Citation Nr: 21000076 Decision Date: 01/04/21 Archive Date: 01/04/21 DOCKET NO. 14-11 513 DATE: January 4, 2021 ORDER The overpayment of Department of Veterans Affairs (VA) compensation benefits in the amount $25,093.73 was properly created; the appeal is denied. The request for a waiver of an overpayment of VA compensation benefits in the amount of $25,093.73 was timely filed; to this extent only, the appeal is granted. REMANDED Entitlement to a waiver of an overpayment of VA compensation benefits in the amount of $25,093.73 is remanded. FINDINGS OF FACT 1. The Veteran was incarcerated due to a felony on May 1, 2010; the 61st day of incarceration was July 3, 2010. 2. The Regional Office (RO) retroactively reduced the Veteran’s compensation benefits which were being paid at the 100 percent rate to the 10 percent rate, and this action resulted in an overpayment. 3. In December 2012, the Veteran requested a waiver of the recovery of the debt; this request was timely based on a finding that the VA’s debt notice was insufficiently addressed. CONCLUSIONS OF LAW 1. The overpayment of VA compensation benefits was properly created for the period starting July 3, 2010 due to a retroactive reduction in the compensation rate to the 10 percent rate as of the 61st date of the Veteran’s felony conviction. 38 U.S.C. § 5313; 38 C.F.R. § 3.665. 2. The Veteran’s request for a waiver of recovery of the overpayment of compensation benefits in the amount of $25,093.73 is timely. 38 U.S.C. § 5302 (a); 38 C.F.R. § 1.963 (b)(2). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS The Veteran had active service from September 1973 to April 1987. These matters come before the Board of Veterans’ Appeals (Board) on appeal from a March 2011 notification letter from the Department of Veterans Affairs (VA) Regional Office (RO) and a May 2013 decision by the Committee on Waivers and Compromises (Committee). The appeal was previously before the Board in October 2015, when it was remanded for further development. The record reflects that the Veteran received a letter indicating that he could request a virtual tele-hearing instead of waiting for a Travel Board hearing. Upon further review, the Veteran does not have a pending hearing request. As noted in the October 2015 Board remand, the hearing request was deemed withdrawn. 38 C.F.R. § 20.704. The appeal will be decided based on the evidence of record. 1. Whether the overpayment of Department of Veterans Affairs (VA) compensation benefits in the amount $25,093.73 was properly created In a June 1988 rating decision, the Veteran was granted service-connected benefits. He was provided VA Forms 21-8764. The VA Form 21-8764 states, in pertinent part, that compensation is subject to future adjustment, and that “benefits will be reduced upon incarceration in a Federal, State, or local penal institution in excess of 60 days for conviction of a felony.” This notice complies with VA law and regulation. Under pertinent VA laws and regulations, any individual who is entitled to compensation or to dependency and indemnity compensation and who is incarcerated in a Federal, State, local, or other penal institution or correctional facility for a period in excess of sixty days for conviction of a felony (where, as here, committed after October 7, 1980) shall not be paid such compensation or dependency and indemnity compensation, for the period beginning on the sixty-first day of such incarceration and ending on the day such incarceration ends, in an amount that exceeds (A) in the case of a veteran with a service-connected disability rated at 20 percent or more, the rate of compensation payable under section 1114(a) of this title; or (B) in the case of a veteran with a service-connected disability not rated at 20 percent or more or in the case of a surviving spouse, parent, or child, one-half of the rate of compensation payable under section 1114(a) of this title. 38 U.S.C. § 5313 (a); 38 C.F.R. § 3.665 (a). The Veteran was arrested and convicted of a felony. The date of incarceration was determined to be May 1, 2010. In November 2010, VA advised the Veteran that VA proposed to retroactively reduce his VA benefits based on his incarceration. In March 2011, it was confirmed that this action was taken. In accordance with VA law and regulation, the RO retroactively reduced the Veteran’s compensation benefits which were being paid at the 100 percent rate to the 10 percent rate and this action resulted in an overpayment. The Board acknowledges the Veteran’s contention that he properly informed a VA doctor at a VA outreach clinic regarding his incarceration. The Board finds this primarily goes toward the issue of a waiver rather than validity of the debt. However, to the extent the Veteran is arguing that he notified VA and his continued payments constituted sole administrative error, the Board does not concur. Under 38 U.S.C. § 5112 (b)(10), the effective date of a reduction or discontinuance of compensation by reason of an erroneous award based solely on administrative error or error in judgment shall be the date of last payment. See also 38 C.F.R. § 3.500 (b)(2). “Stated another way, when an overpayment has been made by reason of an erroneous award based solely on administrative error, the reduction of that award cannot be made retroactive to form an overpayment debt owed to VA from the recipient of the erroneous award.” Erickson v. West, 13 Vet. App. 495, 499 (2000). The Board notes, however, that sole administrative error may be found to occur only in cases where the Appellant neither had knowledge of nor should have been aware of the erroneous award. Further, such error contemplates that neither the Appellant’s actions nor her failure to act contributed to the erroneous award. 38 U.S.C. § 5112 (b)(10); 38 C.F.R. § 3.500 (b)(2). In this case, the Veteran continued to be paid at the same rate after his incarceration. As such, he should have had knowledge of the award and he contributed to it since he continued to receive those payments. Thus, there was no sole VA error. The Board further acknowledges the argument made by the Veteran’s representative in the November 2020 brief that the debt is invalid because VA did not follow appropriate guidelines regarding informing the Veteran’s spouse that she was entitled to an apportionment of his benefits during his incarceration. However, the Board notes that a March 2011 letter was sent to the Veteran’s spouse informing her that she may be eligible for a special apportionment. The letter notified her of how to file for an apportionment, including enclosing VA Form 21-0788, and stated that VA would not take further action unless she returned the enclosed form. There is no indication that the letter was returned as undeliverable. Thus, the Board finds that the Veteran’s spouse was appropriately informed regarding an apportionment, and the debt is not invalid. For the reasons set forth above, the Board finds that the overpayment at issue in this case was properly created and is a valid debt. Narron v. West, 13 Vet. App. 223 (1999). 2. Whether the request for a waiver of an overpayment of VA compensation benefits in the amount of $25,093.73 was timely filed Under applicable criteria, a request for waiver of an indebtedness shall only be considered if made within 180 days following the date of a notice of indebtedness to the debtor. The 180-day period may be extended if the individual requesting waiver demonstrates, as a result of error by either the VA or the postal authorities, or due to other circumstances beyond the debtor’s control, there was a delay in such individual’s receipt of the notification of indebtedness beyond the time customarily required for mailing. If the debtor does substantiate there was such a delay in the receipt of the notice of indebtedness, the 180-day period shall be computed from the date of the debtor’s actual receipt of the notice of indebtedness. 38 U.S.C. § 5302 (a); 38 C.F.R. § 1.963 (b)(2). In May 2010, the Veteran was incarcerated in prison. Although he indicated that he notified a VA doctor of his incarceration, his record does not reflect that he notified the VA Regional Office (RO) of the incarceration. In November 2010, the RO sent notice of the proposal to reduce the Veteran’s benefits due to his incarceration to the address of record. A March 2011 decision letter was issued in which the benefits were retroactively reduced. In another April 2011 letter, the Veteran was advised of the overpayment amount and of the details for requesting a waiver, including the 180-day time limit to do so. The former letter was sent to the Veteran’s address at the correctional facility, and the latter was sent to his home address of record. The March 2011 letter was returned as undeliverable due to an insufficient address. In January 2012, the Veteran called VA to report his release from prison. In December 2012, the Veteran submitted a statement requesting a representative, stating he did not believe he should be liable for the debt due to notifying a VA doctor of his incarceration, and reporting his financial difficulties. The Board finds this statement may properly be construed as a request for a waiver of the recovery of the debt. Under applicable criteria, a request for waiver of an indebtedness shall only be considered if made within 180 days following the date of a notice of indebtedness to the debtor. The 180-day period may be extended if the individual requesting waiver demonstrates, as a result of error by either the VA or the postal authorities, or due to other circumstances beyond the debtor’s control, there was a delay in such individual’s receipt of the notification of indebtedness beyond the time customarily required for mailing. If the debtor does substantiate there was such a delay in the receipt of the notice of indebtedness, the 180-day period shall be computed from the date of the debtor’s actual receipt of the notice of indebtedness. 38 U.S.C. § 5302 (a); 38 C.F.R. § 1.963 (b)(2). The record reflects that the Veteran did not receive the VA notification letter due to an insufficient address. The Veteran’s request for a waiver of the recovery of the debt was not received within 180 days of the notification letter. However, the Veteran did not promptly receive VA notifications due to “other circumstances beyond the debtor’s control.” As such, the Board accepts the Veteran’s request for a waiver as timely. REASONS FOR REMAND Entitlement to a waiver of an overpayment of VA compensation benefits in the amount of $25,093.73 is remanded. Due to the Board’s above grant, the issue of waiver of recovery of an overpayment of VA compensation benefits in the amount of $25,093.73 must now be adjudicated by the Agency of Original Jurisdiction (AOJ). The matter is REMANDED for the following action: 1. Obtain a complete and current financial status report from the Veteran.   2. Adjudicate the issue of waiver of recovery of an overpayment of VA compensation benefits in the amount of $25,093.73, undertaking such development as is necessary in order to adjudicate the issue. Nathaniel J. Doan Veterans Law Judge Board of Veterans’ Appeals Attorney for the Board A. Dean, 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.