The Third Circuit Court of Appeals vacated and remanded the federal district court’s denial of a preliminary injunction sought by the appellants to halt enforcement of a New Jersey statute that prohibited anyone from receiving compensation for helping Veterans submit claims for benefits except as allowed under federal law and for any services rendered before an appeal to the Board of Veterans’ Appeals. Veterans Guardian VA Claim Consulting LLC v. Platkin, No. 24-1097 (3rd Cir. Apr. 1, 2025).
Federal law requires those who act as an agent or attorney providing assistance with Veterans benefits to be accredited and prohibits them from charging for services before the Department of Veterans Affairs (VA) makes an initial benefits decision, but it does not provide the VA with the power to enforce those rules. However, to provide an enforcement mechanism, New Jersey passed a law prohibiting any person from receiving compensation (1) for assisting with claims for Veterans benefits except as allowed by federal law and (2) for any services rendered before an appeal of the VA’s initial decision to the Board of Veterans’ Appeals.
Veterans Guardian is a national consulting company that, for a fee, provides Veterans with advice on claiming disability benefits. John Rudman and Andre Soto were Veterans in New Jersey who planned to use Veterans Guardian’s services. However, Veterans Guardian stopped doing business in New Jersey due to concern that its business model violated the New Jersey statute. Veterans Guardian, Rudman, and Soto filed suit against New Jersey’s attorney general in federal district court seeking a preliminary injunction, asserting that the New Jersey law violated their First Amendment rights. The court denied the preliminary injunction, and they appealed to the Third Circuit Court of Appeals.
In its review, the Third Circuit examined the entire record independently because the case involved the First Amendment. Although the plaintiff typically must show they are likely to succeed on the merits to get a preliminary injunction, in First Amendment cases, the burden of proof is on the government to show the plaintiff is unlikely to succeed on the merits. The court determined that the district court had erred in deciding that the New Jersey statute did not implicate the First Amendment and that the plaintiffs were unlikely to succeed on the merits. Rather, there was a reasonable probability that Veterans Guardian could show that its services were speech and that the New Jersey law burdened its speech by prohibiting it from charging for that speech. The court rejected New Jersey’s arguments that the statute only targeted charging money and that Veterans Guardian’s speech was integral to illegal conduct.
In addition, the court determined that the case should be remanded so the district court could determine whether the New Jersey statute, which incorporates federal accreditation requirements, was a neutral licensing scheme regulating professional conduct that would warrant less scrutiny than other professional speech and whether the law was content-neutral based on its effect on speech. The court also remanded the case to the district court so it could analyze the constitutionality of the two sections of the New Jersey law separately rather than only addressing the provision restricting those who can charge for services to those who are accredited. The court expressed serious doubt about the constitutionality of the statute’s prohibition on charging for counseling before an appeal, stating that it must satisfy some level of heightened scrutiny, which should be determined on remand. In addition, the court indicated that, on remand, the district court must find more facts to determine whether New Jersey’s law was tailored to pursue its interest in protecting Veterans from fraud and predatory pricing or if less restrictive alternatives were available and to analyze nonmerit factors in weighing whether a preliminary injunction should be granted. Thus, the court vacated and remanded to the district court.
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