Citation Nr: 1322445 Decision Date: 07/15/13 Archive Date: 07/24/13 DOCKET NO. 09-48 783 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Milwaukee, Wisconsin THE ISSUE Entitlement to waiver of recovery of an overpayment of disability compensation benefits in the original calculated amount of $4,473.00. REPRESENTATION Appellant represented by: Disabled American Veterans ATTORNEY FOR THE BOARD C. J. Houbeck, Counsel INTRODUCTION The appellant is a veteran who served on active duty from January 1967 to August 1969. This matter is before the Board of Veterans' Appeals (Board) on appeal from a June 2009 decision of the Committee on Waivers/Compromises of the Department of Veterans Affairs (VA) Regional Office (RO) in Milwaukee, Wisconsin. The Board has not only reviewed the Veteran's physical claims file, but also his Virtual VA electronic claims file to ensure a total review of the evidence. FINDINGS OF FACT 1. A valid overpayment in the amount of $4,473.00 was created due to the receipt of compensation benefits under both the Federal Employees' Compensation Act (FECA) and VA regulations for a right knee disability. 2. Although the Veteran was not at fault in the debt's creation, he was fully aware of its creation and continual accrual, such that the fault of VA in creating the debt is of minimal significance. 3. Undue financial hardship is not demonstrated. 4. The recovery of the VA benefits would not nullify the objective for which benefits were intended. 5. 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. CONCLUSIONS OF LAW 1. The overpayment of pension benefits in the amount of $4,473.00 was properly created. 38 U.S.C.A. §§ 1521, 5112 (West 2002); 38 C.F.R. §§ 3.23, 3.271, 3.272 (2012). 2. The recovery of the overpayment of VA disability compensation benefits in the amount of $4,473.00 is not against equity and good conscience and, therefore, is not waived. 38 U.S.C.A. §§ 5107, 5302(a) (West 2002); 38 C.F.R. §§ 1.962, 1.963, 1.965, 3.501 (2012). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS Duties to Notify and Assist The Veterans Claims Assistance Act of 2000 (VCAA), codified in part at 38 U.S.C.A. §§ 5103, 5103A, and implemented in part at 38 C.F.R § 3.159, amended VA's duties to notify and to assist a claimant in developing information and evidence necessary to substantiate a claim. However, the VCAA duties to notify and to assist do not apply to the claim for relief under Chapter 53 of Title 38 of the United States Code, pertaining to the waiver of recovery of overpayments. See Schaper v. Derwinski, 1 Vet. App. 430 (1991) (challenging validity of debt); see Reyes v. Nicholson, 21 Vet. App. 370 (2007) (the notice provisions of 38 U.S.C. § 5103(a) do not apply to chapter 53 proceedings (special provisions for the waiver of recovery of overpayments), citing Barger v. Principi, 16 Vet. App. 132 (2002)). General due process concerns have been satisfied in connection with this appeal. See 38 C.F.R. §§ 3.103, 3.105(h) (2012). In an October 2008 letter, the RO informed the Veteran that his compensation benefits would be reduced from $1,204.00 to $707.00 from February 1, 2008 to June 1, 2009, and from $1,068.00 to 639.00 from June 1, 2009 to August 1, 2009, because the Veteran had elected to receive compensation benefits for his service-connected right knee disability from FECA rather than from VA. The Veteran was afforded time to provide additional evidence to show that the proposed action should not be taken. In a November 2008 letter, the RO sent the Veteran a recoupment statement indicating that he was overpaid $4,473.00 and that the recoupment of this debt would be scheduled to begin in February 2009. Significantly, the Veteran was informed by this statement of his right to dispute the debt and to request a waiver of recovery of this overpayment. Although the Veteran has not disputed the validity of this debt, he did submit a waiver request in November 2008, suggesting that recoupment was unwarranted because he provided timely notice of his award of FECA benefits and requested that VA benefits for his service-connected right knee disability be stopped, as well as that repayment would cause him undue financial hardship. The RO requested that the Veteran submit evidence concerning his income and expenses in order to determine whether recovery of the overpayment would in fact result in undue financial hardship and the Veteran complied with that request. The Veteran has engaged the services of a representative, and has been provided ample opportunity to submit evidence and argument in support of his claim. The Board will now proceed to a decision. Waiver of Overpayment In a March 2007 rating decision, the Veteran was granted entitlement to a 100 percent rating from July 18, 2006, and 30 percent from September 1, 2007, for a right knee disability. In December 2007, the Veteran was granted compensation for the same disability through the FECA, effective from July 18, 2007 to August 1, 2009. That same month, the Veteran notified VA that he was receiving the compensation from the FECA and provided a copy of the award letter. In that letter, the Veteran also requested that VA withhold any payments for his service-connected right knee disability and waive any overpayment that might occur. In January 2008, VA also received a letter from the U.S. Department of Labor notifying VA that the Veteran was in receipt of FECA benefits and requested information from VA. In May 2008, the Veteran sent two more letters to VA again requesting that his payments for his service-connected right knee disability be stopped and that any overpayment made in failing to stop these payments be waived. Finally, in October 2008 VA notified the Veteran that as a result of his receipt of FECA benefits that his VA compensation benefits would be reduced. The letter outlined how the compensation benefits would be reduced from $1,204.00 to $707.00 from February 1, 2008 to June 1, 2009, and from $1,068.00 to 639.00 from June 1, 2009 to August 1, 2009, because the Veteran had elected to receive compensation benefits for his service-connected right knee disability from FECA rather than from VA. In November 2008, VA notified the Veteran that due to the dual payments from FECA and VA that an overpayment of $4,473.00 had been created and informed the Veteran that he could dispute the debt and/or request a waiver of the overpayment. In November 2008, the Veteran submitted a request for waiver of the overpayment. The Veteran acknowledged the validity of the debt based on his receipt of dual benefits from FECA and VA, but contended that he should not be required to repay the overpayment because he had timely notified VA of the FECA benefits and the need to reduce his VA benefits. In February 2009, the Veteran submitted a Financial Status Report (VA Form 5655) that showed a total net monthly income of $10,759.34 and monthly expenses of $2,720.00. (The Board notes that the Veteran appears to have initially entered a monthly amount of $7,000 for food and subsequently altered the amount to $700.) In June 2009, a decision of the Committee on Waivers/Compromises denied the Veteran's request for waiver of overpayment. In a July 2009 notice of disagreement the Veteran reiterated his claims made in November 2008 and indicated that the provided Financial Status Report showed, "the current finical [sic] hardship that would be accrued if the overpayment was withheld from my VA Benefits." At that time, the Veteran resubmitted the Financial Status Report (although this copy did not amend the $7000 per month food expense and noted total monthly expenses of $9,020.00, monthly net income of $10,759.34, and that the amount the Veteran could pay on a monthly basis toward the debt was $1,739.34). Following a September 2009 statement of the case (SOC) continuing the denial of the waiver of overpayment claim, the Veteran filed a timely substantive appeal reiterating his prior arguments and adding, "I was not attempting to have unjust enrichment as it was stated in the Statement of the Case. I even had specifically requested that my VA compensation benefits to [sic] be stopped for my VA service connected Right Knee Condition (Prosthesis) as I was in receipt of the [sic] both the VA compensation and the Department of Labor workmens compensation benefits at the same time." Thus, the Veteran is not challenging the validity of the overpayment in the amount of $4,473.00, but, instead, is seeking a waiver of recovery of that overpayment. FECA as amended (5 U.S.C. § 8101 et seq.) provides for the payment of workers' compensation benefits to civilian employees of all branches of the government of the United States. See 20 C.F.R. § 10.0 (2012). Generally, a civilian employee of the Federal Government cannot concurrently receive federal workers' compensation payments under FECA and other federal benefits based on the same disability. See 5 U.S.C.A. § 8116 (West 2002). Where a person is entitled to compensation under FECA based upon civilian employment and is also entitled to compensation or dependency and indemnity compensation under laws administered by VA for the same disability or death, the claimant will elect which benefit he or she will receive. 38 C.F.R. § 3.708(b)(1), (b)(2) (2012); see also 5 U.S.C.A. 8116(b). On or after September 13, 1960, an award by another Federal agency cannot be approved for payment of compensation concurrently with compensation from FECA and an election to receive benefits from either agency is final. There is no right of reelection. 38 U.S.C. § 5 U.S.C.A. 8116(b); 38 C.F.R. §§ 3.958; 3.708(b)(2). There is no prohibition against payment of benefits under FECA concurrently with benefits administered by VA when such benefits are not based on the same disability or death. 38 C.F.R. § 3.708(b)(2) (2012). For VA purposes, 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). An overpayment may arise from virtually any benefits program administered pursuant to VA law, including pension, compensation, dependency and indemnity compensation (DIC), educational assistance benefits and subsistence allowance, insurance benefits, burial and plot allowances, clothing allowance, and automobile or other conveyance and adaptive equipment allowances. 38 C.F.R. § 1.956(a) (2012). VA regulations provide that, when an indebtedness is assessed, the debtor has the right to: informally dispute the existence or amount of the debt, appeal the VA decision underlying the debt, and request waiver of collection of the debt. 38 C.F.R. § 1.911(c) (2012). These rights can be exercised separately or simultaneously. See Schaper v. Derwinski, 1 Vet. App. 430, 434 (1991). As noted, the Veteran is not challenging the validity of the underlying debt, but is only requesting that VA waive recovery of the overpayment. The Veteran's contention is that, because he timely informed VA of his award of FECA benefits and because of the undue financial hardship that recovery would cause, VA should waive recovery of the debt. As the validity of the $4,473.00 debt has been conceded by the Veteran, the Board will consider only whether recovery of that debt (or overpayment) should be waived. Recovery of an overpayment of VA benefits may be waived if recovery of the indebtedness would be against equity and good conscience. 38 U.S.C.A. § 5302; 38 C.F.R. § 1.963(a). 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 various elements which are not intended to be all-inclusive. The elements are the fault of the debtor where such actions contribute to creation of the debt, balancing of faults where VA fault is also involved, whether collection of the debt would cause the debtor undue financial hardship by depriving him of basic necessities, whether collection would defeat the purpose of the VA benefit, whether failure to make restitution would result in unjust enrichment, and whether reliance on VA benefits resulted in relinquishment of a valuable right (i.e., changing position to one's detriment). 38 C.F.R. § 1.965(a). Where fraud, misrepresentation, or bad faith on the part of the Veteran is shown, denial of waiver of recovery of an overpayment may be made without regard to factors considered in applying the equity and good conscience standard. 38 U.S.C.A. § 5302. Bad faith generally describes unfair or deceptive dealing by one who seeks to gain thereby at another's expense. Thus, a debtor's conduct in connection with a debt arising from a VA benefit/services program exhibits 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. 38 C.F.R. § 1.965(b)(2). In order to establish misrepresentation, the VA must show that there was a willful misrepresentation of a material fact or the willful failure to disclose a material fact with the intent of obtaining or retaining, or assisting an individual to obtain eligibility for VA benefits. In order to determine whether misrepresentation exists, VA must prove a willful intent on the part of the debtor. The burden of proof lies solely with VA. 38 C.F.R. §§ 1.962(b), 1.965(b)(1). In this case, there is no evidence of fraud, misrepresentation, or bad faith on the part of the Veteran. To the contrary, the Veteran was extremely forthright and timely in informing VA of his award of FECA benefits in December 2007. Thus, there is no basis for denying the Veteran's claim on the basis of fraud, misrepresentation, or bad faith. The remaining consideration is whether recovery of the indebtedness would be against equity and good conscience. As noted above, when considering whether recovery of the debt would be against equity and good conscious consideration is given to the following six elements: (1) fault of debtor, (2) balancing of fault, (3) undue hardship, (4) defeat the purpose of the debt, (5) unjust enrichment, and (6) changing position to one's detriment. See 38 C.F.R. § 1.965(a). In this case, the Veteran's arguments center on the balancing of faults, undue hardship, and unjust enrichment, but the Board will consider all factors in its decision. In this case, there is no evidence or contention that the Veteran changed his position to his detriment in reliance on the monies erroneously paid him (i.e., the $4,473.00 overpayment). As noted above, the Veteran clearly realized that he was not entitled to this extra money and on multiple occasions informed VA that VA compensation payments for his service-connected right knee disability should be stopped. There is no evidence that the Veteran incurred any legal obligation or changed his circumstances in reliance on this erroneously paid money. Nor would recovery of the overpayment defeat the purpose of the debt. The Veteran was awarded service connection benefits for a right knee disability and he also received compensation benefits through FECA for the same disability. As the amount paid by FECA was greater than VA, the Veteran chose to receive benefits through FECA. As discussed above, the Veteran is not eligible to receive benefits from both FECA and VA. Thus, even if the overpayment were to be recovered he would continue to receive compensation based on his right knee disability. The Board acknowledges the Veteran's contention that recovery of the overpayment would create undue hardship. The Board finds this argument wholly unpersuasive. The submitted Financial Status Reports indicate that even were the Veteran spending $7,000 per month on food that his income would still exceed his expenses by over $1,700 per month. If the amended notation of $700 per month for food was considered than the Veteran's family's monthly income would exceed his expenses by over $7,000. The Veteran has provided no specific information or indication why it would be an undue hardship to repay the debt from this excess monthly income and based on the information of record the Veteran has substantial excess monthly income to repay the debt. As to the fault of the Veteran and the relative fault of the Veteran and VA in creating the debt, the Board acknowledges that the Veteran timely informed VA about the award of FECA benefits and asked that his VA compensation benefits be reduced accordingly. It took VA over 9 months to act on the Veteran's request. Thus, there is some fault in the accrual of the debt on the part of VA and no fault on the part of the Veteran. That said, the Veteran clearly understood that until VA stopped his compensation benefits for his service-connected right knee disability that he would be receiving VA compensation benefits to which he was not entitled. Indeed, the Veteran specifically requested a waiver of any prospective overpayment in his initial notification to VA in December 2007 of his FECA benefits. Moreover, the Veteran had previously received FECA benefits for a left knee disability beginning in October 2005 that had resulted in an overpayment of VA compensation benefits for the same knee. Thus, while there may have been some fault on the part of VA for the creation of the debt, that fault is substantially mitigated by the Veteran's clear understanding that until VA stopped his compensation benefits for the right knee that he would be receiving benefits to which he was not entitled and that VA could and would later seek to recover. While the Veteran may not have been certain of the precise amount of the overpayment, he clearly would have had a general idea of amount of monthly overpayment because his right knee disability was the last of his disabilities to be service-connected and, therefore, a comparison between his current benefits and the amount prior to his award of service-connected benefits for the right knee would have given him a fairly accurate estimate as to amount of monthly overpayment received. As the Veteran from December 2007 had a clear understanding that he was receiving an overpayment of VA compensation benefits that could be fairly accurately estimated and which VA would seek to recover, the Board finds that any fault on the part of VA in the creation of the debt is of minimal significance in considering the propriety of recovering that debt. As to the final specific factor enumerated above, the failure to make restitution clearly would result in an unfair gain to the Veteran. The overpayment debt was validly created when he received both FECA and VA compensation benefits for his right knee disability. Federal law and regulation specifically preclude the receipt of FECA and VA compensation benefits for the same disability. As such, the Veteran would be unjustly enriched by the waiver of overpayment that would permit him to receive both FECA and VA compensation benefits for his right knee disability for the same time period contrary to law and regulation. As noted above, the six factors explicitly listed in 38 C.F.R. § 1.965(a) are not an exhaustive list of the considerations in determining whether a waiver of overpayment is warranted. In this case, however, the Veteran knowingly chose to receive benefits through FECA and knew that such a choice would mean the cessation of his VA compensation benefits for the right knee. Although the Veteran timely notified VA of his award of FECA benefits and requested the cessation of his VA compensation benefits for the right knee, he was aware that until VA actually stopped payment for his service-connected right knee disability that a debt could and was being created (as evidenced by his repeated requests to VA to stop VA compensation benefits for his right knee disability and to waive any overpayment that had been created). Moreover, the Veteran had been through the same process previously in choosing FECA benefits over VA compensation benefits for his left knee and knew that this choice had created an overpayment for which VA sought remuneration. Given the Veteran's substantial excess monthly income of between $1,700 and $7,000, he clearly was not reliant on the overpayment for his VA compensation benefits for the right knee that he knowingly was receiving and remains able to repay the debt without great financial difficulty. Based on these factors and those discussed above, the Board concludes that recovery of the indebtedness in the original amount of $4,473.00 would not be against equity and good conscious. In sum, based on the Veteran's knowledge that an overpayment was being created by the continued payment of VA compensation benefits, the fact that he was unjustly enriched via the overpayment from VA, recovery of the overpayment would not defeat the purpose of the debt, and that he has a proven ability to repay the charged indebtedness in its entirety without undue hardship, the Board concludes that a waiver of recovery of the overpayment of VA compensation benefits in the original amount of $4,473.00 is not warranted. ORDER Entitlement to a waiver of recovery of overpayments in the original calculated amount of $4,473.00 is denied. ____________________________________________ BETHANY L. BUCK Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs