Citation Nr: 1308960	
Decision Date: 03/15/13    Archive Date: 03/25/13

DOCKET NO.  09-35 339	)	DATE
	)
	)

On appeal from the
Department of Veterans Affairs Regional Office in Chicago, Illinois


THE ISSUE

Whether the recoupment of separation pay through withholding of disability compensation payments is valid.

(The issues of entitlement to an earlier effective date of service connection for and entitlement to an increased evaluation for hypertension are addressed in a separate Board decision.)


REPRESENTATION

Appellant represented by:	Christopher Taravella, Attorney-At-Law


WITNESS AT HEARING ON APPEAL

Appellant


ATTORNEY FOR THE BOARD

W.H. Donnelly, Counsel


INTRODUCTION

The Veteran served on active duty with the United States Navy from July 1989 to March 1998.

These matters come before the Board of Veterans' Appeals (Board) on appeal from a February 2006 notification letter regarding rating decision dated the same month by a Regional Office (RO) of the United States Department of Veterans Affairs (VA), which included information on recoupment of separation pay.

The Veteran testified at a December 2012 hearing held before the undersigned Veterans Law Judge via videoconference from the Chicago, Illinois, RO.  A transcript of the hearing is associated with the Veteran's electronic file as maintained as part of the Virtual VA system; all electronic files have been reviewed in connection with the appeal.


FINDING OF FACT

The Veteran served a single period of active duty, at the conclusion of which she received separation pay.


CONCLUSION OF LAW

The criteria for recoupment of separation pay through withholding of disability compensation payments are met.  10 U.S.C.A. § 1147 (West 2002); 38 C.F.R. § 3.700 (2012).



REASONS AND BASES FOR FINDINGS AND CONCLUSION

VA's Duties to Notify and Assist

VA has a duty to notify and assist claimants in substantiating a claim for VA benefits.  38 U.S.C.A. §§ 5100, 5102, 5103, 5103A, 5107, 5126; 38 C.F.R. §§ 3.102, 3.156(a), 3.159 and 3.326(a).  

The pertinent facts in this case are not in dispute and the law is dispositive. Therefore, the duties to notify and assist do not apply.  See generally Dela Cruz v. Principi, 15 Vet. App. 143 (2001); see also Mason v. Principi, 16 Vet. App. 129 (2002).  Furthermore, the issue does not arise from the receipt of a "substantially complete application" from the Veteran under 38 U.S.C.A. § 5103(a), but rather, arises by action of law under 10 U.S.C.A. § 1174.  Thus, the duties do not apply to this appeal, and further discussion of compliance with such is not required. Accordingly, the Board will proceed to a decision on the merits of the case.

Recoupment

The Veteran's DD Form 214 states that she was involuntarily discharged due to a failure to maintain her weight within service physical readiness requirements.  MILPERSMAN 3620260.  The form also states she was paid separation pay in the amount of $7,383.56; the Veteran has stated this was for "transitioning" out of the military.

Statutes provide that when a service member is involuntarily discharged after serving six or more years, but less than 20, she is entitled to separation pay, which is calculated based on time in service and current pay rate.  10 U.S.C.A. § 1174(b). Only enlisted members who have completed an initial term of enlistment are eligible for separation pay.  10 U.S.C.A. § 1174(e)(2)(B).

The law also provides that payment of separation pay must be coordinated with disability compensation.  When a service member who receives separation pay is also found entitled to disability compensation, the separation pay is deducted from the compensation, less any Federal taxes withheld from the separation pay.  Regulations echo the statute, and distinguish instances where, as here, entitlement began after September 1981.  10 U.S.C.A. § 1174(h)(2); 38 C.F.R. § 3.700(a)(2)(iii).

The Veteran, through her attorney, has argued that her separation pay falls within an exception to these recoupment rules.  In the case of a service member who has multiple periods of active duty, no recoupment of severance pay from an earlier period is made from disability compensation arising out of a later period of service.  10 U.S.C.A. § 1174(h)(2); 38 C.F.R. § 3.700(a)(2)(iv).

The argument fails, however.  The Veteran's situation simply does not match that reflected in the statute and regulation.  The Veteran served on active duty from July 1989 to March 1998; at several points during that period the Veteran "re-upped" and extended her period of enlistment, as she detailed in her April 2008 Declaration and at the December 2012 hearing.  She argues that this constitutes multiple period of service.  The Board disagrees.  The statute and regulations refer to periods of duty and service, and not to periods of enlistment.  This is made clear by 10 U.S.C.A. § 1174(e)(2)(B); the statute distinguishes enlistment obligations from service periods.  The Veteran served continually on active duty from 1989 to 1998, without break.  This is one period, regardless of re-enlistment during it.  Both the separation pay and the disability compensation therefore are associated with the same service period, and recoupment is required.  Majeed v. Nicholson, 19 Vet. App. 525 (2006).

Further, even if the Board accepts that the Veteran did have multiple periods of service based on her re-enlistments, the statute and regulation do not apply.  Recoupment is barred only when separation pay is paid at the end of an earlier period, and then in a later period, the Veteran becomes entitled to compensation benefits.  The Veteran has argued the exact opposite of this situation, stating that disability entitlement arose during her first enlistment in 1990, and separation pay arose out of her last enlistment in 1998.  The exception applies only where the separation pay comes first, then disability compensation.  
 
In short, the law specifically proscribes receipt of both separation pay and disability compensation absent a very specific circumstance which is not present here.  Recoupment of the separation pay is valid.


ORDER

Recoupment of separation pay through withholding of disability compensation payments is valid, and the appeal is denied.



____________________________________________
MICHAEL A. PAPPAS
Veterans Law Judge, Board of Veterans' Appeals

Department of Veterans Affairs