Burkhart: Home Loan Guarantees Do Not Arise from Section 1151 Claims

Burkhart v. Wilkie, Case Number 16-1334, decided January 3, 2019 is an opinion that has limited application, but applies interesting concepts of statutory interpretation and equitable principles.

The case concerns a surviving spouse who obtained DIC benefits as a result of a Section 1151 claim after her husband died due to VA medical treatment.

In 2007, the widow sought a home loan guarantee form the VA and was issued a certificate of eligibility (COE), but she never purchased a home.  In 2013, she requested another home loan guarantee and was told she was not eligible for one and the 2007 COE was issued in error.  This appeal resulted.

The Court took a very deep dive into the language of Section 1151 claims and Chapter 37 of title 38 of the U.S. Code (which governs VA guaranteed home loans).  The widow made three arguments: 1) a surviving spouse under Section 1151 is entitled to ancillary home loan guarantee benefits; 2) whether 38 USC Section 3721 (the incontestability provision) found in the home loan guarantee chapter prevents the VA from contesting her eligibility after the first COE was issued; and 3) whether equitable principles apply such as the Court should compel the VA to grant the COE.  Id. at *1. 

The first point involved a close reading of the chapter governing home loan guarantees and a conclusion by the Court that “Based on section 3701’s plain language, the appellant is not eligible for chapter 37 benefits under section 3701’s definition of "veteran" because her husband lacked a service-connected disability and his death was not service connected.”   Id. at *6.  The Court then looked at a case related to this area of the law Kilpatrick v. Principi, 327 F.3d 1375 (Fed. Cir. 2003).  In Kilpatrick involved specially adapted housing benefits and determined:

Section 1151's predecessor statute listed benefits available to veterans who suffered disability or death resulting from VA care, with specially adapted housing benefits among them. Id. Decades later, Congress reorganized what is today title 38 but failed to include the specially adapted housing benefit among those provided to the veterans who suffered disability or death resulting from VA care. Id. at 1380-81. Because "where you end up depends on where you begin," the Federal Circuit determined that, because Congress had expressly conferred those benefits on veterans, mere reorganization of various statutory provisions did not evince congressional intent to deprive veterans of those benefits that Congress had previously conferred.

Id. at *7.

 

The Court then reviewed Section 1151 and Section 3701’s plain language and legislative history and determined nothing suggested Congress intended section 1151 beneficiaries to receive chapter 37 benefits.  Id. at *8. 

Next, the Court turned to the incontestability provision and determined that a fiar reading of Section 3721 was that “Congress clearly intended the incontestability provision to apply to the relationship between the Government and lending institutions such as banks, not the Government and COE recipients, and as to the documents guaranteeing the loan, not a COE.”  Id. at *9. 

Finally, the Court turned to the equitable doctrines of injunctive relief, equitable estoppel, laches and waiver.  Initially, the Court noted any equitable powers it has are constrained by the Court’s limited jurisdiction, but does point out that the Secretary has been granted equitable powers and thus sets up further arguments that the Secretary is not properly using its equitable powers.  The other arguments related to the specific equitable doctrines sought to be relied upon are summarized as 1) injunctive relief (the Appellant must establish an entitlement to prevail, which the injunction itself cannot do); 2) estoppel (the court reasoned the incontestability provision acted like estoppel and because “Congress uses explicit statutory grants to give private parties this privilege, we decide

that Congress's decision not to grant this privilege to others means that Congress intended to withhold this privilege from them”); laches and waiver (these are not affirmative theories of relief but defensive theories).  Id. at *16-17

Judge Greenberg wrote a concise dissent which pinpointed the problem: “Title 38 is an imperfect collage meant to organize decades of Congressional intent towards veterans

into a consumable statutory scheme.”  Id. at *18.  He argued: “The addition of section

1151(c) does not reflect the desire of Congress to limit ancillary benefits under this section to those in chapters 21 and 39. Such a position would suggest that Congress intended to provide specially adaptive housing and automotive benefits, but no other benefit, to a woman who is a widow solely because of improper VA care. There is no logical justification for this conclusion.” Id. at *18. 

I understand and appreciate Judge Allen’s opinion and focus on the words of the legislation, but believe Judge Greenberg points to the real problem—VA laws are a patchwork that have been added to and reorganized so often as to create inconsistencies that were likely not intended.  This case really serves as a call to Congress to fix an unintended problem.

Decision by Judge Allen and joined in by Judge Bartley.  Dissent by Judge Greenberg.

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