Citation Nr: A21017771 Decision Date: 11/03/21 Archive Date: 11/03/21 DOCKET NO. 200520-86503 DATE: November 3, 2021 REMANDED 1. Challenge to the validity of the amounts of Department of Veterans Affairs (VA) disability compensation benefits disbursed as to the period running from June 2019 to May 2020, inclusive, and appearing to reflect Debt Management Center's (DMC) incremental withholdings for the purposes of recoupment of an unspecified overpayment in the amount of $2,240.45, is remanded. 2. Challenge to the propriety of the creation of an overpayment in the amount of $1,494.35, which could not be ruled out to present an overpayment distinct and different from the overpayment in the amount of $2,240.45, is remanded. REASONS FOR REMAND The Veteran had active duty from May 1974 to January 1977. These matters are before the Board of Veterans' Appeals (Board) on his appeal from a May 2019 demand letter issued by the Department of Veterans Affairs (VA) agency of original jurisdiction (AOJ) which, here, appears to be the Debt Management Center (DMC) that acted either jointly with or independently of a VA Regional Office (RO). In February 2019, the RO issued a rating decision awarding the Veteran an earlier effective date for his total disability based on individual unemployability rating (TDIU). In May 2019, the RO generated an award notification printout showing that the amount of the Veteran's past-due benefits ensuing from his February 2019 award was $46,476.63. Two days after the RO generated the aforesaid May 2019 award print, the RO issued the Veteran a notification letter indicating how the past-due amount was calculated. Two weeks after the RO issued its May 2019 notification letter, DMC issued the Veteran a demand letter stating that: (a) his entitlement to VA benefits had changed, which was correct since the Veteran's entitlement was positively affected by the RO's May 2019 rating decision; but (b) the Veteran was charged with an overpayment in the amount of $1,494.37, which was puzzling since the RO's May 2019 notification letter was silent as to any overpayment. In May 2020, one year after DMC's issuance of its May 2019 demand letter, the Veteran filed a VA Form 10182 Notice of Disagreement (NOD) asserting a "Nullification Determination of Indebtedness" as the issue on appeal. Since the Veteran's NOD contained a reference to the date of the DMC's demand letter, the Board surmises that the NOD was meant to challenge the propriety of the creation of the $1,494.37 overpayment and the validity of its amount. In June 2020, the Veteran filed a correspondence (docketed under the hearing "Third Party Correspondence") operating as his Appellant's Brief. The Veteran noted that, as to the period from June 2019 to May 2020, inclusive, i.e., immediately after the issuance of DMC's May 2019 demand letter, he was systemically underpaid either $369.98 or $260.53 or $244.98 or $125 per month, and the combined amount of such underpayments was $2,240.45. The Veteran, thus, expressed his understandable bewilderment with the difference between the $2,240.45 amount that had been withheld and the $1,494.37 amount stated in the DMC's May 2019 demand letter. Further, the Veteran noted his uncertainty as to whether the $2,240.45 amount withheld represented an incorrect withholding based on the May 2019 demand letter or a withholding distinct and different from the $1,494.37 overpayment reflected in DMC's demand letter. In addition, the Veteran indicated that prior to his receipt of the May 2019 demand letter he was not provided with due process allowing him to address the overpayment charges. Simply put, the Veteran's Appellant's Brief indicated that the Veteran's VA benefits were subjected to DMC's withholdings for reasons that were never disclosed to the Veteran in any form or fashion. In terms of procedural due process, VA is required to provide a beneficiary who, in VA's opinion, has been overpaid, with a notice: (a) stating the actions that VA is proposing, i.e., to create an overpayment debt that would be charged to the beneficiary, and explaining the factual predicate and legal authority for such a charge in a manner sufficient for the beneficiary to intelligently respond to the proposal; and (b) availing the beneficiary to a period of time to respond. After the beneficiary's time to respond expires, VA is obligated to notify him/her of its final action on the aforesaid proposal. Typically, an RO issues a proposal notice and a final action notice. In addition, VA is obligated to inform the beneficiary about the amount of his/her overpayment debt based on the factual predicate and the governing legal authority implicated by the RO's final action notice. Typically, DMC issues a demand letter stating such an amount; however, an RO could also issue such a notice. That said, DMC's demand letter (or the debt amount notice issued by the RO) must also include a notice of the beneficiary's right to seek a waiver of his/her overpayment debt, and the information about the period of limitations governing waiver claims. Here, the record suggests that DMC's May 2019 demand letter was issued without the RO issuing the Veteran a required proposal notice or a final action notice. Therefore, the Veteran or the Board is not in a position to determine or even speculate about the factual predicate and governing legal authority underlying the RO's proposal to charge the Veteran with an overpayment which, in turn, was underlying DMC's May 2019 demand letter. Accordingly, the Veteran was denied his due process rights, to include an opportunity to intelligently respond to such a proposal. Moreover, since the Veteran was not issued a final action notice, he was not in a position to raise a waiver claim fully: since one of the elements of the waiver analysis is the determination of the balance of fault in the creation of an overpayment at issue, but the Veteran could not intelligently argue that he was not at fault for the creation of the overpayment since the Veteran was never notified of what he was faulted for. Simply put, the record currently accrued indicates that the Veteran's vested VA compensation benefits became subject to a recoupment commenced in violation of the Veteran's due process rights. Therefore, while the Board regrets additional delay, these matters are remanded for further actions and development. The matters are REMANDED for the following action: 1. Conduct a paid and due audit of the Veteran's account to verify that the amount of his VA compensation benefits withheld since May 31, 2019, corresponds to the $2,240.45 amount stated in the Appellant's Brief. 2. Simultaneously with the foregoing, issue the Veteran an Appeal Notification Letter detailing the bases, if any, for withholdings of his VA compensation benefits that were executed since May 31, 2019. At a minimum, the Appeal Notification Letter shall detail whether and when the Veteran was issued a proposal notice and a final action notice related to such withholdings. In the event a proposal notice and final action notice related to such withholdings were in fact issued but not associated with the Veteran's electronic claims file, copies of such a proposal notice and final action notice should be provided to the Veteran jointly with the Appeal Notification Letter and associated with his electronic claims file. In addition, the Appeal Notification Letter shall provide a clarification as to the bases, if any, to believe that the Veteran was actually in receipt of such a proposal notice and final action notice. 3. In the event it is determined that no proposal notice and/or final action notice related to such withholdings were issued to the Veteran, remit the $2,240.45 amount to the Veteran upon qualifying it as the amount withheld without a factual basis or as the amount withheld prematurely and without availing the Veteran to his due process rights. In the event it is determined that the $2,240.45 amount was withheld prematurely and without availing the Veteran to his due process rights but not without a factual basis, and an overpayment subject to recoupment should have been created, provide the Veteran with due process by: (a) issuing him a proposal notice stating the underlying factual predicate and governing legal authority; (b) providing him with an opportunity to reply; (c) issuing him a final action notice; and (d) issuing him a notice as to the amount of the Veteran's overpayment, as well as his rights and period of limitations to seek a waiver of his overpayment. 4. In the event it is determined that the $2,240.45 amount withheld from the Veteran is related to an overpayment ensuing from a factual predicate distinct and different from the overpayment in the amount of $1,494.37 reflected in DMC's May 2019 demand letter, issue the Veteran a follow-up Appeal Notification Letter clarifying the difference in factual predicates underlying the creation of the $2,240.45 overpayment and the $1,494.37 overpayment. 5. In addition, in the event it is determined that the $2,240.45 amount withheld from the Veteran is related to an overpayment ensuing from a factual predicate distinct and different from the overpayment in the amount of $1,494.37, halt any and all recoupment measures related to the overpayment in the amount of $1,494.37 until after the Veteran is availed to due process related to recoupment of such an overpayment, i.e., to: (a) a proposal notice stating the underlying factual predicate and legal authority; (b) an opportunity to reply; (c) a final action notice; and (d) a notice as to his rights and period of limitations to seek a waiver of this overpayment debt. 6. Notify the Veteran that, in the event his claims are not granted in full upon remand, his claims would not be automatically returned to the Board, and the Veteran's additional actions would be required if he desires further review by the Board. Cynthia M. Bruce Veterans Law Judge Board of Veterans' Appeals Attorney for the Board Anna Kapellan, 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.