I-Team: Thousands of veterans forced to repay severance years after leaving military

Why is the government taking back separation pay from Maine veterans? I-Team investigates.

NATIONWIDE (WGME) — The I-Team discovers the federal government is using an obscure law to take back severance pay from thousands of service members who put their lives on the line, and some Maine veterans say it's a slap in the face after years of service.

Service members are often given severance when the military downsizes and closes bases, but now in some cases, years later, the government is taking that money back.

"I joined in 1980; I was 30-years-old," said retired Lieutenant Commander Edgar Cormier, who served our country with pride in the United States Navy for 17 years.

When the Navy wanted to trim its ranks in the late 90s, Cormier was forced out.

"They said your services are no longer required, and we'll throw money at you to make you go away," LCDR (Retired) Cormier said,

According to military records, Cormier was released from active duty, given an honorable discharge and a "separation payment" of about $83,000; he got $60,000 after taxes.

"[I] thought this was a severance pay, just like you get from any major corporation when you're downsized," he said.

He said he used that money to start his new life outside the service.

"You lost your job, you're unemployed, you have to now move because you can't stay in base housing, you have to get your family re-established," he explained.

He later learned he'd have to pay that severance money back to the federal government.

"It's a great kept secret. No one knows about it. The people who give you the money were not told about it," Cormier said.

It took him about a decade to pay it all back with monthly deductions from his disability benefits and then military retirement: $83,000 went back to the federal government, but remember he only took home $60,000.

"That $83,000 bonus now costs me $106,000 because I can't get my $23,000 back that was taken out by the IRS," he said.

The CBS 13 I-Team checked with the Department of Veterans Affairs and the Department of Defense.

Both told us Congress requires them to collect the money and pointed us to federal law, which in fact does require service members to repay severance if they later become eligible for disability or retirement.

"The point is it's wrong. It's wrong to give it, take it, and then take it again, " said Adria Horn, Director of the Bureau

Adria Horn is the director of the Bureau of Maine Veterans' Services.

Horn said this bureaucratic curve ball is often thrown at veterans when they need the money the most, blocking benefits to disabled veterans.

"They will suffer with this type of law in place because they think they're the only one," Horn said.

We asked the VA to tell us how many veterans were given separation money and are now paying it back.

According to a report we were sent, during the last five years, the VA withheld more than $400 million in disability benefits from nearly 25,000 veterans.

Another $261 million will be taken from future compensation.

The Department of Defense couldn't tell us how many people are making payments out of their military retirement.

"Whether there's one person, or 50 people, or a thousand people, if it's wrong, it's wrong it can be addressed and it can be changed," Horn said.

That would have to happen in Congress so we brought the issue to our Maine's United States senators.

"I am very concerned about it. To me it is not fair to recoup that," Sen. Susan Collins (R-Maine) said and told us she'd take a closer look at the issue.

"But that is my first reaction," she said.

Senator Angus King told us he wasn't aware of the issue.

"These people have earned our respect and the support they're due," Sen. King said (I-Maine).

Sen. King said he wants answers, too — specifically if service members are made aware that accepting separation pay could affect any future benefits.

"I wonder if anybody would think that it would apply to disability payments which to me are a separate item, but obviously we've got to get to the bottom of it," King said.

LCDR (Retired) Cormier is concerned this issue will only get bigger as more troops are asked to leave the service.

"It's causing all kinds of family hardships because the DoD is saying we want it back and we want it back now," Cormier said.

A VA spokesman said veterans who can show financial hardship may be eligible for a more lenient re-payment plan.

More than 50,000 people have signed a petition, including more than 200 Maine veterans, asking Congress to repeal the law that requires pay back, before getting disability benefits.

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