It is exceedingly rare for any controversy to make it to the United States Supreme Court. The court hears approximately eighty cases per year out of the seven to eight thousand that are filed. It is rarer still for the court to hear a divorce related case.
It is also interesting that the court chose to hear a case involving retirement benefits. The division of retirement benefits pursuant to a divorce is one of the most important aspects of the entire case. This issue may not be exciting, but it can have significant financial implications.
In May of 2017, the Supreme Court ruled that states cannot increase a former spouse’s share of a veteran’s military retirement pay to make up for a loss in benefits caused by a waiver to receive disability payments.1
John and Sandra Howell divorced in 1991, and they agreed that Sandra was entitled to half of her ex-husband’s military retirement pay when it took effect. John retired from the Air Force in 1992 after a 20-year career, and both John and Sandra began receiving retirement pay the next year. Years later, John claimed that degenerative joint disease in his shoulder was directly related to his military service and the Department of Veterans Affairs approved that claim in 2005. He qualified for monthly VA disability payments and elected to receive them, which required that he waive an equal amount of money from his military retirement pay to avoid “double dipping,” according to court records. The government accordingly reduced retirement payments to both John and Sandra, causing her to receive $127 less per month. Sandra filed a motion in 2013 to enforce the divorce decree’s division of retirement payments. The family court ruled in her favor, finding that she had a vested property right in 50 percent of John’s retirement pay and neither his election of disability payments nor Arizona law deprived her of that right.
The specific state law at issue prohibits courts from “making up” for a reduction in retirement benefits by awarding more assets to the non-military former spouse.
In 2015, the Arizona Supreme Court affirmed the family court and held that neither state law nor federal law prevents courts from allowing such relief for an ex-spouse when a veteran chooses to waive retirement pay.
Five months after agreeing to hear the case, the U.S. Supreme Court reversed and ruled that the Uniformed Services Former Spouses’ Protection Act pre-empts the state court’s order for John to indemnify Sandra for the reduction in her portion of his retirement pay due to his election of disability benefits.
A federal statute provides that a state may treat as community property, and divide at divorce, a military veteran’s retirement pay. The statute, however, exempts from this grant of permission any amount that the government deducts ‘as a result of a waiver’ that the veteran must make ‘in order to receive’ disability benefits. Justice Stephen Breyer wrote for court.
Breyer cited the high court’s 1989 decision in Mansell v. Mansell, in which it held that federal law prohibited California from treating the waived portion of a major’s retirement pay as community property divisible at divorce.
Can the state subsequently increase, pro rata, the amount the divorced spouse receives each month from the veteran’s retirement pay in order to indemnify the divorced spouse for the loss caused by the veteran’s waiver? The question is complicated, but the answer is not,” Breyer wrote. “Our cases and the statute make clear that the answer to the indemnification question is ‘no.’
Breyer was joined in the decision by Chief Justice John Roberts and Justices Anthony Kennedy, Ruth Bader Ginsburg, Samuel Alito, Sonia Sotomayor and Elena Kagan.
Justice Clarence Thomas filed a separate opinion concurring in part and concurring in the judgment.
I join all of the opinion of the Court except its brief discussion of ‘purposes and objectives’ pre-emption. As I have previously explained, ‘[t]hat framework is an illegitimate basis for finding the pre-emption of state law,’ Thomas wrote. “In any event, that framework is not necessary to support the court’s judgment in this case.”
The high court’s newest member, Justice Neil Gorsuch, did not participate in the consideration or decision of the case.
As a family lawyer in Clearwater, Florida, it is a point of interest that military retirement benefits can be affected by a service member’s waiver after the divorce is final.
The nuances associated with preparing orders that divide retirements benefits require that a special attorney – a Q.D.R.O. attorney – be retained for this specific purpose.
1 Lessmiller, Kevin. “Justices Clarify Benefits in Military Divorce Case”. May 15th 2017. Retrieved from: https://www.courthousenews.com/justices-clarify-benefits-military-divorce-case/.