Citation Nr: 1330444 Decision Date: 09/23/13 Archive Date: 09/30/13 DOCKET NO. 09-23 230A ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Honolulu, Hawaii THE ISSUE Entitlement to waiver of recovery of an overpayment of VA compensation benefits in the amount of $4,185.00. REPRESENTATION Veteran represented by: Hawaii Office of Veterans Services WITNESS AT HEARING ON APPEAL The Veteran ATTORNEY FOR THE BOARD S. Heneks, Counsel INTRODUCTION The Veteran served on active duty from April 1969 to September 1976 and from October 1977 to July 1990. This matter comes before the Board of Veterans' Appeals (BVA or Board) on appeal from a April 2005 decision of the Department of Veterans Affairs (VA) Regional Office (RO) in Oakland, California. The appeal is currently under jurisdiction of the RO in Honolulu, Hawaii. In April 2011, the appeal was remanded to afford the Veteran a video conference hearing, which was held before the undersigned in November 2011. FINDINGS OF FACT 1. The creation of the overpayment of VA compensation benefits was not due to the Veteran's fraud, misrepresentation, or bad faith. 2. Recovery of the overpayment in the amount of $7,162.50 would defeat the purpose of the benefit because the Veteran was married to E. for nearly the entire period of the debt. CONCLUSION OF LAW 3. The overpayment of $7,162.50 was not due to fraud, misrepresentation, or bad faith of the Veteran. 38 U.S.C.A. §§ 5107 , 5302(c) (West 2002 & Supp. 2012); 38 C.F.R. §§ 1.963 , 1.965 (2012). 4. Recovery of the overpayment of VA compensation benefits in the amount of $7,162.50, would be against the principles of equity and good conscience and is, therefore, waived. 38 U.S.C.A. §§ 5107 , 5302(a) (West 2002 & Supp. 2012); 38 C.F.R. §§ 1.963 , 1.965 (2012). REASONS AND BASES FOR FINDINGS AND CONCLUSION The Veterans Claims Assistance Act of 2000 (VCAA) enhanced VA's duty to notify and assist claimants in substantiating their claims for VA benefits. 38 U.S.C.A. §§ 5102, 5103, 5103A, 5107, 5126 (West 2002 & Supp. 2012); 38 C.F.R. §§ 3.102, 3.156(a), 3.159, 3.326(a) (2013). However, the U.S. Court of Appeals for Veterans Claims (Court) held that the VCAA, with its expanded duties, is not applicable to cases involving a claim for waiver of recovery of an overpayment. See Barger v. Principi, 16 Vet. App. 132 (2002). The amount of overpayment in question is $4,185.00 for the period from December 1, 1994 through August 31, 2003. The Veteran asserts that in May 1995, he properly notified VA of his divorce from R.S. in November 1994 and remarriage to C.L.L. in April 1995, but VA failed to properly update his change in marital status. He concedes that the overpayment from December 1, 1994 to March 31, 1995 is valid; however, he contends that he is entitled to a waiver from April 1, 1995 to August 31, 2003, as he notified VA of his change of marital status in April 1994 and should not be penalized for VA's error. Waiver of repayment of indebtedness is statutorily precluded if there is any indication of fraud, misrepresentation of a material fact, or bad faith on the part of the person having an interest in obtaining a waiver. 38 U.S.C.A. § 5302(c); 38 C.F.R. § 1.965(b). In the April 2005, the Committee on Waivers and Compromises determined that no fraud, misrepresentation, or bad faith was involved in this case, and the Board agrees. Although the Veteran appears to contend that the propriety of the overpayment is in dispute, the issue as to whether the creation of an overpayment of was proper is not on appeal. Instead, the Board will address the matter of whether the Veteran timely notified VA of his divorce and remarriage under the analysis whether it would be against equity and good conscience for VA to require repayment of the instant indebtedness. 38 U.S.C.A. § 5302. The Committee denied waiver on the basis that recovery would be against the principles of equity and good conscience. The Board disagrees. In applying the equity and good conscience standard to a case, the factors to be considered by the adjudicator are: (1) whether actions of the debtor contributed to the creation of the debt, (2) whether collection would deprive the debtor or the debtor's family of basic necessities, (3) whether recovery of the debt would nullify the objective for which benefits were intended, (4) whether failure to make restitution would result in unfair gain to the debtor, and (5) whether the debtor has changed position to his detriment due to his reliance upon receipt of VA benefits. Additionally, the adjudicator must conduct a "balancing of the faults," weighing the fault of the debtor against any fault attributable to the VA. 38 C.F.R. § 1.965(a). Beginning with the first enumerated factor, as indicated above, the Veteran asserts that he notified VA of his divorce and remarriage in April 1995. The Board observes that there is evidence of record that weighs against his assertions. In this regard, the record reflects that in October 1994, VA received notification that the Veteran married R.S. in September 1993. An October 1997 rating decision notice letter informed the Veteran that he was being paid additional compensation for his spouse, listed as R.S., and two dependent children. The letter advised that he should let VA know right away if there was any change in the status of his dependents. Despite being informed that VA considered R.S. his spouse, the first evidence of record that the Veteran was divorced from R.S. was in a January 2002 Report of Contact (ROC) wherein the Veteran reported that he was no longer married to R.S. and had remarried. The ROC stated that the Veteran was unable to provide dates and places of events of the divorce and remarriage, and was instructed to promptly complete and return a VA Form 21-686c, Declaration of Status of Dependents. Except as provided in 38 C.F.R. § 3.204(a)(2), VA will accept, for the purpose of determining entitlement to benefits under laws administered by VA, the statement of a claimant as proof of marriage or dissolution of marriage, provided that the statement contains: the date (month and year) and place of the event; and the full name and relationship of the other person to the claimant. A claimant must also provide the social security number of any dependent on whose behalf he or she is seeking benefits. 38 C.F.R. § 3.204(a)(1). The next correspondence of record from the Veteran regarding his marital status, which contained the information required pursuant to 38 C.F.R. § 3.204(a)(1), was in a February 2003 Status of Dependents Questionnaire, wherein he reported that he married C.L.L. in April 1995. After VA sent the Veteran letters in March 2003 asking him to clarify his prior marriages and informing him that VA's records reflect that he was being paid for spouse R.S., in June 2003, VA received a Declaration of Status of Dependents reflecting that the Veteran divorced R.S. in November 1994 and married C.L.L. in April 1995. It was not until his October 2003 request for a waiver that the Veteran stated he made several attempts to notify VA of his marital status to include when he inquired with the San Francisco RO regarding educational benefits around 1995, to the Honolulu RO in 1997 or 1998, and to the VA office at the Tripler Army Medical Center around the end of 2001. In his July 2006 Form 9, the Veteran indicated that in approximately May 1995, he inquired about educational benefits at the Oakland VA office, and informed the vocational rehabilitation counselor of his divorce and remarriage at that time. Additional compensation for a new dependent will be effective the latest of the: (1) date of claim; (2) date the dependency arises; (3) effective date of the qualifying disability rating provided evidence of dependency is received within a year of notification of such rating action; or (4) date of commencement of a veteran's award. 38 C.F.R. § 3.401(b) . The "date of claim" means the date of a veteran's marriage, if evidence of the event is received within a year of the event; otherwise, the date notice is received of the dependent's existence. 38 C.F.R. § 3.401(b)(1) . The Veteran is at fault for the creation of the overpayment because the evidence of record does not show that he reported his divorce and remarriage promptly. However, the record clearly reflects that in January 2002, the Veteran informed VA that he divorced R.S. and remarried, which should have prompted the RO to provide a follow up before the next correspondence VA received from the Veteran regarding his marital status, February 2003, more than a year later. Thus, there is also VA fault. Importantly, the evidence of record is clear that the Veteran divorced R.S. in November 1994. The effective date of a reduction or discontinuance of compensation, dependency and indemnity compensation, or pension by reason of marriage, annulment, divorce, or death of a dependent of a payee shall be the last day of the month in which such marriage, annulment, divorce, or death occurs. 38 U.S.C.A. § 5112(b). Therefore, the Veteran's compensation benefits should have been reduced effective November 30, 1994. Payment of monetary benefits based on increased awards of compensation may not be made for any period prior to the first day of the calendar month following the month in which the award became effective. 38 C.F.R. § 3.31(a). The term "increased award" includes an award which is increased because of an added dependent. 38 C.F.R. § 3.31(b). The Veteran married C.L.L. in April 1995. If he had provided notice of his divorce immediately and of his remarriage immediately, payment of monetary benefits based on C.L.L. being an added dependent would have been effective May 1, 1995. Compensation benefits for a spouse is a program that is intended to assist veterans with serious disabilities in providing the basic necessities for a spouse. The Veteran was essentially married the whole time, but for an extremely brief period of time from November 1994 until April 1995. Although the Veteran failed to notify the VA of his divorce and remarriage promptly, the Veteran would have received additional compensation for C.L.L. if he had reported his divorce from R.S. and remarriage immediately. Therefore, recovery of the overpayment from May 1, 1995 to August 31, 2003 would defeat the purpose of the benefit. Also, the Veteran was not unjustly enriched in receiving additional compensation benefits on basis of a spouse because he was married to C.L.L. at that point. In addition, his monthly income and debts are at best equal. According to the April 2006 SOC, it appears that after his monthly expenses are subtracted from his monthly income, he has a "positive cash flow" of $188.00. It was further noted that the Veteran owes back child support in an amount then exceeding $95,000.00. Therefore, repaying the debt would create a financial hardship for him. There is also no evidence of the Veteran changed position to his detriment due to his reliance upon receipt of VA benefits. In short, the Board gives more weight to the fact that recovery of the overpayment of the debt would defeat the purpose of the benefit and would create an undue financial hardship and the fact that there was no unjust enrichment than to the other factors as defined in 38 C.F.R. § 1.965(a). Accordingly, recovery of an overpayment of VA compensation benefits between May 1, 1995 to August 31, 2003 would be against the principles of equity and good conscience and is, therefore, waived. 38 U.S.C.A. §§ 5107, 5302(a); 38 C.F.R. §§ 1.962, 1.963, 1.965. ORDER ____________________________________________ LAURA H. ESKENAZI Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs