Citation Nr: 1754159	
Decision Date: 11/28/17    Archive Date: 12/07/17

DOCKET NO.  16-09 154	)	DATE
	)
	)

On appeal from the
Department of Veterans Affairs Regional Office in Boston, Massachusetts


THE ISSUE

Validity of a debt based on an overpayment of educational assistance benefits under the chapter 33 Post-9/11 GI Bill. 


WITNESSES AT HEARING ON APPEAL

Appellant and her Father


ATTORNEY FOR THE BOARD

J. Rutkin, Counsel



INTRODUCTION

This matter comes before the Board of Veterans' Appeals (Board) on appeal from a September 2014 decision of the Department of Veterans Affairs (VA) Regional Office (RO) in Buffalo, New York.  

The appellant and her father testified at a hearing before the undersigned.  A transcript is of record. 

This appeal has been advanced on the Board's docket pursuant to 38 C.F.R. § 20.900(c) (2017).  38 U.S.C. § 7107(a)(2) (2012).


FINDINGS OF FACT

1. The Veteran did not satisfy the service requirements for eligibility to transfer chapter 33 education benefits to the appellant. 

2. As of December 28, 2012, VA had notice that the Veteran did not satisfy the eligibility requirements for chapter 33 benefits, and yet VA continued to issue chapter 33 payments through at least December 2013. 

3. VA error was the sole cause of payments of chapter 33 benefits issued on or after December 28, 2012. 



CONCLUSIONS OF LAW

1. Any amount of debt (as determined by the agency of original jurisdiction) based on chapter 33 payments issued prior to December 28, 2012 is valid.  38 U.S.C. §§ 3311, 3319, 5112 (2012); 38 C.F.R. §§ § 1.962, 21.9520, 21.9570, 21.9635, 21.9695 (2017). 

2. An overpayment and resultant debt based on chapter 33 payments issued on or after December 28, 2012 was not validly created.  38 U.S.C. §§ 3311, 3319, 5112 (2012); 38 C.F.R. §§ § 1.962, 21.9520, 21.9570, 21.9635, 21.9695 (2017). 


REASONS AND BASES FOR FINDINGS AND CONCLUSIONS

The appellant challenges a debt based on an overpayment of educational assistance benefits from 2010 through 2013 under the Chapter 33 Post-9/11 GI Bill.  Specifically, she states that the Veteran, her father, was unfairly discharged before he could satisfy his obligated term of service in order to qualify for transfer of his chapter 33 benefits to her.  She also states that she and her father were unaware that the Veteran did not satisfy the requirements for transfer of his chapter 33 benefits to her, and therefore that she should not be liable for any debt based on payment of such benefits.  In this regard, she states that the Veteran was informed by Navy personnel that his discharge prior to meeting his obligation date would not be a bar to transfer of his chapter 33 benefits.  Finally, she states that she should not be liable for any chapter 33 payments made since December 2012, as VA had knowledge the Veteran's service was disqualifying as early as December 28, 2012.  

For the following reasons, the Board finds that any amount of debt based on chapter 33 payments made during the period prior to December 28, 2012 is valid.  Any amount of debt based on chapter 33 payments made on or after December 28, 2012 is not valid, as VA's administrative error was the sole cause of the erroneous award as of that date. 


I. Law

A. Basic Eligibility Requirements for Chapter 33 Benefits

The post-9/11 GI Bill, 38 U.S.C. Chapter 33, provides for VA educational assistance for members of the Armed Forces based on active duty service after September 10, 2001.  38 U.S.C. § 3311; 38 C.F.R. § 21.9520. 

A veteran may establish eligibility for educational assistance under 38 U.S.C. Chapter 33 based on active duty service after September 10, 2001, if he or she serves a minimum of 90 aggregate days excluding entry level and skill training (such training may be included in the total creditable length of service for longer periods, as set forth in 38 C.F.R. § 21.9640(a)), and, after completion of such service, he or she: (1) continues on active duty; (2) is discharged from service with an honorable discharge; (3) is released from service characterized as honorable and placed on the retired list, temporary disability retired list, or transferred to the Fleet Reserve or the Fleet Marine Corps Reserve; (4) is released from service characterized as honorable for further service in a reserve component; or (5) is discharged or released from service characterized as honorable for: (i) a medical condition that preexisted such service and is not determined to be service-connected; (ii) hardship, as determined by the Secretary of the military department concerned; or (iii) a physical or mental condition that interfered with the individual's performance of duty but was not characterized as a disability and did not result from the individual's own misconduct.  38 U.S.C. § 3311; 38 C.F.R. § 21.9520(a). 

With regard to the last condition of eligibility, namely being discharged or release from service due to a medical condition, hardship, or a physical or mental condition that interfered with performance of duty, as set forth in 38 U.S.C. § 3311(c)(4), the requirement that such service be characterized as honorable applies to discharges or releases that occur on or after January 4, 2011.  See Pub. L. No. 111-377, § 101(b), 124 Stat. 4106, 4107 (2011).  The Board notes that the corresponding regulation does not specify that such service must be honorable.  Cf. 38 C.F.R. § 21.9520(a)(5).  However, the Board finds that the statutory provision is controlling. 

A veteran is also eligible for Chapter 33 education benefits if he or she serves a minimum of 30 continuous days and, after completion of such service, is discharged under other than dishonorable conditions due to a service-connected disability.  38 C.F.R. § 21.9520(b).


B. Authority to Transfer Chapter 33 Benefits to Dependents

An individual who is entitled to educational assistance under 38 U.S.C. chapter 33 based on his or her own active duty service, and who is approved by a service department to transfer entitlement, may transfer up to a total of 36 months of his or her entitlement to a dependent (or among dependents).  38 C.F.R. § 21.9570; 38 U.S.C. 3319.  

The Department of Defense (DOD) is charged with making determinations of eligibility for transfer of chapter 33 entitlement to dependents; VA has no authority to determine such eligibility.  74 Fed. Reg. 14,654 (2009); Garza v. McDonald, 28 Vet. App. 222, 230 (2016) (upholding VA's interpretation of 38 U.S.C.A 3319 that DOD is responsible for making determinations of eligibility and effective dates); see 38 U.S.C. 3319; 38 C.F.R. § 21.9570.  

Dependents are not eligible for transferred entitlement if the transferor fails to complete the amount of service he or she agreed to serve in the Armed Forces in order to participate in the transferability program, unless one of the following circumstances exists: 

(1) The transferor did not complete the service due to (a) his or her death; (b) a medical condition that preexisted such service on active duty and that the Secretary of the military department concerned determines is not service-connected; (c) a hardship, as determined by the Secretary of the military department concerned; (d) a physical or mental condition that was not characterized as a disability and did not result from the individual's own willful misconduct but interfered with the individual's performance of duty, as determined by the Secretary of the military department concerned; or 

(2) The transferor is considered to have completed his or her service as a result of being discharged for (a) a disability); or (b) a reduction in force. 

38 C.F.R. § 21.9570(l).  


C. Discontinuance Dates and Liability for Overpayments

VA will discontinue each award of educational assistance given to a dependent effective the first date of each such award when: (1) The transferor fails to complete the active duty service requirement that afforded him or her the opportunity to transfer entitlement of educational assistance; and (2) The military department discharges the transferor for a reason other than one of the reasons stated in 38 C.F.R. § 21.9570.  38 C.F.R. § 21.9635(aa).

If an individual transferring chapter 33 entitlement fails to complete the service agreed to by the individual, the amount of any transferred entitlement that is used by a dependent of the individual as of the date of such failure shall be treated as an overpayment of educational assistance.  38 U.S.C. 3319(i)(2).

In the event of an overpayment of chapter 33 educational assistance benefits with respect to a dependent to whom entitlement is transferred, the dependent and the individual making the transfer shall be jointly and severally liable for the amount of the overpayment.  38 U.S.C. 3319(i)(1).   

An overpayment of educational assistance paid to an eligible individual constitutes a liability of that individual, unless: (1) The overpayment was waived as provided in 38 C.F.R. §§ 1.957 and 1.962; or (2) The overpayment results from an administrative error or an error in judgment.  38 C.F.R. § 21.9695(b) (cross-referencing 38 C.F.R. § 21.9635(r)). 

Regarding the exception to an individual's liability when there is administrative error or error in judgment, VA regulation provides that when an administrative error or error in judgment by VA, DOD, or the Department of Homeland Security with respect to the Coast Guard when it is not operating as a service in the Navy, is the sole cause of an erroneous award, the award will be reduced or terminated effective the date of last payment.  38 C.F.R. § 21.9635(r)(1).  When a payee receives an erroneous award of educational assistance as the result of providing false information or withholding information necessary to determine eligibility for the award, the effective date of the reduction or discontinuance will be the effective date of the award, or the day before the act, whichever is later.  38 C.F.R. § 21.9635(r)(2).  The date of the reduction or discontinuance will not be before the last date on which the individual was entitled to payment of educational assistance.  Id.; see 38 U.S.C. §§ 3323(c), 5112(b), 5113.  

The term "erroneous award" includes erroneous payments made subsequent to the initial award of benefits.  Dent v. McDonald, 27 Vet. App. 362, 374 (2015).

With regard to fault for an erroneous award, if fault for an overpayment cannot "clearly be ascribed to the beneficiary," VA's policy is to assume that fault and not create a debt against the beneficiary.  Dent, 27 Vet. App. at 380 (citing VAOPGCPREC 2-90 (March 1990)).  However, when both VA and the beneficiary are partially at fault, the debt based on the effective date of reduction or discontinuance of benefits is properly created.  See Jordan v. Brown, 10 Vet. App. 171, 174 (1997).  

VA regulation also provides that in administering chapter 33 educational assistance, VA will apply the provisions of sections 21.4008 and 21.4009 of the regulations to eligible individuals and, when appropriate, to institutions of higher learning.  38 C.F.R. § 21.9695.  38 C.F.R. § 21.4008 concerns prevention of overpayments when approval of a course or a licensing or certification test may be withdrawn.  38 C.F.R. § 21.4009 provides that the amount of overpayment of educational assistance allowance or special training allowance paid to a veteran or eligible person constitutes a liability of that veteran or eligible person.  It further provides that an educational institution may be liable for the overpayment under the circumstances specified in that regulation.  

As the issue here does not concern withdrawing approval of a course or licensing or certification test, and does not concern the liability of an educational institution, the provisions of sections 21.4008 and 21.4009 are generally not applicable to the facts of this case.  



II. Analysis

An overpayment is created when VA determines that a beneficiary or payee has received benefit payments in excess of the amount due or to which such beneficiary or payee is entitled.  38 C.F.R. § 1.962 (2017).  The debtor may challenge the validity or amount of the debt owed.  See 38 C.F.R. § 1.911(c)(1); see also VAOPGCPREC 6-98; Schaper v. Derwinski, 1 Vet. App. 430, 437 (1991).  

The amount of debt is not in dispute.  The September 2014 letter from the Buffalo RO to the appellant notifying her of the debt, as well as notifications from the VA Debt Management Center (DMC), show that a debt was created in the amount of $99,568.57.  The DMC sent separate notifications to the appellant for separate amounts of overpayments stemming from distinct types of chapter 33 benefits.  These include the amount issued as a "kicker" or supplemental payment, totalling $49,774,90; the amount issued for tuition and fees or a yellow ribbon payment, totalling $46,993.67; and the amount issued for books, supplies, and other expenses, totalling $2,800.  These amounts add up to $99,568.57.  Whether the amount of debt was properly calculated is not before the Board.  The only issue on appeal is whether the basis for the creation of the debt was valid.  

The debtor may also apply for a waiver of any debt found to be valid.  See 38 U.S.C. § 5302; 38 C.F.R. §§ 1.911(c)(2), 1.963.  Such waiver requests must be submitted within 180 days following the date of notice of indebtedness issued on or after April 1, 1983.  38 C.F.R. § 1.963(b) (2017).  In this case, in December 2015 decisions (separate decisions were issues for the separate amounts specified above), the Committee on Waivers and Compromises denied the appellant's request for waiver of indebtedness on the basis that the application for waiver was not timely filed.  See 38 U.S.C. § 5302(a) (2012); 38 C.F.R. § 1.963(b).  The appellant did not appeal these decisions.  Consequently, the issue of whether a waiver of all or a portion of the debt is warranted is not before the Board.  See 38 C.F.R. § 1.958 (2017); cf. 38 U.S.C. § 7104 (2012); 38 C.F.R. §§ 20.101, 20.200, 20.302 (2017).   

Turning to the facts, the Veteran elected to transfer his entitlement to chapter 33 benefits to his daughter, the appellant in this case.  Records from an electronic database titled Veterans Information Solution (VIS)-an application that provides authorized VA personnel access to service discharge data and other eligibility information-show that the Veteran was approved to transfer such benefits effective March 31, 2010.  The VIS records reflect that as a condition of eligibility for transfer of his chapter 33 benefits, the Veteran, as sponsor, had an obligated projected end date of December 1, 2013 in terms of his service requirements.  In other words, eligibility for transfer of chapter 33 benefits was contingent on his completing his service obligation with the Navy Reserve, which required that he continue serving until December 1, 2013.  

Service department records show that the Veteran was separated from service in November 2012 by reason of unsatisfactory participation in the ready reserve based on unauthorized absences.  He received a general (under honorable conditions) discharge.  

DOD is charged with making determinations of eligibility for transfer of chapter 33 entitlement to dependents.  74 Fed. Reg. 14,654 (2009); Garza v. McDonald, 28 Vet. App. 222, 230 (2016); see 38 U.S.C. 3319; 38 C.F.R. § 21.9570.  While VA is tasked with administering chapter 33 benefits, it does not have authority to determine eligibility for transfer of such benefits.  See id.  The Board also notes, as an independent matter, that the Veteran did not satisfy basic eligibility requirements for chapter 33 benefits, as he did not receive an honorable discharge, and was not discharged under one of the circumstances listed in 38 U.S.C. § 3311 and 38 C.F.R. § 21.9520(a). 

Accordingly, the Veteran did not satisfy the eligibility requirements for transfer of his chapter 33 benefits to the appellant.

The appellant has stated that the Veteran suffered from a condition that prevented him from completing his service requirements.  However, the service department records show that the Veteran was not discharged for a medical condition, a service-connected disability, or hardship, but rather due to unsatisfactory participation based on unauthorized absences.  VA does not have the authority to alter DOD's reasons for the Veteran's separation, or the characterization of his service.  The service department's findings on such matters are conclusive and binding on VA.  See, e.g., Duro v. Derwinski, 2 Vet. App. 530 (1992); Dacoron v. Brown, 4 Vet. App. 115, 120 (1993).  

The appellant and the Veteran have also testified that the Veteran was unfairly discharged due to a conflict with a superior.  As stated, VA does not have the authority to change the Navy's determinations regarding the reason for his discharge or the character of his service as reflected in official service department records.  

The appellant attended college from 2010 through 2014.  She received chapter 33 payments, via automated payments issued to her college, from September 2010 through December 2013.  The discontinuance of these benefits effective the date of the initial award, in 2010, was proper, as the Veteran did not complete the service requirement that was the basis of eligibility for the transfer, and was not discharged for one of the reasons set forth in 38 C.F.R. § 21.9570.  See 38 C.F.R. § 21.9635(aa).

Accordingly, all chapter 33 payments issued prior to December 28, 2012 constitute an overpayment for which the appellant is liable.  See 38 U.S.C. 3319(i)(1); 38 C.F.R. § 21.9695(b).  

The Board finds that the appellant is not liable for any chapter 33 payments issued on or after December 28, 2012, as VA administrative error was the sole cause of these payments.  Specifically, a VIS record dated December 28, 2012 shows that the Veteran's service was disqualifying.  Thus, as of December 28, 2012, VA was on notice that the appellant no longer qualified for chapter 33 benefits.  Nevertheless, VA continued to issue payments through at least December 2013.  These payments were clearly made based on administrative error. 

Fault for the erroneous payments made since December 28, 2012 cannot be clearly ascribed to the appellant.  The erroneous payments since December 28, 2012 were not "the result of" the appellant providing false information or withholding information necessary to determine eligibility to the award.  It is true neither the Veteran nor the appellant informed VA that the Veteran did not satisfy his service obligation and consequently did not qualify for transfer of chapter 33 benefits.  However, VA was on notice that the Veteran did not meet the eligibility requirements for transfer of chapter 33 benefits since December 28, 2012 based on the VIS records.  Thus, it cannot be said that there was a link between the erroneous award from that date and any act of commission or omission on the part of the Veteran or the appellant. 

The Board notes that unlike the regulatory provisions governing other VA benefit programs regarding effective dates of discontinuance of benefits, the provisions specific to chapter 33 benefits, as set forth in 38 C.F.R. § 21.9635(r), do not state that the payee's knowledge of the erroneous nature of the award will result in the effective date of the discontinuance being the date of the award.  Cf. 38 C.F.R. §§ 38 C.F.R. § 3.500(b)(1), 21.4135(p) (2017).  Moreover, the appellant and the Veteran provided credible testimony at the April 2017 hearing that they were unaware that the eligibility requirements for transfer of chapter 33 benefits were no longer satisfied once he received the November 2012 discharge.  Although the appellant had at least constructive knowledge of the erroneous award, there is still no liability for erroneous payments made from December 28, 2012 forward, as such payments were not the result of providing false information or withholding information.  See 38 C.F.R. § 21.9635(r); cf. Dent, 27 Vet. App. at 380 (noting that a payee can have constructive knowledge of an erroneous award) (citing VAOPGCPREC 2-90 (March 1990)).  

Accordingly, the proper effective date of discontinuance of the erroneous award once VA learned of the disqualifying service, which was on December 28, 2012, is the date of last payment.  See 38 C.F.R. § 21.9635(r).  Accordingly, the appellant is not liable for any payments issued on or after December 28, 2012.  See 38 C.F.R. § 21.9695(b).

While not necessary to this determination, the Board also notes that the record does not show clear notice to the appellant or the Veteran that VA must promptly be notified if the service member does not meet his service obligation.  Rather, notice letters such as a September 2010 letter only state that the beneficiary must promptly notify VA if there is a change in school enrollment status, and that the beneficiary is responsible for all debts resulting from reductions or terminations of enrollment.  While a bullet point notes that VA cannot pay for changes in active duty status, the meaning of this statement is unclear, it is embedded in a list of points regarding school enrollment, not military service, and fails to make clear that the service member or the appellant must promptly notify VA if there is a change in active duty status.  The erroneous payments issued since December 28, 2012 could easily have been avoided by sending clearer notice, or by requiring that the service member or dependent to whom the benefits were transferred verify every semester, or at least every year, that the eligibility requirements continued to be satisfied.  That said, it seems that this is the very purpose of the VIS system, which provides VA ready access to current DOD information regarding a service member's active duty status and eligibility status for transfer of chapter 33 benefits.  Yet, when the VIS system notified VA that the Veteran was no longer eligible, VA continued to issue chapter 33 payments.  Under these circumstances, the Board finds that this was solely administrative error on the part of VA. 

In sum, the overpayment and resultant debt based on chapter 33 payments issued to the appellant prior to December 28, 2012 is valid.  The exact amount of such debt is a matter for the agency of original jurisdiction to determine.  As the outcome of this issue is determined as a matter of law, the benefit-of-the-doubt rule does not apply.  Cf. 38 U.S.C. § 5107 (2012); 38 C.F.R. § 3.102 (2017); Sabonis v. West, 6 Vet. App. 426, 430 (1994).  The debt based on erroneous payments issued on or after December 28, 2012 is not valid.  Thus, the appellant is not liable for any payments issued on or after December 28, 2012. 


ORDER

The amount of debt (as determined by the agency of original jurisdiction) based on an overpayment of educational assistance benefits under the Chapter 33 Post-9/11 GI Bill prior to December 28, 2012, is valid; to that extent the appeal is denied.

There is no valid debt for which the appellant is liable based on payments of educational assistance benefits under the Chapter 33 Post-9/11 GI Bill from December 28, 2012 forward; to that extent the appeal is granted.



____________________________________________
P. M. DILORENZO 
Veterans Law Judge, Board of Veterans' Appeals



Department of Veterans Affairs

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