Additional Disability or Death Due to Hospital Care, Medical or Surgical Treatment, Examination, or Training and Rehabilitation Services

DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 3

RIN 2900-AJ04

Additional Disability or Death Due to Hospital Care, Medical or

Surgical Treatment, Examination, or Training and Rehabilitation

Services

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

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

adjudication regulations concerning awards of compensation or

dependency and indemnity compensation for additional disability or

death due to VA hospital care, medical or surgical treatment,

examination, or training and rehabilitation services. Under this final

rule, benefits are payable for additional disability or death caused by

VA hospital care, medical or surgical treatment, or examination only if

VA fault or ``an event not reasonably foreseeable'' proximately caused

the disability or death. Benefits are also payable for additional

disability or death proximately caused by VA's provision of training

and rehabilitation services. This final rule is necessary to reflect

Congress' recent amendment of 38 U.S.C. 1151, the statutory authority

for such benefits.

DATES: Effective Date: October 1, 1997.

FOR FURTHER INFORMATION CONTACT: John Bisset, Jr., Consultant,

Regulations Staff, Compensation and Pension Service, Veterans Benefits

Administration, 810 Vermont Avenue, NW., Washington, DC 20420,

telephone (202) 273-7210.

SUPPLEMENTARY INFORMATION: Section 1151 of 38 U.S.C. previously

authorized the award of compensation or dependency and indemnity

compensation for any additional disability or death of a veteran which

did not result from the veteran's own willful misconduct but which did

result from an injury or aggravation of an injury suffered as the

result of hospitalization, medical or surgical treatment, or the

pursuit of a course of vocational rehabilitation awarded under any of

the laws administered by VA or as a result of having submitted to an

examination under any such law. 38 CFR 3.358 and 3.800 contain the

regulatory provisions implementing those statutory provisions.

Effective for claims filed on or after October 1, 1997, section

422(a) of Pub. L. 104-204, 110 Stat. 2874, 2926 (1996), amended 38

U.S.C. 1151 to authorize an award of compensation or dependency and

indemnity compensation for a veteran's ``qualifying additional

disability'' or ``qualifying death.'' Under 38 U.S.C. 1151, as amended,

an additional disability or death qualifies for compensation or

dependency and indemnity compensation if it (1) was not the result of

the veteran's willful misconduct; (2) was caused by hospital care,

medical or surgical treatment, or examination furnished the veteran

under any law administered by VA, either by a VA employee or in a VA

facility; and (3) was proximately caused

[[Page 45005]]

by carelessness, negligence, lack of proper skill, error in judgment,

or similar instance of fault on VA's part in furnishing the care,

treatment, or examination or by an event not reasonably foreseeable. An

additional disability or death also qualifies for benefits if it was

not the result of the veteran's willful misconduct and was proximately

caused by VA's provision of training and rehabilitation services as

part of an approved rehabilitation program under 38 U.S.C. chapter 31.

This document adds new 38 CFR 3.361 to implement 38 U.S.C 1151 as

amended, new 38 CFR 3.362 to codify rules concerning the offset of

benefits awarded under 38 U.S.C. 1151 if the beneficiary has also

recovered damages under the Federal Tort Claims Act, and new 38 CFR

3.363 to consolidate regulatory provisions previously contained in

Secs. 3.358 and 3.800.

Section 422(b)(2) of Pub. L. 104-204, 110 Stat. 2874, 2927,

provides that 38 U.S.C. 1151, as amended, shall govern all

administrative determinations of eligibility for benefits under 38

U.S.C. 1151 made for claims filed on or after the effective date set

forth in section 422(b)(1), which is October 1, 1996. However, section

422(c) of Pub. L. 104-204, 110 Stat. 2874, 2927, provides that,

notwithstanding section 422(b)(1) or any other provision of the act,

the amendments shall not take effect until October 1, 1997, unless

Congress enacts legislation other than Pub. L. 104-204 to provide an

earlier effective date. Congress has not enacted such legislation.

Therefore, we apply new Secs. 3.361 through 3.363 only to claims

received by VA on or after October 1, 1997, and continue to apply

Secs. 3.358 and 3.800 to claims received by VA before October 1, 1997.

These applicability rules are reflected in new Secs. 3.358(a),

3.361(a), 3.362(a), 3.363(a), and 3.800(a).

New Sec. 3.361(b), concerning additional disability, is derived

from Sec. 3.358(b)(1) with appropriate changes made to reflect the

amendments made by section 422 of Pub. L. 104-204 and editorial changes

made to improve clarity. Similarly, proposed Sec. 3.361(c), concerning

cause, is derived from Sec. 3.358(b)(2) and (c)(1).

As amended by section 422 of Pub. L. 104-204, 38 U.S.C. 1151(a)(1)

requires for entitlement that a veteran's additional disability or

death be proximately caused either by ``an event not reasonably

foreseeable'' or by ``carelessness, negligence, lack of proper skill,

error in judgment, or similar instance of fault'' on VA's part in

furnishing the hospital care, medical or surgical treatment, or

examination that caused the additional disability or death. We believe

that Congress, by listing several synonymous terms relating to

negligence, intended not to provide alternative standards of liability,

but rather to establish a single standard which would trigger

entitlement to 38 U.S.C. 1151 benefits if not met in VA's furnishing of

hospital care, medical or surgical treatment, or examination. We

further believe that the single standard Congress intended to establish

is tort-variety negligence. We recognize that there is not a single

standard of liability governing tort claims under the Federal Tort

Claims Act, but rather that the standard applied may vary from state to

state. However, we also believe that Congress did not intend

entitlement to a veterans' benefit to depend on a claimant's state of

residence. Accordingly, we apply a uniform standard in the adjudication

of claims under 38 U.S.C. 1151. Therefore, in new Sec. 3.361(d)(1)(i),

we interpret 38 U.S.C. 1151 as providing entitlement to benefits if VA,

in furnishing hospital care, medical or surgical treatment, or

examination, fails to exercise the degree of care that would be

expected of a reasonable health care provider in furnishing hospital

care, medical or surgical treatment, or examination.

New Sec. 3.361(d)(1)(ii), concerning consent to care, treatment, or

examination, is derived from Sec. 3.358(c)(3). However, we include a

requirement that consent be informed, in accordance with 38 CFR 17.32.

As reflected in new Sec. 3.361(d)(2), we leave to the factfinder in

each claim the determination as to whether the proximate cause of a

veteran's additional disability or death was an event not reasonably

foreseeable, and for the factfinder, in making that determination, to

apply the standard of what a reasonable health care provider would have

foreseen. New Sec. 3.361(d)(3), concerning proximate cause by the

provision of rehabilitation and training services, is derived from

Sec. 3.358(c)(5) with appropriate changes made to reflect the

amendments made by section 422 of Pub. L. 104-204 and editorial changes

made to improve clarity.

The definition of ``Department employee'' in new Sec. 3.361(e)(1)

is derived from 5 U.S.C. 2105(a), which defines ``employee'' for title

5 (Government Organization and Employees) purposes, modified to refer

only to VA employees who are engaged in the furnishing of health care

services. The definition of ``Department facility'' in new

Sec. 3.361(e)(2) reflects a provision of 38 U.S.C. 1151(a) as amended

by section 422 of Pub. L. 104-204. 38 U.S.C. 1151(a)(1) refers to ``a

Department facility as defined in section 1701(3)(A)'' of title 38,

United States Code. Section 1701(3)(A) defines ``facilities of the

Department'' as facilities over which the Secretary has direct

jurisdiction. We therefore define ``Department facility'' in the same

way.

New Sec. 3.361(f)(1) excludes hospital care or medical services

furnished pursuant to a contract made under 38 U.S.C. 1703 because,

under section 1703's terms, such care or services are furnished in a

non-Department facility, and the day-to-day operations of such a

facility's employees are not subject to the Secretary's supervision.

The exclusion in new Sec. 3.361(f)(2) of nursing home care furnished

under 38 U.S.C. 1720 is derived from Sec. 3.358(c)(6). New

Sec. 3.361(f)(3) excludes hospital care or medical services provided

under 38 U.S.C. 8153 in a facility over which the Secretary does not

have direct jurisdiction because care or services under section 8153

are not provided by VA employees, but may or may not be furnished in a

VA facility. New Sec. 3.361(f)(3) excludes only such care and services

in fact not provided in a VA facility. New Sec. 3.361(g) is derived

from Sec. 3.800(b).

New Sec. 3.362(b), concerning the amount of a tort recovery to be

offset from a veteran's compensation awarded under 38 U.S.C. 1151(a),

is derived from Sec. 3.800(a)(2). New Sec. 3.362(c), concerning the

amount of a tort recovery to be offset from a survivor's dependency and

indemnity compensation (DIC) awarded under 38 U.S.C. 1151(a), is

derived from Sec. 3.800(a)(2) and the Office of the General Counsel

precedent opinion (VAOPGCPREC) 79-90. That opinion held that the amount

to be offset from a DIC award under 38 U.S.C. 1151 depends on the

nature of the damages recovered by the claimant under the Federal Tort

Claims Act. Amounts recovered by a claimant as damages under a typical

``wrongful-death statute'' may be offset from a DIC award under 38

U.S.C. 1151, even if the damages are paid to a nominal party as trustee

for the veteran's survivors. Each survivor receiving such damages is

subject to offset of DIC under 38 U.S.C. 1151 to the extent of sums

included in the tort claim's judgment, settlement, or compromise to

compensate for harm suffered by that survivor. On the other hand,

amounts recovered by a claimant, acting as personal representative of a

decedent veteran's estate, as damages under a ``survival statute'' may

not be offset from a DIC award under 38 U.S.C. 1151.

New Sec. 3.362(d), concerning offset of structured settlements, is

derived from the principles espoused in

[[Page 45006]]

VAOPGCPREC 79-90. Structured settlements are settlements or compromises

in which the Government, rather than simply paying to a plaintiff a

sum, in settlement or compromise of a claim under the Federal Tort

Claims Act, buys an annuity or otherwise funds payments, which may

differ in total amount from the amount expended by the Government, to

be made to the plaintiff at some future time. We will offset from a

compensation or DIC award only the veteran's or survivor's proportional

share of the Government's cost of such a settlement, including the

veteran's or survivor's proportional share of attorney fees.

Furthermore, the offset begins as soon as compensation or DIC payments

are made after the settlement becomes final, not when the settlement

payments are actually made to the beneficiary.

New Sec. 3.362, concerning a bar to benefits due to alternative

recoveries before December 1, 1962, is derived from Sec. 3.800(a)(3).

This final rule merely restates and interprets statutory

provisions. Pursuant to 5 U.S.C. 553, we are dispensing with notice and

comment and 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 this final rule

will not have a significant economic impact on a substantial number of

small entities as they are defined in the Regulatory Flexibility Act

since it only concerns individuals.

The Catalog of Federal Domestic Assistance program numbers are

64.104 and 64.109.

List of Subjects in 38 CFR Part 3

Administrative practice and procedure, Claims, Disability benefits,

Health care, Pensions, Veterans, Vietnam.

Approved: May 11, 1998.

Togo D. West, Jr.,

GPA Secretary.

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. 3.358, the section heading and paragraph (a) are revised

to read as follows:

Sec. 3.358 Compensation for disability or death from hospitalization,

medical or surgical treatment, examinations or vocational

rehabilitation training (Sec. 3.800).

(a) General. This section applies to claims received by VA before

October 1, 1997. If VA determines that a veteran has an additional

disability resulting from a disease or injury or aggravation of an

existing disease or injury suffered as a result of training,

hospitalization, medical or surgical treatment, or examination, it will

pay compensation for such additional disability. For claims received by

VA on or after October 1, 1997, see Sec. 3.361.

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3. Section 3.361 is added to read as follows:

Sec. 3.361 Benefits under 38 U.S.C. 1151(a) for additional disability

or death due to hospital care, medical or surgical treatment,

examination, or training and rehabilitation services.

(a) Claims subject to this section. This section applies to claims

received by VA on or after October 1, 1997. This includes original

claims and claims to reopen, revise, reconsider, or otherwise

readjudicate a previous claim for benefits under 38 U.S.C. 1151 or its

predecessors. For claims received by VA before October 1, 1997, see

Sec. 3.358.

(b) Determining whether a veteran has an additional disability. To

determine whether a veteran has an additional disability, VA compares

the veteran's condition immediately before the beginning of the

hospital care, medical or surgical treatment, examination, or training

and rehabilitation services upon which the claim is based to the

veteran's condition after such care, treatment, examination, or

services have stopped. VA considers each involved body part or system

separately.

(c) Establishing the cause of additional disability or death. (1)

Actual causation required. To establish causation, the evidence must

show that the hospital care, medical or surgical treatment, or

examination resulted in the veteran's additional disability or death.

Merely showing that a veteran received care, treatment, or examination

and that the veteran has an additional disability or died is not

sufficient to establish cause.

(2) Continuance or natural progress of a disease or injury.

Hospital care, medical or surgical treatment, or examination cannot

cause the continuance or natural progress of a disease or injury for

which the care, treatment, or examination was furnished unless VA's

failure to timely diagnose and properly treat the disease or injury

proximately caused the continuance or natural progress. The provision

of training and rehabilitation services cannot cause the continuance or

natural progress of a disease or injury for which the services were

provided.

(3) Veteran's failure to follow medical instructions. Additional

disability or death caused by a veteran's failure to follow properly

given medical instructions is not caused by hospital care, medical or

surgical treatment, or examination.

(d) Establishing the proximate cause of additional disability or

death. (1) Care, treatment, or examination. To establish that

carelessness, negligence, lack of proper skill, error in judgment, or

similar instance of fault on VA's part in furnishing hospital care,

medical or surgical treatment, or examination proximately caused a

veteran's additional disability or death, the evidence must show that

the hospital care, medical or surgical treatment, or examination caused

the veteran's additional disability or death (as explained in paragraph

(c) of this section); and

(i) VA failed to exercise the degree of care that would be expected

of a reasonable health care provider; or

(ii) VA furnished the hospital care, medical or surgical treatment,

or examination without the veteran's or, in appropriate cases, the

veteran's representative's informed consent. To determine whether there

was informed consent, VA will consider whether the health care

providers complied with the requirements of Sec. 17.32 of this chapter.

Consent may be express (i.e., given orally or in writing) or implied

(i.e., suggested by all the pertinent facts).

(2) Events not reasonably foreseeable. Whether the proximate cause

of a veteran's additional disability or death was an event not

reasonably foreseeable is to be determined in each claim based on what

a reasonable health care provider would have foreseen.

(3) Training and rehabilitation services. To establish that the

provision of training and rehabilitation services proximately caused a

veteran's additional disability or death, the evidence must show that

the veteran's participation in an essential activity or function of the

training or services provided or authorized by VA, as part of an

approved rehabilitation program under 38 U.S.C. chapter 31, proximately

caused the disability or death. It need not show that VA approved that

specific activity or function, as long as the activity or function is

generally accepted as being a necessary

[[Page 45007]]

component of the training or services VA provided or authorized.

(e) Department employees and facilities. (1) A Department employee

is an individual--

(i) Who is appointed by the Department in the civil service under

title 38, United States Code, or title 5, United States Code, as an

employee as defined in 5 U.S.C. 2105;

(ii) Who is engaged in furnishing hospital care, medical or

surgical treatment, or examinations under authority of law; and

(iii) Whose day-to-day activities are subject to supervision by the

Secretary of Veterans Affairs.

(2) A Department facility is a facility over which the Secretary of

Veterans Affairs has direct jurisdiction.

(f) Activities which are not hospital care, medical or surgical

treatment, or examination furnished by a Department employee or in a

Department facility. The following are not hospital care, medical or

surgical treatment, or examination furnished by a Department employee

or in a Department facility within the meaning of 38 U.S.C. 1151(a):

(1) Hospital care or medical services furnished under a contract

made under 38 U.S.C. 1703.

(2) Nursing home care furnished under 38 U.S.C. 1720.

(3) Hospital care or medical services, including examination,

provided under 38 U.S.C. 8153 in a facility over which the Secretary

does not have direct jurisdiction.

(g) Benefits payable under 38 U.S.C. 1151 for a veteran's death.

(1) Death before January 1, 1957. The benefit payable under 38 U.S.C.

1151(a) to an eligible survivor for a veteran's death occurring before

January 1, 1957, is death compensation. See Secs. 3.5(b)(2) and 3.702

for the right to elect dependency and indemnity compensation.

(2) Death after December 31, 1956. The benefit payable under 38

U.S.C. 1151(a) to an eligible survivor for a veteran's death occurring

after December 31, 1956, is dependency and indemnity compensation.

(Authority: 38 U.S.C. 1151)

4. Section 3.362 is added to read as follows:

Sec. 3.362 Offsets under 38 U.S.C. 1151(b) of benefits awarded under

38 U.S.C. 1151(a).

(a) Claims subject to this section. This section applies to claims

received by VA on or after October 1, 1997. This includes original

claims and claims to reopen, revise, reconsider, or otherwise

readjudicate a previous claim for benefits under 38 U.S.C. 1151 or its

predecessors.

(b) Offset of veterans' awards of compensation. If a veteran's

disability is the basis of a judgment under 28 U.S.C. 1346(b) awarded,

or a settlement or compromise under 28 U.S.C. 2672 or 2677 entered, on

or after December 1, 1962, the amount to be offset under 38 U.S.C.

1151(b) from any compensation awarded under 38 U.S.C. 1151(a) is the

entire amount of the veteran's share of the judgment, settlement, or

compromise, including the veteran's proportional share of attorney

fees.

(c) Offset of survivors' awards of dependency and indemnity

compensation. If a veteran's death is the basis of a judgment under 28

U.S.C. 1346(b) awarded, or a settlement or compromise under 28 U.S.C.

2672 or 2677 entered, on or after December 1, 1962, the amount to be

offset under 38 U.S.C. 1151(b) from any dependency and indemnity

compensation awarded under 38 U.S.C. 1151(a) to a survivor is only the

amount of the judgment, settlement, or compromise representing damages

for the veteran's death the survivor receives in an individual capacity

or as distribution from the decedent veteran's estate of sums included

in the judgment, settlement, or compromise to compensate for harm

suffered by the survivor, plus the survivor's proportional share of

attorney fees.

(d) Offset of structured settlements. This paragraph applies if a

veteran's disability or death is the basis of a structured settlement

or structured compromise under 28 U.S.C. 2672 or 2677 entered on or

after December 1, 1962.

(1) The amount to be offset. The amount to be offset under 38

U.S.C. 1151(b) from benefits awarded under 38 U.S.C. 1151(a) is the

veteran's or survivor's proportional share of the cost of the

settlement or compromise to the United States, including the veteran's

or survivor's proportional share of attorney fees.

(2) When the offset begins. The offset of benefits awarded under 38

U.S.C. 1151(a) begins the first month after the structured settlement

or structured compromise has become final that such benefits would

otherwise be paid.

(Authority: 38 U.S.C. 1151)

5. Section 3.363 is added to read as follows:

Sec. 3.363 Bar to benefits under 38 U.S.C. 1151.

(a) Claims subject to this section. This section applies to claims

received by VA on or after October 1, 1997. This includes original

claims and claims to reopen, revise, reconsider, or otherwise

readjudicate a previous claim for benefits under 38 U.S.C. 1151 or its

predecessors.

(b) Administrative awards, compromises, or settlements, or

judgments that bar benefits under 38 U.S.C. 1151. If a veteran's

disability or death was the basis of an administrative award under 28

U.S.C. 1346(b) made, or a settlement or compromise under 28 U.S.C. 2672

or 2677 finalized, before December 1, 1962, VA may not award benefits

under 38 U.S.C. 1151 for any period after such award, settlement, or

compromise was made or became final. If a veteran's disability or death

was the basis of a judgment that became final before December 1, 1962,

VA may award benefits under 38 U.S.C. 1151 for the disability or death

unless the terms of the judgment provide otherwise.

(Authority: 38 U.S.C. 1151)

6. Section 3.800 is amended by adding introductory text to read as

follows:

Sec. 3.800 Disability or death due to hospitalization, etc.

This section applies to claims received by VA before October 1,

1997. For claims received by VA on or after October 1, 1997, see

Secs. 3.362 and 3.363.

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[FR Doc. 98-22486 Filed 8-21-98; 8:45 am]

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