Citation Nr: 0004661 Decision Date: 02/23/00 Archive Date: 02/28/00 DOCKET NO. 98-02 562 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Roanoke, Virginia THE ISSUE Entitlement to a waiver of recovery of an overpayment of Department of Veterans Affairs (VA) vocational rehabilitation subsistence allowance under Chapter 31, Title 38, United States Code in the amount of $1,070.65. REPRESENTATION Appellant represented by: Disabled American Veterans ATTORNEY FOR THE BOARD C. L. Mason, Associate Counsel INTRODUCTION The veteran had active service from June 1967 to January 1968. This case comes before the Board of Veterans' Appeals (Board) on appeal from a December 1997 decision by the Committee on Waivers and Compromises (Committee) of the Roanoke, Virginia Department of Veterans Affairs (VA) Regional Office (RO) which denied the veteran's request for waiver of recovery of an overpayment of VA Chapter 31 vocational rehabilitation benefits in the amount of $1,070.65. The veteran requested and was scheduled to appear before a Member of the Board in a traveling section of the Board in May 1999. The veteran canceled his hearing and requested that the case be sent to the Board. FINDINGS OF FACT 1. The veteran began receiving Chapter 31 vocational rehabilitation benefits in October 1994. 2. In May 1997, it was shown that the veteran enrolled at Thomas Nelson Community College for the Summer 1997 term. 3. In June 1997, the veteran was paid full time Chapter 31 vocational rehabilitation subsistence allowance for full-time attendance during the period from May 19, 1997 to July 16, 1997 and at 3/4 time rate from July 17, 1997 to August 1, 1997. 4. In June 1997, the school notified the RO that the veteran had reduced his credit hours from 9 to 6, the 3/4 time, effective May 19, 1997. 5. In June 1997, the RO notified the veteran that this reduction resulted in an overpayment of $204.61 for the period from May 19, 1997 to August 1, 1997. 6. In July 1997, Thomas Nelson Community College notified the RO that the veteran last attended classes on May 29, 1997. This action created an overpayment of $866.04 for the period from June 1, 1997 to August 1, 1997. 7. The veteran was overpaid Chapter 31 vocational rehabilitation benefits in the total amount of $1,070.65. 8. In December 1998, the veteran was awarded nonservice- connected pension effective May 14, 1998 and thus was entitled to a retroactive award. 9. The overpayment was not due to the veteran's fraud, misrepresentation of bad faith. 10. Recovery of the overpayment would not be against the principles of equity and good conscience. CONCLUSION OF LAW There was no fraud, misrepresentation or bad faith in the creation of the overpayment but recovery of the overpayment of Chapter 31 vocational rehabilitation benefits, calculated in the amount of $1,070.65, would not be against equity and good conscience; therefore, recovery of the overpayment is not waived. 38 U.S.C.A. § 5302(a) (West 1991); 38 C.F.R. §§ 1.963(a), 1.965(a) (1999). REASONS AND BASES FOR FINDINGS AND CONCLUSION The veteran began receiving VA Chapter 31 vocational rehabilitation benefits in October 1994 for school attendance in Louisiana. The veteran subsequently moved to Virginia. The veteran enrolled in classes at the Thomas Nelson Community College in Spring 1997 and Summer 1997. A VA form 28-1905, enrollment certification, received by VA in May 1997, shows that the veteran was enrolled for a total of 12 credits for the period from May 19, 1997 to July 31, 1997(3 hours from May 19, 1997 to July 16, 1997 and 9 hours from May 19, 1997 to July 31, 1997). In June 1997, the veteran was awarded Chapter 31 vocational rehabilitation subsistence allowance for the period from May 1997 to August 1, 1997. A subsequent VA Form 22-1999b-1, Notice of Change of Student Status, received in June 1997, indicates that the veteran had reduced his number of credits from 9 to 6 for the period from May 19, 1997 to July 31, 1997. The effective date listed for the reduction was May 19, 1997. This resulted in an overpayment of $204.61. Another Notice of Change in Student Status was received by the RO in July, which indicates that the veteran had not attended class since May 29, 1997, resulting in overpayments of $433.02 for June and $433.02 for July 1997. In August 1997, the veteran was advised that his Chapter 31 vocational rehabilitation subsistence allowance had been retroactively terminated effective June 1, 1997. These actions created a total overpayment of $1,070.65. According to the claims folder, the veteran requested waiver in September 1997. In December 1997, the Committee denied the veteran's request based on a finding that there was no fraud, misrepresentation, or bad faith in the creation of the overpayment but that recovery of the overpayment would not be against equity and good conscience. The Committee found that the veteran was at fault in the creation of the overpayment as he did not notify the VA in a timely manner of his withdrawal from classes and because he continued to accept checks through August 1997 when he knew he was not attending classes. The Board agrees with the Committee that the overpayment was not due to the veteran's fraud, misrepresentation or bad faith. In a December 1997 Financial Status Report, the veteran indicated that his total monthly income was $444 (VA compensation) and that his total monthly expenses of $525 including rent at $175, food at $125, utilities and heat at $53, and child support at $172, exceeded his monthly income by $81. However, subsequent evidence indicates that the veteran's financial status changed. Evidence of record indicates that the veteran now resided with his daughter. Moreover, a December 1998 award action of record reveals that the veteran determined eligible for nonservice-connected pension benefits. A March 1999 VA Form 21-8947, Compensation and Pension award, reveals that the veteran was awarded pension beginning in June 1, 1998, and the veteran was entitled to a retroactive grant of VA disability pension benefits. In addition, his monthly VA rates were $945 as of June 1, 1998 and $958 as of December 1, 1998. Therefore, monthly income significantly exceeds monthly expenses. In light of the foregoing, it is clear that the veteran's financial situation has changed. Based on the record, the Board finds that payment of the debt would not result in undue financial hardship. In cases where there is no fraud, misrepresentation, or bad faith on the veteran's part with respect to the creation of the overpayment at issue, and, therefore, waiver is not precluded pursuant to 38 U.S.C.A. § 5302(a) (West 1991), in order to dispose of the matter on appeal, the Board must determine whether recovery of the indebtedness would be against equity and good conscience, thereby permitting waiver under 38 U.S.C.A. § 5302(a) (West 1991) and 38 C.F.R. §§ 1.963(a), 1.965(a) (1999). The pertinent regulation in this case provides that the standard of "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. 38 C.F.R. § 1.965(a) (1999). The elements of equity and good conscience are as follows: (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 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. At the outset, the Board notes that there is no evidence of record that the veteran informed the RO of his withdrawal from school; rather, his school notified the VA. The Board finds that the veteran was at fault in the creation of the overpayment. The veteran received Chapter 31 vocational rehabilitation benefits for classes that he did not attend. Under the existing statutory and regulatory guidelines, the veteran received an overpayment of educational assistance benefits. A review of all of the evidence of record shows that there was no fault on the part of VA in the creation of the overpayment. The Board finds that recovery of the overpayment would not defeat the original purpose of the benefit by nullifying the objective for which it was intended. The benefits were intended to allow the veteran to obtain an education which he did not do at the time that he was receiving those benefits. The failure of the Government to insist on its right to repayment of the debt would result in his unjust enrichment at the expense of the taxpayers because he will have received benefits without meeting his obligation to attend a program of education. There is also no evidence that the veteran's reliance on VA benefits resulted in the relinquishment of a valuable right or the incurrence of a legal obligation. Another element for consideration in this case is whether the veteran would be subjected to undue hardship if a waiver of the debt at issue was denied. As previously noted, the veteran's financial status has recently changed due to his entitlement to retroactive VA pension benefits and his relocation to live with his daughter. Furthermore, income now significantly exceeds reported expenses. In light of the foregoing, the Board is unable to conclude that there is financial hardship in this case. Based on these considerations, the Board concludes that a waiver of the recovery of the overpayment of the Chapter 31 vocational rehabilitation assistance is not warranted. ORDER Waiver of recovery of an overpayment of Chapter 31 vocational rehabilitation subsistence allowance in the amount of $1,070.65 is denied. H. N. SCHWARTZ Member, Board of Veterans' Appeals