[00:00:00] Speaker 00:
The next case for argument is Cloud versus McDonough, number 23-1846.

[00:00:05] Speaker 00:
When you're ready, Mr. Carpenter, take your time.

[00:00:15] Speaker 02:
May it please the court, Kenneth Carpenter, appearing on behalf of Mr. Cloud.

[00:00:21] Speaker 02:
The issue in this case deals with the overlap between two different VA regulations.

[00:00:28] Speaker 02:
they are in the same regulatory section of 3.105 but one is in sub-paragraph A and the other is in sub-paragraph D. We believe that error was made by the lower court in relying upon the criteria in A rather than the criteria that exist in D. In D, which is the applicable regulation in this case, a service-connected

[00:00:58] Speaker 02:
service connection will be severed only where the evidence establishes that it was clearly and unmistakably erroneous to have made that grant in the first instance.

[00:01:10] Speaker 02:
The lower court, in our view, made an error of law in assuming that because of the similarity of the language, that is to say clear and unmistakable error,

[00:01:23] Speaker 02:
in A and clearly and unmistakably erroneous in D that the criteria for A as established by this Court's case law and by its own case law

[00:01:38] Speaker 02:
was the applicable criteria.

[00:01:41] Speaker 02:
We believe that these are two separate and distinct regulations and that one regulation cannot be imputed into the other to dictate whether or not the burden of proof, in this case of the government, had been met.

[00:01:59] Speaker 02:
In this case, the regulatory requirements were amended

[00:02:05] Speaker 02:
prior to the decision of the agency on this question.

[00:02:11] Speaker 02:
And the most recent versions of both of those regulations were amended in February of 2019, and it became effective February of 2019, and were applicable for the decision in this matter.

[00:02:35] Speaker 02:
The lower court, or excuse me, the proceedings were commenced before the agency based upon an administrative decision.

[00:02:45] Speaker 02:
That administrative decision is found in the record.

[00:02:48] Speaker 00:
I want to make sure I understand the issue that you're presenting to us.

[00:02:51] Speaker 00:
I've understood from your brief at page one, the sole issue is whether there was a misinterpretation of 3.105D.

[00:02:59] Speaker 00:
D, correct.

[00:03:01] Speaker 00:
And D, you say, requires clear and unmistakable error.

[00:03:07] Speaker 00:
No.

[00:03:08] Speaker 00:
Help me, but my understanding of your issue is you say that 3.105D requires the government, when it severs benefits, to show there was a clear and unmistakable error in granting the benefits that it now wants to sever.

[00:03:24] Speaker 00:
Is that the issue or that's not the issue?

[00:03:28] Speaker 02:
Well, that is.

[00:03:29] Speaker 02:
the issue generally, more specifically, it is whether or not the plain language of D requires evidence to base the severance on that the original award was clearly and unmistakably erroneous.

[00:03:51] Speaker 02:
And that is not defined by the regulation.

[00:03:57] Speaker 02:
when the VA amended its regulation in A, it provided a definition for clear and unmistakable error.

[00:04:06] Speaker 02:
The term clear and unmistakable error is not used in this, in D, the explicable error.

[00:04:13] Speaker 00:
I'm sorry, it's very elusive.

[00:04:16] Speaker 00:
What's the language in D, and how does it differ from A?

[00:04:21] Speaker 00:
Really and unmistakably erroneous?

[00:04:23] Speaker 02:
The evidence, excuse me,

[00:04:27] Speaker 02:
Regulatory language is service connection will be severed only where evidence establishes that it, meaning the grant of benefits, was clearly and unmistakably erroneous.

[00:04:42] Speaker 00:
Do you think there's something different between clearly and unmistakably erroneous and clear and unmistakable air?

[00:04:49] Speaker 00:
Those are just adverb forms of the same words.

[00:04:53] Speaker 02:
Well, they may be adverb forms of the same words, Your Honor,

[00:04:57] Speaker 02:
we believe that the case law that has been developed about what constitutes a clear and unmistakable error is not the proper legal criteria for determining whether the evidence established whether or not the award was clearly and unmistakably covered.

[00:05:20] Speaker 00:
The standard should be here.

[00:05:21] Speaker 00:
I mean, the board looked at this and said,

[00:05:24] Speaker 00:
Look, the original service award was wrong because this was a result of his own misconduct.

[00:05:31] Speaker 00:
You agree that you can't get service connection if the disability arises from the veteran's own misconduct, right?

[00:05:38] Speaker 02:
I do, Your Honor.

[00:05:40] Speaker 02:
But in this case... That's what the board found.

[00:05:43] Speaker 02:
But the problem is that finding is not consistent with the regulatory criteria of the Secretary's regulation for what the burden of proof that is imposed upon the government is to be

[00:05:59] Speaker 02:
in order to lawfully sever.

[00:06:02] Speaker 00:
Can I just ask, can I look at the board's decision at page 147 of the appendix?

[00:06:09] Speaker 00:
The board cites the applicable law and says service connection will be severed only where the evidence establishes that it is clear and unmistakable error.

[00:06:18] Speaker 00:
And it cites 48105B.

[00:06:22] Speaker 00:
What's wrong with that?

[00:06:23] Speaker 00:
That is the standard.

[00:06:24] Speaker 00:
All they did is leave off the LYs at the end of clearly, unmistakably, and are running.

[00:06:31] Speaker 00:
No, Your Honor.

[00:06:33] Speaker 02:
If you look at the underlying facts, as the lower court was required to have done, they would have recognized that there was no

[00:06:42] Speaker 02:
evidence submitted in support of the decision to sever.

[00:06:48] Speaker 00:
What happened in this case... Are you saying there needed to be additional new evidence in support of the severance or that they could just look at the original application?

[00:06:59] Speaker 02:
Under D, they can look at either.

[00:07:02] Speaker 02:
But there must be evidence establishing that the original award

[00:07:08] Speaker 02:
was clearly and unmistakably erroneous.

[00:07:11] Speaker 00:
Wasn't the evidence in the file that the original award was wrong because this was the result of a drunk driving accident?

[00:07:20] Speaker 02:
No, Your Honor.

[00:07:21] Speaker 02:
That was the inference and the incorrect inference made by

[00:07:25] Speaker 02:
the Veterans Court.

[00:07:27] Speaker 00:
The record reflects that the proceedings were initiated vis-a-vis... You're starting to talk about how the Veterans Court has applied this legal standard to the facts.

[00:07:39] Speaker 00:
You know we don't have jurisdiction over that.

[00:07:41] Speaker 02:
No, Your Honor.

[00:07:43] Speaker 02:
I'm asking this Court to simply look at the record as it existed before the Veterans Court.

[00:07:50] Speaker 02:
And if I can

[00:07:51] Speaker 02:
quote what the Veterans Court said in its decision.

[00:07:55] Speaker 02:
While the board did assess the appellant's motor vehicle accident resulted from misconduct under the preponderance of evidence standard, which is a clearly different legal standard than clearly and unmistakably erroneous, and that this was just one aspect of the board's overall decision.

[00:08:15] Speaker 02:
The board applied the three-step test for the RO's 2019 decision

[00:08:22] Speaker 02:
And that three-step framework established in Q is the correct legal standard.

[00:08:28] Speaker 02:
And that is simply incorrect.

[00:08:30] Speaker 00:
Let's assume we disagree with you about that.

[00:08:33] Speaker 00:
That when they say clearly and unmistakably or erroneous in D, they're just using the same Q standard that we've talked about forever.

[00:08:42] Speaker 00:
Because honestly, they're the same words.

[00:08:45] Speaker 02:
But Your Honor, that's fundamentally unfair.

[00:08:47] Speaker 02:
I mean, it's only high burden for the VA to establish Q. And they were not

[00:08:56] Speaker 00:
held to that burden.

[00:08:58] Speaker 00:
Can I ask you, let me see if I can drill down a little bit, because I'm so a little confused.

[00:09:04] Speaker 00:
What do you think is the difference between the Q standard that we all know, the three-part standard, which the board clearly applies?

[00:09:11] Speaker 00:
The Veterans Court's opinion, you know,

[00:09:14] Speaker 00:
there's parts of it dealing with the insomnia that may be different than the parts affirming actual severance decision we can get into that if we have to but what do you think is the substantive legal difference between the three-part Q standard that's that we've known forever and what you think is different indeed

[00:09:34] Speaker 02:
Because in D, as opposed to A, there is no reference to evidence.

[00:09:41] Speaker 02:
A does not make any reference to evidence.

[00:09:43] Speaker 02:
It refers to a clear and unmistakable error made either in the application of law or in correctly applying the facts.

[00:09:55] Speaker 00:
D, which the secretary wrote separately from A. OK, but can I just stop you there?

[00:10:01] Speaker 00:
Yes.

[00:10:01] Speaker 00:
Because even though A doesn't specifically say evidence, clearly the secretary has to have evidence to conclude its decision under A, too.

[00:10:13] Speaker 00:
They can't just come in and say clear and unmistakable error because we think so.

[00:10:16] Speaker 00:
It has to be based

[00:10:18] Speaker 00:
I mean, what we all know is, Q has to be based on the evidence in the file.

[00:10:26] Speaker 00:
And so it has to be based on evidence.

[00:10:28] Speaker 02:
But that is the evidence that was in the file at the time of the decision.

[00:10:32] Speaker 02:
We've already established that under D, and the case law has established,

[00:10:36] Speaker 02:
that you can use evidence that wasn't in the file.

[00:10:39] Speaker 02:
And they did attempt to refer to evidence when they initiated this administrative decision.

[00:10:47] Speaker 00:
Okay, can I stop you again?

[00:10:48] Speaker 00:
They can use evidence that wasn't in the final to establish severance, sometimes because it came out after the fact or the life, but they don't have to, right?

[00:10:57] Speaker 00:
No, they do not have to.

[00:10:58] Speaker 00:
Did they do that here?

[00:11:00] Speaker 00:
Did anyone just look back in the file and say, oh, we blew this?

[00:11:03] Speaker 00:
There's evidence in the file that shows this was caused by his own willful misconduct.

[00:11:08] Speaker 02:
No, Ron.

[00:11:09] Speaker 02:
That evidence was not in the record.

[00:11:12] Speaker 00:
The government, in its brief, concedes that there was no line-of-duty determination made either by the military during his period of service... It concedes there was no expressed line-of-duty determination, but I don't think they conceded that the police report and the drunk driving evidence was not... No, no, no.

[00:11:31] Speaker 00:
That was in the record, and that's what made the initial implicit line-of-duty determination a clear and unmistakable error when they got around to reviewing it later, isn't that?

[00:11:41] Speaker 00:
What happened here?

[00:11:42] Speaker 02:
No, Your Honor.

[00:11:43] Speaker 02:
And that's why I'm trying to direct the Court's attention to the administrative decision found in the record at pages 64 to 66.

[00:11:51] Speaker 02:
This was a VA-initiated administrative proceeding, which was completely ex parte and

[00:12:01] Speaker 00:
What would happen is your client, for better or worse, asked for an earlier service connection date in connection with an award he got, and that triggered some further review, and the RO determined, uh-oh, we made a clear and unmistakable error.

[00:12:18] Speaker 00:
This was willful misconduct.

[00:12:20] Speaker 00:
Isn't that correct?

[00:12:20] Speaker 02:
But respectfully, Your Honor, they did so using the line of duty determination and the criteria under three

[00:12:29] Speaker 02:
USC 105A for rebutting that.

[00:12:33] Speaker 02:
And that criteria is based on a preponderance of evidence.

[00:12:38] Speaker 02:
And that's the only finding that is in this record as to whether or not there was a preponderance of evidence, not whether there was clear and unmistakable evidence.

[00:12:50] Speaker 00:
For the sake of argument, if that's what happened, do we have jurisdiction to do anything about that?

[00:12:54] Speaker 02:
You do, Your Honor, because of the way in which the Veterans Court made its decision.

[00:13:00] Speaker 02:
The Veterans Court said that that was permissible because of the Q framework in A. There is no Q framework in D. The framework in D is limited to evidence, and the only evidence was

[00:13:20] Speaker 02:
the administrative decision that relied upon a preponderance of evidence to rebut the presumption under 105 that this was willful misconduct.

[00:13:31] Speaker 02:
This is not a case in which the secretary came forward and offered that evidence.

[00:13:36] Speaker 00:
Are you saying that because that initial RO decision didn't go through in fulsome

[00:13:42] Speaker 00:
analysis that there's not enough here because I've read the board's decision.

[00:13:46] Speaker 00:
It goes through in detail applying a Q standard, looking at the file record and saying the record shows that he was drunk, the accident was a result of his own misconduct, and it meets the Q standard.

[00:14:00] Speaker 02:
And that was the board reviewing a decision that was required to be made under the criteria under D.

[00:14:07] Speaker 02:
The D criteria shifts the burden of proof to the secretary.

[00:14:11] Speaker 02:
What the board should have been reviewing was whether or not the secretary met his statutory obligation to present clear and unmistakable evidence.

[00:14:23] Speaker 02:
And the secretary did not do that to support the severance.

[00:14:27] Speaker 02:
This is a taking.

[00:14:28] Speaker 02:
This is a taking away of a granted benefit.

[00:14:32] Speaker 02:
A veteran should be entitled to the benefit of the presumption that the first decision was correct.

[00:14:40] Speaker 00:
I see that I'm in the middle.

[00:14:51] Speaker 01:
May it please the court.

[00:14:53] Speaker 01:
There are some points made that we didn't necessarily draw from the briefing.

[00:14:56] Speaker 01:
I'm happy to address those at the court.

[00:14:58] Speaker 00:
Can I just get your initial reaction to the argument that somehow the clear and unmistakable error in 105A is different than clearly evidence showing that it was clearly and unmistakably erroneous in D?

[00:15:13] Speaker 00:
Is there any difference in the government's view?

[00:15:15] Speaker 01:
No, the government sees no difference in those, Your Honor.

[00:15:17] Speaker 01:
It's the same Q standard, the evidentiary and clearly legal error standard is the same.

[00:15:24] Speaker 00:
And even though A doesn't use the word evidence, you still have to show A. That's correct.

[00:15:30] Speaker 00:
Evidence for A.

[00:15:32] Speaker 01:
Yes, VA has to prove that there was, in fact, a clear and unmistakable error based upon the record.

[00:15:39] Speaker 01:
And as Your Honor pointed out, in a service connection severance case, that can include later developed evidence.

[00:15:45] Speaker 01:
Here, it did not.

[00:15:46] Speaker 01:
It was based purely on the record at the time.

[00:15:48] Speaker 01:
As the record showed, there was not a line of duty determination made originally that came out when Mr. Cloud sought an earlier effective date.

[00:15:57] Speaker 01:
VA recognized the error.

[00:16:00] Speaker 01:
did decline a duty determination in the first instance, and maybe this is where there's some confusion in the argument presented by Mr. Cloud, it wasn't applying the preponderance standard.

[00:16:09] Speaker 01:
The only thing that VA ever applied the preponderance standard to in this case was when Mr. Cloud was presented with the proposal to sever,

[00:16:17] Speaker 01:
He exercised his right, which he has under the regulation, to provide additional argument and evidence as to why severance was inappropriate.

[00:16:24] Speaker 01:
He did so by presenting a new argument, a new theory, that he suffered from insomnia and alcoholism based upon a tuberculosis treatment that was performed in service.

[00:16:33] Speaker 01:
That was a new argument, new evidence, and VA had an obligation to address that.

[00:16:40] Speaker 01:
As a new argument, it addressed it under the preponderance standard, which was entirely appropriate.

[00:16:44] Speaker 01:
But the original severance proposal

[00:16:47] Speaker 01:
It didn't apply that and he couldn't have known that that's what he would have argued.

[00:16:51] Speaker 01:
It was based upon the evidence in the record, which showed obviously he was intoxicated when he was driving.

[00:16:57] Speaker 01:
That was the cause of his accident and that was the cause of his injuries and VA just missed it.

[00:17:02] Speaker 00:
Is it fair to say that to get to that new evidence, there had to first be a determination under 3.105D that the secretary proved clear and unmistakable error to support severance?

[00:17:16] Speaker 00:
We don't even get to the preponderance of the evidence and the new evidence unless that finding has first been made?

[00:17:22] Speaker 00:
That's correct, John.

[00:17:23] Speaker 00:
That's what the proper interpretation of 3.105D should be.

[00:17:27] Speaker 00:
It is.

[00:17:28] Speaker 00:
And how can we, for example, do we have jurisdiction

[00:17:32] Speaker 00:
to ask the question of, did that actually happen here?

[00:17:34] Speaker 01:
I think the only thing this court could do is assess, did the board actually apply that legal standard?

[00:17:41] Speaker 01:
If the question is, did the facts line up with that standard, that would be beyond the court's jurisdiction.

[00:17:46] Speaker 00:
But we could answer the question of whether the board applied that standard.

[00:17:50] Speaker 00:
You could, Your Honor.

[00:17:51] Speaker 00:
And we believe it's evident.

[00:17:52] Speaker 00:
If you could help me with that, because there's a number of references to preponderance of the evidence.

[00:17:57] Speaker 00:
that I'm not sure the board was as careful as you've tried to be.

[00:18:02] Speaker 00:
I would agree with that, Your Honor, admittedly.

[00:18:05] Speaker 01:
But I think we can see, if we look at the board decision as a whole, that it is undertaking this sort of stepwise analysis that the regulation requires.

[00:18:13] Speaker 01:
Obviously, at appendix 147, it clearly identifies the appropriate standard.

[00:18:19] Speaker 01:
Service connection will be severed if there is clear and unmistakable error, the burden of proof being on the government with the citation to 105D.

[00:18:26] Speaker 01:
And then if we look at the actual analysis, which begins at Appendix 150, the first thing the Board does is lay out the three-part test for Q, identify the failure to complete a line of duty determination in the original decision, state that that was obviously a legal error,

[00:18:43] Speaker 01:
It then looks at the evidence that was present in the record at the time, shows that there could be no reasonable disagreement that the evidence at the time showed that the vehicle accident was caused by Mr. Cloud's alcohol intoxication and his willful misconduct.

[00:18:59] Speaker 01:
And then it says that that manifestly changed the outcome, because if the regional office had appropriately considered the evidence in the record at the time, which was undisputable, it would have determined in the line of duty determination that this was not in the line of duty.

[00:19:12] Speaker 01:
That's the very first thing the board does at appendix 150 to 151.

[00:19:17] Speaker 01:
Then the board addresses the new issue that Mr. Cloud presented in response to the proposal to sever, which is his claim was that his alcohol use was caused by a different in-service incident, which was this tuberculosis treatment.

[00:19:34] Speaker 01:
And the board spent several pages weighing the evidence, taking all of the material that he provided, the other relevant medical evidence, and concludes on the preponderance standard that that is not true.

[00:19:46] Speaker 00:
And it was correct in the government's view to apply the preponderance standard and place that preponderance burden on Mr. Cloud at that point?

[00:19:54] Speaker 01:
Yes, Your Honor, because if we look at the regulation 3105A, which in our view is sort of the general categories of error and then D talks about specific procedures for severance of prior service connection, but 105A says that all of these rules are talking about previous determinations which are final and binding.

[00:20:15] Speaker 01:
And that's the heading as well, 3105 is revision of decisions.

[00:20:19] Speaker 01:
So all of this framework only happens, and it only conceptually makes sense, if you are reviewing a decision already made by the VA on some issue that has become final.

[00:20:30] Speaker 01:
Here, the argument that Mr. Cloud presented in response to the proposal to sever that he had in-service tuberculosis treatment that caused insomnia and alcoholism had never been presented.

[00:20:42] Speaker 01:
VA had never made a decision on that.

[00:20:43] Speaker 01:
It just doesn't make sense to say that VA was required to find an error in that decision that it never made.

[00:20:50] Speaker 01:
It's a new issue.

[00:20:51] Speaker 01:
And so it falls back to the default standards, the default burdens, and the preponderance evaluation.

[00:21:00] Speaker 01:
Now, where I think there may have been some confusion, admittedly, once we get to appendix 156, when the board is, by its own statement, summarizing its conclusions, it does loosely go back and forth between the preponderance language and the clear and unmistakable evidence language.

[00:21:16] Speaker 01:
And I think that's just the way it's written.

[00:21:19] Speaker 01:
I don't think it's as clear as it could have been.

[00:21:21] Speaker 01:
But it's only the concluding paragraph.

[00:21:23] Speaker 01:
Again, we have six pages of analysis that is doing the proper stepwise process here.

[00:21:33] Speaker 01:
And we think the court can affirm on that basis.

[00:21:37] Speaker 01:
The court has no other questions.

[00:21:39] Speaker 01:
Thank you.

[00:21:39] Speaker 01:
Thank you.

[00:21:45] Speaker 00:
Mr. Coughlin, I'll give you two minutes.

[00:21:47] Speaker 02:
Thank you very much.

[00:21:48] Speaker 02:
If the court would direct its attention to the February 6, 2019 rating decision, which severed the awards, and it's at appendix 91 and 93, actually it begins earlier.

[00:22:03] Speaker 02:
Let me get the correct beginning citation.

[00:22:18] Speaker 02:
It begins at 90 and ends at 101.

[00:22:22] Speaker 02:
But in particular, I'd ask the court to look at pages of the appendix 91 and 93.

[00:22:28] Speaker 02:
And in those pages, the reference to the basis for the severance being made by the VA under D was made a determination that your motor vehicle accident was a result of willful misconduct

[00:22:47] Speaker 02:
as you were intoxicated at the time of the regulation per VA regulation, and then it cites the manual provision.

[00:22:57] Speaker 02:
Now, at that point, the only basis for the preceding determination was that there was a preponderance of evidence to rebut the 105A presumption that was relied upon presumptively by the rating decisions

[00:23:16] Speaker 02:
that granted these benefits to Mr. Clout.

[00:23:20] Speaker 00:
Where did they say preponderance?

[00:23:22] Speaker 00:
I mean, the first paragraph of that section... No, no, no, no, no.

[00:23:25] Speaker 02:
I'm sorry.

[00:23:25] Speaker 02:
I was referring to the preponderance was the burden under 105 that is relied upon for what they are referring to as a line of duty determination.

[00:23:39] Speaker 02:
That administrative decision framed it as a line of duty determination.

[00:23:44] Speaker 02:
There is a statute at 105A, which this court has found to be a presumption of service connection when the event takes place in service, which is precisely what happened here.

[00:23:57] Speaker 02:
Based upon that,

[00:24:00] Speaker 02:
the lower court should have afforded the benefit to Mr. Cloud that those were presumptively regularly made decisions of the agency the two times that he was awarded compensation.

[00:24:16] Speaker 02:
First, for a series of physical conditions.

[00:24:18] Speaker 00:
The government disagrees with you.

[00:24:20] Speaker 00:
But what the government can do, and what they did here, is show by clear and unmistakable error that that decision was incorrect.

[00:24:30] Speaker 00:
And throughout these papers, even what you just cited to us, the first paragraph under 2 says, service connection for PTSD is severed effective May 2019 due to a clear and unmistakable error.

[00:24:45] Speaker 02:
and clear and unmistakable error is not the legal standard.

[00:24:50] Speaker 00:
Let's just assume you're losing that argument, that clear and unmistakable error in A is the same thing as clearly and unmistakably erroneous in D. If that's the case,

[00:25:02] Speaker 00:
And again, there are tons of these decisions.

[00:25:06] Speaker 00:
Sometimes there's imprecise language.

[00:25:07] Speaker 00:
But is it not the case that if you read the Auro severance decision and the board's more detailed analysis, that it understood that it had to apply a Q standard to this?

[00:25:19] Speaker 02:
The fact that they understood it is not the issue, Your Honor.

[00:25:22] Speaker 02:
The question is, was there or wasn't there in the record

[00:25:25] Speaker 02:
clear and unmistakable evidence.

[00:25:28] Speaker 00:
That's not a question for us.

[00:25:30] Speaker 00:
As long as they're applying the right standard, whether they applied it correctly or not is an application of law of attack.

[00:25:36] Speaker 02:
But, Your Honor, respectfully, it is a question of interpretation of the regulation.

[00:25:41] Speaker 02:
3.105D uses the word evidence.

[00:25:45] Speaker 02:
Okay, Mr. Harper, we have your argument.

[00:25:46] Speaker 02:
Thank you.