Citation Nr: 20011990 Decision Date: 02/13/20 Archive Date: 02/12/20 DOCKET NO. 16-98 471 DATE: February 13, 2020 ORDER Entitlement to a waiver of recovery of an overpayment of VA educational benefits in the amount of $103,996.72 is denied. FINDINGS OF FACT 1. There is no evidence of fraud, misrepresentation, or bad faith on the appellant’s part in the creation of this debt. 2. Recovery of the overpayment by VA would not be against equity and good conscience. CONCLUSION OF LAW The criteria for waiver of recovery of the overpayment of Chapter 33 benefits have not been met. 38 U.S.C. §§ 5107, 5302 (a) (2012); 38 C.F.R. §§ 1.962, 1.963 (a), 1.965(a) (2019).   REASONS AND BASES FOR FINDINGS AND CONCLUSION The Veteran served on active duty in the United States Army from October 2004 to February 2015. He also had periods of service with the Army National Guard. The appellant is his stepson. This matter comes to the Board of Veterans’ Appeals (Board) on appeal from an April 2016 determination of the Department of Veterans Affairs (VA) Regional Office (RO). In that decision, the RO denied the appellant’s request for waiver of an overpayment of Chapter 33 (Post 9/11 GI Bill) Transfer of Entitlement (TOE) education benefits. This matter was previously before the Board in March 2019 at which time the matter was remanded for additional development. An overpayment is created when VA determines that a beneficiary or payee has received monetary benefits to which he or she is not entitled. 38 U.S.C. § 5302; 38 C.F.R. § 1.962. Overpayments created by retroactive discontinuance of benefits will be subject to recovery if not waived. 38 C.F.R. § 3.660 (a)(3). An appellant has two forms of recourse when faced with an overpayment. He or she may challenge the validity of the debt and/or request a waiver of indebtedness. 38 C.F.R. § 1.911 (c). Those are considered distinct issues but may be exercised separately or simultaneously. Id; see also Schaper v. Derwinski, 1 Vet. App. 430, 437 (1991). Here, the appellant is not challenging the validity of the overpayment of Chapter 33 education benefits. That is, he does not dispute the fact that the overpayment was created in the amount of $103,996.72 for his attendance at George Mason University from August 2012 to August 2015 after it was shown that the Veteran was ineligibile for the TOE program based on insufficient service. Rather, he asserts that he should not be held accountable for the overpayment and that the debt should be waived. Under the TOE program, veterans who are eligible to transfer benefits are service members who, “at the time of the approval of the individual’s request to transfer entitlement to educational assistance under this section, has completed at least six years of service in the armed forces and enters into an agreement to serve at least four more years as a member of the uniformed services,” or who has completed the years of service as determined in the implementing regulations. 38 U.S.C. § 3319. The implementing regulation, 38 C.F.R. § 21.9570, provides that an individual entitled to educational assistance under 38 U.S.C. § 3319 based on his service, and who is approved by a service department to transfer entitlement, may transfer up to 36 months of his entitlement to a dependent. The statute also provides that in the event of an overpayment of TOE benefits, the dependent and the individual making the transfer of benefits shall be jointly and severally liable to the United States for the amount of the overpayment for purposes of section 3685. 38 U.S.C. § 3319 (i). On file is a Certificate of Eligibility (COE) dated in June 2012 that informed the appellant that he was entitled to benefits for an approved program of education under the Post 9/11 GI Bill program. The appellant was further informed that the Veteran had transferred 36 months of full-time benefits starting on October 28, 2011, and that he was entitled to receive 100 percent of the benefits payable based on the Veteran’s credible service commencing in October 2004. The appellant was similarly advised in a September 2012 COE that he was entitled to receive 100 percent of the benefits payable based on the Veteran’s credible service commencing in October 2004. He was also informed to notify the school and VA of any active duty status changes. In October 2015, VA made an inquiry to the U.S. Department of Army regarding whether the Veteran had met his obligation date for the TOE program. The U.S. Department of Army responded by stating that Veteran had not met his service obligation for TOE and that his TOE request had been rejected. Information from the VA/Department of Defense (DOD) Identity Repository shows that he was discharged from active duty on February 6, 2015, under other than honorable conditions. Pursuant to the relevant statute above, i.e. 38 U.S.C. § 3319, the Veteran was required to serve until October 28, 2015, in order to be eligible for TOE. Thus, because the Veteran did not complete his required service, his dependents were not, as a matter of law, entitled to educational assistance through transferred entitlement. See Sabonis v. Brown, 6 Vet. App. 426 (1994). VA notified the appellant in October 2015 that he was not eligible for Chapter 33 benefits and that he was responsible for the overpayment of benefits paid on his behalf under the Post 9/11 GI Bill program at George Mason University from August 2012 to August 2015. The calculated amount of the overpayment of $103,996.72 includes $46,603.25 for tuition and fees, $53,726.80 for housing, and $3,666.67 for books and supplies. The present appeal stems from the appellant’s January 2016 request for a waiver of the overpayment. As a starting point, there is no evidence demonstrating that the indebtedness resulted from fraud, misrepresentation, or bad faith on the appellant’s part. In this regard, the Board agrees with the appellant who asserted in December 2015 that at no time did he ever attempt to deceive the government with respect to his entitlement to Chapter 33 education benefits under TOE. Consequently, waiver of indebtedness is not precluded if shown that it would be against the principles of equity and good conscience to require the appellant to repay this debt to the government. 38 C.F.R. §§ 1.962, 1.963, 1.965. 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. The phrase equity and good conscience means arriving 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. Whether the actions of the debtor contributed to the creation of the debt. 2. Balancing of faults. Weighing of the fault of the debtor against that of VA. 3. Undue hardship. Whether collection would deprive the debtor or family of basic necessities. 4. Defeat the purpose. Whether withholding of benefits or recovery would nullify the objective for which benefits were intended. 5. Unjust enrichment. Whether failure to make restitution would result in unfair gain to the debtor. 6. Changing position to one’s detriment. Whether reliance on VA benefits resulted in relinquishment of a valuable right or the incurrence of a legal obligation. 38 C.F.R. § 1.965 (a). With respect to fault, the Board does not find that there was any fault on the part of the appellant in the creation of the debt. The record indicates that he thought that he was entitled to the benefits. He then applied for the benefits and was approved by VA for the benefits in June 2012. Regarding the amount of the debt, although the appellant did not inform VA of the Veteran’s active duty discharge in February 2015 despite VA’s notice to him in the award letter to notify VA of any active duty status changes, he explained that he was told by the Veteran that his education benefits would not be affected by the Veteran’s discharge. In any event, to the extent that the amount of debt could have been reduced by earlier notice from the appellant (or the Veteran) of the Veteran’s February 2015 discharge, that is offset by the appellant’s assertion that VA did not terminate his benefits until two months after receiving notice of the Veteran’s service discharge. Just as the appellant is not at fault in the creation of the overpayment, neither is VA at fault. Rather, VA paid the TOE benefits based on the Veteran’s projected discharge date in October 2015. Thus, by balancing fault between the appellant and VA, neither party is significantly at fault. Rather, fault lies with the Veteran who failed to fulfill his service obligation with respect to being eligible for TOE benefits. Regarding the factor of undue hardship, the appellant reported on a Financial Status Report (FSR) in September 2016 that he had no income and $420 in monthly expenses. However, in light of subsequent correspondence from him in June 2017 indicating that he was employed, the Board remanded the matter to the Agency of Original Jurisdiction (AOJ) in March 2019 to obtain an updated FSR from the appellant. Unfortunately, the appellant did not comply with the AOJ’s request for an updated FSR. Thus, based on the most recent evidence on file in 2017 showing that the appellant was working, and in consideration of his offer in February 2017 to pay $100 a month towards the debt while his appeal was pending, the Board finds that recovery of the overpayment would not result in undue hardship. See VA Form 21-3138 in February 2017. That is, the Board does not find that the collection of the debt would deprive the appellant of basic necessities. 38 C.F.R. § 1.965. The Board has also considered the factor of whether the appellant’s reliance on the benefits caused him to change his position to his detriment. It is not certain whether the appellant would have chosen a different path had he known that he was not entitled to these benefits in order to avoid debt, or whether he would have pursued the same educational goals through other financial means, such as student loans. With this said, there is no indication that the appellant changed position to his detriment when relying on VA’s benefits, resulting in relinquishment of a valuable right or incurrence of a legal obligation. Consideration has also been given to the Veteran’s assertion in December 2015 that he had been misinformed by a VA representative in February 2015 who told him that his discharge would not affect his entitlement to the TOE program. However, this does not change the fact that he did not meet the requisite criteria for eligibility for TOE. 38 U.S.C. § 3319. In this regard, payment of government benefits must be authorized by statute, inaccurate advice does not create any legal right to benefits where such benefits are otherwise precluded. See also Harvey v. Brown, 6 Vet. App. 416, 424 (1994). Also, recovery of the overpayment would not defeat the purpose of the intended benefit which is to promote recruitment and retention in the uniformed forces per 38 U.S.C. § 3319(a)(2) by requiring that a Veteran serve at least four more years after the approval of a TOE benefit request. Second, the appellant would be unjustly enriched if the debt is waived since the overpayment would, in effect, allow the appellant to realize a gain (receipt of benefits he was not entitled to receive under the TOE program) based on the erroneous payment of that money to the appellant. Consideration has also been given to the appellant’s reported dissatisfaction with how the debt has been handled and collected, to include referral to the Department of Treasury. The Board’s jurisdiction in that matter is limited to the question of whether the appellant’s waiver request should be granted. It does not have the authority to determine the manner in which the debt is collected. The appellant also contends that the debt should be evenly divided between himself and the Veteran. As noted, the statute provides that in the event of an overpayment of TOE benefits, the dependent and the individual making the transfer of benefits shall be jointly and severally liable to the United States for the amount of the overpayment for purposes of section 3685. 38 U.S.C. § 3319 (i). “Joint and several liability” is a legal phrase which means that both parties are independently liable for the full amount of the debt. While the Board is extremely sympathetic to the appellant in light of the circumstances regarding the creation of this overpayment, after balancing the totality of the circumstances, the Board finds that a waiver of overpayment is not warranted. The appellant was unjustly enriched by the overpayment, as he was not entitled to the education benefits he received for his enrollment at George Mason University. Finally, VA was not at fault in the creation of the overpayment. Even when balanced against the lack of fault by the appellant, the totality of the circumstances weighs in favor of recovering the debt. Therefore, the waiver of overpayment is denied. Kristin Haddock Veterans Law Judge Board of Veterans’ Appeals Attorney for the Board A. Shawkey, Counsel The Board’s decision in this case is binding only with respect to the instant matter decided. This decision is not precedential, and does not establish VA policies or interpretations of general applicability. 38 C.F.R. § 20.1303.