Citation Nr: 1126952 Decision Date: 07/19/11 Archive Date: 07/29/11 DOCKET NO. 02-15 526 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in St. Petersburg, Florida THE ISSUES 1. Entitlement to a waiver of recovery of an overpayment of nonservice-connected pension benefits in the calculated amount of $1,802.18 (US dollars). 2. Entitlement to a waiver of recovery of an overpayment of nonservice-connected pension benefits in the calculated amount of $17,076.00 (US dollars). REPRESENTATION Appellant represented by: The American Legion ATTORNEY FOR THE BOARD Patrick J. Costello, Counsel INTRODUCTION The appellant had active military service from April 1944 to February 1946. This matter comes before the Board of Veterans' Appeals (Board) on appeal from decisions of the St. Petersburg, Florida, Regional Office (RO), decision of the Committee on Waivers and Compromises that denied waiver of recovery of an overpayment of pension benefits in the amounts of $1,802.18 (US dollars) and $20,156.00 (US dollars). In October 2003, the Board denied the appellant's request for waiver of recovery of the pension overpayment in the amount of $1,802.18 (US dollars), on the grounds that waiver was precluded because of bad faith on the part of the appellant. Additionally, the Board also found that $3,080.00 (US dollars) of the total assessed debt of $20,156.00 (US dollars) was not properly created, but denied waiver of recovery of the remaining overpayment amount of $17,076.00 (US dollars) on the grounds of bad faith. Following notification of the October 2003 Board Decision, the appellant appealed the decision to the United States Court of Appeals for Veterans Claims (Court). In a July 2007 decision, the Court vacated the Board's October 2003 decision "to the extent that the Board concluded the appellant acted in bad faith in the creation of the overpayment" and remanded the matter for further adjudication. The Court's July 2007 action was reduced to judgment in June 2008. The Board then issued a Decision/Remand in November 2008 on the following issues: 1. Whether the veteran's conduct in the creation of an overpayment of pension benefits in the calculated amount of $1,802.18 was due to bad faith on his part. 2. Whether the veteran's conduct in the creation of an overpayment of pension benefits in the calculated amount of $17,076.00 was due to bad faith on his part. 3. Whether recovery by VA of an overpayment of pension benefits in the calculated amount of $1,802.18 would be against equity and good conscience. 4. Whether recovery by VA of an overpayment of pension benefits in the calculated amount of $17,076.00 would be against equity and good conscience. In the Decision/Remand, the Board found that the appellant's conduct in the creation of the two debts was not due to bad faith on the part of the appellant. The remaining two issues were remanded to the RO via the Appeals Management Center (AMC), in Washington, DC, for the purpose of obtaining additional financial information from the appellant. The claim has since been returned to the Board for review. Upon reviewing the development since November 2008, the Board finds there has been substantial compliance with its remand instructions. The Board notes that the Court has noted that "only substantial compliance with the terms of the Board's engagement letter would be required, not strict compliance." D'Aries v. Peake, 22 Vet. App. 97, 105 (2008); see also Dyment v. West, 13 Vet. App. 141, 146-47 (1999) (holding that there was no Stegall violation when the examiner made the ultimate determination required by the Board's remand, because such determination "more than substantially complied with the Board's remand order"). The AMC was tasked by the Board to obtain additional financial information from the appellant, and it has done so. Specifically, the AMC requested financial data concerning the appellant's current income, bills, etcetera, and that information has been provided to the VA. The results of that request have been included in the claims folder for review. The results were then examined by the AMC which, in turn, issued a Supplemental Statement of the Case (SSOC) in response to the information obtained. Based on the foregoing, the Board finds that the AMC substantially complied with the mandates of the Board's most recent remand instructions. See Stegall v. West, 11 Vet. App. 268, 271 (1998) (finding that a remand by the Board confers on the appellant the right to compliance with the remand orders). Thus, the Board will proceed to review and decide the claim based on the evidence that is of record. In a February 2007 statement, the appellant also raised the issue of entitlement to service connection for a heart disorder. This matter is not currently developed or certified for appellate review. Accordingly, it is referred to the RO for appropriate action. Please note this appeal has been advanced on the Board's docket pursuant to 38 C.F.R. § 20.900(c) (2010). 38 U.S.C.A. § 7107(a)(2) (West 2002). FINDINGS OF FACTS 1. The nonservice-connected pension overpayment in the amounts of $1,802.18 (US dollars) and $17,076.00 (US dollars) resulted from an unreported increase in Social Security Administration benefits, as well as some other income of the appellant and his spouse. 2. The differential of appellant's income versus his expenses is miniscule, and the repayment of the overpayment will cause undue hardship. 3. Recovery of the overpayment of compensation benefits would be against equity and good conscience CONCLUSIONS OF LAW 1. The recovery of the overpayment of VA compensation benefits in the amount of $1,802.18 (US dollars) would be against equity and good conscience and, therefore, may be waived. 38 U.S.C.A. § 5302 (West 2002); 38 C.F.R. §§ 1.963(a), 1.965(a) (2010). 2. The recovery of the overpayment of VA compensation benefits in the amount of $17,076.00 (US dollars) would be against equity and good conscience and, therefore, may be waived. 38 U.S.C.A. § 5302 (West 2002); 38 C.F.R. §§ 1.963(a), 1.965(a) (2010). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS The appellant has come before the Board expressing disagreement with having to repay an overpayment of nonservice-connected pension benefits funds. Specifically, the appellant received pension benefits when his household income would have prevented him from obtaining those benefits. As such, overpayments in the amounts of $1,802.18 (US dollars) and $17,076.00 (US dollars) have been created. The RO has denied his request for a waiver of overpayment and he has appealed to the Board for review. The appellant had active service from April 1944 to February 1946. He began receiving VA improved pension benefits in April 1993, effective in April 1991. Approximately five years later, in May 1996, he was charged with an overpayment in the amount of $1,802.18 (US dollars). A review of the file discloses that this overpayment resulted from three separate events. First, in October 1995, the appellant's pension benefits were retroactively adjusted effective in December 1994, due to the appellant and his family having received benefits from the Social Security Administration (SSA) in amounts greater than previously counted or anticipated. This resulted in an overpayment in the amount of $831.00 (US dollars). Then, the appellant submitted information showing that his wife and dependent son had received earned income in 1995, and he himself had received income from a pension fund. In February 1996, the RO retroactively adjusted the appellant's account effective in February 1993. This resulted in an additional $114.00 (US dollars) of overpayment, for a total overpayment of $945.00 (US dollars). The appellant disputed this portion of the overpayment, contending that his son did not work in 1993. In reviewing the file, the Board notes that the income from the appellant's pension fund from the Maritime Union apparently was erroneously identified as the son's earned income. The income, however, had not been previously counted, although the appellant has stated that he began receiving income from this pension fund in 1991. The remaining $857.18 (US dollars) of the debt was created in April 1996, when the RO adjusted the appellant's award to reflect the information contained in the eligibility verification report (EVR) submitted by the appellant that month. He reported that his wife's income for the year 1996 would be $6,000.00 (US dollars). Accordingly, the pension award was adjusted to account for this additional income, effective in January 1996. The Veteran appealed the May 1996 denial of his waiver request, and the case was remanded by the Board in January 1998. However, after initiating action pursuant to the remand, no further action had been taken on this overpayment, and the issue remained in appellate status. With respect to the overpayment in the amount of $20,156.00 (US dollars), this overpayment was created in July 2001, when the appellant's nonservice-connected pension award was retroactively adjusted effective in February 1998, to reflect his wife's receipt of earned income beginning in February 1998. (A separate overpayment, in the amount of $4,833.00 (US dollars), created in March 2001, as the result of income earned by the appellant's wife from February 1997 through January 1998, was paid by the appellant, and he did not request a waiver of this overpayment.) This adjustment resulted in a reduction of benefits for the period from February 1998 through January 1999, with termination of benefits beginning in February 1999. However, the Board notes that the appellant and his wife were divorced in June 2000, according to the divorce decree received in July 2000. Therefore, beginning in July 2000, the former spouse's income was no longer countable to the appellant. Moreover, in July 2000, the appellant filed a claim for reinstatement of his pension as a single veteran. Since that time, the appellant has submitted numerous financial statements showing the income that he is receiving, the personal expenses he now has, and any additional medical costs that have been generated over the long course of this appeal. The most recent income reports are from 2009. On those reports, the appellant indicated that he received monthly SSA benefits in the amount of $570.27 (US dollars) and a pension check of $128.00 (US dollars). It was further indicated that the appellant's new spouse's gross wages for a year was approximately $20,800.00 (US dollars). In August 2009, he reported that his monthly expenses are as follows: $669.00 (US dollars) - rent; $250.00 (US dollars) - food; $65.00 (US dollars) - utilities; $50.00 (US dollars) - medical expenses; $542.00 (US dollars) to $791.00 (US dollars) - aid and attendance day care. The Board would note that it is unclear from the record whether the appellant has been paying $542.00 (US dollars) or $791.00 (US dollars) per month, or whether he has been paying the sum of both dollar amounts ($1333.00 (US dollars)). On the VA Form 21-4138, Statement in Support of Claim, dated May 13, 2010, it was intimated that both amounts were being spent on care of the appellant. It was further suggested by the appellant that he spent approximately $15,996.00 (US dollars) per year on said care. (The claims folder insinuates that such care has been occurring since 2008 when the appellant was diagnosed with dementia and/or Alzheimer's disease. A further reduction of the costs to a calendar year projection reveals the following: SSA benefits - $6,843.24 (US dollars); pension income - $1,536.00 (US dollars); spouse's earnings - $20,800.00 (US dollars). The total amount of income for a calendar year would be approximately $29,179.24 (US dollars). Expenses for the year appear to be the following: rent - $8,028.00 (US dollars); food - $3,000.00 (US dollars); utilities - $780.00 (US dollars); medical expenses - $600.00 (US dollars); aid and attendance day care - $15,996.00 (US dollars). The total amount of expenses for a calendar year would be approximately $28,404.00 (US dollars). The difference between income and expenses appears to be $775.24 (US dollars). This averages out to $64.60 (US dollars) positive income per month. The Board would note, however, that the appellant did not provide any information as to expenses for automobile insurance even though he reported that he had an automobile. As an initial matter, the Board notes that the present case involves Chapter 53 of Title 38 of the Unites States Code, and therefore the duty to notify and assist provisions of the VCAA do not apply. Barger v. Principi, 16 Vet. App. 132, 138 (2002); see also, 38 U.S.C.A. §§ 5103, 5103A (West 2002 & Supp. 2010). In deciding this case on appeal, the initial point worth noting that in the Board's Decision/Remand of November 2008, the Board found that there was no indication of fraud, misrepresentation, or bad faith on the part of the appellant in the creation of these debts. Additionally, the Board has further found that both debts have been properly created. More specifically on this point - in October 2003, the Board issued a Decision on the merits of the appellant's claim. Of specific importance is that the Decision made a determination that the pension overpayment amounts of $1,802.18 (US dollars) and $17,076.00 (US dollars) were properly created. The appellant and his attorney were provided with this information and when the Decision was appealed to the Court, both the Secretary and the appellant's representative tacitly recognized the dollar amounts as being properly created. Additionally, the Court itself, in issuing its precedential three-judge decision, recognized the dollar amounts as being correct as it used those dollar amounts throughout the decision. There is no reason for the Board to further address these items and the Board will therefore proceed. Having determined there was no fraud, misrepresentation, or bad faith on the appellant's part, the Board may now continue to the question of whether the collection of the overpayment would be against "equity and good conscience." 38U.S.C.A. § 5302(a) (West 2002); 38 C.F.R. § 1.963(a) (2010). Pursuant to 38 C.F.R. § 1.965 (2010), 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) (2010). 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. Id. In making this determination of whether recovery would be against equity and good conscience, 38 C.F.R. § 1.965(a) (2010) 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) (2010); see also Ridings v. Brown, 6 Vet. App. 544, 546 (1994). The Veteran asserts that he has severe illnesses including mental challenges. He also asserts that repayment would cause severe financial hardship and that he was not aware of his ex-wife's income while they were in the process of obtaining the divorce. The above-cited regulation sets forth the various elements to be considered in reaching a determination in these cases. The first element pertains to the fault of the debtor and requires an analysis as to whether the actions of appellant contributed to the creation of the debt. As outlined in the above section of this decision, it appears that the appellant's nonreporting or the underreporting of income was the significant reason for the creation of the overpayment in this case. The second element pertains to the fault on the part of the VA. The VA is required to balance the fault of the debtor against any fault of the VA in the creation of the overpayment. A review of the record fails to indicate that any fault may be attributed to the VA in the creation of the overpayment in this case and the appellant does not allege that the VA committed any fault in the creation of the overpayment. Accordingly, the Board has determined, in balancing of the fault of the appellant against the fault of the VA in this case, that any fault found in this case must be attributed to the appellant and not the VA. It is factor number three which the Board believes is highly relevant to the appeal. Specifically, would recovery of the overpayment cause undue hardship on the appellant? As annotated above, the claims file contains evidence that would provide insight to the appellant's present financial situation. The record shows that the appellant's monthly income barely covers all of the household expenses and does not even address emergency expenses or expenses that might be incurred for everyday living. There is no information contained in the claims folder that would suggest or insinuate that the appellant lives extravagantly or spends his money unwisely or without purpose. The appellant has asked that he not be held accountable for the debt as repayment will result in severe financial hardship. In light of his expenses to purchase the basic necessities, and the minimal amount of monthly income that is left after paying his expenses, the Board finds that compelling repayment would result in undue financial hardship. The Board notes that the fourth, fifth and sixth elements preponderate against the appellant's claim. Recovery of the benefits would not nullify the objective for which benefits were intended. A waiver of the indebtedness would result in an unjust enrichment to the appellant in that he did receive benefits to which he was not entitled. Finally, there is no evidence that the appellant relinquished a valuable right or incurred legal obligation in reliance of the benefit. Standing alone, these elements are not felt to be of such importance in this case as to warrant a denial of the waiver. In sum, the circumstances in this case indicate a need for reasonableness and moderation in the exercising of the Government's right to collect the debt charged to the appellant in light of the undue financial hardship that repayment would cause the appellant. In light of these facts, based on the Board's review of the undue hardship element pertaining to the principle of equity and good conscience, as set forth in 38 C.F.R. § 1.965(a) (2010), the Board is persuaded that the Government should forgo its right to collection of the indebtedness in this instance. Accordingly, the Board concludes that recovery of the overpayment in the amount of $1,802.18 (US dollars) and $17,076.00 (US dollars) would be against equity and good conscience. The Board finds that when all of the elements are weighed in this case, the claim appears to be at least in equipoise. See 38 U.S.C.A. § 5107 (West 2002 & Supp. 2010). In Gilbert v. Derwinski, 1 Vet. App. 49 (1990), the Court stated that an appellant "need only demonstrate that there is an 'approximate balance of positive and negative evidence' in order to prevail." Because the evidence is in equipoise, and since the appellant is supposed to be afforded the benefit-of-the-doubt, the Board concludes that waiver of recovery of the overpayment of compensation dependency benefits in the amounts of $1,802.18 (US dollars) and $17,076.00 (US dollars) is in order. 38 U.S.C.A. § 5302(a) (West 2002); 38 C.F.R. §§ 1.963(a), 1.965(a) (2010). (CONTINUED ON NEXT PAGE) ORDER Entitlement to a waiver of recovery of the overpayment of compensation benefits in the amount of $1802.18 (US dollars) is granted. Entitlement to a waiver of recovery of the overpayment of compensation benefits in the amount of $17,076.00 (US dollars) is granted. ____________________________________________ S. S. TOTH Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs