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'(B) with respect to severance pay to which he is entitled 'under any provi. sion of law other than section 680 of that title, to elect either to receive that severance pay or to receive readjustment pay under this section, but not both.';

"(4) by amending subsection (c) to read as follows: "'(c) Under regulations to be prescribed by the Secretary concerned or the Administrator of Veterans' Affairs, as the case may be, there shall be deducted

'(1) from the monthly retired pay of an officer who has received readjustment payments under the second sentence of subsection (a) and who qualifies for retired pay under any provision of title 10, United States Code, except"and at this point insert the exception relating to title 3 retirees, that is this language:

After the word "code" insert "except chapter 67 thereof."
Mr. ANDERSON. At what point does that go in?

Mr. SLATINSHEK. That goes in on line 17, after the words “United States Code,” insert the language "except chapter 67 thereof."

In other words, any retirement pay to which an individual would be entitled under title 10, which relates to the Armed Forces, would require recoupment of the readjustment pay, except in the instance of an individual retiring under title III of Public Law 810.

Mr. RIVERS. Very fine. We understand that completely.
Mr. ANDERSON. Chapter 67 is now title III?
Mr. SLATINSHEK. Yes, sir; it is the codified version of title III.
Mr. RIVERS. Go ahead.
Mr. SLATINSHEK (reading):

(2) from the monthly compensation of an officer who has received readjustment payments under the second sentence of subsection (a) and who qualifies for compensation under any law administered by the Veterans' Administration for a disability incurred during a period for which he has received that readjustment payment.

At this point we should again—a typographical error-move the remainder of line 24, beginning with the words "an amount sufficient to recover”—move that entire section over to the margin, so that it again applies to both (1) and (2). Mr. RIVERS. Yes. As we did in that other section.

Mr. SLATINSHEK. Yes, sir. an amount sufficient to recover, during the life expectancy of the officer, that part of the readjustment payment based on service performed after June 30, 1959. However, the deduction may not be more, in any 1 month, than 25 per centum of the officer's, monthly compensation. There shall be deducted from any severance pay to which an officer who has received readjustment payments under the second sentence of subsection (a) is entitled under section 1212, 3303 (d) (3), 3786(b), 6382(c), 6383 (f), 6384 (b), 8303 (d) (3), or 8786(b) of title 10, United States Code, an amount equal to that received as readjustment payments. However, in place of the deduction described above, a Reserve officer who has received readjustment payments under the second sentence of subsection (a) may elect to have deducted, from the years of service with which he would otherwise be credited in determining his eligibility for retired pay and in computing the amount of his retired pay, all periods for which he received readjustment payments under that sentence.

Mr. RIVERS. That helps them liquidate it.

Mr. SLATINSHEK. Yes, sir. That was designed originally to take care of these title III people who have an abundance of years and who could remove those active years from the computation. But it would also have an application, of course, theoretically at least in the case of voluntary retirement from active duty.

Am I correct?

Mr. MINOR. Yes.

Mr. Rivers. Now, where you refer to those sections of the code up there, be sure you comply with the Ramseyer and our explanation.

Mr. SLATINSHEK. Yes, sir.

Mr. RIVERS. Because we will be asked questions. They will say, "Rivers, what does that mean?"

I will say, “I don't know. I will have to ask Mr. Ramseyer Slatinshek."

Mr. SLATINSHEK. Yes, sir, I will be prepared.

Mr. BARTIMO. Would you like a short summary on what every one of them means? I have them written here in my notes.

Mr. RIVERS. Mr. Slatinshek can put that in the report.

Mr. Slatinshek, refer to the appropriate sections of this act to which we make an addition.

Now, if the committee wants to hear them, it is all right with me.

Mr. ANDERSON. Mr. Chairman, perhaps I am he only one in the committee who doesn't follow exactly what we are doing here in this subparagraph (2). We are forcing repayment from those who have disability under the Veterans Administration.

Now, what is the philosophy behind that? Mr. SLATINSHEK. Well, sirMr. Rivers. That is the overpayment, isn't it? Mr. CHAMBERLAIN. It is the cake and eat it" clause. Mr. SLATINSHEK. That is basically it. Mr. ANDERSON. It is what? Mr. SLATINSHEK. It is basically precluding the possibility that he will get both readjustment pay and retirement benefits. Theoretically, if a man incurs a disability while on active duty he will be either retired from the military-well, he will be retired from the military and will also be entitled to retirement benefits based either on his military situation or on schedules promulgated by the Veterans' Administration.

Mr. RIVERS. You see, General Anderson—as you know, we had a lot lot of contention about that after the war. Rather than taking a Reserve and retiring him under the disability status of the military, they said, “Well, you take your chances before the Veterans' Administration."

That is why they went to the Veterans' Administration. And in the case of an unjust recoupment or whatever you want to call it, this takes in the veterans. It is your "cake and eat it” thing.

Mr. ANDERSON. We are not working an undue hardship on Reserve officers under this section?

Mr. Rivers. No. That is not my understanding. That is where he has had

Mr. SLATINSHEK. Well, sir, let me be very clear. This is my opinion and I would like Mr. Bartimo to clarify this.

Mr. Rivers. Mr. Bartimo, that is not my understanding of it. Mr. BARTIMO. No. Mr. SLATINSHEK. It could be conceivably a hardship. I feel the committee should be aware of it. In this type of situation:

Let's assume we have a Reserve officer who has X number of years of service. He is about to be involuntarily released or he has completed a contract period. At this stage of the game he is given a physical

in connection with his separation from the service and there has been nothing discovered which indicates a physical disability. Subsequently he goes to inactive duty and 6 months later something shows up.

He makes a claim to the Veterans Administration and the Veterans' Administration determines that there is in fact a service-incurred disability and therefore he is entitled to disability compensation from the VA.

He would then be precluded from getting disability compensation benefits from the VA until the amount of money

Mr. MINOR. No.

Mr. SLATINSHEK. You correct me if I am wrong. That is my interpretation, however.

Mr. ANDERSON. He would not be precluded but it would be paid back.

Mr. RIVERS. What is your name?

Mr. MINOR. My name is Minor. I worked on the drafting of this. I would like to explain

Mr. SLATINSHEK. With the Department of the Air Force.
Mr. RIVERS. Yes, sir. Go ahead.

Mr. MINOR. There are two provisions here, one of which says you recoup at the rate of 25 percent per month from any retirement or pension benefits, any amount paid under this.

The rest of these things, that has all the sections in it, that the chairman talked about, deal with another problem entirely, and that is with severance payments given to officers who are discharged. This merely says that you can't get two kinds of service payments from the military services.

An example would be an officer who serves for 5 years on active duty as a Reserve officer. And this happens quite a few times. He finishes his contract. He is involuntarily released and goes home with a payment under this act in his pocket.

For some other reason, later on, he becomes a Regular officer of an armed force and then becomes entitled to some sort of severance pay as a Regular officer. This merely says that whatever severance pay he gets later on as a Regular officer, he may not count that service that he got paid for as a Reserve officer; or if he does count it, he must deduct the amount of money he got as a Reserve officer. There are two parts.

Mr. RIVERS. You have run into lots of cases where the man was called on by the Treasury to pay back money after GAO/listen to this, Mr. Minor. You find a lot of cases where the GAO has found out that some disbursing officer has paid a man something he wasn't entitled to. And a few years after he gets home he finds out about it.

They say, “You owe us money."
He says, "I don't know anything about it.”
But he still has to pay.

This does not excuse him. You may have to introduce a bill to excuse him, but under the law he is not excused. And they are the sections of the code which relate to that.

Mr. ANDERSON. But this is in the matter of degree so far as the disabled retiree is concerned comparative, with the exception that we just made to the title III people, is it not?

Mr. BARTIMO. Mr. Chairman, may I
Mr. RIVERS. Yes.

Mr. BARTIMO. I think it might serve a useful purpose if I did just pinpoint what these sections do in a very short time, because there appears to be some confusion.

Mr. RIVERS. It is worth it for us to take the time. So you go ahead, so the general can understand it and I understand it.

Mr. BARTIMO. For example, take section 6382(c). This section deals with Navy and Marine Corps officers who have received severance pay at the rate of 2 months per year served, not to exceed 2 years.

That is in effect what we are doing under this law. This section of the law provides that a man who has served and is r.i.f.'d out, gets 2 months' pay for each year served.

The Navy happens to have that law on the books today.

Now, take the next section, 6384. This section applies to Regular Navy and Marine Corps officers discharged for unsatisfactory performance of duty. What do they get? They get 2 months of basic pay multiplied by the number of years in which they serve. This happens to be on the books for them.

The point here sir, is this, as Mr. Minor, I think, stated it.

If these officers have gotten this severance pay, 2 months per year year served, and by some fluke or some other device they get back on active duty, you certainly don't want them also to receive readjustment pay which would be in effect at that time for the same period. And all we are guaranteeing here is that such a person doesn't get paid under two separate statutes.

Mr. RIVERs. Now, get back to General Anderson's specific question. If he should by some fluke get back on active duty and get a disability and get in the Veterans’ Administration—now, that is your question.

Mr. ANDERSON. I don't know that he would have had to have gone back on active duty. Would this not apply to a reservist who gets out and develops a physical condition which would entitle him to

Mr. Minor. Sir, the answer to that one is that we treat a pension from the Veterans' Administration exactly like we do retired pay in this case. In either case, if he gets retired pay later or if he gets a pension later, we deduct from that an amount equal to 25 percent of it, until he has paid back the amount of severance pay he got under this bill.

Mr. ANDERSON. I understand that is what you propose to do, and I am trying to find out whether or not there is inequity.

Mr. RIVERS. They do it now.
Mr. ANDERSON. This is the first two sentences.

While I appreciate what the counsel said about all these other paragraphs, it is the first two sentence of (2) in which I am interested.

Might I ask if the ROA has considered this matter?

Mr. Rivers. Let me say this thing first. Will you excuse me, General!

Mr. ANDERSON. Of course, yes.

Mr. RIVERS. This puts the Reserve in the same legal status as a Regular; am I right or not?

(Colonel Boyer nods.)
Mr. RIVERS. Mr. Bartimo and Mr. Minor?

Mr. BARTIMO. Yes, it does, Mr. Chairman, for this reason: That if a Regular officer should under any provision of law receive what we call severance pay and later get retirement pay, he can't collect one cent of retirement pay until he has returned all of the soverance pay he received.

Mr. RIVERs. And this applies at present to the reservists? Mr. BARTIMO. As a matter of fact, I think the Reserve officer gets a little better break, for this reason, Mr. Chairman: The Reserve officer is only going to pay it back at the rate of 25 percent of his retirement pay per month and therefore in the example which I gave the Reserve officer who has retirement pay at the rate of $200 per month after having previously received severance pay-he would receive $150 per month instead of the $200. In other words, 25 percent is deducted over the period of his life expectancy.

Mr. RIVERS. That is right.

Mr. BARTIMO. And actually, Mr. Chairman, in some cases he would probably never live long enough to pay it all back.

Mr. RIVERS. Now, Colonel Boyer, what have you so say?

Colonel BOYER. I thought maybe I might help clarify your disability conversation, disability retirement. A man who gets sick or disabled through wounds or otherwise on active duty is put before a medical board and he is finally evaluated and they either find there is no percentage of disability or he is 10 to 100 percent. Of course, anything over 75 percent he doesn't get.

Now, 10 or 20 percent disability finding by a service medical board is a lump-sum settlement. Ho gets severance pay. I believe it is 2 months for each year of active duty.

(Mr. Bartimo nods.) Colonel BOYER. Then he is knocked out of ever qualifying for retirement. If he accepts that, he is through.

Now, the other means: If he gets 30, 40, 50, he gets that much retired pay, starting on the date that he accepts.

Now, on disability compensation, that is awarded by the Veterans Administration. And while they are supposed to apply the same type of medical records with reference to his disability-the Veterans' Administration goes a little further. They decideis maybe 10 or 20 percent disabled and is making as much money in civilian life with this disability as he would otherwise. And we have lots of cases where the Veterans' Administration pays anywhere from 10 to 50 percent disability and the Army and the Navy-I don't remember about the others, but I know the Army carries him as physically qualified as a Reserve officer. He goes on active duty and he waives the disability payment to receive his active duty payment.

So this question was fully discussed when the Pay Readjustment Act of 1956 was under consideration. And your committee at that time decided that anyone who was awarded disability compensation by the Veterans' Administration-it was awarded on the basis that before he got his readjustment pay he got his choice. If he took his readjustment pay and later was awarded it, he would have to pay it back.

So I don't think there is very much we can do in that case.
Mr. RIVERS: General
Mr. ANDERSON. This continues the policy on readjustment pay?
(Colonel Boyer nods.)

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