[No. 60] COMMITTEE ON VETERANS' AFFAIRS, U.S. SENATE VETERANS' ADMINISTRATION, OFFICE OF THE ADMINISTRATOR OF VETERANS' AFFAIRS, Hon. ALAN CRANSTON, Chairman, Committee on Veterans' Affairs, DEAR MR. CHAIRMAN: We are pleased to respond to your request for a report on S. 364, 95th Congress. 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 report. Judicial Review of Administrators' 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, recent court decisions have eroded the immunity from court review pro 29-180 No. 60 2 vided by section 211(a) by assuming jurisdiction of challenges to the constitutionality of statutes providing Veterans' Administration benefits and the constitutionality of procedures and regulations implementing such statutes. The most notable of these cases is Johnson v. Robison, 415 U.S. 361 (1974). In Robison, the Supreme Court declared that section 211(a) does not preclude court review of challenges to the constitutionality of veterans' benefits legislation and then upheld the constitutionality of a statute denying educational benefits to conscientious objectors. The Robison holding was extended by the Maryland Federal District Court in Plato v. Roudebush, 397 F. Supp. 1295 (D. Md. 1975), to permit court review of Veterans' Administration hearing procedures. The pension benefits of the plaintiff in Plato had been terminated without providing her with an opportunity for a hearing. The court agreed that this was a denial of her due process rights and held that section 211(a) does not preclude court review of the constitutionality of Veterans' Administration procedures. This case has been relied on as a basis for jurisdiction in a number of subsequent suits questioning the constitutionality of Veterans' Administration procedures. Current VA claims procedures are designed to assure the claimant due process and to prevent any possible abuse of discretion by the Administrator. These procedures are defined by statutes and regulations which charge the Veterans' Administration with the duty to assist the claimant in developing the facts pertinent to his claim and to render a decision which grants every benefit that can be supported in law, 38 CFR § 3.103. Further, if the evidence presented raises a reasonable doubt regarding service origin, degree of disability, or any other point, that doubt is to be resolved in favor of the claimant, 38 CFR § 3.102. The most salient characteristic of the Veterans' Administration claims process is its informality. In most cases, a claimant may submit an application without need of any assistance, and without an attorney. If a claimant desires assistance, or needs advice, access is provided to Veterans' Administration employees who specialize in answering inquiries and assisting in the development and submission of claims. At the same level, there exists a wide network of veterans service organizations which furnish technically proficient claims specialists at no charge to assist claimants in the presentation of their claims. In almost all cases, a claimant need do nothing more than file a claim on a proper application form. Generally, the agency will procure all of the evidence necessary to establish the claimant's eligibility for the benefits sought. Where the evidence is insufficient to grant the benefit, the claimant is advised what evidence is required and what sources are acceptable. Any decision with which a claimant disagrees may be appealed within the Agency by merely filing a Notice of Disagreement. This will initiate a review of the claim, and if it remains denied, the preparation of a Statement of the Case. A Statement of the Case sets forth the facts and law relied upon to reach the original decision and the reason therefor, and is designed to assist the claimant in preparing the best arguments possible to support his claim on appeal. If after 3 receiving the Statement of the Case, a claimant remains dissatisfied with the decision, his appeal will be heard by the Board of Veterans Appeals. The Board's decision, made after a complete and independent review of all of the evidence of record, is final. Hearings are available at almost any point in the claims process, both at the initial level of adjudication and at the appellate stage. Such hearings are conducted informally, and, although the agency attempts to provide all possible assistance, a claimant may be represented by an attorney or one of the service organizations' claims specialists. The foregoing procedures have evolved over the years and in general have functioned well by providing maximum services to the veterans of all eras. In addition, we believe that they meet all of the requirements of fundamental fairness and compare favorably with the procedures of other Government agencies administering benefit programs. Finally, we believe that our procedures comply with the evolving concept of "due process." The Veterans' Administration has historically been in agreement with the longstanding congressional intent to preclude judicial review of the decisions of the Administrator. However, the modern trend of the courts to assume jurisdiction in traditionally nonreviewable areas such as welfare, parole matters, and deportation of illegal aliens, and the continuing concern in the Veterans' Administration to insure that veterans and dependents receive all the due process protections available to other Americans compel us to reevaluate the position of the Agency with respect to judicial review. Upon reexamination, we believe that the law should be amended so that veterans have access to Federal courts to resolve any constitutional questions arising from the administration of Veterans' Administration programs. Indeed, as noted earlier, the Supreme Court, in Johnson v. Robison, supra, held that section 211(a) cannot be construed to deny jurisdiction to those who challenge the constitutionality of statutes providing Veterans' Administration benefits. We believe the doctrine enunciated by the Supreme Court should be logically extended to any constitutional challenge including judicial challenge to the constitutionality of regulations and other procedural provisions implementing such statutes. If, in the administration of the Agency's programs, a veteran has been denied rights guaranteed under the Constitution, then a judicial forum to redress such wrongs should be available. Moreover, if Congress deems it appropriate, we would not oppose judicial review of individual benefit decisions not involving constitutional questions. Should Congress desire expanded review, however, we believe it important to clearly delineate its nature and extent. First, it is in our opinion axiomatic that exhaustion of administrative remedies is and should continue to be required before the institution of legal proceedings. Suits filed prior to final Board of Veterans Appeals decisions would be subject to dismissal for failure to exhaust administrative remedies. Second, such review would be more appropriate if limited to a review of the administrative record. This would allow the Veterans' Administration to retain the informal characteristics of our claims proce 4 dures, the acceptance of evidence which would not be admissable under the formal rules of evidence, and the nonadversary tone at all stages of claims processing including hearings. The retention of the informal nonadversary nature of the Veterans' Administration adjudication procedure is in the best interest of both the veteran and the Government. Accordingly, we would oppose de novo court review of the Administrator's decisions on questions of fact made in the adjudication of individual claims. De novo review which entails development of a new record, would substitute the court's judgment for agency discretion in the consideration of very technical matters, thus complicating procedures and excessively burdening already overburdened courts. Moreover, we do not believe it possible for a claim to be processed through the various stages of administrative consideration and a decision rendered which would be so unsupported by the facts as to require de novo court review. We further believe that the scope of review of individual cases should be based on the "substantial evidence" test currently applicable to other Federal agencies. The substantial evidence rule requires a reviewing court to affirm an agency decision if that decision is based upon evidence that is substantial when viewed in light of the record as a whole, Universal Camera Corp. v. N.L.R.B., 340 U.S. 474 (1951). The nature of the evidence required under this standard was succinctly expressed by the Supreme Court, in Universal Camera, supra, at page 477, as follows: [S]ubstantial evidence is more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Accordingly, it must do more than create a suspicion of the existence of the fact to be established... it must be enough to justify, if the trial were to a jury, a refusal to direct a verdict when the conclusion sought to be drawn from it is one of fact for the jury. Application of the substantial evidence rule would permit a veteran to "have his day in court" without diminishing the Agency's ability to perform its mission or substituting the judgment of the Court for that of the technical expertise of the Veterans' Administration. In summary, the Agency favors the concept of judicial review of constitutional questions and does not oppose the extension to other benefit determinations to the extent discussed above. However, we do not believe these objectives would be accomplished by enactment of S. 364 which would amend § 211 (a) to subject decisions of the Administrator to provisions of chapter 7 of title 5 of the United States Code, also known as the Administrative Procedure Act. We believe judicial review should be provided by legislation specifically designed to accomplish this result and codified in title 38, United States Code. Such legislation should be accomplished by a joint effort between the Congress and the Agency and could be patterned after statutes relating to the Social Security Administration benefit programs as codified in title 42, United States Code. For a number of reasons, we believe this would be a better approach to judicial review than merely relying on the provisions of chapter 7 of the Administrative Procedure Act. First, the provisions of the Administrative Procedure Act were intended to set up only general re 93-774 078-2 5 quirements to be met by all federal agencies which fall within its jurisdiction. Such agencies usually administer programs that are similar in nature and amenable to identical procedures. This is not true of the Veterans' Administration benefit programs. The Veterans' Administration is unique in that it administers a vast number of diverse programs most of which require equally unique administratve procedures. For example, the loan guaranty program is different from the other programs because in the vast majority of loan guaranty matters, the Agency does not deal directly with eligible veterans or dependents. After the initial determination of eligibility, which is adjudicatory in nature, the Agency deals with third parties, independent lending institutions and to some extent with builders. Once basic eligibility is established by the Veterans' Administration, the veteran or dependent then deals directly with the third party. This, of course, requires a completely different set of administrative procedures than other Veterans' Administration programs which deal directly with veterans, for example, as in areas of compensation or pension. In addition, legislation specifically designed to permit judicial review of decisions of the Administrator of Veterans' Affairs should include certain provisions in areas not covered by chapter 7 of the Administrative Procedure Act. If the present finality provision is eliminated as contemplated by S. 364, there are several such areas in which problems would arise that could best be resolved by specific legislative provisions. First, problems could arise from the statutory jurisdictional bar of 28 U.S.C. § 1346 (d). Currently, section 1346 (d) specifically prohibits district court jurisdiction of any civil action or claim for pension. The courts have held compensation to be included within the term "pension" as it is used in section 1346 (d). Smith v. United States, 57 F. 2d 998 (4th Cir. 1931); Allen v. United States, 148 F. Supp. 817 (D. Ill. 1957). Subjecting final Administrator's decisions to judicial review under chapter 7 of the Administrative Procedure Act presents further difficulty in light of the lack of any grant of subject matter jurisdiction. Although it is arguable that section 211 (a) as amended by S. 364 could be construed as the necessary jurisdictional grant, a specific statutory provision in title 38 of the United States Code would be preferable to eliminate any possibility of a problem, particularly in view of the recent holding of the Supreme Court in Califano v. Sanders, U.S., 97 S. Ct. 980 (1977). The Sanders case involved review of a denial of a claim for Social Security disability benefits wherein jurisdiction was alleged on the basis of chapter 7 of the Administrative Procedure Act. The Court in Sanders held that chapter 7 of the Administrative Procedure Act is not to be interpreted as an implied grant of subject matter jurisdiction to review agency decisions. The Court further found that an interpretation in favor of such an implied jurisdictional grant would effectively override Congress' recent decision to expand jurisdiction under section 1331 of title 28 of the United States Code. This expansion resulted from the elimination of the amount in controversy requirement as a prerequisite to maintaining a Federal question action against the Government. The Court then held that section 1331 did not con |