JONES v. WEST

PER CURIAM.

Robert E. Jones appeals from the decision of the United States Court of Appeals for Veterans Claims, Jones v. West, No. 97-0011, 1998 WL 732856 (Vet. App. Oct. 9, 1998), affirming the decision of the Board of Veterans' Appeals ("Board") that denied as a matter of law the claim of clear and unmistakable error ("CUE"). For the reasons set forth below, we affirm the decision of the Court of Appeals for Veterans Claims.

Mr. Jones served on active duty in the U.S. Army from August 1947 to June 1949 and in the U.S. Air Force from August 1949 to December 1959. In July 1962, he was hospitalized and diagnosed as having an "anxiety reaction with personality trait disturbance, passive aggressive personality, considered competent and mild in degree." In September 1962, the Department of Veterans Affairs (formerly, Veterans' Administration) ("VA") regional office ("RO") denied Mr. Jones' application for service connection of a psychiatric disorder on the basis that his disorder was a constitutional or developmental abnormality rather than a psychiatric disorder acquired in or aggravated by military service (the "1962 RO Decision"). Mr. Jones did not file a timely appeal to that decision as set forth in 38 U.S.C. § 7105(b)(1) and that decision became final after one year. See 38 U.S.C. § 7105(c) (1994); 38 C.F.R. § 20.1103 (1999).

Subsequent rating decisions that issued in February 1965, June 1985, and May 1989 denied requests to reopen Mr. Jones' claim for service connection of an acquired psychiatric disorder. Mr. Jones appealed the May 1989 decision to the Board, which remanded the claim for readjudication in light of recent Court of Appeals for Veterans Claims decisions regarding the standard for reopening claims based on new and material evidence. In September 1991, the RO again denied Mr. Jones' request to reopen his claim.

When the denial was appealed to the Board, it conducted a de novo review of the evidence and material of record in the veteran's claims file and considered new and material evidence after securing an advisory medical opinion from an independent medical expert ("IME"). In a November 1993 decision, the Board granted Mr. Jones service connection for his acquired psychiatric disorder based on the new and material evidence, particularly the IME opinion, which provided that there was a link between Mr. Jones' in-service experience of killing a Korean boy and his subsequent psychiatric difficulties (the "1993 Board Decision"). The effective date for the service connection based on the new and material evidence was limited by statute and regulation to May 23, 1989, the date his application to reopen the claim was received by the RO. See 38 U.S.C. § 5110(a) (1994) (stating that effective date of award based on claim to reopen for new and material evidence "shall not be earlier than the date of receipt of application therefor"); 38 C.F.R. § 3.400(q)(1)(ii) (1999). Mr. Jones did not raise the issue of whether there was CUE in the 1962 RO Decision, and the Board never expressed in its opinion whether that rating decision was free of CUE.

In December 1994, Mr. Jones alleged that the 1962 Rating Decision was based on CUE because the same evidence that was available to the RO in 1962 was available to the Board in 1993 when it believed the record required an additional medical examination and granted him service connection. Mr. Jones argued that there was CUE in the 1962 RO Decision because, among other reasons, there was a conflict in diagnosis in his condition in 1962, which triggered the VA's duty to assist the veteran by resolving the conflict. Mr. Jones contended that this breach of the duty to assist constituted CUE and that he was therefore entitled to an effective date of September 1962. In a December 20, 1994 rating decision, the RO determined that Mr. Jones had failed to file a valid CUE claim because his contentions were not limited to the factual record previously before the RO and were not based on the laws and regulations in existence in 1962.

In April 1995, Mr. Jones appealed to the Board. On September 10, 1996, the Board concluded that Mr. Jones' claim of CUE was insufficient as a matter of law (the "1996 Board Decision"). Based on its interpretation of 38 C.F.R. § 20.1104, the Board reasoned that Mr. Jones was prohibited from collaterally attacking on the grounds of CUE the 1962 RO Decision because it had become subsumed into the 1993 Board Decision. The Board explained that, because the 1993 Board addressed on the merits the same determinations as did the 1962 RO Decision, this Board decision had "subsumed" the 1962 RO Decision. Mr. Jones could not challenge the subsumed 1962 RO Decision by bringing a CUE claim to an RO because that would effectively result in an RO reviewing a Board decision, which is prohibited because a lower tribunal cannot review a higher tribunal. The Board also explained that Mr. Jones could not bring a claim of CUE with respect to the 1993 Board Decision because CUE could be asserted only with respect to RO decisions and not Board decisions. The Board further noted that breach of the duty to assist could not, as a matter of law, result in CUE and therefore denied his arguments regarding the breach of the duty to assist. This decision, however, did not examine the record before the RO in 1962 to determine the substance of Mr. Jones' claim, that is, whether there was CUE in the original RO decision.

Mr. Jones then appealed to the Court of Appeals for Veterans Claims the issue of whether the final, unappealed 1962 RO Decision could be subsumed by a subsequent Board decision reviewing that RO decision during a collateral attack and not on direct appeal. Mr. Jones also argued that the same evidence that was before the RO in 1962 was before the Board in 1993 when it granted service connection and therefore CUE must have been present in the 1962 RO Decision. The court held that the CUE claim was legally insufficient for two independent and alternate reasons. First, the court concluded that, based on the evidence, no CUE existed in the 1962 RO Decision. It also noted that the IME opinion, which was pivotal in the service connection granted in 1993, was not part of the record in 1962 and therefore could not be used to demonstrate CUE. Second, the court, relying on Dittrich and Donovan, held that the 1993 Board Decision subsumed the 1962 RO Decision and therefore an RO could not collaterally review that 1993 Board Decision. See Dittrich v. West, 11 Vet. App. 10 (1998), aff'd, 163 F.3d 1349 (Fed. Cir. 1998), cert. denied, ___ U.S. ___, 119 S.Ct. 1499 (1999) (holding that an RO could not collaterally review an earlier Board decision on the same operative facts with regard to the same legal issue); Donovan v. Gober, 10 Vet. App. 404, 407-08 (1997), aff'd sub nom., Donovan v. West, 158 F.3d 1377 (Fed. Cir. 1998), cert. denied, ___ U.S. ___, 119 S.Ct. 1255 (1999) (holding that a veteran could not request an RO to collaterally review a prior RO decision because the Board had determined that no CUE tainted that initial decision and the RO cannot review a Board decision). The Court of Appeals for Veterans Claims therefore affirmed the Board's holding that Mr. Jones' claim of CUE was legally insufficient in a Memorandum Decision dated October 9, 1998, which became final when the court denied a motion for reconsideration. See Jones v. West, No. 97-0011 (Judgment Nov. 3, 1998).

On appeal to our court, the issue Mr. Jones presents is whether, given the 1993 Board Decision granting his claim for service-connected psychiatric disability based on new and material evidence, 38 C.F.R. § 20.1104 permits the Board to deny his claim of CUE on the basis that the 1962 RO Decision was subsumed by the 1993 Board Decision and an RO cannot review a Board decision. Mr. Jones asserts that the 1962 RO Decision was not subsumed by the 1993 Board Decision. He contends that the Court of Appeals for Veterans Claims therefore erroneously prohibited a collateral attack on an unappealed, final RO decision. Furthermore, Mr. Jones contends that the Court of Appeals for Veterans Claims "completely failed to reach the merits of [his] arguments" and instead affirmed the Board decision on a new and independent ground rather than the subsumption ground, which was the basis for the 1996 Board Decision.

The Secretary of the Department of Veterans Affairs (the "Secretary") responds that the Court of Appeals for Veterans Claims correctly concluded that, even if Mr. Jones' CUE claim had merit, he was precluded from requesting an RO to review the 1962 RO Decision because it had been subsumed by the 1993 Board Decision under Dittrich and Donovan. See Dittrich, 11 Vet. App. at 11-12; Donovan, 10 Vet. App. at 407-08. The Secretary also notes that the Court of Appeals for Veterans Claims properly determined that there was no CUE in the 1962 RO Decision. Consequently, in the Secretary's view, the decision of the Court of Appeals for Veterans Claims must be affirmed if it is supported by either of these two independent and alternate grounds.

A. Standard of Review

Our review of decisions of the Court of Appeals for Veterans Claims is limited. Under 38 U.S.C. § 7292(c), we have the exclusive jurisdiction to "review and decide any challenge to the validity of any statute or regulation or any interpretation thereof brought under [section 7292], and to interpret constitutional and statutory provisions, to the extent presented and necessary to a decision." 38 U.S.C. § 7292(c) (1994). We have the authority to decide all relevant questions of law and can set aside a regulation or an interpretation of a regulation relied upon by the Court of Appeals for Veterans Claims when we find it to be arbitrary, capricious, and an abuse of discretion, or otherwise not in accordance with law; contrary to constitutional right, power, privilege, or immunity; in excess of statutory jurisdiction, authority, or limitations, or in violation of a statutory right; or without observance of procedure required by law. See 38 U.S.C. § 7292(d)(1) (1994). Except to the extent that an appeal presents a constitutional issue, we may not review a challenge to a factual determination or a challenge to a law or regulation as applied to the facts of a particular case. See 38 U.S.C. § 7292(d)(2) (1994).

1. Subsuming and the Doctrine of Delayed-Subsuming

Under the veterans benefits system, a veteran must bring his or her claim for disability benefits to the RO. If the RO denies the claim, the veteran must timely appeal the denial to the Board or else the RO decision becomes final. See 38 U.S.C. § 7105(c) (1994); 38 C.F.R. § 20.1103 (1999). As we have stated previously, "[b]asic principles of finality and res judicata apply to such agency decisions." Routen v. West, 142 F.3d 1434, 1437 (Fed. Cir. 1998). A final and binding agency decision can only be reviewed in certain instances. For example, a veteran can collaterally attack a final RO decision based on CUE. See 38 U.S.C. § 5109A, 7111 (1999); see also Bustos v. West, No. 98-7069, 1999 WL 395988, at *2 (Fed. Cir. June 16, 1999). A veteran can also collaterally attack a final RO decision based on new and material evidence. See 38 U.S.C. § 5108 (1994); see also Routen, 142 F.3d at 1438 ("A second ground, again statutory, under which a previously closed case may be reopened is to present `new and material evidence' sufficient to reopen the claim."). We have also held that an intervening change in the law may entitle a veteran to consideration of a previously closed RO decision. See Spencer v. Brown, 17 F.3d 368, 372 (Fed. Cir. 1994). In addition, we have recently held that a veteran, under appropriate circumstances, can attack the finality of an unappealed RO decision by showing that such a decision was based on a breach of the statutory duty to assist. See Hayre v. West, No. 98-7046, 1999 WL 618583, at *6 (Fed. Cir. Aug. 16, 1999) (holding that when there is a breach of the duty to assist in which the VA failed to obtain pertinent service medical records specifically requested by the claimant and failed to provide the claimant with notice explaining the deficiency, the claim does not become final for purposes of appeal.).

When the veteran does, however, timely appeal the RO's denial to the Board and the Board affirms the initial decision, the veteran can collaterally attack only the Board decision, and not the initial RO decision. This is because the Board decision "subsumes" the RO decision under 38 C.F.R. § 20.1104, which provides that "[w]hen a determination by the [RO] is affirmed by the [Board] such a determination is subsumed by the final appellate decision." (emphasis added). This regulation provides that RO decisions are subsumed by Board decisions when they are directly appealed to the Board. On direct appeal, the Board is exercising its appellate powers and "affirming" the RO decision, thereby "subsuming" the RO decision. This interpretation of 38 C.F.R. § 20.1104 as only allowing for subsuming on direct appeal was also established in the jurisprudence of the Court of Appeals for Veterans Claims. See Elkins v. Brown, 8 Vet. App. 391, 396 (1995) (holding that CUE claim could not be raised as to RO decision because service connection for psychiatric disability was subject of subsuming Board decision on direct appeal); Landicho v. Brown, 7 Vet. App. 42, 52 (1994) (holding that RO denial of service connection could not be collaterally attacked because it was subsumed by Board decision on direct appeal).

In sum, when a veteran appeals an RO decision and such a decision is affirmed by the Board, the Board decision subsumes the RO decision. In such circumstances, the veteran can only collaterally attack the Board decision and not the RO decision, which has been subsumed. In addition, the veteran must file his or her collateral attack on the Board decision with the Board itself rather than the RO because a lower tribunal cannot review the decision of higher tribunal. See Smith, 35 F.3d at 1526.

Mr. Jones is therefore correct that 38 C.F.R. § 20.1104 does not provide for subsuming of final, unappealed RO decisions by subsequent Board decisions that consider the RO decision during collateral attacks. Thus, in this case, the 1993 Board Decision cannot have subsumed the 1962 RO Decision based on 38 C.F.R. § 20.1104. Our court, however, has recently introduced the concept of "delayed-subsuming," which is not based on 38 C.F.R. § 20.1104. See Dittrich, 163 F.3d 1349, 1353; Donovan, 158 F.3d at 1381-82. Under the doctrine of delayed-subsuming, a Board decision that considers a collateral attack on a final, unappealed RO decision can also subsume that RO decision under certain circumstances, thereby preventing the veteran from collaterally attacking the final, unappealed RO decision by filing a claim with an RO. In other words, the doctrine of delayed-subsuming allows the Board to subsume final RO decisions that are not directly appealed to the Board, but rather are the subject of collateral attacks. In such instances, the veteran is required to collaterally attack the Board decision rather than the RO decision and to file this collateral attack with the Board rather than the RO.

2. Donovan and Dittrich

In Donovan, the RO denied the veteran's claim for gastric neurosis and psychoneurosis in 1947 and the veteran did not appeal this decision to the Board. In 1985, Mr. Donovan filed another claim for benefits, this time for Post Traumatic Stress Disorder. The RO denied his claim and he appealed to the Board, which denied the request in 1988 and noted that it had reviewed the entire evidence of record and was making a de novo determination of entitlement. In 1991, Mr. Donovan filed a claim for CUE with respect to the 1947 RO decision. Two new VA psychiatric examinations concluded that he had a stress disorder. Given this new and material evidence, the RO granted service connection for the stress disorder with payments effective as of 1991. Mr. Donovan requested that payments be made retroactive to 1947. The RO denied this request and Mr. Donovan appealed to the Board, which affirmed by holding that his claim that the 1947 RO decision contained CUE was without legal merit because the 1947 RO decision had been subsumed by the 1988 Board decision, which had reviewed the record de novo. The 1947 RO decision was therefore "immune from collateral attack under a theory of [CUE]." Donovan, 158 F.3d at 1380. The Court of Appeals for Veterans Claims affirmed this application of the doctrine of delayed-subsuming. Our court also affirmed, holding that the 1988 Board decision implicitly made a determination that the 1947 decision did not include CUE. We held that the 1988 Board decision not only focused on whether the claim should be reopened but also determined the merits of the underlying question of service connection. We found the 1988 Board made a de novo review and essentially reviewed the 1947 decision as if the Board were acting in a direct appeal. The 1988 Board decision therefore "subsumed" the 1947 RO decision, rendering the initial RO denial immune from collateral attack. We explained that the 1988 Board decision had to bar Mr. Donovan's CUE claim because (1) it would place the RO in the improper position of reviewing an appellate tribunal and (2) the Board decision was final and could not be reopened on the same factual basis. See 38 U.S.C. § 7104(a), (b). Therefore, Donovan was our first case to hold that there could be a subsuming of an unappealed, final RO decision by a later Board decision even if the claim of CUE had not been raised or argued by the appellant to the Board — a "delayed-subsuming."

Subsequently, in Dittrich, the veteran submitted a request for service connection for a nervous condition with the RO in 1960. The RO denied this request and Mr. Dittrich did not timely appeal. He submitted new evidence after several years, which was treated as a request to reopen based on new and material evidence. The RO denied the claim to reopen and, on appeal, the Board reopened his claim in 1969 but denied it on the merits. Mr. Dittrich later submitted a claim for CUE in the 1960 RO decision. The RO held there was no CUE and, on appeal, the Board held that in its 1969 decision had effectively reviewed the 1960 RO decision and therefore "subsumed" it because the 1969 decision had reviewed the entirety of the evidence before the RO in 1960 in addition to the new and material evidence. We therefore held that the RO could not review the Board's 1969 decision, though Mr. Dittrich could collaterally attack the 1969 decision by bringing a claim for CUE at the Board level. Consequently, in Dittrich we reaffirmed the doctrine of delayed-subsuming.

Mr. Jones' case falls squarely within the parameters of our precedent regarding delayed-subsuming. The 1993 Board Decision reviewed de novo the entirety of the evidence before the RO in 1962 and determined the merits of the underlying question of service connection. The 1993 Board Decision, under Dittrich and Donovan, therefore "subsumed" the 1962 RO Decision, rendering this unappealed, final RO decision immune from a CUE attack. We therefore affirm the decision of the Court of Appeals for Veterans Claims with respect to the applicability of the doctrine of delayed-subsuming to this case. We note, however, that our decision today does not preclude Mr. Jones from filing a claim of CUE as to the 1993 Board Decision directly to the Board. See 38 U.S.C. § 7111 (1994).

For the foregoing reasons, the decision of the Court of Appeals for Veterans Claims is AFFIRMED.

Each party shall bear its own costs.