Suddenly Owe $100k for Severance Backpay

N

nadopolo9

PEB Forum Regular Member
Registered Member
I was medically separated (with severance) from active duty in 2018. The BCNR recently ruled that PEB’s initial decision to medically separate me was unjust, then directed NPC & DFAS to place me on the PDRL.

Last month, DFAS informed me that I’m now required to payback the severance amount ($100k). They advised I can request a waiver by filing a DD2789, but that a waiver isn’t guaranteed. Has anyone had a similar experience? Or can anyone provide advice? IMO, I shouldn’t be on the hook for paying back a severance that DFAS gave me as the result of an unjust separation decision.

Thanks all.
 
nadopolo9 said:
I was medically separated (with severance) from active duty in 2018. The BCNR recently ruled that PEB’s initial decision to medically separate me was unjust, then directed NPC & DFAS to place me on the PDRL.

Last month, DFAS informed me that I’m now required to payback the severance amount ($100k). They advised I can request a waiver by filing a DD2789, but that a waiver isn’t guaranteed. Has anyone had a similar experience? Or can anyone provide advice? IMO, I shouldn’t be on the hook for paying back a severance that DFAS gave me as the result of an unjust separation decision.

Thanks all.
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There isn't much you can do other than fill that form out and hope it gets forgiven. I would start with talking to an attorney for advice and a non profit or VSO for guidance on filling out the form. The conclusion of DFAS is logical and that should have been an expected outcome if you filed a BCNR to get it changed.
 
nadopolo9 said:
I was medically separated (with severance) from active duty in 2018. The BCNR recently ruled that PEB’s initial decision to medically separate me was unjust, then directed NPC & DFAS to place me on the PDRL.

Last month, DFAS informed me that I’m now required to payback the severance amount ($100k). They advised I can request a waiver by filing a DD2789, but that a waiver isn’t guaranteed. Has anyone had a similar experience? Or can anyone provide advice? IMO, I shouldn’t be on the hook for paying back a severance that DFAS gave me as the result of an unjust separation decision.

Thanks all.
Click to expand...
No, that's basically how it's gonna work. BCNR waved their magic wand and erased your severance, made it PDRL. You're no longer entitled to that severance pay. So you'll pay it back.

But, I assume they'll just take it out of the PDRL back pay? So does it really matter?
 
PERS-95 said:
No, that's basically how it's gonna work. BCNR waved their magic wand and erased your severance, made it PDRL. You're no longer entitled to that severance pay. So you'll pay it back.

But, I assume they'll just take it out of the PDRL back pay? So does it really matter?
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Hello,

It might be much more complicated.

Considerations:
—Was VA compensation paid for the same period?
—If the severance was based on the same disability (or disabilities) as the VA comp, then some of the severance might have been recouped from the VA compensation in accordance with M21-1.
—Also, to receive VA comp as a retiree, he must waive the retired pay dollar for dollar in the amount of the VA compensation.

Ron
 
RonG said:
Hello,

It might be much more complicated.

Considerations:
—Was VA compensation paid for the same period?
—If the severance was based on the same disability (or disabilities) as the VA comp, then some of the severance might have been recouped from the VA compensation in accordance with M21-1.
—Also, to receive VA comp as a retiree, he must waive the retired pay dollar for dollar in the amount of the VA compensation.

Ron
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Thank you, I do think it is a bit more complicated. Here are my answers to your questions:
—VA compensation (100% P&T) was paid for the same period.
—Since I’m 100% P&T, the recoup requirement was waived at the time.
— Since my VA comp is higher than my retired pay, retired pay is waived.
 
@PERS-95 great analysis! Recoupment, at this stage, is an interesting topic, especially in light of the initial VA-recoupment waiver coupled with SM intiating the BCNR claim that gave rise to the recoupment issue.
 
nadopolo9 said:
Thank you, I do think it is a bit more complicated. Here are my answers to your questions:
—VA compensation (100% P&T) was paid for the same period.
—Since I’m 100% P&T, the recoup requirement was waived at the time.
— Since my VA comp is higher than my retired pay, retired pay is waived.
Click to expand...
Hello,

Ref: Pers-95 said: “No, that's basically how it's gonna work. BCNR waved their magic wand and erased your severance, made it PDRL. You're no longer entitled to that severance pay. So you'll pay it back.
But, I assume they'll just take it out of the PDRL back pay? So does it really matter?”
===

My thoughts:

1. Since you already received VA compensation for the same period, any Retroactive retired pay must be reduced by the amount of the VA comp received. That waiver/reduction might take all the retro back pay.

2. The result of all this (in my opinion) is that a $100,000 debt remains. I recommend you pursue the waiver application opportunity.

Ron
 
RonG said:
Hello,

Ref: Pers-95 said: “No, that's basically how it's gonna work. BCNR waved their magic wand and erased your severance, made it PDRL. You're no longer entitled to that severance pay. So you'll pay it back.
But, I assume they'll just take it out of the PDRL back pay? So does it really matter?”
===

My thoughts:

1. Since you already received VA compensation for the same period, any Retroactive retired pay must be reduced by the amount of the VA comp received. That waiver/reduction might take all the retro back pay.

2. The result of all this (in my opinion) is that a $100,000 debt remains. I recommend you pursue the waiver application opportunity.

Ron
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Thanks, Ron. Here are my responses to each thought:

1. The waiver/reduction did take back all of the retro back pay, wxo $1k. DFAS applied that $1k to my outstanding $100k balance.

2. I intend to pursue the waiver application opportunity with counsel, starting with the following logic as a baseline: According to BCNR, PEB was unjust in its decision to medically separate (vice medically retire) me from active duty. From my perspective, PEB accepted risk in a) making this unjust decision, and b) directing DFAS to pay me the $100k severance. DFAS is owed the $100k, but not by me. PEB/DON should foot the bill because, in making its unjust decision, it accepted both the risk & the responsibility of any ensuing financial consequences.
 
nadopolo9 said:
From my perspective, PEB accepted risk in a) making this unjust decision, and b) directing DFAS to pay me the $100k severance. DFAS is owed the $100k, but not by me. PEB/DON should foot the bill because, in making its unjust decision, it accepted both the risk & the responsibility of any ensuing financial consequences.
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So, IANAL, and I am certainly not the smartest guy in the room, but here is a thought about that.

I don't think PEB was accepting any risk at the time they made their decision. Unless you can show that they made a decision with deliberate malice or negligence, there's no risk in their process. They process thousands of cases each year. Are they going to make a mistake? Sure. Does that mean that they are liable for that? Not necessarily. Keep in mind that PEB is a SECNAV level organization. Essentially, they work for the guy who *IS* the Navy.

The bottom line is, you were paid money by DFAS based on a decision that at the time was considered proper, or at least there was no reason to consider it improper. Now your status has changed. The situation has been reversed. You were paid money based on the previous decision, and now that the status has changed, that money no longer applies. So legally, since you are the last one to have had the money, you are the last one who will probably have to pay it back. It's no different than dealing with any similar situation in a civil court. Whoever had the money improperly is the one who generally has to pay it back.

I still think you should do the waiver. You miss 100% of the shots that you don't take, right? I just think you need to be realistic about the possibility that you're going to have $100,000 taken out of your next couple of PDRL paychecks, or back pay, or however that is being settled.
 
@PERS-95

This is excellent in my opinion:

"I don't think PEB was accepting any risk at the time they made their decision. Unless you can show that they made a decision with deliberate malice or negligence, there's no risk in their process. They process thousands of cases each year. Are they going to make a mistake? Sure. Does that mean that they are liable for that? Not necessarily. Keep in mind that PEB is a SECNAV level organization. Essentially, they work for the guy who *IS* the Navy."

"The bottom line is, you were paid money by DFAS based on a decision that at the time was considered proper, or at least there was no reason to consider it improper. Now your status has changed. The situation has been reversed. You were paid money based on the previous decision, and now that the status has changed, that money no longer applies."

Ron
 
PERS-95 said:
So, IANAL, and I am certainly not the smartest guy in the room, but here is a thought about that.

I don't think PEB was accepting any risk at the time they made their decision. Unless you can show that they made a decision with deliberate malice or negligence, there's no risk in their process. They process thousands of cases each year. Are they going to make a mistake? Sure. Does that mean that they are liable for that? Not necessarily. Keep in mind that PEB is a SECNAV level organization. Essentially, they work for the guy who *IS* the Navy.

The bottom line is, you were paid money by DFAS based on a decision that at the time was considered proper, or at least there was no reason to consider it improper. Now your status has changed. The situation has been reversed. You were paid money based on the previous decision, and now that the status has changed, that money no longer applies. So legally, since you are the last one to have had the money, you are the last one who will probably have to pay it back. It's no different than dealing with any similar situation in a civil court. Whoever had the money improperly is the one who generally has to pay it back.

I still think you should do the waiver. You miss 100% of the shots that you don't take, right? I just think you need to be realistic about the possibility that you're going to have $100,000 taken out of your next couple of PDRL paychecks, or back pay, or however that is being settled.
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This helps, thank you. I think I can make a case for "deliberate malice or negligence" against SECNAVCORB's PFR response. In the PFR response, SECNAVCORB used a short excerpt from an irrelevant mental health note as a "red herring" to distract from the mountain of objective musculoskeletal evidence contained in my PFR.

As an aside, the same SECNAVCORB that replied to my PFR is the same SECNAVCORB that made unjust decisions leading to Torres v. Del Toro, a class action lawsuit of 3,700 Sailors & Marines against DON (link: Navy Loses Class Action Lawsuit)
 
nadopolo9 said:
I was medically separated (with severance) from active duty in 2018. The BCNR recently ruled that PEB’s initial decision to medically separate me was unjust, then directed NPC & DFAS to place me on the PDRL.

Last month, DFAS informed me that I’m now required to payback the severance amount ($100k). They advised I can request a waiver by filing a DD2789, but that a waiver isn’t guaranteed. Has anyone had a similar experience? Or can anyone provide advice? IMO, I shouldn’t be on the hook for paying back a severance that DFAS gave me as the result of an unjust separation decision.

Thanks all.
Click to expand...
Yeah man, I say fire that pigskin and take a shot on that waiver. In my opinion I believe the 100k will need to be paid back in one way or fashion. Probably from withholding until recouped. Errors happen mistakes happen. I imagine you were also in agreement of the decision at the time of your separation as well. I’m on your side and hope you’re on the up and up with this situation! Good luck battle buddy!
 
nadopolo9 said:
I was medically separated (with severance) from active duty in 2018. The BCNR recently ruled that PEB’s initial decision to medically separate me was unjust, then directed NPC & DFAS to place me on the PDRL.

Last month, DFAS informed me that I’m now required to payback the severance amount ($100k). They advised I can request a waiver by filing a DD2789, but that a waiver isn’t guaranteed. Has anyone had a similar experience? Or can anyone provide advice? IMO, I shouldn’t be on the hook for paying back a severance that DFAS gave me as the result of an unjust separation decision.

Thanks all.
Click to expand...
Also, just curious…, did you spend all of the 100k? You don’t have to answer if you don’t want. I’m just curious…
 
To any other retirees who find themselves in a similar situation, this 1996 case may give you hope: Chief Hospital Corpsman, William R. Brown, USN.

"A Navy member was separated due to physical disability and was paid severance pay. The Board for Correction of Naval Records later corrected his record to show that he had been placed on the Temporary Disability Retired List rather than separated. [...] Considering the purpose of the correction board action and to prevent the inequity of placing him in debt in the new status, the net amount of the member's debt, after deduction for retroactive retired pay entitlements, is waived pursuant to 10 U.S.C. sec. 2774. [...] When he was separated from the Navy, he received disability severance pay, which became an erroneous payment when the Board corrected his record to indicate that he was placed on the Temporary Disability Retired List rather than separated. [...] the net amount of his debt (which the service has determined to be $20,475.24) is hereby waived."
 
Quick question. Did your PDRL have anything to do with the Torres v Del Toro decision?
 
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