Citation Nr: 0811817 Decision Date: 04/10/08 Archive Date: 04/23/08 DOCKET NO. 05-00 093 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in St. Petersburg, Florida THE ISSUE Entitlement to waiver of recovery of an overpayment of compensation benefits in the calculated amount of $1,181. REPRESENTATION Appellant represented by: The American Legion ATTORNEY FOR THE BOARD K.S. Hughes, Counsel INTRODUCTION The veteran had active military service from August 1977 to July 1980 and from November 1983 to September 1995. This appeal to the Board of Veterans' Appeals (Board) is from a March 2004 decision by the Committee on Waivers and Compromises at the Department of Veterans Affairs (VA) Regional Office (RO) in St. Petersburg, Florida. The veteran was scheduled to appear at a hearing before the Committee in May 2005, but he failed to appear for the proceeding. He was also scheduled to appear at a hearing before a traveling Member of the Board in January 2006. However, he subsequently notified VA that he would be unable to attend the scheduled hearing. He effectively then has withdrawn his hearing request. See 38 C.F.R. § 20.704(e). Thus, the Board will proceed with adjudication of his claim. FINDINGS OF FACT 1. The veteran was at fault in the creation of the overpayment in question as he did not timely notify VA that his son, for whom he was receiving additional benefits based on school attendance, had not been enrolled in an educational program during the fall semester of 2002 and had withdrawn from the spring semester due to his being called for active duty in the National Guard; VA was not at fault in the creation of this resulting overpayment. 2. There is no indication the veteran relinquished a valuable right or incurred a legal obligation in reliance upon the benefits received or that recovery of the assessed overpayment would result in undue financial hardship. 3. The failure of the Government to insist upon its right to repayment of the overpayment would result in unjust enrichment of the veteran, inasmuch as he accepted benefits to which he was not entitled. CONCLUSION OF LAW Waiver of recovery of the overpayment of VA disability compensation benefits in the amount of $1,181 is not warranted. 38 U.S.C.A. § 5302(a) (West 2002); 38 C.F.R. §§ 1.962-1.965, 3.665 (2007). REASONS AND BASES FOR FINDINGS AND CONCLUSION The Veterans Claims Assistance Act (VCAA) and implementing regulations do not apply in waiver cases because the statutory right to request waiver of recovery of indebtedness within Chapter 53 of Title 38 of the United States Code contains its own notice provisions. Barger v. Principi, 16 Vet. App. 132 (2002); see also 38 U.S.C.A. § 5302 (West 2002). The veteran has received the notice required under Chapter 53. The veteran contends that he is entitled to a waiver of an overpayment of service connected compensation in the amount of $1,181. He acknowledges that there was an overpayment, but argues that, although his son was no longer enrolled in an educational program due to his being called into active duty, his son continued to be his dependant because he was living at home while serving on active duty. As a preliminary matter, the Board notes that the veteran has not disputed that a debt was created and he has not disputed the amount of the debt. Instead, he contends that the debt should not have to be repaid. Therefore, the matter of the validity of the debt is not before the Board. The pertinent facts in this matter are not in dispute. The veteran is entitled to receive service connected compensation payments. In April 2002, he submitted a VA Form 21-674C, Request for Approval of School Attendance, for his son. The expected start date was August 2002 and the expected graduation date was May 2006. This form notified the veteran that if extra compensation was awarded for school attendance, it would be his responsibility to contact VA if there was a change in status such as discontinuance of school attendance. He was notified in an April 2002 letter that his benefits were being increased based on his son's school attendance, effective April 1, 2002, and were to continue until June 1, 2006. He was also notified that he must tell VA immediately if there is any change in the number or status of his dependants and that failure to tell VA immediately of a dependency change will result in an overpayment which must be repaid. A VA Form 21-8960, Certification of School Attendance or Termination, was received from the veteran in May 2003. This form indicated that the veteran's son was no longer in school and he had not been in school since September 2003. The veteran explained that his son attended Pensacola Junior College for one week then was activated by the National Guard. The veteran further explained that his son hoped to go back to school in the fall of 2004 and, in the meantime, he still lived at home and worked at Hurlburt Air Force Base. A July 2003 VA Form 119, Report of Contact, reflects that the RO contacted the admissions office at Pensacola Junior College and was informed that there was no record of the veteran's son having attended during the fall semester of 2002, which begins in August. The admissions office further indicated that the veteran's son had enrolled on January 2, 2003 but that he had withdrawn on January 13, 2003. Based on this information, the veteran was notified in a July 2003 letter that it was proposed that his payments be reduced effective from August 1, 2002. In November 2003, the veteran was notified that the amount of the overpayment was $1,181. The veteran submitted a request for a wavier in November 2003 which was denied by the Committee on Waivers and Compromises in March 2004. It is noted that much of the veteran's contentions are based on his belief that VA should continue to pay additional benefits for the veteran's son during the time he was activated because he was living at home and was a dependent. In this regard, pertinent regulations provide that a veteran with a service connected disability rated at not less than 30 percent shall be entitled to additional compensation for dependents. 38 U.S.C.A. § 1115(2) (West 2002); 38 C.F.R. § 3.4(b)(2) (2006). The definition of the term "child," as defined for VA purposes, means an unmarried person who is a legitimate child, a child legally adopted before the age of 18 years, a stepchild who acquired that status before the age of 18 years and who is a member of the veteran's household at the time of the veteran's death, or an illegitimate child. In addition, the child must also be someone who: (1) is under the age of 18 years; or (2) before reaching the age of 18 years became permanently incapable of self support; or (3) after reaching the age of 18 years and until completion of education or training (but not after reaching the age of 23 years) is pursuing a course of instruction at an approved educational institution. 38 U.S.C.A. § 101(4); 38 C.F.R. § 3.57(a). The appellant's son was born in June 1984 and although he was over 18 in August 2002, when the veteran was being paid additional benefits, such benefits had been awarded on the basis of the veteran's son being in school. Because the veteran's son was over 18 and was shown to not have been enrolled in an educational program as of August 2000, the veteran was not entitled to the additional benefits which he was being paid for this dependant son; thereby, resulting in a retroactive reduction of benefits and the overpayment at issue in the present appeal. Pursuant to 38 U.S.C.A. § 5302(a), a claimant is allowed to seek a waiver of recovery of an overpayment of VA benefits. The Secretary of Veterans Affairs is authorized to grant a waiver of recovery of indebtedness when collection of the debt would be against "equity and good conscience." See generally 38 U.S.C.A. § 5302(a) (West 2002); 38 C.F.R. §§ 1.962-1.965 (2007). Initially, the Board notes that a waiver of overpayment is precluded when there is found to be fraud or misrepresentation of a material fact by the claimant, or bad faith on the part of the claimant. 38 C.F.R. §§ 1.962(b); 1.965(b). The Committee on Waivers and Compromises found that there is no evidence of fraud, misrepresentation, or bad faith on the part of the veteran for the creation of the overpayment. The Board agrees. It must also be determined whether or not it would be against the standards of equity and good conscience for VA to collect the overpayment from the veteran. Pursuant to 38 C.F.R. § 1.965, 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. 38 C.F.R. § 1.965(a). The decision reached should not be unduly favorable or adverse to either side. Id. The phrase "equity and good conscience" means arriving at a fair decision between the obligor and the government. In making this determination of whether recovery would be against equity and good conscience, 38 C.F.R. § 1.965(a) requires consideration of each of the following factors, which are not intended to be all inclusive: (1) fault of the debtor; (2) balancing of faults between debtor and VA; (3) undue hardship; (4) whether collection would defeat the purpose of the benefit; (5) unjust enrichment; and (6) whether the debtor changed position to his own detriment through reliance on the benefit. 38 C.F.R. § 1.965(a); see Ridings v. Brown, 6 Vet. App. 544, 546 (1994). The first element to consider is the fault of the debtor and whether actions of the debtor contribute to creation of the debt. 38 C.F.R. § 1.965(a)(1). The question of fault is a different question than that of fraud or bad faith. The United States Court of Appeals for Veterans Claims (Court) has held that persons dealing with the Government are charged with knowledge of Federal statutes and lawfully promulgated agency regulations. Morris v. Derwinski, 1 Vet. App. 261 (1991) citing Fed. Crop Ins. Corp. v. Merrill, 332 U.S. 380 (1947). The Court found that, even though the veteran may have been ignorant of certain provisions, he was necessarily charged with knowledge of the regulation. Id. In this case, the veteran's Request for Approval of School Attendance shows an expected start date of August 2002 and he certified that he agreed to notify VA immediately of any changes in this course of education, such as discontinuance of school attendance. In addition, the April 2002 notice that the veteran had been awarded additional benefits for his son based on school attendance also notified him that he must tell VA immediately if there is any change in the number or status of his dependants and that failure to tell VA immediately of a dependency change will result in an overpayment which must be repaid. However, notice from the veteran that his son was not enrolled in school was not received until May 2003. The veteran's failure to immediately notify VA that his son was no longer in school resulted in the retroactive reduction in benefits and creation of the overpayment at issue in this appeal. Thus, the veteran was at fault in the creation of the debt. The second element to consider is the balancing of faults, which requires a weighing of the fault of the debtor against the fault of VA. 38 C.F.R. § 1.965(a)(2). The Board notes that VA took action to adjust the veteran's compensation immediately upon receiving written notification that his son was not in school. Thus, VA is without fault in the creation of the debt. The debt resulted from the failure of the appellant to notify VA of the status of his son's enrollment in an educational program and he had previously been informed of his obligation to do so; the debt in no way resulted from fault on the part of VA. The third element to consider involves undue hardship, described as "[w]hether collection would deprive debtor or family of basic necessities." 38 C.F.R. § 1.965(a)(3). The veteran has not submitted a Financial Status Report and he does not allege that the repayment of the overpayment would result in undue hardship. The Board concludes that repayment of the debt would not result in undue hardship or a loss of basic necessities. The fourth element concerns whether recovery of the overpayment would defeat the purpose for which the benefit was intended. See 38 C.F.R. § 1.965(a)(4). In this regard, the Board notes that the purpose of disability compensation benefits is to assist persons who have an impaired earning capacity due to a service-connected disability. As noted above, the veteran's does not contend that repayment of this debt would result in undue hardship. Thus, repayment of the debt would not nullify the purpose for which the disability compensation benefits were intended, since the veteran will not be deprived of basic necessities such as food and shelter. See 38 C.F.R. § 1.965(a)(4). The fifth and sixth elements concern whether the veteran's failure to repay this debt would result in unjust enrichment, 38 C.F.R. § 1.965(a)(5), and whether the veteran relinquished any right or incurred any legal obligation as a result of his reliance on the unwarranted VA benefit, 38 C.F.R. § 1.965(a)(6). The Board notes that the failure of the Government to insist upon its right to repayment of this debt would result in the veteran's unjust enrichment at the expense of the Government. Finally, the veteran did not, according to the available record, incur additional debt in expectation of receiving his benefit payments or otherwise change his position to his detriment as a result of the award of $1,181. In sum, the elements of the equity and good conscience standard favor recovery of the overpayment by VA. There was fault on the part of the veteran in the creation of the debt with no fault on the part of VA in this regard. There is no evidence that undue hardship would occur if the debt is collected at this time and no change in position to the veteran's detriment. Further, there would be unjust enrichment. While the elements as discussed are not all inclusive, a review of the record does not reflect any other basis upon which the claim may be granted. Having considered all of the equities in this case, the Board concludes that waiver of recovery of the overpayment of compensation benefits in the amount of $1,181 is not warranted. For these reasons and bases, the claim for waiver of recovery of compensation benefits in the amount of $1,181 must be denied. In reaching this conclusion, the Board has considered the applicability of the benefit-of-the-doubt doctrine. However, as the preponderance of the evidence is against the veteran's claim, this doctrine is inapplicable. See 38 U.S.C.A. § 5107(b) (West 2002); 38 C.F.R. § 3.102 (2007); Gilbert v. Derwinski, 1 Vet. App. 49, 53-56 (1990). ORDER The claim for waiver of recovery of the overpayment of VA compensation benefits in the amount of $1,181 is denied. ____________________________________________ KEITH W. ALLEN Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs