Citation Nr: 21028554 Decision Date: 05/11/21 Archive Date: 05/11/21 DOCKET NO. 19-06 459 DATE: May 11, 2021 ORDER Entitlement to a waiver of recovery of the overpayment of Department of Veterans Affairs (VA) compensation benefits in the amount of $42,013.83 is denied. FINDINGS OF FACT 1. The Veteran's VA disability compensation was properly reduced for concurrent receipt of military service drill pay for a period of 119 days during Fiscal Year (FY) 2007 and 46 days during FY 2008. 2. The Veteran's VA disability compensation was properly terminated due to a return to active duty service on June 1, 2010 and January 7, 2012. 3. The overpayment was not due to the Veteran's fraud, misrepresentation or bad faith. 4. Recovery of the debt in this case in the amount of $42,013.83 is not against equity and good conscience. CONCLUSION OF LAW Recovery of the overpayment of the VA compensation benefits in the amount of $42,013.83 is not contrary to the principles of equity and good conscience. 38 U.S.C. § 5302; 38 C.F.R. §§ 1.963 (a), 1.965. REASONS AND BASES FOR FINDINGS AND CONCLUSION The Veteran served on active duty from October 2004 to April 2005, July 2005 to November 2006, July 2010 to November 27, 2010, November 28, 2010 to January 6, 2012, and from January 7, 2012 to the present. The Veteran was afforded a hearing before the undersigned Veterans Law Judge in March 2021. A transcript of the hearing has been associated with the Veteran's electronic claims file. Waiver of Recovery of Overpayment is Denied. The issue of the validity of a debt is a threshold determination that must be made in a benefits overpayment debt collection matter. Schaper v. Derwinski, 1 Vet. App. 430 (1991). 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. The law prohibits the receipt of VA disability compensation benefits for any period for which a person receives active service pay. This includes active duty pay, drill, and active duty for training payments, and inactive duty for training payments made to reservists and members of the National Guard. 38 U.S.C. § 5304 (c); 38 C.F.R. §§ 3.654, 3.700. Reservists or members of the National Guard may waive their VA disability compensation 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). Given that the overpayment debt is the result of multiple periods of military drill and active service, and the Veteran's request for waiver is heavily dependent on several key events, the Board finds that a brief recitation of pertinent facts would be helpful. In September 2007, the Veteran was awarded service connection and was assigned a 30 percent disability rating, effective November 17, 2006. In a September 2007 phone call, the Veteran reported active duty service in Germany for two weeks but did not provide the dates of service. The Veteran was informed that she could not receive VA compensation while on active duty and was directed to submit evidence of active duty service. The evidentiary record does not indicate that the Veteran submitted the requested evidence. In an undated VA Form 21-8951, Notice of Waiver of VA Compensation or Pension to Receive Military Pay and Allowances, the Veteran was informed that VA received information from the Defense Manpower Data Center (DMDC) that she received military drill pay concurrently while receiving VA benefits. The VA Form 21-8951 reflected that the Veteran served 119 training days in FY 2007. The Veteran did not dispute the number of drill days and did not return the form. In July 2009, the Veteran was provided with VA Form 21-8951, Notice of Waiver of VA Compensation or Pension to Receive Military Pay and Allowances, showing that VA had been informed that she served 46 training days in FY 2008. The Veteran did not dispute the number of drill days and did not return the form. In a December 2009 notification letter, VA proposed to reduce the Veteran's VA compensation payments due to concurrent receipt of VA compensation and military drill pay in FYs 2007 and 2008. The Veteran was again provided with VA Form 21-8951, and was provided 60 days from the date of the letter to provide information regarding her drill days to VA. The Veteran did not return the form. In a February 2010 Notification Letter, VA informed the Veteran that her VA compensation would be reduced effective March 1, 2010. In a November 2010 phone call, the Veteran reported that she returned to active duty for a period of approximately one year on November 28, 2010. In a January 2011 Notification Letter VA terminated the Veteran's VA compensation effective November 28, 2010, based on the Veteran's report of return to active duty. The Veteran was thereafter notified that an overpayment debt in the amount of $413.60 was created. The Veteran filed a claim for VA compensation in February 2012. In August 2013, the Veteran submitted DD Forms 214 in support of the claim. The DD Forms 214 showed, in part, a period of active duty service from June 1, 2010 to January 6, 2012. The Veteran was awarded service connection in a November 2013 rating decision and assigned a 40 percent disability rating effective January 7, 2012. The Veteran was issued a retroactive payment of $12,412.07. In a November 2013 phone call, VA informed the Veteran that an overpayment would be created due to the concurrent receipt of active duty pay and VA compensation from June 1, 2010 to November 27, 2010, and that the adjustment to her account would affect the prior drill pay adjustments. The Veteran acknowledged receipt of the information and waived due process. The Veteran was subsequently notified that an overpayment debt in the amount of $265.07 was created. In December 2016, records from the Defense Personnel Records Information Retrieval System were associated with the record. These records included the Veteran's active duty orders showing full-time National Guard duty in an Active Guard/Reserve (AGR) status effective June 1, 2013. In a January 2017 statement, the Veteran requested that her VA compensation be terminated due to her return to active duty status. In support of her request, the Veteran submitted a copy of the aforementioned orders effective June 1, 2013. Later in January 2017, in conjunction with a VA and Department of Defense joint disability evaluation board claim, several active duty orders, showing full-time National Guard duty in an Active Guard/Reserve (AGR) status effective January 7, 2012 to May 31, 2019, were associated with the record. In a February 2018 phone call, VA informed the Veteran that she is not permitted to receive VA compensation while on Title 32 Active Guard Reserve status. The Veteran stated that she wanted to stop her VA compensation and waive due process. In a February 2018 Notification Letter VA terminated the Veteran's VA compensation effective January 7, 2012 due to her return to active duty service, and adjusted her drill pay withholding for FYs 2007 and 2008. The Veteran was informed that the VA actions created an overpayment. The Veteran was thereafter notified that an overpayment debt in the amount of $42,013.83 was created. As the law prohibits the receipt of VA disability compensation benefits for any period for which a person receives active service pay, the evidentiary record shows that the Veteran had actual knowledge of the prohibition against concurrent receipt of active duty pay and VA compensation, and the Veteran acknowledges that she received and spent VA disability compensation to which she was not entitled (See Veteran's statement dated March 26, 2018), the Board finds that the overpayment debt was validly created. In April 2018, the Veteran requested a waiver of the recovery of the overpayment of $42,013.83. In its April 2018 decision denying the waiver request, the Committee on Waivers and Compromises (COWC) of the RO did not find fraud, misrepresentation, or bad faith in this case. The Board also finds no fraud, misrepresentation, or bad faith. The COWC further determined it would be against the principles of equity and good conscience if the debt was not collected; thus, the request for a waiver of the recovery of the overpayment at issue was denied. The Veteran appealed that determination. In cases where fraud, misrepresentation, or bad faith on a veteran's part with respect to the creation of the overpayment at issue has not been demonstrated, and, therefore, waiver is not precluded pursuant to 38 U.S.C. § 5302 (a), the Board must determine whether recovery of the indebtedness would be against equity and good conscience, thereby permitting waiver under 38 U.S.C. § 5302 (a) and 38 C.F.R. §§ 1.963 (a), 1.965(a). In making this determination, consideration is given to the following elements, which are not intended to be all-inclusive: (1) fault of debtor (where actions of the debtors contribute to the creation of the debt); (2) balancing of faults (weighing fault of the debtor vs. the fault of VA); (3) undue hardship (whether collection would deprive the 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); and (6) changing position to one's detriment (reliance on VA benefits results in relinquishment of a valuable right or incurrence of a legal obligation). See 38 C.F.R. § 1.965 (a). The first and second elements pertain to the fault of the debtor versus the fault of VA. The Board finds that, in this case, while VA bears some fault due to its delay in terminating the Veteran's VA compensation, the Veteran is at primarily at fault in the creation of the debt. Regarding her training days during FYs 2007 and 2008, the Veteran did not return VA Form 8951 electing to waive VA compensation. Although in a September 2007 phone call the Veteran reported a short period of active duty, she did not provide requested details regarding the period of service. Regarding the Veteran's subsequent periods of active duty, the Board acknowledges that the Veteran called to report that she returned to active duty on November 28, 2010. However, the Veteran actually returned to active duty on June 1, 2010, did not inform VA of the correct date until 2013, and made no effort to return the funds she was not entitled to. Further, when VA contacted the Veteran in November 2013 to inform her of the overpayment created by the discovery of the earlier active duty date the Veteran did not inform VA that she remained on active duty at that time. By that point the Veteran had been informed on multiple occasions that concurrent receipt of active duty pay and VA compensation is prohibited. VA first received notification that the Veteran had consecutive periods of active duty, beginning in January 2012, in December 2016 and January 2017. Regarding these periods of service, the Veteran first requested that her VA benefits be stopped in January 2017. Here, the Board finds that VA bears some fault in the creation of the debt, as it did not terminate the VA compensation until over a year later, in February 2018. However, the Veteran is primarily at fault as she did not timely report the period of active duty service that began in January 2012 until several years later. The Board acknowledges the Veteran's assertions that she repeatedly requested that her VA compensation be stopped. However, the record indicates that these assertions of requests were either inaccurate or were significantly delayed. As noted above, the Veteran incorrectly reported the effective date of her 2010 active duty service. The Veteran's requests to stop VA compensation due to the January 2012 period of service began more than five years after she returned to active duty service. The Board also acknowledges the Veteran's assertion that she timely reported her return to active duty, that she terminated her direct deposit in 2014 or early 2015 to prevent the receipt of funds she was not entitled to, and that VA then continued to mail payments to her. See Veteran's Statement dated March 2018; March 2021 Board Hearing Transcript. The Veteran's statements are directly contradicted by the evidentiary record. Specifically, in a June 2014 Report of Contact, the Veteran reported that her banking information had been stolen and requested that VA cancel her direct deposit and mail a check instead. The Board acknowledges the Veteran's assertion that she received conflicting information from her fellow service members, and was confused about which periods of military service prohibited the receipt of VA compensation and when it was necessary to report periods of active duty to VA. Here, the Board emphasizes that regulations are binding on all who seek to come within their sphere, "regardless of actual knowledge of what is in the regulations or of the hardship resulting from innocent ignorance." See Morris v. Derwinski, 1 Vet. App. 260 (1990), (citing Fed. Crop Ins. Corp. v. Merrill, 332 U.S. 380, 385 (1947)). In regard to whether failure to collect would cause unjust enrichment to the debtor, the Board notes that the Veteran received benefits to which she was not entitled and as such, retaining the benefits would cause unjust enrichment to the debtor. Likewise, there is no indication that the Veteran's reliance on VA benefits resulted in relinquishment of another valuable right. As to whether recoupment of those benefits would defeat the purpose of the benefit, recoupment of those benefits would not defeat the purpose of the benefit since the Veteran was not entitled to both payments. The Board has also considered whether the Veteran would suffer undue financial hardship if forced to repay the debt at issue. A review of the financial status report reveals that income exceeds the expenses for the Veteran's basic necessities of living (mortgage/rent, food, and utilities/heat) by over $4,700 per month. The Board acknowledges that the Veteran has significant debt consisting of credit card debt, automobile loans, and other consumer debt; however, the current valid debt to the U.S. Government should be accorded the same consideration as other creditors. There is no evidence that the Veteran was actually deprived of basic necessities of living. As such, the Board finds that there is no financial hardship. The record does not demonstrate any additional factors which should be considered in adjudicating the Veteran's claim for a waiver of the indebtedness, nor has the Veteran identified any such factors. After weighing all of the enumerated factors, the Board finds that total recovery of the overpayment does not violate the principles of equity and good conscience; thus, waiver of the recovery of the overpayment of the debt of $42,013.83 must be denied. J. PARKER Veterans Law Judge Board of Veterans' Appeals Attorney for the Board T. Bynum, Associate 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.