Citation Nr: 1617694 Decision Date: 05/03/16 Archive Date: 05/13/16 DOCKET NO. 14-13 293 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Indianapolis, Indiana THE ISSUES 1. Entitlement to a waiver of recovery of an overpayment of VA compensation benefits in the amount of $253,637.97, created as a result of the termination of a total disability rating based on individual unemployability (TDIU). 2. Whether the reduction in VA compensation due to incarceration for felony conviction, resulting in an overpayment to the Veteran of $10, 803.47, was proper. ATTORNEY FOR THE BOARD C. Fields, Counsel INTRODUCTION The appellant served in the Army National Guard from October 1963 to December 1967. He had periods of active duty for training (ACDUTRA) from April 1964 to August 1964; July 1965 to August 1965; in June 1966 and in June 1967. Although there was no active duty period, veteran status was previously established by virtue of being service-connected for disabilities incurred during a period of ACDUTRA. This matter comes to the Board of Veterans' Appeals (Board) on appeal from a July 2013 determination by the Department of Veterans Affairs (VA) Regional Office (RO) and Committee on Waivers and Compromises (Committee on Waivers), in Indianapolis, Indiana. This decision denied the Veteran's request for a waiver of recovery of overpayment of TDIU benefits because a timely waiver request had not been made. In addition, in August 2008, the RO notified the Veteran of a final rating decision to reduce his VA compensation payments due to incarceration for a felony conviction. As discussed below in the remand section, the Board finds that the Veteran submitted a timely notice of disagreement for this determination in October 2008. The Veteran was previously represented by a service organization and by accredited agents for his appeal; however, prior authorizations of representation were revoked. In November 2013, the Veteran requested his last appointed agent to withdraw from his case; and in December 2013, prior to certification to the Board, this agent notified VA that it was requesting to revoke its representation. Although the Veteran later submitted a copy of partial fee contract and an invoice from an attorney's office, the Veteran's statements and other documents indicate that this attorney was hired for work concerning the Veteran's tax obligations. There is no argument or indication that this attorney represents the Veteran for his VA claims. The issue of the propriety of the reduction in the Veteran's VA compensation due to incarceration for felony conviction is addressed in the REMAND portion of the decision below and is REMANDED to the Agency of Original Jurisdiction (AOJ). FINDINGS OF FACT 1. In September 2011, the AOJ informed the Veteran of the creation of an overpayment resulting from termination of his TDIU benefits, effective from December 31, 1994, and the requirements to request a waiver of overpayment. 2. The Veteran did not submit a request for a waiver within 180 days of the notification of creation of indebtedness, and there are no grounds for extension of the deadline based on mailing delay or equitable tolling due to other factors. CONCLUSION OF LAW A timely request for waiver of recovery of overpayment of TDIU benefits was not received. 38 U.S.C.A. § 5302(a) (West 2014); 38 C.F.R. § 1.963(b) (2015). REASONS AND BASES FOR FINDINGS AND CONCLUSION The provisions of the Veterans Claims Assistance Act of 2000 (VCAA) and VA's implementing regulations require VA to provide notice and assistance upon receipt of a complete claim in certain circumstances. However, these provisions are relevant to a different chapter of Title 38, and they do not apply to requests for waiver of recovery of overpayment. Barger v. Principi, 16 Vet. App. 132 (2002). Moreover, the Veteran has been notified several times of the requirements to obtain a waiver of recovery of overpayment, to include the deadline for filing such a request, and he has made arguments in this regard. The electronic claims file includes nearly 2,000 entries of multiple pages with pertinent information. There is no argument or indication that any further notice or assistance is needed, and the Veteran has had ample opportunity to participate in the adjudication of his claim. The overpayment at issue in this case arose from the retroactive termination of the Veteran's TDIU benefits, effective as of December 31, 1994. In a June 2010 memorandum, VA's internal investigatory office found that the Veteran had committed fraud against VA, in that he had failed to report that he was self-employed through a business that he started in 1994 and that he actually received income while he was being paid VA compensation for TDIU. These conclusions were based on a review of all available evidence, including documentation regarding the creation of business, the Veteran's involvement in the business, and income from the business; as well as bank fraud relating to the same business. In March 2011, the RO notified the Veteran of the proposed termination of his TDIU benefits based on a special file review, which would result in a reduction of his compensation payment entitlement, effective from December 31, 1994. The Veteran disputed this proposal in March 2011, asserting that he had no gainful employment, the corporation he had created made no profit, and he had not committed fraud against VA or otherwise, to include the bank fraud for which he was convicted and incarcerated from 2008 to 2009. The Veteran's wife also submitted a letter in April 2011, asserting that he had been wrongfully incarcerated in 2008, that he did not try to "cheat" the government, and essentially that he had been the victim of some bad schemes by others. The Veteran testified as to the proposed termination of TDIU benefits at an August 2011 DRO hearing, making similar arguments and asserting alternately that he had nothing to do with the corporation and it was his wife's business, and that the corporation was a shadow company created in order for him to gather intelligence for the U.S. Government. On September 8, 2011, the RO issued a final decision terminating the Veteran's TDIU benefits, effective December 31, 1994, based on fraud. A September 12, 2011, letter notified the Veteran of this determination and his appellate rights. In a September 14, 2011, letter, VA's Debt Management Center (DMC) informed the Veteran that an overpayment of $253,637.97 had been created in this matter, and notified him of the requirements for requesting a waiver of the overpayment. On September 15, 2011, the Veteran and his former representative filed a notice of disagreement, identifying the September 8, 2011, rating decision as in dispute, i.e., the final decision to terminate his TDIU benefits, effective December 31, 1994. In June 2013, the RO informed the Veteran's Congressional representative that his dispute of the termination of a TDIU was still under their appellate jurisdiction. Thereafter, a VA memorandum to the Veteran's Congressional representative, which appears to have been created in July 2013, indicated that the Veteran's current balance owed to VA was $253,289.44, and that amounts would continue to be withheld from his VA benefits until the debt was paid in full. The memorandum indicated that the Veteran would need to submit written request for a waiver of the debt, along with a current Financial Status Report (FSR), within 180 days from the notice of creation of the debt. The memorandum then stated that, because VA would be receiving the Veteran's waiver request after the 180-day time limit, the Veteran should be advised that his waiver would be denied due to untimeliness. In July 2013, the Veteran submitted a current FSR to VA, which included a request for a waiver of recovery of the debt due to termination of his TDIU benefits. On July 31, 2013, the Committee on Waivers notified the Veteran that his request for a waiver of recovery of the debt due to overpayment in the amount of $253,637.97 had been denied because he did not file a timely request for a waiver. This decision and notice incorrectly stated that the Veteran had been notified of the creation of the debt and his right to request a waiver of recovery of overpayment in August 2008. The August 2008 notifications were regarding a separate debt based on the Veteran's incarceration for felony conviction, whereas the debt due to termination of his TDIU benefits was in September 2011. Nevertheless, the July 2013 decision notified the Veteran that his request for a waiver of the amount of $253,637.97 was received in July 2013, and that this request was not timely because it was received more than 180 days after notice of the creation of the debt, citing to 38 U.S.C.A. § 5302(a) and 38 C.F.R. § 1.963(b). Thus, the incorrect identification of the date of notice (in 2008 as opposed to in 2011) was not prejudicial in this case. The Veteran disputed this denial of his waiver request; a statement of the case (SOC) was provided in April 2014; and the Veteran submitted a substantive appeal (VA Form 9) in April 2014, followed by another VA Form 9 in February 2015. The Veteran continued to assert that termination of his TDIU was improper because he was not employed or employable during the period at issue, and the corporation was created as a shell for intelligence activities and never made any money. The Veteran also asserted that he spoke to a VA employee prior to forming the corporation in 1994 and that the VA employee told him that he would be allowed to receive TDIU benefits based on his assertion that the corporation would not have any income. See, e.g., statements in March 2014, April 2014, and February 2015. In January 2016, the RO issued a statement of the case (SOC) to the Veteran regarding the termination of his TDIU benefits, which addressed all of the Veteran's arguments as to his entitlement to a TDIU since 1994. This SOC also addressed the Veteran's more recent claim of entitlement to a TDIU, pertaining to the period after the dissolution of the corporation previously at issue. This SOC did explicitly address whether the overpayment on the basis of termination of the TDIU properly created. Nevertheless, the Veteran has essentially argued that he was not gainfully employed during the period at issue and, therefore, he was entitled to a TDIU and did not commit fraud. In this regard, an overpayment is created when a beneficiary receives benefit payments in excess of the amount due or the amount to which such beneficiary is entitled. 38 U.S.C.A. § 5302; 38 C.F.R. § 1.962. To establish improper creation of an overpayment, the evidence must show that (1) the Veteran was legally entitled to the benefits at issue; or, (2) the erroneous payment was due solely to VA administrative error or error in judgment. See 38 U.S.C.A. § 5112(b)(9) & (b)(10); 38 C.F.R. § 3.500(b). Thus, the Veteran was provided adequate notice of the reasons for the denial of his appeal of the termination of TDIU that resulted in overpayment, along with the requirements for an appeal. Therefore, this issue was implicitly denied, and no further adjudication is required. In addition to the Veteran's arguments as to why he believes his TDIU benefits should not have been terminated, he has made assertions as to why the recovery of the resulting overpayment should be waived. However, the dispositive question is whether the Veteran's request for a waiver of this debt was timely received. Where a notice of indebtedness is issued by VA to a debtor on or after April 1, 1983, a request for waiver shall only be considered if, except as otherwise provided in the governing regulation, the request is made within 180 days following the date of issuance of the notice of such indebtedness. This 180-day period may be extended if the debtor demonstrates that there was a delay in receipt of the notification of indebtedness beyond the time customarily required for mailing (including for forwarding), and that this delay was the result of an error by VA or by the postal authorities or was due to other circumstances beyond the debtor's control. If such a delay in the receipt of the notice of indebtedness is substantiated, then the 180-day period shall be computed from the date of the debtor's actual receipt of the notice of indebtedness. 38 U.S.C.A. § 5302(a); 38 C.F.R. § 1.963(b). The Board first finds that VA satisfied its duty to provide notice of the creation of the indebtedness and the requirements and time limit for requesting a waiver. The September 14, 2011, DMC letter notified of the Veteran of this information, and it was mailed to the Veteran's last reported address of record. The letter was not returned to VA as undeliverable, and there is no suggestion that any of the necessary correspondence was sent to an incorrect address. Indeed, the Board has thoroughly reviewed the voluminous claims file, and there is no indication that the Veteran has ever asserted that he did not receive the paperwork informing him of the relevant time limit to request a waiver of this amount. In fact, the Veteran has demonstrated actual receipt, as he submitted a copy of this September 14, 2011, notice in January 2015, along with notification of a recent change of address. Thus, the criteria for extension of the deadline to file a waiver request are not met. Id. Additionally, VA did not receive a request for a waiver of the debt against the Veteran due to termination of his TDIU benefits until July 2013, nearly two years after notice of the creation of the debt and waiver requirements. Id. The Veteran has not asserted that he filed a request for a waiver of this overpayment at any prior date. Indeed, in March 2014, the Veteran forwarded a copy of the 2013 VA memorandum regarding the procedures to request a waiver of overpayment, and indicated that he had faxed a waiver request and FSR to the indicated number. This is consistent with VA's receipt of his request for a waiver and FSR in July 2013. The Veteran has not alleged, and there is no indication, that he was given any advice or misinformation from a VA employee that misled him and resulted in him not filing a timely waiver request. See Bailey v. West, 160 F.3d 1360, 1365 (Fed.Cir. 1998) (holding that a statutory filing period may be equitably tolled due to the conduct of VA, and that there need not be misconduct or trickery, but the claimant must have been "misled by the conduct of [VA] into allowing the filing deadline to pass"). Equitable relief of tolling is not appropriate where the claimant failed to exercise due diligence in preserving his legal rights. Pfau v. West, 12 Vet. App. 515, 517 (1999); Irwin v. Department of Veterans Affairs, 498 U.S. 89 (1990). In his July 2013 FSR and his April 2014 VA Form 9, the Veteran stated that his prior attorney, Mr. Scully, had informed him after three or four months that he had spoken with the DMC and no longer wished to represent the Veteran. He asserted that any loss of time in filing paperwork for an appeal was due to this circumstance. Thus, the Veteran again essentially acknowledged that he received the initial notification of the creation of the debt, and that no waiver request was filed in a timely manner. The Veteran's assertions of a delay due to a prior representative's actions do not establish entitlement to a tolling or extension of the deadline to request a waiver because VA had no control or conduct in any such actions. Moreover, the record reflects that Mr. Scully's office was appointed as representative for the Veteran's wife, L.K., via a VA Form 21-22a submitted in April 2012. Mr. Scully's office submitted a notice of disagreement on behalf of the Veteran's wife to the October 2011 denial of her request for a waiver of the debt in her name, which resulted in the grant of that waiver in May 2012. This overpayment had also been created in September 2011, based on her receipt of apportioned TDIU benefits for the period of the Veteran's incarceration. However, the waiver request on behalf of the Veteran's wife did not apply to the separate debt in the Veteran's name. Furthermore, there is no information to reflect appointment of Mr. Scully's office as representative for the Veteran, or of any submission of a waiver request on the Veteran's behalf. In fact, the 2012 VA Form 21-22a specifically stated that representation was limited to the Veteran's wife. In a July 2013 letter to his Congressional representative, the Veteran also asserted that he was prevented from filing the correct paperwork because he was incarcerated for bank fraud. To the extent that this pertains to his failure to submit a waiver request within 180 days from the September 2011 notice of creation of the debt due to TDIU, the Veteran's period of incarceration for bank fraud ended in 2009, and his full VA benefits resumed at that time. Moreover, he did submit many documents and arguments during the 180-day period following the September 2011 notification, pertaining to arguments that the TDIU should not have been terminated. Thus, the Veteran's assertion that he was unable to file the necessary paperwork to request a waiver in a timely manner is not credible because his statements are internally inconsistent and inconsistent with the other information. The Veteran has otherwise argued that he is unable to pay the debt at issue, that he is "now" unemployable, and that he is entitled to TDIU compensation benefits and the debt amount due to being a U.S. citizen and former service member. See, e.g., VA Form 9 received in February 2015. These statements amount to arguments as to why he believes the recovery of overpayment should be waived on the merits. As noted above, the January 2016 SOC addressed the Veteran's arguments as to being entitled to a TDIU based on his current disability and employment status. The Board is bound by the law and is without authority to grant benefits on an equitable basis. Although equity and good conscience are for consideration when analyzing the merits of a waiver request, these factors come into play only after a timely request for waiver has been submitted. See 38 C.F.R. §§ 1.963, 1.965. In sum, the Veteran did not request a waiver of recovery of the overpayment based on termination of his TDIU at any time prior to July 2013. This was well outside the 180-day deadline to file a waiver request and, therefore, was untimely. No exceptions to the legal criteria are applicable, and the Board has no authority to disregard the limitations pertaining to timeliness standards for waiver requests. 38 U.S.C.A. § 5302(a); 38 C.F.R. § 1.963(b). The preponderance of the evidence is against the finding of a timely waiver request; therefore, there is no reasonable doubt to resolve, and the Veteran's appeal must be denied. 38 U.S.C.A. § 5107. ORDER A timely request for waiver of recovery on an overpayment was not received for the debt of $253,637.97 based on the termination of TDIU, and the appeal is denied. REMAND In August 2008, the RO notified the Veteran of a final rating decision to reduce his VA compensation payments due to incarceration for a felony conviction; and the DMC notified the Veteran that a debt of $10,803.47 had been created and his right to request a waiver. In October 2008, the Veteran requested a waiver of this debt and asserted that his incarceration was the result of wrongful prosecution. Although a statement of the case (SOC) was issued for the waiver request, no action was taken on the dispute of the reduction of benefits. Thus, the case must be remanded to provide a SOC on this matter. Manlincon v. West, 12 Vet. App. 238 (1999). This matter should not be returned to the Board unless a timely substantive appeal is received after the issuance of a SOC. 38 C.F.R. § 20.200, 20.202, 20.302 (2015). Accordingly, the case is REMANDED for the following action: The AOJ must issue a statement of the case for the issue of the propriety of the reduction of the Veteran's VA compensation benefits due to incarceration from 2008 to 2009; with the requirements for a substantive appeal. The appellant has the right to submit additional evidence and argument on the matter the Board has remanded. Kutscherousky v. West, 12 Vet. App. 369 (1999). This claim must be afforded expeditious treatment. All claims that are remanded by the Board of Veterans' Appeals or by the United States Court of Appeals for Veterans Claims for additional development or other appropriate action must be handled in an expeditious manner. See 38 U.S.C.A. §§ 5109B, 7112 (West 2014). ______________________________________________ JAMES G. REINHART Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs