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STUART F. DELERY Acting Assistant Attorney General

ANDRE BIROTTE JR. United States Attorney LEON W. WEIDMAN Chief, Civil Division ALARICE M. MEDRANO (SBN 166730) Assistant United States Attorney Room 7516 Federal Building 300 North Los Angeles Street Los Angeles, CA 90012 Telephone: (213) 894-0460 Facsimile: (213) 894-7819 E-mail: Alarice.Medrano@usdoj.gov Attorneys for Defendants

JUDRY L. SUBAR Assistant Branch Director ELISABETH LAYTON Senior Counsel KAREN S. BLOOM Trial Attorney U.S. Department of Justice Civil Division Federal Programs Branch 20 Massachusetts Ave., N.W. Washington, DC 20001 T: (202) 514-3183; F: (202) 616-8470 Email: Elisabeth.Layton@usdoj.gov

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

GREGORY VALENTINI, et al., Plaintiffs, vs. ERIC SHINSEKI, et al., Defendants.

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Case No.: 11-CV-04846 SJO (MRW) DEFENDANTS REPLY MEMORANDUM IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT [NO HEARING DATE SET] [Before the Honorable S. James Otero]

Case No. 11-cv-04846

Reply Memorandum In Support Of Defendants Motion for Summary Judgment

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Plaintiffs have defined the focus of the one claim remaining in this case as the meaning of the term health-care resources as used in 38 U.S.C. 81518153. In other words, although Plaintiffs initially alleged that United States Department of Veterans Affairs (VA) decisions to enter into those land-use agreements at VAs West Los Angeles (WLA) campus that are included in the Administrative Record (AR ) (ECF No. 96, 98, 112), all violated the Administrative Procedure Act, 5 U.S.C. 706(2)(A) and (C), Plaintiffs are now abandoning that claim in part. Specifically, Plaintiffs have moved for summary judgment based solely on their allegation that VA exceeded its statutory authority by interpreting health-care resources to include property belonging to the WLA medical center run by the Veterans Health Administration (VHA). See Pls. Oppn to Defs. Mem. Summ. J., 1 May 10, 2013, ECF No. 125(PODMSJ). For the reasons set forth below and in Defendants Memorandum In Support Of Summary Judgment (DMSJ) and Opposition To Plaintiffs Motion for Summary Judgment (DOPMSJ),1 summary judgment should be granted in Defendants favor.2 Defendants incorporate by reference all arguments made in their motion for summary judgment and opposition to plaintiffs motion for summary judgment. See Defs. Mem. Summ. J., April 10, 2013, ECF No. 116 (DMSJ) and Defs. Oppn to Pls. Mot. for Summ. J., June 12, 2013, ECF No. 127 (DOPMSJ). It appears quite clear from their papers that Plaintiffs are not raising any other legal arguments. Plaintiffs choice to challenge some but not all of the ESAs encompassed in the AR, even though all of these ESAs reflect VAs challenged interpretation of health-care resources, suggests that Plaintiffs might also want this Court to second-guess the policy decisions of the VA Secretary as to which agreements are in the best interest of the VA medical program. See DOPMSJ 1317. Of course, the Court would lack jurisdiction to do so. See DMSJ 3-11. Indeed, Plaintiffs appear to acknowledge that these individual decisions about which agreements are in the best interest VAs medical program are appropriately left to the Secretarys discretion. See PODMSJ 8 (the uncontested proposition that the Secretary has discretion to decide whether entering into a particular healthcare resources sharing agreement is in the best interests of the program).
Case No. 11-cv-04846 Memorandum in Opposition to Plaintiffs Motion for Summary Judgment Page 1

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I. VA HAS ACTED WITHIN ITS STATUTORY AUTHORITY IN INTERPRETING HEALTH-CARE RESOURCES, WHETHER THAT INTERPRETATION IS TREATED WITH DEFERENCE OR ONLY WITH RESPECT

Central to the issue now before the Court is the meaning of the term healthcare resource, as used in the statute giving VA authority to share such resources. 38 U.S.C. 8151 - 8153. The scope of the term health-care resources is described in the statute as encompassing health-care support or administrative resource[s], 38 U.S.C. 8152(1); see DOPMSJ 13-17, a phrase that itself is both undefined in the statute and somewhat ambiguous. Therefore, Plaintiffs APA claim cannot be resolved under what has come to be known as step one of Chevron U.S.A., Inc. v. Natl Res. Def. Council, 467 U.S. 837, 842-44 (1984), under which unambiguous statutory terms control. Instead, the Court should look to VAs interpretation of the ESA statute, in order to determine the scope of VAs own authority under 38 U.S.C. 8151-8153. The Supreme Court has recognized that agencies must be accorded Chevron step two deference, see 467 U.S. at 84244 (upholding agency interpretation of ambiguity on statute where agency construction of statute is permissible), in interpreting the scope of their own authority as in other aspects of interpreting statutory ambiguities. See City of Arlington, Tex. FCC , -- S.Ct. --, 2013 WL 2149789 (May 20, 2013) at *5 (describing Chevron step two, but not referring to it in those terms). Here, VA reasonably interpreted the term health-care resources with reference to the totality of the resources available to VHA, to meet the health-care and related needs of Veterans on th approximately 388 acre WLA campus. See DOPMSJ 1317. While VA did not publicize this interpretation either through notice-andcomment rulemaking, or by a decision reached in an adjudication, even Plaintiffs acknowledge that VA was not required to engage in either of these processes. POMSJ 2. As the Government has explained, VA may nevertheless be entitled to

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Chevron deference under Barnhart v. Walton, 535 U.S. 212, 222 (2002), which held that the degree of deference to an agency depends upon factors such as: the interstitial nature of the legal question, the related expertise of the Agency, the importance of the question to administration of the statute, the complexity of [the] administration, and the careful consideration the Agency has given the question over a long period of time. See DMSJ 15-16, DOPMSJ 13-16. But even if VA is afforded only the lesser respect sometimes afforded an agencys internal guidance documents, see United States v. Mead, 533 U.S. 218, 228 (2001); Skidmore v. Swift Co., 323 U.S. 134, 140 (1944), VAs interpretation should be upheld as reasonable for the reasons VA has explained. See DMSJ 12-23; DOPMSJ 13-17. Even if Plaintiffs had offered a coherent alternative interpretation of health-care resources, which they have not, the Court must defer to VAs interpretation if it is permissible under the statute, even if the Court does not believe the agencys interpretation to be the only or best possible interpretation. Holder v. Martinez Gutierrez, 132 S. Ct. 2011, 2017 (2012); Nat'l Cable & Telecomms. Ass'n v. Brand X Internet Servs., 545 U.S. 967, 980 (2005); United States v. Haggar Apparel Co., 526 U.S. 380, 394 (1999). II. CONGRESSIONAL ACQUIESCENCE IN VAS STATUTORY INTERPRETATION FURTHER SUPPORTS VA

Congressional awareness of an agencys longstanding interpretations coupled with the fact that it has not overruled them is at least some evidence of the reasonableness of that construction, particularly where the administrative construction has been brought to Congress attention. United States v. Riverside Bayview Homes, Inc., 474 U.S. 121, 137 (1985). This rule applies here, and supports VAs position.3
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VA is not making a broader argument about congressional acquiescence than this.

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VA has consistently, and candidly, informed Congress annually about its use of its enhanced sharing authority (ESA), pursuant to 38 U.S.C. 8151-8153, and decisions to enter into a variety of agreements each year. See AR 90 - 139. Although these reports are by nature general, since they summarize in the aggregate all sorts of ESAs that VA has entered at VA medical facilities nationwide, VAs annual reports to Congress show that the agency has put Congress on notice that it understands generating revenue to be one of the objectives of using the ESA authority. See, e.g. AR 116.008 (increasing reliance of VISNs and VAMCs to purchase health care resources and to generate revenue by selling services through the health care resources sharing authority). In addition, VA has put Congress on notice of the ways in which it understands its sharing authority to have expanded since it was amended in 1996. See, e.g., AR 116.029 (increasingly, VA facilities are establishing sharing agreements that creatively and fruitfully generate revenue by providing services to sharing partners. VA facilities that have particular resources that are not fully utilized for the care of veterans may share these resources with other community entities and provide resources to patients referred by the sharing partner.). Further, VA has made clear to Congress that the agency understood health-care resource to encompass any VHA-controlled (health-care facility) property (see, e.g., AR 116.005); and indicated that some ESAs made underutilized VHA facilities available to the community. See, e.g., AR 116.005. Thus, VA (and the General Accountability Office, for that matter) has made Congress aware, since at least 2009, that VA has used its health-care sharing authority under 38 U.S.C. 815153, to provide the use of VHA space (including parking, recreational facilities, and vacant land) and that VA has used ESAs to generate financial benefits.4 Indeed, members of U.S. House of Representatives Committee on Veterans Affairs indicated some degree of awareness of at least some of the ESAs at issue. For example, Veterans Affairs Committee members asked VA detailed questions concerning the Brentwood School ESA in correspondence which reflect detailed
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DMSJ 19 n. 28-29 (quotation marks omitted). If members of the Congressional committees (particularly those overseeing VA) had been concerned about these references to what Plaintiffs term commercial leases (some of which are anything but commercial,5 and none of which are leases) being entered pursuant to VAs enhanced sharing authority, Congress could have amended the statute or otherwise precluded VA from continuing to enter such agreements. The fact that VAs statute was not amended to preclude expressly what Plaintiffs say is unlawful supports the proposition that VAs reading of the statute is permissible. Accordingly, summary judgment should be entered for Defendants. Respectfully submitted, Dated: June 12, 2013 STUART F. DELERY Acting Assistant Attorney General ANDRE BIROTTE JR. United States Attorney LEON W. WEIDMAN Chief, Civil Division ALARICE M. MEDRANO Assistant United States Attorney JUDRY L. SUBAR Assistant Branch Director By: /s/ Elisabeth Layton ELISABETH LAYTON Senior Counsel KAREN S. BLOOM knowledge by Committee members about the annual revenue VA expected to receive from this private school as part of an agreement allowing the school to build and operate athletic facilities on the WLA campus. See AR 246.1-246.3; 246.5; 246.18-246.19; 246.22-242.23. See, e.g., AR186-87 (VAs Master Plan for WLA campus); AR 824-860 (ESA for Veterans Memorial Park and healing gardens); AR 877-916 (agreement with soccer clubs for non-exclusive use of MacArthur field).
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Trial Attorney U.S. Department of Justice Civil Division Federal Programs Branch 20 Massachusetts Ave., N.W. Washington, DC 20001 T: (202) 514-3183;F: (202) 616-8470 Email: Elisabeth.Layton@usdoj.gov Attorneys for Defendants

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