BVA9504698 DOCKET NO. 92-18 925 ) DATE ) ) On appeal from the decision of the Department of Veterans Affairs Regional Office in Louisville, Kentucky THE ISSUE Entitlement to a waiver of recovery of an overpayment of improved death pension benefits in the amount of $6,398. ATTORNEY FOR THE BOARD K. J. Alibrando, Associate Counsel INTRODUCTION The veteran served on active duty from April 1944 to January 1946. This appeal arises from a March 1992 decision of the Regional Office's Committee on Waivers and Compromises (RO), which denied the veteran's request for waiver of recovery of an overpayment in the amount of $6,398. In May 1993, the Board of Veterans' Appeals (Board) remanded the case for further development of the evidence. The requested development was accomplished, following which the RO determined that there was no intentional misrepresentation of income, but denied the claim for waiver on the basis that recovery of the overpayment would not be against equity and good conscience. The case has now been returned to the Board for completion of appellate consideration. CONTENTIONS OF APPELLANT ON APPEAL The appellant asserts, in effect, that recovery of the overpayment should be waived. She contends that she was unaware that she had to report interest income. She asserts that recovery of the debt would be against equity and good conscience. 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 appellant's claims file. 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 the preponderance of the evidence is against the claim for waiver of recovery of an overpayment of improved death pension benefits in the amount of $6,398. FINDINGS OF FACT 1. All relevant evidence necessary for an equitable disposition of the veteran's appeal has been obtained by the RO. 2. The appellant was awarded improved death pension benefits effective in September 1980. 3. The appellant failed to report interest income of $4,480 received in 1989. Her total countable income of $6,674 in 1989 exceeded the applicable statutory limit for entitlement to improved death pension benefits effective in December 1988, resulting in the overpayment in question. 4. The appellant was significantly at fault in the creation of the overpayment; the VA promptly suspended payment of benefits on learning of the appellant's increased income. 5. The appellant is not currently in receipt of VA benefits. 6. Reliance on VA benefits did not result in relinquishment of a valuable right or the incurrence of a legal obligation. 7. Recovery of the debt would not deprive the appellant of the ability to provide for life's basic necessities; failure to repay the debt would result in unfair gain to the appellant. CONCLUSION OF LAW Recovery of an overpayment of death pension benefits in the amount of $6,398 would not be against equity and good conscience. 38 U.S.C.A. § § 5107, 5302 (West 1991); 38 C.F.R. §§ 1.963(a), 1.965(a) (1994). REASONS AND BASES FOR FINDINGS AND CONCLUSION The appellant's claim is well grounded within the meaning of 38 U.S.C.A. § 5107(a). That is, she has presented a claim which is plausible. All relevant facts have been properly developed, and no further assistance is required to comply with the duty to assist as mandated by 38 U.S.C.A. § 5107(a). Some of the basic facts are not in dispute. The overpayment in this case was created as a result of the fact that the appellant was paid improved death pension benefits on the basis that her sole source of income was from Social Security benefits. However, she failed to report interest income received in 1989. The RO's Committee on Waivers has held that the appellant was at fault in the creation of the overpayment. A review of the record shows that by letter dated in March 1981, the RO notified the appellant of the award on non-service connected death pension benefits effective in September 1980. The appellant was advised to reported any change in income, net worth or dependency status. By letters dated in June 1981 and January 1982, the appellant was notified that her pension award had been amended. The January 1982 letter informed the appellant that any change in income should be immediately reported, noting that income included interest from savings. The appellant submitted Improved Pension Eligibility Verification Reports (EVR) in May 1986, April 1987, May 1988, May 1989, May 1990 and March 1991. She reported that her only source of income was from monthly Social Security benefits. In response to specific questions, she stated that she had no interest or dividend income. The EVR form also includes Part C, which required the appellant to furnish net worth information, including the source and total amount of all cash and bank accounts. On each form listed above, the appellant indicated "none" in the category for reporting cash or bank accounts. Amended award letters dated in April and May 1991 notified the appellant that her award had been adjusted on the basis of the EVR which showed that her sole income was from Social Security benefits. Included with those letters was VA Form 21-8768 which advised the appellant that she was required to promptly report any change in her income. By letter dated in December 1991, the RO notified that appellant that her pension benefits had been terminated effective in February 1989 due to excessive income. The RO indicated that the appellant had verified that she received interest income of $4,479 in 1989. In October 1993, the appellant submitted a statement of interest earned prepared by Peoples Bank of Tompkinsville and dated in August 1993. That statement shows that the appellant earned total interest of $4480.45 in 1989, $5133.67 in 1990 and $4637.89 in 1991 from both a passbook account and a certificate of deposit. The surviving spouse of a veteran is entitled to receive VA improved death pension if the veteran had qualifying service or at the time of death was receiving or entitled to receive compensation for a service-connected disability. 38 U.S.C.A. § 1541(a); 38 C.F.R. § 3.3(b)(4). Improved death pension benefits shall be paid at the maximum annual rate reduced by the amount of annual income received by the surviving spouse and any dependent children. 38 U.S.C.A. §§ 1541(b), (c); 38 C.F.R. §§ 3.3(b)(4)(iii), 3.23(a)(5), (b), (d)(5). Effective December 1988, the maximum annual rate of improved death pension for a surviving spouse with no children was $ 4,331; effective December 1, 1989, the maximum annual rate was $ 4,535; and effective in December 1, 1990, the maximum annual rate was $ 4,780. 38 C.F.R. § 3.23(a). Payments of any kind from any source shall be counted as income during the 12-month annualization period in which received unless specifically excluded. 38 C.F.R. § 3.271(a). Initially, the Board must determine whether the debt was properly created. A review of the record shows that the appellant was paid improved death pension benefits from February 1989 to November 1991 on the basis that her sole source of income was Social Security benefits. However, the appellant received interest income of $4,480 in 1989, $5,133 in 1990 and $4,637 in 1991. She did not report that income on the EVR's submitted in 1989, 1990 and 1991. That interest income was verified by the bank statement submitted in October 1993. The appellant's total countable income for 1989 was $6,674, it was $7,401 in 1990 and was $7,047 in 1991. She has not claimed any medical expenses. The record clearly shows that the appellant's actual income was excessive for the receipt of improved death pension benefits and that the overpayment was properly created. Pursuant to 38 U.S.C.A. § 5302(c), a finding of fraud, misrepresentation or bad faith precludes a grant of a waiver of recovery of the overpayment. The RO concluded that the facts in this case do not show the presence of any of the preceding factors and the Board will accept that conclusion. As a result, the Board's decision on appeal will be limited to the determination of whether or not waiver of recovery of an overpayment of improved pension benefits is warranted on the basis of equity and good conscience. The RO has denied the appellant's claim for waiver on the basis that recovery of the overpayment would not be against equity and good conscience. 38 U.S.C.A. § 5302; 38 C.F.R. § 1.963(a). In the absence of the aforementioned statutory bars to waiver, the factors to be considered in determining whether recovery of the overpayment would violate the principles of equity and good conscience include the following: Whether the actions of the debtor contributed to the creation of the debt; a weighing of the fault of the debtor against that of the VA; whether collection would deprive the debtor of basic necessities; whether withholding of benefits or recovery would nullify the objective for which benefits were intended; whether failure to make restitution would result in unfair gain to the debtor; and whether reliance on VA benefits resulted in relinquishment of a valuable right or the incurrence of a legal obligation. 38 C.F.R. § 1.965(a). The record shows that the appellant was notified in the original award letter of March 1981 that she should report any change in her income or net worth. The amended award letter dated in January 1982 again notified her of the reporting requirements and specifically noted that income included interest from savings accounts. In April and May 1991, amended award letters again advised the appellant of the requirement of reporting any change in income. In addition, the EVR form included a section requesting net worth information, including cash and bank accounts. The appellant submitted completed EVR forms each year from May 1986 to March 1991. For each year from 1989 to 1991, she reported "none" with regard to cash and bank accounts when, in fact, she had substantial passbook and certificates of deposit and she also specifically denied receiving any interest or dividend income. Despite being informed of the VA income reporting requirements, the appellant failed to accurately report her interest income. The RO promptly suspended the payment of pension benefits in December 1991 on the basis of the appellant's verification of interest income. The RO acted timely with regard to the payment of benefits. The Board concludes that no fault can be attributed to the VA in the creation of the overpayment in question. On the other hand, the appellant's failure to promptly report interest income to the VA constitutes significant fault on her part. Accordingly, it is clear that the appellant's actions, or lack of action, caused the overpayment without any fault on the part of the VA to offset her fault. The Board must consider whether reliance on benefits resulted in relinquishment of a valuable right or the incurrence of a legal obligation. The appellant has not contended, nor does the evidence show, that she has relinquished a valuable right or incurred a legal obligation in reliance on her VA benefits. Another factor to be considered is whether the recovery of the overpayment would defeat the purpose for which the benefits are intended. In this case the purpose would not be defeated as the appellant is not entitled to pension benefits due to excessive income. The Board also finds that failure to make restitution would result in unfair gain to the appellant because she has received monetary benefits to which she was not entitled. The VA made erroneous payments of benefits based on incorrect information which the appellant failed to rectify, and she, in turn, benefited. In addition, the Board must also consider whether recovery of the debt would result in financial hardship. The most recent information concerning her assets, income and expenses was submitted in a July 1993 financial status report. She reported a monthly gross income of $214.60 from Social Security benefits and noted that $36.60 is deducted for Medicare, leaving a net monthly income of $178. The appellant related total monthly expenses of $300, including no rent payment, $80 per month for food, $80 per month for utilities and heat, $22 for telephone, $28 for insurance, $20 for clothing, $30 for medical expenses and $40 for other living expenses. She indicated that she had no installment contracts or other debts. She listed assets of $54,000 cash in the bank, furniture worth $3000 and real estate jointly owed with seven children worth $40,000. She did not include an amount for monthly interest income. Her net monthly expenses exceeded her net income by $122. Based on the income and expense information of record, the Board concludes that the appellant has not demonstrated that recovery of the debt would render her unable to provide for life's basic necessities. On the current financial status report the appellant indicated that her sole source of income was her monthly Social Security check. However, she also reported that she had $54,000 in cash in the bank, available to be applied to the monthly shortfall. The appellant has sufficient cash on hand to meet her needs and to repay the overpayment. The Board concludes, therefore, that the evidence weighs heavily against a finding of financial hardship. In sum, it appears that none of the elements to be considered in determining whether recovery of the overpayment would be against equity and good conscience support the appellant's claim for waiver. While this list of elements is not all inclusive, a review of the record does not reflect any other basis upon which a claim for waiver could be granted. ORDER Waiver of recovery of an overpayment of pension benefits is denied. C.W. SYMANSKI 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.