Citation Nr: 21004446 Decision Date: 01/27/21 Archive Date: 01/27/21 DOCKET NO. 15-11 451 DATE: January 27, 2021 ORDER 1. Challenge to the creation of an overpayment in the amount of $8,250 arising from apportionment of the Department of Veterans Affairs (VA) pension benefits is granted. 2. The claim for a waiver of the overpayment debt in the amount of $8,250 arising from apportionment of VA pension benefits is dismissed. FINDINGS OF FACT 1. The creation of an overpayment arising from the apportionment of VA pension benefits resulted from a sole administrative error attributable to VA. 2. The challenge to the propriety of the creation of the overpayment underlying the claim for a waiver of the overpayment debt arising from the apportionment of VA pension benefits has been granted. CONCLUSIONS OF LAW 1. The overpayment arising from apportionment of VA pension benefits was improperly created. 38 U.S.C. § 5112; 38 C.F.R. § 3.500. 2. The claim for a waiver of the overpayment debt arising from apportionment of VA pension benefits is moot. 38 U.S.C. §§ 511, 7104, 7105. REASONS AND BASES FOR FINDINGS AND CONCLUSIONS The Veteran had active duty from September 1974 to September 1977. These matters are before the Board of Veterans’ Appeals (Board) on appeal of the February 2014 Debt Management Center’s (DMC) demand letter issued to D.N.M., the Veteran’s daughter, as to an overpayment in the amount of $8,250 charged to her by VA Regional Office (RO), and the December 2014 decision issued by the Committee on Waivers and Compromises (COWC), which denied D.N.M.’s application for a waiver of the debt arising from said overpayment. In April 2011, D.N.M., at the time, the Veteran’s dependent school child residing separately from the Veteran, requested apportionment of his VA benefits. In January 2012, the Veteran, a VA pensioner, also requested apportionment of his VA benefits in favor of D.N.M. In May 2012, D.N.M. again requested apportionment of the Veteran’s VA benefits. In February 2013, the RO issued a notice addressed to D.N.M. but mailed to the Veteran, even though his address was distinct and different from D.N.M.’s. The February 2013 notice stated that D.N.M. was awarded a monthly apportionment in the amount of $250, and the apportionment award was retroactive effective May 2011. The February 2013 notice further stated that the award was to remain in effect throughout June 2014, i.e., until D.N.M.’s expected graduation. However, also in February 2013, and simultaneously with issuing a notice stating that D.N.M. was awarded apportionment, the RO also notified the Veteran that, because he had failed to report his December 2012 award of Social Security Administration (SSA) benefits, which had increased his income, the Veteran’s VA pension benefits ended up being overpaid: since his VA benefits had not been downwardly adjusted to account for the income increase due to the SSA benefits. Therefore, the RO proposed to retroactively reduce the amount of the Veteran’s VA pension benefits effective December 2012. The Veteran did not respond. After the RO acted on the February 2013 retroactive reduction proposal, DMC notified the Veteran that his overpayment debt was in the amount of $5,250, and it would be recouped through incremental withholdings from his VA benefits. Being both retroactively and prospectively downwardly adjusted (as a result of his SSA benefits) and prospectively withheld (as a result of his overpayment), the Veteran’s monthly VA benefits yielded a markedly smaller amount available for apportionment to D.N.M. Therefore, in January 2014, the RO concluded that the Veteran’s retroactively and prospectively reduced VA benefits were insufficient to support any apportionment to D.N.M. and retroactively terminated her apportionment effective the date of the grant of the apportionment. The RO’s action resulted in the creation of an overpayment charged to D.N.M., and that overpayment was equal to all apportionment payments that VA had disbursed to D.N.M. One year after the aforesaid events, i.e., in February 2014, DMC issued D.N.M. a demand letter informing her that the overpayment was in the amount of $8,250, and that the debt arising from said overpayment became subject to collection. Notably, while DMC’s demand letter asserted that D.N.M. had been notified by the RO of both, the overpayment and the basis for its creation, the record shows that the RO did not issue D.N.M. any notice, thus violating her due process rights. 38 C.F.R. § 1.911(d); Veterans Benefits and Transition Act, Pub. L. No. 115-407, § 504(b), 132 Stat. 5368 (2018) (notices of debt shall provide a clear explanation of why the individual is in debt). In October 2014, D.N.M. applied for a waiver of the debt. In December 2014, COWC denied her application as untimely, since D.N.M.’s application was filed more than 180 days after the issuance of DMC’s February 2014 demand letter. In March 2015, D.N.M. filed a notice of disagreement (NOD) clarifying that she was challenging not only the denial of a waiver but also the propriety of the creation of the overpayment. D.N.M. stressed that she was neither made aware nor had a reason to be aware of the Veteran’s receipt of SSA benefits or his duty – or his failure – to report his award of SSA benefits to the RO. D.N.M. further pointed out that she was alienated from the Veteran and had no reason to know that she had been overpaid. In March 2015, the RO issued a Statement of the Case, and D.N.M. filed a Substantive Appeal requesting a Board hearing. Although D.N.M.’s Board hearing was scheduled to take place in September 2018, her hearing notice was mailed to the Veteran’s address, rather than D.N.M.’s address. Correspondingly, being unaware of the hearing, D.N.M. did not attend it. When the error was detected, the hearing was rescheduled for May 2019. However, for reasons not immediately apparent to the Board, the notice of the rescheduled hearing was again mailed to the Veteran’s address (and even addressed to the Veteran, although the appellation on the notice stated D.N.M.’s name). Therefore, D.N.M., being again unaware of the rescheduled hearing, did not attend it. The Board acknowledges that D.N.M.’s request for a Board hearing is pending. However, given that her overpayment debt is being invalidated and, thus, D.N.M.’s challenges are being granted in full, the Board’s resolution of D.N.M.’s challenges without a hearing cannot prejudice her or implicate D.N.M.’s due process rights. In Johnson v. Wilkie, No. 19-5789, 2020 U.S. App. Vet. Claims LEXIS 1205, at *5 (Vet. App. June 25, 2020), the Court reminded that every overpayment case potentially raises three claims. Two of them present are interrelated legal and financial challenges since one claim challenges the propriety of the creation of the overpayment, and the other questions the validity of the overpayment amount. Id. The third claim that could be raised is for a waiver of the debt arising from the overpayment. These rights can be exercised separately or simultaneously. Id.; see Bethea v. Derwinski, 2 Vet. App. 252, 254 (1992) (single judge memorandum decisions may be relied upon for any persuasiveness or reasoning they contain). An overpayment is created if a VA beneficiary receives benefits to which (s)he is not entitled. 38 C.F.R. § 1.962. Therefore, an inquiry into the propriety of the creation of an overpayment begins with a determination whether the beneficiary was legally entitled to the benefits (s)he received. If the answer is “no,” the next step is to determine whether VA was solely responsible for the overpayment, i.e., if VA committed a sole administrative error. The finding of a sole administrative error requires a showing that the beneficiary’s actions/failure to act did not contribute to the creation of the overpayment, and that (s)he neither knew nor should have known that the benefits that resulted in the overpayment were awarded erroneously. 38 U.S.C. § 5112(b)(9), (10); 38 C.F.R. § 3.500(b)(2). In light of the latter, the concept of a sole administrative error is linked to the inquiry as to the propriety of the creation of an overpayment. Further, the Court stressed that the concept of a sole administrative error was also indelible from the inquiry into whether VA provided the debtor with a clear notice as to his/her obligations in preventing/mitigating an overpayment. Erickson v. West, 13 Vet. App. 495 (2000). Here, the Board acknowledges that D.N.M. was eligible but not legally entitled to apportionment of the Veteran’s VA benefits until the RO granted apportionment. Therefore, the Board proceeds with the sole administrative error analysis. Here, the record is not in dispute that the debt arose as a result of the action that the Veteran, rather than D.N.M., was required but failed to take, i.e., to report the award of his SSA benefits to the RO. Therefore, the Board is without a basis to find that D.N.M. either caused or contributed to the creation of the overpayment. Moreover, the record is not in dispute that D.N.M. was neither notified nor placed in a position to enforce the Veteran’s reporting obligations. Indeed, D.N.M. was alienated from the Veteran, and the RO neither provided her with any mechanism to perform any monitoring and reporting functions nor articulated any basis for her to perform such functions ab initio. Further, all of the RO’s notices which identified D.N.M. as the intended recipient were mailed to the Veteran’s address, where she could not receive them. In sum, since the RO’s actions cannot be reconciled with Erickson, the Board finds that D.N.M. neither knew nor should have known of the Veteran’s increase in income ensuing from his SSA benefits, or of his duty to report such an increase. Finally, nothing in the record suggests that D.N.M. knew or should have known that she was not entitled to receipt of her apportionment until, after being served with DMC’s demand letter, she contacted VA by means of a telephonic communication and was informed that the Veteran failed to notify the RO of his SSA benefits, which triggered an overpayment of his VA pension, and that overpayment caused the retroactive and prospective reduction of his VA benefits, which – in turn – caused the RO to retroactively terminate D.N.M.’s apportionment and create her overpayment. In light of the complexity of this chain of events, the Board is without a basis to find that it was more likely than not that D.N.M. knew or should have known she was overpaid. In contrast, the record demonstrates that, in February 2013, simultaneously with awarding D.N.M. apportionment, the RO notified the Veteran of the effect his SSA award would have on his VA benefits. This RO notice meant that, prior to awarding D.N.M. apportionment, the RO had known that the Veteran’s VA benefits would be insufficient to support her apportionment. Nevertheless, the RO proceeded with awarding D.N.M. apportionment, thus ensuring that she would be both overpaid and unable to repay her debt, since the RO knew D.N.M.’s tough financial circumstances from her apportionment application. Correspondingly, the record establishes that the overpayment was created as a result of a sole administrative error on the part of VA. Accordingly, D.N.M.’s challenge to the creation of the overpayment in the amount of $8,250 charged to D.N.M. is granted. The foregoing leaves the Board solely with D.N.M.’s claim for a waiver of her debt, a claim which was dismissed by COWC as untimely. Under 38 U.S.C. § 7104; 38 C.F.R. § 20.101, the Board has jurisdiction in all matters where there is a question of law or fact necessary to a decision by the Secretary under a law that affects the provision of benefits by the Secretary to veterans or their dependents, or survivors. It follows that, under 38 U.S.C. § 7105, the Board may dismiss any appeal or portion of an appeal where the case or controversy ceased to exist. See 38 U.S.C. § 511(a); Church of Scientology v. United States, 506 U.S. 9, 12 (1992); accord Armstrong v. VA, 2016 MSPB LEXIS 6372 (M.S.P.B., Oct. 27, 2016) (while the Board is not a federal court but, rather, an ‘administrative agency with quasi-judicial functions,’ and – therefore – it has ‘powers and limitations distinct from those of an Article III court,’ this is a distinction without a difference for the purposes of the mootness analysis”) (quoting Conrad v. Department of Justice, 24 M.S.P.R. 452, 454 (1984)). Here, the Board’s grant to D.N.M.’s challenge to the propriety of the creation of the overpayment underlying her debt constitutes a greater award than the award she would have obtained had she been granted a waiver of the debt because, if the overpayment is found to be an administrative error, no taxes are owed by the debtor, while a grant of a waiver has tax implications. Since D.N.M.’s claim for a waiver of her debts does not present a case or controversy amenable to the Board’s favorable resolution, this claim is dismissed as moot. Cynthia M. Bruce Veterans Law Judge Board of Veterans’ Appeals Attorney for the Board Anna Kapellan, Associate 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.