Citation Nr: 1752031 Decision Date: 11/14/17 Archive Date: 11/22/17 DOCKET NO. 13-07 682 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Cleveland, Ohio THE ISSUE Entitlement to a waiver of recovery of overpayment of VA benefits in the amount of $17,431.70. REPRESENTATION Veteran represented by: Disabled American Veterans ATTORNEY FOR THE BOARD A. Borman, Associate Counsel INTRODUCTION The Veteran served on active duty from August 1990 to July 1991, January 2004 to March 2005, February 2008 to August 2008, and September 2009 to August 2010. The Veteran also participated in multiple periods of ACDUTRA. This matter comes before the Board of Veteran's Appeals (Board) on appeal of a May 2012 waiver decision by the Committee on Waivers and Compromises of the Department of Veterans Affairs (VA) Regional Office (RO) in Milwaukee Wisconsin, which denied the Veteran's request for waiver of recovery of an overpayment of VA compensation in the amount of $17,431 70. The case is currently under the jurisdiction of the RO in Cleveland, Ohio. The appeal was remanded in April 2015 and is now ready for adjudication. This appeal is comprised entirely of documents contained in the Virtual VA paperless claims processing system as well as the Veterans Benefits Management System (VBMS). Accordingly, any future documents should be incorporated in the Veteran's VBMS file. FINDING OF FACT The overpayment of VA disability benefits was an unjust enrichment to the Veteran (money he was never entitled) and the Veteran was at fault in the creation of the overpayment; however, collection of the indebtedness would be inequitable because it would cause undue hardship. CONCLUSION OF LAW Recovery of the overpayment of VA benefits of $17,431.70 is against equity and good conscience. 38 U.S.C.A. §§ 5107, 5302(a) (West 2014); 38 C.F.R. §§ 1.963(a), 1.965(a) (2016). REASONS AND BASES FOR FINDING AND CONCLUSION Veterans Claims Assistance Act Pursuant to the Veterans Claims Assistance Act of 2000 (VCAA), VA has duties to notify and assist claimants in substantiating a claim 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) (2016). See also Pelegrini v. Principi, 18 Vet. App. 112 (2004); Quartuccio v. Principi, 16 Vet. App. 183 (2002); Mayfield v. Nicholson, 444 F.3d 1328 (Fed. Cir. 2006); Dingess/Hartman v. Nicholson, 19 Vet. App. 473 (2006). However, the Court has held that the notice and duty-to-assist provisions of the VCAA do not apply to claims for waiver of recovery of overpayment. See Barger v. Principi, 16 Vet. App. 132 (2002); see also Lueras v. Principi, 18 Vet. App. 435 (2004). Nevertheless, the legal provisions pertaining to the collection of debts owed by reason of participation in a VA benefits program are contained in 38 C.F.R. § 1.911. Under section 1.911, when VA has determined that a debt exists by reason of an administrative decision or by operation of law, VA shall promptly demand, in writing, payment of the debt. VA shall notify the debtor of his or her rights and remedies and the consequences of failure to cooperate with collection efforts. In this case, this notification was performed in a December 2011 letter. The Board notes that this case was remanded in April 2015. The Board requested additional service department records, an updated financial status report, and an audit of how the overpayment was calculated. All three requests have been completed. Overpayment In 2009, the Veteran was receiving VA disability benefits for his service-connected posttraumatic stress disorder and tinnitus for a combined 60 percent rating. After VA received information that the Veteran received pay for 78 training days in fiscal year 2009, VA contacted the Veteran to inform him that it planned to recoup overpaid wages. At that time, the Veteran informed VA that he had served on active duty from September 4, 2009, to August 24, 2010. He requested that VA combine his repayment debts, which came out to $17,431.70. The reason for the overpayment is that a person is prohibited from receiving both drill pay and disability benefits simultaneously. The Veteran submitted a waiver request that was denied in May 2012. The Veteran appealed the denial of the waiver that same month. Validity of Overpayment The Board must first consider whether a valid debt has been created before considering whether the Veteran may be entitled to waiver of the indebtedness. See Schaper v. Derwinski, 1 Vet. App. 430 (1991). In general, an overpayment is created when VA determines that a beneficiary or payee has received monetary benefits to which he or she is not entitled, and may arise from virtually any benefits program administered pursuant to VA law, including pension, compensation, dependency and indemnity compensation, or any other form of benefits. See 38 U.S.C.A. § 5302; 38 C.F.R. §§ 1.956(a), 1.962 (2016). 38 U.S.C.A. § 5304(c) prohibits the receipt of VA disability compensation benefits for any period for which the person receives active service pay. See 38 C.F.R. § 3.654, 3.700. This includes active duty pay, drill, and active duty for training payments, and inactive duty for training payments made to Reservists and members of the National Guard. Reservists may waive their pension, compensation, or retirement pay for periods of field training, instruction, other duty, or drills. A waiver may include prospective periods and contain a right of recoupment for the days for which the reservist did not receive payment for duty by reason of failure to report for duty. 38 C.F.R. § 3.700(a)(1)(iii). The Veteran's overpayment has resulted from being simultaneously paid active duty and disability benefits simultaneously for 78 drill days in Fiscal Year 2009 and during the Veteran's active duty from September 4, 2009, to August 24, 2010. Audits performed on the disability benefits the Veteran received during the period in contention reveals that, because of his simultaneous duty and disability pay, he received VA benefits in excess of that he was entitled to in the amount of $17,431.70. VA's calculation first took into account the time period from September 4, 2009, to August 24, 2010. Afterwards, VA counted back 78 days prior to September 4, 2009. As a result, VA calculated the overpayment time period as starting on June 16, 2009. The monetary amount was calculated utilizing the number of overpaid days/months multiplied by the Veteran's 60 percent disability rate with a spouse and 3 children ($1219 per month). The Veteran has not disputed the amount of the overpayment and after a careful recalculation, the Board agrees that an overpayment in the amount of $17,431.70 has been validly created. Waiver of Overpayment Having found that the debt has been validly created, the Board must next consider whether repayment of the incurred debt should be waived. Recovery of overpayments of any benefits made under the laws administered by VA shall be waived if there is no indication of fraud, misrepresentation, or bad faith on the part of the person or persons having an interest in obtaining the waiver and if the recovery of the indebtedness from the payee who received the benefits would be against equity and good conscience. 38 U.S.C. § 5302 (2012); 38 C.F.R. §§ 1.962, 1.963(a), 1.965 (2017). The standard 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 VA's right of debt recovery. The elements for consideration are: (1) fault of debtor, where actions of the debtor contribute to creation of the debt; (2) balancing of faults, weighing fault of debtor against VA fault; (3) undue hardship, whether collection would deprive 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(a) (2017). When there is an approximate balance of positive and negative evidence regarding the merits of an issue material to the determination of the matter, reasonable doubt will be resolved in favor of the claimant in each such issue. 38 U.S.C. § 5107(b) (2012). In this case, the Board finds that the Veteran is at significant fault for creation of the debt. The Veteran does not dispute having received simultaneous military pay and concurrent VA disability compensation benefits for 78 drill days as well as during the time he was on active duty. In an April 2012 statement, the Veteran states that the overpayment situation initially occurred when he was on active duty orders for school. He notes that his daughter's mother passed away unexpectedly shortly before his orders began, which necessitated his daughter living with him during his active duty time. As it was temporary, it was necessary to make mortgage payments on his permanent address while paying living and housing costs at his residence during active duty. Although these circumstances are tragic, the Veteran would have had to continue making mortgage payments regardless of the passing of his daughter's mother. The Board finds that the Veteran's explanation fails to excuse the fact that he is at fault for the debt. In contrast, there is no indication of fault by VA. The Board has strongly considered whether recouping these benefits would defeat the purpose for which the benefits were intended and whether this would cause undue hardship. On one hand, the Board weighed the fact that the Veteran made an extremely poor decision not to withhold either his military pay or his disability compensation pay. There is no excuse for being paid double while his fellow soldiers, some of which may have had monetary problems, were only receiving a single paycheck. Considering the Veteran's current financial status, the Board gives special consideration to the fact that the Veteran's monthly net household income less expenses is only $186. With such a low positive cash flow, it would be a hardship for the Veteran to pay off this debt even after consideration of a payment plan. The Veteran has also indicated that he has previously declared bankruptcy. The Board concludes that repayment of the $17,431.70 would likely be unattainable. In making this determination, the Board acknowledges the Veteran's past wrongdoing, but finds that waiver of the debt is necessary to prevent undue hardship. VA does not seek to deprive the Veteran and his family of basic necessities, especially as he has 3 dependent children and an additional child on the way who will have been born by the time this decision is issued. The Board also recognizes that at the time of the overpayment, the Veteran relied on the money to help support his daughter when his daughter's mother passed away. The Board finds that the waiver of the debt would not create an unjust enrichment for the Veteran. Instead, waiver of the debt will enable the Veteran to support his family while preventing a second bankruptcy. Resolving reasonable doubt in favor of the Veteran, the Board grants the request for a waiver. ORDER Waiver of the debt of VA disability benefits in the amount of $17,431.70 is granted. ____________________________________________ B.T. KNOPE Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs