[00:00:00] Speaker 03:
The next case for argument is 24-1211, Pace v. Collins.

[00:00:03] Speaker 03:
Mr. Niles, nice to see you again.

[00:00:08] Speaker 01:
Thank you, Your Honors, and may it please the Court.

[00:00:14] Speaker 01:
The Veterans Court erred in this case because it misinterpreted the two-step protractive inquiry that 38 CFR sections 3.343a and 344a

[00:00:26] Speaker 01:
provide to US military veterans who have earned a total stabilized rating when, in fact, 3.343A and 344A, they do have that two-step inquiry.

[00:00:36] Speaker 03:
And the Veterans Court misinterpreted it as providing an unstructured whole list of- But even if you were right, didn't the court below go through an analysis even under your view that you had to have the 2001 and the 2005 and reach the same conclusion nonetheless?

[00:00:54] Speaker 01:
No, Your Honor, it did not.

[00:00:56] Speaker 01:
And the reason is that the Board of Veterans' Appeals was looking at essentially collapsed the same

[00:01:04] Speaker 01:
unstructured holistic analysis where instead of looking first and foremost pursuant to 3.343a's first sentence and whether there was examination showing material improvement, the Board of Veterans' Appeals jumped straight into assuming that there were examinations showing material improvement, then looking at all the facts and evidence of record to see whether that material improvement was sustainable.

[00:01:29] Speaker 01:
And so the

[00:01:31] Speaker 01:
The Veterans Court then, in analyzing this under the wrong inquiry, erred and wouldn't.

[00:01:37] Speaker 03:
Well, what's the wrong inquiry where the second sentence of 3.343 says examination reports, blah, blah, blah, must be evaluated in conjunction with all the facts of the record, and so forth?

[00:01:52] Speaker 01:
Yes, Your Honor.

[00:01:53] Speaker 01:
There are two reasons then why 3.343 splits this up.

[00:01:59] Speaker 01:
And just syntactically, the first sentence of 3.343a.

[00:02:04] Speaker 03:
When you say splits this up, what is the this?

[00:02:09] Speaker 01:
First of all, looking to an examination requiring material improvement.

[00:02:12] Speaker 01:
And so that first question then is not to a VA adjudicator, but instead takes that analysis out of the hands of a VA adjudicator and says that this is a rating

[00:02:21] Speaker 01:
This context of rating reduction is one of medical inquiry.

[00:02:24] Speaker 01:
And before then it goes into the hands of a VA adjudicator.

[00:02:27] Speaker 01:
We're going to start with a medical professional requiring an examination showing material improvement.

[00:02:33] Speaker 01:
At that point, the second step of the analysis goes back to the VA adjudicator as further protection and also for administrative efficiency.

[00:02:41] Speaker 01:
We start with this examination report showing material improvement and then asking the adjudicator to say, well, looking at all of the facts in the record, is this

[00:02:52] Speaker 01:
of these examination reports showing material improvement consistent with that entire evidence.

[00:02:59] Speaker 03:
So we're in CUELand.

[00:03:01] Speaker 01:
Yes, Your Honor.

[00:03:02] Speaker 03:
And I didn't see a lot of it discussed in your brief, but you've got to show this is outcome determinative, correct?

[00:03:09] Speaker 01:
In a simple case, yes, Your Honor.

[00:03:11] Speaker 01:
Because, however, the Veterans Court ended its analysis at was there error, the Veterans Court did not reach then what becomes a fact-found inquiry in terms of

[00:03:21] Speaker 01:
Is this an error that would have led to a manifestly different result?

[00:03:24] Speaker 01:
And so the Veterans Court's analysis in this case warrants.

[00:03:30] Speaker 03:
I don't remember exactly.

[00:03:31] Speaker 03:
They didn't say this is not COE.

[00:03:33] Speaker 03:
It's not outcome determinative.

[00:03:35] Speaker 03:
Are you saying they didn't apply the COE standard?

[00:03:38] Speaker 03:
Are you saying they didn't have to apply it or what?

[00:03:43] Speaker 03:
There are multiple... Isn't the burden... I'm sorry.

[00:03:47] Speaker 03:
I'll interrupt one more time and then I'd like to talk.

[00:03:49] Speaker 03:
Which is, doesn't CUE place the burden on you to demonstrate that even if there were an error, it was outcome determinative?

[00:04:00] Speaker 03:
And did you do that?

[00:04:02] Speaker 01:
Yes, Your Honor, and yes, Your Honor.

[00:04:04] Speaker 01:
And so rating reductions are special.

[00:04:07] Speaker 01:
They are... The Veterans Court's Stoffelmeyer decision was correct to point out that the regulation

[00:04:13] Speaker 01:
has specific limitations and has carefully circumscribed when the VA may take away with the veteran has already gone through the process of VA to establish as a total stabilized rating.

[00:04:27] Speaker 01:
And when that happens then the, and speaking of when the VA has departed from those

[00:04:35] Speaker 01:
carefully circumscribed limitations and its ability to reduce that rating, then the rating is void of an issue.

[00:04:46] Speaker 01:
And here, with the Board of Veterans' Appeals in its analysis of the 2006 rating officer's reduction, well, the rating officer's reduction did not go through this two-part process.

[00:04:58] Speaker 01:
So first, looking at the examination reports

[00:05:01] Speaker 01:
to see what the examination report show material improvement and then open up to the entirety of the record.

[00:05:06] Speaker 01:
That then, as Mr. Pace has argued before the Veterans Court, and this court, at least preserving the argument here, is outcome-determined because it renders the rating reduction void of an issue.

[00:05:21] Speaker 03:
So are you saying that this case is an exception

[00:05:24] Speaker 03:
to the rules.

[00:05:25] Speaker 03:
I mean, all of our cases lay out these requirements, including that it has to be outcome-determined.

[00:05:31] Speaker 03:
So you're saying, in this context, that requirement doesn't apply?

[00:05:36] Speaker 01:
No, Your Honor, not going that far.

[00:05:39] Speaker 01:
But rating reduction is a narrow and special context.

[00:05:43] Speaker 01:
And certainly, rating reductions, the context of showing clear and unmistakable error in the context of rating reduction is somewhat easier for

[00:05:51] Speaker 03:
a movement than an appellant to do than showing clear and unmistakable error in the... Are there any other areas in veterans land where the CUA standard of outcome determinants doesn't apply because there's this void at Benicio theory hanging over us?

[00:06:11] Speaker 01:
And so I do want to be clear that I'm not saying that the outcome determinative test does not apply to rating reductions.

[00:06:18] Speaker 01:
But rating reductions then would be in the same camp as severances.

[00:06:20] Speaker 01:
But instead, rather, showing Q remains a multi-step process, one step in which is to show that there was error.

[00:06:29] Speaker 01:
And then a successive, conceptually downstream element is whether there was that error.

[00:06:36] Speaker 01:
But for that error, there would have been a manifestly different outcome.

[00:06:39] Speaker 01:
And what the Veterans Court did here is stop this analysis at that inquiry simply of error.

[00:06:45] Speaker 01:
And so what Mr. Pace is requesting at this court, set aside or reverse the Veterans Court's legal error in mashing together into an unstructured holistic analysis, what 3.343A and 344A have as a two-step inquiry, and then remand for the Veterans Court to adjudicate the EQ entitlement to include then under this two-step inquiry.

[00:07:08] Speaker 01:
whether then there is error and assuming yes, whether that error was outcome-determinative or would have led to a manifestly... You're challenging the interpretation of that two-step process.

[00:07:20] Speaker 01:
Yes, Your Honor.

[00:07:20] Speaker 04:
Right?

[00:07:21] Speaker 04:
Okay.

[00:07:22] Speaker 04:
You're not challenging the outcome of that two-step process.

[00:07:25] Speaker 04:
You're not bringing a Q claim before us.

[00:07:29] Speaker 01:
Mr. Pace, in the entirety of his case, is challenging that.

[00:07:33] Speaker 01:
But before this court, understanding the limitations and restrictions on this court, being able to address it back down to industry.

[00:07:39] Speaker 04:
Right.

[00:07:40] Speaker 04:
The only argument you really have before us is the interpretation, interpretation of the regulations that set out that two-step process.

[00:07:48] Speaker 01:
That's correct, Your Honor.

[00:07:50] Speaker 04:
And if we agree with that, with the interpretation, then this case goes away.

[00:07:58] Speaker 04:
If this court agrees with the Veterans Court's interpretation, matching together... Because we can't, as you know, we can't reach a fact-based determination.

[00:08:08] Speaker 01:
That's correct, Your Honor.

[00:08:09] Speaker 01:
I just wanted to make sure I was correctly framing it.

[00:08:11] Speaker 04:
So there's only two things before us.

[00:08:14] Speaker 04:
Interpretation of the regulations that outline that two-step process, and then the outcome of that application of that two-step process.

[00:08:22] Speaker 04:
You're not arguing before us that we had jurisdiction to rule as to the outcome, the factual, or even the application of the regulations to the facts.

[00:08:36] Speaker 01:
That's correct, Your Honor.

[00:08:37] Speaker 01:
And to the extent that the briefs are inconsistent with that, there wasn't a request in the alternative, or I guess in the first instance, asking this court for outright reversal.

[00:08:48] Speaker 01:
However, what Mr. Pace would be very happy with and believes that it is far, as far as this court can go, would be to reverse the legal error of the Veterans Court and remand for that second question then to go to the Veterans Court in the first instance, because it is bound up in facts.

[00:09:06] Speaker 00:
I want to make sure I understand the two-step process as you see it.

[00:09:09] Speaker 00:
The first step is begin with the medical examinations, right?

[00:09:13] Speaker 01:
Yes, Your Honor.

[00:09:14] Speaker 00:
And is it your contention that the regulation requires you only get past that first step if there's at least two consecutive medical examinations that show improvement in the condition that led to the disability writing?

[00:09:33] Speaker 01:
Mostly, Your Honor.

[00:09:34] Speaker 01:
And the reason why I'm hedging on that is, as initially briefed, this was requesting to look at the very most recent and then no matter what the penultimately most recent examination said, that those two were it.

[00:09:50] Speaker 01:
And Mr. Pace does recognize that this is in the context of clear and unmistakable error.

[00:09:56] Speaker 01:
and that he disagrees with the outcome of Collier, the Veterans Court's Collier case.

[00:10:01] Speaker 01:
However, in the context of Q, that was binding to this particular case.

[00:10:06] Speaker 01:
And so to more directly answer Your Honor's question, the analysis starts by looking at just the examination reports.

[00:10:14] Speaker 01:
And in a Karnas context, where you have examination report, nothing in the middle of the major examination report, that will be the most recent two examination reports.

[00:10:25] Speaker 01:
Where there is an examination report chronologically in the middle that shows material improvement, or the examiner is saying, this person has really improved, but then the adjudicator comes back and says, I don't see sustained improvement yet.

[00:10:39] Speaker 01:
We're going to order a future exam.

[00:10:41] Speaker 01:
Then at that point, in this context of Q challenging the 2006 decision,

[00:10:46] Speaker 01:
the analysis would go to what the examination reports, the July 2005 examination report, the 2001 examination report, and the 1998 examination report, whether across the NUC material improvement.

[00:10:59] Speaker 01:
At that point, if the answer is yes, then the analysis opens up to more of that holistic second step.

[00:11:05] Speaker 00:
So what that sounds like to me, if I want to make sure I got it right, is in this case, like it or not, the only issue before us is whether

[00:11:14] Speaker 00:
The first step, based on the regulations, can be clearly and unmistakably understood as limited to situations where those first, where those most two recent examinations show sustained improvement.

[00:11:31] Speaker 00:
That is, you have a very, very narrow reading of what that step one is.

[00:11:36] Speaker 00:
That's what you're stuck with, because that's this case.

[00:11:39] Speaker 01:
Yes, Your Honor.

[00:11:40] Speaker 01:
It is even more narrow than I understood, Your Honor, to articulate.

[00:11:43] Speaker 01:
I was with you until the word sustained, where the first inquiry is examination report showing material improvement.

[00:11:51] Speaker 01:
The second step would then be sustained.

[00:11:52] Speaker 01:
But otherwise, I was with Your Honor.

[00:11:54] Speaker 00:
But the problem for you, I think, is

[00:11:57] Speaker 00:
Your reading of the regulation is that we don't even get to step two unless those circumstances, except in the narrow circumstances where step one is satisfied, as you've just articulated.

[00:12:10] Speaker 00:
But that just doesn't seem to be what the regulation says.

[00:12:14] Speaker 01:
If that is a problem for Mr. Pace, then that is a problem for Mr. Pace.

[00:12:17] Speaker 01:
But that is his position, Your Honors.

[00:12:20] Speaker 03:
Why don't we hear from the government?

[00:12:21] Speaker 01:
Thank you, Your Honors.

[00:12:45] Speaker 02:
Good morning, Your Honors.

[00:12:46] Speaker 02:
May it please the court?

[00:12:48] Speaker 02:
There are, I think, three each independently sufficient hurdles that Mr. Pace cannot overcome in order to prevail in this appeal.

[00:12:58] Speaker 02:
The first is that because this is a Q claim, the court cannot change the law on a Q claim.

[00:13:04] Speaker 02:
Q has to be analyzed based on the law as it was understood at the time, i.e.

[00:13:09] Speaker 02:
the 2006 decision here.

[00:13:12] Speaker 02:
And there's no question that Collier was the law.

[00:13:15] Speaker 03:
But what if we read the regulation hypothetically and say we're on all fours with Mr. Pace and we think the regulation requires X, Y, and Z. Isn't that sufficient?

[00:13:30] Speaker 02:
So two things.

[00:13:31] Speaker 02:
One, and my third point will be that there is no way to read the regulation the way he wants to read the regulation.

[00:13:36] Speaker 02:
But even if, hypothetically, the court were to, I think that would amount to changing the law here.

[00:13:42] Speaker 02:
That the law in place at the time in 2006 was the Collier decision at the Veterans Court that was applied in this case.

[00:13:49] Speaker 02:
And therefore, because this is a cue claim rather than a direct appeal, that's not something that the court can correct in this appeal.

[00:13:56] Speaker 02:
It would have to be in a direct appeal challenge

[00:13:59] Speaker 02:
that the court could then reverse the Veterans Court's interpretation of the regulation and remand for further development.

[00:14:07] Speaker 02:
The second problem that I think also goes to this question, which is the independently dispositive factual finding here, which is that even if the analysis were to proceed

[00:14:18] Speaker 02:
in the way that Mr. Pace advocates, i.e.

[00:14:21] Speaker 02:
that there would have to be a material improvement between the 2001 and 2005 examinations, the last two examinations in the record.

[00:14:31] Speaker 02:
The board also held that a reasonable person could interpret those two examinations to see an improvement there.

[00:14:38] Speaker 02:
And that is appendix.

[00:14:41] Speaker 03:
Is that what he's saying?

[00:14:42] Speaker 03:
I thought he was saying that the 2001 had to show material improvement, too.

[00:14:48] Speaker 03:
You needed two exams to show material improvement.

[00:14:53] Speaker 02:
Well, I think there's no question that the 2001 exam here showed material improvement.

[00:14:57] Speaker 02:
And that's also a board finding that he improved from 1998 to 2001.

[00:15:04] Speaker 02:
And then the continuation in 2001 was to see whether or not it would be sustained or whether that improvement was sort of temporal or episodic.

[00:15:14] Speaker 02:
Then, as I understood the briefing, his argument was that you needed to see in 2005, when they were actually doing the reduction, you had to see an improvement as compared to the very last, the penultimate examination.

[00:15:28] Speaker 02:
the 2001 examination.

[00:15:30] Speaker 02:
I think that's not correct as a matter of law.

[00:15:33] Speaker 02:
But in this case, the board made a factual finding that even if you were limited to just those two, that there was, he showed further improvement from 2001 to 2005, or at least a reasonable person could make that conclusion.

[00:15:46] Speaker 02:
So you're saying even if you accept his interpretation of the regulation, it doesn't matter?

[00:15:50] Speaker 02:
It doesn't matter, exactly.

[00:15:51] Speaker 02:
And so that's the second reason why this can't be Q, because

[00:15:56] Speaker 02:
it can't possibly be outcome determinative.

[00:15:59] Speaker 02:
And then the third reason is just to touch on the interpretation of the law.

[00:16:05] Speaker 02:
I think Mr. Pace got the benefit of the most lenient reading of these regulations that still makes any kind of sense.

[00:16:13] Speaker 02:
And that goes to the figures that we put in our brief on page 24, which

[00:16:21] Speaker 02:
If we look at them, Mr. Pace in 1998, that was when he had symptoms.

[00:16:27] Speaker 02:
That's time point A in the context of this case.

[00:16:31] Speaker 02:
Mr. Pace actually had symptoms that demonstrated total social and occupational impairment necessary for the 100% rating.

[00:16:40] Speaker 02:
Time point B on the figure is the 2001 examination.

[00:16:45] Speaker 02:
That's when the row observed that he had improved.

[00:16:48] Speaker 02:
And the question was, is he going to be figure one or figure two?

[00:16:52] Speaker 02:
Is it going to be a temporary improvement?

[00:16:54] Speaker 02:
And it's sort of an episodic.

[00:16:56] Speaker 02:
He had a good debt.

[00:16:57] Speaker 02:
We caught him on a good day.

[00:16:59] Speaker 02:
Or is it going to be sustained improvement?

[00:17:02] Speaker 02:
And therefore, it's a new plateau where we have to reduce the ratings.

[00:17:05] Speaker 02:
And so time point C was the 2005 examination, where they looked back and saw, yes, in fact, it has been sustained improvement.

[00:17:14] Speaker 02:
We have a new plateau at the 50%.

[00:17:17] Speaker 02:
And that's when they finally reduced his rating.

[00:17:21] Speaker 03:
Do you have any view on this theory about void ab initio?

[00:17:26] Speaker 03:
I mean, he made the narrow point in terms of why this would be outcome determinative.

[00:17:31] Speaker 03:
So accepting a lot of what he said, which I know you clearly disagree with, is that still a viable legal theory when we're talking about these reductions?

[00:17:42] Speaker 02:
Well, I think the sort of the critical step that he's missing is before you get to the VoIDAB initiative, which is that, in fact, if the board were to undertake the analysis that he's claiming was necessary, that they would have concluded that a reduction in 2006 was improper.

[00:18:00] Speaker 02:
And then,

[00:18:02] Speaker 02:
it would be potentially void of an issue, as he says.

[00:18:05] Speaker 02:
But I think the problem that he has here, given the board's factual finding that a reasonable person, even undertaking the limited comparison that he says was the legally required comparison, still could have concluded and saw improvement there, which means that a reduction could have still been appropriate in 2006.

[00:18:27] Speaker 02:
even under his reading how he thinks these ABRA regulations should be applied.

[00:18:32] Speaker 02:
And therefore, then it wouldn't be void ab initio, because it could still be proper.

[00:18:37] Speaker 02:
So I think his outcome-determinative problem is that a step earlier in the analysis, and so that never comes into effect.

[00:18:48] Speaker 03:
Can I just ask you, I may be wrong on this, and I can't recall this coming up in an earlier case, but you made the point earlier that on a CUE, Hulus for a number of reasons.

[00:18:58] Speaker 03:
But one of those reasons was that the law in the earlier time was the Collier Veterans case.

[00:19:06] Speaker 03:
So is it true that if we've not analyzed

[00:19:12] Speaker 03:
the regulatory regime.

[00:19:15] Speaker 03:
And if we now say the regulation is absolutely on all fours with what Mr. Pace says, that we still wouldn't be a CUE because the law then hadn't been decided.

[00:19:29] Speaker 02:
I think that's right, Your Honor.

[00:19:32] Speaker 02:
And I think in particular because there was a Veterans Court decision on that issue.

[00:19:35] Speaker 02:
So there was a legal interpretation

[00:19:38] Speaker 02:
in effect.

[00:19:39] Speaker 02:
And that's, I think, what George confirmed at the Supreme Court a few terms ago, that even if subsequently, obviously, a higher court changes their mind and says, no, you botched it in 1992, Veterans Court, and we just didn't have an opportunity to correct you until now, I think that has to wait for the court to address that on a direct appeal.

[00:20:02] Speaker 02:
I don't think they can do that on cue.

[00:20:04] Speaker 03:
That's interesting.

[00:20:12] Speaker 00:
analysis look like?

[00:20:15] Speaker 02:
I think because the opening brief really doesn't tangle with the Q standard at all.

[00:20:21] Speaker 02:
And so I don't really know how the court thinks about that.

[00:20:26] Speaker 02:
If the appellant sort of does not acknowledge the standard under which his appeal has to proceed, whether that would be a dismissal or affirmance.

[00:20:35] Speaker 04:
So what do you mean by that?

[00:20:36] Speaker 04:
They should have alleged each one of the standards, the Q standards, and gone through each one

[00:20:41] Speaker 02:
They should have done the Q analysis.

[00:20:43] Speaker 02:
I think the opening briefly reads as if this is a direct appeal rather than a Q appeal.

[00:20:47] Speaker 03:
Well, I get his point, though.

[00:20:49] Speaker 03:
I take his point, which is that if his theory is void ab initio, and we accept that at least it's the argument he's making, that he's saying if he's right on the law, then that reduction goes away.

[00:21:05] Speaker 03:
And so that's the beginning and end of the outcome determinative.

[00:21:10] Speaker 03:
standard.

[00:21:11] Speaker 02:
So.

[00:21:12] Speaker 02:
And we're perfectly happy for the court to affirm rather than dismiss.

[00:21:15] Speaker 02:
I think that's not a, however the court wants to dispose of it.

[00:21:21] Speaker 03:
And of course, there's this, we have a long plate of what to do.

[00:21:24] Speaker 03:
But the government's position is that he's wrong under the interpretation of the regulation, right?

[00:21:30] Speaker 02:
Yeah.

[00:21:31] Speaker 02:
Yes.

[00:21:31] Speaker 02:
Yes.

[00:21:31] Speaker 02:
I think that this fails as Q and also would fail as a direct appeal.

[00:21:37] Speaker 04:
Thank you.

[00:21:38] Speaker 04:
If it's a failure of key, then we dismiss.

[00:21:42] Speaker 04:
We would have to dismiss the case, correct?

[00:21:45] Speaker 02:
Yeah, I think it's between a dismissal and an affirmance that's sort of all roads lead to Rome.

[00:22:05] Speaker 01:
Thank you, Your Honor.

[00:22:07] Speaker 01:
Two quick points.

[00:22:08] Speaker 01:
And actually, before I get there, of course, the result that... I'm sorry.

[00:22:12] Speaker 03:
I'm having a hard time.

[00:22:13] Speaker 01:
Oh, I'm sorry.

[00:22:13] Speaker 01:
The result that Mr. Pace, of course, asks this Court to reach in this appeal is to vacate or reverse, set aside the Veterans Court's legal error and remand rather than affirm or dismiss.

[00:22:24] Speaker 01:
I do want to touch upon what I believe was my friend's, which she was referring to as supposedly a board factual finding here.

[00:22:31] Speaker 01:
I believe what she was referring to was at Appendix 22.

[00:22:35] Speaker 01:
At Appendix 22, the board said a reasonable person could have found a sustained

[00:22:40] Speaker 01:
material improvement under the ordinary conditions of life in comparing the examinations.

[00:22:45] Speaker 01:
And again, that sustained leaking into the analysis.

[00:22:49] Speaker 01:
And by that point, the board's decision is very clear.

[00:22:51] Speaker 01:
The board's looking beyond the examinations themselves to the overarching factual records.

[00:22:57] Speaker 01:
So jumping, just as the Veterans Court did,

[00:22:59] Speaker 01:
into this holistic or what Mr. Pace posits is the step two analysis, overlooking then just report to report.

[00:23:07] Speaker 01:
You have examination showing material improvement.

[00:23:11] Speaker 01:
Mr. Pace, I

[00:23:13] Speaker 01:
The briefing is much more articulate and sophisticated.

[00:23:16] Speaker 01:
I could do here in a minute 45 in terms of why then going through 3.343A, the first sentence without examination showing material improvement, and then the second sentence starting within a second step, where a sentence wants the analysis to include both an examination report and the overall factual record.

[00:23:37] Speaker 01:
It says so.

[00:23:38] Speaker 01:
Where the sentence does not, it does not.

[00:23:41] Speaker 01:
And so for all of the reasons that Mr. Pace has briefed and that I have mentioned this morning, Mr. Pace respectfully requests that this Court reverse or set aside the Veterans Court's legal error in assessing the Board's cue determination and then remand for the Veterans Court to re-adjudicate Mr. Pace's entitlement to read from that Board error in connection with his cue claim.

[00:24:03] Speaker 03:
Thank you.

[00:24:04] Speaker 01:
We thank both sides and the case is submitted.