Court refuses to affirm the Board's Decision because of its Contradictory Extraschedular VA Disability Determinations

Court refuses to affirm the Board’s Decision because of its Contradictory Extraschedular VA Disability Determinations

Memorial Day, in the United States, celebrated on the last Monday of May honours those who have died in the nation’s wars. It originated during the American Civil War when citizens placed flowers on the graves of those who had been killed in battle. 

Let us revisit Ray V. Wilkie (2019) on this occasion where the U.S. Court of Appeals for Veterans Claims refused to accept the Board of Veterans’ Appeals’ inadequate reasons or bases regarding its contradictory extraschedular determinations.


In July 2014, the Board of Veterans’ Appeals (Board) referred U.S. Army veteran Eddie D. Ray’s claim for a rating of total disability on the basis of individual unemployability (TDIU) to what is today the Director, Compensation Service, for extraschedular consideration. The Board found that “[w]hile [an October 2011] Department of Veterans Affairs (VA) examiner indicated that the Veteran was able to perform sedentary employment, the record suggests that the Veteran may not be able to obtain such employment as it is inconsistent with his education and occupational background.” The Director then denied the veteran an extraschedular TDIU rating, and the matter returned to the Board.

Though in July 2014 the Board found extraschedular referral warranted and though no new evidence had been submitted since its July 2014 decision, in a February 15, 2017, decision, the Board found that the veteran’s “service-connected disabilities did not render him unable to secure and follow a substantially gainful occupation consistent with his education and special training” and denied him an  extraschedular TDIU rating. Nowhere in its decision did the Board explain what it understood from the phrase “unable to secure and follow a substantially gainful occupation,” a phrase that VA has refused to define since this Court’s inception, to mean. Nor did the Board explain why referral for extraschedular consideration was warranted in July 2014 but an extraschedular rating wasn’t warranted in February 2017.


In the appeal that followed, the U.S. Court of Appeals for Veterans Claims sought to answer two questions. First, what is the effect, if any, of the Board’s determination to refer a case for extraschedular consideration under 38 C.F.R. § 4.16(b) when the Board later reviews the Director’s decision not to award an extraschedular TDIU rating? Second, does VA’s refusal to define key terms in § 4.16(b) make the Board’s statement of reasons or bases inadequate, and if so, should the Court interpret those terms itself?

Discussion by the Court

A. Is a Referral Decision Under 38 C.F.R. § 4.16(b) a Factual Finding?

Typically, VA compensates veterans for their service-connected disabilities through its rating schedule, which is designed to reflect the average impairment in earning capacity that a veteran with a certain type of disability would experience. But, in certain circumstances, VA can determine that a veteran is unemployable as a result of his or her service-connected disabilities even when he or she hasn’t met the requirements for a 100% rating. In those instances, 38 C.F.R. § 4.16(a) and (b) kick in.

The veteran contended that the Board’s 2014 referral decision was a binding factual finding that the Board impermissibly changed when it denied him an extraschedular rating in 2017. The Secretary argued that the Board’s 2014 referral decision “did not equate to a factual finding, but instead indicated simply that evidence of record warranted referral to the Director.”

The Court held that if the veteran is right that the decision to refer a claim for extraschedular consideration is a binding factual finding, then the Director would be little more than a rubberstamp. Put simply, it can’t be the case that when the Board refers a claim to the Director for extraschedular consideration and the Director denies an extraschedular rating, the Board then must award an extraschedular rating anyway because of its initial referral decision. 

But, on the other hand, the Secretary also can’t be right that the referral decision isn’t a factual finding as it clearly involves the application of a legal standard, § 4.16(b), to the facts of a given claim.

B. Does Referral Under 38 C.F.R. § 4.16(b) Require the Board to Award an Extraschedular Rating?

The Board’s obligation to provide an adequate statement of reasons or bases to support its decision also applies when the Board reviews the Director’s decision not to grant an extraschedular TDIU rating. Thus, the Board must ensure that it adequately explains its reasoning when a factual finding made at the referral stage comes out differently at the review stage. Some factors that may affect the Board’s ability to reach a different result or the adequacy of its discussion of reasons or bases include, but are not limited to, the certainty or complexity of factfinding in the initial referral decision and to the extent to which the record has changed since the referral decision. 

Thus, the Court held that the referral decision can still be relevant at the award stage in certain circumstances. For example, where the Board finds referral appropriate because “it is beyond dispute” that a veteran was unemployable because of his service-connected disabilities, more explanation might be needed for a contrary finding than where the Board’s referral finding is more equivocal. It’s also possible that no amount of explanation may overcome the Board’s initial finding.

The Court decided that since the Board’s decision didn’t explain why the factual finding it made at the referral stage came out differently at the review stage, remand was warranted. On remand, the Board must ensure that it explains its different factual determinations at the referral and review stages.

C. Interpreting “Substantially Gainful Employment”

The Court stated that expert discretion is the lifeblood of the administrative process, but unless the requirement for administrative action is made strict and demanding, expertise, the strength of modern government, can become a monster which rules with no practical limits on its discretion.

Since is the first occasion in which the Court has interpreted “unable to secure and follow a substantially gainful occupation” under § 4.16 and provided guidance on what it means to “secure and follow” said employment,  the decision on appeal was set aside and the matter was remanded to the board because it is a absolute rule that a reviewing court may not affirm an administrative agency’s actions on a reasoned basis different from the rationale actually put forth by the agency.

Ideally, VA, with its expertise, would have interpreted the phrase at some point after this Court first encouraged it to do so in 1991, but it hasn’t. So, the Court provided guiding principles to frame the proper inquiry for extraschedular TDIU.


The Court set aside the Board’s February 15, 2017, decision and remanded the matter to the Board for further adjudication.

Key Takeaways:

  • In pursuing his case on remand, the veteran is free to submit additional evidence and argument, including the arguments raised in his briefs to this Court. The Board must consider any such evidence or argument. The Court reminded the Board that “a remand is meant to entail a critical examination of the justification for the decision.”
  • The U.S. Court of Appeals for Veterans Claims remanded this matter to the Board because of its inadequate reasons or bases regarding its contradictory extraschedular determinations.

Case Details:

Case Caption:Ray V. Wilkie
Docket Number:17-0781
Court:United States Court of Appeals for Veterans Claims
Order Date:March 14, 2019


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