Marozsan v. U.S.

• Decision Date: 25 July 1988
• Docket Number: No. 86-1954,86-1954
• Parties: Stephen MAROZSAN, Plaintiff-Appellant, v. The UNITED STATES of America and the Veterans' Administration, Defendants- Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1469

852 F.2d 1469

Stephen MAROZSAN, Plaintiff-Appellant, v. The UNITED STATES of America and the Veterans'

Administration, Defendants- Appellees.

No. 86-1954.

United States Court of Appeals, Seventh Circuit.

Argued Oct. 6, 1987.

Reargued En Banc Feb. 23, 1988.

Decided July 25, 1988.

Philip R. Skodinski, South Bend, Ind., for plaintiff-appellant.

John S. Koppel, Washington, D.C., for defendants-appellees.

Before BAUER, Chief Judge, and CUMMINGS, WOOD, Jr., CUDAHY, POSNER, COFFEY, FLAUM, EASTERBROOK, RIPPLE, MANION, and KANNE, Circuit Judges.

FLAUM, Circuit Judge, with whom BAUER, Chief Judge, and CUMMINGS, HARLINGTON WOOD, Jr., CUDAHY, POSNER, and KANNE, Circuit Judges, join.

Stephen Marozsan filed a complaint in the district court alleging in part that the Veterans' Administration violated his constitutional right to due process of law. The district court ruled that 38 U.S.C. Sec. 211(a) "bars a court from hearing and reviewing an action challenging a decision of the V.A., even when a plaintiff alleges that the decision violates his constitutional rights." Marozsan v. United States, 635 F.Supp. 578, 580 (N.D.Ill.1986). Because Marozsan challenges the constitutionality of the procedures used by the Administrator, and because we do not read Sec. 211(a) to preclude a federal court from hearing this challenge, we reverse and remand for further proceedings consistent with this opinion.

I.

Marozsan injured his back in 1949 while on active duty in the Navy. He filed his first claim for veterans' benefits in 1953. This and subsequent claims ¹ were denied until 1981, when the Board of Veterans' Appeals rated Marozsan 20% disabled. The Board refused Marozsan's petitions to increase this rating. In August of 1984, Marozsan filed an action in federal court alleging, among other things, that the V.A. employed an arbitrary quota system in processing claims that denied him due process of law. In his complaint, Marozsan requested that the district court issue a "directive to the Agency" enjoining "capricious and arbitrary" decisions. He also asserted that he

does not seek judicial review of the decision rendered in his own particular V.A. claim action, erroneous as it may be, but is questioning the constitutionality of the V.A. procedures which make it impossible for veterans to obtain a fair and impartial hearing.

The district court dismissed all of the defendants except the United States and the V.A., ² converted the defendants' motion to dismiss into a motion for summary judgment, and entered summary judgment in their favor. The court found that Sec. 211(a) was an unequivocal bar to judicial review of Marozsan's due process claims, and rejected on the merits his equal protection challenge to the statute itself. ³

II.

The district court interpreted Marozsan's claim as a challenge to his benefit level and therefore a claim essentially seeking money from the Treasury. But this is an inappropriate characterization of the complaint. Although it is not a model pleading, a reading of Marozsan's complaint clearly reveals that it establishes a claim for more than benefits. He alleges serious constitutional violations, including a claim that the V.A. employs a quota system ⁴ which arbitrarily limits the number of benefits claims granted. This procedure, he asserts, unconstitutionally deprived him of his property interest in his veterans' benefits. ⁵ It is evident that Marozsan would like to obtain increased benefits from the Administrator; were he not a disabled veteran seeking benefits the events giving rise to this action would not have occurred, and Marozsan would not have standing to challenge the V.A.'s procedures. But the V.A.'s decision to grant or deny him higher benefits under the veterans' benefits statutes and regulations is not our concern. Marozsan properly asks us to review the methods--not the decision--of the Administrator. He claims that a federal executive agency has acted outside its constitutional authority by violating his right to due process. Marozsan's action therefore is not essentially a suit to recover veterans' benefits; "it is a suit to enforce lawful conduct on the part of the [administrator]." Starnes v. Schweiker, 715 F.2d 134, 141 (4th Cir.1983) (holding that Sec. 1395ff of the Social Security Act did not bar claims that the Secretary's reimbursement ceilings violated the Constitution). When the issue is "not whether the Administrator's decision granting or denying benefits in a particular case was right or wrong, but rather whether the Administrator had acted consistently with his grant of authority or had exceeded his authority and acted in violation of veterans' rights guaranteed by the fifth amendment," Sec. 211(a) does not apply. Arnolds v. Veterans' Administration, 507 F.Supp. 128, 130-31 (N.D.Ill.1981).

The district court, having labeled Marozsan's challenge a claim for benefits despite its constitutional allegations, ruled that a federal court could not exercise review. This holding, if correct, would imply that Congress has chosen not to grant Marozsan a judicial remedy against V.A. procedures that violate the Constitution. As a result, Marozsan would have no judicial forum, and indeed--since the V.A. disclaims authority to consider constitutional claims ⁶--no forum at all in which to raise his due process claim. ⁷ See Bartlett v. Bowen, 816 F.2d 695, 703 (D.C.Cir.1987). Yet if Sec. 211(a) deprives us of jurisdiction, that statute would implicate profound and long-debated questions about the power of Congress, consistent with Article III, to preclude all judicial review of executive agency action. We must construe statutes to avoid such difficult constitutional questions whenever possible. Edward J. DeBartolo Corp. v. Florida Gulf Coast Bldg. and Constr. Trades Council, --- U.S. ----, 108 S.Ct. 1392, 1397, 99 L.Ed.2d 645, (1988); Johnson v. Robison, 415 U.S. 361, 366-67, 94 S.Ct. 1160, 1165, 39 L.Ed.2d 389 (1974). The logical extension of the Supreme Court's reasoning in Johnson and Traynor v. Turnage, --- U.S. ----, 108 S.Ct. 1372, 99 L.Ed.2d 618 (1988) and the structure of our constitutional form of government dictate that we not read Sec. 211(a) to preclude all judicial review of a veteran's serious constitutional claims. To preserve its constitutionality, we must instead construe Sec. 211(a) to allow substantial constitutional challenges ⁸ to the veterans' benefits statutes and regulations, as well as to the procedures established by the V.A. to administer them.

III.

When the district court ruled on Marozsan's claim, it did not have the benefit of two decisions of this court which narrowly construed Sec. 211(a). Because the statute is facially ambiguous, it is possible to interpret it as barring review of all decisions of the Administrator (a broad interpretation), or only those decisions of law or fact under V.A. benefits laws (a narrower construction). ⁹ In Winslow v. Walters, 815 F.2d 1114, 1117 (7th Cir.1987) a veteran filed an action challenging the constitutionality of the V.A.'s procedures, claiming that the agency did not provide him with a hearing before changing his disability rating. We held in Winslow that Sec. 211(a) does not bar review of claims that the procedures of the V.A. violate the due process clause. In Mathes v. Hornbarger, 821 F.2d 439, 440 (7th Cir.1987) we reiterated the holding of Winslow that "federal courts are not divested of jurisdiction over suits challenging the constitutionality of the VA's procedures under the Due Process Clause of the Fifth Amendment." ¹⁰ The narrow interpretation of Sec. 211(a) that we adopted in Winslow and Mathes is not only viable, it is required in order to avoid the serious constitutional questions necessarily raised by a broader construction of the statute. ¹¹

Mathes and Winslow interpreted and applied Johnson v. Robison, 415 U.S. 361, 94 S.Ct. 1160, 39 L.Ed.2d 389 (1974), the seminal case on the construction of Sec. 211(a). The Supreme Court held in Johnson that veterans may challenge in federal court the constitutionality of veterans' benefits legislation. The Court held that the statute does not bar challenges to the constitutionality of such legislation because its enactment is a decision of Congress, not the Administrator. ¹² The Court chose to read Sec. 211(a) to allow constitutional review of veterans' benefits statutes in order to avoid "serious questions concerning the constitutionality" of the statute which would be raised by a contrary construction. Id. at 366, 94 S.Ct. at 1165. Whatever the statute precludes, the Court in effect said, it does not preclude judicial review of the constitutionality of the legislation. The Court did not need to go beyond the statutory challenge at issue to consider whether review of constitutional challenges to the V.A.'s regulations or procedures might also be required. Chief Justice Rehnquist later suggested, however, that Johnson implicitly interpreted Sec. 211(a) to allow precisely the kind of challenge Marozsan makes. "Despite the general preclusion of judicial review with respect to VA benefits claims, this Court held in Johnson ... that the district courts have jurisdiction to entertain constitutional attacks on the operation of the claims systems." Walters v. Nat'l Ass'n of Radiation Survivors, 473 U.S. 305, 311 n. 3, 105 S.Ct. 3180, 3184 n. 3, 87 L.Ed.2d 220 (1985).

Even though Johnson did not explicitly resolve the fate of constitutional challenges to the procedures employed by the Administrator in his "operation of the claims systems," the reasoning of that case compels federal court review of Marozsan's claim. The Johnson decision was based on three factors in addition to the Court's desire to avoid an unnecessary construction of Sec. 211(a) which would implicate constitutional concerns. First, the statute itself contains no explicit language barring judicial consideration of a veteran's constitutional challenge to the benefits system. This factor...