Citation Nr: 1303799 Decision Date: 02/04/13 Archive Date: 02/08/13 DOCKET NO. 11-14 048 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office and Insurance Center in Philadelphia, Pennsylvania THE ISSUE Entitlement to a waiver of recovery of an overpayment of Department of Veterans Affairs (VA) compensation benefits in the amount of $36,113.90. REPRESENTATION Appellant represented by: Veterans of Foreign Wars of the United States WITNESS AT HEARING ON APPEAL Appellant ATTORNEY FOR THE BOARD D.J. Drucker, Counsel INTRODUCTION Please note this appeal has been advanced on the Board's docket pursuant to 38 C.F.R. § 20.900(c) (2012). 38 U.S.C.A. § 7107(a)(2) (West 2002). The Veteran had active military service from September 1973 to September 1977. This matter comes to the Board of Veterans' Appeals (Board) on appeal from a November 2010 decision of the Committee on Waivers and Compromises (COWC) of the VA Regional Office and Insurance Center (RO) in Philadelphia, Pennsylvania, that denied the Veteran's request for a waiver of recovery of an overpayment of VA compensation benefits in the amount of $36,113.90. In October 2011, the Veteran testified during a hearing before the undersigned Veterans Law Judge that was conducted at the Board's main office in Washington, D.C. A transcript of the hearing is of record. The Board observes that, in August 2012, the Veteran submitted additional information regarding her finances and marital status for consideration of her claim on appeal. She did not submit a waiver of initial consideration of the evidence by the agency of original jurisdiction (AOJ). See 38 C.F.R. § 20.1304(c) (2012). The Board does not find this evidence pertinent to deciding the claim and a waiver is not necessary. See 38 C.F.R. §§ 20.800, 20.1304(c) (2012). FINDINGS OF FACT 1. Effective from June 24, 1997, the Veteran was in receipt of VA compensation benefits for a bipolar disorder. 2. In 2010, the RO received notice that a felony warrant for forgery was issued against the Veteran in May 2000. 3. The Veteran has been charged with an overpayment of VA compensation in the amount of $36,113.90, representing the excessive amount she received in compensation benefits for the time period between December 27, 2001 and October 28, 2010. 4. Resolving all reasonable doubt in her favor, the Veteran was not a fugitive felon. 5. The overpayment of $36,113.90 was solely the result of VA administrative error; neither the Veteran's actions nor her failure to act contributed to the creation of the debt. CONCLUSION OF LAW The overpayment of compensation benefits in the amount of $36,113.90 was based solely upon VA administrative error, such that the debt was not valid and the overpayment was not properly created. 38 U.S.C.A. §§ 5107, 5302, 5313B (West 2002 & Supp. 2012); 38 C.F.R. §§ 1.956, 1.962, 1.963, 1.965, 3.665 (2012). REASONS AND BASES FOR FINDINGS AND CONCLUSION I. Duty to Notify and Assist As provided for by the Veterans Claims Assistance Act of 2000 (VCAA), VA has a duty to notify and assist claimants in substantiating a claim for VA benefits. 38 U.S.C.A. §§ 5100, 5102, 5103, 5103A, 5107, 5126 (West 2002 & Supp. 2012); 38 C.F.R. §§ 3.102, 3.156(a), 3.159, 3.326(a) (2012). As the Veteran's claim involves the validity of a creation of an overpayment and a request for waiver of recovery of overpayment, involving Chapter 53 of Title 38 of the Unites States Code, the duty to notify and assist provisions of the VCAA do not apply. See Lueras v. Principi, 18 Vet. App. 435 (2004); Barger v. Principi, 16 Vet. App. 132, 138 (2002); see also 38 U.S.C.A. §§ 5103, 5103A (West 2002 & Supp. 2012). In addition, in light of the favorable disposition of this matter, the Board finds that any additional discussion as to whether VA's duties to notify and assist the Veteran have been satisfied is not required. II. Factual Background and Legal Analysis Pertinent Laws and Regulations 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 U.S.C.A. § 5302; 38 C.F.R. § 1.962. An overpayment may arise from virtually any benefits program administered pursuant to VA law, including pension, compensation, dependency and indemnity compensation, education educational assistance benefits and subsistence allowance, insurance benefits, burial and plot allowances, clothing allowance, and automobile or other conveyance and adaptive equipment allowances. 38 C.F.R. § 1.956(a). The 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. Shaper v. Derwinski, 1 Vet. App. 430 (1991). The VA General Counsel has reinforced this obligation by holding that where the validity of the debt is challenged, that issue must be developed before the issue of entitlement to a waiver of the debt can be considered. VAOPGCPREC 6-98 (April 24, 1998). Effective December 27, 2001, the law was amended to prohibit the payment of compensation benefits for any period during which a veteran was a fugitive felon. 38 U.S.C.A. § 5313B. 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 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). In addressing how fugitive felon status affected payment of VA benefits to dependents, a VA General Counsel opinion noted that the VA fugitive felon provision was modeled after Public Law No. 104-193, that barred fugitive felons from receiving Supplemental Security Insurance from the Social Security Administration (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. SSA's fugitive felon provision is essentially identical to the VA provision cited above. 42 U.S.C.A. § 1382(e)(4)(A). In Massachusetts, for forgery of a check, punishment can lead up to five years in the state prison or by a fine of not more than $1,000 and imprisonment in jail for not more than one year. Mass. Gen. Laws. ch. 267, § 10 (2010). For forgery of a prescription for a controlled substance, punishment can lead up to eight years in the state prison or in a jail or house of correction for not more than two and one half years, or by a fine of not more than $30,000 or by both fine and imprisonment. Mass. Gen. Laws. ch. 94C, § 33 (2010). 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; 38 C.F.R. § 1.963(a). In cases where there is no fraud, misrepresentation, or bad faith on the Veteran's part with respect to the creation of the overpayment at issue, waiver is not precluded pursuant to 38 U.S.C.A. § 5302(a). In order to adjudicate the matter on appeal, the Board must determine whether recovery of the indebtedness would be against equity and good conscience, thereby permitting waiver under 38 U.S.C.A. § 5302(a) and 38 C.F.R. §§ 1.963(a), 1.965(a). 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. 38 C.F.R. § 1.965(a); Ridings v. Brown, 6 Vet. App. 544, 546 (1994). The standard of "equity and good conscience" means arriving at a fair decision between the obligor and the Government. 38 C.F.R. § 1.965(a). In making this determination, consideration is given to the following elements, which are not intended to be all-inclusive: (1) Fault of the debtor (whether actions of the debtor contributed to creation of the debt); (2) Balancing of faults (weighing fault of the debtor against VA fault); (3) Undue hardship (whether collection would deprive the debtor or his 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 (whether failure to make restitution would result in unfair gain to the debtor); and (6) Changing positions to one's detriment (whether reliance on VA benefits resulted in relinquishment of a valuable right or incurrence of a legal obligation). 38 U.S.C.A. § 5302; 38 C.F.R. § 1.965(a). Factual Background Evidence of record shows that the Veteran received VA compensation benefits for a bipolar disorder, evaluated as 30 percent disabling from June 24, 1997. In an April 2010 letter, the RO informed the Veteran that she was the subject of an outstanding arrest warrant and considered a fugitive felon. It was indicated that the RO proposed to suspend the Veteran's VA benefits from the later date of the warrant or December 27, 2001, the effective date of the fugitive felon provisions of Public Law 107-103, discussed supra. The RO proposed to stop the Veteran's compensation award as of December 27, 2001. Warrant information indicated the issue date was May 25, 2000, for the offense of forgery. In a June 2010 letter, the RO advised the Veteran that her benefits were suspended as of December 1, 2001 that created an overpayment. In a July 2010 letter, the VA Debt Management Center (DMC) sent a notice of overpayment of VA compensation benefits in the amount of $36,379.10 to the Veteran. A July 2010 Recall of Warrant was received by the RO in August 2010, showing that the warrant in question was recalled, effective July 29, 2010. In August 2010, the RO received the Veteran's request for a waiver of overpayment of her debt and information regarding her monthly income and expenses. In September 2010, the Veteran's case was referred to the RO in Huntington, West Virginia, for possible debt adjustment based upon receipt of her financial information. It was noted that her award should have been terminated as of December 27, 2001, rather than December 1, 2001. In October 2010, the RO advised the Veteran that her request to resume her VA compensation benefits due to the recall of the warrant against her was received. She was informed that VA corrected a previous error and that her benefits should have stopped effective December 27, 2001, rather than December 1, 2001. The RO informed her that benefits were effectuated again from the date of the recall of her warrant on July 29, 2010. Her debt was reduced to $36,113.90. In a November 2010 electronic communication with RO personnel, the Veteran explained that her offense was committed in 1984 and that the warrant was not issued until 2000. She said she was on the verge of bankruptcy and inquired as to the status of her waiver request. In its November 2010 decision on appeal, the COWC noted that, in November 2010, the Veteran's award was processed and her indebtedness was reduced to $36,113.90. The COWC found no finding of fraud, misrepresentation, or bath faith on the Veteran's part in the creation of the indebtedness that would preclude waiver of recovery. She was found to be at fault in the creation of the debt as her fugitive felon status caused the debt. It was determined that collection of the debt would not defeat the purpose of the VA compensation benefits she received. In her February 2011 notice of disagreement and April 2011 substantive appeal, and during her October 2011 Board hearing, the Veteran indicated that she was unaware of the warrant issued by the State of Massachusetts in 2000, as she lived in West Virginia since 1998, and, before that, in Washington, D.C, since approximately 1987. See Board hearing transcript at page 10. After she received the RO's April 2010 notice, the Veteran immediately acted to have the warrant recalled. She further testified that the financial information she submitted in August 2010 was based on her job at the time at the VA medical center in Martinsburg, West Virginia, that she subsequently lost in April 2011. Id. at 6-7. The Veteran said that she was 62 years old and a psychiatric social worker but finding a new career at her age was not easy. Id. at 14. Analysis While the Veteran has not disputed the amount of overpayment in question, she has argued that the underlying creation of the debt, and thereby the overpayment itself, was improper. The Veteran has continually asserted that she was unaware of the warrant issued in May 2000 until she was notified of it by VA in 2010. She therefore contends that she was erroneously classified as a fugitive felon. While fugitive is not specifically defined by the governing statute and regulation (38 C.F.R. § 3.665(n)), 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. Thus, to engage in an intentional act of fleeing from prosecution, the Veteran would first have to know that she was facing prosecution. The Board's finding that an individual must have at least some knowledge of prosecution before she can be found to be fleeing from such is also consistent with the interpretation by several federal courts of the essentially identical SSA fugitive felon provision. In December 2005, the Second Circuit Court of Appeals found that, under that statute (42 U.S.C.A. § 1382(e)(4)(A) , in order for a person to be fleeing prosecution there must be some evidence that the person knows her 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, 96-97 (2nd Cir. 2005). In light of the above decision, the SSA issued a Notice of Social Security Acquiescence Ruling in April 2006. 71 Fed. Reg. 17,551 -17,552 (April 6, 2006). The ruling noted the holding of the court and that the agency could not conclude that an individual was fleeing to avoid prosecution, custody, or confinement from the mere fact that there was an outstanding felony arrest warrant or similar order. The agency said they would apply this decision to all SSA cases involving fugitive felon determinations in Connecticut, New York, and Vermont. Thus, the ultimate question before the Board is one as to whether the Veteran was a fugitive felon within the intent of 38 C.F.R. § 3.665(n). This all depends on whether there is evidence that she had knowledge of the warrant for her arrest and, thereby was in flight to avoid prosecution. There is no evidence to support such a finding. First, there is simply no objective evidence indicating that the Veteran was aware of the warrant prior to her receiving notice of the fact from the RO. Next, and of even greater import, the Board finds the Veteran's statements to be credible, as there is internal consistency, facial plausibility, and consistency with other evidence submitted on behalf of the claimant. Caluza v. Brown, 7 Vet. App. 498 (1995). In this regard, she provided a consistent history of the circumstances and disposition of the May 2000 warrant. In addition to being internally consistent, her statements concerning the May 2000 warrant were also consistent with other evidence of record. Specifically, she acted immediately to clear the warrant issued in Massachusetts, and that was done in July 2010. Madden v. Gober, 125 F.3d 1477, 1481 (1997) (the Board is entitled to assess the credibility of evidence in light of its own inherent characteristics and its relationship to other items of evidence). Finally, the undersigned found the appellant's personal testimony to genuine, credible, and consistent with the evidence of record. See Caluza v. Brown, 7 Vet. App. at 498 (VA may consider interest, bias, inconsistent statements, bad character, internal inconsistency, facial plausibility, self interest, consistency with other evidence of record, malingering, desire for monetary gain, and demeanor of the witness); Jones v. Derwinski, 1 Vet. App. 210, 217 (1991) (finding that "the assessment of the credibility of the veteran's sworn testimony is a function for the BVA in the first instance"). When there is no evidence that an appellant knew there was a warrant for her arrest, the mere presence of an outstanding warrant is insufficient to establish fugitive felon status. See e.g., Garnes v. Barnhardt, 352 F. Supp. 2d 1059, 1066, (N.D. Cal. 2004) and Hull v. Barnhart, 336 F. Supp. 2d 1113 (D.Or. 2004) (finding that an intent to avoid prosecution was required for a fugitive felon finding under the SSA statute). As discussed above, and resolving all reasonable doubt in the Veteran's favor, the Board finds that there is evidence that the Veteran was not aware of the outstanding warrant against her until 2010. As such, the Board concludes that the evidence does not show she was a fugitive felon from December 27, 2001, and must further conclude that the overpayment in question is not a validly created debt. As the Board's findings vitiate the Veteran's status as a fugitive felon for the period from December 27, 2001, the creation of the overpayment of VA compensation benefits accordingly was not proper and the Veteran's benefits for that period therefore are reinstated. ORDER The overpayment in compensation benefits of $36,113.90 was not properly created and is not a valid debt, such that the Veteran's recovery of that sum is granted. ____________________________________________ ERIC S. LEBOFF Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs