Citation Nr: 18151794 Decision Date: 11/20/18 Archive Date: 11/20/18 DOCKET NO. 16-05 975 DATE: November 20, 2018 ORDER A waiver of the collection of an overpayment of VA disability compensation in the amount of $10,854.21 is granted. FINDING OF FACT 1. VA paid the Veteran disability compensation benefits in excess of the amount to which he was entitled by law. The Veteran bears no fault in the creation of the resulting debt. 2. There was no fraud, misrepresentation, or bad faith on the part of the Veteran in the creation of the overpayment, and recovery of the overpayment in the amount of $10,854.21 would violate the standards of equity and good conscience CONCLUSIONS OF LAW 1. There is a valid debt resulting in an overpayment of VA disability compensation in the amount of $10,854.21. 38 U.S.C. §§ 501(a), 5313; 38 C.F.R. § 3.665. 2. The requirements for waiver of recovery of the overpayment of compensation in the amount of $10,854.21 are met. 38 U.S.C. § 5302; 38 C.F.R. §§ 1.962, 1.963, 1.965. REASONS AND BASES FOR FINDING AND CONCLUSIONS The Veteran served on active duty from January 1973 to July 1974. This matter is before the Board of Veterans’ Appeals (Board) on appeal from a February 2015 decision of the Department of Veterans Affairs (VA) Regional Office (RO) in Winston-Salem, North Carolina which notified him of an additional overpayment that was to be added to an already-existing overpayment debt and further reduced the amount of the Veteran’s compensation benefits. In a January 2016 statement of the case (SOC), the RO indicated that an additional $10,854.21 was added to the preexisting overpayment balance. Although the RO phrased the Veteran’s disagreement as one questioning VA’s decision to reduce his benefits, the Board finds that the Veteran’s disagreement encompassed a waiver request. As such, the Board has recharacterized the issue on appeal. The Board notes that this decision does not impact the overpayment debt balance that preexisted the February 2015 decision. The Veteran did not contest the validity of that debt nor timely request a waiver when the debt was created in October and November 2008. Validity of the Debt The preliminary issue of the validity of a debt is a threshold determination that must be made prior to a decision on a request for waiver of the indebtedness. See Schaper v. Derwinski, 1 Vet. App. 430 (1991). In a February 2004 rating decision, the Veteran was awarded a 100 percent disability rating for schizophrenia, effective August 15, 2003. Thereafter, in October 2007, the Veteran was convicted of a felony and incarcerated in a correctional facility operated by the State of North Carolina. The Veteran was given an initial projected release date in October 2023. Pursuant to 38 C.F.R. § 3.3665, a veteran who is incarcerated in a Federal, State, or local penal institution more than 60 days and is in receipt of a disability rating of 20 percent or more for compensation purposes is to receive no more than the rate of compensable payable under 38 U.S.C. § 1114(a)—i.e., compensation at the 10 percent level. In May 2014, the RO notified that Veteran that it had reviewed the Veteran’s claims file regarding legislative pay increases mandated for fiscal years 2011, 2012, and 2013 and discovered that VA had erroneously been paying an amount greater than the amount permitted under 38 C.F.R. § 3.3665. Although the Veteran was not at fault in creation of the debt, VA did pay him an amount greater than one permitted by law. Accordingly, the Board finds the overpayment to be valid. Waiver Recovery of overpayment of any benefits made under laws administered by VA shall be waived if there is no indication of fraud, misrepresentation, or bad faith on the part of the person or persons having an interest in obtaining the waiver and recovery of the indebtedness from the payee who received such benefits would be against equity and good conscience. 38 U.S.C. § 5302(c); 38 C.F.R. §§ 1.963(a), 1.965(b). “Equity and good conscience is defined as “arriving at a fair decision between the obligor and the Government.” 38 C.F.R. § 1.965(a). In applying this standard, VA is to consider the following elements: (1) the degree of fault of the debtor; (2) a balancing of faults between the debtor and VA; (3) whether collection of the debt would deprive the debtor or his family of basic necessities; (4) whether withholding or recovery of the debt would nullify the objective for which the benefits were intended; (5) whether a failure to make restitution would result in an unfair gain to the debtor; and (6) whether relying on VA benefits results in relinquishment of a valuable right or incurrence of a legal obligation. Id. These elements are not intended to be all inclusive. Id. In considering these elements, the Board reiterates that the Veteran was not at fault in creating the debt. Specifically, at the time of the decision in February 2015, as well as during fiscal years 2011, 2012, and 2013, the Veteran was an incarcerated felon who received his VA compensation via correctional facility employees depositing monthly checks sent by VA into an account on his behalf and did not communicate with VA officials. VA discovered the above-described payment discrepancy on its own accord and the Veteran did not engage in any action or inaction resulting in the overpayment. Simply put, the overpayment—and associated reduction in benefits—implemented by the February 2015 decision on appeal was a result of VA’s own administrative errors. The Board finds the elements of fault and balance of faults to be of overriding significance in the instant case. Accordingly, the Board concludes that it would violate standards of equity and good conscience to allow collection of the overpayment award—including an additional reduction of the Veteran’s benefits below that mandated by 38 C.F.R. § 3.3665. As such, a waiver of overpayment of compensation in the amount of $10,854.21 is granted. S. C. KREMBS Veterans Law Judge Board of Veterans’ Appeals ATTORNEY FOR THE BOARD N.S. Pettine, Associate Counsel