Citation Nr: 18148514 Decision Date: 11/07/18 Archive Date: 11/07/18 DOCKET NO. 15-04 443 DATE: November 7, 2018 ORDER The Department of Veterans Affairs (VA) Regional Office (RO) having acted properly in withholding the Veteran’s compensation benefits to recoup his separation pay, this appeal is denied. FINDINGS OF FACT 1. The Veteran received separation pay in November 1991, in the gross amount of $5,486.31. 2. In an August 2011 rating decision, the RO increased the noncompensable ratings assigned the Veteran’s service-connected left femur and left ankle disabilities to 10 percent, entitling the Veteran to VA compensation benefits. 3. The RO withheld the Veteran’s VA compensation benefits until his separation pay of $5,486.31 was recouped. CONCLUSION OF LAW As a matter of law, the withholding of the Veteran’s VA compensation benefits to recoup his separation pay was proper. 10 U.S.C. § 1174; 38 C.F.R. § 3.700(a). REASONS AND BASES FOR FINDINGS AND CONCLUSION Whether VA acted properly in withholding the Veteran's compensation benefits to recoup his separation pay The Veteran served on active duty from December 1983 to November 1991. According to his DD Form 214, on separation from service in November 1991, he received “severance pay” in the gross amount of $5,486.31. Following discharge, the Veteran filed claims for service connection, which the RO granted in April 1992, assigning the disabilities noncompensable ratings. In August 2011, the RO increased the noncompensable ratings assigned the Veteran’s service-connected left femur and left ankle disabilities to 10 percent, entitling the Veteran to VA compensation benefits. In an August 2011 letter notifying the Veteran of the recent award, the RO informed him that, because he had received “Disability Severance Pay” of $5,486.31 from the military on separation, the RO would be withholding his VA compensation benefits to recoup such pay. The RO subsequently took such action, which the Veteran is challenging on appeal. The Veteran alleges VA acted improperly by taking such action, arguing that the pay he received on separation had nothing to do with a medical condition/disability, a fact his DD Form 214 reportedly supports. He refers to the separation code of “JBK”, noted therein, contending that it shows he received the pay for mustering out, based on longevity in a career program. He explains that, at that time, the Government was cutting back on troop strength and there is no indication in his DD Form 214 that he was separated based on a medical condition. He acknowledges having undergone a Physical Evaluation Board examination in 1989, after which separation with severance pay was recommended, if otherwise qualified, but points out that he was not released in response to this recommendation; instead, he served for two more years, separating due to a reduction in force in November 1991, with a voluntary separation incentive and special separation benefit. The Veteran is correct that the pay he received on separation had nothing to do with a medical condition, and it is unfortunate he had to wait five years for this to be acknowledged. Due to the notation of “severance pay” in his DD Form 214, which, under 38 C.F.R. § 3.700(a)(3) is awarded for disability, and the RO’s initial characterization of the pay as “Disability Severance Pay”, the appeal proceeded as if such were the case, without considering the Veteran’s assertions. As asserted, however, according to Army Regulation 635-5-1, Army Separation Program Designator (SPD) Codes, the separator code “JBK”, which applies to enlistment personnel, indicates the Veteran was involuntarily separated based on completion of required active service. The pay received for this type of separation is characterized as “separation pay or special separation benefits” under 38 C.F.R. § 3.700(a)(5). Unfortunately, this distinction does not change the outcome of the Veteran’s case, both types of pay requiring the same disposition. Under 38 C.F.R. § 3.700, the concurrent payment of more than one benefit based on one’s service is prohibited. See 38 C.F.R. § 3.700. A veteran who has received separation pay, severance pay or readjustment pay based on service in the Armed Forces, shall not be deprived, by reason of his receipt of such pay, of any disability compensation to which he is entitled under VA laws, but there shall be deducted from that disability compensation an amount equal to the total amount of separation, severance or readjustment pay received. See 10 U.S.C. 1174(h)(2); 38 C.F.R. § 3.700(a)(2)-(4), (5); see also VAOGCPREC 14-92 (holding, in pertinent part, that VA disability compensation should be offset to recoup the amount of special separation benefits received by a former member of the armed forces). As noted, these provisions do not distinguish between disability severance payments and separation payments unrelated to disability. In addition, they do not distinguish between servicemembers discharged voluntarily and those discharged involuntarily. 38 U.S.C. § 1174(b)(1). In each case, the law demands recoupment of the money paid on separation. The only question that remains is whether the RO acting properly by recouping the entire $5,486.31. Where payment of separation pay was made on or before September 30, 1996, VA will recoup from the disability compensation an amount equal to the total amount of separation pay. Where payment of separation pay was made after September 30, 1996, or payment of special separation benefits under 10 U.S.C. § 1174a was made on or after December 5, 1991, VA will recoup from the disability compensation an amount equal to the total amount of separation pay less the amount of Federal income tax withheld from such pay. 38 C.F.R. § 3.700(a)(5)(i). Here, the Veteran received the separation pay in November 1991, requiring VA’s recoupment of the gross amount of such pay. The RO thus acted appropriately. The Board acknowledges the Veteran’s assertions and understands his frustration. For years, he submitted statements expressing his confusion as to why VA was treating his separation pay as disability severance pay. Had the VA promptly explained to him the irrelevancy of this distinction, this claim might have been resolved at the RO level. Now here, it must be denied as a matter of law. See Sabonis v. Brown, 6 Vet. App. 426, 430 (1994) (if disposition of claim is based entirely on law, and not facts of case, claim must be denied based on a lack of entitlement under the law). LESLEY A. REIN Veterans Law Judge Board of Veterans’ Appeals ATTORNEY FOR THE BOARD L. N., Counsel