[Federal Register Volume 69, Number 205 (Monday, October 25, 2004)]
[Proposed Rules]
[Pages 62229-62237]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-23488]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF VETERANS AFFAIRS

38 CFR Parts 3 and 20

RIN 2900-AL86


Dependency and Indemnity Compensation: Surviving Spouse's Rate; 
Payments Based on Veteran's Entitlement to Compensation for Service-
Connected Disability Rated Totally Disabling for Specified Periods 
Prior to Death

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Department of Veterans Affairs (VA) proposes to amend its

[[Page 62230]]

adjudication regulations concerning payment of dependency and indemnity 
compensation (DIC) for certain non-service-connected deaths and the 
rate of DIC payable to a surviving spouse for either service-connected 
or non-service-connected deaths. The proposed rules would clarify VA's 
interpretation of similar statutes governing both matters, which 
provide for payments to the survivors of veterans who were, at the time 
of death, in receipt of or entitled to receive disability compensation 
for service-connected disability that was rated totally disabling for a 
specified period prior to death. The proposed rules would also 
reorganize and revise the regulations governing surviving spouses' DIC 
rate with the intent of making them easier to identify and understand. 
VA also proposes to reissue, with a minor nonsubstantive change, the 
Board of Veterans' Appeals rule concerning the effect of unfavorable 
decisions during a veteran's lifetime on claims for death benefits by 
the veteran's survivors. This reissuance is necessitated by a court 
decision vacating VA's prior action in revising that rule.

DATES: Comments must be received on or before December 27, 2004.

ADDRESSES: Mail or hand deliver written comments to: Director, 
Regulations Management (00REG1), Department of Veterans Affairs, 810 
Vermont Ave., Room 1068, NW., Washington, DC 20420; or fax comments to 
(202) 273-9026; or e-mail comments to <a href="/cdn-cgi/l/email-protection#a2f4e3d0c7c5d7cec3d6cbcdccd1e2cfc3cbce8cd4c38cc5cdd4"><span class="__cf_email__" data-cfemail="bdebfccfd8dac8d1dcc9d4d2d3cefdd0dcd4d193cbdc93dad2cb">[email protected]</span></a>; or, 
through www.Regulations.gov. Comments should indicate that they are 
submitted in response to ``RIN 2900-AL86.'' All comments received will 
be available for public inspection in the Office of Regulations 
Management, Room 1063B, between the hours of 8 a.m. and 4:30 p.m., 
Monday through Friday (except holidays). Please call (202) 273-9515 for 
an appointment.

FOR FURTHER INFORMATION CONTACT: David Barrans, Staff Attorney (022), 
Office of General Counsel, Department of Veterans Affairs, 810 Vermont 
Avenue, NW., Washington, DC 20420, (202) 273-6332.

SUPPLEMENTARY INFORMATION: VA proposes to revise its regulations 
relating to DIC to clarify its interpretation of two statutory 
provisions and to reorganize and restate provisions in current VA 
regulations. Specifically, we propose to move the provisions of current 
38 CFR 3.5(e) to a new regulation at 38 CFR 3.10, to revise those 
provisions, and to revise 38 CFR 3.22(b).
    DIC is a benefit paid to survivors of veterans in cases of service-
connected death or certain cases of non-service-connected death. 
Provisions governing entitlement to DIC for service-connected death are 
set forth in 38 CFR 3.5(b), while provisions governing entitlement to 
DIC in cases of certain non-service-connected deaths are set forth in 
38 CFR 3.22. Provisions governing the rate of DIC payable to a 
surviving spouse in either circumstance are set forth in 38 CFR 3.5(e). 
Because those payment-rate provisions apply to DIC awarded under either 
Sec.  3.5 or Sec.  3.22, their placement in Sec.  3.5 may cause 
unnecessary confusion. Accordingly, we propose to delete paragraph (e) 
from current Sec.  3.5, and to establish a separate regulation in 38 
CFR 3.10 to govern the rate of DIC payment to a surviving spouse. In 
new Sec.  3.10, we propose to reorganize the existing provisions of 
Sec.  3.5(e), to revise certain language for clarity, and to 
significantly elaborate upon the criteria governing one basis for 
entitlement to DIC payment at a level above the basic DIC rate, as 
explained below.
    Current Sec.  3.5(e)(1) states that, for deaths occurring on or 
after January 1, 1993, DIC will be paid at a flat rate specified in 38 
U.S.C. 1311(a)(1). Section 3.5(e)(1) further states, however, that the 
basic rate may be increased by a specified amount in the case of the 
death of a veteran who at the time of death was in receipt of or 
``entitled to receive'' compensation for a service-connected disability 
that was rated as totally disabling for a continuous period of at least 
eight years immediately preceding death. In a decision in National 
Organization of Veterans' Advocates, Inc. v. Secretary of Veterans 
Affairs, 314 F.3d 1373 (Fed. Cir. 2003) (``NOVA''), the United States 
Court of Appeals for the Federal Circuit criticized VA for not 
elaborating upon the meaning of the phrase ``entitled to receive'' in 
this provision, as VA had done in Sec.  3.22, where that phrase is also 
used. The Court ordered VA to revise its regulations for clarity and 
consistency. Although the court gave VA the option of amending either 
Sec.  3.5(e) or 38 CFR 20.1106, VA has concluded that the meaning of 
the phrase ``entitled to receive'' logically should be explained in a 
revision to Sec.  3.5(e), the regulation that uses that phrase and sets 
forth the substantive criteria governing DIC payment rates. Because we 
propose to move the relevant provisions of Sec.  3.5(e) to 38 CFR 3.10, 
we will address the meaning of the phrase ``entitled to receive'' in 
Sec.  3.10.
    VA has concluded that the phrase ``entitled to receive'' should be 
given the same meaning for purposes of both Sec.  3.22 and Sec.  3.5(e) 
and the Federal Circuit upheld that conclusion in its January 2003 NOVA 
decision. Section 3.22 implements 38 U.S.C. 1318, which provides that 
basic entitlement to DIC may be established in certain cases of non-
service-connected deaths, if the veteran, at the time of death, was in 
receipt of or ``entitled to receive'' compensation for a service-
connected disability that was either continuously rated totally 
disabling for a period of ten or more years immediately preceding 
death, or was so rated continuously for a period of not less than five 
years from the date of separation from service to the date of death, or 
in the case of a former prisoner of war who died after September 30, 
1999, was so rated for a period of not less than one year immediately 
preceding death. Section 3.5(e) implements 38 U.S.C. 1311(a)(2), which 
provides that a survivor having entitlement to DIC at the basic rate 
may receive an enhanced DIC payment in cases where the veteran was, at 
the time of death, in receipt of or ``entitled to receive'' 
compensation for a service-connected disability that was rated totally 
disabling for a continuous period of at least eight years immediately 
preceding death.
    In the Federal Register of April 5, 2002, VA published a final rule 
amending 38 CFR 20.1106 to provide, in effect, that a survivor's claim 
under either section 1311 or 1318 must be decided with reference to 
decisions rendered during the veteran's lifetime. 67 FR 16309 (2002). 
That rule reflects our conclusion that a veteran could have been in 
receipt of or entitled to receive total disability compensation for a 
specified number of years prior to death only if VA had granted such 
benefits during the veteran's lifetime or had denied the benefits based 
on an error that could be corrected retroactively under the laws 
governing veterans' benefits. We have explained the basis for this 
conclusion in several prior notices in the Federal Register. See 67 FR 
16309 (2002); 66 FR 65861 (2001); 65 FR 3388 (2000). In its January 
2003 NOVA decision, however, the Federal Circuit stated that VA's 
regulations were disparate in that Sec.  3.22 contained a detailed 
definition of the phrase ``entitled to receive'' for purposes of 38 
U.S.C. 1318, but neither Sec.  3.5(e) nor Sec.  20.1106 contained a 
similarly detailed definition of that phrase for purposes of 38 U.S.C. 
1311. To eliminate that disparity, we propose to include in new Sec.  
3.10 a definition of the phrase ``entitled to receive'' that will be 
nearly identical to the definition in Sec.  3.22(b), with only minor 
differences

[[Page 62231]]

necessary to reference the different durational requirements of the two 
governing statutes. As explained below, we propose to revise the 
definitional provisions of current Sec.  3.22(b) in two respects, and 
those revisions will be reflected in the definition of ``entitled to 
receive'' included in new Sec.  3.10.
    Section 3.22(b) currently defines the phrase ``entitled to 
receive'' to mean that, at the time of death, the veteran had service-
connected disability that was rated totally disabling by VA but was not 
receiving compensation because: (1) VA was paying the compensation to 
the veteran's dependents; (2) VA was withholding the compensation to 
offset an indebtedness of the veteran; (3) the veteran had applied for 
compensation but had not received total disability compensation for the 
required number of years prior to death due solely to a clear and 
unmistakable error in a VA decision; (4) the veteran had not waived 
retired or retirement pay; (5) VA was withholding payments under the 
provisions of 10 U.S.C. 1174(h)(2); (6) VA was withholding payments 
because the veteran's whereabouts were unknown but the veteran was 
otherwise entitled to payment; or (7) VA was withholding payments under 
38 U.S.C. 5308 but determines that benefits were payable under 38 
U.S.C. 5309. We propose to adopt these criteria into new Sec.  3.10 
with certain changes discussed below, which will be made in both Sec.  
3.10 and Sec.  3.22(b).

Revision of Sec.  3.22(b)

    We propose to revise Sec.  3.22(b) in two respects. First, we 
propose to reorganize and restate the provision concerning correction 
of clear and unmistakable error (CUE) to eliminate a potential 
ambiguity in the current regulation. Second, we propose to include one 
additional circumstance under which a veteran may be found to have been 
``entitled to receive'' total disability compensation for the specified 
period prior to death.
    We propose to revise for clarity the provisions of Sec.  3.22(b) 
regarding correction of CUE as a basis for DIC entitlement. Current 
Sec.  3.22(b) states that the phrase ``entitled to receive'' means 
that, at the time of death, the veteran had service-connected 
disability rated totally disabling by VA but was not receiving 
compensation for one of seven specified reasons, including the fact 
that the veteran was not receiving total disability compensation at the 
time of death due solely to CUE in a VA decision. This provision is 
potentially ambiguous as to whether DIC may be paid in circumstances 
where the CUE is not corrected until after the veteran's death. In 
cases involving CUE, the veteran's disability may not actually have 
been rated totally disabling at the time of death. Once VA has issued a 
decision correcting CUE, the veteran would be deemed, as a matter of 
law, to have held a service-connected total disability rating at the 
time of death, because 38 U.S.C. 5109A(b) and 7111(b) mandate that a 
decision correcting CUE has the same effect as if it had been made at 
the time of the prior erroneous decision.
    VA has consistently construed the statutes and regulations to 
permit DIC payment based on correction of CUE after a veteran's death. 
We note, however, that the requirement in current Sec.  3.22(b) that 
the veteran's disability was rated totally disabling at the time of 
death, may not adequately convey this conclusion to readers. 
Accordingly, we propose to revise Sec.  3.22(b) to contain a separate 
paragraph addressing DIC awards based on correction of CUE, which will 
not contain the requirement of a total disability rating existing at 
the time of the veteran's death. We note that 38 U.S.C. 1311(a)(2) and 
1318 both require that the veteran have been entitled to receive total 
disability benefits at the time of death for a service-connected 
disability that was rated totally disabling by VA for a specified 
period. We continue to believe that awards based on correction of CUE 
will satisfy this requirement, due to the retroactive effect of 
decisions correcting CUE. In order to avoid confusion, however, we 
believe it is clearer to state simply that the phrase ``entitled to 
receive'' includes circumstances where the veteran would have received 
total disability compensation at the time of death for a service-
connected disability rated totally disabling for the specified period 
but for a CUE committed by VA in a decision on a claim filed during the 
veteran's lifetime, without expressly requiring a finding that such 
entitlement existed at the time of death. We will retain the 
requirement of entitlement existing at the time of the veteran's death 
with respect to the other six criteria in current Sec.  3.22(b), 
because we do not believe there is similar potential for confusion with 
respect to those criteria.
    We also propose to add a provision to Sec.  3.22(b) explaining that 
the phrase ``entitled to receive'' includes circumstances where new and 
material evidence consisting solely of service department records 
provides a basis for reopening a claim finally decided during the 
veteran's lifetime and for awarding a total service-connected 
disability rating retroactively in accordance with 38 CFR 3.156(c) and 
3.400(q)(2) for the relevant continuous period required by 38 CFR 
3.22(a)(2). The reasons for this change are discussed below. In light 
of the Federal Circuit's January 2003 decision in NOVA, however, it is 
also necessary to explain why VA does not propose to extend DIC 
entitlement to cases where a survivor submits new and material evidence 
consisting of items other than such contemporaneous service department 
records and alleges that such evidence establishes that the veteran was 
entitled to receive total disability compensation for a retroactive 
period of several years before the veteran's death and before such 
evidence was submitted to VA.
    In its January 2003 decision in NOVA, the Federal Circuit held that 
VA regulations implementing 38 U.S.C. 1311(a)(2) and 1318 are 
reasonable insofar as they reflect the conclusion that DIC cannot be 
paid under those statutes in cases where the veteran had never filed a 
claim for VA disability compensation during his or her lifetime. NOVA, 
314 F.3d at 1378-80. The court concluded, however, that VA had not 
adequately addressed whether entitlement to DIC under those statutes 
may be established in cases where the veteran had filed a claim during 
his or her lifetime, but had not received a rating meeting the duration 
or degree-of-disability requirements of section 1311 or 1318, and the 
survivor seeks to reopen the claim based on new and material evidence 
submitted after the veteran's death. Id. at 1380-81. The court directed 
VA to address the issue of whether reopening based on new and material 
evidence may provide a means of establishing entitlement to DIC under 
sections 1311 and 1318.
    As a general matter, the submission of new and material evidence 
cannot establish any person's entitlement to benefits for a past 
period. Congress has established a statutory scheme prescribing in 
detail the starting date and duration of any benefit award based on 
original claims or claims reopened by new and material evidence. As 
explained below, those statutes define VA's authority to award--and 
thus, a veteran's entitlement to receive--benefits for any specific 
period.
    Pursuant to 38 U.S.C. 7104(b) and 7105(c), VA decisions are final 
once a final appellate decision has been made or the period for seeking 
appeal has expired. As these provisions state, VA decisions are 
``final,'' and the finality serves as a bar to subsequent consideration 
of the claim as well as to a subsequent award of benefits based on

[[Page 62232]]

the claim. There are two statutory exceptions to this bar. One 
exception, permitting correction of CUE, operates retroactively, as 
explained above. See 38 U.S.C. 5109A(b) and 7111(b). Accordingly, a 
claim of CUE that is brought after a veteran's death may nevertheless 
operate retroactively to establish that the veteran was entitled to 
total disability compensation for the required period prior to the 
veteran's death.
    The other exception to the finality of VA decisions derives from 38 
U.S.C. 5108, which permits a previously-disallowed claim to be reopened 
if new and material evidence is obtained. In contrast to the correction 
of CUE, however, a reopening based on new and material evidence 
generally does not have retroactive effect and cannot establish an 
individual's entitlement to benefits for past periods. The effective 
dates of benefit awards are governed by 38 U.S.C. 5110. Section 5110(a) 
states that, unless specifically provided otherwise by statute, the 
effective date of an award based on a claim reopened after final 
adjudication ``shall not be earlier than the date of receipt of 
application therefor.'' VA has consistently interpreted this statute to 
provide that an award based on a reopened claim generally can be 
effective no earlier than the date the claim for reopening was filed, 
and the United States Court of Appeals for the Federal Circuit has 
upheld that interpretation. See Sears v. Principi, 349 F.3d 1326 (Fed. 
Cir. 2003), cert. denied, 124 S. Ct. 1723 (2004). The CAVC has further 
explained that a reopening under 38 U.S.C. 5108 ``is not a reactivation 
of the previous claim, based upon the original application for 
benefits,'' and that ``even upon a reopening, the prior claim is still 
`final' in a sense'' because any award based on the reopening can be 
effective no earlier than the date of the application to reopen. 
Spencer v. Brown, 4 Vet. App. 283, 293 (1993), aff'd, 17 F.3d 368 (Fed. 
Cir. 1994).
    VA has concluded that the different temporal effects of these two 
finality exceptions, as prescribed by statute, are significant in the 
context of 38 U.S.C. 1311 and 1318. By statute, when VA corrects CUE, 
it is required to give retroactive effect to its decision and to grant 
entitlement retroactive to the date of a previously denied claim. 
Accordingly, correction of CUE even after a veteran's death clearly may 
result in a conclusion that the veteran was entitled to receive total 
disability compensation for a number of years prior to death. In 
contrast, when VA awards benefits in a reopened claim, it is prohibited 
by statute from giving retroactive effect to its decision or from 
awarding benefit entitlement for any period prior to the date of the 
application for reopening. Thus, the reopening of a claim after a 
veteran's death ordinarily could not establish that the veteran was 
entitled to total disability compensation for any period prior to 
death.
    We believe it is logical to conclude that, when Congress 
conditioned a survivor's DIC eligibility on the extent and duration of 
a veteran's entitlement to benefits, it intended that VA would apply 
the existing statutory provisions governing the extent and duration of 
the veteran's entitlement, including those prohibiting VA from 
according retroactive effect to decisions based on new and material 
evidence.
    We also conclude that adherence to the provisions regarding the 
nonretroactivity of decisions based on new and material evidence is 
consistent with the purpose of the DIC statutes as indicated by their 
legislative history. In providing for payment of DIC based on the 
veteran's entitlement to total disability compensation during his or 
her lifetime, Congress explained that its purpose was to replace the 
source of income the veteran's family would otherwise lose when the 
veteran died and his or her compensation payments ceased. The Senate 
Committee on Veterans' Affairs explained this purpose by stating:

    The appropriate Federal obligation to these survivors should, in 
the Committee's view, be the replacement of the support lost when 
the veteran dies. For example, assume that a veteran who is totally 
blind from service-connected causes dies at the age of 55 from a 
heart attack, having been so disabled from the age of 22--a period 
of 33 years. During that period, his wife and he depended upon his 
disability compensation for income support, but, because his death 
is not service connected, she would not receive DIC.

S. Rep. No. 1054, 95th Cong., 2nd Sess. 28 (1978), reprinted in, 1978 
U.S.C.C.A.N. 3465, 3486. Permitting survivors to rely on new and 
material evidence to establish a veteran's entitlement to benefits that 
were not actually awarded during the veteran's lifetime--and could not 
have been awarded to the veteran retroactively if he or she had 
survived--would be contrary to the stated purpose to replace income 
that veterans and their families had come to depend on by virtue of 
having received total disability payments for a prolonged period prior 
to death.
    In 1982, Congress expanded DIC eligibility under what is now 38 
U.S.C. 1318, by authorizing DIC in cases where the veteran would have 
received total disability compensation for the specified period prior 
to death but for CUE committed by VA in a decision on a claim submitted 
during the veteran's lifetime. The stated purpose of that change was 
``to provide that the existence of a clear and unmistakable error 
should not defeat entitlement to the survivors' benefits.'' S. Rep. No. 
550, 97th Cong., 2nd Sess. 35 (1982), reprinted in 1982 U.S.C.C.A.N. 
2877, 2898. The legislative history further explained that, ``[u]nder 
the amendment, a veteran would not need actually to have been ``in 
receipt'' of total disability benefits for the requisite period of time 
in order to provide eligibility to the survivors if a clear and 
unmistakable error had been made that resulted in a shorter period of 
receipt than should have been provided.'' Id.
    Permitting survivors to rely on new and material evidence to 
establish a veteran's entitlement to benefits that were not actually 
awarded during the veteran's lifetime would go well beyond the stated 
purpose to provide DIC in cases where CUE resulted in a shorter period 
of entitlement than should have been provided. As noted above, new and 
material evidence does not have retroactive effect and could not 
establish a longer period of compensation entitlement for any veteran, 
as correction of CUE may do. The legislative history of the 1982 
statute reasonably reflects the principle that veterans and their 
families should not be penalized in cases where the veteran did 
everything necessary to establish entitlement to a total disability 
rating for the required period, but VA's error prevented the timely 
assignment of such rating. The purpose of that amendment was clearly 
remedial, in the same way that the general authority to correct CUE 
retroactively is remedial. In contrast, the authority to reopen and 
grant claims upon receipt of new and material evidence is not remedial, 
in the sense that it does not correct any past error, but merely 
permits a new adjudication informed by new evidence.
    In view of the stated congressional purpose, we believe it is 
appropriate to recognize the distinction between statutory procedures 
that may result in the retroactive assignment of a total disability 
rating for periods prior to death (i.e., correction of CUE) and those 
that may not (i.e., reopening based on new and material evidence). It 
is, further, appropriate to recognize a distinction between procedures 
designed to remedy VA error (i.e., correction of CUE) and those that 
are not (i.e., reopening based on new and material evidence). In view 
of

[[Page 62233]]

Congress's stated purpose to allow DIC where VA's error was the only 
obstacle to the veteran's receipt of benefits, we find no basis for 
extending DIC to circumstances where there was no VA error and, 
moreover, where VA would have no statutory authority to award 
retroactive entitlement to the veteran, if the veteran were still 
alive.
    Finally, VA notes that interpreting 38 U.S.C. 1311 and 1318 to 
permit reopening based on new and material evidence concerning past 
disability would have significant practical effects on VA claims 
processing. In VA's view, those statutes require determinations based 
on an existing record of evidence and adjudications made during the 
veteran's lifetime. Either VA had awarded a total disability rating 
during the veteran's lifetime or the evidentiary record established 
during the veteran's lifetime demonstrates that VA committed CUE in 
failing to award such a rating. Moreover, the duration of the veteran's 
entitlement could be readily established by reference to existing 
ratings or to the effective-date provisions of 38 U.S.C. 5110. In 
contrast, if new and material evidence were a basis for establishing 
DIC entitlement under 38 U.S.C. 1311 and 1318, VA potentially would be 
required to conduct significant new evidentiary development, including 
requesting medical opinions as necessary to resolve issues concerning 
the extent and duration of past disability. In addition, if VA were 
required to ignore the provisions of 38 U.S.C. 5110 prohibiting 
retroactive awards based on new and material evidence, determinations 
concerning the duration of the veteran's ``entitlement'' would be a 
matter of significant uncertainty and dispute. Inasmuch as Congress's 
stated purpose is limited to cases involving existing ratings and 
correction of CUE in an existing record, we cannot conclude that 
Congress intended to impose the burdens of the much more complex, 
uncertain, and hypothetical adjudicative actions that would be 
necessary in determinations based on new and material evidence.
    For the foregoing reasons, VA has concluded that new and material 
evidence submitted after a veteran's death generally may not provide a 
basis for establishing that the veteran was ``entitled to receive'' 
benefits not awarded during the veteran's lifetime and thus may not 
provide a basis for establishing entitlement to DIC under 38 U.S.C. 
1318.
    As noted above, however, there is one circumstance in which 
additional evidence submitted after a veteran's death may result in 
retroactive benefit awards, potentially for several years prior to the 
date of reopening--where the additional evidence consists of service 
department records that existed at the time of a final decision by VA 
during the veteran's lifetime but for some reason were not previously 
considered by VA.
    Arguably, VA regulation 38 CFR 3.156(c) indicates that retroactive 
entitlement is potentially possible for several years prior to the date 
of reopening of a previously denied claim based upon the submission of 
new evidence consisting of either previously-existing service 
department records that VA presumes to have been lost or mislaid at the 
time of a prior decision or supplemental service department reports 
correcting a prior service department record. However, as discussed 
below, regulatory provisions governing the assignment of effective 
dates for awards clearly establish that retroactive entitlement for 
several years prior to the date of a reopening of a previously denied 
claim is potentially possible only when a claim has been reopened and 
granted based upon the submission of new evidence in the form of 
service department records that existed when the prior decision was 
made and which VA presumes to have been previously lost or mislaid. 38 
CFR 3.400(q)(2). When a claim has been reopened and granted based upon 
the submission of new and material evidence in the form of corrected 
service department records, entitlement to such awards is limited to 
the date of filing the application for change, correction, or 
modification with the service department; the date VA received a prior 
claim if it disallowed the claim; or the date one year prior to the 
date of reopening of the disallowed claim, whichever is later. 38 CFR 
3.400(g).
    A VA regulation, 38 CFR 3.400(q)(2), states that when a claim is 
reopened and granted based on new and material evidence in the form of 
records from a service department (i.e., the Army, Navy, or Air Force) 
that VA considers to have been lost or mislaid, benefits may be awarded 
retroactive to the date of the previously denied claim. Under the plain 
language of this section, new and material evidence in the form of 
presumably lost or mislaid official service department records 
submitted after a veteran's death potentially may establish that the 
veteran was entitled to total disability benefits for retroactive 
periods during his or her lifetime. This regulation reflects a 
longstanding VA policy of treating service department records that were 
presumably lost or mislaid as providing a basis for an award of 
benefits based on the veteran's original claim. Moreover, this 
regulation is clearly intended to remedy error (the loss or 
misplacement of service department records or failure to associate 
pertinent service department records with the file) affecting the prior 
final decision.
    VA regulation 38 CFR 3.400(g) prohibits the awarding of retroactive 
entitlement for several years prior to the date of reopening of a 
previously denied claim when a claim has been reopened and granted 
based on the submission of new and material evidence in the form of 
corrected military records. This implementing regulation mirrors its 
authorizing statutory provision, 38 U.S.C. 5110(i). Section 5110(i) 
provides that, ``[w]henever any disallowed claim is reopened and 
thereafter allowed on the basis of new and material evidence resulting 
from the correction of the military records of the proper service 
department under section 1552 of title 10, or the change, correction, 
or modification of a discharge or dismissal under section 1553 of title 
10, or from other corrective action by competent authority, the 
effective date of commencement of the benefits so awarded shall be the 
date on which the application was filed for the correction of the 
military record or for the change, modification, or correction of a 
discharge or dismissal, as the case may be, or the date the disallowed 
claim was filed, whichever date is later, but in no event shall such 
award of benefits be retroactive for more than one year from the date 
of reopening of such disallowed claim.'' 38 U.S.C. 5110(i) (emphasis 
added). Accordingly, a reopening based on new and material evidence in 
the form of corrected service department records could establish a 
veteran's entitlement to benefits for no more than one year prior to 
the date of reopening, and could not satisfy the periods of entitlement 
necessary to support a survivor's DIC award under 38 U.S.C. 1311 and 
1318. Reopenings based on corrected military records are therefore 
excluded from this regulation.
    As noted above, we believe 38 U.S.C. 1311 and 1318 are most 
reasonably construed as requiring VA to apply its existing statutes and 
regulations in determining the extent and duration of a veteran's 
entitlement to benefits. Further, those statutes reflect an intent that 
a survivor's DIC entitlement should not be defeated solely by VA error. 
Although the misplacement of service department records may have been 
due to error by the service department, rather than VA, we believe it 
would be consistent with the language and purpose of 38 U.S.C. 1311 and 
1318 to

[[Page 62234]]

permit DIC in cases where new and material evidence solely in the form 
of presumably lost or misplaced service department records results in 
assignment of a total disability rating with a retroactive effective 
date sufficient to satisfy the requirements of those statutes. 
Accordingly, we propose to add provisions to 38 CFR 3.10 and 3.22(b) to 
reflect this determination.
    Although VA regulation 38 CFR 3.400(q)(2) refers to records that VA 
considers to have been lost or mislaid, we do not believe it requires a 
factual determination that the records were actually lost or mislaid. 
The reference to records ``considered'' to have been lost or mislaid 
serves to draw a distinction between service department records that 
existed at the time of the prior VA decision and therefore presumably 
could or should have been available for VA's consideration when the 
veteran's original claim was filed, and the type of post-service 
corrections of service department records that are separately addressed 
in 38 CFR 3.400(g). If a service department record existed at the time 
of VA's prior decision, but for some reason was not provided to and 
considered by VA at the time of its decision on the veteran's original 
claim, VA will presume that the record was lost or mislaid. In order to 
clarify the distinction between this type of service department record 
covered by 38 CFR 3.400(q)(2) and the type of post-service corrections 
covered by 38 CFR 3.400(g), we propose to state that DIC entitlement 
under 38 U.S.C. 1311 and 1318 may be established where additional 
evidence consisting solely of service department records that existed 
at the time of VA's prior decision but were not previously considered 
by VA provide a basis for reopening a claim finally decided during the 
veteran's lifetime and for awarding a total service-connected 
disability rating in accordance with Sec.  3.156(c) and Sec.  
3.400(q)(2) for the retroactive period specified in 38 U.S.C. 1311 or 
1318.

Provisions in New 38 CFR 3.10

    As explained above, we propose to move provisions currently in 38 
CFR 3.5(e) to a new provision codified at 38 CFR 3.10. We further 
propose to reorganize those provisions for clarity, and to add 
provisions mirroring those in 38 CFR 3.22(b), as modified by these 
proposed rules.
    Proposed Sec.  3.10 will state rules governing the DIC rate payable 
to the surviving spouse of a deceased veteran. Paragraph (a) of Sec.  
3.10 will state that the rate of DIC payable to a surviving spouse will 
be the total of a basic monthly rate and any applicable increases. This 
provision would merely provide a general summary of the existing 
provisions in Sec.  3.5(e), and would not effect any change in existing 
requirements.
    Paragraph (b) of proposed Sec.  3.10 is a restatement of the first 
sentence of current Sec.  3.5(e)(1), which states the basic monthly 
rate of DIC. Current Sec.  3.5(e)(1) states that this rate is payable 
for deaths occurring on or after January 1, 1993. Under 38 U.S.C. 
1311(a)(3) and current 38 CFR 3.5(e)(2), however, this rate may also be 
paid for deaths occurring prior to that date, if it would be greater 
than the alternative rate payable for such deaths, which is discussed 
below. To avoid confusion regarding this point, we propose to delete 
the reference to deaths occurring on or after January 1, 1993, in this 
provision. As explained below, we propose a separate paragraph 
explaining the alternative rate that may be payable for deaths 
occurring before January 1, 1993. No substantive change is intended by 
this revision.
    Paragraph (c) of proposed Sec.  3.10 is a restatement of the second 
sentence of current Sec.  3.5(e)(1). It would explain that the basic 
monthly rate may be increased in cases where the veteran, at the time 
of death, was receiving, or was entitled to receive, compensation for 
service-connected disability that was rated by VA as totally disabling 
for a continuous period of at least eight years immediately preceding 
death. We propose to refer to this increase as the ``veteran's 
compensation increase'' in the caption of paragraph (c) and in 
subsequent references in other paragraphs of proposed Sec.  3.10. We 
further propose to state that determinations of entitlement to that 
increase will be made in accordance with provisions in paragraph (f) of 
Sec.  3.10.
    Paragraph (d) of proposed Sec.  3.10 is a restatement of the first 
two sentences of current Sec.  3.5(e)(2). This provision states that, 
in the case of death occurring before January 1, 1993, the basic 
monthly rate of DIC is a rate specified in 38 U.S.C. 1311(a)(3), based 
on the veteran's pay grade, but only if such rate would be greater than 
the total of the basic monthly rate under paragraph (b) of proposed 
Sec.  3.10 and the veteran's compensation increase, if applicable, 
payable under paragraph (c) of proposed Sec.  3.10.
    Paragraph (e) of proposed Sec.  3.10 addresses three additional 
increases that may augment the monthly DIC rate. Paragraph (e)(1) 
restates, without substantive change, the provisions of current Sec.  
3.5(e)(3), governing additional amounts for children. Paragraph (e)(2) 
restates, without substantive change, the first sentence of current 
Sec.  3.5(e)(4), governing additional amounts based on the surviving 
spouse's need for regular aid and attendance. Paragraph (e)(3) 
restates, without substantive change, the second sentence of current 
Sec.  3.5(e)(4), governing additional amounts based on the surviving 
spouse's housebound status.
    Paragraph (f) of the proposed rule states criteria governing 
entitlement to the veteran's compensation increase under paragraph (c) 
of the proposed rule. We propose to place those criteria in a separate 
paragraph at the end of the regulation, rather than including them in 
paragraph (c), due to their length. We believe proposed Sec.  3.10 will 
be easier to follow if it provides a succinct statement of the DIC 
rates and allowances payable to a surviving spouse in paragraphs (b) 
through (e), and the lengthy explanation necessary to fully explain the 
veteran's compensation increase is reserved for the end.
    Proposed paragraph (f)(1) states that the surviving spouse must 
have been married to the veteran for the entire eight-year period 
referenced in paragraph (c) in order to qualify for the veteran's 
compensation increase. This is a restatement of the third sentence of 
current Sec.  3.5(e)(1), which says that, in determining the eight-year 
period, only periods during which the veteran was married to the 
surviving spouse shall be considered. We believe it is clearer to state 
simply that the surviving spouse must have been married to the veteran 
for the entire period required by paragraph (c). No substantive change 
is intended by this different wording.
    Proposed paragraph (f)(2) states that the phrase ``rated by VA as 
totally disabling,'' as used in paragraph (c), includes total 
disability ratings based on unemployability. This paragraph would 
contain a reference to 38 CFR 4.16, which provides that, even though a 
veteran's service-connected disability does not qualify for a 100% 
rating under VA's disability rating schedule, VA may assign a total 
disability rating if the veteran's service-connected disability 
prevents him or her from pursuing substantially gainful employment. 
Current Sec.  3.5(e) does not contain this provision. However, proposed 
paragraph (f)(2) would mirror the provision in current 38 CFR 3.22(c) 
defining the phrase ``rated by VA as totally disabling'' for purposes 
of 38 U.S.C. 1318. We propose to add a similar statement in Sec.  
3.10(f)(2) based on our conclusion that the language of 38 U.S.C. 
1311(a)(2) and 38 U.S.C. 1318, must be interpreted in the same manner.

[[Page 62235]]

    Proposed paragraph (f)(3) would define the phrase ``entitled to 
receive'' as used in proposed paragraph (c). Paragraph (f)(3) is based 
on the provisions of 38 CFR 3.22(b), which define the phrase ``entitled 
to receive'' for purposes of 38 U.S.C. 1318. We have previously 
explained the basis for our interpretation of the phrase ``entitled to 
receive'' in 38 U.S.C. 1318 and our reasons for concluding the phrase 
must be interpreted in the same manner for purposes of 38 U.S.C. 
1311(a)(2). See 67 FR 16309 (2002); 66 FR 65861 (2001); 65 FR 3388 
(2000). The Federal Circuit upheld that determination in its January 
2003 NOVA decision. Accordingly, we propose to include in paragraph 
(f)(3) of Sec.  3.10 a provision mirroring the provisions of 38 CFR 
3.22(b), as proposed to be amended by this document.

Reissuance of 38 CFR 20.1106

    In the Federal Register of April 5, 2002 (67 FR 16309), VA 
published a final rule amending 38 CFR 20.1106, the Board of Veterans' 
Appeals regulation governing the effect of adverse decisions during a 
veteran's lifetime on a survivor's claim for death benefits. As 
amended, the final rule stated that, except with respect to benefits 
under 38 U.S.C. 1311 and 1318 and certain cases involving veterans 
whose benefits have been forfeited for treason or subversive activities 
under 38 U.S.C. 6104 and 6105, issues involved in a survivor's claim 
for death benefits will be decided without regard to any prior 
disposition of those issues during the veteran's lifetime. That rule 
reflects VA's longstanding practice of adjudicating de novo the issue 
of service connection for the cause of a veteran's death even if VA had 
denied the veteran's claim during his or her lifetime for compensation 
for the disease or injury that later caused death. The April 2002 
final-rule notice explained that claims under 38 U.S.C. 1311 and 1318 
were excepted from that principle because VA construed those statutes 
to require that determinations regarding the veteran's entitlement to 
receive total disability compensation for a specified number of years 
prior to death must be made with reference to decisions rendered during 
the veteran's lifetime.
    The final rule was issued pursuant to the Federal Circuit's August 
2001 order in National Organization of Veterans' Advocates, Inc. v. 
Secretary of Veterans Affairs, 260 F.3d 1365 (2001). In its January 
2003 order in NOVA, the Federal Circuit concluded that the final rule 
did not fully comply with the court's prior order. Specifically, the 
Federal Circuit stated that VA had not amended either 38 CFR 3.5 or 
20.1106 to state criteria similar to those in 38 CFR 3.22 and that the 
final rule did not explain the scope of the rule concerning prior 
adjudications. The court stated that it could not sustain the final 
rule, but instead ``vacate[d] and remand[ed] for a further rulemaking 
proceeding.''
    In response to the court's order, we are proposing to revise the 
provisions currently in 38 CFR 3.5(e) to explain the criteria governing 
entitlement to benefits under 38 U.S.C. 1311. The proposed revision 
will make clear that the veteran must have filed a claim for disability 
compensation during his or her lifetime in order for the survivors to 
be eligible for DIC under section 1311, and will explain the 
circumstances under which DIC may be paid based on correction of CUE or 
submission of new and material evidence.
    We have concluded that these provisions are more appropriately 
included in proposed Sec.  3.10 than in 38 CFR 20.1106. Section 3.10 
will be the VA regulation specifically implementing 38 U.S.C. 1311 and 
will be codified in part 3 of title 38, Code of Federal Regulations, 
the part containing the regulations governing awards of compensation, 
pension, and DIC. Section 20.1106, in contrast, implements 38 U.S.C. 
7104(b), governing the finality of Board decisions, rather than 38 
U.S.C. 1311 or 1318, and the regulation is codified in the portion of 
title 38, Code of Federal Regulations, setting forth the rules of the 
Board of Veterans' Appeals. Section 20.1106 states a general rule of 
finality applicable to a broad range of statutory provisions and is not 
limited to 38 U.S.C. 1311. We believe the revision to 38 CFR 3.5(e) 
proposed in this notice will satisfy the requirements of the Federal 
Circuit's remand order.
    We further conclude that the provisions of 38 CFR 20.1106 issued in 
our April 2002 Federal Register notice properly reflect VA's 
interpretation of 38 U.S.C. 1311 and 1318 and are consistent with the 
VA regulations implementing those statutes. As revised in April 2002, 
section 20.1106 provides in effect that claims under 38 U.S.C. 1311 and 
1318 will be decided with regard to decisions during the veteran's 
lifetime. This comports with our conclusion, stated above and in our 
April 2002 final-rule notice, that DIC entitlement under those statutes 
may exist when ratings during the veteran's lifetime granted total 
disability compensation, or would have granted such compensation but 
for CUE, or where new and material evidence in the form of presumably 
lost or mislaid service department records warrants a retroactive award 
of total disability compensation.
    Where a DIC claim is based on the allegation of CUE in a decision 
made during the veteran's lifetime, the DIC claim must be made with 
regard to the prior decision, in order to determine whether there was 
error in that decision. Similarly, where a DIC claim is based on new 
and material evidence in the form of presumably lost or mislaid service 
department records, the claim must be made with regard to the prior 
decision on the veteran's claim. As the CAVC stated in Spencer v. 
Brown, 4 Vet. App. at 293, ``where the claim is reopened on the basis 
of new and material evidence from service department reports, the VA 
has consistently treated it as a true `reopening' of the original claim 
and a review of the former disposition in light of the service 
department reports which were considered to have been lost or 
mislaid.'' (Emphasis in original).
    For the foregoing reasons, we conclude that the final rule issued 
in April 2002 revising 38 CFR 20.1106 is valid and reasonable. However, 
because the status of that rule is uncertain in light of the Federal 
Circuit's January 2003 order ``vacat[ing]'' the matter before it, we 
propose to reissue the provisions of the April 2002 rule, with one 
minor, nonsubstantive change discussed below.
    Although the caption of current Sec.  20.1106 refers to 
``unfavorable'' decisions during made a veteran's lifetime, the term 
``unfavorable'' does not appear in the text of the regulation, which 
states that, with certain exceptions, issues involved in a survivor's 
claim for death benefits will be decided without regard to ``any prior 
disposition'' of those issues during the veteran's lifetime. We propose 
to add the word ``unfavorable'' before ``disposition'' in the text of 
the regulation, to clarify that VA generally will disregard only 
unfavorable decisions made during the veteran's lifetime. This change 
will resolve any ambiguity that could result from the different 
terminology used in the caption and text of the current regulation.
    The added language does not alter the meaning of the regulation, 
but merely clarifies VA's existing interpretation of the regulation as 
requiring VA to disregard only unfavorable decisions. As noted above, 
the caption of the current regulation indicates that it is intended to 
apply only to prior unfavorable decisions. Further, the statutory 
authority cited for the current regulation, 38 U.S.C. 7104(b), 
addresses the finality of Board decisions that have ``disallowed'' a 
claim. Section 20.1106

[[Page 62236]]

implements that statute by prescribing rules to govern the finality of 
prior unfavorable decisions, and the proposed amendment would merely 
clarify that purpose.

Unfunded Mandates

    The Unfunded Mandates Reform Act requires, at 2 U.S.C. 1532, that 
agencies prepare an assessment of anticipated costs and benefits before 
developing any rule that may result in an expenditure by State, local, 
or tribal governments, in the aggregate, or by the private sector, of 
$100 million or more in any given year. This proposed amendment would 
have no such effect on State, local, or tribal governments, or the 
private sector.

Executive Order 12866

    The Office of management and Budget has reviewed this document 
under Executive Order 12866.

Paperwork Reduction Act

    This document contains no provisions constituting a collection of 
information under the Paperwork Reduction Act (44 U.S.C. 3501-3521).

Regulatory Flexibility Act

    The Secretary hereby certifies that this regulatory amendment will 
not have a significant economic impact on a substantial number of small 
entities as they are defined in the Regulatory Flexibility Act (RFA), 5 
U.S.C. 601-612. The reason for this certification is that these 
amendments would not directly affect any small entities. Only VA 
beneficiaries and their survivors could be directly affected. 
Therefore, pursuant to 5 U.S.C. 605(b), these amendments are exempt 
from the initial and final regulatory flexibility analysis requirements 
of sections 603 and 604.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance program numbers are 
64.109, and 64.110.

List of Subjects

38 CFR Part 3

    Administrative practice and procedure, Claims, Disability benefits, 
Health care, Pensions, Radioactive materials, Veterans, Vietnam.

38 CFR Part 20

    Administrative practice and procedure, Claims, Veterans.

    Approved: July 13, 2004.
Anthony J. Principi,
Secretary of Veterans Affairs.
    For the reasons set forth in the preamble, 38 CFR parts 3 and 20 
are proposed to be amended as follows:

PART 3--ADJUDICATION

Subpart A--Pension, Compensation, and Dependency and Indemnity 
Compensation

    1. The authority citation for part 3, subpart A continues to read 
as follows:

    Authority: 38 U.S.C. 501(a), unless otherwise noted.


Sec.  3.5  [Amended]

    2. Section 3.5 is amended by removing paragraph (e).
    3. Section 3.10 is added to read as follows:


Sec.  3.10  Dependency and indemnity compensation rate for a surviving 
spouse.

    (a) General determination of rate. When VA grants a surviving 
spouse entitlement to DIC, VA will determine the rate of the benefit it 
will award. The rate of the benefit will be the total of the basic 
monthly rate specified in paragraph (b) or (d) of this section and any 
applicable increases specified in paragraph (c) or (e) of this section.
    (b) Basic monthly rate. Except as provided in paragraph (d) of this 
section, the basic monthly rate of DIC for a surviving spouse will be 
the amount set forth in 38 U.S.C. 1311(a)(1).
    (c) Veteran's compensation increase. The basic monthly rate under 
paragraph (b) of this section shall be increased by the amount 
specified in 38 U.S.C. 1311(a)(2) if the veteran, at the time of death, 
was receiving, or was entitled to receive, compensation for service-
connected disability that was rated by VA as totally disabling for a 
continuous period of at least eight years immediately preceding death. 
Determinations of entitlement to this increase shall be made in 
accordance with paragraph (f) of this section.
    (d) Alternative basic monthly rate for death occurring prior to 
January 1, 1993. The basic monthly rate of DIC for a surviving spouse 
when the death of the veteran occurred prior to January 1, 1993, will 
be the amount specified in 38 U.S.C. 1311(a)(3) corresponding to the 
veteran's pay grade in service, but only if such rate is greater than 
the total of the basic monthly rate and veteran's compensation increase 
(if applicable) the surviving spouse is entitled to receive under 
paragraphs (b) and (c) of this section. The Secretary of the concerned 
service department will certify the veteran's pay grade and the 
certification will be binding on VA. DIC paid pursuant to this 
paragraph may not be increased by the veteran's compensation increase 
under paragraph (c) of this section.
    (e) Additional increases. One or more of the following increases 
may be paid in addition to the basic monthly rate and veteran's 
compensation increase.
    (1) Increase for children. If the surviving spouse has one or more 
children under the age of 18 of the deceased veteran (including a child 
not in the surviving spouse's actual or constructive custody, or a 
child who is in active military service), the monthly DIC rate will be 
increased by the amount set forth in 38 U.S.C. 1311(b) for each child.
    (2) Increase for regular aid and attendance. If the surviving 
spouse is determined to be in need of regular aid and attendance under 
the criteria in Sec.  3.352 or is a patient in a nursing home, the 
monthly DIC rate will be increased by the amount set forth in 38 U.S.C. 
1311(c).
    (3) Increase for housebound status. If the surviving spouse does 
not qualify for the regular aid and attendance allowance but is 
housebound under the criteria in Sec.  3.351(f), the monthly DIC rate 
will be increased by the amount set forth in 38 U.S.C. 1311(d).
    (f) Criteria governing veteran's compensation increase. In 
determining whether a surviving spouse qualifies for the veteran's 
compensation increase under paragraph (c) of this section, the 
following standards shall apply.
    (1) Marriage requirement. The surviving spouse must have been 
married to the veteran for the entire eight-year period referenced in 
paragraph (c) of this section in order to qualify for the veteran's 
compensation increase.
    (2) Determination of total disability. As used in paragraph (c) of 
this section, the phrase ``rated by VA as totally disabling'' includes 
total disability ratings based on unemployability (Sec.  4.16 of this 
chapter).
    (3) Definition of ``entitled to receive''. As used in paragraph (c) 
of this section, the phrase ``entitled to receive'' means that the 
veteran filed a claim for disability compensation during his or her 
lifetime and one of the following circumstances is satisfied:
    (i) The veteran would have received total disability compensation 
for the period specified in paragraph (c) of this section but for clear 
and unmistakable error committed by VA in a decision on a claim filed 
during the veteran's lifetime; or
    (ii) Additional evidence submitted to VA before or after the 
veteran's death, consisting solely of service department records that 
existed at the time of a prior VA decision but were not previously 
considered by VA, provides a basis for reopening a claim finally 
decided during the veteran's lifetime and for awarding a total service-
connected

[[Page 62237]]

disability rating retroactively in accordance with Sec. Sec.  3.156(c) 
and 3.400(q)(2) of this part for the period specified in paragraph (c) 
of this section; or
    (iii) At the time of death, the veteran had a service-connected 
disability that was continuously rated totally disabling by VA for the 
period specified in paragraph (c) of this section, but was not 
receiving compensation because:
    (A) VA was paying the compensation to the veteran's dependents;
    (B) VA was withholding the compensation under the authority of 38 
U.S.C. 5314 to offset an indebtedness of the veteran;
    (C) The veteran had not waived retired or retirement pay in order 
to receive compensation;
    (D) VA was withholding payments under the provisions of 10 U.S.C. 
1174(h)(2);
    (E) VA was withholding payments because the veteran's whereabouts 
were unknown, but the veteran was otherwise entitled to continued 
payments based on a total service-connected disability rating; or
    (F) VA was withholding payments under 38 U.S.C. 5308 but determines 
that benefits were payable under 38 U.S.C. 5309.

(Authority: 38 U.S.C. 501(a), 1311, 1314, and 1321).

    4. Section 3.22 is amended by revising paragraph (b) to read as 
follows:


Sec.  3.22  DIC benefits for survivors of certain veterans rated 
totally disabled at time of death.

* * * * *
    (b) For purposes of this section, ``entitled to receive'' means 
that the veteran filed a claim for disability compensation during his 
or her lifetime and one of the following circumstances is satisfied:
    (1) The veteran would have received total disability compensation 
at the time of death for a service-connected disability rated totally 
disabling for the period specified in paragraph (a)(2) of this section 
but for clear and unmistakable error committed by VA in a decision on a 
claim filed during the veteran's lifetime; or
    (2) Additional evidence submitted to VA before or after the 
veteran's death, consisting solely of service department records that 
existed at the time of a prior VA decision but were not previously 
considered by VA, provides a basis for reopening a claim finally 
decided during the veteran's lifetime and for awarding a total service-
connected disability rating retroactively in accordance with Sec. Sec.  
3.156(c) and 3.400(q)(2) of this part for the relevant period specified 
in paragraph (a)(2) of this section; or
    (3) At the time of death, the veteran had a service-connected 
disability that was continuously rated totally disabling by VA for the 
period specified in paragraph (a)(2), but was not receiving 
compensation because:
    (i) VA was paying the compensation to the veteran's dependents;
    (ii) VA was withholding the compensation under authority of 38 
U.S.C. 5314 to offset an indebtedness of the veteran;
    (iii) The veteran had not waived retired or retirement pay in order 
to receive compensation;
    (iv) VA was withholding payments under the provisions of 10 U.S.C. 
1174(h)(2);
    (v) VA was withholding payments because the veteran's whereabouts 
were unknown, but the veteran was otherwise entitled to continued 
payments based on a total service-connected disability rating; or
    (vi) VA was withholding payments under 38 U.S.C. 5308 but 
determines that benefits were payable under 38 U.S.C. 5309.
* * * * *

PART 20--BOARD OF VETERANS' APPEALS: RULES OF PRACTICE

    5. The authority citation for part 20 continues to read as follows:

    Authority: 38 U.S.C. 501(a) and as noted in specific sections.

Subpart L--Finality

    6. Section 20.1106 is revised to read as follows:


Sec.  20.1106  Rule 1106. Claim for death benefits by survivor--prior 
unfavorable decisions during veteran's lifetime.

    Except with respect to benefits under the provisions of 38 U.S.C. 
1311(a)(2), 1318, and certain cases involving individuals whose 
Department of Veterans Affairs benefits have been forfeited for treason 
or for subversive activities under the provisions of 38 U.S.C. 6104 and 
6105, issues involved in a survivor's claim for death benefits will be 
decided without regard to any prior unfavorable disposition of those 
issues during the veteran's lifetime.

(Authority: 38 U.S.C. 7104(b))

[FR Doc. 04-23488 Filed 10-22-04; 8:45 am]
BILLING CODE 8320-01-P


</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>