Arellano v. McDonough: Will the Supreme Court Allow Equitable Tolling for Service-Disabled Veterans?
Written By: Shelby Parks
Law at Issue: The Big Picture
Service-disabled veterans are eligible for disability compensation from the Department of Veterans Affairs. These compensation benefits are monthly tax-free payments given to veterans who were either injured or became ill during their military service and veterans who had a preexisting condition worsened by their service. Veterans with either physical or mental health conditions that developed before, during, or after their service are eligible for these benefits.
Service-disabled veterans must file their application for disability benefits retroactive to the date of their discharge within one year from the date they are discharged from military service. (38 U.S.C. § 5110(b)(1)). If a veteran fails to file his application within this one-year period, any subsequent benefit award will have an effective date of receipt of the application. (38 U.S.C. § 5110(a)(1)). Veterans who fail to file their claims within one year of their discharge forfeit the retroactive disability compensation to which they would otherwise be entitled. Translated, this means that, even if service-disabled veterans’ applications are filed months after discharge, veterans’ benefits retroactively begin from their discharge date as long as the application is done by the 365th day. If the veterans file on the 366th day, their benefits begin on the date their applications are received, entitling them to less benefits.
An argument brought by many service-disabled veterans, including Arellano, is that the disability statute, 38 U.S.C. § 5110, is subject to equitable tolling. Specifically, Arellano is arguing that equitable tolling be applied to § 5110(b)(1) for veterans in compelling circumstances like his. Equitable tolling is a delay or stop of a certain time limit. Courts applying equitable tolling allow claim-processing rules like § 5110(b)(1) to have a time constraint extended by having the clock pause. All claim-processing rules are presumed to be subject to equitable tolling. The question now is whether this presumption is given to service-disabled veterans applying for benefits.
A Historical View
The United States Supreme Court first addressed the issue of equitable tolling and veterans in Irwin v. Department of Veterans Affairs. While the Court considered claims for wrongful termination and unlawful discrimination, not an application to receive benefits, the Court still discussed the application of equitable tolling to claims against the government by service-disabled veterans. The Court ultimately ruled that service-disabled veterans who have claims against the federal government should, as a general principle, be placed on the same footing as private litigants with respect to the availability of equitable tolling in compelling circumstances.
Despite the Irwin ruling, the United States Court of Appeals for the Federal Circuit refused to apply equitable tolling to 38 U.S.C. § 5110(b)(1) in its Andrews v. Principi decision. There, a service-disabled veteran with a psychiatric disorder failed to file her disability application within the one-year limitation of § 5110(b)(1) and argued that she was entitled to retroactive benefits under equitable tolling. The Federal Circuit found equitable tolling inapplicable to § 5110(b)(1) because it determined the statute was not a statute of limitations subject to equitable tolling, as was the case in Irwin. Rather, the statute as a whole discusses when veterans benefits begin and allows for an earlier date of accrual under limited circumstances. The statute does not foreclose payment for veterans after the one-year period. It simply forecloses retroactive accrual of benefits. Thus, the Federal Circuit held that veterans, no matter the circumstances, cannot request equitable tolling under § 5110(b)(1).
Arellano v. McDonough
Today, the important question of whether a veteran’s filing deadline within § 5510(b)(1) is subject to equitable tolling is still unanswered. The Supreme Court will hopefully answer this question in Arellano v. McDonough.
Arellano served in the U.S. Navy from November 1977 to October 1981. During his service, Arellano suffered traumatic injuries in an aircraft carrier collision. This collision killed and severely injured several of his shipmates and nearly crushed Arellano and swept him overboard. After his discharge, Arellano was diagnosed with several psychiatric disorders, including schizoaffective disorder, bipolar disorder, and PTSD, all of which were causally linked to his trauma suffered in service. These disorders rendered Arellano 100% disabled.
It wasn’t until 31 years after the collision and 30 years after his discharge that Arellano first applied for his disability benefits. He was awarded 100% disability, with an effective date of June 3, 2011, the date his application was received. Utilizing arguments similar to those made in Andrews, Arellano requested retroactive benefits to the date he was discharged from service because his mental illness prevented him from filing prior to June 3, 2011. Arellano timely appealed the denial of these retroactive benefits, arguing that he was entitled to equitable tolling based on his circumstances.
The Veterans Court never reached the merits of Arellano’s argument because the Andrews decision of the Federal Circuit bound the court to forgo any equitable tolling under § 5110(b)(1). The Federal Circuit is the only federal appeals court able to hear cases dealing with VA benefits, making its decisions binding precedent on the Veterans Court. Arellano timely appealed to the Federal Circuit, arguing that it should overturn its 2003 Andrews decision and allow for the rebuttable presumption of equitable tolling to apply to § 5110(b)(1). The Federal Circuit issued a per curiam decision affirming the denial of retroactive benefits for Arellano.
The Federal Circuit, sitting en banc, unanimously determined Arellano was not eligible for equitable tolling, but the circuit was split as to the availability of equitable tolling for the statute itself. Six of the judges agreed with the Andrews logic that § 5110(b)(1) is not a statute of limitations entitled to the Irwin presumption of equitable tolling. These six judges further concluded that, even if the Irwin presumption applied, the plain text of the statute established a clear intent to foreclose equitable tolling of the one-year period. The remaining six judges reached the opposite conclusion, finding that Andrews should be overturned and that the Irwin presumption applies to § 5110(b)(1)’s one-year period. This split in logic established the closest thing to a circuit split for veterans law.
Oral Argument
The United States Supreme Court sat for oral argument in this case on Tuesday, October 4, 2022. The three main issues it will consider are (1) whether § 5110(b)(1) is a statute of limitations eligible for the Irwin presumption, (2) whether the presumption was rebutted if the statute is a statute of limitations, and (3) whether it is practical to have the VA apply equitable tolling.
Arellano argues that veterans should benefit from the equitable tolling presumption on this one-year filing deadline because it functions as a statute of limitations for retroactive benefits. The statute prescribes a veteran’s rights to these complete benefits, and the veteran loses a portion of his benefits if his application is not filed and received within a certain time period. Further, the equitable tolling would only be appropriate in compelling circumstances similar to Arellano’s: where veterans are so severely handicapped by their service disability that they are unable to file for benefits or unable to understand their eligibility for disability benefits. Because the presumption is one of equity, it would still have to be argued that the veteran is entitled to such equitable remedy. The crux of Arellano’s argument rests on two things: (1) the veteran’s canon of statutory construction when considering veterans’ rights that all ambiguities in interpretation should be resolved in favor of the veterans; and (2) multiple amicus briefs providing examples of extreme circumstances where veterans are unable to file within the one-year period. Examples like the veterans who were a part of the U.S. Army Laboratories’ classified medical studies and forbidden from filing.
The Government contests that the Federal Circuit was correct in stating that equitable tolling does not apply. Section 5110(b)(1) is a grace period, not a statute of limitations, and only determines the amount of benefits a veteran receives. It does not forbid receipt of benefits altogether and is not a bar to entitlement. If it was intended that § 5110(b)(1) be eligible for equitable tolling, that language would have explicitly been in the statute because § 5110(b)(1) is an exception to the general rule that the benefits payment start date be the date the application is received. The Government further argues that Arellano has not established entitlement to equitable tolling because he did not diligently pursue benefits in the years following his discharge and because another exception within § 5110, § 5110(b)(4), applies to Arellano, giving him an extra year of benefits.
Conclusion
A number of questions exist on both sides of the Court’s decision. Will this open the floodgates for veterans’ benefits and lead to a depletion in the available resources for all veterans? Are there appropriate circumstances that should allow for equitable tolling under § 5110(b)(1)? How extraordinary must the reason be for failing to file within this one-year period: banned due to classified military medical studies or hindered by a psychiatric disorder?
The Court may answer these questions, or it may not. Nevertheless, the Court should clarify two things: how explicit Congress must be to rebut the Irwin presumption and what the definition of a statute of limitations is. The Court owes at least these two clarifications to the veterans attempting to follow the procedure laid out for them by the agency whose purpose is to support them rather than bind them with rigid rules.
