Citation Nr: 21004434 Decision Date: 01/27/21 Archive Date: 01/27/21 DOCKET NO. 17-52 973 DATE: January 27, 2021 ORDER The overpayment of Department of Veterans Affairs (VA) special monthly pension (SMP) at the aid and attendance rate in the amount of $47,995.97 was properly created; the appeal is denied. FINDINGS OF FACT 1. The Veteran paid J.C. $27,692.52 per year, as his caregiver from 2014 to 2015, and initially claimed these payments as unreimbursed medical expenses, however, he married J.C. in November 2014, and VA was not notified of the marriage until December 2014. 2. The Veteran’s countable annual income, less excludable expenses, exceeds the maximum annual pension rate (MAPR) for non-service-connected pension benefits for the period on appeal. 3. An overpayment in the amount of $47,995.97 was validly created due to the receipt of SMP with aid and attendance benefits while the income requirements for entitlement to pension benefits were not met. CONCLUSION OF LAW The debt created due to overpayment of SMP for aid and attendance in the original amount of $47,995.97 is valid. 38 U.S.C. § 5302; 38 C.F.R. § 1.962. REASONS AND BASES FOR FINDINGS AND CONCLUSION The Veteran served on active duty from December 1969 to November 1971. A Department of Veterans Affairs (VA) Regional Office (RO) has certified for appeal an issue entitled “[w]as the award completed on February 17, 2017 processed correctly.” In pertinent part, the Veteran had been financially eligible for SMP based on unreimbursed medical expenses of $27,692.52 for caregiver J.C. However, the Veteran subsequently married J.C. which eliminated his eligibility to declare expenses paid to J.C. as an unreimbursed medical expense. Notably, J.C. is also recognized as the Veteran’s fiduciary. This created an overpayment of SMP benefits. On March 4, 2017, the Debt Management Center (DMC) sent the Veteran a notification of an overpayment debt. On March 17, 2017, a Notice of Disagreement (NOD) was sent to the “Milwaukee Pension Center” disputing the validity of the debt (claimed as a mistake) and also requesting waiver of overpayment (based on financial hardship). This NOD was returned by the Pension Debt Center as it was unsigned. The cover letter informed the Veteran to return the form as soon as possible, preferably within 30 days, or otherwise it must be returned within one year. On April 3, 2017, the Veteran faxed to the Milwaukee Pension Center the same NOD which had been signed. The Board finds that the Veteran properly disputed both the validity of the debt and requested waiver of overpayment within 90 days of the DMC debt letter. In February 2020, the Board remanded the appeal to the COWC for issuance of a Statement of the Case regarding the validity of the debt and waiver of overpayment. In May 2020, the COWC issued a Supplemental Statement of the Case (SSOC) which found that the overpayment had been validly created. In May 2020, the RO issued a Statement of the Case denying the waiver of overpayment. The appellant did not file a timely appeal. As such, the issue of entitlement to a waiver of overpayment is not before the Board. 1. Whether the overpayment of VA SMP at the aid and attendance rate in the amount of $47,995.97 was properly created. The Veteran has challenged the validity of the overpayment of $47,995.97 in debt owed to VA. When the validity of a debt is challenged, a threshold determination must be made on that question prior to a decision on waiver of indebtedness. Schaper v. Derwinski, 1 Vet. App. 430, 437 (1991); 38 U.S.C. § 5302; 38 C.F.R. § 1.911(c); VAOPGCPREC 6-98 (Apr. 24, 1998). Disability pension is 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. §§ 1502, 1503, 1521. The Veteran here was found to be permanently and totally disabled due to nonservice-connected disabilities. 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. 38 U.S.C. §§ 1521, 1522. The rate of pension payable to an entitled payee is based on the amount of countable income received. The MAPR is established by statute every year and is reduced by the veteran’s countable annual income. “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 incomes of each child of the veteran in his or her custody or to whose support he or she is reasonably contributing. 38 C.F.R. § 3.23(d)(4). Under 38 C.F.R. § 3.272, the following shall be excluded from countable income for the purpose of determining entitlement to improved pension: welfare; maintenance; VA pension benefits; payments under Chapter 15, including accrued pension benefits; reimbursement for casualty loss; profit from sale of property; joint accounts (accounts in joint accounts in banks and similar institutions acquired by reason of death of the other joint owner); and medical expenses in excess of five percent of the MAPR, which have been paid. Medical insurance premiums, as well as the Medicare deduction, may be applied to reduce countable income. For purposes of calculating the five percent deduction for medical expenses, the MAPR is calculated using the rate for a veteran and any dependents, without regard for SMP status. 38 C.F.R. § 3.272(g)(1)(iii). An overpayment is created when VA determines that a beneficiary or payee has received monetary benefits to which he or she is not entitled. See 38 U.S.C. § 5302; 38 C.F.R. § 1.962. A claimant has the right to dispute the existence and amount of the debt. 38 U.S.C. § 501; 38 C.F.R. § 1.911(c). An overpayment is created when a beneficiary receives benefit payments in excess of the amount due or the amount to which such beneficiary is entitled. 38 U.S.C. § 5302; 38 C.F.R. § 1.962. To establish improper creation of an overpayment, i.e., an invalid debt, the evidence must show that (1) the Veteran was legally entitled to the VA benefits at issue; or, (2) the erroneous payment of excess benefits was due solely to VA administrative error or error in judgment. The terms “administrative error” and “error in judgment” include all administrative decisions of entitlement, whether based on a mistake of fact or mistake of law. The beneficiary will be liable for the overpayment if the error was caused in whole or in part by any action or failure to act by the beneficiary, or by another person with the beneficiary’s knowledge. In other words, sole error by VA means that the Veteran did not have knowledge of, and should not have been aware of, the erroneous award or receipt of benefits; and that neither the Veteran’s actions, nor his failure to act, contributed to the erroneous payment of benefits. See 38 U.S.C. § 5112(b)(9) and (b)(10); see also Jordan v. Brown, 10 Vet. App. 171, 174-75 (1997); 38 C.F.R. § 3.500(b); VAOPGCPREC 6-97 (January 28, 1997); VAOPGCPREC 11-92 (May 14, 1992); VAOPGCPREC 2-90 (March 20, 1990). A debtor may dispute the amount or existence of a debt, either separately from a request for waiver or at the same time. See 38 C.F.R. § 1.911(c)(1); see also VAOPGCPREC 6-98 (April 24, 1998). Further, the propriety and amount of the overpayment at issue is integral to a waiver determination; thus, the lawfulness of the debt must be determined before the waiver application is adjudicated. Schaper, 1 Vet. App. at 434-35; VAOPGCPREC 6-98. By way of history, in June 2014, the Veteran submitted a claim for SMP based upon the need for aid and attendance. The RO sent him a letter in July 2014 informing him of the grant of entitlement to SMP and also notified him that: We're paying you as a single veteran with no dependents. We allowed medical expenses of $29,407.00 as a continuing deduction beginning July 1, 2014. A decrease in these expected medical expenses is a change in income. To prevent an overpayment, you would have to repay, immediately report any decrease in these unreimbursed medical expenses. Your monthly rate includes an aid and attendance allowance because you need another person's constant help in conducting your daily activities. On your application you report that you receive $1,395.90 in monthly Social Security income. However, the Social Security Administration (SSA) has reported that your actual gross rate of entitlement is $1,320.90. The law requires that we count the higher reported amount of $1,395.90 when determining your eligibility for VA pension. If this information is incorrect, please provide us with a copy of your Social Security benefit letter and we will reconsider this decision. The attached income breakdown shows the annual income and expense amounts we used when determining your rate of pension. How We Figure Your Pension: Your pension rate depends on your income and the number of your dependents. Medical expenses that you paid may be used to reduce the income we count. Please keep receipts for your medical expenses. We may need them. What Are Your Responsibilities? You should tell us right away if any one of the following happens: your income changes (i.e., earnings, Social Security Benefits, lottery winnings) you gain a dependent your net worth increases (cash, bank accounts, investments, and real estate except your home) you move The Veteran reported that he paid his caregiver, J.C., $27,692.52 per year for healthcare services. He claimed these expenses as unreimbursed medical expenses on his Eligibility Verification Report (EVR, VA Form 21-516-1). On February 17, 2017, VA adjusted the Veteran’s award based on an Eligibility Verification Report (EVR, VA Form 21-516-1) and Marriage Certificate submitted by the Veteran on September 21, 2015, showing that he had married his previous caregiver, J.G.C. on November [REDACTED], 2014. The RO notified the Veteran of this decision through VA letter dated February 21, 2017. A Notice of Disagreement was received on April 4, 2017. The RO denied entitlement to nonservice-connected pension benefits, finding that the Veteran’s income was excessive for VA pension purposes. Basic entitlement to pension exists if, among other things, the Veteran’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. § 1521; 38 C.F.R. § 3.3(a)(3). The MAPR is periodically increased from year to year. See 38 C.F.R. § 3.23(a). For the period on appeal, the MAPR for Aid and Attendance for a veteran with one dependent was $25,022.00 from June 5, 2014 to December 1, 2014, and $25,448.00 from December 1, 2014 through June 30, 2015. See http://www.benefits.va.gov/PENSION/rates_veteran_pen13.asp Based on the income and medical expense records available in the claims file, the Veteran’s countable income has exceeded the applicable income limits for receipt of non-service-connected pension for the period from June 5, 2014 through June 30, 2015. With regard to total income for the period on appeal, the income received for the Veteran is derived from the following sources: Monthly Social Security Administration (SSA) benefits of $1,238.00, for an annualized amount of $14,856.00. Monthly Worker’s Compensation Benefits of $1,038.00, for an annualized amount of $12,456.00. As noted above, however, the law provides that a claimant’s countable income for pension purposes may be reduced by payment of unreimbursed medical expenses. The Veteran claimed unreimbursed medical expenses of $27,692.52 paid to his spouse, but did not list these payments as spousal income. The RO requested information regarding the Veteran’s unreimbursed medical expenses for the period on appeal. The Veteran has not provided any unreimbursed medical expenses. Rather, he provided an unsigned VA medical expense report for the period from June 5, 2014 to June 2015, which stated “VA pays for medical. Goes to VA clinic.” Thus, the Veteran’s reported annual income for the period on appeal was $27,312.00, which exceeds the MAPR of $25,448.00 in effect for non-service-connected pension eligibility for the period on appeal, as outlined above. The Veteran specifically wants to claim as an unreimbursed medical expense a monetary amount for the care services of his spouse – as he was able to claim when he was not married. The Board finds no provision of law which would lead to this result. Because the Veteran’s household income exceeded the income limits for purposes of payment of non-service-connected pension benefits for the 12-month annualization period on appeal, the Veteran did not meet the eligibility requirements for pension. Thus, his pension payment should have been $0 for this period. 38 U.S.C. § 1521(b). The Board notes that the Veteran was entitled to a 10 percent disability compensation rating for a right knee injury. The 2014 monthly compensation rate was $133.57. As the Veteran would not have been entitled to a pension payment for this period, the Board finds that his disability compensation is a greater benefit than special monthly pension for aid and attendance for a Veteran with one dependent rate. This rate has been properly deducted from the overpayment amount. Based on the evidence of record, the Board finds that the overpayment at issue in this case was validly created. The Veteran received SMP based on his income, minus unreimbursed medical expenses, which exceeded the MAPR, and therefore, to which he was not entitled. Specifically, the Veteran did not notify VA of his marriage, nor did he report her spousal income as his caregiver, but rather continued to claim these expenses as unreimbursed medical expenses. This failure on the part of the Veteran created the overpayment on appeal. Therefore, the overpayment has been validly created and the appeal is denied. In reaching this decision, the Board has considered the doctrine of reasonable doubt; however, as the preponderance of the evidence is against the claim, the doctrine is not for application. 38 U.S.C. § 5107; Gilbert v. Derwinski, 1 Vet. App. 49 (1990). T. MAINELLI Veterans Law Judge Board of Veterans’ Appeals Attorney for the Board Michael J. O’Connor 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.