Citation Nr: 0006238 Decision Date: 03/08/00 Archive Date: 03/17/00 DOCKET NO. 98-13 893A ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Philadelphia, Pennsylvania THE ISSUE Entitlement to a waiver of recovery of an overpayment of death pension benefits calculated in the amount of $14,336. ATTORNEY FOR THE BOARD Michael Martin, Counsel INTRODUCTION The veteran had active service from May 1953 to May 1955. He died in August 1985. The appellant is the veteran's surviving spouse. This matter came before the Board of Veterans' Appeals (BVA or Board) on appeal from decisions of the Committee on Waivers and Compromises at the Department of Veterans Affairs (VA) Philadelphia, Pennsylvania, Regional Office (RO). In the decisions, the committee denied the appellant's claim for a waiver of collection of an overpayment of VA pension benefits in the amount of $14,336. FINDINGS OF FACT 1. All evidence necessary for equitable resolution of the issue on appeal has been obtained. 2. An overpayment of $14,336 was created when the appellant received pension benefits that were paid based on incomplete information regarding the appellant's income. 3. The record contains evidence of fraud, bad faith, or misrepresentation on the part of the appellant as there was willful failure on the appellant's part to disclose a material fact, with intent to obtain or retain eligibility for additional pension benefits. CONCLUSION OF LAW The requirements for a waiver of recovery of an overpayment of death pension benefits calculated in the amount of $14,336 have not been met. 38 U.S.C.A. § 5302 (West 1991); 38 C.F.R. §§ 1.962, 1.963, 1.965 (1999). REASONS AND BASES FOR FINDINGS AND CONCLUSION The Board has found that the appellant's claim is "well grounded" within the meaning of 38 U.S.C.A. § 5107 (West 1991). That is, the claim is not inherently implausible. The Board also finds that all relevant facts have been properly developed. All evidence necessary for an equitable resolution of the issue on appeal has been obtained. The appellant has declined the opportunity to have a hearing. The Board does not know of any additional relevant evidence that is available. Therefore, no further assistance to the appellant with the development of evidence is required. The appellant contends that the RO made a mistake by denying her claim for waiver of recovery of an overpayment of death pension benefits in the amount of $14,336. She argues that repayment would deprive her of funds that she needs to live on. 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 a waiver of recovery of the overpayment is not warranted. I. BACKGROUND Many of the facts in this case are not in dispute. The appellant originally applied for death pension as the veteran's surviving spouse in September 1985. In her application, she reported that she had no earnings or other income. A letter from the RO to the appellant dated in December 1985 shows that her claim for death pension was approved, effective from September 1, 1985. In the letter, she was advised that the award was based on countable income of zero dollars. Subsequently, in December 1985, the appellant submitted a Statement of Income and Net Worth in which she reported that she received benefits from SSI which amounted to $4,284 per year. In February 1989, the appellant submitted an Improved Pension Eligibility Verification Report in which she stated that she had no income from Social Security, SSI, wages from employment, or any other source. She again denied having any income in subsequent verification reports which she submitted in November 1989, December 1990, and December 1991. A letter from the RO to the appellant dated in January 1992 shows that she was advised that her pension award had been continued, and that the award action was based on annual income of zero dollars. She was also advised the rate of VA pension was directly related to her family's income, and that an adjustment to her payments must be made whenever her family's income changed. Therefore, she was instructed that she must immediately notify the VA if her income changed. It was further noted that failure to inform the VA promptly of income changes may result in the creation of an overpayment. She received another letter from the RO containing the same information in November 1992. A letter from the RO to the appellant dated in December 1992 shows that her VA benefits would be adjusted [reduced] because of information that she had received wages of $19,000 in 1989 that she had not previously reported. It was noted that this adjustment might result in an overpayment. She was requested to provide a list of her income from all sources, including wages, for 1990, 1991, and 1992. A letter from the RO to the appellant dated in March 1993 notes that the appellant had not replied to the previous letter. Subsequently, in April 1993, the appellant replied that she did not have any income in 1990, 1991, and 1992. She also requested that the VA take out $50 dollars per month to recoup the overpayment, as she could not afford any more than that. An improved Pension Eligibility Verification report dated in March 1993 shows that the appellant again denied having any income for the period from December 1, 1991 through November 30, 1992. She also indicated that she did not expect to receive any income for the period from December 1, 1992, through November 30, 1993. In connection with the proposed overpayment due to having unreported wages in 1989, the appellant requested a waiver of collection. In support of the claim for a waiver, she submitted a Financial Status Report dated in April 1993. She indicated that she received no monthly salary, no monthly income other than $41 per month in SSI that she received on behalf of a son. She also stated that she was suffering from severe financial hardship because her pension award had been stopped. Subsequently, in May 1993, the Committee on Waivers and Compromises determined that a waiver of indebtedness was warranted for the overpayment of $4,354 which had been created because the appellant failed to report her earned income of $19,000 in 1989. The Committee noted that the appellant was at fault in the creation of the debt, but that the information that she had provided showed that her current expenses exceed her income and that collection of the debt would cause undue financial hardship. Later in May 1993, the appellant was notified by letter that collection of the overpayment of benefits from 1989 had been waived. She was also instructed that, in order to reduce the possibility of future overpayment, she had to report all income and promptly report any change of income to the RO. A letter dated in April 1993 from the RO to the appellant shows that it was again proposed that her VA benefits would be adjusted based on receipt of earned income from nursing jobs in the amount of $4,289 which she had earned in 1990, but had not previously reported. In a Financial Status Report dated in January 1994, the appellant requested that the VA forgive the debt. She stated that she had not worked since 1990, and had financial hardship. She also submitted an Improved Pension Eligibility Verification Report in which she denied having any income during the previous year, and stated that she did not expect to receive any income during the year from December 1993 to November 30, 1994. Subsequently, the Committee on Waivers and Compromises waived the collection of overpayment pertaining to 1990. Again, it was noted that the appellant was at fault in the creation of the debt because she failed to report earned income in 1990, but that a waiver was warranted as the information that she had provided showed that collection of the debt would cause undue financial hardship. Subsequently, in August 1995, the RO wrote to the appellant and advised her that her benefits would be adjusted based on a finding that she had wages of $19,596 in 1992. It was noted that the adjustment resulted in the creation of an overpayment. Subsequently, in a letter dated in October 1996, the RO notified the appellant that her pension had been changed because she had income in 1993 from earnings in the amount of $21,404, and in the amount of $15,809 in unemployment benefits from the Commonwealth of Pennsylvania. It was noted that she had been paid too much and that she would be notified shortly of the amount. Subsequently, in October 1996, the appellant requested a waiver of debt. She stated that any repayment would cause severe financial hardship. She submitted a Financial Status Report in which she denied receiving any income other than her VA pension. Subsequently, in a decision of November 1996, the Committee on Waivers and Overpayments granted a waiver. The committee noted that the appellant was at fault in failing to report her 1993 wages and unemployment compensation, but concluded that collection would cause undue hardship as review of her current financial statement revealed that her monthly income and expenses were approximately the same. A letter from the RO to the appellant dated in July 1997 shows that her VA benefits were being terminated effective from February 1, 1994, based on verification that she had earned $36,404 in 1994, $35,468 in 1995, and $28,103 in 1996. In a decision of September 1997, the Committee on Waivers and Compromises concluded that waiver of collection of an overpayment in the amount of $18,574 was not warranted. The committee stated that there was evidence of misrepresentation in the creation of the debt. The Committee noted that, based on the previous establishment of overpayments, the appellant should have reasonably known that her wages had an effect on the amount of VA pension to which she was entitled. It is this September 1997 decision which gave rise to the current appeal. The RO subsequently received a letter from the Elmira Jeffries Memorial Home dated in September 1997 that stated that the appellant was employed by the organization from November 19, 1992, through October 3, 1996. In October 1997, the RO granted pension effective from October 1996. The Board notes that this award had the effect of reducing the overpayment debt to $14,336. II. ANALYSIS Collection of an overpayment may be waived if collection of such indebtedness would be against equity and good conscience. See 38 C.F.R. § 1.962 (1999). 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. See 38 C.F.R. § 1.965 (1999). 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 the creation of the debt. (2) Balancing of faults. Weighing fault of debtor against Department of Veterans Affairs fault. (3) Undue hardship. Whether collection would deprive debtor or family of basic necessities. (4) Defeat the purpose. Whether the withholding of benefits or recovery would nullify the objective for which the 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 Department of Veterans Affairs benefits results in relinquishment of a valuable right or incurrence of a legal obligation. Significantly, however, there cannot be any indication of fraud, misrepresentation, or bad faith on the part of the person seeking the waiver. See 38 U.S.C.A. § 5302(c); 38 C.F.R. §§ 1.964(a), 1.964(a)(2) (1999). The misrepresentation must be more than non-willful or mere inadvertence. See 38 C.F.R. § 1.962(b) (1999). The term "bad faith" generally describes unfair or deceptive dealing by one who seeks to gain thereby at another's expense. Thus, a debtor's conduct in connection with a debt arising from participation in a VA benefits/services program exhibits bad faith if such conduct, although not undertaken with actual fraudulent intent, is undertaken with intent to seek an unfair advantage, with knowledge of the likely consequences, and results in a loss to the government. See 38 C.F.R. § 1.965(b)(2) (1999). Lack of good faith is an absence of an honest intention to abstain from undertaking unfair advantage of the holder and/or the Government. See 38 C.F.R. § 1.965(b)(2) (1999). The Committee for Waivers and Compromises at the RO determined that the indebtedness resulted from misrepresentation on the appellant's part, which constituted a legal bar to granting the requested waiver. The Board concurs with this determination that there was willful failure on the appellant's part to disclose a material fact, with intent to obtain or retain eligibility for additional pension benefits and, thus, waiver is precluded pursuant to 38 U.S.C.A. § 5302 (West 1991). In light of the repeated incidents of failure to report income after having been repeatedly instructed regarding the importance of doing so, the Board concludes that this misrepresentation was willful and was not due to mere inadvertence. The appellant's failure to fully report her financial status directly was material as it resulted in the creation of the overpayment. In light of this finding of misrepresentation, the Board need not address the elements listed above, such as whether repayment would cause undue hardship. The Board also notes that the appellant has not presented any competent medical evidence showing that she was not competent to handle her own financial affairs during the relevant time period. Accordingly, a waiver of recovery of an overpayment is not warranted. ORDER Waiver of recovery of an overpayment of death pension benefits calculated in the amount of $14,336 is denied. RAYMOND F. FERNER Acting Member, Board of Veterans' Appeals