Compensation for “Waived” Military Retirement Pay

Ruling on Post Decree Election to Waive Military Retirement Pay

After jurisdiction, waived military retirement pay (to receive disability pay) is the next most complicated issue concerning military divorce.

Veterans capture our hearts. Disabled veterans fall in an even more honored slot. Separations are always sorrowful, but they seem to be a little more heartbreaking when a disabled veteran is involved. Disability adds to the stress, emotions, and complications of divorce.

If you feel like you’re drowning in the military divorce terms: VA disability pay, CRDP, and CRSC, you’re not alone. During 2013, this website and our Facebook page have noted concerns about service members’ election to waive retiree pay for receipt of disability pay.

CRSC is Combat Related Special Compensation—a form of pay; a disability entitlement benefit.

The ruling of a Michigan appeal case (discussed below) may be helpful to former military spouses and lawyers, to use as a precedent for those seeking reimbursement due to the 2004 implementation of CRSC.

Michigan Case: MeGee v. Carmine, No. 292207, Macomb Circuit Court, LC No. 1988-003172-DM; (RONALD A. MEGEE, Plaintiff-Appellant, v. JOAN C. CARMINE, f/k/a JOAN C. MEGEE)

• This couple divorced in 1989.
• The service member retired from the Navy in 2008 and elected to receive CRSC, which reduced his disposable retired pay to zero. This wiped out the award to the former spouse.
• In 2009, she appealed and the appeal court issued a new order that effectively forced the veteran to make payments from his CRSC.
• In 2010, it was the service member’s turn to appeal—claiming the court was not permitted to divide CRSC, and thus, he asked for the ruling to make CRSC payments be overturned.

Outcome: Michigan appeals court ruled that the service member must compensate the former military spouse to fulfill the intention declared in the original order or face contempt. The court clarified that while states cannot order that CRSC funds be used for this compensation, the service member was free to do so. Essentially, the judge didn’t care where the compensation funds came from. The opinion was that the service member is:

“financially responsible to compensate his or her former spouse in an amount equal to the share of retirement pay ordered to be distributed to the former spouse as part of a divorce judgment’s property division, where the military spouse makes a unilateral and voluntary post-judgment election to waive the retirement pay in favor of disability benefits contrary to the terms of the divorce judgment.” See source

The logic behind this ruling: The court intends to preserve the intent of and honor the terms set in the original decree.

What about Mansell v Mansell and Division of Disability Pay?

Mansell v Mansell, 490 US 581; 109 S Ct 2023; 104 L Ed 2d 675 (1989) is a case dealing with disability pay. The Mansell case was declared to have no impact or relevance to the subject at hand for two reasons:

1. Title used in Mansell was Inapplicable: Mansell ruling concerned VA disability benefits provided for in Title 38, but the CRSC benefits are included in Title 10.
2. Election After Judgment: The Mansell case dealt with disability pay in existence at time of divorce, not an election made post divorce; post judgement.

Post Decree Actions Cause Confusion with Disability Pay

CRSC is not retirement pay and cannot be divided as an asset in a military divorce.

Confusion arises in cases such as the Michigan MeGee divorce, because crunching current day numbers or looking at today’s pay statements—can give the appearance that the courts have divided CRSC disability pay.

This is simply not true. We have to go back to the situation at time of divorce; the final judgment court order.

Using a simplified scenario may help illustrate the logic behind the Michigan court decision.

EXAMPLE: Suppose a service member has $5,000 in retiree pay and there is a 50% award to the former spouse at time of divorce. The service member receives $2,500 and DFAS pays the former spouse $2,500. Some time later, the service member qualifies for $500 CRSC. DFAS will now compute the Disposable Retired Pay as $4,500 ($5,000 gross pay – $500 CRSC) and pay the spouse $2,250 (computed from 50% x $4,500).

Michigan would say, the service member must make a separate payment to the former spouse for $250. The original decree intended for the former military spouse to receive $2,500.

This is a fair ruling. With the additional compensation, the service member will then take home $2,500 and the former spouse takes home $2,500 as intended in the original decree.

When a service member has waived military retirement pay to receive disability payments, and a former spouse protests, sometimes we hear discussions of the greedy spouse. The perception is the former spouse is taking pay from the disabled veteran. Cases like Michigan’s MeGee v. Carmine should help everyone understand how each party is actually taking home exactly what they agreed to and signed in the final judgment.

CRSC should not be used as a tool, giving one party the ability and control to change a court order.

Take Aways:

• Pay attention to when disability pay was elected.
• Take note of the intention of the original decree.
• Service members electing CRSC can avoid returning to court (avoid new legal fees) by doing the right thing—start an allotment or other form of payment to ensure the intention of their original decree has been met.