Citation Nr: 1335364 Decision Date: 11/04/13 Archive Date: 11/13/13 DOCKET NO. 10-14 435 ) DATE ) ) On appeal from the Department of Veterans Affairs (VA) Regional Office (RO) in Milwaukee, Wisconsin THE ISSUE 1. Whether an overpayment of VA compensation benefits in the principal amount of $268.20 is a valid debt. 2. Entitlement to a waiver of recovery of VA compensation benefits in the principal amount of $268.20. REPRESENTATION Veteran represented by: Disabled American Veterans ATTORNEY FOR THE BOARD Kristy L. Zadora, Counsel INTRODUCTION The Veteran had active duty service from September 1991 to July 1996. This appeal to the Board of Veterans' Appeal (Board) arose from an May 2009 decision in which the Milwaukee RO's Committee on Waivers and Compromises (Committee) denied waiver of recovery of an overpayment of service-connected benefits in the calculated amount of $268.20. The Veteran filed a notice of disagreement (NOD) in August 2009, and the RO issued a statement of the case (SOC) in October 2009. The Veteran filed a substantive appeal (via a VA Form 9, Appeal to Board of Veterans' Appeals) in November 2009. The Board notes that, in additional to the paper claims file, there is a paperless, electronic (Virtual VA) folder associated with the Veteran's claim. A review of the Virtual VA claims processing system reveals an October 2013 Informal Hearing Presentation (IHP) submitted by the Veteran's representative. For the reasons expressed below, the appeal (characterized to encompass both matters on the title page, as explained below) is being remanded to the RO, via the Appeals Management Center (AMC) in Washington, D.C. VA will notify the Veteran when further action, on his part, is required. REMAND Unfortunately the Board finds that further RO action in this appeal is warranted, even though such will, regrettably, further delay an appellate decision. Initially, the Board notes that before a decision can be made on whether the Veteran is entitled to a waiver of recovery of the assessed overpayment, it must be determined whether or not the overpayment was properly calculated. See Schaper v. Derwinski, 1 Vet. App. 430, 434 (1991). In general, waiver determinations, which do not involve fraud, misrepresentation, or bad faith by the claimant, should be waived only when it is shown that the recovery would be against the principles of equity and good conscience. 38 U.S.C.A. § 5302 (West 2002); 38 C.F.R. § 1.963 (2013). The Board emphasizes that waiver decisions are based upon the evidence of record, which, in essence, places the burden of proof upon the claimants. See 38 C.F.R. § 1.966 (2013). According to 38 U.S.C. § 1505 (West 2002) and 38 C.F.R. 3.666 (2013), any individual receiving a pension, who is imprisoned in a federal, state, or local penal institution in excess of 60 days due to the conviction for a felony or misdemeanor, shall have his/her pension terminated effective the 61st day of incarceration. Preliminary review of the current evidentiary record in this case reveals a January 2009 letter to the Veteran indicating that he owed $268.20 as his entitlement to Compensation and Pension benefits had changed. A May 2009 administrative decision subsequently denied the Veteran's request for a waiver of this debt reasoning that while the Veteran's fault in the creation of this debt was "minimal" and that the receipt of these benefits would allow the Veteran to gain financially at the government's expense. It was also determined that the Veteran would incur no financial hardship by recovering these funds as his basic necessities were being provided to him during his incarceration. The Veteran argues that VA was timely notified of his incarceration and that no overpayment should have resulted. The Board notes that while it appears that this indebtedness was created by the Veteran's incarceration, it is not clear from the current record how this debt was purported to have been created. The Board notes, in addition, although the RO was notified of the Veteran's incarceration in July 2008, it appears that the RO did not reduce the Veteran's compensation until January 2009, possibly creating part of the overpayment in question. In this regard, the Board further notes that where a debt is created as the result of administrative error, the effective date of the reduction of benefits is the date of the last payment based on this error. 38 U.S.C.A. § 5112(b)(10) (West 2002); 38 C.F.R. § 3.500(b) (2013). The United States Court of Appeals for Veterans Claims (Court) has held that when the validity of the debt is challenged, a threshold determination must be made on that question prior to a decision on the waiver of indebtedness. See Schaper, supra. A debtor may dispute the amount or existence of a debt, which is a right that may be exercised separately from a request for waiver or at the same time. See 38 C.F.R. § 1.911(c)(1); see also VAOPGCPREC 6-98. The propriety and amount of the overpayment at issue are matters that are integral to a waiver determination. See Schaper, 1 Vet. App. at 434. As such, the Board believes that further action by the Committee to determine whether the creation of the debt at issue was proper and, if so, the correct amount is needed prior to further appellate consideration, to include consideration of whether any portion of the debt was created through administrative error. Thus, the Board finds that additional development is necessary before the Board may proceed with further appellate review. It also appears that some of the assessed indebtedness in question may have been recouped. Nevertheless, in accordance with Franklin v. Brown, 5 Vet. App. 190 (1993), the Board must consider the entire amount calculated. Moreover, there is no audit in the record showing how the debt was calculated or indicating the amount of any repayments for the period in question. In addition, it appears from the record that the Veteran has been released from his incarceration. Consequently, if the debt is determined to be valid, the Veteran should be asked to submit a current financial status report (FSR). In its October 2009 SOC, the RO indicated that VA received the Veteran's waiver request in March 2009. The January 2009 letter to the Veteran notifying him of his indebtedness referred to another letter that had explained that his benefits had changed and presumably detailed how this debt was created However, the document is contained in the current record. Thus, the RO should contact the VA's Debt Management Center (DMC) to obtain notice issued by the DMC of the overpayment at issue, including notice of the amount and cause of the overpayment. If such a letter of notification of indebtedness is unavailable, documentation confirming the date the notice of the debt was sent to the Veteran and certification that the notice was not returned as undeliverable should be obtained. Accordingly, these matters are hereby REMANDED for the following action: 1. Ensure that the VA Debt Management Center (DMC) has sent a letter to the Veteran notifying him of the amount of the overpayment incurred and his right to request a waiver. Obtain and associate with the claims file copies of all outstanding records related to the matter on appeal as held by the DMC, to include a copy of any notice letter to the Veteran concerning the amount and cause of any overpayment incurred and his right to request a waiver. If such a letter of notification of indebtedness is not available, then a certification from the DMC indicating the date of the demand letter, which contained the Veteran's notice of appellate rights, as well as when and where it was sent and whether it was returned as undeliverable, should be obtained and associated with the claims file. 2. A written paid and due audit of the Veteran's account for the period of the overpayment should be performed. This audit should reflect, on a month-by-month basis, the amounts actually paid to the Veteran, as well as the amounts properly due. In addition, the audit should include the amount of the overpayment, if any, that may have been repaid by the Veteran. A copy of the written audit should be inserted into the claims file and another provided to the Veteran and his representative. 3. After completion of the above development, as well as any other action deemed necessary, adjudicate the issue of whether the overpayment of disability compensation at issue was properly created, to include consideration of whether any of the debt was due to VA administrative error, and the amount of any overpayment. A comprehensive explanation of the reasons and bases for that decision should be prepared and incorporated into the claims file, to include a discussion of any information obtained from the DMC and the Veteran. If it is determined that any or all of the overpayment at issue was improperly created, award action should be taken to rectify the error. In any case, the Veteran and his representative should be informed of the decision made and should be allowed the requisite period of time for a response. 4. Thereafter, if an overpayment is found to have been properly created, the Veteran should be allowed an opportunity to submit additional evidence pertinent to his request for waiver of recovery of the assessed overpayment, including a current and complete FSR, providing all current income, expenses, and assets. 5. After the actions requested above have been completed, the Committee should review the record and reconsider the Veteran's request for waiver pursuant to the principals of equity and good conscience. A formal, written record of the Committee's decision, including an analysis of the various elements to be considered, should be prepared and placed in the claims file. A supplemental statement of the case (SSOC) is not the appropriate means for accomplishing this task, under proper appellate guidelines. 6. To help avoid future remand, ensure that all requested actions have been accomplished (to the extent possible) in compliance with this REMAND. If any action is not undertaken, or is taken in a deficient manner, appropriate corrective action should be undertaken. Stegall v. West, 11 Vet. App. 268 (1998). 7. If the benefit sought on appeal remains denied, furnish to the Veteran and his representative an appropriate SSOC that includes clear reasons and bases for all determinations-to include the issue of whether the debt was properly created, along with recitation of the pertinent law and regulations governing the issue of proper creation, including 38 U.S.C.A. § 5112; 38 C.F.R. § 1.965(a)-and afford them the appropriate time period for response before the claims file is returned to the Board for further appellate consideration. The purpose of this REMAND is to afford due process and to accomplish additional development and adjudication; it is not the Board's intent to imply whether the benefits requested should be granted or denied. The Veteran need take no action until otherwise notified, but he may furnish additional evidence and/or argument during the appropriate time frame. See Kutscherousky v. West, 12 Vet. App. 369 (1999); Colon v. Brown, 9 Vet. App. 104, 108 (1996); Booth v. Brown, 8 Vet. App. 109 (1995); Quarles v. Derwinski, 3 Vet. App. 129, 141 (1992). This REMAND must be afforded expeditious treatment. The law requires that all claims remanded by the Board of Veterans' Appeals 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). _________________________________________________ JACQUELINE E. MONROE Veterans Law Judge, Board of Veterans' Appeals Under 38 U.S.C.A. § 7252 (West 2002), only a decision of the Board of Veterans' Appeals 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 appeal. 38 C.F.R. § 20.1100(b) (2013).