Citation Nr: 1117153 Decision Date: 05/04/11 Archive Date: 05/10/11 DOCKET NO. 08-26 244A ) DATE ) ) On appeal from the Department of Veterans Affairs (VA) Regional Office (RO) in Louisville, Kentucky THE ISSUE Whether the Veteran's net worth is excessive for entitlement to nonservice-connected pension benefits. REPRESENTATION Veteran represented by: Lauren Murphy, Agent ATTORNEY FOR THE BOARD J.B. Freeman, Counsel INTRODUCTION The Veteran served on active duty from March 1970 to December 1971. This matter comes before the Board of Veterans' Appeals (Board) on appeal from a March 2007 rating decision of the RO in Louisville, Kentucky, which determined that the Veteran's net worth exceeded the limitations to pay nonservice-connected pension. The Veteran claims service connection for a spinal condition to include degenerative disc disease, an acquired psychiatric disability to include post traumatic stress disorder (PTSD) and depression, peripheral artery disease secondary to heart disease, a throat condition to include loss of use of voice box, hypertension, and entitlement to a total disability rating due to individual unemployability (TDIU). While these claims have been raised and the RO has begun development, they have not been adjudicated by the Agency of Original Jurisdiction (AOJ). Therefore, the Board does not have jurisdiction over them, and they are referred to the AOJ for appropriate action. As will be discussed in further detail in the following decision, the Board finds, based on the evidence of record, that the Veteran's income for nonservice-connected pension purposes was excessive prior to December 1, 2006. However, the Board has also determined that further evidentiary development with regard to the matter of whether his income for nonservice-connected pension purposes from December 1, 2006 is necessary prior to an adjudication of that portion of his appeal. Accordingly, the Board remands that portion of the Veteran's appeal to the RO, through the Appeals Management Center in Washington, D.C. VA will notify the Veteran if further action is required. FINDING OF FACT Prior to December 1, 2006, the Veteran's income exceeded the maximum allowable pension rate for a Veteran with no spouse and no children. CONCLUSION OF LAW Prior to December 1, 2006, the basic requirements for entitlement to nonservice- connected disability pension benefits have not been met. 38 U.S.C.A. §§ 1521, 5303 (West 2002 & Supp. 2010); 38 C.F.R. §§ 3.23, 3.252, 3.271, 3.272, 3.274, 3.277, 3.342 (2010). REASONS AND BASES FOR FINDING AND CONCLUSION The Board has thoroughly reviewed all the evidence in the Veteran's claims folders. Although the Board has an obligation to provide reasons and bases supporting this decision, there is no need to discuss, in detail, the evidence submitted by the Veteran or on his behalf. See Gonzales v. West, 218 F.3d 1378, 1380-81 (Fed. Cir. 2000) (the Board must review the entire record, but does not have to discuss each piece of evidence). The analysis below focuses on the most salient and relevant evidence and on what this evidence shows, or fails to show, on the claim. The Veteran must not assume that the Board has overlooked pieces of evidence that are not explicitly discussed herein. See Timberlake v. Gober, 14 Vet. App. 122 (2000) (the law requires only that the Board address its reasons for rejecting evidence favorable to the appellant). The Board must assess the credibility and weight of all evidence, including the medical evidence, to determine its probative value, accounting for evidence which it finds to be persuasive or unpersuasive, and providing reasons for rejecting any evidence favorable to the claimant. Equal weight is not accorded to each piece of evidence contained in the record; every item of evidence does not have the same probative value. When all the evidence is assembled, VA is responsible for determining whether the evidence supports the claim or is in relative equipoise, with the Veteran prevailing in either event, or whether a preponderance of the evidence is against a claim, in which case, the claim is denied. Gilbert v. Derwinski, 1 Vet. App. 49 (1990). I. Veterans Claims Assistance Act (VCAA) VA has met all statutory and regulatory notice and duty to assist provisions as to the Veteran's claim for pension benefits. See 38 U.S.C.A. §§ 5100, 5102, 5103, 5103A, 5106, 5107, 5126 (West 2002 & Supp. 2010); 38 C.F.R. §§ 3.102, 3.156(a), 3.159, 3.326 (2010). Under the VCAA, when VA receives a complete or substantially complete application for benefits, it is required to notify the claimant and his representative, if any, of any information and medical or lay evidence that is necessary to substantiate the claim. 38 U.S.C.A. § 5103(a) (West 2002); 38 C.F.R. § 3.159(b) (2010). The United States Court of Appeals for Veterans Claims (Court) held that VA must inform the claimant of any information and evidence not of record (1) that is necessary to substantiate the claim; (2) that VA will seek to provide; and (3) that the claimant is expected to provide. Quartuccio v. Principi, 16 Vet. App. 183 (2002). Prior to initial adjudication of the Veteran's claim, a July 2006 letter fully satisfied the duty to notify provisions. 38 U.S.C.A. § 5103(a); 38 C.F.R. § 3.159(b)(1); Quartuccio, at 187. In addition, the instant appeal turns on the Veteran's income and net worth. The RO has engaged in numerous attempts to obtain relevant information as discussed below. The Veteran has persistently failed to report his assets with specificity and has made materially incorrect statements on at least one occasion. In particular, the Veteran has failed to provide relevant information regarding the mortgage on his house on Pope Street. The Board notes that corresponding to VA's duty to assist the veteran in obtaining information is a duty on the part of the veteran to cooperate with VA in developing a claim. See Wood v. Derwinski, 1 Vet. App. 190, 193 (1991) (noting that "[t]he duty to assist is not always a one-way street"). VA's duty must be understood as a duty to assist the veteran in developing his claim, rather than a duty on the part of VA to develop the entire claim with the veteran performing a passive role. Turk v. Peake, 21 Vet. App. 565, 568 (2008). The Board finds that the RO has made reasonable attempts to obtain the information. The Board also concludes VA's duty to assist has been satisfied for the period prior to December 1, 2006. The instant claim turns on the Veteran's finances, which he has described sufficiently for the period prior to December 1, 2006. The Veteran has at no time referenced outstanding records that he wanted VA to obtain or that he felt were relevant to the claim prior to December 1, 2006. Similarly, there is no medical evidence which may be pertinent to the resolution of the claim. Thus, the duty to assist is satisfied. As there is no indication that any failure on the part of VA to provide additional notice or assistance reasonably affects the outcome of this case, the Board finds that any such failure is harmless. See Newhouse v. Nicholson, 497 F.3d 1298 (Fed. Cir. 2007). II. Improved Pension Net Worth and Income Limitations In a June 2006 rating action, the RO granted basic eligibility for pension benefits, effective from March 10, 2006. However, the RO also determined that his net worth exceeded the limitations for paying pension benefits. The Veteran disputes his net worth and argues that pension should be paid. Pursuant to 38 U.S.C.A. § 1521(a), improved (nonservice-connected) pension is a benefit payable by VA to a veteran of a period of war who is permanently and totally disabled from non-service-connected disability not the result of the veteran's willful misconduct. Basic entitlement exists if, among other things, the veteran's income is not in excess of the applicable maximum allowable pension rate specified in 38 C.F.R. § 3.23, as changed periodically and reported in the Federal Register. See 38 U.S.C.A. § 1521; 38 C.F.R. § 3.3(a)(3). The maximum annual pension rate (MAPR) is periodically increased from year to year. 38 C.F.R. § 3.23(a). The maximum rates for improved pension shall be reduced by the amount of the countable annual income of the veteran. 38 U.S.C.A. § 1521; 38 C.F.R. § 3.23(b). In addition, payment of a veteran's pension shall be denied or discontinued based upon consideration of the annual income of the veteran, the veteran's spouse, and the veteran's children. 38 U.S.C.A. § 1522(a); 38 C.F.R. § 3.274. The Veteran has not indicated that he is either married or has dependent children. Thus, the Board will restrict consideration solely to pension for a single Veteran with no dependents. In 2005, the maximum annual rate of improved pension for a Veteran was $10,579 ($881.58 per month). Beginning on December 1, 2006, the maximum annual rate of improved pension for a Veteran was $10,929 ($910.75 per month). See VA Manual M21- 1, Part I, Appendix B (Change 56, December 5, 2008); 38 U.S.C.A. § 1521; 38 C.F.R. § 3.23. In determining annual income, all payments of any kind or from any source (including salary, retirement or annuity payments, or similar income, which has been waived) shall be included except for listed exclusions. 38 U.S.C.A. § 1503(a); 38 C.F.R. §§ 3.260, 3.261, 3.262, 3.271(a). Income from the Social Security Administration (SSA) is not specifically excluded under 38 C.F.R. § 3.272. Similarly, VA compensation benefits are not specifically excluded under 38 C.F.R. § 3.272. Such payments are therefore included as countable income. Medical expenses in excess of five percent of the MAPR, which have been paid, may be excluded from an individual's income for the same 12-month annualization period to the extent they were paid. 38 C.F.R. § 3.272(g)(1)(iii). Here, the Veteran has also filed claims for service connection. In March 2011, the Veteran was awarded service connection for ischemic heart disease with an initial disability rating of 30 percent, effective June 13, 1990. A retroactive award is countable as income for the period on appeal. The Veteran filed the instant claim for pension benefits in March 2006. The Board will include the 30 percent rate in calculating the Veteran's income for each month beginning in March 2006. As of December 1, 2005, the payment for a 30 percent disability rating for a Veteran with no spouse or dependents was $337 per month. The amount was increased to $348 on December 1, 2006, and to $356 on December 1, 2007. Under 38 C.F.R. § 3.272, the following shall be excluded from countable income for the purpose of determining entitlement to improved pension: welfare; maintenance; VA pension benefits, payments under Chapter 15, including accrued pension benefits; reimbursement for casualty loss; profit from sale of property; joint accounts (accounts in joint accounts in banks and similar institutions acquired by reason of death of the other joint owner); and medical expenses in excess of five percent of the MAPR, which have been paid. The Veteran has not provided evidence regarding medical expenses. His March 2006 claim, income submissions of September 2006, July 2008, September 2008, and claims for service connection in August 2010 and January 2011 do not list any medical expenses. Thus, the Board will exclude medical expenses from the following discussion. As a condition of granting or continuing pension, the Department of Veterans Affairs may require from any person who is an applicant for or a recipient of pension such information, proofs, and evidence as is necessary to determine the annual income and the value of the corpus of the estate of such person. 38 C.F.R. § 3.277(a). Under 38 C.F.R. § 3.277(c)(3), an individual who applies for or receives pension as defined in § 3.3 of this part shall, as a condition of receipt or continued receipt of benefits, furnish VA an Eligibility Verification Report (EVR) upon request. 38 C.F.R. § 3.277(d) provides that if VA requests that a claimant or beneficiary submit an eligibility verification report but he or she fails to do so within 60 days of the date of the VA request, the Secretary shall suspend the award or disallow the claim. Unfortunately, the Veteran has not been forthcoming in reporting his assets. In his March 2006 claim, the Veteran listed income of $3,200 from a family owned bar and $500 a month in rental income. On an annualized basis, the rental income would be $6,000 per year, for a total of $9,200. The RO contacted the Veteran in July 2006, indicating that he needed to complete a Form 21-4185, to report income from business or property. The Veteran returned that form in September 2006, listing only expenses related to a "lounge," presumably the family owned bar. The Veteran listed his expenses and income from 2005, not the current year and indicated that he had $2,335 worth of income from the business. The RO denied the claim in March 2007. In the denial letter, the RO requested that the Veteran complete an "Improved Pension Eligibility Verification Report." Instead, the Veteran sent a partial copy of his 2006 Federal Income Tax return. He sent a Schedule E for his residence, showing rental income of $6,600 and mortgage interest, taxes and utilities of $3,658. The Veteran also sent a Schedule C, Profit or Loss from Business, showing gross income of $20,136 for a business at [redacted]. The Veteran claimed $17,682 in expenses, for a net profit of $2,454 for the business for that year. In May 2008, the RO again contacted the Veteran, requesting that he complete the EVR and provide full copies of his 2006 and 2007 Federal income tax returns. The Veteran returned the EVR in June 2008, again showing $500 a month in rental income, with a note that he rented out an upstairs apartment. The Veteran also reported $82 a month in SSI income. In section 7G of the EVR, the Veteran stated that he had no assets countable as net worth. SSI amounts are considered charitable and not countable as income to the Veteran. 38 C.F.R. § 3.262 (d), (f). The Veteran did not report any business income. The RO contacted the Veteran again in July 2008 requesting that he complete a Form 21-5655 regarding commercial and rental property. The Veteran returned the form in July 2008, but did not complete the form completely. The Veteran failed to provide the value of his house and the separate value of the apartment he rented out. He also failed to provide information on his mortgage. The RO contacted the Veteran again in August 2008, requesting that he provide the missing information. The RO returned the form to him so that he had only to complete only the missing sections. The Veteran did not respond, so the RO issued the September 2008 Statement of the Case. The Veteran returned a Substantive Appeal in September 2008. In it, the Veteran stated that his home value was $135,000, with the rented apartment comprising about half of the space of the house. The Veteran again failed to complete the section on debts outstanding. The Veteran wrote in that the rental income was not a business. He also provided a copy of a lease for the [redacted] property. The contract was signed in October 2006, for a period of ten years. The Veteran also reported that his brother and daughter had been helping him cover his expenses for an unspecified period of time. The value of maintenance furnished by a relative is not countable as income to the Veteran. 38 C.F.R. § 3.262(c). The Veteran submitted a January 2009 statement in support of his claim. He reported that he had applied to Social Security Insurance (SSI) benefits and had been awarded $82 per month. He also stated that his rental income did not cover the mortgage on his house. The Veteran was not clear in identifying when the SSI benefits had begun. The RO contacted the Veteran in March 2010 regarding the lease agreement. The RO requested clarification of the ownership of the property on [redacted] and his permanent address and use for the property. The Veteran called in and stated that he had owned the property on [redacted] but sold it in 2007. He reported that he owned the house he lived in and had a mortgage on the property. He indicated that his monthly payment was $654. The Veteran also submitted an August 2010 statement indicating that he rented the [redacted] address for his bar and that his house was up for sale and had been for 16 months. He also stated that he was going to file for bankruptcy. The period prior to December 1, 2006, is the only period for which the Board may make findings with any certainty. The Veteran filed his claim for pension in March 2006. Including that month and ending November 30, 2006 (the day prior to the increased rate for pension calculations), the Veteran had nine months eligibility under the December 1, 2005, rate of $10,579. The monthly rate under the December 1, 2005, rate was $881.58. He had nine months' worth of $6,600 in rental income and nine months of $2,454 in business profit. On that basis, the Veteran's income averaged $754.50 for those nine months. The Veteran has also been awarded the 30 percent disability compensation in March 2011, worth $337 per month and countable as income to him for that period. Thus, from the filing date to November 30, 2006, the Veteran had monthly income of $1,091.50. Excluding any questions of net worth, the Veteran exceeded the maximum income allowable for the period prior to December 1, 2006. Thus, pension is not warranted for that portion of the appeal period. Accordingly and based on this evidentiary posture, the Board finds that the preponderance of the evidence is against the Veteran's pension claim prior to December 1, 2006. Consequently, the benefit-of-the-doubt rule does not apply, and this portion of the Veteran's claim must be denied. 38 U.S.C.A. § 5107(b) (West 2002); Gilbert v. Derwinski, 1 Vet. App. 49, 55 (1990). For reasons that will be discussed below, however, the Board must remand the matter pertaining to the period on and after December 1, 2006, for additional development. ORDER Prior to December 1, 2006, basic eligibility for pension benefits is denied. REMAND For the period on and after December 1, 2006, the Board is stymied by the lack of information provided by the Veteran. First, the Veteran has persistently failed to provide any information regarding his debts, particularly his mortgage. In completing his EVRs, the Veteran refused to enter any debt information. Again, his 2006 income tax return showed mortgage interest. As his recent filings indicate a bankruptcy filing, such debts must have been incurred. Second, the Veteran has reported that, during 2007, he disposed of his business, which generated $2,454 in income during 2006. Without that income, the Veteran may have fallen below the income maximum and a net worth calculation would be required. The record is not clear as to how much the Veteran had in business income in 2007 or whether the Veteran was able to liquidate the business and increase his net worth in 2007. While the RO requested that the Veteran provide his 2007 income tax return, the Board notes that any such return would have been filed with the Internal Revenue Service (IRS) and is thus in the possession of a Federal agency. The records, which are potentially relevant, adequately identified and in the possession of a Federal agency, must be obtained to discharge VA's duty to assist. The RO issued a January 2011 Supplemental Statement of the Case denying the claim. The RO noted that the Veteran had yet to complete the Form 5655 and had persistently failed to report his debts or the value of his home. Unfortunately, the Veteran has indicated a bankruptcy filing which is a matter of public record in a U.S. Bankruptcy Court. In order to declare bankruptcy, he would have been required to declare the value of his house and the remaining debt owed, if any. This information is highly relevant to the outcome of the determination as to the Veteran's net worth. The records, which are potentially relevant, adequately identified and in the possession of a Federal agency, must be obtained to discharge VA's duty to assist. The Board finds that a remand is necessary to obtain the Veteran's 2010 bankruptcy filing and income tax filings for tax year 2007 from the relevant Federal agency. Furthermore, the Veteran has filed a series of service connection claims with the RO, as noted in the Introduction. Depending on the outcome of those claims, the Veteran's income may increase to the point where an excessive net worth calculation is unnecessary. This is particularly true because the RO has granted a preliminary award for ischemic heart disease which raised the Veteran's income prior to December 1, 2006, to a level which precluded pension benefits. Thus, the Board finds that these issues are intertwined with the pension benefits claim. The pension claim must be deferred pending resolution of the service connection claims. Accordingly, this matter is hereby REMANDED to the RO, via the AMC, for the following actions: 1. Obtain, and associate with the claims file, the Veteran's Federal income tax return for tax year 2007 from the IRS and his 2010 bankruptcy filing from the U.S. Bankruptcy Court. All requests for information and responses should be associated with the claims file. 2. Following completion of the development on, and adjudicate of, the Veteran's service connection claims, readjudicate the remaining issue on appeal-whether the Veteran's net worth is excessive from December 1, 2006 for nonservice-connected pension benefits purposes. If this benefit sought is not granted, the Veteran and his representative should be furnished a SSOC and afforded a reasonable opportunity to respond before the record is returned to the Board for further review. The Veteran has the right to submit additional evidence and argument on the matter that the Board has remanded. Kutscherousky v. West, 12 Vet. App. 369 (1999). This claim must be afforded expeditious treatment. The law requires that all claims that are remanded by the Board or by the Court for additional development or other appropriate action must be handled in an expeditious manner. See 38 U.S.C.A. §§ 5109B, 7112 (West Supp. 2010). ____________________________________________ THERESA M. CATINO Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs