Challenges to the propriety of the creation of an overpayment in the amount of $6,225.65 are denied.

Citation Nr: A26069929 Decision Date: 07/30/26 Archive Date: 07/30/26 DOCKET NO. 201005-113965 DATE: July 30, 2026 ORDER Challenges to the propriety of the creation of an overpayment in the amount of $6,225.65 are denied. The claim for a waiver of the recoupment of the overpayment in the amount of $6,225.65 is denied. FINDINGS OF FACT 1. The Veteran continued receiving an upward spousal adjustment based on A.L.H. after he and A.L.H. divorced. 2. The recoupment of the overpayment is not against the principles of equity and good conscience. CONCLUSIONS OF LAW 1. The overpayment was properly created. 38 U.S.C. § 5112; 38 C.F.R. § 3.500. 2. The criteria for a waiver of the recoupment of the overpayment have not been met. 38 U.S.C. § 5302; 38 C.F.R. § 1.965. REASONS AND BASES FOR FINDINGS AND CONCLUSIONS The Veteran, a Department of Veterans Affairs (VA) compensation beneficiary having a total disability based on individual unemployability (TDIU) rating, had active duty from February 2009 to June 2012. These matters come before the Board of Veterans' Appeals (Board) on his October 2020 filing of VA Form 10182, Notice of Disagreement (NOD), stating only one word, "Debt," and designating an unspecified August 18, 2020, decision as the decision on appeal. However, there is no such decision of record. Given that the VA Committee on Waivers and Compromises (COWC) issued a September 18, 2020, decision denying the Veteran's claim for a waiver of his overpayment, the Board gathers that the "Debt" word relates to that decision. Since challenges to a VA overpayment debt may encompass up to three claims: a challenge to the propriety of the creation of the overpayment, a challenge to the amount of the overpayment, and the claim for an equitable waiver of the overpayment debt, Johnson v. Wilkie, No. 19-5789, 2020 U.S. App. Vet. Claims LEXIS 1205, at *5 (Vet. App. June 25, 2020), the Board construes the Veteran's VA Form 10182, read jointly with his FSR, as raising the first and third claims and begins its analysis with adjudicating his challenges to the propriety of the creation of his debt. See Schaper v. Derwinski, 1 Vet. App. 430, 437 (1991). The debt arose from the Veteran's receipt of an upward spousal adjustment based on his former spouse A.L.H. after the Veteran and A.LH. divorced. Notably, in January 2013, upon awarding the Veteran an upward spousal adjustment and a minor-child upward adjustment, the VA agency of original jurisdiction (AOJ) notified the Veteran as follows: "We are paying you as a veteran with 2 dependents. Your payment includes an additional amount for your spouse A[.L.H.] and your child D[.E.H]. Let us know right away if there is any change in the status of your dependents." (Emphasis in original). In March 2017, the AOJ reminded the Veteran of the same. On March 27, 2019, the AOJ again reminded the Veteran of the same. The next day, on March 28, 2019, the Veteran notified the AOJ that he and A.L.H. had been divorced since September 2012. Therefore, the AOJ retroactively removed A.L.H. from his VA account effective the first day of the month following the month of divorce, and the overpayment debt at bar was charged to the Veteran. The Veteran's sole word "Debt" used in his NOD does not offer the Board any argument to construe in regard as to why the Veteran might perceive his debt improperly created, given that he knew-or, at the very least, a reasonable person standing in his shoes would have known-that he was receiving an upward adjustment based on A.L.H. without any basis in law, and given that the Veteran's failure to report his divorce from A.L.H. was the cause of his overpayment. Thus, the overpayment was properly created and, to the extent the Veteran's single word "Debt" was meant to imply some sort of challenges to the propriety of the creation of the debt, these implied challenges are denied. 38 U.S.C. § 5112(b)(9), (10); 38 C.F.R. § 3.500(b)(2); Jordan v. Brown, 10 Vet. App. 171 (1997). The Veteran's sole word "Debt" also does not offer the Board any information as to why the Veteran is challenging COWC's decision. The Board acknowledges that he filed two VA Forms 21-5655, Financial Status Report (FSRs), one considered by COWC and another two and a half months after the filing of his NOD that selected the hearing docket. Given that the Veteran cancelled his scheduled Board hearing more than three years later, the second FSR falls outside the Board's evidentiary window and cannot be considered. The Board, however, takes judicial notice of the increase in the amount payable of the Veteran's VA compensation and, thus, assesses the Veteran's waiver claim through the prism of the fact that he receives his VA compensation upwardly adjusted based on his son R.L.H. and on his current spouse, S.L.H., given that the AOJ's adjudication of the Veteran's request to add R.L.H. preceded the COWC decision on appeal and the AOJ's adjudication of the Veteran's request to add S.L.H. to his VA account is not evidence but a ruling. Accordingly, the Board takes judicial notice that the Veteran's current tax-free VA benefits are $4,318.99 per month. No recoupment of an overpayment should be performed if it would be against the principles of equity and good conscience. The "equity and good conscience" inquiry calls for an assessment of all considerations relevant to the unique facts at bar. Examples of such considerations are whether the debtor's fault is outweighed by VA's fault in terms of causing the creation of the overpayment (the balance-of-fault element, including the embedded inquiry into the Veteran's fault), whether his/her failure to make restitution would result in his/her unfair gain (the unjust-enrichment element), whether the debtor has changed his/her position for the worse in reliance on the stream of income (s)he was deriving from his/her VA benefits, e.g., forfeited an employment opportunity or took a loan (the reliance element), whether the recoupment would deprive him/her of basic life necessities, such as basic food, shelter, and clothing (the financial-hardship element), whether the policy goals of his/her VA award would be nullified by the recoupment (the nullification element), etc. 38 U.S.C. § 5302; 38 C.F.R. § 1.965(a). Here, the Veteran's fault element and the balance-of-fault element both counsel against his waiver claim because the debt was caused solely by the Veteran. And the unjust-enrichment counsels against the Veteran's waiver claim because the record is not in dispute that the Veteran-rather than an unrelated third party-received the funds at issue. Compare Shephard v. Shinseki, 26 Vet. App. 159, 162, 167-68 (2013) (upon a veteran's release from confinement, she testified that her former spouse declared bankruptcy after withdrawing and spending the entire $63,749.21 amount that VA had erroneously deposited on their joint bank account, hence leaving the veteran solely with the debt, without an opportunity to have any benefit of VA deposits, even though the veteran repeatedly notified VA that being held in confinement she was unable to remove her former spouse from their joint bank account, and he ignored her many requests not to withdraw VA funds). Further, the financial elements also counsel against the Veteran's waiver claim. The FSR considered by COWC asserted that the Veteran's non-itemized expenses other than rent, utilities, and food were $1,930 and consisted of unspecified "meds," "child support," "insurance," and "car payments," but the list of his installment contracts did not include any of these debt obligations. Moreover, given that the Veteran alleged that his monthly income was $274.19 less than his monthly expenses, and that the Veteran had $0 savings, $0 investments, and $0 cash on hand, the Veteran's FSR is facially not probative because the Veteran has not explained how he was covering this $274.19 deficit month after month. In sum, the facial defects of the FSR demonstrate that VA recoupments of his overpayment did not expose the Veteran to the risk of homelessness, malnutrition, or exposure to the elements. Further, the Veteran's failure to itemize his debts, the lack of probative value of his FSR, and the Veteran's TDIU status demonstrate that the Veteran did not give up any employment opportunity on account of his VA benefits and did not enter any installment agreement based on his reliance on the stability of the amount payable of his VA stream of income. Thus, the reliance element also counsels against the Veteran's waiver claim. The Board further notes that in 2019, the pre-tax median per-capita annual income in Belmont County, OH (the Veteran's community) was $28,822, and the current pre-tax median household annual income in the county is $57,017, meaning that post-tax these figures were/are $25,507 and $49,149 per annum, while the Veteran's 2019 tax-free income was $39,060 and his current family income is $51,827.88, the Board is without a basis in the record to find that VA's incremental recoupment of the Veteran's overpayment nullified the goals of his VA compensation by subjecting him to circumstances markedly less advantageous than those of other persons in his community whose earning capacity was/is not affected by service-connected disabilities. Accordingly, the nullification element also counsels against the Veteran's waiver claim. Given that all regulatory elements uniformly counsel against granting the Veteran a waiver of recoupment, his waiver claim is denied. Cynthia M. Bruce Veterans Law Judge Board of Veterans' Appeals Attorney for the Board Anna Kapellan, Counsel The Board's decision in this case is binding only with respect to the instant matter decided. This decision is not precedential and does not establish VA policies or interpretations of general applicability. 38 C.F.R. § 20.1303.