Citation Nr: 21042326 Decision Date: 07/12/21 Archive Date: 07/12/21 DOCKET NO. 06-20 606 DATE: July 12, 2021 ORDER The overpayment in the amount of $4,504.00 due to the removal of the Veteran's daughter as a dependent from February 1, 2004, to December 1, 2005, was not valid and, to that extent, the appeal is granted. FINDING OF FACT 1. In a September 2003 rating decision, the Veteran was awarded Dependents Educational Assistance (DEA) under Chapter 35, Title 38 U.S.C., as he was found to have a total and permanent disability. 2. VA then established DEA benefits for the Veteran's daughter effective October 3, 2003, and she began receiving education assistance benefits in January 2004. 3. In March 2004, VA received a VA Form 21-674 (Request for Approval of School Attendance) indicating that the Veteran's daughter was enrolled in a full-time course of study beginning in January 2004. 4. The RO erroneously included the Veterans' daughter in his compensation award as a dependent over the age of 18, but enrolled in school full-time, effective February 1, 2004, creating a compensation award overpayment in the amount of $4,504.00 for duplicity of VA benefits. 5. The overpayment was created due to an erroneous award solely based on administrative error. CONCLUSION OF LAW The overpayment of VA disability compensation benefits in the amount of $4,504.00 was the result of an erroneous award based solely on a VA administrative error; such overpayment was not properly created, and the debt assessed against the Veteran is not valid. 38 U.S.C. §§ 1115, 5112; 38 C.F.R. §§ 3.500 (b), 3.503, 21.3023 (2005). REASONS AND BASES FOR FINDING AND CONCLUSION The Veteran served on active duty from October 1968 to August 1970. The case is on appeal from a December 2005 decision that retroactively terminated an additional allowance for the Veteran's daughter, effective February 1, 2004. In July 2016, the Board last remanded the present matter for further development. While the case was in remand status, in July 2020, the Committee on Waivers and Compromises (COWC) waived the debt. In May 2021, the Veteran was asked if he wished to continue the appeal. He responded in June 2021 that he would like to do so. Thus, the issue of validity of the debt is still on appeal despite the grant of the waiver. Whether an overpayment in the amount of $4,504.00 is valid. Legal Criteria 38 U.S.C. § 1115 provides that any Veteran entitled to compensation and whose disability is rated at least at 30 percent, shall be entitled to additional compensation for dependents. A veteran will also be entitled to an additional dependent's allowance for children over the age of 18, but who are pursuing a course of instruction at an approved educational institution (school attendance). See 38 U.S.C. § 1115(1)(F) (2005). In addition, 38 U.S.C. § 3500 establishes that dependent children of Veteran's who have a service-connected disability considered as totally and permanently disabling are entitled to DEA. As to the nonduplication of VA benefits, applicable regulation establishes that a child who is eligible for educational assistance under Chapter 35, and who is also eligible for pension, compensation or indemnity compensation based on school attendance must elect whether he or she will receive educational assistance or pension, compensation or dependency and indemnity compensation. An election of educational assistance either before or after the age of 18 is a bar to subsequent payment or increased rates or additional amounts of pension, compensation or dependency and indemnity compensation on account of the child based on school attendance on or after the age of 18 years. Nonetheless, payment of pension, compensation or dependency and indemnity compensation to or on account of a child after his or her 18th birthday does not bar subsequent payments of educational assistance. See 38 C.F.R. § 21.3023(a)(1), (2). An overpayment is created when VA determines that a beneficiary or payee has received monetary benefits to which he or she is not entitled. See 38 U.S.C. § 5302; 38 C.F.R. § 1.962. An overpayment may arise from virtually any benefits program administered pursuant to VA law, including compensation, dependency and indemnity compensation, and educational assistance benefits and subsistence allowance. See 38 C.F.R. § 1.956(a). In order for the Board to determine whether the overpayment was created properly, it must be established that the veteran was not entitled legally to the benefits in question, and if there was no legal entitlement, it must then be shown that VA was not solely responsible for the veteran being paid benefits erroneously. As previously stated, if the debt was the result solely of administrative error, the effective date of the reduction of benefits would be the date of the last payment based on this error, and consequently there would be no overpayment charged to the Veteran for the portion of the overpayment attributable to administrative error. See 38 U.S.C. § 5112(b)(10); 38 C.F.R. §§ 3.500(b)(2). Administrative errors include all administrative decisions of entitlement, whether based upon mistake of fact, misunderstanding of controlling regulations or instructions, or misapplication of law. VAOPGCPREC 2-90 (Mar. 20, 1990). Under 38 U.S.C. § 5112(b)(9), (10) (2005), the effective date of a reduction or discontinuance of compensation contemplate two scenarios; when by reason of an erroneous award based on an act of commission or omission by the beneficiary, or with the beneficiary's knowledge, shall be the effective date of the award, whereas when 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) (2005). 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). Lastly, and with respect to the discontinuance of dependency compensation paid to a Veteran for his child, 38 C.F.R. § 3.503 provides that such discontinuance will be effective the last day of the month following 60 days after notice to payee. See 38 C.F.R. § 3.503(a)(3)(ii) (2005). Analysis The Veteran contends that he must not be responsible for an overpayment in the amount of $4,504.00 as the debt was not properly created. In support of his claim, he asserts that the payment of DEA benefits to his daughter, received concurrently with an additional allowance in his compensation award for his daughter based on school attendance was not an attempt to take advantage of VA. In that regard, he asserts that the RO never took appropriate measures to inform him of such and that he did not know that he was not allowed to receive both benefits concurrently. The Veteran indicates that it was only after a telephone conversation with a VA representative that he was explained about the prohibition and that the error was noted. See April 27, 2009 Appellant's brief. As noted in the Board's July 2010 remand, the Veteran essentially argues that the debt at issue is invalid based on a theory of sole administrative error. See 38 U.S.C. § 5112. As such, the question for the Board is whether the discontinuance of the Veteran's additional allowance for his dependent in his compensation award was based solely on an administrative error, or whether the overpayment was based on the Veteran's act of commission or omission, or with the Veteran's knowledge. See 38 C.F.R. § 3.500(b). In November 2002, the Veteran was granted a combined disability rating of 30 percent for his service-connected disabilities. In December 2002, the RO notified the Veteran that he may be entitled to receive additional benefits for his dependents and provided him with a VA form 21-686c (Declaration of Status of Dependents). In January 2003, the Veteran provided the necessary dependency information and in April 2003, the RO awarded an additional dependency allowance to his compensation award. He was advised, however, that effective December 2002, his award was reduced as one of his dependent children turned 18 years old. The Veteran notified VA that while his daughter had turned 18 years old, she was still enrolled in school full-time. In April 2003, the RO provided the Veteran with a VA form 21-674 (Request for Approval of School Attendance) to complete for his daughter. In a September 2003 rating decision, the RO increased the Veteran's combined disability rating to 100 percent. The RO also established entitlement to DEA benefits effective July 2001. An October 2003 notification letter advised the Veteran that his dependents may be eligible for DEA benefits. The RO enclosed a VA form 22-5490 in the event the Veteran wished to claim such benefits. On January 27, 2004, VA received a VA form 22-5490 (Application for DEA benefits) indicating that the Veteran's daughter was enrolled at the Cedar Valley College for the Spring semester from January 2004, to May 2004. An undated VA letter notified the Veteran's daughter that she must elect an effective date for her award from the following options: (1) December [REDACTED], 2002 (date she became 18 years old); (2) October 3, 2003 (date the Veteran was notified of his permanent and total disability); or (3) any date between the previous two dates. In February 2004, the Veteran's daughter elected October 3, 2003, as the effective date for her award. Shortly thereafter, the RO establish the DEA award. See February 20, 2004 Chapter 35 Education Award. In March 2004, the Veteran submitted a VA Form 21-674 indicating that his daughter had begun a full-time course of education effective January 12, 2004. In an April 2004 notification letter, VA determined that the Veteran would continue to receive an additional dependency allowance for his daughter, effective February 1, 2004. In a September 2005 letter, the RO notified the Veteran that the law prohibited the concurrent receipt of a dependency allowance and Chapter 35 educational benefits. The RO stated that because his daughter had elected to receive Chapter 35 benefits effective in January 2004, the additional dependency allowance he had received for her would be terminated effective February 1, 2004, resulting in an overpayment of $4,504.00. See also December 2005 VA notification letter. In an October 2005 statement, the Veteran argued that when his daughter enrolled at the Cedar Valley College, a school's VA liaison guided them through the completion of VA forms to establish her education award. The Veteran asserts that the school's VA liaison indicated that the paperwork would go to the Oklahoma VA education office for processing. He further noted that he was made aware, at any time, of the prohibition on duplication of benefits and contends, in essence, that he completed the forms he was provided with to secure and establish his daughter's education award. Further, the Veteran states that he should not be penalized for the mistake that was made as he had been told through previous VA letters that his daughter was still to receive money for her education until she turned 26 years of age. See February 7, 2006 notice of disagreement (NOD). In an April 2009 brief, the Veteran's representative VSO indicated that as the subject matter expert, VA should have taken appropriate measures to inform the Veteran regarding this matter and avoid the overpayment. The representative further noted that it was not possible for the Veteran to be familiar with the regulatory and statutory provisions addressing the non-duplicity of benefits and that VA did not discharge its duty to inform the Veteran of his responsibilities. Ultimately, as noted previously, in a July 2020 decision, the COWC determined that "no fault is shown on the part of the Veteran as the VA RO failed to act in a timely manner for the removal of his dependent daughter from his compensation award upon their receipt of Chapter 35 benefits. This delay contributed to the size of the debt." In that regard, the COWC noted that "once the VA education division processes a Chapter 35 education award, they are to notify the Compensation Division (VSC) at the appropriate [RO] for any necessary dependency adjustment to the Veteran's compensation award [in order] to prevent this type of overpayment." The facts of this appeal are not in dispute. Here, the Veteran was awarded additional dependency allowance benefits for his dependent daughter effective July 2001. Thereafter, the Veteran was notified that an adjustment was made to his award effective December 2002 as his daughter turned 18 years old; however, he was notified that she could continue as a dependent in his award as long as school attendance was certified. The foregoing clearly indicates that effective December 2002, the Veteran's daughter was no longer in his compensation award. Thereafter, in January 2004 the Veteran's daughter applies for DEA benefits, which were granted effective October 2003. She began to receive benefits directly in January 2004. Then in April 2004 the Veteran submits the completed Request for Approval of School Attendance. Noticeably, the Veteran appears to have been erroneously instructed to do so by the school' VA liaison. Nevertheless, the RO still processed the request an added the Veteran's daughter back to his compensation award effective February 1, 2004, despite the fact that the evidence clearly shows that a separate award for DEA benefits was in effect. After consideration of the evidence of record, the Board finds that the RO's action in adding the Veteran's daughter back to his compensation award was an erroneous administrative decision of entitlement based upon misapplication of law. This is supported by the COWC's decision which found "no fault is shown on the part of the Veteran as the VA RO failed to act in a timely manner for the removal of his dependent daughter from his compensation award upon their receipt of Chapter 35 benefits. The Board agrees with the outcome of their decision, however, under a different premise since given that a DEA award was in effect at the time of the request for school attendance, the RO should have informed the education division that the Veteran's daughter was added back to his compensation award. (Continued on the next page) It follows that the effective date of the reduction of benefits in the present case would be the date of the last payment based on this error, and consequently there would be no overpayment charged to the Veteran. 38 U.S.C. § 5112(b)(10); 38 C.F.R. §§ 3.500(b)(2). Thus, as the applicable regulation specifically addressing the discontinuance of dependency compensation paid to a Veteran for his child provides that such discontinuance will be effective the last day of the month following 60 days after notice to payee, here, the discontinuance is effective December 1, 2005, which is the date the RO chose as 60 days from the September 2005 notification letter. 38 C.F.R. § 3.503(a)(3)(ii)(2005). For the reasons set forth above, the Board finds that the overpayment at issue was based solely due to an administrative error and, consequently, the debt is not valid. RYAN T. KESSEL Veterans Law Judge Board of Veterans' Appeals Attorney for the Board William Pagan 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.