BVA9502177 DOCKET NO. 93-03 703 ) DATE ) ) On appeal from the decision of the Department of Veterans Affairs Regional Office in Boise, Idaho THE ISSUE Entitlement to waiver of recovery of an overpayment of improved disability pension benefits. REPRESENTATION Appellant represented by: Disabled American Veterans ATTORNEY FOR THE BOARD Robert B. Swanson, Associate Counsel INTRODUCTION The veteran had active service from August 1941 to June 1945. This matter comes before the Board of Veterans' Appeals (Board) on appeal from a May 1992 decision by the Department of Veterans Affairs (VA) Committee on Waivers and Compromises of the Regional Office (RO) in Boise, Idaho. CONTENTIONS OF APPELLANT ON APPEAL The veteran contends that a waiver of overpayment of improved death pension benefits should be granted because repayment of the overpayment would result in undue hardship. 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 waiver of recovery of the overpayment of improved disability pension benefits. FINDINGS OF FACT 1. All relevant evidence necessary for an equitable disposition of the appellant's appeal has been obtained by the RO. 2. An overpayment of improved disability pension benefits resulted through significant fault on the part of the veteran. Recovery of the overpayment would not result in undue hardship to the veteran, deprive him of basic necessities, or defeat the purpose for which the benefits were granted. He did not rely on the benefits to his detriment, and failure to recover the overpayment would result in unjust enrichment to the veteran. CONCLUSION OF LAW Recovery of the overpayment of improved disability pension benefits would not be against the principles of equity and good conscience. 38 U.S.C.A. §§ 5107, 5302 (West 1991); 38 C.F.R. § 1.965 (1993). REASONS AND BASES FOR FINDINGS AND CONCLUSION The veteran is seeking a waiver of recovery of an overpayment of improved disability pension benefits. He asserts that repayment of the overpayment would impose an undue hardship because despite realizing a profit from the sale of a substantial portion of his real estate in 1990, such profit was depleted by the repayment of his mortgage and other substantial expenses, including medical expenses, burial expenses for his spouse, federal and state taxes, and home improvements. In March 1990, the veteran filed a claim with the VA for improved disability pension benefits. In his claim, he indicated that he had Social Security income of $399 per month, that his spouse had Social Security income of $183 per month, and that the only other income consisted of farm income, the amount of which was not stated. He also reported that he had no real estate except for his home, and that he had no bank accounts. In May 1990, the veteran submitted a completed VA questionnaire regarding his farm income. He reported he owned 157 acres and that farm income had exceeded farm expenses the last calendar year by only about $480. In June 1990, the VA requested the veteran to provide information including the fair market value of the 150 acres of farm land owned by him, and a copy of his Social Security award letter. In June 1990, the veteran responded that Farm Credit Services, or P.C.A. (Production Credit Association), appraised the land at $110,000. He added that over $91,000 was owed to P.C.A. and that there was a matter of $30,000 interest. He also submitted Social Security benefits statements, which indicated that in 1989 he had received $4,954, and that his spouse had received $2,636. In July 1990, the VA awarded improved disability pension benefits, effective from April 1990. The VA also informed the veteran that his pension benefits were directly related to his income, and that he should, therefore, promptly notify the VA of any changes in his income in order to prevent the creation of an overpayment of benefits. In December 1990, the RO notified the veteran of an adjustment to his pension benefits, and that he should promptly notify the VA of any changes in his income. In June 1991, the veteran filed an eligibility verification report (EVR) with the VA. In the report, he indicated that he had monthly Social Security income of $460, that his spouse had monthly Social Security income of $235, that he had real property excluding his home worth $5,000, that he had savings of $10,000, and that he had $700 in cash. In July 1991, the VA asked the veteran to submit verification of his Social Security income. He was also asked to explain the source of the $10,000 reported on his June 1991 EVR. In September 1991, the VA again asked the veteran to submit an explanation regarding the circumstances surrounding his receipt of his savings of $10,000 and his cash of $700, and reminded him to submit verification of his Social Security income. He was advised that the payment of pension benefits was being discontinued pending development of this information. In November 1991, a $623 overpayment was created when the RO retroactively terminated the veteran's benefits, effective in April 1990, based upon the veteran's failure to respond to the VA request to provide information regarding his assets and income. In a January 1992 statement, the veteran requested waiver of recovery of the $623 overpayment on the grounds of financial hardship. He also stated that he had sold all his farm ground in 1990 (the month not specified) and that the proceeds had gone to pay taxes for that year and to pay off the debt to the Federal Land Bank. He added that funeral and medical expenses associated with the death of his wife during 1991 had reduced his savings to near nothing. In March 1992, the VA requested the veteran to provide specific information about the reported 1990 sale of his farm land, to include the type of property sold, the date of the sale, the total sales price, whether it was sold on a cash sale or installment basis, and (if on an installment basis) the date of the first installment payment and the frequency of ongoing payments. He was also requested to provide, if possible, a copy of the contractual agreement regarding the sale of the farm. In March 1992, the veteran submitted a financial status report. In the report, he related that he had a negative monthly cash flow of $165 when his average monthly expenses of $591 were deducted from his average monthly income of $426. He also reported assets valued at $30,000, which were comprised of 11 acres of real estate valued at $25,000, a savings account worth $5,000, and a checking account worth $700. In May 1992, the RO Committee on Waivers and Compromises denied the veteran's request for a waiver of the overpayment on the bases that the overpayment had been created through significant fault on the part of the veteran, and that recovery of the overpayment would not be against the principles of equity and good conscience. In pertinent part, it was stated that the veteran had repeatedly failed to provide requested information necessary to assess his net worth. In June 1992, the VA received a statement written on the veteran's behalf by his granddaughter in which it was reported that the date of the land sale had been September 4, 1991, that the total sale price had been $160,000, that the net total sale price (after a reduction of $4,000 due to an acreage mistake) had been $156,000, that the sale had been on a cash basis, and payment of that associated tax and accountant expenses had left about $29,000. From this, the veteran had spent various amounts for home improvement and the expenses of his wife's last illness and burial. Currently, his statement from a bank indicated $350 in cash and $5,300 in savings. Recovery of an overpayment of VA benefits may be waived if recovery of the debt would be against the principles of equity and good conscience. 38 U.S.C.A. § 5302; 38 C.F.R. § 1.965. Equity and good conscience mean arriving at a fair decision between the debtor and the VA. 38 C.F.R. § 1.965(a). In arriving at a fair decision, a non-exclusive list of factors is to be taken into account. The factors are fault on the part of the debtor in the creation of the overpayment, a balancing of fault if the VA were also at fault in the creation of the debt, whether recovery of the debt would result in undue hardship by depriving the debtor of basic necessities, whether recovery of the debt would defeat the purpose for which the benefits were granted, unjust enrichment in that failure to make restitution would result in an unfair gain to the debtor, and whether the debtor relied to his or her detriment on the receipt of VA benefits by relinquishing a valuable right or incurring a legal obligation. Id. The veteran does not dispute that an overpayment was properly created, but contends that he had not attempted to defraud the VA. His request for waiver was not denied by the VA on the basis of fraud, but on the basis that recovery would not be against the principles of equity and good conscience. With respect to the latter basis, any fault on the part of the debtor and the VA is taken into account. Despite repeated efforts by the RO, the record remains unclear as to certain aspects of the sale of the veteran's farm land, particularly including the date of the sale. The veteran has stated that it occurred in 1990, without specifying the month. The veteran's granddaughter stated in June 1992 that the date of the sale was September 4, 1991. This September 1991 date would appear to be inconsistent with the fact that the veteran reported an increased net worth including savings of $10,000 on his June 1991 EVR. The VA notified the veteran on several occasions of the necessity of promptly notifying the VA of any change in his income to prevent the creation of an overpayment of benefits because his benefits were directly related to his income. The veteran realized a profit from the sale of real property, apparently sometime in 1990, but did not report anything relating to this until June 1991. The profit when combined with his other income would make him ineligible for VA improved pension benefits, and his continued receipt of such benefits after his ineligibility would create an overpayment. Income, however, is only one of the two financial factors affecting entitlement to improved disability pension, the other factor being net worth. On his initial application, the veteran reported that his net worth consisted only of his home. In July 1990, in response to VA inquiry as to the market value of his 150 some acres of farm land, he reported it was valued at $110,000 with a debt of $121,000. It was on the basis of the information of record at this point that the VA awarded pension benefits in July 1990. However, a September 1992 statement made on the veteran's behalf, which notes that the sale price was $160,000, reflects that the award of pension was premised on clearly inaccurate information as to net worth, which information was provided by the veteran. Thus, even considering only the factor of net worth, it is apparent that there was significant fault on the part of the veteran in the creation of the overpayment. No such fault on the part of the VA is evident. The veteran contends that recovery of the overpayment will cause financial hardship. In a financial status report, which he submitted in March 1992, he indicated that his monthly expenses exceeded his monthly income. He also reported, however, that he had liquid assets of $5,700 and real property valued at $25,000, although part of this property contained his house. Even excluding his home, he has significant assets with which to repay the overpayment. Recovery of the overpayment would not, therefore, impose undue hardship by depriving the veteran of basic necessities. The benefits were provided to assist the veteran and his spouse. They were not, however, necessary because his family financial resources were beyond the eligibility threshold for pension benefits. Recovery will not deprive the veteran of assistance as he is not currently in receipt of VA disability pension benefits. Accordingly, recovery of the overpayment would not defeat the purpose for which the benefits were granted. The veteran accepted VA pension benefits, although he was not entitled to them, and he was at fault in creation of the overpayment. He apparently used VA benefits for various purposes, such as to pay state taxes and make home improvements, rather than for basic assistance as was their purpose. Failure to make restitution would, therefore, result in an unfair gain to the veteran. The record does not show, nor does the veteran contend, that he changed his legal position in reliance on his receipt of VA benefits. Accordingly, recovery of the overpayment would not be unfair to the veteran due to detrimental reliance. Recovery of the overpayment of VA improved pension benefits from the veteran has not been shown to be against the principles of equity and good conscience pursuant to the applicable criteria or otherwise. Accordingly, the Board finds that the preponderance of the evidence is against waiver of the overpayment of improved disability pension benefits. 38 U.S.C.A. §§ 5107, 5302; 38 C.F.R. § 1.965. The evidence is not so evenly balanced as to raise doubt with respect to any material issue. 38 U.S.C.A. § 5107(b). ORDER Entitlement to waiver of recovery of an overpayment of improved disability pension benefits is denied. JAMES R. ANTHONY 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.