Texas Employers Insurance Ass'n v. United States

• Decision Date: 15 February 1975
• Docket Number: No. CA 1-74-40.,CA 1-74-40.
• Citation: 390 F. Supp. 142
• Parties: TEXAS EMPLOYERS INSURANCE ASSOCIATION v. UNITED STATES of America, by and through its Agency, Veterans Administration.
• Court: U.S. District Court — Northern District of Texas

390 F. Supp. 142

TEXAS EMPLOYERS INSURANCE ASSOCIATION v. UNITED STATES of America, by and through its Agency, Veterans Administration.

No. CA 1-74-40.

United States District Court, N. D. Texas, Abilene Division.

February 15, 1975.

J. M. Lee, Steve Suttle, Abilene, Tex., for plaintiff.

Wm. L. Johnson, Jr., Fort Worth, Tex., for defendant.

OPINION

BREWSTER, District Judge.

This action has furnished the Court with the rare opportunity to try a case which was originally filed in a Texas justice of the peace court.¹ The prosecution and defense hereof will, of course, cost each side several times more than the $144.00 involved. The parties claim that such expense is justified because the legal issue to be decided is a recurring one. It is another phase of the general question before the courts in the two cases cited below of the right of the government to recover from a third party the value of hospital and medical services furnished by it without cost to members or ex-members of its armed forces. The only federal appellate court decisions on the point are United States v. Standard Oil Co., 332 U.S. 301, 67 S. Ct. 1604, 91 L.Ed. 2067 (1947),² and Pennsylvania National Mutual Cas. Ins. Co. v. Barnett, 5 Cir., 445 F.2d 573 (1971).

The injuries necessitating the hospital and medical services in the Standard Oil Co. case were sustained by a soldier in a collision with a privately owned truck occurring under circumstances giving rise to a tort action. Though the amount of the government's claim was less than $200, the Supreme Court granted certiorari because of "the novelty and importance of the principal question",³ and wrote a fifteen page opinion on it. The reason given for the importance of the question was that "the issue comes down in final consequence to a question of federal fiscal policy", the determination of which was vested in Congress. Liability was denied because Congress had not authorized collection of claims of the type involved. Congress later granted such authority in tort cases by the enactment of 42 U.S.C. § 2651(a).

In the Pennsylvania National case, the government attempted to recover the value of hospital and medical services furnished an ex-member of the armed forces by the Veterans Administration in the treatment of injuries received under such circumstances as to be covered by the Workmen's Compensation Act of Texas. The government relied upon 42 U.S.C. § 2651(a),⁴ and C.F.R., Sec. 17.48(d)⁵ for authority to assert its claim. The Court of Appeals held that the statute was inapplicable because no tort situation was involved,⁶ and that the regulation could not be considered because it required an assignment of the claim from the patient, which the Veterans Administration did not have.⁷

The present case also involves a claim by the Veterans Administration for hospital and medical services furnished by it to an ex-service man on account of injuries covered by the Texas Workmen's Compensation Act. The new wrinkle present here is that the Veterans Administration took an assignment from the veteran of his claim to the extent of the value of the services supplied by it.

It would ordinarily be expected that where there are three cases involving only the one question of the right of the government to recover from a third party the value of hospital and medical services furnished free of charge to an injured member or ex-member of the armed forces, thorough opinions of the Supreme Court in the first case and of the Court of Appeals in the second case a few years later would leave no issue of importance for the third case. However, the claim of the government here that an administrative agency has authority to create a new substantial liability affecting the federal fiscal policy by the adoption of a regulation, when the Supreme Court has said that such power should be exercised solely by Congress, presents a question which "ought to make Bentham's skeleton rattle."⁸

This case was tried before the Court without a jury. The only issue in the case is the legal one heretofore stated. The facts are established as a matter of law either by stipulation or by undisputed documentary evidence. They need be only briefly summarized.

On July 7, 1973, Leslie D. Swiggart sustained an on-the-job injury in the course of his employment for the Pool Company in Big Spring, Howard County, Texas. At the time of such injury, the Pool Company was a workmen's compensation subscriber under an insurance policy issued to it by Texas Employers Insurance Association (Texas Employers), which policy provided for payment of benefits to employees of Pool Company in accordance with the Workmen's Compensation Act of Texas. Art. 8306, Vernon's Ann.Civ.St.⁹ Those benefits included hospital and medical services and medicines reasonably necessary for the treatment of injuries covered by the Act. Following his injury, Swiggart received medical care and treatment having a reasonable value of $144.00 from the Veterans Administration Hospital in Big Spring, Texas. As an ex-service man, he was entitled to such hospital and medical services without charge to him, and therefore incurred no expense in connection with them.

On July 9, 1973, Swiggart executed an assignment on V. A. Form 1023 to the Administrator of Veterans Affairs for all claims and demands which he might have by reason of any liability of third parties for medical and hospital care and treatment. The assignment was limited to an amount equal to the reasonable charges of hospital and medical care and treatment which Swiggart received. Thereafter, the Veterans Administration, purporting to act under the authority of 38 C.F.R., Sec. 17.48(d), filed with the Texas Industrial Accident Board its claim for the value of such services. On July 18, 1974, the Board entered its award ordering payment of $144.00 to the Veterans Administration.

Texas Employers obviously had some doubt about whether jurisdiction of its suit to set aside the $144.00 award of the Board was vested in the justice court or in the district court. It protected itself by filing its action in each such court in Big Spring, Texas. Both of the cases were removed by the United States to this Court, where they were consolidated for trial.

The Veterans Administration contends that the assignment from Swiggart entitled it to recover under 38 C.F.R., Sec. 17.48(d) the medical and hospital services rendered to Swiggart from the workmen's compensation insurance carrier. Texas Employers contends that the Veterans Administration is authorized by Congress to recover such expenses from third parties only under circumstances creating a tort liability 42 U.S.C., Sec. 2651(a), and that 38 C.F. R., Sec. 17.48(d) does not create a right of recovery by the Veterans Administration against a workmen's compensation insurance carrier. Alternatively, Texas Employers contends that if 38 C.F.R., Sec. 17.48(d) should be construed to create such a right of recovery, the regulation would be invalid to that extent because it would exceed the statutory authority governing the Veterans Administration. Further, in the alternative, Texas Employers contends that the assignment from Swiggart to the Veterans Administration is void under the provisions of the Texas workmen's compensation law.

The holding in Pennsylvania National shattered any hopes that the government had to assert the kind of claim here involved under the present statutes. The only recourse left to it under the existing status of things, other than to press for passage of the necessary statute, was to rely upon the regulation of the Veterans Administration 38 C.F.R., Sec. 17.48(d). There is no contention that the regulation expressly gives the necessary authority, Neither is it contended that Pennsylvania National actually holds that the regulation implies such authority. The most that can be made of the government's position is that it argues that Pennsylvania National implies that the regulation implies that the authority is given. The Court does not agree.

The opinion in the Standard Oil case begins with the statement that the Court is being asked "to create a new substantive legal liability without legislative aid." 332 U.S., at 302, 67 S.Ct., at 1605, 91 L.Ed., at 2068. It says that "we have not here simply a question of creating a new liability in the nature of a tort" but one which "comes down in final consequence to a question of federal fiscal policy, coupled with considerations concerning the need for and the appropriateness of means to be used in executing the policy sought to be established." 302 U.S., at 314, 67 S.Ct., at 1611, 91 L.Ed., at 2075. The following language is taken from the concluding portion of the opinion, 302 U.S., at 314-316, 67 S.Ct. at 1611, 91 L.Ed., at 2075-76:

"Whatever the merits of the policy, its conversion into law is a proper subject of congressional action, not for any creative power of ours. Congress, not this Court or the other federal courts, is the custodian of the national purse. By the same token it is the primary and most often the exclusive arbiter of federal fiscal affairs. And these comprehend, as we have said, securing the treasury or the government against financial losses however inflicted, including requiring reimbursement for injuries creating them, as well as filling the treasury itself."

". . . . Among others, one trouble with this is that the situation is not new, at any rate not so new that Congress can be presumed not to have known of it or to have acted in the light of that knowledge.

"When Congress has thought it necessary to take steps to prevent interference with federal funds, property or relations, it has taken positive action to that end. We think it would have done so here, if it had been its desire. This it may still do, if or when it so wishes." (Emphasis supplied)

The Veterans Administration derives its power to make rules and regulations from 38 U.S.C. §§ 210(c) and 621.¹⁰ So far as they are...