## Veterans Benefits Administration M21-1, Part IV

**Department of Veterans Affairs Change 210**

**Washington, DC 20420 October 8, 2004**

Veterans Benefits Manual M21-1, Part IV, "Authorization Procedures," is
changed as follows:

**Pages 20-VI-1 and 20-VI-2:** Remove these pages and substitute pages
20-VI-1 and 20-VI-2 attached.

Paragraph 20.36b(3) is revised to state the amended entitling criteria
for evaluating hearing impairment under the "paired organ" provisions of
38 CFR 3.383. This change is based on the amendment to 38 U.S.C.
1160(a)(3) by Section 103 of Public Law 107-330 effective December 6,
2002.

**Pages 25-VIII-5 and 25-VIII-6:** Remove these pages and substitute
pages 25-VIII-5 and 25-VIII-6 attached.

In paragraph 25.19, the reference to part VI, paragraph 7.67a, is
changed to part VI, paragraph 7.26a, and the reference to chapter 20,
subchapter VII, is changed to chapter 20, subchapter VI.

By Direction of the Under Secretary for Benefits

Renée L. Szbala, Director

> Compensation and Pension Service

Distribution: RPC: 2068

FD: EX: ASO and AR (included in RPC 2068)

LOCAL REPRODUCTION AUTHORIZED

**October 8, 2004 M21-1, Part IV**

**Change 210**

**SUBCHAPTER VI. DISABILITY COMPENSATION FOR PAIRED ORGANS**

**OR EXTREMITIES (38 CFR 3.383)**

**20.36 SPECIAL CONSIDERATION FOR PAIRED ORGANS AND EXTREMITIES**

a\. **Combined Evaluation.** If there is service-connected loss or loss
of use of an organ or extremity and nonservice-connected loss or loss of
use of the paired organ or extremity, 38 U.S.C. 1160 requires that the
evaluations of the paired organs or extremities be combined as if both
were service connected. This may result in an offset action should
benefits subsequently be received for the NSC condition as a result of
legal action.

b\. **Conditions Involved.** The following combinations of paired organs
or extremities give rise to special consideration under 38 U.S.C. 1160:

\(1\) Blindness in one eye as a result of service-connected disability
and blindness in the other eye as a result of nonservice-connected
disability.

\(2\) Loss or loss of use of one kidney as a result of service-connected
disability and involvement of the other kidney as a result of
nonservice-connected disability.

\(3\) Hearing impairment in one ear compensable to a degree of 10
percent or more as a result of service-connected disability and hearing
impairment in the other ear as a result of nonservice-connected
disability that meets the provisions of 38 CFR 3.385.

\(4\) Loss or loss of use of one hand or one foot as a result of
service-connected disability and loss or loss of use of the other hand
or foot as a result of nonservice-connected disability.

\(5\) Permanent service-connected disability of one lung, rated 50
percent or more disabling, in combination with a nonservice-connected
disability of the other lung.

c\. **Misconduct.** Special consideration under 38 U.S.C. 1160 is not
permitted if the nonservice-connected disability is the result of the
veteran\'s own willful misconduct.

d\. **38 U.S.C. 1151.** If compensation is granted for loss or loss of
use of an organ or extremity under 38 U.S.C. 1151 and loss or loss of
use of the paired organ or extremity is involved which is neither
service connected nor quasi-service connected under 38 U.S.C. 1151, 38
U.S.C. 1160 requires that the evaluations of the paired organs or
extremities be combined as if both were service connected. See chapter
22 for procedures applicable to cases under 38 U.S.C. 1151.

**20.37 PROHIBITION AGAINST DUPLICATION OF BENEFITS**

a\. **General.** Special consideration under 38 U.S.C. 1160 is afforded
if a veteran has loss or loss of use of a service-connected organ or
extremity and loss or loss of use of a paired nonservice-connected organ
or extremity. If the loss or loss of use of the nonservice-connected
organ or extremity results from circumstances which 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 (based on the nonservice-connected disability
only) must be offset against the ADDITIONAL benefit payable under 38
U.S.C. 1160.

b\. **Offset Provisions.** Offset provisions for the paired extremities
of hand or feet have been in effect and are continued. Offset provisions
for the remaining paired organs or extremities apply only to
compensation granted or increased after October 27, 1986.

**20-VI-1**

**M21-1, Part IV October 8, 2004**

**Change 210**

c\. **Social Security and Workers\' Compensation.** Benefits received
under Social Security or Workers\' Compensation are not subject to
recoupment even though the benefits may have been awarded pursuant to a
judicial proceeding.

d\. **Characterization of Award.** With the exception of Social Security
and Worker\'s Compensation, all other recoveries related to the
nonservice-connected organ or extremity are subject to recoupment
regardless of whether the payment to the veteran is characterized as a
tort award, settlement, compromise, administrative award or judgment.
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 nonservice-connected organ or
extremity.

e\. **Veteran\'s Duty to Report.** The veteran is required to report to
VA any damages received as the result of a lawsuit, compromise,
settlement or other recovery involving the nonservice-connected organ or
extremity. The veteran should report the total amount of money received.
If the veteran refuses to provide information and evidence that is
essential for the adjudication of the claim has been placed under a
court seal, solicit the assistance of Regional Counsel for obtaining
such evidence. Expenses incident to recovery, such as an attorney\'s
fees, may **NOT** be deducted from the amount to be reported.

**20.38 PREPARATION OF AWARDS**

a\. **Deferral of Award Action.** Do not defer award action because
there is reason to believe a tort claim for damages has been filed based
on the injury to the nonservice-connected paired organ or extremity. 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, defer
award action and develop to ascertain the date damages were received by
the veteran.

b\. **Total Amount to Be Recouped.** The total amount to be recouped
will be 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. Enter the gross amount
received in the TORT AWARDS field on the 401 Screen.

c\. **Changes in Amount to be Recouped.** 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 the
claims folder and send a routing slip to Finance requesting that the
recoupment balance be changed. Maintain close control of the case to
verify that the transaction was properly posted to the master record.

d\. **Special Law Code.** Enter special law code 20 in the SLC field on
the 401 Screen if compensation is granted or increased under 38 U.S.C.
1160. Use special law code 20 whether or not offset is required. See
part V, paragraph 6.09.

e\. **Withholding for Offset.** Enter the amount of offset as a type 7
withholding in the DED-OFFSET field on the 403 Screen. See part V,
paragraph 6.11b.

f\. **Monthly Withholding Amount.** Withhold only the additional
compensation (including amounts for dependents) payable for the
nonservice-connected paired organ or extremity. If this results in
payment at a rate less than the combined evaluation of the
service-connected (exclusive of 38 U.S.C. 1160) disabilities (including
amounts for dependents), withhold only the remaining balance payable.

g\. **Effective Date of Withholding.** Make the withholding effective
the first of the month after the month during which the veteran received
damages as a result of injury to the nonservice- connected organ or
extremity. If the veteran receives payments in installments, start the
withholding the first of the month

**20-VI-2**

**October 8, 2004 M21-1, Part IV**

**Change 210**

\(1\) Process a change of address under the CADD command and
concurrently enter the consolidated pay number 7271 under the CORR
command. If an amended award is required, use the CORR command to enter
consolidated payee number 7271.

\(2\) The transferring office may process the address change before
transferring the claims folder to WRO.

c\. **Veteran Leaves the Home.** If a veteran paid under a consolidated
voucher leaves the Home, change the address to pay the veteran directly
(and zero out the consolidated pay number) unless the veteran is
transferred to St. Elizabeth\'s Hospital as a U.S. Soldiers\' Home
patient (par. 25.17). In this instance, continue payments through the
consolidated voucher.

**NOTE:** If the veteran leaves the Home before VA takes award action,
ignore the period of residence at the Home and pay all benefits due
directly to the veteran.

d\. **Fiduciary Involved.** If payments are made to a fiduciary at the
time of admission to the Home, do not change the address from the
fiduciary to the Treasurer of the Home.

**25.17 AWARDS TO VETERANS INSTITUTIONALIZED IN ST. ELIZABETH\'S
HOSPITAL,**

**WASHINGTON, DC**

The controlling procedure on institutional awards to the chief officer
of a non-VA institution (par. 18.27) applies if an incompetent veteran
without a fiduciary is a patient at St. Elizabeth\'s Hospital,
Washington, DC. If the veteran is rated competent even though retained
in that hospital, pay benefits directly to the veteran with competency
payment code 1 (Screen 601) reflecting \"competent\" and direct payment
(pt. V, par. 13.05b(10) and pt. VI, par. 3.28).

**25.18 CHANGE OF LAW OR ISSUE**

a\. **Initial or Increased Awards.** Under 38 CFR 3.114(a), VA may
authorize retroactive benefits in certain cases if the claimant had
potential entitlement at the time the liberalizing law or regulation
became effective. Its provisions apply to persons who become entitled to
initial or increased benefits solely because of liberalizing changes in
law or administrative issues, provided the claimant met the liberalized
eligibility requirements from the effective date of the change through
the entire period for which retroactive payments are to be made. The
regulation is not limited to cases involving pending or previously
disallowed claims. It may also apply to original claims filed after the
change in law or administrative issue.

\(1\) If a liberalizing law or approval of a liberalizing VA issue,
e.g., change in rating or dependency criteria, establishes liberalized
standards of entitlement, award or increase benefits retroactively as
follows, but not for any period prior to December 1, 1962:

\(a\) From the effective date of the law or VA issue if VA reviews the
case within 1 year as part of a general review, during routine handling
or at the request of the claimant or his or her representative.

> \(b\) For a period of 1 year prior to the date of the administrative

**25-VIII-5**

**M21-1, Part IV October 8, 2004**

**Change 210**

determination of entitlement if the VA initiates the review more than 1
year after the effective date of the law or VA issue.

\(c\) For a period of 1 year prior to the date of receipt of a
claimant\'s or representative\'s request for review if received more
than 1 year after the effective date of the law or VA issue.

\(2\) The claimant must meet the requirements of the liberalizing law or
regulations:

\(a\) On the effective date of the liberalizing law or regulation and

\(b\) On the effective date of the award and

\(c\) During the entire retroactive period.

\(3\) The provisions of this regulation apply equally to pending and
disallowed claims.

b\. **Reduction or Discontinuance of Awards.** 38 CFR 3.114(b) provides
due process if a new law, regulation, change in the interpretation of a
law or VA issue, e.g., change in the Schedule for Rating Disabilities,
or revision of VA Regulations, requires reduction or termination of
benefits properly authorized under instructions in effect at the time
the award was processed. Send the claimant written notice of the
proposed action and allow 60 days for the claimant to submit evidence
showing the change should not be made. The due process notice must state
the proposed effective date (first of the month following the end of the
60-day period), explain the reasons and advise of the right to present
evidence, request a hearing and have representation.

**25.19 DISABILITY COMPENSATION FOR CERTAIN PAIRED ORGANS OR
EXTREMITIES**

Under the provisions of 38 CFR 3.383, compensation may be paid in
certain cases for a nonservice-connected loss of a paired organ or
extremity if the loss of the other organ or extremity is service
connected. See part VI, paragraph 7.26a for entitling criteria. See
chapter 20, subchapter VI concerning awards subject to offset.

**25.20 VETERAN-MARRIED-TO-VETERAN CASES**

In Improved Pension, veteran-married-to-veteran cases authorize payment
under one combined award unless one spouse requests separate payment;
multiple special monthly pension benefits are paid; the Housebound
allowance is granted to a spouse when the combined award is being paid
under the other veteran\'s file number; or a Medal of Honor grant is
involved. The maximum rates payable in these cases are established by 38
CFR 3.23(a)(4).

a\. **Combined Payment.** Use either file number to establish this award
except in original or reopened cases when one spouse has entitlement to
the A&A, Housebound or World War I or Mexican border period allowance.
In those cases, establish the award under the file number of the veteran
with entitlement to the special benefit. Enter the names of both
veterans on the first address line if awarding benefits in a combined
award. Use the entitlement code of the veteran whose file number is used

**25-VIII-6**