Citation Nr: 1215545 Decision Date: 05/01/12 Archive Date: 05/10/12 DOCKET NO. 08-17 271 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Montgomery, Alabama THE ISSUE Entitlement to a waiver of recovery of an overpayment of $15,036 in VA compensation payments. REPRESENTATION Veteran represented by: The American Legion ATTORNEY FOR THE BOARD J. L. Prichard, Counsel INTRODUCTION The Veteran had active service from June 1970 to April 1972 and from February 1976 to April 1994. This matter comes before the Board of Veterans' Appeals (Board) on appeal of decisions of the Montgomery, Alabama, regional office (RO) of the Department of Veterans Affairs (VA). The appeal is REMANDED to the RO via the Appeals Management Center (AMC), in Washington, DC. VA will notify the Veteran if further action is required. REMAND The Veteran contends that he is entitled to a waiver of the recovery of an overpayment of $15,036 in VA disability payments. He argues that he was completely without fault in the creation of this debt, that he received conflicting information from the RO and the VA Debt Management Center as to whether or not he continues to owe money to the VA, that he repaid the original amount of the overpayment, and that he has a letter from the Debt Management Center stating that his debt has been repaid in full. The Veteran further contends that if a debt exists, it should be waived, as it would be a financial hardship for him to repay. First, although the Veteran has requested a waiver of the overpayment, it is also apparent that he disagrees that he owes the VA any money at all. He has argued from beginning that he did as he was instructed by VA and has provided a copy of the VA letter which states his debt was paid in full and not to send any more money. He also asserts he was not at fault for the creation of the debt, as it was based entirely on a miscalculation of the past benefits owed to him after a grant of service connection when combined with his military retirement pay. His representative has repeated this argument in the March 2012 Informal Hearing Presentation in some detail. Thus, the Veteran argues that the overpayment was the result of sole administrative error by VA and is therefore invalid. Therefore, he has formally disputed the existence of the debt. However, the RO has failed to adjudicate the preliminary issue of the validity / amount of a debt. See 38 U.S.C.A. § 5314(b) (prohibiting offset of a debt from future benefit payments unless VA first makes a determination with respect to the beneficiary's dispute of existence or amount of debt); Schaper v. Derwinski, 1 Vet. App. 430, 437 (1991). A debtor may dispute the amount or existence of a debt, which is a right that may be exercised separately from a request for waiver or at the same time. See 38 C.F.R. § 1.911(c)(1) (2011); see also VAOPGCPREC 6-98. The propriety and amount of the overpayment at issue are matters that are integral to a waiver determination. See Schaper, 1 Vet. App. at 434. The Board notes that the April 2008 statement of the case does not contain any laws or regulations pertaining to the validity of the debt, and while fault is discussed in the context of the waiver, there is no discussion of such in the creation of the debt, and no finding as to whether or not the debt is valid. Since the issue of the validity / amount of the debt has not been formally adjudicated at the RO or Committee level, the Board may not consider it at this time in the first instance. See Bernard v. Brown, 4 Vet. App. 384, 392 (1993). In other words, first, the Committee or RO must first adjudicate whether the amount / creation of the debt at issue was proper, and not due to sole administrative error by VA. The propriety of the creation of the debt is inextricably intertwined with the claim for a waiver, as there is no need for a waiver if the debt was not properly created. After adjudication of this preliminary issue, only then can the Committee or RO adjudicate the issue of waiver of recovery of an assessed overpayment. Second, the Board notes that the Veteran requested and was provided an audit of his account in November 2005. However, it is unclear from the audit why the $32,286 payment to the Veteran on March 2, 2005, which is the cause of the overpayment, was made and why the Veteran was not entitled to this payment. It is also unclear why the March 2005 letter from the Debt Management Center to the Veteran stating that his account had been paid in full is in error. The Veteran has repeatedly asked for these explanations but none have been provided. He should be provided explanations and copies of these explanations should be placed in the claims folder. Third, in order to properly address the question of entitlement to waiver of recovery of compensation benefits in this case, VA must have accurate and current financial information. Such information is crucial when weighing the equities of any claim for waiver of indebtedness. The only Financial Status Report (FSR, VA Form 5655) of record is dated December 2005. Consequently, if it finds that the underlying debt is valid, the RO must obtain an updated FSR, VA Form 5655 from the Veteran before issuing a determination whether waiver of recovery of any debt determined to be valid is against the principles of equity and good conscience. It is one of the Veteran's primary contentions that the repayment of the overpayment would impose upon him an undue financial hardship. The potential for the imposition of an undue hardship is one of the elements for consideration in the determination of whether the collection of an overpayment would violate the principles of equity and good conscience. 38 C.F.R. § 1.965 (2011). The Board therefore believes that an updated FSR is also critical to the resolution of the claim. Accordingly, the case is REMANDED for the following action: 1. The RO is requested to provide the Veteran written notice and explanation as to why the $32,286 payment to him on March 2, 2005 was made and why he was not entitled to this payment. He should also be provided a written explanation as to why the March 2005 letter from the Debt Management Center stating that his account had been paid in full is in error. Copies of these letters should be placed in the claims folder. 2. Thereafter, the Committee or the RO should adjudicate the preliminary issue of whether the overpayment of compensation was properly created (i.e. the validity of the debt), including whether the amount of the overpayment ($15,036) is proper and including whether the overpayment is the result of sole administrative error by the VA. See 38 C.F.R. § 1.911(c)(1) (2011); see also VAOPGCPREC 6-98; VAOPGCPREC 2-90. The Veteran is challenging the existence and amount of the debt by arguing that he received conflicting information from VA and that he followed the instructions from the Debt Management Center. If it is determined that any or all of the overpayment at issue was improperly created, award action should be taken to rectify the error. In short, the Committee or RO must first address whether the overpayment was valid and properly created. 3. If an overpayment is found to be valid and properly created, the RO should request that the Veteran complete an updated Financial Status Report (FSR, VA Form 5655), listing all monthly income, monthly expenses, assets and debts. Supporting documentation should be requested from the Veteran as deemed appropriate. Once obtained, all documentation should be associated with the claims folder. This information is required for purposes of determining whether there is undue hardship from collection on the debtor. 4. If an overpayment is found to be valid and properly created, the Committee should again review the record and reconsider whether the Veteran's request for waiver is precluded by the principles of equity and good conscience. See 38 U.S.C.A. § 5302; 38 C.F.R. §§ 1.962, 1.963, 1.965. 5. If the Committee's determination is unfavorable with regard to the issues of (a) the validity of the debt or (b) whether his waiver request is precluded by the principles of equity and good conscience, the Veteran and his representative should be provided with a Supplemental Statement of the Case (SSOC). Thereafter, the Veteran should be afforded a reasonable period of time within which to respond thereto. The Veteran has the right to submit additional evidence and argument on the matter or 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. 2011). _________________________________________________ THOMAS J. DANNAHER Veterans Law Judge, Board of Veterans' Appeals Under 38 U.S.C.A. § 7252 (West 2002), only a decision of the Board of Veterans' Appeals is appealable to the United States Court of Appeals for Veterans Claims. This remand is in the nature of a preliminary order and does not constitute a decision of the Board on the merits of your appeal. 38 C.F.R. § 20.1100(b) (2011).