Citation Nr: A21005557 Decision Date: 03/11/21 Archive Date: 03/11/21 DOCKET NO. 201112-119630 DATE: March 11, 2021 ORDER The overpayment of VA compensation benefits in the amount of $1,625.11 was properly created, and entitlement to a waiver of indebtedness for the recovery of the overpayment of $1,625.11 is granted. FINDING OF FACT 1. The Veteran’s spouse died in October 2016. 2. The Veteran timely informed VA of a change in dependent status in October 2016 with the submission of VA Form 21-686c, Declaration of Status of Dependents. 3. The RO did not effectuate the change to the Veteran’s account until September 2017, upon receipt of a second VA Form 21-686c, Declaration of Status of Dependents; a monthly overpayment in disability compensation occurred, effective November 1, 2016, creating an indebtedness of $1,625.11. 4. Recovery of the overpayment would be against equity and good conscience as the Veteran’s fault was minimal and VA’s fault in the creation of the overpayment by not timely effectuating the change in dependent status greatly outweighs any fault that may be attributed to him. CONCLUSIONS OF LAW 1. The overpayment of VA compensation benefits in the amount of $1,625.11 was properly created. 38 U.S.C. §§ 5110, 5112; 38 C.F.R. §§ 3.4, 3.500, 3.501. 2. Recovery of the overpayment of compensation benefits in the amount of $1,625.11 would be against equity and good conscience. 38 U.S.C. § 5302; 38 C.F.R. §§ 1.963, 1.965. REASONS AND BASES FOR FINDINGS AND CONCLUSIONS 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. Overpayments created by retroactive discontinuance of benefits will be subject to recovery if not waived. 38 C.F.R. § 3.660(a)(3). The relevant authority for determining the effective dates of reductions and discontinuances of pension is 38 U.S.C. § 5112 and 38 C.F.R. § 3.500. In pertinent part, the effective date of reduction or discontinuance of pension by reason of death of a dependent of a payee shall be the last day of the month in which such death occurs. 38 U.S.C. § 5112(b)(2). Where the overpayment occurred by reason of an erroneous award based solely on administrative error, the reduction of that award cannot be made retroactive to form an overpayment of debt owed to VA. 38 U.S.C. § 5112(b)(10); 38 C.F.R. § 3.500(b)(2); Erickson v. West, 13 Vet. App. 495, 499 (2000). Administrative errors include all administrative decisions of entitlement, whether based upon mistake of fact, misunderstanding of controlling regulations or instructions, or misapplication of law. VAOPGPREC 2-90 (Mar. 20, 1990). An error resulting in overpayment will not be classified as VA administrative error if it is based on an act of commission or omission by the beneficiary, or with the beneficiary’s knowledge. Id.; Jordan v. Brown, 10 Vet. App. 171 (1997) (sole administrative error is not present if the payee knew, or should have known, that the payments were erroneous); see Dent v. McDonald, 27 Vet. App. 362, 380 (2015) (knowledge can be actual or constructive). The facts of this case are not in dispute. The Veteran is in receipt of a total disability rating due to individual unemployability (TDIU), effective July 14, 2011. His compensation included payment for his spouse, G.D.N. The law provides for payment of additional compensation for dependents of veterans who are at least 30 percent disabled, which the Veteran was for the entire period at issue. 38 U.S.C. §§ 1114 (c), 1115. In October 2016, the Veteran’s spouse died. In October 2016, 20 days after her death, the Veteran submitted VA Form 21-686c, Declaration of Status of Dependents, with a copy of G.D.N.’s death certificate. In September 2017, the Veteran submitted another VA Form 21-686c wherein he reported the death of his spouse in October 2016. In September 2017, VA removed G.D.N. from the Veteran’s award, effective November 1, 2016, which resulted in an overpayment. In October 2017 correspondence, VA informed the Veteran that he was being paid as a single Veteran with no dependents, and that the payment of benefits in an amount exceeding a beneficiary’s entitlement that is due to a claims-processing delay remains the responsibility of the Veteran, and the Veteran is responsible for repaying the overpayment that resulted from the delay in adjustment to the award. Correspondence dated in October 2017 reflects that an overpayment in the amount of $1,625.11 was created. Based on a review of the evidence of record, the Board finds that the $1,625.11 debt is valid, and the Veteran has not challenged the amount of debt. The overpayment debt is due to a retroactive adjustment of VA compensation benefits caused by the removal of his spouse from the award due to her death. See 38 C.F.R. § 3.4 (b)(2). The Veteran had knowledge that the presence of his dependent spouse on his account provided for additional compensation, and that a change in her dependent status would affect his level of VA disability compensation moving forward. Thus, after her death he promptly submitted the appropriate form to have her removed from his award. While VA did not effectuate the change for approximately one year, a reasonable person would have entertained doubt as to the continuance of their benefits at the same monthly rate. The Veteran continued to accept VA disability compensation checks at the unchanged rate and 11 months later submitted another form regarding his dependency. His actions in this regard are considered an omission. In other words, fault does not lie solely with VA; rather, it is shared, to at least some degree, by the Veteran. The Board notes that VA policy dictates that payment of benefits in an amount exceeding a beneficiary’s entitlement that is due to claims-processing delay is not considered administrative error. See VA Adjudication Manual M21-1, III.v.1.I.3.d. In sum, the creation of the $1,625.11 debt was not the result of sole administrative error. While the Veteran did timely inform VA of the passing of his spouse, he continued to accept checks at an unchanged rate. He had knowledge or should have known that these payments were erroneous, and his continued acceptance of the checks at the unchanged rate constituted an omission. Because the creation of the debt was aided by his knowledge of erroneous payments and act of omission, there is not sole administrative error. Accordingly, the $1,625.11 debt is valid. The Veteran seeks a waiver of indebtedness for the recovery of the overpayment of $1,625.11. He asserts that waiver is appropriate because he timely informed VA of the death of his spouse and the creation of the debt was the result of administrative delay. For the reasons that follow, the Board finds that a waiver is warranted. The recovery of overpayment of any benefits shall be waived if collection of such indebtedness would be against equity and good conscience and if there is no indication of fraud, misrepresentation, or bad faith on the part of the person or persons having an interest in obtaining the waiver. 38 U.S.C. § 5302; 38 C.F.R. § 1.963(a). In determining whether collection of the indebtedness is against equity and good conscience, consideration will be given to the following elements, which are not intended to be all-inclusive: (1) Fault of the debtor. Where actions of the debtor contribute to the creation of the debt. (2) Balancing of faults. Weighing fault of the debtor against VA fault. (3) Undue hardship. Whether collection would deprive 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. (6) Changing position to one’s detriment. Reliance on VA benefits results in relinquishment of a valuable right or incurrence of a legal obligation. 38 C.F.R. § 1.965(a)(1)-(6). The facts of this case were set out in the discussion of the validity of the debt. They are incorporated into this discussion by reference. Based on a review of all evidence of record, the Board finds that a waiver of the $1,625.11 debt is warranted. Preliminarily, the Board notes there is no evidence demonstrating that the indebtedness resulted from fraud, misrepresentation, or bad faith on the Veteran’s part. Therefore, a waiver of indebtedness is not precluded. 38 C.F.R. §§ 1.963, 1.965. Applying the standard of equity and good conscience, the first factor requires consideration of the fault of the debtor. In this regard, the Veteran’s fault was minimal. After his dependent spouse died, he timely informed VA of the change in dependent status. VA did not act on this information until the Veteran submitted a second VA Form 21-686c. As discussed in the analysis of the validity of this debt, he did have at least constructive knowledge that a change in the status of a dependent could affect his monthly rate of compensation for disability benefits. While the Veteran did not follow-up on the change in status for 11 months, his follow-up in September 2017 triggered VA to remove his spouse from his award. Thus, the Board views the Veteran’s failure to follow-up for 11 months, while an act of omission, is relatively negligible as there is no indication that he was certain his monthly rate would decrease and, if so, by how much. The second factor requires balancing the faults between the debtor and VA. In this regard, fault lies heavily with VA. The Veteran timely informed VA of the change in his dependent status, and it was far easier for VA to process the change on his account than for the Veteran to continue to follow-up with VA to confirm whether he was being paid the proper amount. VA did not effectuate the change in a timely manner. In fact, again, VA only took action once the Veteran submitted a second VA Form 21-686c. Thus, when balancing the faults between the debtor and VA, the Board finds that the Veteran’s fault was minimal while VA’s fault in creation of the overpayment was considerable and inexcusable. These first two factors overwhelm all the others. In this regard, the Board finds that the factors set forth in 38 C.F.R. § 1.965(a) need not be viewed in a vacuum, but rather in relation to each other. A waiver of indebtedness need not be supported by a majority of factors. Even a single factor weighing in favor of the debtor can be sufficient, and the weight of any one factor or combination of factors can tilt the scale for or against the application for a waiver. In this case, given that VA’s fault in creation of the debt greatly outweighs the Veteran’s, factors such as undue hardship, whether collection would defeat the purpose of the benefit, unjust enrichment, and relying on VA benefits to one’s detriment, which do not favor the Veteran, do not, in the Board’s view, alter the conclusion that collection of the debt would be against equity and good conscience in this case. As noted above, the factors are not all inclusive, and the Board will highlight one additional factor that weighs in the Veteran’s favor. The debt amounts to a considerable sum of $1,625.11. The change in the Veteran’s monthly compensation, in contrast, was small, and what was a slight overpayment in monthly compensation was allowed to balloon into a $1,625.11 debt over the course of 11 months. This debt was suddenly sprung upon the Veteran and its creation was primarily due to the inaction of VA. Thus, the fault on part of VA combines with the size of the debt to further weigh in favor of the grant of a waiver. (Continued on the next page)   Accordingly, a waiver of the entire indebtedness of $1,625.11 is warranted. 38 C.F.R. § 1.965. Eric S. Leboff Veterans Law Judge Board of Veterans’ Appeals Attorney for the Board M.W. Kreindler, 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.