Citation Nr: A21020582 Decision Date: 12/28/21 Archive Date: 12/28/21 DOCKET NO. 191130-50772 DATE: December 28, 2021 REMANDED 1. The challenge to the propriety of the creation of one overpayment debt, which presents a part of a combined overpayment debt, is remanded. 2. The challenge to the validity of the computation of the amount of another overpayment debt, which presents the other part of the combined overpayment debt, is remanded. 3. The claim for a waiver of the combined overpayment debt is remanded. REASONS FOR REMAND The Veteran had active duty from March 2010 to July 2016. These matters are before the Board of Veterans' Appeals (Board) on his appeal from the May 2019 and September 2019 final action letters issued by the Department of Veterans Affairs (VA) agency of original jurisdiction (AOJ), which charged the Veteran with two different overpayment debts, and the July 2019 Committee on Waivers and Compromises (COWC) decision denying the Veteran's waiver claim. By way of background, VA awarded the Veteran service connection for various disabilities effective the date following the date of his July 2016 discharge from active service and then twice increased the Veteran's combined disability rating. Specifically, the Veteran's combined disability rating was: (a) 70 percent from July 2016 to July 2017; (b) 90 percent from July to August 2017; and (c) 100 percent from August 2017. In other words, during the calendar year 2017, the Veteran had three different combined disabilities ratings and, therefore, he was receiving different monthly amounts of VA benefits during this calendar year. The record also demonstrates that, at an unspecified point in time that occurred after the Veteran's discharge from active service and while he was in receipt of VA disability compensation benefits, the Veteran began serving as a member of the North Carolina National Guard (National Guard). However, in addition to being unclear as to the beginning date of the Veteran's National Guard service, the record is also ambiguous as to the precise nature of his National Guard service. That said, the record shows that the Veteran was discharged from the National Guard on February 1, 2018, and suggests that the Veteran's National Guardsman's might have been limited to execution of Unit Training Assemblies (UTAs). Same as active service, execution of UTAs, also referred to as "drill periods," is a compensable activity, which means that the veterans who execute UTAs receive disbursements from the Defense Finance and Accounting Service (DFAS), i.e., the financial arm of the Department of Defense (DOD). However, same as it is the case with active duty, the concurrent receipt of VA disability compensation benefits and DFAS disbursements for UTAs is prohibited. Therefore, a veteran anticipating execution of UTAs is required to waive either his/her VA benefits or his/her DFAS compensation with regard to the time when (s)he executes UTAs. Because DFAS compensation typically presents a more lucrative disbursement than VA disability compensation benefits, regardless of a veteran's combined rating, veterans typically waive their VA benefits and elect in favor of DFAS' pay. However, in the event a veteran omits to timely waive one of these two forms of disbursement and receives both VA benefits and DFAS' payments, the veteran ends up being overpaid. If VA is notified by DFAS/DOD that the veteran was disbursed funds for executing UTAs during the period when (s)he was also in receipt of VA disability compensation benefits, VA initiates procedural due process in order to charge the veteran with an overpayment and, once the charge is properly imposed, commences the process of recouping the overpayment debt. In terms of procedural due process, VA is required to provide the veteran with a notice: (a) stating the actions that VA is proposing, i.e., to create an overpayment debt that would be charged to the veteran, and explaining the factual predicate and legal authority in a manner sufficient for the veteran to intelligently respond to the proposal; and (b) availing the veteran to a period of time to respond. After the veteran's time to respond expires, VA is required to notify him/her of its final action on the proposal, i.e., the creation of an overpayment. Typically, an AOJ issues a proposal notice and a final action notice. In addition, VA is obligated to inform the veteran about the amount of his/her overpayment debt based on the factual predicate and the governing legal authority implicated by the AOJ's final action notice. Typically, VA Debt Management Center (DMC) issues a demand letter stating such an amount; however, an AOJ could also issue such a notice. That said, the demand letter (or the debt amount notice) must also include a notice of the veteran's right to seek a waiver of his/her overpayment debt, as well as the information about the period of limitations governing waiver claims. COWC typically adjudicates waiver claims which, if timely filed, are addressed on the merits. (If a waiver claim is untimely, it is dismissed on this ground.) In addition, because there are various ways for VA to execute recoupment, DMC's demand letters and/or AOJs' debt amount notices typically include statements as to the proposed mode and rate of recoupment. If the debtor is a VA beneficiary at the time when his/her overpayment is created and charged, DMC typically recoups the debt through incremental withholdings from the debtor's monthly VA benefits. Here, the Veteran was charged with two overpayments. Both charges were on the ground that he was in concurrent receipt of VA disability compensation payments and DFAS disbursements for his execution of UTAs. The Board notes, in passing, that there are two UTA periods in every full calendar day. Therefore, a veteran executing UTAs may but not must execute two UTAs during one day. Further, while the date of any UTA is entered into DOD/DFAS records based on the calendar date, month, and year when the UTA was executed, DFAS commonly reports veterans' UTAs to VA by referring only to the fiscal year (FY) when these UTAs were executed (and the exact dates are usually supplied to VA upon VA's request for a DFAS audit of DFAS' records). Regretfully, due to the discrepancy between the calendar years and fiscal years, DFAS' mode of reporting frequently causes confusion. To avoid such a confusion in the matters at bar, the Board points out that: (a) FY 2017 started on October 1, 2016, and ended on September 30, 2016; (b) FY 2018 started on October 1, 2017, and ended on September 30, 2018; and (c) FY 2019 started on October 1, 2018, and ended on September 30, 2019. Having clarified these preliminary matters, the Board now turns back to the facts at bar and notes that the AOJ issued the Veteran a December 2018 proposal notice informing him that VA had been notified by DFAS of DFAS' disbursement of funds based on the UTAs that the Veteran executed on unspecified dates during an unspecified calendar or fiscal year of his National Guard service. Simply put, the AOJ's December 2018 proposal notice did not qualify as a valid notice within the meaning of the Veteran's due process rights because the proposal notice did not sufficiently inform him of the factual predicate underlying the AOJ's proposal, thus depriving the Veteran of an opportunity to intelligently respond. Not surprisingly, the Veteran did not respond to the AOJ's December 2018 proposal notice. In May 2019, the AOJ issued the Veteran a final action notice. In sync with the AOJ's December 2018 proposal notice, the final action notice informed the Veteran that he was charged with an overpayment based on his concurrent receipt of VA disability compensation benefits and DFAS' disbursements. In addition, the AOJ's final action notice alleged that the overpayment charge was based on 57 UTAs that the Veteran executed during FY 2017. However, the AOJ's final action notice contained another due process error: the notice did not specify the calendar dates when these 57 UTAs were allegedly executed. Correspondingly, the AOJ's final action notice failed to provide the Veteran with means to determine the amount of his alleged overpayment. This was so because the Veteran's combined disability rating during FY 2017 (i.e., the period that ran from October 1, 2016, to September 30, 2017) was initially at 70 percent, then was raised to 90 percent, and then was raised once again to 100 percent. This means that, in the event the Veteran executed any FY 2017 UTAs during the period when his combined rating was 70 percent, then the portion of his overpayment based on those UTAs had to be calculated based on the amount of the Veteran's 70 percent compensation. The same mode of calculation should have been repeated as to the portion of the overpayment based on his UTAs, if any, that the Veteran executed when his combined rating was at 90 percent. Moreover, the same calculative process had to be repeated once again as to the portion of the overpayment based on the UTAs, if any, that the Veteran executed while having a 100 percent combined rating. After all of these preliminary calculations were done, their results should have been summed up in order to arrive at the total amount of the overpayment, and the Veteran had to be availed either to these calculations or, at the very least, to information enabling him to conduct these calculations on his own through review of VA's archived compensation rates. To make the matters even more puzzling, the AOJ's final action notice merely stated that the calculation of the Veteran's overpayment debt would be performed based solely on his 100 percent combined rating. This statement, in and by itself, indicated the AOJ's impression that the Veteran executed all of his alleged 57 UTAs during the period running from August 8 to September 30, 2017, i.e., the period that ran from the date when the Veteran's combined rating was increased to 100 percent to the last day of FY 2017. The Board notes, in passing that, while there are only 54 calendar days from August 8 to September 30, inclusive of the beginning and end dates, the Veteran could have, theoretically, executed 57 UTAs during that 54 day period since each UTA, as noted supra, corresponds to only half of a calendar day. However, given that UTAs are typically, albeit not always, executed only during weekends, and there were only eight Saturdays and seven Sundays, i.e., a total of 15 weekend days, it appears unlikely that the Veteran executed more than 30 UTAs during the portion of FY 2017 when his combined rating was 100 percent. Accordingly, the content of the AOJ's May 2019 final action notice suggested either an outright error on the part of the AOJ or, at the very least, a miscommunication between the AOJ and DFAS with regard to the remaining 27 (57 30) UTAs allegedly executed by the Veteran during FY 2017. This is especially so because nothing in the record verifies the fact that the Veteran executed all of his 57 UTAs between August 8 and September 30, 2017, or even the fact that he executed 57 UTAs, rather than a lower amount. To add to the confusion, the AOJ's May 2019 final action notice also stated that the Veteran's overpayment related to FY 2017 UTAs would be calculated based on a table included in the final action notice. The table, however, stated that a "Drill Pay Adjustment" in the form of recoupment of the Veteran's debt through withholding of $3,078.11 from his VA disability benefits had been performed in October 2018 (with the balance of $62.56 disbursed to the Veteran). If the table information was correct, it meant that VA had recouped the Veteran's overpayment debt before the AOJ's December 2018 proposal notice, the May 2019 final action notice, and without an opportunity to apply for a waiver., i.e., without any due process whatsoever. Moreover, since the table indicated that no "Drill Pay Adjustment" had to be performed the next month, i.e., in November 2018, the table suggested that the withholding of $3,078.11 recouped the Veteran's debt in full. If the $3,078.11 amount stated in the table qualified as a "full" recoupment, the amount suggested that the Veteran executed UTAs only during weekends when his combined rating was 100 percent during FY 2017. This is so because: (a) the $3,078.11 amount roughly corresponded to a monthly amount of the Veteran's VA disability compensation benefits (being just $62.56 less); and (b) there were 15 weekend days during the period when the Veteran's combined rating was 100 percent during FY 2017, and these 15 weekend days could accommodate 30 UTAs. Therefore, the table in the AOJ's May 2019 final action notice rendered this notice inconsistent as to the amount of the FY 2017 UTAs. And, if the foregoing was not confusing enough, in May 2019, DMC issued the Veteran a demand letter informing him that his overpayment debt ensuing from the AOJ's final action notice was $5,848.41. Since the $5,848.41 amount roughly corresponded to an overpayment that could have ensued from the Veteran's execution of 57 rather than 30 UTAs during the time when his combined disability rating was 100 percent, DMC's demand letter was inconsistent with the table included in the AOJ's final action notice and, thus, highlighted the AOJ's due process failure to inform the Veteran of the dates of the UTAs he allegedly executed during FY 2017. In other words, DMC's demand letter was derivatively deficient because it was based on the AOJ's procedurally deficient final action notice that followed the AOJ's procedurally deficient proposal notice. However, the events underlying the Veteran's claims did not stop at that. Instead, in June 2019, the AOJ issued another notification letter, this time proposing to charge the Veteran with one more overpayment based on six more UTAs that he had allegedly executed on unspecified calendar dates in FY 2018, i.e., during the period running from October 1, 2017, to September 30, 2018. In July 2019, COWC issued a decision denying the Veteran's claim for a waiver of his debt. However, stating the overpayment period underlying its adjudication, COWC stated that the overpayment accrued from "10/01/2018 to 11/27/2018 due to [the Veteran's execution of UTAs] in FY [20]17." This was a facial non sequitur since the period from "10/01/2018 to 11/27/2018" falls within FY 2019, not 2017. In September 2019, the AOJ issued the Veteran a final action notice with regard to six UTAs that he allegedly had executed in FY 2018. In September 2019, DMC issued the Veteran another demand letter informing him that he was charged with an additional debt in the amount of $627.93. Adding this new debt to the previous debt in the amount of $5,848.41, DMC issued the Veteran one more demand letter stating that the sum of his old and new debts was $6,476.34, and that those debts were yet to be recouped. In other words, DMC's September 2019 demand letter was inconsistent with the table included in the AOJ's May 2019 final action notice (since the table suggested that the Veteran's debt was in the amount of $3,078.11, and that amount had already been recouped in full). Later in September 2019, being properly confused by the AOJ's, DMC's, and COWC's communications, the Veteran filed VA Form 10128 stating that he was "[a]ppealing [his] indebt[ed]ness decision," without clarifying whether he was challenging the validity of the amount of the debt ensuing from the UTAs that he allegedly executed in FY 2017, or the propriety of the creation of the debt ensuing from the UTAs he allegedly executed in FY 2018, or COWC's decision denying him a waiver of the debt that COWC described by its non sequitur proposition, or the total debt stated in DMC's September 2019 demand letter. However, in an effort to clarify these matters, the Veteran's VA Form 10182 stated that he selected the hearing docket in order to present his position to the Board. Jointly with his VA Form 10182, the Veteran filed a Statement in Support of Claim pointing out that he executed no UTAs after his discharge from the National Guard. The Veteran also pointed out that his overpayments resulting from his concurrent receipts of DFAS' compensation and VA benefits had already been "taken care of appropriately." In other words, the Veteran's VA Form 10182 and accompanying Statement in Support of Claim indicated the Veteran's position that no additional withholding from his VA benefits should be conducted. In January 2021, the Veteran had a videoconference Board hearing before the undersigned Veterans Law Judge. A transcript of the hearing has been associated with the claims file. During the hearing, the Veteran elaborated on his challenges to the creation of his second overpayment debt (i.e., based on the six UTAs he had allegedly executed in FY 2018) and the AOJ's calculation of the amount of his first debt (i.e., based on 57 UTAs he had allegedly executed in FY 2017). Toward that end, the Veteran reiterated that he did not execute any UTAs after his discharge from the National Guard and submitted a copy of the chain of VA emails demonstrating the AOJ's prolonged erroneous belief that the Veteran was discharged from the National Guard in 2019. In addition, the Veteran opined that the amount of his first overpayment debt (based on 57 UTAs that the Veteran allegedly executed in FY 2017) was incorrectly calculated, since the calculation was based entirely on his 100 percent combined rating, while the Veteran recalled performing only a handful of UTAs after his combined disability rating was increased to 100 percent. Finally, while the Veteran did not elaborate on his waiver claim, his opening statement made it abundantly clear that the Veteran wished to challenge COWC's denial of his waiver claim, and that the Veteran was seeking a waiver of his entire debt, be it based on either one or both overpayments. Notably, the law does not require any particular VA form or particular words to be used by a debtor in order to seek a waiver of his/her overpayment debt, and the waiver intent should be liberally distilled from the context of the debtor's statement. Edwards v. Peake, 22 Vet. App. 57, 58, 60 (2008) (although a debtor's submissions did not use the word "waiver" or a synonym for "waiver," the context of the debtor's claim made it evident that the debtor was indeed seeking a waiver). Thus, the Board finds that the Veteran's statements, read in toto, qualify as his application for a waiver of both of his debts, that is, after such debts are duly created and properly calculated. In light of the above-detailed due process violations, the glaring inconsistencies in the record, the chain of VA emails demonstrating that the AOJ was under an erroneous impression as to the period and, potentially, even the very nature of a portion of the Veteran's National Guard service when the AOJ was charging the Veteran with both overpayments, the non sequitur factual predicate underlying COWC's adjudication, and the lack of record as to the exact calendar dates when the Veteran executed each of his UTAs, plus the inconsistency between the AOJ's statements, DMC's demand letters, and the table included in the AOJ's May 2019 final action notice, and the Board is presently not in a position to adjudicate the Veteran's claims without engaging in undue factual speculations. Accordingly, while the Board regrets an additional delay, a remand is required. In connection with this conclusion, the Board takes an opportunity to clarify concepts of constitutional law and economics implicated in overpayment matters. While the due process analysis in various areas of administrative law turns on individual and governmental interests deduced from applicable statutes and regulations, the principle of the "due process of law" uniformly applies to Federal entities through the Fifth Amendment of the U.S. Constitution and unequivocally directs the government to provide a person with a valid notice and opportunity to be heard in connection with the deprivation of, inter alia, his/her property rights. An adjudicated right to VA financial benefits qualifies as a vested property right, which means that VA benefits could be withheld by the government only based on a finding reached after the holder of such a vested right has been provided with his/her due process, that is: (a) served with a notice stating the facts in a fashion sufficient to enable the holder to intelligently respond; and (b) an adjudication of so stated facts by a tribunal that applies these facts to law. Accord Dura Pharms., Inc. v. Broudo, 544 U.S. 336, 347 (2005) ("it should not prove burdensome for a plaintiff suffering economic loss to provide a defendant with some indication of the loss and the causal connection that the plaintiff has in mind"). To illustrate, a mortgagee, who is of opinion that his/her mortgagor failed to pay a mortgage installment, cannot evict the mortgagor by stating that, someday, the mortgagee might commence a proper foreclosure proceeding and disclose the mortgagee's facts but, meanwhile, the mortgagor should leave the premises upon being served with any piece of paper that the mortgagee wishes to dispense. The facts at bar are substantively indistinguishable from the aforesaid example since the Veteran had his vested property interest in the financial support (which was meant to compensate him for his loss in earning capacity) taken away without proper due process. Therefore, the Board's mere directive to the AOJ to conduct an audit of the Veteran's VA account would effectively provide him with nothing but a promise that, someday, either VA might return his wrongfully taken property or the Veteran would be able to sue VA, once again, if he finds errors in the audit. Such a promise is not a sufficient remedy under the circumstances at bar. Without a receipt of his vested VA benefits, on which he counts, the Veteran would either be required to take a loan (and, thus, incur financial loss related to the loan interest) or avoid making an investment (and, thus, incur financial loss related to the interest he could have earned on the investment). While the combined amount of the debts charged here appears to be only $6,476.34, the Board declines to discount the value of this amount as something so petty that VA could hold on to with impunity and without providing the Veteran with due process until he finally succeeds at getting these funds (or his portion of these funds) back after a long chain of litigations. As the U.S. Supreme Court wisely guided, "[w]hile $4 is . . . an extremely nominal sum, if one does not have it and is unable to get it, [that amount] might as well be $400." Smith v. Bennett, 365 U.S. 708, 712 (1961). And, if a government official cannot realize the value of the Veteran's concern, such an official would probably be able to relate to the Veteran's concern better had the official had his/her monthly salary withheld and, instead, "paid" with a mere promise that, someday, (s)he would be able to sue for the monies in which (s)he had a vested right ab initio. Therefore, given the multitude of due process violations, the likelihood that one of the Veteran's overpayments (seemingly in the amount of $627.93) would be nullified as improperly created, and his other overpayment (seemingly in the amount of $5,848.41) would be deemed improperly created in part (seemingly, in the part equal to $2,770.30 ($5,848.41 $3,078.11)) and might potentially be shown to be already recouped as to the remainder, the Board finds it warranted to direct the AOJ to remit the monies, if any, withheld from the Veteran in connection with these overpayments. Such a remittance would enable VA to: (a) start the process anew (since there is no period of limitations as to VA's creation and recoupment of overpayments); and (b) conduct the process properly after obtaining DFAS' information supporting VA's actions. Directing anything less would be tantamount to the Board's implied condonation of the nonchalant due process violations at the Veteran's expense. Indeed, the Appeals Modernization Act applicable to the Veteran's appeal expressly envisions the Board's remand in connection with VA's pre-decisional errors and inadequate development of factual predicates underlying VA's decisions. Here, try as it may, the Board was unable to locate even a single decision reached by the AOJ, DMC, or COWC without a due process error and exponential guesses of facts. However, as the U.S. Supreme Court pointedly observed, "adjudication cannot rest on any such 'house that Jack built' foundation." Salyer Land Co. v. Tulare Lake Basin Water Storage Dist., 410 U.S. 719, 731 (1973). The matters are REMANDED for the following action: 1. Request and obtain an audited report from DFAS detailing the exact calendar dates when the Veteran executed his FY 2017, FY 2018, and FY 2019 UTAs, if any, as to which UTAs DFAS disbursed compensation to the Veteran. 2. Simultaneously with the foregoing, determine the exact calendar date when the Veteran's service with the National Guard was commenced, and verify that his National Guard service ended on February 1, 2018, and that it did not include any post-February 1, 2018, UTAs. 3. Simultaneously with the foregoing, in the event it is determined that the Veteran executed UTAs post February 1, 2018, summarize the content of all evidence so demonstrating and associate the summary, together with the evidence underlying the summary, with the claims file. 4. Simultaneously with the foregoing, conduct a paid and due audit of the Veteran's VA account to determine whether any withholdings have already been conducted from the Veteran's VA disability compensation benefits for the purposes of recouping the Veteran's overpayment debts ensuing from his concurrent receipts of VA disability compensation benefits and DFAS disbursements for the UTAs, if any, that the Veteran executed during FY 2017 or FY 2018, or FY 2019. 5. If, upon conclusion of the paid and due audit detailed in Step 4, it is determined that a recoupment of the overpayment debt(s) charged to the Veteran based on his execution of UTAs, if any, during FY 2017 or FY 2018, or FY 2019 had already taken place, remit the amount equal to the sum all such withholdings to the Veteran: as recouped prematurely and without availing the Veteran to his procedural due process rights. 6. Upon completion of the foregoing and any other development deemed necessary, issue the Veteran and his representative an initial Appeal Notification Letter accompanied by copies of the DFAS' audited report obtained pursuant to Step 1 and the audit report generated pursuant to Step 4. 7. The initial Appeal Notification Letter should include a two-column, three-row table, having the headings and being populated as follows: Combined Rating Period Exact Dates of UTAs [state the beginning and end dates of the 70% combined rating period] [list the exact dates of all UTAs, if any, executed during the 70% combined rating period; each date must be listed separately and state whether one or two UTAs were executed on that date] [state the beginning and end dates of the 90% combined rating period] [list the exact dates of all UTAs, if any, executed during the 90% combined rating period; each date must be listed separately and state whether one or two UTAs were executed on that date] [state the beginning and end dates of the 100% combined rating period] [list the exact dates of all UTAs, if any, executed during the 100% combined rating period; each date must be listed separately and state whether one or two UTAs were executed on that date] 8. Simultaneously with issuing the initial Appeal Notification Letter, issue the Veteran and his representative a curative proposal notice in the event the DFAS' audited report obtained pursuant to Step 1 provides a basis to create an overpayment in light of the UTAs that the Veteran executed and was compensated for by DFAS while concurrently receiving VA disability compensation benefits during FY 2017 and/or FY 2018 and/or FY 2019. The curative proposal notice should state the total amount of the overpayment being charged to the Veteran. Further, the curative proposal notice should allow the Veteran and his representative an appropriate period of time to respond to the proposal. 9. After the Veteran's period to respond expires, issue the Veteran and his representative a curative final action notice stating the decision to create an overpayment, if any, and detailing the amount of the overpayment, how the amount was calculated, and how the overpayment debt would be recouped. 10. In addition, the curative final action notice should inform the Veteran and his representative that the monthly amount of withholding presents a compromise not appealable to the Board but amenable to negotiations between the Veteran and DMC. 11. Finally, the curative final action notice should inform the Veteran and his representative of the Veteran's right to seek a waiver of his debt stated in the curative final action notice, as well as of the Veteran's right, but not his obligation, to submit his current Financial Status Report (FSR) in support of the Veteran's waiver claim. A blank VA Form 5655 FSR should be included with the curative final action notice, and the Veteran should be notified of his period of limitations to seek a waiver. 12. In the event the Veteran files a timely waiver claim, forward the Veteran's waiver claim (and his current FSR, if submitted) to COWC for adjudication, together with a copy of the initial Appeal Notification Letter in order to ensure that COWC addresses: (a) the proper amount of debt; and (b) the proper overpayment period. 13. Upon completion of the foregoing and any additional development deemed necessary, issue the Veteran and his representative a follow-up Appeal Notification Letter summarizing all actions taken pursuant to Steps 1 to 12, together with dates when each of these actions was taken, and notify the Veteran that his challenges to the propriety of the creation of his overpayment(s) and/or the validity of the amount(s) of the overpayment(s), and/or denial of his claim for a waiver of his overpayment debt(s) would not be automatically returned to the Board, and the Veteran's appropriate actions are required if he desires further Board review. 38 C.F.R. § 3.2502. 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.