Damian Reyes v. R. James Nicholson

UNITED STATES COURT OF APPEALS FOR VETERANS CLAIMS
NO . 03-1929
DAMIAN REYES, APPELLANT ,
V.
R. JAMES NICHOLSON ,
SECRETARY OF VETERANS AFFAIRS, APPELLEE.
On Appeal from the Board of Veterans' Appeals
(Argued April 25, 2007 Decided July 20, 2007 )
Richard R. James, of Glen Allen, VA, for the appellant.
Brent A. Bowker, with whom Tim S. McClain, General Counsel; R. Randall Campbell,
Assistant General Counsel; Richard Mayerick, Deputy Assistant General Counsel, and Barbara J.
Finsness, Appellate Attorney, all of Washington, D.C., for the appellee.
Before HAGEL, MOORMAN, and LANCE, Judges.
MOORMAN, Judge: The appellant, Damian Reyes, through counsel, seeks review of an
October 2, 2003, decision of the Board of Veterans' Appeals (Board) that denied his requests for
waiver of pension overpayments in the amounts of $1,802.18 and $17,076 upon finding bad faith
on his part in the creation of the debt. Record (R.) at 9. This appeal is timely and the Court has
jurisdiction to review the Board decision pursuant to 38 U.S.C. §§ 7252(a) and 7266(a). For the
reasons set forth below, the Court will affirm, in part, and vacate, in part, the Board's October 2003
decision as to the matters appealed and remand for further adjudication consistent with this decision.
I. FACTS
Mr. Reyes served in the U.S. Army from April 1944 to February 1946. R. at 13. In March
1991, he submitted an application for VA disability compensation and pension, which the VA
regional office (RO) granted in April 1993. R. at 16, 21. His notice of award informed him of the
following :
Your rate of VA pension depends on total "family" income which includes your
income and that of any dependents. We must adjust your payments whenever this
income changes. You must notify us immediately if income is received from any
source other than that shown above. You must also report any changes in the income
shown above. Your failure to promptly tell VA about income changes may create
an overpayment which will have to be repaid.
R. at 23. He was notified of this requirement in several other letters from the RO, dated from July
1993 to February 1999. See R. at 42-43, 49, 55, 86, 179, 181, 203, 218, 229-30.
In September 1995, the RO notified Mr. Reyes that his pension payments had been reduced,
effective from December 1, 1994, because he failed to report his wife's and son's receipt of Social
Security benefits. R. at 58, 60. In November 1995, Mr. Reyes requested a waiver of this
overpayment, asserting that he was unaware of the debt and that the reduction in his pension would
cause an undue, financial hardship on him and his family. R. at 80. In December 1995, his pension
was reduced again, based on notification that he had received pension fund payments. R. at 84, 95.
He then filed a Notice of Disagreement (NOD), in which he requested an increase in his pension
benefits because of his son's unemployment and loss of income. R. at 88. In February 1996, VA
again adjusted his pension award, effective from February 1993, for failure to report wages. R. at
98. In March 1996, he requested waiver of this $945 overpayment, and asked VA to consider his
personal medical expenses and current physical condition, as well as possible entitlement to
improved pension with aid and attendance or housebound benefits. R. at 105.
On April 10, 1996, the VA Committee on Waivers and Compromises (Committee) denied
Mr. Reyes's request for waiver of $945, after concluding that the debt was created in bad faith. R.
at 109-10. On April 26, 1996, VA reduced his pension effective February 1995, and terminated the
pension award effective from January 1, 1996, due to excessive income for pension. R. at 148. This
created a total overpayment of $1,802.18. Id. Mr. Reyes requested a waiver of this overpayment
and in a September 1996 Statement of the Case (SOC), the RO affirmed its denial of waiver in the
amount of $1,802.18, after concluding, as the RO originally had, that the debt was created in bad
faith because of Mr. Reyes's failure to timely report all sources of, and changes in, income. R. at
150. In October 1996, he filed an appeal with the Board, in which he also asserted entitlement to
VA disability compensation for various injuries and disorders. R. at 152. In January 1998, the
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Board remanded Mr. Reyes's appeal to the RO, instructing the RO to request from Mr. Reyes a list
of all personal medical expenses from 1993 forward, and to adjudicate his claim as to the amount
and propriety of the creation of each element of the overpayment. R. at 190. The Board, after
determining that the claims were not inextricably intertwined with his overpayment issue, also
referred claims for service connection for post-traumatic stress disorder, a back disorder, throat
disorder, malaria, dysentery, a stomach disorder, and residuals of exposure to cold weather, to the
RO for "appropriate action." R. at 188.
In April 1998, the RO requested the information from the appellant ordered by the Board's
January 1998 remand. R. at 193. In a report of contact, a VA representative noted that Mr. Reyes
"indicated he cannot remember expenses for the time frame requested because he is suffering from
multiple medical problems, but he did not have any expenses because he receives almost all of his
medical care and medications from the DVA [Department of Veterans Affairs] Medical Center."
R. at 195.
In July 2000, Mr. Reyes notified the RO that he and his wife were no longer married. He
requested VA reinstate his pension as a single veteran. R. at 233. In January 2001, the RO sent Mr.
Reyes a notice, informing him that VA was terminating his pension benefits effective from February
1, 1997, until he responded to VA's September 2000 request for information regarding his wife's
income from that time until the date of their divorce. R. at 238-39 (noting that his spouse had
reported receipt of $5,200 in income in 1997, which was not reported to VA at that time). The RO
sent another notice in March 2001, noting that it had received information that his former wife had
received additional income in the amount of $6,996 in 1999 that was not reported to VA. R. at 243-
44. In March 2001, Mr. Reyes paid the overpayment of $4,833 resulting from the unreported
income from February 1997 to January 1998. R. at 257. Based on Mr. Reyes's wife's 1999
unreported income, VA notified Mr. Reyes in August 2001 that an additional overpayment, in the
amount of $20,156, had been created. R. at 255.
On August 21, 2001, Mr. Reyes requested a waiver of the overpayment in the amount of
$20,156. R. at 257. He noted that VA had instructed him, since his March 2001 payment, not to
send any funds because his overpayments had been paid in full. R. at 257. In February 2002, the
Committee denied his request for waiver, finding that the overpayment was created in bad faith. The
Committee stated:
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The evidence of record shows that you have been repeatedly advised that
your pension was based on your total family income. Despite the VA's notices to
accurately and promptly report your total family income, you failed to report your
wife was working for years 1998 and 1999. A review of your claim file shows
overpayments in the past, caused by your failure to inform the VA of your total
family income. In spite of your previous overpayments you continued to submit
eligibility verification reports (EVRs) which indicated your spouse was not in receipt
of income. Your failure to report your spouse's income allowed you to receive
benefits you were not entitled to receive.
Your failure to report your total family income and continued acceptance of
VA pension based on the intentional omission of that income shows an intent to seek
an unfair advantage. You had knowledge that failure to promptly report receipt of
income would create an overpayment. . . . This constitutes bad faith.
R. at 270. Mr. Reyes filed an NOD as to this decision, asserting that he was not aware of the
indebtedness, as he was in the process of divorcing his wife and was not aware of the income she
received during that time. R. at 274. The Committee issued a Statement of the Case, affirming its
decision to deny waiver of the overpayment. R. at 285. Mr. Reyes filed his appeal with the Board.
R. at 288.
In the decision on appeal, the Board affirmed the Committee's decision to deny waiver of the
$1,802.18 overpayment, and reduced the overpayment in the amount of $20,156 to $17,076, after
concluding that $3,080 of the overpayment was not properly created because Mr. Reyes's pension
benefits for a single veteran should have been reinstated following his divorce in July 2000. R. at
2. The Board concluded that despite Mr. Reyes's assertions that he was not aware of his wife's
activities and earned income during that period because they were in the process of separating, in
his eligibility verification reports for that time period, he noted that he was married, living with his
spouse and that his spouse had not worked during the previous year and that no income was
expected for her in the current year; thus, based on his assertions in these reports, the debt was
properly created. The Board also determined that the overpayment in the amount of $1,802.18 was
properly created because of Mr. Reyes's failure to accurately report all sources of income, including
Social Security benefit payments. R. at 4.
The appellant makes five assertions of error on appeal. First, he avers that the regulatory
definition of bad faith, at 38 C.F.R. § 1.965(b)(2) (2003), confers unfettered discretion upon VA to
deny waivers whenever it so chooses, contrary to the legislative intent of 38 U.S.C. § 5302(c).
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Second, he asserts that the Board failed to comply with Stegall v. West, 11 Vet.App. 268, 271
(1998), by not ensuring the adjudication of the claims for service connection previously referred
to the RO by the Board in its January 1998 decision. Third, he argues that the Board did not provide
an adequate statement of reasons and bases for its decision because it failed to consider 38 C.F.R.
§§ 1.931(a),(b) (2003); 1.941(b) (2003); 1.942(a) (2003), provisions that allow for suspension,
termination, or compromise of debt. Next, the appellant maintains that pursuant to 38 C.F.R. §
1.913 (2003), VA should have conducted a personal interview. Finally, he avers that the Court
should reconsider its decision in Barger v. Principi, 16 Vet.App. 132 (2002), and apply the
requirements of 38 U.S.C. § 5103(a) and 38 C.F.R. § 3.159 to waiver claims. Appellant's Brief
(App. Br.) at 14.
II. ANALYSIS
A. 38 U.S.C. § 5302: Statutory Bars to Waiver of Overpayments
Pursuant to 38 U.S.C. § 5302(a) "[t]here shall be no recovery of payments or overpayments
(or any interest thereon) of any benefits under any of the laws administered by the Secretary
whenever the Secretary determines that recovery would be against equity and good conscience."
Although this provision, at first blush, appears to set no limit on when a waiver of debt or
overpayment may be permitted, such requests for waiver are constrained by three specified statutory
bars set forth in 38 U.S.C. § 5302(c). That provision absolutely precludes the Secretary from
granting a waiver, "if, in the Secretary's opinion, there exists in connection with the claim for such
waiver an indication of fraud, misrepresentation or bad faith on the part of the person or persons
having an interest in obtaining a waiver of such recovery or the collection of such indebtedness."
38 U.S.C. § 5302(c) (emphasis added); see also Farless v. Derwinski, 2 Vet.App. 555, 556 (holding
that "[b]efore the Board may determine whether 'equity and good conscience' affords waiver,
however, it must determine whether 'there exists . . . an indication of fraud, misrepresentation or bad
faith.' . . . If such is found, the Board cannot waive the indebtedness by inquiry into 'equity and good
conscience' criteria"). Thus, at issue in this case is the Secretary's interpretation of a statute, and his
implementing regulation, that create an absolute bar to any consideration of equitable relief
regarding waiver of any debt owed to VA. The Court will now examine, therefore, the legislative
history of the statute, as well as the Secretary's regulatory implementation, to discern whether the
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Secretary's interpretation of "bad faith" is permissible. See Chevron, U.S.A., Inc. v. Natural Res.
Def. Council, Inc., 467 U.S. 837, 842 (1984) (holding that where a statute has a plain meaning, the
Court shall give effect to that meaning; however, where statute is silent as to the matter at issue, the
Agency's attempt at filling the gap left by the statute should be afforded deference); see also NLRB
v. United Food & Commercial Workers Union, 484 U.S. 112, 123 (1987) (holding that if a statute
is silent as to the matter at issue, Agency's attempt at filling the gap "will generally be sustained as
long as it reflects a permissible construction of the statute"); cf. Smith (Ellis) v. Nicholson, 451 F.3d
1344, 1350 (Fed. Cir. 2006) (holding that where VA merely replaces statutory ambiguity with
regulatory ambiguity, VA's interpretation of its own regulation "becomes 'of controlling weight
unless it is plainly erroneous or inconsistent with the regulation'" (internal citations omitted)).
1. Statutory Language and Legislative History
In 1989, Congress amended section 5302(c), to replace the then-existing standard barring
waiver if there was "an indication of fraud, material fault, or lack of good faith," with the current
standard barring waiver if there is "an indication of fraud, misrepresentation or bad faith[.]" See
Pub. L. 101-237, § 311(2)(B), 103 Stat. 2062, 2076 (Dec. 18, 1989). In regard to this change from
"lack of good faith" to "bad faith," although focusing mainly on collection of home-loan debts,
Representative Montgomery, on behalf of the U.S. House of Representatives Committee on Veterans
Affairs, reported that the provision "would, effective upon enactment, (1) generally make mandatory
the granting of waivers of home-loan debts if collection of the debt would be against equity and
good conscience; and (2) prohibit waiver in cases involving 'fraud, misrepresentation, or bad faith.'
The Committees intend that a borrower's abandonment of a mortgage despite having the financial
ability to make the mortgage payments be considered 'bad faith' in connection with the default and
that 'misrepresentation' include only a material misrepresentation." Veterans' Health Care Programs
Amendments of 1989, 135 CONG . REC . H9095, H9115 (daily ed. Nov. 20, 1989) (statement of Rep.
Montgomery). Further, in reporting before the U.S. House of Representatives on the proposed
change, Representative Montgomery stated:
It has always been the Congress' intent to afford waiver relief when equitable
considerations warrant it. . . . Although the law permits waiver whenever collection
of the indebtedness would violate equity and good conscience, the Department relies
heavily on two additional criteria – balancing of fault and the veteran's ability to
repay. The committee disagrees with the Department's undue emphasis on these two
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criteria. By disagreeing, the committee does not imply that it condones fraud, waste,
or gross neglect on the veteran's part. The committee believes that if the veteran is
not at fault in creating an indebtedness due to improper action or lack of action by
the Department, relief should be granted to the veteran in such cases.
Veterans' Home Loan Mortgage Indemnity Act of 1989, 135 CONG . REC . H2289, H2291 (daily ed.
June 6, 1989) (statement of Rep. Montgomery).
Specifically, in regard to bad faith, Senator Cranston reported:
The compromise agreement includes a provision to modify section 3102 of title 38
to make such debt waivers mandatory, rather than discretionary, if the veteran meets
the 'equity and good conscience' test. Current law prohibits waivers in cases
involving 'fraud, misrepresentation, material fault, or lack of good faith' in obtaining
the waiver; the compromise agreement would modify this list to include only 'fraud,
misrepresentation, or bad faith.' The committees deleted 'material fault' because it
is subsumed within the other terms and used the term 'bad faith' to require a higher
standard of culpability in order to deny a waiver.
Veterans' Benefits Amendments of 1989, 135 CONG . REC . S16443-01, S16460 (daily ed. Nov. 20,
1989) (statement of Sen. Cranston) (emphasis added).
The intent of Congress, as well as the plain language of the statute, is not clear as to what
precisely was meant by "bad faith." Rather, it is only clear that in requiring an affirmative showing
of bad faith, Congress intended to mandate a "higher standard of culpability to deny waiver." Id.No standards were provided, other than the abandonment of the payment of a mortgage secured
through the VA home loan program when one is financially able to continue such payments, for
determining what actions could constitute "bad faith." Thus, the term "bad faith" is sufficiently
vague to allow VA to exercise its 38 U.S.C. § 501 rulemaking authority and "fill the gaps" left by
the statute. See Chevron, U.S.A., Inc., 467 U.S. at 842-43; see also NLRB, 484 U.S. at 123; see also
BLACK 'S LAW DICTIONARY 134 (7th ed. 1999) (defining "bad faith" as "dishonesty of belief or
purpose" and recognizing that "'[a] complete catalogue of types of bad faith is impossible but the
following types are among those which have been recognized in judicial decisions: evasion of the
spirit of the bargain, lack of diligence and slacking off, willful rendering of imperfect performance,
abuse of a power to specify terms, and interference with or failure to cooperate in the other party's
performance'" (internal citations omitted)).
2. Regulatory Interpretation
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Following the statutory amendment, the Secretary amended 38 C.F.R. § 1.965(b)(2),
providing this definition:
Bad faith. This term generally describes 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, is
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)(2) (1993); see also 57 Fed. Reg. 15,046 (Apr. 24, 1992) (noting that Pub. L.
No. 101-237 "removed material fault and lack of good faith as absolute bars to waiver and replaced
them with bad faith. As a result, we must now revise the three regulations to comply with these new
requirements"). The Secretary, in promulgating this regulatory definition, provided no guidance as
to how this definition should be applied. See 57 Fed. Reg. 15,046. In the notice of final rulemaking,
VA recognized the Court's decision in Farless, supra, which noted an inconsistency between the
authorizing statutory provision, 38 U.S.C. § 5302, and the implementing regulation, 38 C.F.R.
§ 1.965(b)(2), in that the regulation failed to include the statutory language "indication of" prior to
"fraud, misrepresentation or bad faith." 58 Fed. Reg. 3840 (Jan. 12, 1993). The only change to the
proposed regulation in the final rule was to include this introductory language. Furthermore, the
Secretary appears not to have provided further guidance in his adjudication manual regarding how
this provision should be applied.
The appellant asserts that this regulatory interpretation of "bad faith," as applied, is too broad
and essentially allows VA "unfettered discretion . . . to deny as many waivers as it wishes, thereby
thwarting the legislative intent." Appellant's Reply Brief at 11. The Court does not agree. The mere
fact "that the application of the VA regulations as a practical matter may benefit one class of
veterans more than another, or not benefit one class of veterans at all, is not grounds for finding the
VA's interpretation unreasonable." Nat'l Org. of Veterans' Advocates v. Sec'y of Veterans Affairs,
476 F.3d 872, 877 (Fed. Cir. 2007). Rather, the Court concludes that the Secretary's regulatory
interpretation as set forth in § 1.965(b)(2), which requires an affirmative showing that (1) the
appellant's conduct was undertaken with an intent to seek an unfair advantage, (2) with knowledge
of the likely consequences, and (3) that resulted in a loss to the government, is consistent with the
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intent of Congress in requiring a higher degree of culpability to bar waiver, and is not "plainly
erroneous." Smith (Ellis), 451 F.3d at 1350.
B. Application of § 1.965(b)
Having concluded that the Secretary's interpretation of the statutory term "bad faith" is
consistent with the legislative intent of Congress and not plainly erroneous, the Court must now
examine the application of that interpretation in this instance. See Butts v. Brown, 5 Vet.App. 532,
539-40 (1993) (holding that the appropriate standard of review for an issue of application of law to
the particular facts of a case is the "arbitrary, capricious, abuse of discretion, or otherwise not in
accordance with law" standard of review). In light of the legislative history of 38 U.S.C. § 5302(c),
which places the burden of proof on the Secretary to make an affirmative finding of "bad faith," we
conclude that the Secretary's application of the statutory bar of bad faith in this instance was
"arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 38 U.S.C.
§ 7261(a)(3)(A); see also Butts, 5 Vet. App. at 539-40.
The Board, in each decision, must provide a written statement of the reasons or bases for its
findings and conclusions on all material issues of fact and law presented on the record; adequate to
enable a claimant to understand the precise basis for the Board’s decision, as well as to facilitate
review in this Court. See 38 U.S.C. § 7104(d)(1); Allday v. Brown, 7 Vet.App. 517, 527 (1995);
Simon v. Derwinski, 2 Vet.App. 621, 622 (1992); Gilbert v. Derwinski, 1 Vet.App. 49, 57 (1990).
To comply with this requirement, the Board must analyze the credibility and probative value of the
evidence, account for the evidence that it finds to be persuasive or unpersuasive, and provide the
reasons for its rejection of any material evidence favorable to the claimant. See Caluza v. Brown,
7 Vet.App. 498, 506 (1995), aff’d per curiam, 78 F.3d. 604 (Fed. Cir. 1996) (table); Gabrielson v.
Brown, 7 Vet.App. 36, 39-40 (1994); Gilbert, supra. The clear intent of Congress was to "make debt
waivers mandatory, rather than discretionary, if the claimant meets the 'equity and good conscience'
test"; and, it was the equally clear intent of Congress to require "a higher standard of culpability in
order to deny a waiver" by adopting the "bad faith" test. 135 CONG . REC . S16443-01, S16460.
Thus, it is the Secretary's burden to prove bad faith, and it is the Board's responsibility to clearly
articulate its reasons or bases for finding that it exists. To make such findings, when raised on the
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record, the Board should consider any evidence and relevant factors bearing on the claimant's
knowledge of the need to report and his awareness of income subject to reporting. During oral
argument, the appellant's counsel raised several such factors that could warrant comment by the
Board, in this instance and in general when considering the existence of bad faith in requests for
waivers. These included the level of the claimant's education, the existence of any language barriers,
any assistance the claimant may have had in completing the income-reporting forms, information
submitted to any other federal agency requiring income-reporting from the claimant during the time
period in question, and any statements from friends and family members regarding his or her
knowledge and intent in attempting to comply with the requirements by reporting changes in income
over the years.
In this instance, the Board concluded that the appellant acted in bad faith because "he
persistently failed to accurately report his family income. His actions, which gave rise to this
overpayment, demonstrate an intent to seek unfair advantage with regard to VA pension benefits.
Further, he had been informed of the likely consequences, and his intentional failure to report
income resulted in a loss to the government in the amount of the overpayment." R. at 8. Thus,
although the Board concluded that the appellant had been "informed" of the need to report changes
in income, the Board failed to discuss the appellant's knowledge of the need to report income and
his awareness of the income that he failed to report. Such discussion is essential to an informed
review by the Court of the Board's finding that the appellant's failure to report income was an
intentional act. 38 C.F.R. § 1.965(b)(2) (requiring a showing of actual "intent to seek an unfair
advantage" to find bad faith). Furthermore, the only evidence the Board evaluated and apparently
relied upon was provided by the appellant's own statements. In doing so, the Board failed to address
fully his assertions that he was not aware of the consequences of failing to timely report, that he
believed he was entitled to the funds, or that he was unaware of his wife's receipt of income from
1998 to 1999 due to their pending divorce proceedings. Therefore, in relying solely on the
appellant's own reports to find that he acted in bad faith, without further addressing the other
relevant evidence, the Board failed to comply with its duty to fully explain the basis for its decision
that the evidence was sufficient to find that the statutory bar to equitable consideration should be
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applied. Thus, remand is required for the Board to provide an adequate statement of reasons or
bases for its decision to deny the appellant a waiver based on the conclusion that he acted in bad
faith in the creation of the debt. 38 U.S.C. § 7104(d)(1). Upon remand, the Board should consider
the factors noted above that were raised in the first instance by the appellant's counsel during oral
argument. See Maggitt v. West, 202 F.3d 1370 (Fed. Cir. 2000).
C. Failure to Consider 38 C.F.R. §§ 1.931(a),(b); 1.941(b); 1.942(a)
The appellant asserts that the Board provided an inadequate statement of reasons or bases
because it failed to discuss 38 C.F.R. § 1.931(a), inability to pay, §1.941(b), suspension of collection
activity, and § 1.942(a), termination of collection activity. Initially, the Court notes that pursuant
to 38 C.F.R. § 1.901 (2003), "[t]he standards set forth in §§ 1.900 through 1.954 shall apply to VA
handling of civil claims for money and property but the failure of the agency to comply with any
provision of the standards shall not be available as a defense for any debtor." The Secretary asserts
that these provisions are not relevant to the present situation because those regulations "pertain to
housing and small business loans . . . In addition, these provisions pertain to the collection of the
debt, not whether the debt is valid or whether recovery of the debt may be waived." Secretary's
Brief at 16. As to the Secretary's first assertion, the Court finds no limitation in the statutory or
regulatory provisions that restricts their application to cases involving housing or small business
loan debt. Rather, 38 C.F.R. § 1.907 specifically states that "the terms 'claims' and 'debt' are
synonymous and interchangeable. They refer to any amount of money or property which has been
determined by an appropriate official of the VA to be owed to the United States by any person,
organization or entity, except another federal agency." 38 C.F.R. § 1.907(a) (2003). However, the
Court concludes that because the issue before the Board was whether the appellant's debt was valid,
not whether it could be collected, consideration of the collection provisions by the Board prior to
a determination on the validity of the debt would have been premature. Thus, the Court can find no
error with the Board's failure to consider these inapplicable regulations. See Schafrath v. Derwinski,
1 Vet.App. 589, 593 (1991) (holding that the Board is required to consider all evidence of record
and to consider, and discuss in its decision, all "potentially applicable" provisions of law and
regulation); see also 38 U.S.C. § 7104(a); Charles v. Principi, 16 Vet.App. 370, 373 (2002).
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D. Failure to Conduct a Personal Interview Pursuant to 38 C.F.R. § 1.913 (2003)
Pursuant to 38 C.F.R. § 1.913, VA "will, to the extent feasible, undertake personal interviews
whenever requested by debtors and in other cases having regard for the amounts involved and the
proximity of agency representatives to the debtors." 38 C.F.R. § 1.913 (2003); see also 69 Fed. Reg.
62188, 62195 (Oct. 25, 2004) (amending VA's debt collection regulations to comply with the Debt
Collection Improvement Act of 1996, Pub. L. 104-134, 110 Stat. 1321, 1358, and in the process of
amending these provisions, removing 38 C.F.R. § 1.913 (2003)). Again, the Court notes that
pursuant to 38 C.F.R. § 1.901 (2003), VA's failure to comply with this provision is not available as
a "defense" for the debtor. Even assuming that this provision could be a basis for remand, the
appellant does not assert, nor does the record indicate, that at any time during the course of his
appeal he "requested" such a personal interview as required by 38 C.F.R. § 1.913 (2003). The Court
concludes, therefore, that remand for compliance with this provision is not warranted.
E. Stegall Violation
The appellant asserts that the Board failed to comply with Stegall, supra, in ensuring
compliance with the 1998 Board's referral of claims for VA disability compensation for development
and adjudication by the RO. Pursuant to Stegall, "a remand by this Court or the Board imposes upon
the Secretary of Veterans Affairs a concomitant duty to ensure compliance with the terms of the
remand. . . . [and] where . . . the remand orders of the Board or this Court are not complied with,
the Board itself errs in failing to insure compliance." 11 Vet.App. at 272. In this instance, the
Board, in its 1998 decision, referred rather than remanded the claims to the RO for adjudication.
See Link v. West, 12 Vet.App. 39, 47 (1998) (holding that claims referred by the Board are not ripe
for review by the Court). These claims were not before the Board when it issued its decision on
appeal. Thus, the Court cannot conclude that the Board erred in failing to ensure compliance with
Stegall, supra, in regard to the claims that were referred to the RO in the 1998 Board decision.
F. 38 U.S.C. §5103 (a)
The appellant urges the Court to reconsider its decision in Barger, supra, that the notice
provisions of 38 U.S.C. § 5103(a) do not apply to claims involving waiver of debt. See Barger,
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16 Vet.App. at 137-38 (finding no error with the notice provided to the appellant pursuant to the
specific statutory notice provisions regarding waiver of debt under 38 U.S.C. § 5302(a)). The Court
has consistently held that the notice provisions of 38 U.S.C. § 5103(a) do not apply to debt waiver
claims, and thus, finds no error with the Board's decision in this regard. See Lueras v. Principi,
18 Vet.App. 435, 438 (2004) ("The language in Barger clearly and explicitly precludes application
of the VCAA [Veterans Claims Assistance Act of 2000, Pub. L. No. 106-475, 114 Stat. 2096] notice
provisions to chapter 53 proceedings.").
G. Arguments Presented for the First Time
The appellant raised on appeal, for the first time, several arguments during the course of oral
argument. Although the appellant urges that these issues are ripe for review because they were first
addressed by the Secretary in his brief, the Court does not agree. If the appellant believed that such
issues were critical to the proper resolution of this appeal, he should have addressed them thoroughly
in his reply brief. It is not appropriate, however, for an appellant "'to raise, for the first time, an issue
for appellate review'" during the course of oral argument. Carbino v. West, 168 F.3d 32, 34 (Fed.
Cir. 1999) (quoting Amhil Enters. Ltd. v. Wawa, Inc., 81 F.3d 1554, 1563 (Fed. Cir. 1996)).
The Federal Circuit and this Court consistently have held that "[a]n improper or late
presentation of an issue or argument under the court's rules need not be considered and, in fact,
ordinarily should not be considered." Carbino, 168 F.3d at 34; see Tubianosa v. Derwinski,
3 Vet.App. 181, 184 (1992) (noting that the Secretary "should have developed and presented all of
his arguments in his initial pleading") (emphasis in original). Furthermore, "[a]dvancing different
arguments at successive stages of the appellate process does not serve the interests of the parties or
the Court. Such a practice hinders the decision-making process and raises the undesirable specter
of piecemeal litigation." Fugere v. Derwinski, 1 Vet.App. 103, 105 (1990).
III. CONCLUSION
After consideration of the appellant's and the Secretary's briefs, oral argument as presented
on April 25, 2007, and a review of the record on appeal, the Board's October 2, 2003, decision is
13
AFFIRMED to the extent the Board concluded that the notice provisions of 38 U.S.C. § 5103 were
not applicable. This decision is VACATED to the extent that the Board concluded the appellant
acted in bad faith in the creation of the overpayment, and REMANDED for further adjudication
consistent with this decision.
14