Citation Nr: 0005169 Decision Date: 02/28/00 Archive Date: 03/07/00 DOCKET NO. 98-06 546A ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Roanoke, Virginia THE ISSUE Entitlement to waiver of recovery of an overpayment of improved disability pension benefits in the amount of $2,116. REPRESENTATION Appellant represented by: Disabled American Veterans ATTORNEY FOR THE BOARD Christopher P. Kissel, Counsel INTRODUCTION The appellant served on active duty from November 1962 to November 1964. This case comes before the Board of Veterans' Appeals (the Board) on appeal from a June 1997 decision of the Committee on Waivers and Compromises (the Committee) of the Roanoke, Virginia, Department of Veterans Affairs (VA) Regional Office (RO). FINDINGS OF FACT 1. The appellant was awarded improved disability pension benefits in February 1994, effective from October 1, 1993. 2. In April 1997, based on information relating to the appellant's receipt of income from his wife's employment, his pension award was retroactively reduced, giving rise to an overpayment in the amount of $2,116. 3. The appellant is at fault with respect to creation of the overpayment by virtue of his failure to timely notify VA of his wife's increased income from employment in 1996. It is not shown that any event, act of God, or a physical or mental disorder prevented him from notifying VA of changes in his income in 1996. 4. Failure to make restitution would result in unfair gain to the appellant, and it is not shown by the evidence of record that collection of the overpayment would deprive him of the basic necessities of life. CONCLUSION OF LAW Recovery of an overpayment of improved disability pension benefits in the amount of $2,116 would not be against equity and good conscience. 38 U.S.C.A. §§ 5107(b), 5302(a), (c) (West 1991); 38 C.F.R. §§ 1.963(a), 1.965(a) (1999). REASONS AND BASES FOR FINDINGS AND CONCLUSION Factual Background The pertinent facts surrounding the creation of the overpayment at issue may be briefly set forth as follows: The appellant was awarded improved disability pension benefits by rating decision in November 1993. He received notice of the award and his rights and income/net worth reporting obligations germane thereto by letter dated February 1, 1994. This letter informed the appellant that his pension benefits were payable at the maximum rate effective from October 1, 1993, based on zero income for him with an additional allowance for his dependent spouse. The letter also included information concerning the fact that his pension benefits were based on income limitations and that accordingly, he was to notify VA promptly of any changes in his income or net worth. However, following the initial grant of pension, two successive overpayments of the appellant's pension benefits were created in 1994 and 1995. These overpayments were based on his failure to notify VA of his wife's employment income from her job as a hairdresser and receipt of Social Security Administration (SSA) disability benefits paid to him as the beneficiary. However, each overpayment was waived by decisions of the Committee in August 1994 and October 1995; the overpayment created by his receipt of income from his wife's employment was waived after it was determined that her countable income after business expenses and taxes was only $2,756 instead of the reported amount of $12,000 and because VA committed error in not processing the award correctly. The overpayment created from the SSA benefits was waived because the appellant promptly reported his receipt of the award from SSA, but due to a delay caused by processing time he was overpaid for two months. Thereafter, in April 1996, the RO received the appellant's "Eligibility Verification Report" (EVR) which disclosed for the first time that the appellant's wife earned income from employment in 1995 totaling $1,117 and that she expected to make the same amount for 1996. An award action letter issued in September 1996 notified the appellant that his pension benefits would continued to be paid based on the information reported by him on his 1996 EVR. However, when he filed his next EVR in February 1997, he notified the RO that his wife had made $10,800 in 1996. That same month, the RO sent him a letter requesting that he clarify whether that revised amount was correct, and in response, the appellant submitted a "Statement in Support of Claim" in March 1997 which stated that his wife's income information provided on the 1997 EVR was correct and that the reason his wife's income increased was due to a relocation of her work site that occurred in August 1996. Based on this information, the RO issued an award action letter in April 1997 which informed the appellant that his pension benefits were to be retroactively reduced to zero effective September 1, 1996, based on excess income. This action created an overpayment of $2,116. He was notified of this overpayment and his right to request a waiver by letter dated April 12, 1997. The appellant filed a timely request for waiver of the overpayment in May 1997. The Committee denied his claim by decision in June 1997 on the basis that he was at fault in the creation of the debt for failure to timely notify VA of the increased amount of his wife's income based on her relocation to a new work site in August 1996, which was significantly more then the amount he initially reported on his April 1996 EVR. This appeal followed. Financial status information obtained from the appellant in May 1997 reflects that he lives on his Social Security benefits of $655/month and his wife's income from her job as a hairdresser/beautician, which he reported totaled approximately $600 a month after $300 in deductions. Analysis The appellant's claim is well grounded. 38 U.S.C.A. § 5107(a) (West 1991) and Murphy v. Derwinski, 1 Vet. App. 78 (1990). Waiver of recovery of overpayments may be authorized in a case in which collection of the debt would be against equity and good conscience. 38 U.S.C.A. § 5302(a), (c) (West 1991). "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. 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: fault of debtor; balancing of faults; undue financial hardship; collection would defeat purpose of the benefits; unjust enrichment to either VA or debtor; and changing position to one's detriment. 38 C.F.R. § 1.965(a) (1999). The list of elements contained in the regulation is not, however, all inclusive. Ridings v. Brown, 6 Vet. App. 544, 546 (1994). The Board concludes that no fraud, misrepresentation or bad faith was involved in the creation of the overpayment and thus, consideration of wavier of recovery under the standard of equity and good conscience is not precluded by law. 38 C.F.R. §§ 1.963(a), 1.965(b) (1999). After having carefully considered the appellant's contentions and all of the other evidence of record, the Board concludes that a waiver of the overpayment of disability pension benefits in the amount of $2,116 is not in order. The Board finds that he bears responsibility for the creation of the debt. The record in this case reflects that the appellant was aware of the income reporting requirements applicable to his award of pension benefits, and has been so since the original grant of pension in November 1993. The record reflects that he did not affirmatively take action to notify VA of his wife's increased income until February 1997 when he filed his EVR, a point in time many months after he was aware of her relocation plans and the anticipated increase in her income from that move for the balance of 1996. These facts, when viewed in light of the entire evidentiary record, which reflects two prior overpayments that were in large part created by his failure to notify the RO in a timely manner of income status changes, supports the Board's finding that he was clearly at fault in the creation of the $2,116 overpayment in question. The Board is aware of the fact that his wife's income as a self-employed hairdresser was subject to variations from month to month, but looking at the whole record, it is clear that from at least 1996 onward, she was making on average $600 a month after deductions, which in such case, would not equate to the $1,117 figure he initially reported for her expected income for 1996. The bottom line here is the facts clearly show that the appellant knew of the income reporting requirements and the timeliness issues running germane thereto, and hence, he should have reported sooner then the 1997 EVR that his wife was making considerably more in the 1996 tax year than the aforementioned $1,117 amount. Moreover, while he is of advanced age, it is not claimed or shown by the evidence that the appellant was impaired in his ability to comprehend the reporting requirements, or that any event or act of God prevented him from notifying VA of the income-status changes in 1996 based on his wife's adjusted income. Hence, the record clearly supports a finding that he was at fault in the creation of the overpayments created in September 1996. With respect to whether recover of the overpayment would result in undue hardship to the appellant, the Board notes that the appellant's most recent Financial Status Report of May 1997 reflects that he had a negative balance of monthly income to monthly expenses. He listed no dependents or monthly installment/past due debts. In addition, he reported assets totaling $81,000, the bulk of which was tied up in real estate. It appears that he and his wife subsist on limited income, a great portion of which is fixed as derived from receipt of his monthly Social Security disability benefits. Nevertheless, as it is not alleged or shown by this financial report that collection of the debt would deprive the appellant and his wife of the basic necessities of life (food, clothing, or shelter), and because the debt to the Government is entitled to as much consideration as any other debt incurred, the Board concludes that collection of the relatively small overpayment would not result in undue financial hardship. The Board further finds that failure to make restitution of the overpayment totaling $2,116 would result in unfair gain to the appellant. In effect, a waiver of this overpayment would allow the appellant to realize a gain (receipt of additional pension benefits paid for the period which he was not entitled to based on income limitations) based on his failure to notify VA of a change in income from receipt of increased employment wages by his wife beginning in the latter half 1996. Under such circumstances, the element of equity and good conscience pertaining to undue financial hardship is not considered to be of such significance as to outweigh the other critical elements cited herein (i.e., the appellant's fault in creation of debt and unjust enrichment to him if debt was waived) which favor the Government's right to collect the overpayment. The Board does not find applicable to the facts in this case the other elements of the standard of equity and good conscience discussed above. Specifically, there is no evidence of fault on the part of VA, any evidence that collection of the debt, either in whole or in part, would defeat the purposes for which benefits were intended, or evidence that the appellant changed his position to his detriment by reliance on VA benefits by giving up some other valuable right or legal obligation. Accordingly, in view of the above, the Board concludes that waiver of recovery of this overpayment is not in order, based on the standard of equity and good conscience. 38 C.F.R. §§ 1.963(a), 1.965(a) (1999). For the reasons discussed above, the Board finds that the evidence in this case is not so evenly balanced so as to allow application of the benefit of the doubt rule. 38 U.S.C.A. § 5107(b) (West 1991). ORDER Waiver of recovery of an overpayment of improved disability pension benefits in the amount of $2,116 is denied. A. BRYANT Member, Board of Veterans' Appeals