Prior to 2003, the U.S. Department of Veteran Affairs ran a disability compensation program. It's popularity stemmed from the manner in which disabled veterans of the United States Armed Forces could waive a portion of their disposable military retirement pay and receive VA compensation for that waiver in exchange. That compensatory pay from the VA was exempt from federal and state taxes. Depending on the disability rating of the veteran it was entirely possible that his or her entire retirement pay could be converted into tax free income.
While supporting US veterans (which is a laudable goal), Congress simultaneously sheltered VA compensation from garnishment actions by ex-spouses of veterans and made equitable treatment in state family proceedings a small nightmare. State courts and the attorneys of ex-spouses of disabled veterans found a loophole in applying indemnity clauses which naturally were crafted with varying degrees of skill.
In the early 2000s, Congress enacted two new entitlement programs: Concurrent Retirement and Disability Pay (CRDP) and Combat Related Special Compensation (CRSC). These two programs operate under different rules, but numerous difficulties arise when disabled veterans and their ex-spouse transitioned from the old system which was in place when they were divorced into the new system, for which their final judgment for dissolution of marriage was not written.
How should a family law attorney handle such a case when a former spouse is requesting that they file a motion to enforce and/or hold the disabled veteran in contempt? What questions and issues arise? How can one avoid the pitfalls of the dreaded s. 57.105 notice from opposing counsel? Let's try and cover the basics:
The Defense Finance and Accounting Service (DFAS)
DFAS is the government agency mandated to process the payments of CRDP and CRSC funds to disabled veterans and any ex-spouse entitled to a portion of their disposable military retirement pay pursuant to any final judgment for dissolution of marriage.
Once an application by a disabled veteran requesting consideration under the new entitlement programs is received, DFAS will assign the veteran to the program which pays out the most. This determination is made without regard to any entitlement by an ex-spouse to a marital property split. Inclusion in one program precludes entitlement to the other. It should also be noted that CRSC is only available to veterans with disability related to combat operations (real or simulated). So all disabled veterans (I'm generalizing here) are entitled to CRDP, but not all disabled veterans are entitled to CRSC.
DFAS will accept requests for information from ex-spouses and return information regarding any breakdown in payment from any disposable military retirement pay he or she would be entitled to. What they will not provide are copies of the Retiree Account Statements (RAS) they provide the retiree. This tends to make things terribly inconvenient for the ex-spouse or the attorney seeking information. So unless the cooperation of the disabled veteran is secured, obtaining the RAS sheets must wait until discovery.
CRDP
Concurrent Retirement and Disability Pay (CRDP) is a program enacted by Congress that started on January 1, 2014. Over 10 years, this program "phased in" a reduction of the VA Waiver that eliminated part of the disposable military retirement pay in exchange for VA Disability Compensation. The result, disabled veterans saw an increase in their military retirement pay without a concurrent drop in their VA Disability Compensation.
This program's entitlement is divisible with an ex-spouse pursuant to any final judgment in a dissolution of marriage action, even if that final judgment was written prior to the 2004 transition. So this program is often advantageous to the ex-spouse.
CRSC
Combat Related Special Compensation (CRSC) is an entitlement program for veterans with disabilities related to actual or simulated combat exercises which, to be brief, means that if the veteran was disabled while fighting he qualifies. DFAS handles the payouts for this program as well. If a single dollar is paid out to the disabled veteran under CRSC, no amount of CRDP can be paid.
This program's entitlement is not divisible with an ex-spouse. So being placed under this program is more often an advantage to the veteran and a disadvantage to the ex-spouse of the veteran.
The Inherent Equity and Inequity of the System
Congress, in it's usual "wisdom," created a system whose intent was to no doubt provide an advantage to veterans and simultaneously provide an advantage to the ex-spouses of disabled veterans who should not be cut off simply because the marriage ended.
The problem with the design is that its effects are absolute, and can either work fairly or very unfairly. Consider the situation where a deserving ex-spouse is foreclosed from a payout because DFAS assigned the disabled veteran to CRSC, or an undeserving ex-spouse getting an enormous payout because DFAS assigned the disabled veteran to CRDP. Neither situation is equitable: either the ex-spouse is shafted or the disabled veteran is. Bummer.
So the system works... when it works. The rest of the time it doesn't. Certainly it was not Congress's intent to create a system designed to randomly victimize certain parties to a divorce or reward the unconscionable actions of undeserving parties to a divorce. But effectively that is what they did. What makes this more remarkable (and somewhat disappointing) is the number of JDs in Congress at any one time.
Pre-2004 Final Judgments into Post-2004 Enforcement
The real difficulties when attempting to enforce pre-2004 final judgments after the transition is that the language of the judgment, while advantageous to the represented party under the old system, can become crippling under the new system. If DFAS assigned the veteran to CRDP then life may be a little easier. If the veteran takes steps to switch during "open season" to CRSC in order to shut down payments to an ex-spouse (hint: DFAS will not stop him or her) then an enforcement proceeding may occur if an appropriate QDRO with an indemnity clause was included in the final judgment.
If on the other hand, a disabled veteran switches from CRDP after CRSC was originally assigned, there may be no bad faith and during a switch back to correct the ex-spouse may see a large spike in payment only to see it vanish the next year. This may trigger a legal attack from the ex-spouse that may ultimately prove futile.
This potential for dead-end litigation is raised because the disabled veteran is not required to produce any of the RAS and DFAS will not honor a request to produce them for pre-litigation discovery purposes. This means that in general practitioners will not know if there is a case until they file a motion for enforcement and request discovery. Of course, it isn't unheard of a s. 57.105 notice coming from an unsupported motion. Here are a few tips to avoid unnecessary litigation:
If you are the ex-spouse's attorney:
- Examine the QDRO (or it's equivalent) in the final judgment or marital settlement agreement ("MSA") paperwork and make sure there is an indemnity clause that would support a motion for enforcement.
- Send a demand letter to the disabled veteran for the RAS sheets from 2003-2014. Explain that fluctuations in DFAS payouts are raising suspicion of bad-faith attempts by the veteran to prevent your client from receiving funds. Explain that the veteran may avoid unnecessary litigation through cooperation and that failing to produce the RAS will force litigation.
- Compare the bank statements of the client with the RAS and try to determine whether or not the veteran switched from CRDP to CRSC or from CRSC to CRDP. (See above).
- If it appears that DFAS initially assigned the veteran to CRDP and after the veteran took steps to switch to CRSC, then check the indemnity language.
- Verify your complaints and attach all your exhibits. It doesn't hurt to mention in the Motion to Enforce that "in an attempt to avoid unneeded litigation a demand for the RAS was sent but Respondent but went unanswered."
- File your motion and ancillary paperwork and demand discovery. Once discovery is obtained, re-analyze your client's position.
If you are the disabled veteran's attorney:
- Usually you will only hear from the veteran once a motion to enforce is filed. If you hear from them earlier and a demand letter was received, ask them if they switched from CRDP to CRSC (if they are indeed entitled to CRSC). You might be able to resolve the issue for them without wasting time in litigation.
- Besides the usual reading over of the motion, you should demand the RAS from your client from 2003-2014 immediately (it's probably going to be demanded anyway, so it's better to get it as soon as possible). You can instruct your client to go to
https://mypay.dfas.mil to obtain the sheets or they can write the agency and have the agency send copies.
- If the evidence shows that your client started on CRSC, then your client is standing in a strong position to argue against enforcement. Depending on your strategy, you may want to volunteer the evidence on the back end of a s. 57.105 notice and try to shut the litigation down before it starts.
- If the evidence shows that your client started on CRDP and then switched to CRSC, then your client's position is weakened only by an amount justified by the language in the indemnity clause.
Indemnification Language
Of course, longtime military spouses are divorcing these days, and as before part of any MSA or the final judgment should contain an indemnity clause and a method for splitting the marital settlement agreement. Mathematically
Youngblood v. Youngblood, 959 So.2d 416 (Fla. 1st DCA 2007) is an excellent example of a well drafted (and admitted lucky) indemnity provision. In
Youngblood, the ex-spouse (prior to 2004) was receiving $1,233.25. When the system changed, the ex-spouse began receiving... well, $1,233.25. I won't spoil the read for those of you who are interesting but the structure of the indemnity language was perfect.
Certainly we will likely see more tweaks to the system as Congress revisits this issue. Complaints of inequity will certainly arise as time moves forward from both disabled veterans and their ex-spouses.
Practitioners should fight for an "It is the intent of the Court that
gets paid an amount equal to and that should any changes to the VA disability programs prevent this intention from being realized, then and the Court will revisit this Final Judgment and reform this portion to reflect its original intention." clause. Reciprocity should be considered because this type of clause is of great benefit for both parties. Any future change could have catastrophic effects on the financial stability of either party.
There is almost no case law that this attorney found on CRSC and CRDP programs and how they interplay with pre-2004 VA disability compensation programs. Soon enough an order will be published out of Brevard detailing some of the information contained in here, and I'll revisit this entry and cite the order.
EDIT:
Gertz v. Odzimowski, 22 Fla. L. Weekly Supp. 98c (Fla. Brevard Cty. Ct, 2014)
For the attorneys reading this, if you practice in Family Law and are familiar with military divorce issues I'd like to list you here so don't be shy and email me.
