Citation Nr: 1213698	
Decision Date: 04/13/12    Archive Date: 04/26/12

DOCKET NO.  11-26 396A	)	DATE
	)
	)

On appeal from the
Department of Veterans Affairs Regional Office in St. Paul, Minnesota


THE ISSUE

Entitlement to waiver of recovery of overpayment of Department of Veterans Affairs nonservice-connected pension benefits in the calculated amount of $6,576.00.


REPRESENTATION

Appellant represented by:	The American Legion


ATTORNEY FOR THE BOARD

Shamil Patel, Associate Counsel



INTRODUCTION

Please note this appeal has been advanced on the Board's docket pursuant to 38 C.F.R. § 20.900(c) (2011).  38 U.S.C.A. § 7107(a)(2) (West 2002).

The Veteran served on active duty from January 1943 to September 1945.

This matter comes before the Board of Veterans' Appeals (Board) on appeal from a March 2011 decision by the Committee on Waivers and Compromises (COWC) at the St. Paul, Minnesota Regional Office (RO) of the Department of Veterans Affairs (VA).  The COWC declined to grant the Veteran's request to waive an overpayment of pension benefits in the amount of $6,576.00.
 

FINDINGS OF FACT

1.  There is no indication of fraud, misrepresentation or bad faith on the part of the Veteran in the creation of this debt.

2.  A waiver of repayment of this debt would not result in unfair enrichment to the Veteran.


CONCLUSION OF LAW

Recovery of the overpayment of pension compensation in the amount of $6,576.00 would be against equity and good conscience.  38 U.S.C.A. § 5302, 5304, 5305 (West 2002); 38 C.F.R. § 3.370 (2011); 38 C.F.R. §§ 1.962, 1.963, 1.965 (2011).



REASONS AND BASES FOR FINDINGS AND CONCLUSION

A.  Veterans Claims Assistance Act of 2000

As provided by the Veterans Claims Assistance Act (VCAA), VA has duties to notify and assist claimants in substantiating claims for VA benefits.  38 U.S.C.A. §§ 5100, 5102, 5103, 5103A, 5107, 5126 (West 2002); 38 C.F.R. §§ 3.102, 3.156(a), 3.159 and 3.326(a) (2010).  The VCAA, however, does not apply to waiver claims.  See Barger v. Principi, 16 Vet. App. 132, 138 (2002); Lueras v. Principi, 18 Vet. App. 435 (2004); and Reyes v. Nicholson, 21 Vet. App. 370 (2007) (the notice provisions of 38 U.S.C. § 5103(a) do not apply to Chapter 53 proceedings).  

The statute governing waiver claims, however, has its own notice provisions.  38 U.S.C.A. § 5302 (West 2002).  In this case, however, the Board is granting in full the waiver of overpayment requested on appeal.  Therefore, any error with respect to notification was harmless and will not be further discussed.

B.  Applicable Law

Recovery of an overpayment may be waived if there is no indication of fraud, misrepresentation, or bad faith, on the part of the person or the persons having an interest in obtaining the waiver, and recovery of such indebtedness would be against equity and good conscience.  See 38 U.S.C.A. § 5302(c) (West 2002); 38 C.F.R. §§ 1.962, 1.963 (2011).  In the absence of fraud, misrepresentation, or bad faith, consideration may be given as to whether recovery of the overpayment would be against equity and good conscience.  The standard "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.  The decision reached should not be unduly favorable or adverse to either side.  The phrase "equity and good conscience" means arriving at a fair decision between the obligor and the Government.  In making this determination, consideration will be given to the following elements, which are not intended to be all-inclusive: (1) the fault of the debtor; (2) balancing of faults between the debtor and VA (3) undue hardship of collection on the debtor; (4) whether collection would defeat the purpose of an existing benefit to the veteran; (5) whether failure to collect a debt would result in the unjust enrichment of the veteran; and (6) whether the veteran changed positions to his detriment in reliance upon a granted VA benefit.  See 38 U.S.C.A. § 5302; 38 C.F.R. § 1.965(a) (2011); Ridings v. Brown, 6 Vet. App. 544, 546 (1994).

In the evaluation of whether equity and good conscience necessitates a favorable waiver decision, the Board must consider all the specifically enumerated elements applicable to a particular case.  See Ridings, supra; Cullen v. Brown, 5 Vet. App. 510, 512 (1993).  If warranted, the Board may waive a portion of the debt.  See Jordan v. Brown, 10 Vet. App. 171 (1997).

When, in fully weighing and balancing each equitable factor, there is an approximate balance of positive and negative evidence as to any material issue, VA shall give the Veteran the benefit of the doubt.  See 38 U.S.C.A. § 5107(b).  See also Dela Cruz v. Principi, 15 Vet. App. 143, 148-49 (2001).

C.  Evidence

In June 2010, the Veteran submitted a claim for VA pension benefits.  Attached to his claim was a Care Expense Statement, which confirmed that the Veteran required in-home care at a cost of $4,800.00 per month.

In August 2010, the Veteran was granted disability pension benefits with aid and attendance effective June 2, 2010.  He was awarded a monthly payment of $1,644.00, and payment began in July 2010.  The Veteran received payments for July, August, September, and October.

In October 2010, the Veteran submitted a statement indicating that his son had moved into his home, and that he was no longer paying for in-home care services.  In November 2010, the RO informed the Veteran that his monthly award was reduced to $0 effective from July 2010.  Because the Veteran was no longer paying for in-home care, the RO found that his annual income exceeded the allowable limit for a single veteran rated for aid and attendance benefits.  In an August 2011 statement of the case (SOC), the RO further explained that the awarded benefits were based on calculations of annual income and annual medical expenses (i.e., annualized), and not on a month-to-month basis.  Because the Veteran stopped paying for in-home care in October 2010, his overall expenses for the year were significantly reduced.

The Board notes that payments are made at a specified annual maximum rate, reduced on a dollar-for-dollar basis by annualized countable income.  38 U.S.C.A. §§ 1503, 1521; 38 C.F.R. §§ 3.3, 3.23.

An overpayment was created in the amount of $6,576.00, based on the four monthly payments of $1,644.00 that the Veteran had received.  The Veteran subsequently reported that he had returned the October 2010 check he received, and a September 2011 statement of the Veteran's account appropriately lists an outstanding balance of $4,932.

D.  Analysis

The Board finds that the facts of this case do not reveal fraud, misrepresentation, or bad faith on the Veteran's part in the creation of the overpayment in question.  However, having established the lack of fraud, misrepresentation, or bad faith, the Board must now proceed to the question of whether the collection of the overpayment would be against "equity and good conscience."  See 38 U.S.C.A. § 5302(a); 38 C.F.R. § 1.963(a) (2011).  As mentioned, 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.  See 38 C.F.R. § 1.965(a).  

The first and second elements pertain to the fault of the debtor versus the fault of VA.  In the August 2011 SOC, the RO stated that the Veteran was primarily at fault for the creation of the debt because he did not immediately report changes in his paid medical expenses.  However, the responsibility in the creation of the overpayment of benefits does not rest with the Veteran, inasmuch as he reported that he no longer needed VA benefits as of October 2010 and returned his payment for that month.  The remainder of the debt resulted from VA's retroactive determination that the Veteran should not have received payments he had already been awarded.  Thus, the Board finds that the Veteran does not bear primary fault in the creation of the overpayment at issue.

With respect to the third element, whether the Veteran would be subjected to undue hardship if the debt were recovered, the Veteran's March 2011 reflected a net monthly income of $1,299.00, resulting from a combined income of $3,674.00, minus monthly expenses totaling $2,375.00.  The Veteran also reported having $55,000.00 cash in the bank.  

The Board acknowledges the Veteran's statements that recovery of the overpayment would cause undue hardship.  However, financial hardship alone is not sufficient to constitute undue hardship for VA purposes.  Undue hardship is defined as depriving the debtor or his family of basic necessities.  38 C.F.R. § 1.965(a)(3).  Basic necessities constitute food, clothing, and shelter, and the Board finds that to require the Veteran to repay the overpayment in this case would not deprive him of basic necessities for VA purposes.  Accordingly, while the Board is sympathetic to any financial difficulty the Veteran may incur as a result of repayment of this debt, this factor alone is not sufficient to warrant a waiver of an otherwise valid debt.

The fourth element to be addressed is whether recovery of the overpayment would defeat the purpose for which the benefits were intended.  Here, VA awarded aid and attendance benefits to the Veteran beginning in July 2010, based upon his need for in-home care.  The evidence reflects that the Veteran did require and pay for such care from July 2010 through September 2010.  Therefore, any reduction in this benefit would defeat the purpose for which it was intended, namely to assist the Veteran in obtaining services for his aid and attendance albeit the Board does note this is an annualized benefit.

Also for consideration is the fifth element of whether a waiver of overpayment would cause "unjust enrichment."  Put another way, the Board must contemplate whether failure to make restitution would result in unfair gain.  Here, the evidence reflects that the Veteran required in-home care services in the amount of $4,800.00 per month from July 2010 through September 2010.  The Board also notes that the Veteran, of his own accord, informed VA in October 2010 that he was no longer paying for in-home care as of that month and returned his October benefit check.  There is no indication that the Veteran received funds that he did not need although the Board does note that normally such benefits are annualized.  Accordingly, the Veteran would be not unjustly enriched by waiver of the overpayment in this case.

The sixth element to be considered is whether reliance on VA benefits resulted in the Veteran relinquishing a valuable right or incurring a legal obligation.  The Veteran has not claimed that he relinquished any right or incurred any legal obligation or that he relied upon VA to his detriment, nor is there any evidence of such.  Thus, this sixth element does not support the Veteran's request for a waiver of overpayment.

The record does not demonstrate any additional factors which should be considered in adjudicating the Veteran's claim for a waiver of the indebtedness, nor has the Veteran identified any such factors.  

After weighing all of the enumerated factors, the Board finds that total recovery of the overpayment would violate the principles of equity and good conscience.  Repayment of the debt would not create an undue hardship on the Veteran, and the Veteran did not rely upon VA benefits to his detriment or relinquish a right as a result of benefits.  However, the Veteran was not at significant fault in the creation of the debt, and in fact notified VA of a change in his medical expenses very soon after they occurred.  Moreover, the benefits were utilized for their intended purpose, and there is no indication that the Veteran was unjustly enriched as a result of receiving them.  When viewed collectively, the factors supporting waiver of overpayment outweigh those supporting recovery of the debt.  Therefore, a waiver of overpayment is appropriate in this case.



ORDER

Waiver of recovery of an overpayment of VA nonservice-connected pension benefits in the amount of $6,576.00 is granted.



____________________________________________
S. L. Kennedy
Veterans Law Judge, Board of Veterans' Appeals



Department of Veterans Affairs