Citation Nr: 1140022 Decision Date: 10/27/11 Archive Date: 11/07/11 DOCKET NO. 09-02 830 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Milwaukee, Wisconsin THE ISSUE Entitlement to a waiver of recovery of an overpayment of Department of Veterans Affairs (VA) pension benefits in the amount of $6,729.40, to include the question of whether the overpayment was properly created. ATTORNEY FOR THE BOARD Joseph R. Keselyak, Counsel INTRODUCTION The Veteran served on active duty from October 1965 to November 1966. This matter comes to the Board of Veterans' Appeals (Board) from a 2008 rating decision of decision of the Committee on Waivers and Compromises (COWAC) at the Milwaukee, Wisconsin RO. This matter was last before the Board in January 2011 at which time it was remanded for further development. As will be discussed in greater detail below, that development was substantially completed. See Dyment v. West, 13 Vet. App. 141, 146-47 (1999). FINDINGS OF FACT 1. Following the receipt of information reflecting the Veteran's unreported receipt of disability benefits from the Social Security Administration (SSA), the RO retroactively reduced the Veteran's non-service-connected pension benefits for the period of October 1, 2004, to October 31, 2007; the RO also calculated that the reduction in benefits resulted in an overpayment of $32,382.00, but later reduced the overall overpayment to $11,772.00, granted a partial waiver in the amount of $5,042.60, and denied a partial waiver of the remaining $6,729.40 finding that non-service-connected pension benefits should be reinstated from October 1, 2004, through November 30, 2006. 2. The Veteran's verified income levels exceed the maximum annual rates of improved pension for the period at issue. 3. The resulting overpayment totals $6,729.40. 4. Overpayment in the amount of $6,729.40 resulted in part from the actions of the Veteran and in part from delay on the part of VA. 5. The recovery of the VA benefits would not nullify the objective for which benefits were intended. 6. The Veteran did not change her position to his detriment, and there was no reliance on these VA benefits that resulted in relinquishment of a valuable right or incurrence of a legal obligation. 7. Financial hardship is not demonstrated. CONCLUSIONS OF LAW 1. The overpayment of pension benefits in the amount of $6,729.40 was properly created. 38 U.S.C.A. §§ 1521, 5112 (West 2002); 38 C.F.R. §§ 3.23, 3.271, 3.272 (2011). 2. The recovery of the overpayment of VA disability compensation benefits in the amount of $6,729.40 is not against equity and good conscience and, therefore, is not waived. 38 U.S.C.A. §§ 5107, 5302(a) (West 2002); 38 C.F.R. §§ 1.963(a), 1.965(a) (2011). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS The Veterans Claims Assistance Act of 2000 (VCAA), codified in part at 38 U.S.C.A. §§ 5103, 5103A, and implemented in part at 38 C.F.R § 3.159, amended VA's duties to notify and to assist a claimant in developing information and evidence necessary to substantiate a claim. However, the VCAA duties to notify and to assist do not apply to the claim for relief under Chapter 53 of Title 38 of the United States Code, pertaining to waiver of recovery of overpayments, which includes the validity of the debt. See Schaper v. Derwinski, 1 Vet. App. 430 (1991) (challenging validity of debt); see Reyes v. Nicholson, 21 Vet. App. 370 (2007) (the notice provisions of 38 U.S.C. § 5103(a) do not apply to chapter 53 proceedings (special provisions for the waiver of recovery of overpayments), citing Barger v. Principi, 16 Vet. App. 132 (2002)). The Board notes that when this matter was last before it, the amount of the overpayment in question was calculated at $32,382.00. Following the Board's remand, the overpayment was reduced to $11,772.00 and a partial waiver was granted, resulting in a currently contested overpayment of $6,729.40, which VA has recouped from the Veteran. Because the maximum waiver was not granted, the issue remains on appeal. See AB v. Brown, 6 Vet. App. 35, 38 (1993). Moreover, the Board notes that when the matter was last considered, the Board remanded the claim for adjudication of the validity of the underlying debt. The Agency of Original Jurisdiction (AOJ) addressed the matter in a March 2011 determination in which the amount of the overpayment was recalculated and adjusted, and a May 2011 determination in which the Veteran was found to be at fault for the creation of the debt and a waiver was denied. The Board notes that the findings contained in these two decisions were subsequently incorporated into a Supplemental Statement of the Case (SSOC). As the validity of the debt is a question intertwined in the present appeal and the AOJ has adjudicated it in such a fashion, providing the appellant an explanation of its findings, the Board finds that the AOJ substantially complied with the Board's remand directives. Dyment, supra. Moreover, as the Veteran solely contends that her SSA disability benefits were included as countable income in error, the question is a matter of law and the Board's current adjudication would not result in any prejudice. See Sabonis v. Brown, 6 Vet. App. 426, 430 (1994). A review of the claims file discloses that the Veteran filed her claim for non-service-connected pension in September 2004. At this time, she indicated that she had a SSA disability benefits claim pending since May 2003, but reported only income of $115.00 month in county welfare and $149.00 in food stamps. She did not outline any other expenses, including medical expenses. In May 2005 the Veteran was awarded non-service-connected pension. She was notified at the time of the award that she must immediately report any changes in income, including SSA benefits. The letter advised her that any failure to promptly tell VA about income changes may result in an overpayment, which would have to be repaid. See May 24, 2005, award letter. In November 2006, the Veteran submitted a letter to VA regarding her upcoming adjusted pension. In this letter, she indicated that she had no "increase in [her] dependents or any change in income other than the anticipated" December 2006 SSA disability increase. In April 2007, the Veteran submitted an Improved Pension Eligibility Verification Report for a single veteran with no children. She listed no income from any source, but for a monthly SSA payment of $1,183.00. Of record is a May 2007 SSA inquiry. This inquiry documents that the Veteran had been in receipt of SSA disability benefits since November 2003, with a disability onset date of May 2003. However, VA has indicated that SSA informed VA that the Veteran first became entitled to SSA benefits in August 2004, having been first paid in September 2004, i.e. about the same time she filed her VA claim for non-service-connected pension benefits. The SSA inquiry shows that beginning December 1, 2005, the Veteran was paid $1,210.00 in monthly SSA disability benefits, and that on August 1, 2006 she began receiving payments of $1,210.50, which were increased to $1,250.50, effective December 1, 2006. In August 2007 the AOJ notified the Veteran that it had received information from SSA that showed she had been receiving SSA disability benefits since October 1, 2004. Accordingly, the AOJ proposed to terminate her non-service-connected pension benefits and attempt to recover the overpaid amount. In a September 2007 letter the Veteran responded to the AOJ's proposal. With respect to the overpayment, she asserted that her SSA disability benefits were not countable income for VA purposes. She reiterates this assertion elsewhere in the record. In a statement received after termination of the Veteran's non-service-connected pension benefits, the Veteran detailed that she had been awarded SSA disability benefits effective September 2006, although she had filed a claim in May 2003. Although her statement is somewhat difficult to understand, she seems to have indicated that during the processing of her SSA award that SSA had contacted VA as to the amount of her VA benefits. She seems to suggest that this qualifies as her notifying VA of her income, although it is not entirely clear because she seems to also disagree with the denial of SSA Supplemental Security Income (SSA) based upon her VA benefits. In January 2011 the Board remanded this matter. In a March 2011 determination, the AOJ reinstated non-service-connected pension benefits effective October 1, 2004, though September 30, 2006, based upon the fact that the SSA had indicated that the Veteran did not receive her first payment of $23,021.00 until September 27, 2006, and a second payment of $10,890.00 until September 28, 2006. The AOJ did not count a one-time windfall SSI payment of $5,268.00. The Veteran's pension was discontinued effective October 1, 2006, as her income greatly exceeded the MAPR of $10,579.00 for a single veteran. Ultimately, the Veteran's total overpayment was reduced to $11,772.00, based upon this adjustment and, in May 2011, a partial waiver was granted, with a resulting balance of $6.729.40 not waived as this amount had been recouped by VA. In May 2011 the Veteran submitted a Financial Status Report for a single veteran with no dependents. At this time, she indicated that she was receiving $1,200.00 per month in SSA disability benefits, with $1,179.00 in average monthly expenses. In July 2011 the AOJ adjusted the amount of the overpayment to $11,772.00, apparently based upon the date that the Veteran actually began receiving SSA disability benefits and granted the aforementioned partial waiver in the amount of $5,042.60 noting that the remaining $6,729.40 had been recovered by VA. Based upon the May 2011 financial statement, the AOJ found that collection of the outstanding amount could impair the ability to provide for basic necessities and cause financial hardship. As the remaining amount had been collected, no such hardship was apparently found. Improved (non-service-connected) pension is a benefit payable by VA to a veteran of a period of war who is permanently and totally disabled from non-service-connected disability not the result of the veteran's willful misconduct. 38 U.S.C.A. § 1521(a) (West 2002). Basic entitlement to non-service-connected pension exists if a veteran: (1) meets the service requirements; (2) meets the net worth and income requirements; and (3) is age 65 or older; or is permanently and totally disabled from non-service-connected disability not due to his/her own willful misconduct. 38 C.F.R. § 3.3(a)(3) (2011). To be eligible for pension, the veteran's income cannot exceed the applicable maximum annual pension rate (MAPR) specified in 38 C.F.R. § 3.23. 38 C.F.R. § 3.3(a)(3)(v) (2011). The MAPR, which was previously published in Part I, Appendix B, of VA Manual M21-1, is to be given the same force and effect as if published in VA regulations. 38 C.F.R. §§ 3.21, 3.23 (2011). According to the MAPR, the maximum income allowed for a single veteran with no dependents was $9,894 for the period beginning December 1, 2003, $10,162.00 for the period beginning December 1, 2004, $10,579.00 for the period beginning December 1, 2005, and $10,929.00, effective December 1, 2006. VA Manual M21-1, Part I, Appendix B. In determining countable annual income for improved pension purposes, all payments of any kind or from any source (including salary, retirement or annuity payments, or similar income, which has been waived) shall be included, except for listed exclusions. See 38 U.S.C.A. § 1503(a) (West 2002); see also 38 C.F.R. §§ 3.260, 3.261, 3.262, 3.271(a) (2011). Such income includes compensation paid by the United States Department of Labor, Office of Workers' Compensation Programs, Social Security Administration, or the Railroad Retirement Board, or pursuant to any worker's compensation or employer's liability statute, or damages collected because of personal injury or death. However, medical, legal, or other expenses incident to the collection or recovery of the amount of the award or settlement may be deducted. 38 C.F.R. § 3.271(g). Under applicable criteria, VA shall consider all lay and medical evidence of record in a case with respect to benefits under laws administered by VA. When there is an approximate balance of positive and negative evidence regarding any issue material to the determination of a matter, VA shall give the benefit of the doubt to the claimant. 38 U.S.C.A. § 5107(b); see also Gilbert v. Derwinski, 1 Vet. App. 49, 55 (1990). Initially, the Board will address the question of the validity of the debt. The inquiry in the present case centers on whether VA properly counted the Veteran's SSA disability benefits in determining countable income. As noted, in a March 2011 rating action, the AOJ reinstated non-service-connected pension benefits effective October 1, 2004, though September 30, 2006, based upon the fact that the SSA had indicated that the Veteran did not receive her first payment of $23,021.00 until September 27, 2006, and a second payment of $10,890.00 until September 28, 2006. The AOJ did not count a one-time windfall SSI payment of $5,268.00. The Veteran's pension was discontinued effective October 1, 2006, as her income greatly exceeded the MAPR of $10,579.00 for a single veteran. Ultimately, the Veteran's total overpayment was reduced to $11,772.00, based upon this adjustment and a partial waiver was granted. In this regard, the Veteran has not disputed the specific figures used by the AOJ in making these calculations. Rather, her primary contention appears to be that SSA benefits should not be counted as income for VA purposes. The Board finds, however, that SSA disability benefits, as a matter of law, are countable income for VA pension purposes. 38 C.F.R. § 3.271(g). Accordingly, the debt was validly created based upon the Veteran's receipt of SSA disability benefits. Although the debt may have been validly created, the Board must address whether a waiver of the remaining amount of $6,729.40 is warranted. As noted above, VA has recouped this money by withholding from the Veteran's VA benefits. The Veteran has requested a waiver on a hardship basis. She also seems to indicate some sort of detrimental reliance, having asserted "estoppel" in several vague assertions. The provisions of 38 U.S.C.A. § 5302(c) prohibit the waiver of a debt where there exists in connection with the claim for such waiver an indication of fraud, misrepresentation, or bad faith on the part of the person or persons having an interest in obtaining the waiver. Similarly, 38 C.F.R. § 1.965(b) precludes waiver upon a finding of (1) fraud or misrepresentation of a material fact, or (2) bad faith. If the debtor's conduct is deemed not to have constituted fraud, misrepresentation of a material fact, or bad faith, the request for waiver will be evaluated pursuant to the principles of "equity and good conscience." 38 U.S.C.A. § 5302(a) (West 2002). VA regulation 38 C.F.R. § 1.965(a) provides that "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 decision reached should not be unduly favorable or adverse to either side. The phrase equity and good conscience means arriving at a fair decision between the obligor and the government. In making this determination, consideration will be given to the following elements, which are not intended to be all inclusive: (1) fault of debtor - where actions of the debtor contribute to creation of the debt; (2) balancing of faults - weighing fault of the debtor against VA's fault; (3) undue hardship - whether collection would deprive the debtor or family of basic necessities; (4) defeat the purpose - whether withholding of benefits or recovery would nullify the objective for which the benefits were intended; (5) unjust enrichment - failure to make restitution would result in unfair gain to the debtor; and (6) changing position to one's detriment - reliance on VA benefits results in relinquishment of a valuable right or incurrence of a legal obligation. 38 C.F.R. § 1.965(a) (2011). Initially, the Board must consider whether there was any evidence of fraud, misrepresentation, or bad faith on the Veteran's part. See 38 U.S.C.A. § 5302(c) (West 2002). The AOJ did not apparently find these factors to be present in this case, and the Board similarly finds that waiver should not be precluded solely on the basis of such factors. Although the evidence indicates that there was some confusion as to when the Veteran actually began receiving SSA disability benefits related to her responsibility to report any such income, there is no indication in the record that the Veteran intended to commit fraud or intentionally misrepresented facts, particularly as SSA has indicated that she did not actually receive such benefits until around September 2006. Further, there is no indication the Veteran was being deceptive or purposely seeking an unfair advantage knowing that it would result in a loss to the government. See 38 C.F.R. § 1.965(b) (2011). The first and second elements pertain to the fault of the debtor versus the fault of the VA. In this regard, the Board notes that the AOJ adjusted the overpayment based upon the Veteran's receipt of SSA disability benefits beginning October 2006, the date she received lump sum SSA awards. She did not immediately notify VA of this income upon receipt, although she did note in passing that she was in receipt of SSA benefits in November 2006. Despite this notification, VA did not receive confirmation of her SSA disability benefits until May 2007. The Board acknowledges the implicit assertion that that the overpayment was not processed in a timely fashion. Given the reference to receiving SSA benefits in her November 2006 letter, and the fact that confirmation was not obtained from SSA as to her status until May 2007, the Board agrees, and concludes that delayed action on the part of VA is partially to blame for the creation of the overpayment. Thus, the Board essentially concludes that fault rests with both the Veteran and VA in creation of the debt. In regard to whether collection would defeat the purpose of the benefit and whether failure to collect would cause unjust enrichment to the debtor, the Board finds that collection would not defeat the purpose of the benefit. The Veteran was in receipt of benefits to which she was not entitled under the law, due to her excessive income. There is no indication that the Veteran's reliance on VA benefits resulted in relinquishment of another valuable right, despite any vague assertions of "estoppel." Thus, this element of equity and good conscience is not in the Veteran's favor. As to whether recoupment of those benefits would defeat the purpose of the benefit, it is again noted that the Veteran was not entitled to receive these benefits due to her excessive income. There is no indication that recoupment would affect the Veteran's ability to support herself. Thus, this element of equity and good conscience is not in the Veteran's favor. The Board has also considered whether the appellant would experience undue financial hardship if and when forced to repay the debt at issue. The May 2011 Financial Status Report indicates that the monthly income of the Veteran is approximately $1,200.00 and that her monthly expenses are approximately $1,179.00. The Board additionally notes that the current outstanding debt is $6,729.40, and has been recouped; thus, it is possible that should a waiver be granted, in whole or part, that this money could be refunded to the Veteran. 38 C.F.R. § 1.911(c)(2). Nevertheless, it is clear to the Board that financial hardship would not result as the Veteran has obviously been comfortably meeting her needs and expenses, and she has identified no unusual needs or expenses so as to suggest that repayment of the debt would result in financial hardship. In summary, the Board has considered the elements of equity and good conscience. Despite finding some fault on the part of VA in the creation of the debt, the Board finds that the remaining factors weigh against waiving recovery of the overpayment in this case. In essence, the facts in this case do not demonstrate that the recovery of the overpayment is against equity and good conscience. Gilbert, supra. Accordingly, waiver of the debt is denied. ORDER Entitlement to a waiver of recovery of an overpayment of VA pension benefits in the amount of $6,729.40, to include the question of whether the overpayment was properly created, is denied. ____________________________________________ MICHAEL LANE Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs