Dr. John Peterson, a pain-management physician at the Veterans Administration Illiana Health Care System, was placed on summary suspension in early 2020 following concerns that his medical practice did not meet accepted standards and posed a threat to patient welfare. After a comprehensive review delayed by the COVID-19 pandemic, the VA proposed his removal based on charges of failing to provide appropriate medical care and failing to follow instructions. Peterson appealed to the Veterans Administration Disciplinary Appeals Board, which held a hearing in June 2021. During the hearing, the Board excluded Peterson's 154-page rebuttal because it was submitted the night before the hearing, preventing the agency from reviewing it. The Board sustained the charges and recommended removal, a decision later approved by the Deputy to the VA Undersecretary for Health. Peterson filed suit in federal court, arguing the procedures were arbitrary, capricious, and violated his Fifth Amendment due process rights. The district court granted summary judgment for the government, and Peterson appealed to the Seventh Circuit.
The Seventh Circuit reviewed the case under the arbitrary and capricious standard of 38 U.S.C. § 7462(f)(2)(A), which requires only that the agency's decision have a rational basis. The court addressed three main arguments. First, regarding the exclusion of the rebuttal, the court found the Appeals Board acted reasonably by enforcing clear deadlines. Although Peterson was granted three extensions to secure an expert, he submitted his own rebuttal the evening before the hearing. The Board's refusal to admit the document was justified because it left the agency no time to review the voluminous filing, and the Board still allowed Peterson to consult the document during testimony. Second, concerning aggravating and mitigating factors, the court noted that while the Appeals Board's report was brief, it referenced the thorough analysis of the twelve Douglas factors conducted by the agency in prior documents. Under the standard that courts uphold decisions of less than ideal clarity if the agency's path is discernible, this reference was sufficient. Third, regarding alleged violations of the VA Handbook, the court found no harm. The delay in the comprehensive review was documented and justified by the pandemic, the signature error on the removal letter was harmless because the Acting Chief of Staff was involved in the decision, and Peterson received the evidence file containing over 2,000 pages. Finally, the court held that Peterson's due process rights were satisfied by the notice he received, the statement of reasons, and the multiple opportunities to be heard, including the hearing and extensions.
The decision affirms the removal of Dr. Peterson and reinforces the deferential standard of review applied to VA disciplinary actions. It clarifies that administrative bodies may exclude late-filed evidence without violating due process if they provide a rational basis and allow the party to reference the document during testimony. The ruling also establishes that an agency's brief reference to prior detailed analyses of mitigating factors can satisfy the requirement to consider aggravating and mitigating circumstances. The case is remanded with instructions to dismiss the action, leaving the VA's removal decision in place.
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