Citation Nr: 1008268	
Decision Date: 03/05/10    Archive Date: 03/11/10

DOCKET NO.  08-31 100	)	DATE
	)
	)

On appeal from the
Department of Veterans Affairs Regional Office in Salt Lake 
City, Utah


THE ISSUE

Entitlement to Dependency and Indemnity Compensation, paid 
without recoupment of tort settlement.


REPRESENTATION

Appellant represented by:	Disabled American Veterans


WITNESS AT HEARING ON APPEAL

Appellant



ATTORNEY FOR THE BOARD

J. M. Macierowski, Counsel


INTRODUCTION

The Veteran served on active duty from February 1967 to 
February 1969, and died in February 2001.  The appellant is 
his surviving spouse.

This matter comes before the Board of Veterans' Appeals 
(Board) on appeal from the Department of Veterans Affairs 
(VA) Regional Office in Salt Lake City, Utah (RO).


FINDINGS OF FACT

1.  The appellant is the surviving spouse of the decedent 
Veteran.

2.  In a March 2002 decision, the appellant was awarded 
Dependency and Indemnity Compensation (DIC) benefits under 38 
U.S.C.A. § 1151.

3.  In November 2006, the appellant and the four other 
plaintiffs (the Veteran's mother, and the appellant and 
Veteran's three children) entered into a Stipulation for 
Compromise Settlement and Release of Federal Tort Claims 
(Settlement) pursuant to 28 U.S.C. § 2672 for and in 
consideration of $362,500.00 in settlement of the Veteran's 
wrongful death.

4.  The appellant and the four other plaintiffs received 
$302,500.00 in a cash sum payment; the remaining $60,000.00 
was paid by the United States to a private insurance company 
to purchase an annuity contract to benefit the three children 
on their 30th birthday.

5.  The setoff of benefits received under 38 U.S.C.A. § 
1151(a) against DIC benefits is prescribed by law under 38 
U.S.C.A. § 1151(b) and 38 C.F.R. § 3.362.


CONCLUSION OF LAW

The offset amount of $302,500.00 awarded under 38 U.S.C.A. § 
1151 against the appellant's DIC benefits was proper.  38 
U.S.C.A. § 1151 (West 2002 & Supp. 2009); 38 C.F.R. §§, 
3.103, 3.362, 3.363, 3.800 (2009); Sabonis v. Brown, 6 Vet. 
App. 426, 430 (1994).


REASONS AND BASES FOR FINDINGS AND CONCLUSION

The appellant contends that the offset amount of $302,500.00, 
derived from the amount of a settlement received under the 
Federal Tort Claims Act, against her DIC benefits was not 
proper.  Specifically, she asserts that she was never 
informed that her negotiated settlement would precluded such 
an occurrence, and that the loss of said income would 
essentially result in an elimination of any benefit she 
should have received from VA under the circumstances of the 
Veteran's death.  She also asserts that she only received 
$78.804.20 of the $302,500.00 cash sum payment; she alleges 
that the remaining amounts went to the Veteran's three 
children and his mother, and for attorneys' fees.  After a 
careful review of the law and the record, the Board finds 
that as a matter of law, the appeal must be denied.

The following facts of the case are not in dispute.  A March 
2002 rating decision awarded DIC benefits to the appellant 
under 38 U.S.C.A. § 1151.  In November 2002, the appellant 
filed a claim against the United States Government under the 
provisions of the Federal Tort Claims Act (FTCA), seeking 
damages stemming from the February 2001 death of the Veteran, 
in accordance with 28 U.S.C.A. § 2672.  In November 2006, the 
appellant agreed to settle her FTCA claim for $362,500.  The 
Settlement indicated that $60,000.00 of that total would be 
used by the United States to purchase an annuity contract for 
the benefit of the Veteran's three children, and that the 
remaining amount, $302,500, was to be paid to the appellant 
and the four other plaintiffs (the Veteran's mother, and the 
appellant and Veteran's three children) in a cash sum 
payment.  The Settlement also noted that the appellant's DIC 
payments would "be suspended due to this settlement 
according to the provisions of [38 U.S.C.A. § 1151]."  See 
Settlement, at 8 (6).

Under 38 U.S.C.A. § 1151, "[w]here an individual is, on or 
after December 1, 1962, awarded a judgment against the United 
States in a civil action brought pursuant to section 1346(b) 
of title 28, or . . . enters into a settlement or compromise 
under section 2672 or 2677 of title 28 by reason of a 
disability or death treated pursuant to this section as if it 
were service-connected, then no benefits shall be paid to 
such individual for any month beginning after the date such 
judgment, settlement, or compromise becomes final until the 
aggregate amount of benefits which would be paid but for this 
subsection equals the total amount included in such judgment, 
settlement or compromise."  38 U.S.C.A. § 1151(b); see also 
69 Fed. Reg. 46,426 (August 3, 2004).  

VA regulations implementing 38 C.F.R. § 1151(b) are in accord 
with the statute, and provide that where any person is 
awarded a judgment on or after December 1, 1962, against the 
United States in a civil action brought pursuant to 28 U.S.C. 
§ 1346(b), or enters into a settlement or compromise on or 
after December 1, 1962, under 28 U.S.C. § 2672 or § 2677, by 
reason of disability, aggravation or death within the purview 
of this section (i.e., 38 U.S.C.A. § 1151), no compensation . 
. . shall be paid to such person for any month beginning 
after the date of such judgment, settlement, or compromise on 
account of such disability, aggravation, or death becomes 
final until the total amount of benefits which would be paid 
except for this provision equals the total amount included in 
such judgment, settlement, or compromise.  The provisions of 
this paragraph do not apply, however, to any portion of such 
compensation or dependency and indemnity compensation payable 
for any period preceding the end of the month in which such 
judgment, settlement, or compromise becomes final.  38 
U.S.C.A. § 3.800(a) (2).

The amount to be offset under 38 U.S.C.A. § 1151(b) from 
benefits awarded under 38 U.S.C.A. § 1151(a) is the 
survivor's proportional share of the cost to the United 
States of the settlement or compromise, including the 
survivor's proportional share of attorney fees.  38 C.F.R. § 
3.362(d).  Moreover, the amount to be offset under 38 
U.S.C.A. § 1151(b) from any DIC awarded under 38 U.S.C.A. § 
1151(a) is only the amount of the settlement representing 
damages for the Veteran's death the survivor receives in an 
individual capacity or as distribution from the decedent 
Veteran's estate of sums included in the settlement to 
compensate for harm suffered by the survivor, plus the 
survivor's proportional share of attorney fees.  38 C.F.R. 
§ 3.362(c).

Under the applicable statutes and regulations, the amount of 
$302,500.00 is subject to recoupment from the appellant's 
award of VA compensation benefits under 38 U.S.C.A. § 1151 
before payments of those benefits to her can resume.  The 
Settlement reflects that the $302,500.00 was paid to her both 
in her individual capacity and on behalf of the estate of the 
Veteran.  She has alleged, to include in her October 2009 
letter to her Member of Congress, that she paid out amounts 
to the Veteran's three children, his mother, and to the 
attorneys, such that she only received $78,804.20 for 
herself.  However, she has submitted no evidence, other than 
the letter to her Member of Congress, that she has paid out 
those amounts, nor was she required to; the Settlement does 
not prescribe any specific payments to the Veteran's mother 
or his three children, other than those amounts they will be 
paid from the matured annuity contract at each of their 30th 
birthdays.  Thus, if the appellant has paid out monies to 
those parties, she did so by her own accord.  Moreover, even 
if the attorneys' fees are considered to be a "required" 
payment due to the nature of the Settlement, the monies were 
paid to the attorneys by the appellant; at no time were the 
attorneys' fees paid by the United States.  Thus, any 
argument that VA would be recovering "sums the benefit of 
which the [appellant] never enjoyed" fails; the appellant 
may not have "enjoyed" the monies she paid in attorneys' 
fees, as she did not retain them for her personal use, but 
she received the benefit of the attorneys' counsel in 
exchange for same.  See VAOPGCPREC 79-90 (the offset 
provision of section 351 was intended to assure that the same 
individual does not recover twice for the same disability or 
death).

Additionally, the appellant asserted in her April 2008 notice 
of disagreement and October 2008 substantive appeal that she 
was never informed, either by her attorney or by VA, that she 
would be required to offset her DIC by the amount of the 
award.  Without addressing her allegations as to the 
responsibilities of her private attorney, the stipulation to 
recoupment of DIC benefits is clearly stated, as noted above, 
in Paragraph 6 of the Settlement, which the appellant signed.  
See Settlement, at 8 (6).  Moreover, the Court of Appeals 
for Veterans Claims held that persons dealing with the 
Government are charged with knowledge of Federal statutes and 
lawfully promulgated agency regulations, regardless of actual 
knowledge or hardship resulting from innocent ignorance.  See 
Morris v. Derwinski, 1 Vet. App. 260, 265 (1991), citing Fed. 
Crop Ins. Corp. v. Merrill, 332 U.S. 380, 384-85 (1947); see 
also Velez v. West, 11 Vet. App. 148, 156- 57 (1998).

The Board is cognizant of the Veteran's honorable service and 
notes that it empathizes with the appellant's plight and her 
loss.  Nonetheless, the controlling law and regulation are 
quite specific, and there is no legal authority for any 
exception in the present case.  The Board is bound by the law 
and is without authority to grant benefits on an equitable 
basis.  See 38 U.S.C.A. §§ 503, 7104; Harvey v. Brown, 6 Vet. 
App. 416, 425 (1994).  Having carefully reviewed the evidence 
of record, and in light of the laws and regulations, the 
Board concludes that the offset of $302,500, awarded under 38 
U.S.C.A. § 1151 against DIC benefits was proper and the claim 
must be denied as a matter of law.  Sabonis v. Brown, 6 Vet. 
App. 426, 430 (1994).

The appellant's claim to have DIC paid without recoupment of 
tort settlement is a matter of law; in this case, there is no 
legal entitlement to the claimed benefit as a matter of law.  
The notice provisions and duty to assist provisions are not 
applicable to a claim where the claim cannot be substantiated 
because there is no legal basis for the claim or because 
undisputed facts render the claimant ineligible for the 
claimed benefit.  See VAOPGCPREC 5-2004 (June 23, 2004).  
There is no reasonable possibility that any further 
assistance would aid the appellant in substantiating her 
claim.  See Sabonis v. Brown, 6 Vet. App. 426, 430 (1994).  
Accordingly, it is not prejudicial for the Board to decide 
the issue before it without further development.  Bernard v. 
Brown, 4 Vet. App. 384 (1993).


ORDER

The offset amount of $302,500.00, awarded under 38 U.S.C.A. § 
1151 against the appellant's DIC benefits was proper, and the 
appeal is denied.



____________________________________________
C. CRAWFORD
Veterans Law Judge, Board of Veterans' Appeals




 Department of Veterans Affairs