Citation Nr: 1425979 Decision Date: 06/09/14 Archive Date: 06/16/14 DOCKET NO. 11-03 349 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in North Little Rock, Arkansas THE ISSUES 1. Whether an overpayment of $9,112.30, was a validly created debt based on a period of fugitive felon status from April [redacted], 2009 to December [redacted], 2009. 2. Entitlement to a waiver of recovery of the overpayment of VA service-connected compensation, in the amount of $9,112.30. REPRESENTATION Appellant represented by: Disabled American Veterans ATTORNEY FOR THE BOARD Donna D. Ebaugh, Counsel INTRODUCTION The Veteran served on active duty from March 1988 to September 1991. This case comes before the Board of Veterans' Appeals (Board) on appeal from a January 2010 and November 2010 decisions of the Department of Veterans Affairs (VA) Regional Office (RO) in North Little Rock, Arkansas. A report of contact dated in May 2012 indicates that the Veteran waived response time to have his case before a "BVA hearing." An April 2014 letter from the Veteran's representative clarifies that the Veteran does not desire a hearing before the Board. In June 2012, the Veteran submitted additional evidence. The April 2014 letter from the Veteran's representative waives review of the same by the Agency of Original Jurisdiction (AOJ). Lastly, the Board notes that, in addition to the paper claims file, there are two separate paperless, electronic files associated with the Veteran's claim: a Virtual VA file and a Veterans Benefits Management System (VBMS) file. The Board notes that the Informal Hearing Presentation is located in Virtual VA. The documents in the VBMS file are irrelevant to the issue on appeal. FINDING OF FACT 1. In February 2003, the Veteran was awarded VA compensation benefits effective in November 2002. 2. On February 5, 2007, the Veteran was sentenced to probation by the state of South Carolina for a felony offense and transferred to Arkansas to serve probation from February 2007 to February [redacted], 2010. 3. While on probation, in April 2009, the Veteran was arrested in Arkansas under the charge of capital murder. 4. On April [redacted], 2009, a warrant for arrest was issued by the state of South Carolina. This warrant remained outstanding until the state withdrew the warrant effective December [redacted], 2009. 5. From April [redacted], 2009 to December [redacted], 2009, a valid warrant was outstanding and the Veteran was not eligible for VA compensation benefits based on his status as a fugitive felon. 6. There is no indication of fraud, misrepresentation, or bad faith on the part of the Veteran with respect to his interest in obtaining the waiver of repayment. 7. Collection of the indebtedness in this case, would be against equity and good conscience. CONCLUSIONS OF LAW 1. The appellant has been shown to be a fugitive felon under the provisions of applicable law during the period from April [redacted], 2009 to December [redacted], 2009, and the debt was properly created. 38 U.S.C.A. § 5313B (West 2002); 38 C.F.R. § 3.665(n) (2013). 2. The criteria for the waiver of recovery of the overpayment of VA disability benefits in the amount of $9,112.30 are met. 38 U.S.C.A. § 5302 (West 2002); 38 C.F.R. §§ 1.963, 1.965 (2013). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS I. Due Process Considerations The matter at issue in this case, essentially a determination of the appellant's fugitive felon status, is governed by Chapter 53, United States Code. The United States Court of Appeals for Veterans Claims (Court) has expressly held that the VCAA does not apply to determinations under Chapter 53, United States Code, a statute "which concerns special provisions relating to VA benefits." See Barger v. Principi, 16 Vet. App. 132, 138 (2002); see also Lueras v. Principi, 18 Vet. App. 435, 439-40 (2004); Reyes v. Nicholson, 21 Vet. App. 370, 380 (2007) (noting that application of the VCAA notice provisions to chapter 53 proceedings is explicitly precluded). Further, with respect to the validity of the debt created based on fugitive felon status, the Board acknowledges that the Order withdrawing the April [redacted], 2009 arrest warrant was not obtained and associated with the file. However, the report of contact between the RO and an official from the state of South Carolina regarding the arrest warrant is of record and notes the date upon which the outstanding arrest warrant was cleared. There is no indication that the withdrawal of the warrant was effective at an earlier date. See M21- 1MR, Pt. X, Ch. 16.2f. Additionally, in light of the fact that the Board is herein waiving the debt owed, a Remand to obtain a copy of the Order clearing the warrant would unduly delay processing of the claim and unnecessarily expend VA resources. Regarding the issue of the waiver of the debt, the Board finds that any failure on the part of VA to meet general due process requirements is not prejudicial as the Board is herein granting the waiver. See 38 C.F.R. § 3.103 (2013). Prior to reducing or terminating an award of compensation or pension, VA is required to comply with pertinent VA regulations concerning due process, which as explained below, did not happen in this case. II. Analysis a. Background The record on appeal shows that the Veteran is service-connected for physical and psychological disabilities, with a combined evaluation of 50 percent during the relevant period on appeal. Court documentation of record confirms that in February 2007, the Veteran was put on probation in the state of South Carolina for a felony and then transferred from the parole and probation office in South Carolina to the same in Alabama for the purpose of serving on probation until February 2010. While on probation, in April 2009, the Veteran was charged with capital murder in Arkansas. Shortly thereafter, the state of South Carolina issued an arrest warrant on April [redacted], 2009. Later in April 2009, the Veteran's public defender contacted VA with a FOIA request. The public defender's expressed intent was to seek treatment records to support the Veteran's defense as the state was seeking capital punishment. In September 2009, the Veteran negotiated a plea of guilty or nolo contendere to the charge of capital murder and was sentenced to life in prison. He reported that he informed VA of his imprisonment in October 2009. See December 2010 affidavit. In November 2009, VA received notification that on April [redacted], 2009 a warrant had been issued by the state of South Carolina for the appellant's arrest for obstructing justice. Also in November 2009, VA proposed to cease compensation benefits as the Veteran was a fugitive felon. The RO created a proposal for the reduction that set forth the material facts and reasons, and attempted to notify the Veteran at his latest address of record in accordance with 38 C.F.R. §§ 3.103(b), 3.105; however the proposed reduction notification was returned undeliverable. The RO subsequently sent the decision that set in place the actual reduction to the same incorrect address. Notably, the address was that of the facility where the Veteran was being held while he awaited trial; however, he had been moved to another detention center by the time the VA correspondence was mailed. In January 2010, a VA official contacted law enforcement authorities in South Carolina regarding the outstanding warrant and was told that the warrant for the appellant had been withdrawn on December [redacted], 2009. In July 2010, the Veteran contacted VA to inquire about his case file. It appears that it was at that time, that he learned of the overpayment and VA's characterization of him as a fugitive felon from April [redacted], 2009 to December [redacted], 2009. Through a series of communications dated in September 2010 and December 2010, the Veteran appealed the determination to cease benefits for the period in question and requested a waiver of the overpayment balance. He contends that he was not a fugitive felon and had no knowledge of any outstanding warrant in South Carolina. See December 2010 notice of disagreement. In fact, he noted that he had been transferred from probation and parole custody in South Carolina to Alabama in 2007. He contends that because he was physically in custody in Alabama at the time of the April 2009 warrant, had previously been transferred from the South Carolina parole and probation system to that in Alabama, and had no knowledge of the South Carolina warrant, he cannot be considered a "fugitive felon". In November 2010, the Committee on Waivers and Compromises (COWC) denied the request for waiver of the indebtedness in the amount of $9,112.30. The Veteran disagreed with this decision and perfected this appeal with respect to the validity of the debt as well as the waiver of indebtedness. b. Validity of Debt 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 (West 2002). The implementing regulation, 38 C.F.R. § 3.665(n) provides that compensation is not payable on behalf of a veteran for any period during which he or she is a fugitive felon. 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. § 3.665(n) (2013). The statute which bars Veterans from receiving VA benefits while they are "fugitive felons," does not require an adjudication of guilt or knowledge of the outstanding arrest warrant. Mountford v. Shinseki, 24 Vet. App. 443 (2011). VA's Adjudication Procedure Manual provides additional guidance with respect to issues relating to fugitive felons. See M21-1MR, Part X, Chapter 16. Under those guidelines, a beneficiary who is the subject of a valid outstanding felony arrest warrant is presumed to be a fugitive felon for VA purposes. M21-1MR, Pt. X, Ch. 16.1c. An arrest warrant is simply an order from a magistrate or other official authorized to issue such warrants directing that a named individual be arrested and brought before the issuing official. Id. When a warrant is dismissed, recalled, or quashed, there was still a valid warrant up to the date the warrant was cleared and VA benefits are subject to adjustment from the warrant date until the recall/dismissal/quash date, unless there was a specific determination that the warrant was void from its inception because of mistaken identity or a defect in the warrant, or the court order specifically states that the recall is effective from a specific date that is on or before the date of the warrant, or uses the terminology nunc pro tunc, which refers to changing back to an earlier date. M21- 1MR, Pt. X, Ch. 16.2f. As set forth above, on April [redacted], 2009, a warrant for the Veteran's arrest was issued, while he was serving probation for a felony. Despite this warrant, the appellant argues that he was improperly characterized as a fugitive felon because he had no idea of its existence and was not running from the state of South Carolina. Indeed, he had been living in Arkansas and was transferred to the state of Arkansas via the Interstate Compact. The Veteran contends that the South Carolina warrant is merely a duplicate of a similar warrant in Arkansas and is not valid. Although the Board has considered the Veteran's contentions, it does not find them to be persuasive. The Board notes that the record on appeal contains absolutely no basis upon which to conclude that the warrant of April [redacted], 2009, should be considered invalid. The record contains no indication whatsoever that there was a defect in the warrant to render it invalid. The report of contact by the VA official who spoke with an official in South Carolina regarding the warrant, indicates that the state of South Carolina withdrew the warrant on December [redacted], 2009. There is no indication that the withdrawal of the warrant was effective prior to the December [redacted], 2009. As discussed above, the Veteran's lack of knowledge of the warrant has no bearing on his "fugitive felon" status. The Board acknowledges the Veteran's argument with respect to the Black's Law Dictionary definition of the word "fugitive" and the insinuation that there must be some knowledge of the outstanding warrant and an intent to flee. This argument may be persuasive if the basis for the reduction came under 38 C.F.R. § 3.655(n)(i) - fleeing to avoid prosecution. However, the basis for the reduction is due to a violation of a condition of probation or parole imposed for commission of a felony under the Federal or State law under 38 C.F.R. § 3.665(n)(ii) which does not require knowledge or intent. Mountford, 24 Vet. App. 443 (2011). Here, the Veteran was on probation imposed for a felony, and he violated that probation agreement. Thus, he meets the VA definition of a fugitive felon under 38 C.F.R. § 3.665(n)(ii). Regarding the issuance of the warrant, the Board also notes that there is a well-established presumption of regularity under which it is presumed that government officials "have properly discharged their official duties." See United States v. Chemical Foundation, Inc., 272 U.S. 1, 14-15, 47 S. Ct. 1 (1926). The appellant's unsubstantiated allegations that the warrant was merely a duplicate of a similar warrant in Arkansas and thereby invalid, standing alone, are insufficient to rebut the presumption that the April [redacted], 2009, warrant was properly issued. In this case, the record on appeal shows that on April [redacted], 2009, a warrant for the appellant's arrest was issued and that warrant remained outstanding until December [redacted], 2009. As discussed above, absent evidence to the contrary, the warrant remained valid during the duration of the period it was outstanding. Under these circumstances, the appellant was not entitled to receive VA compensation benefits based on his status as a fugitive felon from April [redacted], 2009 to December [redacted], 2009. The debt was properly created. c. Waiver of Overpayment The Veteran requested a waiver of the aforementioned debt in September 2010. Any indebtedness of a veteran can be waived only when the following factors are determined to exist: 1) there is no indication of fraud, misrepresentation, or bad faith on the part of the person or persons having an interest in obtaining the waiver; and, 2) collection of such indebtedness would be against equity and good conscience. 38 U.S.C.A. § 5302(c); 38 C.F.R. § 1.963(a). For the reasons that follow, the Board finds that the Veteran is entitled to a waiver of overpayment in this case. The controlling legal criteria provide that the standard of "equity and good conscience" will be applied when the facts and circumstances in a particular case indicate the need for reasonableness and moderation in the exercise of the Government's rights. 38 C.F.R. § 1.965(a) (2013). The decision reached should not be unduly favorable or adverse to either side. The phrase equity and good conscience means arriving at a fair decision between the obligor and the U. S. Government. In making this determination, consideration will be given to the following elements, which are not intended to be all inclusive: (1) Fault of debtor, where actions of the debtor contribute to the creation of the debt. (2) Balancing of faults and weighing the fault of the debtor against the VA's fault. (3) Undue hardship and whether collection would deprive the debtor or his or her family of basic necessities. (4) Defeat the purpose, whether withholding of benefits or recovery would nullify the objective for which benefits were intended. (5) Unjust enrichment, failure to make restitution would result in an unfair gain to the debtor. (6) Changing position to one's detriment, reliance on VA benefits results in relinquishment of a valuable right or incurrence of a legal obligation. 38 U.S.C.A. § 5302(c); 38 C.F.R. § 1.965(a). The Board finds that the overpayment, in the adjusted amount of $9,112.30, was not the result of fraud, misrepresentation, or bad faith on the part of the Veteran. Based on the Veteran's statements and inquiries, it appears that the Veteran was not aware of the effect an outstanding warrant would have on his benefits. Accordingly, the Board finds no fraud, misrepresentation or bad faith on the part of the Veteran in the creation of the overpayment. As the evidence does not establish fraud, misrepresentation, or bad faith on the part of the Veteran, the Board will next determine if a waiver of recovery of the VA indebtedness is warranted on the basis of equity and good conscience under 38 U.S.C.A. § 5302(a); 38 C.F.R. §§ 1.963(a), 1.965(a). For the reasons discussed below, the Board finds that repayment of indebtedness on the $9,112.30 balance due on the Veteran's account would violate principles of equity and good conscience and the waiver should be granted. The first two elements for consideration under 38 C.F.R. § 1.965(a) are the fault of the debtor, and balancing the fault of the debtor and VA. The Board finds that the Veteran was at fault in the creation of the overpayment. Indeed, he violated the terms of his probation making him a "fugitive felon" under VA regulations and did not expressly inform VA that he was incarcerated in April 2009. However, there is also some fault on the part of VA in the creation of the debt. First, the record shows that the Veteran's public defender notified VA of the Veteran's capital murder charge within a few weeks of the arrest, but VA did not take action to inquire as to whether the Veteran was being held in custody while awaiting trial. Such action could have resulted in a reduction in overpayment, even if VA was not on notice of the fugitive felon status, as incarcerated veterans are only entitled to a portion of their compensation benefits. VA should have inquired as to the Veteran's location as it was on notice that the Veteran was being charged with capital murder, the death penalty was being sought, and the Veteran could not afford a private attorney. The combination of these things should have at least raised the possibility that the Veteran was likely being held without bond and further inquiry should have been made by VA. Additionally, the first the Veteran was informed of the overpayment was following his inquiry into his file in July 2010. Further, he contends that the first time he became aware of any active warrant for his arrest in South Carolina, was in March 2012. See April 2012 statement. Thus, the Veteran was not informed of his fugitive felon status, or the effect of such status on his benefits, until well after the nine months of overpayments had been received. Based on the foregoing, the Board finds that balance of fault in creating the overpayment is at least in equipoise. Further, the Board finds that that repayment of the debt in the amount of $9,112.30 would represent undue financial hardship. As to the element of undue financial hardship, the regulation provides that consideration should be given to whether collection of the indebtedness would deprive the debtor or his family of the basic necessities. In November 2009, the Veteran's wife filed an apportionment claim for herself and the Veteran's dependents and informed VA that the Veteran had been sentenced to life in prison. Along with the claim, she submitted receipts and statements to show that her monthly expenses exceeded $2,538 while her monthly income was only $1,844.80, resulting in a monthly deficit of over $693. Even if the Veteran's repayment of the overpayment is spread across a payment plan, it may make the Veteran's wife's monthly deficit increase. As the Veteran is sentenced to life without parole, he is unable to work to repay the debt. Next, the Board finds that the Veteran was not unjustly enriched. Although he was in receipt of VA compensation to which he was not entitled, the Veteran has a wife and dependent children who require funds for their daily living expenses. The Veteran's wife's list of expenses and report of income and realized appears to reflect that the Veteran's family was dependent on the VA compensation to meet the monthly bills. Regarding whether the waiver of the debt would defeat the purpose of the VA benefits program, the Board acknowledges that VA regulations specifically provide that compensation benefits may not be paid to a veteran for any period during which he is a fugitive felon. Thus, providing the funds directly would appear to defeat the purpose of the fugitive felons program. However, the Board emphasizes that the VA benefits program is also there to support the Veteran's family. The Veteran's spouse has been awarded a special apportionment of his benefits. Thus, a waiving of the overpayment would directly benefit the Veteran's dependents and not the Veteran. In balancing the equities in this case, this factor alone weighs heavily in waiving overpayment of the VA compensation in question. Taking all of these factors together, notwithstanding the fact that the Veteran was by definition a "fugitive felon," the Board finds that it would go against the principles of equity and good conscience to enforce repayment of the debt. The Veteran is in prison for life and will not be unjustly enriched by the waiver of overpayment. Repayment would only deprive the Veteran's family of money necessary for their daily living expenses. Based on the foregoing, the Board finds that although the debt is valid, the overpayment should be waived in full. ORDER The debt created due to the appellant being determined to be a fugitive felon was proper. Waiver of overpayment is granted. ____________________________________________ T. MAINELLI Acting Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs