Citation Nr: 1323990 Decision Date: 07/29/13 Archive Date: 08/07/13 DOCKET NO. 09-19 904 ) DATE ) ) On appeal from the Committee on Waivers and Compromises, Department of Veterans Affairs (VA) Regional Office (RO) in Philadelphia, Pennsylvania THE ISSUE Entitlement to waiver of overpayment of pension debt in the amount of $47,332. ATTORNEY FOR THE BOARD Heather J. Harter, Counsel INTRODUCTION The veteran served on active duty from October 1973 to February 1974. This matter comes before the Board of Veterans' Appeals (Board) from a December 2008 decision by the Committee on Waivers and Compromises (Committee) which denied waiver of recovery of an overpayment of pension debt in the amount of $47,332, finding that bad faith on the part of the Veteran was a bar to waiver of the overpayment. FINDINGS OF FACT 1. Effective from September 2000, the Veteran was granted VA pension benefits based upon disability which was judged to preclude him from employment together with his report of having no income. 2. The RO notified the Veteran at the time of the original grant and multiple times afterward that his VA pension benefit was predicated upon his having no income, and that it was his responsibility to notify VA of any changes in his income, or other changes which would affect his pension benefits. 3. Prior to the instant appeal, the Veteran had other debts resulting from his failure to report income waived by the Committee due to the financial hardship repayment would have caused him. 4. Through income verification matching, the RO discovered that the Veteran had earned income between $20,000 to $25,000 per year in 2004, 2005, 2006, and 2007. 5. An overpayment of pension benefits in the declared amount of $47,332 was validly created as a result of the Veteran's failure to report earned income in 2004, 2005, and 2006. 6. The Veteran's bad faith in the creation of the overpayment bars him from seeking waiver of recovery of the of $47,332 in overpaid pension benefits. CONCLUSIONS OF LAW 1. The overpayment of pension benefits in the declared amount of $47,332 was validly created. 38 U.S.C.A. §§ 5107, 5302, 5317 (West 2002); 38 C.F.R. §§ 3.23, 3.271, 3.277 (2012). 2. Waiver of recovery of an overpayment of pension benefits in the declared amount of $47,332 is precluded by reason of bad faith on the part of the Veteran. 38 U.S.C.A. §§ 5107, 5302(c) (West 2002); 38 C.F.R. §§ 1.963, 1.965, 3.105 (2012). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS The debt at issue was created when the Veteran failed to report earned income to VA over a period of several years between 2004 and 2007. During this time, the VA continued to pay the Veteran pension benefits based upon his report of having no earned income. The Veteran contends that he is unable to repay this debt, as his only current income is from unemployment benefits, which are temporary in nature. He alternatively contends that VA should only consider recouping the amount of benefits he was overpaid in 2004. The Board has thoroughly reviewed all the evidence in the Veteran's claims file, and has an obligation to provide an adequate statement of reasons or bases supporting its decision. While the Board must review the entire record, it need not discuss each piece of evidence. 38 U.S.C.A. § 7104 (West 2002); Gonzales v. West, 218 F.3d 1378, 1380-81 (Fed. Cir. 2000). The analysis below focuses on the most salient and relevant evidence and on what this evidence shows, or fails to show, on the claim. The Veteran must not assume that the Board has overlooked pieces of evidence that are not explicitly discussed herein. The law requires only that the Board address its reasons for rejecting evidence favorable to the Veteran. Timberlake v. Gober, 14 Vet. App. 122 (2000). Duty to notify Claims for waiver of debt owed to the VA are governed by the provisions of Chapter 53 of Title 38 of the United States Code. This statute contains its own specific notice provisions. Review of the record shows that the veteran received notice of his debt which conforms to the requirements of 38 U.S.C.A. § 5302 and its implementing regulations. The United States Court of Appeals for Veterans Claims (Court) has held that the notice and duty to assist provisions of the Veterans Claims Assistance Act of 2000, Pub. L. No. 106-475, 114 Stat. 2096 (Nov. 9, 2000) (VCAA), are relevant to a different chapter of title 38, and thus do not apply to this appeal. Barger v. Principi, 16 Vet. App. 132 (2002). History The VA granted pension benefits to the Veteran in March 2001, based upon disabilities which were judged to preclude him from employment. He was notified at the time of the original grant and upon multiple occasions afterward that his pension award was predicated upon his report of having no income whatsoever, and that it was his responsibility to notify the VA of any changes in his income or his dependents' status, and of address changes, etc. 38 C.F.R. §§ 3.271, 3.277. Almost immediately, however, the Veteran failed to comply with the requirement that he report any income to VA. He had very modest, part-time earned income in 2001 and a one-time payment of unearned income during 2002, which he had not reported to VA. The Committee considered and granted the Veteran's requests for waiver of these debts on the basis that requiring repayment would cause undue hardship. Also, in 2001, he failed to comply with the requirements which accompany pension benefits because he moved to a different state without notifying VA of his new address; he also continued to receive pension benefits which included additional allowances for his wife and stepchildren, even though they did not move with him, and were thus no longer considered to be part of his household. The debt at issue here was created when the Veteran obtained a job which paid him between $20,000 to $25,000 per year in 2004, 2005, 2006, and 2007. He did not report this income to VA, however. Through income verification matching, the RO later discovered the Veteran's earned income. Based upon this information, in December 2006 and September 2007, the RO requested that the Veteran confirm his income, which he did. In November 2007, the VA notified the Veteran of this debt, and that his pension benefits would be terminated until the debt was recouped. In August 2008, the VA's Debt Management Center calculated the amount of the Veteran's overpayment debt as $47,332. The Veteran promptly requested a waiver of the debt and perfected an appeal of the denial of this decision. Validity of the debt Before VA may adjudicate a waiver application, the lawfulness of a debt must first be decided. Schaper v. Derwinski, 1 Vet. App. 430, 434-435 (1991). VA General Counsel has reinforced this obligation by holding that 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. VAOGCPREC 6-98. Under 38 U.S.C.A. § 7104(c), the Board is bound by the precedent opinions that are issued by the Office of the VA General Counsel. Initially, the Board observes that the RO complied with all applicable laws and regulations governing the use of income verification matching in the Veteran's case. In particular, the RO obtained independent verification of the earned income at issue prior to taking the appropriate steps to terminate, suspend, or reduce the Veteran's pension benefits. 38 U.S.C.A. § 5317. In this case, the Veteran has not specifically challenged the validity of this debt. His written contentions reveal that he does not contest his earned income over the years at issue; rather, he contends he is unable to repay the debt. Nevertheless, the Board has reviewed the RO's bookkeeping and it is clear that the VA paid the Veteran pension benefits during the years 2004, 2005, 2006, and 2007 and resulted in a total of $88, 632.32 in unreported wages over these four years; the overpayment was calculated at $47,332. Thus, the Board finds that the overpayment of that an overpayment of pension benefits in the calculated amount of $47,332 was validly created as a result of the Veteran's failure to report earned income during 2004, 2005, 2006, and 2007. Bad faith-bar to waiver The purpose of the VA pension program is to provide a subsistence living for Veterans of a period of war who have no alternative means of support. 38 U.S.C.A. §§ 1502, 1503. The term "overpayment" refers only to those benefit payments made to a designated living payee or beneficiary in excess of the amount due or to which such payee or beneficiary is entitled. 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. However, there shall be no waiver of an overpayment, or any interest thereon, in any case where there is an indication of fraud or misrepresentation of a material fact on the part of the debtor. The misrepresentation must be more than non-willful or mere inadvertence. In such a case, the claimant must be given the opportunity to make a rebuttal with countervailing evidence. 38 U.S.C.A. § 5302(a); 38 C.F.R. § 1.962(c). The Committee has determined in the December 2008 decision that waiver of recovery of the Veteran's overpayment debt is prohibited because the overpayment of pension benefits was the result of bad faith on the part of the Veteran. 38 U.S.C.A. § 5302(c). In its decision, the Committee noted that the Veteran had been informed upon multiple occasions of his responsibility to report any income to VA. The Committee also noted the Veteran's prior problems with compliance in reporting his income, and the prior waiver decisions, and concluded that the Veteran acted in bad faith by not reporting his income for a period of three years. After review of all the evidence, including the financial evidence and the Veteran's written submissions, the Board finds that the Veteran's failure to report earned income of $88, 632.32 over a period of four years amounts to more than non-willful misrepresentation or mere inadvertence. 38 C.F.R. § 1.962(b). Numerous award letters from 2001 to 2008 explained to the veteran that he was awarded pension benefits on the basis of report of "$0" of countable annual income, that his entitlement to benefits was income sensitive, that he had an affirmative duty to report any income changes promptly, and that his failure to promptly report income changes could result in an overpayment of benefits. He was thus on notice of his obligation to report earned income to VA. The multiple notices he had received relating to the purpose of pension benefits and his responsibilities to report any changes in income or circumstances, in conjunction with his prior waiver claims indicate that he knew or reasonably should have known he could not lawfully collect pension benefits at the same time he was holding down a steady job. Furthermore, the evidence of record reveals a pattern of deceitful behavior on the part of the veteran in his dealings with VA. In the past he moved to another state without notifying the VA and he failed to report prior income upon at least two occasions. In support of the instant request for waiver, he reported for the first time that he was receiving unemployment benefits-a fact he was required under the laws pertaining to pension recipients to have reported at the point in time when he began receiving those benefits. Although he has not argued any failure to understand the requirements for reporting income, we observe that his ability to promptly file three waiver claims and to timely perfect an appeal as to the instant waiver denial shows his ability to comprehend and follow instructions related to his benefits. On this record, the Board finds that the Veteran had knowledge of his duty to report his earned income to VA, but that he effectively denied any such form of income for the years 2004, 2005, 2006, and 2008 by not reporting it. His recent statements made in support of the request for waiver, to the effect that he is too poor to maintain a roof over his head and is forced to live with friends, that he has difficulty buying diapers for his daughter, and that he is so financially strapped that he cannot begin to repay his debt to the government; all provide some insight into his motivation for failing to report his income. Unfortunately, it appears his desire to supplement his VA pension income with a paying job led him to commit the unlawful act of omitting to report his additional earned income to VA. The Board concludes from this evidence that the Veteran knowingly failed to report any form of wage income to VA from 2004 through 2007 in order to receive VA pension benefits to which he knew he was not entitled. The Board finds that the Veteran's intent was to seek an unfair advantage of receiving pension benefits while simultaneously earning wage income that had not been reported to VA, knowing that the result would be that VA would continue to pay pension benefits because VA was unaware that he had additional income which exceeded the limits of eligibility for pension benefits. The Veteran's act of bad faith led to a loss to the government and taxpayers in the declared amount of $47,332, during 2004, 2005, 2006, and 2007. The Veteran's bad faith bars him from seeking waiver of recovery of the $47,332 in overpaid pension benefits, and the claim for waiver of recovery must be denied. Because a preponderance of the evidence shows bad faith on the Veteran's part, the standard of equity and good conscience is inapplicable. 38 U.S.C.A. § 5107(b). Furthermore, because the law prohibits the Board from considering the standard of equity and good conscience, the denial of this waiver must be made without consideration of the Veteran's pleas of hardship. ORDER Waiver of properly-created debt resulting from the overpayment of pension benefits in the amount of $47,332 is denied. ____________________________________________ JONATHAN B. KRAMER Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs