Citation Nr: 21022827 Decision Date: 04/19/21 Archive Date: 04/19/21 DOCKET NO. 17-39 966A DATE: April 19, 2021 ORDER The reduction in Department of Veterans Affairs (VA) compensation benefits for the purpose of recouping active duty pay from July 25, 2009 to October 10, 2009; June 8, 2010 to March 1, 2011; and April 6, 2013 to December 12, 2013, was proper; the appeal is denied. Entitlement to a waiver of recovery of VA compensation benefits for the remaining balance of the Veteran’s debt is granted. FINDINGS OF FACT 1. The Veteran received concurrent VA compensation benefits and active duty pay from July 25, 2009 to October 10, 2009; June 8, 2010 to March 1, 2011; and April 6, 2013 to December 12, 2013. 2. Recovery of the remainder of the Veteran’s debt would subject him to undue hardship and would be against equity and good conscience. 3. A waiver of the Veteran’s debt would not result in unjust enrichment to the Veteran. CONCLUSIONS OF LAW 1. The withholding of the Veteran’s VA compensation benefits to recoup active duty pay received from July 25, 2009 to October 10, 2009; June 8, 2010 to March 1, 2011; and April 6, 2013 to December 12, 2013 was proper. 38 U.S.C. §§ 5107, 5304(c); 38 C.F.R. §§ 3.654, 3.700. 2. The criteria for entitlement to a waiver of recovery of overpayment of VA compensation benefits for the remaining balance of the Veteran’s debt have been met. 38 U.S.C. § 5302(a); 38 C.F.R. §§ 1.963(a), 1.965, 3.666(e). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS The Veteran has had various periods of active and inactive duty. The Veteran served on active duty in the United States Army from February 2000 to March 2008. Subsequently, the Veteran had active service in the United States Air Force from July 2009 to October 2009, February 2010 to May 2010, June 2010 to March 2011, April 2012 to December 2012, and April 2013 to December 2013. In November 2018, the Veteran testified before the undersigned Veterans Law Judge (VLJ). A transcript of the hearing is of record. In August 2019, the Board remanded the claim for further development. 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. When the validity of a debt is challenged, a threshold determination must be made on that question prior to a decision on waiver of indebtedness. Schaper v. Derwinski, 1 Vet. App. 430, 431 (1991); see also 38 C.F.R. § 1.911I; VAOPGCPREC 6-98 (Apr. 24, 1998). To establish improper creation of an overpayment, i.e. an invalid debt, evidence must show that the claimant was legally entitled to the VA compensation benefits at issue, or, if he was not legally entitled to these benefits, then it must be shown that VA was solely at fault for the erroneous payment of excess benefits. As relevant to this appeal, 38 U.S.C. § 5304I prohibits the receipt of VA disability compensation benefits for any period for which the person receives active service pay. See 38 C.F.R. §§ 3.654, 3.700. This includes active duty pay, drill, and active duty for training and inactive duty training payments made to Reservists and members of the National Guard. Id. Reservists may waive their pension, compensation, or retirement pay for periods of field training, instruction, other duty, or drills. A waiver may include prospective periods and contain a right of recoupment for the days for which the reservist did not receive payment for duty by reason of failure to report for duty. 38 C.F.R. § 3.700(a)(1)(iii). 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, 27 Vet. App. at 380 (citing 38 U.S.C. § 5112(b)(9); see 38 C.F.R. § 3.500(b)(1); VAOPGCPREC 2-90 (March 20, 1990)). Sole administrative error connotes that the claimant neither had knowledge of nor should have been aware of the erroneous award. Further, neither the claimant’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). 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 challenges the validity of an overpayment created when he received VA compensation concurrently with active duty pay. In a February 2009 Notification Letter, the Veteran was granted service connection for his disabilities. He was provided with VA Form 21-8764 which informed him that receipt of active duty or drill pay as a reservist or member of the Federally recognized National Guard could affect his rights to compensation payments. The Veteran was instructed to promptly inform VA if this occurred. In July 2015, VA noted that from July 25, 2009 to October 10, 2009; June 8, 2010 to March 1, 2011; and April 6, 2013, to December 12, 2013, the Veteran served on active duty. Due to the Veteran’s active duty service, VA terminated the Veteran’s benefits for the periods he served on active duty. The terminations created a $21,915.99 debt. The Veteran requested a waiver of the debt. In December 2016, the Committee on Waivers and Compromises denied the waiver request. In his March 2017 Notice of Disagreement, August 2017 Substantive Appeal, and during his November 2018 Board hearing, the Veteran stated that repaying the debt would result in severe financial hardship. Therefore, a waiver should be granted. In August 2019, the Board remanded the claim for further development. The Board noted that in a September 2017 Decision on Waiver of Indebtedness notice, VA noted that the Veteran’s waiver was granted; however, in an April 2019 DMC letter, VA noted that the Veteran’s debt had been increased to $15,353.26. Based on the conflicting information, the Board remanded the claim so that VA could complete an audit of the Veteran’s account and determine if a waiver was granted for the active duty periods listed above. In September 2020, VA confirmed the validity and amount of the Veteran’s debt. VA explained that award terminations for the periods of July 25, 2009 to October 10, 2009; June 8, 2010 to March 1, 2011; and April 6, 2013 to December 12, 2013 were processed correctly. Accordingly, the debt amount was deemed valid and was not the result of a VA error. VA also confirmed the Veteran’s waiver denial. Based on the evidence of record, the Board finds that the creation of the debt is valid. The law prohibits the receipt of VA disability compensation benefits for any period for which a Veteran receives active service pay. See 38 C.F.R. §§ 3.654, 3.700. Here, from July 25, 2009 to October 10, 2009; June 8, 2010 to March 1, 2011; and April 6, 2013 to December 12, 2013, the Veteran received active duty pay concurrently with VA disability compensation. Additionally, the overpayment was not solely due to VA administrative error. Sole administrative error entails no knowledge or fault on the part of the debtor. See Jordan, 10 Vet. App. 171. In February 2009, the Veteran received VA Form 21-8764. The form informed the Veteran that receipt of active duty or drill pay as a reservist or member of the Federally recognized National Guard could affect his rights to compensation payments. Therefore, the Board finds that the Veteran knew that he was not legally entitled to receive compensation benefits concurrently with military drill pay. As such, the Board finds that the Veteran’s debt was not solely due to VA administrative error. Therefore, the Board finds that the debt is 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. Waiver Recovery of overpayments of any benefits made under the laws administered by VA shall be waived 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 and if the recovery of the indebtedness from the payee who received such benefits would be against equity and good conscience. 38 U.S.C. § 5302; 38 C.F.R. §§ 1.962, 1.963(a), 1.965. In this case, the Board has not found any evidence of fraud, misrepresentation, or bad faith on the part of the Veteran in the creation of the overpayment. The next question is whether the facts dictate that a waiver should be granted under the standard of “equity and good conscience.” The phrase “equity and good conscience” means the arrival at a fair decision between the obligor and the Government. In making this determination, consideration will be given to the following elements (which are not intended to be all-inclusive): (1) fault of the debtor, (2) balancing of faults between the debtor and VA, (3) undue hardship of collection on the debtor, (4) defeat of the purpose of an existing benefit to the appellant, (5) unjust enrichment of the appellant, and (6) whether the appellant changed positions to his or her detriment in reliance upon a granted VA benefit. 38 U.S.C. § 5302; 38 C.F.R. § 1.965(a). The first and second elements pertain to the fault of the debtor versus the fault of VA. As noted above, the Board finds that the fault in creating the debt is entirely with the Veteran. With respect to the third factor, financial hardship, the pertinent regulation provides that consideration should be given to whether collection of the indebtedness would deprive the debtor of basic necessities. 38 C.F.R. § 1.965(a)(3). “Financial hardship” is primarily intended to mean that he or she would be deprived of basic necessities, such as food, clothing, and shelter. There is no indication that collection of the overpayment would defeat the purpose of an existing benefit. Additionally, there is no indication that the Veteran detrimentally changed his position in reliance on the overpayment. However, the Board finds that collection of the debt would cause the Veteran undue financial hardship. In August 2015, the Veteran submitted a Financial Status Report. He indicated net household monthly income of $9,200.00. The Veteran’s living expenses including rent or mortgage, food, utilities and heat, and monthly payments on installment contracts and other debts totaled $9,510.00. However, the Board notes that the Veteran listed a credit card with an original debt amount of $3,000.00, unpaid balance of $3,000.00, and monthly payments of $3,000.00. The Board notes that if the Veteran paid $3,000.00 per month for his credit card debt, the debt would have been repaid after the first month. As such, the Board is uncertain as to whether the Veteran meant to note $3,000.00 as his monthly payments. Based on the information the Veteran provided, the Board finds that the Veteran’s household monthly expenses exceeded his income by $310.00 per month. The Veteran indicated having $52.00 cash in the bank. He also had two automobiles (one leased and the other belonged to his ex-wife) and real estate. He owed a total of $100,000.00 for the real estate; however, he did not indicate the value of the real estate. Based on the information above, the Board finds that collection of the debt would not impair the Veteran’s ability to provide for basic necessities. In March 2017, the Veteran submitted a statement along with a Financial Status Report. The Veteran stated that during the time it took for VA to decide his waiver, his hardship increased immensely. He stated that for four consecutive months during 2015, he was unemployed and was not receiving unemployment benefits and had to take a position that paid him half the compensation he previously made. On his Financial Statement Report, he indicated net household monthly income of $5,204.13. The Veteran’s living expenses including rent or mortgage, food, utilities and heat, and monthly payments on installment contracts and other debts totaled $7,189.00. The Board finds that the Veteran’s household monthly expenses exceeded his income by $1,984.87 per month. He stated that he was able to pay $50.00 or less towards his debt. In August 2017, the Veteran submitted another Financial Status Report. He did not complete the form, but instead, he instructed VA to use the financial report that was on file. As such, the Board is unable to determine whether the Veteran currently suffers financial hardship. However, the Board finds that collection of the portion of the debt that has not been repaid, i.e., for the debt created due to the Veteran’s return to active duty from July 25, 2009 to October 10, 2009; June 8, 2010 to March 1, 2011; and April 6, 2013, to December 12, 2013, would deprive the Veteran of basic necessities. The Board is unable to grant the portion of the debt that has already been repaid because a waiver of the debt that has already been repaid would essentially require VA to pay the Veteran additional benefits that were not due to him. Therefore, if the waiver of the entire debt is granted, the Veteran would be unjustly enriched. After weighing all of the equities involved, the Board finds that recovery remaining overpayment would be against equity and good conscience. (Continued on next page) Thus, the request for waiver of recovery of the overpayment of the remaining debt is granted. Evan M. Deichert 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.