Citation Nr: 21020819 Decision Date: 04/08/21 Archive Date: 04/08/21 DOCKET NO. 15-16 087 DATE: April 8, 2021 ORDER The overpayment of Department of Veterans Affairs (VA) compensation benefits in the amount of $14,156.70 was validity created; the appeal is denied. FINDINGS OF FACT 1. In April 2004, the Veteran was awarded non-service-connected pension benefits. He was subsequently incarcerated. 2. Based on the Veteran’s incarceration, VA switched his pension benefits to the 10 percent service connection rate effective June 25, 2012, the 61st day of his incarceration. This resulted in an overpayment in the amount of $14,156.70. CONCLUSION OF LAW The overpayment of VA benefits in the amount of $14,156.70 was validly created. 38 U.S.C. § 5313; 38 C.F.R. § 3.665. REASONS AND BASES FOR FINDINGS AND CONCLUSION The Veteran served on active duty from June 1971 to November 1972. In his May 2015 Substantive Appeal, the Veteran requested a Board hearing. The hearing was scheduled for May 15, 2019. However, the Veteran did not appear for the hearing. Thus, there are no outstanding hearing requests. Validity 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 law limits the payment of compensation to persons incarcerated for a felony conviction. Pertinent to the Veteran’s appeal, VA regulations hold that no pension shall be paid to (or for) a veteran who has been imprisoned in a Federal, State, or local penal institution as a result of conviction of a felony or misdemeanor for any part of the period beginning sixty-one days after such individual’s imprisonment begins and ending when such individual’s imprisonment ends. See 38 U.S.C. § 1505; 38 C.F.R. § 3.666; see also Lantham v. Brown, 4 Vet. App. 256 (1993). Additionally, in the case of a veteran with service-connected disability rated at 20 percent or more, he shall not be paid an amount in excess of the rate under 38 U.S.C. § 1114(a), which is at the rate of 10 percent. 38 U.S.C. § 5313; 38 C.F.R. § 3.665. In order for the Board to determine that an overpayment was not properly created, thereby invalidating the debt, the record must establish the Veteran was legally entitled to the benefits in question or if not legally entitled, then it must be shown that VA was solely responsible for the Veteran being erroneously paid compensation benefits. 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 (July 17, 1989), 55 Fed. Reg. 27,757 (1990). Sole administrative error connotes the Veteran neither had knowledge of nor should have been aware of the erroneous award. Further, neither the Veteran’s actions nor his or her failure to act must have contributed to payment pursuant to the erroneous award. 38 U.S.C. § 5112(b)(9), (10); 38 C.F.R. § 3.500(b)(2); 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). An administrative error resulting in an overpayment will not be classified as a VA administrative error or error in judgment if the error is “based on an act of commission or omission by the beneficiary, or with the beneficiary’s knowledge.” Dent v. McDonald, 27 Vet. App. 362, 380 (2015) (citing 38 U.S.C. § 5112(b)(9); see 38 C.F.R. § 3.500(b)(1); VAOGCPREC 2-90 (Mar. 20, 1990)). Thus, a finding of sole administrative error requires not only error on the part of VA, but that the beneficiary is unaware that the payments are erroneous. Analysis The Veteran asserts that an overpayment of VA benefits in the amount of $14,156.70, based on a retroactive reduction to the 10 percent rate as of the 61st day of his felony conviction, was not properly created. In April 2004, the Veteran was awarded 70 percent nonservice connected pension benefits. VA provided the Veteran with VA Form 21-8768 which states, in pertinent part, that compensation is subject to future adjustment, and that “benefits will be discontinued effective the 61st day of incarceration in a Federal, State or local penal institution following conviction for a felony or misdemeanor.” The Veteran was instructed to immediately notify VA if there was a change in any condition affecting his right to continued payments. In April 2005, VA informed the Veteran that it received information stating that he had been imprisoned for more than 60 days following conviction of a felony or misdemeanor. VA stated that the law requires termination of pension payments effective the 61st day of imprisonment. Based on this information, VA proposed to stop the Veteran benefit payments on the 61st day of his imprisonment. On August 16, 2005, VA effectuated the termination. The termination resulted in a $8,635.74 debt. However, VA received information stating that the Veteran was not imprisoned for more than 60 days. As such, VA reinstated his benefits. In August 2013, a VA and Bureau of Prisons Computer Match noted that the Veteran had been incarcerated for a felony. Based on this, VA proposed to switch the Veteran’s pension benefits to the 10 percent service-connection rate effective June 25, 2012, the 61st day of his imprisonment. On May 5, 2014, VA effectuated the reduction. The reduction resulted in a $14,156.70 overpayment debt. On May 30, 2014, the Veteran disagreed with the debt but acknowledged his April 2012 incarceration. In August 2014, the Veteran stated, while in jail, he attempt to obtain VA’s address; however, the jail did not have the resources to obtain the address. The Veteran also stated that he had no control of his finances and was unable to stop the direct deposit. He took full responsibility. In his Substantive Appeal, the Veteran stated that, effective June 25, 2012 and due to his incarceration, VA switched his benefits to the 10 percent rate. However, he kept receiving his full benefit payments until June 2013. He further stated that VA conceded knowing about his incarceration. He requested an audit of his account. A February 2019 audit report confirmed the Veteran’s debt amount. 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 he was incarcerated for a felony conviction in April 2012. There can be no dispute that the Veteran was not legally entitled to benefits beginning the 61st day of his incarceration. See 38 C.F.R. § 3.666. However, for a valid debt to be created, the overpayment must not have been solely due to administrative error. The evidence shows that VA’s overpayment to the Veteran was not the result of sole VA administrative error. Sole administrative error entails no knowledge or fault on the part of the debtor. See Jordan, 10 Vet. App. 171. In April 2004, the Veteran received a Notification Letter stating that benefits will be discontinued effective the 61st day of incarceration in a Federal, State, or local penal institution following conviction for a felony or misdemeanor. Additionally, the Board notes that, although his benefits were reinstated, the Veteran’s benefits were termination in 2005 due to incarceration for more than 60 days. Therefore, the Board finds that the Veteran knew that his benefit award should have been reduced on the 61st day of his incarceration and that he was aware that the full payments he continued to receive following the 61st day of his incarceration were erroneous. In August 2014, the Veteran stated, while in jail, he attempt to obtain VA’s address; however, the jail did not have the resources to obtain the address. The Board notes that from between 1972 to 2012, the Veteran received multiple notices and letters from VA. The Veteran also sent multiple documents to VA. As such, the Board finds this argument unpersuasive as to why the Veteran failed to inform VA of his incarceration. Additionally, in his Substantive Appeal, the Veteran stated that, effective June 25, 2012 and due to his incarceration, VA switched his benefits to the 10 percent rate. However, he kept receiving his full benefit payments until June 2013. The Board notes that according to the record, VA did not receive notice of the Veteran’s incarceration until August 2013. When VA learned of his incarceration, VA took steps, which included providing the Veteran with a hearing, to reduce his benefits. Additionally, it is not considered administrative error for VA to continue sending monthly payments after it is notified of a Veteran’s change in status. The Board also notes that VA’s delay in administratively processing the adjustment to the rate of compensation is also not considered administrative error. See Dent at 374. Here, the Veteran knew that he was not entitled to the monies he continued to receive based on his incarceration. 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). Therefore, base on the foregoing, the Board finds VA was not solely responsible for the erroneously paid benefits. 38 U.S.C. § 5112(b)(9), (10); 38 C.F.R. § 3.500(b)(2); Jordan, supra. Accordingly, the Board finds the creation of the overpayment was valid. The Board is bound by the law and is without authority to grant benefits on an equitable basis. See 38 U.S.C. §§ 503, 7104; Harvey v. Brown, 6 Vet. App. 416, 425 (1994). The application of the law to the facts in this case is dispositive. MICHAEL LANE Veterans Law Judge Board of Veterans’ Appeals Attorney for the Board T. Moore 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.