M21-1MR, Part IV, Subpart II, Chapter 3, Section C




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M21-1MR, Part IV, Subpart ii, Chapter 3, Section C

Section C. Compensation for Certain Paired Organs and Extremities Under 38 CFR 3.383

Overview




In this Section

This section contains the following topics:




Topic

Topic Name

See Page

8

Special Consideration for Certain Paired Organs and Extremities

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9

The Prohibition Against Duplication of Benefits

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10

Preparation of Awards Under 38 CFR 3.383

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8. Special Consideration for Certain Paired Organs and Extremities




Change Date

December 13, 2005


a. Considering Paired Organs and Extremities

In certain cases


  • compensation may be paid for the nonservice-connected (NSC) loss of a paired organ or extremity if the loss of the other organ or extremity is service-connected (SC) under 38 U.S.C. 1160, and

  • the evaluations of these paired organs or extremities are combined as if both were SC.


Note: The loss, or loss of use (L/LOU), of the NSC organ or extremity sometimes leads to legal action by the claimant. If such action is successful and monetary damages are awarded, the Department of Veterans Affairs (VA) must undertake offset action per M21-1MR, Part IV, Subpart ii, 3.C.9.b.
Reference: For information on the criteria for establishing entitlement, see

  • 38 CFR 3.383

  • M21-1MR, Part III, Subpart iv, 6.B.4, and

  • M21-1MR, Part IV, Subpart ii, 2.K.66.



9. The Prohibition Against Duplication of Benefits




Introduction

This topic contains information on the prohibition against duplication of benefits. It includes information on


  • when to provide special consideration under 38 U.S.C. 1160

  • offsetting benefits under 38 U.S.C. 1160 due to damage recovery

  • when the offset provisions apply

  • damage recoveries involving NSC organs or extremities, and

  • the veteran’s duty to notify VA.



Change Date

December 13, 2005



a. When to Provide Special Consideration Under 38 U.S.C. 1160

Special consideration under 38 U.S.C. 1160 is provided if a veteran has L/LOU of




b. Offsetting Benefits Under 38 U.S.C. 1160 Due to Damage Recovery

If the L/LOU of the NSC organ or extremity results from circumstances that could give rise to legal liability, the veteran may seek to recover damages by lawsuit or other means.
If the veteran does successfully recover damages, the amount of damages received (for the NSC disability only) must be offset against the additional benefit payable under 38 U.S.C. 1160.



c. When the Offset Requirements Apply

Offset requirements involving the paired extremities of the hands or feet only have long been in effect, and continue to be in effect, while the offset requirements concerning the remaining paired organs or extremities listed in M21-1MR, Part III, Subpart iv, 6.B.4 apply only to cases in which compensation was granted or increased after October 27, 1986.

Continued on next page

9. The Prohibition Against Duplication of Benefits, Continued


d. Damage Recoveries Involving NSC Organs or Extremities

Benefits received under Social Security (SS) or workers’ compensation are not subject to recoupment, even though the benefits may have been awarded pursuant to a judicial proceeding.
All other recoveries related to the NSC organ or extremity are subject to offset, regardless of whether the payment to the veteran is characterized as a


  • tort award

  • settlement

  • compromise, or

  • administrative award or judgment.


Rationale: The prohibition against duplication of benefits applies whenever the veteran receives a sum of money or property to extinguish a legal claim arising from injury to the affected NSC organ or extremity.



e. Veteran’s Duty to Notify VA

If the veteran is receiving, or files a claim for, compensation for L/LOU of a paired organ due to NSC disability under 38 U.S.C. 1160, he/she is required to report to VA any damages recovered, involving the paired organ or extremity, as the result of a


  • lawsuit

  • compromise

  • settlement, or

  • other recovery.

The veteran should report to VA the total amount of money received.


Notes:

  • If the veteran refuses to provide the information required, and evidence essential for adjudication of the issue has been placed under a court seal, solicit the assistance of Regional Counsel in obtaining such evidence.

  • Expenses incident to recovery, such as an attorney’s fees, may not be deducted from the amount to be reported.



10. Preparation of Awards Under 38 CFR 3.383




Introduction

This topic contains information on the preparation of awards under 38 CFR 3.383. It includes information on


  • the action to take when it appears a tort claim may have been filed

  • determining the amount to be recouped

  • entering the gross amount of judgment

  • changing the recoupment balance in the master record

  • when to use special law (SL) code 20

  • how to enter the offset amount

  • the monthly withholding amount

  • the effective date of the withholding

  • retroactive compensation benefits

  • providing notice of the award, and

  • considering entitlement to ancillary benefits.



Change Date

December 13, 2005



a. Action to Take When It Appears a Tort Claim May Have Been Filed

Do not defer award action because there is reason to believe a tort claim for damages has been filed against any party (VA or otherwise) based on the injury to the NSC paired organ or extremity.
Do defer award action and initiate development action to ascertain the date damages were received by the veteran if there is reason to believe that a tort claim for damages has been finalized, but the date the veteran recovered damages is not known.



b. Determining the Amount to Be Recouped

The total amount to be recouped is the gross amount of the settlement or judgment.
Attorney’s fees, court costs, and other expenses incident to the claim are not deductible from the total amount awarded.

Continued on next page

10. Preparation of Awards Under 38 CFR 3.383, Continued


c. Entering the Gross Amount of the Judgment

Enter the gross amount of the judgment in the TORT AWARDS field on the 401 screen. The maximum amount that can be entered is $999,999.99.
Important: If the tort award is $1,000,000 or more

  • enter $999,999.99 on the 401 screen

  • refer the folder to the finance activity for entry of the remaining recoupment balance, and

  • maintain close control to ensure that the master record recoupment balance is correct after the finance transaction has been processed.


d. Changing the Recoupment Balance in the Master Record

Once a recoupment balance has been established in the master record, it cannot be changed by amended award action.
If the recoupment balance must be changed


  • document that fact in the claims folder

  • ask the finance activity to change the balance, and

  • maintain close control of the case to verify that the master record is appropriately updated.



e. When to Use SL Code 20

Enter special law (SL) code 20 in the SLC field on the 401 screen if compensation is granted or increased under 38 U.S.C. 1160.
Note: Use SL code 20 whether or not an offset is required.
Reference: For more information on SL codes, see M21-1, Part V, 6.09.



f. How to Enter the Offset Amount

Enter the amount of offset as a type 7 withholding in the DED-OFFSET field on the 403 screen.
Reference: For more information on offset recoupment data, see M21-1, Part V, 6.11b.

Continued on next page

10. Preparation of Awards Under 38 CFR 3.383, Continued


g. Monthly Withholding Amount

Withhold only the additional compensation, including amounts for dependents, payable for the NSC paired organ or extremity.
However, withhold only the remaining balance payable if, after withholding the amount mentioned above, the total payment is at a rate less than the combined evaluation of the SC disabilities, exclusive of the NSC disabilities compensable under 38 U.S.C. 1160, but including amounts for dependents.



h. Effective Date of the Withholding

Commence withholding compensation effective the first of the month after the month during which the veteran received damages as a result of injury to the NSC organ or extremity.
If the veteran receives payments in installments, start the withholding the first of the month after the month during which the first installment was received.
Important: Do not withhold compensation before October 28, 1986, for any of the combinations of disabilities as outlined in M21-1MR, Part III, Subpart iv, 6.B.4.



i. Retroactive Compensation Benefits

Do not offset compensation payable for any period before the month following the date on which the settlement or judgment becomes final.
Example

Situation: A judgment for an NSC extremity is final on June 15, 2005. The rating activity later grants Special Monthly Compensation (SMC) effective March 16, 2005, for the paired extremities under 38 U.S.C. 1160.
Result: Do not offset any portion of the compensation benefits prior to July 1, 2005, the month following the date the judgment became final.

Continued on next page

10. Preparation of Awards Under 38 CFR 3.383, Continued


j. Providing Notice of the Award

The entry of SL code 20 automatically suppresses the Benefits Delivery Network (BDN) award letter.
Send a locally-generated letter, explaining the basis of the award, and


  • telling the veteran to inform VA immediately if he/she recovers damages from any source because of injury to the NSC organ or extremity, or

  • (if offset of the benefit is required) explaining the requirement for recoupment of an amount equal to the gross amount of any damages received.



k. Considering Entitlement to Ancillary Benefits

A veteran may be entitled to Dependents’ Educational Assistance (DEA), as established under 38 CFR 3.807(c) amended effective December 6, 1994, when disabilities are treated as if SC under 38 U.S.C. 1160.
Entitlement to the following ancillary benefits does not exist unless the veteran is entitled based on disabilities for which compensation is payable without regard to the provisions of 38 U.S.C. 1151:
A veteran is not entitled to the following ancillary benefits unless entitlement is based on SC disabilities for which compensation is payable without regard to the provisions of 38 U.S.C. 1160:


  • automobile or adapted equipment, per M21-1MR, Part IX, Subpart i, 2

  • specially adapted housing, per M21-1MR, Part IX, Subpart i, 3, and

  • the Civilian Health and Medical Program of VA (CHAMPVA), per 38 U.S.C. 1781 and M21-1MR, Part IX, Subpart i, 4.


Reference: For more information on entitlement to DEA under 38 U.S.C. 1160, see Kimberlin v. Brown, 5 Vet. App. 174 (1993).




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