Citation Nr: 20027240 Decision Date: 04/19/20 Archive Date: 04/19/20 DOCKET NO. 15-17 219 DATE: April 19, 2020 ORDER A waiver of the recovery of the overpayment of Department of Veterans Affairs (VA) improved pension benefits in the amount of $37,927 is granted. FINDINGS OF FACT 1. The overpayment was not due to the Veteran’s fraud, misrepresentation or bad faith. 2. Recovery of the debt in this case is against equity and good conscience. CONCLUSION OF LAW Recovery of the overpayment of $37,927 in VA improved pension benefits would be contrary to the principles of equity and good conscience. 38 U.S.C. § 5302; 38 C.F.R. §§ 1.963 (a), 1.965. REASONS AND BASES FOR FINDINGS AND CONCLUSION Nonservice-connected improved pension is available to a Veteran of a period of war who meets statutorily-defined service, net worth, and annual income requirements; and who is permanently and totally disabled from nonservice-connected disability not the result of willful misconduct, or who is 65 years of age or older. 38 U.S.C. §§ 1501-1503, 1513, 1521, 1522; 38 C.F.R. §§ 3.3 (a)(3), 3.23. The purpose of VA pension benefits is to provide a subsistence income for Veterans of a period of war who are totally disabled and who are otherwise unable to maintain a basic, minimal income level. Recipients are required to report any changes in income and number or status of their dependents in a timely fashion. 38 U.S.C. §§ 1521, 1522. In determining annual income for pension purposes, all payments of any kind or from any source, which is received by anyone in the recipient’s household, are generally counted as income during the 12-month annualization period in which received. Only those amounts that are listed in 38 C.F.R. § 3.272 may be excluded from countable income for determining entitlement to improved pension. 38 U.S.C.§ 1503; 38 C.F.R. §§ 3.271, 3.272. Income from wages and the Social Security Administration (SSA) are included as countable income because they are not specifically excluded under 38 C.F.R. § 3.272. A May 2006 rating decision granted entitlement to improved pension benefits. Enclosed with the notification letter was a VA Form 21-8768 which advised him that he was obligated to provide prompt notice of any change in income or net worth or dependency status and that a failure to provide such would result in the creation of an overpayment which would be subject to recovery. It further stated that when reporting income, the total amount and source of all income received should be reported, that he was obligated to provide prompt notice of any change in income or net worth or dependency status, and that his award was based on his report of countable annual income. The Veteran’s countable annual income must not exceed the specified maximum annual pension rate (MAPR), as increased periodically and reported in the Federal Register. 38 U.S.C.§ 1521; 38 C.F.R. § 3.3. In December 2006, the Veteran was again furnished a VA Form 21-8768. He was also provided additional letters which told him to report changes in his income. In May 2012, the Veteran reported to VA that he was employed. His employer was VA. The Veteran also received monetary benefits from the SSA between 2008-2012. In May 2013, he again reported to VA having employment. In response, he was requested to complete an Eligibility Verification Report to provide details on his income. The Veteran was advised that it was proposed that his benefits would be terminated effective January 2012, if he did not provide the financial information showing he was still entitled to those benefits. However, no action was taken. About a year later, the Veteran reported the amount of his biweekly income which was excessive for the receipt of pension benefits. Thereafter, a May 2014 letter advised the Veteran that his pension benefits were being terminated effective January 2012 due to his receipt of countable income which was excessive for the receipt of pension benefits. In June 2014, the Veteran submitted a financial status report in which a waiver of the recovery of the overpayment was requested. The Veteran indicated that his monthly expenses exceeded income and that he had no assets. The Board of Veterans’ Appeals (Board) notes that his monthly expenses did not include some basic necessities for him and his child such as utilities/heat, clothing, insurance (health or car), and food appears under-reported. In August 2014, the Committee on Waivers and Compromises (Committee) determined that there was no fraud, misrepresentation or bad faith on the part of the Veteran. Thus, the principles of equity and good conscience were considered. However, the Committee found that the Veteran was partially at fault in the creation of the debt. In sum, the Veteran knew that he was responsible for reporting all income to VA immediately. By not reporting the exact income, the Veteran received a large amount of pension benefits that he was not entitled to receive and gained financially at the Government’s expense. The Committee considered the Veteran’s financial status report and a payroll statement, but felt that the Veteran could have a repayment plan and that he had an overage of income once certain expenses were excluded like canteen deductions. The Committee denied the request for a waiver. The Veteran appealed that determination. The Veteran testified at a Board hearing that he attempted to notify VA several times of his employment, particularly since he was employed by VA. In addition, he related that he had no assets and had undergone bankruptcy proceedings. He was also delinquent with several creditors, including his landlord. He submitted supporting documentation following the hearing. In cases where fraud, misrepresentation, or bad faith on the Veteran’s part with respect to the creation of the overpayment at issue has not been demonstrated, and, therefore, waiver is not precluded pursuant to 38 U.S.C. § 5302 (a), the Board must determine whether recovery of the indebtedness would be against equity and good conscience, thereby permitting waiver under 38 U.S.C. § 5302 (a) and 38 C.F.R. §§ 1.963 (a), 1.965(a). In making this determination, consideration is given to the following elements, which are not intended to be all-inclusive: (1) fault of debtor (where actions of the debtors contribute to the creation of the debt); (2) balancing of faults (weighing fault of the debtor vs. the fault 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 (failure to make restitution would result in unfair gain to the debtor); and (6) changing position to one’s detriment (reliance on VA benefits results in relinquishment of a valuable right or incurrence of a legal obligation). See 38 C.F.R. § 1.965 (a). The first and second elements pertain to the fault of the debtor versus the fault of VA. After consideration of the record, the Board finds that the Veteran as well as VA were both at fault. The Veteran did not notify VA of his exact income when he was requested to do so. However, he was employed by VA so his income could have been ascertained. Also, VA took no action to terminate the benefits as had been indicated in the proposal letter. In regard to whether failure to collect would cause unjust enrichment to the debtor, the Board notes that the Veteran received benefits to which he was not entitled and as such, would cause unjust enrichment to the debtor. Likewise, there is no indication that the Veteran’s reliance on VA benefits resulted in relinquishment of another valuable right. As to whether recoupment of those benefits would defeat the purpose of the benefit, the Veteran was no longer entitled to pension benefits so the purpose of those benefits would not be defeated. The Board has also considered whether the Veteran would suffer undue financial hardship if forced to repay the debt at issue. A review of the financial status report reveals that expenses exceed income. The Board notes that the Committee felt that certain deductions could be made from the expenses such as canteen expenses. However, the Veteran did not report many basic expenses and underreported others, particularly as he provides for his son. The Veteran has no assets, has undergone bankruptcy proceedings, owes past-due rent payments, and owes creditors. The Veteran no longer receives pension. The Board finds that there is in fact financial hardship at this point, noting that the Committee made its assessment over five years ago. The Board finds that there does not appear to be a reasonable possibility of a repayment of the debt without endangering the Veteran’s ability to provide for basic necessities. In this case, the Board finds that a waiver of the recovery of the debt is warranted. The Board recognizes that this is a large debt. However, the Board finds that the elements of financial hardship as well as some fault on VA’s part outweigh the elements not in the Veteran’s favor. He clearly has no means to repay the debt with his lack of VA benefits and lack of assets. As such, it is in fact already questionable whether the Veteran can afford basic necessities. Accordingly, a waiver of the recovery of the overpayment of the debt is warranted. D. Martz Ames Veterans Law Judge Board of Veterans’ Appeals J. Connolly, Attorney for the Board 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.