Citation Nr: 0000453 Decision Date: 01/06/00 Archive Date: 01/11/00 DOCKET NO. 98-06 480A ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Cleveland, Ohio THE ISSUE Waiver of recovery of an overpayment of improved death pension benefits in the amount of $3,304. REPRESENTATION Appellant represented by: AMVETS ATTORNEY FOR THE BOARD J. Johnston, Counsel INTRODUCTION The veteran apparently had active service from February 1954 to October 1957. He died in August 1996 and the appellant is his surviving spouse. This matter comes before the Board of Veterans' Appeals (Board) on appeal from the Department of Veterans Affairs (VA) Regional Office Committee on Waivers and Compromises (RO) in Cleveland, Ohio. While the RO initially found that collection of the overpayment would not violate the principles of equity and good conscience, that determination was later reconsidered and, in April 1998, it was determined that waiver of any amount of the overpayment was precluded by the appellant's bad faith actions in failing to report Social Security income despite being clearly informed that it was her obligation to do so in connection with her application and later receipt of VA pension benefits. In March 1999, the Board, resolving all doubt in the appellant's favor, found that bad faith was not shown, and remanded the case to the RO for an equity and good conscience determination. The RO obtained an up-to-date financial status report from the appellant and denied waiver of all or any amount of the overpayment at issue. The case is now ready for appellate review. FINDINGS OF FACT 1. All relevant evidence necessary for an equitable disposition of the appeal has been requested or obtained. 2. The appellant was at fault in creating an overpayment of VA pension benefits, calculated at $3,304, by her failure to properly report to VA all income received from every source, including Social Security benefits. 3. VA was not at fault in the creation of the overpayment. 4. The appellant is shown to be unable to repay all or any part of the overpayment at issue by reason of financial inability. She is clearly shown to have minimized all or most of her expenses and proper application of the principles of equity and good conscience requires waiver of the entire amount of overpayment. CONCLUSION OF LAW Recovery of all or any amount of the overpayment of VA pension benefits in the amount of $3,304 would violate the principles of equity and good conscience. 38 U.S.C.A. §§ 5107, 5302 (West 1991); 38 C.F.R. §§ 1.963(a), 1.965(a) (1999). REASONS AND BASES FOR FINDINGS AND CONCLUSION The appellant's claim is well grounded within the meaning of 38 U.S.C.A. § 5107(a) in that it is plausible. All of the facts have been properly developed and no further assistance is necessary to comply with the duty to assist required by law. Id. The essential history of this appeal was provided in the introduction. While applicants for VA benefits, including the appellant, are expected to read and follow the directions with respect to all or any benefits they may receive and to comply with all reporting requirements, and while all individuals dealing with the Government are presumed to understand the legal requirements for the lawful receipt of any benefits, in this particular case, the Board previously found that despite the fact the appellant was provided clear and adequate notice of her obligations to report all income from every source (including Social Security benefits), the veteran's failure to report her receipt of this income was not intentional and thus did not constitute a willful intention to seek an unlawful advantage. Accordingly, her actions giving rise the overpayment of $3,304 did not rise to the level of bad faith, thereby precluding waiver of all or any amount of the overpayment at issue. The appellant does not dispute the creation or the amount of the debt. However, there is no question that the appellant's failure to read and follow the clear and simple directives of VA correspondence (which was certainly received by the appellant and which explained in no uncertain terms that it was her obligation to report all income received from every source, including Social Security), and her failure to promptly report the receipt of such income, was the absolute and proximate cause of the overpayment in this case. There is no argument nor is there any evidence which shows that VA was in any way at fault in the creation of this overpayment. The appellant was unjustly enriched by the entire amount of the overpayment since no amount was apparently payable to her in consideration of her receipt of Social Security Supplemental Income benefits. While the veteran has written that it was her honest belief that she was able to receive both Social Security and VA benefits, the United States Supreme Court has held that everyone dealing with the Government is charged with knowledge of Federal statutes and lawfully promulgated agency regulations. Fed. Crop Ins. Corp. v. Merrill, 332 U.S. 380 (1947); Morris v. Derwinski, 1 Vet. App. 260 (1991). Regulations are binding on all who seek to come within their sphere, regardless of actual knowledge of what is in the regulations or of the hardship resulting from innocent ignorance. Merrill at 385. It must next be determined whether the evidence establishes that recovery of the indebtedness in this case would be against equity and good conscience, in which case, recovery of the overpayment may be waived. 38 U.S.C.A. § 5302; 38 C.F.R. §§ 1.963(a), 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. A decision reached should not be unduly favorable or adverse to either the appellant or the Government. Arriving at an equitable determination between both the appellant and the Government, consideration must be given to certain enumerated factors, which are not intended to be all-inclusive. The standard "equity and good conscience" will be applied when the facts and circumstances in a particular case indicate 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 is 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 creation of the debt. (2) Undue hardship. Whether collection would deprive the debtor or family of basic necessities. (3) Defeat the purpose. Whether withholding of benefits or recovery would nullify the objective for which benefits were intended. (4) Unjust enrichment. Failure to make restitution would result in unfair gain to the debtor. (5) Changing position to one's detriment. Reliance on VA benefits results in relinquishment of a valuable right or incurrence of a legal obligation. 38 U.S.C.A. § 5302; 38 C.F.R. §§ 1.963, 1.965. The fault of the appellant having been discussed above, the only remaining issue relevant to this case is undue hardship of collection on the appellant. The appellant herein is 55 years old and shown to be unemployed and disabled from work. Her spouse is deceased. Her only income is from Social Security and is $810 per month. Her recent financial status report indicates that she has mostly minimized necessary monthly expenses. She pays no rent and lives in her mother's home, but is worried that this home will be taken to offset her mother's considerable medical expenses from a nursing home. After payment of all monthly bills from total monthly income, she has reported a net monthly loss in excess of $125. While the Board does not consider it to have been a sound financial choice to have purchased a motor vehicle for a sum in excess of $17,000 the same month she was initially notified by VA of conflicts regarding her receipt of pension benefits, and while the ownership of this vehicle including monthly insurance appears to cost almost $4,000 per year, the Board cannot say that such expense is unreasonable or excessive. She is not shown to have any substantial assets and the only luxury appears to be cable television, the cost of which would not itself be sufficient for repayment of this debt. Accordingly, again resolving all doubt in the appellant's favor, the Board finds that requiring her to repay all or any part of this overpayment of pension benefits would cause undue financial hardship and the entirety of this debt should be waived. The benefit of the doubt has been resolved in her favor. 38 U.S.C.A. § 5107. ORDER Waiver of recovery of improved death pension benefits of $3,304 is granted. WAYNE M. BRAEUER Member, Board of Veterans' Appeals