Citation Nr: 20002936 Decision Date: 01/14/20 Archive Date: 01/13/20 DOCKET NO. 16-19 748 DATE: January 14, 2020 ORDER VA incorrectly adjusted the Veteran’s non-service-connected disability pension benefits (hereafter “pension benefits”) from December 1, 2014 to December 1, 2015, and his appeal is granted. FINDINGS OF FACT 1. In his January 2015 application for pension benefits, the Veteran reported that he and his spouse received income only from Social Security benefits. 2. In developing the Veteran’s claim, the RO only sought data match information from the SSA, which did not provide adequate information as to the source of the spouse’s income. Furthermore, although an SSI Inquiry was conducted on the Veteran, one was not done on his spouse. 3. In a March 2015 decision, based on data match information from the SSA, the Veteran was awarded pension benefits based solely on his income as a determination was made that his spouse’s SSA income was from SSI benefits and, therefore, not countable as income. 4. At no time prior to the initial adjudication of his claim in March 2015 did the Veteran report that his spouse received Supplemental Security Income (SSI) benefits from the Social Security Administration (SSA). 5. In August 2015, the Veteran filed a claim for an adjustment in his pension benefits due to an alleged income change. 6. In September 2015, based on a review of essentially the same evidence used in the March 2015 decision, a determination was made that the SSA benefits received by the Veteran’s spouse was countable income and the Veteran was notified by letter of a proposal to reduce his pension benefits effective December 1, 2014 due to an increase in countable income. 7. By a December 2015 notification letter, the Veteran was notified that the RO had taken action to reduce his benefits and that this action would create an overpayment in his account, which he will receive a separate letter regarding the amount of the overpayment. 8. Pursuant to the Board’s April 2019 remand, the RO verified with SSA that the SSA benefits received by the Veteran’s spouse are not SSI benefits, but are spousal benefits that are countable as income in determining the Veteran’s entitlement to pension benefits. 9. Any erroneous payment of pension benefits to the Veteran was solely due to the RO’s error in failing to ensure it was aware of the exact nature of the SSA benefits received by the Veteran’s spouse before issuing the March 2015 decision and, therefore, the effective date of the reduction in the Veteran’s pension benefits should have been December 1, 2015, the date of his last payment rather than December 1, 2014. CONCLUSION OF LAW The reduction of the Veteran’s pension benefits from December 1, 2014 to December 1, 2015 was not proper. 38 U.S.C. §§ 1521, 5107, 5112, 5304; 38 C.F.R. §§ 3.3, 3.23, 3.271, 3.272, 3.500(b), 3.700. REASONS AND BASES FOR FINDINGS AND CONCLUSION The Veteran had honorable active military service from September 1969 to March 1972 and August 1975 to August 1979. This matter comes before the Board of Veterans’ Appeals (Board) on appeal from a Department of Veterans Affairs (VA) Regional Office (RO)’s decision that reduced the Veteran’s non-service-connected disability pension benefits effective December 1, 2014. The Veteran disagreed with that decision and this appeal ensued. The Veteran testified at a Travel Board hearing before the undersigned Veterans Law Judge in December 2018. A copy of the hearing transcript is associated with the claims file. Thereafter, the Board remanded the Veteran’s claim in April 2019 for additional development. Having completed that development, the RO issued a revised decision in October 2019 adjusting the Veteran’s countable income based upon the new information received on remand and issued a supplemental statement of the case (SSOC). In addition, in November 2018 while the Veteran’s appeal was pending a hearing, the Veteran notified VA that his spouse had died in September 2018. In April 2019, the RO issued a letter to the Veteran proposing to adjust his non-service-connected disability pension benefits to remove his spouse as a dependent, as well as to adjust his income based on new information from the Social Security Administration (SSA) as to the amount of his current benefits. In September 2019, the RO issued a separate decision adjusting the Veteran’s non-service-connected disability pension benefits to remove his spouse as a dependent. As such issue was not part of the original decision appealed, the Board does not have jurisdiction over that issue and will not consider it in this decision. Rather, it will only address the October 2019 decision adjusting the Veteran’s income and medical expenses as that is the issue on appeal. The Board notes that the SSOC refers to an October 2, 2019 letter as the decision adjusting the Veteran’s income and medical expenses; however, that decision is actually in a letter dated October 3, 2019. Whether VA correctly adjusted the Veteran’s non-service-connected disability pension benefits from December 1, 2014 to the present In his notice of disagreement and VA Form 9, the Veteran argued that the reduction in benefits affected him financially making it difficult for him and his spouse to meet their basic needs. However, at the Board hearing in December 2018, it was argued that the creation of the overpayment was not his fault because it appears that VA had the information regarding the Veteran’s spouse’s income at the time of the original application and the revision was based upon VA’s own review, not anything the Veteran did. Given the arguments raised at the hearing, the Board will address the question of whether the reduction of the Veteran’s pension benefits was solely the result of VA error. Basic entitlement to pension exists if, among other things, the claimant’s income is not in excess of the maximum annual pension rate (MAPR) specified in 38 C.F.R. § 3.23. 38 U.S.C. § 1521; 38 C.F.R. § 3.3(a)(3). The MAPR is published in Appendix B of the VA Adjudication Procedures Manual M21-1 and is given the same force and effect as if published in VA regulations. 38 C.F.R. § 3.21. 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 claimant. 38 U.S.C. §§ 1503, 1521; 38 C.F.R. §§ 3.3, 3.23(b). In determining annual income, all payments of any kind or from any source (including salary, retirement or annuity payments, one-time lump sum payments or similar income, even if waived) shall be included during the 12-month annualization period in which received, except for income specifically excluded. 38 U.S.C. § 1503(a); 38 C.F.R. §§ 3.271(a), 3.272. Gross income received is counted rather than the amount of the payment a beneficiary receives, except where certain expenses are allowed to be deducted (e.g., necessary operating expenses are deductible from business, farm or professional income and medical, legal or other expenses incident to an injury or death or expenses incident to the collection or recovery of the amount of an award or settlement for an injury or death are deductible from compensation received for an injury or death). For purposes of calculating pension benefits, total income may be reduced by amounts paid by a claimant for unreimbursed medical expenses that are “in excess of 5 percent of the applicable maximum annual pension rate or rates... as in effect during the 12-month annualization period in which the medical expenses were paid.” 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 claimant received no reimbursement, such as from an insurance company. However, medical insurance premiums themselves, including Medicare Plan B premiums deducted from Social Security benefits, may be applied to reduce countable income. For the purpose of determining initial entitlement, or resuming payments on an award that was previously discontinued, the monthly rate of pension shall be computed by reducing the applicable maximum pension rate by the countable income on the effective date of entitlement and dividing the remainder by twelve. 38 C.F.R. § 3.273(a). In essence, VA subtracts the total amount of countable income in one year from the MAPR for that year; then, if a positive amount remains, the rest is divided by 12 to determine the monthly pension benefit. When a change in the MAPR occurs, VA repeats the calculation with the new MAPR as the starting amount on the effective date of the change, typically December 1st. 38 C.F.R. § 3.273(b)(1). Whenever there is a change in a beneficiary’s countable income, VA will repeat the calculation using the beneficiary’s new countable income effective the date of the change in the amount of income. 38 C.F.R. § 3.273(b)(2). In the present case, the Veteran initially filed for VA pension benefits in November 2014 on a VA Form 21-526EZ, but this was an improper form and it was returned to him for his to resubmit on the correct form. In January 2015, he refiled his claim on the appropriate form (VA Form 21-527EZ) reporting his family income, expenses and net worth. He reported that the only income received by both him and his spouse was from SSA benefits. On this form, he wrote “0” in the line for SSI benefits. In developing the Veteran’s claim, the RO conducted an SSI Inquiry in December 2014 that showed the Veteran did not receive SSI benefits. No inquiry was made on his spouse. In addition, an SSA Inquiry on both the Veteran and his spouse was conducted in March 2015. This data match with the SSA showed the Veteran in receipt of Social Security Disability Insurance benefits starting in January 2013 and thereafter. The spouse’s data match shows she was in receipt of SSA benefits as well starting in January 2013. However, the spouse’s data match gives inconsistent information as to the nature of her benefits. Two different BIC codes are provided. The first BIC code is “B00” indicating that she is an aged wife, age 62 or older. The second BIC code is “M” indicating that she is not entitled to Title II or monthly benefits. However, her Title II Status was “Y” indicating she is eligible to Title II benefits. Also, her Title XVI status for SSI benefits is given as “C” but the Board has been unable to determine the meaning of this designation. There are notations in the claims file that, based on this information, it was determined that the Veteran’s spouse receives SSI benefits from SSA and, therefore, her income was not counted in determining the Veteran’s entitlement to pension benefits in the March 2015 decision that initially granted him benefits. Thereafter, in August 2015, the Veteran wrote into VA reporting a reduction in his SSA benefits and asking VA to recalculate his benefits based on a reduction in income. In this statement, he indicated that his benefits were previously drawn from his spouse’s benefits and that she drew her own SSA benefits because she was older than him. However, when he turned 65, he had to draw his own SSA benefits that resulted in a reduction in the amount he receives. Unfortunately, instead of reducing his income like he asked, the RO sent the Veteran a letter in September 2015 advising him that the SSA information received showed the Veteran’s spouse also receives SSA income and VA had been counting a lesser amount. Thus, the RO proposed to count his spouse’s income and reduce his pension benefits. In a December 2015 notification letter, the RO took action to reduce the Veteran’s pension benefits as he did not respond to the proposed action sent in the September 2015 letter. A first demand letter was sent shortly thereafter advising the Veteran that an overpayment in the amount of $5,232.00 was created by the reduction of his pension benefits. At the end of December, the Veteran submitted a notice of disagreement disagreeing with the reduction of his benefits arguing that the reduction would be financially devastating to him as both his spouse and him are both disabled and can barely make ends meet with the amount of money they currently make. He continued to argue financial hardship in his VA Form 9 and at the Board hearing in December 2018. In addition, at the December 2018 hearing, the Veteran disagreed with the reduction in benefits on the basis that it was solely based on VA error. In April 2019, the Board remanded the Veteran’s appeal directing the RO to contact the SSA to verify the nature of the benefits received by the Veteran’s spouse. In telephone contacts with the SSA in August and September of 2019, VA learned that the SSA benefits received by the Veteran’s spouse were spousal benefits, not disability or need-based (SSI) benefits. In the September 2019 telephone contact, the RO obtained an accurate report as to the SSA benefits paid to the spouse and Medicare Part B premiums paid by the spouse as a deduction from her benefits. In an October 2019 notification letter, the RO revised the Veteran’s pension benefits from December 1, 2014 to December 1, 2018 (the Veteran’s spouse died in November 2018 limiting the period under consideration) based upon the new income and expense information received from the SSA. Although this letter indicates an overpayment was created, it also indicates this was considered a partial grant on appeal as it reduced the original overpayment created by the December 2015 decision. The law is clear that income from whatever source is includable in countable income unless specifically excluded. See 38 C.F.R. § 3.271 and 3.272. The regulations provide in 38 C.F.R. § 3.272(a) that income from welfare, i.e., donations from public or private relief, welfare or charitable organizations), is excluded from countable income. VA has determined that SSI benefits are considered welfare since they are a need-based benefit provided by the SSA under Title XVI. However, Title II benefits administered by the SSA are not need-based benefits and, therefore, VA counts those benefits as income in determining a Veteran’s entitlement to VA pension benefits. Therefore, in the present case, the Board acknowledges that it is was proper for the SSA benefits received by the Veteran’s spouse to be counted in determining the Veteran’s entitlement to VA pension benefits. However, the Board finds the RO improperly adjusted the Veteran’s pension benefits back to December 1, 2014 because VA, not the Veteran, was solely responsible for the error in not counting the spouse’s income in determining the Veteran’s entitlement pension benefits in the March 2015 decision. Under applicable statutory and regulatory criteria, the effective date of a reduction or discontinuance of VA pension, compensation, or dependency and indemnity compensation benefits for a payee by reason of an act of commission or omission by a payee, or with the payee’s knowledge, is the effective date of the award or day preceding the act, whichever is later, but not prior to the date entitlement ceased. The effective date of a reduction or discontinuance of VA pension, compensation, or dependency and indemnity compensation benefits for a payee or dependent by reason of an erroneous award based solely on administrative error or error in judgment shall be the date of the last payment. 38 U.S.C. § 5112 (b)(9), (10); 38 C.F.R. § 3.500 (b)(1), (2). The United States Court of Appeals for Veterans Claims (Court) has said that, “[s]tated another way, when an overpayment has been made by reason of an erroneous award based solely on administrative error, the reduction of that award cannot be made retroactive to form an overpayment debt owed to VA from the recipient of the erroneous award.” Erickson v. West, 13 Vet. App. 495, 499 (2000). The Board notes that, generally, the term “VA administrative error” applies to an erroneous compensation award based solely on administrative error or error in judgment. Sole administrative error is an error in which the veteran neither had knowledge of nor should have been aware of an erroneous award. Further, neither the veteran’s actions nor his or her failure to act must have contributed to payment pursuant to the erroneous award. 38 U.S.C. § 5112(b)(9), (10). In the present case, the Veteran clearly reported his spouse’s income appropriately in his initial pension application. He had no reason to know of the erroneous determination by VA that his spouse’s SSA benefits were SSI benefits as he was not informed of the reason why her income was not counted in the March 2015 decision letter. Furthermore, his August 2015 statement also reported his spouse received SSA benefits, not SSI benefits, again indicating he was not aware of VA’s error in the manner it handled his spouse’s income. Therefore, the Board finds there was no fault on the part of the Veteran in the RO’s faulty determination that his spouse’s SSA benefits were SSI benefits and, therefore, not countable income in the March 2015 decision. Moreover, the September 2015 proposal letter advised the Veteran that new information from the SSA was the reason for the change when, in fact, the information received by VA and upon which the decision was made was essentially the same except for the addition of the change in benefit amount in January 2015. Thus, there was really no change in the basic facts as to the type of benefits the Veteran’s spouse was receiving between the March 2015 decision and the September/December 2015 decisions. Rather, it appears to be simply a matter of a different interpretation of the facts by the reviewers. However, had the initial reviewer conducted an SSI Inquiry on the Veteran’s spouse to determine whether she was in fact in receipt of such benefits, no error would have been made because such inquiry would have answered that question with a negative response. Unfortunately, it was not until after the Board’s April 2019 remand instructing the RO to inquire with the SSA as to the nature of the spouse’s benefit that it was finally verified that her benefit was countable as income. It was the RO’s failure to ensure it knew the exact nature of the spouse’s SSA benefits before rendering the March 2015 decision that resulted in the Veteran being overpaid benefits to which he was not entitled. Such error was the sole fault of VA and the Veteran should be held harmless from the results of that error. (Continued on the next page)   For the foregoing reasons, the Board finds that the overpayment of benefits to the Veteran was solely the result of administrative error or an error in judgement on the part of the RO. Having made such a finding, the effective date of the reduction of the Veteran’s pension benefits should be the date of the last payment prior to the decision effectuating the reduction, i.e., December 1, 2015, rather than December 1, 2014. Hence, the Board finds that RO incorrectly reduced the Veteran’s pension benefits from December 1, 2014 to December 1, 2015, and the Veteran’s appeal is granted to that extent only. However, prospectively, from the December 2015 decision forward, the RO properly adjusted the Veteran’s pension benefits to include his spouse’s SSA benefits. Finally, the Veteran testified at the Board hearing that he has paid off the debt he owed through the RO withholding amounts from his pension benefits. Given this evidence and the decision herein that there is no overpayment subject to recovery by VA, it appears that such withholding was not proper, and the Veteran may be owed monies related thereto. To that extent, however, the Board notes that the Veteran has not made a claim for reimbursement of such funds, and it has no authority to otherwise direct payment of them. The Veteran must seek such a claim for such reimbursement outside of this appeal. A. S. CARACCIOLO Veterans Law Judge Board of Veterans’ Appeals Attorney for the Board S. M. Kreitlow The Board’s decision in this case is binding only with respect to the instant matter decided. This decision is not precedential, and does not establish VA policies or interpretations of general applicability. 38 C.F.R. § 20.1303.