Citation Nr: 1307495	
Decision Date: 03/05/13    Archive Date: 03/11/13

DOCKET NO.  09-09 221	)	DATE
	)
	)

On appeal from the
Department of Veterans Affairs Regional Office and Insurance Center in Philadelphia, Pennsylvania

THE ISSUE

Entitlement to waiver of an overpayment of VA pension benefits in the amount of $9,816, including preliminarily considering the validity of the debt.


ATTORNEY FOR THE BOARD

T. Mainelli, Counsel


INTRODUCTION

The appellant served on active duty from June 1972 to July 1976.

This matter comes before the Board of Veterans' Appeals (Board) on appeal from a July 2008 determination by the Committee on Waivers and Compromises (Committee) at the Department of Veterans Affairs (VA) Regional Office (RO) and Insurance Center in Philadelphia, Pennsylvania

In November 2011, the Board remanded this case to the RO, via the Appeals Management Center (AMC) in Washington, DC, for further development.


FINDINGS OF FACT

1.  For the time period from February 1, 2003 to June 1, 2008, VA paid the appellant pension benefits in the amount of $9,816 based upon his report of only being in the receipt of Social Security Administration (SSA) disability benefits with "0$" of income for "earnings," "retirement," and "income from other sources."

2.  An Income Verification Matching (IVM) program discovered that the appellant had received earned income for the years 2003, 2004 and 2005 which, when combined with his SSA benefits, far exceeded the maximum annual pension rate (MAPR). 

3.  The creation of $9,816 debt was due to the appellant's fault for failing to disclose earned income, and no part of the creation of the debt may be attributed to "sole" error on the part of VA. 

4.  The appellant willfully disregarded the RO's advisements concerning his eligibility for pension benefits and his duty to report receiving any forms of income, and acted in bad faith in accepting his pension benefits. 


CONCLUSION OF LAW

The overpayment of VA pension benefits in the amount of $9,816 was properly created and not the result of sole VA error, and waiver of recovery of the overpayment is precluded by reason of bad faith on the part of the appellant.  38 U.S.C.A. §§ 5107, 5112(b)(10), 5302 (West 2002) 38 C.F.R. §§ 1.963, 1.965, 3.105, 3.500(b)(2) (2012). 


REASONS AND BASES FOR FINDINGS AND CONCLUSION

The appellant requests waiver of recovery of overpayment in VA pension benefits in the amount of $9,816.  Historically, the appellant filed his original claim for VA pension benefits on March 26, 2003 by means of a VA Form 21-526 (Veteran's Application for Compensation and/or Pension).  He reported being 49 years old and being in receipt of SSA disability benefits in the amount of $723 per month.  He denied any other assets or sources of income.  He reported last working on November 24, 2002.

In April 2003, the RO confirmed that the appellant was in receipt of SSA disability benefits with a disability onset date of February 12, 1994.

On April 18, 2003, the RO notified the appellant of his award of VA pension benefits in the amount of $82 per month effective April 1, 2002, and $83 effective December 1, 2002.  The RO's letter contained the following advisements:

How We Figure Your Pension
Your pension rate depends on your income.

Medical Expenses that you paid may be used to reduce the income we count.  Please keep receipts for your medical expenses.  We may need them.

What Income and Allowance Expenses Did We Use?
We counted the income shown below to figure your pension from April 1, 2003.

For Yourself:  $0 income from earnings, $8,686 from Social Security, $0 income from retirement and $0 income from other sources.

We considered your monthly social security income of $723 you reported on your application.  We need you to send us a letter from your local social security office showing your monthly social security income effective December 1, 2001 and December 1, 2002.  Once we have received this information, we will make an adjustment to the income we counted.

We're paying you as a single veteran with no dependents.

What Are Your Responsibilities?
You are responsible to tell us right away if:

* your income or the income of your dependents changes (i.e., earnings, Social Security Benefits, lottery and gambling winnings)
* your net worth increases (i.e., bank accounts, investments, real estate)
* your continuing medical expenses are reduced
* you gain or lose a dependent
* your address or phone number changes

We've also attached a VA Form 21-8768, Disability Pension Award Attachment, which explains certain factors concerning your benefits.

...
Additionally, the RO's award letter included a toll free phone number which the appellant could call if he had any questions or needed assistance.

Thereafter, the appellant submitted an SSA statement reflecting a total benefit of $10,284 for the year 2002 with a $216 deduction for Medicare premiums.  Effective December 2002, his regular SSA monthly benefit was $656.90.

On June 21, 2003, the Veteran's pension award was adjusted to reflect the new SSA information for a net monthly rate of VA pension benefits in the amount of $151 effective April 1, 2002, and $150 effective January 1, 2003.  See VA Form 21-8947 (Compensation and Pension Award) signed June 21, 2003.  This rate increased to $154 per month effective December 1, 2003.

The controversy in this case arises as a result of an IVM Program which found that, for the year 2003, the Veteran had earned income of $2,800 from a church and $1,251 from a lawn service company.  In a statement received in June 2006, the Veteran acknowledged in writing that this information was correct.

The RO also received IVM information for the years 2004 and 2005, which , when added to his Social Security Benefit, far exceeds his VA pension eligibility.  The appellant has not specifically acknowledged the income figures for 2004 and 2005, but he has essentially conceded the amounts by arguing that his debt should only be $1,156 which represents the amount his earned income exceeded the MAPR.  The appellant has not provided any information that the IVM information received is incorrect.  On this record, the Board must find that the IVM information received for the years 2004 and 2005 is correct.  The record also reflects that VA pension benefits were discontinued effective June 1, 2008.  

As a threshold matter, the Board must determine the lawfulness of the debt asserted.  See Schaper v. Derwinski, 1 Vet. App. 430 (1991); VAOPGCPREC 6-98 (Apr. 24, 1998).  The appellant does not dispute that, between February 1, 2003 and June 1, 2008, VA paid him pension benefits in the amount of $9,816.  Rather, the appellant argues that no debt is due because he had not been informed of his inability to work part-time while receiving VA pension benefits.  Alternatively, the appellant asserts that the amount of debt owed should be less as VA failed to timely notify him of the overpayment of benefits.  In another alternative argument, the appellant asserts that the true debt is $1,156 which is calculated by the amount that his income exceeded the MAPR.

In this case, the appellant was provided a notice letter on April 18, 2003 which advised him that his pension rate depended on his income which VA had calculated as $8,686 from Social Security and $0 from "earnings," "retirement," and "income from other sources."  He has also advised of his responsibility to report "right away" if his income changed with an advisement that income included monetary sources ranging broadly from "earnings, Social Security Benefits, lottery and gambling winnings."

In totality, the advisement provided by VA to the Veteran contains clear language that any source of income or "earnings" beyond the $8,686 in SSA benefits needed to be reported to VA.  The Veteran's perception that this broad definition excluded part-time work is not convincing as monies earned would by any reasonable person standard be considered "earnings."  Quite simply, the Veteran knew, or should have known, that his part-time work earnings constituted "earnings" under the definition provided by VA.  He simply cannot profess ignorance of VA compensation eligibility requirements when such a basic and simple definition had been provided to him.  See Jordan v. Brown, 10 Vet. App. 171, 174 (1997).

Arguably, the appellant may be asserting that the creation of the debt at issue, or at least portions thereof, was the sole result of VA administrative error.  See 38 U.S.C.A. § 5112(b)(10); 38 C.F.R. § 3.500(b)(2) (the effective date of reduction or discontinuance of benefits by reason of an erroneous award based solely on administrative error shall be the date of last payment).  See Jordan, 10 Vet. App. 171 (1997).

Here, the appellant clearly bore the fault in the creation of the debt by failing to report earned income as he had been advised by VA.  On the other hand, the RO consolidated the information from an IVM in October 2005, and began steps in June 2006 to advise the Veteran of the information received.  An additional letter was sent in September 2007 upon the receipt of additional IVM information.

By letter dated December 4, 2007, the appellant was advised of the RO's determinations regarding his VA pension eligibility in 2003, 2004 and 2005.  The appellant was advised that the income adjustments would result in an overpayment of benefits.  As required by law, the Veteran was given a 60-day period to present evidence and/or argument as to why the proposed action should not be taken.  He was also advised that, if he wished to make a more timely adjustment to his award, he could sign, date and return a provided form authorizing the RO to take earlier action.

While it may be argued that VA possibly could have processed the discontinuance of payments in a faster and more efficient manner, due process requirements exist, which prevent the RO from simply discontinuing benefits sua sponte.  In any event, the Board must find that the appellant bears the overwhelming fault in the overpayment of VA pension benefits due to his failure to report earned income and request an immediate discontinuance of pension benefit payments.  Thus, the RO is not at "sole" fault for the creation of this debt or any portion thereof.

Finally, the appellant asserts that the true debt is $1,156 which he self-calculates by the amount that his income from non SSA resources, (hence his unreported earned income that caused this debt), exceeded the MAPR.  Basic entitlement to pension exists if, among other things, the claimant's "income" is not in excess of the MAPR specified in 38 C.F.R. § 3.23.  See 38 U.S.C.A. § 1521(a), (b); 38 C.F.R. § 3.3(a)(3).  Certain expenses may be deducted, or "excluded," from countable income.  Income from SSA benefits and/or "part-time work" are not specifically excluded under 38 C.F.R. § 3.272.  This argument, therefore, has no legal merit.

As such, the Board finds that no portion of the creation of the debt may be attributed to sole error on the part of VA.  The preponderance of the evidence establishes that the overpayment of pension benefits in the amount of $9.816 was validly created.  There is no doubt of material fact to be resolved in the appellant's favor.  38 U.S.C.A. § 38 U.S.C.A. § 5107(b). 

The Committee has determined that waiver of recovery is prohibited in this case as the overpayment in pension benefits to the appellant was the result of conduct on his part which amounted to bad faith.  38 U.S.C.A. § 5302(c).  A debtor's conduct is deemed to constitute 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."  A debtor exhibits lack of good faith where the debtor's conduct shows an "absence of an honest intention to abstain from taking unfair advantage of the ... Government."  The Board also notes that any misrepresentation of material fact must be "more than non-willful or mere inadvertence."  38 C.F.R. § 1.962(b). 

The chronology of events in this case is quite simple.  The appellant had actual notice that his VA pension benefits were based, in part, on VA's assumption that his only source of income was SSA benefits.  He was specifically advised of the need to disclose all forms of income which included "earnings," "retirement," "income from other sources," "Social Security Benefits" as well as "lottery and gambling winnings."  

For the time period from February 1, 2003 and June 1, 2008, the appellant accepted and cashed his pension benefits while, unknown to VA, he had been in receipt of part-time work-related income.  This income was only discovered through an IVM Program, and the appellant took no affirmative action to report sources of income now known to have existed.  The appellant now argues that he did not report the earned income because he was unaware part-time work came within the definition of all forms of income such as "earnings," "retirement," "income from other sources," "Social Security Benefits" as well as "lottery and gambling winnings" provided by VA.

On this evidence, the Board finds that appellant willfully disregarded the RO's advisements concerning his eligibility for pension benefits and his duty to report receiving any form of income, and acted in bad faith in accepting his pension benefits.  At the time he accepted his pension benefits from February 1, 2003 and June 1, 2008, the appellant had been on clear notice that his pension award was income sensitive and that income generated from "earnings" were considered a form of income that he had to report once and when he received them.  He engaged in a willful blindness, or deliberate indifference, to these clear and simple requests to report any changes in income based upon an unconvincing rationale that his part-time work earnings did not fall within the definition of "earnings" or income provided by VA.  His act of bad faith has led to a loss to the government in the amount of $9,816.  Accordingly, the Board finds that the appellant's act of bad faith bars him from seeking waiver of recovery of the $9,816 in overpaid pension benefits.  There is no doubt of material fact to be resolved in his favor.  38 U.S.C.A. § 5107(b).  His claim for waiver of recovery, therefore, is denied 

In so holding, the Board notes that the notice and duty to assist requirements of the Veterans Claims Assistance Act of 2000 (VCAA) do not apply to a claim for waiver of recovery of overpayment as these types of claims are subject to separate notice and development provisions.  Lueras v. Principi, 18 Vet. App. 435 (2004).



ORDER

Waiver of recovery of pension benefits in the amount of $9,816 is denied. 




____________________________________________
DENNIS F. CHIAPPETTA
Veterans Law Judge, Board of Veterans' Appeals



Department of Veterans Affairs