**UNITED STATES COURT OF VETERANS APPEALS**

No. 92-141

[Mary Ann Martin, Appellant,]{.smallcaps}

v\.

[Jesse Brown,]{.smallcaps}

[Secretary of Veterans Affairs, Appellee.]{.smallcaps}

On Appellant\'s Motion for Reconsideration

(Decided November 29, 1994 )

*Michael P. Horan* and *Linda E. Blauhut* were on the brief for the
appellant.

*James A. Endicott, Jr.*, General Counsel; *David T. Landers*, Acting
Assistant General Counsel; *Andrew J. Mullen*, Deputy Assistant General
Counsel; and *Angela Foehl* were on the brief for the appellee.

Before MANKIN, HOLDAWAY, and STEINBERG, *Judges*.

STEINBERG, *Judge*: Mary Ann Martin, the widow of a deceased war
veteran, appeals a September 24, 1991, decision of the Board of
Veterans\' Appeals (BVA or Board), which determined that accrued
benefits paid in 1989 were countable income in determining entitlement
to death-pension benefits for the following year under 38 U.S.C. § 1541
and therefore served to reduce the amount of those pension benefits by
the amount of the accrued-benefits payment. *Mary A. Martin*, BVA
91-18111 (Sept. 24, 1991).

On March 3, 1994, the Court issued an opinion in this case affirming the
decision of the Board. *Martin v. Brown*, 6 Vet.App. 272 (1994). Judge
Steinberg dissented. *Id.* at 275-77. On March 15, 1994, the appellant,
who had been pro se, filed a motion, through counsel, to stay entry of
judgment until April 15, 1994, to enable her to file a motion for
reconsideration. On April 14, 1994, she did so. Under Rule 35(a) of the
Court\'s Rules of Practice and Procedure, the reconsideration motion
stayed entry of judgment pursuant to

the Court\'s March 3, 1994, opinion. This case has been in abeyance
during the Court\'s en banc consideration of *Zevalkink v. Brown*, No.
91-1683, in which the attorney now representing appellant Martin also
entered the *Zevalkink* case to represent the appellant there. That case
was decided by the Court on June 2, 1994. *Zevalkink*, 6 Vet.App. 483
(1994) (en banc). The Court now grants the pending motion for
reconsideration, vacates its March 3, 1994, opinion, and issues this
opinion in its stead.

**I. Background**

The appellant is the widow of John E. Martin, a Korean-conflict veteran
who served on active duty in the U.S. Army from March 1952 to February
1954. R. at 17. The veteran died in April 1988. *Martin*, BVA 91-18111,
at 3. Pending before the Veterans\' Administration (now Department of
Veterans Affairs) (VA) at that time was his claim for VA improved
pension benefits under 38 U.S.C. § 1521. *Id.* at 3-4. In May 1988, the
appellant applied to a VA regional office (RO) for both lump-sum accrued
benefits under 38 U.S.C. § 5121(a) in the amount of VA pension to which
the veteran was entitled at his death under 38 U.S.C. § 1521, as well as
monthly death-pension benefits under 38 U.S.C. § 1541. *Id.* at 4. In a
November 17, 1989, letter the VARO informed the appellant that she was
entitled to accrued benefits and would receive a lump-sum payment of
\$3,814 in such benefits. R. at 5. That payment was made in November
1989. *Martin*, BVA 91-18111, at 4.

The RO also granted the appellant improved death-pension benefits with
an effective date of May 1988. R. at 17. However, the RO reduced her
pension benefit by \$3,814 for the year following the accrued-benefits
payment, in order to offset the amount of the accrued-benefits payment.
R. at 17. The RO determined the following breakdown of effective dates
for monthly pension, countable annual income, and maximum annual
pension:

+--------------+-----------------+-----------------+-----------------+
| EFFECTIVE    | MONTHLY         | COUNTABLE       | MAXIMUM         |
|              |                 |                 |                 |
| DATE         | PENSION         | ANNUAL          | ANNUAL          |
|              |                 |                 |                 |
|              |                 | INCOME          | PENSION         |
+--------------+-----------------+-----------------+-----------------+
| 05-01-88     | \$347.00        | \$ 0.00         | \$4,164         |
+--------------+-----------------+-----------------+-----------------+
| 12-01-88     | 360.00          | 0.00            | 4,331           |
+--------------+-----------------+-----------------+-----------------+
| 12-01-89     | 60.00           | 3,814.00        | 4,535           |
+--------------+-----------------+-----------------+-----------------+
| 12-01-90     | 377.00          | 0.00            | 4,535           |
+--------------+-----------------+-----------------+-----------------+

R. at 9. The RO determined that the appellant was to receive a pension
benefit of \$347 per month from May 1, 1988, to November 30, 1988,
because she had received no income from any source since May 1, 1988,
and a pension benefit of \$360 per month \-- increased by virtue of a
cost-of-living adjustment (COLA) effective December 1, 1989, *see* 38
U.S.C. § 5312 \-- from December 1, 1988, to November 30, 1989. The RO
reduced the appellant\'s monthly pension benefit to \$60 for the
one-year period from December 1, 1989, to November 30, 1990, because of
the appellant\'s receipt of the \$3,814 lump-sum accrued-benefits
payment. Finally, on December 1, 1990, the RO restored the appellant\'s
monthly pension benefit to the maximum of \$377 \-- increased by virtue
of a COLA effective December 1, 1990 \-- because she had no income from
any source beginning on that date. *Ibid.*

The RO reasoned that the pension reduction was required because the
accrued benefits were countable as annual income under 38 C.F.R. §
3.271(a) (1993). R. at 12. The RO considered the appellant\'s argument
that the accrued-benefits payment should be excluded from countable
income under 38 C.F.R. § 3.272 (1993), but found that accrued benefits
were not listed as excludable income under that regulation. R. at 12.
The BVA reached the same conclusion. *Martin*, BVA 91-18111, at 4.

On appeal, the appellant contends that the Board erred in finding that
accrued benefits are includable within countable income for
death-pension purposes. More specifically, she argues that accrued
benefits awarded pursuant to 38 U.S.C. §§ 1521 and 5121(a) are excluded
from countable income by 38 C.F.R. § 3.272(c). The Secretary contends
that neither the law nor any VA regulation makes provision for such
exclusion of accrued-benefits payments received by a VA pension
claimant.

**II. Analysis**

***A. Accrued Benefits Based on Pension Benefit Owed to Veteran at
Death***

Under chapter 15 of title 38, U.S. Code, a veteran is entitled to VA
improved pension if the veteran served in the active military, naval, or
air service for ninety days or more during a period of war and is
permanently and totally disabled from a non-service-connected disability
not the result of the veteran\'s willful misconduct. 38 U.S.C. §
1521(a), (j). The veteran\'s service during 1952 to 1954 was during the
Korean conflict, a period of war under 38 U.S.C. § 101(11), (9). *See
also* 38 C.F.R. §§ 3.2(e), 3.3(a)(3) (1993). His application for VA
improved pension benefits was pending at his death in April 1988.
Thereafter, the appellant sought one year\'s worth of those pension
benefits as an accrued benefit under 38 U.S.C. § 5121(a).

The law defines accrued benefits as follows:

> \[P\]eriodic monetary benefits . . . under laws administered by the
> Secretary to which an individual was entitled at death under existing
> ratings or decisions, or those based on evidence in the file at date
> of death . . . and due and unpaid for a period not to exceed one year,
> shall, upon the death of such individual be paid as follows:
>
> . . . .
>
> \(2\) Upon the death of the veteran, to the living person first listed
> below:

\(A\) The veteran\'s spouse . . . .

38 U.S.C. § 5121(a). In *Zevalkink*, the Court held that \"the substance
of the survivor\'s claim \[for accrued benefits\] is purely derivative
from any benefit to which the veteran might have been \'entitled\' at
his death.\" *Zevalkink*, 6 Vet.App. at 489-90. The veteran\'s spouse is
not entitled to receive any such attributed benefit that the \"veteran
could not have received upon proper application therefor.\" *Id*. at
490. The law entitles the survivor only \"to stand in the shoes of the
veteran and pursue his claim after his death. The only differences are
that the law limits the . . . \[spouse\] to one year\'s worth of those
periodic monetary benefits to which the veteran was entitled at death
and which were unpaid at the time of death and \[as to\] certain
adjudication rules . . . . \" *Ibid.* In the instant case, under
*Zevalkink, supra*, the \$3,814 lump-sum payment to the appellant in
accrued benefits represented one year\'s worth of the improved pension
benefits to which the veteran was entitled at death.

***B. Death Pension Paid to Veteran\'s Spouse***

The surviving spouse of a veteran is entitled to receive VA improved
death pension where the veteran satisfies the service requirements of
section 1521(j) or, at time of death, was receiving or entitled to
receive compensation or retirement pay for a service-connected
disability. *See* 38 U.S.C. § 1541(a); 38 C.F.R. § 3.3(b)(4).
Death-pension benefits are governed by income limitations which require
that, when there is no child of the veteran in the custody of the
surviving spouse, the annual rate of pension be reduced by the amount of
the annual income of the surviving spouse. *See* 38 U.S.C. § 1541(b); 38
C.F.R. §§ 3.3(b)(4)(iii); 3.23(b), (d)(5) (1993). The statute and VA
regulations provide that \"annual income\", as defined by statute and
applicable regulation, includes payments of any kind from any source,
unless explicitly exempted by statute or regulation. 38 U.S.C. § 1503;
38 C.F.R. § 3.271; *see* 38 C.F.R. § 3.272 (setting forth exclusions
from income). The RO included the \$3,814 lump-sum accrued-benefits
payment as countable annual income for 1989 and reduced the appellant\'s
maximum 1989-90 pension benefit of \$ 4,535 by \$3,814, prorating the
\$721 difference over twelve months and yielding a \$60-per-month
pension payment for the period from December 1, 1989, to November 30,
1990.

***C. Determination of Countable Income for Death-Pension Purposes***

The appellant asserts that the lump-sum accrued-benefits payment is
exempted from being counted as annual income by 38 U.S.C. § 1503(a)(2)
and 38 C.F.R. § 3.272(c), which provide that payments made \"under
chapter 15 of title 38, United States Code\", are excluded from annual
income. 38 C.F.R. § 3.272(c). The essence of her argument is that since
an accrued benefit is derivative in nature the accrued-benefit payment
in this case was no more than payment of the pension that VA owed to the
veteran under 38 U.S.C. § 1521 at his death. Thus, according to the
appellant, the benefit was paid \"under\" chapter 15 and is excludable
as countable annual income. We agree.

The issue in this case is a pure question of statutory interpretation
and requires close attention to the words of the two statutory
provisions in question, sections 1503(a)(2) and 5121(a) of title 38,
U.S. Code, and the interrelationship between them. Section 1503(a)(2)
provides:

> In determining annual income under this chapter, all payments of any
> kind or from any source . . . shall be included except \--
>
> . . .
>
> \(2\) payments ***under*** this chapter.

38 U.S.C. § 1503(a)(2) (emphasis added). Accrued benefits are \"periodic
monetary benefits . . . ***under*** laws administered by the Secretary
to which an individual was entitled at death . . . and due and unpaid
for a period not to exceed one year.\" 38 U.S.C. § 5121(a) (emphasis
added).

The statutory-interpretation question is whether a payment of accrued
benefits is made \"under\" the law authorizing the benefit to which the
veteran was entitled at his death, here VA pension under section 1521,
or is made \"under\" the accrued-benefits provision in section 5121(a).
On the face of section 5121(a), the Secretary is directed to pay the
monetary benefits that are owing \"under \[those other\] laws\" to the
named beneficiaries notwithstanding the death of the originally entitled
beneficiary. As noted above, we held in *Zevalkink* that the benefit to
be paid is actually the very one owed to the veteran at death (only the
payee has been changed, and the amount is limited to one year\'s worth
of the benefit owed). *Zevalkink*, 6 Vet.App. at 490.

The legislative history of section 5121, as illuminated in *Zevalkink*,
*supra*, buttresses the conclusion that the accrued benefit paid is
actually the underlying benefit. Before the technical recodification in
1958 of VA laws in title 38, U.S. Code, by Pub. L. No. 85-857, 72 Stat.
1105, 1228 (1958), the predecessor provision for section 3021, as that
section was codified by the 1958 law (section 3021 is the forerunner of
the current section 5121(a)), provided expressly that \"\[p\]ension\"
(as well as other listed benefits) due and unpaid at a veteran\'s death
was to be paid to the designated survivors as \"accrued benefits\". Pub.
L. No. 85-56, § 921(a), 71 Stat. 83, 121 (1957). The legislative history
specifies that the 1958 title 38 codification was \"basically a
restatement of existing law\", effective January 1, 1959. 1958
U.S.C.C.A.N 4353, H.R. Rep. No. 1298, 85th Cong., 2d Sess. 2 (1958);
1958 U.S.C.C.A.N 4375, S. Rep. No. 2259, 85th Cong., 2d Sess. 1 (1958).

The survivor\'s accrued-benefits entitlement in section 5121 could very
well have been written by Congress as a benefit paid to the survivor in
the same \"amount\" as the veteran had been entitled to receive. For
example, that is exactly the way Congress wrote certain provisions of
law borrowing features from earlier laws. In 1982, Congress enacted the
Restored Entitlement Program for Survivors (REPS) \"to replace the
social security benefits \[inadvertently\] terminated by . . . the
Omnibus Budget Reconciliation Act of 1981 \[(OBRA)\]\", *Cole v.
Derwinski*, 2 Vet.App. 400, 400-01 (1992) (quoting 128 Cong. Rec. S15121
(daily ed. Dec. 16, 1982)), *aff\'d sub nom.* *Cole v. Brown*, \_\_ F.3d
\_\_, No. 93-7003 (Fed. Cir. Sept. 14, 1994). Congress specifically
provided that the REPS benefit would be \"the amount . . . that such
person would receive . . . under section 202(g) of the Social Security
Act\" were it not for the enactment of OBRA. Pub. L. No. 97-377, §
156(a)(2), (b)(2), 96 Stat. 1920, 1921 (1982). Quite clearly, the REPS
benefit is one paid \"under\" that 1982 law and not \"under\" the Social
Security Act. Similarly, Congress has provided for a periodic COLA
increase for the REPS benefit \"by a percentage that is equal to\" the
dependency and indemnity compensation (DIC) COLA that is provided for
DIC payments made under 38 U.S.C. § 1311 (Pub. L. No. 97-377, §
156(e)(1)(A), 96 Stat. 1920, 1921 (1982)); and in 38 U.S.C. § 5312(a)
Congress provided a COLA increase for VA pension rates \"by the same
percentage as the percentage by which\" benefit rates are increased
under title II of the Social Security Act (Federal Old-Age, Survivors,
and Disability Insurance Benefits), 42 U.S.C. § 401 *et seq.*

In the case of accrued benefits, however, Congress elected to have the
very \"monetary benefits . . . to which \[the deceased beneficiary\] was
entitled at death . . . paid . . . to the . . . spouse.\" 38 U.S.C. §
5121, (a)(2)(A). It did not choose, as it had for the above REPS and
pension benefits, to have \"the amount\" of accrued benefits payable
determined by the \"amount\" of pension benefits which \"would have been
received\" by the veteran had he lived.

Accordingly, the Court holds that the accrued-benefits payment in the
instant case meets the pension-income-exclusion provision in section
1503(a)(2) as a \"payment\[\] under this chapter\", that is, chapter 15,
for purposes of computing the appellant\'s entitlement to death pension
under chapter 15. At a minimum, the accrued benefit is paid \"under\"
both section 5121 and chapter 15, and that is sufficient to meet the
section 1503(a)(2) exclusion. If there were any doubt about the
correctness of this interpretation, it would be resolved by the Supreme
Court\'s injunction that \"provisions for members of the Armed
Services\" should be \"construed in the beneficiaries\' favor\". *King
v. St. Vincent\'s Hospital*, 112 S.Ct. 570, 574 n.9 (1991); *see Smith
(William A.) v. Brown)*, \_\_\_ F.3d \_\_\_, \_\_\_, No. 93-7043, slip
op. at 12-13 (Fed. Cir. Aug. 12, 1994) (\"\[v\]eterans benefits statutes
clearly fall in this category\").

**III. Conclusion**

For the foregoing reasons, the Court reverses the September 24, 1991,
BVA decision and remands the matter to the Board for it to award the
appellant the 1989-90 death-pension benefits to which she would have
been entitled if the \$3,814 accrued-benefits payment she received had
been excluded, as it should have been, from the computation of her
income for purposes of determining her entitlement to those VA pension
benefits.

REVERSED AND REMANDED.