Citation Nr: 1824946 Decision Date: 04/25/18 Archive Date: 05/03/18 DOCKET NO. 12-03 141 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Atlanta, Georgia THE ISSUE Entitlement to a waiver of recovery of an overpayment of dependency and indemnity compensation (DIC) benefits in the amount of $58,394 to include the validity of the debt. REPRESENTATION Appellant represented by: Georgia Department of Veterans Services WITNESS AT HEARING ON APPEAL Appellant ATTORNEY FOR THE BOARD M. Riley, Counsel INTRODUCTION The Veteran served on active duty from May 1989 to February 1993. He died in August 1997 and the appellant is his widow. This case comes before the Board of Veterans' Appeals (Board) on appeal from a February 2011 decision of the Committee on Waivers and Compromises of the Department of Veterans Affairs (VA) Regional Office (RO) in Philadelphia, Pennsylvania. Jurisdiction over the claims file is currently held by the RO in Atlanta, Georgia. In August 2015, the appellant testified at a hearing before the undersigned Veterans Law Judge (VLJ) at the RO. This case was previously before the Board in November 2015 when it was remanded for additional development. It has now returned to the Board for further appellate action. FINDINGS OF FACT 1. An overpayment of VA DIC benefits in the amount of $58,394 was properly created and was not due to the appellant's fraud, misrepresentation, or bad faith. 2. Recovery of the overpayment would result in financial hardship to the appellant. CONCLUSION OF LAW Recovery of the properly created overpayment of VA DIC benefits in the amount of $58,394 is against equity and good conscience. 38 U.S.C. §§ 5107, 5302 (2012); 38 C.F.R. §§ 1.963, 1.965 (2016). REASONS AND BASES FOR FINDINGS AND CONCLUSION In September 1997, VA awarded the appellant DIC benefits effective August 1, 1997 for service connection for the cause of the Veteran's death. In letters dated in December 2007 and December 2008, the appellant was provided details of her monthly DIC payments and told to contact VA immediately if her marital status changed. In January 2010, the appellant contacted VA by telephone and reported that she remarried in April 2006. She was notified in September 2010 that her DIC benefits had been terminated effective April 1, 2006 and an overpayment was created. On September 17, 2010, the appellant was informed that an overpayment debt in the amount of $68,587.13 was created as a result of her failure to inform VA of her remarriage. 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; 38 C.F.R. § 1.911(c). The appellant requested a waiver of the debt and has objected to the debt's validity. The Committee on Waivers and Compromises denied the appellant's request for a waiver of the overpayment debt in a February 2011 administrative decision. The Committee found that the appellant was at fault in the creation of the debt for failing to report her marriage to VA in a timely manner. They did not make a finding of fraud, misrepresentation, or bad faith, but instead found that failure to make restitution would result in an unfair gain to the appellant at the expense of the government, causing unjust enrichment. The Committee further noted that repayment of the debt would pose some degree of financial hardship, but concluded that collection of the debt would not be against equity and good conscience. The appellant was notified that her waiver of the overpayment was denied in a February 7, 2011 letter. The Board must first determine whether the debt in this case is valid. The overpayment in this case was created as a result of information received regarding the appellant's marital status. The amount of the debt was originally calculated in the amount of $68,587.13 and a waiver of this amount was denied in the February 2011 administrative decision on appeal. In response to a request from the appellant and the Board's November 2015 remand, the appellant's account was audited in January 2018. As a result of the audit, the debt was reduced to $58,394 as adjustments were made to the appellant's VA benefits from April 1, 2006 to September 15, 2008 to provide additional payments for her dependent children. Thus, the amount of the debt is now calculated as $58,394. As the reduction of the debt is in the appellant's favor, the Board will accept the RO's statements and calculations and must now determine whether the debt was properly created. To establish improper creation of an overpayment, i.e., an invalid debt, the evidence must show that (1) the appellant was legally entitled to the VA compensation benefits at issue; or, (2) the erroneous payment of excess benefits was due solely to VA administrative error or error in judgment. The terms "administrative error" and "error in judgment" include all administrative decisions of entitlement, whether based on a mistake of fact or mistake of law. The beneficiary will be liable for the overpayment, however, if the error was caused in whole or in part by any action or failure to act by the beneficiary, or by another person with the beneficiary's knowledge. In other words, sole error by VA means that the appellant did not have knowledge of, and should not have been aware of, the erroneous award or receipt of benefits; and that neither the appellant's actions, nor her failure to act, contributed to the erroneous payment of benefits. See 38 U.S.C. § 5112 (b)(9) & (b)(10); see also Jordan v. Brown, 10 Vet. App. 171, 174-75 (1997); 38 C.F.R. § 3.500 (b); VAOPGCPREC 6-97 (January 28, 1997); VAOPGCPREC 11-92 (May 14, 1992); VAOPGCPREC 2-90 (March 20, 1990). The Board finds that the debt from April 1, 2006 to September 1, 2010 was properly created. During this period, the appellant received DIC payments as a surviving spouse with two dependent children. She remarried in April 2006 and received DIC benefits from April 1, 2006 to September 1, 2010 to which she was not entitled. The debt was therefore properly created. The appellant contends that a waiver is appropriate in this case as repayment of the debt would cause undue hardship due to her financial difficulties. She also contends that she informed VA on multiple occasions in early April 2006, 2008, 2009, and January 2010 about her remarriage. She testified in August 2015 that while her phone calls to VA were not specifically for the purpose of reporting her marriage (they involved a property tax exemption and dependents' education benefits), she did inform VA she was remarried at those times. The appellant requested a waiver of recovery of the overpayment of DIC benefits within 180 days of receiving notification of the indebtedness. As she filed a timely application for waiver of this overpayment, she 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). Recovery of overpayments of any benefits made under the laws administered by VA shall be waived if 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 if the recovery of the indebtedness from the payee who received such benefits would be against equity and good conscience. 38 U.S.C. § 5302; 38 C.F.R. §§ 1.962, 1.963(a), 1.965. The phrase "equity and good conscience" means the arrival 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 the debtor, (2) balancing of faults between the debtor and VA, (3) undue hardship of collection on the debtor, (4) defeat of the purpose of an existing benefit to the appellant, (5) unjust enrichment of the appellant, and (6) whether the appellant changed positions to his or her detriment in reliance upon a granted VA benefit. 38 U.S.C. § 5302; 38 C.F.R. § 1.965(a). 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. 38 C.F.R. § 1.965(a); Ridings v. Brown, 6 Vet. App. 544, 546 (1994). The question before the Board then is whether recovery of the overpayment would be against equity and good conscience. 38 C.F.R. § 1.965(a); Ridings v. Brown, 6 Vet. App. 544 (1994). In determining whether the recovery of the overpayment would be against equity and good conscience, the first consideration is whether the appellant was at fault in the creation of the overpayment. 38 C.F.R. § 1.965(a)(1). In this case, the appellant was at fault in the creation of the overpayment by virtue of her failure to notify VA of her marriage in a timely manner. While she reports that she notified VA of her marriage while addressing other matters in earlier communications, there is no documentation of this contact and VA was not clearly notified that her marital status had changed. The RO conducted a review of her dependent children's education files in August 2017, and there was no record of correspondence from the appellant reporting her marital status. The Board therefore finds that the appellant was at fault in not clearly informing VA of her remarriage in April 2006. Despite the appellant's fault in the creation of the debt, the Board finds that a waiver is warranted as collection of the debt would cause the appellant undue financial hardship. Undue hardship is described as "[w]hether collection would deprive debtor or family of basic necessities." 38 C.F.R. § 1.965(a)(3). In the present case, the appellant's income and expense information from September 2015 shows that her expenses typically exceed her income and she carries a large amount of credit card debt. Although the record does not contain any more recent income or expense information, the Board notes that VA's January 2018 request to the appellant for updated financial information was mailed to an outdated address and was returned as undeliverable. The record does not indicate that VA attempted to resend the request to the appellant's current address. The Board finds that the appellant's testimony and financial forms are credible and therefore finds that repayment of the debt would cause financial hardship. Based on the foregoing, the Board finds that the appellant would incur undue financial hardship if a waiver is not awarded in this case. Although she was at fault in the creation of the indebtedness, an equal consideration is that recovery of the indebtedness would subject her to undue economic hardship. The Board believes that the latter factor overrides other considerations, such as any possible unjust enrichment. Under the principles of equity and good conscience, taking into consideration all of the specifically enumerated elements of 38 C.F.R. § 1.965(a), it would be unfair to recover the appellant's DIC compensation overpayment indebtedness in the amount of $58,394. The end result would not be unduly favorable or adverse to either the Government or the appellant. 38 U.S.C. § 5107(b). Accordingly, the appellant's request for a waiver of her overpayment debt is granted. ORDER Entitlement to a waiver of recovery of a valid overpayment of DIC benefits in the amount of $58,394 is granted. ____________________________________________ M. H. Hawley Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs