January 24, 1991 M28-2, Part II

Change 2

CHAPTER 3. DISALLOWANCE PROCESSING

CONTENTS

PARAGRAPH PAGE

3.01
Scope\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...
3-1

3.02 Types of Disallowances\...\...\...\...\...\...\...\...\...\...\...
3-1

a\. Substantive Disallowance Based on Determination of Ineligibility 3-1

b.  Administrative/Record Purpose
    Disallowance\...\...\...\...\...\...\...\...\...\...\..... 3-1

3.03 Lack of Address Insufficient for
Disallowance\...\...\...\...\...\...\...\...\...\...\...\..... 3-1

3.04 Notification
Requirements\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....
3-1

3.05 Failure To Prosecute
Claim\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...
3-1

a\. Disallowance at Expiration of Control
Period\...\...\...\...\...\...\...\...\...\...\... 3-1

b\. Referral to Rating Board for Failure to Report for a Physical
Examination 3-2

c\. Notice to Claimant of a Record Purpose
Disallowance\...\...\...\...\...\...\...\..... 3-2

d\. Evidence Is Received Within the Statutory
Period\...\...\...\...\...\...\...\... 3-2

3.06 Processing the Disallowance on the 408
Screen\...\...\...\...\...\...\...\...\...\...\...\..... 3-2

a.  Reasons for
    Disallowance\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....
    3-2

b.  Authorization\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....
    3-2

c.  Reprocessing a
    Disallowance\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....
    3-2

3.07 Circumstances When 408 Screen Will Not Be Completed for
Disallowance\...\...\...\...\... 3-2

a.  New Evidence Causes No Change in Previous Disallowance 3-2

b.  Consideration of New Evidence Does Not Change Previous Disallowance
    Reason\... 3-3

c.  Informal
    Claims\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....
    3-3

d.  Apportionment Claims\...\...\...\...\...\...\...\...\...\...\...\...
    3-3

e.  Disallowance
    Letter\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....
    3-3

f.  General\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....
    3-3

> b\. Letter
> Production\...\...\...\...\...\...\...\...\...\...\...\...\...\.....
> 3-3

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January 24, 1991 M28-2, Part II

Change 2

CHAPTER 3. DISALLOWANCE PROCESSING

3.01 SCOPE

This chapter provides instructions for processing chapter 31
disallowances. The Target 408 screen, Chapter 31 Disallowance, records
non-entry into training for disallowance determinations made in both
Adjudication and VR&C Divisions.

3.02 TYPES OF DISALLOWANCES

a\. Substantive Disallowance Based on Determination of Ineligibility.
Complete the 408 screen after determining based on the evidence of
record that a chapter 31 claimant does not meet the requirements for
eligibility for these benefits. Upon denial of a current claim, a formal
disallowance is required.

\(1\) Initial Claim. Complete the 408 screen to record in the
claimant\'s chapter 31 MR (master record) the formal disallowance of an
initial claim in the following instances:

\(a\) The veteran does not meet all the eligibility requirements of
applicable laws; or

\(b\) The veteran withdraws his or her original claim.

\(2\) Reopened Claim. In addition, use the 408 screen to record
disallowances of reopened claims for the same reasons VA may deny an
initial claim.

b\. Administrative/Record Purpose Disallowance. Prepare a 408 screen
when administratively disposing of a pending initial or reopened claim
and the disallowance does not require notification to the claimant. This
situation generally occurs upon receipt of evi­dence of the veteran\'s
death prior to a substantive Adjudication or VR&C Division disallowance
of the pending claim. Prepare these record purpose disallowances as
provided in paragraph 3.05 below, but include a brief statement of the
precise reason for denial in the REMARKS field on the 408 screen. This
reason will then appear on the printout generated following GAP
(Generate and Print) processing.

3.03 LACK OF ADDRESS INSUFFICIENT FOR DISALLOWANCE.

Neither adjudicators nor VR&C Division personnel may disallow a claim
based solely upon the claimant\'s failure or refusal to pro­vide a
current address, if the claimant is otherwise eligible or entitled to
chapter 31 benefits. The case manager will prepare an award to send
subsistence allowance checks, as well as all correspondence, to the
local Agent Cashier. This procedure is designed principally to assist
homeless claimants.

3.04 NOTIFICATION REQUIREMENTS

Public Law 10 1 -237, the \"Veterans\' Benefits Amendments of 1989,\" in
section 3004, Decisions and Notices of Decisions, requires VA to timely
notify both claimants and their representatives of every decision made
affecting the claimants\' eligibility and entitlement to benefits. Each
notice must explain the procedure for obtaining a review of the
decision. If VA denies a benefit sought, in whole or in part, the notice
to the claimants and their representatives will also include a statement
of the reasons for the decision, a summary of the evidence on which the
decision was based, and a copy of VA Form 1-4107, Notice of Procedural
and Appellate Rights.

3.05 FAILURE TO PROSECUTE CLAIM

a\. Disallowance at Expiration of Control Period. The Authorization
activity often requests that a claimant submit evidence VA needs to
determine chapter 31 eligibility. The veteran\'s claim remains in a
pending status until VA receives the evidence or a control period
expires, whichever comes first. If the claimant does not submit the
required evidence within the control period, the Authorization activity
will disallow the claim by entering an \"X\" next to disallowance code
16. The disallowing official will use a pattern or dictated letter to
fully notify the claimant of the denial, citing the evidence VA used in
making the decision, the reasons for the decision, the evidence the
veteran needs to submit to reopen the claim, and the time limit for
submitting the requested evidence. The letter will include VA Form
1-4107.

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M28-2, Part II January 24, 1991

Change 2

b\. Referral to Rating Board for Failure to Report for a Physical
Examination. Prior to any disallowance because of failure to report for
a physical examination, the adjudicator will refer the claims folder to
a rating board for consideration for a memorandum rating. NOTE: If VA
has already inducted the veteran into the chapter 31 program, do not
refer a claims folder to the rating board for memorandum rating and do
not process a disallowance of chapter 31 benefits for failure to report
(see M28-2, Pt. IV, ch1).

\(1\) Evidence Is Adequate to Establish or Deny Existence of a 20
Percent Compensable Disability. If evidence is adequate to either
establish or deny the existence of a combined disability rating which is
at least 20 percent compensable, the rating board will prepare a
memorandum rating decision on VA Form 21-6796, Rating Decision. The
rating board will then forward the rating to the Authorization activity
along with the claims folder for either an eligibility determination or
disallowance action.

\(2\) Evidence Is Inadequate to Establish Existence of a 20 Percent
Compensable Disability. If evidence is inadequate to establish at least
a 20 percent combined compensable disability rating, the rating board
will prepare a memorandum rating on VA Form 21-6796 indicating that a
compensable evaluation cannot be established based on the available
evidence. The rating board will then forward the rating with the claims
folder to the Authorization activity.

c\. Notice to Claimant of a Record Purpose Disallowance. In the
disallowance notice to the veteran, the Authorization activity will
fully inform the claimant by following the procedures in paragraphs 3.04
and 3.05a above. For disallowances for failure to report for an
examination, the Authorization activity must give as reasons for the
decision both the failure to report for an examination and the absence
of other evidence to establish combined service-connected disability
rating which is at least 20 percent compensable. The notice will also
state that to reopen the claim the veteran must submit additional
evidence or indicate a willingness to report for an examination.

d\. Evidence Is Received Within the Statutory Period. A disallowance for
failure to prosecute a claim does not affect the I -year statutory time
limitation for submission of evidence or the effective date of induction
into a program of rehabilitation services which the VR&C Division may
subsequently approve. If VA has previously denied a claim for failure to
submit evidence, the Authorization activity must prepare a new
disallowance on the 408 screen under the following conditions:

\(1\) The veteran submits the requested evidence within the statutory
period for reopening the claim, and

\(2\) VA makes a substantive disallowance for ineligibility.

3.06 PROCESSING THE DISALLOWANCE ON THE 408 SCREEN

a\. Reasons for Disallowance. Enter an \"X\" in only one of the fields
in the left column on the 408 screen to show the specific reason for
disallowance. If there are two or more reasons for disallowance, enter
the principal reason. Following selection of code 29, Other, enter an
explanation in the REMARKS field. This explanation may be up to 70
characters long. (For a more complete explanation of the reasons for
disallowance, see par 2.02j(l).)

b\. Authorization. The preparing adjudicator and an authorizer will sign
the disallowance printout generated following GAP processing. The
authorizer will also complete the 501 screen. (For a more complete
explanation of CAUT (claims authorization) processing, see par. 2.02k )

c Reprocessing a Disallowance. If on review or reconsideration the basis
for the disallowance has changed, reprocess the disallowance and fully
inform the veteran of the decision as explained in paragraphs 3.04,
3.05a, and 3.05c.

3.07 CIRCUMSTANCES WHEN 408 SCREEN WILL NOT BE COMPLETED FOR
DISALLOWANCE

Do not prepare a 408 screen for the situations listed below:

a\. New Evidence Causes No Change in Previous Disallowance. VA may
receive evidence after disallowance of the claim, but the evidence may
not warrant change in the previous determination. The adjudicator must,
however, fully notify the claimant of the consid­eration VA has given the
newly submitted evidence, the confirmation of the earlier denial, and
the reasons for the confirmation. 3-2

January 24, 1991 M28-2, Part 11

Change 2

b\. Consideration of New Evidence Does Not Change Previous Disallowance
Reason. If a rating board prepared a rating which was part of the
previous disallowance and the veteran submits new evidence, the rating
board must consider the evidence in a new rating decision. This rating
may still result in disallowing the chapter 31 claim for the same reason
as the prior claim. Prepare a 408 screen only if the disallowance reason
differs from the prior disallowance reason. Notify the veteran in the
same manner as under subparagraph a above

c\. Informal Claims. An adjudicator does not need to disallow an
informal claim, including an unsigned application. For informal claims,
the adjudicator will not give the claimant notice of any right to
appeal, instead the adjudicator will send the claimant the applica­tion
or forms required and tell the claimant that VA may not determine
eligibility and entitlement in the absence of a formal application

d\. Apportionment Claims. An adjudicator may decide that a claimant for
an apportionment is not entitled to a portion of the veteran\'s
benefits. The claimant retains the right to notice of the action taken
and the right to appeal the determination. If the Adjudication Division
receives a notice of disagreement with a denial of apportionment, the
adjudicator should treat the notice as a contested claim and follow the
procedures in M21-1, chapter 36. Do not process disallowances of
apportionment\'s on the 408 screen.

3.08 DISALLOWANCE LETTER

a\. General. Whenever VA disallows a claim based upon a determination of
ineligibility or non entitlement, the claimant or fiduciary and any
designated representative must receive complete information regarding
the decision as described in paragraphs 3.04,3.05a, and 3.05c above.
This notification may be a Target-generated letter or a pattern or
dictated letter if the Target letter does not fully cover the issues in
the case,

b\. Letter Production. Effective July 1, 1990, most disallowance
transactions will generate a letter to the claimant. The letter must
include the name and address of the State vocational rehabilitation
office to contact. Enter this data in the STATE OFFICE TO CONTACT field
on the 408 screen. For those disallowance transactions that do not
generate a letter, see subparagraph 2.02j(3).

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