MILITARY UPDATE
Court of Appeals rehears retiree healthcare case
Military Update focuses on issues affecting pay, benefits and lifestyle of active and retired servicepeople. Its author, Tom Philpott, is a Virginia-based syndicated columnist and freelance writer. He has covered military issues for almost 25 years, including six years as editor of Navy Times. For 17 years he worked as a writer and senior editor for Army Times Publishing Co. Philpott, 49, enlisted in the U.S. Coast Guard in 1973 and served as an information officer from 1974-77.
By Tom Phlipott
It appears that the U.S. Court of Appeals for the Federal Circuit is turning a jaundiced eye on the federal government's attempt to shrug off promises of free lifetime healthcare to a generation of military retirees.
That, at least, was the impression left after a dozen appellate judges reheard oral arguments last week in the six-year-old lawsuit of Schism and Reinlie v. U.S.
With retirees from the World War II and Korean War-eras packing a Washington, D.C., courtroom, and an overflow crowd watching on closed-circuit television, Air Force retiree Col. George "Bud" Day opened his argument with a brief history of military healthcare regulations and promises made to retirees.
Day, 77, wore a gray suit and the Medal of Honor, awarded for his heroism as a prisoner of war in Vietnam. Among 100 retirees seated behind Day was George Wood, 72, of Goldsboro, N.C. He arrived at court three hours early and stood in line for two — after a six-hour bus ride north with fellow retirees.
Attorney Day represents not only William Schism, 81, and Robert Reinlie, 76, both retired Air Force officers, but the Class Act Group, more than 30,000 retirees who have supported the lawsuit with donations. They hope a trial court eventually will designate the lawsuit a class action and award up to $10,000 each to retirees who first entered service before June 7, 1956. That was the date Congress finally defined its healthcare obligation to military retirees as "space-available care."
The money would reimburse older retirees for having to pay Medicare Part B and Medigap insurance premiums since 1995 when TRICARE, the military's managed care program, began. TRICARE forced thousands of elderly beneficiaries to rely on Medicare and ended access to routine care in military medical facilities.
A three-judge panel of the appeals court gave retirees a victory two years ago, with a unanimous ruling that the government had breached its promise of lifetime medical care to retirees. But the government appealed, the ruling was vacated and the appeals court agreed to rehear the case before all 12 judges.
Soon after the argument began, Day was interrupted by Judge Paul Michel who asked him to reconcile recruiter promises of free lifetime care with pre-1956 regulations that restricted retiree care to the availability of hospital beds and staff. Those regulations, Michel said, suggest the promise was always conditional.
Despite the regulations, Day said, retirees routinely received the promised care, until 1995.
Judge Raymond Clevenger then asked if, in delivering unconditional care to retirees for all those years, the government acquiesced to the recruiter promises.
"Exactly right," Day said. Although hospital commanders had regulatory authority to deny such care, in practice retirees only needed an ID card to be seen.
Day argued for the first 15 minutes, and would then get the final 15 for rebuttal. As he sat down the first time, it wasn't possible to tell how the court was leaning. But like the three-judge panel in 2000, the full court quickly pounced on Justice Department attorney E. Roy Hawkens, who urged rejection of the retirees' appeal. Not only was there no statutory basis for the promise of lifetime health care but service regulations conflicted with the same recruiter promises, he said. The expectation of care, without a statutory basis, is not enforceable.
Hawkens cited the Anti-Deficiency Act, which states that an employee cannot obligate the government for money or services unless authorized by law to do so.
"But isn't that, in fact, what happened?" Clevenger asked. For years, the military did provide care to retirees based on their expectations.
"Congressional intent is the touchstone for deciding this case," Hawkens countered.
But there was a promise and it was accepted, said Clevenger. "And the only missing element is the authorization, right?"
Michel pressed Hawkens on whether recruiter promises, made in good faith, should have no effect on the government's obligation to provide benefits.
"That's correct, your honor." Hawkens said. This drew snickers and bitter laughs from the courtroom of retirees.
Judge Arthur Gajarsa suggested Congress acquiesced to the promise of free lifetime healthcare for retirees by paying for such care for decades.
But Hawkens said any such acquiescence was "a conditional privilege," which Congress could nullify when space became less available under TRICARE.
"You're saying we have 50 years — 150 years — of nullity?" asked Judge Pauline Newman, one of the judges who had ruled in favor of retirees in 2000.
"No, Congress did," Hawkens said.
Supreme Court case law, Michel said, does allow exceptions to employees committing the government to obligations not backed by statute.
"If that exists," he said, "why isn't this a perfect case to apply it?"
Hawkens pointed again to regulations that specifically limited healthcare obligations to retirees. The government must protect the appropriations process, keeping it the responsibility of Congress, not of recruiters or even the president. Hawkens also noted that new TRICARE for Life benefits give elderly retirees most of what they seek in the lawsuit, but also show that only Congress has such authority.
As the hour ended, Chief Judge H. Robert Mayer said his final remark "has nothing to do with the case." But looking at Day, he said, "on behalf of everyone in the room, we salute you for your service."
With that, retirees stood and applauded. Wood, the retired chief master sergeant from North Carolina, had promised to assess the arguments he heard. He did so now, as the applause fell away.
"Colonel Day hit a home run," he said. "No doubt in my mind."
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