Citation Nr: 21002638 Decision Date: 01/14/21 Archive Date: 01/14/21 DOCKET NO. 17-07 537 DATE: January 14, 2021 REMANDED The issue of validity of debt in the amount of $19,646.87 due to overpayment of Department of Veterans Affairs (VA) compensation for recoupment of disability severance ($17,211.60) and for incorrect payments to the Veteran while incarcerated ($2,435.27) is remanded. REASONS FOR REMAND The Veteran honorably served on active duty from April 1989 to August 1998. This matter is before the Board of Veterans’ Appeals (Board) on appeal from a July 2010 administrative decision of the Department of Veterans Affairs (VA) Regional Office (RO). The Veteran testified before the undersigned at a VA Central Office Board hearing in December 2018. A transcript of the hearing is of record. This matter was previously remanded in May 2019 for adjudication of validity of debt. The Board finds that the September 2020 VA memorandum and September 2020 waiver decision substantially complies with the May 2019 Board remand. 1. Validity of debt in the amount of $19,646.87 due to overpayment of VA compensation for recoupment of disability severance ($17,211.60) and for incorrect payments to the Veteran while incarcerated ($2,435.27) is remanded. Recovery of the debt has already been considered waived in full by the Debt Management Center (DMC). See September 2020 Decision of Waiver on Indebtedness. The representative is seeking a declaration regarding whether the debt is valid. See December 2020 Appellate Brief. The Veterans Benefits Management System (VBMS) currently reflects no debt relating to the $19,646.87 overpayment. Thus, it is uncertain whether there remains a question before the Board. Compare Schaper v. Derwinski, 1 Vet. App. 430 (1991) (finding an error where waiver is adjudicated prior to validity of debt when such an issue has been raised in conjunction with the waiver request) with Waterhouse v. Principi, 3 Vet. App. 473 (finding that there is no case or controversy when a waiver had already been granted and the veteran was merely seeking a declaration by the Board of debt validity). However, the Veteran has subsequently stated that he is not being reimbursed for the amount collected on the debt. See November 2020 Correspondence. This statement could be construed in two ways: one way is that he is not being reimbursed for the amount that had been paid towards the $19,646.87 overpayment after its creation and a second way is that the recoupment had been collected in large part during a period of his incarceration and then recreated into a debt in the April 2010, such that he is seeking to have the debt both waived or invalidated and reimbursed for that period. If the former, this raises the issue whether the debt has indeed been waived in full and, therefore, whether there is any debt remaining to be found valid or invalid. A full waiver of recovery contemplates that any part of the $19,646.87 debt that had already been recovered be returned to the Veteran If it is the latter, the Board notes that the recoupment that occurred during his period of incarceration was not taken from his award of benefits. See April 2003 Notification Letter (reflecting that the Veteran’s benefit was $106.00, consistent with a 10 percent benefit in 2003, but that the apportionees were not awarded the complete remaining amount of the Veteran’s pre-incarceration 40 percent award). The record reflects that most of the 10 percent rate was being withheld to pay back an overpayment established in April 2003 due to his incarceration. See April 2003 VA 20-8270 Master Record Audit Writeout (reflecting $103.00 being repaid to an overpayment and $153.00 be paid towards recoupment); see also December 2010 Financial Actions (reflecting that the Veteran was paid $6.00 approximately every other month from May 2003 to July 2005, at which point his payments increased to $106.00). To be clear, the Veteran was not entitled to any more than the 10 percent benefit he had already been awarded. See 38 U.S.C. § 5313(a); 38 C.F.R. § 3.665(a). To the extent that any overcollection on the recoupment occurred, the aggrieved persons would be the apportionees and not the Veteran because the recoupment was being taken at the expense of their award. While a veteran has the right to contest the amount of an apportionment, his protests during the appellate period were then limited to seeking to have the apportionment ceased and not to have an increase in the apportionment amount. See, e.g., June 2003 Correspondence. If the Veteran is now seeking to have the apportionment increased via retroactive payment to the apportionees in the amount that was diverted to recoupment of disability severance pay, he did not timely appeal the amount of the apportionment. The Board further notes that had the recoupment been properly ceased with resumption after his full benefits were reinstated, thus not creating an overpayment, much of this debt would not have been eligible for waiver and recoupment would continue until all $20,952.00 was fully repaid. The recoupment of the Veteran’s separation pay from his VA disability compensation is required by law under 10 U.S.C. §§ 1174 (h)(2) and 1212(d)(1). In Sabonis v. Brown, a veteran argued that recoupment of separation pay was inequitable and sought relief from the recoupment. 6 Vet. App. 426 (1994). In that case, the Court of Appeals for Veterans Claims (Court) noted that the mandates regarding recoupment are unambiguous and that the withholding of VA compensation benefits is required. Id. at 429-430. The Court held that “[t]here is simply no authority in law which would permit the VA to grant appellant’s requests for relief from total recoupment of her readjustment pay.” Id. at 430. Similar to Sabonis, the mandates requiring recoupment of disability severance are unequivocal and withholding of VA benefits would have been required by law. Lastly, with respect to $2,435.27 of the overpayment, the representative contended that it was solely VA error that he was paid “for unknown reasons.” See December 2020 Appellate Brief; see also September 2020 VA Memorandum. This debt corresponds to the period in which the Veteran was inexplicably provided his full benefit rate beginning April 1, 2009, which was created due to a computer error. See April 2010 Notification Letter; see also September 2020 VA Memorandum. The Veterans statements reflect that he knew that he was being overpaid at the time. See May 2010 Correspondence (“In September 2009, I wrote your office about the increase in my benefit amount and that I didn’t think I was entitled to the increase because of my incarceration…. It is my belief that I have been overpaid since April 2009.”). 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 his failure to act contributed to the erroneous award. 38 U.S.C. § 5112(b)(10); 38 C.F.R. § 3.500(b)(2). In summary, the Board is remanding on the chance that the Veteran’s contentions mean that a full waiver of recovery has not occurred; a full waiver of recovery contemplates that any part of the $19,646.87 debt that had already been recovered be returned to the Veteran. However, if the Veteran is instead seeking to have both the recovery of the debt waived and to get paid for any of the recoupment that occurred while he was incarcerated, the Veteran would not be eligible for these benefits because he was already granted the full 10 percent benefit during his incarceration. Had this mistaken continuation of recoupment not occurred, the Veteran would be required to pay back the full disability severance pay because there is no legal basis for waiver of recoupment of disability severance pay. Lastly, with respect to the remaining debt not related to the recoupment ($2,435.27), the Veteran was aware that he was not entitled to receive the erroneous award, but sole VA administrative error cannot be found where the Veteran knew of the erroneous award. The matters are REMANDED for the following action: 1. Coordinate with the Debt Management Center (DMC) to determine how much of the $19,646.87 debt had been collected prior to their waiver and what amount, if any, has been returned to the Veteran. L. B. CRYAN Veterans Law Judge Board of Veterans’ Appeals Attorney for the Board S. Lambert 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.