Citation Nr: 1303060 Decision Date: 01/30/13 Archive Date: 02/05/13 DOCKET NO. 09-32 237A ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Buffalo, New York THE ISSUE Whether the apportionment of the Veteran's VA compensation benefits is proper. REPRESENTATION Appellant represented by: Disabled American Veterans ATTORNEY FOR THE BOARD Timothy D. Rudy, Counsel INTRODUCTION The Veteran served on active duty from April 1993 to November 2005. The original claimant and appellee in this action is the former wife of the Veteran who is the mother and custodian of their two sons, J.W. and D.W., Jr. This case is before the Board of Veterans' Appeals (Board) on appeal from apportionment decisions of the Department of Veterans Affairs (VA) Regional Office (RO) in Roanoke, Virginia, and Buffalo, New York, dated in September 2008 and thereafter. The decisions granted an apportionment allotted from the Veteran's compensation benefits for the Veteran's children, D.W., Jr. and J.W., and for the appellee before the effective date of their divorce. During the pendency of this appeal, the Veteran relocated. His claims file is now within the jurisdiction of the Buffalo, New York RO. The Veteran is the appellant in this matter who has perfected an appeal of his disagreement with an apportionment of his disability compensation benefits on behalf of his two minor children. The claimant/appellee, the Veteran's former spouse, never perfected an appeal of her disagreement over a decrease in the apportionment made in a September 2010 rating decision. The record shows that she submitted a Notice of Disagreement (NOD) in November 2010 to the decrease. However, she never submitted a VA Form 9, Substantive Appeal, after the RO issued a supplemental statement of the case (SSOC) in August 2011 which, in part, adjudicated the propriety of this decrease. The Board notes that an August 2011 cover letter to the appellee had informed her that she needed to file a Substantive Appeal if she wished to perfect her appeal to the Board. She has never done so. The Board also notes rating decisions dated in 2011 and 2012 concerning the status of D.W., Jr., as a helpless child. Neither party has appealed these decisions nor are they the subject of this appeal. Therefore, the only claim before the Board in this appeal is the one listed on the title page. FINDINGS OF FACT 1. The Veteran's two dependent children reside with their mother. 2. By court order, the Veteran is obligated to pay child support for his dependent children in the monthly amount of $1,560.00. 3. In April 2007, the RO received a request for apportionment of the Veteran's benefits on behalf of his dependent children submitted by their custodian, the Veteran's former spouse, at which time the Veteran was receiving compensation for service-connected disabilities at a combined rating of 70 percent. 4. The Veteran did not pay child support from approximately December 2007 and consequently was not reasonably discharging his responsibilities to his children until he resumed payments with wage withholding in October 2009; thereafter he reasonably discharged his responsibilities to his children. 5. As of November 1, 2009, the Veteran was suffering an undue hardship in making both monthly court-ordered child support payments and apportioning his monthly VA compensation benefits; moreover apportionment of less than 20 percent of his VA benefits is considered insufficient to constitute a reasonable basis for any apportionee. CONCLUSION OF LAW The criteria for an apportionment of the Veteran's VA disability compensation benefits were met only until November 1, 2009. 38 U.S.C.A. §§ 5107, 5307 (West 2002 & Supp. 2012); 38 C.F.R. §§ 3.102, 3.450, 3.451, 3.452, 3.458 (2012). REASONS AND BASES FOR FINDINGS AND CONCLUSION Duties to Notify and Assist The Veterans Claims Assistance Act of 2000 (VCAA) and implementing regulations impose obligations on VA to provide claimants with notice and assistance. 38 U.S.C.A. §§ 5102, 5103, 5103A, 5107, 5126 (West 2002 & Supp. 2012); 38 C.F.R §§ 3.102, 3.156(a), 3.159, 3.326(a) (2012). Proper VCAA notice 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. 38 U.S.C.A. § 5103(a); 38 C.F.R. § 3.159(b)(1). However, the United States Court of Appeals for Veterans Claims (Court) has held that the VCAA does not apply to decisions regarding how benefits are paid. Sims v. Nicholson, 19 Vet. App. 453, 456 (2006). An apportionment decision involves a determination as to how existing benefits are paid, such as between the Veteran and his dependents in the case at hand. Under the reasoning in Sims, the requirements of the VCAA have been met in this case. However, while not specifically addressing the apportionment statute (38 U.S.C.A. § 5307), the Court has held that the VCAA does not apply to claims predicated on chapter 53 of title 38 of the U. S. Code, which concerns special provisions relating to VA benefits. See Lueras v. Principi, 18 Vet. App. 435 (2004); Barger v. Principi, 16 Vet. App. 132 (2002). Even so, the Board notes that both the claimant and the Veteran were each advised in separate December 2007 letters of the evidence and information necessary to adjudicate the apportionment claim and their and VA's respective duties in obtaining evidence in support of such claim. These letters requested that they provide additional, updated information and evidence relevant to the pending claim. Both the Veteran and the claimant eventually submitted some financial information regarding their income and expenses. Additionally, the Board notes that the contested claims procedures codified at 38 U.S.C.A. § 7105A(b) and 38 C.F.R. §§ 19.100 through 19.102 and 20.500 through 20.504 are applicable to apportionment claims. In this regard, the Board notes that both parties received notice of the September 2008 decision awarding the appellee an apportionment on her behalf and as custodian for her two minor children, and the September 2009 statement of the case (SOC) and the August 2011 SSOC. Therefore, neither party will be prejudiced as a result of the Board proceeding to the merits of the claim. Apportionment The claimant sought apportionment of the Veteran's VA compensation benefits. The record indicates that the couple lived in Virginia before 2007 when the Veteran moved to New York. The claimant and their two sons later moved to Oklahoma. Their divorce was effective as of December [redacted], 2007. The Veteran's representative argues in his December 2012 brief that apportionment is not proper in this case because the Veteran pays child support in excess of $4,800 per year pursuant to a court order. In a January 2006 rating decision, the Veteran was awarded compensation benefits for obstructive sleep apnea with periodic limb movements with a 50 percent disability rating; for degenerative disc disease of the lumbar spine and intervertebral disc syndrome with a 10 percent disability rating; for degenerative disc disease of the cervical spine with a 10 percent disability rating; for post operative lateral meniscal tear with degenerative changes of the right knee with a 10 percent disability rating; for left foot onychomycosis with a noncompensable disability rating; for a residual scar of the post operative lateral meniscal tear of the right knee with a noncompensable disability rating; and for recurrent kidney stones with a history of microhematuria with a noncompensable disability rating. In a March 2006 rating action, the Veteran also was awarded compensation benefits for left cubital tunnel syndrome with a 10 percent disability rating and for cubital tunnel syndrome of the right upper extremity with a 10 percent disability rating. The Veteran has a combined evaluation of 70 percent. VA regulations provide for two types of apportionments. A "general" apportionment may be paid under the circumstances set forth in 38 C.F.R. § 3.450 (2012). More specifically, the law provides that all or any part of the Veteran's VA compensation benefits may be apportioned if the Veteran is not residing with his spouse or children, and the veteran is not reasonably discharging his responsibility for the support of the spouse or children. 38 U.S.C.A. § 5307 (West 2002); 38 C.F.R. §§ 3.450, 3.452 (2012). It is not necessary for the claimant to establish the existence of hardship in order to obtain an apportionment under 38 C.F.R. § 3.450 (2012). See Hall v. Brown, 5 Vet. App. 294 (1993). The second type of apportionment is a "special" apportionment which may be paid under the circumstances set forth in 38 C.F.R. § 3.451 (2012). That regulation provides that, without regard to any other provision regarding apportionment, where hardship is shown to exist, compensation may be apportioned between the Veteran and his or her dependents on the basis of the facts of the individual case as long as it does not cause undue hardship to the other persons in interest. In determining the basis for special apportionment, consideration is to be given to such factors as the amount of VA benefits payable, other income and resources of the Veteran and those dependents in whose behalf the apportionment is claimed, and the special needs of the Veteran, his or her dependents and the apportionment claimants. 38 C.F.R. § 3.451 further provides that apportionment of more than 50 percent of the Veteran's benefits is ordinarily considered to constitute undue hardship on him or her while apportionment of less than 20 percent of his or her benefits is ordinarily considered insufficient to constitute a reasonable basis for any apportionee. A veteran's benefits will not be apportioned where the total benefit payable to the disabled person does not permit payment of a reasonable amount to any apportionee. 38 C.F.R. § 3.458(a) (2012). The claimant first filed for apportionment of the Veteran's VA benefits in correspondence dated in April 2007 on her behalf and on behalf of J.W. and D.W., Jr., as their custodian. At the time J.W. was 12 and D.W., Jr. was 16. She requested $360 per month "or whatever was available" for her support and that of their two sons. She reported her net income was $3,300 per month and monthly bills totaled $3,950. She asserted that the Veteran had deserted the family in September 2006 when he moved in with his girlfriend and her young children. According to a separation agreement signed in December 2006, she said that the Veteran had agreed to pay child support of $360 per week and did so until March 2007 when he moved to New York and child support ceased. She also claimed that the Veteran was in arrears in paying child support, but that he could not be sued for legal process because she did not have his address. In a March 2008 apportionment decision the RO denied apportionment because the claimant had neglected to list any income on her VA Form 21-0788 (Information Regarding Apportionment of Beneficiary's Award). Using her monthly income of $3,300 listed in her claim, she showed a positive net income and no need for an apportionment. The claimant filed a NOD in March 2008. She claimed that she was only getting by because of the generosity of the family. She also reported that she had been on disability leave from work from October 2007 to January 2008 due to a hand injury. She said that she had been struggling since the Veteran stopped paying child support and provided more detailed current expenses. She also indicated that she was working a second job and that the oldest child, D.W., Jr., still had two more years of high school before he graduated from a special education program. In the September 2008 rating decision on appeal, the RO allowed an apportionment to the claimant and her two sons because it was deemed that the Veteran was not reasonably discharging his responsibility for the support of his spouse or children. It was noted that a court had ordered him to pay $360 per week in child support, but that the claimant said that the Veteran had last paid child support in October 2007. The apportionment allowed $217 for the spouse and both children from May 1, 2007; $114 for the children from January 1, 2008 after the effective date of the divorce; then after one child was to be removed from the award on his 18th birthday $65 for the remaining child from July 22, 2008 until September 7, 2012. The claimant and the Veteran filed NODs to the September 2008 rating decision. The claimant asked for an apportionment review because the Veteran was supposed to be paying $1,560 per month in child support, but as of August 2008 the Veteran owed more than $14,000 in past due child support. Her NOD was typed on stationary of an Oklahoma district attorney child support enforcement division office. She also attached a copy of the court order and a record of payments made. In December 2008 she submitted another VA Form 21-0788 showing no income but child support. In December 2008 the Veteran filed a NOD objecting to the apportionment. He noted that he was barely able to pay his monthly bills, that he had remarried in February 2008, and that his current wife was currently unemployed. He noted that two stepchildren belonging to his current wife also lived in the home. The girl was 15 and the boy was 6. In a January 2009 apportionment decision the RO said that the current apportionment was paid in accordance with the general apportionment provisions of 38 C.F.R. § 3.450. It was noted that the claimant was not entitled to apportionment in her own right as of January 1, 2008, because she was divorced from the Veteran in December 2007. An increase in apportionment was deemed not a hardship to the Veteran and the claimant had a negative net income for the period prior to the divorce becoming final. Therefore, the apportionment was increased to $450, the difference between her income and expenses. The apportionment was granted effective November 1, 2008, pursuant to the provisions of the special apportionment provisions of 38 C.F.R. § 3.451. School child rates of $158 effective August 1, 2008 would be paid to D.W., Jr., and the balance paid to the claimant as custodian of J.W. It was also decreed that the total amount apportioned shall not be reduced until the youngest child reached the age of 18. In February 2009, the Veteran filed a NOD to the January 2009 rating decision objecting to the amount of the apportionment in which he asserted that he had fully supported his children until June 2008. In March 2009 the Veteran submitted several documents to the RO. A Financial Status Report showed monthly net income of $3,129 from wages as an automobile technician in addition to his VA benefits. His monthly expenses totaled $3,451. The Veteran did not report any income from his current spouse. In a March 2009 Report of Contact, it was noted that the Veteran said in a telephone call that the apportionment of his VA compensation was causing him a financial hardship and that he did not have any income at this time. He also submitted copies of the December 2006 separation agreement, which indicated that the claimant was not entitled to any of his retirement or pension benefits. He stated in a March 2009 signed statement that he did not agree with the notion that he owed child support. He said that he stopped all child support when his ex-wife stopped all contact between the Veteran and the two boys. In a late March 2009 statement the Veteran claimed that he had just been informed that he was being put on part-time status (25 hours) at work due to a decline in the economy and business. In an April 2009 statement the Veteran explained that his monthly gross pay had decreased by $693 a month. The Veteran submitted a Financial Status Report in September 2009 that showed monthly income of $3,005 and total monthly expenses of $3,640. No spousal income was reported. In a letter dated in September 2009 the Veteran also informed VA that he had learned the claimant was living with "an Air Force man" since December 2007 in a house that gentleman owned in Oklahoma. The Veteran notified the RO that he was paying child support as of October 2009. There is a copy of an October 2, 2009, pay voucher in the claims file which shows a child support payment was withheld from his September 2009 paycheck. There is also a copy of a State of Oklahoma child support administrative enforcement order dated August 13, 2009, showing the Veteran would satisfy past due support by making monthly payments to the Oklahoma Department of Human Services in the minimum amount of $118.44 in addition to current monthly support in the amount of $281.56, for a total of $400 monthly. In a January 2010 signed statement the Veteran said that he had stopped paying child support in November 2007 because attorneys had determined that the claimant owed him $41,000 since February 2008. He noted that the divorce decree had stated that he was current in child support through November 2007. He also referred to the claimant as [redacted] rather than [redacted], apparently in the belief that she had remarried. He also enclosed pages from Facebook which show that a [redacted] reported in January 2007 that she had finally married [redacted] in Oklahoma, apparently on December [redacted], 2009, after 2 to 5 years together. In March 2010 the Veteran was granted waivers of overpayment due to the removal of his former spouse as a dependent and due to the apportionment of his benefits. These decisions noted that repayment of the debts would deprive the claimant of basic necessities and collection of the debts would defeat the purpose of the VA benefits, which is to provide supplemental income. In April 2010 the Veteran attended an informal conference at VA in lieu of a personal hearing. The Veteran contended that he was providing financial assistance to his dependent children through court-ordered child support. This was taken from his weekly earnings of $480. He said that his former spouse was also receiving $282 in addition to the $450 from VA every month and that he also paid $118 in school support arrears. He claimed this was causing him financial hardship. He also submitted a statement from his private attorney outlining the Veteran's finances. The Veteran's divorce attorney outlined why the claimant owed the Veteran more than $43,000 and noted that the Veteran had resumed paying child support through the Oklahoma child support office. The attorney also contended that the claimant's hardship ceased in August 2009 when the child support matter was settled. In April 2010 the claimant submitted a Financial Status Report that showed monthly net income of $2,333.00 and monthly expenses of $2,335. She did not report any spousal income, signed the form as [redacted] and not [redacted], and stated that she was presently working as a temporary employee with variable hours. She said that she lost her full-time job in January 2009. In July 2010 the Veteran submitted another statement expressing his opposition to the apportionment. He noted that his current wife got a part-time job in January 2010 and now that school was out they had to pay $85 a week for childcare. He reminded VA to obtain spousal income figures from the claimant. He also submitted a current Financial Status Report that showed he had $2,410 in monthly income, his current wife had $791 in monthly income, and that they had monthly expenses totaling $3,922 for a deficit of $721. In a September 2010 apportionment decision, the RO determined that an adjustment in the apportionment for J.W. was warranted based on what appeared to be the remarriage of both the Veteran and the claimant and other evidence in the file. The RO pointed out that both parties had been lacking in furnishing credible supporting evidence regarding either income or marital status. As the $450 apportionment was causing the Veteran undue financial hardship, the RO stated that the apportioned share for J.W. was reduced to $72, or the available difference paid for a dependent child, effective November 1, 2010. It was noted that this would not cause the claimant hardship because she had not reported spousal income. In November 2010 the claimant filed her NOD to the decrease in apportionment and contended it would cause her family extreme hardship. She submitted state forms that showed she had been unemployed since December 2009 and was receiving $400 a week in state unemployment benefits that had been extended to April 2011. She also noted that she was behind in rent for two months. In December 2010 the RO wrote the claimant asking her if she was married to [redacted] and if she resided at the address to which they sent the letter. In reply she did not answer these questions, but submitted another Financial Status Report noting monthly income of $1,864 and monthly expenses of $1,955. She also reported that she had been discharged from bankruptcy in November 2008, and had been unemployed since December 2009 but for temporary jobs at an agency for a few months before she was laid off. She submitted the report as [redacted] and said spousal income was not applicable. The Veteran filed another Financial Status Report in June 2011 showing monthly income of $2,820, spousal monthly income of $765, and monthly expenses of $3,582. In an April 2012 statement, the Veteran complained that he was barely getting by on his income and that of his current wife. Based on the evidence of record, the Board finds that the apportionment of the Veteran's VA compensation benefits was proper until November 1, 2009, as either a general or special apportionment. At the time of the September 2008 initial apportionment, the Veteran was not living with his former spouse or with either of their two minor sons. Although he had promised to pay $1,560 in monthly child support, evidence from the Oklahoma Department of Human Services indicated that he had stopped these child support payments in December 2007 (and not March 2007 as asserted by the claimant). Therefore, apportionment on behalf of the former spouse before the finalization of their divorce and in favor of the two minor children was proper and fulfilled one of the purposes of a general apportionment. The Board notes that 38 C.F.R. § 3.450(a)(ii) indicates that if a veteran is not residing with his spouse or if his children are not residing with him, then the veteran is not reasonably discharging his responsibility for the support of the spouse or the children. The Board notes too that a January 2009 decision removed the claimant as a beneficiary after notice that the couple's divorce was effective December [redacted], 2007. The RO then increased the apportionment to a total of $450 in favor of the two minor children because it said that figure represented the difference between the claimant's income and expenses as custodian of the two boys. This decision represented a special apportionment under the provisions of 38 C.F.R. § 3.451 and made provision for apportionment payments until the younger son turned 18 years of age. The Board finds that this special apportionment is proper too in that the evidence recited above clearly indicates that the claimant suffered more hardship than the Veteran because her income and net income were lower than the Veteran's and she was out of work the last three months of 2007. The Board also finds that the Veteran was not going to suffer undue hardship with the apportionment during this period as he was not paying his court-ordered child support. However, the Board believes that apportionment of the Veteran's benefits after November 1, 2009, was not proper. As noted above the Veteran notified VA in October 2009 that he had resumed paying child support. He furnished a pay stub dated October 2, 2009, which showed a child support payment was withheld from his late September 2009 paycheck. The Oklahoma child support administrative enforcement order dated in August 2009 showed that the Veteran would pay monthly on both his arrears and his current monthly child support for a total of $400 a month. Thus, the remedial court-ordered child support totaled $400 a month while the apportionment allowed by VA totaled $450 during this time period. In fact, the apportionment was not reduced until a September 2010 decision reduced the apportionment from $450 to $72 in favor of J.W., the younger boy. It is not clear from the RO's decision why this reduction was not effective until November 1, 2010. However, the evidence found in the claims file clearly shows that the Veteran began repaying child support almost a year earlier with withholding noted in an October 2009 paycheck. Therefore, the Board finds apportionment totaling $450 a month was not proper after November 1, 2009, and should have ended after that date. A review of the claims file underscores an observation the RO made in the September 2010 apportionment decision that both parties have not always been forthcoming about income or marital status in the wake of a bitter and acrimonious divorce. The Veteran thought that it was permissible to stop child support at one point because of a financial dispute with his former wife. The claimant, on the other hand, insists that she is still a single mother when the Veteran has produced evidence that she was married on December [redacted], 2009. However, it appears that in the period immediately before and after November 2009, both the Veteran and the claimant suffered some degree of financial hardship with the Veteran in effect paying child support twice, once through his payroll deduction and again through apportionment of his VA compensation benefits check, and the claimant enduring another period of unemployment. The claimant/appellee, however, has not perfected any appeal about the apportionment process. The Board finds that the Veteran was facing undue hardship in this time period because his finances were tight and he was being asked to pay for child support both through court-sanctioned paycheck withholding and an apportionment of his VA benefits compensation while the claimant appeared to be withholding material evidence about a remarriage. Thus, the Board finds that apportionment was no longer proper after November 1, 2009, under the provisions of 38 C.F.R. § 3.451 because the Veteran was suffering an undue hardship in having his VA compensation benefits apportioned while at the same time making his monthly child support payments. In addition, § 3.451 clearly states that apportionment of less than 20 percent of VA benefits is ordinarily considered insufficient to constitute a reasonable basis for any apportionee. The Board notes that in November 2010, when apportionment was decreased the Veteran's monthly VA compensation totaled $1,585.00. Twenty percent of that figure is $317.00. Therefore, the $72 figure used for apportionment after the September 2009 apportionment decision is considerably less than the 20 percent of benefits which § 3.451 decrees is usually insufficient to constitute a reasonable basis for any apportionee. Therefore, the Board also finds that the apportionment approved after November 1, 2010, was also unreasonable because of its size. For the foregoing reasons, the Board finds that the evidence shows that the apportionment of the Veteran's VA benefits until November 1, 2009, was proper, but that with the resumption of child support payments after that date, continued apportionment would be considered an undue hardship on the Veteran and so small as to be considered insufficient to constitute a reasonable basis for any apportionee. ORDER Apportionment of the Veteran's VA compensation benefits was proper until November 1, 2009, but not thereafter. ____________________________________________ Michael J. Skaltsounis Acting Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs