[00:00:00] Speaker 02: November 20, 1321, no vote against the Secretary of Veterans Affairs, Mr. Stafford. [00:00:08] Speaker 00: Thank you, Your Honor. [00:00:08] Speaker 00: May it please the Court. [00:00:10] Speaker 00: For the past five years, VA has blatantly defied this Court's decision in Hudgens v. McDonald and continued to enforce its unlawful and erroneous interpretation of Diagnostic Code 5055 against countless veterans. [00:00:24] Speaker 00: Hudgens is controlling precedent and its reasoning remains sound. [00:00:27] Speaker 03: This court should reject VA's refusal to follow the law. [00:00:35] Speaker 03: In your view, could the VA have done anything? [00:00:38] Speaker 03: I mean, Hudgens was backward-looking. [00:00:42] Speaker 03: When they said post-hoc rationalization, that means it's very backward-looking. [00:00:46] Speaker 03: They were saying, this is a rationalization that's for cases that have already been filed and are pending. [00:00:52] Speaker 03: We are now talking about a group of cases that all are going forward. [00:00:57] Speaker 03: after the regulation, after this manual provision and so forth was issued. [00:01:02] Speaker 03: Doesn't that make a difference? [00:01:04] Speaker 00: No, Your Honor. [00:01:05] Speaker 00: The guidance was issued before the court's decision in Hudgens. [00:01:08] Speaker 00: And I think that the guidance is the main focus of today's argument. [00:01:12] Speaker 00: And so I don't think the fact that the guidance [00:01:17] Speaker 00: I just don't think the chronology works in that instance. [00:01:21] Speaker 03: Well, tell me why. [00:01:22] Speaker 03: I mean, post-hoc rationalization was, I think even Kaiser talks about post-hoc rationalization as being something you can ignore. [00:01:33] Speaker 03: And that's because it's advanced to defend past agency actions against attack. [00:01:40] Speaker 03: That was true in Hudgens, and that's what the court said. [00:01:43] Speaker 03: But they didn't get rid of the regulation or the manual provision. [00:01:47] Speaker 03: And so going forward, if it therefore is not to advance a defense of past agency action, we're now talking about using it to defend subsequent agency action. [00:02:01] Speaker 03: To me, that's a real distinction that has a heft, right? [00:02:06] Speaker 00: I agree it's a distinction, Your Honor. [00:02:08] Speaker 00: I think the other problem with it is that it still conflicts with past agency interpretations. [00:02:12] Speaker 03: And so I think that's the other leg of Hutchins. [00:02:15] Speaker 00: OK. [00:02:15] Speaker 03: Correct. [00:02:15] Speaker 03: So the second leg of Hutchins is the board opinions. [00:02:19] Speaker 03: Right. [00:02:19] Speaker 03: Right. [00:02:20] Speaker 03: But we've got like seven more years of board opinions. [00:02:25] Speaker 03: I mean, what the Hutchins panel was looking at were board opinions up until, I think, 2012. [00:02:32] Speaker 03: And so, and they were overwhelming. [00:02:35] Speaker 03: So now if we're here in 2021. [00:02:39] Speaker 03: and we're looking at the body of board opinions, wouldn't you assume, I don't know what the numbers are, but I assume if it's a valid thing to look at those, wouldn't the overwhelming or the large majority of board opinions now go the other way? [00:02:52] Speaker 03: And so we would reach the opposite result if that is a factor we should be relying on? [00:02:58] Speaker 00: I don't think so, Your Honor. [00:02:59] Speaker 00: Again, the guidance was issued before the court's decision in Hudgens. [00:03:02] Speaker 00: So we're looking at when VA issued the guidance to determine whether today it would be entitled to our deference. [00:03:08] Speaker 00: and I still think the conflict... We're frozen in 2015? [00:03:12] Speaker 00: Your Honor, I don't think VA is frozen. [00:03:13] Speaker 00: I think VA has a perfectly viable avenue, and that's to go through notice and comment rulemaking and revise the regulation itself to clarify what it intends for it to mean today. [00:03:23] Speaker 00: I think that's what the VA has tried to do with this interpretive rule, and that's why you don't see board decisions coming out today [00:03:32] Speaker 00: you know, awarding benefits under 50-55 for partial replacements because today the board assumes that the regulation itself has been revised and the board believes that it's bound. [00:03:42] Speaker 03: That's the way it works. [00:03:43] Speaker 03: I mean, let's assume there was never a Hudgens case. [00:03:47] Speaker 03: So the board issues these revised things in 2015 and moving forward the board follows them as I think one would expect they would. [00:03:57] Speaker 03: Why isn't that okay? [00:03:59] Speaker 00: But Your Honor, again, I think Hudgens is controlling on this point, that it says the prior conflict controls whether VA gets our deference on its interpretation of this regulation. [00:04:08] Speaker 00: But even setting Hudgens aside, I don't think the fact that [00:04:12] Speaker 00: You know, the secretary may have issued some instruction to align internally within the agency, the interpretation. [00:04:18] Speaker 00: I still think, I don't think the agency is able to seek our deference in court. [00:04:23] Speaker 00: And that's clear from the Supreme Court's decision in Kaiser, in Christopher, and in the Morgan spaces. [00:04:28] Speaker 03: But why is, I mean, I take the point, and Hudgens, I think the first point and the major point, and I think maybe Hudgens could have stopped there, is saying, there's nothing to defer to. [00:04:39] Speaker 03: because this is purely post hoc rationalization, issued, we're not going to use it to defend past actions when it was issued after that for purposes only of litigation. [00:04:51] Speaker 03: That seems to be universally accepted doctrine. [00:04:55] Speaker 03: But that's no longer true in terms of the application of that regulation in our context. [00:05:00] Speaker 03: It's no longer post hoc rationalization because it's being applied to cases going forward not to defend actions done previously. [00:05:09] Speaker 03: We're all living with Hudgens in terms of that bucket of cases that were decided. [00:05:13] Speaker 03: So you understand why I think [00:05:15] Speaker 03: The main premise of Hudgens has been undermined or is different than in this case? [00:05:20] Speaker 00: I think the only reason it would be undermined or would be different is because VA refused to implement the Hudgens decision and followed what the court held, which is that 5055 is best read to cover both partial and total knee replacements. [00:05:32] Speaker 03: In the absence of anything else, because it said we're not going to consider this new issuance in 2015 because it's post hoc rationalization. [00:05:42] Speaker 03: If that had not been post hoc rationalization, [00:05:45] Speaker 03: If that's something the agency had issued five years before Hutchins had filed his claim, don't you think the result may well have been different? [00:05:53] Speaker 00: No, I don't. [00:05:54] Speaker 00: Because the interpretation would still conflict with all of the board decisions that had interpreted it the other way. [00:05:59] Speaker 00: And so therefore, the VA would not be entitled to any hour difference. [00:06:02] Speaker 03: So you think just the board decisions going a predominant number. [00:06:05] Speaker 03: Do we know what the percentage was? [00:06:07] Speaker 00: At the time of Hutchins, I believe it was 11 favoring partial in total versus three. [00:06:12] Speaker 00: going the other way. [00:06:13] Speaker 03: All right. [00:06:13] Speaker 03: And that was as of 2012? [00:06:14] Speaker 00: I think there were some up until the court. [00:06:17] Speaker 00: I mean, the court's decision was in 2016. [00:06:19] Speaker 00: And I think there were board decisions up until 2014, 2015. [00:06:23] Speaker 03: Can I ask you about the third leg which you cover in your brief of Hudgens, which is the veterans' canon? [00:06:29] Speaker 03: Sure. [00:06:32] Speaker 03: Let's assume hypothetically we reject your, we say Hudgens doesn't apply in terms of post hoc rationalization. [00:06:42] Speaker 03: we say that Tudgens no longer applies because we've got board decisions that go the other way, or for other reasons. [00:06:48] Speaker 03: You know, Kaiser has an interest, as you'll know at the end of Kaiser and the Supreme Court's opinion, they start talking about the Solicitor General and they don't reach the issue, they don't decide the issue, but they do give a very fulsome explanation of why the Solicitor General argued to the Supreme Court that board decisions aren't the kind of authoritative [00:07:10] Speaker 03: agency spoke speech that should be given deference to, that should be relied on. [00:07:16] Speaker 03: Are you familiar with that? [00:07:17] Speaker 03: Do you think that undermines in any way, shape, or form the notion that the percentage of board decision should be a compelling factor? [00:07:27] Speaker 00: I don't, Your Honor. [00:07:28] Speaker 00: And the reason is because the question here isn't whether the board decisions were going to themselves receive our deference. [00:07:34] Speaker 00: The question is whether the agency has issued conflicting interpretations. [00:07:37] Speaker 00: And if it has issued conflicting interpretations, and I think Kaiser makes this point clear, the agency is no longer entitled to the deference that it would normally be entitled to in interpreting its own regulations. [00:07:50] Speaker 03: Moving on to the veterans' canon. [00:07:54] Speaker 03: If that's all we're left with, hypothetically, what do we do with this case? [00:08:00] Speaker 00: I think Hudgens is also controlling on the veterans' canon. [00:08:04] Speaker 00: Hudgens held that the regulation does not unambiguously favor VA and that VA is not entitled to any hour deference given its conflicting interpretations. [00:08:14] Speaker 00: I think the pro-veteran canon would kick in in that context and would require the regulation to be resolved in favor of veterans. [00:08:20] Speaker 03: Well, what if we reject, let's assume hypothetically we don't think, we think we've lost [00:08:26] Speaker 03: at this point with respect to this new adjudication of cases post-Hudgens, you've lost that conflicting interpretation argument. [00:08:36] Speaker 03: So let's assume we're not left with conflicting interpretation. [00:08:39] Speaker 03: We're not left with the post hoc rationalization. [00:08:42] Speaker 03: What do we do about the can? [00:08:45] Speaker 00: Sure, and I'm happy to answer that. [00:08:46] Speaker 00: I just want to clarify that. [00:08:47] Speaker 00: I still think the conflicting interpretation, because we're looking at what the validity of the guidance in 2015. [00:08:52] Speaker 00: We're not looking at an individual veteran's case filed today. [00:08:56] Speaker 00: So I think the state of affairs is, the relevant state of affairs is the state of affairs that existed in 2015 when VA issued the guidance. [00:09:04] Speaker 03: But going to the pro-veteran camp... [00:09:10] Speaker 03: Hudgens didn't say this guidance, didn't talk to the guidance. [00:09:14] Speaker 03: They said, and I think correctly, and certainly we're bound by it whether we think it's correct or not, that it was issued in 2015 while this litigation was going on, long after Mr. Hudgens had filed his case. [00:09:27] Speaker 03: His case was pending. [00:09:28] Speaker 03: It was issued and now used in this case to defend what had been done prior to the issuance of that guidance. [00:09:38] Speaker 03: That's a completely different situation than the import of the guidance now, which is now being applied to cases going forward after the guidance issue. [00:09:49] Speaker 03: Doesn't that make a difference? [00:09:50] Speaker 00: I don't think so, Your Honor, because the regulation is exactly the same. [00:09:53] Speaker 00: The regulation still uses the same language that was at issue in Hudgens. [00:09:58] Speaker 00: The guidance was also in the CFR. [00:10:01] Speaker 00: We had put it in there a year before Hudgens came down. [00:10:03] Speaker 00: And I don't think Hudgens was really [00:10:05] Speaker 00: you know, trying to cabin its opinion to only post-hoc actions or to only prior actions. [00:10:13] Speaker 00: I don't think the post-hoc rationalization was not the sole basis upon which the court declined reference. [00:10:19] Speaker 03: Well, the only other basis was because board decisions which preceded the guidance were overwhelmingly going one way. [00:10:28] Speaker 03: That's the only other thing, right? [00:10:30] Speaker 00: Right. [00:10:31] Speaker 00: And I still think those interpretations, you know, [00:10:33] Speaker 00: still create the conflict today. [00:10:34] Speaker 00: I don't think that there's any reason for VA to sort of be able to insulate itself from the question of whether they're conflicting interpretations by just continuing to apply an erroneous interpretation after this court's already said that it shouldn't apply it. [00:10:51] Speaker 03: One final question on our difference. [00:10:53] Speaker 00: Sure. [00:10:54] Speaker 03: Just a complete hypothetical. [00:10:56] Speaker 03: OK. [00:10:56] Speaker 03: If we're left with this case and let's assume there's no Hudgens and there's no prior litigation [00:11:01] Speaker 03: We're left with this interpretive rule. [00:11:04] Speaker 03: What role does the veterans' canon play in terms of our deciding whether or not we would defer to an agency's guidance in interpreting an ambi... Let's assume the regulation is ambiguous. [00:11:18] Speaker 03: Agency provides guidance going forward. [00:11:21] Speaker 03: And we've got the veterans can and which we know what it requires. [00:11:26] Speaker 03: What do we do with that? [00:11:28] Speaker 00: Sure. [00:11:28] Speaker 00: And I know this court's issued several opinions recently grappling with this issue. [00:11:32] Speaker 00: I'll begin with the necessary caveat that we think Hudgens already addressed this in the footnote because there's no our difference. [00:11:39] Speaker 00: But assuming away all of that, it's our position that the pro-veteran canon would apply at the step one inquiry of the power in Kaiser, because Kaiser held that you have to look at all traditional tools of interpretation, and the pro-veteran canon has been applied by the Supreme Court, and this court has one of those traditional tools. [00:11:58] Speaker 03: Why do you think Kaiser never mentions the veterans' canon? [00:12:01] Speaker 03: It's just because the parties never raised it at all? [00:12:04] Speaker 03: It's kind of odd, right, looking back on it. [00:12:06] Speaker 03: I mean, they referred to traditional tools of statutory construction in four or five places. [00:12:13] Speaker 03: And I think in every place that the Supreme Court refers to those, they don't define it, but they talk about text, history, and purpose. [00:12:23] Speaker 03: Thank you. [00:12:25] Speaker 03: No mention of the canon whatsoever. [00:12:29] Speaker 03: that just because it wasn't presented. [00:12:31] Speaker 00: I think, you know, the court was focused on whether to overrule our or not. [00:12:35] Speaker 00: And I think, you know, the pro veteran canon was was one of the questions presented at the petition stage, I believe, in Kaiser and the court did not grant on that on that issue. [00:12:42] Speaker 00: It just granted on the question of whether to overrule our. [00:12:45] Speaker 00: So I don't think the court was intending to catalog all of the traditional tools of interpretation in its opinion. [00:12:50] Speaker 00: I think it was simply admonishing courts not to jump to ambiguity quickly, but to instead employ all of the tools that might be available. [00:12:58] Speaker 03: So you think in this case, if all we had was the canon and no previous Hudgens thing, the veteran should win because? [00:13:07] Speaker 00: Because I don't think VA has any compelling textual arguments other than its dictionary definition of a knee joint. [00:13:13] Speaker 00: And I think the pro-veteran canon is one of the tools that this court and the Supreme Court has applied in ascertaining what the text means. [00:13:23] Speaker 00: So when would our ever apply? [00:13:27] Speaker 00: I think the pro-veteran canon is just one canon of construction. [00:13:30] Speaker 00: So I think it would balance out with other textual indicators or other contextual indicators. [00:13:35] Speaker 03: Well, I'm talking about a circumstance where we all agree it's ambiguous. [00:13:38] Speaker 03: We're left with ambiguity. [00:13:40] Speaker 03: when we go through all these traditional canons of statutory construction. [00:13:44] Speaker 03: And then we've got the veterans canon, and we've got our and an agency interpretation. [00:13:50] Speaker 03: Again, no problems with Hutchins or whatever. [00:13:52] Speaker 03: What do we do? [00:13:53] Speaker 00: Right. [00:13:53] Speaker 00: Well, I think the assumption in your question is that we've reached the conclusion that it's ambiguous. [00:13:59] Speaker 00: And I guess my submission is that before you get to that conclusion, you have to consider the pro-veteran canon. [00:14:04] Speaker 00: Because if there are no textual indicators on the other side, and all you have is this bare text, [00:14:10] Speaker 00: Plus the pro-veteran canon, I think that resolves the ambiguity question before you get to deference. [00:14:14] Speaker 01: Have we ever held that the pro-veteran canon alone would lead to a ruling in favor of the litigant, just looking at that canon alone? [00:14:22] Speaker 00: I don't think that, Your Honor, I don't think this court's ever really held that specifically. [00:14:27] Speaker 00: But again, you know, I know that the court has grappled with sort of how to apply it in the hour context. [00:14:33] Speaker 00: You know, here, of course, we still think Hudgens is completely controlling on this question because, you know, VA has not demonstrated that it's entitled to any hour deference in this case. [00:14:43] Speaker 00: And Hudgens, you know, specifically held in that final footnote that without hour deference, you know, any ambiguity must be resolved in the veteran's favor. [00:14:51] Speaker 01: To the number of board decisions, I understand it's maybe more than 100,000 decisions each year. [00:14:56] Speaker 01: Does that affect what you think about authoritative agency interpretations? [00:15:00] Speaker 01: Do you think that number has an impact on that? [00:15:03] Speaker 00: I don't think the number really has an impact. [00:15:05] Speaker 00: I'm not prepared to say a specific number is necessary. [00:15:08] Speaker 00: I think Hudgens already held that the 11 versus 3 is a pretty clear conflict, and we think that that's sufficient for the court to resolve this case. [00:15:17] Speaker 00: I think VA can't really come to this court and say that we don't really have control over all of our board decisions, and therefore you shouldn't consider [00:15:26] Speaker 00: the fact that several veterans are being compensated under this provision law, whereas others aren't. [00:15:31] Speaker 00: We just don't think that's a viable mechanism for achieving our difference. [00:15:36] Speaker 03: Can I just? [00:15:36] Speaker 03: Yeah, go for it. [00:15:38] Speaker 03: Just going back to the board decisions, as I said, there's a language in Kaiser. [00:15:42] Speaker 03: Kaiser doesn't decide it. [00:15:43] Speaker 03: It just calls out the Solicitor General's view about you've got thousands of board people issuing 80,000 decisions a year, none of which have any precedential value. [00:16:00] Speaker 03: And for all we know, they could all be different. [00:16:03] Speaker 03: And that's why the Solicitor General said this is not the kind of specialized agency authority that we're talking about deferring to. [00:16:12] Speaker 03: And Kaiser says we're not going to go there. [00:16:18] Speaker 03: But there's a lot of language in Kaiser that gives us guidance in terms of what is something that we would defer to from the agency. [00:16:27] Speaker 03: And it does really not suggest anything like non-precedential board decisions, thousands of which are issued every year. [00:16:35] Speaker 03: Now, the panel on Hudgens didn't have the benefit of that language in Kaiser. [00:16:39] Speaker 03: But Kaiser, do you understand the language I'm talking about? [00:16:42] Speaker 03: I do, yes, I do. [00:16:43] Speaker 03: I mean, the whole point of looking at the agency's position is because it's uniform and it's consistent. [00:16:48] Speaker 03: And that's exactly the opposite of what we look for in board opinions generally, where they're non-precedential [00:16:56] Speaker 03: They're all different. [00:16:58] Speaker 03: There's no uniformity. [00:16:59] Speaker 03: There's no speaking with one voice. [00:17:01] Speaker 03: So doesn't language in Kaiser suggest that we ought to be very careful about deferring to the board stuff? [00:17:08] Speaker 00: Your Honor, I completely agree that you should not defer to board decisions. [00:17:11] Speaker 00: We took this position at the on-box stage in this case as well. [00:17:14] Speaker 00: But the question here is not whether the board decisions get our deference. [00:17:17] Speaker 00: It's whether the board decisions represent a prior agency interpretation of a regulation. [00:17:22] Speaker 00: And Hudgens makes clear that it does, that board decisions, because they render the final decision of the agency, they do interpret the regulation each time they apply it. [00:17:32] Speaker 00: And so the fact that you have several board decisions interpreting this regulation exactly the same way, and only a handful supporting VA's position, it does show... But the agency could change its position. [00:17:42] Speaker 03: I mean, even accepting what you say is correct, agencies can change their minds. [00:17:48] Speaker 03: In this case, I think the VA would say medical science is developing. [00:17:52] Speaker 03: What was a knee replacement, partial or full, 30 years ago is a substantially different procedure today. [00:18:01] Speaker 03: So even if that's correct, the agency is free to change its position, right? [00:18:05] Speaker 00: I don't think it's free to change its position and then insist on our deference in court. [00:18:09] Speaker 00: I think the Supreme Court's case has made clear that when you have prior conflicting agency interpretations of a regulation, you need to go through notice and comment if you want to clarify the regulation. [00:18:20] Speaker 00: And so the medical sciences issue that VA raises in its brief, I think is a perfect example of that. [00:18:27] Speaker 00: That is precisely the type of issue that my clients would have loved to submit comments on, to explain to the agency why medical science [00:18:34] Speaker 00: doesn't require this sort of distinction that they're trying to draw here. [00:18:38] Speaker 00: What VA cannot do is try to modify the regulation itself through an interpretive rule, which is what's done here. [00:18:49] Speaker 02: Would you, I know we're running, would you just take a sentence or two to summarize directly the relief that you're asking for from this court? [00:19:00] Speaker 00: Sure, Your Honor. [00:19:00] Speaker 00: We're asking this Court to set aside the knee replacement guidance, the 2015 guidance, to set aside the knee replacement manual provision, and to accept VA's concession that the knee joint stability manual provision is invalid and was invalid because it was not published in the Federal Register. [00:19:16] Speaker 00: And to dismiss our challenge to that, provision is moved. [00:19:21] Speaker 02: Okay. [00:19:21] Speaker 02: Any more questions at the moment? [00:19:23] Speaker 02: All right. [00:19:24] Speaker 02: We'll save you rebuttal time. [00:19:25] Speaker 02: Thank you. [00:19:25] Speaker 02: Let's hear from the government. [00:19:27] Speaker 02: Ms. [00:19:28] Speaker ?: Finnis. [00:19:29] Speaker 04: May it please the court, there are three issues for you today. [00:19:33] Speaker 04: With respect to the first issue, the secretary asked that this court deny Nova's petition challenging the 2015 interpretive rule. [00:19:42] Speaker 04: That 2015 interpretive rule was a procedurally and substantively valid exercise of the agency's interpretive rulemaking authority. [00:19:50] Speaker 03: Let me ask you about that if I could and I think in grey the other side makes this point. [00:19:56] Speaker 03: You seem to be wanting to have it a couple of ways with respect to the guidance to the extent that you say you've got a note in the regulation. [00:20:05] Speaker 03: Does that make it any different? [00:20:08] Speaker 03: How does that matter? [00:20:10] Speaker 03: It seems like the government is telling us, yeah, yeah, it's an interpretive rule, but look, we put this note in the regulations, so maybe it ought to mean a little more. [00:20:19] Speaker 03: The other side calls you out for that in gray, and I understand their point. [00:20:22] Speaker 03: So what's your position? [00:20:23] Speaker 04: Understood, Your Honor. [00:20:25] Speaker 04: And so I'll direct the panel back to this court's NOVA decision from 2001, in which something similar occurred. [00:20:32] Speaker 04: The agency exercised its interpretive rulemaking authority. [00:20:36] Speaker 04: by publishing the Federal Register its interpretation of the death and compensation benefits provision in that case. [00:20:45] Speaker 04: But it also, by way of that Federal Register publication, made changes to the regulation itself. [00:20:52] Speaker 04: It revised language in the regulation itself. [00:20:55] Speaker 04: And the court, in Nova 2001, found that that action was not arbitrary and capricious and sustained it. [00:21:03] Speaker 04: So there's nothing inherently or procedurally problematic in a 2015 interpretive, in our 2015 interpretive rule, revising the regulation itself by the addition of that note. [00:21:15] Speaker 03: Well, you can't revise it, can you? [00:21:17] Speaker 03: You can maybe clarify it. [00:21:19] Speaker 03: I mean, if you were going to revise it, substantively revise it, you'd have to do notice and comment rulemaking, right? [00:21:25] Speaker 04: Yes, to the extent, to my word choices. [00:21:29] Speaker 04: I'm not meaning revise as a substantive [00:21:32] Speaker 04: term, I mean, revise it in the sense that they added a note. [00:21:37] Speaker 04: They've clarified their interpretation. [00:21:40] Speaker 03: Okay. [00:21:41] Speaker 03: But you can't do a revision. [00:21:43] Speaker 04: Not in the way that you're using the word revision as a substantive change. [00:21:47] Speaker 04: No, you cannot. [00:21:50] Speaker 04: But turning back to your question, [00:21:54] Speaker 04: It is relevant in the context of this panel's review that the 2015 interpretive rule inserted a note into the regulation because this court is now charged with determining whether or not the regulation in effect with this clarified note is arbitrary and capricious. [00:22:16] Speaker 04: We submit that it's, and how the court would reach that determination, right? [00:22:21] Speaker 04: We submit that that's what makes the regulation before this panel different than the regulation that was in front of the Hudgens 2 panel. [00:22:28] Speaker 04: Hudgens 2 definitively held that the prior un-clarified version of the regulation was ambiguous. [00:22:34] Speaker 04: This court and VA is bound by that aspect of the Hudgens 2 decision. [00:22:40] Speaker 04: The prior un-clarified pre-2015 version of the regulation [00:22:44] Speaker 04: was ambiguous as the court held in Hudgens 2 at page 637. [00:22:48] Speaker 04: The regulation then in effect, which was applicable in Mr. Hudgens' claim, neither explicitly included nor excluded partial knee replacements. [00:22:57] Speaker 03: Do you also read Hudgens as saying, and there's nothing to defer to, because all of this 2015 stuff is simply we're going to look at it as if it's a post hoc rationalization to what came before it. [00:23:10] Speaker 03: And so we're not saying that. [00:23:13] Speaker 03: whether it's good enough or it's not good enough, it's just irrelevant. [00:23:16] Speaker 03: We don't defer to things like post-hoc rationalization. [00:23:20] Speaker 03: Correct, Your Honor. [00:23:20] Speaker 03: And so why should you get us to defer to it now? [00:23:23] Speaker 03: I mean, you know, your friend and I had this conversation. [00:23:27] Speaker 03: What's the difference between the 2015 regulations, same words, what Hudgens did with it in 2016 and what you're asking us to do with it going forward? [00:23:39] Speaker 04: Understood. [00:23:40] Speaker 04: So to look at whether or not Hudgens 2 is controlling or persuasive here, you have to look at the context in which that holding was entered. [00:23:48] Speaker 04: Hudgens was, Hudgens 2, [00:23:50] Speaker 04: was a veteran's benefits appeal. [00:23:52] Speaker 04: It was not a rule-making challenge. [00:23:55] Speaker 04: Mr. Hudgens had, several years earlier, filed a claim for benefits for his partial knee replacement and was denied those benefits under DC 5055. [00:24:04] Speaker 04: He's entitled to benefits under other parts of the diagnostic code, but not, in VA's view, under DC 5055. [00:24:16] Speaker 04: That appeal wound its way up to the Federal Circuit [00:24:20] Speaker 04: And at that stage, the court was charged with interpreting the version of the regulation that was in effect on Mr. Hudgens' claim, which was filed years earlier. [00:24:31] Speaker 04: It was a version of the regulation in effect prior to 2015. [00:24:37] Speaker 04: It held that version of the regulation without the subsequent clarifying note. [00:24:41] Speaker 04: was ambiguous in either explicitly included or explicitly excluded partial knee replacements. [00:24:47] Speaker 04: So how would the court resolve the ambiguity? [00:24:50] Speaker 04: Well, the government at that point had submitted the 2015 interpretive rule that had just been promulgated while that appeal was pending. [00:24:58] Speaker 04: And you're honest, correct. [00:24:59] Speaker 04: The court held this is a post hoc rationalization. [00:25:01] Speaker 04: We're not going to defer to it. [00:25:03] Speaker 04: in the absence of an agency interpretation, how will we resolve this ambiguity? [00:25:09] Speaker 04: Well, we will resort to the pro-veteran's canon and find in favor of Mr. Hudgens' appeal. [00:25:15] Speaker 04: And so the version of the regulation, pre-2015, in effect in governing Mr. Hudgens' claim, Hudgens 2 held, encompassed partial knee replacements. [00:25:28] Speaker 03: OK, but you've got to get to the answering my question, which is, we're dealing with the same paper in Hudgens and here in terms of the 2015 submission. [00:25:39] Speaker 03: So is it your position that Hudgens write, we follow Hudgens? [00:25:46] Speaker 03: Because in that context, in the context in which it was presented, it was post hoc rationalization, which the court should not have considered. [00:25:54] Speaker 03: And how do we get to? [00:25:56] Speaker 03: But in this context, we can treat it differently. [00:25:59] Speaker 03: Your friend suggested that, no, no, no, you can't treat the same piece of paper differently in two different contexts. [00:26:05] Speaker 03: And I assume your position is the opposite. [00:26:07] Speaker 03: So tell us why. [00:26:08] Speaker 04: Yes, because in this context, the 2015 interpretive rule is not post hoc, right? [00:26:14] Speaker 04: It's being applied by the VA to resolve claims for partial knee replacement in effect upon the effective date of that 2015 interpretation [00:26:25] Speaker 04: through February 7, 2021 when the entire scheme has been revised through notice and comment rulemaking. [00:26:31] Speaker 04: So there's a window there where the 2015 interpretive rule was in effect and it's to those claims that VA wants to apply or intends to apply [00:26:43] Speaker 04: the 2015 interpretive rule. [00:26:44] Speaker 04: It's not post hoc in that context. [00:26:46] Speaker 03: Could I ask you, just as a logistic, just, I don't know if this stuff is in the record. [00:26:51] Speaker 03: I'm just curious. [00:26:52] Speaker 03: What this case involves then is a five year window or a six year window of cases because before claims before that are covered by Hudgens and claims after that will be covered under this new regulation. [00:27:05] Speaker 03: Has the new regulation been challenged? [00:27:08] Speaker 03: Not to my knowledge. [00:27:09] Speaker 03: Okay. [00:27:10] Speaker 03: All right. [00:27:11] Speaker 03: So do you have any estimate about the number of claims we're talking about that fall within that five-year window? [00:27:18] Speaker 03: And if you have any further information about whether or not it involves the partial knee issue? [00:27:27] Speaker 04: The information is not in the record, and I don't have it, but I would also submit it's not relevant, right? [00:27:32] Speaker 04: Because this court is charged with deciding whether or not the 2015 interpretive rule [00:27:37] Speaker 04: is arbitrary and capricious. [00:27:39] Speaker 04: We submit that it's not because it clarifies what this court has previously held was an ambiguous regulation, and it clarified it with an interpretation that Hudgens 2 recognized was a permissible interpretation of that ambiguity. [00:27:55] Speaker 04: Hudgens 2 didn't adopt it for that [00:27:57] Speaker 04: claim, right, but it did recognize that it was... Yeah, I didn't suggest the numbers were relevant. [00:28:03] Speaker 03: I was just curious about what universe we're talking about. [00:28:06] Speaker 03: Understood. [00:28:06] Speaker 03: Can you also speak to the board stuff? [00:28:11] Speaker 03: Because maybe I misread your brief. [00:28:13] Speaker 03: I understood in your brief you put a pretty thick thumb on the scale saying, [00:28:19] Speaker 03: Even no matter what you do in this case, you ought to be really careful what you say about these board opinions. [00:28:24] Speaker 03: And obviously, we've got Kaiser reiterating what the Solicitor General said. [00:28:28] Speaker 03: Now, we can't undo Hudgens, and it's controlling precedent. [00:28:32] Speaker 03: And it did put emphasis on the number of board decisions. [00:28:38] Speaker 03: What are we to do with that in this context, in this case? [00:28:43] Speaker 04: My answer is several fold. [00:28:45] Speaker 04: So not only do we have Kaiser, [00:28:48] Speaker 04: which post-States Hudgens to. [00:28:50] Speaker 04: We also have this court's en banc decision in this appeal, right? [00:28:55] Speaker 04: The Nova en banc decision in this appeal at page 1382 discussed the volume of board decisions and the non-precedential nature of those decisions and stated that by themselves, it does not reflect the agency's authoritative or official position. [00:29:13] Speaker 04: not binding in future cases and appear not to be entitled to our deference." [00:29:19] Speaker 04: That's pages 1382 and 1384, footnote 14. [00:29:25] Speaker 03: Just for clarity of record. [00:29:27] Speaker 03: So wait, do you consider that sort of overruling or restating what the panel and Hudgens said about the depth deferring to what board opinion said? [00:29:40] Speaker 04: I think it erodes the foundation of that finding in Hudgens 2, right? [00:29:44] Speaker 04: Subsequent events, subsequent decisions of the Supreme Court and this court sitting on Bonk have eroded that foundation. [00:29:50] Speaker 04: So for that reason, it's not controlling or no longer controlling or persuasive. [00:29:57] Speaker 04: I also want to point out for the court, NOVA makes several representations that the board decisions are [00:30:05] Speaker 04: actions of the agency. [00:30:07] Speaker 04: The board is an independent authority who issues individual claims by the thousands, decisions by the thousands. [00:30:15] Speaker 04: And their mandate is certainly to apply VA's statutory and regulatory scheme, but they are an independent authority. [00:30:22] Speaker 04: They are not a part of the VA. [00:30:25] Speaker 01: Are you arguing in favor of our deference here? [00:30:29] Speaker 04: We don't have to get to our deference because the regulation as revised by the 2015 interpretive rule is no longer ambiguous. [00:30:40] Speaker 01: What about the pro-veteran canon? [00:30:42] Speaker 01: So if we find that that canon of construction applies, what do you have to show to win? [00:30:50] Speaker 04: If the pro-veterans canon applies, it would only apply if the regulation remains ambiguous. [00:30:58] Speaker 04: which we submit it's not. [00:31:04] Speaker 04: I mean, then you would be getting into a discussion of our. [00:31:07] Speaker 04: I think the Supreme Court and this course authority does not, other than in dissents, suggest that the pro-veterans canon is used above and beyond or before our deference. [00:31:23] Speaker 04: But it is our position in this appeal that we don't get there. [00:31:26] Speaker 03: I don't think I understand your answer to Judge Cunningham's question. [00:31:32] Speaker 03: It's ambiguous. [00:31:34] Speaker 03: The regulation is ambiguous. [00:31:37] Speaker 03: And I thought you were saying your interpretive guidance plus the note, whatever we want to call that because it's not been done through notice and comment rulemaking, deserves our deference because we're clarifying what the agency's authoritative view is of this ambiguous language which is just need that doesn't differentiate between full and partial, right? [00:32:04] Speaker 04: That is an argument that we made in our brief in the alternative, but our primary argument is that we don't get there. [00:32:10] Speaker 04: It's not ambiguous. [00:32:11] Speaker 03: Well, let's assume it is ambiguous. [00:32:13] Speaker 03: And then Judge Cunningham's question about what we do. [00:32:16] Speaker 03: If we're left with an ambiguous regulation, you've got an agency interpretive rule that says it means one thing. [00:32:24] Speaker 03: What do we do with the canon? [00:32:29] Speaker 03: How does a canon play into that? [00:32:31] Speaker 03: If it's ambiguous, [00:32:32] Speaker 03: Does the canon get applied first and therefore there's no ambiguity remaining because the canon puts a thumb on the scale for the veteran and so we never have to apply our deference at all? [00:32:43] Speaker 03: How does this work? [00:32:45] Speaker 04: I'm not aware of any Supreme Court authority or majority opinion of this court that has held that the pro-veteran's canon applies above and before other canons of statutory construction. [00:32:59] Speaker 02: If it's ambiguous such that one needs to consider whether or not to apply our deference, isn't that overridden by the veteran's preference? [00:33:10] Speaker 02: Doesn't that end the whole debate? [00:33:13] Speaker 02: If it's ambiguous? [00:33:16] Speaker 04: If the pro-veterans canon were to end every ambiguity, the court would be completely eviscerating [00:33:26] Speaker 04: all of the statutory and regulatory authority VA has to interpret statutes and provide for their interpretation in a procedurally and substantively valid way, right? [00:33:40] Speaker 04: But there would be no regulatory authority. [00:33:45] Speaker 04: There would be no interpretive rulemaking authority, substantive rulemaking authority, no ability to clarify something that's ambiguous. [00:33:56] Speaker 04: if the pro-vectors canon applied above everything else. [00:34:02] Speaker 03: In other words, you're saying that if we apply it to resolve every ambiguity, whether it's statutory or regulatory, there is no such thing as Chevron or our deference in the VA space. [00:34:15] Speaker 03: Is that what you just said? [00:34:18] Speaker 04: It's hard for me to opine on every hypothetical that could. [00:34:22] Speaker 03: That would be an issue, or at least a question or a concern. [00:34:27] Speaker 04: It would be a question or concern, right. [00:34:29] Speaker 04: And I think for this court's purposes, you just don't have to get there. [00:34:33] Speaker 04: The regulation is clarified by the 2015 interpretive rule, the Federal Register publication, as well as the note [00:34:41] Speaker 04: that was inserted into that regulation by the 2015 interpreter rule. [00:34:45] Speaker 03: How different would your argument be if you hadn't clarified the regulation with the note, if we were just left with the manual guidance, whatever it is we're talking about? [00:34:56] Speaker 03: How strongly do you, in order to prevail, how strongly do you have to rely on the note essentially becoming part of the regulation itself? [00:35:08] Speaker 03: Which, I guess, in your view means that you don't even need a difference. [00:35:13] Speaker 04: Correct. [00:35:13] Speaker 04: But I think the court, in that hypothetical, would be denying, no, this petition challenging the interpretive rule either way. [00:35:22] Speaker 04: Because the note was not only inserted into the regulation, but also appears in the 2015 interpretive rule, in the Federal Register publication, as does the rationale for that 2015 interpretive rule. [00:35:38] Speaker 04: Right, so even if you didn't look at the note specifically in the Code of Federal Regulations, it's in the 2015 Interpretive Rule, which is in the Federal Register. [00:35:50] Speaker 03: Getting back to just to follow on Judge Newman's question about the canon, and this is kind of hypothetical, but do you think there's a distinction? [00:35:59] Speaker 03: We have all sorts of cases, and sometimes we really have statutory language that is ambiguous. [00:36:04] Speaker 03: and we have to apply the tools of statutory construction. [00:36:09] Speaker 03: This is, you know, we've got a case called Buffington, a presidential opinion that came out in August that was kind of instructive saying, there's a gap. [00:36:18] Speaker 03: Congress didn't speak to this, so there's no veterans canon to apply. [00:36:23] Speaker 03: In this case, [00:36:25] Speaker 03: We've really not got Congress doing much of anything other than telling the delegating to the agency fill this huge gap, which is to draft diagnostic codes, which is your specialization and certainly nothing that Congress is going to dive into. [00:36:41] Speaker 03: Does that color the way we should view this in terms of deference to the agency and reliance on the agency as opposed to other doctrinal things? [00:36:57] Speaker 04: I think the traditional tools of statutory construction don't encompass the pro-veteran's canon. [00:37:04] Speaker 04: I think it is a tool for resolution of veteran's appeals. [00:37:13] Speaker 03: It's a different kind of canon. [00:37:14] Speaker 03: It's not a linguist. [00:37:16] Speaker 03: It's a canon that we have to apply. [00:37:18] Speaker 03: It's not a linguistic canon. [00:37:20] Speaker 03: It's what some have called a substantive canon. [00:37:22] Speaker 03: Some have called a normative canon and different people have expressed different views about what role that plays, but it is a canon construction, right? [00:37:35] Speaker 04: I would submit it's not on the same par as things like plain language, legislative history. [00:37:42] Speaker 04: and deference to agency. [00:37:44] Speaker 03: And do you think, assuming we think we need to apply it, how we apply it, how does it matter? [00:37:52] Speaker 03: I mean, is it, if there were two equally plausible ways to interpret an ambiguous thing, then the veterans canon comes into play. [00:38:01] Speaker 03: Does it matter? [00:38:03] Speaker 03: I mean, is it, [00:38:04] Speaker 03: is opposed to one much better reading and one less better reading, but we still, because there's still ambiguity, the canon still picks the less good reason. [00:38:16] Speaker 03: Do you have any views on whether the canon is kind of a tiebreaker kind of thing, or the canon has more heft than that? [00:38:28] Speaker 04: I mean, we're sort of in a land of hypotheticals here. [00:38:31] Speaker 04: I think it can't, [00:38:34] Speaker 04: It should not supersede VA's interpretation of its own regulation. [00:38:43] Speaker 04: It has been statutorily charged with promulgating regulations by interpretive rule and by substantive rule to implement the congressional mandate, right? [00:38:55] Speaker 04: Their congressional mandate, their statutory mandate is to provide for benefits for veterans for impairments that are service-connected. [00:39:04] Speaker 01: Are you suggesting there's an order for whether or not you apply our deference before the Veterans Canon or vice versa? [00:39:10] Speaker 01: Are you suggesting ordering there? [00:39:14] Speaker 04: That sort of briefing is not developed in this case based on the procedural posture, but in other cases I believe we have. [00:39:21] Speaker 01: And what would that ordering be then? [00:39:24] Speaker 04: our deference or deference to the agency's interpretation would supersede the Pro-Venture Scanning. [00:39:30] Speaker 02: Okay. [00:39:30] Speaker 02: Any more questions for counsel? [00:39:32] Speaker 02: Anything else for counsel? [00:39:33] Speaker 02: Thank you. [00:39:34] Speaker 02: We'll hear from the other side. [00:39:37] Speaker 02: Mr. Stafford. [00:39:40] Speaker 00: Thank you, Your Honor. [00:39:41] Speaker 00: Three quick points. [00:39:42] Speaker 00: The first point is that the regulation in this case is exactly the same regulation that was at issue in Hudgens. [00:39:48] Speaker 00: VA offered the exact same interpretation that it was offering of that identical regulation that it offered in Hudgens. [00:39:54] Speaker 00: So the reasoning in Hudgens is exactly the same in this context. [00:39:59] Speaker 00: The 2015 interpretive guidance that we're challenging here came before Hudgens. [00:40:03] Speaker 00: So VA was not purporting to change its interpretation or anything. [00:40:06] Speaker 03: And in fact, the guidance itself says this interpret... But Hudgens, clearly, the question before Hudgens was whether they're going to apply the regulations that were hot off the press to a claim that had been filed and adjudicated before [00:40:21] Speaker 03: those regulations came into effect. [00:40:23] Speaker 03: And you know, and your view is that that doesn't matter in terms of the temporal existence of these regulations in terms of whether or not we should say call them as the Hudgens and court did post hoc rationalization. [00:40:35] Speaker 00: So your honor, I just want to be clear. [00:40:36] Speaker 00: The regulation itself is identical. [00:40:39] Speaker 00: The regulation 50-55. [00:40:40] Speaker 03: I'm sorry, talk about the interpretive rule. [00:40:41] Speaker 00: Sure. [00:40:41] Speaker 00: And the only reason VA would issue an interpretive rule is to try to seek our deference in court and to align its internal agency adjudicators on an interpretation. [00:40:50] Speaker 00: But the hour deference inquiry doesn't change in this context because of the conflicting interpretations. [00:40:56] Speaker 00: And I would also point out that they focus a lot on the arbitrary and capricious portion of this. [00:41:02] Speaker 00: And we do think Hudgens also eviscerated every basis in the guidance itself. [00:41:06] Speaker 00: VA's whole position was that this was not a change in interpretation, but in fact a longstanding interpretation. [00:41:11] Speaker 00: ignoring all of the board decisions and Chief Judge Casel's dissent in the Veterans Court opinion in that case. [00:41:18] Speaker 00: So we don't even think the guidance could survive aside from that. [00:41:23] Speaker 00: The second point I want to make, though, is that VA has now admitted that it's not seeking our deference in this case, but is instead resting its entire case on the fact that the regulation itself was amended. [00:41:34] Speaker 00: And we don't think that that's viable under the APA at all. [00:41:39] Speaker 00: The APA requires notice and comment rulemaking. [00:41:42] Speaker 00: to amend a regulation. [00:41:44] Speaker 00: And I think it's telling that the guidance itself uses the word amend, because that is what VA thought it was doing. [00:41:49] Speaker 00: They thought it was amending the regulation. [00:41:51] Speaker 00: And that's not permissible. [00:41:52] Speaker 00: It's an interpretive rule. [00:41:54] Speaker 00: And as we point out in our reply brief, if you accept this position, that VA doesn't even need our deference anymore, because the regulation is now unambiguous. [00:42:03] Speaker 00: I mean, you've eviscerated the entire hour framework. [00:42:06] Speaker 00: Any time an agency finds an ambiguous regulation, it could always just stick in an interpretive rule. [00:42:11] Speaker 00: And VA has not pointed to any case where this has worked. [00:42:15] Speaker 00: They identified the Nova 2001 case. [00:42:18] Speaker 00: But in that case, VA was revising its interpretation of a statute, not a regulation. [00:42:23] Speaker 00: And so therefore, it wasn't revising the source authority that it was purporting to interpret. [00:42:28] Speaker 00: It was revising its own interpretation and coming to this court seeking Chevron deference. [00:42:34] Speaker 00: Here, VA is revising the very thing that it is purporting to interpret. [00:42:37] Speaker 00: And that's the sort of question-begging reasoning that would eviscerate the hour framework. [00:42:42] Speaker 00: So we still think Hudgens is perfectly controlling here. [00:42:45] Speaker 00: Nothing has changed. [00:42:46] Speaker 00: And the court should set aside the rules based on Hudgens alone. [00:42:51] Speaker 00: Thank you. [00:42:54] Speaker 02: Thank you. [00:42:54] Speaker 02: Thanks to counsel. [00:42:56] Speaker 02: The case is well presented and is taken under submission.