Citation Nr: 1526916 Decision Date: 06/24/15 Archive Date: 06/30/15 DOCKET NO. 13-35 343 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Philadelphia, Pennsylvania THE ISSUE Entitlement to waiver of recovery of an overpayment of VA compensation in the calculated amount of $1,038.75. ATTORNEY FOR THE BOARD K. Hudson, Counsel INTRODUCTION The Veteran served on active duty from December 1987 to September 1993. This matter comes before the Board of Veterans' Appeals (Board) on appeal from a regional office (RO) decision of the Committee on Waivers and Compromises (COWC) dated in March 2013, which denied waiver of recovery of an overpayment of VA compensation in the calculated amount of $1,038.75. The Board notes that the file contains an appointment of the Virginia Department of Veterans' Affairs as the Veteran's representative, executed in September 1993, in connection with an earlier claim for VA benefits. He has not explicitly revoked this power of attorney. However, he no longer resides in Virginia, where this representative's jurisdiction lies. In addition, in the November 2010 letter informing the Veteran of his grant of compensation, he was informed that VA had no record of him appointing a service organization or representative to assist him with his claim. He was informed that he could contact VA for a listing of recognized veterans' service organizations and/or representatives. Veterans service organizations could also help him. He did not respond with any indication that he desired a representative, or further information regarding a representative. Therefore, the Board finds that the Veteran is unrepresented in this appeal. FINDINGS OF FACT 1. From July 2011 to December 2012, the Veteran received VA compensation to which he was not entitled, due to his incarceration in May 2011 as a result of conviction of a felony. 2. The Veteran was significantly at fault in the creation of the overpayment, in failing to notify VA of his incarceration, as contrasted to there being little fault on VA's part; he was unjustly enriched by the amount of the overpayment; recovery of the debt would not defeat the purpose for which VA compensation is authorized, or deprive the appellant of basic necessities; the appellant did not detrimentally rely on the erroneous payments, and it has not been otherwise shown to be inequitable to require repayment of the debt. CONCLUSION OF LAW Waiver of recovery of an overpayment of VA compensation in the amount of $1,038.75, would not be against equity and good conscience. 38 U.S.C.A. § 5302 (West 2014); 38 C.F.R. §§ 1.963, 1.965 (2014). REASONS AND BASES FOR FINDINGS AND CONCLUSION The essential facts in this case have been fully developed and are not in dispute. The notice and duty to assist provisions of the Veterans Claims Assistance Act (VCAA) of 2000, Pub. L. No. 106-475, 114 Stat. 2096 (2000) do not apply to claims involving waiver of recovery of overpayments. See Barger v. Principi, 16 Vet. App. 132, 138 (2002). The Veteran does not dispute the amount of the overpayment. Additionally, the VCAA has no effect upon an appeal where the law, and not the underlying facts or development of the facts, is dispositive in the matter. Manning v. Principi, 16 Vet. App. 534 (2002). Moreover, the RO has explained to the Veteran the bases for denial of the claim, and afforded him the opportunity to present information and evidence in support of the claim. Any deficiencies in notice or assistance would be relevant to principles of equity and good conscience, and, as such, discussed in the body of the decision. The overpayment in this case was created when the Veteran received VA compensation from July 2011 to December 2012, after his incarceration in prison in May 2011 due to conviction of a felony. The amount of VA compensation payable to a veteran who is incarcerated in a Federal, State or local penal institution in excess of 60 days for conviction of a felony will be reduced. 38 C.F.R. § 3.665. Specifically, a veteran in receipt of a 10 percent rating shall receive one-half the rate of compensation payable. 38 C.F.R. § 3.665(d)(2). Here, the Veteran was awarded VA compensation at the 10 percent rate for a right knee condition in a November 2010 rating decision. There is no indication of fraud, misrepresentation, or bad faith on the part of the appellant in the creation of the overpayment. In such circumstances, recovery of an overpayment shall be waived where recovery of the overpayment would be against equity and good conscience. 38 C.F.R. §§ 1.962, 1.963(a). 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. 38 C.F.R. § 1.965(a). The decision reached should not be unduly favorable or adverse to either side. Id. The phrase equity and good conscience means arriving at a fair decision between the obligor and the Government. Id. In making this determination, the facts and circumstances in a particular case must be weighed carefully. In applying the "equity and good conscience" standard to a case, the factors to be considered by the adjudicator are: (1) whether actions of the debtor contributed to the creation of the debt, (2) weighing the fault of the debtor against any fault attributable to VA; (3) financial hardship, i.e., whether collection would deprive the debtor or the debtor's family of basic necessities, (4) whether recovery of the debt would nullify the objective for which benefits were intended, (5) unjust enrichment, i.e., whether failure to make restitution would result in unfair gain to the debtor, and (6) whether the debtor has changed position to his detriment due to his reliance upon the receipt of VA benefits. 38 C.F.R. § 1.965(a). All the listed elements of equity and good conscience must be considered in a waiver decision. See Ridings v. Brown, 6 Vet.App. 544 (1994). With respect to fault, the Veteran contends that he was without fault, because he was not notified that compensation would be reduced if he were to be incarcerated, and that, in any event, his conservator informed VA of his imprisonment in February 2011. However, the November 2010 notice of the award of VA compensation at the 10 percent rate informed him of his rights and responsibilities concerning his entitlement to VA compensation. The award notice referenced VA Form 21-8764, DISABILITY COMPENSATION AWARD ATTACHMENT IMPORTANT INFORMATION, which was included with the notification letter. This form included a section entitled: "WHAT CONDITIONS AFFECT RIGHT TO PAYMENTS?" The Veteran was informed, in that section, that "[b]enefits will be reduced upon incarceration in a Federal, State or local penal institution in excess of 60 days for conviction of a felony." Professed ignorance of the controlling regulation or the failure to read relevant notices does not alleviate fault. See Jordan v. Brown, 10 Vet.App. 171 (1997). According to a February 2011 VA outpatient psychiatry note, the Veteran's "conservator" had stated that the Veteran was incarcerated in Missouri, awaiting trial. The length of his incarceration was unknown at that time. The Veteran had not been adjudicated as incompetent, and the "conservator" was not otherwise officially authorized to act on the Veteran's behalf. According to a June 2010 outpatient note, the individual acted as a "voluntary conservator." He was an administrator of a program that provided supervised living for people on probation. Moreover, the information he provided was that the Veteran had been incarcerated "pending trial." Because payments are only reduced upon incarceration for conviction of a felony, an incarceration pending trial would not result in reduction of benefits. The information provided by the "conservator" was not sufficient to place VA on notice that the Veteran was no longer entitled to receive the full amount of his compensation. Thus, the Veteran's fault considerably outweighs the lack of fault on the part of VA. As to financial hardship, the Veteran's initial financial status report was received when he was incarcerated, and reported monthly expenses exactly equal to his monthly VA benefits at the 10 percent rate of $123. However, due to his incarceration, the Board finds that his basic necessities were being provided by the state. His next financial status report was received in May 2014, after his release from prison in March 2014. At that time, he reported $175 per month in expenses, and no income. This indicates some financial hardship, but according to the Veteran, nearly all of the debt had been recouped by that time. As to other elements of equity and good conscience, the Veteran received $1,038.75, to which he was not entitled. He was thereby unjustly enriched by this quantifiable amount. It has not been shown that recovery of the overpayment would defeat the purpose of VA compensation, which is to compensate veterans for lost earning capacity resulting from service-connected disabilities. The Veteran has not claimed to have relinquished any valuable right or to have changed his position by reason of having relied on the additional erroneous benefits. No other factors which would preclude recovery of the overpayment as against equity and good conscience have been put forth. Thus, taken as a whole, the Veteran's fault in the creation of the debt, and the unjust enrichment resulting from the Veteran's receipt of $1,038.75, to which he was not entitled outweigh the short-term financial hardship, and there are no equitable factors which counteract those factors. After weighing all of the above factors, the Board believes that recovery of the overpayment would not be against equity and good conscience. 38 U.S.C.A. § 5302. Thus, the request for waiver of recovery of the debt is denied. The evidence is not so evenly balanced as to create a reasonable doubt, and, hence, the benefit-of-the-doubt doctrine is inapplicable. 38 U.S.C. § 5107(b); see Ortiz v. Principi, 274 F.3d 1361 (Fed. Cir. 2001); Gilbert v. Derwinski, 1 Vet. App. 49 (1990). ORDER Waiver of recovery of an overpayment of VA compensation in the amount of $1,038.75, is denied. ______________________________________________ MICHAEL A. HERMAN Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs