## Facts

- A veteran was entitled to a nonservice-connected pension under 38 U.S.C. Chapter 15 when he died.
- His surviving spouse applied for (1) a lump-sum payment of pension amounts due and unpaid at the veteran’s death (accrued benefits) and (2) ongoing death-pension benefits.
- The Department of Veterans Affairs granted both benefits, paying the accrued-benefits lump sum and awarding monthly death pension.
- The VA later reduced the surviving spouse’s death-pension rate by treating the accrued-benefits lump sum as countable annual income for pension purposes.
- The Board of Veterans’ Appeals affirmed the reduction, and the surviving spouse appealed.

## Issues

1. Whether a lump-sum payment of accrued pension benefits to a surviving spouse is excluded from “annual income” when calculating VA death-pension benefits as a “benefit payable under” Chapter 15.
2. Whether the Chapter 15 income exclusion applies when the survivor’s payment is authorized by the accrued-benefits provisions of Chapter 51, even if the underlying entitlement arose under Chapter 15.

## Decision

- The court affirmed the Board of Veterans’ Appeals.
- The court held that the accrued-benefits lump-sum payment was not excluded from the surviving spouse’s annual income for death-pension computation.
- The VA properly treated the lump-sum accrued-benefits payment as countable income and properly reduced the death-pension rate.

## Legal Principles

- A survivor’s entitlement to unpaid amounts owed to a veteran at death arises under the accrued-benefits statute (Chapter 51), which is distinct from the veteran’s lifetime pension entitlement under Chapter 15.
- An income exclusion for “benefits payable under” Chapter 15 applies to payments for which Chapter 15 is the operative statutory payment authority; it does not cover accrued-benefits payments made pursuant to Chapter 51.
- Needs-based VA pension benefits are income-tested, and statutory income exclusions are construed narrowly.
- Where statutory text and structure support the agency’s interpretation and the agency’s reading is reasonable and consistent with the scheme, the court will not expand exclusions beyond the statute’s terms.

## Conclusion

The court upheld the reduction of a surviving spouse’s death-pension benefits because a lump-sum payment of accrued pension benefits is paid under Chapter 51 and must be counted as annual income when calculating Chapter 15 death-pension entitlement.


Martin v. Brown, 7 Vet. App. 196 (1994)