Citation Nr: 1450282 Decision Date: 11/13/14 Archive Date: 11/26/14 DOCKET NO. 11-30 809 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office and Pension Management Center in St. Paul, Minnesota THE ISSUES 1. Whether VA correctly adjusted the Veteran's nonservice-connected pension benefits from April 1, 2009. 2. Whether VA correctly adjusted the Veteran's nonservice-connected pension benefits from January 1, 2010. 3. Whether VA correctly adjusted the Veteran's nonservice-connected pension benefits from April 1, 2010. REPRESENTATION Veteran represented by: Veterans of Foreign Wars of the United States ATTORNEY FOR THE BOARD J. L. Prichard, Counsel INTRODUCTION The Veteran had active service from October 1970 to October 1973. This matter comes before the Board of Veterans' Appeals (Board) on appeal of a June 2011 decision of the St. Paul, Minnesota, Regional Office and Pension Management Center. The matter on appeal has been developed as a single issue. However, as there are in fact three separate periods affected by the adjustment, the Board will consider the matter as three separate issues for the sake of convenience and ease of understanding. The paper claims file and all pertinent records in Virtual VA and the Veterans Benefit Management System (VBMS) have been considered. FINDINGS OF FACT 1. The only income received by the Veteran for the 12-month period beginning April 1, 2009, was irregular income in the amount of $2,705. 2. The only income received by the Veteran for the 12-month period beginning January 1, 2010, was irregular income in the amount of $5,256. 3. As the two 12-month reporting periods overlapped from January 1, 2010, to April 1, 2010, the lesser amount of annual income ($2,705) should be used to calculate the monthly pension award for this period. CONCLUSIONS OF LAW 1. The monthly pension award amount of $1,065 was calculated correctly for the period from April 1, 2009, to January 1, 2010. 38 U.S.C.A. §§ 1502, 1503, 1513, 1521, 1522 (West 2002); 38 C.F.R. §§ 3.3(a)(3), 3.23, 3.271, 3.272, 3.273 (2014). 2. The monthly pension award amount of $627 from January 1, 2010, to April 1, 2010, was incorrect; the correct amount for this period is $1,065. 38 U.S.C.A. §§ 1502, 1503, 1513, 1521, 1522 (West 2002); 38 C.F.R. §§ 3.3(a)(3), 3.23, 3.271, 3.272, 3.273 (2014). 3. The monthly pension award amount of $853 was calculated correctly for the period from April 1, 2010, to February 1, 2011. 38 U.S.C.A. §§ 1502, 1503, 1513, 1521, 1522 (West 2002); 38 C.F.R. §§ 3.3(a)(3), 3.23, 3.271, 3.272, 3.273 (2014). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS I. 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) (2014). Under the VCAA, 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; and (3) that the claimant is expected to provide. Pelegrini v. Principi, 18 Vet. App. 112, 120-21 (2004); see 38 U.S.C.A. § 5103(a); 38 C.F.R. § 3.159(b). The Veteran's pension payments were lowered due to increased income. He does not dispute the amount of his income or that his payments should have been reduced. Instead, he argues that his income was counted twice for a portion of the period in question, which resulted in an excessive reduction in his payments. Hence, this case does not turn on the facts, but on an interpretation of the law. As the law is dispositive of the matter on appeal, the duties to notify and assist imposed by the VCAA are not applicable to the issue of entitlement to nonservice-connected death pension benefits. See Mason v. Principi, 16 Vet. App. 129, 132 (2002). II. Pension Disability pension will be paid to a veteran of a period of war who meets statutorily-defined service, net worth, and annual income requirements; and who is permanently and totally disabled from nonservice-connected disability not the result of willful misconduct. 38 U.S.C.A. §§ 1502, 1503, 1521. Pension is also payable to each veteran of a period of war who is 65 years of age or older and who meets the service requirements of 38 U.S.C.A. § 1521 and under the conditions (other than the permanent and total disability requirement) applicable to pension paid under that section. 38 U.S.C.A. § 1513. The purpose of VA pension benefits is to provide a subsistence income for veterans of a period of war who are totally disabled and who are otherwise unable to maintain a basic, minimal income level. Pension benefits are based upon total family income and the amount of pension benefits is adjusted based upon the number of dependents the veteran supports. Recipients of pension income are required to report any changes in income and number or status of their dependents in a timely fashion. 38 U.S.C.A. §§ 1521, 1522. Under the law, the maximum annual rate of improved (nonservice-connected) pension payable to a veteran varies according to the number of dependents. 38 U.S.C.A. §§ 1503, 1521; 38 C.F.R. §§ 3.3(a)(3), 3.23, 3.273. The rate of pension payable to an entitled payee is based on the amount of countable income received. Basic entitlement to such pension exists if, among other things, the appellant's income is not in excess of the maximum annual pension rate (MAPR) specified in 38 C.F.R. § 3.23. See 38 U.S.C.A. § 1521(a), (b); 38 C.F.R. § 3.3(a)(3). The MAPR is published in Appendix B of VA Manual M21-1 MR (M21-1 MR) and is to be given the same force and effect as published in VA regulations. 38 C.F.R. § 3.21. Pension is payable at the specified annual maximum rate, which is reduced on a dollar for dollar basis by income on a 12-month annualized basis. 38 U.S.C.A. §§ 1503, 1521; 38 C.F.R. §§ 3.3, 3.23. "Annual income" includes the veteran's own annual income, and, where applicable, the annual income of a dependent spouse and, with certain exceptions, the annual income of each child of the veteran in his custody or to whose support the veteran is reasonably contributing. 38 C.F.R. § 3.23(d)(4). Payments of any kind, from any source, shall be counted as income during the 12-month annualization period in which it was received unless it is specifically excluded by regulation. 38 C.F.R. §§ 3.271, 3.272. As a general rule, all family income shall be counted in determining entitlement to pension, including the income received by a dependent spouse. Pertinent to this case, the maximum annual rate of pension benefits for a veteran with one dependent (e.g., spouse) is $15,493, effective from December 1, 2008, and December 1, 2009. In fact, this maximum annual rate remained unchanged until December 1, 2011, which is after the period in question. 38 C.F.R. § 3.23(a)(3); see M21-1 MR, Part I, Appendix B. In this case, the Veteran submitted his claim for a nonservice-connected pension on March 30, 2009. The application form shows that the Veteran stated that neither he nor his wife had any source of income. A July 2009 Financial Status Report from the Veteran says that he had been unemployed since February 2009. Once again, neither he nor his wife had any source of income. Entitlement to nonservice-connected pension was granted in a November 2009 rating decision. The Veteran was notified of his pension in a December 2009 letter. He was further notified that his monthly entitlement amount was $1,291, payable from April 1, 2009. The Board observes that the monthly entitlement amount was calculated by taking the maximum annual rate of pension for a veteran with one dependent ($15,493), subtracting the Veteran's yearly income ($0), and dividing by 12 (the months of the year), which equals $1,291. See 38 C.F.R. § 3.273(a). In April 2010, the Veteran submitted a statement indicating that he wished to report income from "sporadic, limited employment." An Improved Pension Eligibility Verification Report (EVR) received at this time shows that he reported gross wages from all employment from March 30, 2009, to December 31, 2009, to be $2,704. He reported wages of $6,000 from January 1, 2010, to December 31, 2010. There was no other income reported for the Veteran or his wife. In October 2010, the Veteran was notified of a change to his monthly award amount based on the income change he reported in April 2010. This resulted in a monthly award amount of $1,065 effective from July 1, 2009, and $791 effective from July 1, 2010. The Veteran did not appeal from this reduction. The Board observes that this reduction created an overpayment, but that a waiver of repayment of this overpayment was granted in March 2011. However, the Veteran submitted another statement in October 2010 in which he requested that his estimated projected income for January 1, 2010, to December 31, 2010, be reduced to $2,916. He noted that the $6,000 he had previously reported had been an estimate, but that $2,916 was what he had actually earned to date in 2010. The Veteran further noted that he would no longer be employed after October 25, 2010. The Veteran submitted a new Improved Pension EVR in January 2011. On this occasion, he reported gross wages of $5,520 from January 1, 2010, to December 31, 2010. There was no other source of income for him or his wife during that year. The Veteran reported that he anticipated no income for himself or his wife in 2011. The Veteran was contacted by letter in March 2011 and requested to provide additional financial information, based on four separate time periods. In response, the Veteran submitted another income statement in March 2011. He reported $2,705 in income from March 30, 2009, to December 31, 2009; $2,795 from January 1, 2010, to March 31, 2010; $2,461 from April 1, 2010, to December 31, 2010; and a projected income of $0 in 2011. Similarly, with his November 2011 substantive appeal, the Veteran submitted tax return information to confirm $2,705 of income in 2009 for VA pension purposes, i.e., from March 2009 forward. He also submitted tax return information for 2010 showing income of $5,521 (from two payors in the amount of $2,509 plus $3,012), which is consistent with his January 2011 EVR. In contrast, the amounts reported by the Veteran in March 2011 of $2,795 through March 2010, and $2,461 from April through December 2010, would equal $5,256. Nevertheless, as the RO used the amounts of income as reported by the Veteran in March 2011, and these are more favorable to the Veteran's claim, the Board will also use the lower amounts. In June 2011, the Veteran was notified that his monthly pension awards had been adjusted based on the financial information he had provided in January 2011 and March 2011. Effective from April 1, 2009, his monthly award amount remained at $1,065. This was based on the annual income for 2009 of $2,705, and the monthly amount was derived from the maximum annual rate of pension of $15,493 minus the $2,705 of income divided by 12. Effective January 1, 2010, his monthly award amount was reduced to $627. This was based on an annual income of $7,961, and was derived from the maximum annual rate of pension of $15,493 minus the $7,961 of income divided by 12. As of April 1, 2010, the Veteran's monthly award amount became $853. This was based on an annual income of $5,256 and was derived from the maximum annual rate of pension of $15,493 minus the $5,256 of income divided by 12. Finally, the letter noted that on February 1, 2011, the monthly amount became $1,291. As the Veteran did not have any projected income for this period, the monthly amount was reached by dividing the maximum annual rate of pension of $15,493 by 12. The Board observes that this was the maximum monthly amount payable for a Veteran with one dependent and no income ($15,493 divided by 12). The Veteran has repeatedly denied or declined to report any medical expenses, or other possible exclusions from income, for the appeal periods. 38 C.F.R. § 3.272. The Veteran submitted a notice of disagreement with the June 2011 reduction. He argues that VA counted his income for January 1, 2010, to March 31, 2010, twice. He also, in effect, argues that the $2,461 of income he earned from April 1, 2010, through December 31, 2010, should be used to calculate the rate of pension for this period instead of the total amount of income of $5,256 he earned in 2010. After careful consideration of the evidence and the pertinent laws, regulations, and manuals, the Board agrees with the Veteran's first contention, but not the second. In determining the initial award entitlement, the monthly rate of pension payable shall be computed by reducing the applicable MAPR by the countable income on the effective date of entitlement, and dividing the remainder by 12. 38 C.F.R. § 3.273(a). The initial period is defined as the period extending from the effective date of the award through the end of the month that is 12 months from the month during which pension entitlement arose. M21-1MR, Part V, Subpart iii, 1.E.34(a). In this case, the initial period of entitlement runs through March 30, 2010. By regulation, there are four different income classifications. These are nonrecurring, recurring, short-term recurring, and irregular. See 38 C.F.R. § 3.271; M21-1MR, Part V, Subpart iii, 1.E.32. It appears that the Veteran's income has been classified as irregular. Examples of irregular income include earned income from odd jobs. M21-1MR, Part V, Subpart iii, 1.E.32.f. This is consistent with the Veteran's April 2010 description of his income from "sporadic, limited employment." The Board agrees that this is the proper classification. When irregular income is initially received from a particular source, it is to be counted for 12 months from the first day of the month after the month during which it is first received. Thereafter, irregular income is to be counted for 12 months from the beginning of the EVR reporting period during which it is received. 38 C.F.R. §§ 3.271(a)(2), 3.273(d); M21-1MR, Part V, Subpart iii, 1.E.33.e. This is consistent with what the RO has done for the initial award, in that based on the annual income of $2,705 reported to have been earned starting from March 30, 2009, until the end of that year, his monthly award amount was $1,065 ($15,493 minus $2,705 divided by 12). Therefore, the payment for this period is correct. Similarly, the monthly award of $853 as of April 1, 2010, is also correct. This was based on the annual income of $5,256 for all of 2010 for the 12-month EVR reporting period beginning January 1, 2010 ($15,493 minus $5,256 divided by 12). However, the Board finds that $627 monthly award that was made effective from January 1, 2010, to April 1, 2010, is not correct. The RO combined the income from the first 12-month initial annualization rate that began on April 1, 2009, ($2,705) with the income from the second 12-month annualization rate that began on January 1, 2010, ($5,256) for the period in which there was an overlap, so that the Veteran was considered to have an annual income of $7,961 for this period. Although the regulations do not appear to address this situation, it is addressed in the VA Adjudication Procedures Manual M21-1 MR. This states that the lower amount of irregular income during any overlapping period is the amount to be counted. See 38 C.F.R. § 3.271(a)(2); M21-1MR, Part V, Subpart iii, 1.E.33.e. The M21-1MR includes an example that is similar to the Veteran's situation, which demonstrates that the income from the initial 12-month annualization period that began on April 1, 2009, ($2,705) should not have been combined with the next 12-month annualization period that began January 1, 2010. Rather, the lower amount for the overlapping period ($2,705 as opposed to $2,795 through March 31, 2010) should have been counted by itself until the end of the overlapping period. Then, effective April 1, 2010, the total amount earned for calendar year 2010 ($5,256) should have been used. 38 C.F.R. § 3.271(a)(2); M21-1MR, Part V, Subpart iii, 1.E.33.g. That being the case, the proper monthly award for the period from January 1, 2010, to April 1, 2010, is $1,065 ($15,493 minus $2,705 divided by 12). ORDER VA correctly adjusted the Veteran's nonservice-connected pension benefits from April 1, 2009; to this extent the appeal is denied. VA incorrectly adjusted the Veteran's nonservice-connected pension benefits from January 1, 2010; to this extent only the appeal is granted. VA correctly adjusted the Veteran's nonservice-connected pension benefits from April 1, 2010; to this extent the appeal is denied. ____________________________________________ C. FIELDS Acting Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs