Citation Nr: 1711167 Decision Date: 04/07/17 Archive Date: 04/19/17 DOCKET NO. 13-09 039A ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office and Insurance Center in Philadelphia, Pennsylvania THE ISSUES 1. Whether overpayment of VA disability compensation in the amount of $5,426.00, based on removal of former spouse, L.P., as a dependent is valid. 2. Entitlement to a waiver of recovery of an overpayment of VA compensation benefits based on the Veteran's marital status. REPRESENTATION Appellant represented by: Disabled American Veterans ATTORNEY FOR THE BOARD M. M. Lunger, Associate Counsel INTRODUCTION The Veteran served on active duty from February 1966 to July 1988. This matter comes before the Board of Veterans' Appeals (Board) on appeal from a July 2010 determination by the Committee on Waivers and Compromise (Committee) issued by the Department of Veterans Affairs (VA) Regional Office (RO) and Insurance Center Philadelphia, Pennsylvania, which denied the Veteran's request for a waiver of recovery of overpayment in the amount of $5,426.00. The Agency of Original Jurisdiction (AOJ) is the RO in Winston-Salem, North Carolina. In the Veteran's substantive appeal which was received in April 2013, a Travel Board hearing request was made. In August 2014, the Veteran indicated that he was withdrawing his request for a Travel Board hearing. The issue of entitlement to a waiver of recovery of an overpayment of VA compensation benefits based on the Veteran's marital status is addressed in the REMAND portion of the decision below and is REMANDED to the AOJ. FINDINGS OF FACT 1. For the period effective October 1, 2004 until February 28, 2010, VA paid the Veteran disability benefits on a monthly basis in the total amount of $64,078.00, based on a finding that the Veteran had one dependent spouse, L.P., during this period. 2. The Veteran divorced L.P. in September 2004, and the Veteran was not entitled to the additional benefits provided for L.P. beginning October 1, 2004; therefore, the Veteran was entitled to benefits in the total amount of $58,652.00 during this time period. The Veteran was overpaid in the amount of $5,426.00. 3. The Veteran received notice repeatedly of the requirement to promptly notify VA regarding any changes to the status of his dependents, and that his failure to do so would result in an overpayment. 4. The Veteran failed to promptly notify VA of his divorce from L.P.; therefore VA's monthly payments of disability compensation at the additional rate provided for a dependent spouse L.P. was not a result of sole VA administrative error. 5. There is no evidence of fraud, misrepresentation, or bad faith, on the Veteran's part in creation of the debt. 6. The overpayment of VA spousal benefits in the amount of $5,426.00 was properly created. CONCLUSION OF LAW An overpayment of VA compensation benefits for a dependent spouse in the amount of $5,426.00 was properly created, and the debt is valid. 38 U.S.C.A. § 5112 (West 2014); 38 C.F.R. § 3.500 (2016). REASONS AND BASES FOR FINDINGS AND CONCLUSION The Veteran contests the validity of the debt that was created as a result of payment of additional compensation for a dependent spouse, L.P., which VA has concluded the Veteran was not eligible to receive, due to his failure to notify VA of his divorce from L.P. in September 2004. The Veteran has acknowledged his fault in his failure to notify VA of the change in his marital status. However, he asserts that because he married F.J.P. in November 2004, the overpayment amount should only be calculated based on the time period between his two marriages - from October 2004 to November 2004. 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 (West 2014); 38 C.F.R. § 1.962 (2016). For a determination that an overpayment was not properly created, and is therefore invalid, it must be established that the claimant was either legally entitled to the benefits in question or, if the claimant was not legally entitled, then it must be shown that VA was solely responsible for the claimant being erroneously paid benefits. Administrative errors include all administrative decisions of entitlement, whether based upon mistake of fact, misunderstanding of controlling regulations or instructions, or misapplication of law. VAOPGPREC 2-90 (July 17, 1989), 55 Fed. Reg. 27757 (1990). Sole administrative error connotes that the claimant neither had knowledge of nor should have been aware of the erroneous award. Further, neither the claimant's actions nor his or her failure to act must have contributed to payment pursuant to the erroneous award. 38 U.S.C.A. § 5112 (b)(9), (10) (West 2014); 38 C.F.R. § 3.500(b)(2) (2016); Jordan v. Brown, 10 Vet. App. 171 (1997) (sole administrative error is not present if the payee knew, or should have known, that the payments were erroneous). Thus, a finding of sole administrative error requires not only error on the part of VA, but that the beneficiary is unaware that the payments are erroneous. Applicable regulations pertaining to compensation benefits provide that it is the responsibility of the recipient of VA compensation benefits to notify VA of all circumstances which will affect entitlement to receive the rate of the benefit being paid. Thus, the recipient of VA benefits must notify VA when he acquires knowledge that income, marital status, or dependency status will change or other circumstances which would affect his entitlement to receive, or the rate of, the benefit being paid. 38 C.F.R. § 3.660(a)(1). Where the dependency of another person ceased on or after October 1, 1982, due to marriage annulment, divorce or death, the reduction or discontinuance shall be effective the last day of the month in which dependency ceased (i.e., the date of the divorce). 38 U.S.C.A. § 5112(b)(2); 38 C.F.R. § 3.660 (a)(2). Overpayments created by retroactive discontinuance of benefits will be subject to recovery if not waived. 38 C.F.R. § 3.660(a)(3). Regarding the submission of information affecting entitlement to benefits, generally, VA may take action affecting entitlement to benefits based on oral or written information or statements provided to VA by a beneficiary or his or her fiduciary. 38 C.F.R. § 3.213 (2015). Regarding a change of status affecting entitlement, for the purposes of establishing entitlement to a higher rate of compensation based on the existence of a dependent, VA will require evidence which satisfies the requirements of § 3.204. Such requirements include proof of dissolution of marriage along with the date (month and year) and place of the event. 38 C.F.R. § 3.204. Here, the record shows that the Veteran received multiple notifications from VA advising him of his responsibility to promptly report changes to VA regarding any change in the status of his dependents - beginning as early as May 1993. In February 2010, in response to a proposed decrease to his award for his failure to provide current information regarding his dependent, the Veteran submitted a copy of his September 2004 divorce decree and his November 2004 marriage certificate. The RO informed the Veteran that the amount of his award would change to reflect the removal of L.P. effective October 1, 2004 and would change again effective March 1, 2010 to reflect the change in spouse status - his marriage to F.J.P. VA determined that the Veteran had been overpaid in the amount of $5,462.00. The Board finds that the VA's overpayment to the Veteran was not a result of sole VA administrative error. The Veteran divorced L.P. in September 2004 and was not entitled to any additional benefits from that time based on L.P.'s status as a dependent spouse. The evidence in the electronic file shows that the Veteran had been notified multiple times over the years that he was responsible for notifying VA of any change in the status of his dependents. The Veteran did not notify VA of his divorce from L.P. until February 2010. Although the Board is sympathetic to the Veteran's contention that he was only unmarried for a period of two months, October 2004 and November 2004, it is undisputed that the Veteran failed to notify VA of the change in his marital status. Because the Veteran had knowledge of the erroneous award and failed to promptly notify VA of his September 2004 divorce, he contributed to VA's payment of the erroneous award, and thus the creation of the overpayment was not a result of sole VA administrative error. 38 U.S.C.A. § 5112(b)(9), (10); 38 C.F.R. § 3.500 (b)(2); Jordan, supra. Next, the evidence shows that the amount of debt of $5,462.00 is proper. Under 38 U.S.C.A. § 1135, any Veteran entitled to compensation at the rates provided in section 1134 (rates of peacetime disability compensation), and whose disability is rated not less than 30 percent, shall be entitled to additional monthly compensation for dependents as provided in section 1115. Under 38 U.S.C.A. § 5112, the effective date of a reduction or discontinuance of disability compensation, when by reason of divorce from a dependent of the payee, shall be the last day of the month in which such divorce occurs. The electronic file contains an April 2010 audit which shows the Veteran was overpaid. During the period from October 1, 2004 to February 28, 2010, the Veteran was entitled to a total amount of $58,652.00 because L.P. was no longer his spouse. However, during this period, the Veteran was paid $64,078.00, which included compensation for L.P., his spouse. Thus, the Veteran was overpaid in the amount equaling $5,426.00. For these reasons, and because the creation of the debt was not the result of sole administrative error, the creation of the overpayment debt of $5,426.00 was valid. The Board acknowledges the Veteran's contention that because he married F.J.P. in November 2004, he was entitled to additional compensation for her starting in December 2004, and that any overpayment that was created by removal of L.P. as a dependent spouse should be offset by his marriage to F.J.P. However, the issue adjudicated by this decision only pertains to whether the overpayment of $5,426.00 was validly created based on the status of L.P. as a dependent. ORDER The overpayment of VA disability compensation in the amount of $5,426.00, based on removal of former spouse L.P. as a dependent, is valid. REMAND The Veteran's timely request that recovery of the debt be waived was denied by the Committee. In its Decision on Waiver of Indebtedness, the Committee stated that the Veteran failed to complete and return a Financial Status report that was requested in May 2010. Thus, due to the absence of financial information the Committee was unable to determine whether or not unjust enrichment occurred or if collection of the overpayment would cause undue financial hardship, or defeat the purpose of the VA compensation benefit received. The Committee decided that denial of waiver of overpayment would not be against equity and good conscience. Notably, a review of the file does not reveal that a VA Form 5655, Financial Status Report was provided to the Veteran for his completion. In order to properly adjudicate the Veteran's eligibility for a waiver of the recovery of the debt, a financial status report should be obtained. Accordingly, the case is REMANDED for the following action: 1. The AOJ should request that the Veteran complete and return a VA Form 5655, Financial Status Report. 2. Then, readjudicate the appeal. If any benefit sought is not granted in full, furnish the Veteran and his representative a Supplemental Statement of the Case to the Veteran, and after allowing an appropriate period of time for response, return the case to the Board. The appellant and his representative have 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. The law requires that 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). ______________________________________________ G. A. WASIK Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs