Citation Nr: 1512655 Decision Date: 03/25/15 Archive Date: 04/01/15 DOCKET NO. 12-03 721 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Honolulu, Hawaii THE ISSUE Entitlement to a waiver of debt in the amount of $24,325, to include the validity of the debt. WITNESS AT HEARING ON APPEAL The Veteran ATTORNEY FOR THE BOARD H. M. Walker, Counsel INTRODUCTION The Veteran served on active duty from April 1984 to February 1991, October 2003 to September 2004, December 2006 to January 2008, February 2008 to March 2009, and June 2009 to July 2012. This case comes before the Board of Veterans' Appeals (Board) on appeal of a July 2011 decision by the Department of Veterans Affairs (VA) Committee on Waivers and Compromises, which denied the Veteran's request for a waiver of his indebtedness. In August 2012, the Veteran appeared and testified at a videoconference hearing before the undersigned Acting Veterans Law Judge (VLJ). A transcript of the hearing is associated with the Veteran's claims file. In addition to a paper claims file, the Veteran also has an electronic file in Virtual VA and/or Veterans Benefits Management System (VBMS). The Board has reviewed both the paper and electronic records in rendering this decision. FINDINGS OF FACT 1. The Veteran erroneously received VA benefits between June 26, 2009, and May 4, 2011, in the amount of $24.325, while he was on active duty status. 3. Creation of the debt is the fault of the Veteran; repayment of the debt would not cause an undue financial hardship on the Veteran; he did not adjust his position in reliance upon the benefit, and failure to collect the debt would unjustly enrich the Veteran. CONCLUSION OF LAW Collection of an overpayment indebtedness of nonservice-connected pension benefits in the amount of $24,325 would not be against equity and good conscience, and is not waived. 38 U.S.C.A. §§ 5107, 5302 (West 2014); 38 C.F.R. §§ 1.962, 1.963, 1.965 (2014). REASONS AND BASES FOR FINDINGS AND CONCLUSION VA's Duties to Notify and Assist VA generally has a duty to notify and assist claimants in substantiating a claim for VA benefits. 38 U.S.C.A. §§ 5100 , 5102, 5103, 5103A, 5107, 5126; 38 C.F.R. §§ 3.102, 3.156(a), 3.159, 3.326(a). These provisions do not apply in waiver cases, however, because the statutory right to request waiver of recovery of indebtedness within Chapter 53 of Title 38 of the United States Code contains its own notice provisions. See Lueras v. Principi, 18 Vet. App. 435 (2004) citing Barger v. Principi, 16 Vet. App. 132 (2002); see also 38 U.S.C.A. § 5302. Notwithstanding the fact that the VCAA is not controlling in these matters, the Board has reviewed the case for purposes of ascertaining that the Veteran has had a fair opportunity to present arguments and evidence in support of his request for a waiver. In short, the Board concludes from that review that the requirements for the fair development of the waiver request have been met in this case. Validity of the Debt 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). The Veteran essentially contends that the VA was at fault in the creation of the debt, an argument that can be construed to mean that he does not owe the debt because it was created due to sole administrative error. He alleges that he timely notified VA in person of his active duty status, and VA failed to take proper action. When an overpayment has been made by reason of an erroneous award based solely upon administrative error, the reduction of that award cannot be made retroactive to form an overpayment of debt owed to VA from the recipient of the erroneous award. 38 U.S.C.A. § 5112(b)(10); 38 C.F.R. § 3.500(b); Erickson v. West, 13 Vet. App. 495, 499 (2000). Administrative errors include all administrative decisions of entitlement, whether based upon mistake of fact, misunderstanding of controlling regulations or instructions, or misapplication of law. VAOPGPREC 2-90 (July 17, 1989), 55 Fed. Reg. 27757 (1990). Sole administrative error, however, may be found to occur only in cases where the Veteran neither had knowledge of, nor should he have been aware of the erroneous award. Further, such error contemplates that neither the Veteran's actions nor his failure to act contributed to payment pursuant to an erroneous award. 38 U.S.C.A. § 5112(b)(10); 38 C.F.R. § 3.500(b)(2); Jordan v. Brown, 10 Vet. App. 171 (1997) (sole administrative error is not present if the payee knew, or should have known, that the payments were erroneous). 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, educational assistance benefits and subsistence allowance, insurance benefits, burial and plot allowances, clothing allowance, and automobile or other conveyance and adaptive equipment allowances. See 38 C.F.R. § 1.956(a). First, the Board finds that sole administrative error may not be found here. In this case, the Veteran has admitted that he received VA disability compensation at the time he was also receiving active duty pay. VA issued these monthly payments erroneously, from June 26, 2009, to May 4, 2011, without knowledge that the Veteran was called to active duty during the period in question. The Veteran requested a waiver of the overpayment of $24,325 in July 2011. The Veteran contends that he reported his active duty status to VA via Tripler Medical Center in Honolulu, Hawaii. VA compensation benefits shall not be paid during any period for which a veteran received active service pay. Active service includes active duty, active duty for training, or inactive duty for training. 38 C.F.R. §§ 3.654(a), 3.700, 3.654(b). It was determined that the amount currently owed by the Veteran is $24,325. Here, the Veteran has failed to demonstrate that he was not on active duty during the period in question for which he also received VA disability benefits, or that VA disability payments were not actually received. Although the Veteran contends that he reported his active duty status to VA, the only evidence of communication from the Veteran to the VA regarding his active duty status are the statements provided by the Veteran in conjunction with his request for a waiver. During his hearing, the Veteran contended that he filled out a form at the VA office at Tripler Medical Center notifying VA of his active duty status. This form is not of record. The Board finds that the Veteran's statements as to whether he reported his active duty status to VA for the time period in question lacks credibility. First, when VA contacted the Veteran in March 2011 to determine whether he was on active duty during the timeframe in question, the Veteran confirmed that he was. The detailed report of contact does not include any mention by the Veteran that he filled out a form at Tripler, as he now contends. Additionally, the VA employee making the report told the Veteran that he was not entitled to VA benefits at the same time he is receiving active duty pay. The employee indicated that the Veteran "now understood that he was not entitled to VA comp while still being on active duty status." This would indicate that prior to the contact the Veteran was asserting he was unaware of the prohibition, in contrast to his current allegations. Moreover, if the Veteran had in fact notified VA of his duty status, knowing it was germane to his receipt of compensation benefits, he still continued to receive VA benefits for nearly two years, knowing that he was not entitled to these benefits, and yet did not make any additional attempts to stop these payments. In sum, the Board finds that to the extent the Veteran contends that he reported his active duty status to VA through a form at Tripler Medical Center, his statements lack credibility and are far outweighed by the other evidence of record showing that he did not actually report his active duty status. Moreover, even if he did report his active duty status as contended, he knowingly continued to erroneously receive VA benefits and never again attempted to correct them. Accordingly, the Board concludes the overpayment in question is a valid debt; the Veteran received benefits to which he was not entitled and there is no sole administrative error. See 38 U.S.C.A. § 5112(b)(2); 38 C.F.R. §§ 3.501, 3.652(a). Waiver of the Debt The Veteran's request for a waiver of the overpayment was referred to the Committee. In September 2011, the Committee considered the Veteran's claim for a waiver. The Committee made a specific determination that there was no fraud, misrepresentation, or bad faith on the Veteran's part with respect to the creation of the overpayment at issue (which the Board agrees). The Committee further determined that recovery of the overpayment of VA disability benefits for the period in question would not be against equity and good conscience. In cases where there is no fraud, misrepresentation, or bad faith on the Veteran's part with respect to the creation of the overpayment at issue, and, therefore, waiver is not precluded pursuant to 38 U.S.C.A. § 5302(a), in order to dispose of the matter on appeal, the Board must determine whether recovery of the indebtedness would be against equity and good conscience, thereby permitting waiver under 38 U.S.C.A. § 5302(a); 38 C.F.R. §§ 1.963(a), 1.965(a). The pertinent regulation in this case provides that 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. See 38 C.F.R. § 1.965(a). In making this determination, consideration is given to the following elements, which are not intended to be all-inclusive: (1) fault of the debtor (where actions of the debtors contribute to the creation of the debt); (2) balancing of faults (weighing fault of the debtor vs. the fault of VA); (3) undue hardship (whether collection would deprive the debtor or family of basic necessities); (4) defeat the purpose (whether withholding of benefits or recovery would nullify the objective for which benefits were intended); (5) unjust enrichment (failure to make restitution would result in unfair gain to the debtor); and (6) changing position to one's detriment (reliance on VA benefits results in relinquishment of a valuable right or incurrence of a legal obligation). See 38 C.F.R. § 1.965. 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 v. Brown, 6 Vet. App. 544, 546 (1994); 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 Veteran 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). In July 2011, the Veteran submitted his Financial Status Report (FSR) in which he reported a gross monthly income of $12,000. His reported a total monthly net income of $9050 for him and his spouse. His total monthly expenses were $8450-this leaves $600 remaining. The Veteran also submitted a document from his civilian employer, United Airlines, indicating that he had a disqualifying condition for FAA medical certification. In other words, while the Veteran was undergoing treatment for his cancer, he was not qualified to fly planes for United Airlines. The Veteran maintains that his inability to work due to his cancer causes an undue hardship on repaying his overpayment debt. In September 2011, the Committee denied the Veteran's request for a waiver of the indebtedness created by the overpayment of VA disability benefits, finding that these overpaid funds increased the Veteran's assets, creating a financial gain at Government expense. Defeat of purpose and change of position were not considered. In consideration of the standards of equity and good conscious, the Committee determined that that a waiver of debt was not warranted. 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. See 38 C.F.R. § 1.965(a). The first and second elements pertain to the fault of the debtor versus the fault of VA. The responsibility in the creation of the overpayment of benefits rests with the Veteran, inasmuch as it was due to his failure to submit timely notice of his return to active duty status. The Board notes that the Veteran has repeatedly asserted that he reported to VA so as to communicate his active duty status. Specifically, he indicated that he reported his active duty status at Tripler Medical Center by filling out a form. As discussed above, the Board finds his statements as to whether he submitted a form at Tripler indicating his active duty status to lack credibility. Moreover, he failed to make any additional attempts to inform VA of his active duty status. Following receipt of information from the Defense Manpower Data Center indicating that the Veteran has been on active duty since December 2006, VA contacted the Veteran in March 2011 to request he confirm his duty status. The fact remains that there is no objective evidence of any communication by the Veteran or VA to demonstrate change in duty status prior to this date. The Veteran did not provide any written evidence of such communication, and he has not alleged that he contacted VA in any other manner to disclose his active duty status. Moreover, he received these VA benefits for a period of just over two years, knowing that he was not entitled to these benefits at the same time he was receiving active duty pay. The competent and credible evidence shows that at no other time did he report active duty status until VA contacted him in March 2011 with confirmation letter dated that same month. Thus, the Board finds that the Veteran bears primary fault in the creation of the overpayment at issue. With respect to the third element, whether the Veteran would be subjected to undue hardship if the debt were recovered. The Veteran's FSR shows that he has $600 remaining each month after deducting, mortgage/rent, food, utilities, and other living expenses (the Veteran categorized these living expenses as including school tuition, insurance, clothing, transportation, and communications). The Board finds that the Veteran would not be subjected to undue hardship if the debt was recovered. He is currently in receipt of service connection for multiple disabilities-resulting in a 100 percent disability rating. Ultimately, the Board finds that the overpayment of disability benefits is a valid debt to the U.S. Government, and the Veteran has not presented any evidence to demonstrate an inability to pay this debt. In this case, the Veteran clearly understood that he should not get this benefit. The fourth element of equity and good conscience also fails to support the waiver of overpayment in this case. Again, 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 VA disability benefits to which the Veteran is entitled during the period(s) of time when he is not serving on active duty or otherwise receiving VA retirement pay. See 38 C.F.R. § 3.654(a). The Veteran has not submitted any evidence to demonstrate that he was not on active duty from June 2009 to May 2011. Instead, he has acknowledged that he was, in fact, on active duty during that period and therefore not eligible to receive the disability compensation which he did in fact receive. Therefore, the reduction of this benefit would not defeat the purpose for which the benefit was intended, as the benefit was never intended for veterans receiving active duty pay. Also for consideration is 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 Veteran clearly received assistance to which he was not entitled. The Veteran received from VA a total of $24,325 during a period of active duty, which is not permitted by law. In the absence of any evidence that the Veteran did not serve on active duty during the period in question, the Board cannot conclude that the monies given to the Veteran did not provide an unfair gain during that time. Accordingly, the Veteran would be unjustly enriched by waiver of the overpayment in this case. Simply stated, the Veteran was provided monies he was not entitled to receive, and the Veteran understood this fact (though it was not an act of fraud on his behalf). The sixth element to be considered is 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 or that he relied upon VA to his detriment, nor is there any evidence of such. Thus, this sixth element does not support the Veteran's request for a waiver of overpayment. After weighing all of the enumerated factors, the Board finds that total recovery of the remaining overpayment does not violate the principles of equity and good conscience. As discussed above, the Veteran is at fault for creating the overpayment, in that he has no evidence, written or otherwise, to confirm that he reported his active duty status prior to the March 2011 phone call from VA confirming his active duty status after receiving information from the Defense Manpower Data Center. In balancing the fault based on the circumstances in this case, the Veteran's fault was more significant, as there is no indication that VA failed to act following any such telephonic notification, as there is no evidence of any such communication. In any event, even if the Board assumes he did call/contact VA several times (and that he was not at any fault), this fact does not allow him to keep the money. The Veteran cannot keep money that he was never entitled to receive, and that he clearly knew he was not entitled to receive. If the Veteran accidentally sent a check to the Government for money the Government was not entitled to receive, it would not be reasonable to assume that if the Government was not a fault, it could keep the money. To that point, the Board notes that, if the Veteran was of the opinion that VA had been properly notified of his active duty status as of when he continued receiving VA benefits in June 2009, it is unclear as to why he accepted this additional compensation during the period in question. The Veteran has attested that he knew he was not entitled to these benefits, and yet did not return the benefits. Finally, there is no evidence of detrimental reliance on his part. The Veteran did not change his financial position in reliance on receipt of the excess monies. For example, he did not quit his job, or incur a debt. In reaching the above conclusions, the Board has considered the Veteran's statements in support of his application for a waiver of recovery of an overpayment. Again, the Board finds that the Veteran's contention that he properly notified VA of his active duty status is perplexing, considering the fact that he was in receipt of compensation each month from June 2009 to May 2011 to which he, by his own admission (which is also the crux of his argument) knew he was not entitled. And now he challenges that debt, stating in essence that he knew he was not entitled and notified VA of that fact in a timely manner. Again, not only does the Board find this argument unpersuasive, such a contention stands in contrast to the Veteran's claim that such debt should be waived by VA. Simply, if the Veteran knew that he was receiving payments to which he was unentitled, then he also must have known that VA was not adequately notified regarding his active duty status. The preponderance of the evidence is against his claim, the "benefit-of-the-doubt" rule does not apply, and the claim must be denied. See 38 U.S.C.A. § 5107(b); 38 C.F.R. § 3.102. ORDER Waiver of a debt in the amount of $24,325, due to overpayment of service-connection benefits, is denied. ____________________________________________ WILLIAM H. DONNELLY Acting Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs