Citation Nr: 1452995	
Decision Date: 12/02/14    Archive Date: 12/10/14

DOCKET NO.  13-07 710	)	DATE
	)
	)

On appeal from the
Department of Veterans Affairs Regional Office in Milwaukee, Wisconsin


THE ISSUE

Entitlement to a waiver of recovery of overpayment of Department of Veterans Affairs death pension benefits in the calculated amount of $2,052.00.


REPRESENTATION

Appellant represented by:	Veterans of Foreign Wars of the United States


ATTORNEY FOR THE BOARD

Shauna M. Watkins, Counsel



INTRODUCTION

The Veteran had active duty service from June 1965 to January 1970, to include a tour on land in the Republic of Vietnam (Vietnam) during the Vietnam War.  During his active military service, the Veteran was awarded, in pertinent part, the Combat Infantryman Badge (CIB).  The Veteran died in May 2009.  The Appellant is the Veteran's surviving spouse.

This matter comes before the Board of Veterans' Appeals (Board) on appeal from a September 2012 decision by the Department of Veterans Affairs (VA) Regional Office (RO) in Milwaukee, Wisconsin, which denied the claim on appeal.  The Appellant timely appealed that decision.

The paperless claims files were also reviewed and considered in preparing this decision, along with the paper claims file. 

The Board notes that the Appellant has also perfected appeals regarding service connection for the cause of the Veteran's death and entitlement to Dependency and Indemnity Compensation (DIC) under 38 U.S.C.A. § 1318 (West 2002 & Supp. 2014).  These issues will be addressed in a separate Board decision.


FINDINGS OF FACT

1.  There is no indication of fraud, misrepresentation, or bad faith on the part of the Appellant in the creation of this debt.
 
2.  A waiver of repayment of this debt would not result in unfair enrichment to the Appellant.


CONCLUSION OF LAW

Recovery of the overpayment of the VA non-service-connected death pension compensation in the amount of $2,052.00 would be against equity and good conscience.  38 U.S.C.A. §§ 5107(b), 5302 (West 2002 & Supp. 2014); 38 C.F.R. §§ 1.962, 1.963, 1.965 (2014).


REASONS AND BASES FOR FINDINGS AND CONCLUSION

A.  Veterans Claims Assistance Act of 2000

As provided by the Veterans Claims Assistance Act (VCAA), VA has duties to notify and assist claimants in substantiating claims for VA benefits.  38 U.S.C.A. 
§§ 5100, 5102, 5103, 5103A, 5107, 5126 (West 2002 & Supp. 2014); 38 C.F.R. 
§§ 3.102, 3.156(a), 3.159, 3.326(a) (2014).  The VCAA, however, does not apply to waiver claims.  See Barger v. Principi, 16 Vet. App. 132, 138 (2002); Lueras v. Principi, 18 Vet. App. 435 (2004); Reyes v. Nicholson, 21 Vet. App. 370 (2007) (the notice provisions of 38 U.S.C. § 5103(a) do not apply to Chapter 53 proceedings). 

The statute governing waiver claims, however, has its own notice provisions.  38 U.S.C.A. § 5302 (West 2002).  In this case, however, the Board is granting in full the waiver of overpayment requested on appeal.  Therefore, any error with respect to notification was harmless and will not be further discussed.

B.  Analysis

Recovery of an overpayment may be waived if there is no indication of fraud, misrepresentation, or bad faith, on the part of the person or the persons having an interest in obtaining the waiver, and recovery of such indebtedness would be against equity and good conscience.  38 U.S.C.A. § 5302(c); 38 C.F.R. §§ 1.962, 1.963.  In the absence of fraud, misrepresentation, or bad faith, consideration may be given as to whether recovery of the overpayment would be against equity and good conscience.  The standard "equity and good conscience" will be applied when the facts and circumstances in a particular case indicate a need for reasonableness and moderation in the exercise of the Government's rights.  The decision reached should not be unduly favorable or adverse to either side.  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) the fault of the debtor; (2) balancing of faults between the debtor and VA; (3) undue hardship of collection on the debtor; (4) whether collection would defeat the purpose of an existing benefit to the claimant; (5) whether failure to collect a debt would result in the unjust enrichment of the claimant; and, (6) whether the claimant changed positions to his detriment in reliance upon a granted VA benefit.  38 U.S.C.A. 
§ 5302; 38 C.F.R. § 1.965(a); Ridings v. Brown, 6 Vet. App. 544, 546 (1994).

In the evaluation of whether equity and good conscience necessitates a favorable waiver decision, the Board must consider all the specifically enumerated elements applicable to a particular case.  See Ridings, supra; Cullen v. Brown, 5 Vet. App. 510, 512 (1993).  If warranted, the Board may waive a portion of the debt.  See Jordan v. Brown, 10 Vet. App. 171 (1997).

When, in fully weighing and balancing each equitable factor, there is an approximate balance of positive and negative evidence as to any material issue, VA shall give the claimant the benefit of the doubt.  See 38 U.S.C.A. § 5107(b); see also Dela Cruz v. Principi, 15 Vet. App. 143, 148-49 (2001).

Here, the Veteran died in May 2009.  That same month, the Appellant submitted a claim for VA non-service-connected death pension benefits.  In August 2009, the Appellant submitted her Report of Income from Property or Business (VA 21-4185 Form), along with her tax returns and Declaration of Status of Dependents (VA 21-686c Form).  According to these forms, on June 1, 2009, the Appellant did not have any wages from employment, but she received $6,480.00 in Social Security for her children.  On July 1, 2009, the Appellant received $9,720.00 in Social Security for her children and $270.00 in other income for her children.  She did not have any wages from employment.  On June 1, 2010, the Appellant did not have any wages from employment or income from her children.

Based on the aforementioned information, in a June 2010 letter, the Appellant was granted VA non-service-connected death pension benefits, retroactively effective from May 15, 2009.  She was awarded a monthly payment of $325.00, and payment began on June 1, 2009.  On July 1, 2009, her payment went down to $32.00 due to an income adjustment.  On June 1, 2010, her payment went up to $661.00 as her child turned 18 and was removed from the award.

In a February 2011 letter, the Appellant's pension award was adjusted to include the Veteran's last expenses from June 1, 2009, for 12 months as a deductible expense.  The Appellant paid $7,518.00, minus the $300.00 plot allowance reimbursement by VA and the $300.00 burial allowance reimbursement by VA.  Accordingly, the Appellant was awarded a monthly payment of $865.00, beginning on June 1, 2009.  On July 1, 2009, her payment went down to $609.00 due to an income adjustment.  On May 11, 2010, her payment went up to $661.00 as her child turned 18 and was removed from the award.

In a December 2011 letter, the Appellant's pension was increased to $684.00, effective December 1, 2011, based on the Appellant's net countable income of $0.

In a statement dated on April 27, 2012, the Appellant informed VA that she "began working full time at Walmart beginning March 28, 2012 and that my earnings will exceed the amount of pension benefits that I am entitled to."  No further information regarding the Appellant's income was provided, and VA did not ask the Appellant for further information.  The Appellant received no response from VA and continued to receive her monthly death pension benefits for April, May, and June of 2012.

In a July 24, 2012, letter, the Appellant was informed by VA that her non-service-connected death pension benefits were to be adjusted to $865.00, beginning on September 1, 2011, as the Appellant's child started school and was thus added to the award.  The Appellant's benefits were then increased to $896.00, beginning on December 1, 2011, due to a legislative adjustment.  The Appellant was informed that beginning on April 1, 2012, her VA non-service-connected death pension benefits were terminated due to her earned wages.  The Appellant was told that she had been paid too much and would be advised shortly about how she could repay this debt.

In an August 4, 2012, letter, the Appellant was advised that she was overpaid $2,052.00 in VA death pension benefits and must repay this amount.  In response, on August 20, 2012, the Appellant requested a waiver of this amount.  

Her waiver request was denied by VA in September 2012.  In particular, the VA Committee on Waivers and Compromises found that fraud, misrepresentation, or bad faith were not shown by the evidence.  However, the Committee determined that the Appellant's financial hardship was outweighed by fault and unjust enrichment.  

In her September 2012 Notice of Disagreement (NOD), the Appellant argued that:

I was not unjustly enriched by the payments that were automatically deposited into my checking account.  The benefits that I was receiving were used to pay some of the bills that were still overdue during the time I was waiting on the start of the pension benefits.  I believe that I reported my earnings in a very timely manner.  It was not my fault that the turn around time of the claim cannot be expedited in a more timely manner.  As shown by the submission of VA Form 5655, my income is very low and I am financially unable to take on any additional bills.  I was not trying to fraud the government in any way.

In August 2012, the Appellant submitted a Financial Status Report (VA Form 5655).  On the Form, the Appellant indicated that she had been employed as a Walmart Stocker since March 2012.  The Appellant indicated that her monthly gross salary from working at Walmart was $1,200, and her monthly net income was $1,157.  This was her sole source of income.  The Appellant itemized her monthly expenses, which totaled $2,138.00.  Thus, the Appellant's net monthly income less expenses was -$981.00.  The Appellant indicated that she had two personal bank loans that were past due in a total amount of $900.00.  The Appellant reported that she did not have any cash in the bank and did not own any real estate.  The Appellant stated that she was in "severe financial distress and in fear of losing my house."

In her February 2013 Substantive Appeal (on VA Form 9), the Appellant made the following statement:

I reported to the VA through my veteran service officer in a timely manner my estimated earnings as soon as I started working at Walmart.  I did not use the monies I received from VA in bad faith, by fraud or lack of good faith.  I had to catch up on old bills that had accumulated since before my husband died to do waiting so long for my claim for pension benefits to come to fruition.  My husband died and left me as a widow with a child to support and a failing business.  I did not intend to benefit from this money I received, just used it to catch up on bills.  I have never asked for a waiver of any other monies and due to my lack of income, I believe that a waiver of my overpayment should have been awarded to me and my family.

Upon reviewing the evidence of record, the Board agrees with the Committee that the facts of this case do not reveal fraud, misrepresentation, or bad faith on the Appellant's part in the creation of the overpayment in question.  The Appellant informed VA in a timely manner that she was currently employed by Walmart.  She did not try to conceal her earnings from VA, or misrepresent the amount of her income.  The Appellant has not acted out of fraud, misrepresentation, or bad faith.  

However, having established the lack of fraud, misrepresentation, or bad faith, the Board must now proceed to the question of whether the collection of the overpayment would be against "equity and good conscience."  38 U.S.C.A. 
§ 5302(a); 38 C.F.R. § 1.963(a).  As mentioned, pursuant to 38 C.F.R. § 1.965, the standard of equity and good conscience will be applied when the facts and circumstances in a particular case indicate a need for reasonableness and moderation in the exercise of the Government's rights.  38 C.F.R. § 1.965(a). 

The first and second elements pertain to the fault of the debtor versus the fault of VA.  In the December 2012 SOC, the RO stated that the Appellant was primarily at fault for the creation of the debt because she knew, when she submitted her April 2012 statement to VA, that she was no longer entitled to VA death pension benefits once her income exceeded her rate of VA benefits.  Therefore, the RO found that the Appellant would be unjustly enriched if a waiver was granted.  However, the responsibility in the creation of the overpayment of benefits does not rest with the Appellant, inasmuch as she reported that her income had changed in April 2012.  The debt resulted from VA continuing to provide the Appellant with monthly death pension payments, despite this change in income, for the months of April, May, and June.  After the Appellant informed VA about the change of her income, she did not receive any notice from VA that she was not no longer entitled to death pension benefits due to her new earnings and she continued to receive her monthly payments.  Thus, the Board finds that the Appellant does not bear primary fault in the creation of the overpayment at issue, as she timely notified VA of her change in income and in response, received no notice from VA and continued to receive her payments.

With respect to the third element, whether the Appellant would be subjected to undue hardship if the debt were recovered, the Appellant's August 2012 VA Form 5655 reflected a net monthly income of $1,157.00, minus monthly expenses totaling $2,138.00 and thus a monthly deficit.  The Appellant stated that she was $900.00 past due on bank loans.  The Appellant reported having $0 cash in the bank and not owning any real estate.  The Board acknowledges the Appellant's statements that recovery of the overpayment would cause undue hardship.  However, financial hardship alone is not sufficient to constitute undue hardship for VA purposes.  Undue hardship is defined as depriving the debtor or his or her family of basic necessities.  38 C.F.R. § 1.965(a)(3).  Basic necessities constitute food, clothing, and shelter, and the Board finds that to require the Appellant to repay the overpayment in this case would deprive her of basic necessities for VA purposes.  The Appellant is already financially short each month when her income is weighed against her expenses, and she is already past due on two loans.  Thus, requiring the Appellant to make payments on another loan would require her to take money from basic necessities.  Accordingly, the Board finds that the Appellant would be subjected to undue hardship if the debt were recovered.

The fourth element to be addressed is whether recovery of the overpayment would defeat the purpose for which the benefits were intended.  Here, VA awarded non-service-connected death pension benefits to the Appellant beginning in June 2009 to help her cover her minimum level of financial security following the death of her spouse, a Veteran.  The evidence reflects that the Appellant did require this money and use this money to pay for her bills and living expenses from that time until June 2012.  As shown in her August 2012 VA Form 5655, the Appellant was still past due on debt, albeit not as much, following her use of the April 2012, May 2012, and June 2012 death pension benefits.  The Appellant does not appear to have used the funds for any purpose except making an attempt to secure a minimum level of financial security.  Therefore, any reduction in this benefit would defeat the purpose for which it was intended.

Also for consideration is the fifth element of whether a waiver of overpayment would cause "unjust enrichment."  Put another way, the Board must contemplate whether failure to make restitution would result in unfair gain.  Here, the evidence reflects that the Appellant was overpaid $2,052.00.  Following the receipt of and the spending of this money, the Appellant indicated, in her August 2012 VA From 5655, that she was still past due $900.00 in personal loans and had a negative cash flow each month.  This evidence does not indicate that overpaying the Appellant $2,052.00, resulted in an unfair gain to her, as she was still in financial distress following the receipt of this money.  The Board also notes that the Appellant, of her own accord, informed VA in April 2012 that she now had employment at Walmart and thus the amount of her income had changed.  The Appellant then later indicated that she needed the death pension payments, after obtaining her employment, to pay back old debts that she had incurred prior to and immediately following her husband's death.  There is no indication that the Appellant received funds that she did not need.  Accordingly, the Appellant would be not unjustly enriched by a waiver of the overpayment in this case.

The sixth element to be considered is whether reliance on VA benefits resulted in the Appellant relinquishing a valuable right or incurring a legal obligation.  The Appellant has not claimed that she relinquished any right or incurred any legal obligation or that she relied upon VA to her detriment, nor is there any evidence of such.  Thus, this sixth element does not support the Veteran's request for a waiver of overpayment.

The record does not demonstrate any additional factors which should be considered in adjudicating the Appellant's claim for a waiver of the indebtedness, nor has the Appellant identified any such factors. 

After weighing all of the enumerated factors, the Board finds that total recovery of the overpayment would violate the principles of equity and good conscience.  The Appellant did not rely upon VA benefits to her detriment or relinquish a right as a result of benefits.  However, the Appellant was not at significant fault in the creation of the debt, and in fact notified VA of a change in her income immediately.  Additionally, repayment of the debt would create an undue hardship on the Appellant.  Moreover, the benefits were utilized for their intended purpose, and there is no indication that the Appellant was unjustly enriched as a result of receiving them.  When viewed collectively, the factors supporting waiver of overpayment outweigh those supporting recovery of the debt.  Therefore, a waiver of overpayment is appropriate in this case.


ORDER

A waiver of recovery of an overpayment of VA non-service-connected death pension benefits in the amount of $2,052.00 is granted.



____________________________________________
MARJORIE A. AUER
Veterans Law Judge, Board of Veterans' Appeals



Department of Veterans Affairs