Citation Nr: 20022067 Decision Date: 03/30/20 Archive Date: 03/30/20 DOCKET NO. 16-57 327 DATE: March 30, 2020 ORDER VA properly adjusted the appellant’s VA survivor’s pension benefits as of May 1, 2015, and her appeal is denied. FINDINGS OF FACT 1. The appellant earned wages in the amount of $3,582 during the period of April 2015 to September 2015, which income was properly counted for the annual period of May 1, 2015 to April 30, 2016. 2. The appellant began receiving Social Security benefits in March 2016 that were properly counted beginning April 1, 2016. 3. The appellant has failed to provide the information and evidence regarding her interest income. CONCLUSION OF LAW VA properly adjusted the appellant’s VA survivor’s pension benefits as of May 1, 2015. 38 U.S.C. § 1521; 38 C.F.R. §§ 3.3, 3.23, 3.271, 3.272. REASONS AND BASES FOR FINDING AND CONCLUSION The Veteran had honorable active military service from May 1942 to October 1945. The Veteran passed away in September 2012. The appellant is his surviving spouse who has been receiving VA survivor’s pension since October 2012. This matter comes before the Board of Veterans’ Appeals (Board) on appeal from a Department of Veterans Affairs (VA) Regional Office (RO)’s April 2016 decision that reduced the appellant’s pension benefits effective May 1, 2015 and then terminated them effective April 1, 2016 due to an increase in her income. The Board remanded the appellant’s appeal in February 2019 seeking additional development as to the appellant’s interest income. The RO sent the appellant a duty to assist letter in March 2019 that she failed to respond to. The Board again remanded the appeal in January 2020 for the AOJ to explain why it counted $230 of annual interest income in adjusting her survivor’s pension benefit. In February 2019 the AOJ provided a memorandum to the file explaining the calculation of interest income. Thus, the Board finds that substantial compliance with the prior remands has been accomplished. Substantial compliance with a remand order, not strict compliance, is required. See Donnellan v. Shinseki, 24 Vet. App. 167, 176 (2010); Dyment v. West, 13 Vet. App. 141, 147 (1999). Therefore, the Board may proceed forward with adjudicating the Veteran’s claim without prejudice to her. See D'Aries v. Peake, 22 Vet. App. 97, 105 (2008). Whether VA properly adjusted the appellant’s VA survivor’s pension benefits as of May 1, 2015? The appellant was initially awarded VA survivor’s pension benefits beginning in October 2012. See November 2013 Notification Letter. At that time, her only income counted was interest income of $230 and the Social Security death benefit of $255 (which was counted only for the first annual period). In February 2016, the appellant filed an Eligibility Verification Report on which she reported that she earned wages in the amount of $3,582 from a temporary agency during the period of April 2015 to September 2015. She also reported receiving $697 monthly in Social Security benefits and submitted a letter from the Social Security Administration showing she had been awarded benefit and would begin receiving them in March 2016. She also reported a net worth of $7,800 in interest bearing assets but did not report receiving any interest income. In an April 2016 decision, the RO revised the appellant’s pension award to count for the changes in her income. The RO counted the appellant’s earned income of $3,582 from her temporary employment for the period of May 1, 2015 to April 30, 2016. In addition, the RO counted the appellant’s Social Security benefits of $697 per month, which is $8,364 annually, as of April 1, 2016. As a result of counting this income, the appellant’s monthly pension benefits was reduced to $401 from May 1, 2015 to March 31, 2016, and her benefits were terminated due to excessive income as of April 1, 2016. The appellant disagrees with the manner that the RO counted her earned income. She contends that she only worked for a temporary agency and earned wages from April to May and then again in September of 2015 and objects to VA using her temporary wages to adjust her pension benefits for months in which she did not earn wages. See April 2016 notice of disagreement and November 2016 VA Form 9. She feels it is unfair for VA to “penalize” her for the rest of the months in 2015 when she had no income other than her pension benefits. See November 2016 VA Form 9. 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). The amount of recurring and irregular income anticipated or received by a beneficiary shall be added to determine the beneficiary’s annual rate of income for a 12-month annualization period commencing at the beginning of the 12-month annualization. 38 C.F.R. § 3.273(d). The amount of nonrecurring income (e.g., an inheritance) 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. 38 C.F.R. § 3.273(c). For purposes of calculating countable income, 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 for 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 beneficiary’s 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). With regard to the appellant’s contention that her earned income should only be counted in the months that she earned it, unfortunately, that is not how the law computes income. Pension benefits are calculated in 12-month annualization periods. Income received during a 12-month annualization period is counted unless specifically excluded. See 38 C.F.R. § 3.271(a). Income is broken up into three types – recurring, irregular and nonrecurring. The appellant’s earned income is not recurring because it was not in equal amount at regular intervals. However, her Social Security benefits are considered recurring income because she receives the same amount, i.e., $697, at regular intervals, i.e., each month. 38 C.F.R. § 3.271(a)(1). Rather her wages in 2015 would be considered either irregular income or nonrecurring income. Irregular income is income that is received or anticipated during a 12-month annualization period, but which is received in unequal amounts or at irregular intervals. The amount of irregular income for pension purposes will be the amount received or anticipated during the 12-month annualization period following the initial receipt of such income. 38 C.F.R. § 3.271(a)(2). Nonrecurring income is income received or anticipated on a one-time basis during a 12-month annualization period (e.g., an inheritance). Pension computations of income will include nonrecurring income for a full 12-month annualization period following receipt of the income. 38 C.F.R. § 3.271(a)(3). It is clear that the RO considered her wages to be irregular income based on the manner they were treated. Thus, VA is required to count all her wages earned within the 12-month annualization period following the initial receipt of such income together and look at it in a lump sum. The individual months in when the income was earned is irrelevant to the inquiry like the appellant contends that VA should have done. It is not a penalization of the beneficiary. It is simply how pension benefits are calculated, which are in a 12-month period. Thus, although the Board understands the appellant’s argument and sympathizes with her, it must agree with the RO’s handling of her earned income. According to 38 C.F.R. § 3.660(a)(2), a reduction or discontinuance of pension benefits due to an increase in income is effective the last day of the month in which the increase occurred. Therefore, in the present case, the increase in income occurred in April 2015 and, therefore, the RO properly counted the appellant’s wages starting in May 2015 to effectuate the reduction in her pension benefits. The income is to be counted for a full 12-month annualization period, which the RO did as it counted the appellant’s wages from May 1, 2015 to April 30, 2016. Therefore, the Board finds that the RO properly counted the appellant’s earned income. Furthermore, the Board finds that the RO properly counted the appellant’s Social Security benefits. The appellant reported that she began receiving Social Security benefits in the amount of $697 per month beginning in March 2016. The RO confirmed through a data match with the Social Security Administration that $697 is the gross amount of the appellant’s Social Security benefit. Thus, the appellant’s annual benefit is $8,364 ($697 x 12 months). As the increase in income occurred in March 2016, the RO properly counted the increase in income on April 1, 2016. Moreover, the Board remanded the appellant’s appeal in February 2019 and January 2020 seeking additional information regarding her interest income questioning the RO’s initial calculation of interest income as well as its continued inclusion of $230 in her countable income given her report of reduced net worth in her February 2016 Eligibility Verification Report. Thus, in the 2019 remand, it asked the RO to seek verification of the appellant’s income. The appellant failed to respond to the RO’s March 2019 duty to assist letter requesting such information. The Board acknowledges that the RO did not seek any other form of verification, such as requesting federal tax information as suggested in the Board’s remand, but finds that such was not necessary as the remand allowed the RO to choose which method it would seek verification. Subsequent to the January 2020 remand the AOJ explained the RO’s calculation of interest income. As a condition of granting or continuing pension, the VA may require from any person who is an applicant for or a recipient of pension such information, proofs, and evidence as is necessary to determine the annual income and the value of the corpus of the estate of such person. 38 C.F.R. § 3.277(a). Where the law places the burden on the claimant to produce evidence necessary for VA to determine whether an award of benefits may be properly made but does not specifically identify the kind of evidence required to establish entitlement, it is left to VA’s discretion on a case-by-case basis to determine what information and evidence is needed and it is not an arbitrary and capricious exercise of that discretion to require the claimant to submit the requested information and evidence prior to deciding the application for benefits. See Caranto v. Brown, 4 Vet. App. 516, 519 (1993). The Board finds that no adjustment should be made to the interest income included in the appellant’s countable income because of her failure to respond to the March 2019 duty to assist letter’s request for information relating to her interest income. The RO responded to the Board’s latest remand inquiry as to how it calculated the amount of $230 in interest income, which is that it relied upon VA Fast Letter 11-16 issued in 2011 (which has since been rescinded and incorporated in VBA’s Adjudication Procedures Manual, M21-1), which set forth the policy that, if a beneficiary reports at least $5,000 in interest-bearing assets but does not report interest income, then VA will use the weekly national average interest rate set by the Federal Deposit Insurance Company (FDIC) for a 60-month CD to calculate the beneficiary’s interest income for one year based on the interest-bearing assets reported. Notably, the appellant asked that her interest income be calculated this way (see the Remarks section on her October 2012 application). However, the M21-1 was modified in November 2015 and it appears that the revisions changed VBA’s policy that interest income be calculated based on the FDIC’s weekly national rate. Rather, the M21-1 now directs that development be initiated for interest income in four situations: (1) when there are assets reported that may be earning interest, but it is not clear whether or not they are; (2) when federal tax information is not available and interest bearing net worth is $5,000 or more with no interest income reported; (3) when interest or dividend income of over $20 is reported, but the beneficiary does not report the source of the dividend or interest as net worth; or (4) when the same amount of interest and net worth is reported as the claimant or beneficiary most likely confused the two fields. See M21-1, Chapter V, Section i.3.c.4.a. In the present case, the RO initiated development at the request of the Board into the appellant’s interest income, although the appellant herself has expressed no disagreement with the inclusion of $230 as interest income in her countable income. The Board acknowledges that the appellant only reported $4,800 in interest-bearing assets in her February 2016 Eligibility Verification Report and reported having no interest income. Thus, it does not appear that she reported adequate net worth to initiate development of her interest income under current VBA policy. However, the Board questions whether this $4,800 were reported correctly as being in interest-bearing accounts or whether they are the assets the appellant previously reported in her initial October 2012 application as IRA’s, Keough’s, etc. (which were reported in the amount of $4,833). Moreover, the Board notes that the appellant did not report having any IRA’s, Keough’s, etc. on her February 2016 Eligibility Verification Report, although those assets were reported on her initial October 2012 application. Liquidation of those assets would have resulted in reportable income to the appellant; however, she has not reported any such income to VA. Although normally the Board would remand to obtain additional information from the appellant to resolve these questions, the appellant has shown that she is unlikely to respond to any requests for information as, not only did she fail to respond to the March 2019 request for information regarding her interest income sent after the Board’s first remand, but the claims file demonstrates she also failed to respond to earlier requests for information in 2017 resulting in permanent termination of her pension benefits as of May 1, 2016. See March 15, 2017 VA Form 27-0820 and April 20, 2017 Notification Letter. Hence, the Board believes further efforts to seek additional information from the appellant would be futile due to her failure to cooperate with VA’s previous attempts to obtain information and evidence from her. See Wood v. Derwinski, 1 Vet. App. 190, 192 (1991) (VA’s duty to assist is not a one-way street). Finally, the Board has reviewed the RO’s calculations in determining the appellant’s pension entitlement and does not find any error in them. Therefore, the Board finds that the RO properly revised the appellant’s pension benefits as of May 1, 2015. M. C. GRAHAM 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.