Citation Nr: 1125135 Decision Date: 07/01/11 Archive Date: 07/14/11 DOCKET NO. 10-18 367A ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Atlanta, Georgia THE ISSUE Entitlement to waiver of recovery of an overpayment of education benefits under Chapter 30, Title 38, United States Code (Chapter 30 benefits) in the calculated amount of $1,228.03. WITNESSES AT HEARING ON APPEAL Veteran and his spouse ATTORNEY FOR THE BOARD E. Pomeranz, Counsel INTRODUCTION The Veteran had active service from July 1998 to May 2006. This matter comes before the Board of Veterans' Appeals (Board) on appeal of an August 2009 determination by the Department of Veterans Affairs (VA) Regional Office (RO) located in Atlanta, Georgia. The Veteran testified at a Travel Board hearing before the undersigned Veterans Law Judge in February 2011 at the RO in Winston-Salem, North Carolina. A copy of the transcript of that hearing is of record. FINDINGS OF FACT 1. In May 2007, the Veteran began receiving education benefits under Chapter 30, Title 38 United States Code. 2. On May 5, 2009, VA electronically received an Enrollment Certification noting that the Veteran was certified for enrollment at the Fayetteville Technical Community College from May 18, 2009 to July 14, 2009, at six credit hours. The Certification reflects that the Veteran received educational assistance benefits for this period. 3. On May 26, 2009, the RO received notification from the Fayetteville Technical Community College that the Veteran's status had changed, and that effective May 13, 2009, the Veteran had unsatisfactory attendance, conduct, or progress. 4. In a letter, dated in August 2009, over two months after receiving notification that the Veteran had unsatisfactory progress, the RO notified the Veteran that they had stopped his educational assistance payments on May 13, 2009, due to his unsatisfactory progress, and that because the Veteran had received VA education benefits after May 13, 2009, an overpayment was created in the calculated amount of $1,228.03. 5. VA bears sole responsibility for the erroneous payment of benefits due to administrative error. CONCLUSION OF LAW Due to VA's administrative error, the overpayment of Chapter 30 benefits in the calculated amount of $1,228.03, is invalid. 38 U.S.C.A. § 5112 (West 2002 & Supp. 2010); 38 C.F.R. §§ 21.7540, 21.7550 (2010). REASONS AND BASES FOR FINDINGS AND CONCLUSION Initially, the Board points out that Veterans Claims Assistance Act of 2000 (VCAA), Pub. L. No. 106-475, 114 Stat. 2096 (2000) addresses VA's duties to inform and assist claimants for VA benefits. The VCAA does not apply to cases involving overpayment or indebtedness. See Barger v. Principi, 16 Vet. App. 132, 138 (2002); Lueras v. Principi, 18 Vet. App. 435 (2004). Notwithstanding the fact that the VCAA is not controlling in these matters, the Board has reviewed this case to determine whether the Veteran has had a fair opportunity to present arguments and evidence in support of his challenge to the validity of the overpayment. The Veteran's claims file contains evidence relevant to his education benefits. The Veteran has presented arguments in support of his appeal regarding waiver of the overpayment. The Board concludes therefore, and particularly in light of the favorable decision below, that the requirements for the fair development of this appeal have been met. Under 38 C.F.R. § 21.7153, in order to receive educational assistance for pursuit of a program of education, an individual must maintain satisfactory progress. VA will discontinue educational assistance if the individual does not maintain satisfactory progress. Progress is unsatisfactory if the individual does not satisfactorily progress according to the regularly prescribed standards of the educational institution he or she is attending. 38 C.F.R. § 21.7153(a) (2010). In May 2007, the Veteran began receiving education benefits under Chapter 30, Title 38 United States Code. The Veteran was awarded educational benefits for multiple terms at Fayetteville Technical Community College, including terms from January 12, 2009 to May 13, 2009 (spring semester), and from May 18, 2009 to July 14, 2009 (summer semester). Specifically, on May 5, 2009, VA electronically received an Enrollment Certification noting that the Veteran was certified for enrollment at the Fayetteville Technical Community College from May 18, 2009 to July 14, 2009, at six credit hours. The Certification reflects that the Veteran received educational assistance benefits for this period. However, on May 26, 2009, the RO received notification from the Fayetteville Technical Community College that the Veteran's status had changed, and that effective May 13, 2009, the Veteran had unsatisfactory attendance, conduct, or progress. In the Veteran's February 2011 Travel Board hearing, the Veteran testified that his status had changed because his grade point average (GPA) went below a 2.00, and he was placed on probation. In a letter to the Veteran, dated in August 2009, the RO notified the Veteran that VA regulations required that students maintain satisfactory attendance, conduct, and progress to continue receiving VA education benefits. See 38 C.F.R. § 21.7153. The school certifying official was required to notify VA when a student did not meet those requirements. The RO noted that they had stopped the Veteran's educational assistance payments on May 13, 2009, because they had received school notification that his progress in training had not been satisfactory. Because the Veteran had received VA education benefits after May 13, 2009, an overpayment was created in the calculated amount of $1,228.03. The Veteran contends that he was not at fault in the creation of the overpayment. He notes that it was not until after the spring semester from January 12, 2009 to May 13, 2009, that he was notified that he was on probation because his GPA was under 2.00. He maintains that at that time, VA had already certified his educational benefits for the summer semester from May 18, 2009 to July 14, 2009. According to the Veteran, he then talked with the VA representative at his school who advised him that because his summer semester had already been paid for, and due to the fact that he could be taken off of probation if his grades improved, he could attend the summer semester without having to pay any monies back. The Veteran indicated that his grades actually did improve over the summer semester, and that because of the improvement, he could have been taken off probation without ever losing his benefits. Instead, the Veteran reported that due to the overpayment debt, he stopped attending school after the summer semester because he had no money. An overpayment is created when VA determines that a beneficiary or payee has received monetary benefits to which he or she is not entitled. See 38 U.S.C.A. § 5302; 38 C.F.R. § 1.962. An overpayment may arise from virtually any benefits program administered pursuant to VA law, including pension, compensation, dependency and indemnity compensation (DIC), education educational assistance benefits and subsistence allowance, insurance benefits, burial and plot allowances, clothing allowance, and automobile or other conveyance and adaptive equipment allowances. 38 C.F.R. § 1.956(a). Whenever VA finds that an overpayment of educational assistance benefits has been made to a Veteran, the amount of such overpayment shall constitute a liability of such Veteran to the United States and may be recovered in the same manner as any debt. 38 U.S.C.A. § 3685(a) and (c); 38 C.F.R. § 21.7144. The issue of the validity of a debt is a threshold determination that must be made prior to a decision on a request for waiver of the indebtedness. See Schaper v. Derwinski, 1 Vet. App. 430 (1991). If the debt were the result solely of administrative error, the effective date of the reduction of benefits would be the date of the last payment based on this error; consequently, there would be no overpayment charged to the veteran for the portion of the overpayment attributable to administrative error. 38 U.S.C.A. § 5112(b)(10); 38 C.F.R. §§ 3.500(b), 21.7635(q)(2); see Erickson v. West, 13 Vet. App. 495, 499 (2000). However, where an erroneous award is based on an act of commission or omission by a payee or with the payee's knowledge, the effective date of the discontinuance of the erroneous payment is the date the award became erroneous, but not earlier than the date entitlement ceased. Jordan v. Brown, 10 Vet. App. 171, 174 (1997). Thus, a finding of administrative error requires not only error on the part of VA, but that the beneficiary be unaware that the payments are erroneous. 38 U.S.C.A. § 5112 (b)(2); 38 C.F.R. § 3.500(b). If the claimant fails to provide full disclosure of facts or due to the amount of the overpayment should know an error has been made, yet accepts the payment, the overpayment will not be considered due to administrative error. See VA Manual 22- 4, Part III, § 2.03. An example when administrative error applies is when VA erroneously interprets the law to allow payment of greater benefits than the legislative intent. Another example of when administrative error does not apply is when the claimant accepts an amount that is patently excessive. Id. In this case, the Veteran was not legally entitled to educational assistance benefits from May 13, 2009. As the Veteran was not legally entitled to educational benefits from May 13, 2009, then it must be shown that VA was solely responsible for the erroneous payment of excess benefits. In order for the overpayment to be considered the result of sole administrative error, and for the Veteran to consequently not be liable for the debt, the Veteran must not have known that the education assistance payments were erroneous. After reviewing the available evidence, the Board finds that the overpayment was created solely as a result of VA administrative error and it cannot, therefore, be held to have been properly created. The Board recognizes that it was not until after VA paid educational benefits that the Veteran's school informed them that the Veteran's status had changed, and that effective May 13, 2009, he had unsatisfactory progress. However, the RO waited over two months to notify the Veteran that they had stopped his educational assistance payments on May 13, 2009 because of unsatisfactory progress, thereby creating an overpayment. By the time the RO contacted the Veteran in August 2009, he had already completed his summer semester from May 18, 2009 to July 14, 2009. The evidence of record does not demonstrate that the Veteran had knowledge that he was receiving benefits to which he was not entitled, or that he otherwise acted or failed to act in such a way as to perpetuate the error. Throughout the summer semester, the Veteran did not receive any notification that his educational benefits had been stopped. Although he was aware that he was on probation due to his GPA, given that he had received his educational assistance benefits for the summer semester, and that a VA representative had informed him that he could attend the summer semester, it is not reasonable to conclude that he must have known or should have known that his education assistance payments were erroneous for the summer semester. In light of the above, given that as of May 26, 2009, VA was aware of the fact that the Veteran was not entitled to education benefits after May 13, 2009, and yet allowed the Veteran to attend the summer semester from May 18, 2009 to July 14, 2009, without notifying him that his benefits for that semester had been stopped, the Board finds that the Veteran should not be held responsible for the resulting overpayment of educational benefits since May 13, 2009. Even though the RO was aware soon after the summer semester started in May 2009 that the Veteran was not entitled to educational benefits after May 13, 2009, they waited until August 2009, after the Veteran had completed the summer semester, to inform him that his benefits had been stopped, effective May 13, 2009. Accordingly, the Board finds that the overpayment was solely the result of VA administrative error, and that the debt therefore was not properly created and cannot legally be charged to the Veteran. Thus, the Board finds that the overpayment in the calculated amount of $1,228.03, should be waived. ORDER Entitlement to waiver of overpayment of Chapter 30 benefits in the calculated amount of $1,228.03, is granted. ____________________________________________ V. L. JORDAN Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs