Citation Nr: 21000731 Decision Date: 01/06/21 Archive Date: 01/06/21 DOCKET NO. 15-39 613 DATE: January 6, 2021 ORDER The withholding of Department of Veterans Affairs (VA) disability compensation for recoupment of disability severance pay in the amount of $86,136.00, was not proper; the appeal is granted. FINDINGS OF FACT 1. The Veteran was discharged from military service in August 2010 and received disability severance pay in the amount of $86,136.00 due to diarrhea, status-post ileostomy and hemicolectomy, for which he was later granted service connection. 2. The Veteran’s diarrhea, status-post ileostomy and hemicolectomy was incurred in the line of duty while the Veteran served in Qatar, a combat zone. CONCLUSION OF LAW As the Veteran’s disability was incurred in the line of duty in a combat zone, the recoupment of the Veteran’s disability severance pay, by withholding a portion of his VA disability compensation, was not proper. 10 U.S.C.§ 1212; 38 C.F.R. § 3.700(a)(3). REASONS AND BASES FOR FINDINGS AND CONCLUSION The Veteran served on active duty from February 1998 to August 2010. This matter comes before the Board of Veterans’ Appeals (Board) on appeal from an August 2011 decision of the Department of Veterans Affairs (VA) Regional Office (RO). The case was previously before the Board in October 2018 when it was remanded for further development. In July 2017, a hearing was held before the undersigned. A transcript of the hearing is of record. Whether the recoupment of severance pay was proper The Veteran in this case was discharged from active duty in August 2010 with a disability and awarded severance pay in the gross amount of $86,136.00. The Veteran’s service treatment records (STRs) include a document titled “Findings and Recommended Disposition of USAF Physical Evaluation Board” (PEB), dated in July 2010, which shows that the Veteran was found to be unfit for duty because of a physical disability. The disability was listed as diarrhea, status-post ileostomy and hemicolectomy. His disability was assigned a 20 percent rating. In a June 2011 rating decision, the RO granted service connection for chronic diarrhea status post hemicolectomy and ileostomy, with a 10 percent rating effective September 1, 2010. In an August 2011 rating decision, the RO found that the Veteran was entitled to service connection for painful abdominal scars, status post hemicolectomy and ileostomy with an evaluation of 20 percent, effective September 1, 2010, the day after his discharge from service. June 2011 and August 2011 letters notified the Veteran that as the Veteran had received disability pay allowance of $86,136.00 (Gross) and $64,452.00 (net) from the military for his chronic diarrhea status post hemicolectomy and ileostomy and painful abdominal scars, status post hemicolectomy and ileostomy, the VA must hold back part of his VA compensation until the severance amount is paid back. The Veteran has asserted that he incurred his diarrhea and abdominal scar disabilities in the line of duty while he was serving in a combat zone. At the July 2017 Board hearing, he testified that he incurred the disability while he was serving in Qatar, a combat zone. Therefore, the Veteran asserts that recoupment of his severance pay was not warranted. The recoupment of the Veteran’s separation or severance pay from his VA disability compensation is required by 10 U.S.C. § 1174(h)(2). The Veteran shall have deducted from that disability compensation an amount equal to the total amount of separation pay, severance pay, and readjustment pay received. 10 U.S.C. § 1174(h)(2),(i); 38 C.F.R. § 3.700(a)(5)(iii). According to the revised regulation at 38 C.F.R. § 3.700(a)(3), for members of the military who were medically discharged after January 28, 2008, “no recoupment of severance pay will be made for disabilities incurred in the line of duty in a combat zone or incurred during performance of duty in combat-related operations as designated by the Department of Defense.” Because the Veteran was medically discharged from active duty in August 2010, the revised provision applies to his present claim. When 38 C.F.R. § 3.700(a)(3) was amended, it was noted that “We are adding to the regulation a new provision specifying that there will be no recoupment of disability severance pay for disabilities identified by the [Department of Defense] as being incurred in combat zones or during performance of duty in combat-related operations.” See 74 Fed. Reg. 26,956 (June 5, 2009); 38 U.S.C. § 1212(d)(2). An April 2010 Medical Evaluation Board Summary reflects that the Veteran was seen while deployed in the acute care clinic in Qatar. He was evaluated in September 2009 with nonbloody diarrhea and abdominal pain. The Veteran returned to the acute care clinic the next two days. The Veteran was admitted for observation 4 days later and was found to have a perforation of the transverse colon. A left hemicolectomy with primary anastomosis was performed. The Veteran was then transferred to Germany and the United States. The Veteran’s diagnosis at discharge was diarrhea status post ileostomy and hemicolectomy. The Veteran’s PEB stated, “The disability was incurred in line of duty in time of war or national emergency or after 14 September 1978.” It stated the disability was not “the direct result of armed conflict or was caused by an instrumentality of war and incurred in line of duty during a period of war” and was not “the direct result of a combat related injury.” The recommended disposition was discharge with severance pay. The Veteran’s DD Form 214 notes the reason for separation was “disability, severance pay.” A July 2010 Request and Authorization for Separation noted that 10 U.S.C. § 1212 authorizes severance pay... for members separating with “non-combat related conditions.” The Veteran was medically discharged after January 28, 2008. As noted above, for members of the military who were medically discharged after January 28, 2008, no recoupment of severance pay will be made for disabilities incurred in the line of duty in a combat zone or incurred during performance of duty in combat-related operations as designated by the Department of Defense. 38 C.F.R. § 3.700(a)(3). The evidence reflects that the Veteran’s disability was not incurred during performance of duty in combat-related operations, as the PEB specifically stated that the disability was not the direct result of armed conflict or of a combat related injury. However, the evidence supports a finding that the disability was incurred in the line of duty in a combat zone. Under Executive Order 12744, effective January 17, 1991, Qatar is a designated combat zone by the Department of Defense. 56 Fed. Reg. 2663 (Jan. 23, 1991). As the Veteran’s service treatment records and Medical Evaluation Board report indicate the diarrhea disability was incurred in the line of duty while the Veteran was serving in Qatar, under the plain language of 38 C.F.R. § 3.700(a)(3), the Veteran’s disability was incurred in the line of duty in a combat zone. Therefore, under 38 C.F.R. § 3.700(a)(3), no recoupment of severance pay is warranted. Accordingly, the recoupment of severance pay was not proper. The Veteran’s appeal is granted. H. SEESEL Veterans Law Judge Board of Veterans’ Appeals Attorney for the Board K. Marenna, 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.