The Supreme Court declined yesterday to disturb a law enacted during the Civil War that forbids lawyers to charge veterans more than $10 for their services -- a limitation that, in effect, denies today's veterans legal assistance in obtaining disability benefits from the Veterans Administration.
Justice William H. Rehnquist, writing for the majority in the 6-to-3 decision, said the 1864 law's fee ceiling, aimed at protecting veterans from greedy lawyers, was proper and that a U.S. District Court judge who struck down the law did not have sufficient grounds to do so.
Rehnquist said that Congress had a legitimate interest in limiting fees to ensure that veterans, not lawyers, receive the benefits and to keep the claims process "as informal and nonadversarial as possible."
Veterans organizations provide trained "service agents" who help veterans free of charge, Rehnquist said, and lifting the fee cap would likely "complicate a proceeding which Congress wished to keep as simple as possible."
Two veterans organizations and four individual veterans challenged the law, which includes criminal penalties for anyone who overcharges. They said that the VA process is nonadversarial in name only and there are at least 30,000 disputed claims each year. They also argued that lawyers are vital for such complex cases as those involving psychological trauma or injuries from chemicals such as Agent Orange or from atomic testing.
Justice John Paul Stevens, in a harsh 14-page dissent joined by Justices William J. Brennan Jr. and Thurgood Marshall, said the court majority "does not appreciate the value of individual liberty," and the fee limitation "aimed at unscrupulous attorneys" is "unwise and an insult to the legal profession."
"Only if it is assumed that the average lawyer is incompetent or unscrupulous can one rationally conclude that the efficiency of the agency's work would be undermined" by allowing veterans to hire lawyers, Stevens said.
A lawyer may be unnecessary in most cases and "counter-productive" in a few, Stevens said, but that "does not justify a total prohibition on their participation."
The $10 cap is equivalent to about $580 in current dollars, he estimated.
Brennan, in a separate dissent, noted that it was not clear that Rehnquist, although he had six votes in this case, had a clear majority to uphold the law's blanket limitation.
Justices Sandra Day O'Connor, joined by Justice Harry A. Blackmun, sided with Rehnquist, but they said the limitation may be unconstitutional in some cases and the trial judge, when considering the case, "is free to and should consider any individual claims" that the procedures were inadequate.
Harold J. McElhinny, an attorney for the veterans, said he is "confident that when we are able to complete the record on the treatment afforded to a large number of veterans, that we will be able to convince the district court again and the Supeme court, if necessary" that a blanket limitation is unconstitutional.
A narrowly divided court also ruled yesterday that state agencies cannot be sued in federal courts for discriminating against the handicapped because the Eleventh Amendment gives states immunity from such suits.
Justice Lewis F. Powell Jr., writing for the court, said that the states, in accepting funds under the Rehabilitation Act of 1973, do not waive their immunity from such suits and that Congress, in passing the law, did not specifically abrogate that immunity.
The 5-to-4 decision threw out a suit by a man who claimed he was denied a job at a California state hospital because he had diabetes and was blind in one eye.
The ruling in Atascadero State Hospital v. Scanlon, sparked a spirited 55-page dissent from Brennan, who accused the majority of "putting the federal judiciary in the unseemly position of exempting the states from compliance with laws that bind every other legal actor in our nation."
Brennan, Marshall, Blackmun and Stevens held that the majority's analysis "rests on flawed premises, misguided history, and an untenable vision of the needs of the federal system it purports to protect."
In other action, the court:
*For the third time in five years failed to resolve a controversy between developers and local governments over whether the Constitution requires businesses hurt by zoning changes to be compensated.
Blackmun, writing for himself and six other justices in Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City (Tenn.), cited procedural flaws in sending the case back to the lower courts. Justice Byron R. White dissented and Powell did not vote in the case.
*Ruled 6 to 3 that the National Stolen Property Act does not apply to someone who violates federal copyright laws and sells bootleg Elvis Presley records across state lines.
Blackmun said that Congress did not intend the law to cover transportation of material sold in violation of copyright laws. The court overturned part of a Towson, Md., man's conviction but did not not review his conviction and one-year prison sentence on other charges.
Powell, White and Chief Justice Warren E. Burger dissented in Paul Edmond Dowling v. U.S.