BVA9503754 DOCKET NO. 93-09 158 ) DATE ) ) On appeal from the decision of the Department of Veterans Affairs Regional Office in Montgomery, Alabama THE ISSUE Entitlement to waiver of recovery of overpayment of disability compensation benefits in the calculated amount of $4,032. REPRESENTATION Appellant represented by: Alabama Department of Veterans Affairs ATTORNEY FOR THE BOARD Darryl A. Joe, Associate Counsel INTRODUCTION The veteran had active military service from August 1967 to June 1969. In August 1992, the Montgomery, Alabama Regional Office (RO) of the Department of Veterans Affairs (VA) retroactively reduced the veteran's compensation benefits, effective February 1, 1989, after it learned of the veteran's divorce from his ex-wife Martha in January 1989. This action created an overpayment in the amount of $4,032. The instant matter comes before the Board of Veterans' Appeals (the Board) on appeal from a November 1992 determination by the Committee on Waivers and Compromises (Committee) at the RO, which denied the veteran's request for a waiver of recovery of the overpayment of compensation benefits. The Committee determined that there was no evidence of fraud, misrepresentation, or bad faith on the part of the veteran. However, the Committee found that failure on the part of the Government to collect the indebtedness would result in unjust enrichment of the veteran. The veteran was promptly notified of the Committee's determination. CONTENTIONS OF APPELLANT ON APPEAL The veteran contends that he is entitled to waiver of recovery of the overpayment of compensation benefits. He maintains that his failure to comply with VA's reporting requirements was due to the continuous deterioration of his physical and mental state. According to the veteran, physical and mental ailments rendered him so incapacitated that he was unable to remember that he was responsible for reporting his divorce from Martha to the VA. The veteran also asserts that collection of the indebtedness would cause him to experience undue financial hardship due to excessive medical expenses. 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. 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 veteran's claim for a waiver of recovery of the overpayment of compensation benefits in the calculated amount of $4,032. FINDINGS OF FACT 1. The RO has calculated that for a period beginning February 1, 1989, the veteran was paid a total of $4,032 in additional compensation benefits for a dependent spouse, additional benefits which he was not entitled to following his January 1989 divorce. 2. The veteran is primarily at fault in creating the overpayment which resulted from the retroactive reduction of his compensation benefits effective February 1, 1989, as he was obligated to immediately notify VA of any change in his marital status, but even after being advised of the reporting requirements, he failed to notify VA until July 1991 of his January 1989 divorce. 3. The latest detailed income and expense data, supplied by the veteran in September 1992, reveal that his combined monthly net income, from VA compensation and Social Security benefits, exceeds his monthly expenses for necessities by over $200 per month. 4. Repayment of the debt in regular monthly installments would not cause undue financial hardship. 5. The purpose of VA compensation benefits will not be nullified by recovery of the overpayment from the veteran. 6. A failure to recover the overpayment of compensation benefits from the veteran would result in unjust enrichment of the veteran to the extent he was overpaid benefits. 7. There are no other elements of equity and good conscience which support granting the requested waiver to the veteran. CONCLUSION OF LAW Recovery of the overpayment of compensation benefits 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) (1993). REASONS AND BASES FOR FINDINGS AND CONCLUSION Initially, we have found that the veteran's claim is well- grounded within the meaning of 38 U.S.C.A. § 5107(a). That is, we find that he 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 veteran has not disputed the amount of additional VA compensation pension benefits which were paid to him for a dependent spouse. These benefits, which are considered to have been overpaid, were calculated by the RO to total $4,032. Since 1969, the veteran, who is a double amputee, has been in receipt of service-connected compensation benefits, paid at the 100 percent rate, in addition to special monthly compensation based on the anatomical loss of both lower extremities. In April 1970, for the purpose of obtaining additional VA benefits, the veteran informed the VA of his marriage to his first wife, Sandra, in December 1969. Later in April 1970, he furnished dependency information, and in May 1970, he was advised of the adjustment of his compensation award because of the addition of Sandra as a dependent. The May 1970 award letter, VA Form 21- 6755, informed the veteran that payment of additional compensation to him for his wife would be discontinued upon divorce from her. He was also advised of his responsibility to notify the VA immediately of any change in his marital or dependency status. In June 1973, the RO received a certified document reflecting the veteran's divorce from Sandra earlier that month. Thereafter, on June 25, 1973, the RO forwarded to the veteran an award letter reflecting a decrease in compensation due to his changed marital status. He was again reminded by VA Form 21-6755, to promptly report any future changes in his marital or dependency status. In November 1973, the RO received notice of the veteran's marriage to Martha. In January 1974, the RO, by VA Form 21-6755, informed the veteran of the award of additional compensation benefits due to his marriage to Martha, and reminded him of his obligation to immediately report any change in his marital or dependency status to the VA. Thereafter, the veteran continued to receive and accept additional compensation benefits for Martha. In response to a VA Social Security Number Solicitation inquiry regarding his spouse in July 1991, the veteran reported that he was not married and did not have any children. Thereafter, responding to VA's request for clarifying information, the veteran submitted a copy of the Final Judgment of Divorce, reflecting the dissolution of his marriage to Martha in January 1989. Subsequently, the RO took action to retroactively adjust the veteran's compensation award, by terminating the additional allowance paid for a dependent spouse, effective February 1989, thereby resulting in the overpayment at issue. On his completed Financial Status Report, received in September 1992, the veteran reported that his combined monthly net income was $2,754, from VA compensation and Social Security benefits, and total monthly expenses were $2,534, resulting in a positive balance of $220 per month. The reported monthly expenses included amounts for food, clothing, shelter and other necessities, as well as the amount of $225 for medical expenses. He also reported that he was current on all installment debts, for which he paid $678 monthly. 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 the overpayment that has been assessed against her, we now seek to determine whether the evidence establishes that recoupment 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. §§ 1.963M 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 the debtor. Where actions of the debtor contribute to creation of the debt. 2. Balancing of faults. Weighing fault of debtor against the 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 examined the record, with respect to the veteran's claim that he is entitled to waiver of recovery of the overpayment of compensation benefits. The record in this case demonstrates that the veteran was instructed in writing, on repeated occasions, to report all changes in dependency status to the VA. We observe that the veteran promptly notified the VA of his divorce from his first wife in 1973, clearly illustrating that he was aware of his duty to provide VA prompt notice as a recipient of additional compensation for a dependent spouse. The veteran has argued that declining mental and physical health caused him to forget to provide the VA with timely notice from his second wife in 1989. In support of this contention, the veteran submitted medical evidence, including treatment notes dated in February 1990, wherein a private physician speculated that the veteran's complaints, at that time, were either due to toxic metabolic encephalopathy or early onset dementia. The physician noted, however, that while the veteran had complaints related to difficulty with memory and concentration, the errors demonstrated were irregular and not typical of actual dementia. The physician observed that the veteran was "quite clear in his head" and understood "concepts quite well." Notwithstanding the veteran's contentions, we find that there was fault on his part in the creation of the overpayment, insofar as he failed to promptly notify the VA of his divorce from Martha. Although his mother and others have submitted statements which illustrate that the veteran requires a great deal of care and assistance, the evidence does not indicate that he was mentally incompetent at the time of his divorce in 1989, or at any point thereafter. In short, the record does not support his argument that a mental disorder caused him to forget that he was responsible for providing the VA with timely notice of any change in marital status. And since the VA provided the veteran with abundant information advising him of the need to promptly report any changes in dependency status, the VA was not at fault in the creation of the overpayment. The RO took prompt action to adjust the veteran's award, once clarifying information was furnished by the veteran regarding the dissolution of his marriage. The Board finds that the fault in the creation of the indebtedness rests with the veteran. Another element of the standard of equity and good conscience is whether withholding of the benefits or recovery would defeat the purpose of the benefits. The Board finds that recovery would not, since the additional benefits paid to the veteran were for a dependent spouse, which he did not have after January 1989. Similarly, failure to recover the overpayment would result in unjust enrichment, since the veteran was paid a sum of money to which he clearly was not entitled. There is no allegation or suggestion in the record that the veteran changed his position to his detriment, so as to make recovery of the overpayment against the standard of equity and good conscience. Another significant element for consideration n deciding a waiver request is whether or not the recovery of the debt from the veteran would result in undue financial hardship. In his Financial Status Report filed in September 1992, the veteran, who lives with his mother, reported that he experiences a positive balance of $220, after satisfaction of his expenses, including allowances for food, clothing, and shelter. He has no past due debts on installment payments. We also note that the veteran has argued that he has exorbitant monthly medical costs. Although he did indicate on his Financial Status Report that he spends $225 per month for nonreimbursable medical expenses, we observe that this sum is accounted for in his total monthly expenses. In view of the veteran's circumstances, we do not find that requiring that he repay his debt, in reasonable installments, would deprive him of basic necessities. The Board acknowledges the veteran's service to his country and recognizes that as a result of that service, he is seriously disabled and has substantial medical expenses. The bulk of his income consists of VA compensation benefits paid at the 100 percent rate in addition to special monthly compensation, which is intended to compensate for his disability. The record indicates that his VA compensation, in addition to his Social Security income, provides adequate monthly income such that he is able to meet his medical expenses and other monthly expenses. On this basis, we find that hardship is not shown. We also note that the veteran has apparently chosen not to avail himself of VA medical care. In sum, while the Board has carefully considered the record in this case, the preponderance of the evidence clearly supports a finding that recovery of the overpayment would not be against equity and good conscience. ORDER A waiver of recovery of the overpayment of compensation benefits, in the amount of $4,032 is denied. D. C. SPICKLER 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.