Citation Nr: 1312368 Decision Date: 04/15/13 Archive Date: 05/02/13 DOCKET NO. 10-47 774 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Muskogee, Oklahoma THE ISSUE Entitlement to waiver of recovery of education benefits overpayment in the calculated amount of $3,000.00, to include whether the debt was validly created. ATTORNEY FOR THE BOARD J. M. Kirby, Counsel INTRODUCTION The Veteran served on active duty from September 2008 to June 2009. This matter comes before the Board of Veterans' Appeals (Board) on appeal from a May 2010 decision by a Department of Veterans Affairs (VA) Regional Office (RO) denying the Veteran's request for a waiver of overpayment. FINDINGS OF FACT 1. In July 2009, the RO sent the Veteran a Certificate of Eligibility for an approved program of education or training under the Post-9/11 GI Bill; this award was based on his dates of active duty service as listed in his Department of Defense Form 214 (DD Form 214), which had been received earlier in July 2009. 2. In November 2009, the RO notified the Veteran that the Certificate of Eligibility was issued in error and that he was not eligible for Post-9/11 GI Bill benefits due to the narrative reason for his discharge from service being "erroneous enlistment." 3. In May 2010, VA notified the Veteran that an overpayment in the amount of $3,000.00 had been promulgated; the Veteran filed a request for waiver of that overpayment later that month. 4. The overpayment was created because in determining the Veteran's eligibility for educational benefits, the RO did not note that the narrative reason for the Veteran's separation from service as "erroneous enlistment." 5. While the overpayment resulted in unjust enrichment of the Veteran, he was not at fault in creating the overpayment, and denying his request for a waiver would result in undue hardship. CONCLUSIONS OF LAW 1. The overpayment in the amount of $3,000.00 was validly created. 38 U.S.C.A. § 3562 (West 2002); 38 C.F.R. § 3.667 (2012). 2. The criteria for waiver of recovery of the overpayment of VA nonservice-connected disability pension benefits, in the calculated amount of $3,000.00, have been met. 38 U.S.C.A. § 5302 (West 2002); 38 C.F.R. § 1.965(b) (2012). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS The Board has considered VA's duty to inform the Veteran of the evidence needed to substantiate his claim and to assist him in obtaining the relevant evidence. However, the United States Court of Appeals for Veterans Claims (Court) has held that those provisions pertaining to VA's duties to notify and to assist do not apply to Chapter 53 of Title 38 of the United States Code, and questions pertaining to the waiver of recovery of an indebtedness due VA. Barger v. Principi, 16 Vet. App. 132, 138 (2002). Therefore, the Board will not address whether VA's duties to notify and to assist have been satisfied in this case. Validity of Overpayment The Post-9/11 GI Bill was enacted by Congress in June 2008 and codified at Title 38 U.S.C.A. Chapter 33. See Pub. L. No. 110-252, Title V, §§ 5001-5003, 122 Stat. 2357 (2008). In March 2009 VA promulgated new regulations to implement the change in law and the regulations are currently codified at 38 C.F.R. §§ 21.9500- 21.9770. Under these provisions, an eligible individual is entitled to a maximum of 36 months of educational assistance. 38 C.F.R. §§ 21.9550(a). In July 2009, the RO sent the Veteran a Certificate of Eligibility for an approved program of education or training under the Post-9/11 GI Bill. The accompanying notice letter indicated that this award was based on his dates of active duty service as listed in his DD Form 214, which had been received earlier in July 2009. An August 2009 VA Form 22-1999 indicates that the Veteran began classes in August 2009. In October 2009, the Veteran was issued a $3,000.00 emergency advance on his benefit payments; he stated in his May 2010 waiver request that it was used to pay his tuition and other related expenses. However, in November 2009, VA determined that based on the narrative reason for separation listed on his DD Form 214, "erroneous enlistment," the Veteran was in fact not eligible for educational benefits under the Post-9/11 GI Bill. They notified him of this determination later that month. In February 2010, the Debt Management Center notified the Veteran that he had been paid $3,000.00 in error. The Veteran's May 2010 waiver request was referred to the Committee on Waivers (COW) and was denied in a May 2010 decision. The COW concluded that although there was no fraud, misrepresentation, or bad faith on the part of the Veteran, waiving the debt would result in unjust enrichment. The Veteran filed a notice of disagreement with that decision, and this appeal followed. After consideration of the record and the applicable regulatory provisions, the Board finds that the debt was validly created. Although the RO mistakenly made an award of educational benefits to the Veteran in the July 2009 letter - notwithstanding that his DD Form 214 was of record at the time of the decision - the fact remains that because of the narrative reason for his discharge ("erroneous enlistment"), he was never eligible for educational benefits. To the extent that the Veteran argued in his October 2010 substantive appeal that he was having psychotic episodes at the time he signed a form agreeing to that specific narrative reason for discharge, it is a moot issue. As noted in the September 2010 Statement of the Case, the Veteran had also enlisted under the Loan Repayment Program, which requires that the first three years of eligible service not be considered when calculating whether a claimant completed sufficient length of service to be eligible. In order to be eligible for additional educational benefits after having enlisted through the Loan Repayment Program, the Veteran would have had to serve more than 3 years on active duty, far more than the approximately 9 months listed on his DD Form 214. Thus, the Board finds that the overpayment was validly created. Waiver A waiver of indebtedness may be authorized in a case in which collection of the debt would be against equity and good conscience. 38 U.S.C.A. § 5302(b). In essence, equity and good conscience means fairness to both the veteran and to the government. 38 C.F.R. § 1.965(a) (2012). Under the regulation, equity and good conscience involves a variety of elements: (1) fault of the debtor, (2) balancing of the faults, (3) undue hardship, (4) whether recovery would defeat the purpose of the benefit, (5) unjust enrichment, and (6) changing position to one's detriment. 38 C.F.R. § 1.965. The list of elements is not all-inclusive. See Ridings v. Brown, 6 Vet. App. 544, 546 (1994). The law also precludes waiver of recovery of an overpayment or waiver of collection of any indebtedness where any one of the following elements is found to exist: (1) fraud; (2) misrepresentation; or (3) bad faith. 38 U.S.C.A. § 5302(c) (West 2002); 38 C.F.R. § 1.965(b). Only one of three elements (fraud, misrepresentation, or bad faith) need be shown to preclude consideration of waiver of recovery of the indebtedness. 38 U.S.C.A. § 5302(c). The Veteran's May 2010 request for a waiver of his overpayment was denied in a decision issued later that month. The Veteran filed a notice of disagreement in July 2010, citing financial hardship. He also submitted a Financial Status Report, noting that he received approximately $1,600.00 per month in unemployment benefits, and had approximately $1,142.00 in expenses to include rent, food, and utilities. After review of the evidence of record, there are elements both in favor and against granting a waiver of the validly created overpayment. The Board agrees with the Committee on Waivers that the Veteran's receipt of VA educational benefits constituted unjust enrichment; valid entitlement to the educational benefits never existed, yet he received $3,000.00 in advance payments towards tuition and related expenses. However, it would be against equity and good conscience to require this particular Veteran to repay the amount of the overpayment. It is clear he had no fault in creation of the debt. He submitted all forms requested of him by VA, to include the DD Form 214 which clearly listed the narrative reason for his service separation. That the DD Form 214 was of record at the time the initial award of benefits was granted, and yet the issuing RO did not notice the narrative reason as one that would preclude benefits, is not the Veteran's fault. Further, based on the Veteran's Financial Status Report, repayment of the debt would likely result in an undue hardship to him. The Veteran indicated in his May 2010 waiver request that his unemployment would likely expire six weeks from that time; his Financial Status Report indicated that it was his only income. Even assuming those unemployment benefits were extended through Federal legislation for an additional number of weeks or months, the fact remains that he has no other source of income. While the Financial Status Report lists $458.00 per month of net monthly income, it is also not clear whether this limited amount of net income would also be needed to pay other periodic or irregular expenses not listed on the Report, such as medical bills. Ultimately, the Board finds that while the overpayment resulted in unjust enrichment of the Veteran, he was not at fault in its creation, and denying his request for a waiver would result in undue hardship. Accordingly, waiver of the validly created overpayment in the amount of $3,000.00 is warranted. ORDER Waiver of recovery of overpayment of educational benefits in the amount of $3,000.00 is granted. ____________________________________________ K. A. BANFIELD Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs