# October 5, 2005 M21-1, Part V

#  Change 35

**CHAPTER 10. DISALLOWANCE PROCESSING**

**CONTENTS**

PARAGRAPH PAGE

**SUBCHAPTER I. GENERAL PROCESSING**

10.01 Scope 10-I-1

10.02 Disallowance Based on Determination of Nonentitlement 10-I-1

10.03 Failure to Prosecute Claim 10-I-1

10.04 Failure to Provide Signature for a VONAPP Application 10-I-2

10.05 Notice of Confirmed Rating Decisions 10-I-2

10.06 Release of Information - Privacy Act 10-I-2

10.07 Disallowance of Burial Claims 10-I-2

10.08 Disallowance of Accrued Claims 10-I-3

**SUBCHAPTER II. ENTRIES**

10.09 Preparation of Disallowance - The 405 Screen 10-II-1

10.10 Processing Disallowances 10-II-2

10.11 When Disallowance Screen Will Not Be Prepared 10-II-3

**SUBCHAPTER III. LETTERS**

10.12 Disallowance Letters 10-III-1

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# October 5, 2005 M21-1, Part V

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**CHAPTER 10. DISALLOWANCE PROCESSING**

**SUBCHAPTER I. GENERAL PROCESSING**

**10.01 SCOPE**

This chapter provides instructions for use of BDN Screen 405, C&P
Disallowance, to disallow claims for disability and death compensation
and pension, emergency officers\' retirement pay and dependency and
indemnity compensation.

**10.02 DISALLOWANCE BASED ON DETERMINATION OF NONENTITLEMENT**

Use the 405 Screen to record the determination of a pending claim in
which the entitlement requirements were not met. This does not include
apportionments.

a\. **Original Claim.** Prepare the 405 Screen as a disallowance of an
original pending claim in the following instances:

\(1\) Disallowance of a claim because at least one legal entitlement
factor is not met. This includes disallowance because of excess income
in the year of initial entitlement.

\(2\) Withdrawal of an original claim.

\(3\) Disallowance of a surviving spouse\'s claim if it includes a claim
for children, whether or not the children are entitled.

b\. **Reopened Claim.** Use the 405 Screen under the same criteria as
for original claims.

**10.03 FAILURE TO PROSECUTE CLAIM**

a\. **Disallowance at Expiration of Control Period.** If the requested
evidence is not submitted within the control period and the evidence of
record does not support a grant or partial grant of the benefits sought
(see pt. III, par. 1.02), prepare a disallowance on the 405 Screen.
Claims requiring a rating decision must first be referred to the rating
activity. Inform the claimant

\(1\) that the VA must disallow the claim because the required evidence
has not been received,

\(2\) that the records in his/her file do not support the claim,

\(3\) what evidence was considered,

\(4\) his/her the right to furnish the requested evidence within 1 year
of the date of the initial letter requesting such evidence in order to
receive benefits from the original date of claim, and

\(5\) about procedural and appellate rights.

b\. **Disallowance for Failure to Report for Physical Examination.**
Prior to disallowing a pending claim for failure to report for a
physical examination, refer the claims folder to the rating activity.
See part IV, paragraph 25.05.

c\. **Evidence Received Within the Statutory Period.** A disallowance
for failure to prosecute a claim has no effect on the statutory time
period for submission of evidence or the effective date of an award.

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\(1\) If a claim is disallowed for failure to submit evidence and a
subsequent determination of nonentitlement is made based on additional
evidence furnished within the statutory period, prepare a new
disallowance on the 405 Screen.

\(2\) If a claim is subsequently denied solely on a legal ground,
prepare a new disallowance on the 405 Screen. Show the new disallowance
reason code.

d\. **Entitlement of Other Claimant Involved.** For purposes of DIC, if
a claim is disallowed because the required evidence was not received
within the control period but the statutory period for submission of
evidence has not expired, determine if there may be other claimants
whose entitlement or rates may be affected. If so, set up a future diary
(see M21-1, Appendix C, Table E) for the end of the statutory period. At
that time, determine the rights of such claimants and take appropriate
action.

**10.04 FAILURE TO PROVIDE SIGNATURE FOR A VONAPP CLAIM**

a\. **VONAPP Signature Not Received.** .

A VONAPP application may not be finalized unless the claimant has signed
the application. If a decision on the claim has been made but no
signature provided, change the pending end product to EP 400, then clear
it. Notify the claimant that a decision has been made, but do not
discuss the outcome. In the absence of a signed application, there is no
valid claim. Therefore, neither notification of a decision nor
procedural rights are furnished to the claimant.

b\. **Signature Subsequently Received.** If the claimant subsequently
signs the application, the original EP (110, 010, 180) should be
established with the date the signature is received as the date of
claim. If the signature is not received within one year from the date of
VA's initial request, benefits may not be authorized for any period
prior to the date of receipt of the signature.

**Note:** A signature is required only on an original application for
compensation or pension. If a VONAPP application for a new claim, a
claim for increase, or a reopened claim is received, signature
development is unnecessary.

**10.05 NOTICE OF CONFIRMED RATING DECISION**

a\. 208 Screen: Enter the appropriate data on the 208 Screen to notify
the claimant about the confirmed rating decision using the CDEV, CDAT or
CADJ command. For proper notice of a confirmed rating decision specify
only the disability or disabilities currently at issue. Do not refer to
any condition not currently at issue. This avoids the possibility of
unintentionally giving appellate rights for conditions not at issue.
Then enter 209 in the NEXT SCREEN field.

b\. 209 Screen: The 290 Screen **MUST** be completed to fully inform the
claimant. This screen is free text for the evidence, reasons and basis
of the decision to be added to the letter.

**10.06 RELEASE OF INFORMATION - PRIVACY ACT**

If release of information is denied, see MP-1, part II, chapter 21.

**10.07 DISALLOWANCE OF BURIAL CLAIMS**

If it has been determined the claimant is not entitled to the basic
burial benefit or the plot/interment allowance, enter the 307 Screen for
disallowance purposes. For information on the completion of this screen,
see chapter 7.

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**Change 35**

**10.08 DISALLOWANCE OF ACCRUED CLAIMS**

Use the 407 Screen to disallow accrued benefit claims. For information
on the completion of this screen, see chapter 8.

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**SUBCHAPTER II. ENTRIES**

**10.09 PREPARATION OF DISALLOWANCE - THE 405 SCREEN**

a\. **Processing Disallowances.** Use the CADJ command to process C&P
disallowances. To accomplish disallowance action, enter X to the left of
the appropriate disallowance code or codes.

**NOTE:** The 405 Screen **CANNOT** be accessed to disallow any
apportionment issue regardless of the payee.

b\. **Character of Discharge.** If X is entered to the left of reason
code 03, the cursor moves to the right of the legend.

\(1\) In this blank field the operator **MUST** enter the date of
discharge (RAD) in standard date format. This is a required entry if
reason 03 is selected.

\(2\) If the claim is being disallowed for character of discharge but
the claimant is still entitled to service-connected treatment, enter X
to the left of the ENTITLED TO SC TREATMENT field. Entry in this field
is optional. If an entry is made, entry is also required in 03 CHARACTER
OF DISCHARGE and its date field.

c\. **Accrued Not Payable.** If a claim for DIC/Death pension is denied,
you must also deny ACCRUED NOT PAYABLE by entering an X to the left of
the field.

d\. **Excess Income.** If the claimant is disallowed pension benefits
because of excess income, enter X to the left of disallowance reason 11,
EXCESS INCOME. In addition, enter the claimant\'s income for VA purposes
in the IVAP field. This is a required entry for all claimants if reason
11 is selected.

\(1\) **MAX PENSION AMOUNT.** The system generates this field for all
but parent payees. The operator must enter this information for DIC
parents, payees 50 and 60.

\(2\) **SPOUSE and CHILDREN.** These fields are used to enter applicable
dependency for generation of a different MAX PENSION AMT. Place X to the
left of SPOUSE (only applicable to payee 00), and enter the number of
dependent children to the left of CHILDREN (only applicable to payees 00
and 10).

\(3\) **EARLY WAR SERVICE Bonus.** An entry of X to the left of EARLY
WAR SERVICE results in the automatic addition of the applicable bonus in
the MAX PENSION AMT. This applies to Mexican Border Period and WWI
veterans only (entitlement codes that begin with a 6 or 1).

\(4\) **A&A and Housebound.** An entry of X in either the VET/PAYEE A&A
or HSB or the SPOUSE A&A HSB fields results in the increase of MAX
PENSION AMT to include entitlement to these allowances.

\(5\) **SMP Disallowance.** The VET/PAYEE A&A HSB field may also be used
to simultaneously disallow a claim for special monthly pension. Entering
D in either or both of these fields generates a letter paragraph
indicating benefits were denied and outlining the eligibility
requirements. The entry of D (denied) will **NOT** increase the MAX
PENSION AMT. The operator may enter X (awarded) in either or both
fields, D in either or both fields or D in A&A and X in HSB, as
applicable.

\(6\) **Custodial Claims.** If disallowing death pension to a child with
a custodian or guardian whose income is to be counted, enter X in the
CUST/GDN field. This will increase the MAX PENSION AMT.

e\. **More than One Disallowance Reason.** If there are two or more
reasons for disallowance, entry is required for each so all appropriate
paragraphs are included in the letter.

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## M21-1, Part V October 5, 2005

**Change 35**

f\. **Duplicate Reason Codes on Screen.** Some reason codes appear more
than once on the 405 Screen. Ensure entry is made in the proper field in
order to generate the appropriate paragraph in the letter.f. **NEXT
SCREEN.** When required for generation of a disallowance letter, enter
290 in this field to add data for insertion into the letter.

g\. **REMARKS.** If Code 29, OTHER, is entered, enter a written
explanation in the remarks portion of the dedicated award print.

h\. **Authorization.** Both the adjudicator and authorizer sign the
disallowance documentation. The authorizer must also make the proper
entries on the 501 Screen.

405 C&P DISALLOWANCE XX-XX-XX

FILE NUMBER XXXXXXXXXXX-XX END PRODUCT XXX NAME X X XXXXX

X 01 NO MILITARY SERVICE X 12 EXCESS NET WORTH

X 02 NO QUALIFYING SERVICE X 14 RELATIONSHIP NOT ESTABLISHED

X 02 INSUFFICIENT QUALIFYING SERVICE X 14 NON-CONTINUOUS COHABITATION

X 03 CHARACTER OF DISCHARGE XXXXXXXX X 15 WIDOW/ER REMARRIED (INFERENCE)

X ENTITLED TO SC TREATMENT X 15 CHILD MARRIED

X 04 ENTITLEMENT FORFEITED X 16 FAILURE TO PROSECUTE

X 05 0% SVC-CONNECTED DISABILITY X 17 FAILURE TO REPORT FOR EXAM

X 06 DIS/DEATH NOT DUE TO SERVICE X 19 ON ACTIVE DUTY/RETIRED PAY

X 07 NOT SHOWN LAST EXAM-NO RATING X 20 CLAIM WITHDRAWN

X 08 NOT SHOWN EVID/RCD-NO RATING X 21 WHEREABOUTS UNKNOWN

X 08 NO ACTIVE TB POST DISCHARGE X 22 DEATH OF CLAIMANT

X 09 WILLFUL MISC/NOT LINE OF DUTY X 24 CHILD OVER 18 (NOT SCL OR HLP)

X 10 DISABILITY NOT PERMANENT X 28 CLAIMANT INCARCERATED

X 10 DISABILITY NOT TOTAL X 29 OTHER

X 11 EXCESS INCOME X 30 ELECTED OTHER BENEFIT

IVAP XXXXX MAX PENSION AMT XXXXX

VET/PAYEE X A&A X HSB X SPOUSE X A&A X HSB

XX CHILDREN X CUST/GDN X EARLY WAR SERVICE

NEXT SCREEN XXX

Figure 10.01. C&P DISALLOWANCE SCREEN (405) LAYOUT

**10.10 PROCESSING DISALLOWANCES**

a\. **Need for Rating Data**

\(1\) **Disability Cases.** If a rating decision has been made, entry of
all necessary statistical data is a prerequisite for processing a
disallowance based on the rating decision.

\(2\) **Death Cases.** Rating data are **NOT** entered in the
disallowance of any death claim.

b\. **Change or Correction in Disallowance Reason.** If a disallowance
has been processed and, on review or reconsideration, the basis for the
disallowance has changed, reprocess the disallowance. Use a locally
generated letter to notify the claimant and provide procedural and
appellate rights.

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## October 5, 2005 M21-1, Part V

**Change 35**

**10.11 WHEN DISALLOWANCE SCREEN 405 WILL NOT BE PREPARED**

Do not prepare a formal disallowance through BDN (405 screen) in the
situations listed below:

a\. Award and disallowance actions are taken at the same time.

b\. An award has been previously made for one benefit pending
development of entitlement to a greater or additional benefit, which is
now to be disallowed.

c\. A determination is made that a beneficiary currently in receipt of
benefits is not entitled to a grant or continuation of an additional
amount.

\(1\) Update the M-13 screen through award action (suppressing the
letter) to reflect new service-connected disabilities. It is necessary
to process such an update only when at least one of the new
service-connected disabilities will be displayed on the M-13 screen. The
M-13 screen will retain information for 6 diagnostic codes.

\(2\) Discontinuation of additional amounts, if not done previously,
must be accomplished through appropriate award action.

d\. After an award or disallowance of a claim, evidence is submitted
that warrants no change in the previous determination.

e\. After disallowance of a claim, a new claim by the same claimant is
disallowed for the same reason without reconsideration of new evidence.
Duplicate applications will be marked \"Duplicate Claim\" and initialed
by the adjudicator.

f\. A claim is not presented in the form prescribed by the Secretary
(informal claim). In this case, write to the claimant and explain that
to establish entitlement to VA benefits, the claimant must complete and
return the appropriate VA application. Enclose the appropriate form and
explain the need to return the completed form within 1 year from the
date of the letter to receive benefits from the date the informal claim
was received. See part III, paragraph 2.01f.

g\. A claim for apportionment is disallowed. However, the claimant
retains both the right to a notice of the action taken and the right to
file an appeal. Treat a notice of disagreement with a denial of
apportionment between a veteran and spouse as a contested claim under
the procedures in part IV, chapter 5. For apportionments, see part IV,
chapter 19.

h\. An original claim on a VONAPP application if the claimant fails to
furnish a signature after appropriate development and expiration of the
time limit for submitting the signature.

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# October 5, 2005 M21-1, Part V

**Change 35**

**SUBCHAPTER III. LETTERS**

**10.12 DISALLOWANCE LETTERS**

If action is taken to disallow a claim, a locally generated letter to
the claimant and all interested persons may be required to fully advise
them of the reasons for the decision and to provide a summary of the
evidence considered. Provide procedural and appellate rights. Computer
generation of disallowance letters is possible provided the 290 Screen
is completed. (See paragraph 17.11 for information on this screen.) When
this screen is not entered, the letter will be automatically suppressed.
The message DICTATED LETTER REQUIRED - DISALLOWANCE is printed on the
dedicated award and the LETTER SUPPRESSOR appears on the 501 Screen.

a\. **Notice of Disallowance Due to Excess Income or Net Worth.** See
part IV, paragraph 16.04.

b\. **Eligibility to Service Department Death Gratuity.** See part III,
paragraph 10.05e.

c\. **Notices to State Public Assistance Agencies.** See part III,
paragraph 9.18.

d\. **Denial of Claims Based on Prisoner of War Status.** Use a
thoughtful, sympathetic locally generated letter suited to the
circumstances of the individual case to inform claimants of the denial
of a claim based on POW status.

e\. **Disallowance of Election Not in Claimant\'s Interest.** See part
IV, paragraph 20.08b(1) for notification procedures.

**10-III-1**