Citation Nr: 21028860 Decision Date: 05/12/21 Archive Date: 05/12/21 DOCKET NO. 18-52 817 DATE: May 12, 2021 ORDER Entitlement to waiver of recovery of an overpayment of Department of Veterans Affairs (VA) compensation benefits in the amount of $7,927.62 is denied. FINDINGS OF FACT 1. The overpayment was not due to the Veteran's fraud, misrepresentation or bad faith. 2. Recovery of the debt in this case in the amount of $7,927.62 is not against equity and good conscience. CONCLUSION OF LAW Recovery of the overpayment of the additional VA disability compensation in the amount of $7,927.62 would not be contrary to the principles of equity and good conscience. 38 U.S.C. § 5302; 38 C.F.R. § 1.965. REASONS AND BASES FOR FINDINGS AND CONCLUSION The Veteran had active service from August 1966 to June 1969. This matter comes before the Board of Veterans' Appeals (Board) on appeal from a November 2016 decision by the Committee on Waivers and Compromises (Committee) of the Department of Veterans Affairs (VA) Regional Office (RO). It was before the Board in October 2019, when it was remanded for further development, specifically for adjudication of whether the overpayment was properly created. An August 2020 supplemental statement of the case (SSOC) found the overpayment had been properly created. As the Veteran did not perfect an appeal as to that issue, it is not before the Board. Entitlement to waiver of recovery of an overpayment of Department of Veterans Affairs (VA) compensation benefits in the amount of $7,927.62 In a July 2003 rating decision, the Veteran was assigned a combined 40 percent rating. The Veteran was notified of the grant of benefits and that he was receiving additional compensation benefits for a dependent, specifically his spouse, S.; he was furnished a VA Form 21-8764 that stated he should notify VA immediately if there is any change in the number or status of his dependents. He was advised that the failure to do so would result in a creation of an overpayment in his account. In August 2011, the Veteran submitted a VA Form 21-0538 Status of Dependents Questionnaire on which he indicated he was not married. He provided no further details. In March 2013, a VA representative contacted the Veteran to obtain missing marital information for his spouse. The Veteran stated his spouse had been married twice previously. There is no indication that the Veteran reported he was divorced or unmarried at this time. In a March 2013 notification letter, VA informed the Veteran he was being paid for one dependent, his spouse, S. He was informed he needed to notify VA right away if there was any change in his marital status. The Veteran submitted a March 2013 VA Form 21-686c Application Request to Add and/or Remove Dependents, where he indicated he and S. had divorced in September 2006. An October 2015 notification letter informed the Veteran that action was subsequently taken to retroactively reduce his compensation benefits to remove S. as his wife effective from September 11, 2006. The adjustment resulted in the creation of an overpayment in the amount of $7,927.62. The Veteran requested a waiver of the overpayment. He stated he notified VA of his divorce and he should not be responsible for the delay in VA removing S. from his award. In November 2016, the Committee on Waivers and Compromises (Committee) denied the request for a waiver in the amount of $7,927.62, and the Veteran appealed. The Committee determined that there was no fraud, misrepresentation, or bad faith on the Veteran's part with respect to the creation of the overpayment at issue, but the Committee further determined that recovery of the overpayment of VA would not be against equity and good conscience. VA law provides that recovery of overpayment of any benefits 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 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. § 1.963(a). The standard "Equity and Good Conscience" will be applied when the facts and circumstances in a particular case indicate a need for reasonableness and moderation in the exercise of the government's rights. 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. Where actions of the debtor contribute to the creation of the debt. (2) Balancing of faults. Weighing fault of the debtor against VA fault. (3) Undue hardship. Whether collection would deprive 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. (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 U.S.C. § 5302; 38 C.F.R. § 1.965(a). In this case, the Committee found, and the Board agrees, that there is no evidence demonstrating that the indebtedness resulted from fraud, misrepresentation, or bad faith on the Veteran's part. Therefore, waiver of indebtedness is not precluded if shown that it would be against the principles of equity and good conscience to require the Veteran to repay the debt to the government. 38 C.F.R. §§ 1.963, 1.965. With regard to fault, a claimant who is receiving compensation is required to report to the VA any material change or expected change in income or other circumstance that affects the payment of benefits. 38 C.F.R. § 3.660. 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 C.F.R. § 1.962. VA law provides for additional monthly compensation for dependents when a veteran is entitled to disability compensation evaluated as thirty percent or greater. 38 C.F.R. § 3.4(b)(2). The Veteran has been evaluated as 30 percent or more disabled since July 2003; thus, he was eligible for additional benefits based on dependency during the appellate period, provided certain requirements were met. The law states that the Veteran has an obligation to timely notify VA of all marriages and divorces. The RO advised the Veteran of his obligation to provide notification regarding any changes in dependency, as noted above, also furnishing him a VA Form 21-8764. The Veteran divorced his spouse, S., in September 2006. The first indication VA had that he was no longer married to S. was the August 2011 VA Form 21-0538 Status of Dependents Questionnaire where he indicated he was not married. The law and regulation are clear; that is, the Veteran is obligated to promptly notify VA of dependency changes. As the Veteran did not notify VA of his divorce for several years, the Veteran is at fault in the creation of the overpayment. The Board acknowledges the Veteran's contention that he notified VA of his divorce and S. was not removed from his award for many years. The Board recognizes that 2.5 years passed from the time the Veteran requested that S. be removed from his award and her actual removal. However, the Board finds the Veteran is primarily at fault since he notified VA of his divorce from S. approximately seven years after the fact. Regardless, the Veteran was not entitled to additional compensation for S. as a dependent spouse following their divorce. In regard to whether failure to collect would cause unjust enrichment to the debtor, the Board notes that the Veteran received benefits to which he was not entitled and as such, 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. In this regard, the Board notes the Veteran has not claimed that he relinquished any right or incurred any legal obligation, or that he relied upon VA to his detriment, nor is there any evidence of such. As to whether recoupment of those benefits would defeat the purpose of the benefit, the purpose of the additional benefit is to provide compensation for dependents. As the Veteran did not have a dependent spouse during the time period in question, recoupment of the benefits would not defeat the purpose of the benefit. The Board has also considered whether the Veteran would suffer undue financial hardship if forced to repay the debt at issue. A review of a May 2016 financial status report reveals a total monthly net income of $5,624.02. The net income consists of retirement benefits, a pension, and VA and Social Security Administration (SSA) benefits. There is no indication this income is volatile or would change significantly in the future. The Veteran does not have employment income or other potentially variable income. He reported total monthly net expenses of $4,609.55, which includes multiple installment contracts. His monthly income exceeds expenses; as such, even considering his other debts, there is no financial hardship. In this regard, the Board notes he also reported other significant assets, particularly in the form of real estate that he owns. Further, as the overpayment represents a valid debt to the U.S. Government, there is no reason that the Veteran should not accord the Government the same consideration that he accords his other creditors. There is no evidence that repayment of the debt would deprive the Veteran of his basic necessities of living. To reiterate, the Veteran's income exceeds his expenses. The Board acknowledges that on his financial status report, the Veteran reported he could pay $0 monthly toward the debt and noted he had previously been adjudicated bankrupt. As noted above, the information of record reveals that his income exceeds his expenses. However, after weighing all of the enumerated factors, the Board finds that 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 $7,927.62 is not warranted, and the appeal must be denied. Nathaniel J. Doan Veterans Law Judge Board of Veterans' Appeals Attorney for the Board A. Dean, 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.