Villanueva-Hernandez et al v. Veterans Administration et al

MOTION to Dismiss/Lack of Jurisdiction as to Veterans Administration

D.P.R.June 28, 2017

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO SANTIAGO VILLANUEVA-HERNANDEZ et al, Plaintiffs, v. VETERANS ADMINISTRATION, Defendant. CIVIL NO. 16-1034 (ADC) MOTION TO DISMISS TO THE HONORABLE COURT: COMES NOW the Secretary, Department of Veterans Affairs through the undersigned attorneys to move the court to Dismiss Plaintiff’s Complaint, for this Court’s lack of subject matter jurisdiction under F.R.C.P. 12(b)(1) and for Plaintiff’s failure to state a cause of action cognizable under the law pursuant to F.R.C.P. 12(b)(6). In compliance with Local Rule 7(a) a Memorandum of law In Support of the Motion to Dismiss is included for this Court’s consideration. WHEREFORE, the appearing party respectfully requests from this court that it dismiss Plaintiff’s complaint with costs and attorneys fees taxed to the Plaintiff. I HEREBY CERTIFY, I electronically filed the foregoing with the Clerk of the Court using the CM/ECF System which will send notification of such filing to the attorney(s) of record. RESPECTFULLY SUBMITTED in San Juan, Puerto Rico, this 28th day of June, 2017. ROSA EMILIA RODRÍGUEZ VÉLEZ United States Attorney Case 3:16-cv-01034-ADC Document 46 Filed 06/28/17 Page 1 of 2 Santiago Villanueva-Hernandez et al v. Veterans Administration. Civil No. 16-1034(ADC) Page 2 S/Fidel A. Sevillano-Del Río FIDEL A. SEVILLANO-DEL RIO Assistant U.S. Attorney U.S.D.C.-P.R. 117812 Torre Chardón, Suite 1201 350 Carlos Chardón St. San Juan, Puerto Rico 00918 Tel. (787) 766-5656 Fax (787) 766-6219 E-mail fidel.sevillano@usdoj.gov Case 3:16-cv-01034-ADC Document 46 Filed 06/28/17 Page 2 of 2 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO SANTIAGO VILLANUEVA-HERNANDEZ et al, Plaintiffs, v. VETERANS ADMINISTRATION, Defendant. CIVIL NO. 16-1034 (ADC) MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS COMES NOW the Secretary Department of Veterans Affairs to submit a Memorandum of Law in Support of its Motion to Dismiss as follows: Introduction On January 7, 2016 the Plaintiff filed his complaint at E.C.F. 1. In it, he essentially alleges that the Secretary Department of Veterans Affairs (“DVA”) stripped away the fiduciary assignment of Santiago Villanueva to the management of the money of his father, Mr. Elvyn Villanueva DeJesus has “E.C.F. 1, at Par. 3). Claims involving fiduciaries appointed by the DVA may only be heard by the Board of Veterans Appeals and from the Board to the Article 1 Court created to hear such appeals, and finally to the Federal Circuit Court. The Supremacy Clause of the U.S. Constitution and the statutes and regulations regarding veteran's benefits prevent this Court's interference as to DVA benefits, including the decisions regarding DVA's selection or removal of a fiduciary. To the extent Plaintiff seeks from the District Court to interfere with the DVA appointed or removal of a fiduciary and issue orders regarding where DVA benefit funds should be paid, this Court is without a subject matter to hear such claims. Case 3:16-cv-01034-ADC Document 46-1 Filed 06/28/17 Page 1 of 11 Santiago Villanueva-Hernandez et al v. Veterans Administration. Civil No. 15-2601(CCC) Page 2 STANDARD OF REVIEW Motion to Dismiss Under Fed. R. Civ. P.12(b)(l) Pursuant to Rule 12(b)(l), a defendant may move to dismiss an action for lack of federal subject matter jurisdiction. Fed. R. Civ. P. 12(b)(1). The party asserting jurisdiction has the burden of demonstrating its existence. Skwira v. United States, 344 F.3d 64, 71 (1st Cir. 2003) (citing Murphy v. United States, 45 F.3d 520,522 (1st Cir. 1995)). The court has an obligation to inquire sua sponte into its own subject matter jurisdiction. McCulloch v. Velez, 364F .3d 1, 5 (1st Cir. 2004). Rule 12(b)(1) is a "large umbrella, overspreading a variety of different types of challenges to subject- matter jurisdiction," including ripeness, mootness, the existence of a federal question, diversity, and sovereign immunity. Valentin v. Hosp. Bella Vista, 254 F.3d 358, 362-63 (1st Cir. 2001). Dismissal of the Complaint for lack of subject matter jurisdiction in the instant case is appropriate on grounds of sovereign immunity. Motion to Dismiss under Fed. R. Civ. P.12(b)(6) Federal Rule of Civil Procedure 12(b)(6) governs dismissal of a case for failure to state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion to dismiss, "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 550, 555 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a “probability Case 3:16-cv-01034-ADC Document 46-1 Filed 06/28/17 Page 2 of 11 Santiago Villanueva-Hernandez et al v. Veterans Administration. Civil No. 15-2601(CCC) Page 3 requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are 'merely consistent with a defendant's liability, it 'stops short of the line between possibility and plausibility of entitlement to relief"' Iqbal, 129 S. Ct. at 1949. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 129 S. Ct. at 1949. Likewise, the court need not "accept as true a legal conclusion couched as a factual allegation." Papasan v. Allain, 478 U.S. 265, 286 (1986). "Rule 8 marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior era, but it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions." Iqbal, 129 S. Ct. at 1949. In Washington Legal Fund v. Massachusetts Bar Fund, 993 F.2d 962, 971 (1st Cir. 1992) the Court held that it will not accept a complainant's unsupported conclusions or interpretations of law and that subjective characterizations or conclusory descriptions of a general scenario, which could be dominated by unsupported facts will not defeat a motion to dismiss. ARGUMENTS Plaintiff’s Claims or Challenges to DVA’s Determinations regarding fiduciaries and benefits to Veterans are preempted by Federal law. Throughout the Complaint, Plaintiff challenges DVA’s determinations on behalf of veteran Elvyn Villanueva DeJesus’ which is also, intertwined with allegations of Plaintiff’s constitutional right violations of lack of due process. However, as a matter of law, any challenge to DVA’s determination regarding veteran benefits to include its fiduciary program must be dismissed for lack of subject matter jurisdiction. The Veterans Judicial Review Act of 1988 at 38 U.S.C. § 511(a) bars the judicial review Case 3:16-cv-01034-ADC Document 46-1 Filed 06/28/17 Page 3 of 11 Santiago Villanueva-Hernandez et al v. Veterans Administration. Civil No. 15-2601(CCC) Page 4 of a decision of the Secretary of the Department of Veterans Affairs which may affect veterans benefits. Menendez v. United States, 67 F.Supp.2d 42, 45 (D.P.R. 1999). The District Court noted that in enacting the Veterans Judicial Review Act, Congress established a multi-tiered framework for the adjudication of claims regarding veterans benefits. Citing Beamon v. Brown, 125 F.3d 965, 967 (6th. Cir. 1997). The Court further found that judicial review over decisions of the Court of Veterans Appeals reside in the Court of Appeals for the Federal Circuit. Id. at 45-46, citing 38 U.S.C. § 7252(a). The Menendez Court also recognized court interpretations of § 511(a) precluding from review Veterans Administration determinations. Id. at 46, citing Sugrue v. Derwinski, 808 F.Supp. 946, 949 (E.D.N.Y. 1992). “They have held that a plaintiff may not circumvent the bar on judicial review established by § 211, and subsequently § 511(a), by cloaking his claims regarding denial of benefits in the garb of constitutional or other statutory violations. They clearly establish that section 211(a) precludes federal courts from hearing claims-even if draped in constitutional claims, seeking a particular type or level of medical care.” Id. at 46. (Emphasis ours, internal citations omitted). In an unpublished opinion, the District Court in Puerto Rico in the case of Montes-Ponce v. United States, 2007 WL 141075 (D. Puerto Rico) noted that 38 U.S.C. § 511(a) denies federal district courts jurisdiction over lawsuits seeking review of veterans' benefits determinations, citing Price v. United States, 228 F.3d 420, 421 (D.D.C. 2000)(holding that "[t]he exclusive avenue for redress of veterans' benefits determinations is appeal to the Court of Veterans Appeals and from there to the United States Court of Appeals for the Federal Circuit') Accordingly, Plaintiff’s claims to challenge determinations of veteran benefits related to Case 3:16-cv-01034-ADC Document 46-1 Filed 06/28/17 Page 4 of 11 Santiago Villanueva-Hernandez et al v. Veterans Administration. Civil No. 15-2601(CCC) Page 5 Mr. Elvyn Villanueva DeJesus, draped as constitutional claim or any benefit claim that Plaintiff feels he was entitled to are barred by sovereign immunity and the express provisions of 38 U.S.C. § 511(a). Federal Law Preempts Court Orders Modifying the Secretary's Appointment, Supervision or Removal of a Federal Fiduciary The Supremacy Clause of the U.S. Constitution provides that Federal law "shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding." U.S. Const., Art. VI, cl. 2. "Under this principle, Congress has the power to preempt state law." Arizona v. United States, 132 S. Ct. 2492, 2500 (2012); See Dow Chem. Co. v. Exxon Corp., 139 F.3d 1470, 1473 (Fed. Cir. 1998) ("Pursuant to the Supremacy Clause, state causes of action are preempted if they stand as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress in enacting a statute." (internal quotation marks and citation omitted)). Preemption of state law may be inferred from" a framework of regulation 'so pervasive ... that Congress left room for the States to supplement it' or where a 'federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject."' Arizona, 132 S. Ct. at 2501 (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218,230 (1947)). The Supreme Court of the United States has recognized that Federal law affecting veterans' benefits will preempt state laws that impede the objectives of Federal legislation, even in areas of traditional state concern. See United States v. Oregon, 366 U.S. 643 (1961) (preempting state inheritance laws regarding veterans property rights); Ridgway v. Ridgway, 454 U.S. 46 (1981) Case 3:16-cv-01034-ADC Document 46-1 Filed 06/28/17 Page 5 of 11 Santiago Villanueva-Hernandez et al v. Veterans Administration. Civil No. 15-2601(CCC) Page 6 (preventing state divorce court from creating constructive trust on proceeds of a U.S. Army sergeant's life insurance). The Secretary of Veterans Affairs has broad authority granted by Congress over matters regarding the provision of veterans' benefits. Title 38, § 511(a) of the United States Code provides as follows: (a) The Secretary [of Veterans Affairs] shall decide all questions of law and fact necessary to a decision by the Secretary under a law that affects the provision of benefits by the Secretary to veterans or the dependents or survivors of veterans. Subject to subsection (b), the decision of the Secretary as to any question shall be final and conclusive and may not be reviewed by any other official or by any court, whether by an action in the nature of mandamus or otherwise. (Emphasis added). Subsection (b) provides that the second sentence of (a) shall not apply to matters subject to § 502 of Title 381 (Administrative Procedure Act review of rules and regulations in Federal District Court), matters covered by §§ 1975 and 1984 of Title 38 (district court review of insurance claims and suits on insurance claims), matters arising under Chapter 37 of Title 38 (which relates to housing and small business loans), and finally matters covered by Chapter 72 of Title 38 (which creates the United States Court of Appeals for Veterans Claims). Before the creation of the United States Court of Appeals for Veterans Claims, the Department of Veterans Affairs determinations were insulated from judicial review. Gardner v. Brown, 5 F.3d 1456, 1463 (Fed. Cir. 1993), affd, 513 U.S. 115 (1994). However, now decisions of the Secretary are subject to review by the Board of Veterans' Appeals, 38 U.S.C. § 7104, and 1 In these instances actions are to be filed only in the U.S. Court of Appeals for the Federal Circuit, and not in District Court. (See 38 U.S.C. § 502.) Case 3:16-cv-01034-ADC Document 46-1 Filed 06/28/17 Page 6 of 11 Santiago Villanueva-Hernandez et al v. Veterans Administration. Civil No. 15-2601(CCC) Page 7 subsequently by the independent, Article I United States Court of Appeals of Veterans Claims, 38 U.S.C. § 7252(a). See Freeman v. Shinseki, 24 Vet. App. 404, 415-16 (2011) (providing that Secretary's decision to appoint a fiduciary is subject to review in the Court of Appeals for Veterans Claims because it affects the provision of benefits under 38 U.S.C. §§ 511(a), 5502(a) and 7104). Final decisions of the Court of Appeals for Veterans Claims are appealable to the United States Court of Appeals for the Federal Circuit. 38 U.S.C. § 7292. All other court’s lack jurisdiction to review or supersede the Secretary's authority in matters involving the provision of veterans’ benefits. See Weaver v. United States, 98 F.3d 518, 519-20 (10th Cir. 1996); see also Zuspann v. Brown, 60 F.3d 1156, 1159 (5th Cir. 1995). VA Fiduciary Benefits Process The determination of who should be the payee of VA benefits for an incapacitated veteran is clearly governed by Federal law as set forth in 38 U.S.C. § 5502(a) and 38 C.F.R. Part 13. Congress has granted the Secretary wide latitude in making decisions with respect to the selection of payees, or fiduciaries, to receive benefits on behalf of veterans and in the supervision of how funds are to be managed by the payees selected. Section 5502 provides as follows: Where it appears to the Secretary that the interest of the beneficiary would be served thereby, payment of benefits under any law administered by the Secretary may be made directly to the beneficiary or to a relative or some other fiduciary for the use and benefit of the beneficiary, regardless of any legal disability on the part of the beneficiary.... 38 D.S.C. § 5502(a)(l). The statute also provides the Secretary with authority for supervising fiduciaries: Case 3:16-cv-01034-ADC Document 46-1 Filed 06/28/17 Page 7 of 11 Santiago Villanueva-Hernandez et al v. Veterans Administration. Civil No. 15-2601(CCC) Page 8 Whenever it appears that any fiduciary, in the opinion of the Secretary, is not properly executing or has not properly executed the duties of the trust of such fiduciary or has collected or paid, or is attempting to collect or pay, fees, commissions, or allowances that are inequitable or in excess of those allowed by law for the duties performed or expenses incurred, or has failed to make such payments as may be necessary for the benefit of the ward or the dependents of the ward, then the Secretary may appear, by the Secretary's authorized attorney, in the court which has appointed such fiduciary, or appellate jurisdiction over said cause, and make proper presentation of such matters....The Secretary may appear or intervene by the Secretary's duly authorized attorney in any court as an interested party in any litigation instituted by the Secretary or otherwise, directly affecting money paid to such fiduciary under this section. Id. Section 5502(b). When the program was first created in the 1920s, the only way for the VA to appoint a fiduciary to receive benefits for an incompetent beneficiary was to appear in state probate court to have a guardian appointed for the beneficiary. Congress amended the statute in 1974 to authorize the VA to make payments to a fiduciary other than a state appointed guardian. Pub. L. 93-295, Section 301, 88 Stat. 180, 183 84 (1974). Whether the fiduciary is appointed by the state or by the VA, the VA has the authority and responsibility to supervise the fiduciary and to take action if the VA believes that the fiduciary is acting improperly. See 38 U.S.C. Section 5502(b); 38 C.F.R. Section 13.100. There is no waiver of sovereign immunity that would allow the courts to dictate the benefit payee selected by the Secretary. Guardianship & Conservatorship of Blunt, 358 F.Supp.2d 882, 888 n. 4 (D.N.D, 2005). The Secretary's decision regarding the appointment of a fiduciary falls under 38 U.S.C. § 511 and thus is appealable to the Board of Veterans' Appeals and subsequently Case 3:16-cv-01034-ADC Document 46-1 Filed 06/28/17 Page 8 of 11 Santiago Villanueva-Hernandez et al v. Veterans Administration. Civil No. 15-2601(CCC) Page 9 to the U.S. Court of Appeals for Veterans Claims and the Federal Circuit. See Olson v. United States, 2012 WL 5411542 (N.D. Ind. Nov. 6, 2012). In Olson, Congress created a specific procedure for judicial review for veteran's claims disputing a VA benefits decision, under 38 U.S.C. § 511, the Secretary of Veterans Affairs has exclusive jurisdiction over decisions regarding a veteran's benefits, subject to a review process outlined in 38 U.S.C. Sections 7251-7299. (See Olson, at *2. Cf Guardianship and Conservatorship of Blunt, 358 F.Supp.2d 890-91). It is clear from the above that the U.S. District Courts lack jurisdiction at its own instigation or the request of any third party to interfere with the appointment of a fiduciary for the VA benefits by the VA, or to dictate where VA benefits should be applied. The VA may choose to make payments to a fiduciary, appointed and primarily supervised by a court, with the VA exercising secondary supervision over funds paid to the fiduciary. 38 C.F.R. §§ 13.59(a), Or, in its discretion it may appoint a federal fiduciary (legal custodian, custodian-in-fact, etc.) See 38 U.S.C. § 5502(a); 38 C.F.R. § 13.55. The VA has the full authority to supervise the management of veterans' benefit money paid to the fiduciary. 38 U.S.C. § 5502; 38 C.F.R. §§ 13.2, 13.58(b), 13.102, 13.103. In this case the Plaintiff seeks to superimpose its own choice of fiduciary, direct the turn- over of VA benefits, and assert requirements on the VA selected fiduciary which interfere with and contradict the appointment and fiduciary agreements set forth by the VA. The doctrine of supremacy does not permit such an approach. Because Plaintiff seeks to modify DVA’s fiduciary decision and the disbursement and management of federal funds, this Court lacks subject matter jurisdiction to entertain this case. Case 3:16-cv-01034-ADC Document 46-1 Filed 06/28/17 Page 9 of 11 Santiago Villanueva-Hernandez et al v. Veterans Administration. Civil No. 15-2601(CCC) Page 10 Plaintiff’s contortion as it relates to the federal fiduciary and federal benefits impermissibly intrudes on the discretion of the Secretary under the authority granted him by Congress to designate, supervise and remove a federal fiduciary. There has been no waiver of sovereign immunity that would subject the Secretary to such an action in the Courts or against the federally appointed fiduciary as to federal funds. CONCLUSION This Honorable Court lacks subject matter jurisdiction to interfere with the VA appointment or removal of a fiduciary and to order DVA benefit payments turned over to a Court appointed guardian or conservator. Plaintiff’s complaint is subject to dismissal. WHEREFORE, in view of the above, the Secretary of Veterans Affairs requests that Plaintiff’s Complaint be dismissed with costs and attorneys fees taxed to Plaintiff. I HEREBY CERTIFY, that on this date a true copy of the foregoing Notice of Removal and related documentation has been mailed to Atty Yassmin Gonzalez-Velez, Gonzales Velez Law Offices, PMB 131 La Cumbre 273 Sierra Morena, San Juan, PR 00926 and Fredeswin Perez- Caballero, Perez-Caballero Law Office, PO Box 723, Caguas, PR 00726-0723. RESPECTFULLY SUBMITTED in San Juan, Puerto Rico, this 28th day of June, 2017. ROSA EMILIA RODRÍGUEZ VÉLEZ United States Attorney Case 3:16-cv-01034-ADC Document 46-1 Filed 06/28/17 Page 10 of 11 Santiago Villanueva-Hernandez et al v. Veterans Administration. Civil No. 15-2601(CCC) Page 11 S/Fidel A. Sevillano-Del Río FIDEL A. SEVILLANO-DEL RIO Assistant U.S. Attorney U.S.D.C.-P.R. 117812 Torre Chardón, Suite 1201 350 Carlos Chardón St. San Juan, Puerto Rico 00918 Tel. (787) 766-5656 Fax (787) 766-6219 E-mail fidel.sevillano@usdoj.gov Case 3:16-cv-01034-ADC Document 46-1 Filed 06/28/17 Page 11 of 11