Citation Nr: 18152823 Decision Date: 11/27/18 Archive Date: 11/26/18 DOCKET NO. 15-21 239 DATE: November 27, 2018 REMANDED The appeal as to the validity of the debt resulting from the overpayment of spousal dependency allowance declared in the amount of $28,900, is remanded. The appeal for waiver of debt resulting from the overpayment of spousal dependency allowance declared in the amount of $28,900, is remanded. REASONS FOR REMAND The Veteran served on active duty from March 1967 to June 1968. The Veteran is contesting the VA’s declaration of an overpayment in the amount of $28,900, based upon the overpayment of a spousal dependency allowance for the time period from June 1991 to April 2011. She has also requested a waiver of the declared debt. VA is currently collecting the debt in monthly deductions from the Veteran’s VA compensation benefits, and the Veteran contends that these deductions are causing her financial hardship. Initially, the Board observes that the case is complicated by the fact that Veteran’s claims file was lost at some point prior to 1996. The file has been extensively rebuilt, but there are few documents dated prior to 1996, to include several submitted by the Veteran from her personal files, and those kept by her representative. This case has a complex history apart from the missing documents. In May 1991, the RO implemented a Board decision granting service connection. The grant resulted in a combined rating of 30 percent effective in May 1989. Previously, she had been service-connected only for disability which was deemed noncompensable. A veteran who is in receipt of disability compensation of 30 percent or more is entitled to an additional allowance for each dependent, including a spouse and each child. 38 U.S.C. § 1115; 38 C.F.R. § 3.4(b)(2). The additional allowance is payable from the effective date of the rating if proof of dependency is received within one year from the date of notification of such rating action. 38 U.S.C. § 5110(f). The effective date of the award of any benefit or increase by reason of marriage or the birth/adoption of a child shall be the date of that event if proof is received by VA within a year from the date of marriage, birth or adoption. 38 U.S.C. § 5110(n). Regarding additional compensation for dependents, the effective date will be the latest of the following dates: (1) date of claim; (2) date the dependency arises; (3) effective date of the qualifying disability rating provided evidence of dependency is received within a year of notification of such rating action; or (4) date of commencement of the Veteran’s award. 38 C.F.R. § 3.401(b). Thus, in this case, the date the Veteran was entitled to receive VA compensation benefits at the 30 percent level, May 1989, was also the first date that she was entitled to receive dependency allowances. Because the file does not currently contain the May 1991 notification letter of this grant, we cannot know for sure whether she was so informed; however, standard VA practice in the normal course of business indicates that she likely received the standard notice to this effect, along with information as to how to establish her dependents at that time. A July 1994 letter provided during the reconstruction of the Veteran’s file, from the files of the Disabled American Veterans organization, states that the Veteran had been married to her first husband from December 1969 to November 1990, and requested that a dependency allowance be established. This July 1994 letter refers to a similar January 1994 letter, which is not currently contained in the claims file, which had also requested the payment of a dependency allowance, within the one-year period outlined in 38 U.S.C. § 5110(f). It appears that no action was taken to implement a spousal dependency allowance at this point, likely because of the ongoing search for the complete claims file. An increased compensation award in June 1996 reflects no spousal allowance was being paid at that point, although dependency allowances for two children were being paid. In correspondence about an unrelated matter in March and April 1997, the Veteran referred to herself as a single parent for the previous eight years. In April 1997, the RO granted service connection for another disability, with the result that the Veteran’s combined disability rating was increased to 100 percent, effective as of June 1993. The notification letter informing the Veteran of this grant also informed her that she was receiving two child dependency allowances. A July 2000 Compensation and Pension Award form (VA Form 21-8947) indicates no spousal dependency award was being paid at that point in time. In January 2001, however, the Veteran wrote VA. She stated “My last award went retroactive back to 1991. I was still married & had 2 children one was 12 & one 15. I was not paid for them as dependents.” At the same time, she submitted a “Declaration of Status of Dependents” Form, on which she reported having been married to her first husband in December 1967. She reported her marital status as “married,” and did not report a divorce. In November 2002, the RO recalculated the Veteran’s monthly awards beginning in June 1991, informing her that she would be paid for a spouse and two children effective in June 1991. The letter does not indicate whether the RO was aware she had previously been receiving two child dependency allowances, and whether those payments had been taken into account in their calculations. A Compensation and Pension Award form of the same date reflects that the Veteran received a retroactive net payment of $13,757, on account of the dependency allowance adjustment. How the RO arrived at this figure is unclear from the evidence of record, however. Individuals to whom benefits are being paid are required to certify, when requested, that any or all of the eligibility factors which established entitlement to the benefit being paid continue to exist. 38 C.F.R. § 3.652(a). When the required certification is received, benefits will be adjusted, if necessary, in accordance with the facts found. 38 C.F.R. § 3.652(b). The RO phoned the Veteran in February 2010 to request information about her dependents. The Veteran returned the phone call promptly but only provided information regarding her two children and their respective birthdates. Apparently, no information was requested and the Veteran did not volunteer any information regarding her marriage. A subsequent April 2010 routine VA form shows the Veteran was still being paid a spousal dependency allowance. In September 2010, the Veteran again inquired about the status of her “dependency claim opened January 2001,” which she asserted was still open. She indicated she was seeking the retroactive dependency benefits from when her children were school-age. The RO again requested confirmation of the Veteran’s dependents’ status in December 2010. In response, the Veteran submitted a statement that she had been married to her first husband “until Dec. of 2009.” Two days subsequent, she faxed a copy of the divorce decree, showing that the divorce had in fact taken place in November 1990. Later in the same month, she submitted a new Declaration of Status of Dependents Form showing that she had divorced her first husband in November 1990, and had married her second husband in February 2009. In April 2011, the RO contacted the County Clerk’s Office and was informed that the Veteran had married her second husband in February 2010, rather than 2009. The County Clerk provided a copy of the marriage license, bearing the February 2010 date. It certainly appears that the Veteran was less than accurate in her reporting regarding her divorce from her first husband, both in 2001 when she submitted the Dependents’ Form and did not report her divorce; again in February 2010 during the phone call; and yet again in the December 2010 statement that she had been married until 2009. We observe as well that she received several letters from VA during this time, explaining that she was being paid spousal dependency benefits, most notably the November 2002 letter explaining how her monthly benefits were affected by the dependency recalculation. The RO notified the Veteran in April 2011 that they had recalculated her dependency benefits beginning in October 1990, to reflect her November 1990 divorce. According to this notice, her two children were calculated as having been added to her dependency award effective in June 1991, and then removed as they either turned 18 or left school. In May 2011, the VA’s Debt Management Center calculated the overpayment of dependency allowance as totalling $28,900, and informed the Veteran that she was required to repay this debt. The Veteran requested a timely waiver of the debt, and submitted a July 2011 Financial Status Report to support her claim for financial hardship. The Committee on Waivers and Compromises denied her request for a waiver in September 2011, finding that the Veteran was at fault in the creation of the debt. The Veteran appealed this decision, making several arguments in support of her appeal. She variously asserts that VA knew or should have known of her divorce, that VA informed her she was not being paid a spousal allowance on multiple occasions, that she did not realize whether she was being paid a spousal allowance or not, as her notice letters did not break down her monthly benefit that way. She points out that her VA compensation changed over the years, as new grants were implemented retroactively. She also notes that it is not her fault her claims file was lost. At one point, the Veteran reported that she had a common law marriage with her first husband after the 1990 divorce. Most importantly, however, she challenged the amount of the debt, expressing surprise at the figure and wondering how the dependency allowance totaled such a large number. She requested an audit and has repeated the request upon several occasions. Although multiple notice letters and explanations have been provided, no formal audit has yet been prepared. During the June 2018 hearing on appeal, the Veteran testified that she had always made a point of informing VA of her marriages and her children; that she was sure she had sent a copy of her divorce decree to VA. She also stated she had recently experienced a stroke and a brain tumor, so may have misunderstood or completed a form incorrectly. Following careful review of the file, the Board determines that this appeal is not yet ready for appellate review. A remand is necessary to provide the Veteran with the audit she requested several years ago, and to adjudicate the validity of the creation of the debt. The preliminary issue of the validity of a debt is a threshold determination that must be made in a benefits overpayment debt collection matter. Schaper v. Derwinski, 1 Vet. App. 430 (1991). An overpayment is created when VA determines that a beneficiary or payee has received monetary benefits to which he or she is not entitled. 38 U.S.C. § 5302; 38 C.F.R. § 1.962. The RO has not yet performed an explicit review as to the validity of the creation of the debt. Thus, this should be accomplished on remand. Inherent to review of the validity of the debt is an accurate calculation of the amount of the debt. Therefore, upon remand the VA should provide the Veteran with a paid and due audit showing the exact amount and date of each compensation payment made to the Veteran beginning in May 1989. This audit should reflect and provide an explanation for each compensation increase awarded to the Veteran, and should include such events as the November 2002 $13,757 retroactive dependency adjustment payment. In preparing this audit, the VA must separately identify the value of the spousal dependency allowance and the value of the child dependency each year at issue. An audit of the amounts of money due to the Veteran over the years should also be prepared. The Veteran appears to be making an argument of administrative error on the part of the VA. According to the doctrine of sole administrative error, if a debt was the result solely of administrative error, no overpayment may be charged to the Veteran for the portion of the overpayment attributable to administrative error. Jordan v. Brown, 10 Vet. App. 171 (1997). However, where an erroneous award is based on an act of commission or omission by a payee or with the payee’s knowledge, sole administrative error is not present. Id. In Jordan, the Court also found that sole administrative error was not present if the payee knew, or should have known, that the payments were erroneous. Relevant to the argument of administrative error, governing regulation provides that for the purpose of determining entitlement to benefits, the statement of a claimant as to proof of marriage, dissolution of a marriage, birth of a child, etc., will be accepted by VA unless the claimant’s statement on its face raises a question of its validity, the claimant’s statement conflicts with other evidence of record, or there is a reasonable indication of fraud or misrepresentation of the relationship in question. 38 C.F.R. § 3.204. In this case, the 1994 letter indicating the divorce was of record in the rebuilt claims file when the RO awarded the retroactive net payment of $13,757. This will be a factor to be explicitly considered in the re-adjudication of these claims. The Veteran is urged to work closely with her representative to ensure that all necessary actions are taken to protect her case. We observe for the sake of clarity that because most, if not the entire, debt has already been recouped; if the Veteran is ultimately successful in a waiver claim or if the Committee were to determine that a partial waiver is appropriate, the recouped monies would then have to be repaid by VA to the Veteran. The matters are REMANDED for the following action: 1. The appropriate office within VA must review the calculation of the debt, to include determining the amounts of spousal and child dependency allowances payable over the years, and determining the amounts actually paid over the years. The audit should clearly show the payment of child allowances and separately what appears to be nonpayment of a spousal allowance. The audit should also clearly show how the retroactive net payment of $13,757 was calculated and how the declared debt of $28,900 was calculated. All discrepancies should be accounted for, and a new, accurate figure should be reached. This calculation must be transparent and easily-reviewable by the Veteran, her representative, the Committee, and the Board. 2. Next, the appropriate office must review the validity of the creation of the debt, to include whether there was sole administrative error on the part of the VA, and addressing the Veteran’s arguments as outlined above. Such consideration should be documented for further review by all parties. 3. Lastly, the Veteran’s request for a waiver of the debt must be referred to the Committee for further review and any development necessary, such as requesting additional financial information from the Veteran to support her claim for financial hardship. Continued on next page H. N. SCHWARTZ Veterans Law Judge Board of Veterans’ Appeals ATTORNEY FOR THE BOARD Heather J. Harter