Citation Nr: 1343423 Decision Date: 12/31/13 Archive Date: 01/07/14 DOCKET NO. 11-07 439 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Portland, Oregon THE ISSUE Entitlement to waiver of recovery of the debt of $16,509.00 due to overpayment of VA compensation benefits. REPRESENTATION Appellant represented by: Disabled American Veterans WITNESS AT HEARING ON APPEAL The Veteran ATTORNEY FOR THE BOARD M. Mills, Associate Counsel INTRODUCTION The Veteran served on active duty from December 1967 to May 1970. This matter comes to the Board of Veterans' Appeals (Board) on appeal from a January 2011 decision of the Committee on Waivers and Compromises of the Department of Veteran's Affairs (VA) Regional Office (RO) in St. Paul, Minnesota that determined that the Veteran was not entitled to a waiver of recovery of overpayment of $16,509.00 in VA benefits. The Veteran provided testimony at a March 2013 hearing before the undersigned Veterans Law Judge. A transcript of the hearing is associated with the Virtual VA claims file. A review of the Veterans Benefits Management System (VBMS) and Virtual VA paperless claims processing system does not reveal any additional documents pertinent to the present appeal. FINDINGS OF FACT 1. The Veteran was awarded an additional compensation allowance for a spouse in January 1994. 2.The Veteran was divorced from his first spouse on June 19, 2000. 3. The Veteran married his second spouse on October 2, 2004. 4. The Veteran notified VA of his June 19, 2000, divorce and October 2, 2004, remarriage when he contacted the RO in September 2010. 5. The RO retroactively terminated the compensation allowance paid to the Veteran for his first spouse from July 1, 2000 to September 30, 2010, resulting in an overpayment of compensation benefits in the amount of $16,509.00. 6. There is no indication of fraud, misrepresentation of material fact, or bad faith on the part of the Veteran in the creation of the $16,509.00 indebtedness. 7. The Veteran was at fault in the creation of the overpayment for the period from July 1, 2000 to October 31, 2004; repayment of this amount would not result in undue financial hardship to the Veteran or deprive him of the basic necessities of life, nor would it defeat the purpose for which the benefits were intended, and failure to recover this portion of the overpaid benefits would result in unfair gain to the Veteran. 8. Recovery of the overpayment from November 1, 2004, to September 30, 2010, would defeat the purpose for which the benefits were intended, would not result in unfair gain to the Veteran, and would violate principles of equity and good conscience because the Veteran was remarried during this period. CONCLUSIONS OF LAW 1. The overpayment of compensation benefits in the amount of $16,509.00 was not due to fraud, misrepresentation, or bad faith of the Veteran. 38 U.S.C.A. §§ 5107, 5302(c) (West 2002); 38 C.F.R. §§ 1.963, 1.965 (2013). 2. Recovery of the overpayment of VA compensation benefits created during the period of July 1, 2000 to October 31, 2004, does not violate principles of equity and good conscience. 38 U.S.C.A. §§ 5107, 5302 (West 2002); 38 C.F.R. §§ 1.963, 1.965 (2013). 3. A waiver of the Veteran's compensation benefits indebtedness during the period from November 1, 2004, until September 30, 2010, is consistent with the principles of equity and good conscience. 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 Court of Appeals for Veterans Claims (Court) has held that the notice and duty-to-assist provisions of the Veterans Claims Assistance Act of 2000 do not apply to claims for waiver of recovery of overpayment. See Barger v. Principi, 16 Vet. App. 132 (2002); see also Lueras v. Principi, 18 Vet. App. 435 (2004). Law and Regulations Recovery of overpayment of any benefits made under laws administered by VA may 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. 38 U.S.C.A. § 5302(c); 38 C.F.R. § 1.963(a). If there is no indication of fraud, misrepresentation, or bad faith in the record, the indebtedness shall be waived if the recovery of the overpayment would be against equity and good conscience. 38 U.S.C.A. § 5301(a); 38 C.F.R. §§ 1.962, 1.965. Consideration of equity and good conscience is intended to reach a result that is not unduly favorable or adverse to either the claimant or the Government. It is intended to achieve a result that is fair. 38 C.F.R. § 1.965(a). Six non-exclusive elements are set forth in the regulations that must be addressed to determine whether the facts and circumstances in a particular case dictate that collection of an overpayment would be against equity and good conscience. The six non-exclusive elements, consist of: (1) the fault of the debtor; (2) balancing of faults between the debtor and VA; (3) undue hardship of collection on the debtor; (4) a defeat of the purpose of an existing benefit to the veteran; (5) the unjust enrichment of the veteran; and (6) whether the veteran changed positions to his/her detriment in reliance upon a granted VA benefit. 38 U.S.C.A. § 5302; 38 C.F.R. § 1.965(a). Each of the six elements must be addressed. See Ridings v. Brown, 6 Vet. App. 544, 546 (1994). Analysis The Veteran has been charged with an overpayment of $16,509.00 for VA benefits. A January 1994 letter from VA notified the Veteran that his disability compensation award included benefits for his spouse, and informed him that he was to notify VA immediately if there is any change in the number or status of his dependents. In June 19, 2000, the Veteran and his first spouse were divorced. The Veteran did not initially notify the VA of his divorce and continued to collect an additional allowance for a spouse in his monthly VA compensation. The Veteran submitted a Status Of Dependent Questionnaire in September 2010. He also submitted a divorce decree for his first marriage and a marriage certificate for his remarriage. In November 2010, VA notified the Veteran of the retroactive reduction in his compensation benefits, effective July 1, 2000, the first of the month following the divorce to reflect the fact that he had received an additional allowance for his first spouse from that date. See 38 C.F.R. § 3.501(d)(1). The Veteran was notified that this action resulted in an overpayment of benefits which was subject to repayment. The Veteran requested a partial waiver of recovery of overpayment for the period after he remarried, claiming that he was partially at fault in creating the overpayment at issue. He stated that the first time he notified VA of his June 2000 divorce was during a December 2005 VA examination. In January 2011, the Committee on Waivers and Compromises determined that the Veteran was at fault for the creation of the debt. He was found to be unjustly enriched because he received funds for which he was not eligible and no financial hardship was found. The request for waiver was denied because it was found that failure to make repayment would result in an unfair gain for the Veteran. The Court has held that the issue of the validity of a debt is a threshold determination which must be made prior to a decision on a request for waiver of the indebtedness. See Schaper v. Derwinski, 1 Vet. App. 430 (1991); see also VA O.G.C. Prec. Op. No. 6-98, published at 63 Fed. Reg. 31,264 (1998). In this case, the Veteran did inform a VA examiner during a December 2005 examination that he had divorced and remarried. However, the Veteran did not inform VA of his June 2000 divorce until after he remarried and he has not otherwise questioned the validity of the creation of the debt prior to his remarriage. As such, the Board concludes that the creation of the debt between July 1,2000 and October 31, 2004 is valid. The next issue for consideration is waiver of recovery the $16,509.00 overpayment. In this case, the Committee has determined that the Veteran was free from fraud, misrepresentation or bad faith in the creation of the instant overpayment. The Board will not revisit that issue, and as such, tacitly concurs with the Committee determination in this respect. Bernard v. Brown, 4 Vet. App. 384 (1993). The next issue to be addressed is whether a collection of the debt from the Veteran would be contrary to the principles of equity and good conscience. The Board initially finds that the fault in the creation of the overpayment at issue lies with the Veteran. The Veteran was divorced in June 2000 and VA had no actual or constructive knowledge of that change in dependency status until 2005. As the Veteran continued to accept an additional allowance for his ex-spouse to which he knew that he was not entitled, the Veteran bears responsibility in the creation of the debt. The next element to be considered regards undue hardship and whether collection would deprive debtor or family of basic necessities. At the time he submitted his Financial Status Report in December 2010, the Veteran's monthly net income, including that of his spouse, was $5,774.00 and his monthly expenses including payments to other debt collectors was $3,368.65. Based on the evidence of record, therefore, the Board finds that the surplus in the Veteran's monthly income is indicative of his ability to repay his debt to VA. The next element to be considered concerns whether recovery of the overpayment at issue would defeat the purpose for which the benefits were intended. The additional allowance was intended to provide the Veteran with increased benefits for the purpose of providing for a dependent spouse. As the Veteran had a dependent spouse as of October 2, 3004, the collection of the debt for the period from October 2, 2004, to September 30, 2010, would defeat the purpose of compensating the Veteran for such dependent. On the other hand, recovery of the overpayment corresponding to the period from July 1, 2000 to October 2004, during the period the Veteran was not married, would not defeat the purpose of the benefits originally authorized. The fifth element involves unjust enrichment. In this case, the Veteran clearly received additional VA benefits to which he was not legally entitled. Although he was remarried in October 2, 2004, he did not inform VA in a timely manner or claim the benefit. Nonetheless, although he was not legally entitled to an additional allowance for a spouse because he failed to provide VA adequate evidence prior to September 2010, the Board again observes that the Veteran was, in fact, married again in October 2, 2004. Under the circumstances in this case, and in the context of equity and good conscience, the Board concludes that waiver of recovery of the amount of the overpayment corresponding to his period of remarriage (i.e., October 2, 2004 in accord with 38 C.F.R. § 3.31), would not result in unjust enrichment to the Veteran. The Board also concludes that waiver of recovery of the additional compensation he received for a spouse from July 1, 2000 to October 31, 2004 would result in a windfall and produce unfair gain to this Veteran, as he was not entitled to any additional allowance for a spouse during this period. The Board must consider whether reliance on VA benefits resulted in the Veteran relinquishing a valuable right or incurring a legal obligation. The Veteran has not claimed that he relinquished any right or incurred any legal obligation in reliance on receipt of VA benefits, nor is there any evidence that he did so. After carefully weighing all relevant factors set forth above, and affording the Veteran the benefit of the doubt, the Board finds that a waiver of the Veteran's compensation overpayment indebtedness from November 1, 2004 to September 30, 2010, is consistent with the principles of equity and good conscience in this case. However, recovery of the remainder of the compensation overpayment indebtedness, from the period of July 1, 2000 to October 31, 2004, does not violate the principles of equity and good conscience. The Board finds that the Veteran bears the fault in the creation of this debt, that partial repayment would not result in undue financial hardship to him or deprive him of the basic necessities of life, nor would it defeat the purpose for which the benefits were intended, and failure to recover this portion of the overpayment would result in unfair gain to the Veteran. ORDER A partial waiver of the Veteran's compensation overpayment indebtedness, from the period of November 1, 2004 to September 30, 2010 is granted. Waiver of recovery of the remainder of the compensation overpayment indebtedness from the period of July 1, 2000 to October 31, 2004 is denied. ____________________________________________ H. N. SCHWARTZ Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs