Citation Nr: 0004530 Decision Date: 02/22/00 Archive Date: 02/28/00 DOCKET NO. 93-10 970 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Indianapolis, Indiana THE ISSUE Entitlement to waiver of recovery of an overpayment of improved death pension benefits. REPRESENTATION Appellant represented by: Military Order of the Purple Heart ATTORNEY FOR THE BOARD R. A. Caffery, Counsel INTRODUCTION The veteran served on active duty from January to October 1944. He died in January 1978. The appellant is his surviving spouse. This is an appeal from a March 1992 decision by the Department of Veterans Affairs (VA) Regional Office Indianapolis, Indiana, Committee on Waivers and Compromises, which denied entitlement to waiver of recovery of an overpayment of improved death pension benefits. The basis for the decision was that there had been misrepresentation on the part of the appellant in creation of the overpayment by failing to report all of her income to the VA. The overpayment was initially in the amount of $12,104. Later, it was reduced to $11,706. The case was initially before the Board of Veterans' Appeals (Board) in March 1995 when it was remanded for further action. The case is again before the Board for further appellate consideration. FINDINGS OF FACT 1. All relevant evidence necessary for an equitable disposition of the appellant's appeal has been obtained by the regional office to the extent possible. 2. The appellant had been in receipt of improved death pension benefits as surviving spouse of the veteran for many years. Her awards had been based on her regular reports that she had no income from any source and no net worth of any type. 3. In September 1991 the regional office received evidence that she had income in 1989 that she had not reported. 4. In October 1991 the regional office terminated the appellant's award of improved death pension effective in February 1989 due to excess income. The overpayment in question resulted from this action. 5. The overpayment resulted from unfair dealing on the appellant's part to obtain VA benefits to which she was not entitled. CONCLUSION OF LAW There was bad faith on the part of the appellant in creation of the overpayment of improved death pension benefits. 38 U.S.C.A. §§ 5107, 5302(c) (West 1991); 38 C.F.R. § 1.965 (1999). REASONS AND BASES FOR FINDINGS AND CONCLUSION The record reflects that the appellant had been in receipt of improved death pension benefits as surviving spouse of the veteran for many years. Her awards had been based on her reports that she had no income from any source and no net worth. In September 1991 the regional office advised the appellant that it had received information that she had received other income in 1989 which had not been reported to the VA. In October 1991, the appellant's award of improved death pension was terminated effective in February 1989 due to excess income. The overpayment in question resulted from this action. The appellant has not questioned the amount of income utilized by the regional office in terminating her award of improved death pension effective in February 1989. She has been provided an audit of her account reflecting the amounts paid and the amounts due during the period of the overpayment and has not questioned the amount of the overpayment. Thus, the Board concludes that the appellant has not questioned the propriety of creation of the overpayment and the sole question for consideration is entitlement to waiver of recovery of the indebtedness. The Regional Office Committee on Waivers and Compromises has held that there was misrepresentation on the part of the appellant in creation of the overpayment due to her ongoing failure to report her income to the VA. Accordingly, her request for waiver of recovery of the indebtedness was denied. The law preludes waiver of recovery of an overpayment or waiver of collection of any indebtedness where there exists in connection with the claim for such waiver an indication of fraud, misrepresentation or bad faith on the part of the claimant. 38 U.S.C.A. § 5302(c). As used in 38 U.S.C.A. §§ 110 and 1159 and implementing regulations, fraud means an intentional misrepresentation of fact or the intentional failure to disclose pertinent facts, for the purpose of obtaining or retaining eligibility for VA benefits with knowledge that the misrepresentation or failure to disclose may result in the erroneous award or retention of such benefits. 38 C.F.R. § 3.1(aa). Fraud and misrepresentation both contain common characteristics and are considered as a single element. The burden of proof to establish fraud or misrepresentation lies solely with the VA. Bad faith generally describes unfair or deceptive dealing by one who seeks to gain thereby at another's expense. 38 C.F.R. § 1.965. The burden of proof lies solely with the VA. In this case, as noted previously, the record reflects that the appellant had been in receipt of improved death pension benefits as surviving spouse of the veteran for many years and her awards had been based on her reports that she had no income from any source. However, in 1991, the regional office received information that the appellant had received income in 1989 which was excessive for continued receipt of improved death pension benefits. Accordingly, her award was terminated effective in February 1989 with the resulting overpayment in her account. The appellant had been informed that her pension rate was based in part upon the amount of her income and she had been asked to immediately report any change in income to the VA. The appellant has indicated that she is unable to read or write and that the annual income reports were completed by a daughter who is now deceased but who was slightly mentally retarded. She has contended that the failure to report income on the financial reports resulted from ignorance and not from any intent to defraud the Government. In this regard, there is of record, a December 1992 statement by a County Veterans Services Officer, indicating that he had begun to assist the appellant in 1991 with the problem of the overpayment and the unreported income and could attest to the fact that she could not read. He related that she appeared to be an honest person who was simply ignorant. He indicated that he had had seven years' experience handling veteran's claims and had met many claimants. It did not appear to him that the appellant had any intent to defraud the VA. The Board notes, however, that in 1992 the appellant reported that she had received $75,000 in damages in 1981 and had received income from investment of the amount in certificates of deposit and later in mutual funds. However, she never reported this settlement and on numerous income and net worth reporting documents submitted since that time, she repeatedly denied having any net worth of any type or any income of any type. Although the appellant may not be able to read, she still had a responsibility to ensure that the information pertaining to income and net worth on her eligibility verification reports was correct. Even if they were completed by someone on her behalf, they are signed by her and she is responsible for the acts of her agent. The record reflects that the appellant was paid improved death pension for several years based on incorrect financial information provided by her and she took no action to call the erroneous awards to the attention of the regional office. Instead, she negotiated the improved death pension checks and utilized the proceeds. Although the RO, for reasons which are not apparent to the Board, did not elect to establish the overpayment as of 1981, the Board finds that there was unfair dealing on her part by repeatedly failing to report her net worth and income to the regional office and by failing to call to the attention of the RO the erroneous awards of improved death pension from 1981 until the RO independently determined that she had such income. Accordingly, the Board concludes that the overpayment was due to bad faith on the part of the appellant. Since the Board has found bad faith on the part of the appellant, possible pertinent equitable factors may not be considered and waiver of recovery of the indebtedness is not in order. 38 U.S.C.A. § 5302(c); 38 C.F.R. § 1.965. ORDER Entitlement to waiver of recovery of an overpayment of improved death pension benefits is not established. The appeal is denied. ROBERT D. PHILIPP Member, Board of Veterans' Appeals