John J. Batcher v. Robert L. Wilkie ( 2019 )

UNITED STATES COURT OF APPEALS FOR VETERANS CLAIMS
No. 16-0638
JOHN J. BATCHER, APPELLANT,
V.
ROBERT L. WILKIE,
SECRETARY OF VETERANS AFFAIRS, APPELLEE.
On Appeal from the Board of Veterans' Appeals
(Argued September 14, 2018 April 26, 2019)
John S. Kamarados, of New Kensington, Pennsylvania, for the appellant.
Bryan W. Thompson, with whom Meghan Flanz, Interim General Counsel; 1 Mary Ann
Flynn, Chief Counsel; Selket N. Cottle, Deputy Chief Counsel; Sarah W. Fusina, Senior Appellate
Attorney, were on the brief, all of Washington, D.C., for the appellee.
Before BARTLEY, GREENBERG, and TOTH, Judges.
BARTLEY, Judge, filed the opinion of the Court. GREENBERG, Judge, filed a dissenting
opinion.
BARTLEY, Judge: Veteran John J. Batcher appeals through counsel a December 17, 2015,
Board of Veterans' Appeals (Board) decision granting Roberta M. Batcher entitlement to special
apportionment of the veteran's disability compensation benefits from April 2008 to December
2010, at which time the veteran and Ms. Batcher were married but living separately. Record (R.)
at 3-9.2 This matter, over which the Court has jurisdiction pursuant to 38 U.S.C. §§ 7252(a) and
7266(a), was referred to a panel of the Court, with oral argument,3 to address whether and to what
extent a separation agreement sanctioned by a state court during divorce proceedings affects a
spouse's entitlement to special apportionment of a veteran's VA benefits. We hold that a domestic
1
Meghan Flanz was Interim General Counsel for the appellee when his brief was submitted to the Court, but
James M. Byrne has since been appointed General Counsel.
2
During oral argument, the Court ordered the Secretary to supplement the record of proceedings (ROP) with
various documents. He did so one week later, filing a supplemental record of proceedings (SROP) consisting of two
parts. Citations to the SROP will be designated as such.
3
Oral argument was held at Penn State's Dickinson Law in Carlisle, Pennsylvania, on September 14, 2018.
The Court extends its appreciation to the law school for its hospitality.
relations separation agreement sanctioned by a state court by a judgment of separation plays no
role in VA's determination of entitlement to special apportionment. To the extent that such an
agreement purports to preclude a veteran's spouse from seeking apportionment of a veteran's VA
benefits, the veteran's remedy to make himself or herself whole lies with the state court.
Accordingly, the Court will affirm the December 2015 Board decision.
I. FACTS
Mr. Batcher served on active duty in the U.S. Army from September 1966 to August 1967.
R. at 971. He married Roberta in February 1972, R. at 917, and the couple separated in September
2001, R. at 456.
In December 2004, Mr. Batcher filed a separation action in the Supreme Court of the State
of New York, Suffolk County (hereinafter New York State Court). See R. at 461. In March 2005,
the New York State Court entered a judgment of separation based on a stipulated agreement
between the Batchers, which specified that, inter alia, the veteran would pay Ms. Batcher a $7,200
distributive award; monthly maintenance payments of $300 commencing on January 1, 2005;
$3,000 in arrears maintenance payments; and "certain benefits from the US Army." R. at 463-64.
Regarding the Army benefits, the judgment of separation directed that Mr. Batcher "shall cooperate
with [Ms. Batcher] to effectuate all necessary filings for [her] to receive payments due her under
Federal laws, including survivor benefits or any life insurance benefits, without additional costs to
the [veteran]." R. at 464. The judgment of separation further indicated that "all other issues of
personal properties and marital debts have been resolved." Id.
One year later, in March 2006, Mr. Batcher filed with VA a claim for service connection
for various disabilities. SROP at 896-909. He indicated that he was married but was not living
with his spouse. SROP at 903.
In September 2006, a VA regional office (RO) granted Mr. Batcher service connection for
diabetes mellitus type II and assigned a disability evaluation of 20% effective March 27, 2005, one
year prior to the date of his claim. SROP at 707-08. The RO also granted service connection for
five disabilities secondary to diabetes mellitus type II, as well as special monthly compensation
(SMC) for loss of use of a creative organ, all effective March 27, 2006, the date of his claim.
SROP at 708-12. As a result of that decision, Mr. Batcher received a combined disability
evaluation of 20% beginning on March 27, 2005, and 40% plus SMC at the (k)(1) level beginning
2
on March 27, 2006. SROP at 715. The RO informed him that, as of April 1, 2006, his disability
compensation payment "include[d] an additional amount for [his] spouse" and that he was required
to notify VA "right away if there is any change in [his] marital status." SROP at 699.4
In November 2006, two months after the veteran was awarded VA disability compensation,
the New York State Court held a maintenance hearing. R. at 467-80. At the hearing, the parties
stipulated that Ms. Batcher would accept a lump sum payment of $7,000 from Mr. Batcher in lieu
of the previously agreed-upon monthly maintenance payments. R. at 469 (explaining that, in
consideration of the lump sum payment, "all maintenance and health insurance and obligations
owing from [Mr. Batcher] to [Ms. Batcher] shall cease"), 470 (Ms. Batcher's attorney's
acknowledgment that "the $7,000 amount would resolve the past maintenance, which is due and
owing[,] and future maintenance"). The parties agreed to be bound by this stipulation, R. at 473-
79, and the March 2005 judgment of separation was modified to reflect that Mr. Batcher no longer
owed future maintenance or support obligations to Ms. Batcher. See R. at 472 (parties' agreement
that the March 2005 judgment of separation was modified with respect to maintenance payments
and that the new stipulation "resolves the issues with respect to maintenance"). Mr. Batcher issued
a $7,000 check to Ms. Batcher later that month. R. at 481.
Notwithstanding the November 2006 hearing stipulation, the New York State Court
determined, in December 2006, that Mr. Batcher's disposable military retired pay from the
Uniformed Service Retired Pay Program was marital property and ordered the veteran to pay 50%
of those monthly benefits to Ms. Batcher. R. at 483-86. And, in October 2007, the New York
State Court ordered Mr. Batcher to release to Ms. Batcher 50% of the funds from his 401(k)
retirement account. R. at 499-500.
Ms. Batcher's financial condition subsequently deteriorated and, in April 2008, she filed a
claim with VA for apportionment of Mr. Batcher's VA disability compensation benefits. See R. at
576. In August 2009, the RO denied entitlement to apportionment, including special
apportionment, because, although Ms. Batcher's monthly living expenses exceeded her income,
she "voluntarily renounced any maintenance or support from the veteran[,] including future
claims," in November 2006. R. at 538. Ms. Batcher timely appealed that decision to the Board,
4
Although VA ultimately increased Mr. Batcher's combined disability evaluation, he first met the criteria to
receive additional compensation for a dependent on April 1, 2006. See 38 U.S.C. § 1115 (authorizing additional
compensation for a veteran with dependents "whose disability is rated not less than 30[%]").
3
which, in November 2013, remanded to correct a notice error. R. at 46-52. In the meantime, Ms.
Batcher became homeless, see R. at 9, and the couple divorced in December 2010, R. at 453.
In December 2015, the Board issued the decision currently on appeal. R. at 3-9. The
Board reviewed the evidence of record, including the March 2005 judgment of separation and the
November 2006 hearing transcript, but found that there was "inadequate objective evidence" to
decide Ms. Batcher's entitlement to general apportionment because it was unclear whether the
veteran reasonably discharged his responsibility for her support. R. at 7-8. The Board granted
Ms. Batcher special apportionment of the veteran's disability compensation benefits between April
2008 and December 2010 because it found that she had experienced a hardship during that
period—namely, that her monthly living expenses exceeded her income and that she was homeless
for a time—and that the veteran had not offered any mitigating evidence of his own undue
hardship. R. at 8-9. This appeal followed.5
II. ANALYSIS
Mr. Batcher primarily argues that the Board erred in granting Ms. Batcher special
apportionment of his VA disability compensation because it failed to consider whether she waived
her right to apportionment when she agreed, in a November 2006 state court proceeding, to accept
a lump sum payment from him, purportedly resolving all his past and future maintenance and
support obligations to her. The Secretary disputes this contention and urges the Court to affirm
the Board decision because VA was obligated to grant special apportionment once Ms. Batcher
met the statutory and regulatory criteria for that benefit, regardless of the terms of any potentially
contrary contract between the Batchers. In the Secretary's view, the proper remedy for Mr. Batcher
to pursue is to return to the New York State Court to seek modification of the separation agreement
to reflect the changed circumstances of the grant of apportionment. The Court agrees with the
Secretary.
Relevant to this appeal, a veterans benefits statute provides that "[a]ll or any part of the
[VA] compensation, pension, or emergency officers' retirement pay payable on account of any
veteran may[,] . . . if the veteran is not living with the veteran's spouse, . . . be apportioned as may
be prescribed by the Secretary." 38 U.S.C. § 5307(a)(2). In general, VA may apportion such
5
In November 2016, Mr. Batcher served Ms. Batcher with a copy of the Notice of Appeal in this case. The
Court then ordered that Ms. Batcher had 60 days to file a motion to intervene, but she did not do so.
4
benefits to a competent veteran's spouse "if the veteran is not residing with his or her spouse, . . .
and the veteran is not reasonably discharging his or her responsibility for the spouse's . . . support."
38 C.F.R. § 3.450(a)(1)(ii) (2018). Those benefits may be "specially apportioned" to the spouse
of a veteran, "[w]ithout regard to any other provision regarding apportionment[,] where hardship
is shown to exist." 38 C.F.R. § 3.451 (2018). Special apportionment is awarded "on the basis of
the facts in the individual case as long as it does not cause undue hardship to the other persons in
interest," with certain exceptions not applicable here. Id.; see Hall v. Brown, 5 Vet. App. 294, 295
(1993). "In determining the basis for special apportionment, consideration will be given such
factors as: Amount of [VA] benefits payable; other resources and income of the veteran and those
dependents in whose behalf apportionment is claimed; and special needs of the veteran, his or her
dependents, and the apportionment claimants." 38 C.F.R. § 3.451.
In enacting section 5307, Congress bestowed on certain veterans' dependents the right to
seek apportionment of certain VA benefits paid to the veteran, including disability compensation.
See 38 U.S.C. § 5307(a); Belton v. Principi, 17 Vet. App. 209, 211 (2003) ("Although arising from
a veteran's benefits, an apportionment is an entity legally separate from those benefits. Thus, when
veterans' dependents file on their own behalf for an apportionment, they seek to exercise their right
to an apportionment." (internal quotation marks omitted)). Congress's intent in creating this
federal apportionment right is clear—namely, to ensure that "veterans' disability benefits [] be
used, in part, for the support of veterans' dependents." Rose v. Rose, 481 U.S. 619, 631 (1987);
see also VA Gen. Coun. Prec. 74-90 (July 18, 1990) ("The purpose of apportionment is to
effectuate the responsibility of a VA beneficiary to support the beneficiary's dependent.").
After specifying the general classes of dependents eligible to receive apportionment,
Congress delegated to the Secretary the sole responsibility for defining the criteria for entitlement
to apportionment. See, e.g., 38 U.S.C. § 5307(a)(2) (authorizing apportionment for certain
dependents "as may be prescribed by the Secretary"). Pursuant to that statutory authority, the
Secretary promulgated § 3.450 and § 3.451, which contain the elements for establishing
entitlement to general and special apportionment, respectively. As outlined above, to be entitled
to special apportionment, a claimant must establish that (1) he or she is a qualifying dependent of
the veteran; (2) he or she suffered a hardship during the relevant period; and (3) apportionment
would not cause undue hardship to the other person of interest, usually the veteran. 38 C.F.R.
§ 3.451. Once those criteria are met, entitlement to special apportionment is established and VA
5
must grant that benefit to the claimant. See Holland v. Brown, 9 Vet. App. 324, 329 (1996) (holding
that VA is bound by its own regulations (citing Vitarelli v. Seaton, 359 U.S. 535, 539-40 (1959)));
see also Cushman v. Shinseki, 576 F.3d 1290, 1298 (Fed. Cir. 2009) (explaining that "[a] veteran
is entitled to disability benefits upon a showing that he [or she] meets the eligibility requirements
set forth in the governing statutes and regulations").
That is precisely what happened here. In December 2015, the Board determined that Ms.
Batcher met all the requirements for special apportionment: (1) she was married to but not living
with Mr. Batcher between April 2008 and December 2010,6 R. at 7; (2) she experienced hardship
during that period, as evidenced by the fact that her monthly living expenses exceeded her monthly
income and she was homeless for a time, R. at 8-9; and (3) Mr. Batcher did not proffer any evidence
that apportionment of his disability compensation benefits would cause him undue hardship, R. at
9. With those findings by the Board, entitlement to special apportionment was established and
only the administrative steps of calculation and payment of the apportioned benefits remained. See
Cushman, 576 F.3d at 1298; Jackson v. McDonald, 635 Fed. App'x 858, 861-62 (Fed. Cir. 2015)
(noting that entitlement to a benefit is established when "[a]ll the determinations required for an
award" have been made, even if "clerical computations . . . to produce the bottom-line dollar
amount" of the awarded benefit still remain). Accordingly, the Court discerns no error in the
Board's adjudication of Ms. Batcher's apportionment claim.
Mr. Batcher does not challenge any of the Board's specific findings regarding Ms. Batcher's
entitlement to special apportionment.7 Instead, the veteran limits his arguments to whether Ms.
Batcher waived her right to seek apportionment of his disability compensation by agreeing at the
November 2006 support hearing to accept a lump sum payment in lieu of future maintenance and
6
Although our dissenting colleague notes that section 5307(a)(2) permits apportionment of certain veterans
benefits to a "veteran's spouse" as opposed to an "ex-spouse," post at 8-9, it is undisputed that the Batchers were
married but living separately—i.e., that Ms. Batcher was the veteran's spouse—for the entire period for which the
Board granted special apportionment. See R. at 6 ("[A] divorce decree between the [v]eteran and [Ms. Batcher] was
entered on December 23, 2010. [Ms. Batcher] lost her right to any potential apportionment effective from the date of
their divorce forward. As such, this decision focuses on the period from the date of claim to the date of divorce."
(internal citations omitted)), 9 (finding that Ms. Batcher was "entitled to apportionment of the [v]eteran's compensation
for the period prior to their divorce").
7
He also does not attack the validity of § 3.451, argue that he was not properly informed of the proceeding
or that he did not have the opportunity to present evidence, or otherwise argue that the grant of special apportionment
in this case effected an unconstitutional taking of his property. Consequently, the Court deems any such arguments
abandoned and will not consider them in this decision. See Grivois v. Brown, 6 Vet. App. 136, 138 (1994) (explaining
that the Court has discretion to deem abandoned issues not argued on appeal).
6
support payments from him.8 Whether Ms. Batcher contracted away her right to file a claim for
special apportionment in exchange for adequate consideration from Mr. Batcher—a question that
requires interpretation of a state-court-sanctioned, domestic-relations contract between two private
parties, which was drafted pursuant to state law, see N.Y. FAM. CT. ACT § 425, and to which VA
is not a party—is a matter of contract law best decided by a state court. See United States v.
Windsor, 570 U.S. 744, 766 (2013) (noting that, "subject to [constitutional] guarantees, regulation
of domestic relations is an area that has long been regarded as a virtually exclusive province of the
States" (internal quotation omitted)); Pennoyer v. Neff, 95 U.S. 714, 722 (1877) ("[E]very State
has the power . . . to prescribe the subjects upon which [its inhabitants] may contract, the forms
and solemnities with which their contracts shall be executed, the rights and obligations arising
from them, and the mode in which their validity shall be determined and their obligations
enforced."); Meccico v. Meccico, 76 N.Y.2d 822, 823-24 (N.Y. 1990) ("A separation agreement is
a contract subject to the principles of contract construction and interpretation.").
The Supreme Court's decision in Howell v. Howell, 137 S. Ct. 1400 (2017), is instructive
in this regard. In that case, a state court awarded Mrs. Howell 50% of Mr. Howell's military
retirement pay, a portion of which he later waived to receive VA disability compensation benefits,
thereby decreasing his ex-wife's share. Id. at 1404. The state court ordered Mr. Howell to
reimburse or indemnify Mrs. Howell for the lost share, but the Supreme Court held that such an
order violated the portion of the Uniformed Services Former Spouses' Protection Act that excludes
from the definition of "disposable retirement pay" divisible upon divorce the amount of retirement
pay waived to receive VA disability benefits. Id. at 1404-05; see 10 U.S.C. § 1408(a)(4)(A)(ii);
Mansell v. Mansell, 490 U.S. 581, 594-95 (1989). The Supreme Court explained that the
contingency that Mr. Howell might execute such a waiver "meant that the value of [Mrs. Howell's]
share of military retirement pay was possibly worth less—perhaps less than [she] and others
thought—at the time of the divorce" and that "a family court, when it first determines the value of
a family's assets, remains free to take account of the contingency that some military retirement pay
might be waived, or, . . . take account of reductions in value when it calculates or recalculates the
need for spousal support." Howell, 137 S. Ct. at 1405-06 (citing Rose, 481 U.S. at 630-34 and n.6)
8
The Court notes that the New York State Court's December 2006 and October 2007 orders that Mr. Batcher
pay Ms. Batcher 50% of his military retired pay and the proceeds of his 401(k) retirement account, respectively, appear
to belie that assertion. R. at 483-86, 499-500.
7
The same logic applies here. A federal benefit—Ms. Batcher's right to claim special
apportionment, see Belton, 17 Vet. App. at 211—made Mr. Batcher's spousal obligation potentially
greater than he anticipated in November 2006. Mr. Batcher could have valued that contingency in
the separation agreement and negotiated a lower lump sum payment to account for it. See Howell,
137 S. Ct. at 1406. He apparently did not do so. Nevertheless, the veteran remains free to seek
redress from Ms. Batcher in the New York State Court, either by suing Ms. Batcher for breach of
contract or seeking modification of the separation agreement based on the changed circumstance
of the grant of special apportionment. See id.; see also N.Y. FAM. CT. ACT § 466(a) (permitting
modification of a support or maintenance decree based on changed circumstances). In either event,
his remedy does not lie with VA.
III. CONCLUSION
Upon consideration of the foregoing, the December 17, 2015, Board decision is
AFFIRMED.
GREENBERG J. dissenting: The Secretary is surely too busy to be spending his valuable
time and limited legal resources hounding a Vietnam combat veteran about issues that were settled
in a state court agreement a decade ago. For that and the following reasons, and with the greatest
possible respect for my colleagues, I dissent.
This is a matter of statutory construction. The statute in question is 38 U.S.C. § 5307(a)(2),
which provides, in pertinent part: "if the veteran is not living with the veteran's spouse . . . [benefits
may] be apportioned as prescribed by the secretary." 38 U.S.C. § 5307(a)(2). The language of the
statute is "unambiguous, unequivocal, and unlimited." Conroy v. Aniskoff, 507 U.S. 511, 514
(1993).
Mr. John J. Batcher (appellant) is a decorated Vietnam combat veteran, R. at 971 (DD
Form 214), and he is unemployable because of his service-connected disabilities, R. at 125-30.
The veteran and his ex-spouse, Roberta Batcher (Ms. Batcher), were separated in September 2001.
R. at 456. In November 2006, the parties, each represented by counsel, with full knowledge of the
financial status of the veteran, entered a settlement agreement addressing their financial disputes.
R. at 467-80, 469. Despite this agreement, Ms. Batcher filed a claim with VA requesting
apportionment of the appellant's disability benefits in July 2008. R. at 539. In August 2009, the
8
regional office (RO) denied Ms. Batcher's request for apportionment stating: "we must deny the
claim for an apportionment at this time because Roberta, the spouse, voluntarily renounced any
maintenance or support from the veteran including future claims." R. at 538. Ms. Batcher appealed
and the RO continued to deny apportionment in multiple Statements of the Case. See, e.g., R. at
42-43. On December 23, 2010, the parties were divorced. R. at 453. On December 17, 2015, the
Board issued a decision granting Ms. Batcher an apportionment of the veteran's disability benefits
because Ms. Batcher showed a hardship and the appellant did not. R. at 9. The appellant appealed.
Ms. Batcher should get nothing from VA. If her circumstances have changed it is she, not
the veteran, who must return to state court for a modification. Apparently, the parties agreed in
New York, R. at 467-80, but were divorced in Pennsylvania, R. at 453. The statute concerning
apportionment of VA benefits clearly states that benefits may be apportioned "if the veteran is not
living with the veteran's spouse." 38 U.S.C. § 5307(a)(2) (emphasis added). Congress could have
said ex-spouse, but it did not and "[i]f the intent of Congress is clear, that is the end of the matter."
Chevron, U.S.C., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 843 (1984). The Congressional
directive to the Secretary is clear – he may apportion benefits for separated spouses. Not ex-
spouses. See 38 U.S.C. § 5307(a)(2). Further, "the whole subject of domestic relations of husband
and wife, parent and child, belongs to the laws of the States and not to the laws of the United
States." Rose v. Rose, 481 U.S. 619, 625 (1987) (citing In re Burrus, 136 U.S. 586, 593-594
(1890)); see also Howell v. Howell, 137 S. Ct. 1400, 1406 (2017) (holding that, while military
retirement pay is divisible as marital property, veterans disability pay is not). The state of New
Jersey recently dealt with the Supreme Court holding in Howell when it decided Fattore v. Fattore,
___ A.3d ___, No. A-3727-16T1, 2019 WL 437946 (Feb. 5 2019). There, the New Jersey
Appellate Division determined that a divorce agreement disposed of the marital property and the
only way to address a change in circumstances was by petitioning the New Jersey courts. Id. The
same is true here. If the ex-spouse in this case had a change in circumstances, the appropriate place
to address those circumstances was with the state court where she entered her binding contract,
New York. R. at 467-80. She may also be free to petition the Commonwealth of Pennsylvania
where the actual decree of divorce was entered. R. at 453. Not with VA.
The correct analogy is to Article 1, Section 10, of the United States Constitution, which
states: "No state shall . . . impair the obligation of Contracts." U.S. Const. art. 1, §10. See Trustees
of Dartmouth College v. Woodward, 17 U.S. 581 (1819). While this provision of the Constitution
9
applies to states, and not to the federal government, the reasoning remains the same. That is, the
ex-spouse should not be permitted to maintain a modification of a properly entered state sanctioned
contract, neither the New York agreement nor the Pennsylvania decree, by the misuse of a VA
order, itself the subject of intense dispute. Compare the RO determinations, R. at 538, with the
Board decision, R. at 9. VA should not be impairing a contract sanctioned by a state court. The
Court should have held that the state court agreements controlled here.
For these reasons, I dissent.
10