Opinion ID: 384949
Heading Depth: 1
Heading Rank: 2

Heading: jurisdiction to examine the evidentiary basis of the

Text: FORFEITURE DECISION 66 The Government's second argument is that even if the district court has jurisdiction over the NSLI claim, the court's scope of inquiry is limited to determining that in fact the forfeiture decision was entered, creating a debt and providing a basis for the decision to assert a set-off. It contends that any further inquiry into the evidentiary basis for the forfeiture decision is barred by section 211. 67 We cannot agree that this was the intent of Congress when section 211 was passed, and we are bolstered in that conclusion by a decision by the Second Circuit, directly on point, which holds that where the Government seeks a set-off or other affirmative relief it cannot rely on the 'no-review clause' of Section 211(a) to support its own claims. DiSilvestro v. United States, 405 F.2d 150, 155 (2d Cir. 1968). DiSilvestro had been receiving veterans' disability benefits, but the VA subsequently decided that certain entries in his medical records had been falsified. It declared his disability benefits forfeit, and in order to recoup the benefits which had already been paid, withheld payment of his NSLI dividends as a set-off. In DiSilvestro's action seeking payment of the withheld dividends, the court held that while section 211(a) served to shield VA determinations concerning gratuitous benefits from direct challenge, it could not be turned around by the VA to be used as a sword when it took affirmative action against an individual. Therefore, the court held, the district court had jurisdiction to examine the evidentiary basis for the set-off to assure that it was reasonable and supported by substantial evidence. 16 68 We find this result to be wholly consistent with congressional intent in adopting section 211(a), perhaps the only result consistent with due process, and fully supported by ordinary jurisdictional principles. It is not at all unusual for a court to find it necessary in the course of deciding a dispute over which it does have jurisdiction to decide an issue which would be outside its jurisdiction if raised directly. For example, in deciding a conversion action, a court may have to determine title to property in another state, a question which it would have no competence to decide directly. Or in a contract action in state court, the court may find it necessary to decide the merits of the defendant's position that the contract was in violation of the federal antitrust laws, an issue which is within the exclusive jurisdiction of the federal courts if raised directly. While a court's lack of jurisdiction to decide an issue directly may affect the collateral estoppel effect of the particular factual determination, see, e. g., Lyons v. Westinghouse Electric Corp., 222 F.2d 184, 188 (2d Cir.), cert. denied sub nom. Walsh v. Lyons, 350 U.S. 825, 76 S.Ct. 52, 100 L.Ed. 737 (1955), it does not limit the court's power to decide the question to the extent it is relevant to the dispute over which it does have jurisdiction. As Mr. Justice Holmes pointed out in a case involving a state court's incidental determination of the validity of a patent agreement:Establishing a fact and giving a specific effect to it by judgment are quite distinct.... That decrees validating or invalidating patents belong to the Courts of the United States does not give sacrosanctity to facts that may be conclusive upon the question in issue. A fact is not prevented from being proved in any case in which it is material, by the suggestion that if it is true an important patent is void .... 69 Becher v. Contoure Laboratories, Inc., 279 U.S. 388, 391-92, 49 S.Ct. 356, 357, 73 L.Ed. 752 (1929). 70 Furthermore, a conclusion that Congress intended section 211(a) to bar consideration of the validity of the VA's determinations even when used by that agency as the basis for affirmative action against an individual's admitted property interests would raise serious constitutional problems. Not only would this theory, in effect, allow the VA to function as its own independent judge, jury and police force, determining first whether it has been the victim of a fraud and then setting out to remedy its own damages free of judicial interference, but carried to its logical conclusion, this interpretation of the statute would permit the VA to enlist the coercive power of the courts to enforce a money judgment against an individual without the basis of the VA's claim ever being subject to judicial scrutiny. Such self-help on the part of an administrative agency runs into substantial due process problems, and is contrary to the very notion of an ordered government of checks and balances; we would not lightly conclude that Congress intended to grant the VA such power. It is one thing for an agency to have the final say over whether an individual will continue to receive a gratuitous governmental benefit; it is quite another for it to assert a right to use the coercive power of the government to seize and convert to its own use an individual's property without any possibility of judicial review. 17 71 We can find no hint in the statute or legislative history that Congress intended such a novel and questionable result, and we agree with the DiSilvestro decision that no such result was intended. But the VA argues and the District Court held, that the analysis in DiSilvestro did not survive the 1970 amendments to section 211(a), which served to strengthen the barrier to judicial review. 72 We cannot agree with this view of the 1970 amendments; the decision and its analysis is nowhere mentioned in the legislative history, though many other cases raising different problems are; and the changes that were made in the former section 211(a) do not affect the DiSilvestro theory in the least. 18 To the extent that the decision was a sound analysis of section 211(a) when it was decided, it remains so today. 73 Nor would the VA's interpretation advance the purposes of section 211(a). In a decision holding that section 211(a) was no denial of veterans' benefits to conscientious objectors who perform alternative civilian service, the Supreme Court identified the purposes of section 211(a) as: 74 (1) to insure that veterans' benefits claims will not burden the courts and the Veterans' Administration with expensive and time-consuming litigation, and (2) to insure that the technical and complex determinations and applications of Veterans' Administration policy connected with veterans' benefits decisions will be adequately and uniformly made. 75 Johnson v. Robison, 415 U.S. 361, 370, 94 S.Ct. 1160, 1167, 39 L.Ed.2d 389 (1974). The VA renders thousands of routine determinations annually; full-scale judicial review would indeed add substantially to the work of the courts, and many of the VA's determinations involve technical medical inquiries. If either of these legislative purposes would be frustrated by our holding that the courts have jurisdiction over this case we would approach this decision with more pause. 76 We have no figures on how often the VA seeks forfeiture today, but even in 1958, before Congress removed the VA's power to declare a forfeiture whenever the recipient resides in the United States, 19 leaving the remedy as a possibility only with respect to overseas recipients, forfeiture was decreed in only 303 cases, hardly a number to overwhelm the judicial system. House Report at 2. The number of cases in which the VA decides to move against a recipient to recover benefits it believes were wrongfully paid must be even less, as the paucity of precedent would suggest. Finally, and particularly in the case of forfeiture, these issues are within the peculiar expertise of the courts, not the agency. Fraud and deceit are, unfortunately, questions which the courts must consider regularly, and we are well-acquainted both with the elements of the offense and the evidentiary standards which govern its determination. Indeed, problems with the agency's attempts to administer the forfeiture provisions, together with the feeling that standard criminal penalties were sufficient punishment and deterrence for fraud, led to the withdrawal of the agency's power to declare forfeitures in domestic cases in 1959, as the House Report makes clear: 77 More than a hundred cases in which forfeiture had been considered by the Veterans' Administration were examined by the committee. In addition to problems involved in the basic philosophy of forfeiture the committee found the administration of the program was not uniform and created inequitable results. Consideration of forfeiture seemed to depend upon chance so that some cases were forfeited where many other instances of identical misrepresentation were not considered. Until recently there had not been any standard adopted for testing the materiality of a statement so that in many instances forfeiture was adjudged where the false statement had no bearing on entitlement of the benefit. In most instances the accused was not accurately informed of the charges against him and in other cases the Veterans' Administration was in possession of the true facts so they were not misled by the misrepresentation. 78 House Report at 4. 79 In sum, we have determined that the question of whether section 211(a) would-or should-bar a court's inquiry in a case such as this one was never addressed or considered by Congress, either when the predecessor to section 211(a) was first adopted or upon its amendment in 1970. Furthermore, the purposes of the section, as identified by the Supreme Court, would not be served by extending the section 211(a) bar to this situation. Finally, such a construction of the provision would pose serious constitutional questions, forcing us to explore questions which we would prefer to avoid absent the clearest indication that such was the intent of Congress. We conclude that when the VA takes affirmative action against an individual whether by bringing an action to recover on an asserted claim or by proceeding on its common-law right of set-off, the validity of the underlying basis of the action becomes open to judicial scrutiny. We therefore reverse the decision of the district court and remand the case for further proceedings consistent with this opinion.