Citation Nr: 21070498 Decision Date: 11/24/21 Archive Date: 11/24/21 DOCKET NO. 19-29 173 DATE: November 24, 2021 REMANDED Entitlement to waiver of recovery of an overpayment of Department of Veterans Affairs (VA) compensation benefits in the amount of $122,275.60, to include the question of whether the overpayment was properly created is remanded. REASONS FOR REMAND The Veteran had active service from September 2008 to February 2011. This matter comes before the Board of Veterans' Appeals (Board) on appeal from an October 2018 decision by the Committee on Waivers and Compromises (Committee) of the Department of Veterans Affairs (VA) Regional Office (RO). Entitlement to waiver of recovery of an overpayment of Department of Veterans Affairs (VA) compensation benefits in the amount of $122,275.60, to include the question of whether the overpayment was properly created is remanded. In this case, the Veteran has challenged the proper creation of the debt. As such further appellate review by the Board of Veterans' Appeals (Board) on the Veteran's waiver claim must be deferred pending formal adjudication of his challenge to the validity of the debt. Schaper v. Derwinski, 1 Vet. App. 430, 437 (1991) ("when a Veteran raises the validity of the debt as part of a waiver application... it is arbitrary and capricious and an abuse of discretion to adjudicate the waiver application without first deciding a veteran's challenge to the lawfulness of the debt asserted against him or her"); VAOPGCPREC 6-98 (July 24, 1998) (holding that when a veteran challenges the validity of the debt and seeks waiver of the debt, the [Regional Office] must first fully review the debt's validity and, if the office believes the debt to be valid, prepare a written decision fully justifying the validity of the debt before referring the waiver request to the Committee on Waivers and Compromises). A debtor may dispute the amount or existence of a debt, which is a right that may be exercised separately from a request for waiver or at the same time. 38 C.F.R. § 1.911 (c)(1). Resolution of the creation issue must precede consideration of the waiver issue. In that consideration of the propriety of the creation, for a determination that the overpayment was not properly created such that the debt was not valid, it must be established that the Appellant was either legally entitled to the benefits in question or, if the Appellant was not legally entitled, then it must be shown that VA was solely responsible for the Appellant being erroneously paid benefits. Administrative errors include all administrative decisions of entitlement, whether based upon mistake of fact, misunderstanding of controlling regulations or instructions, or misapplication of law. VAOPGCPREC 2-90 (July 17, 1989); 55 Fed. Reg. 27757 (1990). Sole administrative error connotes that the Appellant neither had knowledge of nor should have been aware of the erroneous award. Further, neither the Appellant's actions nor his or her failure to act must have contributed to payment pursuant to the erroneous award. 38 U.S.C. § 5112 (b)(9), (10); 38 C.F.R. § 3.500 (b)(2); Jordan v. Brown, 10 Vet. App. 171 (1997) (sole administrative error is not present if the payee knew, or should have known, that the payments were erroneous). Thus, a finding of sole administrative error requires not only error on the part of VA, but that the beneficiary is unaware that the payments are erroneous. The United States Court of Appeals for Veterans Claims ("the Court") noted that, "[s]tated another way, when an overpayment has been made by reason of an erroneous award based solely on administrative error, the reduction of that award cannot be made retroactive to form an overpayment debt owed to VA from the recipient of the erroneous award." Erickson v. West, 13 Vet. App. 495, 499 (2000). Here, the Veteran's debt arose when his benefits were stopped due to information indicating he was the subject of a felony arrest warrant, and thus a fugitive felon. By way of background, the Veteran was first notified that the overpayment at issue had been created in a March 2018 letter from the RO. An August 2018 letter from the Debt Management Center (DMC) informed him that his overpayment was in the amount of $122,275.60. He filed a notice of disagreement several days later, in August 2018, stating there was no warrant for him and it had been quashed. An August 2018 Report of General Information from a telephone call indicated the Veteran was informed that an eligible beneficiary adjustment created a net payment of $103,639.56. The form stated that ordinarily when a debt exists, all payments go to service the debt, but here, the Veteran would receive a $47,835.94 payment. The Veteran was "contacted and the situation explained that he would be receiving a large payment." See August 2018 VA Form 27-0820 Report of General Information. In an August 2018 decision, the Committee on Waivers and Compromises (Committee) denied the Veteran's request for a waiver of overpayment. In a January 2019 letter, the RO notified the Veteran that based on information that the felony warrant had been quashed, VA resumed the Veteran's full benefits from August 18, 2015. The award action resuming the benefits was in the amount of $103,639.56 and was intended to be applied to his overpayment balance. The letter stated that instead, only $55,803.62 was applied to the debt and the remaining $47,835.94 had been erroneously issued to the Veteran, resulting in a remaining balance of $63,954.98. In a March 2019 statement, the Veteran reported that a VA employee told him the retroactive payment was a "clear and unmistakable error;" however, the Veteran asserted that he had contacted VA on multiple occasions and had been told the payment was valid. The Veteran submitted a February 2019 Court Order that the warrant should never have been filed, and vacating the Petition to Revoke Probation. In April 2019, the RO sent a new letter stating that due to the Order vacatingas opposed to quashingthe warrant, the Veteran's benefits would be resumed for the entire period they had been terminated, so from December 23, 2014 until August 18, 2015. The letter stated this action resulted in a reduction of the overpayment in the amount of $18,636.04, and that the Veteran still had an overpayment of $43,668.94. It stated the amount started at $47,835.94 based on "a payment [he] should not have received." See April 2019 notification letter. The July 2019 statement of the case (SOC) by the RO stated the decision to deny the waiver request for $122,275.60 was affirmed, and that subsequent award actions reduced the debt to $47,835.94. The Veteran contends that the overpayment is the result of sole administrative error, as the fugitive felon warrant was issued in error. He appears to believe the overpayment is still in the amount of $122,275.60. However, the source of the remaining debt in the amount of $47,835.94 is unclear, to include whether it was properly created and related to the erroneous arrest warrant. Therefore, the source and amount of debt should be verified, and the Veteran should have the opportunity to submit a new Financial Status Report form and provide any additional information and argument in support of his request for a waiver, specifically regarding the equity and good conscience factors. The matter is REMANDED for the following action: 1. If necessary, conduct an audit to determine the proper overpayment amount. Once verified, inform the Veteran of the amount. 2. Then ask the Veteran to submit an updated Financial Status Report and any other information regarding the equity and good conscience factors. 3. After completing the above and conducting any other development deemed appropriate, readjudicate the claim(s)(1) Determining the validity of the debt; (2) if the debt is found to be valid, determining whether recovery of overpayment is warranted, applying the "equity and good conscience" standard. Please specifically discuss the VA Form 27-0820 Report of General Information from August 2018 when addressing the validity of the debt. 4. If any claim remains denied, send the Veteran and his representative a Supplemental Statement of the Case and provide an opportunity to respond. If necessary, return the case to the Board for further appellate review. 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.