Citation Nr: 1806705 Decision Date: 02/01/18 Archive Date: 02/14/18 DOCKET NO. 02-09 763 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Los Angeles, California THE ISSUE Entitlement to waiver of recovery of an overpayment of Section 306 pension benefits in the amount of $2,119.13. ATTORNEY FOR THE BOARD Kate Sosna, Associate Counsel INTRODUCTION The appellant is the surviving spouse of the Veteran, who served on active duty from January 1975 to January 1978. This matter is before the Board of Veterans' Appeals (Board) on appeal from a February 2002 rating decision of the Committee on Waivers and Compromises (Committee) of a Veterans Affairs (VA) Regional Office (RO), which denied entitlement to waiver of recovery of an overpayment of Section 306 death pension benefits on the basis that the request for waiver was untimely. In March 2003 and January 2004, the Board remanded the case for additional development. In an August 2006 decision, the Board noted the appellant had submitted a timely request for waiver of recovery of the overpayment and that the overpayment of pension benefits was properly created for the periods of time when the appellant was incarcerated for more than 60 days for a felony conviction and subsequent parole violations, but was not properly created for the periods when she was not incarcerated or was incarcerated for 60 days or less. The Board then remanded the case for further development, to include recalculation of the amount of the overpayment and adjudication of the claim for waiver of recovery of the remaining debt. In July 2014, the Board remanded the appeal again for compliance with the August 2006 remand and it now returns for further appellate review. FINDINGS OF FACT 1. A March 1979 decision granted entitlement to Section 306 pension benefits. 2. In November 1990, the appellant was imprisoned for the commission of a felony. She did not notify VA of her imprisonment until 1997, after her final release from parole. 3. In November 1997, VA notified the appellant that an overpayment in the amount of $10,874.97 had been created. 4. In an August 2006 decision, the Board determined the entirety of the $10,874.97 debt was not valid as such did not take into consideration periods where the appellant was imprisoned for fewer than 60 days or periods when she was not incarcerated; the Board affirmed the validity of the debt for the periods the appellant was imprisoned for more than 60 days. 5. In September 2017, VA noted the erroneous debt of $10,874.97 had already been collected from the appellant and that she was entitled to a refund of $8,755.83; waiver of the valid debt of $2,119.13 was denied. 6. The appellant bears all of the fault for the creation of the debt in the amount of $2,119.13. 7. VA's collection of the $2,119.13 did not result in the appellant being unable to provide for her basic necessities and did not nullify the objective for which Section 306 pension benefits were intended. 8. The appellant did not relinquish a valuable right or incur a legal obligation in reliance on VA benefits and returning her restitution would result in an unfair gain to her at the expense of the government. 9. It was not against equity and good conscience for VA to recover the amount of the debt. CONCLUSION OF LAW The criteria for a waiver of recovery of an overpayment of VA Section 306 pension benefits in the amount of $2,119.13 have not been met. 38 U.S.C. § 5302 (2012); 38 C.F.R. §§ 1.962, 1.963, 1.965 (2017). REASONS AND BASES FOR FINDINGS AND CONCLUSION I. Preliminary Matters The Board has limited the discussion below to the relevant evidence required to support its findings of fact and conclusions of law, as well as to the specific contentions regarding the case as raised directly by the appellant and those reasonably raised by the record. See Scott v. McDonald, 789 F.3d 1375, 1381 (Fed. Cir. 2015); Robinson v. Peake, 21 Vet. App. 545, 552 (2008); Gonzales v. West, 218 F.3d 1378, 1380-81 (Fed. Cir. 2000); Timberlake v. Gober, 14 Vet. App. 122, 128-30 (2000). Further, the appellant has not alleged any deficiency with respect to VA's duties to notify or assist with regard to the issue before the Board. See Scott, supra (holding that "the Board's obligation to read filings in a liberal manner does not require the Board...to search the record and address procedural arguments when the veteran fails to raise them before the Board."); Dickens v. McDonald, 814 F.3d 1359, 1361 (Fed. Cir. 2016) (applying Scott to duty to assist argument). II. Analysis The appellant is seeking a waiver of recovery of an overpayment of Section 306 pension benefits in the amount of $2,119.13; the amount has already been recovered by VA. Initially, the Board incorporates by reference the procedural history and posture of this appeal that has been thoroughly detailed in the March 2003, January 2004, August 2006, and July 2014 Board remands and the August 2006 ruling as to the validity of the debt. In short, the appellant was imprisoned for a felony, did not notify VA, and continued to receive VA benefits during her incarceration despite her ineligibility for such benefits, resulting in an overpayment. While VA originally retained $10,874.97 to satisfy the debt, following the August 2006 Board decision the proper amount of the debt was determined to be $2,119.13; the $8,755.83 erroneously retained by VA has been refunded to the appellant. The appellant reports that recoupment of the debt caused her extreme financial hardship in that she was unable to pay rent, resulting in homelessness and associated parole violations. She also contends the recouped debt should be refunded to her in light of her poor health. In September 2017, a decision was issued denying the appellant's request for waiver of recovery of overpayment in the amount of $2,119.13; a waiver of recovery of the erroneous debt of $8,755.83 was granted. The decision indicated that the appellant was found to be free of fraud, misrepresentation, or bad faith. It was explained that the standards of equity and good conscience were applied, which indicated that: (1) the appellant was at fault for the actual debt from periods of incarceration over 61 days; (2) withholding the pension would defeat the purpose, but the appellant actually continued to receive payments while incarcerated; (3) the appellant did not experience hardship from the prior collection of the debt as funds were collected from a substantial retroactive payment; (4) waiver would give rise to unjust enrichment at the expense of the government; and (5) there was no evidence the appellant had changed her position to her detriment in reliance on the overpaid funds. Ultimately, it was determined that a denial of the waiver of $2,119.13 would not be against equity and good conscience. In financial status reports (FSRs) submitted throughout the lengthy period on appeal, the appellant has reported her yearly income ranged from $1,596 ($133.00 a month in June 2002) to $10,272.00 ($856.00 a month in December 2007). She also reported assets in the form of $6.88 (September 2004 FSR), $9.97 (December 2007 FSR), and $0.85 (June 2017 FSR). Her specific income and expenses were reported as follows: Expense September 2004 FSR December 2007 FSR June 2017 FSR Income $552.00 $856.00 $735.00 Rent $200.00 $300.00 $400.00 Food $141.00 $200.00 $100.00 Utilities $53.56 $150.00 $104.00 Personal Care Items $100.00 $88.00 $131 Installment Contracts $375.00 $100 - Total Expenses $869.56 $838.00 $735 Difference -$317.56 $18.00 $0.00 The Board first finds that waiver of recovery is not prohibited as it has determined that the overpayment of Section 306 pension benefits was not the result of conduct on the appellant's part which amounted to "fraud," "misrepresentation of a material fact," or "bad faith." 38 U.S.C. § 5302(c); 38 C.F.R. §§ 1.962(b), 1.965(b). The Board nevertheless notes that the appellant was having her mother sign for her pension checks while she was in prison, which arguably amounts to misrepresentation of a material fact, to wit, her eligibility to receive benefits. However, as the Committee has determined the appellant's conduct in this matter did not consisted of "fraud," "misrepresentation of a material fact," or "bad faith," her request for waiver will be evaluated in light of the principles of "equity and good conscience" which are set forth at 38 C.F.R. § 1.965(a). In applying the "equity and good conscience" standard to an individual case, several factors are to be considered by the decision-maker. Among these are (1) whether actions of the debtor contributed to the creation of the debt, (2) whether collection would deprive the debtor or the debtor's family of basic necessities, (3) whether recovery of the debt would nullify the objective for which benefits were intended, (4) whether failure to make restitution would result in unfair gain to the debtor, and (5) whether the debtor has changed position to his/her detriment due to his/her reliance upon the receipt of VA benefits. Additionally, the decision-maker must conduct a "balancing of the faults," weighing the fault of the debtor against any fault attributable to VA. As the validity and amount of the debt has been well established during the lengthy appeal period, the following discussion will deal exclusively with the sole issue on appeal, i.e., entitlement to a waiver of the overpayment of benefits. Turning to the first consideration under the principles of equity and good conscience, the Board finds the appellant is at fault in the creation of the debt. In this regard, the appellant did not notify VA of her imprisonment and actually hid such fact from VA by having her mother deposit her pension checks during her incarceration. Additionally, while she contends her pension is administered under "Carter's Law," and cannot be terminated for any reason, as noted in the August 2006 Board decision, the applicable law has remained essentially unchanged with regard to terminating benefits due to incarceration since its enactment. Notably, the plain language of the regulation states that benefits will be terminated for any individual who is receiving pension "under a public or private law administered by the VA." This broad language clearly does not exclude recipients of Section 306 pension as such is a pension program administered by VA. As the appellant failed to notify VA of her incarceration, the Board concludes that she is at entirely at fault for the creation of the debt. The next factor to consider is whether collection of the appellant's debt would deprive her of basic necessities. In this case, the debt has already been recovered. While the appellant reported in a November 2017 submission that repaying the debt caused her to be homeless and thus violate the terms of her parole, such is not supported by the record. In this regard, the debt was recouped from a lump sum payment provided to the appellant well after the term of her parole. When she violated parole repeatedly in 1992, 1993, 1994, 1995, and 1996, VA was unaware of her incarceration and was still paying her Section 306 benefits. Moreover, the financial data supplied by the appellant shows she has always had sufficient income to pay for her rent, food, and utilities. Indeed, she reported excess of income of $18.00 a month in December 2007 and had exactly enough money for her needs in June 2017. In light of the foregoing, the Board finds that recovery of the appellant's overpayment did not result in undue financial hardship, and that such collection did not deprive her of basic necessities. The Board next considers whether waiving the debt would nullify the objective for which benefits were intended. In this regard, the appellant's pension benefits are intended to assist in the support of a veteran's widow after his death, during the time such widow is not incarcerated. Here, the appellant received such benefit for all of the periods she was duly entitled to receive such. While incarcerated, the appellant was presumably provided with shelter, food, and personal hygiene items. Therefore, repayment of this debt does not defeat the benefits purpose as the appellant maintained a minimum level of security. The Board next considers whether the appellant's failure to make restitution (or the return of restitution already paid) would result in unfair gain to herself. Here, the appellant created the debt to VA by continuing to accept benefits despite her ineligibility for such. If a waiver of recovery is granted it would create an unfair gain to her because she would be allowed to retain funds to which she was not legally entitled to receive. Thus, the Board finds that returning the appellant's already-paid restitution to her would result in an unjust enrichment. While the Board must also consider whether the appellant detrimentally changed her position due to reliance upon the receipt of VA pension benefits, she has not claimed such and there is no indication in the record she changed position in reliance on the receipt of VA benefits. As such, the Board finds the appellant did not detrimentally change her position due to reliance on VA pension benefits. Finally, while the above-mentioned factors weigh against waiver of the debt in the amount of $2,119.13, the Board must still weigh the fault of the debtor against the fault attributable to VA in arriving at its decision. The record shows that VA was not notified of the appellant's incarceration until the year after her discharge from parole. Absent knowledge of ineligibility for pension benefits, VA had no fault in the creation of the debt and the appellant bears all of the fault for the debt. In sum, consideration of equity and good conscience as to the facts and circumstances in the appellant's case do not indicate a need for reasonableness and moderation in the exercise of the Government's rights. In view of the Board's findings, recovery of the $2,119.13 was not against equity and good conscience. Accordingly, the appellant's request for a waiver must be denied. ORDER Waiver of recovery of an overpayment of VA pension benefits in the amount of $2,119.13 is denied. ____________________________________________ A. JAEGER Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs