BVA9500742 DOCKET NO. 93-10 357 ) DATE ) ) On appeal from the decision of the Department of Veterans Affairs Regional Office in New Orleans, Louisiana THE ISSUE Whether the appellant's improved death pension benefits were properly reduced from January 1, 1993 to December 31, 1993, based on the receipt of accrued benefits. REPRESENTATION Appellant represented by: The American Legion ATTORNEY FOR THE BOARD Susan S. Toth, Associate Counsel INTRODUCTION The veteran had active service from August 1950 to August 1953 and died in June 1992. The appellant is his widow. This matter arises from an administrative decision of December 1992, whereby the Regional Office (RO) reduced the appellant's improved death pension benefits, effective from January 1, 1993 to December 31, 1993, due to the receipt of accrued benefits. In an informal hearing presentation dated in December 1993, the appellant's representative has raised the question of entitlement to special monthly pension as well as increased pension due to payment of medical expenses. These matters are not in proper appellate status and are referred back to the RO for appropriate action. CONTENTIONS OF APPELLANT ON APPEAL The appellant contends that the RO erred in reducing her improved pension benefits due to excess income. She asserts that accrued benefits should not be included in her countable annual income for Department of Veterans Affairs' (VA) improved death pension purposes since it should have been paid to her husband during his life. She argues that such inclusion would result in severe financial hardship since she has many unpaid bills and serious physical conditions. She further asserts that the accrued benefits were used to pay last illness and burial expenses of the veteran. DECISION OF THE BOARD The Board, in accordance with the provisions of 38 U.S.C.A. § 7104 (West 1991), 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 accrued benefits representing payment for improved pension benefits based on the need for aid and attendance must be excluded from countable annual income for VA improved death pension purposes; while accrued benefits representing payments of compensation to which the veteran was entitled prior to death must be included in countable annual income. FINDINGS OF FACT 1. Attempts to obtain all relevant evidence necessary for an equitable disposition of the appeal have been made by the RO. 2. The veteran was in receipt of improved pension benefits at the time of his death in June 1992. 3. The veteran was assigned a 10 percent evaluation for disability of the left knee, to include arthritis, at the time of his death. 4. By letter dated in December 1992, the RO notified the appellant that countable annual income for improved death pension award purposes included $2,744 paid to the appellant as an accrued benefit. CONCLUSION OF LAW Accrued pension benefits, which represent payment for improved pension benefits based on the need for aid and attendance from March 1, 1992 to March 31, 1992, are excluded from countable annual income for improved death pension purposes, while accrued benefits representing compensation benefits owed from April 1, 1992 to May 31, 1992 are included in countable annual income. 38 U.S.C.A. §§ 1502(b), 1521(a), (d), 1541, 5107 (West 1991); 38 C.F.R. §§ 3.3(b)(4), 3.23, 3.271(a), 3.272(c) (1993). REASONS AND BASES FOR FINDINGS AND CONCLUSION The appellant satisfied the threshold requirement of presenting a well-grounded claim within the meaning of 38 U.S.C.A. § 5107(a). That is, she set forth a claim which was plausible. The Board is also satisfied that all relevant evidence has been properly developed, and that no further assistance is required to comply with the Department of Veterans Affairs' (VA) duty to assist as mandated by 38 U.S.C.A. § 5107(a). The veteran was in receipt of improved pension benefits and had a claim for special monthly pension benefits based on the need for aid and attendance pending at the time of his death in June 1992. He was also assigned a 10 percent evaluation for disability of the left knee, to include arthritis. The following month, the appellant submitted an application for dependency and indemnity compensation or death pension (including accrued benefits and death compensation, where applicable). By letter dated in September 1992, the RO informed her that improved pension benefits were awarded effective July 1, 1992. The letter indicated that from July 1, 1992 to November 5, 1992, the sole income considered was a $600 annual ($50 monthly benefit) Social Security benefit received by the appellant's dependent child. Effective November 6, 1992, the appellant was considered to have no countable annual income, as her child was no longer considered a dependent. Therefore, the appellant was entitled to receive the maximum pension rate payable to a surviving spouse with no dependents under the improved death pension program. The RO issued a rating decision in November 1992 concerning the appellant's claim for accrued benefits. An increased evaluation of 30 percent was assigned for the veteran's left knee disability, to include arthritis, effective from December 13, 1991. A 100 percent evaluation was assigned for that disability effective from March 17, 1992, based on the need for convalescence. In addition, special monthly pension benefits based on the need for regular aid and attendance were awarded effective from February 10, 1992. By letter of December 1992, the RO informed the appellant that additional benefits were only payable from March 1, 1992, since a higher benefit was actually paid to the veteran prior to that time. The accrued benefit payment of $2,744 consisted of the following: (1) payment of improved pension benefits based on the need for aid and attendance from March 1, 1992 to March 31, 1992 and (2) payment of compensation benefits based on the need for convalescence from April 1, 1992 to May 31, 1992. Also by letter of December 1992, the RO informed the appellant that the accrued benefit of $2,744 paid to her would be counted in her annual income for the 12- month period following receipt. Accordingly, her monthly improved pension benefit was reduced, effective from January 1, 1993 to December 31, 1993, based on her countable annual income of $2,744 during that time period. Under chapter 15 of title 38, United States Code, a veteran is entitled to an increased VA improved pension benefit based on the need for aid and attendance if he or she is a patient in a nursing home; or is helpless or blind, or so nearly helpless or blind as to need or require the regular aid and attendance of another person. 38 U.S.C.A. §§ 1502(b), 1521(d). The surviving spouse of a veteran is entitled to receive VA improved death pension if the veteran had qualifying service or at the time of death was receiving or entitled to receive compensation for a service-connected disability. 38 U.S.C.A. § 1541(a); 38 C.F.R. § 3.3(b)(4). Improved death pension benefits shall be paid at the maximum annual rate reduced by the amount of annual income received by the surviving spouse and any dependent children. 38 U.S.C.A. §§ 1541(b), (c); 38 C.F.R. §§ 3.3(b)(4)(iii), 3.23(a)(5), (b), (d)(5). In determining annual income, all payments of any kind or 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). Nonrecurring income (received or anticipated on a one-time basis during a 12-month annualization period) will be counted as income for a full 12-month annualization period following receipt of the income. 38 C.F.R. § 3.271(a)(3). One of the exclusions set forth in 38 C.F.R. § 3.272 is for any payment made under chapter 15 of title 38 of the United States Code. 38 C.F.R. § 3.272(c). In that respect, the United States Court of Veterans Appeals recently held that a payment of accrued benefits to a surviving spouse, which represented improved pension benefits owed to the veteran under 38 C.F.R. § 1521 at his death, were paid under chapter 15 and, thus, were excludable from countable annual income. Martin v. Brown, No.92-141 (U.S. Vet.App. Nov. 29, 1994) overruling Martin. v. Brown, 6 Vet.App. 272 (1994). Accordingly, that portion of the accrued benefit paid to the appellant which represented improved pension benefits based on the need for aid and attendance are properly excluded from income. To that extent her appeal is granted. That portion of the accrued benefit which represented payment for compensation benefits owed must be included in countable annual income since 38 C.F.R. § 3.272 sets forth no relevant exception. Compensation benefits for service connected disability are paid under chapter 11 of title 38 of the United States Code whereas the regulation providing for exclusion of income refers only to benefits paid under chapter 15. With no specific reference being made to chapter 11; accrued benefits representing payment of compensation must be included as income. ORDER Accrued benefits representing improved pension benefits based on the need for aid and attendance are not countable annual income for improved death pension purposes; and increased pension is granted from January 1, 1993 to December 31, 1993, subject to a determination by the RO as to the amount of accrued pension benefits to be excluded. Accrued benefits representing payment of compensation is countable as income for the purpose of determining entitlement to death pension and to this extent the appeal is denied. C. W. SYMANSKI Member, Board of Veterans' Appeals The Board of Veterans' Appeals Administrative Procedures Improvement Act, Pub. L. No. 103-271, § 6, 108 Stat. 740, ___ (1994), permits a proceeding instituted before the Board to be assigned to an individual member of the Board for a determination. This proceeding has been assigned to an individual member of the Board. NOTICE OF APPELLATE RIGHTS: Under 38 U.S.C.A. § 7266 (West 1991), 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 (1988). The date which appears on the face of this decision constitutes the date of mailing and the copy of this decision which you have received is your notice of the action taken on your appeal by the Board of Veterans' Appeals.