BVA9507492 DOCKET NO. 92-09 940 ) DATE ) ) On appeal from the decision of the Department of Veterans Affairs Regional Office in St. Louis, Missouri THE ISSUE Entitlement to waiver of recovery of an overpayment of disability compensation benefits, in the calculated amount of $3,206, to include the question of whether the overpayment was properly created. ATTORNEY FOR THE BOARD Anna Bryant, Counsel INTRODUCTION The veteran had active military service from March 1971 to December 1972. This matter originally came before the Board of Veterans' Appeals (Board) on appeal from a March 1992 determination of the Committee on Waivers and Compromises (Committee) of the St. Louis, Missouri Regional Office (RO), which denied the veteran's claim seeking waiver of recovery of an overpayment of disability compensation benefits. In April 1994, the Board remanded the case to the RO for additional development and due process considerations. Pursuant thereto, the debt, originally calculated as $3,254, was audited for verification and determined to actually be $3,206. The veteran's request for waiver of recovery of the assessed overpayment was again denied by the Committee in November 1994, on the basis that there was fault on the part of the veteran in the creation of the indebtedness and recovery would not otherwise be against the principles of equity and good conscience. The appeal is once again before the Board for appellate review. Review of the evidentiary record indicates that a portion of the assessed overpayment in question has been recouped. Nevertheless, in accordance with Franklin v. Brown, 5 Vet.App. 190 (1993), the Board will consider the entire overpayment in the currently calculated amount of $3,206. CONTENTIONS OF APPELLANT ON APPEAL The veteran contends, in effect, that he is entitled to waiver of recovery of the overpayment of disability compensation benefits at issue. Essentially, he maintains that he was not trying to defraud the Government and asserts that he promptly reported his divorce and remarriage to the Marine Corps Finance Center in Kansas City, Missouri. The veteran further alleges that he was never informed of his responsibility to advise the Department of Veterans Affairs (VA) of changes regarding his martial status. In addition, he asserts that he was remarried five months after the dissolution of his marriage to [redacted] and, therefore, the amount of the assessed overpayment is unfairly calculated. 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 waiver of the recovery of a properly created overpayment of disability compensation benefits in the calculated amount of $3,206. 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's disability compensation benefits were adjusted by the RO in February 1992, retroactive to October 1, 1979, due to his divorce in April 1979, creating an overpayment in the calculated amount of $3,254. 3. The VA first became aware that the veteran had divorced [redacted] in July 1991; the record reflects that when he was advised of the increased award payable on account of [redacted]'s dependency, in August 1979, he was told that he must report all marital and dependency changes immediately to VA. 4. The veteran's failure to report his divorce from [redacted] in a timely fashion directly resulted in the overpayment at issue. 5. In August 1994, the RO retroactively amended the veteran's disability compensation benefits pursuant to the Board's remand request of April 1994, eliminating the spousal allowance effective from January 1, 1980. This action reduced the assessed overpayment to $3,206. 6. Recovery of the assessed overpayment would not cause an undue financial hardship and failure to make restitution would result in the veteran's unjust enrichment at the expense of the Government. 7. Failure of the VA to insist on the repayment of the veteran's indebtedness to the Government would not defeat the purpose for which those benefits were initially intended since granting a waiver to the veteran would allow him to retain payments of benefits made to him to which he is not legally entitled. 8. There are no other elements of equity and good conscience which support granting the requested waiver to the veteran. CONCLUSION OF LAW 1. The overpayment of disability compensation benefits, in the calculated amount of $3,206, has been properly created and assessed against the veteran. 38 U.S.C.A. § 5112(a)(b)(2) (West 1991); 38 C.F.R. §§ 3.401(b), 3.501(d)(1) (1994). 2. Recovery of the aforementioned overpayment would not be against the principles of equity and good conscience. 38 U.S.C.A. §§ 5107, 5302 (West 1991); 38 C.F.R. §§ 1.963, 1.965 (1994). REASONS AND BASES FOR FINDINGS AND CONCLUSION Initially, we have determined 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 plausible. Additionally, we find that the RO has obtained all relevant evidence in regard to his claim and that no further assistance to the veteran is required to comply with the duty to assist him, as mandated by 38 U.S.C.A. § 5107(a). It has been maintained by the veteran that recovery of the overpayment of disability compensation benefits in question, in the calculated amount of $3,206, should be waived because he was without fault in the creation of the overpayment. The record reveals that the alleged indebtedness resulted from the veteran's continued receipt of disability compensation benefits, which included a spousal allowance, subsequent to his divorce in April 1979. As pertinent to the present appeal, review of the evidentiary record reflects that the veteran completed a Declaration Of Marital And Dependency Status in December 1978. The veteran was advised that veterans having service-connected disability of 30 percent or more were entitled to additional compensation for all dependents. On his completed form, the veteran reported that he had two dependent children and that he was legally separated from his spouse although he was contributing to her support. In an August 1979 VA letter, the veteran was notified that he had been awarded additional compensation benefits for a dependent spouse, effective January 7, 1979. Accompanying that letter was a copy of VA Form 21-6755, which informed the veteran to promptly notify the VA of any change in the number or status of dependents. He was told that additional compensation payable to a spouse would terminate in the event of divorce. He was further advised that if he did not notify the VA of these changes immediately, an overpayment could result which would be subject to recovery. In August 1991, the veteran completed VA Form 21-0595d (NR) (Social Security Number Solicitation), wherein he indicated his current dependents. In a January 1992 Declaration Of Status Of Dependents (VA Form 21-686c), the veteran reported that he and [redacted] were divorced and that he married [redacted] in October 1979. The veteran also submitted a copy of his divorce decree which indicated the dissolution of marriage to [redacted] in April 1979. As a result of this information, action was taken by the RO in February 1992 to retroactively adjust the veteran's compensation award effective October 1, 1979. This action resulted in the creation of an overpayment in the calculated amount of $3,254. The veteran's current wife, [redacted], and his two additional children were added to his award, effective September 1, 1991, the first of the month following the date of receipt of the Social Security Number Solicitation with his dependency information. 38 C.F.R. § 3.401(b). In accordance with the Board's remand request of April 1994, the RO retroactively adjusted the veteran's compensation award pursuant to 38 U.S.C.A. § 5112(a)(b)(2); 38 C.F.R. § 3.501(d)(1). This action reduced the assessed overpayment to $3,206, representing benefits paid for the period January 1, 1980 through August 31, 1991. In view of the aforementioned discussion, the Board concludes that the veteran's compensation award was properly adjusted and that the overpayment of compensation benefits in question was properly assessed against him based on the statute and regulations cited above. It is clear that the veteran was not entitled to payment of additional benefits for a spouse during the period January 1, 1980 through August 31, 1991, based on his divorce from [redacted] in April 1979. 38 C.F.R. § 3.501(d)(1). Similarly, he was not entitled to payment of additional benefits for a spouse due to his remarriage to [redacted] in October 1979 prior to September 1, 1991, on the basis of the documentation of that marriage, received in August 1991. 38 C.F.R. § 3.401(b). Having determined that the veteran is legitimately indebted to the Government in an amount calculated as $3,206, it now remains for the Board to consider his request for a waiver of recovery of that debt. The Committee has determined that the indebtedness did not result from fraud, misrepresentation or bad faith on the veteran's part, any of which would constitute a legal bar to granting the requested waiver. 38 U.S.C.A. § 5302. The Board concurs with the RO that there was no willful failure on the veteran's part to disclose a material fact, with an intent to obtain or retain eligibility for additional compensation benefits, and thus there is no indication of fraud, misrepresentation, or bad faith. Nevertheless, before the recovery of this indebtedness from the veteran can be waived, it must also be shown that it would be against the principles of equity and good conscience to require him to repay this debt to the Government. 38 C.F.R. §§ 1.963, 1.965. 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 the creation of the debt. (2) Balancing of faults. Weighing fault of the 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 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 evidence of record reflects that the veteran was clearly made aware that his compensation award included a spouse allowance, and he had been instructed in writing, on at least one occasion, to promptly report any change in the number or status of his dependents, to include divorce. His failure to promptly report that he was divorced in April 1979 resulted in the assessed overpayment. The veteran has attempted to excuse his failure to report that he was divorced in April 1979 by asserting that he mistakenly believed that he was required to provide such notification to the Marine Corps Finance Center in Kansas City, Missouri. However, based upon the aforementioned information, it is clear that the veteran was properly advised of his responsibility to immediately report changes in the number or status of his dependents to the VA. Notwithstanding the Board's determination that there was fault on the part of the veteran in the creation of the assessed overpayment, we must also find that VA was somewhat at fault at the time of the initial award of additional compensation for a dependent spouse. Despite the fact that the veteran reported in December 1978 that he was legally separated from his spouse, it does not appear from the record that an attempt was made to clarify the veteran's marital status prior to the award of the benefits which included an additional allowance for a spouse. Thus, we find that there was also fault on the part of the VA although it is outweighed by the veteran's fault. However, it is significant to note that fault is not the only criterion to determine whether it would be against equity and good conscience to recover the overpayment. Another criterion is whether or not the recovery of the debt from the veteran would result in undue financial hardship. The veteran was given an opportunity to provide information pertaining to his current income and expenses, but did not respond to the RO's August 1994 request. Earlier, in February 1992, he did submit a Financial Status Report, review of which revealed that the veteran would not suffer financial hardship if the debt was recouped. The veteran reported that his family's combined monthly income exceeded their total monthly expenses by $718.93. Inasmuch as the veteran failed to provide detailed information pertaining to his current financial status, the Board cannot find from the available evidence that the existence of hardship is demonstrated. There is simply no indication of a significant change for the worse in his financial status. The Board finds that to demand payment of the indebtedness would not be unfair, unconscionable or unjust, and it would not defeat the purpose of the benefit granted to him by the VA. The veteran was not legally entitled to disability compensation benefits which included a spousal allowance subsequent to his divorce. Furthermore, the failure of the Government to insist upon its right to repayment of this debt would result in the veteran's unjust enrichment at the expense of the Government. In addition, the evidence of record provides no indication that the veteran relinquished a valuable right or incurred a legal obligation in reliance on VA benefits. Upon review of the various elements of equity and good conscience, the Board is not persuaded that the Government should waive its right to the repayment of the assessed overpayment. The Board has carefully reviewed the entire record in this case and finds that the evidence is not so evenly balanced that there is doubt as to any material issue. The preponderance of the evidence is against the claim. 38 U.S.C.A. § 5107(b). ORDER Entitlement to waiver of recovery of an overpayment of disability compensation benefits in the calculated amount of $3,206, to include the issue of whether the overpayment was properly created, 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. (CONTINUED ON NEXT PAGE) 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.