Citation Nr: 18148772 Decision Date: 11/09/18 Archive Date: 11/08/18 DOCKET NO. 14-17 116A DATE: November 9, 2018 REMANDED Entitlement to accrued benefits is remanded. REASONS FOR REMAND The Veteran had active service from July 1964 to April 1967. He died in January 2009, and the appellant is the Veteran’s sister. This matter comes before the Board of Veterans’ Appeals (Board) on appeal from an August 2010 administrative decision by the Department of Veterans Affairs (VA) Pension Management Center (PMC) in Milwaukee, Wisconsin. In March 2011, jurisdiction of the claim was transferred to the Regional Office (RO) in Chicago, Illinois. A VA Form 21-22a, received at the RO in May 2014 reflects that the appellant wishes to appoint a private attorney, C.C., as her representative; however, C.C. has not obtained accreditation from VA to assist the appellant in her claim for VA benefits before the Board, and the VA Form 21-22a does not reflect that C.C. was appointed as an individual providing a one-time representation under 38 C.F.R. § 14.630. See 38 U.S.C. § 5901-5904; 38 C.F.R. § 14.629, 14.630. The appellant was notified of this fact by letter dated in July 2018. She was informed of alternative options for representation, and informed that if she did not respond within 30 days identifying new representation, VA would assume she had elected to represent herself and proceed with the adjudication of the claim. No response was received within 30 days. Thus, the Board finds the appellant has elected to represent herself. 1. Entitlement to accrued benefits is remanded. In April 2008, the Veteran filed a claim of service connection for several disabilities. In a March 2009 rating decision, service connection was established for type II diabetes, coronary artery disease, peripheral vascular disease, right foot and left toe amputations, diabetic retinopathy, hypertension, peripheral neuropathy of the upper and lower extremities, and erectile dysfunction. The combined disability rating for compensation was 100 percent, effective from April 25, 2007. Accordingly, a check in the amount of $69,480.00 was sent to the Veteran in April 2009 for retroactive compensation owed from April 25, 2007 (the effective date of the awards of service connection). Additionally, a second check in the amount of $3,185.00 was subsequently sent to the Veteran in May 2009 for the Veteran’s first monthly payment of disability compensation. Unfortunately, the Veteran died in January 2009, and VA was unaware of the Veteran’s death at the time the March 2009 rating decision was issued or at the time that the April 2009 and May 2009 checks were sent to the Veteran. As a matter of law, appellants’ claims do not survive their deaths. Zevalkink v. Brown, 102 F.3d 1236, 1243-44 (Fed. Cir. 1996); Smith v. Brown, 10 Vet. App. 330, 333-34 (1997); Landicho v. Brown, 7 Vet. App. 42, 47 (1994). Accordingly, the checks were sent in error. The record further shows that the appellant deposited the check for $69,480.00 in the Veteran’s bank account in April 2009; and, returned the check for $3,185.00 to VA. Following VA’s receipt of the returned check, the appellant received notice from the Debt Management Center (DMC) in St. Paul, Minnesota, that benefits for the period from January 16, 2009, through March 31, 2009, amounting to $9,555.00, be returned. Although the DMC stipulated that the $9,555.00 should be returned to VA to cover the period when the Veteran was paid benefits in error for a period following his death, it appears that the entire amount of $69,480.00 was reclaimed by the Treasury Department from the bank. See July 2009 Reclamation Notice signed by a bank employee authorizing the debit from the Veteran’s account. Thus, the appellant had no way to return the $9,555.00. It is, therefore, imperative for VA to locate the funds so that the appellant is not accountable for repaying VA money that was already reclaimed by VA. The appellant also maintains that she was never provided notice that VA was taking this action. Moreover, as the entire amount of the $69,480.00 check was supposedly reclaimed, the appellant no longer owes VA $9,555.00 as that amount would have been included in the $69,480.00 payment. Unfortunately, the record does not clarify if VA actually sent the reclamation notice to the Veteran’s bank (i.e. whether the reclamation notice was legitimate or fraudulent); and/or whether VA ever received the reclaimed funds. According to the record, VA has not been able to account for the reclamation, even though a bank representative confirmed that the reclamation took place. See May 2014 memorandum email from the bank’s assistant branch manager, R.A. Additionally, it appears that the bank submitted a copy of the Veteran’s bank statement from August 2009 which reportedly shows when the reclamation took place; however, the bank statement is not of record; and, according to VA internal emails from July and August 2009, VA is unable to account for the return of those funds. Meanwhile, in December 2009, the appellant submitted a claim for accrued benefits. Periodic monetary benefits to which a VA beneficiary was entitled at death, either by reason of existing VA ratings or decisions, or those based on evidence in the file at date of death, and due and unpaid, are known as “accrued benefits.” 38 U.S.C. § 5121; 38 C.F.R. § 3.1000; Zevalkink v. Brown, 102 F.3d 1236 (Fed Cir. 1996). In this case, it has already been established that the Veteran was entitled to monetary compensation benefits at the time of his death based on the RO’s finding in the March 2009 rating decision that service-connected compensation was warranted, effective from April 25, 2007. Unfortunately, because the March 2009 rating decision, and payment to the Veteran based on that decision, was issued in error, after the Veteran’s death in January 2009, the appellant is not automatically entitled to that money. In a March 2010 rating decision, the PNC granted service connection for the cause of the Veteran’s death. As such, the appellant was paid service-connected burial benefits of $2000.00. However, in August 2010, the appellant was notified by the PMC that her claim for additional accrued benefits was denied because the check for $69,480.00 was not returned. In short, the RO essentially determined that it would be a duplication of benefits to grant the appellant’s claim for accrued benefits because she could not prove that she returned the $69,480.00. The appellant asserts that she has provided evidence showing that VA reclaimed the funds in the Veteran’s bank account and, therefore, she believes she is entitled to accrued benefits (not additional accrued benefits) in the amount of $59, 925.00 (the $69,480.00 paid to the Veteran following his death, less the $9,555.00 not owed to the Veteran following his death) because VA reclaimed $69,480.00 from the Veteran’s bank account. There are two issues that need to be resolved on remand. First, the PMC, DMC, and RO need to determine what happened to the reclamation amount of $69,480.00, to include whether it was fraudulently reclaimed from the bank or legitimately returned to VA. In this regard, the appellant was requested to provide proof from the bank that the money was returned to VA. In response to that request, the appellant provided a signed reclamation notice, and a memo from the bank’s assistant branch manager verifying that the reclamation took place. However, these documents do not show where the money went after it was reclaimed. Although a copy of the Veteran’s August 2009 bank statement was reportedly attached to that memo, it is not currently of record, and could potentially show who reclaimed the funds and where they went. Accordingly, on remand, the appellant should be notified that she needs to submit a copy of the Veteran’s August 2009 bank statement, as well as any additional evidence showing where the funds were routed as a result of the reclamation. Also, according to the record, the only evidence that the reclaimed amount was not received by VA comes from internal emails and standardized print outs of payment amounts to the Veteran without any indication of what procedures were undertaken, if any, to track the reclamation of funds, and without any discussion of the validity of the reclamation notice provided by the appellant. In a March 2010 notice letter to the appellant, the RO explained that VA payments that were issued in the Veteran’s name after the date of death must be returned, and if not returned, the appellant would receive notification from the DMC regarding the amount of outstanding debt and instructions for returning the funds. Additionally, the letter notified the appellant that any funds not returned may be electronically reclaimed from the Veteran’s account by the United States Treasury. Unfortunately, that notice was provided to the appellant nearly eight months after the date of the July 2009 reclamation notice to the Veteran’s bank. Additionally, and irrespective of whether VA ever received the reclaimed amount of $69,480.00 that was improperly paid to the Veteran following his death, VA never determined whether the appellant is a proper claimant to receive accrued benefits. Following timely filing of a proper claim, such benefits will be paid according to a statutorily prescribed order of distribution. Upon the death of a Veteran receiving VA benefits, accrued benefits are paid to his or her spouse; his or her children (in equal shares); or his or her dependent parents (in equal shares) or the surviving parent. 38 C.F.R. § 3.1000 (a)(1). Upon the death of a surviving spouse receiving VA benefits, accrued benefits are paid to the Veteran’s children. 38 C.F.R. § 3.1000(a)(2). In all other cases, only so much of the accrued benefit may be paid as may be necessary to reimburse the person who bore the expense of last sickness or burial. 38 C.F.R. § 3.1000 (a)(5). According to September 2009 correspondence from C.C., the Veteran was survived by eight brothers and sisters; he had no spouse and no children, and his parents predeceased him. Accordingly, as the appellant is the Veteran’s sister, she would only be entitled to an amount of accrued benefits to reimburse her for bearing the expense of last sickness (she was already paid burial benefits as noted above). The appellant argues, however, that the full amount of accrued benefits is payable to the Veteran’s estate. Accrued benefits are also addressed within 38 U.S.C. § 5122. This section provides that a check received by a payee in payment of accrued benefits shall, if the payee died on or after the last day of the period covered by the check, be returned to the issuing office and canceled, unless negotiated by the payee or the duly appointed representative of the payee’s estate. The amount represented by such check, or any amount recovered by reason of improper negotiation of any such check, shall be payable in the manner provided in section 5121 of this title (governing accrued benefits), without regard to section 5121(c) of this title. Any amount not paid in the manner provided in section 5121 of this title shall be paid to the estate of the deceased payee unless the estate will escheat. 38 U.S.C. § 5122. The accompanying regulation pertaining to 38 U.S.C. § 5122 clarifies that where the payee of a check for benefits has died prior to negotiating the check, the check shall be returned and canceled. 38 C.F.R. § 3.1003. The amount represented by the returned check, less any payment for the month in which the payee died, shall be payable to the living person or persons in the order of precedence set forth for accrued benefits. 38 C.F.R. § 3.1003 (a). Payments to persons who bore the payee’s last expenses are limited to the amount necessary to reimburse those expenses. Id. There is no limit on the retroactive period for which payment of the amount represented by the check may be made, and no time limit for filing a claim to obtain the proceeds of the check or for furnishing evidence to perfect a claim. 38 C.F.R. § 3.1003 (a)(1). Any amount not paid in this manner shall be paid to the estate of the deceased payee, provided that the estate will not revert to the state because there is no one eligible to inherit it. 38 C.F.R. § 3.1003 (b). The Court has interpreted the requirement that the check be “received” by a payee, for purposes of applying 38 U.S.C. § 5122, as requiring actual receipt by the payee during the payee’s lifetime, that is, that the benefit payment be at least delivered to or under the control of the payee prior to the payee’s death, even if not negotiated, signed, or used by the payee during his or her lifetime. See Wilkes v. Principi, 16 Vet. App. 237, 242-43 (2002) (electronic transfer to deceased payee’s account six days after payee’s death did not constitute “receipt” by the payee for purposes of 38 U.S.C. § 5122). In essence, if the payment at issue was made to the payee after his or her death, the provisions of 38 U.S.C. § 5122 and 38 C.F.R. § 3.1003 are inapplicable; rather, the provisions of section 38 U.S.C. § 5121 govern as to an accrued benefits claim. Id. Applicable law does not include fiduciaries, estates, or executors of estates among the persons eligible to receive accrued benefits. The United States Court of Appeals for Veterans Claims and the United States Court of Appeals for the Federal Circuit have repeatedly affirmed that accrued-benefits claims by persons other than those listed in section 5121(a) are not viable as a matter of law. See, e.g., Morris v. Shinseki, 26 Vet. App. 494, 499-500 (2014) (holding, in the context of accrued benefits, that Veteran’s brother and fiduciary was not an eligible claimant); Youngman v. Shinseki, 699 F.3d 1301, 1303-04 (Fed. Cir. 2012) (denying accrued benefits to a deceased Veteran’s fiduciary for distribution to the Veteran’s “heirs”); Pelea v. Nicholson, 497 F.3d 1290, 1291-92 (Fed. Cir. 2007) (denying accrued benefits to deceased claimant’s “estate”); Richard v. West, 161 F.3d 719, 721-23 (Fed. Cir. 1998) (denying accrued benefits to a deceased Veteran’s brother); Wilkes v. Principi, 16 Vet. App. 237, 242 (2002) (denying accrued benefits to a deceased Veteran’s nephew); Caranto v. Brown, 4 Vet. App. 516, 518 (1993) (holding it was necessary to determine whether a Veteran’s daughter was a “child” for purposes of accrued benefits as she was otherwise ineligible to pursue an accrued benefits claim). The threshold question in any claim for VA benefits is whether status as an eligible claimant has been established. See Hayes v. Brown, 7 Vet. App. 420 (1995). The matter is REMANDED for the following action: 1. Notify the appellant that the Veteran’s August 2009 bank statement is not of record and ask her to submit it, as well as any additional evidence to support her claim that $69,480.00 was reclaimed from the Veteran’s bank account in or around July 2009 and to show where the funds were routed pursuant to the reclamation. 2. Provide the DMC, PMC, and any other appropriate VA authority with a copy of the appellant’s reclamation notice for review and request a determination as to whether such notice is legitimate, and if so, conduct an appropriate audit to determine what happened to the $69,480.00 after it was reclaimed from the bank in 2009. (Continued on the next page)   3. Determine whether the appellant is a proper accrued benefits claimant. In so doing, request from the appellant an accounting of any expenses (other than burial expenses) that she incurred as a result of the Veteran’s last sickness. L. B. CRYAN Veterans Law Judge Board of Veterans’ Appeals ATTORNEY FOR THE BOARD D. Orfanoudis, Counsel