The Supreme Court, in a case that has applicability to all administrative agencies, including the IRS, vacated and remanded a case brought by a Vietnam war veteran against the Department of Veterans Affairs.
In the decision, the court validated a line of cases holding that courts should defer to an administrative agency’s interpretation of its own rules, such as tax regulations and guidance from the IRS. Although the decision was technically unanimous, with all justices voting to remand the case to a lower court, the justices split as to whether to completely overrule the Auer v Robbins and Bowles v Seminole Rock Sand Co. cases, which held that courts should defer to agencies’ interpretation of their own rules. Four justices wished to completely overrule these cases, while the majority, expressed by Justice Elena Kagan, leaves these decisions intact but limits them to issues that are ambiguous and the interpretations reasonable, and only when they are interpretations from senior agency officials.
The court summarized how the case came before it, although it stated that “nothing recounted in this Part has much bearing on the rest of our decision. But a recitation of the facts and proceedings below at least shows how the question presented arose.”.
In the case, Kisor v. Wilkie, James Kisor sought disability benefits from the VA, alleging in 1982 that he had developed PTSD, or post traumatic stress disorder, while participating in Operation Harvest Moon, a military operation he was engaged in while serving in Vietnam. The VA denied him his claim. In 2006, Kisor moved to reopen his case. Based on a new psychiatrist’s report, the VA agreed that he suffered from PTSD, but granted him benefits only from the date he moved to reopen the case. The Board of Veterans Appeals, a part of the VA, affirmed the timing of the decision based on its interpretation of an agency rule. Under the VA rule, the agency could grant Kisor retroactive benefits if it found there were “relevant official service department records” that it failed to consider in its initial denial. In fact, the board acknowledged that Kisor had come up with two new service records confirming his participation in Operation Harvest Moon.
However, that did not go into the reason for the first denial, based on a psychiatrist’s evaluation that he did not, at that time, suffer from PTSD. The Court of Appeals for Veterans Claims affirmed the board’s decision for the same reasons. The Court of Appeals for the Federal Circuit also affirmed the decision, but it did so in deference to the board’s interpretation of the VA rule, believing that Auer deference was appropriate. The court said the agency’s construction of its own regulation would govern unless “plainly erroneous or inconsistent with the VA’s regulatory framework.”
Justices of the U.S. Supreme Court pose during their formal group photograph in the East Conference Room of the Supreme Court in Washington, D.C. Seated from left: Associate Justice Stephen Breyer, Associate Justice Clarence Thomas, Chief Justice John Roberts, Associate Justice Ruth Bader Ginsburg and Associate Justice Samuel Alito Jr. Standing behind from left: Associate Justice Neil Gorsuch, Associate Justice Sonia Sotomayor, Associate Justice Elena Kagan and Associate Justice Brett Kavanaugh.
Andrew Harrer/Bloomberg
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