Gordon v. Principi

UNITED STATES COURT OF APPEALS FOR VETERANS CLAIMS

NO . 99-200

MAMIE GORDON , APPELLANT ,

V.

ANTHONY J. PRINCIPI,

SECRETARY OF VETERANS AFFAIRS, APPELLEE.

On Appeal from the Board of Veterans' Appeals

(Decided July 23, 2001 )

Victoria A. Phillips, of Washington, D.C., was on the brief for the appellant.

Leigh A. Bradley, General Counsel; Ron Garvin, Assistant General Counsel; Carolyn F.

Washington, Deputy Assistant General Counsel; and Allyn L. Engelstein, all of Washington, D.C.,

were on the brief for the appellee.

Before HOLDAWAY, STEINBERG, and GREENE, Judges.

STEINBERG, Judge: The appellant, through counsel, seeks review of a November 25, 1998,

Board of Veterans' Appeals (Board or BVA) decision that denied the appellant's request for waiver

of recovery of the overpayment of Department of Veterans Affairs (VA) non-service-connected

death-pension benefits on the ground that the waiver application was not timely filed. Record (R.)

at 2. The appellant filed, pro se, an informal brief, and the Secretary filed a motion for single-judge

affirmance. Subsequently, the case was submitted for panel consideration, and counsel entered on

behalf of the appellant. On November 27, 2000, the Court determined that further briefing was

needed and ordered the parties to file memoranda of law regarding specific questions posed by the

Court in its order. Gordon v. Gober, 14 Vet.App. 193 (2000) (per curiam order). On December 27,

2000, the Secretary filed a responsive memorandum, and on March 15, 2001, the appellant filed a

supplemental brief that responds to the questions posed by the Court's order and raises additional

argument. This appeal is timely, and the Court has jurisdiction pursuant to 38 U.S.C. §§ 7252(a) and

7266(a). For the reasons that follow, the Court will vacate the Board decision and remand the

matter.

I. Background

The appellant is the unremarried widow of World War II veteran Sydney Gordon, who had

active service from April 1942 to April 1943. R. at 2, 9. Apparently, the veteran died and the

appellant was thereafter awarded VA death-pension benefits. In December 1993, for reasons that

are not made clear in the record on appeal (ROA), the appellant submitted to a VA regional office

(RO) an eligibility-verification report that included information as to her income and net worth. R.

at 12-13. On January 6, 1994, the VARO notified her that her "award of pension [wa]s suspended"

pending review of "income issues". R. at 15. Following additional RO notices regarding suspension

of her death-pension benefit (R. at 17-18, 20), the appellant was notified in September 1994 that her

"income . . . exceed[ed] the maximum allowable by law . . . for a widow without dependents" and

that her death-pension award had therefore been "terminated . . . effective January 1, 1991." R. at

22. Later that month, the VA Debt Management Center [hereinafter VA Center] notified her that

she owed VA $4,788.00 as the result of overpayments of the death-pension benefit. R. at 25;

Supplemental (Suppl.) R. at 1. The letter informed her of her rights, including the right to request

a waiver of the debt within 180 days after the date of that letter, and stated: "A waiver means all or

part of the debt may be forgiven. A waiver cannot be granted if there is fraud, misrepresentation[,]

or bad faith on your part in connection with the change in your benefits that caused the

overpayment." R. at 25; Suppl. R. at 1.

In September 1996, the appellant, having made payments on the debt and reduced the

principal to $4,038, requested a waiver of the balance due; she asserted, as bases for a waiver,

economic hardship, and the facts that she was then 75 years old, had had to retire from work on

March 29, 1996, was on Medicaid and receiving food stamps, was receiving $508 per month from

the Social Security Administration, and had monthly expenses that exceeded her monthly income

by $112.50. R. at 27-30, 34.

On September 24, 1996, the VA Center denied the appellant's waiver request on the ground

"that an application for waiver must be made within 180 days from the date of notification of an

2

indebtedness" and that her request had not been so submitted. R. at 32. In October 1996, she filed

a Notice of Disagreement as to the VA Center's decision; she explained that she had not requested

a waiver within 180 days after the date of the overpayment notification because at that time she had

been employed and had been able to make payments pursuant to a payment plan that she had

negotiated with VA. R. at 37. The RO issued a Statement of the Case in November 1996 (R. at 40-

43), and in December 1996 the appellant filed a Substantive Appeal to the Board, reiterating that she

did not initially apply for a waiver because she felt that as long as she could work, she would "try

and pay some of this money back". R. at 45-46. In the November 25, 1998, BVA decision here on

appeal, the Board concluded that the appellant's request for a waiver was not timely filed and denied

her appeal from the RO's denial of waiver. R. at 1-5.

II. Analysis

In his motion for summary affirmance, the Secretary urges the Court to affirm the Board

decision based on the declaration in 38 U.S.C. § 5302(a) that "[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, if

an application for relief is made within 180 days from the date of notification of the indebtedness

by the Secretary to the payee" and in 38 C.F.R. § 1.963(b) (2000) that "[a] request for waiver . . .

shall only be considered . . . if made within 180 days following the date of a notice of indebtedness".

On November 27, 2000, the Court ordered the parties to file memoranda regarding certain

possible inconsistencies in the statutory and regulatory framework regarding waiver applications,

and as to whether the Veterans Claims Assistance Act of 2000, Pub. L. No. 106-475, 114 Stat. 2096

(Nov. 9, 2000) (VCAA), could have any potential impact on this case. See Gordon, supra. Rather

than file a memorandum in response to the Court's order, however, the appellant filed, through

counsel, a supplemental brief. The Secretary has not objected to the form of the appellant's response,

and the Court will not raise such an objection sua sponte, especially because the appellant's

supplemental brief represents the first and only substantive filing by counsel on behalf of the

appellant.

3

In her supplemental brief, the appellant argues that the Board decision should be reversed

(Suppl. Br. at 4) because, inter alia, the Board failed to consider and apply 38 C.F.R. § 1.942 (2000).

That regulation, contained in the section of title 38, U.S. Code of Federal Regulations that applies

to "STANDARDS FOR SUSPENDING OR TERMINATING COLLECTION ACTION ", provides:

§ 1.942 Termination of collection activity.

Termination of collection activity involves a final determination. Collection

activity may be terminated on cases previously suspended. The Department of

Veterans Affairs may terminate collection activity and consider closing the agency

file on a claim which meets any one of the following standards:

(a) Inability to collect any substantial amount. Collection action may be

terminated on a claim when it becomes clear that VA cannot collect or enforce

collection of any significant amount from the debtor, having due regard for the

judicial remedies available to the agency, the debtor's future financial prospects, and

the exemptions available to the debtor under State and Federal law. In determining

the debtor's inability to pay, the following factors, among others, shall be considered:

Age and health of the debtor, present and potential income, inheritance prospects, the

possibility that assets have been concealed or improperly transferred by the debtor,

the availability of assets or income which may be realized by means of enforced

collection proceedings.

(b) Inability to locate debtor. The debtor cannot be located, no security

remains to be liquidated, the applicable statute of limitations has run, and the

prospects of collecting by offset are too remote.

(c) Death of debtor. The debtor is determined to be deceased and the

Government has no prospect of collection from his/her estate.

(d) Cost will exceed recovery. The cost of further collection effort is likely

to exceed the amount recoverable.

(e) Claim legally without merit. Collection action should be terminated on a

claim whenever it is determined that the claim is legally without merit.

(f) Claim cannot be substantiated by evidence. VA will terminate collection

action on once asserted claims because of lack of evidence or unavailability of

witnesses only in cases where efforts to induce voluntary payment are unsuccessful.

38 C.F.R. § 1.942. The Board did not address this regulation, and the Secretary has not sought leave

to file a response to the appellant's supplemental brief, wherein the appellant raises the argument for

the first time.

The U.S. Court of Appeals for the Federal Circuit (Federal Circuit) has held that although

this Court "may hear legal arguments raised for the first time with regard to a claim that is properly

before the [C]ourt, it is not compelled to do so in every instance." Maggitt v. West, 202 F.3d 1370,

4

1377 (Fed. Cir. 2000). The Federal Circuit then invited this Court to "develop of [sic] body of law

in its unique setting that will permit [a] comparable certainty in outcome [to that] that has occurred

in other fields of law." Id. at 1378. In McCormick v. Gober, the Court took "the first step toward

creating that 'body of law'." McCormick, 14 Vet.App. 39, 44 (2000) (quoting Maggitt). There, the

Court considered that having the Board address in the first instance the questions that had been

raised for the first time to the Court on appeal "would be helpful to the Court's review of this matter

and, further, that [some of those] questions [we]re peculiarly within the competence of VA to

address." Id. at 45. Other factors cited by the Court as a basis for its decision to remand the matter

rather than address the questions in the first instance were as follows:

A remand will likely benefit the Court by producing "a better record . . . for appellate

review of the agency decision" and, further, may result in the "agency self-

correct[ing] and amend[ing] its ways", which, in turn, would "protect agency

administrative authority" regarding the interpretation of its own issuances as well as

"promote judicial efficiency".

Ibid. (quoting Maggitt, supra); see also Hensley v. West, 212 F.3d 1255, 1263 (Fed. Cir. 2000)

("[a]ppellate courts can 'review' only that which has happened in the past" and Court must thus

vacate BVA decision that fails to make necessary findings of fact and remand the matter for VA

adjudication); Holliday v. Principi, 14 Vet.App. 280, 290 ("the Court must avoid cutting off an

appellant's rights under the VCAA by prematurely injecting itself into the VA adjudication process

and making determinations on issues that were not addressed by VA in the first instance"), mot. for

recons. denied, 14 Vet.App. 327 (per curiam order), mot. for full Court review denied, 15 Vet.App.

21 (2001) (en banc order); Teten v. West, 13 Vet.App. 560, 564 (2000) (remanding matter for BVA

to consider law and make factual findings in first instance, pursuant to Maggitt and Hensley, both

supra).

In the instant case, the appellant requests that the Court consider in the first instance -- and

reverse the BVA based on -- a regulation (§ 1.942) that was not considered by the Board and, further,

that has not been considered in any precedential court decision. Moreover, consideration of the

application of the regulation to this case might require the Court to make factual determinations as

to whether the appellant meets the requirements of the regulation and, in turn, to define several terms

contained within that regulation, without first allowing VA to take a position on such issues in the

5

course of the regular process of claims adjudication. For example, it appears that the Court would

be required to determine, inter alia, whether the RO's January 1994 notification to the appellant that

her death-pension award was then "suspended" (R. at 15; see also R. at 17-18, 20) was a suspension

for the purposes of § 1.942 ("[c]ollection activity may be terminated on cases previously

suspended"), and, at a minimum, either (a) whether the appellant's economic situation, age, and

health, etc., met the requirements of § 1.942(a); or (b) whether the costs of VA's collection efforts

would be "likely to exceed the amount recoverable" (or even whether the costs have already

exceeded that amount), 38 C.F.R. § 1.942(d). Moreover, the regulation appears to have discretionary

rather than mandatory application ("may terminate collection activity and consider closing the

agency file on a claim", 38 C.F.R. § 1.942 (emphasis added)), and the Court would benefit from

allowing the Board to consider exercising that discretionary authority prior to our undertaking review

of this matter. Finally, whether or not VA's exercise of its § 1.942 termination authority is a matter

that this Court may properly review is a subject on which we express no view. Because

consideration of the newly raised argument could benefit from additional development of the record

or VA factfinding, and because consideration of the argument by VA in the first instance might

produce a different result on remand, the Court will remand this matter (thereby promoting both the

protection of agency authority and judicial economy), with instructions for the BVA to address the

arguments raised in the appellant's supplemental brief. Also, for the foregoing reasons, the Court

will not grant the reversal sought by the appellant based on § 1.942.

The Court notes that the appellant in this case appears to have made every effort to repay the

debt that she incurred as a result of an overpayment of death-pension benefits, and, moreover, that

there is no suggestion here that incurring the overpayment was intentional on the part of the

appellant. The Secretary, in his motion for summary affirmance, conceded that the only reason that

the appellant now seeks a waiver is due to "a change in her financial circumstances in 1996" (i.e.,

impoverishment based on loss of wages due to her retirement at age 75 (R. at 27-30, 34)), and that

this case presents an "unfortunate situation". These factors may be relevant in terms of the

applicability of § 1.942.

As to the appellant's remaining arguments, in view of the foregoing the Court holds that

review of those arguments would be premature at this time and thus will not exercise its jurisdiction

6

over those arguments; however, on remand, the Board is required to consider all arguments put forth

in the appellant's supplemental brief as well as any possible application of the VCAA, which was

enacted subsequent to the BVA decision. See Holliday, 14 Vet.App. at 286 ("all provisions of the

VCAA are potentially applicable to claims pending on the date of the VCAA's enactment"); Fletcher

v. Derwinski, 1 Vet.App. 394, 397 (1991) ("A remand is meant to entail a critical examination of the

justification for the decision. The Court expects that the BVA will reexamine the evidence of record,

seek any other evidence the Board feels is necessary, and issue a timely, well-supported decision in

this case.").

III. Conclusion

Upon consideration of the foregoing analysis, the ROA, and the submissions of the parties,

the Court vacates the November 25, 1998, BVA decision and remands the matter for expeditious

further development and issuance of a readjudicated decision supported by an adequate statement

of reasons or bases, see 38 U.S.C. §§ 5103, 5103A, 5107, 7104(a), (d)(1); 38 C.F.R. § 1.942, 1.962,

1.963; Fletcher, supra -- all consistent with this opinion and in accordance with section 302 of the

Veterans' Benefits Improvements Act, Pub. L. No. 103-446, § 302, 108 Stat. 4645, 4658 (1994)

(found at 38 U.S.C. § 5101 note) (requiring Secretary to provide for "expeditious treatment" for

claims remanded by BVA or the Court). See Allday v. Brown, 7 Vet.App. 517, 533-34 (1995). The

Secretary's motion is denied. On remand, the appellant's supplemental brief will be made part of her

claims file, and the Board will be required to address the arguments therein; in addition, the appellant

will be free to submit additional evidence and argument on the remanded claim in accordance with

Kutscherousky v. West, 12 Vet.App. 369, 372-73 (1999) (per curiam order). The Court notes that

a remand by this Court and by the Board confers on an appellant the right to VA compliance with

the terms of the remand order and imposes on the Secretary a concomitant duty to ensure compliance

with those terms. See Stegall v. West, 11 Vet.App. 268, 271 (1998). A final decision by the Board

following the remand herein ordered will constitute a new decision that, if adverse, may be appealed

7

to this Court only upon the filing of a new Notice of Appeal with the Court not later than 120 days

after the date on which notice of the new Board final decision is mailed to the appellant. See Marsh

v. West, 11 Vet.App. 468, 472 (1998).

VACATED AND REMANDED.

8