service organizations in assisting veterans in the preparation and presentation of their claims before the VA. Veterans service organizations have a long and distinguished record of service to the veterans they have represented by providing competent, professonal assistance. I firmly believe that changes in the attorneys' fee limit will not significantly affect the level or quality of representation afforded by veterans service officers in VA proceedings.

Some opponents to the concept of judicial review of VA decisions also say that such issues as disability compensation are too technical for the courts to review. But that argument ignores the fact that most other agencies such as the Social Security Administration, with its complex and technical regulations, are subject to independent review by the courts of their adjudicative procedures. Furthermore, the Federal Courts, under the guidelines of the Administrative Procedures Act, would normally be limited in their review of VA cases to the substantive legal issues involved in the case, and their application in the VA adjudicative procedures. In other words, did the Board of Veterans Appeals consider all the evidence and were the regulations and applicable statutes correctly followed in reaching the decision on the veteran's claim?

Other opponents of judicial review argue that it would destroy the uniformity of VA decisions. Frankly, I believe that there already is a significant lack of uniformity of VA decisions. My research has exposed a marked disparity between several VA regional offices in decisions handed down in veterans' cases. Several high ranking VA officials have informed my staff that such disparity is common across the country.

One VA official cited an example of two VA Regional Offices, with close proximity to each other: one had a reputation for great magnanimity in awarding benefits; the other, a less generous record. According to the official, many veterans, knowing that their chances for a favorable hearing of claim would be better, file a claim with the VA Regional Office with the more generous reputation. To do this, the veterans would establish residence, if they came from outside the VA Regional Office jurisdiction, by simply renting a Post Office box in the area.

Another example of the lack of uniformity in the adjudication of VA claims can be found in a 1975 General Accounting Office survey of several western VA Regional Offices. Although the GAO did not find significant variances among the four regional offices in the ratings they gave the sample cases, it did find a wide disparity in the percentage of disability awarded the veterans. The survey cited an example of one test case rated by the Denver VA office granting a 30 percent service-connected disability while the Cheyenne VA office rated the same veterans, using the same information, at 100 percent service-connected disability. The 30 percent service-connected disability entitled the veteran to $89 a month while a 100 percent disability would have entitled the veteran to $584 a month in compensation payments.

This evidence appears to indicate a lack of uniformity of VA decisions within the system. If VA adjudicators and members of the Board of Veterans Appeals know that ultimately their decisions could be subject to judicial review, it logically follows that their determinations would be reached with more careful adherence to the dictates of procedural due process. If judicial review is granted, more uniformity of VA decisions-not less-would be the result and this would strengthen the adjudicative process.

Mr. Chairman, opponents of this legislation argue that opening the VA to judicial review would flood the dockets of the Federal Courts. The Veterans' Administration processed over 2.7 million claims for pensions and compensation benefits in fiscal 1976. However, an examination of the statistics demonstrates that the Board of Veterans Appeals, the final reviewing body on disputed claims, handled only 28,482 cases-a fraction of the original number. Of these, about 8,555 were reversed or remanded to the local rating boards for their reconsideration. This left approximately 20,000 cases which could have been brought before the Federal Courts for final review.

My research on judicial review of administrative decisions handed down by the Social Security Administration revealed that approximately 20 percent of the cases denied by its Bureau of Hearings and Appeals are submitted to the Federal Courts for review. Assuming that these same percentages would hold true for the Veterans' Administration, only 4,000 VA cases would actually be brought before the Federal Courts for final review. Clearly, this would not place an unbearable burden on the Federal judiciary. It must also be noted that, before a

case can be brought before the Federal Courts, the veteran must exhaust all internal administrative remedies and follow the procedures set forth in the Administrative Procedures Act.

CONCLUSION

Mr. Chairman, in closing I again wish to point out that the Veterans' Administration is one of the few Federal agencies that is allowed to be the final judge of its own power. The Administrator of Veterans' Affairs has at his discretion, the power to write rules and regulations, which set policy, without having to answer to any questions raised by interested parties affected by that policy. For the veteran that means not only is he or she precluded from seeking judicial review of an adverse decision on a claim but the veteran is also not allowed an opportunity to play a role in the development of policy that affects his or her welfare.

When Congress addressed the question of administrative review subsequent to the passage of the Administrative Procedure Act of 1947, it clearly set forth its intent by saying: "It has never been the policy of Congress to prevent the administration of its own statutes from being judicially confined to the scope of authority granted or to the objectives specified. Its policy could not be otherwise, for in such a case, statutes would in effect be blank checks drawn to the credit of some administrative officer or board." (S. Doc., 248 (1946), pp. 212, 285)

It is clear that Congress, in enacting the Federal Administrative Procedure Act, was concerned with the potential of arbitrary and capricious action on the part of Federal agencies and wanted to insure some measure of control over those abuses. I firmly believe that the Veterans' Administration should be subject to those same controls outlined in the Administrative Procedure Act. The fundamental issue addressed in the legislation being considered by the Committee is simple justice for the American veteran. To deny a citizen access to an attorney, isolate a Federal agency for judicial review and also not to allow citizens affected by an agency's action to be able to participate in or comment on the development of guidelines that set the policy for the agency, goes against the very principles of our constitutional system.

Chairman CRANSTON. Now, before calling the first witness, I would like to ask that those of you testifying to be as brief as you can and summarize the key points of your testimony, the most important points. The whole written prepared testimony will go into the record. If you will give the key points, we will be able to complete this hearing on schedule. There will also be more time for those questions that we may wish to ask of you who testify.

Our first witness is Harvey Levin, a member of the Special Committee on Federal Limitations on Attorneys' Fees, American Bar Association.

TESTIMONY OF HARVEY LEVIN, MEMBER OF THE SPECIAL COMMITTEE ON FEDERAL LIMITATIONS ON ATTORNEYS' FEES, AMERICAN BAR ASSOCIATION

Mr. LEVIN. Thank you.

Mr. Chairman, accompanying me is Katherine Soffor of the American Bar Association's Special Committee on Federal Limitations on Attorneys' Fees.

Mr. Chairman, if I may, I would like to highlight the key points of my testimony. I suspect that it will take no more than 10 minutes. Chairman CRANSTON. That is what I hope you will do.

Mr. LEVIN. Mr. Chairman and members of your staff, during the past 211⁄2 years, the American Bar Association has undertaken an exhaustive study of the $10 limitation on fees which attorneys may

charge for representing clients before the Veterans' Administration. This restriction has made it all but impossible for private attorneys to participate in VA adjudications. As a result, a number of veterans have been denied benefits to which they were entitled either because they were unable to detect procedural or substantive abuses or because they simply were unable to successfully assert their rights. Therefore, the American Bar Association heartily supports the lifting of the $10 limitation in order that attorneys can protect the rights of claimants before the Veterans' Administration.

Tied closely to the liberalization of the fee restriction is judicial review of agency actions. If, for example, the $10 fee restriction were lifted, the VA Administrator might continue the practice of awarding fees not to exceed $10 if his decision were not subject to judicial review and attorney participation in VA adjudications would continue to be nonexistent. Such a policy would result in a continuation of the procedural and substantive abuses to which many veterans are subjected. Therefore, it appears that S. 364 is intended to provide for judicial review of the VA Administrator's decision involving attorney fees as well as decisions affecting VA claimants. However, S. 364, as presently written, does not clearly provide for judicial review of determinations involving attorney fees. Particularly in light of Califano vs. Sanders, a recent Supreme Court case, which appears to hold that in order to have judicial review of an agency action a statute must explicitly provide for it, the ABA believes that this ambiguity in S. 364 should be eliminated by explicitly providing for judicial review of such determinations.

Also, section 4 of the bill provides that section 3404 (c) of title 38 be repealed. In addition to providing for the $10 limitation on attorney fees, section 3404 (c) empowers the VA Administrator to award fees. In its present form, S. 364 would render the Administrator powerless to award any attorneys' fees. The Committee can easily solve this error in S. 364 by repealing on section 3404 (c) (2) of title 38, the subsection which imposes the $10 restriction.

As I have said, because of the harsh fee limitation private attorneys rarely, in fact, almost never, practice before the VA. If a VA claimant is represented at all, it is usually by a lay member of service organizations such as the Veterans of Foreign Wars or the American Legion. Our findings indicate that these service organizations are not effective in prosecuting certain claims. It appears that the service organizations may discourage claimants from bringing the difficult cases, those which involve complex issues or matters which traditionally have been unsuccessfully prosecuted. Also, the service organizations may be unwilling to fully and fairly represent certain types of claimants such as those with less than honorable discharges. For example, benefits are available by Federal law to all veterans who received discharges under conditions other than dishonorable. Undesirable discharges and certain bad conduct discharges constitute the gray area of military discharges. If a veteran has one of these, and more than six out of seven Vietnam veterans with less than honorable discharges do, the VA makes an independent determination of whether or not it was issued under dishonorable conditions and almost always decides that it was. Let me illustrate. A recent study by the VA indicates that 93 percent

of the applications by veterans with less than honorable discharges who applied for educational benefits were rejected. A study of a 5month period in 1972 noted that over 1,300 applications for educational benefits were received from men with less than honorable discharges. Of these 91 were approved. During the same period, more than 4,000 veterans with less than honorable discharges applied for unemployment compensation and 3,400 were found ineligible. Ninety-seven of these cases involved veterans with drug-related discharges. Six of these were approved.

The per se rules which the VA has adopted with respect to servicemen with less than honorable discharges appear to be a violation of congressional intent and it appears from these statistics that the service organizations have not been particularly effective in prosecuting such claims. This is an area ripe for the watchful eye of an attorney in assuring that congressional intent is implemented and those entitled to benefits are treated equally.

A recent study supports the ABA contention that the effective marshaling and presentation of evidence can markedly improve a claimant's chance for success. When new evidence is presented to the Veterans' Administration Appeals Board, the Board of Veterans' Appeals, the chances of a claimant prevailing jump, in service connection cases, from 44 percent to 52 percent, and in rating schedule cases, from 32 percent to 48 percent. Yet, in service connection matters, for example, service representatives from organizations like the Veterans of Foreign Wars or the American Legion submitted new evidence in only 12 percent of the cases. Since attorneys are trained in the art of gathering and presenting evidence, it seems likely that their assistance would improve the veterans' chances of prosecuting their claims. In summary, the data we have gathered over the past 22 years indicates that many determinations made by the Veterans' Administration involve complex issues which lay service personnel from the various military service organizations are ill suited for dealing with effectively, either because of a lack of training or because of inadequate resources. Moreover, lay service personnel often do not present their cases to the VA in the most effective way. This is highlighted by their failure to gather and present evidence to the VA Appeals Board.

Also, for whatever reason, it appears that a number of veterans have not been afforded a full and fair hearing with a just result by the VA and the service organizations have been quite ineffective in preventing such abuses. An attorney can be particularly effective because of his training and experience in protecting and promoting the rights of VA claimants. More fundamentally, a VA claimant certainly should not be denied the opportunity to avail himself of an attorney's services. Yet he is effectively denied this opportunity by the existing unreasonable restriction on attorneys' fees.

The limitation on attorneys' fees at issue here was established shortly after the Civil War when it appeared that certain attorneys were charging the VA claimant exhorbitant fees for legal services. The problem of over-reaching by attorneys has certainly been substantially mitigated since Civil War Times. Bar associations have established strict rules prohibiting the charging of excessive fees for legal

services. Moreover, S. 364 would preserve the VA Administrator's power to award fees, subject, of course, to judicial review. This should eliminate any fears that attorneys would exact unreasonable fees from VA claimants.

For the foregoing reasons, and with the changes which we have offered, the ABA fully supports S. 364.

Thank you.

Chairman CRANSTON. Thank you very, very much.

Would you please provide for the hearing record copies of your committee findings and the resolution of the ABA House of Delegates adopting these findings?

Mr. LEVIN. Certainly, Mr. Chairman.

[Subsequently, the American Bar Association submitted the following committee findings and the resolution of the ABA House of Delegate adopting those findings; memorandum on statement that S. 364 as presently written does not provide for judicial review of determination involving attorneys' fees, and proposed statutory language explicitly providing for judicial review of these determinations; and ABA's Committee's proposed revision of S. 364 with language which would preserve the Administrator's power under section 3404 (c) of title 38 to award attorneys' fees.]