Citation Nr: 21012375 Decision Date: 03/04/21 Archive Date: 03/04/21 DOCKET NO. 17-39 961A DATE: March 4, 2021 ORDER The overpayment of Department of Veterans Affairs (VA) compensation benefits in the amount of $32,914.10 was properly created due to a retroactive reduction in the compensation rate to the 10 percent rate as of the 61st day of the Veteran’s incarceration following his November 5, 2014 felony conviction; the appeal is denied. FINDINGS OF FACT 1. The Veteran was incarcerated following a felony conviction on November 5, 2014; the 61st day of incarceration was January 5, 2015. 2. The Veteran, his family members, and his representative timely notified VA of his incarceration and VA took several months, but less than a year, to respond. 3. The Veteran knew that the ongoing receipt of VA compensation benefits at the 100 percent rate during his incarceration was erroneous. 4. The Regional Office (RO) retroactively reduced the Veteran’s compensation benefits which were being paid at the 100 to the 10 percent rate and this action resulted in an overpayment. CONCLUSION OF LAW The overpayment debt of VA compensation benefits was properly created due to a retroactive reduction in the compensation rate to the 10 percent rate as of the 61st day after the Veteran’s felony conviction. 38 U.S.C. § 5313; 38 C.F.R. § 3.665. REASONS AND BASES FOR FINDINGS AND CONCLUSION The Veteran had active service in the United States Army from March 1962 to September 1962, and from July 1963 to February 1964. As will be discussed in greater detail, below, the matter on appeal comes before the Board of Veterans’ Appeals (Board) from a December 2015 decision by the Regional Office (RO) to retroactively reduce the Veteran’s benefits from a 100 percent rating to a 10 percent rating, effective January 5, 2015, due to his incarceration. The Veteran perfected an appeal as to whether the resulting debt was validly created. The Veteran recently provided hearing testimony before the undersigned in December 2020. Initially, the Board notes that the Veteran is in receipt of VA disability compensation benefits, and has been rated as 100 percent disabled since May 29, 2012. In October 2014, the Veteran communicated with VA with an indication that he was presently incarcerated in the Grayson County Jail. In January 2015, the Veteran’s brother-in-law reported to VA that the Veteran had been convicted of a felony on November 5, 2014, and was incarcerated since that time. The brother-in-law requested that VA take appropriate action. In June 2015, a Veterans Service Organization (VSO) communicated with VA again reporting the Veteran’s incarceration and providing his proper address. VA then responded to the Veteran later in June 2015 communicating with him at his address at the correctional facility. VA was undoubtedly aware that the Veteran was incarcerated. In August 2015, the VSO again contacted VA expressing concern since VA continued to pay the Veteran at the 100 percent rate without any incarceration adjustment. The VSO reported that the Veteran’s sister and brother-in-law had been in contact and noted the Veteran’s checking account is consequently growing. The Regional Office (RO) then received confirmation of the Veteran’s November 5, 2014 felony conviction and incarceration from the correctional facility in October 2015. Also in October 2015, the RO notified the Veteran of the proposed reduction of his benefits to the 10 percent rate effective January 5, 2015, the 61st day of his incarceration. In December 2015, the RO communicated with the Veteran to notify him that the proposed action was being taken. The adjustment in benefits was retroactively applied effective January 5, 2015 and the overpayment at issue resulted. The VA Debt Management Center (DMC) notified the Veteran of the $32,914.10 debt associated with this overpayment in January 2016. The Veteran has appealed and argues that this debt is not valid because VA is at fault in its creation. In particular, the Veteran argues that the debt would not have occurred had VA not erred in failing to act when the Veteran, his family members and his representative at the time notified VA of his incarceration. The Board notes that the Veteran also requested a waiver of this overpayment debt, which was denied in August 2020. The Veteran has not yet filed an appeal of the waiver decision; thus, this decision is limited to whether the debt was properly created. Under pertinent VA laws and regulations, any individual who is entitled to compensation or to dependency and indemnity compensation and who is incarcerated in a Federal, State, local, or other penal institution or correctional facility for a period in excess of sixty days for conviction of a felony that was, as here, committed after October 7, 1980, shall not be paid such compensation or dependency and indemnity compensation, for the period beginning on the sixty-first day of such incarceration and ending on the day such incarceration ends, in an amount that exceeds (A) in the case of a veteran with a service-connected disability rated at 20 percent or more, the rate of compensation payable under section 1114(a) of this title; or (B) in the case of a veteran with a service-connected disability not rated at 20 percent or more or in the case of a surviving spouse, parent, or child, one-half of the rate of compensation payable under section 1114(a) of this title. 38 U.S.C. § 5313(a); 38 C.F.R. § 3.665(a). In this case, the Veteran was convicted of a felony on November 5, 2014, and VA retroactively reduced his VA benefits based on his incarceration effective on the 61st day of the incarceration. This action was taken in accordance with VA law and regulation and the action resulted in the overpayment at issue. The debt in this case was properly created. The Veteran maintains that the error in this case was on VA’s part as he notified VA of his incarceration and action was not promptly taken to adjust his benefits. The Board has considered whether there was sole administrative error in the payment of ongoing benefits at the full 100 percent rate for almost a year after they should have been reduced. The record clearly shows that the Veteran, his family and his VSO notified VA in a timely fashion and VA took several months, although less than a year, to respond. 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 various communications submitted show that the Veteran and his representative were indeed aware that the payments he continued receiving were erroneous. The representative noted in August 2015 that the amount in the Veteran’s checking account was growing as a result. Further, the Board observes that the Veteran’s June 2019 Financial Status Report associated with his waiver claim shows that he had $36,000 cash in the bank at that time. Thus, the evidence shows the Veteran knew of the erroneous award, and the overpayment accumulated in his account and, as of June 2019, he appeared to continue to have the monies that were paid. These facts simply do not support a finding of sole VA error in this case. Accordingly, because this debt was validly created in accordance with VA law and regulation, and there was not sole VA administrative error causing the overpayment, this appeal must be denied. The Board has duly considered the benefit-of-the-doubt doctrine. However, the preponderance of the evidence is against the Veteran’s claim, so that doctrine is not applicable. 38 U.S.C. § 5107; see also Gilbert v. Derwinski, 1 Vet. App. 49, 54 (1990). JOHN Z. JONES Veterans Law Judge Board of Veterans’ Appeals Attorney for the Board A. Adamson, 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.