Federal Appeal Decision Finds for
Vets in Landmark Breach of Contract
Suit

Feb 12, 2001
Dave Eberhart
Stars and Stripes Veterans Affairs Editor 

William O. Schism and Robert L. Reinlie, retired veterans over 65 years of age, each had more than 20 years of active military service. They entered the military in 1943 and 1942 and retired in 1979 and 1968, respectively. 

After years of participation in the military health care system as retirees, both men, at 65, found themselves--like all their contemporaries--forced to depend on Medicare for their health care. They both came to believe that the U.S. government had breached a promise to them and their families of health care for life.

On Feb. 8, in a landmark decision hailed by veterans groups nationwide, the Court of Appeals for the Federal Circuit agreed with them.

(The intermediate appellate courts in the federal judicial system are the courts of appeals. Twelve of these courts have jurisdiction over cases from certain geographic areas. The Court of Appeals for the Federal Circuit has national jurisdiction over specific kinds of cases.)

The two veterans in 1996 filed suit for monetary damages in U.S. District Court in Pensacola, Fla., but the judge later denied their petition and ruled that their action was not eligible to be opened up as a class action to other potential claimants. The appellate panel not only remanded the case back to the lower federal court, but also granted summary judgment in favor of the plaintiffs and determined that the case can be expanded to a class-action proceeding. 

The only discretion given the district court judge is to determine the extent of monetary damages owed to the two veterans.

'Monumental' Decision

"The decision represents a monumental legal way station on the way to a class-action suit that may redefine what Uncle Sam owes to its veterans," veterans' advocate Phil Cushman, president of Veterans for Due Process, told The Stars and Stripes Feb. 12. 

The two retirees submitted affidavits from former recruiters and other military officials describing the specific offers made to prospective recruits and service members to persuade them to enlist, re-enlist or continue their military careers until retirement.   One such affidavit from a former military recruiter said: "I specifically remember one incident that has always stood
out in my mind. On an [Inspector General] Inspection in January 1949, [several officers] gave eight recruiters in Denver a talk on the benefits of permanent health care and free medicine that we would be entitled to for the rest of our lives. We were told that we had to consider this as a part of
our pay."

"It is unthinkable that the U.S. Congress would select the World War II and Korean War vets as the group to lose military medical care at age 65," said Day, a retired Air Force colonel who received the Medal of Honor for bravery as a prisoner of war in North Vietnam.  "These are the vets who won World War II and suffered so badly in Korea. Would Congress dare do this with ethnic or minority groups in today's politically correct atmosphere? It is not likely. This breach of contract is pure political discrimination against America's heroes."

'That's discrimination'

"To date," explained Day, "various veterans associations and societies have elected not to sue the government, and have chosen to offer retirees insurance policies like Champus, Tri-Care and subvention.  But thousands of irate retirees and dependents out here who have earned what they were
promised...agree that the lawsuit is the way to go.

"Military retirees are the only federal employees forced into Medicare instead of having a continuing health plan," Day said. "That's discrimination. How are we going to attract loyal and honorable men and women for military careers if government itself is incapable of keeping promises?"

Day said that "an immediate request will be made to certify this case as a class action for these World War II and Korean veterans."

In the 20-page decision on Feb. 8, the appeals court declared:  "Here, the secretaries (of the military departments), acting under congressional authority delegated by 5 U.S.C. 301, made implied-in-fact contracts to provide Schism and Reinlie and their dependents with free, lifetime health
care provided they served for twenty years. This created a contractual
right to that medical care that the passage of 10 U.S.C. 1074(b) and 1076(b) could not divest.  The notion that the federal government could avoid a contractual obligation through subsequent legislation would
conflict with the government's own long-run interest as a reliable contracting partner in the myriad of workaday transactions of its agencies."

The appeals court noted that the U.S. government--named as defendant in the suit--conceded that recruiters made good-faith representations to potential recruits that, upon retirement, they and their dependents would receive free, lifetime medical care. 

"In fact, the record shows that the Army made these promises in its recruiting brochures as recently as the 1990s," the court said.

Recruiters' Promises 

The court quoted from one brochure: "Health care is provided to you and your family members while you are in the Army, and for the rest of your life if you serve a minimum of 20 years of active Federal service to earn your retirement."

In the key language of the decision, the justices said:  "Based on the Secretary of the Navy's letter in 1945, it is apparent that the recruiters made these promises at the direction of the secretaries. In determining whether the government intended to contract, we presume that the secretaries carried out their duties in good faith and in accordance with law when making these promises." 

"Before 1956," the court added, "promises of free, lifetime health care were well within the discretion and power of the secretaries. Funding by Congress of the military's health care system confirmed this broad delegation.  Congressional delegation of authority along with the absence of any contrary statutes or regulations in force at the time the retirees entered military service, gives the promises of free, lifetime health care made by recruiters, under the authority of the secretaries, the force of law and
creates an implied-in-fact contract binding upon the government."

According to Day, participants in the class-action suit must
be:

Honorably retired with 20 or more years of active duty; no break in service on or after June 7, 1956, until retirement. 

At least 65 years of age. 

Receiving Social Security payments. 

Currently on Medicare and paying for Part B coverage.  Day said that military retirees interested in joining the class-action proceeding should contact the litigant group at:
Class Act Group, 32 Beal Parkway SW, Fort Walton Beach,
Fla. 32548-5398 (telephone 850-664-6324 or 5139; fax
850-664-6385 or 1-800-972-6275).

Required documentation includes:

A copy of the retiree's (full) retirement order or Form DD-214; 

A representation agreement, downloadable from website
(see below);

If affordable, a one-time donation of $50 (enlisted) or $100 (officers) payable to George E. Day Escrow Account. 

Day joined the Marine Corps in 1942 and served 30 months in the South Pacific as a noncommissioned officer. He received an appointment as a second lieutenant in the National Guard in 1950. He was called to active duty in the Air Force in 1951 and entered jet pilot training, later serving
two tours in the Far East as a fighter-bomber pilot during the Korean War.

Shot down over North Vietnam on Aug. 26, 1967, Day spent 67 months as a prisoner of war. Earlier, Day was the only POW to escape from prison in the South. He also is credited with living through the first "no-chute" bailout from a burning jet fighter in England in 1955.

The recipient of nearly 70 military decorations and awards, Day is the nation's most highly decorated officer, as well as the most-decorated since Gen. Douglas MacArthur. 

Day is former Florida State Republican Committee member and a former member of the board of directors of the Congressional Medal of Honor Society. In 1984, he was national chairman of Veterans for Reagan. He campaigned for President George H.W. Bush in 1992.

Some Relief Already on Way

Last year, House and Senate armed services committee leaders agreed to include language in the fiscal 2001 defense authorization bill providing lifetime health coverage for Medicare-eligible retirees, family members and survivors.  The agreement established "TRICARE-for-life" as a permanent entitlement as of Oct. 1, 2001. 

Under the provision, TRICARE would serve either as a primary provider or a second-payer supplemental to Medicare. The Defense Department has a year to establish the new program, which would be funded through a new
retiree health care trust fund to become effective on Oct. 1, 2002.

The federal appeals court did not acknowledge the congressional action as mooting the relief sought by Schism and Reinlie.

Class-action lawsuit website: www.classact-lawsuit.com.

Please post your comments below or email David Eberhart
at deberhart@stripes.com.