Citation Nr: 18154899 Decision Date: 12/04/18 Archive Date: 11/30/18 DOCKET NO. 14-04 630 DATE: December 4, 2018 REMANDED Whether the creation of the debt against the Veteran's account in the amount of $7,770.40 is valid is remanded. Entitlement to a waiver of indebtedness for recovery of the overpayment in the amount of $7,770.40 is remanded. REASONS FOR REMAND The Veteran served on active duty in the U.S. Army from January 1972 to February 1973. This matter comes before the Board of Veterans’ Appeals (Board) on appeal from March 2009 and October 2009 decisions issued by the Department of Veterans Affairs (VA) Regional Office (RO) in Chicago, Illinois, and a September 2010 decision issued by the Committee on Waivers and Compromises (COWC). In November 2016, the Veteran testified at a videoconference hearing before the undersigned Veterans Law Judge (VLJ); a copy of the hearing transcript is of record. In a November 2017 decision, the Board remanded the appeal for further development. The issue on appeal has been recharacterized as two separate issues: one concerning the validity of the debt and another concerning entitlement to a waiver of indebtedness. 1. Whether the creation of the debt against the Veteran's account in the amount of $7,770.40 is valid is remanded. 2. Entitlement to a waiver of indebtedness for recovery of the overpayment in the amount of $7,770.40 is remanded. The Veteran challenges the validity of his debt and also requests a waiver of indebtedness. Remand of the appeal is required to correct a procedural defect and for explanation of how the debt was calculated. Procedural Defect 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. Overpayments created by retroactive discontinuance of benefits will be subject to recovery if not waived. 38 C.F.R. § 3.660(a)(3). An appellant has two forms of recourse when faced with an overpayment. He or she may challenge the validity of the debt and/or request a waiver of indebtedness. 38 C.F.R. § 1.911(c). These are considered distinct issues but may be exercised separately or simultaneously. Id. In this case, a March 2009 decision informed the Veteran that an overpayment related to dependent benefits had been created subsequent to divorce from his spouse. An October 2009 decision informed the Veteran that another overpayment related to dependent benefits had been created subsequent to his daughter electing to receive Chapter 35 benefits. The Veteran submitted a notice of disagreement (NOD). The exact date of receipt of the NOD is unclear; however, it was treated by VA as a timely appeal of both decisions. 38 U.S.C. § 7105(b)(1); see Percy v. Shinseki, 23 Vet. App. 37 (2009). As written by the Veteran, the NOD was framed as a request for a waiver of indebtedness. Review of its text also showed an implicit challenge to the validity of debt. In September 2010, the COWC issued a decision denying a waiver of indebtedness. It is unclear why, but both debts were combined and considered in the same waiver decision. See, e.g., 38 C.F.R. § 1.963(b)(2) (providing a regulatory bar to a waiver based on date of receipt of the application therefor); see also 38 C.F.R. §§ 1.962 and 1.966(b) (allowing for a partial waiver). The Veteran filed a timely NOD with the denial of the waiver, and the request for a waiver was denied once more in an April 2013 statement of the case (SOC). The Veteran perfected that issue to the Board later the same month. In a November 2017 decision, the Board determined that the issue of the validity of debt had been timely appealed by the Veteran but had not yet been adjudicated in a SOC. Accordingly, on remand, the agency of original jurisdiction (AOJ) was to issue a SOC considering both the validity of debt and the waiver request and, if necessary, return the appeal to the Board. The Board also identified the issue of the validity of debt to be part-and-parcel of the waiver request. This was in error. While the validity of debt is considered a preliminary matter, Schaper v. Derwinski, 1 Vet. App. 430, 433-34 (1991), they are distinct issues that may be pursued separately or simultaneously. 38 C.F.R. § 1.911(c). In January 2018, the AOJ issued a supplemental statement of the case (SSOC) addressing both issues and then returned the appeal to the Board. This development was not proper because, to date, the issue of the validity of debt has not been perfected to the Board. 38 U.S.C. § 7105(a); see Schaper, 1 Vet. App. at 434 (an adverse decision on the validity of debt is to be appealed in accordance with Part 19 of title 38 of the Code of Federal Regulations). On remand, the AOJ must issue a SOC addressing the validity of the debt. The issuance should include notice of the need to file a substantive appeal to perfect this claim to the Board. Calculation of Debt The debt against the Veteran’s account stems from two separate overpayments: one for dependent benefits related to a divorce and another for dependent benefits related to his daughter electing to receive Chapter 35 benefits. The amount of the combined debt varied during the claim period due to retroactive increases in disability compensation and corrections of prior erroneous administrative actions. On remand, the AOJ must, in narrative form, clearly explain how the debt was calculated. It should be explained how much of the debt relates to the overpayment stemming from the divorce and how much of the debt relates to the overpayment stemming from receipt of Chapter 35 benefits. These should be exact numbers. It should explain how all adjustments to the total debt, to include those identified in the September 2010 decision of waiver on indebtedness, affected the amount of each overpayment; i.e., how did each adjustment change the overpayment relating to divorce and how did each adjustment change the overpayment relating to Chapter 35 benefits. Again, these changes should be explained with exact numbers. A complete explanation of the forgoing must be associated with the claims file, and the Veteran should be mailed notice explaining it as well. The matters are REMANDED for the following action: 1. In narrative form, explain how the debt was calculated. It should be explained how much of the debt relates to the overpayment stemming from the divorce and how much of the debt relates to the overpayment stemming from receipt of Chapter 35 benefits. It should explain how all adjustments to the total debt, to include those identified in the September 2010 decision of waiver on indebtedness, affected the amount of each overpayment; i.e., how did each adjustment change the overpayment relating to divorce and how did each adjustment change the overpayment relating to Chapter 35 benefits. Again, these changes should be explained with exact numbers. A complete explanation of the forgoing must be associated with the claims file. 2. Send the Veteran a copy of the narrative explanation of how his debt was calculated. 3. Issue a SOC concerning the validity of the debt. The issuance should include notice of the need to file a timely substantive appeal in order to perfect the issue to the Board. An appropriate period of time must be allowed for response. 4. If the benefit sought remains denied, issue a SSOC and return the appeal to the Board. If the Veteran perfected the issue of the validity of debt, then the SSOC should consider both the validity of debt and the request for a waiver of indebtedness. If the Veteran did not perfect the issue of the validity of debt, then the SSOC should only consider the request for a waiver of indebtedness. S. C. KREMBS Veterans Law Judge Board of Veterans’ Appeals ATTORNEY FOR THE BOARD Mike A. Sobiecki, Associate Counsel