Citation Nr: 1612192 Decision Date: 03/25/16 Archive Date: 03/29/16 DOCKET NO. 14-23 737 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Milwaukee, Wisconsin THE ISSUES 1. Whether an overpayment of Department of Veterans Affairs (VA) disability benefits in the amount of $41,312.93 was properly created. 2. Entitlement to waiver of recovery of an overpayment of VA disability benefits in the amount of $41,312.93. REPRESENTATION Appellant represented by: Disabled American Veterans ATTORNEY FOR THE BOARD C.S. De Leo INTRODUCTION The Veteran served on active duty from April 1967 to May 1969. These matters come before the Board of Veterans' Appeals (Board) from a December 2013 decision of the Committee on Waivers and Compromises of the Department of Veterans Affairs (VA) Regional Office (RO) in Milwaukee, Wisconsin. The Board has not only reviewed the Veteran's physical claims file, but also the Veteran's file on the Veterans Benefits Management System (VBMS) and Virtual VA system. FINDINGS OF FACT 1. The Veteran was convicted of a felony on April [redacted], 2012 and incarcerated from March [redacted], 2012 to present day; June [redacted], 2012 was the 61st day of his incarceration following the conviction. 2. There is no indication that the Veteran engaged in fraud, misrepresentation, or bad faith in creating the alleged overpayment. 3. The Veteran's failure to report his incarceration was the cause of the overpayment. 4. Recovery of this overpayment will subject the Veteran to undue hardship. 5. Recovery of the overpayment would defeat the purpose of the disability benefits. 6. Waiving the overpayment would not result in unjust enrichment. CONCLUSIONS OF LAW 1. There is a valid debt resulting from an overpayment of benefits in the amount of $41,312.93. 38 U.S.C.A. §§ 1503, 1542, 5112 (West 2014); 38 C.F.R. §§ 3.23, 3.103, 3.271, 3.272, 3.500, 3.501 (2015). 2. The criteria for waiver of recovery of the partial amount of $32,375.00 overpayment have been met. 38 U.S.C.A. §§ 5107, 5302(a) (West 2014); 38 C.F.R. §§ 1.956(a), 1.962, 1.963(a), 1.965(a) (2015). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS I. VA's Duty to Notify and Assist In this case, the Veteran claim involves the validity of a creation of an overpayment and a request for waiver of recovery of overpayment, involving Chapter 53 of Title 38 of the Unites States Code. Therefore, the duty to notify provisions of the Veteran Claims Assistant Act does not apply. Lueras v. Principi, 18 Vet. App. 435 (2004). To the extent that VA's duty to assist may apply (see Edwards v. Peake, 22 Vet.App. 57, 60 (2008)), the Board finds no deficiency in this case. The Veteran has not identified any outstanding records or additional evidence that is necessary to decide the appeal, or any other deficiency in the duty to assist that would result in prejudice with the Board proceeding with an appellate decision at this time. II. 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 was granted disability benefits for a service-connected disability and thereafter assigned a 100 percent disability rating due to individual unemployability. He was subsequently incarcerated. VA law prohibits payment of compensation benefits to incarcerated veterans beginning the 61st day of imprisonment following conviction. 38 C.F.R. § 3.666 (2015). VA continued the compensation payments while the Veteran was incarcerated. VA therefore found that a debt of $41,312.93 was created, that being the amount of compensation paid to the Veteran during the period of June [redacted], 2012, the 61st day of imprisonment following conviction, through September [redacted], 2013. 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. The provisions of 38 U.S.C.A. § 5313 provide for limitation on payment of compensation for persons incarcerated for conviction of a felony. For the period beginning on the 61st day of such incarceration and ending on the day such incarceration ends, the rate of compensation payable to a veteran with a service-connected disability rated at 20 percent or more is limited to the amount of 10 percent. 38 U.S.C.A. §§ 5313(a)(1)(A), 1114(a). It appears the Veteran contends that his incarceration was shorter than that indicated by VA and therefore the amount of the debt was not valid. Specifically, the Veteran states that he received a letter from VA dated on August 1, 2013, which indicates that he had been incarcerated at [redacted], Tennessee since April [redacted], 2012. See December 2013 statement. The Veteran submitted documentation and contends that he arrived at [redacted] Complex on January [redacted], 2013 therefore, this mistake affects the amount of the debt. Id.; eTomis Report (submitted by Veteran). The Veteran indicated in subsequent statements however, that he has been incarcerated since April [redacted], 2012, and that bank statements from SunTrust Bank, the account in which his VA compensation benefits are directly deposited, indicates unauthorized withdrawals as he was incarcerated during this time. See April 2014 statements; see also August 2014 correspondence from the Office of the District Attorney General located in VBMS. The Veteran submitted a document showing several dates during his incarceration from November [redacted], 2012 through June [redacted], 2013, where he was moved from one location to another, but there do not appear to be any such documentation that he was initially incarcerated on January [redacted], 2013 in the evidence of record. See eTomis Report. The evidence reflects that the Veteran was incarcerated on March [redacted], 2012 for the same offense. See VA and Social Security Administration State Prisoner Computer Match. VA calculated the amount of the debt based on the information it had regarding the length of the Veteran's incarceration, and there is no evidence other than the Veteran's statements indicating this information was erroneous. For purposes of the validity of the debt, the Board finds the documentary evidence as to the length of incarceration to be of greater probative weight than the Veteran's lay assertions, and therefore finds the creation of the debt in the amount of $41,312.93 to be valid. III. Waiver of Recovery of Overpayment Once it is determined that the indebtedness was validly created, a finding of fraud, misrepresentation, or bad faith by the debtor in the creation of the overpayment precludes waiver of the overpayment. See 38 C.F.R. §§ 1.962, 1.963, 1.965(b). There has been no allegation or finding of fraud, misrepresentation, or bad faith by the Veteran, however. The Board must therefore consider whether collection of the debt would be against equity and good conscience. The phrase "equity and good conscience" means arriving at a fair decision between the obligor and the government. See 38 C.F.R. § 1.965. In making this determination, consideration will be 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 the 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; (6) Changing position to one's detriment - reliance on VA benefits results in relinquishment of a valuable right or incurrence of a legal obligation. 38 C.F.R. § 1.965. Here, the Veteran was at fault in the creation of the debt. When granted disability benefits he was notified that he had to inform VA of any change in status and did not do so. However, fault of the debtor is only one factor in the Board's analysis. 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. Ridings v. Brown, 6 Vet. App. 544, 546 (1994). If warranted, the Board may waive a portion of the debt. 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. 38 U.S.C.A. § 5107(b). The Veteran contends that while he was incarcerated, an unauthorized person had withdrawn a significant amount of money from his checking account with an unauthorized debit card, in which he filed a complaint to pursue a criminal investigation. See April 2014 statements. Thereafter, the Veteran submitted evidence in the form of correspondence from the Nashville, Tennessee Assistant District Attorney General detailing the alleged criminal activity. See August 2014 correspondence from the Office of the District Attorney General located in VBMS. The Board finds that the financial information in the evidence of record reflects that collection would cause undue hardship. The Veteran's financial status report and other documents show that his monthly income is currently zero due to his incarceration. He has monthly expenses, he has virtually no liquid assets, and he has multiple debts totaling $32,735. He indicated that repaying the debt due to overpayment would cause significant hardship and has requested a partial waiver of recovery of the overpayment in the amount of $32,735 as he is able to pay the amount of $8,577.93. See December 2013 Financial Status Report. His statements appear credible. The purpose of disability benefits and individual unemployability is to provide supplemental income to veterans who are permanently and totally disabled due to service connected disabilities and to compensate for loss of working time related to service-connected disability. The record reflects that the Veteran's disability benefits are a principal source of income for him, along with his Social Security disability benefits. Therefore, recovery of the overpayment would defeat the purpose of the intended benefit. The Board also finds that waiving a portion of the recovery would not result in unjust enrichment to the Veteran. Although he was not entitled to receive the disability benefits while incarcerated, at this point, the debt is in addition to other debts he owes and will not result in a financial windfall to him, but will merely allow him not to fall into further financial hardship. The factors listed above are not all inclusive. While the Board has found that the Veteran was at fault in the creation of the debt, there is enough evidence showing that the factors of undue hardship and recovery defeating the purpose of the benefit to find that the evidence is approximately evenly balanced as to whether recovery of the debt would be against equity and good conscience. As the reasonable doubt created by this relative equipoise in the evidence must be resolved in favor of the Veteran, waiver of recovery of an overpayment of VA disability benefits in the amount of $32,735 is warranted. 38 U.S.C.A. § 5107(b). ORDER An overpayment of VA disability benefits in the amount of $41,312.93 was properly created. Entitlement to waiver of recovery of an overpayment of VA disability benefits in the amount of $32,735 is granted, subject to controlling regulations governing the payment of monetary awards. ____________________________________________ Jonathan Hager Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs