Citation Nr: 22012157 Decision Date: 03/02/22 Archive Date: 03/02/22 DOCKET NO. 19-03 138 DATE: March 2, 2022 REMANDED Whether waiver of recovery of an overpayment of Department of Veterans Affairs (VA) compensation benefits in the amount of $5,295.71 is warranted, to include whether the debt was properly created, is remanded. REASONS FOR REMAND The Veteran served on active duty in the United States Marine Corps from November 1997 to December 2005. This matter comes before the Board of Veterans' Appeals (Board) from an August 2018 decision by the VA Committee on Waivers and Compromises (COWC). The Veteran appealed COWC's decision to deny a waiver of recovery of the Veteran's $5,295.71 debt. The Veteran provided hearing testimony before the undersigned Veterans Law Judge in April 2021. A transcript of that hearing is within the Veteran's claims file. The Veteran was initially awarded service connection benefits by way of a March 2006 rating decision. He began receiving VA compensation benefits effective December 2, 2005, the day after his separation from active service. Eleven years later, in December 2016, VA notified the Veteran that it had not recouped the separation pay that he received when he was discharged from active duty on December 1, 2005. The December 2016 letter indicated the total pay was $7,060.95. The amount was adjusted to reflect the after tax amount of $5,295.71. The VA Debt Management Center (DMC) notified the Veteran of this $5,295.71 debt in May 2018. The Veteran filed a statement requesting a waiver later the same month. He then filed a Financial Status Report (FSR) in June 2018. At the April 2021 Board hearing, the Veteran, by way of his representative, confirmed knowledge that separation pay and VA compensation benefits cannot be simultaneously collected. However, the basis for the Veteran's appeal was clarified at this time. In particular, the Veteran is asserting that the debt at issue in this appeal was created in error as, he contends, he never received separation pay. Rather, the Veteran asserts that he was paid for unused leave at the time of his separation. The Board has reviewed the record in an attempt to ascertain what, in fact, the $7,060.95 ($5,295.71 after taxes) represented. Records from the Defense Finance and Accounting Service (DFAS) suggested this was separation pay. However, service records in the claims file include a "Separation/Travel Pay Certificate" dated in November 2005, which shows the Veteran receiving "Pay Lump-Sum Leave 02.0 days" and "Leave Awaiting Separation 30 leave days." The box indicating payment of separation pay was not checked on this form. This record seems to support the Veteran's contention; however, there is no dollar amount on the form. Thus, it is unclear whether the amount at issue is what was paid for this accrued leave, or whether it represents separation pay, as DFAS documents suggest. The Board, therefore, cannot assess the validity of this debt. As the matter of validity has clearly been raised, the Board finds a remand is necessary as the Agency of Original Jurisdiction (AOJ) has yet to formally adjudicate this aspect of the Veteran's appeal. During this adjudication, the AOJ must obtain an audit from DFAS to assess the payment referenced for accrued leave as shown in the Veteran's service records and to determine, with documentation, what exactly the $7,060.95 represents. The Board also cannot address the matter of whether a waiver is warranted at this time. The Court of Veterans Appeals (Court) has directed that appellate review by the Board on the Veteran's waiver claim must be deferred pending formal adjudication of the Veteran's challenge to the validity of the debt undertaken by the AOJ. 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 Committee on Waivers and Compromises). A debtor may dispute the amount or existence of a debt, which is a right that may be exercised separately from a request for waiver or at the same time. 38 C.F.R. § 1.911 (c)(1). Resolution of the creation issue must precede consideration of the waiver issue. Since the waiver matter is being delayed, the Board also recognizes several years has passed since the Veteran completed an FSR. On remand, he should be given the opportunity to complete an updated FSR to support his request for waiver. The matters are REMANDED for the following action: 1. Obtain an audit of payments made to the Veteran at the time of his separation from service from DFAS and/or any other appropriate resource. This should address the "Separation/Travel Pay Certificate" dated in November 2005, which shows the Veteran receiving "Pay Lump-Sum Leave 02.0 days" and "Leave Awaiting Separation 30 leave days," and does not indicate any separation pay was being issued. The AOJ must reconcile the findings to determine whether the $7,060.95 was payment for accrued leave, or separation pay, and must provide documentation for the conclusion made. 2. Once the development of the record is complete, adjudicate the issue of whether the overpayment was properly created, to include consideration of the Veteran's argument that he did not receive separation pay, but only received payment for accrued leave. 3. If the debt is deemed valid, then afford the Veteran the opportunity to complete an updated FSR in relation to his claim for waiver. 4. After completing the above actions, to include any other development as may be indicated by any response received as a consequence of the actions taken in the preceding paragraphs, the Veteran's claims should be readjudicated based on the entirety of the evidence. K. Conner Veterans Law Judge Board of Veterans' Appeals Attorney for the Board A. Adamson, 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.