Citation Nr: 1004187 Decision Date: 01/28/10 Archive Date: 02/16/10 DOCKET NO. 07-20 500 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Phoenix, Arizona THE ISSUES 1. Entitlement to waiver of recovery of an overpayment of compensation benefits for the period of April 1997 to March 2000. 2. Entitlement to waiver of recovery of an overpayment of compensation benefits for the period of December 1996 to March 1997. 3. Entitlement to waiver of recovery of an overpayment of compensation benefits for the period of January 2005 to March 2005. REPRESENTATION Appellant represented by: Disabled American Veterans WITNESSES AT HEARING ON APPEAL Appellant, Appellant's Spouse (DR) ATTORNEY FOR THE BOARD W. H. Donnelly, Counsel INTRODUCTION This appeal has been advanced on the Board's docket pursuant to 38 C.F.R. § 20.900(c) (2009). 38 U.S.C.A. § 7107(a)(2) (West 2002). The Veteran served on active duty with the United States Women's Army Corps from December 1973 to August 1974, and with the United States Air Force from September 1974 to May 1980. This matter comes before the Board of Veterans' Appeals (Board) on appeal from a November 2004 decision by the Committee on Waivers (COW) at the Phoenix, Arizona, Regional Office (RO) of the United States Department of Veterans Affairs (VA), which denied waiver of recovery of an overpayment in the total amount of $10,537.00, covering the periods of December 1996 to April 2004. Initially, the Veteran was informed that the amount of the debt was $29,227.00. The RO then realized that an incorrect compensation amount had been used to calculate the overpayment amount, and the debt was recalculated as $10,537.00, covering the period of December 1996 to April 2004. The Veteran appealed this determination, and in the course of that appeal the RO received additional information regarding the periods of the Veteran's marriages. The RO then recalculated the amount of the debt based on the new information, and informed the Veteran that the overpayment amount was $4,868.00, covering the periods of December 1996 to March 2000 and January 2005 to April 2005. It is this final amount and periods which are currently before the Board. The Veteran and her spouse testified at a hearing held at the RO before a Decision Review Officer (DRO) in September 2006. The Veteran testified at an August 2009 hearing held before the undersigned Veterans Law Judge at the RO. Transcripts of both these hearings are associated with the claims file. The issues have been recharacterized to more accurately reflect the evidence of record and the contentions of the Veteran. The dates have been adjusted to reflect the months in which the RO determined the Veteran was overpaid. The issues of entitlement to waiver of recovery of overpayment for the periods of December 1996 to March 1997 and January 2005 to March 2005 are addressed in the REMAND portion of the decision below and are REMANDED to the RO via the Appeals Management Center (AMC), in Washington, DC. FINDINGS OF FACT 1. Effective from August 1988, the Veteran was in receipt of compensation benefits, payable in part on account of her marriage to AM; the Veteran was rated totally disabled due to individual unemployability effective in October 1996. 2. The Veteran married AM in February 1981. 3. The Veteran "married" DR in October 1996. This was not a legally valid marriage. 4. The Veteran divorced AM in November 1996. 5. The Veteran remarried AM in March 1997. 6. The Veteran divorced AM for the second time in December 2004. 7. The Veteran "remarried" DR in March 2005. 8. An overpayment was validly created for the periods of December 1996 to April 2000 and January 2005 to March 2005, based on the failure of the Veteran to timely notify VA of the changes in her marital status. 9. From April 1997 to March 2000, the Veteran is at fault in the creation of the overpayment, but over that period she did not receive any monies to which she was not in fact entitled, and recoupment of the overpayment would nullify the objective for which benefits were intended.. CONCLUSION OF LAW Collection of overpayment of compensation benefits from April 1997 to March 2000 is against equity and good conscience, and is waived. 38 U.S.C.A. §§ 5107, 5302(2) (West 2002 & Supp. 2007); 38 C.F.R. §§ 1.963(a), 1.965(a) (2007). REASONS AND BASES FOR FINDINGS AND CONCLUSION I. VA's Duties to Notify and Assist VA has a duty to notify and assist Veterans in substantiating a claim for VA benefits. 38 U.S.C.A. §§ 5100, 5102, 5103, 5103A, 5107, 5126 (West 2002 & Supp. 2007); 38 C.F.R. §§ 3.102, 3.156(a), 3.159 and 3.326(a) (2007). The United States Court of Appeals for Veterans Claims (the Court) has determined that the notice and duty to assist duties do not apply to waiver claims. See Lueras v. Principi, 18 Vet. App. 435 (2004); see also Barger v. Principi, 16 Vet. App. 132 (2002). The duties would apply to the threshold issue of the validity of the debt; however, in this case, the Veteran has conceded that the debt was validly created. No further discussion of the duties to notify or assist is required. II. Entitlement to Waiver Where there is no fraud, misrepresentation, or bad faith on the Veteran's part with respect to the creation of the overpayment at issue, waiver of recovery of the assessed overpayment is not precluded pursuant to 38 U.S.C.A. § 5302(a) (West 2002 & Supp. 2007). The Board must determine whether recovery of the indebtedness would be against equity and good conscience, thereby permitting waiver under 38 U.S.C.A. § 5302(a) and 38 C.F.R. §§ 1.963(a), 1.965(a) (2007). Regulations provide that 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 elements of equity and good conscience are as follows: (1) fault of debtor, where actions of the debtor contribute to creation of the debt; (2) balancing of faults, weighing fault of debtor against VA fault; (3) undue hardship, whether collection would deprive debtor or family of basic necessities; (4) defeat the purpose, whether withholding of benefits or recovery would nullify the objective for which benefits were intended; (5) unjust enrichment, failure to make restitution would result in unfair gain to the debtor; (6) changing position to one's detriment, reliance on VA benefits results in relinquishment of a valuable right or incurrence of a legal obligation. This list of element is not intended to be all-inclusive. 38 C.F.R. § 1.965(a). The RO has determined that there is no evidence of fraud, misrepresentation, or bad faith on the part of the Veteran in the creation of the indebtedness. The evidence of record supports that conclusion. The Veteran was in possession of marriage licenses indicating she was continually married (to AM and DR in turn) over the entire period of the overpayment. While the marriage to DR as of October 1996 is legally invalid, as the Veteran was not yet officially divorced from AM, the Veteran did have a basis to believe she was married continually since February 1981. Although she did have an obligation to inform VA of the change in the identity of the husband included in her award payments, her omission is understandable, as to the Veteran, her marital status (married) had not changed. The question remains as to whether a waiver of the overpayment for any particular period would be against equity and good conscience. The creation of the debt in this case is entirely the fault of the Veteran. While her error was based on a misunderstanding of domestic relations law regarding the legal validity of marriages and the necessity of identifying specific dependents for VA compensation purposes, the fact is that the such misunderstandings were entirely on her part, regardless of her motivation or intent. VA did not offer any information which may have lead the Veteran to an improper conclusion, and VA was in fact completely unaware of the process of divorce and remarriage occurring prior to 2001, when VA was first notified of a potential problem by DR. Both the first and second elements in a consideration of equity and good conscience, therefore, weigh against the Veteran. The third listed element neither favors nor disfavors the Veteran. She did not change her position in reliance upon her receipt of VA benefits and payment of compensation for a spouse dependent. There is no evidence that she gave up any right or opportunity to continue receiving that benefit. The fourth and fifth elements, regarding nullification of the objective of the benefit and unjust enrichment, both heavily favor the Veteran, and support a waiving of recovery of the overpayment. The overpayment is based upon the Veteran's receipt of additional compensation because she had a dependent spouse. The money was intended to compensate her for the additional household costs imposed by caring for another person. The evidence of record establishes that the Veteran was in fact validly married to AM as of March [redacted], 1997. She accurately reported on her February 2000 VA Form 21-538, Status of Dependents Questionnaire, that she was married. The Veteran was married to AM for the April 1997 to March 2000 period. The Veteran has stated that over this period, she was living with AM and caring for him while he was ill and hospitalized in a VA facility in California. The evidence shows that from April 1997 to March 2000, the Veteran was living in the circumstances her compensation payments were designed to reflect. To now recoup those payments would defeat the purpose of paying increased compensation for a dependent spouse. Moreover, because the evidence establishes that the Veteran was in fact married and living with her spouse from April 1997 to March 2000, she was actually entitled to the monies she received. She was not unjustly enriched. The RO found that had AM been removed from the award as a dependent spouse upon the November 1996 divorce, he would not have been added back until March 2000, after the Veteran had supplied her Form 21-538. This presumes, however, that had the Veteran actually been reduced in entitlement in November 1996, she would not have notified VA of her remarriage to AM in March 1997 when it occurred. This presumption is disingenuous. Given that the Veteran clearly understood that having a dependent spouse entitled her to additional benefits, and that the file reveals she has contacted VA promptly each time her benefits have been reduced, she likely would have informed VA of her remarriage and AM would have been restored to her benefits as a dependent immediately. The last element of an equity and good conscience determination cannot be properly weighed based on the evidence of record. The most recent financial data of record dates from March 2006, and since that time the Veteran's second husband, DR, has passed away. She stated at the August 2009 hearing that her financial situation had changed considerably with the loss of the second household income. However, even assuming that the Veteran would face no undue hardship from recovery of the overpayment from April 1997 to March 2000, the overall balancing of the equities favors waiving of such recovery. The Veteran received no monies to which she was not actually entitled over that period based on her marital status and living circumstances. Had she timely notified VA of her divorces and remarriages, VA would have paid her for that period anyway. Accordingly, a waiver of recovery of overpayment for the period of April 1997 to March 2000 is warranted. The amount of such waiver is to be calculated by the RO. ORDER Waiver of recovery of an overpayment of compensation benefits for the period of April 1997 to March 2000 is granted. REMAND The Veteran has not disputed the validity of the debt for the periods of December 1996 to March 1997, and January 2005 to march 2005. She now recognizes that she was not in fact married during those periods. She argues, however, that recovery of the overpayment would impose upon her a financial hardship, and equity and good conscience require waiver of recovery of the overpayment. In particular, she points out that because her husband, DR died in September 2008, her household income has been severely reduced, and she is more dependent upon her own income from her VA benefits for her living expenses. The most recent financial data of record was obtained in March 2006. This information is too remote to allow a proper weighing of the impact of recovering the overpayment, especially in light of the changed circumstances the Veteran has reported. Remand is required for additional development to obtain current financial information. Accordingly, the case is REMANDED for the following action: (This appeal has been advanced on the Board's docket pursuant to 38 C.F.R. § 20.900(c) (2009). Expedited handling is required.) 1. Contact the Veteran and request that she complete an updated VA Form 5655, Financial Status Report, fully describing her current income, living expenses, assets, and installment debt. 2. Review the claims file to ensure that all the foregoing requested development is completed, and arrange for any additional development indicated. Then readjudicate the claims on appeal. If any benefit sought remains denied, the RO should issue an appropriate SSOC and provide the Veteran and her representative the requisite time period to respond. The case should then be returned to the Board for further appellate review, if otherwise in order. No action is required of the appellant unless she is notified. The appellant has the right to submit additional evidence and argument on the matters the Board has remanded. Kutscherousky v. West, 12 Vet. App. 369 (1999). This claim must be afforded expeditious treatment. The law requires that all claims that are remanded by the Board of Veterans' Appeals or by the United States Court of Appeals for Veterans Claims for additional development or other appropriate action must be handled in an expeditious manner. See 38 U.S.C.A. §§ 5109B, 7112 (West Supp. 2009). ______________________________________________ RONALD W. SCHOLZ Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs