Bruce v. Gober

UNITED STATES COURT OF APPEALS FOR VETERANS CLAIMS
No. 99-413
THOMAS E. BRUCE , APPELLANT ,
V.
HERSHEL W. GOBER,
ACTING SECRETARY OF VETERANS AFFAIRS, APPELLEE.
On Appeal from the Board of Veterans' Appeals
(Decided August 1, 2000 )
Thomas E. Bruce, pro se.
Leigh A. Bradley, General Counsel; Ron Garvin, Assistant General Counsel; Michael A.
Leonard, Deputy Assistant General Counsel; and Richard Scott Ragan, all of Washington, D.C.,
were on the pleading for the appellee.
Before KRAMER, FARLEY, and IVERS, Judges.
KRAMER, Judge: The appellant, Thomas E. Bruce, appeals a July 23, 1998, decision of the
Board of Veterans' Appeals (BVA or Board) denying entitlement to waiver of recovery of an
overpayment of VA compensation benefits in the amount of $82,928.76. Record (R.) at 2, 9. The
appellant has filed an informal brief, and the Secretary has filed a motion for summary affirmance
in lieu of a brief. This appeal is timely, and the Court has jurisdiction pursuant to 38 U.S.C.
§§ 7252(a) and 7266(a). The Court notes that, on March 24, 2000, this appeal was stayed for 30 days
in accordance with In re Panel Referrals in Pro Se Cases, 12 Vet.App. 316 (1999) (en banc order).
For the reasons that follow, the Court will affirm the decision of the Board.
I.
The appellant served on active duty from January 1969 to November 1970. See R. at 2. He
was granted service connection for schizophrenic reaction, paranoid type, in 1970 and has been rated
100% disabled for that condition since 1971. R. at 13, 15. In 1980, Congress enacted 38 U.S.C.
§ 5313, which provides limitations on the payment of compensation to a veteran incarcerated for
conviction of a felony. See Pub. L. No. 96-385, § 504(a), 94 Stat. 1528, 1534 (1980). In 1991 and
1992, a VA regional office (RO) received information reflecting that the appellant had been
convicted of a felony and, as a result, had been continuously incarcerated in a penal institution since
August 1987. R. at 22, 24, 54. Based on that information, the RO retroactively reduced from 100%
to 10% the appellant's disability compensation, effective on the 61st day of his incarceration. R. at
32-34; 60-62; see 38 U.S.C. § 5313(a)(1)(A) (limiting to 10% monthly payment of disability
compensation for veteran convicted of felony and incarcerated in penal institution for more than 60
days). This ultimately resulted in the calculation of an overpayment to the appellant in the amount
of $82,928.76. See R. at 36-43, 51.
After receiving notice of the overpayment, the appellant submitted to VA a request for waiver
of recovery of that debt. R. at 56. In support of his request, he asserted that he had not been
informed that his compensation "could be reduced because of being incarcerated for a felony"; that
his family had informed VA of his incarceration; and that recovery would create a financial hardship
because his financial resources had been completely depleted as a result of the criminal proceedings
leading to his conviction. R. at 56-57. A VA Committee on Waivers and Compromises
subsequently determined that, even though a report of income reflected that the appellant's expenses
exceeded his income, recovery of the debt would not cause hardship because the appellant was
"incarcerated at government expense." R. at 65. The Committee further determined that the
appellant had "substantial fault" in the creation of the overpayment and that waiver would result in
his unjust enrichment. R. at 65, 67. Consequently, the Committee denied his request for waiver of
recovery. R. at 65. The appellant appealed that decision, asserting that his family had timely
informed VA of his incarceration and arguing that collection of the overpayment would create undue
financial hardship because he did not have the financial resources to retain an attorney to assist in
appealing his conviction. R. at 73-76, 86-88.
In the BVA decision on appeal, the Board initially determined that the overpayment had been
properly created (R. at 5) and that "there was no fraud, misrepresentation, or bad faith on the part of
the [appellant] with respect to creation of the overpayment at issue" (R. at 7). The Board then
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considered the factors listed in 38 C.F.R. § 1.965(a) (1999) in order to determine whether recovery
would be "against the principles of equity and good conscience." R. at 7. In addressing those
factors, the Board found that there was "no fault on the part of the [appellant] in the creation of the
assessed overpayment" because it would not be reasonable "to expect [the appellant] to be aware of
the fact that his incarceration would result in a reduction of his compensation payments." R. at 7.
The BVA also found that VA was not at fault in creating the overpayment because "it would have
caused an undue burden" to require VA to notify every veteran in receipt of compensation in 1980
that he or she "would have to report incarceration for a felony on the off chance that he or she might
then be or sometime later be incarcerated for a felony." R. at 8. The BVA further concluded that
recovery would not create an "undue financial hardship" on the appellant, reasoning that "the
[appellant] is currently incarcerated; as such his basic necessities (i.e., food, shelter, clothing) are
provided for by the correctional institution, and any collection would not deprive him of these
necessities." R. at 8. As to the remainder of the elements in § 1.965(a), the Board stated:
As the [appellant] received disability compensation to which he [was] not entitled (as
a result of his incarceration), this resulted in his unjust enrichment. Additionally,
there is no evidence that the [appellant] relinquished a valuable right or incurred any
legal obligations resulting from reliance on VA benefits. Furthermore, the evidence
of record discloses no other element of the standard of equity and good conscience
which would persuade the Board that the Government should waive its right to the
repayment of the assessed indebtedness.
R. at 9. Accordingly, the Board concluded that recovery of the overpayment would not be against
equity and good conscience and thus denied entitlement to waiver. R. at 9. This appeal followed.
On appeal, the appellant contends that VA was at fault in the creation of the overpayment
because VA did not inform him about the change in law that provided that incarceration would result
in a reduction in his VA disability compensation or notify him that it was his responsibility to report
his incarceration to VA. Appellant's Informal Brief, Attachment at 1-3. Additionally, he argues that
the Board erred in determining that recovery of the overpayment would not create an undue financial
hardship. Id. at 3. In that regard, he essentially asserts that his basic necessities are not all provided
for by the penal institution because he is required to pay for such items as toiletries, medication,
dental appointments, and medical appointments and that "without the financial aid of family
members" he would not be able to obtain "some of the needed items [that] he deems a necessity to
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his survival in such a surrounding." Id. at 4-5. Finally, he contends that failure to reimburse the
government would not result in his unjust enrichment because there is no evidence "showing where
or how [he] may have benefited from the overpayment." Id. at 4. The Secretary responds that the
BVA decision should be affirmed because it was made in accordance with applicable laws and
regulations and because the appellant has not identified any errors of fact or law that would warrant
remand or reversal. Secretary's Motion at 1.
II.
Pursuant to 38 U.S.C. § 5302(a), "[t]here shall be no recovery of payments or overpayments
. . . 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." See 38 C.F.R. §§ 1.962,
1.963, 1.965(a) (1999); see also 38 U.S.C. § 5302(c) (recovery may not be waived if there is "an
indication of fraud, misrepresentation, or bad faith"); 38 C.F.R. § 1.965(b) (1999). In determining
whether recovery would be against equity and good conscience, the Secretary is required to consider
the elements set forth in 38 C.F.R. § 1.965(a), which are not intended to be all inclusive: (1) the
fault of the debtor; (2) the balancing of faults between the debtor and VA; (3) undue hardship;
(4) whether the purpose of the existing benefits would be defeated; (5) unjust enrichment; and
(6) whether the appellant changed his position to his detriment. See Ridings v. Brown, 6 Vet.App.
544, 546 (1994). Determining whether there would be "undue hardship," in turn, requires a
determination as to "[w]hether collection would deprive [the] debtor . . . of basic necessities."
38 C.F.R. § 1.965(a)(3). "Waiver decisions, and the review of such decisions by the BVA, are
subject to review by this Court to determine whether the statutory standard was applied in
accordance with the regulatory guidance or whether the decision was made in an arbitrary or
capricious manner." Smith (Barbara) v. Derwinski, 1 Vet.App. 267, 279 (1991); see 38 U.S.C.
§ 7261(a)(3)(A); Cullen v. Brown, 5 Vet.App. 510, 512 (1993). The scope of review under the
"arbitrary and capricious" standard is narrow and does not permit the Court to substitute its judgment
for that of the Board. See Kaplan v. Brown, 9 Vet.App. 116, 119 (1996). "If the Board articulates
a satisfactory explanation for its decision, including a rational connection between the facts found
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and the choice made, the Court must affirm." Jordan v. Brown, 10 Vet.App. 171, 175 (1997); see
also 38 U.S.C. § 7104(d)(1); Gilbert v. Derwinski, 1 Vet.App. 49, 57 (1990).
Because the appellant, in his brief, raises arguments only as to the Board's consideration of
fault, undue hardship, and unjust enrichment, the Court will confine its review to issues related to
those factors. See Ford v. Gober, 10 Vet.App. 531, 535 (1997); Grivois v. Brown, 6 Vet.App. 136,
138 (1994) (issues or claims not argued on appeal are deemed abandoned); Bucklinger v. Brown,
5 Vet.App. 435, 436 (1993).
On appeal, the appellant appears to express disagreement with the Board's determination that
it would have been unduly burdensome for VA to notify every veteran in receipt of compensation
in 1980 of the enactment of 38 U.S.C. § 5313 and its further determination that VA therefore was
not at fault in creation of the overpayment. R. at 8. However, the appellant has not pointed to any
authority indicating that VA had a duty to provide such notification, nor is the Court aware of any
such duty. Cf. 38 U.S.C. § 7722(c) (Secretary shall distribute full information to eligible veterans
regarding "all benefits and services" to which they may be entitled (emphasis added)); Wells
v. Principi, 3 Vet.App. 307, 309 (1992). Further, the appellant has not provided any other argument
that would support a finding of VA fault. Accordingly, the Court concludes that the appellant has
not demonstrated that the Board failed to provide a satisfactory explanation for its conclusion
regarding the apportionment of fault in the present case.
The appellant also expresses disagreement with the Board's determination that recovery of
the overpayment would not create an undue hardship on the appellant. In this regard, the Court notes
that, prior to the BVA decision, the appellant argued that his financial resources had been depleted
as a result of the criminal proceedings leading to his incarceration; argued that, due to inadequate
funds, he had been forced to appeal his conviction without legal representation; and provided
information reflecting that his expenses exceeded his income. R. at 29, 56-57, 65, 87. Although the
Board did not explicitly address these contentions, the Board's determination that the appellant's
"basic necessities (i.e., food, shelter, clothing) are provided for by the correctional institution"
necessarily encompasses an implicit determination that any of his claimed expenditures were not for
"basic necessities" and that inadequate funds for such expenditures would not lead to a deprivation
of "basic necessities." 38 C.F.R. § 1.965(a)(3) (assessment of "[u]ndue hardship" element requires
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determination as to "[w]hether collection would deprive debtor . . . of basic necessities").
Consequently, the Court concludes that the Board provided a sufficient articulation of its reasoning
in this regard.
The appellant further contends, for the first time on appeal, that while incarcerated he must
pay for items such as toiletries, medication, dental appointments, and medical appointments and that
"without the financial aid of family members" he would not be able to obtain some "items he deems
a necessity." Appellant's Informal Brief, Attachment at 4-5. Although, under certain circumstances,
the Court would have jurisdiction to consider an argument raised for the first time on appeal (see
Maggitt v. West, 202 F.3d 1370, 1377 (Fed. Cir. 2000)), the Court is precluded by statute from
including in the record on appeal any evidence that was not contained in the "record of proceedings
before the Secretary and the Board" (38 U.S.C. § 7252(b); see Cumby v. West, 12 Vet.App. 363, 365
(1999); Rogozinski v. Derwinski, 1 Vet.App. 19, 20 (1990)). Here, the appellant's statements in his
brief essentially constitute an attempt to introduce new evidence (regarding the nature and level of
his purported expenditures) in support of an argument that he previously raised (that recovery of the
overpayment would deprive him of basic necessities). See Robinette v. Brown, 8 Vet.App. 69, 78
(1995) (defining the term "evidence"). Thus, the Court will not consider this evidence in rendering
its decision. However, the Court notes that the appellant may be able to utilize statements regarding
the nature and level of his expenditures (together with any corroborating evidence) to demonstrate
"new and material evidence" in connection with an attempt to reverse or modify the waiver decision
under 38 C.F.R. § 1.969(a) (1999).
Finally, as to the appellant's assertion that the Board erred in finding unjust enrichment, the
Court concludes that the Board's explanation in this regard, albeit brief, was satisfactory. See R. at
9 ("As the [appellant] received disability compensation to which he [was] not entitled (as a result
of his incarceration), this resulted in his unjust enrichment.").
III.
In sum, the Court holds that the appellant has not demonstrated that the Board failed to
articulate a satisfactory explanation for its decision, and thus the Court cannot conclude that the
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BVA's denial of waiver was arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with the law. Accordingly, the July 23, 1998, BVA decision is AFFIRMED.
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