Citation Nr: 1341499 Decision Date: 12/16/13 Archive Date: 12/31/13 DOCKET NO. 11-23 680A ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Milwaukee, Wisconsin THE ISSUE Whether the termination of the Veteran's nonservice-connected pension benefits, effective February 1, 2006, due to excessive countable income was proper. REPRESENTATION Appellant represented by: Veterans of Foreign Wars of the United States ATTORNEY FOR THE BOARD T. Y. Hawkins, Counsel INTRODUCTION The Veteran served on active duty from February 1942 to December 1945. This matter comes before the Board of Veterans' Appeals ("Board") on appeal from an October 2010 rating decision issued by the Department of Veterans Affairs ("VA") Pension Management Center ("PMC") in Milwaukee, Wisconsin, which terminated the Veteran's nonservice-connected pension benefits, effective February 1, 2006, due to excess countable income. The Board has previously considered this claim. The claim was remanded back to the Agency of Original Jurisdiction ("AOJ") in May 2012, December 2012, and May 2013 for additional evidentiary development, to include obtaining complete financial disclosures from the Veteran and for a Corpus of Estate determination. To date, the veteran has provided some but not all of the requested information despite the repeated requests by VA for him to do so. See Wood v. Derwinski, 1 Vet. App. 190, 193 (1991) ("The duty to assist is not always a one-way street. If a veteran wishes help, he cannot passively wait for it in those circumstances where he may or should have information that is essential in obtaining the putative evidence."). VA has provided ample assistance to develop the claim as will be discussed. To the extent possible, there has been substantial compliance on the part of VA with the Board's remand directives, the Board finds there is sufficient evidence to adjudicate the claim. See Stegall v. West, 11 Vet. App. 268, 271 (1998) (a remand by the Board confers upon the claimant, as a matter of law, the right to compliance with the remand instructions, and imposes upon the VA a concomitant duty to ensure compliance with the terms of the remand). This appeal includes a paper and Virtual VA paperless file, where a portion of the Veteran's records are stored. Please note this appeal has been advanced on the Board's docket pursuant to 38 C.F.R. § 20.900(c) (2013). 38 U.S.C.A. § 7107(a)(2) (West 2002). FINDINGS OF FACT 1. In October 2005, the PMC granted the Veteran "Improved Pension" nonservice-connected pension benefits, effective June 1, 2005. 2. Based on financial disclosures made in 2007 and 2008, the PMC was informed that a deposit of $12,000 had been made to the Veteran's bank account in 2006. 3. As a result of such deposit, in April 2009, the PMC advised the Veteran of its proposal to terminate his pension, effective February 1, 2006. 4. Effective February 1, 2006, the Veteran's annual countable income either exceeded the maximum annual pension rates for a veteran with no dependents, and/or his net worth was excessive. 5. It is reasonable for the Veteran to consume some part of his net worth for his maintenance. CONCLUSION OF LAW From February 1, 2006, the Veteran's annual countable income is excessive for receipt of VA pension benefits. 38 U.S.C.A. §§ 1503 , 1521, 1522 (West 2002 & Supp. 2013); 38 C.F.R. §§ 3.3, 3.21, 3.23, 3.271, 3.272, 3.273 (2013). REASONS AND BASES FOR FINDINGS AND CONCLUSION I. Veterans Claims Assistance Act of 2000 (VCAA) As provided for by the Veterans Claims Assistance Act of 2000 ("VCAA"), VA has a duty to notify and assist claimants in substantiating a claim for VA benefits. 38 U.S.C.A. §§ 5100 , 5102, 5103, 5103A, 5107, 5126 (West 2002 & Supp. 2013); 38 C.F.R. §§ 3.102 , 3.156(a), 3.159, 3.326(a) (2013). In Pelegrini v. Principi, 18 Vet. App. 112, 120-21 (2004) ("Pelegrini II"), the 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; (3) that the claimant is expected to provide; and (4) request that the claimant provide any evidence in his or her possession that pertains to the claim. Element (4), the requirement of requesting that the claimant provide any evidence in his or her possession that pertains to the claim, was eliminated by the Secretary. See 73 Fed. Reg. 23353 (final rule eliminating fourth element notice as required under Pelegrini, effective May 30, 2008). In this case, by means of a letter dated September 2008, the Veteran was notified of PMC's determination that he had excessive income. Thereafter, in a letter dated June 2012, the Veteran was notified of how excessive income could affect his right to pension benefits. The Veteran was also advised of what information and evidence he needed to submit, and what information and evidence VA would seek to obtain, and he was afforded an opportunity to provide information and evidence pertinent to the claim. In this case, while the Board recognizes that the Veteran was not provided with VCAA notice prior to the initial adjudication of his claim, the PMC cured any notice deficiency by providing him with complete notice in June 2012, then readjudicated him claim in Supplemental Statements of the Case ("SSOC") dated July 2012, September 2012, March 2013, August 2013 and September 2013. Based on the notice given, as well as the statements from the Veteran during the course of his appeal, the Board finds that a reasonable person would have known what evidence was needed in order to substantiate his claim. II. Laws and Regulations 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 a nonservice-connected disability not the result of his or her willful misconduct. 38 U.S.C.A. § 1521(a) (West 2002 & Supp. 2013). 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 as changed periodically and reported in the Federal Register. 38 U.S.C.A. §§ 1513, 1521, 1522; 38 C.F.R. § 3.3(a)(3)(v). The issue here is whether termination of the Veteran's nonservice-connected pension benefits, effective February 1, 2006, due to excessive countable income was proper. The Veteran avers that the $12,000 deposited into Westby Co-op Credit Union in 2006 was simply the transferal of part of an annuity from his previous financial institution, Bankers Life & Casualty Company, into another institution that he trusted more than Bankers Life. See Veteran's statement, November 2007. Accordingly, he asserts that it was the transference of an asset; he emphatically denies that any portion of the funds deposited was used as income. Id. The law authorizes the payment of nonservice-connected disability pension to a veteran of a war who has the requisite service and who is permanently and totally disabled. 38 U.S.C.A. §§ 1502 , 1521 (West 2002 & Supp. 2013). Basic entitlement exists if, among other things, the veteran's income is not in excess of the applicable maximum annual pension rate specified in 38 C.F.R. § 3.23, as changed periodically and reported in the Federal Register. 38 U.S.C.A. § 1521; 38 C.F.R. § 3.3(a) (2013). 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) (2013). 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) (West 2002 & Supp. 2013); 38 C.F.R. §§ 3.260, 3.261, 3.262, 3.271(a) (2013). Social Security Administration ("SSA") 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). 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). 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 PMC granted the Veteran nonservice-connected pension benefits in October 2005. As of that date, he was awarded "improved pension" benefits. Prior to that date, he had been receiving Section 306 pension benefits, an earlier benefit that arose out of Pub. L. 86-211; 73 Stat. 432. "Improved pension" means the disability and death pension programs becoming effective January 1, 1979, under authority of Pub. L. 95-588; 92 Stat. 2497. See 38 C.F.R. §§ 3.1(u) & (w) and 3.3(a)(2) & (3) (2013). Pursuant to financial disclosures made by the Veteran in November 2007 and October 2008 concerning a deposit of $12,000 into his bank account in 2006 following a verification of income, the PMC issued a decision terminating the Veteran's nonservice-connected pension benefits, effective as of February 1, 2006. In so doing, the PMC found the Veteran to have received income of, inter alia, $12,000 for the year 2006; combining that amount with other income from the Veteran's SSA benefits and interest-bearing accounts, the PMC concluded that the Veteran's annual income for 2006 exceeded the maximum rate of improved pension provided under 38 U.S.C.A. § 152, thus rendering him ineligible to receive nonservice-connected pension benefits. See 38 C.F.R. § 3.23(b) (2013). The PMC thus retroactively terminated his benefits, effective February 1, 2006. On a 2006 eligibility verification report, the unmarried Veteran reported receiving $6,122.00 in annual income from SSA (it appears that he erroneously listed the full amount in the area designated for gross monthly income) and $968.00 in total interest and dividends. Based on this information, his annual income for 2006 was $7,090.00. Effective December 1, 2005, the maximum annual pension rate for a veteran with no dependents was $10,579.00. According to this information, the Veteran would have been eligible for an improved pension for 2006. However, as discussed above, VA received notification that he received a deposit of $12,000.00. Despite letters dated June 2012 and February 2013 requesting that the Veteran provide information as to the basis of this sum, he failed to provide such information. Thus, his total annual income for 2006 was $19,090.00, which exceeded the maximum annual pension rate by over $8,500.00. In August 2012, the Veteran submitted multiple incomplete forms that were associated with the record, to include an Improved Pension Eligibility Verification Report for 2006-2007, reflecting that he was unmarried and had $3,645.00 in interest-bearing bank accounts and $23,599.00 from IRA's, KEOGH plans, etc., and that his annual income from interest/dividends and all other was $4,020.00, for a monthly income of $335.00. He estimated monthly expenses of $787.00. Thus, he had a net monthly deficit of $452.00. In July 2013, the Veteran submitted financial statements from his checking account for the period February 2006 through May 2013, and for his savings account for the period January 2007 through April 2013. These reports showed that for the year 2006, his total monthly income was $675.00. His total monthly expenses were $922.00. Thus, his expenses exceeded his income by $247.00 per month. However, the Corpus of Estate determination, prepared in September 2013, indicated that the Veteran's life expectancy at that time was 5.6 years, thus, he was expected to live off the corpus of his estate for another 9.2 years. For the year 2007, however, the Veteran's total month income was $982.00 and total monthly expenses were $945.00, meaning that, because income exceeded expenses, he was not consuming any part of his net worth. This scenario repeated for the year 2008, at which time, his income again exceeded his expenses. In 2009, although the Veteran's total monthly expenses of $970.00 exceeded his total monthly income of $765.00, resulting in a monthly deficit of $205.00, his reported net worth for 2009 of $61,300.00 divided by $205.00 showed that at the current rate of depletion, his assets would make up the shortfall and provide him with 24.9 years to deplete his assets, a period far exceeding his life expectancy of 4.7 years. In the 2013 Corpus of Estate determination, the Veteran's life expectancy was 3.5 years. His total monthly income was $1,480.00 and his total monthly expenses were $892.00. Thus, his income exceeded his expenses by $588.00 and he was not consuming any part of his net worth. 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 2013 rate of spending, the Veteran's net worth of $84,568.00 would be enough to support him comfortably for the rest of his projected life expectancy and to provide for his necessary expenses, including medical care, without VA assistance. The evidence indicates that this property, most of which is in the form of stocks, can readily be converted to cash at no substantial sacrifice. Moreover, the Veteran has no dependents and is not currently housebound. Accordingly, and based on the law, which is dispositive, the matter on appeal must be denied as without legal merit. Sabonis v. Brown, 6 Vet. App. 426 (1994). In any event, the Board finds that the preponderance of the evidence is against the Veteran's claim that his nonservice-connected pension benefits were improperly terminated. 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 his maintenance. 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. 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 continuation of VA nonservice-connected pension benefits 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, effective February 1, 2006, based on excessive countable income, was proper. ____________________________________________ K. PARAKKAL Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs