Citation Nr: A25035453
Decision Date: 04/17/25	Archive Date: 04/17/25

DOCKET NO. 241028-481973
DATE: April 17, 2025

ORDER

Entitlement to a waiver of recovery of an overpayment of Department of Veterans Affairs (VA) pension benefits, in the amount of $5,496.00 is granted.

FINDINGS OF FACT

1. In January 2024, VA retroactively terminated the Veteran's pension benefits, after receiving information that his income was beyond the Maximum Annual Pension Rate. The retroactive termination of pension benefits was effective from September 1, 2022, and resulted in an overpayment of $5,496.00.

2. The Veteran is at fault for the creation of the debt, as the income he reported to a VA representative who assisted him in filling out the pension application, was incorrect, however that fault is heavily mitigated, as the Veteran was confused during the process, is legally blind and incompetent to handle the disbursement of funds, and has provided competent testimony that he reported his income as deposited into his checking account to the best of his ability.

3. VA bears some responsibility for the overpayment generated, because despite VA's laudable efforts in assisting the Veteran in his pension application, he voiced his considerable confusion and more thoroughly addressing that confusion may have helped reduce and/or prevent the overpayment from being generated.

4. Recovery of the debt would create an undue hardship for the Veteran, insofar as it would negatively impact his ability to pay for basic financial necessities, including food, housing, and utilities, among others.

5. Recovery of the debt would defeat the purpose for which pension benefits are originally intended.

6. The Veteran was unjustly enriched at the expense of the U.S. Government, as he received pension funds despite his income being beyond the Maximum Annual Pension Rate.

7. The Veteran has not changed his legal position to his detriment through the reliance on VA pension benefits.

CONCLUSION OF LAW

Recovery of the overpayment of VA pension benefits in the amount of $5,496.00 would be against the standards of equity and good conscience. 38 U.S.C. § 5302; 38 C.F.R. §§ 1.963, 1.965.

REASONS AND BASES FOR FINDINGS AND CONCLUSION

The Veteran served on active duty in the Army from February 1969 to October 1969. This matter comes before the Board of Veterans' Appeals (Board) on appeal from an October 2024 administrative decision, issued by the Department of Veterans Affairs (VA) Committee on Waivers and Compromises (COWC) which denied entitlement to the benefits currently sought on appeal.

This appeal has been advanced on the Board's docket pursuant to 38 C.F.R. § 20.902(c). 38 U.S.C. § 7107(b).

Following the October 2024 COWC decision, the Veteran filed a VA Form 10182, Notice of Disagreement (NOD). The Veteran selected to have a hearing before a Veterans Law Judge, and the claim was eventually docketed before the Board.

Therefore, the Board may only consider the evidence of record at the time of the October 2024 decision on appeal, as well as any evidence submitted by the Veteran, or their Representative, within 90 days from the scheduled Board hearing. 38 C.F.R. § 20.303. The Board cannot consider (1) evidence submitted during the period after the October 2024 decision on appeal and before the Board hearing took place, or (2) evidence submitted more than 90 days after the Board hearing took place. 38 C.F.R. § 20.302.

If evidence was associated with the claims file during a period of time when additional evidence was not allowed, the Board has not considered it in its decision. 38 C.F.R. § 20.300. If the Veteran would like VA to consider any evidence that was added to the claims file that the Board could not consider, the Veteran may file a Supplemental Claim (VA Form 20-0995) and submit or identify this evidence. 38 C.F.R. § 3.2501. If the evidence is new and relevant, VA will issue another decision on the claim, considering the new evidence in addition to the evidence previously considered. Id. Specific instructions for filing a Supplemental Claim are included with this decision.

The Veteran appeared before the undersigned Veterans Law Judge in a Board hearing in January 2025 to present testimony on the issue on appeal. A transcript of the hearing has been associated with the Veteran's claims file.

Of note, the Veteran has only requested a waiver of recovery of the overpayment. He has not disputed, nor challenged, the validity of that debt. Therefore, the Issue on appeal has been characterized to reflect the waiver claim, only.

Entitlement to a waiver of recovery of an overpayment of Department of Veterans Affairs (VA) pension benefits, in the amount of $5,496.00.

The overpayment on appeal stems from the Veteran's receipt of VA pension benefits.

For reference, basic entitlement to pension exists if, among other things, the claimant's income is not in excess of the maximum annual pension rate (MAPR) specified in 38 C.F.R. § 3.23. 38 U.S.C. § 1541; 38 C.F.R. § 3.3 (a)(3).

By way of background, the Veteran initially submitted a VA Form 21-527EZ, Fully Developed Claim for pension benefits in August 2022. In that form, the Veteran wrote that he was blind and had a left knee disability that made it difficult for him to walk. The Veteran wrote that his only income was that from Social Security Administration (SSA) benefits, and that he paid Medicare premiums and American Continental insurance premiums.

In October 2022, the Veteran was granted nonservice-connected pension benefits, as well as an additional allowance for aid and attendance. A finding of incompetency was also proposed.

In December 2022, VA received information from SSA that the Veteran's monthly income was slightly larger than had been reported to VA. VA therefore wrote to the Veteran and proposed to reduce his monthly pension rate from $334.00 to $320.00, effective January 2023. He was informed that this would generate an overpayment. While this is not the overpayment on appeal, the Veteran's response to this notice is contextually important.

In that response from December 2022, the Veteran wrote that he does not receive anything more than what he reported, and he gets all of his medical care from the VA. The Veteran requested "that someone from the [Pension Management Center (PMC)] call him because he does not have the ability to read letters. He is extremely sight impaired and considered legally blind." The Veteran continued that "he truly only receives the figure he reported on his initial application for pension."

In January 2023, the RO found the Veteran not competent to handle the disbursement of funds. A Fiduciary was eventually assigned, which the Board observes is the Veteran's son.

In February 2023, a field examination was conducted, which revealed some further discrepancies in the Veteran's income, medical expenses, and net worth, which "may have an effect on the VA benefit amount." The field examiner reported that the Veteran's net worth was approximately $32,062.80, not the $30,597.00 that VA had calculated. They further reported the Veteran's unreimbursed medical expenses were approximately $778.80, but VA had calculated $5,953.00. unreimbursed medical expenses are used to reduce annual income, and so this adjustment also meant the Veteran's income was higher than previously reported.

In August 2023, VA wrote to the Veteran, through his Fiduciary, stating that they were alerted to the field examiner's report of the Veteran's countable income being higher than what was on record. Following a recalculation, VA therefore proposed to terminate the Veteran's benefits, effective September 1, 2022, because his annual income exceeded the MAPR. The Veteran was informed that this would create an overpayment.

An internal Award Print screen noted that the retroactive termination of pension benefits created a debt of $5,496.00.

In January 2024, VA again wrote to the Veteran, through his Fiduciary, and stated that the earlier proposed termination of pension benefits had taken place. They would be informed as to their rights regarding the overpayment generated.

In February 2024, the Veteran, through his Fiduciary, was sent a letter from the Debt Management Center (DMC), informing him that an overpayment had been created in the amount of $5,496.00. The Veteran was informed of his rights to dispute the debt and/or to request a waiver of recovery of the debt.

In June 2024, the Veteran submitted a VA Form 5655, Financial Status Report (FSR), through which he requested a waiver. The Veteran reported that he was unmarried, with no dependents. The Veteran was currently unemployed, and his only listed income was that from SSA. The Veteran included his rent, food, and phone/internet costs. He did not list a utility/heating cost. The reported income exceeded his expenses. The Veteran reported about $5,000.00 cash in the bank, $20.00 cash on hand, but no additional assets, nor installment contracts. In the final portion of the Form, the Veteran wrote that he "is blind and has no assets."

An updated FSR was then submitted later in June 2024, this time with more details provided. The Veteran wrote that he was retired. He again reported SSA income, along with rent and food expenses. Other expenses included television, phone, internet, life insurance, and two small monthly donations to St. Jude's and the Tunnel to Towers foundation for homeless veterans. The Veteran's income exceeded his expenses by approximately $1,020.00. He listed $8,100.00 cash in the bank, $20.00 on hand, but no other assets, including no vehicles.

The Veteran's waiver request was forwarded to the COWC. In a Decision from October 2024, the COWC denied the Veteran's waiver request. They found that he was at fault for not reporting the higher income at the time of the pension application, and that this placed his income beyond the MAPR. Financial hardship was not found, because his income exceeded his expenses. Recovery of the debt did not defeat the purpose of the pension benefits, and the COWC determined that he was also unjustly enriched.

The Veteran then submitted his VA Form 10182, appealing the COWC Decision that denied the wavier claim. He selected to have a Hearing before a Veterans Law Judge.

The Veteran was then given a Board hearing before the undersigned in January 2025. During the hearing, the Veteran testified that he is legally blind, and deemed incompetent to handle his own financial affairs, so he needed help with filling out the pension application. The Veteran stated that he actually thought he was getting help with healthcare from the VA, and that someone on the 'public contact' team - which may have possibly been inexperienced - tried to help the Veteran make the application for pension benefits for him. Even after the application was submitted, the Veteran questioned "what ... did we just do? What did we fill out?" He then started receiving money in his checking account, but was unsure exactly what it was for, because again, he could not read the Forms to fill them out himself and was also not competent to handle matters of financial funds. The Veteran testified that he did not really understand it, but he reported everything openly and honestly as he believed, including his income and medical expenses. The Veteran even reported that him being assigned a Fiduciary confused him, because he always paid his bills on time, that he carried himself honestly, and that he did his best to save what he could because he did "not want my children to pay for my burial." The Veteran continued that, after his recent divorce, he faced homelessness and had to start again in an empty apartment. The increased cost of living, specifically furniture, meant that he did not even have a mattress for some time, and it was his son who had to convince him to buy a bed.

The Veteran's claim is now before the Board.

As an initial matter, the Board finds that there has been no evidence of fraud, misrepresentation, or bad faith in the present case.

In cases where fraud, misrepresentation, or bad faith on the Veteran's part with respect to the creation of the overpayment at issue have not been demonstrated, and, therefore, waiver is not precluded pursuant to 38 U.S.C. § 5302 (a), the Board must determine whether recovery of the indebtedness would be against equity and good conscience, thereby permitting waiver under 38 U.S.C. § 5302 (a) and 38 C.F.R. §§ 1.963 (a), 1.965(a).

The standards of "equity and good conscience" will be applied when the facts and circumstances in a particular 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, which are not intended to be all-inclusive:

1. Fault of debtor. Where actions of the debtor contribute to creation of the debt.

2. Balancing of faults. Weighing faults of the debtor against VA fault.

3. Undue hardship. Whether collection would deprive debtor or family of basic necessities.

4. Defeat the purpose. Whether withholding of benefits or recovery would nullify the objective for which the VA benefits were intended.

5. Unjust enrichment. Failure to make restitution would result in unfair gain to the debtor.

6. Changing position to one's detriment. Reliance on VA benefits results in relinquishment of a valuable right or incurrence of a legal obligation.

38 C.F.R. § 1.965(a).

Turning to the first factor, the Board finds the Veteran at fault for the creation of the debt, however that fault is heavily mitigated. At the simplest level, the Veteran reported going into a VA facility and receiving help with the pension application. He reported his income to the best of his ability, and knowingly or unknowingly, that report ended up being incorrect based on the findings of the field examiner. Thus, the incorrect reporting of income, as well as unreimbursed medical expenses, meant that the Veteran received pension benefits despite being beyond the MAPR. This is prohibited.

Having said that, the fault of the Veteran is heavily mitigated by his specific circumstances. The Veteran provided competent testimony that he actually thought he was getting VA healthcare, and then a VA representative, who may have been inexperienced, helped him fill out the application for pension benefits. The Veteran is blind, and so reading and understanding the parameters of VA pension benefits is, at best, difficult. Couple that with VA's own finding that the Veteran is deemed incompetent to handle the disbursement of funds, and any fault that the Veteran may objectively have, is certainly subjectively mitigated. The Veteran testified that he never meant to misreport his income, and provided everything to the best of his ability, and the Board takes him at his word. Thus, any fault borne by the Veteran is heavily mitigated.

By comparison, VA does bear some fault for the creation of the debt. On one hand, VA received information from the field examiner that the Veteran's income was higher than previously thought, and then recalculated that debt. The Veteran, even though his Fiduciary, was promptly informed of the proposed termination of benefits, his information as forwarded to the DMC who informed the Veteran of his right to request a waiver, and all stages, he was not denied any procedural due process.

Having said that, the Board is, again, taking the Veteran at his word, that he did not originally intend to submit a pension application, but instead was looking for healthcare. A representative from VA then assisted the Veteran with the pension application, and it is unclear if the Veteran understood the form he was having filled out on his behalf. While assistance from the VA to the Veteran is of course welcome, and is generally something to be praised, logically speaking, the debt may have not occurred if the Veteran was fully informed of the nature of the application that was being filled out on his behalf. He voiced his considerable confusion and, hypothetically, had VA addressed that confusion more thoroughly, it may have helped reduce and/or prevent the overpayment from being generated. Thus, VA does bear some comparative fault for the creation of the debt.

Third, the Board must assess whether or not recovery of the debt would cause undue financial hardship. On the one hand, the Veteran's income exceeds his expenses. He has no dependents, manageable expenses, no installment contracts, and a reasonable amount of money saved in the bank. On the other hand, however, the Veteran certainly lives within his limited means. He is on fixed income sources, and considering his found incompetence, his blindness, and his need for aid and attendance, the Veteran's future earning potential is virtually nonexistent. He has no vehicle, no stocks/bonds, and while he does have a reasonably-sized checking account, he testified that his primary goal is to have enough saved so that his children do not have to pay for his burial out of their own pockets. The Veteran also provided detailed testimony of his period of homelessness following his recent divorce, whereby he eventually had an apartment but could not afford a mattress, and that even the cost of basic furniture is prohibitive with the increased cost of living. Considering each of these factors, there is a significant risk that recovery of the debt would cause the Veteran undue financial hardship, insofar as he may be deprived of the ability to pay for basic financial necessities. This factor for consideration is thus in the Veteran's favor for the waiver claim on appeal.

Fourth, the Board finds that recovery of the debt would defeat the original purpose of the benefits. Pension benefits are an income-based program that are designed to provide a minimum living standard for those eligible who are at risk of poverty. The Veteran has provided statements and testimony demonstrating a risk to his being able to afford basic financial necessities. Thus, it can be reasoned, that recovery of the debt would risk pushing the Veteran further into poverty. As this is something that pension benefits are designed to prevent, recovery of the debt would therefore defeat the purpose of those benefits.

Fifth, the Board finds that the Veteran was unjustly enriched. Simply put, he received VA pension benefits despite being above the MAPR, and therefore he was not entitled to receive those benefits. This means that he was unjustly enriched at the expense of the U.S. Government.

Sixth, there is no indication that the Veteran relied on the funds to his detriment by the relinquishment of a valuable right, nor did he incur a legal obligation. This factor is not for application.

Applying each of the above factors, and when considered as a whole, the Board finds that recovery of the overpayment of VA pension funds, in the amount of $5,496.00, would be against the standards of equity and good conscience. C.F.R. §§ 1.963 (a), 1.965(a).

The Veteran is at fault for the creation of the debt, although that fault is heavily mitigated by various factors, as explained above. VA does bear some fault by comparison, as the parameters of pension benefits could have perhaps been, at the very least, better explained to the Veteran, as his application was being filled out for him. Furthermore, even though the Veteran was unjustly enriched, recovery of the debt would risk depriving him of basic financial necessities, and his recent period of homelessness was a serious consideration in this regard. Finally, recovery of the debt would defeat the original purpose of pension benefits, as it would risk pushing him further into poverty.

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Accordingly, the Board finds that a waiver of the entire indebtedness of $5,496.00 is warranted. 38 C.F.R. § 1.965. The Veteran's claim of entitlement to a waiver of recovery of the debt is therefore granted.

 

 

John R. Doolittle, II

Veterans Law Judge

Board of Veterans' Appeals

Attorney for the Board	G. Mulrain, 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.