Citation Nr: 1756484 Decision Date: 12/07/17 Archive Date: 12/15/17 DOCKET NO. 14-04 992 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Indianapolis, Indiana THE ISSUE Entitlement to waiver of overpayment of VA dependency and indemnity compensation (DIC) benefits in the amount of $105,559.00, with a current balance of $91,870.20. REPRESENTATION Appellant represented by: The American Legion WITNESS AT HEARING ON APPEAL Appellant ATTORNEY FOR THE BOARD J. Ragheb, Counsel INTRODUCTION The Veteran served on active duty from July 1970 to December 1972, and died in March 2001. The appellant is the Veteran's surviving spouse. This appeal comes before the Board of Veterans' Appeals (Board) from an August 2013 administrative decision issued by a Department of the Veteran Affairs (VA) Regional Office (RO). In June 2016, the appellant provided testimony at a videoconference Board hearing before undersigned Veterans Law Judge (VLJ); a transcript of the hearing is of record. FINDINGS OF FACT 1. The creation of an overpayment of VA DIC benefits in the amount of $105,559.00 did not involve fraud, misrepresentation, or bad faith on the part of the appellant. 2. There is significant fault on the part of the appellant in the creation of the overpayment, and minimal fault on the part of VA. 3. Repayment of the overpayment debt would not result in undue hardship to the appellant. 4. Recovery of the overpayment would not defeat the purpose of the VA DIC benefits program. 5. Waiver of the overpayment would result in unjust enrichment by the appellant. 6. The appellant did not relinquish a valuable right, but has changed his position by reason of having relied on the erroneous benefits. 7. Recovery of the overpayment would not be against equity and good conscience. CONCLUSION OF LAW The criteria for waiver of recovery of the overpayment of VA DIC benefits in the total amount of $105,559.00, with a current balance of $91,870.20, are not met. 38 U.S.C.A. § 5302 (West 2014); 38 C.F.R. §§ 1.963, 1.965 (2017). REASONS AND BASES FOR FINDINGS AND CONCLUSION Duties to Notify and Assist The Veterans Claims Assistance Act of 2000 (VCAA) enhanced VA's duty to notify and assist claimants in substantiating their claims 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) (2017). In Barger v. Principi, 16 Vet. App. 132 (2002), the United States Court of Appeals for Veterans Claims (Court) held that the VCAA, with its expanded duties, is not applicable to cases involving the waiver of recovery of overpayment claims, noting that the statute at issue in such cases is found in Chapter 53, Title 38, United States Code; therefore, the VCAA is not for application in this matter. Notwithstanding the fact that the VCAA is not controlling in this matter, the Board has reviewed the case for purposes of ascertaining that the appellant has had a fair opportunity to present arguments and evidence. In short, the Board concludes that the requirements for the fair development of the appeal have been met in this case. Waiver of Overpayment 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; 38 C.F.R. § 1.962. A claimant has the right to dispute the existence and amount of the debt. 38 U.S.C.A. § 501 (West 2014); 38 C.F.R. § 1.911(c) (2017). In this case, the appellant was granted entitlement to DIC benefits based on the service-connected death of the Veteran (appellant's former spouse). In December 2010, following notification that the appellant had remarried on July 21, 2002, VA discontinued the appellant's entitlement to DIC benefits effective July 1, 2002. This action created the indebtedness at issue as it was determined that the appellant was not eligible to continue receiving DIC benefits after remarrying. Initially, the evidence does not reflect, and the appellant has not alleged, that the debt at issue was invalid. Therefore, the validity of the debt will not be addressed in this decision. Any indebtedness of a veteran can be waived only when the following factors are determined to exist: (1) 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, (2) collection of such indebtedness would be against equity and good conscience. 38 U.S.C.A. § 5302(c); 38 C.F.R. § 1.963(a) (2017). In this case, there is no indication of fraud, misrepresentation, or bad faith on the part of the appellant in the creation of the overpayment. In such circumstances, recovery of an overpayment shall be waived where recovery of the overpayment would be against equity and good conscience. 38 C.F.R. §§ 1.962, 1.963(a). The controlling legal criteria provide that the standard of "equity and good conscience" will be applied when the facts and circumstances in a particular case indicate the need for reasonableness and moderation in the exercise of the Government's rights. 38 C.F.R. § 1.965(a). The decision reached should not be unduly favorable or adverse to either side. The phrase equity and good conscience means arriving at a fair decision between the obligor and the U.S. Government. In applying the "equity and good conscience" standard to a case, the factors to be considered by the adjudicator are: (1) whether actions of the debtor contributed to the creation of the debt, (2) weighing the fault of the debtor against any fault attributable to VA; (3) financial hardship, i.e., whether collection would deprive the debtor or the debtor's family of basic necessities, (4) whether recovery of the debt would nullify the objective for which benefits were intended, (5) unjust enrichment, i.e., whether failure to make restitution would result in unfair gain to the debtor, and (6) whether the debtor has changed position to his detriment due to his reliance upon the receipt of VA benefits. 38 U.S.C.A. § 5302(c); 38 C.F.R. § 1.965(a). Moreover, all listed elements of equity and good conscience must be considered in a waiver decision. See Ridings v. Brown, 6 Vet. App. 544 (1994). The Veteran contends that waiver of recovery of the overpayment at issue is warranted because he reported to VA in 2002 that he was remarried, and that a pamphlet he received at the time DIC benefits were granted indicated that he would be ineligible to educational assistance benefits if he remarried, but did not include any information indicating that he would not be entitled to DIC benefits if he remarried. Therefore, he assumed he was still entitled to DIC benefits after remarrying. The appellant also reported that he was 55 years old at the time, had just lost his job, and ended up losing his house and filing for bankruptcy. The appellant advanced that his second wife had a young son at that time, and was unable to add much income. The appellant indicated that had he known that he would lose DIC benefits upon remarrying and that there is an exception if he were 57 years old, he would have waited two years to get married. The appellant asserted that he informed VA in 2002 regarding a change of address and that he remarried, and that the change of address request was processed so he assumed that he was still entitled to the DIC benefits because DIC benefit payments did not stop. He recalled receiving annual letters from VA requesting an update of his marital status and advanced that he honestly completed the VA forms and returned them to VA. See March 2010 and March 2011 appellant statements; June 2016 Board hearing transcript. The Board finds that repayment of the Veteran's indebtedness would not violate principles of equity and good conscience, and that a waiver of the overpayment is not warranted. The first two elements for consideration under 38 C.F.R. § 1.965(a) are the fault of the debtor, and balancing the fault of the debtor and VA. The Board finds that the appellant was significantly at fault in the creation of the overpayment, and there is minimal fault on the part of VA. The evidence, including the appellant's own statements, reflects that VA notified the appellant of the general duty to promptly report change in marital status to VA. While the record reflects that the pamphlet issued at the time of the October 2001 rating decision only addressed educational benefits, the appellant was on notice of the general requirement to promptly notify VA of any change in marital status. Moreover, the appellant has indicated on numerous occasions that he received annual letters from VA that requested that the appellant report any change in marital status. A December 2008 VA letter, which informed the appellant of an increased in the benefit amount, requested that he should notify VA immediately upon any change in marital status; however, the record reflects that the appellant did not notify VA until February 2010. See February 2010 VA Form 21-0537. Accordingly, the Board finds that the appellant knew of the requirement to promptly notify VA of the change in his marriage status, but failed to do so. Although the appellant asserts that he notified VA by phone in 2002 that he remarried, and that he honestly completed the annual marital status forms received from VA, "[t]here is a presumption of regularity under which it is presumed that government officials 'have properly discharged their official duties.'" Ashley v. Derwinski, 2 Vet. App. 307, 308 (1992) (quoting United States v. Chem. Found., Inc., 272 U.S. 1, 14-15, 47 S.Ct. 1, 71 L.Ed. 131 (1926)). To rebut the presumption, the appellant, in addition to asserting that he notified VA by phone and completed the above-referenced forms, bears the burden of producing clear evidence that VA did not follow its regular practices in associating a record of the claimed phone call or the alleged forms with the claims file, or that its practices were not regular. See Ashley, 2 Vet. App. at 309. Absent the production of such clear evidence, VA is presumed to have associated a record of the phone call, as well as all correspondence received from the appellant, with the claims file. If, on the other hand, clear evidence is presented to rebut the presumption of regularity, the burden then shifts to the Secretary to establish proper mailing of notice in accordance with the applicable case law. See Baxter v. Principi, 17 Vet. App. 407, 410 (2004). The presumption of regularity on behalf of VA has not been rebutted in the present case. While the Veteran claims to have informed VA by phone in 2002 that he remarried, the record contains no evidence of such phone conversation such as a VA Form 119 (Report of Contact) or a VA Form 21-0820 (Report of General Information). The only record of phone contact by the appellant was in August 2008 when the appellant reported a change in banking information. See August 2008 VA Form 119. Moreover, although the appellant claims to have honestly completed the annual marital status forms received from VA, the record contains no evidence that he submitted such forms, and the appellant has not otherwise provided any evidence to support his contention. The appellant has supplied no evidence, such as a copy of a certified mail receipt, a date-stamped envelope or postal receipt, a dated copy of a form submitted directly to the RO, or any other document to suggest that he actually mailed or submitted the claimed forms. Therefore, the presumption of regularity has not been rebutted, and the first document that can serve as a notification that the appellant remarried was received in February 2010. See February 2010 VA Form 21-0537. Based on the foregoing, the Board finds that the appellant's assertions that he promptly informed VA of his remarriage in 2002, and that he honestly completed the annual VA marital status forms, are not credible. The minimal fault assigned to VA in this case is due to the fact that the December 2001 letter, which notified the appellant of the DIC benefit grant, did not specifically notify the appellant of the requirement to promptly report to VA any change in marital status in connection with the DIC benefits. However, as explained above, the appellant had actual knowledge of the general requirement to promptly notify VA of any change in marital status. Had the appellant promptly informed VA of the change in his marital status, VA would have stopped the DIC benefit payments and the overpayment would not have been created. Accordingly, the Board accords significant fault to the appellant in the creation of the overpayment, and minimal fault to VA. As to the element of undue financial hardship, the regulation provides that consideration should be given to whether collection of the indebtedness would deprive the debtor or his family of the basic necessities. In this case, the Board finds that repayment of the debt would not deprive the appellant of the basic necessities of life. A July 2011 VA Form 5655 shows that the appellant reported monthly income of $1,732 and monthly expenses of $1,530.71, which results in a net income of $201.29. The July 2011 VA Form 5655 shows that the appellant reported that he was not working, and noted assets in the total amount of $83,000. A July 2017 VA Form 5655 shows that the appellant reported monthly income of $2,520 and monthly expenses of $2,130, which results in net income of $390. The appellant indicated that he can pay $70 per month toward VA debt. The July 2017 VA Form 5655 shows that the Veteran reported that his only asset is a 2009 Honda Accord valued at $12,000; however, he did not explain what happened to his remaining assets which were reported on the July 2011 VA Form 5655 as totally $83,000, especially given that he reported that he was working from September 2011 to February 2017 as an audiovisual technician. Therefore, it would be reasonable to infer that his total assets would have at least remained the same rather than significantly decrease. The record reflects that the Veteran is able to pay for housing, food, utilities, a vehicle, insurance, and a storage unit, with money to spare. Based on the foregoing, the Board finds that recovery of the overpayment debt would not deprive the appellant or his family of the basic necessities. For these reasons, the Board finds that repayment of the overpayment debt would not result in undue financial hardship to the appellant. With regard to the remaining elements pertaining to the principles of equity and good conscience as set forth by 38 C.F.R. § 1.965(a), the Board finds that recovery of the overpayment would not defeat the purpose for which the DIC benefits was intended, and that failure of VA to collect the overpayment debt would result in unjust enrichment by the appellant. The purpose of DIC benefits is to provide payments to an unmarried surviving spouse of a veteran who dies from a service-connected disability in order to provide the surviving spouse with financial assistance and support with daily living expenses. 38 U.S.C.A. §§ 101(3), 1310 (West 2014). In this case, because the appellant remarried, he became ineligible to receive DIC benefits as a matter of law because he was no longer an unmarried surviving spouse of the Veteran, and therefore, recovery of the overpayment would not defeat the purpose of the DIC benefit because DIC benefits are only available to unmarried surviving spouses. Moreover, the appellant has been unjustly enriched because he received DIC benefit payments for which he was not entitled. Finally, the Board has considered whether the appellant may have relinquished any valuable right or to have changed his position by reason of having relied on the erroneous benefits. The appellant reported that he was 55 years old at the time of remarrying, and indicated that had he known that he would lose DIC benefits upon remarrying and that there is an exception if he were 57 years old, he would have waited two years to get married. The Board does not find this assertion to indicate that the appellant relinquished any valuable right because he exercised his right to remarry, and was not prevented from exercising such right as a result of having relied on the erroneous DIC benefits. To the extent that the appellant remarried at age of 55 instead of remarrying at 57 because he erroneously thought he would still be entitled to DIC benefits, the Board acknowledges that this amounts to changing his position by reason of having relied on the erroneous benefits. However, as is reiterated in the summation below, after weighing all the relevant factors, waiver of recovery of the overpayment is not warranted under the circumstances of this case. In sum, the Veteran was at fault in the creation of the overpayment of DIC benefits with minimal fault on the part of VA, repayment of the overpayment debt would not result in undue financial hardship to the appellant, recovery of the overpayment would not defeat the purpose of DIC benefits, the appellant has been unjustly enriched because he received DIC benefit payments for which he was not entitled, and he changed his position by reason of having relied on the erroneous benefits. The Board finds that the Veteran's fault and unjust enrichment, together with lack of undue financial hardship and the finding that recovery of the overpayment would not defeat the purpose of DIC benefits, significantly outweigh the appellant's assertion of a change in position by reason of having relied on the erroneous benefits. No other factors which would preclude recovery of the overpayment as against equity and good conscience have been put forth. Based on the foregoing, the Board finds that the criteria for waiver of recovery of the overpayment of VA DIC benefits in the amount of $105,559.00, with a current balance of $91,870.20, are not met. See 38 C.F.R. §§ 1.963, 1.965. The request for waiver of recovery of the overpayment debt is therefore denied. ORDER Entitlement to waiver of overpayment of VA dependency and indemnity compensation (DIC) benefits in the amount of $105,559.00, with a current balance of $91,870.20, is denied. ____________________________________________ JONATHAN B. KRAMER Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs