Citation Nr: 1324315 Decision Date: 07/31/13 Archive Date: 08/07/13 DOCKET NO. 10-01 076 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office and Insurance Center in Philadelphia, Pennsylvania THE ISSUE Entitlement to waiver of recovery of overpayment of disability compensation in the amount of $9,281.83. REPRESENTATION Veteran represented by: Disabled American Veterans ATTORNEY FOR THE BOARD John Francis, Counsel INTRODUCTION The Veteran served on active duty from December 1970 to December 1973 and from June 2003 to January 2007 with an additional 26 years of inactive service in the Army Reserve. This matter comes before the Board of Veterans' Appeals (Board) on appeal from a September 2009 decision issued by the Department of Veterans Affairs (VA) Regional Office (RO) Committee on Waivers and Compromises that denied a waiver of a debt in the amount of $9,281.83. In addition to the paper claims file, there are paperless, electronic (Virtual VA and Veterans Benefits Management System) files associated with the Veteran's claims. A review of the two electronic files does not reveal any additional documents pertinent to the present appeal with the exception of the Veteran's representative's June 2013 Appellate Brief Presentation. FINDINGS OF FACT 1. As a result of receiving concurrent full military pay and allowances and VA disability benefits at the 30 percent rate while on active duty from June 2003 to January 2007, an overpayment of disability compensation in the amount of $9,281.83 was created. 2. There is no indication that the Veteran engaged in fraud, misrepresentation, or bad faith in creating the overpayment. 3. The Veteran was solely at fault in the creation of the overpayment of VA compensation benefits as he failed to report that he had returned to active duty. 4. A recovery of the overpaid VA compensation benefits would not result in an undue hardship of the Veteran. 5. The recovery of the overpayment does not defeat the purpose for which the benefits were intended as Congress has clearly precluded the simultaneous payment of a full military active duty salary and veteran disability benefits. 6. A failure by the Veteran to make restitution would result in unfair gain to the Veteran. 7. There is no indication the Veteran relinquished a valuable right or incurred a legal obligation in reliance upon the additional benefits received. CONCLUSION OF LAW The criteria for waiver of recovery of overpayment of disability compensation in the amount of $9,281.83 have not been met. 38 U.S.C.A. § 5302, 5304 (West 2002); 38 C.F.R. §§ 1.963, 1.965 (2012). REASONS AND BASES FOR FINDINGS AND CONCLUSION The notice requirements set forth in the Veteran's Claims Assistance Act of 2000 (VCAA) and its implementing regulations are not required because the issue presented involves a claim for waiver of recovery of overpayment of VA benefits. See Barger v. Principi, 16 Vet. App. 132, 138 (2002) (the VCAA, with its expanded duties, is not applicable to cases involving the waiver of recovery of overpayment claims as the statute at issue in such cases was not found in Title 38, United States Code, Chapter 51 (i.e., the laws changed by VCAA)). In reaching this decision, the Court observed that the statute pertaining to waiver claims, 38 U.S.C.A. § 5302, contains its own notice provisions. This statute requires that a payee be notified of his/her right to apply for a waiver, and a description of the procedures for submitting the application. 38 U.S.C.A. § 5302(a). In addition, by regulation it is required that when a debt results from an individual's participation in a benefits program, the individual must be informed of the exact amount of the debt, and the collection methods to be employed. 38 C.F.R. § 1.911(d). The individual must also be notified of his rights and remedies, specifically, that he or she may informally dispute the debt, or the amount of the debt; that he or she may request a waiver; that he or she may request a hearing; and that he or she may appeal the underlying debt. 38 C.F.R. § 1.911(b), (c). The claimant must also be provided notice of the reasons for the debt. 38 C.F.R. § 1.911(d). In the instant case, this information was provided to the appellant in April 2009 and May 2009 letters, the September 2009 decision denying a waiver, and the November 2009 statement of the case. The Board also finds that all relevant facts have been properly developed, and that all evidence necessary for equitable resolution of the issue on appeal has been obtained. The Veteran has not identified any additional evidence that has not been obtained. Accordingly, the Board concludes that the evidence of record provides sufficient information to adequately evaluate the claim. Therefore, no further assistance to the appellant with the development of evidence is required. Service personnel records showed that the Veteran served as a U.S. Army cook during his active duty from 1970 to 1973 including one year of service in the Republic of Vietnam. The Veteran later enlisted in the U.S. Army Reserve and served approximately 26 years of inactive duty service. In June 2003, the Veteran was mobilized for federal active duty. The Veteran performed his duties as a chaplain's assistant in Germany. Upon demobilization in April 2005, the Veteran was found medically unfit for further service and was retained on active duty in a Medical Retention Processing Unit at his home base under another mobilization order until June 2007. The Veteran was separated from service because of physical disability but elected to waive severance pay in lieu of Selected Reserve retirement benefits. He retired at the rank of Sergeant First Class. Pension, compensation, or retirement pay on account of any person's own service shall not be paid to such person for any period for which such person received active service pay. 38 U.S.C.A. § 5304(c). At the time of his entry on active duty in June 2003, the Veteran was receiving VA disability compensation at the 30 percent rate. In several previous VA award letters, the RO advised the Veteran that his payments may be affected by receipt of active duty or drill pay or reentrance on active duty and that he must promptly notify VA if these circumstances arise. In subsequent rating decisions, the RO granted service connection and combined increased ratings of 50 percent, effective in February 2006 (while still on active duty); 90 percent, effective in January 2007, the day following the date of retirement; and 100 percent effective in October 2008. In each year from 2003 to 2007, VA received information via the Defense Manpower Data Service that reported the number of days of active duty performed by the Veteran in the previous calendar year. VA notified the Veteran in correspondence in March 2007 of an overpayment debt of $5,976.54 and that recovery of the overpayment would be made by withholding $200.00 of future benefits each month starting in May 2006 until the debt was repaid. In May 2009, the RO notified the Veteran that the overpayment debt was $9,281.83, reflecting the additional payments made during the Veteran's extended active duty service. In May 2009, the Veteran expressed disagreement with the amount of the debt, contending that it had already been repaid. At the Veteran's request, the RO provided an audit of the amount due and the amount paid from April 2005 to April 2009 that showed a total overpayment of $9,281.83. In correspondence in June 2009, the Veteran no longer disputed the amount of the debt, but requested a waiver of recovery because of financial hardship. Therefore, the validity or amount of the debt is not at issue and need not be addressed further herein. See Schaper v. Derwinski, 1 Vet. App. 430 (1991);38 C.F.R. § 1.911(c); see also VAOPCCPREC 6-98. A waiver of recovery of an overpayment or waiver of collection of any indebtedness is not warranted 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. In a September 2009 decision, the Committee explicitly determined that there was no evidence of fraud, misrepresentation, or bad faith. Upon review of the record, the Board also concludes that there is no indication of fraud, misrepresentation, or bad faith on the part of the Veteran in this case. Given that preliminary finding, the dispositive question before the Board is whether the evidence establishes that recovery of the overpayment indebtedness would be against equity and good conscience, in which case recovery of that overpayment may be waived. 38 U.S.C.A. § 5302; 38 C.F.R. §§ 1.963, 1.965. The standard "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. The decision reached should not be unduly favorable or adverse to either side. 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 debtor. Where 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 the VA benefits were intended. 5. Unjust enrichment. Failure to make restitution would result in unfair gain to the debtor. 6. Changing position to one's detriment. Reliance on VA benefits results in relinquishment of a valuable right or incurrence of a legal obligation. 38 C.F.R. § 1.965(a). As an initial matter, the Board finds that the Veteran was solely at fault in creating the debt as he failed to report his return to active duty to VA. In this regard, in several VA award letters, the RO advised the Veteran that his payments may be affected by receipt of active duty or drill pay or reentrance on active duty and that he must promptly notify VA if these circumstances arise; however, he did not notify VA in a timely manner as to his return to active duty. There is no indication that VA was at fault in creating the debt. Regarding undue hardship, the Veteran submitted a March 2003 application to the U.S. Bankruptcy Court to convert a July 2002 Chapter 13 petition to a Chapter 7 Petition. There is no evidence in the file to indicate the outcome or whether the Veteran's private debts were restructured or discharged. Nevertheless, this action was initiated by the Veteran prior to the period of overpayment. The Veteran submitted a Financial Status Report dated in June 2009. He reported that he was married with two sons, ages 22 and 11. He reported receiving Social Security Administration (SSA) benefits and VA disability benefits, but underreported the latter by several hundred dollars per month. He did not report receipt of a military retirement pension. Including earned income by his spouse, the total household income calculated with the correct VA benefits was $5,689.44 per month. The Veteran itemized monthly expenses including a total of $300.00 credit card, $883.00 home mortgage, and $438.00 automobile loan payments. Other expenses included automobile maintenance, utilities, cable TV, internet, telephone, and cellular telephone services. The total monthly expenses were $4,807. The Veteran reported the ownership of three automobiles at a total asset value of $24,700.00. He did not report any equity in his home. Despite income exceeding expenses by $882, the Veteran noted that he could not pay any amount on a monthly basis to reduce the debt. Following the Committee's September 2009 decision to deny a waiver, in October 2009, the Veteran submitted another Financial Status Report. He continued to underreport his VA income and denied receipt of a military pension. He reported income from his spouse approximately $1000.00 per month less than previously reported for a total monthly income of $4,337.00. The Veteran reported total monthly expenses of $7,290.00. He double reported the expense of a second mortgage and reported general household expense more than double the previous report. This accounting shows that his expenses exceeded his income by $2,953.00. Regarding assets, the Veteran indicated that he had $14,000.00 in home equity and only two automobiles. He reported the value of the newest vehicle more than $13,000.00 less than in the previous report. Neither the June nor September Financial Status Reports were signed by the Veteran or his spouse. The Board places low probative weight on the accuracy of the two Financial Status Reports because of internal inconsistencies and the dramatic difference between the two reports dated only four months apart. The reports are insufficient to show that collection of the debt in monthly withholding of future benefits would deprive debtor or family of basic necessities. Although the Veteran is totally disabled and unable to work, his VA benefits are at the 100 percent rate and he is in receipt of SSA benefits. His spouse is employed. Further, he has equity in his home, two or three automobiles, and many household services such as cellular telephones and cable TV. Although he is obligated on two home mortgages and two credit cards, he did not report foreclosure or collection action. That his expenses exceeded his income is not credible. Therefore, the Board finds that recovery of the debt will not impose an undue financial hardship. The Board must also consider whether the recovery of the overpayment would defeat the purpose for which the benefits were intended. The law specifically prohibits concurrent payments of active duty pay and VA disability benefits. Therefore, in this case, the recovery of the overpayment does not defeat the purpose for which the benefits were intended. Regarding unjust enrichment, the Veteran received his full military pay and allowances at the grade of E-7 during his active duty as well as his VA compensation benefits. Therefore, he did receive income from VA in excess of that received by similarly situated fellow soldiers at the same pay grade with the same military and family responsibilities. In the law governing the payment of disability compensation, Congress has clearly precluded the simultaneous payment of a full military active duty salary and veteran disability benefits. Thus, failure to make restitution would result in unfair gain to the Veteran. Finally, the Board must consider whether reliance on the benefits resulted in relinquishment of a valuable right or the incurrence of a legal obligation. The Veteran has not contended, nor does the evidence show, that he relinquished a valuable right or incurred a legal obligation in reliance on VA continuing to pay disability benefits while he was on active duty. Therefore, the Board concludes that collection of the debt would not violate the standard of equity and good conscience. The law specifically prohibits concurrent payments of active duty pay and VA disability benefits and the Veteran was unjustly enriched by receiving both benefits simultaneously. Moreover, collection of the debt would not deprive him and his family of basic necessities. As the preponderance of the evidence is against the petition for a waiver of the overpayment debt, the "benefit of the doubt" rule is not for application, and the waiver must be denied. See 38 U.S.C.A. § 5107(b); Gilbert v. Derwinski, 1 Vet. App. 49 (1990). ORDER Waiver of recovery of overpayment of disability compensation in the amount of $9,281.83 is denied. ____________________________________________ A. JAEGER Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs