Citation Nr: 1306891 Decision Date: 02/28/13 Archive Date: 03/01/13 DOCKET NO. 12-07 008 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Milwaukee, Wisconsin THE ISSUE Whether the decision to adjust and terminate non-service connected death pension effective March 1, 2010 was proper. REPRESENTATION Appellant represented by: Disabled American Veterans ATTORNEY FOR THE BOARD M. Zawadzki, Counsel INTRODUCTION The Veteran served on active duty from January 1942 to October 1945. He died in 2009. The appellant is the Veteran's surviving spouse. This matter comes before the Board of Veterans' Appeals (Board) on appeal from a July 2010 decision of the Department of Veterans Affairs (VA) Pension Management Center (PMC) in Milwaukee, Wisconsin. The appellant was initially awarded non-service connected death pension benefits in June 2009. She was initially awarded a monthly benefit of $661.00 from March 1, 2009 and a benefit of $342.00 from May 1, 2009. The benefit was terminated effective March 1, 2010. In July 2010, the PMC contacted the appellant to advise her that a mistake had been made in calculating her income. The appellant's income was recalculated and, in the July 2010 decision, the PMC adjusted the appellant's non-service connected death pension benefits, effective April 1, 2009, and terminated the benefits effective March 1, 2010, based on income adjustment. As discussed in the January 2012 statement of the case (SOC), the adjustment (reducing the non-service connected death pension benefits from $661.00 to $342.00 on April 1, 2009, as opposed to May 1, 2009), resulted in an overpayment of $319.00. This debt was waived in February 2011. The appellant is represented by Disabled American Veterans (DAV). In April 2009, she filed a VA Form 21-22, Appointment of Veterans Service Organization as Claimant's Representative, naming DAV as her representative. In July 2011, a private attorney submitted a letter stating that she had been retained to assist the appellant with the collection of VA benefits, and included a copy of an April 2011 contract between herself and the appellant. The appellant's Virtual VA e-folder includes a 21-22a, Appointment of Individual as Claimant's Representative, appointing the private attorney as her representative, received by VA in March 2012. Despite the filing of the March 2012 21-22a, DAV was listed as the representative on an April 2012 rating decision and was furnished a copy of a September 2012 supplemental statement of the case (SSOC). DAV also filed a statement in support of the appellant's claim in August 2012 and filed an Informal Hearing Presentation (IHP) in November 2012. In January 2013, the Board sent the appellant a letter to clarify her wishes for representation. In response, the appellant returned a VA Form 21-22 naming DAV as her representative in February 2013. In an April 2012 decision, the PMC found that new and material evidence had not been submitted sufficient to reopen a previously denied claim for service connection for the cause of the Veteran's death. The appellant was advised of the decision via a letter dated May 2, 2012. In a statement received in February 2013 with the 21-22 naming DAV as her representative, the appellant indicated that she wanted DAV to continue to be her representative for Dependency and Indemnity Compensation (DIC) approval. It is unclear from this statement whether the appellant wishes to appeal the April 2012 rating decision. While special wording is not required, a notice of disagreement (NOD) must express disagreement with a specific determination of the RO and reflect a desire for appellate review. 38 C.F.R. §§ 20.201, 38 C.F.R. § 20.300 (2012); see Gallegos v. Gober, 283 F.3d 1309 (Fed. Cir. 2002). The appellant is advised that, if she wishes to appeal the April 2012 decision, she has until one year from the date of the May 2012 letter advising her of the rating decision to file an NOD regarding this claim. The Board has reviewed the contents of the Virtual VA file and found that it contains additional evidence that has been considered by the PMC. 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). FINDINGS OF FACT 1. As of April 1, 2009, the appellant's countable income for purposes of calculating entitlement to non-service connected death pension consisted of a monthly Social Security benefit of $939.40 and a Social Security Death Benefit of $255.00; her excludable expenses were no more than $1,156.80 for medical expenses and $6,944.00 for the Veteran's final expenses. 2. Effective from March 1, 2010, the appellant's countable annual income for a surviving spouse with no dependents exceeded the maximum annual pension rate (MAPR) limit set by law for payment of VA death pension benefits, thus, necessitating termination of her benefits. CONCLUSION OF LAW Adjustment and termination of non-service connected death pension effective March 1, 2010 was proper. 38 U.S.C.A. §§ 1503, 1541 (West 2002 & Supp. 2012); 38 C.F.R. §§ 3.23, 3.271, 3.272, 3.273, 3.660 (2012). REASONS AND BASES FOR FINDINGS AND CONCLUSION In this decision, the Board will discuss the relevant law which it is required to apply. This includes statutes enacted by Congress and published in Title 38, United States Code ("38 U.S.C.A."); regulations promulgated by VA under the law and published in the Title 38 of the Code of Federal Regulations ("38 C.F.R.") and the precedential rulings of the Court of Appeals for the Federal Circuit (as noted by citations to "Fed. Cir.") and the Court of Appeals for Veterans Claims (as noted by citations to "Vet. App."). The Board is bound by statute to set forth specifically the issue under appellate consideration and its decision must also include separately stated findings of fact and conclusions of law on all material issues of fact and law presented on the record, and the reasons or bases for those findings and conclusions. See 38 U.S.C.A. § 7104(d); see also 38 C.F.R. § 19.7 (implementing the cited statute); see also Vargas-Gonzalez v. West, 12 Vet. App. 321, 328 (1999); Gilbert v. Derwinski, 1 Vet. App. 49, 56-57 (1990) (the Board's statement of reasons and bases for its findings and conclusions on all material facts and law presented on the record must be sufficient to enable the claimant to understand the precise basis for the Board's decision, as well as to facilitate review of the decision by courts of competent appellate jurisdiction). The Board must also consider and discuss all applicable statutory and regulatory law, as well as the controlling decisions of the appellate courts. Duty to Notify and Assist The Veterans Claims Assistance Act of 2000 (VCAA) describes VA's 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. 2012); 38 C.F.R. §§ 3.102, 3.156(a), 3.159, 3.326(a) (2012). This claim is being denied as a matter of law. VCAA notice is not required because the United States Court of Appeals for Veterans Claims (Court) has held that when the interpretation of a statute is dispositive of the issue on appeal, neither the duty to assist nor the duty to notify provisions of the VCAA are implicated. Dela Cruz v. Principi, 15 Vet. App. 143, 149 (2001); Smith v. Gober, 14 Vet. App. 227, 231- 32 (2000). Analysis Death pension is available to the "surviving spouse" of a Veteran because of his non-service connected death, as long as the Veteran served for the required period of time during wartime subject to certain income limitations. See 38 U.S.C.A. §§ 101, 1521(j), 1541 (West 2002 & Supp 2012); 38 C.F.R. §§ 3.3(b)(4), 3.23(a)(5), (d)(5), (2012). Basic entitlement exists if, among other things, the surviving spouse's income is not in excess of the applicable MAPR specified in 38 C.F.R. § 3.23 as changed periodically and reported in the Federal Register. See 38 U.S.C.A. § 1521 (West 2002 & Supp. 2012); 38 C.F.R. §§ 3.3(b)(4), 3.23(a), (b), (d)(5) (2012). The MAPR is published in Appendix B of VA Manual M21-1 (M21-1) and is to be given the same force and effect as if published in VA regulations. See 38 C.F.R. §§ 3.21, 3.23. The MAPR is revised every December 1st and is applicable for the following 12-month period. The MAPR shall be reduced by the amount of the countable annual income of the surviving spouse. See 38 U.S.C.A. §§ 1503, 1521; 38 C.F.R. §§ 3.3, 3.23(b). Fractions of dollars will be disregarded in computing annual income. See 38 C.F.R. § 3.271(h). To calculate the monthly pension benefit, VA subtracts the total amount of countable income in one year, less excluded income, from the MAPR for that year, then, if a positive amount remains, the rest is divided by twelve to determine the monthly death pension benefit. See 38 C.F.R. § 3.273(a). When a change in the MAPR occurs, VA repeats the calculation with the new MAPR as the starting amount. See 38 C.F.R. § 3.273(b)(1). When a change in income occurs, the MAPR will be reduced by the new annualized income effective on the date that the increased income began. See 38 C.F.R. § 3.273(b)(2). 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 during the 12 month annualization period in which received, except for listed exclusions. See 38 U.S.C.A. § 1503(a) (West 2002); 38 C.F.R. § 3.271(a) (2012). Income from Social Security Administration (SSA) benefits is not specifically excluded under 38 C.F.R. § 3.272, and therefore is included as countable income. The types of income which are excluded from countable income for VA pension purposes include welfare benefits; maintenance benefits furnished by a relative, friend, or a charitable organization; VA pension benefits; casualty loss reimbursement; profit from the sale of property; joint accounts; medical expenses; expenses of last illnesses, burials, and just debts; educational expenses; a portion of the beneficiary's children's income; Domestic Volunteer Service Act Programs payments; distributions of funds under 38 U.S.C. § 1718; survivor benefit annuities; Agent Orange settlement payments; restitution to individuals of Japanese ancestry; cash surrender value of life insurance policies; income received by American Indian beneficiaries from trust or restricted lands; Radiation Exposure Compensation Act payments; and Alaska Native Claims Settlement Act payments. See 38 C.F.R. § 3.272. Unreimbursed medical expenses in excess of five percent of the MAPR, which have been paid, may be excluded from an individual's income for the same 12-month annualization period to the extent they were paid. See 38 C.F.R. § 3.272(g)(1)(iii). In order to be excluded from income, these medical expenses must be paid during the time period at issue, regardless of when they were incurred. In addition, they must be out-of-pocket expenses, for which the surviving spouse received no reimbursement, such as through an insurance company. However, medical insurance premiums themselves, as well as the Medicare deduction, may be applied to reduce countable income. Recurring income, received or anticipated in equal amounts and at regular intervals such as weekly, monthly, quarterly and which will continue throughout an entire 12-month annualization period, will be counted as income during the 12-month annualization period in which it is received or anticipated. See 38 C.F.R. § 3.271(a)(1). Nonrecurring income (income received on a one-time basis), such as the surviving spouse benefit for the month of the Veteran's death, will be counted, for pension purposes, for a full 12-month annualization period following receipt of the income. See 38 C.F.R. § 3.271(a)(3). The amount of any nonrecurring countable income received by a beneficiary shall be added to the beneficiary's annual rate of income for a 12-month annualization period commencing on the effective date on which the nonrecurring income is countable. See 38 C.F.R. § 3.273(c). Effective December 1, 2008 and December 1, 2009, the MAPR for a surviving spouse with no children was $7,933.00. See 38 C.F.R. § 3.23(a)(5); M21-1, Part I, Appendix B. In her March 2009 claim for death pension, the appellant reported monthly income of $843.00 from Social Security. She reported a pre-arranged burial expense of $5,688.80 paid in October 1999, burial expenses of $750.00 and $506.13 paid in February 2009 to a memorial garden and a funeral home, respectively, and monthly Medicare payments of $96.40 (which she reported were deducted from her SSA benefit). Regarding her reported SSA income, an April 2009 SSA inquiry reflects that the appellant was in receipt of a monthly benefit of $355.40 from December 2008 and was in receipt of a monthly benefit of $939.40 from February 2009, with a Supplementary Medical Insurance (SMI) premium amount of $96.40. This SSA inquiry further reflects that the appellant received a lump-sum Social Security death benefit of $255.00 in February 2009. Based on this reported information, in June 2009, the PMC awarded non-service connected death pension. Death pension was awarded from February 19, 2009 based on total income of $4,264.00. This figure is based on the appellant being in receipt of a monthly SSA benefit of $355.40 from December 2008 ($355.40 for 12 months is $4,264.80). The PMC then reduced this income based on the appellant's SMI premiums. Medical expenses can only be deducted that are in excess of five percent of the MAPR. Here, the total for medical expenses ($1,156.80) exceeds five percent of the MAPR ($396.65). Subtracting this amount ($1,156.80 minus $396.65) reveals medical expenses above five percent of the MAPR totaling $760.15, the amount to be deducted from income. The PMC also reduced the appellant's income by $255 for the Social Security Death Benefit, and considered final expenses for the Veteran in the amount of $6,944.00. As these reductions exceeded her income, she was awarded a benefit of $661.00 per month, from March 1, 2009 ($7,933.00 divided by 12 months is $661.00 per month). The PMC then explained that, from May 1, 2009 through February 28, 2010, it had used her total income of $11,272.00 to adjust her death pension benefit ($939.40 monthly SSA benefit for 12 months is $11,272.80). This income was reportedly reduced by the SMI premiums in excess of five percent of the MAPR ($760.15) and the Social Security Death Benefit of $255.00. The PMC again considered the Veteran's final expenses in the amount of $6,944.00. While the PMC stated that these reductions resulted in the appellant's countable income being reduced to $3,823.00, it seems that the Social Security Death Benefit was, in fact, counted as income, despite being characterized as a continuing deduction ($11,272.80 plus $255.00 is $11,527.80 minus $760.15 is $10,767.65 minus $6,944.00 is $3,823.65). Regardless, the current appeal comes from the July 2010 decision. The appellant did not appeal the PMC's June 2009 calculation of her non-service connected death pension. The June 2009 PMC decision terminated the appellant's non-service connected death pension benefit from March 1, 2010, based on her annual income of $11,272.00 as, even after excluding SMI premiums in excess of five percent of the MAPR ($760.15), the appellant's income was excessive for death pension benefits. A July 2010 SSA inquiry reflects that the appellant was receiving a monthly SSA benefit of $939.50 from December 2009, with an SMI premium of $96.50. In July 2010 a Veterans Service Representative (VSR) from the PMC contacted the appellant to inform her that her $255.00 Social Security Death Benefit payment had been mistakenly counted as an expense to reduce her income from March 1, 2009 and, instead, this payment should be counted as income received for 12 months, first of the month after it was received. The appellant indicated that she had received the payment in March 2009 and the VSR advised her that the $255.00 death payment would be counted effective April 1, 2009. She was further informed that her benefits would remain at a terminated status due to excess income. In the July 2010 decision, the PMC adjusted the appellant's death pension benefits. The PMC continued to find that she was entitled to $661.00 per month from March 1, 2009. The $661.00 benefit was based on SSA income of $4,264.00, SMI premiums of $1,156.00, and last expenses of $6,944. She was awarded a monthly benefit of $342.00 from April 1, 2009. The $342.00 benefit was based on SSA income of $11,272.00, the death benefit payment of $255.00, SMI premiums of $1,156.00, and last expenses of $6,944.00. In the July 2010 decision, the PMC also confirmed that the appellant's death pension benefit was terminated effective March 1, 2010. The termination was based on SSA income of $11,274.00, the death benefit payment of $255.00, and SMI premiums of $1,158.00. As to the question of termination of non-service connected death pension benefits from March 1, 2010, the appellant was in receipt of $939.50 per month in SSA benefits, from December 1, 2009; resulting in an annual income of $11,274.00 ($939.50 times 12 is $11,274.00). The PMC appropriately included the SSA death benefit of $255.00 for March 2010, raising the appellant's income to $11,529.00. Her SMI premiums for the 12 month period beginning March 1, 2010 totaled $1,158.00 ($96.50 times 12). The amount in excess of five percent of the MAPR, so, $761.35 ($1,158.00 minus $396.65) may be deducted from this income; however, the result, $10,767.65, is well in excess of the applicable MAPR of $7,933.00. Thus, the PMC correctly terminated the appellant's non-service connected death pension benefits due to excessive income, effective March 1, 2010. The July 2010 adjustment of the appellant's pension benefit, assigning a benefit of $342.00 effective April 1, 2009, was correct based on the information reported by the appellant. This figure is based on the appellant being in receipt of a monthly SSA benefit of $939.40 from February 2009 ($939.40 for 12 months is $11,272.80) and in receipt of a $255.00 Social Security Death Benefit, for a total income of $11,527.80 ($11,272.80 plus $255.00). The PMC then reduced this income based on the appellant's SMI premiums in excess of five percent of the MAPR, $760.15 ($1,156.80 minus $396.65) and final expenses for the Veteran in the amount of $6,944.00, for a remaining income of $3,823.65 ($11,527.80 minus $760.15 minus $6,944.00). When the MAPR of $7,933.00 is reduced by the appellant's income of $3,823.65, the result is $4,109.35 ($7,933.00 minus $3,823.65). This amount, divided by 12, results in a monthly benefit of $342.00 ($4,109.35 divided by 12 is $342.44, rounded to the nearest dollar is $342.00). There is some question as to whether the full amount of $6,944.00 for the Veteran's final expenses should have been excluded from income; however, as exclusion of this entire amount was to the benefit to the appellant, the Board will not disturb the calculations of the PMC. Expenses of last illness and burial expenses, for example, prepaid burial, paid before the date of pension entitlement, can be considered final expenses if paid by a surviving spouse. See M21-1MR, V.iii.1.G.46.g (May 7, 2009). Such expenses are deducted from countable income for the initial period of entitlement. See M21-1MR, V.iii.1.G.47.a (May 7, 2009). In March 2009, the appellant reported final expenses consisting of a pre-arranged burial expense of $5,688.80 (paid in October 1999 to a funeral home) and burial expenses of $750.00 and $506.13 (paid in February 2009) to a memorial garden and the funeral home, respectively. The PMC totaled these reported figures to come up with last expenses of $6,944.00. The burial expense of $750.00 should certainly be included in the Veteran's final expenses and the appellant has submitted a copy of her February 2009 check for $750.00 to the memorial garden. Regarding her reported expense of $506.13 to the funeral home, the PMC contacted the funeral home in April 2009 and asked that a copy of the final receipt be faxed. The funeral home provided a copy of a receipt for costs associated with the Veteran's funeral, in addition to the prepaid amount. The receipt reflects an expense of $586.67; however, the payor is listed as R.H., the appellant's son-in-law. A deduction for funeral and other last expenses is only made for expenses which were actually paid by the claimant and for which he or she will not be reimbursed. See M21-1MR, V.i.3.D.15.a (Dec. 13, 2005). As the receipt reflects that the additional payment to the funeral home was made by the appellant's son-in-law, as opposed to the appellant, this amount paid to the funeral home would normally not be used as a deduction from the appellant's countable income. However, in this case, the Virtual VA e-folder includes a Durable Power of Attorney, signed in November 1997, reflecting that the appellant's son-in-law was appointed as the appellant's attorney in fact, and authorized to use funds in any of her accounts and to take any and all actions on her behalf, as fully and effectively as if she were personally present. Thus, the Board will resolve any doubt in the appellant's favor and assume that, despite the appellant's son-in-law being listed on the receipt from the funeral home as the payor, this expense was, at least in the amount of $506.13 reported by the appellant in March 2009, paid by the appellant. The question, however, arises as to whether the pre-paid burial expense in the full amount of $5,688.80 should be counted as a deduction from countable income, as a major portion of this amount was paid with proceeds from a life insurance policy. The proceeds of cashed-in life insurance policies are not counted as income. See M21-1MR, V.iii.1.I.58.t (September 27, 2011). The appellant has submitted an October 1999 statement from the funeral home reflecting that she and the Veteran had made funeral arrangements in the amount of $5,688.80 each, for a total of $11,377.60. Thus, the amount of $5,688.80 listed in her March 2009 claim. Payment of the prepaid burial expenses for the Veteran and the appellant, however, was made with the proceeds from an insurance policy. A copy of the check from the insurance company shows that the Veteran received a payment of $10,130.35. The pre-arranged funeral expense of $11,377.60 for the Veteran and the appellant, minus the insurance proceeds of $10,130.35 left a balance of $1,247.25, which, the appellant reported, was paid out of pocket by herself and the Veteran. While the check from the insurance company was made out to the Veteran, the Board considers the amount, which was used to pre-pay funeral expenses for both the Veteran and the appellant, as marital income to both the appellant and the Veteran, presumably deposited in a joint account. Where payment is made from a claimant's separate funds or from a joint account with the claimant and another person, the expense is considered to have been paid by the claimant. See M21-1MR, V.iii.1.G.47.h (May 7, 2009). Even if the PMC should only have excluded the amount of the prepaid burial expenses which was paid out of pocket (as opposed to the amount paid out of pocket and the amount paid with insurance proceeds), the PMC's exclusion of the entire pre-paid funeral expense of $5,688.80 was to the appellant's benefit, and the Board will not disturb the PMC's findings regarding the amount of non-service connected death pension benefits effective from March 1, 2009 and April 1, 2009. The Board has carefully reviewed the record in depth and it has been unable to identify a basis upon which the appeal may be granted. It has been observed that "no equities, no matter how compelling, can create a right to payment out of the United States Treasury which has not been provided for by Congress." Smith (Edward F.) v. Derwinski, 2 Vet. App. 429 (1992) [citing Office of Personnel Management v. Richmond, 496 U.S. 414, 426 (1990)]; see Harvey v. Brown, 6 Vet. App. 416 (1994). Payment of non-service connected death pension requires that the appellant's countable income is less than the annual MAPR rate determined by law. VA is bound by the applicable law and regulations as written. See 38 U.S.C.A. § 7104(c). Here, her countable income was in excess of the applicable pension rate for death pension as of March 1, 2010. The appellant is not legally entitled to death pension benefits beginning on that date, nor is she entitled to any higher rate of pension at any time between the effective date of her award (March 1, 2009) and that date. Her claim must be denied as a matter of law. See Sabonis v. Brown, 6 Vet. App. 426, 430 (1994). ORDER The decision to adjust and terminate the appellant's non-service connected death pension benefit, effective March 1, 2010, was proper. ____________________________________________ Vito A. Clementi Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs