Phillips v. McDonough: Court Upholds TDIU Award Despite Earlier Claims Pending

Felix Paul Phillips appealed a decision issued by the Board of Veterans' Appeals concerning entitlement to a total disability rating based on individual unemployability. The United States Court of Appeals for Veterans Claims reviewed the history of his claims, the procedural developments across several decades, and the principles governing when the Department of Veterans Affairs must consider unemployability as part of a disability rating. The court examined the record within the context of the modernized review system and the various claim streams involved in Mr. Phillips’s case.

Background of Mr. Phillips’s Claims

Mr. Phillips served in the U.S. Army from 1966 to 1968, including service in Vietnam. Over time, he sought benefits for multiple conditions, including several skin disabilities and a psychiatric condition later identified as PTSD. His skin-related claims dated back to 2002, and through several stages of review, those claims remained pending for many years. In 2018, the Board granted service connection for multiple skin disabilities. A noncompensable rating was assigned from 2002, later increased to 10% from 2016. Additional skin-related claims continued on a separate track until ultimately being consolidated and rated at 60% dating back to 2002.

Mr. Phillips also pursued service connection for a psychiatric disability. In 2020, service connection for PTSD was granted and assigned a 70% rating from 2009. He did not appeal that rating. Around this time, he also disagreed with denials relating to skin conditions affecting additional parts of his body.

The April 2021 Submission and Resulting Decisions

In April 2021, Mr. Phillips submitted a VA Form 21-8940, an application for increased compensation based on unemployability. He reported that his PTSD and skin disabilities prevented him from working and that he last worked full-time in 1978. VA interpreted this submission as also seeking a higher PTSD rating.

The RO issued a decision in January 2022. It increased his PTSD rating to 100% effective April 7, 2021. It continued the then-assigned 10% rating for his skin disability and concluded that entitlement to a total disability rating based on individual unemployability was moot because the PTSD rating was now 100%. Mr. Phillips appealed the issues involving PTSD and unemployability to the Board.

In April 2022, the Board granted unemployability and assigned an effective date of April 7, 2020. The Board applied the one-year lookback rule associated with increased rating claims, determining that the earliest possible effective date was one year prior to the April 2021 application.

Issues Before the panel

The central issue before the panel concerned whether the Board should have considered unemployability for a period earlier than April 7, 2020. Mr. Phillips maintained that unemployability was part of his earlier PTSD and skin-related claims dating back to 2002. He argued that the Board should have reviewed unemployability from the earliest possible period in those streams.

The Secretary responded that the April 2021 application was the claim stream before the Board and that the effective date assigned was based on the applicable regulations. The Secretary noted that unemployability raised in other claims remained at other levels of adjudication.

the panel reviewed the framework governing unemployability. It reaffirmed previous holdings that unemployability was not a separate claim but instead was a rating component that must be considered whenever the record contained evidence of an inability to secure substantially gainful employment.

the panel noted, however, that in the modernized system, different claim streams could be moving separately based on the options a claimant selected. In this case, unemployability was part of multiple claim streams at different stages. the panel’s task was to determine whether the Board erred when it limited its review to the period tied to the April 2021 application.

Court’s Analysis

the panel observed that unemployability may be raised at several points within the adjudication process and may be relevant to different disability ratings at different times. the panel reviewed evidence showing that Mr. Phillips’s unemployability had been part of his skin and psychiatric disability claims for many years. However, the issue before the Board was narrowed because Mr. Phillips had only appealed matters relating to PTSD and unemployability from the 2022 RO decision.

the panel concluded that when the Board adjudicated the April 2021 claim stream, it correctly assigned an effective date using the one-year lookback under the applicable regulation. It held that while unemployability remained part of other claim streams, those matters were not before the Board in the decision under review.

the panel acknowledged that developments occurring after the Board’s decision-such as the later grant of unemployability back to 2009 as part of the skin disability claim-confirmed that unemployability for earlier periods remained pending before VA. These developments narrowed the scope of the appeal but did not eliminate the live dispute concerning whether the Board erred in its analysis of the period tied to the April 2021 application.

Final Ruling

the panel affirmed the Board’s denial of entitlement to a total disability rating based on individual unemployability prior to April 7, 2020. The remainder of the appeal was dismissed.

Veterans Disability Assistance

If you need help with veterans disability matters, including appeals, disagreements with disability decisions, or questions involving total disability based on individual unemployability, our team at Whitcomb Selinsky PC assists veterans seeking benefits. To learn how we can support your case, visit our veterans disability page.