Citation Nr: 21027136 Decision Date: 05/04/21 Archive Date: 05/04/21 DOCKET NO. 18-55 333 DATE: May 4, 2021 REMANDED Entitlement to waiver of recovery of an overpayment of Department of Veterans Affairs (VA) compensation benefits in the amount of $779.62, to include the validity of the debt, is remanded. REASONS FOR REMAND The Veteran served on active duty from May 1971 to July 1971. In December 2019, the Board remanded the claim for further development. The overpayment debt that is the basis for the claim for the waiver of recovery is due to the retroactive recoupment of an award of an annual clothing allowance. 38C.F.R. §3.810(a). In his June 2018 Notice of Disagreement, the Veteran reported that he did not understand why the clothing allowance was recouped because he had received the award for the past four years without a change in circumstances. He indicated that he believed he was entitled to the benefit, and the overpayment was not valid. He submitted a request for waiver. In August 2018, the Committee on Waivers and Compromises (Committee) denied the waiver request. The Veteran appealed the waiver denial to the Board. In December 2019, the Board noted that the Veteran questioned the validity of the debt. However, the issue was not been adjudicated. The Board remanded the claim. In its remand directives, the Board instructed VA to adjudicate the issue of whether the overpayment was properly created, to include whether the debt was due to sole administrative error. In October 2020, the Committee granted the waiver request. However, VA failed to address the validity issue. See Stegall v. West, 11 Vet. App. 268, 271 (1998) (Board remand confers a right on a claimant to compliance with the remand order); Dyment v. West, 13 Vet. App. 141, 147 (1999) (clarifying that substantial compliance with Board remand is required). Where the Board fails to ensure substantial compliance, remand is appropriate. Stegall, 11 Vet. App. at 271. The Board notes that although the Committee granted the waiver, when a veteran raises the validity of a debt as part of a waiver application, it is arbitrary and capricious and an abuse of discretion to adjudicate the waiver application without first deciding the veteran's challenge to the lawfulness of the debt asserted against him or her. Schaper v. Derwinski, 1 Vet. App. 430, 437 (1991). The Board is also mindful that, since the Committee waived the Veteran's overpayment debt in its entirety, the Committee's action has eliminated the Veteran's standing to challenge, before the U.S. Court of Appeals for Veterans Claims (Court), the Board's determination as to the propriety of the overpayment. Waterhouse v. Principi, 3 Vet. App. 473 (1992). However, the Committee's grant of a full waiver did not affect the Veteran's standing for the purposes of the Board's proceedings at bar. Further, while the Committee's grant of a full waiver retroactively eliminated the Veteran's debt obligation and resulted in VA's remittance of the indebtedness funds recouped by VA from the Veteran, such a remittance could not eliminate the Board's jurisdiction in this matter because the grant of a waiver has tax implications for the claimant, while the Board's finding that an overpayment underlying a debt was improperly created does not. Therefore, in light of the potential tax consequences that the Veteran might be exposed to in the event the Board does not adjudicate his challenge to the propriety of the creation of the overpayment, the Board is not in a position to find that this challenge has been rendered moot and, accordingly, is required to address this challenge on the merits. However, in this particular case, VA has not adjudicated the validity issue in the first instance. As such, the Board finds that a remand is necessary to determine if the debt was validly created. The matters are REMANDED for the following action: Adjudicate the issue of whether the overpayment was properly created, to include whether the debt is due to sole administrative error. 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.