Citation Nr: 1333184 Decision Date: 10/23/13 Archive Date: 10/24/13 DOCKET NO. 10-27 607A ) 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 Department of Veterans Affairs disability compensation, to include the issue of whether the overpayment was properly created. REPRESENTATION Veteran represented by: Disabled American Veterans WITNESSES AT HEARING ON APPEAL The Veteran and his wife ATTORNEY FOR THE BOARD Debbie A. Breitbeil, Counsel INTRODUCTION The Veteran, who is the appellant, served on active duty from November 1966 to January 1969. This matter is before the Board of Veterans' Appeals (Board) on appeal of a January 2008 decisional letter of the Department of Veterans Affairs (VA) Regional Office (RO) in Chicago, Illinois, which notified the Veteran that his disability compensation benefits were reduced, effective April 1, 1997, as a result of removing his spouse from his award as they had terminated their marriage. This matter is also before the Board on appeal of a determination, dated in November 2008, of the Committee on Waivers and Compromises of the VA Pension Management Center (PMC) in Milwaukee, Wisconsin, which denied the Veteran's request for waiver of recovery of the resulting overpayment in the calculated amount of $13,672.67. The Chicago RO is currently handling the appeal. In March 2013, a Travel Board hearing was held before the undersigned; a transcript of that hearing is associated with the record. The appeal is REMANDED to the RO via the Appeals Management Center in Washington, DC. VA will notify the appellant if further action is required. REMAND According to the determination by the Committee on Waivers in November 2008, the overpayment of $13,672.67 in this case was created as a result of the reduction of the Veteran's disability compensation benefits on account of the removal of his wife from his award as they were no longer married. His failure to report the termination of their marriage in a timely manner led to the debt, which is disputed by the Veteran. The Committee on Waivers denied the Veteran's request for a waiver of recovery of the overpayment in part because it found that the Veteran was found to be at significant fault for the debt creation as he knew or should have known that he was not entitled to benefits paid for a dependent, and that he gained financially at the government's expense. The Board observes that the original overpayment amount of $13,672.67 was re-calculated after the RO adjusted the Veteran's award in May 2009. At that time, the RO notified the Veteran by letter that, based on receipt of a copy of his divorce decree showing his divorce from his wife was finalized in August 2001, his former spouse was added back to his award for the period of April 1, 1997 to September 1, 2001. The RO informed the Veteran that he would be told shortly of the exact amount of his overpayment as a result of the adjustment. A note attached to this letter indicated that the new debt would be approximately $7,500. However, there is no documentation in the Veteran's physical claims file or in his electronic file on the "Virtual VA" system to indicate what the re-calculated overpayment amount was or whether he was notified of the adjusted overpayment amount. In statements beginning in March 2008 and in testimony, the Veteran maintains that he notified VA in a timely manner of his divorce from his wife in August 2001. He asserts that he was not at fault in the creation of the debt and that it was therefore improper. As indicated at the hearing, an audit of the overpayment in the Veteran's account is warranted, which would specify the period of the overpayment and the exact amount of the debt. Before a decision can be made on whether the Veteran is entitled to a waiver of recovery of the overpayment, it must be determined whether or not the overpayment was properly calculated. See Schaper v. Derwinski, 1 Vet. App. 430 (1991) (where the United States Court of Appeals for Veterans Claims (Court) held that it is improper to adjudicate an application for waiver without first determining the lawfulness of the debt asserted). As the record now stands, there is inadequate information to determine the exact amount of the overpayment and whether it is correct. Additionally, after conducting an audit and sending the Veteran a copy of the audit, the RO should give him an opportunity to submit an updated Financial Status Report (VA Form 5655). It is acknowledged that he last filed a Financial Status Report in May 2013 (which incidentally was not accompanied by a waiver of initial RO consideration of that evidence). Finally, the Board notes that after the Committee on Waivers denied the Veteran's request for a waiver of recovery of the overpayment in November 2008, he filed a notice of disagreement (NOD) with the waiver decision in March 2009. The filing of a NOD signals the initiation of an appeal in a claim. See 38 C.F.R. § 20.200. When there has been adjudication by the RO and a timely NOD has been filed, a statement of the case (SOC) addressing the issue must be furnished to the veteran. Manlincon v. West, 12 Vet. App. 238 (1999). In this case, the RO issued the Veteran a SOC in July 2010, but it addressed only the issue of the validity of the overpayment. In the document, the RO noted that the decisional document being appealed was the January 2008 letter in which the RO notified the Veteran of the reduction of his disability compensation and the creation of an overpayment in his account; the Veteran then disputed the debt in a March 2008 statement through his representative. Notably, the SOC failed to reference the Veteran's disagreement with the waiver decision of November 2008 (for which he had filed a timely NOD), nor did it cite to the laws and regulations or provide reasons and bases in relation to waivers of recovery of an overpayment. Therefore, on remand the RO should issue a SOC in response to the Veteran's NOD with the November 2008 waiver decision. Accordingly, the case is REMANDED for the following action: 1. Obtain for association with the claims file copies of any (and all) documents relevant to notifying the Veteran of his current amount of overpayment, particularly after his debt was re-calculated in May 2009. 2. Send the Veteran a copy of an audit of his disability compensation account, setting forth the period of the overpayment at issue, the amounts due and paid to him for that period only, and the reason(s) behind the creation of the overpayment. The audit should take into consideration the adjustment to the award made in May 2009, whereby the Veteran's wife was added back to his award from April 1, 1997 to September 1, 2001. 3. Request an updated VA Form 5655, Financial Status Report, from the Veteran. 4. Following completion of the foregoing, the RO should readjudicate the Veteran's claim of whether the overpayment of disability compensation benefits was properly created. If the decision remains adverse to the Veteran, the RO should issue an appropriate supplemental SOC and afford the Veteran the opportunity to respond. 5. Furnish the Veteran a SOC on the claim of waiver of recovery of an overpayment of disability compensation benefits in the amount that has been re-calculated following readjustment of the Veteran's disability award in May 2009. To perfect an appeal of this claim (which is separate and distinct from the issue of the validity of the overpayment, for which the Veteran has filed a timely substantive appeal) to the Board, the Veteran must still timely file a substantive appeal (i.e., VA Form 9) after issuance of the SOC. The case should then, if in order, be returned to the Board. The Veteran has the right to submit additional evidence and argument on the matter the Board has remanded. Kutscherousky v. West, 12 Vet. App. 369 (1999). This claim must be afforded expeditious treatment. The law requires that all claims that are remanded by the Board or by the United States Court of Appeals for Veterans Claims for additional development or other appropriate action must be handled in an expeditious manner. See 38 U.S.C.A. §§ 5109B, 7112 (West Supp. 2012). _________________________________________________ George R. Senyk Veterans Law Judge, Board of Veterans' Appeals Under 38 U.S.C.A. § 7252 (West 2002), only a decision of the Board is appealable to the United States Court of Appeals for Veterans Claims. This remand is in the nature of a preliminary order and does not constitute a decision of the Board on the merits of the Veteran's appeal. 38 C.F.R. § 20.1100(b) (2013).