Citation Nr: 0004129 Decision Date: 02/16/00 Archive Date: 02/23/00 DOCKET NO. 98-14 583 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Milwaukee, Wisconsin THE ISSUE Entitlement to a waiver of recovery of an overpayment of Department of Veterans Affairs pension benefits in the amount of $1,017.00. REPRESENTATION Appellant represented by: Wisconsin Department of Veterans Affairs ATTORNEY FOR THE BOARD L. Helinski, Counsel INTRODUCTION The veteran had active military service from September 1954 to September 1956. This matter comes before the Board of Veterans' Appeals (BVA or Board) on appeal from a June 1998 determination by the Department of Veterans Affairs (VA) Regional Office (RO) Committee on Waivers and Compromises (Committee), in Milwaukee, Wisconsin, which denied the benefit sought on appeal. FINDINGS OF FACT 1. In a May 1992 VA letter, the veteran was notified that he was awarded nonservice-connected pension benefits, effective from July 1991; attached to that notification letter was a Disability Pension Award Attachment, VA Form 21-8768, which sets forth factors affecting the right to payment, including the effect of incarceration on benefits. 2. In January 1998, the RO learned that in November 1997, the veteran was incarcerated for violation of probation. 3. By VA letter dated January 15, 1998, the veteran was notified of a proposal to terminate his monthly pension benefits beginning January 24, 1998, which was the 61st day of his incarceration; the veteran was also notified that this termination may create an overpayment if he continued to accept future payments and if the VA decided to take the proposed action. 4. In a March 1998 VA letter, the veteran was notified that the proposed action had been taken, and that he had been overpaid benefits. 5. The veteran knew or reasonably should have known that an overpayment of VA pension benefits may arise if he continued to accept benefits while he was incarcerated beyond 60 days; however, he continued to accept benefits during his period of incarceration. 6. Although the veteran may experience some financial hardship in repaying the debt at issue in this appeal, failure to allow collection of the indebtedness at issue in this case would result in unfair gain to the veteran, and would violate the principles of equity and good conscience. CONCLUSION OF LAW Waiver of recovery of an overpayment of VA pension benefits in the amount of $1,017.00, would 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 (1999). REASONS AND BASES FOR FINDINGS AND CONCLUSION This appeal arises from the denial of the veteran's claim for waiver of recovery of an overpayment of VA disability pension benefits, in the amount of $1,017.00. Essentially, the overpayment resulted because the veteran continued to accept the full amount of his pension benefits during a period of incarceration in excess of 60 days. Initially, the Board notes that the veteran has not disputed the validity of the debt at issue in this case, but merely requests a waiver of the debt. In the absence of a challenge to the validity of the debt, or in the absence of prima facie evidence that the debt was improperly created, the validity of the debt need not be examined further. See Shaper v. Derwinski, 1 Vet. App. 430, 434 (1991). The law provides that there shall be no recovery of payments or overpayments of any benefits under any of the laws administered by the Secretary of the VA, whenever it is determined that recovery of benefits would be against equity and good conscience, if application for relief is made within 180 days of notification. 38 U.S.C.A. § 5302(a). The standard "equity and good conscience" will be applied when the facts and circumstances in a case indicate a need for reasonableness and moderation in the exercise of the Government's rights. 38 C.F.R. § 1.965(a). The decision reached should not be unduly favorable or adverse to either side. Id. The phrase "equity and good conscience" means arriving at a fair decision between the obligor and the Government. Id. In making this determination, consideration will be given to the following elements: fault of the debtor; balancing of fault; undue hardship; defeat the purpose; unjust enrichment; changing position to one's detriment. Id. If there is any indication of fraud or misrepresentation, such as bad faith or lack of good faith, waiver of a debt is precluded. 38 C.F.R. § 1.965(b). In the present appeal, the Committee determined in a June 1998 decision that the evidence in this case did not establish fraud, misrepresentation, or bad faith in the creation of the debt. The Board is also satisfied that none of the circumstances in this case rise to a level of fraud, misrepresentation, or bad faith on the veteran's part such that there is a legal bar to the issue of waiver of recovery of the debt. See 38 U.S.C.A. § 5302(a); Ridings v. Brown, 6 Vet. App. 544, 546 (1994). Thus, the sole question before the Board is whether collection of the indebtedness at issue in this appeal, in the amount of $1,017.00, would violate the principles of equity and good conscience. See 38 U.S.C.A. § 5302(a) and 38 C.F.R. §§ 1.963(a), 1.965(a). As set forth below, the Board finds that collection of the debt would not be against equity and good conscience, as the veteran accepted benefits that he knew or reasonably should have known he was not entitled to, and the Board finds that a waiver of recovery of the debt is not warranted. In determining whether recovery of the overpayment would be against the principles of equity and good conscience, thereby permitting waiver under 38 U.S.C.A. § 5302(a) and 38 C.F.R. §§ 1.963(a), 1.965(a), there are various elements to consider. The first element pertains to the fault of the debtor and requires an analysis as to whether the actions of the veteran contributed to causing the debt. 38 C.F.R. § 1.965(a)(3). Before assessing the fault of the veteran, the Board will briefly set forth the facts of this case. In a May 1992 rating decision, the veteran was awarded nonservice-connected pension benefits. When the veteran was notified of this award, by VA letter dated in May 1992, he was provided with VA Form 21-8768, which contained important information about the right to receive pension benefits. VA Form 21-8768 is entitled "Disability Pension Award Attachment," and sets forth factors affecting the right to payment. Included on that form is a section entitled "INCARCERATION - Effect on pension benefits," which indicates that the VA "will discontinue pension benefits payable to a person who is incarcerated in a Federal, State or local penal institution in excess of 60 days as a result of a felony or misdemeanor conviction." The record reveals that on several other occasions, in conjunction with VA notices regarding adjusted pension rates, the veteran was again provided with VA Form 21-8768. In a January 1998 Report of Contact, the VA was notified that the veteran was incarcerated on November 1997 for violation of probation. It was noted that the veteran was originally convicted and incarcerated in January, 1984, and was subsequently released on parole, probation, and mandatory release. However, on several occasions the veteran was re- incarcerated for violation of probation, including the most recent incarceration in November 1997. In a January 1998 VA letter, the veteran was notified that upon incarceration, VA law requires termination of VA benefits beginning the 61st day of incarceration following conviction of a felony or misdemeanor. Thus, the VA proposed to terminate his benefits on January 24, 1998. The VA offered the veteran an opportunity to present additional evidence as to why the proposed action should not be taken. The veteran was also informed that he may not be due the full amount paid for the next 60 days, and if he continued to accept benefits and the RO decided to take the proposed action, he may have to repay all or some of his benefits. The veteran responded with a statement, received in January 1998. He requested that the benefits not be stopped as he still had financial obligations even though he was incarcerated. He also stated that he was disabled and would not be able to work after release from prison. In a March 1998 VA letter, the veteran was notified that his pension benefits were retroactively terminated effective January 24, 1998. The veteran was also notified that he had been paid too much, and that an overpayment was created. In April 1998, the veteran submitted a request for a waiver of recovery of the overpayment. He indicated that he had no money to repay any overpayments, and that if he was expected to repay this money it would defeat the purpose of pension benefits. In assessing whether the veteran contributed to causing the debt, see 38 C.F.R. § 1.965(a)(3), the foregoing information reveals that the veteran was made aware on numerous occasions of the effects of incarceration in excess of 60 days on payment of VA pension benefits. Furthermore, by VA letter dated January 15, 1998, the veteran was notified of the proposal to terminate his benefits effective January 24, 1998, and he was also informed that if he continued to accept benefits, an overpayment may result. Nevertheless, the veteran continued to accept VA pension benefits during his incarceration, even though he knew or reasonably should have known that he may be overpaid. Additionally, a review of the record indicates that this is not the first time that the veteran has been assessed an overpayment for receipt of VA benefits while incarcerated. Thus, the Board is satisfied that the veteran was aware of his rights regarding receipt of pension benefits, and for the foregoing reasons the Board finds that the veteran was at fault in causing the debt in this case. The second element for consideration pertains to fault on the part of the VA. 38 C.F.R. § 1.965(a)(2). As noted earlier, upon the initial award of disability pension benefits, the VA provided the veteran with a detailed explanation of the factors affecting the right to receive VA disability pension benefits. Furthermore, on several occasions, the veteran was provided with VA Form 21-8768, "Disability Pension Award Attachment," detailing the factors affecting payment of benefits, including incarceration. Additionally, in January 1998, just after the VA learned of the veteran's incarceration, the VA informed the veteran of the proposed reduction, and the steps he could take to minimize potential overpayment. In short, the Board finds that the VA was not at fault in causing this debt. Other elements for consideration address whether repayment of the debt would nullify the objective for which the benefits were intended, see 38 C.F.R. § 1.965(a)(4), and whether failure to make restitution would result in unfair gain to the debtor, see 38 C.F.R. § 1.965(a)(5). In this regard, the Board notes that the purpose of non-service connected pension benefits is to assist persons who are unable to secure and follow a substantially gainful occupation due to disability. In light of the purpose underlying pension benefits, the Board finds that repayment of the debt at issue in this case would not conflict with the objective underlying the benefits, as the veteran's basic necessities were provided for while he was incarcerated. See 38 C.F.R. § 1.965(a)(4). Thus, repayment of the debt would not nullify the purpose for which the pension benefits were intended, since the veteran was not deprived of basic necessities such as food and shelter during his period of incarceration when he was not entitled to VA pension benefits. See 38 C.F.R. § 1.965(a)(4). Further, if the veteran fails to repay this debt, it will result in an unfair gain to him. See 38 C.F.R. § 1.965(a)(5). As to the element of undue financial hardship, the regulations provide that consideration should be given to whether collection of the indebtedness would deprive the debtor of basic necessities. 38 C.F.R. § 1.963(a)(3). As noted earlier, the effect on the veteran's financial situation is but one factor for consideration and is not dispositive of the issue in and of itself. In various statements of record from the veteran, he indicates that his VA pension is his only source of income, and that he would not be able to repay any sort of overpayment. A Financial Status Report received in March 1997, prior to incarceration, reflects that the veteran's monthly income consisted solely of his VA pension benefits in the amount of $707.00. His monthly expenses totaled approximately $965.00, including $88.60 for a car loan and $187.00 for another VA overpayment debt. The veteran indicated that his monthly expenses exceeded his monthly income by approximately $258.00. In November 1998, the veteran submitted a more updated Financial Status Report, reflecting his monthly finances during incarceration. He indicated that he was receiving no monthly income, and that he still owed unspecified amounts for rent and utilities, as well as $2,600.00 in fines. Nevertheless, the Board notes that upon release from prison, the veteran's pension benefits were set to resume in full. Although the veteran may still experience some hardship in repaying the debt at issue in this appeal, it will not cause him undue financial hardship as contemplated by VA law, especially if he pays back his obligation in monthly installments. Furthermore, the Board finds that any financial difficulty is outweighed by other factors in this case, such as the veteran's fault in causing the debt, and the fact that he was unjustly enriched with pension benefits. In summary of the foregoing, a review of some of the elements pertaining to the principles of equity and good conscience, as set forth by 38 C.F.R. § 1.965(a), convinces the Board that greater weight in this case should be accorded to the fault of the veteran, in that continued to accept the full amount of his monthly VA pension benefits, despite notification from the VA that an overpayment might result from such action. When all of the relevant elements as set forth above are considered, the Board is not persuaded that the Government should forego its right to collection of the indebtedness in the instant appeal, in the amount of $1,017.00. Accordingly, the Board finds that waiver of recovery of the overpayment in the amount of $1,017.00 is not warranted. ORDER Entitlement to a waiver of recovery of an overpayment of VA pension benefits in the amount of $1,017.00, is denied. BRUCE KANNEE Member, Board of Veterans' Appeals