Shealey: EAJA, discharged attorneys

Shealey v. Wilkie, docket no. 2019-1057 (January 6, 2020)

HELD: Discharged attorneys lacked standing to seek fees under the EAJA

SUMMARY: Veteran hired legal aid organization to represent him in his appeal to the CAVC. The two attorneys represented the veteran for three months and learned, at the Rule 33 conference, that the Secretary planned to file a motion to dismiss the appeal. Based on the prospect of a dismissal, the attorneys advised the veteran to file a new claim. The veteran disagreed with their advice – and discharged the attorneys. He was represented by new counsel for the remainder of the appeal. The Court ultimately vacated and remanded the Board’s decision. There was no dispute that the veteran was a “prevailing party” in the appeal. 

The two prior attorneys then filed an application for fees under the Equal Access to Justice Act (EAJA) for the work they had done prior to their discharge. The government did not oppose the fee award – but the veteran did. The Court allowed the two attorneys to intervene – but then dismissed the EAJA application because it determined that they lacked standing to seek fees under the EAJA. 

The attorneys appealed to the Federal Circuit, which first found that the statutory “right” to fees under the EAJA is limited to the “prevailing party” and the prevailing party is the veteran, not the attorney. The Court next found that they did not have a right to assignment of the veteran’s EAJA claim under their fee agreement – because their claim for fees is against the government and the law prohibits such assignment unless the government has waived its objection to the assignment. Finally, the Court rejected the notion that the attorneys had third-party standing because even though the attorneys did have a “relationship” to the claimant (the veteran), the veteran was free to assert the fee claim on his own and his interest in settling the fee claim (or not pursuing it at all) would be impaired if the attorneys had standing. The Court affirmed the CAVC’s decision. 

Robinson: EAJA, prevailing party

Robinson v. O’Rourke, 891 F.3d 976 (May 31, 2018)

HELD: Remand for the Board to address an issue that was raised for the first time on appeal to the Court does not confer prevailing party status on an appellant for EAJA purposes. 

FULL DECISION

Blue: EAJA, prevailing party status

Blue v. Wilkie, 30 Vet.App. 61 (May 16, 2018)

HELD: To determine “prevailing party” status where agency error is not explicitly found in the merits decision or conceded by the Secretary, the Court will look to “the substantive discussion in the merits decision, the relief awarded, and whether the caselaw cited in the merits decision would allow such relief in the absence of agency error.”

SUMMARY: CAVC issued a memorandum decision that remanded the veteran’s appeal for additional development and readjudication – specifically directing the Board to obtain VA medical records. In its decision, the Court stated that it found “no error” in the Board’s failure to obtain these records because the veteran had not provided VA with the dates of treatment. 

The appellant’s attorney filed an EAJA application and the Secretary challenged it, arguing that he was not a “prevailing party” since the Court expressly found “no error” in the Board’s decision. 

The Court first discussed the relevant case law and outlined a three-part test, from Dover v. McDonald, 818 F.3d 1316 (Fed. Cir. 2016), to determine “prevailing party” status for EAJA purposes: “(1) the remand was necessitated by or predicated upon administrative error, (2) the remanding court did not retain jurisdiction, and (3) the language of the remand order clearly called for further agency proceedings, which leaves the possibility of attaining a favorable merits determination.” The only issue here was whether the remand was based on administrative error.  

The Court noted that error can be explicit or implicit – and it could be found by the Court or conceded by the Secretary. In this case, the Court expressly found “no error” and the Secretary did not concede error – so the Court looked at “the context of the remand order itself to determine whether the remand was implicitly predicated on agency error.” The Court determined that Mr. Blue was a prevailing party based on “the substantive discussion in the merits decision, the relief awarded, and whether the caselaw cited in the merits decision would allow such relief in the absence of agency error.” The Court determined that the cases cited in the merits decision would not allow for remand in the absence of agency error – and thus concluded that, “under the unique circumstances presented by this case,” the appellant demonstrated that the remand “must have been implicitly predicated on ‘actual or perceived’ agency error.” The Court found the appellant was a prevailing party in this matter. 

FULL DECISION

Mead: NO EQUITABLE TOLLING FOR LATE EAJA APPLICATION

Mead v. Shulkin, 29 Vet.App. 159 (per curiam order) (Oct. 27, 2017)

HELD: To warrant equitable tolling of the 30-day deadline to file an EAJA application, a claimant must demonstrate that physical or mental illness, individually or in combination, rendered “one incapable of handling one’s own affairs or rational thought and decisionmaking,” and thus “directly or indirectly” prevented the timely filing of the EAJA application. 

SUMMARY: The attorney in this case filed an application for fees under the Equal Access to Justice Act (EAJA) 52 days late. The Court ordered her to explain why the application should not be dismissed as untimely. She admitted that she mistakenly believed she had 60 days to file her EAJA application. However, she explained to the Court that during the appeal, she had been seen for suspected cancer, underwent testing and outpatient surgery, and was under the care of a psychiatrist. She submitted her opposed EAJA application 52 days late – and the Court ordered her to provide additional information regarding the medical procedures and mental health diagnosis. She declined, stating that it would be a privacy violation and would set “an unfortunate precedent that calls into question the integrity of advocates practicing before this Court.” 

The Court explained that the 30-day deadline to file an EAJA application is subject to equitable tolling “if it is established that some ‘extraordinary circumstance’ prevented a timely filing, and that despite the circumstance the applicant pursued her rights diligently.” The Court found that the attorney had not demonstrated that “her physical or mental health singly or in combination directly or indirectlyprevented her from timely filing her EAJA application within the 30-day period.” (emphasis in original). The Court noted that she had outpatient surgery 2 days into the 30-day filing period and was on anti-depressants during the appeal, but found that she did not “allege that these problems rendered her incapable of rational thought or decisionmaking, and she declined to provide opinions from her medical care providers as to her abilities during the 30-day EAJA filing period.” The Court further noted that she had mistakenly thought she had 60 days to file the application – which it characterized as “the type of garden variety neglect not contemplated by equitable tolling.” 

Regarding the attorney’s privacy concerns, the Court stated that she could ask the Court to lock the record. The Court added that it “had not required anything more of counsel than it requires of a veteran seeking equitable tolling of a deadline” – and dismissed the application as untimely. 

Judge Greenberg dissented on two grounds. First, he would have found that the attorney’s “potentially life-threatening illness” amounted to an extraordinary circumstance and that she was diligent in her representation during this time. Second, he challenged the Court’s Internal Operating Procedures that allowed for review of a single-judge decision by two judges as a violation of 38 U.S.C. § 7245(c)(1). This statute states: “A majority of the judges of the Court shall constitute a quorum for the transaction of the business of the Court.” 

In this case, Judge Greenberg had granted equitable tolling in a single-judge order – but two other judges disagreed and called the decision to panel. At that time, there were six active judges on the Court. Judge Greenberg argued that “sending a matter for precedential panel disposition constituted ‘business of the Court’ that should have required a 4 vote majority” – and that “[s]ubjecting an individual Judge’s equitable tolling discretion to panel review is inconsistent with the IOP itself” and with the basic tenets of equity jurisprudence. He concluded that “[a] process that allows for a single Judge’s veteran-friendly decision to be overturned merely because two other Judges disagreed goes against the intent of Congress in creating our Court, which was to ‘place a thumb on the scale in the veteran’s favor in the course of administrative and judicial review of VA decisions.’” (quoting Henderson v. Shinseki, 562 U.S. 428, 440 (2011)). 

FULL DECISION

Parrott: EAJA - LOCAL V. NATIONAL CPI

Parrott v. Shulkin, docket no. 2016-1450 (Fed. Cir. Mar. 13, 2017)

HELD: Where an attorney works in multiple locations, the correct method for calculating attorney fees is the local Consumer Price Index (CPI) approach, which is based on the cost of living where the legal services were actually performed, and the EAJA application should apportion the attorney’s “time to those locations and use[] the CPI for each locality.”

SUMMARY: The Equal Access to Justice Act (EAJA) provides for an hourly rate of $125 – and allows for an adjustment to this rate to reflect the increased cost of living. The increase is based on one of two calculations: the national Consumer Price Index (CPI) or the local CPI. The national approach focuses on the “national scope of the statutory cap and the ease of computation,” whereas the local approach focuses on where an attorney works and has an office.

In this case, Ms. Parrott’s attorney has his principal office in Dallas, Texas, with additional offices in San Francisco, California and Little Rock, Arkansas. The attorney worked on Ms. Parrott’s case at all three offices. In the EAJA application, he calculated the attorney fee using the CPI rate for Washington, DC. He asserted that this was consistent with the Court’s prior holding in Mannino v. West, 12 Vet.App. 242, 243 (1999), which applied “the local cost-of-living increase actually experienced … where work was performed nationally but always before the Court in Washington, DC.” The Secretary objected to the EAJA application, asserting that the appropriate rate was the CPI for Dallas, the location of the attorney’s principal office.

The CAVC disagreed with both parties, and determined that the fairer approach was to “use the local CPI to calculate the hourly rate for each of the three locations in which [the attorney] performed work and to then review [the attorney’s] itemized billing statement and apportion each billing entry to the firm office where the work resulting in the entry was performed.” Because this approach would require the Court “to seek additional information” from the appellant and her attorney and to “calculate four separate hourly rates,” the Court declined to take on this task and instead ruled that the attorney was entitled to the statutory $125 hourly rate.

On appeal to the Federal Circuit, the attorney argued that the “EAJA does not mandate a particular method for computing attorney fees,” and because statutory ambiguity should be construed in the veteran’s favor, he should be allowed to use the CPI approach that yields the highest fee. This “optimal yield” approach would allow the attorney to use the CPI for Washington, DC. The Secretary argued that the local CPI approach is more consistent with the language of the EAJA and produces fairer results. The Secretary resisted the “optimal yield” approach, noting that the EAJA is not a veterans benefits statute. He further argued that because the EAJA “represents a waiver of sovereign immunity … [it] should be strictly construed in the government’s favor.”

The Federal Circuit examined the language of the statute, discussed the relevant case law, and determined that “the local CPI approach, where a local CPI is available … is more consistent with EAJA than the national approach.” The Court held that the CAVC did not err in ruling that the local CPI approach was the correct calculation method, and that it correctly determined that the attorney’s EAJA application should have apportioned his time to the different locations of his offices and used the CPI’s for each locale.

The Federal Circuit disagreed with the proposed “optimal yield” approach, finding nothing in the statute that would permit a claim for “the highest fee.” The Court found that this approach “runs afoul of the statutory text and EAJA’s prohibition against windfalls.” The Court added that the doctrine of resolving interpretive doubt in the veteran’s favor does not apply to EAJA because EAJA is not a veterans benefits statute.

Finally, the attorney argued that the decision to award the statutory rate of $125 per hour was an abuse of discretion because the CAVC did not permit him to resubmit a corrected EAJA application. The Federal Circuit determined that it lacked jurisdiction “to review all discretionary actions” of the CAVC, and stated that its “jurisdiction attaches when the Veterans Court commits an abuse of discretion rising to the level of legal error.” The Court found that the CAVC “did not interpret any law or regulation in declining to permit [the attorney] to resubmit a corrected EAJA application.” Rather, the CAVC simply determined that the requested fee was not reasonable and “used its broad discretion” to calculate what it deemed an appropriate fee. The Court found no legal error in the CAVC’s ruling.

FULL DECISION

Bly: EAJA & EQUITABLE TOLLING

Bly v. McDonald, docket no. 15-0502(E) (Oct. 7, 2016), overruled, Bly v. Shulkin, docket no. 17-1287 (Fed. Cir. Mar. 2, 2018)

HELD: The 30-day appeal period to file an EAJA application is subject to equitable tolling, but the person seeking equitable tolling must show (1) that he has pursued his rights diligently and (2) that extraordinary circumstance prevented timely filing.  

SUMMARY: On January 5, 2016, the Court granted the parties’ joint motion for remand. In its order, the Court stated “this order is the mandate of the Court,” meaning that the Court’s judgment became “final.” On February 5, 2016 – 31 days after the Court’s order – Mr. Bly submitted his application for attorney fees under the Equal Access to Justice Act (EAJA). Because an EAJA application must be filed within 30 days of the Court’s final judgment, the Court ordered Mr. Bly to show cause as to why his application should not be dismissed.

Mr. Bly contended that the application was timely, and alternatively argued that the deadline should be equitably tolled. The Court sent this case to panel to determine whether equitable tolling applies to EAJA applications and, if so, what standard should be applied.

The parties agreed that equitable tolling applies to EAJA applications, but disagreed on the appropriate standard to apply to determine whether equitable tolling is warranted in these cases. Mr. Bly argued that the Court should adopt a standard in which it only asks “whether a veteran would be financially harmed without tolling and whether the Government would be prejudiced by tolling.” The Secretary asserted that the Court should apply the same standard as the general test for equitable tolling, which inquires as to “whether an extraordinary circumstance prevented the timely filing despite due diligence.”

The Court first determined that Mr. Bly’s EAJA application was untimely, rejecting his argument that “final judgment had not entered and he still had time to appeal.” The Court found this argument to be “incorrect as a matter of law,” since the EAJA statute defines “final judgment” to include “an order of settlement” and the Court’s rules provide that judgment is effective when the Court “order states that it constitutes the mandate of the Court.” The Court’s order, in Mr. Bly’s case, expressly stated that “this order is the mandate of the court.” U.S. Vet.App. R. 41(b). In addition to the EAJA statute and the Court’s own rules, the Court also pointed to its precedential caselaw stating that “an order granting a joint motion for remand . . . is final and not appealable.”

Next, the Court determined that “the doctrine of equitable tolling may be applied to the 30-day time limit for filing an EAJA application.” The Court rejected Mr. Bly’s arguments regarding the standard to apply, finding that applying his proposed standard “would essentially swallow the statutory rule that an EAJA application is due within 30 days of final judgment.” The Court explained that to base an equitable tolling determination on the question of whether a veteran would be financially harmed if the EAJA petition were dismissed, could apply to “virtually every case where an EAJA application is untimely filed.” The Court found that Mr. Bly had not shown extraordinary circumstance or due diligence to warrant equitable tolling.

Finally, Mr. Bly had also argued that dismissing his EAJA application would result in a potentially smaller retroactive award to the veteran, if the veteran is awarded benefits on remand. This is because any contingent attorney fee would have been offset dollar for dollar by the EAJA amount, resulting in a higher award for the veteran. The Court rejected this argument, noting that the Secretary and the Court both have the authority to review attorney fee agreements for reasonableness. The Court expressly directed the Secretary to consider the holding in this case when assessing the reasonableness of any potential attorney fees that result on remand.

Judge Greenberg concurred with the portion of the decision that held that the 30-day EAJA filing period is subject to equitable tolling, but dissented from the holding that equitable tolling was not warranted in this case. He emphasized the importance of encouraging lawyers to represent veterans and noted that the application was only one day late and there was “no evidence of prejudice to the Secretary as a result of that delay.” Judge Greenberg stated that “[p]enalizing an attorney for filing 1 day late where there is no prejudice to the Government, not only unnecessarily penalizes the veteran, but also may have chilling effects on worthy veterans obtaining adequate representation.”

FULL DECISION

EQUAL ACCESS TO JUSTICE ACT (EAJA)

Butts v. McDonald, docket no. 14-3019(E) (June 3, 2016)

HELD: VA's compliance with existing Court precedent "does not relieve the Court of its duty to evaluate the reasonableness of the Secretary’s regulatory interpretation and his conduct at the administrative level.” therefore, “the Secretary may be required to pay EAJA fees despite following [Court] precedent.” 

SUMMARY: In Johnson v. Shinseki (Johnson I), 26 Vet.App. 237 (2013) (en banc), the Court held that 38 C.F.R. § 3.321(b)(1) was ambiguous and deferred to the Secretary’s interpretation that limited extraschedular consideration to individual disabilities, as opposed to multiple conditions. The Federal Circuit reversed this decision in Johnson v. McDonald (Johnson II), 762 F.3d 1362 (Fed. Cir. 2014), concluding that the plain language of the regulation was unambiguous and that it “provides for referral for extra-schedular consideration based on the collective impact of multiple disabilities.” Johnson II, 762 F.3d at 1365-66.

While Johnson I was on appeal to the Federal Circuit, the Board of Veterans’ Appeals issued the decision in Mr. Butts’ case, denying referral for extraschedular consideration for his service-connected disabilities. Mr. Butts filed his Notice of Appeal in September 2014 – after the Federal Circuit issued Johnson II. The parties subsequently agreed to a joint motion for partial remand (JMPR) because the Board’s adverse extraschedular determination did not comply with 38 C.F.R. § 3.321. The Court granted the JMPR and Mr. Butts’ attorney filed an application for fees under the Equal Access to Justice Act (EAJA).  

The Secretary disputed the EAJA application, arguing that Mr. Butts was “not a prevailing party because the JMPR was based on a change in precedent, rather than Board error.” Mr. Butts argued that “he is a prevailing party because the JMPR was implicitly based on the Board’s failure to properly apply § 3.321(b)(1), as Johnson II ‘did not create a new interpretation of the regulation, but simply explained what the regulation has always said.’”

The Court first noted that it is the appellant’s burden to show “prevailing-party status under the EAJA,” and that a joint motion for remand “may confer prevailing-party status if the JMR contains an explicit or implicit admission of error.” *4 (citing Thompson v. Shinseki, 24 Vet.App. 176, 178 (2010)). It is the Secretary’s burden to show “that his position was substantially justified at both the administrative and litigation stages.” *5 (citing Locher v. Brown, 9 Vet.App. 535, 537 (1997)).

The Court found that the language of the JMPR “explicitly concedes error” because it stated that the Board’s decision did not comply with § 3.321. Because of this language, the Court determined that Mr. Butts was a prevailing party for EAJA purposes. *7.

The Secretary argued that his position was substantially justified because the Board was bound to comply with Johnson I when it issued its decision. *8. The Court rejected this argument, noting that the Board never mentioned Johnson I in its decision. The Court added that the fact that the Court had previously upheld the Secretary’s “erroneous interpretation” of the regulation in Johnson I did not resolve the substantial-justification question. *9. Instead, the Court must examine the “totality of the circumstances” surrounding the government’s position and assess “the reasonableness of the Secretary’s regulatory interpretation and his conduct at the administrative level.” *9. The Court found that, in Johnson I, the majority had “simply erred when it deferred to the Secretary’s interpretation” – and that the majority’s error did not make the Secretary’s error “reasonable . . . under the totality of the circumstances.” Id. The Court thus held that “under the EAJA’s totality-of-the-circumstances analysis, the Secretary may be required to pay EAJA fees despite following precedent.” *10.

The Court found further support for its holding in the Federal Circuit’s determination “that there was ‘no logic’ and no policy support for [the Secretary’s] interpretation that § 3.321(b)(1) applied only to service-connected disabilities on a disability-by-disability basis ‘and not also on the collective impact of all of the veteran’s disabilities.’” *11.

The Court reiterated the Federal Circuit’s finding that the plain language of the regulation was consistent with 38 U.S.C. § 1155, which authorizes the Secretary to adopt and apply a rating schedule, adding that the Secretary’s interpretation was not supported by the regulation’s history. *12.

The Court also noted that while VA was bound by Johnson I, the Secretary could have sought a stay in any cases that would involve the application of Johnson I while that decision was on appeal to the Federal Circuit. *14-15. The Court concluded that the only factor in favor of substantial justification was the Board’s obligation to comply with Johnson I. That factor was outweighed by

(1) the Secretary’s failure to abide by the plain wording of § 3.321(b)(1) … (2) the fact that the Secretary had no policy basis for his proffered interpretation; (3) the fact that [Johnson I] was a mixed decision and on appeal while the Secretary continued to misapply § 3.321(b)(1); and (4) the fact that the Secretary had the option of staying the case pending a decision on appeal. *15.

FULL DECISION

ENTITLEMENT TO EAJA FEES

Dover v. McDonald, 818 F.3d 1316 (Fed. Cir. Apr. 7, 2016)

HELD: Where a remanding court does not retain jurisdiction over a case and the remand order contemplates and/or precipitates additional agency proceedings on the merits – even if the order just leaves open “the possibility of attaining a favorable merits determination through further agency proceedings” – the appellant is a “prevailing party” for purposes of being entitled to EAJA fees.

FULL DECISION