Citation Nr: 1325256 Decision Date: 08/09/13 Archive Date: 08/13/13 DOCKET NO. 09-38 955 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Milwaukee, Wisconsin THE ISSUES 1. Whether reduction of the Veteran's disability compensation benefits due to incarceration was proper. 2. Whether the effective date for the reduction of December 27, 2001, was proper. REPRESENTATION Appellant represented by: Disabled American Veterans ATTORNEY FOR THE BOARD M. Taylor, Counsel INTRODUCTION The Veteran served on active duty from May 1967 to January 1969. This matter comes before the Board of Veterans' Appeals (Board) on appeal from a December 2008 determination by the Department of Veterans Affairs (VA) Milwaukee, Wisconsin Regional Office (RO). FINDINGS OF FACT 1. The Veteran has been incarcerated from 1971 until the present for the conviction of a felony. 2. The reduction of the Veteran's disability compensation to one-half the 10 percent rate due to incarceration for a felony conviction was proper, effective April 1, 2002. 3. The correct effective date of April 1, 2002, for the reduction is proper. CONCLUSIONS OF LAW 1. The reduction of the Veteran's disability compensation to one-half the 10 percent rate due to incarceration for a felony conviction was proper. 38 U.S.C.A. §§ 1114, 5107, 5313 (West 2002); 38 C.F.R. §§ 3.103, 3.665 (2012). 2. The effective date of April 1, 2002, is the correct effective date for the reduction of the Veteran's disability compensation to one-half the 10 percent rate due to incarceration for a felony conviction. 38 FR 34, 542. Duty to Notify and to Assist The Veterans Claims Assistance Act of 2000 (VCAA) and implementing regulations impose obligations on VA to provide claimants with notice and assistance. 38 U.S.C.A. §§ 5102, 5103, 5103A, 5107; 38 C.F.R §§ 3.102, 3.156(a), 3.159, 3.326(a). However, Congress, in enacting the statute, noted the importance of balancing the duty to assist with "the futility of requiring VA to develop claims where there is no reasonable possibility that the assistance would substantiate the claim." Mason v. Principi, 16 Vet. App. 129, 132 (2002) (quoting 146 CONG. REC. S9212 (daily ed. Sept. 25, 2000) (statement of Sen. Rockefeller)). Because the law, and not the evidence, is dispositive of the issue regarding the reduction, VCAA is not applicable. As such, any failure to provide notice is considered to be at most harmless error. See Shinseki v. Sanders, 129 U.S. 1696 (2009) (reversing prior case law imposing a presumption of prejudice on any notice deficiency, and clarifying that the burden of showing that an error is harmful, or prejudicial, normally falls upon the party attacking the agency's determination). Neither the Veteran, nor his representative, has argued otherwise. The Veteran was informed of the reasons for the denial and of his dependents rights to apportionment in September 2009. REASONS AND BASES FOR FINDINGS AND CONCLUSIONS Under 38 C.F.R. § 3.665(a), any person who is incarcerated in a federal, state, or local penal institution in excess of 60 days for conviction of a felony shall not be paid compensation in excess of the amount specified in 38 C.F.R. § 3.665(d) beginning on the 61st day of incarceration. Under this section, a veteran who is rated 20 percent or more shall receive the rate of compensation payable under 38 U.S.C.A. § 1114(a), which equates to a 10 percent disability payment. 38 C.F.R. § 3.655 was amended effective June 10, 2003. It was stipulated that in accordance with statutory provisions amendments would be applied retroactively, with amendment to 38 C.F.R. § 3.665(c) being applicable April 1, 2002. See 68 Fed. Reg. 34,542 (June 10, 2003). Amendments to 38 C.F.R. § 3.665(c) provide that 38 C.F.R. § 3.665 applies to a veteran who in October 7, 1980, was incarcerated in a Federal, State, or local penal institution for a felony committed before that date and remained incarcerated for the conviction of that felony as of December 27, 2001. The amount payable during a period of incarceration, where involving a Veteran with a service-connected disability evaluation of 20 percent or more is the rate of compensation payable under 38 U.S.C.A. § 1114(a), which generally corresponds to a 10 percent rating. The amount payable where involving a Veteran with a service-connected disability evaluation of less than 20 percent is one-half the rate of compensation payable under 38 U.S.C. 1114(a). 38 U.S.C.A. § 5313(a); 38 C.F.R. § 3.665(d). The Veteran had been receiving compensation benefits at the 10 percent level for a shell fragment wound of the posterior right shoulder since January 1969. The record reflects that he has been incarcerated in a state correctional institution for a felony conviction since June 24, 1971, and remains incarcerated to the present. Prior to December 27, 2001 a veteran's benefits were not reduced due to the fact that the date of the commission of the offense for which he is incarcerated was prior to October 7, 1980. Based on the revisions to 38 C.F.R. § 3.665 (c), discussed above, the Veteran was notified of the proposed reduction in September 2008, and in December 2008, the RO determined that the payment of compensation benefits to the Veteran met the criteria for reduction in benefits under 38 C.F.R. § 3.665(c)(3), as he had been incarcerated in a state correctional institution for a felony conviction since 1971. Given his single 10 percent rating, the RO reduced his monthly compensation payments to one-half the 10 percent rate as required under 38 C.F.R. § 3.665(d). Although the reduction was proper, the effective date of December 27, 2001, was not proper as the regulations, to include the Veteran's category of incarcerated veterans subjected to reduction of benefits under 38 C.F.R. § 3.665, did not become effective until April 1, 2002. Nevertheless, the reduction in the Veteran's benefits from April 1, 2002 onward is proper as the Veteran has been continuously incarcerated for the same felony from prior to October 7, 1980 to the present. See 38 C.F.R. § 3.665(a)(c). With respect to the Veteran's assertion that Public Law 107-103 is an ex post facto law and is therefore unconstitutional and/or that his 10 percent disability rating is protected from reduction under 38 C.F.R. § 3.951, there is no provision grandfathering this class of veterans into exemption from a reduction of benefits. The law does not otherwise exempt the Veteran from its provisions. The Veteran has also challenged Public Law 107-103 on the grounds that it is ex post facto application of new law and therefore unconstitutional. He essentially contends that the right to payment of VA benefits that was established in the July 1971 rating decision cannot be abolished retroactively. In Saunders v. Brown, 4 Vet. App. 320, 326 (1993), the Court noted that '[a]dministrative agencies are entitled to pass on constitutional claims but they are not required to do so.' [Quoting Plaquemines Port v. Federal Maritime Comm'n, 838 F.2d 536, 544 (D.C. Cir. 1988)]. See also Suttman v. Brown, 5 Vet. App. 127, 139 (1993) (noting that the 'Board is free to express an opinion on the appellant's constitutional claim). To the extent that the question is sufficiently addressed by prior case law, the Board will discuss the Veteran's ex post facto contentions. The United States Court of Appeals for the Federal Circuit has held that there is a strong presumption of constitutionality attending laws providing for governmental payment of monetary benefits. See Talon v. Brown, 999 F.2d 514 (Fed. Cir. 1993) cert. denied, 510 U.S. 1028, 126 L. Ed. 2d 601, 114 S. Ct. 643 (1993). This presumption has been held to apply to claims for veterans' benefits. See, e.g., Cleland v. National College of Business, 435 U.S. 213, 221 (1978) (per curiam) (Congress has broad power to make decisions concerning how veterans benefits should be administered). With regard to ex post facto laws in particular, Federal Courts have held that to be ex post facto, a law must impose punishment for past acts which were not so punishable at the time they were performed. See Jensen v. Schweiker, 709 F.2d 1227, 1230 (8th Cir. 1983). The Federal Courts have also held that suspension of a noncontractual benefit is not considered a punishment, thus such a law is not considered an ex post facto law. See Jensen v. Heckler, 766 F.2d 383, 386 (8th Cir. 1985), cert. denied, 474 U.S. 945 (1985). The specific constitutional question at issue in this case is essentially addressed in Latham v. Brown, 4 Vet. App. 265 (1993), aff'd 11 F.3d 1070 (Fed. Cir. 1993) (table). That case involved the reduction of benefit payments to veterans who were incarcerated felons under 38 U.S.C.A. § 1505(a) and 38 C.F.R. § 3.666, which are a similar statute and regulation to those at issue in the case at hand. The Court noted that 'in order to demonstrate a constitutional violation, appellant must show that the classification is arbitrary or does not bear any rational relationship to a legitimate government interest.' Latham, 4 Vet. App. at 267. The Court observed that, according to the legislative history, Congress believed persons who were incarcerated were already charges of the public and did not require additional monetary benefits. The legislative history also reflected an intention 'to prevent prisoners from being able to purchase contraband, particularly narcotics.' Id. at 268. The Court therefore concluded that the statute and regulation cited above were not ex post facto laws or bills of attainder and did not violate the Fifth Amendment of the Constitution. There is no authority the Board can find to overturn or ignore the statute and regulation at issue in this case as promulgated. To the extent he contends that his benefits cannot be reduced because his 10 percent disability rating is protected under 38 C.F.R. § 3.951, this regulation provides, in pertinent part, that any disability which has been continuously rated at or above any evaluation of disability for 20 or more years for VA compensation purposes may not be reduced except upon a showing that such rating was based on fraud. 38 C.F.R. § 3.951(b) (2012). As noted above, the Veteran has been in receipt of a 10 percent rating since 1969. A disability rating assigned is distinguished from a benefit that is to be paid. The Veteran's service-connected disability is still rated as 10 percent disabling under the applicable diagnostic code, and 38 C.F.R. § 3.951(b) protects this rating from being reduced to 0 percent absent a finding of fraud. However, this regulation does not govern the payment itself. The Board finds that the reduction in the VA disability compensation benefits is proper, but the correct effective date for the reduction is April 1, 2002. ORDER Reduction of the Veteran's disability compensation benefits due to incarceration is proper, and the appeal is denied. A later effective date for such reduction of April 1, 2002, is granted. ____________________________________________ RONALD W. SCHOLZ Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs