Catherine A. Shephard v. Eric K. Shinseki
2013 U.S. Vet. App. LEXIS 277
| Vet. App. | 2013Background
- Appellant Catherine A. Shephard, incarcerated for a felony from Jan 2003 to Nov 2008; VA reduced her compensation to 10% during incarceration under 38 U.S.C. §5313(a)(1).
- In 2004 VA proposed reduction and warned it would cause an overpayment; later reduced benefits retroactively to Jan 12, 2003, with notice about potential apportionment.
- VA continued full monthly compensation payments for about two years after learning of incarceration; records show deposits into jointly held accounts with former husband.
- Appellant divorced her husband (May 2009) and sought reinstatement of full compensation upon release, plus the possibility of apportionment to dependents; debt amount was $63,749.21.
- Board (May 25, 2011) affirmed the 10% rating for the incarceration period and the validity of the overpayment, but remanded the waiver issue; Court reviews eligibility to recoup payments and the propriety of the overpayment.
- Court will affirm the Board on the 10% rating period and vacate the overpayment ruling and remand for further proceedings consistent with the decision.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the debt was properly created under §5313(a)(1). | Shephard argues Snyder supports recoupment rights post-release. | Secretary contends §5313(a)(1) prohibits payment during incarceration and does not authorize post-release restitution. | Debt properly created; statute limits payments during incarceration and does not require post-release restoration. |
| Whether Shephard is entitled to payment of amounts withheld during incarceration upon release. | Snyder supports recoupment of withheld compensation after release; that restoration is required. | Statute does not promise restoration of payments after release; reduction is an ongoing withholding, not a grant of post-release restoration. | The court vacates the overpayment ruling and remands to consider post-release restoration consistent with statutory framework. |
| Whether VA notice and apportionment rights were properly handled and whether due process issues were raised. | Shephard contends she was not properly informed about apportionment rights and that private attorney actions misled payments. | Notice and opportunity for hearing were provided; due process arguments lack specificity. | Remand to address apportionment notice and due process considerations is required. |
| Whether Board provided adequate reasons and bases for its conclusions on the overpayment and related issues. | Board failed to distinguish between reductions of an award and reductions in payment; failed to address prison hearing issue. | Board relied on applicable regulations; there was a remand for adequate reasons and bases. | Remand required for adequate reasons and bases and to reassess the overpayment question. |
Key Cases Cited
- Snyder v. Nicholson, 489 F.3d 1213 (Fed. Cir. 2007) (withholding during incarceration does not alter award, post-release rights capped by statute)
- Ferenc v. Nicholson, 20 Vet.App. 58 (Vet. App. 2006) (distinguishes between 'compensation' vs. 'rating' and payment mechanics)
- Wanless v. Shinseki, 618 F.3d 1333 (Fed. Cir. 2010) (legislative history supports plain reading; avoid duplicative expenditures windfall concern)
- Dixon v. Nicholson, 20 Vet.App. 544 (Vet. App. 2006) (restoration of benefits if conviction overturned; regulatory framework alignment)
- Allday v. Brown, 7 Vet.App. 517 (Vet. App. 1995) (requires adequate reasons and bases; remand if insufficient)