Citation Nr: 18149916 Decision Date: 11/15/18 Archive Date: 11/14/18 DOCKET NO. 15-13 839 DATE: November 15, 2018 ORDER Entitlement to a waiver of recovery of an overpayment of Department of Veterans Affairs (VA) compensation benefits in the amount of $5336 is denied. FINDING OF FACT 1. This overpayment at issue was not due to the Veteran’s fraud, misrepresentation or bad faith. 2. The Veteran received additional compensation benefits for his son, J., who received duplicate educational benefits under the Chapter 35 (Dependents’ Educational Assistance (DEA)) program; he bore no fault in the debt created. 3. Since the Veteran’s son, J., was paid Chapter 35 benefits, the recovery of the overpayment would not defeat the purpose of paying benefits by nullifying the objective for which the benefits were intended, namely, payment of additional compensation on the basis of the Veteran’s child’s educational pursuits. 4. Waiver of recovery of the overpayment would constitute an unjust enrichment to the Veteran by essentially paying the same benefit twice. 5. The evidence does not show that the Veteran incurred a legal obligation or changed his position to his detriment in reliance upon the receipt of VA benefits. 6. There is no financial hardship in this case. CONCLUSION OF LAW The overpayment was not due to fraud, misrepresentation or bad faith of the Veteran, but recovery of the overpayment of VA compensation benefits in the amount of $5336 would be against equity and good conscience and, therefore, is not waived. 38 U.S.C. §§ 5107, 5302(a); 38 C.F.R. §§ 1.963(a), 1.965(a). REASONS AND BASES FOR FINDING AND CONCLUSION Before June 2002, the Veteran’s disability compensation benefit payments included additional amounts based on his dependent children and spouse. 38 C.F.R. § 3.4 (b)(2) (an additional amount of compensation may be payable for a child where a veteran is entitled to compensation based on disability evaluated at 30 percent or more disabling). In pertinent part, even if the Veteran’s children attain 18 years of age, but commence college before the age of 26 years, for purposes of calculating the amount of his disability compensation benefit payments, he was entitled to an additional amount based on each child’s school attendance. 38 C.F.R. § 3.57 (a)(a)(iii) (the term “child” means an unmarried person who is a legitimate child who, after reaching 18 years of age and until completion of education, is pursuing a course of instruction at an educational institution approved by VA). An individual is eligible for Chapter 35 DEA benefits if he or she is a child of a veteran who has a total disability, permanent in nature, resulting from service-connected disability. 38 U.S.C. § 3501. A child who is eligible for DEA and for pension, compensation, or dependency and indemnity compensation (DIC) must elect whether he or she wishes to receive DEA or compensation. An election of DEA either before or after the age of 18 years is a bar to subsequent payment, increased rates, or additional amounts of pension, compensation, or DIC based on the child’s school attendance on or after the age of 18 years. See 38 C.F.R. §§ 3.667 (f), 3.707(a), 21.3023. The effective date of the discontinuance of DIC to or for a child will be the day preceding the beginning date of the educational assistance allowance. 38 C.F.R. § 3.503 (a)(8). In June 2002, the RO granted the Veteran a total rating for compensation purposes due to individual unemployability, effective as of July 1, 2001. The June 2002 notice letter informed the Veteran that his children may be eligible for DEA benefits. He was given VA Pamphlet 22-73-3, “Summary of Education Benefits.” This pamphlet explained the program. Specifically, the pamphlet stated “If you’re a son or daughter of a Veteran receiving a disability benefit, the Veteran can generally receive an additional allowance for you as a dependent until you reach age 23 if you’re attending school. However, if you elect DEA, the additional allowance to the Veteran will stop when you begin receiving DEA benefits.” Additionally, he was given the application, VA Form 22-5490, Dependents’ Application for VA Education Benefits. In this application, it was reported that a child may not be claimed as a dependent in a compensation claim while receiving DEA benefits. This information was provided to the Veteran so that he would be aware of the rules regarding the election of DEA benefits. In this case, there were two consequences of the determination of the Veteran’s TDIU grant. First, the Veteran was provided with a retroactive disability compensation payment for the period from July 1, 2001 until June 2002. According to the June 2002 letter sent to the Veteran, that payment included additional amounts based on his daughter’s (J.’s) school attendance. The monthly payments thereafter (at the 100 percent rate) also included additional amounts based on this daughter’s school attendance. Another result of the total rating was that the Veteran’s children became eligible for DEA benefits. In January 2003, DEA benefits were approved for daughter J. with an effective date of July 1, 2001. The Veteran’s daughter was thereafter provided with a retroactive payment for those benefits. If a veteran’s child receives DEA benefits, the additional disability compensation benefits to a veteran on the basis of that child’s school attendance are prohibited. 38 U.S.C. § 3562 (the commencement of a program of education benefits under Chapter 35 shall be a bar to additional amounts of compensation because of such a person); 38 C.F.R. §§ 20.3023 (a)(1) (if a child elects educational assistance benefits under Chapter 35, is a bar to additional compensation on account of the child based on school attendance after age 18); 3.667(f)(1) (compensation may not be authorized after a child has elected to receive educational assistance under Chapter 35). In August 2003, the RO notified the Veteran that because his daughter, J., was receiving DEA benefits, the RO was proposing that he no longer receive an additional amount in his disability compensation benefit payments with respect to her school attendance. In October 2003, although the Veteran continued to receive disability compensation benefit payments at the rate of 100 percent, the RO reduced the additional disability compensation benefit payments because the RO removed the Veteran’s daughter J. as his dependent. The Veteran was also informed that he had been overpaid his disability compensation benefits for the period since August 13, 2001, and he would be notified shortly of the exact amount of that overpayment. In November 2003, the Veteran was notified of the amount of the overpayment of his disability compensation benefits ($5,023.20) and that he was required to pay that debt to VA. The Veteran requested a waiver of the recovery of the debt which was denied and he appealed the denial to the Board. In a May 2008 decision, the Board denied the appeal for a waiver of recovery of the overpayment of disability compensation benefits in the amount of $5,023.20. The Veteran appealed that decision to the United States Court of Appeals for Veterans Claims, which in an April 2010 decision vacated and remanded the Board decision back to the Board for further proceedings. Subsequently, in September 2010, the Board determined that while the debt was valid, a waiver of the recovery thereof was warranted. The Board determined that the Veteran was not at fault for the creation of the overpayment since most of the overpayment related to a retroactive compensation benefits payment that was made before the Veteran’s daughter ever applied for Chapter 35 educational assistance benefits and which, at the time, he was entitled to receive. Conversely, VA bore some fault for the creation of the overpayment. When the RO notified the Veteran that DEA benefits had been awarded to the Veteran’s daughter, it took an additional six months before the RO determined that there was an overlap of benefits. Thus, the total amount of the overpayment was larger than it would have been had that determination been made sooner. The Board further found that there was some financial hardship and no unjust enrichment to the Veteran; the other factors were not in the Veteran’s favor. Several years later, in November 2009, VA notified the Veteran that his son J. had been added to his VA compensation award as a dependent child/school child and that it was his responsibility to immediately notify VA of any changes in dependency status. A couple years later, in May 2011, the Veteran submitted a VA Form 21-8960-1 (Certification of School Attendance or Termination) in which he reported that his son J. was attending school, but was not receiving and had not applied for DEA benefits. The form noted that the Veteran could not receive the additional benefits for his child as a dependent and DEA benefits simultaneously. Thereafter, the Veteran’s son J. applied for and was awarded DEA benefits. Meanwhile, the Veteran repeatedly contacted the RO regarding his waiver award and the reimbursement thereof with regard to his daughter’s overpayment; however, there was no report that his son J. had applied for or was receiving DEA benefits. Once the RO discovered that the Veteran’s son, J., was receiving DEA benefits, the RO issued a letter in February 2014 which indicated that the RO determined that the Veteran’s son J. was receiving Chapter 35 benefits since August 15, 2011, but that VA rules and regulations stipulate that a dependent that elects to receive Chapter 35 benefits must not be included in a veteran’s award concurrently and the RO thus proposed to remove his son, J., from the Veteran’s compensation benefits effective August 15, 2011. In May 2014, the proposed action was taken. This action resulted in an overpayment of $5336. The Veteran requested a waiver of the recovery of the debt at issue. He submitted financial information which showed his monthly income exceeded his debts by approximately $580. In a December 2014 decision, the Committee considered the Veteran’s claim for waiver. The Committee did not find fraud, misrepresentation, or bad faith on the Veteran’s part with respect to the creation of the overpayment at issue. The Board agrees with this determination. The Committee further found that the overpayment was created because the Veteran’s dependent, his son J. received Chapter 35 educational benefits while the Veteran received an additional allowance in his compensation for this dependent. However, the Veteran may not receive both benefits concurrently. 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). In order to dispose of the matter on appeal, 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 pertinent regulation provides that 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). The elements of equity and good conscience are as follows: (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. VA certainly bears some responsibility for the creation of the overpayment. There was an application for Chapter 35 benefits which took time to process. In the meantime, the Veteran received additional benefits for J. as a dependent school child. These actions were proper. However, once Chapter 35 benefits were awarded, the award was retroactive to when J. filed an application. Thus, a measure of the “fault” lies in how the claim for Chapter 35 was processed; however, the Veteran was clearly aware of his Chapter 35 benefits are awarded and processed and the resulting effect on his VA benefits given the prior overpayment. He did not notify VA of any pending Chapter 35 application even though he was in contact with VA for other matters. With regard to the other elements of equity and good conscience, none of these elements is in the Veteran’s favor. Given that his child is or was being paid Chapter 35 benefits, the recovery of the overpayment would not defeat the purpose of paying benefits by nullifying the objective for which the benefits were intended, namely, payment of additional compensation on the basis of his child’s educational pursuits. Waiver of recovery of the overpayment would constitute an unjust enrichment to him by essentially paying the same benefit twice. The evidence does not show that he incurred a legal obligation or changed his position to his detriment in reliance upon the receipt of VA benefits. The last element of equity and good conscience is whether the Veteran would suffer undue financial hardship if forced to repay the debt at issue. However, there is no financial hardship in this case as the Veteran’s monthly income exceeds expenses and he is therefore able to pay debt in installments which has already been occurring. (Continued on the next page)   Therefore, overall the Board finds that, in weighing all of the elements of equity and good conscience, the elements not in the Veteran’s favor outweigh the element in the Veteran’s favor. Accordingly, waiver of recovery of the overpayment is not warranted. S. L. Kennedy Veterans Law Judge Board of Veterans’ Appeals ATTORNEY FOR THE BOARD J. Connolly, Counsel