Citation Nr: 1300160 Decision Date: 01/03/13 Archive Date: 01/11/13 DOCKET NO. 10-36 522 ) DATE ) ) On appeal from the Department of Veterans Affairs (VA) Regional Office (RO) in Nashville, Tennessee THE ISSUE Entitlement to waiver of recovery of overpayment of VA disability compensation benefits in the amount of $11,514.90 for the period from July 1, 2002 to June 30, 2009. REPRESENTATION Appellant represented by: Disabled American Veterans ATTORNEY FOR THE BOARD K. Osegueda, Associate Counsel INTRODUCTION The Veteran served on active duty from December 1975 to September 1977. This matter comes before the Board of Veterans' Appeals (Board) on appeal from a September 2009 decision of the Committee on Waivers and Compromises denying a waiver of the Veteran's debt in the amount of $11,514.90. In August 2010, the Veteran requested a videoconference hearing at the RO. She was scheduled for a hearing in June 2012; however, the Veteran failed to report to the hearing and requested that her hearing be rescheduled to a later date. In June 2012, the Board informed the Veteran that her motion showing good cause for her failure to report to the June 2012 hearing was granted. The Veteran was rescheduled for another videoconference hearing at the RO in December 2012. The Veteran failed to report to the December 2012 hearing or provide a written motion showing good cause for her failure to report. Therefore, the Board hearing request is considered withdrawn. See 38 C.F.R. § 20.704(e) (2012). A review of the Virtual VA paperless claims processing system reveals the August 2009 VA Debt Management Center referral for the Committee on Waivers, the August 2009 Financial Status Report, the September 2009 decision on the waiver of indebtedness, and the September 2009 VA Debt Management Center notification letter pertinent to the present appeal. FINDINGS OF FACT 1. The Veteran is not found to have presented credible lay assertions that are sufficient to establish that she previously submitted paperwork to VA about her divorce in June 2002. 2. The Veteran is not shown to have first sought to add her current spouse to her VA disability compensation award as a dependent earlier than May 2009. 3. In June 2009, the Veteran was notified that her VA disability compensation was being reduced based on the removal of her former spouse from her award as a dependent and that VA was unable to add her current spouse to the award because she had not supplied his Social Security number, date of birth and prior marital history. 4. In July 2009, the Veteran was notified that her VA disability compensation was reduced effective in October 2009 to recoup the overpayment in the amount of $11,514.90. 5. The Veteran was at fault in the creation of the indebtedness at issue, but she was not guilty of bad faith, misrepresentation or fraud. 6. The recouping of the $11,514.90 in overpaid benefits would not deprive the Veteran of basic necessities. 7. The recovery of the overpayment at issue would not defeat the purpose for which they were awarded as the benefits were intended to provide disability compensation for the Veteran and her dependents including her spouse when they were actually divorced. 8. The failure to make restitution in this case would result in unfair gain to the Veteran. 9. The Veteran did not relinquish a valuable right or incur a legal obligation in reliance on the VA disability compensation overpayment. CONCLUSION OF LAW The recovery of the overpayment of VA disability compensation in the amount of $11,514.90 for the period from July 1, 2002 to June 30, 2009 would not be against equity and good conscience. 38 U.S.C.A.§ 5302 (West 2002); 38 C.F.R. §§ 1.962, 1.963, 1.965, 3.4 (2012). REASONS AND BASES FOR FINDINGS AND CONCLUSION Duties to Notify and Assist The Veterans Claims Assistance Act of 2000 (VCAA) enhanced VA's duty to notify and assist claimants in substantiating their claims for VA benefits. 38 U.S.C.A. §§ 5102, 5103, 5103A, 5107, 5126 (West 2002 & Supp. 2011); 38 C.F.R. §§ 3.102, 3.156(a), 3.159, 3.326(a) (2012). The VCAA provisions are not applicable to claims such as the one decided here. See Barger v. Principi, 16 Vet. App. 132 (2002), in which the U.S. Court of Appeals for Veterans Claims (Court) held that VCAA, with its expanded duties, is not applicable to cases involving a claim for waiver of recovery of an overpayment. Notwithstanding the inapplicability of VCAA, general due process considerations have been adhered to by the RO. See 38 C.F.R. § 3.103. The RO in this regard has explained to the Veteran the bases for the denial of the claim, and afforded her the opportunity to present information and evidence in support of the claim. Factual Background In a January 1978 rating decision, the Veteran was awarded VA compensation benefits for disabilities manifested by depression with a hysterical personality and for the residuals of a hysterectomy. Her monthly rate was for a Veteran with dependents. The claims file shows the Veteran reported numerous marital changes and provided the appropriate documentation to either establish and/or terminate her marital status from September 1977 to July 2001. In August 1985 and January 1989, the Veteran was notified that she was receiving benefits for herself, as well as her spouse and children. She was informed to tell VA immediately if there was any change in the number or status of her dependents. In July 2001, the Veteran was notified that VA proposed to reduce her compensation payments because she did not return a dependency questionnaire that was sent to her. She was informed that she had 60 days to submit evidence showing that her award should not be adjusted. In response to the proposed reduction, the Veteran reported a change in her marital status when she noted her separation from her husband, K. H. R., in July 2001. She indicated that she was not legally separated from her husband and that their marriage was not yet terminated. In November 2001, the Veteran was informed that the proposed reduction was reconsidered by the RO and that there was no action taken to reduce her award. In December 2007 and December 2008, the Veteran was notified that her compensation was being increased. She was notified to advise the RO immediately if she had a change in marital and/or dependent status. In May 2009, the Veteran reported that she was being treated for nerve damage in her legs with medication that "took [her] memory" and was unable to remember the date of her divorce from K. H. R. She indicated that, as soon as her divorce was finalized, she married J. T. W. in February 2003 and that they were still married. She stated that she did not know her spouse's Social Security number. In a statement received by VA in June 2009, the Veteran reported that she was divorced from K. H. R. in June 2002 and married to J. T. W. in February 2003. She stated that she supplied copies of her divorce paperwork and marriage certificate to the administrative offices at the Asheville, North Carolina VA Medical Center (VAMC). In a June 2009 report of contact, a VA employee indicated that she contacted the Veteran to obtain identification information for her current spouse. The Veteran stated that she did not know his information and that they did not currently live together. She reported that she was unsure where he lived, but she was going to try to locate his information so she could claim him as a dependent. In June 2009, the Veteran was informed that K. H. R. was removed from her award effective on June [redacted], 2002, the date they were divorced and that the action created an overpayment. Her application to add her new spouse, J. T. W. was denied because she had not submitted his Social Security number, date of birth, and prior marital history. In a Notice of Disagreement received by VA in July 2009, the Veteran reported that she married J. T. W. when she was "messed up on Neurontin and Clonozepam." She indicated that she met him on the internet and that he was "stealing her blind." She was unsure how many years they were "actually together," but noted that, when he left, he stole the proceeds from her house that she sold for $77,000. She reported that the house was worth $159,000, but she did not know what she was doing due to her medication. In August 2009, the Veteran requested a waiver of the overpayment on the basis of financial hardship. She stated that she "wasn't even aware that [she] received money for being married." She stated that she owed over $3,000 in bills which she paid using her VA disability compensation award and part of her Social Security Administration (SSA) disability award payments. She had no additional income and continued to support her adult son due to his mental disability and inability to obtain employment. She stated that she received no money from her current husband, J. T. W. In another statement received by VA in August 2009, the Veteran stated that she disagreed with the amount of the overpayment created when K. H. R. was removed from her award because she was remarried to J. T. W. in February 2003. She stated that she brought her divorce papers and her marriage license to the VAMC and was told that the paperwork would be sent to the appropriate place. The Veteran reported that she would be "out on the streets" if she was unable to pay her bills. She indicated that she used her VA and SSA disability award payments to pay her bills totaling over $3,000 per month and to purchase over-the-counter medicine, feminine hygiene products, gas, food for two people, and to pay her copayments for prescription medication. In August 2009, the Veteran submitted a copy of a marriage certificate that documented that her marriage to J. T. W. in February 2003 appeared of record in the County Clerk's Marriage Record Book in July 2009. In August 2009, the Veteran filed a Financial Status Report. She indicated that she was receiving a total monthly income of $4,035.00 from VA and Social Security disability payments. She reported total monthly expenses of $4,394.14 for the following: $671.59 for rent or mortgage payment; $800.00 for food; $250.00 to $300.00 for utilities; $60.00 for gas; $150.00 for toiletries; $110.00 for cleaning supplies and copayments for medication; and a total of $814.70 on installment contracts or other debts. She reported a monthly deficit of $369.14 after expenses. Under assets, the Veteran reported: a deficit of $49.74 for cash in the bank and $5,000.00 for the resale value of her automobile. She indicated that she was buying $65,000 in real estate and was in possession of furniture with a resale value of approximately $6,000, but she had an outstanding loan on it. She did not include a total value of her assets. In September 2009, the Veteran was notified that her application to add J. T. W. to her award as her dependent spouse was denied because she had not submitted his Social Security number, date of birth, or prior marital history. She was informed that, if VA received the requested information by August 3, 2010, her claim would continue to be processed; however if it was received after August 3, 2010, it would be considered a new claim. The Veteran's request for waiver was denied in September 2009. The Committee on Waiver and Compromise found that there was no evidence of fraud, misrepresentation or bad faith on the part of the Veteran in the creation of the indebtedness, but that collection of the overpayment would not be against equity and good conscience. Notably, the Committee found that the Veteran was at "significant fault" in the creation of the debt because when she divorced K. H. R. in 2002, she failed to immediately notify VA. The Committee noted that VA was not made aware of her divorce from K. H. R. until she submitted a request to add her current spouse, J. T. W., to her award. Therefore, she received VA benefits for a spouse from whom she was divorced and this resulted in unjust enrichment at the expense of the Government. The Committee determined that fault and unjust enrichment on the Veteran's part outweighed any claim of financial hardship. In a statement received by VA in October 2009, the Veteran reported that she knew two people who witnessed her providing VAMC employees with her divorce papers and her marriage certificate and being informed that the paperwork would be sent to the RO. Essentially, she contended that she should not be held accountable for the creation of the overpayment because the VAMC employees did not properly forward her dependency information to the Nashville RO. Analysis Initially, the Board notes that the amount of overpayment in question is $11,514.90 for the period from July 1, 2002 to June 30, 2009. The Veteran has not disputed the amount of the debt in question. See 38 C.F.R. § 1.911(c)(1). The Veteran essentially argues that she is entitled to a full waiver of recovery of the overpayment at issue based on undue financial hardship. Waiver of repayment of indebtedness is statutorily precluded if there is any indication of fraud, misrepresentation of a material fact, or bad faith on the part of the person having an interest in obtaining a waiver. 38 U.S.C.A. § 5302(c); 38 C.F.R. § 1.965(b). Pursuant to 38 C.F.R. § 3.901(a), fraud has been defined as: "[A]n act committed when a person knowingly makes or causes to be made or conspires, combines, aids, or assists, in agrees to, arranges for, or in any way procures the making or presentation of a false or fraudulent affidavit, declaration, certificate, statement, voucher, or paper, concerning any claim for benefits ..." Misrepresentation of a material fact must be more than non-willful or mere inadvertence. 38 C.F.R. § 1.962(b). Bad faith has been defined as: "Generally describ[ing] 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." 38 C.F.R. § 1.965(b)(2). The Committee on Waivers and Compromises determined that no fraud, misrepresentation, or bad faith was involved in this case, and the Board agrees. The Veteran argues that she informed VA about the change in her dependency status shortly after her divorce from K. H. R. She asserts that she submitted copies of her divorce paperwork to individuals at the Asheville VAMC and that she was informed the paperwork would be sent to the RO. Despite the Veteran's contentions that she submitted the divorce paperwork, there is no evidence of any communication from the Veteran to the RO regarding her divorce, including a copy of a divorce decree or final dissolution prior to 2009. Although she indicated that she knew two witnesses who watched her hand the divorce paperwork to a VA employee at the VAMC, she has not submitted any documentation from the unnamed witnesses to support her assertions. Moreover, in award letters from the RO dated in December 2007 and December 2008, she was instructed to notify the RO immediately if she had a change in marital and/or dependent status. There is no indication that the Veteran made any attempts to notify the RO of the change in her marital status after her divorce. If there is no indication of fraud, misrepresentation, or bad faith, as in this case, recovery of overpayment of benefits is prohibited if the Secretary determines that recovery would be against equity and good conscience. 38 U.S.C.A. § 5302(a); 38 C.F.R. § 1.962. The recovery of an overpayment shall be waived if it is determined that recovery of the indebtedness would be against equity and good conscience. 38 C.F.R. § 1.963(a). Consideration of equity and good conscience is intended to reach a result that is not unduly favorable or adverse to either the claimant or the Government. It is intended to achieve a result that is fair. 38 C.F.R. § 1.965(a). The regulations set forth six non-exclusive elements that must be addressed to determine whether the facts and circumstances in a particular case dictate that collection of an overpayment would be against equity and good conscience. Id. Each of the six elements must be addressed. The first element is "fault of the debtor," defined as "[w]here actions of the debtor contribute to creation of the debt." 38 C.F.R. § 1.965(a)(1). In this case, the debt at issue was created when the Veteran failed to inform the RO of her divorce in a timely manner. Even if she had informed VA in June 2002 that she was divorced (though there is no record of such), the Veteran was at fault for accepting additional VA benefits that were awarded based on her having a dependent spouse as notified in December 2007 and December 2008. These letters from the RO specifically informed the Veteran that she was to notify VA immediately if there was any change in the number of her dependents or marital status. In addition, she was advised that failure to notify VA of change in dependent status would result in the creation of an overpayment. In light of the Veteran's failure to notify the RO of her divorce and continued acceptance of additional benefits for her spouse, she is at fault in creating the overpayment. The next element concerns "balancing of faults." 38 C.F.R. § 1.965(a)(2). This requires weighing the fault of the debtor against the fault of VA. The RO duly notified the Veteran to report any change in dependent status. The Veteran did not report her divorce in June 2002. Moreover, she did not attempt to stop the receipt of additional compensation received for her spouse earlier than May 2009, when she sought to add her current husband, J. T. W., as a dependent. Therefore, the Veteran is responsible for repayment of the overpayment. The third element to be address is "undue hardship." The standard is "[w]hether collection would deprive debtor or family of basic necessities." 38 C.F.R. § 1.965(a)(3). As discussed, the Veteran submitted a Financial Status Report in connection with her waiver request. In September 2009, the Veteran was notified that VA denied her waiver request and that she could choose to pay the debt in full, request a monthly installment plan if she was unable to make the full payment, have her monthly VA benefits reduced by the amount owed, or have her monthly VA benefits reduced by a lesser amount until the debt is paid in full. There is no indication that the Veteran responded to the notification letter with an election of her payment options and/or submission of an updated Financial Status Report. However, she has reported entering into some repayment plan The most recent evidence of record, the Financial Status Report received in August 2009, shows monthly income in the amount of $4,035.00. The Veteran has not contended otherwise, and thus, the Board accepts this amount as accurate. The Veteran claims that collection of the $11,514.90 overpayment for the period from July 1, 2002 to June 30, 2009 would cause her undue hardship if collected due to a reported deficiency of $369.14 per month after expenses. She indicated that she could afford no amount per month for recoupment. The Board finds no evidence of record to suggest that the RO has proposed withholding all compensation until the debt is satisfied. When the Board looks at the list of monthly expenses submitted by the Veteran, her income is more than sufficient to provide for her basic necessities. The Veteran has an income of over $4,000 between her VA disability compensation and SSA disability benefits. She reported that her average monthly living expenses for rent, food, utilities and heat, and other living expenses totaled approximately $2,000. The Board has additionally looked at the Veteran's monthly payments on installment contracts and other debts. She reported monthly payments on installment contracts and other debts totaled $814.70. As the overpayment of VA disability compensation benefits is a valid debt to the government, there is no reason that the Veteran should not accord VA the same consideration that she accords her private creditors. After carefully reviewing the Veteran's financial status, it is the Board's opinion that payment of the outstanding indebtedness in reasonable monthly installments would not prevent the Veteran from providing herself with the basic necessities of life. The fourth element concerns whether recovery of the overpayment would defeat the purpose for which the benefits were intended. 38 C.F.R. § 1.965(a)(4). The Board finds that recovery of the debt would not nullify the objective for which benefits are intended, as disability benefits are intended to provide payment for injury or disease incurred while in active service. 38 C.F.R. § 3.4. The VA disability benefits were intended to provide compensation for the Veteran's service-connected disabilities, as well as an additional amount for her spouse. The Veteran continued to receive payment for a dependent spouse for approximately seven years after they were divorced. The recovery of additional disability benefits for a dependent spouse, to which she was not entitled, would not defeat the purpose for which they were awarded. The fifth element involves "unjust enrichment," i.e., the concept that failure to make restitution would result in unfair gain to the debtor. 38 C.F.R. § 1.965(a)(5). In this case, the Veteran failed to advise the RO of her divorce. The Veteran was notified that she was receiving additional disability compensation benefits for her dependent spouse for approximately seven years after her divorce and continued to accept such. The overpayment consists of the additional VA benefits for a dependent spouse, to which she was not entitled under the law. The Board finds that receipt of these additional VA benefits constituted unjust enrichment to the extent of benefits in the amount of $11,514.90. The final element to be considered is whether reliance on VA benefits resulted in the Veteran relinquishing a valuable right or incurring a legal obligation. 38 C.F.R. § 1.965(a)(6). The Veteran has not claimed that she relinquished any right or incurred any legal obligation in reliance upon receipt of these VA benefits, nor is there any evidence of record that she in fact relied upon the additional benefits. After review of all the evidence of record, carefully weighing all relevant factors and the contentions of the veteran, the Board finds that recovery of the overpayment of $11,514.90 would not be against equity and good conscience. 38 U.S.C.A. § 5302. The end result is not unduly favorable or adverse to either the Government or the Veteran and the evidence in this case is not so evenly balanced that there is doubt as to any material issue. 38 U.S.C.A. § 5107. ORDER The application for Waiver of recovery of the overpayment of VA disability compensation, in the amount of $11,514.90 is denied. ____________________________________________ STEPHEN L. WILKINS Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs