Citation Nr: A22016140 Decision Date: 08/16/22 Archive Date: 08/16/22 DOCKET NO. 200610-90750 DATE: August 16, 2022 REMANDED Claim for a waiver of an overpayment debt in the amount of $47,291.04 is remanded. REASONS FOR REMAND The Veteran had active duty from March 1996 to June 2016. This matter is before the Board of Veterans' Appeals on his appeal from an April 2020 decision rendered by the Committee on Waivers and Compromises (COWC) that denied the Veteran's claim for a waiver of his overpayment debt in the amount of $47,291.04 that arose from the Department of Veterans Affairs (VA) disbursements of full disability compensation benefits during a period that ran from the 61st day of the Veteran's incarceration based on a felony conviction to the effective date of the June 2018 final action notification letter issued by VA agency of original jurisdiction (AOJ). Effective July 2016, the Veteran was awarded service connection for various disabilities yielding a 100 percent combined rating, and the amount of his disability compensation award was upwardly adjusted for V., the Veteran's dependent spouse, and two of his three children, i.e., D. and A., who at the time qualified as his dependent minor children. (The Veteran's eldest child was already emancipated at that time, and she did not qualify as the Veteran's dependent school child.) D. turned 18 years old in February 2018 (and the record is silent as to D. being the Veteran's dependent school child), but A. will remain a minor until January 2024. On February [REDACTED], 2017, the Veteran was convicted of violating Idaho Code Ann. § 18 1508, a provision qualifying the conduct underlying his conviction as a felony under the Idaho Penal Code. The Board acknowledges that the record suggests that the Veteran was held in pretrial detention prior to his conviction but no statement offering a dispositive clarification as to this aspect has been associated with the claims file. The record, however, demonstrates that, prior to the Veteran's incarceration, he, V., D., and A. resided in N., Idaho. On March 27, 2017, the AOJ received a written communication from the Veteran. (The AOJ correctly qualified the date of mailing of this communication as the date of the RO's receipt pursuant to the so-called "prisoner's mailbox" rule.) However, the content of the Veteran's March 27, 2017, communication demonstrated that the Veteran had drafted this communication prior to February [REDACTED], 2017, i.e., prior to the date of his conviction. Moreover, the Veteran's communication: (a) reflected his awareness that the amount of the Veteran's VA disability compensation benefits would "drop," i.e., would be reduced in its amount in the event he was convicted of his penal charges; but (b) inquired whether the "drop" would take place "after [he would] arrive to prison or [would occur] while [he was still] awaiting conviction." Moreover, the Veteran's communication suggested that he was held in pretrial detention because the envelope in which the Veteran's communication had arrived showed that he had been held in a certain Detention Center in Idaho. Notably, the Detention Center, also known as the "C.C. Jail," operates as both a jail (i.e., a correctional facility that houses inmates undergoing criminal prosecution or being in transit from one correctional facility to another) and a prison (i.e., a correctional facility housing post-conviction inmates who serve their penal sentences). See https://www.countyoffice.org/dale-g-haile-detention-center-caldwell-id-780/. The C.C. Jail is operated by the C.C. Sheriff's Office on behalf of the Idaho Department of Corrections (IDOC). Thus, the Veteran did not have to be transferred from the C.C. Jail to a prison upon his conviction and could begin serving his post-conviction term right there. In September 2017, the AOJ was notified of the Veteran's conviction of a felony offense and his confinement at the C.C. Jail. In October 2017, the AOJ generated a letter proposing to reduce the amount of the Veteran's disability compensation benefits effective the 61st day of his post-conviction confinement to the amount payable for a 10 percent disability: under 38 U.S.C. § 5313. The AOJ's October 2017 letter was mailed to the C.C. Jail. However, the letter was addressed, quite literally, to the C.C. Jail, i.e., neither the Veteran's name nor his prisoner's number were included in the address: since all this information was merely included in the main text on the AOJ's October 2017 letter. Simply put, information about who was the addressee of the AOJ's letter could become available to the reader only after the letter was opened. The Board, therefore, acknowledges that correctional facilities are required to open incoming mail in the presence of the addressees: this precaution is taken to ensure both delivery and prevention of contraband (that could be included in an envelope, e.g., controlled substances that are sent to inmates being wrapped in a letter paper). Therefore, correctional facilities typically discard all mailings that do not have either a prisoner's name and/or his/her prisoner's number printed/written on the envelope or visible through the envelope's cut-out "addressee window." This is so because, without a prisoner's name and his/her prisoner's number, correctional facilities do not know or might have no certainty as to which inmate's presence they should request to open the envelope. (Indeed, many inmates have identical names or use the same aliases as names; therefore, a letter sent to, e.g., John Smith, might have multiple simultaneous addressees because multiple inmates having such a name or using such an alias might be held at the same correctional facility at the same time. Accordingly, a prisoner's number is essential in such a scenario.) Moreover, the Board is mindful that correctional facilities typically do not return such mailings to senders as undeliverable. This is so because such a return might create an undue impression that mailing was properly addressed but the intended addressee was transferred to another correctional facility, even if such a transfer has not taken place. Since litigations often become subject to an administrative termination if the litigant-inmate fails to inform the tribunal presiding over his/her litigation about his/her change in address, and repeated administrative terminations might yield a prejudicial termination on the grounds of claim abandonment, legal mailings that are improperly addressed are typically not returned as undeliverable. Hence, while the Board presumes that the October 2017 letter was in fact mailed to the C.C. Jail, the Board is without a basis to presume that the letter was actually delivered to the Veteran. In December 2017, the AOJ requested additional information from the C.C. Jail, and the C.C. Sheriff's Office responded by a statement suggesting that at that point in time the Veteran still remained incarcerated at the C.C. Jail. In January 2018, the AOJ calculated the 61st day from the date of the Veteran's confinement; the calculation was based exclusively on the date of his conviction and, therefore, the AOJ determined that the § 5313 reduction in the amount of the Veteran's VA benefits should have taken effect on February [REDACTED], 2017, i.e., 60 days after his conviction. Simultaneously with so determining, the AOJ sent the Veteran a more detailed version of its proposal notice, this time mailing it to his pre incarceration address at N., Idaho. Having received no response, the AOJ sent the third proposal notice, again mailing it to the Veteran's pre incarceration address at N., Idaho. In June 2018, the AOJ took action on its proposals and issued the Veteran a final action notice showing that the amount of his disability compensation benefits was retroactively reduced effective the 61st day of his post-conviction confinement. The June 2018 final action notice was analogously mailed to the Veteran's pre incarceration address at N., Idaho. Therefore, the Board is without a basis to speculate that the Veteran received either one of the AOJ's proposal notices or the AOJ's final action notice. The Board also notes that with regard to all prisoners confined due to their convictions of State or Federal penal offences the U.S. Federal Bureau of Prisons (FBOP) and each of the U.S. States' Department of Corrections (DOCs) maintain online records that enable offender searches for currently-held inmates, and such FBOP and DOCs' websites necessarily include all the information about names, prisoners' numbers, and current places of confinement, plus often include information about inmates' aliases. Accordingly, the only action that an AOJ has to perform in order to send its proposal notices and final action notice to a convicted inmate at the place of his/her confinement is to conduct a few minutes of searching the IDOC records. On July 6, 2018, the VA Debt Management Center (DMC) issued the Veteran a demand letter stating that the amount of the Veteran's overpayment was $47,291.04. In sync with the AOJ's last two proposal notices and final action notice, the July 2018 DMC's demand letter was mailed to the Veteran's pre incarceration address at N., Idaho. In March 2021, the Veteran was released on parole and began residing in L., Idaho. However, allegedly on March 12, 2020, i.e., a year prior to his release on parole, the Veteran filed a claim seeking a waiver of his $47,291.04 overpayment debt. Notably, the Veteran's actual waiver claim and even the envelope in which it was received have not been associated with the claims file. Rather, the sole evidence of the Veteran's filing of his waiver claim on March 12, 2020, is limited to an entry typed by COWC into COWC's April 2020 decision as to his waiver claim. Specifically, the April 2020 COWC's decision pointed out that a waiver claim should have been filed within 180 days from the date of the issuance of DMC's July 6, 2018, demand letter, and a period much longer than 180 days had expired between to DMC's July 2018 demand letter and the Veteran's alleged March 12, 2020, filing of his waiver claim. Thus, without any equitable analysis on the merits, COWC denied the Veteran's waiver claim as untimely. In June 2020, i.e., still being held in confinement, the Veteran filed VA Form 10182 Notice of Disagreement (NOD) indicating that, at the time, i.e., nine months prior to his release on parole, the Veteran was confined at the Idaho State Correctional Center located in K., Idaho, but utilizing P.O. Boxes in Boise, Idaho, for mailing purposes. The Veteran's NOD duly stated his prisoner's number and demonstrated that the only challenge he was raising was to COWC's denial of a waiver. In July 2021, i.e., already after the Veteran's release on parole, a Veterans Services Organization (VSO), acting as the Veteran's representative, filed his Appellant's Brief arguing that the Veteran's waiver claim was wrongly adjudicated as untimely. In support of this position, the VSO pointed out that the DMC's July 6, 2018, demand letter was mailed not to the Veteran at an unspecified correctional facility (since the VSO also seemingly did not know where the Veteran was incarcerated in July 2018) but to the Veteran's pre-incarceration address in N., Idaho. With that, the VSO asserted that such an address "literally explain[ed] why the Veteran took so long to request a waiver of such debt." No clarification as to when and how did the Veteran learn of the June 6, 2018, DMC's demand letter, and no information suggesting that the Veteran acted promptly upon learning about the DMC's demand letter was included in the VSO's brief or the Veteran's NOD. Therefore, the rationale of the VSO's position is not immediately apparent to the Board. This is so because, assuming that the Veteran acted right upon learning of the DMC's mailing, e.g., assuming that V. continued living in the N., Idaho, address, and upon her receipt of the DMC's demand letter informed the Veteran of this fact during her visit to the Veteran's place of confinement or over the phone (assuming that the Veteran called V. from the places of his confinement), or she simply remailed the DMC's demand letter to the Veteran at his place of incarceration, the Board is without a basis to speculate that such a process took 615 days, i.e., one year, eight months, and six days. Simply put, the Veteran's filing of his NOD prior to his release on parole necessarily raises more questions than what would be there had he found out about DMC's action after being released on parole and learning that his VA benefits are being withheld due to a recoupment of his overpayment debt. In other words, if COWC's statement that the Veteran's waiver claim was received on March 12, 2020, is correct, the Veteran's inexplicably delayed filing of his waiver claim either suggests that he received the DMC's demand letter but unduly procrastinated or that he received the demand letter by means that the Board cannot begin to fancy. Accord Thornton v. Micrografx, 878 F. Supp. 931, 938 (N.D. Tex. 1995) ("The court refuses to leave its common sense at the courthouse steps"). However, the Board is also mindful of a third possibility that the VSO did not assert, i.e., that the fact that the claims file lacks the Veteran's waiver claim and even the envelope in which it was received means that the Veteran's waiver claim might have been received not on March 12, 2020, but much earlier, and March 12, 2020, was merely the date when the Veteran's waiver claim was acknowledged by the AOJ or DMC, or COWC: since, on rare occasions, such developments occur. Accordingly, recognizing that the Veteran's waiver claim might have been both dated and stamped upon receipt and/or the envelope in which his waiver claim arrived should have the date of mailing stamped on it, the Board factors these considerations into its directives to the AOJ to ensure that a dismissal on the grounds of untimeliness is not frivolous. On August 6, 2021, the Veteran notified the AOJ that, one day prior to the date of the Veteran's August 6, 2021, notification, i.e., on August 5, 2021, V. passed away. The Veteran also clarified that V. passed away in Fredonia, Arizona. Regretfully, the AOJ officer who created a report of general information reflecting this fact did not inquire with the Veteran and, therefore, did not include in the report any information as to whether the Veteran remained married to V. and/or whether A. was still qualified as his dependent minor child at the time of V.'s death. Critically here, the facts of the Veteran's August 6, 2021, communication with the AOJ are not factored into the Board's analysis: because these facts fall outside the Board's evidentiary window. However, the Board's legal analysis conducted in this matter has been more detailed because V.'s death in Arizona highlighted the Board's obligation to pay closer attention to the nature of Idaho Code Ann. § 18 1508. With these facts in mind, the Board now turns to the Veteran's waiver claim at bar. A challenge to a debt arising from VA overpayment may encompass three claims, i.e., a challenge to the creation of the overpayment, a challenge to the amount of the overpayment, and the claim for a waiver of the overpayment debt. Johnson v. Wilkie, No. 19-5789, 2020 U.S. App. Vet. Claims LEXIS 1205, at *5 (Vet. App. June 25, 2020). If either one of the first two challenges is raised, even if only implicitly, that challenge must be resolved prior to addressing the waiver claim. Schaper v. Derwinski, 1 Vet. App. 430, 437 (1991). However, if no implicit challenges are raised, the sole inquiry is limited to the substantive and procedural analysis of the waiver claim. In contrast, if a VA debtor expressly challenges the amount of his/her overpayment, such an appeal entails not only a possible benefit of having the overpayment nullified or reduced, but also a risk of a corrective action adversely affecting the debtor. For instance, in Majeed v. Principi, 16 Vet. App. 421 (2002), a veteran expressly appealed the amount of his overpayment debt. Since his appeal caused the Board to review the amount, the review caused an increase in the amount: because the DMC's calculation was more favorable to the veteran than it had to be. The Majeed veteran appealed after his debt amount had been increased, but his appeal was denied upon finding that the veteran had clearly put the issue of the amount of his overpayment into consideration, i.e. he had appealed at his own risk. Majeed v. Nicholson (Majeed II), 19 Vet. App. 525, 531 (2006). Here, the Veteran challenges only the denial of a waiver of the overpayment debt arising from the fact of his incarceration based on his conviction of Idaho Code Ann. § 18 1508. Therefore, the holding of Majeed II prevents the Board's review as to the amount of his overpayment accrued as a result of his incarceration, even though the AOJ might later charge the Veteran with an additional overpayment upon a determination that his period of post-conviction confinement was credited with a period of his pretrial detention. However, the Board is required to address a qualitatively different calculation. Here, the amount of the Veteran's overpayment was calculated as the difference between: (a) his upwardly adjusted VA benefits actually disbursed to the Veteran during the overpayment period; and (b) the amount payable for a 10 percent rating during the same period. Therefore, the amount of the Veteran's overpayment was equal to the sum of: (a) the difference between VA benefits payable to a veteran without any dependents for a 100 percent combined rating and the amount payable for a 10 percent rating; and (b) the upward adjustment paid for V., D., and A. during the overpayment period. However, such a calculation was appropriate only if the Veteran remained married to V. during the period of his overpayment, and D. and A. remained qualified as his dependent minor children. Conversely, if V. did not qualify as the Veteran's dependent spouse (and/or D. and/or A. did not remain qualified as his dependent minor children) during at least a portion of the period underlying the Veteran's overpayment, then two different overpayments should have been created, i.e., one equal to the difference between VA benefits payable to a veteran without dependents for a 100 percent combined rating and the amount payable for a 10 percent rating, and another equal to the upward adjustment paid for V., D., and A. during the period when they did not qualify as the Veteran's dependents. Assuming that the Veteran was, in fact, not entitled to such an upward adjustment, due process requires that separate proposal notices, separate final action notices, separate DMC demand letters, and separate COWC determinations should have addressed each of these two overpayments. The Board is mindful that a veteran's incarceration does not necessarily result in his/her divorce or a change in family circumstances such that his/her children stop qualifying as dependent children. Here, however, Idaho Code Ann. § 18 1508 governs sexual offences with a person under 16 years old. Hence, the fact of the Veteran's conviction of such an offense warranted a closer look at whether the Veteran was divorced from V. and whether D. and/or A. were not qualified as the Veteran's dependent minor children during at least a portion of his overpayment: since courts tend to deny custody to parents convicted of a sexual offence with a minor. In other words, in the event the Veteran's overpayment had a component based on his failure to report changes in the status of his dependents, such a component should not have been conflated with the portion of his overpayment arising from the operation of § 5313. It follows that the AOJ should have first inquired about the status of the Veteran's dependents and, if it were determined that V. and/or D., and/or A. did not qualify as the Veteran's dependents during at least a portion of the overpayment period, the AOJ should have issued him two sets of proposal notice and final action notice: one as to the overpayment based on § 5313 and another as to the overpayment based on the Veteran's receipt of upward adjustment. And, in such a scenario, DMC had to calculate two overpayment debts and allow the Veteran separate opportunities to seek waivers, placing COWC in the position to determine, separately, whether the Veteran was entitled to a full or partial waiver of either debt. Simply put, the legal bases for such overpayments were different, and the Veteran's waiver claims might have been based on two different factual predicates for the purposes of equitable analysis on the merits. This consideration is critical here because it might be shown that the Veteran indeed unduly procrastinated with seeking a waiver of his overpayment debt created under § 5313, but he could not have procrastinated with a waiver claim with regard to a debt arising from a change in the status of his dependents since the AOJ did not issue any notice and DMC did not issue any demand letter as to such a debt, thus preventing the Veteran from seeking any waiver from COWC. Accordingly, while the Board regrets additional delay, a remand is required. The matters are REMANDED for the following action: 1. Issue the Veteran a curative notice proposing to charge the Veteran with an overpayment based on the change in the status of V. as the Veteran's dependent spouse and D. and A. as his dependent minor children. The proposal notice should state, in terms amenable to a layperson's understanding, that the Veteran should respond by clarifying: (a) whether V. took any actions that changed her status as the Veteran's dependent spouse prior to V.'s death; and (b) whether any court action or action by V. was taken with regard to D. and/or A. that changed their status as the Veteran's minor children. To facilitate the Veteran's response, examples of scenarios (other than attaining the age of 18 without becoming a school child) that might have caused a change in the status of V., D., and A. as the Veteran's dependents should be provided in the proposal notice. 2. In the event the Veteran responds to the AOJ's proposal notice by a statement showing that V. stopped qualifying as the Veteran's dependent spouse and/or D. and/or A. stopped qualifying as his dependent minor children during at least a portion of the period of overpayment, issue the Veteran a final action notice. Upon the issuance of such a final action notice, direct DMC to calculate the amount of the Veteran's overpayment arising from a retroactive change in the status of his dependent(s) and request DMC to issue the Veteran a demand letter stating this overpayment amount and informing the Veteran of his right to seek a waiver as to this overpayment within 180 days from the date of the DMC's demand letter. 3. Upon completion of Step 1 and Step 2, conduct a search of the Veteran's hard-copy claims file, if any, to determine the basis for COWC's statement that the Veteran's waiver claim was filed on March 12, 2020. In the event the Veteran's waiver claim and/or the envelope in which it was received is/are located, associate this evidence with the claims file. In the event no such evidence is located, generate an express statement to that effect, serve it upon the Veteran and his representative, and associate it with the claims file. 4. In the event DMC issues a demand letter pursuant to Step 2 stating the amount of the Veteran's overpayment arising from a retroactive change in the status of his dependent(s), request DMC to recalculate the Veteran's overpayment arising solely from his felony conviction. (The amount of such a recalculated overpayment should be equal to the difference between the amount payable for a 100 percent rating and the amount payable for a 10 percent rating during the period of the overpayment, without factoring any upward adjustment that the Veteran received: because, under Step 2, such an upward adjustment would qualify as a separate overpayment). Upon completion of the foregoing, direct DMC to issue a curative demand letter stating that the Veteran is allowed 180 days to seek a waiver of the so-recalculated overpayment. 5. In the event it is determined, pursuant to Step 1 and Step 2, that no overpayment should be created based on a retroactive change in the status of the Veteran's dependents and, in addition, the Veteran's waiver claim and/or the envelope in which the claim was received are located, and this evidence supports a finding that the Veteran learned of the DMC's July 6, 2018, demand letter markedly earlier than one year, eight months, and six days after the issuance of the DMC's July 6, 2018, demand letter, readjudicate the Veteran's challenge to COWC's finding that his March 12, 2020, waiver claim was untimely by focusing on the untimeliness aspect exclusively. 6. In the event DMC issues new demand letters pursuant to Step 2 and Step 4 or, in alternative, if the Veteran's waiver claim allegedly received on March 12, 2020, and/or the envelope in which it was received are not located or this evidence is located but indicates that, as likely as not, that the Veteran's waiver claim was received within 180 days from the date of the DMC's July 6, 2018, demand letter, readjudicate the Veteran's claim for a waiver of his overpayment(s) on the merits. 7. For the purposes of adjudication of the Veteran's waiver claim(s) on the merits, provide the Veteran with an opportunity to submit his Financial Status Report (since such an opportunity should have been afforded to him upon the issuance of the DMC's July 6, 2018, demand letter). 8. Upon completion of the foregoing, issue the Veteran an appeal notification letter stating the outcome(s) of the adjudication(s) performed pursuant to Step 7. 9. Notify the Veteran that, in the event he is dissatisfied with the outcome of the actions taken by the AOJ and/or DMC, and/or COWC pursuant to the Board's aforesaid directives, and the Veteran desires the Board's further review of these matters, the Veteran's challenges would not be automatically returned to the Board, and the Veteran's appropriate and timely actions would be required in order to obtain the Board's additional review of these matters. Cynthia M. Bruce Veterans Law Judge Board of Veterans' Appeals Attorney for the Board Anna Kapellan, Associate Counsel The Board's decision in this case is binding only with respect to the instant matter decided. This decision is not precedential and does not establish VA policies or interpretations of general applicability. 38 C.F.R. § 20.1303.