Citation Nr: 18151618
Decision Date: 11/19/18	Archive Date: 11/19/18

DOCKET NO. 15-43 647
DATE:	November 19, 2018
ORDER
The withholding of Department of Veterans Affairs (VA) disability compensation payments to recoup military separation pay was proper; the appeal is denied.
FINDING OF FACT
The Defense Finance and Accounting Service (DFAS) indicated separation pay in the lump sum amount of $51,992.54 (pre-tax); federal tax of $12,998.16; the amount to be withheld, after federal income tax, was $38,994.48.
CONCLUSION OF LAW
The recoupment of the Veteran’s separation pay by withholding his VA disability compensation, in the amount of $38,994.48 is mandated by governing law, and was proper.  10 U.S.C. § 1174; 38 C.F.R. § 3.700.

REASONS AND BASES FOR FINDING AND CONCLUSION
The recoupment of the Veteran’s separation pay from his VA disability compensation is required by law under 10 U.S.C. § 1174 (h) (2).  Subsection 1174(h)(2) provides that a member who has received separation pay under this section, or severance pay or readjustment pay under any other provision of law, based on service in the armed forces shall not be deprived, by reason of her receipt of such separation pay, severance pay, or readjustment pay, of any disability compensation to which she is entitled under the laws 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 readjustment pay received.
Where entitlement to disability compensation was established on or after September 15, 1981, a veteran who has received separation pay may receive disability compensation for disability incurred in or aggravated by service prior to the date of receipt of separation pay subject to recoupment of the separation pay.  38 C.F.R. § 3.700(a) (5).
The Veteran served in the U.S. Navy from July 14, 1993, to October 15, 1997 and from June 1, 2004, to February 28, 2014.  A March 2014 rating decision granted entitlement to service connection for various disabilities with a combined 80 percent rating, from March 1, 2014.
The April 2014 notice stated that VA would recoup the separation pay minus the federal tax amount.
Thereafter, the DFAS indicated that the Veteran was furnished separation pay in the lump sum amount of $51,992.54 (pre-tax); federal tax of $12,998.16.  Thus, the amount to be withheld, after federal income tax, was $38,994.48.
An opinion of the VA General Counsel, VAOGCPREC 12-96, held that 10 U.S.C. § 1174 (h)(2) requires that VA recoup from a veteran’s VA disability compensation the amount of non-disability separation pay received by the Veteran under section 631 of Pub. L. No. 96-513.  The recoupment of the full amount of disability separation pay that the Veteran received when he was discharged from service by withholding in monthly allotments payments of disability compensation benefits is required by law.  10 U.S.C. § 1174; 38 C.F.R. § 3.700 (a).
The law does not allow that the Veteran receive both separation pay and VA compensation.  The law requires that the separation pay be recouped.  Thus, the claim must be denied.  See Sabonis v. Brown, 6 Vet. App. 426, 430 (1994).
 
S. L. Kennedy
Veterans Law Judge
Board of Veterans’ Appeals
ATTORNEY FOR THE BOARD	J. Connolly, Counsel