Nehmer v. US Veterans Administ

Background

The case was settled in 1991 through a consent decree after plaintiffs challenged the Department of Veterans Affairs’ framework for recognizing disabilities related to exposure to dioxin and Agent Orange. The decree requires the VA to automatically reopen certain claims when the agency later recognizes a disease as service-related. The order states that these obligations continue after a veteran’s death.

The VA had favorably readjudicated claims for 1,137 deceased Vietnam War veterans, with total payments of about $63 million. The proposed recipients fell into two groups:

- For 268 veterans, class counsel identified eligible survivors but could not locate them after searches involving public records, commercial databases, social media, private investigators, and phone calls. The opinion noted that advertisements had not apparently been used. - For 869 veterans, class counsel reported that no eligible survivors or open estates remained.

Class counsel asked the court to direct a cy pres award. Cy pres is an equitable method of distributing funds to an alternative recipient when payment to the intended recipients is not possible. The proposed recipient, Legal Services Corporation, would oversee grants to legal-services organizations supporting veterans in areas including housing and employment.

Court’s Analysis

The court held that the consent decree’s default payment sequence is to pay eligible survivors and then the veteran’s estate. For the 268 veterans with apparently eligible but missing survivors, the court found that reasonable efforts to locate them had not yet been exhausted. Because the funds averaged about $55,000 per veteran, the court stated that the search efforts should be repeated and should include placing advertisements.

For the 869 veterans without identified eligible survivors, the court held that the funds should be directed to each veteran’s estate. The supplemental briefing showed that a closed estate can often be reopened, and that reopening may not always be necessary. The opinion also stated that states may provide ways to pay beneficiaries without reopening an estate and abbreviated procedures for distributing funds from small estates.

The court concluded that the consent decree did not authorize a cy pres award, and that no statute or case law supplied that authority. It distinguished this case from securities or consumer class actions involving unclaimed funds because this case is against the United States. The court stated that directing the money to the proposed cy pres recipient would effectively require Congress to appropriate money for that recipient, which a federal court lacks power to do.

Disposition

The plaintiffs’ motion, Docket No. 525, was DENIED. The court stated that the funds must remain available to pay proper claimants and that counsel must continue efforts to locate eligible survivors or make payment through veterans’ estates. The order did not require reopening estates when doing so would be wholly unreasonable.