Catherine A. Shephard v. Eric K. Shinseki

UNITED STATES COURT OF APPEALS FOR VETERANS CLAIMS
NO. 11-2074
CATHERINE A. SHEPHARD, APPELLANT,
V.
ERIC K. SHINSEKI,
SECRETARY OF VETERANS AFFAIRS, APPELLEE.
On Appeal from the Board of Veterans' Appeals
(Argued January 15, 2013 Decided February 27, 2013)
Katrina J. Eagle, of San Diego, California, for the appellant.
Sarah W. Fusina, of Washington, D.C., argued for the appellee. Will A. Gunn, General
Counsel; R. Randall Campbell, Assistant General Counsel; and Gayle E. Strommen, Deputy
Assistant General Counsel; and Purnima G. Boominathan, Appellate Attorney, all of Washington,
D.C., for the appellee.
Before KASOLD, Chief Judge, and SCHOELEN and PIETSCH, Judges.
SCHOELEN, Judge: The appellant, Catherine A. Shephard, appeals through counsel a May
25, 2011, Board of Veterans' Appeals (Board) decision in which the Board (1) found that, from
January 12, 2003, until November 13, 2008, the appellant was entitled only to payment of
compensation commensurate with a 10% disability rating; (2) decided that an overpayment of
compensation benefits was properly created; and (3) remanded the matter of whether the appellant
is entitled to a waiver of a recovery of overpaid benefits for additional development. Record of
Proceedings (Record or R.) at 3-9. Because the issue has been remanded by the Board, the
appellant's eligibility for a waiver of recovery of overpaid benefits is not before the Court. See
Breeden v. Principi, 17 Vet.App. 475, 478 (2004). This appeal is timely, and the Court has
jurisdiction to review the Board's decision pursuant to 38 U.S.C. §§ 7252(a) and 7266(a). For the
reasons stated below, the Court will affirm the Board's finding that the appellant was entitled only
to payment of compensation commensurate with a 10% disability rating for the period from January
12, 2003 until November 13, 2008, because the appellant has failed to demonstrate that veterans
subject to a reduction of compensation payments as a result of incarceration may, upon their release,
recoup the amounts withheld during their incarceration. However, the Court will vacate that part of
the Board's decision that decided that an overpayment of compensation benefits was properly
created, and remand the matter for further proceedings consistent with this decision.
I. BACKGROUND
The appellant served on active duty in the U.S. Navy from December 1986 to January 1995.
R. at 171. In July 1997, the VA regional office (RO) awarded the appellant a total disability rating
effective November 1996 (R. 905-08), and, in April 2003, the RO revised the appellant's monthly
compensation to $2,399, effective June 2003. R. at 853.
In September 2003, upon a database search, VA learned that the appellant had been
imprisoned on a felony conviction in November 2002. R. at 844. Nine months later, in June 2004,
the RO proposed to reduce the appellant's compensation to a monthly payment corresponding to a
10% disability rating pursuant to VA regulations governing compensation of incarcerated veterans.
R. at 833; see also 38 C.F.R. § 3.665(a), (d)(1) (2004). The RO advised the appellant that the
reduction in compensation "will result in an overpayment of benefits" and that the appellant would
be provided "repayment information." Id. The RO also informed the appellant that if she believed
the proposed reduction was inappropriate, she could request a personal hearing and VA "w[ould]
arrange a time and place for the hearing." R. at 834. The appellant was not advised at this time that
she could apportion any reduced compensation to her spouse or dependent.
On June 27, 2005, the RO reduced the appellant's compensation to a monthly payment
corresponding to a 10% disability rating, as it had proposed, effective January 12, 2003. R. at 816-
17. Until the date it reduced the appellant's benefit payment, VA electronically deposited the
appellant's payment into bank accounts held jointly by the appellant and her former husband.1 R. at
86-97, 102-119. Also on June 27, 2005, the RO advised the appellant that she may be entitled to
apportion the reduced compensation to her dependents. R. at 816. There is no evidence, however,
that the appellant requested any such apportionment. Finally, the RO promised the appellant further
notice regarding the specific amount of the overpayment. Id.
1
The appellant and her former husband married on December 11, 1992, and divorced on May
5, 2009. R. at 250-59.
2
In July 2005, the VA Debt Management Center advised the appellant that she owed VA
$63,749.21. R. at 814. That same month, the appellant filed a Notice of Disagreement (NOD) with
the RO's June 2005 decision. R. at 472. Construing the appellant's NOD as a request for waiver of
indebtedness, the Committee on Waiver of Indebtedness (Committee) ruled that the appellant was
"solely at fault in the creation of the overpayment." R. at 456. The Committee reasoned that the
overpayment was the direct result of the appellant's failure to report her felony conviction and
incarceration in a timely manner. Id.
The appellant was released from incarceration in November 2008. R. at 477. Thereafter, the
appellant sought reinstatement of her full compensation, and she asked that VA withhold the
"smallest amount possible" to pay back her overpaid benefits. R. at 348, 361. The appellant asserted
that during her incarceration her former husband had withdrawn the overpaid benefits from their
jointly held bank account and "kept using them" even though she "advised him several times that he
was not entitled to these benefits." R. at 361. She also asserted that, before VA reduced her benefit
payment, she had "advised VA that [she] was in prison but checks were still being sent." Id.
In January 2009, the appellant's full monthly compensation was reinstated. R. at 344-46. In
a December 2009 report of contact between an RO official and the appellant's representative, the RO
official noted that "the debt was too large because the file shows that [the RO] [k]new in 2004 that
she was incarcerated and they should have stopped the award to minimize the debt." R. at 218. The
official also stated that the RO continued to make payments because a private attorney requested a
personal hearing on the appellant's behalf. Id. The official noted, however, that the attorney's
"request should have been ignored because the private attorney didn't have [power of attorney] status
[a]t that time." Id. Despite these notations, the RO's Statement of the Case affirmed the Committee's
earlier decision that the overpayment was properly created. R. at 199.
In a March 2010 hearing before a decision review officer, the appellant stated that VA was
first notified of her incarceration in January 2003. R. at 202. The appellant asserted that her former
husband "knowingly kept the benefits every month," that she "never got any of that money," that her
name was taken off of the bank account when VA reduced her benefit payments, and that her former
husband filed for bankruptcy protection soon thereafter. R. at 203-05, 209. The appellant stated that
in the time between her incarceration and the date her benefit payments were reduced "[n]umerous
3
calls were made" and "numerous letters" sent to VA to inform the Agency that her benefits payment
was too high. Id.
The appellant's representative stated that during the appellant's incarceration a private
attorney contacted VA asking that the VA benefits be continued and stating that the appellant would
request a personal hearing. R. at 204. The appellant stated that she "was not aware of anything that
went on with that." Id. The appellant's representative asserted that VA acted on the private
attorney's request and continued to make excessive benefit payments even though the private
attorney had no power of attorney over her affairs. Id. The appellant argued that she properly
notified VA about her incarceration and that she "shouldn't be held responsible for something" over
which she exercised no control. Id. Finally, she noted that she "could not go to hearings, because
they, of course, were not court-ordered, as you are well aware," but if there had been "court-ordered
hearings, the prison could have taken care of me." Id. She asserted, however, that she did
"everything in her power" to notify VA that her benefits payments should be stopped, and that it is
both not "my fault that they didn't stop them" and that it is not "fair that I be held responsible for
something my ex-husband took." R. at 204-05.
On May 25, 2011, the Board remanded the waiver-of-indebtedness issue, but (1) found that,
between January 12, 2003, and November 13, 2008, the appellant was entitled only to monthly
payment of compensation commensurate with a 10% disability rating; and (2) affirmed the RO's
decision that the overpayment was properly created. R. at 5, 7-8. The Board stated that, although
VA continued to pay the appellant full monthly compensation for almost two years after it learned
of her incarceration, VA's continued payments did not meet "the criteria of sole administrative error"
set forth in 38 C.F.R. § 3.500(b)(2) (2012). R. at 7. The Board reasoned that "[a]ny administrative
error by VA in not enacting the required reduction earlier may not be used to negate the validity of
the debt where the Veteran had cause to know that benefit payments received were received in error."
Id. This appeal followed.
II. THE PARTIES' ARGUMENTS
The parties agree that the Board decision should be vacated and the matter remanded for
failure to provide adequate reasons and bases for its determination that, because the appellant had
4
knowledge that VA continued to deposit payments in a joint account, the $63,749.21 debt was
properly created. See Appellant's Brief (Br.) at 15; Secretary's Br. at 21-22. The parties disagree as
to whether the appellant is now entitled to payment of the difference between the appellant's full
monthly compensation and the amount to which her full compensation was reduced during her term
of incarceration. See Appellant's Br. at 10-14; Secretary's Br. at 6-18.
The appellant maintains that the Secretary lacks the authority to retain the compensation
withheld during her term of incarceration and that her entitlement to payment of all withheld funds
upon release from incarceration is protected by statute. See Appellant's Br. at 8. In particular, the
appellant submits that, in Snyder v. Nicholson, 489 F.3d 1213, 1218 (Fed. Cir. 2007), the U.S. Court
of Appeals for the Federal Circuit held that section 5313(a)(1) of title 38, U.S. Code, does not alter
a veteran's monthly compensation during her period of incarceration. Rather, according to the
appellant, the Snyder court's reasoning supports the proposition that, upon release from prison, a
veteran is entitled to recoup the compensation withheld during incarceration. See Appellant's Br.
at 9-10. The Secretary responds that the Snyder court explicitly declined to reach the issue raised
by the appellant, and the statutory language is clear that the compensation withheld during
incarceration shall not be paid, irrespective of when payment is demanded. Secretary's Br. at 8-9.
The appellant also appears to argue, without support, that VA's failure to restore the benefits
reduced during incarceration amounts to an unconstitutional enhancement of the criminal penalty
underlying her felony conviction and violates the Due Process and Takings Clauses of the Fifth
Amendment to the U.S. Constitution. See Appellant's Br. at 7-9, 12-14. In response, the Secretary
asserts that the Due Process Clause does not prohibit a reduction of benefits; instead, it only requires
that veterans be provided with notice and an opportunity to be heard before they can be deprived of
their protected benefits. See Secretary's Br. at 16-17. In this regard, the Secretary argues that the
appellant fails to explain how her due process rights were violated and that VA could not have
violated her due process rights because it provided notice and an opportunity for a hearing on the
reduction of her benefit payment. Secretary's Br. at 17. The Secretary did not address the appellant's
unsupported assertion that VA's actions amount to an enhancement of the criminal penalty
underlying her felony conviction or a violation of the Takings Clause.
5
III. ANALYSIS
A. Legal Framework
The basic entitlement to disability compensation begins with a veteran's service-connected
disability. See 38 U.S.C. § 1110 ("For disability resulting from personal injury suffered . . . in line
of duty . . . the United States will pay to any veteran thus disabled . . . compensation as provided in
[38 U.S.C. § 1114]"); see also Snyder, 489 F.3d at 1218; Ferenc v. Nicholson, 20 Vet.App. 58, 61
(2006). To grant an award on the basis of a veteran's service-connected disability, VA must assign
a disability rating, which, in turn, it must use to set the veteran's disability compensation. See
Snyder, 489 F.3d at 1218 (citing 38 U.S.C. §§ 1114, 1155). Pursuant to the veteran's award, VA
renders monthly payments to the veteran, surviving spouse, or a qualifying dependent. See 38 U.S.C.
§ 101(13), (14).
However, in the event that a veteran receiving monthly payments is incarcerated for a felony
conviction, a portion of his or her monthly compensation "shall not be paid . . . for the period
beginning on the sixty-first day of such incarceration and ending on the day such incarceration ends."
See 38 U.S.C. § 5313(a)(1), (e)(1). For a veteran whose disability rating exceeds 20%, she may
expect to be paid compensation commensurate with a 10% disability rating during the designated
period of incarceration. See 38 U.S.C. § 5313(a)(1)(A). All or part of the compensation not paid
to a veteran may be apportioned to a spouse or qualifying dependent. See 38 C.F.R. § 3.665(e).
Upon release from her term of incarceration, a veteran is entitled to resumption of payment of full
disability compensation. See 38 C.F.R. § 3.665(i). In the event that a veteran's felony conviction
is overturned on appeal, she is also entitled to the "restor[ation]" of the compensation withheld
during incarceration. 38 C.F.R. § 3.665(m).
B. Statutory Interpretation
1. Plain Language
The question presented requires the Court to interpret section 5313(a)(1). "'Statutory
interpretation begins with the language of the statute, the plain meaning of which we derive from its
text and its structure.'" Myore v. Nicholson, 489 F.3d 1207, 1211 (Fed. Cir. 2007) (quoting McEntee
v. Merit Sys. Prot. Bd., 404 F.3d 1320, 1328 (Fed. Cir. 2005)). "In evaluating whether Congress has
directly spoken to the question at issue, the starting point is to examine the language and structure
6
of the statute itself." Wanless v. Shinseki, 23 Vet.App. 143, 146 (2009), aff'd, 618 F.3d 1333 (Fed.
Cir. 2010). "'[E]ach part or section [of a statute] should be construed in connection with every other
part or section so as to produce a harmonious whole.'" Meeks v. West, 12 Vet.App. 352, 354 (1999)
(quoting 2A N. SINGER, SUTHERLAND ON STATUTORY CONSTRUCTION § 46.05 (5th ed.1992)).
Section 5313(a)(1) explicitly commands that
any person who is entitled to compensation or to dependency and indemnity
compensation and who is incarcerated in a Federal, State, local, or other penal
institution or correctional facility for a period in excess of sixty days for conviction
of a felony shall not be paid such compensation or dependency and indemnity
compensation, for the period beginning on the sixty-first day of such incarceration
and ending on the day such incarceration ends . . . .
38 U.S.C. § 5313(a)(1) (emphasis supplied). On its face, section 5313(a)(1) is clear. Disability
compensation shall not be paid to certain incarcerated veterans for a designated period of their
incarceration. "If the intent of Congress is clear, that is the end of the matter; for the court, as well
as the agency, must give effect to the unambiguously expressed intent of Congress." Chevron v.
Nat'l Res. Def. Council, Inc., 467 U.S. 837, 842-43 (1984).
The appellant's argument that the Secretary lacks authority to retain the withheld portion of
her disability compensation even after her release from prison misunderstands the focus and
direction of section 5313(a)(1). The statute's text concerns the "payment," and not the "award," of
disability compensation, see Snyder, 489 F.3d at 1218 ("The statutory limitation on payments to an
incarcerated veteran does not purport to change the monthly compensation awarded on the basis of
the veteran's claim" (emphasis added)); Ferenc, 20 Vet.App. at 62 ("It is evident that 'compensation'
is a distinct legal term from both 'rating' and 'service connection.'"). In addition, section 5313(a)(1)
does not speak in terms of the timing of payments; rather, it directs that a veteran is not to be paid
"for the period" of incarceration. 38 U.S.C. § 5313(a)(1).
Furthermore, the statute contains neither an implicit nor explicit command to pay, upon a
veteran's release from incarceration, those sums previously reduced. Rather, section 5313(a)(1) acts
as an affirmative prohibition on the Secretary's general obligation to pay a veteran's award of
compensation. See Ferenc, 20 Vet.App. at 61 ("Under the statutory scheme, disability compensation
benefits are paid to veterans . . . . However, if a veteran in receipt of compensation benefits is
incarcerated for conviction of a felony, these payments of compensation are subject to reduction"
7
(emphasis in original)); see also 38 U.S.C. § 101(13) (defining "compensation" as a "monthly
payment made by the Secretary to a veteran because of [a] service-connected disability" (emphasis
added)). Thus, on a plain reading of the statute, the appellant's argument must fail.
2. The Snyder Decision
The appellant's attempt to apply the Snyder court's reasoning to the interpretive issue at bar
is mistaken. As an initial matter, the Snyder court explicitly declined to reach the issue now before
the Court. See Snyder, 489 F.3d at 1217 n.1 ("At oral argument, it was suggested that the amount
of past-due benefits reduced under section 5313 is forever lost to [the veteran]. That issue is not
before us, and we express no view on it."). Indeed, the appellant in Snyder did not assert entitlement
to payment of reduced compensation upon release from incarceration. Rather, the appellant there
was an attorney who claimed entitlement to attorney fees arising from a retroactive award of benefits
granted to his incarcerated client. See id. at 1214-18; see also 38 U.S.C. § 5904(d)(1) (providing for
the payment of attorney fees "out of past-due benefits").
Moreover, the Snyder court's reasoning does not support the interpretation of section
5313(a)(1) proffered by the appellant. The Snyder court explained that section 5313(a)(1) serves as
a "withholding" mechanism, much like a "Social Security withholding" from an employee's "gross
salary." Snyder, 489 F.3d at 1218. The Snyder court elaborated: "[J]ust as a Social Security
withholding does not alter the person's gross salary, a section 5313(a)(1) withholding does not alter
the incarcerated veteran's awarded compensation." Id. The Snyder court's reasoning does not imply,
as the appellant would have it, that an incarcerated veteran is entitled to the equivalent of the
difference between a "gross" and "net" salary upon release from prison. See id. at 1217 n.1. Rather,
to carry the analogy further, the Snyder court merely suggested that an employee's various
withholdings are calculated on the basis of her gross salary, but that she continues to receive only
her net salary in exchange for eligibility for a host of taxpayer-funded benefits to which her
withholdings contribute. See id. at 1218.
The appellant's interpretation also finds no refuge in the Snyder court's statement that "a right
to receive payment may accrue while a veteran is not presently able to enjoy actual complete receipt
of the funds represented by the final award." Id. at 1220. In this comment, the Snyder court merely
acknowledged that, in particular instances, incarceration will not permanently preclude payment of
8
the disability compensation slated for reduction, such as when a veteran has a "spouse qualifying for
apportionment," Snyder, 489 F.3d at 1219 (citing 38 U.S.C. § 5313(b)(1); 38 C.F.R. § 3.665(e)
(2006)), or when an incarcerated veteran's conviction is overturned on appeal. See 38 C.F.R. §
3.665(m) (2006); cf. Dixon v. Nicholson, 20 Vet.App. 544, 549 (2006) ("If a veteran's felony
conviction is 'overturned on appeal,' VA must restore any withheld disability compensation benefits
(less the amount of any apportionment)." (quoting 38 C.F.R. § 3.665(m) (2006)). No faithful reading
of the Snyder court's comment would lead to the conclusion that it established an unqualified right
to repayment for all veterans subject to section 5313(a)(1) upon their release from incarceration. Cf.
Snyder, 489 F.3d at 1220 ("[A] right to receive payment may accrue . . . ." (emphasis added)).
Accordingly, the appellant fails to demonstrate that the Snyder court's "accru[al]" comment
is anything more than a careful restatement of the exceptions to section 5313(a)(1)'s general
reduction command. The Court is similarly not convinced that the Snyder court's reasoning and
holding deviate from the plain meaning of section 5313(a)(1) articulated above. Accordingly, the
appellant's reading of Snyder must be rejected.
3. Legislative History
The appellant maintains that Congress's initial purpose in enacting section 5313(a)(1) was
limiting education and training benefits to incarcerated veterans in order to curb disciplinary
problems occasioned by such funds, and that it is unclear how Congress's focus shifted to disability
compensation payments.2 Appellant's Br. at 11 n.3. Irrespective of how Congress turned its
attention to compensation payments and although the Court finds no ambiguity in the statute, it
2
The House committee report that the appellant cites appears to refer to a bill considered by
the U.S. House of Representatives Committee on Veterans' Affairs Subcommittee on Education,
Training, and Employment, entitled "H.R. 1534, A Measure to Provide Limitations on the Payment
of Educational Assistance to Incarcerated Veterans," later passed as the "Veterans' Rehabilitation and
Education Amendments of 1980," Pub. L. 96-466. Like the appellant, the Snyder court suggests that
this bill was related to the legislative intent behind section 5313(a)(1), Snyder, 489 F.3d at 1215-16,
but this connection is not clear from the legislative materials available to the Court. Cf. H.R. REP.
NO. 96-1155 (1980) (H.R. 7511 – the progenitor of section 5313(a)(1) – was passed as part of the
"Veterans' Disability Compensation and Housing Benefits Amendments of 1980," Pub. L. No. 96-
385).
9
"take[s] comfort in knowing that the legislative history also supports" the plain reading established
above. Wanless, 618 F.3d. at 1337-38.
As this Court noted in Wanless, Congress expressed a "strong sense of responsibility to the
public fisc" in promulgating section 5313(a)(1), and its "main stated objective [was] the avoidance
of duplicative Government expenditures that would result in a windfall for those convicted of
felonies."3 Wanless, 23 Vet.App. at 148-49. After introducing House bill 7511 (H.R. 7511),
Congressman Montgomery, the bill's principal sponsor and, at the time, the chairperson for the U.S.
House of Representatives Committee on Veterans' Affairs' Subcommittee on Compensation,
Pension, Insurance, and Memorial Affairs, remarked:
"Mr. Speaker, the purpose of compensation is to replace the lost earning capability
of a disabled veteran where the impairment is caused by a service-connected
condition. I do not consider it unreasonable to recognize that individuals who are
confined by our judicial system for commission of a serious offense against society
are no longer available to the labor market. An economic detriment caused by a
disability is not felt by such individuals during long periods of confinement.
* * * *
"I do not see the wisdom of providing hundreds and thousands of tax free benefits to
such individuals [referring to individuals serving long sentences for the commission
of felonies] when at the same time the taxpayers of this country are spending
additional thousands of dollars to maintain these same individuals in penal
institutions."
Bolton v. Brown, 8 Vet.App. 185, 192-93 (1995) (Ivers, J., concurring) (quoting 126 CONG. REC.
26,118 (1980) (statement of Rep. Montgomery)). Congressman Wylie, the ranking minority member
of the Subcommittee on Compensation, Pension, Insurance, and Memorial Affairs stated:
"In the case of imprisonment, when a prisoner is being fully supported by tax dollars
that fund the penal institution, it becomes ludicrous to continue payment of benefits
designed to help him maintain a standard of living. Thus, I believe the reduced
stipend of $60 a month is reasonable and, indeed, generous. Personally, I would stop
all compensation during incarceration for a felony. But, this is a good compromise."
Id. (quoting 126 CONG. REC. 26,122 (1980)).
3
The Snyder court, too, acknowledged Congress's concern over duplicative expenditures in
enacting section 5313(a)(1). See Snyder, 489 F.3d at 1215 ("Congress recognized that [incarcerated]
veterans were receiving benefits that were not offset to account for expenses, such as room and
board, that were provided by the prisons.").
10
Based upon these statements of congressional intent, it is clear, as the Court observed in
Wanless, that "if the taxpayers are financing a veteran's incarceration, it is contrary to the public good
to also pay him full VA disability benefits." Wanless, 23 Vet.App. at 148. If, after her release from
prison, the appellant had a right to receive the VA disability compensation "withheld" during her
prison term despite the fact that taxpayer dollars were expended to feed, clothe, and house her during
that period, section 5313(a)(1) would fail to fulfill Congress's intent to avoid duplicative spending.
Postincarceration payments of withheld compensation would only delay, rather than eliminate, "a
windfall for those convicted of felonies." Wanless, 23 Vet.App. at 148. Such an outcome is contrary
to the congressional intent animating section 5313(a)(1) and will not be countenanced by this Court.
4. Regulatory Framework
The appellant's interpretation also departs from the logic of the VA regulations implementing
section 5313(a)(1). As noted above, VA regulations provide for the resumption of full compensation
upon a veteran's release from prison, see 38 C.F.R. § 3.665(i), as well as the "restor[ation]" of
benefits previously withheld. 38 C.F.R. § 3.665(m). However, an incarcerated veteran is eligible
for a restoration of benefits only if her "conviction is overturned on appeal." Dixon, 20 Vet.App. at
547.
As the Secretary reasons (Secretary's Br. at 14-15), the appellant's effort to grant the
restoration of benefits to every veteran upon release from incarceration would moot the inquiry into
the status of the conviction dictated by § 3.665(m). The Court will not introduce such confusion into
a regulatory framework that is otherwise consistent with the precepts of section 5313(a)(1).
C. Constitutional Arguments
In her brief and during oral argument, the appellant suggested that the permanent withholding
of VA disability compensation withheld during her period of incarceration constitutes a violation of
the Due Process and Takings Clauses of the Fifth Amendment to the U.S. Constitution, and a
constitutionally impermissible enhancement of her felony conviction. See Appellant's Br. at 7-9, 12-
14. However, the appellant's arguments were stated perfunctorily, and she made little effort to
describe how the reduction performed in this case violated the constitutional rights that she invokes.
As the Supreme Court has counseled, Federal courts are disinclined to pass upon constitutional
questions cast in abstract terms. See Gov't & Civic Employees Organizing Comm., CIO v. Windsor,
11
353 U.S. 364, 366 (1957). This Court's practice is consistent with the Supreme Court's command,
see Coker v. Nicholson, 19 Vet.App. 439, 442 (2006) (the Court requires the appellant to plead the
allegation of error with some particularity), and, as a result, the appellant's constitutional challenges
must be denied.4 See Brewer v. West, 11 Vet.App. 228, 236-37 (1998); Villeza v. Brown, 9 Vet.App.
353, 357-58 (1996), appeal dismissed, 114 F.3d 1206 (Fed. Cir. 1997); United States v. M. Genzale
Plating, Inc., 723 F.Supp. 877, 885 (E.D.N.Y. 1989) ("Vague assertions of unfairness on the part of
the government, without more, cannot be molded into constitutional violations.").
D. Reasons and Bases
The parties concur that a remand is in order for the Board to provide adequate reasons and
bases for its conclusion that the $63,749.21 debt was properly created. See Appellant's Br. at 15;
Secretary's Br. at 21-22; see also Allday v. Brown, 7 Vet.App. 517, 527 (1995). The Court agrees.
Citing to 38 C.F.R. § 3.500(b)(2), the Board explained that the debt created in this case could
only be deemed improper if it is shown that "VA was solely at fault for the erroneous payment of
excess benefits." R. at 6. The Board found that the appellant had not demonstrated that the debt was
improperly created because she knew or should have known of the erroneous payments to her
account. R. at 7. The Board stated that "[a]ny administrative error by VA in not enacting the
required reduction earlier may not be used to negate the validity of the debt where the Veteran had
cause to know that benefits received were received in error." Id.The Board, however, failed to explain why a reduction in payment of disability compensation
pursuant to section 5313(a)(1) and § 3.665(a), (d) is governed by § 3.500(b)(2), which controls the
"effective date of reduction or discontinuance of an "award of [] compensation." Cf. Snyder, 489
F.3d at 1218 ("The statutory limitation on payments to an incarcerated veteran does not purport to
change the monthly compensation awarded on the basis of the veteran's claim." (emphasis added)).
As discussed above and as the Secretary conceded at oral argument, reductions or discontinuances
of an award are distinct from reductions in payment of awarded compensation, and the Board's
4
Of note, the provisions of section 5313 became effective on October 7, 1980, more than
20 years prior to Ms. Shephard's incarceration, and Ms. Shephard, like all persons "dealing with the
Government[,] is charged with knowledge of federal statutes and lawfully promulgated agency
regulations." See Morris v. Derwinski, 1 Vet.App. 260, 265 (1991).
12
failure to address this distinction renders its statement inadequate for judicial review. See Allday,
7 Vet.App. at 527.
Additionally, at oral argument, and in her hearing before a decision review officer, the
appellant stated that she could not exercise her right to a hearing prior to the reduction of her benefit
payment because prison rules did not allow her to attend a VA hearing. R. at 204. She insinuated
that had she been given a hearing, she would have told VA to immediately reduce her payment. Id.
The Board's failure to address this allegation, too, was a violation of its duty to provide adequate
reasons and bases. See Robinson, 21 Vet.App. at 552. A remand is therefore in order for the Board
to review the legal and factual issues identified above and incorporate an analysis of such issues into
a reconsideration of the propriety of the creation of the overpayment.5
On remand, the appellant is free to submit additional evidence and argument on the remanded
matter, and the Board is required to consider any such relevant evidence and argument. See Kay v.
Principi, 16 Vet.App. 529, 534 (2002) (stating that, on remand, the Board must consider additional
evidence and argument in assessing entitlement to benefit sought); Kutscherousky v. West, 12
Vet.App. 369, 372-73 (1999) (per curiam order). The Court has held that "[a] remand is meant to
entail a critical examination of the justification for the decision." Fletcher v. Derwinski, 1 Vet.App.
394, 397 (1991). The Board must proceed expeditiously, in accordance with 38 U.S.C. § 7112(requiring Secretary to provide for "expeditious treatment" of claims remanded by the Court).
5
The Court notes that VA failed to notify the appellant of the opportunity for apportionment
until it reduced the appellant's benefit payments. See R. at 814-17. Although the Court makes no
decision on the issue as it was not raised by either party in their briefs, see Carbino v. West, 168 F.3d
32, 34 (Fed. Cir. 1999) ("[I]mproper or late presentation of an issue or argument . . . ordinarily
should not be considered."), aff'g sub nom. Carbino v. Gober, 10 Vet.App. 507, 511 (1997)
(declining to review argument first raised in appellant's reply brief), VA is urged to review its
practice to ensure that this is not a systemic problem. See 38 C.F.R. § 3.665(a), (f), (e)(1) (requiring
that "VA [] inform a person whose benefits are subject to [a] reduction of the rights of the person's
dependents to an apportionment while the person is incarcerated.")
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IV. CONCLUSION
After consideration of the appellant's and the Secretary's pleadings, and a review of the
record, the May 25, 2011, Board decision is AFFIRMED IN PART and VACATED IN PART, and
the vacated matter is REMANDED for further proceedings consistent with this decision.
DATED: February 27, 2013
Copies to:
Katrina J. Eagle, Esq.
VA General Counsel (027)
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