[Federal Register Volume 61, Number 101 (Thursday, May 23, 1996)]
[Rules and Regulations]
[Pages 25787-25789]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-12924]



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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 3

RIN 2900-AH44


Compensation for Disability Resulting From Hospitalization, 
Treatment, Examination, or Vocational Rehabilitation

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

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SUMMARY: This document adopts as a final rule with minor, 
nonsubstantive changes an interim rule amending Department of Veterans 
Affairs (VA) adjudication regulations concerning compensation for 
disability or death resulting from VA hospitalization, medical or 
surgical treatment, or examination. Before the interim rule, to 
establish entitlement to compensation for adverse results of medical or 
surgical treatment, the regulations required that VA be at fault or 
that an accident occur. In order to conform the regulations to a recent 
United States Supreme Court decision, the interim rule deleted the 
fault-or-accident requirement and instead provided that compensation is 
not payable for the necessary consequences of proper treatment to which 
the veteran consented.

EFFECTIVE DATE: This final rule is effective July 22, 1996.

FOR FURTHER INFORMATION CONTACT: Paul Trowbridge, Consultant, 
Regulations Staff, Compensation and Pension Service, Veterans Benefits 
Administration, 810 Vermont Avenue, NW, Washington, DC 20420, telephone 
(202) 273-7210.
SUPPLEMENTARY INFORMATION: 38 U.S.C. 1151 provides for the payment of 
disability or dependency and indemnity compensation for additional 
disability or death resulting from an injury or aggravation of an 
injury suffered as the result of VA hospitalization, medical or 
surgical treatment, examination, or pursuit of a course of vocational 
rehabilitation under 38 U.S.C. ch. 31. VA had long interpreted the 
statute to require a showing of fault on the part of VA or the 
occurrence of an accident to establish entitlement to Sec. 1151 
compensation for adverse consequences of VA medical treatment. This 
interpretation was codified at 38 CFR 3.358(c)(3).
    In a recent decision, Brown v. Gardner, 115 S. Ct. 552 (1994), 
upholding a lower court decision, the U.S. Supreme Court held that the 
fault-or-accident requirement in former 38 CFR 3.358(c)(3) was 
inconsistent with the plain language of 38 U.S.C. 1151 and that no 
fault requirement was implicit in the statute. The Supreme Court 
determined that the statutory language simply requires a causal 
connection between an injury or aggravation of an injury and VA 
hospitalization, medical or surgical treatment, examination, or 
vocational rehabilitation, but that compensation is not payable for the 
necessary consequences of treatment to which a veteran consented.
    In the Federal Register of March 16, 1995 (60 FR 14222), VA 
published an interim rule amending 38 CFR 3.358(c) in order to 
implement 38 U.S.C. 1151 as interpreted in that decision of the Supreme 
Court. Interested persons were invited to submit written comments on or 
before May 15, 1995. We received comments from the Paralyzed Veterans 
of America and from a concerned individual.
    One commenter, observing that VA may provide disability 
examinations for beneficiaries of the British Imperial and Canadian 
governments and for pensioners of other nations allied with the U.S. 
during World War I and World War II, and that VA may conduct 
examinations for other Federal agencies (e.g., Office of Personnel 
Management, Railroad Retirement Board), asked whether VA intends to 
cover under 38 U.S.C. 1151 those examinees. Since the plain language of 
38 U.S.C. 1151 provides for payment of benefits only for a veteran, VA 
has no authority to award Sec. 1151 benefits for anyone who is not a 
veteran.
    The same commenter suggested substituting the term ``veteran'' for 
the

[[Page 25788]]

terms ``beneficiary'' and ``claimant'' in 38 CFR 3.358 (b)(1) and 
(c)(5) respectively if VA's intention was to restrict payment of 
compensation under 38 U.S.C. 1151 for veterans only. Since the statute 
authorizes the payment of benefits only for veterans, we have made the 
suggested changes. These changes are not substantive; they merely 
conform the regulation's terms to the statute's terms.
    One commenter stated that because VA changed the regulation as a 
result of the Supreme Court's decision in Brown v. Gardner, which he 
contends found that the relevant portions of VA's prior regulations 
were void ab initio, the effective date of the regulatory change should 
be the date the legislation now codified as 38 U.S.C. 1151 was 
originally enacted rather than November 25, 1991, the date of the Court 
of Veterans Appeals decision that invalidated former Sec. 3.358(c)(3).
    We make no change in the effective date of the interim rule based 
on this comment. In our opinion, choosing November 25, 1991, as the 
effective date is rational. Furthermore, it is consistent with VA 
policies concerning the finality of decided claims and the application 
of court decisions invalidating VA regulations or statutory 
interpretations.
    VA's General Counsel, in a precedent opinion issued March 25, 1994 
(VAOPGCPREC 9-94) (see 59 FR 27307, May 26, 1994), held that decisions 
of the Court of Veterans Appeals invalidating VA regulations or 
statutory interpretations do not have retroactive effect in relation to 
prior finally adjudicated claims, but should be given retroactive 
effect as they relate to claims still open on direct review. In 
reaching this conclusion, the General Counsel quoted the following 
passage from the U.S. Supreme Court's opinion in Harper v. Virginia 
Dept. of Taxation, 113 S. Ct. 2510 (1993):

    When this Court applies a rule of federal law to the parties 
before it, that rule is the controlling interpretation of federal 
law and must be given full retroactive effect in all cases still 
open on direct review and as to all events, regardless of whether 
such events predate or postdate our announcement of the rule.

Id. at 2517. That General Counsel precedent opinion is binding on VA 
and requires that VA apply the courts' interpretation of 38 U.S.C. 1151 
to claims still open on direct review on November 25, 1991, the date of 
the Court of Veterans Appeals decision, but not to prior finally 
adjudicated claims.
    By being effective from the date of the Court of Veterans Appeals 
decision invalidating former Sec. 3.358(c)(3), the new rule will be 
applied just as VAOPGCPREC 9-94 requires the court decision to be 
applied. With an effective date of November 25, 1991, the new rule will 
apply to all claims still open on direct review on that date, whether 
by an agency of original jurisdiction or the Board of Veterans' 
Appeals. Moreover, the effective date of any award based on the new 
rule's application to such a claim will be in accordance with 38 U.S.C. 
5110. However, the new rule will not retroactively apply to claims 
already finally decided as of November 25, 1991. Although those claims 
can be reopened with new and material evidence or administratively 
reviewed under the liberalized provisions of the new rule, no award 
based on the new rule's application to such a claim will be effective 
before that date.
    In the absence of new and material evidence to reopen a claim or 
another reason to reconsider a Board of Veterans' Appeals decision, a 
finally decided claim remains final unless it involved clear and 
unmistakable or obvious error. By being effective from November 25, 
1991, the new rule will also be consistent with this policy of 
finality. Claims pending on that date will receive the benefit of the 
new, more liberal interpretation of 38 U.S.C. 1151. Claims finally 
decided by that date, although decided under the old, subsequently 
invalidated rule, in the absence of new and material evidence to reopen 
or another reason to reconsider, will remain final unless they involved 
clear and unmistakable or obvious error. Moreover, we do not consider 
the application of the old rule before November 25, 1991, to have been 
clear and unmistakable or obvious error. See 38 CFR 3.105; VAOPGCPREC 
25-95 (December 6, 1995).
    The same commenter also objected to using 38 U.S.C. 1151 as the 
authority citation for paragraph (c)(6). In addition to containing 
information relating to 38 U.S.C. 1151, this paragraph contains 
information relating to 38 U.S.C. 1720 (non-VA nursing home care). 
Therefore, we are changing the authority citation to include both 38 
U.S.C. 1151 and 1720.
    Before the interim rule, 38 CFR 3.358(c)(4) provided that 
compensation would be payable for disability resulting from 
transportation while in a hospitalized status only if injury or death 
proximately resulted from VA's fault. The interim rule removed former 
paragraph (c)(4). A commenter suggests adding language to 38 CFR 
3.358(a) expressly providing for 38 U.S.C. 1151 coverage where 
additional disability results from transportation while in a 
hospitalized status.
    As was true before the courts invalidated VA's former 
interpretation of 38 U.S.C. 1151, claims based on additional disability 
or death resulting from an injury suffered as a result of 
transportation while in a hospitalized status are held to the same 
standard as claims based on additional disability or death resulting 
from an injury otherwise suffered as a result of hospitalization. 
Former paragraph (c)(4) was added to the regulation because of a 
decision of the Administrator of Veterans' Affairs holding that 
injuries suffered while being transported in a hospitalized status 
could give rise to eligibility under the predecessor provisions of 38 
U.S.C. 1151. Transportation while hospitalized can still give rise to 
eligibility even though the old fault-or-accident standard is no longer 
valid. However, since the rule's general term ``hospitalization'' 
encompasses the particular circumstances of transportation while in a 
hospitalized status, we see no need to specify a provision for 
transportation while in a hospitalized status.
    The Office of Management and Budget has reviewed this regulatory 
action under Executive Order 12866.

    The Catalog of Federal Domestic Assistance program number is 
64.109.

List of Subjects in 38 CFR Part 3

    Administrative practice and procedure, Claims, Health care, 
Individuals with disabilities, Pensions, Veterans.

    Approved: February 7, 1996.
Jesse Brown,
Secretary of Veterans Affairs.

    For the reasons set forth in the preamble, the interim rule 
amending 38 CFR Part 3, which was published at 60 FR 14222 on March 16, 
1995, is adopted as a final rule with the following changes:

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, paragraph (b)(1) introductory text is amended by 
removing ``beneficiary's'' and adding, in its place, ``veteran's''; 
paragraph (c)(4) is amended by removing ``claimant's'' and 
``claimants'' and adding, in their respective places, ``veteran's'' and 
``veterans''; and an authority citation is added immediately following 
paragraph (c)(6) to read as follows:

[[Page 25789]]

Sec. 3.358   Determinations for disability or death from 
hospitalization, medical or surgical treatment, examinations or 
vocational rehabilitation training (Sec. 3.800).

* * * * *
(Authority: 38 U.S.C. 1151, 1720.)

[FR Doc. 96-12924 Filed 5-22-96; 8:45 am]
BILLING CODE 8320-01-P