Report to Congressional Committees

United States Government Accountability Office

GAO

March 2006 MILITARY

DISABILITY SYSTEM 

Improved Oversight 

Needed to Ensure 

Consistent and Timely 

Outcomes for Reserve 

and Active Duty 

Service Members 

GAO-06-362

The Web version of this report was reposted on April 13, 

2006, to reflect a change to the text on page 16, in line 

13 of the last paragraph, the “2 years” is revised to read “ 

1 year.” 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

www.gao.gov/cgi-bin/getrpt?GAO-06-362.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Robert E. 

Robertson at (202) 512-7215 or 

robertsonr@gao.gov. 

Highlights of GAO-06-362, a report to 

congressional committees 

March 2006

MILITARY DISABILITY SYSTEM 

Improved Oversight Needed to Ensure 

Consistent and Timely Outcomes for 

Reserve and Active Duty Service 

Members

Policies and guidance for military disability determinations differ somewhat 

among the Army, Navy, and Air Force. DOD has explicitly given the services 

the responsibility to set up their own processes for certain aspects of the 

disability evaluation system and has given them latitude in how they go 

about this. As a result, each service implements its system somewhat 

differently. Further, the laws that govern military disability and the policies 

that DOD and the services have developed to implement these laws have led 

reservists to have different experiences in the disability system compared to 

active duty members. For example, because reservists are not on active duty 

at all times, it takes longer for them to accrue the 20 years of service that 

may be needed to earn monthly disability retirement benefits. 

While DOD has issued policies and guidance to promote consistent and 

timely disability decisions for active duty and reserve disability cases, DOD 

is not monitoring compliance. To encourage consistent decision making, 

DOD requires all services to use multiple reviewers to evaluate disability 

cases. Furthermore, federal law requires that reviewers use a standardized 

disability rating system to classify the severity of the medical impairment. In 

addition, DOD periodically convenes the Disability Advisory Council, 

comprised of DOD and service officials, to review and update disability 

policy and to discuss current issues. However, neither DOD nor the services 

systematically determine the consistency of disability decision making. DOD 

has issued timeliness goals for processing disability cases, but is not 

collecting information to determine compliance. Finally, the consistency and 

timeliness of decisions depend, in part, on the training that disability staff 

receive. However, DOD is not exercising oversight over training for staff in 

the disability system. 

While GAO’s review of the military disability evaluation system’s policies 

and oversight covered the three services, GAO examined Army data on 

disability ratings and benefit decisions from calendar year 2001 through 

2005. After controlling for many of the differences between reserve and 

active duty soldiers, GAO found that, among soldiers who received disability 

ratings, the ratings of reservists were comparable to those of active duty 

soldiers with similar conditions. GAO’s analyses of the military disability 

benefit decisions for the soldiers who were determined to be unfit for duty 

were less definitive, but suggest that Army reservists were less likely to 

receive permanent disability retirement or lump sum disability severance 

pay than their active duty counterparts. However, data on possible reasons 

for this difference, such as whether the condition existed prior to service, 

were not available for our analysis. GAO did not compare processing times 

for Army reserve and active duty cases because GAO found that Army’s data 

needed to calculate processing times were unreliable. However, Army 

statistics based on this data indicate that from fiscal 2001 through 2005, 

reservists’ cases took longer to process than active duty cases. 

The House Committee on Armed 

Services report that accompanies 

the National Defense Authorization 

Act of fiscal year 2006 directs GAO 

to review results of the military 

disability evaluation system. In 

response to this mandate, GAO 

determined: (1) how current DOD 

policies and guidance for disability 

determinations compare for the 

Army, Navy, and Air Force, and 

what policies are specific to 

reserve component members of the 

military; (2) what oversight and 

quality control mechanisms are in 

place at DOD and these three 

services of the military to ensure 

consistent and timely disability 

decisions for active and reserve 

component members; and (3) how 

disability decisions, ratings, and 

processing times compare for 

active and reserve component 

members of the Army, the largest 

branch of the service, and what 

factors might explain any 

differences. 

What GAO Recommends

GAO recommends the Secretary of 

Defense improve oversight of the 

military disability evaluation 

system, including providing 

guidance to the services to collect 

reliable data to allow for an 

adequate assessment of the system. 

In its comments, the Department of 

Defense agreed with our 

recommendations, indicating the 

department will implement them 

all. 
Contents

Letter 1

Results in Brief 3

Background 5

Military Disability Policies Differ among the Services, and Certain

Policies May Result in Different Experiences for Reservists 13

DOD Has Guidance in Place to Promote Consistent and Timely

Decisions, but Does Not Adequately Oversee Key Aspects of the 

Disability System 18

Disparities May Exist in Disability Benefits and Processing Times 

between Army Reservists and Active Duty Soldiers, but Lack of 

Data Prevents More Definitive Conclusions 22

Conclusions 27

Recommendations for Executive Action 27

Response to Agency Comments 28

Appendix I Objective, Scope, and Methodology 29

Appendix II Selected Data from Service Branches on Processing 

Time, Dispositions, and Medical Holdover 38

Appendix III Compilation of Differences in Regulations Governing 

 the Military Disability Evaluation System 44

Appendix IV Characteristics of Army Service Members Entering

the DES 48

Appendix V Disability Evaluation Outcomes for Army Active Duty 

and Reserve Component Members for 2001 to 2005 50

Appendix VI Comments from the Department of Defense 51

Page i GAO-06-362 Military Disability System
Appendix VII GAO Contact and Staff Acknowledgments 54

Related GAO Products 55

Tables

Table 1: Military Disability PEB Caseload, Fiscal Year 2001 to 2005 11

Table 2: Military Disability Funding Expenditures for Fiscal Year 

2004 11

Table 3: Post-PEB Appeals Process across the Services 14

Table 4: Estimate of the Relationship between Being a Reservist 

and the Final Disability Rating among Soldiers Receiving a 

Rating 34

Table 5: Estimate of the Relationship between Being a Reservist 

and Receipt of Benefits before and after Controlling for 

Other Factors (among Those Unfit and Assigned a Final 

Disposition) 36

Table 6: Army Processing Times for Disability Cases, Including

both MEB and PEB Processing, Fiscal Year 2001 to 2005 38

Table 7: Navy Processing Times for Disability Cases, Including 

Only PEB Processing, Fiscal Year 2001 to 2005 39

Table 8: Air Force Processing Times for Disability Cases, Including

Only PEB Processing, Fiscal Year 2001 to 2005 40

Table 9: Final Dispositions Made by Navy PEB for Disability Cases, 

Fiscal Year 2001 to 2005 41

Table 10: Final Dispositions Made by Air Force PEB for Disability

Cases, Fiscal Year 2001 to 2005 42

Table 11: Number of Army Reserve Component Members Entering 

Medical Holdover by Year, Calendar Year 2001 to 2005 43

Table 12: Occupational Codes for Services Members in Military 

Disability Evaluation System, Calendar Years 2001 to 2005 48

Table 13: Rank Groups by Component for Services Members in the 

Military Disability System, Calendar Years 2001 to 2005 49

Table 14: Descriptive Statistics on Disability Evaluation Outcomes 

for Active Duty and Reserve Component Members in the 

Army, Calendar Years 2001 to 2005 50

Table 15: Descriptive Statistics on Disability Evaluation Outcomes 

for Active Duty and Reserve Component Members in the 

Army, Calendar Years 2001 to 2005 50

Page ii GAO-06-362 Military Disability System
Figures

Figure 1: Decisions Made during the Military Disability Evaluation 

Process 7

Figure 2: Oversight of the Military Disability Evaluation Process 

within the Department of Defense 12

Figure 3: Yearly Percentage Change in PEB Caseload for Active

Duty and Reserve Component Soldiers, Calendar Years 

2001 to 2005 24

Figure 4: Ages of Active Duty and Reserve Component Soldiers 

Entering the Disability Evaluation System, Calendar Years 

2001 to 2005 25

Page iii GAO-06-362 Military Disability System
Abbreviations

CBHCO Community-Based Health Care Organization 

DOD Department of Defense 

DES disability evaluation system

DMDC Defense Manpower Data Center 

FY fiscal year

GAO Government Accountability Office 

LOD line of duty 

MEB medical evaluation board

MEBITT Medical Evaluation Board Internal Tracking

Tool

MMRB Military Occupational Specialty/Medical

 Retention Board

MTF military treatment facility 

OLS ordinary least squares 

PDCAPS Physical Disability Computer Assisted Processing System 

PEB physical evaluation board

PEBLO Physical Evaluation Board Liaison Officer 

SSA Social Security Administration 

TDRL temporary disability retired list 

USMC United States Marine Corps 

VA Veterans Affairs

VASRD Veterans Administration Schedule for Rating Disabilities 

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately.

Page iv GAO-06-362 Military Disability System
United States Government Accountability Office

Washington, DC 20548

March 31, 2006

The Honorable John Warner 

Chairman 

The Honorable Carl Levin

Ranking Minority Member 

Committee on Armed Services 

United States Senate 

The Honorable Duncan L. Hunter 

Chairman 

The Honorable Ike Skelton

Ranking Minority Member 

Committee on Armed Services 

House of Representatives

In recent years, about 490,000 reserve members of the military have been

called to augment active duty military forces in conflicts and peacekeeping missions in support of the Global War on Terrorism. About 

110,000 mobilized reserve component members were on active duty on

January 31, 2006, down from about 174,000 the prior January. A number of 

these service members get injured or develop temporary or permanent 

disabilities related to their service, such as head, neck or spinal injuries 

and psychological conditions such as post-traumatic stress disorder. 

In recent years, about 490,000 reserve members of the military have been

called to augment active duty military forces in conflicts and peacekeeping missions in support of the Global War on Terrorism. About 

110,000 mobilized reserve component members were on active duty on

January 31, 2006, down from about 174,000 the prior January. A number of 

these service members get injured or develop temporary or permanent 

disabilities related to their service, such as head, neck or spinal injuries 

and psychological conditions such as post-traumatic stress disorder. 

The Department of Defense (DOD), through its disability evaluation 

system, is responsible for determining if active and reserve service 

members are unable to perform the military duties of their office, grade, 

rank, or rating as a result of a diagnosed medical condition and

compensating those with service-incurred or aggravated injuries or 

diseases that render them unfit for continued military service. One of the 

primary goals of the military disability system is to ensure that disability 

evaluations for all service members are conducted in a consistent and 

timely manner. Each of the services administers its own disability 

evaluation system and assigns a standardized severity rating, from 0 to 100

percent, to each disabling condition, which along with years of service and

other factors, determines compensation. Disability compensation may be 

in the form of lump sum payments or monthly benefits, depending on the 

rating and years of service. 

The Department of Defense (DOD), through its disability evaluation 

system, is responsible for determining if active and reserve service 

members are unable to perform the military duties of their office, grade, 

rank, or rating as a result of a diagnosed medical condition and

compensating those with service-incurred or aggravated injuries or 

diseases that render them unfit for continued military service. One of the 

primary goals of the military disability system is to ensure that disability 

evaluations for all service members are conducted in a consistent and 

timely manner. Each of the services administers its own disability 

evaluation system and assigns a standardized severity rating, from 0 to 100

percent, to each disabling condition, which along with years of service and

other factors, determines compensation. Disability compensation may be 

in the form of lump sum payments or monthly benefits, depending on the 

rating and years of service. 

The House Committee on Armed Services report that accompanies the 

National Defense Authorization Act of fiscal year 2006 directs GAO to 

Page 1 GAO-06-362 Military Disability System
review results of the military disability evaluation system. In response to 

this mandate, GAO determined: (1) how current DOD policies and 

guidance for disability determinations compare for the Army, Navy, and

Air Force, and what policies are specific to reserve component members 

of the military; (2) what oversight and quality control mechanisms are in 

place at DOD and these three services of the military to ensure consistent 

and timely disability rating and benefit decisions for active and reserve 

component members; and (3) how disability rating and benefit decisions, 

and processing times compare for active and reserve component members 

of the Army, the largest branch of the service, and what factors might 

explain any differences.1

To address the first two objectives covering DOD and three branches of 

the service, we reviewed relevant legislation, policy guidance, and 

literature; interviewed officials from DOD, Army, Navy, Air Force,

Reserves, and National Guard; and visited Lackland and Randolph Air 

Force Bases, Fort Sam Houston and Walter Reed Army Medical Center, 

Washington Navy Yard and Bethesda Naval Hospital and interviewed

relevant officials.2

 We chose these sites because the services conduct

physical disability evaluations at these locations. In addition, we

interviewed officials from military treatment facilities (MTF), including 

Brooke Army Medical Center and Wilford Hall Medical Center. We limited 

the scope of the third objective to the Army because it currently processes

the most military disability cases. To determine if outcomes for active duty

and reserve disability cases were statistically consistent, we analyzed data

provided by the Army. Based on our assessment of the quality of the 

Army’s data, we concluded that data on disability determinations and 

ratings were sufficiently reliable for our analyses. On the other hand, the

Army’s data on processing times were not reliable for our analyses. Except

for the Army data used in our analyses, we did not test the reliability of 

other data we received from the services and DOD. While GAO has noted 

in its 21st Century Challenges report that eligibility criteria for disability 

programs need to be brought into line with the current state of science,

medicine, technology and labor market conditions, this study does not 

1

 The word reservist in this report refers to reserve component members.

2

 This report addresses the military disability systems for three branches of the service: the

Army, Navy (including Marines), and Air Force. This report does not address the Coast 

Guard or Coast Guard Reserve.

Page 2 GAO-06-362 Military Disability System
examine the basic eligibility criteria for military disability benefits.3

 We 

conducted our review from June 2005 through January 2006 in accordance

with generally accepted government auditing standards. A detailed 

description of our scope and methodology is provided in appendix I. 

There are differences in policies and guidance for disability 

determinations, in general, among the Army, Navy, and Air Force. The 

services’ policies differ, in part because DOD has explicitly given the 

services the responsibility to set up their own processes for certain 

aspects of the disability evaluation system and has given them latitude in 

how they go about this. For example, the services set different 

qualifications for members of the medical disability decision making

boards. Further, the laws that govern military disability and the policies 

that DOD and the services have developed to implement these laws have 

led reservists to have different experiences in the system compared to the 

active duty members. For example, because they are not on active duty at

all times, it takes longer for reservists to accrue the 20 years of service that

may be needed to earn monthly disability retirement benefits. Moreover, 

unlike full-time active duty soldiers, many mobilized Army reservists are 

assigned to special units while being treated for medically limiting injuries 

or illnesses. 

Results in Brief 

DOD has issued policies and guidance to promote consistent and timely 

disability decisions for active duty and reserve disability cases, but the 

agency is not monitoring compliance with these. To encourage consistent 

decision making, DOD requires all services to use multiple reviewers to 

evaluate disability cases. Furthermore, federal law requires that the 

services use a standardized disability rating system to classify the severity 

of the medical impairment. In addition, DOD periodically convenes a 

Disability Advisory Council comprised of service officials to review and 

update disability policy and to discuss current issues. However, neither 

DOD nor the services systematically analyze the consistency of decision 

making. Such an analysis of data should be one key component of quality

assurance. To ensure timely disability case processing, DOD has issued 

timeliness goals for processing all service members’ cases. However, DOD 

is not collecting available information on disability evaluation processing 

times from the services to determine compliance, nor are the services

3

 GAO, 21st Century Challenges: Reexamining the Base of the Federal Government,

GAO-05-325SP (Washington, D.C.: March 4, 2005).

Page 3 GAO-06-362 Military Disability System
ensuring these data are reliable. Moreover, some military officials have 

expressed concerns that the current goals may not be appropriate for all 

cases. Finally, both the consistency and timeliness of decisions depend, in 

part, on the training that disability officials receive. Despite a regulation

requiring DOD’s Office of Health Affairs to develop relevant training for 

disability staff, DOD is not exercising oversight over training for staff in 

the disability system. 

While our review of the military disability evaluation system’s policies and 

oversight covered three branches of the service, we most closely 

examined data from the Army’s disability evaluation process to better 

understand how disability decisions and processing times compare for 

reserve component and active duty soldiers. Our analyses of ratings from 

the Army disability evaluation system from calendar year 2001 to 2005 

indicated that, after taking into account many of the differences between

reserve and active duty soldiers, among soldiers who received disability 

ratings, Army reservists received ratings comparable to their active duty 

counterparts. The results of our analyses of military disability benefit 

decisions for soldiers were less definitive, but suggest that Army reservists

with impairments that made them unfit for duty were less likely to receive

either permanent disability retirement or lump sum disability severance

pay than their active duty counterparts. However, data on all possible 

reasons for this difference, such as whether the condition existed prior to 

service, were not available for our analysis. With regard to disability

evaluation processing times, we did not compare processing times for 

Army reserve and active duty cases because we found that the data in the 

Army’s electronic database needed to calculate processing times were 

unreliable. The Army’s own statistics indicate that from fiscal year 2001

through 2005, more than half of all reservists’ cases took longer than 90 

days to process as compared to about one third of active duty soldiers’ 

cases.

We are recommending that the Secretary of Defense improve oversight of

the military disability system, evaluate the appropriateness of timeliness 

standards for case processing, and assess the adequacy of training for 

disability evaluation staff. DOD agreed with our recommendations and 

stated that it is taking steps toward implementing them. 

Page 4 GAO-06-362 Military Disability System
As provided by the Career Compensation Act of 1949, as amended, service

members who become physically unfit to perform military duties may 

receive military disability compensation under certain conditions.4

Compensation for disabilities can be in the form of monthly disability 

retirement benefits or a lump sum disability severance payment, 

depending on the disability rating and years of creditable service.5

 To 

qualify for monthly disability retirement benefits, a service member with a 

permanent impairment that renders him or her unfit for duty must have (1) 

at least 20 years of creditable service or (2) a disability rating of at least 30 

percent.6

 Service members with less than 20 years of creditable service 

and a disability rating less than 30 percent receive a lump sum severance

disability payment. 

Service members with service connected disabilities may also be eligible

for VA disability compensation. Until recently, this military benefit was 

offset by any VA compensation received. However, the fiscal year 2004

National Defense Authorization Act now allows some military retirees to 

concurrently receive VA and military benefits.7

 Generally, military

disability retirement pay is taxable. Exceptions are (1) if the disability pay 

is for combat-related injuries or (2) if the service member was in the 

military, or so obligated, on September 24, 1975.

Each of the military services administers its own disability evaluation 

process. According to DOD regulations, the process should include a 

medical evaluation board (MEB), a physical evaluation board (PEB), an 

appellate review process, and a final disposition. Each service member 

should be assigned a Physical Evaluation Board Liaison Officer (PEBLO), 

Background

The Disability Evaluation 

Process

4

 Pub. L. No. 81-351(1949).

5

 Creditable years are computed according to 10 U.S.C. § 1208. To meet the 20-year

threshold, reserve component members must have at least 7,200 points of combined active 

duty points, membership points, and inactive duty points.

6

 To qualify for monthly disability retirement payments, service members with ratings of 30

percent or higher must have a disability incurred or aggravated in the line of duty. For

members on ordered active duty of greater than 30 days, a non-aggravated pre-existing

condition is awarded disability compensation under 10 U.S.C. § 1207a if the member has a 

total of 8 years of active service (active duty). 

7

 For more information about concurrent receipt of military retirement and VA benefits see 

Military Retirement: Major Legislative Issues, Congressional Research Service, updated

January 3, 2006.

Page 5 GAO-06-362 Military Disability System
a counselor to help the service member navigate the system and prepare 

documents for the PEB. 

As shown in figure 1, there are a number of steps in the disability

evaluation process and several factors that play a role in the decisions that

are made at each step. There are four possible outcomes in the disability 

evaluation system. A service member can be 

• found fit for duty; 

• separated from the service without benefits—service members whose 

disabilities were incurred while not on duty or as a result of intentional 

misconduct are discharged from the service without disability benefits; 

• separated from the service with lump sum disability severance pay; or 

• retired from the service with permanent monthly disability benefits or 

placed on the temporary disability retired list (TDRL). 

Page 6 GAO-06-362 Military Disability System
Figure 1: Decisions Made during the Military Disability Evaluation Process 

Dispositions:

Disability benefits

entitled to

Member

with

medically

limiting

injury/

condition

What is the 

disability rating

(injury/condition’s

severity)?

Does the 

member meet 

retention

standard?

Is the member

fit for duty?

Is the disability

compensable? No No Yes

Placed on the 

Temporary Disability

Retired List (TDRL)

Placed on

Permanent Disability

Retirement

(Separated with 

monthly disability

retirement benefits)

Separated with 

lump sum disability

severance

Separated

without

benefits

Return 

to

duty

Source: DOD documents.

Medical Evaluation Board

(MEB) Decision

Physical Evaluation Board

(PEB) Decisions

0-20%

Member’s

years of

active duty

or equivalent

service

Based on

· Medical evidence

and

· DOD/service

 regulations

Yes

< 20 years

Yes Yes No

Based on

· Medical evidence,

· Member’s injury/

 condition

· Occupational

specialty

· Performance

Based on

· Line of duty

 determination

· For injury/condition

 existing prior to

service—whether

 member has at

 least 8 years of

active duty service

Based on

· Medical evidence

and

· VA “Schedule for

 Rating Disabilities”

 guidance

· DOD rating

 guidance

Disability

is stable

30% or

higher

≥ 20 years

No

Page 7 GAO-06-362 Military Disability System
The disability evaluation process begins at a military treatment facility 

(MTF), when a physician identifies a condition that may interfere with a 

service member’s ability to perform his or her duties.8

 The physician

prepares a narrative summary detailing the injury or condition.9

 DOD 

policy establishes the date of dictation of the narrative summary as the 

beginning of the disability evaluation process. This specific type of 

medical evaluation is for the purpose of determining if the service member

meets the military’s retention standards, according to each service’s

regulations.10 This process is often referred to as a medical evaluation

board (MEB). Service members who meet retention standards are 

returned to duty, and those who do not are referred to the physical

evaluation board (PEB). 

The PEB is responsible for determining whether service members have 

lost the ability to perform their assigned military duties due to injury or 

illness, which is referred to as being “unfit for duty”. If the member is 

found unfit, the PEB must then determine whether the condition was 

incurred or permanently aggravated as a result of military service. While

the composition of the PEB varies by service, it is typically composed of 

one or more physicians and one or more line officers. Each of the services 

conducts this process for its service members. The Army has three PEBs 

located at Fort Sam Houston, Texas; Walter Reed Army Medical Center in 

Washington, D.C.; and Fort Lewis, Washington. The Navy has one located

at the Washington Navy Yard in Washington, D.C. The Air Force has one

located in San Antonio, Texas.

Medical Evaluation Board 

Physical Evaluation Board 

The first step in the PEB process is the informal PEB—an administrative 

review of the case file without the presence of the service member. The 

PEB makes the following findings and recommendations regarding 

possible entitlement for disability benefits: 

8

 A physician is required to identify a condition that may cause the member to fall below 

retention standards after the member has received the maximum benefit of medical care.

9

 In addition, there are specific conditions listed in DOD regulations that require a service

member to be referred to the disability evaluation system. 

10 According to DODI 1332.38, retention standards are the physical standards or guidelines

that establish those medical conditions or physical defects that may render a member unfit

for further military service and are therefore cause for referral of the member into the

disability evaluation system. 

Page 8 GAO-06-362 Military Disability System
• Fitness for duty—The PEB determines whether or not the service

member “is unable to reasonably perform the duties of his or her office, 

grade, rank, or rating,” taking into consideration the requirements of a 

member’s current specialty. Fitness determinations are made on each

medical condition presented. Only those medical conditions which

result in the finding of “unfit for continued military service” will 

potentially be compensated. Service members found fit must return to 

duty.

• Compensability—The PEB determines if the service member’s injuries 

or conditions are compensable, considering whether they existed prior 

to service (referred to as having a pre-existing condition) and whether 

they were incurred or permanently aggravated in the line of duty.11

Service members found unfit with noncompensable conditions are 

separated without disability benefits.

• Disability rating—When the PEB finds the service members unfit and 

their disabilities are compensable, it applies the medical criteria

defined in the Veterans Administration Schedule for Rating Disabilities 

(VASRD) to assign a disability rating to each compensable condition.

The PEB then determines (or calculates) the service member’s overall 

degree of service connected disability. Disability ratings range from 0 

(least severe) to 100 percent (most severe) in increments of 10

percent.12 Depending on the overall disability rating and number of 

years of active duty or equivalent service, the service member found 

unfit with compensable conditions is entitled to either monthly 

disability retirement benefits or lump sum disability severance pay. 

In disability retirement cases, the PEB considers the stability of the 

condition. Unstable conditions are those for which the severity might 

change resulting in higher or lower disability ratings. Service members

with unstable conditions are placed on TDRL for periodic PEB

reevaluation at least every 18 months. While on TDRL, members receive 

monthly retirement benefits. When members on TDRL are determined to 

be fit for duty, they may choose to return to duty or leave the military at 

11 According to 10 U.S.C. § 1201, a service member is ineligible if 1) the disease or injury

was incurred while not entitled to receive basic pay (i.e., the condition existed prior to

service and is not service aggravated) and the member does not fall under the 8-year 

provision of 10 U.S.C. § 1207a; 2) the disease or injury was incurred while not in the line of

duty; 3) the disease or injury was incurred during a period of unauthorized absence; or 4)

the disease or injury resulted from intentional misconduct or willful neglect. 

12 For more information on the VA rating schedule, see DODI 1332.39, November 14, 1996.

Page 9 GAO-06-362 Military Disability System
that time. Members who continue to be unfit for duty after 5 years on 

TDRL are separated from the military with monthly retirement benefits, 

discharged with severance pay, or discharged without benefits, depending

on their condition and years of service.

Service members have the opportunity to review the informal PEB’s 

findings and may request a formal hearing with the PEB; however, only

those found unfit are guaranteed a formal hearing. The formal PEB 

conducts a de novo review of referred cases and renders its own decisions 

based upon the evidence. At the formal PEB hearing, service members can

appear before the board, put forth evidence, introduce and question 

witnesses, and have legal counsel help prepare their cases and represent 

them. The military will provide military counsel or service members may

retain their own representative. If service members disagree with the 

formal PEB’s findings and recommendations, they can, under certain 

conditions, appeal to the reviewing authority of the PEB. Once the service

member either agrees with the PEB’s findings and recommendations or 

exhausts all available appeals, the reviewing authority issues a final 

disability determination concerning fitness for duty, disability rating, and 

entitlement to benefits. 

Disability Evaluation 

System Caseloads 

In 2005, over 23,000 U.S. service members with physical injuries or other 

conditions went through the military disability evaluation system, 

according to DOD. In total, the Army, Navy, and Air Force report

evaluating over 90,000 PEB cases during the fiscal years 2001 to 2005. The

Army represents the largest share of disability cases, with Army reserve 

component members representing approximately 32 percent of all Army 

cases in 2005 (see table 1). PEB disability caseloads for all services have 

increased over time from about 15,000 in fiscal year 2002 to about 23,000

in fiscal year 2005.

Page 10 GAO-06-362 Military Disability System
Table 1: Military Disability PEB Caseload, Fiscal Year 2001 to 2005 

Number of service members

Services 2001 2002 2003 2004 2005

Army

Active duty 6,627 6,510 6,659 7,694 9,322

Reserve component 591 812 1,546 4,187 4,426

Navy

Active duty 4,620 3,953 3,814 4,889 4,645

Reserve component 379 413 436 543 555

Air Force

Active duty 2,376 3,251 3,340 3,525 3,610

Reserve component 441 535 633 719 758

TOTAL 15,034 15,474 16,428 21,557 23,316

Source: Departments of the Army, Navy, and Air Force.

Military Disability 

Retirement Expenditures 

In fiscal year 2004, the military services spent over $1 billion in disability

retirement benefits for over 90,000 service members. See table 2. This

table does not include expenditures for lump sum disability payments 

which DOD was unable to provide. 

Table 2: Military Disability Funding Expenditures for Fiscal Year 2004 

Temporary disability retirement Permanent disability retirement Total

Service

Dollars

(in millions)

Number of 

service

members

Dollars

(in millions)

Number of 

service

members

Dollars

(in millions)

Number of 

service members

Army $16.9 2,170 $432.3 34,372 $449.2 36,542

Navy $21.4 2,769 $379.1 30,831 $400.5 33,600

 Air 

Force $4.1 399 $349.6 21,540 $353.7 21,939

 DOD 

(all) $42.4 5,338 $1,161.0 86,743 $1,203.4 92,081

Source: DOD Office of the Actuary, Statistical Report FY 2004.

Page 11 GAO-06-362 Military Disability System
The Secretary of Defense oversees the military disability evaluation

system through the Under Secretary of Defense for Personnel and 

Readiness.13 The Surgeons General for each service are responsible for 

overseeing their service’s MTFs, including the MEBs conducted at each 

facility. The Deputy Under Secretary of Defense for Military Personnel 

Policy has oversight of the PEBs, and also oversees the Disability Advisory 

Council. The council is composed of officials from DOD’s offices of 

Military Personnel Policy, Health Affairs, and Reserve Affairs, the services’ 

disability agencies; and the Department of Veterans Affairs. See fig. 2. 

Oversight

Figure 2: Oversight of the Military Disability Evaluation Process within the Department of Defense 

Air Force

Surgeon

General

Navy

Surgeon

General

Army

Surgeon

General

Air Force

MEB

Navy

MEB

Army

MEB

Secretary of Defense

Deputy Under Secretary of Defense

for Military Personnel Policy

Disability Advisory Council

Assistant Secretary of Defense for Health Affairs

Air Force

Personnel

Center

(Disability

Division)

Naval Council

of Review

Boards

Army Physical

Disability

Agency 

Air Force

PEB

Navy

PEB

Army

PEB

Source: GAO analysis of DOD documents.

Under Secretary of Defense for Personnel and Readiness

13 The Under Secretary of Defense for Personnel and Readiness also oversees the Defense

Health Program, Defense Commissaries and Exchanges, the Defense Education Activity, 

and the Defense Equal Opportunity Management Institute.

Page 12 GAO-06-362 Military Disability System
The policies and guidance for disability determinations for all service 

members are somewhat different among the Army, Navy, and Air Force. 

DOD has explicitly given the services the responsibility to set up their own 

processes for some aspects of the disability system and has given the 

services much room for interpretation. Each service has implemented its 

system somewhat differently. For example, the composition of decision 

making bodies differs across the services. Additionally, the laws that 

govern military disability and the policies that DOD and the services have 

developed to implement these laws have led to reserve members having 

different experiences with the disability system than active duty members. 

Some of these experiences result from the part-time nature of reserve 

service while others are the consequence of policies and laws specific to 

reservists.

DOD regulations establish some parameters for the disability system and 

provide guidelines to the services, and the services each have their own 

regulations in accordance with these. Specifically, the aspects of the 

system that differ among the services include: characteristics of the 

medical evaluation board (MEB) and physical evaluation board (PEB), the 

use of counselors to help service members navigate the system, and 

procedures to make line of duty determinations. Appendix III provides a 

compilation of these and other differences.

DOD regulations require that each service set up MEBs to conduct medical 

evaluations to determine if the service member meets retention standards 

according to each service’s regulations. The services carry out MEB 

procedures differently. For example, the Air Force MEB convenes an 

actual board of physicians who meet regularly and vote to decide whether

a service member meets retention standards. In the Army and Navy, in 

contrast, the MEB is an informal procedure. A service member’s case file

is passed among the board’s members, who separately evaluate it. In all of 

the services, the medical commander or his designee may sign off on the 

final decision. The services also differ in the qualifications and

requirements for MEB board membership. The Army and Navy require that

at least two physicians serve on an MEB, while the Air Force requires 

three.

In accordance with DOD regulations, the military services have set up

PEBs to evaluate whether service members are fit for duty. DOD 

regulations provide no guidance concerning how much time a service 

member has to decide whether to accept the disability decision of his or 

her informal PEB. Army provides service members 10 calendar days; Navy

Military Disability 

Policies Differ among 

the Services, and 

Certain Policies May 

Result in Different 

Experiences for 

Reservists

DOD Policies and 

Guidance Allow Services

to Implement the Disability 

System Differently

Medical Evaluation Boards 

Physical Evaluation Boards 

Page 13 GAO-06-362 Military Disability System
provides 15 calendar days; and Air Force provides 3 duty days, according 

to their regulations. Additionally, DOD regulations provide that service 

members found unfit for duty by an informal PEB are guaranteed the right

to appeal to a formal PEB. However, service members found fit are not 

guaranteed the right to appear before a formal PEB.

While DOD regulations state that a service member has the right to appeal 

the decision of a formal PEB, they do not state what this appeal process

should look like. The services differ in how many appeal opportunities

they offer service members after the formal PEB. For example, the Navy

and Air Force offer two opportunities for appeal after the formal PEB. The 

Army also has two opportunities for appeal. However, it also has the Army 

Physical Disability Appeal Board, which provides appeal for only certain 

cases, for example, if the Army Physical Disability Agency revises the 

finding of the PEB during a quality or mandatory review and the soldier 

disagrees with the change (see table 3).

Table 3: Post-PEB Appeals Process across the Services

Military service Appellate authority 

Army

 1st appeal Army Physical Disability Agency

 Additional appealaArmy Physical Disability Appeal Board

 Final appeal Army Board for the Correction of Military Records

Navy

 1st appeal Secretary of the Navy Council of Review Boards

 Final appeal Board for the Correction of Naval Records

Air Force 

 1st appeal Air Force Secretary of the Air Force Personnel Council

 Final appeal Air Force Board of Correction of Military Records

Source: DOD documents.

a

Note: Applicable only to cases in which Army Physical Disability Agency revises the PEB findings as

part of a quality or mandatory review and the soldier does not concur with the revised finding. 

Further, the services also differ on whether they permit the same members

to sit on the informal and formal PEB of the same case. The Army allows 

PEB members to do this while the Air Force only allows this under certain

circumstances. The Navy has no written policy on the matter, although 

one official from the Navy PEB indicated that the members of the two 

boards were often the same for a case. 

Page 14 GAO-06-362 Military Disability System
The point at which PEBLOs become involved in the disability evaluation

system and the training PEBLOs receive differ between the services. DOD 

regulations require that each service provide members counseling during

the disability evaluation process and outline the responsibilities of these 

counselors. For example, they are expected to discuss with service 

members their rights, the effects of MEB and PEB decisions, and available

benefits.

Physical Evaluation Board 

Liaison Officers 

Each service has created PEBLOs in accordance with these rules, but the

services have placed the PEBLOs under different commands. In the Army 

and Air Force, PEBLOs are the responsibility of the medical command. In 

the Navy, in contrast, the PEBLO responsibility is shared by the PEB and 

MTF. Further, the services involve PEBLOs at different points in the 

disability process. In the Army and Air Force, PEBLOs begin counseling 

the service member at the MEB level of the disability process. However, 

while Navy, officials told us that PEBLOs provide counseling at the MEB 

level, some PEBLOs we interviewed told us that they begin counseling

members after the informal PEB has issued its decision. At some MTFs, 

case managers provide counseling for service members going through the

disability evaluation process. The services also differ in their training of 

PEBLOs. The Army holds an annual conference for PEBLOs and provides 

on-the-job training. The Navy relies primarily on on-the-job training and 

also offers quarterly and annual training. The Air Force also relies heavily 

on on-the-job training and, until recently, held regular training for PEBLOs. 

As required by law, a service member may receive disability compensation

for an injury or illness that was incurred or permanently aggravated while 

in the line of duty. Generally, the military services document that an injury 

occurred in the line of duty by filling out a form or noting it in the service 

member’s health record. Typically, a service member’s commanding 

officer is responsible for this action, according to the service’s policies. 

Unlike the Army and Navy, the Air Force always requires a line of duty 

determination for reservists. 

Line of Duty Determinations

DOD regulations state that an injury is presumed to have been in the line 

of duty when it clearly resulted from enemy or terrorist attack, regardless 

of whether the member is a reserve or active duty member. However, if 

the injury may have resulted from misconduct or willful negligence, DOD 

requires the military services to investigate and determine whether the 

injury did, in fact, occur in the line of duty. The line of duty determination

is a complicated process involving a number of people, such as the 

examining medical official and higher commands. DOD gives the services

responsibility for creating the procedures for conducting line of duty 

Page 15 GAO-06-362 Military Disability System
determinations, and there are some technical differences in the processes

among the services. For example, the services have different rules 

regarding how long this process should take. The Army and the Air Force 

place time frames on the process, while the Navy does not. 

DOD and the Services 

Have Established Policies 

That Result in Different 

Experiences with the 

Disability System for 

Reservists

The laws that govern the military disability system and the policies and 

guidance that DOD and the services have developed to implement the laws 

can result in different experiences with the disability system for reservists.

Some of these differences are due to the part-time nature of reserve 

service, while others result from laws and policies specific to reservists.

Because they are not on duty at all times, reservists take longer to accrue

the 20 years of service that may be needed to earn the monthly disability 

retirement benefit when the disability rating is less than 30 percent. For 

example, an active duty service member who enlisted in the Army in 1985 

and stayed on continuous active duty would have 20 years toward 

disability retirement by 2005. An Army reservist who enlisted at the same 

time, met his training obligations, and had been activated for 1 year would 

have roughly 5 years and 9 months toward disability retirement by 2005, 

according to the formula the Army uses to determine years of service 

toward disability retirement benefits. All three services use the same 

formula when calculating the 20 years of service requirement for disability 

retirement benefits. 

Twenty Years of Service 

Requirement for Disability

Retirement

The part-time status of reservists also makes it more difficult for reservists

with preexisting conditions to be covered by the 8-year rule and therefore 

eligible for compensation. By law, service members with at least 8 years of 

active duty service are entitled to compensation even if their conditions

existed before the beginning of their military service or were not service 

aggravated. This entitlement only applies to reservists when they are on 

ordered active duty of more than 30 days at the time of PEB adjudication. 

For reservists, accruing the 8 years necessary for a condition to be 

covered by this rule can be more difficult than for active duty service 

members. For example, an active duty service member who enlisted in the

Army in 1997 and stayed on continuous active duty would have 8 years

toward disability retirement by 2005. A reservist who enlisted at the same 

time, met his training obligations, and has been activated for 1 year would 

have roughly 1 year and 3 months of service, according to the Army’s 8-

year rule formula and would not be eligible for compensation for a 

preexisting condition. Further, the services differ slightly in how they 

Eight Years of Service 

Requirement for Compensation 

for Preexisting Conditions 

Page 16 GAO-06-362 Military Disability System
calculate the 8 years for reservists. The Army and Navy calculate the 8

years differently from the 20 year requirement, but the Air Force uses the 

same formula for both. The Army and Navy count only active duty time, 

while the Air Force also counts time spent in other activities, such as 

continuing education.14

Officials reported that commanders and others responsible for completing 

line of duty determinations were often uncertain as to when line of duty 

determinations were necessary for reservists and active duty members. 

Moreover, these officials noted that in some cases, the necessary line of 

duty determinations were not made, resulting in delays for service 

members. For example, Air Force officials we spoke with had different 

impressions as to whether line of duty determinations were always 

required for reservists, even though Air Force regulations state they are.

Officials from the Army and Army National Guard similarly offered 

different perspectives on the need for line of duty determinations for 

reservists.

Line of Duty Determinations

In the Army, deployed active duty soldiers return to their unit in a back up 

capacity when they are injured or ill. However, mobilized injured or ill 

Army reservists have no similar unit to return to. Consequently, they may 

be removed from their mobilization orders and retained on active duty in

“medical holdover status” and assigned to a unit, such as a medical

retention processing unit.15 While in medical holdover status, reservists 

may live on base, at a military treatment facility, at home or other 

locations. After their mobilization orders expire, they can elect to continue 

on active duty through a program such as medical retention processing,

which allows them to continue receiving pay and benefits. Between 2003

and 2005 the Army reports that about 26,000 reservists entered medical 

holdover status (see appendix II). 

Medical Holdover 

Unlike most injured active duty soldiers, reservists in medical holdover

generally live farther from their families than active duty members

because the units at military medical facilities are often far from where 

14 Army and Navy officials offered different views on the requirements of DOD regulations,

disagreeing on whether they were obligated to count time spent through the appeals

process toward the 8 years or not. However, this difference applied to both active duty and

reserve component members alike.

15 Medical holdover status provides for the command and control of mobilized reserve

component members.

Page 17 GAO-06-362 Military Disability System
their families live. In certain cases reservists in medical holdover may 

receive treatment and recuperate at home. The Army’s Community-Based 

Health Care Organizations (CBHCOs) provide medical and case

management for these reservists living at home as they receive medical 

care in their communities. As of December 2005, about 35 percent of the 

reservists in medical holdover were being cared for in the CBHCO 

program. In order to be assigned to the CBHCO program, reservists must

meet a number of criteria. For example, reservists must live in 

communities where they can get appropriate care, and they must also be 

reliable in keeping medical appointments.

DOD has policies and guidance to promote consistent and timely disability 

decisions, but is not monitoring whether the services are compliant.

Neither DOD nor the services systematically determine the consistency of

decision making, which would be a key component of quality assurance.

With regard to timeliness, DOD has issued goals for processing service 

members’ cases but is not collecting available information from the 

services, and military officials have expressed concerns that the goals may

not be realistic. Finally, DOD is not exercising any oversight over training 

for staff in the disability system, despite being required to do so.

To encourage consistent decision making, DOD policies require that 

service members’ case files undergo multiple reviews and federal law 

requires that disability ratings be based on a common schedule. During 

both the MEB and PEB stages of the disability process, a service member’s 

case must be reviewed and approved by several officials with different 

roles. When rating the severity of a service member’s impairment, all 

services are required to use a common schedule, VA’s Schedule for Rating

Disabilities (VASRD), in accordance with federal law. The VASRD is a 

descriptive list of medical conditions along with associated disability 

ratings. For example, if a service member has x-ray evidence of

degenerative arthritis affecting two or more joints, “with occasional 

incapacitating exacerbations,” he or she should receive a rating of 20 

percent according to the VASRD. 

DOD Has Guidance in 

Place to Promote 

Consistent and Timely

Decisions, but Does 

Not Adequately

Oversee Key Aspects

of the Disability 

System

DOD Requires All Services 

to Use a Common Ratings 

System and Multiple 

Reviewers and Convenes a 

Disability Council 

DOD also convenes the Disability Advisory Council, which DOD officials 

told us is the primary oversight body of the disability system. The 

disability council is composed of key officials from the three disability

agencies of the services, the VA, and relevant DOD officials from the 

Page 18 GAO-06-362 Military Disability System
health affairs, reserve affairs, and personnel departments. The council’s 

mission is to monitor the administration of the disability system and, 

according to DOD officials, the council serves as a forum to discuss issues 

such as rules changes and increasing coordination among the services. 

Currently, the disability council is facilitating a review and revision of all 

DOD regulations pertaining to the disability system. Military officials view 

the council as a group that aims to meet quarterly to discuss issues raised 

by the services. By having these meetings, DOD hopes to bring all of the 

services “on the same page” when it comes to the disability system.

However, military officials reported that the council has not met quarterly 

in the past year and generally does not produce formal reports for the 

DOD chain of command. Furthermore, the disability council is staffed by 

one person at DOD who has additional responsibilities. 

Military officials also regard the appeals process as helping to ensure the 

consistency of disability evaluation decision making. However, not all 

service members appeal. In addition, during the appeals process additional 

evidence may be presented that may result in a different outcome for the 

same case. Furthermore, the appeals process is designed to determine

whether the correct decision was made, rather than whether consistent

decisions were made across comparable cases.

Lack of Oversight by DOD 

and the Services Provides 

Little Assurance Decisions 

Are Consistent 

Despite this policy guidance and the presence of the disability council,

both DOD and the three services lack quality assurance mechanisms to 

ensure that decisions are consistent. Given that one of the primary goals of 

the disability system is that disability evaluations take place in a consistent 

manner, collecting and analyzing the service members’ final disability

determinations are critical for ensuring that decisions are consistent. DOD 

regulations recognize this and require that the agency establish necessary

reporting requirements to monitor and assess the performance of the 

disability system and compliance with relevant DOD regulations. Yet, DOD 

does not collect information from the services on the final disability

determinations and personal characteristics of service members going 

through the disability system. 

In addition, DOD has not established quality parameters for the services to

follow to evaluate the consistency of decision making. As a result, the 

services generally lack a robust quality assurance process. In our past 

work on federal disability programs, we have recommended that quality

assurance have two components: (1) the use of multivariate regression

analysis examining disability decisions along with controlling factors to 

determine whether the decisions are consistent and (2) an in depth

Page 19 GAO-06-362 Military Disability System
independent review of a statistically valid group of case files to determine 

what factors may contribute to inconsistencies. However, the services

were unable to provide any evidence that they are conducting statistical

reviews – such as multivariate regression analysis – on their data to 

determine the consistency of decision making for service members with 

similar characteristics. Furthermore, while we found that the Army is 

conducting independent reviews of 25 to 30 percent of its PEB cases, the 

Navy and Air Force conduct these reviews only when a service member 

appeals the PEB’s decision. Additionally, these reviews reflect how a 

single case’s medical evidence supports the dispositions made (accuracy) 

rather than the degree to which decisions in cases, in general, with similar 

impairments and characteristics compare (consistency). Without such an 

analysis the services are unable to assure that adjudicators are making 

consistent decisions in reservist and active duty cases with similar 

characteristics.

Officials from the services said that it was very difficult to examine

outcomes for consistency because each disability decision is unique and 

there are a multitude of factors considered when rendering a disability 

decision, some of which could not be captured in a database. For example, 

individuals’ pain tolerance varies, along with their motivation to adhere to

treatment programs. Nonetheless, other federal disability programs face 

the same challenges, have acknowledged the importance of determining

consistency of decision making, and have taken some initial steps to 

develop quality assurance systems. For example, the VA selects a random 

sample of files for independent review using a standard methodology and

compiles the results of these reviews.16

16 Although VA compiles this data, it does not systematically assess decision-making

consistency. In a past report, we recommended that the VA use its data to identify possible

inconsistencies. VA officials concurred with this recommendation and indicated they were 

implementing a nationwide information system which they would use to determine

consistency of their disability decisions. See GAO, Veterans Benefits: VA Needs Plan for

Assessing Consistency of Decisions, GAO-05-99 (Washington, D.C.: Nov. 19, 2004) and 

GAO, VA Disability Benefits: Routine Monitoring of Disability Decisions Could Improve

Consistency, GAO-06-120T (Washington, D.C.: Oct. 20, 2005).

Page 20 GAO-06-362 Military Disability System
DOD regulations set forth timeliness goals for the two major processes of 

the disability system. According to DOD, the first stage of the process—

the MEB—should normally be completed in 30 days or less. The second 

stage of the process—the PEB—should normally take 40 days or less. 

Despite establishing these timeliness goals for the services, DOD is not 

ensuring compliance with them. DOD does not regularly collect available

timeliness data from the services, a necessary first step for determining 

compliance.

DOD Has Instituted 

Timeliness Goals for 

Processing Service

Members’ Cases, but Does 

Not Oversee Compliance 

with Them 

The services generally are using their databases to track the timeliness of 

decisions, but military officials cited confusion regarding the start date for

the process. Both the Army and Navy are tracking processing times for 

both the MEB and PEB using their databases. The Air Force lacks a 

centralized database to track its MEB cases and therefore can only track 

PEB timeliness. However, we found that the usefulness of these timeliness 

data may be undermined by confusion among military officials and data 

entry staff regarding the starting dates for the disability process. We 

compared original Army PEB case files to Army electronic data from both 

its MEB and PEB databases, and found that the date a physician dictates a

narrative summary, the beginning of the disability process and a critical 

data point for timeliness calculations, was frequently entered incorrectly

into the Army’s databases. When we asked about these errors, Army 

officials said that increased training of data entry staff would help with 

these problems. Navy officials also said that there was some confusion

about how to record starting dates for cases when additional medical 

information was needed to make a disability decision for a service 

member.

Data reported by the services on the timeliness of cases generally show 

that the services are not meeting DOD timeliness goals (see appendix II). 

Military officials said that these results stemmed in part from the 

unrealistic nature of the goals themselves. Navy officials told us that they

do not consider the 30-day goal as a performance standard for MEB 

processing to be held accountable for. They said that the 30-day goal is 

also unrealistic, especially in certain cases when there were addendums to 

the narrative summary. Army officials also said that it was unrealistic for 

all MEB cases to be processed in 30 days because certain cases take 

longer. For example, cases when a line of duty determination is needed or

when certain medical tests are required to diagnose some orthopedic or 

psychiatric conditions. 

Page 21 GAO-06-362 Military Disability System
While DOD regulations require that the agency develop and maintain

training for key participants in the disability system, DOD officials told us

that they had given this responsibility to the services. The Assistant

Secretary of Defense for Health Affairs is given explicit instructions to 

develop and maintain a training program for MEB and PEB staff, but 

officials from the Office of Health Affairs indicated they were unaware 

that they had the responsibility to develop a training program. In addition, 

despite high turnover among military disability evaluation staff, the 

services do not have a system to ensure that all staff are properly trained. 

This turnover stems, in part, from the military requirement that personnel

rotate to different positions in order to be promoted. Depending on the 

positions involved, military officials told us that some staff remain in their 

positions from 1 to 6 years, with most remaining about 3 years. This 

turnover and the resulting loss of institutional knowledge require that the

services systematically track who has been properly trained. However, all 

of the services lack data systems that would allow them to do so, an issue 

that was highlighted in a previous report by the RAND Corporation.17

Our analysis of Army disability data from calendar years 2001 to 2005 

indicated that after controlling for many of the differences we found 

between reservists and active duty soldiers, Army reservists received

similar disability ratings to their active duty counterparts. We also found 

that reservists may be less likely to receive military disability benefits.

Data on years of service and preexisting conditions were not available for

this analysis, however, factors that influence disability benefit decisions. 

Finally, we were unable to compare processing times for reserve and

active duty disability cases because we found that Army data on 

processing times were not reliable. However, based on these data, some 

Army officials conclude that reservists’ cases often take longer to process 

through the disability evaluation system than the cases of active duty 

soldiers.

DOD’s Delegation of 

Training to the Services

and Staff Turnover

Presents Additional 

Challenges for the 

Disability System 

Disparities May Exist 

in Disability Benefits 

and Processing Times

between Army 

Reservists and Active 

Duty Soldiers, but 

Lack of Data Prevents 

More Definitive

Conclusions

17 Cheryl Y. Marcum, Robert M. Emmerichs, Jennifer S. Sloan, and Harry J. Thie, Methods

and Actions for Improving Performance of the Department of Defense Disability 

Evaluation System. MR-1228-OSD (Santa Monica, Calif.: the Rand Corporation, 2002).

Page 22 GAO-06-362 Military Disability System
From 2001 through 2005, the characteristics of Army reservists and active

duty soldiers in the disability evaluation system differed in a number of 

ways. Specifically, reservists tended to have more impairments than active

duty soldiers; they were more likely than active duty soldiers to have three

or four impairments. Reservists also experienced higher rates of 

impairments affecting the cardiovascular and endocrine systems, while 

active duty soldiers experienced a higher rate of impairments affecting the

musculoskeletal system. Reservists were more often classified in higher 

pay grades and more often worked as functional support and 

administration, crafts workers, and service and supply handlers. See 

appendix IV. Active component soldiers worked more often as infantry 

and gun crews; electronic equipment repairers; and communications and 

intelligence specialists.18 In addition, compared to the number of active 

duty disability cases from 2001 through 2005, which remained relatively

constant, the proportion of reservists going through the PEB process rose 

dramatically through 2004. See figure 3. 

Army Reservists and 

Active Duty Soldiers in the 

Disability Evaluation 

System Had Different 

Characteristics

18 Army military occupational specialty data were translated into DOD occupation 

categories, as derived by the Defense Manpower Data Center.

Page 23 GAO-06-362 Military Disability System
Figure 3: Yearly Percentage Change in PEB Caseload for Active Duty and Reserve

Component Soldiers, Calendar Years 2001 to 2005 

0

20

40

60

80

100

120

140

2001 2002 2003 2004 2005 (projected)

Percentage change

Source: GAO analysis of Army data.

Year

Active duty

Reserve component

4

33

29

22

-18

135 138

-7

Note: The 2005 numbers represent annual projections based on data collected through Aug 2005. 

Finally, the demographic characteristics of Army reservists and active duty

soldiers in the disability evaluation system also differed. Eighty percent of

reservists were male, compared to 76 percent of active duty soldiers,

while, on average, reservists were 11 years older than active duty 

soldiers.19 See figure 4. 

19 The average reservist was 38 years old, while the average active duty soldier was 27 years

old.

Page 24 GAO-06-362 Military Disability System
Figure 4: Ages of Active Duty and Reserve Component Soldiers Entering the

Disability Evaluation System, Calendar Years 2001 to 2005 

0

10

20

30

40

50

60

70

80

90

100

17-24 25-34 35-44 45-54 55+

Percentage of soldiers

Source: GAO analysis of Army data.

Age groups

Active duty

Reserve component

17

0.2

7

2

22

13

32

43

22

42

Note: The 2005 numbers represent annual projections based on data collected through August 2005.

Army Reservists Received 

Disability Ratings Similar 

to Their Active Duty 

Counterparts, but 

Reservists May Be Less 

Likely to Receive Benefits

Before controlling for factors that could account for differences in the 

outcomes of the Army disability evaluation system for reserve and active 

duty soldiers, our analysis of Army data indicates that, from 2001 through

2005, reservists were assigned slightly higher disability ratings, but 

received benefits less often than active duty soldiers. See appendix V. 

When we controlled for many of the characteristics of reserve and active

duty soldiers that could account for their difference in ratings, we found 

that, among soldiers who received ratings, the ratings assigned to Army 

reservists were comparable to those assigned to their active duty

counterparts. When we controlled for a more limited number of factors,

Army reservists who were determined to be unfit for duty appeared less 

likely to receive benefits (either monthly disability payments or severance 

pay). See appendix I. This analysis of benefit outcomes for Army reserve 

Page 25 GAO-06-362 Military Disability System
and active duty disability cases could not account for the influence that 

preexisting conditions and years of service can have on disability

decisions.20 These factors are key in determining whether an injured or ill 

service member qualify for disability benefits.21 Because we could not test 

the effect of these factors empirically, we cannot rule out the possibility

that one or the other may account for the differences we found. 

Poor Quality Data 

Precluded GAO Analysis, 

but the Army Reports 

Reservists’ Cases Can Take

Longer

While, according to the Army’s own statistics, the PEB process can take 

longer for reservists than active duty soldiers, we found the Army data 

used to calculate processing times not of sufficient quality to warrant its 

use in our analysis. Specifically, the dates in Army’s electronic database

often did not correspond with the dates recorded in paper files. See 

appendix I. Nonetheless, the statistics the Army provided indicate that

disability cases reviewed between fiscal years 2001 and 2005 took

consistently longer than those of active duty soldiers. Over half (54 

percent) of reserve soldiers took longer than 90 days while over one-third

(35 percent) of active duty soldiers exceed this threshold. See appendix II

for more detail. 

There are several possible explanations for the differences in processing

times between reservists and active duty members, according to the Army. 

For example, the Army officials reported that MEBs often must request 

medical records from private medical practitioners for reservists’ cases, 

which can involve considerable delays. In addition, the personnel

documents for reservists are stored in facilities around the U.S., and 

therefore they may take longer to obtain than records for centrally located

active duty soldiers. Due to the lack of data on these issues as well as the 

problems we encountered with the data provided by the Army we were 

not able to measure the differences or empirically test possible 

explanations for differences the Army reported in the timeliness of 

disability case processing for Army reservists and active duty soldiers. 

20 If an impairment that renders a member of the military unfit for duty existed prior to 

service, it is only compensable when the member has 8 or more years of service.

21 Prior GAO research found that, in recent years, reserve members were deployed with

preexisting medical conditions. In addition, because reservists are not on duty fulltime 

(except when mobilized/activated), their injuries are more likely to occur while not in the

line of duty. Both explanations could result in reserves having a higher likelihood to be 

separated without benefits.

Page 26 GAO-06-362 Military Disability System
The military disability system’s outcomes can greatly impact the future of 

service members, including reservists, injured in service to their country. 

Given the significance of these decisions as well as the latitude that 

services have to implement the system, it is important that DOD exercise 

proper oversight to make sure the system meets the needs of service

members today and in the future. However, DOD is not adequately 

monitoring the outcomes for active duty and reservist cases in the 

disability evaluation system. DOD and the services do not have complete 

and reliable data for all aspects of the disability system. Further, neither 

DOD nor the services are systematically evaluating consistency and 

timeliness of decision making in the system.

Military officials recognize that in many cases, service members’ cases are 

not determined within timeliness goals and have suggested that the goals

may not be appropriate in many cases. In addition, it may take longer for

reservist cases to go through the system. If a goal does not reflect

appropriate processing times, it may not be useful as a program 

management tool. Furthermore, both consistency and timeliness of 

decisions depend on the adequate training and experience of all

participants in the disability system. Yet we found that DOD had little 

assurance that staff at all levels are properly trained. 

To ensure that all service members—both active duty and reserves—

receive consistent and timely treatment within the disability evaluation

process, we recommend that the Secretary of Defense take the following 

five actions 

Conclusions

Recommendations for 

Executive Action 

• require the Army, Navy, and Air Force to take action to ensure that 

data needed to assess consistency and timeliness of military disability 

rating and benefit decisions are reliable; 

• require these services to track and regularly report these data—

including comparisons of processing times, ratings and benefit

decisions for reservists and active duty members—to the Under 

Secretary of Personnel and Readiness and the Surgeons General; 

• determine, based on these reports, if ratings and benefit decisions are 

consistent and timely across the services and between reservists and 

active duty members and institute improvements to address any 

deficiencies that might be found; 

• evaluate the appropriateness of current timeliness goals for the 

disability process and make any necessary changes; and 

Page 27 GAO-06-362 Military Disability System
• assess the adequacy of training for MEB and PEB disability evaluation

staff.

We provided a draft of this report to the Department of Defense for its 

review. DOD agreed with our recommendations, indicating the

Department will implement all of them and listing a number of steps it will 

take to do so. DOD also provided technical comments, which we 

incorporated into the report as appropriate. 

We are sending copies of this report to the Secretary of Defense, relevant

congressional committees, and others who are interested. Copies will also 

be made available to others upon request. The report is also available at no

charge on GAO’s Web site at http://www.gao.gov.

Response to Agency 

Comments

Please contact me on (202) 512-7215 if you or your staff have any

questions about this report. Contact points for our Offices of 

Congressional Relations and Public Affairs can be found on the last page 

of this report. Other major contributors to this report are listed in 

appendix VII.

Robert E. Robertson 

Director

Education, Workforce, and Income Security 

Page 28 GAO-06-362 Military Disability System
Appendix I: 

Methodology

Objective, Scope, and

Page 29 GAO-06-362

Appendix I: Objective, Scope, and 

Methodology

The objectives of our report were to determine: (1) how current DOD 

policies and guidance for disability determinations compare for the Army, 

Navy, and Air Force, and what policies are specific to reserve component

members of the military; (2) what oversight and quality control

mechanisms are in place at DOD and these three services of the military to 

ensure consistent and timely disability rating and benefit decisions for 

active and reserve component members, and (3) how disability rating and 

benefit decisions, and processing times compare for active and reserve 

component members of the Army, the largest branch of the service, and

what factors might explain any differences.

To address objectives 1 and 2, we reviewed relevant legislation, policy

guidance, and literature; interviewed officials from DOD, Army, Navy, Air

Force, Reserves, and National Guard; and visited Lackland and Randolph 

Air Force Bases, Fort Sam Houston and Walter Reed Army Medical Center;

Washington Navy Yard and Bethesda Naval Hospital; and interviewed

relevant officials. In addition, we interviewed officials from military 

treatment facilities. 

To determine if outcomes for active duty and reserve service members’

disability cases were statistically consistent, we analyzed data provided by 

the physical evaluation board (PEB) of the Army. We also obtained

summary information on total caseloads and processing times from the 

services and from the Department of Defense. Based on our assessment of 

the quality of the Army’s data, we concluded that data on disability 

determinations and ratings made by the Army’s PEB were sufficiently 

reliable for our analysis. On the other hand, the Army’s data on processing 

times were not reliable for our analysis. We did not test the reliability of 

statistical data provided by DOD and the services.

This appendix is organized into two sections: Section 1 describes the 

analyses related to our tests of data quality and reliability. Section 2 

describes the empirical analyses that were used to determine if outcomes

for active duty and reserve disability cases were statistically consistent. 

To ensure that the Army data were sufficiently reliable for our analyses, 

we conducted detailed data reliability assessments of the data sets that we

used. We restricted these assessments, however, to the specific variables

that were pertinent to our analyses. We found that all of the data sets used 

in this report were sufficiently reliable for use in our analyses.

Section 1: Data 

Reliability Tests

Military Disability System
Appendix I: Objective, Scope, and

Methodology

To allow us to analyze the outcomes of the disability evaluation process 

and determine whether decisions were made in a timely fashion, we 

requested that the Army share data from both the Medical Evaluation

Board and the Physical Evaluation Board for our review. The Army 

provided extracts from both the Medical Evaluation Board Internal 

Tracking Tool (MEBITT), used by the Medical Evaluation Board and the 

Physical Disability Computer Assisted Processing System (PDCAPS), used

by the PEB. 

During interviews with the database managers responsible for MEBITT 

and PDCAPS, we learned that the Army has few internal controls to ensure 

that the data are complete and accurate. Consequently, we conducted a 

trace-to-file process to determine whether the data in the electronic

systems were an accurate reflection of what was recorded in the paper 

files. We requested that the Army provide us with the paper files for a 

sample of 130 cases that completed the Army’s disability evaluation

process between 2000 and August, 2005. Army officials provided 93 paper

files for our review. The remaining files were archived or were not found. 

We checked the data in files provided against the electronic records in 

MEBITT and PDCAPS. We determined that the MEBITT data were not 

sufficiently reliable for our use. We also determined that in the PDCAPS, 

there was a high degree of accuracy in the data fields related to: rank, 

component (active duty versus reserve component), date of entry into 

military service, primary military occupational specialty, disposition of 

disability case, percentage rating for disability, location of PEB, and 

illness/diagnosis codes. These fields were deemed reliable for use in our 

report.1

 However, this review also revealed that the data in the date fields,

such as the narrative summary dates and the final decision dates, were 

often inaccurate and were therefore determined to be of insufficient

quality for use in our report. 

To determine if outcomes for active duty and reserve disability cases were 

statistically consistent, we conducted extensive statistical analyses 

including cross tabulations and econometric modeling. This was important

because active and reserve component soldiers being evaluated differ 

Section 2: Statistical

Analyses

1

 We concluded that data for a particular variable was sufficiently reliable for use in our

analyses if entries in the electronic system and the paper record matched in at least 99 

percent of the cases reviewed. 

Page 30 GAO-06-362 Military Disability System
Appendix I: Objective, Scope, and

Methodology

greatly in demographic characteristics and in administrative 

characteristics, such as pay grade and occupational specialty. Recognizing

the potential of these characteristics to influence final outcomes and 

disability ratings, we developed econometric models to assess whether the 

observed differences between active and reserve component soldiers 

persist after controlling for these factors.

We began with a series of bivariate cross tabulations and then expanded

these cross-classifications and examined three-way and four-way tables. 

These allowed us to compare large groups of active and reserve soldiers, 

as well as to compare soldiers in specific sets of categories—such as 

active and reserve soldiers of different grades being evaluated at different

PEBs. To control for additional factors, we supplemented the crosstabulations with ordinary least squares (OLS) and multivariate logistic 

regressions. Our analyses considered both the size and significance of the

relationships of interest, using means, percentages, and odds and odds 

ratios to assess magnitude, and f-tests, chi-square tests and Wald statistics 

to assess the significance of the differences.

The analyses are limited due to our inability to control for several 

important factors in the disability evaluation process. For example, no 

reliable electronic data existed to indicate whether an injury existed prior 

to service or was incurred outside of the line of duty, both primary reasons 

for separating a soldier without benefits. Similarly, Army officials told us 

that data on years of service for reservists in the electronic data the Army 

provided were unreliable. Additionally, soldiers declared fit or separated 

without benefits do not receive percentage disability ratings, and the Army 

reports no impairment codes for soldiers declared fit. As such, we could

not determine whether active and reserve component soldiers were 

similarly likely to be declared fit controlling for impairment or percentage 

rating. Given these difficulties, we restricted our multivariate analyses to 

soldiers rated unfit. 

Page 31 GAO-06-362 Military Disability System
Appendix I: Objective, Scope, and

Methodology

To assess factors contributing to the final rating among those members 

declared unfit and receiving a percentage rating (that is, excluding those 

separated without benefits), we ran a series of multivariate models. Army 

data systems report up to four impairments.2

 Their final percentage

disability rating is determined by a composite of ratings for individual 

impairments, the system(s) affected and how the specific impairment 

relates to the soldier’s ability to perform his or her duties.3

 Regression

analysis allows us to assess whether the observed differences between 

reserve and active soldiers’ final ratings persist controlling for factors that 

enter the decision process, such as military occupational specialty4

 and 

system of impairment, as well as other factors such as demographic 

differences between the reserve component and active duty soldiers. 

Multivariate

regression analysis 

We began by estimating a “gross effects” (or unadjusted) model, which 

considers the gross difference in mean disability ratings between active 

and reserve component soldiers ignoring other factors. The model

confirms descriptive statistics showing that reserve component members’

ratings average approximately 4 points higher than those of active

component members. 

We next estimated a series of alternative “net effects” (or adjusted) models 

to account for other factors that influence the decision process; these 

models estimate the impact of being a reservist on rating “net” of other 

factors. Our first model included number of reported impairments, 

physical system affected and occupational specialty; a second model

added year of decision, age, race, sex, pay grade, and PEB to control for 

forces that may influence the decision process unofficially and certain 

demographic differences between components. Additionally, we ran a 

variety of alternative specifications to ensure the stability and robustness 

of the results; this included, for example, a model testing the interaction

2

 According to the Army their databases list impairments in order of severity. While some

soldiers with multiple impairments might have consecutive impairments of equal severity,

we only included the first impairment listed in models presented here. Alternative models

with the full set of potential impairments did not alter the substantive interpretation of 

being a reservist on final ratings.

3

 As the final disability rating is measured in increments of 10, some might question our

choice of OLS rather than a categorical analysis or a count model (e.g., Poisson). We

believe that the data represent an underlying continuous distribution between zero and 100,

and are thus appropriately modeled using OLS regression.

4

 Our measure of occupation converts military occupational specialty codes into DOD

standard occupational codes.

Page 32 GAO-06-362 Military Disability System
Appendix I: Objective, Scope, and

Methodology

between system affected and occupational specialty5 and a model to 

account for the clustering (and potential “nonindependence”) of cases 

within each PEB.6

Table 4 presents the coefficient representing the relationship between 

being a reservist on final disability ratings in models that control for a 

limited set of controls both relevant and external to the formal decision 

process. What appears to be a small difference in ratings between reserve 

and active component members diminishes controlling for other factors. 

Overall, results of our OLS regression analyses suggest that active and 

reserve component members receive similar disability ratings controlling 

for factors that enter the formal decision process formally and indirectly.

5

 As this more complicated model produced nearly identical estimates of the effect of being 

a reservist on ratings, we present only the results of the simpler models without

interactions here.

6

 Standard error estimates are usually calculated under the assumption of independent

observations. A control for clustering adjusts the standard errors to account for the

possibility of non-independence of observations within each cluster (here, PEB).

Page 33 GAO-06-362 Military Disability System
Appendix I: Objective, Scope, and

Methodology

Table 4: Estimate of the Relationship between Being a Reservist and the Final

Disability Rating among Soldiers Receiving a Rating 

Effect of Being a Reservist on

Disability Ratings 

Unstandardized

coefficient

(standard error) Interpretation

Gross effects model

(no controls)

3.8a

(0.25)

Reserve component soldiers

receive ratings approximately

4 percentage points higher

than active component

soldiers.

Net effects model, limited controls

(number of impairments, main body 

system affected, and occupational

specialty)

1.9a

(0.22)

Reserve component soldiers

receive ratings approximately

2 percentage points higher

than active component

soldiers.

Net effects model, expanded controls

(year of decision, controls above plus 

age, race, sex, pay grade, PEB and 

PEB cluster adjustment) 

-1.1b

(0.40)

Reserve component soldiers

receive disability ratings

approximately 1 percentage

point lower than active duty 

soldiers, but this result is not 

statistically significant at 

conventional levels after 

adjusting for clustering within

each PEB. 

Source: GAO analysis of Army PDCAPS data.

a

Coefficients statistically significant at the 99 percent level. 

b

Standard errors in the final model presented here account for PEB clustering and reduce the

statistical significance of the estimate to just below the 90 percent confidence level based on three

independent clusters; the coefficient is significant at the 99 percent level in an identical model that 

does not adjust standard errors for clustering.

To assess receipt of benefits, we estimated a multinomial logistic model, a

technique that allows us to estimate the likelihood of placement in one of

several categories controlling for additional factors. The model produces 

relative risk ratios that compare the relative odds of reserve component 

soldiers and active duty soldiers determined unfit for duty being placed 

into either one of two categories (severance pay or permanent disability 

retirement) rather than the base or referant category (separated without 

benefits). With controls, the relative risk ratio compares the odds of 

placement in the given category for similarly situated active and reserve 

component soldiers. 

Multinomial Logistic 

Analysis

A relative risk ratio of 1 indicates that reserve and active component 

members have equal odds of being placed in one category rather than the 

base category. A relative risk ratio of less than 1 for reserve soldiers 

Page 34 GAO-06-362 Military Disability System
Appendix I: Objective, Scope, and

Methodology

indicates that reservists have lower odds than active members of 

placement in the category rather than in the base category, and a relative

risk ratio of greater than 1 indicates that reservists have higher odds than 

active duty members of being placed in that category rather than in the 

base category. Because soldiers placed on the temporary disability retired 

list (TDRL) have not received a final benefits determination, they are 

excluded from the model. 

The relative risk ratios in table 5 demonstrate that among those declared

unfit, reserve component soldiers have significantly lower odds than 

active component soldiers of receiving either permanent disability 

retirement or lump sum disability severance pay. Prior to controlling for 

other factors (our “gross effects” model), reserve soldiers have 

significantly lower odds than active component members of receiving 

either permanent disability retirement or severance pay rather than being

separated without benefits—the relative risk ratios of 0.5 and 0.4 in the

first row of the table respectively demonstrate reservists are only half or 

less than half as likely to receive permanent disability retirement or 

severance pay, respectively.

Page 35 GAO-06-362 Military Disability System
Appendix I: Objective, Scope, and

Methodology

Table 5: Estimate of the Relationship between Being a Reservist and Receipt of

Benefits before and after Controlling for Other Factors (among Those Unfit and

Assigned a Final Disposition)

Effect of Being a

Reservist on odds of

receiving (relative risk 

ratio)

Permanent

disability

retirement

Severance

pay Interpretation

Gross effects model

(no controls, base 

category is separation 

without benefits)

0.5 0.4

The odds of receiving

permanent disability retirement

or severance pay are lower for

reservists

Net effects model, 

limited controls

(number of impairments,

main body system 

affected, occupational

specialty)

0.4 0.4

The odds of receiving

permanent disability retirement

or severance pay are lower for

reservists

Net effects model, 

expanded controls

(year of decision,

controls above plus age,

race, sex, pay, and PEB 

0.1 0.3

The odds of receiving

permanent disability retirement

or severance pay are lower for

reservists

Source: GAO analysis of Army PDCAPS data.

Note: This analysis compared relative risk ratios of those who were granted permanent disability

retirement and severance pay with those who were separated without benefits. Relative risk ratios are

statistically significant at the 99 percent level.

This relationship persists after controlling for limited factors both relevant

to7

 and external to8 the official decision making process (“net effects” 

models), and in fact the estimated difference between reservists and active

duty soldiers is in fact increased by the inclusion of variables such as race,

sex and PEB location. While these additional factors do not directly enter

the decision making process, they control for some of the administrative

and demographic differences we observe between active and reserve

component members. The relationship differs for the odds of receiving

severance pay, where reserve soldiers have less than one third the odds of 

active soldiers, and the odds of receiving permanent disability retirement, 

where the odds of reservists’ receiving this type of benefit rather than 

7

 These “relevant” factors include number of reported impairments, body system affected, 

and occupation.

8

 This analysis adds age, race, sex, pay grade, PEB location, and year the decision was

reported.

Page 36 GAO-06-362 Military Disability System
Appendix I: Objective, Scope, and

Methodology

separation without benefits is about one-tenth that of active component 

members.

We lacked reliable electronic data on two potentially important factors. 

This inability to control for length of service and injuries existing prior to 

service prevents us from determining whether the differences presented

above are warranted or defensible.

Page 37 GAO-06-362 Military Disability System
Appendix II: Selected Data from Service

Branches on Processing Time, Dispositions, Appendix II: Selected Data from Service and Medical Holdover

Branches on Processing Time, Dispositions, 

and Medical Holdover 

Table 6: Army Processing Times for Disability Cases, Including both MEB and PEB Processing, Fiscal Year 2001 to 2005 

Percentage of cases processed in:

Total Number

of Cases 30 days 31-60 days 61-90 days 91-120 days >120 days

FY2001

 Active duty 6,627 1.6 13.6 41.3 20.1 23.4

 Reserve component 591 4.1 14.5 24.2 15.9 41.3

FY2002

 Active duty 6,510 1.7 10.9 36.6 22.6 28.2

 Reserve component 812 3.6 10.5 24.9 20.2 40.9

FY2003

 Active duty 6,659 7.4 31.9 28.9 14.7 17.1

 Reserve component 1,546 6.5 25.5 23.9 17.7 26.3

FY2004

 Active duty 7,694 5.5 35.9 27.9 13.9 16.8

 Reserve component 4,187 2.0 18.7 22.3 19.6 37.2

FY2005

 Active duty 9,322 16.0 37.1 21.3 12.3 13.2

 Reserve component 4,426 5.5 21.8 20.3 16.3 36.0

Source: Department of the Army.

Note: Percentages may not total 100 due to rounding.

Page 38 GAO-06-362 Military Disability System
Appendix II: Selected Data from Service

Branches on Processing Time, Dispositions,

and Medical Holdover

Table 7: Navy Processing Times for Disability Cases, Including Only PEB Processing, Fiscal Year 2001 to 2005 

Percentage of cases processed in:

Total Number of Cases 30 days 31-60 days 61-90 days 91-120 days >120 days

FY 2001 

 Active duty 4,620 24 41 16 6 13

 Reserve component 379 7 39 19 9 26

FY2002

 Active duty 3,953 26 43 15 6 9

 Reserve component 413 9 41 24 6 20

FY2003

 Active duty 3,814 23 39 21 7 10

 Reserve component 436 11 38 24 10 17

FY2004

 Active duty 4,889 31 35 18 7 9

 Reserve component 543 19 40 17 7 17

FY2005

 Active duty 4,645 61 24 5 3 5

 Reserve component 555 30 39 12 6 14

Source: Department of the Navy.

Page 39 GAO-06-362 Military Disability System
Appendix II: Selected Data from Service

Branches on Processing Time, Dispositions,

and Medical Holdover

Table 8: Air Force Processing Times for Disability Cases, Including Only PEB Processing, Fiscal Year 2001 to 2005 

Percentage of cases processed in:

Total Number of Cases 30 days 31-60 days 61-90 days 91-120 days >120 days

FY2001

 Active duty 2,376 89 7 3 10

 Reserve component 441 85 9 5 2 0

FY2002

 Active duty 3,251 86 8 4 20

 Reserve component 535 86 4 5 31

FY2003

 Active duty 3,340 82 5 6 43

 Reserve component 633 77 4 6 66

FY2004

 Active duty 3,525 70 11 7 5 7

 Reserve component 719 67 8 5 7 13

FY2005

 Active duty 3,610 55 23 9 5 8

 Reserve component 758 44 20 12 8 16

Source: Department of the Air Force.

Page 40 GAO-06-362 Military Disability System
Appendix II: Selected Data from Service

Branches on Processing Time, Dispositions,

and Medical Holdover

Table 9: Final Dispositions Made by Navy PEB for Disability Cases, Fiscal Year 2001 to 2005 

FY2001 FY2002 FY2003 FY2004 FY2005

Total Number of Cases

 Active duty 4,620 3,952 3,813 4,889 4,645

 Reserve component 380 414 436 543 557

Disposition:

Fit/Returned to Dutya

 Active duty 1,164 926 820 1,213 1,297

 Reserve component 176 193 180 200 183

Separated with Severance Pay 

 Active duty 1,998 1,667 1,688 1,991 1,649

 Reserve component 130 144 130 197 196

Separated without Benefits

 Active duty 288 225 272 362 269

 Reserve component 9 11 30 24 26

Permanent Disability Retirement 

 Active duty 130 171 114 141 126

 Reserve component 5 10 7 9 13

Temporary Disability Retired List 

 Active duty 1,040 963 919 1,182 1,304

 Reserve component 60 56 89 113 139

Source: Department of the Navy.

a

Includes “presumed fit” cases.

Page 41 GAO-06-362 Military Disability System
Appendix II: Selected Data from Service

Branches on Processing Time, Dispositions,

and Medical Holdover

Table 10: Final Dispositions Made by Air Force PEB for Disability Cases, Fiscal Year 2001 to 2005 

FY2001 FY2002 FY2003 FY2004 FY2005

Total Number of Cases

 Active duty 2,376 3,251 3,340 3,525 3,610

 Reserve component 441 535 633 719 758

Disposition:

Fit/Returned to Duty 

 Active duty 1,406 1,797 1,730 1,492 1,503

 Reserve component 294 365 427 441 387

Separated with Severance Pay 

 Active duty 311 691 773 1,040 1,273

 Reserve component 44 40 79 106 156

Separated without Benefits

 Active duty 101 273 425 429 273

 Reserve component 5 22 37 49 30

Permanent Disability Retirement

 Active duty 169 162 144 146 228

 Reserve component 25 36 32 56 93

Temporary Disability Retired List

 Active duty 389 328 268 258 333

 Reserve component 73 72 58 67 92

Source: Departments of the Air Force.

Page 42 GAO-06-362 Military Disability System
Appendix II: Selected Data from Service

Branches on Processing Time, Dispositions,

and Medical Holdover

Table 11: Number of Army Reserve Component Members Entering Medical 

Holdover by Year, Calendar Years 2001 to 2005

Year of Entry Number Entered

2001 175

2002 560

2003 7,865

2004 9,850

2005 8,729

TOTAL 27,181

Source: Department of the Army.

Page 43 GAO-06-362 Military Disability System
Appendix III: Compilation of Differences in 

Regulations Governing the Military Disability

Evaluation System

Aspect Army Navy Air Force

Line of Duty Determinations

1. Time frames for processing for active component

members

Time limits are placed on each

participant in the process.

No stated policy Time limits for 

completing LOD

determinations are 

placed on each

participant in the

process.

2. Time frames for processing for reserve component

members

Time limits are placed on each

participant in the process. 

No stated policy Line of duty 

determinations must 

be completed

“promptly”.

3. Required for reserve component members RequiredaRequiredaAlways required

4. Responsible for doing line of duty determination Unit commander Line commander Commander

5. MEB/PEB options for missing or incomplete line of 

duty determinations

If line of duty determination is 

required by regulations and is 

not in the case file, the case 

will be returned to the MTF for

completion of LOD process. 

PEB does not have the 

authority to make LOD

determinations.

MEB reviews case

records to ensure

line of duty

determination is 

done. Under some

circumstances, case 

can be forwarded

without one.

If necessary for 

adjudication, the

MEB/PEB will 

request a missing

LOD be 

accomplished and 

incomplete LODs to 

be completed.

MEB

1. Means of referral to MEB Physician, unit commander,

higher command, or the 

Military Occupational

Specialty/Medical Retention

Board (MMRB).b

Physician, unit 

commander, or

higher command.

Physician and/or unit 

commander with

physician input.

2. Composition Two or more physicians. If 

MEB contains a mental 

condition, one must be a 

psychiatrist. If dental condition,

one must be a dentist. When

adjudicating mental

incapacitation, three required

(one must be psychiatrist).

Minimum of two

physicians. When

adjudicating mental

incapacitation, three 

required, one must 

be a psychiatrist.

Three physicians.

When adjudicating

mental

incapacitation, one 

must be a 

psychiatrist.

3. Type of process Informal process in which at

least two physicians compile

and evaluate a service 

member’s medical history and

his or her current medical

status.

MEB members pass 

files among

themselves and

review them

independently.

Formal process in 

which board meets to 

discuss the case.

4. MEB has option to place member on limited dutycYes Yes No

Appendix III: Compilation of Differences in 

Regulations Governing the Military Disability 

Evaluation System 

Page 44 GAO-06-362 Military Disability System
Appendix III: Compilation of Differences in 

Regulations Governing the Military Disability

Evaluation System

Aspect Army Navy Air Force

5. Service member can appeal MEB decision Yes Service member has 

option of submitting

a written rebuttal or 

addendum.

Physician must

address the service

member’s specific

issues.

No

PEBLOs

1. Command with responsibility for PEBLO Medical Medical and PEB Medical

2. Training Primarily on-the-job training

and annual conference.

Primarily on-the-job

training, plus 

quarterly and annual

training.

Primarily on-the-job

training, PEBLO

Guide, and planned

annual training.

3. Point in process PEBLO begins counseling service 

member

MEB Regulations indicate

this is done upon

referral of MEB.

However, Navy

officials interviewed

said it was done

after the PEB 

decision.

MEB

PEB

1. Overall PEB process

a. Number of PEBs nationwide Three, plus “mobile PEB”dOne One

b. Reserve component board member required on for 

reserve component cases 

Yes Yes Yes

c. Active component board member required on case 

for active component cases 

No stated policy No stated policy Yes

2. Informal PEB 

a. Composition At least three members Three members Three members

b. Amount of time service member has to 

concur/nonconcur with findings

Ten calendar days Fifteen calendar

days

Three duty days

c. Informal PEB can reconsider findings under some 

circumstances

Yes Yes Yes

3. Formal PEB 

a. Composition At least three members Three members Three members

b. Members of informal and formal PEB can be the 

same for a case

Normally will be No stated policy Normally will not be 

c. Amount of time given to a service member to prepare 

for the formal PEB 

Minimum of three workings

days.

A “reasonable

period”.

Up to three duty days 

after arrival at formal 

PEB.e

d. When service member is notified of Formal PEB 

decision

At conclusion of proceedings. Two to three weeks

after proceedings.

At conclusion of

proceedings.

Page 45 GAO-06-362 Military Disability System
Appendix III: Compilation of Differences in 

Regulations Governing the Military Disability

Evaluation System

Aspect Army Navy Air Force

e. Amount of time service member has to 

concur/nonconcur with findings

Ten calendar days from receipt

of findings letter.

Fifteen calendar

days from receipt of 

findings letter. 

Service member has 

24 hours to concur or 

nonconcur with the 

findings. If service 

member does not

concur he has 

10 duty days to

submit a rebuttal if 

desired.f

f. Formal PEB can reconsider findings under some 

circumstances

Yes No No

Appeals

1. Appeal opportunities beyond the formal PEB Army Physical Disability

Agency

Petition for Relief to 

the Secretary of the 

Navy Council of

Review Boards

Secretary of the Air 

Force Personnel 

Council

Army Physical Disability

Appeal Boardg

Board for the 

Correction of Naval

Records

Air Force Board for 

the Correction of

Military Records

Army Board for the Correction

of Military Records

Source: GAO analysis, review of relevant regulations and interviews with military officials.

a

“Required” includes a general authority that includes reserve members.

b

The Military Occupational Specialty/Medical Retention Board (MMRB) is an administrative board that 

evaluates the ability of a service member with a permanent profile of 3 or 4 (which indicates a 

physical limitation) to meet the responsibilities of his military occupational specialty in a worldwide 

field environment.

c

Limited duty is a temporary period in which a service member’s responsibilities are restricted.

d

The “mobile PEB” is a group of three adjudicators who travel and provide additional manpower to the

PEBs when needed.

e

An Air Force official stated that members can begin their preparations once they non-concur with the 

informal PEB findings and request a formal PEB. 

f

A February 2006 policy revision allows the formal PEB president to approve written requests for

additional time to allow the member to obtain medical documentation or consult with legal counsel.

g

Applicable only to cases in which Army Physical Disability Agency revises the PEB findings as part 

of a quality or mandatory review and the soldier does not concur with the revised finding.

Page 46 GAO-06-362 Military Disability System
Appendix III: Compilation of Differences in 

Regulations Governing the Military Disability

Evaluation System

Federal Code

38 CFR Part 4: Veterans Affairs Schedule for Rating Disabilities 

Department of Defense 

Disability Evaluation 

Related Regulations 

DODD 1332.18 “Separation or Retirement for Physical Disability”

DODI 1332.38 “Physical Disability Evaluation” 

DODI 1332.39 “Application of the Veterans Administration Schedule for 

Rating Disabilities” 

Army

AR 40-400 “Patient Administration” 

AR 40-501 “Standards of Medical Fitness”

AR 600-8-4 “Line of Duty Policy, Procedures, and Investigations”

AR 600-60 “Physical Performance Evaluation System”

AR 635-40 “Physical Evaluation for Retention, Retirement, or Separation”

Navy

SECNAV 1850.4E “Department of the Navy Disability Evaluation Manual” 

JAGINST 5800.7D “Manual of the Judge Advocate General” 

NAVMED P-117 “Manual of the Medical Department” 

Air Force

AFI 36-2910 “Line of Duty (Misconduct) Determinations” 

AFI 36-3212 “Physical Evaluation for Retention, Retirement and

Separation”

AFI 41-210 “Patient Administration Functions” 

AFI 44-157 “Medical Evaluation Boards and Continued Military Service” 

AFI 48-123 “Medical Examination and Standards” 

Page 47 GAO-06-362 Military Disability System
Appendix IV: Characteristics of Army Service Appendix IV: Characteristics of Army Service Members Entering the DES 

Members Entering the DES 

Table 12: Occupational Codes for Services Members in Military Disability Evaluation System, Calendar Years 2001 to 2005 

Active duty Reserve Component Total

Enlisted Occupation Codes Frequency Percent Frequency Percent Frequency Percent

10 Infantry, Gun Crews, and

Seamanship Specialists 7,112 21.2 1,330 14.4 8,442 19.8

11 Electronic Equipment Repairers 2,029 6.1 210 2.3 2,239 5.2

12 Communications and

Intelligence Specialists 3,673

11.0 361

3.9

4,034

9.4

13 Health Care Specialists 2,930 8.8 534 5.8 3,464 8.1

14 Other Technical and Allied

Specialists 945

2.8 222

2.4

1,167

2.7

15 Functional Support and 

Administration 4,749

14.2 1,826

19.8

6,575

15.4

16 Electrical/Mechanical

Equipment Repairers 4,539

13.6 1,084

11.8

5,623

13.2

17 – Crafts Workers 649 1.9 557 6.1 1,206 2.8

18 Service and Supply Handlers 4,872 14.5 2,447 26.6 7,319 17.1

19 Non-Occupational 281 0.8 17 0.2 298 0.7

Officer Occupation Codes

21 General Officers and 

Executives, N.E.C. 0

0.0 2

0.0

2

0.0

22 Tactical Operations Officers 535 1.6 151 1.6 686 1.6

23 Intelligence Officers 136 0.4 39 0.4 175 0.4

24 Engineering and Maintenance

Officers 247

0.7 66

0.7

313

0.7

25 Scientists and Professionals 81 0.2 43 0.5 124 0.3

26 Health Care Officers 424 1.3 131 1.4 555 1.3

27 Administrators 115 0.3 94 1.0 209 0.5

28 Supply, Procurement and Allied

Officers 163

0.5 94

1.0

257

0.6

29 Non-Occupational 19 0.1 6 0.1 25 0.1

Total 33,499 78.4 9,214 21.6 42,713 100

Source: Based on conversion of military occupational specialty codes into DOD standard occupational codes.

Page 48 GAO-06-362 Military Disability System
Appendix IV: Characteristics of Army Service

Members Entering the DES 

Table 13: Rank Groups by Component for Services Members in the Military Disability System, Calendar Years 2001 to 2005 

Active duty Reserve Component Total

Rank group Frequency Percent Frequency Percent Frequency Percent

Junior. Enlisted

(E1-E4)

22,460 66.8 3,771 40.7 26,231 61.1

Non-Commissioned Officer (E5-E9) 9,403 28.0 4,862 52.4 14,265 33.3

Company grade officer 

(01-03)

1,018 3.0 205 2.2 1,223 2.9

Field grade and general officer (04-010) 447 1.3 311 3.4 758 1.8

Warrant officer 

(W01-CW5)

302 0.9 128 1.4 430 1.0

Total 33,630 74.8 9,277 21.6 42,907 74.8

Source: Department of the Army.

Page 49 GAO-06-362 Military Disability System
Appendix V: Disability Evaluation Outcomes

for Army Active Duty and Reserve Component Appendix V: Disability Evaluation Outcomes Members for 2001 to 2005

for Army Active Duty and Reserve 

Component Members for 2001 to 2005 

Table 14: Descriptive Statistics on Disability Evaluation Outcomes for Active Duty and Reserve Component Members in the 

Army, Calendar Years 2001 to 2005

 Year Fit

Separation

w/out benefits

Permanent

disability

retirement Severance pay

Temporary

disability

retired list Total

Active duty

2001 504 526 642 4,541 165 6,378

2002 462 541 517 4,866 246 6,632

2003 366 555 435 4,390 427 6,173

2004 407 666 362 5,495 1,050 7,980

2005 445 506 209 4,468 837 6,465

Reserve

Component

2001 105 24 87 311 20 547

2002 141 73 112 370 32 728

2003 223 472 126 796 91 1,708

2004 328 782 177 2,345 439 4,071

2005 248 338 102 1,220 315 2,223

Source: GAO analysis of Army PDCAPS data.

Table 15: Descriptive Statistics on Disability Evaluation Outcomes for Active Duty and Reserve Component Members in the 

Army, Calendar Years 2001 to 2005 

Year Fit

Separation

w/out benefits

Permanent

disability

retirement Severance pay

Temporary

disability

retired list Total

Active duty

2001 7.9 8.2 10.1 71.2 2.6 100

2002 7 8.2 7.8 73.4 3.7 100

2003 5.9 9 7 71.1 6.9 100

2004 5.1 8.3 4.5 68.9 13.2 100

2005 6.9 7.8 3.2 69.1 12.9 100

Reserve

Component

2001 19.2 4.4 15.9 56.9 3.7 100

2002 19.4 10 15.4 50.8 4.4 100

2003 13.1 27.6 7.4 46.6 5.3 100

2004 8.1 19.2 4.3 57.6 10.8 100

2005 11.2 15.2 4.6 54.9 14.2 100

Source: GAO analysis of Army PDCAPS data.

DRAFT

Page 50 GAO-06-362 Military Disability System
Appendix VI: Comments from the Department Appendix VI: Comments from the of Defense 

Department of Defense 

Page 51 GAO-06-362 Military Disability System
Appendix VI: Comments from the Department

of Defense 

Page 52 GAO-06-362 Military Disability System
Appendix VI: Comments from the Department

of Defense 

Page 53 GAO-06-362 Military Disability System
Appendix VII: 

A

GAO Contact and Staff 

cknowledgments

Page 54 GAO-06-362

Appendix VII: GAO Contact and Staff 

Acknowledgments

Robert E. Robertson (202) 512-7215 or robertsonr@gao.gov

In addition to the contact named above, Clarita A. Mrena, Assistant 

Director; and Anna M. Kelley made major contributions to this report. In 

addition, Jason Barnosky, Melinda Cordero, Erin Godtland, and

Scott Heacock served as team members; Lynn Milan, Anna Maria Ortiz, 

Doug Sloane, Mitch Karpman, and Wil Holloway provided guidance and

assistance with design and analysis; Rachel Valliere advised on report 

preparation; and Roger Thomas provided legal advice.

GAO Contact 

Staff

Acknowledgments

Military Disability System
Related GAO Products Related GAO Products 

Veterans’ Disability Benefits: Claims Processing Challenges and

Opportunities for Improvements. GAO-06-283T. Washington,

D.C.: December 7, 2005.

Military Personnel: Top Management Attention Is Needed to Address

Long-standing Problems with Determining Medical and Physical 

Fitness of the Reserve Force. GAO-06-105. Washington, D.C.: October 27,

2005.

Military Personnel: DOD Needs to Improve the Transparency and 

Reassess the Reasonableness, Appropriateness, Affordability, and 

Sustainability of Its Military Compensation System. GAO-05-798.

Washington, D.C.: July 19, 2005. 

Federal Disability Assistance: Wide Array of Programs Needs to be 

Examined in Light of 21st Century Challenges. GAO-05-626. Washington, 

D.C.: June 2, 2005.

Veterans’ Disability Benefits: Claims Processing Problems Persist and 

Major Performance Improvements May Be Difficult. GAO-05-749T.

Washington, D.C.: May 26, 2005.

21st Century Challenges: Reexamining the Base of the Federal 

Government. GAO-05-325SP Washington, D.C.: March 4, 2005. 

Military Pay: Gaps in Pay and Benefits Create Financial Hardships for 

Injured Army National Guard and Reserve Soldiers. GAO-05-125 and

related testimony GAO-05-322T. Washington, D.C.: February 17, 2005.

High-Risk Series: An Update. GAO-05-207. Washington, D.C.: January 1, 

2005.

SSA’s Disability Programs: Improvements Could Increase the Usefulness

of Electronic Data for Program Oversight. GAO-05-100R. Washington, 

D.C.: December 10, 2004.

Veterans Benefits: VA Needs Plan for Assessing Consistency of 

Decisions. GAO-05-99. Washington, D.C.: November 19, 2004 and related

testimony GAO-06-120T.

Military Personnel: DOD Needs to Address Long-term Reserve Force 

Availability and Related Mobilization and Demobilization Issues.

GAO-04-1031. Washington, D.C.: September 15, 2004.

Page 55 GAO-06-362 Military Disability System
Related GAO Products

Social Security Administration: More Effort Needed to Assess

Consistency of Disability Decisions. GAO-04-656. Washington, D.C.: July 

2, 2004.

SSA Disability Decision Making: Additional Steps Needed to Ensure 

Accuracy and Fairness of Decisions at the Hearing Level. GAO-04-14.

Washington, D.C.: November 12, 2003.

Defense Health Care: Army Needs to Assess the Health Status of All 

Early-Deploying Reservists. GAO-03-437. April 15, 2003 and related 

testimony GAO-03-997T Washington, D.C.: July 9, 2003.

Veterans’ Benefits: Quality Assurance for Disability Claims and Appeals 

Processing Can Be Further Improved. GAO-02-806. August 16, 2002 and

related testimony GAO-05-655T. Washington, D.C.: May 5, 2005.

Defense Health Care: Disability Programs Need Improvement and Face 

Challenges. GAO-02-73. Washington, D.C.: October 12, 2001.

DOD Disability: Overview of Compensation Program for Service 

Members Unfit for Duty. GAO-01-622. Washington, D.C.: April 27, 2001.

Disability Benefits: Selected Data on Military and VA Recipients. 

GAO/HRD-92-106. Washington, D.C.: August 13, 1992.

(130501) Page 56 GAO-06-362 Military Disability System
GAO’s Mission The Government Accountability Office, the audit, evaluation and

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and policies; 

and provides analyses, recommendations, and other assistance to help

Congress make informed oversight, policy, and funding decisions. GAO’s 

commitment to good government is reflected in its core values of 

accountability, integrity, and reliability.

The fastest and easiest way to obtain copies of GAO documents at no cost

is through GAO’s Web site (www.gao.gov). Each weekday, GAO posts 

newly released reports, testimony, and correspondence on its Web site. To

have GAO e-mail you a list of newly posted products every afternoon, go 

to www.gao.gov and select “Subscribe to Updates.”

The first copy of each printed report is free. Additional copies are $2 each.

A check or money order should be made out to the Superintendent of 

Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 

more copies mailed to a single address are discounted 25 percent. Orders 

should be sent to: 

U.S. Government Accountability Office

441 G Street NW, Room LM 

Washington, D.C. 20548

To order by Phone: Voice: (202) 512-6000

TDD: (202) 512-2537

Fax: (202) 512-6061

Contact:

Web site: www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470

Gloria Jarmon, Managing Director, JarmonG@gao.gov (202) 512-4400

U.S. Government Accountability Office, 441 G Street NW, Room 7125 

Washington, D.C. 20548

Paul Anderson, Managing Director, AndersonP1@gao.gov (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149

Washington, D.C. 20548

Obtaining Copies of 

GAO Reports and 

Testimony

Order by Mail or Phone 

To Report Fraud,

Waste, and Abuse in 

Federal Programs 

Congressional

Relations

Public Affairs 

PRINTED ON RECYCLED PAPER