BVA9502019 DOCKET NO. 93-07 564 ) DATE ) ) On appeal from the decision of the Department of Veterans Affairs Regional Office in Albuquerque, New Mexico THE ISSUE Entitlement to a waiver of an overpayment of compensation for a dependent child in the calculated amount of $2,802. REPRESENTATION Appellant represented by: Veterans of Foreign Wars of the United States ATTORNEY FOR THE BOARD Darryl A. Joe, Associate Counsel INTRODUCTION The veteran had active military service from August 1955 to February 1976. In May 1992, the Albuquerque, New Mexico Regional Office (RO) of the Department of Veterans Affairs (VA) retroactively reduced the veteran's compensation benefits, effective August 1, 1982, after it was learned that the veteran's son [redacted] was no longer the veteran's dependent child. This action created an overpayment in the veteran's account, in an amount calculated as $2,802. He was promptly notified of this determination. He filed a request for a waiver of recovery of the overpayment shortly thereafter. The instant matter comes before the Board of Veterans' Appeals (the Board) on appeal from a September 1992 determination by the Committee on Waivers and Compromises (Committee) at the RO, which denied the veteran's request for waiver of recovery of the overpayment of compensation benefits. The Committee determined that there was no evidence of fraud, misrepresentation, or bad faith on the part of the veteran. However, the Committee found that the veteran was significantly at fault in connection with the creation of indebtedness, and that it was not shown that collection of the debt would be against equity and good conscience. CONTENTIONS OF APPELLANT ON APPEAL The veteran contends that he is entitled to waiver of recovery of the overpayment of compensation benefits. He maintains that the creation of the indebtedness is due to the VA's failure to adjust the award in 1982 after he allegedly notified the RO that his son [redacted] was no longer a dependent child, as well as the RO's failure to make proper inquiries regarding his dependency status. In essence, he argues that the VA was more at fault than he was in the creation of the overpayment. The veteran also claims that repayment of the indebtedness would result in financial hardship. 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 a waiver of recovery of the overpayment of compensation benefits in the calculated amount of $2,802. FINDINGS OF FACT 1. All relevant evidence necessary for an equitable disposition of the veteran's claim has been obtained by the RO. 2. The RO has calculated that for a period beginning August 1, 1982, and continuing to April 1992, the veteran was paid a total of $2,802 in additional compensation benefits for a dependent child, [redacted], who had ceased to be his dependent in July 1982. 3. The veteran is primarily at fault in creating the overpayment which resulted from the retroactive reduction of his compensation benefits effective August 1, 1982, as he was obligated to immediately notify VA of any change in his dependency status, but even after being notified that his additional compensation benefits would continue as long as his dependency status remained unchanged, he failed to notify VA until April 1992 that his son [redacted] ceased to be a dependent in July 1982. 4. Repayment of the indebtedness would not cause undue financial hardship. 5. The purpose of the overpaid compensation benefits will not be nullified by recovery of the overpayment from the veteran. 6. A failure to recover the overpayment of compensation benefits from the veteran would result in unjust enrichment of the veteran to the extent he was overpaid benefits for a period of more than nine years. 7. There are no other elements of equity and good conscience which support granting the requested waiver to the veteran. CONCLUSION OF LAW Recovery of the overpayment of compensation benefits would not violate the standard of 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 Initially, we have found 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 not inherently implausible. Further, upon examination of the record in this case, we are satisfied that all relevant facts have been properly developed and that the evidence on file is sufficient for us to render a fair and equitable determination of the matter at hand. The veteran has not disputed the amount of additional VA disability compensation benefits which were paid to him, but which he was not entitled to, for a dependent child. These benefits, which are considered to have been overpaid, were calculated by the RO to total $2,802. Because it has been determined by the Committee that there was no willful intention on the part of the appellant to commit fraud, misrepresent a material fact, or exercise bad faith in the creation of the overpayment that has been assessed against her, we now seek to determine whether the evidence establishes that recovery of the indebtedness would be against equity and good conscience, in which case recovery of that overpayment may be waived. 38 U.S.C.A. § 5302; 38 C.F.R. §§ 1.963(a), 1.965. The following is pertinent to this matter: 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 creation of the debt. 2. Balancing of faults. Weighing fault of debtor against the 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 the VA 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). Since 1976, the veteran has been in receipt of service-connected compensation benefits, paid at the 40 percent rate. In December 1978, the veteran was advised of a change in the law to permit payment of additional compensation benefits for dependents, including spouses and children, to veterans with service- connected disorders rated as 30 percent disabling or higher. He was asked to provide information about his dependents in the event that he wished to claim benefits based on them. The veteran furnished the requested dependency information, including that relating to his three children, [redacted], [redacted], and [redacted]. In May 1979, the veteran was advised of action taken to add dependents to his award effective March 1, 1979. The award letter also notified him that his award would be reduced at specified later dates, when his children reached eighteen years of age. In August 1979, the veteran's award was further adjusted to reflect additional benefits for his dependents. The record shows that at that time, he was sent VA Form 21-6755, regarding the adjustment to his award based on his dependency status. That form contained notice concerning conditions affecting the right to payment of additional compensation, including that benefits were payable for a child until the child became 18 years old, or until age 23 if in school taking an approved course of instruction. The form also contained notice that failure to advise VA of changes in dependency status could effect the right to payment of additional compensation and could require refund of any overpayment to the Federal Government. Received in April 1980, were documents pertaining to the veteran's adoption of [redacted], including the veteran's request for additional benefits based on dependency of his adopted son. The certificate of adoption documented that [redacted] was born October 12, 1979. The veteran was notified in July 1980 that his compensation award had been amended to reflect the addition of another dependent. He was again notified of prospective dates when his award would be reduced due to future changes in his dependency status resulting from his children reaching age eighteen or ceasing school attendance. One such prospective award reduction was specified for October 12, 1997, when his child ([redacted]) reached the age of eighteen. In October 1980, the veteran informed the RO that his daughter [redacted] had married, and that while [redacted] would be living with [redacted], he, the veteran, would still be supporting [redacted]. Thereafter, in December 1980, the RO wrote to the veteran informing him that his disability compensation award, including additional benefits for his spouse and children, had been amended. In that letter, the RO also reminded the veteran to promptly report to the VA any change in the number or status of his dependents. In August 1984, the veteran submitted VA Form 21-686c, Declaration of Marital Status, which contained information pertaining to his divorce from his wife in July 1984. The RO then advised the veteran in September 1984 that his disability compensation award would be reduced effective August 1, 1984, based on his divorce. He was again reminded to report any change in his marital or dependency status immediately by VA Form 21- 6755. Award data in the record show that following the reduction effective August 1, 1984, the only dependent reflected on the veteran's compensation award was a child who was to be continued on the award until October 12, 1997. The September 1984 letter sent to the veteran advised him of the prospective reduction in his award effective October 12, 1997. In March 1992, the RO forwarded a letter to the veteran advising him that the compensation he received for his service-connected disabilities included an additional amount for his dependent. He was further advised that he was responsible for reporting any changes in the number of his dependents. For the purpose of verifying whether or not he was entitled to continued receipt of additional benefits, the RO asked the veteran to complete and return a form showing any changes in dependency status. The veteran responded by sending in a Status of Dependents Questionnaire in April 1992. In the section of the questionnaire designated for providing information of each child under 18, over 18 and under 23 and attending school, or of any age if permanently helpless for mental or physical reasons, the veteran wrote "none." It was also noted, on the questionnaire, that the veteran believed that his "status was up to date." Later in April 1992, the RO advised the veteran that he was receiving additional benefits for his son [redacted]. He was told to furnish information as to the date when [redacted] ceased to be his dependent. The veteran responded later that month. In his statement, he informed the RO that his son [redacted] ceased to be his dependent in July 1982. Subsequently, the RO took action to retroactively adjust the veteran's compensation award, by terminating the additional allowance paid for a dependent child, effective August 1, 1982, thereby resulting in the overpayment at issue. The Board has carefully examined the record, with respect to the veteran's claim that he is entitled to waiver of recovery of the overpayment of compensation benefits. The Board does not concur with the veteran's argument that he was not at fault in the creation of the overpayment. The record in this case demonstrates that the veteran was clearly instructed in writing, on several occasions, that he was receiving additional benefits for a dependent child and of the importance of notifying the VA immediately of any change in his dependency status. The veteran contends that he notified the VA in 1982 that his son [redacted] was no longer a dependent. However, this claim that the veteran satisfied the notification requirement is unsupported by any objective evidence of record, which provides no indication that such notice was ever provided. It is also significant to point out that the veteran did provide the VA with timely notice of the change in his daughter's marital status in October 1980 and that, at that time, he reiterated that despite this status change, he continued to support [redacted]. The veteran's actions at that time demonstrate an awareness on the his part of the VA's reporting requirements. Moreover, in September 1984, the veteran was sent a letter which clearly specified a future award reduction date of October 12, 1997, which he must have known, based on prior notices, would be based on [redacted]'s becoming eighteen years old. Thus, as of the receipt of this letter, the veteran had notice that his award continued to reflect an additional dependency allowance for [redacted], an allowance which the veteran knew he was no longer entitled to. Nevertheless, he continued to accept compensation checks after July 1982 at a rate to which he knew he was not entitled, inasmuch as no reduction was taken due to his son [redacted]'s change in dependency status. Since the VA immediately adjusted the veteran's award after it learned of the above change in dependency status and, moreover, advised him, in writing of his obligation to report dependency changes, VA is not at fault in the creation of the overpayment. Another element of the standard of equity and good conscience is whether withholding of benefits or recovery would defeat the purpose of the benefits. The Board finds that recovery would not, since the additional benefits paid to the veteran were for a dependent child, which he did not have at the time of receipt of the benefits at issue. Similarly, failure to recover the overpayment would result in unjust enrichment, since the veteran was paid benefits to which he clearly was not entitled during a period of more than nine years. There is no allegation or suggestion in the record that the veteran changed his position to his detriment, so as to make recovery of the overpayment against the standard of equity and good conscience. The Board also observes that the veteran has argued that recovery of his indebtedness would impose an undue financial hardship. In support of this contention, a Financial Status Report, signed by the veteran, was received in August 1992, showing that, after satisfaction of expenses, which include amounts for food, clothing, and shelter, his monthly income exceeds his monthly expenses by $170. He also reported that he owns his own home and has total assets in the amount of $96,000, with $8,000 attributable to ownership of an automobile, approximately $5,700 to cash in the bank, and $300 to U.S. Savings Bonds. He has no past due debts on installment payments. In light of these facts, the Board finds that collection of the overpayment would not result in financial hardship inasmuch as the Financial Status Report shows that the veteran has adequate income to meet his basic needs. A review of the evidence of record discloses no other element of equity and good conscience which would persuade the Board that the Government should forego its rights to the collection of this debt. Consequently, he must repay to the Government his disability compensation indebtedness. 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 the overpayment of compensation benefits, in the amount of $2,802, is denied. D. C. SPICKLER 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.