Citation Nr: 1300430 Decision Date: 01/07/13 Archive Date: 01/11/13 DOCKET NO. 09-29 663 ) DATE ) ) Received from the Department of Veterans Affairs Regional Office in Cleveland, Ohio THE ISSUE Entitlement to a waiver of collection of an overpayment in the amount of $500.00. REPRESENTATION Appellant represented by: Disabled American Veterans ATTORNEY FOR THE BOARD L. Kirscher Strauss, Counsel INTRODUCTION The Veteran had active military service from May 1974 to March 1976. This matter comes before the Board of Veterans' Appeals (Board) on appeal of a January 2009 decision by the Committee on Waivers and Compromises (Committee) at the Department of Veterans Affairs (VA) Regional Office (RO) in Milwaukee, Wisconsin. In October 2011 the Veteran failed to appear for a requested hearing at the RO before a member of the Board. FINDINGS OF FACT 1. The Veteran submitted her request for a waiver of recovery of an overpayment of VA compensation benefits in the amount of $500.00 within 180 days following the date of notice of indebtedness. 2. The Veteran promptly reported a change in her marital status; she had no fault in the creation of the debt and collection would result in undue hardship. CONCLUSION OF LAW Recovery of the debt in the amount of $500.00 would be against equity and good conscience. 38 U.S.C.A. § 5302 (West 2002); 38 C.F.R. §§ 1.962, 1.963, 1.965 (2012). REASONS AND BASES FOR FINDINGS AND CONCLUSION 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 (2012). 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 her detriment in reliance upon a granted VA benefit. See 38 U.S.C.A. § 5302; 38 C.F.R. § 1.965(a) (2012); Ridings v. Brown, 6 Vet. App. 544, 546 (1994). For a notice of indebtedness issued on or after April 1, 1983, a request for waiver of the indebtedness shall only be considered if made within 180 days following the date of notice. The 180-day period may be extended if the individual requesting waiver demonstrates to the Chairperson of the Committee that, as a result of an error by either VA or the postal authorities, or due to other circumstances beyond the debtor's control, there was a delay in such individual's receipt of the notification of indebtedness beyond the time customarily required for mailing, including forwarding. If the requester does substantiate that there was such a delay in the receipt of the notice of indebtedness, the Chairperson shall direct that the 180-day period be computed from the date of the requester's actual receipt of the notice of indebtedness. See 38 U.S.C.A. § 5302; 38 C.F.R. § 1.963(b). By way of background, the Veteran was divorced on July 31, 2007. She promptly notified the Birmingham, Alabama RO regarding the change in her marital status, enclosing a copy of her Final Judgment for Divorce and requesting that the RO take the necessary action to adjust her VA payments. She dated her request on August 6, 2007, and the RO received the Veteran's request on August 23, 2007. In July 2008 the Veteran completed a VA Form 21-0538, Status of Dependents Questionnaire, in which she again notified the RO that she was not married. In a letter dated in August 2008, the Montgomery RO acknowledged its receipt on August 23, 2007 of the Veteran's notification of change in marital status. The letter explained that the Veteran's husband had been removed from her award of VA disability benefits, effective July 31, 2007, and that the adjustment would result in a $50 reduction in monthly payments and an overpayment to the Veteran. In a separate letter dated in August 2008, the Debt Management Center (DMC) in St. Paul, Minnesota notified the Veteran that she had been overpaid $500 in VA compensation and pension benefits. The Veteran did not challenge the validity or amount of the debt. However, in October 2008, within 180 days following the August 2008 notice of indebtedness, she requested a waiver of the debt of $500.00 that was created due to the overpayment. She expressed shock that VA did not take action to adjust her award when she first notified VA of her change in status in August 2007, emphasizing that she did what she was supposed to do. Nevertheless, she also took some responsibility for not paying much attention to deposits made to her bank account. She submitted a VA Form 5655, Financial Status Report, identifying income from VA compensation benefits and from the Social Security Administration. She reported approximately $695 in monthly expenses: $443 in monthly installment contracts and other debts and $252 for rent or mortgage payment. She did not list her monthly food expenses. In January 2009 the Committee in Milwaukee, Wisconsin denied the Veteran's request for a waiver of the overpayment. The Committee found no fraud, misrepresentation, or bad faith on the part of the Veteran and, instead, decided the claim on the principles of equity and good conscience. Specifically, the Committee acknowledged that the Veteran's fault in creation of the debt was minimal because she notified VA immediately in regards to her divorce. However, the Committee concluded that she had financially gained at Government expense and that repayment of the debt would not result in financial hardship. Because the waiver request was timely and because there is no indication of fraud, misrepresentation, or bad faith on the part of the Veteran, the Board shall next consider whether recovery of the overpayment would be against equity and good conscience. See 38 U.S.C.A. § 5302(c); 38 C.F.R. §§ 1.962, 1.963. In considering the "equity and good conscience" elements, the Veteran was unjustly enriched by the payment of VA compensation benefits, which included her ex-husband on the award after their divorce was final. However, the overpayment occurred through absolutely no fault on the part of the Veteran. The fault lay entirely with VA officials, who did not take action on the Veteran's prompt notification regarding her change in marital status and specific request to adjust her payments accordingly. It would be difficult for the Veteran to realize such an error was made. Here, the change to her monthly award was a reduction of $50 dollars, and the Veteran indicated that she did not closely monitor the monthly deposits made to her bank account by VA and the Social Security Administration. Additionally, the Veteran has indicated that repayment of the debt would create a financial hardship. She described additional expenses that she incurred associated with moving after the divorce and needing to visit agencies to get food due to her limited, fixed income. Her representative also noted that the Veteran did not list her expenses for food or clothing. Therefore, when considering the relevant elements, particularly that the debt was not the fault of the Veteran and that there would be an undue hardship on the Veteran, the Board finds that recovery of the overpayment would be against equity and good conscience even if the Veteran was unjustly enriched. See 38 U.S.C.A. § 5302; 38 C.F.R. § 1.965(a). In sum, consideration of equity and good conscience as to the facts and circumstances in the Veteran's case indicates a need for reasonableness and moderation in the exercise of the Government's rights. In view of the Board's findings, recovery of the debt in the amount of $500.00 would be against equity and good conscience. Accordingly, the Veteran's timely request for a waiver of collection is granted. ORDER Waiver of recovery of the debt in the amount of $500.00 is granted. _________________________________ MARK F. HALSEY Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs