[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
OVERSIGHT OF THE
JUDGMENT FUND
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON THE CONSTITUTION
AND CIVIL JUSTICE
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
MARCH 2, 2017
__________
Serial No. 115-6
__________
Printed for the use of the Committee on the Judiciary
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://judiciary.house.gov
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COMMITTEE ON THE JUDICIARY
BOB GOODLATTE, Virginia, Chairman
F. JAMES SENSENBRENNER, Jr., JOHN CONYERS, Jr., Michigan
Wisconsin JERROLD NADLER, New York
LAMAR SMITH, Texas ZOE LOFGREN, California
STEVE CHABOT, Ohio SHEILA JACKSON LEE, Texas
DARRELL E. ISSA, California STEVE COHEN, Tennessee
STEVE KING, Iowa HENRY C. ``HANK'' JOHNSON, Jr.,
TRENT FRANKS, Arizona Georgia
LOUIE GOHMERT, Texas THEODORE E. DEUTCH, Florida
JIM JORDAN, Ohio LUIS V. GUTIERREZ, Illinois
TED POE, Texas KAREN BASS, California
JASON CHAFFETZ, Utah CEDRIC L. RICHMOND, Louisiana
TOM MARINO, Pennsylvania HAKEEM S. JEFFRIES, New York
TREY GOWDY, South Carolina DAVID CICILLINE, Rhode Island
RAUL LABRADOR, Idaho ERIC SWALWELL, California
BLAKE FARENTHOLD, Texas TED LIEU, California
DOUG COLLINS, Georgia JAMIE RASKIN, Maryland
RON DeSANTIS, Florida PRAMILA JAYAPAL, Washington
KEN BUCK, Colorado BRAD SCHNEIDER, Illinois
JOHN RATCLIFFE, Texas
MARTHA ROBY, Alabama
MATT GAETZ, Florida
MIKE JOHNSON, Louisiana
ANDY BIGGS, Arizona
Shelley Husband, Chief of Staff & General Counsel
Perry Apelbaum, Minority Staff Director & Chief Counsel
------
Subcommittee on the Constitution and Civil Justice
STEVE KING, Iowa, Chairman
RON DeSANTIS, Florida, Vice-Chairman
TRENT FRANKS, Arizona STEVE COHEN, Tennessee
LOUIE GOHMERT, Texas JAMIE RASKIN, Maryland
TREY GOWDY, South Carolina JERROLD NADLER, New York
C O N T E N T S
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MARCH 2, 2017
Page
OPENING STATEMENTS
The Honorable Steve King, Iowa, Chairman, Subcommittee on the
Constitution and Civil Justice................................. 1
The Honorable Steve Cohen, Tennessee, Ranking Member,
Subcommittee on the Constitution and Civil Justice............. 3
The Honorable Bob Goodlatte, Virginia, Chairman, Committee on the
Judiciary...................................................... 5
WITNESSES
Paul Figley, Associate Director of Legal Rhetoric, American
University Washington College of Law:
Oral Statement............................................... 6
Neil Kinkopf, Professor of Law, Georgia State University College
of Law:
Oral Statement............................................... 8
Chris Jacobs, Founder and CEO, Juniper Research Group:
Oral Statement............................................... 9
ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD
Letter submitted by the Honorable Eric Thorson, Inspector General of
the U.S. Department of the Treasury. This material is available at
the Committee and can be accessed on the committee repository at:
http://docs.house.gov/meetings/JU/JU10/20170302/105620/HMTG-115-
JU10-20170302-SD002.pdf
Statement submitted by the Honorable John Conyers, Jr., Michigan,
Ranking Member, Committee on the Judiciary. This material is
available at the Committee and can be accessed on the committee
repository at:
http://docs.house.gov/meetings/JU/JU10/20170302/105620/HMTG-115-
JU10-MState-C000714-20170302.pdf
Statement submitted by the Honorable Steven Cohen, Tennessee, Ranking
Member, Subcommittee on the Constitution and Civil Justice. This
material is available at the Committee and can be accessed on the
committee repository at:
http://docs.house.gov/meetings/JU/JU10/20170302/105620/HMTG-115-
JU10-MState-C001068-20170302.pdf
OVERSIGHT OF THE JUDGMENT FUND
----------
Thursday, March 2, 2017
House of Representatives,
Subcommittee on the Constitution and Civil Justice,
Committee on the Judiciary,
Washington, DC.
The subcommittee met, pursuant to call, at 9:00 a.m., in
Room 2141, Rayburn House Office Building, Hon. Steve King,
[Chairman of the Subcommittee] presiding.
Present: Representatives King, Goodlatte, DeSantis, Franks,
and Cohen.
Staff Present: John Coleman, Counsel; Jake Glancy, Clerk;
James Park, Minority Chief Counsel; Veronica Eligan, Minority
Professional Staff Member; and Matthew Morgan, Professional
Staff Member.
Mr. King. The Subcommittee on the Constitution and Civil
Justice will come to order. Without objection, the chair is
authorized to declare a recess of the committee at any time. We
welcome everyone to today's hearing and on the oversight of the
Judgment Fund, and I now recognize myself for an opening
statement.
Today's hearing is about the Judgment Fund, which was
established by statute to pay court judgments and Justice
Department compromise settlements of actual or imminent
lawsuits against the government. Payment through the Judgment
Fund is administered by the Judgment Fund Branch, which is a
part of the United States Department of Treasury Bureau of
Fiscal Service. We have seen in recent years that the vast
bureaucracy of the Federal Government can have the effect of
obscuring the facts and circumstances of payments from the
Judgment Fund.
When the public seeks to scrutinize executive actions like
the Iran settlement, the potential risk corridor settlement, or
settlements under the Equal Credit Opportunity Act, Congress is
at the mercy of Federal agencies to provide information. This
dynamic exists because the Judgment Fund as a permanent
appropriation recognizes, excuse me, requires no congressional
action for payments to be made.
Today's hearing was in part intended to gather information
from Federal officials about how the Judgment Fund is
administered. We extended invitations to the Government
Accountability Office, the GAO, and the United States
Department of Treasury to testify on this topic. Neither
produced witnesses. I am particularly dismayed that given GAO's
years of involvement on matters relating to the Judgment Fund,
it is unable to voluntarily offer information to contribute to
today's hearing; no reason was provided.
I intend to follow up with GAO to ensure that this
committee's questions are answered. Nevertheless, at this
committee's request, the Inspector General of the U.S.
Department of the Treasury, the Honorable Eric Thorson,
submitted a letter addressing his office's recent inquiry into
the Iran Settlement, which I would like to submit for the
record. And without objection, it is so ordered.
LETTER SUBMITTED BY THE HONORABLE ERIC THORSON, INSPECTOR
GENERAL OF THE U.S. DEPARTMENT OF THE TREASURY
This material is available at the Committee and can be
accessed on the committee repository at: http://docs.house.gov/
meetings/JU/JU10/20170302/105620/HMTG-115-JU10-20170302-
SD002.pdf.
Mr. King. The conclusion reached by the Inspector General,
as well as the description of the materials that the Treasury
Department officials relied upon in determining whether the
Department of Justice's request for payment in this settlement
should be approved, show that the Treasury Department's
regulatory and manual-based requirements, appear to set a low
bar for approval of payment requests.
For example, the approval of the Iran Settlement claim,
relied, in part, on verbal notifications that the Judgment
Fund's statutory requirements were met, and that is according
to Inspector General Thorson. Fiscal Services chief counsel
told us and the Office of Inspector General, that the
settlement agreement was not provided to Judgment Fund Branch
personnel due to its sensitive nature and legally, the Judgment
Fund Branch is not required to review the settlement agreement.
Fiscal Services chief counsel told us, and a Judgment Fund
Branch employee confirmed that the chief counsel verbally
notified the Judgment Fund Branch employee that the settlement
agreement was final as authorization for the Judgment Fund to
approve the payment. In other words, a verbal approval.
Moreover, the Inspector General's letter reveals that the
lack of publicly available precedence regarding approval of the
Judgment Fund request makes it difficult for the public and
Congress to understand the approval process. The Treasury
Department does not issue decisions regarding Judgment Fund
requests, which would document the agency's reasoning.
To make matters worse, the documents that Treasury relied
upon in making a decision are not publicly available.
Therefore, no recent body of precedent exists to assure
Congress and the public that the Judgment Fund's use in any one
case was proper.
My hope is that the testimony from today's distinguished
panel will inform the committee regarding the current state of
the Judgment Fund and that they will provide recommendations
about what congressional actions are needed. Indeed, Article I,
Section 9, Clause 7 of the Constitution states, ``No money
shall be drawn from the Treasury, but in consequence of
appropriations made by law, and a regular statement and account
of the receipts and expenditures of all public money shall be
published from time to time.'' This provision, known as the
Appropriation Clause, is the foundation of Congress' power of
the purse.
Today's hearing is about safeguarding that power, and as I
have watched some of these cases come before the news and had
difficulty in getting answers about the Judgment Fund, what
goes into it and what comes out of it and to whom and why and
asks some direct questions of some of the members of the
previous administration, I would just like to let this
committee know that I am determined to drill into the bottom of
this.
We have a congressional obligation to do oversight. We have
a constitutional authority that we need to protect, and part of
our job also is to restore our Article I authority, hopefully
one day in its entirety. And so with that, I would conclude my
opening statement, and I would recognize the gentleman from
Tennessee, Mr. Cohen, for his opening statement.
Mr. Cohen. Thank you, Mr. Chairman. The Judgment Fund is an
issue that the chairman and I probably will agree on. There is
an issue about privacy, but in a bill that we passed on the
floor which I was a sponsor with Doug Collins on, Congressman
Collins, H.R. 1033, it respected the privacy rights of parties
who were reimbursed for the litigation cost and that particular
bill striking a balance between transparency and privacy
interests and prohibited the release of information of the
disclosure which is prohibited by law or court order.
If we can get to that in this bill where we do not release
information that is prohibited, the disclosure thereof by law
or court order, I think we can have a bill that is bipartisan
and gets through this committee with unanimity and it to go to
transparency which is important in all government affairs.
Transparency is so important with funds.
It is important with testimony before Senate Committees and
testimony in court and all other things. Transparency is very
important, so I think this is a good thing, and I was proud to
be the lead Democratic sponsor in the Open Book on Equal Access
to Justice Act which passed three days ago, and I think it
gives us a pathway to get this bill to go through in a
unanimous fashion and without controversy on the floor. And the
folks that didn't respond, should have responded, of course. I
would like to enter into the record my statement, which I am
not going to go through entirely, and Mr. Conyers' statement,
without objection.
Mr. King. Without objection, so ordered.
STATEMENT SUBMITTED BY THE HONORABLE STEVEN COHEN, TENNESSEE,
RANKING MEMBER, SUBCOMMITTEE ON THE CONSTITUTION AND CIVIL
JUSTICE
This material is available at the Committee and can be
accessed on the committee repository at: http://docs.house.gov/
meetings/JU/JU10/20170302/105620/HMTG-115-JU10-MState-C001068-
20170302.pdf.
STATEMENT SUBMITTED BY THE HONORABLE JOHN CONYERS, JR.,
MICHIGAN, RANKING MEMBER, COMMITTEE ON THE JUDICIARY
This material is available at the Committee and can be
accessed on the committee repository at: http://docs.house.gov/
meetings/JU/JU10/20170302/105620/HMTG-115-JU10-MState-C000714-
20170302.pdf.
Mr. Cohen. But today, there are important matters, and
while these are important matters, more important matters,
which is the issue of testimony before the Senate and
confirmation hearings and Russia's involvement in our election
process or possible involvement, I guess we kind of know there
was involvement now.
The chairman and I both were on a recent journey when we
met with some Russian Duma officials. I can say based on a
small bit of information we got from them, that the Russian
Duma Officials are just like the Russian Duma officials of 20,
30, 50 years ago. They have not changed, and as the old
expression, ``Once KGB, always KGB,'' which applies to Mr.
Putin, and I read something today about some intelligence
officials that so many people in Russia are considered
intelligence officials. They said once an intelligence
official, always an intelligence official.
Well, once a Duma member, same thing. And we met with some
other folks in private who let us know that Russia does not
have the same interests that America has, which we should know,
and I know the chairman and I share that perspective. There is
an issue about Mr. Sessions being the Attorney General and some
of the questions he answered during his confirmation hearings
asked by Mr. Franken orally and by Senator Leahy in writing
that call into question his veracity at that hearing, when he
said he did not have any contact with any Russian officials,
and in fact, they now announced he had two meetings with
Russian Ambassadors.
There may be a hedge that he can have and some wiggle room,
but the Attorney General like Caesar's wife, Caesar's wife was
supposed to be beyond reproach. The Attorney General should not
need wiggle room, and if there is a wiggle room answer, the
Attorney General should be totally forthcoming, and in this
case where there is an issue of his veracity, then it is an
issue whether he should even remain as Attorney General, but
there is certainly an issue whether he should appoint a special
counsel to look into any possible transgressions between the
Trump campaign and the Russians in influencing our elections,
he should appoint a special counsel.
Wiggle room is something we cannot have with lady justice
and with our Attorney General, and that is all he has right now
is wiggle room. He was asked a direct question, Mr. Chair, by
Senator Franken, and he said, ``No, I have not met with the
Russians,'' and in fact, now he says he had twice, one time
even in September. Russia just keeps coming up, and in the
President's speech, he made a point of saying we are going to
make some new friends.
We are not only going to be friendly with the old world and
support NATO which is great and good, and I was surprised and
the first one, I think, to my feet on the--if anybody was on
their feet on the floor on that--because we need to support our
friends in the Balkans and the Baltic regions and Georgia and
Malta and Ukraine and every place else that is threatened by
the big bear, but he said we are going to make some new
friends, and what he was saying, he did not say it but what he
was saying was Russia, and he pointed toward the Democrats, and
he said, with his right hand, we need to get beyond some of our
small, trivial differences and move on.
He did not say what those were, but I suspect those were
his income taxes, his involvement with Russia, other foreign
interests, the Emoluments Clause issues that are going on and
serious issues that fall within the jurisdiction of this
committee and this subcommittee I would submit as well. And I
would ask the chair to consider hearings concerning Russia's
hacking of our election, the Attorney General's involvement or
lack of involvement in those discussions, and any other issues
concerning Mr. Trump, his taxes.
You know, what he should have said when he started, Mr.
Chair, he had a good speech written for him, and he delivered
it pretty well, pretty good, pretty good, but instead of
starting with the last day of Black History Month and the
Jewish Cemetery desecration, and the threats on the Jewish
Community Centers, which was nice and good, he should have
started with, ``There is some problems in this country, and we
need to resolve them, we need to come together, and I am going
to lead by releasing my income taxes,'' that would have gone a
long way towards bringing this country together and making him
truly a President.
So, with that I would ask the chair to consider some
hearings on these issues, and I know the chair is a patriot and
holds America first in his heart and is no big fan of the
former Soviet Union and Russia and some of the things they do.
I yield back the balance of my time.
Mr. King. The gentleman yields back the balance of his
time, and his words are duly considered, and the chair will now
recognize the chairman of the full Judiciary Committee, Mr.
Goodlatte, of Virginia for his opening statement.
Chairman Goodlatte. Thank you, Mr. Chairman. Mr. Chairman,
James Madison in Federalist No. 58 stated, ``The House of
Representatives cannot only refuse, but they alone can propose,
the supplies requisite for the support of government. They, in
a word, hold the purse, that powerful instrument by which we
behold, in the history of the British Constitution, an infant
and humble representation of the people gradually enlarging the
sphere of its activity and importance, and finally reducing, as
far as it seems to have wished, all the overgrown prerogatives
of the other branches of the government. This power of the
purse may, in fact, be regarded as the most complete and
effectual weapon with which any constitution can arm the
immediate representatives of the people, for obtaining a
redress of every grievance, and for carrying into effect every
just and salutary measure.''
In its current form, the Judgment Fund, when abused, allows
the executive branch to pilfer taxpayer dollars to fund its
overgrown prerogatives without any congressional action or
oversight.
In such cases, Congress' check on these abuses is rigorous
oversight to determine whether additional legislation is
required. In recent years, it has become apparent that little
information is known about individual payments from the
Judgment Fund, particularly with regard to the payment of
settlements.
Searches for individual payments from the Judgment Fund in
a database maintained by the Treasury Department reveals little
about the underlying facts, how the funds were used, and even
who received them. In a system of government in which Congress
is accountable for the way in which the taxpayer dollars are
spent, this is unacceptable.
I look forward to the witnesses' testimony today and to
their recommendations regarding how Congress, the immediate
representatives of the people, can improve our oversight of
this permanent, indefinite appropriation, as well as improve
transparency for the public. Thank you, Mr. Chairman.
Mr. King. I would like to thank the chairman of the full
committee. In recognizing that the ranking member of the full
committee's statement has been entered into the record, and
without objection, other members' opening statements will be
made part of the record, and let me now introduce the
witnesses.
Our first witness is Professor Paul Figley. Professor
Figley is the associate director of Legal Rhetoric at American
University Washington College of Law. And our second witness is
Professor Neil Kinkopf. Professor Kinkopf is a Professor of Law
at Georgia State University College of Law. And our third and
final witness is Chris Jacobs, and Mr. Jacobs is the founder
and CEO of the Juniper Research Group.
Each of the witnesses' written statements will be entered
into the record in its entirety, and I ask that each witness
summarize their testimony in 5 minutes or less. And to help you
stay within that time limit, there is a light in front of you.
I expect you are familiar with that light, gentlemen. And
that switch will turn from green to yellow when there is one
minute left and, of course, when it is red, it means the same
thing here as it does out on the streets of Washington, D.C.
and, however, we want you to summarize your statement and
complete your thought. And before I recognize the witnesses, it
is the tradition of the committee that they be sworn in.
So, I would ask the witnesses to please stand and raise
your right hand. Do you swear that the testimony you are about
to give before this committee is the truth, the whole truth,
and nothing but the truth, so help you God? Thank you,
gentlemen.
Let the record reflect that all the witnesses responded in
the affirmative. And I now recognize the first witness for his
testimony, Professor Figley, and please proceed with your 5
minutes, Professor Figley.
STATEMENTS OF PAUL FIGLEY, ASSOCIATE DIRECTOR OF LEGAL
RHETORIC, AMERICAN UNIVERSITY WASHINGTON COLLEGE OF LAW; NEIL
KINKOPF, PROFESSOR OF LAW, GEORGIA STATE UNIVERSITY COLLEGE OF
LAW; AND CHRIS JACOBS, FOUNDER AND CEO, JUNIPER RESEARCH GROUP
STATEMENT OF MR. PAUL FIGLEY
Mr. Figley. Thank you, Mr. Chairman. Through the
Appropriations Clause, Congress holds the power of the purse.
For administrative convenience, in 1956, it established the
Judgment Fund as the means of paying most settlements in
judgments against the Federal Government. Since 1977, the
Judgment Fund has automatically made those payments regardless
of their amount and without congressional review.
The Judgment Fund is not an all-purpose fund for judicial
disbursements, rather it can be used only where there is a
substantive right to compensation based on the expressed terms
of a specific statute. The Attorney General and his delegees
have broad authority to settle imminent litigation under his
supervision. They do not have authority to circumvent limits
Congress places on statutes that authorize the payment of money
damages.
The Judgment Fund system is in trouble. Two settlements,
each exceeding $100 million, show the problem. Each paid much
more money than the government was likely to lose in court. The
decisions to settle them on generous terms appear politically
motivated. The suits involved claims similar to those brought
by black farmers in the Pigford Litigation that alleged USDA
discrimination in farm programs in violation of the Equal
Credit Opportunity Act. The Pigford Litigation in the
settlements amounting to over $2.2 billion for which Congress
made specific appropriations.
In Keepseagle, Native Americans brought a class action
alleging USDA discrimination. Although no class was certified
for monetary relief, the suit was settled in 2010 for $760
million, including a settlement fund of $680 million
established with Judgment Fund money. The settlement grossly
miscalculated the number of claimants.
When fewer than 4,500 farmers perfected claims, it paid
them about $300 million. That left $380 million in the
settlement fund. Because the settlement agreement lacked a
provision requiring reversion of leftover money, that money was
not returned to the Treasury. Various Native American groups
are still litigating how to use it.
Eventually, that $380 million of Judgment Fund money will
be spent on something other than valid claims against the
government. In the Garcia and Love cases, Hispanic farmers and
women farmers filed similar class action suits. In both cases,
the district court's decisions to deny class certifications
were affirmed on appeal, and the Supreme Court denied
certiorari. Then in 2011, USDA and the Department of Justice
unilaterally announced a new claims program for Hispanic and
women farmers, including they said, at least $1.33 billion from
the Judgment Fund.
The executive branch created this claims program without
legislative input or judicial supervision and financed it with
Judgment Fund money. The litigative risk posed by Garcia and
Love did not justify the new program. No class had been or ever
would be certified, making the prospect of sizable adverse
judgments extremely remote. Politics motivated creation of the
program.
For example, eight Senators wrote to President Obama
arguing that about $2.25 billion had been allotted to,
``Resolve USDA discrimination against black farmers,'' and
calling for equal treatment for Hispanic farmers. Agency
descriptions portrayed the new program as comparable, saying it
included, ``At least $1.33 billion in the Judgment Fund.'' In
fact, no special fund was created. The total amount paid to
claimants was about $160 million.
By creating this program through administrative decree, the
administration intentionally bypassed the appropriation
process. Secretary Vilsack argued, ``We do not have to have an
appropriation from Congress for Garcia-Love.'' This is
something that can be resolved as is the case with virtually
every other claim against the United States from the Judgment
Fund, but the Judgment Fund is properly available only to
settle valid legal claims.
The Judgment Fund is now on the executive's radar as an
easy way to finance new programs and initiatives that are
somehow related to claims against the government. Absent
legislation, it is likely to be used again. The problem is not
partisan.
While the Keepseagle Settlement and the Hispanic woman
farmer claims process were products of the Obama
administration, it is fair to anticipate that the other
administrations will follow the same path if that path remains
open. The tension here is between Congress and the executive
branch. Congress' power of the purse is a key part of the
Constitution's system of checks and balances. To preserve that
power, Congress should place a limit on the size of payments
that the executive branch can make from the Judgment Fund.
Mr. King. Thank you, Professor Figley. And now I will
recognize Professor Kinkopf for his testimony. Professor.
STATEMENT OF MR. NEIL KINKOPF
Mr. Kinkopf. Thank you, Mr. Chairman and Mr. Ranking
Member. It is a real honor to appear before you today,
especially to do this as sort of an encore performance. We were
here in September, and I do not want to repeat what I said
then. Much of what I had to say at that time I repeated it in
my written statement to you. I will not repeat that here. I
just want to say I completely agree with the comments that I
think all of the opening statements made to the effect that
transparency is good, right? Who could be against transparency?
Accountability is good, and accountability and transparency for
the Judgment Fund are important.
Like any government program, the Judgment Fund and its
administration relies on the good faith administration of those
individuals, those human people who actually administer the
program, and it is just and legitimate for this committee to
engage in oversight to make sure that those functions are being
performed in good faith.
I want to respond a bit to what Professor Figley had to
say. Well, first of all, the Obama administration's use of the
Judgment Fund is completely within the letter of the law, and
there can be no doubt about that. It is also completely and
fully within the practice of administrations of both political
parties going back to the inception of the Judgment Fund.
So, nothing that the Obama administration did was or could
be regarded as illegal. Nothing the Obama administration did is
unprecedented. Moreover, I think the way to look at some of the
settlements entered into during the Obama administration is not
from the perspective of what a private law firm representing a
private party might do. The motto of the Justice Department is,
``Qui Pro Domina Justitia Sequitur.'' Those who advocate in
behalf of justice.
It is a common saying around the Justice Department that,
``The Justice Department wins when justice is served.'' With
respect to the farm litigation, the Department of Agriculture
engaged in discrimination on race and gender for decades. It is
not the proper function of the Government of the United States
to make it difficult for people to receive just compensation
for government discrimination perpetrated over decades, and so
the fact that perhaps the Justice Department could have hidden
behind various legal defenses in order to avoid paying the just
compensation for injuries it imposed on citizens is not at all
an illegitimate function. It is, in fact, in the highest and
best traditions of the Department of Justice. With that, I will
yield the balance of my time.
Mr. King. Thank you, Professor Kinkopf, for his testimony.
And I will recognize Mr. Jacobs for his.
STATEMENT OF MR. CHRIS JACOBS
Mr. Jacobs. Thank you, Mr. Chairman. Chairman King, Ranking
Member Cohen, members of the subcommittee, thank you for
inviting me to testify. As Chairman King stated, my name is
Chris Jacobs, and I focus my career on analyzing issues in
health policy, including more than 6 years here on Capitol
Hill. My entire written statement is before you, so I will not
repeat it, but instead emphasize three main points regarding
the use of the Judgment Fund as it pertains to health insurer
claims regarding risk corridors currently pending in the Court
of Federal Claims.
First, past precedence suggests that by prohibiting the use
of taxpayer funds for the risk corridor program, Congress has
otherwise provided for claims payments, rendering the Judgment
Fund inaccessible to insurers' claims. The nonpartisan
Congressional Research Service reached this conclusion more
than one year ago, consistent with prior opinions by both the
Governmental Accountability Office and the Justice Department's
Office of Legal Counsel.
Second, the amount of money in dispute regarding risk
corridor dwarfs most other Judgment Fund payments. Losses for
the risk corridor program in 2014 and 2015 have totaled
approximately $8.3 billion. When final numbers are tabulated,
total losses over the program's 3 years, that is 2014, 2015,
and 2016, will likely exceed $10 billion at minimum. By
comparison, the Washington Post noted last September, that the
Department of Health and Human Services claims paid out from
the Judgment Fund over the last decade total only $18 million.
A potential Judgment Fund verdict or settlement regarding
risk corridors would vastly exceed last year's Iran settlement
and the Pigford and other settlements discussed by Professor
Figley in his testimony.
Third, last fall the Obama administration made no secret of
the fact they wished to settle the risk corridor cases by the
Judgment Fund to circumvent the express congressional
prohibition in the Department of Health and Human Services
using taxpayer dollars to fund the program. I understand that
the status of risk corridors and the healthcare law, in
general, have become a matter of no small dispute between the
two parties, but Members in Congress of both political parties,
both Republican and Democrat, should be aware of the
consequences of such an executive encroachment on Congress'
most important power, the power of the purse, for the roles
could easily be reversed in a subsequent case regarding another
issue.
For this reason, I believe that Congress and this committee
should consider codifying past practice and precedence by
enacting language to clarify that where the legislature has
enacted limitations or restrictions on appropriations. Congress
says, therefore, otherwise provided for payment of claims, and
the Judgment Fund should remain off limits in those cases.
Thank you very much for the opportunity to testify this
morning, and I look forward to your questions.
Mr. King. Thank you, Mr. Jacobs. And I will now recognize
myself for my 5 minutes of questioning. I want to first turn to
Professor Kinkopf and ask you--USDA engaged in discrimination
for decades, and I am going to presume you were referring to
all four of the cases that we have discussed here, the
Keepseagle and Garcia and Love and Pigford?
Mr. Kinkopf. Yes.
Mr. King. And then, are you aware of any individuals that
work for the USDA that were identified as discriminators?
Mr. Kinkopf. No, I am not.
Mr. King. And would you not question how it would be that
we could pay off billions of dollars in damages but not find a
single perpetrator within our USDA?
Mr. Kinkopf. I would not say that there were no such
perpetrators. The Department of Agriculture conceded that this
had happened. I do not know names. The Department of
Agriculture conceded that this had happened, and once that
happens, I think it is perfectly legitimate for the Justice
Department to say we are going to compensate the victims of
that discriminatory----
Mr. King. I do not remember Dan Glickman's confession to
that back sometime in the 1990s, and I do not remember any
evidence with regard to that discrimination. It always seemed
curious to me that the department that could make such a
confession and put such an all-out effort out to identify
people who are victims of discrimination could not identify a
single perpetrator to fire or to at least use as an example.
I turn to Professor Figley. Are you aware of any
perpetrators within the USDA with regard to these cases?
Mr. Figley. I am not, and there was some discussion.
Mr. King. Your microphone, please.
Mr. Figley. I am not, and there was some discussion that
there were pretty good defenses that might have been available.
The point that, if that answers your question.
Mr. King. Well, thank you. Did you have a tally on the
totals that were paid out on the four cases that you testified
on? Did that get added up?
Mr. Figley. I could add it up, I have not. It was about
$2.25 billion for Pigford.
Mr. King. Does that begin with a B?
Mr. Figley. 1.1 or 1.2 billion dollars for Keepseagle, the
Hispanic movement of farmers ended up only $160 million,
although it had been portrayed as a billion-dollar program.
Mr. King. So, the totals you have given me would be
consistent with the total given by Mr. Jacobs that the risk
corridors will end up being considerably more than all four
cases that have to do with discrimination at USDA?
Mr. Figley. Yes.
Mr. King. You would agree with that statement?
Mr. Figley. Yes.
Mr. King. And I want to turn back to you, Professor
Kinkopf, and ask you when you said that Obama is completely
within the letter of the law and nothing was unprecedented
regarding these cases, and I will acknowledge that the
authority granted seems to be within that authority granted but
would your statement also include, and I would just ask what
your position would be.
Do you think if this was litigated and taken back to
Article I, Section 9, Clause 7, no money shall be drawn from
the Treasury but in consequence of appropriations made by law?
I could complete that, but would you not understand that
clause? Do you expect that could be litigated with regard to
taking it back to the Constitution if someone had standing,
could the argument then be made that this kind of expenditures
and the billions of dollars are consistent with the
Constitution?
Mr. Kinkopf. The Judgment Fund is an appropriation by law.
Mr. King. Slush fund appropriation by law.
Mr. Kinkopf. So, as long as it is within the judgment and
it is an appropriation by law and it is within the
Constitution.
Mr. King. But in consequence for appropriation made by law
and a regular statement in account of the receipts and
expenditures of all money shall be published from time to time.
Has that been complied with?
Mr. Kinkopf. What the Constitution requires has been
complied with, although you also point to what has long been a
problem with the receipts provision, which is no one has
standing because there are any number of off budget
expenditures that are made. CIA expenditures are kept secret.
There is no provision for that in the Constitution, right? So,
with how practice has come to understand that clause, the
Judgment Fund is within it.
Now, the measures you are considering to improve
transparency I think are salutary, and I would support. I do
not think the Constitution requires them, although I think you
are quite right to perceive it if I am understanding the
premise of your question that legislation that would require
greater transparency would promote those constitutional values.
Mr. King. Thank you, Professor Kinkopf, and I appreciate
your testimony promoting a more transparency, and I appreciate
the bipartisan look at this transparency, and I want to let
people know that not am I only determined to get to the bottom
of this, but I believe we have a constitutional obligation to
do so, and when billions of dollars stack up without even
questioning the motivations for that, and I hear discussions
about our Attorney General and his integrity, I am thinking
about the answers I did not get from the previous Attorney
General.
And so with that, I see that my time has expired, and I now
recognize the ranking member for his questioning.
Mr. Cohen. Thank you, Mr. Chair. I find it unfortunately,
frequent that my friends--and the chair is one of my friends on
the other side, often in these issues about Trump
administration and Russia, go back and refer to something that
might have happened with Obama and they go but, but, but this
happened then, and it is not really important what happened
then, that is in the history books.
It is what is happening now on our watch, and to go back
and suggest that, oh, something happened then, does not mean
you should be mute on issues that are before us today.
Professor Kinkopf, you were involved with the Justice
Department, can the Attorney General do his job if he is under
a cloud of suspicion of giving false testimony before a Senate
panel?
Mr. Kinkopf. It certainly makes the job difficult. I would
not say it is impossible to do the job, I guess yes, it is
possible to do the job. It is much more difficult, depending on
how serious the cloud is.
Mr. Cohen. You were a counsel to Senator Biden during the
impeachment trial of President Clinton.
Mr. Kinkopf. That is true.
Mr. Cohen. The gravamen of that case was that he lied. It
was not the fact that he engaged in oral sex with an intern. It
was the fact that he lied about it, is that correct?
Mr. Kinkopf. That is correct.
Mr. Cohen. So, lying is real important under oath.
Mr. Kinkopf. That is correct.
Mr. Cohen. What is the proper remedy or where should this
Congress go when there is an issue about whether somebody gave
false testimony to the Senate under confirmation hearings?
Mr. Kinkopf. Well, if there is a serious and credible basis
for believing someone has given false testimony, then I think
Congress should take that very seriously and consider a
contempt citation and hearings in support of that.
Mr. Cohen. And would that be limited to the Senate where
the testimony was given or could it be this particular House as
well, and the Judiciary Committee sits in and involves the
integrity of our government and our Attorney General.
Mr. Kinkopf. This committee certainly has legitimate
oversight authority with respect to the Justice Department, so
it would be a legitimate exercise, and perhaps if the Senate
wanted to look into it, they might take precedence because it
was a Senate hearing.
Mr. Cohen. And Mr. Jacobs, I see you had some experience
with Mr. Pence?
Mr. Jacobs. That is correct.
Mr. Cohen. Sometimes, we have had people suggest that this
is just Democrats being upset about losing the election. I want
everybody to know my concern is not the Democrats. I am
concerned the Democrats lost the election. I am concerned that
the Russians might have influenced it, but I am more concerned
about the idea that we do not have somebody like Vice President
Pence as President who we do not have to have concerns about
possibly doing irrational things and blowing up the universe.
Your former boss has served on this committee, had a well-
earned reputation for being honest, somewhat little bleep with
the general, but it was clear that the general who led him
astray, and we would look forward to you being in the executive
branch.
So, it is not necessarily an issue with Republicans, it is
the particular person who is not really a Republican. He has
taken over the party in a coup. A coup at the ballot box, but
that is just kind of where we are.
On this law, Professor Figley, assuming I understand where
you are coming from on the farmer's suit and Professor Kinkopf
his, I do not it has to be settle a case that is done, you have
to have a place to pay it. This law would just make it public
and give notice. So, if that was done, we would know have known
more about it earlier about the T-note payments, but it would
not necessarily make it illegal, is that correct? Under this
proposed law?
Mr. Figley. Under the Openness Law, that bill, it would not
make any difference. As I understand it, this hearing is on a
broader topic at the Judgment Fund. If there was a cap placed
on the Judgment Fund, that would have made a difference.
Mr. Cohen. Okay, well that might be the case. My time is
about up. I am going to ask you a personal question just to see
if it is my eyes and my memory, has anybody else thought you
looked a little bit like Paul Newman?
Mr. Figley. Oh, I wish. Well, thank you. I will take that
home and see if it flies with my wife.
Mr. Cohen. Good. I yield back the balance.
Mr. King. Again, I thank the witnesses for your testimony.
Mr. Figley. Chairman, if I might make two brief points.
Mr. King. You are recognized.
Mr. Cohen. Paul Newman.
Mr. Figley. I wish. Professor Kinkopf suggested that
nothing done by the Obama administration was unprecedented.
Creating a new claims program without any input from Congress
is unprecedented, and he suggested that the Department of
Justice's best tradition calls for not hiding behind legal
defenses. It is the role of the Department of Justice to apply
the law equally to everyone, and when Congress places
substantive legal defenses into the law, it is not for
individuals within the Department of Justice to decline to use
those defenses.
The only way, and I speak now from 30 years' experience of
Justice, the only way that Justice can fulfill its obligations
is to apply the law to every claim, whether the claimant is
Little Sisters of the Poor or Hells Angels gang. It is not for
us to pick winners and losers, that is for Congress to decide,
and we must as Department of Justice attorneys assert every
proper legal defense in every case unless Congress gives us the
discretion not to do so.
Mr. King. Thank you, professor, and since we have broken
from protocol, I would acknowledge either one of the other two
witnesses if you have concluding statement or are you
comfortable with what you have delivered today?
Mr. Kinkopf. I am comfortable with what I have delivered, I
would simply add that what Professor Figley just said is
correctly the perspective of a line attorney in the Department
of Justice; however, at the higher levels of decision making,
at the cabinet level, much bigger policy concerns do and should
come into account, and concern about preserving the civil
rights of individual citizens and compensating those who have
been injured, are legitimately within that ambit, and I think
were legitimately taken into account by the Justice Department
in these cases.
Mr. King. Thank you, professor. Mr. Jacobs is comfortable
with his testimony. He would like to have it capped off here,
and I would conclude with this that the statement I made
earlier that I intend to drill into this, and get as complete
an audit as this can be achieved and to examine the
implications, especially if there is political motivation that
is indicated with where these dollars have been distributed, I
think we should recognize that, and I think the public should
know, and they can make their decisions when they go to the
ballot box.
So, universal statement here is transparency. I will do my
share to achieve that transparency, and I am confident Mr.
Cohen will as well.
I thank the witnesses for your testimony here today and
without objection, all members will have 5 legislative days to
submit additional written questions for the witnesses or
additional materials for the record. This hearing is now
adjourned.
[Whereupon at 9:47 a.m., the subcommittee adjourned subject
to the call of the chair.]