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Helman v. Department of Veterans Affairs

United States Court of Appeals, Federal Circuit

May 9, 2017

SHARON M. HELMAN, Petitioner
v.
DEPARTMENT OF VETERANS AFFAIRS, Respondent
v.
VETERANS OF FOREIGN WARS, AMVETS, IRAQ AND AFGHANISTAN VETERANS OF AMERICA, NATIONAL ASSOCIATION FOR UNIFORMED SERVICES, RESERVE OFFICERS ASSOCIATION, NON-COMMISSIONED OFFICERS ASSOCIATION, MARINE CORPS LEAGUE, ARMY RESERVE ASSOCIATION, MARINE CORPS RESERVE ASSOCIATION, U.S. ARMY WARRANT OFFICERS ASSOCIATION, SPECIAL FORCES ASSOCIATION, JEWISH WAR VETERANS OF THE UNITED STATES, Intervenors

         Petition for review of the Merit Systems Protection Board in No. DE-0707-15-0091-J-1.

          Eric Richard Nitz, MoloLamken LLP, Washington, DC, argued for petitioner. Also represented by ROBERT Kelsey Kry, Jeffrey A. Lamken; Debra Lynn Roth, James Philip Garay Heelan, Julia Helen Perkins, Shaw, Bransford & Roth P.C., Washington, DC.

          Mark R. Freeman, Appellate Staff, Civil Division, United States Department of Justice, Washington, DC, argued for respondent. Also represented by Mark B. Stern; Hillary Stern, Benjamin C. Mizer, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington DC; HANSEL JAIDEV CORDEIRO, Office of General Counsel, United States Department of Veterans Affairs, Washington, DC.

          Michael T. Morley, Coolidge-Reagan Foundation, Washington, DC, argued for intervenors. Before Prost, Chief Judge, Clevenger and Chen, Circuit Judges.

          Prost, Chief Judge.

         Sharon M. Helman, the former Director of the Phoenix Veterans Affairs Health Care System, appeals a decision of the Merit Systems Protection Board ("MSPB" or "Board"). The Deputy Secretary of the Department of Veterans Affairs ("DVA") removed Ms. Helman from her position under 38 U.S.C. § 713, and a MSPB administrative judge subsequently affirmed her removal. Ms. Helman sought review from the full Board. Citing § 713(e)(2), the Board refused to take any further action on Ms. Helman's appeal. Ms. Helman timely petitioned for our review of the constitutionality of the statute governing her removal and the process afforded to her under that statute.

         We conclude that by prohibiting Board review under § 713(e)(2), Congress vests significant authority in an administrative judge in violation of the Appointments Clause. We also conclude that § 713(e)(2) and two related portions of § 713(e) are severable and, thus, the proper remedy for the constitutional flaw in § 713 is to sever those portions of the statute and leave the remainder of the statute intact. We remand for the MSPB to take appropriate action on Ms. Helman's petition for review of the administrative judge's initial decision.

         Background

         I

         In 2014, Congress began investigating reports that senior executives in the DVA had manipulated hospital performance metrics by maintaining secret wait lists of veterans who needed care. Dissatisfied with the pace of the DVA's disciplinary efforts, legislators proposed a variety of reforms, including measures designed to make it easier for the Secretary of Veterans Affairs to remove or demote senior executives in the agency for poor performance. These proposals culminated in the enactment of § 707 of the Veterans Access, Choice, and Accountability Act, which sets forth new rules for the removal or transfer of DVA Senior Executive Service employees. Veterans Access, Choice, and Accountability Act of 2014, Pub. L. No. 113-146, § 707, 128 Stat. 1754, 1798 (2014) (codified in relevant part at 38 U.S.C. § 713) ("Veterans Access Act").

         Prior to the enactment of the Veterans Access Act, senior executives at the DVA could only be removed according to the removal scheme established by the Civil Service Reform Act of 1978, 5 U.S.C. § 1101 et seq. See id. §§ 7541-43. Under Title 5, the DVA is limited to taking an adverse action against a senior executive only "for misconduct, neglect of duty, malfeasance, or failure to accept a directed reassignment or to accompany a position in a transfer of function." Id. § 7543(a). The executive against whom such an action is taken is entitled to appeal to the MSPB, id. § 7543(d), to a hearing, id. § 7701(a)(1), and to be represented by an attorney, id. § 7701(a)(2), among other rights. Upon receiving the case, "[t]he Board may hear any case appealed to it or may refer the case to an administrative law judge ... or other employee of the Board designated by the Board to hear such cases." Id. § 7701(b)(1). These employees of the Board are called administrative judges. See 5 C.F.R. § 1201.4 (defining the term "judge" to include such employees). In practice, the Board refers most, if not all, of its cases to administrative judges. See MSPB, Judge's Handbook 10 (2007). According to MSPB policy, the administrative judge will adjudicate the appeal and render an initial decision within 120 days. Id. at 1. The executive then has thirty days to petition the Board to review the initial decision. 5 U.S.C. § 7701(e)(1). Once the Board issues a final decision, the executive may then file a petition for review of the final decision in this court. Id. § 7703.

         As part of the Veterans Access Act, Congress created a new executive removal scheme, codified at 38 U.S.C. § 713, to make it easier for the DVA to remove or demote its senior executives. At a high level, § 713 differs from the removal provisions of Title 5 in two respects: (1) it creates a process for the removal or transfer of senior executives by the Secretary for poor performance with limited executive protections, 38 U.S.C. § 713(a)-(d)(1), (f)-(g); and (2) it creates a process for an expedited MSPB review of a removal or transfer carried out under the statute, id. § 713(d)(2)-(e).

         First, with respect to the removal and transfer process, § 713 provides the Secretary with broader authority to remove or transfer a senior executive if "the performance or misconduct of the individual warrants such removal." Id. § 713(a)(1) (emphasis added).[1] A senior executive removed or transferred under § 713 is not entitled to the thirty-day written notice requirement or the seven-day response period that are provided under Title 5. Id. § 713(d)(1). Section 713 eliminates the moratorium on removals and transfers within 120 days of the appointment of a new agency head or, in some circumstances, the employee's most immediate supervisor. Id. § 713(f)(2). Executives transferred under § 713 may only receive the annual rate of pay applicable to their new position, id. § 713(b)(1), whereas Title 5 allows the individual to receive the highest of various basic rates of pay, 5 U.S.C. § 3594(c)(1)(B)(i)-(iii). Finally, § 713 prohibits placing executives on administrative leave. 38 U.S.C. § 713(b)(2).

         Second, with respect to the MSPB appeal process, § 713 creates an accelerated timeline for appeals to the MSPB and shortens the MSPB appeals themselves. For example, where Title 5 provides thirty days to appeal an adverse action to the MSPB, 5 C.F.R. § 1201.22(b)(1), § 713 only provides seven, 38 U.S.C. § 713(d)(2)(B). Section 713 also requires the MSPB, pursuant to 5 U.S.C. § 7701(b)(1), to refer all appeals to an administrative judge who "shall issue a decision not later than 21 days after the date of the appeal." 38 U.S.C. § 713(e)(1). Additionally, the removal or transfer may not be stayed during the appeal to the administrative judge, id. § 713(e)(4), and the Secretary and the Board must ensure that the appeal is expedited, id. § 713(e)(6); see also Veterans Access Act § 707(b)(1), (3), 128 Stat, at 1754, 1800 (requiring the Board to promulgate rules for the processing of expedited appeals under § 713 and authorizing the Board to waive any regulation as necessary for that purpose). Section 713 denies senior executives any type of pay, bonus, or benefit during their appeals. 38 U.S.C. § 713(e)(5). In contrast to Title 5, administrative judges' decisions under § 713 are final and Board or judicial review is prohibited. Id. § 713(e)(2) ("Notwithstanding any other provision of law, including section 7703 of title 5, the decision of an administrative judge . . . shall be final and shall not be subject to any further appeal.").

         II

         Ms. Helman was the Director of the Phoenix Veterans Affairs Health Care System, which is operated by the DVA. On November 10, 2014, Deputy Secretary Gibson notified Ms. Helman in writing of a pending action to remove her from federal service pursuant to § 707 (codified at 38 U.S.C. § 713). The Deputy Secretary identified a number of charges of "misconduct that warrant[ed] removal from federal service." J.A. 90-93. The charges included: lack of oversight, conduct unbecoming a senior executive, and failure to report gifts. Ms. Helman had "five business days after receipt of th[e] notice to submit a written response showing why the charges [we]re unfounded and any other reasons why [her] removal should not be effected." J.A. 94. She timely responded through counsel. On November 24, 2014, Deputy Secretary Gibson notified Ms. Helman that, after "carefully consider[ing] [he]r written reply and the evidence, " he had "decided to remove [her] from federal service effective immediately." J.A. 112-14.

         Ms. Helman appealed her removal to the MSPB. Within the 21-day period required by § 713(e)(1), the designated administrative judge reviewed the parties' arguments and evidence and issued a written decision analyzing each charge and specification. The administrative judge declined to sustain the charge of lack of oversight, but found that the agency had proved the remaining charges. The administrative judge also discussed and rejected each of Ms. Helman's affirmative defenses, including her contention that her removal violated her constitutional right to due process. Ms. Helman sought an extension of time to appeal the administrative judge's decision to the full Board. The Clerk of the Board, citing the finality of the administrative judge's decision under § 713(e)(2), indicated that the MSPB would take no further action on her appeal. Ms. Helman subsequently filed this petition for review.

         Veterans of Foreign Wars et al. moved this court for permission to intervene, or at a minimum, to participate as amici curiae in this appeal.[2] Ms. Helman and the government both opposed the motion to intervene but did not oppose allowing participation as amici. This court, concluding that intervention was warranted in the unique circumstances of this case, granted the motion to intervene and allowed for supplemental briefing.

         Discussion

         We generally have jurisdiction over appeals of a final decision of the MSPB under 28 U.S.C. § 1295(a)(9), pursuant to 5 U.S.C. § 7703(b)(1). Ms. Helman and the government agree that Ms. Helman properly seeks review in this court of a "final order or decision of the Board" within the meaning of § 7703(b)(1)(A) and that § 713(e)(2) cannot preclude judicial review of Ms. Helman's constitutional claims. Intervenors maintain, however, that this court does not have jurisdiction-not even to review Ms. Helman's constitutional claims-because of the language of § 713(e)(2). See 38 U.S.C. § 713(e)(2) ("the decision of an administrative judge . . . shall be final and shall not be subject to any further appeal"). We have considered the Intervenors' arguments and find them to be unpersuasive.

         The Supreme Court has consistently declined to interpret provisions like § 713(e)(2) to preclude judicial review of colorable constitutional claims. See Webster v. Doe, 486 U.S. 592, 603 (1988); Johnson v. Robison, 415 U.S. 361 (1974). The Court has explained that "where Congress intends to preclude judicial review of constitutional claims its intent to do so must be clear." Webster, 486 U.S. at 603. Here, while Congress intended to prohibit judicial review of the merits of MSPB administrative judges' decisions, nothing in the statute or its legislative history indicates that Congress intended to take the additional step of precluding judicial review of constitutional questions. Accordingly, we have jurisdiction over Ms. Helman's constitutional claims under 28 U.S.C. § 1295(a)(9), pursuant to 5 U.S.C. § 7703(b)(1).

         I

         Ms. Helman asks this court to review the constitutionality of 38 U.S.C. §713. In particular, she contends that § 713 violates the Appointments Clause because it impermissibly "vest[s] in an administrative judge-a mere employee and career civil servant-unreviewed discretion to implement or overturn the decision of a cabinet-level official." Pet'r's Br. 1. Ms. Helman argues in the alternative that the administrative judges' exercise of this authority violates the separation of powers required by the Constitution. The alternative argument is based on Ms. Helman's contention that the administrative judge is insulated by multiple layers of for-cause removal restrictions, in violation of Free Enterprise Fund v. Public Co. Accounting Oversight Board, 561 U.S. 477 (2010). The government, for its part, agrees with Ms. Helman that such "final and unreviewable discretion" is "significant authority [that] can only be exercised by a properly appointed Officer of the United States." Resp't's Br. 19. The government agrees with Ms. Helman that an MSPB administrative judge is not appointed as an officer of the United States. Thus, the government concedes, § 713 is "inconsistent with the Appointments Clause" to the extent that it vests a federal employee with the authority to render final, unreviewable decisions. Id. The government points out, correctly, that Ms. Helman's alternative separation of powers argument is moot in this appeal if we find a violation of the Appointments Clause.

         Intervenors, in contrast, argue that § 713 is constitutional. First, Intervenors contend that MSPB administrative judges are not officers of the United States because they do not "exercise[] a 'portion of the sovereign authority of the federal Government.'" Intervenors' Br. 12. Rather, Intervenors maintain, MSPB administrative judges only "review certain employees' terminations" and that "does not implicate the Government's sovereign authority to punish, regulate, license, or otherwise execute or enforce federal law against the public." Id. at 13. Second, Intervenors argue that § 713 does not confer "significant authority" upon administrative judges because "[t]he authority to make decisions relating to an extremely small group of people, under exceedingly rare circumstances, concerning a narrow range of employment-related issues can hardly be deemed 'significant authority.'" Id. Finally, Intervenors maintain that, even if MSPB administrative judges are inferior officers, their appointment is constitutionally valid because (1) "department heads [are] able to delegate their authority to appoint inferior officers, " or (2) "MSPB cured any constitutional defects in [the administrative judge's] appointment by implicitly ratifying it over the course of his employment throughout the past nine years." Id. at 14.

         The parties also suggest varying remedies to the alleged constitutional flaw in § 713. The government argues that because "[t]he core of the constitutional defect in [§] 713 is the provision that renders the decision of the administrative judge final and unreviewable by the Board, " Resp't's Br. 40, this court need only sever that provision and "two related portions of [§] 713(e) whose operation is expressly keyed to the finality of the administrative judge's decision, " id. at 42. Ms. Helman contends that § 713 must be invalidated in its entirety because severance "would produce a statute that Congress would not have enacted, rewrites a congressional compromise, and directly contravenes Congress's goals." Pet'r's Reply Br. 2. Intervenors argue, if we are to find a portion of § 713 unconstitutional, that the best course of action is to "invalidate the MSPB's delegation of its authority to hire AJs and give the MSPB an opportunity to directly appoint, or ratify the appointment of, [the administrative judge who presided over Ms. Helman's hearing]." Id. at 13-14 (internal citation omitted).

         In order to address the constitutionality of § 713, we first identify the constitutional flaw, if any, in the statute. With respect to this question, we agree with Ms. Helman and the government and conclude that by prohibiting Board review, Congress vests significant authority in an administrative judge in violation of the Appointments Clause. We carefully considered the Intervenors' arguments on this point but find them to be unpersuasive. Second, upon identifying the portions of the statute that are indeed unconstitutional, we determine whether those invalid portions are severable from the remainder of the statute. In addressing this question, we agree with the government that the problematic portions of the statute are severable and, thus, the proper remedy to the constitutional flaw in § 713 is to sever those portions of the statute and leave the remainder intact. We carefully considered the Intervenors' remedial arguments but find them to be unpersuasive. Finally, once we conclude that the invalid portions of the statute are ...


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