Citation Nr: 1017345	
Decision Date: 05/11/10    Archive Date: 05/26/10

DOCKET NO.  08-25 240	)	DATE
	)
	)

On appeal from the
Department of Veterans Affairs Regional Office in Cleveland, 
Ohio


THE ISSUE

Propriety of reduction of the Veteran's service-connected 
disability compensation benefits due to incarceration.


REPRESENTATION

Appellant represented by:	Veterans of Foreign Wars of 
the United States


WITNESS AT HEARING ON APPEAL

Appellant


ATTORNEY FOR THE BOARD

David S. Ames, Counsel


INTRODUCTION

The Veteran served on active duty from March 1984 to July 
1987.

This matter comes properly before the Board of Veterans' 
Appeals (Board) on appeal from a rating decision by the 
Department of Veterans Affairs (VA) Regional Office in 
Cleveland, Ohio (RO).


FINDING OF FACT

The Veteran was not convicted of a felony.


CONCLUSION OF LAW

The Veteran was not incarcerated for the conviction of a 
felony and the reduction of the Veteran's service-connected 
disability compensation benefits was not proper.  38 U.S.C.A. 
§ 5313 (West 2002); 38 C.F.R. § 3.665 (2009).


REASONS AND BASES FOR FINDING AND CONCLUSION

In November 2000, the Veterans Claims Assistance Act of 2000 
(VCAA) was signed into law.  See 38 U.S.C.A. §§ 5100, 5102, 
5103, 5103A, 5106, 5107, 5126 (West 2002 & Supp. 2009).  VA 
has issued regulations implementing the VCAA.  38 C.F.R. 
§§ 3.102, 3.156(a), 3.159, 3.326 (2009).  Without deciding 
whether the notice and development requirements of the VCAA 
have been satisfied in the present case, this law does not 
preclude the Board from adjudicating the issue involving the 
Veteran's claim as the Board is taking action favorable to 
the Veteran by finding that the reduction of the Veteran's 
service-connected disability compensation benefits due to 
incarceration was not proper.  As such, this decision poses 
no risk of prejudice to the Veteran.  See, e.g., Bernard v. 
Brown, 4 Vet. App. 384 (1993); see also Pelegrini v. 
Principi, 17 Vet. App. 412 (2004).

Under VA laws and regulations, a person who is incarcerated 
in a Federal, State or Local penal institution in excess of 
60 days for conviction of a felony will not be paid 
compensation in excess of that amount specified in 38 C.F.R. 
§ 3.665 beginning on the 61st day of incarceration.  38 
U.S.C.A. § 5313(a)(1); 38 C.F.R. § 3.665(a).  In the case of 
a Veteran with a service-connected disability rated at 20 
percent or more, the Veteran shall not be paid an amount that 
exceeds the rate under 38 U.S.C.A. § 1114(a), which is at the 
rate of 10 percent.  38 C.F.R. § 3.665(d).  If a disability 
evaluation is less than 20 percent, the Veteran shall receive 
one-half the rate of compensation payable under 38 U.S.C.A. § 
1114(a).  Id.  VA will restore to a beneficiary any 
compensation withheld due to incarceration, if the conviction 
for which the Veteran was incarcerated is later overturned on 
appeal.  38 C.F.R. § 3.665(m).

The Veteran was arrested and confined in an Ohio detention 
center for the offenses of failure to comply, fleeing and 
eluding, and reckless operation of a motor vehicle.  The 
period of confinement was from January 14, 2006 to April 1, 
2006.  The Veteran served some of his time in the detention 
center, and some in a mental health facility for treatment of 
his service-connected schizophrenia.  In August 2006, the 
prosecuting attorney for the state of Ohio filed a motion to 
dismiss the case against the Veteran.  The reason given for 
the motion to dismiss was "[a]n evaluation of [the Veteran] 
indicates that he would be found not guilty by reason of 
insanity.  His 'insanity' seems to be properly and adequately 
treated at this time.  Further, the [Veteran] has been held 
for a substantial length of time."  The motion was 
subsequently confirmed by a judge, and the case against the 
Veteran was dismissed.

While the evidence of record shows that the Veteran was 
incarcerated in a State or Local penal institution on felony 
charges, it does not show that the Veteran was convicted of a 
felony.  Instead, the charges were dismissed after the 
Veteran was arrested and confined, but before the case was 
brought to trial.  Thus, the Veteran was not convicted of a 
felony.  Accordingly, based on the evidence of record, the 
Board finds that the requirements of 38 C.F.R. § 3.665(a) 
(2009) are not met.  As such, the reduction of the Veteran's 
service-connected disability compensation benefits, was not 
proper and his VA benefits should be reinstated to the 
applicable rate.


ORDER

The reduction of the Veteran's service-connected disability 
compensation benefits due to incarceration was not proper and 
the Veteran's appeal is granted.



____________________________________________
JOY A. MCDONALD
Veterans Law Judge, Board of Veterans' Appeals




 Department of Veterans Affairs