Citation Nr: 1324171	
Decision Date: 07/30/13    Archive Date: 08/07/13

DOCKET NO.  10-00 440	)	DATE
	)
	)

On appeal from the
Department of Veterans Affairs Regional Office in Milwaukee, Wisconsin


THE ISSUES

1.  Whether the Veteran is competent to handle disbursement of Department of Veterans Affairs (VA) benefits.

2.  Whether the recoupment of severance pay was proper.


REPRESENTATION

Appellant represented by:	Disabled American Veterans


ATTORNEY FOR THE BOARD

James R. Siegel, Counsel



INTRODUCTION


The Veteran served on active duty from May 1982 to December 1988.

By letter dated April 2009, the Regional Office (RO) notified the Veteran that the withholding of his VA compensation benefits was proper.  The Veteran filed a timely appeal to the Board of Veterans' Appeals (Board).

In February 2011, a statement of the case addressing claims for an increased rating for a psychiatric disability, gastritis and reflux esophagitis, Osgood-Schlatter's disease of the left knee and Osgood-Schlatter's disease of the right knee, as well as a claim for an earlier effective date for an award of service connection for depression was issued.  Since the Veteran did not submit a timely substantive appeal, these matters are not before the Board. 

In addition, the Veteran indicated on his substantive appeal that he wanted to testify at a hearing before the Board.  A video conference hearing was scheduled for October 2011, but the Veteran failed to report for it.  His request for a hearing, accordingly, is deemed to have been withdrawn.

The issue of whether the Veteran is competent is addressed in the REMAND portion of the decision below and is REMANDED to the RO via the Appeals Management Center (AMC), in Washington, DC.


FINDING OF FACT

The Veteran received severance pay in the amount of $23,230.80 upon his discharge from service in December 1988; this amount was deducted from his VA compensation benefits.


CONCLUSION OF LAW

The recoupment of severance pay in the amount of $23,230.80 by withholding the Veteran's VA disability compensation was proper.  10 U.S.C.A. § 1174; (West 2002); 38 C.F.R. § 3.700 (2012).


REASONS AND BASES FOR FINDINGS AND CONCLUSION

Veterans Claims Assistance Act

The Veterans Claims Assistance Act (VCAA) redefined VA's duty to assist the appellant in the development of a claim.  VA regulations for the implementation of the VCAA were codified as amended at 38 C.F.R. §§ 3.102, 3.156(a), 3.159, and 3.326(a) (2012).

In addition, the Board points out that there are some claims to which VCAA does not apply.  Livesay v. Principi, 15 Vet. App. 165, 178 (2001).  One such claim is where, as here, there is no dispute as to the facts, and the law is dispositive.  Mason v. Principi, 16 Vet. App. 129.  The United States Court of Appeals for Veterans Claims (Court) has held that the VCAA does not affect matters on appeal when the question is limited to statutory interpretation.  See Dela Cruz v. Principi, 15 Vet. App. 143 (2001).  Thus, the Board concludes that no further action is necessary under the VCAA, since all evidence needed to adjudicate the claim is of record.

Analysis

Applicable law mandates that a member who has received separation pay under 10 U.S.C.A. § 1174  , or severance pay or re-adjustment pay under any other provision of law, based on service in the armed forces shall not be deprived, by reason of receipt of such separation pay, severance pay, or re-adjustment pay, of any disability compensation to which he is entitled under the law administered by VA, but there shall be deducted from that disability compensation an amount equal to the total amount of separation pay, severance pay, and re-adjustment pay received. 10 U.S.C.A. § 1174(h)(2)  .

This statute is implemented by VA in 38 C.F.R. § 3.700(a)(3) which, in pertinent part, states that, "[w]here the disability or disabilities found to be service-connected are the same as those upon which disability severance pay is granted, or where entitlement to disability compensation was established on or after September 15, 1981, an award of compensation will be made subject to recoupment of the disability severance pay." 38 C.F.R. § 3.700(a)(3).

When severance pay is made on or before September 30, 1996, as is the case here, "VA will recoup from disability compensation an amount equal to the total amount of the severance pay" without consideration of the amount withheld for Federal income tax.  Id. 

With regard to compensation benefits a veteran is receiving for the disability or disabilities for which severance pay was granted, the regulation provides that "following the initial determination of the degree of disability[,] recoupment shall not be at a monthly rate in excess of the monthly compensable rate payable for that degree of disability."  Id. However, the regulations further provide that, where service connection compensation benefits are established on or after September 15, 1981, VA "must recoup from that disability compensation" an amount equal to the severance pay the veteran received.  Id.

The Board notes that both the VA General Counsel and the United States Court of Appeals for Veterans Claims have addressed the issue of recoupment of military severance pay.  See VAOPGCPREC 14-92 (holding that section 1174 clearly and unambiguously requires that the total amount of any severance payment shall be recouped from VA disability compensation for a disability incurred prior to the date of receipt of the payment); see also Sabonis v. Brown, 6 Vet. App. 426, 428, 430   (1994), appeal dismissed, 56 F.3d 79   (Fed. Cir. 1995) (the meaning of the recoupment provision of 10 U.S.C.A. § 1174 is unambiguous).

A Physical Evaluation Board in August 1988 shows it was determined the Veteran was unfit for service due to physical disability.  The unfitting conditions were patellofemoral syndrome and Osgood-Schlatter's disease of the right knee.

By rating action dated March 1989, the RO granted service connection for Osgood-Schlatter's disease of the right knee, and assigned a 10 percent evaluation for it.

In a letter dated March 1989, the RO informed the Veteran he had been awarded VA benefits, but it was subject to the recoupment of the $23,230.80 he had received.  He was further notified that when the amount had been recouped, his full award would be paid.  

In a statement received in November 2008, the Veteran requested reimbursement of the amount of his severance pay that was recouped.  

The Board finds that the law, as enacted by Congress and implemented by VA regulation, has been correctly applied in this case.  The recoupment of the amount of disability severance pay from payments of VA disability compensation benefits, is required by law. 10 U.S.C.A. § 1174; 38 C.F.R. § 3.700(a)(3).  The Board is without authority to grant benefits or, in this particular case preclude withholding them, as a matter of law.  See 38 U.S.C.A. § 7104; Harvey v. Brown, 6 Vet. App. 416, 425 (1994).  Thus, as VA does not have any discretion in the recoupment of the separation pay, the claim must be denied for lack of legal merit.  Sabonis, 6 Vet. App. 426.



ORDER

Recoupment of severance pay in the amount of $23,230.80 was proper.  The appeal is denied.  


REMAND

By rating action dated March 2013, the RO found the Veteran was not competent to handle the disbursement of VA benefits.  He submitted a notice of disagreement with this determination the following month, but a statement of the case has not been issued.  Where a statement of the case has not been provided following the timely filing of a notice of disagreement, a remand, not a referral is required by the Board.  Manlincon v. West, 12 Vet. App. 238 (1999).  This matter must, accordingly, be remanded for issuance of a statement of the case.  

Accordingly, the case is REMANDED for the following action:

The RO should issue a statement of the case addressing the issue of whether the Veteran is competent to handle the disbursement of VA benefits.  The appellant and his representative should be afforded the appropriate period of time to respond.  This issue should be returned to the Board only if the Veteran or his representative submits a timely substantive appeal.

The appellant has the right to submit additional evidence and argument on the matter or matters the Board has remanded.  Kutscherousky v. West, 12 Vet. App. 369 (1999).

This claim must be afforded expeditious treatment.  The law requires that all claims that are remanded by the Board of Veterans' Appeals or by the United States Court of Appeals for Veterans Claims for additional development or other appropriate action must be handled in an expeditious manner.  See 38 U.S.C.A. §§ 5109B, 7112 (West Supp. 2012).




______________________________________________
ALAN S. PEEVY
Veterans Law Judge, Board of Veterans' Appeals


Department of Veterans Affairs