Citation Nr: 18145188 Decision Date: 10/26/18 Archive Date: 10/26/18 DOCKET NO. 15-35 079A DATE: October 26, 2018 ORDER Entitlement to a waiver of recovery of an overpayment of Department of Veterans Affairs (VA) compensation benefits in the amount of $15,766.53 is denied. FINDINGS OF FACT 1. This overpayment was not due to the Veteran’s fraud, misrepresentation or bad faith. 2. The Veteran received additional compensation benefits for her two school-aged dependent children who received duplicate educational benefits under the Chapter 35 program, with comparatively equal fault on her part for delayed notification on the change in status of her two school-aged dependents and on VA for lack of communication between the relevant implementing offices. 3. There is no undue hardship; the evidence does not demonstrate that collection of the overpayment debt would deprive debtor or family of basic necessities. 4. Since the Veteran’s two school-aged dependent children are being paid Chapter 35 benefits, the recovery of the overpayment would not defeat the purpose for which the benefits were intended, namely, payment of additional compensation on the basis of the Veteran’s children’s educational pursuits. 5. Waiver of recovery of the overpayment would constitute an unjust enrichment to the Veteran by essentially paying the same benefit twice. 6. The evidence does not show that the Veteran incurred a legal obligation or changed her position to her detriment in reliance upon the receipt of VA benefits. 7. Recovery of the amount of the overpayment would not be against equity and good conscience. CONCLUSION OF LAW Recovery of the overpayment of VA compensation benefits in the amount of $15,766.53 would not be against equity and good conscience and, therefore, may not be waived. 38 U.S.C. §§ 5107, 5302(a); 38 C.F.R. §§ 1.963(a), 1.965(a). REASONS AND BASES FOR FINDINGS AND CONCLUSION The Veteran served on active duty from March 1988 to March 1992. The Veteran’s overpayment debt is due to the removal of two school-aged dependent children from her VA compensation benefits for the period of August 22, 2011, to December 31, 2014, due to their concurrent receipt of Chapter 35 Dependents’ Educational Assistance (DEA) benefits. See 38 C.F.R. §§ 3.667, 3.707, 21.3023 (although a veteran may receive additional compensation on behalf of a dependent child over the age of 18 who is in school, VA regulations prohibit payment of extra compensation for a dependent child based on school attendance when the child is concurrently receiving Chapter 35 educational assistance). Historically, the Veteran has been in receipt of disability compensation benefits for various service-connected disabilities. Notification letters of April 2002, July 2004, April 2006, May 2010 and March 2013 and information provided with rating decisions addressing her service-connected disabilities dated in May 2002, February 2005, April 2006, May 2010, and March 2013 explained that she was receiving additional compensation benefits for a spouse and children, that her payments could be affected by a change in the status of her dependents, and that she was to promptly advise VA in the event of such changes. In December 2006, the Veteran submitted an additional declaration of status of dependents that added her current spouse and three children to her compensation benefits award; the associated notification letter also explained that any change in the number or status of her dependents must be reported immediately. In April 2012, the Veteran submitted VA Form 21-674 requests for approval for school attendance for two dependents, V.D. and J.N.; a January 2013 notification letter stated that the two children were added as dependents to her compensation benefits due to school-age status and reiterated that she was required to immediately notify VA of any change in the status of the dependents. In June 2013, Chapter 35 educational benefits were awarded for the Veteran’s two school-aged dependents with an effective date of November 20, 2010. Reports on education eligibility indicate V.D. became eligible for benefits in August 2011 and J.N. became eligible for Chapter 35 benefits in August 2012. The Board notes that since the Chapter 35 program is administered by one of the Education Processing Offices, while compensation is administered by the RO, an overpayment based on concurrent payments is not unusual. In a September 2014 report of general information, the Veteran stated that J.N. and V.D. were receiving Chapter 35 benefits and that she may have been overpaid. A statement received in October 2014 requested immediate removal of the two school-aged dependent children from the disability compensation award and indicated that the Veteran attempted to update the information on her dependents online. In a January 2015 VA notification letter, the Veteran was advised that her compensation benefits included payment for three dependents, that V.D. was removed from the award in August 2011 and J.N. was removed in August 2012, and that an overpayment debt was created due to the adjustment. In a January 2015 first demand letter, the Veteran was advised by the Debt Management Center (DMC) that an overpayment of $17,309.91 had been assessed. She requested a waiver of the debt in February 2015. A VA Form 5655, Financial Status Report, was received from the Veteran showing monthly income exceeded her expenses by about $3,000.00 per month and reported assets of about $34,000.00 and outstanding debts of about $12,000.00. In a March 2015 decision on waiver of indebtedness, the Committee on Waivers and Compromises (COWC) did not find fraud, misrepresentation, or bad faith on the Veteran’s part. The Board agrees with this determination. The COWC further found that the overpayment was created because the Veteran’s dependents, V.D. and J.N. received Chapter 35 educational benefits while the Veteran received an extra allowance in her compensation for these dependents, but that fault was not a significant factor in the creation of the debt due to the possibility that she was unaware of the law that does not allow VA to pay additional benefits for a dependent while they are in receipt of DEA benefits. The COWC found that the payment of compensation benefits at a higher rate than the Veteran was entitled and failure to repay the debt would result in unjust enrichment at the government’s expense, collection of this debt would not cause financial hardship, repayment of the debt would not defeat the purpose of the VA compensation benefit she receives, and the changed position standard did not apply. The Veteran contends that VA was at fault for not catching the double payment and for failing to take action on her requests to remove V.D. and J.N. from her compensation award in a timely fashion; she also explained that she called the VA education telephone line multiple times between May 2013 and September 2014, when the overpayment issue was first noted, without any advisement that the awards for DEA benefits would affect her compensation entitlement. She also noted that paying the debt would deplete her savings. She reported in an August 2015 VA Form 9 that VA Regional Offices were at fault for not notifying the pertinent offices of the awards of Chapter 35 benefits. Subsequently, a September 2015 decision on waiver of indebtedness modified the March 2015 decision and granted waiver of $1,543.38 for debt incurred between September 2014 and January 2015; the remaining debt was denied waiver of recovery in the amount of $15,766.53. The September 2015 decision found the Veteran was at fault for failing to immediately report the receipt of Chapter 35 benefits by her dependent children that resulted in unjust enrichment at the government’s expense and noted that no financial hardship was found based on her VA Form 5655 indicating income exceeded expenses and that she was willing to pay $1000.00 per month toward the debt. The Board initially notes that the Veteran has asserted clear and unmistakable error (CUE) with the March 2015 decision on waiver of indebtedness. In addition, the Veteran’s representative contended that administrative error committed by VA may be corrected on a final decision when it is clear and unmistakable; however, the decision was not final and may not be collaterally attacked because it has been subsumed by this decision. Therefore, a claim of CUE is not before the Board. See 38 C.F.R. §§ 3.105; 20.1104. Additionally, the Board finds the Veteran is not challenging the validity of the debt. See Schaper v. Derwinski, 1 Vet. App. 430 (1991) (indicating this otherwise would be the threshold preliminary determination). Although the Veteran and her representative make some broad statements indicating she should not be responsible for the debt because VA erroneously created the debt, the Board finds such statements are related to the weighing of fault as it pertains to the issue of waiver. As such, the Board will proceed to the merits of her waiver request. In cases where there is no fraud, misrepresentation, or bad faith on the Veteran’s part with respect to the creation of the overpayment at issue, waiver is not precluded pursuant to 38 U.S.C. § 5302(a). Rather, the Board must determine whether recovery of the indebtedness would be against equity and good conscience, thereby permitting waiver under 38 U.S.C. § 5302(a) and 38 C.F.R. §§ 1.963(a), 1.965(a). The standard of “equity and good conscience” will be applied when the facts and circumstances indicate a need for reasonableness and moderation in the exercise of the Government’s rights. 38 C.F.R. § 1.965(a) (outlining the elements of equity and good conscience as: (1) fault of debtor, where actions of the debtor contribute to creation of the debt; (2) balancing of faults, weighing fault of debtor against VA fault; (3) undue hardship, whether collection would deprive debtor or family of basic necessities; (4) defeat the purpose, whether withholding of benefits or recovery would nullify the objective for which benefits were intended; (5) unjust enrichment, failure to make restitution would result in unfair gain to the debtor; (6) changing position to one’s detriment, reliance on VA benefits results in relinquishment of a valuable right or incurrence of a legal obligation.). The first and second elements pertain to the fault of the debtor versus the fault of VA. In this case, the Veteran has essentially argued that VA was more at fault with regard to the duplicate payments. The Board finds the Veteran partially at fault in the creation of the overpayment of compensation benefits because she was notified to update VA for any change in status of her dependents, which includes enrollment of V.D. and J.N. in the Chapter 35 program. Therefore, she should have been aware that her disability compensation payments were separate from the Chapter 35 benefits that were also being paid to her two school-aged dependent children. Evidence of record first indicates the Veteran notified VA of the Chapter 35 benefits in September 2014, months after she received notification of eligibility for DEA in June 2013. Although VA was in part at fault for not implementing the adjustment to her disability compensation award until January 2015, that portion of the overpayment debt has already been modified to omit that debt incurred during the period since the Veteran submitted the September 2014 notice. Thus, for the remaining overpayment period prior to September 2014, the Board finds the Veteran bears some responsibility with regard to fault for the delayed notification of change in status of her dependents and that VA is also partially at fault for not communicating the award for Chapter 35 benefits between offices. Thus, this is not the case of sole administrative error on VA’s part. Although both sides are partially at fault, the Board finds the remaining elements do not weigh in the Veteran’s favor and the remaining overpayment debt of $15,766.53 cannot be waived. With regard to the third element, the Board finds no undue hardship is demonstrated based on the Veteran’s self-reported VA Form 5655, which notes income greater than monthly expenses and the ability to pay $1000 per month toward the outstanding debt. Therefore, collection would not deprive debtor or family of basic necessities. With regard to the fourth element, given that her two children were being paid Chapter 35 benefits, the recovery of the debt would not defeat the purpose of paying the additional compensation benefits for two school-aged dependent children; the underlying objective of the benefits is the payment of additional compensation to support her children’s educational pursuits and such benefit is not nullified. With regard to the fifth element, the Board finds waiver of recovery of the overpayment would constitute an unjust enrichment to the Veteran by essentially paying the same benefit twice. Finally, with regard to the sixth element, the evidence does not show that she incurred a legal obligation or changed her position to her detriment in reliance upon the receipt of VA disability compensation benefits that included compensation for two school-aged dependent children. Based on the above, the Board finds the weight of the elements regarding equity and good conscience are not in the Veteran’s favor. As there is evidence of partial fault on the part of the Veteran but a lack of financial hardship, nullification of the purpose for which the benefits were intended, or reliance on the benefit to her detriment, failure to make restitution would result in unfair gain to the debtor and result in unjust enrichment at the expense of the government. As such, the elements supporting recoupment of the overpayment debt outweigh the elements in favor of a waiver of recovery, particularly the lack of undue hardship and the finding that recovery would not defeat the purpose for which benefits were intended. (Continued on the next page) Accordingly, the standard of equity and good conscience may not be applied, waiver of recovery of the overpayment is not warranted, and the claim must be denied. Nathan Kroes Veterans Law Judge Board of Veterans’ Appeals ATTORNEY FOR THE BOARD A. Odya-Weis, Counsel