[Federal Register Volume 71, Number 104 (Wednesday, May 31, 2006)]
[Proposed Rules]
[Pages 31056-31068]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-4940]



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Part III





Department of Veterans Affairs





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38 CFR Part 5



Matters Affecting the Receipt of Benefits; Proposed Rule

  Federal Register / Vol. 71, No. 104 / Wednesday, May 31, 2006 / 
Proposed Rules  

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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 5

RIN 2900-AM05


Matters Affecting the Receipt of Benefits

AGENCY: Department of Veterans Affairs

ACTION: Proposed rule.

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SUMMARY: The Department of Veterans Affairs (VA) proposes to reorganize 
and rewrite in plain language regulations relating to determinations 
involving bars to benefits, forfeiture of benefits, and renouncement of 
benefits. These revisions are proposed as part of VA's rewrite and 
reorganization of all of its compensation and pension regulations in a 
logical, claimant-focused, and user-friendly format. The intended 
effect of the proposed revisions is to assist claimants and VA 
personnel in locating and understanding these regulations.

DATES: Comments must be received by VA on or before July 31, 2006.

ADDRESSES: Written comments may be submitted by: mail or hand-delivery 
to Director, Regulations Management (00REG1), Department of Veterans 
Affairs, 810 Vermont Ave., NW., Room 1068, Washington, DC 20420; fax to 
(202) 273-9026; or e-mail through www.Regulations.gov. Comments should 
indicate that they are submitted in response to ``RIN 2900-AM05.'' All 
comments received will be available for public inspection in the Office 
of Regulation Policy and Management, Room 1063B, between the hours of 8 
a.m. and 4:30 p.m., Monday through Friday (except holidays). Please 
call (202) 273-9515 for an appointment.

FOR FURTHER INFORMATION CONTACT: Bob White, Acting Chief, Regulations 
Rewrite Project (00REG2), Department of Veterans Affairs, 810 Vermont 
Avenue, NW., Washington, DC 20420, (202) 273-9515.

SUPPLEMENTARY INFORMATION: The Secretary of Veterans Affairs has 
established an Office of Regulation Policy and Management to provide 
centralized management and coordination of VA's rulemaking process. One 
of the major functions of this office is to oversee a Regulations 
Rewrite Project (the Project) to improve the clarity and consistency of 
existing VA regulations. The Project responds to a recommendation made 
in the October 2001 ``VA Claims Processing Task Force: Report to the 
Secretary of Veterans Affairs.'' The Task Force recommended that the 
compensation and pension regulations be rewritten and reorganized in 
order to improve VA's claims adjudication process. Therefore, the 
Project began its efforts by reviewing, reorganizing and redrafting the 
content of the regulations in 38 CFR part 3 governing the compensation 
and pension program of the Veterans Benefits Administration. These 
regulations are among the most difficult VA regulations for readers to 
understand and apply.
    Once rewritten, the proposed regulations will be published in 
several portions for public review and comment. This is one such 
portion. It includes proposed rules regarding line of duty and willful 
misconduct determinations, and the effects of alcohol and drug abuse 
and homicide on entitlement to certain VA benefits. This subpart also 
contains proposed rules concerning forfeiture of benefits and 
renouncement of benefits. After review and consideration of public 
comments, final versions of these proposed regulations will ultimately 
be published in a new part 5 in 38 CFR.

Outline

Overview of New Part 5 Organization
Overview of Proposed Subpart K Organization
Table Comparing Current Part 3 Rules With Proposed Part 5 Rules
Content of Proposed Regulations

Bars to Benefits

5.660 Line of duty.
5.661 Willful misconduct.
5.662 Alcohol and drug abuse.
5.663 Homicide as a bar to VA benefits.

Forfeiture and Renouncement of the Right to VA Benefits

5.675 General forfeiture provisions.
5.676 Forfeiture for fraud.
5.677 Forfeiture for treasonable acts.
5.678 Forfeiture for subversive activity.
5.679 Forfeiture decision procedures.
5.680 Remission of forfeiture.
5.681 Effective dates--forfeiture.
5.682 Presidential pardon for offenses causing forfeiture.
5.683 Renouncement of benefits.
Endnote Regarding Amendatory Language
Paperwork Reduction Act
Regulatory Flexibility Act
Executive Order 12866
Unfunded Mandates
Catalog of Federal Domestic Assistance Numbers
List of Subjects in 38 CFR Part 5

Overview of New Part 5 Organization

    We plan to organize the part 5 regulations so that most provisions 
governing a specific benefit are located in the same subpart, with 
general provisions pertaining to all compensation and pension benefits 
also grouped together. We believe this organization will allow 
claimants, beneficiaries, and their representatives, as well as VA 
personnel, to find information relating to a specific benefit more 
quickly than the organization provided in current part 3.
    The first major subdivision would be ``Subpart A--General 
Provisions.'' It would include information regarding the scope of the 
regulations in new part 5, delegations of authority, general 
definitions, and general policy provisions for this part. This subpart 
was published as proposed on March 31, 2006. See 71 FR 16464.
    ``Subpart B--Service Requirements for Veterans'' would include 
information regarding a veteran's military service, including the 
minimum service requirement, types of service, periods of war, and 
service evidence requirements. This subpart was published as proposed 
on January 30, 2004. See 69 FR 4820.
    ``Subpart C--Adjudicative Process, General'' would inform readers 
about claims and benefit application filing procedures, VA's duties, 
rights and responsibilities of claimants and beneficiaries, general 
evidence requirements, and general effective dates for new awards, as 
well as revision of decisions and protection of VA ratings. This 
subpart will be published as three separate Notices of Proposed 
Rulemaking (NPRM)s due to its size. The first, concerning the duties of 
VA and the rights and responsibilities of claimants and beneficiaries, 
was published on May 10, 2005. See 70 FR 24680.
    ``Subpart D--Dependents and Survivors'' would inform readers how VA 
determines whether an individual is a dependent or a survivor for 
purposes of determining eligibility for VA benefits. It would also 
provide the evidence requirements for these determinations.
    ``Subpart E--Claims for Service Connection and Disability 
Compensation'' would define service-connected disability compensation 
and service connection, including direct and secondary service 
connection. This subpart would inform readers how VA determines service 
connection and entitlement to disability compensation. The subpart 
would also contain those provisions governing presumptions related to 
service connection, rating principles, and effective dates, as well as 
several special ratings. This subpart will be published as three 
separate NPRMs due to its size. The first, concerning presumptions 
related to service connection, was published on July 27, 2004. See 69 
FR 44614.
    ``Subpart F--Nonservice-Connected Disability Pensions and Death 
Pensions'' would include information

[[Page 31057]]

regarding the three types of nonservice-connected pension: Improved 
Pension, Old-Law Pension, and Section 306 Pension. This subpart would 
also include those provisions that state how to establish entitlement 
to Improved Pension, and the effective dates governing each pension. 
This subpart will be published as two separate NPRMs due to its size. 
The portion concerning Old-Law Pension, Section 306 Pension, and 
elections of Improved Pension was published as proposed on December 27, 
2004. See 69 FR 77578.
    ``Subpart G--Dependency and Indemnity Compensation, Death 
Compensation, Accrued Benefits, and Special Rules Applicable Upon Death 
of a Beneficiary'' would contain regulations governing claims for 
dependency and indemnity compensation (DIC); death compensation; 
accrued benefits; benefits awarded, but unpaid at death; and various 
special rules that apply to the disposition of VA benefits, or proceeds 
of VA benefits, when a beneficiary dies. This subpart would also 
include related definitions, effective-date rules, and rate-of-payment 
rules. This subpart will be published as two separate NPRMs due to its 
size. The portion concerning accrued benefits, death compensation, 
special rules applicable upon the death of a beneficiary, and several 
effective date rules, was published as proposed on October 1, 2004. See 
69 FR 59072. The portion concerning DIC benefits and general provisions 
relating to proof of death and service-connected cause of death was 
published on October 21, 2005. See 70 FR 61326.
    ``Subpart H--Special and Ancillary Benefits for Veterans, 
Dependents, and Survivors'' would pertain to special and ancillary 
benefits available, including benefits for children with various birth 
defects.
    ``Subpart I--Benefits for Certain Filipino Veterans and Survivors'' 
would pertain to the various benefits available to Filipino veterans 
and their survivors.
    ``Subpart J--Burial Benefits'' would pertain to burial allowances.
    ``Subpart K--Matters Affecting the Receipt of Benefits'' would 
contain provisions regarding bars to benefits, forfeiture of benefits, 
and renouncement of benefits. This subpart is the subject of this 
document.
    ``Subpart L--Payments and Adjustments to Payments'' would include 
general rate-setting rules, several adjustment and resumption 
regulations, and election-of-benefit rules. Because of its size, 
proposed regulations in subpart L will be published in two separate 
NPRMs.
    The final subpart, ``Subpart M--Apportionments and Payments to 
Fiduciaries or Incarcerated Beneficiaries,'' would include regulations 
governing apportionments, benefits for incarcerated beneficiaries, and 
guardianship.
    Some of the regulations in this NPRM cross-reference other 
compensation and pension regulations. If those regulations have been 
published in this or earlier NPRMs for the Project, we cite the 
proposed part 5 section. We also include, in the relevant portion of 
the Supplementary Information, the Federal Register page where a 
proposed part 5 section published in an earlier NPRM may be found. 
However, where a regulation proposed in this NPRM would cross-reference 
a proposed part 5 regulation that has not yet been published, we cite 
to the current part 3 regulation that deals with the same subject 
matter. The current part 3 section we cite may differ from its eventual 
part 5 counterpart in some respects, but we believe this method will 
assist readers in understanding these proposed regulations where no 
part 5 counterpart has yet been published.
    Because of its large size, proposed part 5 will be published in a 
number of NPRMs, such as this one. VA will not adopt any portion of 
part 5 as final until all of the NPRMs have been published for public 
comment.
    In connection with this rulemaking, VA will accept comments 
relating to a prior rulemaking issued as a part of the Project, if the 
matter being commented on relates to both rulemakings.

Overview of Proposed Subpart K Organization

    This NPRM pertains to those regulations governing matters affecting 
the receipt of benefits. These regulations would be contained in 
proposed Subpart K of new 38 CFR part 5. Although these regulations 
have been substantially restructured and rewritten for greater clarity 
and ease of use, most of the basic concepts contained in these proposed 
regulations are the same as in their existing counterparts in 38 CFR 
part 3. However, a few substantive differences are proposed, as are 
some regulations that do not have counterparts in 38 CFR part 3.

Table Comparing Current Part 3 Rules With Proposed Part 5 Rules

    The following table shows the correspondence between the current 
regulations in part 3 and the proposed regulations contained in this 
NPRM:

------------------------------------------------------------------------
                                            Based in whole or in part on
   Proposed part 5 section or paragraph      38 CFR section or paragraph
                                                    (or ``New'')
------------------------------------------------------------------------
                            Bars to Benefits
------------------------------------------------------------------------
5.660(a)..................................  3.301(a)
5.660(b)..................................  3.1(m)--first sentence.
5.660(c)..................................  3.1(m)(1)-(3)
5.660(d)..................................  3.1(m)--second sentence.
5.661(a)(1)...............................  3.1(n) first sentence of
                                             introduction and (n)(1) and
                                             (2).
5.661(a)(2) and (3).......................  New.
5.661(b)(1)...............................  3.1(n)(3), 3.301(a)
5.661(b)(2)...............................  3.301(b)
5.661(c)(1)...............................  3.301(c)(2)
5.661(c)(2)...............................  3.301(c)(3), 3.301(d)
5.661(d)..................................  3.302
5.661(e)..................................  3.301(c)(1)
5.661(f)..................................  3.1(n)--second sentence of
                                             introduction.
5.662(a)..................................  3.301(d)
5.662(b) through (d)......................  New.
5.663(a)(1)...............................  3.11
5.663(a)(2) and (3).......................  New.
5.663(b)..................................  3.11
5.663(c) through (f)......................  New.
------------------------------------------------------------------------
         Forfeiture and Renouncement of the Right to VA Benefits
------------------------------------------------------------------------
5.675(a)..................................  3.900(a)
5.675(b)..................................  3.900(c)
5.676(a)..................................  3.901(a)
5.676(b)(1)...............................  3.901(d)
5.676(b)(2)...............................  3.901(b)
5.676(b)(3)(i)............................  3.901(d)--last sentence.
5.676(b)(3)(ii) and (iii), (b)(4).........  New (cross-reference).
5.676(b)(5)...............................  3.669(a) and (b)(1)
5.676(c)(1)...............................  3.669(d)(1); 3.900(b)(2)--
                                             last sentence.
5.676(c)(2)(i)............................  3.901(c)
5.676(c)(2)(ii) and (c)(3)................  New (cross-reference).
5.676(d)..................................  3.904(a)
5.676(e)..................................  New (cross-reference).
5.677(a)..................................  3.902(a)
5.677(b)(1)...............................  3.902(d)
5.677(b)(2)...............................  3.902(b), 3.904(b)--last
                                             sentence.
5.677(b)(3)(i)............................  3.902(d)--last sentence.
5.677(b)(3)(ii)...........................  3.904(b)--last sentence.
5.677(b)(4)...............................  New (cross-reference).
5.677(b)(5)...............................  3.669(a) and (b)(2)
5.677(c)(1)...............................  3.669(d)(1); 3.900(b)(2)--
                                             last sentence.
5.677(c)(2)...............................  3.902(c); 3.904(b)
5.677(d)..................................  3.902(e)
5.677(e)..................................  New (cross-reference).
5.678(a)(1)...............................  3.903(a)(2)
5.678(a)(2)...............................  3.903(a)(1)
5.678(a)(3)...............................  New.

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5.678(a)(4)...............................  3.903(a)(3)
5.678(a)(5)...............................  3.903(a)(4)
5.678(b)(1)...............................  3.903(b)(2)
5.678(b)(2)(i)............................  3.669(a)
5.678(b)(2)(ii)...........................  3.669(c)--first sentence.
5.678(b)(3)(i) and (ii)...................  3.903(b)(1)
5.678(b)(3)(iii)..........................  New (cross-reference).
5.678(b)(3)(iv)...........................  3.903(b)(1), 3.904(c)--first
                                             sentence.
5.678(c)(1)...............................  New (cross-reference).
5.678(c)(2) and (3).......................  3.904(c)--last sentence.
5.679(a)..................................  3.905(a)
5.679(b)..................................  3.905(b)
5.679(c)(1)...............................  3.905(c)
5.679(c)(2)...............................  3.905(c) and New.
5.679(d) and (e)..........................  3.905(d)
5.680(a)..................................  3.905(a)
5.680(b)..................................  New.
5.680(c)(1) and (2).......................  3.901(e)
5.680(c)(3)...............................  3.905(e)
5.681(a)(1)...............................  3.669(a)
5.681(a)(2)...............................  3.669(b)
5.681(b)(1)...............................  3.500(k), 3.669(b)(1)--last
                                             sentence.
5.681(b)(2)...............................  3.500(s)(1), 3.669(b)(2)--
                                             last sentence.
5.681(b)(3)...............................  3.500(s)(2), 3.669(c)--last
                                             sentence.
5.682(a)..................................  3.903(c) and New.
5.682(b) and (c)..........................  3.669(d)(1)
5.682(d)..................................  3.669(d)(2)
5.683(a) and 5.683(b).....................  3.106(a)
5.683(c)..................................  3.106(a), 3.500(q)
5.683(d)(1)...............................  3.106(d)
5.683(d)(2)...............................  3.106(e)
5.683(e)(1)...............................  3.106(b), 3.400(s)
5.683(e)(2)...............................  3.106(c)
------------------------------------------------------------------------

    Readers who use this table to compare existing regulatory 
provisions with the proposed provisions, and who observe a substantive 
difference between them, should consult the text that appears later in 
this document for an explanation of significant changes in each 
regulation. Not every paragraph of every current part 3 section 
regarding the subject matter of this rulemaking is accounted for in the 
table. In some instances, other portions of the part 3 sections that 
are addressed in these proposed regulations will appear in subparts of 
part 5 that are being published separately for public comment. For 
example, a reader might find a reference to paragraph (a) of a part 3 
section in the table, but no reference to paragraph (b) of that section 
because paragraph (b) will be addressed in a separate NPRM. The table 
also does not include provisions from part 3 regulations that will not 
be repeated in part 5. Such provisions are discussed specifically under 
the appropriate part 5 heading in this preamble. Readers are invited to 
comment on the proposed part 5 provisions and also on our proposals to 
omit those part 3 provisions from part 5.

Content of Proposed Regulations

Bars to Benefits

5.660 Line of duty.
    Proposed Sec.  5.660 is based on line of duty determination rules 
currently found in Sec. Sec.  3.1(m) and 3.301(a). We propose to state 
in Sec.  5.660(a) that the line-of-duty requirement does not apply to 
service connection under Sec.  3.310. That section concerns service 
connection for disability proximately due to, or aggravated by, a 
service connected injury or disease. (The reference to Sec.  3.310 will 
be updated in the final version of Sec.  5.660 to reflect the part 5 
equivalent to Sec.  3.310.)
    In proposed Sec.  5.660(b), we replaced the term ``active military, 
naval, or air service,'' used in the Sec.  3.1(m) definition of ``line 
of duty,'' with the shorter term ``active military service.'' This 
shorter term, ``active military service,'' will have the same meaning 
in part 5 as the term ``active military, naval, or air service'' does 
in part 3.
    Current Sec.  3.301(a) states, ``Direct service connection may be 
granted only when a disability or cause of death was incurred or 
aggravated in line of duty.'' All basic entitlement to service-
connected compensation and related benefits for a disability that is 
either directly or presumptively service connected is authorized under 
38 U.S.C. 1110, 1131. Both statutes require that the service-connected 
condition have been ``contracted [or aggravated] * * * in line of duty 
in the active military * * * service.'' The statutes establishing 
presumptions do not do away with the line of duty requirement. See 38 
U.S.C. 1112(a), for example, which states that ``for the purposes of 
section 1110'' when ``any veteran who served for ninety days or more 
during a period of war'' suffers a listed condition, the condition 
``shall be considered to have been incurred in or aggravated by such 
service.'' The service referred to there is the minimum 90-day period 
of service. Section 1112 does not state that such condition is 
considered incurred in line of duty for purposes of section 1110. In 
order to eliminate any potential for misinterpretation of the rule, we 
would not include the word ``direct'' in the proposed part 5 
regulation.
5.661 Willful misconduct.
    Proposed Sec.  5.661 is based on current Sec. Sec.  3.1(n), 
3.301(a) through (d), and 3.302 pertaining to willful misconduct 
determinations.
    Current Sec.  3.1(n)(2) states ``Mere technical violation of police 
regulations or ordinances will not per se constitute willful 
misconduct.'' VA intends that all ordinances (e.g. police, city, or 
county) and police regulations be covered by this provision. We 
therefore propose to clarify this by inserting the word ``other'' in 
front of the word ``ordinances'', in Sec.  5.661(a)(1). In addition, we 
have replaced the phrase ``per se'' with ``by itself''. It is a more 
easily understood phrase that has the same meaning. Black's Law 
Dictionary 1162 (7th ed. 1999).
    Willful misconduct involves the legal concept of ``proximate 
cause.'' Current 3.1(n)(3) states that ``[w]illful misconduct will not 
be determinative unless it is the proximate cause of injury, disease, 
or death.'' Proposed Sec.  5.661(b) retains this concept, by stating 
that ``[s]ervice connection may not be granted for an injury, disease, 
or death proximately caused by the veteran's own willful misconduct'' 
and that ``[d]isability pension may not be granted for any condition 
proximately caused by the veteran's own willful misconduct.'' However, 
current regulations do not define ``proximate cause.''
    Two definitions of ``proximate cause'' appear in Black's Law 
Dictionary. ``1. A cause that is legally sufficient to result in 
liability. 2. A cause that directly produces an event and without which 
the event would not have occurred.'' Black's Law Dictionary 213 (7th 
ed. 1999). We believe that the second definition is most appropriate 
and clearest in the veterans-benefits context. Based on that 
definition, we propose to define``proximately caused'' in Sec.  
5.661(a)(2) consistent with the definition of ``proximate cause'' in 
Black's, and to make that definition applicable to all of proposed part 
5.
    In Sec.  5.661(a)(3), we propose to define ``drugs'' as 
``prescription or non-prescription medications and other substances 
(e.g., glue or paint), whether obtained legally or illegally''. We are 
omitting the additional term ``illicitly'' that is included in current 
Sec.  3.301(d) because it would be redundant if included in the revised 
definition. Black's Law Dictionary defines ``illicit'' as ``illegal or 
improper''. (Black's Law Dictionary 750 (7th ed. 1999)). ``Legally or 
illegally obtained'' is sufficiently broad to cover all the means of 
obtaining the drugs or other substances.

[[Page 31059]]

We propose to include the parenthetical ``(e.g., glue or paint)'' after 
the word ``substances.'' This addition is illustrative and not intended 
to be an exclusive list.
    The first two sentences of current Sec.  3.301(c)(2) state that 
``[t]he simple drinking of alcoholic beverage is not of itself willful 
misconduct. The deliberate drinking of a known poisonous substance or 
under conditions which would raise a presumption to that effect will be 
considered willful misconduct.'' We have not repeated these two 
sentences in proposed Sec.  5.661(c)(1) because we believe they could 
be confusing to some regulation users and their inclusion would not add 
substantively to proposed Sec.  5.661(c)(1). Proposed paragraph (c)(1) 
clearly describes the situations in which the consumption of alcohol 
leading to injury, disease, or death will constitute willful 
misconduct, i.e., that drinking ``alcoholic beverages to the point of 
intoxication * * * [that] proximately causes injury, disease, or 
death'' will be considered willful misconduct. Thus, the proposed 
regulation encompasses the concepts expressed in current Sec.  
3.301(c)(2).
    Proposed Sec.  5.661(d) states how VA will determine whether 
suicide, or attempted suicide, involves willful misconduct. The 
proposal is based on current Sec.  3.302 which provides VA's 
longstanding policy on this issue in clear and easily understandable 
language. Since there is no need to rewrite the current rule, we have 
simply incorporated the regulatory text of current Sec.  3.302 into 
proposed Sec.  5.661(d) without substantive change.
    Proposed Sec.  5.661(e) is based on adjudication rules concerning 
venereal disease in current Sec.  3.301(c)(1). We propose to omit the 
rules in Sec.  3.301(c)(1) concerning whether the disease was incurred 
in or aggravated by service. The omitted rules are consistent with the 
rules VA generally uses to determine whether a disease was incurred in 
or aggravated by service. Those rules will be addressed in Subpart E of 
proposed part 5 and there is no need to repeat them here.
5.662 Alcohol and drug abuse.
    Proposed Sec.  5.662 is based on rules in current Sec.  3.301(d) 
and in related statutes, as interpreted by the United States Court of 
Appeals for the Federal Circuit (Federal Circuit). These rules are 
applied to determine whether VA may grant benefits for a disability or 
death related to the use of alcohol or drugs.
    Proposed Sec.  5.662(a) states the definitions applicable to the 
abuse of alcohol or drug rules. These definitions are based on concepts 
in current Sec.  3.301(d).
    Paragraph (b) precludes a grant of service connection for alcohol 
or drug abuse and for injury or disease resulting from such abuse. 
Section 105 of title 38, United States Code, precludes a ``line of 
duty'' finding for an injury resulting from ``the person's own * * * 
abuse of alcohol or drugs.'' Because such injury cannot be considered 
in line of duty, such injury cannot be service connected. In addition, 
38 U.S.C. 1110 precludes payment of compensation for disability 
resulting from the veteran's abuse of alcohol or drugs. Moreover, 
current Sec.  3.301(d) precludes a ``line of duty'' determination (and, 
by extension, an award of service connection) for an ``injury or 
disease that was a result of the abuse of alcohol or drugs.'' Proposed 
paragraph (b) would carry this existing policy into part 5.
    Proposed Sec.  5.662(c) codifies the holding of the Federal Circuit 
in Allen v. Principi, 237 F.3d 1368, 1376 (Fed. Cir. 2001). In that 
case, the Court held that 38 U.S.C. 1110 ``when read in light of its 
legislative history, does not preclude a veteran from receiving 
compensation for alcohol or drug-related disabilities arising 
secondarily from a service-connected disability, or from using alcohol 
or drug-related disabilities as evidence of the increased severity of a 
service-connected disability.''Allen, 237 F.3d at 1370. Rather, 38 
U.S.C. 1110 ``precludes compensation only in two situations: (1) For 
primary alcohol abuse disabilities; and (2) for secondary disabilities 
(such as cirrhosis of the liver) that result from primary alcohol 
abuse.'' Allen, 237 F.3d at 1376.
    Proposed Sec.  5.662(d) codifies long-standing VA practice with 
respect to instances of accidental use of drugs. This proposed 
paragraph explains that VA will not consider the accidental use of a 
prescription or non-prescription drug or other substance as drug abuse. 
However, there is one exception. VA will consider accidental use as 
drug abuse if that accidental use is the result of impairment of 
judgment that is due to alcohol abuse, drug abuse, or the use of 
alcohol or drugs constituting willful misconduct under proposed Sec.  
5.661(c).
5.663 Homicide as a bar to VA benefits.
    Proposed Sec.  5.663 clarifies rules concerning VA benefit 
entitlement when a claimant or beneficiary kills the veteran or some 
other person upon whom their benefit entitlement depends. It is based 
on current Sec.  3.11 and on long-standing VA practice.
    Proposed Sec.  5.663(a) contains applicable definitions, beginning 
with a definition of homicide. Current Sec.  3.11, titled, 
``Homicide,'' bars ``[a]ny person who has intentionally and wrongfully 
caused the death of another person'' from receiving certain benefits. 
In applying this regulation, VA has traditionally understood a wrongful 
killing as being a killing without excuse or justification. Therefore, 
we propose to define homicide as ``intentionally causing the death of a 
person without excuse or justification.'' We also propose to state in 
Sec.  5.663(a)(1) that homicide ``includes causing the death of the 
person directly or aiding or abetting someone else in causing the 
death.'' Individuals who assist in the killing of others should not 
profit from their wrongful acts. See Lofton v. West, 198 F.3d 846, 850 
(Fed. Cir. 1999) (holding that current Sec.  3.11 codifies the 
``slayer's rule,'' which is a common law principle that bars wrongdoers 
from obtaining benefits as a direct consequence of their wrongful 
acts).
    Proposed Sec. Sec.  5.663(a)(2) and (3) codify VA's current 
recognition, unstated in current regulations, that an ``excuse'' for 
killing means that the killing was accidental or that the person was 
insane at the time of the killing, and that ``justification'' means 
that there was a lawful reason for causing the death. The proposed 
definition of justification in Sec.  5.663(a)(3) specifically 
references the well-recognized legal justification of a killing 
committed in self-defense or in defense of another person, which is 
further described in proposed paragraph (c).
    In Sec.  5.663(c), again based on long-standing VA practice, we 
propose to set out rules for what constitutes a killing committed in 
self-defense or in defense of another (i.e., a homicide with 
``justification''). Essentially the requirements are that the killer 
had reason to believe that he or she, or someone else, was in immediate 
danger of death or serious bodily harm from the person slain; there was 
no apparent way for the endangered person to escape or retreat; and the 
act causing the death was necessary to avoid the danger of death or 
serious bodily harm, i.e., the killer's response was in proportion to 
the threat posed by the deceased.
    Proposed Sec.  5.663(d), (e), and (f) are also codifications of 
long-standing VA practice.
    Proposed Sec.  5.663(d) addresses the effect of criminal judicial 
proceedings on VA claims involving homicide. Proposed Sec.  5.663(d)(1) 
provides that VA will accept a criminal conviction of homicide as 
binding. We believe that this is appropriate, inasmuch as a

[[Page 31060]]

criminal conviction requires a finding of guilt beyond a reasonable 
doubt, a higher standard than is applicable in civil matters such as VA 
claims adjudication. By the same token, because of the higher standard 
of proof required for criminal conviction, acquittal does not mean that 
a person would not be guilty of homicide for VA purposes. Therefore we 
provide in proposed Sec.  5.663(d)(2) that VA will develop the evidence 
to determine guilt for VA purposes if the person is acquitted, or if a 
conviction is reversed on appeal and the person is not retried.
    Proposed Sec.  5.663(e) explains that VA will accept a court 
finding that a person was insane at the time of a killing. We 
acknowledge that jurisdictions may differ on the standard of proof 
required to demonstrate insanity; however, we propose to accept such a 
finding in the interest of administrative economy, because it is 
rational to defer to a judicial proceeding that is directly relevant to 
the matter of sanity at the time of the killing. In other cases, VA 
would develop evidence to determine whether the person was sane at the 
time of the killing, if insanity is raised as a defense.
    Proposed Sec.  5.663(f) provides rules for determining how the 
death of the homicide victim affects VA benefits for potential 
beneficiaries other than the person who committed the homicide. The 
basic premise behind these rules is that a person who is guilty of 
homicide should not profit from his or her wrongdoing, nor should that 
person's wrongdoing interfere with the payment of benefits to other VA 
claimants or beneficiaries who were innocent of involvement in the 
homicide. Proposed Sec.  5.663(f) provides a general rule that VA will 
make payments to eligible innocent claimants or beneficiaries as if the 
person who committed the homicide did not exist. It then addresses five 
common scenarios that show how this plays out.
    The first specific rule, in Sec.  5.663(f)(2), is illustrative. 
Some VA benefits are only payable to a veteran's children if there is 
no surviving spouse. For example, 38 U.S.C. 1313(a) provides for 
payment of dependency and indemnity compensation to a veteran's 
children if the veteran is not survived by a spouse. Proposed Sec.  
5.663(f)(2) provides that in the case of a homicide of a veteran by the 
veteran's spouse, VA will pay benefits to the veteran's eligible 
children as if there was no surviving spouse. Other proposed rules 
provide for cases in which there is a homicide of a veteran by the 
veteran's child, homicide of a veteran by the veteran's parent, 
homicide of one claimant or beneficiary by another claimant or 
beneficiary, and rules for determining how homicide affects payment of 
accrued benefits and benefits awarded, but unpaid at death.

Forfeiture and Renouncement of the Right to VA Benefits

5.675 General forfeiture provisions.
    Proposed Sec.  5.675, based on portions of current Sec.  3.900, 
contains generally applicable forfeiture-of-benefits rules.
    We propose to not include current Sec.  3.900(b)(1), which states 
that ``[e]xcept as provided in paragraph (b)(2) of this section, any 
offense committed prior to January 1, 1959, may cause a forfeiture and 
any forfeiture in effect prior to January 1, 1959, will continue to be 
a bar on and after January 1, 1959.'' Current Sec.  3.900(b)(1) is 
based on section 3 of Public Law 85-857, 72 Stat. 1262. Public Law 85-
857 established the forfeiture provisions applicable to veterans' 
benefits. Section 3 was a saving clause that continued forfeitures 
under laws predating Public Law 85-857 and permitted forfeitures for 
acts committed before the law became effective (on January 1, 1959). 
Stressing the provisions of the saving clause was important during the 
time of transition to the newly codified law; however, that is no 
longer necessary for the reasons stated in the following paragraph.
    The rule in Sec.  3.900(b)(1) that any offense committed prior to 
January 1, 1959, may cause a forfeiture is unnecessary because current 
statutes do not contain any time limitation on when acts leading to 
forfeiture were committed, whether prior to January 1, 1959, or 
otherwise. The rule in current Sec.  3.900(b)(1) that any forfeiture in 
effect prior to January 1, 1959, will continue to be a bar on and after 
January 1, 1959, is also unnecessary, because it is subsumed in another 
rule. Current Sec.  3.900(b)(2) provides that forfeitures found before 
September 2, 1959, will continue to be a bar on and after that date. We 
have retained that rule in proposed Sec. Sec.  5.676(c)(1) and 
5.677(c)(1) and 5.678(b)(3)(i). Forfeitures found before September 2, 
1959, necessarily include those in effect prior to January 1, 1959.
    We also propose to not include Sec.  3.900(d), which reads: ``When 
the person primarily entitled has forfeited his or her rights by reason 
of fraud or a treasonable act determination as to the rights of any 
dependents of record to benefits under Sec.  3.901(c) or Sec.  3.902(c) 
may be made upon receipt of an application.'' These two provisions 
concern apportionment of benefits which were forfeited based on fraud 
or treason, respectively. Submitting such an application would now have 
little usefulness. As Sec. Sec.  3.901(c) and 3.902(c) show, no 
forfeited benefits are apportionable unless the forfeiture was found 
before September 2, 1959, and the apportionment was authorized 
(granted) by VA before September 2, 1959. Since VA no longer has 
authority to grant such apportionments, the provision in Sec.  3.900(d) 
is obsolete and no longer relevant.
5.676 Forfeiture for fraud.
    Proposed Sec.  5.676 consolidates rules for forfeiture of VA 
benefits for fraud currently found in Sec. Sec.  3.669(a) and (b)(1), 
3.900(b)(2), 3.901 and 3.904(a).
    Proposed Sec.  5.676(b)(2) would clarify that forfeiture applies to 
both current and future VA benefits. This is consistent with 38 U.S.C. 
6103(a), which provides that forfeiture for fraud extends to ``all 
rights, claims, and benefits under all laws administered by the 
Secretary.''
    Proposed Sec.  5.676(b)(5) states the procedures for suspension of 
benefits for fraud and the restoration of benefits if VA ultimately 
decides that forfeiture is not appropriate.
    In proposed Sec.  5.676(c)(1), we have added references to the 
exception to the general rule that any forfeiture in effect prior to 
September 2, 1959, continues to be a bar to benefits on and after 
September 2, 1959. The exception is where there is a Presidential 
pardon for committing the act(s) that led to the forfeiture or where VA 
remits the forfeiture. This is not a substantive change.
5.677 Forfeiture for treasonable acts.
    Proposed Sec.  5.677 restates in one regulation rules for 
forfeiture of VA benefits for treasonable acts currently found in 
Sec. Sec.  3.669(a) and (b)(2), 3.900(b)(2), 3.902 and 3.904(b).
    Proposed Sec.  5.677(b)(5) states the procedures for suspension of 
benefits for treasonable acts and the restoration of benefits if VA 
ultimately decides that forfeiture is not appropriate.
    In proposed Sec.  5.677(c)(1), we have added references to the 
exceptions to the general rule that any forfeiture in effect prior to 
September 2, 1959, continues to be a bar to benefits on and after 
September 2, 1959. The exceptions are where there is a Presidential 
pardon for committing the act(s) that led to the forfeiture and where 
VA remits the forfeiture. This is not a substantive change. See current 
Sec.  3.100(b) (delegating authority to certain VA officials to, among 
other things, remit a forfeiture of benefits under 38 U.S.C. 6104, 
``Forfeiture for treason'') and

[[Page 31061]]

Sec.  3.669(d) (providing for the resumption of awards after the 
payee's offense has been pardoned by the President).
5.678 Forfeiture for subversive activity.
    Proposed Sec.  5.678 consolidates rules for forfeiture of VA 
benefits for subversive activity currently found in Sec. Sec.  3.669(a) 
and (c), 3.903, and 3.904(c).
    Current Sec.  3.903(a) defines subversive activity by referring to 
numerous sections of titles 10, 18, 42, and 50 of the United States 
Code. The proposed definition in new Sec.  5.678(a) adds the United 
States Code title names and the names of the specific code sections to 
provide regulation users with information about the subjects of the 
cited sections.
    Section 705 of the Veterans Benefits Act of 2003 (``the Act'') 
added several offenses to the list of offenses considered subversive 
activity. Sec. 705, Public Law 108-183, 117 Stat. 2672. The section 705 
amendments apply to claims filed after the enactment of the Act (Dec. 
16, 2003). Id. These additional offenses, and the relevant effective 
date information, are in proposed Sec.  5.678(a)(3).
    Under current Sec.  3.903(b)(2) the Secretary of the Treasury 
notifies VA when members of the Coast Guard are convicted of subversive 
activity under various provisions of the Uniform Code of Military 
Justice. The Coast Guard is now under the jurisdiction of the 
Department of Homeland Security. Proposed Sec.  5.678(b)(1) reflects 
this change. See sec. 888(b), Public Law 107-296, 116 Stat. 2249.
    Proposed Sec.  5.678(b)(2)(ii) adds ``or otherwise not convicted'' 
after the word ``acquitted.'' Conviction and acquittal are not the only 
potential outcomes of an indictment. For example, the charges might be 
dismissed, or a conviction reversed on appeal and the person not 
retried.
5.679 Forfeiture decision procedures.
    Proposed Sec.  5.679, based on current Sec.  3.905, provides 
procedures VA uses when rendering a decision on forfeiture. Section 
3.905 and other related regulations use the term ``declaration of 
forfeiture''. Throughout these forfeiture regulations in part 5, we 
propose to simply use the term ``forfeiture decision'', which is less 
technical and more easily understood.
    Pursuant to 38 U.S.C. 6105(a), VA makes a decision that VA benefits 
provided under this part have been forfeited without further 
adjudication upon being notified that a beneficiary has been convicted 
of engaging in subversive activity. However, 38 U.S.C. 6103, which 
governs forfeiture for fraud, and 38 U.S.C. 6104, which governs 
forfeiture for treason, do not provide for forfeiture without VA first 
adjudicating whether a beneficiary is guilty of fraud or treason for 
the limited purpose of determining whether this beneficiary has 
forfeited the right to VA benefits.
    Neither 38 U.S.C. 6103 nor 6104 provide a standard of proof to 
apply in these forfeiture adjudications. As noted by the Court of 
Appeals for Veterans Claims (CAVC) in Trilles v. West, 13 Vet. App. 
314, 318 (2000), the standard VA has historically applied is proof 
``beyond a reasonable doubt,'' but that standard does not appear in 
current VA forfeiture regulations. We propose to codify the ``beyond a 
reasonable doubt'' standard in Sec.  5.679(c)(2).
5.680 Remission of forfeiture.
    Proposed Sec.  5.680, based in part on current Sec.  3.905, 
provides procedures applicable to remittance of a forfeiture.
    Proposed Sec.  5.680(b) states the two bases for remission of a 
forfeiture: Showing that the forfeiture decision involved clear and 
unmistakable error (CUE), and submission of new and material evidence 
establishing that the forfeiture should not be continued. As the CAVC 
pointed out in Trilles, although current VA regulations ``do not 
expressly state the method of review of final forfeiture decisions,'' 
they cumulatively ``authorize revoking a forfeiture declaration because 
of CUE in that earlier decision declaring forfeiture or on the basis of 
new and material evidence.'' Trilles, 13 Vet. App. at 323.
    We propose to require in Sec.  5.680(b)(2) that ``[i]n accordance 
with the requirements noted in Sec.  3.156(a) of this chapter, the new 
and material evidence must directly relate to the basis for 
forfeiture.'' This language is based on Reyes v. Brown, 7 Vet. App. 
113, 115 (1994), where the court held that in seeking to reopen a Board 
of Veterans' Appeals' decision in a forfeiture case, ``the appellant 
would have had to produce new and material evidence bearing directly on 
whether she had acted in a false or fraudulent manner in her efforts to 
restore her DIC benefits.'' The proposed language, like the Reyes 
opinion, does not represent a gloss or change to the current 
requirements of Sec.  3.156; rather, it clarifies what issue in 
particular is subject to a reopening based on new and material 
evidence.
    Proposed Sec.  5.680(c) includes rules from current Sec.  3.901(e) 
concerning a special remission procedure applicable where a forfeiture 
for fraud was imposed before September 2, 1959.
5.681 Effective dates--forfeiture.
    Proposed Sec.  5.681 is based on current Sec. Sec.  3.500(k) and 
(s) and 3.669(a) through (c). It provides the effective dates for the 
various actions associated with forfeiture. We have intentionally 
omitted an effective date rule found at current Sec.  3.400(m), which 
reads as follows: ``(m) Forfeiture (Sec. Sec.  3.901, 3.902). Day 
following date of last payment on award to payee who forfeited.'' 
Section 3.400(m) provides the effective dates for awards of apportioned 
benefits to the dependents of a beneficiary after the beneficiary 
forfeits his or her benefits due to fraud or treasonable acts. As noted 
in the discussion of proposed Sec. Sec.  5.675 and 5.676, payments to 
dependents of benefits forfeited for fraud or treasonable acts can be 
made only under an apportionment decision that predates September 2, 
1959. Inasmuch as there has been no authority to make a new 
apportionment award of benefits forfeited for fraud or treasonable acts 
since 1959, Sec.  3.400(m) no longer serves a useful purpose.
5.682 Presidential pardon for offenses causing forfeiture.
    Proposed Sec.  5.682 is based on current Sec. Sec.  3.669(d) and 
3.903(c). It provides the effective date rules related to the 
restoration of forfeited benefits after a Presidential pardon of the 
offenses leading to forfeiture.
    Current Sec.  3.903(c) states that ``[w]here any person whose right 
to benefits has been [forfeited for subversive activities] is granted a 
pardon of the offense by the President of the United States, the right 
to such benefits shall be restored as of the date of such pardon, if 
otherwise eligible.'' Current Sec.  3.903(c) is based on similar 
language concerning forfeiture for subversive activities in 38 U.S.C. 
6105(a). However, the stated rule is equally applicable to forfeitures 
for fraud or treason. This is implicit in current Sec.  3.669(d)(1) 
which, subject to certain conditions, provides for the resumption of an 
award of forfeited VA benefits effective the date of a Presidential 
pardon. Therefore proposed Sec.  5.682(a) states as a general rule that 
if the President of the United States pardons the offenses that were 
the basis of a forfeiture of rights to VA benefits, VA will restore 
rights to all forfeited VA benefits effective the date of the pardon, 
if otherwise in order.
    Current Sec.  3.669(d)(1) speaks of ``resuming an award'' after a 
Presidential pardon. We propose to instead speak of resuming payment in 
Sec.  5.682(b). We believe this terminology will be clearer to many 
regulation users.

[[Page 31062]]

VA intends no substantive change by the substitution of terms.
5.683 Renouncement of benefits.
    Proposed Sec.  5.683 is based on current Sec. Sec.  3.106, 
3.400(s), and 3.500(q). It sets out rules concerning a VA beneficiary's 
renouncement of VA pension, compensation, or dependency and indemnity 
compensation.
    One change is in proposed Sec.  5.683(c), which states that ``VA 
will discontinue payment of renounced benefits effective the last day 
of the month in which VA received the renouncement. If payments had 
been suspended, VA will discontinue payment of renounced benefits 
effective the first day of the month that follows the month for which 
VA last paid benefits''. The first sentence of this rule is consistent 
with provisions of current Sec. Sec.  3.106(a) and 3.500(q). The second 
sentence of this rule is new.
    If a beneficiary has an award that has been suspended, he or she 
may not have received any benefit payments for some length of time. 
Under normal circumstances if VA resumes a beneficiary's suspended 
award, those payments that are due but not yet paid would be released 
to the beneficiary. In the case of renouncement, however, releasing 
those payments to a beneficiary would be inconsistent with the 
expressed desire of the beneficiary to stop receiving benefits. The 
proposed wording for Sec.  5.683(c) would ensure that beneficiaries who 
renounce their rights to receive VA benefits are not sent any 
additional benefit payments.

Endnote Regarding Amendatory Language

    We intend to ultimately remove part 3 entirely, but we are not 
including amendatory language to accomplish that at this time. VA will 
provide public notice before removing part 3.

Paperwork Reduction Act

    This document contains no provisions constituting a collection of 
information under the Paperwork Reduction Act (44 U.S.C. 3501-3521).

Regulatory Flexibility Act

    The Secretary hereby certifies that this proposed 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, 5 U.S.C. 601-612. This proposed amendment would not 
affect any small entities. Therefore, pursuant to 5 U.S.C. 605(b), this 
proposed amendment is exempt from the initial and final regulatory 
flexibility analysis requirements of sections 603 and 604.

Executive Order 12866

    Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, when regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety, 
and other advantages; distributive impacts; and equity). The Order 
classifies a rule as a significant regulatory action requiring review 
by the Office of Management and Budget if it meets any one of a number 
of specified conditions, including: having an annual effect on the 
economy of $100 million or more, creating a serious inconsistency or 
interfering with an action of another agency, materially altering the 
budgetary impact of entitlements or the rights of entitlement 
recipients, or raising novel legal or policy issues. VA has examined 
the economic, legal, and policy implications of this proposed rule and 
has concluded that it is a significant regulatory action because it may 
raise novel legal or policy issues.

Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 
1532, that agencies prepare an assessment of anticipated costs and 
benefits before issuing any rule that may result in an expenditure by 
State, local, or tribal governments, in the aggregate, or by the 
private sector of $100 million or more (adjusted annually for 
inflation) in any given year. This rule would have no such effect on 
State, local, or tribal governments, or the private sector.

Catalog of Federal Domestic Assistance Numbers

    The Catalog of Federal Domestic Assistance program numbers and 
titles for this proposal are 64.101, Burial Expenses Allowance for 
Veterans; 64.102, Compensation for Service-Connected Deaths for 
Veterans' Dependents; 64.104, Pension for Non-Service Connected 
Disability for Veterans; 64.105, Pension to Veterans Surviving 
Spouses, and Children; 64.109, Veterans Compensation for Service-
Connected Disability; 64.110, Veterans Dependency and Indemnity 
Compensation for Service-Connected Death; and 64.127, Monthly 
Allowance for Children of Vietnam Veterans Born with Spina Bifida.

List of Subjects in 38 CFR Part 5

    Administrative practice and procedure, Claims, Disability benefits, 
Pensions, Veterans.

    Approved: February 17, 2006.
Gordon H. Mansfield,
Deputy Secretary of Veterans Affairs.

    For the reasons set forth in the preamble, VA proposes to amend 38 
CFR part 5 as proposed to be added at 69 FR 4832, January 30, 2004 by 
adding subpart K to reads as follows

PART 5--COMPENSATION, PENSION, BURIAL, AND RELATED BENEFITS

Subpart K--Matters Affecting the Receipt of Benefits

Bars to Benefits

Sec.
5.660 Line of duty.
5.661 Willful misconduct.
5.662 Alcohol and drug abuse.
5.663 Homicide as a bar to VA benefits.
5.664-5.674 [Reserved]

Forfeiture and Renouncement of the Right to VA Benefits

5.675 General forfeiture provisions.
5.676 Forfeiture for fraud.
5.677 Forfeiture for treasonable acts.
5.678 Forfeiture for subversive activity.
5.679 Forfeiture decision procedures.
5.680 Remission of forfeiture.
5.681 Effective dates--forfeiture.
5.682 Presidential pardon for offenses causing forfeiture.
5.683 Renouncement of benefits.
5.684-5.689 [Reserved]

    Authority: 38 U.S.C. 501(a) and as noted in specific sections.

Subpart K--Matters Affecting the Receipt of Benefits

Bars to Benefits


Sec.  5.660  Line of duty.

    (a) Effect of line of duty findings on claims adjudication. Except 
as provided in Sec.  3.310 of this chapter, VA may grant service 
connection only for an injury, disease, or cause of death that was 
incurred or aggravated in line of duty.
    (b) Definition of ``in line of duty.'' Except as provided in 
paragraph (c) of this section, an injury, disease, or cause of death 
was incurred or aggravated in line of duty when that injury, disease, 
or cause of death was incurred or aggravated during a period of active 
military service and was not the result of either of the following:
    (1) The veteran's own willful misconduct; or
    (2) The veteran's abuse of alcohol or drugs. See Sec. Sec.  5.661, 
``Willful misconduct,'' and 5.662, ``Alcohol and drug abuse.''
    (c) Exceptions. Line of duty requirements are not met as to an 
injury, disease, or cause of death incurred or aggravated at a time 
that the veteran was:
    (1) Avoiding duty by desertion;

[[Page 31063]]

    (2) Absent without leave, which materially interfered with the 
performance of military duty;
    (3) Confined under a sentence of court-martial involving an 
unremitted dishonorable discharge; or
    (4) Confined under sentence of a civil court for a felony as 
determined under the laws of the jurisdiction where the veteran was 
convicted by such court.
    (d) Weight given service department findings. A service department 
finding that injury, disease, or death occurred in line of duty will be 
binding on VA unless the finding is patently (clearly) inconsistent 
with the laws administered by VA.

(Authority: 38 U.S.C. 101(16), 105, 1110, 1131)


    Cross Reference: See also Sec.  3.1(y)(4) of this section 
(concerning whether the detention or internment of a former prisoner 
of war was in line of duty).


Sec.  5.661  Willful misconduct.

    (a) Definitions.--(1) Willful misconduct, for the purposes of this 
part, means an act involving deliberate or intentional wrongdoing with 
knowledge of, or wanton and reckless disregard of, its probable 
consequences. A mere technical violation of police regulations or other 
ordinances will not by itself constitute willful misconduct.
    (2) Proximately caused, for the purposes of this part, means that 
the event resulted directly from the cause and would not have occurred 
without that cause. For example, injury, disease, or death is 
proximately caused by willful misconduct if the act of willful 
misconduct results directly in injury, disease, or death that would not 
have occurred without the willful misconduct.
    (3) Drugs, for the purposes of this part, means prescription or 
non-prescription medications and other substances (e.g., glue or 
paint), whether obtained legally or illegally.
    (b) Effect of willful misconduct findings on claims adjudication.--
(1) Service connection may not be granted for a disability or death 
resulting from injury or disease proximately caused by the veteran's 
own willful misconduct and compensation may not be paid for disability 
due to such injury, disease, or death. This paragraph applies to 
service connection established under any provision of this chapter, 
including Sec.  3.310 of this chapter and compensation awarded under 
Sec. Sec.  3.358 and 3.361 of this chapter.
    (2) Disability or death pension may not be granted for any 
condition proximately caused by the veteran's own willful misconduct.
    (c) Use of alcohol or drugs constituting willful misconduct.--(1) 
Alcohol. (i) If a person consumes alcoholic beverages to the point of 
intoxication and that intoxication proximately causes injury, disease, 
or death, VA will consider the injury, disease, or death to have been 
proximately caused by willful misconduct.
    (ii) Organic diseases and injuries that are proximately caused by 
the chronic use of alcohol as a beverage will not be considered of 
willful misconduct origin. However, VA may be precluded by Sec.  
5.662(b) from awarding service connection for such diseases or 
injuries.
    (2) Drugs. (i) The isolated and infrequent use of drugs by itself 
will not be considered willful misconduct. However, the progressive and 
frequent use of drugs in a manner not legally prescribed and to the 
point of addiction will be considered willful misconduct.
    (ii) If a person uses drugs in a manner not legally prescribed to 
the point of intoxication and that intoxication proximately causes 
injury, disease, or death, VA will consider the injury, disease, or 
death to have been proximately caused by willful misconduct.
    (iii) Organic diseases that are proximately caused by the chronic 
use of drugs and infections coinciding with the injection of drugs will 
not be considered of willful misconduct origin. However, VA may be 
precluded by Sec.  5.662(b) from awarding service connection for such 
diseases.
    (iv) The use of drugs for therapeutic purposes as directed is not 
willful misconduct.
    (v) The use of drugs or addiction to drugs proximately caused by a 
service-connected disability is not willful misconduct.
    (d) Suicide constituting willful misconduct.--(1) General. (i) In 
order for suicide to constitute willful misconduct, the act of self-
destruction must be intentional.
    (ii) A person of unsound mind is incapable of forming an intent 
(mens rea, or guilty mind, which is an essential element of crime or 
willful misconduct).
    (iii) It is a constant requirement for favorable action that the 
precipitating mental unsoundness be service connected.
    (2) Evidence of mental condition. (i) Whether a person, at the time 
of suicide, was so unsound mentally that he or she did not realize the 
consequences of such an act, or was unable to resist such impulse is a 
question to be determined in each individual case, based on all 
available lay and medical evidence pertaining to his or her mental 
condition at the time of suicide.
    (ii) The act of suicide or a bona fide attempt is considered to be 
evidence of mental unsoundness. Therefore, where no reasonable, 
adequate motive for suicide is shown by the evidence, the act will be 
considered to have resulted from mental unsoundness.
    (iii) A reasonable, adequate motive for suicide may be established 
by affirmative evidence showing circumstances which could lead a 
rational person to self-destruction.
    (3) Evaluation of evidence. (i) Affirmative evidence is necessary 
to justify reversal of service department findings of mental 
unsoundness where VA's criteria do not otherwise warrant contrary 
findings.
    (ii) In all instances any reasonable doubt should be resolved 
favorably to support a finding of service connection (see Sec.  3.102).
    (e) Venereal disease. VA will not consider the residuals of 
venereal disease to be the result of willful misconduct. Whether the 
veteran complied with service regulations and directives for reporting 
the disease and undergoing treatment is immaterial after November 14, 
1972, and the service department characterization of acquisition of the 
disease as willful misconduct or as not in line of duty will not 
govern.
    (f) Weight to be given to service department findings. A service 
department finding that injury, disease, or death was not proximately 
caused by willful misconduct will be binding on VA unless it is 
patently (clearly) inconsistent with the facts and the laws 
administered by VA.

(Authority: 38 U.S.C. 105, 501, 1110, 1131, 1151, 1521)

Sec.  5.662  Alcohol and drug abuse.

    (a) Definitions.--(1) Alcohol abuse means the consumption of 
alcoholic beverages over time, or excessive use at any one time, 
sufficient to proximately cause injury, disease, or death to the person 
consuming such beverages.
    (2) Drug abuse means the intentional use of drugs for a purpose 
other than their medically intended use or in a manner not prescribed 
or directed.
    (b) Service connection for alcohol or drug abuse. Except as 
provided in paragraph (c) of this section, an injury or disease 
incurred during active military service shall not be deemed to have 
been incurred in line of duty if such injury or disease was proximately 
caused by the abuse of alcohol or drugs.
    (c) Alcohol or drug abuse related to, or a part of, a service-
connected injury or disease.--(1) VA may grant service

[[Page 31064]]

connection for a disability or death proximately caused by the abuse of 
alcohol or drugs that is secondary to a service-connected injury or 
disease.
    (2) VA will consider the effect of the abuse of alcohol or drugs in 
evaluating the severity of a service-connected disability under part 4 
of this chapter if competent evidence shows that the abuse of alcohol 
or drugs was proximately caused by that service-connected disability.
    (d) Accidental use. The accidental use of prescription or non-
prescription drugs or other substances is not drug abuse unless the 
accident was due to impaired judgment caused by one or more of the 
following:
    (1) Alcohol abuse.
    (2) Drug abuse.
    (3) The use of alcohol or drugs constituting willful misconduct 
under Sec.  5.661(c).

(Authority: 38 U.S.C. 105(a), 501(a), 1110, 1131)

Sec.  5.663  Homicide as a bar to VA benefits.

    (a) Definitions. The following definitions apply to this section:
    (1) Homicide means intentionally causing the death of a person 
without excuse or justification. Homicide includes causing the death of 
the person directly or aiding or abetting someone else in causing the 
death.
    (2) Excuse means that the death was caused by a person who was 
insane at the time of the act causing the death.
    (3) Justification means that there was a lawful reason for causing 
the death, including acting in self-defense or in defense of another 
person, as provided in paragraph (c) of this section.
    (b) Homicide as a bar to VA benefits. The general rule is that VA 
will not award pension, compensation, or dependency and indemnity 
compensation (including benefits under 38 U.S.C. 1318), or any increase 
in those benefits, to which the person responsible for the homicide 
would otherwise be entitled because of the death of the person slain.
    (c) Self defense, or defense of another. A killing is justified as 
having been committed in self-defense or defense of another if the 
evidence establishes that the killer reasonably believed that:
    (1) She or he, or another person, was in immediate danger of death 
or serious bodily harm from the deceased;
    (2) There was no way to escape or retreat in order to avoid the 
danger of death or serious bodily harm; and
    (3) The action causing the death was necessary to avoid the danger 
of death or serious bodily harm.
    (d) Effect of court of law proceeding on VA finding of homicide.--
(1) Conviction. VA will accept a court of law conviction of homicide as 
binding.
    (2) In all other situations, including those in which the person 
was acquitted of criminal charges or in which the conviction was 
reversed on appeal and the person is not retried, VA will develop the 
necessary evidence and determine whether the person was guilty of 
homicide, as defined in paragraph (a)(1) of this section.
    (e) Effect of court of law proceeding on VA finding of insanity at 
time of killing. VA will accept as binding a court's determination that 
a person was insane at the time of the killing. In other cases, if 
insanity is alleged, VA will develop the necessary evidence and 
determine whether the person was insane.
    (f) Effect of homicide on eligibility for death benefits.--(1) 
General rule. The general rule is that VA will make payments to 
eligible innocent beneficiaries as if the person who committed the 
homicide did not exist.
    (2) Homicide of a veteran by the veteran's spouse. In the case of a 
homicide of a veteran by the veteran's spouse, VA will pay benefits to 
the veteran's eligible children as if there were no surviving spouse.
    (3) Homicide of veteran by the veteran's child. The following rules 
apply in the case of a homicide of a veteran by the veteran's child:
    (i) VA will pay to the veteran's surviving spouse any additional 
benefits to which the spouse is entitled on account of that child, if 
the surviving spouse has actual or constructive custody of the child.
    (ii) If the surviving spouse does not have actual or constructive 
custody of the child, VA will pay death benefits to the eligible 
surviving spouse as if the child did not exist.
    (iii) VA will pay death benefits to any other child of the veteran 
(including apportionments of benefits based on the veteran's death) as 
if the child who committed the homicide did not exist.
    (4) Homicide of a veteran by the veteran's parent. In the case of a 
homicide of a veteran by the veteran's parent, VA will pay benefits to 
which the veteran's other parent is entitled as if the parent who 
committed the homicide did not exist.
    (5) Homicide of one claimant or beneficiary by another claimant or 
beneficiary. In the case of homicide of a VA claimant or beneficiary by 
another VA claimant or beneficiary, the person who committed the 
homicide cannot receive any increase in benefits based on the death of 
the victim. For example, if both beneficiaries are children of a 
deceased veteran, the child who committed the homicide is not entitled 
to any increase in benefits based on the death of the deceased child. 
If one of the veteran's parents is responsible for the homicide of the 
other parent, the parent who committed the homicide is not entitled to 
receive benefits, or an increase in benefits, based on being a sole 
surviving parent.
    (6) Homicide and accrued benefits or benefits awarded, but unpaid 
at death. Accrued benefits and benefits awarded, but unpaid at death, 
are paid to various classes of claimants, each of which takes 
precedence over lower classes of beneficiaries. See Sec.  5.551, 
``Persons entitled to accrued benefits or benefits awarded, but unpaid 
at death.'' The homicide of a person who is a member of a higher 
priority class by a person in a lower priority class will not entitle 
the wrongdoer to such benefits. The homicide of one member of a class 
by a person in the same class will not entitle the wrongdoer to an 
increased share of the benefits payable to the members of that class 
because of the death of the person slain.

(Authority: 38 U.S.C. 501(a))

Sec. Sec.  5.664--5.674  [Reserved]

Forfeiture and Renouncement of the Right to VA Benefits


Sec.  5.675  General forfeiture provisions.

    (a) Forfeiture does not bar benefits based on later periods of 
service. Forfeiture of benefits based on one period of service does not 
affect entitlement to benefits based on a later period of service that 
begins after the commission of the offense(s) that caused the 
forfeiture.
    (b) Violation of hospital rules not grounds for forfeiture. Pension 
or compensation benefits are not subject to forfeiture because of 
violation of hospital rules.

(Authority: 38 U.S.C. 501(a), 6103, 6104, 6105)

Sec.  5.676  Forfeiture for fraud.

    (a) Definition of fraud. For purposes of this section, the 
definition of fraud in Sec.  3.901(a) applies.
    (b) Forfeiture for fraud after September 1, 1959.--(1) Persons 
subject to forfeiture. After September 1, 1959, forfeiture for fraud 
will be found only if:
    (i) The person committing the fraud was not residing or domiciled 
in a State at the time of the commission of the fraud; or
    (ii) The person committing the fraud ceased to be a resident of or 
domiciled in a State before expiration of the period during which 
criminal prosecution could be instituted; or

[[Page 31065]]

    (iii) The fraud was committed in the Philippine Islands.
    (2) Effect of forfeiture for fraud. Any person for whom forfeiture 
for fraud is found forfeits all rights to VA benefits provided under 
this part. The forfeiture applies to both current and future VA benefit 
entitlement.
    (3) Effect on dependents of forfeiture for fraud.--(i) 
Apportionment. After September 1, 1959, VA may not apportion benefits 
forfeited for fraud.
    (ii) Death benefits. See paragraph (d) of this section.
    (iii) Burial benefits. See [regulation that will be published in a 
future Notice of Proposed Rulemaking] (concerning the effect of 
forfeiture on burial benefits).
    (4) Effective date of forfeiture. See Sec.  5.681 (concerning the 
effective date of forfeitures for fraud).
    (5) Suspension for fraud. When a case is recommended for forfeiture 
for fraud in accordance with Sec.  5.679, VA will suspend payment of 
benefits provided under this part. If VA ultimately decides that 
forfeiture for fraud is not appropriate, VA will restore payments 
effective the first day of the month that follows the month for which 
VA last paid benefits, if otherwise in order.
    (c) Forfeiture before September 2, 1959.--(1) Forfeitures continue 
to bar benefits. Any forfeiture in effect before September 2, 1959, 
continues to bar benefits on and after September 2, 1959, except where 
there is a Presidential pardon for commission of the offense(s) leading 
to the forfeiture, or where VA remits the forfeiture under the 
provisions of Sec.  5.680, ``Remission of forfeiture.''
    (2) Effect on dependents of forfeiture for fraud.--(i) 
Apportionment of disability compensation. (A) When payable. Disability 
compensation a veteran forfeited for fraud may be paid to the veteran's 
spouse, child, or parent if the forfeiture was found before September 
2, 1959, and if VA authorized the apportionment before September 2, 
1959.
    (B) Amount that may be apportioned. The total apportioned amount is 
the lesser of the service-connected death benefit that would be payable 
if the veteran were dead or the amount of disability compensation that 
would have been paid to the veteran but for the forfeiture.
    (C) Participation in the fraud bars apportionment. VA may not 
apportion benefits forfeited for fraud to any dependent who 
participated in the fraud that caused the forfeiture.
    (ii) Death benefits. See paragraph (d) of this section.
    (3) Remission. See Sec.  5.680(c), ``Special rules for remission of 
a forfeiture for fraud imposed before September 2, 1959.''
    (d) Death benefits.--(1) Veteran's fraud does not bar dependents' 
death benefits. A veteran's forfeiture of benefits for fraud does not 
bar the award of death pension, death compensation, or dependency and 
indemnity compensation to eligible dependents.
    (2) Dependent's participation in fraud bars death benefits. VA may 
not pay death benefits to any surviving dependent who participated in 
the fraud that caused the forfeiture of the veteran's benefits.
    (e) Presidential pardons. See Sec.  5.682, ``Presidential pardon 
for offenses causing forfeiture.''

(Authority: 38 U.S.C. 501(a), 6103)


    Cross Reference: For decision procedures, see Sec.  5.679, 
``Forfeiture decision procedures.''


Sec.  5.677  Forfeiture for treasonable acts.

    (a) Definition of treasonable acts. For purposes of this section, 
treasonable acts are acts of mutiny, treason, sabotage, or rendering 
assistance to an enemy of the United States or of its allies.
    (b) Forfeiture for treasonable acts after September 1, 1959.--(1) 
Persons subject to forfeiture. After September 1, 1959, forfeiture for 
treasonable acts will be found only where:
    (i) The person committing the treasonable act was not residing or 
domiciled in a State at the time of the commission of the treasonable 
act;
    (ii) The person committing the treasonable act ceased to be a 
resident of or domiciled in a State before expiration of the period 
during which criminal prosecution could be instituted; or
    (iii) The treasonable act was committed in the Philippine Islands.
    (2) Effect of a forfeiture for treasonable acts. Any person for 
whom forfeiture for treasonable acts is found after September 1, 1959, 
forfeits all rights to VA benefits provided under this part. The 
forfeiture applies to both current and future VA benefit entitlement.
    (3) Effect on dependents of a forfeiture for treasonable acts. 
After September 1, 1959, VA has no authority to make either of the 
following awards to dependents of a veteran who forfeited VA benefits 
for treasonable acts:
    (i) An apportionment award of the forfeited benefits.
    (ii) An award of VA benefits provided under this part to the 
veteran's dependents based on a period of the veteran's active military 
service that began before the date of commission of the treasonable 
acts.
    (4) Effective date of forfeiture. See Sec.  5.681 (concerning the 
effective date of forfeitures for treasonable acts).
    (5) Suspension for treasonable acts. When a case is recommended for 
consideration of forfeiture for treasonable acts in accordance with 
Sec.  5.679, VA will suspend payment of VA benefits provided under this 
part. If VA ultimately decides that forfeiture for treasonable acts is 
not appropriate, VA will restore payments effective the first day of 
the month that follows the month for which VA last paid benefits, if 
otherwise in order.
    (c) Forfeiture before September 2, 1959.--(1) Forfeitures continue 
to bar benefits. Any forfeiture in effect before September 2, 1959, 
continues to bar benefits on and after September 2, 1959, except where 
there is a Presidential pardon for commission of the offense(s) leading 
to the forfeiture, or where VA remits the forfeiture under the 
provisions of Sec.  5.680, ``Remission of forfeiture.''
    (2) Effect on dependents of a forfeiture for treasonable acts--(i) 
Apportionment of forfeited benefits--(A) When payable. If forfeiture 
for treasonable acts was found before September 2, 1959, and if VA 
authorized the apportionment before September 2, 1959, VA may pay any 
part of the forfeited benefits to the dependents of the person who 
forfeited benefits, as follows:
    (B) Amount of compensation that may be apportioned. If the 
forfeited benefit is disability compensation, the total amount payable 
to the veteran's spouse, children and parents is the lesser of the 
service-connected death benefit that would be payable if the veteran 
were dead or the amount of disability compensation that would have been 
paid to the veteran but for the forfeiture.
    (C) Amount of pension that may be apportioned. If the forfeited 
benefit is pension, the total amount payable to the veteran's spouse 
and children is the lesser of the nonservice-connected death benefit 
that would be payable if the veteran were dead or the amount of pension 
being paid to the veteran at the time of the forfeiture.
    (D) Participation in the treasonable acts bars apportionment. VA 
may not apportion benefits forfeited for treasonable acts to any 
dependent of a beneficiary who participated in the treasonable acts 
that caused the forfeiture.
    (ii) Death benefits. VA may pay death pension, death compensation, 
or dependency and indemnity compensation to the eligible surviving

[[Page 31066]]

dependents of a veteran who forfeited VA benefits for a treasonable act 
if all of the following are true:
    (A) The forfeiture was found before September 2, 1959;
    (B) The specified death benefits were authorized before September 
2, 1959; and
    (C) The payee of the specified death benefits did not participate 
in the treasonable acts that caused the forfeiture.
    (d) Effect of a child's treasonable act on the benefits of a 
surviving spouse. Treasonable acts committed by a child in the 
surviving spouse's custody do not affect the spouse's award of 
additional death benefits for that child.
    (e) Presidential pardons. See Sec.  5.682, ``Presidential pardon 
for offenses causing forfeiture.''

    (Authority: 38 U.S.C. 501(a), 6103(d)(1), 6104)

    Cross Reference: For forfeiture procedures, see Sec.  5.679, 
``Forfeiture decision procedures.''


Sec.  5.678  Forfeiture for subversive activity.

    (a) Definition of subversive activity. Subversive activity is any 
of the following offenses in the United States Code for which 
punishment is prescribed:
    (1) Title 10, ``Armed Forces'' (Uniform Code of Military Justice).
    (i) Section 894--(Art. 94, ``Mutiny or sedition'').
    (ii) Section 904--(Art. 104, ``Aiding the enemy'').
    (iii) Section 906--(Art. 106, ``Spies'').
    (2) Title 18, ``Crimes and Criminal Procedure.''
    (i) Section 792, ``Harboring or concealing persons.''
    (ii) Section 793, ``Gathering, transmitting, or losing defense 
information.''
    (iii) Section 794, ``Gathering or delivering defense information to 
aid foreign government.''
    (iv) Section 798, ``Disclosure of classified information.''
    (v) Section 2381, ``Treason.''
    (vi) Section 2382, ``Misprision of treason.''
    (vii) Section 2383, ``Rebellion or insurrection.''
    (viii) Section 2384, ``Seditious conspiracy.''
    (ix) Section 2385, ``Advocating overthrow of Government.''
    (x) Section 2387, ``Activities affecting armed forces generally.''
    (xi) Section 2388, ``Activities affecting armed forces during 
war.''
    (xii) Section 2389, ``Recruiting for service against United 
States.''
    (xiii) Section 2390, ``Enlistment to serve against United States.''
    (xiv) Chapter 105, ``Sabotage.''
    (3) Title 18, ``Crimes and Criminal Procedure''--claims filed on 
and after December 16, 2003. With respect to the forfeiture of benefits 
awarded on the basis of claims filed on and after December 16, 2003, 
the following offenses in Title 18 are also subversive activities:
    (i) Section 175, ``Prohibitions with respect to biological 
weapons.''
    (ii) Section 229, ``Prohibited activities.''
    (iii) Section 831, ``Prohibited transactions involving nuclear 
materials.''
    (iv) Section 1091, ``Genocide.''
    (v) Section 2332a, ``Use of certain weapons of mass destruction.''
    (vi) Section 2332b, ``Acts of terrorism transcending national 
boundaries.''
    (4) Title 42, The Public Health and Welfare.
    (i) Section 2272, ``Violation of specific sections.''
    (ii) Section 2273, ``Violation of sections.''
    (iii) Section 2274, ``Communication of Restricted Data.''
    (iv) Section 2275, ``Receipt of Restricted Data.''
    (v) Section 2276, ``Tampering with Restricted Data.''
    (5) Title 50, War and National Defense. Section 783, ``Offenses.''
    (b) Indictment or conviction for subversive activity.--(1) Sources 
of notification. The Secretary of Defense or the Secretary of Homeland 
Security, as applicable, notifies VA in each case in which an 
individual is convicted of an offense listed in paragraph (a)(1) of 
this section. The Attorney General notifies VA in each case in which an 
individual is indicted or convicted of an offense listed in paragraphs 
(a)(2) through (5) of this section.
    (2) Indictment--(i) VA action on notice of indictment. Upon receipt 
of notice of the return of an indictment for subversive activity, VA 
will suspend payment of VA benefits provided under this part to the 
individual indicted pending disposition of the criminal proceedings. 
Payments will be suspended effective the first day of the month that 
follows the month for which VA last paid benefits.
    (ii) VA action on notice of acquittal. If the person indicted for 
subversive activity is acquitted or otherwise not convicted, VA will 
restore payments effective the first day of the month that follows the 
month for which VA last paid benefits, if otherwise in order.
    (3) Conviction--(i) VA action on notice of conviction. Upon receipt 
of notice that a VA beneficiary was convicted after September 1, 1959, 
of subversive activity, VA will make a decision on forfeiture as 
provided in Sec.  5.679(c)(1).
    (ii) Benefits forfeited. Any person convicted of subversive 
activity forfeits all rights to VA benefits provided under this part. 
The forfeiture applies to both current and future benefits.
    (iii) Effective date of forfeiture upon conviction. See Sec.  
5.681(b)(3), ``Effective dates--forfeiture for subversive activity.''
    (iv) Effect on dependents. VA may not award benefits provided under 
this part to the dependents of a veteran who was convicted of 
subversive activity after September 1, 1959, if the award would be 
based on a period of the veteran's active military service that began 
before the date of commission of the subversive activity.
    (c) Presidential pardons.--(1) Restoration of forfeited benefits. 
See Sec.  5.682, ``Presidential pardon for offenses causing 
forfeiture.''
    (2) Restoration of benefits for surviving dependents. Upon 
application following Presidential pardon for the offenses leading to 
forfeiture for subversive activity, a veteran's dependents may be paid 
death pension, death compensation, or dependency and indemnity 
compensation, if otherwise eligible for that benefit.

(Authority: 38 U.S.C. 501(a), 6105)

Sec.  5.679  Forfeiture decision procedures.

    (a) Officials authorized to make a forfeiture decision; recommend 
forfeiture; or refer forfeiture cases--(1) Forfeiture decisions. An 
official authorized under Sec.  3.100(b) of this chapter (the Director 
of the C&P Service or his or her designee) shall have the authority to 
make a forfeiture decision.
    (2) Recommendation of forfeiture. A Regional Counsel or, in the 
Manila Veterans Service Center (VSC), the Veterans Service Center 
Manager (VSCM) shall have authority to recommend forfeiture and submit 
the case to such an official.
    (3) Referral of forfeiture cases. The following individuals may 
refer cases to the Regional Counsel or VSCM in Manila, as appropriate, 
for consideration whether to recommend the case for forfeiture: the 
director of a Veterans Benefits Administration service, the Chairman, 
Board of Veterans' Appeals, or the General Counsel.
    (b) VA obligations prior to recommending forfeiture based on fraud 
or treasonable acts. Before recommending forfeiture for fraud or 
treasonable acts under paragraph (a) of this section, the Regional 
Counsel or, in Manila, Philippines, the VSCM must

[[Page 31067]]

provide the beneficiary or claimant with written notice that VA is 
proposing to make a forfeiture decision and of the right to present a 
defense. The notice will be sent to the person's latest address of 
record and will include the following information:
    (1) The specific charges against the person;
    (2) A detailed statement of the evidence supporting the charges 
(subject to regulatory limitations on disclosure of information);
    (3) A citation and discussion of the applicable statute;
    (4) The right to submit a statement or evidence within 60 days 
after the date of the notice, either to rebut the charges or explain 
the person's position;
    (5) The right to a hearing within 60 days after the date of the 
notice, with representation by counsel of the person's own choosing; 
and
    (6) Information about that fees for representation are limited in 
accordance with 38 U.S.C. 5904, ``Recognition of agents and attorneys 
generally,'' and that VA will not pay expenses incurred by a claimant, 
his or her counsel, or witnesses.
    (c) Standards for forfeiture.--(1) Forfeiture upon conviction of 
engaging in subversive activity. An official authorized under Sec.  
3.100(b) of this chapter will make a decision to forfeit benefits when 
notified that a VA beneficiary has been convicted of an offense 
involving subversive activity.
    (2) Forfeiture for engaging in fraud or treasonable acts. An 
official authorized under Sec.  3.100(b) of this chapter will make a 
forfeiture decision when the official determines that the evidence 
shows beyond a reasonable doubt that a VA claimant or beneficiary has 
engaged in fraud as defined in Sec.  5.576(a), or one or more 
treasonable acts as defined in Sec.  5.677(a).
    (d) Administrative appeal. An authorized VA official may file an 
administrative appeal of a forfeiture decision under the provisions in 
Sec.  19.51 of this chapter, ``Officials authorized to file 
administrative appeals and time limits for filing.''
    (e) Finality of forfeiture decisions. Forfeiture decisions are 
final and binding under the provisions in Sec.  3.104(a) of this 
chapter (concerning the binding effect of a decision by an agency of 
original jurisdiction on all VA field offices); Sec.  20.1103 of this 
chapter, ``Finality of determinations of the agency of original 
jurisdiction where appeal is not perfected;'' or Sec.  20.1104 of this 
chapter, ``Finality of determinations of the agency of original 
jurisdiction affirmed on appeal;'' as applicable.



(Authority: 38 U.S.C. 501(a), 512(a), 6103, 6104)


Sec.  5.680  Remission of forfeiture.

    (a) Authority to make remission decisions. See Sec.  3.100(b) of 
this chapter (concerning the delegation of authority to make forfeiture 
decisions).
    (b) Standards.--(1) Clear and unmistakable error. VA will remit a 
forfeiture upon a showing that the forfeiture decision involved clear 
and unmistakable error. See Sec.  3.105(a) of this chapter (concerning 
reversal or amendment of prior decisions based on clear and 
unmistakable error).
    (2) New and material evidence. VA will remit a forfeiture upon the 
submission of new and material evidence establishing that forfeiture 
should not be continued, see Sec.  3.156 of this chapter, ``New and 
material evidence.'' In accordance with the requirements noted in Sec.  
3.156(a) of this chapter, the new and material evidence must directly 
relate to the basis for forfeiture.
    (c) Special rules for remission of a forfeiture for fraud imposed 
before September 2, 1959.--(1) Basis for remission. If a forfeiture for 
fraud was imposed before September 2, 1959, and that forfeiture would 
not be imposed under the statutes and regulations in effect on and 
after September 2, 1959, the forfeiture will be remitted.
    (2) Effective dates--(i) Effective date of remission. Remission of 
a forfeiture under paragraph (c)(1) of this section is effective June 
30, 1972.
    (ii) Effective date of payments. Upon receipt of an application, VA 
will award benefits under paragraph (c)(1) of this section effective as 
of the date provided by Sec.  3.114 of this chapter, ``Change of law or 
Department of Veterans Affairs issue.''
    (3) Deduction of apportionment payments. (i) Applicability. This 
paragraph applies when all of the following are true:
    (A) VA remitted a forfeiture under paragraph (c)(1) of this 
section.
    (B) During the period of time that the forfeiture was in effect, VA 
apportioned some or all of the forfeited benefits to the beneficiary's 
dependents as provided in Sec.  5.676(c)(2).
    (C) The remission results in payments being due to the beneficiary 
for periods during which the apportionment was being paid to the 
beneficiary's dependents.
    (ii) Deduction. The payments to the beneficiary will be reduced by 
the amount of apportioned benefits paid to the beneficiary's dependents 
during the time stated in paragraph (c)(3)(i)(C).

(Authority: 38 U.S.C. 501(a), 6103(d)(2))

Sec.  5.681  Effective dates--forfeiture.

    (a) Suspension upon recommendation of forfeiture for fraud or 
treasonable acts.--(1) Suspension on recommendation for forfeiture. VA 
will suspend payment, effective the first day of the month after the 
most recent month for which VA has paid benefits, upon receipt of 
notice from a VA Regional Counsel, or from the Veterans Service Center 
Manager in Manila, Philippines, when such an official recommends 
forfeiture for fraud or treasonable acts pursuant to Sec.  5.679.
    (2) Restoration of payments where forfeiture for fraud or 
treasonable acts is not warranted. VA will restore payments effective 
the first day of the month after the most recent month for which VA 
paid benefits, if otherwise in order, if VA decides that forfeiture is 
not appropriate.
    (b) Effective dates of forfeiture.--(1) Forfeiture for fraud. A 
forfeiture of VA benefits for fraud is effective the later of the 
starting date of the award of the forfeited benefits or the day before 
the commission of the act resulting in forfeiture.
    (2) Forfeiture for treasonable acts. A forfeiture of VA benefits 
for treasonable acts is effective the earlier of the date of the 
forfeiture decision or the first day of the month following the month 
for which VA last paid benefits.
    (3) Forfeiture for subversive activity. A forfeiture of VA benefits 
for conviction for subversive activity is effective the later of the 
starting date of the award of the forfeited benefits or the day before 
the commission of the subversive activity for which the beneficiary was 
convicted.

(Authority: 38 U.S.C. 5112(a), (b)(9); 6105)

Sec.  5.682  Presidential pardon for offenses causing forfeiture.

    (a) Restoration of rights to VA benefits. If the President of the 
United States pardons the offenses that were the basis of a forfeiture 
decision, VA will restore rights to all forfeited VA benefits effective 
the date of the pardon, if otherwise in order.
    (b) Effective date of resumption of payment of monetary benefits. 
Once rights have been restored under paragraph (a) of this section, VA 
will resume payment of forfeited VA monetary benefits, if otherwise in 
order, as follows:
    (1) If an application is filed within one year after the date of 
the pardon, VA will restore payments effective the date of the pardon.
    (2) If an application is filed more than one year after the date of 
the pardon, VA will restore payments effective the date of receipt of 
the application.

[[Page 31068]]

    (c) Payment subject to recovery of overpayments. Payment of VA 
monetary benefits following Presidential pardon of the offenses that 
were the basis of a forfeiture decision is subject to recovery of any 
existing overpayments.
    (d) Discontinuance of apportionments. VA will discontinue any 
benefits apportioned to a dependent under Sec. Sec.  5.676(c)(2)(i) or 
5.677(c)(2)(i) effective the day before the date of the pardon.

(Authority: 38 U.S.C. 501(a), 6105(a))

Sec.  5.683  Renouncement of benefits.

    (a) Who may renounce a benefit. A person entitled to receive 
compensation, pension, or dependency and indemnity compensation (DIC) 
under the laws administered by VA may renounce their right to that 
benefit.
    (b) How to renounce a benefit. The renouncement of the right to 
receive a VA benefit must be in writing and must be signed by the 
beneficiary, and not by a fiduciary or by a representative. The 
renouncement must be for the entire benefit, not a portion of it.
    (c) Effective date of renouncement. VA will discontinue payment of 
renounced benefits effective the last day of the month in which VA 
received the renouncement. If payments had been suspended, VA will 
discontinue payment of renounced benefits effective the first day of 
the month that follows the month for which VA last paid benefits.
    (d) Effect of renouncement of DIC on the rights of other 
beneficiaries.--(1) Effect on other beneficiaries in the same class. 
The renouncement of DIC by one beneficiary does not increase the rate 
payable to any other DIC beneficiary in the same class. For example, 
the renouncement of DIC by one child will not increase the DIC rate 
payable to another child.
    (2) Effect of renouncement by surviving spouse on rights of 
children. The renouncement of DIC by a surviving spouse does not 
entitle a child under the age of 18 to DIC, or increase the DIC rate 
payable to a child over the age of 18.
    (e) Reapplying for renounced benefits.--(1) General rules.
    (i) A beneficiary who renounced the right to receive a VA benefit 
may reapply for the same benefit at any time. VA will treat the new 
application as an original claim.
    (ii) Except as provided otherwise in paragraph (e)(2) of this 
section, the effective date for the award of benefits resulting from 
the new application will be the date of receipt of that application.
    (2) Special rule applicable to pension and parents' DIC benefit 
renouncements. If a beneficiary who has renounced pension or parents' 
DIC benefits files a new application for the same benefit within one 
year after renouncement, the application will not be treated as an 
original application and the benefit will be payable as if VA never 
received the renouncement.

(Authority: 38 U.S.C. 501(a), 5112(a), 5306)


    Cross Reference: See Sec.  5.83(c)(4) for procedures VA uses to 
discontinue payments of renounced benefits.


Sec. Sec.  5.684--5.689  [Reserved]

[FR Doc. 06-4940 Filed 5-30-06; 8:45 am]
BILLING CODE 8320-01-P