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A Big Development in Military Retirement Division… Maybe!

Military servicemember in wheelchair

In this office, we have the distinct pleasure of serving many members of our military through their divorce or other family law matters. We watch the federal, state and appellate decisions surrounding military matters with great interest. There is almost no single topic that interests both military members and their separating/divorcing spouses more than the various nuances and details of dividing the military pension. Thus, when news or developments occur surrounding the division of military pensions, we work to make sure our clients are updated and understand how new developments in the law may affect their case and situation.

On March 1, 2022, the Claims Appeals Board (CAB) provided a decision in Claims Case Number 2016 CL 091608.3. The case indicates and now stands for the holding that the Uniformed Services Former Spouses' Protection Act (USFSPA) allows Concurrent Retirement and Disability Pay (CRDP) paid to a retired military member who has a qualifying disability to be divided as a property right/interest in a divorce case, with the reasoning that the retirement and disability pay is the payment of longevity retired pay (not the restoration of disability retired pay). The summation of the Board ruling is the following in the conclusion of the option:

In this case, the member retired under Chapter 61 and subsequently became entitled to receive CDRP. The restoration of his retired pay under the statute authorizing CRDP, 10 U.S.C. § 1414, is subject to division under the USFSPA. CRDP is a restoration of retired pay based on longevity, which is 20 years of service. It is divisible under the USFSPA. The USFSPA is consistent with the CRDP statute and the implementing regulations contained in Chapter 64 of Volume 7B of the DoDFMR [Department of Defense Financial Management Regulation]. Any contrary interpretation would provide the member with an entitlement or benefit that was not explicitly authorized by Congress.

This ruling represents a substantial shake-up in what the standing law has been since the United States Supreme Court decisions of Mansell v. Mansell and Howell v. Howell, the leading opinions on military retirement and disability pay.

Essentially, this determination by the Claims Appeals Board allows a determination by DFAS (the Defense Finance Account Service) that a former spouse is not entitled to CDRP payments to be appealed and the determination to be overturned. Thus, potentially, irrespective of a state court’s ruling, if the CAB continues to consistently make this ruling, the division of restored retired pay will be possible, at least for the spouses that have the financial means to appeal the initial determination from DFAS that the retired benefits are denied. Additionally, given that the CAB gets its authority in the ability of government to resolve claims made against it, the government’s ability to resolve claims does not preclude a suit in federal court by a party who believes the government (through the CAB Board) failed to act according to the law/precedent set through the opinion issued. See St. Louis, B. & M. R. Co. v. United States, 268 U.S. 169, 174, 45 S. Ct. 472, 474 (1925). Potentially, if a litigant suffers harm (i.e. is denied the ability to receive CDRP payments, the litigant can potentially bring this issue to a federal court as well.

In the future, this ruling from the CAB could be put to the test against the United States Supreme Court holding in the Mansell case. The Mansell case said, at its essence that CDRP is not divisible because reductions in retired pay required by Title 5 or 38 or chapter 61 of title 10 are not considered disposable retired pay and thus not divisible. The CAB holding on the other hand indicates that a deduction is only referring to money that the government keeps so restoring retired pay is not a valid deduction as this is not money kept by the government. As CDRP did not exist at the time of the Mansell opinion, this was not addressed in the holding, however, the court also did not provide a solid definition of the meaning of a “deduction.” Potentially, the Mansell holding does not contradict the CAB holding/finding. However, even more interesting is that the Howell holding seems to much more clearly articulate that dividing disability pay on any level would violate Mansell. Mansell focused on overruling/disallowing state court determinations of indemnity in lieu of an actual loss for disability pay.

Perhaps, this will begin a line of cases and considerations to change or update the current case holdings which are the standard on this topic: Mansell and Howell. It will be interesting to see how the law surrounding the divisibility of military retired pay and military disability pay continues to develop!