Citation Nr: 1300668 Decision Date: 01/08/13 Archive Date: 01/16/13 DOCKET NO. 12-12 860 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office and Insurance Center in Philadelphia, Pennsylvania THE ISSUE Eligibility for Veterans Mortgage Life Insurance (VMLI). WITNESS AT HEARING ON APPEAL Appellant ATTORNEY FOR THE BOARD J. M. Kirby, Counsel INTRODUCTION The Veteran had active military service from July 1966 to May 1969, and died in May 2011. The appellant is his surviving spouse. This matter comes before the Board of Veterans' Appeals (Board) on appeal from a July 2011 decision by the Department of Veterans Affairs (VA) Regional Office (RO) and Insurance Center in Philadelphia, Pennsylvania, from which the appeal was certified. The appellant testified at a October 2012 hearing by the undersigned held the RO in Cleveland, Ohio. A transcript of that hearing is associated with the claims file. The appeal has been advanced on the Board's docket pursuant to 38 C.F.R. § 20.900(c) (2012). 38 U.S.C.A. § 7107(a) (2) (West 2002). FINDINGS OF FACT 1. An April 2011 rating decision established eligibility for a specially adapted housing grant. 2. The Veteran died in May 2011. 3. Prior to his death, the Veteran had not submitted adequate documentation to satisfy certain eligibility requirements for a grant of specially adapted housing. 4. At the time of the Veteran's death, VA had not approved a specially adaptive housing grant to him. CONCLUSION OF LAW The criteria for eligibility for a VMLI policy have not been met. 38 U.S.C.A. §§ 2101, 2102, 2106 (West 2002); 38 C.F.R. §§ 36.4402, 36.4405 (2012). REASONS AND BASES FOR FINDINGS AND CONCLUSION Because the application of the law to the undisputed facts is dispositive of this appeal, no discussion of VA's duties to notify and assist is necessary. See Mason v. Principi, 16 Vet. App. 129 (2002). Under applicable criteria, VA is authorized to assist any Veteran who is entitled to disability compensation for the loss of use of one lower extremity together with residuals of organic disease or injury, or the loss of use of one upper extremity, which so affect the functions of balance or propulsion as to preclude locomotion without the aid of braces, crutches, canes or a wheelchair, in acquiring a suitable housing unit with special fixtures or movable facilities made necessary by the nature of the Veteran's disability and necessary land therefore, or in remodeling a dwelling to meet those requirements. 38 U.S.C.A. §§ 2101, 2102. The United States shall automatically insure any eligible Veteran who is or has been granted assistance in securing a suitable housing unit under chapter 21, of Title 38 United States Code, against the death of a Veteran. The amount of insurance provided a Veteran under this section may not exceed the lesser of $90,000.00 or the amount of the loan outstanding on the housing unit. 38 U.S.C.A. § 2106. The appellant asserts eligibility for VMLI. She argues that because eligibility for specially adapted housing had been established prior to the Veteran's death, and that his claim for VMLI was pending at the time of his death, she should be entitled to the VMLI benefit as the surviving spouse. The April 2011 rating decision established eligibility for a specially adapted housing grant due to the severity of his service-connected disabilities, to include his cholangiocarcinoma (bile duct cancer), for which service connection was granted and a 100 percent rating assigned in that same rating decision. In a separate letter to the Veteran dated in April 2004, he was advised of this determination, and that VA's Loan Guaranty Division would contact him in the near future regarding that benefit. The Veteran's submission of VA Form 29-8636, Veterans Mortgage Life Insurance Statement was received by VA on April 26, 2011. Thereafter, a Specially Adapted Housing Initial Interview Report was completed on May 10, 2011, the day the appellant was interviewed by a VA specially adapted housing agent. During that interview, a discussion of the specially adapted housing grant program took place, including contractor selection requirements and the submission of plans and required exhibits. Thereafter, a May 16, 2011 letter notified the Veteran of the result of the May 10, 2011, VA inspection of his residence for use with the Special Adapted Housing Grant. He was informed that the inspection found that the residence did not comply with the Specially Adapted Housing Minimum Property Requirements; although it appeared feasible for adaptation, the Veteran was warned that the extent of the work required may be extensive and the cost to meet VA's Specially Adapted Housing Minimum Property Requirements may exceed the amount of the grant. After delineating all of the Specially Adapted Housing Minimum Property Requirements that would be required for his home, the letter instructed the Veteran that the next step was to provide a copy of the letter to a contractor or designer, so that a design that included all needed Specially Adapted Housing Minimum Property Requirements could be developed. Then, three bids needed to be obtained. Critically, this letter also stated that it "did not represent an approval of the [specially adapted housing] grant," and that the "grant approval can only be obtained after a complete package of all required documentation is submitted and reviewed to determine all [specially adapted housing] items have been met;" he was cautioned not to begin any work until grant approval had been obtained. According to the Veteran's death certificate, he died on May [redacted], 2011. Thereafter, the appellant contacted her Member of Congress; on her behalf, the Member wrote to VA and indicated that the appellant was "aware that she no longer qualifies to continue the [specially adapted housing grant] process, but would like to know the status of the VMLI which was also processing when" the Veteran died. The RO replied to the appellant's Member of Congress that "the evidence of record shows that [the Veteran] was in the process of the grant approval when he passed away but was not approved for a Specially Adapted Housing Grant before his death. Therefore, he is not entitled to [VMLI]." The Veteran submitted two notices of disagreement with that denial, received by VA in July 2011, and this appeal followed. In 1995, VA's Office of General Counsel issued a precedent opinion, in a situation factually similar to the appellant's case, holding that a grant of assistance in securing a suitable housing unit is clearly a condition precedent to coverage under VMLI, and having been "granted assistance" within the meaning of 38 U.S.C.A. § 2106 means when "VA approves the specially adapted housing grant." VAOGCPREC 4-95. It was noted that the administrative act of approval is a determination that an award will be made. Id. The opinion went on to quote Pappalardo v. Brown, 6 Vet. App 63, 65 (1993), which held that whether a specially adapted housing grant had been approved by VA before the Veteran's death was a factual matter requiring adjudication based upon the evidence of record and the applicable law and regulations. Thus, an award of the VMLI benefit turns on whether the specially adapted housing grant had already been approved. VAOGCPREC 4-95 further observed that the statute authorizing VMLI requires that the regulations that implement the specially adapted housing program: shall include, but not be limited to, provisions requiring findings that (1) it is medically feasible for such Veteran to reside in the proposed housing unit and in the proposed locality; (2) the proposed housing unit bears a proper relation to the Veteran's present and anticipated income and expenses; and (3) the nature and condition of the proposed housing unit are such as to be suitable to the Veteran's needs for dwelling purposes. 38 U.S.C.A. § 2101(a). Moreover, as authorized by the statute, the implementing regulation requires findings on additional eligibility factors that are not included in the statute. With respect to adaptation grants as contemplated in this case, 38 C.F.R. § 36.4402(a) provides that no beneficiary shall be eligible for assistance for the purpose of reimbursing the Veteran for the cost of remodeling a dwelling unless a number of determinations have been made. These include that the Veteran has or will acquire an interest in the housing unit which is: (i) a fee simple estate, or (ii) a leasehold estate, the unexpired term of which, including renewals at the option of the lessee, is not less than 50 years, or (iii) an interest in a residential unit in a cooperative or a condominium type development which in the judgment of the Under Secretary for Benefits or the Director, Loan Guaranty Service, provides a right of occupancy for a period of not less than 50 years, or (iv) a beneficial interest in a revocable Family Living Trust that ensures that the Veteran, or Veteran and spouse, have an equitable life estate, provided the trust arrangement is valid under State law; and provided, the title to such estate or interest is or shall be such as is acceptable to prudent lending institutions, informed buyers, title companies, and attorneys, generally, in the community. 38 C.F.R. § 36.4402(a) (4). Another requirement set out in this regulation is that the Veteran certify on such form as the Secretary shall prescribe, that neither the Veteran, nor anyone authorized to act for the Veteran, will refuse to sell or rent, after the making of a bona fide offer, or refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny the dwelling or property acquired by this benefit to any person because of race, color, religion, sex, or national origin; that the Veteran recognizes that any restrictive covenant on the property relating to race, color, religion, sex, or national origin is illegal and void and any such covenant is specifically disclaimed; and that the Veteran understands that civil action for preventive relief may be brought by the Attorney General of the United States in any appropriate U.S. District Court against any person responsible for a violation of the applicable law. 38 C.F.R. § 36.4402(a) (5). Lastly, 38 C.F.R. § 36.4402 provides that it must be determined whether the housing unit for which an adaptation grant is sought is located in an area identified by the Federal Emergency Management Agency as having special flood hazards and in which flood insurance has been made available under the National Flood Insurance Act, as amended, and if so, or becomes so, it will be covered by flood insurance. The Secretary cannot approve any financial assistance for the acquisition or construction of property located in an area identified by the Federal Emergency Management Agency as having special flood hazards unless the community in which such area is situated is then participating in the National Flood Insurance Program. 38 C.F.R. § 36.4402(a) (6). A separate regulation, 38 C.F.R. § 36.4405, sets forth that VA, as a condition precedent to a specially adapted housing grant, may require submission of such proof of costs and other matters as VA may deem necessary. The record reflects that the Veteran and the appellant intended to adapt their current home to meet the Veteran's special needs resulting from his service-connected disabilities. In regard to the approval of the application for the specially adapted housing grant to make an adaptation possible, the worksheet for the specially adapted housing interview that was conducted with the appellant on May 10, 2011, lists a number of modifications to their current home to accommodate his disabilities, including but not limited to creating a means of egress from the master bedroom, having each of the two required egresses equipped with a walk, widening hallways to a minimum of 48 inches wide and interior doors to a minimum of 36 inches wide (or obtaining a waiver as to one or both of these). Finally, the interviewer checked a box on the worksheet indicating his recommendation to "proceed with the grant." Accordingly, it appears the statutory requirements for a specially adapted housing grant approval were met prior to the Veteran's death. However, with respect to the regulatory requirements for such an approval, it appears that all conditions had not been met. It appears that no action beyond that initial interview had been completed. While it is recognized that this letter was likely received by the Veteran less than 10 days prior to his death, there is no indication that a contractor or designer had been contacted and the record does not reflect that any needed documentation had been completed or obtained. As such, it may not be concluded that the Veteran's interest in the property at issue was determined prior to his death, as would be necessary to approve any specially adapted housing grant. The record also does not show and the appellant has not contended that the Veteran made the necessary certifications regarding his actions with others in connection with this property based on race, color, religion, sex, or national origin; and his awareness of the consequences of any such actions. Finally, the statute authorizing the benefit at issue is worded in such a way that any grant that would be approved would be only that amount warranted by the particular needs of the Veteran, up to a specified limit, ($90,000.00 at the time of the initial application). Because the benefit was not a fixed lump sum award, the specific costs of the contemplated adaptations would have to have been determined prior to any grant approval. There is no indication in the record that any such costs were known at the time of the Veteran's death. The appellant testified before the Board at her October 2012 Board hearing that she should be granted the specially adapted housing grant, and consequently the VMLI. She argued that the only reason those benefits were not granted prior to the Veteran's death was VA's delay in adjudicating and ultimately granting the Veteran's claim for service connection for cholangiocarcinoma, on which basis his entitlement to the specially adapted housing benefit was established. She also testified that she was afraid to lose her home if she did not receive the financial benefit inherent in the specially adapted housing grant and/or VMLI. Although the Board is sympathetic to the appellant's arguments, the law authorizes VMLI only in cases where the specially adapted housing grant has been awarded. Indeed, the May 2011 letter notifying the Veteran of the result of the VA inspection of the residence specifically stated that notice of the requirements to obtain grant approval did not represent an approval of the grant itself. Thus, even though he was clearly eligible for a specially adapted housing grant, such a grant had not been finally approved because all regulatory requirements had not been met. Ultimately, the record does not establish that, prior to the Veteran's May 2011 death, he had not been granted assistance in securing suitable housing under Chapter 21, Title 38, United States Code, for purposes of entitlement to VMLI provided in 38 U.S.C.A. § 2106. There is, thus, simply no legal basis for granting the appellant's entitlement to VMLI, and her claim unfortunately must be denied. ORDER Eligibility for VMLI is denied. ____________________________________________ STEVEN D. REISS Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs