[Federal Register Volume 66, Number 77 (Friday, April 20, 2001)]
[Proposed Rules]
[Pages 20220-20223]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-9643]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 3

RIN 2900-AK25


Written and Oral Information or Statements Affecting Entitlement 
to Benefits

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: This document proposes to amend the Department of Veterans 
Affairs (VA) adjudication regulations to eliminate the requirement that 
beneficiaries advise VA of changes affecting their entitlement to 
benefits in writing. This will allow VA to increase or decrease benefit 
payments based on information submitted orally or by e-mail, facsimile, 
or other electronic means and make it easier for beneficiaries to 
submit information that they must provide. We further propose to amend 
our notice requirements to allow VA to reduce or terminate benefit 
payments based on information reported orally without issuing a 60-day 
advance notice, but only under certain conditions that would ensure 
that claimants are not deprived of benefits without adequate notice. 
This would reduce the amounts of any overpayments created by these 
actions.

DATES: Comments must be received on or before June 19, 2001.

ADDRESSES: Mail or hand-deliver written comments to: Director, Office 
of Regulations Management (02D), Department of Veterans Affairs, 810 
Vermont Ave., NW., Room 1154, Washington, DC 20420; or fax comments to 
(202) 273-9289; or e-mail comments to [email protected]. 
Comments should indicate that they are submitted in response to ``RIN 
2900-AK25.'' All comments received will be available for public 
inspection in the Office of Regulations Management, Room 1158, between 
the hours of 8 a.m. and 4:30 p.m., Monday through Friday (except 
holidays).

FOR FURTHER INFORMATION CONTACT: Donald England, Chief, Policy and 
Regulations Staff (211A), Compensation and Pension Service, Veterans 
Benefits Administration, Department of Veterans Affairs, 810 Vermont 
Avenue, NW., Washington, DC 20420, (202) 273-7210 (This is not a toll-
free number).

SUPPLEMENTARY INFORMATION: For compensation, pension and dependency and 
indemnity compensation (DIC) benefits administered by VA, individual 
factors such as income, marital status, the beneficiary's number of 
dependents, may affect the amount of the benefit that he or she 
receives or they may affect his or her right to receive the benefit. 
Beneficiaries must report changes in these factors to VA in a timely 
manner; certain current VA regulations require that they report such 
changes in writing. However, there are other means by which 
beneficiaries could report such changes, including telephone, 
facsimile, or e-mail, that would allow beneficiaries to advise VA of 
the changes more quickly and thereby enable VA to adjust benefit 
payments more quickly. Furthermore, the office of the VA Inspector 
General has recommended that we eliminate the requirement that such 
reports be in writing in order to reduce the amounts of the 
overpayments created when beneficiaries report changes that require VA 
to reduce or terminate their benefits. For these reasons, we propose to 
amend VA's adjudication regulations at 38 CFR 3.204(a)(1), 3.256(a) and 
3.277(b) to delete the requirement that beneficiaries report such 
changes in writing.
    If VA is to adopt these changes, clearly we must also develop 
safeguards, both for beneficiaries and for VA, to ensure that VA 
adjusts benefit payments based only on information provided by the 
beneficiary (or his or her fiduciary) and that the information provided 
is documented for VA records. We propose to address these issues by 
adding a new regulation at 38 CFR 3.217. We propose to specify in 
paragraph (a) of that new section, that unless specifically provided 
otherwise elsewhere in the regulations, the submission of information 
that affects entitlement via e-mail, facsimile, or other written 
electronic means will satisfy a requirement that such information be 
submitted in writing. This paragraph will also include a note to 
clarify that the new section applies only to how such information is 
submitted; it does not relieve the claimant of any other evidence

[[Page 20221]]

requirements, such as a requirement to use a specific form, to provide 
specific information or evidence, or to provide a certified statement 
or a signature. Although VA cannot currently accept electronic 
signatures, we are exploring technology that may allow us to do so in 
the future.
    We propose to authorize VA to take action affecting entitlement to 
benefits based on oral or written information provided by a beneficiary 
or his or her fiduciary in paragraph (b) of new section 3.217. When an 
individual submits information in writing or by facsimile or e-mail, 
clearly there is, or in the case of e-mail VA may clearly create, a 
written document detailing the information provided and the date VA 
received it. However, because there is no such automatic recording of 
information that is provided orally, we propose that VA may not take 
action based on oral information or statements unless the VA employee 
receiving the information takes specific actions during the 
conversation in which the information or statement is provided. We 
propose to require the VA employee to take the following actions:
    (1) Identify himself or herself as a VA employee who is authorized 
to receive the information or statement;
    (2) Verify the identity of the provider as either the beneficiary 
or his or her fiduciary by obtaining specific information about the 
veteran or beneficiary, such as Social Security number, date of birth, 
branch and/or dates of military service, or other information, that can 
be verified from the beneficiary's VA records; and
    (3) Inform the provider that VA will use the information or 
statement to calculate benefit amounts.
    We also propose to require the VA employee receiving the 
information to document all of the information or the statement 
received, as well as the steps taken to verify the identity of the 
provider, in the beneficiary's VA records. Just as importantly, we 
propose to require the VA employee to document in the beneficiary's VA 
records that he or she informed the provider that VA would use the 
information or statement to calculate benefit amounts.
    VA regulations at 38 CFR 3.103(b) generally prohibit VA from 
reducing or terminating an award of compensation, pension or DIC 
without first notifying the beneficiary of the adverse action and 
allowing him or her 60 days in which to submit evidence showing that VA 
should not take the adverse action. There are specific exceptions to 
that rule in which VA may issue a notice of the adverse action at the 
same time it takes the action rather than wait 60 days before taking 
the action. One of those exceptions is when an adverse action is based 
solely on written, factual, unambiguous information regarding income, 
net worth, dependency or marital status provided to VA by the 
beneficiary or his or her fiduciary with knowledge or notice that VA 
will use the information to calculate benefits. We propose to revise 
Sec. 3.103(b) to allow VA to issue notice at the same time it takes 
adverse action, in lieu of the otherwise required 60-day advance 
notice, based on written or oral information as described above if the 
VA employee receiving the information met all of the requirements set 
out in proposed Sec. 3.217. The proposed rule also states that VA will 
restore retroactively benefits that were reduced or terminated based on 
oral information or statements if within 30 days of the date of the 
notification of adverse action the beneficiary or his or her fiduciary 
asserts that the adverse action was based upon information or 
statements that were inaccurate or upon information that was not 
provided by the beneficiary or his or her fiduciary. This will not 
preclude VA from taking subsequent action that adversely affects 
benefits.
    Many beneficiaries report these changes to VA by telephone because 
it is more convenient or in hopes of keeping VA from issuing payments 
to which they know they are not entitled. They are frustrated when VA 
advises them that it will issue at least two additional benefit 
payments unless the beneficiary reports the same information in 
writing. Adopting the proposed change to Sec. 3.103(b) in conjunction 
with the proposed changes to Secs. 3.204, 3.256 and 3.277 and the 
addition of Sec. 3.217, will address the concerns of both 
beneficiaries, by allowing VA to take action on reported changes in a 
more timely and customer friendly fashion, and the Office of the 
Inspector General by reducing the amounts of overpayments created 
because of adverse actions. We believe the proposed provisions contain 
sufficient added safeguards to ensure that the information and 
statements used for decision making are accurate and that we accept 
oral information or statements only under conditions that meet due 
process requirements.
    We also propose to make nonsubstantive changes for purposes of 
clarity.

Paperwork Reduction Act

    Proposals regarding 38 CFR 3.256, and 3.277 would contain changes 
to collections of information under the Paperwork Reduction Act of 1995 
(44 U.S.C. 3501-3520). Accordingly, under section 3507(d) of the Act, 
VA has submitted a copy of this rulemaking action to OMB for its review 
of the collections of information.
    OMB assigns a control number for each collection of information it 
approves. VA may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a 
currently valid OMB control number.
    Comments on the proposed collections of information should be 
submitted to the Office of Management and Budget, Attention: Desk 
Officer for the Department of Veterans Affairs, Office of Information 
and Regulatory Affairs, Washington, DC 20503, with copies mailed or 
hand-delivered to: Director, Office of Regulations Management (02D), 
Department of Veterans Affairs, 810 Vermont Ave., NW, Room 1154, 
Washington, DC 20420. Comments should indicate that they are submitted 
in response to ``RIN 2900-AK25.''
    Title: Eligibility Verification Reporting.
    Summary of collection of information: Under the provisions of 
proposed Secs. 3.256 and 3.277 the modes for submitting evidence of 
changes in factors affecting entitlement to pension or dependency and 
indemnity compensation benefits would be expanded to include oral or 
electronic submissions. The current OMB information collection approval 
applies only to written, not oral or electronic, submissions of factual 
and unambiguous information that the beneficiary or his or her 
fiduciary is required to provide to VA to meet the reporting 
requirements of Secs. 3.256 and 3.277. A slight reduction in the 
current burden estimate is anticipated with likely respondents' use of 
these more customer-friendly modes of submitting evidence.
    Description of the need for information and proposed use of 
information: This information would be needed for VA to determine 
whether adjustments in the rate of payment are necessary.
    Description of likely respondents: Veterans and their dependents 
who receive compensation, pension or dependency and indemnity 
compensation benefits.
    Estimated number of respondents: 372,209.
    Estimated frequency of responses: 1.
    Estimated total annual reporting and recordkeeping burden: 31,017 
hours.
    Estimated annual burden per collection: 5 minutes.

[[Page 20222]]

    The Department considers comments by the public on proposed 
collections of information in--
     Evaluating whether the proposed collections of information 
are necessary for the proper performance of the functions of the 
Department, including whether the information will have practical 
utility;
     Evaluating the accuracy of the Department's estimate of 
the burden of the proposed collections of information, including the 
validity of the methodology and assumptions used;
     Enhancing the quality, usefulness, and clarity of the 
information to be collected; and
     Minimizing the burden of the collections of information on 
those who are to respond, including responses through the use of 
appropriate automated, electronic, mechanical, or other technological 
collection techniques or other forms of information technology, e.g., 
permitting electronic submission of responses.
    OMB is required to make a decision concerning the collections of 
information contained in this proposed rule between 30 and 60 days 
after publication of this document in the Federal Register. Therefore, 
a comment to OMB is best assured of having its full effect if OMB 
receives it within 30 days of publication. This does not affect the 
deadline for the public to comment on the proposed rule.

Executive Order 12866

    This document has been reviewed by the Office of Management and 
Budget under Executive Order 12866.

Regulatory Flexibility Act

    The Secretary hereby certifies that this regulatory amendment will 
not have a significant economic impact on a substantial number of small 
entities as they are defined in the Regulatory Flexibility Act (RFA), 5 
U.S.C. 601-612. This amendment would not directly affect any small 
entities. Only individuals could be directly affected. Therefore, 
pursuant to 5 U.S.C. 605(b), this amendment is exempt from the initial 
and final regulatory flexibility analysis requirements of sections 603 
and 604.

    The Catalog of Federal Domestic Assistance program numbers are 
64.104, 64.105, 64.109, and 64.110.

List of Subjects in 38 CFR Part 3

    Administrative practice and procedure, Claims, Disability benefits, 
Health care, Pensions, Radioactive materials, Veterans, Vietnam.

    Approved: February 15, 2001.
Anthony J. Principi,
Secretary of Veterans Affairs.
    For the reasons set out in the preamble, 38 CFR part 3 is proposed 
to be amended as set forth below:

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. Section 3.103 is amended by:
    A. Revising paragraph (b)(2) heading and revising paragraphs (b)(3) 
introductory text and (b)(3)(i).
    B. Removing ``is'' from paragraphs (b)(3)(ii), (b)(3)(iv), 
(b)(3)(v) and (b)(3)(vi).
    C. Removing the comma at the end of paragraphs (b)(3)(ii), 
(b)(3)(iii) and (b)(3)(iv), and adding, in its place, a period.
    D. Removing ``, or'' at the end of paragraph (b)(3)(v) and adding, 
in its place, a period.
    E. Adding paragraph (b)(4).
    F. Revising the authority citation at the end of the section.
    The addition and revisions read as follows:


Sec. 3.103  Procedural due process and appellate rights.

* * * * *
    (b) * * *
    (2) Advance notice and opportunity for hearing.* * *
    (3) Exceptions. In lieu of advance notice and opportunity for a 
hearing, VA will send a written notice to the beneficiary or his or her 
fiduciary at the same time it takes an adverse action under the 
following circumstances:
    (i) An adverse action based solely on factual and unambiguous 
information or statements as to income, net worth, or dependency or 
marital status that the beneficiary or his or her fiduciary provided to 
VA in writing or orally (under the procedures set forth in 
Sec. 3.217(b)), with knowledge or notice that such information would be 
used to calculate benefit amounts.
* * * * *
    (4) Restoration of benefits. VA will restore retroactively benefits 
that were reduced, terminated, or otherwise adversely affected based on 
oral information or statements if within 30 days of the date on which 
VA issues the notification of adverse action the beneficiary or his or 
her fiduciary asserts that the adverse action was based upon 
information or statements that were inaccurate or upon information that 
was not provided by the beneficiary or his or her fiduciary. This will 
not preclude VA from taking subsequent action that adversely affects 
benefits.

(Authority: 38 U.S.C. 501, 1115, 1506, 5104)

    3. In Sec. 3.204(a)(1), the word ``written'' is removed.
    4. A new Sec. 3.217 is added preceding the undesignated 
centerheading ``Dependency, Income and Estate'':


Sec. 3.217  Submission of statements or information affecting 
entitlement to benefits.

    (a) For purposes of this part, unless specifically provided 
otherwise, the submission of information or a statement that affects 
entitlement to benefits by e-mail, facsimile, or other written 
electronic means, will satisfy a requirement or authorization that the 
statement or information be submitted in writing.

    Note to Paragraph (a): Section 3.217(a) merely concerns the 
submission of information or a statement in writing. Other 
requirements specified in this part, such as a requirement to use a 
specific form, to provide specific information, to provide a 
signature, or to provide a certified statement, must still be met.


    (b) For purposes of this part, unless specifically provided 
otherwise, VA may take action affecting entitlement to benefits based 
on oral or written information or statements provided to VA by a 
beneficiary or his or her fiduciary. However, VA may not take action 
based on oral information or statements unless the VA employee 
receiving the information meets the following conditions:
    (1) During the conversation in which the information or statement 
is provided, the VA employee:
    (i) Identifies himself or herself as a VA employee who is 
authorized to receive the information or statement (these are VA 
employees authorized to take actions under Secs. 2.3 or 3.100 of this 
chapter);
    (ii) Verifies the identity of the provider as either the 
beneficiary or his or her fiduciary by obtaining specific information 
about the beneficiary that can be verified from the beneficiary's VA 
records, such as Social Security number, date of birth, branch of 
military service, dates of military service, or other information; and
    (iii) Informs the provider that the information or statement will 
be used for the purpose of calculating benefit amounts; and
    (2) During or following the conversation in which the information

[[Page 20223]]

or statement is provided, the VA employee documents in the 
beneficiary's VA records the specific information or statement 
provided, the date such information or statement was provided, the 
identity of the provider, the steps taken to verify the identity of the 
provider as being either the beneficiary or his or her fiduciary, and 
that he or she informed the provider that the information would be used 
for the purpose of calculating benefit amounts.

(Authority: 38 U.S.C. 501, 1115, 1506, 5104)

    5. Section Sec. 3.256(a) introductory text is amended by removing 
``in writing''.
    6. Section Sec. 3.277(b) introductory text is amended by removing 
``in writing''.

[FR Doc. 01-9643 Filed 4-19-01; 8:45 am]
BILLING CODE 8320-01-P