Citation Nr: 1761155
Decision Date: 12/29/17 Archive Date: 01/02/18

DOCKET NO. 15-35 092 ) DATE
)
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On appeal from the
Department of Veterans Affairs Regional Office in Milwaukee, Wisconsin

THE ISSUE

Whether the overpayment of VA pension benefits in the amount of $44,170.00, was validly created.

REPRESENTATION

Appellant represented by: The American Legion

ATTORNEY FOR THE BOARD

Christine C. Kung, Counsel

INTRODUCTION

The Veteran served on active duty from May 1954 to July 1957. Unfortunately, he died in June 2017. The appellant is his surviving spouse and has been substituted pursuant to 38 U.S.C. § 5121A (2012) for the Veteran as the claimant in this appeal. See August 25, 2017 RO letter.

This matter comes on appeal before the Board of Veterans’ Appeals (Board) from an April 2013 action taken by the Department of Veterans Affairs (VA) Pension Management Center and Regional Office in Milwaukee, Wisconsin (RO) which terminated the Veteran’s pension entitlement effective February 1, 2008. This created an overpayment of benefits in the amount of $44,170.00.

The Veteran has perfected an appeal as to the validity of the overpayment debt. In April 2013, the Veteran also requested a waiver of the overpayment debt. Because the issue had not been considered by the Agency of Original Jurisdiction (AOJ) in the first instance, in April 2017 Board remanded the claim for a waiver of the overpayment for adjudication. In October 2017, the Committee on Waivers and Compromises denied the claim for a waiver of the overpayment in the amount of $44,170.00. The appellant did not submit a notice of disagreement to the October 2017 decision; therefore, the only issue currently on appeal is whether the overpayment debt was validly created.

The Board also finds that the AOJ substantially complied with the Board’s remand instruction in obtaining income information contained in the Veteran’s medical administration file from 2008 and the Board may proceed with a decision at this time. See Dyment v. West, 13 Vet. App. 141, 146-47 (1999) (remand not required under Stegall v. West, 11 Vet. App. 268 (1998), where the Board’s remand instructions were substantially complied with), aff’d, Dyment v. Principi, 287 F.3d 1377 (Fed. Cir. 2002).

FINDINGS OF FACT

1. The appellant is the Veteran’s surviving spouse, who was properly substituted as the claimant to continue the Veteran’s pending claim and appeal to completion.

2. VA pension benefits were terminated effective February 1, 2008, based on the Veteran’s failure to report spousal income information, resulting in an overpayment in the amount of $44,170.00.

3. The Board finds that the overpayment of VA pension benefits in the amount of $44,170.00 was validly created.

CONCLUSION OF LAW

The overpayment of VA pension benefits in the amount of $44,170.00, was validly created. 38 U.S.C. §§ 1502, 1503, 1521, 5112(b) 5302 (2012); 38 C.F.R. §§1.963, 1.965, 3.23, 3.271, 3.272, 3.273, 3.660(a) (2017).

REASONS AND BASES FOR FINDINGS AND CONCLUSION

Due Process

The Board finds that general due process concerns have been satisfied in connection with the termination of VA pension benefits. See 38 C.F.R. §§ 3.103(b)(3)(i), 3.105(h) (2017). Prior to reducing or terminating benefits by reason of information received concerning income, VA is required to comply with pertinent VA regulations concerning due process. Specifically, VA must create a proposal for the reduction or termination that sets forth all material facts and reasons, notify the beneficiary at his or her latest address of record of the contemplated action, and furnish detailed reasons thereof. The beneficiary must be given 60 days for the presentation of additional evidence to show that compensation payments should be continued at the present level. See 38 C.F.R. §§ 3.103, 3.105.

VA pension benefits were terminated based on the receipt of income verification match (IVM) information identifying sources of unreported income. An Income Verification Match (IVM) conducted in August 2011 and in April 2012, identified unreported income for the Veteran’s spouse in 2008 and 2009. In November 2012 correspondence, the RO proposed to terminate pension benefits, effective February 1, 2008, based on the receipt of unreported income in 2008 and 2009, and asked that the Veteran and his spouse verify the receipt of income during this time period.

In a November 2012 statement, the appellant indicated that she did not recall the exact amount she had earned, and did not have documentation of it. She did not dispute the income amounts identified on the IVM and did not deny that she had been working, but merely indicated that she could not confirm the amount of income at issue. The appellant contends that she did reply to an October 2012 request for information. She indicated that the letter and statement were given to the VA hospital business office in Shreveport, Louisiana. A request for the Veteran’s medical administration file, to include income information from 2008 forward shows that income information was not submitted to the VA hospital as stated. Instead, administrative records included a May 2009 financial disclosure, signed by the Veteran, which shows that he did not identify any sources of income for himself or his spouse for the 2008 calendar year. Accordingly, the Board finds that the appellant did not provide VA with requested income information prior to the termination of benefits in April 2013.

In April 2013, pension benefits were terminated based on the Veteran’s failure to report spousal income. He was informed that this resulted in an overpayment of benefits. An April 2013 letter from the Debt Management Center informed the Veteran that he received an overpayment in the amount of $44,170.00. In this case, VA pension benefits were terminated based on the receipt of unreported spousal income in 2008 and 2009. Notice of the proposed termination of benefits was provided to the Veteran, and he was given 60 days to respond prior to the termination of the benefits. Therefore the termination of benefits was procedurally proper.

Validity of Debt

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 veteran who meets wartime service requirements and who is permanently and totally disabled due to disability not the result of willful misconduct is entitled to a rate of pension set by law, reduced by the amount of his countable income.
38 U.S.C. § 1521 (2012); 38 C.F.R. § 3.23 (2017). Countable income consists of payments of any kind from any source received during a 12-month annualization period (e.g., a year), unless specifically excluded. 38 C.F.R. § 3.271 (2017). It also includes income of a veteran’s spouse and/or child(ren) regardless of whether dependency has been established for VA pension purposes. See 38 C.F.R.
§ 3.23(d)(4) (2017).

Basic entitlement to pension exists only if, among other things, the Veteran’s countable income is not in excess of the maximum annual pension rate specified by law. 38 U.S.C. § 1521 (a). If basic entitlement is met, the monthly rate of pension shall be computed by reducing the maximum annual pension rate (MAPR) by the countable income on the effective date of entitlement and dividing the remainder by twelve. 38 C.F.R. § 3.273 (a) (2017). Whenever there is a change in a beneficiary’s amount of countable income the monthly rate of pension payable shall be computed by reducing the applicable maximum annual pension rate by the new amount of countable income on the effective date of the change in the amount of income and dividing the remainder by twelve. 38 C.F.R. § 3.273 (b)(2).

The Veteran was awarded VA pension benefits, effective May 2000. An April 2001 notification letter informed him that his pension rate was dependent upon income, and he was informed that the only income which had been counted by VA for he and his spouse was his Social Security benefits. His spouse was listed as having no income in this explanation. The Veteran was also informed that he could reduce his countable income by submitting documentation of his medical expenses. Improved Pension Eligibility Verification Reports submitted by the Veteran in 2002 and 2003 show that he identified having only income from Social Security for himself, and he identified his spouse as having no income from wages or other sources.

In subsequent notice letters dated from 2002 to 2008, the Veteran was informed that his pension rate was based on countable income, to include sources of income for himself and his spouse such as earned income, Social Security benefits, retirement income, interest, insurance, and other income. Later notice letters, to include a letter issued in December 2008, informed that the Veteran would no longer receive yearly Eligibility Verification Report forms, but he was informed that it was his responsibility to tell VA if he or a family member (a spouse or child) began receiving Social Security payments, or started to receive other income such as earnings, interest from bonds or savings, pension or other payments from anyone, or money or property that you inherit. The Board finds, therefore, that the Veteran had been notified of his duty to report any spousal income.

IVM information shows that the annualized income for the Veteran and his spouse in 2008 far exceeded the applicable MAPR for a Veteran with one dependent. The record shows that this income had not been reported to VA. On February 1, 2008, the Veteran was receiving Social Security benefits at a rate of $672.40 a month with an annualized income of $8,069.00. In a November 2012 notice letter and in his statement of the case, the Veteran was informed that an IVM identified spousal income from Hope Youth Ranch in the amount of $17,738.00 in 2008 and income from the Department of Revenue in the amount of $226.00. The applicable MAPR rate for a veteran with one dependent for the 2008 calendar year was $14,643.00.

In May 2015, the Veteran submitted medical expense information for the 2008 calendar year, identifying $6,441.80 in unreimbursed medical expenses. Even with consideration of the identified medical expenses, the Board finds that the annualized income of $20,324.00 received in 2008 ($26,033.00 minus $5,709.00 for medical expenses in excess of 5% of the applicable MAPR rate) exceeded the applicable MAPR rate for 2008 and was a bar to the receipt of pension benefits.

Pension benefits were terminated based on the Veteran’s failure to report relevant income information. The award of VA pension benefits was adjusted from February 1, 2008, creating an overpayment in the amount of $44,170.00. Accordingly, the Board finds that the overpayment of VA pension benefits in the amount of $44,170.00 was properly created based on the termination of benefits due to the Veteran’s failure to report relevant income information. For these reasons, the Board finds that the termination of pension benefits based on IVM information was proper and the overpayment debt was validly created.

In an October 2017 statement, the appellant’s representative contends that the overpayment was made due to an administrative error on the part of VA. In support of this assertion, the representative contends that VA was on notice of the his wife’s income during the time period at issue, noting that the Veteran submitted a copy of a form which showed that his wife was working and earning income in 2012.

According to the doctrine of sole administrative error, if a debt was the result solely of administrative error, no overpayment may be charged to the Veteran for the portion of the overpayment attributable to administrative error. Jordan v. Brown, 10 Vet. App. 171 (1997). However, where an erroneous award is based on an act of commission or omission by a payee or with the payee’s knowledge, sole administrative error is not present. Id. In Jordan, the Court also found that sole administrative error was not present if the payee knew, or should have known, that the payments were erroneous.

The Board finds that the creation of the overpayment debt was not the result of sole administrative error. The Board finds that prior to the termination of benefits in April 2013, the Veteran did not report his spouse’s earned income which was later shown in the 2008 IVM and 2009 IVM. While the Veteran has indicated that financial disclosures were provided to the VA hospital business office in Shreveport, Louisiana, hospital administration records have been obtained, and show that in a May 2009 financial disclosure signed by the Veteran, he failed to identify spousal income for the 2008 calendar year, and instead, reported receiving no income for himself or his spouse.

In May 2013, after receiving notice of the overpayment debt, the Veteran did submit a Financial Status Report identifying spousal income for 2012. He specified at the top of the form, that the Financial Status Report was completed in conjunction with his “waiver” request. The Board finds that this income information, submitted in conjunction with the request for a waiver well after the creation of the overpayment debt at issue, cannot be considered as evidence which put VA on notice of his wife’s income prior to the creation of the overpayment debt at issue. While the Veteran asserted in a May 2013 statement, that he submitted financial disclosures (Form 10-10EZR) to the VA hospital business office in Shreveport, LA for the years 2010, 2011, and 2012, these financial disclosures were allegedly sent to the VA hospital for the purpose of establishing eligibility to VA medical care, and were not sent to the RO or Pension Management Center for the purpose of notifying VA of spousal income for pension purposes. VA hospital administration records do not confirm receipt of these financial disclosures.

The Board finds that the Veteran knew, based on the receipt of multiple notice letters, that his pension payments were contingent upon income, and he knew that pension benefits were administrated through the RO. Significantly, the record shows that the Veteran submitted Medical Expense Reports to the RO in November 2009, identifying unreimbursed medical expenses for 2007, and in March 2011, identifying unreimbursed medical expenses for 2010. While the Veteran knew to submit medical expense information for consideration in the calculation of pension benefits, he did not also submit information identifying spousal income to the RO during this time period. While the Veteran contends that VA was on notice of spousal income through financial disclosures provided to the VA hospital business office, the only financial disclosure contained in VA hospital administration records was the 2009 financial disclosure, in which he failed reported income for the 2008 calendar year. It is presumed that government officials “have properly discharged their official duties.” United States v. Chemical Foundation, Inc., 272 U.S. 1, 14-15 (1926). Thus, the Board finds that had the Veteran reported his income information in financial disclosures, they would have been recorded. The Board finds that the weight of the evidence does not show that the Veteran submitted spousal income information to VA for the 2008 or 2009 calendar years, and there was no administrative error on the part of VA in the creation of the overpayment debt. Moreover, the Veteran knew, or should have known, based on earlier submission of Improved Pension Eligibility Verification Reports and the receipt of multiple notice letters informing him of the income sources on which his pension rate was calculated, that his payments were erroneous as they did not consider his spouse’s income. Accordingly, the overpayment debt is not shown to be being due to administrative error, and the overpayment of VA pension benefits in the amount of $44,170.00 was validly created.

(CONTINUED ON NEXT PAGE)

ORDER

The termination of VA pension benefits was proper, and the overpayment in the amount of $44,170.00, was validly created.

____________________________________________
S. B. MAYS
Veterans Law Judge, Board of Veterans’ Appeals

Department of Veterans Affairs

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