Citation Nr: 1644170 Decision Date: 11/21/16 Archive Date: 12/01/16 DOCKET NO. 11-09 605 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Milwaukee, Wisconsin THE ISSUE Entitlement to waiver of recovery of overpayment of Department of Veterans Affairs nonservice-connected pension benefits in the calculated amount of $22,836.00 to include whether the overpayment was properly created. ATTORNEY FOR THE BOARD J. Connolly, Counsel INTRODUCTION The Veteran served on active duty from May 1953 to May 1955. This matter comes before the Board of Veterans' Appeals (Board) on appeal from a September 2010 decision by the Committee on Waivers and Compromises (Committee) at the Milwaukee, Wisconsin Regional Office (RO) of the Department of Veterans Affairs (VA). The Committee denied the Veteran's request to waive an overpayment of pension benefits in the amount of $22,836.00 due to a retroactive termination of VA pension benefits in a May 2010 decision letter. In May 2012, the Board remanded this case because the Veteran disputed the validity of the debt in this case, and has argued that the creation of an overpayment was through no fault of his own and to provide the Veteran with the opportunity to furnish additional evidence and argument. In June 2016, the Veteran's claim was reconsidered, but the prior May 2010 termination was confirmed as being proper and the request for a waiver the overpayment created from that termination of benefits continued to be denied. 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. For the annual year of December 1, 2007 to November 30, 2008, the Veteran met the income requirements for special monthly pension benefits based on aid and attendance and was entitled to those benefits. 2. For the annual year commencing December 1, 2008 and thereafter, the Veteran did not substantiate his finances as being within the income limitations for special monthly pension benefits based on aid and attendance as requested repeatedly by VA. 3. In considering the Veteran's entitlement to special monthly pension benefits based on aid and attendance for the annual year of December 1, 2007 to November 20, 2008 as proper, the valid amount of the debt at issue is reduced to $4,632; the remainder of the debt for that period is not valid or properly created. 4. For the valid portion of the debt for the period commencing December 1, 2008, the Veteran is not shown to have committed fraud, misrepresentation, or bad faith in the creation of the overpayment. 5. The Veteran received VA special monthly pension benefits that he was not entitled to receive because he did not provide requested financial information to establish continued entitlement based on income, and he was at fault in the creation of this debt due to his failure to do so. 6. Withholding of benefits or recovery would not nullify the objective for which benefits were intended because the Veteran did not substantiate his entitlement to special monthly pension benefits by properly verifying his income and the Veteran would therefore be unjustly enriched if the benefits were not recovered because failure to make restitution would result in unfair gain to the Veteran for the same reason. 7. The Veteran did not change his position to his detriment and reliance on these VA benefits does not result in relinquishment of a valuable right or incurrence of a legal obligation. 8. Recovery of the overpayment would not deprive the Veteran of basic necessities as his income exceeds his expenses as reported by him on a financial status report. CONCLUSIONS OF LAW 1. The Veteran's annual countable income was not excessive for the purposes of establishing eligibility for nonservice-connected special monthly pension benefits based on aid and attendance beginning December 1, 2007 through November 2008; thus that portion of the debt was not validly created. 38 U.S.C.A. §§ 101, 501, 1151, 1503, 1541 (West. 2014); 38 C.F.R. §§ 3.2, 3.3, 3.23, 3.24, 3.271, 3.272, 3.274, 3.275, 3.350 (2015). 2. The portion of the debt from payment of nonservice-connected special monthly pension benefits beginning December 1, 2008, was validly created. 38 U.S.C.A. §§ 101, 501, 1151, 1503, 1541 (West. 2014); 38 C.F.R. §§ 3.2, 3.3, 3.23, 3.24, 3.271, 3.272, 3.274, 3.275, 3.350 (2015). 3. The criteria for waiver of recovery of an overpayment of the valid portion of the debt from payment of nonservice-connected special monthly pension benefits totaling $4,632 have not been met. 38 U.S.C.A. §§ 5107, 5302(a) (West 2014); 38 C.F.R. §§ 1.963(a), 1.965(a) (2015). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS There has been a significant change in the law with the enactment of the Veterans Claims Assistance Act of 2000 (VCAA). 38 U.S.C.A. §§ 5100, 5102, 5103, 5103A, 5106, 5107, 5126 (West 2002). To implement the provisions of the law, the VA promulgated regulations at 38 C.F.R. §§ 3.102, 3.156(a), 3.159, 3.326(a)). However, VCAA is inapplicable to claims such as the one decided herein. See Barger v. Principi, 16 Vet. App. 132 (2002). In Barger, the United States Court of Appeals for Veterans Claims (Court) held that the VCAA, with its expanded duties, is not applicable to certain cases, pointing out that the statute at issue in such cases (Chapter 53) was not found in Title 38, United States Code, Chapter 51 (i.e. the laws changed by VCAA). This case is based on income considerations and is analogous to the cases under the Barger directives. In November 2007, the Veteran applied for VA benefits. In his application, he reported that he had income from the Social Security Administration (SSA) and a private company, Caterpillar. He received $1,028.50 monthly ($12,342 annually) from SSA; $722 monthly ($8,664 annually) from Caterpillar; and $3 monthly in interest, which he later noted in the form to actually be $38 in interest income annually. So, annual income totaled $21,044. The Veteran also reported that he had expenses that included for a caregiver he paid $1700 monthly ($20,400 annually) and Schedule B SSA medical expenses of $93.50 monthly ($1,116 annually). Therefore, the Veteran reported that expenses exceeded income without including any of his other expenses. In a November 2007 rating decision, entitlement to special monthly pension based on aid and attendance was granted. The rating decision noted that a statement was received from the Veteran's caregiver detailing the services she provided the Veteran. In the award letter, the Veteran was advised that these benefits were granted effective December 1, 2007, and were based on his income. He was told to inform VA immediately if there were any changes in income. He was provided a VA Form 21-8768. This form informed him that he was obligated to provide prompt notice of any change in income or net worth and that a failure to provide such would result in the creation of an overpayment which would be subject to recovery. It further stated that when reporting income, the total amount and source of all income received should be reported. Thereafter, tax information was received to verify the 2008 income which reflected the Caterpillar income. Tax information was also received which showed annual interest income was $67.50. Verification was also received from SSA showing that the 2008 income was $12,628.80 which most likely accounted for the cost of living increase for 2008 as it was slightly higher than reported by the Veteran. So, the adjusted income was $21,360.30. That income is considered verified by objective financial information. An Eligibility Verification Report (EVR) from the Veteran for the 2008 annual year showed the SSA income, the Caterpillar income, and the interest income. Thereafter, SSA income for 2009 was submitted which showed SSA income totaling $1,017 (and was noted to have the medical expense already deducted prior to that total); thus, the annual total was $12,204. A Medical Expenses Report was received from the Veteran which enumerated the Veteran's annual medical expenses including the caregiver expenses for 2008. The total indicated was $21,269.69. The Veteran actually reported that he had paid his caregiver slightly less than the $20,400. Although the Veteran did not include receipts for these expenses, there is a statement from the caregiver regarding her rate and the Board finds credible the other reported expenses which appear consistent with his medical status. Thereafter, in a December 2009 letter, the Veteran was advised that his financial forms were incomplete and additional information was required. The following was requested: 1 A complete VA Form 21-0516-1, EVR, and VA Form 21-8416, Medical Expense Report, for the time period November 8, 2007 through November 30, 2008, with 60 days to complete. 2. An explanation for the purpose of the receipt of $38.64 from Caterpillar in 2008 as well as when it was received. The Veteran was asked to explain if he received monthly retirement benefits from Caterpillar and the gross amount he received. He was given an attached a VA Form 21-4138, Statement in Support of Claim. 3. The Veteran was also given a VA Form 21-4138, Statement in Support of Claim, to report the monetary value of the additional property that he owned. 4. The Veteran was also given a VA Form 21-4138, Statement in Support of Claim, to show how much money he currently had in interest bearing bank accounts. 5. Since the 2008 VA Form 21-8416, Medical Expense Report, was noted to be "drastically incomplete", the Veteran was requested to fully complete the attached VA Form 21-8416, Medical Expense Report for calendar years 2008 and 2009. 6. The Veteran was requested to sign and have his caregiver complete and sign the attached Attendant Affidavits. 7. The Veteran was also asked to verify his SSA income was correct and to provide VA with a copy of all of SSA benefit letters as proof of what he had been receiving. He was told to be sure to include any information, amount(s) and date(s) received, concerning garnishments withholdings and retroactive payments. Thereafter, an EVR was received for 2009, but it only listed medical expenses of $21,522 with no explanation whatsoever. In March 2010, an EVR was received which indicated that he had SSA income of $1,017 per month ($12,204 annually) and Caterpillar income of $6 or $72 annually. Although the Veteran indicated that his income had not changed, no other income was listed and it does not match prior income reporting and there was no supporting evidence, such as tax forms/reports like the Veteran had previously submitted for an earlier period. In May 2010, the Veteran was notified that his VA benefits were retroactively terminated as of December 1, 2007, the date that they commenced because he failed to provide the requested information set forth in the December 2009 letter. The termination of these benefits resulted in an overpayment in the amount of $22,836. The Veteran replied that the $38.64 was a one-time interest payment. In December 2010, VA again requested the Veteran's medical expenses from November 8, 2007, until December 31, 2010, in annual year periods. Information was verified with SSA showing that in December 2007, the monthly income was $1,052, but was about $1,113 monthly, thereafter. The Board accepts that information as verification of SSA income. The Board notes that basic entitlement for nonservice-connected pension benefits exists if, among other things, the Veteran's income is not in excess of the applicable maximum allowable pension rate (MAPR) specified in 38 C.F.R. § 3.23, as changed periodically and reported in the Federal Register. See 38 U.S.C.A. § 1521; 38 C.F.R. § 3.3 (a)(3). The eligibility of a veteran for improved pension depends on countable income. Pertinent regulations provide that improved pension benefits shall be terminated if countable annual income exceeds applicable income limitations. The Board notes that it is the responsibility of the pension recipient to notify VA of all circumstances that will affect entitlement to receive the rate of the benefit being paid, and such notice must be provided when the recipient acquires knowledge that his/her income has changed. See 38 C.F.R. §§ 3.277, 3.660(a)(1). Under the provisions of 38 C.F.R. § 3.271, payments of any kind from any source shall be counted as income during the 12-month annualization period in which received unless specifically excluded under 38 C.F.R. § 3.272. Income from the SSA and interest income are not excluded under 38 C.F.R. § 3.272. The rate at which a veteran may be paid pension is reduced by the amount of a veteran's countable annual income. 38 C.F.R. § 3.23. Medical expenses in excess of five percent of the MAPR, which have been paid, may be excluded from an individual's income for the same 12-month annualization period to the extent they were paid. 38 C.F.R. § 3.272 (g)(1)(iii). There are other listed exclusions that are not pertinent to this case Effective December 1, 2007, through November 30, 2008, the MAPR for a Veteran with no dependents at the aid and attendance rate is $18,654. Thus, medical expenses in excess of $932.70 may be excluded. Effective December 1, 2008, through November 30, 2009, the MAPR for a Veteran with no dependents at the aid and attendance rate is $19,736. Likewise, effective December 1, 2009, through November 30, 2010, the MAPR for a Veteran with no dependents at the aid and attendance rate is $19,736. Thus, medical expenses for both of these annual years in excess of $986.80 may be excluded. The RO indicated that the Veteran did not respond to the request for complete financial information so his benefits were terminated from their commencement date of December 1, 2007. However, the Board finds that there is sufficient documentation to evaluate the Veteran's income and medical expenses for the annual year (12 month period) commencing on December 1, 2007. The Veteran submitted supporting evidence of his income. He listed his expenses. The expense of the Veteran's caregiver is the highest expense. However, the Board notes that the grant of special monthly pension was based on part on a statement from the caregiver and an agreement submitted by the Veteran and the caregiver that he was paying her $1700 per month or about $20,400 annually, although he had later indicated that he paid her slightly less overall which is accepted as accurate. During that time period, the Veteran's income from SSA was $1,052 in December 2007, and $1,113 (rounded down) for each of the remaining 11 months in that annual year, for an annual income of $13,295, as verified by the SSA. The Veteran also had $8,664 annually from Caterpillar (as shown on a tax form); and $67.50 in interest income annually (as shown on a tax form). Thus, total income of $22,026 (rounded down). The total medical expenses for this period were $21,269.69 and with five percent of the MAPR deducted ($932.70), equals $20,337 (rounded to next cent from $20,336.99). Therefore, $22,026 less $20,337 equals $1,689 as countable income which is less than the MAPR of $19,736. That amount, $19,736 less income is $18,047, which divided by 12 months equals $1503.92 for each month or $18,047 for that 12 month period. The Board finds that based on the information of record, the Veteran was entitled to the special pension benefits based on aid and attendance for the annual year commencing December 1, 2007 to November 20, 2008. However, there is insufficient information to evaluate the annual year commencing December 1, 2008, or thereafter, as the Veteran has not submitted sufficient information and failed to reply to VA's request for additional information. The overpayment was originally calculated as $22,836. An April 2016 audit showed that for the 12 month annual year commencing December 1, 2007, the Veteran was paid $18,204. For the annual period commencing December 1, 2008 to February 28, 2009 when the Veteran's benefits were terminated, the amount paid to him was $4,632. According to what was owed to the Veteran in the amount of $18,047; per above, the amount of the overpayment totals $4,789. In the June 2016 statement of the case (which should have been labeled a supplemental statement of the case), the RO indicated that a portion of the debt had been recouped and the Veteran still owed $14,204.90; thus the Veteran had repaid $8,631.10. The Board realizes that more of the debt as calculated by the RO may have been recouped since, and during the pendency of this appeal. In light of the foregoing, the Board finds that the creation of the debt in its entirely was not proper. The Veteran was owed special monthly pension benefits based on aid and attendance for the annual year (12 months) commencing December 1, 2007, but not for the period commencing December 1, 2008, for the reasons outlined above. The amount of the overpayment which was proper was $4,632. Although monies in excess of that amount have been recouped, the Veteran should only be assessed that amount because that portion of the debt should not be waived, as indicated below. With regard to the proper overpayment of $4,632 (as well as the full amount paid to the Veteran), the Committee considered the Veteran's claim for a waiver. The Committee did not find fraud, misrepresentation, or bad faith in this case; however, the Committee determined that recovery would not be against equity and good conscience. Thus, the request for a waiver of the recovery of the overpayment at issue was denied. The Veteran appealed that determination. In cases where fraud, misrepresentation, or bad faith on the Veteran's part with respect to the creation of the overpayment at issue has not been demonstrated, and, therefore, waiver is not precluded pursuant to 38 U.S.C.A. § 5302(a), the Board must determine whether recovery of the indebtedness would be against equity and good conscience, thereby permitting waiver under 38 U.S.C.A. § 5302(a) and 38 C.F.R. §§ 1.963(a), 1.965(a). In making this determination, consideration is given to the following elements, which are not intended to be all-inclusive: (1) fault of 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 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); and (6) changing position to one's detriment (reliance on VA benefits results in relinquishment of a valuable right or incurrence of a legal obligation). See 38 C.F.R. § 1.965(a). As noted above, the Veteran received special monthly pension benefits based on aid and attendance for the period commencing December 1, 2008, and he failed to submit the requested information to verify that he met the income conditions to receive those benefits. The Veteran was repeatedly asked to submit the information, but did not do so. The first and second elements to be addressed pertain to the fault of the debtor versus the fault of VA. In this case, the Veteran contends that he did not know he was not entitled to benefits. The Board notes that the Veteran met the medical requirements for benefits, but the income requirement was not verified and therefore cannot be considered met. The Board has endeavored to consider all substantiated information and has used that information to verify that pension was warranted for the initial 12 month annual year, but the Veteran did not confirm the information for the next annual year as requested. Thus, the Veteran was solely at fault in the creation of the remaining debt. With respect to the third element, whether the Veteran would be subjected to undue hardship if the debt were recovered, his financial status report shows that monthly income exceeds expenses; as such, there is no financial hardship. The fourth element of equity and good conscience also fails to support the waiver of overpayment in this case. Again, the fourth element to be addressed is whether recovery of the overpayment would defeat the purpose for which the benefits were intended. Here, the Veteran did not provide financial information to confirm hiis continued entitlement to special monthly pension benefits. Also for consideration is whether a waiver of overpayment would cause unjust enrichment, the Board must contemplate whether failure to make restitution would result in unfair gain. Here, again, the Veteran was repeatedly requested to verify his financial status and he did not do so. Thus, he would be unjustly enriched if he did not repay those benefits. The sixth element to be considered is whether reliance on VA benefits resulted in the Veteran relinquishing a valuable right or incurring a legal obligation. The Veteran has not claimed that he relinquished any right or incurred any legal obligation or that he relied upon VA to his detriment, nor is there any evidence of such. Thus, this sixth element does not support the Veteran's request for a waiver of overpayment. The record does not demonstrate any additional factors which should be considered in adjudicating the Veteran's claim for a waiver of the indebtedness, nor has the Veteran identified any such factors. After weighing all of the enumerated factors, the Board finds that total recovery of the overpayment does not violate the principles of equity and good conscience. Thus, waiver of the recovery of the debt of $4,632 is not warranted. ORDER For the annual 12 month period beginning December 1, 2007 and ending November 30, 2008, the portion of the debt derived from payment of nonservice-connected special monthly pension benefits was not validly created, and the appeal is granted to this extent only. For the annual 12 month period beginning December 1, 2008, the portion of the debt derived from payment of nonservice-connected special monthly pension benefits was validly created and totals $4,632; and the claim of entitlement to a waiver of recovery of an overpayment of the valid portion of the debt from payment of nonservice-connected special monthly pension benefits totaling $4,632, is denied. ____________________________________________ S. L. Kennedy Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs