Citation Nr: 1626535 Decision Date: 07/01/16 Archive Date: 07/14/16 DOCKET NO. 14-27 321 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Atlanta, Georgia THE ISSUE Entitlement to waiver of the recovery of overpayment (or debt) of Post-9/11 GI Bill benefits in the amount of $6,245.04, to include whether the overpayment was properly created. REPRESENTATION Appellant represented by: The American Legion ATTORNEY FOR THE BOARD C. Ferguson, Counsel INTRODUCTION The Veteran, who is the appellant, had service from September 2009 to February 2010. This matter comes before the Board of Veterans' Appeals (Board) on appeal from a February 2013 decision of the Regional Office (RO) in Atlanta, Georgia. FINDINGS OF FACT 1. The overpayment of VA education benefits in the amount of $6,245.04 was properly created. 2. The Veteran is not shown to have committed fraud, misrepresentation, or bad faith in the creation of the overpayment. 3. The fault of VA in the creation of the debt outweighs the fault of the Veteran. 4. Recovery of the amount of the debt in the calculated amount of $6,245.04 would be against equity and good conscience. CONCLUSION OF LAW 1. The overpayment in the amount of $6,245.04 was properly created. 38 U.S.C.A. §§ 3319, 3695 (West 2014); 38 C.F.R. §§ 21.4020(a), 21.9550, 21.9570 (2015). 2. The criteria are met for waiver of recovery of overpayment of VA education benefits in the calculated amount of $6,245.04. 38 U.S.C.A. §§ 5107, 5302 (West 2014); 38 C.F.R. §§ 1.962, 1.963, 1.965 (2015). REASONS AND BASES FOR FINDINGS AND CONCLUSION Duties to Notify and Assist The Veterans Claims Assistance Act of 2000 (VCAA) enhanced VA's duty to notify and assist claimants in substantiating their claims for VA benefits. 38 U.S.C.A. §§ 5100, 5102, 5103, 5103A, 5107, 5126 (West 2014); 38 C.F.R. §§ 3.102, 3.156(a), 3.159, 3.326(a) (2015). In Barger v. Principi, 16 Vet. App. 132 (2002), the United States Court of Appeals for Veterans Claims (Court) held that the VCAA, with its expanded duties, is not applicable to cases involving the waiver of recovery of overpayment claims, noting that the statute at issue in such cases is found in Chapter 53, Title 38, United States Code. Furthermore, because the Board is granting the appeal, a discussion of any due process concerns, if present, in connection with the appeal for a waiver is not needed. See 38 C.F.R. § 3.103 (2015). Waiver of Overpayment Legal Criteria Recovery of overpayments shall be waived if there is no indication of fraud, misrepresentation, or bad faith on part of the person having an interest in obtaining the waiver and recovery of the indebtedness from the payee who received such benefits would be against equity and good conscience. 38 U.S.C.A. § 5302(a), (c); 38 C.F.R. § 1.963. In other words, any indication that the appellant committed fraud, misrepresentation of a material fact, or bad faith/lack of good faith in connection with the receipt of VA benefits precludes the granting of a waiver of recovery of the overpayment. The Court defines bad faith as, "a willful intention to seek an unfair advantage." Richards v. Brown, 9 Vet. App. 255, 257-58 (1996). The provisions of 38 C.F.R. § 1.965(b)(2) describe bad faith as an 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 participation in a VA benefits or services program exhibits bad faith if such conduct, although not undertaken with actual fraudulent intent, is undertaken with the intent to seek an unfair advantage, with knowledge of the likely consequences, and results in a loss to the government. A lack of good faith is defined under VA law as, "the absence of an honest intention to abstain from taking unfair advantage of the holder and/or the government." 38 C.F.R. § 1.965(b)(3). There shall be no collection of an overpayment, or any interest thereon, which results from participation in a benefit program administered under any law by VA when it is determined by a regional office Committee on Waivers and Compromises that collection would be against equity and good conscience. 38 C.F.R. § 1.962 (2015). The standards 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. The decision reached should not be unduly favorable or adverse to either side. 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 the following elements, which are not intended to be all-inclusive: (1) fault of the debtor - where actions of the debtor contribute to the creation of the debt; (2) balancing of faults - weighing fault of the debtor against VA fault; (3) undue hardship - whether collection would deprive the debtor or his family of basic necessities; (4) defeat the purpose - whether withholding of benefits or recovery would nullify the objective for which these benefits were intended; (5) unjust enrichment - where failure to make restitution would result in an unfair gain to the debtor; and (6) changing position to one's detriment - where reliance on VA benefits results in the relinquishment of a valuable right or the incurrence of a legal obligation. 38 C.F.R. § 1.965(a); see generally Cullen v. Brown, 5 Vet. App. 510 (1993). Waiver of Overpayment Analysis The Veteran seeks waiver of recovery of the overpayment of VA education benefits in the amount of $6,245.04. The Veteran asserts that she should not have to repay the debt because she did not misrepresent her service or any other information when applying for VA education benefits, and VA approved the benefits when she was not eligible. She maintains she was not aware that she needed to have honorable service to receive the benefits and would not have applied for the VA education benefits if she had known that she was not eligible. She further contends that repayment of the debt would cause financial hardship. After review of the record, the Board finds that the overpayment of VA education benefits in the amount of $6,245.04 was properly created. On September 25, 2009, the Secretary announced that VA had authorized emergency checks to be given to students who had applied for educational benefits and who had not yet received their government payment. It was noted that, "students should be focusing on their studies, not worrying about financial difficulties." Delays in educational assistance payments were in part due to the overwhelming popularity of the Post-9/11 GI Bill resulting in tens of thousands of claimants. In January 2010, the Veteran requested Post-9/11 GI Bill (Chapter 33) VA education benefits. After VA approved the application and notified her that she was entitled to the benefits, the Veteran received payment in the total amount of $6,245.04 for the fall 2010 and spring 2011 semesters at the college where she was enrolled although she did not qualify for the benefits due to insufficient service. Given the foregoing, the Board finds that the debt in the amount of $6,245.04 for payment of VA education benefits was properly created. The Board next finds that the overpayment was not the result of fraud, misrepresentation, or bad faith on the part of the Veteran. The evidence shows no misrepresentation or bad faith on the Veteran's part when she requested the payment of VA education benefits in the amount of $ 6,245.04 because she accurately reported her service when applying for benefits, and VA advised her in a March 2010 letter that she was eligible for VA education benefits. In the absence of evidence showing that the Veteran intentionally misrepresented her service when she applied for VA education benefits, the Board finds that the Veteran's actions do not represent intentional behavior to obtain government benefits to which she was not entitled, which is necessary for a finding of fraud, misrepresentation, or bad faith in the creation of the overpayment of $6,245.04 for VA education benefits. In consideration thereof, the Board will next consider whether recovery from the Veteran of this overpayment would be against the principles of equity and good conscience, utilizing the factors described at 38 C.F.R. § 1.965(a). After review of the record, the Board finds that there is significant fault on the part of VA in creation of the debt. In September 2010, VA approved the Veteran's request for payment of VA educational benefits in the amount of $6,245.04 although she was ineligible for the benefits due to the character of service (i.e., uncharacterized service). The Board finds that the Veteran is at no fault in the creation of the debt. The Veteran applied for VA education benefits after being encouraged to do so by the VA office at the college where she was enrolled, and VA approved the benefits. VA has acknowledged that the grant of benefits was merely administrative error on their part and was not the fault of the Veteran. See September 2011 VA Form 119, Report of Contact. The Board finds that payment of the debt would result in undue financial hardship to the Veteran. According to the March 2013 VA Form 5655 (Financial Status Report), the Veteran received monthly net income in the amount of $895.10 and had living expenses in the amount of $905.00. She also had another outstanding debt in the amount of $90.00 for which she was paying monthly installments of $35.00. The Veteran has credibly reported that it would be a financial strain to repay the debt. The Board finds that the Veteran was unjustly enriched by receiving benefits to which she was not entitled. The Veteran received a payment of $6,245.04 for VA educational benefits when she had uncharacterized service and was ineligible for the benefits. The Board finds that the Veteran changed her position to her detriment due to the receipt of VA educational benefits in the amount of $6,245.04. The Veteran stated that she applied for and accepted the payment of VA education benefits because she only had a part-time job and was unable to afford school on her own. Because she was unable to afford school without the VA education benefits, it is reasonable to conclude that the Veteran changed her position to her detriment due to receipt of VA education benefits, and it would be burdensome for her to repay the debt. The Board finds that recovery of the Veteran's VA educational benefits would nullify the objective for which the benefits were intended. The Veteran received the benefits for educational assistance and used the money for that purpose. After weighing all of the factors described at 38 C.F.R. § 1.965(a), the Board finds that the Veteran's payment of the debt would be against equity and good conscience; therefore, the Veteran is entitled to waiver of the debt in the amount of $6,245.04. ORDER A waiver of recovery of the overpayment of VA education benefits in the amount of $6,245.04 is granted. ____________________________________________ J. PARKER Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs