Citation Nr: 1802731 Decision Date: 01/11/18 Archive Date: 01/23/18 DOCKET NO. 16-42 106 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Detroit, Michigan THE ISSUE Entitlement to waiver of recovery of an overpayment of VA compensation benefits in the amount of $11,168.00, to include whether the debt was properly created. REPRESENTATION Appellant represented by: The American Legion WITNESS AT HEARING ON APPEAL The Veteran ATTORNEY FOR THE BOARD R. Casadei, Counsel INTRODUCTION The Veteran served on active duty from August 1957 to January 1965. This matter comes before the Board of Veterans' Appeals (Board) on appeal from a June 2016 rating decision of a Department of Veterans Affairs (VA) Regional Office (RO) in Detroit, Michigan. The RO's Committee on Waivers waived $8590.81 of a total overpayment calculated as $19,758.81, based on the Veteran's failure to report a divorce in a timely manner, but denied waiver for the overpayment of VA compensation benefits in the amount of $11,168.00. The decision to deny the waiver request was affirmed by the Committee in an October 2017 supplemental statement of the case. The Veteran testified at a June 2017 Board videoconference hearing before the undersigned Veterans Law Judge. A copy of the hearing transcript is associated with the claims file. The Veteran submitted additional evidence after his case was certified to the Board. The Veteran's substantive appeal was filed after February 2, 2013, and therefore the Board may consider this additional evidence in the first instance. See Honoring America's Veterans and Caring for Camp Lejeune Families Act of 2012, Public Law No. 112-154, 126 Stat. 1165. 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. An overpayment of VA benefits was properly created and the debt of $11,168, is valid. 2. Recovery of the debt from the Veteran would not be against equity and good conscience. CONCLUSIONS OF LAW 1. The debt of $11,168, was properly created. 38 U.S.C. §§ 3319, 3695 (2012); 38 C.F.R. §§ 21.4020 (a), 21.9550, 21.9570 (2017). 2. Recovery of the overpayment of $11,168, is warranted and should not be waived. 38 U.S.C. § 5302 (2012); 38 C.F.R. §§ 1.962, 1.963, 1.965 (2017). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS Duties to Notify and Assist This appeal involves the validity of the creation of an overpayment and a request for waiver of recovery of overpayment. Therefore, the duty to notify provisions of the Veterans Claims Assistance Act of 2000 (VCAA) do not apply. Lueras v. Principi, 18 Vet. App. 435 (2004). To the extent that VA's duty to assist may apply (see Edwards v. Peake, 22 Vet. App. 57, 60 (2008)), the Board finds no deficiency. The Veteran has not identified any additional evidence necessary to decide the appeal, or any other deficiency in the duty to assist that would result in prejudice by the Board proceeding with an appellate decision. The statute governing waiver claims has its own notice provisions. 38 U.S.C. § 5302 (2012). In a waiver of overpayment claim, the payee must be notified of his right to dispute the debt and request a waiver of the debt with a description of the procedures for submitting the application. The RO indicates the Veteran was notified of his indebtedness, and it is the Veteran's request of a waiver on which this appeal is based. The Board notes that VA's June 2016 decision outlined the regulations associated with waiver of a debt. Laws and Analysis In a June 2016 decision, it was determined that the Veteran had a debt in the amount of $19, 758.81. In this decision, a partial waiver in the amount of $8,590.81 was granted, but the remaining $11,168 was not waived. The overpayment was created because the Veteran divorced in March 2004 and he remarried in April 2006. In a November 2010 VA Form 21-0538 (Status of Dependents Questionnaire), the Veteran notified VA that he had remarried in April 2006. As explained in the June 2016 decision by the Committee on Waivers, the Veteran was unmarried from March 2004 to April 2006, but was being compensated as having a spouse. Accordingly, the Board concludes that the debt was properly created. Notably, the Veteran does not contend that the debt was improperly created. The Board will now turn to the question of the waiver of the recovery of the $11,168, overpayment. Recovery of overpayments of any benefits made under the 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 if the recovery of the indebtedness from the payee who received such benefits would 38 U.S.C. § 5302 (2012); 38 C.F.R. §§ 1.962, 1.963(a), 1.965 (2017) be against equity and good conscience. Here, the Board finds that the evidence is insufficient to show fraud, misrepresentation, or bad faith on the part of the Veteran. The term "bad faith" generally describes unfair or deceptive dealing by one who seeks to gain thereby at another's expense. 38 C.F.R. § 1.965 (b)(2) (2017). Thus, a debtor's conduct in connection with a debt arising from participation in a VA benefits or services program exhibits bad faith if the 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. Id. The question now is whether the facts here dictate that a waiver should be granted under the standard of "equity and good conscience." The phrase "equity and good conscience" means the arrival 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, (2) balancing of faults between the debtor and VA, (3) undue hardship of collection on the debtor, (4) defeat of the purpose of an existing benefit to the appellant, (5) unjust enrichment of the appellant, and (6) whether the appellant changed positions to his or her detriment in reliance upon a granted VA benefit. 38 U.S.C. § 5302 (2012); 38 C.F.R. § 1.965 (a) (2017). 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. 38 C.F.R. § 1.965 (a) (2017). The first factor to consider is the fault of the debtor in creating the debt. Here, the Board finds that the Veteran is at fault for the $11,168 overpayment, as he failed to notify VA of his divorce in March 2004. Although the Veteran notified VA in 2010 of his remarriage in 2006, this was approximately 6 years following his divorce. The Board acknowledges that the Veteran testified that he notified the Defense Enrollment Eligibility Reporting System (DEERS) of his divorce in 2004 and his remarriage in 2006. The Veteran testified that he believed that this was sufficient and that he did not have to separately report these events to VA and would not need to inform anyone else, including VA. The Board is sympathetic to the Veteran's claim that he notified DEERS and believed that this was sufficient. However, whether or not he promptly notified DEERS is unknown and investigation in this regard is unnecessary to this determination. Even assuming the divorce of his previous wife and the addition of his new wife were promptly registered in DEERS, doing so did not constitute notice to VA as these systems are not linked. There is no indication that anyone ever told the Veteran that these systems were linked. There also is no indication that he relied on anything else which made him think that they would be linked. It appears, in sum, that he simply presumed they would be linked. Importantly, in a November 2002 VA letter to the Veteran, he was specifically notified that his disability compensation had been amended to include additional benefits for his spouse. The Veteran was also specifically notified that he was to report any change in the number of or status of dependence "immediately" to avoided overpayment. For these reasons, the Board finds that the Veteran was at fault for the $11,168 overpayment. The next consideration is whether requiring repayment of the overpayment would impose undue hardship of collection on the debtor, thereby defeating the purpose of the benefit to the Veteran. During the June 2017 Board hearing, the Veteran indicated that he had already paid back the overpayment to VA. The Veteran also stated "I knew I had the savings. And I really didn't want to use the savings but I had to pay back what they said I owe." See id at pg. 6. Moreover, there is no evidence that the completed recovery of the assessed overpayment deprived the Veteran of basic necessities. Thus, the Board finds that recovery of the debt would not create an undue hardship. The Board next finds that recovery of the overpayment would not defeat the purpose of an existing benefit to the Veteran. As noted above, the Veteran's debt has already been collected by VA. The requirement of having him repay the debt did not necessarily force him to make payment using his VA compensation benefits as evidenced by the fact that the Veteran was able to use his savings to repay his debt. The Veteran also indicated that he was able to purchase a home in Florida and relocate to warmer climate for health reasons. As such, the Board finds that recovery of the overpayment would defeat the purpose for which the compensation program is intended. The Board also finds that failure to recover the overpayment would result in an unjust enrichment of the Veteran. The Veteran received additional compensation for his spouse when he was in fact unmarried from March 2004 to April 2006. There is no indication that the Veteran changed position to his detriment in reliance upon the advance of these VA benefits. Instead, the creation of the debt was to his benefit. In sum, the Board concludes that the facts in this case do not demonstrate that the recovery of the overpayment of $11,168, would be against equity and good conscience. 38 U.S.C. § 5107 (b) (2017). Based on the foregoing, the Veteran's request for a waiver of his overpayment in the amount of $11,168 is denied. ORDER Entitlement to a waiver of indebtedness for an overpayment in the amount of $11,168, is denied. ____________________________________________ S. B. MAYS Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs