Wanless v. Shinseki

United States Court Of Appeals for the Federal Circuit __________________________ WILLIAM H. WANLESS, Claimant-Appellant, v. ERIC K. SHINSEKI, SECRETARY OF VETERANS AFFAIRS, Respondent-Appellee. __________________________ 2010-7007 __________________________ Appeal from the United States Court of Appeals for Veterans Claims in 07-1501, Judge Robert N. Davis. ___________________________ Decided: September 10, 2010 ___________________________ ROBERT K. KRY, MoloLamken LLP, of Washington, DC, argued for claimant-appellant. JAMES SWEET, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for respondent- appellee. With him on the brief were TONY WEST, Assis- tant Attorney General, JEANNE E. DAVIDSON, Director, and MARTIN HOCKEY, Assistant Director. Of counsel on the brief were MICHAEL J. TIMINSKI, Deputy Assistant General Counsel, and MARTIN J. SENDEK, Staff Attorney, WANLESS v. DVA 2 Office of the General Counsel, United States Department of Veterans Affairs, of Washington, DC. __________________________ Before LOURIE, BRYSON, and GAJARSA, Circuit Judges. GAJARSA, Circuit Judge. The issue before this court is one of statutory con- struction, specifically the construction of 38 U.S.C. § 5313 (1993). This statute reduces the benefits of veterans who are convicted of felonies and are “incarcerated in a Fed- eral, State, or local penal institution.” William H. Wanless is an incarcerated veteran whose disability benefits were reduced pursuant to § 5313. Upon transfer- ring from a state-operated prison to Davis Correctional Facility (“Davis”), a privately owned prison operated by the Corrections Corporation of America, Mr. Wanless requested full reinstatement of his disability benefits. His request was denied by the Board of Veterans’ Appeals (the “Board”) and the Veterans Court. See Wanless v. Shinseki, 23 Vet. App. 143 (2009). Mr. Wanless subse- quently appealed to this court. Because the Veterans Court properly construed § 5313 to include penal institu- tions that are privately operated, yet state-contracted, we affirm. BACKGROUND Mr. Wanless served on active duty in the United States Army from September 1979 to November 1981. Id. at 144. During his service, he suffered service-connected injuries, including enucleation of the right eye, chronic lumbar strain with degenerative disc disease, tinnitus, high-frequency hearing loss, and residuals of a cervical strain. Id. The Department of Veterans Affairs (“VA”) granted Mr. Wanless $808 per month as disability com- pensation for his service-connected injuries. Id. at 145. 3 WANLESS v. DVA On January 15, 1993, the Payne County District Court in Oklahoma convicted Mr. Wanless of first degree murder for the death of his wife. For this felony, he was sentenced to incarceration in a penitentiary for life with- out parole. Id. at 144. Upon receipt of the final sentenc- ing order, the Veterans Administration (“VA”) informed Mr. Wanless that, pursuant to § 5313(a)(1), his disability rating was reduced to ten percent and his monthly dis- ability compensation would be reduced from $808 to $85. Id. In 1998, Mr. Wanless was transferred from a state- operated prison to Davis, a prison owned and operated by the for-profit company, Corrections Corporation of Amer- ica, under contract with the Oklahoma Department of Corrections. 1 Shortly after his transfer, Mr. Wanless sought reinstatement of his benefits contending that he was “no longer in a facility which falls under the parame- ters of § 5313.” The VA denied Mr. Wanless’s claim. It reasoned that “[t]he fact that [he was] incarcerated in the Davis Correc- tional Facility and that it is administered by Corrections Corporation of America, does not change [the] fact that [he was] imprisoned following [his] conviction of a felony.” Mr. Wanless filed a “Notice of Disagreement” and ap- pealed the decision to the Board. The Board concluded that Mr. Wanless was “a prisoner in accord with the life imprisonment sentence that was imposed . . . by an Okla- homa state court judge in accordance with Oklahoma state law.” The Board further stated that merely because “the State of Oklahoma has decided to allow for the 1 The parties disagree about the exact date of Mr. Wanless’s transfer from the State-operated prison to Davis. The record indicates that Mr. Wanless was trans- ferred sometime in early 1998. WANLESS v. DVA 4 private management of a penal facility under a contract does not serve to remove the veteran’s felony conviction, nor does it alter his status as a prisoner of the State of Oklahoma.” According to the Board, “[i]t is this status as a convicted felon in a state prison that absolutely prohib- its the payment of full disability compensation.” The Board thus affirmed the denial of Mr. Wanless’s claim, holding that “[t]he veteran is not entitled to payment of full disability compensation while incarcerated for the commission of a felony.” Mr. Wanless appealed the Board’s decision to the Vet- erans Court. It remanded the case to the Board, finding that the Board had failed to analyze any state laws or contractual provisions that bear on whether Davis quali- fied as a “State . . . penal institution” within the meaning of § 5313. On remand, the Board cited a VA General Counsel opinion, which stated that: [c]onstruing [§] 5313(a)(1) as not applying to a convicted felon whom the State, pursuant to a contract between the State and a private corpora- tion, has incarcerated in a privately owned and operated facility rather than a State-owned penal institution would thwart Congress’ clear purpose for the reduction in benefit payments. J.A. 748. After a thorough analysis, the General Counsel had concluded that “a correctional facility owned and operated by a private corporation pursuant to a contract with a State department of corrections responsible within a State for the incarceration of convicted felons is incar- ceration in a State penal institution within the meaning of section 5313.” J.A. 749. The Board concluded once more that Mr. Wanless was rightfully denied full disabil- ity benefit compensation pursuant to § 5313 because he was “incarcerated in a State penal institution for VA 5 WANLESS v. DVA purposes under the felony conviction sentence imposed in January 1993.” Mr. Wanless appealed again to the Vet- erans Court. On appeal, the Veterans Court found that “[t]he plain language of section 5313 does not explicitly include or exclude private prisons under State contract from the list of incarceration facilities.” Wanless, 23 Vet. App. at 147. Because the statute was silent, the Veterans Court exam- ined its structure and legislative history. The Veterans Court determined that “throughout the statute, the emphasis is on a veteran’s ‘incarceration,’” id. at 147, and “[n]othing in the legislative history suggests that Con- gress was concerned about limiting [§] 5313 so as to not affect veterans who are incarcerated in privately run, State-contracted penal institutions,” id. at 148-49. Turning to the General Counsel’s opinion, the Veter- ans Court noted that it was “entitled to respect to the extent it has ‘the power to persuade.’” Id. at 150 (quoting Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944)). The Veterans Court then determined that the General Coun- sel’s opinion relied upon sound reasoning and was “not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” Id. at 151. Given the stat- ute’s language, its legislative history, and the General Counsel’s opinion, the Veterans Court affirmed the Board’s decision and concluded that privately owned and operated prisons contracted by the state, such as Davis, fell within the ambit of “State . . . penal institution” pursuant to § 5313. Mr. Wanless filed a timely appeal to this court. DISCUSSION This court’s jurisdiction to review decisions by the Veterans Court is limited. We have exclusive jurisdiction “to review and decide any challenge to the validity of any WANLESS v. DVA 6 statute or regulation or any interpretation thereof . . . and to interpret constitutional and statutory provisions, to the extent presented and necessary to a decision.” 38 U.S.C. § 7292(c) (2006). Absent a constitutional issue, however, we lack the jurisdiction to “review (A) a challenge to a factual determination, or (B) a challenge to a law or regulation as applied to the facts of a particular case.” Id. § 7292(d)(2). On appeal, Mr. Wanless argues that the Veterans Court improperly construed the prior version of § 5313 to include privately operated prisons contracted by the state. His argument is a legal challenge to the Veterans Court’s interpretation of § 5313. We review such a legal chal- lenge de novo. Id. § 7292(d)(2); see also Glover v. West, 185 F.3d 1328, 1331 (Fed. Cir. 1999). Until it was amended effective December 22, 2006, § 5313 stated: (a)(1) To the extent provided in subsection (d) of this subsection, any person who is entitled to compensation or to dependency and indemnity compensation and who is incarcerated in a Federal, State, or local penal institution for a period in excess of sixty days for conviction of a felony shall not be paid such compensation or depend- ency and indemnity compensation, for the period beginning on the sixty-first day of such incarceration and ending on the day such incarceration ends in an amount that exceeds [specified amounts]. 38 U.S.C. § 5313 (1993) (emphasis and alteration added); see also 38 C.F.R. § 3.665 (1999) (implementing regula- tion). A December 2006 amendment changed the statu- tory language in § 5313(a)(1) to state that benefits will be reduced for claimants convicted of a felony and incarcer- 7 WANLESS v. DVA ated in a “Federal, State, local, or other penal institution or correctional facility.” Veterans Benefits, Health Care, and Information Technology Act of 2006, Pub. L. 109-461, § 1002, 120 Stat. 3403, 3464-65 (2006). The amendment was entitled “Clarification of Correctional Facilities Covered by Certain Provisions of Law.” Id. The legisla- tive history of the amendment states that it was promul- gated as part of “technical and clarifying amendments to title 38.” 152 Cong. Rec. H9015 (daily ed. Dec. 8, 2006) (statement of Rep. Steve Buyer). While the statute was changed to incorporate “other penal institution[s] or correctional facilit[ies],” the implementing regulation does not include this change. See 38 C.F.R. § 3.665 (2009). Mr. Wanless argues that the Veterans Court commit- ted legal error when it interpreted the statute to include privately operated prisons under contract with the State of Oklahoma. According to Mr. Wanless, veterans incar- cerated in facilities operated by private contractors are not subject to § 5313’s mandated reduction in disability benefits. We disagree. The Veterans Court first reviewed the language of § 5313 and found that “[t]he plain language of section 5313 does not explicitly include or exclude private prisons under State contract from the list of incarceration facili- ties.” Wanless, 23 Vet. App. at 147. But silence alone does not create an ambiguity, especially if it can be recon- ciled with the statutory language. Section 5313 formerly stated that “any person who is entitled to compensation and who is incarcerated in a Federal, State, or local penal institution . . . for conviction of a felony shall not be paid such compensation.” Mr. Wanless does not dispute that he was “incarcerated” within the meaning of § 5313. Rather, Mr. Wanless alleges that he was no longer in a facility that qualifies as ”a Federal, State, or local penal institution” because Davis is a privately operated prison. WANLESS v. DVA 8 The statutory language, however, focuses on a veteran’s incarceration for a felony conviction in any facility and does not distinguish between government-operated pris- ons and privately operated prisons. The statute’s failure to distinguish between the two types of prisons indicates that incarceration in a privately owned and operated prison under contract with the state is tantamount to incarceration in a state penal institution. See Evans v. Newton, 382 U.S. 296, 299 (1966) ([W]hen private indi- viduals or groups are endowed by the State with powers or functions governmental in nature, they become agen- cies or instrumentalities of the State . . . . “); see also Street v. Corr. Corp. of Am., 102 F.3d 810, 814 (6th Cir. 1996) (stating that employees of the Corrections Corpora- tion of America perform a “traditionally state function” by operating a prison); Giron v. Corr. Corp. of Am., 14 F. Supp. 2d 1245, 1249 (D.N.M. 1998) (holding that a Cor- rections Corporation of America prison guard acted under color of state law for purposes of § 1983 suit because “[t]he function of incarcerating people, whether done publicly or privately, is the exclusive prerogative of the state.”). There is no rationale for treating veterans incarcerated for felony convictions in a privately operated, yet state contracted prison more favorably than veterans incarcer- ated in state-operated prisons. Because Mr. Wanless was incarcerated at a prison contracted by the Oklahoma Department of Corrections, the interpretation of the statutory language by the Veterans Court is correct. While we do not find the statute ambiguous, we take comfort in knowing that the legislative history also sup- ports our conclusion. When promulgated in 1980, Con- gress intended for the statute to correct the perceived problem of “providing hundreds and thousands of tax free benefits to [veterans incarcerated for the commission of felonies] when at the same time the taxpayers of this 9 WANLESS v. DVA country are spending additional thousands of dollars to maintain these same individuals in penal institutions.” 126 Cong. Rec. 26,118 (1980) (statement of Rep. G.V. Montgomery) (alteration added). During debate on the bill, Congressman Chalmers Wylie likewise focused on the economic consequences of providing federally funded disability benefits to “a prisoner . . . [already] being fully supported by tax dollars that fund the penal institution.” 126 Cong. Rec. 26,122 (1980) (alteration added). Based upon this legislative history, the Veterans Court con- cluded that “Congress’s main stated objective is the avoidance of duplicative Government expenditures that would result in a windfall for those convicted of felonies.” Wanless, 23 Vet. App. at 149. Legislative history is “often murky, ambiguous, and contradictory,” Exxon Mobil Corp. v. Allapattah Services, Inc., 545 U.S. 546, 568 (2005), but here it clearly points to an appropriate legislative ration- ale for reducing the disability benefits of incarcerated veterans. Thus, the legislative history of § 5313 supports the Veterans Court’s decision. The December 2006 clarifying amendment to § 5313 further supports the Veterans Court’s decision. The amendment, published as a “Clarification of Correctional Facilities Covered by Certain Provisions of Law,” broad- ens the statute to include “Federal, State, local, or other penal institution or correctional facility.” 38 U.S.C. § 5313 (emphasis added). But, as the Veterans Court duly noted, the amendment was not substantive but rather “technical and clarifying.” See 152 Cong. Rec. H9015 (daily ed. Dec. 8, 2006) (statement of Rep. Steve Buyer). The amend- ment made explicit what was already implicit in the statute’s language and the legislative history—a desire to avoid duplicative government expenditures. See 126 Cong. Rec. 26,122 (1980) (statement of Congressman Chalmers Wylie) (“In the case of imprisonment, when a WANLESS v. DVA 10 prisoner is being fully supported by tax dollars that fund the penal institution, it becomes ludicrous to continue payment of benefits designed to help him maintain a standard of living.”). Because the amendment did not effectuate a substantive change in the law, but rather clarified the original intent of Congress, it supports the conclusion that the prior version of the statute applies to privately operated penal institutions contracted by the state. Finally, the Veterans Court also gave proper weight to the VA General Counsel’s opinion. Lacking the formali- ties of notice-and-comment rulemaking, the General Counsel’s opinion is entitled to deference only in so far as it has “the power to persuade.” Skidmore, 323 U.S. at 140. The Veterans Court correctly found the General Counsel’s opinion persuasive. The General Counsel’s opinion provided three persuasive reasons for including veterans such as Mr. Wanless within the scope of § 5313: (1) A private prison's authority to confine a vet- eran derives from his State felony conviction and the authority to imprison citizens ultimately rests with the government only; (2) interpreting section 5313 to apply to private prisons under State con- tract would promote the statute's stated legisla- tive purpose of avoiding the duplication of governmental expenditures for veterans who are already supported by the government and suffer no lost earnings as a result of their disability; and (3) creating a distinction between veterans in State-operated and State-contracted privately op- erated prisons would create an unreasonable or irrational result because it would both thwart the intentions of Congress and allow felons who chance to be incarcerated in private facilities at government expense [to] continue to be entitled to 11 WANLESS v. DVA the full amount of their VA benefits while felons incarcerated in State-owned-and-operated facili- ties would not. Wanless, 23 Vet. App. at 151. We agree with the Veterans Court that these reasons are persuasive and consistent with the language and legislative history of § 5313. Accordingly, the Veterans Court was correct in relying on the General Counsel’s “very persuasive” opinion. Id. Accordingly, we hold that the Veterans Court properly construed § 5313 to mandate the reduction in disability benefits of veterans incarcerated in privately operated, yet state-contracted prisons. CONCLUSION For the foregoing reasons, we affirm the judgment of the Veterans Court. AFFIRMED COSTS No costs.