Citation Nr: 9900190 Decision Date: 01/06/99 Archive Date: 01/12/99 DOCKET NO. 98-05 253 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Fort Harrison, Montana THE ISSUES 1. Entitlement to an effective date prior to October 1, 1996, for an award of payment of Dependency and Indemnity Compensation (DIC) benefits, based on the grant of service connection for the cause of the veteran’s death under the provisions of 38 U.S.C.A. § 1151. 2. Whether the full amount of $150,000 received in a settlement under the Federal Tort Claims Act should be offset against DIC benefits payable to the appellant under 38 U.S.C.A. § 1151. REPRESENTATION Appellant represented by: Craig W. Holt, Attorney at Law WITNESS AT HEARING ON APPEAL Appellant ATTORNEY FOR THE BOARD Jeanne Schlegel, Associate Counsel INTRODUCTION The veteran served on active duty from April 1956 to June 1959. He died on March [redacted], 1993. The appellant is the veteran’s widow. This matter comes before the Board of Veterans’ Appeals (the Board) from a December 1996 rating determination by the Department of Veterans Affairs (VA) Regional Office (RO) in which the RO granted DIC benefits for the appellant under the provisions of 38 U.S.C.A. § 1151 and assigned an effective date of October 1, 1996. This matter is also before the Board on appeal of a January 1997 administrative determination in which the appellant was advised that although she had been awarded DIC benefits effective from October 1, 1996, she was unable to receive those benefits until $150,000 received as a settlement payment under the Federal Tort Claims Act had been recouped. CONTENTIONS OF APPELLANT ON APPEAL The appellant contends that DIC benefits should have been granted prior to October 1996. She maintains that an informal claim was filed in June 1993 prior to the formal claim for DIC benefits which was filed in September 1996. She further argues that she was not furnished the proper forms with which to file a formal claim for DIC benefits following the submission of an informal claim for benefits filed in June 1993. DECISION OF THE BOARD The Board, in accordance with the provisions of 38 U.S.C.A. § 7104 (West 1991 & Supp. 1998), has reviewed and considered all of the evidence and material of record in the veteran’s claims file. Based on its review of the relevant evidence in this matter, and for the following reasons and bases, it is the decision of the Board that the preponderance of the evidence supports the assignment of an effective date of March 1, 1993 for the grant of entitlement to DIC benefit payments. As discussed more fully below, the issue of whether the full amount of $150,000 received in a settlement under the Federal Tort Claims Act should be offset against DIC benefits payable to the appellant under 38 U.S.C.A. § 1151 is being remanded to the RO in accordance with considerations of due process. FINDINGS OF FACT 1. The veteran died on March [redacted], 1993. 2. The appellant filed a VA Form 90-2008, Application for United States Flag for Burial Purposes, in March 1993. 3. On June 25, 1993, the RO received correspondence from the appellant requesting that the VA determine whether she was eligible for readjudication of a prior claim of entitlement to service connection for a disability claimed as a result of ionizing radiation or for death benefits claimed as a result of the veteran’s exposure to ionizing radiation during service. 4. In correspondence from the RO dated in June 1993, the appellant was informed that she was not eligible for readjudication of the issue of entitlement to service connection for a disability claimed as a result of ionizing radiation (for purposes of accrued benefits). However, she was advised that the June 1993 correspondence was accepted as an informal claim for death benefits, and that she would soon receive correspondence from the VA which would include a formal application for benefits. 5. In March 1996, the RO sent correspondence to the appellant advising her that she might be eligible for DIC and/or death pension benefits, and provided her with a formal application form for such benefits. 6. The appellant filed a formal claim for DIC benefits on September 12, 1996. 7. Entitlement to DIC benefits was granted by the RO in a December 1996 rating action, with payment commencing October 1, 1996, the first day of the month following the receipt of the formal claim for DIC benefits. CONCLUSION OF LAW The criteria for an effective date of March 1, 1993 for the award of DIC benefits have been met. 38 U.S.C.A. §§ 5107, 5110 (West 1991); 38 C.F.R. §§ 3.155, 3.400 (1998). REASONS AND BASES FOR FINDINGS AND CONCLUSION Initially, the Board finds that the appellant’s claim is well grounded within the meaning of 38 U.S.C.A. § 5107(a) (West 1991). That is, she has presented a claim which is not implausible. Further, after reviewing the record, the Board is satisfied that all the relevant facts have been fully developed and that the case is properly in appellate status. Factual Background The evidence shows that the veteran died on March [redacted], 1993. At the time of his death, the veteran was service connected for inguinal hernia. The veteran’s service medical records reflected that he was participated in atmospheric nuclear testing during service. The record revealed that in December 1986, the veteran had filed a claim for entitlement to service connection for nerve damage claimed as a result of exposure to radiation during service. That claim was denied in a rating action of June 1987 and was not appealed. Subsequently, in correspondence from the RO dated in June and July 1992, the veteran was advised that he might be eligible for readjudication of a claim for disability benefits based upon exposure to radiation due to a change in the law. However, no response to that correspondence was received from the veteran. In March 1993, the appellant filed a VA Form 90-2008, Application for United States Flag for Burial Purposes. In June 1993, the appellant submitted correspondence to the RO requesting that the VA determine whether she was eligible for readjudication of the claim for entitlement to service connection for a disability (for purposes of accrued benefits) or for the veteran’s death based upon exposure to radiation sustained during service. In June 1993, the RO sent correspondence to the appellant advising her that she was not eligible for readjudication of a claim for entitlement to service connection for a disability (for purposes of accrued benefits) based upon exposure to radiation sustained during service. However, she was advised that her June 1993 correspondence had been accepted as an informal claim for death benefits, and that she would soon receive another letter from VA with a formal application form. It appears from the evidence of record, however, that this form was not sent. In March 1996, the RO sent correspondence to the appellant advising her that she was eligible to apply for DIC and/or death pension benefits. The correspondence reflected that a VA Form 21-534 (Application for Dependency and Indemnity Compensation or Death Pension by a Widow or Child) was sent to the appellant as an enclosure to the RO’s letter. On September 12, 1996, the RO received a VA Form 21-534, the appellant’s formal claim for DIC benefits. By rating action of December 1996, the RO granted entitlement to DIC benefits under the provisions of 38 U.S.C.A. § 1151. The appellant was notified of the grant in correspondence from the RO dated in January 1997, and that an effective date of October 1, 1996, for the award of DIC benefits had been assigned. The appellant appealed the assigned effective date. In July 1998, the appellant presented testimony at a Board hearing. She testified that she initially contacted the VA shortly after the veteran’s death to inquire as to whether she was entitled to any benefits as a result of his death, and was told that she was not. She indicated that the next the next time she heard anything more about entitlement to DIC benefits was in March 1996. Pertinent Law and Regulations The surviving spouse of a veteran who has died from a service-connected disability after December 31, 1956, may be entitled to DIC. 38 U.S.C. §§ 1310, 1311. The veteran’s death will be considered service connected where a service- connected disability was either the principal or a contributory cause of death. 38 C.F.R. § 3.312(a) (1998). Under the provisions of 38 U.S.C.A. § 1151, where injury or death occurs as a result of having submitted to VA hospitalization, and not the result of the veteran’s own willful misconduct, compensation will be awarded for such disability or death as if it were service-connected. If a claimant files an application for DIC benefits within one year after the veteran’s death, then the effective date is the first day of the month in which the veteran died. 38 U.S.C. § 5110(d)(1). If no such application is filed or could be construed to have been filed within one year after the veteran’s death, the relevant effective date provision is 38 U.S.C. § 5110(a), which states: "Unless specifically provided otherwise in this chapter, the effective date of an award based on . . . a claim for . . . dependency and indemnity compensation or pension shall be fixed in accordance with the facts found, but shall not be earlier than the date of receipt of application therefor." Regardless of VA regulations concerning effective dates of awards, payment of monetary benefits based on original claim for DIC may not be made for any period prior to the first day of the calendar month following the month in which the award became effective. 38 C.F.R. § 3.31 (1998). Upon receipt of notice of death of a veteran, it is mandated that the appropriate application form will be forwarded for execution by or on behalf of any dependent who has apparent entitlement to pension, compensation, or dependency and indemnity compensation. 38 U.S.C.A. § 7722, 38 C.F.R. § 3.150(b). Any communication or action indicating an intent to apply for one or more benefits may be considered as an informal claim. Such informal claim must identify the benefit sought. Upon receipt of an informal claim, if a formal claim has not been filed, an application form will be forwarded to the claimant for execution. If received within one year from the date it was sent to the claimant, it will be considered filed as of the date of receipt of the informal claim. 38 C.F.R. § 3.155 (1998). Analysis The appellant and her attorney maintain that an effective date prior to October 1, 1996 is warranted for the grant of DIC benefits. In support of this claim the appellant and her representative have argued that an informal claim for benefits was filed prior to that time. Specifically, they maintain that the correspondence received from the appellant in June 1993 requesting that the VA determine whether she was eligible for readjudication of the claim for entitlement to service connection for a disability (for purposes of accrued benefits) or for the veteran’s death based upon exposure to radiation sustained during service, represented an informal claim for DIC benefits and should have been acted upon by the RO. The Board also construes by the appellant’s testimony that it is argued that the VA did not assist the appellant by advising her that she was eligible for VA benefits following the veteran’s death, of which the VA was aware by virtue of her filing an application for burial benefits in March 1993. Initially, the Board points out that an application for burial benefits may not be construed as either a formal or informal application for DIC benefits. The Court of Veterans Appeals (Court) in Shields v. Brown, 8 Vet. App. 346 (1995) held that an application for burial benefits was not in and of itself an application for DIC benefits. In Shields, the Court indicated that an application for burial benefits “may not be construed as an informal claim for DIC benefits” pursuant to 38 C.F.R. § 3.155, because the appellant did not identify DIC benefits as among the benefits being sought. Similarly, in this case when the appellant filed the March 1993 Application for United States Flag for Burial Purposes, she did not claim that the cause of the veteran’s death was due to service, and did not otherwise indicate that she intended to file a claim of entitlement to DIC benefits. In the Shields decision, the Court also referenced one of its earlier decisions in which it was held that an application for burial benefits should not be deemed an application for DIC benefits, Herzog v. Derwinski, 2 Vet. App. 502, 503 (1992). In view of the legal precedent, the appellant’s March 1993 Application for United States Flag for Burial Purposes is not deemed to constitute an informal claim for DIC benefits. See also Stewart v. Brown, 10 Vet. App. 15 (1997) The appellant further argues that her June 1993 correspondence constituted an informal claim for effective- date purposes. The regulation which governs informal claims, 38 C.F.R. § 3.155 (1998), provides that (a) Any communication or action, indicating an intent to apply for one or more benefits under the laws administered by [VA], from a claimant . . . may be considered an informal claim. Such informal claim must identify the benefit sought. Upon receipt of an informal claim, if a formal claim has not been filed, an application form will be forwarded to the claimant for execution. If received within 1 year from the date it was sent to the claimant, it will be considered filed as of the date of receipt of the informal claim. See Quarles v. Derwinski, 3 Vet. App. 129, 136 (1992); Crawford v. Brown, 5 Vet. App. 33, 35 (1993); see also Servello v. Derwinski, 3 Vet. App. 196, 199 (1992) (regulation does not require claimant to identify specifically benefit being sought; correct query was whether any communication or action by claimant evidenced a belief by the claimant that he or she was entitled to benefits). The June 1993 correspondence from the appellant to the RO did indicate an intent on the part of the appellant to pursue a claim of entitlement to service connection for VA death benefits. Moreover, the RO informed the appellant in June 1993 that her June 1993 correspondence was considered to be an informal claim for VA death benefits, and that she would soon be receiving correspondence from the VA in which a formal application would be enclosed. Accordingly, the Board finds that the June 1993 correspondence from the RO to the appellant did constitute an informal claim for DIC benefits. Under the provisions of 38 C.F.R. § 3.155, upon receipt of an informal claim, if a formal claim has not been filed, an application form will be forwarded to the claimant for execution. If received within 1 year from the date it was sent to the claimant, it will be considered filed as of the date of receipt of the informal claim. 38 C.F.R. § 3.155(a) (1992). In this case an application form was not sent from the RO to the appellant until March 1996, almost three years after the informal claim was filed. However, even so, the appellant did file a formal claim for DIC benefits in September 1996, within a year from the date that the formal application form was sent to her, in compliance with the provisions of 38 C.F.R. § 3.155. accordingly, under 38 C.F.R. § 3.155, the date of receipt of the informal claim, June 25, 1993, is also considered the date of the filing of a formal claim. In Quarles v. Derwinski, 3 Vet. App. 129, 137 (1992), and Servello v. Derwinski, 3 Vet. App. 196, 200 (1992), the Court held that "the one-year filing period for such applications did not begin to run" when VA did not forward the claimant a formal application form once his informal claim had been received and that, therefore, the date on which the informal claim was received "must be accepted as the date of his ‘claim’ or ‘application’ for purposes of determining an effective date . . . ." Servello, 3 Vet. App. at 200. Accordingly, inasmuch as the RO did not send the appellant a formal application form until nearly three years after the submission of her informal claim, the date of receipt of the informal claim, June 25, 1993, must be accepted as the date of the claim for purposes of determining an effective date. The applicable regulation states that if a claimant files an application for DIC benefits within one year after the veteran’s death, then the effective date is the first day of the month in which the veteran died. 38 U.S.C. § 5110(d)(1); 38 C.F.R. § 3.400(c)(2). In this case the veteran died in March 1993; a claim for DIC benefits was filed on June 25, 1993, within one year after the veteran death. Accordingly, the proper effective date for the grant of DIC benefits is March 1, 1993, and the appeal is granted to that extent. There is no regulatory provision which would provide an earlier effective date in this case. ORDER An effective date of March 1, 1993 for the grant of entitlement to DIC benefits is granted. REMAND The appellant has argued that the full amount of $150,000 received in a settlement under the Federal Tort Claims Act should not be offset against DIC benefits payable to the appellant under 38 U.S.C.A. § 1151 because that award was significantly diminished because the appellant was required to pay attorney’s fees and debts of her bankruptcy. A brief review of the facts of this case reflects that in January 1995 the appellant filed a claim for damage injury or death brought under the provisions of the Federal Tort Claims Act. Therein, the appellant claimed that the veteran had been examined on March [redacted], 1993 at a VA clinic in Billings, Montana, apparently due to cardiovascular problems. She indicated that he was sent home without treatment, and that the next day, March [redacted], 1993, the veteran suffered full cardiopulmonary arrest and died. She stated that the failure of the VA to diagnose and treat the veteran at that time caused his death. The death certificate reflected that the veteran died on March [redacted], 1993, as a result of sudden cardiac event, due to atherosclerosis. In January 1996, a federal tort claim settlement in the amount of $150,000 was agreed upon by the appellant and VA. In September 1996, the appellant filed a formal claim for DIC benefits based upon the veteran’s death. By rating action of December 1996, the RO granted entitlement to DIC under the provisions of 38 U.S.C.A. § 1151. In correspondence from the RO dated January 1997, the appellant was informed that although she had been awarded DIC benefits, due to her receipt of a tort claim settlement award in the amount of $150,000 she was unable to receive such benefits until the entire amount of the tort settlement award had been recouped. In March 1997, the appellant’s representative argued that although the appellant had been awarded a $150,000 settlement, of that amount she had incurred $30,000 in attorney’s fees, and fees and debts related to bankruptcy which the appellant was forced to declare in 1993, resulting in a net amount to the appellant of only $90,842.54. It was argued that the amount of the tort settlement award which should be offset is $90,842.45, not the entire settlement amount of $150,000. The RO denied the appellant’s recoupment claim in August 1997, applying the provisions of 38 C.F.R. § 3.800. It is provided under 38 C.F.R. § 3.800(a)(2) that where any person is awarded a judgment on or after December 1, 1962, against the United States in a civil action brought pursuant to 28 U.S.C. 1346(b), or enters into a settlement or compromise on or after December 1, 1962, under 28 U.S.C. 2672 or 2677, by reason of disability within the purview of this section [i.e., 38 U.S.C.A. § 1151], no compensation shall be paid to such person for any month beginning after the date such settlement, or compromise on account of any such disability becomes final until the total amount of benefits which would be paid except for this provision equals the total amount included in such settlement, or compromise. However, effective October 1, 1997, an amended regulation governing the issue of offsets of benefits awarded under the provisions of 38 U.S.C.A. § 1151 was promulgated. The new regulation provides as follows: (a) Claims subject to this section. This section applies to claims received by VA on or after October 1, 1997. This includes original claims and claims to reopen, revise, reconsider, or otherwise readjudicate a previous claim for benefits under 38 U.S.C. 1151 or its predecessors. (b) Offset of veterans’ awards of compensation. If a veteran’s disability is the basis of a judgment under 28 U.S.C. 1346(b) awarded, or a settlement or compromise under 28 U.S.C. 2672 or 2677 entered, on or after December 1, 1962, the amount to be offset under 38 U.S.C. 1151(b) from any compensation awarded under 38 U.S.C. 1151(a) is the entire amount of the veteran’s share of the judgment, settlement, or compromise, including the veteran’s proportional share of attorney fees. (c) Offset of survivors’ awards of dependency and indemnity compensation. If a veteran’s death is the basis of a judgment under 28 U.S.C. 1346(b) awarded, or a settlement or compromise under 28 U.S.C. 2672 or 2677 entered, on or after December 1, 1962, the amount to be offset under 38 U.S.C. 1151(b) from any dependency and indemnity compensation awarded under 38 U.S.C. 1151(a) to a survivor is only the amount of the judgment, settlement, or compromise representing damages for the veteran’s death the survivor receives in an individual capacity or as distribution from the decedent veteran’s estate of sums included in the judgment, settlement, or compromise to compensate for harm suffered by the survivor, plus the survivor’s proportional share of attorney fees. (d) Offset of structured settlements. This paragraph applies if a veteran’s disability or death is the basis of a structured settlement or structured compromise under 28 U.S.C. 2672 or 2677 entered on or after December 1, 1962. (1) The amount to be offset. The amount to be offset under 38 U.S.C. 1151(b) from benefits awarded under 38 U.S.C. 1151(a) is the veteran’s or survivor’s proportional share of the cost of the settlement or compromise to the United States, including the veteran’s or survivor’s proportional share of attorney fees. (2) When the offset begins. The offset of benefits awarded under 38 U.S.C. 1151(a) begins the first month after the structured settlement or structured compromise has become final that such benefits would otherwise be paid. 38 C.F.R. § 3.362 (1997) The Board notes that where a law or regulation changes after a claim has been filed or reopened, but before the administrative or judicial appeal process has been concluded, the version most favorable to an appellant applies unless Congress provided otherwise or permitted the Secretary to do otherwise and the Secretary does so. Marcoux v. Brown, 9 Vet. App. 289 (1996); Karnas v. Derwinski, 1 Vet. App. 308 (1991). In Bernard v. Brown, 4 Vet. App. 384 (1993), the Court of Veterans Appeals held that before the Board addresses in a decision a question that has not been addressed by the RO, it must consider whether the claimant has been given adequate notice of the need to submit evidence or argument, an opportunity to submit such evidence or argument, an opportunity to address the question at a hearing, and whether the claimant has been prejudiced by being denied those opportunities. In this case, neither the appellant nor her representative have been provided an opportunity to review the new regulation or to provide additional argument for the record in accordance with the new regulation. Moreover, the RO has not had the opportunity to adjudicate the claim under both the revised and former applicable regulations, applying the regulation which is more favorable to the claim. Consequently, in accordance with the aforementioned considerations of due process this claim must be remanded. To ensure full compliance with due process requirements, the case is REMANDED to the RO for the following development: 1. The RO should inform the appellant and her attorney that prior to readjudication of the claim they are invited to submit additional argument or evidence in light of the potential relevance of the revised VA regulations pertaining to this claim. See Quarles v. Derwinski, 3 Vet. App. 129, 141 (1992). The appellant should be given a reasonable amount of time to submit such argument and/or evidence. 2. The RO should then review the record and adjudicate the issue on appeal applying both the former provisions of 38 C.F.R. § 3.800 (1997) and the revised provisions provided under 38 C.F.R. § 3.362 (1998) to the claim. If deemed necessary in light of the potential applicability of 38 C.F.R. § 3.362 (1998), the RO should obtain an opinion from the VA regional counsel concerning the amounts which are properly offset against any dependency and indemnity compensation award, and if obtained that opinion should be associated with the claims folder. Thereafter, a rating determination should be made utilizing the regulation which is most favorable to the appellant. If any benefit sought on appeal remains denied, the appellant and her representative should be furnished a supplemental statement of the case and given a reasonable opportunity to respond. Thereafter, the case should be returned to the Board, if in order. The Board intimates no opinion as to the ultimate outcome of this case. This claim must be afforded expeditious treatment by the RO. The law requires that all claims that are remanded by the Board of Veterans’ Appeals or by the United States Court of Veterans Appeals for additional development or other appropriate action must be handled in an expeditious manner. See The Veterans’ Benefits Improvements Act of 1994, Pub. L. No. 103-446, § 302, 108 Stat. 4645, 4658 (1994), 38 U.S.C.A. § 5101 (West Supp. 1998) (Historical and Statutory Notes). In addition, VBA’s ADJUDICATION PROCEDURE MANUAL, M21-1, Part IV, directs the ROs to provide expeditious handling of all cases that have been remanded by the Board and the Court. See M21-1, Part IV, paras. 8.44-8.45 and 38.02-38.03. Barry F. Bohan Member, Board of Veterans’ Appeals NOTICE OF APPELLATE RIGHTS: Under 38 U.S.C.A. § 7266 (West 1991 & Supp. 1998), a decision of the Board of Veterans’ Appeals granting less than the complete benefit, or benefits, sought on appeal is appealable to the United States Court of Veterans Appeals within 120 days from the date of mailing of notice of the decision, provided that a Notice of Disagreement concerning an issue which was before the Board was filed with the agency of original jurisdiction on or after November 18, 1988. Veterans’ Judicial Review Act, Pub. L. No. 100-687, § 402, 102 Stat. 4105, 4122 (1988). The date that appears on the face of this decision constitutes the date of mailing and the copy of this decision that you have received is your notice of the action taken on your appeal by the Board of Veterans’ Appeals. Appellate rights do not attach to those issues addressed in the remand portion of the Board’s decision, because a remand is in the nature of a preliminary order and does not constitute a decision of the Board on the merits of your appeal. 38 C.F.R. § 20.1100(b) (1997). As indicated previously in this decision, an informal claim for death benefits had been filed in June 1993. The Board observes that it appears that to some extent the appellant is raising what amounts to a theory of relief couched in equity. The Board, however, is bound by the law in such matters and is without authority to grant benefits on an equitable basis. See 38 U.S.C.A. §§ 503, 7104; Harvey v. Brown, 6 Vet. App. 416, 425 (1994). The Board further observes that "no equities, no matter how compelling, can create a right to payment out of the United States Treasury which has not been provided for by Congress." Smith (Edward F.) v. Derwinski, 2 Vet. App. 429, 432-33 (1992) (citing Office of Personnel Management v. Richmond, 496 U.S. 414, 426 (1990). - 2 -