Citation Nr: 1126352 Decision Date: 07/13/11 Archive Date: 07/19/11 DOCKET NO. 10-39 657 ) 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 benefits in the calculated amount of $3,000. REPRESENTATION Appellant represented by: The American Legion ATTORNEY FOR THE BOARD W. Yates, Counsel INTRODUCTION The Veteran served on active duty from June 2001 to June 2005 This matter comes before the Board of Veterans' Appeals (Board) on appeal from an April 2010 decision by the Committee on Waivers and Compromises (Committee) located at the Department of Veterans Affairs (VA) Regional Office (RO) in Muskogee, Oklahoma. FINDINGS OF FACT 1. In November 2009, the Veteran filed a claim seeking an advance payment of VA educational benefits. The claim form submitted by the Veteran included his signed certification that he had not received his monthly educational benefit payment for the 2009 Fall term; that he understood that the payment provided represented "an advance payment of my educational benefits for the Fall 2009 term that will be deducted from future benefits due me"; that he understood that receipt of this check could result in a duplicate payment or overpayment; and that he understood that he was responsible for repaying any duplicate payment or overpayment. 2. Pursuant to his November 2009 claim, the Veteran was awarded a check for advance payment of educational benefits in the amount of $3,000. 3. In November 2009, the Veteran was not enrolled in school for the Fall 2009 term and had not applied for VA education benefits for the Fall 2009 term. 4. The Veteran misrepresented a material fact and acted in bad faith in creation of the overpayment. CONCLUSION OF LAW Waiver of recovery of the overpayment of VA educational benefits in the calculated amount of $3,000 is precluded by reason of misrepresentation of a material fact and bad faith on the part of the Veteran. 38 U.S.C.A. § 5302 (West 2002); 38 C.F.R. §§ 1.962, 1.963, 1.965 (2010). REASONS AND BASES FOR FINDINGS AND CONCLUSION The Veterans Claims Assistance Act of 2000 (VCAA) describes VA's duty to notify and assist claimants in substantiating a claim for VA benefits. 38 U.S.C.A. §§ 5100, 5102, 5103, 5103A, 5106, 5107, 5126 (West 2002 & Supp. 2010); 38 C.F.R. §§ 3.102, 3.156(a), 3.159 and 3.326(a) (2010). The United States Court of Appeals for Veterans Claims (Court), however, has consistently held that the VCAA notice provisions do not apply in waiver cases. Lueras v. Principi, 18 Vet. App. 435 (2004); Barger v. Principi, 16 Vet. App. 132, 138 (2002). Nevertheless, the Board has reviewed the case for purposes of ascertaining that the Veteran has had a fair opportunity to present arguments and evidence in support of his request for a waiver of overpayment. The Board concludes from this review that the requirements for the fair development of the claim have been met. A waiver of indebtedness may be authorized in a case in which collection of the debt would be against equity and good conscience. 38 U.S.C.A. § 5302(b). In essence, "equity and good conscience" means fairness to both the Veteran and to the government. 38 C.F.R. § 1.965(a) (2010). Under the regulation, "equity and good conscience" involves a variety of elements: (1) fault of the debtor, (2) balancing of the faults, (3) undue hardship, (4) whether recovery would defeat the purpose of the benefit, (5) unjust enrichment, and (6) changing position to one's detriment. 38 C.F.R. § 1.965. The list of elements is not all-inclusive. See Ridings v. Brown, 6 Vet. App. 544, 546 (1994). However, the law precludes wavier of recovery of an overpayment or waiver of collection of any indebtedness where any one of the following elements is found to exist: (1) fraud; (2) misrepresentation of a material fact; or (3) bad faith. 38 U.S.C.A. § 5302(c) (West 2002); 38 C.F.R. § 1.965(b). Only one of three elements (fraud, misrepresentation, or bad faith) need be shown to preclude consideration of waiver of recovery of the indebtedness. 38 U.S.C.A. § 5302(c). In other words, any indication that a claimant committed fraud, misrepresentation of a material fact, or bad faith in connection with his receipt of VA benefits precludes the Board from granting a waiver of recovery of the overpayment. This parallels the "clean hands" doctrine familiar in equity cases; only if a Veteran is free from all taint of fraud in connection with his claim for benefits may waiver on account of "equity and good conscience" be considered. See Farless v. Derwinski, 2 Vet. App. 555 (1992). VA regulations define "bad faith" as unfair or deceptive dealing by one who seeks to gain thereby at another's expense. Thus, a debtor's conduct in connection with a debt arising from participation in a VA benefits/services program exhibits bad faith if such conduct, although not undertaken with actual fraudulent intent, is undertaken with intent to seek an unfair advantage, with knowledge of the likely consequences, and results in a loss to the government. Richards v. Brown, 9 Vet. App. 255 (1996); 38 C.F.R. § 1.965(b) (2010). In this case, the Veteran filed a claim seeking an advance payment of VA educational benefits in November 2009. The claim form submitted by the Veteran included his signed certification that he had not received his monthly education benefit payment for the Fall 2009 term; that the advance payment requested represented an advance payment of educational benefits for the Fall 2009 term; and that he would be responsible for any duplicate payment or overpayment issued to him. In November 2009, the Veteran was not enrolled in school for the Fall 2009 term and had not applied for VA education benefits for the Fall 2009 term. Based upon his November 2009 claim, the Veteran was awarded a check for educational benefits in the amount of $3,000 in November 2009. In February 2010, VA notified the Veteran that the proposal of an overpayment in the amount of $3,000 had been promulgated. That same month, the Veteran filed a claim seeking waiver of overpayment of educational benefits in the amount of $3,000. In April 2010, the Committee issued a decision which denied the Veteran's wavier claim. In making this determination, the RO found that the Veteran had acted in bad faith by claiming an advance payment of educational benefits. In support of its decision, the RO noted that there was no evidence that the Veteran was enrolled in school for the Fall 2009 term, or that he had applied for VA educational benefits. The Veteran timely appealed this decision. The Veteran contends that he requested the advance payment of educational benefits based upon his having registered for school for the Spring 2010 term. He alleges that he was informed by RO personnel this made him eligible for an advanced payment, and that the debt should be waived based upon administrative error. After consideration of the record, the Board agrees with the Committee's finding of bad faith. In addition, the Board finds that the Veteran misrepresented a material fact in his application for benefits. Consequently, a waiver of recovery of that overpayment is automatically precluded. Specifically, the Veteran submitted an application seeking an advance payment of educational benefits on November 20, 2009. In support of his claim, he submitted a statement that he: (1) had not received his monthly educational benefit payment for the 2009 Fall term; (2) understood that the payment provided represented "an advance payment of my educational benefits for the Fall 2009 term that will be deducted from future benefits due me"; (3) understood that receipt of this check could result in a duplicate payment or overpayment; and (4) understood that he was responsible for repaying any duplicate payment or overpayment. At the bottom of this form is the Veteran's signature under the following statement, "I CERTIFY THAT the statements on this form are true and correct to the best of my knowledge and belief." In view of the above, the Board concludes that the Veteran's application form includes a misrepresentation of a material fact, and that his actions in submitting the application constituted bad faith. While the Veteran may have been misinformed as to his eligibility to receive the advance payment of educational benefits in this matter, he committed a misrepresentation of a material fact in executing and submitting the claim for the advance payment of educational benefits in this case. The claim form he submitted states in two separate places that it concerned educational benefits arising from the 2009 Fall term. The claim form does not reference the 2010 Spring term. As the Veteran is not shown to have been registered for the 2009 Fall term, the Veteran has committed a misrepresentation of material fact. In addition, the Veteran acted in bad faith in submitting the claim. The Veteran signed the application form indicating that the statements in it were true and correct to the best of his knowledge and belief. This implies that the Veteran took a moment to review the application and had knowledge of its contents. Particularly so in this case, where the section to be completed by the Veteran contains only six statements, and the entire application form itself is confined to a single one-sided page. Consequently, the Veteran's actions in submitting this claim form were done in bad faith. He filed the claim certifying that its contents were true and correct to the best of his knowledge and belief. However, the evidence clearly indicates that he either failed to review it at all, or knowingly submitted the inaccurate statements. Since the Veteran committed a material misrepresentation of fact and acted in bad faith in the creation of the $3,000 educational benefits overpayment, waiver of recovery of this amount is precluded by law. 38 U.S.C.A. § 5302(c); 38 C.F.R. §§ 1.962, 1.965. Hence, the principles of equity and good conscience, such as any current financial hardship, are not applicable. A material misrepresentation of fact and bad faith are shown by the preponderance of the evidence, and thus the benefit-of-the-doubt rule (38 U.S.C.A. § 5107(b)) does not apply. Waiver of recovery of overpayment is denied. ORDER Waiver of recovery of overpayment of educational benefits in the amount of $3,000 is denied. ____________________________________________ KATHLEEN K. GALLAGHER Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs