(a) The standard “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. The decision reached should not be unduly favorable or adverse to either side. The phrase equity and good conscience means arriving at a fair decision between the obligor and the Government. In making this determination, consideration will be given to the following elements, which are not intended to be all inclusive:
(1) Fault of debtor. Where actions of the debtor contribute to creation of the debt.
(2) Balancing of faults. Weighing fault of debtor against Department of Veterans Affairs 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 Department of Veterans Affairs benefits results in relinquishment of a valuable right or incurrence of a legal obligation.
(b) In applying this single standard for all areas of indebtedness, the following elements will be considered, any indication of which, if found, will preclude the granting of waiver:
(1) Fraud or misrepresentation of a material fact (see § 1.962(b)).
(2) Bad faith. This term generally describes unfair or deceptive dealing by one who seeks to gain thereby at another's expense. Thus, a debtor's conduct in connection with a debt arising from participation in a VA benefits/services program exhibits bad faith if such conduct, although not undertaken with actual fraudulent intent, is undertaken with intent to seek an unfair advantage, with knowledge of the likely consequences, and results in a loss to the government.
(Authority: 38 U.S.C. 5302(c))
[39 FR 26400, July 19, 1974, as amended at 58 FR 3841, Jan. 12, 1993; 58 FR 7296, Feb. 5, 1993; 69 FR 62202, Oct. 25, 2004]
Notes of Decisions
Cited in
47
cases (
3 in the last 5 years), 1983–2022 · leading case:
Hilkert v. West, 12 Vet. App. 145 (Vet. App. 1999).
Hilkert v. West, 12 Vet. App. 145 (Vet. App. 1999).
· cites it 2× “544, 546 (1994) (finding reasons-or-bases error and remanding where Board failed to discuss all elements applicable to determination whether recovery of overpayment would be against equity and good conscience under 38 C.F.R. § 1.965 (a)); Cullen v. Brown, 5 Vet.”
Damian Reyes v. R. James Nicholson, 21 Vet. App. 370 (Vet. App. 2007).
· cites it 5× “First, he avers that the regulatory definition of bad faith, at 38 C.F.R. § 1.965 (b)(2) (2003), confers unfettered discretion upon VA to deny waivers whenever it so chooses, contrary to the legislative intent of 38 U.”
Ridings v. Brown, 6 Vet. App. 544 (Vet. App. 1994).
· cites it 5× “On May 17, 1990, the Committee, after considering all the elements of 38 C.F.R. § 1.965 (a) (1993), found that collection of the debt would not violate the standard of equity and good conscience.”
Parker v. Brown, 9 Vet. App. 476 (Vet. App. 1996).
· cites it 2× “38 C.F.R. § 1.965 (a) (1995). Waiver decisions • are subject to review under the “arbitrary and capricious” standard.”
Cullen v. Brown, 5 Vet. App. 510 (Vet. App. 1993).
· cites it 3× “” According to 38 C.F.R. § 1.965 (a) (1992), “[t]he phrase equity and good conscience means arriving at a fair decision between the obligor and the Government.”
Branham v. Derwinski, 1 Vet. App. 93 (Vet. App. 1990).
“In his brief to this Court, appellant’s counsel argued that the VA abused its discretion in refusing to release appellant from liability when he sold his house to a new buyer.”
Farless v. Derwinski, 2 Vet. App. 555 (Vet. App. 1992).
· cites it 2× “We note that in the future a question may arise as to the inconsistency between section 5302 and its corresponding regulation, 38 C.F.R. § 1.965 (b). Section 5302(c) provides that indebtedness may not be waived where there exists “an indication of fraud, misrepresentation or bad…”
Erickson v. West, 13 Vet. App. 495 (Vet. App. 2000).
· cites it 2× “See 38 C.F.R. § 1.965 . Nonetheless, the appellant sought to deny the validity of the indebtedness and argued that this error was solely the fault of VA and, for whatever reason, eschewed a request for waiver of the indebtedness.”
Smith v. Derwinski, 1 Vet. App. 267 (Vet. App. 1991).
“38 C.F.R. § 1.965 (1990). Waiver decisions, and the review of such decisions by the BVA, are subject to review by this Court to determine whether the statutory standard was applied in accordance with the regulatory guidance or whether the decision was made in an arbitrary or…”
Schaper v. Derwinski, 1 Vet. App. 430 (Vet. App. 1991).
“38 C.F.R. § 1.965 (1990). In Smith, we held: Waiver decisions, and the review of such decisions by the BVA, are subject to review by this Court to determine whether the statutory standard was applied in accordance with the regulatory guidance or whether the decision was made in…”
Franklin v. Brown, 5 Vet. App. 190 (Vet. App. 1993).
· cites it 2× “But see 38 C.F.R. § 1.965 (b) (1992) (listing bars to waiver as fraud or misrepresentation of a material fact, material fault, and lack of good faith).”
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