BVA9502590 
DOCKET NO.  93-05 917     )       DATE
          )
          )

On appeal from the decision of the
Department of Veterans Affairs Regional Office in Louisville,
Kentucky

THE ISSUE

Entitlement to waiver of recovery of an overpayment of Department
of Veterans Affairs (VA) improved pension.

REPRESENTATION

Appellant represented by: Paralyzed Veterans of America,
Inc.

ATTORNEY FOR THE BOARD

J. Connolly, Associate Counsel

INTRODUCTION

The veteran had active service from January 1953 to December
1954.

This matter came before the Board of Veterans' Appeals (Board) on
appeal from a May 1992, rating decision by the Committee on
Waivers and Compromises (Committee) of the New York, New York, VA
Regional Office.  The notice of disagreement was received in
November 1992.  The statement of the case was sent to the veteran
in January 1993.  The substantive appeal was received in March
1993.

REMAND

The Board observes that further development as well as the
clarification of several inconsistencies in this case needs to be
completed prior to the adjudication by the Board.

First, in the veteran's substantive appeal, he asserts that the
rent monies he receives from the Urban Renewal and Community
Development Agency is not income paid to him, rather, it is a
government subsidy.  Essentially, the veteran disputes that any
monies received from that source should not be considered income.
In light of those statements, the Board finds that the veteran is
disputing the creation of the overpayment.  In this regard, the
United States Court of Veterans Appeals has clearly stated when a
debtor requests a waiver and also asserts that the underlying
debt is invalid, VA must resolve both matters.  Schaper v.
Derwinski, 1 Vet.App. 430 (1991).  Based on the veteran's
statements, the Board has determined that the appellant has
raised the issue of whether the overpayment in this case was
properly created.  Furthermore, the Board has also determined
that the creation issue is inextricably intertwined with the
issue of waiver of the overpayment, currently certified for
appellate review.  Thus, the issue of the proper creation of the
overpayment of improved pension benefits should be adjudicated by
the RO prior to return of the case to the Board.  Harris v.
Derwinski, 1 Vet.App. 180 (1991).

Second, the Board observes that there are several inconsistencies
regarding the veteran's finances as reported by him regarding
income from rental properties.  The veteran and his spouse
submitted several VA Forms 21-4185 (Report of Income from
Property or Business), Improved Pension Eligibility Verification
Reports, VA Forms 21-526 (Veteran's Application for Compensation
or Pension), and personal statements between July 1987 and the
end of 1991.  These documents indicate that the veteran and his
spouse have income from rental property or, alternatively,
receive no income and actually incur a debt from that rental
property.  For example, in reviewing information submitted by the
veteran for 1989, the Board observes the following
inconsistencies: a statement received in January 1989 indicated
that the veteran and his spouse had or would have a gross income
from rental property for the period August 1988 through July 1989
of $10,800 gross and $1,020 net; a VA Form 21-4185 received in
May 1989 indicated that the veteran and his spouse had or would
have a gross income in from rental property for 1989 of $15,174
gross and have no net income but a debt of $675 after expenses;
and a VA Form 21-4185 received in August 1990 indicated that the
veteran and his spouse had or would have a gross income in from
rental property for 1989 of $10,200 gross and a net income of
$668.28.  However, an attached letter from the veteran's spouse
indicated that they receive no profit from the rental properties.

In light of the inconsistencies set forth above, the veteran and
his spouse should be asked to provide a detailed account of the
income that was received from rental property during 1989.  Since
the veteran and his spouse have indicated that expenses were
incurred, an itemized account of those expenses should also be
provided.  This information should be secured prior to the
adjudication of the creation issue and the waiver issue.

Third, the Board observes that the Committee denied the claim for
waiver because the veteran committed misrepresentation, thereby
indicating that waiver on the basis of equity and good conscience
was precluded by law.  However, in the decision, the Committee
stated "(a)s you have been found with misrepresentation, it would
not be equitable for you to retain the benefits you were overpaid
as it would result in an unjust enrichment."

Under the law and regulations governing the granting or denying
of a waiver of recovery of an overpayment depends on various
elements.  Fraud, misrepresentation or bad faith automatically
prevents the granting of a waiver.  If the debtor has committed
none of these, then the standard of equity and good conscience is
utilized to decide whether waiver should be granted.  If
collection of the debt would be against equity and good
conscience, then a waiver may be granted.  38 U.S.C.A. § 5302
(West 1991); 38 C.F.R. § 1.963(a) (1993).  The equity and good
conscience standard is applied in most cases where the facts
indicate that reasonableness and the exercise of the Government's
rights is necessary.  Consideration is given to the fault of the
debtor in the creation of the debt and any fault is to be weighed
against possible fault of the VA.  Also taken into consideration
is whether collection would create an undue hardship for the
debtor; whether collection would defeat the purpose of the
benefit; whether failure to collect would cause unjust enrichment
to the debtor; and if reliance on VA benefits resulted in
relinquishment of another valuable right.  This list represents
some of the elements to be considered and is not all inclusive.
38 U.S.C.A. § 5302 (West 1991); 38 C.F.R. § 1.965(a) (1993).

As set out above, although the Committee apparently denied the
veteran's request for waiver on the basis of misrepresentation,
the Committee indicated that it would not be "equitable" for him
to retain the overpaid benefits as it would result in an "unjust
enrichment."  The Board observes that if the waiver was denied on
the basis of misrepresentation, then the standard of equity and
good conscience need not be addressed.  However, the Committee
did address at least one of the elements, unjust enrichment, that
is considered under the standard of equity and good conscience.

Therefore, the Board finds that the veteran's claim should be
reviewed again to determine first if misrepresentation
automatically prevents the granting of a waiver.  If it is found
by the Committee that the veteran committed misrepresentation,
then, pursuant to 38 C.F.R. § 1.962(b) (1993), the case should be
referred to the Inspector General or the District Counsel.
However, if the Committee finds that the veteran has not
committed misrepresentation as originally indicated, then the
Committee should take into consideration the standard of equity
and good conscience.

If the Committee finds that the veteran has not committed fraud,
misrepresentation or bad faith, prior to any further action, the
veteran and his spouse should be asked to provide a current
financial status report.  After the completion of that request,
then the veteran's claim should be reviewed under the standard of
equity and good conscience pursuant to 38 U.S.C.A. § 5302 (West
1991); 38 U.S.C.A. §§ 1.962, 1.965 (West 1991).

Under the circumstances of this case, additional development is
necessary in order to fulfill the VA's duty to assist.
Accordingly, this matter is REMANDED for the following action:

1.  The veteran and his spouse should be
asked to provide a detailed account of the
income that was received from rental
property during 1989.  Since the veteran
and his spouse have indicated that expenses
were incurred, an itemized account of those
expenses should also be provided.

2.  The RO should develop and adjudicate
the issue of whether the creation of the
overpayment of VA improved pension benefits
was proper.  The RO should explain how the
amount that should have been paid was
derived and provide information as to the
sources of the income considered.  The
period covered for the overpayment, i.e.,
beginning and ending dates, amount, and the
reason for the creation of the overpayment
must be set forth separately.

3.  If it is determined that the creation
of the overpayment was proper, then the
Committee should develop and adjudicate the
appellant's claim for waiver of the
overpayment under 38 U.S.C.A. § 5302 (West
1991); 38 C.F.R. § 1.965 (1993), to include
the issue of whether appellant committed
misrepresentation, and if so, whether the
waiver of the recovery of the overpayment
is therefore precluded by the existence of
that misrepresentation.

4.  If it is determined that the veteran
committed misrepresentation, the case
should be referred to the Inspector General
or the District Counsel pursuant to 38
C.F.R. § 1.962(b) (1993).

5.  If it is determined that the veteran
did not commit misrepresentation, then the
veteran and his spouse should be asked to
provide a current financial status report.
Thereafter, taking into consideration all
evidence of record, the Committee should
review the veteran's claim taking into
consideration all the elements of the
standard of equity and good conscience.
Consideration should be given to the fault
of the debtor in the creation of the debt
and any fault is to be weighed against
possible fault of the VA.  Also taken into
consideration is whether collection would
create an undue hardship for the debtor;
whether collection would defeat the purpose
of the benefit; whether failure to collect
would cause unjust enrichment to the
debtor; and if reliance on VA benefits
resulted in relinquishment of another
valuable right.  This list represents some
of the elements to be considered and is not
all inclusive.  38 U.S.C.A. § 5302 (West
1991); 38 C.F.R. § 1.965(a) (1993).

6.  If the determination is adverse to the
veteran, he and his representative should
be furnished a supplemental statement of
the case that contains a summary of the
relevant evidence and a citation and
discussion of the applicable laws and
regulations .  He should also be afforded
the opportunity to respond to that
supplemental statement of the case before
the claim is returned to the Board.

The case should be returned to the Board for further appellate
review on the issue currently in appellate status as well as any
issue placed in appellate status during the course of this
REMAND.  The purpose of this REMAND is to assist the veteran in
developing his claim.  No action is required of her until further
notice.  The Board expresses no opinion, either factual or legal,
as to the ultimate determination warranted in this case pending
completion of the requested action.

          G. H. SHUFELT
          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.

Under 38 U.S.C.A. § 7252 (West 1991), only a decision of the
Board of Veterans' Appeals is appealable to the United States
Court of Veterans Appeals.  This remand is in the nature of a
preliminary order and does not constitute a decision of the Board
on the merits of your appeal.  38 C.F.R. § 20.1100(b) (1993).