Citation Nr: 1800114	
Decision Date: 01/03/18    Archive Date: 01/19/18

DOCKET NO.  14-13 651	)	DATE
	)
	)

On appeal from the
Department of Veterans Affairs Regional Office in Milwaukee, Wisconsin


THE ISSUE

Entitlement to waiver of recovery of pension overpayment in the amount of $66,578.00.


REPRESENTATION

Veteran represented by:	Wisconsin Department of Veterans Affairs


WITNESS AT HEARING ON APPEAL

The Veteran


ATTORNEY FOR THE BOARD

M. D. Bruce, Associate Counsel

INTRODUCTION

The Veteran served on active duty from June 1964 to June 1968.

This matter comes before the Board of Veterans' Appeals (Board) on appeal from a February 2014 determination by the Committee on Waivers and Compromises (COWC) of the Department of Veterans Affairs (VA) Regional Office in Milwaukee, Wisconsin, which denied the Veteran's request for a waiver of recovery of an overpayment of pension benefits in the amount of $66,578.00.

In May 2017, the Veteran testified at a Travel Board hearing before the undersigned Veterans Law Judge.  A transcript of that hearing is of record.


FINDING OF FACT

There was no fraud, misrepresentation, or bad faith on the part of the Veteran in the creation of the debt, but recovery of the indebtedness in the amount of $66,578.00 would not violate the standards of equity and good conscience.  


CONCLUSION OF LAW

The requirements for waiver of recovery of the overpayment of pension benefits in the amount of $66,578.00 have not been met.  38 U.S.C. § 5302 (2012); 38 C.F.R. §§ 1.962, 1.963, 1.965, 3.660 (2017).


REASONS AND BASES FOR FINDING AND CONCLUSION

The Veteran seeks a waiver of recovery of the debt of $66,578.00 due to the overpayment of VA pension benefits.  The debt was created because the Veteran did not fully report his income.  The Board notes that the Veteran made a compromise offer of repayment of $16,000.00 of the debt which was subsequently rejected by the COWC.

Initially, the Veteran has not appealed the issue of the validity of the debt.  See Schaper v. Derwinski, 1 Vet. App. 430 (1991).  Therefore, the validity of the debt will not be addressed in this decision.  

Recovery of overpayment of any benefits made under laws administered by VA may 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.  38 U.S.C. § 5302(c); 38 C.F.R. § 1.963(a).  The COWC determined that the Veteran had not demonstrated bad faith in creating the overpayment.  It is the Board's responsibility to consider the matter of bad faith on a de novo basis.  Indeed, the United States Court of Appeals for Veterans Claims has held that the Board must independently address this preliminary consideration before addressing whether waiver would be appropriate under the applicable criteria of 38 C.F.R. § 1.965(a).  See Ridings v. Brown, 6 Vet. App. 544 (1994).  The Board concludes based on the evidence of record that there was no indication of fraud, misrepresentation, or bad faith in the creation of the overpayment.  

If there is no indication of fraud, misrepresentation, or bad faith in the record, the indebtedness shall be waived if the recovery of the overpayment would be against equity and good conscience.  38 U.S.C. § 5302(a); 38 C.F.R. §§ 1.962, 1.965.  

Consideration of equity and good conscience is intended to reach a result that is not unduly favorable or adverse to either the claimant or the Government.  It is intended to achieve a result that is fair.  38 C.F.R. § 1.965(a).  Six non-exclusive elements are set forth in the regulations that must be addressed to determine whether the facts and circumstances in a particular case dictate that collection of an overpayment would be against equity and good conscience.  The six non-exclusive elements consist of: (1) the fault of the debtor; (2) balancing of faults between the debtor and VA; (3) undue hardship of collection on the debtor; (4) a defeat of the purpose of an existing benefit to the veteran; (5) the unjust enrichment of the veteran; and (6) whether the veteran changed positions to his detriment in reliance upon a granted VA benefit.  38 U.S.C. § 5302; 38 C.F.R. § 1.965(a).  Each of the six elements must be addressed.  See Ridings, 6 Vet. App. at 546.

The Board will consider each of these elements in turn.

Fault should initially be considered relative to the degree of control an appellant had over the circumstances leading to the overpayment.  If control is established, even to a minor degree, the secondary determination is whether an appellant's actions were those expected of a person exercising a high degree of care, with due regard for the appellant's contractual responsibility to the government.  The age, financial experience, and education of the appellant should also be considered in these determinations.

A person who is a recipient of VA pension benefits must notify VA of all circumstances that will affect entitlement to receive the benefit being paid.  38 U.S.C. § 1506(3) (2012); 38 C.F.R. §§ 3.277, 3.652 (2017).

The record reflects that the Veteran was in receipt of pension benefits since 2007.  The Veteran was informed in multiple letters that VA was under the impression that he received no income at all, including no income from the Social Security Administration (SSA), and that it was his responsibility to let VA know if there was any change in his income or net worth, including in payments from SSA.  Each year, he was informed that he would not be receiving an Eligibility Verification Report (EVR) because he had no income, but he was also informed that he had to report any income or change in net worth.  The Veteran argues that he misunderstood the letters sent to him that indicated he would not receive an EVR because he had no income.  He further argues that he submitted evidence for healthcare purposes that should have put VA on notice of his SSA income; however, there is no indication of this in the record.  

Upon review, the Board finds that the Veteran bore a majority of the fault in the creation of the overpayment.  He did not report his income accurately for pension purposes until 2013.  If he had accurately reported his income before, the debt would not have been created or would have been much less significant.  The Board notes that the Veteran's initial application for pension as accurate as to SSA income; while the Veteran's SSA disability benefits date to 2006, he did not receive his first payment until 2008, after he began receiving VA pension benefits.  While the Board is sympathetic to the fact that the Veteran may have misunderstood the letters sent to him and may have reported income for healthcare purposes, Cost of Living Adjustment letters sent to the Veteran annually clearly indicate that VA understood the Veteran to have no income, including SSA income, for pension purposes, and that it was the Veteran's responsibility to correct any errors or report any changes.  Balancing the faults of the debtor versus that of VA, the Board finds that the Veteran bore greater fault in failing to accurately report his income, as VA was only able to act on the information provided.

With respect to whether recovery of the overpayment would result in undue financial hardship, a finding of financial hardship is justified if the collection of the indebtedness would deprive the appellant of food, clothing, shelter, or other basic necessities.  The Veteran owns his home outright and pays only property taxes and upkeep expenses.  In a Financial Status Report dated May 2017, over which the Veteran indicated that he wished to waive initial review by the Agency of Original Jurisdiction, he reported approximately $2,891.00 in monthly expenses as well as a monthly income of approximately $2,204.00, with an additional $6,740.00 in the bank.  He further indicated that he had approximately $64,639.00 in savings. 

In view of the information the Veteran has submitted, the Board finds that, while he would incur some financial sacrifice through the recovery of the debt and while his monthly expenses exceed his income, such repayment would not deprive him of the basic necessities of life and thereby pose an undue hardship.  The financial information he has submitted does not support such a finding.  Further, the Government is entitled to the same consideration as other creditors or potential creditors.  Thus, based on consideration of the information submitted, the Board finds that financial hardship from recovery of the Veteran's indebtedness to VA is not shown.  38 C.F.R. § 1.963(a)(3).

As to whether collection of the debt would defeat the purpose of the benefit, the purpose of pension benefits is to provide financial assistance to the beneficiary.  The amount of pension benefits is calculated based on total income and assets.  In regard to whether collection of the debt would defeat the purpose for which benefits were intended, it would not.  The Board finds that repayment of the debt at issue in this case would not conflict with the objective underlying the benefits, as the Veteran presently appears capable of acquiring basic necessities.  38 C.F.R. § 1.965(a)(4).  Thus, repayment of the debt would not nullify the purpose for which the pension benefits were intended, as the Veteran's repayment will not deprive him of basic necessities such as food, clothing, and shelter.

Additionally, the Veteran received benefits to which he was not entitled, so waiver of recovery of this consequent indebtedness would result in unjust enrichment to him.  If a waiver of recovery is granted it would create an unfair gain to him because he would be allowed to retain funds to which he was not legally entitled.  38 C.F.R. § 1.965(a)(5). 

There is no evidence that the Veteran incurred a legal obligation or relinquished a valuable right as a result of having to repay the overpayment to VA.

Weighing all the factors considered above based on the circumstances of this case as a whole, the Board concludes that a preponderance of those factors is against waiver of recovery.  Accordingly, the Board finds that recovery of the overpayment of $66,578.00 is not against equity and good conscience, and waiver of recovery of the overpayment is denied.


ORDER

Entitlement to waiver of recovery of pension overpayment in the amount of $66,578.00 is denied.


____________________________________________
Nathan Kroes
Veterans Law Judge, Board of Veterans' Appeals

Department of Veterans Affairs