Citation Nr: 18143320 Decision Date: 10/18/18 Archive Date: 10/18/18 DOCKET NO. 13-13 924 DATE: October 18, 2018 REMANDED The issue of entitlement to waiver of recovery of an overpayment of Department of Veterans Affairs (VA) improved pension benefits in the amount of $22,252.80 is remanded. REASONS FOR REMAND The Veteran served on active duty from November 1988 to December 1991. In July 2018, the Veteran testified at a Board of Veterans’ Appeals (Board) hearing before the undersigned. A transcript of the hearing is associated with the record. As explained below, the Board finds the Veteran has raised the issue of the proper creation of the debt, to include a dispute regarding the amount owed based on the amount of pension benefits received during the time he was subject to an outstanding warrant and incarcerated. Resolution of the creation issue must precede consideration of the waiver issue. An overpayment debt was created in the amount of $22,252.80 due to a notice that the Veteran was the subject of an outstanding warrant. The debt is also related to pension benefits received during a period of incarceration. The Veteran has contested the validity of the overpayment debt. The Veteran testified that the amount of debt was incorrect because he did not receive benefits totalling $22,252 during the period in question. In support of his claim, the Veteran submitted bank statements and paperwork was received in September 2011 indicating incarceration at Coastal State Prison from October 2010 to August 2011 and included a bail recognizance form. See 38 U.S.C. § 5313; 38 C.F.R. § 3.666 (Where a veteran in receipt of pension is incarcerated in a federal, state, or local penal institution in excess of 60 days for conviction of a felony or misdemeanor, pension payments will be discontinued beginning on the 61st day of incarceration); see also 38 U.S.C. § 5313B; 38 C.F.R. § 3.666(n) (VA is prohibited from payment of compensation benefits for any period during which a veteran was a fugitive felon). The record also includes June 2012 and December 2012 VA memorandums noting the debt dispute was referred to the Committee on Waivers and Compromises (COWC) for adjudication; however, the June 2012 memo indicates no action was taken due to pending Regional Office (RO) action on an incarceration issue. Based on the above, further appellate review by the Board on the Veteran’s waiver claim must be deferred pending adjudication of a threshold determination on the propriety of the creation of the debt. Schaper v. Derwinski, 1 Vet. App. 430, 437 (1991) (“when a Veteran raises the validity of the debt as part of a waiver application... it is arbitrary and capricious and an abuse of discretion to adjudicate the waiver application without first deciding a veteran’s challenge to the lawfulness of the debt asserted against him or her”); VAOPGCPREC 6-98 (July 24, 1998) (holding that when a veteran challenges the validity of the debt and seeks waiver of the debt, the [RO] must first fully review the debt’s validity and, if the office believes the debt to be valid, prepare a written decision fully justifying the validity of the debt before referring the waiver request to the COWC). A debtor may dispute the amount or existence of a debt, which is a right that may be exercised separately from a request for waiver or at the same time. 38 C.F.R. § 1.911(c)(1). In addition, the Board notes that the Veteran has requested an audit of his pension disbursements and recalculation of his overpayment debt. Specifically, the Veteran indicated in a May 2012 notice of disagreement that $17,900.00 was deposited during the contested period that accrued an overpayment debt of $22,252.80, and he also reported in his VA Form 9 that he did not receive pension benefits while he was incarcerated such that an overpayment balance for those months was improper. In May 2013, the Veteran’s request for an audit on the amount of debt owed was acknowledged and even though a subsequent December 2015 notification letter provided an accounting of the Veteran’s reinstated pension benefits and an associated retroactive payment, there is no indication that an audit was completed on the amount of debt created by the Veteran’s outstanding warrant and incarceration. As the record is unclear regarding the amount of pension benefits the Veteran received while he was subject to an outstanding warrant and during his period of incarceration, consideration of his claim should include a proper accounting for the period covered by the overpayments. The matter is REMANDED for the following action: 1. Adjudicate the issue of whether the overpayment of improved pension benefits in the amount of $22,252.80 was properly created. Consideration should include completion of an audit for the entire period covered by the overpayment that provides an accounting to the Veteran, explaining the amount of the overpayment and how it was calculated. (Continued on the next page)   2. After the issue regarding whether the overpayment was properly created is resolved to the Veteran’s satisfaction, perfected on appeal, or finally denied, issue a supplemental statement of the case (SSOC) that addresses the waiver issue and afford him and his representative the opportunity to respond.] JAMES G. REINHART Veterans Law Judge Board of Veterans’ Appeals ATTORNEY FOR THE BOARD A. Odya-Weis, Counsel