Citation Nr: 1303124 Decision Date: 01/30/13 Archive Date: 02/05/13 DOCKET NO. 12-11 688 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Milwaukee, Wisconsin THE ISSUES 1. Whether the termination of the Veteran's nonservice-connected VA disability pension benefits with entitlement to aid and attendance effective January 1, 2010, based on excessive net worth, was proper. 2. Whether an overpayment of VA nonservice-connected pension benefits in the amount of $13,621.00 was properly created. 3. Entitlement to a waiver of recovery of any properly-created overpayment. REPRESENTATION Appellant represented by: The American Legion ATTORNEY FOR THE BOARD Elizabeth Jalley, Counsel INTRODUCTION The Veteran served on active duty from May 1943 to December 1945. This matter comes before the Board of Veterans' Appeals (Board) on appeal from a September 2011 administrative decision of the Pension Management Center of the Department of Veterans Affairs (VA) Regional Office (RO) in Milwaukee, Wisconsin, and from a January 2012 decision of the Milwaukee RO. The September 2011 decision effectuated a July 2011 proposal to stop the Veteran's pension benefits effective January 1, 2010, based on an increase of his net worth from $26,000.00 in 2009 to $71,942.00 in 2010. In doing so, the RO determined that the Veteran's net worth had become great enough to provide for his maintenance without pension benefits in 2010. He was informed that he would receive a letter notifying him of the amount he was overpaid as a result of the decision to retroactively stop his pension benefits. Following the September 2011 decision, the Veteran was notified, via a letter from the Debt Management Center, that he had been overpaid by an amount of $13,621.00. He was told that he could pay the debt in full or through a monthly debt schedule. He was also notified that he could dispute the debt and request a waiver. In November 2011, the Veteran requested a waiver of recovery of overpayment and submitted a Financial Status Report detailing his income, assets, and expenses. The January 2012 administrative decision denied the Veteran's waiver request. Later that month, the Veteran filed a notice of disagreement "on the over payment of VA benefits." The Veteran's waiver of overpayment request was again denied in a March 2012 administrative decision, but this issue was not addressed in the March 2012 statement of the case. The Board also notes that, in addition to the paper claims file, there is a paperless, electronic claims file associated with the Veteran's claim. A review of the documents in this file reveals that they highly relevant to the appeal. Thus, any future consideration of this appellant's case should take into account the existence of this electronic record. Please note this 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). The issues of the propriety of the $13,621.00 overpayment, and entitlement to a waiver of recovery of any properly-created overpayment, are addressed in the REMAND portion of the decision below and are REMANDED to the RO via the Appeals Management Center (AMC), in Washington, DC. FINDINGS OF FACT 1. The Veteran was born in May 1923. 2. As of January 1, 2010, the corpus of the Veteran's estate consisted of $71,942.00, and income of approximately $1869.91 per month. 3. As of January 1, 2010, the Veteran's estimated expenses totaled $2,221.64 per month. 4. In June 2011, the Veteran's life expectancy for net worth determinations was 5 years. 5. In June 2011, it was estimated that, at the current rate of income and expenses, the Veteran's net worth would be exhausted after 17.04 years. 6. It is reasonable for the Veteran to consume some part of his net worth for his maintenance. CONCLUSION OF LAW From January 1, 2010, the corpus of the Veteran's estate precludes the payment of nonservice-connected pension benefits. 38 U.S.C.A. §§ 1503, 1513, 1521,1522, 1541, 1542, 5103, 5103A (West 2002 & Supp. 2012); 38 C.F.R. §§ 3.3, 3.23, 3.271, 3.272, 3.274, 3.275 REASONS AND BASES FOR FINDINGS AND CONCLUSION I. Duties to Notify and Assist The Veterans Claims Assistance Act of 2000 (VCAA), Public Law No. 106-475, 114 Stat. 2096 (2000), substantially amended the provisions of chapter 51 of title 38 of the United States Code, concerning the notice and assistance to be afforded to claimants in substantiating their claims. VCAA § 3(a), 114 Stat. 2096, 2096-97 (2000) (now codified as amended at 38 U.S.C.A. §§ 5103, 5103A (West 2002 & Supp. 2012)). In addition, VA published regulations, which were created for the purpose of implementing many of the provisions of VCAA. See 66 Fed. Reg. 45,620 (Aug. 29, 2001) (now codified, in pertinent part, at 38 C.F.R. § 3.159 (2012)). The notice requirements of the VCAA require VA to notify the appellant of any evidence that is necessary to substantiate a claim, as well as the evidence VA will attempt to obtain and which evidence the appellant is responsible for providing. Quartuccio v. Principi, 16 Vet. App. 183 (2002). Such notice must be provided to a claimant before the initial unfavorable decision on a claim for VA benefits by the agency of original jurisdiction. Id; see also Pelegrini v. Principi, 18 Vet. App. 112 (2004). The VCAA notice requirements, however, may be satisfied if any errors in the timing or content of such notice are not prejudicial to the claimant. See Dingess, supra; Pelegrini, supra. In this case, the Board finds that a letter dated in July 2011 satisfied the notice requirements of the VCAA. The letter advised the appellant of how VA determines entitlement to nonservice-connected pension benefits, including the purpose of these benefits and the factors that are relevant to determining continued entitlement to such benefits based on net worth. He was notified that review of his pension entitlement was prompted by the Veteran's report in a January 2011 Improved Pension Eligibility Verification Report that his net worth had increased considerably in 2010 over what it was in 2009. VA notified the appellant that it needed to verify the increase in his net worth, and it notified him of the information it required in order to make this determination. This letter provided specific instruction on how to furnish VA with this information. In response to this letter, the appellant submitted a statement in July 2011 noting that his medical expenses had not decreased and that his "net worth is still below the $80,000.00 allowed as stated in M21-1MR, Chapter 3. 4c - 'Requirement of Net Worth Administrative Decision.'" In November 2011, the Veteran submitted a Financial Status Report in which he reported his income, expenses, and assets. With regard to VA's duty to assist, the Board notes that the Veteran has not identified any outstanding records for VA to obtain. Therefore, the Board finds that VA's duty to assist in this regard has been satisfied. The evidence of record provides sufficient information to adequately evaluate the claim. Therefore, no further assistance to the Veteran with the development of evidence is required, nor is there notice delay or deficiency resulting in any prejudice to the Veteran. 38 U.S.C.A. § 5103A(a)(2); 38 C.F.R. § 3.159(d); see Mayfield v. Nicholson, 19 Vet. App. 103 (2005), rev'd on other grounds, 444 F.3d 1328 (Fed. Cir. 2006). II. Nonservice-Connected Pension Benefits 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 nonservice-connected disability not the result of the veteran's willful misconduct. 38 U.S.C.A. § 1521(a) (West 2002 & Supp. 2012). Basic entitlement exists, in relevant part, if the veteran meets the net worth requirements under § 3.274 and does not have an annual income in excess of the applicable maximum annual pension rate specified in § 3.23. 38 U.S.C.A. §§ 1513, 1521, 1522; 38 C.F.R. § 3.3(a)(3)(v). The issue on appeal in the case at hand centers on whether the Veteran's net worth is excessive for purposes of qualifying for VA nonservice-connected pension benefits. Pension shall be denied or discontinued when the corpus of the estate of the veteran, and of the veteran's spouse, are such that under all the circumstances, including consideration of the annual income of the veteran, the veteran's spouse, and the veteran's children, it is reasonable that some part of the corpus of such estates be consumed for the veteran's maintenance. 38 U.S.C. 1522(a); 38 C.F.R. § 3.274(a). The terms 'corpus of estate' and 'net worth' mean the market value, less mortgages or other encumbrances, of all real and personal property owned by the claimant, except the claimant's dwelling (single family unit), including a reasonable lot area, and personal effects suitable to and consistent with the claimant's reasonable mode of life. 38 C.F.R. § 3.275(b). In determining whether the estate should have been used for the appellant's maintenance, factors to be considered include: whether the property can be readily converted into cash at no substantial sacrifice; life expectancy; number of dependents; and potential rate of depletion, including unusual medical expenses. 38 C.F.R. § 3.275(d). 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. See 38 U.S.C.A. § 1503(a); see also 38 C.F.R. § 3.271(a). Social Security benefits are not specifically excluded under 38 C.F.R. § 3.272; such income is therefore included as countable income. Medical expenses in excess of five percent of the maximum income rate allowable, which have been paid, may be excluded from an individual's income for the same 12-month period, to the extent they were paid. 38 C.F.R. § 3.272(g)(1)(iii). The Board notes that VA's pension program is intended to give beneficiaries a minimum level of financial security; it is not intended to protect substantial assets or build up the beneficiary's estate for the benefit of heirs. Pension entitlement is based on need and that need does not exist if a claimant's estate is of such size that he/she could use it for living expenses. The basic issue in evaluating net worth is to determine whether or not the claimant's financial resources are sufficient to meet the claimant's basic needs without assistance from VA. Thus, if net worth is a factor for the benefit claimed, VA should consider if it is reasonable, under all the circumstances, for the claimant to consume some of his/her estate for maintenance. If a claimant's assets are sufficiently large that the claimant could live off of these assets for a reasonable period of time, pension should be denied for excessive net worth. If net worth is later depleted, the claimant can reopen the pension claim. There are no precise guidelines, however, which establish what size estate would preclude the payment of pension. What constitutes excessive net worth is a question of fact for resolution after considering the facts and circumstances in each case. See VA Adjudication Procedure Manual, M21-1MR, Part V, Subpart iii, Chapter 1, Section J, Topic 67, Blocks g, h (February 13, 2007). See also M21-1MR, Part V, Subpart iii, Chapter 1, Section J, Topic 70, Block a (February 13, 2007). The Veteran was initially granted non-service connected disability pension with entitlement to aid and attendance in a July 2007 administrative decision. This determination was made based, in part, on a determination that the net worth of the Veteran and his spouse was not excessive and that their annual net income was within the maximum income rate allowable. These benefits were effective January 1, 2007. In January 2011, the Veteran submitted an Improved Pension Eligibility Verification Report reflecting that he and his spouse had a combined $71,942.00 in interest-bearing bank accounts in 2010, and that their combined annual income from SSA, other retirement, and interest/dividends was $22,439.00 in 2010, for a monthly income of $1869.91. In April 2011, the Veteran submitted a Request for Details of Expenses form that had been sent to him by VA. He estimated monthly expenses of $2,221.64. Thus, his net monthly expenses were approximately $351.75. At that rate, his spending would be exhausted in approximately 17.04 years. The June 2011 "Corpus of Estate Determination," notes that the appellant's life expectancy was 5.0 years. See also M21-1MR, Part V, Subpart iii, Chapter 1, Section J, Topic 70, Block a (February 13, 2007). Thus, the corpus of his estate has been projected to exceed his expected lifespan by 12 years. As indicated above, size and liquidity of net worth, family income, life expectancy, and the potential rate of depletion are considered in a net worth determination. At his current rate of spending, the projected rate of depletion of the Veteran's net worth of $71,942.00 exceeds his life expectancy by 12 years. The evidence indicates that this property, which is in interest-bearing bank accounts, can be readily converted into cash at no substantial sacrifice. The Veteran has one dependent, his spouse, and her assets, income, and expenses are contemplated by the above calculations. With respect to unusual medical expenses, the Veteran's estate would be depleted in his five-year lifespan if he incurred an increase in medical expenses of $1,199.03 per month. The Board emphasizes that, if his net worth becomes significantly depleted in the future, or there is a substantial increase in necessary out-of-pocket medical expenses, the Veteran is encouraged to again file a claim for pension benefits and submit the appropriate financial documentation in support of that claim. As noted above, the standard by which the Board is to determine whether the net worth can be consumed to provide for maintenance is one of reasonableness. While there may be some depletion of the Veteran's financial resources, the Board emphasizes that the purpose of VA pension benefits is to give beneficiaries a minimum level of financial security. They are not intended to protect substantial assets, subsidize discretionary spending, or build up the beneficiary's estate. The Board recognizes the Veteran's sincere belief that he needs and is entitled to nonservice-connected pension benefits. Given his net worth detailed above, however, the Board finds that some portion of the corpus of his estate may reasonably be consumed in order to provide for the maintenance of the Veteran and his spouse. 38 U.S.C.A. § 1522(a) ; 38 C.F.R. § 3.274(a). Under the circumstances and the facts as presented regarding the Veteran's net worth at the present time, however, his assets are sufficient to meet his needs for the foreseeable future. Finally, as noted above, the Veteran submitted a statement in July 2011 noting that his medical expenses had not decreased and that his "net worth is still below the $80,000.00 allowed as stated in M21-1MR, Chapter 3. 4c - 'Requirement of Net Worth Administrative Decision.'" The Board acknowledges that the Veteran's net worth has, in fact, remained below $80,000. The Board notes, however, that the provision that is being cited by the Veteran states that "A formal net worth administrative decision must be completed if the claimant has an estate of at least $80,000, and it has been determined that net worth is not a bar to entitlement." M21-1MR, M21-1MR, Part V, Subpart i, Chapter 3, Section A, 4(c). These criteria are conjunctive, not disjunctive; thus all criteria must be met. See Melson v. Derwinski, 1 Vet. App. 334 (June 1991) (use of the conjunctive 'and' in a statutory provision meant that all of the conditions listed in the provision must be met). In the case at hand, the RO and the Board have determined that net worth is a bar to VA benefits. Thus, the above-cited provision of M21-1MR has not been satisfied. In light of the above, the Board finds that, at present, the Veteran does not meet the net worth eligibility requirement for nonservice-connected pension benefits. The Board has considered the doctrine of reasonable doubt. In this case, however, the preponderance of the evidence is against the claim, and the benefit-of-the-doubt doctrine does not apply. 38 U.S.C.A. § 5107(b); Gilbert v. Derwinski, 1 Vet. App. 49 (1990). Pension benefits are thereby precluded, and the Veteran's claim for VA nonservice-connected pension benefits with aid and attendance must be denied. 38 U.S.C.A. §§ 1503, 1513, 1521,1522, 1541, 1542, 5103, 5103A; 38 C.F.R. §§ 3.3, 3.23, 3.271, 3.272, 3.274, 3.275 ORDER The termination of the Veteran's nonservice-connected VA disability pension benefits with entitlement to aid and attendance effective January 1, 2010, based on excessive net worth, was proper. REMAND The Veteran was notified in October 2011 that he had incurred a $13,621.00 debt as a result of the retroactive termination of his pension benefits. In November 2011, the Veteran requested a waiver of recovery of overpayment and submitted a Financial Status Report detailing his income, assets, and expenses. As noted above, the Veteran's waiver request was denied in a January 2012 administrative decision. Later that month, the Veteran filed a notice of disagreement "on the over payment of VA benefits." The Board has interpreted this statement in the light most favorable to the Veteran to encompass both a challenge of the validity of the underlying debt and a request for a waiver of recovery of overpayment of any validly-created debt. The waiver of recovery of overpayment request was again denied in a March 2012 administrative decision, but this issue was not addressed in the March 2012 statement of the case. The Court has held that the filing of a notice of disagreement initiates the appeal process, and that the failure of the RO to issue a statement of the case is a procedural defect requiring a remand. See Manlincon v. West, 12 Vet. App. 238 (1999). In this case, the Veteran submitted a request for waiver of the debt within the applicable 180-day time limit following the date the October 2011 notice of the indebtedness. 38 C.F.R. § 1.963(b); see also 38 U.S.C.A. § 5302(a) (West 2002). Even though the March 2012 statement of the case only addresses the question of the propriety of VA's decision to terminate the Veteran's pension benefits, the Board notes that the Veteran's January 2012 notice of disagreement "on the over payment of VA benefits" is timely to the issues of whether an overpayment of VA nonservice-connected pension benefits in the amount of $13,621.00 was properly created and entitlement to a waiver of recovery of any properly-created overpayment. Therefore, the issues of whether an overpayment of VA nonservice-connected pension benefits in the amount of $13,621.00 was properly created and entitlement to a waiver of recovery of any properly-created overpayment must be remanded for the issuance of a statement of the case. Accordingly, the case is REMANDED for the following action: (Please note, this appeal has been advanced on the Board's docket pursuant to 38 C.F.R. § 20.900(c) (2012). Expedited handling is requested.) Issue a statement of the case addressing the issues of whether an overpayment of VA nonservice-connected pension benefits in the amount of $13,621.00 was properly created and entitlement to a waiver of recovery of any properly-created overpayment. The appellant should be provided the opportunity to perfect a timely substantive appeal (VA Form 9) with respect to those issues. The RO/AMC is free to undertake any additional development deemed necessary with respect to those issues. The appellant has the right to submit additional evidence and argument on the matter or matters 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 of Veterans' Appeals or by the United States Court of Appeals for Veterans Claims for additional development or other appropriate action must be handled in an expeditious manner. See 38 U.S.C.A. §§ 5109B, 7112 (West Supp. 2012). ______________________________________________ WAYNE M. BRAEUER Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs