**CONTENTS**

**CHAPTER 2. Accuracy**

PARAGRAPH PAGE

SUBCHAPTER 1 GENERAL 2-1

2.01 PERCENTAGE SELECTION PLANS 2-1

2.02 DAILY ACCUMULATION 2-2

2.03 STATISTICAL QUALITY CONTROL CHARTS 2-2

2.04 DEFINITION OF CONTROL CHART 2-3

2.05 ASSIGNABLE CAUSES 2-3

2.06 USE OF CONTROL CHARTS 2-3

2.07 DEFINITION OF ERROR 2-4

2.08 REPORTING 2-5

SUBCHAPTER 2 SQC SPECIFICATIONS 2-5

2.09 DISABILITY CLAIMS - SQC 100 2-5

2.10 DEATH CLAIMS - SQC 200 2-7

2.11 AWARDS MAINTENANCE ACTIONS - SQC 201 2-9

2.12 BENEFICIARY AND OPTION CHANGES - SQC 202 2-10

2.13 MEDICAL APPLICATIONS - SQC 300 2-11

2.14 CORRESPONDENCE - SQC 400 2-12

2.15 APPLICATIONS - SQC 401 2-12

2.16 DISBURSEMENTS (LOANS AND CASH SURRENDERS) - SQC 402 2-13

2.17 RECORD MAINTENANCE ACTIONS - SQC 403 2-14

2.18 REFUNDS - SQC 404 2-14

2.19 TELEPHONE MONITORING - SQC 800 (Philadelphia only) 2-15

# CHAPTER 2. ACCURACY

## SUBCHAPTER 1 GENERAL

### 2.01 PERCENTAGE SELECTION PLANS

a\. There are one hundred selection plans available to adjust to various
work volumes throughout the Insurance activity. No specific percentage
selection plan is assigned to the surveys presented in this chapter. The
only requirement is that, whichever plan is used, it should produce
initial selections in an amount equal to the established sample size,
plus a minimum of approximately 10 percent in additional samplings. The
plans may be changed as the workload dictates; however, such changes
will only be made at the beginning or the middle of the SQC month.
Whichever plan is used, it should be noted on SQC worksheet, VA Form
20-6559-29 series.

b\. The proper method for determining the control numbers for the
various percentage selection plans is illustrated below.

\(1\) **[Listing Controls]{.underline}** - The primary set (last two
digits) of the last case listed each day becomes the beginning control
numbers to make selections the next day. For example: for file number FV
1234 67 89, 89 is the primary set, the beginning control digits for the
following day.

\(2\) **[Initial Selections]{.underline}** - Cases containing the
control digits in the secondary set (third and fourth from the end) of
the insurance number. The following chart shows examples of how the
control digits are selected for the different percentage plans.

**[PERCENTAGE PLAN]{.underline} [LAST FILE NUMBER]{.underline}**

**[CONTROL NUMBERS]{.underline} [AT CUTOFF]{.underline}**

1% V 1234 17 38 38

2% V 17 23 80 80, 81

3% RS 500 42 41 41, 42, 43

4% J 8230 90 98 98, 99, 00, 01

5% RH 1696 81 12 12, 13, 14, 15, 16

10% K 42 30 55 55 through 64

15% RH 1697 30 02 02 through 16

20% V 1230 51 79 79 through 98

c\. The established sample sizes are mandatory and strict adherence is
important. However, if workload decreases to such an extent that the
percentage plan \[#100\] does not produce the established sample size
plus the minimum of \[10\] percent additional samplings for three
consecutive months, action should be taken to reduce the sample size.

### 2.02 DAILY ACCUMULATION

It is stressed that initial selections will be made from all workdays of
every month. Final selections will be made at a daily rate as specified
below (see also paragraph 1.10).

**Sample Size, 100 Monthly**

19 workday month = 6 daily, first 5 days + 5 daily, last 14 days

20 workday month = 5 daily, throughout

21 workday month = 5 daily, first 16 days + 4 daily, last 5 days

22 workday month = 5 daily, first 12 days + 4 daily, last 10 days

23 workday month = 5 daily, first 8 days + 4 daily, last 15 days

**Sample Size, 50 Monthly**

19 workday = 3 daily, first 12 days + 2 daily, last 7 days

20 workday = 3 daily, first 10 days + 2 daily, last 10 days

21 workday month = 3 daily, first 8 days + 2 daily, last 13 days

22 workday month = 3 daily, first 6 days + 2 daily, last 16 days

23 workday month = 3 daily, first 4 days + 2 daily, last 19 days

Daily selections for monthly sample sizes other than 100 or 50 per month
are readily calculated, using the above techniques.

### 2.03 STATISTICAL QUALITY CONTROL CHARTS

a\. Experience shows that the mere introduction of a control chart into
a work situation often causes quality improvement. Such improvement may
result only from the influence of the chart in focusing the attention of
employees and management on the quality level. This is certainly a
positive aspect of control charts and should be considered as such.

b\. Using control charts to focus attention solely on the quality level,
however, is not the whole story. In the long range, much of the quality
improvement attributable to the use of control charts actually comes
from concentrating the user\'s attention on variations which are
statistically abnormal. Care should be taken to view control charts in
terms of whether the work processed items are, or are not, in
statistical control. And, of course, this must include identifying
\"assignable causes\" and taking the necessary steps to bring the system
back into a constant-cause system.

### 2.04 DEFINITION OF CONTROL CHART

SQC control charts are graphs with plots showing the monthly error rate
or timeliness rate for the various statistical quality control programs.
On such graphs there are three parallel lines: a central line which
represents the actual average error rate or timeliness rate for the
previous year and an upper and a lower control line. The control limits
are intervals of three standard deviations above and below the actual
average percent in error. They represent the boundaries within which the
error rate for any month should statistically fall.

\(1\) According to M20-2, Quality Control, a control chart is defined as
\"a graphic device for detecting lack of statistical control.\" Thus,
control charts which plot the error rate from month to month are more
than just a means for determining how well or how poorly we are doing.
In fact, their primary importance, according to this definition, is to
let us know if review results are reflecting what would be expected
statistically by randomly selecting and reviewing a work process. They
answer the question of whether the review process shows the random-like
variability anticipated in any work process. When control charts reveal
that a work process demonstrates this anticipated random-like
variability, the process is said to exhibit the stability of a
\"constant-cause system\" and is in \"statistical control\". Conversely,
a process lacking \"statistical control\" means that observed variations
in quality are greater than should occur by chance, or that plot
patterns simply do not show expected month-to-month variability or
randomness.

\(2\) Control charts for the SQC programs are tools used in monitoring
the quality of work completed. The purpose of such a process is
fourfold: (1) to review the quality of work being processed; (2) to
indicate when a work process does not exhibit the stability of a
constant-cause system (is not in statistical control); (3) to attribute
assignable causes when an SQC program is not in statistical control; (4)
to take positive steps to eliminate those assignable causes.

### 2.05 ASSIGNABLE CAUSES

Assignable causes are simply those underlying reasons why a work process
such as an SQC program is not in statistical control. Assignable causes
are sometimes broken down into either special causes or common causes.

\(1\) Special causes of variation may be defined as those which are not
common to all the work items or to all the work areas under scrutiny.
They can generally be corrected by individual employees. Conversely,
common causes of errors and other quality defects cannot be corrected by
individual employees.

\(2\) Common causes may be inadequate job instruction, poor supervision,
faulty procedures, poor work space, obsolete equipment, lack of an
effective quality control system and similar situations.

### 2.06 USE OF CONTROL CHARTS

Control charts can show whether a work process is in statistical control
by position, order, trend, or grouping of successive plots placed on
those charts. Putting it more simply, basically two things are looked
for on control charts. Are all points (plots) within the upper and lower
control limits and do the point groupings avoid having a particular
form? If they meet these two basic criteria, they are considered to be
in a so-called \"controlled state\".

**a. PLOTS OUTSIDE THE CONTROL LIMITS** - The first of these two
situations has been the traditional barometer of whether we have been
doing okay. If we have a plot or two above the upper control limit, then
we are in an \"out-of-control\" situation, should look into the matter,
and do what we can to ensure that the error or timeliness improves the
following month. This is not an inappropriate response to the situation,
but we must emphasize that this is not the only time a response is
warranted. It is very important to note that a plot below the lower
control limit also represents a situation that \"lacks statistical
control\". Often when this has happened, the approach has been to assume
two things: that we have attained near or total perfection and that the
review results were totally accurate. Actually, this situation should
cause us to look into the work process in question. In short, the
correct use of control charts never allows us to assume the accuracy of
any error rate that is questionable based upon that error rate\'s
failure to fall within the limits which have been established
statistically.

**b. PLOTS ASSUMING A PARTICULAR FORM** - Plots which are said to
\"assume a particular form\" generally fall into four or five separate
categories . These indicate that things may not be what they should be.
A basic summary of these categories is shown below.

\(1\) **RUN** - A run exists when seven or more consecutive plots are on
one side of the central line, even though none is outside the control
limit on that side. A run of less than six may also fall under this
category if 10 out of 11 plots, 12 out of 14 plots, or even 16 out of 20
plots lie on one side of the central line (average error or timeliness
rate). The number of plots is called the length of run.

\(2\) **TREND** - A trend exists when seven or more points form a
continuous upward or downward curve. Normally, the plots appear from a
point near one control limit and go to a point near the opposite control
limit. In some situations the points will extend beyond the control
limits. Even if there are not seven continuous plots in one direction, a
trend may still exist if there is nonetheless an overall \"drastic
trend\" in one direction extending for more than seven plots.

\(3\) **PERIODICITY** - Periodicity is seen when the plots show the same
pattern of change, up or down, over equal intervals.

\(4\) **HUGGING THE CONTROL LINE** - This occurs when plots on the
control chart stick close to either control limit line. To determine if
there is \"hugging\" of the control limit lines, two lines should be
drawn at two-thirds of the distance between the central line and each
control limit line.

\(5\) **SUDDEN CHANGE** - This happens when four or more consecutive
plots appear on one side of the central line and suddenly show a change
in level by the appearance of four or more plots on the opposite side of
the central line.

### 2.07 DEFINITION OF ERROR

a\. End products, in most cases, lend themselves readily to a *right* or
*wrong* action or determination. In measuring the quality of these
insurance work items, the all-inclusive term *error* is subdivided into
effects that are internal or administrative (procedural discrepancies),
and effects having a direct and immediate material impact (substantive
errors).

\(1\) **A substantive error** is an action which adversely affects the
insured, his or her beneficiary, the insurance trust fund(s) or the
Government\'s extra hazard appropriation. The criterion here is that the
correct action in the light of law, regulation, equity or precedent,
would have been opposite to that taken. Such an error must be clear and
unmistakable, without resort to judgment or opinion.

\(2\) **A procedural discrepancy** is an action or omission, the effect
of which is purely internal or administrative without direct and
immediate impact on the insured, his or her beneficiary, the insurance
trust fund(s) or the extra hazard appropriation.

b\. Defects should be charged against the SQC worksheet line code number
which they most nearly resemble. Only if totally unrelated to any of the
defect line codes will an item be listed as an unclassified error or
discrepancy.

### 2.08 REPORTING

a\. As stated under the specifications for each quality survey, the
individual cases reviewed in the regular SQC sample are listed on VA
Form 20-6563-29, Statistical Quality Review Worksheet. The information
from all such forms for the month will be consolidated on the
corresponding SQC worksheet, VA Form 20-6559-29 series.

b\. Copies of the review worksheets (VA Form 20-6563-29), will be
stapled to their respective SQC error classification sheets (VA Form
20-6559-29 series). These will be prepared as of the last workday of
each calendar month.

c\. Results of regularly scheduled validity checks and any independent
checks will be included with the foregoing. Validations will not be
considered as substitutes for the regular SQC reviews, and are to be
conducted in addition to the continuing monthly surveys.

d\. It will be noted that specifications for some surveys call for
reporting certain items by special coding on VA Form 20-6563-29. For
example, \"C\" to designate a conversion; \"ROL\" Repl/Special Ordinary
Life; \"REIN\" to indicate non-medical reinstatement. Those listed under
the individual specification sheets are mandatory; however, this coding
may be expanded to a numerical system, locally, whenever there is a need
to gather statistics for station management\'s information needs.

## SUBCHAPTER 2 SQC SPECIFICATIONS

### 2.09 DISABILITY CLAIMS - SQC 100

a\. **[Organization of Sample]{.underline}.** Samples for this survey
will be drawn from all cases in which a new claim for disability
benefits has been awarded or denied, including pending cases as defined
in paragraph 1.09.

b\. **[Sample Size]{.underline}.** Fifty monthly at Philadelphia which
will include forty completed cases and ten pending cases. Twenty five
monthly at St. Paul, which will include twenty completed cases and five
pending cases. The cases will be drawn from all workdays throughout the
current month, at the appropriate daily rate as specified below.

**Pending Cases Completed Cases**

19 workday month = 1 every other day until a 3 daily, first 2 days

> total of 10 are reviewed 2 daily, last 17 days

20 workday month = 1 every other day until a 2 daily, throughout

> total of 10 are reviewed

21 workday month = 1 every other day until a 2 daily, first 19 days

> total of 10 are reviewed 1 daily, last 2 days

22 workday month = 1 every other day until a 2 daily, first 18 days

> total of 10 are reviewed 1 daily, last 4 days

23 workday month = 1 every other day until a 2 daily, first 17 days

> total of 10 are reviewed 1 daily, last 6 days

c\. **[Listing Control Digits]{.underline}.** The last two digits at the
end of the last file number recorded on VA Form 20-6563-29 at the close
of the quality workday become the starting control digits for making
selections the next day.

d\. **[Initial Selections]{.underline}.** The designated person will
list on VA Form 20-6563-29 all new claims which bear the listing control
digits for that day in the secondary set of the insurance file number.
The special code column of VA Form 20-6563-29 will be noted \"PEND\" for
pending cases.

e\. **[Final Selections for SQC]{.underline}.** These will be made as
per paragraphs 1.07f and g. The selector will be guided further as
outlined in paragraphs 1.09 and 1.11. The final selections, with all
material kept associated, will be delivered to the person designated to
conduct the regular SQC review for accuracy.

f\. **[SQC Review]{.underline}.** The review will be conducted in
accordance with the error classifications on VA Form 20-6559-29t,
Statistical Quality Control Worksheet (Disability Claims). Defects will
be charged against the line code number to which they most closely
apply, or as unclassified only if totally unrelated. The reviewer will
be responsible for completing the appropriate columns on VA Form
20-6563-29 reserved for SQC 100 for all cases selected for review, and
for preparation of VA Form 20-6567-29, Quality Review Exception Sheet,
when required. The notation \"TDIP\" will be included in the Special
Code column on VA Form 20-6563-29 for cases involving monthly TDIP
payments. The exception sheet will contain information indicating that a
full explanation of the defect has been made, and that the originator
has been advised as to the correct action (s) or procedure for future
cases.

g\. **[Acceptable Quality Level (AQL)]{.underline}.** The AQL is
adjusted annually. It is set at the prior year\'s average process
accuracy.

### 2.10 DEATH CLAIMS - SQC 200

a **[Organization of Sample.]{.underline}** Samples for this survey will
be drawn from all death cases having undergone the adjudicative process.
This includes cases on which insurance death awards are granted or
disallowed, as well as those going into diary awaiting further
developmental requirements, including the submission of a claim. In
those cases designated as final selections for SQC review, all records
available during consideration of the case will be kept associated until
such review is completed, including any outgoing correspondence.

b **[Sample Size]{.underline}.** One hundred monthly, (which will
include 80 completed cases and 20 pending cases) drawn from all workdays
throughout the current month, at a daily rate specified as follows:

**Pending Cases Completed Cases**

19 workday month = 2 first day, 6 daily, first 2 days

1 daily on successive days 4 daily, last 17 days

20 workday month = 1 daily 4 daily, throughout

21 workday month 1 daily 4 daily, first 19 days

until 20 are reviewed 2 daily, last 2 days

22 workday month = 1 daily 4 daily, first 18 days

until 20 are reviewed 2 daily, last 4 days

23 workday month =1 daily 4 daily, first 17 days

until 20 are reviewed 2 daily, last 6 days

c\. **[Listing Control Digits]{.underline}.** The last two digits at the
end of the last file number recorded on VA Form 20-6563-29 at the close
of the quality workday become the starting control digits for making
selections the next day.

d\. **[Initial Selections]{.underline}.** The designated person will
list on VA Form 20-6563-29 all death cases received from the
adjudicators which bear the listing control digits for that day in the
secondary set of the insurance file number. The notation \"PEND\" will
be included in the Special Code column for those cases that are to be
placed in the Death Claims pending file.

e\. **[Final Selections for SQC]{.underline}.** These will be made as
per paragraphs 1.07f and g. The selector will also be guided further as
outlined in paragraphs 1.09 through 1.11. The final selections, with all
material kept associated, will be delivered to the person(s) designated
to conduct the regular SQC review.

f\. **[SQC Review]{.underline}.** The review will be conducted in
accordance with the error classifications on SQC worksheet VA Form
20-6559-29y, Statistical Quality Control Worksheet (Death Claims).
Defects will be charged against the line code number to which they most
closely apply, or as unclassified only if totally unrelated. The quality
reviewer will be responsible for completing the appropriate blocks on
the review worksheet (VA Form 20-6563-29) reserved for SQC 200 for all
cases selected for review, and for preparation of VA Form 20-6567-29,
Quality Review Exception Sheet, when required. The exception sheet will
contain information indicating that a full explanation of the defect has
been made, corrective action taken if appropriate, and that the
originator has been advised as to the correct action(s) or procedure for
future cases.

g\. **[AQL]{.underline}.** The AQL is adjusted annually. It is set at
the prior year\'s average process accuracy.

### 2.11 AWARDS MAINTENANCE ACTIONS - SQC 201

a\. **[Organization of Sample]{.underline}.** Samples for this survey
will be drawn from all incoming correspondence, address changes,
\"RETCK\" RPO\'s and other generated RPO\'s usually processed by the
Claims Technician, including those noted \"NAN\". The cases will be
accompanied by all letters or other material denoting action(s) taken.
This will also include cases made pending while waiting for return of
money, further information, records, etc.

b\. **[Sample Size]{.underline}.** One hundred monthly (which will
include 20 \"RETCK\" generated RPO\'s, 20 other generated RPO
maintenance actions and any combination of 60 award correspondence and
address change actions) drawn from all workdays at a daily rate
specified as follows:

**\"RETCK RPO\" Award Correspondence**

**Maintenance and Address Changes**

19 workday month = 2 first day, 4 daily, first 3 days

1 daily on all successive days 3 daily, last 16 days

20 workday month = 1 daily 3 daily, throughout

21 workday month = 1 daily 3 daily, first 18 days

until 20 are reviewed 2 daily, last 3 days

22 workday month = 1 daily 3 daily, first 19 days

until 20 are reviewed 1 daily, last 3 days

23 workday month = 1 daily 3 daily, first 19 days

until 20 are reviewed 1 daily until 60 are reviewed

NOTE: The daily rate for other generated RPO maintenance actions will be
the same as that for \"RETCK\" RPO\'s.

c\. **[Listing Control Digits]{.underline}.** The last two digits at the
end of the last insurance file number recorded on VA Form 20-6563-29 at
the close of the quality workday become the starting control digits for
making selections the next day.

d\. **[Initial Selections]{.underline}.** The designated person will
list on VA Form 20-6563-29 all cases with the control digits for that
day in the secondary set of the file number. The Special Code column of
VA Form 20-6563-29 may be noted \"A\" for address change, \"C\" for
correspondence action, \"RETCK\" for first notice of returned check and
\"R\" for follow-up generated RPO maintenance.

e\. **[Final Selections for SQC]{.underline}.** These will be made in
accordance with paragraphs 1.07f and g. The selector will be further
guided as outlined in paragraphs 1.09 through 1.11. The final
selections, with all material kept associated, will be delivered to the
person designated to conduct the regular SQC review.

f\. **[SQC Review]{.underline}.** The review will be conducted in
accordance with the error classifications on SQC worksheet, VA Form
20-6559-29z, Statistical Quality Control Worksheet (Insurance Awards
Maintenance Actions). Defects will be charged against the line code
number to which they most closely apply, or as unclassified only if
totally unrelated. The reviewer will be responsible for completing the
appropriate blocks on the review worksheet (VA Form 20-6563-29) reserved
for SQC 201 for all cases selected for review, and preparation of VA
Form 20-6567-29, Quality Review Exception Sheet, when required. The
exception sheet will contain information indicating that a full
explanation of the defect has been made, corrective action taken if
appropriate, and that the originator has been advised as to the correct
action or procedure for future cases.

g\. **[AQL]{.underline}.** The AQL is adjusted annually. It is set at
the prior year\'s average process accuracy.

### 2.12 BENEFICIARY AND OPTION CHANGES - SQC 202

a\. **[Organization of Sample]{.underline}.** The items to be reviewed
are mainly VA Forms 29-336, Designation of Beneficiary and Optional
Settlement. However, to cover the entire population of work items in
this area, sampling will include any written request over the insured\'s
signature in which the intent is clearly stated.

b\. **[Sample Size]{.underline}.** One hundred monthly, drawn from all
workdays throughout the current month, at a daily rate as specified in
paragraph 2.02.

c\. **[Listing Control Digits]{.underline}.** The last two digits at the
end of the last insurance file number recorded on VA Form 20-6563-29 at
the close of the quality workday become the starting control digits for
making selections for the next day.

d\. **[Initial Selections]{.underline}.** The designated person will
list on VA Form 20-6563-29 all cases which bear the control digits for
that day in the secondary set of the insurance file number.

e\. **[Final Selections for SQC]{.underline}.** These will be made in
accordance to paragraphs 1.07f and g. The selector will also be guided
as outlined in paragraphs 1.09 through 1.11. The final selections, with
all related material, will be delivered to the person designated to
conduct the SQC review. Cases that are not selected for review will be
released immediately.

f\. **[SQC Review]{.underline}.** The review will be conducted in
accordance with the error classifications on SQC worksheet, VA Form
20-6559-29a. Defects will be charged against the line code number to
which they most closely apply, or as unclassified only if totally
unrelated. The reviewer will be responsible for completing the
appropriate blocks on the review worksheet (VA Form 20-6563-29) reserved
for SQC 202 for all cases selected for review, and for preparation of VA
Form 20-6567-29, Quality Review Exception Sheet, when required. The
Exception Sheet will contain information indicating that a full
explanation of the defect has been made, and the originator advised as
to the correct action or procedure for future cases.

g\. **[AQL]{.underline}.** The AQL is adjusted annually. It is set at
the prior year\'s average process accuracy.

### 2.13 MEDICAL APPLICATIONS SQC 300

a\. **[Organization of Sample]{.underline}.** The work items for this
survey include all cases processed to completion by the Claims Examiners
as well as those going into diary awaiting further development. These
consist of applications which involve a medical determination, based on
either a report of physical examination (full medical) or on the
applicant\'s replies to health questions (short form medical). The
survey includes medical reinstatements, changes of plan (higher to lower
reserve), and all issues including the total disability income
provision.

b\. **[Sample Size]{.underline}.** Fifty monthly at Philadelphia and 25
monthly at St. Paul, drawn from all workdays throughout the current
month, at a daily rate as specified in paragraph 2.02.

c\. **[Listing Control Digits]{.underline}.** The last two digits at the
end of the last insurance file number recorded on VA Form 20-6563-29 at
the close of the quality workday become the starting control digits for
making selections the next day.

d\. **[Initial Selections]{.underline}.** The designated person will
list on VA Form 20-6563-29 all cases which bear the control digits for
that day in the secondary set of the insurance file number. The Special
Code column of VA Form 20-6563-29 will be noted \"A\" to designate an
approved case; \"D\" for disapproved; \"M\" for medical reject; and
\"PEND\" for pending.

e\. **[Final Selections for SQC]{.underline}.** These will be made as
per paragraphs 1.07f and g. The selector will also be guided as outlined
in paragraphs 1.09 through 1.11. The final selections, with all material
kept associated, will be delivered to the person designated to conduct
the regular SQC review for accuracy.

f\. **[SQC Review]{.underline}.** The review will be conducted in
accordance with the error classifications on SQC worksheet, VA Form
20-6559-29b, Statistical Quality Worksheet (Medical Applications).
Defects will be charged against the line code number to which they most
closely apply, or as unclassified only if totally unrelated. The
reviewer will be responsible for completing the appropriate blocks on
the review worksheet (VA Form 20-6563-29) reserved for SQC 300, and for
preparation of VA Form 20-6567-29, Quality Review Exception Sheet, when
required. The Insurance File Number block of VA Form 20-6563-29 will
indicate the type of action, such as \"Med. R\", \"Ch. Plan\" or \"RH\".
The exception sheet will contain information indicating that a full
explanation of the defect has been made, and that the originator has
been advised as to the correct action or procedure for future cases.

g\. **[AQL]{.underline}.** The AQL is adjusted annually. It is set at
the prior year\'s average process accuracy.

### 2.14 CORRESPONDENCE - SQC 400

a\. **[Organization of Sample]{.underline}.** This sample will be
gathered from all incoming correspondence processed to completion by the
Policyholders Services entities. The sample will also include all
transmittals noted as \"D\" mail, \"NAN,\" or \"Ready for File.\"

b\. **[Sample Size]{.underline}.** One hundred monthly drawn from all
workdays throughout the current month, at a daily rate as specified in
paragraph 2.02.

c\. **[Listing Control Digits]{.underline}.** The last two digits at the
end of the last insurance file number recorded on VA Form 20-6563-29 at
the close of the quality workday become the starting control digits for
making selections the next day.

d\. **[Initial Selections]{.underline}.** The designated person will
list on VA Form 20-6563-29 all cases which bear the control digits for
that day in the secondary set of the insurance file number. The Special
Code column will be noted to indicate the type of reply released \"O/A\"
(Office Automation); \"COR-1\" (ADP Generated); \"OTHER\"; or \"NAN\".

e\. **[Final Selections for SQC]{.underline}.** These will be made as
per paragraphs 1.07f and g. The selector will be guided further as
outlined in paragraphs 1.09 and 1.11. The final selections, with all
associated material, will be delivered to the person designated to
conduct the regular SQC review for accuracy.

f\. **[SQC Review]{.underline}.** The review will be conducted in
accordance with the error classifications on SQC worksheet, VA Form
20-6559-29f, Statistical Quality Control Worksheet (Correspondence).
Defects will be charged against the line code number to which they most
closely apply, or as unclassified only if totally unrelated. The
reviewer will be responsible for completing the appropriate blocks on
the review worksheet (VA Form 20-6563-29) reserved for SQC 400 for all
cases selected for review, and for preparation of VA Form 20-6567-29,
Quality Review Exception Sheet, when required. The exception sheet will
indicate that a full explanation of the defect has been made, and that
the originator has been advised as to the correct action or procedure
for future cases.

g\. **[AQL]{.underline}.** The AQL is adjusted annually. It is set at
the prior year\'s average process accuracy.

### 2.15 APPLICATIONS - SQC 401

a\. **[Organization of Sample]{.underline}.** The items for this survey
will be collected from all applications for conversions, replacement
insurance and reinstatements processed by the Policyholders Services
entities, on which a medical determination is not necessary.

b\. **[Sample Size]{.underline}.** One hundred cases monthly at
Philadelphia and fifty cases monthly at St. Paul, drawn from all
workdays throughout the current month, at the appropriate daily rate
specified in paragraph 2.02.

c\. **[Listing Control Digits]{.underline}.** The last two digits at the
end of the last insurance file number recorded on VA Form 20-6563-29 at
the close of the quality workday become the starting control digits for
making selections for the next day.

d\. **[Initial Selections]{.underline}.** The designated person will
list on VA Form 20-6563-29 all cases which bear the control digits for
that day in the secondary set of the insurance file number. The cases
should indicate whether Reinstatement, SPOL or Conversion.

e\. **[Final Selections for SQC]{.underline}.** These will be made in
accordance to paragraph 1.07f and g. The selector will be guided further
as outlined in paragraphs 1.09 through 1.11. The final selections, with
all associated material, will be delivered to the person designated to
conduct the regular SQC review; the remaining cases will be released
immediately.

f\. **[SQC Review]{.underline}.** The review will be conducted in
accordance with the error classifications on SQC worksheet, VA Form
20-6559-29h. Defects will be charged against the line code number to
which they most closely apply, or as unclassified if totally unrelated.
The reviewer will be responsible for completing the appropriate blocks
on the review worksheet (VA Form 20-6563-29) reserved for SQC 401 for
all cases selected for review, and for preparation of VA Form
20-6567-29, Quality Review Exception Sheet, when required. The exception
sheet will include information indicating that a full explanation of the
defect has been made, and that the originator has been advised as to the
correct action or procedure for future cases.

g\. **[AQL]{.underline}.** The AQL is adjusted annually. It is set at
the prior year\'s average process accuracy.

### 2.16 DISBURSEMENTS (LOANS AND CASH SURRENDERS) - SQC 402 

a\. **[Organization of Sample]{.underline}.** The items for this review
will be selected from all processed loans and cash surrenders.

b\. **[Sample Size.]{.underline}** One hundred monthly for both offices.
Samples will be selected each workday throughout the current month at
the appropriate daily rate specified in paragraph 2.02.

c\. **[Listing Control Digits.]{.underline}** The last two digits at the
end of the last file number recorded on VA Form 20-6563-29 at the close
of the quality workday become the starting control digits for making
selections the next day.

d\. **[Initial Selections.]{.underline}** The designated person will
list on VA Form 20-6563-29 all cases which bear the listing control
digits for that day in the secondary set of the insurance file number.
The cases should indicate whether loan or cash surrender.

e\. **[Final Selections for SQC.]{.underline}** These will be made in
accordance to paragraph 1.07f and g. The selector will be further guided
per paragraphs 1.09 through 1.11. The final selections will be delivered
to the person designated to conduct the SQC review.

f\. **[SQC Review.]{.underline}** The review will be conducted in
accordance with the error classifications on VA Form 29-6559 series
designated for Statistical Quality Control Worksheet (Disbursements).
Defects will be charged against the line code number to which they most
closely apply, or as unclassified only if totally unrelated. The
reviewer will be responsible for completing the appropriate blocks on
the review worksheet (VA Form 20-6563-29) reserved for SQC 402 for all
cases selected for review, and for preparation of VA Form 20-6567-29,
Quality Review Exception Sheet, when required. The exception sheet will
indicate that a full explanation of the defect has been made, and that
the originator has been advised as to the correct action for future
cases.

g\. **[AQL]{.underline}.** The AQL is adjusted annually. It is set at
the prior year\'s average process accuracy.

### 2.17 RECORD MAINTENANCE ACTIONS - SQC 403

a\. **[Organization of Sample.]{.underline}** The items for this survey
will be selected from the regular category of tape-generated record
printouts, VA Forms 20-8271, Notice of Exception and VA Forms 20-6560,
Notice of Benefit Payment Transactions.

b\. **[Sample Size.]{.underline}** One hundred monthly for both offices.
Samples will be selected each workday throughout the current month at
the rates specified in Paragraph 2.02.

c\. **[Listing Control Digits.]{.underline}** The last two digits at the
end of the last file number recorded on VA Form 20-6563-29 at the close
of the quality workday become the starting control digits for making
selections the next day.

d\. **[Initial Selections.]{.underline}** The designated person will
list on VA Form 20-6563-29 all cases which bear the listing control
digits for that day in the secondary set of the insurance file number.

e\. **[Final Selections for SQC.]{.underline}** These will be made in
accordance to paragraph 1.07f and g. The selector will be further guided
per paragraphs 1.09 through 1.11. The final selections will be delivered
to the person designated to conduct the SQC review.

f\. **[SQC Review.]{.underline}** The review will be conducted in
accordance with the error classifications on VA Form 20-6559-29j,
Statistical Quality Worksheet (Record Maintenance Actions). Defects will
be charged against the line code number to which they most closely
apply, or as unclassified only if totally unrelated. The reviewer will
be responsible for completing the appropriate blocks on the review
worksheet (VA Form 20-6563-29) reserved for SQC 403 for all cases
selected for review, and for preparation of VA Form 20-6567-29, Quality
Review Exception Sheet, when required. The exception sheet will indicate
that a full explanation of the defect has been made, and that the
originator has been advised as to the correct action for future cases.

g\. **[AQL.]{.underline}** The AQL is adjusted annually. It is set at
the prior year\'s average process accuracy.

### 2.18 REFUNDS - SQC 404

a\. **[Organization of Sample.]{.underline}** The items for this review
will be selected from all completed actions to refund monies to an
insured or to a third party.

b\. **[Sample Size.]{.underline}** One hundred monthly for both offices.
Samples will be selected each workday throughout the current month at
the appropriate daily rate specified in paragraph 2.02.

c\. **[Listing Control Digits.]{.underline}** The last two digits at the
end of the last file number recorded on VA Form 20-6563-29 at the close
of the quality workday become the starting control digits for making
selections the next day.

d\. **[Initial Selections.]{.underline}** The designated person will
list on VA Form 20-6563-29 all cases which bear the listing control
digits for that day in the secondary set of the insurance file number.

e\. **[Final Selections for SQC.]{.underline}** These will be made in
accordance with paragraphs 1.07f and g. The selector will be further
guided per paragraphs 1.09 through 1.11. The final selections will be
delivered to the person designated to conduct the SQC review.

f\. **SQC Review.** The review will be conducted in accordance with the
error classifications on VA Form 20-6559-29g, Statistical Quality
Worksheet (Refunds). Defects will be charged against the line code
number to which they most closely apply, or as unclassified only if
totally unrelated. The reviewer will be responsible for completing the
appropriate blocks on the review worksheet (VA Form 20-6563-29) reserved
for SQC 404 for all cases selected for review, and for preparation of VA
Form 20-6567-29, Quality Review Exception Sheet, when required. The
exception sheet will indicate that a full explanation of the defect has
been made, and that the originator has been advised as to the correct
action for future cases.

g\. **AQL.** The AQL is adjusted annually. It is set at the prior
year\'s average process accuracy.

### 2.19 TELEPHONE MONITORING - SQC 800 (Philadelphia only)

a\. **[Organization of Sample.]{.underline}** The sampling for this
survey will be taken from all incoming telephone calls.

b\. **[Sample Size.]{.underline}** One hundred monthly selected from all
workdays at a daily rate specified in paragraph 2.02.

c\. **[Selections.]{.underline}** The Section Chief shall be responsible
for scheduling monitors to conduct the SQC review. The calls will be
selected by utilizing the Automatic Call Distributor Directory Numbers
assigned to the Agents. Each month, based on available Directory Numbers
(DN\'s), a random number chart will be prepared. From this chart, the
monitor will systematically access these DN\'s.

d\. **[SQC Review.]{.underline}** The monitoring will be conducted daily
during both the mornings and afternoons. The surveys will be made in
accordance with the error classifications on VA Form 20-6559-29,
Statistical Quality Control Worksheet (Telephone Monitoring). The
monitor will be responsible for completing the appropriate blocks on the
review worksheet (VA Form 29-6563a) reserved for SQC 800 for all cases
surveyed. The monitor will also be responsible for the preparation of VA
Form 20-6567-29, Quality Exception Sheet, when required. The exception
sheet will indicate that a full explanation of the defect has been made
and that the agent has been advised as to the correct action or
procedure for future calls.

e\. **[AQL.]{.underline}** The AQL is adjusted annually. It is set at
the prior year\'s average process accuracy.