United States Court of Appeals for the Federal Circuit ______________________

NATIONAL ORGANIZATION OF VETERANS’ ADVOCATES, INC., PETER CIANCHETTA, MICHAEL REGIS, ANDREW TANGEN, Petitioners

v.

SECRETARY OF VETERANS AFFAIRS, Respondent ______________________

2020-1321 ______________________

Petition for review pursuant to 38 U.S.C. Section 502. ______________________

Decided: September 20, 2022 ______________________

BLAKE E. STAFFORD, Latham & Watkins LLP, Wash- ington, DC, argued for petitioners. Also represented by SHANNON MARIE GRAMMEL, ROMAN MARTINEZ.

MOLLIE LENORE FINNAN, Commercial Litigation Branch, Civil Division, United States Department of Jus- tice, Washington, DC, argued for respondent. Also repre- sented by BRIAN M. BOYNTON, ERIC P. BRUSKIN, MARTIN F. HOCKEY, JR.; JULIE HONAN, Y. KEN LEE, Office of General Counsel, United States Department of Veterans Affairs, Washington, DC. ______________________ Case: 20-1321 Document: 147 Page: 2 Filed: 09/20/2022

2 NOVA v. SECRETARY OF VETERANS AFFAIRS

Before NEWMAN, PROST, and CUNNINGHAM, Circuit Judges. Opinion for the court filed by Circuit Judge CUNNINGHAM. Dissenting opinion filed by Circuit Judge PROST. CUNNINGHAM, Circuit Judge. At the heart of the government’s scheme for awarding disability benefits to veterans is a rating schedule. The De- partment of Veterans Affairs adopted this rating schedule to standardize the evaluation of how severely diseases and injuries resulting from military service impair veterans’ earning capacity. 38 C.F.R. § 4.1. The rating schedule is, in turn, divided into diagnostic codes that provide disabil- ity ratings for various symptoms or conditions. National Organization of Veterans’ Advocates, Inc., Pe- ter Cianchetta, Michael Regis, and Andrew Tangen peti- tion this court under 38 U.S.C. § 502 to review the VA’s interpretation of two of these diagnostic codes: DCs 5055 and 5257, both found at 38 C.F.R. § 4.71a. The VA set out its interpretation of DC 5055 in Agency Interpretation of Prosthetic Replacement of a Joint, 80 Fed. Reg. 42,040 (July 16, 2015) (the “Knee Replacement Guidance” or “Guidance”), and VA Adjudication Procedures Manual M21-1 Section III.iv.4.A.6.a (the “Knee Replacement Man- ual Provision”). The VA set out its interpretation of DC 5257 in Manual Section III.iv.4.A.6.d (the “Knee Joint Stability Manual Provision”). For the reasons provided below, we conclude that the Knee Replacement Manual Provision is not a reviewable agency action. We also hold that the Knee Replacement Guidance is arbitrary and capricious under the controlling precedent of Hudgens v. McDonald, 823 F.3d 630 (Fed. Cir. 2016). Finally, we dismiss the challenge to the Knee Joint Stability Manual Provision as moot. Accordingly, we grant-in-part and dismiss-in-part the petition. Case: 20-1321 Document: 147 Page: 3 Filed: 09/20/2022

NOVA v. SECRETARY OF VETERANS AFFAIRS 3

BACKGROUND I. The VA’s Interpretation of DC 5055 Petitioners seek review of two interpretive rules. To introduce the VA’s interpretation of DC 5055, we must turn back to the claim at issue in Hudgens. In that case, the VA regional office (“RO”) denied Michael A. Hudgens, a U.S. Army veteran, a 100-percent disability evaluation for his partial prosthetic knee replacement under DC 5055 because the RO found that DC 5055 applied only to total knee replacements. Hudgens, 823 F.3d at 632–33. The Board of Veterans’ Appeals and the United States Court of Appeals for Veterans Claims both affirmed the RO’s con- clusion that DC 5