Citation Nr: 21005478 Decision Date: 02/01/21 Archive Date: 02/01/21 DOCKET NO. 13-29 823 DATE: February 1, 2021 ORDER A waiver of the recovery of the debt from the overpayment of Department of Veterans Affairs (VA) improved death pension benefits is granted. FINDINGS OF FACT 1. The overpayment at issue in this case was not due to the Appellant’s fraud, misrepresentation or bad faith. 2. Recovery of the debt in this case is against equity and good conscience. CONCLUSION OF LAW The criteria for a waiver of the recovery of the overpayment of the VA improved death pension benefits are met. 38 U.S.C. § 5302; 38 C.F.R. §§ 1.963(a), 1.965. REASONS AND BASES FOR FINDINGS AND CONCLUSION The Veteran served on active duty from June 1952 to April 1954. The Veteran died in January 1999. The Appellant is the Veteran’s surviving spouse. This matter comes before the Board of Veterans’ Appeals (Board) on appeal of an August 2013 decision of the VA Committee on Waivers and Compromises (Committee). The case was remanded by the Board to the Agency of Original Jurisdiction (AOJ) in October 2017 and again in April 2020. There having been substantial compliance with the remand directives, the case has been returned to the Board for appellate review. The Appellant was awarded improved death pension in July 2001. In several letters, the Appellant was advised that her monthly rate of death pension was based on her reported income and that she should notify the AOJ (the VA Regional Office (RO) in this instance) of changes in income, including in November 2007, November 2008, December 2009, December 2010, December 2011, and December 2012. On June 6, 2013, the Pension Management Center (PMC) took retroactive action to count previously unconsidered wage income effective February 1, 2009. The Appellant’s pension benefits were terminated from February 1, 2009. These retroactive actions resulted in a debt totaling $34,858.00. An audit of the debt was undertaken confirming that amount. In order to be eligible for nonservice-connected death pension benefits, the Appellant must meet the net worth requirements of 38 C.F.R. § 3.274 and have an annual income not in excess of the maximum annual pension rate (MAPR) specified in 38 C.F.R. §§ 3.23 and 3.24. See 38 C.F.R. § 3.3 (b)(4). The Appellant must meet the specific income and net worth requirements for each annual pension year. See 38 U.S.C. §; 38 C.F.R. § 3.3 (b)(4). A surviving spouse who meets these requirements will be paid the maximum rate of death pension, reduced by the amount of countable income. See 38 U.S.C. § 1541; 38 C.F.R. § 3.23. In determining income for this purpose, payments of any kind from any source are counted as income during the 12-month annualization period in which received unless specifically excluded. See 38 U.S.C. § 1503; C.F.R. § 3.271. The MAPR for a surviving spouse is specified by statute and is increased periodically under 38 U.S.C. § 5312. See 38 C.F.R. § 3.23. In determining annual income, all payments of any kind or from any source shall be included except for listed exclusions which do not include Social Security Administration (SSA), wage income, or retirement income. See 38 U.S.C. § 1503 (a); see also 38 C.F.R. § 3.271 (a). The record shows that the Appellant did not report all of her countable income. As a result, retroactive action was taken to terminate her death pension benefits which resulted in the debt. She requested a waiver of the recovery of the debt asserting that from about six years earlier that she was homeless, living with family, only had SSA income and some retirement income from the Veteran, had no assets, and had filed for bankruptcy. The Appellant’s request for a waiver of the overpayment was referred to the Committee. In an August 2013 decision, the Committee did not find fraud, misrepresentation, or bad faith in this case; however, the Committee determined that it would be against the principles of equity and good conscience if the debt was not collected. The Committee indicated that the principles of equity and good conscience were not in the Appellant’s favor including financial hardship. Although the financial status report prepared by the Appellant listed more debts than income, the Committee stated that the monthly debts were overstated, such as a monthly car repair cost of over $700. Thus, the request for a waiver of the recovery of the overpayment at issue was denied. 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. After consideration of the record, the Board finds that the Appellant was at fault for not notifying VA of her complete income even though she had been instructed to do so. The Appellant has asserted that she attempted several times to disclose her income to VA; however, the record does not include this correspondence. 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, pension benefits are income-based and for those below a certain income level. The Appellant was not qualified to be receiving the amount of pension she received because she had more income than she had reported. Thus, recoupment of those benefits would not defeat the purpose of the benefit. The Board has also considered whether the Appellant would suffer undue financial hardship if forced to repay the debt at issue. As noted, the Committee did not find financial hardship because certain listed expenses appeared to be inflated. The Board agrees and if they had not been inflated, then income and debts (including the retirement income which she did not list) would not have been as unbalanced. However, the Appellant has maintained that she does experience financial hardship including medical expenses which she has recently furnished. In October 2018, the RO denied the claim for death pension because the Appellant’s income, even considering medical expense, still exceeded the threshold level of VA death pension. However, that being noted, the Board notes that the Appellant has limited static income, and is in her 70’s. She has credibly reported increased medical expenses. It appears that the Appellant is struggling financially and her ability to provide for basic necessities seems to be marginal if she is required to repay the indebtedness to VA given the total amount of her income. After weighing all of the enumerated factors and affording all reasonable doubt, the Board finds that recovery of the overpayment violates the principles of equity and good conscience. The element of financial hardship outweighs the other elements in this case as of that point. Thus, waiver of the recovery of the overpayment of the debt is warranted. S. L. Kennedy Veterans Law Judge Board of Veterans’ Appeals Attorney for the Board J. Connolly, 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.