Citation Nr: 1753430 Decision Date: 11/21/17 Archive Date: 12/01/17 DOCKET NO. 12-30 506 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Detroit, Michigan THE ISSUE Entitlement to waiver of overpayment of nonservice-connected pension benefits from July 14, 2010 through July 31, 2011, in the amount of $16,875.77. ORDER The overpayment of nonservice-connected pension from July 14, 2010 through August 10, 2010, which is yet to be separately calculated, is a valid indebtedness. The overpayment of nonservice-connected pension from August 11, 2010 through July 31, 2010, which is yet to be separately calculated, is not valid indebtedness. Entitlement to waiver of recovery of an overpayment of nonservice-connected pension from July 14, 2010 through August 10, 2010, which is yet to be separately calculated, is denied. WITNESS AT HEARING ON APPEAL The Veteran FINDINGS OF FACT 1. On July 14, 2010, a warrant was issued in Detroit, Michigan, for the Veteran's arrest. The Veteran was not arrested pursuant to this warrant until August 11, 2010, meaning that he was a fugitive felon from July 14, 2010 through August 10, 2010. 2. The Veteran was incarcerated awaiting trial during the period from August 11, 2010 through July 31, 2011, meaning that during that period he was not a fugitive felon and was not imprisoned as the result of conviction of a felony or misdemeanor. 3. The Veteran was solely at fault in the creation of the overpayment from July 14, 2010 through August 10, 2010, and failure to recover the overpaid benefits would result in an unfair gain to him. These factors outweigh any other considerations, including financial hardship. CONCLUSIONS OF LAW 1. The Veteran was a fugitive felon from July 14, 2010 through August 10, 2010, meaning that termination of his benefits during that period was proper, and the resulting debt is valid. 38 U.S.C. § 5313B (2012); 38 C.F.R. § 3.666 (2017). 2. The Veteran was not a fugitive felon or incarcerated as a result of conviction of a felony or misdemeanor from August 11, 2010 through July 31, 2011, meaning that termination of his benefits during that period was improper, and the resulting debt is not valid. 38 U.S.C. § 5313B (2012); 38 C.F.R. § 3.666 (2017). 3. The criteria for entitlement to waiver of recovery of overpayment of nonservice-connected benefits from July 14, 2010 through August 10, 2010 have not been met. 38 U.S.C. § 5302 (a) (2012); 38 C.F.R. §§ 1.963 (a), 1.965, 3.666(e) (2017). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS The Veteran served on active duty from January 1986 to August 1990. This matter comes before the Board of Veterans' Appeals (Board) on appeal from a January 2012 decision of the Department of Veterans Affairs (VA) Pension Office in Milwaukee, Wisconsin. Jurisdiction over the matter has been retained by the VA Regional Office (RO) in Detroit, Michigan. This matter was remanded by the Board in March 2017 for the scheduling of a hearing. The Veteran testified before the undersigned Veterans Law Judge (VLJ) at a hearing in May 2017. A transcript of that hearing is of record. As a preliminary matter, the Board notes that the Veterans Claims Assistance Act of 2000 (VCAA) does not apply in this case, given the nature of the issue on appeal. See e.g. Reyes v. Nicholson, 21 Vet. App. 370 (2007); see also Schaper v. Derwinski, 1 Vet. App. 430 (1991). Validity of the Debt Prior to issuing a decision on a request for waiver of an overpayment, the Board must determine as a threshold issue whether the debt in question is valid. Schaper v. Derwinski, 1 Vet. App. 430 (1991). The issue of validity was briefly addressed in the statement of the case, although it was not separately listed on the title page. Therefore, the preliminary question before the Board is whether the debt of overpayment of nonservice-connected benefits from July 14, 2010 through July 31, 2011 is valid. The Board finds that the debt accrued from July 14, 2010 through August 10, 2010 is valid, but that the debt accrued from August 11, 2010 through July 31, 2011 is not valid. Effective December 27, 2001, 38 U.S.C.A. § 5313B was enacted by Congress which provides that a Veteran may not be paid VA 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), 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). In this case, an April 2011 Investigative Summary Form containing fugitive felon information indicates that a warrant was issued for the Veteran on July 14, 2010. A January 2014 sentencing monitoring computation containing prisoner information finds that the Veteran was in jail awaiting trial from August 11, 2010 through June 27, 2012, and that the computation of his sentence began on June 28, 2012. This is consistent with a May 2011 letter from the Veteran's attorney arguing that he was not a fugitive felon because he was arrested pursuant to the warrant issued on July 14, 2010 in August 2010, and remains incarcerated awaiting trial. The Veteran has not offered any argument for why he should not be considered a fugitive during the period from July 14, 2010 through August 10, 2010. The Veteran argued that the overwhelming stress of his arrest combined with his psychiatric disability, which the Board notes was diagnosed as adjustment disorder with depression in a January 2009 VA examination, prevented him from notifying VA of his arrest. He has not argued that his adjustment disorder prevented him from cooperating with legal authorities. The January 2009 examination found that the Veteran was capable of managing his personal financial affairs, and did not indicate that his psychiatric symptoms were so severe that he was unable to respond appropriately to the warrant for his arrest. As there is no record that the Veteran was cooperating with legal authorities during this period, or that the warrant in question was not valid, the Board will presume that the Veteran was a fugitive felon. Therefore, he was not entitled to nonservice-connected pension benefits during the period from July 14, 2010 through August 10, 2010, and the debt is valid. As to the period from August 11, 2010 through July 31, 2011, the Veteran was confined in a jail awaiting trial, and thus was not fleeing to avoid prosecution. Therefore, he was not a fugitive felon as of August 11, 2010. Additionally, the discontinuance of a pension for an incarcerated veteran applies when he or she is imprisoned in a Federal, State or local penal institution as the result of conviction of a felony or misdemeanor. 38 C.F.R. § 3.666. In this case, the Veteran was awaiting trial, meaning he had not been convicted and was thus not incarcerated for the purposes of the regulation. This interpretation of incarceration for VA purposes is generally supported by a General Counsel opinion finding that a statute discontinuing benefits on the sixty-first day of incarceration takes effect on the sixty-first day after conviction, even if a veteran is given credit for time served prior to conviction. See VAOPGCPREC 3-2005, 72 Fed. Reg. 5801 (2007). As the Veteran was not a fugitive felon or incarcerated within the meaning of 38 C.F.R. § 3.666 during the period from August 11, 2010 through July 31, 2011, he and his dependents were entitled to payment of his nonservice-connected pension benefits. Therefore, there was no overpayment during this period, and the debt is not valid. Waiver for the Period from July 14, 2010 through August 10, 2010 The Veteran argues that repayment of the debt would cause him severe financial hardship as he transitions back into society from prison. The question before the Board is whether a waiver of the valid debt is appropriate. The Board finds that it is not. 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); 38 C.F.R. §§ 1.962, 1.963(a), 1.965. 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. The Board finds that there is no indication that the Veteran misrepresented himself in order to seek unfair advantage from VA resulting in a loss to the government. 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). In this case, the fault is entirely with the Veteran for the one-month period when he was a fugitive felon. The Veteran made the choice to avoid prosecution for this month, and to continue accepting his VA benefits. The Veteran's argument regarding his reliance on advice from a VSO officer applies to his acceptance of benefits after his arrest. As discussed above, the period after his arrest is not at issue here because the debt incurred during that period is invalid. There is no evidence that VA is at fault for the incurrence of this debt. The Board recognizes that the Veteran has argued that repayment of this debt would cause him and his family undue hardship because he reports no income and is transitioning out of a prison environment, but also notes that the debt has been reduced because any debt incurred during the period from August 11, 2010 through July 31, 2011 was found invalid. The Board finds that waiver of the debt would result in unjust enrichment of the Veteran because it would allow him to receive benefits for the month when he was avoiding the outstanding warrant, which would undermine the purpose of the fugitive felon regulation. The benefits were not intended to assist a veteran in evading prosecution for felonies or misdemeanors, and awarding an individual benefits during the period when he was doing so would thus not serve the purpose of nonservice-connected pension. There is no indication that the Veteran changed his position to his detriment or benefit during the period in question due to reliance upon the VA benefit. Therefore, the Board finds that the balance of equity and good conscience does not require waiver of the debt. The Veteran's claim for waiver is denied for the period from July 14, 2010 through August 10, 2010. ____________________________________________ U. R. POWELL Veterans Law Judge, Board of Veterans' Appeals ATTORNEY FOR THE BOARD A. Budd, Counsel Copy mailed to: Veterans of Foreign Wars of the United States Department of Veterans Affairs