895 F.3d 432
6th Cir.2018Background
- Jerry West, a Vietnam veteran, applied for VA disability benefits in June 2013; the VA determined eligibility on Nov. 26, 2013, and West died two days later.
- The VA issued an $8,660 retroactive pension check to West; West’s ex-wife (appointed executor) deposited the check into the Estate’s escrow account.
- The VA later determined the Estate was not entitled to the benefits under 38 U.S.C. § 5121(a) and directed the bank to return the funds to the U.S. Treasury via the Treasury’s reclamation authority; the bank wired the funds without advance notice to the Estate.
- The Estate sought recovery in Kentucky probate court; the probate court ordered return of funds; the government removed to federal district court under 28 U.S.C. § 1442(a).
- The district court remanded to probate court under the probate-exception; the government appealed and the Sixth Circuit reversed and dismissed for lack of subject-matter jurisdiction under the Veterans’ Judicial Review Act (38 U.S.C. § 511(a)).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Secretary's benefits determination is reviewable only under the Veterans' Judicial Review Act (VJRA) such that federal and state courts lack jurisdiction | Estate: probate court (and district court after removal) can adjudicate the Estate's entitlement to the $8,660 | Government: VJRA exclusively channels review of VA benefit determinations to VA/Article I and Federal Circuit procedures; other courts lack jurisdiction | Held: VJRA § 511(a) divests state and district courts of jurisdiction; case dismissed for lack of subject-matter jurisdiction rather than remanded |
| Whether the government's seizure of the Estate's bank funds via Treasury "reclamation" violated the Fifth Amendment due process requirement | Estate: seizure without advance notice or hearing deprived the Estate of property without due process | Government: (implicit) reclamation authority permits recovery; argued issue waived or not properly presented | Held: Court declined to decide on the undeveloped record but signaled serious due-process concerns and allowed Estate to raise the claim in future litigation |
Key Cases Cited
- Marshall v. Marshall, 547 U.S. 293 (2006) (describing the probate exception and avoiding federal adjudication over the same res)
- Beamon v. Brown, 125 F.3d 965 (6th Cir. 1997) (VA benefit determinations are subject to the Review Act’s exclusive review scheme)
- Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532 (1985) (procedural due process requires constitutionally adequate procedures before deprivation of property)
- Barnhill v. Johnson, 503 U.S. 393 (1992) (recognizing property interests in bank account funds)
- Evans v. Greenfield Banking Co., 774 F.3d 1117 (7th Cir. 2014) (affirming dismissal where state court lacked jurisdiction under the Review Act)
- Int'l Primate Prot. League v. Admins. of Tulane Educ. Fund, 500 U.S. 72 (1991) (statutory command to remand under § 1447(c) and caution about futility exceptions)