Citation Nr: 0121010 Decision Date: 08/17/01 Archive Date: 08/27/01 DOCKET NO. 00-13 941 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Muskogee, Oklahoma THE ISSUE Entitlement to waiver of recovery of an overpayment of educational assistance paid pursuant to Chapter 30, Title 38, United States Code in the amount of $8,340.30. WITNESS AT HEARING ON APPEAL Appellant ATTORNEY FOR THE BOARD Nancy Rippel, Counsel INTRODUCTION The veteran had active military service from November 1974 to October 1997. This matter arises from a February 2000 decision by the Committee on Waivers and Compromises (Committee) of the Department of Veterans Affairs (VA) Regional Office (RO) in Muskogee, Oklahoma, wherein it was held that the appellant was at fault in creating an overpayment of education benefits and that the collection of the overpayment of 38 U.S.C.A. Chapter 30 educational assistance in the amount of $8,340.30 would not violate the principles of equity and good conscience. Following compliance with the procedural requirements set forth in 38 U.S.C.A. § 7105 (West 1991), the case was forwarded to the Board of Veterans' Appeals (Board) for appellate consideration. FINDINGS OF FACT 1. In March 1999, the appellant was awarded Chapter 30 educational assistance benefits for full-time undergraduate training for the period from February 1, 1999 to May 1, 1999 for courses at Golden Gate University (GGU) at American Samoa Community College (ASCC) in Pago Pago, American Samoa, towards the completion of a bachelor's degree and subsequently a master's degree. Enrollment certifications are also of record for training taken at ASCC from May 18, 1998 to December 1998; the certifying official for this earlier training appears to have been the GGU coordinator. The appellant was also enrolled in a bachelor's degree program at Hawaii Pacific University (HPU) at the time. 2. In July 1999, the appellant was awarded benefits for the above training for classes taken from May 1, 1999 to July 24, 1999; in September 1999, she was awarded Chapter 30 benefits for courses attended from July 24, 1999 to December 1999. 3. In September 1999, RO was notified by the state approving agency (SAA) that ASCC was only approved for associate degree programs and not for bachelor's and master's degree programs; the SSA also informed the RO that there was not an approved GGU branch at ASCC for VA educational benefit purposes. 4. In September 1999, the RO retroactively terminated the appellant's educational benefits effective from May 18, 1998, thereby resulting in an overpayment of Chapter 30 educational benefits in the amount of $8348.300 for training completed between May 18, 1998, to July 24, 1999. 5. The appellant was free from fraud, misrepresentation and bad faith in the creation of the overpayment. 6. The appellant was not at fault in the creation of the overpayment. 7. The appellant received VA educational assistance benefits to which she was not at the time entitled and failure to make restitution would result in unfair gain to the appellant. 8. The appellant did not relinquish a valuable right or change her position in reliance on the erroneous benefits. 9. Collection of the debt would not deprive the appellant and her family of basic necessities by causing undue hardship. 10. Waiver of recovery of the overpayment, in the amount of $8348.30 would not defeat the purpose for which the educational assistance program was created. CONCLUSION OF LAW Waiver of recovery of an overpayment of VA educational assistance benefits, paid pursuant to Chapter 30, Title 38, United States Code, in the amount of $8348.30 would not be against the principles of equity and good conscience. 38 U.S.C.A. §§ 5107, 5302(a) (West 1991 & Supp. 2001); 38 C.F.R. §§ 1.963(a), 1.965(a) (2000). REASONS AND BASES FOR FINDINGS AND CONCLUSION The issue before the Board is whether the appellant is entitled to a waiver of recovery of an overpayment of Chapter 30 educational assistance benefits calculated in the amount of $8348.30. During the pendency of the appellant's appeal, new legislation was passed that enhances the VA's duties to notify a claimant of the evidence necessary to substantiate a claim and to assist a claimant in the development of a claim. See Veterans Claims Assistance Act of 2000 (VCAA), Pub. L. No. 106-475, § 3(a), 114 Stat. 2096 (2000) (codified at 38 U.S.C.A. § 5103A (West Supp. 2001)). The change in the law is applicable to all claims filed on or after the date of enactment of the VCAA, or filed before the date of enactment of the VCAA and which are not final as of that date. VCAA, Pub. L. No. 106-475, § 7, subpart (a), 114 Stat. 2096, 2099 (2000). Where the law or regulations change after a claim has been filed or reopened but before the administrative or judicial appeal process is completed, the version of the law or regulations most favorable to the appellant applies unless Congress provides otherwise. Karnas v. Derwinski, 1 Vet. App. 308, 313 (1990). In this case, the RO has not developed or considered the appellant's claim pursuant to the VCAA. However, prior to the enactment of the VCAA, the RO took action that is consistent with the notification and assistance provisions of the VCAA. In any event, due to the disposition of this claim, the Board's decision to proceed in adjudicating the appellant's claim does not prejudice the appellant. See Bernard v. Brown, 4 Vet. App. 384, 392-94 (1993). The appellant served on active duty November 1974 to October 1997. The appellant's eligibility for Chapter 30 educational assistance benefits was established in March 1999. Based on an application for such benefits and enrollment certifications received in February 1999, June 1999, and August 1999, the RO awarded the appellant Chapter 30 benefits totaling $8,348.30 for enrollment extending from May 18, 1998, through December 20, 1999. The veteran's VA Form 22- 1999, enrollment certification forms, indicated that she was taking standard undergraduate programs at ASCC towards the completion of a "BBA/MBA" program. These forms were processed by VA and the veteran was paid. Enrollment certifications are also of record for training taken at ASCC from May 18, 1998 to December 1998; the certifying official appears to have been the GGU coordinator in that case. However, in September 1999, the RO received information from the state accrediting agency that ASCC did not offer bachelor's or master's degree programs. The veteran's educational benefits were thus terminated in October 1999 and she was informed that the benefits awarded to her for her training for the time period from May 1998 to July 1999 resulted in an overpayment of $8,348.30, which she was now required to repay. In February 2000, the Committee on Waivers and Compromises found the veteran at fault in the creation of the debt and that there was no evidence of hardship; thus collection of the debt was not against the principles of equity and good conscience. The veteran has, during the course of the adjudication of this matter, explained that she was taking courses at ASCC, but that the courses were actually being accepted and credited at GGU. These institutions had entered into an agreement whereby GGU would offer a bachelor's program at ASCC in American Samoa. The veteran, who is in fact the registrar at ASCC, provided extensive documentation of this agreement. She has also explained that she was concurrently taking courses towards another bachelor's degree at HPU. She explained further that she had devised this educational schedule so as to obtain her educational goal, a master's degree, before her Chapter 30 entitlement expired. The veteran has maintained that she took precautionary steps prior to enrolling in the courses for which she is now asked to repay the overpayment, as she wanted to be sure she could use her Chapter 30 entitlement to finance them. Of record is an electronic communication dated in April 1998 between the certifying official at ASCC and the RO indicating that there were two possible ways to get certification for ASCC students taking courses at the ASCC branch location of GGU. The RO informed that official that the California State Approving Agency (SAA) could approve GGU courses taught at ASCC, then the GGU veterans' representative would certify students taking their courses at the branch location. The alternative was to have HPU (which was approved for VA benefits), as a parent institution, accept the courses taken at ASCC toward her degree at HPU; in that case, the certifying official would need to attach a copy of the parent school letter, indicating which courses were accepted, to the enrollment certification prepared by the ASCC certifying official. The appellant has acknowledged that she was provided with a copy of the April 1998 information from the RO at that time and that she elected to pursue the second option by attending GGU classes at the ASCC branch location and then have the courses accepted and credited toward her degree at HPU. In support of her position, she submitted a December 1997 letter from HPU in which it was indicated that her degree plan had been updated to the Bachelor of Science in Business Administration degree; she was asked to advise them if she had access to a four-year institution as the degree required a minimum of 54 semester hours of upper division credits. She also submitted a June 1998 letter from HPU to the appellant that included a list of her remaining HPU course requirements and the GGU substitutes. In a February 2000 letter, the appellant argues that HPU agreed to accept her GGU courses taken at the ASCC branch location, and that she then took GGU classes through ASCC for 16 months from May 1998 to September 1999 before she was suddenly told that the arrangement was not approved for VA benefits. She has stated that her understanding was that if HPU would accept the GGU credits taken through the ASCC branch site, then such courses would be approved for VA benefits. The Committee apparently found that because the information regarding the proper method for approval of her course of training had been communicated to her before she attended the classes in question, and because of her position as a registrar at ASCC, the appellant knew or should have known that the type of training she was pursuing was not approved for VA benefits. The Committee therefore, found the appellant to have a high degree of fault in the creation of the overpayment in this case. Parenthetically, the Board does note that in 2000, some adjustments in payment were made for training pursued from February 1999 to December 1999 at ASCC pursuant to a supplement enrollment with HPU as the parent institution. At a hearing held in April 2001, the appellant testified before the undersigned Board Member that a waiver of recovery of her VA debt is warranted on the basis that she was not at fault in the creation thereof. She explained that, at all times, the VA knew of her status as the registrar and that she was taking the courses at ASCC through GGU. She also explained that she was doing everything in her power prior to enrollment to comply with the rules in order to assure that she would be paid and thought that she had, in fact, followed the proper method for payment pursuant to the information provided her by ASCC certifying official and the RO. She argued that as there was an articulation agreement between GGU and ASCC during the training period in question, that agreement governed the acceptance and approval of courses. Finally, she asserted that in her duties as registrar, she had nothing to do with the approval of VA educational assistance benefits. For the reasons that follow, the Board agrees that the veteran was not at fault, that recovery of the overpayment would be against the principles of equity and good conscience, and that waiver of recovery of the debt, in full, is warranted. The law provides that a finding of fraud, misrepresentation or bad faith precludes a grant of a waiver of recovery of an overpayment. 38 U.S.C.A. § 5302(c) (West 1991); 38 C.F.R. § 1.963(a) (2000). In this case, the Committee found no fraud, misrepresentation or bad faith on the part of the veteran in the creation of the overpayment, and after reviewing the facts and circumstances of this case, the Board agrees with the Committee's conclusion. Waiver of the recovery of the overpayment is thus not precluded under the provisions set forth in 38 U.S.C.A. § 5302(c). To complete the analysis required to fully adjudicate the matter on appeal, the Board must determine whether recovery of the overpayment would be against the principles of equity and good conscience, thereby permitting waiver under 38 U.S.C.A. § 5302(a) (West 1991) and 38 C.F.R. §§ 1.963(a), 1.965(a) (2000). The standard of "equity and good conscience" will be applied when the facts and circumstances in a particular case indicate a need for reasonableness and moderation in the exercise of the Government's rights. The elements to be considered when applying the standard include: the fault of the debtor, the fault of the VA, whether recovery would nullify the objective for which benefits were intended, whether failure to make restitution would result in unfair gain to the debtor, whether the debtor relinquished a valuable right or changed his position by reason of having relied on the erroneous benefits, and whether collection would deprive the debtor and her family of basic necessities by causing undue hardship. 38 C.F.R. § 1.965(a). It is clear in this case that the Committee found a high degree of fault on the appellant's part in that she was the registrar at ASCC and by virtue of the fact that the RO had provided information to her through the ASCC certifying official prior to her enrollment of the proper method for approval of the course of training that she wished to pursue. However, the Board does not concur in the assessment of such a degree of fault in the creation of the overpayment in this case on the part of the appellant. Rather, it appears to the Board that the creation of the debt in this case appears to be more a matter of confusion on the part of both the ASCC certifying official and the appellant as to what should have been the proper course of action for course approval in this case. In reviewing the record on appeal including the testimony provided by the appellant at a personal hearing, it is clear that the appellant believes that her benefits were terminated because ASCC was not an approved branch location of GGU. She has repeatedly argued and has submitted evidence of an articulation agreement between the two institutions. However, what the RO has attempted to communicate to the appellant is that regardless of the agreement between the two schools, a particular degree program and facility has to be approved for VA benefits by the appropriate SAA, the California SAA in this case. In other words, simply because students may take classes at ASCC that GGU has agreed to accept as part of a GGU degree program does not mean that GGU classes taken through ASCC are approved for VA benefits. Apparently, the GGU branch site location at ASCC was not approved by the California SAA for VA benefits. Therefore, the RO was correct in terminating the appellant's benefits. Payment for courses taken at ASCC that were accepted by HPU, as an approved parent school, could, however, apparently be awarded as they were approved for VA benefits. It appears that adjustments were later made in this regard with HPU being identified as the parent school. The Board notes further, that the certifying officials at ASCC and at GGU both signed respective VA Form 22-1999s for the training in question. The Board observes that the certification is, in part, a certification on the part of that designated official that the course or courses certified are approved by the SAA and are generally acceptable to meet the requirements for the student's educational, professional, or vocational goal, and that the institution has exercised reasonable diligence in meeting all applicable requirements of Title 38, United States Code. It is not clear from the record what impact these certification had on the appellant's assumption that the training in question was approved for VA benefits, but it is reasonable to assume that the enrollment certifications made by the appropriate certifying officials at ASCC and GGU had some impact and bearing on the appellant's actions as well as on the VA determination that the appellant was entitled to the claimed educational benefits. The Board finds that it cannot ascribe a large degree of fault to the appellant in this case as it appears that she took all reasonable and foreseeable action required of her based on her understanding of the proper method to obtain an award of VA educational benefits. To impute additional responsibility or requirements to her appears to be misplaced since she has, from the record and as was apparent in her testimony, attempted to deal with the VA in a candid and forthright fashion. The appellant has evidenced her misunderstanding of the requirements regarding approval of a degree program and/or facility for VA training and has provided documentation supportive of her assumption that she had followed the instructions provided to her by the RO. The Board does note that the RO did impart the appropriate information to the appellant through ASCC's certifying official prior to her enrollment regarding the proper method to follow for approval of the training in question. However, the Board finds the misunderstanding on the part of the appellant to be plausible given her explanation. The Board does not, thus, find fault on the part of the appellant in the creation of the debt in question. With regard to the remaining elements for consideration, the evidence discloses that the appellant clearly received educational benefits to which she was not entitled simply by virtue of the fact that they were not, it appears, approved through the appropriate channels. Further, recovery of the overpayment would not defeat the purpose or objective of the program and it is clear that a waiver of recovery of the overpayment would result in the appellant's unjust enrichment. In addition, there is no evidence of record on appeal to indicate that the appellant relinquished a valuable right or incurred a legal obligation as a result of her reliance on the additional benefits. The only action taken by the appellant with regard to the mistakenly issued payments was utilizing them for education-related purposes. As to the element of undue financial hardship, the appellant does not allege that her living expenses exceed her monthly income. There is no evidence or argument that her monthly income is insufficient to meet her family's basic necessities of life and requiring her to repay the indebtedness at issue would not cause her undue financial hardship. Nonetheless, having considered the aforementioned elements collectively and having accorded greater weight to the element of fault (especially with regard to the appellant's lack thereof), the Board finds that recovery of the overpayment of $8,348.30 would be against the principles of equity and good conscience. The evidence thus supports a waiver of recovery of that overpayment, and the appellant's claim should be granted. ORDER A waiver of recovery of an overpayment of educational assistance benefits under Chapter 30, Title 38, United States Code, calculated in the amount of $8,348.30, is granted. S. L. KENNEDY Member, Board of Veterans' Appeals