Citation Nr: 18153234 Decision Date: 11/27/18 Archive Date: 11/27/18 DOCKET NO. 15-12 093 DATE: November 27, 2018 ORDER The overpayment debt of Department of Veterans Affairs (VA) disability compensation benefits in the amount of $9,951.00 due to change in dependency status was proper and the appeal regarding the validity of the debt is denied. Entitlement to a waiver of recovery of an overpayment of VA compensation benefits is denied from January 2006 to January 2007. Entitlement to a partial waiver of recovery of an overpayment of VA compensation benefits is granted from February 2007 to February 2013. FINDINGS OF FACT 1. The Veteran’s spouse, M.M. died on December [redacted], 2005. 2. In a February 2013 VA Form 21-0538, status of dependents questionnaire, the Veteran indicated his current spouse was E.M.; VA notified the Veteran that M.M. was removed from his benefits award in February 2014 due to notification that he was married to E.M. On March [redacted], 2014, the Veteran provided a VA Form 21-686c, Declaration of Status of Dependents that provided the first notification of M.M.’s death. 3. The retroactive reduction in compensation benefits is due, at least in part, to the Veteran’s failure to timely notify VA of the death of his spouse, which generated an overpayment debt in the amount of $9,951.00 for the period from January 2006 to February 2013. 4. The overpayment debt is not a result of sole administrative error. 5. This overpayment was not due to the Veteran’s fraud, misrepresentation or bad faith. 6. The Veteran received additional compensation benefits for his spouse who died in December 2005, with some fault on his part for delayed notification of her death. 7. As the Veteran’s wife was deceased and he had not remarried, from January 2006 to January 2007, the recovery of the overpayment would not defeat the purpose for which the benefits were intended, namely, payment of additional compensation to support a spouse, and waiver of recovery of the overpayment from January 2006 to February 2013 would constitute an unjust enrichment to the Veteran by paying additional benefits for an individual that was no longer a dependent. 8. Since the Veteran had a spouse from February 2007 to February 2013, the recovery of the overpayment would defeat the purpose for which the benefits were intended, namely, payment of additional compensation to support a spouse. 9. 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. CONCLUSIONS OF LAW 1. The overpayment of VA compensation benefits in the amount of $9,951.00 was properly created. 38 U.S.C. § 1115; 38 C.F.R. § 3.4(b)(2). 2. Recovery of the overpayment of VA compensation benefits disbursed from January 2006 to January 2007 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). 3. The evidence is at least in equipoise that recovery of the overpayment of VA compensation benefits disbursed between February 2007 and February 2013 would be against equity and good conscience and, therefore, is waived. 38 U.S.C. §§ 5107, 5302(a); 38 C.F.R. §§ 1.963(a), 1.965(a). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS The Veteran served on active duty from November 1942 to April 1973, to include service in the Republic of Vietnam. Initially, the Board notes that this appeal extends from a substantive appeal to an October 2014 Debt Management Center’s first demand letter assessing an overpayment debt in the amount of $9,951.00 due to a change in the Veteran’s dependency status. Although the Veteran did not timely disagree with a subsequent June 2015 decision on waiver of the indebtedness by the Committee on Waivers and Compromises (COWC), an October 2017 Board decision denied the Veteran’s claim for a waiver of the overpayment debt and found the debt was validly created, essentially taking jurisdiction of both issues. Further, the Veteran appealed the decision to the United States Court of Appeals for Veterans Claims (Court), which granted a Joint Motion for Remand (Joint Motion) in April 2018 that vacated and remanded the October 2017 Board decision’s denial of entitlement to a waiver of the overpayment, which included consideration of whether the debt was validly created. The appeal has returned to the Board, which has recharacterized the issues on appeal to separately address the issue of whether the creation of the overpayment debt was proper and the issue of whether a waiver of the overpayment debt is warranted. Validity of the overpayment debt The Veteran’s overpayment debt is due to a change in dependency status resulting from the death of his spouse, M.M., in December 2005. 38 C.F.R. § 3.4(b)(2) (a veteran in receipt of compensation at the rate of 30 percent or more is entitled to additional compensation for a spouse). The Veteran disagreed with an October 2014 DMC first demand letter assessing an overpayment debt in the amount of $9,951.00 based on the retroactive reduction of the Veteran’s compensation benefits due to removal of M.M. as a dependent spouse on his award from January 2006 to February 2013, his current spouse, E.M.,was added to the award effective March 2013. The Veteran does not dispute that his disability compensation benefits were properly reduced due to the December 2005 death of M.M. However, he maintains that the error in this case was on VA’s part as he notified VA by submitting her death certificate shortly after her passing. See 38 U.S.C. § 5112(b)(10); 38 C.F.R. § 3.500(b)(2) (finding the effective date of a reduction or discontinuance of compensation by reason of an erroneous award based solely on administrative error or error in judgment shall be the date of last payment). Specifically, the Veteran contends that he sent the death certificate to the Roanoke Regional Office and indicated that any issue with receipt of the certificate was solely due to VA administrative error. Further, the Veteran asserts that any overpayment debt should not include the benefits for a dependent spouse since January 2007; he reported that he submitted a marriage certificate shortly after his remarriage to E.M. and also indicated that any delay in processing the second change in dependency status was solely due to VA administrative error. The Board notes that the Joint Motion directed the Board to set forth adequate reasons and bases as to whether an overpayment debt must be repaid based on whether such recovery would be against equity and good conscience; as such considerations pertain to the issue of waiver, the directives are discussed in the waiver section below. 38 C.F.R. §§ 1.962, 1.963. With regard to the issue of the validity of the overpayment debt, the Board finds the evidence of record supports a finding that the creation of the overpayment debt was proper. Review of the record does not reflect any correspondence received by the Veteran prior to February 2013, when the Veteran returned a VA Form 21-0538, status of dependents questionnaire, that listed his spouse as E.M. Based on receipt of the questionnaire, VA notified the Veteran that M.M. was removed from his benefits award in February 2014. The first notification of M.M.’s death of record is in March 2014, when the Veteran submitted a VA Form 21-686c that noted the date of death of M.M. and enclosed a death certificate. Although the Veteran asserts that he mailed a death certificate to the RO shortly after M.M.’s death in December 2005, such is not reflected in the evidence before the Board. See Rizzo v. Shinseki, 580 F.3d 1288, 1292 (Fed. Cir. 2008) (the presumption of regularity provides that, in absence of clear evidence to the contrary, it is presumed that public officers have properly discharged their official duties). Rather, the record indicates the Veteran last submitted a status of dependents questionnaire in April 2005 until his submission in February 2013. Based on the above, the Board finds the Veteran’s statements alone do not constitute clear evidence to rebut the presumption of regularity nor does any other evidence of record. Therefore, the Board finds the Veteran’s notification of his change in dependency status, for the death of M.M. or his remarriage to E.M. was provided, at earliest, in February 2013. As the Veteran did not advise VA of changes in his dependency status until many years after the events occurred, sole administrative error may not be found to potentially adjust the indebtedness as the Veteran’s failure to act contributed to the erroneous award. 38 U.S.C. § 5112(b)(10); 38 C.F.R. § 3.500(b)(2). As such, any delay on the part of VA in the adjustment of the Veteran’s compensation benefits award was not the only cause of the overpayment debt, does not constitute sole administrative error, and may not be the basis to reduce the amount of the overpayment debt. As the Veteran received higher compensation benefits payments to which he was not entitled due, in part, to his failure to notify VA of changes to his dependency status, the Board concludes the overpayment was properly created. The appeal is denied. Waiver of recovery of the overpayment debt The Board must determine whether recovery of the indebtedness would be against equity and good conscience, thereby permitting waiver of recovery of the overpayment debt. 38 U.S.C. § 5302(a); 38 C.F.R. §§ 1.963(a), 1.965(a). As discussed below, the Board finds partial waiver of recovery of the overpayment debt of compensation benefits is warranted from February 2007 to February 2013; however, waiver of the indebtedness is not warranted from January 2006 to January 2007. Historically, the Veteran has been in receipt of disability compensation benefits for various service-connected disabilities and the Veteran has received notice that he was receiving additional compensation benefits for his spouse, that his payments could be affected by a change in marital status, and that he was to promptly advise VA in the event of such changes prior to the issue on appeal. Specifically, in February 1994 he was advised to return identifying information on his spouse with notice that his benefits would be adjusted if his spouse was no longer considered his dependent and he was also notified in February 1997 and March 2005 that his compensation award included additional benefits for a spouse and responded with completed status of dependents questionnaires in March 1997 and April 2005. In February 2013, VA again requested the Veteran return information on the status of his dependents and he returned a VA Form 21-0538 indicating he was married to E.M.; this action initiated the retroactive adjustment in his disability compensation benefits award. As noted above, the Veteran disagreed with the resulting October 2014 DMC first demand letter and timely requested a waiver of the debt. In a June 2015 decision on waiver of indebtedness, the COWC did not find fraud, misrepresentation, or bad faith on the Veteran’s part. The Board agrees with this determination. 38 U.S.C. § 5302(a) (waiver is not precluded where there is no fraud, misrepresentation, or bad faith on the Veteran’s part with respect to the creation of the overpayment at issue). The COWC further found that the overpayment was created due to receipt of an extra allowance for his spouse after her passing and that the Veteran was in part at fault for the creation of the debt due to the untimely notification of the change in his marital status. The COWC was unable to make a determination on whether unjust enrichment or financial hardship was present because there was no financial information provided and found the factor of changed position did not apply; based on the above, the COWC determined denial of a waiver of recovery would not be against equity and good conscience. The Board notes 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) (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 generally argued that VA was at fault because he timely notified VA of M.M.’s death. However, as discussed above, the Board finds some fault on the Veteran’s part in the creation of the overpayment of compensation benefits because he was notified to update VA for any change in marital status. The Board acknowledges that VA also bears some fault for not implementing the adjustment to his disability compensation award until November 2014; however, the Veteran bears responsibility for the delayed notification of changes in marital status. With regard to the third element, the Board notes that the Veteran did not provide any information relating to his financial status to inform any analysis on whether recovery of the overpayment debt would cause undue hardship. Although there is no indication that collection would deprive debtor of basic necessities, as there is no relevant evidence of record the Board does not make any findings on undue hardship. With regard to the fourth element, for the period from January 2006 to January 2007, the Board finds recovery of the debt would not defeat the underlying objective of the benefit, paying the additional compensation benefits to support a spouse. During that period of time, the purpose of paying additional compensation was nullified by M.M.’s passing. However, the Board does find recovery of the debt would defeat the underlying objective of the benefit from February 2007 to February 2013, as the Veteran had a qualifying spouse. A Virginia marriage license documents the Veteran’s marriage to E.M. on January 20, 2007. With regard to the fifth element, the Board finds waiver of recovery of the overpayment would constitute an unjust enrichment to the Veteran because he would be allowed to retain funds to which he was not legally entitled throughout the appeal period. In that regard, the Board notes that the Veteran was not entitled to additional benefits for M.M. at any point due to her passing in December 2005. Moreover, the Board acknowledges the Veteran’s contentions that he was entitled to additional benefits beginning in January 2007, the date of his marriage to E.W., however, entitlement to additional compensation benefits for E.W. arose the date notice of his marriage was received by VA, as he did not report the marriage within one year of the event (as discussed above, the first notification to VA was in February 2013). 38 C.F.R. § 3.401(b)(1)(i)-(ii). Finally, with regard to the sixth element, there is no indication that he incurred a legal obligation or changed his position to his detriment in reliance upon the receipt of VA disability compensation benefits that included compensation for a spouse. Based on the above, the Board finds the weight of the elements of equity and good conscience are not in the Veteran’s favor from January 2006 to January 2007. As there is evidence of partial fault on the part of the Veteran and unjust enrichment, no defeat of the purpose for which the benefits were intended, and no reliance on the benefit to his detriment, failure to make restitution would result in unfair gain to the debtor and unjust enrichment at the expense of the government. However, from February 2007 to February 2013, the Board finds recovery of the overpayment debt would be against equity and good conscience. See 38 U.S.C. § 5302(a); 38 C.F.R. § 1.962. Namely, the additional factor of the Veteran’s January 2007 marriage to E.M. would result in the nullification of the underlying objective of the benefit if the debt was recovered. As such, the elements supporting recoupment of the overpayment debt outweigh the elements in favor of a waiver of recovery, particularly the finding of unjust enrichment and lack of nullification of the purpose of the benefits from January 2006 to January 2007. From February 2007 to February 2013, recoupment of the overpayment debt would defeat the purpose for which the disability compensation benefits were intended. Accordingly, waiver of recovery of the overpayment is not warranted from January 2006 to January 2007 and that portion of the claim must be denied. As equity and good conscience dictate waiver of recovery of the debt from February 2007 to February 2013 results in a fair decision between the Veteran and the government, a partial waiver of recovery of the overpayment is granted. Nathan Kroes Veterans Law Judge Board of Veterans’ Appeals ATTORNEY FOR THE BOARD A. Odya-Weis, Counsel