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Judge inclined to make VA inform vets’ children of rights to survival benefits

The VA acknowledges that a rule banning payments to surviving veterans’ children after overpayments are made to others should be rescinded, but veterans’ advocates say the agency is moving too slowly to correct the problem.

SAN FRANCISCO (CN) — A federal judge signaled in court Thursday that he will require the U.S. Veterans Administration to act more quickly in informing veterans’ beneficiaries of their right to payments for Agent Orange-related health problems, even if benefits were previously overpaid to other family members.

The dispute stems from a 1986 class action, Nehmer v. U.S. Veterans Administration, which led to a consent decree in 1991 requiring the VA to automatically reconsider past denials of benefits for conditions it later found were tied to exposure to the herbicide Agent Orange. The agency also agreed to grant retroactive benefits to veterans and their surviving family members.

Used ubiquitously by the U.S. military to clear forested areas in Vietnam from 1962 to 1975, the toxic contaminant dioxin in Agent Orange has been linked to a slew of health problems, including leukemia, lymphoma, throat cancer and many other diseases.

Over the last 16 months, plaintiffs have complained the VA has kept an unlawful regulation on the books that instructs the agency to deny benefits to surviving children of deceased veterans if benefits were already fully paid to other siblings. No further payments can be made until the agency claws back overpayments made to other siblings, according to the regulation.

In September, the plaintiffs filed a motion to enforce the 1991 settlement, asking the court to order the VA to rescind that rule.

During a court hearing Thursday, U.S. Justice Department lawyer Michael Andrew Zee argued that such a court order is unnecessary because the VA is already working to rescind the regulation, a process that could drag on until the end of next year. The agency also issued a memorandum on Oct. 21 telling adjudicators to stop applying the contested regulation when it processes claims for benefits.

Plaintiffs’ lawyer Stephen Gordon of the firm Holland & Knight said those steps are inadequate because the continued existence of the regulation could deter beneficiaries and their lawyers from filing claims for benefits.

Senior U.S. District Judge William Alsup appeared to sympathize with that argument.

“Well you have a regulation on the books that’s wrong, and you act like the plaintiffs are being unreasonable by wanting the regulation to conform to the law,” Alsup said. “It’s not unreasonable.”

The issue was first brought to the VA’s attention in June 2020. The agency agreed to rescind the rule but decided to fold it into a larger rulemaking process for a bigger package of regulatory changes related to herbicide exposure and benefits, Zee told the judge.

“The agency saw efficiencies in combining it in another rulemaking,” Zee said.

A notice of proposed rulemaking is expected in May next year, and a final rule will be published by the end of 2022, Zee said.

“That would be more than a year from now,” Alsup responded.

Gordon said the VA’s Oct. 21 memo telling adjudicators not to apply the rule falls short because it does not bind the Board of Veterans Appeals that reviews challenged determinations, nor does it specifically instruct adjudicators to pay benefits to surviving children after benefits were fully paid to other siblings.

“If there’s been an overpayment made, that’s the government’s problem, not the beneficiaries,” Gordon said. “It can’t be interpreted out of existence. That has to be rescinded.”

The veterans’ advocate said the rule could also have a chilling effect if attorneys advising beneficiaries read the regulation and conclude their client cannot get paid after an overpayment is made.

“I think counsel makes a good point that the world is not just agency people,” Alsup said. “It’s also the lawyers who advise potential claimants, and some might be deterred from even going forward under this regulation.”

Zee told the judge that if the court is inclined to rule in the plaintiffs’ favor, it could simply rescind the contested part of the regulation and the VA could publicize that decision in the federal register.

“If the court vacates the final sentence, there’s no need to formally rescind it at that point because it's already been vacated,” Zee said.

Gordon disagreed, arguing that a notice in the federal register will not change the fact that the rule appears in the code of federal regulations.

“It needs to come out of the CFR,” Gordon said.

After about 30 minutes of debate, Alsup asked both sides to assume he will rule in the plaintiffs’ favor and to meet, confer and come up with specific ways the agency could “get the word out” on a potential court order abolishing the contested part of the rule.

Alsup ordered both sides to submit a joint statement on ways to publicize such an order by Nov. 9.

Last year, Alsup ordered the VA to pay retroactive benefits to thousands of so-called Blue Water Navy vets who never set foot on Vietnam soil but served on ships in the nation’s territorial waters during the war. The VA had argued that a 1991 consent decree did not include Blue Water veterans and therefore their previously denied claims for Agent Orange-related health problems should not be automatically re-adjudicated.

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