Citation Nr: 1800245 Decision Date: 01/04/18 Archive Date: 01/19/18 DOCKET NO. 13-11 164 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Chicago, Illinois THE ISSUE Entitlement to waiver of recovery of overpayment of compensation and pension benefits in the calculated amount of $3,099. REPRESENTATION Appellant represented by: Illinois Department of Veterans Affairs WITNESS AT HEARING ON APPEAL Appellant ATTORNEY FOR THE BOARD W. Yates, Counsel INTRODUCTION The Veteran served on active duty from May 1976 to May 1982. This matter comes before the Board of Veterans' Appeals (Board) on appeal from a February 2012 decision by the Committee on Waivers and Compromises (COWC) of the Department of Veterans Affairs (VA) Regional Office (RO) in Milwaukee, Wisconsin. Jurisdiction of the case was subsequently transferred to the RO in Chicago, Illinois. In August 2016, a Board hearing was conducted before the undersigned Veterans Law Judge at the RO. A transcript of this hearing has been added to the record. FINDING OF FACT An overpayment of compensation and pension benefits in the amount of $ 3,099 was properly created, but recovery of this overpayment would be against equity and good conscience. CONCLUSION OF LAW The overpayment of compensation and pension benefits in the amount of $ 3,099 was properly created, but the Veteran is entitled to waiver of recovery of the overpayment. 38 U.S.C. § 5302 (West 2014); 38 C.F.R. §§ 1.963, 1.965(a) (2017). REASONS AND BASES FOR FINDING AND CONCLUSION The RO has determined that the Veteran was improperly paid additional compensation and pension benefits in total calculated amount of $ 3,099. The payment of these additional benefits occurred from January 1, 2003, to August 31, 2011, and was based upon the Veteran having a dependent son. As noted on his September 2011 Notice of Disagreement, the Veteran is not contesting the overpayment amounts, but is rather challenging VA's attempt to recoup this overpayment as it was due to their error. Under these circumstances, the Board concludes that the overpayment of compensation and pension benefits in the amount of $ 3,099 was properly created. Accordingly, the Board's decision shall focus on the Veteran's request for a waiver of recovery of this overpayment. Recovery of overpayment of any benefits made under 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 recovery of the indebtedness from the payee who received such benefits would be against equity and good conscience. 38 U.S.C. § 5302; 38 C.F.R. § 1.963(a). However, if there is an indication of fraud, misrepresentation, or bad faith in the creation of the overpayment, waiver of the overpayment is automatically precluded and further analysis is not warranted. See 38 U.S.C. § 5302(a); 38 C.F.R. §§ 1.962, 1.963, 1.965. The Court has defined bad faith as "a willful intention to seek an unfair advantage." Richards v. Brown, 9 Vet. App. 255, 257-58 (1996). The provisions of 38 C.F.R. § 1.965(b)(2) define bad faith as an 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 participation in a VA benefits/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. 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 government's rights. 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 government. In making this determination, consideration will be given to the following elements, which are not intended to be all-inclusive: (1) Fault of the debtor - where actions of the debtor contribute to the creation of the debt. (2) Balancing of faults - weighing fault of the debtor against Department of Veterans Affairs 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 Department of Veterans Affairs benefits results in relinquishment of a valuable right or incurrence of a legal obligation. 38 C.F.R. § 1.965(a). After reviewing the Veteran's claims file, to include the Veteran's financial documents, statements, forms, and hearing testimony, the Board finds that it would be against equity and good conscience for VA to recover the overpayment of compensation and pension benefits in the calculated remaining amount of $3,099. Specifically, the Board finds the Veteran's testimony about notifying the VA of his change in dependents to be credible. On April 25, 2003, the Veteran submitted a VA Form 21-686C, Declaration of Status of Dependents, indicating that his son was in the custody of foster care. A subsequent VA form 21-8947, Compensation and Pension Award, was issued by VA and included the removal of the Veteran's son as a dependent child. Although the Veteran's son would subsequently be added back as a dependent, this appears to have been solely the fault of VA. Although the Veteran had opportunity to subsequently resubmit this information, the balance of fault herein goes against VA. The Board also accepts the Veteran's credible testimony considering the undue hardship created in making these payments, as well as his assertions that it was never his intent to commit fraud against the Government and that he performed his due diligence by trying to inform VA about his change in dependents. Under these circumstances, waiver of recovery of an overpayment of compensation and pension benefits in the calculated remaining amount of $3,099 is granted. ORDER Waiver of recovery of overpayment of compensation and pension benefits in the calculated amount of $3,099 is granted. JOHN J. CROWLEY Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs