UNITED STAT ES COURT OF AP P EALS FOR VETERANS CLAIMS

N O
. 04-1248
J OHN M. F EREN C , A PP EL L ANT ,

V
. R. J A M ES N I C HOL S ON , S EC RE T A RY O F V ET ER A N S A FF A I RS , A PPEL L EE
.

On Ap pe a l f ro m th e B oa

rd of Ve te ra ns ' Ap pe a ls
(De cided Ma

y 12, 2006 )

Allan T. Fenley , o f Sc he ne c ta dy , N e w Y or k , w a s o n th e br ie f f

or the a pp e lla nt.
Tim S. Mc Cla in , G e ne ra l Co un se l; R. Ra nd all Cam pb e ll , As sis tant Ge ne ra l Co un se l; Brian B. Ri pp e l , Deputy Assistant Gener al Counsel; and Erika E. Liem , all of Washington, D.C., we re on the brief for the a ppellee.
Be fore KASOL D , L ANCE , and SCHOEL EN, Judge s. SCHOEL EN, Judge : The appe llant, J ohn M. Fe renc , throug h counsel, a ppeals a May

28, 20 04 , B oa

rd of Ve te ra ns ' Ap pe a ls ( B oa

rd ) d e c isi on

in wh ic h the B oa

rd fo un d that, as a re su lt o f h is inc arc e ratio n, the a

pp e lla nt' s d isa bil ity c omp e ns a tio n w as pr op e rl y re du c e d to that c omm e ns ur a te with a 10% disability

rate , eff ective O ctober

1983. Record ( R.) at 1-10 . The a ppellant and the Se c re tary e a c h fi led a br ie f. Th is a pp e a l is tim e ly , a

nd the Court

ha s juri sd ic tio n o ve r t

he c a se pursuant to 38 U.S.C. §§ 7252(a) and 7266. For the rea sons that follow, the Court will affirm the Boa rd' s decision.

I. BACKG ROUND Th e a pp e lla nt s e rv e d o n a c tiv e du ty

in t he U. S. M ari ne Co rps fr om S e pte mbe r 1 94 5 to J anuar y 1949. R. at 12. He wa s rate d 70% disabled f or ser vice- connec ted schizophrenia, e ffe ctive Janu ar y 1 9 6 9 , an d w a s s u

b s e qu e n tl y r a te d 1 0 0 % d is a b le d , e f f e c ti v e O c to b e r 1 9 8 0

. R. at 73.2

I n Se pte mbe r 1 98 3, the a

pp e lla nt wa s convic te d of mul tip le fe lon ie s and inc arc e ra te d w ith the Depa rtment of Corre ctions of t he S tate of Florida

. R. at 357-59. The VAreg ional office (RO)

no tif ie d th e a pp e lla nt t hat hi s d isa

bil ity be ne fi ts w ou ld b e re du c e d, and that his de pe nd e nts we re to
rec ei v e an apportionment of the re duced be nefits. R. at 164-65. In October 1983, the appe llant submitt ed a N otice of D isag ree ment (NOD ) re g ardingthe re duction of hi s benef its. R. at 189. An April 19 8 4 RO a c ti o nw it h dr e w th e a

p p e ll an t' s N O D b e c a

u s e th e b a la

n c e o f h is r e duced compensation was beingapportioned to his de pendents. R. at 196. A Septembe r 30, 2002, dec ision of the Court dete rmined that the RO had i m p er m issibly withdrawn the NOD, a nd the Court

re mand e d th e iss ue of

wh e the r t he NO D w a s tim e ly fi le d ba c k to the B oa rd fo r re a dju dic a tio n. R. at 261-62. A Ma

y 2003 Boa rd decision found t hat t he October 1983 NOD was timely , and re manded the ca se to the RO for the issuance of a Stateme nt of the Case ( SOC). R. at 348. The RO issued an SOC in J anuar

y 2004 (R. at 388), a

nd the appe llant then perf ecte d his appeal to the Boar d (R. at 403). On May 2 8 , 2 0 0 4 , th e B o ar d is s u e d th e d e c is io nh e r e o na

p p e a l. R. a t 1

- 1 1

. T h e Boa rd fo un d th a t, a s a

re su lt o f h is i nc arc e ratio n, the ap pel lan t' s d isa bil ity c omp e ns a tio n w a s p ro pe rl y
r e d u c e d t o t h a t c o m m e n s u r a t e w i t h a 1 0 % d i s a b i l i t y r a t i n g , e f

f e c t i v e O c t o b e r

1 9 8 3

. A c c o r d i n g l y, the Board denied hi s claims for the resumption of benefits paid at the pre -inca rce ration rate. R. at 8.

II. THE P AR TIES ' A RG UM EN TS The ap p e ll an t a

r g u e s th at ( 1 ) th e r e d

u c ti o n o f h is b e n e f it s d u e to h is in c ar c e r a ti o nv io late s the statutory

prohibitions aga inst the reduction of a ratingof total d i s abil ity

that has bee n in force for more than 20 y ear s, and the sever ance of service connec tion that has been in force for more than 10 y e ars , a

nd (2 ) t he a pp or tio nme nt o f t

he re du c e d c omp e ns a tio n to the a pp e lla nt' s d e pe nd e nts violates the statute g overningthe nonassig nability of compe nsation benef

its. Appellant' s Br ief (B r.) at 4-5. The appellant argues for a reve rsal of the May 28, 2004, Boa

rd dec ision and reque sts that he recei ve "pa y

men t o f t he b enef

it s o f wh ich he has been dep ri ved fro m 198 3 to t he p res ent ." Id . at 5-6. T h e S ec re t ary

fi rs tar gu es t h at t h e ap p el l an td o es n o th av e s t an d i n g u n d er t h i s C o u rt 's decision in Belton v. Principi , 17 Vet.App. 209 (2003). Secre tary ' s Br . at 8. The Sec reta ry further3

argues that the a

ppellant' s argument is " premised upon a miscomprehension of the fac ts a nd the law." Id . at 8-9. Spec ifically , the Secr etar y states that the appe llant's disabilit y rating has not been r educe d, nor has his service connection been sever ed. Rather, the appellant' s level of c ompensation, which is disti nct from a

rat i n g l ev el an d from ser vice- connec tion status, has been re duced. Id . The Secre tary also argues that the re duction and appor tionment of the appe llant's disabi lity compensation does not violate the nona ssigna bility provision of 38 U.S.C. § 5301 (a)( 1). R. at 9-11.

III . A NA LY SIS The a ppellant ar g ues t hat t he reduction in compensation and apportionment of his reduc ed compensation pursuant to 38 C.F.R. § 3 .665 (2005) violates 38 U .S.C. §§ 110, 1159, and 5301. VA' s interpre tation of regu l ati ons and statutes ar e re viewed de novo by the Court. See Lane v

. Principi , 3 39 F .3 d 1 33 1, 13 39 (F e d. Cir . 2 00 3) (" [I ]nte rp re tatio n o f a statut e or

re g ulatio n is a qu est io n of law . . . ." ); Bu tts v . B ro wn , 5 V e t. A p p
. 5 3 2 , 5 3 9 ( 1 9 9 3 ) ( e nb an c ) ( Co u rt r e v ie ws "que stions of law de novo without any defe renc e to the B oard' s conclusions of law" ). I n statutor y in te r p r e tation, if "the pla in meaning of a statute is disce rnable , that ' plain meaning

mu st be giv en ef

fect .'" J oh ns on v . B ro wn , 9 Ve t

. Ap p
. 3 6 9 , 3 7 1 (1 9 9 6 ) ( qu o t i n g Tal lm an v . B ro wn , 7 Vet.App. 453, 460 ( 1995)); see also Brown v. Gardne r , 513 U.S. 115, 119 (1994). " Deter mining a st atute' s plain meaning require s examining the spec ific languag e at issue a nd the over all structure of the statute." Gardner v. D erwinski , 1 Ve t

. Ap p
. 5 8 4 , 5 8 6 (1 9 9 1 ) ( ci t i n g Bethesda Hosp. Ass'n v. Bowen , 485 U.S. 3 9 9 , 403-05 (1988) ), aff 'd su b n om . G ar

dn e r v . B ro wn , 5 F.3d 1456 ( Fe d.Cir. 1 9 93), a ff 'd , 5 1 3 U

. S

. 1 1 5 ( 1 9 9 4 )

. " [W ]h e na r e v i e w i n g c o u rt' f

i n d [s ] t h e t e r m s o f a s t a tu te
un amb iguo us , j ud ici al i nq ui ry is com pl ete ex cept in rare an d ex cept io nal cir cum st ances .'" Smith v. Derwinski , 2 Ve t

. Ap p
. 4 2 9 , 4 3 1 (1 9 9 2 ) ( q u o t i n g Demare st v. Manspeak

er , 498 U.S. 184 (1991)). The " plain meaningm u s t be g iven ef fec t unless a ' literal application of the statute will produce a
res ul t d emo ns tr abl y

at o dd s w it h t h e i n t e n t i on of i ts draf ter s. '" Gardner , 1 Vet.App. at 586-87 (q u o t i n g Griffin v. Oc ea n i c Contractors, Inc. , 458 U.S. 564 (1982)). " [W ]here two statutes ar e capa ble of coexistence, it is the duty of the cour ts, absent a c lear ly

expressed cong ressional intention to th e con tr ary , to regard eac h as effect iv e." Com be e v . B ro wn , 5 Vet.App. 248, 250 ( 1993) (c iting Ruck elshaus v. Monsanto Co. , 467 U.S. 986, 1018 (1984)).4 A. Re du c tio n o f B e ne fi ts The Sec reta

ry first argues that the appellant doe s not have standingto challeng e the r eduction of his benef

its under this Court's holding in Belton . Secre tary ' s Br . at 8. In Belton , t h e C ourt deter mined that the petitioner, an incar cer ated veter an whose be nefits wer e re duced a nd apportioned to h is m oth e r, did

no t ha ve sta nd ingto c ha lle ng e the te rm inatio n o f h is m oth e r' s appo rt ionme nt. Belton , 17 Vet.App. at 209. I n denying the petitioner standing , the Court stated that he did not have a " leg ally signific ant conne ction" to the apportioned be nefits his mother was r ece iving be cause he had no per sonal stake in the be nefits. Id . at 211. Howe ver, Belton is disti ng uishable fr om the prese nt case in that th e p et i t i o ner in Belton was c halleng ing only the appor

tionment. Here , the

a pp e lla nt c ha lle ng e s bo th the a

pp or tio nme nt and the pre cede nt reduc tion in benefits. Be cause the holding in Belton wa s li mit e d to the c ha lle ng e of the a pp or tio nme nt, we se e no re a so n o r a uth or ity to ext end that holding to a cha lleng e of the reduc tion of compensation pay ments. Thus, we f

ind that the appe llant does have standing to challeng e the reduc tion of hi s compensation pay ments beca

use, as it was his compensation pay ments that wer e reduce d, as opposed to apportioned be nefits ar ising fr om h is b e ne fi ts, he ha s a pe rs on a l st a ke in t

he se re du c e d c omp e ns a tio n p ay me nts

. Under the statutory

scheme , disability

co m pensation bene fits are paid to veter ans for disabiliti es that we re inc urre d or ag g ravated in the military

. See 38 U.S.C. §§ 1110, 1131. Howeve r, if a ve te ra

n in re c e ipt of c omp e ns a tio n be ne fi ts is inc arc e ra te d fo r c on vic tio n of a fe lony , the se pay m e nt s o f co m pe nsa ti on are subject to reduc tion. 38 U.S.C . § 5 3 1 3 (a ); 3 8 C.F.R. § 3.665(a)

. "Compensati o n " i s define d, in releva nt part, as a

"monthly

pay ment made by

the Secr etar

y to a veter an bec ause of

[a] service -conne cted disability ." 38 U.S.C § 101(13). The over all purpose of the disability

compensation scheme is to compensate veter ans " when they have, in honor able se rvice to their nation, suffe red a

loss that is reflec ted in the dec rea sed ability to ear n a living f

or themselves andth eir fam il ies ." Hunt v. De rwinski , 1 Vet.App. 292, 296 ( 1991). I n th is r e g ard , th e te rm

" dis a bil ity " me ans " the a ve ra g e imp a ir ment in e arn ingc a

pa c ity

re su lti ngfr om d ise a se s, inj ur ie s o r t he ir re sid ua l c on dit ion s. " 38 C.F .R. § 4 .1 (2 00 5) ; see Fe lden v. W est , 1 1 V e t.A

pp . 4 27 , 4 31 (1 99 8) . Co ng re ss g ra nte d V A a uth or ity to d e ve lop a

sc he du le to a sse ss the levels of disabiliti es (the Schedule for Rating Disabilities). The rating sc hedule pr ovides deg ree s of imp a ir me nt ev a luate d fr om 0% to 100 % in i nc re me nts of te n. 38 U. S.C. § 1 15 5. Th e dis a bil ity5

perc e n ta g e r a ti n g s , " a s f ar a s p r a c ti c a

b le , " ar e b a s e d o n th e " a v e r a g e im p a ir me n ts o f ear ning cap ac i ties resulting from such disea ses and injuries in a c ivilian occupation." 38 U.S.C. § 1155, 38 C.F .R. § 4 .1 ; se e als o Ho ll an d v. Brown , 6 Ve t.A pp . 4 43 , 4 46 (1 99 4) . A lth ou g h Co ng re ss deleg ated the a

uthority to VA to deter

mine the disability rating s associate d with particular diseases

an d i n j u ri es , C o n gre s s s t i l l d i ct at es t h e a m o u n to f m o n e y af fo rd edt o ea ch d i s ab i l i t y ra t i n g. 38 U.S.C. § 1114. Under t h e statutory

scheme addre ssing disability compensation, Congre ss has provided protec tion for disabilities that have bee n rate d at or a bove a pa rticular le vel for 20 y ear s or more. S e e C o l a y o n g v . W

e st , 1 2 Vet.App. 524 ( 1999). Section 110 states in per tinent part that " [a] d i s a b i l i t y w h i c h h a s b e e nc o n t i nu o u s l y r at e d at or a bove eva luation for twenty or more year s for compensation purposes under la ws administered by the Secre tary shall not the rea fter be rate d a t le ss than such e valuation, except upon a showingthat such r at ing was based on f raud." 38 U.S.C. § 110 (empha sis added). A lthough the te rms "r ated" and "r ating " are not expl icitly define d in section 110, the intended mea

ning of these ter ms "may be g leane d from reading the statute as a whole and harm on iz in g t he p art s i nt o a co here nt man dat e." Conary v. De rwinski , 3 Vet.App. 109, 112 ( 1992) (Steinberg , J ., concur

ring ). The plain languag e of the statute makes c lear that disabiliti es ratings that have bee n in effe ct continuously for 20 y ear s or m ore are protecte d from beingreduc ed to lower disability rating s. Here , it is t rue that the appellant' s 100% disability ratinghas been in e ffe ct since October 1980; however , VA h as t ak en n o ac t i o nt o re d u ce t h at d i s ab i l i t y

ra t i n g. Simi larly , service connec tion for a disability that has bee n in forc e for 10 or more year s may
no t be se ve re d. 38 U. S.C. § 1 15 9. Th e te rm " se rv ic e -c onne c te d" is d e fi ne d b y statut e a s, " wi th

re sp e c t to dis a

bil ity or de a th,

. . . s uc h d isa

bil ity wa s inc ur

re d or ag g ra

vate d .

. . in t

he lin e of du ty in the active military , naval, or air ser vice." 38 U.S.C. § 101 (16). The plain mea ning of section 1159 is that one ' s status of service connec tion that has been in for ce f or 10 y ear s or more ma

y not be se ve re d. I n thi s c a se , the a pp e lla nt' s se rv ic e -c onne c te d s tatus ha s n ot b e e n s e ve re d. Ra the r, his pay ment has bee n reduc ed to that commensura te with a 10% disability

rating . I n order

for a veter an to rec eive disability

compensation, the disabilit y must be service connec ted. The appellant argues that 38 U.S.C. § 1159 prohibits the reduc tion of h i s co m p ensation6

pay ments while he is inc arc erated. As discussed above , "c ompensation" is the "monthly pay ment
ma de by the Se c ret ary to a vete ra n b e c a us e of [a] s e rv ic e -c onne c te d d isa bil ity ." 38 U. S.C. § 1 01 (1 3) . The tw o co nc e pts , sev e ra nc e and re du c tio n of co mpe ns a tio n, are int e rt wi ne d, bu t pl a inl y dis tin c t. I t is evident that "c om pensation" is a distinct lega l term from both " rating " a nd "se rvice

c onne c tio n. " Th ou g h th e thr e e te rm s are c los e ly re late d to on e ano the r, it i s o bv iou s th a t Co ng re ss ha s c re a te d a

c le ar d ist inc tio n b e tw e e n th e se te rm s. Th e pla in me anin g of se c tio ns 11 0 a

nd 11 59 is clea r in preve nting the r eduction of a disability ratingand the sever ance of service c onnection that have be e n in for c e fo r statut or ily pr e sc ri be d ter ms, bu t the se statut e s c ann ot b e int e rp re te d to a pp ly also to a prohibition of reduc tion of compensation due to incarc eration. These statutory provisions do no t a dd

re ss t he re du c tio n o f c omp e ns a tio n, no r do e s th e a pp e lla nt c ite to a

ny law that su g g e sts that these statutory

provisions apply

to the reduc tion of compensation. Not only do 38 U.S.C. §§ 110 and 1159 not prohibit the reduc tion of compensation, but a separ ate statute also specific ally allows for the reduc tion in compensation pa y ment to inc arc erated benef iciarie s. See 38 U.S.C. § 5313. The statutes addre ss separate conc epts, and thus, ar e all ca pable of coexistence. Se e Com be e, s up ra . It is the ref ore the duty of this Court to r eg ard eac h as ef fec tive. Id

. As such, the a ppellant' s argument that a re duction in compensation is prohib i ted under 38 U.S.C. §§ 110 and 1159 is not a corre ct interpre tation of the law, a nd the re duction of the a

ppellant' s benef

its pursuant to 38 C.F.R. § 3.665 does not abrog ate 38 U.S.C. § 110 or 38 U.S.C. § 1159. B . A ssi g nme nt o f B e ne fi ts When a veter an' s disability compensation has been reduc ed based on incar cer ation, all or a pa rt of the re du c e d c omp e ns a tio n ma y be a pp or tio ne d to de pe nd e nts of

the ve te ra

n. 38 U. S.C. § 5 31 3 ( b) (1 ); 38 C.F .R. § 3. 66 5( e )( 1)

. Th e a pp e lla nt a rgue s th a t th e a

pp or tio nme nt o f h is b e ne fi ts violates the statute g overning the nonassig nability and exempt st atus of bene fits. Accor ding to the

a pp e lla nt, the a pp or tio nme nt i s an ass ignmen t of his be ne fi ts t

hat is pr e c lud e d und e r 3 8 U .S. C. § 5 30 1( a )( 1) . T he Se c re tary argue s that no na ssi g na bil ity un de r 38 U. S.C. § 5 30 1( a )( 1) is s ub je c t to
e xce pti on s sp e c if

ic a lly a uth or ize d b y

law, and that a pp or tio nme nt i s an e xce pti on sp e c if ic a lly

a uth or ize d b y

law. Th e re fo re , th e S e c re tary state s, the a

pp or tio nme nt o f b e ne fi ts d oe s n ot v iol a te the nonassig nability

statute.7

Th e st atu te r eli ed upo n b y th e app ell ant for th is argum ent st ate s tha t "[ p ] ay me nts of b e ne

fit s due or to bec ome due un de r a ny law a dmi nis te re d b y the Se c re tary sh a ll n ot b e a ssi g na

ble e xce pt t o the extent specifica lly

authorized by

law." 38 U.S.C. § 5301(a)(1) (empha sis added). O nly the pay ments of bene fits due or to bec ome due a re subjec t to this n o n as s igna bility provision. See id. Howeve r, bec ause the appellant' s compensation has be en prope rly reduc ed, the only pay ments due to him are the pay

ments reduc ed to the amount commensurate with a 10% disability ratingthat he is c ur re ntl y re c e ivi ng . T his 10 % p or tio n h a s n ot b e e n a ssi g ne d, a s h e is i n f ull re c e ipt

of the se benef its. Theref

ore, the re ha s been no a ssignment of the appe llant's be nefits. The a rg ument
re gar d i n g t h e a s s i gn m en to f t h e ap p el l an t 's b en ef i t s i s u n av ai l i n g. C. A pp or tio nme nt o f B e ne fi ts Although the appellant doe s have s t an d ing to c halleng e the pur ported re duction and

sever ance of his compensation benefits, he does not ha ve standing to c halleng e the appor tionment of benef its, pursuant to this C ourt' s decision in Belton , su pra . As mentioned above , in Belton , the mother of a

n incar cer ated ve tera

n was c ollecting an appor

tionment of t he veteran' s benef its. Belton , 17 Vet.App. at 209. When she entere d a Medic aid-subsidized nursing home wit h all of her expenses
co v ere d by

Medica id, VA terminate d her a pportionment awa

rd. Id. a t 2 1 0

- 1 1

. The ve tera n petitioned the Court to reinstate the a pportionment awa

rd to the mother. Id. The Court stated that [a]lt ho ug h a ri sin g fr om a

ve te ra n' s b e ne fi ts, an a

pp or tio nme nt i s a

n e ntity le g a lly separ ate f rom those benefits.

. . .The pe titioner has no leg ally signific ant conne ction to the apportioned be nefits; . . .[t ]herefor e, he doe s not ha ve a persona l stake in the o u tc o me , n o r

h a s h e s h o w nth a t h e h a s b e e na dv e r s e ly a f f e c te d

. . . A s s u c h , the pe tit ion e r' s argume nt t

hat he ha s st and ingla c ks me ri t. Belton , 17 Vet.App. at 211. The sa me re asoning applies to the pre sent ca se. Onc e the r eduction of benef its has bee n authorized, the appe llant no longe r has a persona l stake in the appor tioned pa y me nts

. Th e a

pp e lla nt ca nn ot de mon str a te that he ha s bee n adve rs e ly a ff e c te d b y the de c isi on

to g ive the appor

tioned benef

its to hi s depende nts when the determination to reduc e his compensation p ay m en t s h as al re ad y

b ee nau t h o ri z ed

. T h er ef

o re , t h e ap p el l an t d o es n o th av e s t an d i n g t o ch al l en ge the a pp or tio nme nt.8 IV . C ON CL USI ON After consideration of

the appe llant's a

nd the Secr etar

y ' s briefs, a

nd a re view of the rec ord, the B oard' s May

28, 2004 , decision is AFF I RMED.