An appellate court in New Jersey has ruled that the United State Supreme Court’s decision in Howell v. Howell, means that state courts cannot enforce or otherwise order disabled veterans to reimburse or otherwise indemnify former spouses with veterans disability pay received as a result of a waiver of retirement pay.

In Fattore v. Fattore, the parties were divorced in 1997. They had agreed as a part of the judgment to divide the military pension of the veteran. The veteran became disabled and started collecting disability pay, which he received as a result of a waiver of his pension. Nearly 20 years after the parties were divorced, the former spouse filed a motion to compel the disabled veteran to compensate her for her share of the military pension which had not been paid to her by the Defense Finance and Accounting Service (DFAS). DFAS had explained to her in a letter that pursuant to the Uniformed Services Former Spouses Protection Act (USFSPA), 10 U.S.C. § 1408, only disposable military retired pay was divisible in state court divorce proceedings, and since the veteran was receiving non-disposable disability pay instead, DFAS was unable to compensate or otherwise pay the former spouse. 

The trial court judge ruled that the disabled veteran was required to reimburse his former spouse to make up the amount of the divisible pension benefits the former spouse had been deprived of by operation of federal law.

The appellate court reversed. Citing Mansell v. Mansell, and Howellsupra, the Court noted that the United States Supreme Court had held that the USFSPA preempted state court orders which permitted equitable distribution (or redistribution) of disability benefits to satisfy property divisions in state court divorce proceedings. The Court followed the controlling precedent of Howell by stating that federal law completely preempts states from treating military retirement pay waived to receive federal military disability pay and such disability pay as well as a divisible asset or property. The Court further noted that Howell held that Congress intended to omit disability benefits from disposable retirement pay and state courts cannot overcome Congress’ intent by enforcing or otherwise entering orders that purport to equitably offset the effects upon the servicemember’s pension as a result of his or her waiver to receive disability pay to which he or she is entitled.

The Court held “the order in this case requiring the calculation of the hypothetical pension benefit waived as a result of defendant’s receipt of disability benefits, and payment of the figure from another asset belonging to defendant, is preempted and reversed.” 

Importantly, the court held that since Mansell had already held that the USFSPA expressly excluded veteran disability benefits from the definition of disposable retired pay prior to the entry of the parties’ divorce judgment, the former spouse could not rely on principles of res judicata or collateral estoppel. The state court was bound to follow federal law.

This is another example of the sweeping reach and effect of the Supreme Court’s decision in Howell, a rare “unanimous” decision in which the United States Supreme Court followed each of the arguments of law posited in the amicus curiae (friend of the court) brief by Veterans of Foreign Wars and Operation Firing for Effect, which submitted on behalf of all disabled veterans by attorney Carson J. Tucker.