Citation Nr: 21005370 Decision Date: 02/01/21 Archive Date: 02/01/21 DOCKET NO. 16-23 336 DATE: February 1, 2021 ORDER A waiver of the recovery of the overpayment of Department of Veterans Affairs (VA) compensation benefits in the amount of $1,661, to include whether the debt was properly created is denied. FINDINGS OF FACT 1. In an April 2013 letter, the RO informed the Veteran that she had been awarded additional benefits for his spouse, M.G., and she was informed that she should promptly inform that office of VA of any change in the status of her dependent; she was provided a VA Form 21-8764 which reiterated that additional benefits were included for her spouse and that failure to notify the RO in a prompt fashion of a dependency change would result in an overpayment. 2. In March 2014, the Veteran and M.G. divorced. 3. The Veteran initially notified the RO that her marital status had changed in June 2014. 4. In April 2015, the RO removed M.G. from the Veteran’s award of VA disability compensation benefits effective April 1, 2014; the actions of the RO resulted in the creation of an overpayment. 5. In a May 2015 letter, the Veteran was notified that she owed a debt of $1,661; the letter stated that the Veteran could request a waiver of the recovery of the debt within 180 days. 6. In December 2015, the Veteran requested a waiver of the recovery of the debt. 7. There was no delay in the Veteran’s receipt of the notification of indebtedness as a result of VA or postal authority error, or due to other circumstances beyond the debtor’s control. CONCLUSIONS OF LAW 1. The overpayment of VA compensation benefits in the amount of $1661 was properly created. 38 U.S.C. §§ 5110, 5111, 5112; 38 C.F.R. §§ 3.401, 3.501. 2. The Veteran did not apply for a waiver of recovery of overpayment of VA benefits in the amount of $1,661 in a timely manner. 38 U.S.C. § 5302 (a); 38 C.F.R. § 1.963 (b)(2). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS The Veteran served in the Army from October 23, 1981, to October 22, 1984, and from April 3, 1986, to September 28, 1992. The Board has noted that in addition to the issue involving the overpayment, the Veteran has also perfected appeals pertaining to claims for service connection for headaches, a thyroid disorder, an overactive bladder, post-traumatic stress disorder and lupus. However, the Veteran has not been afforded a requested hearing on those issues. Accordingly, the Board will not address those issues at this time. The Veteran was afforded a hearing before the undersigned Veterans Law Judge in December 2018. A transcript of the hearing has been associated with the Veteran’s electronic claims file. In June 2019, the Board remanded the appeal to the Department of Veterans Affairs (VA) Regional Office (RO) for additional development. The appeal has been returned to the Board for further consideration. Validity of Debt and Waiver When the validity of a debt is challenged, a threshold determination must be made on that question prior to a decision on waiver of indebtedness. Schaper v. Derwinski, 1 Vet. App. 430, 437 (1991); 38 U.S.C. § 5302; 38 C.F.R. § 1.911 (c); VAOPGCPREC 6-98 (Apr. 24, 1998). An overpayment is created when a beneficiary receives benefit payments in excess of the amount due or the amount to which such beneficiary is entitled. 38 U.S.C. § 5302; 38 C.F.R. § 1.962. To establish improper creation of an overpayment, i.e., an invalid debt, the evidence must show that (1) the Veteran was legally entitled to the VA benefits at issue; or, (2) the erroneous payment of excess benefits was due solely to VA administrative error or error in judgment. The terms "administrative error" and "error in judgment" include all administrative decisions of entitlement, whether based on a mistake of fact or mistake of law. The beneficiary will be liable for the overpayment if the error was caused in whole or in part by any action or failure to act by the beneficiary, or by another person with the beneficiary's knowledge. In other words, sole error by VA means that the Veteran did not have knowledge of, and should not have been aware of, the erroneous award or receipt of benefits; and that neither the Veteran's actions, nor his failure to act, contributed to the erroneous payment of benefits. See 38 U.S.C. § 5112 (b)(9) and (b)(10); see also Jordan v. Brown, 10 Vet. App. 171, 174-75 (1997); 38 C.F.R. § 3.500 (b); VAOPGCPREC 6-97 (January 28, 1997); VAOPGCPREC 11-92 (May 14, 1992); VAOPGCPREC 2-90 (March 20, 1990). A debtor may dispute the amount or existence of a debt, either separately from a request for waiver or at the same time. See 38 C.F.R. § 1.911 (c)(1); see also VAOPGCPREC 6-98 (April 24, 1998). Further, the propriety and amount of the overpayment at issue is integral to a waiver determination; thus, the lawfulness of the debt must be determined before the waiver application is adjudicated. Schaper, 1 Vet. App. at 434-35; VAOPGCPREC 6-98. As relevant to this appeal, the law provides for the rates of disability compensation, and for payment of additional compensation for dependents of veterans who are at least 30 percent disabled. 38 U.S.C. §§ 1114 (c), 1115, 1134, 1135. The Veteran was, at all times relevant to this issue and the period of time in question, rated appropriately to receive additional compensation for a spouse. Under applicable criteria, a request for waiver of an indebtedness shall only be considered if made within 180 days following the date of a notice of indebtedness to the debtor. The 180-day period may be extended if the individual requesting waiver demonstrates, as a result of error by either the VA or the postal authorities, or due to other circumstances beyond the debtor’s control, there was a delay in such individual’s receipt of the notification of indebtedness beyond the time customarily required for mailing. If the debtor does substantiate there was such a delay in the receipt of the notice of indebtedness, the 180-day period shall be computed from the date of the debtor’s actual receipt of the notice of indebtedness. 38 U.S.C. § 5302 (a); 38 C.F.R. § 1.963 (b)(2). Validity of the Debt In an April 2013 VA letter, the RO informed the Veteran that she had been awarded additional benefits for her spouse, M.G., and she was informed that he should promptly inform that office of VA of any change in the status of her dependent and that a failure to do so might result in an overpayment which must be repaid. She was provided a VA Form 21-8764 which reiterated that additional benefits were included for his spouse as well as a dependent and that failure to notify the RO in a prompt fashion of a dependency change would result in an overpayment. In June 2014, the Veteran informed VA that she divorced her spouse in March 2014 and submitted a copy of the divorce decree. In an April 2015 letter, the Veteran was advised that the RO retroactively removed M.G. as the Veteran’s spouse from her award of VA compensation benefits effective April 1, 2014, the first day of the month following their divorce. The Veteran was informed that the retroactive adjustments to the Veteran’s VA compensation benefits resulted in an overpayment debt. On May 4, 2015, the Veteran was informed of an overpayment debt in the amount of $1,661 and was provided with her rights to dispute the debt and to request a waiver. Based on the evidence of record, the Board finds that the creation of the debt is valid. The record shows, and the Veteran does not dispute, that she was divorced in March 2014. There can be no dispute that the Veteran was not legally entitled to benefits for a spouse after April 1, 2014. 38 C.F.R. 501 (d). However, for a valid debt to be created, the overpayment must not have been solely due to administrative error. The Board recognizes that VA was notified in June 2014 that the Veteran was single. However, VA took no action for almost a year. Accordingly, the Board has considered whether there was sole administrative error in the payment of the additional benefits for a spouse due to the delay. Under 38 U.S.C. § 5112 (b)(10), the effective date of a reduction or discontinuance of compensation by reason of an erroneous award based solely on administrative error or error in judgment shall be the date of last payment. See also 38 C.F.R. § 3.500 (b)(2). “Stated another way, when an overpayment has been made by reason of an erroneous award based solely on administrative error, the reduction of that award cannot be made retroactive to form an overpayment debt owed to VA from the recipient of the erroneous award.” Erickson v. West, 13 Vet. App. 495, 499 (2000). The Board notes, however, that sole administrative error may be found to occur only in cases where the Appellant neither had knowledge of nor should have been aware of the erroneous award. Further, such error contemplates that neither the Appellant’s actions nor his failure to act contributed to the erroneous award. 38 U.S.C. § 5112 (b)(10); 38 C.F.R. § 3.500 (b)(2). In this case, the Veteran continued to be paid at the same rate after June 2014 when she reported her change in status; in other words, there was no reduction in her benefits after she reported that he had no spouse. The Veteran has acknowledged that she knew she was being paid funds she was not entitled to, but that she kept the funds because she needed the money. See July 12, 2016 Correspondence; December 2018 Hearing Transcript. The Veteran also asserts that she returned some of the checks to VA. See December 2018 Hearing Transcript. However, a payment history associated with the record shows that the only check returned to VA during the debt period was returned due to an incorrect address, and that VA sent a replacement check to the Veteran that same month. See March 2020 Payment History. Thus, the Veteran had actual knowledge that she was erroneously receiving benefits for a spouse because there was no decrease in her benefits when she was no longer married and the retention of those benefits contributed to the erroneous award. Based on the foregoing, the Board finds that the overpayment of VA compensation in the amount of $1,661 is valid since the Veteran was not entitled to the benefits after April 1, 2014 and because VA was not solely at fault in the creation of the debt. Waiver In May 2015, the Veteran was notified of the debt at issue. In its January 2016 decision, the Committee on Waivers and Compromises (COWC) of the RO indicated that the Veteran’s request for waiver of the debt at issue was received on December 2, 2015. The request for waiver was received on December 2, 2015 which is outside of the 180-day period. With regard to the contention that her psychiatric disorder prevented her from responding to the VA notification letter within the 180-day period, the Board finds that the Veteran was competent with regard to financial matters. At no time was she determined to be incompetent nor was a custodian or fiduciary assigned. Moreover, during the 180-day period, the Veteran pursued other VA claims and apparently understood the time limits of those claims. Thus, the Board finds that she had adequate knowledge and awareness of her responsibilities. See generally Reyes v. Nicholson, No. 03-1929 (U.S. Vet. App. July 20, 2007). Because there is no evidence in the record establishing that there was a delay in the Veteran’s receipt of the notification of indebtedness beyond the 30 days accepted by the Board as a result of an error by either VA or the postal authorities, or due to other circumstances beyond the Veteran’s control, the Board concludes that the Veteran did not timely request a waiver of recovery of an overpayment of VA benefits. Therefore, based on the foregoing, the Board finds that the overpayment of VA benefits in the amount of $1,661 was validly created, and the Veteran’s request for a waiver of the recovery of such overpayment was not timely filed. Consequently, the appeal as to both issues must be denied. MICHAEL MARTIN 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.