Justia Government & Administrative Law Opinion SummariesArticles Posted in U.S. 3rd Circuit Court of Appeals
McGrogan v. Comm’r of Internal Revenue
The Virgin Islands, a U.S. territory, does not share the same sovereign independence as the states; the power to pass rules and regulations governing territories rests with Congress. Congress passed legislation applying the Internal Revenue Code to the Virgin Islands, 48 U.S.C. 1397, “except that the proceeds of such taxes shall be paid into the treasuries of said islands.” Bona fide VI residents are granted a full exemption from paying federal income taxes if they file a territorial tax return and fully pay territorial taxes to the Virgin Islands Bureau of Internal Revenue (VIBIR), I.R.C. 932(c). This exemption is significant because Congress authorized the VI government to create an Economic Development Program granting substantial tax incentives to certain taxpayers. Between 2001 and 2004 Taxpayers claimed bona fide VI residency and eligibility for the tax benefits granted by the Economic Development Program; they filed tax returns with the VIBIR and paid taxes only to the VI government. Taxpayers did not file federal income tax returns. In late 2009-2010, Taxpayers were issued IRS tax prepayment deficiency notices challenging their claims of residency. The district court dismissed Taxpayers’ challenges on grounds that the Tax Court was the only proper forum. The Third Circuit affirmed. View "McGrogan v. Comm'r of Internal Revenue" on Justia Law
New Vista Nursing & Rehab. v. Nat’l Labor Relations Bd.
The NLRB certified a union and ordered an election. The union won a majority. The company refused to bargain. The union claimed unfair labor practices. A three-member NLRB delegee group granted the union summary judgment. The NLRB is composed of up to five members, appointed by the president and confirmed by the Senate, 29 U.S.C. 153(a) and may delegate its authority to any group of three or more members. Delegee groups must maintain a membership of three.The company unsuccessfully moved for reconsideration, arguing that the group’s order was not issued until it was mailed, by which time one member had resigned and the panel had only two members. The company then argued that the reconsideration order group was improperly constituted because one panelist was a recess appointee whose term concluded at the end of the Senate‘s 2011 session, which, it contended, was 13 days before the order issued. The NLRB denied the second motion. The company next argued that the group that issued the second order included two members that were invalidly appointed under the Recess Appointments Clause while the Senate was not in recess, reasoning that if the Senate‘s session ended when it began using pro forma sessions, the term of one member had expired; if the session did not end then, the president‘s recess appointments were invalidly made while the Senate was not in recess. The NLRB denied the motion. The Third Circuit vacated, holding that the Recess of the Senate in the Recess Appointments Clause refers to only intersession breaks; the panel lacked the requisite number of members because one panel member was invalidly appointed during an intrasession break. View "New Vista Nursing & Rehab. v. Nat'l Labor Relations Bd." on Justia Law
United States v. Manzo
Under the “Hyde Amendment,” a district court in criminal cases may award to a prevailing party a reasonable attorney’s fee and other litigation expenses, if the position of the United States was vexatious, frivolous, or in bad faith, unless the court finds special circumstances, 18 U.S.C. 3006A. The district court denied such an award in a case involving four counts of conspiring and attempting to commit extortion, 18 U.S.C. 951(a) & 2 (Hobbs Act), and two counts of traveling in interstate commerce to promote and facilitate bribery, 18 U.S.C. 1952(a)(3) & 2 (Travel Act). The government alleged that Manzo, a candidate for mayor of Jersey City, sought cash payments from Dwek, an informant posing as a developer, and that, in exchange, Manzo indicated he would help Dwek with matters involving Jersey City government. The district court dismissed each Hobbs Act count because Manzo was not a public official at the time of the conduct. The Third Circuit affirmed. The court later held that receipt of something of value by an unsuccessful candidate in exchange for a promise of future official conduct does not constitute bribery under the New Jersey bribery statute and dismissed all remaining charges. The Third Circuit affirmed the denial of fees. View "United States v. Manzo" on Justia Law
Tellado v. Indymac Mortg. Serv.
In 2007, Tellado heard a Spanish-language radio advertisement for mortgage refinancing, called the number, and spoke in Spanish to arrange refinancing of an existing mortgage. Bloom, a closing agent acting as a representative of IndyMac, conducted the closing at the Tellados’ home. The loan documents, including the notice of the right to cancel, were in English. Oral communications between Bloom and the Tellados, were conducted through the Tellados’ daughter, who served as an interpreter for verbal instructions and Bloom’s explanations of the loan documents. IndyMac subsequently failed and was placed in FDIC receivership. In 2009, the Tellados sent a notice of cancellation under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law, 73 P.S. 201-7. The district court held that IndyMac had failed to provide proper notice and that the three-day cancellation period had never begun; it ordered refund to the Tellados of all payments, termination of the security interest, and payment of a $10,000 penalty. The Third Circuit reversed; the claim is precluded by the Financial Institutions Reform, Recovery, and Enforcement Act, 12 U.S.C. 1821(d)(13)(D) because the claim is predicated upon an act or omission of IndyMac. Tellados failed to exhaust their administrative remedies under FIRREA. View "Tellado v. Indymac Mortg. Serv." on Justia Law
Defoe v. Phillip
Phillip and Defoe worked together at an oil refinery in the U.S. Virgin Islands. Phillip was driving a company-owned vehicle near the refinery when it struck Defoe. While recovering, Defoe filed a claim and received benefits under the Virgin Islands Workers’ Compensation Act, 24 V.I. Code 250. He also sued Phillip for negligence in the Superior Court of the Virgin Islands, which granted summary judgment for Phillip, holding that the Act prevents injured employees from suing their coworkers. The Supreme Court of the Virgin Islands reversed, declaring that it was not bound by Third Circuit pre-2007 decisions on Virgin Islands law. Phillips sought certiorari to the Third Circuit, which upheld the decision of the Supreme Court of the Virgin Islands, stating that that court “is on the road to Erie R. Co. v. Tompkins, 304 U.S. 64, 78 (1938),” which requires federal courts to defer to local courts on issues of local law. The court held that it will defer to the Supreme Court on questions of local law, subject to a manifest-error standard of review, including with respect to its pre-2007 precedents; the court did not manifestly err in rejecting that precedent. View "Defoe v. Phillip" on Justia Law
Hagans v. Comm’r of Soc. Sec.
Until 2003, Hagans worked as a security guard and as a sanitation worker. At 44 years old, Hagans required open-heart surgery. Hagans claims additional medical problems relating to his cerebrovascular and respiratory systems, hypertension and dysphagia, insomnia, and back pain. He has been diagnosed with depression. Hagans began receiving disability benefits as of January 30, 2003. In September, 2004, pursuant to an updated Residual Function Capacity assessment showing his condition had improved, SSA determined that Hagans was no longer eligible for benefits. The ALJ considered several evaluations of Hagans’s condition, most of which were completed in mid-2004, and found that he was capable of engaging in substantial gainful activity, although he could not perform his past relevant work. The Appeals Council denied review; the district court affirmed. The Third Circuit affirmed, after determining that “relatively high” deference should be afforded to SSA’s Acquiescence Ruling interpreting the cessation provision of 42 U.S.C. 423(f) as referring to the time of the SSA’s initial disability determination. SSA correctly evaluated Hagans’s condition as of the date on which the agency first found that Hagans’s eligibility for disability benefits ceased. Substantial evidence supported the conclusion that Hagans was not fully disabled as of that date. View "Hagans v. Comm'r of Soc. Sec." on Justia Law
Nichole Medical Equip & Supply, Inc. v. Tricenturion, Inc.
TriCenturion audited Nichole Medical as a Program Safeguard Contractor under the Medicare Integrity Program, 42 U.S.C. 395ddd(a), and concluded that Nichole “might” be improperly billing for medical equipment; that Nichole had received overpayments; and that it had not maintained sufficient medical records to establish reasonableness or medical necessity. TriCenturion directed Nichole’s carrier, HealthNow, to withhold payments. TriCenturion calculated the actual overpayment of several specific claims, used those as a representative sampling, and extrapolated an overpayment amount for all relevant claims. The Attorney General found no evidence of fraud and refused to prosecute; HealthNow stopped withholding payments. TriCenturion instructed HealthNow’s successor to re-institute the offset. Nichole went out of business, but pursued an appeal. An ALJ determined that Nichole was entitled to reimbursement on some, but not all, appealed claims and found that the process for arriving at the extrapolated overpayment was flawed. The Medicare Appeals Council found that all 39 claims had been reopened and reviewed improperly. The district court dismissed Nichole’s suit against TriCenturion, which alleged torts and breach of the statutory duty of care under 42 U.S.C. 1320c-6(b). The Third Circuit affirmed. Defendants are immune from suit as officers or employees of the Secretary of the Department of Health and Human Services. View "Nichole Medical Equip & Supply, Inc. v. Tricenturion, Inc." on Justia Law
Hip Heightened Indep. & Progress, Inc. v. Port Auth. of NY & NJ
The Port Authority’s subsidiary, PATH, operates the Grove Street Station in Jersey City. The Station was built in 1910. In 2000 PATH planned to expand the Station to accommodate larger trains and persons with disabilities, a project that would have involved construction of a new entrance and two elevators. After September 11, 2001, and the resulting closure of two stations, ridership increased at the Station. Concerned about congestion and safety, PATH scrapped its renovation plans and undertook a “fast track” project. Construction began in 2002 and concluded in 2005. Plaintiffs alleged that the renovations triggered an obligation under the Americans with Disabilities Act, 42 U.S.C. 12101–12213, to make the Station accessible to handicapped persons. They also alleged violations under New Jersey’s Law Against Discrimination and certain state construction code provisions. The district court dismissed, state-law claims on the basis that allowing such claims to proceed would violate the interstate compact between New York and New Jersey that created the Authority, but ordered the Authority to make the east entrance accessible. The Third Circuit affirmed dismissal of the state law claims, but remanded the ADA issue for trial on the issue of feasibility. View "Hip Heightened Indep. & Progress, Inc. v. Port Auth. of NY & NJ" on Justia Law
Treasurer, State of NJ v. U.S. Dept of Treasury
Seven states sought to recover proceeds of matured but unredeemed U.S. savings bonds from the Treasury, asserting that Treasury has possession of approximately $16 billion worth of matured but unredeemed savings bonds, of which persons whose last known addresses were within the plaintiff states own $1.6 billion. The states contended that their respective unclaimed property acts obliged Treasury to account for and deliver the proceeds of these bonds to the states for reunification with their owners. The district court dismissed, reasoning that sovereign immunity and intergovernmental immunity barred the action and that federal law and regulations preempted the states’ statutory authority to obtain the proceeds of the savings bonds. The Third Circuit affirmed. Although the federal government has waived sovereign immunity (5 U.S.C. 702), states may not directly regulate the federal government’s operations or property and federal law is sufficiently pervasive so as not to leave room for the enforcement of the unclaimed property acts to achieve the result that the states seek.
Lewis v. Alexander
Plaintiffs brought a putative class action challenging 62 Pa. Stat. 1414, which was enacted to regulate special needs trusts. The comprehensive Medicaid eligibility rules enacted by Congress generally mandate that trusts be counted as assets of those seeking Medicaid, but exempt special needs trusts, which are intended to provide disabled individuals with necessities and comforts not covered by Medicaid. Plaintiffs allege Section 1414 is preempted by 42 U.S.C. 1396p(d)(4). The district court held that all but one of the challenged provisions of Section 1414 was preempted, finding that plaintiffs had a private right of action under both Section 1983 and the Supremacy Clause. The court also held that Section 1414 was severable, certified a class, and appointed class counsel. The Third Circuit affirmed in part, agreeing that the case is justiciable and that plaintiffs have a private right of action. Section 1414's 50% repayment provision, "special needs" provision, expenditure provision, and age restriction are all preempted by federal law. The enforcement provision of Section 1414, however, when used to enforce provisions not otherwise preempted, is a reasonable exercise of the Commonwealth's retained authority to regulate trusts.