Citation Nr: 1339437 Decision Date: 12/02/13 Archive Date: 12/13/13 DOCKET NO. 11-09 681 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Louisville, Kentucky THE ISSUE Entitlement to special apportionment of incarcerated Veteran's benefits on behalf of the Veteran's dependent child, C.J. REPRESENTATION Appellant represented by: Kentucky Department of Veterans Affairs WITNESS AT HEARING ON APPEAL Appellant ATTORNEY FOR THE BOARD Sarah Richmond, Counsel INTRODUCTION The Veteran had active military service from June 1981 to May 1986 (the second period of service from July 3, 1984 to May 2, 1986 was under conditions other than honorable). The appellant in this case is the Veteran's spouse. This matter comes to the Board of Veterans' Appeals (Board) from a January 2010 decision of the Department of Veterans Affairs (VA) Regional Office (RO) in Louisville, Kentucky, which terminated the appellant's special apportionment of the incarcerated Veteran's benefits, effective February 1, 2010. In July 2011, the appellant testified before the undersigned Veterans Law Judge at a Board video conference hearing at the RO. After the hearing, the appellant submitted additional evidence. A remand, pursuant to 38 C.F.R. § 20.1304 is not necessary, however, as the evidence is duplicative of information already in the file. Also at the time of the hearing the appellant waived RO jurisdiction of any new evidence that would be submitted at a later date. The issue of entitlement to general apportionment of the Veteran's benefits has been raised by the record, but has not been adjudicated by the Agency of Original Jurisdiction (AOJ). Therefore, the Board does not have jurisdiction over it, and it is referred to the AOJ for appropriate action. FINDING OF FACT The appellant is not shown to have individual need to be awarded special apportionment of the Veteran's VA benefits during the time that he is incarcerated. CONCLUSION OF LAW The criteria for a special apportionment of the incarcerated Veteran's VA compensation benefits, on behalf of his dependent child, C.J., have not been met. 38 U.S.C.A. §§ 5307, 5313(b) (West 2002 & Supp. 2013); 38 C.F.R. §§ 3.450, 3.451, 3.665(e) (2013). REASONS AND BASES FOR FINDING AND CONCLUSION I. Procedural Requirements The Veterans Claims Assistance Act of 2000 (VCAA) enhanced VA's duty to notify and assist claimants in substantiating their claims for VA benefits, as codified in pertinent part at 38 U.S.C.A. §§ 5103, 5103A, 5107, 5126 (West 2002 & Supp. 2013); 38 C.F.R. §§ 3.102, 3.159, 3.326(a) (2013). However, the U.S. 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 benefits under existing entitlement are paid, such as between the Veteran and his dependents, in the case at hand. Thus, under Sims, the VCAA is not applicable to this claim. VA rules do, however, include special procedural requirements for simultaneously contested claims, such as a claim for apportionment. See 38 C.F.R. §§ 19.100, 19.101, and 19.102 (2013). A claim for an apportionment is a "contested claim," and is subject to the special procedural regulations set forth in 38 C.F.R. §§ 19.100 , 19.101, and 19.102. In this case, the applicable contested claims procedures were followed. The RO provided both parties (the appellant and the Veteran) with notices and determinations related to the contested claim. In connection with the appellant's claim for special apportionment of his benefits, the RO sent a letter to the Veteran in November 2008 requesting information as to his assets, income, and expenses. The Veteran submitted a letter in February 2009 that he did not extend any authorization of apportionment beyond what the appellant is already receiving. After the apportionment benefits were stopped the Veteran also submitted a note in February 2011 requesting apportionment for his wife and dependent children, including C.J. In addition he submitted a VA Form 21-0788 listing his income. The Veteran and the appellant both received copies of the January 2010 RO decision stopping apportionment and the March 2011 statement of the case. VA also has obtained financial information from the appellant. All known and available records relevant to the issue on appeal have been obtained and associated with the claims files; and neither party has contended otherwise. The Board therefore concludes that neither the appellant nor the Veteran is prejudiced by a decision on the claim at this time. With respect to the procedures for discontinuing the benefits for the appellant, in October 2009 the RO sent the appellant a letter that it was proposing to stop the appellant's special apportionment of the Veteran's benefits, as information had been received that the appellant was in receipt of VA benefits in her own right that had not been considered in the apportionment decision. Because of the additional income, the RO noted that need had not been demonstrated. The RO notified the appellant that they would continue payment at the present rate for 60 days following the date of the notice and that she could submit evidence showing that the proposed action should not be taken within that time. The RO also notified the appellant how to minimize potential overpayment, how to obtain a personal hearing, and how to obtain representation. The Board finds that the RO's letter satisfied the requirements of 38 C.F.R. § 3.105(h). The appellant was afforded a hearing before a Veterans Law Judge (VLJ) in July 2011, in which she presented oral argument. In Bryant v. Shinseki, 23 Vet. App. 488 (2010), the United States Court of Appeals for Veterans Claims (Court) held that 38 C.F.R. § 3.103(c)(2) (2010) requires that the VLJ/DRO who chairs a hearing fulfill two duties to comply with the above the regulation. These duties consist of (1) the duty to fully explain the issues and (2) the duty to suggest the submission of evidence that may have been overlooked. Here, the appellant, who was represented by a Veterans Service Organization, acknowledged that the claim for apportionment for the incarcerated Veteran's benefits was on appeal and provided testimony regarding her contentions as to why she believed she was entitled to a special apportionment. The VLJ did not specifically note the bases of the prior determinations or the elements that were lacking to substantiate the claim. The VLJ asked specific questions, however, directed at identifying the criteria for a special apportionment of the Veteran's benefits including going through a detailed account of the appellant's expenses and income. The VLJ also specifically sought to identify any pertinent evidence not currently associated with the claims file including verifying that there were no other expenses the appellant had other than what she reported during the hearing. Neither the appellant nor her representative has asserted that VA failed to comply with 38 C.F.R. § 3.103(c)(2), nor has she identified any prejudice in the conduct of the Board hearing. Accordingly, the VLJ has complied with the requirements of 38 C.F.R. § 3.103(c)(2). II. Apportionment Claim The Veteran is in receipt of a 100 percent rating for a psychiatric disorder, effective in October 1998. He has been incarcerated since September 2007. The appellant submitted a claim for apportionment of the Veteran's VA benefits while he is incarcerated in June 2008. The RO originally granted the appellant special apportionment of the incarcerated Veteran's benefits on behalf of the Veteran's child, C.J., in a March 2009 decision. But then the RO issued a letter in October 2009 that it was proposing to discontinue the appellant's benefits. In November 2009 the appellant submitted a VA Form 21-0788 and copies of her bills and requested that her apportionment be reinstated. However, in January 2010, the RO notified both the appellant and the Veteran that special apportionment of the incarcerated Veteran's award was stopped because need had not been demonstrated. The appellant contends that stopping the apportionment has caused great financial hardship on her family. She submitted copies of various bills that were in delinquent status, including a foreclosure notice on her house. She contends that without the apportionment her expenses are greater than her income. The statutory authority for apportionment of VA compensation in a case such as this appeal is found at 38 U.S.C.A. §§ 5307, 5313(b). All or part of the compensation not paid to an incarcerated veteran may be apportioned to the veteran's spouse, child or children, and dependent parents on the basis of individual need. 38 C.F.R. § 3.665(e). In determining individual need, consideration is given to such factors as the apportionee claimant's income and living expenses, the amount of compensation available to be apportioned, the needs and living expenses of other apportionee claimants as well as any special needs, if any, of all apportionee claimants. Id. In addition, without regard to any other provision regarding apportionment, where hardship is shown to exist, a Veteran's compensation may be specially apportioned to the Veteran's dependents as long as such apportionment would not cause undue hardship to other persons in interest including the veteran. 38 C.F.R. § 3.451. The special apportionment was apparently designed to provide for an apportionment in situations where a Veteran is reasonably discharging his responsibility for the support of any claimant who might be entitled to a "general" apportionment, but special circumstances exist which warrant giving additional support to "dependents." The "benefit-of-the-doubt" rule is not for application in a contested claim such as this case because the benefit of the doubt cannot be given to both the appellant and the Veteran simultaneously. Elias v. Brown, 10 Vet. App. 259, 263 (1997). In determining whether hardship exists, consideration will be given to such factors as the amount of VA benefits payable; other resources and income of the veteran and the dependents on whose behalf apportionment is claimed; and special needs of the veteran, his dependents, and the apportionment claimants. 38 C.F.R. § 3.451. Ordinarily, an apportionment of more than 50 percent of the Veteran's benefits would constitute undue hardship on him or her, whereas an apportionment of less than 20 percent of the veteran's benefits would not provide a reasonable amount for any apportionee. 38 C.F.R. § 3.451. In this case, the Veteran has stated that he wants apportionment for his wife and children, including C.J. The Board also notes that there are other claims in the file for special apportionment filed by custodians for the Veteran's other children. The appellant maintains that the stopping of special apportionment for her has caused financial hardship for her and her minor daughter, C.J.. She has submitted numerous VA Forms 21-0788 in support of her claim. Previously in December 2008 she had submitted a VA Form 21-0788 listing her monthly income as $3475.00 (based on Social Security benefits for herself of $820 and VA benefits of $2655). She listed her monthly expenses as totaling $3633.00. The RO noted in its March 2009 decision granting special apportionment that her monthly income was only $820 (Social Security) and that her monthly expenses were $2933.00 with a negative net income of -$2,113.00. Thereafter the RO realized that the appellant was receiving VA benefits in addition to Social Security benefits for her and her daughter, and proposed to stop the special apportionment. In November 2009 the appellant submitted a VA Form 21-0788 listing her monthly income as $3959.00 (including $850.00 for Social Security benefits, $2809.00 for VA benefits, and $300.00 in cash). She listed her monthly expenses as totaling $4727.00 The RO noted in its January 2010 decision that it was going to stop special apportionment of the incarcerated Veteran's benefits because the appellant was in receipt of disability compensation at the rate of 100 percent (for herself) and was in receipt of Social Security for herself and the Veteran's dependent, C.J. The RO noted that the appellant's total monthly income was $4209.00 (including $2809.00 for VA benefits, and $1400.00 for other monthly income), and that the total monthly expenses were $4188.00, with a net income after expenses of $21.00. Therefore, the RO determined that financial need had not been established. The appellant submitted a VA Form 21-0788 in July 2010 listing her monthly income as totaling $3783.00 (including Social Security income of $851.00 and VA benefits of $2932), and her monthly expenses as totaling $4595.00. At the Board hearing in July 2011, the appellant referred to the RO's January 2010 decision, which noted that she had $21.00 net income each month, and stated that the $21.00 was not enough to cover unexpected expenses, such as household repairs. The appellant mentioned that she wanted to buy a car for her 16-year old daughter to reward her for good grades. See Board hearing transcript, p. 5. She also indicated that she had a shortfall of $800 to $900 each month but that she managed to pay the bills by "juggling." See Board hearing transcript, p. 20. She submitted paperwork to show that her house was in foreclosure and noted that she planned to file for bankruptcy. She indicated that she did not want to live like she was "filthy rich" but just wanted to have a good life for her daughter and did not want to lose her house. See Board hearing transcript, p. 30. At the hearing the appellant indicated that her monthly income was $4808.00 including $3252.00 in VA benefits and $1556.00 in Social Security benefits (for herself and her daughter). Her monthly expenses were itemized (mortgage: $1200.00, student loans: $150, utilities: $500, food: $400, car insurance: $564, car repair: $150, trash: $70, water: $60, school lunch and breakfast: $70, and miscellaneous: $400). This totaled: $3564 (with an excess of $1244 each month). She also testified that she had negative $590 in the bank. She noted that she was 10 months behind on her mortgage at that time and that it would cost $1200 to file for bankruptcy. She indicated that she had paid off her credit card debt during those 10 months instead of paying her mortgage. Finally she reported that she owned a 2005 Dodge Stratus and a 1996 Dodge Ram. In reviewing the various VA Forms 21-0788 of record, while the appellant always listed the expenses as totaling more than the income, she has offered inconsistent amounts for her expenses and income, which has been rather significant. Specifically she consistently underreported her Social Security income by not reporting the income she received for her daughter. She also has offered bills that are in delinquent status, demonstrating that she has not paid them, but not actually reflecting her monthly statements. Therefore, the Board determines that the VA Forms 21-0788 cannot be relied on as an accurate account of the appellant's expenses and income. At the Board hearing, however, the appellant offered a rather detailed account of her monthly income and expenses. The Veterans Law Judge went through each area of income and expense to make sure all was accounted for and asked the appellant if there was anything else missing. Based on the information provided at the hearing, the appellant's monthly expenses do not, in fact, exceed her monthly income, but rather amount to an excess of income each month. The Board does not doubt that the appellant's house was in danger of being foreclosed on at the time of the hearing but there is no reason shown in the expenses and income that she listed during the hearing that she should not be able to afford her mortgage payment or pay her other bills without the special apportionment of the Veteran's benefits. The Board thus determines that individual need has not been demonstrated by the appellant and that she is not entitled to special apportionment of the Veteran's VA benefits during the time that he is incarcerated under the provisions of 38 C.F.R. §§ 3.451, 3.655(e). ORDER Entitlement to special apportionment of incarcerated Veteran's benefits on behalf of the Veteran's dependent child, C.J., is denied. ____________________________________________ S. L. Kennedy Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs