Carr v. McDonough, Case Number 16-3438, decided February 19, 2021 involves a veteran who transferred a portion of his 48 months of education benefits to his daughter. After using the benefits for two semesters, his daughter had only one day of eligibility left. She sought to use 38 CFR Section 21.9635(o) to extend her benefits until the end of that semester. The Board determined that 21.9635(y) prevented a transferee from receiving such an extension even though a veteran in the same situation was entitled to such an extension.
The daughter appealed arguing the regulation (21.9635) was inconsistent with the statute (38 USC Section 3319). In a prior decision, the Veterans Court concluded 38 USC 3695 prevented veterans or transferees from receiving more than 48 months of benefits. However, the Federal Circuit reversed that decision interpreting the phrase “may receive” as referring not to the amount of benefits a person “may receive”, but as a baseline limit on entitlement to benefits when combined under more than one chapter. The Veterans Court then reconsidered the regulation question.
A veteran can receive 45 months of education benefits under chapter 34 and 36 months under chapter 33. When a veteran receives benefits from more than one chapter, section 3695(a) provides a 48 month cap of total benefits. However, if a veteran uses up chapter 33 entitlement during the middle of a semester, VA will provide financial assistance until the end of the semester. 38 C.F.R. § 21.9635(o) provides that "If an individual enrolled in an institution of higher learning that regularly operates on the quarter or 3 semester system exhausts his or her entitlement under 38 U.S.C. chapter 33, the effective discontinuance date will be the last day of the quarter or semester in which the entitlement is exhausted."
In this case, the veteran earned 45 months of benefits under chapter 34 and personally used 41 months and 11 days. He returned to active duty and would have earned up to 36 more months, but section 3695 limited his total accumulated months to 48. Thus, he earned another 6 months and 19 days. He transferred his education benefits to his daughter who used a portion to pay for classes in the fall of 2010. After a calculation error was discovered by the VA, it determined she had 19 additional days of eligibility, of which 18 were applied retroactively to the fall of 2010. She applied the remaining day to her fall 2013 semester and sought to extend her benefits to the end of the semester.
The Board denied the argument relying on 38 C.F.R. § 21.9635(y), stating it decides the ending date of an award of educational assistance to a dependent who exhausts the entitlement transferred to him or her is the date he or she exhausts the entitlement.
The Court started by saying:
Ms. Carr argues that VA's regulation
is invalid because it treats veterans and dependents differently and so
conflicts with its enabling statute. Specifically, Ms. Carr contends that, by discontinuing
her educational assistance benefits immediately upon her exhaustion of
entitlement, § 21.9635(y) prevents her from using her educational benefits in
the same manner as a similarly situated veteran, thus violating the authorizing
statute for the regulation, 38 U.S.C. § 3319(h)(2). Section 3319 is the only
authority cited for subsection (y). See 74 Fed. Reg. 14,654, 14,684 (March 31,
2009). On this basis, Ms. Carr has requested that the Court declare subsection
(y) invalid as inconsistent with the law enacted by Congress.
Id. at *3-4.
After a close textual reading, the Court determined:
Because § 21.9635(y) prevents
transferees from using the statutory extension provision enjoyed by veterans (as
recognized in § 21.9635(o)), § 12.9635(y) arbitrarily restricts the manner in
which a transferee is entitled to educational assistance benefits. Therefore §
21.9635(y)'s exhaustion provision conflicts with subsection (h)(2) of its
authorizing statute and is invalid.
Id. at *8.
This is a helpful decision for individuals who received transferred benefits and puts them on the saying playing field as the veteran they received the benefits from.
Decision by Chief Judge Bartley and Judges Pietsch and Toth.
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