Veteran was awarded nonservice-connected pension benefits and was provided information about the circumstances that would affect his continued receipt of these benefits – specifically, a change in income. The veteran was subsequently awarded Supplemental Security Income (SSI) and he informed VA of this. He also returned his VA pension check for that month, which he had voided, explaining that he had been told by his local VA office to send it back. VA did not respond to the veteran’s submission – and continued to send him VA pension checks, which he subsequently cashed.
Five months later, his RO notified the VA Pension Management Center (PMC) in Milwaukee that the veteran had been awarded Social Security benefits and had been improperly receiving VA pension benefits based on having “no income” since March 2008.
In September 2009, the PMC informed the veteran that his Social Security benefits were considered countable income for VA pension purposes. The PMC explained that this had created an overpayment and that his pension payments would stop. The PMC told him he had 60 days to dispute this. The veteran did not respond, and the PMC discontinued pension payments and informed the veteran that the overpayment had created a debt.
The following month, the veteran sent the PMC a letter disputing the debt. He explained that he had informed VA of his receipt of Social Security benefits and returned his voided VA pension check – and that when VA continued to pay him monthly pension benefits, he assumed that he was supposed to receive both benefits. That same month, the PMC sent him a letter stating that he owed VA $11,538.
He continued to appeal the debt up to the CAVC. At the Court, he argued that the Board erred in finding that the debt was valid because the overpayments were the result of VA’s administrative error. The Secretary argued that an assessment of whether an overpayment is based on administrative error applies only during the initial award of pension benefits or in determining the initial pension rate. The Secretary asserted that because the veteran had a “change in income,” the effective-date provisions in 38 U.S.C. § 5112(b)(4)(A) and 38 C.F.R. § 3.500(c) and § 3.600 apply – not section 5112(b)(10). Alternatively, the Secretary argued that the veteran had not shown that the overpayment resulted solely from VA administrative error because he had actual knowledge of his duty to report a change in income.
The Court rejected the Secretary’s first argument based on its review of the legislative history of the relevant statute. The Court held that the phrase “erroneous award” applies to “erroneous payments made subsequent to the initial award” and that when such payments are solely the result of VA administrative error, no debt or overpayment is created. The Court also determined that its holding is supported by VA regulations and policy manual provisions.
With respect to the second argument, the Court found that the Board did not err in concluding that the debt was not solely due to VA administrative error because the veteran did have actual knowledge that his pension benefits would change with a change to his income. Even though VA continued to erroneously pay the veteran, he did continue to cash the checks – so the Court determined that the he was at least partially at fault in creating the overpayment.
In a well-crafted dissent, Judge Bartley disagreed with the majority’s determination that the debt was valid because the veteran had “fulfilled all legal requirements by notifying VA of his income change.” Judge Bartley noted that the relevant statute and regulation only requires a pension recipient to “promptly notify the Secretary” of a change in income. Because the veteran did that, Judge Bartley would have held that the debt was invalid.