Citation Nr: 0005124 Decision Date: 02/28/00 Archive Date: 03/07/00 DOCKET NO. 93-16 965 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Phoenix, Arizona THE ISSUE Entitlement to waiver of recovery of an overpayment of improved death pension benefits in the amount of $7,731. REPRESENTATION Appellant represented by: Veterans of Foreign Wars of the United States WITNESS AT HEARING ON APPEAL Appellant ATTORNEY FOR THE BOARD K. J. Alibrando, Counsel INTRODUCTION The veteran served on active duty from January 1945 to August 1946. He died in September 1961. The appellant is the veteran's widow. This appeal comes before the Board of Veterans' Appeals (Board) from a November 1992 decision of the Regional Office's Committee on Waivers and Compromises (RO), which denied the appellant's request for waiver of recovery of an overpayment in the amount of $7,731. The Board notes that in a November 1996 decision, the RO denied the appellant's request for waiver of recovery of an overpayment in the amount of $7,901 for the period from September 1992 to June 1994. The appellant was notified of that determination and of her appellate rights by letter dated that same month. The appellant has not submitted a notice of disagreement with that decision and that issue is not in appellate status. FINDINGS OF FACT 1. The appellant's election of improved VA death pension benefits was effective July 1980 and she was paid benefits on the basis that she had no countable income. 2. The record shows for the period from February 1989 to December 1991 the appellant was paid $11,862 in VA death pension benefits and was due $4,131 for that period; she failed to report income changes to the RO despite constant reminders by the RO. 3. There is evidence that the appellant willfully failed to disclose material facts in order to obtain benefits to which she had no legal entitlement during the overpayment period of February 1989 to December 1991. CONCLUSION OF LAW The overpayment of VA death pension benefits in the amount of $7,731$ for the period of February 1989 to December 1991 resulted from fraud and misrepresentation on the part of the appellant; waiver of recovery of the overpayment is therefore barred. 38 U.S.C.A. §§ 5107, 5302(c) (West 1991). 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). A review of the file reflects that the appellant was awarded death pension benefits in February 1962, effective in September 1961. She elected to received improved pension, effective in July 1980. In an Improved Pension Eligibility Verification Report (EVR) submitted in August 1989, the appellant indicated that she was not receiving any income from any source, including wages. She reported $432 in medical expenses. In an EVR submitted in October 1990, the appellant indicated that she had not received any wages for the period from July 1989 to June 1991. No medical expenses were reported. In an EVR submitted in January 1991, the appellant reported that she had received wages from employment from December 1989 in the amount of $4,393 and additional wages of $250. She reported medical expenses of $503.63. In an EVR submitted in April 1991, the appellant reported wages of $3,818.54 from July 1990 to June 1991. She reported medical expenses of $200. In an EVR received in September 1991, the appellant reported wages of $2,803.57 from July 1990 to June 1991. No medical expenses were reported. In a September 1991 Decision on Waiver of Indebtedness, the RO indicated that the appellant's pension benefits were reduced effective from January 1990 on the basis of reported income of $391.72 in December 1989 and $4,348.27 in 1990. The RO granted a waiver of recovery of the overpayment in the amount of $3,843.59 on the basis that recovery of that debt would be against equity and good conscience. In a July 1992 Administrative Decision, the RO indicated that the appellant misrepresented her income for purpose of receiving pension payments she knew she would not otherwise received and this constituted fraud for VA purposes. The RO indicated that she began working in 1989 and failed to report wages on the EVR dated in October 1990. The November 1992 Decision on Waiver of Indebtedness indicated that the appellant's pension benefits were reduced effective in February 1989 on the basis of unreported earned and unearned income in 1989. The RO determined that the prior waiver decision dated in September 1991 was voided as the evidence now showed income from the beginning of 1989 and as the finding of fraud precluded the granting of a waiver. As a result, the RO concluded that an overpayment in the amount of $7,731 was created from the period from February 1989 through December 1991. In July 1996, the RO prepared an audit of the appellant's account which was provided to the appellant. The audit shows that the appellant was paid $11,862 in VA death pension benefits for the period from February 1989 to December 1991 and was due $4,131. This created an overpayment of $7,731. The Board has reviewed the statements and testimony of the appellant contained in the record. The thrust of the statements of record is to the effect that the appellant understood that she was required to report wages earned but that she knowingly did not report wages when she began working in 1989. She has asserted that she was afraid to report the wages because she was unsure if she would continue working. She indicated that she did not want to be without income if she lost her job, since it might take several months for VA benefits to be reinstated. The appellant has not contested that she began receiving wages in 1989 nor contested the amount of the overpayment as calculated by the RO for the period in question. She asserts that she did not intend to defraud the VA by failing to report her income. Improved death pension is a benefit payable by the VA to surviving spouses of veterans of a period of war because of disability. Basic entitlement exists if, among other things, the spouse's income is not in excess of the applicable maximum pension rate specified in 38 C.F.R. § 3.23. 38 U.S.C.A. § 1541(a); 38 C.F.R. §§ 3.3(b)(4) (1998). The maximum annual rate of improved death pension for a surviving spouse of a veteran was $4,535 in December 1989, was $4,780 in December 1990 and was $4,957 in December 1991. 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). Medical expenses in excess of 5 percent of the maximum annual pension rate may be excluded from an individual's income for the same 12-month period to the extent they were unreimbursed. 38 C.F.R. § 3.272(g)(1)(iii). Initially, the Board must determine whether the debt was properly created. A review of the record shows that the appellant was paid improved pension benefits for the period of February 1989 to December 1991 on the basis that the appellant had no wages when in fact she was working. The July 1996 audit provided to the appellant shows that she was paid a total of $11,862, while the total due to the appellant was $4,131. This created an overpayment in the amount of $7,731. The record clearly shows that the appellant was paid VA benefits on the basis of no wages when in fact she was working during the period in question and that the overpayment was properly created. The Committee found that waiver of recovery of the overpayment in this case was necessarily denied under 38 U.S.C.A. § 5302(c), which provides that a finding of fraud, misrepresentation, or bad faith will preclude a grant of waiver of recovery of an overpayment. Misrepresentation must be more than non-willful or mere inadvertence. 38 C.F.R. § 1.962(b). Fraud and misrepresentation both contain common characteristics and are considered as a single element. The burden of proof to establish fraud or misrepresentation lies solely with the VA. In ascertaining whether there was fraud or misrepresentation in this case, it is helpful to turn to the VA manual for guidance to the RO's committee on waivers. It is stated: Fraud and misrepresentation. Although these are listed as separate elements in Section 5302(c), they both contain common characteristics and should be considered as a single element. In order to establish fraud or misrepresentation, a Committee must determine that there was a willful misrepresentation of a material fact, or the willful failure to disclose a material fact, with the intent of obtaining or retaining, or assisting an individual to obtain or retain, eligibility for VA benefits. A Committee must show that the willful intent to either misrepresent or fail to disclose was done with the veteran's knowledge that such misrepresentation or failure would result in the erroneous or improper award or erroneous retention of VA benefits. VA Manual MP-4, Part I, Chapter 8, § 8B.02 (1993). The Board finds that the evidence supports the conclusion that the appellant intended to defraud the VA through her willful failure to disclose material facts with regard to receipt of income for the period of overpayment from February 1989 to December 1991. The record shows that the appellant began to work in 1989 but failed to report her wages which caused the overpayment, and the weight of the evidence establishes that the failure to report wages was done with willful intent knowing that she was improperly receiving benefits. The statements and testimony of the appellant clearly establish that she understood the requirement of reporting any income she received. She has admitted that she failed to report her income for fear of losing her VA benefits. She has asserted that she did not intend to defraud the government, however, she has acknowledged that she knew that the amount of pension was directly related to her income. The record shows that she has been notified by the RO repeatedly of her obligation to report promptly any income changes, and she failed to do so. In view of her failure to report income changes to the RO despite constant reminders by the RO, it is apparent that the appellant intended to misrepresent her wages in order to retain pension benefits to which she was not entitled. The record clearly shows that on more than one occasion, she submitted EVR's in 1989 and 1990 wherein she denied receiving any income from employment. This erroneous information was obviously reported for the purpose of maintaining payment of pension benefits to which she knew she had no legal entitlement. While she has indicated that this was not done with fraudulent intent, she has provided no information which would take it outside the definition of fraud and/or willful misrepresentation. There is nothing in the record to suggest that the appellant was not qualified or competent to complete EVRs for the purpose of reporting income. Under the circumstances, the Board finds that the evidence of record supports a finding of fraud or misrepresentation on the part of the appellant in the creation of the overpayment in the amount of $7,731. 38 U.S.C.A. § 5302(c). ORDER Waiver of recovery of an overpayment of VA improved death pension benefits in the amount of $7,731 is precluded by a finding of fraud and to this extent the appeal is denied. C.W. SYMANSKI Member, Board of Veterans' Appeals