Citation Nr: 1201034 Decision Date: 01/11/12 Archive Date: 01/20/12 DOCKET NO. 09-10 311 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Seattle, Washington THE ISSUE Whether the overpayment of nonservice-connected disability pension benefits in the amount of $6,148.70 was properly created, to include the issue of entitlement to waiver of recovery of the overpayment. REPRESENTATION Appellant represented by: The American Legion WITNESS AT HEARING ON APPEAL Appellant ATTORNEY FOR THE BOARD E. Woodward Deutsch, Counsel INTRODUCTION The Veteran served on active duty from April 1969 to April 1971. This matter comes before the Board of Veterans' Appeals (Board) from a June 2007 decision of a Department of Veterans Affairs (VA) Regional Office (RO) that terminated the Veteran's pension benefits for the period from May 25, 2004, to March 21, 2006, creating a debt of $6,148.70. In September 2011, the Veteran was afforded a Travel Board hearing before the undersigned Veterans Law Judge. Following the hearing, the record was held open for 30 days in order to enable the Veteran to obtain additional evidence in support of his claim. No such information has been provided to VA for consideration. The 30-day period has now expired and appellate review may proceed. FINDINGS OF FACT 1. Effective February 1, 1994, the Veteran began receiving nonservice-connected disability pension benefits. 2. In September 1999, the Veteran was arrested and charged with possession of a controlled substance. He entered a guilty plea and was sentenced to three years of probation for the period from August 17, 2001, to August 17, 2004. 3. On December 27, 2001, VA's governing laws were amended to prohibit the payment of VA benefits to fugitive felons. 4. The RO subsequently learned that the Veteran had been classified as a fugitive felon from May 25, 2004, to March 21, 2006, due to a warrant that had been issued for his arrest for failure to comply with his probationary requirements. That warrant remained outstanding until March 22, 2006, when the Veteran established that the terms of his probation had been met. 5. During the period in which his fugitive felon status had been in effect, the Veteran had continued receiving VA pension benefits, thereby creating an overpayment in the amount of $6,148.70. 6. While there has been no fraud, misrepresentation, or bad faith on the part of the Veteran, his actions have been shown to be the direct cause of the overpayment. Conversely, there has been no showing of fault on the part of VA in the generation of the debt. 7. Recovery of the assessed overpayment would not deprive the Veteran of the ability to provide for basic necessities. 8. Waiver of the assessed overpayment would unjustly enrich the Veteran. 9. The Veteran's assets and income, with consideration of the cost of life's basic necessities, would be sufficient to permit collection of the $6,148.70 debt and would not result in undue financial hardship. Additionally, collection of the debt would not defeat the purpose of the award of VA benefits, or otherwise be inequitable. 10. There is no indication that the Veteran has relinquished a valuable right or incurred a legal obligation in reliance upon the benefits received. CONCLUSIONS OF LAW 1. The overpayment of disability compensation benefits in the original amount of $6,148.70 was validly created. 38 U.S.C.A. §§ 5107, 1521 (West 2002 & Supp. 2011); 38 C.F.R. §§ 3.500, 3.660, 3.665(n) (2011). 2. Waiver of recovery of the overpayment of VA disability compensation benefits is precluded by law. 38 U.S.C.A. § 5302(a) (West 2002 & 2011); 38 C.F.R. §§ 1.962, 1.963, 1.965 (2011). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS The Veteran, in written statements and testimony before the Board, contests the RO's finding that his receipt of nonservice-connected pension benefits for the period from May 25, 2004, to March 21, 2006, was barred by law and resulted in an overpayment totaling $6,148.70. He further argues that, even if such a debt had been validly created, recovery should be waived in light of his limited financial circumstances. The preliminary issue of the validity of a debt is a threshold determination that must be made prior to a decision on a request for waiver of the indebtedness. Schaper v. Derwinski, 1 Vet. App. 430 (1991). Where, as here, the validity of a debt is challenged, that issue must be developed before the issue of entitlement to waiver of the debt can be considered. VAOGCPREC 6-98 (1998), 63 Fed. Reg. 31264 (1998). The general rules regarding the effective dates of reductions and discontinuances of VA benefits are set forth in 38 U.S.C.A. § 5112 (West 2002 & 2011) and 38 C.F.R. § 3.660 (2011). Effective December 27, 2001, Congress enacted the Veterans Education and Benefits Expansion Act of 2001, Pub. L. No. 107-103, 115 Stat. 976. That act includes a provision that precludes payment of VA compensation benefits during any period in which a Veteran is a fugitive felon. While not expressly identified in VA's governing statutes and regulations, the term "fugitive" is defined in Black's Law Dictionary (8th Ed. 2004) as a person who flees or escapes; a refugee; or 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. Moreover, under VA law, 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 (West 2002 & 2011); 38 C.F.R. § 3.665(n)(2) (2011). In this case, information obtained from the Mississippi Department of Corrections reveals that the Veteran was charged in September 1999 with possession of a controlled substance. He later entered a guilty plea and was sentenced to three years of probation from August 17, 2001, to August 17, 2004. However, according to law enforcement authorities, the Veteran subsequently violated the terms of his probation, prompting the Corrections Department to issue a warrant for his arrest on May 24, 2004. Based on the above information, the RO determined that the Veteran was a fugitive felon and therefore barred from receiving VA pension benefits. Consequently, the RO sent the Veteran a letter informing him of the law prohibiting payment of benefits to fugitive felons. That letter also notified the Veteran that he had 60 days to submit evidence showing that his arrest warrant had been cleared or his nonservice-connected pension benefits would be terminated, effective May 25, 2004. In response, the Veteran submitted a discharge order from the Harrison County Circuit Court. That order indicated that the May 2004 warrant for his arrest had been cancelled, effective March 22, 2006. However, the Veteran did not submit any evidence showing that the arrest warrant had been issued in error or had otherwise been rendered invalid prior to March 22, 2006. Consequently, the RO determined that, while the Veteran was no longer a fugitive felon, he had been a fugitive felon from May 25, 2004, to March 21, 2006, and was therefore prohibited from receiving VA benefits during that time period. The RO then sent the Veteran a December 2006 letter informing him that his entitlement to benefits had been terminated as of May 25, 2004, and reinstated as of March 22, 2006. The Veteran was later notified that he would need to repay the benefits he had received while his status as a fugitive felon had been in effect. The Veteran now contends that he should never have been classified as a fugitive felon because the warrant issued for his arrest was the result of an administrative error. He asserts that, following his initial sentencing, his case was transferred to the District Court of Alexandria, Louisiana. After being assigned a new probation officer, the Veteran claims to have successfully completed his sentence and to have reported to Alexandria probation office on August 17, 2004. At that time, his officer's supervisor reportedly congratulated him on completing his probation and told him that the paperwork finalizing his release would be forthcoming. Consequently, the Veteran maintains, he was under the impression that he had fully complied with the terms of his probation and was free to leave the state. He further maintains that, only after relocating to Washington and receiving notice of his arrest warrant from the Seattle RO, did he realize that the Mississippi Department of Corrections considered him to be in violation of his probation. That realization reportedly prompted him to travel by bus to Harrison County, Mississippi, where he voluntarily surrendered to authorities. In support of his contentions, the Veteran has submitted a July 2007 letter from his Gulfport, Mississippi, probation officer, confirming that the Veteran turned himself in and was "fully cooperative" with law enforcement until a sentencing judge determined that the conditions of his probation had been met. That letter also references the March 2006 discharge order terminating the Veteran's arrest warrant. However, it does not indicate that the warrant was canceled before March 22, 2006, or that the conditions of the Veteran's probation were met at any time prior to that date. The Board acknowledges that, at the recent Travel Board hearing, the Veteran stated that he would provide additional evidence, to specifically include letters from his probation officers in Mississippi and Louisiana, showing that his release date from probation had been retroactively extended to 2004 and that the matter of his fugitive felon status had been resolved. However, while the record was held open an additional 30 days in order to allow the Veteran to provide that information, he did not submit any additional evidence in support of his claim. Consequently, the Board finds that any additional information that may have been elicited in support of that claim has not been not obtained because the Veteran did not submit additional evidence. The Board reminds the Veteran that the duty to assist in the development and the adjudication of claims is not a one-way street. If a claimant wishes help, he cannot passively wait for it in those circumstances where he may or should have information that is essential in obtaining the evidence. Wood v. Derwinski, 1 Vet. App. 190 (1991). The Board recognizes that the Veteran is, in effect, contending that the Louisiana probation office failed to notify its Mississippi counterpart that he had successfully completed his probation. Nevertheless, the Board observes that there is a presumption of regularity that law enforcement personnel and other public officers perform their duties correctly, fairly, in good faith, and in accordance with law and governing regulations. Indeed, the law presumes the regularity of the administrative process. Marsh v. Nicholson, 19 Vet. App. 381 (2005); Crain v. Principi, 17 Vet. App. 182 (2003). Furthermore, clear evidence to the contrary is required to rebut the presumption of regularity. Ashley v. Derwinski, 2 Vet. App. 307 (1992); United States v. Chemical Foundation, Inc., 272 U.S. 1 (1926). No such evidence has been presented here. Indeed, the Veteran has not submitted any documentation to corroborate his assertions that he reported to the Louisiana probation office on August 17, 2004, and was told that he had completed his sentence. Consequently, the Board cannot rely on his blanket assertions as a basis for finding that he was fully compliant with the terms of his probation and that the warrant for his arrest was issued in error. Nor can the Board rely on the Veteran's account of voluntarily submitting to Mississippi authorities as evidence that his arrest warrant was invalid. The Board has considered the statement from the Veteran's probation officer, attesting to the Veteran's cooperative attitude, his successful meeting with the sentencing judge, and the cancelation of his arrest warrant, effective March 22, 2006. However, the probation officer made no mention of the warrant being nullified prior to that date. Had this been the case, the Board presumes that the officer would have mentioned that fact in the statement so that the Veteran could use it to support his claim. The Board recognizes that, in addition to advancing the above arguments, the Veteran has disputed his fugitive felon status on the grounds that VA remained in contact with him and, thus, had knowledge of his whereabouts throughout the entire period in which his arrest warrant was pending. Similarly, the Veteran has contended that his ability to acquire a Washington driver's license shows that authorities in that state also had knowledge of his whereabouts during the time period in question. However, the mere fact that VA or Washington state authorities may have known where the Veteran was has no bearing on his status as a fugitive felon. Rather, the salient fact is that the issuer of the arrest warrant, the Mississippi Department of Corrections, was unaware of his whereabouts; thus he remained a fugitive to that office. In light of the foregoing, the Board finds that a warrant for the Veteran's arrest remained outstanding from May 25, 2004, to March 21, 2006. Therefore, he was properly classified as a fugitive felon during that time period because the warrant issued was for a felony offense. Thus, the Board finds that the Veteran was not entitled to VA pension benefits during that time period and that his receipt of pension benefits resulted in the creation of a valid debt totaling $6,148.70. Having determined that the Veteran's debt was validly created, the Board must now address whether a waiver of recovery of the overpayment may be granted. The Veteran submitted his request for waiver within 180 days of receiving notification of the indebtedness. Therefore, his request is deemed timely and must be considered on the merits. 38 U.S.C.A. § 5302(a) (West 2002 & 2011); 38 C.F.R. § 1.963(b)(2) (2011). Recovery of overpayments of any benefits made under the laws administered by VA shall be waived if 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 if the recovery of the indebtedness from the payee who received such benefits would be against equity and good conscience. 38 U.S.C.A. § 5302 (West 2002 & 2011); 38 C.F.R. §§ 1.962, 1.963(a), 1.965 (2011). The phrase equity and good conscience means arriving at a fair decision between the obligor and the government. 38 C.F.R. § 1.965 (2011). In making the determination, consideration will be given to the following elements, which are not intended to be all inclusive: (1) Fault of the debtor. Where actions of the debtor contribute to the creation of the debt. (2) Balancing of faults. Weighing fault of debtor against any VA fault. (3) Undue hardship. Whether collection would deprive debtor or family of basic necessities. (4) Defeat the purpose. Whether the withholding of benefits or recovery would nullify the objective for which the benefits were intended. (5) Unjust enrichment. Whether failure to make restitution would result in unfair gain to the debtor. (6) Changing position to one's detriment. Whether reliance on Department of Veterans Affairs benefits has resulted in relinquishment of a valuable right or incurrence of a legal obligation. 38 C.F.R. § 1.965 (2011). The above criteria, however, are only applicable in the absence of any fraud, misrepresentation, or bad faith on the part of the person seeking the waiver. 38 U.S.C.A. § 5302(c) (West 2002 & 2011); 38 C.F.R. § 1.963 (2011). For VA purposes, misrepresentation must amount to more than mere inadvertence. 38 C.F.R. § 1.962(b) (2011). It must be willful in nature. Moreover, the term "bad faith" must amount to unfair or deceptive dealing in an effort to gain at another another's expense. Therefore, in the context of a validly generated VA debt, a debtor would be considered to exhibit bad faith if his conduct, although not performed with actual fraudulent intent, was undertaken to seek an unfair advantage, with knowledge of the likely consequences, and resulted in a loss to the government. 38 C.F.R. § 1.965(b)(2) (2011). Further, the Board observes that "lack of good faith" indicates an absence of an honest intention to abstain from undertaking unfair advantage of the holder or the government. 38 C.F.R. § 1.965(b)(2) (2011). Here, the Board finds no evidence of fraud, misrepresentation, or bad faith on the part of the Veteran in the creation of the overpayment at issue. That debt resulted from the payment of pension benefits during a period in which the Veteran was the subject of an outstanding arrest warrant. However, the Veteran has effectively indicated that he was unaware of that outstanding warrant until it was brought to his attention by VA. Moreover, the record shows that, upon learning of that warrant's existence, the Veteran took affirmative steps to resolve his underlying legal troubles by turning himself into Mississippi law enforcement. He then remained fully cooperative with authorities until a judge determined that terms of his probation had been met and the warrant could be lifted. From those facts, it appears that not only was the Veteran ignorant of his arrest warrant for the majority of the time it was pending but that he also exercised due diligence in resolving that impediment to his receipt of VA benefits. There is no evidence that he willfully intended to deceive VA or seek unfair advantage. Accordingly, the Board finds that a showing of fraud, misrepresentation, or bad faith has not been presented. Therefore, there are no mandatory bars to waiver in this case. The Board now turns to the remaining question of whether recovery of the overpayment would be against equity and good conscience. 38 C.F.R. § 1.965(a) (2011); Ridings v. Brown, 6 Vet. App. 544 (1994). In addressing that question, the first consideration is whether the Veteran was predominantly at fault in the creation of the debt. In this case, he was. Notwithstanding the Veteran's lack of fraud, misrepresentation, or bad faith, the fact remains that he collected nonservice-connected pension benefits during a period in which a warrant for his arrest was pending. Moreover, even though the Veteran may not have had actual notice of the warrant, notice is immaterial for the purpose of determining whether he was at fault for accepting benefits to which he knew, or should have known, he was not entitled. The question of fault differs from that of fraud or bad faith. Persons dealing with the United States Government are at charged with knowledge of federal statutes and lawfully promulgated agency regulations, regardless of whether they have actual notice of the regulations at issue. Morris v. Derwinski, 1 Vet. App. 261 (1991); Fed. Crop Ins. Corp. v. Merrill, 332 U.S. 380 (1947). Therefore, the Veteran may be charged with knowing that he was prohibited from collecting VA benefits while classified as a fugitive felon. He also was the subject of a warrant due to his own actions, despite that he may not have had knowledge of the warrant. By continuing to accept benefits, he assumed responsibility for the creation of the debt. Having established that fault lies with the Veteran, the Board must weigh his liability against that of VA. 38 C.F.R. § 1.965(a)(2) (2011). The Board observes that VA acted promptly once it became aware of the overpayment and cannot in any way be held responsible for the creation of that debt. Therefore, its culpability cannot be found to exceed the fault of the Veteran. That weighs against a finding that recovery of the overpayment would violate the principles of equity and good conscience. However, the Board's analysis does not end here as it must still consider whether collection of the debt would cause the Veteran undue financial hardship. In a February 2007 written statement, the Veteran indicated that he had very little income and could not afford to cover the amount of the debt. At that time, he also submitted a final status report, indicating that his gross earnings totaled $909.00 per month and were derived entirely from VA and Social Security Administration benefits. He also stated that he owed approximately $1,200.00 to creditors. The Veteran further stated that his net monthly income generally totaled $847.00, while his monthly expenses, including rent, food, and utilities, generally totaled $725.00. He indicated that, after paying all of his bills each month, he generally had approximately $122.00 remaining. Significantly, the Veteran also noted that he could afford to pay $20.00 per month towards his VA debt. In view of the information the Veteran has submitted, the Board finds that, while he would incur some financial sacrifice through the recovery of the debt, such repayment would not deprive him of the basic necessities of life and thereby pose an undue hardship. On the contrary, the Veteran has indicated that he has sufficient funds remaining each month to purchase food and basic necessities, including lodging. Moreover, he has expressly conceded that he can afford to pay $20.00 per month in reimbursement of his overpayment. Further, the Board considers it significant that, at his recent hearing, the Veteran expressed his belief that most of the debt had already been paid through the garnishment of his pension benefits. Therefore, it appears that the Veteran may have already satisfied a significant portion of his financial obligation without relinquishing the ability to provide himself with basic necessities. In addition, while the Veteran may have creditors, his debt to the government is also an important obligation that must be satisfied. Accordingly, the Board finds that recovery of the overpayment does not constitute a violation of the principles of equity and good conscience. Next, the Board must consider whether the recovery of the overpayment would defeat the intended purpose of the VA compensation at issue. In this case, the Board finds that the purpose of the Veteran's nonservice-connected pension benefits would not be defeated. Pension benefits are intended to compensate wartime Veterans who have limited or no income, and who, if under age 65, like the appellant, are considered permanently disabled. 38 U.S.C.A. § 1155 (West 2002 & Supp. 2011). However, otherwise qualified Veterans are statutorily prohibited from receiving pension benefits during periods of time in which they are classified as fugitive felons. The Veteran's status as a fugitive felon has been established. Consequently, the Board finds that repayment of his debt would not conflict with the objective underlying his pension benefits as he was legally barred from receiving those benefits during the time period in which that debt was generated. The Board also finds that failure to make restitution would unfairly enrich the Veteran because he received monetary benefits to which he was not entitled. VA continued made pension payments after the Veteran met the definition of a fugitive felon. Those additional payments were not warranted throughout the time period in which his arrest warrant remained in effect. Thus, to allow the Veteran to keep those additional payments would constitute unjust enrichment. As a final point in its analysis, the Board must consider whether reliance on the benefits has resulted in the relinquishment of a valuable right or the incurrence of a legal obligation. In this case, no such relinquishment of right or incurrence of obligation has been contended or shown. Indeed, there has been no evidence to suggest that the Veteran detrimentally changed his position by relying on the pension benefits received from May 25, 2004, to March 21, 2006. The Board finds that the principles of equity and good conscience would not be violated if VA were to recover the overpayment. The Veteran has been found to be at fault in the creation of the debt, and, thus, the retention of the overpayment would unfairly enrich him. Moreover, repayment of the debt would not deprive the Veteran of the basic necessities of life. Nor would it defeat the purpose for which his benefits were intended. Accordingly, the Board finds that the preponderance of the evidence is against the Veteran's claim and waiver of recovery of the overpayment of VA compensation benefits is not warranted. 38 U.S.C.A. § 5107(b) (West 2002 & 2011); Gilbert v. Derwinski, 1 Vet. App. 49 (1990). Lastly, with respect to VA's duties to notify and assist, the provisions of law and regulations which set forth VA's requirements for other claims are not applicable to claims involving the validity of creations of overpayment or requests for waiver of recovery of overpayments. 38 U.S.C.A. § 5103A (West 2002); 38 C.F.R. § 3.159 (2011); Lueras v. Principi, 18 Vet. App. 435 (2004); Barger v. Principi, 16 Vet. App. 132 (2002). Therefore, no further discussion of those requirements is needed prior to the disposition of the Veteran's claim. ORDER A debt was validly created by the overpayment of nonservice-connected pension benefits in the original amount of $6,148.70. Waiver of the recovery of the overpayment of nonservice-connected pension benefits in the amount of $6,148.70 is denied. ____________________________________________ Harvey P. Roberts Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs