[Federal Register Volume 63, Number 163 (Monday, August 24, 1998)]
[Rules and Regulations]
[Pages 45004-45007]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-22486]


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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.
* * * * *
    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.
* * * * *
[FR Doc. 98-22486 Filed 8-21-98; 8:45 am]
BILLING CODE 8320-01-P