BVA9500074 DOCKET NO. 93-07 684 ) DATE ) ) On appeal from the decision of the Department of Veterans Affairs Regional Office in Detroit, Michigan THE ISSUE Entitlement to waiver of recovery of an overpayment of Section 306 death pension benefits, in the amount of $2,400. REPRESENTATION Appellant represented by: Disabled American Veterans INTRODUCTION The veteran served on active duty from May 1945 to April 1946. He died in May 1977. The appellant in this case, the veteran's widow, has appealed to the Board of Veterans' Appeals (Board) from the October 1992 decision of the Committee on Waivers and Compromises of the Department of Veterans Affairs (VA) Regional Office (RO), Detroit, Michigan, denying her claim for waiver of recovery of an overpayment of Section 306 death pension benefits. That decision was predicated on a finding that although there was no evidence of misrepresentation, fraud or bad faith, statutory bars to waiver, recovery of the overpayment would not violate the standard of equity and good conscience. CONTENTIONS OF APPELLANT ON APPEAL The appellant maintains that she is entitled to waiver of recovery of the overpayment of death pension benefits. She claims that the overpayment was not her fault inasmuch as she was advised that the only income she need report was her Social Security income, which she did. She claims that repayment would impose financial hardship upon her, making it difficult for her to purchase health insurance and pay for medication. DECISION OF THE BOARD The Board, in accordance with the provisions of 38 U.S.C.A. § 7104 (West 1991), has reviewed and considered all of the evidence and material of record in the veteran's claims file(s). Based on its review of the relevant evidence in this matter, and for the following reasons and bases, it is the decision of the Board that recovery of the overpayment of death pension benefits would not violate the standard of equity and good conscience. FINDINGS OF FACT 1. All relevant evidence necessary for an equitable disposition of the appellant's appeal has been obtained by the RO. 2. The appellant has been overpaid death pension benefits in the amount of $2,400. 3. The appellant was notified by the VA, at the time she filed her initial application for death pension and at the time of her original award letter, that death pension was an income based program, that she should notify the VA immediately of any changes in income, and that failure to properly report income could cause an overpayment which would be subject to recovery. 4. The appellant is completely at fault in the creation of the overpayment of death pension benefits, which resulted from the retroactive termination of her award, after it was learned that she had previously unreported interest income. 5. The failure of the Government to insist upon its right to repayment of the assessed overpayment would result in unjust enrichment of the appellant, inasmuch as she accepted benefits to which she was not entitled. 6. Repayment of the debt would not deprive the appellant of the basic necessities of life, or otherwise defeat the purpose of the death pension benefit program. 7. There are no other elements of the standard of equity and good conscience which mandate waiving recovery of the overpayment. CONCLUSION OF LAW Recovery of the overpayment of death pension benefits would not violate the standard of equity and good conscience. 38 U.S.C.A. §§ 5107, 5302 (West 1991); 38 C.F.R. §§ 1.963(a), 1.965(a) (1993). REASONS AND BASES FOR FINDINGS AND CONCLUSION Initially, we have found that the appellant's claim is well- grounded within the meaning of 38 U.S.C.A. § 5107(a). That is, we find that she has presented a claim which is not inherently implausible. Further, after examining the record, we are satisfied that all relevant facts have been properly developed and that the data on file are sufficient for us to render a fair and equitable determination of the matter at hand. The Board notes that the basic facts of this case are not in dispute. Review of the record in this case reflects that the appellant, the veteran's widow, was awarded death pension benefits in 1977, under the Section 306 program, with the monthly rate based on her countable income. Her application form, VA Form 21-534, requested information from her relating to income received. As well, instructions which accompanied that form advised her that the monthly rate of pension was based on income, that she should report the total amount and source of all income and that the VA would compute the amount which didn't count. Again in late 1977, the appellant was reminded to report all income to the VA. In 1979 she was awarded Social Security widow's benefits, which she promptly reported to the VA. The appellant was also required to complete annual income reporting forms to the VA, initially Income Questionnaires and later Eligibility Verification Reports (EVR). Each of these forms requested that she provide information about all income, including interest and dividend income. In December 1987 the appellant was advised that her monthly rate of death pension was $96; she was again provided information regarding her obligation to report all income to the VA, via the enclosed VA Form 21-8767. On her EVR, dated in December 1989, the appellant reported, over her signature, that her sole source of income was from Social Security benefits. In the spaces provided for reporting annual interest and dividend income, as well as assets, the appellant reported "None." Essentially the same information was reported on the EVR completed by her in December 1990. In August 1991 the appellant was questioned by the VA regarding 1989 income not previously reported by her. She was directed to an enclosed list of payers of this income and ask to verify whether the information was correct. She was told that if she found any errors, she should bring them to the attention of the VA. The list reflects that she had been paid approximately $4,800 from various banks, credit unions, and savings and loans. The appellant acknowledged, over her signature, that the income was correct and that she understood that the VA would adjust her award. Thereafter the RO took action to terminate her award of death pension, due to excessive income, effective January 1, 1990. She was again advised of the sources and amounts of income used in making such determination and told that she had 60 days to submit evidence prior to making the final adjustment. In her EVR, filed in late 1991, the appellant reported that for 1991 she had interest income of $931.75, in addition to her Social Security benefits. She also stated that her total assets consisted of $16,158.24, cash in bank. In her letter of December 1991, the appellant again admitted receiving the total interest amount that the VA considered, but stated that her name was one of five names on those accounts, and that she reported only 1/5 of the interest on her EVR, as she understood she was required to do. In a letter of January 1992, the VA requested that the appellant submit evidence to support her claim that not all of the interest income was hers. She was told that such evidence could consist of bank statements and/or income tax returns. In July 1992 she was advised again of the termination of her award, based partly on her failure to provide documents establishing her claim that not all the interest earned in 1989 was hers. She was reminded that the termination decision could be reconsidered if she provided such information, including the account numbers and the Social Security numbers of the person(s) with whom she held the account(s). As a result of the retroactive termination of death pension, an overpayment was created in the appellant's account of $2,400. The appellant, in September 1992 requested waiver of recovery of the overpayment of death pension benefits, stating that she had been told that as long as she had her four children on her bank accounts, she did not have to report the interest. The appellant completed a Financial Status Report in September 1992. She indicated that she had no dependents. She stated that her monthly income consisted of Social Security benefits of $662.80 and interest of $117.50, for a total of $780.30. Her monthly expenses were reported to total $627.06, and consisted of the following: $0, rent or mortgage; $150, food; $102.93, utilities and heat; $36 telephone; $31.80, insurance; $25, clothing; $37, medical; $108.83, home taxes and insurances; $75.50 auto insurance and expenses; and $60, daily living expenses. She reported no monthly payments on installment contracts or other debts. She listed her assets as $73,000 cash in bank, as well as other items such as a car and furniture. The law precludes waiver of recovery of an overpayment or waiver of collection of any indebtedness where any one of the following elements is found to exist: (1) Fraud, (2) misrepresentation, (3) bad faith. 38 U.S.C.A. § 5302 (West 1991) The Board's review of the record reflects that the Committee has resolved this question in favor of the appellant, finding, in essence, that her actions did not represent the intentional behavior to obtain government benefits to which she was not entitled, which is necessary for a finding of fraud, misrepresentation or bad faith. The Board agrees that the evidence is in equipoise on the question of willful intent and the matter is therefore resolved to that extent in the appellant's favor. Because it has been determined by the Committee that there was no willful intention on the part of the appellant to commit fraud, misrepresent a material fact, or exercise bad faith in the creation of an overpayment that has been assessed against her, the Board's review is limited to the issue of whether the evidence establishes that recovery of the indebtedness would be against equity and good conscience, in which case recovery of that overpayment may be waived. 38 U.S.C.A. § 5302; 38 C.F.R. §§ 1.963, 1.965. The following is pertinent to this matter: The standard "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 fault of 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). The Board has carefully reviewed the entire record, in light of the appellant's contentions and the applicable law and regulations. A VA pension recipient must notify the VA of all circumstances which will affect his or her entitlement to receive, or the rate of, the benefit being paid. Such notice must be furnished when the recipient acquires knowledge that his or her income changed. 38 C.F.R. § 3.660(a)(1). After consideration of the record, the Board concurs with the RO that the appellant was at fault in the creation of the overpayment. She had been properly advised that the death pension program was income based and that she was under an obligation to accurately and completely report all income and the sources thereof. Her claim that she had been told that she need only to report her Social Security income is totally without merit. The claims folder is replete with written notification to her of the necessity to report all income, including interest income. Nonetheless, the appellant reported on her EVR that her sole source of income was from Social Security. Her rate of death pension was based on this amount, and she was fully apprised of this fact by the VA. Clearly the appellant's income for the period in question was at a level which did not permit payment of death pension and had she provided correct financial information to the VA the award of pension would not have been made. The RO took appropriate action to terminate her award and thus all fault in the creation of the debt rests with the appellant. At this juncture, the Board also points out that, in view of the assertion of the appellant that she was only a joint owner of the various interest producing accounts, she was provided ample opportunity to submit supporting documentation, but failed to do so. Had such documents been submitted, the RO would, of course, have made any necessary adjustment to her award. The Board has also considered another element of the standard of equity and good conscience, that is, whether recovery of the overpayment from the appellant would result in undue financial hardship. She claims that it will, yet her Financial Status Reports show that a balance remains after she pays her monthly expenses, including medical expenses. Such balance of approximately $150 can be applied to the overpayment in reasonable monthly installments to liquidate the debt. More significantly, the appellant reported on her Financial Status Report that she had cash assets of $73,000; she had never before admitted to having assets of such magnitude. It is apparent that collection of the overpayment would not in any way deprive the appellant of the basic necessities of life. Another factor to be considered is whether recovery of the overpayment would defeat the original purpose of the benefit, by nullifying the objective for which it was intended. Death pension, as noted above, is an income based program, intended to provide a basic level of support for otherwise eligible dependents of veterans with wartime service. Recovery of those amounts to which the appellant was not entitled in view of her countable income would not defeat the purpose of the benefit. On the other hand, the failure of the Government to insist upon its right to repayment of this debt would result in her unjust enrichment at the expense of the Government. The appellant in this case did not, according to the available record, change her position due to her detriment as a result of the award of death pension. Considering the degree of fault in this case, the Board is not persuaded that recovery of the overpayment at issue would be unfair, unconscionable, or unjust. This is so particularly since the appellant continued to accept VA death pension at a time when she had substantially higher income than she had previously reported to VA. Furthermore, the evidence of record discloses no other element of the standard of equity and good conscience which would persuade the Board that the Government should waive its right to the repayment of the assessed overpayment. The evidence in this case is not so evenly balanced that there is doubt as to any material issue. 38 U.S.C.A. § 5107(b). (CONTINUED ON NEXT PAGE) ORDER Waiver of recovery of the overpayment of death pension benefits is denied. N. R. ROBIN Member, Board of Veterans' Appeals The Board of Veterans' Appeals Administrative Procedures Improvement Act, Pub. L. No. 103-271, § 6, 108 Stat. 740, ___ (1994), permits a proceeding instituted before the Board to be assigned to an individual member of the Board for a determination. This proceeding has been assigned to an individual member of the Board. NOTICE OF APPELLATE RIGHTS: Under 38 U.S.C.A. § 7266 (West 1991), a decision of the Board of Veterans' Appeals granting less than the complete benefit, or benefits, sought on appeal is appealable to the United States Court of Veterans Appeals within 120 days from the date of mailing of notice of the decision, provided that a Notice of Disagreement concerning an issue which was before the Board was filed with the agency of original jurisdiction on or after November 18, 1988. Veterans' Judicial Review Act, Pub. L. No. 100-687, § 402 (1988). The date which appears on the face of this decision constitutes the date of mailing and the copy of this decision which you have received is your notice of the action taken on your appeal by the Board of Veterans' Appeals.