On May 16, 2024, the United States Court of Appeals for the Federal Circuit (“Federal Circuit”) issued a precedent-setting decision in Barry v. McDonough that significantly impacts veterans who receive special monthly compensation (SMC).
A precedent-setting decision is a ruling that establishes a legal principle or interpretation that lower courts must follow in similar cases in the future.
The Federal Circuit reversed a decision by the Court of Appeals for Veterans Claims (“Veterans Court”) in Barry v. McDonough, No. 20-3367 (Vet. App. Oct. 25, 2021), which limited a veteran’s entitlement to additional SMC increases.
This ruling is a significant victory for veterans with severe disabilities
Background: The Dispute Over Multiple SMC Increases
The case revolved around interpreting 38 C.F.R. § 3.350(f)(3), which sets forth the rates of SMC for veterans with specific severe disabilities. Daniel D. Barry, a Navy veteran, argued that the regulation allows for multiple intermediate-rate SMC increases if a veteran has additional disabilities independently ratable at 50% or more.
The Board of Veterans’ Appeals had previously denied Barry additional SMC increases. On appeal, the Veterans Court agreed with the Board, interpreting the regulation to permit only one SMC increase, regardless of the number of qualifying disabilities a veteran has.
The Federal Circuit’s Analysis and Reversal
However, the Federal Circuit reversed the Veterans Court’s decision in Barry v. McDonough, No. 22-1747 (Fed. Cir. May 16, 2024). The court held that the plain language of § 3.350(f)(3) does not limit the number of SMC increases a veteran can receive. Instead, it is a mandatory entitlement that can apply multiple times, subject to the statutory maximum rate outlined in 38 U.S.C. § 1114(p).
The Federal Circuit emphasized that the regulation’s use of singular and specific terms like “the next higher intermediate rate” indicates a half-step increase for
Understanding Special Monthly Compensation (SMC)
Special Monthly Compensation is an additional tax-free benefit that can be paid to veterans, their spouses, surviving spouses, and parents. It’s designed for veterans whose service-connected disabilities are particularly severe.
The Court’s Reasoning
The court is considering two different scenarios:
- A veteran with two separate disabilities, each rated at 50% or higher
- A veteran with one disability rated at 100%
The court believes that the first scenario might warrant a higher SMC rate than the second. Here’s why:
Multiple Disabilities vs. Single Disability
- Two 50%+ Disabilities: When a veteran has two distinct disabilities affecting different parts of the body or different body systems, each rated at 50% or more, it can create a complex situation. These disabilities might interact in ways that significantly impact the veteran’s quality of life.
- One 100% Disability: While a single 100% disability is undoubtedly severe, it might not always capture the full range of challenges faced by a veteran with multiple serious disabilities.
Rejecting the Government’s Argument
The government had argued that interpreting the law this way would make some parts of it unnecessary (this is what’s meant by the “surplusage argument”). However, the court disagrees.
Why This Matters
This interpretation could potentially lead to higher compensation for some veterans with multiple severe disabilities. It recognizes that the impact of multiple disabilities can sometimes be greater than the sum of their parts.
Implications for Veterans
For veterans navigating the VA claims process, this interpretation highlights the importance of:
- Accurately documenting all service-connected disabilities
- Understanding how different disabilities interact
- Being aware that multiple severe disabilities might qualify for higher compensation rates.
each qualifying disability rather than a single increase overall. The court also situated this reading within the broader statutory SMC scheme under 38 U.S.C. § 1114, which recognizes the cumulative effects of multiple disabilities.
Implications for Veterans Currently Receiving SMC
The Barry decision is excellent news for veterans currently receiving SMC. It confirms that under 38 C.F.R. if you have additional service-connected disabilities independently ratable at 50% or more, § 3.350(f)(3) entitles you to multiple intermediate-rate SMC increases, which can result in a substantial increase in your monthly compensation.
If the VA has denied you additional SMC increases despite having multiple qualifying disabilities, the Barry ruling may provide grounds to challenge that denial. It would help if you discussed your circumstances with an experienced veterans law attorney or claims agent to determine the best course of action.
The Road Ahead: Implementing the Barry Decision
While the full impact of the decision will become more apparent as the VA implements it, Barry v. McDonough represents an important affirmation of the benefits Congress intended to provide to veterans with severe disabilities through the SMC program. The VA must update its adjudication procedures and manual, including the relevant sections of the M21-1 Adjudication Procedures Manual, to reflect the Federal Circuit’s interpretation of 38 C.F.R. § 3.350(f)(3).
Veterans service organizations and advocates will also actively inform veterans about the implications of the Barry decision and help them get the SMC benefits they are entitled to under the law.
As always, we at HadIt.com will keep you updated on further developments and provide resources to help you navigate the VA claims process.
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