Argument Recap / Supreme Court Activity

Late last month, the Supreme Court heard arguments in George v. McDonough, a case that raises an important question regarding review for clear and unmistakable error in the denial of a veteran’s claim for disability benefits: “When the Department of Veterans Affairs (VA) denies a veteran’s claim for benefits in reliance on an agency interpretation that is later deemed invalid under the plain text of the statutory provisions in effect at the time of the denial, is that the kind of ‘clear and unmistakable error’ that the veteran may invoke to challenge VA’s decision?” This is our argument recap.

Melanie Bostwick argued on behalf of the veteran, George. Bostwick began her argument by emphasizing that clear and unmistakable error is a distinct and unique procedural protection awarded to veterans, “prevent[ing] the agency’s obvious errors from depriving veterans of the benefits to which their service entitles them.” She argued “[t]here is no dispute that a clear and unmistakable error has occurred when VA adjudicators misapply the terms of a plain statute.” Nor, she maintained, is the legal error here “a mere change in interpretation.” She argued that the “VA’s regulations have long distinguished between genuine legal changes that might warrant updating prior benefits rulings and legal errors that entitle veterans to revision of a flawed ruling.”

The first set of questions came from Justice Thomas, who asked for an explanation of the statutory basis for review here and then the history and context of review for clear and unmistakable error. During this exchange, Bostwick explained how review for clear and unmistakeable error dates to the 1920s and originally found its basis in VA’s regulations. According to Bostwick, moreover, an en banc decision from the Court of Appeals for Veterans Claims held that an incorrect application of a statutory provision is clear and unmistakeable error.

Chief Justice Roberts then indicated he disagreed with Bostwick about the basic question in this case. While Bostwick maintained the question is whether a particular case changed the law, Chief Justice Roberts indicated the “question is whether there’s been a change in the interpretation of a statute.” In response, Bostwick argued there has “long been this distinction between errors on the one hand and changes [in interpretation] on the other.” After Justice Kagan asked a follow up question, Bostwick clarified her position by explaining that, “in the 1950s, . . . change in interpretation got separated out, put in its own regulation.” And, according to Bostwick, “you . . . have to distinguish between what falls under CUE and what falls under a change . . . in interpretation. “[B]ut,” she went on, “the latter . . . has consistently been understood throughout . . . history to mean a genuine change, a new act of Congress, a switch from one permissible interpretation of the statute to another by the agency.”

Justice Kavanaugh then asked about a “General Counsel opinion from 1994 which seemed to suggest or said decisions of the Court of Veterans Appeals invalidating VA regulations or statutory interpretations do not have retroactive effect in relation to prior final adjudications of claims.” In response, Bostwick argued that “practice was inconsistent” and, moreover, the “opinion simply misdescribes the holding” of a case. Notably, Justice Kavanaugh also asked whether adoption of Bostwick’s position would impose tremendous hardship on the agency. In this regard, Bostwick clarified her position by explaining that “a clear and unmistakable error is one that is obvious or manifest,” but then she said “any error of statutory interpretation, so long as it affected the outcome, falls within CUE.”

Justices Kavanaugh and Barrett immediately found trouble with Bostwick’s approach. Justice Kavanaugh, for example, asked “how does that make sense?” Justice Barrett then asked whether it was Bostwick’s position that “every single time the agency misinterprets a statute, it’s always clear and unmistakeable [error].” Bostwick indicated that all misinterpretations of a statute are clear and unmistakeable error.

Justice Breyer then engaged in a long discussion highlighting an error in a regulation, which omitted words from the governing statute. Justice Kagan, however, noted that the statute also indicates that “you’re bound by the regulations . . . whether the regulations are right or whether the regulations are wrong,” and “[s]o, once you’re bound by the regulation, how . . . can it possibly be error, let alone clear and unmistakeable error, for the Board to do what they’re commanded to do?” Bostwick responded that “the Board was also commanded to follow the statute.”

Justice Alito highlighted his view that Bostwick has “one interpretation of the concept of error: Is it objectively erroneous?” while “[t]he government has another: Was there an adjudicative error?”

Later, Justice Gorsuch asked about the appropriate remedy assuming that clear and unmistakeable error existed here. He asked whether the Court should address the remedy or remand the case to the Federal Circuit “to decide what the appropriate remedy would be.” Bostwick responded that the Court could remand for a determination of whether there was clear and unmistakable error or it could say “that when you have a regulation that contradicts a plain statute, that can be CUE.”

Justice Sotomayor and Bostwick later clarified that “if there is a material new fact that wasn’t before the adjudicator,” that could not be grounds for a clear and unmistakeable error because that is a “separate type of claim.” In this discussion with Justice Sotomayor, Bostwick also agreed that a change from one permissible interpretation to another would not be clear and unmistakeable error.

Assistant Solicitor General Anthony Yang argued on behalf of the government. He began by arguing that “[c]lear and unmistakable error serves the function of allowing for correction on collateral review with no time limits, and it’s a very specific type of error based on the legal context that existed at the time of the original decision, an error that no one from that framework could reasonably dispute.”

He stated that clear and unmistakable error requires “a highly unusual error, more egregious than just clear error, and an adjudicator is not naturally said to commit clear and unmistakable error by doing something it’s required to do.” Moreover, he argued, “[f]or nearly 60 years now, the regulation governing clear and unmistakable error provided that such error cannot be based on a change in interpretation of the law.”

Yang asserted that here there a change in interpretation and that this does not fall qualify as clear and unmistakable error.

In response to a question from Justice Thomas, Yang explained why the Court could be sure that Congress codified the government’s understanding of clear and unmistakeable error. Yang argued that the error “must be an error in the prior adjudication” in the sense that “statutory/regulatory provisions extant at the time were incorrectly applied.”

Justice Gorsuch asked Yang to address the fact that “we don’t normally think of judicial interpretations as changes in the law.” Yang indicated that this framing of the dispute is incorrect and that the government is “not saying the law has changed.” Yang also indicated that the government is not challenging the pro veteran canon but believes it does not apply in this case.

Justice Sotomayor later indicated that “[t]he only thing that favors [the government] is what Justice Kavanaugh pointed to, which was that . . . counsel’s decision, but there is no evidence that Congress knew that when it . . . adopted this CUE standard.”

In the middle of a long discussion before posing a question, Justice Breyer stated that this case presents “the most clear and unmistakable error [he’s] seen in 40 years.” Justice Kagan then asked if you “assume that the regulation was clearly and unmistakably wrong, . . . is the decision based on that regulation clearly and unmistakably wrong?” In response, Yang highlighted that the text of the statute indicates a decision by the Board is subject to review for clear and unmistakeable error; it does not say that the regulation is subject to review for clear and unmistakeable error. Justice Kagan highlighted that the argument is that, even if VA did something wrong, the Board may not have done something wrong by following the incorrect regulation. Justice Gorsuch then intervened to clarify that the statute indicates the Secretary makes the relevant decision, and Yang explained that the Secretary delegates the decision to the Board.

Yang later distinguished between various forms of direct review and supplementation compared to the collateral review provided using the clear and unmistakeable error standard.

Justice Kavanaugh again turned to the impact that overturning this case would have on the agency. In other words, Justice Kavanaugh sought to explore the practical consequences that would accompany overturning decades-old VA denial decisions because a later judicial decision invalidated a longstanding agency regulation upon which the initial VA decision was based. Yang agreed with Justice Kavanaugh’s phrasing that such rulings would be a “big issue” and a “big hit” and explained that VA identified “about 14 or 16 decisions that invalidate regs in various contexts.” According to Yang, overturning old decisions based on a new interpretation of a regulation would have “cascading” and “substantial” effects on final VA decisions.

In rebuttal, Bostwick highlighted that (1) direct review as not available to George or any veteran until 1988; (2) supplemental claims must be based on new and relevant evidence; (3) and mandamus relief is not available to award discretionary relief. She also pointed out that VA in a regulation in 1956 included an explicit definition of “clear and unmistakable” as “obvious or manifest.” And, she argued, this is “a meaning that’s consistent with other demanding standards of review” under the law.

Bostwick also highlighted that “the effect of the government’s argument is that if the General Counsel issues a precedential opinion that is contrary to a statute and the Board relies on that precedential opinion in denying benefits, that can’t be CUE.”

We will report on the Court’s resolution of the case.