[Federal Register Volume 88, Number 247 (Wednesday, December 27, 2023)]
[Rules and Regulations]
[Pages 89307-89309]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-28241]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 4

RIN 2900-AR51


Exceptions to Applying the Bilateral Factor in VA Disability 
Calculations

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

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SUMMARY: The Department of Veterans Affairs (VA) adopts as final, 
without changes, an interim final rule that amended the regulation 
governing the bilateral factor for diseases and injuries of both arms, 
both legs, or paired skeletal muscles.

DATES: Effective Date: This rule is effective December 27, 2023.

FOR FURTHER INFORMATION CONTACT: Howard McCuien, Jr., Regulations 
Analyst, VA Schedule for Rating Disabilities (VASRD) Regulations Staff 
(218A), Compensation Service, Veteran Benefits Administration, 
Department of Veterans Affairs, 810 Vermont Avenue NW, Washington, DC 
20420, (202) 461-9700. (This is not a toll-free telephone number.)

SUPPLEMENTARY INFORMATION: On April 14, 2023, VA published the interim 
final rule in the Federal Register to allow VA adjudicators to exclude 
certain disabilities that would be calculated using the bilateral 
factor to determine the combined evaluation if, by their exclusion, a 
higher combined evaluation can be achieved. See 88 FR 22914. VA 
received one comment during the 60-day public comment period. The 
commenter agreed with VA's amendment but offered two considerations for 
how VA implements it.

[[Page 89308]]

I. Limiting Application of Regulation

    The commenter expressed concern that application of the bilateral 
factor rule may fail to maximize benefits at the 80 percent combined 
evaluation level (in addition to the 90 percent level) and, in support 
of this assessment, cited the decision of the United States Court of 
Appeals for Veterans Claims (CAVC) in Wilburn v. McDonough, No. 22-
5577, 2023 WL 5217853 (Ct. Vet. App. Aug. 15, 2023). This commenter 
suggested that since VA cannot guarantee that the anomaly described in 
the interim final rule is limited to the 90 percent to 100 percent 
range, VA should apply this systemic fix to all cases where the 
bilateral factor has been or will be considered to ensure it has 
complied with the duty to maximize benefits as described in Wilburn.
    VA agrees that the application of the bilateral factor rule should 
not be limited to 90 percent combined evaluations. While the interim 
final rule stated that ``it is only at the low 90-percent level where 
it may reduce a combined evaluation,'' VA has since determined that 
there are limited scenarios where a combined 80-percent evaluation 
could be increased to 90 percent. Nevertheless, the regulatory text of 
the bilateral factor rule does not limit its application to only 90 
percent combined evaluations but will apply whenever ``the combined 
evaluation is lower than what could be achieved by not including one or 
more bilateral disabilities in the bilateral factor calculation.'' See 
38 CFR 4.26(d). Therefore, no changes to the regulatory text are 
necessary, and the regulatory impact analysis of this final rule 
reflects the additional Veterans who are eligible for increased 
combined evaluations based on its application to Veterans at all 
possible combination levels.

II. Liberalizing Law

    The commenter also suggested that VA should retroactively apply 
this regulatory amendment back to the original applicable effective 
date for each Veteran rather than the effective date of the rulemaking 
amending 38 CFR 4.26, which is April 16, 2023. Specifically, the 
commenter contended that this regulatory amendment is not a 
``liberalizing law'' because it does not bring about a substantive 
change that creates a new or different entitlement as defined by 
Spencer v. Brown, 17 F.3d 368, 372 (Fed. Cir. 1994). Instead, the 
commenter asserted that this amendment merely clarifies the proper 
application of the bilateral factor to both more accurately account for 
the full disability picture and to comply with VA's duty to maximize 
benefits. The commenter further asserted that any instance in the past 
in which VA did not properly apply the bilateral factor (based on its 
now clarified application) and did not maximize benefits was a clear 
and unmistakable error; therefore, VA should correct this error back to 
the date it originally occurred.
    VA disagrees that this regulatory amendment merely clarified the 
proper application of the bilateral factor rule and that previous 
decisions were in error. The instructions for applying ``old'' 38 CFR 
4.26 (hereinafter referred to as the ``prior bilateral factor rule'') 
were unambiguously clear, and no clarification was necessary for 
applying them. The prior bilateral factor rule stated that whenever 
there was a partial disability or disabilities that affected both arms, 
both legs, or paired skeletal muscles, those partial disabilities 
``will be combined as usual, and 10 percent of this value will be added 
(i.e., not combined) before proceeding with further combinations, or 
converting to degree of disability.'' The prior bilateral factor rule 
had no exceptions or other caveats that would have allowed claims 
processers to forego combining all partial disabilities, and it used 
the term ``will,'' indicating an obligation to perform. Additionally, 
the prior bilateral factor rule did not include any provisions to 
disregard its instructions if a higher evaluation could be assigned. 
Conversely, there are many examples in 38 CFR part 4 of provisions that 
allow claims processors to apply or disregard an instruction if doing 
so results in a higher evaluation. One such example is note 2 of 38 CFR 
4.118, DC 7801, Burn scar(s) or scar(s) due to other causes, not of the 
head, face, or neck, that are associated with underlying soft tissue 
damage. The note directs the claims processor to separately evaluate 
each affected zone of the body and then combine each evaluation. 
However, it also states that the claims processor may combine all of 
the zones into a single evaluation if that would result in a higher 
evaluation.
    As such, this regulatory amendment was necessary to create an 
exception to the application of the prior bilateral factor rule. 
Because a regulatory amendment was necessary, retroactive application 
of its provisions is limited by 38 U.S.C. 5110(g), which states, in 
part, that ``the effective date of such award or increase (pursuant to 
any Act or administrative issue) shall be fixed in accordance with the 
facts found but shall not be earlier than the effective date of the Act 
or administrative issue.''
    In addition to the public comment, a different organization 
identified the problem of certain Veterans receiving lower combined 
evaluations due to the application of the prior bilateral factor rule 
and brought it to VA's attention before VA published the interim final 
rule on April 14, 2023. VA informed the organization that it was aware 
of this problem and was drafting a regulation to address it. During 
that discussion, the organization also inquired about whether VA could 
employ equitable relief as a basis for retroactive application of this 
regulatory amendment. VA has determined that it cannot apply equitable 
relief based on the application of the prior bilateral factor rule. 
Equitable relief provisions under 38 U.S.C. 503 only apply in cases 
where VA has made an administrative error or an erroneous 
determination. Since VA has always interpreted the use of the prior 
bilateral factor rule as mandatory without exception, previous 
evaluations using the prior bilateral factor rule were not in error. 
Therefore, 38 U.S.C. 503 is not applicable. Furthermore, a clear and 
unmistakable error finding likewise would not be authorized with regard 
to claims already finally decided under the prior bilateral factor rule 
because VA's decision would have been in accordance with the law as it 
existed at the time the claim was decided.
    While VA is committed to ensuring benefits are maximized to the 
full extent of the law, retroactive application is not authorized in 
this instance, as it is limited by statute and regulation. Accordingly, 
VA makes no changes based on this comment.
    Since VA makes no changes based on the comment received, this 
document adopts as a final rule the interim final rule published in the 
Federal Register on April 14, 2023, 88 FR 22914.

Administrative Procedure Act

    VA has considered all relevant input and information contained in 
the comment submitted in response to the interim final rule (88 FR 
22914) and, for the reasons set forth above, has concluded that no 
changes to the interim final rule are warranted. Accordingly, based 
upon the authorities and reasons set forth in the interim final rule, 
as supplemented by the additional reasons provided in this document in 
response to the comment received, VA is adopting the provisions of the 
interim final rule at 88 FR 22914 as a final rule without changes.

Executive Orders 12866, 13563 and 14094

    Executive Order (E.O.) 12866 (Regulatory Planning and Review) 
directs agencies to assess the costs and

[[Page 89309]]

benefits of available regulatory alternatives and, when regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, and other advantages; distributive impacts; and equity). E.O. 
13563 (Improving Regulation and Regulatory Review) emphasizes the 
importance of quantifying both costs and benefits, reducing costs, 
harmonizing rules, and promoting flexibility. E.O. 14094 (Executive 
Order on Modernizing Regulatory Review) supplements and reaffirms the 
principles, structures, and definitions governing contemporary 
regulatory review established in E.O. 12866 of September 30, 1993 
(Regulatory Planning and Review), and E.O. 13563 of January 18, 2011 
(Improving Regulation and Regulatory Review). The Office of Information 
and Regulatory Affairs has determined that this rulemaking is not a 
significant regulatory action under E.O. 12866, as amended by E.O. 
14094. The Regulatory Impact Analysis associated with this rulemaking 
can be found as a supporting document at www.regulations.gov.

Regulatory Flexibility Act (RFA)

    The Regulatory Flexibility Act, 5 U.S.C. 601-612, is not applicable 
to this rulemaking because notice of proposed rulemaking is not 
required. 5 U.S.C. 601(2), 603(a), 604(a).

Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 
1532, that agencies prepare an assessment of anticipated costs and 
benefits before issuing any rule that may result in the expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation) in any one year. This final rule will have no such effect on 
State, local, and tribal governments, or on the private sector.

Paperwork Reduction Act (PRA)

    This final rule contains no provisions constituting a collection of 
information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3521).

Assistance Listing

    The Assistance Listing numbers and titles for the programs affected 
by this document are 64.104, Pension for Non-Service-Connected 
Disability for Veterans; 64.109, Veterans Compensation for Service-
Connected Disability; and 64.110, Veterans Dependency and Indemnity 
Compensation for Service-Connected Death.

Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
the Office of Information and Regulatory Affairs designated this rule 
as not a major rule, as defined by 5 U.S.C. 804(2).

List of Subjects in 38 CFR Part 4

    Disability benefits.

Signing Authority

    Denis McDonough, Secretary of Veterans Affairs, signed and approved 
this document on December 18, 2023, and authorized the undersigned to 
sign and submit the document to the Office of the Federal Register for 
publication electronically as an official document of the Department of 
Veterans Affairs.

Luvenia Potts,
Regulation Development Coordinator, Office of Regulation Policy & 
Management, Office of General Counsel, Department of Veterans Affairs.

0
For the reasons stated in the preamble, VA adopts as final the interim 
final rule published on April 14, 2023, at 88 FR 22914.

[FR Doc. 2023-28241 Filed 12-26-23; 8:45 am]
BILLING CODE 8320-01-P