Citation Nr: 1334335 Decision Date: 10/29/13 Archive Date: 11/06/13 DOCKET NO. 12-23 467 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in New York, New York THE ISSUE Entitlement to waiver of recovery of an overpayment of pension benefits in the amount of $18,883. ATTORNEY FOR THE BOARD K. Marenna, Associate Counsel INTRODUCTION The appellant had active service from May 1951 to May 1953. This matter comes before the Board of Veterans' Appeals (Board) on appeal from a March 2012 decision by the Committee on Waivers and Compromises (Committee) at the Department of Veterans Affairs (VA) Regional Office (RO) in Philadelphia, Pennsylvania, that denied his request for waiver of the recovery of an overpayment of pension benefits in the amount of $18,883. In his substantive appeal, the appellant requested a Travel Board hearing. However, in April 2013, the appellant's custodian withdrew the appellant's hearing request. Please note this appeal has been advanced on the Board's docket pursuant to 38 C.F.R. § 20.900(c) (2013). 38 U.S.C.A. § 7107(a)(2) (West 2002). FINDINGS OF FACT 1. A January 2010 rating decision granted entitlement to nonservice-connected pension. 2. The creation of the indebtedness at issue did not involve fraud, misrepresentation, or bad faith on the appellant's part. 3. The appellant was unjustly enriched by his receipt of non-service-connected VA pension income; recovery of the $18,883 overpayment debt will not violate the standards of equity and good conscience. CONCLUSION OF LAW The criteria are not met for waiver of recovery of the overpayment of VA pension benefits in the amount of $18,883. 38 U.S.C.A. §§ 5107, 5302 (West 2002); 38 C.F.R. §§ 1.963, 1.965 (2013). REASONS AND BASES FOR FINDINGS AND CONCLUSION The Board has thoroughly reviewed all the evidence in the appellant's claims folder. Although the Board has an obligation to provide reasons and bases supporting this decision, there is no need to discuss, in detail, each piece of evidence of record. See Gonzales v. West, 218 F.3d 1378, 1380-81 (Fed. Cir. 2000) (the Board must review the entire record, but does not have to discuss each piece of evidence). 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 appellant must not assume that the Board has overlooked pieces of evidence that are not explicitly discussed herein. See Timberlake v. Gober, 14 Vet. App. 122 (2000) (the law requires only that the Board address its reasons for rejecting evidence favorable to the appellant). The Board must assess the credibility and weight of all evidence, including the medical evidence, to determine its probative value, accounting for evidence which it finds to be persuasive or unpersuasive, and providing reasons for rejecting any evidence favorable to the claimant. Equal weight is not accorded to each piece of evidence contained in the record; every item of evidence does not have the same probative value. When all the evidence is assembled, VA is responsible for determining whether the evidence supports the claim or is in relative equipoise, with the appellant prevailing in either event, or whether a preponderance of the evidence is against a claim, in which case, the claim is denied. Gilbert v. Derwinski, 1 Vet. App. 49 (1990). I. Notice and Assistance VA has duties to notify and assist a claimant in substantiating a claim for VA benefits upon receipt of a complete or substantially complete application. U.S.C.A. §§ 5100; 5102, 5103, 5103A, 5106, 5107, 5126, and the implementing VA regulations were codified as amended at 38 C.F.R. §§ 3.102, 3.156(a), 3.159, 3.326(a), 3.159, 3.326(a). As part of this assistance, VA is required to notify a claimant of what they must do to substantiate their claim, including apprising them of their and VA's respective responsibilities in obtaining this supporting evidence. 38 U.S.C.A. § 5103(a); 38 C.F.R. § 3.159(b)(1). However, in Barger v. Principi, 16 Vet. App. 132 (2002), the United States Court of Appeals for Veterans Claims (Court) held that the Veterans Claims Assistance Act (VCAA), with its expanded duties, is inapplicable to cases involving waivers of recovery of overpayments. See also Leuras v. Principi, 18 Vet. App. 435, 438-39 (2004) (VCAA provisions are inapplicable to waiver of indebtedness claims). Therefore, the VCAA is not for application in this appeal. Nevertheless, the appellant was apprised of the reasons for the overpayment and resultant debt to VA, and given opportunity to present evidence and argument as to why he should not be responsible for repayment of the overage. The Board concludes that the requirements for the fair development of the appeal have been met in this case. 38 C.F.R. § 1.911(c) (2013). II. Legal Criteria and Analysis In July 2009, the appellant filed a claim for nonservice-connected pension benefits. The claim indicated that he had $5,000 in cash and $10,000 in interest bearing bank accounts and/or certificates of deposit (CDs). The appellant noted that he would receive income from rental property within 12 months of the day he signed the form. The from noted that the appellant had Social Security income of $650 a month. A June 2010 request for appointment of fiduciary, custodian or guardian reflects that the appellant has advanced macular degeneration, is blind and has COPD. An eligibility verification report received in April 2011 indicated that the appellant received $761 a month from Social Security and had rental income of $1250 a month. The report also noted that he had cash in non-interest bearing bank accounts of $28,539 and that he had $76,5912 in interest-bearing bank accounts. He also had $11,764 in IRAs. In September 2011, the RO sent a notice letter addressed to the appellant's custodian stating that they were unable to process the claim because it was not properly signed. The letter stated that the law required that VA Forms, reports and correspondence be signed by the person whose name appears as the payee or a VA recognized fiduciary. The letter stated that the appellant's custodian needed to sign the form and return it as soon as possible. The letter informed him that failure to return the properly signed Eligibility Verification Report would result in suspension of benefits. VA also requested more information about the appellant's assets and informed him that his total net worth was a factor in continued entitlement to VA pension. In November 2011, the RO sent the appellant a letter notifying him that because they had not received the evidence and information requested, they needed to stop his benefits. The benefits were stopped at the beginning of the Eligibility Verification Report period in question, which was January 1, 2010. The appellant was informed that his resulted in an overpayment of benefits. In March 2012, VA received a letter from the appellant's custodian requesting that the appellant's benefits be reinstated and a waiver of overpayment. The appellant's custodian stated that the appellant owned a building that had rental units. He also stated that when the appellant ". . . was enrolled in this program, the gentleman at Stratton VA Center took all the information which was truthfully given and qualified [the appellant] for this and a New York State Blind Citizens benefit." He also enclosed a current statement of the appellant's assets and liabilities. The form indicated the appellant had rent of $2250 a month and assets of $5,475 in the bank and 4 CDs totalling $75,539. In March 2012, the Committee on Waivers and Compromises at the VA Regional Office and Insurance Center of Philadelphia, Pennsylvania denied the waiver of overpayment request. The Committee found that fault in the creation of the debt fell on him because he failed to submit documentation that was requested by the VA. The Committee also found that repayment of the debt would not impair his ability to provide for necessities based on the financial statement indicating he had $80,000 in disposable income. The appellant's legal custodian filed a notice of disagreement on the appellant's behalf in April 2012. He stated that the assets the appellant had were in CDs and were not readily liquid. He also stated that the CDs represented what he had to live on for the rest of his life. A statement of the case was issued in June 2012 and the appellant appealed the decision. In an April 2013 letter, the appellant's custodian stated that he had "received documentation which showed that the information in the original application was incorrect, which was the fault of the person who took the information as [the appellant] is blind and had no way to verify the information on the form, and that ultimately he was not eligible for the benefit which has been repaid in full in the requested amount of $18,883.000." The custodian asked to appeal the penalties and fines that had been levied against him. An overpayment is created when VA determines that a beneficiary or payee has received monetary benefits to which he or she was not entitled. See 38 U.S.C.A. § 5302 (West 2002 & Supp. 2012); 38 C.F.R. § 1.962 (2013). An overpayment may arise from virtually any benefits program administered pursuant to VA law, including pension, compensation, DIC, educational assistance benefits and subsistence allowance, insurance benefits, burial and plot allowances, clothing allowance, and automobile or other conveyance and adaptive equipment allowances. 38 C.F.R. § 1.956(a) (2013). Recovery of overpayments shall be waived if there is no indication of fraud, misrepresentation, or bad faith on the part of the person having an interest in obtaining the waiver and recovery of the indebtedness from the payee who received such benefits would be against equity and good conscience. 38 U.S.C.A. § 5302(a), (c) (West 2002 & Supp. 2013); 38 C.F.R. § 1.963 (2013). The Court has defined bad faith as "a willful intention to seek an unfair advantage." Richards v. Brown, 9 Vet. App. 255, 257-58 (1996). The provisions of 38 C.F.R. § 1.965(b)(2) define bad faith as an unfair or deceptive dealing by one who seeks to gain thereby at another's expense. Thus, a debtor's conduct in connection with a debt arising from participation in a VA benefits/services program exhibits bad faith if such conduct, although not undertaken with actual fraudulent intent, is undertaken with intent to seek an unfair advantage, with knowledge of the likely consequences, and results in a loss to the government. 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 the debtor - where actions of the debtor contribute to the 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 benefits were intended; (5) Unjust enrichment - failure to make restitution would result in unfair gain to the debtor; and (6) Changing position to one's detriment - reliance on VA benefits results in relinquishment of a valuable right or incurrence of a legal obligation. See 38 U.S.C.A. § 5302; 38 C.F.R. § 1.965(a) (2013). Initially, the Board notes that the appellant is not challenging the validity of the debt. See Schaper v. Derwinski, 1 Vet. App. 430 (1991) (indicating this otherwise would be the threshold preliminary determination). Hence, the Board may proceed directly to the merits of his waiver request. The Committee determined in the March 2010 decision at issue that the evidence in this case did not establish fraud, misrepresentation, or bad faith on the part of the appellant in the creation of the debt. The Board is also satisfied that none of the circumstances in this case rise to the level of fraud, misrepresentation, or bad faith, such that there is a legal bar to the waiver of recovery of the debt. See 38 U.S.C.A. § 5302(c). Thus, the sole question before the Board is whether collection of the indebtedness at issue in this appeal, in the amount of $18,883, would violate the principles of equity and good conscience. See 38 U.S.C.A. § 5302(a); 38 C.F.R. §§ 1.963(a), 1.965(a). As discussed above, in determining whether recovery of the overpayment would be against the principles of equity and good conscience, thereby permitting waiver under 38 U.S.C.A. § 5302(a) and 38 C.F.R. § 1.963(a), 1.965(a), there are various elements or factors to consider. The first element pertains to the fault of the debtor and requires an analysis as to whether the actions of the debtor contributed to causing the debt. 38 C.F.R. § 1.965(a)(1). In April 2011, VA received an Improved Pension Eligibility Verification Report signed by the appellant. As noted above, In September 2011, VA sent a letter to the appellant's custodian notifying him that the law required that the VA forms, reports and correspondence be signed by the person whose name appears as the payee or a VA recognized fiduciary. They informed him that his signature must appear on all documents rendered from VA. The letter also notified him that failure to return the properly signed Eligibility Verification report would result in suspension of benefits. The appellant's legal custodian did not respond to the letter and in November 2011, the appellant's benefits were terminated which resulted in an overpayment of benefits. The appellant's custodian did not write to VA until March 2012 when he requested the waiver of overpayment. Although the appellant's assets were incorrectly reported in his claim for nonservice-connected pension, his legal custodian's failure to complete a timely Eligibility Verification Report was the immediate cause of the termination of benefits. The appellant's legal custodian was notified of the consequences of a failure to complete an Eligibility Verification Report. As the appellant's legal custodian did not respond in a timely matter, and as legal custodian, he had a duty to report the appellant's income, the Board finds that the fault for the creation of indebtedness rests on the appellant's legal custodian. In regard to the inaccuracies in the July 2009 claim for nonservice-connected pension, although the appellant's custodian noted that the appellant could not review the claim as he was blind, the information on the form was provided to VA by the appellant. The VA claims form indicates he failed to provide information regarding his rental income and net worth. The Board finds that the appellant's and his legal custodian's actions contributed to the creation of the debt. As to the element of undue financial hardship, the pertinent regulation provides that consideration should be given to whether collection of the indebtedness would deprive the debtor of basic necessities. 38 C.F.R. § 1.963(a)(3). "Financial hardship" is primarily intended to mean that he would be deprived of basic necessities such as food, clothing, and shelter, which do not appear to be factors here. The March 2012 letter from the appellant's custodian indicates the appellant owns the building in which he resides and has CD accounts with an approximate value of $75,539.91, which included the pension benefits. The legal custodian said the appellant rented a third floor apartment for $750 per month, although he was in the process of evicting the tenants for nonpayment of rent. Based on the appellant's assets, the Board finds that financial hardship from recovery of this indebtedness is not shown. 38 C.F.R. § 1.963(a)(3). Other elements for consideration address whether repayment of the debt would nullify the objective purpose for which the benefits were intended, see 38 C.F.R. § 1.965(a)(4), and whether failure to make restitution would result in unfair gain to the debtor, see 38 C.F.R. § 1.965(a)(5). The purpose of the pension benefits is to provide financial assistance to the Veteran. The amount of pension benefits is calculated based on total income and assets. In regard to whether collection of the debt would defeat the purpose of the benefit, it would not. The Board finds that repayment of the debt at issue in this case would not conflict with the objective underlying the benefits, as basic necessities appear to have been provided for during the period in which the overpayment arose. See 38 C.F.R. § 1.965(a)(4). Thus, repayment of the debt would not nullify the purpose for which the pension benefits were intended, since the appellant apparently was not deprived of the basic necessities such as food and shelter. Id. Additionally, the appellant clearly received benefits to which he was not entitled, so waiver of recovery of this consequent indebtedness would result in unjust enrichment to him. If a waiver of recovery is granted it would create an unfair gain to him because he would be allowed to retain funds to which he was not legally entitled. There also is no indication that his position changed to his detriment or that, in reliance on the overpayment, he relinquished a valuable right or incurred a legal obligation. In conclusion, the Board finds that the facts of this case demonstrate that recovery of the overpayment is not against equity and good conscience. Accordingly, the request for waiver of recovery of overpayment is denied. Therefore, the Board finds that the preponderance of the evidence is against the appellant's claim. Consequently, the benefit-of-the-doubt rule is not applicable, and the claim must be denied. 38 U.S.C.A. § 5107(b) (West 2002); Gilbert v. Derwinski, 1 Vet. App. 49, 55 (1990). ORDER The request for entitlement to waiver of recovery of an overpayment of pension benefits in the amount of $18,883 is denied. ____________________________________________ MILO H. HAWLEY Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs