Citation Nr: A21020644 Decision Date: 12/29/21 Archive Date: 12/29/21 DOCKET NO. 211029-195298 DATE: December 29, 2021 ORDER Entitlement to waiver of recovery of an overpayment of Department of Veterans Affairs (VA) survivor's pension benefits in the amount of $90,712.00 is granted. FINDINGS OF FACT 1. The overpayment of VA survivor's pension benefits was properly created and the debt in the amount of $90,712.00 is valid. 2. The overpayment was not due to the Appellant's fraud, misrepresentation or bad faith. 3. Recovery of the debt in this case in the amount of $90,712.00 is against the principles of equity and good conscience. CONCLUSION OF LAW Recovery of the overpayment of the VA survivor's pension benefits in the amount of $90,712.00 is 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 passed away in March 1999. The Appellant is his surviving spouse. This appeal comes to the Board of Veterans' Appeals (Board) from a September 2021 decision of the Committee on Waivers and Compromises (COWC) of the Department of Veterans Affairs (VA) Regional Office (RO). In the October 2021 VA Form 10182, Decision Review Request: Board Appeal, the Appellant elected the Direct Review docket. Therefore, the Board may only consider the evidence of record at the time of the agency of original jurisdiction (AOJ) decision on appeal. 38 C.F.R. § 20.301. Evidence was added to the claims file during a period of time when new evidence was not allowed. As the Board is deciding the issue of entitlement to a waiver of recovery of the overpayment of the VA survivor's pension benefits in the amount of $90,712.00, it may not consider this evidence in its decision. 38 C.F.R. § 20.300. The Appellant may file a Supplemental Claim and submit or identify this evidence. 38 C.F.R. § 3.2501. If the evidence is new and relevant, VA will issue another decision on the claim, considering the new evidence in addition to the evidence previously considered. Id. Specific instructions for filing a Supplemental Claim are included with this decision. This appeal has been advanced on the Board's docket pursuant to 38 C.F.R. § 20.902(c). 38 U.S.C. § 7107(b). Analysis The issue of the validity of a debt is a threshold determination that must be made in a benefits overpayment debt collection matter. Schaper v. Derwinski, 1 Vet. App. 430 (1991). 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 U.S.C. § 5302; 38 C.F.R. § 1.962. For the Board to determine that an overpayment was properly created, it must be established that the Appellant was not legally entitled to the benefits in question and that VA was not solely responsible for the Appellant being paid such benefits erroneously. See 38 U.S.C. § 5112 (b); see also 38 C.F.R. § 3.500 (b)(2). Pursuant to 38 U.S.C. § 1521 (a), pension is payable to a Veteran of a period of war who is permanently and totally disabled from nonservice-connected disability not the result of his or her own willful misconduct. Basic entitlement exists if, among other things, such Veteran's income is not in excess of the applicable maximum annual pension rate specified in 38 C.F.R. § 3.23. See 38 U.S.C. §§ 1503, 1521; 38 C.F.R. §§ 3.3, 3.23. Death pension benefits are available for a surviving spouse pursuant to 38 U.S.C. § 1541 (a) and its implementing regulation 38 C.F.R. § 3.3 (b)(4). A surviving spouse is entitled to such benefits if two criteria are met. First, the veteran had qualifying wartime service as defined in 38 C.F.R. § 3.3 (a)(3)(i), (ii), and (iii). Second, the surviving spouse meets the net worth requirements of 38 C.F.R. § 3.274 and has an annual income not in excess of the applicable MAPR specified in 38 C.F.R. §§ 3.23 and 3.24. Payments of VA nonservice-connected pension benefits are made at the specified maximum annual rate, reduced on a dollar-for-dollar basis by annualized countable family income. Payments of any kind, from any source, shall be counted as income during the 12-month annualization period in which received, unless specifically excluded. 38 C.F.R. §§ 3.271, 3.272. Unreimbursed medical expenses, which were paid within the twelve-month annualization period regardless of when incurred, are excluded from annual countable income to the extent that the amount paid exceeds 5 percent of the regular maximum annual rate payable to the Appellant. 38 C.F.R. § 3.272. The rates of pension are published in tabular form in Appendix B of VBA guidance documents, and are given the same force and effect as if published in the Code of Federal Regulations. The MAPR is adjusted from year to year. 38 C.F.R. § 3.21. In October 2014, the Appellant was awarded a survivor's pension with entitlement to aid and attendance effective October 1, 2014. The Appellant was informed that in calculating her income, VA counted $35,673.00 of the medical expenses reported as the Appellant resided in a private assisted living facility. The Appellant was further informed of the requirement that she inform VA if she moved. Enclosed with the notification letter was a VA Form 21-8768 which advised the Appellant that she was obligated to provide prompt notice of any change in income or net worth or dependency status and that a failure to provide such would result in the creation of an overpayment which would be subject to recovery. In October 2020, the RO sent the Appellant a letter which proposed to terminate the pension benefits. The Appellant was notified that the RO had been considering assisted living fees while calculating her income, but that it had been informed that she was approved for Medicaid for long term care at a nursing home. As the RO did not know the date that the Appellant's medical expenses changed, it proposed to remove all assisted living fees and terminate the Appellant's award effective October 1, 2014. The Appellant was asked to submit medical expense reports for each year from October 2014 to the present and to notify the RO of the date that she stopped paying the assisted living facility and the date she entered a Medicaid approved nursing home. In an October 2020 phone call, K.U. contacted the RO and requested an additional 60 days to submit the required paperwork, as the Appellant's nursing facility was on lockdown due to COVID-19 and she was unable to obtain the Appellant's signature. The Board notes that while K.U. is not an accredited VA representative, the Appellant appears to have authorized K.U. to communicate with VA on her behalf. In December 2020, K.U. again contacted the RO and stated that the required documents would be submitted that week. K.U. subsequently contacted the RO a third time to state that she was still trying to get past medical expense information. In December 2020, the Appellant submitted a November 2020 bank statement, a statement from the Social Security Administration showing monthly benefits of $1,293.00, verification of long term care nursing facility benefits from the state of Ohio Medicaid program, a statement of updated insurance premium contribution, and verification of pension benefit income. In a February 2021 Notification Letter, the RO informed the Appellant that VA did not have an accurate accounting of medical expenses, did not know when she left a private assisted living facility or the date she entered a Medicaid approved facility, and did not have the name or address of the Medicaid facility or the monthly amount paid. The RO therefore terminated the Appellant's survivor's pension benefits effective October 1, 2014. The RO actions resulted in an overpayment in the amount of $90,712.00. In a March 2021 statement, K.U. reported that the Appellant was currently living at F.H.C.C. K.U. stated that the Appellant was admitted to a private pay assisted living facility in November 2013, that the Appellant was hospitalized in February 2016, and that the Appellant was then placed at F.H.C.C. in February 2016. K.U. reported that the Appellant's expenses were covered by Medicare from February 2016 to May 2016 and that the Appellant was private pay until she was approved for Medicaid in July 2020. K.U. reported current monthly income for the Appellant of $1,310.00 in Social Security benefits, $1,228.00 in VA benefits, and a pension of $90.89. K.U. reported current monthly expenses of patient liability for the skilled nursing facility of $2,225 and Medicare Advantage premiums of $50.00. K.U. reported current resources of less than $3,000.00. While the Appellant has provided some information regarding her current monthly expenses and fees for the skilled nursing facility where she resides, she has not provided the requested medical expense reports for October 2014 to the present, which would allow the RO to properly calculate her unreimbursed medical expenses for the years in question and determine her continued eligibility for a survivor's pension. The Board notes that this information has been requested on at least two occasions by the RO. As such, the overpayment created when the RO terminated the Appellant's survivor's pension effective October 1, 2014 was proper. In August 2021, the Appellant requested a waiver of the recovery of the overpayment of $90,712.00. In its September 2021 decision denying the waiver request, the COWC did not find fraud, misrepresentation, or bad faith in this case. The Board agrees with this determination. However, the COWC determined it would be against the principles of equity and good conscience if the debt was not collected. Thus, the request for a waiver of the recovery of the overpayment at issue was denied. The Appellant appealed that determination. In cases where fraud, misrepresentation, or bad faith on the Appellant'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). The first and second elements pertain to the fault of the debtor versus the fault of VA. The Board finds that the Appellant is at fault in the creation of the debt, as she did not notify VA of changes in her income, to include her Medicaid entitlement and her relocation to a Medicaid facility. In regard to whether failure to collect would cause unjust enrichment to the debtor, the Board notes that the Appellant received benefits to which she was not entitled and as such, would cause unjust enrichment to the debtor. Likewise, there is no indication that the Appellant's reliance on VA benefits resulted in relinquishment of another valuable right. As to whether recoupment of those benefits would defeat the purpose of the benefit, recoupment of those benefits would not defeat the purpose of the benefit since the Appellant was receiving Social Security benefits and Medicaid benefits. The Board has also considered whether the Appellant would suffer undue financial hardship if forced to repay the debt at issue. The Board notes that a review of the financial status report provides little clarity in this matter. The financial status report shows income that is almost equal to expenses. However, the reported housing expense of $1,300.00 is inconsistent with the evidentiary record showing that the Appellant resides in a skilled nursing facility and that her financial responsibility is more than $1,300 per month. A review of the Appellant's bank statements, monthly statements from the skilled nursing facility, and copies of checks written to the skilled nursing facility indicate that the Appellant's monthly expense is over $2,200 per month. As discussed above, the Appellant's VA survivor's pension benefit has been terminated, and the application to reapply for those benefits has been denied. A review of the available evidence shows that the Appellant receives monthly income of $1,310 in Social Security benefits and a pension of $90.89. Further, the Appellant's cash assets appear to have depleted over the relevant period, from more than $40,000 in 2014 to less than $3,000 in early 2021. The Appellant has limited future earning potential, as she is elderly and lives in a skilled nursing facility. The Board finds that in weighing all of the elements of equity and good conscience, the element of financial hardship that would be caused by recoupment of the debt outweighs the elements which are not in the Appellant's favor in this particular case. Accordingly, in view of the hardship resulting from recovery of the overpayment, recovery would be against equity and good conscience and waiver of recovery of the overpayment is warranted. (continued on next page) TANYA SMITH Veterans Law Judge Board of Veterans' Appeals Attorney for the Board T. Bynum, 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.