BVA9500392 DOCKET NO. 93-05 759 ) DATE ) ) On appeal from the decision of the Department of Veterans Affairs Regional Office in Nashville, Tennessee THE ISSUE Entitlement to waiver of recovery of an overpayment of improved pension benefits in the amount of $3,504. REPRESENTATION Appellant represented by: AMVETS ATTORNEY FOR THE BOARD J. Connolly, Associate Counsel INTRODUCTION The veteran had active service from August 1954 to December 1954. This matter came before the Board of Veterans' Appeals (Board) on appeal from a March 1992 decision by the Committee on Waivers and Compromises (Committee) of the Nashville, Tennessee, Regional Office (RO) of the Department of Veterans Affairs (VA). The notice of disagreement was received in October 1992. The statement of the case was sent to the veteran in December 1992. The substantive appeal was received in February 1993. CONTENTIONS OF APPELLANT ON APPEAL The veteran essentially contends that a waiver of the overpayment should be granted since a repayment of such would cause undue hardship on himself and his family. 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 files. 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 establishes that a recovery of the overpayment of improved pension in the calculated amount of $3,504 would not be against the principles of equity and good conscience, and, therefore, may not be waived. FINDINGS OF FACT 1. The veteran was granted entitlement to improved pension benefits in August 1985. 2. Following the grant of improved pension benefits, the veteran reported changes in his income on several occasions, thus indicative that he understood his obligation to inform the VA of any changes in income. His rate of his pension benefits was adjusted accordingly on those reported occasions. 3. In a report received from the Social Security Administration on June 4, 1987, it was stated that the veteran began receiving Social Security payments in February 1986. 4. In July 1987, the veteran submitted an Improved Pension Eligibility Verification Report (EVR) in which he reported receiving Social Security benefits since February 1987. 5. In a September 1987 letter, the RO informed the veteran that his annual countable income, which was based on his spouse's income and his Social Security benefits, less the unreimbursed medical expenses exceeded the $8,709 limitation applicable for a veteran, with a spouse and a dependent child which resulted in an overpayment of benefits. 6. In December 1987, the veteran initially made a request for waiver, but was denied waiver consideration due to potential fraud. That request is currently being considered an original request for waiver. 7. In September 1987, the State of Tennessee provided a state wage match which indicated that the veteran's spouse's income in 1985 and 1986 were different than the amounts that were previously reported by the veteran, specifically, the combined amount earned for that two year period exceeded the combined amount reported by the veteran. The RO, in a July 1988 letter, informed the veteran that his pension rate for those time periods was adjusted accordingly. 8. In a November 1988 letter, the veteran was informed that he had excessive income for VA purposes and that an overpayment in the amount of $3,504 had been created. In March 1992, the Committee denied the veteran's request for waiver. 9. The VA had no fault in the creation of the overpayment. 10. The recovery of the overpayment would not subject the veteran to undue financial hardship. CONCLUSION OF LAW The recovery of the overpayment of improved pension benefits in the calculate amount of $3,504 would not be against equity and good conscience and, therefore, may not be waived. 38 U.S.C.A. § 5302(a) (West 1991); 38 C.F.R. §§ 1.963(a), 1.965(a) (1993). REASONS AND BASES FOR FINDINGS AND CONCLUSION The Board observes that the Committee made a specific determination in March 1992 that there was no fraud, misrepresentation, or bad faith on the veteran's part with respect to the creation of the overpayment at issue. The Board agrees, and, therefore, waiver is not precluded pursuant to 38 U.S.C.A. § 5302(a) (West 1991). However, to dispose of the matter on appeal, the Board must determine whether recovery of the indebtedness would be against equity and good conscience, thereby permitting waiver under 38 U.S.C.A. § 5302(a) (West 1991) and 38 C.F.R. §§ 1.963(a), 1.965(a) (1993). The applicable law states that the standard of "equity and good conscience" will be applied when the facts and circumstances in a particular case indicates a need for reasonableness and moderation in the exercise of the Government's rights. 38 C.F.R. § 1.965(a) (1993). The above cited regulation sets forth the various elements to be considered in reaching such determination. The first such element pertains to fault of the debtor and requires an analysis of whether the actions of the debtor contributed to creation of the debt. Historically, the veteran was granted entitlement to improved pension benefits in August 1985. Thereafter, the veteran reported several changes in his annual countable income and the RO adjusted the veteran's pension rate accordingly. The Board notes that the veteran was, thus, well aware of the need to report any changes in income to the RO so that his pension rate could be adjusted. In addition, in a June 1, 1987 letter, the RO informed the veteran that he needed to notify the RO immediately if he began receiving Social Security benefits. Thereafter, in a report received from the Social Security Administration on June 4, 1987, it was stated that the veteran began receiving Social Security payments beginning in February 1986. In July 1987, the veteran submitted an EVR in which he reported receiving Social Security benefits since February 1987 and also reported unreimbursed medical expenses. In a subsequent September 1987 letter, the RO informed the veteran that his annual countable income, which was based on his spouse's income and his Social Security benefits, less the unreimbursed medical expenses exceeded the $8,709 limitation applicable for a veteran with a spouse and a dependent child. Apparently, in December 1987, the veteran initially made a request for waiver, but was denied waiver consideration due to potential fraud. That request is currently being considered an original request for waiver. In September 1987, the State of Tennessee provided a state wage match which indicated that the veteran's spouse's income in 1985 and 1986 were different than the amounts that were previously reported by the veteran. That is, the combined amount earned for that two year period exceed the combined amount reported by the veteran. In response, in a July 1988 letter, the RO informed the veteran that his pension rate for those time periods was adjusted accordingly. In a November 1988 letter, the veteran was informed that he had excessive income for VA purposes and that an overpayment in the amount of $3,504 had been created. In March 1992, the Committee denied the veteran's request for waiver. The Board has reviewed the veteran's claim, however, the Board finds that the claim must be denied in accordance with the denial made by the Committee in March 1992. As to the first element, fault of the debtor, the Board finds that the veteran was at fault in the creation of the indebtedness at issue. Essentially, the veteran did not report that he was receiving Social Security benefits until July 1987. At that time, he indicated that he had only received such payments since February 1987, however, the Social Security Administration indicated that the first check was issued in February 1986. In addition, according to the State of Tennessee state wage match report, the veteran also did not report the accurate amount of income earned from wages by his wife in 1985 and 1986. That is, he reported that his spouse earned less income than she actually had earned during that time. As noted above, the veteran was aware of his obligation to notify the VA of any changes in his annual countable income. Moreover, he was informed of his obligation to correctly report the amount of his annual countable income. Nevertheless, he did not report his Social Security income until he had been receiving payments for over one year, nor did he accurately report the income consisting of earned wages from the employment of his spouse. As a result of his failure to report, an overpayment of $3,504 was created and he was actually paid VA improved pension benefits exceeding the limit set for a veteran with a spouse and a dependent child. The veteran's annual countable income was greater than the annual rate for improved pension payable to a veteran with dependents. 38 C.F.R. §§ 3.271, 3.272, 3.273 (1993). The veteran has not advanced any arguments that the overpayment was not properly created. The second element deals with the fault on the part of the VA, and as noted above, there have been no allegations that the overpayment was created as a result of fault on the part of the VA, and as such, the record does not suggest that there was any such fault. As to the element of "undue hardship," the Board notes that the regulation provides that consideration should be given as to whether collection of the indebtedness would deprive a veteran of the basic necessities. Currently, the veteran contends that a waiver of the overpayment should be granted since a repayment would cause undue hardship. In conjunction with his appeal, the veteran submitted a Financial Status report in September 1991 in which, the veteran reported that the combined monthly income of himself and his spouse was $1,434.84, and their expenses were $1,409.50. There is a surplusage of $25.34. Included in the reported monthly expenses were payments to two creditors totaling $295.09. The veteran also reported that he had $1,000 cash in the bank and $30 cash on hand, two cars worth $2,700, and furniture worth $800. Thereafter, in October 1992, the veteran submitted another Financial Status Report. At that time, he indicated that his spouse had lost her job and was drawing unemployment. The reported combined monthly income was $1,127 and the reported monthly expenses were $1,443.10. Included in the reported monthly expenses were payments to three creditors totaling $390.09. The veteran also reported that he had $500 cash in the bank and $20 cash on hand, U.S. Savings bonds worth $50, two cars worth $2,700, and furniture worth $800. The Board notes that the veteran's monthly expenses currently exceed his monthly income by $316.10. However, the Board observes that the veteran currently discharges monthly payments of $390.09 to three creditors. Given the amount of fault on the part of the veteran in the creation of the overpayment, the fact that the veteran has $500 in liquid assets, and since the veteran has not supplied evidence which would suggest that his indebtedness to the Government should not be afforded the same consideration and attention he provides to his other obligations, the Board does not find undue financial hardship in this case. Upon review of the other elements pertaining to the principles of equity and good conscience, as set forth by 38 C.F.R. § 1.965(a) (1993), the Board is not persuaded that the Government should forego its right to collection of the indebtedness in this instance. Improved pension benefits are intended to make up the difference in income between what the veteran receives in earnings from Social Security, employment, and other sources and the maximum annual pension income rate payable each year. The veteran actually received income higher than reported and received improved pension benefits on top of this amount including, additional amounts based on a dependent child. The Board notes that the child under age 18 at the time of the overpayment is now age 23. Therefore, the veteran received benefits to which he was not entitled. Thus, recovery of the overpayment would not defeat the purpose or the objective of the pension program and, rather, would result in the veteran's unjust enrichment. Additionally, there is no evidence that the veteran relinquished a valuable right or incurred a legal obligation as a result of his reliance on VA benefits. 38 C.F.R. § 1.965(a) (1993). Accordingly, the Board finds that the veteran should be able to anticipate monthly income to adequately meet expenses and make installment repayments of the indebtedness to the Government without being deprived of the basic necessities. Accordingly, the Board concludes that the negative evidence outweighs the positive evidence and that the facts in this case do not demonstrate that the recovery of the overpayment would be against equity and good conscience. 38 U.S.C.A. § 5107(b) (West 1991). ORDER The appeal is denied. EUGENE A. O'NEILL 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.