Veterans who are divorced often ask whether their service-connected VA compensation can be used to satisfy an alimony obligation in State court. The same question is often asked relative to child support as well. Can VA deduct alimony from my VA compensation?
The short answer is, yes, under certain circumstances. VA can withhold your VA disability compensation to satisfy a State-court alimony obligation. The Federal Circuit addressed this question in the recent case of Rhone v. McDonough. Essentially, if a veteran has waived a portion of his military retirement pay to receive disability compensation, 42 U.S.C. § 659(a) and (h)(1)(A)(ii)(V) authorize the VA to withhold disability compensation for alimony payments. The same statute also authorizes VA to withhold VA compensation to pay child support obligations.
To understand this issue, we have summarized the Federal Circuit’s opinion below.
Case Summary of Rhone v. McDonough, Vet. App. 20-2370
The veteran appealed the decision of the Court of Appeals for Veterans Claims (CAVC) affirming a decision of the Board of Veterans’ Appeals (Board) determining that the Department of Veterans Affairs (VA) lawfully withheld a portion of his disability compensation payments pursuant to a state court order for alimony payments.
The veteran served in the United States Navy from February 1950 to December 1953 and in the United States Air Force from November 1959 to August 1988. In February 1986, the veteran and his former spouse divorced upon entry of a Final Judgment of Dissolution of Marriage (Divorce Decree) by the Circuit Court for Hillsborough County, Florida (State Court). Recognizing that the veteran would be eligible for military retirement within two years, the Divorce Decree stated that his spouse would receive 40% of the veteran’s military retirement benefits. The veteran appealed, and the District Court of Appeals for the 2nd District of Florida (State Appellate Court) upheld the Divorce Decree.
In 1988, the veteran separated from military service due to physical disability. Effective August 10, 1988, he had a combined disability rating of 60%. This disability rating was subsequently increased to 70%, effective April 18, 1989. To receive his disability compensation, the veteran elected to waive a portion of his military retirement pay on July 27, 1990. As the Board found, it was undisputed that the veteran made such a waiver.
The veteran moved to modify his payment obligation under the Divorce Decree, which the State Court denied in an April 1990 order. In doing so, the State Court clarified that the veteran’s spouse was entitled to an amount equal to forty percent (40%) of the gross military retirement as permanent periodic alimony. The veteran appealed, and the State Appellate Court affirmed the April 1990 order.
Following a CAVC remand in 2018, the Board issued the February 2020 decision at issue. The Board found that the State Court’s order to the VA was “valid on its face,” and the April 1990 order provided for “permanent periodic alimony.” The Board determined that the VA legally garnished the veteran’s disability compensation under 42 U.S.C. § 659(a) and (h)(1)(A)(ii)(V). The Board also determined that it lacked authority to review the state court garnishment order, as this was “the province of state and federal courts, and not [the] VA.”
The veteran appealed the February 2020 Board decision to the CAVC. Affirming the Board, the CAVC determined that 42 U.S.C. § 659(a) and (h)(1)(A)(ii)(V) authorized the VA to withhold a portion of a veteran’s VA disability payment for alimony or child support pursuant to legal process when a veteran has waived a portion of military retirement pay to receive VA benefits.
On appeal to the Federal Circuit, the veteran argued the CAVC erred for two reasons: (1) federal statutes do not allow withholding of disability compensation for alimony payments; and (2) the VA’s denial of substantive review of state court garnishment orders violated his right to due process within the VA adjudication system.
The Federal Circuit’s authority to review decisions of the CAVC is limited by statute. Goodman v. Shulkin, 870 F.3d 1383, 1385 (Fed. Cir. 2017). Its review is limited to legal challenges regarding the “validity of any statute or regulation or any interpretation thereof. . ., and to interpret constitutional and statutory provisions, to the extent presented and necessary to a decision.” 38 U.S.C. § 7292(c). The Federal Circuit may review “a challenge to a factual determination” or “a challenge to a law or regulation as applied to the facts of a particular case” only if the appeal presents a constitutional issue. Id. § 7292(d)(2). The Federal Circuit must affirm a CAVC decision unless it is “(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; (B) contrary to constitutional right, power, privilege, or immunity; (C) in excess of statutory jurisdiction, authority, or limitations, or in violation of a statutory right; or (D) without observance of procedure required by law.” Id. § 7292(d)(1).
Under 38 U.S.C. § 5301(a)(1), VA benefits are generally exempt from any legal or equitable process, “except to the extent specifically authorized by law.” One such authorization is found in 42 U.S.C. § 659, which provides an exception for alimony and child support:
Notwithstanding any other provision of law . . . , effective January 1, 1975, moneys (the entitlement to which is based upon remuneration for employment) due from, or payable by, the United States . . . to any individual . . . shall be subject, in like manner and to the same extent as if the United States . . . were a private person, to withholding in accordance with State law . . . and to any other legal process brought, by a State agency administering a program under a State plan approved under this part or by an individual obligee, to enforce the legal obligation of the individual to provide child support or alimony. 42 U.S.C. § 659(a).
Thus, § 659(a) allows withholding of money “based upon remuneration for employment” to provide alimony obligated under State law. Moreover, money “based upon remuneration for employment” includes disability compensation from VA under §659 (h)(1)(A)(ii)(V):
[M]oneys payable to an individual which are considered to be based upon remuneration for employment . . . consist of . . . compensation for a service-connected disability paid by the Secretary [of Veterans Affairs] to a former member of the Armed Forces who is in receipt of retired or retainer pay if the former member has waived a portion of the retired or retainer pay in order to receive such compensation[.] 42 U.S.C. § 659(h)(1)(A)(ii)(V) (emphasis added).
Accordingly, if a veteran has waived a portion of his military retirement pay in order to receive disability compensation, § 659(a) and (h)(1)(A)(ii)(V) authorize the VA to withhold disability compensation for alimony payments. The Board found that the veteran had elected to make such a waiver, making his case fall within the plain language of § 659.
Section 1408(d)(1) authorizes the Secretary of the appropriate military department to make payments from a servicemember’s “disposable retired pay” to satisfy court-ordered alimony.
Section 1408 and § 659 are directed to different departments and different sources of money. Section 1408 is in Title 10 of the U.S. Code, which governs the Armed Forces, and authorizes the Secretary of the appropriate military department to deduct child support, alimony, or community property from a member’s disposable retired pay—i.e., the pay earned for completing a prescribed time in service—in response to a court order. See § 1408(d)(1).
In contrast, § 659 is in Title 42 and authorizes the Secretary of the VA to garnish a member’s disability pay—i.e., the pay the member receives as compensation for a disability—in response to a court order. See § 659(a), (h)(1)(A)(ii)(V). A retired service member with a disability may receive both retired pay and disability compensation, and § 1408(d)(1) and § 659 work together to ensure that both forms of payment to the service member are subject to state orders to pay alimony. Contrary to the veteran’s arguments, § 1408 is entirely consistent with § 659, and therefore his view that § 1408 supersedes § 659 was without merit.
Accordingly, the CAVC correctly determined that § 659 authorized the VA to withhold a portion of the veteran’s VA disability compensation for alimony as the veteran had waived a portion of military retirement pay to receive disability compensation.
The veteran also averred that he was entitled, under 38 U.S.C. § 511(a), to review by the Board of the state garnishment order for alimony. He argued that the VA’s refusal to undertake such a review violated his due process rights.
The Federal Circuit explained that “[g]arnishment is purely a creature of state law” that was “routinely provided by state law for enforcement of court-ordered child support and alimony (a judgment debt).” Millard v. United States, 916 F.2d 1, 3 (Fed. Cir. 1990). Thus, any challenges to the garnishment order were properly heard in the state that issued the garnishment order.
Since garnishment of alimony was a matter of state law provided by state courts, it was not a decision “by the Secretary under a law that affects the provision of benefits by the Secretary.” Indeed, the veteran agreed that any appellate review, if one was to take place at all, was with the same state court that initially ordered the garnishment of the waived retired pay. Thus, the CAVC correctly determined that the veteran was not entitled, under § 511(a), to adjudication by the VA as to the merits of the garnishment order issued by the State Court and affirmed by the State Appellate Court.
For the foregoing reasons, the Federal Circuit affirmed the decision of the CAVC.
In summary, veterans should be aware that their VA disability compensation may be withheld to satisfy alimony or child support obligations arising from state court orders or judgments. The best place to address the appropriateness of such obligations would be in State court and not with the federal agency.