Citation Nr: 21062178 Decision Date: 10/06/21 Archive Date: 10/06/21 DOCKET NO. 17-18 601 DATE: October 6, 2021 ORDER The overpayment of payment of educational assistance benefits under the Transfer of Entitlement provisions of Chapter 33, Title 38, United States Code (known as the Post-9/11 GI Bill), in the amount of $35,868.90, was validly created. Entitlement to waiver of recovery of an overpayment of payment of educational assistance benefits under the Transfer of Entitlement provisions of the Post-9/11 GI Bill, in the amount of $35,868.90, is granted. FINDINGS OF FACT 1. A debt in the amount of $35,868.90 was properly created. 2. There is no indication of fraud, misrepresentation, or bad faith on the part of the appellant in matters involving creation of the debt at issue in this matter. 3. Recovery of the overpayment of Chapter 33 educational assistance benefits in the amount of $35,868.90 would be against equity and good conscience. CONCLUSIONS OF LAW 1. The debt created by the overpayment of Chapter 33 educational assistance benefits in the amounts of $35,868.90 for tuition and fees, housing allowance benefit, and books and supplies is valid. 38 U.S.C. § 5302; 38 C.F.R. §§ 21.7136, 21.7144. 2. The criteria for waiver of the overpayment of Chapter 33 educational assistance benefits in the amount of $35,868.90 have been met. 38 U.S.C. § 5302; 38 C.F.R. §§ 1.962, 1.963, 1.965. REASONS AND BASES FOR FINDING AND CONCLUSION The Veteran served as a member of the United States Army National Guard, which service included periods of active duty from January 2010 to January 2011, and from May 2013 to September 2013. The appellant in this case is the Veteran's spouse. The procedural history of this case has been detailed in the numerous prior actions in the appeal. Accordingly, the procedural history will only be repeated herein as necessary to explain the state of the issues currently before the Board. In January 2021, the appellant testified at a Board hearing before a Veterans Law Judge (VLJ); a transcript of that hearing is of record. Notably, at the time of that hearing, the issue on appeal was whether a request for waiver had been timely filed; testimony regarding the merits of the underlying claim for a waiver of recovery of an overpayment of payment of educational assistance benefits under Chapter 33 was not taken. As explained during the January 2021 hearing, if it was determined that a timely request for waiver had been filed, an additional decision regarding the merits of the underlying claim would be required and the appellant would be afforded an opportunity for another Board hearing if she so desired. In a February 2021 decision, the Board found that that appellant's request for a waiver of indebtedness was timely filed. The Board then remanded the issue of entitlement to a waiver of recovery of an overpayment of payment of educational assistance benefits under Chapter 33 in the calculated amount of $35,868.90, to include the question of whether the overpayment was validly created, to the agency of original jurisdiction (AOJ) for adjudication on the merits. Notably, the Board instructed that if the claim remained denied, the appellant was to be provided a statement of the case; it was indicated that the matter was to be returned to the Board only if a timely substantive appeal was filed. On remand from the Board, the AOJ determined that the overpayment and resulting debt in the amount of $35,868.90 was validly created; notification of this determination was sent to the appellant in March 2021. In the notification letter, the AOJ informed the appellant that the issue of entitlement to a waiver of recovery of indebtedness had been referred to the Committee on Waivers and Compromises (COWC) and that if the benefit sought on appeal remained denied, a supplemental statement of the case (SSOC) would be issued. In April 2021, the COWC denied the appellant's waiver request. An SSOC addressing the issue of entitlement to a waiver of recovery of an overpayment of payment of educational assistance benefits under Chapter 33 in the calculated amount of $35,868.90, to include the question of whether the overpayment was validly created, was issued that same month, and the matter was thereafter returned to the Board. The matter was then again before the Board in July 2021, at which point the Board assumed jurisdiction over the issue of entitlement to a waiver of recovery of overpayment of VA compensation benefits in the amount of $35,868.90 The Board then remanded that issue for further development and readjudication. Upon completion of the requested development, the AOJ issued an SSOC in which it continued to deny the Veteran's request for a waiver of indebtedness, and the matter was thereafter returned to the Board for further appellate consideration. Regarding the claim on appeal, although it does not appear as though the appellant specifically disagreed with the validity of debt, because the issue of the validity of a debt is a threshold determination that must be made prior to a decision on a request for waiver of the indebtedness, see Schaper v. Derwinski, 1 Vet. App. 430 (1991), the Board has framed the issue on appeal to include the matter of whether the debt was validly created. The Board also notes that in correspondence received in July 2021, the appellant indicated that she desired a hearing before a VLJ regarding the issue of entitlement to a waiver of recovery of an overpayment of payment of Chapter 33 educational assistance benefits, but that she also wanted resolution of her appeal. As noted above, the hearing held in January 2021 did not cover the issues currently on appeal; rather, that hearing only addressed whether the appellant's waiver request was timely filed. As such, the appellant would be entitled to an additional hearing at this juncture, if she so desired. However, as the Board is granting the appellant's request for waiver of indebtedness herein, the Board finds no reason to further delay adjudication of the appellant's claim on appeal to clarify whether she desires a Board hearing and/or schedule her for a Board hearing, as there is no prejudice to the appellant in failing to do so. Lastly, the Board notes that, for legacy appeals, governing law and regulation provides that the VLJ who conducts a hearing on appeal must participate in any decision made on the appeal (unless the appellant waives this procedural guarantee). 38 U.S.C. § 7107; 38 C.F.R. § 20.707. Regarding the January 2021 Board hearing, as discussed, that hearing addressed the issue of the timeliness of the waiver request. That issue has since been resolved. As such, the Board finds the current claim need not be decided by the VLJ who conducted the January 2021 hearing, as the issue now on appeal is separate and distinct from that which was before the Board at the time of the January 2021 hearing. Validity of the Debt In the instant case, the record shows that in July 2011, the Veteran transferred his Post-9/11 GI Bill educational assistance benefits to the appellant, transfer of which was approved in October 2011. That same month, the RO received the appellant's application for use of transferred educational assistance benefits for a program of education at the University of Massachusetts Boston (UMass Boston). In November 2011, the AOJ issued a "Certificate of Eligibility" in which the appellant was informed that she had been approved for use of transferred Post-9/11 GI Bill benefits, and that she had 18 months of full-time benefits to use, which benefits were paid at the 60 percent rate. The record then shows that UMass Boston certified that the appellant was enrolled in an undergraduate degree program at that institution beginning in September 2011. Specifically, numerous enrollment certifications show that the appellant was enrolled in various credit hours for the terms running from September 6 through December 22, 2011; from January 23, through May 18, 2012; from 12 credit hours from September 4 through December 20, 2012; from January 7 through January 25, 2013, and from January 28 through May 24, 2013. On October 31, 2014, the Veteran was discharged from service. On February 23, 2015, the AOJ informed the appellant that because the Veteran did not complete his service obligation (the date of which was July 3, 2015), she was not eligible for VA educational assistance benefits under the Transfer of Entitlement provisions of Chapter 33. The appellant was informed that because of this change, VA had paid her more than she was due, which resulted in an overpayment of tuition and fees, books and supplies, and monthly housing allowance in the total amount of $35,868.90 for the terms outlined above. Relevant to the issue on appeal, the law provides that that the Secretary of Defense or, in this case, the Secretary of the Army, may approve a member of the Armed Forces who is entitled to basic educational assistance under Chapter 33, under certain circumstances, to elect to transfer to one or more dependents the unused portion of entitlement to such assistance. 38 U.S.C. § 3319(a). To be eligible to transfer educational assistance benefits, a transferor must have served six years on active duty or in the Selected Reserve at the time of his approval by the Secretary of the Army and must have entered into an agreement to serve at least four more years as a member of the Armed Forces. 38 U.S.C. § 3319(b). The law further provides that if an individual transferring entitlement under 38 U.S.C. § 3319 fails to complete the service agreed to in accordance with the terms of the agreement of the individual under individual under 38 U.S.C. § 3319(b)(1), the amount of any transferred entitlement under this section that is used by a dependent of the individual as of the date of such failure shall be treated as an overpayment of educational assistance. 38 U.S.C. § 3319(i)(2)(A). Exceptions however exist and subparagraph (A) will not apply in the case of an individual who fails to complete service agreed to by the individual (1) by reason of the death of the individual or (2) for a reason referred to in 38 U.S.C. § 3311(c)(4). 38 U.S.C. § 3319(i)(2)(B). In accordance with 38 U.S.C. § 3311(c)(4), if the individual transferring entitlement fails to complete the service agreed to due to early discharge or release from active duty for (1) a medical condition which preexisted the applicable period of service of the individual and which the Secretary determines is not service-connected; (2) hardship; or a physical or mental condition that was not characterized as a disability and did not result from the individual's own willful misconduct but did interfere with the individual's performance of duty, as determined by the Secretary concerned in accordance with regulations prescribed by the Secretary of Defense, an overpayment of education assistance benefits will not be assessed. 38 U.S.C. § 3311(c)(4); 38 C.F.R. § 21.9750(l). Here, the evidence of record shows that the Veteran requested to be discharged from service in lieu of trial by court martial. There are no records of evidence that reflect any of the exceptions listed under 38 U.S.C. § 3319(i)(2)(B). There is also no debate that the appellant received Chapter 33 educational assistance benefits from the September 2011 semester through the January 2013 semester; therefore, a qualifying mitigating circumstance under 38 C.F.R. § 21.7020 does not apply. See 38 C.F.R. § 21.7020. The Board also finds no error in the AOJ's calculation of the overpayment and the appellant has not disputed the actual amount in question. As such, the Board finds that the overpayment of Chapter 33 educational assistance benefits in the amount of $35, 868.90 was properly created. Waiver Having determined that the debt was validly created, the Board turns to the question of entitlement to a waiver of recovery of the overpayment. The law provides that recovery of an overpayment may be waived if there is no indication of fraud, misrepresentation, or bad faith, on the part of the person or the persons having an interest in obtaining the waiver, and recovery of such indebtedness would be against equity and good conscience. See 38 U.S.C. § 5302(a), (c); 38 C.F.R. §§ 1.962, 1.963. At the outset, the Board finds there to be no indication of fraud, misrepresentation, or bad faith on the part of the appellant in the creation of the debt. Having found an absence of fraud, misrepresentation, or bad faith, consideration must now be given as to whether recovery of the overpayment would be against equity and good conscience. The standard "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) the fault of the debtor, (2) balancing of faults between the debtor and the VA, (3) undue hardship of collection on the debtor, (4) whether collection would defeat the purpose of an existing benefit, (5) whether failure to collect a debt would result in the unjust enrichment of the debtor, and (6) whether the debtor changed positions to his or her detriment in reliance upon a granted VA benefit. 38 U.S.C. § 5302; 38 C.F.R. § 1.965(a); see Ridings v. Brown, 6 Vet. App. 544, 546 (1994). After review of the evidence of record, the Board finds that it would be against the principles of equity and good conscience to require the appellant to repay the debt of $35,868.90. Specifically, the Board cannot conclude that the appellant was at fault in creating the debt. Indeed, the appellant relied on a November 2011 certificate of eligibility which detailed that she was eligible for education benefits at the 60 percent rate based on the Veteran's eligible service. As the appellant was not the servicemember, and had no authority concerning the servicemember's retirement date or obligatory service commitment, the Board finds that she was not at fault for the subsequent creation of the debt. Similarly, the Board finds that while VA was not responsible for the creation of debt, the appellant was equally not at fault for the debt creation for the reasons outline previously. 38 C.F.R. § 1.965(a)(2). As to the element of undue hardship, the pertinent regulation provides that consideration should be given to whether collection of the indebtedness would deprive the debtor or her family of basic necessities. 38 C.F.R. § 1.965(a)(3). The appellant submitted a Financial Status Report in December 2015 which detailed that her and her spouse's monthly expenses exceeded their monthly income by $899.00. A more recent Financial Status Report dated in June 2021 details that the appellant has no income and relies solely on her spouse for household income. The report also details that after expenses, the household's monthly expenses exceeds the monthly income by $1,938.06. The appellant further reported having recently moved to Israel in late June 2021 to be with her family due to concerns over the COVID-19 pandemic. She noted that her spouse will be unable to work in Israel as he not a citizen or resident of the country. In consideration of this evidence, the veracity of which the Board has no reason to doubt, the Board finds that recovery of the debt would have a significant financial impact on the appellant and inhibit her ability to make payments and obtain other basic necessities. After review of the appellant's Financial Reports, and her statements detailing her household members and obligations, the Board finds repayment would constitute an undue hardship for VA purposes. The Board must also consider whether the recovery of the overpayment would defeat the purpose for which the benefits were intended. It has not been shown that recovery of the overpayment would defeat the purpose of VA education benefits, which is to help eligible students complete a program of education by providing financial assistance. Here, the record reflects that the appellant completed her education program and the benefits were used to effectuate this achievement. Although erroneously granted in retrospect, these education benefits were used for their intended purpose. Regarding the fifth element, the facts show that the appellant was arguably enriched by the improper payment of VA benefits which allowed for completion of her education program, thus increasing her earning potential in the future. However, this alleged enrichment is tempered by the other factors described above. The final factor that the Board is explicitly required to consider is whether reliance on the benefits resulted in relinquishment of a valuable right or the incurrence of a legal obligation. The appellant has not contended with any specificity, nor does the evidence show, that she had relinquished a valuable right or incurred a legal obligation in reliance on her VA educational assistance benefits. Overall, the Board concludes that the totality of the evidence weighs in favor of finding that recovery of the overpayment of Chapter 33 educational assistance benefits in the amount of $35,868.90. Specifically, the Board finds that considerations of equity and good conscience as they pertain to the specific facts of this case dictate a need for reasonableness and moderation in the exercise of the Government's rights. In view of the Board's findings, and affording reasonable doubt in favor of the appellant, recovery of the $35,868.90 overpayment would cause undue hardship on the appellant and would be against equity and good conscience. Accordingly, the appellant's request for waiver is granted. K. Conner Veterans Law Judge Board of Veterans' Appeals Attorney for the Board K. Neilson, 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.