Citation Nr: A21016875 Decision Date: 10/18/21 Archive Date: 10/18/21 DOCKET NO. 200514-92542 DATE: October 18, 2021 ORDER Entitlement to waiver of recovery of an overpayment of the Department of Veterans Affairs (VA) compensation benefits in the amount of $6,995.49 is denied. FINDINGS OF FACT 1. In a December 2004 Notification Letter, VA informed the Veteran that he was awarded additional benefits for his spouse, L.M. 2. On December 26, 2012, the Veteran reported his divorce from L.M. in June 2008. 3. On January 30, 2020, VA notified the Veteran that L.M. was removed from his benefits award effective July 1, 2008 due to his divorce on June 9, 2008. The VA actions created an overpayment in the amount of $13,995.49. 4. On February 14, 2020, the Veteran reported his marriage to D.M. on May 2, 2013 and his divorce from D.M. on January 7, 2020. 5. In June 2020, the COWC granted a partial waiver of the overpayment debt in the amount of $7,000 due to the delay by VA in processing the Veteran's report of his divorce from L.M. 6. Both VA and the Veteran bear fault in the creation of the debt. 7. The Veteran did not commit fraud, misrepresentation, or bad faith in the creation of the debt. 8. Recovery of the overpayment would not subject the Veteran to undue hardship, nor would it be against equity and good conscience. CONCLUSION OF LAW The criteria for entitlement to waiver of recovery of an overpayment of the Department of Veterans Affairs (VA) compensation benefits in the amount of $6,995.49 have not been met. 38 U.S.C. § 5302 (a); 38 C.F.R. §§ 1.963 (a), 1.965, 3.401, 3.501. REASONS AND BASES FOR FINDINGS AND CONCLUSION The Veteran served on active duty from May 1971 to May 1991. In the May 2020 VA Form 10182, Decision Review Request: Board Appeal, the Veteran elected the Direct Review docket. Therefore, the Board may only consider the evidence of record at the time of the agency of original jurisdiction (AOJ) decision on appeal. 38 C.F.R. § 20.301. Overpayment A Veteran has the right to dispute the existence and amount of the debt. 38 C.F.R. § 1.911 (c). In determining whether a waiver of overpayment is appropriate, the inquiry is focused on three distinct questions. First, VA must determine if the overpayment at issue was validly created. See Schaper v. Derwinski, 1 Vet. App. 430, 434-35 (1991) (noting that before adjudicating a waiver application, the lawfulness of the overpayment must first be decided). The term "overpayment" refers only to those benefit payments made to a designated living payee or beneficiary in excess of the amount due or to which such payee or beneficiary is entitled. See 38 U.S.C. § 5302; 38 C.F.R. § 1.962. Second, if the debt is valid, VA must determine if fraud, misrepresentation, or bad faith played a role in its creation. If it did, waiver of the overpayment is automatically precluded, and further analysis is not warranted. See 38 U.S.C. § 5302 (a); 38 C.F.R. §§ 1.963 (a), 1.965(b); see also Ridings v. Brown, 6 Vet. App. 544 (1994) (holding that the Board must independently address the matter of bad faith before addressing whether waiver would be appropriate). Finally, if VA determines that the debt is valid, and that fraud, misrepresentation, and/or bad faith had no part in its creation, VA must then consider whether collection of the debt would be against equity and good conscience. See 38 U.S.C. § 5302 (b); 38 C.F.R. §§ 1.962, 1.963, 1.965. Analysis The Veteran is seeking a waiver of a debt in the amount of $6,995.49. In December 2004, the Department of Veterans Affairs (VA) notified the Veteran that he was being paid an additional amount for his spouse, LM. VA instructed the Veteran to promptly notify VA of, among other things, any change in the status of his dependents. On December 26, 2012, the Veteran submitted Form VA 21-0538, Mandatory Status of Dependents. The Veteran reported his divorce from L.M. in June 2008 and stated that he had submitted a copy of his divorce decree in June 2008. On January 30, 2020, VA notified the Veteran that L.M. was removed from his benefits award effective July 1, 2008 due to his divorce on June 9, 2008. The VA actions created an overpayment in the amount of $13,995.49. In a February 2020 phone call, the Veteran reported his divorce from D.M. on January 1, 2020 and requested that she be removed from his award. Subsequently, on February 14, 2020, the Veteran submitted Form VA 21-686c, in which he reported his marriage to D.M. on May 2, 2013 and his divorce from D.M. on January 7, 2020. The Veteran also submitted a copy of his divorce decree from D.M. In March 2020, the Veteran requested a waiver of the debt. In April 2020, the Committee on Waivers and Compromises (COWC) of the VA Regional Office (RO) issued a decision denying the waiver. The Veteran appealed the waiver decision in a May 2020 10182. In June 2020, the COWC granted a partial waiver in the amount of $7,000 due to the delay by VA in processing the Veteran's report of his divorce from L.M. Based on the evidence of record, the Board finds that the creation of the debt is valid. Under 38 U.S.C. § 5112 (b)(2), the effective date of reduction or discontinuance of compensation by reason of divorce of a dependent of a payee shall be the last day of the month in which such divorce occurs. See 38 C.F.R. § 3.501 (d)(2). An effective date of the award of any benefit or any increase therein by reason of marriage shall be the date of such event if proof of such event is received by the Secretary within one year from the date of the marriage, birth, or adoption. 38 U.S.C. § 5110 (n); 38 C.F.R. § 3.401 (b). Otherwise, the effective date is the date notice is received of the dependent's existence, if evidence is received within one year of the Department of Veterans Affairs request. 38 C.F.R. § 3.401 (b). The payment of monetary benefits based on an award or an increased award of compensation, dependency and indemnity compensation, or pension, may not be made to an individual for any period before the first day of the calendar month following the month in which the award or increased award became effective. The term "award or increased award" means an original or reopened award or an award that is increased because of an added dependent, increase in disability or disability rating, or reduction in income. 38 U.S.C. § 5111 (a), (d). In December 2012, the Veteran informed VA of his June 2008 divorce from L.M. Therefore, from June 2008, the Veteran was not legally entitled to additional benefits based on L.M. being a dependent spouse. Further, the Veteran first notified VA of his marriage to D.M. in February 2020, after the date of his divorce. Thus, D.M. was no longer a spousal dependent at the time the Veteran responded to VA in February 2020. There is no basis in law to allow for a retroactive payment in the absence of a claim for additional compensation at a time when the Veteran had spousal dependents. See Rodriguez v. West, 189 F.3d 1351 (Fed. Cir. 1999). Based on the evidence of record, the Board finds that the creation of the debt is valid. In December 2012, the Veteran informed VA of his June 2008 divorce from L.M. Although the Veteran remarried in May 2013, he did not inform VA of his marriage to D.M. until after the date of his divorce. Therefore, from June 2008, the Veteran was not legally entitled to additional benefits based on either L.M. or D.M. being a dependent spouse. Additionally, the evidence shows that VA's overpayment in the amount of $13,995.49 was not the result of sole VA administrative error. Sole administrative error entails no knowledge or fault on the part of the debtor. See Jordan, 10 Vet. App. 171. From December 2004, the Veteran began receiving Notification Letters stating that he was receiving additional benefits on account of his dependent spouse, L.M., and that it was his responsibility to promptly report any change in the status of his dependents to VA. Although the Veteran asserts that he informed VA of his divorce from L.M. in June 2008, the evidentiary record shows that he first informed VA of his June 2008 divorce from L.M. in December 2012. There was no reduction in the Veteran's benefits after June 2008. As such, the Veteran should have known that he was not entitled to additional benefits for a dependent spouse. While the Board recognizes that VA did not process the Veteran's December 2012 report until January 2020, the Court of Appeals for Veteran's Claims has found that claim processing delays are not administrative errors. See Dent v. McDonald, 27 Vet. App. 362 (2015). The Veteran continued to be paid at the same rate after he reported his divorce from L.M. in December 2012. While the Veteran remarried in May 2013, he did not report his marriage to D.M. until February 2020, after his divorce. The Veteran had knowledge that he was erroneously receiving benefits for L.M. because there was no decrease in his benefits after he reported his divorce from her, and VA continued to send notification letters identifying L.M. as his spouse. Therefore, based on the evidence of record, the Board finds that the Veteran knew that his compensation award should have been adjusted based on a change in dependent status in 2008. Because the Veteran had knowledge of the erroneous award, the creation of the overpayment was not a result of sole VA administrative error. 38 U.S.C. § 5112 (b)(9), (10); 38 C.F.R. § 3.500 (b)(2); Jordan, supra. Accordingly, the Board finds the creation of the overpayment was valid. Waiver Recovery of overpayments of any benefits made under the laws administered by VA 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 if the 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. §§ 1.962, 1.963(a), 1.965. The COWC did not find fraud, misrepresentation, or bad faith on the Veteran's part. The Board agrees with this determination. See 38 C.F.R. § 1.963 (a) (providing in cases where there is no fraud, misrepresentation, or bad faith on the Veteran's part with respect to the creation of the overpayment at issue, waiver is not precluded pursuant to 38 U.S.C. § 5302 (a)). The next question is whether the facts dictate that a waiver should be granted under the standard of "equity and good conscience." The phrase "equity and good conscience" means the arrival 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) fault of the debtor, (2) balancing of faults between the debtor and VA, (3) undue hardship of collection on the debtor, (4) defeat of the purpose of an existing benefit to the appellant, (5) unjust enrichment of the appellant, and (6) whether the appellant 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). After reviewing all the evidence of record, the Board finds that recovery of the overpayment would not violate principles of equity and good conscience. The first and second elements pertain to the fault of the debtor versus the fault of VA. The Veteran and VA are both at fault in the creation of the debt. The Veteran did not inform VA of his divorce from L.M. until December 2012, more than four years after the date of the divorce. Further, the Veteran did not inform VA of his remarriage to D.M. until February 2020, after his divorce from her. Although the Veteran should have known that VA had not processed his notification of his divorce from L.M. as there was no reduction in his benefits and VA continued to send him notifications showing L.M. as his spouse, he made no effort to return the funds he received in error. However, even after VA received notice of the Veteran's June 2008 divorce from L.M. in December 2012, this notification was not processed until January 2020, more than eight years later. As such, VA is also at fault in the creation of the debt. As noted above, VA granted a partial waiver of the Veteran's debt due to this excessive delay. With respect to the third element, the Board finds that collection of the debt would not cause undue hardship. In his March 2020 Financial Status Report, the Veteran indicated that his household monthly income exceeded his basic expenses for housing, food, and utilities by more than $2,800 per month. While the Veteran asserts that he has incurred significant legal expenses related to his divorce and reports consumer debt from various sources, the current valid debt to the U.S. Government should be accorded the same consideration as other creditors. Based on his Financial Status Report, the Board finds that collection of the debt would not deprive the Veteran of basic necessities. The fourth and fifth factors consider whether recovery of the overpayment would defeat the purpose for which the benefits were intended and whether the Veteran would be unjustly enriched if a waiver was granted. The Board finds that the recovery of the debt would not defeat the underlying objective of the benefit, i.e., paying the additional compensation benefits to support a spouse, as the purpose of paying additional compensation was nullified by the Veteran's divorce from L.M. Thus, the collection of the debt would not defeat the purpose for which the benefits were intended. Additionally, the waiver of recovery of the overpayment would constitute an unjust enrichment to the Veteran because he would be allowed to retain funds to which he was not legally entitled. Again, while the Board acknowledges that the Veteran was married for part of the debt period, the COWC has previously granted a partial waiver. The sixth factor to be considered is whether reliance on VA benefits resulted in relinquishing a valuable right or incurring a legal obligation. The Veteran has not claimed that he relinquished any right or incurred any legal obligation, relied upon VA to his detriment, nor is there any evidence of such. Thus, this sixth factor does not support the Veteran's request for a waiver of overpayment. The Board's inquiry is not necessarily limited to the six factors discussed above. However, nothing in the record suggests any other reason for waiver of the charged overpayment. Therefore, the Board finds that the balance of equity and good conscience does not require waiver of the debt. The Veteran's claim for waiver is denied. TANYA SMITH Veterans Law Judge Board of Veterans' Appeals Attorney for the Board T. Bynum, 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.