Citation Nr: 1314344	
Decision Date: 05/01/13    Archive Date: 05/15/13

DOCKET NO.  11-26 542	)	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 Department of Veterans Affairs (VA) compensation benefits in the amount of $4,072.00.


REPRESENTATION

Appellant represented by:	The American Legion


ATTORNEY FOR THE BOARD

C. Fleming, Counsel



INTRODUCTION

The Veteran had active military service from April 1951 to March 1953.

This matter comes to the Board of Veterans' Appeals (Board) on appeal from a March 2011 decision of the Committee on Waivers and Compromises (Committee) of the VA Regional Office (RO) in Milwaukee, Wisconsin, that denied the Veteran's request for a waiver of recovery of an overpayment of VA non-service-connected pension benefits in the amount of $4,072.00.

Please note that this appeal has been advanced on the Board's docket pursuant to 38 C.F.R. § 20.900(c) (2012).  38 U.S.C.A. § 7107(a)(2) (West 2002).


FINDINGS OF FACT

1.  Overpayment in the amount of $4,072.00 resulted solely from the actions of the Veteran; there was no fault on the part of VA. 

2.  The recovery of the VA benefits would not nullify the objective for which benefits were intended. 

3.  The Veteran did not change his position to his detriment, and there was no reliance on these VA benefits that resulted in relinquishment of a valuable right or incurrence of a legal obligation. 

4.  The waiver of the debt would involve unjust enrichment to the Veteran. 

5.  Financial hardship has not been demonstrated.

6.  Repayment of the debt would not deprive the Veteran of basic necessities.



CONCLUSION OF LAW

An overpayment of VA non-service-connected pension benefits in the calculated amount $4,072.00 was not due to fraud, misrepresentation, or bad faith on the part of the Veteran; however, recovery of the overpayment of VA non-service-connected pension benefits would not be against equity and good conscience and, therefore, is not waived.  38 U.S.C.A. §§ 1521, 5107, 5302(a) (West 2002 & Supp. 2012); 38 C.F.R. §§ 1.963, 1.965 (2012).


REASONS AND BASES FOR FINDINGS AND CONCLUSION

I.  Duties to Notify and Assist
 
The Board notes that the Veterans Claims Assistance Act of 2000 (VCAA), codified at 38 U.S.C.A. §§ 5100, 5102, 5103, 5103A, 5106, 5107 (West 2002); 38 C.F.R. §§ 3.102, 3.156(a), 3.159, and 3.326(a), redefined VA's duties to notify and assist a claimant in substantiating a claim for VA benefits.  However, the notice provisions of the VCAA are inapplicable to waiver claims.  Barger v. Principi, 16 Vet. App. 132 (2002).  Additionally, the Veteran has been accorded the opportunity to present evidence and argument in support of his claim.  Accordingly, the Board will proceed to a decision on the merits of the case.

II.  Analysis

The Veteran was awarded non-service-connected pension benefits in 2006.  However, he failed to report all sources of income that, when properly considered, rendered him ineligible for non-service-connected pension benefits based on a total income over the eligibility threshold.  This resulted in an overpayment of VA non-service-connected pension benefits in the calculated amount of $4,072.00.  The Veteran has not disputed the validity of the debt but has requested a waiver of the collection of the overpayment of $4,072.00.  

Recovery of overpayment of any benefits made under laws administered by VA shall be waived if 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 recovery of the indebtedness from the payee who received such benefits would be against equity and good conscience.  38 U.S.C.A. § 5302; 38 C.F.R. § 1.963.

The standard of "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, which means arriving at an outcome that is fair to both the obligor (the Veteran) and the Federal Government (VA).  In making this determination, consideration will be given to the following factors, which are not intended to be all-inclusive: (1) the fault of the debtor; (2) balancing of faults between the debtor and the VA; (3) undue hardship of collection on the debtor; (4) a defeat of the purpose of an existing benefit to the Veteran; (5) the unjust enrichment of the Veteran; and (6) whether the Veteran changed positions to his detriment in reliance upon a granted VA benefit.  38 U.S.C.A. § 5302; 38 C.F.R. § 1.965(a).

In evaluating whether equity and good conscience necessitates a favorable waiver decision, the Board must consider all the specifically enumerated elements applicable to a particular case.  Ridings v. Brown, 6 Vet. App. 544, 546 (1994); Cullen v. Brown, 5 Vet. App. 510, 512 (1993).  If warranted, the Board may waive a portion of the debt.  Jordan v. Brown, 10 Vet. App. 171 (1997).  When, in fully weighing and balancing each equitable factor, there is an approximate balance of positive and negative evidence as to any material issue, VA shall give the Veteran the benefit of the doubt.  38 U.S.C.A. § 5107(b).  See also Dela Cruz v. Principi, 15 Vet. App. 143, 148-49 (2001).

If there is an indication of fraud, misrepresentation, or bad faith in the creation of the overpayment, waiver of the overpayment is automatically precluded, and further analysis is not warranted.  See 38 U.S.C.A. § 5302; 38 C.F.R. §§ 1.962, 1.963(a), 1.965(b).  As an initial matter, the Board agrees with the Committee's determination that the facts of this case do not reveal fraud, misrepresentation, or bad faith on the Veteran's part in the creation of the overpayment in question; thus, there is no statutory bar to waiver of recovery of the overpayment in this case.

As indicated above, 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 six elements enumerated above.  See 38 C.F.R. § 1.965(a); see also Cullen v. Brown, 5 Vet. App. 510 (1993) (when determining whether recovery is against equity and good conscience, the Board must analyze all six factors).

The definition of fault is "the commission or omission of an act that directly results in the creation of the debt."  Veterans Benefits Administration Circular 20-90-5, (Feb. 12, 1990).  Fault should initially be considered relative to the degree of control the appellant had over the circumstances leading to the overpayment.  If control is established, even to a minor degree, the secondary determination is whether the appellant's actions were those expected of a person exercising a high degree of care, with due regard for the appellant's contractual responsibility to the Government.  The age, financial experience, and education of the appellant should also be considered in these determinations.  A person who is a recipient of VA benefits must notify VA of all circumstances that will affect his entitlement to receive the benefit being paid.  Here, there is no evidence that the Veteran willfully disregarded information supplied by VA concerning the effect of failing to report all sources and amounts of income and the requirement that he report such incomes.  

However, although this may lead to a conclusion that bad faith did not exist, it does not absolve the Veteran of fault.  See Jordan v. Brown, 10 Vet. App. 171 (1997) (professed ignorance of the controlling regulation or the failure to read relevant notices does not alleviate fault).  Even if the Veteran did not read the instructions from VA, persons dealing with the Government are charged with knowledge of federal statutes and lawfully promulgated agency regulations "regardless of actual knowledge of what is in the [r]egulations or of the hardship resulting from innocent ignorance."  See Morris v. Derwinski, 1 Vet. App. 260, 265 (1991), citing Fed. Crop Ins. Corp. v. Merrill, 33 U.S. 380, 384-85; 68 S. Ct. 1, 3; 92 L. Ed. 10 (1947).

In this case, the Board finds that the responsibility in the creation of the overpayment of benefits rests entirely with the Veteran.  In this regard, the Board finds that the Veteran failed to fully report his income from all sources in a timely manner.  In making this determination, the Board observes that in at least four separate letters, the Veteran was informed of the types of income he was required to report and was told that all income changes must be reported immediately.  However, despite the multiple letters informing him of these requirements, the Veteran failed to timely report all sources of his income that should have been included in the initial determination as to whether he was entitled to non-service-connected pension.  The Board also notes in this analysis that the Veteran has not challenged the validity of the debt.

Regarding the question of whether the purpose of the intended benefit would be defeated if the debt were not waived, the Board finds that it would not.  This is so because, as described above, the Veteran was not eligible to receive the benefits paid to him for non-service-connected pension because his total income exceeded the eligibility requirements for an award of non-service-connected pension.  Thus, the recoupment of those benefits does not defeat the purpose of the benefit because the Veteran has been found not to be entitled to non-service-connected pension benefits.  

The Board further finds that failure to make restitution of the overpayment would result in unjust enrichment to the Veteran.  In effect, a waiver of this overpayment would allow the Veteran to realize a gain (receipt of benefits paid to which he was not entitled).  In this regard, the Board points out that the Veteran received non-service-connected pension payments that he was not entitled to receive under the law.  Allowing him to realize any gain would result in unjust enrichment.

The Board also has considered the factor of whether the Veteran's reliance on the additional benefit caused him to change his position to his detriment.  However, there is no evidence of record indicating that receipt of the benefits otherwise caused him to relinquish a valuable right or to incur additional legal obligation.

Finally, with respect to undue hardship, the Veteran submitted a Financial Status Report most recently in January 2011.  At that time, he reported that he and his spouse combined had a monthly net income of $2,107.00.  The monthly expenses were reported to be $2,162.00.  However, although the reported income is shown to be less than monthly expenses by $55.00 per month, the Board finds, as did the Committee, that the Veteran's reported monthly expenses appear to be in some instances exaggerated-for instance, he reported a monthly expenditure of $700.00 for food and an additional $280.00 for telephone and cable service.  The Board finds that expenses such as cable television do not represent the basic needs of living.  The collection of the debt would necessarily represent a hardship as the Veteran would have a lesser amount of disposable income; however, he would still retain some monthly income from his Social Security benefits.  

Further regarding the question of undue hardship, although he contended in his September 2011 VA Form 9 that his financial "situation has changed drastically" due to his wife's failing health, he has submitted neither an updated Financial Status Report nor any other evidence to support this contention.  The most recent information available to the Board is the January 2011 Financial Status Report, which supports a finding that the Veteran can repay the debt without being deprived of basic necessities.  Further, the record shows that this debt has, to a large extent, already been recovered from the Veteran.  In that connection, the Board notes that documentation in the claims file shows that, as of February 2013, the total debt remaining was $449.89.  Therefore, the Board finds that recovery of the overpayment would not cause an undue hardship that would deprive the Veteran of basic necessities.  

Therefore, based on the Veteran's fault in the creation of the indebtedness; the fact that he was unjustly enriched via the overpayment from VA; the fact that the purpose of the intended benefit would not be defeated by recovery of the debt; the fact that any reliance did not cause him to change his position to his detriment; and because of his ability to repay the charged indebtedness, the Board concludes that a waiver of collection of the overpayment of VA benefits is not warranted.

In sum, after weighing the facts in light of the principles of equity and good conscience, the Board finds that the preponderance of the evidence is against entitlement to waiver of the recovery of the overpayment.  As the preponderance of the evidence is against the Veteran's claim, the benefit-of-the-doubt rule does not apply, and the Veteran's claim of entitlement to waiver of collection of overpayment in the amount of $4,072.00 is denied.  See 38 U.S.C.A §5107 (West 2002 & Supp. 2012).


ORDER

Entitlement to a waiver of recovery of overpayment of benefits in the amount of $4,072.00 is denied.



____________________________________________
ERIC S. LEBOFF
Veterans Law Judge, Board of Veterans' Appeals



Department of Veterans Affairs