Citation Nr: 18158437 Decision Date: 12/14/18 Archive Date: 12/14/18 DOCKET NO. 15-13 361 DATE: December 14, 2018 ORDER Entitlement to waiver of an overpayment of VA pension benefits in the amount of $14,356 is granted. Entitlement to waiver of an overpayment of VA pension benefits in the amount of $15,630 is denied. FINDINGS OF FACT 1. An overpayment of VA pension benefits in the amount of $29,986 was validly created. 2. The creation of the overpayment was not the result of fraud, misrepresentation, or bad faith. 3. Of the total calculated overpayment, $14,356 is directly attributable to VA’s fault in failing to act in a timely fashion and recalculate the Veteran’s benefits after he submitted all the required information. 4. Of the remaining overpayment of $15,630, collection would not be against equity and good conscience. CONCLUSIONS OF LAW 1. The criteria for waiver of recovery of an overpayment of VA pension benefits in the amount of $14,356 have been satisfied. 38 U.S.C. § 5302 (2012); 38 C.F.R. §§ 1.963, 1.965 (2018). 2. The criteria for waiver of recovery of an overpayment of VA pension benefits in the amount of $15,630 have not been satisfied. 38 U.S.C. § 5302 (2012); 38 C.F.R. §§ 1.963, 1.965 (2018). REFERRED As discussed further below, waiver of an overpayment of VA pension benefits in the amount of $14,356 is granted. Since it appears this overpayment has been fully recouped by withholding of the Veteran’s benefits, the RO should take prompt action to implement this decision. The issue of entitlement to a waiver of an overpayment in the amount of $4,022.00 was raised by the record in an April 2015 statement, but has not been adjudicated by the Agency of Original Jurisdiction (AOJ). Therefore, the Board does not have jurisdiction over it, and it is referred to the AOJ for appropriate action. 38 C.F.R. § 19.9(b). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS The Veteran requested a hearing before the Board in his substantive appeal, and a hearing was scheduled in August 2018. However, the hearing was canceled by his representative, and written argument was submitted. All substantive evidence added to the file since the 2015 Statement of the Case was submitted by the Veteran. Under Public Law 112-154, which amends 38 U.S.C. 7105, by adding paragraph (e), if new evidence is submitted after a Substantive Appeal received on or after February 2, 2013, then it is subject to initial review by the Board unless the Veteran explicitly requests AOJ consideration. Here, the Veteran’s substantive appeal was received in 2015, and he has not requested AOJ consideration. The Board can proceed. Entitlement to waiver of an overpayment of VA pension benefits in the amount of $29,986.00 An overpayment is created when VA determines that a beneficiary or payee has received monetary benefits to which he or she is not entitled. See 38 U.S.C. § 5302; 38 C.F.R. § 1.962. The Veteran was awarded VA pension benefits in 1983. Annual notification letters dated since then have informed him that the pension rate was based on “family income” to include the income of any dependents. Pension benefits were reduced based on the receipt of a marriage license and a July 2012 Improved Pension Eligibility Verification Report (EVR) identifying the Veteran’s February 2012 marriage and spousal income information. The reduction of pension benefits based on the previously unreported spousal income was proper and created an overpayment in the amount of $29,986.00. Thus, the Board finds that the overpayment in the amount of $29,986.00 was validly created. Any indebtedness can be waived only when the following factors are determined to exist: 1) 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, 2) collection of such indebtedness would be against equity and good conscience. 38 U.S.C. § 5302 (c); 38 C.F.R. §§ 1.963, 1.965. Thus, a finding of fraud, misrepresentation, or bad faith precludes a grant of a waiver of recovery of the overpayment. The controlling legal criteria provide that the standard of “equity and good conscience” will be applied when the facts and circumstances in a particular case indicate the need for reasonableness and moderation in the exercise of the Government’s rights. 38 C.F.R. § 1.965(a). 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 obligor and the U.S. Government. In this determination, the Board must consider the following elements, which are not intended to be all inclusive: (1) Fault of debtor. Where actions of the debtor contribute to the creation of the debt. (2) Balancing of faults. Weighing the fault of the debtor against the VA’s fault. (3) Undue hardship. Whether collection would deprive the debtor or his or her 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 an 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. 38 U.S.C. § 5302(c); 38 C.F.R. § 1.965(a). The Board finds that the overpayment was not the result of fraud, misrepresentation, or bad faith on the part of the Veteran. 38 U.S.C. § 5302 (c); 38 C.F.R. §§ 1.963(a), 1.965(b). The Veteran reported income received by his spouse when he informed VA of his marriage. He contends that he was told by his former representative that the application for dependency may increase his benefit. Despite the multiple letters informing him of such, he did not appear to know that it was his responsibility to report any spousal income regardless of the dependency claim, and did not appear to know that the income was countable for pension purposes. The Board finds that the Veteran did inform VA of spousal income in July 2012, five months after his marriage. Thus, the evidence does not establish fraud, misrepresentation, or bad faith on the part of the Veteran in the creation of the overpayment debt. As the evidence does not establish fraud, misrepresentation, or bad faith, the Board will next determine if a waiver of recovery of the VA indebtedness is warranted on the basis of equity and good conscience under 38 U.S.C. § 5302 (a); 38 C.F.R. §§ 1.963 (a), 1.965(a) (2018). The first two elements for consideration under 38 C.F.R. § 1.965(a) are the fault of the debtor, and balancing the fault of the debtor and VA. The record shows that the Veteran did inform VA of his marriage and spousal income five months after the marriage. The record shows that a July 2012 declaration of status of dependents was submitted by the Veteran with a marriage certificate dated in February 2012. Additional information was provided in a July 2012 EVR. A second EVR was submitted in October 2012. In March 2013, the RO asked for additional information, and tax documents were submitted later that same month. However, the RO took no further action to reduce pension payments until April 2014. In looking at the chronological chain of events, it is quite clear that VA’s failure to timely take action resulted in a significant portion of the overpayment. By the end of March 2013, the RO had enough information about the marriage and the income for calendar year 2012 to recalculate entitlement to benefits and take any necessary action. However, the RO waited an entire year to perform these actions. The Board finds a portion of the debt is through no fault at all of the Veteran, but due entirely to the RO’s failure to respond in a timely fashion. Therefore, the Veteran is granted a waiver for that amount, as calculated below. It is completely against the concepts of equity and good conscience to require him to repay a debt that was created by VA’s failure to act. For calendar year 2012, the Veteran received $1,334 per month in pension benefits. See, e.g., December 1, 2011, and June 25, 2012 letters. Beginning December 1, 2013, the Veteran received $1,357 per month in pension benefits. See, e.g., December 1, 2012, and December 26, 2013 letters. Once the RO processed the dependency and income information, it was determined that the Veteran should have received $132 per month beginning March 1, 2012; $154 per month beginning December 1, 2012, and $174 per month beginning December 1, 2013. See VETSNET award print dated April 2014; notification letter dated April 28, 2014. Therefore, the overpayment of $29,986.00 was determined as follows: • March 1, 2012 through November 2012: paid $1,334 per month, actual entitlement $132 per month, difference of $1,202 per month x 9 months = $10,818 • December 1, 2012 through November 2013: paid $1,357 per month, actual entitlement $154 per month, difference of $1,203 per month x 12 months = $14,436 • December 1, 2013 through March 2014: paid $1,357 per month, actual entitlement $174 per month, difference of $1,183 per month x 4 months = $4,732 Since the RO had sufficient dependency and income information by the end of March 2013, yet failed to act until April 2014, the Board finds the Veteran should not be required to pay the portion of the overpayment attributable to VA’s actions. Here, that would be the amounts from April 2013 through March 2014, which would total $14,356. The Veteran is hereby granted a waiver for that portion of the overpayment. However, the Board finds that repayment of the remaining debt in the amount of $15,630 would not violate principles of equity and good conscience. This portion of the debt (representing payments from March 2012 through March 2013) is partially due to the Veteran’s fault because of his failure to immediately inform VA of spousal income and timely respond to VA’s requests for additional information. While it appears that the Veteran did not know that such income was countable for pension purposes, the Board finds that he was provided with multiple notice letters informing him that his award was based on family income, and was asked to inform VA immediately of any changes to income or of income received by his family. He was also asked to inform VA if he married or divorced. While the Board understands the Veteran’s mental illness may have affected his cognitive abilities, it is still his responsibility to provide the information to VA in a timely fashion so that his entitlement to benefits can be properly determined. VA was not at fault in the overpayment due to benefits received from March 2012 to March 2013. As to the element of undue financial hardship, the regulation provides that consideration should be given to whether collection of the indebtedness would deprive the debtor or family of the basic necessities. A May 2014 Financial Status Report that was submitted by the Veteran shows that he and his former spouse had a monthly income of $2,806.00. He identified monthly expenses in the amount of $420.00 for rent or mortgage payments, $400.00 for food, $220.00 for utilities and heat, $117.00 for phone bills, $68.00 for insurance, $144.00 medical/chiropractic care for his wife, and $360.00 for gas. Monthly expenses totaled $1,729.00. The Board notes that while the Veteran also listed amounts paid toward a car loan, student loan, and credit card bills, and has argued that he has significant debt which contributes to his hardship, after taking care of basic necessities such as shelter and food, the Veteran is expected to accord a debt to VA the same regard given to any other debt. The Board finds that the Veteran’s family income of $2,806.00 exceeded total monthly expenses represented by rent or mortgage, food, utilities, and other necessities which amounted to $1,729.00 a month. Given the income and expense information provided, the Board finds that the collection of the debt would not deprive him of the basic necessities of life. In March 2017, the Veteran submitted a copy of his divorce decree, dated in December 2016 and pension benefits resumed at the aid and attendance rate effective April 2017. The Veteran received $1,397.00 monthly in VA pension benefits and an SSA Inquiry shows that he was receiving $397.00 a month in SSA benefits. The Veteran had a monthly income of $1,794.00. The Board finds that the Veteran’s income continued to exceed the cost of basic necessities such as rent or mortgage, food, and utilities. With regard to the other elements pertaining to the principles of equity and good conscience as set forth by 38 C.F.R. § 1.965 (a), the Board finds that recovery of the overpayment debt would not defeat the purpose for which benefits were intended. The award and disbursement of VA pension benefits are made for the support of veterans and their dependents, but are designed to be an income-based benefit. In this case, the Veteran was in receipt of a greater benefit than warranted based on his family income from March 2012 to March 2013.   The Board finds that the failure of the Government to insist upon its right to repayment of the assessed overpayment would result in unjust enrichment of the Veteran and there is no evidence showing that he relinquished a valuable right or incurred any legal obligations resulting from reliance on VA benefits. Balancing the factors discussed above, to include the creation of the debt, the lack of undue financial hardship, and unjust enrichment by the Veteran, the Board finds that the recovery of the overpayment in the amount of $15,630 would not be against the principles of equity and good conscience. See 38 C.F.R. §§ 1.963, 1.965 (2018). MICHELLE KANE Veterans Law Judge Board of Veterans’ Appeals ATTORNEY FOR THE BOARD Christine C. Kung