Citation Nr: 0001624 Decision Date: 01/19/00 Archive Date: 01/28/00 DOCKET NO. 95-34 499 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in New Orleans, Louisiana THE ISSUE Entitlement to waiver of recovery of an overpayment of Department of Veterans Affairs improved pension benefits in the amount of $13,976.00. REPRESENTATION Appellant represented by: Disabled American Veterans ATTORNEY FOR THE BOARD J. T. Hutcheson, Counsel INTRODUCTION The veteran had active service from February 1942 to December 1945. In August 1993, the New Orleans, Louisiana, Regional Office (RO) retroactively terminated the veteran's Department of Veterans Affairs (VA) improved pension benefits as of March 1993 due to his receipt of earned income. In August 1993, the veteran was informed in writing of an overpayment of VA improved pension benefits in the amount of $1,503.00 and his waiver rights. In September 1993, the veteran requested a waiver of recovery of the overpayment of VA improved pension benefits in the amount of $1,503.00. In November 1993, the RO's Committee on Waivers and Compromises (Committee) denied the veteran's request for waiver of recovery of the overpayment of VA improved pension benefits in the amount of $1,503.00. The veteran was informed in writing of the adverse decision and his appellate rights. He did not perfect a timely substantive appeal from the adverse decision. In January 1994, the RO proposed to adjust the veteran's VA improved pension benefits retroactively from December 1981 due to his receipt of earned income. In April 1994, the RO effectuated the proposed action. The veteran was subsequently informed of an overpayment of VA improved pension benefits in the amount of $13,976.00. This matter came before the Board of Veterans' Appeals (Board) on appeal from a March 1995 decision of the Committee which denied the veteran's request for waiver of recovery of the overpayment of VA improved pension benefits in the amount of $13,976.00. In June 1997, the Board remanded the veteran's appeal to the RO for additional action which included requesting that the veteran submit a current Financial Status Report (VA Form 20-5655) and all other relevant documentation which might bear upon the issue of a waiver of recovery of the alleged overpayment; "recalculating" the veteran's indebtedness; and referring the veteran's request for waiver to the Committee for readjudication. In December 1998, the RO determined that the veteran had been properly informed in January and April 1994 that there had been an overpayment of VA improved pension benefits between 1981 and 1993; the total amount of the overpayment provided to the veteran was incorrect to the extent that it covered only the period between 1988 and 1993; determined that the prior calculation of the overpayment of VA improved pension benefits in the amount of $13,976.00 was correct based upon the veteran's previously unreported earned income and interest between December 1988 and February 1993; determined that there had been an additional overpayment of VA improved pension benefits in the amount of $24,915.76 based upon the veteran's previously unreported earned income and interest between December 1981 and November 1988; determined that the veteran had not been properly notified of the overpayment of VA improved pension benefits in the amount of $24,915.76; and officially notified the veteran in writing of that overpayment and his appellate rights. The veteran did not subsequently submit a timely request for waiver of recovery of the overpayment of VA improved pension benefits in the amount of $24,915.76. In April 1999, the Committee confirmed its prior denial of a waiver of recovery of the overpayment of VA improved pension benefits in the amount of $13,976.00. The veteran has been represented throughout this appeal by the Disabled American Veterans. The Board observes that the veteran did not submit either a notice of disagreement with the November 1993 denial of a waiver of recovery of an overpayment of VA improved pension benefits in the amount of $1,503.00 or a timely request for waiver of recovery of an overpayment of VA improved pension benefits in the amount of $24,915.76. Therefore, those issues are not before the Board and will not be addressed below. In August 1998, the veteran submitted claims of entitlement to service connection for arthritis, hearing loss disability, and prostate cancer. It appears that the RO has not had an opportunity to act upon the claims. Absent an adjudication, a notice of disagreement, a statement of the case, and a substantive appeal, the Board does not have jurisdiction over the issues. Rowell v. Principi, 4 Vet. App. 9 (1993); Roy v. Brown, 5 Vet. App. 554 (1993); Black v. Brown, 10 Vet. App. 279, 284 (1997); Shockley v. West, 11 Vet. App. 208 (1998). Jurisdiction does matter and it is not "harmless" when the VA fails to consider threshold jurisdictional issues during the claim adjudication process. Furthermore, this Acting Board Member cannot have jurisdiction of the issues. 38 C.F.R. § 19.13 (1999). The United States Court of Appeals for Veterans Claims (Court) has noted that: Furthermore, 38 U.S.C.A. § 7105 (West 1991) establishes a series of very specific, sequential, procedural steps that must be carried out by a claimant and the RO or other "agency of original jurisdiction" (AOJ) (see Machado v. Derwinski, 928 F.2d 389, 391 (Fed. Cir. 1991)) before a claimant may secure "appellate review" by the BVA. Subsection (a) of that section establishes the basic framework for the appellate process, as follows: "Appellate review will be initiated by a notice of disagreement [(NOD)] and completed by a substantive appeal after a statement of the case is furnished as prescribed in this section." Bernard v. Brown, 4 Vet. App. 384 (1994). All steps required for jurisdiction have not been satisfied. More recently, the Court again established that jurisdiction counts. Specifically, the Court could not remand a matter over which it has no jurisdiction. Hazan v. Gober, 10 Vet. App. 511(1997). Therefore, the issues are referred to the RO for action as may be appropriate. Black v. Brown, 10 Vet. App. 279 (1997). If the veteran wishes to appeal from the decision, he has an obligation to file a timely notice of disagreement and a timely substantive appeal following the issuance of the statement of the case. 38 C.F.R. § 20.200 (1999). FINDINGS OF FACT 1. The RO has obtained all relevant evidence necessary for an equitable disposition of the veteran's appeal. 2. The veteran was overpaid VA improved pension benefits in the amount of $13,976.00 between December 1988 and February 1993 due to his failure to promptly and accurately inform the VA of his family's receipt of earned income and interest. 3. Notwithstanding the veteran's fault in creating the overpayment of VA improved pension benefits, recovery of the indebtedness would result in severe financial hardship to the veteran. CONCLUSIONS OF LAW 1. The overpayment of VA improved pension benefits in the amount of $13,976.00 was not due to error solely on the part of the VA and was otherwise properly created. 38 U.S.C.A. § 5107(a) (West 1991); 38 C.F.R. § 3.660(a) (1999). 2. Recovery of the overpayment of VA improved pension benefits in the amount of $13,976.00 would be against the principles of equity and good conscience. 38 U.S.C.A. § 5302 (West 1991 & Supp. 1999); 38 C.F.R. §§ 1.963(a), 1.965(a) (1999). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS I. Creation of the Debt Generally, a veteran in receipt of VA pension benefits must notify the VA of all circumstances which will affect his entitlement to receive pension benefits or the rate of those benefits. Such notice must be furnished when the recipient acquires knowledge that his income has changed. 38 C.F.R. § 3.660(a)(1) (1999). In May 1975, the veteran was granted nonservice-connected pension benefits. In August 1980, the veteran elected to receive VA improved pension benefits. In Improved Pension Eligibility Verification Reports (Veteran with Spouse), (VA Form 21-0516) dated April 1988, April 1989, April 1990, March 1991, and March 1992, the veteran reported that he and his spouse received Social Security Administration (SSA) benefits and denied having any wages, interest, or other earned income. Between 1980 and 1992, the veteran's VA improved pension benefits were variously amended. With notification of the amendments, the RO informed the veteran that he had a duty to promptly inform the VA of any changes in his family's income. In January 1994, the RO informed the veteran that his employer had verified that he had received earned income between 1981 and 1993. Additionally, two banks had verified that the veteran and his wife received interest income during that period. Based upon the veteran's unreported earned income and interest, the RO proposed retroactively adjusting his improved VA pension benefits from December 1981. In April 1994, the RO effectuated the proposed adjustment and informed the veteran that the adjustment resulted in an overpayment. While the actual notice is unfortunately not of record, the veteran was apparently informed of the overpayment of VA improved pension benefits in the amount of $13,976.00. In his August 1994 request for a waiver of recovery of the overpayment and April 1995 notice of disagreement, the veteran acknowledged that he had been employed and failed to report his wages to the VA. He advanced that he did not report his income because he was not well-educated and had erroneously followed his coworkers' advice. He stated that he had not intended to "cheat" the Government. The veteran has not contested the amount of the overpayment. In light of this fact and given the veteran's acknowledgment that he failed to inform the VA of his wage and interest income, the Board finds that the overpayment of VA improved pension benefits in the amount of $13,976.00 was solely the consequence of the veteran's own action and thus properly created. II. Waiver of Recovery Recovery of an overpayment of VA improved pension benefits may be waived if recovery of the indebtedness from the payee who received the benefit would be against equity and good conscience. 38 U.S.C.A. § 5302 (West 1991 & Supp. 1999); 38 C.F.R. § 1.963(a) (1999). The equity and good conscience standard means arriving at a fair decision between the obligor and the Government. In making this decision, consideration is to be given to factors such as: the fault of the debtor; a balancing of the fault of the debtor against any fault of the VA; whether collection would deprive the debtor of basic necessities; whether recovery would nullify the objective for which the benefits were intended; whether a failure to make restitution would result in unfair gain to the debtor; and whether reliance on the benefits would result in relinquishment of a valuable right or incurrence of a legal obligation. 38 C.F.R. § 1.965(a) (1999). In an August 1994 Financial Status Report (VA Form 20-5655), the veteran indicated that: his family's gross monthly income consisted of wages in the amount of $376.80 and Social Security Administration (SSA) benefits in the amount of $518.20; they had a net monthly income of $812.80; their monthly expenses totaled $802.10; and their assets consisted of $600.00 in cash, a 1970 truck, and a 1980 automobile. In his April 1995 notice of disagreement and August 1995 substantive appeal, the veteran advanced that he had approximately $10.70 remaining after he paid his regular monthly expenses. He believed that he would probably not be able to pay any exceptional expenses if such arose during the month. In his August 1995 substantive appeal, the veteran reported that he had been forced to leave certain of his debts unpaid each month as he did not have sufficient money to pay them. In a March 1998 written statement, the veteran advanced that he would be 81 years old on his next birthday; used a cane to walk; and was unable to work. He stated that he was unable to see how he would be able to repay the overpayment of VA improved pension benefits. He stated that he was already foregoing many obligations in order to meet his family's basic necessities. In his August 1998 Veteran's Application for Compensation or Pension (VA Form 21-526), the veteran indicated that his family's income consisted of monthly SSA benefits in the amount of $522.80 and yearly interest income of $25.00. He stated that his assets consisted of $900.00 in stocks, bonds, and/or bank deposits. At a September 1998 VA examination for compensation purposes, the veteran was noted to be 80 years old. He was diagnosed with prostate cancer, chronic obstructive pulmonary disease, and bilateral sensorineural hearing loss disability. The Board has reviewed the probative evidence including the veteran's statements on appeal. While he was clearly at fault in the creation of the overpayment of VA improved pension benefits, there is no indication of bad faith evident in the veteran's actions. The veteran unfortunately failed to follow the Board's remand instructions and the RO's request to submit a recent Financial Status Report (VA Form 20-5655) detailing his income and expenses. However, the Board observes that recovery of the overpayment would clearly result in severe financial hardship to the veteran and probably render him unable to meet his family's basic necessities. In August 1994, the veteran reported net monthly income which exceeded his monthly expenses by approximately $11.00. In August 1998, the veteran indicated that his net monthly income had fallen by approximately $288.00. He is 82 years old and has a number of significant disabilities including prostate cancer and chronic obstructive pulmonary disease. Upon application of the aforementioned authorities to the instant appeal, the Board concludes that recovery of the overpayment from the veteran would be against equity and good conscience. According, a waiver of recovery of the overpayment of VA improved pension benefits to the veteran in the amount of $13,976.00 is granted. ORDER Waiver of recovery of the overpayment of VA improved pension benefits in the amount of $13,976.00 is granted. M. S. SIEGEL Acting Member, Board of Veterans' Appeals