In the 82-page ruling Judge Conti Acknowledges that there are problems, deficiencies and delays, but he says an overhaul of the system is not within the jurisdiction of his court, but instead lies with Congress and the Department of Veterans Affairs.
The lawsuit tried to force the VA to diagnose and treat veterans who show signs of post traumatic stress disorder in a timely manner. But, Judge Samuel Conti said it was not up to him to order a complete overhaul of the VA system.
"There is no remedy if the courts will not step in to enforce the constitution when the rights of veterans are being violated," says Gordon Erspamer, the attorney representing the vets.
Enrique Gonzalez served in Iraq. He underwent testing for PTSD and has been waiting since last February for an answer from the VA.
"It's still ridiculous to wait years for something that is going on daily in our lives, in our heads and other aspects and other issues, health issues that can be resolved pretty soon," says Enrique.
Tim Chapman was diagnosed with PTSD after he tried to kill himself.
"How many troops are committing suicide after coming home? For them to sit here and decline it like that, decline the help like that, it's like a big slap in the face," says Chapman.
The VA's mental health director acknowledged that there were around 1,000 suicide attempts a month among veterans.
In court, lawyers for the vets showed an email where a VA psychologist suggested changing a diagnosis of PTSD to a diagnosis of adjustment disorder -- to avoid giving vets any compensation.
The U.S. Department of Veterans Affairs said "the court's decision speaks for itself. The VA is pleased with the decision."
The judge in this case left the proposed overhaul in the hands of congress and the VA.
East Bay Congressman Jerry McNerney will now ask to hold hearings with the veterans committee.
"They covered up veterans suicides, then they encouraged medical professionals not to diagnose post traumatic street disorder in veterans and then they failed to disclose drug side effects for drugs they were administrating to veterans."
So while the matter seems to be heading to Congress, the lawyers for the veterans groups will now take it to the 9th U.S Circuit Court of Appeals in San Francisco.