DiSilvestro v. United States

• Decision Date: 18 December 1968
• Docket Number: No. 190,Docket 32460.,190
• Citation: 405 F.2d 150
• Parties: Joseph W. DiSILVESTRO, Appellee, v. UNITED STATES of America, Appellant.
• Court: U.S. Court of Appeals — Second Circuit

405 F.2d 150 (1968)

Joseph W. DiSILVESTRO, Appellee, v. UNITED STATES of America, Appellant.

No. 190, Docket 32460.

United States Court of Appeals Second Circuit.

Argued November 20, 1968.

Decided December 18, 1968.

Joseph W. DiSilvestro, appellee pro se.

Morton Hollander, and Michael C. Farrar, Dept. of Justice, Washington, D. C. (Edwin L. Weisl, Jr., Asst. Atty. Gen., Joseph P. Hoey, U. S. Atty., on the brief), for appellant.

Before KAUFMAN and ANDERSON, Circuit Judges, and TENNEY, District Judge.^*

TENNEY, District Judge:

This appeal from an order of the District Court for the Eastern District of New York (Mishler, J.), which granted summary judgment in favor of Joseph DiSilvestro, the appellee herein, DiSilvestro v. United States, Civil No. 62-C-713 (E.D.N.Y., filed Feb. 1, 1968); DiSilvestro v. United States, 268 F. Supp. 516 (E.D.N.Y.1966), presents for review the issue of whether Title 38, United States Code, Section 211(a),¹ which deprives the courts of jurisdiction to review decisions of the Veterans' Administration (hereinafter referred to as the "V. A.") on any question of law or fact concerning a claim for benefits or payments, precludes judicial review of a V. A. decision,² upon which a claimed right of set-off by the Government is based, that payments have been erroneously made to the appellee.

Inasmuch as the facts surrounding the protracted litigation which led to the instant appeal have been set forth in detail in the decisions below, only a brief statement shall be made herein regarding the nature of the action.

On February 20, 1948, V. A. rating specialists determined that DiSilvestro was entitled to monthly disability payments stemming from service-connected aggravation of a nervous condition. Subsequently, suspicion arose as to the authenticity of certain entries made on appellee's Army medical records, which records allegedly formed the basis for appellee's award of monthly disability payments. On May 17, 1953, after an investigation, the V. A.'s New York Regional Office concluded that the grant of disability payments to appellee had been erroneous and contrary to law in that the medical records were, in fact, not authentic. Accordingly, the V. A. informed DiSilvestro that his claim for disability compensation had been rerated and, as such, disallowed. On September 30, 1954, based on an analysis of the known writings of DiSilvestro, the V. A.'s Investigation Service concluded that appellee had submitted false and fraudulent evidence in support of his claim. This finding prompted the V. A.'s Central Committee on Waivers and Forfeitures to declare a forfeiture of appellee's rights, claims and benefits as a veteran, pursuant to 38 U.S.C. § 3503(a).³ DiSilvestro's appeal from this decision was denied by the Board of Veterans' Appeals.

Based on this forfeiture, the V. A. computed that there had been a total overpayment of compensation and subsistence benefits to appellee in the amount of $2,026.06.

Thereafter, appellee sought judicial restoration of his pension and compensation benefits, which action, however, was held to be barred by the "no-review clause" of 38 U.S.C. § 705,⁴ as amended, 38 U.S.C. § 211(a). DiSilvestro v. United States Veterans' Administration, 132 F.Supp. 692 (E.D.N.Y.1955), aff'd, 228 F.2d 516 (2d Cir.), cert. denied, 350 U.S. 1009, 76 S.Ct. 654, 100 L.Ed. 870, rehearing denied, 351 U.S. 928, 76 S.Ct. 784, 100 L.Ed. 1458 (1956). Subsequent attempts by appellee to obtain judicial review of the V. A. determination were similarly unsuccessful. DiSilvestro v. United States Veterans' Administration, 151 F.Supp. 337 (E.D.N.Y.1957), cert. denied, 355 U.S. 935, 78 S.Ct. 416, 2 L. Ed.2d 416, rehearing denied, 355 U.S. 968, 78 S.Ct. 550, 2 L.Ed.2d 544 (1958); DiSilvestro v. United States, 181 F.Supp. 860 (E.D.N.Y.), cert. denied, 364 U.S. 825, 81 S.Ct. 65, 5 L.Ed.2d 55, rehearing denied, 364 U.S. 897, 81 S.Ct. 219, 5 L. Ed.2d 192, rehearing denied, 364 U.S. 917, 81 S.Ct. 270, 5 L.Ed.2d 230 (1960).

Although stipulating that the decision of forfeiture did not affect appellee's right to certain National Service Life Insurance dividends, the Government, in an effort to recoup the amount which it determined had been erroneously paid to appellee, withheld payment of the dividends so as to effect a set-off against the amount allegedly owed to the United States.

On June 29, 1962, DiSilvestro instituted this action against the United States seeking, inter alia, payment of the dividends withheld by the Government. The Court, in an opinion entered on November 22, 1966, recognized the Government's right to charge a fund in its possession with the claims it has against the fund's owner, but held that appellee, in this instance, was entitled to judicial review of the forfeiture proceedings which, the Court believed, provided the evidentiary basis for the claimed right of set-off, on the ground that the "no-review clause" of 38 U.S.C. § 211(a) is inapplicable where the Government is seeking a set-off or other affirmative relief.

After a review of the entire record, the Court found that the entries in question on appellee's claims folder were not authentic. Nevertheless, summary judgment was granted in favor of DiSilvestro on the basis of the Court's determination that the V. A. had failed to meet its burden of showing that appellee was capable of forming the requisite intent at the time that the alleged fraud was committed. The Government appeals from that judgment, asserting as reversible error that: (1) the Court was mistaken in its view that the set-off depended upon the validity of the V. A. determination that DiSilvestro should forfeit all his rights, claims and benefits as a veteran. The Government argues that quite apart from that forfeiture determination, the right of set-off arose when the V. A. determined, on March 17, 1953, that its prior decision granting DiSilvestro service-connected disability benefits for his mental condition was based upon medical records which had been altered and that, in the absence of the alteration, the grant of such benefits would not have been made; and (2) the Court erred in undertaking to review the merits of the forfeiture determination in view of the fact that 38 U.S.C. § 211(a) prohibits judicial review of V. A. decisions on any question of law or fact concerning a claim for benefits or payments under any law administered by the V. A.

The circuits which have considered the applicability and scope of the so-called "no-review clauses" of Title 38, United States Code, Section 211 and its predecessor sections,⁵ appear to be in conflict. It is generally conceded, however, that pensions, compensation allowances and special privileges are gratuities which involve no agreement of the parties and create no vested rights. Lynch v. United States, 292 U.S. 571, 577, 54 S.Ct. 840, 78 L.Ed. 1434 (1934). Accordingly, the weight of authority appears to be that a decision by the V. A. denying a claim for benefits or declaring a forfeiture of compensation allowances theretofore granted cannot be reviewed by the courts when challenged by an aggrieved claimant. Lynch v. United States, supra; Redfield v. Driver, 364 F.2d 812, 813 (9th Cir.1966); Milliken v. Gleason, 332 F.2d 122, 123 (1st Cir.1964), cert. denied, 379 U.S. 1002, 85 S.Ct. 723, 13 L.Ed.2d 703 (1965); Barefield v. Byrd, 320 F.2d 455, 458 (5th Cir.1963), cert. denied, 376 U.S. 928, 84 S.Ct. 675, 11 L.Ed.2d 624 (1964); Smith v. Settle, 286 F.2d 420 (8th Cir.), cert. denied, 366 U.S. 969, 81 S.Ct. 1932, 6 L.Ed.2d 1259 (1961), cert. denied, 368 U.S. 994, 82 S.Ct. 615, 7 L.Ed.2d 532 (1962), rehearing denied, 369 U.S. 826, 82 S.Ct. 837, 7 L.Ed.2d 792, cert. denied, 370 U.S. 927, 82 S.Ct. 1568, 8 L.Ed.2d 506 (1962); Magnus v. United States, 234 F.2d 673, 674-75 (7th Cir. 1956), cert. denied, 352 U.S. 1006, 77 S. Ct. 569, 1 L.Ed.2d 551 (1957). Contra, Tracy v. Gleason, 126 U.S.App.D.C. 415, 379 F.2d 469 (1967). More specifically, this Court, in a per curiam opinion, affirmed the judgment dismissing DiSilvestro's prior complaint in an action which sought judicial review of the V. A. decision forfeiting his compensation award. DiSilvestro v. United States Veterans' Administration, 228 F.2d 516 (2d Cir.), cert. denied, 350 U.S. 1009, 76 S.Ct. 654, 100 L.Ed. 870 (1956).

Of significance, however, is the fact that this Court is not presently faced with a petition to review a decision of the V. A., but, rather, with an action to recover monies wrongfully withheld. See United States v. Wiley's Cove Ranch, 295 F.2d 436, 448 (8th Cir. 1961). In this respect, where the Government seeks affirmative judgment in an amount which it alleges has been erroneously paid or where it attempts to recoup such payments from a fund in its possession upon a claimed right of setoff, there is a conflict of authority as to whether the "no-review clause" of § 211(a) mandates judicial abstention. The better view, we believe, limits the scope of this finality provision to cases where review is sought of decisions which deny a claim for gratuitous benefits or declare their forfeiture. Lynch v. United States, supra, 292 U.S. at 587, 54 S.Ct. 840; United States v. Gibson, 207 F.2d 161, 163 (9th Cir.1953), rev'd on other grounds, 225 F.2d 807 (9th Cir. 1955);⁶ Gongora v. United States, 183 F.Supp. 872, 873 (D.D.C.1960); United States v. Lawrence, 154 F.Supp. 454, 456-457 (D.Mont.1957); United States v. Owens, 147 F.Supp. 309, 313-315 (E.D.Ark.1957); Hormel v. United States, 123 F.Supp. 806, 809-810 (S.D. N.Y.1954); Radio-Television Training Ass'n, Inc. v. United States, 163 F.Supp. 637, 641-642, 143 Ct.Cl. 416 (1958); see In re Ally, 33 Misc.2d 417, 226 N.Y.S.2d 602 (Surr.Ct.1962). Contra, United States v. Mroch, 88 F.2d 888, 890 (6th Cir.1937); United States v. Rohde, 189 F.Supp. 842, 844-845 (W.D.S.D.1960); United States v. Crockett, 158 F.Supp. 460, 462 (N.D.Me.1958); United States v. Perry, 141 F.Supp. 443, 445 (E.D.N. C.1956); ...