Citation Nr: 22019736
Decision Date: 04/02/22	Archive Date: 04/02/22

DOCKET NO. 16-23 175
DATE:  April 2, 2022

ORDER

The appeal as to whether the overpayment of Department of Veterans Affairs (VA) compensation benefits in the amount of $1,001.00 was properly created is dismissed.

The reduction in VA compensation benefits in the amount of $18,876.76 due to concurrent receipt of military service drill pay for Fiscal Years (FY) 2004, 2010, 2011, and 2012 was proper, and the appeal is denied.

Entitlement to waiver of recovery of VA compensation benefits in the amount of $18,876.76 is denied.

REMANDED

The appeal as to whether the $25,419.13 debt created due to an overpayment of VA compensation benefits paid while the Veteran was on active duty between February 14, 2005, and April 14, 2006, was validly created is remanded.

FINDINGS OF FACT

1. In September 2011, the VA Regional Office (RO) notified the Veteran that his spouse, B., was being removed from his award effective March 1, 2011, the first day of the month following their divorce; a $1001.00 debt was created due to this retroactive adjustment.

2. The Veteran disagreed with both the creation of the debt and the denial of a waiver.

3. In November 2012, the VA Committee on Waivers and Compromises (COWC) granted a full waiver of the overpayment of VA compensation benefits in the amount of $1001.00 related to the removal of B. from the Veteran's award.

4. The Veteran received military drill pay concurrently with VA disability compensation payments for a period of 33 days in FY 2004, 58 days in FY 2010, 171 days in FY 2011, and 62 days in FY 2012. 

5. The $18,876.76 overpayment related to the Veteran's military drill pay for FY 2004, 2010, 2011 and 2012 was not due to the Veteran's fraud, misrepresentation or bad faith.

6. The Veteran was at least partially at fault for the creation of the $18,876.76 debt at issue, and recovery of that debt would not create an undue hardship for him or defeat the purpose of the benefit.

7. A waiver of recovery of the overpayment of the $18,876.76 debt at issue would result in unfair gain to the Veteran, and there is no indication that he relinquished a valuable right or incurred a legal obligation in reliance on this benefit.

CONCLUSIONS OF LAW

1. The criteria for dismissal of the appeal as to whether the overpayment of VA compensation benefits in the amount of $1,001.00 was properly created are met. 38 U.S.C. §§ 7104, 7105; 38 C.F.R. §§ 20.201, 20.205.

2. The reduction in the VA disability compensation benefits to offset the concurrent receipt of active service drill pay for a period of 33 days in FY 2004, 58 days in FY 2010, 171 days in FY 2011, and 62 days in FY 2012 was proper. 38 U.S.C. §§ 5107, 5304(c); 38 C.F.R. §§ 3.654, 3.700.

3.  Recovery of VA compensation benefits in the amount of $18,876.76 would not be against equity and good conscience. 38 U.S.C. § 5107, 5302; 38 C.F.R. §§ 1.962, 1.963, 1.965.

REASONS AND BASES FOR FINDINGS AND CONCLUSIONS

The Veteran served on active duty from June 1984 to November 1999 in the United States Marine Corps, and from January 2002 to July 2002 and February 2005 to April 2006 in the United States Army. He also has various additional periods of National Guard Service.

This matter comes before the Board of Veterans' Appeals (Board) from various decisions related to debts owed to VA by the Veteran. In October 2021, the Veteran provided hearing testimony before the undersigned Veterans Law Judge related to the overpayment matters. A transcript of that hearing is within the Veteran's claims file.

Validity of Debt Created by Removal of Spouse from Award

The Board only decides actual "questions" of law and fact in a case. 38 U.S.C. § 7104. The Board may dismiss any appeal that fails to allege a specific error of fact or law in the determination being appealed. 38 U.S.C. § 7105.

In this case, in February 2011, the Veteran notified VA that he and B. had divorced, and he requested that VA remove her from his award. He provided a divorce decree showing the date of divorce as February 8, 2011. In September 2011, the RO notified the Veteran that it took action to remove B. from his award effective March 1, 2011, the first day of the month following the February 8, 2011, divorce. A $1,001.00 debt was created as a result of this retroactive adjustment to the Veteran's benefits.

In October 2011, the Veteran disagreed with the validity of this debt. However, in November 2012 the COWC issued a decision and waived the $1,001.00 debt in full. 

As the grant of the waiver of overpayment in the total amount of $1,001.00 completely eliminates the debt the Veteran owed to VA related to the removal of B. from his award, the November 2012 COWC decision represents a full grant of the benefit the Veteran was seeking in relation to this appeal; thus, it renders moot any argument or question to decide with regard to the validity of the debt created. It is unclear why the RO continues to adjudicate this matter or why VA continues to attempt to collect this debt. There is no debt related to the removal of B. from the Veteran's award, as the debt was waived in full.

Because the Veteran's contentions as to the validity of the $1,001.00 overpayment have been rendered moot, there remains no allegation of fact or law (i.e., no justiciable material issue or controversy) for the Board to decide with regard to this issue. 38 U.S.C. § 7104 (providing that the Board only decides "material issues" of law and fact). Accordingly, a dismissal of this issue is warranted. 38 U.S.C. §§ 7104 (a), 7105(d)(5); 38 C.F.R. § 20.201.

Validity of Debt Created Due to Recoupment of Military Drill Pay

As relevant to this appeal, 38 U.S.C. § 5304(c) prohibits the receipt of VA disability compensation benefits for any period for which the person receives active service pay. See 38 C.F.R. §§ 3.654, 3.700. This includes active duty pay, drill, and active duty for training payments, and inactive duty for training payments made to Reservists and members of the National Guard. Id. Reservists may waive their pension, compensation, or retirement pay for periods of field training, instruction, other duty, or drills. A waiver may include prospective periods and contain a right of recoupment for the days for which the reservist did not receive payment for duty by reason of failure to report for duty. 38 C.F.R. § 3.700 (a)(1)(iii).

The Veteran's $18,876.76 debt at issue in this appeal is due to concurrent receipt of military service drill pay for FYs 2004, 2010, 2011, and 2012. The Veteran has appealed and challenged the validity of this debt. He has not questioned the calculation with regard to the drill pay debt. Rather, he clarified at the October 2021 Board hearing, that he feels the debt is not valid because VA knew of his drill in advance and unreasonably delayed in assessing the debt against him. He indicated he informed VA of his drill time or waiver of pay and VA delayed in assessing the debt.

Various documents were sent related to these payments and the debts were summarized and the calculations explained in the July 2018 Statement of the Case (SOC). 

In August 2005, VA received a VA Form 21-8951 showing 33 days of military drill pay in FY 2004. Action was taken to recoup the $1,626.00, which represented the concurrent payment of military drill pay and VA compensation pay for 33 days at the rate of pay the Veteran was receiving during FY 2004. The RO explained in the July 2018 SOC that the Veteran was paid $1,479.00 monthly in VA compensation in FY 2004 and that this dollar amount was divided by 30 to determine the daily rate, and then multiplied by 33 to assess the total debt being assessed, $1,626.90. The Veteran asserted a hardship with this being collected in one lump sum, and in April 2016, VA notified the Veteran that it was refunding the lump sum of $1,626.90 and assessing it as a retroactive debt in order to allow the Veteran the opportunity to undertake a repayment plan with the DMC.

In March 2014, VA received an unsigned VA Form 21-8951 showing 58 days of military drill pay in FY 2010. In November 2014, VA proposed to take steps to make a retroactive adjustment for the 58 days he was receiving drill pay in FY 2010. The Board recognizes there was a typo in this letter and it indicated 88 days in FY 2010; however, subsequent adjudication shows the RO created the debt based upon 58 days for FY 2010. The Veteran was told that he had the right to complete the appropriate sections of the VA Form 21-8951, and indicate to VA that he disputes the number of days listed in the VA Form 21-8951 for which he performed drill. He was provided 60 days from the date of the letter to provide that information to VA. The form provides a place for the Veteran to indicate the number of drill days served, and for him to sign this form, secure the signature of his unit commander or designee, and return the completed form to VA. The Veteran did not subsequently furnish this form. Thereafter, in February 2016, the Veteran was informed that the RO had taken this action. A $3,969.13 debt was created, which was explained to the Veteran in the July 2018 SOC. The RO explained that the Veteran was receiving $2,053.00 in monthly VA compensation benefits at the end of FY 2010, which was divided by 30 to determine the daily rate, and multiplied by 58 to determine the total amount due, $3,969.13.

In June 2014, VA received an unsigned VA Form 21-8951 showing 171 days of military drill pay in FY 2010. In November 2014, VA proposed to take steps to make a retroactive adjustment for the 171 days he was receiving drill pay in FY 2011. He was told that he had the right to complete the appropriate sections of the VA Form 21-8951, and indicate to VA that he disputes the number of days listed in the VA Form 21-8951 for which he performed drill. He was provided 60 days from the date of the letter to provide that information to VA. The form provides a place for the Veteran to indicate the number of drill days served, and for him to sign this form, secure the signature of his unit commander or designee, and return the completed form to VA. The Veteran did not subsequently furnish this form. Thereafter, in February 2016, the Veteran was informed that the RO had taken this action. A $9,655.80 debt was created, which was explained to the Veteran in the July 2018 SOC. The RO explained that the Veteran was receiving $1,694.00 in monthly VA compensation benefits at the end of FY 2011, which was divided by 30 to determine the daily rate, and multiplied by 171 to determine the total amount due, $9,655.80.

Finally, in March 2013, VA received an unsigned VA Form 21-8951 showing 62 days of military drill pay in FY 2012. In April 2016, the RO informed the Veteran that it was taking action to collect the concurrent VA compensation pay. A $3,624.93 debt was created, which was explained to the Veteran in the July 2018 SOC. The RO explained that the Veteran was receiving $1,754.00 in monthly VA compensation benefits at the end of FY 2012, which was divided by 30 to determine the daily rate, and multiplied by 62 to determine the total amount due, $3,624.93.

The Board finds no reason to question the amounts or calculations related to the various drill pay adjustments. As for the Veteran's argument that the debts are not valid due to VA's delay in processing the information related to his drill days, VA policy dictates that benefits in an amount exceeding a beneficiary's entitlement that is due to claims-processing delay is not considered administrative error. 

Based on a review of the record, the Board finds that the RO appropriately withheld the Veteran's VA compensation benefits for his drill days in FYs 2004, 2010, 2011 and 2012. Accordingly, the $18,876.76 reduction in the VA disability compensation benefits to offset the concurrent receipt of military drill pay was proper. The appeal is therefore, denied.

Waiver of $18,876.76 Debt Created Due to Recoupment of Military Drill Pay

The Veteran also requested a waiver of the $18,876.76 debt related to his military drill pay adjustments. He submitted a Financial Status Report in June 2016. In July 2016, the RO issued an administrative decision letter denying the waiver. The RO indicated that the debt could not be considered by COWC because the "debt is not a result of an overpayment." The Veteran submitted a notice of disagreement in August 2016. The RO responded with a March 2017 SOC that addressed the question of waiver on the merits. The Veteran then perfected the appeal as to the waiver matter by way of a March 2017 VA Form 9. 

The law provides that there shall be no recovery of overpayments of any benefits under any of the laws administered by the Secretary of VA, whenever it is determined that recovery would be against equity and good conscience, if application for relief is made within 180 days of notification. 38 U.S.C. § 5302(a).

The standard "equity and good conscience" will be applied when the facts and circumstances in a case indicate a need for reasonableness and moderation in the exercise of the Government's rights. The decision reached should not be unduly favorable or adverse to either side. The phrase "equity and good conscience" means arriving at a fair decision between the obligor and the Government.

In making this determination, consideration will be given to the following elements: fault of the debtor, balancing of faults, undue hardship, whether recovery would defeat the purpose of the benefit, unjust enrichment, and changing position to one's detriment. If there is any indication of fraud, misrepresentation, or bad faith, waiver of a debt is precluded. 38 C.F.R. § 1.965. 

The RO, in its March 2017 SOC, did not find that the mandatory bars to waiver apply in the present case, and the Board agrees. There is no indication that the Veteran attempted to defraud VA by misrepresenting any relevant facts with respect to his benefits. 

However, after reviewing the record, the Board finds that it would not offend the principles of equity and good conscience to require the Veteran to repay the debts owed. In assessing whether collection of the debt would be against equity and good conscience, the Board finds that the Veteran is at least partially at fault in the creation of the debt. Regulations require consideration of whether the actions of the debtor contributed to causing the debt. 38 C.F.R. § 1.965(a)(1). Here, there is no evidence to suggest the Veteran reported his drill at the time he was involved in it. Rather, he reported it after the fact, as is customary, on the VA Form 21-8951. Thus, he was at least partly at fault in the creation of this debt. 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; thus, allowing him to keep those benefits 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. As to whether recoupment of those benefits would defeat the purpose of the benefit, recoupment of those benefits would not defeat the purpose of the benefit since the Veteran was not entitled to both payments. Additionally, the Board finds that failure to make restitution for the full amount of the debt would result in unfair gain to the Veteran. Money to which he was ultimately not entitled was paid on his behalf.

The Veteran has based his appeal primarily upon the notion that requiring repayment would cause undue financial hardship. A review of the June 2016 financial status report reveals that expenses exceeded income at that time by about $400 per month. However, the Board has reviewed the Veteran's listing of monthly expenses, which includes discretionary spending, family vacation expenses, as well as questionable monthly expenses such amount due for a debt listed as having a $0.00 balance (Amazon) and monthly expenses listed as $27-35 for a debt listed as having an $18 balance (Macy's). As to the element of undue hardship, the pertinent regulation provides that consideration should be given to whether collection of the indebtedness would deprive the debtor or his family of basic necessities. 38 C.F.R. § 1.965(a)(3). While the Veteran has suggested that repaying the debt would cause a hardship, the evidence does not show it would deprive him of basic necessities. No more recent evidence has been received to suggest any hardship has arisen that would deprive the Veteran or his family of basic necessities.

In sum, and after weighing the elements pertaining to the principles of equity and good conscience as set forth by 38 C.F.R. § 1.965(a), the Board finds that recovery of the overpayment does not violate the principles of equity and good conscience. The Veteran has been found to be at least partially at fault in the creation of the debt, and the retention of the overpayment would unfairly enrich him. Moreover, there is no specific evidence that the repayment of the debt would create an undue hardship upon the Veteran, and recovery of the overpayment would not defeat the purpose for which the benefits were intended. 

Accordingly, the Board finds that the benefit-of-the-doubt rule is not applicable as the evidence is not in approximate balance, and entitlement to waiver of recovery of the $18,876.76 overpayment of VA compensation benefits related to his FY 2004, 2010, 2011 and 2012 drill pay is not warranted. 38 U.S.C. § 5107 (b) (2018); Lynch v. McDonough, 21 F.4th 776 (Fed. Cir. 2021). 

REASONS FOR REMAND

Validity of Debt Due to Recoupment of VA Compensation Pay during Active Duty Period

The Veteran has also challenged the validity of the debt assessed against him by VA in the amount of $25,419.13 related to his period of active duty from February 14, 2005, to April 14, 2006. 

The RO sent the Veteran a December 2009 letter indicating it had received information about this active duty period. VA proposed to terminate his benefits retroactively for the period from February 14, 2005, to April 14, 2006. He was given 60 days to provide a response to indicate why this action should not be taken. 

In December 2009, the Veteran submitted a statement indicating he disagreed with the RO's letter and he submitted a copy of a February 2006 letter showing that he had no VA debt at that time. In April 2010, the RO responded and recognized receipt of the Veteran's December 2009 communication. The RO explained that the debt discussed in the 2006 letter is not related to the active duty debt. The RO also notified that final action to terminate the benefits for the period of February 14, 2005, to April 14, 2006, was being taken. A $25,419.13 debt resulted and the VA Debt Management Center (DMC) notified the Veteran of this debt in May 2010. In May 2010, the Veteran again submitted a statement indicating disagreement with the validity of this debt, because he felt the debt was paid in full. The Veteran also requested a waiver at this time.

In June 2010, the RO sent the Veteran a letter that informed him that an initial overpayment was created in the amount of $5,262.40 and only pertained to the period from February 14, 2005, to June 1, 2005. The RO then indicated that there was a January 2006 award that failed to withhold benefits for the period of active duty from February 2005 to April 2006. The RO also indicated that the $5,262.40 debt was eliminated, and the Veteran received benefits he was not eligible to receive since he was on active duty and that subsequent award actions failed to withhold benefits for his period of active duty. It is unclear whether the $5,262.40 was withheld from the award referenced as paid. The RO then indicated that it terminated the benefits for the entire period leading to the $25,419.13 debt. The RO went on to say, "Remember, since your last period of active duty, your disability evaluation has increased. Therefore, the amount of the debt is larger than the initial overpayment created in 2005." There was no paid and due audit to accompany this letter to show the Veteran, in numerical terms, what was actually paid to him and what was due to him during the time period in question.

Since this time, the Veteran has repeatedly requested an audit and an explanation as to how the debt at issue was calculated. The Veteran does not question the fact that he cannot receive VA compensation and active duty pay concurrently. Rather, he questions that the debt at issue was properly created. As recent as at the time of his October 2021 Board hearing, the Veteran reported that he has not gotten a clear explanation of this debt from the RO. 

Moreover, the Veteran has pointed out that he notified VA in February 2005 that he was returning to active duty in February 2005 and that his benefits should be terminated. A copy of his communication is in the claims file and it shows the RO received it on March 7, 2005. A June 2005 letter in the claims file from the RO to the Veteran indicates as follows, "Our office received your correspondence on March 7, 2005 indicating that you are now on active duty. We have stopped your award effective February 17, 2005, the day you were placed on active duty with the military." An internal document (VA 21-8947) dated in June 2005 also has a handwritten note, "Stop Awrd Active Duty." It is unclear to the Board how the RO can now suggest it has to collect benefits for the time period in question when it appears from the record that these benefits were not paid to the Veteran due to his timely notice to the RO that he was returning to active duty. It is unclear what, if any, money the Veteran legitimately owes VA for his active duty period.

Given the Board cannot determine the answer to this question from a review of the claims file, the Veteran certainly cannot be expected to understand how much is owed or why. The record does not provide a clear accounting of the debt owed for the active duty period from February 14, 2005, to April 14, 2006. In order to afford due process to the Veteran, an accounting should be made, and the Veteran should be provided a clear, thorough explanation of the basis for the amount at issue in this appeal.

This matter is REMANDED for the following action:

1. Provide a paid and due audit of the overpayment of VA disability compensation benefits at issue ($25,419.13 related to the active duty period from February 14, 2005, to April 14, 2006), clearly explaining the amount of the overpayment, how it was calculated, and what payments were made to the Veteran during this time. This should address the RO's June 2005 letter to the Veteran indicating that his benefit payments were actually terminated during this active duty period and the June 2005 VA 21-8947 showing the internal direction to stop payments due to the Veteran's active duty status. If the benefits were, in fact, terminated as the June 2005 documents indicate, then the RO should explain to the Veteran why it is attempting to collect monies that were not paid to him.

A copy of the audit and the narrative explanation should be provided to the Veteran and placed in the claims file.

2. If any part of the debt on appeal is deemed valid, the RO should consider whether the matter should be referred to the COWC in response to the Veteran's May 2010 request for waiver.

3. 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 claim should be readjudicated based on the entirety of the evidence.

 

 

Kristin Haddock

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.