Citation Nr: 1806220 Decision Date: 01/31/18 Archive Date: 02/07/18 DOCKET NO. 09-49 029 ) DATE ) ) On appeal from the Department of Veterans Affairs (VA) Regional Office (RO) in Waco, Texas THE ISSUES 1. Validity of a declared overpayment of pension debt in the amount of $3,821.20. 2. Whether the Veteran's notification of his debt and the procedures for requesting a waiver was delayed by error of the VA or other circumstances beyond his control. REPRESENTATION Veteran represented by: Disabled American Veterans ATTORNEY FOR THE BOARD Heather J. Harter, Counsel INTRODUCTION The Veteran served on active duty from May 1992 to February 1994. This matter comes before the Board of Veterans' Appeals (Board) on appeal from an August 2005 RO decision. The Veteran was scheduled for a hearing before the Board in March 2013. He was notified of the scheduled time and place but failed to appear for the hearing. When an appellant elects not to appear at the prescheduled hearing date, the request for a hearing will be considered to have been withdrawn. 38 C.F.R. § 20.704(d). His appeal will thus be adjudicated without further delay based upon all the evidence presently of record. In August 2013, the Board remanded this matter for further evidentiary development. FINDINGS OF FACT 1. Effective from August 2003, the Veteran was granted VA pension benefits. 2. The Veteran was confined to Texas State jail on April 9, 2005, for the commission of a felony. 3. The Veteran notified VA of his incarceration in May 2005, and requested that VA take prompt action to prevent the creation of an overpayment related to his incarceration. 4. VA did not stop the Veteran's pension payments until the end of August 2005. CONCLUSION OF LAW The pension debt in the amount of $3,821.20, caused by VA's overpayment of pension benefits when the Veteran was incarcerated, was validly created. 38 U.S.C. §§ 501, 5302, 5313, 5313B (2012); 38 C.F.R. §§ 1.962, 1.963, 3.666 (2017). REASONS AND BASES FOR FINDINGS AND CONCLUSION As a preliminary matter, the Board notes that VA's duties to notify and assist do not apply where validity of the debt and waiver of overpayment are at issue. See Barger v. Principi, 16 Vet. App. 132 (2002). Historically, the Veteran applied for nonservice-connected pension benefits in August 2003. In October 2003, the RO granted the claim, effective as of the date his claim was received. The Veteran was then adjudged guilty of having committed a felony and was confined on April 9, 2005. In May 2005, the Veteran wrote the RO to inform them of his incarceration. In this letter, he acknowledged that his pension benefits would be reduced according to law, after he had been incarcerated for sixty days. 38 C.F.R. §§ 3.665, 3.666. He explicitly stated that he did not wish to have an overpayment debt created and requested that the RO reduce his benefits effective following the sixty day period, so as to avoid an overpayment. He further requested that the RO send his last two checks to his prior address on Lakeshore Drive. He did not provide any other mailing address for VA to contact him. In August 2005, after confirming the Veteran's felony incarceration date, the RO implemented a "stop pension award," effective as of June 9, 2005, representing exactly sixty days after the Veteran entered incarceration. In September 2005, the VA's Debt Management Center calculated the amount of the resulting overpayment debt as $3,821.20, which presumably represented the amount of money the VA paid the Veteran for the rest of June, all of July and all of August. The Debt Management Center mailed a September 2005 letter to the Veteran at the Lakeshore Drive address, informing him of the exact amount of the overpayment, and how to dispute the debt if he wished to do so, as well as how to request a waiver of the debt. Importantly, this letter also contained notice that he had to formally request a waiver within 180 days of the September 2005 notice. In other words for VA to consider whether a waiver of the pension overpayment debt was warranted, the Veteran was required to submit a request for such a waiver by March 2006. The Veteran corresponded with VA multiple times between his initial notice to VA of his incarceration in May 2005 and March 2006, which was when the 180 days allowed for the Veteran to request a waiver expired. His correspondence pertained to matters involving the apportionment of his remaining VA benefits for the support of his children. One of the VA letters to the Veteran, which had been mailed to his Lake Shore address in November 2005, was returned with a notification from the Postal Service that the Veteran was no longer at that address. In January 2006, VA contacted the State Prison system by phone to confirm that the Veteran was still incarcerated. It appears that this contact also yielded a new address, as it indicates the Veteran was at the Dawson Unit. In February 2006, the Veteran himself wrote about the apportionment issue again and provided a complete address at the Dawson State Jail. This February 2006 correspondence thus contained the first updated mailing address the Veteran provided to VA since he had requested that his last two checks be sent to Lakeshore Drive. In September 2006, one year after the original notification of the debt was mailed, the Debt Management Center again wrote the Veteran informing him that as no repayment plan had been established, they would begin withholding his benefit in order to collect the debt. This letter was addressed to him in the Dawson State Jail. In August 2007, the Veteran forwarded this letter from the Debt Management Center to the RO. In his accompanying note, he protested the overpayment debt. He noted that he had informed VA of his incarceration in a timely manner and had requested that VA reduce his debt so that no overpayment would be created. He asserted VA was at fault for not reducing his VA benefits so as to avoid the overpayment and stated that he did not think he should have to repay anything because he believed the debt was caused by VA error. Lastly, he indicated he wanted to appeal "all VA decisions." The Veteran was released from jail in June 2010. The debt at issue has been fully recouped since that time. The preliminary 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, 434 (1991). 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. § 5302; 38 C.F.R. § 1.962. An overpayment may arise from most benefits programs administered pursuant to VA law including, most pertinent to this case, improved pension benefits. 38 C.F.R. § 1.956 (a). Once it is determined that the indebtedness was validly created, but before moving on to the matter of waiver of the charged indebtedness, if there is a finding of fraud, misrepresentation, or bad faith by the debtor in the creation of the overpayment, then waiver of the overpayment is automatically precluded, and further analysis is not warranted. 38 C.F.R. §§ 1.962, 1.963, 1.965(b). 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. 38 C.F.R. § 1.965(b)(2). A request for waiver of indebtedness shall only be considered if made within 180 days following the date of a notice of indebtedness issued by VA to the debtor. The 180 day period may be extended if the individual requesting waiver demonstrates to the Committee on Waivers and Compromises that, as a result of an error by either the VA or the postal authorities, or due to other circumstances beyond the debtor's control, there was a delay in such individual's receipt of the notification of indebtedness beyond the time customarily required for mailing (including forwarding). If the requestor does substantiate that there was such a delay in the receipt of the notice of indebtedness, the Chairperson shall direct that the 180 day period be computed from the date of the requestor's actual receipt of the notice of indebtedness. 38 U.S.C. § 5302; 38 C.F.R. § 1.963. The Veteran contends that the debt he has been charged with by VA is not valid. This is the only issue before the Board, because the Veteran did not request a waiver of the debt within 180 days of the notice provided to him. The Veteran does not dispute that he was imprisoned or that he was not entitled to his pension benefits after the 61st day of incarceration. However, he notes that he contacted VA soon after his incarceration and requested that his payments be suspended in order to avoid creating a debt. Furthermore, he states that any money that was paid did not go to him but to his children and their guardian. He does not believe he should be responsible for any money that VA continued to pay after he requested the payments to end and that he never personally received. Turning then to how the debt was created, it is clear that the Veteran attempted to forestall the creation of an overpayment. In May 2005, he notified VA of his incarceration and requested that VA stop his benefits after paying the two months of benefits to which he was entitled. Because he was confined on April 9, 2005, under the law, he was due the payment for the remainder of April, all of May, and the first nine days of June. However, VA did not stop payment effective June 9th as he had requested; rather VA continued to pay him through August 2005. When the VA finally stopped payment, they calculated the Veteran had been overpaid in the amount of $3,821.20. This figure is roughly 2.8 times the Veteran's monthly pension payment of $1361. Apparently, this represents the amount of money paid to the Veteran for the remainder of June 2005, all of July, and all of August. Therefore, the amount of the declared debt appears to be accurate. The reason the debt was created: that the Veteran was imprisoned for commission of a felony is accurate as well. The RO acted properly in confirming these facts. That the Veteran was overpaid for a period of more than two months, but less than three months is also documented in the record. We therefore find that the debt of $3,821 was validly created. The fact that the debt was created is unfortunate, especially as the Veteran attempted to avoid the situation by communicating with VA promptly and specifically requesting that VA stop his payments at the proper time. While a lag of nearly four months between the Veteran's notification and the implementation of the stop payment is unfortunate, and created the overpayment at issue here, it is regrettably not unusual in terms of the slowness of the administrative process. Many VA overpayment debts are created in similar situations, where the checks are sent out automatically and the stop payment process takes several months. The law then provides for these overpayment debts to be repaid, through collection or recoupment of benefits. As noted above, the Veteran's debt has already been repaid through recoupment of his VA benefits over time. ORDER The declared debt of $3,821.20, was validly created. REMAND Review of the facts of this case convinces the Board that further action is needed to adequately protect the Veteran's substantive due process rights. The law also provides that a declared debtor can request a waiver of the debt, in cases where collection of the debt would be against equity and good conscience. 38 C.F.R. § 1.963. The Veteran was notified of this provision in the law and of how to request such a waiver in September 2005. However, as described above, the VA mailed this letter to the Veteran's prior address. VA was on notice that Veteran was not living at the Lakeshore Drive address, as he was in jail and VA had confirmed that he was in jail. However, Veteran had requested that his two checks be mailed to that address, and had not provided another address to VA. It is the responsibility of Veterans to cooperate with VA, to include informing VA of any change in address. See Olson v. Principi, 3 Vet. App. 480, 483 (1992). However, it appears that VA may have been remiss in not identifying the Veteran's current address prior to mailing the notice of the Veteran's debt. The VA knew the Veteran was not living at the Lakeshore Drive address, and they also knew how to locate him by contacting the authorities in charge of the Texas State jail system. VA did not do so, however. We also note that the Veteran did provide VA with his current address in February 2006, but VA did not re-mail the notification letter regarding his declared debt to the current address. As of November 2005, it appears that no one who knew or was related to the Veteran was living at that address either, and VA was put on notice of this fact when the mail was returned by the Postal Service. Although there is no indication that the September 2005 notice from the Debt Management Center was not delivered to the address of record, the record definitely shows that whoever had been receiving the Veteran's mail was no longer doing so in November 2005, when other correspondence was returned to VA as undeliverable. Even if whoever had been receiving the Veteran's VA pension checks through August 2005 had also received the September 2005 notice letter regarding the overpayment and how to request a waiver, the record is entirely blank as to whether that person forwarded the notice letter to the Veteran. The fact that he did not request a waiver at that time tends to indicate he did not receive the September 2005 notice. The August 2007 letter in which he expressed surprise at the debt, and asserted he was not at fault in the creation of the debt also tends to indicate he was unaware of the debt and of the procedures for requesting a waiver of it. The Veteran's diligence in corresponding with VA regarding the apportionment of his benefits for the care of his children demonstrates to VA that he was reasonably conscientious in keeping up with his VA affairs and VA benefits. Although we cannot know what was in his mind, his general conscientiousness in these matters while he was in jail indicates that he would likely have requested a waiver of his debt, if he had received the notice explaining the necessity for doing so and the instructions for doing so. His letter of August 2007, in which he set out his arguments against the overpayment demonstrates that he understood the issues well enough to have requested a waiver if he had been properly notified. As set forth above, the governing regulation provides that a request for a waiver must be submitted within 180 days of the date of notice of indebtedness, unless the declared debtor can demonstrate to the Chairperson of the Committee on Waivers and Compromises that, as a result of an error by either the VA or the postal authorities, or due to other circumstances beyond the debtor's control, there was a delay in such individual's receipt of the notification of indebtedness beyond the time customarily required for mailing (including forwarding). If the requestor does substantiate that there was such a delay in the receipt of the notice of indebtedness, the Chairperson shall direct that the 180 day period be computed from the date of the requestor's actual receipt of the notice of indebtedness. 38 U.S.C. § 5302; 38 C.F.R. § 1.963. The Board therefore holds that the particular remedy for this situation must be crafted in accordance with 38 C.F.R. § 1.963. The question of whether the Veteran's notification of his debt and the procedures for requesting a waiver was delayed by error of the VA or other circumstances beyond his control is the responsibility of the Chairman of the Committee on Waivers and Compromises in the first instance. The Veteran should be provided with an opportunity to show whether there was a delay in his receipt of the notification of indebtedness or at least to make the argument. If he can do this, then he must be given another opportunity to file a timely waiver request. Then the Committee on Waivers will be able to review the entire matter under the standards of equity and good conscience, with a preliminary determination as to whether there was fraud, misrepresentation, or bad faith, to include consideration of the facts of the case as outlined by the Board above. The Veteran is urged to work closely with his representative to ensure that all necessary actions are taken to protect his case. We observe for the sake of clarity that because the entire debt has been recouped, if the Veteran is ultimately successful in a waiver claim or if the Committee were to determine that a partial waiver is appropriate, the recouped monies would then have to be repaid by VA to the Veteran. Accordingly, the case is REMANDED for the following action: 1. The Veteran should be provided with a complete copy of the original notification letter, along with information as to how to request a waiver. 2. The Chairman of the Committee on Waivers and Compromises must review the matter and determine whether the Veteran's September 2005 notification of his debt and the procedures for requesting a waiver was delayed by error of the VA or other circumstances beyond his control. 3. After the development requested above has been completed, all further appropriate action should be taken, with notification to the Veteran provided at each stage of the process. If any benefit sought on appeal remains denied, the Veteran and his representative should be furnished a supplemental statement of the case and given the opportunity to respond thereto. The Veteran has the right to submit additional evidence and argument on the matter the Board has remanded. Kutscherousky v. West, 12 Vet. App. 369 (1999). This claim must be afforded expeditious treatment. The law requires that all claims that are remanded by the Board of Veterans' Appeals or by the United States Court of Appeals for Veterans Claims for additional development or other appropriate action must be handled in an expeditious manner. See 38 U.S.C. §§ 5109B, 7112 (2012). ____________________________________________ Kristin Haddock Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs