Citation Nr: 21074585 Decision Date: 12/15/21 Archive Date: 12/15/21 DOCKET NO. 19-11 052 DATE: December 15, 2021 ORDER A partial waiver of recovery of the overpayment of Department of Veterans Affairs (VA) compensation benefits in the amount of $8,548.34 (the total assessed overpayment of $8,646.34 less the spousal benefits from January 2012 of $98.00) is granted. FINDINGS OF FACT 1. The overpayment was not due to the Veteran's (or his fiduciary's) fraud, misrepresentation, or bad faith. 2. Recovery of the overpayment debt in the amount of $8,548.34 (the total assessed overpayment of $8,646.34 less the spousal benefits from January 2012 of $98.00) is against equity and good conscience. 3. The Veteran was married to S.F. from December 1995 to December 2011 and was married to V.T. from February 2012 to June 2018. 4. During the month of January 2012, the Veteran was in receipt of monthly benefits at the 60 percent rate for a Veteran with two dependents ($1,169), but he should have been paid as a Veteran with one dependent child ($1,071). 5. The Veteran was not entitled to spousal benefits during the month of January 2012, and he was paid $98.00 more than he was entitled to receive at that time. CONCLUSION OF LAW Recovery of the overpayment of VA compensation benefits in the amount of $8,548.34 (the total assessed overpayment of $8,646.34 less the spousal benefits from January 2012 of $98.00) would 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 served on active duty from August 1984 to September 2006. In January 2017, the Veteran's then-current spouse, V.T. (also known as V.F.) became his VA-appointed fiduciary. In July 2020, VA was notified that V.T. and the Veteran's divorce terminated as of June 25, 2018, based on July 2020 receipt of a VA Form 21-686c, Declaration of Status of Dependents and a Divorce Decree. This appeal to the Board of Veterans Appeals (Board) arose from a March 2017 notification letter based on mandated review for dependent verification received on September 1, 2016. The letter reflects the removal of the Veteran's former spouse, S.F., as a dependent, effective January 1, 2012 due to divorce on December [REDACTED], 2011, and the addition of the Veteran's then spouse, V.T., as a dependent, effective March 1, 2017 based on receipt of VA Form 21-686c, Declaration of Status of Dependents. In March 2017, the Veteran filed a notice of disagreement (NOD) with the assigned effective date. In January 2019, the RO issued a statement of the case (SOC), and the Veteran filed a VA Form 9, substantive appeal, in March 2019. In July 2020, the Board found that the overpayment debt of VA compensation benefits in the amount of $8,646.34 was properly created but remanded the issue of entitlement to a waiver of recovery of the overpayment debt. In a November 2020 Decision on Waiver of Indebtedness, the Committee on Waivers and Compromises (Committee) denied the Veteran's request for a waiver. In December 2020, the RO issued a supplemental statement of the case (SSOC) indicating that the waiver had been denied. It is now returned to the Board. 1. Entitlement to a waiver of recovery of the overpayment of VA compensation benefits in the amount of $8,646.34 The Veteran asserts that a waiver of recovery of the overpayment of VA compensation benefits is warranted. In the March 2017 NOD and an April 2017 statement, the Veteran stated that he believed the amount of his overpayment was erroneous because his marriage license and divorce decree were submitted in February 2012. He stated that he believed that VA was in receipt of documentation conferring V.T. as his legal spouse because has been listed as his fiduciary and caregiver and he continued receiving the same benefits. He stated that they did not realize that there was a problem until receiving March 2017 notification from VA. He stated that he had no reason to believe that there was an outstanding issue because he had not noticed any interruption in his benefits and was legally remarried at that time, with the exception of 45 days between his divorce and subsequent marriage. He asserted in the March 2017 NOD, that he should not be unjustly burdened or penalized with the "astronomical debt due to no fault of his own." He stated that notification of the lingering debt had become increasingly taxing and was causing undue emotional distress and psychological trauma. He asserted that if the debt was imposed, it would inflict extreme financial hardship on his entire household, as he was unable to work due to his service-connected disabilities. He asserted that the entirety of the debt should be forgiven, minus a period not to exceed 45 days, the time period between his two marriages. An overpayment is created when VA determines that a beneficiary or payee has received benefits to which he or she is not entitled. 38 U.S.C. § 5302; 38 C.F.R. § 1.962. In cases where fraud, misrepresentation, or bad faith on the Veteran's part with respect to the creation of the overpayment at issue has not been demonstrated, and, therefore, waiver is not precluded pursuant to 38 U.S.C. § 5302(a), the Board must determine whether recovery of the indebtedness would be against equity and good conscience, thereby permitting waiver under 38 U.S.C. § 5302(a) and 38 C.F.R. §§ 1.963(a), 1.965(a). In making this determination, consideration is given to the following elements, which are not intended to be all-inclusive: (1) fault of debtor (where actions of the debtors contribute to the creation of the debt); (2) balancing of faults (weighing fault of the debtor vs. the fault of VA); (3) undue hardship (whether collection would deprive the 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); and (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 C.F.R. § 1.965(a). Consideration of equity and good conscience is intended to reach a result that is not unduly favorable or adverse to either the claimant or the Government. It is intended to achieve a result that is fair. 38 C.F.R. § 1.965(a). VA regulations define "bad faith" as unfair or deceptive dealing by one who seeks to gain thereby at another's expense. Thus, a debtor's conduct in connection with a debt arising from participation in a VA benefits/services program exhibits bad faith if such conduct, although not undertaken with actual fraudulent intent, is undertaken with intent to seek an unfair advantage, with knowledge of the likely consequences, and results in a loss to the government. 38 C.F.R. § 1.965(b). Per the July 2020 Board remand directives, the Veteran's request for a waiver of the overpayment was referred to the Committee. In November 2020, they considered the Veteran's claim for a waiver and noted that development was undertaken for a current Financial Status Report (FSR) in August 2020 but that a response had not been received as of the date of their decision. The Committee also noted that the records show that his debt had been fully repaid and that he had been awarded Social Security Administration (SSA) benefits since his original waiver request, to include presumably a large retroactive payment in July 2020. The Committee stated that it would not appear likely that his personal basic living expenses had increased over $2,000.00 per month in the meantime (his SSA rate was established at over $2,000 per month). They stated that given that the debt was recovered mostly through cash deposit repayment around the same time as the SSA benefit award, there is no recent indication that recovery caused undue hardship. The Committee did not find fraud, misrepresentation, or bad faith in this case; however, they determined that V.T. was at fault for the creation of her ward's overpayment given that they failed to disclose his divorce from his prior spouse to his local RO in a timely manner. The Committee stated that they are aware that payment in full had been made to cover this debt, as well as other more recently accrued VA debts. Therefore, the Committee found that financial hardship was not established. The Committee also noted that defeat the purpose and unjust enrichment were not significant in the decision, and that changed position was not found. Resolving all doubt in the Veteran's favor, the Board finds that a partial waiver of the recovery of the total debt amount of $8,646.34 is warranted. Here, there has been no evidence of fraud, misrepresentation, or bad faith. The remaining consideration is whether recovery of the indebtedness would be against equity and good conscience. As noted above, when considering whether recovery of the debt would be against equity and good conscience consideration is given to the following six elements: (1) fault of debtor, (2) balancing of fault, (3) undue hardship, (4) defeat the purpose of the debt, (5) unjust enrichment, and (6) changing position to one's detriment. 38 C.F.R. § 1.965(a). Review of the record shows that there are elements both in favor and against granting a waiver of the validly created overpayment. While the Veteran has credibly asserted that he believed the proper documentation regarding his marriage and divorce had been submitted in a timely manner, the record shows that he failed to timely notify VA of his December 2011 divorce. It was his responsibility to report all changes in dependency as they occurred; in fact, VA informed him of this responsibility multiple times throughout the record. The overpayment began when the Veteran was divorced and continued to receive additional compensation for that spouse because he did not timely advise VA. Thus, as noted in the July 2020 Board decision, the Veteran's debt was validly created due to his failure to notify VA of changes in his dependent status. With respect to whether the Veteran would be subjected to undue hardship if the debt were recovered, the Board notes that undue hardship is based on the consideration of whether the collection would deprive the debtor or family of basic necessities. In the March 2017 FSR, completed by V.T., it shows that the Veteran was unemployed but that his income from VA benefits ($3,534.44) slightly exceeded his total monthly expenses ($3,326.72). Of note, the Board previously directed that the RO request updated financial information from the Veteran. As of the date of this decision, however, the requested documentation has not been received. There is no current evidence of record showing that repayment of this debt would cause or, in fact, did cause undue hardship, as the record shows that the Veteran has repaid this debt. Regarding whether recovery of the overpayment would defeat the purpose for which the benefits were intended, VA awarded benefits at the rate which included an additional spousal dependent. The Veteran divorced from S.F. on December [REDACTED], 2011, and from February [REDACTED], 2012 until June 25, 2018, the Veteran was married to V.T. Thus, aside from the period between December [REDACTED], 2011 and February [REDACTED], 2012, the Veteran was married. Despite the Veteran's failure to timely notify VA of his divorce and remarriage, he was technically eligible to receive the benefits paid to him for a dependent spouse. Thus, to seek collection of this money would indeed defeat the purpose for which the dependent benefits were intended Also for consideration is whether a waiver of overpayment would cause "unjust enrichment" (i.e., whether failure to make restitution would result in unfair gain). Here, for the period of time that he was married, a waiver of that portion of the debt would not result in unjust enrichment on his part because at that time he was eligible to receive the benefits paid to him for the spousal allowance, albeit for S.F. as his spouse, instead of V.T. The last element to be considered is whether reliance on VA benefits resulted in the veteran relinquishing a valuable right or incurring a legal obligation. The Veteran has not claimed that he relinquished any right or incurred any legal obligation or that he relied upon VA to his detriment, nor do the facts show otherwise. Furthermore, the record does not demonstrate any additional factors which should be considered in adjudicating the claim for a waiver of the indebtedness, and the Veteran has not identified any others. In light of the foregoing, the Board finds that total recovery of the overpayment violates the principles of equity and good conscience. Although the Veteran is at fault for creating the overpayment, as he did not inform VA when he was divorced from S.F., and he also failed to timely notify VA when he married V.T., it has been shown that full recovery of the debt would defeat the purposes for which benefits were intended and partial waiver of recovery of the debt would not result in his unjust enrichment. As noted above, between December [REDACTED], 2011 and February [REDACTED], 2012, the Veteran was not married; therefore, during that period of time, he was not eligible for spousal benefits. Thus, as he was married in February 2012, approximately 6 weeks after his December 2011 divorce from S.F. became final, waiver of recovery of the overpayment of benefits, minus benefits paid for the period between the two marriages, is warranted. As compensation benefits for a dependent spouse end upon divorce, the Veteran was entitled to spousal benefits (for S.F.) through December 2011. Additionally, spousal benefits begin upon marriage, effective the first of the month of the marriage, thus, the Veteran was entitled to spousal benefits (for V.T.) as of February 2012. Therefore, the Veteran was not entitled to spousal benefits for the month of January 2012. During the month of January 2012, the record shows that the Veteran was in receipt of monthly benefits at the 60 percent rate for a Veteran with two dependents, including S.F. as his dependent spouse. However, at that time, the Veteran should have been paid at the 60 percent rate for a Veteran with one dependent child. Per the Veterans Compensation Benefits Rate Tables Effective 12/1/2011, the Veteran was paid monthly benefits of $1,169 but should have been paid $1,071. See https://benefits.va.gov/COMPENSATION/resources_comp0111.asp. Therefore, during January 2012, the Veteran was paid $98 more than he was entitled to receive at that time. (Continued on the next page) Because this debt has already been fully recouped, the partial amount of the debt for which repayment has been waived herein must be reimbursed to the Veteran. The Veteran is advised to work with his representative and the RO to ensure that the proper amount of money is repaid in a timely manner. L. B. CRYAN Veterans Law Judge Board of Veterans' Appeals Attorney for the Board A. Labi, 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.