James P. McKelvey v. Thomas K. Turnage, Administrator of Veterans' Affairs, and Veterans' Administration

GINSBURG, Circuit Judge,

concurring in part and dissenting in part:

I agree, for the reasons stated in Section II of the per curiam opinion, that we have jurisdiction over this appeal; on the merits, I dissent from the majority’s position that the Rehabilitation Act does not invalidate the challenged application of the “willful misconduct” regulation. Section 504 of the Rehabilitation Act, 29 U.S.C. § 794, prohibits governmental discrimination on the basis of handicap; authoritative regulations establish that alcoholism is a handicap; and solely because McKelvey is an alcoholic, the Veterans’ Administration (VA) refused to consider relevant evidence that McKelvey’s delay in collecting benefits was not attributable to “willful misconduct.” Yet the majority concludes that the VA’s denial of McKelvey’s request for an extension does not violate Section 504 because the VA may simply reclassify alcoholism as “conduct” rather than a “handicap” and thus discriminate on the basis of conduct, not handicap. This view of Section 504 would evade that provision’s proscription, and the majority’s alignment with the VA’s reasoning puts this circuit squarely in conflict with a sister circuit. Tinch v. Walters, 765 F.2d 599 (6th Cir.1985), affirming 573 F.Supp. 346 (E.D.Tenn.1983).1

A. The Rehabilitation Act: Section 504 of the Rehabilitation Act provides in pertinent part: “No otherwise qualified handicapped individual ... shall, solely by reason of his handicap, ... be subjected to discrimination ... under any program or activity conducted by any Executive agency.” To establish discrimination under this *204provision, a plaintiff must demonstrate four elements: (1) he is a “handicapped individual” under the Act; (2) he is “otherwise qualified” for the program of benefits from which he has been excluded; (3) he has been excluded “solely” because of his handicap; and (4) the program from which he has been excluded is subject to Section 504. See, e.g., Doe v. New York University, 666 F.2d 761, 774-75 (2d Cir.1981).

McKelvey has unproblematically established the elements designated (1) and (4) in the above enumeration. As to element (4), the VA regulations themselves list the educational benefits program as one subject to Section 504, see 38 C.F.R. § 18, Appendix A to Subpart D, and defendants do not dispute this point. Regarding element (1), the VA, the Department of Justice, the Department of Health and Human Services (HHS), and apparently the majority are in agreement that McKelvey is a handicapped individual under the Act. After Congress enacted Section 504, the President directed the predecessor of HHS, the Department of Health, Education, and Welfare (HEW), to promulgate regulations that would establish “standards for determining who are handicapped individuals.” He further instructed each subject federal agency to issue “regulations ... consistent with the standards established” by HEW. Executive Order 11914 (April 28,1976). In carrying out this directive, HEW asked the Attorney General of the United States for an opinion whether alcoholics are “handicapped individuals.” After carefully reviewing the legislative history, the Attorney General answered that question in the affirmative. See 43 Op.Att’y Gen. No. 12 at 2 (April 12, 1977). HEW then issued guidelines reflecting this conclusion, see 43 Fed.Reg. 2137 (1978), and the VA, in turn, adopted those guidelines by regulation. See 38 C.F.R. § 18.403(j)(2)(i)(c). In sum, no serious contention exists that alcoholics are not handicapped individuals within the meaning of the Act.

The dispute in this case involves the other two elements of Section 504. Concerning element (2), the VA argues that McKelvey is not “otherwise qualified” for the benefit program in question for, even if it is conceded that his alcoholism rendered him handicapped, he has nonetheless failed to meet the ten-year deadline for use of educational benefits. See Brief for Appellants at 17. This is bootstrap argument. McKelvey’s challenge targets precisely the discriminatory operation of the deadline itself. The VA cannot tenably argue that the deadline scheme escapes inspection for discrimination because McKelvey is not “otherwise qualified” by virtue of the very same deadline implementation he has placed at issue.

In Southeastern Community College v. Davis, 442 U.S. 397, 406, 99 S.Ct. 2361, 2367, 60 L.Ed.2d 980 (1979), the Supreme Court explained what the statutory phrase “otherwise qualified” means. Quoting from an HEW regulation implementing Section 504, 45 C.F.R. § 84.3(k)(3) (1978) — a regulation that the VA has adopted as its own, see 38 C.F.R. § 18.403(k)(3) — the Court observed: “With respect to postsecondary and vocational education services, [an otherwise qualified individual is one] who meets the academic and technical standards requisite to admission or participation in the [school’s] education program or activity.” Id. The Court went on to quote HEW’s explanatory note to the regulation, 45 C.F.R. pt. 84, App. A, at 405: “The term ‘technical standards’ refers to all nonacademic admissions criteria that are essential to participation in the program in question.” 442 U.S. at 406, 99 S.Ct. at 2367.

Plaintiff McKelvey satisfies these requirements. The government does not suggest that McKelvey in any way fails to meet an “academic [or] technical standard requisite to admission or participation.” The ten-year deadline plainly is not an academic standard, nor, according to the above-stated HEW definition, is it a technical one; indeed, it is not an admissions criterion at all, and it surely is not essential to McKelvey’s successful participation in the program.

*205Turning finally to the element earlier set out as (3), see supra at 204, I inquire whether the VA’s “willful misconduct” regulation discriminates against McKelvey “solely” on the basis of his handicap. As the district court explained in its thoughtful opinion, the VA’s regulation automatically brands primary alcoholics as persons guilty of willful misconduct: the VA will not even consider evidence that might prove the branding false, for example, showings that McKelvey began drinking at the age of thirteen and that within his family, the incidence of alcoholism was high. Former alcoholics, in short, cannot gain deadline extensions by presenting facts indicating that they were not guilty of “willful misconduct.” To gain time to use their accrued benefits, they must demonstrate that they were not primary alcoholics. By contrast, all other individuals need show only that they did not engage in “deliberate or intentional wrongdoing with knowledge of or wanton and reckless disregard of its probable consequences.” 38 C.F.R. § 3.1(n)(l). See McKelvey, 596 F.Supp. at 1323.2

The majority maintains, however, that this discrimination occurs on the basis of conduct, not handicap, and that therefore the VA’s view on what constitutes “willful misconduct” need only be reasonable. See maj. op. at 200. Since the VA’s view is reasonable, see id. at 200-02, “it would insult common sense to require the agency to make it repetitiously, by consistently denying nonpsychiatric defenses in individual adjudications instead of precluding them generically, as it has, by rulemaking.” Id. at 203.

The majority nods in its conclusion that the discrimination contained in the “willful misconduct” regulation is based on conduct. As set out earlier, supra at 204, authoritative HEW guidelines, adopted by the VA itself, establish that alcoholism is a handicap. The VA’s discrimination in this case was based on McKelvey’s alcoholism. The VA’s decision therefore discriminated on the basis of handicap. The majority’s position would allow the VA to escape this syllogism by the simple expedient of redenominating alcoholism as conduct. Discrimination on the basis of alcoholism will therefore never be discrimination “solely” on the basis of handicap, because alcoholism is both conduct and a handicap. As a result, under the majority's analysis, the government can never discriminate on the basis of alcoholism unless it explicitly admits that it is discriminating against alcoholics solely because they are handicapped. This mode of analysis effectively nullifies Section 504 coverage of alcoholics.

Similarly, the government argues that the VA’s discrimination rests not “solely” on McKelvey’s handicap but also on the passage of the ten-year delimiting period. See Brief for Appellants at 17. This twice-made argument gains no force through repetition. It fails here for the reason that the same argument failed to prove McKelvey was not “otherwise qualified”: passage of the ten-year period forecloses McKelvey’s use of educational benefits only because the VA has created a time limit that discriminates against primary alcoholics. An agency may not promulgate a regulation that discriminates solely on the basis of handicap and then sensibly argue that because the regulation is an additional basis for the discrimination, the agency does not discriminate solely on the basis of handicap.3

*206B. 38 U.S.C. § 1662(a)(1): The VA’s next argument does not stem from the Rehabilitation Act but from the statute governing veterans benefits time limit extensions: the VA argues that the statutory time prescription, 38 U.S.C. § 1662(a)(1), incorporated the VA’s definition of “willful misconduct.” To uphold McKelvey’s Rehabilitation Act claim, the government therefore contends, we would have to find that Congress’ extension of that Act to the federal government in 1978, see 29 U.S.C. § 794a(a)(2), implicitly repealed section 1662(a)(1), which was passed in 1977. Implicit repeals, however, are disfavored and should be found only when two statutes are irreconcilable. See Morton v. Mancan, 417 U.S. 535, 549-50, 94 S.Ct. 2474, 2482, 41 L.Ed.2d 290 (1974). The VA thus urges us to accept its interpretation of the Rehabilitation Act so as to reconcile the two statutes.

As already explained, supra at 204-05, the VA’s interpretation of the Rehabilitation Act is not persuasive. Nor need one indulge the VA's interpretation in order to “harmonize” the two acts, for there is no necessary conflict between the statutes. Unavoidable conflict arises only if one accepts the VA’s contention that section 1662(a)(1) incorporated into the statute itself the VA’s definition of “willful misconduct” as applied in the context of alcoholism. For McKelvey’s claim to succeed, therefore, we need only invalidate pro tan-to the VA regulation, 38 C.F.R. § 3.301(c)(2), equating alcoholism with “willful misconduct,” as the VA applies that regulation in administering section 1662(a)(1). It would thus be possible to invalidate the regulation but leave section 1662(a)(1) intact.

For the argument that section 1662(a)(1) incorporates or codifies the VA’s definition of “willful misconduct” in its entirety, the VA relies on a passage from the Senate Report accompanying the section. By regulation, the VA had for many years provided for extension of the time limit on benefit utilization in cases of disability not occasioned by “willful misconduct,” and since 1964, the VA had characterized primary alcoholism as “willful misconduct.” See maj. op. at 196-97. Congress passed section 1662(a)(1) in 1977 to provide by statute for time limit extensions in cases of disability not a result of “willful misconduct.” The accompanying Senate Report noted: “In determining whether the disability sustained was the result of the veteran’s own ‘willful misconduct,’ the Committee intends that the same standards be applied as are utilized in determining eligibility for other VA programs under title 38. In this connection, see 38 C.F.R., part III, paragraphs 3.1(n) and 3.301 [the “willful misconduct” regulation], and VA Manual M21-1, section 1404.” S.Rep. No. 468, 95th Cong., 1st Sess. 69-70 (1977).

I do not read this passage, as the VA does, to codify the particular regulations cited in the Senate Report. If Congress had intended to import those specific provisions into the statute, one might have expected Congress simply to transfer to the legislation the very words appearing in the regulations. Instead of reading the Senate Report passage to indicate that Congress meant to freeze by statutory incorporation particular regulatory provisions, I think another interpretation more sensible: Congress, in 1977, envisioned only that the VA would use the “same standards” — whatever those standards might be as contained in the effective regulations at any given time — in granting extensions as in “determining eligibility for other VA programs.” The passage’s reference to particular regulations “[i]n this connection,” I therefore conclude, was intended not to indicate that Congress was codifying those regulations but only to point out as illustrative the standards used at that time in eligibility determinations. Thus, I believe we may and should grant McKelvey’s Rehabilitation Act claim and invalidate the VA’s “willful misconduct” regulation pro tanto— *207as it applies to exclude former alcoholics from educational benefit time limit extensions — without implicitly repealing section 1662(a)(1).4

Congress apparently did alter its perspective in 1978 on whether the “same standards” should be used in granting extensions as in “determining eligibility for other YA programs.” The 1977 Committee Report, as quoted above, seems to be simply adverting to the general principle that like phrases should be read alike in the same statute absent contrary indications. As I will explain, see infra at 208-09, the specific operation of the Rehabilitation Act is such a contrary indication: Section 504 prohibits the VA from applying its definition of willful misconduct to educational benefit time limit extensions but not in other contexts, such as determining eligibility for disability compensation.

In a further attack on the conclusion that the Rehabilitation Act requires a modified reading of the “willful misconduct” regulation, the VA cites legislative “history” that postdates the Act. After the 1978 extension of the Rehabilitation Act to the federal government, the Senate in 1979, 1981,1982, and 1984 passed bills which would have provided explicitly that alcoholism and drug addiction are not “willful misconduct” under section 1662(a)(1). On all four occasions, the bill met defeat in Conference Committee with the House of Representatives. See S.Rep. No. 604, 98th Cong., 2d Sess. 38-39 (1984). The Senate would never have proffered such an amendment to section 1662(a)(1), the VA contends, if the Senate had viewed the Rehabilitation Act, once extended to federal programs, as already altering the VA’s position that primary alcoholism is in every case and for every purpose “willful misconduct.” See Reply Brief for Appellants at 6-7.

As the per curiam opinion recognizes, see maj. op. at 199-200, the legislative activity emphasized by the VA is not a secure base for judicial decision. The Supreme Court has often observed that “the views of a subsequent Congress form a hazardous basis for inferring the intent of an earlier one.” Consumer Product Safety Comm’n v. GTE Sylvania, Inc., 447 U.S. 102, 117, 100 S.Ct. 2051, 2060, 64 L.Ed.2d 766 (1980) (referring to interpretations of an earlier statute contained in later remarks of a Congressman and a committee report accompanying the amendment of a different statute); United States v. Price, 361 U.S. 304, 313, 80 S.Ct. 326, 331, 4 L.Ed.2d 334 (1960); see United States v. Clark, 445 U.S. 23, 33 n. 9, 100 S.Ct. 895, 902 n. 9, 63 L.Ed.2d 171 (1980) (“[T]he views of some Congressmen as to the construction of a statute adopted years before by another Congress have ‘ “very little, if any, significance.” ’ United States v. Southwestern Cable Co., 392 U.S. 157, 170 [88 S.Ct. 1994, 2001, 20 L.Ed.2d 1001] (1968) (quoting Rainwater v. United States, 356 U.S. 590, 593 [78 S.Ct. 946, 949, 2 L.Ed.2d 996] (1958)).”); Rainwater v. United States, 356 U.S. 590, 593, 78 S.Ct. 946, 949, 2 L.Ed.2d 996 (1958) (amendment of statute by later Congress is “merely an expression of how the [later] Congress interpreted a statute passed by another Congress” and so has “very little, if any, significance”).

I see no reason to accord the “subsequent legislative history” underscored by the VA any more weight than usual. I find no indication that Congress, in dealing with the Senate bills, ever even adverted to the question whether the Rehabilitation Act, as extended to federal programs in 1978, already required alteration of the VA standard. As the Sixth Circuit held on precisely this issue, “we should not read a later Congress’ attempt to abolish the willful misconduct standard as ‘proof’ that an earlier Congress had not already vitiated the willful misconduct standard, as applied by 38 C.F.R. § 3.301(c)(2), by enacting the *2081978 amendments to the Rehabilitation Act.” Tinch, 765 F,2d at 602.5

Most forcibly, the VA and the majority argue that if the Rehabilitation Act invalidates the VA’s view that “willful misconduct” includes alcoholism in the context of time limits on educational benefits, the Act must also invalidate the position that those same words include alcoholism for the purpose of limiting the availability of service-related disability compensation. See 38 U.S.C. § 310. The unacceptable policy consequence of altering the regulatory definition in the latter context is apparent: the VA would have to pay disability compensation to alcoholics as long as they remained alcoholics, thereby deterring alcoholics who could become abstinent from achieving rehabilitation. See Brief for Appellants at 14-15; maj. op. at 201 n. 3.6

I believe, however, that the Rehabilitation Act indeed does alter the VA’s definition for one purpose but not for the other. As the majority recognizes, see maj. op at 201 n. 3, the original regulations issued by HEW to implement the Act,7 included the provision now codified at 28 C.F.R. § 41.51(c): “[Ejxclusion of a specific class of handicapped persons from a program limited by federal statute or executive order to a different class of handicapped persons is not prohibited by [the Act].” 42 Fed.Reg. 22676, 22679 (May 5, 1977) (promulgating the provision as 45 C.F.R. § 84.4(c)). The disability compensation program fits this description: it is limited by federal statute to those with service-related disabilities not attributable to “willful misconduct.” In this context, therefore, the Rehabilitation Act does not impact on the VA’s view that “willful misconduct” includes alcoholism, because the Act contemplates that programs created to benefit specific classes of handicapped persons may exclude other classes.

By contrast, the VA’s educational benefits program surely is not “a program limited by Federal statute to a [specific] class of handicapped persons.” Rather, it is a program open to all honorably discharged veterans. See 38 U.S.C. § 1661(a). The exclusion of alcoholics occurs not in the delineation of the program’s scope but only in the restrictions on time extensions for claiming the program’s benefits. The discrimination, in other words, is not part of the definition of the program but is inserted in a subsection dealing with the program’s administration. The former kind of “discrimination” (helping only the handicapped and then, only some of them) is only the special targeting of resources to alleviate certain conditions; the latter kind (helping all veterans but then, dropping out some on the basis of handicap) reflects the sort of hostility that the Rehabilitation Act was designed to correct.

*209The majority reasons, however, that the “willful misconduct” regulation effects merely the “exclusion of ... a specific class of handicapped persons from a program limited by federal statute ... to a different class of handicapped persons” because the “program” from which McKelvey has been excluded is not the educational benefits program in its entirety but only the educational benefits program after ten years has elapsed. Maj. op. at 201 n. 3. The majority cites no authority for this stilted definition, and the notion that the educational benefits program somehow becomes a new and different program after a delay of ten years defies common sense and common use of the term “program.” Moreover, lilce the majority’s argument that discrimination against alcoholics is appropriately characterized as discrimination on the basis of conduct, the majority’s inclination narrowly to define “program” ultimately will enfeeble the concept “discrimination.” If the VA may explain every act of discrimination against alcoholics in favor of other handicapped persons as simply the exclusion of alcoholics from a narrowly defined program, discrimination against alcoholics can never occur in any program for the handicapped.

Unlike the majority’s position, my view of the statutory complex advances both the policies underlying the veterans disability compensation statute and those on which the Rehabilitation Act rests. The view I take of the various legislative parts does not require the VA to pay alcoholics compensation as long as they remain alcoholics, and thus does not create an unfortunate incentive for those individuals. But my reading of the Rehabilitation Act as it impacts on 38 U.S.C. § 1662(a)(1) does assist formerly addicted individuals who have stopped drinking and were never guilty of willful misconduct (judged on a case-by-case basis) to make a new start by gaining or completing an education.

Conclusion

The Board of Veterans Appeals itself observed in this case that it had “no doubt that if an extension were granted [McKelvey] would use the benefits wisely and become a more productive member of society.” In the Appeal of James P. McKelvey, Findings and Decision (Aug. 6,1980), J.A. at 34. I believe that Congress’ central goal in the Rehabilitation Act was precisely to free handicapped individuals from the kind of discrimination McKelvey encountered so that they could become more productive members of society.

By contrast, the VA’s exclusion of rehabilitated alcoholics from consideration for educational benefits time limit extensions, and the majority’s sufferance of the VA’s policy, annul the intended effect of the Rehabilitation Act. The majority would allow federal agencies simply to label a handicap as falling into some other category contained in the statute entrusted to the particular agency’s administration — for example, “willful misconduct.” The agency need then demonstrate only that its view is “reasonable.” The majority thus entirely abandons the heightened sensitivity to the condition of handicapped persons required by the Rehabilitation Act in favor of the lax standard of rationality to which all agency actions must conform. Because I believe that this mode of analysis frustrates the broad remedial purpose of the Rehabilitation Act, I dissent.

. The only other federal court that has thus far addressed the issue agreed with the adjudication in our district court and in the Sixth Circuit, see Traynor v. Walters, 606 F.Supp. 391 (S.D.N.Y: 1985), but the district court decision in Traynor was reversed when a divided Second Circuit panel found judicial review precluded. Traynor v. Walters, 791 F.2d 226 (2d Cir. 1986).

. The VA argues that its regulation does not presume willful misconduct but merely "focuses” the factfinder’s attention on "whether an underlying psychiatric disorder caused excessive drinking.” Brief for Appellants at 20. This "focus,” however, conclusively denies that alcoholic veterans who do not suffer from an acquired, classifiable psychiatric disorder may be innocent of willful misconduct.

. The government’s appeal to Alexander v. Choate, 469 U.S. 287, 105 S.Ct. 712, 83 L.Ed.2d 661 (1985), is unavailing. That decision did not broadly hold, as the government claims, that "the Rehabilitation Act does not invalidate statutory time limitations.” Brief for Appellants at 18. Rather, the Court held only that the neutral time limit on hospitalization benefits at issue in that case did not create the kind of disparate impact between handicapped individuals and others that would constitute discrimination un*206der the Act. But the opinion clearly indicated that a time limit, such as the one before us, that is not neutral on its face as between handicapped individuals and others would constitute intentional discrimination. See 105 S.Ct. at 720-23.

. Because this is not a case of unavoidable conflict, the VA’s observation that in cases of such conflict a more specific statute controls a more general one, see Brief for Appellants at 17, is irrelevant.

. The VA also reminds us that a "court may accord great weight to the longstanding interpretation placed on a statute by an agency charged with its administration,” especially when "Congress has re-enacted the statute without pertinent change." NLRB v. Bell Aerospace Co., 416 U.S. 267, 274-75, 94 S.Ct. 1757, 1761-62, 40 L.Ed.2d 134 (1974). The interpretation at issue here, however, is not the VA's longstanding interpretation of § 1662 but its interpretation, mint-new with this case, of the Rehabilitation Act, a statute not within the VA’s exclusive province or special competence to administer.

. As authority for this argument, the VA relies primarily on a Senate report that accompanied one of the bills to amend § 1662(a)(1). See Brief for Appellants at 14. The report stated that the Committee wished to exclude alcoholism from "willful misconduct” in the context of time extensions for educational benefits but not in the context of disability compensation. See S.Rep. No. 314, 96th Cong., 1st Sess. at 25-26 (1979). Based on this statement, the VA contends that the Committee must have believed that the Rehabilitation Act, had it invalidated the definition in the one context, would also have invalidated it in the other. Nothing in the Senate report, however, remotely indicates that the Committee considered the effect of the Rehabilitation Act at all; the Committee merely wanted to emphasize that although it had decided to make what it considered to be a change in one provision, it did not wish symmetrically to alter a different provision.

. The Supreme Court has described these regulations as "an important source of guidance on the meaning of section 504.” Alexander v. Choate, 469 U.S. 287, 105 S.Ct. 712, 722 n. 24, 83 L.Ed.2d 661 (1985); Consolidated Rail Corp. v. Darrone, 465 U.S. 624, 104 S.Ct. 1248, 1254-55, 79 L.Ed.2d 568 (1984).