Citation Nr: 21021547 Decision Date: 04/13/21 Archive Date: 04/13/21 DOCKET NO. 14-19 893A DATE: April 13, 2021 ORDER An overpayment of Veterans Retraining Assistance Program (VRAP) benefits in the amount of $5,927.87 having been properly created, the appeal as to this issue is denied. A waiver of the overpayment of VRAP benefits in the amount of $5,927.87 is granted. FINDINGS OF FACT 1. Effective March 14, 2014, the Veteran was terminated from attendance at Salon Professional Academy. The award of VA VRAP benefits was accordingly terminated, creating an overpayment in the amount of $5,927.87. 2. The creation of an overpayment of VA benefits under the VRAP in the amount of $5927.87 was not the result of fraud, misrepresentation, or bad faith on the part of the Veteran. 3. The evidence is at least in equipoise as to whether the waiver of the overpayment in this instance would not be against equity and good conscience. CONCLUSIONS OF LAW 1. The overpayment of VRAP benefits in the amount of $5,927.87 was validly created. 38 U.S.C. §§ 501, 5112, 5302 (2018); 38 C.F.R. §§ 1.911, 1.962, 3.500, 21.9635 (2019). 2. Resolving reasonable doubt in favor of the Veteran, the criteria for a waiver of recovery of the overpayment of VRAP benefits in the amount of $5,927.87 are met. 38 U.S.C. §§ 5107, 5302(a) (2018); 38 C.F.R. §§ 1.962, 1.963, 1.965, 3.501 (2019). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS In February 2019, the Board remanded the issues currently on appeal to the agency of original jurisdiction (AOJ) for additional development. After performing the requested development, the AOJ did not issue a supplemental statement of the case. Moreover, an informal hearing presentation was not prepared by the Veteran’s representative. However, the above-referenced procedural failures are not prejudicial to the Veteran in light of the Board’s grant of the entire amount of the overpayment at issue, as discussed below. 1. The overpayment of VRAP benefits in the amount of $5,927.87 was properly created. The Veteran contends that she was improperly terminated from her educational institute, the Salon Professional Academy (“SPA”), and therefore the $5,927.87 overpayment is not valid or should be waived. The Veteran asserts that she did not withdraw from the SPA, but that she was improperly withdrawn out of retaliation. Specifically, she advanced that SPA terminated her enrollment only after she filed a complaint against SPA. Further, while SPA stated that it terminated her enrollment after failure to pay and/or unexcused absences, the Veteran maintains that she did pay her enrollment fees and that her absences (of one and a half days) had been excused. Under VRAP, an eligible veteran was entitled to up to 12 months of retraining assistance provided by VA to pursue a program of education for training, on a full-time basis, offered by a community college or a technical school designed to provide training for a high-demand occupation. 38 C.F.R. § 21.4270. In order to maintain the benefit, each participating veteran was required to certify to VA enrollment in a requisite program for each month she received the benefit. See VOW to Hire Heroes Act of 2011, Pub. L. No. 112-56, 125 Stat. 711 (November 21, 2011). The authority of the VA to pay such benefits concluded, by law, on March 31, 2014. Statutorily, to ensure that veterans were able to complete enrollment without the interruption of their benefits, VA authorized one-time lump sum payments to cover the cost of the remainder of any semester in which participants were enrolled full-time, after the March 31, 2014 VRAP end date. In order to receive educational assistance for pursuit of program of education, an individual must maintain satisfactory attendance. 38 C.F.R. § 21.7153(c). VA will discontinue educational assistance if the individual does not maintain satisfactory attendance. Id. The amount of overpayment of educational assistance paid to a veteran constitutes a liability of that veteran. 38 C.F.R. § 21.7144 (b). In this case, the Veteran does not dispute that she stopped attending the Salon Professional Academy on March 14, 2014. Thus, the evidence demonstrates that the Veteran did not meet the VRAP requirement beginning March 14, 2014, and thus she was ineligible for the payments made to her under VRAP from March 14, 2014 through July 1, 2014. Accordingly, the Board finds that the overpayment of educational benefits under the VRAP in the amount of $5,927.87 was validly created. Thus, the Board finds that the overpayment at issue is a valid debt. Narron v. West, 13 Vet. App. 223 (1999). As the preponderance of the evidence is against the claim, the benefit of the doubt doctrine is not for application. Gilbert v. Derwinski, 1 Vet. App. 49 (1990); Ortiz v. Principi, 274 F. 3d 1361 (Fed. Cir. 2001). 2. A waiver of the overpayment of VRAP benefits in the amount of $5,927.87 is granted. Recovery of an overpayment of VA benefits may be waived if recovery of the indebtedness would be against equity and good conscience. 38 U.S.C. § 5302; 38 C.F.R. § 1.963(a). The phrase “equity and good conscience” means arriving at a fair decision between the obligor and the Government. In making this determination, consideration will be given to various elements which are not intended to be all-inclusive. The elements are the fault of the debtor where such actions contribute to creation of the debt, balancing of faults where VA fault is also involved, whether collection of the debt would cause the debtor undue financial hardship by depriving the veteran of basic necessities, whether collection would defeat the purpose of the VA benefit, whether failure to make restitution would result in unjust enrichment, and whether reliance on VA benefits resulted in relinquishment of a valuable right (i.e., changing position to one’s detriment). 38 C.F.R. § 1.965(a). Where fraud, misrepresentation, or bad faith on the part of the Veteran is shown, denial of waiver of recovery of an overpayment may be made without regard to factors considered in applying the equity and good conscience standard. 38 U.S.C. § 5302. Bad faith generally describes unfair or deceptive dealing by one who seeks to gain thereby at another's expense. Thus, a debtor’s conduct in connection with a debt arising from a VA benefit/services program exhibits bad faith if such conduct, although not undertaken with actual fraudulent intent, is undertaken with intent to seek an unfair advantage, with knowledge of the likely consequences, and results in a loss to the Government. 38 C.F.R. § 1.965(b)(2). In order to establish misrepresentation, the VA must show that there was a willful misrepresentation of a material fact or the willful failure to disclose a material fact with the intent of obtaining or retaining, or assisting an individual to obtain eligibility for VA benefits. In order to determine whether misrepresentation exists, VA must prove a willful intent on the part of the debtor. The burden of proof lies solely with VA. 38 C.F.R. §§ 1.962(b), 1.965(b)(1). In this case, there is no evidence of fraud, misrepresentation, or bad faith on the part of the Veteran. Thus, there is no basis for denying the Veteran’s claim on the basis of fraud, misrepresentation, or bad faith. The remaining consideration is whether recovery of the indebtedness would be against equity and good conscience. As noted above, when considering whether recovery of the debt would be against equity and good conscious consideration is given to the following six elements: (1) fault of debtor, (2) balancing of fault, (3) undue hardship, (4) defeat the purpose of the debt, (5) unjust enrichment, and (6) changing position to one's detriment. See 38 C.F.R. § 1.965(a). The first two elements for consideration under 38 C.F.R. § 1.965 (a) are the fault of the debtor, and balancing the fault of the debtor and VA. The Board finds that the Veteran was at fault in the creation of the overpayment, and VA was not at fault in the creation of the indebtedness. The Board has found that the overpayment of VRAP benefits was properly created based on the change of enrollment status due to the Veteran’s withdrawal from the school. While the Veteran has alleged that she was forced to withdraw out of retaliation, the Board finds that she is, nonetheless, at fault in creating the debt based on her withdrawal, with no fault on the part of VA in this regard. As to the element of undue financial hardship, the regulation provides that consideration should be given to whether collection of the indebtedness would deprive the debtor of the basic necessities. The Veteran submitted a Financial Status Report that indicates $1,000 monthly income after expenses. The Board notes that after taking care of basic necessities such as shelter and food, the Veteran is expected to accord a debt to VA the same regard given to any other debt. Therefore, the Veteran would have after deducting her shelter, food, and utilities, $1,000 per month to contribute towards repayment. This is not undue hardship. With regard to the other elements pertaining to the principles of equity and good conscience as set forth by 38 C.F.R. § 1.965(a), the Board finds a waiver of the overpayment, in the amount of $5,927.87, would not result in unjust enrichment by the Veteran. In that regard, it appears that part of the overpayment of VRAP benefits was received by SPA. Additionally, assuming the Veteran’s enrollment was terminated out of retaliation, the Veteran was unable to obtain a certificate from Salon Professional Academy and was unable to transfer to another school prior to the expiration of the VRAP benefit program. Thus, the Board finds that the failure of the Government to insist upon its right to repayment of the assessed overpayment would not result in unjust enrichment of the Veteran in this case. The Board finds that recovery of the overpayment, in the amount of $5,927.87 would defeat the purpose for which benefits were intended. The award and disbursement of VRAP assistance benefits was made for the purpose of retraining unemployed, eligible veterans in a high demand occupation. See VOW to Hire Heroes Act of 2011, title II of Public Law 112-56 (2011). Even though the Veteran was not ultimately able to complete the qualifying training program in which she was enrolled, she was still required to pay for tuition and was unable to use her VRAP benefits for another school prior to the termination of the VRAP program. Therefore, recovery of the overpayment would defeat the purpose of the benefit. The Board also finds that the Veteran has changed her financial position to her own detriment in relying on payment of VRAP benefits in the amount of $5,927.87. In that regard, while the Veteran did not ultimately complete the full semester at Salon Professional Academy, the Veteran was not employed while attending school. Accordingly, the Board finds that the Veteran had changed her financial position by enrolling in a program based on the expectation of receiving relevant VRAP education benefits in the amount of $5,927.87. In summary, while the Veteran was at fault for the creation of the debt, and has not demonstrated that she would experience undue hardship if the debt is recovered by VA, she was not unjustly enriched, and she did change her position to her own detriment. Recovery would also defeat the purpose of the benefit. After resolving all reasonable doubt in the Veteran’s favor, the Board finds that recovery of the overpayment in the amount of $5,927.87, would be against the principles of equity and good conscience. For the reasons stated above and resolving the benefit of the doubt in favor of the Veteran, the Board finds that the criteria for a waiver of recovery of the overpayment of VRAP benefits in the amount of $5,927.87 are met. See 38 C.F.R. §§ 1.963, 1.965. The appeal is granted. J. Ragheb Acting Veterans Law Judge Board of Veterans’ Appeals Attorney for the Board Roya Bahrami, 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.