Citation Nr: 18144315 Decision Date: 10/24/18 Archive Date: 10/24/18 DOCKET NO. 15-22 882A DATE: October 24, 2018 ORDER VA withholding of dependency and indemnity compensation (DIC) payments in the amount of $150,000 until November 1, 2017, due to the offset of a tort claim settlement was improper; the correct amount of the withholding of DIC payments is $75,000. The appeal is granted. FINDING OF FACT The appellant, in an individual capacity, received $75,000 due to a tort claim settlement under 28 U.S.C. § 2672. CONCLUSIONS OF LAW 1. VA withholding of the full DIC payments in the amount of $150,000 until November 1, 2017, due to the offset of a tort claim settlement was improper. 28 U.S.C. § 2672; 38 U.S.C. § 1151; 38 C.F.R. § 3.362(c). 2. The correct amount of withholding of DIC payments for the appellant due to the offset of a tort claim settlement is a total amount of $75,000. 28 U.S.C. § 2672; 38 U.S.C. § 1151; 38 C.F.R. § 3.362(c). REASONS AND BASES FOR FINDING AND CONCLUSIONS The Veteran served on active duty from November 1965 to October 1966. He died in October 2004, and the appellant is his surviving spouse. This matter comes to the Board of Veterans’ Appeals (Board) on appeal from an administrative decision issued in November 2014 by a Department of Veterans Affairs (VA) Regional Office. The appellant testified at a Board hearing before the undersigned Veterans Law Judge in April 2017. A transcript of the hearing is of record. At such time, she submitted additional evidence in support of her appeal. 38 U.S.C. § 7105(e)(1). Propriety of VA withholding of DIC payments in the amount of $150,000 until November 1, 2017, due to the offset of a tort claim settlement. By way of background, the appellant is in receipt of DIC benefits under 38 U.S.C. 1151, effective October 1, 2004. In December 2006, a Stipulation for Compromise and Settlement and Release of Federal Tort Claims Act pursuant to 28 U.S.C. § 2672 (Settlement) awarded a sum of $150,000 to multiple claimants, to include the appellant. Subsequently, VA notified the appellant of the withholding of full DIC payments in the amount of $150,000 due to the tort claim settlement, with a full recoupment date of November 1, 2017. At her April 2017 Board hearing and in documents of record, the appellant asserts the withholding of full DIC payments in the amount of $150,000 was improper as she personally only received $75,000 of the tort claim settlement amount. In this case, the Board finds the withholding of DIC payments in the amount of $150,000 until November 1, 2017, due to the tort claim settlement was improper. In pertinent part, 38 C.F.R. § 3.362(c) provides that, if a veteran’s death is the basis of a settlement or compromise under 28 U.S.C. § 2672 entered on or after December 1, 1962, the amount to be offset under 38 U.S.C. § 1151(b) from any DIC awarded under 38 U.S.C. § 1151(a) to a survivor is only the amount of the judgment, settlement, or compromise representing damages for the veteran’s death that the survivor receives in an individual capacity or as distribution from the decedent veteran’s estate of sums included in the judgment, settlement, or compromise to compensate for harm suffered by the survivor, plus the survivor’s proportional share of attorney fees (emphasis added). Additionally, the December 2006 Settlement includes the clause that “should the surviving spouse apply for and receive 38 U.S.C. § 1151 benefits, it is expressly understood and agreed that no benefits under § 1151 will be paid until the aggregate amount of § 1151 benefits equals $75,000 which is the amount attributable to the appellant’s distribution under the settlement.” Here, the Settlement clause clearly demonstrates the appellant received only $75,000 of the total settlement amount and orders that § 1151 benefits would not be paid until the aggregate withholding of § 1151 benefits was equal to such specific amount. In addition, the Board finds the language in 38 C.F.R. § 3.362(c) explicitly holds that the offset of DIC payments is limited to only the amount of the settlement the survivor receives in an individual capacity (emphasis added). The Board also notes that 38 C.F.R. § 3.362(b) states that the amount offset should include the survivor’s proportional share of attorney fees, which would appear to equal the Settlement amount of $75,000, plus the attorney fees paid by the appellant. However, the Settlement shows any attorney’s fees owed by the claimant would be paid out of the settlement amount. Therefore, the withholding amount of $75,000, as dictated by the Settlement, is correct and in accordance with 38 C.F.R. § 3.362(c) as the appellant received the Settlement amount minus her portion of attorney fees. In conclusion, the Board finds VA withholding of DIC payments in the amount of $150,000 until November 1, 2017, due to the offset of a tort claim settlement was improper, and the correct amount of the withholding of DIC payments is $75,000 in accordance with 38 C.F.R. § 3.362(c) and the Settlement. Therefore, the appeal is granted. A. JAEGER Veterans Law Judge Board of Veterans’ Appeals ATTORNEY FOR THE BOARD M. M. Celli, Counsel