Citation Nr: 21031635 Decision Date: 05/24/21 Archive Date: 05/24/21 DOCKET NO. 19-16 324 DATE: May 24, 2021 ORDER The overpayment of Department of Veterans Affairs (VA) compensation benefits in the amount of $7,433.05 due to the concurrent receipt of Dependents' Educational Assistance (DEA) benefits under Chapter 35, Title 38, United States Code, was not properly created and the appeal is granted. FINDINGS OF FACT 1. In a December 2015 rating decision, the VA Regional Office (RO) determined that the Veteran had basic eligibility for Chapter 35 DEA benefits. 2. In January 2016, the Veteran's daughter, S.M., elected to receive DEA benefits and VA was immediately informed. 3. A November 2017 VA notification letter informed the Veteran of a proposal to reduce his compensation benefits due to S.M.'s election of Chapter 35 DEA education benefits effective January 18, 2016. 4. A July 2018 VA notification letter informed the Veteran of the retroactive reduction of the Veteran's compensation award for an additional dependent effective January 19, 2016. 5. The RO's delayed removal of S.M. from the Veteran's award of VA disability compensation benefits resulted in the creation of an overpayment in the amount of $7,433.05. 6. The Veteran neither had knowledge of nor should have been aware of the erroneous award of additional compensation benefits for S.M. after she elected and was awarded DEA benefits; VA's error in the failure to remove the Veteran's child from his compensation award was not due to the Veteran's actions or failure to act. CONCLUSION OF LAW The overpayment of VA compensation benefits for S.M. as a dependent child of the Veteran, after her DEA election and award, in the amount of $7,433.05 was not properly created. 38 U.S.C. §§ 3562, 5112; 38 C.F.R. §§ 3.500, 3.667(f), 3.707, 21.3023. REASONS AND BASES FOR FINDINGS AND CONCLUSION In an August 2013 rating decision, the Veteran established service connection various disabilities. The combined rating was 100 percent from June 1, 2013, thereby entitling him to an additional allowance for each of his eligible dependents. See 38 U.S.C. § 1115. In a September 2013 letter, the Veteran was advised of the RO's determination and notified that him that his compensation award included an additional amount for each of his dependents: his spouse and two daughters. In June 2014, a VA Form 21-674c, REQUEST FOR APPROVAL OF SCHOOL ATTENDANCE, for S.B., one of the Veteran's daughters, was received so that the Veteran could continue to receive additional compensation for her based on her enrollment in school. The Veteran was advised in a January 2015 letter that his compensation award was adjusted to include an additional amount for a school child, S.M., effective September 2014. See 38 C.F.R. § 3.4(b)(2). In a December 2015 rating decision, the RO determined that the Veteran had basic eligibility for Chapter 35 DEA benefits effective October 19, 2015. In a December 2015 letter, the RO notified the Veteran of the decision. The RO further notified the Veteran of the following: that his dependents may be eligible for Dependents' Educational Assistance (DEA). A dependent may not receive DEA benefits while the primary VA beneficiary is receiving payments with additional allowance for the same dependent. If he had a school child over 18 years of age on his award, that he should note that the effective date of payment of the DEA award for the child may create an overpayment if it overlaps any previous payments he had received for that child. He was provided website and telephone number information if he wanted more information on the DEA program. Thereafter, in January 2016, an internal VA electronic mail indicated that the Veteran's daughter, S.M., was awarded DEA benefits from January 2016. The rate she was being paid was also indicated. A subsequent November 2017 VA notification letter informed the Veteran of a proposal to reduce his compensation benefits due to S.M.'s election of Chapter 35 DEA education benefits retroactively effective January 18, 2016. See 38 C.F.R. § 21.3023(a)(1) (an election of educational assistance is a bar to increased rates of compensation on account of the child based on school attendance). A July 2018 notification letter advised the Veteran that S.M. was removed as a dependent from his compensation benefits award, effective January 2016, and that such action generated an overpayment. The July 2018 first demand letter from the Debt Management Center (DMC) assessed an overpayment in the amount of $7,433.05, which the record indicates has since been adjusted and reduced. See, e.g., May 2019 Decision on Waiver of Indebtedness; May 2020 RO Administrative Decision. The Veteran requested a waiver of the recovery of the overpayment debt. He contends that he did not provide false information to VA regarding S.M.'s receipt of DEA education benefits and indicated that he was unaware that his daughter could not receive educational benefits. In his December 2018 notice of disagreement with the November 2018 decision on waiver of indebtedness on appeal, he also contended that he did not believe he needed to report changes to VA because VA was aware that his dependents were in receipt of Chapter 35 DEA education benefits. A June 2019 VA Form 9 continued the Veteran's assertions that he was not aware of his responsibility to ensure VA removed S.M. from his compensation award nor that DEA education benefits could not be concurrently received with dependency benefits; he also reported that a January 2016 letter from VA informed him that S.M. was removed as a dependent child due to her election of DEA education benefits and that the failure to actually remove her from his award was the fault of VA. The Veteran's representative reiterated the contentions in an informal hearing presentation that VA was aware S.M. was in receipt of DEA education benefits and adjusted the compensation award accordingly such that no overpayment was created and that any delay in adjustment was due to VA's failure to act. Based on the above, in a December 2019 decision, the Board construed the Veteran's statements as disputing the creation of the debt. The Board noted that a May 2019 decision by the Committee on Waivers and Compromises (COWC) partially granted the Veteran's claim for waiver in the amount of $3,716.53 and continued the denial of a waiver for the remaining amount of $3,716.52. In May 2020, the RO further reduced the remaining debt by $1,738.72 based on sole administrative error. Nevertheless, the underlying creation issue needed to be addressed to include, in this case, whether there was sole administrative error. Schaper v. Derwinski, 1 Vet. App. 430, 437 (1991) ("when a Veteran raises the validity of the 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 a veteran's challenge to the lawfulness of the debt asserted against him or her"); VAOPGCPREC 6-98 (July 24, 1998) (holding that when a veteran challenges the validity of the debt and seeks waiver of the debt, the [Regional Office] must first fully review the debt's validity and, if the office believes the debt to be valid, prepare a written decision fully justifying the validity of the debt before referring the waiver request to the COWC. With regard to sole administrative error, under 38 U.S.C. § 5112 (b)(10), the effective date of a reduction or discontinuance of compensation by reason of an erroneous award based solely on administrative error or error in judgment shall be the date of last payment. See also 38 C.F.R. § 3.500 (b)(2). "Stated another way, when an overpayment has been made by reason of an erroneous award based solely on administrative error, the reduction of that award cannot be made retroactive to form an overpayment debt owed to VA from the recipient of the erroneous award." Erickson v. West, 13 Vet. App. 495, 499 (2000). The Board notes, however, that sole administrative error may be found to occur only in cases where the Appellant neither had knowledge of nor should have been aware of the erroneous award. Further, such error contemplates that neither the Appellant's actions nor his failure to act contributed to the erroneous award. 38 U.S.C. § 5112 (b)(10); 38 C.F.R. § 3.500 (b)(2). On remand, in a May 2020 administrative decision, the RO noted that VA was informed of S.M.'s DEA election in January 2016, and she was actually removed as a dependent via an adjustment processed in July 2018, which created this debt of $7,433.05. The RO referred to the prior COWC determination. In view of the fact that the RO was aware of S.M.'s Chapter 35 status in a timely manner, fault was not a significant factor in this decision. However, the Veteran continued to receive VA compensation benefits at a higher rate than he was entitled to and therefore, he was unjustly enriched at government expense. As a result, the COWC determined that it did not defeat benefit purpose for him to pay $3,716.52 of the debt. Also, the RO noted that a review of the Veteran's financial statement showed that the Veteran's income exceeds expenses, and that repayment of this portion of the debt would not deprive the Veteran of the basic necessities of food, clothing, and shelter. Therefore, financial hardship was not established, and $3,716.52 of the waiver was denied. However, it was noted that in view of the fact that the Veteran may have been unaware of the law which does not allow the VA to pay the Veteran additional benefits for a dependent while he/she is receiving Chapter 35 benefits and due to the time it took for the VA to process the dependency adjustment, the COWC determined that it was fair and equitable to waive $3,716.53 of the overpayment. In the May 2020 administrative decision, the RO noted further that on November 16, 2017, a due process letter was sent to the Veteran stating that the RO proposed to reduce his benefits because S.M. was receiving Chapter 35 benefits. The Veteran's due process period in which to respond was to expire on January 15, 2018, 60 days from the date of the letter. The RO acknowledged that there might not have been a huge overpayment if the VA had taken appropriate action in a timely manner. An audit was conducted for the period of January 15, 2018, to July 31, 2018, and during this period an additional $1,738.72 was added to the Veteran's overpayment. The RO found that the Veteran was not at fault in $1,738.72 of his debt and would not have any knowledge of VA adjudication procedures to include proper effective dates of said procedures. The RO therefore determined that the Veteran's overpayment of $3,716.52 was reduced by $1,738.72. The overpayment amount therefore is now $1,977.80 for the period of January 19, 2016 to January 15, 2018. Further, the RO noted that the evidence presented illustrates a procedural error made on the part of VA personnel that the Veteran had absolutely no control over. The Board herein will address the issue of whether the Veteran's debt was properly created, to include sole VA error. In general, any veteran whose disability is rated not less than 30 percent shall be entitled to additional compensation for his or her eligible dependents, including a child under the age of 18 years. 38 U.S.C. § 1115. That additional compensation may be extended beyond the child's eighteenth birthday based upon school attendance if the child was at that time pursuing a course of instruction at an approved educational institution and a claim for such benefits is filed within one year from the child's eighteenth birthday. 38 C.F.R. § 3.667 (a)(1). In general, DEA is payable to a child of a veteran who has a total disability permanent in nature resulting from a service-connected disability. 38 C.F.R. § 21.3021. However, payment of both a dependency allowance as part of a veteran's disability compensation benefits and educational assistance under Chapter 35 constitutes a duplication of benefits that is strictly prohibited after the child has elected to receive the latter benefit. See 38 U.S.C. § 3562; 38 C.F.R. §§ 3.667 (f), 3.707, 21.302. A child who is eligible for educational assistance and who is also eligible for a dependency allowance as part of a veteran's disability compensation based on school attendance must elect whether he or she will receive educational assistance or compensation. An election of educational assistance is a bar to subsequent payment of compensation on account of the child based on school attendance on or after the age of 18 years. 38 C.F.R. § 21.3023. The Board finds that the overpayment of VA compensation benefits at issue in this case was not properly created due to sole VA error. In a December 2015 rating decision, the RO determined that the Veteran had basic eligibility for Chapter 35 DEA benefits effective October 19, 2015, and provided notification to him. The Veteran's child, S.M., immediately sought and received Chapter 35 DEA benefits, from January 2016. The internal electronic mail shows that VA was aware of this election. The Board notes that sole administrative error may be found to occur only in cases where the Veteran neither had knowledge of nor should have been aware of the erroneous award. Further, such error contemplates that neither the Veteran's actions nor his failure to act contributed to the erroneous award. 38 U.S.C. § 5112 (b)(10); 38 C.F.R. § 3.500 (b)(2). In this case, the record shows that the Veteran was notified that he was not entitled to additional compensation and DEA at the same time. However, his rate of payment changed at the same time that DEA was awarded. The Board finds his assertions credible that he did not know of the duplicative benefits and believed VA was aware of the election and processing that award accordingly. VA was notified promptly and processed the award promptly of DEA, but then failed to adjust the Veteran's compensation to remove his daughter, S.M., as a dependent for a significant time. The Board finds that the Veteran neither had knowledge of nor should have been aware of the erroneous award of benefits for his daughter after she elected DEA and the error in the daughter not being removed was not due to the Veteran's actions or failure to act. Rather, it was solely due to VA's failure to act which in this case constitutes sole VA administrative error. Thus, the entire debt of $7,433.05 was not properly created and is not valid. Because the Board concludes that the debt is not valid, there is no debt to be waived, and the matter of entitlement to a waiver of any outstanding indebtedness in this matter is moot and will not be further discussed in this decision. Based on the foregoing, the appeal is granted. S. L. Kennedy Veterans Law Judge Board of Veterans' Appeals Attorney for the Board J. Connolly, 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.