Citation Nr: 18159036 Decision Date: 12/18/18 Archive Date: 12/18/18 DOCKET NO. 05-18 814 DATE: December 18, 2018 ORDER The creation of an overpayment of Chapter 31 education benefits in the amount of $246.20 was valid. Entitlement to waiver of recovery of the overpayment of Chapter 31 education benefits in the amount of $246.20 is denied. FINDINGS OF FACT 1. The record reflects the Veteran received Chapter 31 education benefits in the amount of $246.20 for class(es) he did not attend. 2. Recovery of the overpayment of Chapter 31 education benefits in the amount of $246.20 would not be against the principles of equity and good conscience. CONCLUSIONS OF LAW 1. The overpayment of Chapter 31 education benefits in the amount of $246.20 was properly created. 38 U.S.C. §§ 5112, 5302, 5314; 38 C.F.R. §§ 1.956, 1.962, 3.500. 2. The criteria for waiver of recovery of the overpayment of Chapter 31 education benefits in the amount of $246.20 have not been met. 38 U.S.C. § 5302; 38 C.F.R. §§ 1.962, 1.965. REASONS AND BASES FOR FINDINGS AND CONCLUSIONS The Veteran served on active duty in the United States Army from February 1977 to February 1998. This matter comes to the Board of Veterans’ Appeals (Board) on appeal from a June 2008 determination of the Committee on Waivers and Compromises of the Department of Veterans Affairs (VA) Regional Office (RO) in Montgomery, Alabama. In October 2010, the Board remanded this matter for additional development, to include consideration of whether the overpayment here at issue was properly created. The record reflects that the creation issue has been addressed, to include in an April 2015 supplemental statement of the case, and that all other development directed in the October 2010 remand has been substantially accomplished. See Dyment v. West, 13 Vet. App. 141, 146-47 (1999), aff'd, Dyment v. Principi, 287 F.3d 1377 (2002). The case has been returned to the Board for additional appellate consideration. Overpayment 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. An overpayment may arise from virtually any benefits program administered pursuant to VA law, including pension, compensation, dependency and indemnity compensation (DIC), educational assistance benefits and subsistence allowance, insurance benefits, burial and plot allowances, clothing allowance, and automobile or other conveyance and adaptive equipment allowances. 38 C.F.R. § 1.956(a). VA generally is required to recover erroneous VA payments or overpayment of benefits. See Edwards v. Peake, 22 Vet. App. 57, 59 (2008); 38 U.S.C. § 5314(a) (generally requiring VA to deduct from future benefit payments a debt arising from a person's participation in a VA benefits program); 38 C.F.R. § 1.912a(a) (same); 38 U.S.C. § 5316 (authorizing VA to recover benefits-related debt by bringing a suit if the person fails to appropriately respond to reasonable administrative efforts to collect the debt). Whenever the Secretary finds that an overpayment has been made to a veteran or other eligible person, the amount of such overpayment shall constitute a liability of such veteran or eligible person to the United States. 38 U.S.C. § 3685; Mountford v. Shinseki, 24 Vet. App. 443, 450, n.6 (2011). 1. The validity of the creation of the overpayment of Chapter 31 education benefits in the amount of $246.20. The preliminary issue of the validity of a debt is a threshold determination that must be made prior to a decision on a request for waiver of the indebtedness. See Schaper v. Derwinski, 1 Vet. App. 430, 437 (1991). In other words, before deciding a request for waiver, VA must first consider the validity of the debt. See also 38 U.S.C. § 5314(b) (prohibiting offset of a debt from future benefit payments unless VA first makes a determination with respect to the beneficiary's dispute of existence or amount of debt). A debtor may dispute the amount or existence of a debt, which is a right that may be exercised separately from a request for waiver or at the same time. See 38 C.F.R. § 1.911(c)(1); see also VAOPGCPREC 6-98. The propriety and amount of the overpayment at issue are matters that are integral to a waiver determination. See Schaper, 1 Vet. App. at 434. For a determination that the overpayment was not properly created, such that the debt was not valid, it must be established that the appellant was either legally entitled to the benefits in question or, if the appellant was not legally entitled, then it must be shown that VA was solely responsible for the appellant being erroneously paid benefits. Administrative errors include all administrative decisions of entitlement, whether based upon mistake of fact, misunderstanding of controlling regulations or instructions, or misapplication of law. VAOPGPREC 2-90 (July 17, 1989), 55 Fed. Reg. 27757 (1990). Sole administrative error connotes that the appellant neither had knowledge of nor should have been aware of the erroneous award. Further, neither the appellant's actions nor his or her failure to act must have contributed to payment pursuant to the erroneous award. 38 U.S.C. § 5112(b)(9), (10); 38 C.F.R. § 3.500(b)(2); Jordan v. Brown, 10 Vet. App. 171 (1997) (sole administrative error is not present if the payee knew, or should have known, that the payments were erroneous). Thus, a finding of sole administrative error requires not only error on the part of VA, but that the beneficiary is unaware that the payments are erroneous. A claimant must report to VA, without delay, a change in credit hours or clock hours of attendance if that change would result in less than full-time enrollment, as well as any change in his or her pursuit that would result in less than full-time enrollment. 38 C.F.R. §§ 21.7156. A beneficiary is charged with knowing the rules governing compensation. Dent v. McDonald, 27 Vet. App. 362, 382 (2015) (summarizing Jordan v. Brown, 10 Vet. App. 171, 174-75 (1997)). A person may have actual or constructive knowledge of a fact, the latter of which is defined as "[k]nowledge that one using reasonable care or diligence should have, and therefore that is attributed by law to a given person." Dent, 27 Vet. App. at 380; see also Morris v. Derwinski, 1 Vet. App. 261 (1991), citing Fed. Crop Ins. Corp. v. Merrill, 332 U.S. 380, 384-385 (1947) (all persons dealing with the federal government are charged with knowledge of federal statutes and lawfully promulgated agency regulations). In this case, the record reflects the Veteran was authorized to receive a Chapter 31 education subsistence allowance for the period he was scheduled to attend an education program for the March 2006 to May 2006 term. In March 2006, VA received certification from the educational institution in question that the Veteran had reduced his attendance to zero hours, and his entitlement to the subsistence allowance was ended that month. However, the record reflects he had already received $246.20 for that period in which he did not attend class(es). The Board further notes that it appears VA took prompt action upon notification of the change in the Veteran’s attendance. Granted, there was error in the fact that the debt was initially attributed to the Veteran’s son, but subsequent action has corrected this error. The record does not reflect the Veteran has disputed he reduced his attendance at the educational institution for the period in question. In addition, evidence of record indicates the amount of the overpayment of $246.20 was properly calculated. The Board also notes that the Veteran has primarily contended that the overpayment has been full repaid to VA, and that it is error for them to continue to try and collect that overpayment. Even assuming for the purposes of this case that the $246.20 has been fully repaid, the purpose of this appeal is to determine whether he should have been charged the overpayment in the first place. Based upon the aforementioned facts, the Board finds that the overpayment was properly created. 2. Entitlement to waiver of recovery of Chapter 31 education benefits in the amount of $246.20 With respect to whether a waiver is warranted in this case, the Board notes that the law precludes waiver of recovery of an overpayment or waiver of collection of any indebtedness where any one of the following elements is found to exist: (1) fraud, (2) misrepresentation, (3) bad faith. 38 U.S.C. § 5302; 38 C.F.R. §§ 1.962, 1.965. In this case, there is no evidence of such on the part of the Veteran in the creation of the overpayment. The standard of "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 obligor and the Government. In making this determination, consideration will be given to the following elements, which are not intended to be all- inclusive: 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 the VA 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. 38 C.F.R. § 1.965(a). In this case, the Board notes that the facts surrounding the creation of the overpayment does not indicate collection of the overpayment would defeat the purpose for which it was intended, in that it appears the benefits were for a period of educational services in 2006 in which the Veteran did not participate. Additionally, the Veteran did not change his position to his detriment. Moreover, it would not defeat the purpose for which the benefits were intended since the subsistence allowance was to be for a period in which the Veteran was to be attending classes and did not do so. The Board also notes that there is some evidence of fault on the part of the Veteran in the creation of the overpayment. In pertinent part, the Veteran knew or should have known that the subsistence allowance was contingent upon his attending classes for the period in question; and he did not do so. As such, he would be unjustly enriched if he were allowed to keep overpayment as it funds for which he was not entitled. There does not appear to be evidence of fault on the part of VA in this case. As already noted, it appears VA took prompt action once it learned the Veteran would not participating in the education classes for the March to May 2006 term. The Board further finds that recovery of the overpayment would not result in undue hardship. In pertinent part, the Veteran has reported that the overpayment has already been repaid. Moreover, even if the overpayment had not been repaid, the Veteran has submitted Financial Service Reports which reflect his monthly income exceed monthly expenses. In short, the record does not reflect he was or would be deprived of basic necessities due to collection of the overpayment. In view of the foregoing, the Board finds recovery of the overpayment of Chapter 31 education benefits in the amount of $246.20 would not be against the principles of equity and good conscience. Therefore, this aspect of his appeal is denied. In making this determination, the Board notes that if the Veteran is correct in his assertion that the overpayment has already been repaid, he should not be charged any additional amount. The purpose of this decision is to determine whether it was proper to charge him with the overpayment in the first place and, if so, whether a waiver of the overpayment is warranted. The Board intimates no opinion, either legal or factual, as to the status of the underlying debt. DAVID A. BRENNINGMEYER Veterans Law Judge Board of Veterans’ Appeals ATTORNEY FOR THE BOARD John Kitlas, Counsel