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In Benefits Suit, Veteran Seeks Rare Class Action Status

By RJ Vogt | November 4, 2018, 8:02 PM EST

For decades, a quirk of America’s legal system has blocked veterans from banding together in class action lawsuits over benefits. But after a string of recent court rulings leveled that hurdle, a newly proposed class suit is challenging the denial of medical reimbursements to veterans under a controversial new rule.

The case, filed Oct. 30 by the National Veterans Legal Services Program on behalf of U.S. Coast Guard veteran Amanda Wolfe, takes aim at a regulation the Department of Veterans Affairs enacted earlier this year to forbid refunds for some costs incurred by those with third-party insurance when they receive emergency treatment at non-VA hospitals.

Up until the past two years, such an ambitious suit — seeking to keep billions of dollars in expenses from being pushed onto veterans — could not have been filed with the U.S. Court of Appeals for Veterans Claims. In August, however, the CAVC issued a “watershed” decision, reversing its long-standing opposition to entertaining class actions and opening the door to Wolfe’s case.

According to her petition, the VA’s new regulation violates the Emergency Care Fairness Act of 2010 by forcing veterans with health insurance to pay for expenses that veterans without health insurance would get refunded. If Wolfe is able to obtain class action certification, her suit could represent “hundreds of thousands of veterans” affected by the new rule.

While the suit isn’t the first putative class action filed in the wake of the CAVC decision, it’s further proof of a new front in the fight for veterans’ medical rights, some advocates suggest. Attorney Bart Stichman, executive director and co-founder of NVLSP, said the ability to file Wolfe’s suit as a class action is a crucial change in the way veterans benefits claims are handled.

“If our class is certified by the court, then all of these veterans who've been, we believe, wrongly denied, will have access to the lawyers serving as class counsel, whereas now they don't have access,” he said. “We don't know who they are and they don't know who we are.”

Without class actions, veterans must navigate the complex legal system surrounding their benefits claims on a person-by-person basis — often without a lawyer.

The lack of legal access for veterans has its roots in a Civil War-era statute that barred a lawyer from charging veterans more than $10 in legal fees for a benefits claim. Stichman said it was a fair price back in 1862 but eventually became an economic bar to attorneys representing veterans.

In their stead, major veterans organizations like the American Legion and the Disabled American Veterans began providing free nonlawyers to represent veterans before the VA. Congress eventually began allowing attorneys to charge fees of up to 20 percent of past-due benefits in 2007, but according to the Board of Veterans’ Appeals' most recent report to Congress, only 15.3 percent of the 52,000 cases the board handled in 2017 involved attorney representation — as compared to 49 percent represented by the American Legion or Disabled American Veterans.

“Class actions ensure that these veterans, the majority of whom are not represented by lawyers, have representation on a common legal issue that affects of a lot of similarly situated people,” Stichman said.

The CAVC, however, has refused to handle class actions for most of its 30-year history. Its 1991 decision in Harrison v. Derwinski concluded that it lacked authority for such cases due to statutory constraints that limited its jurisdiction to reviewing Board decisions on an individual basis.

That ruling held until April 2017, when Vietnam War veteran Conley Monk’s proposed class action over decision delays at the VA made it to the U.S. Court of Appeals for the Federal Circuit. There, a trio of circuit judges found “no persuasive indication that Congress intended to remove class action protection for veterans” when it created the CAVC, remanding the case.

Although the CAVC denied Monk’s bid to represent himself and a class of similarly situated vets in its August ruling, it did note that it would begin entertaining class actions in accordance with the Federal Circuit’s findings.

“This holding is a seismic shift in our precedent,” wrote Chief Judge Robert N. Davis. “The Court's decision will shape our jurisprudence for years to come and, I hope, bring about positive change for our Nation's veterans and ensure that justice is done more efficiently and timely.”

Stichman estimated around 10 proposed class actions have been filed at the CAVC since it decided to start accepting them, but none has yet been certified.

He hopes to change that with Wolfe’s suit, which represents the latest salvo in a long-running fight over emergency medical care reimbursements. The battle dates back to 2014, when NVLSP filed suit on behalf of Air Force vet Richard Staab after he was denied reimbursement for $48,000 in emergency care costs because secondary insurance had covered part of the bill.

That lawsuit, Staab v. McDonald , led the CAVC to invalidate the VA regulation blocking reimbursement. The court’s April 2016 decision found that Congress intended the VA to step in as a “secondary payer” when other insurers covered only a portion of the cost of a veteran’s emergency treatment.

For the next 21 months, the VA put a moratorium on deciding tens of thousands of pending reimbursement claims. It didn’t begin deciding the backlog until early this year, after issuing a new regulation in January to replace the one struck down in the Staab case.

The amended rule expanded the Emergency Care Fairness Act’s nonreimburseable expenses from only copayments or “similar payments” to include deductibles and coinsurance as well.

When Wolfe needed an emergency appendectomy in September 2016 that cost $22,348.25, her employer-sponsored health insurance covered everything except $2,558.54, which she paid out of her own personal savings.

After she filed a reimbursement claim with the VA, the department denied her bid because the remaining money owed fell under the category of copayments, deductibles and coinsurance. Had she not signed up for employer-sponsored health insurance in the first place, however, the VA would have paid the entire $22,348.25 without trouble.

In a statement, Wolfe said “there’s power in numbers.”

“This is not right, and many of the veterans who need this help from the VA are old and sick and not able to fight this battle,” she added.

A representative for the VA declined to comment on the case.

Wolfe is represented by Barton F. Stichman and Patrick A. Berkshire of the National Veterans Legal Services Program and Mark B. Blocker, Kara L. McCall, Emily M. Wexler, Lindsay K. Eastman and Eric T. O’Brien of Sidley Austin LLP.

Counsel for Secretary of Veterans Affairs’ Robert Wilkie is not yet available.

The case is Wolfe et al. v. Wilkie, number 18-6091 in the U.S. Court of Appeals for Veterans Claims.

--Editing by Pamela Wilkinson.

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