Citation Nr: 22045563 Decision Date: 08/11/22 Archive Date: 08/11/22 DOCKET NO. 18-08 967 DATE: August 11, 2022 ORDER The overpayment of Department of Veterans Affairs (VA) Vocational Rehabilitation and Employment (VR&E) benefits, pursuant to 38 U.S.C. Chapter 31, in the amount of $39,254.87 was properly created; waiver of overpayment of VA educational assistance benefits in the amount of $39,254.87 is denied. The overpayment of VR&E subsistence allowance, pursuant to 38 U.S.C. Chapter 31, in the amount of $18,374.78 was properly created; waiver of overpayment of VA educational assistance benefits in the amount of $18,374.78 is denied. FINDINGS OF FACT 1. The discontinuance of VR&E benefits pursuant to 38 U.S.C. Chapter 31 was proper; the overpayments of VR&E and VR&E subsistence benefits in the amount of $39,254.87 and $18,374.78 were validly created. 2. The Veteran acted in bad faith in the creation of the overpayments. CONCLUSIONS OF LAW 1. The debts created by the overpayment of VA benefits under the VR&E program, Chapter 31, in the amounts of $39,254.87 and $18,374.78 are valid. 38 U.S.C. §§ 5304, 5305; 38 C.F.R. §§ 3.700. 2. The waivers of overpayment of VA benefits under the VR&E program, Chapter 31, in the amounts of $39,254.87 and $18,374.78 are precluded by a finding of bad faith on the part of the appellant. 38 U.S.C. § 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 April 1977 to July 1991, from April 2008 to April 2009, and from September 2010 to September 2015. These matters come before the Board of Veterans' Appeals (Board) on appeal of a July 2012 determination letter, and August 2012 and October 2012 Debt Management Center's demand letters seeking recoupment of the $39,254.87 debt and $18,374.78 debt arising from overpayments created during the period from September 27, 2010 to July 19, 2012, as well as the May 2013 and June 2014 decisions issued by the Committee on Waivers and Compromises denying the Veteran a waiver of the overpayment debt. In January 2022, the Veteran testified before the undersigned Veterans Law Judge at a Board video conference hearing. A copy of the transcript is of record. VALIDITY OF DEBT The Board notes that the Veteran's basic eligibility for Chapter 31 VR&E benefits is not in dispute. Rather, the dispute is whether he received an overpayment of such benefits. An overpayment is created when VA determines that a beneficiary or payee has received benefit payments in excess of the amount due or to which such beneficiary or payee is entitled. 38 C.F.R. § 1.962. The debtor may challenge the validity or amount of the debt owed. See 38 C.F.R. § 1.911(c)(1); see also VAOPGCPREC 6-98; Schaper v. Derwinski, 1 Vet. App. 430, 437 (1991). The debtor may also apply for a waiver of any debt found to be valid. See 38 U.S.C. § 5302; 38 C.F.R. §§ 1.911 (c)(2), 1.963. As discussed above, the Veteran has essentially challenged whether the debt was validly created. The preliminary issue of the validity of a debt is a threshold determination that must be made prior to a decision on a request for waiver of the indebtedness. See Schaper v. Derwinski, 1 Vet. App. 430 (1991). 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. See 38 C.F.R. § 1.911(c); see also VAOPGCPREC 6-98. The propriety and amount of the overpayment at issue are matters that are integral to a waiver determination. See Schaper, 1 Vet. App. at 434. For a determination that the overpayment was not properly created, such that the debt was not valid, it must be established that the claimant was either legally entitled to the benefits in question or, if the claimant was not legally entitled, then it must be shown that VA was solely responsible for the claimant being erroneously paid benefits. Administrative errors include all administrative decisions of entitlement, whether based upon mistake of fact, misunderstanding of controlling regulations or instructions, or misapplication of law. VAOPGPREC 2-90 (July 17, 1989), 55 Fed. Reg. 27757 (1990). In order for the overpayment to be considered the result of sole administrative error, and for the veteran to consequently not be liable for the debt, the veteran must not have known, or should not have known, that the VA benefits were erroneous. In other words, a finding of sole administrative error requires not only error on the part of VA, but that the beneficiary is unaware that the payments are erroneous. 38 U.S.C. § 5112(b)(9), (10); 38 C.F.R. § 3.500(b)(2); Jordan v. Brown, 10 Vet. App. 171 (1997) (sole administrative error is not present if the payee knew, or should have known, that the payments were erroneous). Generally, there is a prohibition on concurrent receipt of concurrent active service pay and VA benefits. 38 U.S.C. §§ 5304, 5305; 38 C.F.R. §§ 3.700. Accordingly, the Board finds that the Veteran was not legally entitled to the benefits in question. Turning to the relevant evidence, VA received an anonymous complaint in July 2012 indicating that the Veteran had been on active duty with the U.S. Army for the past two years and was receiving compensation/pension and VR&E benefits concurrently. Accordingly, that same month the VA Office of Inspector General requested corroboration. VA called the Veteran who confirmed that he was currently on active duty and had been on active duty since September 27, 2010. The Veteran was advised that an overpayment was created. By way of history, in pertinent part, the Veteran was provided VA Forms 21-8951, Notices of Waiver of VA Compensation or Pension to Receive Military Pay and Allowances. The purpose of these forms is to notify a veteran that VA has received information (from the Defense Manpower Data Center) that he was serving on active duty while also receiving VA benefits; to give a veteran an opportunity to correct that information; and to give a veteran an opportunity to waive receiving either his/her military pay or VA benefits. The form notifies the Veteran that VA will waive VA compensation or pension for the number of training days unless a waiver is received from a veteran. The record shows that the Veteran did not opt to waive his VA benefits for 53 days in FY 2010 or 360 days in FY 2011. As a result, in August 2012 and October 2012 Debt Management Center's demand letters, VA advised the Veteran that he received an overpayment of VR&E benefits in the amount of $39,254.87 and an overpayment of VR&E subsistence allowance in the amount of $18,374.78. In light of the evidence, the record shows that the debt was not a result of sole administrative error on the part of VA. In order for the overpayment to be considered the result of sole administrative error, and for the veteran to consequently not be liable for the debt, the veteran must not have known, or should not have known, that the VA educational benefits were erroneous. See Jordan v. Brown, 10 Vet. App. 171 (1997). Here, the record is clear that the overpayment in question occurred as a result of the Veteran not informing VA that he returned to active duty. Further, as VA's actions were based upon the information provided by the Veteran, the creation of the overpayment was not due solely to VA administrative error. In a July 2010 letter regarding his Chapter 31 benefits, the Veteran was informed to immediately report changes in enrollment to his VA case manager. The Veteran did not waive his receipt of military pay nor has he asserted that he did not receive this pay. At the January 2022 Board hearing, the Veteran testified that he was working at VA at the time he was deployed and that he notified the people he worked with at VA verbally and his VR&E counselor over the phone. He stated that he then contacted VA when he received the demand letters but was told that there were no records of the phone calls. The Veteran also claimed that statements that he did not complete the program were false because he graduated from his nursing school program. The Veteran contends that it was not his fault he was deployed. The Board acknowledges the Veteran's arguments that he verbally notified the people he worked with at VA and spoke with his VR&E counselor via telephone. The United States Court of Appeals for Veterans Claims (Court) has ruled that there is a "presumption of regularity" under which it is presumed that Government officials have properly discharged their official duties. Clear evidence to the contrary is required to rebut the presumption of regularity. See Ashley v. Derwinski, 2 Vet. App. 307, 311 (1992) [citing United States v. Chemical Foundation, Inc., 272 U.S. 1, 14-15 (1926)]. While the Ashley case dealt with regularity of procedures at the Board, in Mindenhall v. Brown, 7 Vet. App. 271 (1994), the Court applied this presumption of regularity to procedures at the AOJ. Statements of nonreceipt, standing alone, are not the type of clear evidence to the contrary which would be sufficient to rebut the presumption of regularity. Jones v. West, 12 Vet. App. 90 (1999), Mindenhall v. Brown, 7 Vet. App. 271, 274 (1994); Ashley v. Brown, 2 Vet. App. 62, 64 (1992). In this case, no clear evidence to the contrary has been presented with which to rebut the presumption of regularity. The record contains no telephonic communications documenting that the Veteran had returned to active duty prior to the July 2012 phone conversation initiated by VA. Furthermore, if in fact the Veteran did notify his VR&E counselor that he was being deployed, he knew or should have known that there was an error when he kept receiving VR&E benefits. It is therefore presumed, and it appears from the record that VA was never informed by the Veteran that he had returned to active duty. The United States Court of Appeals for Veterans Claims (Court) has held that "no equities, no matter how compelling, can create a right to payment out of the United States Treasury which has not been provided for by Congress." Smith v. Derwinski, 2 Vet. App. 429, 432-33 (1992) (citing Office of Personnel Management v. Richmond, 496 U.S. 414, 426 (1990)). The Board is without authority to authorize the simultaneous receipt of active duty pay and VA benefits. Accordingly, the Board finds that the overpayment of VR&E benefits in the amount of $39,254.87 and the overpayment of VR&E subsistence allowance in the amount of $18,374.78 were properly created. See Sabonis v. Brown, 6 Vet. App. 426, 430 (1994). WAIVER OF RECOVERY The Board, therefore, turns to the Veteran's claim for a waiver of the debt arising from said overpayment. 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 June 2014 determinations, 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. The Veteran's request for a waiver of the overpayment was referred to the Committee on Waivers and Compromises (Committee). As noted previously, 38 U.S.C. § 5302(c) and 38 C.F.R. § 1.965(b) indicate that a finding of fraud, misrepresentation, or bad faith precludes a grant of a waiver of recovery of an overpayment. Here, the Committee on Waivers and Compromises concluded in its June 2014 decision on appeal that the facts in this case show that the mandatory bars to waiver apply in the present case. The Committee found evidence of bad faith in the creating of the debt, and the Board agrees. The Veteran failed to disclose a material fact that he was recalled to active duty. Here, the record shows that as part of participation in the Chapter 31 VR&E program, the Veteran was advised that he must immediately notify VA if he was recalled to active duty. Therefore, the Veteran knew or should have known that he was not entitled to compensation payments once he was recalled to service. The Veteran contends that he verbally notified the people he worked with at VA and spoke with the VR&E counselor via telephone. The Veteran's testimony, however, is inconsistent with the evidence of record. As previously stated, the record contains no telephonic communications documenting that the Veteran had returned to active duty prior to the July 2012 phone conversation initiated by VA as a result of an anonymous complaint. Furthermore, if in fact the Veteran did notify his VR&E counselor that he was being deployed, he knew or should have known that there was an error when he kept receiving VR&E benefits from 2010 through 2012. It is therefore presumed, and it appears from the record, that the Veteran acted in bad faith when he failed to inform VA that he had returned to active duty. By failing to accurately and fully report the Veteran's change in active duty status and specifically that he was recalled to active duty effective September 27, 2010, the Veteran concealed relevant information. These actions cannot be deemed to be non-willful or mere inadvertence. The Board finds that the Veteran purposely did not inform VA that he returned to active duty status in order to receive VR&E benefits. That is, the Veteran willfully refused to inform VA accurately of his change in active duty status so that he could wrongfully continue to receive VA benefits to which he was not entitled to receive. The Veteran engaged in deceptive behavior. As such, the Board finds that the Veteran did in fact deceive the VA. Likewise, the Board does not find that the Veteran lacked the requisite knowledge of the likely consequences of failing to report his active duty status accurately. As indicated, the Veteran was fully informed that an overpayment which would be subject to recovery could result from a failure to notify VA of changes in active duty status. In light of the foregoing, the Board finds that the evidence establishes that the Veteran acted in bad faith and committed misrepresentation in the dealings with VA. When the overpayment of VA benefits results from such bad faith and misrepresentation on the part of the Veteran, waiver of this debt is precluded by law, regardless of the Veteran's current financial status or any of the other elements of the standard of equity and good conscience. 38 U.S.C. § 5302 (c); 38 C.F.R. § 1.965(b). Accordingly, the appeal must be denied. See 38 U.S.C. § 5107(b); 38 C.F.R. § 3.102; Lynch v. McDonough, No. 2020-2067, 2021 U.S. App. LEXIS 37307 (Fed. Cir. Dec. 17, 2021); Ortiz v. Principi, 274 F.3d 1361, 1364 (Fed. Cir. 2001); Gilbert v. Derwinski, 1 Vet. App. 49, 55-56 (1990). Tiffany Dawson 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.