Oscar Fugere is not a name that rolls off the tongue gently. Regardless of that, his case represents a classic example of VA’s proclivity to take away with the left hand that which they so graciously presented to us with the right.

Oscar G. Fugere was one of the first to be ushered into the Big House after the inception of the COVA late in 1989. Allow me to digress so you can better understand this. Congress created the Court and the VA as we know it today in 89. The statutes were written and then the CFRs were modeled after them for implementation. VA went further and created a book we call the M-21 manual chock full of recipes for how to apply the statutes. M-21 was a guide if you will, on how to do it (claims) and nothing more. If you screwed up on interpreting it or inputted the wrong data, you got the wrong answer. The old computer saw of GIGO (garbage in-garbage out) held sway here. Oddly, it still does regularly with the M-21.

Thus, if VA decided to change a rule in 38 CFR, they had to publish it in the Federal Register and allow comment for a few weeks or so. They didn’t feel this was necessary for the M-21 because it was simply a “how to” manual.

On November 18, 1987, new criteria for rating defective hearing were established by the VA and published in the Federal Register. Despite the adoption of new rating criteria and testing methods, veterans were to be protected against a decrease in benefits if there had not been any change in the veteran’s condition or disability. Paragraph 50.13(b) of the Department’s Adjudication Procedure Manual, M21-1 (hereinafter manual), specifically provided the following direction to adjudicators: “Changed Criteria. If the decrease in evaluation is due to changed criteria or testing methods, rather than a change in disability, apply the old criteria and make no reduction.” Fugere v. Derwinski (1990)

However, unbeknownst to the community of veterans in general and this veteran in particular, the VA Chief Benefits Director rescinded the protective manual paragraph by an internal memorandum to the Regional Office Directors dated November 23, 1988. In doing so, the Chief Benefits Director recognized that veterans had relied upon the protection afforded by paragraph 50.13(b): 

Through various modes of communication the veteran population has been advised that the recent change in the rating schedule for hearing loss would not result in reduction of disability evaluations. Because that advice has been held to be erroneous, the VA must now take steps to insure that as few veterans as possible are disadvantaged because of their reliance on that advice. Fugere supra

What the Chief decided was to create three classes of Indians. Class #1 was to be ones who were told that they might suffer a reduction in rating if they had a hearing exam. Class #2 was Vets who had already scheduled an exam but had not completed it yet. They were given the same briefing and an offer to bail out before the exam, effectively ending it. Class #3 were the poor unfortunates like Oscar who had already been led to the slaughterhouse. For them it was too late. They would suffer the effects of the change and there could be no do over and no going back.

Oscar thus found himself in the universe of claimants whose claims got the haircut. His went from 30% to 10%. His exam was two weeks after the cutoff date. He got no notice and no mercy. Fortunately, from VA’s viewpoint, he couldn’t be reduced below 20% because it was a protected rating over 20 years old. Oscar didn’t feel fortunate. As all know, the difference between 20% and 30% is several light years. You get wife money and kids money at 30% whereas you get zilch for them at 20%. To give you an example in 2012 dollars, 20% is $251.00/mo. and $469.00/mo. for a wife and one child at 30%. Each additional wall crawler is $23.00/mo. more.

If Oscar had any kids, he was taking this in the shorts. He appealed and got the dental rearrangement from the Board. Doing what any intelligent Vet would, he took out his NOA papers and went on up to Indiana Ave. NW.

What happened next is rather remarkable- or was it? The panel of COVA judges reversed the decision to reduce Oscar’s rating and reinstated it. The VASCEC blew coffee out his nose and immediately asked for a do over in front of a en banc sitting of the full Court. He trotted out all manner of new theory on why this was baaaaad law. Now, if you or I tried to pull this stunt of dragging in a whole new theory of why we were entitled to SC after we lost, they’d blow us off like hurricane.  They withdrew the reversal for the Secretary and started all over.

Oscar went after the estoppel defense on the second running of the race. I wrote a piece on that recently to acquaint Vets with the concept.

https://asknod.wordpress.com/2012/02/21/cova-lazano-v-derwinski-estoppel/

Oscar claimed the M-21 was exactly what it purported to be. To change it without telling him gave him the false assurance that a new rating might be higher, but never lower (assuming his symptoms had worsened). As we know, courts at any level hate estoppel more that Writs of Mandamus and are loathe to grant  them. The Court took the same tack. VASEC by now had both feet into the estoppels argument too. He felt this was bogus and pushed even harder for the en banc gig.

This is where the Court used its head. Instead of being led astray down a parallel legal path to Estoppelland, they ran it up on the M-21 rocks and sunk any further debate. Frequently, the two parties lose sight of what it is they are arguing and why it is wrong. The VA changed the rules. Not only that, they created three distinct classes of Vet citizens-some more entitled to rights than others. Therein lies the Bozo No No. VA is entitled to do many things when given permission from their Congressional Lords and Masters. Changing laws and disenfranchising Vets is done all the time. This time they did it on their own without obtaining permission.

The veteran argues that the VA was compelled by its own regulations, 38 C.F.R. §§ 1.12and 1.551(c) (1989), to comply with the APA, specifically 5 U.S.C. §§ 552(a)(1) and 553, by providing notice and an opportunity to comment before it rescinded manual paragraph 50.13(b)and that it failed to do so. The VA does not disagree that it was bound by the provisions of the APA but it argues that the rescission did not require APA notice or opportunity to comment because paragraph 50.13(b) was not a substantive rule. According to the VA, “[t]he M21-1 Manual which Appellant cites is a procedural manual for the use of field personnel and is not intended as a vehicle to notify claimants of their rights.” Br. at 16. Subsequently, the VA also argued that the APA did not apply because paragraph 50.13(b) was “void ab initio.” Memorandum in Support of Appellee’s Motion for Review en Banc at 3. Such arguments cannot prevail in the face of the clear requirements of the APA. Fugere supra

As a sidebar, the VA was roped into the APA when they became the Department of Veterans Affairs. They vicariously danced back and forth and continue to do so today. Sometimes it is advantageous to claim its protections and at other times they prefer to be immune from its reach. The Court succinctly phrased their disdain for what the VASEC was attempting here:

The days when benefits or entitlements were considered to be mere privileges are long past. It is now well recognized that “the interest of an individual in continued receipt of [Social Security disability] benefits is a statutorily created ‘property’ interest protected by the Fifth Amendment.” Mathews v. Eldridge, 424 U.S. 319, 332 (1976). The Supreme Court has noted that veterans benefits, entitlement to which is established by service to country at great personal risk, are “akin to Social Security benefits.” Walters v. National Assoc. of Radiation Survivors, 473 U.S. 305, 333 (1985). “The Administrative Procedure Act was adopted to provide, inter alia, that administrative policies affecting individual rights and obligations be promulgated pursuant to certain stated procedures so as to avoid the inherently arbitrary nature of unpublished ad hoc determinations.” Morton v. Ruiz, 415 U.S. 199, 232 (1974). Even though compliance with APA notice and opportunity to comment requirements in this instance may not have been statutorily required because of the September 1, 1989, effective date of the 1988 law, it was made mandatory by agency regulation and policy. Through 38 C.F.R. §§ 1.12 and 1.551, the VA’s notice and opportunity to comment procedures were designed to insure that the veterans community would receive notice of any proposed change that would impact on “right, privilege, or benefit.” Op. G. C. Mem. (VA July 1, 1987). “Where the rights of individuals are affected, it is incumbent upon agencies to follow their own procedures.” Morton, 415 U.S. at 235; see also Service v. Dulles, 354 U.S. 363 (1957); Vitarelli v. Seaton, 359 U.S. 535 (1959).  Fugere supra

In the end, the VASEC tried to moonwalk this off the stage like Marty McFly up on the bar in Back to the Future Part 3. Try this one on for size. The rule allowing two different classes of claimants on the hearing deal in 1986 was illegal. Therefore the regulation as it was enforced in M-21 was fatally flawed. Being flawed, it had to be removed. VA did so. Oscar got caught in that rare Perfect Storm. Because the requirement/regulation (pick a name) was removed and wrong, it never existed. Poof! If it never existed, it can’t be subject to the APA.

 Since the manual provision which had protected appellant, as well as those similarly situated, never existed, the argument of the Secretary concludes, “the appellant’s attempt to obtain benefits to which he is not entitled, due to erroneous advice appearing in the M21-1 procedures manual, must fail.” Fugere supra

Although neither the advisory opinion of the General Counsel nor the memorandum ofthe Chief Benefits Director expressed the view that paragraph 50.13(b) was void ab initio, the Secretary now urges that position upon this Court in his memorandum in support of en banc review. While it might be interesting to plumb the depths of the Secretary’s commitment to this new view by measuring the quality and quantity of any effort to recoup benefits paid under the manual provision, such a step is not required to decide this case for “[i]t is clear that no deference is due to an agency ‘interpretation’ fashioned for the purposes of litigation.” Alaniz v. Office of Personnel Management, 728 F.2d 1460, 1465 (Fed. Cir. 1984). Fugere supra

Veterans have one of the most horrific forms of legal justice invented. On the one hand we are sweet talked with all the wonderful things we are accorded. While telling us how blessed we are, they are busy out back stealing the tires off our claim.

The Court was instituted to prevent this and it hasn’t set well with the VA ever since. VA often feel we are a terrible imposition on them and are more trouble than we are worth. Nevertheless, they begrudgingly agree to supervise us like a put-out babysitter. This is pretty much what Oscar ran into and we still see evidence of the same today. Derwinski manufactured a new rule and then rescinded it. Afterwards, he had his legal department fashion a legal holding to base it on. Wrong.

In fact, there was so much wrong done here I’m amazed Mr. Fugere isn’t more famous than he is. We have seen what the early Court allowed when the camel was invited into the tent for a do over. It never should have happened twice. We also see what happens when the VASEC starts writing whatever he wants to, calling it the rulebook. Finally, we see the coverup where he quickly has the leagle beagles come in and assure us there is no harm and no foul. Oscar wasn’t entitled to the old rating because it never should have been that way to begin with, so shut up and sit down. Never mind that those other Vets get to keep their 30%. They were smarter and bailed when they saw the writing on the wall.

Here is Mr. Fugere’s travails with Mr. Derwinski and his merry band of robbers:

 Fugere_89-72