Citation Nr: 21063874
Decision Date: 10/18/21	Archive Date: 10/18/21

DOCKET NO. 17-07 537
DATE:  October 18, 2021

ORDER

An overpayment of Department of Veterans Affairs (VA) compensation benefits in the amount $17,211.60, based on the recouped amount of disability severance pay, was not properly created; the overpayment of VA benefits in the amount of $2,435.27, based on payments to the Veteran while incarcerated, was properly created. Thus, the total overpayment of $19,646.87 was not properly created, reimbursement of benefits is not warranted, and the appeal is denied.

FINDINGS OF FACT

1. The Veteran has been in receipt of VA compensation benefits at a 40 percent disability rating since August 22, 1998, 60 percent disability rating since May 7, 2016, and 100 percent from March 22, 2017.

2. A July 1999 notification letter notified the Veteran that he received military disability severance pay of $29,100.00 for left knee, status post arthroscopy, right knee, status post arthroscopy, and coccyx, residuals of injury. It advises that VA would recoup $20,952 (28% of his gross $29,100.00).

3. A January 2002 VA memo shows that an apportionment request was received on August 27, 2001 from the Veteran's ex-wife on behalf of the Veteran's two children because the Veteran was incarcerated. The Veteran's dependents received an apportionment of his benefits during his incarceration.

4. An October 2002 notification letter notified the Veteran that evidence was received showing that the Veteran was incarcerated for a felony conviction, as of October [REDACTED], 2000. 

5. An April 2010 development letter shows that a review of the Veteran's file was completed on January 6, 2010, and that it was discovered that there were errors in the Veteran's VA compensation benefits. It advises that they proposed to adjust his compensation benefits based on apportionment and incarceration.

6. In a July 2010 Debt Management Center letter, the Veteran was advised that he was paid $19,646.87 more than he was entitled to receive.

7. A September 2020 VA memo advises that the Veteran received his full 40 percent VA compensation check from April 22, 2009 to June 1, 2010, in the amount of $512.00 monthly, but that an incarcerated Veteran is only legally entitled to payment at the 10 percent rate, and that award action on June 19, 2010 corrected the discrepancy, issuing an additional debt in the amount of $2,435.27, for a total of $19,646.87.

8. In a September 2020 Decision of Waiver of Indebtedness, the Committee on Waivers and Compromises (Committee) granted the Veteran's request for a waiver of his total indebtedness in the amount of $19,646.87.

9. The overpayment debt resulting from the recouped amount of disability severance in the amount of $17,211.60 was due to error by VA and was not properly created.

10. The portion of the overpayment debt in the amount of $2,435.27, based on overpayments made to the Veteran during incarceration, was properly created and not due to sole VA administrative error.

11. The Veteran is not entitled to reimbursement for any erroneous payments toward recoupment of the debt nor for any amount mistakenly recouped from the Veteran's dependent's apportioned amount.

CONCLUSION OF LAW

The overpayment of VA compensation benefits in the amount of $19,646.87 is partially valid; reimbursement of payments is not warranted. 38 U.S.C. §§ 5111, 5112, 5313; 38 C.F.R. §§ 3.4, 3.401, 3.500, 3.665. 

REASONS AND BASES FOR FINDINGS AND CONCLUSION

The Veteran 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 Department of Veterans Affairs (VA) Debt Management Center (DMC) First Demand Letter. In the July 2010 letter, the Veteran was advised that he was paid $19,646.87 more than he was entitled to receive.

In December 2018, the Veteran testified at a VA Central Office Board hearing before the undersigned Veterans Law Judge sitting in Washington, DC. A transcript of his testimony is associated with the claims file.

In May 2019, the Board remanded the case for adjudication of the validity of the Veteran's overpayment debt. The Board also directed that if any debt remains, it should be recalculated, a current financial status report should be obtained, and that waiver of the recovery of any remaining debt be adjudicated.

In a September 2020 Decision of Waiver of Indebtedness, the Committee waived the Veteran's debt in full. However, since then, the Veteran has continued to seek a declaration regarding whether the debt was valid in the first place, and he has stated that he has not been reimbursed for the amount collected on the debt.

In January 2021, the matter returned to the Board, where the Board found that the September 2020 VA memorandum and September 2020 waiver decision substantially complied with the May 2019 Board remand. However, it was remanded again to 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, had been returned to the Veteran. 

Overpayment and Severance Pay

The law provides for the rates of disability compensation, and for payment of additional compensation for dependents of veterans who are at least 30 percent disabled. 38 U.S.C. §§ 1114(c), 1115, 1134, 1135. The Veteran was, at all times relevant to this issue and the period of time in question, rated appropriately to receive additional compensation for dependents. 

The recoupment of the Veteran's severance pay from his VA disability compensation is required by law under 10 U.S.C. § 1174(h)(2). Subsection 1174(h)(2) provides that a member who has received separation pay under this section, or severance pay or readjustment pay under any other provision of law, based on service in the armed forces shall not be deprived, by reason of her receipt of such separation pay, severance pay, or readjustment pay, of any disability compensation to which she is entitled under the laws administered by VA, but there shall be deducted from that disability compensation an amount equal to the total amount of separation pay, severance pay, and readjustment pay received. In addition, subsection 1212(d) provides that the amount of disability severance pay received under this section shall be deducted from any compensation for the same disability to which the former member of the armed forces or his dependents become entitled under any law administered by the Department of Veterans Affairs.

Where the disability or disabilities found to be service-connected are the same as those upon which disability severance pay is granted, or where entitlement to disability compensation was established on or after September 15, 1981, an award of compensation will be made subject to recoupment of the disability severance pay. 38 C.F.R. § 3.700(a)(3). Prior to the initial determination of the degree of disability recoupment will be at the full monthly compensation rate payable for the disability or disabilities for which severance pay was granted. Id. Following initial determination of the degree of disability recoupment shall not be at a monthly rate in excess of the monthly compensation payable for that degree of disability. Id. For this purpose the term "initial determination of the degree of disability" means the first regular schedular compensable rating in accordance with the provisions of subpart B, part 4 of this chapter and does not mean a rating based in whole or in part on a need for hospitalization or a period of convalescence. Id.

As pertinent to this Veteran, where entitlement to disability compensation was established on or after September 15, 1981, a veteran may receive disability compensation for disability incurred or aggravated by service prior to the date of receipt of the severance pay, but VA must recoup from that disability compensation an amount equal to the severance pay. 38 C.F.R. § 3.700(a)(3). Where payment of severance pay was made after September 30, 1996, VA will recoup from disability compensation an amount equal to the total amount of the severance pay less the amount of Federal income tax withheld from such pay. Id.

1. Whether an overpayment of VA compensation benefits in the amount of $19,646.87 was properly created, to include the recouped amount of disability severance ($17,211.60) and payments to the Veteran while incarcerated ($2,435.27) and whether reimbursement of paid benefits is warranted

The Veteran contends that the overpayment debt of $19,646.87 is invalid. He contends that he should be reimbursed for the recoupment of his severance pay because the recoupment occurred twice. The Veteran asserts that VA recouped the severance pay, partially from apportioned benefits, and then advised him that that action was incorrect, and began correctly recouping the severance pay from his benefits.

The Veteran received a severance payment of $29,100.00 upon separation from active service for left knee, status post arthroscopy, right knee, status post arthroscopy, and coccyx, residuals of injury. The July 1999 notification letter advises that compensation received in severance pay for those disabilities must be held back, that he will receive monthly payments for those disabilities, and that he will still get payments for his other disabilities. It advises that for severance pay received after September 30, 1996, VA will not recoup any amounts withheld for Federal income tax purposes, and therefore, an adjustment was made to collect the after-tax amount of $20,952.00 (28% of the gross amount of $29,100.00).

In a July 1999 rating decision, service-connected compensation benefits was granted at the 40 percent disability rating. The Veteran was later awarded additional compensation benefits for two dependent children.

In December 1999, the Veteran was notified that his severance pay would be incrementally recouped from his compensation pay on a monthly basis, at the initial rate of $139.

In March 2002, the RO took action to retroactively reduce the Veteran's monthly benefits to $103.00, nearly a year after notification of his incarceration. The action to retroactively reduce the Veteran's benefits resulted in an overpayment.

An October 2002 notification letter advised the Veteran that they proposed to reduce his payments from $484.00 to $101.00, effective December [REDACTED], 2000 based on evidence showing that the Veteran was incarcerated for a felony conviction, as of October [REDACTED], 2000. It advises that the law requires that his compensation be reduced to the 10 percent pay rate effective the 61st day after incarceration for a felony conviction. 

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). This Veteran was entitled to be paid at the 10 percent rate.

The Veteran's former spouse requested an apportionment of the Veteran's benefits on behalf of the two minor children in her custody on February 13, 2002. According to 38 C.F.R. § 3.665(e), all or part of the compensation not paid to an incarcerated veteran may be apportioned to a veteran's spouse, child or children, and dependent parents on the basis of individual need. 38 C.F.R. § 3.665(e). In an October 2002 special apportionment decision, the RO granted an apportionment to the former spouse, V.N., on behalf of the minor children, effective December 1, 2000. In an October 2002 notification letter, the Veteran was advised that the apportionment, in the monthly amount of $239.00, had been granted to V.N. as the custodian of his children, effective December 1, 2000, and that the award would terminate on April 22, 2009, when his youngest child turned 18. It also advises that due to the Veteran's incarceration, his monthly entitlement would be reduced to $103.00, effective December 1, 2000 and that his severance pay recoupment would continue. The record reflects that the Veteran's benefits were divided among the Veteran, V.N. (as guardian of their children), and toward severance pay recoupment.

In an April 2003 notification letter, the Veteran was advised that an adjustment was made to his benefits because of a cost-of-living increase. It shows that effective December 1, 2002, he was entitled to $507.00, but that $153.00 would be applied to the recoupment of his disability severance and that $248.00 would go to V.N. for his children. It advises, therefore, that his monthly benefit was $106.00, withheld due to an overpayment. In other words, as stated in the previous Board remand, the Veteran's benefit at that time was $106.00, consistent with a 10 percent benefit in 2003, but the apportionees were not awarded the complete remaining amount of the Veteran's pre-incarceration 40 percent award. The record shows that most of the 10 percent rate was being withheld to pay back the previously established overpayment in April 2003 due to his incarceration. The previous debt is not on appeal. 

A May 2008 Compensation and Pension Award shows, in pertinent part, that effective December 1, 2007, the Veteran's net monthly rate was $117, withheld $252.00 (for apportionment), and offset/recoupment of $181, but that on April 22, 2009 the monthly rate listed increased to $356, with $0 for apportionment, and offset/recoupment of $156. 

In April 2010, the Veteran was notified that there were "errors" in the way his VA compensation benefits had been handled. It was noted that his award had been adjusted effective December 1, 2000 to reflect his incarceration. It also shows that additional money had been recouped from his award toward his disability severance pay but that he was not legally entitled to the additional amount while incarcerated, so VA should not have been recouping this money for his disability severance pay. The letter states that 38 C.F.R. § 3.665 requires that payment of the Veteran's VA compensation benefits be reduced to the amount payable for a disability evaluated as 10 percent disabling if the combined disability evaluation is 20 percent or more. Thus, the RO explained that the law requires that the Veteran receive benefits at the 10 percent rate, but that he had been previously paid incorrectly at a rate above the 10 percent rate on December 1, 2002. In addition, as of April 2009, VA computer error resulted in an increase in his benefits even though he was only entitled to 10 percent based on his incarcerated status. As noted above, in April 2009, when the apportionment ended, the Veteran's net monthly rate was incorrectly increased to $356.00, with $156 recouped for the overpayment. 

During the December 2018 Board hearing, the Veteran testified that he was incarcerated in October 2000 and released on February [REDACTED], 2016. He stated that in 2009 when his son turned 18 years old, the apportionment was cancelled. The Veteran stated that by then, when the apportionment ended, that his severance recoupment was complete, but that VA continued to say he owed money. The Veteran asserts that VA was recouping from the apportionment for the severance, and the Veteran's representative stated that there were three pots of money  the Veteran's 10 percent which they were withholding for the overpayment due to incarceration, the portion that was going to the children (apportionment), and the portion that was being withheld from the apportionment that was going to the severance. He stated that once his children turned 18 years old and the apportionment was to be terminated, the RO began sending the apportioned amount back to the Veteran, instead of continuing to withhold that amount until the Veteran was released from prison in 2016.

A September 2020 VA memo advised that the debt in the amount of $19,646.87 is valid. First, however, the Board notes that the Veteran's date of incarceration was, in fact, October [REDACTED], 2000, but that the Veteran's compensation pay was adjusted, per regulations, on the 61st day from his incarceration, which would have been December [REDACTED], 2000, resulting in an effective date of December 1, 2000. It appears that the RO inadvertently erred when noting the Veteran's date of incarceration as December [REDACTED], 2000. 

The September 2020 VA memo shows that, when VA was informed in February 2002 of the Veteran's incarceration, an adjustment was made using the December 2000 effective date. It states that when the incarceration adjustment was made, payment was still being diverted to the balance of severance payment. It explains that severance payment should have been suspended until the incarceration adjustment ended, and that on April 15, 2010, actions were taken to correct the recoupment of severance payment withholding and a subsequent award action was authorized on June 19, 2010, resulting in a debt of $19,646.87. The memo notes that based on an audit of the Veteran's severance pay withholding, "$3,740.40 was correctly recouped between September 1, 1998, the date of entitlement, to December [REDACTED], 2000, the date of incarceration." The Veteran was not legally entitled to the additional amount of payment going towards the severance balance effective in December 2000, so a debt was correctly issued for the offset. An audit determined that the adjustment accounted for $17,211.60 of the Veteran's debt, and the remaining $2,435.27 of the debt can be attributed to incorrect payments to the Veteran while incarcerated, starting April 22, 2009. An apportionment was granted for the Veteran's children while he was incarcerated; it ended on April 22, 2009. The Veteran received his full 40 percent VA compensation check from April 22, 2009 to June 1, 2010, in the monthly amount of $512.00, but that an incarcerated Veteran is only legally entitled to payment at the 10 percent rate. It notes that award action on June 19, 2010 corrected the discrepancy, issuing an additional debt in the amount of $2,435.27, for a total of $19,646.87.

In the January 2021 Board remand, the Board remanded "on the chance that the Veteran's contentions meant that a full waiver of recovery has not occurred." The Board stated that 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. The Board noted, however, that 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. The Board noted that 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. 

Also, as noted in the previous Board remand, 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; sole VA administrative error cannot be found where the Veteran knew of the erroneous award. Here, the Veteran was receiving his full VA benefits at the 40 percent rate from April 22, 2009 to June 1, 2010 while he was incarcerated. 

Thus, regarding the remaining debt of $2,435.27 based on incorrect payments to the Veteran while he was incarcerated, this portion of the debt was properly created. The Veteran was incarcerated at the time in question, from April 2009 to June 2010 and began receiving benefits at a rate higher than the 10 percent rate, based on his incarceration. The Veteran previously received notification that incarceration limited his VA benefits to the 10 percent rate. Therefore, he knew or should have known that he was receiving VA benefits at a rate higher than he was entitled to. Thus, the overpayment debt of $2,435.27, unrelated to the recoupment of severance pay, was properly created and not the result of sole VA error.

Per the Board remand, the DMC was contacted to determine how much of the $19,646.87 debt had been collected prior to their waiver, and what amount, if any, had been returned to the Veteran. A February 2021 report of general information shows that the DMC was contacted and stated that the records do not reflect that any refund to the Veteran has been made and there is no pending refund in the pay chart, but that additional research was needed. On February 4, 2021, further information was requested from the DMC. In a February 5, 2021 report of general information, it shows that the Veteran stated that he had received two calls from VA personnel asking what amount he would settle for. The RO advised the Veteran that, after searching the file, no record of either conversation could be found. On March 9, 2021, the RO emailed the DMC for status of the February 2021 request. A March 10, 2021 report of general information shows that the RO contacted the DMC for status of the February 4, 2021 request, and a May 19, 2021 email shows that DMC action was needed.

A June 2021 document shows that the Veteran's original debt amount was $19,646.87; it includes the fiscal transaction history and a historical debt record. The corresponding email shows that they attached the record of all payments received from establishment of the debt until it was paid in full on June 12, 2017. It notes that there is some overlap on the dates to ensure that no data was lost or omitted. The refund log records indicate that they have processed no refunds for the Veteran, confirming the information in FAS.

In a July 8, 2021 letter, the Veteran wrote to clarify his position, stating that from 2000 until 2009, while he was incarcerated, VA withheld various amounts of monthly deductions from his dependents' apportionment, to recoup his severance pay. He stated that on April 15, 2010, VA advised him that it was illegal to recoup severance pay via apportionment benefits, and that a debt in the amount of $19,646.87 was created. The Veteran stated that from September 2010 until sometime in 2017, the DMC collected the debt in full by withholding of his 10 percent entitlement and award adjustments. He stated that this shows that the disability severance was collected in full on two occasions. The Veteran stated that after the 2021 Board remand, the RO informed him that he was due a refund of his debt, and that in June 2021, DMC advised him that they were going to process his refund. He stated that it has, instead, returned to the Board, but that per his discussions with the DMC, the refund of $19,646.87 is warranted as a result of the approval of the waiver and collection of the full amount of the debt. He stated that the collection of the disability severance pay was satisfied through collections withheld from the apportioned amount of the award, but that VA forfeited the money that had been collected claiming that it was illegal. The Veteran cited to DoD 7000.14R Financial Regulation (page 4-8, paragraph 3) in support of his contentions. 

The Veteran stated that there was nothing illegal about the VA collecting the debt through deductions from the apportionment, rather that it was illegal how VA created the debt in 2010. The Veteran stated that by creating a "debt" for a severance condition in itself is illegal, and that the recoupment of monies that were awarded to him as a result of new disabilities, that he did not receive severance pay for, was also illegal. He stated that a large portion of the $19,646.87 was collected while he was having financial difficulties. 

The Veteran requested that the Board conclude that a reimbursement of the $19,646.87 is justified as a result of the waiver approved by the DMC, and that the collection and satisfaction of his severance pay was conducted legally as outlined in DoD 7000.14R. 

The Board acknowledges that the Veteran has asserted that he has and continues to experience financial hardship due to his debt. However, the Veteran's debt was previously waived in full by the Committee, taking his financial hardship into consideration. The Veteran's current financial situation is not pertinent to the question of whether the debt in question was validly created or whether reimbursement is warranted. 

As noted above, the Veteran asserts that VA withheld various amounts of monthly deductions from his dependents' apportionment in order to recoup his severance pay from 2000 until 2009, while he was incarcerated. He stated that those actions satisfied the collection of the disability severance pay, but that VA later, in April 2010, claimed this action was illegal, and created a debt of $19,646.87. The Veteran stated that from September 2010 until sometime in 2017, the DMC collected the debt in full by withholding of his 10 percent entitlement and award adjustments. He stated that this shows that the disability severance was collected in full on two occasions. The Veteran stated that there was nothing illegal about the VA collecting the debt through deductions from the apportionment but that it was illegal how VA created the debt in 2010. The Veteran asserts that creating a "debt" for severance pay is incorrect as was the recoupment of monies that were awarded to him as a result of new disabilities. 

The Board acknowledges the Veteran's assertion that deductions were made from his dependents' apportionment in order to recoup his severance pay. However, had the Veteran's severance pay been recouped via the apportionment benefits, as noted in the previous Board remand, the aggrieved persons would be the apportionees and not the Veteran because the recoupment was being taken at the expense of their award. Review of the record reveals that the Veteran's severance pay was not recouped from the entire amount available for apportion, as the record shows that the Veteran's dependents received an apportionment until April 22, 2009. Neither the Veteran's ex-spouse nor his children have asserted any discrepancies related to their receipt or amount of apportionment benefits. There is no indication in the record that the Veteran's dependents did not receive their payments, and financial records associated with the claims file show that apportionment benefits were paid from December 2000 until April 22, 2009. Rather, the Veteran's severance pay was erroneously recouped from the VA's mistaken overpayment to the Veteran of his compensation benefits while he was incarcerated. 

Essentially, the Veteran was in receipt of his VA compensation benefits at the 10 percent rate due to his incarceration, effective December 1, 2000, and at the same time, the Veteran's dependents were in receipt of apportionment benefits, with a portion of benefits incorrectly being used by VA toward recoupment of severance pay. In April 2010, VA notified the Veteran that review of his file was completed in January 2010 and revealed errors in his VA compensation benefits. As a result of VA's overpayment of benefits due to no fault of the Veteran, VA then created a debt for the amount of the severance pay that had been erroneously recouped. This action was incorrect as it created a new overpayment debt to the Veteran to answer for VA's incorrect recoupment of his severance pay. As the Veteran's severance pay should not have been altered and would not have been if not for VA's error, the debt in the amount of $17,211.60, the amount of the Veteran's severance pay after taxes, was not properly created. In other words, VA erroneously recouped the Veteran's severance pay using funds that the Veteran was not entitled to, and then to correct the mistake created an overpayment debt against the Veteran in that amount. As severance pay does not equate to an overpayment debt, this action was improper, and the resulting overpayment debt was improper.

The Veteran asserts that his severance pay was recouped twice and that, while his debt has been waived, he is entitled to reimbursement for the payments made toward recoupment of his severance pay. He has requested that the Board conclude that a reimbursement of the debt is justified as a result of the waiver granted by the DMC, and that the collection and satisfaction of his severance pay was conducted legally. 

As noted above, VA incorrectly paid benefits toward the Veteran in excess of the 10 percent he was allowed due to his incarceration and put those benefits toward the recoupment of severance pay; this was in addition to the amount apportioned to the Veteran's dependents. Thus, the recoupment of those benefits did not affect the Veteran because he was never entitled to those benefits; it did affect him in the sense that as a result of the erroneous actions of VA a new type of debt was created. While the portion of the debt regarding the Veteran's $17,211.60 after tax severance pay was not validly created, the debt has already been waived. He is not entitled to reimbursement of the payments made toward the recoupment of the severance pay because he was never entitled to the benefits that were erroneously used toward the recoupment. In other words, the Veteran's severance pay was initially recouped using funds he was not entitled to, that error resulted in an overpayment debt. After notice of that error, the Veteran's benefits were then correctly put toward recoupment of the debt, including the amount of the severance pay. The overpayment debt created in error, based on the severance pay recoupment as well as overpayments he received while incarcerated, was eventually waived by the Committee. The Veteran asserts that this shows that he paid the debt twice, that the debt was waived, and that he should be reimbursed those benefits. However, while the overpayment debt should never have been created in this manner, the severance pay subject to recoupment was valid, and his benefits would have been subject to recoupment for the severance pay regardless of his financial circumstances. As stated in the previous Board remand, had the 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. 

In sum, the Veteran's debt in the amount of $17,211.60 based on recoupment of severance pay was improperly created due to VA's actions. The Veteran's disability severance pay in the amount of $17,211.60 (after tax) was recouped and a subsequent overpayment debt was created that has since been waived. The portion of the debt based on the Veteran being paid in excess of the 10 percent disability rate from April 2009 until June 2010 was properly created. Reimbursement of benefits is not warranted because the Veteran was never entitled to the benefits used to (erroneously) recoup the Veteran's severance pay, and there is no legal basis for waiver of recoupment of severance pay. 

Thus, based on the foregoing, the Veteran's overpayment debt in the amount of $19,646.87 was only partially created properly. The portion of the debt based on the recouped amount of disability severance ($17,211.60) was not properly created, but the debt due to extra payments received by the Veteran while he was incarcerated, in the amount of $2,435.27, was properly created. While the creation of the $17,211.60 portion of the debt was improper, the Veteran was never entitled to the benefits used to erroneously recoup the amount for severance pay; therefore, reimbursement of benefits is not warranted. The appeal is denied. 

 

L. B. CRYAN

Veterans Law Judge

Board of Veterans' Appeals

Attorney for the Board	A. Labi, 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.