Citation Nr: 1452385 Decision Date: 11/26/14 Archive Date: 12/02/14 DOCKET NO. 12-20 932 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Muskogee Education Center THE ISSUES 1. Whether the overpayment of nonservice-connected disability educational benefits in the amount of $11,296.48 was validly created and assessed against the appellant. 2. Entitlement to a waiver of overpayment of disability educational benefits in the amount of $11,296.48. ATTORNEY FOR THE BOARD Tahirih S. Samadani, Counsel INTRODUCTION The Veteran had active service from July 1981 to October 1981, from February 2003 to June 2004 and March 2008 to February 2011. The appellant is the Veteran's daughter. An October 2011 letter indicates that the Veteran transferred educational benefits to his daughter beginning May 14, 2010. For clarification purposes, the social security number on the claims file is the appellant's social security number. This matter comes before the Board of Veterans' Appeals (the Board) on appeal of an April 2012 decision of the Committee on Waivers and Compromises (Committee) of the Department of Veterans Affairs (VA) Muskogee, Oklahoma Regional Office (RO) that denied the appellant's request for a waiver of an overpayment of educational benefits in the amount of $11,296.48. The issue of overpayment of $481.03 for books, supplies, work study, licensing, certification, tutorial payment or refund has not been appealed to the Board and this decision will not address this overpayment. The Board has not only reviewed the appellant's physical claims file but also the electronic records maintained in Virtual VA to ensure consideration of the totality of the evidence. There are no documents on the Veterans Benefits Management System (VBMS) for this appellant at this time. The appeal is REMANDED to the AOJ. VA will notify the appellant if further action is required. REMAND Before a decision can be made on whether the appellant 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). In her substantive appeal, the appellant disagreed with the validity of the debt and also requested that the debt be waived. The appellant argues that she attended the cosmetology school for six months and did not understand why she owed $10,926.88 when she only had three months left in the program prior to quitting. She agreed with the $369.60 overpayment for a housing allowance. As an aside, the appellant claims that she would have completed the course in March instead of July because she was able to transfer credit from high school. The VBA AMC should formulate an audit explaining how the appellant's educational assistance overpayment was calculated. The issue of whether the creation of a debt was proper is inextricably intertwined with the issue of entitlement to a waiver of recovery of the overpayment. See Henderson v. West, 12 Vet. App. 11, 20 (1998); Harris v. Derwinski, 1 Vet. App. 180, 183 (1991) (two issues are "inextricably intertwined" when they are so closely tied together that a final Board decision on one issue cannot be rendered until the other issue has been considered). Additionally, in general, the threshold determination must be made on the propriety of the creation of the debt prior to a decision on the waiver of indebtedness when the validity of the debt is challenged. See Schaper v. Derwinski, 1 Vet. App. 430, 437 (1991). If the overpayment of the educational benefit is found to be valid, the question becomes whether a waiver of that overpayment can be granted. The appellant has argued that the repayment of the overpayment would impose an undue financial hardship upon her. The potential for the imposition of an undue hardship is one of the elements for consideration in the determination of whether the collection of an overpayment would violate the principles of equity and good conscience. 38 C.F.R. § 1.965 (2014). The appellant reported in her substantive appeal that she was currently working for Allstate. The financial status reports submitted thus far do not reflect the appellant's current employment with Allstate. The appellant should be asked to complete and return a financial status report which reflects her current employment. Furthermore, the appellant should provide tax returns from 2011 to the present in order to confirm her financial status. Additionally, the Board notes that both February 2012 letters to the appellant from the Debt Management Center (DMC) uploaded to Virtual VA note that information concerning waiver options was provided on an enclosed document entitled "Notice of Rights and Obligations." A copy of the attachment of either letter is not contained in the claims file. On remand, the VBA AMC should attempt to obtain a copy of this attachment to DMC demand letters. Accordingly, the case is REMANDED for the following action: 1. Complete a full audit for the entire period covered by the overpayment. Then provide an accounting to the appellant, explaining the amount of the overpayment and how it was calculated. The audit should clearly indicate amounts paid to the appellant and the educational institution and dates of the payments. A copy of the written audit should be inserted into the claims folder. The appellant argues that she was going to complete the course in March 2012 and not July 2012 due to transfer of credits from high school. 2. Attempt to obtain a copy of a "Notice of Rights and Obligations" attachment enclosed with two DMC demand letters dated in February 2012 pertaining to compensation overpayments. Efforts to obtain this document should be recorded in the claims file. If the appellant did not receive this attachment, this notice should be sent to the appellant. 3. The appellant should be provided with a financial status report form (VA Form 5655) and asked to provide a current financial status report. 4. Ask the appellant to provide tax returns from 2011 to present. 5. Following an appropriate period of time for response, readjudicate whether the creation of the overpayment of educational benefits was proper and, if so, then adjudicate the appellant's request for a waiver, taking into consideration all evidence contained in the claims file. If a waiver is denied, explain the reasons and bases for that decision, specifically addressing the principles of equity and good conscience, in accordance with 38 C.F.R. § 1.965(a) (2014). If any benefit on appeal remains denied the appellant should be provided a supplemental statement of the case and be given the legally requisite opportunity to respond. The claims folder should be returned to the Board. The appellant has the right to submit additional evidence and argument on the matters 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 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 2014). _________________________________________________ MICHAEL A. PAPPAS 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 your appeal. 38 C.F.R. § 20.1100(b) (2014).