Sebastian v. US.

• Decision Date: 09 August 1999
• Citation: 185 F.3d 1368
• Parties: (Fed. Cir. 1999) ELEANOR SEBASTIAN, LEWIS HINSON, ROBERT LOWERY, CHARLES W. NEWHOUSER, DENNIS REYNOLDS, HERBERT BROWN, RUDOLPH SINGLETON, JAMES K. ROGERS, BLANE K. LAWSON, LOUIE C. HINSON, WOODY NESBITT, MARION PEARSON, RONALD D'ANELLA, WALTER EWING, LEONARD BARTLETTE and COALITION OF RETIRED MILITARY VETERANS, Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee. 98-1263 DECIDED:
• Court: U.S. Court of Appeals — Federal Circuit

Page 1368

185 F.3d 1368 (Fed. Cir. 1999)

ELEANOR SEBASTIAN, LEWIS HINSON, ROBERT LOWERY, CHARLES W. NEWHOUSER, DENNIS REYNOLDS, HERBERT BROWN, RUDOLPH SINGLETON, JAMES K. ROGERS, BLANE K. LAWSON, LOUIE C. HINSON, WOODY NESBITT, MARION PEARSON, RONALD D'ANELLA, WALTER EWING, LEONARD BARTLETTE and COALITION OF RETIRED MILITARY VETERANS, Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee.

98-1263

DECIDED: AUGUST 9, 1999

United States Court of Appeals for the Federal Circuit

Appealed from: United States District Court for the District of South Carolina, Judge Patrick Michael Duffy

Michael J. Kator, Kator, Scott & Parks, of Washington, DC, argued for plaintiffs-appellants.

E. Roy Hawkens, Attorney, Appellate Staff, Civil Division, Department of Justice, of Washington, DC, argued for defendant-appellee. With him on the brief was Barbara C. Biddle, Attorney. Of counsel on the brief was Lt. Col. Douglas Mickle, Office of the Judge Advocate General, U.S. Army Litigation Division, Department of the Army, of Arlington, Virginia.

Before NEWMAN, Circuit Judge, FRIEDMAN, Senior Circuit Judge, and MICHEL, Circuit Judge.

FRIEDMAN, Senior Circuit Judge.

The district court dismissed a complaint by retired career military personnel seeking just compensation for the government's alleged taking of their purported right to lifetime free medical care. We affirm.

I

The appellants are retired career members of the military service, surviving spouses of deceased members, and an association of such persons (collectively, the Retirees). They filed a complaint in the United States District Court for the District of South Carolina seeking (1) a declaratory judgment that the government had taken their property without just compensation and (2) just compensation not exceeding $10,000 for each individual plaintiff.

The complaint alleged that "[i]t was the practice of the military departments, stated and restated many times in service regulations, to use the promise of continued medical and dental care as a recruitment and retention tool"; that pursuant to this practice, each retiree was "promised, as an inducement to become a career military service member, that upon retirement his military health care benefits would continue, including dental care and prescription drugs, without cost to him or his survivors, so long as he and his dependents lived"; that the government "[i]nitially . . . did in fact live up to this promise and provided continued medical benefits to plaintiffs and other military retirees, their dependents and survivors without cost," but that "[i]n October 1995, the Secretary of Defense promulgated regulations implementing 'TRICARE,' a comprehensive redesign of the health benefits available to military retirees and their families" and this regulatory program "dramatically reduce[d] the value of medical benefits that are provided to military retirees."

The complaint further alleged that "[c]ontinued medical care was . . . a component of the compensation provided to plaintiffs as consideration for their commitment to continue with military service through retirement"; that "[t]hrough its implementation of TRICARE, [the government] has substantially diminished the coverage provided to military retirees and the value of that coverage"; and that the government's "actions in diminishing the value of plaintiffs' compensation is a taking of property for which plaintiffs' are entitled to just compensation."

On the government's motion, the district court dismissed the complaint. The court ruled that it lacked jurisdiction to grant the requested declaratory judgment - the Retirees do not challenge this ruling. With regard to the individual claims, the court concluded that they involved "a challenge to the decision of the military departments as to the manner in which to allocate health care resources, and . . . such military decisions are non-reviewable." Alternatively, the court held that the complaint did not state a claim upon which relief could be granted. After concluding that no statute or regulation granted the Retirees a right to the health benefits they claimed, the court stated:

In the absence of any statutory or regulatory entitlement upon which to base their alleged property interest, plaintiffs' claim is founded only on promises that were made to retired service members at the time they enlisted, or agreed to continue their military careers. It is well established, however, that such representations create no legal interest. [citations omitted]

Accordingly, the court finds that plaintiffs have failed to show a property interest in health care benefits, and their claim for damages resulting from an alleged taking must be dismissed on this ground as well.

II

The sole ground upon which the Retirees seek damages for the government's failure to provide free lifetime medical care is that the government's conduct constituted a taking of their property. They do not state precisely what action by the government they contend constituted the taking, although the complaint suggests that it was the "implementation of the TRICARE program." The "property" that the government allegedly took was a purported "right" to free medical care after retirement which, they assert, constituted deferred compensation for their military service.

A. The right to military pay "must be determined by reference to the [governing] statutes and regulations . . . rather than to ordinary contract principles." United States v. Larionoff, 431 U.S. 864, 869 (1977) (footnote omitted). The same principle covers retirement benefits, which include medical care. See Andrews v. United States, 175 Ct. Cl. 561, 563 (1966) (military "officers have no vested or contractual right to any particular amount of retired pay"); Zucker v. United States, 758 F.2d 637, 640 (Fed. Cir. 1985) ("entitlement to retirement benefits must be determined by reference to the statute and regulations governing these benefits, rather than to ordinary contract principles" (civilian employees)). We therefore look to the governing statutes and regulations to ascertain whether the Retirees have an unconditional right to lifetime free medical care.

Section 1074(b) of Title 10, a statute enacted in 1956 which governs the provision of medical and dental care to active duty and retired members of the Armed Forces and which the Retirees describe as "the predicate of their claims," states that

a member or former member of a uniformed service who is entitled to retired or retainer pay, or equivalent pay may, upon request, be given medical and dental care in any facility of any uniformed service, subject to the availability of space and facilities and the capabilities of the medical and dental staff.

Far from granting the Retirees the unconditional and absolute right to medical and dental care that they claim, this provision merely states that a retiree "may" upon request be given such care, "subject to the availability of space and facilities and the capabilities of the medical and dental staff." In other words, instead of having an absolute right to such medical and dental service, they may be given that service subject to its availability. Nothing in the statute authorized recruiters to promise such care unconditionally.

Some of the Retirees, however, claim that their right to health care originated before Congress enacted Section 1074(b) in 1956. Prior to that date, the controlling statute was 5 U.S.C. 301, "a 'housekeeping statute,' authorizing . . . 'rules of agency organization, procedure, or practice' as opposed to 'substantive rules.'" Chrysler Corp. v. Brown, 441 U.S. 281, 310 (1979) (footnote omitted). It provided that "[t]he head of [a] . . . military department may prescribe regulations for the government of his department, the conduct of its employees, the distribution and performance of its business, and the custody, use, and preservation of its records, paper, and property." 5 U.S.C. 301. That provision stated nothing about health care.

Nor did the various regulations dealing with health care for military retirees upon which the district court relied provide an absolute and unconditional right to care. To the contrary, for many years they have made clear that whether a retiree could receive medical care depended on the fulfillment of various conditions. It suffices to mention a few illustrative examples.

From 1924 until 1950 Army regulations provided that "[t]he admission of retired personnel on inactive status will be limited to cases which in the judgment of the commanding officer of the hospital will be benefited by hospitalization for a reasonable time." Army Regulation 40-590 6b(1) (1935). A superseding regulation continued this grant of discretion to the commanding officer, see Army Regulation 40-506 5e (1950), and also provided that "[t]he furnishing of [medical] care to other than personnel [on extended active duty and on the temporary disability retired list] will be on a 'when adequate facilities are available' basis," id. at 3. Before 1951, the Air Force followed the Army's regulations, see Schism v. United States, 19 F. Supp. 2d 1287, 1293 (N.D. Fla. 1998), but that year, it promulgated Air Force Regulation 160-73 14h (1951), which stated that "[t]he hospitalization of retired inactive Air Force personnel . . . will be limited to cases which in the judgment of the hospital commander will be benefited by hospitalization for a reasonable length of time."

Navy regulations required "all persons of the Navy and Marine Corps, on the retired and active lists" to seek "authority for admission" from "the Surgeon General of the Navy" or "a naval medical officer." Navy Regulation 1920 12 Article 1830 (1927). The 1922 Manual of the Medical Department of the United States Navy (the Manual) provided that "[o]fficers and enlisted men of the Navy and Marine Corps and members of the Nurse Corps, on the active list; officer and enlisted men of the Naval Reserve...