News sources are reporting that the VA is in a deep budget hole – and is asking Congress for more and more money to take care of Veterans.
There are reports that due to budget shortfalls, the VA is having to ration health care for Veterans.
And, then there are stories that the VA is routinely unable to pay its bills. – medical care providers in my own home state of Arkansas have been (as of June 3rd) stiffed on 4,400 claims of 60 hospitals in Arkansas for over $24 million dollars.
But here’s where the VA DOES have money to waste: VA Office of General Counsel attorneys poor legal decisions appear to be costing the American taxpayer MILLIONS of dollars each year.
With absolutely no accountability.
I want to show you how this scenario plays out by walking you through a recent precedential decision of the Court of Appeals for Veterans Claims in the Froio case. (click on this link to read the Court’s published opinion)
For that analysis to make any sense I need to tell you about…..
EAJA Fees at the Court of Appeals for Veterans Claims.
When a Veteran (or Survivor or other party) substantially prevails at the Court of Appeals for Veterans Claims, the Veteran may petition the government for reimbursement of his/her attorneys’ fees and some court costs.
The law that authorizes this is the “Equal Access to Justice Act”.
The idea behind EAJA is that it seeks to make sure there are still attorneys willing to take on the deep-pocketed government (which pays its bills by printing more and more money…something you and I cannot legally do).
These fees are commonly referred to as “EAJA Fees”.
(As you’ll see in the Froio case, below, the VA Office of General Counsel asserted multiple arguments that crossed the border into “Absurdity”…. in what may well have been an attempt to spend the Veteran’s attorneys out of Court…unsuccessfully, in this case).
EAJA fees – and the right to petition the Court for their payment – belongs to the Veteran or Survivor that substantially prevailed at the Court of Appeals for Veterans Claims.
EAJA fees are paid to the Veteran, who typically transfers them to his or her attorney….if the attorney prevails on the administrative claim below, the attorney must reimburse to the Veteran the lower of the fees (EAJA v contingency) in what is known as the “EAJA Offset”.
Attorneys do not typically make “profit” on these fees – the hourly rate is rather low, and only allows law firms representing Veterans a profit margin of around 10-12%. Any private businessperson in the US that was pitched an offer at an 11% profit margin would walk away from that deal. I have had successful multi-million dollar entrepreneurs tell me that my Court cases – with only an 11% profit margin – is a fools’ errand and is limiting my ability to represent Veterans at the VARO and BVA.
EAJA fees are paid, in the end, by you and I: the American taxpayer.
To pay EAJA fees, Congress created the Judgment Fund.
This “appropriation” by Congress is unusual: it is a permanent, indefinite appropriation. By definition, it requires no further congressional action for approval of expenditures, and does not expire at the close of any fiscal year. It makes an unlimited amount of funds available for payment of EAJA Fees at (among other places) the Court of Appeals for Veterans Claims.
In other words, the EAJA Judgment Fund is a blank check for the VA Office of General Counsel.
As discussed below, is my contention that the VA Office of General Counsel is not exercising financial discipline over the taxpayer money that comprises the EAJA Judgment Fund.
“Froio” and the Frivolity of the VA Office of General Counsel.
In the Froio case – back in 2012 – the Court of Appeals for Veterans Claims concluded that the BVA had erred in not considering TDIU after increasing the Veteran’s PTSD impairment rating to 70%.
Many of you who read this blog know that this error is easily avoidable: A claim for any increase in the VA disability rate that also mentions unemployability is construed as a claim for TDIU…and anytime the Veteran has a single disability that exceeds 60%, they are eligible for TDIU consideration.
In that appeal, the Veterans was represented by the law firm of Chisholm Chisholm & Kilpatrick – and the Veteran agreed to allow law students from the Legal Services Center of Harvard Law School assist in preparing his appeal.
Law students are permitted to appear before the Court of Appeals for Veterans Claims, pursuant to Rule 46(b)(1)(G) of the CAVC Rules of Practice and Procedure: this isn’t some novel concept….. its a well-settled and undebated issue that law students can earn fees – albeit lower than an attorney’s fees – at the Court of Appeals for Veterans Claims.
In fact, there is a growing number of Law Schools that have Veterans Legal clinics – largely because the policies and practice of the VA and the VA Office of General Counsel have made it so difficult for Veterans to found attorneys adequately trained to assist in their administrative and Court appeals.
That law students can and frequently do represent Veterans before the Court of Appeals for Veterans Claims makes the position of the Office of General Counsel in the Froio case even more bizarre.
The VA’s attorney – Ronen Morris – asserted the argument that law students that were getting credits for their participation in a Law School Veterans Clinic could not receive fees for their work at the CAVC.
Ronen Morris is not only an attorney at the VA Office of General Counsel, but also appears to own 2 outside businesses. (Link is to Mr. Morris’s LinkedIn profile).…this intrigues me. Mr. Morris’s colleagues at “Group 7” and various Regional Offices of the VA General Counsel have reported working with obscene caseloads. That Mr. Morris finds time to dedicate to such a heavy workload at the General Counsel AND run 2 private businesses makes me wonder: are these other attorneys “blowing smoke” about their workloads?
In any event, Ronen Morris raised this (among other) argument at the CAVC:
“[t]he law students who participated in the law clinic as part of their educational experience did not provide ‘the same services that a licensed attorney or experienced non-attorney practitioner would provide.’ “
Supporting this theory – while speaking for his client, the Secretary of the VA – Mr. Morris argued there was a difference between a law student who was getting education credits in law school for assisting Veterans in a law clinic, and one who was not getting education credits for this work.
What that difference is appears to be so much “thin air”: I’ve read the argument 3 times, and one must sacrifice intellectual honesty and basic syllogistic logic to swallow this OGC argument.
The CAVC stopped well short of saying that, but the tone of the decision demonstrates that it was not pleased by the arguments advanced by Mr. Morris on behalf of his client. The Court said:
“Nothing in the language of EAJA, or the word “fee” limits an award…” in the manner proposed by the Secretary
“The Secretary cites no case in this Court or in any other jurisdiction that recognizes…” the distinction the Secretary attempts to create
“The Secretary’s theory is directly contradicted by the well-settled caselaw …” allowing the award of EAJA fees
“There is no factual or legal basis for the Secretary’s attempt to arbitrarily classify the work performed by the Harvard law students in this case as outside the legal marketplace.”
But the legal goofiness did not end there…Mr. Morris then asserted the argument that because Harvard Law School is one of the wealthiest in the nation, it did not need EAJA fees “…to sustain pro bono representation of veterans…” For that reason, Harvard Law Students should not get a “windfall” by representing Veterans.
The Court rightly pointed out that Mr. Morris’s arguments relied on not only irrelevant facts, but ignored the clear current state of the law: EAJA fees are awarded to the litigant, not the attorney.
What Mr. Morris argued – in the name of VA Secretary Bob McDonald – was that a Veteran is not entitled to get his/her attorney fees reimbursed by the VA if a law school (or by implication, a law firm) representing the Veteran was profitable: even under a Marxist economic model, a law firm – or law school – would not be punished for being profitable.
The Veterans Court hit the nail on the head when it dismissed this argument with ease:
“The Court will not [create a chilling effect on the availability of representation] by now curbing an otherwise eligible appellant’s right to collect EAJA fees based upon the identity or financial status of the attorney, firm, or organization that has provided the legal services, particularly where services were provided on no basis other than the mere possibility of the veteran’s prevailing against a Secretarial administrative or appellate position that lacks substantial justification…..EAJA does not seek to punish profitable law firms for their generosity in assisting those who possess little power to assert their rights against the Federal bureaucracy.”
Here’s the Real Problem with the OGC’s argument in Froio.
In a nutshell, there are only 2 possibilities that these – in my opinion – frivolous legal arguments were asserted:
1) VA Secretary Bob McDonald directed his attorneys to advance them
2) VA OGC attorneys advanced this opinions without consulting their client (VA Secretary Bob McDonald).
I would be shocked – floored – to learn that Bob McDonald directed his attorneys to raise this argument.
Bob has shown himself to be one of the more practical and pragmatic VA Secretaries in generations. While I disagree with some of his positions, and agree on others, I have not seen any hint that he is into asserting stupidity for the sake of winning in Court or spending Veterans’ attorneys (or worse, pro-se Veterans) out of Court.
Bob has even reversed the decision of VA OGC attorneys who sought to deprive an entire class of Veterans exposed to Agent Orange the benefits they are entitled to.
In my opinion, the VA Office of General Counsel attorney was so blinded by the desire to “win” in Froio – and defeat the mighty Chisholm Chisholm and Kilpatrick – that he was blinded to his duties to his client.
These are admittedly strong words. But in light of the cost – and the Court’s explanation of how the VA OGC arguments had little or no merit or support in the law, it is hard to draw a conclusion that the VA Office of General Counsel acted appropriately, reasonably, or quite possibly ethically.
But it doesn’t stop there – in my experience, the VA Office of General Counsel Attorneys that represent Secretary McDonald at the Veterans Court insist that they can only agree to routine extensions of time without the permission of their Deputy.
Why did Mr. Morris’s Deputies -Tammy L. Kennedy, Acting General Counsel and Mary Ann Flynn, Assistant General Counsel – permit these arguments to go forward?
Was there no accountability or oversight over Mr. Morris’s arguments?
Did they believe that these arguments – which were unsupported by any law, rule, regulation, or court decision anywhere – were legitimate and reasonable?
Or did they try to assert these arguments in the hopes they might spend the Veterans attorney out of Court or that the Veterans Court might “bite” on one of the bizarre theories.
We can only speculate at the motive.
What is not speculative, though, is that in the Froio case, the VA Office of General Counsel’s poor judgment in asserting absurd arguments cost the public a HUGE amount of money.
At a time when the VA is losing HUGE amounts of money (link to report by the Daily Caller) and is hinting it will begin rationing health care to Veterans (link to report by the Fiscal Times), the (alleged) fiscal impropriety by the VA’s attorneys is, at best, reckless.
The VA is now on the hook for approximately $28,886.62 in attorney fees that Chisholm Chisholm and Kilpatrick incurred defending its right to recover $6,380 in fees incurred by law students.
Here’s what that means: the VA Office of General Counsel bet almost $29,000 dollars that it could save the public $6400 in EAJA fees.
Even the most desperate gambler wouldn’t risk $29k to win $6k – and most certainly not while holding a pair of deuces after the draw.
This isn’t the first time that the VA Office of General Counsel has asserted questionable legal arguments – and lost those arguments.
In fact, it appears to be a rather common phenomena – a phenomena that is costing the taxpayer MILLIONS of dollars each year.
Take a look at this math….
How Poor Legal Judgment by the VA Office of General Counsel Harms Taxpayers.
In every case, the VA Office of General Counsel has an opportunity to agree to jointly remand the matter to the BVA, or dig in their heels and defend the BVA with full appeal briefs.
The advantage to the government is that, by agreeing to remand when there is Board error, the VA OGC can reduce:
* the caseload of its attorneys
* the docket of the Veterans Court
* EAJA fees paid to attorneys
It’s that last line – reduction of EAJA fees paid to attorneys – that the VA Office of General Counsel doesn’t seem to “get”.
By causing a Veteran’s attorney to brief an appeal to the full Court, the average EAJA fee that attorney might eventually charged is increased anywhere from $9,000 – $18,000… that’s $9k – $18k ABOVE what the taxpayer would have paid if the VA attorneys didn’t force a brief.
In the Froio case, it was much more – had the VA Office of General Counsel supervisory chain asserted a little bit of supervisory discretion, and refused to assert the absurd arguments advanced by Mr. Morris in that case, the VA OGC would have saved the US Taxpayer almost $29,000.
In the grand scheme of things, these are small amounts of money. $18,000 might keep a solo law firm with a minimal staff running for 18 days….if it is running on a shoestring budget.
$29,000 is most definitely NOT enough to keep the lights on for 1 month at a 2 attorney law firm.
Though small in the context of one case, these numbers get really big when you look at the financial impact to taxpayers caused by 1 full year’s worth of ill-advised VA OGC arguments.
If you look at the CAVC Annual Reports from 2012-2014, you see that the VA OGC forced the Veteran to full briefs in about 41% of the appeals at the CAVC.
Over the 3 year period from 2012-2014, that averages out to an average of 1592 appeals per year.
Based on numbers in those same CAVC Annual Reports, the VA OGC is losing (fully or partially) about 52% of the cases it forces to full briefs.
Over the last 3 years, that number has increased – between 2012 and 2014, the VA OGC loss rate at full brief jumped an ADDITIONAL 33%!
Let’s put that all together…if the VA OGC is forcing 1592 cases to full brief each year, and losing 52% of them, and a loss costs the taxpayer (at best) $9,000….
….that’s $7,450,560 every year (at least) that the OGC is costing taxpayers by losing on the merits of CAVC appeals.
Now….what if the amount of additional cost to taxpayers is – like it was in the Froio case, closer to $29,000?
VA OGC losses would cost the taxpayer $27 million dollars…roughly one-third of the annual budget of the entire VA Office of General Counsel.
Well, you might say, everyone wins some and loses some….and a .480 would be an excellent batting average. What’s the big deal?
Well, .480 may be a great batting average, but it is also a horrible Free Throw completion percentage.
And it’s also a horrible rate for an appellate “law firm”.
If any law firm LOST its annual budget due to poor arguments – or poorly contrived arguments – on appeal, heads would roll.
If any managing partner at any law firm saw his attorneys lost 52% of the decisions they choose to defend on appeal, and those loses were costing $7.5 – $27 million dollars a year, attorneys would get fired.
No private business – and no private law firm – can ever afford the luxury of being wrong over half the time.
If you ask any Managing Partner at any successful law firm, they will likely tell you that losing even a mere 30% of its appellate cases might suggest poor – or outright negligent – legal analysis of the merits of a case.
Mark my words – if BigLaw firms lost $7.5 – $27 million dollars a year by being wrong in 52% of their appeals, heads would ROLL in the Appellate Division.
One of the largest residential real estate closing firms recently (and allegedly) declared bankruptcy after finding out that $20 million had (allegedly) “gone missing” from its budget – you can read about Morris Schneider’s problems on the AboveTheLaw Blog, by clicking here.
$20 million dollars in unexplained “losses” appears enough to take down a major US law firm – but $27 million in unexplained losses in a government law firm goes unquestioned?
No government counsel can afford that luxury – unless, of course, they have little or no regard for the taxpayer.
What to Do, though?
If you ask me, it’s time to start talking about privatizing the VA Office of General Counsel – a contract with a private law firm would undoubtedly save taxpayers a HEAP of money.
The staffing of OGC alone is absurdly wasteful.
And with private law firms being held every day to ethical standards that government attorneys thumb their noses at….well….the VA Secretary might get a little better legal advice and find himself in less “hot water”.
But I realize I’m probably on the fringe when it comes to privatizing OGC.
The “gentler” course of action is to investigate the VA Office of General Counsel – whether the VA Secretary, the Office of General Counsel, the Government Accountability Office (GAO), or the US Congress, I don’t know.
Someone needs to investigate this: letting rogue VA OGC attorneys assert ridiculous arguments that cost the taxpayers millions of dollars each year, clog up an already over-burdened Court of Appeals for Veterans Claims, and further delay Veterans’ recovery of benefits to which they are lawfully entitled….is not justice. It’s not fiscal prudence.
At best it’s irresponsible guardianship of the public coffers – at worst an abuse of power for which there should be a reckoning.
* The opinions expressed herein are the opinions of Chris Attig only – not the opinions of the Attig Law Firm or the Veterans Law Blog. If Mr. Morris, the VA Office of General Counsel, the VA Secretary, the Court of Appeals for Veterans Claims – or any other person or entity – wish to allege that these conclusions are based on incorrect facts or interpretations thereof, Chris Attig welcomes your feedback. You may reach Chris by sending an email to firstname.lastname@example.org.