Citation Nr: 1753791 Decision Date: 11/24/17 Archive Date: 12/01/17 DOCKET NO. 15-10 138A ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in St. Petersburg, Florida THE ISSUES 1. Whether the removal of the Veteran's daughter (A.) from his VA compensation award due to her concurrent receipt of Chapter 35 Dependents' Educational Assistance (DEA) benefits was proper. 2. The propriety of the overpayment of VA compensation benefits in the calculated amount of $10,128 created as a result of the removal action. REPRESENTATION Appellant represented by: Disabled American Veterans ATTORNEY FOR THE BOARD M. Postek, Counsel INTRODUCTION The Veteran served on active duty from February 1978 to October 1990. This case comes before the Board of Veterans' Appeals (Board) on appeal from a May 2013 decision of the Department of Veterans Affairs (VA) Regional Office (RO) in St. Petersburg, Florida. The Veteran requested a hearing before the Board in October 2014 and March 2015 written submissions, which were determined by the RO to be premature substantive appeals as to these issues; however, he later indicated that he did not want a Board hearing in his April 2015 substantive appeal. Thus, his hearing request is considered withdrawn. The Board also notes that the RO has acknowledged that the Veteran submitted a timely notice of disagreement (NOD) challenging the denial of multiple claims in an April 2015 rating decision. See July 2017 report of general information and letter. However, the Veterans Appeals Control and Locator System (VACOLS) shows that the RO has acknowledged receipt of that NOD, and it appears that the RO is awaiting a response from the Veteran to continue processing that appeal. See October 2017 letter. Therefore, a remand for the issuance of a statement of the case (SOC) is not required at this time. See Manlincon v. West, 12 Vet. App. 238 (1999) (finding that if an NOD remains unprocessed, a remand is required for issuance of an SOC). This appeal was processed using the Veterans Benefits Management System (VBMS). This appeal has been advanced on the Board's docket pursuant to 38 C.F.R. § 20.900(c) (2017). 38 U.S.C. § 7107(a)(2) (2012). FINDINGS OF FACT 1. The Veteran was originally awarded VA compensation at the 40 percent rate effective from October 16, 1990, and he was paid an additional allowance for his dependent daughter, who was born in September 1989, effective from November 1, 1990. 2. In a June 1997 rating decision, the RO originally granted a total disability rating based on individual unemployability due to service-connected disabilities (TDIU) effective from February 18, 1997, and determined that basic eligibility for Chapter 35 DEA benefits was established effective from that same date because the Veteran had a total service-connected disability that was permanent in nature. 3. The Veteran was subsequently notified by VA that a dependency allowance and Chapter 35 DEA benefits could not be paid concurrently, both prior to and after this daughter's Chapter 35 DEA benefits election. 4. Effective from October 1, 2007, the dependency allowance for the Veteran's daughter was reinstated and continued after her eighteenth birthday based on a request from the Veteran and evidence of her school attendance. 5. In a February 2013 letter, the RO notified the Veteran that it had received information that his daughter had elected to receive Chapter 35 DEA benefits, effective from August 25, 2008. The RO proposed to retroactively remove his daughter from his VA compensation award effective from that date, resulting in an overpayment. The Veteran was offered the opportunity to submit evidence to show why the proposed reduction should not take place. 6. In a May 2013 letter, the RO notified the Veteran that it had taken final action to reduce his benefits based on the retroactive removal of his daughter from his VA compensation award, ultimately deciding that the determination was effective from December 1, 2008, due to her election of Chapter 35 DEA benefits. 7. For the period from December 1, 2008, to May 30, 2012, the Veteran was paid $10,128 in additional VA disability compensation benefits for his daughter based on school attendance. During this same period, the Veteran's daughter was also paid Chapter 35 DEA benefits. VA's retroactive termination of the dependency allowance paid for the Veteran's daughter during this period resulted in the $10,128 overpayment. 8. The $10,128 overpayment was not the result of sole administrative error. CONCLUSION OF LAW The removal of the Veteran's daughter from his VA compensation award due to her concurrent receipt of Chapter 35 DEA benefits was proper, and the resulting overpayment of VA compensation benefits in the calculated amount of $10,128 was properly created and is a valid indebtedness. 38 U.S.C. §§ 3562, 5112 (2012); 38 C.F.R. §§ 3.500, 3.667(f), 3.707, 21.3023 (2017). REASONS AND BASES FOR FINDINGS AND CONCLUSION VA's notification and assistance duties are not applicable in this case, given the nature of the issues on appeal. See, e.g., Reyes v. Nicholson, 21 Vet. App. 370 (2007) (holding that provisions of 38 U.S.C. § 5103(a) do not apply to claims for relief under Chapter 53 of Title 38 of the United States Code, pertaining to waiver of recovery of overpayments, which includes validity of the debt); see also Schaper v. Derwinski, 1 Vet. App. 430 (1991) (challenging validity of debt). Law and Analysis In general, any veteran whose disability is rated not less than 30 percent shall be entitled to additional compensation for his or her eligible dependents, including a child under the age of 18 years. 38 U.S.C. § 1115 (2012); 38 C.F.R. § 3.4(b)(2) (2017). That additional compensation may be extended beyond the child's eighteenth birthday based upon school attendance if the child was at that time pursuing a course of instruction at an approved educational institution and a claim for such benefits is filed within one year from the child's eighteenth birthday. 38 C.F.R. § 3.667(a)(1). In general, Chapter 35 educational assistance is payable to a child of a veteran who has a total disability permanent in nature resulting from a service-connected disability. 38 C.F.R. § 21.3021. However, payment of both a dependency allowance as part of a veteran's disability compensation benefits and educational assistance under Chapter 35 constitutes a duplication of benefits that is strictly prohibited after the child has elected to receive the latter benefit. 38 U.S.C.A. § 3562; 38 C.F.R. §§ 3.667(f), 3.707, 21.3023. A child who is eligible for educational assistance and who is also eligible for a dependency allowance as part of a veteran's disability compensation based on school attendance must elect whether he or she will receive educational assistance or compensation. An election of educational assistance is a bar to subsequent payment of compensation on account of the child based on school attendance on or after the age of 18 years. 38 C.F.R. § 21.3023. In considering the evidence of record under the laws and regulations as set forth above, the Board concludes that the removal of the Veteran's daughter from his VA compensation award due to her concurrent receipt of Chapter 35 DEA benefits was proper, and the overpayment of VA compensation benefits in the calculated amount of $10,128 was properly created and is a valid debt. Regarding the nature of the creation of the overpayment, the RO took action to remove the Veteran's daughter from his VA compensation award effective from December 1, 2008, due to her election of Chapter 35 DEA benefits. The RO notified the Veteran that the retroactive removal had resulted in an overpayment subject to repayment. See May 2013 decision; see also March 2015 audit printout sent with statement of the case. In a letter that same month, VA's Debt Management Center notified the Veteran that the amount of his debt was $10,128. In a March 1991 rating decision, the RO had granted a portion of the Veteran's original compensation claim. He was originally awarded compensation at the 40 percent rate effective from October 16, 1990, which entitled him to an additional allowance for each of his eligible dependents. In a May 1991 letter, the RO notified the Veteran that his compensation included an additional amount for his daughter as a dependent effective from November 1, 1990. The birth certificate of record shows that she was born in September 1989. In a June 1997 rating decision, the RO originally granted TDIU effective from February 18, 1997, and determined that basic eligibility for Chapter 35 DEA benefits was established effective from that same date because the Veteran had a total service-connected disability that was permanent in nature. The record shows that the RO initially removed the Veteran's daughter from his VA compensation award when she turned 18 in September 2007. The Veteran later requested that her dependency allowance be reinstated and continued until she started receiving her approved Chapter 35 DEA benefits because she was still in high school. He also indicated that he had submitted a VA Form 21-674 (Request for Approval of School Attendance), but it was noted that there was no related request pending. See May 2008 report of contact. In June 2008, the Veteran submitted a VA Form 21-674 indicating that his daughter had been a full-time high school student since her eighteenth birthday. He also indicated that she was planning to attend college from August 25, 2008, to May 2012. In a letter that same month, the RO notified the Veteran that the dependency allowance for his daughter was reinstated and continued effective from October 1, 2007, based on the information provided in that VA Form 21-674. 38 C.F.R. § 3.667(a)(1) (providing that a dependency allowance may be extended beyond a child's eighteenth birthday based upon school attendance). The letter notified the Veteran that he was required to notify VA if there was any change in the status of his dependents and provided additional information related to his daughter's future college plans, as detailed below. In March 2009, the Veteran informed the RO that his daughter was receiving Chapter 35 benefits. It was noted that the Veteran's daughter was still on his award and needed to be removed. See March 2009 report of contact. The record shows that the dependency allowance for the Veteran's daughter was thereafter continued. In this regard, a July 2012 report of contact shows that the Veteran visited the RO and reported that his June 2012 monthly compensation payment was lower. It was noted that a review of record revealed that an adjustment was made on June 1, 2012, for school child adjustment - terminated at age 23. It was also noted that the Veteran's daughter was in receipt of Chapter 35 benefits and that the Veteran's VA compensation benefit payment should be reviewed and adjusted as appropriate. The record contains an October 2012 memorandum noting that there was a potential overpayment, as well as a final audit conducted in March 2015 showing that an overpayment in the amount of $10,128 was created for the period from December 1, 2008, to May 30, 2012, based on receipt of concurrent dependency allowance and Chapter 35 DEA benefit payments. In a February 2013 letter, the RO notified the Veteran that it had received information that his daughter had elected to receive Chapter 35 DEA benefits, effective from August 25, 2008. The RO explained that the law prohibited the payment of both a dependency allowance and Chapter 35 DEA benefits. Therefore, the RO proposed to retroactively remove the Veteran's daughter from his compensation award (i.e., retroactively terminate the dependency allowance payable for his daughter) effective from that date. The Veteran was advised that his payments would continue at the present rate for 60 days so that he could submit evidence to show why the proposed reduction should not take effect. He was further notified that he could minimize any potential overpayment by asking that his payments be reduced immediately while his case was being reviewed. The RO indicated that, if he waited more than 60 days to submit additional evidence, the proposed adjustment would go into effect and his benefits would continue at that rate while the evidence was considered. In a March 2013 written statement, the Veteran expressed disagreement with the proposed determination, and he indicated that VA was at fault for the error because it processed the paperwork for payments. In a May 2013 letter, the RO notified the Veteran that it had taken final action to reduce his benefits based on the retroactive removal of his daughter from his VA compensation award, ultimately deciding that the determination was effective from December 1, 2008, due to her election of Chapter 35 DEA benefits effective August 25, 2008. Initially, the Board notes that it is undisputed that the Veteran's daughter sought and received Chapter 35 DEA benefits effective from August 25, 2008. As noted above, payment of both a dependency allowance as part of a Veteran's disability compensation benefits and educational assistance under Chapter 35 constitutes a duplication of benefits that is strictly prohibited by law. The record establishes that, once the Veteran's daughter elected to receive the Chapter 35 DEA benefits, the RO appropriately removed the Veteran's dependency allowance for her, effective from December 1, 2008 (a date later than the initially proposed date of August 25, 2008), resulting in the overpayment at issue here. It is clear from the law that the Veteran is not legally entitled to additional disability compensation for his daughter after that time, which appears to be when his daughter began receiving Chapter 35 DEA benefits. Indeed, the Veteran does not specifically dispute the termination of the dependency allowance for his daughter or the amount of the calculated overpayment. Rather, he has contended that he should not be charged with the overpayment because VA should not have paid him a dependency allowance for his daughter after she elected Chapter 35 DEA benefits. He has essentially contended that the creation of the overpayment was sole administrative error because he notified VA that she had applied for those benefits. See, e.g., March 2015 written submission; April 2015 substantive appeal. In support of his contention that there was sole administrative error, the Veteran first reported that his daughter was automatically dropped from his VA compensation award when she turned 18 and that he did not submit a VA Form 21-674 for his daughter. See October 2014 written submission. In the April 2015 substantive appeal, he later indicated that VA failed to remove his daughter from his award automatically on her eighteenth birthday. These contentions are inconsistent with each other, as well as the record as discussed above. The Veteran also indicated in the substantive appeal that he was not aware of any increase or decrease in his compensation, except for the yearly award letter he received. In any event, given the Veteran's contention that the debt was created through no fault of his own, the Board has carefully considered whether there was sole administrative error in this case. Under 38 U.S.C. § 5112(b)(10), the effective date of a reduction or discontinuance of compensation by reason of an erroneous award based solely on administrative error or error in judgment shall be the date of last payment. See also 38 C.F.R. § 3.500(b)(2). In other words, "when an overpayment has been made by reason of an erroneous award based solely on administrative error, the reduction of that award cannot be made retroactive to form an overpayment debt owed to VA from the recipient of the erroneous award." Erickson v. West, 13 Vet. App. 495, 499 (2000). The Board notes, however, that sole administrative error may be found to occur only in cases where a claimant neither had knowledge of nor should have been aware of the erroneous award. Further, such error contemplates that neither the claimant's actions nor his or her failure to act contributed to the erroneous award. 38 U.S.C.A. § 5112(b)(10); 38 C.F.R. § 3.500(b)(2). In this case, the record shows that the Veteran was notified by VA on multiple occasions that a dependency allowance and Chapter 35 DEA benefits could not be paid concurrently, both prior to and since the election by this daughter. See, e.g., December 1997 letter (RO explained that as he knew, the Veteran may not receive additional compensation for a dependent child over age 18 who is receiving Chapter 35 benefits; if his older daughter began receiving Chapter 35 benefits prior to November 1997 (when the first VA Form 21-674 was received), she would not be added back on his award as a dependent at all); April 2000 report of contact (Veteran notified RO that older daughter was back in school under Chapter 35); June 2008 letter (RO emphasized that Veteran could not simultaneously receive an additional allowance for a school child if that same school child was in receipt of Chapter 35 DEA benefits). He also acknowledged his understanding of this issue in his May 2008 telephone conversation with the RO where he requested that she be returned to his award until she started receiving her Chapter 35 DEA benefits. The record also shows that the RO notified the Veteran that, upon reinstating and continuing the dependency allowance based on his June 2008 request, he was required to notify VA if there was any change in the status of his dependents. Specifically, the June 2008 letter explained that the Veteran should notify VA immediately if his daughter began receiving Chapter 35 DEA benefits at any time; that he could not simultaneously receive an additional allowance for a school child if that same school child was in receipt of Chapter 35 DEA benefits; and that he should complete Part 1 of the enclosed VA Form 21-674b for his daughter who was beginning school attendance in the future. Based on the foregoing, the Board finds that the Veteran knew or should have known that he would not be entitled to the dependency allowance for his daughter for the same period she elected to receive Chapter 35 DEA benefits. Morris v. Derwinski, 1 Vet. App. 261 (1991) (citing Fed. Crop Ins. Corp. v. Merrill, 332 U.S. 380, 384-85 (1947) (holding that all persons dealing with the federal government are charged with knowledge of federal statutes and lawfully promulgated agency regulations)). In addition, although it is clear that VA erroneously paid the Veteran a dependency allowance during the same period it paid his daughter Chapter 35 DEA benefits, the record shows that he thereafter continued to accept the payments when he was under an obligation to correct the error. The Board has considered the Veteran's contention that he was not aware of any increase or decrease in his compensation, except for the yearly award letter he received. However, the record suggests that he did, in fact, monitor his VA payments. See, e.g., December 2010 written statement (Veteran inquiry for verification of re-issuance of payments from the 1990s); July 2012 report of contact (Veteran inquiry as to change in compensation for month of June). In any event, the Board concludes that, whether or not the Veteran actually knew, he should have known that he was receiving additional benefits to which he was not entitled. His failure to pay attention to the amount of money he was receiving from VA, particularly when he knew his daughter had begun to receive Chapter 35 benefits, contributed to the overpayment. Moreover, the Veteran's failure to complete and return the VA Form 21-674B requested by the RO further contributed to the length of the erroneous payments. The Board acknowledges that the Veteran informed the RO in a March 2009 telephone call with the RO that his daughter was receiving Chapter 35 DEA benefits. See March 2009 report of contact. Given this communication, it appears that VA was on notice that the Veteran's daughter may have been receiving Chapter 35 DEA benefits while he was continuing to receive the dependency allowance. Nevertheless, the record indicates that the Veteran continued to accept the dependency allowance payments after that time, even though he had knowledge of the restriction on concurrent payments. Thus, the Board concludes that the Veteran's failure to act contributed to the creation of the overpayment at issue to some extent. Under these circumstances, the Board must find that the overpayment at issue in this case was not due to sole administrative error. 38 U.S.C.A. § 5112(b)(10); 38 C.F.R. § 3.500(b)(2); see also Dent v. McDonald, 27 Vet. App. 362, 380 (2015) (noting that "[a]n error resulting in an overpayment will not be classified as a VA administrative error or error in judgment if the error is 'based on an act of commission or omission by the beneficiary, or with the beneficiary's knowledge.'"). In Dent, the United States Court of Appeals for Veterans Claims (Court) discussed an earlier validity of the debt case, Jordan v. Brown, 10 Vet. App. 171 (1997). The Court noted that, in the Jordan case, it was noted that, even though the beneficiary took the required affirmative step of notifying VA of her remarriage, she was still partially at fault for the creation of the debt because she was charged with knowing the rules governing the compensation she received, and she cashed the checks that were subsequently sent to her. The Court also noted that, although the appellant in the Dent case was not specifically instructed to return any pension checks should his income increase, that was the logical action to take to avoid an overpayment. 27 Vet. App. at 381-82; see also Jordan, 10 Vet. App. at 174 (indicating that, although it appeared that VA was on constructive notice that appellant may have remarried and that further investigation as to the appellant's marital status "may have averted the instant situation, nevertheless, such VA error does not excuse the continued acceptance" payments where the appellant was in receipt of the rules governing such compensation). Based on the foregoing, the Board concludes that the overpayment at issue in this case was properly created and is a valid debt. Narron v. West, 13 Vet. App. 223 (1999). As the weight of the evidence is against the claim, the benefit-of-the-doubt rule does not apply, and the appeal is denied. 38 U.S.C.A. § 5107; Gilbert v. Derwinski, 1 Vet. App. 49, 53 (1990). ORDER The removal of the Veteran's daughter from his VA compensation award due to her concurrent receipt of Chapter 35 DEA benefits was proper; the appeal is denied. The overpayment of VA compensation benefits in the calculated amount of $10,128 as a result of that action is a valid debt; the appeal is denied. ____________________________________________ J.W. ZISSIMOS Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs