Batcher: Spousal Apportionment and Separation Agreements

Batcher v. Wilkie, Case Number 16-0638, decided April 26, 2019 considers the VA’s power to generate a special apportionment for a spouse and how it interacts with state court separation agreements.

The Court specifically “h[e]ld that a domestic relations separation agreement sanctioned by a state court by a judgment of separation plays no role in VA's determination of entitlement to special apportionment. To the extent that such an agreement purports to preclude a veteran's spouse from seeking apportionment of a veteran's VA benefits, the veteran's remedy to make himself or herself whole lies with the state court.”  Id. at *1-2.

“Relevant to this appeal, a veterans benefits statute provides that "[a]ll or any part of the

[VA] compensation, pension, or emergency officers' retirement pay payable on account of any veteran may[,] . . . if the veteran is not living with the veteran's spouse, . . . be apportioned as may be prescribed by the Secretary." 38 U.S.C. § 5307(a)(2).   Id. at *4.  Additionally, the statute has been fleshed out by 38 C.F.R. §§ 3.450 and 3.451.  They state:

to be entitled to special apportionment, a claimant must establish that (1) he or she is a qualifying dependent of the veteran; (2) he or she suffered a hardship during the relevant period; and (3) apportionment would not cause undue hardship to the other person of interest, usually the veteran. 38 C.F.R. § 3.451. Once those criteria are met, entitlement to special apportionment is established and VA  must grant that benefit to the claimant.

Id. at *5-6.

            Initially, the RO had denied special apportionment because the spouse had voluntarily renounced her maintenance or support from the veteran in the state court order.  But, the Board determined in 2015 that the spouse fit the requirements of (1) and (2) and that the veteran did not show undue hardship, and thus it generated special apportionment.

            The veteran essentially argued to the court that the spouse had waiver her right to apportionment when she agreed to accept a lump sum payment, which purported to resolve all past and future maintenance and support obligations.  The Court determined this question was a matter of contract law and best decided by the state court.  It concluded by noting Howell v. Howell, 137 S.Ct. 1400 (2017), is instructive and stating

A federal benefit—Ms. Batcher's right to claim special apportionment, see Belton, 17 Vet.App. at 211—made Mr. Batcher's spousal obligation potentially greater than he anticipated in November 2006. Mr. Batcher could have valued that contingency in the separation agreement and negotiated a lower lump sum payment to account for it. See Howell, 137 S.Ct. at 1406. He apparently did not do so. Nevertheless, the veteran remains free to seek redress from Ms. Batcher in the New York State Court, either by suing Ms. Batcher for breach of contract or seeking modification of the separation agreement based on the changed circumstance of the grant of special apportionment. See id.; see also N.Y. FAM. CT. ACT § 466(a) (permitting modification of a support or maintenance decree based on changed circumstances). In either event, his remedy does not lie with VA.

Id. at *8.

This case resulted in an interesting dissent by Judge Greenberg.  In it he focused on the fact the statute allowing for apportionment addressed a spouse and not an ex-spouse.  He also pointed to an impairment of contracts that potentially impacts Article 1, Section 10 of the U.S. Constitution and ultimately determined it was the spouse and not the veteran who could have sought a modification of the order based on a change in circumstance. 

I do not practice in the area of family law, but believe this case (whether decided rightly or wrongly) potentially creates more uncertainty than not.  It seems family practitioners must now assume that a special apportionment will be requested and potentially granted in the context of divorce cases.

Decision by Judge Bartley and joined in by Judge Toth.  Dissent by Judge Greenberg.

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