Case: 20-1321 Document: 147 Page: 1 Filed: 09/20/2022
`
`
`
`United States Court of Appeals
`for the Federal Circuit
`______________________
`
`NATIONAL ORGANIZATION OF VETERANS’
`ADVOCATES, INC., PETER CIANCHETTA,
`MICHAEL REGIS, ANDREW TANGEN,
`Petitioners
`
`v.
`
`SECRETARY OF VETERANS AFFAIRS,
`Respondent
`______________________
`
`2020-1321
`______________________
`
`Petition for review pursuant to 38 U.S.C. Section 502.
`______________________
`
`Decided: September 20, 2022
`______________________
`
`BLAKE E. STAFFORD, Latham & Watkins LLP, Wash-
`ington, DC, argued for petitioners. Also represented by
`SHANNON MARIE GRAMMEL, ROMAN MARTINEZ.
`
` MOLLIE LENORE FINNAN, Commercial Litigation
`Branch, Civil Division, United States Department of Jus-
`tice, Washington, DC, argued for respondent. Also repre-
`sented by BRIAN M. BOYNTON, ERIC P. BRUSKIN, MARTIN F.
`HOCKEY, JR.; JULIE HONAN, Y. KEN LEE, Office of General
`Counsel, United States Department of Veterans Affairs,
`Washington, DC.
` ______________________
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`NOVA v. SECRETARY OF VETERANS AFFAIRS
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`
`Before NEWMAN, PROST, and CUNNINGHAM, Circuit
`Judges.
`Opinion for the court filed by Circuit Judge CUNNINGHAM.
`Dissenting opinion filed by Circuit Judge PROST.
`CUNNINGHAM, Circuit Judge.
`At the heart of the government’s scheme for awarding
`disability benefits to veterans is a rating schedule. The De-
`partment of Veterans Affairs adopted this rating schedule
`to standardize the evaluation of how severely diseases and
`injuries resulting from military service impair veterans’
`earning capacity. 38 C.F.R. § 4.1. The rating schedule is,
`in turn, divided into diagnostic codes that provide disabil-
`ity ratings for various symptoms or conditions.
`National Organization of Veterans’ Advocates, Inc., Pe-
`ter Cianchetta, Michael Regis, and Andrew Tangen peti-
`tion this court under 38 U.S.C. § 502 to review the VA’s
`interpretation of two of these diagnostic codes: DCs 5055
`and 5257, both found at 38 C.F.R. § 4.71a. The VA set out
`its interpretation of DC 5055 in Agency Interpretation of
`Prosthetic Replacement of a Joint, 80 Fed. Reg. 42,040
`(July 16, 2015) (the “Knee Replacement Guidance” or
`“Guidance”), and VA Adjudication Procedures Manual
`M21-1 Section III.iv.4.A.6.a (the “Knee Replacement Man-
`ual Provision”). The VA set out its interpretation of
`DC 5257 in Manual Section III.iv.4.A.6.d (the “Knee Joint
`Stability Manual Provision”).
`For the reasons provided below, we conclude that the
`Knee Replacement Manual Provision is not a reviewable
`agency action. We also hold that the Knee Replacement
`Guidance is arbitrary and capricious under the controlling
`precedent of Hudgens v. McDonald, 823 F.3d 630 (Fed. Cir.
`2016). Finally, we dismiss the challenge to the Knee Joint
`Stability Manual Provision as moot. Accordingly, we
`grant-in-part and dismiss-in-part the petition.
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`BACKGROUND
`I. The VA’s Interpretation of DC 5055
`Petitioners seek review of two interpretive rules. To
`introduce the VA’s interpretation of DC 5055, we must
`turn back to the claim at issue in Hudgens. In that case,
`the VA regional office (“RO”) denied Michael A. Hudgens,
`a U.S. Army veteran, a 100-percent disability evaluation
`for his partial prosthetic knee replacement under DC 5055
`because the RO found that DC 5055 applied only to total
`knee replacements. Hudgens, 823 F.3d at 632–33. The
`Board of Veterans’ Appeals and the United States Court of
`Appeals for Veterans Claims both affirmed the RO’s con-
`clusion that DC 5055 did not apply to Mr. Hudgens’s par-
`tial knee replacement claim. Id. at 633–34. Mr. Hudgens
`then appealed to this court. Id. at 634.
`On July 16, 2015, twelve days before the Secretary’s fi-
`nal brief in Hudgens was due with this court, the VA pub-
`lished the Knee Replacement Guidance. Id. The Guidance
`stated that the VA was providing notice of the agency’s
`“longstanding interpretation of DCs 5051 to 5056” as
`providing for a 100-percent evaluation “when the total
`joint, rather than the partial joint, has been replaced by a
`prosthetic implant.” 80 Fed. Reg. at 42,040. The VA also
`announced in the Guidance that an “explanatory note”
`would be added to 38 C.F.R. § 4.71a stating that the “term
`‘prosthetic replacement’ in diagnostic codes 5051 through
`5056 means a total replacement of the named joint.”1 Id.
`at 42,041.
`In Hudgens, we nevertheless reversed the judgment of
`the Veterans Court and remanded for further proceedings.
`
`1 The VA also included an exception to this interpre-
`tation for DC 5054, which relates to hip replacements.
`Knee Replacement Guidance, 80 Fed. Reg. at 42,041–42.
`That exception is not relevant here.
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`823 F.3d at 640. We held that DC 5055 “does not unambig-
`uously exclude [partial knee] replacements.” Id. at 637
`(emphasis omitted). We further concluded that the Secre-
`tary’s interpretation of DC 5055 could not be afforded Auer
`deference for two reasons. First, the Secretary’s interpre-
`tation “conflict[ed]” with “numerous inconsistent rulings by
`the Board” holding that partial knee replacements could be
`evaluated under DC 5055. Id. at 638–39. Second, the Knee
`Replacement Guidance was a “post hoc rationalization”
`“conveniently adopted to support the Veterans Court’s in-
`terpretation in this case.” Id. at 639. Finally, we held that
`Mr. Hudgens’s “interpretation of DC 5055 is permitted by
`the text of the regulation,” meaning that we had to apply
`the pro-veteran canon, see id.; see also Brown v. Gardner,
`513 U.S. 115, 117–18 (1994), and “resolve any doubt in the
`interpretation of DC 5055 in his favor,” Hudgens, 823 F.3d
`at 639. His claim, therefore, could be evaluated under
`DC 5055. Id.
`On November 21, 2016, six months after our decision
`in Hudgens, the VA informed RO adjudicators of how the
`agency intended to reconcile our decision in that case with
`the Knee Replacement Guidance. J.A. 4, 28. In the Knee
`Replacement Manual Provision, the VA directed RO adju-
`dicators to not evaluate under DC 5055 any claims for par-
`tial knee replacements “filed and decided on or after July
`16, 2015.” J.A. 28. Claims filed before July 16, 2015, and
`pending as of that date were to be evaluated under
`DC 5055 if doing so would be more favorable than evaluat-
`ing the same claims under another applicable diagnostic
`code. Id. Finally, claims filed before July 16, 2015, and
`adjudicated before that date were not to be revised. Id.
`Four years later, the VA amended DC 5055 following
`notice-and-comment to “clarify VA’s intent to provide a
`minimum evaluation following only total joint replace-
`ment.” Schedule for Rating Disabilities: Musculoskeletal
`System and Muscle Injuries, 85 Fed. Reg. 76,453, 76,454,
`76,456 (Nov. 30, 2020). The change was effective February
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`7, 2021. Id. at 76,453. On February 8, the VA rescinded
`the Knee Replacement Manual Provision. J.A. 246–47.
`But “the new Manual provisions still reference the histori-
`cal Knee Replacement Manual Provision because adjudica-
`tors use the historical guidance to rate claims that were
`pending as of February 7, 2021[,] and that include rating
`periods prior to that date.” Resp’t’s Br. 12; see J.A. 318.
`II. The VA’s Interpretation of DC 5257
`The second rule was stated in the Knee Joint Stability
`Manual Provision. When this Manual provision was prom-
`ulgated in 2018, J.A. 111, 113, DC 5257 assigned a 10-per-
`cent rating for “Slight” knee instability, a 20-percent rating
`for “Moderate” instability, and a 30-percent rating for “Se-
`vere” instability. 38 C.F.R. § 4.71a (2018). The Knee Joint
`Stability Manual Provision directed RO adjudicators to de-
`termine whether a claimant had slight, moderate, or severe
`instability by measuring the amount of movement in the
`joint. J.A. 113. The Manual provision associated slight in-
`stability with 0–5 millimeters of joint translation, moder-
`ate instability with 5–10 millimeters of joint translation,
`and severe instability with 10–15 millimeters of joint
`translation. Id. On January 21, 2021, following our deci-
`sion in National Organization of Veterans’ Advocates, Inc.
`v. Secretary of Veterans Affairs, 981 F.3d 1360 (Fed. Cir.
`2020) (en banc) (“NOVA 2020”), the VA rescinded the Knee
`Joint Stability Manual Provision. J.A. 183, 228.
`III. The Instant Appeal
`On January 3, 2020, NOVA filed a petition for review
`of the Knee Replacement Manual Provision and the Knee
`Joint Stability Manual Provision. NOVA 2020, 981 F.3d at
`1365–66. NOVA later amended the petition to add Messrs.
`Cianchetta, Regis, and Tangen—three members of
`NOVA—as petitioners and to challenge the Knee Replace-
`ment Guidance. Id. at 1368. In NOVA 2020, we held that
`NOVA has associational standing to challenge the Guid-
`ance and both Manual provisions. Id. at 1371. We further
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`held that we have jurisdiction under 38 U.S.C. § 502 to re-
`view the VA’s interpretation of DCs 5055 and 5257.2 Id. at
`1378, 1382. It was left for a merits panel to determine
`whether the Knee Replacement Guidance or the Knee Re-
`placement Manual Provision constitutes an independently
`reviewable interpretive rule and to render a decision on the
`merits of the petition. Id. at 1383, 1386.
`DISCUSSION
`I. The Knee Replacement Manual Provision
`We begin by resolving the jurisdictional question left
`open by NOVA 2020. We hold that the Knee Replacement
`Guidance—not the Knee Replacement Manual Provision—
`constitutes the final agency action subject to review under
`§ 502. As we explained in NOVA 2020: “Manual provisions
`that merely republish prior agency interpretations or re-
`state existing law . . . are not reviewable under section
`502.” Id. at 1382.
`The Knee Replacement Guidance predates the Knee
`Replacement Manual Provision, and the Manual provision
`makes no “substantive change” to the Guidance. Id.; see
`J.A. 1, 25, 28–29. The Manual provision takes as its key
`date July 16, 2015, the day the VA promulgated the Guid-
`ance. J.A. 1, 28. For partial knee replacement claims filed
`on or after that date, the Manual provision directs RO ad-
`judicators not to award evaluations under DC 5055,
`thereby implementing the rule put forward in the Guid-
`ance. J.A. 1, 28. The Manual provision even explains that
`its rule stems from the explanatory note added by the Guid-
`ance. J.A. 28. Under the Manual provision, partial knee
`
`2 Specifically, we have jurisdiction over the amended
`petition because either the Knee Replacement Guidance or
`the Knee Replacement Manual Provision is reviewable un-
`der § 502, regardless of which is the reviewable interpre-
`tive rule under § 552(a)(1). NOVA 2020, 981 F.3d at 1382.
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`replacement claims filed before July 16, 2015, may still be
`evaluated under DC 5055, such that the Knee Replacement
`Guidance has no effect on their adjudication. J.A. 28–29.
`Petitioners contend that this “temporal limitation is
`not contained in the Knee Replacement Guidance,” so the
`Manual provision is substantively different from the Guid-
`ance. Pet’rs’ Br. 50. But there is no suggestion in the Guid-
`ance that it is to have retroactive effect; indeed, the
`Guidance states that it has an effective date of July 16,
`2015. J.A. 1. Thus, the Manual provision does not provide
`instructions to RO adjudicators that are substantively in-
`consistent with the Knee Replacement Guidance. Because
`it “merely republish[es]” the Guidance, the Knee Replace-
`ment Manual Provision is not a final agency action subject
`to review under § 502. NOVA 2020, 981 F.3d at 1382–83.
`II. The Knee Replacement Guidance
`Having concluded that the Knee Replacement Guid-
`ance is the reviewable agency action, we now consider
`whether the Guidance is arbitrary and capricious. We con-
`clude that it is.
`
`A. Standard of Review
`“We review petitions under 38 U.S.C. § 502 in accord-
`ance with the standard set forth in the Administrative Pro-
`cedure Act (‘APA’), 5 U.S.C. §§ 701–706.” Paralyzed
`Veterans of Am. v. Sec’y of Veterans Affs., 345 F.3d 1334,
`1339 (Fed. Cir. 2003) (citing Nyeholt v. Sec’y of Veterans
`Affs., 298 F.3d 1350, 1355 (Fed. Cir. 2002)). Under the
`APA, we “hold unlawful and set aside agency action” that
`is “arbitrary [and] capricious,” is “not in accordance with
`law,” or is promulgated “without observance of procedure
`required by law.” 5 U.S.C. §§ 706(2)(A), (D).
`B. The Text of DC 5055
`We are asked to determine whether the VA’s interpre-
`tation of DC 5055 is arbitrary and capricious or contrary to
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`law. As always, we begin our analysis by looking to the
`regulatory text. See Chase Bank USA, N.A. v. McCoy, 562
`U.S. 195, 204 (2011). “[I]f there is only one reasonable con-
`struction of a regulation,” then a court should not defer to
`any conflicting agency interpretation. Kisor v. Wilkie, 139
`S. Ct. 2400, 2415 (2019).
`We look to the text of DC 5055 on the date that the VA
`promulgated the Knee Replacement Guidance. See Chase
`Bank, 562 U.S. at 204. On July 16, 2015, DC 5055 stated:
`5055 Knee replacement (prosthesis).
`Prosthetic replacement of knee joint:
`For 1 year following implantation of prosthesis
`………………… 100
`With chronic residuals consisting of severe
`painful motion or weakness in the affected ex-
`tremity ………………… 60
`With intermediate degrees of residual
`weakness, pain or limitation of motion rate
`by analogy to diagnostic codes 5256, 5261,
`or 5262.
`Minimum rating ………………… 30
`38 C.F.R. § 4.71a (2015).
`In Hudgens, we held that DC 5055 does not unambigu-
`ously exclude partial knee replacements. 823 F.3d at 637.
`Accordingly, the text of DC 5055 does not resolve whether
`the Knee Replacement Guidance is arbitrary and capri-
`cious. Id. at 637–38. The Secretary argues that we are not
`bound by this holding in Hudgens because DC 5055 has
`subsequently been “clarified” by the addition of the explan-
`atory note. Resp’t’s Br. 31. The Secretary asserts that the
`explanatory note is “plain and unambiguous” in stating
`that “the term ‘prosthetic replacement’ in diagnostic
`codes 5051 through 5056 means a total replacement of the
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`named joint.” Id. at 30 (quoting 38 C.F.R. § 4.71a,
`DCs 5051–56, Note (2020)).
`We reject this circular argument. We are evaluating
`whether the Guidance constitutes a valid interpretation of
`DC 5055. The Guidance itself inserted the explanatory
`note into DC 5055. J.A. 1–3. The Secretary would have us
`hold that the Guidance articulates the only reasonable
`reading of DC 5055 because the Guidance itself says so.
`See generally Resp’t’s Br. 29–31. That cannot be correct.
`Indeed, the Secretary’s argument contravenes a basic tenet
`of administrative law. Agencies must “use the same proce-
`dures when they amend or repeal a rule as they used to
`issue the rule in the first instance.” Perez v. Mortg. Bank-
`ers Ass’n, 575 U.S. 92, 101 (2015); see 5 U.S.C. § 551(5).
`The VA promulgated DC 5055 following notice-and-com-
`ment rulemaking procedures in 1978. Updating the Sched-
`ule for Rating Disabilities, 43 Fed. Reg. 45,348, 45,348–50
`(Oct. 2, 1978). Therefore, the Secretary cannot have
`amended DC 5055 without going through notice-and-com-
`ment.
`In Hudgens, we considered the same version of
`DC 5055 that existed when the VA promulgated the Knee
`Replacement Guidance. Compare 38 C.F.R. § 4.71a (2015),
`with Hudgens, 823 F.3d at 632 (quoting 38 C.F.R. § 4.71a).
`We thus follow Hudgens and conclude that DC 5055 is am-
`biguous as to whether it includes partial knee replace-
`ments.
`
`C. Deference
`We next consider, as we did in Hudgens, whether we
`must defer to the Secretary’s interpretation under Auer v.
`Robbins, 519 U.S. 452 (1997). We conclude that Hudgens
`is still controlling precedent and so we cannot afford the
`Secretary’s interpretation Auer deference.
`In Hudgens, we gave two reasons for why the Secre-
`tary’s interpretation of DC 5055—excluding partial knee
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`replacements—was not entitled to Auer deference. 823
`F.3d at 638–39. First, “the agency’s interpretation con-
`flict[ed] with a prior [agency] interpretation”—namely,
`“numerous inconsistent rulings by the Board.” Id. at 638
`(second brackets in original) (quoting Christopher v.
`SmithKline Beecham Corp., 567 U.S. 142, 155 (2012)). Sec-
`ond, the Secretary’s interpretation was a “post hoc ration-
`alization” “adopted to support the Veterans Court’s
`interpretation.” Id. at 639. The second reason regarding
`post hoc rationalization is not relevant here as we are ad-
`dressing only the interpretation put forward in the Knee
`Replacement Guidance, not a previous agency interpreta-
`tion that the Secretary is justifying with the Knee Replace-
`ment Guidance. See Oral Arg. at 01:47–02:07, available at
`https://oralarguments.cafc.uscourts.gov/default.aspx?fl=20
`-1321_12092021.mp3 (“Q: [G]oing forward, if [the Guid-
`ance] therefore is not to advance a defense of past agency
`action, we are now talking about using it to defend subse-
`quent agency action. To me, that’s a real distinction that
`has heft, right? A [from petitioners]: I agree it’s a distinc-
`tion, your honor.”). Therefore, this leaves our first reason
`in Hudgens that “numerous inconsistent rulings by the
`Board” foreclose the VA’s interpretation. 823 F.3d at 638.
`The Secretary contends that we should not character-
`ize Board interpretations “as representing the agency’s of-
`ficial position.” Resp’t’s Br. 33–35. The Secretary notes
`that “to receive Auer deference, ‘the interpretation must at
`least emanate from those actors, using those vehicles, un-
`derstood to make authoritative policy in the relevant con-
`text.’” Id. at 34 (internal brackets omitted) (quoting Kisor,
`139 S. Ct. at 2416). The Board is not such an authoritative
`actor, the Secretary asserts, because it issues more than
`100,000 non-precedential decisions a year where the judges
`act individually rather than in panels. Id. at 35 (citing
`Board of Veterans’ Appeals Annual Report to Congress
`(FY 2020),
`https://www.bva.va.gov/docs/Chairmans_An-
`nual_Rpts/BVA2020AR.pdf). In the Secretary’s view, these
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`facts, together with our statement in NOVA 2020 that
`Board decisions “appear not to be entitled to Auer defer-
`ence,” 981 F.3d at 1382 n.14, “erodes the foundation” of our
`holding in Hudgens, Oral Arg. at 29:50–52.
`The Secretary’s argument is beside the point. Neither
`in Hudgens nor in this case is the issue whether Board de-
`cisions are entitled to Auer deference. See id. at 17:28–
`18:00 (petitioners emphasizing that they are not arguing
`that Board decisions should be entitled to Auer deference).
`Rather, the issue is whether the existence of conflicting
`prior Board decisions can preclude the application of Auer
`deference to the subsequent VA interpretation in the Knee
`Replacement Guidance. As we explain below, no relevant
`law or facts have changed since our decision in Hudgens,
`and so we continue to be bound by our conclusion that prior
`conflicting Board decisions interpreting DC 5055 preclude
`application of Auer deference to the Knee Replacement
`Guidance.
`Since our decision in Hudgens, the Supreme Court has
`addressed Auer deference in Kisor. In Kisor, the Court
`found “it worth reinforcing some of the limits inherent in
`the Auer doctrine.” 139 S. Ct. at 2415. First, the Supreme
`Court held that before applying Auer deference, courts
`must “carefully consider the text, structure, history, and
`purpose of a regulation” and conclude that “the regulation
`is genuinely ambiguous.” Id. Second, the agency’s inter-
`pretation must also be “reasonable” and “come within the
`zone of ambiguity the court has identified after employing
`all its interpretive tools.” Id. at 2415–16. Third, “a court
`must make an independent inquiry into whether the char-
`acter and context of the agency interpretation entitles it to
`controlling weight.” Id. at 2416. This third part of the Auer
`inquiry is relevant here. The Supreme Court gave a list of
`several “especially important markers for identifying when
`Auer deference is and is not appropriate” given the charac-
`ter and context of the interpretation. Id.
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`The first of these markers, the Court explained, is that
`only “authoritative” agency interpretations should be af-
`forded Auer deference. Id. “That constraint follows from
`the logic of Auer deference—because Congress has dele-
`gated rulemaking power, and all that typically goes with it,
`to the agency alone.” Id. In other words, Auer deference is
`available only when agencies exercise their “delegated
`rulemaking power.”
`But not all agency actions exercising such power can
`receive Auer deference. See Kristin E. Hickman & Richard
`J. Pierce, Jr., Administrative Law § 3.8.3 (6th ed. 2022)
`(summarizing that under Kisor an agency interpretation
`being “authoritative” is one of five conditions that must be
`met before that interpretation can receive Auer deference).
`The Supreme Court proceeded to separately summarize
`case law holding that an agency interpretation should not
`receive Auer deference when it conflicts with a prior inter-
`pretation and “creates ‘unfair surprise’ to regulated par-
`ties.” Kisor, 139 S. Ct. at 2417–18 (quoting Long Island
`Care at Home, Ltd. v. Coke, 551 U.S. 158, 170 (2007)). Such
`agency actions do not reflect the “fair and considered judg-
`ment” of the agency. Id. at 2417 (quoting Christopher, 567
`U.S. at 155). Where there is such an “upending of reliance,”
`the lack of “‘fair warning’ outweigh[s] the reasons to apply
`Auer.” Id. at 2418 (quoting Christopher, 567 U.S. at 156).
`Accordingly, the primary concern of this constraint on Auer
`deference is the expectations that the agency has previ-
`ously engendered.
`Indeed, an agency can create such expectations even if
`it has not previously put forward an “authoritative” agency
`interpretation. Id. at 2418 (“[T]he upending of reliance
`may happen without such an explicit
`interpretive
`change.”); see also Romero v. Barr, 937 F.3d 282, 291 (4th
`Cir. 2019) (“[T]he upending of reliance may happen with-
`out such an explicit interpretive change. Rather, an agency
`may—instead of issuing a new interpretation that conflicts
`with an older one—set forth an interpretation for the first
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`time that is contrary to an established practice to which the
`agency has never objected.” (internal citation omitted)). As
`Kisor explains, in Christopher, the Supreme Court “refused
`to defer to an interpretation that would have imposed ret-
`roactive liability on parties for longstanding conduct that
`the agency had never before addressed.” Kisor, 139 S. Ct.
`at 2418 (citing Christopher, 567 U.S. at 155–56). In other
`words, even the absence of prior agency action can cause a
`new interpretation to be an “upending of reliance,” prevent-
`ing that interpretation from receiving Auer deference.
`Christopher, 567 U.S. at 155–58. Kisor merely reiterated
`that conflicting agency interpretations cannot receive Auer
`deference because they cause “unfair surprise” or an “up-
`ending of reliance.” 139 S. Ct. at 2417–18 (quoting Long
`Island, 551 U.S. at 170); accord Charles H. Koch, Jr. &
`Richard Murphy, 3 Administrative Law & Practice § 10:26
`(3d ed. 2022) (“In Christopher . . . the circumstance that
`mattered most to the Court was the element of unfair sur-
`prise.”). Kisor did not change the exception to Auer defer-
`ence applied in Hudgens. See Hudgens, 823 F.3d at 638–39
`(citing Christopher, 567 U.S. at 155).
`The fact that the Board, as it did before Hudgens, is-
`sues numerous non-precedential decisions by single judges
`each year does not alter our decision. Of the relevant Board
`decisions issued before the VA promulgated the Guidance,
`the vast majority applied DC 5055 to partial knee replace-
`ments. Id. at 637–38 & n.3 (noting Mr. Hudgens’s argu-
`ment that 17 out of 21 Board decisions issued prior to
`Hudgens interpreted DC 5055 to cover partial knee re-
`placements); Hudgens v. Gibson, 26 Vet. App. 558, 566
`(2014) (“Gibson”) (Kasold, C.J., dissenting) (noting that
`there were “at least 11 Board decisions that have inter-
`preted DC 5055 to cover partial knee replacements and
`only 3 that have interpreted it as limited solely to total
`knee replacements”), rev’d sub nom. Hudgens v. McDonald,
`823 F.3d 630 (Fed. Cir. 2016). And although Board deci-
`sions are non-precedential and issued by single judges,
`
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`Case: 20-1321 Document: 147 Page: 14 Filed: 09/20/2022
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`14
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`NOVA v. SECRETARY OF VETERANS AFFAIRS
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`they are—as we held in Hudgens—“the final decision[s] for
`the Secretary on all questions in matters affecting the pro-
`vision of benefits” and provide persuasive authority to the
`Veterans Court on the interpretation of regulations. Hudg-
`ens, 823 F.3d at 638 (quoting Gibson, 26 Vet. App. at 566
`(Kasold, C.J., dissenting) (citing 38 U.S.C. § 7104(c))). As
`such, there is “weight accorded to Board interpretations of
`VA regulations” that can engender reliance interests and
`foreclose application of Auer deference to the later conflict-
`ing Knee Replacement Guidance.3 Id.
`
`
`3 The dissent concludes that the Guidance does not
`upend reliance because it applies prospectively and not ret-
`rospectively. Diss. at 3. But the dissent does not identify
`cases where courts have relied on a distinction between
`prospective and retrospective conflicting agency interpre-
`tations. Instead, the Supreme Court has held that the “dis-
`ruption of expectations may occur when an agency
`substitutes one view of a rule for another.” Kisor, 139 S Ct.
`at 2418. An agency interpretation is not entitled to Auer
`deference when the interpretation “does not reflect the
`agency’s fair and considered judgment,” which may occur
`“when the agency’s interpretation conflicts with a prior in-
`terpretation” or is a “post hoc rationalization.” Christo-
`pher, 567 U.S. at 155. Thus, courts have not given Auer
`deference to conflicting agency interpretations that are ap-
`plied in subsequent proceedings. See, e.g., Romero, 937
`F.3d at 296–97 (declining to give Auer deference to prece-
`dential decision of Attorney General that Board of Immi-
`gration Appeals applied to end administrative closure of
`case); Rafferty v. Denny’s, Inc., 13 F.4th 1166, 1187 (11th
`Cir. 2021) (declining to give Auer deference to agency Opin-
`ion Letter issued prior to filing of complaint at issue). The
`Guidance, like the Board decision in Hudgens, conflicts
`with prior interpretations, which forecloses Auer defer-
`ence. See Hudgens, 823 F.3d at 637–38 & n.3.
`
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`Case: 20-1321 Document: 147 Page: 15 Filed: 09/20/2022
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`NOVA v. SECRETARY OF VETERANS AFFAIRS
`
`15
`
`We are thus still bound by the conclusion in Hudgens
`that the interpretive rule embodied in the Knee Replace-
`ment Guidance cannot qualify for Auer deference because
`it conflicts with most prior Board decisions interpreting
`DC 5055. See id. at 638–39.
`D. Pro-Veteran Canon of Construction
`We also must follow Hudgens, apply the pro-veteran
`canon, and defer to Petitioners’ interpretation of DC 5055.4
`We held in Hudgens that “[e]ven if the government’s as-
`serted interpretation of DC 5055 is plausible, it would be
`appropriate under [the pro-veteran canon] only if the [reg-
`ulatory] language unambiguously supported the govern-
`ment’s interpretation.” Id. at 639 (cleaned up) (quoting
`Sursely v. Peake, 551 F.3d 1351, 1357 (Fed. Cir. 2009)). Pe-
`titioners’ interpretation of DC 5055, which is the same as
`that of Mr. Hudgens, “is permitted by the text of the regu-
`lation.” Id. “DC 5055 is under the heading ‘Prosthetic Im-
`plants’ and merely lists a schedule of ratings for the
`condition ‘Knee replacement (prosthesis),’ without elabora-
`tion or limitation of the condition.” Id. (citing 38 C.F.R.
`§ 4.71a (2015)). The Secretary argues that we are not
`bound by the analysis of the pro-veteran canon in Hudgens
`only because the VA has subsequently added the explana-
`tory note. Resp’t’s Br. 36–37. But we have already con-
`cluded that the explanatory note cannot influence our
`interpretation of DC 5055. So, we follow Hudgens, apply
`
`
`“This court has not definitively resolved at what
`4
`stage the pro-veteran canon applies and whether it pre-
`cedes any claims of deference to an agency interpretation.”
`Roby v. McDonough, 2021 WL 3378834, at *8 (Fed. Cir.
`Aug. 4, 2021). Because we conclude that the Secretary’s
`interpretation is not entitled to Auer deference, we decline
`to opine on whether the pro-veteran canon precedes or fol-
`lows Auer deference.
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`Case: 20-1321 Document: 147 Page: 16 Filed: 09/20/2022
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`NOVA v. SECRETARY OF VETERANS AFFAIRS
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`the pro-veteran canon, and resolve any doubt in Petition-
`ers’ favor.
`
`* * *
`For these reasons, we conclude that the Secretary’s in-
`terpretation of DC 5055 is arbitrary and capricious and va-
`cate the Knee Replacement Guidance.
`III. The Knee Joint Stability Manual Provision
`Finally, we turn to the Knee Joint Stability Manual
`Provision. The parties agree that this issue is moot be-
`cause the Secretary rescinded the Manual provision.
`Pet’rs’ Br. 54–55; Resp’t’s Br. 55–56. We concur. Although
`Petitioners ask us to declare that the Manual provision is
`invalid ab initio, see Pet’rs’ Br. 55, we do not have the au-
`thority to make such a ruling on the merits when the issue
`is moot, see Powell v. McCormack, 395 U.S. 486, 496 n.7
`(1969).
`
`CONCLUSION
`Accordingly, we grant the petition as to the Knee Re-
`placement Guidance and dismiss the petition as to the
`Knee Replacement Manual Provision and Knee Joint Sta-
`bility Manual Provision.
`GRANTED-IN-PART, DISMISSED-IN-PART
`COSTS
`
`No costs.
`
`

`

`Case: 20-1321 Document: 147 Page: 17 Filed: 09/20/2022
`
`United States Court of Appeals
`for the Federal Circuit
`______________________
`
`NATIONAL ORGANIZATION OF VETERANS'
`ADVOCATES, INC., PETER CIANCHETTA,
`MICHAEL REGIS, ANDREW TANGEN,
`Petitioners
`
`v.
`
`SECRETARY OF VETERANS AFFAIRS,
`Respondent
`______________________
`
`2020-1321
`______________________
`
`Petition for review pursuant to 38 U.S.C. Section 502.
`______________________
`PROST, Circuit Judge, dissenting.
`At issue here is the Secretary’s guidance interpreting
`diagnostic code 5055 (“DC 5055”) as limited to total knee
`replacements. See 80 Fed. Reg. 42040 (July 16, 2015)
`(“Guidance”). The Secretary published the Guidance dur-
`ing a prior appeal, Hudgens v. McDonald, 823 F.3d 630
`(Fed. Cir. 2016). There, when urged to apply the Guidance
`retrospectively, we withheld deference under Auer v. Rob-
`bins, 519 U.S. 452 (1997), because we concluded that the
`Guidance was a post-hoc rationalization in conflict with
`prior Board decisions. Hudgens, 823 F.3d at 638–39.
`Then, with Auer off the table, we resorted to the pro-vet-
`eran canon, which instructs that “interpretive doubt is to
`be resolved in the veteran’s favor,” Brown v. Gardner,
`513 U.S. 115, 118 (1994). Invoking that rule, Hudgens held
`
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`Case: 20-1321 Document: 147 Page: 18 Filed: 09/20/2022
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`2
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`NOVA v. SECRETARY OF VETERANS AFFAIRS
`
`for the veteran solely because his interpretation was “per-
`mitted by the text of the regulation.” 823 F.3d at 639 (em-
`phasis added). The majority concludes it is compelled to
`follow the same e