Moffit v. Shinseki (February 14, 2014) Claim for Enhanced Dependency Based on Hypothetical Entitlement
The claimant’s husband was a veteran of the US Army, who served from 1944 through 1946 and served and was wounded in WWII. He filed for and won 100 percent disability compensation in 1946, which was reduced to 60 percent in 1956. In 1972, the veteran sought full disability secondary to individual unemployability. That claim remained unadjudicated when the veteran passed away. The veterans’ wife applied for death benefits, including dependency and indemnity compensation, in 1983, which was granted in 1991. In 1999, the veteran’s widow filed for enhanced dependency, based her assertion that her husband should have rated 100 percent disabled for 10 or more years before he died. She filed her claim stating that her husband’s 1980 VA decision denying him benefits for post-operative left inguinal hernia and phlebitis, suffered from clear and unmistakable error (CUE). The regional office denied the CUE claim in 2000, stating the 1980 regional office decision did not contain “clear and unmistakable error.” The Board of Veterans’ Appeal affirmed the regional office decision in 2001. In 2002 the Court of Appeals for Veterans’ Claims granted a partial remand stating that the Board of Veterans’ Appeals had failed to adjudicate the enhanced dependency and indemnity claim.
The Board then transferred the enhanced dependency and indemnity claim to the regional office. The regional office denied the claim in 2004, the widow appealed to the Board of Veteran’s Appeals. In 2008, the BVA denied the enhanced dependency and indemnity benefit claim stating that the December 2005 amendment to 38 CFR § 20.11106 precluded her theory of hypothetical entitlement. She appealed to the CAVC, who remanded to the Board of Veteran’s Appeals to determine whether the interpretive change in the law created an unlawful retroactive effect on the widow’s claim for enhanced dependency benefits. The BVA affirmed its original decision in November 2010. The widow again appealed the Board of Veterans’ Appeals decision to the Court of Veteran’s Appeals (CAVC).
Enhanced Dependency Entitlement
38 CFR 1311(a)(2) directs that “The basic monthly rate under paragraph (b) of this section shall be increased by the amount specified in 38 U.S.C. 1311(a)(2) if the veteran, at the time of death, was receiving, or was entitled to receive, compensation for service-connected disability that was rated by VA as totally disabling for a continuous period of at least eight years immediately preceding death. Determinations of entitlement to this increase shall be made in accordance with paragraph (f) of this section.”
38 U.S.C. 1311(a)(1)(2) states “Dependency and indemnity compensation to a surviving spouse (a)(1) Dependency and indemnity compensation shall be paid to a surviving spouse at the monthly rate of $1,154. (2) The rate under paragraph (1) shall be increased by $246 in the case of the death of a veteran who at the time of death was in receipt of or was entitled to receive (or but for the receipt of retired pay or retirement pay was entitled to receive) compensation for a service-connected disability that was rated totally disabling for a continuous period of at least eight years immediately preceding death. In determining the period of a veteran’s disability for purposes of the preceding sentence, only periods in which the veteran was married to the surviving spouse shall be considered.”
38 CFR 1311(f) defines “entitled to receive” as meaining that the veteran filed a claim for disability compensation during his or her lifetime and one of the following circumstances is satisfied:
(i) The veteran would have received total disability compensation for the period specified in paragraph (c) of this section but for clear and unmistakable error committed by VA in a decision on a claim filed during the veteran’s lifetime; or
(ii) Additional evidence submitted to VA before or after the veteran’s death, consisting solely of service department records that existed at the time of a prior VA decision but were not previously considered by VA, provides a basis for reopening a claim finally decided during the veteran’s lifetime and for awarding a total service-connected disability rating retroactively in accordance with §§3.156(c) and 3.400(q)(2) of this part for the period specified in paragraph (c) of this section; or
(iii) At the time of death, the veteran had a service-connected disability that was continuously rated totally disabling by VA for the period specified in paragraph (c) of this section, but was not receiving compensation because:
(A) VA was paying the compensation to the veteran’s dependents;
(B) VA was withholding the compensation under the authority of 38 U.S.C. 5314 to offset an indebtedness of the veteran;
(C) The veteran had not waived retired or retirement pay in order to receive compensation;
(D) VA was withholding payments under the provisions of 10 U.S.C. 1174(h)(2);
(E) VA was withholding payments because the veteran’s whereabouts were unknown, but the veteran was otherwise entitled to continued payments based on a total service-connected disability rating; or
(F) VA was withholding payments under 38 U.S.C. 5308 but determines that benefits were payable under 38 U.S.C. 5309. (Authority: 38 U.S.C. 501(a), 1311, 1314, and 1321).
Court’s Decision on “Hypothetical Theory” of Entitlement to Enhanced Dependency
The Court of Appeals for Veteran’s Claims was asked simply to review whether the decision by the Court of Appeals for the Federal Circuit in Kernea v. Shinseki, allowing retroactive application of the bar to hypothetical entitlement for enhanced dependency applied to her case. The widow asserted that since her claims was filed in 1999, before the VA began taking steps to prohibit the use of hypothetical entitlement for claims for enhanced dependency. The Court applied the three factors articulated in Princess Cruises (1) the nature and extent of the change of the law; (2) the degree of connection between the operation of the new rule and a relevant past event; (3) and familiar consideration of fair notice, reasonable reliance, and settled expectations.
In applying these tenants, the Court ruled that retroactive application of the bar to hypothetical theory for enhanced entitlement. The Court determined (1) that the nature and extent of the change in the law was not substantial; (2) that because the veteran applied for benefits in 1946 and total disability in 1979, before the enactment of 1311(a)(2), his “failure to conform his conduct to the requirements of the amended rule cannot be attributed to the change in the law occasioned by the law;” and that (3) since the Secretary had consistently disfavored hypothetical entitlement since at least 1990, “any expectation that the statutory interpretation…was not subject to change through administrative action would have been objectively unreasonable.” The Court therefore ruled that the amendment to §20.1106 and the promulgation of §3.10(f)(3) may be applied retroactively to bar the widow’s theory of entitlement.