Citation Nr: 21075687 Decision Date: 12/21/21 Archive Date: 12/21/21 DOCKET NO. 18-42 662A DATE: December 21, 2021 ORDER Entitlement to a waiver of overpayment of Department of Veterans Affairs (VA) compensation benefits in the amount of $9,539.74, is denied. FINDINGS OF FACT 1. The overpayment was not due to the Veteran's fraud, misrepresentation, or bad faith. 2. Recovery of the debt in this case in the amount of $9,539.74, is not against equity and good conscience. CONCLUSION OF LAW The criteria for a waiver of overpayment of VA compensation benefits in the amount of $9,539.74, have not been met. 38 U.S.C. § 5302; 38 C.F.R. § 1.965. REASONS AND BASES FOR FINDINGS AND CONCLUSION The Veteran has unverified service dates of April 1983 to April 2003. This matter comes before the Board of Veterans' Appeals (Board) on appeal from a September 2017 decision of the Committee on Waivers and Compromises (COWC) of the agency of original jurisdiction (AOJ). As an initial matter, the Veteran had originally requested an in-person Travel Board hearing. In September 2021, the Board sent a letter notifying of her October 2021 hearing date. However, a telephone conversation record indicated she wanted to withdraw this appeal, but since she did not have access to e-mail, she would be mailed a VA Form 21-4138, Statement in Support of Claim, from her representative, to record her intentions that would then be mailed to VA. See October 2021 Report of General Information. As of this date, VA has not received a VA Form 21-4138 reflecting her intent to withdraw this appeal. Moreover, the Veteran's representative thereafter submitted an informal hearing presentation that contained arguments on this issue, thus indicating that this appeal should proceed on the merits. Seeing how the Veteran's representative submitted an informal hearing presentation and there is no statement to formally withdraw this appeal, the Board thereby considers her hearing request withdrawn and will proceed with adjudication on the merits. Entitlement to a waiver of overpayment of VA compensation benefits in the amount of $9,539.74. 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). The Veteran contends that a waiver of recovery for a debt in the amount of $9,539.74 is appropriate because it would cause undue hardship. In addition, the Veteran contends that she notified VA and that she also provided notice by marking the 'divorce' box on a June 2007 VA health benefits renewal form. She avers that she used VA often and always kept her information correct. See October 2017 notice of disagreement. In this case, the Veteran was notified of a debt owed to VA in a correspondence issued by the Debt Management Center (DMC) in March 2017. A waiver request was received in June 2017 and then transferred to COWC for consideration. In the decision on appeal, the COWC did not make a finding as to whether fraud, misrepresentation, or bad faith led to the creation of the debt here. However, as the COWC proceeded to apply the standards of "equity and good conscience," the Board finds that the AOJ implicitly found that there was no fraud, misrepresentation, or bad faith on the part of the claimant. As a result, the Board will also proceed with examining whether recovery of the debt would be against equity and good conscience. After their review, the COWC denied a waiver of her overpayment debt in the amount of $9,539.74, as it would be against the principles of equity and good conscience if the debt was not collected. Thus, the question now before the Board is whether the facts dictate that a waiver should be granted under the standard of "equity and good conscience." The first factor is to consider the fault of the debtor in creating the debt. By way of history, the Veteran applied for VA disability compensation in May 2003. On her VA Form 21-526, the Veteran marked her marital status as 'married' and provided the information requested regarding her marriage. A review of her service treatment records showed that in September 2002, she received mental health treatment, where she reported that a stressor at that time included her 'divorce last year.' In July 2003, the Veteran was awarded a combined rating of 40 percent, effective June 1, 2003. VA law provides for additional monthly compensation for dependents when a veteran is entitled to disability compensation evaluated as 30 percent or greater. 38 C.F.R. § 3.4(b)(2). In its August 2003 notification letter, VA informed the Veteran that her VA compensation benefits was at a rate for a veteran with one dependent and that her payment included an additional amount for her spouse. VA compensation benefits began on June 1, 2003. The letter also stated to let VA know right away if there was any change in her marital status. In December of 2007 and 2008, the Veteran received letters from VA that informed her of an increase in her VA compensation benefits. These letters requested that she advise VA immediately if her marital status changes and provided information on how to contact VA. In August 2009, VA sent a letter to the Veteran's banking institution for her current address in order to verify her current status and her dependents for VA compensation benefit entitlement purposes. The letter indicated that VA did not have the Veteran's current address. A March 2016 VA letter showed that she was sent VA Form 21-0538, Status of Dependents Questionnaire, to complete and verify her dependents, but she did not return this form. VA enclosed a copy of VA Form 21-688c, Declaration of Status of Dependents, and requested that she complete and return the form as soon as possible. After not receiving a reply, VA sent another letter in April 2016 that proposed to reduce her VA compensation benefits as of June 1, 2003, and informed her the change may result in an overpayment. Another copy of VA Form 21-686c was enclosed. A few weeks later, the Veteran called in to report that she was divorced as of July 2001. See April 2016 VA Form 27-0820, Report of General Information. In a July 2016 VA Form 21-688c, the Veteran indicated she had divorced in July 2001. On the form, she remarked to stop her dependent rate of payment as soon as possible. In January 2017, VA contacted the Veteran to confirm her July 2001 divorce date and also reviewed her file with her, including going over the information she provided on her May 2003 VA Form 21-526. The caller reviewed with her the fact that she was paid at a rate that included a dependent, as indicated on the August 2003 VA notification letter. The Veteran replied that she has been updating her information at VA for years, but the caller noted that she updated with the Veterans Health Administration (VHA) and explained that the two systems do not communicate or update each other. See January 2017 VA Form 27-0820, Report of General Information. Subsequently, in March 2017, action was taken to retroactively reduce the Veteran's compensation benefits to remove her dependent spouse, effective June 1, 2013. The adjustment resulted in the creation of an overpayment in the amount of $9,539.74. In a March 2017 letter issued by VA's Debt Management Center, VA compensation benefits would be withheld beginning June 2017. In its denial of the waiver request, the COWC found that the Veteran was at fault for creation of this debt, as even though she stated she was divorced back in July 2001, she still stated she was married in May 2003, and as such, did not report this dependent change in a timely manner. The COWC also found repayment would not impair her ability to provide for basic necessities, failure to repay the debt would result in unjust enrichment at the government's expense, and repayment of the debt would not defeat the purpose of the VA compensation benefit. Along with her October 2017 notice of disagreement, the Veteran submitted a VA health benefits form signed in April 2008 that reflected her current marital status as 'divorced.' The Veteran asserts that she has been inundated with insufficient funds charges, late fees, and credit card interest fees, of which paying back this debt would create additional financial hardships. She also continued to assert that she reported her change of address, name change, and dependent status in late 2003 but that her claims file does not reflect the information like her health benefit renewal form did, and as such, she should not have to repay money due to VA's oversight. See September 2018 VA Form 9. However, the fact remained that the Veteran did not notify VA that she continued to receive compensation benefits at a rate that included a dependent spouse. Although the Veteran was notified of her responsibility to do so, she did not proper advise the VA compensation offices of changes in her marital status, even after being informed in the August 2003 notification letter that she was being paid at a rate set for a veteran with one dependent. Although the Board has considered the Veteran's statement that she reported to VA of her marital status change, this was to VHA and not the VA Regional Office. Moreover, the August 2003 notification letter and the December 2007 and 2008 VA benefits increase letters all informed her of how to notify her VA Regional Office. She stated that she reported a change in address, and yet, VA had to ask her banking institution for her current address in August 2009. She was not entitled to additional compensation but still she kept the payments. The Veteran knew, or should have known, that she was not entitled to the payments in the amount in which she was receiving. Therefore, the Veteran was at fault in the creation of the overpayment. In addition, waiving recovery of the overpayment would defeat the purpose of the benefit, since the Veteran was not entitled to dependent spousal compensation from June 2003 to March 2017, as she was divorced during the period in question. There is also no evidence that the Veteran changed position to her detriment due to her reliance upon receipt of VA benefits. Therefore, the final factor is whether collection would impose undue hardship on the Veteran. On a June 2017 VA Form 4-5655, Financial Status Report (FSR), she reported that her monthly net income was $1,997.39. The Veteran listed her job, military retirement pay, and VA compensation as her sources of income. Her monthly expenses totaled $2519.90 (a handwritten note in the margin indicates $2,499.40). This included 'other living expenses' (listed as car repairs, insurance payments, home repairs, cable/internet, and medical costs). She listed assets that included her car and house. Her discretionary income was $522.51. On the June 2017 FSR, a COWC reviewer noted that the Veteran was receiving $1,056.00 from Social Security Administration (SSA), effective September 2017. The SSA database confirmed this information. In October 2017, she submitted an amended FSR. Her monthly income was now $2,558.67, with her income sources listed as SSA and military retirement pay. The reported monthly expenses, with the same 'other living expenses' listed, was now $2,914.86. This FSR reflected a deficit of $356.19 and showed that she had an amount past due on her credit card payment. The Veteran also remarked she had a roof leak and her wood stove needed replacing. On review, however, her current income sources should actually be from VA compensation ($589.12 from December 2016 to November 2017), military retirement pay ($1,502.67), and SSA ($1,056.00). Therefore, her monthly income should actually total $3,147.79 combined, leaving a discretionary income of $232.93 per month. Given the above, there is no evidence showing that payment of this debt would cause or in fact, did cause, undue hardship. The June 2017 FSR shows a monthly surplus of $522.51. The Board observes that the Veteran underreported her income on the October 2017 FSR; she actually has a surplus, discretionary amount of $232.93 per month. As such, the Board finds no reason that the Veteran would be deprived of her basic daily living necessities. Moreover, the nature of some of the reported living expenses that reasonably could be adjusted (e.g., cable television) to minimize the impact of any debt recovery. The Board acknowledges the contention that the Veteran has financial difficulties, minimal assets, and home repairs to take care of. However, as the overpayment at issue 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 she accords her other creditors. For these reasons, the Board finds that any financial hardship the Veteran may experience from recovery of this debt is outweighed by the other elements of equity and good conscience. In short, after weighing all of the enumerated factors, the Board finds that recovery of the overpayment does not violate the principles of equity and good conscience. Thus, waiver of the recovery of the overpayment of the debt of $9539.74 is not warranted, and the appeal must be denied. D. JOHNSON Veterans Law Judge Board of Veterans' Appeals Attorney for the Board M. Tang, 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.