Citation Nr: 1823780 Decision Date: 04/20/18 Archive Date: 04/26/18 DOCKET NO. 14-10 754A ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Washington, DC THE ISSUE Entitlement to waiver of recovery of an overpayment of nonservice-connected (NSC) pension benefits in the amount of $35,970. REPRESENTATION Appellant represented by: The American Legion ATTORNEY FOR THE BOARD A.J. Turnipseed, Counsel INTRODUCTION The Veteran served on active duty from June 1970 to May 1972. He died in August 2008. The appellant is the Veteran's surviving spouse. This matter comes before the Board of Veterans' Appeals (Board) on appeal from a March 2014 decision by the Committee on Waivers and Compromises of the Department of Veterans Affairs (VA) Regional Office (RO) in Milwaukee, Wisconsin. The RO in Washington, DC currently has jurisdiction of this appeal. The appellant requested a Board hearing on her May 2014 VA Form 9. The hearing was scheduled for April 2017 but the appellant later withdrew her request for a hearing. FINDINGS OF FACT 1. On her March 2009 Application for DIC and Death Pension, the appellant reported that she did not receive any monthly income and did not expect to receive any income except for assistance from her family. 2. Evidence shows the appellant was receiving unemployment benefits when she applied for death pension benefits and had been receiving those benefits since 2007. 3. After she was awarded NSC pension benefits in April 2009, the appellant was consistently notified that she was required to notify VA of any changes in her situation, including if she started receiving income. 4. Evidence shows that, in addition to receiving unemployment benefits, the appellant began working and receiving wages in December 2009 but she did not report this income to VA. CONCLUSIONS OF LAW 1. The overpayment of death pension benefits in the amount of $35,970 was validly created. 38 U.S.C. §§ 5107, 5302, 5317 (West 2012); 38 C.F.R. §§ 3.23, 3.271, 3.272, 3.277 (2017). 2. Waiver of recovery of an overpayment of VA compensation in the amount of $35,970 is precluded as a matter of law. 38 U.S.C.A. § 5302 (West 2012); 38 C.F.R. §§ 1.962, 1.963, 1.965, 3.272 (2017). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS An overpayment is created when VA determines that a beneficiary or payee has received monetary benefits in excess of the amount to which he or she was entitled. 38 C.F.R. § 1.962 (2017). Whenever the Secretary finds that an overpayment has been made to a veteran or eligible person, the amount of such overpayment shall constitute a liability of such veteran or eligible person to the United States. See Mountford v. Shinseki, 24 Vet. App. 443, 450, n.6 (2011) (citing 38 U.S.C.A. §§ 3685, 5314). In determining whether a waiver of overpayment is appropriate, VA's (and the Board's) inquiry is focused on three distinct questions. First, VA must determine if the overpayment at issue was validly created. See Schaper v. Derwinski, 1 Vet. App. 430, 434-35 (1991). Second, if the debt is valid, VA must determine if fraud, misrepresentation, or bad faith played a role in its creation. If it did, waiver of the overpayment is automatically precluded, and further analysis is not warranted. See 38 U.S.C. § 5302; 38 C.F.R. §§ 1.962, 1.963(a), 1.965(b); see also Ridings v. Brown, 6 Vet. App. 544 (1994) (holding that the Board must independently address the matter of bad faith before addressing whether waiver would be appropriate). Finally, after it has been determined that the debt is valid and that fraud, misrepresentation and/or bad faith had no part in its creation, VA must then consider whether collection of the debt would be against equity and good conscience. See 38 U.S.C. § 5302(b); 38 C.F.R. §§ 1.962, 1.963, 1.965. In this case, the record reflects that the appellant filed a claim seeking Dependency and Indemnity Compensation (DIC) benefits and Death Pension in March 2009. In April 2009, the appellant was awarded NSC pension benefits, effective August 10, 2008. At that time, she was notified that she was being awarded benefits as a surviving spouse with no dependents and that the rate of pension she was being paid was based on her report of no income from September 1, 2008. She was also notified that she was responsible for notifying VA if her income changed, such as from earnings, Social Security benefits, or lottery winnings. In the years that followed, VA regularly sent the appellant letters informing her that she was required to notify VA of any changes in her situation, including if she started receiving income. See notice letters dated December 2009, December 2010, December 2011, and January 2013. In November 2013, an Income Verification Match (IVM) revealed that the appellant had been receiving income in the form of unemployment benefits since the effective date of her pension award, in addition to wages received since December 2009. The RO subsequently sent her letters informing her that an overpayment in the amount of $36,103 had been created because he had received additional, unreported income since the initial award of NSC pension. See notice letters dated December 2013 and March 2014. The appellant subsequently submitted medical expense reports and eligibility verification reports which were accepted as a request for a waiver of the overpayment. Based on the information provided by the appellant, her debt was reduced to $35, 970; however, in March 2014, the Committee denied the appellant's request for a waiver finding bad faith on her part by not accurately reporting her income on her application for VA benefits and thereafter. The appellant contends that she did not intentionally commit fraud, misrepresent, or not report her income in bad faith. She has asserted that, while she received letters informing her to report any change in income, she did not realize this included unemployment compensation, which she received from 2007 to 2011. She has also asserted that the collection of the debt would be against equity and good conscience, as it would result in undue hardship and defeat the purpose of the benefits. See May 2014 Notice of Disagreement. Nothing in the record reflects that the calculation of the overpayment at issue in this case was in error and the Veteran has not disputed the validity of the debt in question. Consequently, the Board finds the overpayment of $35,970 was validly created. As noted previously, 38 U.S.C.A. § 5302(c) and 38 C.F.R. § 1.965(b) indicate that a finding of fraud, misrepresentation, or bad faith precludes a grant of a waiver of recover of an overpayment. The Committee on Waivers and Compromises concluded in its March 2014 decision that the facts in this case show that the mandatory bars to waiver apply in the present case, and the Board agrees. Review of the evidence shows that, on her March 2009 Application for DIC and death pension, the appellant reported that she did not receive any monthly income and did not expect to receive any income except for assistance from her family. Subsequent evidence, including the November 213 IVM review and statements from the appellant, show that she misrepresented her income on her March 2009 claim, as she was receiving unemployment benefits at that time and had been receiving those benefits since 2007. The appellant argues that she was unaware that "income" included unemployment benefits; however, as noted, the evidence shows that, when she was awarded NSC pension benefits in April 2009, she was notified that she was responsible for notifying VA if her income changed, such as from earnings. However, the evidence also shows that the appellant began working and receiving wages in December 2009 but failed to inform VA of her additional income. The evidence of record clearly shows that the appellant misrepresented her income when she applied for DIC and death pension benefits and after she was informed of her responsibility to report any changes of income to VA. While the Board notes it is not clear that the appellant intentionally committed fraud or acted in bad faith but it is clear that she continuously misrepresented her income to VA, which resulted in the overpayment of $35,970 in pension benefits. In light of the finding of misrepresentation, waiver of recovery of the overpayment is precluded by law. See 38 C.F.R. § 1.962 (b). As such, there is no basis for further consideration regarding the elements of equity and good conscience, such as hardship or other equitable factors. 38 U.S.C. § 5302 (c); 38 C.F.R. §§ 1.962, 1.963, 1.965. The appeal is denied. ORDER Entitlement to a waiver of recovery of an overpayment in the amount of $35,970 is denied. ____________________________________________ R. FEINBERG Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs