Citation Nr: 21004509 Decision Date: 01/27/21 Archive Date: 01/27/21 DOCKET NO. 13-14 421 DATE: January 27, 2021 ORDER The withholding of compensation benefits to recoup Special Separation Benefits (SSB) in the amount of $40,330.57 was proper, and the appeal is denied. FINDING OF FACT The Veteran separated from active service in January 1995, and he received SSB in the pre-tax amount of $56,014..68 ($40,330.57 after taxes were withheld); VA is required by law to withhold VA disability compensation benefits until SSB paid at service separation are recouped. CONCLUSION OF LAW The withholding of compensation benefits to recoup SSB in the amount of $40,330.57 was proper. 10 U.S.C. § 1174; 38 C.F.R. § 3.700. REASONS AND BASES FOR FINDING AND CONCLUSION The Veteran served on active duty from September 1977 to September 1980 and from August 1981 to January 1995. This matter comes to the Board of Veterans’ Appeals (Board) on appeal from decisions issued by the Department of Veterans Affairs (VA) Regional Offices. In June 2016, the Veteran testified in a video-conference hearing before the undersigned Veterans Law Judge. A transcript of that hearing is of record. Most recently, in September 2020, the Board remanded this claim on appeal for additional development of the record. Specifically, the Board instructed the RO to readjudicate this claim on appeal and issue a Supplemental Statement of the Case (SSOC) if the benefits sought was not granted in full. The RO readjudicated the claim and issued a SSOC in September 2020. Therefore, the requested development has been completed and the claim on appeal is returned to the Board for appellate disposition. 1. Whether the recoupment of SSB in the amount of $40,330.57 was proper The Board initially notes that VA’s General Counsel has determined that the notice and duty to assist provisions of the VCAA are inapplicable where undisputed facts render a claimant ineligible for the benefit claimed and where further factual development could not lead to an award. VAOPGCPREC 2-2004; VAOPGCPREC 5-2004. Where the law is dispositive, the claim must be denied due to a lack of legal merit. As the issue on appeal is decided as a matter of law herein, no discussion of the duties to notify and assist is required. Mason v. Principi, 16 Vet. App. 129 (2002). The Veteran separated from active service on January 1, 1995. The Veteran’s DD 214 reflects that he received a lump sum SSB payment in the amount of $42,181.04 at separation. The narrative reason for separation documented on the DD 214 was early release program – Special Separation Benefit. A second DD 214 reflects that he received a lump sum SSB payment in the amount of $40,405.04. A March 1995 rating decision documents that service connection was granted for tinea corporis (10 percent disabling); status post arthroplasty, bilateral 5th metatarsal (10 percent disabling); hemorrhoids with rectal bleeding (10 percent disabling); low back pain (noncompensable); and, bilateral chondromalacia patella (noncompensable). The effective date for the grant of service connection for these disabilities was January 14, 1995. A March 1995 letter notified the Veteran of the decision and informed him that due to his receipt of SSB in the amount of $42,181.04, his benefits would be withheld until the full amount of his separation pay had been recovered. In November 2014 and January 2015, VA received notification from the Defense Finance and Accounting Service (DFAS) that the gross amount of SSB paid to the Veteran was $56,014.68; $15,684.11 was withheld in taxes and a net amount SSB of $40,330.57 was paid to the Veteran on February 2, 1995. An April 1995 VA Administrative Decision documents that the Veteran’s DD 214 reflects that he was paid a lump sum SSB in the amount of $42,181.04. In March 1995, the Veteran was notified that VA would be withholding compensation benefit payment until the $42,181.04 was recouped. A June 1995 notification letter notified the Veteran that VA was recouping severance pay in the amount of $40,405.04 (different amount than was reported in March 1995). A subsequent DD 214 reflects that the Veteran was paid a lump sum SSB in the amount of $40,405.04. VA conducted an audit in April 1998 and determined that VA had collected $40,301.00 of the 42,181.04 due to be recouped and determined that a refund in the amount of $1,880.04 was due to the Veteran. A memo was placed in the Veteran’s file confirming that he had received $40,301.00 in separation pay instead of $42,181.04 and action was initiated to refund the Veteran $1,880.04. Thereafter, VA received notification from DFAS that the Veteran was paid SSB in the amount of $40,330.57 (after taxes). Thus, the administrative decision concluded that the Veteran owed VA $29.57 ($40,330.57 - $40,301) due to the accounting error. However, as the error was an administrative error, VA wrote off the remaining $29.57 due to be recouped. In this case, the Veteran has not disputed that he received SSB. The Veteran argues that this withholding was improper because when he made the SSB election at separation from service, he was not informed of the fact that VA benefits could be withheld for recoupment of SSB pay. Therefore, he essentially argues that he was deprived of the ability to make a properly informed choice. The Veteran also asserts that recoupment of his SSB, at least in part, was not warranted because of the provisions outlined in 38 C.F.R. § 3.700 (a)(5)(ii). The recoupment of a veteran’s separation pay from his or her monetary VA disability compensation benefits is required by 10 U.S.C. § 1174. If a service member who has received separation pay under 10 U.S.C. § 1174, or separation pay, severance pay or readjustment pay under other provisions of law, based on service in the armed forces, becomes entitled to disability compensation administered by VA, the total amount of the SSB paid to the service member shall be deducted from that disability compensation, less the amount of federal income tax withheld from the SSB. 10 U.S.C. § 1174 (h)(2), (i); 38 C.F.R. § 3.700 (a)(5)(iii). The implementing VA regulation, 38 C.F.R. § 3.700 (a)(5)(i), likewise provides that, where payment of SSB under § 1174 was made on or after December 5, 1991, VA will recoup from disability compensation an amount equal to the total amount of SSB paid to the servicemember, less the amount of Federal income tax withheld from SSB pay. The governing statutes allow limited exceptions to such recoupment, such as a sole survivorship discharge or where disability severance pay was received for disability incurred in line of duty in a combat zone. See 10 U.S.C. §§ 1174 (i), 1212(d). Here, however, there is no argument or indication that the payment of SSB was based on disability severance or sole survivorship provisions. To the extent that the Veteran argues that he was not informed that VA benefits could be withheld for recoupment of SSB pay and thus was deprived of the ability to make a properly informed choice, the Board empathizes with the Veteran’s situation. However, government regulations are binding on all who seek to come within their sphere, “regardless of actual knowledge of (their requirements) or the hardship resulting from innocent ignorance.” Morris v. Derwinski, 1 Vet. App. 260, 265 (1991). Consequently, the Board is bound to follow the legal authority and is not able to make an exception in the Veteran’s case. To the extent that the Veteran argues recoupment of a portion of his SSB was not warranted, the Board reiterates that his DD-214 for the period from August 1981 to January 1995 reflects that the Veteran was awarded SSB payment in the amount of $42,181.04 at separation for this period. He also had a period of active duty from September 1977 to September 1980; however, no SSB appears to have been paid for this period. He makes no clear assertion that any service-connected disability was attributable to his first period of service and accordingly recoupment of at least a portion of his SSB was not warranted under 38 C.F.R. § 3.700 (a)(5)(ii). Review of the medical evidence and rating decisions of record reflect that his service-connected disabilities were linked to his second period of service. In other words, the Veteran’s service-connected disabilities arise from his second period of service for which he received SSB. While the Board is sympathetic to the Veteran’s contentions, the Board is bound by the laws passed by Congress, and this decision is dictated by the relevant statutes and regulations. The recoupment of an amount equivalent to the Veteran’s SSB, less the Federal income tax withheld from such payment, from his VA disability compensation is required by Congress under 10 U.S.C. § 1174 (h)(2). See also 38 C.F.R. § 3.700 (a)(5)(iii). Here, the law, as written by Congress and implemented by VA regulation, has been correctly applied. The claim that recoupment of SSB was improper must be denied for lack of legal merit. Sabonis v. Brown, 6 Vet. App. 426, 430 (1994). Jonathan Hager Veterans Law Judge Board of Veterans’ Appeals Attorney for the Board G. Jackson, 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.