Citation Nr: 1422983 Decision Date: 05/21/14 Archive Date: 05/29/14 DOCKET NO. 10-32 907 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in St. Petersburg, Florida THE ISSUE Whether the recoupment of disability severance pay through withholding of VA disability compensation benefits in the amount of $619.40 beginning on July 1, 2008 was proper. REPRESENTATION Appellant represented by: The American Legion ATTORNEY FOR THE BOARD Dan Brook, Counsel INTRODUCTION The appellant is a Veteran who served on active duty from September 1983 to August 1984. This matter comes before the Board of Veterans' Appeals (Board) on appeal from a September 2008 rating decision of the St. Petersburg, Florida Regional Office (RO) of the Department of Veterans' Affairs (VA). FINDINGS OF FACT 1. At the time of his separation from service, the Veteran received $1337.40 in disability severance pay as a result of his left rectus femoris muscle disability. 2. From August 1, 1984 to June 30, 1985, as a result of the Veteran being otherwise entitled to receive compensation at the 10 % rate for the left rectus femoris muscle disability, VA recouped $718 of this severance pay. 3. As the Veteran's rating for left rectus femoris muscle disability was reduced to 0% effective July 1, 1985, VA was not able to begin recouping the additional $619.40 in severance pay until July 1, 2008 when the Veteran again became otherwise entitled to receive compensation at the 10% rate for the left rectus femoris muscle disability. CONCLUSION OF LAW The recoupment of disability severance pay by withholding VA disability compensation benefits in the amount of $619.40 beginning on July 1, 2008 was proper. 10 U.S.C.A. § 1174 (West 2002 & Supp. 2013); 38 C.F.R. § 3.700 (2013). REASONS AND BASES FOR FINDINGS AND CONCLUSION I. Duties to Notify and Assist The pertinent facts in this case are not in dispute and the law is dispositive. Consequently, there is no additional evidence that could be obtained to substantiate the claim, and no further action is required to comply with the Veterans Claims Assistance Act or the implementing regulation. See Manning v. Principi, 16 Vet. App. 534, 542 (2002); VAOPGCPREC 5-2004 (June 23, 2004). II. Analysis Generally, a service 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). Where the disability or disabilities found to merit service-connected compensation 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. The standard of proof to be applied in decisions on claims for Veterans' benefits is set forth in 38 U.S.C.A. § 5107 (West 2002). A claimant is entitled to the benefit of the doubt when there is an approximate balance of positive and negative evidence. See also 38 C.F.R. § 3.102. When a claimant seeks benefits and the evidence is in relative equipoise, the claimant prevails. See Gilbert v. Derwinski, 1 Vet. App. 49 (1990). The preponderance of the evidence must be against the claim for benefits to be denied. See Alemany v. Brown, 9 Vet. App. 518 (1996). With regard to compensation benefits a veteran is receiving for the disability or disabilities for which severance pay was granted, 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, 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 evidence shows that the Veteran suffered an injury to his left rectus femoris muscle during service. As result, he was found to be physically unfit to continue service and was medically separated from service. His DD-214 indicates that he was found entitled to disability severance pay in the amount of $1337.40. A military pay voucher shows that he received this amount of severance pay in April 1984. In a June 1984 rating decision, the Veteran was granted service connection for impairment of the left rectus femoris muscle and was assigned a 10 percent rating effective April 6, 1984. He began receiving monthly disability compensation in the amount of $64 per month effective May 1, 1984. However, VA subsequently (i.e. effective August 1, 1984) began withholding this payment in order to recoup the amount of severance pay the Veteran had received. Effective December 1, 2004, the amount of withholding/recoupment increased to $66 per month, as this corresponded with the increased amount of compensation payable for the 10% disability rate effective as of that date. Then, in an April 1985 rating decision, VA found that the Veteran's left rectus femoris muscle disability had improved and assigned a noncompensable rating for the disability effective July 1, 1985. As a result, VA stopped recouping the Veteran's severance pay effective July 1, 1985 (as he was not receiving any disability compensation from which such pay could be withheld). On a July 1985 notice of benefit payment transaction, it was noted that as of July 1, 1985, there was still a balance of 619.40 in severance pay that had not been recouped (as $718 in severance pay had been recouped from August 1, 1984 to June 30, 1985). In June 2008, the Veteran filed a claim for increase for the left rectus femoris disability and in the September 2008 rating decision, the RO granted a higher 10 percent rating for the disability effective June 18, 2008. The RO then notified the Veteran that although he was entitled to receive $117 per month in compensation effective July 1, 2008, VA was withholding this monthly amount until the rest of his severance pay could be recouped. As the Veteran was awarded severance pay for the left rectus femoris muscle disability prior to September 30, 1996, VA must recoup the entire balance of that severance pay from the compensation he receives for this disability without consideration of the amount withheld for Federal income tax. 38 C.F.R. § 3.700(a)(3). VA began this recoupment effective August 1, 1984, after the Veteran began receiving compensation for the disability pursuant to the April 1984 rating decision. However, because the monthly rate of this compensation was only $64 at that time, increasing only to $66 effective December 1, 1984, not all (i.e. only $718) of the severance pay was recouped prior to the disability rating being reduced to 0% effective July 1, 1985. Accordingly, VA was required to recoup the remaining $619.40 in severance pay effective July 1, 2008, when the Veteran was again otherwise entitled to receive compensation for the left rectus femoris muscle disability at the 10% rate. Id. In his May 2009 notice of disagreement, the Veteran essentially contended that all of his severance pay was withheld from his compensation in the months following the initial granting of the 10 percent disability rating in 1984. However, as explained above, the record clearly shows that there was a remaining balance of $619.40 that was not recouped. Also, in his subsequent Form 9, the Veteran contended that his rectus femoris muscle disability did not actually improve in 1985 so that he should have continued receiving benefits at the 10 percent rate from July 1, 1985 to June 30, 2008, rather than receiving a rating reduction for this time frame, resulting in no accompanying disability compensation. This latter argument is not pertinent to the current issue on appeal (i.e. whether the withholding of severance pay was proper). If the Veteran wishes to make a separate claim for clear and unmistakable error in the April 1985 rating decision that reduced the rating for his left rectus femoris muscle disability to 0%, he should file such a claim with the agency or original jurisidiction (i.e. the RO). See 38 C.F.R. § 3.105(a). In sum, application of the pertinent regulations to the evidence of record clearly shows that VA was required to continue to recoup the additional $619.40 in disability severance pay beginning July 1, 2008 when the Veteran again began receiving compensation at the 10 percent rate for his service connected left rectus femoris muscle disability. Accordingly, the preponderance of the evidence is against the Veteran's claim and it must be denied. Alemany, 9 Vet. App. 518 (1996). ORDER Recoupment of disability severance pay through withholding of VA disability compensation benefits in the amount of $619.40 beginning on July 1, 2008 was proper and the Veteran's appeal is denied. ____________________________________________ KELLI A. KORDICH Acting Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs