Citation Nr: 1319695 Decision Date: 06/18/13 Archive Date: 06/27/13 DOCKET NO. 07-19 024 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in San Diego, California THE ISSUE Entitlement to a waiver of the recovery of an overpayment of Dependency and Indemnity Compensation (DIC) benefits in the amount of $1,892.60 ATTORNEY FOR THE BOARD S. Coyle, Counsel INTRODUCTION The Veteran served on active duty from August 1967 to August 1971. He died in July 1988. The appellant is the Veteran's surviving daughter. This matter is before the Board of Veterans' Appeals (Board) on appeal of a December 2005 administrative decision by the San Diego, California, Department of Veterans Affairs (VA) Regional Office (RO). In June 2010, the appellant requested a hearing before the Board. In September 2011, the RO notified the appellant that a hearing had been scheduled at the RO on October 4, 2011. The appellant failed to report for her scheduled hearing, despite being notified of the time, date and place of the hearing at her last known address. As a result, the hearing request has been withdrawn. 38 C.F.R. § 20.704(e) (2012). FINDINGS OF FACT 1. Service connection for the cause of the Veteran's death was established in May 2000. DIC benefits were therefore payable to the appellant and her brother as the Veteran's surviving children, as their mother, the Veteran's spouse, had remarried and was thus ineligible to receive DIC benefits. 2. DIC payments were to be paid to the appellant and her brother at the rate payable for two surviving children of the Veteran, and shared equally between them. 3. In January 2005, the appellant was notified that from July 1, 2004, to January 1, 2005, she had been erroneously paid DIC benefits at the rate of a single child, creating an overpayment of benefits. 4. The appellant was not legally entitled to these benefits, and responsibility for the erroneous payment of benefits is not solely due to VA administrative error. 5. The overpayment in question was not due to fraud, misrepresentation, or bad faith by the appellant. 6. Recovery of the overpayment would not be against equity and good conscience. CONCLUSION OF LAW The criteria for waiver of the recovery of the overpayment of DIC benefits in the amount of $1,892.60 are not met. 38 U.S.C.A. § 5302 (West 2002); 38 C.F.R. §§ 1.962, 1.963, 1.965, 3.667 (2012). REASONS AND BASES FOR FINDINGS AND CONCLUSION VA's Duty to Notify and Assist The Veterans Claims Assistance Act of 2000 (VCAA) is not applicable to cases involving the waiver of recovery of overpayment claims, because the statute at issue in such cases is not found in Title 38, United States Code, Chapter 51 (i.e., the laws affected by VCAA). 38 U.S.C.A. §§ 5100, 5102, 5103, 5103A, 5107, 5126 (West 2002); 38 C.F.R. §§ 3.102, 3.156(a), 3.159, 3.326(a) (2012); see also Barger v. Principi, 16 Vet. App. 132 (2002). Therefore, no further action is necessary under the VCAA. Facts A May 2000 rating decision granted service connection for the cause of the Veteran's death. As the Veteran's spouse had remarried and was thus ineligible to receive DIC benefits, the benefits were awarded to the appellant and her brother, to be paid to their mother as custodian, until the age of 18. Effective July 1, 2004, DIC benefits to the appellant's mother as custodian ceased, as the appellant had turned 18 years old and had not filed a Request for Approval of School Attendance to reinstate her DIC benefits. The appellant filed the necessary form on September 14, 2004, based on her status as a full-time high school student. On October 12, 2004, the appellant's brother, a full-time college student was notified that his DIC benefit, which to that point had been paid at the "single child" rate, would be reduced, since the appellant would be added to the award as a second child. On October 22, 2004, the appellant was notified that her benefits would be reduced to $180 per month from July 1, 2004, to January 1, 2005, to afford her brother due process with respect to the reduction of his benefits. The appellant was advised that her benefit would increase to $295 per month, representing an equal share of the DIC rate payable for two surviving children of the Veteran, on January 1, 2005. On December 2, 2004, the appellant was notified that her September 2004 claim for DIC benefits had been approved, with a monthly rate as of July 1, 2004 of $410, with an increase to $422 on December 1, 2004, for cost of living. An audit sheet reflects that the appellant was paid a lump sum of $2,050 on December 8, 2004, representing 5 months of DIC payments at the rate of $410 per month. On January 5, 2005, the appellant was notified that she had been erroneously paid $410 per month from July 1, 2004, to January 1, 2005, and that her monthly payments for that period of time were being reduced to $180 per month, creating an overpayment. The appellant was also informed that she could minimize any overpayment for the period after January 1, 2005 by requesting a temporary reduction in benefits until the matter of the appropriate rate of payment was resolved. The appellant did not make such a request. In August 2005, the appellant requested a waiver of the overpayment, and also challenged the validity of the overpayment by asserting it created solely due to VA administrative error. In December 2005, the RO's Committee on Waivers and Compromises issued a decision, noting that the period of overpayment was from July 1, 2004, to May 8, 2005, and finding that recovery of the debt would not be against equity and good conscience. The decision did not discuss the appellant's challenge to the validity of the debt. Law and Regulations An overpayment is created when VA determines that a beneficiary or payee has received monetary benefits to which he or she is not entitled. See 38 U.S.C.A. § 5302 (West 2002); 38 C.F.R. § 1.962 (2012). A debt is not valid if the claimant was legally entitled to the benefits that resulted in an overpayment. See 38 U.S.C.A. §§ 501, 5112(b)(9), (10) (West 2002 &); 38 C.F.R. §§ 1.962; 3.500(b) (2012). A debt is also not valid if VA is solely responsible for the overpayment. See id. The appellant has challenged the validity of the debt by claiming that it is solely the result of administrative error on the part of VA. Thus, the preliminary determination in this appeal concerns the validity of the debt. See Schaper v. Derwinski, 1 Vet. App. 430 (1991). A debtor may dispute the amount or existence of a debt, which is a right that may be exercised separately from a request for waiver or at the same time. See 38 C.F.R. § 1.911(c)(1) (2012); see also VAOPGCPREC 6-98. The propriety and amount of the overpayment at issue are matters that are integral to a waiver determination. See Schaper, 1 Vet. App. at 434. In order for the Board to determine that an overpayment was not properly created, thereby invalidating the debt, the record must establish that the appellant was legally entitled to the benefits in question or, if the appellant was not legally entitled, then it must be shown that VA was solely responsible for the appellant being erroneously paid benefits. Administrative errors include all administrative decisions of entitlement, whether based upon mistake of fact, misunderstanding of controlling regulations or instructions, or misapplication of law. VAOPGPREC 2-90 (July 17, 1989), 55 Fed. Reg. 27757 (1990). Sole administrative error connotes that the appellant neither had knowledge of nor should have been aware of the erroneous award. Further, neither the appellant's actions nor his or her failure to act must have contributed to payment pursuant to the erroneous award. 38 U.S.C.A. § 5112(b) (9), (10) (West 2002); 38 C.F.R. § 3.500(b)(2)(2011); Jordan v. Brown, 10 Vet. App. 171 (1997) (sole administrative error is not present if the payee knew, or should have known, that the payments were erroneous). Thus, a finding of sole administrative error requires not only error on the part of VA, but that the beneficiary is unaware that the payments are erroneous. The U.S. Court of Appeals for Veterans Claims explained that, "[s]tated another way, when an overpayment has been made by reason of an erroneous award based solely on administrative error, the reduction of that award cannot be made retroactive to form an overpayment debt owed to VA from the recipient of the erroneous award." Erickson v. West, 13 Vet. App. 495, 499 (2000). In other words, if a debt is the result solely of administrative error, the effective date of the reduction of benefits is the date of the last payment based on this error and, consequently, there would be no overpayment charged to the appellant for an overpayment attributable to administrative error. 38 U.S.C.A. § 5112(b)(10) (West 2002); 38 C.F.R. § 3.500(b) (2012). If the claimant fails to provide full disclosure of facts or due to the amount of the overpayment should know an error has been made, yet accepts the payment, the overpayment will not be considered due to administrative error. See VA Manual 22- 4, Part III, § 2.03. An example of administrative error is when VA erroneously interprets the law to allow payment of greater benefits than the legislative intent. An example of overpayment not solely due to administrative error is when the claimant accepts an amount that is patently excessive. Id. In this case, the appellant was not legally entitled to DIC benefits payable at the rate of a single surviving child, since she had a brother who was also entitled to DIC benefits and who was also a full-time student. Instead, she asserts that the overpayment was solely the result of administrative error on the part of VA. As noted, the appellant filed a claim for DIC benefits based on school attendance in September 2004, having not received a benefit payment since July 2004. In October 2004, the RO advised her that her benefit payment would be $180 per month from July 1, 2004 to January 1, 2005, and $295 per month thereafter, representing an equal share of the DIC rate payable to two surviving children. On December 2, 2004, however, the appellant was notified that her claim for DIC benefits had been approved at a monthly rate of $410 from July 1, 2004 to December 1, 2004,and $421 from December 1, 2004, until July 1, 2005, as a result of legislative increase. On December 8, 2004, the appellant received a lump sum payment of $2,050, representing 5 months of benefit payments at the rate of $410 per month. The appellant was advised in October 2004 that her benefit payment was to be $180 per month from July 1, 2004, to January 1, 2005, and that her payment would then rise to $295 after due process rights were afforded to her brother. The appellant therefore knew, or should have known, that the rate of $410 per month and the lump sum amount of $2,050 paid to her on December 8, 2004, was excessive. Thus, her acceptance of payment negates her claim that the overpayment was solely the result of VA administrative error. Additionally, the appellant was informed in January 2005 that she could minimize any additional overpayment after January 2005 by electing to have her benefit payments reduced, but she did not take advantage of this offer. Thus, any overpayment created subsequent to January 1, 2005, is also not solely the result of VA administrative error. The debt is therefore valid. Turning to the question of whether waiver of the recovery of the overpayment of the debt is proper, VA is authorized to grant a waiver of recovery of indebtedness when collection of the debt would be against "equity and good conscience." 38 U.S.C.A. § 5302(a) (West 2002); 38 C.F.R. §§ 1.962, 1.963(a) (201206). Under the criteria set out in 38 U.S.C.A. § 5302(c) (West 2002), the law precludes a waiver of recovery of an overpayment or the 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. § 1.962(b) (2012). However, before the Board may determine whether equity and good conscience affords the appellant a waiver, the Board must first determine whether there was an indication of fraud, misrepresentation, or bad faith on her part in connection with the claim. Concerning this preliminary determination, the Board agrees with the RO's decision and finds that the facts in this case do not reveal the presence of fraud, misrepresentation, or bad faith on the appellant's part in the creation of the overpayment. There is nothing in the record suggesting that the appellant tried to hide the fact that her brother was also entitled to DIC benefits, or mislead VA; and the Board has no reason to conclude otherwise. Having determined there was no fraud, misrepresentation, or bad faith on the appellant's part, the Board may now proceed to the question of whether the collection of the overpayment would be against "equity and good conscience." 38 U.S.C.A. § 5302(a) (West 2002); 38 C.F.R. § 1.963(a) (2012). Pursuant to 38 C.F.R. § 1.965 (2012), 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. 38 C.F.R. § 1.965(a) (2012). The decision reached should not be unduly favorable or adverse to either side. Id. The phrase "equity and good conscience" means arriving at a fair decision between the obligor and the government. Id. In making this determination of whether recovery would be against equity and good conscience, regulations require consideration of each of the following factors, which are not intended to be all inclusive: (1) fault of the debtor; (2) balancing of faults between debtor and VA; (3) undue hardship; (4) whether collection would defeat the purpose of the benefit; (5) unjust enrichment; and (6) whether the debtor changed position to his own detriment through reliance on the benefit. 38 C.F.R. § 1.965(a)(2012); see also Ridings v. Brown, 6 Vet. App. 544, 546 (1994). The first element requires an analysis as to whether the actions of the appellant contributed to the creation of the debt. As previously noted, although VA was at fault in paying the appellant at the rate payable to a single child, the evidence does show that the appellant knew, or should have known, that the payments made to her at the rate of a single child for the period of time from July 1, 2004, to January 1, 2005, were erroneous. Moreover, the appellant was advised of the way she could minimize any overpayment generated after January 1, 2005, but did not do so. As a result, the Board must conclude that the appellant bears some responsibility in the creation of the overpayment in this case. The second element pertains to the fault on the part of the VA. VA is required to balance the fault of the debtor against any fault of the VA in the creation of the overpayment. In an April 2007 statement of the case, VA stipulated its fault in issuing the appellant monthly benefit payments in the incorrect amount. As a result, VA also bears some responsibility in the creation of the overpayment in this case. The third factor, involving whether recovery of the overpayment would cause undue hardship on the appellant, weighs against the appellant. She last submitted a Financial Status Report in September 2009, listing her monthly net income as $1238 and her monthly expenses as $1370. She has not submitted a Financial Status Report since that time, despite being advised to do so in March 2012, pursuant to the Board's February 2012 remand orders. In the March 2012 remand, the Board requested that the appellant submit an updated Financial Status Report as well as any supporting documentation that she might have to help substantiate her claim. The appellant did not respond. The appellant cannot passively wait for VA to obtain evidence or information where he or she should have the information that is essential to substantiating his or her claim. See generally Wood v. Derwinski, 1 Vet. App. 190 (1991). Because of the appellant's failure to respond, it is therefore impossible to determine from the evidence of record whether collection of the debt would deprive the appellant of basic necessities or pose an undue hardship on her. Moreover, because of the appellant's failure to respond with information that is readily available and in her possession, such doubt will not be resolved in the appellant's favor. It is unclear from the record whether the appellant's benefit payments were reduced at any time to recover the debt. If this indeed occurred, it does not appear that caused undue hardship on the appellant, who was employed and had several installment payments as September 2009. The current indebtedness to the Government was due her equal attention. There has been no evidence presented to suggest that making payments to VA deprived the appellant of the basic necessities. Recovery of the debt would not defeat the purpose for the benefit program. DIC benefits are designed to compensate the survivors of a deceased veteran for the deprivation of the veteran's earning capacity. Withholding a relatively small amount from the appellant's monthly compensation payments, or requiring her to pay back the full value of the debt, in order to recover the overpayment would not defeat the purpose or nullify the objective of the benefit program. In addressing the fifth factor, failure to make restitution would, in fact, result in unfair gain to the appellant. She was unjustly enriched by receiving benefits to which she was not entitled. Last, the evidence does not show that the appellant changed position to her detriment in reliance on these additional benefits. The Board acknowledges that in several statements of record, the appellant indicated that she entered school in reliance on monies received from VA. However, the appellant has not demonstrated that she would not have entered college and moved away had she not received VA payments. As set forth above, the appellant has been asked to provide additional information. However, none has been forthcoming. The Board also acknowledges the appellant's argument wherein she asserts that she relied on erroneous information provided by a VA employee. The appellant maintains that a VA employee told her that she would not have to repay the overpayment. However, payment of government benefits must be authorized by statute; therefore, erroneous advice given by a government employee cannot be used to estop the government from denying benefits. Lozano v. Derwinski, 1 Vet. App. 184( 1991), relying upon OPM v. Richmond, 496 U.S. (414) (1990). In OPM, the Supreme Court held that erroneous advice by a government employee cannot create entitlement to benefits where entitlement was not otherwise authorized by statute. Id. Thus, the appellant's argument fails in this regard as well. Weighing all of the above factors, the Board finds that the preponderance of the evidence is against the appellant's claim; and it would not be against equity and good conscience to require the appellant to repay this debt. Consequently, waiver of recovery of the overpayment of $1,892.60 is not warranted. As the evidence is not equally balanced in this case, the benefit-of-the-doubt rule does not apply. See 38 U.S.C.A. § 5107 (West 2002); Gilbert v. Derwinski, 1 Vet. App. 49 (1990). CONTINUED ON THE NEXT PAGE ORDER Entitlement to waiver of compensation overpayment in the amount of $1,892.60 is denied. ____________________________________________ C. CRAWFORD Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs