BVA9508091 DOCKET NO. 93-12 384 ) DATE ) ) On appeal from the decision of the Department of Veterans Affairs Regional Office in Seattle, Washington THE ISSUE Entitlement to waiver of recovery of an overpayment of Chapter 32 educational benefits, in the calculated amount of $891.65. REPRESENTATION Appellant represented by: Veterans of Foreign Wars of the United States ATTORNEY FOR THE BOARD J.P. Reep, Associate Counsel INTRODUCTION The veteran had active military service from March 1983 to December 1986. Service department records reflect additional prior active service beginning in June 1979. This appeal arises from a June 1992 determination of the Committee on Waivers and Compromises (Committee) of the Seattle, Washington Regional Office (RO), which denied the veteran's claim seeking waiver of recovery of an overpayment of Chapter 32 educational benefits on the basis that recovery would not violate the standard of equity and good conscience. CONTENTIONS OF APPELLANT ON APPEAL The veteran contends that the VA was primarily at fault in creating the overpayment of educational benefits. He claims that a VA "phone counselor" informed him that he was entitled to a refund, arising from unused educational benefits, that would be approximately $1400.00, and that he therefore believed that to be an accurate amount. He further claims that he relied upon the accounting accuracy of the VA in determining the amount of his refund, and that he could only guess as to the proper amount. In addition, he maintains that any financial benefits realized by his wife's returning to work, and a lower mortgage rate (resulting from a home loan refinanced through the VA) would be offset by added expenses arising with the arrival of their newborn child. He also maintains that, if he had been informed of the debt three years earlier, he could have paid it off. Thus, he contends, waiver of recovery of his overpayment is in order. 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 waiver of the recovery of the overpayment of Chapter 32 educational benefits in the calculated amount of $891.65. FINDINGS OF FACT 1. All relevant evidence necessary for an equitable disposition of the appeal has been obtained. 2. Both the VA and the veteran were at fault in creating the overpayment. 3. The latest detailed income and expense data, supplied by the veteran and his wife, indicate that their total monthly net expenses exceed their combined monthly income by over $942.00 per month; however, a number of those expenses appear to be excessive or relate to installment payments, none of which is past due. 4. Recovery of the overpayment would not result in undue financial hardship. 5. Recovery of the overpayment would not defeat the purpose for which the VA benefits were intended. 6. The failure of the Government to insist on its right to repayment of the indebtedness would result in unfair gain to the veteran. 7. There is no credible evidence indicating that the veteran relinquished a valuable right or incurred a legal obligation in reliance upon the additional VA benefits in question. 8. 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 Chapter 32 education benefits in the calculated amount of $891.65 would not be against equity and good conscience. 38 U.S.C.A. §§ 5107, 5302 (West 1991); 38 C.F.R. §§ 1.963(a), 1.965(a) (1994). REASONS AND BASES FOR FINDINGS AND CONCLUSION The Board finds that the veteran's claim is well grounded within the meaning of 38 U.S.C.A. § 5107(a) (West 1991). That is, we find that he has presented a claim which is not implausible. We are satisfied that all relevant facts have been properly developed. No further assistance to the veteran is required to comply with the duty to assist mandated by 38 U.S.C.A. § 5107(a) (West 1991) and 38 C.F.R. §§ 3.103(a) and 3.159 (1994). According to a May 1987 VA letter, the veteran was awarded Chapter 32 educational benefits, effective January 19, 1987. That letter indicates that, as of July 19, 1987, the veteran's remaining entitlement was 22 months, representing $6,619.98 in educational assistance. An April 1988 VA letter informed the veteran that, following another award, his remaining entitlement, as of March 13, 1988, was $4,279.98. The record indicates that, in 1989, the veteran requested a refund of Chapter 32 contributions from the VA. The VA refunded $1,426.66 to the veteran, based upon benefits previously paid out under the veteran's Social Security number. In 1991, the VA discovered that, in addition to education benefits paid out under the veteran's Social Security number, $2,674.98 ($891.66 of which was contributed by the veteran) had been paid out under his claim number. That $2,674.98 had not been considered in calculating the refund payment. Thus, the veteran's refund should have only been $535.01, and an overpayment in the calculated amount of $891.65 resulted. In May 1992, the veteran requested waiver of recovery of overpayment. In June 1992, the Committee determined that, while there was no fraud, misrepresentation, or bad faith on the part of the veteran in the creation of the assessed overpayment, recovery was not against equity and good conscience. This was based on determinations that the veteran was at fault, and that the Government should be accorded the same consideration as any other creditor. At this point, we note that neither the amount nor the propriety of the debt has been challenged. The sole issue before the Board is whether waiver of recovery of the debt is warranted. The law precludes waiver of recovery of an overpayment or waiver of collection of any indebtedness where any one of the following elements is found to exist: (1) fraud, (2) misrepresentation, or (3) bad faith. 38 U.S.C.A. § 5302(c) (West 1991). The Board's review of the record reflects that the Committee has resolved this question in favor of the appellant, finding, in essence, that his actions did not represent the intentional behavior to obtain government benefits to which he was not entitled which is necessary for a finding of fraud, misrepresentation or bad faith. After resolving that matter in the appellant's favor, the only issue remaining is whether the evidence establishes that recoupment 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(a) (West 1991); 38 C.F.R. §§ 1.963, 1.965 (1994). The governing regulation provides the following: 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: 1. Fault of debtor. Where actions of the debtor contribute to creation of the debt. 2. Balancing of faults. Weighing fault of debtor against 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) (1994). The overpayment at issue resulted from fault of both the VA and the veteran. The VA was at fault in issuing a refund check without having accounted for money paid out under the veteran's claim number. However, the veteran is not without fault as he was, or should have been, aware of the amount of refund to which he was entitled. We recognize the veteran's argument that he relied upon the accuracy of VA accounting, and that he could only guess as to the amount that was due him. We do not find that contention persuasive. The record indicates that, as late as April 1988, the veteran was informed by the VA as to the amount remaining in his educational fund. Moreover, in an August 1987 application for work-study allowance, the veteran noted that his tuition exceeded the $300.00 per month paid by VEAP (Chapter 32 educational benefits). This evidence suggests that the veteran, an accountant by his report, did in fact have knowledge of the amounts involved in his educational payments. We would also emphasize that fault is only one of several factors to be considered. Regarding undue hardship, we note that an October 1992 financial status report (FSR) shows that the total monthly expenses of the veteran and his wife exceed their combined monthly income by over $942.00 per month. Although this suggests that repayment of the debt might result in financial hardship, several factors indicate that said hardship would not be "undue." First of all, we note that several of the monthly expenses reported on the FSR appear to be somewhat excessive for a couple alleging financial hardship: "security," automotive expenses, "vet," entertainment and miscellaneous expenses totaling nearly $450.00. Secondly, we note that the veteran has considerable installment contract debts, none of which was past due. We recognize the veteran's contentions relating to his wife's employment status, as well as the arrival of a baby, all of which would clearly impact their financial status. Nevertheless, the record reflects that, through an agreement with the VA to refinance his home loan, the veteran's compensation payments were withheld, and all but $91.65 of the debt in question was paid off. It does not appear from the record that paying that debt has deprived the veteran and his spouse of the necessities of life. Accordingly, the Board finds that any hardship arising out of recovery of the overpayment would not be "undue." Nor would repayment defeat the purpose of the Chapter 32 educational benefits program, which is intended to assist veterans in obtaining an education they might not otherwise be able to afford. There is no showing that repayment of the debt would interfere with the veteran's educational goals. Indeed, it would appear from the record that those goals have been achieved. In addition, the failure of the Government to insist upon its right to the repayment of this debt would result in the unjust enrichment of the veteran at the expense of the Government since he would be allowed to retain funds to which he is not legally entitled. Clearly the veteran was not entitled to the additional benefits which he received. The veteran's contention, that he could have paid off the debt if he had been informed of it three years earlier, suggests that he may have changed his position to his detriment. Although the timing of discovery of the overpayment was unfortunate, there is no evidence indicating that he relinquished a valuable right or incurred a legal obligation in reliance upon having the $891.65 in question. Further 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 right to the collection of this debt. Consequently, the veteran is not entitled to a waiver of recovery of overpayment. In reaching this decision the Board has considered the doctrine of granting the benefit of the doubt to the veteran but does not find that the evidence is approximately balanced such as to warrant its application. The preponderance of the evidence is against the claim. N. R. ROBIN 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.