Is Counting VA Disability Pay in Divorce Legal? [Gazette, The (CO)]

A disabled veteran has asked the U.S. Supreme Court to consider anew whether states violate federal law when they allow divorce courts to count a veteran's disability compensation in calculating spousal support.

The petition also invites the justices to consider an issue that states are more sharply divided over: whether federal law bars state courts from considering VA disability benefits communal property to be divided in divorce like other marital assets.

In dissolving the near 20-year marriage of Peter James Barclay, an Air Force veteran, and his wife Claudia Kay, an Oregon district court judge in 2010 considered the value of Peter's VA disability payments in awarding spousal pay of $1000 a month. His only income is VA benefits and Social Security Disability Insurance, a tax-free total of just over $4400 a month.

Barclay, 42, suffers from post-traumatic stress from his role as a Tinker Air Force Base first-responder to the 1995 bombing of the federal building in Oklahoma City. Barclay cleared debris and helped recover the dead and wounded. In time, PTSD made him unemployable and eligible to draw VA compensation at the 100-percent disabled rate.

Barclay argued at trial that to include his disability pay in calculating spousal support would violate federal law. The court ignored that argument and the Court of Appeals of Oregon affirmed its decision.

His Washington D.C. attorney, Michael D.J. Eisenberg, this month petitioned the Supreme Court to consider whether a law, which makes VA disability benefits immune "from taxation, claims of creditors, attachment, levy and seizure," doesn't also bar inclusion of disability pay, directly or indirectly, in spousal support calculations.

"We have two good reasons to be heard before the court," Eisenberg said in an interview. "One is the fact that the states are ignoring federal law. And two, states are split on how they are executing federal law."

The petition concedes that most states have adopted the approach used in Oregon, that disability pay can be used toward alimony. This is based on the Supreme Court's 1987 Rose decision, which said the legislative history of VA disability benefits shows that these payments are intended to compensate both the veteran "and his family."

Eisenberg disagrees. Disability pay, he said, is to compensate the veteran for loss of income due to a service-connected medical condition. If the veteran has a spouse, VA compensation tables set payments higher. But that extra amount, in recognition of the sacrifice the spouse makes in living with a disabled vet, stops if veteran gets divorced. That means the spouse has no direct claim on the compensation.

"It's not like the veteran's disability caused the spouse a military-related disability," Eisenberg said. If a former spouse has no disability, she "has an advantage over the veteran" that the Oregon court should have considered and not try, using VA compensation, to "even the playing field." Doing that gives the former spouse an advantage over the veteran, he said.

Barclay's former spouse claims to have disabilities of her own. But Eisenberg said relief should come from state or federal assistance program like Social Security Disability Insurance, not the veteran's benefits.

Eisenberg acknowledged that a Supreme Court ruling in favor of Barclay would not be a happy result for many former spouses of veterans.

"But let us not forget these VA benefits are to make persons whole for loss of either physical or mental disability incurred while they are serving their country. The spouse is deemed to have no disabilities, certainly no disabilities from military service ... There's nothing in the record to reflect she can't go out and get a job."

Barclay and his former spouse are in the early 40s. He is a veteran but not a military retiree. She worked at home throughout their marriage, raising children who are now grown.

The 1982 Uniformed Services Former Spouses Protection Act, USFSPA, allows courts to distribute "disposable" military retired pay as marital property or as alimony or child support. But Barclay's petition notes that the law also excludes disability compensation from the definition of "net disposable income" that can be divided under the USFSPA.

The petition also points to the Supreme Court's 1989 Mansell decision in favor of a retiree who sought to reduce his spousal support when he won a disability award from the VA. When the retiree began drawing VA benefits, it lowered his military retirement being shared with the ex-spouse.

Despite the harmful impact on former spouses, the court said it had to follow the "plain and precise meaning" of the USFSPA. Justice Sandra Day O'Connor, now retired, dissented, writing that the majority was allowing VA disability compensation to warp the protections of the USFSPA.

Barclay's petition cites O'Connor dissent to point out that Congress hasn't chosen to amend the USFSPA to address her concern. That means Congress still wants disability benefits protected from spousal support calculations, at least for military retirees, Eisenberg argued.

Arizona recently passed a law shielding veterans' disability benefits from alimony calculations. Barclay's petition refers to two other states in which VA disability benefits paid in lieu of retirement (Texas) are not subject to division as property or to alimony calculations (Vermont.)

A prominent attorney on military family law, Marshal Willick of Las Vegas, has written extensively on veterans' disability pay and spousal rights. In fact, when we spoke by phone Wednesday, a small group of veterans angered by his writings had just ended a protest rally outside his law office. The group, Operation Firing for Effect, tracks how state courts treat VA disability benefits and lobby state legislatures to shield those payments.

Willick said every state except Arizona allows veteran benefits to be included in calculating spousal or child support payments based on Rose decision that disability pay was intended to support a veteran's family and not exclusively the veteran. He agreed states are more evenly split on whether disability pay can be divided as marital property.

Eisenberg argues it's time the court addressed the states' "various interpretations" and clarified the law in favor of his client and other disabled veterans. At least four justices would have to agree a review is merited.

Willick expects the petition to be denied without comment.

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