Petition for review pursuant to 38 U.S.C. Section 502.
Kenneth M. Carpenter, Law Offices of Carpenter Chartered,
Topeka, KS, argued for petitioner.
F. Hockey, Jr., Commercial Litigation Branch, Civil Division,
United States Department of Justice, Washington, DC, argued
for respondent. Also represented by Robert Edward Kirschman,
Jr., Loren Misha Preheim, Joseph H. Hunt; Martie Adelman,
Brian D. Griffin, Office of General Counsel, United States
Department of Veterans Affairs, Washington, DC.
Dyk, Wallach, and Stoll, Circuit Judges.
National Organization of Veterans' Advocates, Inc.
("NOVA") challenges the validity of a rule
promulgated by the Veterans Administration ("VA").
The rule is a 2017 amendment to 38 C.F.R. § 3.321(b)(1).
The amended regulation cabined the preexisting regulation (as
interpreted by this court in Johnson v. McDonald,
762 F.3d 1362 (Fed. Cir. 2014)). The amended regulation
authorizes the VA "[t]o accord justice to the
exceptional case where the schedular evaluation is inadequate
to rate a single service-connected disability,"
by adopting "an extra-schedular evaluation commensurate
with the average impairment of earning capacity due
exclusively to the disability." 38 C.F.R.
§ 3.321(b)(1) (2017) (emphases added). Unlike the
previous version, the regulation does not permit the VA to
award extra-schedular disability compensation by considering
the synergistic impact of multiple disabilities together.
NOVA's petition and hold that the 2017 amendment is not
on its face arbitrary, capricious, an abuse of discretion, or
otherwise contrary to law.
the primary tasks of the VA is to process claims for
service-connected disability benefits sought by veterans.
Once the VA has determined the existence of a disability, the
VA must rate the disability, that is, determine the degree to
which the veteran's earning capacity has been diminished.
In that connection, the statute provides:
The Secretary shall adopt and apply a schedule of ratings of
reductions in earning capacity from specific injuries or
combination of injuries. The ratings shall be based, as far
as practicable, upon the average impairments of earning
capacity resulting from such injuries in civil occupations. .
38 U.S.C. § 1155.
to this statute, the VA rates disabilities according to a
rating schedule that takes into account the veteran's
degree of disability and the effect of that disability on the
veteran's earning capacity. For example, where the
veteran suffered a service-connected injury with a small
impact on his earning capacity, he might be assigned a 20%
rating. But if the veteran suffered a more serious injury
that had a greater impact on the veteran's earning
capacity, that veteran would receive a higher rating.
regulation at issue in this case, 38 C.F.R. §
3.321(b)(1), was designed to address exceptional situations
in which the schedular rating for a single disability alone
is inadequate to reflect the actual level of the earning
impairment on the veteran. Before this regulation was amended
in 2017, it provided:
To accord justice . . . to the exceptional case where the
schedular evaluations are found to be inadequate, the
Under Secretary for Benefits or the Director, Compensation
and Pension Service, upon field station submission, is
authorized to approve on the basis of the criteria set forth
in this paragraph an extra-schedular evaluation
commensurate with the average earning capacity impairment due
exclusively to the service-connected disability or
disabilities. The governing norm in these exceptional
cases is: A finding that the case presents such an
exceptional or unusual disability picture with such related
factors as marked interference with employment or frequent
periods of hospitalization as to render impractical the
application of the regular schedular standards.
38 C.F.R. § 3.321(b)(1) (2014) (emphases added).
this regulation provided for extra-schedular rating of the
veteran's disabilities where the Board of Veterans
Appeals ("Board") or regional office determined
that the schedular evaluation "does not contemplate the
claimant's same symptomatology or level of
disability" and that the veteran's disability
picture evinces "related factors such as marked
interference with employment or frequent periods of
hospitalization." Barton F. Stichman et al., Veterans
Benefits Manual § 5.3 (2017-18 ed.); see also Thun
v. Peake, 22 Vet. App. 111, 115-16 (2008),
aff'd, 572 F.3d 1366 (Fed. Cir. 2009).
present controversy arises from the fact that, in many cases,
the veteran has more than one disability. Where a veteran
suffers from more than one disability, the VA generally
combines the individual disability ratings pursuant to a
"combined ratings table" set forth in 38 C.F.R.
§ 4.25. The formula on which the table is based requires
that the disabilities first be "arranged in the exact
order of their severity, beginning with the greatest
disability." 38 C.F.R. § 4.25(a). The percent
efficiency for the highest rated disability is then
determined-e.g., if a disability earns a 60% rating, the
efficiency is 40%. Id. From there, the percent
efficiency corresponding to the next highest rated disability
is determined, and the first and second percent efficiencies
are multiplied. Id. If there are more than two
disability ratings, the process is then repeated with each
lesser rating. Id. This results in an overall
percent efficiency, which must then be converted to a
corresponding disability rating. Id. This number is
then rounded "to the nearest degree divisible by 10,
adjusting final 5's upward."
4.25 operates the same way in the case of extra-schedular
ratings for multiple disabilities. Section 3.321(b)(1)
requires considering whether each individual disability
should result in an extra-schedular rating so that multiple
disabilities can result in multiple extra-schedular ratings.
There is no dispute that § 4.25 requires the VA to
combine multiple disabilities resulting from extra-schedular
ratings under § 3.321(b)(1). This approval is indeed
recognized in the current rulemaking where the VA made clear
that "a veteran would be entitled to an extra-schedular
rating for each service-connected ...