Citation Nr: 1745514 Decision Date: 10/12/17 Archive Date: 10/19/17 DOCKET NO. 10-04 999 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Milwaukee, Wisconsin THE ISSUE Entitlement to a waiver of an overpayment of non-service-connected pension benefits in the currently calculated amount of $10,562.41. WITNESS AT HEARING ON APPEAL The Veteran ATTORNEY FOR THE BOARD Scott Shoreman, Counsel INTRODUCTION The Veteran appellant served on active duty from July 1990 to July 1993. This case comes before the Board of Veterans' Appeals (Board) on appeal from an August 2013 determination issued by the Committee on Waivers and Compromises (COWC) at a Regional Office (RO) of the Department of Veterans Affairs (VA). In August 2014, a Board videoconference hearing was held before a Veterans Law Judge who is retired from the Board. The Veteran did not respond to a July 2017 written inquiry regarding whether he wished to appear at another hearing before the Board. Therefore, the Board will proceed with the appeal. This claim was previously before the Board in December 2014, at which time the Board remanded it for additional development and consideration, including a determination of the validity of the debt and an accounting of the debt. The RO found that the debt was valid. The amount of the debt was decreased in October 2015 from $22,926.59 to $10,562.41. The Veteran has not contested these determinations. The requested development has been completed, and the claim is properly before the Board for appellate consideration. FINDINGS OF FACT 1. The amount of overpaid pension benefits is $10,562.41. 2. There is no evidence of fraud, misrepresentation, and/or bad faith on the Veteran's part in the creation of the debt. 3. VA was not at fault in the creation of the overpayment of pension benefits. 4. The failure of the Government to insist upon its right to repayment would result in unjust enrichment of the Veteran based on his failure to accurately report income. 5. Collection of that indebtedness would not defeat the purpose of the benefit program, or otherwise be inequitable or against good conscience. CONCLUSION OF LAW Waiver of the Veteran's debt of $10,562.41 is not warranted. 38 U.S.C.A. § 5302 (West 2014); 38 C.F.R. §§ 1.962, 1.963, 1.965 (2016). REASONS AND BASES FOR FINDINGS AND CONCLUSION The Board has limited the discussion below to the relevant evidence required to support its finding of fact and conclusion of law, as well as to the specific contentions regarding the case as raised directly by the Veteran and those reasonably raised by the record. See Scott v. McDonald, 789 F.3d 1375, 1381 (Fed. Cir. 2015); Robinson v. Peake, 21 Vet. App. 545, 552 (2008). In February 2006, the appellant was granted nonservice-connected pension benefits and those benefits were payable from June 1, 2005. An overpayment of $22,926.59 was created following receipt of information that revealed the appellant had earned income from three employers in 2008 and 2009. In October 2015, the amount of the debt was reduced to $10,562.41 based on additional income information. The Veteran has acknowledged having earned the income from 2008 and 2008. The validity of the debt and the amount are not at issue in this decision. Legal Criteria Once it is determined that the indebtedness was validly created, but before moving on to the matter of waiver of the charged indebtedness, if there is a finding of fraud, misrepresentation, or bad faith by the debtor in the creation of the overpayment, then waiver of the overpayment is automatically precluded, and further analysis is not warranted. See 38 C.F.R. §§ 1.962, 1.963, 1.965(b). See also 38 U.S.C.A. § 5302. VA regulations define "bad faith" as 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/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). After it has been determined that the debt is valid and that fraud, misrepresentation and/or bad faith had no part in its creation, VA must then consider whether collection of the debt would be against equity and good conscience. The phrase "equity and good conscience" means arriving at a fair decision between the obligor and the government. See 38 C.F.R. § 1.965. 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 debtors contribute to the creation of the debt; (2) Balancing of faults - weighing fault of the debtor vs. the fault of the 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; (6) Changing position to one's detriment - reliance on VA benefits results in relinquishment of a valuable right or incurrence of a legal obligation. 38 C.F.R. § 1.965. Analysis The overpayment was created due to income that the Veteran had not reported to VA for 2008 and 2009. In a February 2014 statement, the Veteran acknowledged the income from three employers in 2008 and 2009. While the Veteran did not properly report this income, it does not appear that he attempted to commit fraud, misrepresentation or bad faith in the creation of the overpayment. Therefore, the Board finds that there is no statutory bar to waiver of the recovery of overpayment. As noted above, the phrase "equity and good conscience" means arriving at a fair decision between the obligor and the government, while considering the fault of the debtor, weighing the fault of the debtor against the fault of the VA, undue hardship, defeating the purpose for which benefits were intended, unjust enrichment or gain to the debtor, and changing position to one's detriment. See 38 C.F.R. § 1.965. While it does not appear that the Veteran intended to commit fraud by not notifying VA of his 2008 and 2009 income, he did not provide notification of the income until after he was informed by VA that it had been discovered. The Veteran has provided no explanation of why he did not notify VA of this income. Therefore, the Board finds that VA was not at fault in the creation of overpayment. The Veteran wrote in May 2013 that repaying the debt of $22,926.59 would be a hardship. In a July 2013 financial status report, the Veteran listed his income as $1,488 from a VA pension. His monthly expenses totaled $1,487. He had no assets, and around $10,434 of debt. The monthly installment payments on his listed debt were included by the Veteran in his expenses. In April 2014 the Veteran wrote that he had $826.00 of income a month from Social Security. He had earned $300 from work between January 1, 2010 and February 2, 2010, and he listed no assets. At the August 2014 Board hearing, the Veteran testified that repaying the debt would be a hardship. In July 2015, the RO implemented the Board's December 2014 grant of service connection for posttraumatic stress disorder (PTSD) with a 100 percent evaluation, effective December 8, 1994. The Veteran was notified in September 2015 that his monthly payments from VA would be retroactively adjusted beginning in February 2008 from the prior monthly rate for a nonservice-connected pension to the higher rate for the service-connected compensation award. This resulted in back payments of at least $2,309.00 a month from February 2008 through August 2015. The Veteran did not respond to a September 2015 request to complete a financial status report. The Board finds it is not shown that the recovery of the overpayment of $10,562.41 from the Veteran would result in financial hardship or the deprivation of basic necessities. With respect to defeating the purpose of VA benefits, the purpose of VA pension compensation is to provide financial support to disabled veterans and their dependents. Since the Veteran erroneously received $10,562.41 due to his failure to accurately inform VA of his monthly income, recovery of those benefits, to which the Veteran was not entitled by law, does not defeat the purpose of the benefits. With respect to unjust enrichment, the Board notes that it is not equitable for the Veteran to retain benefits that have been erroneously provided. To waive recovery and allow the Veteran to retain the benefits would result in an unfair gain to the Veteran. The Board also finds there is no indication that the Veteran relied on VA compensation benefits with consequent relinquishment of a valuable right or incurrence of a legal obligation. In sum, the Board finds that it would not be against the principles of equity and good conscience to require the Veteran to repay the overpayment of pension benefits in the calculated amount of $10,562.41. In balancing the equities, the Board finds that VA was not at fault in creating the overpayment. Instead, the Veteran bears the onus of fault, and recovery of the overpayment would not defeat the purpose of benefits or result in undue hardship to the Veteran. In addition, he would be unjustly enriched if waiver were to be granted. The end result is not unduly favorable or adverse to either the Veteran or the government, and the evidence is not so evenly balanced as to create doubt as to any material issue. Thus, waiver of recovery of the overpayment in the amount of $10,562.41 is not warranted. The Board notes that a November 2015 supplemental statement of the case reflects that, in any case, the debt has already been fully recouped. ORDER Waiver of overpayment of debt in the amount of $10,562.41 is denied. ____________________________________________ RYAN T. KESSEL Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs