Court Opinion

ID: 9365242
Source: CourtListenerOpinion
Date Created: 2023-01-23 16:01:10.842702+00
Date Added: 2024-06-11T17:15:43.745542
License: Public Domain

Case: 21-2023    Document: 56     Page: 1   Filed: 01/23/2023

   United States Court of Appeals
       for the Federal Circuit
                  ______________________

                ROBERT E. COOPER, JR.,
                   Claimant-Appellant

                             v.

       DENIS MCDONOUGH, SECRETARY OF
              VETERANS AFFAIRS,
               Respondent-Appellee
              ______________________

                        2021-2023
                  ______________________

     Appeal from the United States Court of Appeals for
 Veterans Claims in No. 19-2009, Judge Amanda L. Mere-
 dith, Judge Coral Wong Pietsch, Judge Joseph L. Toth.
                  ______________________

                Decided: January 23, 2023
                 ______________________

     CHRIS ATTIG, Attig Curran Steel PLLC, Little Rock,
 AR, argued for claimant-appellant. Also represented by
 HALEY SMITH; JUDY JOANNE DONEGAN, The Veterans Con-
 sortium Pro Bono Program, Washington, DC.

     JOSHUA E. KURLAND, Commercial Litigation Branch,
 Civil Division, United States Department of Justice, Wash-
 ington, DC, argued for respondent-appellee. Also repre-
 sented by BRIAN M. BOYNTON, ELIZABETH MARIE HOSFORD,
 PATRICIA M. MCCARTHY; JONATHAN KRISCH, Y. KEN LEE,
Case: 21-2023     Document: 56     Page: 2    Filed: 01/23/2023

 2                                      COOPER   v. MCDONOUGH

 Office of General Counsel, United States Department of
 Veterans Affairs, Washington, DC.
                  ______________________

      Before PROST, CHEN, and STOLL, Circuit Judges.
 CHEN, Circuit Judge.
     Robert Cooper appeals a decision by the United States
 Court of Appeals for Veterans Claims (Veterans Court) af-
 firming a decision by the Board of Veterans’ Appeals
 (Board) that denied Mr. Cooper’s request to exclude state
 unemployment compensation payments from his annual
 income for purposes of calculating his non-service-con-
 nected (NSC) pension. The Veterans Court found that un-
 employment compensation payments are not excluded
 from a veteran’s annual income under an exception for “do-
 nations from public or private relief or welfare organiza-
 tions.” 38 U.S.C. § 1503(a)(1). Because we agree that state
 unemployment compensation payments are not “dona-
 tions,” we affirm.
                        BACKGROUND
                               I
     A veteran who served during a period of war and is
 “permanently and totally disabled from non-service-con-
 nected disability not the result of the veteran’s willful mis-
 conduct” may be entitled to an NSC pension. 38 U.S.C.
 § 1521(a), (j). NSC pensions are need based, and thus the
 maximum annual rate of pension is “reduced by the
 amount of the veteran’s annual income.” Id. § 1521(b); see
 also Review of the Non-Service-Connected Pension Pro-
 gram: Hearing on H.R. 904, H.R. 2120, H.R. 9000,
 H.R. 10173, etc. Before the Subcomm. on Comp., Pension,
 & Ins. of the H. Comm. on Veterans’ Affs., 95th Cong. 127
 (1978) (statement of Rep. G.V. Montgomery, Chairman,
 Subcomm. on Comp., Pension, & Ins.) (“The non-service-
 connected pension program is a needs program. The
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 COOPER   v. MCDONOUGH                                      3

 amount of pension paid . . . relates specifically to the
 amount of other income which the individual has available
 to him.”).
     In general, a veteran’s “annual income” includes “all
 payments of any kind or from any source.” 38 U.S.C.
 § 1503(a). Congress, however, excluded certain categories
 of payments, including “donations from public or private
 relief or welfare organizations.” Id. § 1503(a)(1).
                              II
     Mr. Cooper served on active duty in the United States
 Marine Corps from March to September 1972 and from
 February to April 1973. Cooper v. McDonough, 33 Vet.
 App. 341, 343 (2021). In 2008, the Department of Veterans
 Affairs (VA) granted Mr. Cooper entitlement to an NSC
 pension. Id. In 2014, the VA notified Mr. Cooper that it
 had adjusted his income from December 2008 through 2010
 based on his collection of unemployment compensation
 from the state of Wisconsin, which resulted in an overpay-
 ment of $13,094. Id. Mr. Cooper appealed to the Board,
 which agreed with the VA that “there is no applicable ex-
 clusion” from income for state unemployment compensa-
 tion and denied Mr. Cooper’s request to exclude his
 unemployment compensation payments from his annual
 income for NSC pension purposes. Id. at 344.
                              III
     Mr. Cooper appealed to the Veterans Court, arguing
 that unemployment compensation payments are “dona-
 tions from public or private relief or welfare organizations”
 that should be excluded from his annual income. Id. The
 Veterans Court disagreed.
     Starting with § 1503(a)’s statutory language and rely-
 ing on dictionary definitions, the Veterans Court found
 that “donations” are “voluntary gifts of, typically, money
 from one party to another and often involve[] a charity.”
 Id. at 347. The court also found that “public . . . relief or
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 4                                     COOPER   v. MCDONOUGH

 welfare organization[]” pertains to “a governmental entity
 providing aid or assistance to a population in need” or one
 “formed for the purpose of providing financial or other as-
 sistance to individuals or communities in need.” Id.
 at 347–48. Applying those definitions, the Veterans Court
 held that unemployment compensation payments are not
 donations from public relief or welfare organizations be-
 cause “the words donation, relief, and welfare in 38 U.S.C.
 § 1503(a) all connote payments premised upon the recipi-
 ent’s need, whereas unemployment compensation turns on
 the recipient’s employment status without regard to need.”
 Id. at 350. Relevant here, the Veterans Court also rejected
 Mr. Cooper’s argument that it would be absurd to include
 state unemployment compensation payments as income
 but exclude payments from VA Compensated Work Ther-
 apy (CWT) programs. The court explained that, unlike un-
 employment compensation, Congress specifically excluded
 CWT payments from income in 38 U.S.C. § 1718(g)(3). Id.
 at 351–52. The Veterans Court thus affirmed the Board’s
 decision to deny Mr. Cooper’s request to exclude his state
 unemployment compensation payments from his annual
 income. Id. at 352–53. Mr. Cooper timely appealed.
                         DISCUSSION
     We have exclusive jurisdiction to “review and decide
 any challenge to the validity of any statute or regulation or
 any interpretation thereof” by the Veterans Court “and to
 interpret constitutional and statutory provisions, to the ex-
 tent presented and necessary to a decision.” 38 U.S.C.
 § 7292(c). We review the Veterans Court’s interpretation
 of 38 U.S.C. § 1503(a) de novo. See Cook v. Wilkie, 908 F.3d
 813, 817 (Fed. Cir. 2018).
      “In statutory construction, we begin ‘with the language
 of the statute.’” Kingdomware Techs., Inc. v. United States,
 579 U.S. 162, 171 (2016) (quoting Barnhart v. Sigmon Coal
 Co., 534 U.S. 438, 450 (2002)). “The first step is to deter-
 mine whether the language at issue has a plain and
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 COOPER   v. MCDONOUGH                                       5

 unambiguous meaning with regard to the particular dis-
 pute in the case.” Barnhart, 534 U.S. at 450 (internal quo-
 tation marks and citation omitted). “The inquiry ceases if
 the statutory language is unambiguous and the statutory
 scheme is coherent and consistent.” Id. (internal quotation
 marks and citation omitted).
     We agree with the Veterans Court that the plain and
 unambiguous meaning of “donations from public or private
 relief or welfare organizations” in § 1503(a)(1) does not in-
 clude unemployment compensation payments. A “dona-
 tion” is “a gift, esp. to a charity; something, esp. money,
 that someone gives to a person or an organization by way
 of help.” Donation, Black’s Law Dictionary (11th ed. 2019).
 A “gift” is a “voluntary transfer of property to another with-
 out compensation.” Gift, Black’s Law Dictionary (11th ed.
 2019). Read together, a “donation” is a voluntary transfer
 of property to another without compensation, especially to
 a charity. Unemployment compensation does not meet this
 definition. Individuals are not eligible for unemployment
 compensation unless they were previously employed and
 paid taxes—i.e., compensation—to the government. Be-
 cause receipt of unemployment compensation payments is
 contingent on prior compensation to the government, un-
 employment compensation payments are not donations.
     To explain, Congress incentivized states to establish
 state unemployment compensation programs through a tax
 offset in the Social Security Act of 1935. See Social Security
 Act of 1935, Pub. L. No. 74-271, 49 Stat. 620; see also Soc.
 Sec. Admin., Annual Statistical Supplement to the Social
 Security Bulletin 65 (2013). Although the details were left
 to state discretion, state unemployment compensation pro-
 grams are generally “modeled after an actuarial insurance
 scheme.” Gillian Lester, Unemployment Insurance and
 Wealth Redistribution, 49 UCLA L. Rev. 335, 343 (2001);
 see also Charity Versus Social Insurance in Unemployment
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 6                                     COOPER   v. MCDONOUGH

 Compensation Laws, 73 Yale L.J. 357, 368–70 (1963). 1
 Thus, in each state, an employee, or their employer on their
 behalf, pays payroll taxes to the state and federal govern-
 ment while that individual is employed, and in return, the
 employee collects payments from the state government if
 they become unemployed through no fault of their own. See
 Lester, supra, at 340–48. Because receipt of unemploy-
 ment compensation payments requires prior contribution
 from the employee to the government in the form of payroll
 taxes, unemployment compensation payments are not
 gifts, and thus they are not donations.
      Put another way, an individual cannot receive unem-
 ployment payments unless they were previously employed
 and paid into the state’s unemployment fund through
 taxes. Soc. Sec. Admin., supra, at 66 (“Unemployment ben-
 efits are available as a matter of right (without a means
 test) to unemployed workers who have demonstrated their
 attachment to the labor force by a specified amount of recent
 work or earnings in covered employment.” (emphasis
 added)); Lester, supra, at 346 (“Eligibility is limited to
 workers who have some minimum level of employment ex-
 perience and continuity . . . .”). Indeed, most states use
 some minimum threshold of earnings during a “base pe-
 riod” preceding application for benefits in order to qualify

     1    For the same reason, unemployment compensation
 is often referred to by state and the federal governments as
 “unemployment insurance.” Soc. Sec. Admin., supra, at 65
 (“Unemployment Insurance”); Wis. Stat. § 108 (“Unemploy-
 ment Insurance”); see also Lester, supra, at 340–41; Unem-
 ployment Insurance, Black’s Law Dictionary (11th ed.
 2019) (“A type of social insurance that pays money to work-
 ers who are unemployed for reasons unrelated to job per-
 formance. Individual states administer unemployment
 insurance, which is funded by payroll taxes. Also termed
 unemployment compensation.” (emphasis added)).
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 COOPER   v. MCDONOUGH                                         7

 for unemployment compensation.               Lester, supra,
 at 346–47; see also id. at 346 (“[Unemployment insurance],
 in contrast with welfare . . . provide[s] benefits only to
 those workers who have ‘earned’ them through some mini-
 mum level of past workforce participation.”); Soc. Sec. Ad-
 min., supra, at 66 (“A worker’s monetary benefit rights are
 based on his or her employment in covered work over a
 prior reference period called the base period . . . .”). In sum,
 we find that unemployment compensation payments are
 not donations within the meaning of 38 U.S.C. § 1503 and
 instead are more akin to an insurance contributory pro-
 gram.
     Mr. Cooper’s arguments fail to convince us that this
 statutory interpretation is incorrect. We first reject his ar-
 gument that unemployment compensation is a noncontrib-
 utory benefit—i.e., a benefit that does not require prior
 compensation to the government—because it is often
 funded through taxes on businesses rather than individu-
 als and does not need to be reimbursed by the recipient.
 Appellant’s Br. 17, 33–34, 36. But the fact that unemploy-
 ment compensation payments need not be reimbursed does
 not make them a noncontributory benefit. Regardless of
 whether it is the employees or their employers that make
 advance payments into the program, unemployment com-
 pensation payments are paid based on those prior contribu-
 tions; Mr. Cooper’s no-reimbursement argument is thus
 beside the point.
      We also perceive no substantive difference based on
 whether the employee or employer pays the taxes that fund
 unemployment compensation. First, employers do not pay
 payroll taxes for individuals not in their employ. See, e.g.,
 Wis. Stat. § 108.01(1) (employers “financ[e] benefits for
 [their] own unemployed workers”). Unemployment com-
 pensation programs are funded through taxes tied to a spe-
 cific employee’s wages and employment term. Second, even
 when employers pay taxes to fund unemployment compen-
 sation programs, research indicates that employers pass
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 8                                    COOPER   v. MCDONOUGH

 those payments on to employees through lower wages.
 Lester, supra, at 379 (citing research finding that a tax on
 labor like the unemployment compensation tax is ulti-
 mately borne by workers rather than employers); see also
 Cong. Budget Off., Unemployment Insurance in the Wake
 of the Recent Recession, Pub. No. 4525, at 13 (Nov. 2012)
 (“Although levied as a payroll tax on employers, the portion
 of the cost of [unemployment insurance] taxes that does not
 vary among firms within a local labor market is ultimately
 paid by workers in the form of reduced wages.”). Third,
 applying this distinction in practice would mean that vet-
 erans in states where employers pay the applicable taxes
 would be able to exclude unemployment compensation pay-
 ments as “donations,” but veterans in states where employ-
 ees pay the taxes would not. We are not convinced that
 Congress intended disparate outcomes for veterans de-
 pending on their state of residence.
     We further reject Mr. Cooper’s attempt to bolster his
 argument by comparing unemployment compensation to
 the noncontributory programs listed in 38 C.F.R. § 3.262(f),
 which are not included in a veteran’s annual income for
 NSC pension purposes. Appellant’s Br. 28. Even assum-
 ing, for argument’s sake, that 38 C.F.R. § 3.262(f) is rele-
 vant here, Mr. Cooper misapplies that regulation’s
 distinction between contributory programs, like old age
 and survivor’s insurance and disability insurance (OASDI),
 and noncontributory programs, like supplemental security
 income (SSI) and aid to dependent children (now called
 Temporary Assistance for Needy Families (TANF)). 38
 C.F.R. § 3.262(f); Soc. Sec. Admin., supra, at 60. OASDI,
 for example, provides monthly benefits to qualified retired
 and disabled workers, their dependents, and survivors.
 Soc. Sec. Admin., supra, at 9. An individual and their em-
 ployer contribute to the OASDI fund through payroll taxes
 while the individual is employed, and, in turn, the individ-
 ual receives payments from the government when they re-
 tire based on their prior contributions, not their need. Id.
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 COOPER   v. MCDONOUGH                                       9

 In contrast, SSI provides monthly payments to adults and
 children with a disability or blindness who have income
 and resources below specific financial limits. Supple-
 mental     Security    Income,     Soc.     Sec.    Admin.,
 https://www.ssa.gov/benefits/ssi (last visited Dec. 16,
 2022). Unlike OASDI, SSI is “funded by general tax reve-
 nues (not Social Security taxes),” and is distributed based
 on need, not employment status. Id.
      We find that unemployment compensation payments
 are more similar to contributory programs like OASDI
 than noncontributory programs like SSI. Like OASDI, an
 individual or their employer pays into the unemployment
 compensation program while the individual is employed,
 and the individual receives payments based on those prior
 contributions and their employment status, not their need.
 It is unlike SSI, for which the payments come from a gen-
 eral fund with no relationship to the recipient and are paid
 based on need, not prior employment. Thus, we disagree
 with Mr. Cooper’s argument that unemployment compen-
 sation should be excluded from his annual income because
 it is similar to the noncontributory programs listed in 38
 C.F.R. § 3.262(f).
      Mr. Cooper also asserts that unemployment compensa-
 tion payments should be considered donations because the
 word “donation” implies giving something of value to help
 a person in a time of need or to relieve suffering. Appel-
 lant’s Br. 33–34, 37–38. Mr. Cooper’s argument, however,
 ignores the fact that unemployment compensation is paid
 based on the fact that an individual is unemployed, regard-
 less of their need. Indeed, Congress intended unemploy-
 ment compensation to provide “partial replacement of
 wages” to allow a recipient to search for other employment
 “without having to resort to relief” or “turn[] to welfare, or
 private charity.” Cal. Dep’t of Hum. Res. Dev. v. Java, 402
 U.S. 121, 131–32 (1971) (citations omitted). Congress spe-
 cifically declined to institute a “means” or “needs” test to
 receive unemployment compensation payments to avoid
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 10                                     COOPER   v. MCDONOUGH

 the “stigma of charity.” See H.R. Rep. No. 74-615, at 7
 (1935) (“Unemployment compensation is greatly preferable
 to relief because it is given without any means test.”); S.
 Rep. No. 74-268, at 11 (1935) (“Unemployment compensa-
 tion differs from relief in that payments are made as a mat-
 ter of right, not on a needs basis . . . .”); see also Charity
 Versus Social Insurance, supra, at 359 (“[B]oth the tech-
 niques of giving charity, particularly the ‘means’ or ‘needs’
 test, and the psychological impact of receiving ‘charity,’ un-
 dermined the self-respect and independence of the unem-
 ployed.”); Lester, supra, at 341–42 (“[M]uch of the rhetoric
 surrounding passage of the legislation . . . augured that
 [unemployment insurance] would preserve the dignity of
 working people who lost their jobs by distinguishing them
 from welfare recipients.”). The result was a two-tiered so-
 cial safety net: (1) unemployment compensation, which
 “was designed for workers with stable labor market attach-
 ment, without regard to their means,” and (2) welfare,
 which was “designed for workers lacking attachment, and
 [therefore] was based on means.” See Lester, supra, at 343.
 Thus, unemployment compensation payments are paid re-
 gardless of need, and we reject Mr. Cooper’s argument.
      We also are not persuaded by Mr. Cooper’s arguments,
 based on various hypotheticals, that our holding would pro-
 duce disparate and absurd outcomes that run contrary to
 congressional intent. Appellant’s Br. 19–24. Mr. Cooper
 again confuses unemployment compensation with welfare
 programs, like SSI and TANF. Mr. Cooper’s first hypothet-
 ical asks us to compare two veterans—one receiving unem-
 ployment compensation and one who is employed but who
 also receives TANF payments. Mr. Cooper argues that the
 result of our holding would be that “the more needy of the
 two veterans – the one without any income at all – is get-
 ting the lower NSC pension amount.” Appellant’s Br. 20.
 This is doubly wrong. First, the veteran receiving unem-
 ployment compensation is not without income. The vet-
 eran receives income through their unemployment
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 COOPER   v. MCDONOUGH                                   11

 compensation payments. Second, eligibility for TANF is
 based on an individual’s income and wealth, and
 Mr. Cooper does not point us to any statute or regulation
 that treats income from wages and income from unemploy-
 ment compensation differently in determining TANF eligi-
 bility. Thus, in both cases, wages and unemployment
 compensation are counted in the veteran’s annual income,
 and any TANF payments are excluded from the veteran’s
 income as donations.
     Mr. Cooper then asks us to consider a hypothetical in
 which an employed veteran collecting TANF loses his job
 and begins collecting unemployment compensation. Appel-
 lant’s Br. 20–21. Mr. Cooper asserts that the veteran could
 no longer exclude the TANF payments from their annual
 income for NSC pension purposes, but this is incorrect.
 TANF payments are excluded as donations, and
 Mr. Cooper again cites no statute or regulation indicating
 that an individual who loses their job and collects unem-
 ployment would be ineligible for TANF.
      Finally, Mr. Cooper asks us to compare two hypothet-
 ical veterans who both lose their employment, but one vet-
 eran collects state unemployment and the other receives
 the same amount in donations from a private community
 welfare organization. Mr. Cooper argues that there is
 “nothing in the language of [§ 1503(a)(1)] that suggests
 Congress intended to incentivize and reward veterans who
 receive private relief from unemployment with a higher
 NSC pension rate, and punish veterans who receive public
 relief from unemployment with a lower NSC pension rate.”
 Appellant’s Br. 22. We disagree. Congress explicitly ex-
 cluded donations from private relief organizations from in-
 come under § 1503(a)(1). In sum, we are not convinced by
 Mr. Cooper’s hypotheticals that our holding produces dis-
 parate and absurd outcomes.
    Mr. Cooper also revives his argument made to the Vet-
 erans Court that unemployment compensation payments
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 12                                   COOPER   v. MCDONOUGH

 and CWT payments are similar, and thus it would be ab-
 surd to exclude CWT payments from a veteran’s annual in-
 come but not exclude unemployment compensation.
 Appellant’s Br. 39–41. The two programs, however, are not
 similar. Unemployment compensation, as already ex-
 plained, is earned through prior employment, and as the
 Supreme Court noted, it was intended to stabilize demand
 across the economy while providing recipients time to
 search for gainful employment without resorting to relief
 or welfare. Java, 402 U.S. at 131–33. In contrast, CWT is
 a “vocational rehabilitation program” that “provide[s] sup-
 port to Veterans living with mental illness or physical im-
 pairment with barriers to employment to secure and
 maintain community based competitive employment.” In-
 formation for Veterans – Compensated Work Therapy, Vet-
 erans Health Admin., https://www.va.gov/HEALTH/cwt/
 veterans.asp (last visited Dec. 16, 2022). Congress recog-
 nized that a veteran might not be motivated to participate
 in CWT if the money earned reduced other VA payments,
 including payments from an NSC pension, and thus explic-
 itly excluded CWT payments from a veteran’s income for
 NSC pension purposes. 38 U.S.C. § 1718(g)(3); see also
 H.R. Rep. No. 102-622, at 8 (1992) (“[L]oss of earnings as a
 result of participating in a rehabilitative program would
 serve as a disincentive for entering or continuing the pro-
 gram and would therefore defeat the program’s therapeutic
 purpose. Further, reduction or termination of VA benefits
 as a result of earnings from the program might decrease a
 veteran’s motivation.” (internal quotations omitted)). This
 same logic does not apply to unemployment compensation,
 where there is no need to incentivize a veteran to partici-
 pate. Congress explicitly excluded payments from CWT as
 income, but it has not done so for unemployment compen-
 sation, and thus it is not absurd to treat the two programs
 differently.
    Two final arguments are worth addressing. Mr. Cooper
 asks the court to apply the pro-veteran canon. Appellant’s
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 COOPER   v. MCDONOUGH                                        13

 Br. 32. Under the pro-veteran canon, “interpretive doubt
 is to be resolved in the veteran’s favor.” Brown v. Gardner,
 513 U.S. 115, 118 (1994). Because there is no interpretive
 doubt in this case, the pro-veteran canon does not apply.
 Rudisill v. McDonough, No. 2020-1637, 2022 WL
 17685435, at *6 (Fed. Cir. Dec. 15, 2022) (en banc) (explain-
 ing that the pro-veteran canon “plays no role where the lan-
 guage of the statute is unambiguous”).
      Mr. Cooper also argues that the Veterans Court erred
 when it relied on a tax law principle from Abrahamsen v.
 United States, 228 F.3d 1360, 1362–63 (Fed. Cir. 2000).
 Appellant’s Br. 24–29. First, we are not convinced that the
 Veterans Court relied on Abrahamsen, for it never invoked
 that opinion in its analysis after its initial citation. Second,
 any perceived error would be harmless. As we explained
 above, unemployment compensation payments are not “do-
 nations” within the meaning of § 1503. That conclusion re-
 lies on the plain text of the statute; it does not rely on a tax
 law principle. Thus, the Veterans Court’s judgment is cor-
 rect, and even if the Veterans Court erred, that error does
 not compel reversal. Wavetronix LLC v. EIS Elec. Inte-
 grated Sys., 573 F.3d 1343, 1345 n.1 (Fed. Cir. 2009).
                          CONCLUSION
     We have considered Mr. Cooper’s remaining argu-
 ments and find them unpersuasive. For the foregoing rea-
 sons, we find that unemployment compensation payments
 are not “donations” within the meaning of 38 U.S.C. § 1503,
 and thus we affirm.
                         AFFIRMED