Citation Nr: 18156513 Decision Date: 12/10/18 Archive Date: 12/10/18 DOCKET NO. 11-19 574 DATE: December 10, 2018 ORDER The retroactive termination of the Veteran’s additional disability compensation benefits for a dependent spouse, N., effective November 1, 2006, was proper; the addition of L. as a dependent spouse effective March 1, 2010 was proper; entitlement to waiver of recovery of the overpayment of Department of Veterans Affairs (VA) compensation benefits for a dependent spouse in the amount of $3,916 is granted. FINDINGS OF FACT 1. The Veteran was awarded additional benefits for his spouse, N., and was informed that he should notify VA of any change in the status of his dependents. 2. In October 2006, the Veteran and N. divorced; within two weeks, the Veteran married L. 3. The Veteran initially notified a VA Regional Office (RO) of his marital status changes in February 2010. 4. The RO removed N. from the Veteran’s award of VA disability compensation benefits effective November 1, 2006 and added L. to the award effective March 1, 2010; the actions of the RO resulted in the creation of an overpayment in the amount of $3,916. 5. The creation of the overpayment of VA compensation benefits was not due to the Veteran’s fraud, misrepresentation, or bad faith. 6. Recovery of the overpayment would be against equity and good conscience. CONCLUSIONS OF LAW 1. The retroactive termination of N. as a dependent spouse, effective November 1, 2006, and the addition of L. as a dependent spouse effective March 1, 2010 were proper. 38 U.S.C. §§5110, 5111, 5112; 38 C.F.R. §§ 3.401, 3.501. 2. Recovery of the overpayment of the additional VA disability compensation in the amount of $3,916 would be contrary to the principles of equity and good conscience. 38 U.S.C. § 5302; 38 C.F.R. § 1.965. REASONS AND BASES FOR FINDINGS AND CONCLUSIONS The law provides for the rates of disability compensation, and for payment of additional compensation for dependents of veterans who are at least 30 percent disabled. 38 U.S.C. §§ 1114 (c), 1115, 1134, 1135. The Veteran was, at all times relevant to this issue and the period of time in question, rated appropriately to receive additional compensation for a spouse. The Veteran was initially awarded additional VA benefits for his dependent spouse N., and was told to notify VA of dependency changes. The Veteran thereafter over the years notified VA of changes to his dependency status with regard to his children. In October 2006, the Veteran and N. divorced. Within two weeks, the Veteran married L. Although the Veteran has indicated that he notified VA of the changes, including in 2007, the record shows that the Veteran initially notified the RO of his marital status changes in February 2010. The RO then removed N. from the Veteran’s award of VA disability compensation benefits effective November 1, 2006, the first day of the month following their divorce. Later, the RO added L. to the Veteran’s award effective March 1, 2010, the first day of the month following the Veteran’s report of their marriage. These actions of the RO resulted in the creation of an overpayment in the amount of $3,916. In this case, the Veteran continued to be improperly paid for N. during the relevant appeal period when she was no longer his spouse, and before VA had knowledge of his divorce from N. and subsequent marriage to L. Thus, the RO’s actions were proper in retroactively adjusting the Veteran’s VA compensation resulting in an overpayment of benefits. However, the Veteran asserts that he was only single for less than two weeks so he was entitled to receive the additional compensation for a spouse the entire time. The Committee on Waivers and Compromises (Committee) denied a waiver of the recovery of the debt and the Veteran appealed. The Committee of the RO determined that there was no fraud, misrepresentation, or bad faith on the Veteran’s part with respect to the creation of the overpayment at issue, but the Committee further determined that recovery of the overpayment of VA compensation benefits would not be against equity and good conscience. VA law provides that recovery of overpayment of any benefits 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; 38 C.F.R. § 1.963 (a). 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. In making this determination, consideration will be given to the following elements, which are not intended to be all-inclusive: (1) Fault of the debtor. Where actions of the debtor contribute to the creation of the debt. (2) Balancing of faults. Weighing fault of the 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. See 38 U.S.C. § 5302; 38 C.F.R. § 1.965 (a). In this case, the Committee found, and the Board agrees, that there is no evidence demonstrating that the indebtedness resulted from fraud, misrepresentation, or bad faith on the Veteran’s part. Therefore, waiver of indebtedness is not precluded if shown that it would be against the principles of equity and good conscience to require the Veteran to repay the debt to the government. 38 C.F.R. §§ 1.963, 1.965. With regard to fault, a claimant who is receiving compensation is required to report to the VA any material change or expected change in income or other circumstance that affects the payment of benefits. 38 C.F.R. § 3.660. 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 C.F.R. § 1.962. VA law provides for additional monthly compensation for dependents when a veteran is entitled to disability compensation evaluated as 30 percent or greater. 38 C.F.R. § 3.4 (b)(2). The Veteran has been evaluated as 30 percent or more disabled since he was granted service connection; thus, he was eligible for additional benefits based on dependency, provided certain requirements were met. The law states that the Veteran has an obligation to timely notify VA of all marriages and divorces which he did not do. However, a recovery of the overpayment would defeat the purpose of the benefit because the Veteran was in fact, for the purposes of payment of additional benefits for a spouse, married for the pertinent time period. He was unmarried for 13 days during October 2006. Thus, he would have been entitled to dependency benefits for L. if he had reported that marriage. As such, the Veteran was not unjustly enriched in receiving additional compensation benefits for a spouse because for payment purposes, he had a spouse. The Board finds that recovery of the overpayment of the additional VA disability compensation in the amount of $3,916 would be contrary to the principles of equity and good conscience. Thus, the request for waiver of the indebtedness in this case is granted. S. L. Kennedy Veterans Law Judge Board of Veterans’ Appeals ATTORNEY FOR THE BOARD J. Connolly, Counsel