Federal Circuit Denies NOVA’s Petition for Review of Substitution Regulations



On January 13th, the Federal Circuit issued its decision on NOVA’s petition for review of VA’s substitution regulations, as codified at 38 CFR §§ 3.1010, 20.900(a)(2), and 20.1302.  The Federal Circuit denied the petition.

NOVA contended that requiring survivors to provide evidence of eligibility when VA is already aware of their status is arbitrary and capricious.  The Federal Circuit concluded “the status of a potential substitute is not static” and “eligibility to substitute can be conclusively determined only at the time of the claimant’s death.”  The Federal Circuit cited divorce, death, or a change in dependency status as reasons the status of an apparent substitute may be altered.

The Federal Circuit further found 38 USC § 5121A(a)(2) was unambiguous in requiring the substitute to “present evidence of the right to claim such status.”  Because 38 CFR § 3.1010(d) “closely tracks” the statutory language, the regulation is not inconsistent with the statute.  The Federal Circuit concluded VA’s interpretation of section 5121A is entitled to Chevron deference and Brown v. Gardner is not for application in this case.

NOVA also challenged VA’s requirement that the Board of Veteran’s Appeals dismiss an appeal upon death of the appellant and the agency of original jurisdiction make a new decision on substitution eligibility.  The Federal Circuit determined it was reasonable for VA to task the agency of original jurisdiction with determining eligibility for substitution even when the case is with the Board.  “The DVA concluded that, consistent with the ‘one review on appeal’ principle, the agency of original jurisdiction should first decide whether to allow substitution, which would enable a dissatisfied prospective substitute to obtain Board review of the substitution issue on appeal.  If the Board were to decide the substitution issue in the first instance, there would be no appellate recourse for the claimant within the DVA.”

You can read the full decision here.