Citation Nr: 1753890 Decision Date: 11/24/17 Archive Date: 12/01/17 DOCKET NO. 09-28 306 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in St. Paul, Minnesota THE ISSUES 1. Whether an overpayment of VA spousal dependency and indemnity compensation (DIC) benefits in the amount of $22,275.00 is proper. 2. Entitlement to a waiver of overpayment of spousal DIC benefits in the amount of $22,275.00. REPRESENTATION Appellant represented by: North Carolina Division of Veterans Affairs ATTORNEY FOR THE BOARD K. Anderson, Counsel INTRODUCTION The Veteran served on active duty from October 1982 until September 1984. He died in November 1984. The Appellant was his widow. This matter comes to the Board of Veterans' Appeals (Board) on appeal from a June 2008 decision of the Committee on Waivers and Compromises (Committee) of the Regional Office (RO) that denied Appellant's claim for waiver of recovery of an overpayment of DIC benefits in the amount $22, 275.00. This claim was previously before the Board in July 2010, at which time the claim was remanded to allow the Agency of Original Jurisdiction (AOJ) to further assist the Appellant in the development of her claim, to include providing an opportunity to submit additional financial information. The requested development has been completed by the RO and with no further action necessary to comply with the Board's remand directives; the case is once again before the Board for appellate consideration of the issue on appeal. Stegall v. West, 11 Vet. App. 268 (1998). FINDINGS OF FACT 1. The Appellant was notified in July 1994 that DIC would be discontinued upon remarriage. 2. On January 2008, the Appellant notified the VA that she remarried in June 2006. 3. The overpayment was validly created because the Appellant was paid compensation to which she was not legally entitled. 4. The overpayment was properly created and was not the result of VA error. 5. The Appellant was at fault in the creation of the debt by not informing the VA of her remarriage in a timely fashion and by accepting DIC benefits to which she was not entitled. 6. Repayment of the debt would cause the Appellant undue financial hardship. CONCLUSIONS OF LAW 1. The overpayment of VA disability compensation benefits in the amount of $22,275.00 was not the result of an erroneous award based solely on VA administrative error; such overpayment was properly created, and the related debt assessed against the Appellant is valid. 38 U.S.C. §§ 5112 (2012); 38 C.F.R. §§ 3.500 (b) (2017). 2. The recovery of the overpayment of VA death pension benefits in the amount of $22,275.00 would be against equity and good conscience due to undue financial hardship and, therefore, is waived. 38 U.S.C. §§ 5107, 5302(a) (2012); 38 C.F.R. §§ 1.962, 1.963, 1.965, 3.501 (2017). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS The Appellant was married to the Veteran from December 24, 1982 until his death in November 1984. Several of the notifications she received regarding her DIC benefits stated that her benefits would be terminated if she remarried. Moreover, the Appellant was notified in several instances that she needed to inform VA if she were to remarry. For instance, in July 1994, the VA sent her a letter regarding her DIC compensation, wherein the Appellant was reminded that her entitlement would end with remarriage. In August 2002, the Appellant was sent a Marriage Status questionnaire that requested her to verify whether or not she had been remarried since the death of the Veteran. The Appellant replied in the negative, signed and submitted the form. In March 2008, the Appellant was notified in a letter from the RO that based upon notification from the Appellant that she had remarried in June 2006; her DIC benefits would stop effective June 1, 2006, the month that she was remarried. This letter also informed the Appellant that an overpayment was created on her account for the time she received benefits during her remarriage; the period between June 2006 and March 2008. The question before the Board is whether the Appellant's remarriage should be grounds for termination of her DIC benefits, and thus, whether a valid overpayment was created. Dependency and Indemnity Compensation (DIC) is a monthly payment made by VA to a surviving spouse, child, or parent due to a service-connected cause of death. See 38 U.S.C. §§ 101 (14), 1310, 1311; 38 C.F.R. § 3.5. Generally, a surviving spouse means a person who was legally married to a veteran at the time of his or her death, and has not since remarried. See 38 U.S.C. § 101 (3); 38 C.F.R. § 3.50 (b). An amendment to Title 38 of the United States Code, effective January 1, 2004, added an additional exception to the remarriage bar for surviving spouse benefits stating that the remarriage of the surviving spouse of a veteran after age 57 shall not bar the furnishing of specified benefits, such as DIC, to such person as the surviving spouse of a veteran. Pub. L. No 108-183, 117 Stat. 2651, 2652-53 (2003) (codified at 38 U.S.C.A. § 103 (d)(2)(B)). VA's regulations have been amended to reflect this statutory change stating that the remarriage of a surviving spouse after the age of 57 shall not bar the furnishing of benefits relating to DIC compensation under 38 U.S.C. § 1311. 71 Fed. Reg. 29082 (May 19, 2006) (codified at 38 C.F.R. § 3.55 (a)(10)). In addition, VA's regulations have been amended to reflect the statutory change. Specifically, 38 C.F.R. § 3.55 (a)(10)(ii) states that a surviving spouse who remarried after the age of 57, but before December 16, 2003, may be eligible for DIC compensation under 38 U.S.C.A. § 1311 only if the application for such benefits was received by VA before December 16, 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. 38 U.S.C. § 5302; 38 C.F.R. § 1.962. An overpayment may arise from virtually any benefits program administered pursuant to VA law, including pension, compensation, dependency and indemnity compensation, educational assistance benefits and subsistence allowance, insurance benefits, burial and plot allowances, clothing allowance, and automobile or other conveyance and adaptive equipment allowances. 38 C.F.R. § 1.956 (a). The issue of the validity of a debt is a threshold determination that must be made prior to a decision on a request for waiver of the indebtedness. See Schaper v. Derwinski, 1 Vet. App. 430 (1991); 38 U.S.C.A. § 5302, 38 C.F.R. § 1.911 (c), VAOPGCPREC 6-98 (Apr. 24, 1998). In order for the Board to determine whether the overpayment was created properly, it must be established that the Appellant was not entitled legally to the benefits in question, and if there was no legal entitlement, it must then be shown that VA was not solely responsible for the Veteran being paid benefits erroneously. If the debt was the result solely of administrative error, the effective date of the reduction of benefits would be the date of the last payment based on this error, and consequently there would be no overpayment charged to the veteran for the portion of the overpayment attributable to administrative error. 38 U.S.C. § 5112 (b)(10); 38 C.F.R. § § 3.500 (b)(2), 21.7635(q)(2); see Erickson v. West, 13 Vet. App. 495, 499 (2000). Administrative errors include all administrative decisions of entitlement, whether based upon mistake of fact, misunderstanding of controlling regulations or instructions, or misapplication of law. VAOPGCPREC 2-90 (Mar. 20, 1990). Sole administrative error, however, may be found to occur only in cases where the veteran neither had knowledge of, nor should have been aware of, the erroneous award. Further, such error contemplates that neither the appellant's actions nor his/her failure to act contributed to payment pursuant to an erroneous award. 38 U.S.C. § 5112 (b)(10); 38 C.F.R. § 3.500 (b)(2); see Jordan v. Brown, 10 Vet. App. 171 (1997) (finding that sole administrative error is not present if the payee knew, or should have known, that the payments were erroneous). After a careful review of the evidence, the Board finds that Appellant was informed prior to her remarriage in June 2006 that any remarriage would end her entitlement to benefits, and that she was under an obligation to inform the VA of a remarriage in order to avoid overpayment. Further, the Board finds that the Appellant was under the age of 57 when she remarried and therefore cannot take advantage of the exception, noted above. Further, at no time does the Appellant argue that the debt was not validly created. Thus, since the debt was validly created and there is no evidence of VA error or fault in the creation of such debt the Board finds that the Appellant has created a valid overpayment in the amount of $22,275.00. Recovery of an overpayment of VA benefits may be waived if recovery of the indebtedness would be against equity and good conscience. 38 U.S.C. § 5302; 38 C.F.R. § 1.963 (a). The phrase "equity and good conscience" means arriving at a fair decision between the obligor and the Government. In making this determination, consideration will be given to various elements, which are not intended to be all-inclusive. The elements are the fault of the debtor where such actions contribute to creation of the debt, balancing of faults where VA fault is also involved, whether collection of the debt would cause the debtor undue financial hardship by depriving her of basic necessities, whether collection would defeat the purpose of the VA benefit, whether failure to make restitution would result in unjust enrichment, and whether reliance on VA benefits resulted in relinquishment of a valuable right (i.e., changing position to one's detriment). 38 C.F.R. § 1.965 (a). Where fraud, misrepresentation, or bad faith on the part of the Appellant is shown, denial of waiver of recovery of an overpayment may be made without regard to factors considered in applying the equity and good conscience standard. 38 U.S.C.A. § 5302. Bad faith generally describes 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 a VA benefit/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)(2). In order to establish misrepresentation, the VA must show that there was a willful misrepresentation of a material fact or the willful failure to disclose a material fact with the intent of obtaining or retaining, or assisting an individual to obtain eligibility for VA benefits. In order to determine whether misrepresentation exists, VA must prove a willful intent on the part of the debtor. The burden of proof lies solely with VA. 38 C.F.R. §§ 1.962 (b), 1.965(b) (1). In this instance, the Board finds that waiving the debt would be against equity and good conscience. Even though the Board finds that the VA had no fault in the creation of the debt, it finds that the collection of this debt would cause undue financial hardship on the Appellant. The Appellant submitted a financial disclosure form in 2008, regarding the pre-tax income and expenses for both she and her husband and they have minimal discretionary income after paying their monthly bills. In January 2010, the Appellant submitted additional statements stating that her spouse's income has since been reduced because of the lack of overtime work available at his employer and this made up a considerable part of his income. In August 2017, the Appellant reported to VA that her husband had filed for bankruptcy and their financial situation was worse. Due to these factors, the Board has determined that a waiver of the overpayment is warranted in this instance as it would cause undue financial hardship on the Appellant. Accordingly, the Board finds that the Appellant is entitled to waiver of recovery of the overpayment due to evidence of undue financial hardship. ORDER The overpayment in the amount of $22,275.00 is valid; the request for waiver of overpayment in the amount of $22,275.00 is granted. ____________________________________________ DONNIE R. HACHEY Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs