On February 27, 2013, the United States Court of Appeals for Veterans Claims (CAVC) issued an opinion in Shephard v. Shinseki regarding a veteran’s entitlement to veteran disability compensation during a period of incarceration. The CAVC held that, as a matter of law, a veteran subject to a reduction of compensation payments as a result of incarceration is not entitled to recoupment of that amount upon release. The CAVC remanded part of the Board of Veterans Appeals’ (Board) decision because the Board improperly analyzed whether “an overpayment of compensation was properly created” by the Department of Veterans Affairs (VA).
While Shephard is fact-specific, it does provide an opportunity to generally discuss the effect of incarceration on a veteran receiving VA compensation. In general, Congress has greatly restricted the amount of benefits that may be paid to a veteran or dependent while he or she is incarcerated. 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.” 38 U.S.C. § 5313(a)(1), (e)(1). For a veteran whose disability rating exceeds 20%, the veteran 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 his or 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, the veteran is entitled to the “restor[ation]” of the compensation withheld during incarceration. See 38 C.F.R. § 3.665(m).
There are several key items worth highlighting for incarcerated veterans. Foremost, as the statute provides, there is a sixty (60) day “grace period” during which the veteran will continue to receive full benefits. However, after this “grace period”, the statute and regulation provide that the veteran’s benefits will be reduced. If the veteran continues to receive benefits during this period of incarceration this may result in an “overpayment” and the VA will attempt to recoup this amount. This is what occurred in Shephard.
Second, under 38 C.F.R. § 3.665(e), the amount to be reduced during a period of incarceration may be apportioned to a spouse or qualifying dependant. This “apport[ionment]” is not automatic and a request must be filed with the VA Regional Office.
If you have a question concerning your entitlements to VA disability compensation, please do not hesitate to contact Fink Rosner Ershow-Levenberg for a free consultation at (732) 382-6070 or through our website at www.finkrosner.com.