BVA9500245 DOCKET NO. 93-11 034 ) DATE ) ) On appeal from the decision of the Department of Veterans Affairs Regional Office in Nashville, Tennessee THE ISSUE Entitlement to waiver of recovery of an overpayment of old law pension benefits, in the amount of $1,890. REPRESENTATION Appellant represented by: Veterans of Foreign Wars of the United States INTRODUCTION The veteran served on active duty from April to December 1918. He has appealed to the Board of Veterans' Appeals (Board) from the July 1992 decision of the Committee on Waivers and Compromises (Committee) of the Department of Veterans Affairs (VA) Regional Office (RO), Nashville, Tennessee, denying his claim for waiver of recovery of an overpayment of pension benefits paid under the old law pension program. That determination was predicated on a finding that although there was no evidence of fraud, misrepresentation, or bad faith, statutory bars to waiver, recovery of the overpayment would not violate the standard of equity and good conscience. The veteran has made comments respecting reinstatement of pension benefits. As he was advised by the RO in a letter dated in January 1993 his claim for pension was denied on the basis of excessive net worth. The veteran is reminded that he may again file a claim for pension at any time and should submit evidence showing a decrease in net worth. CONTENTIONS OF APPELLANT ON APPEAL The veteran contends that he is entitled to waiver of recovery of an overpayment of old law pension benefits, on the basis that recovery will impose financial hardship upon him. He points out that he is aged, does not understand the method of reporting income on his annual Eligibility Verification Reports (EVR), and was unaware that interest income should have been reported. He states that at his age, a serious illness could deplete his financial reserves in a week. 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 the preponderance of the evidence establishes that recovery of the overpayment of pension benefits paid under the old law program would not violate the standard of equity and good conscience. 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 veteran has been overpaid old law pension benefits in the amount of $1,890. 3. The veteran was notified by the VA, at the time he filed his initial application for pension and at the time of his original award letter, that pension was an income based program, that he 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 veteran is completely at fault in the creation of the overpayment of pension benefits, which resulted from the retroactive termination of his award, after it was learned that he 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 veteran, inasmuch as he accepted benefits to which he was not entitled. 6. Repayment of the debt would not deprive the veteran of the basic necessities of life, or otherwise defeat the purpose of the 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 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 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 Board notes that the basic facts of this case are not in dispute. In August 1960 the veteran was first advised of the award of pension benefits at the monthly rate of $78.75, effective in April 1960. At the time that he was notified of his award, he was told, in pertinent part, that he should notify the VA of any additional income when received, and that if he did not do so, an overpayment might result, which would be subject to recovery. He was also advised that when reporting income he should report the total amount and source of all income, including interest. The record reflects that he has been advised by the VA many times that pension is an income based program and that he was obligated to report all income to the VA. The claims folder reflects that following his award of pension, the veteran filed annual Income Questionnaires and, later, Eligibility Verification Reports. Both of these forms contain a space on which to report all interest and dividends. Old Law EVRs filed by the veteran in 1985, 1986, 1987, 1988, 1989, 1990, and 1991 show that he reported the receipt of interest income ranging from $2,400 to $2,800 annually. Each of these forms was completed over his signature. Subsequently the VA learned that in 1989 the veteran received substantially more interest income than the $2,800 he had reported. Submitted on the veteran's behalf in early October 1991 was a letter from an official at the veteran's bank, who reported that in March 1988 the veteran purchased two ten month Certificates of Deposit, in the aggregate amount of $40,753.90. It was stated that the certificates started earning interest in 1988 until the maturity date of January 1989, and were later renewed. It was also noted that after the maturity date was reached, the veteran would have interest paid to him on a monthly basis to avoid similar problems in the future. Attached was documentation showing that these certificates earned interest of $5,328.26 in 1989. By letter of October 1991, the VA advised the veteran that it was proposed to retroactively terminate the award of pension benefits, effective January 1, 1990, based on information that his 1989 interest income totaled $5,667 from certificates of deposit. He was told that his award would not be adjusted for 60 days and that he could submit any evidence showing that the adjustment should not be made. Thereafter, action was taken by the RO to terminate pension, effective January 1, 1990, which had the effect of creating an overpayment in the veteran's account of $1,890. The veteran completed a Financial Status Report in February 1992, at which time he noted his date of birth as July 24, 1893. He reported having no dependents. He stated that his sole source of income was from Social Security benefits, in the amount of $277, monthly. Although he reported having $7,000 cash in bank and $40,000 in certificates, he neglected to report any interest income. His expenses totaled $227, monthly, including: $50, food; $112, utilities and heat; $20, telephone; $20, clothing; and $25, medical. No payments on installment contracts were shown. In October 1992, in connection with his claim for improved pension benefits, the veteran completed additional financial information, in which he indicated the following expenses: $100, food; $22.50, taxes; $20, clothing; $83, utilities; and $66, propane gas. He also showed an expense of $40 monthly for eyedrops, and stated that he expected large medical expenses due to contemplated cataract surgery. In January 1993 the veteran completed another Financial Status Report; at that time he reported again that his sole source of income was from Social Security in the amount of $317.60, with a deduction of $36.60 (presumably the Medicare deduction). He reported that he had a balance of $54 monthly; essentially the same expenses as reported in the earlier Financial Status Report were noted. Assets included $40,000 in Certificates of Deposit, as well as $7,000 cash in bank. Despite these assets, he again neglected to report the receipt of interest income. 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 essentially resolved this question in favor of the appellant, finding, in essence, that his actions did not represent the intentional behavior to obtain government benefits to which he 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 veteran's favor. Because it has been determined by the Committee that there was no willful intention on the part of the veteran to commit fraud, misrepresent a material fact, or exercise bad faith in the creation of an overpayment that has been assessed against him, 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 veteran'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 determines that the veteran was at fault in the creation of the overpayment. Contrary to the assertions of the veteran, it is evident that he was aware of the necessity to report interest income. He had been fully apprised on numerous occasions by the VA to report all income and had, for a several year period prior to the overpayment period, actually reported interest income. The overpayment arose from the fact that he reported only half the interest income that he received in 1989. However he continued to accept and negotiate VA pension checks to which he knew or should have known that he was not entitled because of his misreporting of income. The Board recognizes the veteran's advanced age, but points out that there is no suggestion in the record that he is incompetent or otherwise unable to conduct his financial affairs. 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 veteran continued to accept VA pension at a time when he had substantially higher income than he had previously reported to VA. 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. He claims that it will, yet his Financial Status Reports show that a balance remains after he pays his modest monthly expenses, including medical expenses. Such balance can be applied to the overpayment in reasonable monthly installments to liquidate the debt. More significantly, the veteran reported on his Financial Status Report that he had cash assets of $7,000 and Certificates of Deposit totaling $40,000. It is reasonable to assume that he is earning interest income, although he did not report same on his Financial Status Reports. While we are cognizant of the possibility that the veteran may require utilizing these funds for medical care, still it should be noted that the Government is entitled to the same consideration as other creditors. Furthermore, the assessed overpayment of $2,000 represents only a small portion of his net worth. It is apparent that collection of the overpayment would not in any way deprive the veteran 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. Pension, as noted above, is an income based program, intended to provide a basic level of support for otherwise eligible veterans with wartime service. Recovery of those amounts to which the veteran was not entitled in view of his 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 his unjust enrichment at the expense of the Government. The veteran in this case did not, according to the available record, change his position due to his detriment as a result of the award of pension. 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). ORDER Waiver of recovery of the overpayment of old law 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.