Rezi P. Forshey, Claimant-Appellant v. Anthony J. Principi, Secretary of Veterans Affairs

On February 5, 2001, we granted rehearing en banc to consider the scope of our jurisdiction in cases coming to this court from the Court of Appeals for Veterans Claims under 38 U.S.C. § 7292, and the prudential rules that should govern the exercise of that jurisdiction where it exists.

We conclude that we have jurisdiction under section 7292(a) over: (1) issues concerning the validity of statutes or regulations on which the decision of the Court of Appeals for Veterans Claims depended; (2) issues of interpretation if the Court of Appeals for Veterans Claims elaborated the meaning of a statute or regulation and the decision depended on that interpretation; (3) issues of validity or interpretation raised before the Court of Appeals for Veterans Claims but not explicitly decided, if the decision would have been altered by adopting the position that was urged; and (4) other "relevant" questions of law. Our decisions in Smith v. West, 214 F.3d 1331 (Fed.Cir.2000), cert. denied, 531 U.S. 1144, 121 S.Ct. 1080, 148 L.Ed.2d 956 (2001), and Belcher v. West, 214 F.3d 1335 (Fed.Cir.2000), cert. denied, 531 U.S. 1144, 121 S.Ct. 1080, 148 L.Ed.2d 956 (2001), are modified to the extent, if any, that they are inconsistent with this new approach on jurisdictional issues.

We also hold that, even when jurisdiction exists, prudential considerations should severely limit the exercise of our authority to consider issues not raised or decided below. In this particular case, we affirm the judgment of the Court of Appeals for Veterans Claims.

The appellant, Rezi P. Forshey, is the widow of Charles O. Forshey, who served in the United States Navy from 1975 until his death on August 19, 1990. Mr. Forshey died while he was on active duty from injuries that he sustained in a motorcycle accident. Immediately preceding the accident, Mr. Forshey was riding his motorcycle on a winding rural road when he went off the road around a turn and crashed into a boulder. A police report stated that at the time of the accident, it was daylight, the weather was clear, and the road was dry. The report also noted that there was no sign of a mechanical failure of the motorcycle or its tires. Based on witness accounts, the police estimated that Mr. Forshey was traveling at not more than thirty miles per hour in a twenty mile per hour zone. A toxicology report from an autopsy performed the day after Mr. Forshey died showed that Mr. Forshey had a blood alcohol level of 0.139%. Apparently, the Navy views a blood alcohol level of 0.10% or higher as creating a presumption that the person is under the influence of alcohol. A Navy accident report dated August 29, 1990, stated that alcohol was a contributing factor to the accident. The report further concluded that Mr. Forshey suffered a broken neck and died instantly. However, the Navy report did not determine the ultimate cause of the accident.

In order for a spouse to receive veterans' benefits, the veteran's death generally must have been service-connected. See 38 U.S.C. § 1310 (2000).1 For the death to be service-connected, the death must be caused by an injury that occurred in the line of duty. See 38 U.S.C. § 101(16) (2000). Section 105(a) of title 38 creates a presumption of service connection for injuries or diseases that occur while a veteran is on active duty. Section 105(a) provides in pertinent part:

An injury or disease incurred during active military, naval, or air service will be deemed to have been incurred in line of duty and not the result of the veteran's own misconduct when the person on whose account benefits are claimed was, at the time the injury was suffered or disease contracted, in active military, naval, or air service, whether on active duty or on authorized leave, unless such injury or disease was a result of the person's own willful misconduct or abuse of alcohol or drugs.

38 U.S.C. § 105(a) (2000) (emphases added).

Thus the presumption of service connection may be overcome if the government establishes that the veteran's own willful misconduct or abuse of alcohol or drugs2 caused the injury leading to his death. The Secretary of Veterans Affairs has promulgated a regulation that defines "willful misconduct" in this context. 38 C.F.R. § 3.301(c)(2) (2001). The regulation provides that if "intoxication results proximately and immediately in disability or death, the disability or death will be considered the result of the person's willful misconduct." 38 C.F.R. § 3.301(c)(2) (2001).3 Section 5107(b) of title 38 established the "benefit of the doubt" rule. It provides in pertinent part:

The Secretary shall consider all information and lay and medical evidence of record in a case before the Secretary with respect to benefits under laws administered by the Secretary. When there is an approximate balance of positive and negative evidence regarding any issue material to the determination of a matter, the Secretary shall give the benefit of the doubt to the claimant.

38 U.S.C. § 5107(b) (West Supp.2001) (emphasis added).

The Department of Veterans Affairs Regional Office in Phoenix, Arizona, denied appellant's claim because it concluded that Mr. Forshey's death was proximately caused by his intoxication, which itself constituted willful misconduct.

Ms. Forshey appealed the decision of the Regional Office to the Board of Veterans' Appeals ("BVA"). The BVA applied a preponderance of the evidence standard stating that "the [Court of Appeals for Veterans Claims] has noted that, in light of the `benefit of the doubt' rule established by 38 U.S.C.A. § 5107(b) (West 1991), `the preponderance of the evidence must be against the claim for benefits to be denied.' Gilbert v. Derwinski, 1 Vet.App. 49, 53-54 (1990)."4 In re Forshey, No. 94-07-681, slip op. at 8 (Bd.Vet.App. May 31, 1996). Examining all of the evidence, including "negative evidence," which "eliminates any other possible cause for the accident except for alcohol," the BVA concluded that "because the preponderance of the evidence demonstrates that alcohol was the proximate cause of the veteran's death, and the veteran's death consequently the result of his own willful misconduct, the appellant's claim for entitlement to service connection for the cause of the veteran's death must be denied." Id. at 12-13.

On appeal to the Court of Appeals for Veterans Claims, Ms. Forshey argued that the BVA had improperly interpreted 38 U.S.C. § 105(a) and 38 C.F.R. § 3.301(c)(2) to permit reliance on "negative evidence" to rebut the presumption of service connection. The Court of Appeals for Veterans Claims rejected this argument, stating:

In reaching its conclusion that intoxication was the proximate cause of the veteran's death, the Board considered what it referred to as "negative evidence," which is the evidence tending to disprove the existence of an intervening cause of the accident other than alcohol consumption. This included evidence indicating that the road surface was dry, that the weather was clear, that it was broad daylight, and that there was no apparent malfunction of the motorcycle.... The appellant argues that the Board impermissibly used this negative evidence to conclude that intoxication was the proximate cause of the accident.

... [T]he Board acted properly in considering this evidence.

Forshey v. West, 12 Vet.App. 71, at 74 (Vet.App. 1998). Based on the "negative evidence," the Court of Appeals for Veterans Claims found that the Board's decision was not clearly erroneous and affirmed.

At the Court of Appeals for Veterans Claims, appellant did not question the preponderance of the evidence standard; indeed, she assumed that it applied. Id. at 76. The Court of Appeals for Veterans Claims did not specifically address whether a preponderance of the evidence standard should be applied, but did apply that standard. Id. In addressing the applicable standard of proof, the Court of Appeals for Veterans Claims, citing Gilbert, 1 Vet.App. at 53-54, noted that "twice in its decision the Board recognized that `in light of the benefit of the doubt rule [section 5107(b)], the preponderance of the evidence must be against the claim for benefits to be denied.' Nonetheless, the Board concluded that the preponderance of the evidence was against the claim." Id. (citations omitted). The court concluded that "[a]ccordingly, the Board did not fail to consider the benefit of the doubt rule in the appellant's case." Id.

On appeal to this court, the appellant continued to press her argument that the statute and the regulation did not permit the consideration of "negative evidence," but instead required that the government present "affirmative evidence" to rebut the statutory presumption of service connection set forth in 38 U.S.C. § 105(a). She argued that "the [Court of Appeals for Veterans Claims] interpreted both 38 U.S.C. § 105(a) and 38 C.F.R. § 3.301(c)(2) to allow the use of negative evidence ... to establish the proximate cause of the veteran's death," and that "[s]uch an interpretation clearly contravenes established case law regarding a party's affirmative duty to present evidence necessary to rebut a presumption."

However, for the first time appellant also urged that 38 C.F.R. § 3.301(c)(2) was invalid because it failed to establish a standard of proof and that 38 U.S.C. § 5107(b) required that the government overcome the presumption of service connection by clear and convincing evidence rather than by a preponderance of the evidence. She claimed that the government misconstrued 38 U.S.C. § 5107(b) as providing a standard of proof, when it actually only provided a rule for weighing evidence.

The panel decision in this case did not address the "negative evidence" issue. Instead, it concluded that this court had jurisdiction under 38 U.S.C. § 7292(a) to consider the applicability of a clear and convincing evidence standard because "the [Court of Appeals for Veterans Claims] implicitly relied on 38 U.S.C. § 5107(b)" in applying a preponderance of the evidence standard. Forshey v. Gober, 226 F.3d 1299, 1302 (Fed.Cir.2000), vacated by 239 F.3d 1224 (Fed.Cir.2001).

On reaching the merits, the panel noted that 38 U.S.C. "§ 5107(b) sets out not a standard of proof, but a rule for weighing evidence material to a claim." Id. at 1304. As such, the preponderance of the evidence standard, which had been read into section 5107(b), was inapplicable. Instead, "the benevolent intent behind the veterans system" supported the conclusion that "a showing of clear and convincing evidence to the contrary is ... [required] to rebut the presumption of service-connection afforded a veteran under 38 U.S.C. § 105." Id. at 1305. The panel decision remanded to the Court of Appeals for Veterans Claims for consideration under a clear and convincing evidence standard. Id. Judge Schall, relying on Smith and Belcher, dissented and urged that this court did not have jurisdiction over the clear and convincing evidence issue because this issue was not decided by the Court of Appeals for Veterans Claims or raised in that court. Id. at 1306 (Schall, J., dissenting). Judge Schall also concluded that "[e]ven absent the jurisdictional impediment, [he] would be disinclined for prudential reasons to consider the issues raised by Ms. Forshey because they were not raised before the [Court of Appeals for Veterans Claims]." Id. at 1307 (Schall, J., dissenting).

On February 5, 2001, we granted the government's petition for rehearing en banc, and vacated the panel opinion. We asked the parties to brief the following issues for purposes of the rehearing en banc: 1. Is the rationale and holding in this case consistent with the rationale and holdings in Smith and Belcher?

2. If the rationale and holding in this case is not consistent with the rationale and holdings in Smith and Belcher, should Smith and Belcher be overruled?

3. If Smith and Belcher are not overruled, are the rationale and holdings in those cases consistent with the rationale and holding in In re Bailey?

4. If the rationale and holdings in Smith and Belcher are not consistent with the rationale and holding in In re Bailey, which of Smith and Belcher or In re Bailey should be overruled?

Oral argument was held on October 3, 2001.

* Section 7292 governs our jurisdiction. It is lengthy and provides in pertinent part:

(a) After a decision of the United States Court of Appeals for Veterans Claims is entered in a case, any party to the case may obtain a review of the decision with respect to the validity of any statute or regulation (other than a refusal to review the schedule of ratings for disabilities adopted under section 1155 of this title) or any interpretation thereof (other than a determination as to a factual matter) that was relied on by the Court in making the decision. Such a review shall be obtained by filing a notice of appeal with the Court of Appeals for Veterans Claims within the time and in the manner prescribed for appeal to United States courts of appeals from United States district courts.

* * *

(c) The United States Court of Appeals for the Federal Circuit shall have exclusive jurisdiction to review and decide any challenge to the validity of any statute or regulation or any interpretation thereof brought under this section, and to interpret constitutional and statutory provisions, to the extent presented and necessary to a decision. The judgment of such court shall be final subject to review by the Supreme Court upon certiorari, in the manner provided in section 1254 of title 28.

(d)(1) The Court of Appeals for the Federal Circuit shall decide all relevant questions of law, including interpreting constitutional and statutory provisions. The court shall hold unlawful and set aside any regulation or any interpretation thereof (other than a determination as to a factual matter) that was relied upon in the decision of the Court of Appeals for Veterans Claims that the Court of Appeals for the Federal Circuit finds to be —

(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;

(B) contrary to constitutional right, power, privilege, or immunity;

(C) in excess of statutory jurisdiction, authority, or limitations, or in violation of a statutory right; or

(D) without observance of procedure required by law.

(2) Except to the extent that an appeal under this chapter presents a constitutional issue, the Court of Appeals may not review (A) a challenge to a factual determination, or (B) a challenge to a law or regulation as applied to the facts of a particular case.

(e)(1) Upon such review, the Court of Appeals for the Federal Circuit shall have power to affirm or, if the decision of the Court of Appeals for Veterans Claims is not in accordance with law, to modify or reverse the decision of the Court of Appeals for Veterans Claims or to remand the matter, as appropriate.

(2) Rules for review of decisions of the Court of Appeals for Veterans Claims shall be those prescribed by the Supreme Court under section 2072 of title 28.

38 U.S.C § 7292 (2000 & West Supp.2001) (emphases added).5

This appeal comes to us against the background of our panel decisions in Smith v. West, 214 F.3d 1331 (Fed.Cir. 2000), cert. denied, 531 U.S. 1144, 121 S.Ct. 1080, 148 L.Ed.2d 956 (2001), and Belcher v. West, 214 F.3d 1335 (Fed.Cir.2000), cert. denied, 531 U.S. 1144, 121 S.Ct. 1080, 148 L.Ed.2d 956 (2001), and the Supreme Court's decision in Sims v. Apfel, 530 U.S. 103, 120 S.Ct. 2080, 147 L.Ed.2d 80 (2000). Smith was a case in which the veteran sought to reopen a previously denied claim on the basis of new and material evidence. The BVA and the Court of Appeals for Veterans Claims held that Smith's proffered evidence was not new and material under 38 U.S.C. § 5108, but instead was merely cumulative of previously rejected evidence. Smith, 214 F.3d at 1332. Smith abandoned this factual issue on appeal and urged for the first time on appeal to this court that the agency had failed to inform him of what new and material evidence was required to reopen the claim, and in particular that section 5103(a) of title 38 (providing that "the Secretary shall notify the claimant and the claimant's representative... of any information, and any medical or lay evidence, not previously provided to the Secretary that is necessary to substantiate the claim") required such notice. Id. at 1333. He also urged that the failure to notify denied him due process. Id. This panel specifically found that the only issues appellant raised on appeal were "whether the agency misconstrued 38 U.S.C. § 5103(a) (1994), and whether it thereby violated Smith's right to due process, by failing to inform Smith as to what would constitute `new and material evidence' of service connection." Id.

The panel then interpreted 38 U.S.C. § 7292(a). The panel held that "[t]he `relied on' language [in section 7292] ordinarily means that the issue of validity or interpretation was a part of the court's decision as indicated by its written opinion. Of course, we have held that avoidance of an issue by the veterans court, when that issue was raised below, does not deprive an appellant of the right to raise that issue again here." Id. Because "Smith has raised issues not presented or addressed below ... we therefore cannot address them." Id. at 1334. Accordingly, the panel dismissed the appeal for lack of jurisdiction. Id.

The Supreme Court decided Sims v. Apfel, shortly before our decision in Smith, but Sims was not addressed in Smith. In Sims, the Supreme Court addressed whether Sims, a Social Security claimant seeking judicial review, had waived judicial review of any issues of entitlement that she did not include in her request for review by the Social Security Appeals Council. Sims, 530 U.S. at 105, 120 S.Ct. 2080. The Court distinguished between court proceedings and non-adversarial administrative proceedings, and concluded that the non-adversarial nature of the Social Security proceedings dictated that a "judicially created issue-exhaustion requirement is inappropriate." Id. at 112, 120 S.Ct. 2080. Therefore, the Court held that Sims did not waive any issue by failing to raise it at the administrative level. Id.

In Belcher, another panel of this court held that Sims did not suggest that Smith was wrongly decided. Belcher sought benefits for psychiatric disability. Belcher, 214 F.3d at 1335. He was entitled to a presumption of soundness, under 38 U.S.C. § 1111, supporting his claim that his psychiatric difficulties materialized while he was in service. The presumption of soundness, however, is overcome if the Secretary can demonstrate by clear and unmistakable evidence that the condition existed before entry into service. See 38 C.F.R. § 3.304(b) (2001). The Court of Appeals for Veterans Claims affirmed the BVA's denial of service connection for his psychiatric disability on the ground that the Secretary had produced sufficient evidence to overcome the presumption of soundness, relying on oral statements made by Belcher. On appeal, Belcher abandoned the factual issue that had been decided by the Court of Appeals for Veterans Claims. Instead, Belcher urged reversal based on a regulatory provision, 38 C.F.R. § 3.304(b)(3), not addressed by the Court of Appeals for Veterans Claims, or argued to it. Belcher, 214 F.3d at 1336. That regulation provided that signed statements against interest made by veterans in service related to the origin of disease or injury cannot be held against the veteran unless the statement is independently corroborated. In this court, Belcher argued that section 3.304(b)(3) should be interpreted to include oral statements, and that under such an interpretation the Secretary could not use Belcher's statements to overcome the presumption of regularity. Id.

The panel followed the holding of Smith, in which "[w]e reasoned that where the Court of Appeals for Veterans Claims neither addresses a legal issue nor has such an issue presented to it, that court cannot be said to have `relied on' the issue or argument `in making its decision.'" Id. at 1337. The panel concluded that "[i]n this case, Mr. Belcher's [regulatory interpretation] issue was not addressed by or presented to the Court of Appeals for Veterans Claims. Accordingly, we are without jurisdiction to consider it." Id. The panel dismissed Mr. Belcher's appeal for lack of jurisdiction. Id. at 1338. The panel decided that Sims applied when there was no statute or regulation addressing the issue-exhaustion requirement. Id. at 1337. As 38 U.S.C. § 7292(a) directly addressed the issue exhaustion requirement, Sims was inapplicable in this context. Id. Specifically, the panel noted that:

[S]ection 7292 is a jurisdictional bar to our consideration of a legal issue or argument (one directed to the validity or interpretation of a statute or regulation) on appeal absent at least one of two conditions: (1) the Court of Appeals for Veterans Claims addressed the issue or argument, or (2) the issue or argument was raised by a party to the Court of Appeals for Veterans Claims.

Id.

For many years before the creation of the Court of Appeals for Veterans Claims and the enactment of section 7292, judicial review of decisions of the Veterans' Administration ("VA") was almost entirely foreclosed.6 Proposals were made to subject VA decisions to judicial review, but both the concept of judicial review and the scope of that review proved to be controversial. The debate was fueled in part by Judicial Conference opposition to court of appeals review of factual issues.7

The Senate bill (Senate Bill 11) was introduced on January 6, 1987, by Senator Cranston. It provided for judicial review in district court of any BVA "decision" and then subsequent appellate review of district court "decisions" in the regional circuits. Veterans' Administration Adjudication Procedure and Judicial Review Act, S. 11, 100th Cong. §§ 4025(b), 4029 (1987). This bill provided for review of factual determinations by the VA under a narrow standard. The district court was to set aside BVA factual findings "when [the finding] is so utterly lacking in a rational basis in the evidence that a manifest and grievous injustice would result if such finding were not set aside." Id. § 4026(a)(1)(D). The scope of review was similar to the scope proposed in bills passed by the Senate in 1981, 1983, and 1985. 134 Cong. Rec. S224 (daily ed. Jan. 6, 1987) (statement of Sen. Cranston).

The Senate Committee Report retained this approach and explained that its factual review standard "is intended to afford the maximum possible deference to the BVA's expertise as an arbiter of the specialized types of factual issues that arise in the context of claims for VA benefits, while still recognizing and providing for the possibility of error in BVA factual determinations...." S.Rep. No. 100-418, at 60 (1988). On the floor, a proposal by Senator Murkowski to limit review by courts of appeals to review of regulations and to "confine[] judicial review cases to questions of interpretation of statutory and constitutional law" was rejected, and in this respect the Committee bill was approved. 134 Cong. Rec. S9193, S9208 (daily ed. July 11, 1988).

On the House side, Rep. Montgomery introduced a bill (House Bill 5288) to establish a Court of Veterans Appeals. (This court is presently known as the Court of Appeals for Veterans Claims.) The Court of Veterans Appeals was authorized to review determinations of the BVA. Veterans' Judicial Review Act, H.R. 5288, 100th Cong. § 4001, et seq. (1988). Our court was given exclusive jurisdiction to review the Court of Veterans Appeals, but the scope of that jurisdiction was limited. Id. §§ 4002, 4042. Utilizing language virtually identical to that in the final bill, subsection (a) of House Bill 5288 provided that

"any party to the case may obtain a review of the decision with respect to the validity of any statute or regulation (other than the schedule of ratings for disabilities under section 355 of this title) or any interpretation thereof (other than a determination as to a factual matter) that was relied on by the Court in making the decision."

Id. § 4042(a)(1)(A). Although "[t]he Court of Appeals for the Federal Circuit shall decide all relevant questions of law, including interpreting constitutional and statutory provisions," this court "may not review the facts of the appeal or the application of any law or regulation to those facts unless there is presented a constitutional issue." Id. § 4042(b).

In supporting the preclusion of fact review, the House Report noted:

The committee is concerned with restoring the proper balance between the executive and judicial branch with respect to the adjudication of veterans' claims. It is clear from the testimony before the committee that judges do not wish to take on the very technical and specialized task of applying a well established body of law governing the adjudication of veterans' claims to thousands of factual disagreements which arise between the VA and claimants.

H.R.Rep. No. 100-963, at 24-25 (1988), reprinted in 1988 U.S.C.C.A.N. 5782, 5806. However, the report did not otherwise explain the jurisdictional language. Instead, the report largely restated the language of the bill. Id. at 4, 1988 U.S.C.C.A.N. at 5785 ("The reported bill ... [p]rovide[s] for review by the Court of Appeals for the Federal Circuit of any legal matter relied on by the Court of Veterans Appeals in making a decision in a particular case. This would include constitutional, statutory, and regulatory matters, and interpretations of law."); id. at 35, 1988 U.S.C.C.A.N. at 5818 ("The [Court of Appeals for the Federal Circuit] would have exclusive jurisdiction to review and decide any challenge to the validity of any law, regulation or interpretation thereof that was relied on by the [Court of Veterans Appeals] in making a decision in an individual case.").

The House passed House Bill 5288, as amended. 134 Cong. Rec. H9370 (daily ed. Oct. 3, 1988). The House-passed version, in all relevant respects, was the same as the bill reported by the House Committee. On October 18, 1988, the Senate and House versions were reconciled by a compromise agreement (in lieu of a conference report), which adopted the approach in the House bill. 134 Cong. Rec. S16650-60 (daily ed. Oct. 18, 1988) (explanatory statement on the compromise agreement).

The validity of laws and regulations can be challenged in the U.S. Court of Appeals for the Federal Circuit.... If a veteran believes that a law or regulation is invalid on its face and if that law or regulation was germane to his claim, then the veteran can ask the Federal [C]ircuit to rule on the validity of that law or regulation. The Federal [C]ircuit cannot ... review any factual questions in the veteran's appeal. The Federal [C]ircuit cannot review whether, in a particular case, a law or regulation was applied inappropriately.

Id. at S16659 (statement of Sen. Murkowski).

Having made the policy determination to preclude review of factual determinations by the [Court of Appeals for the Federal Circuit], we have recognized that the court might be tempted to review factual determinations under the guise of reviewing "mixed questions of law and fact." This is the origin of the language contained in the bill passed by the House (H.R.5288) and the amended language contained in the compromise agreement.