Citation Nr: 1309726 Decision Date: 03/22/13 Archive Date: 04/01/13 DOCKET NO. 10-23 299 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in St. Petersburg, Florida THE ISSUE Whether withholding payment of VA disability compensation to recoup amounts paid for 164 days of fiscal year 2008 was proper. REPRESENTATION Appellant represented by: The American Legion WITNESS AT HEARING ON APPEAL Veteran ATTORNEY FOR THE BOARD James G. Reinhart, Counsel INTRODUCTION The Veteran served on active duty from August 1978 to December 1978, from January 1991 to October 1991, from November 1991 to May 1992, and from October 2004 to January 2008. This matter comes to the Board of Veterans' Appeals (Board) on appeal from a July 2009 decision of the Department of Veterans Affairs (VA) Regional Office (RO) in St. Petersburg, Florida. In December 2011, the Veteran testified before the undersigned Veterans Law Judge at a personal hearing. A transcript of that hearing is associated with the claims file. FINDINGS OF FACT 1. The Veteran was not paid VA disability compensation benefits concurrently with payment for military training or active duty for any period during fiscal year 2008 prior to February 1, 2008. 2. The Veteran was not paid VA disability compensation benefits concurrently with payment for military training or active duty for any period during fiscal year 2008 after February 29, 2008. 3. The Veteran was paid VA disability compensation benefits concurrently with payment for military training days that occurred during the period starting on February 1, 2008 and ending on February 29, 2008. 4. During the period between August 1, 2009 and January 15, 2010, VA reduced the Veteran's payment for disability compensation benefits to recoup 164 days of compensation paid during fiscal year 2008. CONCLUSION OF LAW Withholding payment of VA compensation benefits to recoup money due to concurrent payment of VA compensation benefits and military pay for active duty or training was improper to the extent that funds were withheld to recoup payment for any period of fiscal year 2008 other than for payment of VA compensation benefits concurrent with payment for days of military training during the period starting on February 1, 2008 and ending on February 29, 2008. 38 U.S.C.A. §§ 5111(a)(1), (c)(2) (West 2002); 38 C.F.R. §§ 3.31(a), (c), 3.700(a)(i), (iii) (2012). REASONS AND BASES FOR FINDINGS AND CONCLUSION During the hearing before the undersigned, the Veteran clarified his disagreement as to the RO's decision to withhold payment of compensation benefits to recoup 164 days of monetary benefits. He agreed that it was proper for VA to recoup the money paid to him for days in the month of February 2008 for which he received VA compensation pay and military pay for training days. Board hearing transcript at 7. He disagreed with the RO's decision to withhold payment to recoup VA compensation benefits payment for any other period during fiscal year 2008. Id. Here, the Board agrees with the Veteran and grants his appeal consistent with what he contended during the hearing. The Board recognizes that VA has a duty to notify and a duty to assist claimants in substantiating a claim for VA benefits. 38 U.S.C.A. §§ 5103, 5103A (West 2002 & Supp. 2012); 38 C.F.R. §§ 3.159, 3.326(a) (2012). It also recognizes that the Veterans Law Judge who conducts a hearing has duties under 38 C.F.R. § 3.103(c)(2) (2012). As the Board is granting in full the benefit sought on appeal, even if VA, including the Veterans Law Judge who conducted the December 2011 hearing, failed to meet those duties such failure did not result in prejudice to the Veteran and any such failure is harmless error. For this reason, no further discussion is necessary as to whether VA, including the undersigned, fulfilled those. Notwithstanding section 38 U.S.C.A. § 5110 (the provision addressing assignment of effective dates for awards) or any other provision of law and except 38 U.S.C.A. § 5111(c)(2), payment of monetary benefits based on an award of compensation may not be made to an individual for any period before the first day of the calendar month following the month in which the award or increased award became effective as provided under section 38 U.S.C.A. § 5110 or such other provision of law. 38 U.S.C.A. § 5111(a)(1). The exception at 38 U.S.C.A. § 5111(c)(2) is for temporary increases due to hospitalization or treatment and is not applicable in the instant case. Regardless of VA regulations concerning effective dates of awards, and except for specific exclusions listed at 38 C.F.R. § 3.31(c), payment of monetary benefits based on original awards of compensation may not be made for any period prior to the first day of the calendar month following the month in which the award became effective. 38 C.F.R. § 3.31(a). However, beneficiaries will be deemed to be in receipt of monetary benefits during the period between the effective date of the award and the date payment commences for the purpose of all laws administered by the Department of Veterans Affairs except that nothing in this section will be construed as preventing the receipt of retired or retirement pay prior to the effective date of waiver of such pay in accordance with 38 U.S.C. 5305. Pension, compensation, or retirement pay on account of his or her service will not be paid to any person for any period for which he or she receives active service pay. 38 C.F.R. § 3.700(a)(1)(i). Reservists may waive their pension, compensation, or retirement pay for periods of field training, instruction, other duty or drills. 38 C.F.R. § 3.700(a)(1)(iii). A claim for service connected benefits was filed by the Veteran on January 31, 2008. In a May 2008 rating decision, the RO granted service connection for three disabilities with a combined rating for compensation purposes of 20 percent, effective January 27, 2008 (the date following his last day of active duty). It informed him that his payment start date was February 1, 2008. This is consistent with the statutory language that "payment of monetary benefits based on an award of compensation may not be made to an individual for any period before the first day of the calendar month following the month in which the award or became effective. See 38 U.S.C.A. § 5111(a)(1). The Board therefore concludes that February 1, 2008, and no earlier, was the beginning of the period for which payment of monetary benefits was allowed and for which they were paid. In the July 2009 decision on appeal, the RO determined that the compensation payments would be reduced for 164 days that it had determined the Veteran received drill pay during fiscal year 2008. It informed him payment part or all of his total VA benefit pay would be withheld starting on August 1, 2009 and ending on January 15, 2010 to recoup the amount paid for the 164 days. Of record is a VA Form 21-8951 documenting that Defense Manpower Data Center (DMDC) records indicated that the Veteran received training pay for 164 days in fiscal year 2008. The Veteran signed that form in May 2009. He indicated that he wanted to waive VA benefits for the days indicated in order to retain his training pay but also indicated that he believed the number of training days to be incorrect and that the number should be 152. Only the Veteran's signature is on that form. There is no signature by his unit commander or designee. The Board notes that 152 days is the number of days from October 1, 2007 to February 29, 2008. It is also noted that the Veteran has since clarified his disagreement. In a May 2009 letter, the RO informed the Veteran that it could not accept his reported 152 days without the signature of his commanding officer or designee and that the RO proposed to reduce his monthly benefit payments for the 164 days that he received training pay. It effectuated that proposal in the July 2009 decision on appeal; albeit with different starting and ending dates for the reduction. The Veteran contends that he was only paid VA disability compensation benefits for the period beginning on February 1, 2008 and therefore should only have had his pay withheld for concurrent payments of VA compensation benefits and military training days for periods on or after that date. He contends that VA withholding of his disability compensation pay to recoup 164 days of compensation pay for fiscal year 2008 is incorrect because he only received concurrent pay for dates between February 1, 2008 and February 29, 2008. After receiving his notice of disagreement, the RO sent a letter to the Veteran in March 2010. It stated that his DD 214 showed that he was on active duty in fiscal year 2008 from October 1, 2007 through January 26, 2008; that he was granted service connected VA compensation with a payment start date of February 1, 2008; and that he reported that he retired from the U.S. Army Reserve on February 29, 2008, transferring to the U.S. Army Reserve on March 1, 2008. This letter also stated that VA had adjusted his VA benefits on June 28, 2009 to account for the full 164 days of training reportedly paid to him in Fiscal Year 2008. Actually, what the Veteran stated in his May 2009 VA Form 21-4138 was that he was transferred to the U.S. Army Retired Reserve on March 1, 2008, that he did not receive any military pay for periods during fiscal year 2008 later than February 29, 2008, and that he would not be eligible to collect retirement benefits for his military service until February 2012. The DD 214 documents a period during which the Veteran entered active duty on October 1, 2004 and was separated on January 26, 2008 for net active service during such period of 3 years, 3 months, and 26 days. This is consistent with the Veteran's testimony and with a document titled Pay Earned in FY 2008 that is associated with the claims file. That document shows dates of pay as well as retirement points earned. A DRO Conference report documents that an informal hearing was held in May 2010. The agreed upon actions were "audit for monies paid, and determination based on withholding of monies to veteran with the amount of recoupment." Filed behind that report in the claims file is the document titled Pay Earned in FY 2008. That document indicates that the Veteran was in active status, attending active duty for training, from October 1, 2007 to January 26, 2008. It also indicates that he was on inactive status, in the performance of inactive duty for training on January 29-31, 2008, inclusive and for all dates between February 1 and February 29, 2008, inclusive, except for the following days: February 2, 3, 9, 10, 16, 17, 18, 23, and February 24. A DRO Conference Report dated in November 2009 summarizes that a completed audit of funds paid was completed in July 2010 and supported that "no retro is due." This states that the Veteran needed to go through Defense Finance and Accounting Services (DFAS) to support any documentation in regards to concurrent payments, or drill days to which he believes he is entitled. The audit dated in July 2010 is of record. That audit however establishes only VA's findings as to the amount paid and the amount due. It does not establish the particular dates of concurrent payments. The Veteran expressed his argument at the hearing before the undersigned. That argument is based on three statements that he asserts as fact. First, that he was not paid VA compensation benefits for any period prior to February 1, 2008. Second, that he had no training (drill) days after February 29, 2008. Third, that VA has recouped money for periods of military pay prior to February 1, 2008. Fourth, that he only received concurrent payments of military pay and VA compensation benefits pay for days during the period beginning February 1, 2008 and ending February 29, 2008. It is a matter of public knowledge that the Federal government's fiscal year 2008 began on October 1, 2007 and ended on September 30, 2008. The document showing retirement points between October 1, 2007 and February 29, 2008 shows that the type of retirement points were all for training. The number of calendar days from October 1, 2007 to February 2, 2008 is 152. Given that it is undisputed that the Veteran was receiving military pay from October 1, 2007 to January 26, 2008, the bulk of the number of days of training pay that the DMDC reported falls before February 1, 2008. This is consistent with the Veteran's argument. There is no evidence of record that contradicts what the Veteran has reported in his testimony. The undersigned observed the Veteran during the hearing and finds that his testimony was credible. (CONTINUED ON NEXT PAGE) Based on the discussion provided above, the Board concludes that the Veteran's appeal must be granted to the extent that VA withheld his disability compensation pay to recoup monies for more than the training days for which he was paid beginning on February 1, 2008 and ending on February 29, 2008 and concurrently paid VA compensation benefits. VA must therefore reimburse the Veteran the amounts withheld on account of any period other than that resulting from pay for military training days between February 1, 2008 and February 29, 2008. ORDER Pay the Veteran for compensation benefits that were withheld due to payment of military pay days in fiscal year 2008 other than the amount withheld for days for which he was concurrently paid VA compensation benefits and paid for military training days during the period beginning on February 1, 2008 and ending on February 29, 2008. ____________________________________________ MICHAEL A. HERMAN Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs