Introduction
For decades, Combat-Related Special Compensation (CRSC) existed in a strange legal limbo. Congress created CRSC to restore retired pay that combat-disabled retirees were forced to waive in order to receive VA disability compensation. Yet, despite CRSC’s remedial purpose, thousands of retirees saw their awards artificially capped—often losing years or even decades of compensation—because the Department of Defense applied the six-year statute of limitations in the federal “Barring Act.”
On 12 June 2025, the Supreme Court decisively ended that practice in Soto v. United States. Two months later, on 20 August 2025, the Department of Defense issued interim guidance implementing the Court’s holding and setting new rules for CRSC effective dates going forward. Together, these developments represent the most significant change in CRSC law since the program’s creation.
The Legal Conflict That Reached the Supreme Court
At the center of Soto was a deceptively technical question: does the six-year limitations period in the Barring Act (31 U.S.C. § 3702) apply to CRSC claims, or does the CRSC statute itself provide a separate settlement mechanism that displaces that limit?
The Barring Act is a default claims-settlement statute. It allows agencies to resolve claims against the government, but generally bars payment for claims not presented within six years. Importantly, however, the Act contains an exception: when “another law” provides its own settlement authority, that other law displaces the Barring Act’s procedures and limitations.
CRSC is governed by 10 U.S.C. § 1413a. It authorizes the service secretaries to determine eligibility, assess whether disabilities are combat-related, and calculate monthly payments tied to VA compensation and waived retired pay. For years, DoD argued that although § 1413a created an entitlement, it did not expressly authorize settlement of claims—and therefore the Barring Act still applied.
That argument prevailed at the Federal Circuit. It did not survive Supreme Court review.
What the Supreme Court Actually Held in Soto
In a unanimous opinion authored by Justice Thomas, the Court held that § 1413a does exactly what the Barring Act requires to trigger displacement: it gives the Secretary concerned authority to determine both the validity of a claim and the amount due. In government-claims law, that combination is settlement authority.
The Court rejected the idea that Congress must use “magic words” like settle or include its own statute of limitations. Instead, the Court emphasized substance over form. CRSC is a “self-contained, comprehensive compensation scheme” that runs from application through eligibility determination to payment. Because it authorizes the Secretary to decide who is eligible and how much they are owed, it constitutes “another law” under the Barring Act.
The consequence was straightforward and profound: the six-year bar never applied to CRSC. Retroactive awards cannot be limited merely because a veteran applied late.
The Supreme Court reversed the Federal Circuit and remanded the case, clearing the way for full retroactive relief consistent with the statute’s effective dates .
Why the Decision Matters Beyond Simon Soto
Although Simon Soto’s individual case involved PTSD and a Marine Corps medical retirement, the ruling applies across the entire CRSC population. Thousands of retirees—across all services—had awards limited solely due to the Barring Act. For some, that meant losing compensation back to 2003, 2004, or 2008, depending on statutory eligibility categories.
Equally important, Soto resolved years of inconsistent lower-court rulings and internal DoD positions. CRSC is now clearly recognized as a money-mandating statute with its own settlement mechanism, untethered from general claims-limitation law.
DoD’s 20 August 2025 Interim Guidance: Turning Doctrine into Dollars
Supreme Court victories do not automatically translate into payments. Implementation matters. On 20 August 2025, the Office of the Assistant Secretary of Defense for Manpower and Reserve Affairs issued a memorandum providing interim guidance on CRSC determinations in light of Soto.
The guidance does three critical things.
First, it formally orders all military departments to cease applying the Barring Act to CRSC awards and to remove references to it from CRSC materials. This closes the door on any lingering administrative resistance.
Second, it establishes a framework for identifying and compensating what the guidance calls the “Pre-Soto Population”: retirees whose CRSC awards were previously capped at six years due to the Barring Act. For these individuals, the effective date must be recalculated as if the Barring Act never applied. The correct date is the first date on which statutory eligibility conditions were met—retirement eligibility, receipt of VA compensation with a waiver of retired pay, and satisfaction of one of the combat-related criteria in § 1413a(e), subject to statutory start dates (June 1, 2003; January 1, 2004; or January 1, 2008) .
Third, the guidance sets prospective rules for CRSC determinations made on or after 20 August 2025. Going forward, if a retiree is found eligible for CRSC, the effective date is the date the service secretary first received a completed application. If a retiree later receives CRSC for additional combat-related disabilities, the effective date for those additions is likewise tied to the receipt of the completed application for those disabilities.
This prospective rule is especially important. While Soto eliminates artificial retroactive caps, DoD has now clearly anchored future awards to application dates, reinforcing the importance of timely and complete filings.
The Role of DFAS and Arrears of Pay
The guidance also assigns clear roles to the military departments and the Defense Finance and Accounting Service (DFAS). The services must identify affected retirees, correct decision documents, and transmit revised effective dates. DFAS must compute retroactive payments, notify retirees, and issue payment.
Notably, the guidance addresses deceased retirees. Retroactive CRSC owed for periods before death is treated as arrears of pay, payable under 10 U.S.C. § 2771 to eligible beneficiaries, but never beyond the date of death. This ensures that families are not excluded from relief simply because the veteran passed away before Soto was decided .
A Structural Shift in CRSC Law
Taken together, Soto and the August 2025 guidance do more than fix a technical error. They reaffirm the original purpose of CRSC: to fully compensate combat-disabled retirees for pay they were forced to waive—not to ration that compensation through unrelated claims-processing statutes.
The Supreme Court made clear that when Congress creates a comprehensive benefits scheme and entrusts its administration to a Secretary, courts and agencies must respect that structure. The Department of Defense, to its credit, responded with guidance that largely embraces the decision rather than minimizing it.
For retirees and advocates, the implications are immediate and concrete. Many retirees are now entitled to substantial retroactive payments that were unlawfully withheld. Going forward, the rules of the road are clearer, more predictable, and more faithful to the statute Congress enacted in 10 U.S.C. § 1413a .In the often slow-moving world of military benefits law, Soto v. United States stands out as a rare moment when doctrine, equity, and administration finally aligned—and when the law moved decisively in favor of those it was meant to serve.
