The Good News: Fed Circuit Case Clarifies Board Review of VA Penalty Decisions

By Ann Boehm, April 15, 2020

Since the enactment of the Department of Veterans Affairs Accountability and Whistleblower Protection Act of 2017 (the Act), 38 USC § 714, questions have remained about its application. We’ve always known that Congress intended to improve the performance of the VA by making it easier to remove employees for misconduct and performance through shortened notice periods and a lower burden of proof (substantial evidence) for misconduct cases. But we were not really sure how the Act applied to the agency’s penalty selection.

The Act says, “[I]f the decision of the Secretary is supported by substantial evidence, the administrative judge shall not mitigate the penalty prescribed by the Secretary.” 38 USC § 714(d)(2)(B). “Shall not mitigate the penalty” sounds like – well – shall not mitigate the penalty.  With no Board quorum since the Act’s passage, we have not had any case law to substantiate that interpretation.

Now, we have guidance from the Federal Circuit in Sayers v. DVA, Case No. 18-295 (Fed. Cir. Mar. 31, 2020). In this case, the VA argued that section 714 “limits the Board’s review to only the facts underlying an adverse action.” Id., slip op. at 7. The Court disagreed and ruled the Board has to review the penalty, because removing, suspending, or demoting – i.e., the penalty – is necessarily a part of the decision and the Board is reviewing the Secretary’s decision.

Huh? Yep, clear as mud.

What the Federal Circuit really is saying in this case is that “not mitigating” a penalty is different from Board review of whether a penalty is supported by substantial evidence and reasonable. In pages and pages of legalese, it’s my belief that what the Federal Circuit is really saying in Sayers is this — the VA does not have license to fire anyone it wants to based upon any kind of misconduct. The punishment has to fit the misconduct, and if it does not, the Board can reverse the VA’s decision.

Here’s some key language from the decision that explains the Court’s thinking: “[t]he government’s reading — allowing the agency to remove an employee for the tiniest incident of misconduct so long as the agency could present substantial evidence that the trifling misconduct occurred — could ‘gut due process protections’ in a way Congress did not intend.” Id., slip op. at 10. Congress made it easier to remove VA employees, but did not and could not eliminate their basic due process rights, including the right to appeal to the Board.

So now we know.  But before I leave you, I want to tell you a few more interesting things about this case.

• • Sayers appealed to the Federal Circuit after the Administrative Judge sustained his removal. If an employee does not appeal an AJ decision to the Board, the AJ’s decision becomes the Board’s final order and can be appealed directly to the Federal Circuit. This is how an employee can get a quicker decision on an appeal in the absence of a Board quorum.
  • Interestingly, the Federal Circuit really didn’t have to decide the penalty issue in this case. The primary issue in Sayers was whether section 714 applies retroactively. The misconduct for which the VA fired Sayers occurred before the passage of the Act, and yet the VA applied section 714 to Sayers’s case. The Federal Circuit said that was a no-no – section 714 cannot be applied retroactively.

The court vacated and remanded the Administrative Judge’s decision.  End of story, right? Not exactly. The Federal Circuit still wrote a lengthy opinion on section 714’s penalty language. It did not have to do that.

Why did it do that? I think the answer to that question is buried in a footnote in the decision. The Federal Circuit decided a lot of things in this case that it did not have to because THERE IS NO MSPB. Sayers, slip op. at 5 n.3. It’s a problem. So, they are trying to provide guidance in the absence of a functioning Board.

• • Interestingly, this case has some really good language on why it’s easier to remove an employee for performance than for misconduct. According to the court, the agency has a “unique view on how incompetence impacts the agency,” thus performance is reviewed on a lower burden of proof with no penalty mitigation (except, paradoxically, under the Act, where the burden is the same and there is also no penalty mitigation). Folks, remember that language. The agency knows when an employee’s poor performance is hurting the agency. We say it over and over here at FELTG – take care of poor performers, and trust managers when they say an employee’s performance is harming the mission!

So there you have it. I hope you see some Good News in this decision. We have some clarity. We have some good language on performance. Stay safe out there! Boehm@FELTG.com