The internet and social media is spinning as veterans absorb the fact that government is once again attempting to break its promise to military retirees. This attempt comes not long after Colonel Bud Day crossed the fence for the final time. Bud Day's accomplishments were many, and his heroism and patriotism is well known. What some might not remember, however, is that one of his acts of patriotism was challenging the government in a federal lawsuit, after it welched on its promise to provide free health care for life to those who exchanged decades of service for a measure of health security after.
Bud Day, and a group of many other veterans, filed suit in a district court. The district court dismissed their lawsuit on the grounds that the veterans did not prove that there was a contract between the government and military retirees. The veterans appealed to the United States Court of Appeals, Federal Circuit in the case Schism v. United States. A three judge panel ruled in favor of the veterans and overturned the district court ruling.
The government, however, requested en banc review and it was granted. The appeal was then heard by all the judges of the court, and nearly three years later the full court reversed the ruling of the three judge panel and ruled against the veterans in a nine to four ruling. A subsequent attempt by the veterans to be heard by the Supreme Court of the United States (SCOTUS) was denied.
In this blog post I intend to explore the reasoning of the 2002 ruling by the United States Court of Appeals, Federal Circuit, to see what light it might shine on the legislation currently being considered by the Senate which would reduce retirement benefits to military veterans. Key to this discussion will be what constitutes a contract between the government and its military personnel, just as it was when Colonel Day made the case. The appeals court wrote in its opinion:
....plaintiffs assert, the government breached these implied-in-fact contracts by effectively denying them free care so they had to purchase Medicare Part B insurance in order to be treated by civilian doctors or obtain medications without paying fees because space was no longer available in military facilities where care and medications were free. We must decide whether the government is bound by those promises.
The government in its defense admitted that promises were made. The court wrote:
To induce people to join the armed services during the World War II and Korean War era and make it a career, military recruiters, under the direction of superiors, orally promised recruits that if they served on active duty for at least 20 years, they would receive free lifetime medical care for themselves and their dependents. The government concedes such promises were made in good faith and relied upon.The court mentions that the lower district court ruled against the veterans, "holding that because the promises were not authorized they are not enforceable." In other words, the Department of Defense's mouth was writing checks that its congressional body could not cash, as Congress had passed no laws that made free health care for life a contract. The court wrote:
The district court concluded that because no statute authorized these promises, no valid contract was formed between the government and plaintiffs (or other similarly-situated military retirees, i.e., those who entered service prior to 1956 and by 1995 were 65 or more years of age).The court states from the onset of its opinion that, "The principal question before us is whether the promises made to the plaintiffs, older Air Force retirees, were within the authority of the Air Force Secretary..." and then concludes, "Because 5 U.S.C. § 301 at most authorizes space-available treatment, and not free health insurance for life, we hold that the Air Force Secretary lacked the authority in the 1950s when plaintiffs joined to promise free and full medical care."
A pension, however, is established by congressional statute, unlike health care promises that were made unilaterally by the department of defense. However, the court continues further with a very important section, stating:
Further, under long-standing Supreme Court precedent, "common-law rules governing private contracts have no place in the area of military pay," Bell v. United States, 366 U.S. 393, 401, 81 S.Ct. 1230, 6 L.Ed.2d 365 (1961), or pensions and hospital privileges, see Lynch v. United States, 292 U.S. 571, 577, 54 S.Ct. 840, 78 L.Ed. 1434 (1934) (citing United States v. Teller, 107 U.S. 64, 68, 2 S.Ct. 39, 27 L.Ed. 352 (1883) for the proposition that the grant of pensions and such privileges creates no vested right in the recipient and can be withdrawn or redistributed by Congress at any time). Thus military retiree compensation, including free military medical care and government-provided insurance, is controlled exclusively by statute, and so an action for breach of an implied-in-fact contract cannot lie. See id.The court cites the SCOTUS decision from 1934 in Lynch v. United States, in which the nation's highest court ruled:
Pensions, compensation allowances and privileges are gratuities. They involve no agreement of parties; and the grant of them creates no vested right. The benefits conferred by gratuities may be redistributed or withdrawn at any time in the discretion of Congress. United States v. Teller, 107 U.S. 64, 68; Frisbie v. United States, 157 U.S. 160, 166; United States v. Cook, 257 U.S. 523, 527.The appeals court then concluded its finding stating, "Accordingly, we... can do no more than hope Congress will make good on the promises recruiters made in good faith to plaintiffs and others of the World War II and Korean War era..."
Interesting times we live in. We can keep the faith, and hope for the best. We'll see where that gets us.