On behalf of the American Civil Liberties Union, I would like to endorse the position taken on S.364 by Fredric J. Gross before your Committee on September 21, 1977, wherein he urges judicial review of decisions of the Veterans' Administration and the elimination of the fee limitation on attorneys' fees.

The various ACLU affiliates over the years have received numerous complaints from veterans concerning these provisions, and the ACLU feels that without remedial legislation the Veterans Administration will be permitted to conduct its affairs without care for time-honored procedures followed by the rest of the federal government. Government unreviewed is akin to secret government which in turn is only as good as a bureaucrat's intentions. This is not enough.

I have been informed that you are in the process of holding
hearings with reference to changes in the law concerning the
granting of disability benefits to veterans. I have particular
concern with two areas which I understand are under review and
would appreciate your furnishing me with any memoranda or copies
of the hearings themselves as they pertain to these two areas.
The first area I have reference to is that of judicial review
of decisions of the Board of Veterans Appeals. As you may be
aware, there is presently no procedure that a decision of the
Veterans Administration can be carried before any independent
reviewing authority such as a District Court. Although a number
of cases have been raised involving this issue, it appears that
a decision of the Veterans Administration at its highest level
is not subject to any appeal even though the decision may be
arbitrary or capricious.

The second area in which I am concerned is that of representa-
tion of veterans by attorneys. As you may be aware, while there
are provisions made for representation of veterans by attorneys,
as a practical matter few attorneys represent veterans in dis-
putes over claims as to disability due to the fact that apparently,
by law, fees for such representation are limited to $10.00. There
are regulations of the Secretary which purport to allow a repre-
sentative to claim legitimate expenses. I am lead to believe
that such representation and such requests for reimbursement of
expenses would be viewed liberally by the Veterans Administration.
Nevertheless, if such limitations exist, then the effect of these
limitations is to deny the veteran the right to counsel since an
attorney must of necessity handle veterans claims on a charity

Senator Alan Cranston
September 7, 1977
Page 2.

Both of the situations I have described above differ dramatically from that system which prevails under the Social Security Administration. As a practicing attorney I have handled literally hundreds of cases before the Social Security Administration on a contingency fee basis. I have had a number of requests from veterans to handle their claims, but I find that the combination of both of these situations, and especially the latter, precludes my representation in all but a small number of cases.

I realize that the situation as it presently exists is quite compatible with the Veterans Administration and also with a number of veterans organizations which appear before the Veterans Administration. I would even go so far as to say that substantial justice is done in the majority of the cases in which a veteran applies for disability benefits under the present system. There are, however, a large number of veterans who would like to chose their own attorney and arrange to pay the attorney out of past due benefits or on a straight fee basis. There are also numerous situations in which substantial justice has not been rendered due to a misinterpretation of the regulations by the VA or to simply an arbitrary or capricious action by the Veterans Administration. In my judgment, having dealt with cases of a similiar nature before the Social Security Administration, such lapses of judgment or capricious actions can only be corrected by an independent reviewing authority such as the Federal District Court.

As I have requested initially in this letter, I would appreciate a summary of the action taken thus far by the Veterans Administration Committee on these two problem areas and, if possible, any documents you have by way of transcripts of hearings, or otherwise, which would relate to this.

I certainly appreciate your kind attention to these remarks.

Yours truly,

Annaray

Charles Tyler Clark

CTC/rk

The committee met, pursuant to notice, at 9:30 a.m., in room 6226, Dirksen Office Building, Hon. Alan Cranston, chairman, presiding. Present: Senators Alan Cranston, Strom Thurmond, Robert T. Stafford, and Richard (Dick) Stone.

OPENING STATEMENT OF HON. ALAN CRANSTON, CHAIRMAN OF THE SENATE COMMITTEE ON VETERANS' AFFAIRS

Chairman CRANSTON. Good morning. This morning, the Committee on Veterans' Affairs will hold its fifth and final day of hearings in regard to S. 364, the Veterans' Administration Administrative Procedure and Judicial Review Act. Earlier this year, in June, I chaired a hearing in San Francisco; and in August, Senator Stone presided over a hearing in Pensacola, Fla.; and Senator Thurmond chaired a hearing in Columbia, S.C. The full committee heard testimony here in Washington, D.C. on September 21. Originally, it was planned that the hearing on September 21 would be the concluding day of testimony on this matter. However, the number of organizations desiring to testify necessitated the scheduling of an additional day of hearings. I particularly wish to thank all of you for coming in today. For many of you it would normally have been a day off, and I appreciate very much your cooperating with us in this regard.

Today, both the Veterans' Administration and the Department of Justice will be appearing to testify on S. 364. Both, I understand, are now prepared to take a stand on the issues raised by the bill. It is my understanding that much work has gone into this testimony. We look forward to hearing it.

In the coming months, the committee will be examining Judicial Review and related matters raised by S. 364 and these hearings. I am certain that in the next session of this Congress the committee will be prepared to take action on the issues raised by the many witnesses from whom we have received testimony.

I am going to ask each of you to summarize your testimony orally and submit your written testimony for the record. It will be printed in full. By doing so, we will have sufficient time to ask questions, and the hearing will move as expeditiously as possible.

The first witness this morning will be Guy McMichael, General Counsel of the Veterans' Administration. Welcome back again, Guy.

TESTIMONY OF GUY H. McMICHAEL III, GENERAL COUNSEL, VETERANS' ADMINISTRATION

Mr. McMICHAEL. Thank you, Mr. Chairman, I am accompanied by a number of people today. As you indicated, many people have worked on this report and it is not possible to single everyone out. But I would like to identify a number of people.

First, sitting at the table with me is Sidney Shuman, Chairman of the Board of Veterans' Appeals. Sitting to my immediate right is Mary Sinders, Deputy Assistant General Counsel, who has had the prime responsibility for our report to you.

I am also accompanied today by John Mear and John DeLeo, both Assistant General Counsels, and also by two young attorneys of our office, who have done a great deal of work on this, Dean Phillips who serves as my special assistant and, Don Zeglin, a staff attorney. It is a pleasure to be here today to present the views of the Veterans' Administration regarding S. 364.

Three major changes are contemplated by this measure. First, the bill would provide access to the courts to individuals who are dissatisfied with final Veterans' Administration decisions. Second, the internal procedures of the Veterans' Administration would be made subject to all the provisions of chapter 5 of title 5 of the United States Code. Finally, this proposed legislation would repeal the current $10 statutory limitation on the fee which an attorney may receive for representing an individual claimant in prosecuting a claim for veterans' benefits.

In considering the provisions of S. 364, we believe that a brief review of the history of the finality statute, 38 U.S.C. § 211(a), together with an examination of current Veterans' Administration claims procedures is valuable in understanding the issues raised by the proposed legislation. A more detailed discussion of the legislative history and judicial construction of the finality statute together with a thorough description of our claims procedures may be found respectively in Attachments "A" and "B" to this testimony.

JUDICIAL REVIEW OF ADMINISTRATOR'S DECISIONS

The legislative history and the judicial construction of section 211 (a) of title 38, United States Code, reflects a continued intent by Congress to maintain the finality of decisions of the Administrator of Veterans' Affairs. Section 211 (a), as amended in 1970, provides:

On and after October 17, 1940, except as provided in sections 775, 784, and as to matters arising under chapter 37 of this title, the decisions of the Administrator on any question of law or fact under any law administered by the Veterans' Administration providing benefits for veterans and their dependents or survivors shall be final and conclusive and no other official or any court of the United States shall have power or jurisdiction to review any such decision by an action in the nature of mandamus or otherwise. The constitutionality of that provision has been upheld over the years, based on the theory that veterans' benefits are gratuities, and that Congress may provide an "exclusive" administrative remedy when it creates rights in individuals against the Government. However,