Citation Nr: 1322752 Decision Date: 07/17/13 Archive Date: 07/24/13 DOCKET NO. 10-13 691A ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Detroit, Michigan THE ISSUE Entitlement to a waiver of recovery of an overpayment of benefits in the amount of $32,385.00, to include the question of whether the indebtedness was properly created. REPRESENTATION Appellant represented by: Vietnam Veterans of America WITNESS AT HEARING ON APPEAL Veteran ATTORNEY FOR THE BOARD A. Adamson, Counsel INTRODUCTION The Veteran had active military service from October 1966 until November 1968. This matter comes before the Board of Veterans' Appeals (Board) on appeal from an August 2009 decision issued by the VA Committee on Waivers and Compromises (Committee) at the Regional Office (RO) in Detroit, Michigan, which denied the Veteran's request for waiver of the recovery of an overpayment of VA compensation in the amount of $32,385. In April 2011, the Veteran presented testimony at a personal video conference hearing conducted between the RO and the Board Central Office. This hearing was held before Kathleen K. Gallagher, a Veterans Law Judge (VLJ) who was designated by the Chairman to conduct the hearing pursuant to 38 U.S.C.A. § 7107(c) (West 2002) and who will render the determination in this case. A transcript of this personal video conference hearing is in the Veteran's claims file. The record before the Board consists of the Veteran's paper claims files and an electronic file known as Virtual VA. The appeal is remanded to the RO via the Appeals Management Center (AMC), in Washington, DC. VA will notify the Veteran if further action is required. REMAND Reason for Remand: To obtain information relevant to the calculation of the debt The Veteran in this case requests a waiver of an overpayment debt in the amount of $32,385.00, and has also challenged the validity of the debt. Unfortunately, additional development is necessary prior to appellate review, and this case must be remanded. The issue of the validity of a debt is a threshold determination that must be made prior to a decision on a claim of entitlement to waiver of recovery of an indebtedness. Schaper v. Derwinski, 1 Vet. App. 430 (1991). The propriety and amount of the overpayment at issue are matters that are integral to a waiver determination. Id. at 434. See also Narron v. West, 13 Vet. App. 223 (1999); VAOPGCPREC 6-98 (where the validity of a debt is challenged, that issue must be developed before the issue of entitlement to waiver of the debt can be considered.) An overpayment is created when VA determines that a beneficiary or payee has received monetary benefits in excess of the amount to which he or she was entitled. 38 C.F.R. § 1.962 (2012). For the reasons discussed below, the Board finds that the Veteran has challenged the validity and amount of the overpayment indebtedness. However, the issue of the validity of the overpayment debt has not yet been adjudicated by the agency of original jurisdiction (AOJ), and this must be done prior to Board review. See Hickson v. Shinseki, 23 Vet. App. 394, 400-01 (2010); 38 C.F.R. § 20.903(b); see also Godfrey v. Brown, 7 Vet. App. 398 (1995); Bernard v. Brown, 4 Vet. App. 384 (1993). A Veteran in receipt of compensation who is incarcerated in a federal, state, or local penal institution in excess of 60 days for conviction of a felony shall not be paid compensation in excess of the amount payable for a disability evaluated as 10 percent disabling beginning on the 61st day of incarceration. 38 U.S.C.A. § 5313 (West 2002); 38 C.F.R. § 3.665. The Board notes that the RO granted the Veteran service connection for posttraumatic stress disorder in a March 2007 rating decision, and assigned a 70 percent rating effective October 12, 2006. In its Decision on Waiver of Indebtedness, the Committee indicated that the Veteran's overpayment amount developed due to incarceration. The Board notes that the AOJ appears to have calculated the indebtedness based upon the notion that the Veteran was incarcerated from June 12, 1989, and ongoing, and therefore adjusted his benefits from the effective date of the grant of service connection for PTSD, October 12, 2006. Records, however, show that while June 12, 1989, may have been the date of a prior incarceration, the Veteran was incarcerated and released several times over the years. In fact a VA treatment record in July 2006 clearly notes that he was released from prison on June 29, 2006. A December 2008 VA and SSA PRISONER COMPUTER MATCH documented that the Veteran had been reincarcerated on August 1, 2008 and did not provide a release date. At his April 2011 hearing, the Veteran testified that he was incarcerated on July 23, 2008, and released on October 14, 2010. Parole documentation submitted by the Veteran also confirms the release date of October 14, 2010. Thus, it appears that the AOJ calculated the Veteran's indebtedness as though he was continually incarcerated from June 1989, while in fact, it appears that he was not, and that he reentered prison in 2008 and was released in 2010. The record, however, is unclear as to the confirmed actual dates of incarceration. On remand, the AOJ should attempt to verify and clarify the dates of the Veteran's incarceration(s). Because it appears that the AOJ did not appropriately calculate the Veteran's debt in that it did not have the proper dates of incarceration, the AOJ must adjudicate the issue of the validity of the debt in the amount of $32,385.00. Thereafter, the AOJ should readjudicate the issue of entitlement to a waiver of overpayment. In this regard, absent fraud, misrepresentation, or bad faith, 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); 38 C.F.R. §§ 1.962, 1.963, 1.965. In essence, the phrase 'equity and good conscience' means arriving at a fair decision between the obligor and the Government. 38 C.F.R. § 1.965(a). 'Equity and good conscience' involves a variety of elements: (1) Fault of the debtor, where the actions of the debtor contribute to creation of the debt; (2) Balancing of faults, weighing fault of the debtor against VA fault; (3) Undue hardship, whether collection would deprive debtor or 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 unfair gain to the debtor; and (6) Changing position to one's detriment, reliance on VA benefits results in the relinquishment of a valuable right or incurrence of a legal obligation. See 38 C.F.R. § 1.965(a)(1-6). Finally, as there is no current information detailing the Veteran's financial picture of record and undue hardship is a consideration in the waiver of debt, he should be asked to provide complete and accurate information regarding his current income, expenses, and net worth. Specifically, he should be asked to complete and return an updated Financial Status Report. Accordingly, the case is REMANDED for the following action: 1. The Veteran should be asked to provide complete and accurate information regarding his current income, expenses, and net worth. Specifically, he should be asked to complete and return an updated Financial Status Report. 2. The AOJ should attempt to verify the dates of the Veteran's incarceration(s), as it is shown in the record that he was not continually incarcerated after June 12, 1989, and was not incarcerated at the time of the July 2008 VA treatment. 3. Once the dates of incarceration are confirmed, the AOJ must adjudicate the issue of the validity of the entire overpayment amount of $32,385.00. 4. If it is determined that the debt was properly created, the AOJ should readjudicate the issue of entitlement to waiver of recovery of an overpayment of VA compensation benefits. This requires determining (a) whether there is any indication of fraud, misrepresentation, or bad faith, on the part of the person or the persons having an interest in obtaining the waiver, and (b) whether recovery of such indebtedness would be against equity and good conscience. If the benefit requested on appeal is not granted to the Veteran's satisfaction, the Veteran and his representative should be furnished a supplemental statement of the case and be provided an opportunity to respond. The case should then be returned to the Board for further appellate consideration, if in order. The purpose of this REMAND is to obtain additional development, and the Board does not intimate any opinion as to the merits of the case, either favorable or unfavorable, at this time. The Veteran has the right to submit additional evidence and argument on the matters the Board has remanded. Kutscherousky v. West, 12 Vet. App. 369 (1999). This claim must be afforded expeditious treatment. The law requires that all claims that are remanded by the Board of Veterans' Appeals or by the United States Court of Appeals for Veterans Claims for additional development or other appropriate action must be handled in an expeditious manner. See 38 U.S.C.A. §§ 5109B, 7112 (West Supp. 2012). _________________________________________________ KATHLEEN K. GALLAGHER Veterans Law Judge, Board of Veterans' Appeals Under 38 U.S.C.A. § 7252 (West 2002), only a decision of the Board of Veterans' Appeals is appealable to the United States Court of Appeals for Veterans Claims. This remand is in the nature of a preliminary order and does not constitute a decision of the Board on the merits of your appeal. 38 C.F.R. § 20.1100(b) (2012).