BVA9501789 DOCKET NO. 91-51 194 ) DATE ) ) On appeal from the decision of the Department of Veterans Affairs Regional Office in Cleveland, Ohio THE ISSUE Entitlement to waiver of recovery of an overpayment of improved pension benefits in the amount of $1,911. REPRESENTATION Appellant represented by: Disabled American Veterans WITNESS AT HEARING ON APPEAL Appellant ATTORNEY FOR THE BOARD K. J. Alibrando, Associate Counsel INTRODUCTION The veteran served on active duty from October 1953 to September 1954. This appeal arises from a May 1990 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 of improved pension benefits on the basis that recovery of that debt would not be against equity and good conscience. The Board remanded the case in July 1992 and in October 1993 for additional development of the evidence. CONTENTIONS OF APPELLANT ON APPEAL The appellant asserts, in effect, that recovery of the overpayment should be waived. He 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 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 claim for waiver of recovery of an overpayment of improved pension benefits in the amount of $1,911. 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 was awarded improved pension benefits effective in December 1987 on the basis of reported income which included workers' compensation benefits of $1,799 per year; the veteran was actually receiving $270.56 bi-weekly in workers' compensation benefits. 3. The veteran's income of $12,686 as reflected on the March 1988 improved Pension Eligibility Verification Report exceeded the applicable statutory limit for entitlement to improved pension benefits effective in December 1987, resulting in the overpayment in question. 4. The veteran was solely at fault in the creation of the overpayment; the VA promptly suspended payment of benefits on learning of the veteran's increased income. 5. The veteran 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 veteran of the ability to provide for life's basic necessities; failure to repay the debt would result in unfair gain to the veteran. CONCLUSION OF LAW Recovery of an overpayment of compensation benefits in the amount of $1,911 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 The veteran's claim is well grounded within the meaning of 38 U.S.C.A. § 5107(a). That is, he 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 veteran was paid improved pension benefits on the basis of the income reported by him which was, in fact, greater than actually reported. The RO's Committee on Waivers has held that the veteran had contributed to the creation of the overpayment. A review of the record shows that by rating action of July 1978, the RO granted the veteran pension benefits effective from November 1977. By letter dated in February 1980, the RO acknowledged that the veteran had elected to receive improved pension benefits effective in September 1979 and the veteran was advised to promptly report any changes in his income and number of dependents. Amended award letters dated in October 1980, April 1981, March 1983, April 1983, October 1983, and April 1984, included VA Form 21-8768 which advised the veteran that he was required to promptly report any change in his income and number of dependents. In addition, amended award letters dated in January 1984 and January 1985 notified the veteran of the requirement to report any change in his income. In September 1986, the veteran notified the RO that his workers' compensation benefits had increased to $195.14 weekly and in February 1987 he notified the RO that he had received a lump sum payment in October 1986 from the Ohio Bureau of Workers' Compensation in the amount of $7931. By letter dated in November 1986, the veteran was notified that his improved pension benefits had been terminated effective in October 1986 due to excessive income. In March 1988, the veteran submitted an Improved Pension Eligibility Verification Report (EVR) which indicated that he was receiving Social Security benefits of $314.00 per month for himself and $78 for each of two children. He indicated that he was not receiving any other income, but stated that his workers' compensation benefits had been reduced in 1986 due to a lump sum payment of $7931. By letter dated in April 1988, the RO notified the veteran that pension benefits were awarded effective in December 1987 on the basis of reported income of $3765 from Social Security and $1799 from workers' compensation and $936 for each of his children. Page 2 of that letter noted that the rate of the veteran's pension was directly related to his family income and that he was required to report any changes in his income. In December 1988, the veteran submitted an EVR which indicated that he was receiving Social Security benefits of $314.80 himself and $78 for each of two children. He also indicated that he received $586 in workers' compensation from December 1987 to November 1988 and that he expected to receive $586 in worker's compensation benefits from December 1988 to November 1989. He stated that he received $270.56 every two weeks in workers' compensation benefits. By letter dated in January 1989, the RO requested that the veteran clarify the workers' compensation income information provided on December 1988 EVR. The RO notified the veteran that his benefits were suspended pending receipt of the requested information. In January 1989, the veteran submitted correspondence from the Ohio Bureau of Workers' Compensation. An April 1987 letter stated that in 1986 the veteran was advanced $7931 to pay his debts and his permanent total compensation benefits would be reduced from $56 per week to $34.61 per week to "absorb" the moneys advanced. A January 1989 letter showed in addition to the permanent total compensation benefits he received, the veteran received a supplemental award from the Disabled Workers' Relief Fund (DWRF) in the amounts of $197.96 bi-weekly in 1987; $211.72 biweekly in 1988 and $227.10 biweekly in 1989. It was also noted that he was receiving $58.84 biweekly in permanent total compensation benefits. An April 1989 letter from the Ohio Bureau of Workers' Compensation indicated that in March 1987, the veteran was advanced a total of $2686.13 to pay miscellaneous bills and those advancements reduced his weekly rate to $29.42 effective in April 1987. That letter also indicated that he was receiving $113.55 per week from the DWRF. By letter dated in June 1989, the RO notified the veteran that his pension benefits have been terminated from its inception due to excessive income. The RO indicated it considered the veteran's countable income from Social Security for the veteran and his children, his workers' compensation benefits and the DWRF payments. Improved pension is a benefit payable by the VA to veterans of a period of war because of disability. Basic entitlement exists if, among other things, the veteran's income is not in excess of the applicable maximum pension rate. 38 C.F.R. § 3.3(a)(3) (1993). Effective December 1, 1987, the maximum annual rate of improved pension for a veteran with two children was $ 9,195, and effective in December 1, 1988, the maximum annual rate was $ 9,564. 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). A review of the record shows that the veteran was paid improved pension benefits from December 1987 to December 1988 on the basis of reported income which included $1799 in workers' compensation benefits. However, on the March 1988 EVR the veteran reported receiving $270.56 biweekly in workers' compensation benefits and documentation received from the Ohio Bureau of Workers' Compensation confirmed that amount. The veteran received $7034.56 in workers' compensation benefits, in addition to $3778 in Social Security benefits and $936 in Social Security benefits for each of his children, for a total of $12,686. The record clearly shows that the veteran's actual income was excessive for the receipt of improved pensions 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 agrees with 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 veteran'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 veteran was notified by the RO that the amount of pension he was entitled to receive was based directly on the amount of his income and that he was required to report any changes in his income. Despite being consistently reminded of the VA income reporting requirements, the veteran failed to accurately report his workers' compensation income until he submitted the December 1988 EVR. The RO promptly suspended the payment of pension benefits in January 1989 on the basis of the reported 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. Thus, the overpayment was solely due to the fault of the veteran since he was repeatedly informed of the requirement of advising the RO as to any change in his income yet he failed to do so. Accordingly, it is clear that the veteran's actions, or lack of action, caused the overpayment without any fault on the part of the VA to offset his fault. The Board must consider whether reliance on benefits resulted in relinquishment of a valuable right or the incurrence of a legal obligation. The veteran has not contended, nor does the evidence show, that he had relinquished a valuable right or incurred a legal obligation in reliance on his 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 veteran is not entitled to pension benefits due to excessive income. In addition, the Board must also consider whether recovery of the debt would result in financial hardship. In September 1989, the veteran submitted a financial status report. He reported cash in the bank of $3 and a monthly net income of $845.50, including Social Security benefits of $327.90 and workers' compensation benefits of $517.60. The veteran related total monthly expenses of $871.82, including $225 for rent or mortgage payment, $75 per month for food, $125 per month for utilities and heat and $237.82 in monthly payments on installment contracts and other debts. His net monthly expenses exceeded his net income by $26.32. The Board notes that veteran reported a total of $3679.75 in installment contract debts. In February 1990 the veteran testified that he unintentionally failed to report the correct amount of workers' compensation benefits that he was receiving and that he did not willingly attempt to defraud the VA. He indicated that he had reported current expenses of over $871 in September 1987, but that his actual expenses for food were $125 per month instead of the $75 he had reported. He stated that he did not have the financial resources to repay the overpayment and that he depended on his VA benefits to pay his expenses. He stated that he was currently paying debts for purchases of furniture and a television. In July 1990, the veteran submitted a financial status report. He reported a monthly net income of $848.56, including Social Security benefits of $314 and workers' compensation benefits of $534.56. The veteran related total monthly expenses of $863.50, including $225 for rent or mortgage payment, $100 per month for food, $140 per month for utilities and heat and $179 in monthly payments on installment contracts and other debts. His net monthly expenses exceeded his net income by $14.94. The Board notes that veteran reported a total of $3200 in installment contract debts. The most recent information concerning his assets, income and expenses was submitted in a September 1991 financial status report. He reported a monthly net income of $926.32, including Social Security benefits of $360.90. He did not specify the source of the remainder of the monthly income reported. The veteran related total monthly expenses of $1242.00, including $425 for rent or mortgage payment, $275 per month for food, $153 per month for utilities and heat, $35 for telephone, $17 for insurance, $75 for clothing, $90 for car repair and $179 in monthly payments on installment contracts and other debts, but did not report the total amount due in installment contract debts. His net monthly expenses exceeded his net income by $315.63. The Board notes that by letter dated in August 1992, the RO requested that the veteran submit a current financial status report and, in addition, provide reasons for the increase in his expenses as reflected in the July 1990 and September 1991 financial status reports. Those reports indicate that the veteran's rent increased from $225 per month to $425 per month at the same address. The veteran failed to respond to the RO's inquiry. Based on the income and expense information of record, the Board concludes that the veteran has not demonstrated that recovery of the debt would render him unable to provide for life's basic necessities. He has failed to explain the large increase in his monthly rent payment and the Board concludes that the amount reported in September 1991 is unreasonable in light of the financial history of the veteran as reflected in the record. It is to be emphasized that this does not mean that some sacrifice on the part of the veteran would not be required: however, absent a finding that the ability to provide for life's basic necessities would be endangered, it may not be held that financial hardship would result. This is a valid debt to the government and there is no reason that the veteran should not accord the government the same consideration that he accords his private creditors. 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 veteran'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.