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[House Report 105-52]
[From the U.S. Government Publishing Office]

105th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                     105-52
_______________________________________________________________________

 
  TO ALLOW REVISION OF VETERANS BENEFITS DECISIONS BASED ON CLEAR AND 
                           UNMISTAKABLE ERROR

_______________________________________________________________________

 April 14, 1997.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

   Mr. Stump, from the Committee on Veterans' Affairs, submitted-the-
                               following

                              R E P O R T

                        [To accompany H.R. 1090]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Veterans' Affairs, to whom was referred the 
bill (H.R. 1090) to amend title 38, United States Code, to 
allow revision of veterans benefits decisions based on clear 
and unmistakable error, having considered the same, reports 
favorably thereon without amendment and recommends that the 
bill do pass.

                              Introduction

    On March 18, 1997, the Ranking Democratic Member of the 
Committee on Veterans Affairs, the Honorable Lane Evans, along 
with the Honorable Bob Stump, Chairman of the Committee on 
Veterans Affairs, the Honorable Bob Filner, Ranking Member of 
the Subcommittee on Benefits, the Honorable Barney Frank, the 
Honorable Carolyn Maloney, the Honorable Donald Payne, the 
Honorable Phil English, and the Honorable William Lipinski 
introduced H.R. 1090, to allow revision of veterans benefits 
decisions based on clear and unmistakable error.
    The full Committee met on March 20, 1997 and ordered H.R. 
1090 reported favorably to the House by unanimous voice vote.

                      Summary of the Reported Bill

    H.R. 1090 would:

    1. LAmend chapter 51 of title 38, United States Code, to 
codify existing regulations which make decisions made by the 
Secretary at a regional office subject to revision on the 
grounds of clear and unmistakable error by the Regional Office.

    2. LAmend chapter 71 of title 38, United States Code, to 
make decisions made by the Board of Veterans' Appeals subject 
to revision on the grounds of clear and unmistakable error.

    3. LPermit appeal to the Court of Veterans Appeals of any 
decision made before, on, or after enactment on the grounds of 
clear and unmistakable error.

                       Background and Discussion

    The VA claim system is unlike any other adjudicative 
process. It is specifically designed to be claimant friendly. 
It is non-adversarial; therefore, the VA must provide a 
substantial amount of assistance to a veteran seeking benefits. 
When the veteran first files a claim, VA undertakes the 
obligation of assisting the veteran in the development of all 
evidence pertinent to that claim. There is no true finality of 
a decision since the veteran can reopen a claim at any time 
merely by the presentation of new and material evidence.
    Any decision may be appealed within one year. The appeal is 
initiated by a simple notice of disagreement after which VA is 
obligated to furnish a detailed statement of the facts and law 
pertinent to the claim.
    The reported bill would make decisions by VA Regional 
Offices and the Board of Veterans Appeals (BVA) subject to 
review on the grounds of clear and unmistakable error. Regional 
office decisions are currently reversible on this basis by 
regulation, but BVA decisions are not. Smith v. Brown, 35 F. 
3d. 1516, 1523 (Fed. Cir. 1994). The bill would effectively 
codify this regulation, and extend the principle underlying it 
to BVA decisions.
    The BVA is an appellate body located in Washington, DC, 
responsible for reviewing claims on a de novo basis. Under 
current law, a veteran may file a motion for reconsideration at 
the BVA at any time after the decision has been made. If the 
Chairman of the BVA grants a motion for reconsideration, the 
matter is referred to an enlarged panel for a final decision. 
Reconsideration of the claim is conducted under the law as it 
existed at the time of the initial decision, and if an 
allowance on the basis of obvious error is ordered, the veteran 
receives the benefit retroactive to the date of the initial 
claim. If the request for reconsideration is denied, the 
veteran has no right of appeal.
    During fiscal years 1991 through 1996, approximately 4,400 
motions for reconsideration were filed, and more than 900 (21 
percent) of these motions were granted. A panel of at least 
three Board members rendered a new decision. Of the new 
decisions 75 percent were allowances or remands. As of February 
28, 1997, there were 53,434 appeals pending at the BVA and the 
average BVA response time was 513 days.
    ``Since at least 1928, the VA and its predecessors have 
provided for the revision of decisions which were the product 
of `clear and unmistakable error'. (citations omitted) The 
appropriateness of such a provision is manifest.'' Russell v. 
Principi, 3 Vet. App. 310, 313 (1992) (en banc). Congress has 
provided the Board of Veterans Appeals (but not the regional 
office or agency of original jurisdiction) authority to correct 
obvious errors. 38 U.S.C. Sec. 7103(c). In arguments before the 
Court of Veterans Appeals and testimony before this Committee, 
the VA has stated that there is no substantive difference 
between the Board's authority to correct ``obvious error'' and 
the agency of original jurisdiction's authority to correct 
clear and unmistakable error. ``The only real difference is 
that clear and unmistakable error review can be invoked as of 
right, whereas review for obvious error is committed to the 
sound discretion of the Board.'' Smith, 1526.

        It must always be remembered that clear and 
        unmistakable error is a very specific and rare kind of 
        ``error''. It is the kind of error, of fact or of law, 
        that when called to the attention of later reviewers 
        compels the conclusion, to which reasonable minds could 
        not differ, that the result would have been manifestly 
        different but for the error. Thus even where the 
        premise of error is accepted, if it is not absolutely 
        clear that a different result would have ensued, the 
        error complained of cannot be, ipso facto, clear and 
        unmistakable. Russell v. Principi, 3 Vet. App. 310, 313 
        (1992) (en banc).

Fugo v. Brown, 6 Vet. App. 40, 44 (1993). As the court further 
stated in Fugo, clear and unmistakable error is a form of 
collateral attack on an otherwise final decision, and there is 
a very strong presumption of validity that attaches to such 
decisions.

    As noted above, this legislation would allow a claimant to 
raise a claim of clear and unmistakable error with regard to a 
Board decision. However, it does not follow that by merely 
averring that such error has occurred, a veteran can 
successfully attack an otherwise final decision. At least in 
cases brought before the Court of Veterans Appeals,

        while the magic incantation ``clear and unmistakable 
        error'' need not be recited in haec verba, to recite it 
        does not suffice, in and of itself, to reasonably raise 
        the issue . . . [S]imply to claim clear and 
        unmistakable error on the basis that previous 
        adjudications had improperly weighed and evaluated the 
        evidence can never rise to the stringent definition of 
        clear and unmistakable error . . . Similarly, neither 
        can broad-brush allegations of ``failure to follow the 
        regulations'' or ``failure to give due process,'' or 
        any other general, non-specific claim of ``error''.

Fugo v. Brown, 43-44. Given the Court's clear guidance on this 
issue, it would seem that the Board could adopt procedural 
rules consistent with this guidance to make consideration of 
appeals raising clear and unmistakable error less burdensome.

    Finally, the Committee notes that an appellate system which 
does not allow a claimant to argue that a clear and 
unmistakable error has occurred in a prior decision would be 
unique. This bill addresses errors similar to the kinds which 
are grounds for reopening Social Security claims. Under the 
Social Security system, a claim may be reopened at any time to 
correct an error which appears on the face of the evidence used 
when making the prior decision. That is certainly the intent of 
the original VA regulation allowing correction of such 
decisions, no matter when the error occurred or which part of 
the VA made the error. Given the pro-claimant bias intended by 
Congress throughout the VA system, the Committee concludes that 
this legislation is necessary and desirable to ensure a just 
result in cases where such error has occurred. The Committee 
directs the BVA to monitor the effect of this legislation and 
to include the data in its annual report.

                  Statement of Administration's Views

    The Committee has not requested the Administration's 
comment on this bill. However, H.R. 1090 is identical to H.R. 
1483 passed by the House during the 104th Congress. In 
testimony before the Committee on October 12, 1995, the 
Administration opposed H.R. 1483 on the grounds that 
authorizing appeals on the grounds of clear and unmistakable 
error would add to the claims backlog at the Board. The 
Committee requested the Board to provide data to support its 
position, but the Board indicated it could not provide such 
data.

                      Section-By-Section Analysis

    Section 1(a) would amend chapter 51 of title 38, United 
States Code, to codify existing regulations which make 
decisions made by the Secretary at a regional office subject to 
revision on the grounds of clear and unmistakable error.
    Section 1(b) would amend chapter 71 of title 38, United 
States Code, to make decisions made by the Board of Veterans' 
Appeals subject to revision on the grounds of clear and 
unmistakable error.
    Section 1(c) would make the provisions of this bill 
applicable to any determination made before, on, or after the 
date of the enactment of this Act.

                           Oversight Findings

    No oversight findings have been submitted to the Committee 
by the Committee on Government Reform and Oversight.

               Congressional Budget Office Cost Estimate

    The following letter was received from the Congressional 
Budget Office concerning the cost of the reported bill:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, April 10, 1997.
Hon. Bob Stump,
Chairman, Committee on Veterans' Affairs,
House of Representatives, Washington, DC.

    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1090, a bill to 
amend title 38, United States Code, to allow revision of 
veterans benefits decisions based on clear and unmistakable 
error.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Mary Helen 
Petrus, who can be reached at 226-2840.
            Sincerely,
                                           June E. O'Neill,
                                                           Director

    Enclosure

               congressional budget office cost estimate

   H.R. 1090--A bill to amend title 38, United States Code, to allow 
revision of veterans benefits decsions based on clear and unmistakable 
                                 error.

As ordered reported by the House Committee on Veterans' Affairs 
on March 20, 1997

    CBO estimates that H.R. 1090 would raise administrative 
costs over the first two or three years after enactment by $1 
million to $2 million in total, but in the longer run 
administrative costs would rise by less than $500,000 a year. 
In addition, CBO estimates that the bill would have a direct 
spending impact of less than $500,000 a year through 2002. 
Because the bill would raise direct spending, it would be 
subject to pay-as-you-go procedures. H.R. 1090 contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act of 1995 and would not affect the 
budgets of state, local, or tribal governments.
    Section 1(a) would have no budgetary impact because it 
would codify the current procedure for revising veterans' 
claims decisions made by regional offces. Other sections of the 
bill would give certain veterans new rights and opportunities 
for appeal. Under current law, a veteran may appeal a regional 
offce's decision to the Board of Veterans Appeals (BVA). Once 
the BVA has rendered a decision, a veteran may appeal directly 
to the Court of Veterans Appeals (COVA) or move for 
reconsideration of the Board's decision on the basis of 
``obvious error.'' The Chairman of BVA reviews the motion and 
at his discretion may allow it, thus referring the matter to a 
panel of members for reconsideration. Section 1(b) would 
require BVA to review decisions challenged on the basis of 
``clear and unmistakable error.'' Section 1(c) would make 
sections 1(a) and 1(b) retroactive and would allow veterans to 
appeal BVA decisions involving claims of clear and unmistakable 
error to COVA and other higher courts regardless of a current 
restriction limiting consideration to cases in which 
administrative appeals were initiated on or after November 18, 
1988.
    To obtain revision of a BVA decision under the bill, the 
claimant must assert ``clear and unmistakable error,'' which is 
an error of law or fact in the record at the initial decision 
that compels the conclusion that the decision would have been 
different but for the error. The ``clear and unmistakable 
error'' standard is roughly the same as the current standard of 
``obvious error.'' The standard of review, therefore, is not 
the key change that the bill would make in the procedure. 
Rather, the bill would eliminate the Chairman's discretion in 
reconsideration and make the review of a BVA decision a matter 
of right.
    The administrative costs of the bill would have two parts--
a continuing increase in costs associated with the annual 
caseload under current law and a larger initial increase that 
would stem from retroactively extending the right to review. 
CBO assumes that the longer run increase in caseload resulting 
from this bill would be a portion of the requests for 
reconsideration under current law that are denied. From 1991 to 
1995, BVA denied reconsideration for about 500 motions a year, 
including motions that might have been based on clear and 
unmistakable error. Data from the Department of Veterans 
Affairs indicate that the average cost per case is about 
$1,000. Because the marginal cost of each new case would be 
less than $1,000 and BVA would have to review fewer than 500 
new motions a year, the long-run costs of administration would 
be less than $500,000 annually.
    The number of veterans who would demand review of past 
cases based on clear and unmistakable error is the key 
uncertainty in estimating the costs of the bill. Whether or not 
the case involved such error, the demand would still add to 
BVA's workload and costs because it would at least have to 
screen the demands and document its conclusions. Nevertheless, 
the current process for adjudicating veterans claims allows 
many opportunities for appeal, and it is probable that most 
veterans having claims pursue them under current law. CBO 
estimates that up to 2,000 veterans would return to BVA for 
reconsideration under the bill and add about $1 million to $2 
million to BVA's administrative costs, currently about $38 
million annually, during the first three years after enactment.
    By their nature, claims of clear and unmistakable error, if 
sustained, are very likely to lead to additional benefits to 
the claimant. The bill would raise direct spending to the 
extent that the cases involved such benefits as disability 
compensation, pension benefits, or survivor benefits. Although 
the extra administrative costs of the bill would not cumulate 
from year to year, the additional benefits would be paid for 
the life of the veteran or surviving beneficiary. How much 
direct spending would rise depends on the caseload and average 
award in benefits, both of which are very uncertain. Because 
veterans have many opportunities under current law to appeal 
claims decisions, CBO estimates that a small number of 
additional cases would be successfully appealed under the bill. 
Also, it is unlikely that the average annual benefit involved 
in such a case would be more than $1,000 to $2,000. Thus, the 
bill would probably increase direct spending by less than 
$500,000 a year in 1998 and the next several years.
    The CBO staff contact for this estimate is Mary Helen 
Petrus, who can be reached at 226-2840. This estimate was 
approved by Robert A. Sunshine, Deputy Assistant Director for 
Budget Analysis.

                     Inflationary Impact Statement

    The enactment of the reported bill would have no 
inflationary impact.

                  Applicability to Legislative Branch

    The reported bill would not be applicable to the 
legislative branch under the Congressional Accountability Act, 
Public Law 104-1, because the bill would only affect certain 
Department of Veterans Affairs benefits recipients.

                     Statement of Federal Mandates

    The reported bill would not establish a federal mandate 
under the Unfunded Mandates Reform Act, Public Law 104-4.

                 Statement of Constitutional Authority

    Pursuant to Article I, section 8 of the U.S. Constitution, 
the reported bill would be authorized by Congress' power ``(T)o 
provide for the common Defence and general Welfare of the 
Untied States.''

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3 of rule XIII of the Rules of the 
House of Representatives, changes in existing law made by the 
bill, as reported, are shown as follows (new matter is printed 
in italics, existing law in which no change is proposed is 
shown in roman):

                      TITLE 38, UNITED STATES CODE

          * * * * * * *

               PART IV--GENERAL ADMINISTRATIVE PROVISIONS

          * * * * * * *

           CHAPTER 51--CLAIMS, EFFECTIVE DATES, AND PAYMENTS

                          subchapter i--claims

Sec.
5101.    Claims and forms.
5102.    Application forms furnished upon request.
     * * * * * * *
5109A.  Revision of decisions on grounds of clear and unmistakable 
          error.
     * * * * * * *

                          SUBCHAPTER I--CLAIMS

          * * * * * * *

Sec. 5109A. Revision of decisions on grounds of clear and unmistakable 
                    error

  (a) A decision by the Secretary under this chapter is subject 
to revision on the grounds of clear and unmistakable error. If 
evidence establishes the error, the prior decision shall be 
reversed or revised.
  (b) For the purposes of authorizing benefits, a rating or 
other adjudicative decision that constitutes a reversal or 
revision of a prior decision on the grounds of clear and 
unmistakable error has the same effect as if the decision had 
been made on the date of the prior decision.
  (c) Review to determine whether clear and unmistakable error 
exists in a case may be instituted by the Secretary on the 
Secretary's own motion or upon request of the claimant.
  (d) A request for revision of a decision of the Secretary 
based on clear and unmistakable error may be made at any time 
after that decision is made.
  (e) Such a request shall be submitted to the Secretary and 
shall be decided in the same manner as any other claim.
          * * * * * * *

             PART V--BOARDS, ADMINISTRATIONS, AND SERVICES

                 CHAPTER 71--BOARD OF VETERANS' APPEALS

Sec.
7101.   Composition of Board of Veterans' Appeals.
7101A.  Members of Board: appointment; pay; performance review.
     * * * * * * *
7111.    Revision of decisions on grounds of clear and unmistakable 
          error.
     * * * * * * *

Sec. 7111. Revision of decisions on grounds of clear and unmistakable 
                    error

  (a) A decision by the Board is subject to revision on the 
grounds of clear and unmistakable error. If evidence 
establishes the error, the prior decision shall be reversed or 
revised.
  (b) For the purposes of authorizing benefits, a rating or 
other adjudicative decision of the Board that constitutes a 
reversal or revision of a prior decision of the Board on the 
grounds of clear and unmistakable error has the same effect as 
if the decision had been made on the date of the prior 
decision.
  (c) Review to determine whether clear and unmistakable error 
exists in a case may be instituted by the Board on the Board's 
own motion or upon request of the claimant.
  (d) A request for revision of a decision of the Board based 
on clear and unmistakable error may be made at any time after 
that decision is made.
  (e) Such a request shall be submitted directly to the Board 
and shall be decided by the Board on the merits, without 
referral to any adjudicative or hearing official acting on 
behalf of the Secretary.
  (f) A claim filed with the Secretary that requests reversal 
or revision of a previous Board decision due to clear and 
unmistakable error shall be considered to be a request to the 
Board under this section, and the Secretary shall promptly 
transmit any such request to the Board for its consideration 
under this section.
          * * * * * * *

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