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

#### Overview

+------------+---------------------------------------------------------+
| #          | > This section contains the following topics:           |
| #### In th |                                                         |
| is Section |                                                         |
+------------+---------------------------------------------------------+

  ------------ ---------------------------------------------- ------------
  Topic        Topic Name                                     See Page

  8            Special Consideration for Certain Paired       3-C-2
               Organs and Extremities                         

  9            The Prohibition Against Duplication of         3-C-3
               Benefits                                       

  10           Preparation of Awards Under 38 CFR 3.383       3-C-5
  ------------ ---------------------------------------------- ------------

#### 8. Special Consideration for Certain Paired Organs and Extremities

+------------+---------------------------------------------------------+
| ##### C    | > December 13, 2005                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### a. C | > In certain cases                                      |
| onsidering |                                                         |
|  Paired Or | -   compensation may be paid for the                    |
| gans and E |     nonservice-connected (NSC) loss of a paired organ   |
| xtremities |     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

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on the prohibition    |
| troduction | > 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.                    |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > December 13, 2005                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### a    | > Special consideration under 38 U.S.C. 1160 is         |
| . When to  | > provided if a veteran has L/LOU of                    |
| Provide Sp |                                                         |
| ecial Cons | -   an organ or extremity due to SC disability, and     |
| ideration  |                                                         |
| Under 38 U | -   a paired organ or extremity due to NSC disability.  |
| .S.C. 1160 |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > If the L/LOU of the NSC organ or extremity results    |
| ### b. Off | > from circumstances that could give rise to legal      |
| setting Be | > liability, the veteran *may* seek to recover damages  |
| nefits Und | > by lawsuit or other means.                            |
| er 38 U.S. | >                                                       |
| C. 1160 Du | > If the veteran *does* successfully recover damages,   |
| e to Damag | > the amount of damages received (for the NSC           |
| e Recovery | > disability only) must be offset against the           |
|            | > additional benefit payable under 38 U.S.C. 1160.      |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ###        | > Offset requirements involving the paired extremities  |
| ## c. When | > of the hands or feet only have long been in effect,   |
|  the Offse | > and continue to be in effect, while the offset        |
| t Requirem | > requirements concerning the remaining paired organs   |
| ents Apply | > 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

+------------+---------------------------------------------------------+
| ##         | > Benefits received under Social Security (SS) or       |
| ### d. Dam | > workers' compensation are *not* subject to            |
| age Recove | > recoupment, even though the benefits may have been    |
| ries Invol | > awarded pursuant to a judicial proceeding.            |
| ving NSC O | >                                                       |
| rgans or E | > All other recoveries related to the NSC organ or      |
| xtremities | > 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.                                            |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > If the veteran is receiving, or files a claim for,    |
| e. Veteran | > compensation for L/LOU of a paired organ due to NSC   |
| 's Duty to | > disability under 38 U.S.C. 1160, he/she is required   |
|  Notify VA | > 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

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on the preparation of |
| troduction | > 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.      |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > December 13, 2005                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > Do *not* defer award action because there is reason   |
| ### a. Act | > to believe a tort claim for damages has been filed    |
| ion to Tak | > against any party (VA or otherwise) based on the      |
| e When It  | > injury to the NSC paired organ or extremity.          |
| Appears a  | >                                                       |
| Tort Claim | > *Do* defer award action and initiate development      |
|  May Have  | > action to ascertain the date damages were received by |
| Been Filed | > 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.           |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > The total amount to be recouped is the gross amount   |
| b. Determi | > of the settlement or judgment.                        |
| ning the A | >                                                       |
| mount to B | > Attorney's fees, court costs, and other expenses      |
| e Recouped | > 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. E | > Enter the gross amount of the judgment in the TORT    |
| ntering th | > AWARDS field on the 401 screen. The maximum amount    |
| e Gross Am | > that can be entered is \$999,999.99.                  |
| ount of th |                                                         |
| e Judgment | > ***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.             |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #          | > Once a recoupment balance has been established in the |
| #### d. Ch | > master record, it *cannot* be changed by amended      |
| anging the | > award action.                                         |
|  Recoupmen | >                                                       |
| t Balance  | > If the recoupment balance must be changed             |
| in the Mas |                                                         |
| ter Record | -   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.         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #          | > Enter special law (SL) code 20 in the SLC field on    |
| #### e. Wh | > the 401 screen if compensation is granted or          |
| en to Use  | > increased under 38 U.S.C. 1160.                       |
| SL Code 20 | >                                                       |
|            | > ***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.   | > Enter the amount of offset as a type 7 withholding in |
| How to Ent | > the DED-OFFSET field on the 403 screen.               |
| er the Off | >                                                       |
| set Amount | > ***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

+------------+---------------------------------------------------------+
| #####      | > Withhold only the additional compensation, including  |
|  g. Monthl | > amounts for dependents, payable for the NSC paired    |
| y Withhold | > organ or extremity.                                   |
| ing Amount | >                                                       |
|            | > 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.                 |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > Commence withholding compensation effective the first |
| ### h. Eff | > of the month after the month during which the veteran |
| ective Dat | > received damages as a result of injury to the NSC     |
| e of the W | > organ or extremity.                                   |
| ithholding | >                                                       |
|            | > 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.                                    |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > Do not offset compensation payable for any period     |
| ### i. Ret | > before the month following the date on which the      |
| roactive C | > settlement or judgment becomes final.                 |
| ompensatio | >                                                       |
| n Benefits | > ***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.   | > The entry of SL code 20 automatically suppresses the  |
|  Providing | > Benefits Delivery Network (BDN) award letter.         |
|  Notice of | >                                                       |
|  the Award | > 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.        |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > A veteran may be entitled to Dependents' Educational  |
| # k. Consi | > Assistance (DEA), as established under 38 CFR         |
| dering Ent | > 3.807(c) amended effective December 6, 1994, when     |
| itlement t | > disabilities are treated as if SC under 38 U.S.C.     |
| o Ancillar | > 1160.                                                 |
| y Benefits |                                                         |
|            | > 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).                       |
+------------+---------------------------------------------------------+