Court Opinion

ID: 4461186
Source: CourtListenerOpinion
Date Created: 2019-12-04 17:00:41.634446+00
Date Added: 2024-06-11T14:25:30.753603
License: Public Domain

United States Court of Appeals
      for the Federal Circuit
                ______________________

               PRESTON A. MCCORD,
                 Plaintiff-Appellant

                           v.

                  UNITED STATES,
                  Defendant-Appellee
                ______________________

                      2018-2243
                ______________________

    Appeal from the United States Court of Federal Claims
in No. 1:16-cv-00310-EDK, Judge Elaine Kaplan.
                 ______________________

               Decided: December 4, 2019
                ______________________

   JASON MANNE, Pitt Law Veterans Practicum, Pitts-
burgh, PA, argued for plaintiff-appellant.

    STEVEN JOHN GILLINGHAM, Commercial Litigation
Branch, Civil Division, United States Department of Jus-
tice, Washington, DC, argued for defendant-appellee. Also
represented by MIKKI COTTET, JOSEPH H. HUNT, DEBORAH
ANN BYNUM, ROBERT EDWARD KIRSCHMAN, JR.
                   ______________________

    Before NEWMAN, DYK, and REYNA, Circuit Judges.
2                                   MCCORD v. UNITED STATES

DYK, Circuit Judge.
     Preston A. McCord (“McCord”) appeals from a decision
of the Court of Federal Claims (“Claims Court”), which held
that (1) the government properly calculated his entitle-
ment to military retirement back pay; (2) the issue of gov-
ernment recoupment of his severance pay was not ripe; and
(3) he failed to exhaust administrative remedies necessary
to secure an award of out-of-pocket medical expenses. We
affirm the Claims Court’s judgment except as to out-of-
pocket medical expenses. On that issue, we reverse and
remand for entry of judgment awarding the claimed costs.
                       BACKGROUND
                              I
     This case involves the interplay between two statutes
providing disability benefits for retired military personnel.
Section 1201 of Title 10 provides that military personnel
who become disabled in service with at least 20 years of
service or at least a 30% disability rating are entitled to
receive military retirement pay from the Department of
Defense (“DOD”) (hereinafter “military retirement pay”).
Under Section 1110 of Title 38, veterans are also entitled
to receive veterans benefits if they can establish the exist-
ence of a service-connected disability (hereinafter “VA ben-
efits”). But, as discussed below, Congress has provided
that, in general, veterans cannot simultaneously receive
military retirement pay and VA benefits.
    There is also a statutory anomaly. Upon separation
from service, a disabled veteran may be entitled to receive
severance pay if he served less than 20 years and generally
has less than a 30% disability rating or a disability that
was not incurred in time of war or national emergency. 10
U.S.C. § 1203. If the veteran receives military retirement
pay, he is not entitled to severance, and the severance pay
must be recouped from the military retirement pay unless
the government waives its right to recoupment, see 10
MCCORD v. UNITED STATES                                      3

U.S.C. § 2774. On the other hand, a veteran who receives
VA benefits can retain his severance pay if the “disability
[was] incurred in line of duty in a combat zone or incurred
during performance of [a designated] duty in combat-re-
lated operations.” 10 U.S.C. § 1212(d)(2). Thus, a veteran
receiving VA benefits may face a disadvantage if he also
secures an award of military retirement pay because he
would not be entitled to severance pay. However, one ad-
vantage of securing eligibility for military retirement pay
under such circumstances is TRICARE coverage (discussed
below).
                              II
    McCord injured his back while he served in the United
States Army. He was referred to a disability evaluation
program conducted jointly by the DOD and Department of
Veterans Affairs (“VA”). The VA proposed a 20% rating,
which was accepted by the Army’s Physical Evaluation
Board.
    On May 28, 2012, McCord was discharged with a 20%
disability rating. Because his rating was below 30% and
he served for less than 20 years, McCord received sever-
ance pay instead of ongoing military retirement pay. Also,
starting June 2012, McCord received monthly payments
for VA benefits.
    After his discharge, McCord applied to the Army Board
for Correction of Military Records (“ABCMR”) to correct his
record to have at least a 30% disability rating. The
ABCMR denied his application, and McCord sought review
with the Claims Court. The Claims Court reversed and di-
rected the ABCMR to correct his record to reflect “a com-
bined disability rating of thirty percent . . . and, . . . that
[he] was retired with medical retirement pay, rather than
discharged with severance pay.” J.A. 29. The ABCMR
then corrected his record.
4                                   MCCORD v. UNITED STATES

    In March 2018, McCord in his Claims Court action
challenged the government’s calculation of his entitlement
to military retirement back pay and the government’s
claimed right to recover the severance pay. He also re-
quested damages for medical expenses that he incurred as
a result of his not being afforded TRICARE coverage before
the correction. The Claims Court rejected “McCord’s ap-
proach [to calculate back pay] . . . [as] it would provide him
with a windfall by permitting the very ‘double-dipping’ that
the statute forbids” and denied his “relief regarding the re-
coupment of severance pay . . . as not ripe.” J.A. 6, 8. It
also held that McCord “failed to exhaust the applicable ad-
ministrative procedures for securing benefits under
TRICARE” and denied relief. J.A. 9–10.
    McCord appeals to this court. We have jurisdiction un-
der 28 U.S.C. § 1295(a)(3). This court conducts “a plenary
review of the legal conclusions of the [Claims Court] while
reviewing its factual conclusions for clear error.” Stearns
Co. v. United States, 396 F.3d 1354, 1357 (Fed. Cir. 2005).
                        DISCUSSION
             I. Military Retirement Back Pay
    McCord first argues that the government improperly
reduced his military retirement payments by the amount
of his VA benefits. McCord became eligible for military re-
tirement pay from his discharge date because his disability
rating was corrected to be at least 30%. See 10 U.S.C.
§ 1201. The DOD found that he was entitled to military
retirement pay of $37.60 for May 29–31, 2012 and
$37,646.00 for June 2012–October 2017. 1 However, the
DOD determined that McCord could not be paid the mili-
tary retirement pay for the period after June 2012 because
he received VA benefits that exceeded the eligible military

    1   We assume that the claimed back pay period ends
in October 2017.
MCCORD v. UNITED STATES                                        5

retirement pay for each month. The Claims Court upheld
the DOD’s calculation. McCord argues that it was im-
proper for the DOD to reduce his military retirement pay
by the amount of the VA benefits. We disagree.
    Section 5304 of Title 38 provides that a veteran gener-
ally cannot be awarded both military retirement pay and
VA benefits. Specifically, it prescribes a “[p]rohibition
against duplication of benefits”:
   (a)(1) Except . . . to the extent that [military] retire-
   ment pay is waived under other provisions of law,
   not more than one award of . . . [VA] compensation,
   . . . regular, or reserve [military] retirement pay,
   . . . shall be made concurrently to any person based
   on such person’s own service . . . .
38 U.S.C. § 5304. See generally Absher v. United States,
805 F.2d 1025, 1027 (Fed. Cir. 1986) (discussing 38 U.S.C.
§ 3104 (1982), which is the predecessor to § 5304). This
prohibition is inapplicable if a veteran waives his “[mili-
tary] retirement pay as is equal in amount to . . . [his VA]
compensation.” 2 38 U.S.C. § 5305. Specifically, § 5305 pro-
vides:
   [A]ny person who is receiving [military retirement]
   pay pursuant to any provision of law providing re-
   tired or retirement pay . . . and who would be eligi-
   ble to receive . . . [VA] compensation . . . if such
   person were not receiving such retired or retire-
   ment pay, shall be entitled to receive such . . . [VA]
   compensation upon the filing . . . of a waiver of so
   much of such person’s [military] retirement pay as

   2    Another exception to § 5304(a)(1) is that a veteran
with a disability rating of at least 50% can receive both
benefits. 10 U.S.C. § 1414. This exception is not applicable
here.
6                                    MCCORD v. UNITED STATES

    is equal in amount to such . . . [VA] compensa-
    tion . . . .
38 U.S.C. § 5305 (emphases added). Thus, § 5304(a)(1)
bars a veteran from receiving both military retirement pay
and VA benefits absent a waiver under § 5305.
     Here, on September 28, 2011, McCord filed a waiver as
to military retirement pay by “choosing to receive VA com-
pensation instead of military retire[ment] pay” in a disabil-
ity evaluation board claim (the “2011 waiver form”).
J.A. 620. He agreed that if he is “awarded military re-
tire[ment] pay prior to compensation, [the government]
will reduce [his] retired pay by the amount of any [VA] com-
pensation . . . awarded.” 3 Id. Because McCord executed
this waiver, it appears that he cannot receive the claimed
military retirement back pay for the period June 2012–Oc-
tober 2017 as his military retirement pay during that pe-
riod is less than the VA benefits. But McCord argues that
the 2011 waiver form does not constitute a waiver of his

    3   The 2011 waiver form states that:
    Unless you check the box in Item 13 below, you are
    telling us that you are choosing to receive VA com-
    pensation instead of military retired pay, if it is de-
    termined you are entitled to both benefits. If you
    are awarded military retired pay prior to compen-
    sation, we will reduce your retired pay by the
    amount of any compensation that you are awarded.
    VA will notify the Military Retired Pay Center of
    all benefit changes. If you receive both military re-
    tired pay and VA compensation, some of the
    amount you get may be recouped by VA, or in the
    case of Voluntary Separation Incentive (VSI), by
    the [DOD].
J.A. 620. McCord did not check the box in item 13 and thus
chose VA benefits over military retirement pay.
MCCORD v. UNITED STATES                                     7

military retirement back pay. Even if McCord were correct
(an issue we do not decide), he still would confront the stat-
utory bar of § 5304(a)(1).
    As to that provision, McCord contends that
§ 5304(a)(1) does not bar his recovery. In his view, the
word “concurrently” in that section means that it applies
only if the military retirement pay and VA benefits are paid
at the same time. He reasons that he is not receiving both
benefits at the same time because the military retirement
back pay will be paid in the future whereas the VA benefits
were paid in the past. This argument lacks merit because
§ 5304(a)(1) refers to awards of benefits made “concur-
rently” meaning for concurrent periods. 38 U.S.C.
§ 5304(a)(1). The timing of the payment is irrelevant.
    Not only is the statute clear, but also it would make no
sense for Congress to make a veteran whose disability rec-
ord was later corrected better off than another whose rec-
ord had no error in the first place. Congress cannot have
intended to give the former a windfall of both military re-
tirement pay and VA benefits just because his record con-
tained a mistake. Such a result would be contrary to the
very purpose of the Military Pay Act which only entitles a
plaintiff to recover “money in the form of the pay that the
plaintiff would have received but for the unlawful [action].”
Martinez v. United States, 333 F.3d 1295, 1303 (Fed. Cir.
2003).
    We conclude that McCord is not entitled to receive ad-
ditional military retirement back pay for the period June
2012–October 2017.
                     II. Severance Pay
    McCord argues that the government claims entitle-
ment to recoup his severance pay but that 10 U.S.C.
§ 1174(h)(1) only allows recoupment from reduction of his
8                                     MCCORD v. UNITED STATES

military retirement pay. 4 Since he will not receive military
retirement pay (except in the amount of $37.60), recoup-
ment, in McCord’s view, is improper. But McCord concedes
that the severance “overpayment issue is not ripe,” Reply
Br. 1, because a debt has not yet been established by the
government and he has requested that the government
waive recoupment and this request has not been yet acted
on. The Claims Court properly declined to reach the sever-
ance pay recoupment issue.
            III. Out-of-Pocket Medical Expenses
     Due to the correction of his disability rating, McCord
became retroactively eligible for retirement benefits in-
cluding TRICARE coverage. McCord seeks damages in the
amount of $4,760.97 for medical expenses that he incurred
prior to his being enrolled in TRICARE. The Claims Court
held that he could not recover because he “failed to exhaust
the applicable administrative procedures for securing ben-
efits under TRICARE.” J.A. 9.
    The government first argues that the Claims Court has
no jurisdiction over McCord’s claim. This argument is
without merit. The Tucker Act provides jurisdiction over a
claim based on “money-mandating” statutes or regulations.
Martinez v. United States, 333 F.3d 1295, 1302 (Fed. Cir.
2003). Here, the “Secretary concerned may pay[] . . . a
claim for . . . pecuniary benefits, . . . if, as a result of cor-

    4     Section 1174(h)(1) provides that “[a] member who
has received . . . severance pay . . . and who later qualifies
for [military retirement] pay . . . shall have deducted from
each payment of such [military retirement] pay an amount,
in such schedule of monthly installments as the Secretary
of Defense shall specify, . . . until the total amount de-
ducted is equal to the total amount of . . . severance
pay . . . .”
MCCORD v. UNITED STATES                                      9

recting a record . . . the amount is found to be due the claim-
ant on account of his . . . service.” 10 U.S.C § 1552(c)(1).
Although § 1552 itself is not a “money-mandating” statute,
it becomes “money-mandating” if a claimant was improp-
erly denied benefits but became entitled to them under
other provisions of law. See Martinez, 333 F.3d at 1314–
15. Here, the benefit McCord seeks—TRICARE coverage—
is a pecuniary benefit that McCord was entitled to receive
as a military retiree under the regulation. See 32 C.F.R.
§ 199.17 (implementing the TRICARE program and stat-
ing that “[r]etirees and their family members” are benefi-
ciaries of this program). This regulation is the source of
McCord’s entitlement to incurred medical expenses during
the period of time he should have been receiving TRICARE
coverage as a military retiree. The Claims Court has juris-
diction over that claim under the Tucker Act.
    The government also contends that the Claims Court
correctly ruled that McCord was required to first apply for
an award under the TRICARE system. This ruling was er-
roneous. McCord’s request is not for a benefit under
TRICARE procedures but rather for the monetary loss that
he suffered due to the government’s failure to provide
TRICARE coverage. The government conceded during oral
argument that McCord is seeking damages for failure to
recognize his eligibility for TRICARE coverage. The
TRICARE reimbursement procedure only covers medical
claims for services “authorized under the TRICARE Pro-
gram,” Claims Processing Procedure, TRICARE Operations
Manual 6010.59-M, Ch. 8, Sec. 1 (revised Oct. 20, 2017),
https://manuals.health.mil/pages/DisplayManualHtmlFile
/TO15/59/AsOf/TO15/c8s1.html#FM69153, and it thus
does not provide a remedy for damages flowing from im-
proper exclusion from the TRICARE program. Exhaustion
of TRICARE procedures is not required for McCord’s claim.
The fact that McCord was retroactively given TRICARE
entitlement does not change this result.
10                                 MCCORD v. UNITED STATES

    McCord claims damages in the amount of $4,760.97,
which is the total sum of his out-of-pocket expenses that he
incurred due to the fact that he was excluded from
TRICARE coverage. The government did not dispute the
damages amount before the Claims Court or in its briefing
in this appeal. Under the circumstances, we conclude that
McCord has shown his damages and is entitled to an award
of $4,760.97.
                       CONCLUSION
    We reverse the Claims Court’s judgment with respect
to McCord’s claim for out-of-pocket medical expenses, and
direct entry of an award for $4,760.97. We affirm the
Claims Court’s judgment in other respects.
 AFFIRMED-IN-PART, REVERSED-IN-PART, AND
               REMANDED
                          COSTS
     No costs.