Citation Nr: A21020218 Decision Date: 12/17/21 Archive Date: 12/17/21 DOCKET NO. 190917-57729 DATE: December 17, 2021 ORDER Entitlement to waiver of recovery of an overpayment of additional Department of Veterans Affairs (VA) compensation benefits for a dependent spouse in the amount of $6,948.62 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 $6,948.62 is not against equity and good conscience. CONCLUSION OF LAW Recovery of the overpayment of the additional VA disability compensation in the amount of $6,948.62 would not be contrary to the principles of equity and good conscience. 38 U.S.C. § 5302; 38 C.F.R. § 1.965. REASONS AND BASES FOR FINDINGS AND CONCLUSION The Veteran had active service from February 1960 to January 1964 and from May 1966 to March 1982. The decision on appeal was issued in June 2019 by the Committee on Waivers and Compromises (Committee) of the Department of Veterans Affairs (VA) Regional Office (RO). It constitutes an initial decision; therefore, the modernized review system, also known as the Appeals Modernization Act (AMA), applies. In the September 2019 VA Form 10182, Decision Review Request: Board Appeal, the Veteran elected the Hearing docket. Therefore, the Board may only consider the evidence of record at the time of the agency of original jurisdiction (AOJ) decision on appeal, as well as any evidence submitted by the Veteran or his representative at the hearing or within 90 days following the hearing. 38 C.F.R. § 20.302(a). The Veteran testified at a Board videoconference hearing in August 2021. A hearing transcript is of record. Entitlement to waiver of recovery of an overpayment of Department of Veterans Affairs (VA) compensation benefits in the amount of $6,948.62 In an April 2010 rating decision, the Veteran was assigned a combined 60 percent rating effective March 30, 2009. The Veteran was notified of the grant of benefits. He submitted an application to add his spouse, K., to his award that same month. See April 2010 VA Form 21-686c. In October 2010, the Veteran was notified that he was receiving additional compensation benefits for his dependent spouse, K., effective April 1, 2009; he was furnished a VA Form 21-8764 which stated that he should notify VA immediately if there is any change in the number or status of his dependents. See October 2010 Notification Letter. He was advised that the failure to do so would result in a creation of an overpayment in his account. In November 2018, the Veteran submitted a Mandatory Status of Dependents form and indicated he was not married. See November 2018 VA Form 21-0538. A December 2018 Report of General Information reflects that VA called the Veteran, and he reported his spouse, K., had died in November 2012. The Veteran reported he was unaware he was still receiving benefits for her. See December 2018 VA Form 21-0820. Action was subsequently taken to retroactively reduce the Veteran's compensation benefits to remove K. as his wife effective December 1, 2012 due to her November 2012 death. See December 2018 Notification Letter. The adjustment via the removal of K. from the Veteran's benefits effective December 1, 2012 resulted in the creation of an overpayment in the amount of $6,948.62, reflected in a separate letter from the Debt Management Center (DMC). See December 2018 DMC Letter. In June 2019, the Committee on Waivers and Compromises (Committee) denied a waiver of the recovery of the debt and the Veteran appealed, indicating VA should have known of his spouse's death since he attended VA grief counseling, that he was unaware he was still receiving benefits for her, that he was unable to think clearly due to his medication for service-connected posttraumatic stress disorder (PTSD), and that he had filed for bankruptcy and was protected from VA debt collection. See June 2019 Committee Decision; August 2021 Board Hearing Transcript. The Committee of the RO determined that there was no fraud, misrepresentation, or bad faith on the Veteran's part with respect to the creation of the overpayment at issue, but the Committee further determined that recovery of the overpayment of VA compensation benefits would not be against equity and good conscience. 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). In this case, the Committee found, and the Board agrees, that there is no evidence demonstrating that the indebtedness resulted from fraud, misrepresentation, or bad faith on the Veteran's part. Therefore, waiver of indebtedness is not precluded if shown that it would be against the principles of equity and good conscience to require the Veteran to repay the debt to the government. 38 C.F.R. §§ 1.963, 1.965. With regard to fault, the Veteran has made several contentions that he is not at fault in the creation of the overpayment. The Board acknowledges the Veteran's contention that VA knew or should have known of his spouse's death since he attended grief counseling at VA and told VA medical providers of her death. Unfortunately, notice to employees at a VA Medical Center, which is run under the Veterans Health Administration (VHA), is insufficient. VHA does not qualify as notice in this instance. VHA, which handles such issues as medical care, is not a delegated authority to accept notice of a change in entitlement to compensation benefits on behalf of the Veterans Benefits Administration (VBA), which handles compensation benefits and under which the ROs operate. Submission of statements and evidence regarding entitlement to compensation benefits may be submitted in writing to the RO or orally, but only by those VA employees who are properly delegated authorities who identify themselves as such and record the oral evidence in a particular manner. See 38 C.F.R. § 3.217 (Submission of statements or information affecting entitlement to benefits); see also 38 C.F.R. § 3.100 (delegations of authority). Therefore, telling a medical provider or other VHA staff about information relevant to entitlement to compensation benefits does not meet the requirement of notification to VBA or the RO. Regarding the Veteran's statement that following his spouse's death, he was unable to think clearly due to grief and medication for service-connected posttraumatic stress disorder, the Board finds that the Veteran was competent with regard to financial matters. At no time was he determined to be incompetent nor was a custodian or fiduciary assigned. Thus, the Board finds that he had adequate knowledge and awareness of his responsibilities. See generally Reyes v. Nicholson, No. 03-1929 (U.S. Vet. App. July 20, 2007). A claimant who is receiving compensation is required to report to the VA any material change or expected change in income or other circumstance that affects the payment of benefits. 38 C.F.R. § 3.660. An overpayment is created when VA determines that a beneficiary or payee has received monetary benefits to which he or she is not entitled. 38 C.F.R. § 1.962. VA law provides for additional monthly compensation for dependents when a veteran is entitled to disability compensation evaluated as thirty percent or greater. 38 C.F.R. § 3.4 (b)(2). The Veteran has been evaluated as 60 percent or more disabled since his dependent spouse, K., was added to his award; thus, he was eligible for additional benefits based on dependency, provided certain requirements were met. The law states that the Veteran has an obligation to timely notify VA of all changes in dependency status. The RO advised the Veteran of his obligation to provide notification regarding any changes in dependency, as noted above, also furnishing him a VA Form 21-8764. The Veteran's spouse, K., died in November 2012. The Veteran notified VA of her death in November 2018. After consideration of the record, the Board finds that the Veteran was at fault in the creation of the debt. In regard to whether failure to collect would cause unjust enrichment to the debtor, the Board notes that the Veteran received benefits to which he was not entitled and as such, would cause unjust enrichment to the debtor. The Board acknowledges that the Veteran testified that he was unaware he was still receiving benefits for a spouse; however, the Board notes that does not change the fact that he was receiving benefits to which he was not entitled. Likewise, there is no indication that the Veteran's reliance on VA benefits resulted in relinquishment of another valuable right. In this regard, the Board notes 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 is there any evidence of such. As to whether recoupment of those benefits would defeat the purpose of the benefit, the purpose of the additional benefit is to provide compensation for dependents. As the Veteran did not have a dependent spouse during the time period in question, recoupment of the benefits would not defeat the purpose of the benefit. The Board has also considered whether the Veteran would suffer undue financial hardship if forced to repay the debt at issue. A review of a January 2019 financial status report reveals a total monthly net income of $3,993.00. The net income consists of VA and Social Security Administration (SSA) benefits. There is no indication this income is volatile or would change significantly in the future. The Veteran does not have employment income or other potentially variable income. He reported total monthly net expenses of $2,280.00. His monthly income well exceeds expenses; as such, financial hardship is not shown. In this regard, the Board acknowledges that the Veteran previously filed for bankruptcy and has some current debt. However, as the overpayment 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 he would accord any other creditor. There is no evidence that repayment of the debt would deprive the Veteran of his basic necessities of living. To reiterate, the Veteran's income exceeds his expenses. To the extent there may be financial hardship, that factor is outweighed by the other elements of equity and good conscience. Finally, regarding the Veteran's contention that recovery of the debt is precluded by his filing for bankruptcy, the law unfortunately does not support such a finding. In Beaumont v. Dept. of Veterans Affairs, United States of America (In re Beaumont), 586 F.3d 776 (10th Cir. 2009), the U.S. Circuit Court of Appeals addressed a very similar matter in a precedential decision. The U.S. Court of Appeals for the 10th Circuit explained that "recoupment" was an equitable doctrine in bankruptcy that allowed one party to a transaction to withhold funds due to another party, when the debts arise out of the same transaction. Id. at 780. Essentially, a debt caused by overpayment is not a debt that can be discharged under bankruptcy; rather, it is an obligation that VA can recoup after bankruptcy. Id. at 781-782. See also In re Boyd, 223 B.R. 536 (Bankr. E.D. Ark. 1998 ) (finding that a mandate that readjustment pay be recouped from disability benefits does not constitute a debt to the United States and that VA was entitled to recoup readjustment pay despite that veteran's bankruptcy discharge); In re Keisler, 176 B.R. 605 (Bankr.M.D. Fla. 1994) (finding that VA's monthly deductions from bankruptcy debtor's overpaid disability payments represented recoupment to VA and not dischargeable debt); In re Snodgrass, 244 B.R. 353 (Bankr.W.D. Va. 2000) (finding that VA's right to recoup special separation benefit previously paid to a veteran by deducting it from service-connected disability compensation to which debtor was entitled was not a "claim" against a debtor that could be discharged.). CONTINUED ON THE NEXT PAGE The Board is sympathetic to the Veteran's contentions. However, 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 $6,948.62 is not warranted, and the appeal must be denied. B. MULLINS 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.