Retroactive Payments Due to a Liberalizing Law or VA Issue

DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 3

RIN 2900-AI57

Retroactive Payments Due to a Liberalizing Law or VA Issue

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

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SUMMARY: This document amends the Department of Veterans Affairs (VA)

adjudication regulation regarding retroactive payments of compensation,

pension and dependency and indemnity compensation due to a liberalizing

law or VA issue. The change is necessary to bring the regulation into

conformance with a U.S. Court of Veterans Appeals' decision.

EFFECTIVE DATE: This amendment is effective June 12, 1996.

FOR FURTHER INFORMATION CONTACT: Laurence Freiheit, Consultant,

Regulations Staff, Compensation and Pension Service, Veterans Benefits

Administration, 810 Vermont Avenue, NW., Washington, DC 20420, (202)

273-7252.

SUPPLEMENTARY INFORMATION: Under the provisions of 38 U.S.C. 5110(a)

and 38 CFR 3.400, awards of compensation, pension and dependency and

indemnity compensation benefits are generally effective on the date VA

receives the claim or the date entitlement arose, whichever is later.

However, 38 U.S.C. 5110(g) provides an exception: Where benefits are

awarded or increased based on a change in law or an administrative

issue, benefits are awarded based on facts found but not earlier than

the effective date of the law or issue and not more than one year prior

to the earlier of the date of application or administrative

determination of entitlement. The purpose of section 5110(g) was to

provide a one-year grace period, such as that allowed after service

discharge or death, for potential beneficiaries who would otherwise be

penalized by not filing promptly.

The implementing regulation for section 5110(g) is 38 CFR 3.114.

Section 3.114(a) states that the effective date of an award or increase

made pursuant to a liberalizing law or VA issue will be made in

accordance with facts found but not earlier than the effective date of

the law or administrative issue. It goes on to state that, in order for

a claimant to be eligible for a retroactive award, the evidence must

show that he or she met all eligibility criteria for the liberalized

benefit on the effective date of the liberalizing law or issue and that

the eligibility existed continuously from that date to the date of

claim or administrative determination of entitlement.

In McCay v. Brown, 9 Vet. App. 183 (1996), the U.S. Court of

Veterans Appeals (the Court) noted that both section 5110(g) and

Sec. 3.114(a) are silent as to a liberalizing law or issue with a

retroactive effective date. The Court stated that the requirement that

the claimant must have met all eligibility criteria on the effective

date of the law or issue fulfills the intent of section 5110(g) when

the liberalizing law is prospective. However, the Court held that,

where the liberalizing law has a retroactive effective date, it is not

a permissible construction of section 5110(g) and would result in

unequal treatment of claimants. This document amends Sec. 3.114(a) to

make it clear that that requirement applies only when liberalizing laws

or issues take effect on or after the date of enactment or issuance.

The effective date of this amendment is June 12, 1996, the date of

the Court's decision in McCay v. Brown, 9 Vet. App. 183 (1996).

Since this amendment merely implements a Court decision, the

Secretary finds under 5 U.S.C. 553(b) that prior notice and comment are

unnecessary and that there is a basis for dispensing with a 30-day

delay of the effective date.

Because no notice of proposed rulemaking was required in connection

with the adoption of this final rule, no regulatory flexibility

analysis is required under the Regulatory Flexibility Act (5 U.S.C.

601-612.) Even so, the Secretary hereby certifies that these regulatory

amendments will not have a significant economic impact on a substantial

number of small entities as they are defined in the Regulatory

Flexibility Act 5 U.S.C. 601-612. These amendments are not substantive

and do not affect any small entities.

The Catalog of Federal Domestic Assistance program numbers are

64.100, 64.101, 64.104, 64.105, 64.106, 64.109, and 64.110.

List of Subjects in 38 CFR Part 3

Administrative practice and procedure, Claims, Disability benefits,

Health care, Pensions, Veterans, Vietnam.

Approved: February 12, 1997.

Jesse Brown,

Secretary of Veterans Affairs.

For the reasons set forth in the preamble, 38 CFR part 3 is amended

as follows:

PART 3--ADJUDICATION

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

Compensation

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

as follows:

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

2. In Sec. 3.114(a) the second sentence is amended by removing ``In

order'' and adding, in its place, ``Where pension, compensation, or

dependency and indemnity compensation is awarded or increased pursuant

to a liberalizing law or VA issue which became effective on or after

the date of its enactment or issuance, in order for a claimant''.

[FR Doc. 97-9445 Filed 4-10-97; 8:45 am]

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