Citation Nr: 18159080 Decision Date: 12/19/18 Archive Date: 12/18/18 DOCKET NO. 14-13 701 DATE: December 19, 2018 ORDER The appeal for a waiver of recovery of the overpayment of service-connected compensation benefits in the amount of $45,274.34 is granted. FINDINGS OF FACT 1. The creation of an overpayment, in the amount of $45,274.34, was not the result of fraud, misrepresentation, or bad faith on the part of the Veteran. 2. The Veteran was at fault in the creation of the overpayment, and there is no fault on the part of VA. 3. Repayment of the overpayment debt would result in undue hardship to the Veteran. CONCLUSION OF LAW Recovery of the overpayment of VA nonservice-connected pension benefits, in the amount of $45,274.34, is against equity and good conscience. 38 U.S.C. § 5302 (2012); 38 C.F.R. §§ 1.963, 1.965 (2017). REASONS AND BASES FOR FINDING AND CONCLUSION The Veteran served on active duty in the United States Navy from February 1964 to December 1967. This matter comes before the Board of Veterans’ Appeals (Board) on appeal from a June 2013 decision from the Department of Veterans Affairs (VA) Regional Office (RO) in Philadelphia, Pennsylvania. Jurisdiction of this matter was transferred to the RO in Boston, Massachusetts. This matter was previously before the Board in April 2016, when it was remanded for the purpose of scheduling the Veteran for a hearing before the Board. The Veteran presented sworn testimony at a hearing before the undersigned in August 2016. A transcript of that hearing is of record. This matter was also previously remanded in December 2016 for additional development. That development having been completed, this claim is once again before the Board. In October 2018, the Board previously decided the issue of validity of the debt in the amount of $45,274.34 in its October 2018 decision, finding such debt to be valid. Because the RO had prematurely made a decision regarding entitlement to a waiver in the amount of $45,274.34 without having first made a decision on the validity of such debt, the Board also remanded the waiver claim for a RO decision in the first instance having now determined the validity of the debt, as such issue was determined to require adjudication by the agency of original jurisdiction before proceeding to the Board for appellate review. As such matter was reviewed and denied in the first instance by the RO in an October 2018 statement of the case, this claim has once again returned to the Board for adjudication. 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. A claimant has the right to dispute the existence and amount of the debt. 38 U.S.C. § 501 (2012); 38 C.F.R. § 1.911 (c) (2017). Initially, it is noted that the issue of the validity of the debt has already been resolved by the finding in the prior October 2018 Board decision. Therefore, the validity of the debt will not be addressed in this decision. Historically, in August 2008, the Veteran’s award for service-connected disability compensation benefits was terminated due his status as a fugitive felon for VA purposes. His award was terminated from November 13, 2003 to February 15, 2008. The Veteran was notified of a calculated debt in the amount of $45,274.34 and informed about the procedures for acquiring a waiver of repayment in August 2008. In February 2009, the Veteran requested waiver of the overpayment, and asserted that repayment of the overpayment would cause him undue financial hardship. The Veteran requested a waiver of recovery of the overpayment of service-connected disability compensation benefits within 180 days of receiving notification of the indebtedness. As he filed a timely application for waiver of this overpayment, he meets the basic eligibility requirements for a waiver of recovery of his VA indebtedness. The Board will thus proceed to adjudicate the claim on the merits. 38 U.S.C. § 5302 (a); 38 C.F.R. § 1.963 (b)(2). Any indebtedness of a veteran 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 (a). A finding of fraud, misrepresentation, or bad faith precludes a grant of a waiver of recovery of the overpayment. “Bad faith” is defined in VA regulations as “unfair or deceptive dealing by one who seeks to gain thereby at another’s expense. Thus, a debtor’s conduct in connection with a debt arising from participation in a VA benefits/services program exhibits bad faith if such conduct, although not undertaken with actual fraudulent intent, is undertaken with intent to seek an unfair advantage, with knowledge of the likely consequences, and results in a loss to the government.” 38 C.F.R. § 1.965 (b)(2). In this case, in denying the Veteran’s request for a waiver of the overpayment, the RO determination noted that there was no indication of fraud, misrepresentation, or bad faith on the part of the Veteran. The Board concurs. As the evidence does not establish fraud, misrepresentation, or bad faith on the part of the Veteran, the Board will next determine if a waiver of recovery of the 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). 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 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 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 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 Board finds that the Veteran is at fault in the creation of the overpayment, and that there is no fault of VA that could be balanced against the Veteran’s fault. In this case, the Veteran was shown to have been found to be a fugitive felon, thereby resulting in the termination of his benefits due to his own fault. On the other hand, VA, upon the discovery of the Veteran’s status and its prohibition of the payment of benefits by law, followed appropriate procedure in timely notifying the Veteran and affording due process before the termination of such benefits. Accordingly, the Board finds that the Veteran is at fault in the creation of the overpayment, and that there is no fault on the part of VA. Thus, the first two elements do not support the Veteran’s request for a waiver of the overpayment. The next question for consideration is whether collection of the debt would cause the Veteran undue financial hardship. The Board finds that this would result in an undue hardship on the Veteran and would be against the principles of equity and good conscience. Thus, waiver of the validly created overpayment of $45,274.34 is warranted STEVEN D. REISS Veterans Law Judge Board of Veterans’ Appeals ATTORNEY FOR THE BOARD R. Dodd, Counsel