Cooper: Unemployment and a Non-Service Connected Pension

Cooper v. McDonough, Case Number 19-2009, decided February 26, 2021 involves how countable income is calculated for a non-service connected pension.  The Court determined state unemployment compensation is counted as income.

A non-service connected pension provides an income floor for wartime veterans, the idea was to prevent our wartime veteran from sinking into poverty.  However, a veteran only receives it if they have very little income.  This year that amount is approximately $13,000.  However, a provision in the statute excludes certain types of income, including:  “donations from public or private relief or welfare organizations.” 

This case arose when the veteran started receiving a NSC pension and then later started receiving social security disability insurance.  The VA reduced his monthly NSC pension payment and created an overpayment, which it later waived.  Later, he received state unemployment compensation for several years and as a result the VA determined that compensation should count toward the limit and resulted in a $13,094 overpayment.  The veteran sought a waiver of the debt and argued his state unemployment compensation should not be considered income.  The VA took the position that it was income.

Before the Court, the veteran argued state unemployment compensation is "public relief for the unemployed," and constitutes a donation from public relief or welfare organizations and is thus excluded from countable income under 38 U.S.C. § 1503(a)(1).

The Court found that unemployment compensation is not specifically excluded as income, but then considered whether it counts as a donation from public relief or welfare organization.  The Court determined based on the plain meaning that:

Taken together, the plain meaning of "public . . . relief . . . organization[]" is understood as a governmental entity providing aid or assistance to a population in need; and a "public . . . welfare organization[]" similarly pertains to a governmental entity formed for the purpose of providing financial or other assistance to individuals and communities in need. And, the payment provided by these organizations—the donation—must be a voluntary or charitable transfer of money to a recipient in need.   

Id. at *8.  The veteran argued unemployment compensation fit within this definition, but the Court determined otherwise.  Id. at *10.

The Court also considered if this would lead to an absurd result.  “Specifically, he asserts that it would be inconsistent to exclude from countable income compensation from CWT [Compensated Work Therapy], as outlined in 38 U.S.C. § 1718(g)(3), but not income from unemployment compensation because both constitute public relief for the unemployed.  The Court disagrees.”  Id. at *11.   The Court explained that it was “not persuaded that the two categories are so similar that unemployment compensation should also be considered a "donation" for NSC pension purposes and, as discussed above, the nature of the unemployment benefits reflects that those payments are not considered public relief.”  Id. at *13.

Decision by Judge Meredith and joined by Judges Pietsch and Toth. 

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