аЯрЁБс>ўџ 9;ўџџџ8џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџьЅСG П$-bjbjŽйŽй (<ьГьГ2'№џџџџџџ] š ІІІКККК8ђКЪ і........ ‘ ‘ ‘ ‘ ‘ ‘ $Р єДhЕ І.....Е КІІ...ККК.XІ.І. ККІІІІ. КцК R} єІІ ." pјќЎй•РКК†4q Department of Memorandum Veterans Affairs Date: January 4, 2001 VAOPGCPREC 1-2001 From: General Counsel (022) Subj: Consideration of Retroactive Compensation Award in Determining Estate of Veteran for Purposes of $1,500 To: Chairman, Board of Veterans’ Appeals (01) QUESTIONS PRESENTED: Should a retroactive award of compensation that results from a finding of clear and unmistakable error (CUE) be retroactively attributed to the estate of a veteran for purposes of determining whether 38 U.S.C. Ї 5503 and 38 C.F.R. Ї 3.557 bar payment of compensation to the veteran for a prior period during which the veteran was hospitalized at government expense? COMMENTS: The pertinent facts are as follows. On December 18, 1992, the Board of Veterans’ Appeal (BVA) determined that a December 1959 rating decision denying the veteran service connection for schizophrenia was clearly and unmistakably erroneous. On February 3, 1993, the Department of Veterans Affairs (VA) regional office awarded a 100% disability rating for service-connected schizophrenia effective May 27, 1959, the date of the claim to reopen which gave rise to the erroneous decision. This rating decision also noted that the veteran was adjudicated as incompetent from February 11, 1958, and remained incompetent for VA purposes. Because the veteran was hospitalized at government expense from January 1952 to July 1989 and had no spouse or child, the regional office, based upon C.F.R. Ї 3.557, determined the effective date for payment of benefits to be August 1, 1989, which was the first day of the month following the veteran’s release from government hospitalization. The veteran, through the veteran’s legal guardian, contends that the effective date of payment should be retroactive to the effective date of the award of service connection. Prior to its recent amendment, section 5503(b)(1)(A) of title 38, United States Code, commonly referred to as “the $1,500 rule,” provided that: “In any case in which a veteran having neither spouse nor child is being furnished hospital treatment or institutional or domiciliary care without charge or otherwise by the United States, or any political subdivision thereof, is rated by the Secretary…as being incompetent, and the veteran’s estate…from any source equals or exceeds $1,500, further payments of pension, compensation, or emergency officers’ retirement pay shall not be made until the estate is reduced to $500.” Section 5.557(a) of title 38, Code of Federal Regulations, reflects this statute. In our view, these laws do not contemplate the attribution of later assets to a veteran’s estate in determining entitlement to benefits for a retroactive period. The terms of the applicable statute and regulation do not provide a basis for including the retroactive award in calculation of the veteran’s estate. Section 5503(b)(1)(A), as applicable to this claim, limits payment of benefits where a veteran without spouse or child is being furnished treatment or care by the government, the veteran is rated incompetent by VA, and the veteran’s estate “equals or exceeds” $1,500. The statute focuses on the actual situation of the veteran at the time the benefit payments are to be made. Similarly, the implementing regulation at 38 C.F.R. Ї 3.557(b) provides that payment of benefits will not be made where a veteran is rated incompetent by VA, has neither spouse not child, is institutionalized by the government, and “[h]as an estate…which equals of exceeds $1,500.” As with the statute, the regulation focuses on the actual situation of the veteran at the time in question and does not provide for consideration of later acquired assets which could be attributed to a prior period on a theoretical or hypothetical basis. In addition, 38 C.F.R. Ї 13.109, which provides rules for determination of the value of estates for purposes of 38 U.S.C. Ї 5503(b)(1)(A) focuses on assets actually available to a veteran at a particular time. Although the regulation states that, “all funds…as well as other property, both personal and real…will be included in arriving at the value of the veteran’s estate,” the regulation describes funds and other property that is currently available for the support of the veteran and does not appear to contemplate funds that, although not actually available during the period in question, may be in some way attributable to that period. The regulation authorizing revision of decisions on the basis of CUE also does not provide a rationale for attributing funds to a veteran’s estate for a prior period for purposes of the $1,500 estate limit. Section 3.105(a) of title 38, Code of Federal Regulations, provides in pertinent part that, “[f]or the purpose of authorizing benefits, the rating or other adjudicative decision which constitutes a reversal of a prior decision on the grounds of clear and unmistakable error has the same effect as if the corrected decision had been made on the date of the reversed decision.” The CUE finding in this case merely reversed a prior decision that the veteran’s disability was not service connected. The effect of this decision was that the veteran’s condition is considered service connected as of the date of the reopened claim that had been denied by the erroneous decision. This made the veteran potentially eligible for compensation from that date. However, the decision to reverse the prior adjudication did not reach or affect the issue of how to determine the estate of the veteran during the period subsequent to the new effective date of service connection, not did it have the effect of requiring that particular payments be considered estate assets for purposes of estate computation. The legislative history of what is now section 5503(b)(1)(A) also does not suggest that VA should retroactively attribute funds to an estate of an incompetent veteran for purposes of applying the $1,500 rule. The $1,500 estate limitation was in effect for many years and was amended on a number of occasions. The legislative history of the provision indicates that the $1,500 rule was intended “to prevent gratuitous benefits for incompetent veterans receiving care at public expense from accumulating in excessive amount and passing upon the death of the veteran to relatives having no claim against the Government on account of the veteran’s military service.” S. Rep. No. 86-344 (1959), reprinted in 1959 U.S.C.C.A.N. 2048 (commenting on what became Pub. L. No. 86-146, 73 Stat. 297 (1959)); accord H.R. Rep. No. 81-993 (1949), reprinted in 1949 U.S.C.C.S. 1634, 1635 (commenting on what became the Act of August 1, 1949, ch. 375, 63 Stat. 484). Congress’ focus was on individuals receiving care from the government, where a veteran is no longer receiving institutional care from the government, the risk that excessive assets will accumulate in the veteran’s estate is diminished. Thus, application of the $1,500 rule in the situation presented here is not necessary to accomplishment of Congress’ intention. 7. Finally even assuming that the veteran could be considered to have been in receipt of compensation during the retroactive period in question, it cannot be presumed that such receipt would have caused the veteran to all within the scope of the $1,500 estate limitation. As noted above, the veteran was rated in competent and hospitalized in government facilities during a part of the period covered by the retroactive award. Thus, if the veteran had been correctly awarded compensation by VA at the time of the erroneously decided claim, the $1,500 rule would have been for consideration in determining entitlement to compensation. However, it cannot be presumed that the veteran’s guardian would not have spent the funds down below the limit, or that the veteran would have elected to remain hospitalized in a government facility given the additional financial resources the compensation award would have provided. Given the variables and unknowns, it is simply too speculative for VA to conclude, as the regional office apparently did in this case, that the compensation, if it had been properly paid at the time, would have resulted in the veteran’s estate being over the $1,500 ceiling, but less than the $500 floor, so that no would have been payable during the entire 30-year period from May 27, 1959 to August 1, 1989. From a practical perspective, we recognize that a decision that VA should not attribute the retroactive compensation award to the estate of the veteran will result in a substantial award of past-due benefits. However, because 38 U.S.C. Ї 5503(b)(1)(A) does not authorize retroactive attribution of such awards in estate computation, such attribution would amount to imposition of a limitation on benefit entitlement that is not authorized by law. See, e.g., Skinner v. Brown, 27 F.3d 1571, 1574 (Fed. Cir. 1994) (invalidating limitation on entitlement not authorized by statute). For the foregoing reasons, attribution of the retroactive compensation award to estate computation for a prior period for purposes of the $1,500 rule is not warranted. HELD: Prior to a recent statutory amendment, the provisions of 38 U.S.C. Ї 5503(b)(1)(A) and 38 C.F.R. Ї 3.557(b) required that compensation not be paid in the case of an incompetent veteran without spouse or child who is being furnished hospital treatment or institutional or domiciliary care at government expense when the veteran’s estate exceeds $1,500, until such time as the estate is reduced to $500. A retroactive award of compensation based on a finding of clear and unmistakable error in a prior decision denying service connection should not be retroactively attributed to the estate of the veteran for purposes of determining whether section 5503(b)(1)(A) and section 3.557(b) bar payment of compensation for the period subsequent to the effective date of the award of service connection and prior to the date of the veteran’s release from a government facility. Leigh A. Bradley  Section 304 of the Veterans Benefits and Health Care Improvement Act of 2000, Pub. L. No. 106-419, 114 Stat. 1822 (2000), amended 38 U.S.C. Ї 5503(b)(1)(A) to raise the estate limitation to the amount equal to five times the rate of compensation specified in 38 U.S.C. Ї 1114(j) and the floor for resumption of payments to one-half that amount. 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