Citation Nr: 1327564 Decision Date: 08/28/13 Archive Date: 09/05/13 DOCKET NO. 12-33 670A ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Roanoke, Virginia THE ISSUE Entitlement to a waiver of recovery of an overpayment of VA nonservice-connected pension benefits, in the amount of $42,324.50. REPRESENTATION Appellant represented by: Richard B. Lakes WITNESS AT HEARING ON APPEAL Richard B. Lakes ATTORNEY FOR THE BOARD L. A. Rein, Counsel INTRODUCTION The Veteran served on active duty from April 1970 to December 1971. This matter comes to the Board of Veterans' (Board) on appeal from a November 2011 decision by the Department of Veterans Affairs (VA), Committee on Waivers and Compromises of the Debt Management Center, in St. Paul, Minnesota, that denied the Veteran's request for waiver of the recovery of an overpayment in the amount of $42,324.50. In December 2011, the Veteran was provided with notice of this decision by the VA Regional Office (RO) and Insurance Center (ROIC) in Philadelphia, Pennsylvania. The Board notes that in May 2012, the Veteran executed a VA Form 21-22a, Appointment of Individual as Claimant's Representative, in favor of Mr. Richard B. Lakes. That power of attorney was executed in conjunction with the claim currently before the Board. It is a special power of attorney, pursuant to 38 C.F.R. § 14.630, which allows for one-time representation by an individual who is not accredited by VA as required in 38 C.F.R. § 14.629, and is limited to the claim on appeal. In July 2013, Mr. Richard B. Lakes provided testimony on behalf of the Veteran during a videoconference hearing before the undersigned Veterans Law Judge. A transcript of that hearing is of record. This appeal has been advanced on the Board's docket pursuant to 38 C.F.R. § 20.900(c) (2012). 38 U.S.C.A. § 7107(a)(2) (West 2002). FINDINGS OF FACT 1. The overpayment of VA nonservice-connected pension benefits in the amount of $42,324.50 was not due to the Veteran's fraud, misrepresentation, or bad faith. 2. The creation of the debt was due to fault on the part of the Veteran as he failed to notify VA of his period of incarceration, which resulted in an overpayment in the amount of $42,324.50. 3. The evidence demonstrates that continued recovery of that portion of the overpayment not already recovered would deprive the Veteran of the ability to provide for basic necessities. 4. Waiver of recovery of that portion of the overpayment not already recovered would not unjustly enrich the Veteran. 5. The evidence demonstrates that the Veteran's assets and income, with consideration of the cost of life's basic necessities, are not sufficient to permit repayment of the unrecovered portion of the overpayment indebtedness in the original amount of $42,324.50, less that portion already recovered, and will result in undue financial hardship. Additionally, continued collection of the indebtedness would defeat the current purpose VA pension benefits, and be inequitable. CONCLUSION OF LAW The overpayment of VA nonservice-connected pension benefits was not due to fraud, misrepresentation or bad faith of the Veteran and recovery of the overpayment of VA benefits in the uncollected amount of $42,324.50 would be against equity and good conscience. Therefore, the recovery of that portion of the overpayment not collected as of August 27, 2013, is waived. 38 U.S.C.A. §§ 5107, 5302(a) (West 2002 & Supp. 2012); 38 C.F.R. §§ 1.963(a), 1.965(a) (2012). REASONS AND BASES FOR FINDINGS AND CONCLUSION The issue of the validity of a debt is a threshold determination that must be made prior to a decision on a request for waiver of the indebtedness. Schaper v. Derwinski, 1 Vet. App. 430 (1991). The record shows that the Veteran was in receipt of nonservice-connected pension benefits from August 1, 2003. If any individual to or for whom pension is being paid under a public or private law administered by the Department of Veterans Affairs is imprisoned in a Federal, State, or local penal institution as the result of conviction of a felony or misdemeanor, such pension payments will be discontinued effective on the 61st day of imprisonment following conviction. 38 C.F.R. § 3.666 (2012) In March 2010, the RO was notified that the Veteran had been incarcerated since "sometime in 2007." Thereafter, in June 2010, a corrections officer advised the RO that the Veteran had been incarcerated since February 27, 2006, and that the date of his release was April 12, 2010. In a July 2010 letter, the VARO notified the Veteran that they proposed to terminate his VA pension effective February 27, 2006. In July 2010 correspondence, the Veteran requested that the RO withhold $400.00 from his current VA pension checks. In a September 2011 letter from the VARO, the Veteran was notified that his pension benefits were terminated effective May 17, 2006, due to imprisonment in excess of 60 days due to conviction for a felony or misdemeanor effective the 61st day of incarceration. In a September 2011 letter from the Debt Management Center, the Veteran was informed that he was paid $43,910.30 more than he was entitled to received, based on a termination date of March 5, 2006. Withholding from his VA benefits was scheduled to begin on December 2011. In November 2012, VA determined that the Veteran's pension award should have been terminated from April 29, 2006, and thus, reduced the overpayment by $1,585.80. Thus, the overpayment created was $42,324.50. In this case, the Veteran never notified VA that he was incarcerated and therefore, payments continued to be made by VA. As the Veteran's non service-connected pension benefits were not reduced after 61 days of incarceration, the Board concludes that the overpayment of was properly created because the Veteran received benefits to which he was not legally entitled. The Veteran requested a waiver within 180 days of notification of the indebtedness in a November 2011 VA form 5655, accepted by the RO as a request for waiver. As he filed a timely application for waiver of this overpayment, he meets the basic eligibility requirements for a waiver of recovery of her VA indebtedness. The Board thus turns to the merits of the Veteran's claim. 38 U.S.C.A. § 5302(a) (West 2002); 38 C.F.R. § 1.963(b)(2) (2012). An overpayment is created when VA determines that a beneficiary or payee has received monetary benefits to which he or she is not entitled. 38 C.F.R. § 1.962 (2012). An overpayment may arise from virtually any benefits program administered pursuant to VA law. 38 C.F.R. § 1.956(a) (2012). Recovery of overpayments of any benefits made under the laws administered by VA shall be waived if there is no indication of fraud, misrepresentation, or bad faith on the part of the person or persons having an interest in obtaining the waiver and if the recovery of the indebtedness from the payee who received the benefits would be against equity and good conscience. 38 U.S.C.A. § 5302 (West 2002); 38 C.F.R. §§ 1.962, 1.963(a), 1.965 (2012). The standard of 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 right of debt recovery. The elements for consideration are as follows: (1) fault of debtor, where actions of the debtor contribute to creation of the debt; (2) balancing of faults, weighing fault of 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; (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). When there is an approximate balance of positive and negative evidence regarding the merits of an issue material to the determination of the matter, reasonable doubt will be resolved in favor of the claimant in each such issue. 38 U.S.C.A. § 5107(b) (West 2002). In December 2011, the RO determined that the facts of the case did not reveal the presence of fraud, misrepresentation, or bad faith on the part of the Veteran in the creation of the overpayment of VA nonservice-connected pension benefits. The Board finds that there is no evidence that the Veteran intended to deceive VA or seek unfair advantage and that there was no evidence of fraud, misrepresentation, or bad faith on the part of the Veteran in the creation of this overpayment. Thus, there are no mandatory bars to waiver in this case. The question before the Board now turns to whether recovery of the overpayment would be against equity and good conscience. 38 C.F.R. § 1.965(a) (2012); Ridings v. Brown, 6 Vet. App. 544 (1994). In determining whether the recovery of the overpayment would be against equity and good conscience, the first consideration is whether the appellant was at fault in the creation of the overpayment. In this case, the Board finds that the Veteran was at fault in the creation of the overpayment. He failed to timely notify VA of his incarceration so that his benefits could be reduced. Another significant element for consideration in deciding a waiver request is whether the recovery would result in undue financial hardship. In a July 2010 letter, the Veteran reported that he was homeless. Since that time, the Veteran was provided with a housing voucher from VA that supplements his monthly rent. However, he still must pay a portion of the rent not covered by the voucher, along with utilities and transportation to medical appointments and for basic needs such as groceries. After the repayment to VA he is left with less than $100 a month to provide food, clothing and other necessities for himself. Information provided by his Agent, also shows that the Agent provides the Veteran with financial assistance in the form of small loans to help him make meet his financial obligations each month. The Board finds that the statements provided by the Veteran are credible and that testimony provided by the Veteran's representative further supports the credibility of the hardship that would be imposed without the waiver of recovery of the debt. In this case, the Board finds that continued repayment of the indebtedness would cause undue hardship. The purpose of VA's pension program is to provide subsistence to disabled wartime Veterans whose income would not otherwise be sufficient to meet their needs. Therefore, recovery of the overpayment by withholding from pension benefits due would deprive the Veteran of income needed for subsistence, and thereby defeat the purpose of the pension benefits program. Collection of the indebtedness would not result in unjust enrichment. The Veteran did not receive the payments while incarcerated. It appears that a now deceased sister received the money and that a payment received by the Veteran in 2011 was used to pay for medical and funeral experience of his sister. He does not currently have the means to support himself outside of his VA non service-connected pension benefits. Thus, it does not appear that relieving him of continued collection of the debt would put him in a better financial situation. In sum, the Board finds that the equities favor waiver of continued recovery of the overpayment. The circumstances indicate a need for reasonableness and moderation in the exercising of the Government's right to collect the debt charged to the appellant. While some portion of the debt has already been recovered, that is equitable because of the fault of the Veteran in the initial cause of the debt. However, the Board finds that continued collection of the debt after August 27, 2013, would deprive the Veteran of basic necessities and would defeat the purpose of the nonservice-connected pension benefits due to him. Accordingly, the Board concludes that recovery of the portion of the overpayment not recovered as of August 27, 2013, would be against equity and good conscience. Waiver of recovery of the unrecovered portion of the overpayment of nonservice-connected pension benefits, in the original amount of 42,324.50, less that portion that has already been recovered prior to August 27, 2013, is granted. 38 U.S.C.A. §§ 5107, 5302(a) (West 2002); 38 C.F.R. §§ 1.963(a), 1.965(a) (2012). ORDER Waiver of recovery of an the unrecovered portion of an overpayment of VA nonservice-connected pension benefits, in the original amount of $42,324.50, but less that portion already recovered prior to August 27, 2013, is granted. ____________________________________________ Harvey P. Roberts Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs