John J. Franks, M.D. v. Robert P. Nimmo, in His Official Capacity as U. S. Administrator of Veterans Affairs U. S. Veterans Administration T. P. Mullon, in His Official Capacity as Va Regional Administrator, Midwestern Region Mansell G. Piper, Individually and in His Official Capacity as Medical Center Director, Veterans Administration Medical Center, Denver, Colorado William S. Hammond, M.D., Individually and in His Official Capacity as Chief of Staff, Vamc, Denver, Colorado and Philip A. Varneck, Individually and in His Official Capacity as Personnel Officer, Vamc, Denver, Colorado

Citation: 683 F.2d 1290Docket: 81-2187

Court: Court of Appeals for the Tenth Circuit; August 18, 1982; Federal Appellate Court

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An appeal was made by the defendants, collectively referred to as the Veterans Administration (VA), against a district court's preliminary injunction favoring plaintiff John J. Franks, M.D. The injunction arose from an administrative proceeding regarding Franks' potential removal from his full-time role as Associate Chief of Staff for Research and Development at the VA Medical Center in Denver, Colorado. Franks argued that he deserved more procedural due process than what the VA provided, claiming his status as a 'permanent employee' instead of a 'probationary employee.' 

Franks began his affiliation with the VA Medical Center in 1969, initially serving as a part-time Associate Chief of Staff without pay, transitioning to compensated part-time work in 1971, and eventually securing a full-time salaried position in July 1980 through a collaborative agreement with the University of Colorado Medical School and the VA. At this point, he received a permanent appointment and began a two-year probationary period.

Following Franks' full-time appointment, concerns were raised by fellow researchers regarding his performance, prompting the hospital director to commission an evaluation of the research department. A site visit team evaluated the department and recommended against retaining Franks in his administrative role, although it did not address his roles as a medical researcher or instructor, which remained unaffected by the evaluation.

Interviews between Dr. Franks and VA officials did not resolve issues regarding his employment, leading to an administrative process to assess his removal from the position of ACOS. Dr. Franks had been employed full-time for less than a year and was considered a probationary employee under 38 U.S.C. 4106. Following the initiation of this process, he was given 90 days to improve his performance based on management recommendations, during which a rating report from management was required. This report, along with a subsequent review by an independent professional standards board, had not been completed when Dr. Franks filed his action in district court.

Dr. Franks argued he was a permanent employee, citing his appointment form, which did not indicate a probationary status. However, VA personnel clarified this was a computer error and confirmed that Dr. Franks had been informed of his probationary status through memos. The appointment form referenced the authority under 38 U.S.C. 4104, indicating that medical personnel are either full-time permanent employees or under temporary appointments.

Additionally, VA regulations outline previous services that could affect the probationary period. The district court ordered that the VA could not treat Dr. Franks as a probationary employee under Chapter 73 of Title 38, effectively halting ongoing administrative proceedings. The appellate court subsequently issued a stay on this injunction pending appeal.

On August 18, 1981, the district court granted a preliminary injunction in favor of Dr. Frank, despite the defendants' argument that he had not exhausted all available administrative remedies, specifically that the professional standards board had not issued a decision. The court clarified that its ruling did not infringe upon administrative discretion but was limited to determining Dr. Frank's employment status to guide the defendants on necessary procedures. The court contrasted this case with *Sampson v. Murray*, highlighting that Dr. Frank's situation differed because he was not a probationary employee, had demonstrated potential irreparable injury to his past research efforts, and the court's remedy did not encroach on administrative discretion to the same extent as in *Sampson*.

The VA argued for the injunction to be set aside, claiming the district court lacked jurisdiction due to Dr. Frank's failure to exhaust administrative remedies, made incorrect legal determinations regarding his non-probationary status, and acted with judicial discretion that was either clearly erroneous or improvident. However, it was concluded that the district court erred in issuing the injunction, as there was no evidence of detriment to Dr. Frank's employment status or performance. The court noted that any embarrassment he might face during administrative proceedings did not constitute the 'irreparable injury' necessary for injunctions, referencing *Lundgrin v. Claytor*. Since the administrative proceedings were still ongoing at the time of the injunction, their outcomes remained speculative, making them unsuitable for judicial review under 5 U.S.C. 704, which defines the finality of agency actions.

In Ryan v. Pitkin Iron Corporation, 444 F.2d 717 (10th Cir. 1971), the court ruled against issuing a preliminary injunction concerning a challenge to a Special Use Permit granted by the Forest Service while an administrative appeal was pending. The court emphasized the absence of evidence for irreparable injury, which negated the need for temporary relief. The plaintiffs argued that housing on a millsite was an improper use, citing violations of 30 U.S.C. 42 and 43 C.F.R. 3417.1, 3844.1. The court upheld that such challenges must first be addressed through the appropriate administrative agency rather than through federal court, as no final administrative decision had been made, precluding judicial review under 5 U.S.C. 704.

In a separate case concerning Dr. Franks, the trial court initially found a likelihood of irreparable injury due to potential jeopardy to significant research. However, it was concluded that mere loss of a federal job, income, and reputation did not constitute sufficient irreparable injury. The district court's finding of irreparable injury was deemed erroneous, as there was no evidence that Dr. Franks' employment status or duties had changed, maintaining the status quo. The doctrine of exhaustion of administrative remedies was reiterated, highlighting that judicial review is only permissible after final agency action, allowing the agency to fully develop the factual background and potentially correct its own errors before court intervention is warranted.

Intervention by courts before the exhaustion of administrative remedies is warranted only when it is evident that fundamental rights and interests of a private party are being harmed in a way that the administrative process cannot adequately address. The doctrines of 'finality' and 'exhaustion' emphasize that judicial involvement is appropriate only when hardship results in irreparable injury. In the current case, the district court’s injunction was based on determining Dr. Franks’ employment status, an issue central to the case. 

The court acknowledged that the determination of Dr. Franks’ employment status requires applying established facts to specific statutory interpretations. However, the injunction against the VA from treating Dr. Franks as anything but a non-probationary employee was deemed to improperly disrupt the administrative proceedings. Although the court's conclusion regarding Dr. Franks’ status may ultimately be correct, it was considered premature. Federal declaratory judgment should not interfere with issues reserved for administrative bodies. 

Additionally, there was no evidence presented that Dr. Franks would suffer irreparable injury due to the VA proceedings. Claims of potential harm to his research efforts were found to be speculative and insufficient to justify the disruption caused by the injunction. The court emphasized that simply alleging the groundlessness of the administrative charge does not bypass the requirement for exhaustion of remedies. Thus, the finding of irreparable injury was deemed inadequate to justify the injunctive relief granted.

The court reversed and remanded the case with instructions to vacate the preliminary injunction. Under 38 U.S.C. § 4104, the Administrator is authorized to appoint additional personnel for veterans' medical care, including physicians, dentists, podiatrists, optometrists, nurses, physician assistants, and expanded-function dental auxiliaries. According to 38 U.S.C. § 4106, appointments for these medical roles are contingent upon satisfactory qualification assessments, which are conducted without civil-service requirements. Appointments are initially for a two-year probationary period, during which a review board evaluates the performance of appointees; those deemed not fully qualified may be separated from service.