Arellano v. McDonough

Issues

Does the rebuttable presumption of equitable tolling, which would allow a veteran to apply for disability benefits past the normal deadline, apply to 38 U.S.C. § 5110(b)(1), and if so, has the Government rebutted that presumption?

Oral argument:

October 4, 2022

Court below:

United States Court of Appeals for the Federal Circuit

38 U.S.C. § 5110(b)(1) allows veterans who apply for disability compensation benefits within one year of discharge from the military to have retroactive disability compensation benefits counted from the date of discharge instead of the date of application for benefits. In this case, the Supreme Court will determine whether equitable tolling, an exemption to statutes of limitations under which plaintiffs who could not discover the basis to bring their lawsuits until after the expiration of the limitations period may bring a claim, applies to this one-year deadline. Although 38 U.S.C. § 5110(b)(1) does not have an explicit statute of limitation, Arellano argues that the statute functionally serves as a statute of limitations and that the Court has held that equitable tolling applies by default to functional statutes of limitations, including those applicable to suits against the government. McDonough counters that § 5110(b)(1) is not a statute of limitations, and that if Congress intended to allow equitable tolling to apply to the statute, it would have explicitly stated so in the law. The Court’s decision in this case will impact veterans’ welfare and the speed and procedure of disability claims administration.

Questions as Framed for the Court by the Parties

(1) Whether the rebuttable presumption of equitable tolling from Irwin v. Department of Veterans Affairs applies to the one-year statutory deadline in 38 U.S.C. § 5110(b)(1) for seeking retroactive disability benefits, and, if so, whether the government has rebutted that presumption; and (2) whether, if 38 U.S.C. § 5110(b)(1) is amenable to equitable tolling, this case should be remanded so the agency can consider the particular facts and circumstances in the first instance.

Facts

Congress has authorized disability benefits under 38 U.S.C. § 1110 for veterans who suffered disabilities during their service. Arellano v. McDonough at 1061. The size of the benefits is partly determined by the effective date of the award. Id. Petitioner Adolfo Arellano served in the Navy until October 29, 1981. Id. at 1063. Arellano has been disabled since 1980, when he suffered an accident aboard an aircraft carrier. Id. at 1063. During the accident, a collision killed and injured several of his shipmates and almost pushed him off the ship. Id. at 1063. Beginning in November 1981, psychologists documented that Arellano suffered from “psychosis, delusions, schizoaffective disorders, paranoia and anxiety (including PTSD).” Petition for a Writ of Certiorari at 113a. In 2011, Arellano filed a claim with the Department of Veterans Affairs (“VA”) Regional Office (“RO”) in St. Petersburg, Florida for disability benefits connected to his service in the Navy. Id. at 112a–114a.

Ordinarily, 38 U.S.C. § 5110(a)(1) prevents the effective date from being earlier than the day the VA receives the application for benefits. Arellano at 1061–62. However, 38 U.S.C. § 5110(b)(1) provides an exception to this rule. Id. at 1062. Through this exception, the effective date of the disability becomes the day after the veteran’s discharge or release “if application therefor is received within one year from such date of discharge or release.” Id.

The RO determined that there was a connection between Arellano’s disabilities and his service in the Navy. Id. at 1063. However, it set the effective date of Arellano’s disability benefits as June 3, 2011, the date it received his claim. Id. Arellano appealed the effective-date decision to the Board of Veterans’ Appeals (“the Board”). Id. On appeal, Arellano argued that the effective date should be the day after his discharge from the Navy because his disability prevented him from filing earlier. Id. at 1061. The Board rejected his argument, concluding that the timeline of § 5110(b)(1) applies regardless of the reason for filing after the deadline. Id.

Arellano appealed the Board’s decision to the United States Court of Appeals for Veterans Claims, again arguing that § 5110(b)(1) should apply to his case. Petition for a Writ of Certiorari at 2a–3a. The Court rejected his argument based on past case precedent which had addressed the same issue. Id. Arellano again appealed the decision, this time to the United States Court of Appeals for the Federal Circuit. Arellano at 1063–64. The Court of Appeals for the Federal Circuit held that § 5110(b)(1) does not apply to Arellano’s claim. Arellano at 1060. While the court’s decision pertaining to Arellano was unanimous, its reasoning was equally split among the twelve judges. Id. at 1060. Six of the judges believed that while § 5110(b)(1) does not apply to Arellano’s specific case, there could be other limited scenarios where it would apply even though a veteran applies more than one year after discharge. Arellano at 1060. For example, it could apply to mentally disabled veterans who do not have caregivers to assist with their forms. Id. at 1098. The other six judges held that there are no exceptions to the one-year rule. Id. at 1060.

The United States Supreme Court granted Arellano certiorari on February 22, 2022. Brief for Respondent, Denis R. McDonough, at 1.

Analysis

PRESUMPTION OF EQUITABLE TOLLING

Arellano argues that there is a rebuttable presumption of equitable tolling under § 5110(b)(1). Brief for Petitioner, Adolfo R. Arellano at 14. When a plaintiff is unable to discover that the reason for filing the lawsuit existed before the statute of limitations expires, equitable tolling adjusts the amount of time that may pass before a statute of limitations bars a lawsuit. Id. Arellano asserts that equitable tolling presumably applies to a broad range of laws that affect how long plaintiffs have to bring claims, beyond formal statutes of limitations. Id. at 14–16. Arellano contends that this presumption extends to time-limited claims against the government, such as those brought in administrative hearings. Id.

In the alternative, Arellano argues that § 5110(b)(1) functionally acts as a statute of limitations because it fulfills statutes of limitations’ primary function of incentivizing plaintiffs to promptly pursue claims against defendants as they arise or otherwise lose the option to do so. Id. at 20. Arellano notes that courts have held that other laws that impose time limits on claims, while not technically statutes of limitations, are functional statutes of limitations because they incentivize plaintiffs to pursue claims in the same manner that statutes of limitations do. Id. at 20–21. In particular, Arellano argues that regardless of the VA’s procedural idiosyncrasies, veterans’ applications under § 5110(b)(1) incorporate two claims: a backward-looking claim for benefits owed by the government that have accrued since their discharge or release from service, and a forward-looking claim for benefits owed by the government moving forward. Brief for Petitioner at 21–22; Reply Brief for Petitioner at 9. Arellano contends that this distinction of claims suggests that § 5110(b)(1) is a functional statute of limitations because it establishes a time limit for veterans to file their backward-looking claims. Brief for Petitioner at 20; Reply Brief for Petitioner at 7.

McDonough counters that when courts find that equitable tolling exists under statutes, they inherently impose exceptions to otherwise-absolute time limitations. Brief for Respondent, Denis R. McDonough at 14. McDonough suggests that, accordingly, a court should not find such an exception where it would conflict with what Congress intended the statute to mean at the time of passage. Id. Because equitable tolling has traditionally only been applied to formal statutes of limitations, and § 5110(b)(1) is not a formal statute of limitations, McDonough contends that applying it here would be inconsistent with Congress’s intent. Id. McDonough asserts that Congress presumably realized when drafting § 5110(b)(1) that courts have held equitable tolling to only apply to formal statutes of limitations. Id. at 16. As a result, McDonough argues, Congress would have drafted § 5110(b)(1) as a formal statute of limitations if it intended for equitable tolling to apply to veterans benefits. Id.

McDonough further asserts that § 5110(b)(1) cannot act as a functional statute of limitations because it does not affect veterans’ rights to claim benefits altogether. Brief for Respondent at 19. McDonough asserts that, because veterans file a single application for benefits under § 5110 to receive a single award based on a single effective date, a request for benefits under § 5110 represents a single claim. Id. at 26. McDonough thus contends that veterans’ single claims are only adjusted by the total amount of the lapse of deadline set by § 5110(b)(1), but not eliminated altogether by it, as the statute does not bar claims after the expiration of the one-year period. Id. at 19. Therefore, it is not a statute of repose which protects potential defendants by disallowing claims based on the actions of the potential defendant after a set period of time passes. Id. at 20. McDonough argues that because § 5110(b)(1) is not such a statute of repose, and because it does not incentivize plaintiffs to promptly pursue claims against defendants, it is not a functional statute of limitations. Id at 24.

APPLICATION OF PRO-VETERAN INTERPRETIVE CANON

Arellano argues that the Court has maintained a pro-veteran canon of interpreting statutes where interpretive doubt exists; and, Congress has historically intended to craft legislation that favors veterans. Brief for Petitioner at 27–28. As a result, Arellano asserts, if it is unclear whether § 5110(b)(1) is a statute of limitations subject to a presumption of equitable tolling, such ambiguity should be resolved in favor of veterans’ interests. Id. at 28. Arguing that § 5110(b)(1) is ambiguous, Arellano points to the Federal Circuit’s even split as evidence of interpretive doubt. Reply Brief for Petitioner at 13. Additionally, Arellano notes that Congress placed § 5110(b)(1) within a law that serves to ensure veterans receive their rightfully owed benefits and which relies on veterans navigating the process of claiming those benefits alone, suggesting that it should be interpreted in favor of veterans’ interests. Brief for Petitioner at 27–28.

McDonough counters that the Court’s pro-veteran canon is inapplicable here because the meaning of § 5110(b)(1) is clear and unambiguous. Brief for Respondent at 42. McDonough argues that interpretive canons are mere aids that should only be used when interpretive doubt exists as to a statute’s meaning. Id. Accordingly, McDonough maintains that the use of the pro-veteran canon is inappropriate here, where there is no interpretive doubt to resolve. Id.

REBUTTAL OF PRESUMPTION

Arellano argues that the government has failed to rebut the presumption of equitable tolling applicable to § 5110(b)(1). Brief for Petitioner at 29. Unless its language and structure or legislative history suggest that Congress intended to exclude § 5110(b)(1) from equitable tolling, Arellano asserts, equitable tolling applies to § 5110(b)(1). Id. at 30. With respect to the statute’s language, Arellano notes that many statutes with filing deadlines that contain similar or more forcefully restrictive language than § 5110(b)(1) have been found subject to equitable tolling. Id. at 31–32. Arellano also emphasizes that § 5110(b)(1) is a simple, one-sentence provision that lacks any exceptions in § 5110, suggesting that the Court’s creation of an implied equitable tolling exception would not undermine Congress’s intent. Id. at 33. Arellano further argues, on the statute’s legislative history, that Congress’s failure to amend § 5110(b)(1) to explicitly provide for equitable tolling does not suggest that Congress intended to exempt § 5110(b)(1) from equitable tolling. Id. at 38–39. Instead, Arellano contends, since courts have not consistently ruled on whether equitable tolling applies to claims against the government, Congress has not had reason to overrule the courts by explicitly providing for equitable tolling. Id.

On the other hand, McDonough counters that even if a presumption of equitable tolling is applicable to § 5110(b)(1), the government has rebutted it. Brief for Respondent at 26. McDonough asserts that § 5110 overall is a “highly detailed statutory scheme dictating specific legislative choices,” including several exceptions to its default deadline (sixteen in total) which apply analogous principles to the standards of accommodation for plaintiffs’ unique circumstances. Id. at 28–29, 31. As a result, McDonough contends, the Court would disrupt Congress’s intended structure of exceptions to the statute by imposing an additional exception that would usually only apply to situations already covered by existing exceptions. Id. McDonough also points to § 5110(a)’s qualifying clause, “unless specifically provided otherwise in this chapter,” as evidence that Congress intended to make the sixteen exceptions to the statute’s default filing deadline under § 5110(b) exclusive of any additional, judicially-created exceptions. Id. at 28–29. McDonough argues that Congress’s failure to amend the statute, while courts have repeatedly held that it is not subject to the presumption of equitable tolling, indicates that Congress affirmatively intended to uphold the courts’ interpretations. Id. at 36. Finally, McDonough notes that Congress has explicitly modified other VA-administered benefits programs to consider equitable factors. Id. at 33-35. McDonough thus contends that, if Congress intended for the VA to consider equitable tolling in carrying out § 5110, they would have amended the statute to say so explicitly. Id.

Discussion

BALANCING JUSTICE AND ADMINISTRATIVE COMPLEXITY

Military-Veterans Advocacy Inc. (“Military-Veterans”), in support of Arellano, contends that making administrators examine the case-by-case reasons for late disability applications will not create a substantial administrative burden. Brief of Amicus Curiae Military Veterans Advocacy Inc. (“Military-Veterans”), in Support of Petitioner at 16–17. Military-Veterans disagrees with the notion that making administrators examine each individual application for reasons to accept a late application will be burdensome. Id. Military-Veterans asserts that the administrative process is already complex and individualized, so this additional requirement is not so burdensome. Id. at 17. In addition, Military-Veterans notes that the number of veterans who apply for disability benefits is a small and declining number. Id. at 17–18.

Disabled American Veterans and Lee Kirby (“Disabled Veterans”), in support of Arellano, emphasize that the purpose of veterans’ disability compensation is to promote justice and act in the veteran’s favor. See Brief of Amici Curiae Disabled American Veterans and Lee Kirby (“Disabled Veterans”), in Support of Petitioner at 4–5. Disabled Veterans stress that the veterans’ compensation system is to be cooperative, with the focus being on the needs of the veteran. Id. at 5–6.

In response, McDonough warns that there are already delays in the disability compensation system and forcing administrators to engage in such an extensive inquiry will prolong the process for all veterans. Brief for Respondent, at 44–45. McDonough maintains that administrators, despite only granting exceptions for late applications in few instances, would still have to spend time looking for grounds for an exception in every instance when a veteran requests one. Id. at 40.

McDonough also argues that allowing late applications could create administrative complexities due to the difficulty of examining records and other evidence from decades earlier. Id. at 40. Accordingly, McDonough contends, both administrators and veterans will have to spend time finding and reconstructing old evidence that may no longer even exist. Id.

CONCERNS OVER VULNERABLE VETERANS

Federal Circuit Bar Association (“Federal Circuit Bar”), in support of Arellano, fears that forbidding late applications will harm those veterans with the most severe disabilities. See Brief of Amicus Curiae Federal Circuit Bar Association (“Federal Circuit Bar”), in Support of Petitioner at 5–6. Specifically, the Federal Circuit Bar warns that certain disabilities like post-traumatic stress disorder (PTSD) may appear more than one year after a veteran’s discharge from service. Id. Even if the disabilities materialize within one year, the Federal Circuit Bar states that the disabilities themselves may prevent veterans from filing in a timely manner. Id. at 11. Edgewood Veterans et al. add that the time around a veteran’s discharge from the military is a time of great upheaval in the veteran’s life. See Brief of Amici Curiae Edgewood Veterans et al., in Support of Petitioner 14–15. Without providing exceptions for the one-year time limit after discharge, Edgewood Veterans et al. assert, the government will deny benefits to those who may be most in need of them. Id. at 16–17.

McDonough posits that there are already some exceptions in the disability compensation system for veterans who are permanently disabled and whose disabilities delay submission of their applications for benefits. Brief for Respondent at 30. In particular, McDonough maintains that 38 U.S.C. § 5110(b)(4)(B) provides an exception to the deadline for disability pensions for veterans who are permanently and totally disabled. Id. at 31. McDonough further maintains that the statute includes an exception for an increase in the severity of a disability. Id. at 30. Thus, McDonough argues that certain veterans with disabilities who fail to apply by the deadline due to negligence could be able to receive benefits within the language of the statute. Id. at 43–44.