Citation Nr: 1323910 Decision Date: 07/26/13 Archive Date: 08/06/13 DOCKET NO. 09-03 690 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Chicago, Illinois THE ISSUE Entitlement to waiver of recovery of an overpayment of pension benefits in the calculated amount of $10,603. ATTORNEY FOR THE BOARD S. B. Mays, Counsel INTRODUCTION The Veteran served on active duty from October 1963 to July 1966. He died in March 2003. The appellant is the legal guardian of his five minor children, I.S.R., J.M.R., C.N.R., K.G.R., and S.D.R, Jr. She appealed to the Board of Veterans' Appeals (Board/BVA) from a September 2008 decision by the Committee on Waivers and Compromises (Committee) at a Department of Veterans Affairs (VA) Regional Office (RO) that denied her request for waiver of the recovery of an overpayment of pension benefits in the amount of $10,603. In her substantive appeal (on VA Form 9), received in January 2009, the appellant requested a hearing at the RO before a Veterans Law Judge of the Board, in other words, a Travel Board hearing. She was sent notice of her hearing date, as well as another letter from the Board, at her address of record. However, the letters could not be delivered because of a change in address and, therefore, were returned by the U.S. Postal Service. She is unrepresented in this appeal, so her current address could not be obtained and verified alternatively by a representative. But an October 12, 2012 Compensation and Pension (C&P) Master Record, Audit Writeout, was in VA's electronic ("Virtual VA") system listing a different address than the one that the letter was sent to regarding her Travel Board hearing, and was, in fact, a former address of hers. There is a presumption of administrative regularity in VA processes, procedures, and mailings allowing the assumption that VA properly discharged its duties and responsibilities. See Ashley v. Derwinski, 2 Vet. App. 62, 64 (1992) (the "presumption of regularity" applies to the official acts of public officers, and in the absence of clear evidence to the contrary, it must be presumed they have properly discharged their official duties); see also Mindenhall v. Brown, 7 Vet. App. 271 (1994). This presumption of administrative regularity does not diminish the claimant's responsibility to keep VA informed of changes of address and, if she does not, VA is not obligated to turn up heaven and earth to find her. See, too, Hyson v. Brown, 5 Vet. App. 262, 265 (1993). But this presumption is rebuttable, especially when, as here, there is clear evidence of nondelivery (as confirmed by the U.S. Postal Service returning the letter as undeliverable), and seeing as though there was another address on file at which the appellant perhaps could be located. So in November 2012 the Board remanded the claim so that she again could be contacted to try and reschedule her Travel Board hearing using instead the address shown on the October 12, 2012 C&P Master Record, Audit Writeout. Even the remand, however, was returned to the Board as undeliverable. Nevertheless, a March 2013 letter advising the appellant of the rescheduling of her hearing was sent to a different address and was not returned as undeliverable. In any event, she did not appear for her Travel Board hearing that was rescheduled for April 2013 and has not provided any good-cause reason or explanation for her absence. Therefore, the Board deems her Travel Board hearing request withdrawn. See 38 C.F.R. § 20.704(d) (2012). She previously was represented in this appeal by AMVETS, as reflected in an April 2003 VA Form 21-22, Appointment of Veterans Service Organization as Claimant's Representative. But in a February 2012 letter, AMVETS indicated that it was no longer representing her because she had chosen not work with them on her claim. There is no indication she since has appointed another representative, thus, the Board finds that she has elected to proceed on her own behalf, so pro se. FINDINGS OF FACT 1. The Veteran died in March 2003. 2. In 2004, the appellant, as legal guardian of his five minor children, began receiving VA pension benefits on their behalf. 3. The creation of the indebtedness at issue did not involve fraud, misrepresentation, or bad faith on the appellant's part. 4. She was however at fault in the creation of the overpayment in that she did not report as countable family income the Social Security Administration (SSA) benefits received on behalf of the minor children; VA was not at fault in the creation of the overpayment. 5. She was unjustly enriched by her receipt of non-service-connected VA pension income while concurrently receiving the SSA benefits; recovery of the $10,603 overpayment debt will not violate the standards of equity and good conscience. CONCLUSION OF LAW The criteria are not met for waiver of recovery of the overpayment of VA pension benefits in the amount of $10,603. 38 U.S.C.A. §§ 5107, 5302 (West 2002); 38 C.F.R. §§ 1.963, 1.965 (2012). REASONS AND BASES FOR FINDINGS AND CONCLUSION The Duties to Notify and Assist The Veterans Claims Assistance Act of 2000 (VCAA), Pub. L. No. 106-475, 114 Stat. 2096 (Nov. 9, 2000), redefined VA's duties to notify and assist a claimant in substantiating a claim for VA benefits upon receipt of a complete or substantially complete application. The VCAA was codified as amended at 38 U.S.C.A. §§ 5100, 5102, 5103, 5103A, 5106, 5107, 5126, and the implementing VA regulations were codified as amended at 38 C.F.R. §§ 3.102, 3.156(a), 3.159, 3.326(a). As part of this assistance, VA is required to notify a claimant of what they must do to substantiate their claim, including apprising them of their and VA's respective responsibilities in obtaining this supporting evidence. 38 U.S.C.A. § 5103(a); 38 C.F.R. § 3.159(b)(1). However, in Barger v. Principi, 16 Vet. App. 132 (2002), the United States Court of Appeals for Veterans Claims (Court/CAVC) held that the VCAA, with its expanded duties, is inapplicable to cases involving waivers of recovery of overpayments, noting that the statute at issue in such cases is found in Chapter 53, Title 38, of the United States Code, and that the provisions of the VCAA are relevant to a different Chapter (i.e., Chapter 51). See also Lueras v. Principi, 18 Vet. App. 435, 438-39 (2004) (VCAA provisions are inapplicable to waiver of indebtedness claims). Therefore, the VCAA (and, it follows, its implementing regulations) is not for application in this appeal. Nevertheless, suffice to say the appellant was duly apprised of the reasons for the overpayment, and resultant debt to VA, and given opportunity to present evidence and argument as to why she should not be responsible for restitution or repayment of the overage. This occurred both in the notice of the decision, itself, and in the statement of the case (SOC) provided in December 2008. Hence, she has had opportunity to be heard on this matter, including at a hearing before the Board, which, as mentioned, was even rescheduled on remand but still unattended. Background In October 2000 the Veteran was deemed incompetent to manage the disbursement of his VA funds after having had a brain aneurysm and subsequent cardiac arrest. In May 2001, the Probate Court of Madison County, Illinois, authorized the appellant to become legal guardian of his five minor children - I.S.R., J.M.R., C.N.R., K.G.R., and S.D.R, Jr. A medical certificate of death issued from the State of Illinois indicates the Veteran died in March 2003. In April 2003, so the following month, the appellant submitted a VA Form 21-534, Application of Dependency and Indemnity Compensation (DIC), Death Pension and Accrued Benefits by a Surviving Spouse or Child. She identified four of the Veteran's five minor children and indicated I.S.R. received $540 monthly (Supplemental Security Income (SSI)/public assistance). The remaining children reportedly received no income. In April 2004 a VA representative contacted the appellant and requested that she provide her social security number. She stated that she had no income and that the only income then currently being received by the household was the SSI payment to I.S.R. Later in April 2004, the appellant submitted a VA Form 21-4703, Fiduciary Agreement, agreeing to serve as the legal custodian of the Veteran's five minor children for VA benefits' purposes. On a VA Minor Beneficiary Field Examination and Report also dated in April 2004, the average family monthly expenses totaled $800. That same month, VA gave the appellant the legal capacity to receive and disburse benefits on behalf of the Veteran's minor children. She was designated as payee for all monthly disbursement of VA benefits. In an April 2004 letter, VA advised her that it had approved her claim for pension. The monthly rate from June 1, 2003, was $688, and $703 from December 1, 2003. That award was based on countable household income of $0 (zero) from May 13, 2003. VA advised her that the rate of VA pension depended on total "family" income, which included both her income and that of any dependents. It was further noted that VA would have to adjust her payments whenever her income changed. She therefore needed to notify VA immediately if income was received from any source other than that she had reported. She also was advised to report any changes in the income reported from June and December 2003. VA stated further that her failure to promptly tell VA about income changes might resultantly create an overpayment that she would have to repay. In January 2005, an Improved Pension Eligibility Verification Report (EVR) was received. Again the appellant listed only the SSI payment received for I.S.R. The remaining minor children reportedly had no income. In a March 2005 letter, VA advised the appellant that it had amended her pension award based upon review of her EVR which showed that her countable annual income of $0 (zero) from January and December 2004. VA again advised her that the rate of VA pension depended on total "family" income, which included both her income and that of any dependents. She was advised, as well, that VA would have to adjust her payments whenever her income changed and, therefore, that she needed to notify VA immediately if income was received from any source other than that she had reported. VA also advised that her failure to promptly tell VA about income changes might create an overpayment that she resultantly would have to repay. VA wrote to the appellant in December 2007 to tell her that she would not receive an EVR form for that year. VA explained that people with no income did not have to complete an EVR. VA reminded her, however, that she needed to report if she or a family member began receiving Social Security payments or started getting other income. In 2008 VA learned that the appellant - in 2006, so some 2 years earlier - had begun receiving additional SSA benefits for each of the Veteran's minor children (so no longer just for I.S.R., but for the others as well). Consequently, in an April 2008 letter, VA advised the appellant that it had stopped payment of the VA benefits, retroactively effective from January 1, 2006, because she had not submitted a yearly income report beginning in 2006, as requested. Specifically, she was advised to inform VA of all income received from January 1, 2006, through December 31, 2006, and from January 1, 2007, through December 31, 2007 (so years 2006 and 2007). In a June 2008 letter, VA's Debt Management Center (DMC) advised the appellant that she had received an overpayment of $10, 603, and that she could pay this debt, dispute it, or request a waiver of it. Later in June 2008, in response, she requested a waiver of this overpayment. She contended that she had acted in good faith for the children and that the overpayment had occurred when she moved. She indicated that she was unable to repay the debt because it would cause severe financial hardship on her and the children. In July 2008, she completed a VA Form 5655, Financial Status Report (FSR), listing a total monthly net income of $150 and monthly expenses totaling $2,169. In September 2008, the Committee on Waivers and Compromises at the VA Pension Center in Milwaukee, Wisconsin, denied her waiver of overpayment request. The Committee apparently found that fault in the creation of the debt rested solely with her based on her failure to report the additional SSA monthly income (the income for the other children besides I.S.R.). In a statement received in October 2008, the appellant expressed her disagreement with the denial of the requested waiver. She reiterated that she was unable to repay the debt and that repayment would cause severe financial hardship. In response to her inquiry, the SSA wrote to her in October 2008. SSA informed her that on behalf of S.D.R., Jr., for the period from January 1, 2006, to December 1, 2006, she had received a total of $1,377.60 in SSI benefits and a total of $5,981.40 in SSI benefits for the period from January 1, 2007, to December 1, 2007. SSA also informed her that on behalf of I.S.R. for the period from January 1, 2006, to December 1, 2006, she had received a total of $6,337.80, and for the period from January 1, 2007, to December 1, 2007, a total of $3,579.60 in SSI benefits. Claim of Entitlement to Waiver of the Overpayment An overpayment is created when VA determines that a beneficiary or payee has received monetary benefits to which he or she was not entitled. See 38 U.S.C.A. § 5302 (West 2002 & Supp. 2012); 38 C.F.R. § 1.962 (2012). An overpayment may arise from virtually any benefits program administered pursuant to VA law, including pension, 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). Recovery of overpayments shall be waived if there is no indication of fraud, misrepresentation, or bad faith on the part of the person 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(a), (c) (West 2002 & Supp. 2012); 38 C.F.R. § 1.963 (2012). The Court has defined bad faith as "a willful intention to seek an unfair advantage." Richards v. Brown, 9 Vet. App. 255, 257-58 (1996). The provisions of 38 C.F.R. § 1.965(b)(2) define bad faith as an 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 participation in a VA benefits/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. 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 following elements, which are not intended to be all-inclusive: (1) Fault of the debtor - where actions of the debtor contribute to the 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 relinquishment of a valuable right or incurrence of a legal obligation. See 38 U.S.C.A. § 5302; 38 C.F.R. § 1.965(a) (2012). Initially, the Board sees that the appellant is not challenging the validity of the debt. See Schaper v. Derwinski, 1 Vet. App. 430 (1991) (indicating this otherwise would be the threshold preliminary determination). Hence, the Board may proceed directly to the merits of her waiver request. The Committee on Waivers and Compromises determined in the September 2008 decision at issue that the evidence in this case did not establish fraud, misrepresentation, or bad faith on the part of the appellant in the creation of the debt. The Board is also satisfied that none of the circumstances in this case rise to a level of fraud, misrepresentation, or bad faith, such that there is a legal bar to the waiver of recovery of the debt. See 38 U.S.C.A. § 5302(c); see also Reyes, supra, at 374. Thus, the sole question before the Board is whether collection of the indebtedness at issue in this appeal, in the amount of $10,603, would violate the principles of equity and good conscience. See 38 U.S.C.A. § 5302(a); 38 C.F.R. §§ 1.963(a), 1.965(a). As explained, in determining whether recovery of the overpayment would be against the principles of equity and good conscience, thereby permitting waiver under 38 U.S.C.A. § 5302(a) and 38 C.F.R. §§ 1.963(a), 1.965(a), there are various elements or factors to consider. The first element pertains to the fault of the debtor and requires an analysis as to whether the actions of the debtor contributed to causing the debt. 38 C.F.R. § 1.965(a)(1). The Board has carefully considered the facts of this case and concludes that the appellant's actions, alone, contributed to the creation of the debt in that she failed to inform VA of additional countable household income in the form of SSI benefits she received on behalf of the Veteran's minor children beginning in January 2006. Notably, she had been advised a number of times that she needed to immediately report any changes of income and that any change in her income would likely impact the pension benefits she received from VA on behalf of the children and that an overpayment might resultantly occur if she did not promptly advise VA of an income change. It is neither shown nor alleged that she notified VA, much less in a timely manner, of the additional monthly SSI benefits she received on behalf of the minor children beginning in 2006. Her failure to timely notify VA of the change in her household countable income directly resulted in the overpayment at issue. As as their legal custodian, she had a duty to report these income changes at the time she became aware of them, certainly soon after. 38 C.F.R. § 3.660(a)(1). She clearly did not, however. The Board finds that, as between the two parties, her and VA, the fault in the creation of the indebtedness rests entirely with her. Her actions (or inactions) created this debt, thus, she was at fault in causing it. 38 C.F.R. § 1.965(a)(1). There is nothing in the record suggesting otherwise, including any VA fault (e.g., administrative oversight, etc.) in the creation of the debt. As to the element of undue financial hardship, the pertinent regulation provides that consideration should be given to whether collection of the indebtedness would deprive the debtor of basic necessities. 38 C.F.R. § 1.963(a)(3). "Financial hardship" is primarily intended to mean that she would be deprived of basic necessities such as food, clothing, and shelter, which do not appear to be factors here. Though she generally claims that severe financial hardship will ensue, she has not alleged that she would be deprived of basic necessities if she were to have to repay the debt. Even though the reported income and expenses shown on her most recent 2008 FSR admittedly suggests she might not have enough money to pay for her basic necessities, the numbers she presented make the Board question the credibility of the information she provided on that financial report. So there is no basis to ascertain her current financial status, especially seeing as though she has not provided an explanation as to how she has been able thus far to pay over $2000 a month in expenses with an income of only $150 a month. Notably, in her 2008 FSR, she did not report any SSI benefits for any of the minor children. But in 2008, all five of them still would have been under the age of 18 (considering the eldest was born in 1991). There equally is no indication as to her employment status. But there also is no evidence of bankruptcy, either pending or a final determination, or inability to pay her creditors. Moreover, the Board has given her an opportunity to provide evidence necessary to help in the determination of whether repayment of this debt would indeed constitute an undue hardship. She has not provided any such information, however. She did not attend either hearing that was scheduled for her and has not kept VA abreast of her whereabouts. Similarly, the record shows that although she previously appointed AMVETS, she chose not to work with them, and that is the reason why they revoked their representation of her in this appeal. Hence, financial hardship - certainly not the severe level alleged - from recovery of this indebtedness is not shown. 38 C.F.R. § 1.963(a)(3). Other elements for consideration address whether repayment of the debt would nullify the objective purpose for which the benefits were intended, see 38 C.F.R. § 1.965(a)(4), and whether failure to make restitution would result in unfair gain to the debtor, see 38 C.F.R. § 1.965(a)(5). The purpose of the pension benefits is to provide financial assistance to those who depended on the Veteran at the time of his death, which are his minor children. The amount of pension benefits is calculated based on total countable family income and on the number of dependents. In regards to whether collection of the debt would defeat the purpose of the benefit, it would not. The Board finds that repayment of the debt at issue in this case would not conflict with the objective underlying the benefits, as basic necessities appear to have been provided for during the period in which the overpayment arose, and the appellant also had the added benefit of the minor children's SSI during that period. See 38 C.F.R. § 1.965(a)(4). Thus, repayment of the debt would not nullify the purpose for which the pension benefits were intended, since the appellant apparently was not deprived of the basic necessities such as food and shelter. Id. Additionally, the appellant clearly received benefits to which she was not entitled, so waiver of recovery of this consequent indebtedness would result in unjust enrichment to her. If a waiver of recovery is granted it would create an unfair gain to her because she would be allowed to retain funds to which she was not legally entitled and, by all indications, readily acknowledges that she knowingly was not. There also is no indication that her position changed to her detriment or that, in reliance on the overpayment, she relinquished a valuable right or incurred a legal obligation. The duty to assist her in the development and adjudication of her claim is not a one-way street. See Wood v. Derwinski, 1 Vet. App. 190, 193 (1991). Hearings twice were scheduled before a Veterans Law Judge of the Board so she could have opportunity to further explain the circumstances of her case, but she chose not to attend either hearing or, at the very least, did not keep VA apprised of her current addresses to provide her the required notification of the date, time and location of her hearings. Moreover, unlike those prior, the most recent hearing notice was not returned as undeliverable, meaning there is a presumption she received it absent any indication to the contrary. Consequently, the Board finds that any additional information that may have been elicited in support of her appeal has not been not obtained because of her inactions. So, ultimately, in viewing the elements of equity and good conscience, the Board concludes that the negative evidence outweighs the positive evidence and that the facts of this case demonstrate that waiver of recovery of the overpayment is not against equity and good conscience. Accordingly, the request for waiver of recovery of the overpayment is denied. When all the evidence is assembled, VA is responsible for determining whether the evidence supports the claim or is in relative equipoise, meaning about evenly balanced for and against the claim, with the claimant prevailing in either event, or whether instead a preponderance of the evidence is against the claim, in which case the claim is denied. Gilbert v. Derwinski, 1 Vet. App. 49, 55 (1990); Ortiz v. Principi, 274 F. 3d 1361 (Fed. Cir. 2001). Here, for the reasons or bases discussed, the Board finds that the preponderance of the evidence is against this claim for a waiver and, therefore, the benefit-of-the-doubt doctrine does not apply. 38 C.F.R. §§ 3.102, 4.3. ORDER The request for a waiver of recovery of the overpayment of VA pension in the amount of $10,603 is denied. ____________________________________________ KEITH W. ALLEN Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs