4.1. Benefit Payments
Under the VA statutory scheme, disability compensation benefits are paid to veterans for disabilities that were incurred or aggravated in the military. See 38 U.S.C. §§ 1110, 1131. Congress has enacted a comprehensive statutory scheme for the payment of veterans benefits. However, there is no statute or regulation that authorizes the Secretary to pay interest on past due benefits under any circumstances, to include the exercise of his equitable powers. Smith v. Gober, 14 Vet. App. 227, 231-32 (2000); aff'd sub nom. Smith v. Principi, 281 F.3d 1384 (Fed. Cir. 2002)
If a claimant in receipt of compensation benefits is incarcerated for conviction of a felony, these payments of compensation are subject to reduction. 38 U.S.C. § 5313(a); 38 C.F.R. § 3.665(a). "Compensation" is defined, in relevant part, as a "monthly payment made by the Secretary to a veteran because of [a] service-connected disability." 38 U.S.C § 101(13). The overall purpose of the disability compensation scheme is to compensate veterans "when they have, in honorable service to their nation, suffered a loss that is reflected in the decreased ability to earn a living for themselves and their families." Hunt v. Derwinski, 1 Vet. App. 292, 296 (1991). Ferenc v. Nicholson, 20 Vet. App. 58, 61-62 (2006). Benefits may still be apportioned under the same terms and conditions as other benefit payments. 38 U.S.C. § 5313(b).