Citation Nr: 21066103 Decision Date: 10/28/21 Archive Date: 10/28/21 DOCKET NO. 10-10 535 DATE: October 28, 2021 ORDER Entitlement to waiver of recovery of an overpayment of Department of Veterans Affairs (VA) compensation benefits in the amount of $5,471.67 is denied. FINDINGS OF FACT 1. The Veteran was incarcerated due to a felony in April 2006. 2. VA retroactively reduced the Veteran's compensation benefits which were being paid at the 50 percent rate to the 10 percent rate effective June 27, 2006; this action resulted in an overpayment in the amount of $5,471.67. 3. The overpayment was not due to the Veteran's fraud, misrepresentation, or bad faith. 4. Recovery of the debt in the amount of $5,471.67 is not against equity and good conscience. CONCLUSION OF LAW Recovery of the overpayment of VA compensation benefits in the amount of $5,471.67 would not be contrary to the principles of equity and good conscience. 38 U.S.C. § 5302; 38 C.F.R. §§ 1.963(a), 1.965. REASONS AND BASES FOR FINDINGS AND CONCLUSION The Veteran had active service from March 1967 to March 1977. The Veteran's service awards include the Combat Infantryman Badge and Purple Heart. This matter comes before the Board of Veterans' Appeals (Board) on appeal from a February 2009 decision by the Committee on Waivers and Compromises (Committee) of the Department of Veterans Affairs (VA) Regional Office (RO). On substantive appeal in February 2010, the Veteran requested to appear at a hearing before the Board. In March 2010 the Veteran's case was transferred to the Board. The Veteran and his attorney were informed of such by notice issued that same month. In June 2021, the Veteran with a copy to his attorney received notice of upcoming August 2021 Board hearing. The Veteran did not appear. As such, the Board hearing is considered withdrawn. No additional evidence or argument has been submitted. The case is ready for appellate review. Entitlement to waiver of recovery of an overpayment of Department of Veterans Affairs (VA) compensation benefits in the amount of $5,471.67 The Veteran seeks to waive recovery of the overpayment. He essentially maintains repayment of the debt would create undue hardship and is a meager amount for the government to recoup. 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). A review of the record shows that in April 2006, the Veteran was incarcerated following a felony conviction. In August 2006, information was received by the RO from a penal institution that the Veteran was incarcerated following the conviction of a felony, so the RO advised the Veteran that VA proposed to retroactively reduce his VA benefits based on his incarceration. In accordance with VA law and regulation, in February 2007, the RO notified the Veteran that it retroactively reduced the Veteran's compensation benefits which were being paid at the 50 percent rate to the 10 percent rate effective June 27, 2006; this action resulted in an overpayment in the amount of $5,471.67, as reflected in a March 2007 letter from the Debt Management Center (DMC). In February 2009, the Committee on Waivers and Compromises (Committee) of the RO determined that there was no fraud, misrepresentation, or bad faith on the Veteran's part with respect to the creation of the overpayment at issue, but the Committee further determined that recovery of the overpayment of VA compensation benefits would not be against equity and good conscience. VA law provides that recovery of overpayment of any benefits shall be waived if there is no indication of fraud, misrepresentation, or bad faith on the part of the person or persons having an interest in obtaining the waiver and recovery of the indebtedness from the payee who received such benefits would be against equity and good conscience. 38 U.S.C. § 5302; 38 C.F.R. § 1.963 (a). 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. In making this determination, consideration will be given to the following elements, which are not intended to be all-inclusive: (1) Fault of the debtor. Where actions of the debtor contribute to the creation of the debt. (2) Balancing of faults. Weighing fault of the debtor against VA fault. (3) Undue hardship. Whether collection would deprive debtor or family of basic necessities. (4) Defeat the purpose. Whether withholding of benefits or recovery would nullify the objective for which benefits were intended. (5) Unjust enrichment. Failure to make restitution would result in unfair gain to the debtor. (6) Changing position to one's detriment. Reliance on VA benefits results in relinquishment of a valuable right or incurrence of a legal obligation. See 38 U.S.C. § 5302; 38 C.F.R. § 1.965 (a). In this case, the Committee found, and the Board agrees, that there is no evidence demonstrating that the indebtedness resulted from fraud, misrepresentation, or bad faith on the Veteran's part. Therefore, waiver of indebtedness is not precluded if shown that it would be against the principles of equity and good conscience to require the Veteran to repay the debt to the government. 38 C.F.R. §§ 1.963, 1.965. As to the principles of equity and good conscience, the Board finds that the evidence weighs against the Veteran's claim in this regard. Initially, the record shows the Veteran was at fault in the creation of the debt in failing to report his change of status (being an incarcerated felon) to VA. The record shows that the Veteran has received VA disability compensation benefits since March 1977. While it is unclear whether the Veteran was informed that his benefits would be reduced upon incarceration in a Federal, State, or local penal institution in excess of 60 days for conviction of a felony, the record clearly establishes that he was informed to advise VA of any change of status, e.g., marital, dependency, change of address, etc. In fact, the record reflects that he was advised to inform VA of any change in status on multiple occasions, including in June 1989, August 1991, March 1992, August 1992, and July 1996. After his incarceration, such was not accomplished. Thus, the Board finds that the Veteran is at fault in the creation of the overpayment. VA was not at fault. There is no evidence that the Veteran had informed VA that he had been convicted of a felony and that his current address had changed. The Board also finds that collection of the overpayment would not cause undue hardship to the Veteran or his family. The Veteran receives all of his care from the penal institution. His basic necessities are being met. The Board acknowledges that the Veteran has reported he pays a monthly fee for storing his belongings; however, storage is not a necessity. The Veteran has also indicated that collection of the overpayment amount would create hardship for his mother, in that he would not be able to provide the "modest gestures of support" for her. See March 2007 Veteran's statement. However, the Veteran has not submitted any evidence showing that the basic necessities for any family member would not be met if the indebtedness amount was recouped. The record does not substantiate his contention. As to whether collection of the debt would defeat the purpose of paying the benefits by nullifying the objective for which the benefits were intended, the Board notes that the rating schedule is intended to compensate a claimant for average impairments in earning capacity resulting from service-connected disability in civil occupations. 38 U.S.C. § 1155. Generally, the degrees of disability specified in the rating schedule are considered adequate to compensate for considerable loss of working time from exacerbations or illnesses proportionate to the severity of the several grades of disability. 38 C.F.R. § 4.1. However, due to his incarcerated status, he had no earning capacity at that time. Therefore, the Board finds that collection of the debt would not defeat the purpose of paying the benefits. The Board also similarly finds that there is no indication in the record that reliance on the overpaid benefits resulted in the Veteran's relinquishment of a valuable right or the incurrence of a legal obligation. There was no change in position to his detriment. Additionally, following his incarceration, VA was required to reduce his benefits to the 10 percent rate from the 61st date of incarceration. 38 C.F.R. § 3.665. Thus, the Veteran received VA compensation that he was not lawfully entitled to receive. The receipt of disability compensation at the 50 percent rate when he should have received funds at the 10 percent rate represented monies that he was not entitled to receive and the failure to recoup the overpayment amount would result in unfair enrichment to the Veteran. After weighing all of the enumerated factors, the Board finds that recovery of the overpayment would not be against equity and good conscience. The overpayment amount was solely created by the Veteran's incarceration and failure to inform VA of his incarceration and of his current address; there is no evidence that recovery of the overpayment would deprive the Veteran or his family of basic necessities; and collection would not defeat the purpose of the benefits and would result in unjust enrichment to the Veteran. Further, as the overpayment represents a valid debt to the U.S. Government, there is no reason that the Veteran should not accord the Government the same consideration that he would accord any other creditor. The Veteran incurred no legal obligation and did not relinquish a valuable right in reliance on the benefits. Finally, the Board acknowledges the Veteran's request for the Board to exercise "considerable humanitarian latitude" in its judgment and decision. However, the Board is bound in its decisions by the regulations of the Department, instructions of the Secretary, and the precedent opinions of the chief legal officer of the Department. 38 U.S.C. § 7104(c). In this case, the Board finds that the preponderance of the evidence is against the Veteran's claim for a waiver and the benefit of the doubt doctrine does not apply. (Continued on the next page) The appeal is denied. C. CRAWFORD Veterans Law Judge Board of Veterans' Appeals Attorney for the Board A. Dean, 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.