Citation Nr: 1446167 Decision Date: 10/17/14 Archive Date: 10/30/14 DOCKET NO. 08-19 065 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Chicago, Illinois THE ISSUE Entitlement to waiver of overpayment of nonservice-connected pension benefits in the amount of $44,184.80. REPRESENTATION Appellant represented by: Joshua M. Oyster WITNESS AT HEARING ON APPEAL The Veteran ATTORNEY FOR THE BOARD L. McCurdy, Associate Counsel INTRODUCTION The Veteran served on active duty in the military from December 1971 to March 1973. This appeal to the Board of Veterans' Appeals (Board) is from an October 2006 rating decision of the Department of Veterans Affairs (VA) Pension Office in Milwaukee, Wisconsin. Jurisdiction over the matter has been retained by the Regional Office (RO) in Chicago, Illinois. The Veteran testified before the undersigned Veterans Law Judge (VLJ) of the Board at a hearing at the RO (Travel Board hearing) in September 2011; a transcript of the hearing is of record. This claim was previously before the Board in November 2011, when a decision was rendered finding the Veteran's debt was validly created and denying the Veteran a waiver of overpayment. The Veteran appealed to the United States Court of Appeals for Veterans Claims (Court). In December 2013, the Court issued a Memorandum Decision affirming the validity of the debt but vacating the remainder of the Board's decision and remanding the waiver issue for readjudication. Accordingly, as the Court has affirmed the validity of the Veteran's debt under the 38 U.S.C.A. § 5313B, regarding fugitive felons, that issue is no longer before the Board. See Schaper v. Derwinski, 1 Vet. App. 430 (1991) (stating that the issue of the validity of the debt is a threshold determination that must be made prior to a decision on a request for waiver of the overpayment). FINDINGS OF FACT 1. The Veteran's VA nonservice-connected pension was terminated effective December 27, 2001 due to fugitive felon status, resulting in an overpayment in the amount of $44,184.80. 2. 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. 3. There has been no showing of fault on the part of VA in the generation of the debt. 4. Recovery of the assessed overpayment would not deprive the Veteran of the ability to provide for basic necessities and waiver of his debt would result in unjust enrichment. CONCLUSION OF LAW The criteria for entitlement to waiver of recovery of overpayment of nonservice-connected pension benefits in the amount of $44,184.80 have not been met. 38 U.S.C.A. § 5302(a) (West 2002); 38 C.F.R. §§ 1.965, 3.666(e) (2013). REASONS AND BASES FOR FINDINGS AND CONCLUSION I. VCAA As provided by the Veterans Claims Assistance Act (VCAA), VA has duties to notify and assist a claimant in substantiating a claim for VA benefits. 38 U.S.C.A. §§ 5100, 5102, 5103, 5103A, 5107, 5126 (West 2002 & Supp. 2013); 38 C.F.R. §§ 3.102, 3.156(a), 3.159 and 3.326(a) (2013). However, these notice and duty to assist provisions of the VCAA are only relevant to Chapter 51 of Title 38 of the United States Code; they do not apply in validity of debt and waiver of overpayment cases, as here, governed by Chapter 53. See Reyes v. Nicholson, 21 Vet. App. 370 (2007), citing Barger v. Principi, 16 Vet. App. 132 (2002)); see also 38 U.S.C.A. § 5302 (West 2002). II. Analysis Effective December 27, 2001, 38 U.S.C.A. § 5313B was enacted by Congress which provides that a Veteran may not be paid compensation benefits for any period during which such Veteran is a fugitive felon. A "fugitive felon" is defined by 38 U.S.C.A. § 5313B(b) as including a person fleeing to avoid prosecution, custody, or confinement relating to a felony offense, as well as a person violating a condition of probation or parole imposed for a felony. The implementing regulation governing pensions for fugitive felons, under 38 C.F.R. § 3.666(e) (2013), provides that: (1) Pension is not payable on behalf of a Veteran for any period during which he or she is a fugitive felon; (2) 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. § 3.666(e)(3). 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. In an April 1995 decision, the RO granted the Veteran's claim for entitlement to nonservice-connected pension benefits. The RO subsequently received notice in April 2006 from VA's Office of Inspector General (OIG), Fugitive Felon Program, which included an Investigative Summary Form showing an outstanding felony warrant for the Veteran's arrest that had been issued by the King County police department in Seattle, Washington. The charge was burglary, and the report states it was outstanding since February 1981. Accordingly, in July 2006, the RO notified the Veteran it was terminating his service-connected compensation benefits, retroactively from December 27, 2001 (effective date of the fugitive felon provisions of Public Law 107-103), because he was classified as a fugitive felon under VA law and regulations. The VA's Debt Management Center then calculated an overpayment of benefits, and resulting indebtedness by the Veteran, in the amount of $44,184.80. During a hearing in September 2011, the Veteran testified that he was arrested and charged with burglary in Seattle in 1981 along with two others. Following his arrest, he stated he was released "under supervised own recognizance" and proceeded to leave Seattle. The Veteran admitted, "I knew there would be one [(an arrest warrant)] when I left on the charge." See personal hearing transcript, at 6. The Veteran essentially contends that while he knew a warrant would be issued, he had no notice of an outstanding effective warrant until VA stopped his pension benefits. He mistakenly believed that because he was not served with a warrant or extradited by the Seattle, Washington authorities, the warrant was not valid. The Veteran seeks waiver of the $44,184.80 indebtedness resulting from the termination of his pension benefits in light of his limited financial circumstances. VA is authorized to grant a waiver of recovery of indebtedness when collection of the debt would be against "equity and good conscience." 38 U.S.C.A. § 5302(a) (West 2002); 38 C.F.R. §§ 1.962, 1.963(a), 1.965 (2013). 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. Ridings v. Brown, 6 Vet. App. 544, 546 (1994). The law, however, precludes a waiver of recovery of an overpayment or the collection of any indebtedness where any one of the following elements is found to exist: (1) fraud, (2) misrepresentation, or (3) bad faith. 38 U.S.C.A. § 5302(c); 38 C.F.R. § 1.962(b). "Bad faith" is defined in VA regulations as unfair or deceptive dealing by one who seeks to gain thereby at another's expense. Thus, a debtor's conduct in connection with a debt arising from participation in a VA benefits/services program exhibits bad faith if such conduct, although not undertaken with actual fraudulent intent, if undertaken with intent to seek an unfair advantage, with knowledge of the likely consequences, and results in a loss to the government. 38 C.F.R. § 1.965(b). Consequently, before determining whether equity and good conscience affords the Veteran the right to a waiver, it first must be determined whether there was fraud, misrepresentation, or bad faith on his part in the creation of the debt. Id. While the evidence indicates that he was aware that an arrest warrant would likely be issued since he was leaving on an open charge of burglary, there is no indication that he was attempting to defraud the VA or intentionally misrepresent facts regarding his past criminal status. His original application for non-service connection pension benefits also appears to be free of malfeasance. There is simply no evidence in the record the Veteran was being deceptive or purposely seeking an unfair advantage knowing that it would result in a loss to the government. See 38 C.F.R. § 1.965(b). The Board does not find there was any evidence of fraud, misrepresentation, or bad faith on the Veteran's part. See 38 U.S.C.A. § 5302(c). 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); Ridings v. Brown, 6 Vet. App. 544 (1994). The phrase "equity and good conscience" means arriving at a fair decision between the obligor and the Government. In making this determination, consideration will be given to the following elements, which are not intended to be all-inclusive: (1) the fault of the debtor, (2) balancing of faults between the debtor and VA, (3) undue hardship (whether collection would deprive the debtor of basic necessities), (4) defeat of the purpose for which the benefits were intended, (5) the unjust enrichment of the appellant, and (6) whether the appellant changed positions to his or her detriment in reliance upon a granted VA benefit. 38 U.S.C.A. § 5302; 38 C.F.R. § 1.965(a). Each of the six elements must be addressed. See Ridings v. Brown, 6 Vet. App. 544, 546 (1994). The Board finds that there are insufficient grounds to grant a waiver of recovery of indebtedness. First, in this case, the evidence shows that the Veteran was primarily at fault in the creation of the debt. Notwithstanding the Veteran's lack of fraud, misrepresentation, or bad faith, the fact remains that he collected non-service connected pension benefits during a period in which a warrant for his arrest was pending. He admittedly fled prosecution for a felony of burglary by leaving Seattle, Washington for Chicago, thereby causing the outstanding arrest warrant, and he failed to have the matter recalled or notify VA. Indeed, the Veteran testified that he knew there was a warrant in Seattle, Washington when he left and even indicated in a November 2011 letter that he "violated [his] supervised own recognizance" by not reporting back to the court in Seattle, Washington in 1980. Thus, his own actions were responsible for the creation of the debt. There is also no evidence of, and the Veteran does not allege, that there was an administrative error on the part of VA that would weigh fault against the VA. Rather, the Veteran argues that fault is on the part of the King County police department that issued the warrant but failed to serve it personally on the Veteran. However, for the purpose of overpayment waivers, the factors weigh the fault of the debtor against the fault of the VA. As there is no showing of VA fault, the second factor is balanced against the Veteran. Recognition is given that the warrant was quashed during the course of this appeal in May 2013. The outstanding case against the Veteran was dismissed. This, however, does not negate the Veteran's felon status from December 27, 2001 to October 6, 2006. Additionally, since the Veteran's warrant was not quashed nunc pro tunc, or back to a date prior to the Fugitive Felon Statute, there is no basis to nullify the debt currently levied against him. See VA ADJUDICATION AND PROCEDURES MANUAL REWRITE (M21-1MR), pt. X, ch. 16.2. Regarding the third element of undue financial hardship, the Veteran had previously submitted a financial status report, dated in December 2001, for consideration by the RO's Waiver Committee for a prior, unrelated appeal. From this report, there was no indication that the Veteran was currently employed, had attained any higher education, or was able to support himself in general. He reported few assets ($6,500). His required living expenses of rent ($350), food ($175), utilities ($35), clothing ($40) and transportation ($100), amounted to a total of $700 in monthly expenses. The Board emphasizes that his monthly income of $466 failed to cover these modest expenses. His prior income derived almost exclusively from his VA benefits, later stopped due to his fugitive felon status. As of May 2013, the Veteran's VA benefits were reinstated. See VA correspondence April 4, 2014. The Veteran submitted a Financial Status Report in June 2014 indicating that he receives monthly benefits in the amount of $1,054.00. He stated that his monthly expenses generally total $800, which included rent ($199), food ($200), utilities and heat ($56), other living expenses ($300), and monthly payments on other debts ($45). Significantly, the appellant noted that he could afford to make monthly payments towards his debt in the amount of $254.00 per month. 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. Accordingly, the Board finds that recovery of the overpayment does not constitute a violation of the principles of equity and good conscience. With regard to the fourth element, whether repayment of the debt would nullify the objective for which the VA benefits were intended, the Board must balance the competing objectives of the VA pension benefits system and the VA's Fugitive Felon Program. In this case, the Board finds the intent/purpose/needs of the Fugitive Felon Program outweigh those of the pension system, such that a waiver is not appropriate. VA pension benefits are authorized for the payment of a nonservice-connected disability pension to a wartime Veteran who has the requisite service and who is permanently and totally disabled. 38 U.S.C.A. §§ 101, 1521 (West 2002). However, otherwise qualified Veterans are statutorily prohibited from receiving these benefits during periods of time which they are classified as fugitive felons under the VA's Fugitive Felon Program. The Veteran's fugitive felon status has been established. In addressing how fugitive felon status affected payment of VA benefits to dependents, a VA Office of General Counsel opinion noted that the VA fugitive felon provision was modeled after Public Law No. 104-193, which barred fugitive felons from receiving Supplemental Security Income or Insurance from the Social Security Administration and food stamps from the Department of Agriculture. VAOPGCPREC 7-2002 (December 2, 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., quoting S. Rep. No. 107-86, at 17 (2001). Clearly, Congress' intention was to deny fugitives the means to maintain themselves in that status. Id. The Social Security Administration's (SSA's) fugitive felon provision is essentially identical to the VA provision cited above. See 42 U.S.C.A. § 1382(e)(4)(A). The Board acknowledges that the pension system aids financially distraught and disabled Veterans, and that the Veteran has certainly suffered from severe psychiatric disability. The Board also notes that the Veteran's warrant was quashed during the pendency of this appeal. In that view, a waiver of overpayment would not provide the Veteran the means to maintain fugitive status, but rather prevent him from repaying debt he accumulated while he was a fugitive. Although the Veteran is no longer fleeing from criminal authorities, as he had willfully done for over three decades, waiver of the debt would encourage his belief that King County's failure to extradite him negates his prior fugitive felon status. The Veteran fled prosecution in Seattle, Washington after pleading guilty to burglary, knowing that a warrant would be issued. See Veteran statement November 4, 2011. The Veteran's warrant was not quashed until May 2013, having no bearing on his felon status during the time the debt generated (from December 2001 to October 2006). 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 again recognizes the Veteran is no longer "fleeing" and that a waiver of his debt would aide in his continued flight. However, 38 U.S.C.A. § 5313B makes no differentiation between whether a veteran is in flight or was in flight. Rather, the law clearly states that a veteran may not be paid compensation benefits for any period during which such veteran is a fugitive felon. The Veteran was simply not entitled to VA pension benefits during applicable period, and his receipt of a waiver would directly contradict that law. 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 to make pension payments after the Veteran met the definition of a fugitive felon. Those payments were not warranted throughout the time period in which his arrest warrant remained in effect. It is true that, by all indications, the Veteran was previously homeless on the streets of Chicago, even living in a shelter, while suffering from severe psychiatric disability, and that waiver of overpayment would only eliminate debt from an impoverished Veteran. However, 38 U.S.C.A. § 5313B, and it's implementing regulation 38 C.F.R. § 3.666(e), provide no financial or health exceptions for barring the receipt of pension. Further, with the reinstatement of the Veteran's VA benefits in May 2013, his current monthly income outweighs his monthly expenses, and he appears to reside in an apartment complex. 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 VA 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 appellant detrimentally changed his position by relying on the pension benefits received from December 2001 to October 2006. The Board finds that it would not be against equity and good conscience for VA to recover the overpayment of pension benefits, in the amount of $44,184.80. See 38 U.S.C.A. § 5302; 38 C.F.R. § 1.965(a); Ridings v. Brown, 6 Vet. App. 544, 546 (1994). 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 death pension benefits is not warranted. 38 U.S.C.A. § 5107(b); Gilbert v. Derwinski, 1 Vet. App. 49 (1990). ORDER Entitlement to a waiver of recovery of an overpayment in the amount of $44,184.80 is denied. ____________________________________________ MICHAEL A. HERMAN Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs