Citation Nr: 21069645 Decision Date: 11/19/21 Archive Date: 11/19/21 DOCKET NO. 16-46 343 DATE: November 19, 2021 ORDER The appeal of the withholding of retroactive payment of Dependency and Indemnity Compensation (DIC) benefits by the Department of Veterans Affairs (VA) based on receipt of Department of Defense (DOD) Survivor Benefit Plan (SBP) benefits is denied. FINDING OF FACT 1. The appellant began receiving SBP payments upon the death of her husband in January 1994. 2. In a December 2015 rating decision, DIC was awarded, effective the date of the Veteran's death in January 1994. 3. VA withheld $302,188.00 of the DIC benefits and assigned the money to the DOD as a result of the overpayment created when the appellant was awarded SBP and DIC concurrently. CONCLUSIONS OF LAW 1. VA had the authority to assign $302,188.00 of the DIC benefits as a result of the overpayment created when the appellant was awarded both SBP and DIC concurrently. 38 U.S.C. § 5301(a)(1). 2. All fair process, statutory, and regulatory procedural requirements were met by the Regional Office's action to assign the appellant's DIC award money. 10 U.S.C. § 1450; DoD Financial Management Regulation, vol. 7B, ch. 46 (rev'd July. 2011, May 2015, Mar 2018); 38 C.F.R. §§ 1.911, 1.912a, 3.103, 3.658 (2020) 3. The appellant's DIC benefit award was properly assigned to the Department of Defense to offset an overpayment of SBP benefits. 10 U.S.C. § 1450, 38 U.S.C. § 5301; DoD Financial Management Regulation, vol. 7B, ch. 46. REASONS AND BASES FOR FINDINGS AND CONCLUSIONS The Veteran served on active duty from April 1961 to November 1984. He died in January 1994. The appellant is his surviving spouse. This matter comes before the Board of Veterans' Appeals (Board) on appeal from a December 2015 rating decision from the Department of Veterans Affairs (VA) Regional Office (RO). The issue on appeal was previously remanded by the Board in January 2019, October 2019, and January 2020. Background SBP is an insurance-style program, administered by DOD, allowing eligible servicemembers and military retirees to elect to have premiums deducted from their pay in order to provide their spouses with additional benefits after their deaths. 10 U.S.C. §1448 (2006). As the surviving spouse of a deceased military servicemember who chose to participate in SBP, the appellant is the primary beneficiary of annuity payments that became effective the first day after the Veteran's death. 38 U.S.C. § 1450(a). In this case, the appellant's spouse died in January 1994. By contrast, DIC is a separate benefit, administered by VA, which is paid to the surviving beneficiary of a veteran who died while on active duty or as a result of a service-connected disability. 38 U.S.C.§§1310(a), 1318. Here, the appellant was granted DIC in a December 2015 rating decision, with an effective date as of the date of the Veteran's death in January 1994. This created a retroactive award of benefits dating back to the date of the Veteran's death. As a result, the appellant was awarded both SBP and DIC benefits for the period beginning February 1, 1994. Surviving spouses are not entitled to receive concurrent payments from both SBP and DIC, as reflected by the statutes providing offsets for those who receive both SBP and DIC simultaneously prior to 2020. 10 U.S.C. § 1450(c). The SBP offset provision calls for reducing SBP payments by the amount the recipient receives in DIC benefits. 10 U.S.C. § 1450(c)(1) ("If... the surviving spouse... is also entitled to [DIC] under section 1311(a) of title 38, the surviving spouse... may be paid an annuity under this section, but only in the amount that the annuity otherwise payable under this section would exceed that compensation"). Moreover, 38 C.F.R. § 1318(e) provides that for purposes of 10 U.S.C. § 1450(c), eligibility for benefits under this chapter [38 U.S.C. §§ 1301 et seq.] by virtue of this section [38 C.F.R. § 1318] shall be deemed eligibility for dependency and indemnity compensation under section 1311(a) of this title [38 U.S.C. § 1311(a)]. VA withheld $302,188.00 of the DIC benefits as a result of an overpayment to the appellant of SBP benefits from DOD. See April 5, 2016 VA Notification Letter; April 5, 2016 VBMS Compensation and Pension Award. The appellant appealed the decision of VA to withhold this money and assign it to the DOD. She challenges both VA's authority to assign the benefits and the procedure used. I. Authority to Assign DIC Benefits The appellant offers a series of statutory arguments to assert that VA lacks the authority to assign benefit money. The appellant's first argument is that VA does not have the statutory authority to remit, or assign, the appellant's benefits as an overpayment to another agency within the federal government, the Defense Finance Accounting Service (DFAS). The appellant's representative made a similar argument to the U.S. Court of Appeals for Veterans Claims (Veterans Court). Roberts v. McDonald, 27 Vet. App. 108, 113 (2014). The Veterans Court did not resolve the question, but held the authority did not arise under 38 U.S.C. § 5304 and remanded in part for the Board to determine where VA's authority to assign the money came from. To be sure, there are strong protections that shield VA benefits from assignment away from the beneficiary. See, e.g., Ridgway v. Ridgway, 454 U.S. 46, 47, 102 S. Ct. 49, 51 (1981). 38 U.S.C. § 5301 governs the assignability and exempt status of VA benefits, stating, in part, that "[p]ayments of benefits due or to become due under any law administered by the Secretary shall not be assignable except to the extent specifically authorized by law, and such payments made to, or on account of, a beneficiary shall be exempt from taxation, shall be exempt from the claim of creditors, and shall not be liable to attachment, levy, or seizure by or under any legal or equitable process whatever, either before or after receipt by the beneficiary. The preceding sentence shall not apply to claims of the United States arising under such laws nor shall the exemption therein contained as to taxation extend to any property purchased in part or wholly out of such payments." While this statute provides restrictions against the assignability of VA payments, Congress carved out an exception with regard claims of the United States: "prohibit[ing] the collection by setoff or otherwise out of any benefits payable pursuant to any law administered by the Secretary and relating to veterans, their estates, or their dependents, of any claim of the United States or any agency thereof against (1) any person other than the indebted beneficiary or the beneficiary's estate; or (2) any beneficiary or the beneficiary's estate except amounts due the United States by such beneficiary or the beneficiary's estate by reason of overpayments or illegal payments made under such laws to such beneficiary or the beneficiary's estate or to the beneficiary's dependents as such." 38 U.S.C. § 5301 (emphasis added). There is a clear exception made for debts to the United States. It follows that Congress included this exception with the intent to provide an avenue for collection of debts to the United States from a VA beneficiary. See generally Ventas, Inc. v. United States, 381 F.3d 1156, 1161 (Fed. Cir. 2004) ("Where Congress includes certain exceptions in a statute, the maxim expressio unius est exclusio alterius presumes that those are the only exceptions Congress intended."); McCray v. McGee, 504 A.2d 1128, 1130 (D.C.1986) (quoting 2A Sutherland, Statutes and Statutory Construction § 47.23 (4th ed. 1984) for the proposition that, "when a legislature makes express mention of one thing, the exclusion of others is implied, because 'there is an inference that all omissions should be understood as exclusions'"). This money belongs to the United States government. While the appellant has set forth numerous arguments regarding the method in which this debt to the United States government was or should be recouped, the debt has been rightfully created and collection of this debt from the appellant is unavoidable regardless of the method used to recoup the debt. If the VA were to pay the appellant the retroactive DIC benefits, it would run afoul of the Appropriations Clause of the U.S. Constitution. The straightforward and explicit command of the Appropriations Clause, U.S. Const. art. I, § 9, cl. 7, means simply that no money can be paid out of the Treasury unless it has been appropriated by an act of Congress. Any exercise of a power granted by the Constitution to one of the other branches of government is limited by a valid reservation of congressional control over funds in the Treasury. In Office of Personnel Management v. Richmond, the Supreme Court held that payments of money from the Federal Treasury are limited to those authorized by statute. 496 U.S. 414, 416, 110 S. Ct. 2465, 2467 (1990). In that case, the claimant sought advice from a federal employee and received erroneous information and, as a result, lost six months of benefits. He contended that the erroneous advice should give rise to equitable estoppel against the government, and that the court should order payment of the benefits contrary to the statutory terms governing his claim. The Court held that payments of money from the Federal Treasury were limited to those authorized by statute. The Appropriations Clause provides that no money could be paid out of the Treasury unless it had been appropriated by an act of Congress. All parties agreed that the award the claimant sought would have been in direct contravention of the federal statute upon which his ultimate claim to the funds rested. As such, his claim was denied. Office of Pers. Mgmt. v. Richmond, 496 U.S. 414, 416, 110 S. Ct. 2465, 2467 (1990). In this case, there is no statute providing the authority to pay the appellant concurrent payments of SBP and DIC benefits for the period in question. For the period for which payments were withheld, the law is clear that SBP payments must be offset for DIC payments for the same time period. Payment of this debt to the appellant is not allowed under the Appropriations Clause. This money is clearly owed to the United States; whether the entity collecting the money is the VA or DFAS does not alter that conclusion. The Veterans Court also raised the question in Roberts as to the source of the VA's authority to enter into a memorandum of understanding with the DoD to assign DIC benefits monies. 27 Vet. App. at 114. In light of the Supreme Court's precedent on the Appropriations Clause, the Board reads the exception in 38 U.S.C. § 5301 allowing assignability of VA benefits for debts owed to the United States in a statute otherwise offering robust defense against assignability as authorizing VA to assign the benefit amount not appropriated by statute to recover debts owed to the United States. VA's authority to enter into the memorandum of understanding with the DoD is a reasonable extension of VA's obligation to ensure that only appropriated monies are disbursed from the Treasury. The appellant's second argument regarding VA's authorization to assign benefits raises 38 U.S.C. § 5314. The appellant speculates that this statute does not apply to this case. The Board agrees. As the Board has found VA's authority to assign her award in another statute, the appellant's remaining arguments on this point are moot. Having concluded that VA has the authority to assign benefits to recover debts owed to the United States, the Board turns to consider the appellant's due process arguments regarding how VA exercised that authority. II. Due Process The appellant contends that VA did not afford her the appropriate due process protections by failing to provide her with notice and an opportunity to challenge the indebtedness prior to having retroactive DIC payments withheld and paid to the Department of Defense (DOD) to offset SBP payments she previously received. The appellant's contentions may be separated into fair process, statutory, and regulatory components, which the Board will address in turn. a. Fair Process The appellant has made arguments broadly claiming that the VA has not afforded her appropriate due process protections as it did not provide her with notice and an opportunity to challenge the indebtedness prior to having retroactive DIC payments withheld and paid to the DOD to offset SBP payments she previously received. May 2019 Correspondence. She contends that VA did not comply with any of the procedural safeguards prior to withholding the appellant's retroactive DIC payment. See Thurber v. Brown, 5 Vet. App. 119, 123 (1993). Appellants have a right to "fair process" in the development and adjudication of their claims and appeals before VA. Bryant v. Wilkie, 33 Vet. App. 43, 46 (2020) (internal citations omitted). This non-constitutional right stems, in part, from the nature of the nonadversarial VA benefits adjudication system, which "is predicated upon a structure which provides for notice and an opportunity to be heard at virtually every step in the process." Id, citing Thurber, 5 Vet. App. at 123. The quintessential aspect of "fair process" doctrine is that, even in situations where no particular procedural process is required by statute or regulation, the principle of fair process may nonetheless require additional process if it is implicitly required when viewed against the underlying concepts of procedural regularity and basic fair play of the VA benefits adjudicatory system. Smith v. Wilkie, 32 Vet. App. 332, 337 (2020) (internal citations omitted). Those aspects of statutory and regulatory procedural safeguards will be discussed in the sections below. The Board's discussion here is confined to the situation where no particular procedural process is required. The appellant points to no specific aspect of "fair process" doctrine which applies to this case. Her argument revolves mostly around the delegation of authority and procedural requirements outlined in Roberts v. McDonald, which are based on specific statutory and regulatory provisions. Nonetheless, the Board has considered whether any other guidance exists that may indicate that additional procedural safeguards should have been observed before recoupment of the SBP overpayment. Current recipients of compensation benefits paid by VA have cognizable, 5th Amendment due process property interest in continued or modified payments. See Cushman v. Shinseki, 576 F.3d 1290 (Fed. Cir. 2009) (internal citations omitted); see also Fugere v. Derwinski, 1 Vet. App. 103, 108 (1990). The 5th Amendment provides the basis for the procedural due process requirement for government officials to follow fair procedures before depriving a person of life, liberty, or property. Cushman, 576 F.3d at 1296. When the government seeks to deprive a person of one of those interests, procedural due process requires at least for the government to afford the person notice, an opportunity to be heard, and a decision made by a neutral decisionmaker. Id. While the "fair process" safeguards are distinct from constitutional safeguards, there is an essential similarity in affording VA claimants notice, an opportunity to be heard, and adjudication by an impartial adjudicator. Thus, the Board considers broader constitutional principles to be highly informative to the fair process question. In Califano v. Yamasaki, the Supreme Court considered whether the Due Process Clause of the 5th Amendment required hearings prior to certain recoupment actions of Social Security Act benefits. 442 U.S. 682, 99 S. Ct. 2545 (1979). The Supreme Court ruled that the 5th Amendment did not require pre-recoupment due process hearings for actions under § 204(a) of the Social Security Act because those actions involved relatively straightforward matters of computation for which written review was adequate. Id. at 695-96. However, actions under § 204(b), which involved a determination of fault, required pre-recoupment oral hearings, as these actions were more involved, often necessitating assessments of witness credibility. Id. This case is very similar to the post-recoupment category described in Califano. The issue in this case addresses retroactive payments that must be offset following a set of calculations, without an assessment of the competency or credibility of a witness. The determinations are purely mechanical in nature. A neutral decisionmaker need review only file information to answer the questions of fact presented in the case. The Board concludes that the fair process doctrine would require no more than would the 5th Amendment. Califano, at 695-96. Indeed, the adverse action taken by the RO has been on appeal for more than five years, with ample opportunity for the appellant to submit such evidence and argument as she would like. Moreover, although she wishes to receive both the SBP and DIC monies for the period from 1994 to 2016, she has no reliance interest in receiving both for the retroactive period. As such, the Board concludes there is no violation of fair process by use of a post-assignment appeals process. b. Statutory Due Process The appellant offers a series of statutory arguments to assert that if VA has the statutory authority to assign her benefits, that proper notice required by statute was not observed. The appellant asserts that 10 U.S.C. § 1450(c), which was listed in the January 2020 SSOC, requires that DoD follow specific procedures in providing notice to the spouse, and that such notification was not provided to the appellant. Indeed, this statute does include notice requirements in section 1450(c)(3). However, 10 U.S.C. § 1450(c) deals with offsetting SBP payments from DOD rather than offsetting DIC payments from VA. As such, it is not relevant to this case and any notice requirements included in that statute are irrelevant as well. The appellant has argued that VA did not provide her with proper notice of why it was withholding her payment. June 2016 Notice of Disagreement. However, in the April 2016 rating decision notification letter, the appellant was informed that she was not allowed to receive full SBP from the military and full DIC from VA. She was additionally informed that if her DIC was less than her SBP annuity, VA withhold an amount of money equal to the basic DIC rate and that if DIC was greater than the SBP annuity, VA would withhold an amount of money equal to the SBP payments received since entitlement to DIC was established. Moreover, in the years of this appeal, the appellant has displayed an awareness of exactly the reason for which the payments were withheld. The Board finds the appellant had ample notice of the reason for the reason why her payments were withheld. In light of the foregoing, the Board concludes there is no statutory due process error to be remedied before proceeding to a decision on the merits. c. Regulatory Due Process The appellant has also argued that written consent from the appellant was required before an offset could be made, relying on Roberts v. McDonald, 27 Vet. App. 108, 113 (2014), and DoD Financial Management Regulation, vol. 7B, ch. 46, para. 460402. September 2016 Substantive Appeal at 3. In Roberts, the Veterans Court ruled that written consent from the SBP annuitant was required before there was a reduction in DIC to satisfy an SBP annuity overpayment. 27 Vet. App. at 113. The appellant argues that no such consent was requested or given in this case. The appellant argues that an annuitant must be advised of the debt and authorize the method in which the overpayment was being, or may have been, liquidated, prior to the action being taken per DoD Financial Management Regulation, vol. 7B, ch. 46, para. 460701. See June 2016 Notice of Disagreement. If the VA is to withhold benefits and pay them to the DoD, the appellant argues she must authorize such an action in advance, which she did not do. The appellant relies entirely on the construction of the regulation as it appears in the Roberts decision. 27 Vet. App. at 113. Under the version of this regulation that was in effect at the time of the Roberts decision, the annuitant was to be advised of the debt and the method in which the overpayment was being, or may have been, liquidated. The regulation provided three methods for the debt to be liquidated. The method relevant here was for the annuitant to authorize the VA to reduce the DIC and remit the amount collected to DFAS. DoD Financial Management Regulation, vol. 7B, ch. 46, para. 460701(c). This regulation was amended in May 2015 to remove the provision requiring authorization from the annuitant before VA reduced DIC payments and remitted the amount collected to DFAS. DoD Financial Management Regulation, vol. 7B, ch. 46, para. 460703 (effective May 2015). An April 2020 amendment retains that change. The appellant's award of DIC benefits and the actions taken to assign her benefits to DoD to recoup the overpayment of SBP payments happened after May 2015. The Board concludes that the Roberts holding has been superseded by regulatory revision and is not binding on this proceeding. Consequently, the Board finds no due process error in the lack of authorization prior to recoupment action having been taken. Relevant to the appellant's case, the 2015 amendments also added a provision requiring due process notification including the amount of the debt and the method in which the overpayment "is being, or may be" liquidated. DoD Financial Management Regulation, vol. 7B, ch. 46, para. 460801. The regulation's use of "is being" indicates that this notification may be provided contemporaneously with the action taken to liquidate the debt. There is no indication that prior notification is required. As noted above, the appellant was provided with notification meeting these criteria in an April 2016 notification letter. The appellant's second argument concerns DoD Financial Management Regulation, vol. 7B, ch. 46, para. 460402. This provision states that "payment of the SBP annuity is not withheld or delayed pending verification of the DIC award if the annuitant signs a statement authorizing the VA to collect any overpayment that results from the overlap of the SIC and SBP payments." Here, the appellant's SBP payments were not withheld or delayed pending verification of a DIC award. She was paid promptly by the DOD beginning in 1994. This regulation has been amended since the Roberts case was decided; however, the changes have not affected the substance of this regulation. The circumstances addressed in this regulation differ from this case in that the current case does not involve the possibility of withholding or delaying SBP payments. As such, this regulation is not relevant to the current appeal. The appellant also raises the potential applicability of 38 C.F.R. §§ 1.911, 1.912a, 3.103, and 3.658 as potentially relevant to the proceedings on appeal. July 2020 Brief. However, these regulations have no particular bearing on this appeal. The appellant has not been a "debtor of VA," and § 1.911 cannot apply to her. As acknowledged by the appellant, § 1.912a governs debts of a "veteran's" benefit payments and she is not a veteran. September 2016 Notice of Disagreement, at 3. Similarly, the appellant acknowledges that 3.103 has no direct requirements for this case. July 2020 Brief at 3. Finally, the appellant indicates that § 3.658 is directly inapplicable as the Secretary conceded in Roberts. Id. As the appellant acknowledges, these regulations are inapplicable or have no direction on the form that due process must take in this case. As mentioned above, the Board remanded this case in in January 2019, October 2019, and January 2020. These remands were to provide the appellant with a variety of notices regarding the amount of the overpayment, the law applicable in this situation, and the potential for a waiver of the overpayment. The appellant submitted statements in May 2019 and July 2020 that the purpose of the remands had been accomplished and requesting that an appellate decision be issued. The Board takes these submissions as a waiver of any failure by the agency of original jurisdiction to comply substantially with the remands. D'Aries v. Peake, 22 Vet. App. 97 (2008). III. Merits of the Overpayment As to the merits of this appeal, the appellant's arguments are meager. The appellant asserted that the overpayment could not be assessed without VA "first attempting to determine whether she was legally entitled to receive both payments under existing law." June 2016 Notice of Disagreement at 2. Yet, this is precisely what the RO did. The statutory commands, addressed above, required an offset of SBP payments when DIC benefits are awarded. The appellant also argues that statutory language in 38 U.S.C. § 1311(e) indicates Congress' intention to supersede other laws reducing benefits to DIC payments to surviving spouses. June 2016 Notice of Disagreement, at 3. The law and precedent cited refer to restoration of DIC payments to beneficiaries who remarry after the age of 57. 38 U.S.C. § 1311(e); Sharp v. United States, 580 F.3d 1234, 1237 (Fed. Cir. 2009). There is no indication that the Congressional intention to restore benefits to beneficiaries who remarry has any application to the SBP offset provisions in 10 U.S.C. § 1450. There is no plausible argument to the contrary. As discussed above, SBP benefits must be offset for the amount of DIC benefits awarded prior to 2020. 10 U.S.C. § 1450(c). A reduction in a SBP annuity shall be effective on the date of the commencement of the period of payment of DIC payments. 10 U.S.C. § 1450(c)(2). The AOJ set forth the amounts of SBP benefits paid from January 1994 until March 2016, when the overpayment in question was created by the award of DIC benefits. June 2020 SSOC at 58. The amount of the overpayment was $302,188.00. The Board sees no error in the RO's calculations. Thus, the Board finds that the amount of the debt was correctly calculated. The appellant also indicated that VA should provide her notice of how to pursue a waiver of the overpayment of SBP payments. September 2016 Correspondence. The Board observes that the Defense Financial Management Regulation, which the appellant has cited repeatedly in the course of this litigation, contains the procedure to obtain a waiver from DFAS. Defense Financial Management Regulation, vol. 7B, ch. 46, para. 460901. The Board is compelled to note that the appellant's representative relied on this chapter of the regulation before the Veterans Court in the Roberts case. The Board finds that the appellant had actual notice of the procedure to obtain a waiver. The Board emphasizes that the waiver is not available through VA as the debt was not owed to VA. In light of the foregoing, the Board finds the preponderance of the evidence shows that the appellant had received SBP benefits effective January 1994, was awarded retroactive DIC benefits also effective January 1994, that the RO followed the appropriate procedural safeguards to assign the DIC money to DFAS to recoup the overpayment of SBP created by the DIC award. The Board also finds the amount of the overpayment was correctly calculated to be $302,188.00, which the appellant does not contest. There being no question of law or fact for which doubt may be resolved in the appellant's favor, the Board must deny the appeal. 38 U.S.C. § 5107; 38 C.F.R. § 3.102. J. B. FREEMAN Veterans Law Judge Board of Veterans' Appeals Attorney for the Board M. Harrigan Smith 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.