Citation Nr: 1142796 Decision Date: 11/22/11 Archive Date: 12/06/11 DOCKET NO. 08-19 065 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Chicago, Illinois THE ISSUE Entitlement to waiver of overpayment of nonservice-connected pension benefits in the amount of $44,184.00, to include the issue of the validity of the debt due to fugitive felon status. REPRESENTATION Appellant represented by: Disabled American Veterans WITNESS AT HEARING ON APPEAL The Veteran ATTORNEY FOR THE BOARD Biswajit Chatterjee, Associate Counsel INTRODUCTION The Veteran served on active duty in the military from December 1971 to March 1973. This appeal to the Board of Veterans' Appeals (Board) is from an October 2006 rating decision of the Department of Veterans Affairs (VA) Pension Office in Milwaukee, Wisconsin. Jurisdiction over the matter has been retained by the Regional Office (RO) in Chicago, Illinois. The Veteran testified before the undersigned Veterans Law Judge (VLJ) of the Board at a hearing at the RO (Travel Board hearing) in September 2011; a transcript of the hearing is of record. FINDINGS OF FACT 1. The Veteran's VA nonservice-connected pension was terminated effective December 27, 2001 due to fugitive felon status, resulting in an overpayment in the amount of $44,184.00. 2. There was no fraud, misrepresentation, or bad faith on the part of the Veteran in the creation of the debt. 3. Fault is shown on the Veteran's part in creation of the debt with no detrimental reliance is shown; and, while there would be undue hardship to the extent repayment of his debt is required, waiver of this debt would result in unjust enrichment and defeat the purpose of VA's Fugitive Felon Program. CONCLUSIONS OF LAW 1. The debt created by overpayment of nonservice-connected pension benefits based on fugitive felon status is valid. 38 U.S.C.A. §§ 5302, 5313B (West 2002); 38 C.F.R. §§ 1.962, 3.666 (2011). 2. The criteria for entitlement to waiver of recovery of overpayment of nonservice-connected pension benefits in the amount of $44,184.00 have not been met. 38 U.S.C.A. § 5302(a) (West 2002); 38 C.F.R. § 1.965 (2011). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS I. VCAA As provided by the Veterans Claims Assistance Act (VCAA), VA has duties to notify and assist a claimant in substantiating a claim for VA benefits. 38 U.S.C.A. §§ 5100, 5102, 5103, 5103A, 5107, 5126 (West 2002 & Supp. 2011); 38 C.F.R. §§ 3.102, 3.156(a), 3.159 and 3.326(a) (2011). But these notice and duty to assist provisions of the VCAA are only relevant to Chapter 51 of Title 38 of the United States Code; they do not apply in validity of debt and waiver of overpayment cases, as here, governed by Chapter 53. See Reyes v. Nicholson, 21 Vet. App. 370 (2007), citing Barger v. Principi, 16 Vet. App. 132 (2002)); see also 38 U.S.C.A. § 5302 (West 2002). II. Analysis A. Validity of the Debt The Veteran disputes the underlying validity of the debt of $44,184.00, from overpayment of nonservice connected pension benefits. He asserts that because he was not served with an arrest warrant after leaving Seattle where he was charged with burglary, he never became a fugitive felon. He essentially contends he lacked notice of an outstanding warrant and that it was Seattle's responsibility to extradite him. An overpayment is created when VA determines that a beneficiary or payee has received monetary benefits to which he or she is not entitled. 38 C.F.R. § 1.962. The issue of the validity of the debt is a threshold determination that must be made prior to a decision on a request for waiver of the overpayment. See Schaper v. Derwinski, 1 Vet. App. 430 (1991). Effective December 27, 2001, 38 U.S.C.A. § 5313B was enacted by Congress which provides that a Veteran may not be paid compensation benefits for any period during which such Veteran is a fugitive felon. A "fugitive felon" is defined by 38 U.S.C.A. § 5313B(b) as including a person fleeing to avoid prosecution, custody, or confinement relating to a felony offense, as well as a person violating a condition of probation or parole imposed for a felony. The implementing regulation governing pensions for fugitive felons, under 38 C.F.R. § 3.666(e) (2011), provides that: (1) Pension is not payable on behalf of a Veteran for any period during which he or she is a fugitive felon; (2) the term "fugitive felon" means a person who is a fugitive by reason of: (i) Fleeing to avoid prosecution, or custody or confinement after conviction, for an offense, or an attempt to commit an offense, which is a felony under the laws of the place from which the person flees; or (ii) Violating a condition of probation or parole imposed for commission of a felony under the Federal or State law. The term "felony" includes a high misdemeanor under the laws of a State which characterizes as high misdemeanors offenses that would be felony offenses under Federal law. 38 C.F.R. § 3.666(e)(3). Black's Law Dictionary (8th Ed. 2004) defines "fugitive" as a person who flees or escapes; a refugee; or as a criminal suspect or a witness in a criminal case who flees, evades, or escapes arrest, prosecution, imprisonment, service of process, or the giving of testimony, especially by fleeing the jurisdiction or by hiding. In an April 1995 decision, the RO granted the Veteran's claim for entitlement to nonservice-connected pension benefits. The RO subsequently received notice in April 2006 from VA's Office of Inspector General (OIG), Fugitive Felon Program, which included an Investigative Summary Form showing an outstanding felony warrant for the Veteran's arrest that had been issued by the King County police department in Seattle, Washington. The charge was burglary, and the report states it was outstanding since February 1981. Accordingly, in July 2006, the RO notified the Veteran it was terminating his service-connected compensation benefits, retroactively from December 27, 2001 (effective date of the fugitive felon provisions of Public Law 107-103), because he was classified as a fugitive felon under VA law and regulations. The VA's Debt Management Center then calculated an overpayment of benefits, and resulting indebtedness by the Veteran, in the amount of $44,184.80. By all indications, this warrant has not been quashed or recalled; it is still outstanding. Hearing Transcript (T.) at 2-3. The Veteran testified that he was arrested and charged with burglary in Seattle in 1981 along with two others. Following his arrest, he stated he was released "under supervised own recognizance" and proceeded to leave Seattle. The Veteran admitted, "I knew there would be one [(an arrest warrant)] when I left on the charge." See personal hearing transcript, at 6. Here, the Board finds the Veteran has been a fugitive felon under 38 U.S.C.A. § 5313B(b) and 38 C.F.R. § 3.666(e). The Veteran admits that he left the jurisdiction of Seattle in 1981, with knowledge that he had been arrested for burglary and that he left before his burglary case had been resolved by the Seattle, Washington criminal courts. The Veteran was clearly fleeing to avoid prosecution for a serious criminal offense, burglary. As mentioned, the Veteran essentially contends he had no notice of an outstanding warrant until VA stopped his pension benefits, because he was not served with a warrant or extradited by the Seattle, Washington authorities. In the recent case of Mountford v. Shinseki, 24 Vet.App. 443 (2011), the United States Court of Appeals for Veterans Claims (Court) affirmed a February 2009 Board decision that denied entitlement to a restoration of benefits for service-connected schizophrenia prior to May 25, 2004, because the Veteran was found to be a "fugitive felon" under 38 U.S.C. § 5313B. The Court determined 1) that an adjudication of guilt is not required under 38 U.S.C. § 5313B(b)(1)(B) for a Veteran to be considered a fugitive felon, and 2) that actual knowledge that a warrant had been issued is irrelevant and not part of the statutory requirement. The Court reasoned that the statutory language of § 5313B was clear and unambiguous in including the violation of a condition of probation as making one a fugitive felon. The Court, in rejecting the Veteran's argument that conviction for a felony was required for one to be considered a fugitive felon, reasoned that had Congress intended an adjudication of guilt to be necessary, the word "conviction" would have been used, mirroring the language of 38 U.S.C. § 5313B(b)(1)(A), rather than the word "commission." In addressing the dissent's conclusion that the Veteran could not have been a fugitive felon because he was not aware that a warrant had been issued, the Court noted that nowhere in the statute or its legislative history was there the slightest suggestion that one must have knowledge of the warrant. Rather, the plain language of the statute very simply defined "fugitive felon" as one who violates the conditions of probation. Applying this case here, the Board finds it is inconsequential whether the Veteran was served with the arrest warrant after he left Washington State. Under Mountford, there is no requirement of knowledge of his outstanding arrest warrant. It is sufficient that the Veteran knowingly fled from Seattle to avoid prosecution for his burglary charges. The Board finds he has been a fugitive felon since 1981. Consequently, the debt is valid. B. Waiver of Overpayment The Veteran also seeks waiver of any indebtedness resulting from the termination of his pension benefits. VA is authorized to grant a waiver of recovery of indebtedness when collection of the debt would be against "equity and good conscience." 38 U.S.C.A. § 5302(a) (West 2002); 38 C.F.R. §§ 1.962, 1.963(a), 1.965 (2011). The standard of "equity and good conscience" will be applied when the facts and circumstances in a particular case indicate a need for reasonableness and moderation in the exercise of the Government's rights. The decision reached should not be unduly favorable or adverse to either side. Ridings v. Brown, 6 Vet. App. 544, 546 (1994). The law, however, precludes a waiver of recovery of an overpayment or the collection of any indebtedness where any one of the following elements is found to exist: (1) fraud, (2) misrepresentation, or (3) bad faith. 38 U.S.C.A. § 5302(c); 38 C.F.R. § 1.962(b). "Bad faith" is defined in VA regulations as unfair or deceptive dealing by one who seeks to gain thereby at another's expense. Thus, a debtor's conduct in connection with a debt arising from participation in a VA benefits/services program exhibits bad faith if such conduct, although not undertaken with actual fraudulent intent, if undertaken with intent to seek an unfair advantage, with knowledge of the likely consequences, and results in a loss to the government. 38 C.F.R. § 1.965(b). Consequently, before determining whether equity and good conscience affords the Veteran the right to a waiver, it first must be determined whether there was fraud, misrepresentation, or bad faith on his part in the creation of the debt. Id. When applying for his pension benefits, the Board does not find there was any evidence of fraud, misrepresentation, or bad faith on the Veteran's part. See 38 U.S.C.A. § 5302(c). While the evidence indicates that he was aware that an arrest warrant would likely be issued since he was leaving on an open charge of burglary, there is no indication that he was attempting to defraud the VA or intentionally misrepresent facts regarding his past criminal status. There is no evidence in the record the Veteran was being deceptive or purposely seeking an unfair advantage knowing that it would result in a loss to the government. See 38 C.F.R. § 1.965(b). When there is no indication of fraud, misrepresentation, or bad faith in the record, the indebtedness shall be waived if the recovery of the overpayment would be against equity and good conscience. 38 U.S.C.A. § 5301(a); 38 C.F.R. §§ 1.962, 1.965. The phrase "equity and good conscience" means arriving at a fair decision between the obligor and the Government. In making this determination, consideration will be given to the following elements, which are not intended to be all-inclusive: (1) the fault of the debtor, (2) balancing of faults between the debtor and VA, (3) undue hardship (whether collection would deprive the debtor of basic necessities), (4) defeat of the purpose for which the benefits were intended, (5) the unjust enrichment of the appellant, and (6) whether the appellant changed positions to his or her detriment in reliance upon a granted VA benefit. 38 U.S.C.A. § 5302 ; 38 C.F.R. § 1.965(a). Each of the six elements must be addressed. See Ridings v. Brown, 6 Vet. App. 544, 546 (1994). Although the Board acknowledges the validity of the debt, there are sufficient grounds to grant a waiver of recovery of indebtedness. Regarding the first and second elements of equity and good conscience under 38 C.F.R. § 1.965(a), fault of the debtor and balancing of faults, the Board finds that the Veteran bears fault in the creation of the debt because he admittedly fled prosecution for a felony of burglary by leaving Seattle, Washington for Chicago, thereby causing the outstanding arrest warrant, and he failed to have the matter recalled or notify VA. There are also no administrative errors that would weigh fault against the VA. Fault is balanced against the Veteran. Indeed, the Board cannot ignore the plain and simple fact that the Veteran remains at fault in that he is still in fugitive felon status. Recognition is given the Veteran's assertion that he is unable to travel to Seattle to quash the outstanding warrant due to his limited income, and that he would welcome extradition. However, such does not negate that the Veteran's fugitive status places him at fault in creating the debt. Regarding the third element of undue financial hardship, the Veteran had previously submitted a financial status report, dated in December 2001, for consideration by the RO's Waiver Committee for a prior, unrelated appeal. From this report, there was no indication that the Veteran is currently employed, has attained any higher education, or can support himself in general. He reported few assets ($6,500). His required living expenses of rent ($350), food ($175), utilities ($35), clothing ($40) and transportation ($100), amounted to a total of $700 in monthly expenses. The Board emphasizes that his monthly income of $466 failed to cover these modest expenses. His prior income derived almost exclusively from his VA benefits, later stopped due to his fugitive felon status. There is no indication he has since obtained any alternative sources of income, aside from his prior VA benefits. Based on these considerations, the Board finds that collection of the overpayment of pension benefits in the calculated amount of $44,184.80 principal debt would place an undue hardship on the Veteran. With regard to the fourth element, whether repayment of the debt would nullify the objective for which the VA benefits were intended, the Board must balance the competing objectives of the VA pension benefits system and the VA's Fugitive Felon Program. In this case, the Board finds the intent/purpose/needs of the Fugitive Felon Program outweigh those of the pension system, such that a waiver is not appropriate. VA pension benefits are authorized for the payment of a nonservice-connected disability pension to a wartime Veteran who has the requisite service and who is permanently and totally disabled. 38 U.S.C.A. §§ 101, 1521 (West 2002). In contrast, recovery of this debt would defeat the purpose of VA's Fugitive Felon Program. In addressing how fugitive felon status affected payment of VA benefits to dependents, a VA Office of General Counsel opinion noted that the VA fugitive felon provision was modeled after Public Law No. 104-193, which barred fugitive felons from receiving Supplemental Security Income or Insurance from the Social Security Administration and food stamps from the Department of Agriculture. VAOPGCPREC 7-2002 (December 2, 2002). It was noted that Public Law No. 104-193 "was designed to cut off the means of support that allows fugitive felons to continue to flee." Id, quoting S. Rep. No. 107-86, at 17 (2001). Clearly, Congress'' intention was to deny fugitives the means to maintain themselves in that status. Id. The Social Security Administration's (SSA's) fugitive felon provision is essentially identical to the VA provision cited above. See 42 U.S.C.A. § 1382(e)(4)(A). In this case, waiver of the Veteran's debt would enable him to continue to flee from criminal authorities, as he has willfully done for over three decades now. The Board acknowledges the pension system aids financially distraught and disabled Veterans, and he has certainly suffered from severe psychiatric disability. Nonetheless, the needs of the fugitive felon provisions must be given greater weight in this egregious circumstance, where his fugitive felon status remains unabated due to his continued flight from the Seattle criminal court system. Waiver of the debt would only encourage his mistaken belief that King County's failure to extradite him negates his fugitive felon status. Regarding the fifth element, there would be unjust enrichment of the Veteran if a waiver were allowed. It is true that, by all indications, he has been homeless on the streets of Chicago and recently living in a shelter, while suffering from severe psychiatric disability, and that waiver of overpayment would only eliminate debt from an impoverished Veteran. However, to waive the overpayment on such a basis would completely undermine the express intent of 38 U.S.C.A. § 5313B, which bars payment to a veteran who is a fugitive felon. The law, and its implementing regulation, provide no financial exceptions for barring the receipt of pension. Recovery of the overpayment would clearly result in unjust enrichment. As for the sixth element, there are no indications that the Veteran detrimentally relied upon VA pension benefits by changing his financial position. As shown above, the Board finds in this particular case that repayment of the debt would create an undue hardship on the Veteran. However, against this, the Board points to the fact that the Veteran was at fault for creation of the debt, and continues to be at fault; and that there was no fault by VA in creating the debt or detrimental reliance on the payments. It is also very clear that a waiver of the overpayment would result in unjustment enrichment by the Veteran, and that a waiver nullify the objective for which the Fugitive Felon Program was created. Indeed, the thought of allowing the Veteran to recover over $44,000 while he admits that he had knowledge of his fugitive felon status and that he remains a fugitive felon seems unconscionable. Accordingly, it would not be against equity and good conscience for VA to recover the overpayment of pension benefits, in the amount of $44,184.80. See 38 U.S.C.A. § 5302; 38 C.F.R. § 1.965(a); Ridings v. Brown, 6 Vet. App. 544, 546 (1994). ORDER The debt created based on overpayment of compensation due to fugitive felon status in the amount of $44,184.00 is valid. Entitlement to a waiver of recovery of an overpayment in the amount of $44,184.00 is denied. ____________________________________________ MICHAEL A. HERMAN Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs