Citation Nr: 19106810 Decision Date: 01/29/19 Archive Date: 01/29/19 DOCKET NO. 16-00 001A DATE: January 29, 2019 ORDER 1. The overpayment of Department of Veterans Affairs (VA) benefits was validly created in the amount of $6,963.00 for the removal of the Veteran’s spouse as a dependent, effective February 1, 1996. 2. Waiver of recovery of debt in the amount to be determined resulting from the overpayment of additional dependent compensation for the period of February 1996 to February 2005, except for one month between November 1996 to December 1996, is granted. FINDINGS OF FACT 1. The Veteran married his former spouse, C.A.H., in July 1990, who was added as a dependent for VA compensation purposes. The Veteran divorced C.A.H. in November 1996. 2. The Veteran did not inform VA at the time of his divorce that he and C.A.H. were no longer married. 3. The Veteran married his current spouse, R.B., in December 1996 and still is currently married to her. 4. In February 2005, the Veteran provided his marriage certificate to R.B. 5. To require recovery of the properly-created debt for the period from February 1996 to February 2005, except for one month between November 1996 to December 1996, would be unfair because it would nullify the objective for which the benefits were intended, in part because the Veteran was married during this period. 6. To require recovery of the properly-created debt from November 1996 to December 1996 would be fair, as the Veteran was not married for this period. CONCLUSIONS OF LAW 1. 1. An overpayment of additional VA disability compensation benefits for a dependent was properly created and the debt of $6,963.00 is valid. 38 U.S.C. § 5112 (2012); 38 C.F.R. §§ 1.911, 3.401, 3.500, 3.501 (2017). 2. Recovery of the properly-created debt for dependent overpayment for the period from February 1996 to February 2005, except for one month between November 1996 to December 1996, would be against equity and good conscience. 38 U.S.C. § 5302 (2012); 38 C.F.R. §§ 1.962, 1.963, 1.965 (2017). 3. Recovery of the properly-created debt for dependent overpayment for the period from November 1996 to December 1996 is not against equity and good conscience. 38 U.S.C. § 5302 (2012); 38 C.F.R. §§ 1.962, 1.963, 1.965 (2017). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS The Veteran served on active duty from August 1967 to June 1970; from August 1980 to August 1984; and from January 1985 to January 1996. Although the Agency of Original Jurisdiction (AOJ) has not adjudicated the issue of whether the Veteran is entitled to a waiver of the overpayment in the first instance, the decision below represents a full grant of the benefit sought on appeal, therefore, the Veteran will not be prejudiced by the Board’s adjudication of the matter. 1. Whether an overpayment debt for failing to report changes to dependency status was properly created. The preliminary issue of the validity of a debt is a threshold determination that must be made in an overpayment debt collection matter. Schaper v. Derwinski, 1 Vet. App. 430, 433-34 (1991). An overpayment debt is created when VA determines that a beneficiary or payee has received monetary benefits to which she was not entitled. See 38 U.S.C. § 5302; 38 C.F.R. §§ 1.911, 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). The law provides for the rates of disability compensation, and for payment of additional compensation for dependents of veterans who are at least 30 percent disabled. 38 U.S.C. §§ 1114(c), 1115, 1134, 1135. The Veteran was, at all times relevant to this issue and the period of time in question, rated appropriately to receive additional compensation for a spouse. On February 23, 2005, the Veteran submitted a certificate of marriage for his marriage to his current spouse, R.B., reflecting a December 1996 date of marriage. Subsequently, also in February 2005, the Regional Office (RO) requested the information regarding his divorce from C.A.H. Specifically, the RO indicated that VA been paying him for C.A.H. when VA should have been paying him for R.B. In May 2012, a VA Form 21-686c, Declaration of Status of Dependents, was received from the Veteran in which he reported that he been married 4 times and married R.B. in December 1996. The Veteran reported that he divorced C.A.H. in January 1996. The Veteran also submitted a copy of the summons for his divorce to C.A.H., which was undated. In July 2012, the VA requested a copy of the finalized Divorce Decree. In August 2012, a VA Form 21-686c, Declaration of Status of Dependents, was received from the Veteran in which he reported that he had been married 3 times and married R.B. in December 1996. C.A.H. was not listed as one of the Veteran’s previous marriages. In a December 2014 letter, the Veteran was advised that the RO retroactively removed C.A.H. as the Veteran’s spouse from his award of VA compensation benefits effective February 1, 1996, the first day of the month following the date of divorce, January 5, 1996, reported by the Veteran on a May 2012 VA Form 21-686c. Since the Veteran had subsequently married R.B., the RO added her as the Veteran’s spouse to his award of VA compensation benefits effective February 25, 2005, the date that he first informed VA of the marriage. See 38 U.S.C. §§ 5111, 5112. The retroactive adjustments to the Veteran’s VA compensation benefits resulted in an overpayment debt of $6,963.00 which was the amount the Veteran was paid additional VA benefits for a spouse to whom he was divorced. In sum, the RO had informed the Veteran that he should promptly inform the RO of any change in the status of his dependents. For example, in an October 1996 letter to the Veteran informing him that he had been awarded increased compensation benefits, VA told the Veteran, “We’re paying you additional benefits for your spouse, C[]. Let us know if there is any change in the status of your dependents.” The Veteran did not notify VA of any dependency changes until February 23, 2005. The Veteran asserts that he did tell the Defense Finance and Accounting Service (DFAS) in July 2003 after being informed that his ex-wife C.A.H. was listed as his beneficiary and also called the retirement center and informed them that he was remarried and sent a copy of his marriage certificate, so the creation of the overpayment is due to the inaction on VA’s part. However, there is no documentary evidence in the record that VA received any notification of a change in dependency status prior to February 23, 2005. The Board notes that there is a presumption of regularity that applies to official acts, and “in the absence of clear evidence to the contrary, courts presume that they have properly discharged their official duties.” Ashley v. Derwinski, 2 Vet. App. 62, 64 (1992). Therefore, the presumption of regularity applies, and the Board can only conclude that the RO did not receive any information regarding changes in the Veteran’s marital status prior to C.A.H. The Veteran continued to be paid at the same rate based on his marriage to C.A.H. even after he and C.A.H. were divorced. The Veteran should have been aware that he was erroneously receiving benefits for the previous spouse, C.A.H., because there was no decrease in his benefits when there was a period that he was no longer married and even after he remarried to R.B., he did not notify VA until many years later when he discovered an error in his DFAS beneficiary, therefore, the retention of those benefits contributed to the erroneous award. In sum, for the period of time between the Veteran’s divorce from C.A.H and his marriage to R.B, he was not married and was not entitled to any benefits for a spouse and prior to February 23, 2005, the Veteran was in receipt of benefits based on his marriage to C.A.H. The RO terminated the Veteran’s additional benefits for a spouse for that period. This action was proper. The RO did not resume additional benefits for a spouse until the Veteran had informed VA that remarried. The law is clear that the Veteran’s right to receive additional disability compensation with respect to C.A.H. ceased after their divorce and the VA was unaware of the Veteran’s subsequent marriage to R.B. until February 23, 2005. Thus, the Board finds that the overpayment in this case was properly created. 2. Entitlement to waiver of recovery of an overpayment debt for additional VA compensation benefits for a dependent spouse in the amount of $6,963.00. Despite the validity of the overpayment debt, the Veteran may still receive a waiver for the debt created. 38 C.F.R. § 1.962. 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 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 U.S. Court of Appeals for Veterans Claims has defined bad faith as “a willful intention to seek an unfair advantage.” Richards v. Brown, 9 Vet. App. 255, 257-58 (1996). The provisions of 38 C.F.R. § 1.965(b)(2) define bad faith as an 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. 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 Board has not found any evidence of fraud, misrepresentation, or bad faith on the part of the Veteran in creation of the overpayment debt. The record does not show any willful attempt to gain an unfair advantage. The Veteran was at most negligent in failing to inform the VA of his divorce and remarriage, a net month without a spouse-dependent. Therefore, the question is whether or not a waiver should be granted under the standard of “equity and good conscience.” Looking to the several factors listed in 1.965(a), the Board finds that recovery of the overpayment would nullify the objective for which the benefits were intended and would not result in unjust enrichment of the Veteran. 38 C.F.R. § 1.965(a). While VA was not notified of the change in the Veteran’s particular dependents, the Veteran was married for all but one month, from November 1996 to December 1996, between February 1996 and February 2005, and was eligible to receive compensation for his spouse/dependent during that time. The Board notes that the February 1996 date for the termination of his dependency benefit was based on the date of January 5, 1996, the date that the Veteran self-reported was the date that his marriage to C.A.H. terminated in divorce on a May 2012 VA Form 21-686c. However, the Veteran subsequently submitted a divorce decree, which showed November 20, 1996 as the date of his divorce to C.A.H. Regardless of who that individual was, the purpose of dependency compensation is to provide for the Veteran’s spouse. Therefore, collecting debt when the Veteran had a spouse would defeat the purpose of the spouse-dependent compensation. Additionally, the Veteran would not be unjustly enriched if the overpayment debt from February 1996 and February 2005 were to be waived except for one month between November 1996 to December 1996, because he was married and entitled to this compensation. Therefore, waiver of overpayment is granted, except for the period between his marriages from November 1996 to December 1996. This represents a grant of the full benefit of the waiver of overpayment that the Veteran sought on appeal as the Veteran acknowledged that he was married for the entire period except for one month. See July 2007 correspondence from the Veteran’s representative, who is in agreement with these facts. A. P. SIMPSON Veterans Law Judge Board of Veterans’ Appeals ATTORNEY FOR THE BOARD D. Cheng, Associate Counsel