Citation Nr: 1615779	
Decision Date: 04/19/16    Archive Date: 04/26/16

DOCKET NO.  15-34 321	)	DATE
	)
	)

On appeal from the
Department of Veterans Affairs Regional Office in St. Louis, Missouri


THE ISSUE

Entitlement to a waiver of recovery of an overpayment of VA benefits under the Veterans Retraining Assistance Program (VRAP) in the amount of $2,417.07, to include the validity of the debt.


ATTORNEY FOR THE BOARD

James A. DeFrank, Counsel


INTRODUCTION

The Veteran served on active duty from October 1993 to July 1996 and from May 1997 to May 2000.

This appeal arises before the Board of Veterans' Appeals (Board) from an August 2014 rating decision rendered by the Department of Veterans Affairs (VA) Education Center at the Regional Office (RO) in St. Louis, Missouri denied a request for a waiver of recover of an overpayment in the amount of $2,417.07.

The Board notes that, in addition to the paper claims file, there is a Virtual VA electronic claims file associated with the Veteran's claim.  A review of the documents in the electronic file reveals additional evidence that will be considered by the Board in this appeal.

This appeal has been advanced on the Board's docket pursuant to 38 C.F.R. § 20.900(c) (2015).  38 U.S.C.A. § 7107(a) (2) (West 2014).


FINDINGS OF FACT

1. The Veteran did not complete the scheduled for February 7, 2014 to March 30, 2014 at the American College of Technology as the last date of full time attendance was February 16, 2014.  The award of VA VRAP benefits was accordingly terminated, creating an overpayment in the amount of $$2,417.07
 
2. The overpayment of VA benefits under the VRAP in the amount of $2,417.07 was validly created. 
 
3.  The Veteran was at fault in the debt's creation, as he obtained continued payments for VRAP benefits to which he was not entitled.
 
4.  The recovery of the VA benefits would not nullify the objective for which the benefits were intended.
 
5.  The evidence does not demonstrate that the Veteran changed his position to his detriment, and there was no reliance on these VRAP benefits that resulted in relinquishment of a valuable right or incurrence of a legal obligation.
 
6.  The indebtedness did not result from fraud, misrepresentation, or bad faith on the part of the appellant.
 
7.  The above notwithstanding, undue financial hardship has been demonstrated


CONCLUSIONS OF LAW

1.  The overpayment of VRAP benefits in the amount of $2,417.07 was validly created.  38 U.S.C.A. §§ 501, 5302 (West 2014); 38 C.F.R. §§ 1.911, 1.962, 3.500, 21.9635 (2015).
 
2.  The creation of the overpayment, in the amount of $2,417.07, did not involve fraud, misrepresentation, or bad faith on the part of the Veteran.  38 U.S.C.A.  § 5302(c) (West 2014); 38 C.F.R. §§ 1.963(a), 1.965(b) (2015).
 
3.  Resolving reasonable doubt in the Veteran's favor, the criteria for waiver of recovery of the overpayment of VRAP benefits in the amount of $2,417.07 are met.  38 U.S.C.A. § 5302 (West 2014); 38 C.F.R. §§ 1.963, 1.965 (2015).


REASONS AND BASES FOR FINDINGS AND CONCLUSIONS

Veterans Claims Assistance Act of 2000 (VCAA)

VA"s duties to notify and assist claimants in substantiating a claim for VA benefits are found at 38 U.S.C.A. §§ 5100, 5102, 5103, 5103A, 5107, 5126 (West 2014) and 38 C.F.R. §§ 3.102, 3.156(a), 3.159, 3.326(a) (2015).  

However, the VCAA duties to notify and to assist do not apply to the claim for relief under Chapter 53 of Title 38 of the United States Code, pertaining to the waiver of recovery of overpayments.  See Schaper v. Derwinski, 1 Vet. App. 430   (1991) (challenging validity of debt); see 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 (special provisions for the waiver of recovery of overpayments), citing Barger v. Principi, 16 Vet. App. 132 (2002)).  In any case, as the Veteran's claim is granted herein, any error in the duties to notify and assist were not prejudicial to the Veteran.

Laws and Regulations

For VA purposes, 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 educational assistance benefits.  38 C.F.R. § 1.956(a). 

VA regulations provide that, when an indebtedness is assessed, the debtor has the right to: informally dispute the existence or amount of the debt, appeal the VA decision underlying the debt, and request waiver of collection of the debt.  38 C.F.R. § 1.911(c).  These rights can be exercised separately or simultaneously.  See Schaper v. Derwinski, 1 Vet. App. 430, 434 (1991). 

In June 2013, the Veteran was awarded benefits payable under the VRAP for the enrollment in a qualifying training program at the American College of Technology.

The VRAP is a component of the VOW to Hire Heroes Act of 2011, passed by Congress, and signed into law by the President. VRAP offers up to 12 months of training assistance to unemployed Veterans. Participants may pursue an approved program of education offered by a community college or technical school that leads to an associate degree or a certificate (or other similar evidence of the completion of the program of education or training) and is designed to provide training for a high-demand occupation.  Pursuant to the VRAP, an eligible Veteran must: be at least 35 but not more than 60 years old; be unemployed; have last been discharged under other than dishonorable conditions, not be eligible for any other VA education benefit programs, not be in receipt of VA compensation due to unemployability, and not be or have been in the last 180 days, enrolled in a Federal or state job training program.  The program is limited to 45,000 participants from July 1, 2012 through September 30, 2012, and to 54,000 participants from October 1, 2012, through March 31, 2014.  Participants may receive up to 12 months of assistance equal to the monthly full-time payment rate under the Montgomery GI Bill-Active Duty program.

The June 2013 letter informed the Veteran that he had to maintain enrollment as a full-time student in order to receive the benefits and that he was responsible for all debts resulting from any change in his enrollment.  

In June 2014, the VA received a Notice in Change in Student Status from the American College of Technology which indicated that the Veteran never attended the term scheduled for February 7, 2014 to March 30, 2014.  The last date of full time attendance was February 16, 2014.  

The award of VA VRAP benefits was accordingly terminated, effective February 17, 2014, creating an overpayment in the amount of $2,417.07.  Accordingly, the Board finds that the overpayment of educational benefits under the VRAP in the amount of $2,417.07 was validly created based on his dismissal from the qualifying VRAP training program, effective February 17, 2014.

Accordingly, the Board will now consider whether recovery of that debt (or overpayment) should be waived.

Recovery of an overpayment of VA benefits may be waived if recovery of the indebtedness would be against equity and good conscience.  38 U.S.C.A. § 5302; 38 C.F.R. § 1.963(a).  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 various elements which are not intended to be all-inclusive.  The elements are the fault of the debtor where such actions contribute to creation of the debt, balancing of faults where VA fault is also involved, whether collection of the debt would cause the debtor undue financial hardship by depriving her of basic necessities, whether collection would defeat the purpose of the VA benefit, whether failure to make restitution would result in unjust enrichment, and whether reliance on VA benefits resulted in relinquishment of a valuable right (i.e., changing position to one's detriment).  38 C.F.R. § 1.965(a).

Where fraud, misrepresentation, or bad faith on the part of the Veteran is shown, denial of waiver of recovery of an overpayment may be made without regard to factors considered in applying the equity and good conscience standard.  38 U.S.C.A. § 530.  Bad faith generally describes unfair or deceptive dealing by one who seeks to gain thereby at another's expense.  Thus, a debtor's conduct in connection with a debt arising from a VA benefit/services program exhibits bad faith if such conduct, although not undertaken with actual fraudulent intent, is undertaken with intent to seek an unfair advantage, with knowledge of the likely consequences, and results in a loss to the Government.  38 C.F.R. § 1.965(b) (2).  In order to establish misrepresentation, the VA must show that there was a willful misrepresentation of a material fact or the willful failure to disclose a material fact with the intent of obtaining or retaining, or assisting an individual to obtain eligibility for VA benefits.  In order to determine whether misrepresentation exists, VA must prove a willful intent on the part of the debtor.  The burden of proof lies solely with VA.  38 C.F.R. §§ 1.962(b), 1.965(b) (1).

In June 2014, the Veteran was sent a letter notifying her that an overpayment had been created.  In June 2014, the Veteran requested a waiver of recovery of the overpayment.  He indicated that the debt should be discharged to the "mitigating circumstances" which involved his wife suffering a miscarriage in February 2014.  The Veteran noted that these unfortunate circumstances prevented him from completing the education program as he had to tend to his wife, their 2 year old daughter and his special-needs brother in law.  He also indicated that a payment of the debt would cause a hardship to the Veteran and his family.

In August 2014, a Decision on Waiver of Indebtedness denied waiver of recovery of the overpayment based on the Veteran's failure to notify VA that he was no longer enrolled and attending school full time.

Initially, the Board finds that the overpayment was not the result of fraud, misrepresentation, or bad faith on the part of the Veteran.  38 U.S.C.A. § 5302(c); 38 C.F.R. §§ 1.963(a), 1.965(b).  Notably, the Decision on Waiver of Indebtedness denied waiver of recovery of the overpayment based on a Finding of Bad Faith as the Veteran failed to notify VA that he was no longer enrolled and attending school full time.  However, the Veteran contends that his wife unfortunately had a miscarriage which prevented him from completing the education program as he had to tend to his wife, their 2 year old daughter and his special-needs brother in law during the months in question.  To support this contention, the Veteran submitted information on his participation in a bereavement program for patients who had miscarriages.  

Based on the Veteran's contentions, it appears that the Veteran failed to meet attendance standards due to his wife's pregnancy and miscarriage, and his associated increase in responsibilities as a result of these circumstances.  Although the Board recognizes that the Veteran has made inconsistent statements in the past as to his personal and financial circumstances, the Board is cognizant that he is currently evaluated as 70 percent disabled for paranoid schizophrenia.  For these reasons, the Board finds that record weighs against a finding of fraud, misrepresentation, or bad faith on the part of the Veteran.

The remaining consideration is whether recovery of the indebtedness would be against equity and good conscience.  As noted above, when considering whether recovery of the debt would be against equity and good conscious consideration is given to the following six elements: (1) fault of debtor, (2) balancing of fault, (3) undue hardship, (4) defeat the purpose of the debt, (5) unjust enrichment, and (6) changing position to one's detriment.  See 38 C.F.R. § 1.965(a).

After review of the evidence of record, there are elements both in favor and against granting a waiver of the validly created overpayment.  

The first two elements for consideration under 38 C.F.R. § 1.965(a) are the fault of the debtor, and balancing the fault of the debtor and VA. The Board finds that although the Veteran has clearly shown good cause for failing to meet the program's attendance standard, the Veteran was technically at fault in the creation of the overpayment, and VA was not at fault in the creation of the Veteran's indebtedness.

There is also no evidence or contention that the Veteran changed his position to his detriment in reliance on the monies erroneously paid (i.e., the $2,417.07 overpayment), or that he incurred any legal obligation in reliance on this erroneously paid money.

Nor would recovery of the overpayment defeat the purpose of the debt.  The Board finds that the award and disbursement of VRAP assistance benefits was made for the purpose of retraining unemployed, eligible veterans in a high demand occupation.  See VOW to Hire Heroes Act of 2011, title II of Public Law 112-56 (2011).  Thus, the collection of the debt, in the amount of $2,417.07 would not defeat the purpose of the benefits as the Veteran was not ultimately able to complete the qualifying training program in which he was enrolled due to his failure to meet the program's attendance standards.

The Board also agrees with the Committee on Waivers that the Veteran's receipt of VRAP assistance benefits constituted unjust enrichment as the Veteran received $2,417.07 for time that he was not enrolled as a full-time student.

The above notwithstanding, the Board's determination in this case hinges on the undue hardship that would be created by the recovery of the debt.  The Veteran has submitted a financial status report and provided contentions that indicate his income barely exceeds his expenses.  The Veteran's October 2014 Financial Status Report indicates that he has a net amount of $70 a month of income less his expenses.  Additionally, there is no evidence to indicate another source of income is foreseen as the record reflects that the Veteran has been evaluated as 70 percent disablined due to his service-connected schizophrenia disability.

In light of the clear evidence that recovery of the debt would create significant financial hardship on the Veteran, the Board finds that while the overpayment resulted in unjust enrichment of the Veteran, denying his request for a waiver would result in undue hardship.  Accordingly, waiver of recovery of the validly created overpayment in the amount of $2,417.07 is warranted.



ORDER

Entitlement to a waiver of recovery of an overpayment of VA benefits under the VRAP in the amount of $2,417.07 is granted.



____________________________________________
MICHAEL LANE
Veterans Law Judge, Board of Veterans' Appeals




Department of Veterans Affairs