Citation Nr: 18153458 Decision Date: 11/27/18 Archive Date: 11/27/18 DOCKET NO. 15-04 257 DATE: November 27, 2018 ORDER The waiver of the recovery of the overpayment of Department of Veterans Affairs (VA) improved death pension benefits in the calculated amount of $22,073 is not precluded by fraud, misrepresentation, or bad faith on the Appellant’s part; to that extent only the appeal is granted. REMANDED Entitlement to a waiver of the recovery of an overpayment of improved death pension benefits, is remanded. FINDING OF FACT The overpayment of VA improved death pension benefits was not due to the Appellant’s fraud, misrepresentation or bad faith. CONCLUSION OF LAW The waiver of recovery of the overpayment of improved death pension benefits in the calculated amount of $22,073 is not precluded by fraud, misrepresentation, or bad faith on the Appellant’s part. 38 U.S.C. §§ 5107 (b), 5302(c); 38 C.F.R. §§ 1.962 (b), 1.965(b). REASONS AND BASES FOR FINDING AND CONCLUSION The Appellant has been awarded VA death pension benefits and has been informed that she must report her income as pension is an income-based benefit. The Appellant did not fully report her income as income from the Social Security Administration (SSA) was not reported. As such, the Regional Office (RO) retroactively adjusted her pension benefits which resulted in the creation of the overpayment at issue. The Appellant requested a waiver of the recovery of the overpayment indicating that the VA notifications letters are complicated and she did not fully understand them. She asserted that her monthly debts exceeded her monthly income by about $1,000. The Committee on Waivers and Compromises (Committee) denied the request for waiver finding that the Appellant had previously incurred a debt on the same basis so there was bad faith committed on her part in the creation of the current debt. VA law precludes waiver of recovery of an overpayment or waiver of found to exist: (1) fraud, (2) misrepresentation, or, (3) bad faith. 38 U.S.C. § 5302 (c); 38 C.F.R. § 1.965 (b). The Board notes that neither the statute nor the code contains a definition of fraud that is specifically applicable to waiver cases. VA General Counsel has indicated that “the existence or lack of fraud is a case-specific conclusion based on all facts in each instance.” VAOPGCPREC 4-85 (September 16, 1985). However, the opinion also emphasized that the burden of proof is on VA to establish fraud, and that if the evidence is in balance, as to any element, the burden of proof would not be carried. Id. For misrepresentation, there must be willful misrepresentation of a material fact or willful failure to disclose a material fact. The misrepresentation must be more than non-willful or mere inadvertence. 38 C.F.R. §§ 1.962 (b), 1.965(b). “Bad faith” refers to “unfair or deceptive dealing by one who seeks to gain thereby at another’s expense.” 38 C.F.R. § 1.965 (b)(2). Conduct by a claimant undertaken with intent to seek an unfair advantage, with knowledge of the likely consequences, and with resulting loss to the government is required for a showing of bad faith. Id. In Richards v. Brown, 9 Vet. App. 255 1996), the Court found that the operative language in 38 C.F.R. § 1.965 (b)(2) limits bad faith to cases in which there is an intent to seek an unfair advantage. If the overpayment of VA benefits is not due to the Appellant’s fraud, misrepresentation or bad faith, then the waiver of recovery of the overpayment of VA benefits is not precluded by fraud, misrepresentation, or bad faith. The analysis then turns to whether the recovery of the overpayment of VA benefits would be against equity and good conscience. See 38 U.S.C. § 5302(a); 38 C.F.R. § 1.962. The standard “equity and good conscience” will be applied when the facts and circumstances in a particular case indicate a need for reasonableness and moderation in the exercise of the Government’s rights. The decision reached should not be unduly favorable or adverse to either side. The phrase “equity and good conscience” means arriving at a fair decision between the appellant and the Government. In this case, it is the Board’s opinion that the VA has not met the burden of proof in establishing actual fraudulent intent so fraud is not shown. Likewise, the Board finds that there was no willful misrepresentation of a material fact or willful failure to disclose a material fact. The Board also finds that the Appellant did not commit bad faith since she did not engage in unfair or deceptive dealings to seek to gain at VA’s expense. The Board finds that the conduct by the Appellant was not undertaken with the intent to seek an unfair advantage, with knowledge of the likely consequences, and with resulting loss to the government. Although there was in fact a prior overpayment which was waived, the Board notes that the Committee decision on that overpayment indicated that there was minimal fault on the Appellant’s part and it did not appear to be based on SSA income. The Appellant did report to VA her main source of income. It appears that the SSA income may have been confusing to her due to the nature of it being a medical-based benefit. At least, it appears that it was difficult for her to understand and she certainly did not conceal all income which supports her assertion that she did not fully understand VA’s instructions. The Board notes that while the Appellant was not thorough and should have sought assistance, the Board is unable to conclude that the high standard for a finding of fraud, misrepresentation or bad faith are met in this case. Thus, waiver of recovery of the overpayment of improved death pension benefits is not precluded by a finding of fraud, misrepresentation or bad faith. REASONS FOR REMAND 1. Entitlement to a waiver of the recovery of an overpayment of improved death pension benefits, is remanded. Inasmuch as it has been determined that waiver of recovery of the debt is not precluded by any of the statutory bars, the application of the standard of equity and good conscience must be considered. In that regard, the Appellant should be requested to provide a compete and current financial status report. Thereafter, the Committee should consider the request for waiver of the total amount of the overpayment based on the elements of equity and good conscience. The matter is REMANDED for the following action: 1. The Appellant should be provided an opportunity to submit a complete and current financial status report. She should also be provided an opportunity to submit current argument and evidence with regard to the elements of the standard of equity and good conscience. 2. The Appellant’s claim for entitlement to a waiver of the recovery of an overpayment of VA improved death pension benefits should be readjudicated under the standard of equity and good conscience. S. L. Kennedy Veterans Law Judge Board of Veterans’ Appeals ATTORNEY FOR THE BOARD J. Connolly, Counsel