Citation Nr: 21030707 Decision Date: 05/19/21 Archive Date: 05/19/21 DOCKET NO. 16-33 191 DATE: May 19, 2021 ORDER Entitlement to waiver of recovery of an overpayment of Department of Veterans Affairs (VA) compensation benefits in the amount of $162.07 is denied. FINDINGS OF FACT 1. The Veteran did not commit fraud, misrepresentation, or bad faith in the creation of the debt; but is found to be at fault in the creation of the debt. 2. Repayment of the debt, which has already been repaid, would not deprive the Veteran of the basic necessities of life, would not result in financial hardship, and recovery of the overpayment would not defeat the purpose for which benefits were intended. 3. A waiver of the debt would result in unjust enrichment to the Veteran. CONCLUSION OF LAW The criteria for entitlement to a waiver of recovery of overpayment of VA compensation benefits have not 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 CONCLUSION The Veteran served on active duty from November 1966 to August 1969. In January 2020, the Board remanded the claim for further development. Entitlement to waiver of recovery A Veteran has the right to dispute the existence and amount of the debt. 38 C.F.R. § 1.911(c). In determining whether a waiver of overpayment is appropriate, the inquiry is focused on three distinct questions. First, VA must determine if the overpayment at issue was validly created. See Schaper v. Derwinski, 1 Vet. App. 430, 434-35 (1991) (noting that before adjudicating a waiver application, the lawfulness of the overpayment must first be decided). The term "overpayment" refers only to those benefit payments made to a designated living payee or beneficiary in excess of the amount due or to which such payee or beneficiary is entitled. See 38 U.S.C. § 5302; 38 C.F.R. § 1.962. An additional amount of compensation may be payable for a spouse, child, and/or dependent parent where a Veteran is entitled to compensation based on disability evaluated as 30 percent or more disabling. 38 C.F.R. § 3.4(b)(2). If a veteran and his or her dependent spouse divorce, the veteran's VA compensation award is reduced by the amount that was being paid on behalf of the dependent spouse. The effective date of discontinuance of the spouse's compensation award, for divorce or annulment on or after October 1, 1982, is the last day of the month in which the divorce or annulment occurred. 38 U.S.C. § 5112(b)(2); 38 C.F.R. § 3.501(d)(2). Second, if the debt is valid, VA must determine if fraud, misrepresentation, or bad faith played a role in its creation. If it did, waiver of the overpayment is automatically precluded, and further analysis is not warranted. See 38 U.S.C. § 5302(a); 38 C.F.R. §§ 1.963 (a), 1.965(b); see also Ridings v. Brown, 6 Vet. App. 544 (1994) (holding that the Board must independently address the matter of bad faith before addressing whether waiver would be appropriate). Finally, if VA determines that the debt is valid, and that fraud, misrepresentation, and/or bad faith had no part in its creation, VA must then consider whether collection of the debt would be against equity and good conscience. See 38 U.S.C. § 5302(b); 38 C.F.R. §§ 1.962, 1.963, 1.965. Analysis The Veteran seeks a waiver of indebtedness for an overpayment in the amount of $162.07. In May 2003, the Veteran was awarded additional benefits for his spouse, S.S. He was instructed to notify VA immediately if there was any change in the status of his dependents. On January 13, 2015, the Veteran submitted his divorce decree which documented his January 5, 2015 divorce from S.S. He also submitted VA Form 21-686c, Application Request to Add and/or Remove Dependents. He requested VA remove S.S. from his award. On February 27, 2015, an award print noted that the Veteran owed a debt of $162.07. Also on February 27, 2015 and based on the Veteran's divorce from S.S., VA removed S.S. from the Veteran's award. The Board notes that the Veteran did not disagree with the validity of the debt; therefore, the validity issue is not before the Board. In November 2015, the Veteran submitted VA 5655, Financial Status Report and requested a waiver of his debt. However, the Committee on Waivers and Compromises (Committee) denied waiving the Veteran's $162.07 overpayment debt. The Veteran disagreed with the waiver denial. In its September 2020 Statement of the Case, VA noted that the debt had been repaid in full. The Board notes despite the validity of the overpayment debt, the Veteran may still receive a waiver for the debt created. 38 C.F.R. § 1.962. 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 this 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). After reviewing all the evidence of record, the Board finds that recovery of the overpayment would not violate principles of equity and good conscience. The first and second factors pertain to the fault of the debtor versus the fault of VA. In this case, the fault in creating the debt is with the Veteran. Additionally, collection of the debt would not cause the Veteran undue financial hardship. In November 2015, the Veteran submitted a Financial Status Report in which he indicated net household monthly income of $4,568.90. His living expenses including rent or mortgage, food, utilities and heat, other expenses, and monthly payments on installment contracts and other debts totaled $4,283.66. The Veteran had $3,000.00 cash in the bank and $593,000 in other assets, to include his vehicle and his home. The Veteran's household monthly income exceeded his expenses by $285.24 per month. This indicates that collection of the debt would not impair his ability to provide for basic necessities. Therefore, no evidence of undue hardship has been revealed. The fourth and fifth factors consider whether recovery of the overpayment would defeat the purpose for which the benefits were intended and whether the Veteran would be unjustly enriched if a waiver was granted. The Board finds that the recovery of the debt would not defeat the underlying objective of the benefit, paying the additional compensation benefits to support a spouse, as the purpose of paying additional compensation was nullified by the divorce. Thus, the collection of the debt would not defeat the purpose for which the benefits were intended. The Board also notes that because the debt has already been repaid, a waiver of such an overpayment would essentially require VA to pay the Veteran additional benefits that were not due to him. Therefore, if the waiver is granted, the Veteran would be unjustly enriched. Additionally, there is also no indication that the Veteran detrimentally changed his position in reliance on the overpayment. The sixth factor to be considered is whether reliance on VA benefits resulted in relinquishing a valuable right or incurring a legal obligation. The Veteran has not claimed that he relinquished any right or incurred any legal obligation, relied upon VA to his detriment, nor is there any evidence of such. Thus, this sixth factor does not support the Veteran's request for a waiver of overpayment that has already been repaid. Therefore, the Board finds that the balance of equity and good conscience does not require waiver of the debt. The Veteran's claim for waiver is denied. 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.