Citation Nr: 21032033 Decision Date: 05/25/21 Archive Date: 05/25/21 DOCKET NO. 18-32 659 DATE: May 25, 2021 ORDER The withholding of Department of Veterans Affairs (VA) disability compensation in the amount of $459,353.94 to offset a tort claim settlement was proper; the appeal is denied. FINDINGS OF FACT 1. In March 2015, the Veteran signed a Stipulation for Compromise Settlement Agreement under 28 U.S.C. § 2677, for and in consideration of $600,000, in settlement of a wrongful injury claim. 2. The Veteran and his wife received an award of $459,353.94 as a result of the settlement. CONCLUSION OF LAW The withholding of VA disability compensation to offset a tort settlement in the amount of $459,353.94 was proper. 38 U.S.C. §§ 1151 (2020); 38 C.F.R. § 3.362 (2020). REASONS AND BASES FOR FINDINGS AND CONCLUSION The Veteran served on active duty from June 1977 to August 1981. This matter comes before the Board of Veterans' Appeals (Board) on appeal from a September 2015 rating action issued by a VA Regional Office (RO). In April 2018 and April 2021, the Veteran and his spouse testified at a RO hearing before a Decision Review Officer and at a Board hearing before the undersigned Veterans Law Judge, respectively. Propriety of the withholding of VA disability compensation in the amount of $459,353.94 to offset a tort claim settlement. The Veteran contends that the withholding of VA disability compensation to offset a tort claim settlement in the amount of $459,353.94 was improper. In this regard, the Veteran and his spouse testified that they did not receive payment in the full amount, as the attorney representing them in the tort claim took significant fees. They further report that the Veteran has very severe disabilities, which result in significant expenses. However, after a review of the record, the withholding was required by law, and therefore, was proper. 38 U.S.C. § 1151(b)(1) provides that if "an individual" enters into a settlement or compromise by reason of a disability or death treated as if it were service-connected, then no benefits shall be paid to such individual for any month beginning after the date of such judgment, settlement, or compromise on account of such disability or death becomes final until the aggregate amount of benefits paid which would be paid but for such judgement, settlement or compromise, equals the total amount included in such judgment, settlement, or compromise. Generally, pursuant to 38 C.F.R. § 3.362(b), offsets under 38 U.S.C. § 1151(b) of benefits awarded under 38 U.S.C. § 1151(a), if a veteran's disability is the basis of a judgment under 28 U.S.C. 1346(b) awarded, or a settlement or compromise under 28 U.S.C. 2672 or 2677 entered, on or after December 1, 1962, the amount to be offset under 38 U.S.C. § 1151(b) from any compensation awarded under 38 U.S.C. § 1151(a) is the entire amount of the veteran's share of the judgment, settlement, or compromise, including the veteran's proportional share of attorney fees. Specifically, 38 C.F.R. § 3.362(d) provides that if a veteran's disability or death is the basis of a structured settlement or structured compromise under 28 U.S.C. 2672 or 2677 entered on or after December 1, 1962, as is the case here, (1) the amount to be offset under 38 U.S.C. § 1151(b) from benefits awarded under 38 U.S.C. § 1151(a) is the veteran's or survivor's proportional share of the cost to the United States of the settlement or compromise, including the veteran's or survivor's proportional share of attorney fees; and (2) the offset of benefits awarded under 38 U.S.C. § 1151(a) begins the first month after the structured settlement or structured compromise has become final that such benefits would otherwise be paid. Initially, the basic facts of the case are not in dispute. In this regard, in a February 2012 rating decision, the Veteran was awarded service connection under 38 U.S.C. § 1151 for major depressive disorder and angle closure glaucoma of the right eye, with the award of special monthly compensation (SMC) under 38 U.S.C. § 1114, subsection (k) for the loss of use of one eye. Specifically, such were additional disabilities caused by a VA medical treatment consisting of an Avastin injection into the right eye. The Veteran is not service-connected for any other disabilities. The Veteran was later granted a total disability rating based upon individual unemployability effective August 12, 2011, in a June 2013 rating decision. Finally, in a July 2018 rating decision, the Veteran was awarded SMC(s) based on statutory housebound status, effective April 10, 2018. In June 2012, the Veteran and his spouse, through private counsel, filed a personal injury claim for damages based on negligent medical care stemming from the August 2011 treatment. In March 2015, the Veteran and his spouse signed a settlement agreement for a gross sum of $600,000, to be offset by the amount already paid to the Veteran for such disabilities. In this regard, the Veteran had been previously paid $140,646.06 in VA disability compensation. Thus, the settlement agreement awarded $459,353.94 to the Veteran and his spouse. In July 2015, VA notified the Veteran that it had received information from General Counsel showing that the Veteran had received a tort settlement in the amount of $459,353.94, and thus RO proposed to withhold benefit payments effective October 2015. The Veteran was afforded 60 days to submit evidence to show that the proposed action should not be taken. The RO then notified the Veteran that it began withholding compensation in a September 2015 letter. The Board is sympathetic to the Veteran's situation and to the financial hardship he and his spouse experienced as a result of the offset of the benefits. However, the Board is unable to provide a legal remedy. See Owings v. Brown, 8 Vet. App. 17, 23 (1995), quoting Kelly v. Derwinski, 3 Vet. App. 171, 172 (1992) ("[T]his Court must interpret the law as it exists, and cannot 'extend... benefits out of sympathy for a particular [claimant].'"). Under the law, VA is required to withhold disability compensation to offset the amount of the appellant's Federal Tort Claims Act settlement, including the proportional share of attorney fees. See 38 U.S.C. § 1151(b); 38 C.F.R. § 3.362. Put another way, the regulation merely requires offsetting VA's own benefits payments by the amount of compensation received from the federal tort settlement in order to prevent "duplication of payments," as required by law. VA does not have discretion to alter the terms of that withholding based on equitable principles, despite any resulting hardship to the Veteran. 38 U.S.C. §§ 503, 7104. Because the law, rather than the facts, is dispositive of the outcome of this appeal, the benefit-of-the-doubt rule does not apply. Accordingly, the Veteran's challenge of the withholding must be denied as a matter of law. See Sabonis v. Brown, 6 Vet. App. 426, 430 (1994). P.M. DILORENZO Veterans Law Judge Board of Veterans' Appeals Attorney for the Board Jonathan M. Estes 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.