Citation Nr: 1309233 Decision Date: 03/19/13 Archive Date: 04/01/13 DOCKET NO. 10-40 855 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Milwaukee, Wisconsin THE ISSUE Entitlement to a waiver of recovery of an overpayment of VA pension benefits in the amount of $8,996.33. ATTORNEY FOR THE BOARD T. Sherrard, Counsel INTRODUCTION The Veteran had active service from October 1972 to October 1973. The Appellant is the Veteran's mother and legal custodian. This matter comes before the Board of Veterans' Appeals (BVA or Board) from a June 2010 decision by the above Department of Veterans Affairs (VA) Regional Office (RO), which denied a request for a waiver of recovery of a VA pension benefit overpayment in the amount of $8,996.33. The Board has not only reviewed the Veteran's physical claims file but also the Veteran's file on the "Virtual VA" system to insure a total review of the evidence. FINDINGS OF FACT 1. The Veteran was awarded VA pension benefits effective from May 1, 1992. 2. On February 25, 2009, the Veteran was incarcerated for commission of a felony. The award of VA pension benefits was accordingly terminated, creating an overpayment in the amount of $8,996.33. 3. The overpayment of VA pension benefits in the amount of $8,996.33 was properly created. 4. The overpayment was not the result of fraud, misrepresentation or bad faith on the part of the Appellant. 5. The Appellant was at fault in the creation of the overpayment, and there is no fault on the part of VA in its creation. 6. Repayment of the debt would not deprive the Appellant of the basic necessities of life. 7. The failure of the Government to insist upon its right to repayment of the assessed overpayment would result in unjust enrichment of the Veteran. 8. Recovery of the overpayment would not defeat the purpose of the VA pension program. 9. The Appellant and Veteran have not relinquished a valuable right or incurred any legal obligations resulting from reliance on VA benefits. CONCLUSION OF LAW The criteria for waiver of recovery of the overpayment of VA pension benefits in the amount of $8,996.33 have not been met. 38 U.S.C.A. § 5302 (West 2002); 38 C.F.R. §§ 1.963, 1.965 (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, as codified in pertinent part at 38 U.S.C.A. §§ 5103, 5103A, 5107, 5126 (West 2002 & Supp. 2012); 38 C.F.R. §§ 3.102, 3.159, 3.326(a) (2012). In the present case, the only issue on appeal is that of entitlement to a waiver of overpayment of VA pension benefits. In this regard, the United States Court of Appeals for Veterans Claims (Court) has held that the VCAA, with its expanded duties, is not applicable to cases involving requests for waiver of recovery of overpayments, pointing out that the statute applicable to such cases is not found in Title 38, United States Code, Chapter 51 (i.e., the laws amended by the VCAA). Cf. Barger v. Principi, 16 Vet. App. 132 (2002). Therefore, the VCAA and its implementing regulations are not for application in this matter. In any event, the RO, in the June 2010 Decision on Waiver of Indebtedness and an accompanying letter, and in a subsequent Statement of the Case (SOC) and Supplemental Statement of the Case (SSOC) issued in August 2010 and November 2010, respectively, explained to the Appellant the bases for denial of the claim, and afforded her the opportunity to present information and evidence in support of the claim. Waiver of Overpayment Any indebtedness of a veteran can be waived only when the following factors are determined to exist: 1) there is no indication of fraud, misrepresentation, or bad faith on the part of the person or persons having an interest in obtaining the waiver; and, 2) collection of such indebtedness would be against equity and good conscience. 38 U.S.C.A. § 5302(c); 38 C.F.R. § 1.963(a) (2012). Thus, a finding of fraud, misrepresentation, or bad faith precludes a grant of a waiver of recovery of the overpayment. The controlling legal criteria provide that the standard of "equity and good conscience" will be applied when the facts and circumstances in a particular case indicate the need for reasonableness and moderation in the exercise of the Government's rights. 38 C.F.R. § 1.965(a) (2012). 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 U.S. Government. In making this determination, consideration will be given to the following elements, which are not intended to be all inclusive: (1) Fault of debtor. Where actions of the debtor contribute to the creation of the debt. (2) Balancing of faults. Weighing the fault of the debtor against the VA's fault. (3) Undue hardship. Whether collection would deprive the debtor or his or her family of basic necessities. (4) Defeat the purpose. Whether withholding of benefits or recovery would nullify the objective for which benefits were intended. (5) Unjust enrichment. Failure to make restitution would result in an unfair gain to the debtor. (6) Changing position to one's detriment. Reliance on VA benefits results in relinquishment of a valuable right or incurrence of a legal obligation. 38 U.S.C.A. § 5302(c); 38 C.F.R. § 1.965(a) (2012). The Board finds that the overpayment of VA pension benefits in the amount of $8,996.33 was properly created. The Veteran was awarded disability pension benefits effective from May 1, 1992. On February 25, 2009, the Veteran was incarcerated for commission of a felony. In June 2009, VA was notified of the Veteran's incarceration by the Lorain Correctional Records Office. However, it does not appear that any action was taken at that time to adjust the Veteran's pension benefits. Rather, an internal e-mail dated in August 2009 indicates that a Social Security Administration (SSA) Prison Match search revealed that the Veteran was incarcerated. In October 2009, VA informed the Appellant that, due to the incarceration of the Veteran, his award of pension benefits would be terminated, effective the sixty-first day of incarceration following conviction of a felony, or April 27, 2009. The Appellant was advised that an overpayment of benefits would result, and that she would be notified of the exact amount due at a later date. The Veteran's award of VA pension benefits was accordingly terminated, creating an overpayment in the amount of $8,996.33. In a February 2010 letter, VA informed the Appellant of the overpayment amount of $8,996.33. In May 2010, the Appellant requested a waiver of recovery of the overpayment amount. She contends that VA was notified of the Veteran's incarceration in March 2009. Then, in April 2009, she received a letter from VA stating that the Veteran's pension benefit payments would stop the following month; however, she states that the pension payments continued. She avers that she was then notified that the overpayment would be automatically withdrawn from her account, but that nothing happened. When the Veteran asked her to use the VA benefits he had received, she did so, and contends that she did nothing wrong. The Board finds that the overpayment was not the result of fraud, misrepresentation, or bad faith on the part of the Appellant. Although the Appellant did not notify VA that the Veteran had been incarcerated or, subsequently, that she continued to receive benefits on his behalf even after he was incarcerated longer than sixty days, there is no indication that she failed to do so with the intent of committing fraud, that she misrepresented any of the facts, or that she failed to inform VA out of bad faith. Accordingly, the Board finds no fraud, misrepresentation, or bad faith on the part of the Appellant in the creation of the overpayment. As the evidence does not establish fraud, misrepresentation, or bad faith on the part of the Appellant, the Board will next determine if a waiver of recovery of the VA indebtedness is warranted on the basis of equity and good conscience under 38 U.S.C.A. § 5302(a); 38 C.F.R. §§ 1.963(a), 1.965(a) (2012). For the reasons discussed below, the Board finds that repayment of the Appellant's indebtedness would not violate principles of equity and good conscience. The Board finds that the Appellant was at fault in the creation of her indebtedness. The record shows that the Appellant did not inform VA of the Veteran's incarceration. Rather, VA was first notified of the incarceration by the Lorain Correctional Records Office in June 2009, nearly four months after the Veteran's first day of confinement. Moreover, the Appellant contends that she received a letter as early as April 2009 informing her that the Veteran's pension benefits would be terminated based on his incarceration (although the record reflects that she was not notified of termination of benefits until October 2009). In any case, regardless of the date on which she was notified, based on the Appellant's own statements, it appears she was informed that termination of pension benefits would occur as a result of the Veteran's incarceration. The Board finds, therefore, that a reasonable person in the Appellant's situation would have known that the Veteran's incarceration could result in the creation of an overpayment in benefits. The Board finds that, even if benefit payments continued beyond the Veteran's first sixty days of incarceration, because the overpayment of VA pension benefits was properly created based on the incarceration, VA was not at fault in the creation of the Veteran's indebtedness. The first two elements for consideration under 38 C.F.R. § 1.965(a) are the fault of the debtor, and balancing the fault of the debtor and VA. As previously noted, there is no fault on the part of VA in the termination of pension benefits based on the Veteran's incarceration. Assuming the Appellant was not aware of the overpayment of benefits, her action in accepting VA pension benefits still contributed to the creation of the overpayment. In October 2009 (or, as she contends, in April 2009), the Appellant was informed of the termination of the award, and, further, that she may be held responsible for the overpayment of benefits. However, the Appellant continued to accept the pension benefits and used them on the Veteran's behalf. The Board finds, therefore, that the failure to return the amount of the overpayment at that time lies solely with the Appellant, and this represents the greater degree of fault in balancing the actions between the Veteran and VA. The Board finds that that repayment of the debt would not deprive the Appellant of the basic necessities of life. As to the element of undue financial hardship, the regulation provides that consideration should be given to whether collection of the indebtedness would deprive the debtor or her family of the basic necessities. The Appellant's May 2010 Financial Status Report shows that she had a total monthly net income of $629, and total monthly expenses of $525, to include rent or mortgage payments, food, utilities, heat, phone, clothing, and cable television. The Appellant reported that she could pay $50.00 per month toward the overpayment. Given the Appellant's income and statement that she could pay $50.00 per month toward the overpayment of VA benefits, the Board finds that the collection of the $8,996.33 debt would not deprive her of the basic necessities of life. With regard to the other elements pertaining to the principles of equity and good conscience as set forth by 38 C.F.R. § 1.965(a), the Board finds that because the Veteran was in receipt of VA pension benefits to which he was not entitled, he was clearly unjustly enriched by the amount of the overpayment. The failure of the Government to insist upon its right to repayment of the assessed overpayment would, therefore, result in unjust enrichment of the Veteran. Moreover, the Board finds that there is nothing in the record to suggest that recovery of the overpayment would defeat the purpose of the VA pension program. In that regard, the award and disbursement of pension benefits was made to compensate the Veteran for disability and/or reduction in income due to non-service-connected disabilities; and, the termination of this award was effectuated due to his incarceration. Thus, the recovery of the overpayment created by the Veteran's incarceration would not defeat the purpose of the VA pension program. Finally, the Board finds that there is no evidence showing that the Appellant or Veteran relinquished a valuable right or incurred any legal obligations resulting from reliance on VA benefits. The facts of this case do not demonstrate that recovery of the overpayment would be against the principles of equity and good conscience. 38 C.F.R. §§ 1.963, 1.965 (2012). For these reasons, the Board finds that a preponderance of the evidence is against the Appellant's claim for a waiver of recovery of the overpayment of VA pension benefits in the amount of $8,996.33. Because the preponderance of the evidence is against the claim, the benefit of the doubt doctrine is not for application. See 38 U.S.C.A. § 5107; 38 C.F.R. § 3.102 (2012). ORDER Waiver of recovery of an overpayment of VA pension benefits in the amount of $8,996.33 is denied. ____________________________________________ MARK W. GREENSTREET Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs