shaw bransford & roth case law update

Federal Circuit: 38 U.S.C. § 7402(f) Compels VA to Remove Title 38 Employees That Lose Medical Licenses for Cause

Recently, the Federal Circuit examined the interaction between statutory language under 38 U.S.C. § 7402(f) that compels the Department of Veterans Affairs to terminate Title 38 employees who lose their medical licensure for cause, and the due process rights available to those employees. 

Eric Cerwonka was employed as a clinical psychologist for the Department of Veterans Affairs (“VA”). Cerwonka was licensed to practice psychology in Louisiana and New York. He worked as a full-time psychologist for the Veterans Health Administration at the Alexandria Veterans Administration Health Care System, maintained a private practice, and evaluated social security disability applicants for the Social Security Administration.

After receiving an administrative complaint against Cerwonka, the Louisiana State Board of Examiners of Psychologists (“LSBEP”) conducted an investigation into the complaint. LSBEP completed its investigation, and in January 2017, held a 2-day hearing. On February 10, 2017, LSBEP revoked Cerwonka’s license to practice psychology in the State of Louisiana for cause. LSBEP found that Cerwonka engaged in “clear ethical violations” and repeatedly failed to follow the rules and regulations binding upon him as a psychologist.

On February 24, 2017, Dr. Harlan “Mark” Guidry, Chief of Staff at the Alexandria Health Care System, proposed to remove Cerwonka for failure to maintain a current license. Guidry cited 38 U.S.C. § 7402(f) and LSBEP’s license revocation as grounds for Cerwonka’s removal. Per 38 U.S.C. § 7402(f), a person may not be employed as a psychologist with the Veterans Health Administration if his license has been terminated for cause. Cerwonka did not respond to the notice of proposed removal.

On March 22, 2017, the deciding official, Medical Center Director Peter C. Dancy, Jr., sustained the charge of failure to maintain a current license. Dancy informed Cerwonka that he would be removed from employment at the Alexandria Veterans Administration Health Care System effective April 1, 2017.

Cerwonka sought review of the LSBEP’s license revocation decision by filing a petition with a district court in Louisiana. At the same, Cerwonka timely appealed his removal from employment at the Alexandria Veterans Administration Health Care System to the Merit System Protection Board (“MSPB”).

In Cerwonka’s petition with the district court, he asserted due process violations and argued that there was insufficient evidence supporting his license revocation. In May 2017, the district court reinstated Cerwonka’s license pending further processing, and in July 2017, the district court vacated the LSBEP’s revocation decision “due to the fact that the hearing … violated the Constitutional rights of Dr. Cerwonka.” LSBEP appealed the decision to the Louisiana First Circuit Court of Appeals. The court of appeals reversed the district court decision and remanded the matter. The proceedings regarding the merits of LSBEP’s license revocation remain pending at the time the Federal Circuit’s decision discussed herein was issued.

In Cerwonka’s appeal of the VA’s removal decision before an MSPB Administrative Judge (“AJ”), Cerwonka argued that he was removed in retaliation for prior EEO activity, and that his license was subsequently reinstated by the Lousiana district court. The VA contended that per 38 U.S.C. § 7402(f), it was required to remove Cerwonka as soon as the LSBEP revoked his license. The VA argued that Cerwonka became “ineligible for employment as a psychologist” the date his license was revoked.

On October 10, 2017, the AJ issued an initial decision affirming the agency’s decision to remove Cerwonka. The AJ found it undisputed that Cerwonka’s Louisiana license was revoked for cause, which put him in violation of 38 U.S.C. § 70402(f). The AJ also rejected Cerwonka’s affirmative defense that he was subjected to disparate treatment based on his prior EEO activity. Having sustained the agency’s charge, the AJ next considered whether there was a nexus between the charge and the efficiency of the service. The AJ explained that, “[w]hen an employee loses a license or certification necessary to perform the duties of the employee’s position, the requisite nexus exists between the employee’s loss of the same and the efficiency of the service.” The AJ then considered the reasonableness of the penalty and reviewed the factors the agency considered in rendering its penalty determination. The AJ stated that “though the appellant’s license has since been reinstated, at the time the action was taken, his Louisiana license had been revoked for cause” and that regulations demanded Cerwonka be separated from employment.

Cerwonka did not petition the MSPB to review the AJ’s initial decision, making the decision the final decision of the MSPB. Cerwonka then timely petitioned the U.S. Court of Appeals for the Federal Circuit review the final decision. 

On appeal, Cerwonka argued that there was “no rational basis” for the VA to remove him from his position “based on a brief temporary revocation of his Louisiana License.” He also stated that the record was devoid of evidence that his removal promoted the “efficiency of the service” and there was “no discussion of penalty.”

The government responded that because the VA removed Cerwonka pursuant to 38 U.S.C. § 7402(f), the court of appeals should affirm the MSPB’s decision without considering the separate and distinct removal standards under Title 5.

According to the court of appeals, resolution of this appeal involved the interplay between certain procedural protections provided in the Civil Service Reform Act (“CSRA”) and Veterans Health Administration (“VHA”) personnel qualifications on the other. That is, the appeal required the court to interpret and examine the relationship between Chapter 75 of the CSRA, which governs adverse actions against certain federal employees, and Chapter 74 of Title 38, which governs personnel at VHA.

The court noted that “statutory construction begins with the language of the statute itself,” and that if “the statutory language is plain and unambiguous, then its controls” the inquiry. Here, the court of appeals found that consideration of these factors concludes that 38 U.S.C. § 7402(f), and not the standard set forth in CSRA, governed Cerwonka’s removal.

The government contended there is an “inconsistency between the CSRA and 38 U.S.C. § 7402(f).” More specifically, the government argued that the CSRA requires the agency to address the efficiency of the service and the reasonableness of the penalty prior to removal, 38 U.S.C. § 7402(f) prohibits the agency from employing any psychologist who had a license terminated for cause, without permitting any additional considerations or affording any discretion. The government further argued that if the VA decided to permit a psychologist to continue working at VHA despite a license revocation, then the VA would be in violation of 38 U.S.C. § 7402(f), which requires removal.

The court of appeals stated that Congress has resolved any inconsistency between these removal standards, and has made clear that Title 38 overrides Title 5, unless otherwise stated. Indeed, 38 U.S.C. § 7425(b) states: “Notwithstanding any other provision of law, no provision of title 5 … which is inconsistent with any provision of … this chapter shall be considered to supersede, override, or otherwise modify such provision of … this chapter” unless specifically provided. Accordingly, the court found that 38 U.S.C. § 7425(b) makes clear that the CSRA cannot supersede, override, or modify the specific VHA removal standard set forth in 38 U.S.C. § 7402(f).

The court therefore found that the agency’s removal decision complied with the applicable standard set forth in 38 U.S.C. § 7402(f). Cerwonka’s Louisiana license was revoked for cause at the time the Agency removed him from employment, making the agency’s removal action proper at the time it was made.

The court noted that although the standard set forth in 38 U.S.C. § 7402(f) is controlling, and the agency was not required to consider the separate standard for removal set forth within Chapter 75 of the CSRA, it nevertheless did so. The court stated that both the notice of proposed removal and the removal letter indicated that the agency considered the nexus between the conduct and the efficiency of the service, and the relevant Douglas factors. Though both standards did not need to be satisfied in this case, the court found that both standards were satisfied here.

The court found Cerownka’s remaining arguments that he was removed in retaliation for prior protected activity and several procedural arguments to be without merit.

As such, the court affirmed the MSPB’s final decision.

Read the full case: Cerwonka v. Department of Veterans Affairs


This case law update was written by Michael J. Sgarlat, Associate Attorney, Shaw Bransford & Roth, PC.

For thirty years, Shaw Bransford & Roth P.C. has provided superior representation on a wide range of federal employment law issues, from representing federal employees nationwide in administrative investigations, disciplinary and performance actions, and Bivens lawsuits, to handling security clearance adjudications and employment discrimination cases.

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