Citation Nr: 21070490 Decision Date: 11/24/21 Archive Date: 11/24/21 DOCKET NO. 18-40 885 DATE: November 24, 2021 REMANDED The withholding by the Department of Veterans Affairs (VA) of VA disability compensation payments to recoup military severance pay beyond the $65,558.77 previously withheld for severance pay is remanded. REASONS FOR REMAND The Veteran had active service from February 1977 to June 1990, from September 2001 to October 2003, and from January 2004 to September 2004. The recoupment of the Veteran's separation or severance pay from his or her 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 VA disability compensation was established on or after September 15, 1981, a Veteran who has received separation/severance pay may receive disability compensation for disability incurred in or aggravated by service prior to the date of receipt of separation/severance pay subject to recoupment of the separation/severance pay. 38 C.F.R. § 3.700 (a)(5). Where payment of separation/severance pay was made on or before September 30, 1996, VA will recoup from disability compensation an amount equal to the total amount of separation/severance pay. Where payment of separation/severance pay was made after September 30, 1996, or payment of special separation benefits under 10 U.S.C. § 1174a was made on or after December 5, 1991, VA will recoup from disability compensation an amount equal to the total amount of separation/severance pay less the amount of Federal income tax withheld from such pay. Id. The receipt of separation pay does not affect the payment of disability compensation based on a subsequent period of service. 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 or she was discharged from service by withholding in monthly allotments payment of disability compensation benefits is required by law. 10 U.S.C. § 1174; 38 C.F.R. § 3.700 (a). In this case, the Veteran was paid the severance pay prior to September 30, 1996, based on his service in the U.S. Coast Guard. He received $69,832.80. However, when action was taken to withhold benefits until the monies were recouped, only $65,558.77 was withheld, which represented the total amount of separation/severance pay less the amount of Federal income tax withheld from such pay which totaled $4274.03. However, since the Veteran was paid prior to September 30, 1996, the entire amount of $69,832.80 was subject to being recouped. In December 2015, the Veteran was informed that he received a severance pay allowance of $69,832.80 from the military of which $65,558.77 was recouped by the U.S. Coast Guard through monthly withholdings which ended October 2014. The letter further stated that the remaining $4,274.03 is the amount VA is required to withhold. He was then told that although with this calculation, VA's system shows that he overpaid his severance pay by $5440.69, VA was required to withhold the remaining balance of military retired pay since the law prohibits the concurrent payment of military retired pay and disability compensation. The Veteran has appealed this action. At his Board hearing, the Veteran testified it had already been established that he is eligible to receive concurrent retirement and disability compensation. In addition, he had overpaid his severance by $5440.69. Therefore, his question is whether VA is within its authority to withhold $5440.69 in disability compensation from him and that according to statutes and prior Board decisions, by withholding the compensation, VA has exceeded its authority. The Board initially notes that the Veteran received severance pay and appears to be receiving retirement pay. While the Veteran correctly indicates that there are some cases where a veteran may receive both military retirement pay and VA compensation benefits, there are restrictions. In general, there is a prohibition on the concurrent payment of military retired pay and VA disability compensation pay without a waiver of a portion of the retired pay. 38 U.S.C. §§ 5304, 5305. However, a veteran who is entitled to military retired pay and disability compensation for a service-connected disability rated 50 percent or more, or a combination of service-connected disabilities rated 50 percent or more, under the schedule for rating disabilities is entitled to receive both payments per other considerations of this regulation. 38 C.F.R. § 3.750 (b)(1). Retirees with more than 20 years of service are generally eligible for consideration of concurrent pay, but retirees with less than 20 years of service are not eligible for concurrent payment. 38 C.F.R. § 3.750 (b) (2) and (3). The veterans who are entitled to receive some measure of concurrent payments for both their retired military pay and their VA disability compensation are provided such payment under two applicable programs, known as Combat Related Special Compensation (CRSC) and Concurrent Retired and Disability Pay (CRDP) programs. CRDP is a program that is available to some Chapter 61 disability retirees restores some or all of the military retired pay that was deducted due to receipt of VA service-connected disability compensation. Retirees must be rated 50 percent or more disabled by VA and have served a minimum of 20 years creditable service, including service in the National Guard and Reserves. Unlike CRSC, the disabilities do not have to be combat-related. 38 U.S.C. §§ 1414, 5304, 5305; 38 C.F.R. § 3.750. Retirees are not required to apply for this benefit; enrollment is automatic. The CDRP also applies to individuals who retired with less than 20 years of creditable service, under the Temporary Early Retirement Authority (TERA), who are rated 50 percent or more disabled by VA. It appears that VA has fully recouped the remaining $4,274.03 of severance pay where the VA letter mentioned above indicates that the Veteran overpaid his severance pay by $5440.69. It further appears that VA withheld the additional amount for repayment of military retirement pay, but this is not clear nor is the exact amount paid and due clear. As such, the Board finds that the Agency of Original Jurisdiction (AOJ) should perform a paid and due audit which covers the severance pay, any retirement pay, and VA compensation pay. In a Memorandum, the AOJ should explain what money has been recouped including and beyond the $4,274.03 sum and the reasons why. The matters are REMANDED for the following action: 1. Perform a paid and due audit which covers the severance pay, any retirement pay, and VA compensation pay. 2. In a Memorandum, explain what money has been recouped including and beyond the $4,274.03 sum and the reasons why. It should be explained to the Veteran if he is entitled to CRDP or CRSC. YVETTE R. WHITE Veterans Law Judge Board of Veterans' Appeals Attorney for the Board Jacqueline Connolly, 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.