Citation Nr: 22028433 Decision Date: 05/13/22 Archive Date: 05/13/22 DOCKET NO. 15-14 743 DATE: May 13, 2022 ORDER An overpayment of Chapter 33 Post-9/11 GI Bill education assistance benefits in the amounts of $6,381 for tuition and fees, $6,028 for housing, and $700 for books and supplies, for a total amount of $13,109, was validly created; to that extent, the appeal is denied. Waiver of the recovery of overpayment of Chapter 33 Post-9/11 GI Bill education assistance benefits in the amount of $13,109 is not precluded by fraud, misrepresentation, or bad faith on the Veteran's part; to that extent only, the appeal is granted. REMANDED Entitlement to a waiver of the recovery of the Chapter 33 Post-9/11 GI Bill education assistance benefits in the amounts of $6,381 for tuition and fees, $6,028 for housing, and $700 for books and supplies, for a total amount of $13,109, is remanded. FINDINGS OF FACT 1. In February 2010 and as recently as November 2013, the Veteran was informed that he was eligible to receive 100 percent of the benefits payable under the Post-9/11 GI Bill program. 2. The Veteran was awarded Post-9/11 GI Bill educational assistance benefits at the rate of 100 percent for various terms prior to February 2014. 3. The Veteran's active duty service period from January 5, 2006 to January 5, 2009 was subject to the education loan repayment program under 10 U.S.C. Chapter 109. 4. The overpayment of Post-9/11 GI Bill benefits in the amount of $13,109 was not the result of sole administrative error. 5. The overpayment of VA pension benefits in the calculated amount of $13,109 was not due to the Veteran's fraud, misrepresentation, or bad faith. CONCLUSIONS OF LAW 1. The overpayment in the amount of $13,109 for 38 U.S.C. Chapter 33 Post-9/11 GI Bill educational assistance benefits was legally created, thus the debt is valid. 38 U.S.C. §§ 3311, 3322, 5107(b); 38 C.F.R. §§ 1.911, 1.956, 21.9505, 21.9520, 21.9640, 21.9695. 2. The waiver of recovery of the overpayment of $13,109 for 38 U.S.C. Chapter 33 Post-9/11 GI Bill educational assistance benefits is not precluded by fraud, misrepresentation, or bad faith on the part of the Veteran. 38 U.S.C. §§ 5107(b), 5302(c); 38 C.F.R. §§ 1.962(b), 1.965(b). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS The Veteran served on active duty from January 2006 to January 2010. These matters are before the Board of Veterans' Appeals (Board) on appeal of a September 2014 determination by a Department of Veterans Affairs (VA) Regional Office (RO) Education Center, which denied the Veteran's request for a waiver of waiver of the recovery of Chapter 33 Post-9/11 GI Bill education assistance benefits in the amounts of $6381 for tuition and fees, $6028 for housing, and $700 for books and supplies. The Board acknowledges that the September 2014 determination and March 2015 statement of the case (SOC) focused upon whether a waiver of recovery of the overpayment is warranted. However, the Veteran's contentions also go toward the validity of the debt in question. Therefore, the Board has construed this matter as being part of the appeal. Validity of Debt The Veteran is challenging the validity of the debt. He contends that when he enrolled in school, he relied on VA's determination that he was entitled to Post-9/11 GI Bill benefits at a 100 percent rate. For VA purposes, 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 educational assistance benefits. 38 C.F.R. § 1.956(a). VA regulations provide that, when an indebtedness is assessed, the debtor has the right to: informally dispute the existence or amount of the debt, appeal the VA decision underlying the debt, and request waiver of collection of the debt. 38 C.F.R. § 1.911(c). These rights can be exercised separately or simultaneously. See Schaper v. Derwinski, 1 Vet. App. 430, 434 (1991). Relevant to the instant claim, the Post 9/11 GI Bill provides for VA educational assistance for members of the Armed Forces based on active duty service after September 10, 2001. 38 U.S.C. § 3311; 38 C.F.R. § 21.9520. The amount of educational assistance payable under Chapter 33 of Title 38 is calculated in accordance with a table measuring the aggregate length of creditable active duty service after September 10, 2001. 38 U.S.C. §§ 3311(b)(3), 3313; 38 C.F.R. § 21.9640. The percentage of maximum amounts payable is 40 percent with at least 90 days, but less than 6 months, of creditable active duty service (i.e., 90-179 days); 50 percent with at least 6 months, but less than 12 months, of creditable active duty service (i.e., 180-364 days); 60 percent with at least 12 months, but less than 18 months, of creditable active duty service (i.e., 365-544 days); 70 percent with at least 18 months, but less than 24 months, of creditable active duty service (i.e., 545-729 days); 80 percent with at least 24 months, but less than 30 months, of creditable active duty service (i.e., 730-909 days); 90 percent with at least 30 months, but less than 36 months, of creditable active duty service (i.e., 910-1094 days); and 100 percent with at least 36 months of creditable active duty service (i.e., 1095 days or more) or with at least 30 continuous days of creditable active duty service and a discharge due to a service-connected disability. 38 C.F.R. § 21.9640(a). For purposes of calculation Post-9/11 GI Bill entitlement, a period of service counted for purposes of repayment of an education loan under 10 U.S.C. Chapter 109, known as a loan repayment program, may not be counted as a period of active duty service for entitlement to educational assistance under the Post-9/11 GI Bill. 38 U.S.C. §§ 3301, 3322(b); 38 C.F.R. § 21.9505. In this case, the Veteran's basic eligibility for Post-9/11 GI Bill benefits is not in dispute. Rather, the validity of the debt concerns whether the Veteran received educational benefits at a 100 percent rate for a period of service for which he was not eligible to receive Post-9/11 GI Bill benefits at such a rate. Turning to the relevant evidence, the Veteran's active duty service period from January 5, 2006 to January 5, 2009 was subject to the U.S. Army's education loan repayment program under 10 U.S.C. Chapter 109. The RO issued a February 2010 certificate of eligibility awarding the Veteran educational assistance benefits under the Post-9/11 GI Bill program at a 100 percent rate based on his qualifying period of service beginning on January 5, 2006. At the time, VA was not aware that the Veteran had an obligated period of service due to his participation in a loan repayment program. In the Veteran's December 2009 Application for VA Education Benefits, he had replied "no" to the question of whether he had a "period of active duty that the Department of Defense counts for purposes of repaying an education loan." However, VA was not made aware that the Veteran had an obligated period of service due to his loan repayment program participation until February 2014, when VA obtained information through the Veterans Information Solutions (VIS) system (an electronic database that provides a consolidated view of comprehensive eligibility and benefits utilization data from across VA and the Department of Defense). At that point, the Veteran had been paid Post-9/11 GI Bill educational assistance benefits at the 100 percent rate. Accordingly, in an April 2014 certificate of eligibility letter, the Veteran was informed that based on the length of his creditable active duty service he was entitled to receive 60 percent of the benefits payable under the Post-9/11 GI Bill program. In March 2014 Debt Management Center letters, the Veteran was informed that he owed a debt in the amounts of $6,381 for tuition and fees, $6,028 for housing, and $700 for books and supplies. Because the Veteran's period of service from January 5, 2006 to January 5, 2009 was obligated to satisfy the loan repayment program commitment, it must be excluded from calculating the Veteran's qualified active duty service under the Post-9/11 GI Bill. 38 C.F.R. § 3322 (b); 38 C.F.R. § 21.9505. Accordingly, the RO's November 2013 determination that the Veteran qualified at a 100 percent benefit level had to be adjusted. The Veteran's first period of qualified active duty service began on January 6, 2009. As of January 6, 2009, the Veteran had 365 days of qualified active duty service, and thus, his benefit level was calculated at 60 percent. See 38 C.F.R. § 21.9640(a); see also April 2014 certificate of eligibility letter. In an April 2014 statement, the Veteran argued that he has been informed consistently via multiple certificate of eligibility letters, and as recently as November 2013, that he was entitled to receive 100 percent of the benefits payable under the Post-9/11 GI Bill program and that he had no reason to believe that he was at fault for the overpayment and requested a waiver of the overpayment. In a May 2014 Debt Management Center letter, the RO explained that due to the change or correction in his Chapter 33 information, specifically that periods of service obligated by a loan repayment program are not countable as active duty, the Veteran had incurred an overpayment of $6381 for tuition and fees, $6028 for housing, and $700 for books and supplies. The total overpayment and resultant debt were calculated at $13,109. As a preliminary matter, the Board finds that there is no legal basis to find the Veteran eligible for educational assistance benefits under the Post-9/11 GI Bill for the period from January 5, 2006 to January 5, 2009. The Board is bound by the law, and its decision is dictated by the controlling statutes and regulations. See 38 U.S.C. §§ 503, 7104; see also Harvey v. Brown, 6 Vet. App. 416, 425 (1994). As the Veteran is not eligible for benefits under the Post-9/11 GI Bill for that three-year period, he was not legally entitled to those educational assistance benefits at the 100 percent rate for the academic terms prior to February 2014. Furthermore, the Board finds that VA did not commit an error in providing educational benefits at the 100 percent rate prior to February 2014, as VA was not made aware of the Veteran's participation in the loan repayment program until that time. Notably, the Veteran affirmatively denied on his December 2009 Application for VA Education Benefits that he had a period of active duty service that the Department of Defense counted toward repayment of an education loan. Thus, the Veteran's receipt of educational assistance benefits for which he was not entitled is not due to sole administrative error. The Board is sympathetic to the Veteran's contention that when he enrolled in school, he relied on multiple certificate of eligibility letters, including the ones dated February 2010 and November 2014, that stated that he was entitled to educational assistance benefits under the Post-9/11 GI Bill program at the 100 percent rate. However, as discussed above, that determination was based on erroneous and incomplete information regarding his three-year period of obligated service subject to a loan repayment program. Accordingly, the Board finds that the creation of the overpayment in the amount of $13,109 for Post-9/11 GI Bill benefits is valid. To that extent, the appeal is denied. Waiver of Recovery VA law precludes waiver of recovery of an overpayment or waiver of found to exist: (1) fraud, (2) misrepresentation, or, (3) bad faith. 38 U.S.C. § 5302(c); 38 C.F.R. § 1.965(b). In its September 2014 determination, the Committee on Waivers and Compromises denied the request for waiver finding that the Veteran committed bad faith in the creation of the current debt. Significantly, however, the Committee on Waivers and Compromises did not find that the Veteran committed fraud or misrepresentation in obtaining benefits. Accordingly, the Board limits the discussion to the issue of bad faith. "Bad faith" refers to "unfair or deceptive dealing by one who seeks to gain thereby at another's expense." 38 C.F.R. § 1.965 (b)(2). Conduct by a claimant undertaken with intent to seek an unfair advantage, with knowledge of the likely consequences, and with resulting loss to the government is required for a showing of bad faith. Id. In Richards v. Brown, 9 Vet. App. 255 (1996), the United States Court of Appeals for Veterans Claims found that the operative language in 38 C.F.R. § 1.965(b)(2) limits bad faith to cases in which there is an intent to seek an unfair advantage. In finding bad faith, "the Board should consider any evidence and relevant factors bearing on the claimant's knowledge of the need to report and his awareness of income subject to reporting." See Reyes v. Nicholson, 21 Vet. App. 370, 377 (2007). These factors may include "claimant's education, the existence of any language barriers, any assistance the claimant may have had in completing the income-reporting forms, information submitted to any other federal agency requiring income-reporting from the claimant during the time period in question, and any statements from friends and family members regarding his or her knowledge and intent in attempting to comply with the requirements by reporting changes in income over the years." Id. at 377-78. If the overpayment of VA benefits is not due to the Veteran's fraud, misrepresentation, or bad faith, then the waiver of recovery of the overpayment of VA benefits is not precluded by fraud, misrepresentation, or bad faith. The Board notes that in his December 2009 Application for VA education benefits, the Veteran answered "No" when asked if he received an information pamphlet explaining education benefits. In his November 2014 notice of disagreement and April 2015 substantive appeal, the Veteran credibly stated that he was consistently told he was entitled to receive 100 percent of the benefits payable under the Post-9/11 GI Bill program from 2010 through 2014. He stated that he worked with VA to make sure all proper documentation was obtained while he was attending school and was never advised that there was an issue with his benefits. He also reported that he never received money he did not believe he was genuinely entitled to and that he relied on the VA out-processing center to ensure his paperwork was filled out completely. In its September 2014 determination, the Committee on Waivers and Compromises argued that the Veteran, by the exercise of reasonable care, should have known that he was not entitled to Post-9/11 GI Bill Benefits at the 100 percent entitlement rate based on the loan repayment program contract or length. The Board finds that the Veteran did not commit bad faith since he did not intend to seek unfair gain at VA's expense. The Board finds that the conduct by the Veteran was not undertaken with the intent to seek an unfair advantage, with knowledge of the likely consequences, and with resulting loss to the government. To find "bad faith," the Board must consider "any evidence and relevant factors bearing on the claimant's knowledge." See Reyes v. Nicholson, 21 Vet. App. 370, 377 (2007). While the Veteran has a 12th grade education and is both fluent and literate in English, he did not have assistance or an information pamphlet when completing the initial application for Chapter 33 education assistance benefits; thus, his inadvertent response was not of a competent or scrupulous nature. Furthermore, the Veteran relied on multiple certificates of eligibility and advice from VA stating that he was entitled at the 100 percent rate for his Chapter 33 education assistance benefits. Although the Veteran could have exercised reasonable care to learn that he was not entitled to the 100 percent rate, there is no evidence that the Veteran had intent to seek an unfair advantage, with knowledge of the likely consequences, or otherwise was acting in bad faith. See Richards v. Brown, 9 Vet. App. 255 (1996). Furthermore, VA's delay in verification of the Veteran's loan repayment program status further compounded the debt at issue. Thus, waiver of recovery of the overpayment of improved pension benefits is not precluded by a finding of fraud, misrepresentation, or bad faith. REASONS FOR REMAND Entitlement to a waiver of the recovery of Chapter 33 Post-9/11 GI Bill education assistance benefits in the amounts of $6381 for tuition and fees, $6028 for housing, and $700 for books and supplies is remanded. Inasmuch as it has been determined that waiver of recovery of the debt in this case is not precluded by any of the statutory bars, the application of the standard of equity and good conscience must be considered. In that regard, the Veteran should be requested to provide a compete and current financial status report. Thereafter, the Committee on Waivers and Compromises should consider the request for waiver of the total amount of the overpayment based on the elements of equity and good conscience. The matter is REMANDED for the following actions: 1. Invite the Veteran to submit a complete and current financial status report. He should also be provided an opportunity to submit current argument and evidence with regard to the elements of the standard of equity and good conscience. 2. After completing the requested action, and any additional action deemed warranted, the RO, as well as the Committee on Waivers and Compromises, should readjudicate the claim of whether a waiver of recovery is warranted. The Veteran's request for a waiver of recovery of an overpayment of Chapter 33 Post-9/11 GI bill education assistance benefits in the amount of $13,109 should be readjudicated under the standards of equity and good conscience. If the benefits sought on appeal remain denied, the appellant should be furnished a supplemental statement of the case and given the opportunity to respond thereto. The case should then be returned to the Board for further appellate consideration, if in order. S.C. Krembs Veterans Law Judge Board of Veterans' Appeals Attorney for the Board M. Bilstein, 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.