Citation Nr: 0002862 Decision Date: 02/04/00 Archive Date: 02/10/00 DOCKET NO. 98-04 472 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Togus, Maine THE ISSUE Entitlement to waiver of recovery of an overpayment of Department of Veterans Affairs pension benefits in the amount of $3,234.68. REPRESENTATION Appellant represented by: Disabled American Veterans ATTORNEY FOR THE BOARD L. Helinski, Associate Counsel INTRODUCTION The veteran had active military service from February 1972 to February 1973. This matter comes before the Board of Veterans' Appeals (BVA or Board) on appeal from a December 1997 determination by the Department of Veterans Affairs (VA) Regional Office (RO) Committee on Waivers and Compromises (Committee), in Togus, Maine, which denied the benefit sought on appeal. A notice of disagreement with that decision was received in February 1998, a Statement of the Case was issued in March 1998, and the veteran's substantive appeal was received in March 1998. FINDINGS OF FACT 1. In a December 1992 VA letter, the veteran was notified that he was awarded disability pension benefits, effective from August 1992; attached to that notification letter was a Disability Pension Award Attachment, VA Form 21-8768, which sets forth factors affecting the right to payment, including the effect of incarceration on benefits. 2. In January 1997, the RO first learned that the veteran was incarcerated; a notice received in May 1997 reveals that the veteran was incarcerated since February 1995 for a felony conviction, and his scheduled release date was February 12, 1997. 3. In a September 1997 VA letter, the veteran was notified that his monthly pension benefits were reduced effective March 1995, until February 1997, based on his period of incarceration following conviction of a felony. 4. In October 1997, the veteran was notified by the Debt Management Center that he owed the VA $3,234.68. 5. In a December 1997 VA letter, the veteran was notified that his disability pension award was retroactively increased, effective February 1997, based on information that his Social Security Disability benefits had ceased; a portion of the retroactive award equal to the amount of the overpayment at issue was withheld. 6. The veteran knew or reasonably should have known that he should not be receiving VA pension benefits while he was incarcerated; however, he continued to accept VA pension benefits during his period of incarceration. 7. Failure to recover the debt in this appeal would result in unfair gain to the veteran. 8. Collection of the indebtedness at issue in this case would not subject the veteran to undue economic hardship. CONCLUSION OF LAW Waiver of the recovery of the overpayment of disability pension benefits in the amount of $3,234.68 would be against the principles of equity and good conscience. 38 U.S.C.A. §§ 5107, 5302 (West 1991); 38 C.F.R. §§ 1.963, 1.965 (1999). REASONS AND BASES FOR FINDINGS AND CONCLUSION This appeal arises from the denial of the veteran's claim for waiver of recovery of an overpayment of VA disability pension benefits, in the amount of $3,234.68. Essentially, the overpayment resulted because the veteran continued to accept the full amount of his pension benefits during a period of incarceration following conviction of a felony. Initially, the Board notes that the veteran has not disputed the validity of the debt at issue in this case, but merely requests a waiver of the debt. In the absence of a challenge to the validity of the debt, or in the absence of prima facie evidence that the debt was improperly created, the validity of the debt need not be examined further. See Shaper v. Derwinski, 1 Vet. App. 430, 434 (1991). The law provides that there shall be no recovery of payments or overpayments of any benefits under any of the laws administered by the Secretary of the VA, whenever it is determined that recovery of benefits would be against equity and good conscience, if application for relief is made within 180 days of notification. 38 U.S.C.A. § 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. 38 C.F.R. § 1.965(a). The decision reached should not be unduly favorable or adverse to either side. Id. The phrase "equity and good conscience" means arriving at a fair decision between the obligor and the Government. Id. In making this determination, consideration will be given to the following elements: fault of the debtor; balancing of fault; undue hardship; defeat the purpose; unjust enrichment; changing position to one's detriment. Id. If there is any indication of fraud or misrepresentation, such as bad faith or lack of good faith, waiver of a debt is precluded. 38 C.F.R. § 1.965(b). In the present appeal, the Committee determined in a December 1997 decision that the evidence in this case did not establish fraud, misrepresentation, or bad faith in the creation of the debt. The Board is also satisfied that none of the circumstances in this case rise to a level of fraud, misrepresentation, or bad faith, such that there is a legal bar to the issue of waiver of recovery of the debt. See 38 U.S.C.A. § 5302(a); Ridings v. Brown, 6 Vet. App. 544, 546 (1994). Thus, the sole question before the Board is whether collection of the indebtedness at issue in this appeal, in the amount of $3,234.68, would violate the principles of equity and good conscience. See 38 U.S.C.A. § 5302(a); 38 C.F.R. §§ 1.963(a), 1.965(a). In determining whether recovery of the overpayment would be against the principles of equity and good conscience, thereby permitting waiver under 38 U.S.C.A. § 5302(a) and 38 C.F.R. §§ 1.963(a), 1.965(a), there are various elements to consider. The first element pertains to the fault of the debtor and requires an analysis as to whether the actions of the veteran contributed to causing the debt. 38 C.F.R. § 1.965(a)(3). In this case, the record reveals that when the veteran was initially notified of his award of VA disability pension benefits, by VA letter dated in December 1992, he was directed to read an enclosed VA Form 21-8768, which contained important information about the right to receive pension benefits. VA Form 21-8768 is entitled "Disability Pension Award Attachment," and sets forth factors affecting the right to payment. Included on that form is a section entitled "INCARCERATION - Effect on pension benefits," which indicates that the VA "will discontinue pension benefits payable to a person who is incarcerated in a Federal, State or local penal institution in excess of 60 days as a result of a felony or misdemeanor conviction." The Board also notes that the veteran was furnished another copy of VA Form 21-8768 in October 1993. Despite the foregoing information, the veteran failed to notify the VA that he was incarcerated. Rather, the veteran continued to accept VA pension benefits, even though he knew or reasonably should have known that he was not entitled to pension benefits while he was incarcerated. The Board acknowledges the veteran's contentions that he kept asking the prison guards what to do and was told not to worry. The Board also acknowledges the veteran's contentions that he thought the VA would find out, or that the Department of Corrections and/or his probation officer would contact the VA. Nevertheless, the Board finds that the veteran was properly advised on the factors affecting the right to received payment of VA pension benefits, and he should have known that he was not entitled to the benefit payments he was receiving. At the very least, the veteran should have contacted the VA directly with any concerns rather than relying on the prison guards. The fact that the veteran had two prior overpayments also leads the Board to conclude that the veteran was not totally unfamiliar with the various VA reporting requirements regarding his pension. For the foregoing reasons, the Board finds that the veteran was at fault in causing the debt in this case. The second element for consideration pertains to fault on the part of the VA. 38 C.F.R. § 1.965(a)(2). As noted earlier, upon the initial award of disability pension benefits, the VA provided the veteran with a detailed explanation of the factors affecting the right to receive VA disability pension benefits. The VA informed the veteran that VA benefits would be discontinued upon incarceration in excess of 60 days; however, the veteran continued to accept VA pension benefits during his incarceration. In short, the Board finds that the VA was not at fault in causing this debt. Other elements for consideration address whether repayment of the debt would nullify the objective for which the benefits were intended, see 38 C.F.R. § 1.965(a)(4), and whether failure to make restitution would result in unfair gain to the debtor, see 38 C.F.R. § 1.965(a)(5). In this regard, the Board notes that the purpose of non-service connected pension benefits is to assist persons who are unable to secure and follow a substantially gainful occupation due to disability. In light of the purpose underlying pension benefits, the Board finds that repayment of the debt at issue in this case would not conflict with the objective underlying the benefits, as the veteran's basic necessities were provided for while he was incarcerated, which is the period during which the overpayment arose. See 38 C.F.R. § 1.965(a)(4). Thus, repayment of the debt would not nullify the purpose for which the pension benefits were intended, since the veteran was not deprived of basic necessities such as food and shelter during his period of incarceration. See 38 C.F.R. § 1.965(a)(4). Further, if the veteran fails to repay this debt, it will result in an unfair gain to him. See 38 C.F.R. § 1.965(a)(5). As to the element of undue financial hardship, the regulations provide that consideration should be given to whether collection of the indebtedness would deprive the debtor of basic necessities. 38 C.F.R. § 1.963(a)(3). As noted earlier, the effect on the veteran's financial situation is but one factor for consideration and is not dispositive of the issue in and of itself. In December 1997, the veteran submitted a Financial Status Report that reflected monthly income of $199.00, and monthly expenses of $1,000.00. The record indicates that the veteran had been receiving Social Security Disability benefits prior to incarceration, but that those benefits had ceased at some point after his incarceration period commenced. Reviewing the veteran's income more closely, the Board initially notes that the veteran was incarcerated from February 1995 to February 1997. The record reflects that prior to incarceration, effective August 1992, the veteran's VA pension award was approximately $600.00 per month. Effective August 1993, the veteran's monthly VA pension benefits were reduced to approximately $200.00 per month, due to his receipt of Social Security Disability benefits. After incarceration, upon learning that the veteran's Social Security benefits had been terminated, in December 1997 the VA retroactively increased the veteran's disability pension award to approximately $700.00 per month, effective from his release from incarceration in February 1997. However, the RO withheld a portion of the retroactive award equal to the amount of the overpayment at issue in this appeal, and forwarded the veteran a check for $2,177.05. In summary of the foregoing, it appears that from February 1997 through December 1997, the veteran received approximately $200.00 in VA pension benefits. After that time, he received the retroactive pension benefits in the amount of $2,177.05, as well as the increased amount of pension benefits. The Board finds that during the veteran's period of incarceration, he was not experiencing financial hardship as his basic necessities were provided. Moreover, although the veteran may have experienced financial hardship after he was released from prison, the Board finds that the veteran's financial burden was lessened by the retroactive payment of increased pension benefits. Furthermore, the Board finds that as the veteran is currently receiving approximately $700.00 per month, this is much closer to his reported monthly expenses of $1000.00. More significantly, as the RO has already withheld the amount of the overpayment at issue in this appeal, there is essentially no remaining debt for the veteran to repay. In summary, a review of some of the elements pertaining to the principles of equity and good conscience, as set forth by 38 C.F.R. § 1.965(a), convinces the Board that greater weight in this case should be accorded to the fault of the veteran, in that he failed to report his incarceration to the VA, and continued to accept the full amount of his monthly VA pension benefits. When all of the relevant elements as set forth above are considered, the Board is not persuaded that the Government should forego its right to collection of the indebtedness in the instant appeal, in the amount of $3,234.68. Accordingly, the Board finds that waiver of recovery of the overpayment in the amount of $3,234.68 is not warranted, and it was proper for the RO to withhold that amount from the veteran's retroactive award. ORDER The appeal is denied. ALAN S. PEEVY Member, Board of Veterans' Appeals