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How to Fight a VA Overpayment Claim
How You can Fight a VA Overpayment Claim
You’ve been receiving monthly VA disability compensation from the U.S. Department of Veterans Affairs (VA) for years. Out of nowhere, you get a letter saying you’ve been overpaid, and the VA would like you to repay the funds. Since you thought you were receiving the correct amount of monthly compensation, you already spent the money because you thought it was yours.
Many Veterans have stories similar to the one above. However, most Veterans don’t realize they can fight the VA’s decision, resulting in not having to pay back the debt. If the amount of overpayment is substantial, it is a good idea to appeal and fight for your right not to incur the debt.
What Happens When the VA Overpays?
What happens if the VA overpays a Veteran? As with most things involving the VA, it’s a little complicated.
Typically, when the VA claims they have overpaid a Veteran, they send a letter detailing their plan to recoup the debt. This notice must include the following:
- The exact amount of the overpayment
- A clear explanation of the reasons behind the overpayment
- Inform the Veteran of their Rights and available corrective solutions
- Inform the Veteran how the debt can be paid back to the VA. Collection of the debt can be made through an offset of their current or future benefits.
Without any input from the Veteran, the VA will proceed to take the debt out of the Veteran’s monthly compensation benefits payments until the overpayment has been paid back. However, the Veteran has options for fighting the VA overpayment claim, resulting in not having to pay the debt back.
When a Veteran receives their first notice from the VA Debt Management Center (DMC) stating the plans to withhold monthly payments until the entire overpayment is received, they need to file a written waiver request asking them to cancel the overpayment. They must send in the waiver request within 180 days from the date of the first DMC notice. However, if the request is filed no later than 30 days from the date on the notice, the VA must continue to pay the full benefits while it’s processing the waiver request, which could take several months.
The VA will still process the waiver request if the waiver request is filed after the 30-day deadline but before the 180-day deadline, but starting on the date specified on the notice, it will begin to withhold monthly benefits.
To determine how to dispute a VA overpayment, a Veteran has to know why the overpayment occurred. An overpayment could happen due to a variety of reasons. Some of the most common causes for overpayment include the following:
- VA error (commonly known as administrative error)
- Failure by the Veteran to notify the VA of changes in their status
- Recoupment of compensation paid during drill days
If the VA overpays a Veteran by committing an administrative error, the law states that no debt may be created. In other words, if the VA awards benefit based solely on administrative error, the Veteran gets to keep those funds. That sounds simple, but the VA may still try to recoup overpayment in these instances. When this happens, a Veteran must take action to protect his or her rights.
Often, the VA will try to recoup the debt because they do not believe it was created by administrative error. The VA General Counsel has clarified that the VA may collect any error created in whole or in part by the Veteran. To fight against the collection of overpaid benefits paid due to administrative error, Veterans must show they did not fault the creation of the overpayment.
If a Veteran can prove that the overpayment was a direct result of an administrative error made by the VA, they can keep the overpayment funds they received. However, failure to do so could result in the Veteran having payments taken out of their monthly disability compensation.
Waiver of Overpayment
Another way to dispute VA overpayment debt is to request a waiver of that overpayment. This would be a separate and distinct argument disputing the debt collection. Unlike disputing the debt, a Veteran does not argue that the debt is not valid. They instead argue that the collection of the debt would be against equity and good conscience. In other words, the Veteran does not argue that the debt should never have been made, simply that it should not be collected because it would harm the Veteran and their livelihood.
Several considerations will be made when looking at a waiver of overpayment, including:
- Weighing the Veteran’s fault in the creation of the debt against the VA’s fault
- Deciding whether collecting would cause “undue hardship” on the Veteran (i.e., depriving the Veteran of the ability to provide basic necessities to his or her family)
- Determining whether collecting would defeat the purpose of the VA benefit involved
Imagine a Veteran’s spouse passes away, but the VA isn’t informed for months. When the VA discovers this, they might try to recoup the debt created by them paying for the Veteran’s deceased dependent for some time. However, if the former service member had already spent the money and was living paycheck to paycheck, he or she could argue it would create “undue hardship” to recoup the debt.
One steadfast exception to waivers involves bad faith on the part of the Veteran. The VA is not allowed to waive a debt in cases where there is an indication of fraud or misrepresentation of the person seeking the waiver. Keep in mind that this is a rare occurrence. To qualify for the creation of the debt, a Veteran must set out to deceive the VA and receive an unfair advantage with the knowledge of the likely consequences.
VA reasons to grant waiver requests
If any findings prove fraud, bad faith, or misrepresentation on your part, the VA is prohibited from granting a waiver request. The VA is also prohibited from collecting debt if it would go against “equity” and “good conscience.”
There are six factors considered to determine if collecting a debt from the Veteran would go against equity and good conscience.
- Was the Veteran at fault for any reason? For example, if they failed to report a change in your dependent status.
- Was the VA at fault? For example, the Veteran reported the change in dependency or eligibility, but the VA filed to change their compensation amount for a period of time.
- Were the benefits given to help provide the Veteran their basic needs? Denying the benefits would defeat the purpose for which the benefits were granted.
- Would withholding the benefits cause the Veteran undue hardship? For example, a financial status report finds the lesser benefit would cause them financial hardship in the form of homelessness, inability to pay for health care, or the inability to buy food.
- Would the Veteran be unjustly enriched if the VA chose not to collect the overpayment? This means the Veteran would have a large sum of money that exceeds the amount you and your family members need to meet your basic needs.
- Is it unfair to collect the money because the benefits are now relied upon due to a change in their position for the worse? The purchase of a new home or a new home loan is an example of this.
The waiver request should clearly address the above factors for the best chance of winning the appeal.
How to Fight a VA Overpayment Claim
A Veteran may both dispute the debt (i.e., challenge whether the debt should have been created in the first place) and request a waiver of the overpayment at the same time. However, the deadlines are different for each. Dispute of debt has no deadline, but the request for a waiver must be submitted 180 days from the date of the notice of the debt.
The letter explaining the overpayment and plan to recoup will provide methods of response. One of those methods is requesting a hearing. In most instances, a hearing before the VA does not benefit the Veteran, but overpayment issues are an exception. The Veteran has a chance to explain why debt creation is unfair or would disadvantage them.
If a Veteran does not wish to have a hearing, they can instead write a letter to the VA explaining the situation. There is no specific VA form for requesting a waiver of overpayment, nor for disputing the debt.
Finally, if the overpayment is based on an erroneous drill pay for reservists or members of the National Guard, the best way to dispute the overpayment is to correct the number of days spent in receipt of drill pay. It is vital for those who receive VA benefits to keep good records of drill days for this purpose.
Request for a Waiver Denied?
If you have submitted a waiver within 30 days and received benefits while the waiver was being processed, the amount of these benefits will be added to the amount of the debt.
You have the option to ask the VA’s Debt Management Center (DMC) for a payment plan. This means the Department of Veterans Affairs would withhold a lesser amount from your monthly compensation, so you can meet your basic needs. For example, you may be able to negotiate a repayment plan of reducing your monthly benefit payments by $100 per month until the debt has been paid back.
You also have the option to appeal by submitting a notice of disagreement. If you win the appeal, any benefits withheld during the appeal will be reimbursed to you. Consult with a VA lawyer if the amount of the benefit overpayment is substantial.
Veterans Serving Veterans
Berry Law Firm was founded by John Stevens Berry Sr., Vietnam War Veteran and trial attorney. Today, we count many military Veterans among our attorneys and staff. The Department of Labor has recognized us for our efforts to hire, train, and retain Veteran employees. We know what it means to serve, and we know firsthand the struggles many of our clients face every day.
Unfortunately, our team does not currently assist in the recovery of a VA overpayment. We wish you the best of luck in recovering your overpayment and hope our blog proves helpful in finding relief options.
Established in 1965 by Vietnam War veteran and attorney John Stevens Berry Sr., Berry Law Firm is a team of veterans dedicated to defending, safeguarding, and fighting to protect the rights of veterans. Over the decades, thousands of veterans from across the country and all branches of the military have trusted our firm with their cases and, more importantly, their futures.