Citation Nr: 18141137 Decision Date: 10/09/18 Archive Date: 10/09/18 DOCKET NO. 15-05 075 DATE: October 9, 2018 ORDER The overpayment of Department of Veterans Affairs (VA) compensation benefits in the amount of $1,241 was properly created, and the appeal is denied. FINDING OF FACT 1. The Veteran is incarcerated for a felony. 2. VA overpaid the Veteran at a rate than he was higher than he was entitled to receive due to his incarceration. 3. VA retroactively reduced the Veteran’s VA compensation benefits to reflect the lower rate. 4. The retroactive reduction in VA compensation benefits payments resulted in the creation of an overpayment in the amount of $1,241. 5. The Veteran had knowledge of or should have been aware of the erroneous award at the higher rate and his actions or his failure to act contributed to the erroneous award. CONCLUSION OF LAW The overpayment of $1,241 in VA compensation benefits was properly created. 38 U.S.C. §§ 1114, 5112, 5313; 38 C.F.R. §§ 3.500, 3.665. REASONS AND BASES FOR FINDINGS AND CONCLUSION The Veteran has been granted service connection for headaches with anxiety rated at the 100 percent rate. Any person incarcerated in a Federal, State, or local penal institution in excess of 60 days for conviction of a felony will not receive compensation in excess of specified amounts. See 38 C.F.R. § 3.665 (a). If a veteran is rated 20 percent disabled or more, then he or she will receive compensation payable under 38 U.S.C. § 1114 (a), or the equivalent of a 10 percent rating. See 38 C.F.R. § 3.665 (d)(1). If a veteran is rated at less than 20 percent, then he or she will receive one-half the rate of compensation payable under 38 U.S.C. § 1114 (a). See 38 C.F.R. § 3.665 (d)(2). When a veteran is incarcerated for a period in excess of 60 days for conviction of a felony, his or her compensation must be reduced, for the period beginning on the sixty-first day of such incarceration. 38 U.S.C. § 5313 (a)(1); see also 38 C.F.R. § 3.665 (a). In November 2001, the Missouri Department of Corrections informed VA that the Veteran had been convicted of a felony and subsequently incarcerated in July 2001. In March 2002, the Regional Office (RO) informed the Veteran that it had received information that he had been incarcerated following a felony conviction and the provisions of 38 C.F.R. 3.665 required that his VA disability compensation be reduced to the amount payable for a disability evaluated as 10 percent disabling after his 61st day of incarceration. In May 2002, the RO effectuated the proposed reduction as of September 2001. In June 2002, the Veteran was informed in writing of an overpayment of VA disability compensation benefits. in the amount of $18,153 59 and his waiver rights. The Veteran and the Missouri Department of Corrections both informed the RO of the Veteran’s felony conviction and his subsequent July 2001, incarceration in November 2001. The Veteran was not informed of either his duty to report his incarceration or his ineligibility to receive full payment of his VA compensation benefits prior to his receipt of the RO’s March 2002 notice of the proposed reduction of his VA disability compensation benefits. Given the veteran’s lack of express knowledge, in a March 2008 decision, the Board determined that the Veteran was not at fault in the creation of that portion of the overpayment arising from compensation benefits prior to December 2001. In weighing the responsibility of the VA in the creation of that portion of the overpayment created in and after December 2001, the Board determined that the RO failed to take action to appropriately reduce the payment of his compensation benefits expeditiously. As the RO failed to reduce the Veteran’s VA compensation benefits in a timely manner, the Board concluded that the portion of the overpayment created on and after December 2001 was solely due to VA administrative error and thus improperly created. When an overpayment has been made by reason of an erroneous award based solely on administrative error, the reduction of that award cannot be made retroactive to form an overpayment debt owed to VA from the recipient of the erroneous award.” Erickson v. West, 13 Vet. App. 495, 499 (2000). The Board notes that sole administrative error may be found to occur only in cases where the appellant neither had knowledge of nor should have been aware of the erroneous award. Further, such error contemplates that neither the appellant’s actions nor his failure to act contributed to the erroneous award. 38 U.S.C. § 5112 (b)(10); 38 C.F.R. § 3.500 (b)(2). Under 38 U.S.C. § 5112 (b)(10), the effective date of a reduction or discontinuance of compensation by reason of an erroneous award based solely on administrative error or error in judgment shall be the date of last payment. See also 38 C.F.R. § 3.500 (b)(2). Thereafter, in March 2010, the Veteran was notified by VA that the Veteran would continue to be paid compensation benefits at the $123 (reduced) monthly rate. In December 2011, the Veteran telephoned VA to notify the VA that his monthly benefits check received (of $219) was more than he had previously received and the Veteran thought that it was in error. VA then took action to process a reduction. In May 2012, the Veteran was told that VA was obtaining his file so that an adjustment to his compensation benefits could be made. The adjustment made was done in January 2013. The retroactive reduction resulted in the $1,241 overpayment. In this case, clearly VA paid the Veteran the incorrect amount and communicated the wrong information to the Veteran, telling him that he was being paid at the lower rate. However, the Veteran continued to be paid at the higher rate. The Veteran did notify VA in December 2011 that he believed that he was being overpaid, but that was a delayed report by the Veteran. The RO then made a corrective adjustment, albeit, also on a delayed basis. Thus, the Veteran asserts that due to VA error, the debt was created. However, as noted, sole administrative error may be found to occur only in cases where the appellant neither had knowledge of nor should have been aware of the erroneous award and where neither the appellant’s actions nor his failure to act contributed to the erroneous award. In this case, by virtue of the circumstances regarding the earlier and substantially higher overpayment, the Veteran was well aware that he was only entitled to receive the lower rate of benefits. Thus, even though VA miscommunicated with the Veteran and also delayed in reducing the award, it cannot be determined that the Veteran neither had knowledge of nor should have been aware of the erroneous award. He knew the amount of monies that he was entitled to receive; hence his December 2011 communication. However, it can also not be determined that the Veteran’s actions or his failure to act did not contribute to the erroneous award. The Veteran delayed in contacting VA of the error in his award and he retained the earlier payments. According, there is not sole VA error in this case. Even though VA delayed in taking action, this does not mean that the action should not have been undertaken, even if late. In sum, the Board concludes that the overpayment of VA compensation benefit payments due to the Veteran’s incarceration in the amount of $1,241 was properly created. S. L. Kennedy Veterans Law Judge Board of Veterans’ Appeals ATTORNEY FOR THE BOARD J. Connolly, Counsel