Citation Nr: 21076372 Decision Date: 12/23/21 Archive Date: 12/23/21 DOCKET NO. 14-21 037 DATE: December 23, 2021 REMAND The issue of whether the recoupment of Voluntary Separation Pay (VSP) in the amount of $253,339.65, (after tax amount), is valid, is remanded. REASONS FOR REMAND The Veteran served on active duty in the Air Force from June 23, 2005 to April 30, 2008. In a November 2008 rating decision, the Regional Office (RO) of the Department of Veterans Affairs (VA) granted service connection for various disabilities, cumulatively rated as 60 percent disabling from May 1, 2008. A subsequent February 2009 rating decision resulted in an increase in the cumulative rating to 70 percent from May 1, 2008. On October 17, 2007, the Secretary of the Air Force issued a blanket waiver of the requirement to recoup VSP from VA compensation for service members released from active duty on or after that date. Thus, a veteran who was receiving VSP could concurrently receive VA compensation. However, six months later, on April 30, 2008, the Department of the Air Force replaced the blanket waiver with a recoupment schedule for service members released from active duty on or after that date. In other words, veterans could no longer concurrently receive the VSP payments and VA compensation. As noted, the Veteran was separated from service on April 30, 2008, and it was therefore determined that the VSP payment had to be recouped from his VA compensation payment. In written correspondence and during his September 2015 Board of Veterans' Appeals (Board) hearing, the Veteran asserted that he entered into a contractual agreement in February 2008 with the Department of the Air Force to separate from active duty as part of the Air Force's Force Shaping initiative. He indicates that as a condition of his voluntary separation, he was awarded Separation Pay and was guaranteed via the October 2007 memorandum that the requirement to recoup VSP from disability compensation benefits awarded by VA would be waived. The Veteran indicated that although he had requested the subsequent April 30, 2008 memorandum, he had not been furnished that memorandum and it was not part of the record. He asserted that the April 30, 2008 memorandum from the Air Force was not a legally binding modification and does not apply. In March 2016, the Board remanded this case because the April 2008 memorandum was not part of the record and to obtain that memorandum. In April 2018, the Board determined that the recoupment of VSP pay of $253,339.65 by withholding disability compensation benefits at the 50 percent level was proper. In that decision, the Board noted that although the Veteran and RO both made reference to the April 30, 2008 memorandum, that correspondence was not part of the record. The Board noted that the claim was remanded for the RO to obtain a copy of the memorandum. On remand, the RO was unable to obtain a copy of the April 30, 2008 memorandum; however, the RO associated with the record a copy of M21-1 Adjudication Procedures Manual, Recouping VSP Awarded to Air Force Veterans, (M21-1 Adjudication Procedures Manual III.v.4.B.4.a.) under which the recoupment was made. The recoupment schedule for service members released on or after April 30, 2008 whose combined disability rating is 60 percent or more, as in the Veteran's case, stated that the recoupment should be withheld at 50 percent of the VA compensation award. Based on this, the recoupment of the Veteran's VSP in the amount of $253,339.65 (after-tax, amount) was correct. The Veteran appealed the Board's decision to the United States Court of Appeals for Veterans Claims (Court). In an August 2019 Memorandum Decision, the Court set aside the Board's decision and remanded the matter. The Court noted that the RO made the request for the April 30, 2008 memorandum on October 7, 2016, but it was unclear to whom the request was made. The Court noted that the record contains a screenshot that appeared to be the response to the request, but the Court noted that it was unable to tell when the response came and from whom it came. The Court indicated that the key question in this case is what the April 30, 2008 memorandum says. The Court directed that on remand, the Board must obtain a copy of this memorandum and then decide whether recoupment is appropriate. Accordingly, in February 2020, the Board remanded this case for the RO to obtain a copy of the April 30, 2008 memorandum which clarified the policy intent regarding the waiver authority of the Secretaries of the Military Departments under section 1175(h)(4) of Title 10, United States Code; to furnish a copy to the Veteran and his representative; and to associate a copy with the record. In January 2021, the Office of the Assistant Secretary of Defense provided the RO with the April 2008 memorandum. The Veteran requested a copy of his records which was furnished to him and his representative indicated that he also currently had a copy of the memorandum. The representative requested an extension through September 2021. A review of the April 2008 memorandum reflects that the memorandum clarifies the policy intent regarding the waiver authority of the Secretaries of the Military Departments under section 1175a(h)(4) of title 10, United States Code, by striking paragraphs E.7 and E.8 of the referenced DTM and substituting the new paragraphs E.7 and E.8, as provided at Attachment 2 to the memorandum. The substantive changes included at Attachment 2 were highlighted for the Veteran and his representative. In pertinent part, the current provisions provide that the Secretaries of the Military Departments may waive the requirement to repay VSP if it is determined that recovery would be against equity and good conscience and would be contrary to the best interests of the United States. Upon approval, the Military Departments shall forward a copy of all waivers to the Deputy Under Secretary of Defense (DUSD) for Military Personnel Policy (MPP). Waivers by the Secretaries of the Military Departments must be determined on a case-by-case basis, which requires identification of the individual member, the amount of the debt, and the circumstances of each case. The PD USD (P&R) shall review, in coordination with the Department of Defense (DoD), Office of General Counsel, any waiver by a Secretary of a Military Department that applies to more than one individual. This review process shall ensure a consistent consideration of the equities in such cases throughout DoD. It appears that the Veteran may wish to seek one of the waivers. VA does not have jurisdiction over actions of the military departments. A waiver must be sought from the Department of the Air Force. Since the Veteran has just been furnished the April 2008 Memorandum, he should be afforded an opportunity to request a waiver before appellant adjudication of the issue before the Board is undertaken. The matter is REMANDED for the following action: The RO should inform the Veteran that he may obtain a waiver of the requirement to repay VSP (if he has not done so already) if it is determined by the Military Department that recovery would be against equity and good conscience and would be contrary to the best interests of the United States. He should be notified that he may seek this waiver from the Department of the Air Force. (Continued on the next page) The RO should determine if the Veteran intends to seek a waiver (or has already requested such waiver), and, if so, his appeal should be deferred pending the resolution of that request. S. L. Kennedy Veterans Law Judge Board of Veterans' Appeals Attorney for the Board J. Connolly 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.