By Don Holland
The Veterans Disability Protection Act of 2010 (VDPA), could very well be one of the most significant pieces of veterans’ affairs legislation to go before Congress in many, many decades. The fundamental principles used in the development of the VDPA are well documented and deeply rooted within our history as a nation. Passage of this legislation will strengthen and reinforce Congress’s continued legal, moral and ethical obligations to provide absolute and total protection of military disability benefits – with no strings attached.
Everyday in court rooms across the country severely disabled U.S. military veterans are wrongfully stripped of their earned disability compensation by civil court judges and divorce attorneys. This happens when a judge equates veteran’s disability compensation payments as ‘income’ and therefore a divisible marital asset. The VDPA was created to end this practice nationwide.
VA disability compensation is awarded tax-free to a veteran injured in combat, or in the line of duty. This compensation is federally protected from attachment of any kind under USC, Title 38, §5301. The majority of civil court judges do not recognize this Federal law, and divorce attorneys refuse to use this federal code to protect a veteran’s disability benefits from attachment. This questionable practice by divorce court judges and attorneys has directly led to veterans becoming homeless, and even suicidal. Most civil court judges are uneducated about the federal laws which protect veteran’s benefits from third party awards. Judges see no difference between military retirement pay and VA disability compensation, and they wrongfully calculate the veteran’s compensation into a divorce settlement. It is this hardship and injustice facing our disabled veterans which inspired the authoring of the VDPA.
According to the Library of Congress and the Congressional record, veteran’s disability compensation is meant to financially assist a person disabled in the line of duty and to help them live a whole and productive life. This legislation has been on the books since the founding of our country, and Congress has revisited this issue on a number of occasions since then. The VDPA creates yet another opportunity for Congress to clarify and reinforce the federal protection of veteran’s disability compensation from creditors and third parties under any circumstances. Veteran’s disability compensation is not an asset, income, or property. Veteran’s disability compensation is tax exempt, and solely awarded to a single individual based on their particular disabilities. Passage of the VDPA will insure that disability compensation paid out by the U.S. Government goes solely to the eligible veteran, and not another person, or persons.
The VDPA was authored by devoted volunteers from Operation Firing For Effect, a grassroots non-profit veteran’s advocacy group home based in Walworth, New York. The passage of the VDPA would affect every man or woman injured in the line of duty while serving in the U.S. military, past, present, and future, and guarantee the total protection of their earned benefits – with no strings attached.
VDPA Introduction – June 21, 2010
[FINAL DRAFT - 6/28/10]
Veterans Disability Protection Act of 2010 (VDPA)
State Statutes preempted by Federal Statutes constantly eliminate and erode veterans’ disability benefits
States have no laws regarding veteran’s disability benefits because veterans’ statutes are drafted, and controlled by the Federal Government. Veterans like other citizens must come under the laws of Local, State and the Federal Government. By extracting veterans’ disability benefits, State and Local governments violate Statutes enacted by the Federal Government constantly. I speak specifically of the Federal Statutes, which govern military disability benefits only. State and Local governments enact no laws regarding the governing of military disability benefits therefore those laws are preempted by Federal Statutes.
Article VI, § 2, of the United States Constitution provides that the “Constitution, and the Laws of the United States … shall be the supreme Law of the Land.” This Supremacy Clause essentially means that the national government, in exercising any of the powers enumerated in the Constitution, must prevail over any conflicting or inconsistent state exercise of power. The federal preemption doctrine is a judicial response to the conflict between federal and state legislation. When it is clearly established that a federal law preempts a state law, the state law must be declared invalid.
The section of law which is the substance of this bill that has been law in effect since the it was enacted by the Twentieth Congress, Session 1, CH 55 in 1828, codified by United States Code, Title 38, § 5301. The beginning paragraph (a)(1) codifies the essence of the statute by demonstrating the nonassignability and exempt status of a service members military disability benefits by stating, “Payments of benefits due or to become due under any law administered by the Secretary shall not be assignable except to the extent specifically authorized by law, and such payments made to, or on account of, a beneficiary shall be exempt from taxation, shall be exempt from the claim of creditors, and shall not be liable to attachment, levy, or seizure by or under any legal or equitable process whatever, either before or after receipt by the beneficiary.”
A state law may be struck down even when it does not explicitly conflict with federal law, if a court finds that Congress has legitimately occupied the field with federal legislation. Questions in this area require important state and federal interests. Problems arise when Congress fails to make its purpose explicit, which is often the case. The court must then draw inferences based on the presumed objectives of federal law and the supposed impact of related State Action. Unfortunately for veterans this is where the problem begins. Congress enacted the statute but it is up to States where the actual claims exist to interpret the law. Because there is no State regulation of military benefits whatsoever Federal statutes preempt but are disregarded when veterans are the subjects.
Problems associated with this process are as follows:
A veteran is in a position whereby he is to pay certain benefits from his military pay and is in the Superior Court of a particular state. The state judges only observe the full pay of the veteran and nothing more. Therefore the judge may adjudicate a certain portion of the veterans pay in violation of USC Title 38, § 5301. This occurs on a consistent basis simply because state court judges have no idea of the existence or significance of military disability pay and are not concerned as long as they have access to funds of the veteran.
Initial reason for the law
The TWENTIETH CONGRESS. Session. 1 CH 55 1828 was very explicit when it said,
“CHAP. LIII “ An Act for the relief of certain surviving officers and soldiers of the army of the revolution. Sec. 4. And be it further enacted, That the pay allowed by this act shall, under the direction of the Secretary Treasury, be paid to the officer or soldier entitled thereto, or to their authorized attorney, as such places and days as said secretary may direct; and that no foreign officer shall be entitled to said pay, nor shall any officer or soldier receive the same, until he furnish to said secretary satisfactory evidence that he is entitled to the same conformity to the provisions of this act; and the pay allowed by this act shall not, in any, be transferable or liable to attachment, levy, or seizure, by any legal process whatever, but shall inure wholly to the personal benefit of the officer or soldier entitled to the same by this act.
The reason Congress felt so strongly about the disabled veteran and their benefits was because they knew they were earned on the battlefield, a results most severe and horrendous to any human endurance. Amputees, brain and spinal cord injuries, severe burns and disfiguring scars, are all devastating injuries from the battlefield. Congress concluded that these benefits were to be separate benefits and should endure above all others awarded by the U.S. Government. There was no doubt this line of duty benefits resulting from being in the line of duty should be tax free with no strings attached a premise that has not changed since the 1800’s.
The negative effects of lack of State Court guidance on the Federal Law
Over the past 30 years State court judges have violated veterans’ rights and ignored the Federal law by awarding veteran disability compensation to a number of unauthorized persons. A veteran’s disability compensation has been relegated to paying alimony and support, or anything else the court can inject or suffer the embarrassment of jail. Wheelchair, bed bound, handicapped and near dead veterans are being stripped of their benefits in record numbers. Eventually veterans are left sick, handicapped and dying after the courts have stripped them of any remaining dignity.
Proposal for the Federal government to give guidance to State courts and prevent the derogation of military disability benefits
Whenever a veteran comes before a state judicial body the following procedures should prevent violation of the federal statute. (1) It should be ascertained whether or not the person is a veteran; (2) There should be a determination as to whether the veteran has been awarded military disability pay; (3) determine what percentage and what amount of the veterans total pay is military disability pay; (4) exclude any portion of the veteran’s military disability pay from the adjudication of any claim; (5) continue with the original action.
[FINAL DRAFT - 6/28/10]
Veterans Disability Protection Act of 2010 (VDPA)
Since the Revolutionary War and the War of 1812 Americans have given their lives for the pursuit of a single fundamental idealism, the right to be free in a democratic society governed by laws. History has transformed this country into a nation of people under one government. As a developing nation it had to content with political dissonance, as it mature into a concept of democracy. The struggles that ensue would forever shape the way that other nations saw us as a world power. This was no mistake by any mean.
American history has demonstrated that freedom requires a constant vigilance and the sacrifices of many men and women. A war produces causalities in the battlefield, to which the inflicted wounds and injuries have been unimaginable and debilitating.
Historical records obtained from the Library of Congress shows an interesting glimpse into the thought process of our fore fathers, and how they perceived their responsibility to the wounded and injured soldiers. There was a strong connection between sacrifice and a well deserved gratitude of the Nation toward its defenders. Through legislative endeavors Congress enacted laws that would not only give a disabled veteran some relief for their injuries, but also protect it from those persons not entitled. One can just read the laws enacted by Congress and come out with the same conclusion that Congress was serious about protecting these sacred benefits.
While there are many such laws with similar specific language, the ones that have really suffered were the following, but not limited to these only:
- Seventy Fourth Congress Chapter 510; An Act- To safeguard the estates of veterans derived from payments of pension, compensation, emergency officers’ retirement and insurance, and other purposes. Section 3.
“Payments of benefits due or to become due shall not be assignable, and such payments made to, or on account of, a beneficiary under any of the laws relating to veterans shall be exempt from taxation, shall be exempt from the claims of creditors, and shall not be liable to attachment, levy, or seizure by or any legal or equitable process whatever, either before or after receipt by the beneficiary.” Approved August 12, 1935
In an earlier Act in May 15, 1828 it provided the same protection and it was solely for the benefits of the officer or soldier to the same by this act. It is hard to believe that disabling battlefield injuries were any less severe back then, than they are today. The question that come to mind; “when did a disabled veteran become less disabled, or more able?”
- Twentieth Congress under Session I Chapter LIII – An Act for the relief of certain surviving officers and soldiers of the army of the revolution.
Section 4 that the “pay under this act shall not, in way, be transferable or liable to attachment, levy, or seizure, by any legal process whatever, but shall inure wholly to the benefit of the officer or soldier entitled to the same by this act.” Approved, May 15, 1828 (From the Library of Congress)
Congressional records depict a period in our American history that has changed in so many ways, while it’s moral and ethical obligations remains constant when providing relief for its combat wounded and injured soldiers, and their widows and their orphans. It was no fluke that these relief payments were granted special protection. Disabled veterans were being coerced into signing their benefits over to another person for the payment of a debt, or as a gift, while other veterans receiving disability compensation were falling victim to shysters and crooks hell-bent on taking their benefits and compensation away from them.
From the beginning of Colonial Times our Congressional leaders were very explicit and absolute with their language on their implied intent on laws that were enacted to provide protection for disabled veterans. No one was authorized or approved to take a disabled veteran’s disability compensation from them. Furthermore, no legal court process or civil action could deprive the veteran of their earned benefits. Congress had set high standards for the protection of disabled veterans, but as one can see these moral perceptions have deteriorated as civil courts are more determined than ever to go after a disabled veteran’s disability and granting “rights” to those not entitled by federal law to receive any portion of a veteran’s disability compensation.
The language within the context of USC 5301 has been mutilated and manipulated beyond recognition and has consequently become a farce and dishonors many disabled veterans living on a single relief payment from the government. Civil courts continue to punish honorable disabled veterans by incarcerating them because they cannot keep up with the extreme support demand set by the courts and legal fees require to defense themselves against attaching their disability compensation benefits. These relentless efforts by the civil courts have produced and perpetuated veterans’ homelessness to a new despicable level. This situation is only coupled with the increasing suicide among the former and current military population.
There is a rippling effect from military service. Soldiers are coming back from war with disfiguring injuries, TBI, Post Traumatic Stress Disorder (PTSD) and others residuals are having a profound effect on the stability of the family. Sadly, estrange spouses are deserting their sick and disabled partners and taking a significant portion of their disability compensation. The results are devastating, as they are faced with incarceration by civil courts, living on the streets, or in their cars when they refuse to submit to such coerced intimidation.
When a soldier becomes disabled he or she is no longer a whole person. The transition period can be a long and troublesome. When a combat disabled veteran falls on hard times, loses their job, their home, facing bankruptcy, experiencing failing health, emotionally unstable and going through a divorce, the feelings of hopelessness and helplessness can be overwhelming. When facing such hardships the one thing a disabled veteran should be able to count on are their disability compensation benefits, which in many cases are earned on the battlefield with their blood, sweat, and tears. It is at these low points in life when these disability benefits are needed the most, and when they can help the greatest. To allow anyone to arbitrarily or ambiguously take these disability compensation payments from our combat disabled is cruel, unjust and illegal. Congress wrote USC Title 38, section 5301 with all of this in mind. A veteran’s disability compensation was solely intended for the disabled veteran, their surviving spouse, and orphans. The federal government has no interest in the “rights” of any person not entitled to any terminated benefits, other those authorized by law. In addition, Congress has not authorized any veterans’ entitlement to any former dependents, since the welfare of those not entitled has never been the purpose of dispensing veterans’ benefits.
Enforcing Federal law and placing strict limits on access to veterans’ benefits by third parties, to ensure compensation goes mainly to support veterans disabled in the service of their country. The law should be restrictive and precise enough to ensure that, properly applied, it would never permit an able-bodied person to take and enjoy part of the veterans’ payment for the effects of disability he or she suffers.
The following Bill is designed to restore the total and absolute protection of veteran’ disability compensation payments from abuse.
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Amended Section 5301 [W/changes]
TITLE 38 – VETERANS BENEFITS
PART IV – GENERAL ADMINISTRATIVE PROVISIONS
CHAPTER 53 – SPECIAL PROVISIONS RELATING TO BENEFITS
§ 5301. Nonassignability and exempt status of benefits
I. The Secretary in keeping with the initial congressional intent and its moral and ethical obligations to disabled veterans, their widows and their orphan will prohibit any and all determination that pre-empts disability compensation that diverts any payment from the Department, directly or indirectly to a person or persons not authorize, eligible or entitled to such by this Act.
(a) (1) Payments of benefits due or to become due under any law administered by the Secretary
(b) shall not be assignable except to the extent specifically authorized by “federal” law, and such payments made to, or on account of, a beneficiary shall be exempt from taxation, shall be exempt from the claim of creditors, and shall not be liable to attachment, levy, or seizure by or under any legal or equitable process whatever, to include civil and bankruptcy court, either before or after receipt by the beneficiary. The preceding sentence shall not apply to claims of the United States arising under such laws nor shall the exemption therein contained as to taxation extend to any property purchased in part or wholly out of such payments, “but shall inure wholly to the benefit of the veteran entitled to the same by this act.” The provisions of this section shall not be construed to prohibit the assignment of insurance otherwise authorized under chapter 19 of this title, or of servicemen’s indemnity.
(2) For the purposes of this subsection, in any case where a payee of an educational assistance allowance has designated the address of an attorney-in- fact as the payee’s address for the purpose of receiving a benefit check and has also executed a power of attorney giving the attorney-in- fact prohibited.
(3) (A) This paragraph is intended to clarify that, in any case where a beneficiary entitled to compensation, pension, or dependency and indemnity compensation enters into an agreement with another person under which agreement such other person acquires for consideration the right to receive such benefit by payment of such compensation, pension, or dependency and indemnity compensation, as the case may be, except as provided in subparagraph (B), and including deposit into a joint account from which such other person may make withdrawals, or otherwise, such agreement shall be deemed to be an assignment and is prohibited.
(B) Notwithstanding subparagraph (A), nothing in this paragraph is intended to prohibit a loan involving a beneficiary under the terms of which the beneficiary may use the benefit to repay such other person as long as each of the periodic payments made to repay such other person is separately and voluntarily executed by the beneficiary or is made by preauthorized electronic funds transfer pursuant to the Electronic Funds Transfers Act (15 U.S.C. 1693 et seq.).
(C) Any agreement or arrangement for collateral for security for an agreement that is prohibited under subparagraph (A) is also prohibited and is void from its inception.
(D) Veterans in receipt of all or part of disabilities’ compensation payment administered by the Secretary will not be construed in any manner or form as income, whatsoever. Pursuant to Title 26 IRS Code Pub. 525.
(1) A veteran in sole receipt of disability compensation payment by this virtue is not necessarily classified as a retired member of the Armed Forces of the United States of America.
(b) This section shall prohibit the collection by setoff or otherwise out of any benefits payable pursuant to any law administered by the Secretary and relating to veterans, their estates, or their dependents, of any claim of the United States or any agency thereof against
(1) any person other than the indebted beneficiary or the beneficiary’s estate; or
(2) any beneficiary or the beneficiary’s estate except amounts due the United States by such beneficiary or the beneficiary’s estate by reason of overpayments or illegal payments made under such laws to such beneficiary or the beneficiary’s estate or to the beneficiary’s dependents as such. If the benefits referred to in the preceding sentence are insurance payable by reason of yearly renewable term insurance, United States Government life insurance, or National Service Life Insurance issued by the United States, the exemption provided in this section shall not apply to indebtedness existing against the particular insurance contract upon the maturity of which the claim is based, whether such indebtedness is in the form of liens to secure unpaid premiums or loans, or interest on such premiums or loans, or indebtedness arising from overpayments of dividends, refunds, loans, or other insurance benefits.
Amend to delete subsection (c) and move to 5305: Waiver of retire pay
(c) Notwithstanding any other provision of this section, the Secretary may, after receiving a request under paragraph (2) of this subsection relating to a veteran, collect by offset of any compensation or pension payable to the veteran under laws administered by the Secretary the uncollected portion of the amount of any indebtedness associated with the veteran’s participation in a plan prescribed in chapter 73 of title 10.
(1) If the Secretary concerned (as defined in section 101 (5) of title 37) has tried under section 3711 (a) of title 31 to collect an amount described in paragraph (1) of this subsection in the case of any veteran, has been unable to collect such amount, and has determined that the uncollected portion of such amount is not collectible from amounts payable by that Secretary to the veteran or that the veteran is not receiving any payment from that Secretary, that Secretary may request the Secretary to make collections in the case of such veteran as authorized in paragraph (1) of this subsection.
(2) (A) A collection authorized by paragraph (1) of this subsection shall be conducted in accordance with the procedures prescribed in section 3716 of title 31 for administrative offset collections made after attempts to collect claims under section 3711(a) of such title. (B) For the purposes of subparagraph (A) of this paragraph, as used in the second sentence of section 3716 (a) of title 31—
(i) the term “records of the agency” shall be considered to refer to the records of the department of the Secretary concerned; and
(ii) the term “agency” in clauses (3) and (4) shall be considered to refer to such department.
(4) Funds collected under this subsection shall be credited to the Department of Defense Military Retirement Fund under chapter 74 of title 10 or to the Retired Pay Account of the Coast Guard, as appropriate.
(d) Notwithstanding subsection (a) of this section, payments of benefits under laws administered by the Secretary shall not be exempt from levy under subchapter D of chapter 64 of the Internal Revenue Code of 1986 (26 U.S.C. 6331 et seq.).
(e) In the case of a person who—
(1) has been determined to be eligible to receive pension or compensation under laws administered by the Secretary but for the receipt by such person of pay pursuant to any provision of law providing retired or retirement pay to members or former members of the Armed Forces or commissioned officers of the National Oceanic and Atmospheric Administration or of the Public Health Service; and
(2) files a waiver of such pay in accordance with section 5305 of this title in the amount of such pension or compensation before the end of the one-year period beginning on the date such person is notified by the Secretary of such person’s eligibility for such pension or compensation,
the retired or retirement pay of such person shall be exempt from taxation, as provided in subsection (a) of this section, in an amount equal to the amount of pension or compensation which would have been paid to such person but for the receipt by such person of such pay.