Citation Nr: 20042287 Decision Date: 06/22/20 Archive Date: 06/22/20 DOCKET NO. 12-27 568A DATE: June 22, 2020 ORDER The appeal to establish that the Federal Torts Claims Act (FTCA) amount of $375,000 should not be offset against compensation benefits awarded under 38 U.S.C. § 1151 is denied. FINDING OF FACT The Veteran, in an individual capacity, received $375,000 due to settlement under the FTCA. CONCLUSIONS OF LAW The Veteran’s compensation benefits awarded under 38 U.S.C. § 1151 are subject to offset in the amount of $375,000 against her FTCA settlement. 38 U.S.C. §§ 1151, 7104; 38 C.F.R. § 3.800(a)(2). REASONS AND BASES FOR FINDING AND CONCLUSIONS The Veteran had active duty service in the United States Marine Corps from April 1969 to April 1973. This matter comes before the Board of Veterans’ Appeals (Board) on appeal from a July 2010 rating decision. The Veteran testified before a member of the Board at a video conference hearing in September 2016; a transcript of that hearing has been associated with the Veteran’s claims file. In February 2017, the Board determined that the Veteran’s $500,000 settlement under the FTCA should offset her disability compensation awarded pursuant to 38 U.S.C. § 1151. The Veteran appealed the Board’s decision to the United States Court of Appeals for Veterans Claims (Court). In June 2018, the Court granted a Joint Motion for Partial Remand (JMPR) and vacated the Board’s decision that determined that the Veteran’s $500,000 settlement under the FTCA should offset her disability compensation awarded pursuant to 38 U.S.C. § 1151, and remanded the matter for development consistent with the Joint Motion for Partial Remand. The Board member who conducted the September 2016 hearing is no longer with the Board. Ordinarily, prior to issuing a new decision or remand, Veterans and their representatives are offered the opportunity to state whether they would like to testify before a separate member of the Board. In this case, however, both the Veteran and her attorney have written VA to describe her financial hardship and have asked the Board to decide the case on the evidence before it. Pursuant to the directives in the JMPR, the Board remanded the case in March 2019 for further development. In the remand, it was also noted that if the Veteran wanted a new hearing, she could request one, however, she has not made such a request. Accordingly, the Board will proceed with a decision in this matter. 1. Recoupment of Tort Settlement The primary reason for the Court’s Joint Motion for Partial Remand was the lack of clarity regarding the actual nature of the FTCA settlement. In June 2005, the Veteran and her husband agreed to settle a FTCA claim related to the Veteran’s treatment for rectal cancer. They were awarded a $500,000 settlement. In July 2010, the Veteran was granted service connection for residuals of squamous cell carcinoma of the rectum and urinary incontinence under 38 U.S.C. § 1151, incurred as a result of treatment at a VA Medical Center (VAMC). In December 2011, she was awarded compensation under 38 U.S.C. § 1151 for fecal incontinence as a result of treatment at a VAMC. However, the payments were withheld by the VA in order to recoup the $500,000 settlement the Veteran received under the FTCA. A June 2005 Stipulation for Compromise Settlement and Release of Federal Tort Claims Act Claims shows that a payment was made to the Veteran, her husband and her attorney. The Court has held that the offset amount should only be in the amount of the claimant’s personal share of an FTCA award. See Neal v. Derwinski, 2 Vet. App. 296 (1992). As the evidence was unclear with respect to the allocation of the FTCA award, the Board remanded the claim for further development and clarification. In a February 2020 memorandum, the VA’s Office of General Counsel (OGC), stated that in the absence of other relevant evidence, it would be reasonable to treat the Veteran’s and her husband’s tort claims as the best available evidence as to the intent for the allocation of the settlement. The documents that the OGC was able to obtain relating to the FTCA litigation in this case was limited to copies of the plaintiffs’ July 2004 complaint, which included copies of their July 2003 administrative tort claims; a June 2005 Stipulation and Release reflecting settlement of the tort claims; and a copy of the docket entries for the litigation from the U. S. Courts PACER system. The OGC noted that none of those documents indicated the intended allocation or distribution of the settlement funds. However, the Veteran’s claim for damages was noted to be $3 million and her husband’s claim was $1 million, or 75 percent and 25 percent of the total award. The opinion stated that it would be reasonable to assume that the settlement was intended to be allocated in the same proportion as the relief requested by the Veteran and her husband. Moreover, the OGC stated that the settlement amount shall include the Veteran’s proportional share of attorney fees. With consideration of the OGC’s opinion above, out of the $500,000 settlement, the Veteran’ s portion would be $375,000 (75% of the total amount), which would include her share of attorney fees. The corrected offset amount of $375,000 is reflected in the RO’s supplemental statement of the case (SSOC) issued in April 2020. In response to the April 2020 SSOC, the Veteran’s attorney, in May 2020 correspondence, has argued that no offsets should be created in this case. Essentially, the attorney argues that the Veteran’s FTCA settlement is not related to an identified disability but rather encompasses historical pain and suffering and other issues that are not compensable as part of her 38 U.S.C. § 1151 claim. Moreover, the attorney argues that since the actual terms of the tort settlement in this case is not specified, the Veteran should be given the benefit of the doubt and her proportional share should be half of the amount which would be $250,000. The evidence establishes that both the Veteran’s FTCA claim and her claim for compensation benefits under 38 U.S.C. § 1151 are related to her treatment for rectal cancer. Aside from the attorney’s allegations, there is no objective evidence to the contrary. Thus, the monetary award from the tort claim should be offset from the Veteran’s disability claim from the VA. Also, as noted above, based on the all the documents relating to the Veteran’s tort claim, the OGC determined that a fair distribution of the settlement amount resulted in the Veteran receiving 75 percent, or $375,000 of the $500,000 total settlement amount. Thus, under the statutory provision and corresponding applicable regulation, the total amount of $375,000 is subject to recoupment from the Veteran’s award of VA compensation benefits under 38 U.S.C. § § 1151, before payments to her of those benefits can resume. VA is required to recoup the entire amount, including amount of any fees paid to an attorney out of the proceeds. VAOPGCPREC 07-94. As a matter of law, the appeal must be denied. Evan M. Deichert Veterans Law Judge Board of Veterans’ Appeals Attorney for the Board J. Henriquez, Counsel The Board’s decision in this case is binding only with respect to the instant matter decided. This decision is not precedential and does not establish VA policies or interpretations of general applicability. 38 C.F.R. § 20.1303.