Citation Nr: 18148878 Decision Date: 11/08/18 Archive Date: 11/08/18 DOCKET NO. 15-11 421 DATE: November 8, 2018 REMANDED Whether an overpayment of pension benefits was validly created in the amount of $36,051.00, is remanded. Entitlement to waiver of overpayment of pension benefits in the amount of $36,051.00, to include the validity of the debt, is remanded. REASONS FOR REMAND The Veteran served on active duty from July 1969 to July 1973. The Veteran died in December 1981. The Appellant is his surviving spouse. This matter comes before the Board of Veterans’ Appeals (Board) from a September 2014 Decision on Waiver of Indebtedness. For the reasons set forth below, the Board has recharacterized and bifurcated the issues on appeal to afford the Appellant the broadest scope of review. The Appellant was notified in July 2014 that she over paid pension benefits in the amount of $36,051.00. The Appellant requested a waiver of such overpayment in September 2014 on the basis of financial hardship. The Committee denied the waiver request having determined that she was at significant fault for creation of the debt and her failure to report changes in her income resulted in an unjust enrichment at the government’s expense. The Committee notified her that she was sent multiple letters reminding her that her VA benefits were income-based and that she was required to report the receipt of all income. The Committee determined that the claim of financial hardship was outweighed by the findings of fault and unjust enrichment. In her notice of disagreement, the Appellant not only disagreed with the waiver denial, but also challenged the validity of the debt. Specifically, she indicated that she called VA about 4 or 5 times to change her address and that she did not receive any letters or Eligibility Verification Reports from VA for over two years. In the statement of the case (SOC), the RO indicated that Appellant did not file a change of address until January 2014; however, the Board notes that VA Form 21-4138 received in July 2013 reflected her new address. The Appellant is disputing the debt and clearly has asked that the repayment of the debt be waived. Because the Appellant has challenged the proper creation of the debt, further appellate review by the Board with regard to the Appellant’s waiver claim must be deferred pending formal adjudication of her challenge to the validity 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 the 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 Committee on Waivers and Compromises). 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). The Board additionally notes that the overpayment was the result of unreported income for February 2010 to June 2014 discovered through an income verification match. There is a “user calculations” of record, but there is no actual audit that explains the creation of the debt that was attributed to the Appellant during the applicable time period. Resolution of the creation issue, to include obtaining a proper audit detailing the actual amount of the overpayment and how the overpayment was calculated (detailing how medical expenses were deducted from countable income), should precede consideration of the waiver issue. As a final matter, proper notice should be issued to the Appellant as to the creation issue. Accordingly, the case is REMANDED for the following action: 1. The RO should review the record and ensure compliance with all notice and assistance requirements with regard to the creation issue. 2. Prepare an audit of the Appellant’s VA pension benefits. (a) The audit must explain the creation of the debt, to include amount paid for the applicable time period. (b) The audit must contain the amount of net worth and income that was attributed to the Appellant during the applicable time period, including the amount of countable income considered after medical expenses were deducted. (c) The Appellant must be provided a written copy of the detailed audit. 3. Once the development above has been completed, the issue of validity of the creation of the overpayment of benefits in the amount of $36,051.00, should be adjudicated by the RO. The Appellant must be provided the proper notice of any such determination and afforded the necessary time to respond. Thereafter, if necessary, the issue of waiver of recovery of the overpayment should be readjudicated. E. I. VELEZ Veterans Law Judge Board of Veterans’ Appeals ATTORNEY FOR THE BOARD K. L. Wallin, Counsel