Citation Nr: A19000178 Decision Date: 03/12/19 Archive Date: 03/12/19 DOCKET NO. 180630-254 DATE: March 12, 2019 ORDER An overpayment of Department of Veterans Affairs (VA) compensation benefits in the amount of 56,332.29 dollars was not properly created; the appeal is granted. FINDINGS OF FACT 1. The Veteran is charged with an overpayment of VA compensation benefits in the amount of 56,332.29 dollars during the period from July 12, 2016 to December 31, 2017 as he concurrently received military retired pay and VA compensation benefits without providing a waiver of his military retired pay. 2. The Veteran was legally entitled to the concurrent receipt of the full amount of his VA compensation benefits and military retired pay during the period at issue; and as the Veteran’s military retired pay was based on years of service rather than disability, he was not required to submit a waiver of his military retired pay in order to receive VA disability compensation at the same as his military retired pay. CONCLUSION OF LAW The overpayment of VA compensation benefits in the amount of 56,332.29 dollars was not properly created. 38 U.S.C. §§ 5110, 5111, 5112; 38 C.F.R. §§ 3.401, 3.501. REASONS AND BASES FOR FINDING AND CONCLUSION On August 23, 2017, the President signed into law the Veterans Appeals Improvement and Modernization Act, Pub. L. No. 115-55 (codified as amended in scattered sections of 38 U.S.C.), 131 Stat. 1105 (2017), also known as the Appeals Modernization Act (AMA). This law creates a new framework for Veterans dissatisfied with VA's decision on their claim to seek review. The Board is honoring the Veteran’s choice to participate in VA’s test program, the Rapid Appeals Modernization Program (RAMP). The Veteran had active duty service in the United States Army from June 1989 to June 2009. The Veteran selected the Higher-Level Review lane when he submitted the RAMP election form on March 8, 2018. Accordingly, the April 2018 RAMP rating decision considered the evidence of record as of the date VA received the RAMP election form. The Veteran timely appealed this RAMP rating decision to the Board and requested direct review of the evidence considered by the Agency of Original Jurisdiction (AOJ). The Board notes that the issue of entitlement to a waiver of the overpayment of VA compensation benefits in the amount of 56,332.29 dollars was separately adjudicated by the AOJ. As the Board is honoring the Veteran’s choice for the above issue concerning the validity of the debt to be adjudicated under RAMP, the issue related to the waiver of the overpayment is the subject of a separate decision. 1. Whether an overpayment of VA compensation benefits in the amount of 56,332.29 dollars was properly created. As a preliminary matter, the Board notes that the Veterans Claims Assistance Act of 2000 (VCAA) does not apply in this case, given the nature of the issues on appeal. See e.g. Reyes v. Nicholson, 21 Vet. App. 370 (2007) (holding that the provisions of 38 U.S.C. § 5103(a) do not apply to claims for relief under Chapter 53 of Title 38 of the United States Code, pertaining to waiver of recovery of overpayments, which includes the validity of the debt); see also Schaper v. Derwinski, 1 Vet. App. 430 (1991) (challenging validity of debt). For a determination that an overpayment was not properly created, and is therefore invalid, it must be established that the claimant was either legally entitled to the benefits in question or, if the claimant was not legally entitled, then it must be shown that VA was solely responsible for the claimant being erroneously paid benefits. Administrative errors include all administrative decisions of entitlement, whether based upon mistake of fact, misunderstanding of controlling regulations or instructions, or misapplication of law. VAOPGPREC 2-90 (July 17, 1989), 55 Fed. Reg. 27757 (1990). Sole administrative error connotes that the claimant neither had knowledge of nor should have been aware of the erroneous award. Further, neither the claimant's actions nor his or her failure to act must have contributed to payment pursuant to the erroneous award. 38 U.S.C. § 5112(b)(9), (10); 38 C.F.R. § 3.500(b)(2); Jordan v. Brown, 10 Vet. App. 171 (1997) (sole administrative error is not present if the payee knew, or should have known, that the payments were erroneous). Thus, a finding of sole administrative error requires not only error on the part of VA, but that the beneficiary is unaware that the payments are erroneous. The Board notes that the overpayment in this case stems from the Veteran’s concurrent receipt of military retired pay and VA compensation benefits after not providing a waiver of his military retired pay. In general, 38 U.S.C. § 5304(a)(1) provides that an individual may not receive both military retired pay and VA compensation, except as provided in 10 U.S.C. § 1414. See 38 U.S.C. § 5305; 38 C.F.R. § 3.750. When a Veteran is eligible for both military retired pay and disability compensation, but is not eligible to receive both benefits at the same time, a waiver of military retired pay is necessary in order to receive disability compensation. 38 C.F.R. § 3.750(c)(1). Section 1414 of Title 10 provides for the payment of military retired pay and VA disability compensation for qualified retirees. This is the Concurrent Retirement and Disability Pay (CRDP) program. See Concurrent Retirement and Disability Pay (CRDP), Defense Finance and Accounting Service, https://www.dfas.mil/retiredmilitary/disability/crdp.html. This provision was enacted in 2003 and became effective from January 1, 2004. CRDP is a program that is available to Chapter 61 disability retirees who served a minimum of 20 years of creditable service, including service in the National Guard and Reserves. CRDP restores some or all of the military retired pay that was deducted due to receipt of VA service-connected disability compensation. Retirees must be rated 50 percent or more disabled by VA and the disabilities do not have to be combat-related. Retirees are not required to apply for this benefit; enrollment is automatic. The level of concurrent payment was phased-in from January 1, 2004 to December 31, 2013. 10 U.S.C. § 1414(c). From January 1, 2004, to December 31, 2004, qualified retirees with a VA disability rating from 50 to 100 percent were subject to a phase-in period. 10 U.S.C. § 1414(c)(1). After December 31, 2004, qualified retirees with a 100 percent disability rating or a total disability rating based on individual unemployability (TDIU) were generally eligible for full payment of their military retirement pay and VA disability compensation, with some limitations. 10 U.S.C. § 1414(a)(1). During the phase-in period that ended on December 31, 2013, members who were eligible to receive both military retired pay and disability compensation at the same time had to file a wavier in order to receive the maximum amount of disability compensation. 38 C.F.R. § 3.750(c)(1)(ii). However, a waiver was not necessary as of January 1, 2005 for Veterans who received military retired pay that was based on their years of service and were in receipt of either a 100 percent disability rating or a TDIU. 38 C.F.R. § 3.750(c)(2). On and after January 1, 2014, it was no longer necessary for eligible Veterans to file a waiver if their military retired pay was based on their years of service. However, a waiver was still necessary for Chapter 61 disability retirees retiring with 20 or more years of service if their military retirement pay was based on their disability. 38 C.F.R. § 3.750(b)(2)(ii). To receive VA disability compensation, Veterans had to waive any amount of disability retired pay that exceeded the amount they would have received if the pay had been based on their length of service. In this case, the Veteran submitted a VA Form 21-526EZ, Application for Disability Compensation and Related Compensation Benefits, on July 12, 2016 that noted in Section III concerning service pay that submission of the application constituted an election of VA compensation in lieu of military retired pay if it was determined that the Veteran was entitled to both benefits. If he was entitled to receive military retired pay, his retired pay might be reduced by the amount of any VA compensation that he was awarded. However, the application added that if the Veteran did not want to receive VA compensation in lieu of military retired pay, he should check the box in item 20. In that event, the Veteran would not receive any VA compensation that was granted. The application shows that the Veteran checked the box in item 20, stating that he wanted military retired pay instead of VA compensation. In October 2016, the AOJ sent the Veteran a letter proposing to stop his VA compensation payments on July 12, 2016, the date of receipt for the Veteran’s election or receive military retired pay instead of VA compensation. The letter enclosed a VA Form 21-651, Election of Compensation in Lieu of Retired Pay and Waiver of Retired Pay to Secure Compensation from Department of Veterans Affairs, with instructions for the Veteran to sign and return the form if he desired to receive VA compensation instead of his military retired pay. The payment of VA compensation would be discontinued unless the Veteran withdrew his election within 65 days. The letter also advised the Veteran that the proposed adjustment could result in an overpayment. At the time of the Veteran’s July 2016 VA Form 21-526EZ, a December 2011 rating codesheet and notification letters dated in January 2015 and January 2016 reflect that his combined disability rating was 80 percent; and his monthly award amount was 1,775.48 dollars. After a September 2016 rating decision was issued in response to the Veteran’s July 2016 claim, the Veteran’s combined disability rating was increased to 100 percent effective from September 30, 2015. A subsequent October 2016 letter informed the Veteran of this decision and noted that his new total VA benefit was 3,187.60 dollars; and the payment start date was October 1, 2015. The letter also indicated that that a portion of the Veteran’s compensation would be withheld until October 1, 2016 to prevent a double payment of full military retired pay and full VA compensation. The letter additionally explained that the Veteran might be eligible for full or concurrent receipt of VA compensation and military retired pay under the Combat-Related Special Compensation (CRSC) and/or CRDP programs. If the retired pay center (RPC) determined that the withholdings from the Veteran’s VA compensation should be retroactively adjusted due to CRSC/CRDP eligibility, VA would be notified and adjust the Veteran’s compensation accordingly. In December 2016, a letter notified the Veteran that he was eligible for a retroactive compensation payment of 9,894.24 dollars under CRDP for the period from October 2015 to September 2016. The attached Audit Error Worksheet (AEW) shows that during this period, his retired net pay was 824.52 dollars each month based on the difference between his gross retired pay of 2,600.00 dollars and the amount of his VA waiver of 1,775.48 dollars (the portion of his retired pay that was equal to the amount of VA benefits he received based on his previous 80 percent combined disability rating). The worksheet reflects that the Veteran was entitled to a CRDP amount of 100 percent of his gross retired pay of 2,600.00 dollars per month, with CRDP paying the previously waived amount of 1,775.48 dollars for each month during the period. The AEW also shows that VA had paid the Veteran 2,363.08 dollars each month as a result of the difference between his VA award of 3,187.60 dollars based on his new 100 percent rating and the withheld amount from his net retired pay of 824.52 dollars. The worksheet reveals that the Veteran was entitled to receive from VA the total withheld amount of 824.52 dollars for each month during the period. However, a subsequent January 5, 2018 letter notified the Veteran that his compensation payments would be stopped effective from July 12, 2016 as the Veteran had not provided a wavier for his military retired pay. The AOJ noted that it had not received the VA Form 21-651 that the October 2016 letter had asked the Veteran to complete and return. On January 19, 2018, VA’s Debt Management Center informed the Veteran that as a result of the change in VA compensation and pension benefits, he was paid 56,332.29 dollars more than he was entitled to receive. The Veteran contends that the overpayment was not valid as he was legally entitled to the concurrent receipt of VA compensation benefits and military retired pay based on his entitlement to CRDP. As the Veteran was a Chapter 61 disability retiree with at least 20 years of service, and he was in receipt of a VA combined disability rating that was at least 50 percent during the period from July 2016 to December 2017, he met the eligibility requirements for CRDP. As noted above, the Veteran was also determined to be entitled to CRDP in December 2016. The Board additionally notes that the Veteran was entitled to the full amount of his CRDP award as the period in question was after the phase-in period for CRDP that ended on December 31, 2013. The remaining question is whether it was necessary for the Veteran to provide a waiver of his military retired pay in order to receive VA disability compensation. The answer to this question depends on whether the Veteran’s military retired pay was based on years of service or disability. See 38 C.F.R. § 3.750. The July 2016 VA Form 21-526EZ includes the Veteran’s report that he received military retirement pay in the amount of 2,238.47 dollars that was based on his longevity or years of service. This statement is consistent with the Veteran’s previous report in a February 2009 VA Form 21-526 in which he marked the choices to indicate that he would receive retired pay that was based on his length of service. Notably, the Veteran did not mark the other available choices at that time to indicate that his retired pay would be based on disability or the Temporary Disability Retired List (TDRL). However, in the July 2017 VA Form 21-526EZ, he reported a history of receiving 1,775.48 dollars for the TDRL in addition to his military retired pay based on years of service; an amount which the Board notes was the same amount as his VA monthly award at that time. The Board notes that the TDRL is a list of Army members found to be unfit for performance of military duties by reason of physical disability which may be permanent, but which has not sufficiently stabilized to permit an accurate assessment of a permanent degree of disability. See Temporary Disability Retired List TDRL Frequently Asked Questions; United States Army Human Resources Command (Jan. 11, 2019), https://www.hrc.army.mil/TAGD/TEMPORARY%20DISABILITY%20RETIRED%20LIST%20TDRL%20FREQUENTLY%20ASKED%20QUESTIONS. If placed on the TDRL prior to December 31, 2016, members can stay on the TDRL for up to five years. Members on the TDRL undergo periodic examinations at least once every 18 months to determine whether there was has been a change in the disability for which they were medically retired. See 10 U.S.C. 1210(a). They can be removed from the TDRL any time that a periodic examination reveals that their disability has stabilized for rating purposes. However, the Veteran’s service treatment records (STRs) do not suggest that he was placed on the TDRL. The STRs include November 2008 Physical Evaluation Board (PEB) Proceedings which stated that the Veteran was found to have degenerative arthritis of the cervical spine with an assigned disability rating of 20 percent. The records noted that the disability was not the result of intentional misconduct, willful neglect, or unauthorized absence; and it had been incurred in the line of duty while the Veteran was entitled to basic pay. Although he was also found to have obstructive sleep apnea, hyperlipidemia, and gastroesophageal reflux disease (GERD), these disabilities were not rated as that they met the medical retention standards and did not pose significant physical restrictions. Thus, his combined rating was 20 percent. The PEB determined that the Veteran’s medical and physical impairment prevented reasonable performance of duties required by his grade and military specialty. The record noted that pursuant to 10 U.S.C. § 1201, soldiers determined to be unfit with 20 years of service were retired for disability regardless of the percentage rating. As the Veteran would reach the 20-year point by the time of his separation, the finding and recommendation was for the Veteran’s disposition to be permanent disability retirement. The record added that the Veteran’s disability did not result from a combat injury. Subsequent November 2008 entries in the STRs reflect that the PEB’s findings and recommendations were approved, and the Veteran agreed with the determination. In addition, the Veteran’s DD 214 for period from August 1999 to June 2009 lists the narrative reason for his separation as permanent disability. The retirement provisions outlined in 10 U.S.C. § 1201 are applicable to certain eligible members, including a member of a regular component of the armed forces entitled to basic pay, such as the Veteran. See 10 U.S.C. § 1201(c). An eligible member who is found unfit to perform his duties because of physical disability incurred while entitled to basic pay may be retired under 10 U.S.C. § 1201 if it also determined that the member has (1) a disability that is of a permanent nature and stable based upon accepted medical principles; (2) the disability is not the result of the member’s intentional misconduct or willful neglect, and it was not incurred during a period of unauthorized absence; and (3) the member has at least 20 years of service. 10 U.S.C. § 1201 (a), (b). Thus, the record does not indicate that the Veteran was placed on the TDRL. Instead, the PEB proceedings reflect that he was retired in June 2009 under 10 U.S.C. § 1201 by reason of his permanent and stable disability. Consequently, the Veteran’s retired pay is computed under 10 U.S.C. 1401. See 10 U.S.C. § 1201(a). 10 U.S.C. § 1401 provides that retired pay for 10 U.S.C. § 1201 is computed by multiplying the Veteran’s retired pay base by either (1) his years of service multiplied by 2.5 percent; or (2) the percentage of his disability rate when retired. The Veteran is able to elect his multiplier, and the multiplier is limited to 75 percent. As noted above, the Veteran has indicated that he elected to have his retirement pay based on his years of service rather than his disability percentage. As the Veteran’s 20 years of service would result in a multiplier of 50 percent, and his disability would result in a multiplier of 20 percent, the Board notes that this election was more favorable to the Veteran. In light of the above evidence, the Board concludes that the Veteran’s military retired pay was based on his years of service rather than his disability. As such, there was no excess amount of retired disability pay that necessitated a waiver under 38 C.F.R. § 3.750(b)(2)(ii) before VA compensation could be received. (Continued on the next page)   Under these circumstances, no waiver was necessary, and the Veteran was legally entitled to the concurrent receipt of the full amount of his VA compensation benefits and military retired pay. Consequently, the overpayment debt in the amount of 56,332.29 dollars was not properly created and cannot be legally charged to the Veteran. The appeal is granted. ROBERT C. SCHARNBERGER Veterans Law Judge Board of Veterans’ Appeals ATTORNEY FOR THE BOARD K.C. Spragins, Associate Counsel