Citation Nr: 18142285 Decision Date: 10/15/18 Archive Date: 10/15/18 DOCKET NO. 17-21 034 DATE: October 15, 2018 ORDER Entitlement to waiver of recovery of the outstanding overpayment amount of VA disability compensation benefits is granted as of the date of this decision. FINDINGS OF FACT 1. An overpayment in the amount of $65,069.85 was created due to the Veteran’s concurrent receipt of drill pay and VA compensation benefits. 2. The overpayment of VA compensation benefits was not solely the result of VA administrative error. 3. Although the overpayment resulted in unjust enrichment to the Veteran, and VA has waived the amount due to the fault of the VA, denying the Veteran’s request for waiver would result in undue hardship as the Veteran is currently on active duty. CONCLUSION OF LAW 1. The overpayment in the amount of $65,069.85 was validly created. 38 C.F.R. § 3.708 (2018). 2. Collection of the overpayment indebtedness would be against equity and good conscience; therefore, the criteria for waiver of recovery of the overpayment for the remaining balance as of the date of this decision have been met. 38 U.S.C. § 5302 (2012); 38 C.F.R. § 1.965 (2018). REASONS AND BASES FOR FINDING AND CONCLUSION The Veteran had active duty service from November 2006 to April 2007, from January 2008 to January 2009, from June 2010 to September 2010, and is currently on active duty. Entitlement to waiver of recovery of an overpayment of VA disability compensation benefits The Veteran seeks a waiver of recovery for an overpayment of $65,069.85. By a July 2016 statement of the case (SOC), VA found that “because VA took over 3 years to correctly adjust your award, VA is also at fault. Prompt action by the VA would have reduced the size of the debt.” As a result, VA found “$32,398.40 is denied for fault and no hardship. $30,571.45 is granted for VA fault.” $32,398.40 is not the current remaining balance as the Veteran has been making monthly payments on the overpayment. Here, there is no question that the debt was validly created. Instead, the Veteran contends that he should be granted a waiver because he made several efforts to inform VA that he was going back on active duty and was informed by VA staff that he could continue to receive benefits as he was on Title 32 National Guard; and was not a Title 10 soldier. A waiver of indebtedness may be authorized in a case in which collection of the debt would be against equity and good conscience. 38 U.S.C. § 5302(b). Equity and good conscience refers to fairness to both the Veteran and to the government. 38 C.F.R. § 1.965(a). Under the regulation, equity and good conscience involves a variety of elements, including but not limited to: (1) fault of the debtor, (2) balancing of the faults, (3) undue hardship, (4) whether recovery would defeat the purpose of the benefit, (5) unjust enrichment, and (6) changing position to one’s detriment. 38 C.F.R. § 1.965. The law also precludes waiver of recovery of an overpayment or waiver of collection of any indebtedness where any one of the following elements is found to exist: (1) fraud; (2) misrepresentation; or (3) bad faith. 38 U.S.C. § 5302(c); 38 C.F.R. § 1.965(b). The facts in this case are relatively straight-forward. As indicated by the Committee on Waivers and Compromises, the Veteran did not report his active duty status to VA until November 15, 2012. He reported that “the VA did not receive my orders earlier, but I had in fact turned them into my American Legion representative earlier and VA did not process my paperwork until the date of November 15, 2012.” A review of the record reveals that by a November 2012 letter, the American Legion stated “[the Veteran] was placed on AGR status with the North Dakota National Guard effective January 3, 2012. Please discontinue his VA benefits immediately.” Because his representative did not provide these orders in a timely manner, VA had no reason to believe that the benefit should have been stopped. To be clear, the American Legion, which is not part of VA, waited approximately 10 months to provide the necessary paperwork that they clearly were aware would trigger the Veteran’s VA benefits to be halted. This letter calls into question whether or not the Veteran was advised that his AGR status would be a qualifying reason to discontinue his VA benefits. However, this is balanced by the Veteran’s reports that he contacted the VA on numerous occasions only to be told that because he was a Title 32 soldier, the requirements did not apply to him. Although the Board does not dispute the Veteran’s testimony that he immediately contacted the American Legion, the fact remains that the American Legion is not VA; and the Veteran had a duty to provide his military orders to VA. It is reasonable to assume that the Veteran believed that his orders would be submitted to VA in a timely matter. Although it is extremely unfortunate that the Veteran’s representative failed to provide his orders until approximately 10 months after he went AGR status, it simply cannot be said that VA had any fault in this delay. Regardless, as noted above, a waiver of indebtedness may be authorized in a case in which collection of the debt would be against equity and good conscience. This means that the Board is to weigh and balance all factors. Here, VA has already recognized that there was fault on its behalf in waiting three years to stop distributing the Veteran’s benefits. However, prior to VA receiving notice, because the Veteran did not provide the information to VA directly, there is fault on his behalf. With regard to undue hardship, however, the record reveals that at the time of the original recovery of the debt, the Veteran had been married. An October 2018 Financial Status Report shows that he is now divorced. He testified at his Board hearing that he had to refinance his home and continues to struggle to balance his finances, leaving him to put many of his living expenses on credit card. A comparison of his March 2016 Financial Status Report with his current report shows that as a result of his divorce, he has far less disposal income; approximately $3,000 less a month. In addition, as noted above, the Veteran is not currently receiving VA benefits as he is on active duty; and therefore, his ability to work more and make additional money to cover the cost of the overpayment repayment is severely limited. Thus, when considering all of the above, the Board finds no evidence of fraud, misrepresentation, or bad faith on the part of the Veteran that would be a bar to waiver of the overpayment indebtedness. 38 U.S.C. § 5302(c); 38 C.F.R. § 1.965(b). In summary, the Board finds that, although the overpayment of benefits resulted in unjust enrichment for the Veteran, his request for a waiver of repayment of the debt would result in undue hardship as he is currently on active duty. Although the Veteran does have some fault in not submitting his paperwork directly to VA in a timely manner, this is balanced with the fact that he contacted VA only to be told that the requirements did not apply to him. He was diligently paying the overpayment to his detriment—even charging portions of this to his credit cards. Therefore, the Board concludes that collection of the remaining overpayment indebtedness would be against equity and good conscience. Accordingly, waiver of the remainder of the validly created overpayment indebtedness, as of the date of this decision, is warranted. H.M. WALKER Veterans Law Judge Board of Veterans’ Appeals ATTORNEY FOR THE BOARD Martha R. Luboch, Associate Counsel