Purpose Built Families Foundation. v. McDonough

Docket Number23-2114
Decision Date25 August 2023
PartiesPURPOSE BUILT FAMILIES FOUNDATION., INC., PETITIONER, v. DENIS MCDONOUGH, SECRETARY OF VETERANS AFFAIRS, RESPONDENT.
CourtUnited States Court of Appeals For Veterans Claims

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PURPOSE BUILT FAMILIES FOUNDATION., INC., PETITIONER,
v.

DENIS MCDONOUGH, SECRETARY OF VETERANS AFFAIRS, RESPONDENT.

No. 23-2114

United States Court of Appeals For Veterans Claims

August 25, 2023


Before GREENBERG, ALLEN, and LAURER, Judges.

ORDER

ALLEN, JUDGE

Pending before the Court is Purpose Built Families Foundation, Inc.'s (PBFF's) petition for extraordinary relief in the nature of a writ of mandamus and accompanying motion to stay certain administrative actions. Specifically, petitioner asks this Court to issue an order converting VA's temporary voluntary stay of petitioner's Supportive Services for Veteran Families (SSVF) grant terminations into an involuntary stay pending appeal, i.e., an involuntary stay effective until all litigation concerning the SSVF grant termination has been finally resolved. After careful consideration, and for reasons we will explain below, (1) we conclude that, under appropriate circumstances, the Court has the authority to provide the type of relief petitioner seeks-that is, a stay of administrative action pending appeal, but (2) after considering the merits of petitioner's request, we will deny petitioner the relief it seeks because petitioner has not demonstrated that the Court should stay the actions at issue in this case.

We'll begin with a brief general introduction to the SSVF program, a program the Court has not had occasion to address before. We will also lay out the complicated procedural history surrounding the termination of petitioner's grants. Next, we will explain why the Court has the authority, in appropriate circumstances, to enter a stay of administrative action pending an appeal under the All Writs Act (AWA). We will also explain the standard under which the Court determines whether a stay of administrative action is warranted. Finally, we explain why petitioner is not entitled to the relief it seeks. Specifically, petitioner has failed to show that it is likely to succeed in its administrative appeal of the termination of the SSVF grants at issue.

I. SSVF OVERVIEW

In October 2008, Congress passed the Veterans' Mental Health and Other Care Improvements Act (the Act). Under section 604 of the Act, VA was authorized to facilitate providing supportive services for "very low-income veteran families in permanent housing."[1]

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SSVF grants are awarded to selected private nonprofit organizations and consumer cooperatives (grantees) to assist very low-income veterans' families that are residing in or transitioning to permanent housing.[2] Grantees provide a range of supportive services that are meant to promote housing stability, including outreach services, case management services, assistance in obtaining VA benefits, or assistance in obtaining and coordinating other public benefits.[3]

VA implemented the SSVF program by promulgating 38 C.F.R. part 62.[4] These regulations establish the terms and conditions of SSVF grant awards and outline the requirements SSVF grantees must meet to receive, maintain, and renew SSVF grants. The regulatory scheme also establishes the procedure for terminating or withholding grants.[5] In addition to VA's promulgated regulations, the SSVF program must comply with the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards under 2 C.F.R. part 200.[6]

II. BACKGROUND AND PROCEDURAL HISTORY

PBFF is a nonprofit organization located in Broward County, Florida. It is the grantee for three grants from the SSVF program.[7] In November 2021, the VA Office of Business Oversight (OBO) began conducting an onsite audit in connection with PBFF's grants.[8] The audit identified 276 expenditures that reflected questionable costs totaling $955,710.40.[9] Following these audit findings, in May 2022, VA's SSVF Program Office sent a letter to PBFF notifying it that VA would terminate its 3 SSVF grants in 7 days.[10] PBFF immediately filed suit in the U.S. District Court for the Southern District of Florida (district court or Southern District of Florida), seeking to enjoin VA from terminating the SSVF grants.[11] On May 18, 2022, the district court granted a temporary

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restraining order (TRO) preventing VA from terminating the grants.[12] The parties later agreed to extend the TRO until June 2, 2022.[13]

On May 19, 2022, VA informed PBFF of its intent to withdraw the May 2022 termination letter and to provide PBFF an opportunity to submit written responses to OBO's audit.[14] VA informed PBFF that after review of the responses, it would issue a final decision concerning the SSVF grants.[15] After withdrawing its May 2022 termination letter, VA moved the district court to dismiss PBFF's action, a motion the district court ultimately granted on the grounds that the action was moot given the withdrawal of the termination notice.[16] PBFF appealed the dismissal to the U.S. Court of Appeals for the Eleventh Circuit (Eleventh Circuit), where the proceeding remains pending.[17]

In February 2023, OBO issued a revised audit that considered PBFF's response.[18] After review, OBO cleared 31 questionable costs it had originally identified, totaling $80,348.48.[19]However, OBO continued to question the bulk of the expenditures it had originally determined to be questionable. Specifically, OBO stated that "245 exceptions remained with unallowable costs totaling $875,361.92, which amounts to 85% of PBFF's costs being considered questionable."[20]Thereafter, in a March 9, 2023, letter, VA's SSVF Program Office notified PBFF of its renewed intent to terminate PBFF's three SSVF grants.[21] The letter informed petitioner that the SSVF Program Office determined (1) PBFF had violated the terms and conditions of the SSVF awards, (2) PBFF's noncompliance could not be remedied by imposing additional conditions, and (3) that termination of the grants would be effective 7 days after the date of the letter.[22] In addition, the March 2023 termination letter told petitioner that if it disagreed with the termination decision it could appeal to the Board.[23]

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Before termination became effective, VA (acting through the Office of the United States Attorney for the Southern District of Florida) and petitioner entered into a voluntary agreement, under which VA agreed to temporarily stay the grant terminations if petitioner appealed the termination to the Board and sought an involuntary stay pending appeal with the Board or this Court.[24] On April 7, 2023, petitioner filed an appeal at the Board challenging the termination of its SSVF grants, and also filed a motion requesting that the Board stay the grant terminations pending appeal.[25] On April 10, 2023, petitioner filed the petition for extraordinary relief with the Court before us today, seeking a stay of the SSVF grant terminations pending appeal.[26] Petitioner also filed a motion with the Court seeking a stay pending appeal.[27] The petition and motion effectively seek the same relief, so both will succeed, or fail, together.

On May 12, 2023, this case was submitted to a panel of the Court, and we heard oral argument on June 13, 2023. After oral argument, the Court ordered the parties to provide additional information to assist us in resolving this matter. Among other things, the Court ordered the Secretary to submit a declaration from an appropriate Board official informing the Court whether the Board had authority to grant petitioner's motion to stay terminations pending appeal, and if so, under what procedure the Board intended to address the motion.[28]

On June 29, 2023, the Secretary filed a declaration from Anthony C. Scire, Jr., the Board's chief counsel. Mr. Scire informed the Court that on June 28, 2023, the Board sent a letter to petitioner stating that the Board "cannot consider the motion for stay on the merits because [the Board] does not have the authority to grant the relief sought."[29] The Board further informed petitioner that it would "not address the merits of the request to involuntarily stay the termination of SSVF grants awarded to PBFF while its appeal of VA's decision to terminate those grants is pending."[30]

III. PARTIES' ARGUMENTS

Petitioner contends that the Court has the authority to impose a stay of VA's termination of the three SSVF grants pending completion of petitioner's appeal of those terminations.[31] In addition to the AWA under which the petition was filed, petitioner relies on Rule 8 of this Court's Rules of Practice and Procedure, 5 U.S.C. § 705, and Scripps-Howard Radio, Inc. v. FCC, 316

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U.S. 4 (1942) as providing the Court authority to grant the stay.[32] Petitioner argues that it is entitled to a stay because (1) it is likely to succeed on the merits of the underlying appeal of the grant terminations; (2) it, its employees, and the veterans it serves will be "irreparably harmed" by the grant terminations; (3) an involuntary stay of the grant terminations will not harm VA; and (4) the grant terminations "will harm the public interest."[33]

The Secretary opposes petitioner's request. He contends that the AWA is the Court's sole source of authority to issue extraordinary relief, and that here, the relief petitioner seeks isn't appropriate under the AWA.[34] Specifically, the Secretary argues that a writ isn't necessary to protect the Court's prospective jurisdiction, and that exercising authority under the AWA here would be inconsistent with the statutory scheme Congress established for review of VA actions in this Court.[35] Alternatively, the Secretary contends that even if the Court is empowered to grant the type of relief petitioner seeks, petitioner has not demonstrated that it is entitled to a writ.[36]

IV. JURISDICTION AND AUTHORITY TO IMPOSE A STAY/INJUNCTION

Our first task is to consider whether the Court has the authority to impose a stay of administrative action pending an appeal. If we don't, then we don't have the power to grant a stay of...

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