Citation Nr: 1506096 Decision Date: 02/10/15 Archive Date: 02/18/15 DOCKET NO. 12-11 398A ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in St. Petersburg, Florida THE ISSUE Entitlement to waiver of recovery of an overpayment in the amount of $14,268.00, to include the issue of the validity of the overpayment. REPRESENTATION Appellant represented by: Florida Department of Veterans Affairs WITNESS AT HEARING ON APPEAL Veteran ATTORNEY FOR THE BOARD F. Yankey Counsel INTRODUCTION The Veteran served on active duty from July 1967 to July 1970. This case comes before the Board of Veterans' Appeals (Board) on appeal of a December 2008 decision of the Department of Veterans Affairs (VA) Debt Management Center in St. Paul, Minnesota. The Veteran testified before the undersigned at a November 2014 Video Conference hearing. The hearing transcript is of record. 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 v. Derwinski, 1 Vet. App. 430, 437 (1991). 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) (2014); 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. Accordingly, this matter is part and parcel of the overall claim seeking entitlement to waiver of overpayment of VA compensation benefits. In hearing testimony provided in 2014, the Veteran indicated that he believed that VA had made some mistakes in calculating any overpayment. Accordingly, for the sake of completeness, the Board will address the preliminary matter of the validity of the debt and notes that the validity of the creation of the debt was addressed in a September 2009 report from the St. Petersburg, Florida RO. See Bernard v. Brown, 4 Vet. App. 384, 393-94 (1993) (holding that when the Board addresses in its decision a question that has not been addressed by the RO, it must consider whether the appellant has been given adequate notice to respond and, if not, whether he has been prejudiced thereby). FINDINGS OF FACT 1. In an October 2008 rating decision, the Veteran was granted service connection and VA compensation benefits at the 20 percent rate, effective September 22, 2005; VA compensation benefit payments were paid retroactively beginning October [redacted], 2005. 2. As of October [redacted], 2005, at the time the Veteran's compensation benefits began, he was incarcerated following conviction of a felony; he was released 54 days later, on November [redacted], 2005. 3. The Veteran was incarcerated again from August [redacted], 2006 to August [redacted], 2006, a period of 10 days. 4. The RO retroactively reduced the Veteran's VA compensation benefits from October [redacted], 2005 to October 31, 2008, causing an overpayment of $14, 268.00. 5. The Veteran was legally entitled to the payment of VA compensation benefits from October [redacted], 2005 to October 31, 2008, to include his periods of incarceration from October [redacted], 2005 to November [redacted], 2005, and August [redacted], 2006 to August [redacted], 2006. CONCLUSION OF LAW The overpayment of VA compensation benefits in the amount of $14, 268.00 was not properly created and the debt is not valid. 38 U.S.C.A. § 1114(a), 5313(a)(c)(d) (West 2014); 38 C.F.R. § 3.665(a)(c)(d) (2014). REASONS AND BASES FOR FINDINGS AND CONCLUSION The VA has a duty to provide notification to the Veteran with respect to establishing entitlement to benefits, and a duty to assist with development of evidence under 38 U.S.C.A. §§ 5103, 5103A (West 2014); 38 C.F.R. § 3.159(b) (2014). With regard to the Veteran's claim challenging the validity of his debt, the VCAA is inapplicable. See Barger v. Principi, 16 Vet. App. 132 (2002). Furthermore, as discussed below, the Board has determined that the $14,268.00 debt is not valid and shall not be assessed against the Veteran. The issue of entitlement to a waiver of recovery of an overpayment is therefore moot. Accordingly, the Board finds that any error related to due process or the VCAA on this appeal is also moot. See 38 U.S.C. §§ 5103 , 5103A (West 2014 ); 38 C.F.R. § 3.159 (2014); Mlechick v. Mansfield, 503 F.3d 1340 (Fed. Cir. 2007). Legal Criteria An overpayment is created when VA determines that a beneficiary or payee has received monetary benefits to which he or she is not entitled. See 38 U.S.C.A. § 5302; 38 C.F.R. § 1.962. An overpayment may arise from virtually any benefits program administered pursuant to VA law, including pension, compensation, dependency and indemnity 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). "Compensation" means a monthly payment made by VA to a Veteran because of service-connected disability, or to a surviving spouse, child, or parent of a Veteran because of the service-connected death of the Veteran. 38 U.S.C.A. § 101(13) (West 2014); 38 C.F.R. § 3.4 (2014). A Veteran who is incarcerated in a federal, state, or local penal institution in excess of 60 days for conviction of a felony committed after October 7, 1980, and who has a combined rating of 20 percent or more shall receive the rate of compensation of 10 percent payable beginning on the 61st day of incarceration. All or part of the compensation not paid to the Veteran may be apportioned to the Veteran's spouse, child, or children on the basis of individual need. 38 U.S.C.A. § 1114 (a), 5313 (West 2014); 38 C.F.R. § 3.665 (2014). In short, these provisions create a limitation on payment of compensation to persons incarcerated for conviction of a felony. However, in such instances, VA must notify the Veteran that his benefits are subject to reduction due to his incarceration, of the rights of dependents to an apportionment while the person is incarcerated, and conditions under which payments to the person may be resumed upon release from incarceration. 38 C.F.R. § 3.665(a). The preliminary issue of the validity of a debt is a threshold determination that must be made prior to a decision on a request for waiver of the indebtedness. See Schaper v. Derwinski, 1 Vet. App. 430 (1991). 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) (2014); 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. In order for the Board to determine that the overpayment was not properly created, such that the debt was not valid, it must be established that the appellant was legally entitled to the benefits in question or, if the appellant was not legally entitled, then it must be shown that VA was solely responsible for the appellant being erroneously paid benefits. Analysis In this case, the debt at issue arose in conjunction with the Veteran's receipt of VA service-connected compensation benefits, the award of which began on October [redacted], 2005. Specifically, the record reflects that in an October 2008 rating decision, the Veteran was granted service connection for diabetes mellitus type II with erectile dysfunction, and prostate cancer. He was assigned a 20 percent rating, effective September 22, 2005, and a 40 percent rating, effective September 2, 2006. The start of his compensation payments was October [redacted], 2005. In June 2008, the RO notified the Veteran that it had received evidence which indicated that he was incarcerated following conviction of a felony as of October [redacted] 2005, the effective date of his award of service connection and compensation benefits and therefore, his compensation benefits were being reduced, effective October [redacted], 2005. The RO determined that this reduction in benefits caused an overpayment. Specifically, they found that from October [redacted], 2005 to October 31, 2008, the Veteran had been overpaid a total of $14,268.00. See September 2009 letter from the St. Petersburg RO. The original calculated indebtedness in the amount of $14,268 00 has since been reduced to $10,458.00, as of December 15, 2011, through a combination of the withholding of benefits and subsequent award actions. The Veteran contends that he should not be held responsible for a $14,268.00 overpayment, which the RO claims was created as a result of his receipt of VA compensation benefits after 61 days of incarceration, because he was not incarcerated at the time that the benefits were paid. For the reasons that follow, the Board concludes that the Veteran was legally entitled to the VA compensation benefits paid from October [redacted], 2005 to October 31, 2008, and that therefore, the debt is not valid. Evidence of record shows that the Veteran was originally convicted and sentenced on June [redacted], 2002, to twenty seven (27) months with the Bureau of Prisons, with three (3) years of supervised release to follow. The Veteran was released from the Bureau of Prisons Residential Reentry Center in West Palm Beach on November [redacted], 2005, to begin supervision, which was scheduled to terminate on November [redacted], 2008. The record also reflects that the Veteran was incarcerated again for 10 days, from August [redacted], 2006, to August [redacted], 2006, for an unrelated offense. See VA and Social Security Administration (SSA) State Prisoner Computer Match run in September 2007, April 2008 Notice to Department of VA of Veteran or Beneficiary Incarceration in Penal Institution. There are no other periods of incarceration for the Veteran noted in the record. Based on this evidence, the Board finds that the Veteran's incarceration in 2005 should not have affected his VA compensation benefits, as he was released on November [redacted], 2005, and therefore, was only incarcerated for approximately 54 days (not 61 days) following the beginning of his payment of VA benefits, on October [redacted], 2005. Likewise, the Veteran's second brief period of incarceration from August [redacted], 2006 to August [redacted], 2006, did not last 61 days, and therefore, should not have affected his payment of VA compensation benefits. Essentially, the Board finds that the RO's reduction in VA compensation benefits for the Veteran was premature and in error, as he had not been incarcerated for more than 60 days after his VA compensation benefits started before his benefits were reduced. There is no evidence of record showing any other periods of incarceration for the Veteran. It is unclear why the RO believes that the Veteran's benefits should have been reduced from October [redacted], 2005 to October 31, 2008, when the evidence of record clearly shows that the Veteran was released from prison on November [redacted], 2005, less than 61 days after his award of compensation, and that he served only another 10-day stint from August [redacted], 2006 to August [redacted], 2006, again less than the required 61 days. See VA and Social Security Administration (SSA) State Prisoner Computer Match run in September 2007, April 2008 Notice to Department of VA of Veteran or Beneficiary Incarceration in Penal Institution, July 2008 letter from the Veteran's probation officer, October 2008 email correspondence, and undated Bureau of Prisons Inmate Locator. The Board also notes that in its June 2008 letter to the Veteran, the RO indicated that the Veteran's benefits would be resumed upon his release from incarceration. In its November 2008 letter, the RO claimed that it had not been made aware that the Veteran was released from prison in November 2005 until it received the Veteran's May 2009 correspondence and therefore, his benefits were resumed as of June 2009. However, it is clear from the record that the RO was made aware prior to May 2009 that the Veteran had been released from prison on November [redacted], 2005. See July 2008 letter from the Veteran's probation officer and October 2008 email correspondence. The Board finds that as the Veteran was legally entitled to receive VA compensation benefits from October [redacted], 2005 to October 31, 2008, including his period of incarceration from October [redacted], 2005 to November [redacted], 2005, the overpayment of $14,268.00 claimed by the RO was not properly created, and therefore, the debt is not valid, as the Veteran did not improperly receive benefits during the averred timeframe. Finally, the Board notes that in the absence of a validly created debt, consideration of whether the requirements of a waiver of such debt have been met is not necessary. The Board concludes that discussion of a waiver is moot. ORDER The overpayment of VA service-connected VA compensation benefits in the amount of $14,268.00 was not properly created and is thus invalid. ____________________________________________ GAYLE E. STROMMEN Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs