Review of Benefit Claims Decisions

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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 3

RIN 2900-AJ99


Review of Benefit Claims Decisions

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

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SUMMARY: This document concerns the Department of Veterans Affairs'
(VA) adjudication regulations. We are adding new provisions to allow
any claimants who file a timely Notice of Disagreement to obtain a de
novo review of their claims at the Veterans Service Center level before
deciding whether to proceed with the traditional appeal process. This
is intended to provide a more efficient means for resolving
disagreements concerning claims.

DATES: Effective Date: June 1, 2001.

FOR FURTHER INFORMATION CONTACT: Bill Russo, Attorney-Advisor,
Compensation and Pension Service, or John Bisset, Jr., Consultant,
Compensation and Pension Service, Regulations Staff, Veterans Benefits
Administration, 810 Vermont Avenue, NW., Washington, DC 20420,
telephone (202) 273-7210 and (202) 273-7213, respectively.

SUPPLEMENTARY INFORMATION: On February 18, 2000, VA published in the
Federal Register (65 FR 8329-8330), a proposed rule which would
establish provisions at 38 CFR 3.2600 to allow any claimants who file a
timely Notice of Disagreement to obtain a de novo review (a new and
complete review with no deference given to the decision being reviewed)
by Veterans Service Center personnel before deciding whether to proceed
with the traditional appeal process. We received written comments from
American Veterans of WWII, Korea and Vietnam (AMVETS), Florida
Department of Veterans' Affairs, National Organization of Veterans
Advocates, Paralyzed Veterans of America, Veterans of Foreign Wars
(Department of Maine), three VA employees and two concerned private
individuals.

Potential Changes to the Traditional Appeal Process

   We proposed to establish a new de novo review procedure that would
be available to any claimant who files a Notice of Disagreement with a
decision on a claim governed by 38 CFR part 3. We did not, and do not,
intend the new de novo review procedure to change the procedures or
rights involved with appealing such claims decisions to the Board of
Veterans' Appeals. We intend it to be an additional, optional procedure
to be conducted, if at all, between a claimant's filing a Notice of
Disagreement and VA's issuance of a Statement of the Case. If de novo
review under Sec. 3.2600 is not requested with the Notice of
Disagreement or after the Notice of Disagreement is filed but within 60
days after VA mails notice of the right of such review to the claimant,
then the appeal will proceed in accordance with the traditional appeal
process. However, a claimant may not pursue de novo review and the
traditional appeal simultaneously. A traditional appeal is suspended
until de novo review is complete. Otherwise, there would be a risk of
duplicative development and inconsistent decisions made in the same
claim.
   Two commenters stated that the proposed regulations are unclear as
to whether they change existing procedures regarding filing and
processing of the Notice of Disagreement and the issuance of the
Statement of the Case.
   The final rule does not modify the procedures of the traditional
appeal process. To make this clear, we are amending the proposed rule
in two respects. At the end of Sec. 3.2600(b), we are adding language
that provides that if a claimant fails to timely request de novo review
under Sec. 3.2600, VA will proceed with the traditional appellate
process by issuing a Statement of the Case. For clarity, we are also
adding a sentence to Sec. 3.2600(b) to preclude any extension of the
time limit. Section 3.109(b) allows for a good cause extension of time
limits within which a claimant is required to act to perfect a claim or
challenge an adverse VA decision. Since the de novo review process is
an optional procedure, not a required one, Sec. 3.109(b) does not apply
to the period during which a claimant may request the de novo review
process. Moreover, VA believes that a 60-day time limit, without the
possibility of extension, is a reasonable amount of time for a claimant
to decide whether to opt for the de novo review process.

[[Page 21872]]

   In addition, we are using the last sentence of the proposed
Sec. 3.2600(b) to begin a new Sec. 3.2600(f). This new paragraph
provides that review under Sec. 3.2600 does not limit the appeal rights
of a claimant, and, if the claimant does not withdraw his or her Notice
of Disagreement as a result of this review process, VA will proceed
with the traditional appellate process by issuing a Statement of the
Case.
   One commenter suggested that the proposed Sec. 3.2600 be amended to
make clear that claimants who have filed a Notice of Disagreement may
present additional evidence.
   This final rule does not modify existing procedures for submission
of evidence. Under current regulations, any claimant may present
additional evidence after filing a Notice of Disagreement (38 CFR
19.37, 20.304 and 20.1304). Furthermore, Sec. 3.2600(c) allows the
reviewer to obtain additional evidence. We therefore make no change
based on this comment.
   Two commenters expressed concern that this rulemaking would limit
the right of a claimant to have a hearing at some point following this
new review process.
   This final rule doesn't place any limitations on existing rights:
38 CFR 3.103(c) states, ``Upon request, a claimant is entitled to a
hearing at any time on any issue involved in a claim within the purview
of part 3 of this chapter, subject to the limitations described in
Sec. 20.1304 of this chapter with respect to hearings in claims which
have been certified to the Board of Veterans['] Appeals for appellate
review.'' In fact, proposed Sec. 3.2600(b) specified that review under
Sec. 3.2600 ``does not limit the appellate rights of a claimant.'' For
these reasons, we make no change based on these comments.

Management and Personnel Matters

   One commenter predicted that implementation of the de novo review
process that VA proposed would increase the backlog of pending claims
because VA would assign its most productive adjudicators to this new
review process. This same commenter predicted that implementation of
this review process will cause a decline in the quality of VA claims
decisions, for this same reason, and because there would be
insufficient oversight of decisions made during this review process.
Another commenter expressed concern that no benefit would be gained
from the de novo review process unless Veterans Service Centers are
authorized to hire additional personnel to conduct the de novo review.
   VA believes that there is no evidence that implementation of the de
novo review process will increase the backlog of pending claims. In
addition, VA believes that any increase in the backlog of pending
claims which might occur as the de novo review program begins, will be
offset by a greater long-term reduction in pending appeals. At the
twelve VA Veterans Service Centers that have participated in the pilot
test of the Decision Review Officer program since December 1997, there
has been a significant decline in the number of substantive appeals
filed. VA also believes that there will be no decline in the quality of
VA decisions due to the de novo review program. There has been no such
decline at the twelve pilot Service Centers. Moreover, decisions
rendered under the de novo review process will be subject to VA Central
Office oversight under VA's Systematic Technical Advisory Review
(STAR), just like other Service Center decisions. VA believes there
will be significant efficiency benefits gained through the de novo
review program: We believe it will reduce the number of cases that go
to the Board of Veterans' Appeals, which will in turn reduce the number
of claims which must be readjudicated on remand from the Board of
Veterans' Appeals. We therefore make no changes based on these
comments.
   One commenter suggested that the Decision Review Officers should be
placed outside the chain of command of the Veterans Service Center
Manager and report directly to the Director of their VA Regional Office
to ensure that the Decision Review Officer is independent.
   VA believes that it is not necessary to remove the Decision Review
Officers from the chain of command of the Veterans Service Center
Manager in order for them to function independently. Under the final
rule, a Service Center Manager has no authority, other than the
existing clear and unmistakable error authority under Sec. 3.105(a) or
the difference of opinion authority under Sec. 3.105(b) (which must be
approved by VA Central Office), to overturn a Decision Review Officer's
decision. We therefore make no change based on this comment.
   This same commenter suggested that attorneys perform de novo
reviews under Sec. 3.2600, since attorneys are most familiar with the
statutes, regulations and adjudication manual provisions regarding
veterans benefits.
   VA believes that other staff besides attorneys are qualified to
serve as Decision Review Officers. For example, staff which are
currently working as Hearing Officers or Master Rating Specialists have
extensive knowledge of statutes, regulations and adjudication manual
provisions regarding veterans benefits, and are well qualified to serve
as Decision Review Officers. We therefore make no change based on this
comment.

Representation for Claimants

   Two commenters urged that the de novo review process include a
claimant's duly appointed representative, and that the proposed
Sec. 3.2600 be amended for that purpose.
   Nothing in this final rule excludes or discourages the
participation of claimants' representatives. Furthermore, Sec. 3.103(e)
states, ``Subject to the provisions of Secs. 14.626 through 14.637 of
this title [concerning recognition of veterans service organizations
and accreditation of individual representatives], claimants are
entitled to representation of their choice at every stage in the
prosecution of a claim.'' Therefore, we believe that VA regulations
make it clear that a claimant is allowed to have representation during
this new review process, and we make no change based on these comments.

Timing of VA Notice of Right to De Novo Review

   One commenter said that the proposed regulation fails to make it
clear when the VA will send the claimant notice of the right to the de
novo review.
   Based on this comment, we have specified in Sec. 3.2600(b) that VA
will send the notice ``upon receipt of the Notice of Disagreement.''

Timing of Claimant's Request for De Novo Review

   Two commenters said the proposed rule was unclear as to whether a
request for a de novo review, filed at the same time as the Notice of
Disagreement, would be considered valid.
   VA concurs. We have amended Sec. 3.2600(b) to provide that a
claimant may request review under Sec. 3.2600 with his or her Notice of
Disagreement or after the Notice of Disagreement is filed but not later
than 60 days after VA mails notice of the right to de novo review.

Time Limits for VA Action

   One commenter suggested that this rulemaking include a provision to
require VA to respond to a Notice of Disagreement within 30 days. We
believe the intent of the comment is to require, by regulation, that VA
furnish notice of the right to a review under Sec. 3.2600 within 30
days of the receipt of the Notice of Disagreement. This

[[Page 21873]]

commenter felt that this would improve VA's accountability to
claimants.
   VA believes that it would be inadvisable to set a deadline for VA
to furnish this notice. Instances arise where VA must ask the claimant
to clarify some aspect of the Notice of Disagreement. This would make
it impracticable for VA to furnish the notice within a specified time
period. We therefore make no change based on this comment.
   One commenter suggested that this rulemaking strictly limit the
time VA has to conclude the de novo review, for example, within 30-60
days.
   We believe that it would be inadvisable to set time limits on the
review process. Due to factors such as VA's workload or illness of the
claimant, there may be unavoidable delays in scheduling an informal
conference or obtaining additional relevant evidence. We therefore make
no change based on this comment.

Clear and Unmistakable Error

   One commenter stated the rulemaking is unclear as to whether the
reviewer will have independent authority to revise decisions based on
clear and unmistakable error, or whether the Veterans Service Center
Manager must approve such decisions.
   Section 3.2600(e) clearly authorizes the reviewer to reverse or
revise prior decisions based on clear and unmistakable error under
Sec. 3.105(a) without obtaining the approval of any other VA official.
We therefore make no change to Sec. 3.2600 based on this comment.
However, VA has amended Sec. 3.104 to make clear that not only
Sec. 3.105 but also new Sec. 3.2600 are valid bases for revision of
decisions on the same factual basis as the initial decision by the
agency of original jurisdiction.
   One commenter stated the rulemaking is unfair because it gives the
reviewer authority to revise decisions based on clear and unmistakable
error in a manner unfavorable to the claimant, without any prior notice
to the claimant. This same commenter stated that the rulemaking should
be amended to allow a claimant to obtain de novo review of a clear and
unmistakable error. This commenter also stated that the potential for
clear and unmistakable error review of prior, final decisions may be a
disincentive to seeking a review under Sec. 3.2600.
 As stated in Sec. 3.2600(e), the reviewer will have the same clear
and unmistakable error authority as any other VA adjudicator under
Sec. 3.105(a). However, we note that Sec. 3.103(b) and Sec. 3.105(e)
and (f) do already require advanced notice of proposed reductions or
terminations of benefits. With respect to clear and unmistakable error
claims filed by claimants, under Sec. 3.2600, if such claims are
denied, the claimant may file a Notice of Disagreement, and will then
be notified of his or her right to the de novo review process, just as
with any other claim governed by 38 CFR part 3. The potential for clear
and unmistakable error review is not unique to the de novo review
process under Sec. 3.2600. It applies to any claim filed subsequent to
a final VA decision. We therefore make no change based on this comment.

Date of Implementation

   One commenter said that the proposed regulations fail to make it
clear which claimants will be eligible for the de novo review (i.e.
those with appeals pending on the effective date of the regulation, or
those filing claims on or after the effective date).
   To clarify this issue, we have added to proposed Sec. 3.2600 a new
paragraph (g), which states: ``This section applies to all claims in
which a Notice of Disagreement is filed on or after June 1, 2001.''
This will provide claimants with a date certain on which the de novo
review will be available. We believe that including claims which are
pending at various stages of the appellate process would be
administratively difficult because the de novo review is designed to
occur prior to the traditional appellate process.

Other Comments

   One commenter suggested that VA conduct de novo review in every
claim in which a Notice of Disagreement is filed, unless claimants
specifically state they do not want to go through this review process.
 As was stated in proposed Sec. 3.2600(b), ``This [de novo] review
does not limit the appellate rights of a claimant.'' We believe the
suggestion made by this commenter would interfere with the traditional
appeal process by requiring claimants who want only the traditional
process (and not the de novo process) to file an extra document which
makes that statement. We also believe that the de novo review process
should be optional for claimants, not mandatory. We therefore make no
change based on this comment.
   One commenter suggested that a favorable decision resulting from
the de novo review process need not contain a citation to the pertinent
laws.
   We believe that requiring all decisions issued under the de novo
review process to contain the items listed in Sec. 3.2600(d) will
provide more consistent, uniform decisions. This will benefit both
claimants and the Board of Veterans' Appeals (if the claim is
ultimately appealed there). We therefore make no change based on this
suggestion.
   One commenter urged that VA allow claimants whose cases have been
remanded to the Veterans Service Center by the Board of Veterans'
Appeals to obtain review under Sec. 3.2600 at that stage.
   Nothing in this final rule modifies the post-remand VA claims
process. We note, however, that no existing regulations or policies
prohibit a Veterans Service Center from assigning whatever staff they
deem appropriate (including the Decision Review Officer) to review a
case following a remand by the Board of Veterans' Appeals. Review by a
Decision Review Officer following remand from the Board would not,
however, be made under Sec. 3.2600 procedures because, as we stated
above, the de novo review under Sec. 3.2600 is designed to occur prior
to the traditional appellate process. We therefore make no change based
on this suggestion.
   One commenter suggested that the proposed Sec. 3.2600 be revised to
give the reviewer authority to grant entitlement to non-service
connected pension on an extra-schedular basis under 38 CFR 3.321(b)(2).
   This final rule is not intended to modify the procedure or
authority established by Sec. 3.321(b)(2), which authorizes only
Adjudication Officers to grant pension on an extra-schedular basis if
schedular percentage standards are not met. That procedure and
authority is intended to function as a rare exception to the general
requirement in Sec. 4.17 that a claimant must meet certain minimum
disability rating percentage criteria to be entitled to pension
benefits. VA believes that the Adjudication Officer (now called
Veterans Service Center Manager in certain VA Regional Offices) is
capable of deciding all such claims. We therefore make no change based
on this comment.
   One commenter suggested that VA should discuss the applicability of
the U.S. Court of Appeals for the Federal Circuit decisions in Hayre v.
West, 188 F.3d 1327 (Fed. Cir. 1999), and Brown v. West, 203 F.3d 1378
(Fed. Cir. 2000), but did not elaborate.
   These cases have no applicability to the subject of this
rulemaking, which is de novo review of certain appealed decisions, so
we make no change based on this comment. We note, however, that the de
novo review process will be available in any claim for which a Notice
of Disagreement has been filed on or after the effective date of this

[[Page 21874]]

regulation, including claims for an earlier effective date (e.g.,
Hayre) and clear and unmistakable error (e.g., Brown).
   Finally, we are making one other change from the proposed rule. We
proposed to add a new subpart D to part 3 and a new Sec. 3.2100, which
would have governed the scope of applicability of provisions in subpart
D. After the proposed rule was published, VA published another final
rule that added subpart D and new Sec. 3.2100. Accordingly, we do not
include either subpart D or Sec. 3.2100 in this final rule.

Executive Order 12866

   The Office of Management and Budget has reviewed this final rule
under Executive Order 12866.

Paperwork Reduction Act

   This document contains no provisions constituting a collection of
information under the Paperwork Reduction Act (44 U.S.C. 3501-3520).

Unfunded Mandates

   The Unfunded Mandates Reform Act requires (in section 202) that
agencies prepare an assessment of anticipated costs and benefits before
developing any rule that may result in an expenditure by State, local,
or tribal governments, in the aggregate, or by the private sector of
$100 million or more in any given year. This final rule will have no
consequential effect on State, local, or tribal governments.

Regulatory Flexibility Act

   The Secretary hereby certifies that the adoption of this final rule
would not have a significant economic impact on a substantial number of
small entities as they are defined in the Regulatory Flexibility Act, 5
U.S.C. 601-612. The final rule does not directly affect any small
entities. Only VA beneficiaries are directly affected. Therefore,
pursuant to 5 U.S.C. 605(b), these amendments are exempt from the
initial and final regulatory flexibility analysis requirements of
sections 603 and 604.

   The Catalog of Federal Domestic Assistance program numbers are
64.100, 64.101, 64.104, 64.105, 64.106, 64.109, 64.110, and 64.127.

List of Subjects in 38 CFR Part 3

   Administrative practice and procedure, Claims, Disability benefits,
Health care, Pensions, Veterans, Vietnam.

   Approved: February 15, 2001.
Anthony J. Principi,
Secretary of Veterans Affairs.

   For the reasons set forth in the preamble, 38 CFR part 3 is amended
as follows:

PART 3--ADJUDICATION

Subpart A--Pension, Compensation, and Dependency and Indemnity
Compensation

   1. The authority citation for part 3, subpart A continues to read
as follows:

   Authority: 38 U.S.C. 501(a), unless otherwise noted.


Sec. 3.104  Amended

   2. In Sec. 3.104, paragraph (a), the second sentence is amended by
removing ``Sec. 3.105'' and adding, in its place, ``Sec. 3.105'' and
adding, in its place, ``Sec. 3.105 and Sec. 3.2600''.


Sec. 3.105  Amended

   3. In Sec. 3.105, paragraph (b) is amended by adding, as the last
sentence, ``However, a decision may be revised under Sec. 3.2600
without being recommended to Central Office.''

Subpart D--Universal Adjudication Rules That Apply to Benefit
Claims Governed by Part 3 of this Title

   4. The authority citation for part 3, subpart D continues to read
as follows:

   Authority: 38 U.S.C. 501(a), unless otherwise noted.


   5. A new undesignated center heading and Sec. 3.2600 are added to
subpart D to read as follows:

Revisions


Sec. 3.2600  Review of benefit claims decisions.

   (a) A claimant who has filed a timely Notice of Disagreement with a
decision of an agency of original jurisdiction on a benefit claim has a
right to a review of that decision under this section. The review will
be conducted by an Adjudication Officer, Veterans Service Center
Manager, or Decision Review Officer, at VA's discretion. An individual
who did not participate in the decision being reviewed will conduct
this review. Only a decision that has not yet become final (by
appellate decision or failure to timely appeal) may be reviewed. Review
under this section will encompass only decisions with which the
claimant has expressed disagreement in the Notice of Disagreement. The
reviewer will consider all evidence of record and applicable law, and
will give no deference to the decision being reviewed.
   (b) Unless the claimant has requested review under this section
with his or her Notice of Disagreement, VA will, upon receipt of the
Notice of Disagreement, notify the claimant in writing of his or her
right to a review under this section. To obtain such a review, the
claimant must request it not later than 60 days after the date VA mails
the notice. This 60-day time limit may not be extended. If the claimant
fails to request review under this section not later than 60 days after
the date VA mails the notice, VA will proceed with the traditional
appellate process by issuing a Statement of the Case. A claimant may
not have more than one review under this section of the same decision.
   (c) The reviewer may conduct whatever development he or she
considers necessary to resolve any disagreements in the Notice of
Disagreement, consistent with applicable law. This may include an
attempt to obtain additional evidence or the holding of an informal
conference with the claimant. Upon the request of the claimant, the
reviewer will conduct a hearing under Sec. 3.103(c).
 (d) The reviewer may grant a benefit sought in the claim
notwithstanding Sec. 3.105(b), but, except as provided in paragraph (e)
of this section, may not revise the decision in a manner that is less
advantageous to the claimant than the decision under review. A review
decision made under this section will include a summary of the
evidence, a citation to pertinent laws, a discussion of how those laws
affect the decision, and a summary of the reasons for the decision.
   (e) Notwithstanding any other provisions of this section, the
reviewer may reverse or revise (even if disadvantageous to the
claimant) prior decisions of an agency of original jurisdiction
(including the decision being reviewed or any prior decision that has
become final due to failure to timely appeal) on the grounds of clear
and unmistakable error (see Sec. 3.105(a)).
   (f) Review under this section does not limit the appeal rights of a
claimant. Unless a claimant withdraws his or her Notice of Disagreement
as a result of this review process, VA will proceed with the
traditional appellate process by issuing a Statement of the Case.
   (g) This section applies to all claims in which a Notice of
Disagreement is filed on or after June 1, 2001.

(Authority: 38 U.S.C. 5109A and 7105(d))

[FR Doc. 01-11028 Filed 5-1-01; 8:45 am]
BILLING CODE 8320-01-U

 

"From this day to the ending of the world,

But we in it shall be remember'd;

We few, we happy few, we band of brothers;

For he to-day that sheds his blood with me

Shall be my brother; be he ne'er so vile,

This day shall gentle his condition:

And gentlemen in England now a-bed

Shall think themselves accursed they were not here,

And hold their manhoods cheap whiles any speaks

That fought with us upon Saint Crispin's day".

 

 

From Henry V by William Shakespeare

 

Bruce "Doc". Melson

http://www.docmelson.com