Citation Nr: 21012309 Decision Date: 03/04/21 Archive Date: 03/04/21 DOCKET NO. 13-31 322A DATE: March 4, 2021 ORDER The appeal as to the issue of whether the overpayment of nonservice-connected pension benefits in the recalculated amount of $25,377.00 was validly created is denied. FINDINGS OF FACT 1. The Veteran had wage and interest income which he did not promptly report to the Department of Veterans Affairs (VA); he also began receiving benefits from the Social Security Administration (SSA) after he was awarded VA improved pension benefits; he did not promptly notify VA of his award of these benefits. 2. The retroactive action taken to adjust the Veteran’s pension benefits and award the Veteran compensation benefits as the greater benefit when appropriate resulted in the creation of the debt at issue; this action was proper. CONCLUSION OF LAW An overpayment of $25,377.00 in VA benefits was properly created. 38 U.S.C. §§ 101, 1503, 1521, 1541, 5110, 5313; 38 C.F.R. §§ 3.21, 3.23, 3.271, 3.272. REASONS AND BASES FOR FINDINGS AND CONCLUSION The Board of Veterans’ Appeals (Board) notes that this case has been remanded to the Agency of Original Jurisdiction (AOJ) several times before, most recently in November 2020. The Board observes further, that the AOJ actions on remand collectively have substantially complied with the Board’s remand directives. As such, the case has been returned to the Board for appellate review. 1. Whether the overpayment of nonservice-connected pension benefits in the recalculated amount of $25,377.00 was validly created Basic entitlement to pension exists if a veteran of a period or periods of war (as defined in 38 C.F.R. § 3.3 (a)) meets certain net worth requirements and does not have an annual income in excess of the applicable maximum annual pension rate (MAPR), and is either age 65 or older or is permanently and totally disabled from nonservice-connected disability not due to the veteran’s own willful misconduct. See 38 U.S.C. §§ 1521 (a) and (j), 5312; 38 C.F.R. §§ 3.3 (a), 3.23(a). Pension is not payable to a veteran whose annual income exceeds the rates set forth in 38 U.S.C. § 1521. Improved pension provides for maximum income levels under which eligibility is based and this amount is offset by annual income of the recipient minus any excepted unreimbursed medical expenses. For the purpose of determining initial entitlement, or for resuming payments on an award which was previously discontinued, the monthly rate of pension payable to a beneficiary shall be computed by reducing the beneficiary’s applicable maximum pension rate by the beneficiary’s annual rate of countable income on the effective date of entitlement and dividing the remainder by 12; whenever there is a change in a beneficiary’s annual rate of countable income, the monthly rate of pension payable shall be computed by reducing the beneficiary’s applicable MAPR by the beneficiary’s new annual rate of countable income on the effective date of the change in the annual rate of income, and dividing the remainder by 12. 38 C.F.R. § 3.273. For the purpose of computing income for improved pension, payments of any kind from any source shall be counted as income during the 12-month annualization period in which received unless specifically excluded under 38 C.F.R. § 3.272. 38 C.F.R. § 3.271 (a). The following is excluded from countable income for VA pension purposes: welfare benefits; maintenance benefits furnished by a relative, friend, or a charitable organization; VA pension benefits; casualty loss reimbursement; profit from the sale of property; joint accounts; unreimbursed medical expenses (to the extent that the medical expenses exceed 5 percent of the applicable MAPR); expenses of last illnesses, burials, and just debts; educational expenses; a portion of the beneficiary’s children’s income; Domestic Volunteer Service Act Programs payments; distributions of funds under 38 U.S.C. § 1718; survivor benefit annuities; Agent Orange settlement payments; restitution to individuals of Japanese ancestry; cash surrender value of life insurance policies; income received by American Indian beneficiaries from trust or restricted lands; Radiation Exposure Compensation Act payments; and Alaska Native Claims Settlement Act payments. 38 C.F.R. § 3.272. Income from the SSA, wages, and interest is not excluded under 38 C.F.R. § 3.272. The amount of pension actually received is the difference between the recipient’s countable income and the MAPR permitted by VA given the recipient’s circumstances. Pension is not payable if the recipient’s countable annual income exceeds the maximum limitation given the recipient’s circumstances as set forth in the legislation. See generally 38 U.S.C. §§ 101, 1501. The Secretary shall deny or discontinue the payment of a veteran’s pension based upon consideration of the annual income of a veteran, his/her spouse, and children. 38 U.S.C. § 1522. An overpayment is created when VA determines that a beneficiary or payee has received benefit payments in excess of the amount due or to which such beneficiary or payee is entitled. 38 C.F.R. § 1.962. When VA has determined that a debt is owed based on such an overpayment, and once it has satisfied certain procedural requirements, it may collect the debt by offsetting current or future benefit payments until the debt has been repaid. 38 U.S.C. § 5314; 38 C.F.R. §§ 1.911, 1.912a(a). In May 2006, the Veteran was notified that he had been granted entitlement to pension benefits from April 1, 2006. He was provided a VA Form 21-8768 which stated, in pertinent part, that the Veteran was obligated to provide prompt notice of any change in family income or net worth and that a failure to provide such would result in the creation of an overpayment which would be subject to recovery. It further stated that when reporting income, the total amount and source of all income received should be reported. The Veteran was paid as a single Veteran with no income based on his March 2006 application. Thereafter, in 2008, it was noted that the Veteran had wage and interest income in 2006 that had not been reported. In addition, according to a January 2010 Report of Contact, the Veteran reported that he began receiving SSA benefits in November 2009. The SSA was contacted and the SSA indicated that the Veteran actually began receiving benefits in August 2007. Therefore, in a September 2010 letter, the AOJ informed the Veteran that the AOJ proposed to terminate pension benefits and switch the Veteran to service-connected benefits (10 percent) as the greater benefit effective October 1, 2007, when the AOJ would start counting his monthly SSA income of $1,009.00 per month. His annual income of $12,108.00 exceeded the maximum allowable income limit of $10,929.00 for a single veteran. The AOJ then proposed to switch the Veteran back to pension on February 1, 2009, when the AOJ would start counting his 2009 medical expenses. The AOJ then proposed to reduce the medical expenses on January 1, 2010, which again made his 10 percent service-connected disability the greater benefit. In a December 2010 letter, the Veteran was notified that the proposed action was taken. In January 2011, the Veteran was notified that the amount of the overpayment was $32,286.00. The Veteran was then requested to complete VA Forms 21-8416, Medical Expense Reports, for 2007-2019, in order to show his unreimbursed medical expenses that he had paid; however, he did not report any paid expenses. Thereafter, information was sought to determine whether the Veteran was receiving SSA benefits prior to November 2009 or whether he received a lump sum retroactive SSA award since October 2007. Thereafter, it was verified that the Veteran’s SSA entitlement date was from August 2007, but payment was from August 2009. A telephone call with the SSA reflected that the Veteran received his first payment of $14,772.00 in March 2009 which included his monthly benefit of $1,092.00 for February 2009. The next payment was for March 2009 paid in April 2009 in the monthly amount of $1,092.00. On January 23, 2020, the Veteran was notified that the AOJ had granted service-connected compensation as the greater benefit effective from April 1, 2009. The AOJ noted that the Veteran’s pension was increased because the AOJ adjusted the date that the AOJ began counting SSA income. The AOJ began counting the SSA on April 1, 2009 instead of October 1, 2007, which had previously been done. The Veteran was provided a full and detailed accounting in this letter. Thereafter, the AOJ recalculated the debt, determining that the action outlined in January 2020 reduced the debt by $6,909.00. The new total was $25,377.00. The Veteran was provided an accurate audit in December 2020. As noted above, the Veteran had unreported income in 2006 and then began receiving SSA in 2009. Because he had been granted both pension and compensation benefits, he was only entitled to receive one of those benefits and, as indicated above, has been granted compensation as the greater benefit for periods when warranted. The retroactive adjustments in his income as previously indicated resulted in a total overpayment of $25,377.00, for which recoupment from the Veteran’s compensation benefits payments has been effectuated by the AOJ. The Board finds that the debt was properly created because the Veteran had additional countable income which affected the right to pension benefits, an income-based benefit, which was not excludable income per 38 C.F.R. § 3.272. As such, the appeal must be denied. S. L. Kennedy Veterans Law Judge Board of Veterans’ Appeals Attorney for the Board J. Connolly, Counsel 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.