Citation Nr: 18158744 Decision Date: 12/18/18 Archive Date: 12/17/18 DOCKET NO. 16-19 435A DATE: December 18, 2018 ORDER Entitlement to a waiver of recovery of an overpayment of Department of Veterans Affairs (VA) compensation benefits in the amount of $4,115.35 is denied. FINDINGS OF FACT 1. This overpayment was not due to the Veteran’s fraud, misrepresentation or bad faith. 2. From June 2014 to January 2015, the Veteran received concurrent compensation benefits and military pay for his active duty service, with some fault on his part for keeping compensation benefits despite knowledge that he was not entitled to such payments. 3. There is financial hardship; however, the preponderance of the evidence weighs against a finding that such financial strain rises to the level of undue hardship. Consideration of the evidence of record, to include future prospects, does not demonstrate that collection of the overpayment debt would deprive debtor of basic necessities. 4. The recovery of the overpayment would not defeat the purpose for which the benefits were intended, namely, adequate compensation for loss of working time reflective of the average impairment in earning capacity resulting from service-connected diseases and injuries and their residual conditions in civil occupations, as the Veteran was compensated for active military service during the period on appeal. 5. Waiver of recovery of the overpayment would constitute an unjust enrichment to the Veteran by paying disability compensation benefits for an individual that was receiving concurrent military pay. 6. 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. CONCLUSION OF LAW Recovery of the overpayment of VA compensation benefits in the amount of $4,115.35 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). REASONS AND BASES FOR FINDINGS AND CONCLUSION The Veteran served on active duty from November 2004 to August 2013, to include service in Southwest Asia. He also served in the Army Reserves. He also has a period of service beginning in June 2014. The Veteran’s overpayment debt is due to concurrent receipt of disability compensation benefits and active service pay from June 2014 to January 2015. See 38 C.F.R. §§ 3.654(a), 3.700 (explaining that 38 U.S.C. § 5304(c) prohibits the receipt of VA disability compensation benefits for any period for which the person receives active service pay.). Historically, the Veteran has been in receipt of disability compensation benefits for various service-connected disabilities at a combined 50 percent disability rating. As documented in a June 16, 2014, report of general information, the Veteran called to advise VA that he reported for active duty on June 9, 2014; it was noted that his compensation benefits should be stopped and that he was advised to contact VA when he was discharged for benefits to resume. An October 2014 report of contact also noted the Veteran followed up on his June 2014 request to stop his benefit payments. The Veteran was notified in January 2015 that his compensation benefits were terminated due to his return to active duty and that an overpayment was created due to the retroactive adjustment. A January 2015 Debt Management Center (DMC) first demand letter assessed a debt of $6,480.99. In February 2015, the Veteran requested a waiver of the debt and returned a VA Form 5655, Financial Status Report, that indicated he was currently active duty but provided no other financial data. A February 2015 decision on waiver of indebtedness from the Committee on Waivers and Compromises (COWC) denied waiver. In making this determination, the COWC did not find fraud, misrepresentation, or bad faith on the Veteran’s part. The Board agrees with this determination. The COWC resolved the issue of fault in favor of the Veteran because he reported his return to active duty but found no evidence of undue hardship and concluded that the Veteran should have known an award adjustment would be forthcoming and he should have been prepared to provide reimbursement rather than keep VA benefits to which he was not entitled. The COWC found the delay in processing was not excessive and that failure to make restitution would result in an unfair gain to debtor at the expense of the government. The decision placed heavy weight on lack of financial hardship and resulting unjust enrichment, specifically in light of the finding that the Veteran knew or should have known he could not retain compensation benefits received during active duty. The Veteran disagreed with the February 2015 decision and indicated VA bore significant fault due to delay in processing his change in status and reported that he tried to expedite the process on multiple occasions after he returned to active duty. In addition, the Veteran reported that recoupment of the debt would cause financial hardship and returned completed VA Form 5655s in July 2015, September 2015, and May 2016 that showed income about equal to expenses for himself and his dependent wife and child, with assets including a car that was valued around $14,000.00. He also explained that he had administrative difficulties with his military pay during the period in question and submitted evidence that he had not been paid according to his rank; he reported that the VA compensation benefits were used to provide for basic necessities for his family during that time. He contended that the extra payments were not a windfall because they solely allowed him to provide necessities and that the recoupment of the compensation benefits has left his family without emergency funds or a financial safety net. The April 2016 statement of the case (SOC) granted partial waiver of the Veteran’s overpayment debt in the amount of $2,365.64, the amount that was currently owed, but denied waiver on the funds that were already recouped in the amount of $4,115.35. The partial grant was due to a finding that continued collection of the debt would pose financial hardship based on the updated financial information. The partial denial placed weight on findings of some fault by the Veteran because he was aware he was not entitled to the compensation benefits and did not return or set them aside for repayment and resulting unjust enrichment. The Veteran appealed and contended that the overpayment debt was not a result of fault on his part and that the collection of the debt resulted in financial hardship. In cases where there is no fraud, misrepresentation, or bad faith on the Veteran’s part with respect to the creation of the overpayment at issue, waiver is not precluded pursuant to 38 U.S.C. § 5302(a). Rather, the Board must determine whether recovery of the indebtedness would be against equity and good conscience, thereby permitting waiver under 38 U.S.C. § 5302(a) and 38 C.F.R. §§ 1.963(a), 1.965(a). 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. The Board finds that these factors are at least in equipoise when weighing fault of VA against fault of the debtor and agrees with the findings of COWC that while VA bears some fault for the delayed processing of the Veteran’s return to active service, the Veteran also bears some fault because he was aware he was not entitled to the compensation benefits and did not return the funds or set them aside for repayment. In that regard, the June 2014 report of general information noted that the Veteran’s benefits needed to be stopped while he was on active duty and that he was put on notice to advise VA when he was discharged so payments could be resumed; the Board finds this report supports a finding that the Veteran had knowledge that he was not entitled to compensation benefits while he was on active duty. Further, the Veteran acknowledged he was not entitled to the disability compensation payments while receiving active military pay but kept the funds due to other financial considerations. Moreover, the Board notes that COWC has already allowed a partial waiver of the total overpayment debt in the amount of $2,365.64 due to the Veteran’s lack of fault based on his notification of his return to active service. However, the Board finds the remaining elements do not weigh in the Veteran’s favor. With regard to the third element, the Board finds the evidence does not support a finding that recoupment of the overpayment debt would result in undue hardship when viewing the Veteran’s financial history since the February 2015 DMC first demand letter and in consideration of his future prospects. See Stone v. Derwinski, 2 Vet. App. 56, 58 (1992) (explaining that undue hardship exists where collection, in installments if necessary, would seriously impair the veteran’s ability to provide himself with the necessities of life, including food, clothing, shelter, and medical attention, through examination of his current financial status with attention to his future prospects). A longitudinal review of the Veteran’s financial history since the debt was assessed in 2015 indicates that even though he has consistently reported monthly income about equal to his expenses, he has not indicated that recoupment of the debt resulted in hardship that rose to the level of being unable to provide himself or his family with necessities of life. The Veteran reported that the disability compensation benefits were instrumental in providing for basic necessities while he was having trouble with his military pay during the period of time the overpayment debt was accrued; however, the Board’s consideration of undue hardship centers on the period of time from February 2015 when the debt was collected. Even though the Veteran indicated he was unable to save money for emergencies due to the recoupment, his self-reported VA Form 5655 submissions also demonstrate that his necessities of life are met during the period in question. Further, as the outstanding debt was waived in the April 2016 SOC, his future prospects are not so limited that he would be unable to provide for necessities of life due to the debt. With regard to the fourth element, the recovery of the debt does not defeat the underlying objective of the benefit (adequate compensation for loss of working time reflective of the average impairment in earning capacity resulting from service-connected diseases and injuries and their residual conditions in civil occupations) because he was concurrently receiving military pay. With regard to the fifth element, the Board further 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. Specifically, the Board rejects the Veteran’s contentions that the use of the compensation benefits was not a windfall, in other words, did not unjustly enrich the Veteran, because they were used for basic necessities for his family. The Board acknowledges the Veteran’s statements relating to his military pay, which is unfortunate, but notes that does not change the fact that he received money from the government which he was not entitled to and, as explained above, knew he was not entitled to. 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. Based on the above, the Board finds the weight of the elements of equity and good conscience are not in the Veteran’s favor. Specifically, the Board finds the lack of undue hardship and resulting unjust enrichment to be highly probative evidence against waiver of the remaining overpayment debt. Stone, 2 Vet. App. at 58 (explaining that the primary consideration in applying the standard of equity and good conscience is whether collection of indebtedness would constitute undue hardship). Although there is evidence of fault on the part of the Veteran and VA, recovery of the debt does not defeat the underlying objective of the benefit and he did not rely the benefit to his detriment. Overall, the elements in favor of collection outweigh the elements supporting additional waiver of recovery of the debt, particularly the lack of undue hardship and unjust enrichment. Accordingly, the standard of equity and good conscience may not be applied and waiver of recovery of the remaining overpayment debt in the amount of $4,115.35 is not warranted. The claim is denied. Nathan Kroes Veterans Law Judge Board of Veterans’ Appeals ATTORNEY FOR THE BOARD A. Odya-Weis, Counsel