WASHINGTON, July 1 /PRNewswire-USNewswire/ -- The Disabled American Veterans hails as a major victory a recent federal court ruling that would restore an estimated $30 million in death benefits that were wrongly withheld from the surviving spouses of disabled military retirees.

The decision in Sharp, et al v. United States, handed down by the U.S. Court of Federal Claims ordered the Department of Defense to refund military retiree Survivor Benefit Plan (SBP) annuities that were withheld from three widowed spouses who also received veterans' dependency and indemnity compensation (DIC) from the Department of Veterans Affairs. The court found that the DoD's dollar-for-dollar deduction of DIC payments from SBP benefits was based on a faulty interpretation of federal law.

"It is deplorable that this had to be brought to court, but after years of fighting, the right decision was made," said DAV Washington Headquarters Executive Director David W. Gorman. "But this case is much bigger than restoring the benefits just to the three courageous widows who served as plaintiffs in this case."

The road to victory in this important case began when one of the plaintiffs, Pamela J. Sharp, the widow of a retired brigadier general, sought DAV's assistance with her survivor's benefits. She explained the Defense Finance and Accounting Service had reduced her SBP payments by the amount of her VA DIC benefits, money she was entitled to and badly needed.

The DAV looked closely into the matter and determined that she and other widows were being shortchanged as well. The DAV referred the widows to the law firm of Weil, Gotshal & Manges, which agreed to handle the case on a pro bono basis.

The court agreed with the plaintiff's argument that the widows' SBP benefits were wrongly withheld by the Department of Defense based on a misinterpretation of federal law.

Because the court's ruling turned on the interpretation of federal law, it also established a precedent that should result in the reinstatement of benefits to an entire class of survivors of disabled veterans.

When a military retiree dies, his or her retirement pay stops, potentially leaving the surviving spouse without a substantial income source.

The SBP is insurance military retirees can purchase from the government so their surviving spouses receive a monthly annuity to help make up for the loss of the retirement income. The DIC is a monthly benefit paid to eligible survivors of military personnel those who died while on active duty or veterans who die as the result of a service-connected cause.

But until the court's ruling, to accept DIC, the Department of Defense required an equal cut in SBP, illegally saving the Pentagon millions of dollars in unpaid benefits. An estimated 59,000 military survivors were impacted by the SBP-DIC offset last year.

The government has projected that the reinstated benefits will exceed $30 million.

"Veterans' survivors benefits are limited, so this is really going to help a lot of financially distressed widows," said DAV National Service Director Edward R. Reese Jr. "It is going to be a challenge to inform all those eligible that this injustice has been righted so they can apply for the benefit, but our National Service Officers will start right away."

The Defense Department is expected to appeal the ruling.

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