Citation Nr: 21065936 Decision Date: 10/28/21 Archive Date: 10/28/21 DOCKET NO. 18-46 788 DATE: October 28, 2021 ORDER Entitlement to waiver of recovery of overpayment of Department of Veterans Affairs (VA) disability compensation benefits in the amount of $14,200.00, to include the question of whether the overpayment was properly created, is denied. FINDINGS OF FACT 1. From April 1, 2008 to April 1, 2009, the Veteran concurrently received VA compensation benefits and military retirement disability pay. 2. The RO was informed of the duplicate payments made between April 2008 and April 2009 by the Defense Finance and Accounting Service (DFAS) in June 2013. 3. The $14,200.00 overpayment was not due to the Veteran's fraud, misrepresentation, or bad faith. 4. Neither VA, nor the Veteran were primarily at fault for the creation of the debt at issue; recovery of that debt would not create an undue hardship for the Veteran or defeat the purpose of the benefit; a waiver of recovery of the overpayment of the debt at issue would result in unfair gain to the Veteran; and there is no indication that the Veteran relinquished a valuable right or incurred a legal obligation in reliance on this benefit. CONCLUSION OF LAW The overpayment of VA compensation benefits in the amount of $14,200.00 was properly created, and recovery of the overpayment would not be contrary to the principles of equity and good conscience. 38 U.S.C. §§ 5302, 5304, 5305; 38 C.F.R. §§ 1.963, 1.965, 3.401, 3.750. REASONS AND BASES FOR FINDINGS AND CONCLUSION The Veteran had active service from December 2001 to April 2002 and August 2005 to January 2006, with additional service in the Reserves until 2008. In June 2013, the VA Regional Office (RO) notified the Veteran that it had received information showing the Veteran received full military retired pay and full VA compensation at the same time. The letter proposed to reduce the Veteran's compensation benefits to recoup the improperly paid amount. The RO did not take action to assess the overpayment debt created until August 2015, after which, in September 2015, the VA Debt Management Center (DMC) notified the Veteran of a $14,200.00 debt against her. The Veteran filed statements in September 2015 and December 2015 indicating her lack of understanding as to why this debt was being assessed against her and suggesting this debt was improperly created. In December 2015, the Veteran also submitted a Financial Status Report (FSR) to request a waiver of the debt. The VA Committee on Waivers and Compromises (COWC) denied the Veteran's request for waiver in January 2018. The RO formally adjudicated the matter as to the validity of the debt in May 2021. The appeal of both matters is presently before the Board. Initially, with regard to the validity of the debt at issue, any veteran entitled to receive retirement pay based on military service may not receive such payment concurrently with VA compensation benefits. 38 U.S.C. §§ 5304, 5305; 38 C.F.R. § 3.750. A veteran may receive VA compensation upon filing a waiver of so much of his or her retirement pay as is equal in amount to the compensation to which he or she is entitled. Id. When a veteran is in receipt of military retirement pay, awards of compensation to the veteran are effective from the "[d]ate of entitlement if [an election is] timely filed. Subject to prior payments of retirement pay." 38 C.F.R. § 3.401(e)(1). In this case, DFAS notified the RO in June 2013 that the Veteran was receiving temporary military disability pay and VA compensation simultaneously. At this time, DFAS notified the RO that the Veteran's gross retired pay effective April 1, 2008 was $1,747.00 per month; effective December 1, 2008 was $1,834.00 per month; effective December 1, 2011 was $1,900.00 per month; and effective December 1, 2012 was $1,932.00 per month. The record shows the Veteran was in receipt of a 70 percent disability rating in VA compensation effective February 21, 2008, and was awarded a total disability rating based upon individual unemployability effective September 5, 2012. In June 2013, the RO sent the Veteran a letter notifying her that the information had been received showing she was in receipt of military retired pay of $1,747.00 per month from April 1, 2008 and $1,834.00 from December 1, 2008 due to her transfer to the Temporary Disability Retired List from a Reserve status. The letter also informed her that the records show she was in receipt of military retired pay and VA disability compensation from April 1, 2008 to April 1, 2009, at which time her military retirement pay was adjusted by DFAS. The letter proposed to reduce the Veteran's VA compensation pay for a period of time to recoup the overpayment of VA compensation benefits for the time period in question. It does not appear that the Veteran responded to this letter or that the RO took action. A January 2015 Deferred Rating Decision shows the RO indicating the June 28, 2013 letter had been sent and no response was received. Instruction was given at that time to take the appropriate action. Subsequent VA internal documents show the calculation of a $14,200 debt that had been created as a result of the withholding of the amount of retired pay for the April 1, 2008 to April 1, 2009 period of time. In September 2015, the VA DMC notified the Veteran of the $14,200 debt. The Veteran questioned the validity of this debt as she felt she was not informed as to how it was created. She reported in September 2015 that she had called VA and was told it was an education debt. The Veteran also indicted at the time of an October 2016 RO hearing that she was informed that this debt was, at least in part, related to a housing allowance. She indicated several other times that she called the VA main phone number and VA representatives were able to see that she had a debt on record, but could not tell her how the debt had been created. The Board recognizes and finds it understandable that the Veteran was confused as to the origination of this debt. However, the May 2021 supplemental statement of the case (SSOC), which included the formal adjudication of the validity of the debt, clearly explained that the $14,200 debt was created after the RO took the action described in its June 2013 letter. Thus, this debt represents the amount being collected to recoup the VA compensation paid from April 1, 2008 to April 1, 2009, at the same time the Veteran was receiving military retirement pay. Because, as noted above, any veteran entitled to receive retirement pay based on military service may not receive such payment concurrently with VA compensation benefits, the Board finds the debt in this case was validly created. 38 U.S.C. §§ 5304, 5305; 38 C.F.R. § 3.750. Moving to the question of whether a waiver of this overpayment is warranted, the law provides that there shall be no recovery of overpayments of any benefits under any of the laws administered by the Secretary of VA, whenever it is determined that recovery would be against equity and good conscience, if application for relief is made within 180 days of notification. 38 U.S.C. § 5302(a). The standard "equity and good conscience" will be applied when the facts and circumstances in a 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: fault of the debtor, balancing of faults, undue hardship, defeat of the purpose of the benefit, unjust enrichment, and changing position to one's detriment in reliance upon the benefit. If there is any indication of fraud, misrepresentation, or bad faith, waiver of a debt is precluded. 38 C.F.R. § 1.965. The COWC concluded in the January 2018 decision on appeal that the facts in this case do not show that the mandatory bars to waiver apply in the present case, and the Board agrees. There is no indication that the Veteran attempted to defraud VA by misrepresenting any relevant facts with respect to her benefits. There is no evidence that she notified VA of the receipt of duplicative retirement and VA compensation benefits, but there is also no evidence that she knew of these duplicate payments. Further, there is no evidence she attempted to defraud the government or mislead the government at any time. Thus, the Board agrees that the mandatory bars to waiver are not present in this case. However, after reviewing the record, the Board finds it would not offend the principles of equity and good conscience to require the Veteran to repay the VA disability compensation debt owed. In assessing whether collection of the debt would be against equity and good conscience, the Board does not find that the Veteran is at fault in the creation of this debt. She was notified in June 2013, and in August 2015, that she had been paid duplicate payments and the amounts paid to her beginning in April 2008 were noted in both letters. Further, both letters indicated correction must be made. The June 2013 letter proposed the correction, and the August 2015 letter indicated the proposed action was being taken. The September 2015 DMC notification of the debt came after the August 2015 action on the part of the RO occurred. However, this debt related to an overpayment created between April 2008 and April 2009. There is no indication the Veteran knew that any of the monies she received were erroneously paid. She was not at fault in the creation of this debt. In an effort to balance the faults, the Board has further considered whether VA was at fault. VA was not informed of the duplicate benefits until DFAS informed the RO in June 2013. Following the receipt of the information, the RO acted promptly in June 2013 to notify the Veteran that she could not receive duplicate military retirement and VA compensation benefits. There was indeed some delay between the June 2013 notice and the August 2015 action, and further delay between the action and the detailed explanation to the Veteran of how this debt was created; however, the Board recognizes VA was not at fault as to the delay between the 2008/2009 overpayment and the RO's action, because VA had no reason to know of the overpayment until June 2013. The Board, therefore, finds VA was not at fault in the creation of this debt. 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). While the Veteran has suggested that repaying the debt would cause a hardship, she has not suggested it would deprive her or her family of basic necessities. Moreover, she submitted a FSR in December 2015, and again in January 2017. Both forms show her monthly income to be in excess of her expenses, even with consideration of the monthly payment she arranged to repay the debt at issue. The Board also recognizes the Veteran's September 2020 report that she has been furloughed since August 2020. The Veteran explained that the furlough agreement was between her and her employer to work nine months out of the year and be furloughed three months out of the year. The monthly gross salary reported at that time was significantly higher than that reported in the January 2017 FSR. Moreover, the January 2017 FSR also shows she receives retirement income from the Office of Personnel Management (OPM) and her VA compensation benefits, minus the $276.00 per month she is paying toward her debt. Thus, even during the three months of furlough she reported in 2020, the Veteran is receiving income. The evidence does not show that the collection of the indebtedness would deprive her or her family of basic necessities. Undue hardship, therefore, is not shown. The Board has also considered whether recovery of the overpayment of the debt at issue would defeat the purpose for which the benefit was intended. In this case, the purpose would not be defeated. The debt represents prohibited duplicate payments of military retirement and VA disability compensation. As these duplicate benefits were prohibited, there can be no finding that recovery of the overpayment would defeat the purpose for which the benefit was intended. Additionally, the Board finds that failure to make restitution for the full amount of the debt would result in unfair gain to the Veteran. Money to which she was not entitled was paid on her behalf. Finally, the Veteran has not contended with any specificity, nor does the evidence show, that she relinquished a valuable right or incurred a legal obligation in reliance on the benefits received. Based upon the forgoing, and after weighing the elements pertaining to the principles of equity and good conscience as set forth by 38 C.F.R. § 1.965(a), the Board finds that recovery of the overpayment does not violate the principles of equity and good conscience. Accordingly, the Board finds that waiver of recovery of the overpayment of VA disability compensation benefits in the amount of $14,200.00 related to her duplicate payment of military retirement pay and VA disability compensation between April 2008 and April 2009 is not warranted. MICHAEL E. KILCOYNE Veterans Law Judge Board of Veterans' Appeals Attorney for the Board A. Adamson, 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.