefore reverse and remand.

I

A

The sole issue on appeal pertains to 38 U.S.C. § 5904, which permits veterans to retain accredited agents or attorneys to present and prosecute VA benefit claims and sets forth restrictions on, among other things, when agents and attorneys may charge for their services. That provision changed over time. The dispute before us relates to which version of this fee statute applies.

Between 1988 and 2007, veterans' agents and attorneys were prohibited from charging fees "with respect to services provided before the date on which the Board of Veterans' Appeals first makes a final decision in the case." 38 U.S.C. § 5904(c)(1) (2000).¹ In 2006, Congress modified that prohibition, permitting veterans' agents and attorneys to charge for their services from an earlier point in the administrative process, no longer prohibiting such charging for work before a final Board decision. Veterans Benefits, Health Care, and Information Technology Act of 2006, § 101(c)-(d), 120 Stat. at 3407-08; see Military-Veterans Advocacy v. Secretary of Veterans Affairs, 7 F.4th 1110, 1135-36 (Fed. Cir. 2021) (reviewing the statutory history of limitations on attorney's fees for VA benefits claims). As amended, the statutory prohibition applies only "with respect to services provided before the date on which a notice of disagreement is filed with respect to the case." 38 U.S.C. § 5904(c)(1) (2006).² Under the post-Act statute, charging is thus permitted for services from when an appeal to the Board is initiated, because a "notice of disagreement" is a filing that initiates a veteran's effort to seek Board review of a decision by an agency of original jurisdiction (regional office). 38 U.S.C. § 7105(a) ("Appellate review shall be initiated by the filing of a notice of disagreement in the form prescribed by the Secretary" of Veterans Affairs.).

It is undisputed that there was no final Board decision in Mr. Fleming's case. See Perciavalle's Opening Br. at 8; Secretary's Response Br. at 7 n.2; J.A. 74. It is therefore also undisputed that, if the pre-Act version of the statute applies, Mr. Perciavalle is not entitled to the fees in dispute. In contrast, if the post-Act version applies, the timing rule of § 5904(c)(1) does not bar fees. Other possible constraints on fees (e.g., that the fees awarded reflect the contribution to and responsibility for benefits awarded), which are not before us, are immaterial if the pre-Act version's time bar applies.

B

In 2006, Robert Fleming, a veteran who had served during the Vietnam era, filed a claim with VA seeking disability-compensation benefits under 38 U.S.C. § 1110 for PTSD, among other conditions. In a September 2006 decision, VA determined that Mr. Fleming had PTSD that was connected to his military service and granted a 30% disability rating, while also addressing several other conditions, including a shrapnel fragment in his left wrist and injury to muscle group XVII (both of which were service connected). J.A. 16. In October 2006, Mr. Fleming filed a notice of disagreement with the PTSD rating decision. J.A. 17.

In August 2007, while the PTSD appeal was pending, Mr. Fleming filed a new claim for benefits for additional disabilities. In November 2008, Mr. Fleming requested a total disability rating based on individual unemployability (TDIU), citing PTSD and residuals of a traumatic brain injury as the service-connected disabilities that prevented him from securing substantially gainful employment. J.A. 18-19; see also J.A. 112. In March 2009, VA issued a decision addressing the TDIU request raised in Mr. Fleming's November 2008 filing and thirteen additional "claims not currently on appeal." J.A. 20-33. In relevant part, VA denied Mr. Fleming's request for entitlement to a TDIU, determining that Mr. Fleming did not meet schedular requirements (i.e., he did not have either (1) one service-connected disability evaluated at 60% disabling or (2) two or more service-connected disabilities, one of which was evaluated at 40% disabling and which together had a combined evaluation of 70% or more), and that the evidence failed to show that his service-connected disabilities alone precluded all forms of substantially gainful employment. J.A. 32. VA also declined to submit Mr. Fleming's case for extraschedular consideration. J.A. 32. In the same ruling, VA addressed many other conditions, including the shrapnel fragment in his left wrist and injury to muscle group XVII. J.A. 23-25.

In May 2009, Mr. Fleming filed a notice of disagreement with the March 2009 decision. J.A. 37. In that notice of disagreement, Mr. Fleming argued, among other things, that he was entitled to a TDIU because his "evaluation percentage for PTSD should be at 70% minimum" and that "individual unemployability clearly is met." J.A. 37. The Board, when it addressed the appeal, recognized that the May 2009 notice of disagreement sought to place before it the TDIU issue as well as numerous other matters, including the left-wrist shrapnel fragment and muscle group XVII matters. See J.A. 40-41.

All claims raised by Mr. Fleming remained on appeal before the Board for several years, until in January 2013 the Board remanded all of Mr. Fleming's claims to VA. See J.A. 40-47. On May 9, 2016, while these claims remained pending, Mr. Perciavalle entered into a contingent fee agreement with Mr. Fleming. J.A. 50. As permitted by 38 U.S.C. § 5904(d), the fee agreement set Mr. Perciavalle's rate at "20% (twenty percent) of any arrearages awarded . . . as a result of [his] representation before the Department of Veterans Affairs for [Mr. Fleming's] service[-]connected conditions." J.A. 50.

On March 2, 2017, VA increased its evaluation of Mr. Fleming's PTSD to 100% disabling, effective April 11, 2008. J.A. 56-61. VA also granted Mr. Fleming entitlement to special monthly compensation, under 38 U.S.C. § 1114(s), based on his being housebound. J.A. 61-62; see also id. at 62 (also recognizing eligibility for Dependents' Educational Assistance under 38 U.S.C. ch. 35). Given the 100% PTSD rating assignment, Mr. Perciavalle withdrew Mr. Fleming's TDIU appeal the same day. J.A. 225.

VA then had to decide whether to pay to Mr. Perciavalle the 20% of the award referred to in the fee agreement he had with Mr. Fleming, which had been filed with VA. On March 13, 2017, VA issued a decision (correcting a March 10 decision) on that issue. J.A. 73-76. VA granted Mr. Perciavalle a fee consisting of 20% of the SMC amount but denied him any fee from the non-SMC amount.

In making that decision, VA looked to whether a notice of disagreement was filed on or after June 20, 2007. J.A. 74. VA cited 38 C.F.R. § 14.636(c)(2), which refers to that date. The date itself derives from the 2006 Act's "effective date" provision, which says that the relevant amendments "shall take...