Citation Nr: 1413598 Decision Date: 03/31/14 Archive Date: 04/08/14 DOCKET NO. 12-08 227A ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Hartford, Connecticut THE ISSUE Validity of a debt of $34,502.93 due to the retroactive discontinuance of VA benefit payments and resulting overpayment based on fugitive felon status from December 27, 2001 to March 9, 2010, and whether waiver of recovery of any portion of this debt found to be valid is warranted. REPRESENTATION Appellant represented by: The American Legion WITNESS AT HEARING ON APPEAL The Veteran ATTORNEY FOR THE BOARD Rutkin, J.M. INTRODUCTION The Veteran served on active duty from November 1993 to July 1999. This matter comes before the Board of Veterans' Appeals (Board) on appeal from an October 2007 decision of the Department of Veterans Affairs (VA) Regional Office (RO) in Hartford, Connecticut, which determined that the Veteran was in fugitive felon status and that benefit payments would be discontinued retroactively from December 27, 2001. The VA Debt Management Center consequently assigned an overpayment debt of $34,502.93 based on benefits wrongfully received while the Veteran was in fugitive felon status. The Veteran presented testimony at a November 2013 hearing before the undersigned. A transcript is of record. After the appeal was certified and the case transferred to the Board, the Veteran submitted additional evidence and waived his right to initial review of this evidence by the agency of original jurisdiction. See 38 C.F.R. § 20.1304(c) (2013). Moreover, the additional evidence is simply a duplicate copy of the December 2010 Iowa judgment entry already of record and considered by the RO. FINDINGS OF FACT 1. An arrest warrant was issued for the Veteran in Des Moines County, Iowa in August 1997, charging the Veteran for a felony under Iowa law; the warrant was not void from its inception or otherwise dismissed, quashed, recalled, or cleared prior to the Veteran's March 10, 2010 arrest. 2. VA determined that from December 27, 2001 (the effective date of the fugitive felon provisions of Public Law 107-103) until March 10, 2010, the date of the Veteran's arrest for the crime charged in the August 1997 warrant, the Veteran was a fugitive felon, and discontinued his compensation payments for that period of time, resulting in an overpayment of past benefits he received during this period in the amount of $34,502.93. 3. Prior to a March 2007 letter from the RO notifying the Veteran of the outstanding August 1997 warrant, the Veteran was unaware that it had been issued or that he was being prosecuted for the alleged crime that gave rise to the warrant. 4. After the Veteran was notified of the warrant in the March 2007 letter, the warrant remained outstanding until March 10, 2010, when the Veteran was arrested. 5. The Veteran was notified of the debt of $34,502.93 in an October 2007 letter, and did not submit a request for waiver of indebtedness until September 2011. CONCLUSIONS OF LAW 1. Fugitive felon status prior to March 2007, the date of the RO letter notifying the Veteran of the outstanding August 1997 warrant, is not established, and therefore that portion of the $34,502.93 debt based on an overpayment of benefits received prior to the March 2007 letter is not valid. 38 U.S.C.A. § 5313B (West 2002); 38 C.F.R. § 3.665 (2013). 2. Fugitive felon status from March 2007 is established, and any portion of the debt of $34,502.93 allocable to the period beginning July 1, 2007 is valid. 38 U.S.C.A. §§ 5314, 5313B (West 2002); 38 C.F.R. §§ 1.911, 3.665 (2013). 3. Waiver of recovery of any portion of the debt of $34,502.93 allocable to the period beginning July 1, 2007 is not warranted. 38 U.S.C.A. § 5302 (West 2002); 38 C.F.R. § 1.963 (2013). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS I. VA's Duties to Notify and Assist The Veterans Claims Assistance Act of 2000 (VCAA), Pub. L. No. 106-475, 114 Stat. 2096 (2000) (codified as amended at 38 U.S.C.A §§ 5100, 5102, 5103, 5103A, 5107 (West 2002), sets forth VA's duties to notify and assist claimants in substantiating a claim for VA benefits. See 38 C.F.R. §§ 3.102, 3.156(a), 3.159, 3.326(a) (2013). However, the VCAA does not apply to cases involving recovery of overpayment based on indebtedness or the validity of the underlying debt, which are not claims for benefits. See Reyes v. Nicholson, 21 Vet. App. 370, 379-80 (2007) Lueras v. Principi, 18 Vet. App. 435, 438 (2004); Barger v. Principi, 15 Vet. App. 132 (2002). Thus, the provisions of the VCAA do not apply in this matter. II. Compliance with Hearing Officer's Duties At the November 2013 Board hearing, the Veteran had an opportunity to provide testimony in support of his contention that fugitive felon status was not warranted, facilitated by questioning from the undersigned and his representative. With respect to the determination of waiver of overpayment and fugitive felon status as of the March 2007 letter notifying the Veteran of the outstanding warrant, the outcome is determined by applicable law rather than disputed facts. Moreover, the decision to restore that portion of the debt of $34,502.93 for the period prior to July 1, 2007 is fully favorable. Thus, as further development could not affect the outcome of these issues, there is no prejudicial error with regard to the hearing officer's duties under 38 C.F.R. § 3.103(c)(2) (2013). See Bryant v. Shinseki, 23 Vet. App. 488, 498 (2010) (holding, in pertinent part, that the rule of prejudicial error applies in assessing any deficiency with respect to the hearing officer's duties under section 3.103(c)). III. Analysis The Veteran has argued in his December 2011 notice of disagreement (NOD) that he did not know of an August 1997 warrant for his arrest charging him with a felony, and therefore that VA benefits should not have been discontinued due to fugitive felon status, as he was not fleeing prosecution. Thus, he argues, the $34,502.93 debt created based on overpayment of benefits received by him during the period he was in fugitive felon status was invalid and should be restored. For the reasons discussed below, the Board agrees that fugitive felon status is not warranted for the period prior to a March 2007 letter notifying the Veteran of the outstanding warrant. Consequently, that portion of the $34,502.93 debt allocable to the period prior to July 1, 2007 should be restored to him. However, because the Veteran was on notice of the warrant after receiving the March 2007 letter, and yet did not turn himself in for arrest or otherwise clear the warrant prior to March 10, 2010, he was a fugitive felon during this period. Thus, any portion of the $34,502.93 debt allocable to the period from July 1, 2007 was valid. As explained below, he is not eligible for a waiver of this debt. 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 (2013). When VA has determined that a debt is owed based on such an overpayment, and once it has satisfied certain procedural requirements, it may collect the debt by offsetting current or future benefit payments until the debt has been repaid. See 38 C.F.R. § 5314 (West 2002); 38 C.F.R. §§ 1.911, 1.912a(a) (2013). The debtor, in turn, may challenge the validity or amount of the debt owed. See 38 C.F.R. § 1.911(c)(1); see also VAOPGCPREC 6-98; Schaper v. Derwinski, 1 Vet. App. 430, 437 (1991). The debtor may also apply for a waiver of any debt found to be valid. See 38 U.S.C.A. § 5302; 38 C.F.R. §§ 1.911(c)(2), 1.963. In this case, the procedural requirements for discontinuing the Veteran's benefit payments in order to recoup a debt of $34,502.93, as calculated by the VA Debt Management Center, have been satisfied. The Veteran was notified in a March 2007 letter that there was an outstanding warrant for his arrest issued by the Magistrate Court in Burlington, Iowa in August 1997, and that his benefits would be terminated due to fugitive felon status. He was provided an opportunity to request a hearing within 30 days of the letter, and notified that benefits would be stopped after the end of a 60-day period following that letter, unless he requested the hearing or provided appropriate documentation that the warrant had been cleared. Specifically, he was notified that benefits would be stopped beginning July 1, 2007. He did not request a hearing or otherwise respond to the letter. The RO then issued an October 2007 decision which discontinued compensation payments retroactive to December 27, 2001, the date that Section 505 of Public Law 107-103, prohibiting the payment of VA benefits to beneficiaries while they are fugitive felons, became effective. The decision also explained what evidence was needed to show that the warrant had been cleared. Notice of his appellate rights (VA Form 4107) was enclosed with this letter. The Veteran did not respond. The Debt Management Center also sent an October 2007 letter notifying the Veteran that a debt of $34,502.93 had been created based on an overpayment of benefits he was not entitled to receive by virtue of his fugitive felon status. He was informed that benefits would be withheld until the amount overpaid was recouped, and that the withholding would begin on January 1, 2008. He was also notified of his right to request a waiver and of his right to request a hearing. However, he did not respond to this letter. The Board finds that the above letters satisfied all procedural due process requirements for discontinuing benefit payments based on indebtedness. See 38 C.F.R. §§ 1.911, 1.912a, 3.103. The Board now turns to the merits of this case, namely the validity of the debt, which was based on a finding that the Veteran wrongfully received VA benefits during a period when he was in fugitive felon status. A veteran eligible for compensation benefits may not be paid such benefit for any period during which he is a fugitive felon. 38 U.S.C.A. § 5313B(a); 38 C.F.R. § 3.665(n)(1). The term fugitive felon means a person who is a fugitive by reason of: (A) 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 (B) violating a condition of probation or parole imposed for commission of a felony under Federal or State law. 38 U.S.C.A. § 5313B(b); 38 C.F.R. § 3.665(n)(2). While the word "fugitive" is not specifically defined by the governing statute and regulation, Black's Law Dictionary defines "fugitive" as a person who "flees are 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." (9th ed. 2009). The issue here is whether one must have knowledge of a warrant in order to be considered a fugitive felon under 38 U.S.C.A. § 5313B(b)(1)(A). The Board finds that knowledge of the warrant is required under this subsection of the statute. Significantly, the United States Court of Appeals for Veterans Claims (Court) held that actual knowledge was not required to be a fugitive felon with respect to § 5313B(b)(1)(B), noting that the "plain language of the statute very simply defines a 'fugitive felon' as one who violates the conditions of probation." See Mountford v. Shinseki, 24 Vet. App. 443, 448 (2011). However, this holding does not necessarily apply to the fleeing from prosecution or conviction provision of subsection (b)(1)(A), as the Mountford case involved fugitive felon status by virtue of the violation of the terms or probation under subsection (b)(1)(B) of the statute rather than fleeing to avoid prosecution under subsection (b)(1)(A). Indeed, the Court had earlier observed that "the plain language of section 5313B(b)(1)(B) provides that a person is a fugitive felon by reason of 'violating a condition of probation or parole imposed for commission of a felony under Federal or State law,'" and thus "that violation of a condition of probation makes one a fugitive felon." Id. at 447. The Court did not state whether the issuance of a warrant in itself based on an alleged offense constituting a felony committed by someone not on probation or parole likewise automatically makes one a fugitive felon under 5313B(b)(1)(A). Thus, Mountford is not necessarily controlling with respect to this issue. Some guidance on the issue may be found in the Social Security Administration's (SSA's) counterpart of VA's fugitive felon law. In this regard, a VA Office of General Counsel opinion observed that the VA fugitive felon provision was modeled after Public Law No. 104-193, which barred fugitive felons from receiving Supplemental Security Insurance from SSA and food stamps from the Department of Agriculture. VAOPGCPREC 7-2002. 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)). The provisions of SSA's fugitive felon statute are essentially identical to the provisions of 38 U.S.C.A. § 5313B(b)(1) cited above. See 42 U.S.C.A. § 1382(e)(4)(A). In interpreting SSA's fugitive felon law, the United States Court of Appeals for the Second Circuit held that in order for a person to be fleeing prosecution, "there must be some evidence that the person knows his apprehension is sought. The statute's use of the words 'to avoid prosecution' confirms that for 'flight' to result in a suspension of benefits, it must be undertaken with a specific intent, i.e., to avoid prosecution." Oteze Fowlkes v. Adamec, 432 F.3d 90, 97 (Fed. Cir. 2005). Although not controlling on VA, the Second Circuit's interpretation of SSA's fugitive felon statute as requiring knowledge of the warrant provides support for a similar finding with regard to subsection § 5313B(b)(1)(A) of VA's fugitive felon statute which, as stated, was modelled after and contains language identical to SSA's version. Further supporting a finding that there must be some knowledge that a warrant has been issued to be considered a fugitive felon under 38 U.S.C.A. § 5313B(b)(1)(A), despite the Court's holding with respect to subsection (b)(1)(B), is the bipartite structure of the provision of the statute and corresponding regulation defining fugitive felon. The definition is stated in the alternative with use of the disjunctive word "or," indicating that one may be a fugitive felon by virtue of fleeing prosecution/conviction, or by violating a condition of probation or parole (when based on commission of a felony). See id.; see also 38 C.F.R. § 3.665(n)(2). Thus, 38 U.S.C.A. § 5313B(b)(1)(B) provides that violation of the terms of probation or parole in itself makes one a fugitive felon, as observed by the Court in Mountford, 24 Vet. App. at 447, and makes no mention of fleeing or prosecution or conviction. By contrast, subsection (b)(1)(A) uses the word "flee" twice, and specifically in connection with a prosecution or conviction. Under this definition, one cannot flee without there first being the predicate condition of a prosecution, or of confinement or custody following conviction, to flee from. As observed by the Second Circuit in its interpretation of the identical language in SSA's statute, the word "flight" as used in this context connotes some knowledge of the prosecution or conviction. Oteze, 432 F.3d at 97. It would stretch the rules of grammar past the breaking point to find that the word "fleeing" in subsection (b)(1)(A) of the statute or in subsection (i) of the corresponding regulation applies to subsection (b)(1)(B) of the statute or subsection (ii) of the corresponding regulation with regard to violating the terms of probation or parole. In short, a finding that some knowledge of the warrant is required under subsection (b)(1)(A) to be considered a fugitive felon seems to be in keeping with, and indeed necessitated by, the natural meaning of that provision given its repeated use of the word "flee," and is not necessarily in conflict with the Court's holding in Mountford with regard to subsection (b)(1)(B) pertaining to persons on probation or parole. In light of the Board's finding that knowledge of the warrant is required to be a fugitive felon under 38 U.S.C.A. § 5313B(b)(1)(A), the evidence shows that the Veteran was not a fugitive felon prior to March 2007. Specifically, the Board finds it credible that the Veteran did not know of the outstanding warrant issued in August 1997 until he was notified of it by VA, as he stated in the December 2011 NOD. In this regard, he was still on active duty when the warrant was issued, and indeed completed almost two more years of active service following its issuance. There is no indication that he was fleeing at this time merely because he remained with the unit(s) to which he was assigned during active service. Moreover, the Board finds it credible that the Veteran would not necessarily have a reason to believe that such a warrant had been issued or that he was being prosecuted for a crime. The Veteran stated in the December 2011 NOD that law enforcement did not notify him of the warrant. There is no evidence otherwise suggesting that he was ever served with it or notified of it prior to the March 2007 letter from the RO, or that he was evading arrest. Accordingly, because the credible evidence shows that the Veteran did not know of the warrant prior to March 2007, fugitive felon status is not established prior to this date. Thus, to the extent the debt of $34,502.93 pertains to the period prior to July 1, 2007, it is not valid and must be restored. The Board finds that any portion of the debt of $34,502.93 attributable to benefit payments made on or after July 1, 2007 is valid. The Veteran was notified of his fugitive felon status in the March 2007 letter, and informed that benefit payments would be stopped effective July 1, 2007, which is the first day of the month following a period of well over 60 days since the letter was sent. Although the possibility was brought up at the hearing that the Veteran never received the March 2007 letter, the evidence suggests otherwise. The Veteran himself stated at the hearing that he did not remember whether he received the letter. In the December 2011 NOD, he wrote that he "didn't even know about [the warrant] until [he] was notified by [VA] that [his] disability benefits were going to be stopped due to the warrant" (emphasis added). The prospective or forward-looking nature of the phrase "going to be stopped" suggests that the benefits had not yet been stopped when he learned of the warrant, which of course would be in 2007. Finally, absent clear evidence to the contrary, the Board presumes that the Veteran received the letter, as there is no indication that it was sent to the wrong address, and there is a legal presumption that government officials have "properly discharged their official duties." See United States v. Chemical Foundation, Inc., 272 U.S. 1, 14-15 (1926); see also Kyhn v. Shinseki, 24 Vet. App. 228, 233-34 (2011) (applying the presumption of regularity in the administrative process to proper notification of VA examinations); Schoolman v. West, 12 Vet. App. 307 (1999); Mindenhall v. Brown, 7 Vet. App. 271 (1994). A mere assertion that he did not receive the letter, absent evidence it was returned by the Post Office as undeliverable or that it was not sent to the Veteran's then address, is not sufficient to constitute clear evidence to the contrary in order to overcome the presumption. The Veteran also argued in the December 2011 NOD and in his hearing testimony that because the conviction itself was not for a felony but rather aggravated misdemeanor, he should not be considered a fugitive felon. The December 2010 judgment of the Iowa district court in Des Moines County confirms that, in accordance with a plea agreement, he pled guilty to an amended and substituted charge constituting an aggravated misdemeanor. However, that he pled guilty to a lesser charge does not change the fact that he was initially prosecuted for a felony, which is sufficient to be considered a fugitive felon under VA law. See 38 U.S.C.A. § 5313B(b)(1)(A); 38 C.F.R. § 3.665(n); see also Mountford, 24 Vet. App. at 447-48 (holding that an adjudication of guilt is not required under 38 U.S.C.A. § 5313B(b)(1)(B) to be considered a fugitive felon). Accordingly, fugitive felon status is established from the date of the March 2007 letter. The Veteran was provided 60 days from the date of that letter to challenge his fugitive felon status, to include providing evidence that the warrant had been cleared. However, he did not respond to the letter and did not take care of the warrant until March 10, 2010 when he was arrested in Iowa, as reflected in the arrest warrant. While the Board understands the Veteran's stated reasons for not returning to Iowa, which he explained at the hearing, the fact that returning may have been difficult or not feasible does not in itself change his status as a fugitive felon. Thus, any portion of the debt of $34,502.93 allocable to payments received during the period beginning July 1, 2007 and ending January 1, 2008, when benefits were actually stopped according to the October 2007 letter from the Debt Management Center, is valid, and recoupment of it is proper. The Board finds that July 1, 2007 is a proper effective date for commencing fugitive felon status with regard to the discontinuance of benefits. This date is the first day of the month following a period well over 60 days past the March 2007 letter, and the Veteran was informed in that letter that July 1, 2007 would be the last day that benefits would be paid. See, e.g., 38 C.F.R. §§ 3.500(r); 3.501(g) (2013). While the effective date of the discontinuance based on fugitive felon status is generally the date the warrant was issued or December 27, 2001 (the date that Section 505 of Public Law 107-103 went into effect), whichever is later, because fugitive felon status in this case does not begin until the Veteran's receipt of the March 2007 letter, the Board is guided by the ordinary provisions governing effective dates of reduction or discontinuance of benefits. See generally 38 C.F.R. § 3.500. A waiver of any portion of the $34,502.93 debt allocable to the period beginning July 1, 2007 is not permitted as a matter of law. The Veteran was notified of this debt in the October 2007 letter. There is no evidence suggesting that he did not receive this letter or that there was a delay in his receipt of it. Moreover, the mere assertion that he did not receive the letter is not sufficient to overcome the presumption that it was properly delivered to him. See Mindenhall v. Brown, 7 Vet. App. 271 (discussing presumption of regularity in the administrative process). He did not submit a request to waive this debt until September 2011, almost four years after the October 2007 letter was mailed to him. As applications for waivers of indebtedness must be made within 180 days following the date of notice of indebtedness issued on or after April 1, 1983, the waiver request is not timely and therefore may not be considered. See 38 C.F.R. § 1.963(b). To the extent the outcome of this case is determined by applicable law rather than disputed facts, the benefit-of-the-doubt rule does not apply. 38 U.S.C.A. § 5107 (West 2002: 38 C.F.R. § 3.102 (2013). Moreover, the preponderance of the evidence weighs against a finding that the Veteran was not in fugitive status after March 2007, and thus the benefit-of-the-doubt rule does not apply to the validity of any overpayments created as of July 1, 2007. See id. With regard to fugitive felon status prior to March 2007, the Board has resolved any doubt on this issue in the Veteran's favor. ORDER Restoration of $34,502.93, less any portion of this amount allocable to the period beginning July 1, 2007, based on retroactive discontinuance of benefit payments due to an erroneous finding of fugitive felon status prior to March 2007, is granted. Waiver of recovery of any portion of the $34.502.93 debt allocable to the period beginning July 1, 2007 and ending when benefits were actually discontinued, is denied. ____________________________________________ P.M. DILORENZO Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs