[Federal Register Volume 88, Number 237 (Tuesday, December 12, 2023)]
[Rules and Regulations]
[Pages 86058-86062]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-27176]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF VETERANS AFFAIRS
38 CFR Part 3
RIN 2900-AP86
Active Service Pay
AGENCY: Department of Veterans Affairs.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Department of Veterans Affairs (VA) amends its
adjudication regulations to permit VA to adjust disability compensation
payments under certain circumstances upon receipt of notice from the
Department of Defense (DoD) that the veteran has received or is
receiving active service pay. The effect of this action is to reduce
overpayments and erroneous payments associated with receipt of VA
disability compensation and DoD active service pay by allowing VA to
make necessary adjustments as close in time to the receipt of active
service pay as possible. Additionally, the amendments will allow VA to
resume payments discontinued due to receipt of active service pay based
on information received from DoD. The amendments will also clarify how
VA adjudicates benefit adjustments based on a veteran's receipt of
active service pay for certain types of service.
DATES: Effective Date: This rule is effective January 11, 2024.
FOR FURTHER INFORMATION CONTACT: Robert Parks, Chief, Regulations Staff
(211C), Compensation Service (21C), Veterans Benefits Administration,
Department of Veterans Affairs, 810 Vermont Avenue NW, Washington, DC
20420, (202) 461-9540. (This is not a toll-free telephone number.)
SUPPLEMENTARY INFORMATION: On April 19, 2019, VA published a proposed
rule in the Federal Register at 84 FR 16421 to amend 38 CFR 3.103 and
3.654 to permit VA to suspend disability compensation payments upon
receipt of
[[Page 86059]]
notice from DoD that the veteran has received or is receiving active
service pay and to clarify how VA adjudicates benefit adjustments based
on receipt of active service pay for certain types of service. Section
5304(c) of title 38, United States Code, provides that pension,
compensation, or retirement pay shall not be paid for any period in
which a veteran receives active service pay. Currently, VA cannot take
immediate action on DoD-provided information but rather must provide a
veteran with notice of a proposed adverse action--such as suspension of
disability compensation payments--and 60 days to provide evidence
showing why the adverse action should not be taken. VA continues to pay
benefits during this 60-day period. This becomes problematic for some
veterans on active duty serving in remote locations, such as a combat
zone or similarly austere environments, with infrequent mail service
and no reasonable method for dealing with financial matters. As a
result of this rulemaking, VA will be able to leverage technological
advancements and process benefit adjustments based upon information
received from DoD regarding a veteran's receipt of active service pay
under certain circumstances, described in more detail below.
VA invited interested persons to submit written comments on or
before June 18, 2019. VA received four comments in response to the
proposed rule. VA received comments from two organizations, National
Organization of Veterans' Advocates, Inc. (NOVA) and Disabled American
Veterans (DAV), and two members of the public. Some comments addressed
more than one issue. In those instances, VA reviewed and considered
each issue independently. VA also grouped all of the issues raised by
the commenters that concerned at least one portion of the rule together
by topic. VA organized the responses to the comments by topic. The
responses to the comments are as follows:
I. Remove Reference to Prospective Receipt of Pay
Two comments requested the removal of the phrase ``will receive
active service pay,'' in the proposed regulatory text in 38 CFR
3.103(b)(3)(v). One commenter asserted that suspending compensation
based on notice that a veteran will receive active service pay is
inconsistent with 38 U.S.C. 5304(c). The commenter also contended that
active duty dates could change, or receipt of active service pay could
be delayed, potentially creating a situation where a veteran has his/
her compensation suspended but does not receive active service pay. The
other commenter asserted that including the language ``will receive
active service pay'' increases the risk that someone will have benefits
suspended before he or she is actually receiving active service pay.
Concerning notice from DoD, VA clarifies that DoD will not inform
VA of prospective active service pay, only past and current pay. VA
revises Sec. 3.103(b)(3)(v) to clarify that veterans can submit notice
concerning past, current, and future receipt of active service pay, and
DoD notice will only pertain to past or current receipt of active
service pay. Accordingly, changes will not be made on the basis of
notice of prospective pay from DoD.
Concerning notice provided to VA by a veteran, VA will continue to
take action, without any advance notice period, based on statements by
a veteran indicating that the veteran will receive active service pay.
Payments, however, are discontinued effective the day preceding
reentrance on active duty, not as of the date of receipt of the notice.
If a veteran informs VA prior to the discontinuance of payments that
the dates of service have changed or the veteran will no longer return
to service, VA will make the necessary adjustments prior to the
discontinuance if time allows and will otherwise reinstate benefits the
same day they were discontinued. In the case of training pay, benefits
are withheld for the number of training days in the relevant time
period. If a veteran provides timely notice that pay was not received
for expected training duty, retroactive payments will be authorized. 38
CFR 3.654(c). Therefore, VA does not agree that dispensing with the 60-
day notice period in this situation is inconsistent with 38 U.S.C.
5304(c), which precludes concurrent receipt of VA compensation and
active service pay.
II. Expedited Review
One comment recommended that VA provide an expedited review process
for veterans who allege error in the suspension of compensation
benefits based on notice of receipt of active service pay. VA points
out that, due to the Veterans Appeals Improvement and Modernization Act
of 2017, Public Law 115-55, veterans who disagree with a decision by VA
have options including requesting a higher-level review if additional
evidence is not needed to resolve the matter or filing a supplemental
claim if additional evidence is needed. VA's goal for completing
higher-level reviews and supplemental claims is 125 days. Therefore,
there are avenues for review of such allegations of errors to receive
expeditious processing in the current claims processing framework. VA
makes no changes based on this comment.
III. General
VA received two general comments that were not associated with
preventive efforts to reduce the financial burden on veterans of
overpayments due to concurrent receipt of both VA disability
compensation and DoD active service pay. One commenter expressed
disagreement with the proposed rule, stating that veterans should be
compensated more, not less. This rulemaking affects the process for
making necessary adjustments based on receipt of active service pay,
not the amount of compensation to which a veteran is entitled. Section
5304(c) of title 38, United States Code, clearly precludes concurrent
receipt of VA compensation and active service pay. VA does not have
authority to ignore this statutory command in order to provide veterans
additional compensation. The commenter also discussed concerns for
veterans with mental health symptoms. VA makes no changes based on this
comment as it is beyond the scope of this rulemaking.
The other comment consisted of a consent agreement from a banking
institution without any accompanying text describing why the document
was submitted as a comment or how it pertains to active service pay.
This comment is not relevant to the rule amendment; therefore, VA makes
no changes based on this comment.
IV. Resuming Payments Based on DoD Notice
Based on further agency consideration, VA makes additional changes
to the proposed rule. VA proposed amendments to allow VA to suspend
disability compensation payments based on notice from DoD of receipt of
active service pay, explaining that the regulatory change would reduce
the financial impact on veterans associated with receipt of VA
disability compensation and DoD active service pay as well as reducing
the reporting burden on veterans in cases where VA receives information
directly from DoD. 84 FR 16421 (April 19, 2019). VA also explained that
VA and DoD were discussing changes to the way VA receives notification
that a veteran has received active service pay. 84 FR at 16423. VA has
determined that, in addition to discontinuing payments based on DoD
notice under certain circumstances, described in more detail below, it
will be possible in many cases
[[Page 86060]]
to resume payments based on information received from DoD. This will
reduce the reporting burden on veterans in cases where VA receives
information directly from DoD. There may be cases, however, where VA
does not receive timely notice of a veteran's release from active duty
or active duty for training from DoD. Therefore, VA revises 38 CFR
3.654(b)(2) to allow VA to resume payments based on notice from DoD
that a veteran has been released from active duty or active duty for
training while maintaining the option for the veteran to inform VA of
such release by filing a claim to recommence payments. If VA receives
notice from DoD or a claim for recommencement of payments within one
year from the date of release from active duty or active duty for
training, payments, if otherwise in order, will be resumed effective
the day following release. Otherwise, payments will be resumed
effective one year prior to the date of receipt of a new claim.
Resuming payments based on notice from DoD is consistent with VA's
goal, described in the proposed rule, of minimizing the financial
impact and reporting burdens for veterans resulting from the
prohibition on concurrent receipt of VA benefits and active service
pay. VA therefore considers resuming benefit payments based on notice
from DoD to be a logical outgrowth of the proposed rule. We emphasize
that VA considers the automatic resumption of payments based on DoD
notice to generally be a liberalizing change that should generally
expedite access to benefits and reduce the need for administrative
action on the part of both the veteran and VA.
As a corollary to this change, VA has added language clarifying
that a claim for increase must be filed in order for additional
benefits to be paid. This is not a change to existing requirements, as
the relevant statute and regulation tie the effective date of an award
of increased compensation to the date of receipt of claim. 38 U.S.C.
5110(b)(3); 38 CFR 3.400(o)(2). Rather, VA included the clarification
as a reminder that, even if VA resumes payments based on receipt of
notice from DoD that a veteran has been released from service, the
veteran must still file a claim for increase if he or she seeks an
increased rating.
In a similar manner, VA has revised the language regarding
resumption of compensation payments to reflect that the resumption will
be based on the combined evaluation in effect at the time payments were
discontinued. If a reduction in disability evaluation is warranted that
would not lower the combined evaluation, the reduction may be processed
at the same time as the resumption of payments, as the overall payment
will not be affected. If VA determines that a reduction in evaluation
is warranted that would lower the combined evaluation, the reduction
will be governed by 38 CFR 3.105(e), after payments are resumed at the
level previously in effect. This will ensure that veterans receive
notice of any proposed reductions to the compensation in effect at the
time payments were discontinued, even if resumption of payments is
based on notice from DoD.
V. Addressing Concerns About Notice
Upon additional review it was determined that the proposed rule
conflicted with the Privacy Act, specifically 5 U.S.C. 552a(p), which
requires notice to an individual prior to an agency taking adverse
action as a result of information produced by a matching program. To
address this conflict, we have amended the rule so that VA will only
suspend compensation based on information from DoD without additional
advance notice when the veteran has previously received 30-day advance
notice addressing concurrent receipt of compensation and payment for
the type of service at issue as well as notice that suspension of
compensation payments based on subsequent payments for the same type of
service will be made without additional advance notice. We have also
specified that in cases to which 38 CFR 3.700(a)(1)(iii) applies, in
order for the exception to advance notice contained in Sec.
3.103(b)(3)(v) to apply, VA must have received a waiver of VA benefits.
A one-time advance notice with respect to the first instance of double
payments would provide clear notice of the basis for the suspension of
compensation payments, and an opportunity to contest the findings that
led to the suspension, and could be applied to all subsequent payments
of the same benefit during periods of receipt of active service pay for
the same type of service. This change satisfies the notice requirements
of the Privacy Act, and in particular 5 U.S.C. 552a(p)(1)(C)(ii), while
still achieving the modernizing, pro-veteran goals of the proposed
rule. While this solution will not eliminate the initial overpayment to
an individual receiving both active service pay and disability
compensation, it will eventually result in a dramatic decrease in the
overall number of overpayments while providing each individual with the
due process intended by the notice requirement. VA believes it is clear
this result is a logical outgrowth of the proposed rule.
The proposed rule would have allowed for suspension of compensation
without advance notice to the veteran based on information from DoD as
long as the veteran had received prior notice that receipt of active
service pay precludes concurrent receipt of VA benefits or VA had
received a statement from the veteran indicating knowledge of such
preclusion. The final rule will only allow for suspension of
compensation without advance notice based on information from DoD if
the veteran also received, on a previous occasion of concurrent receipt
of compensation and payment for the type of service at issue, advance
notice of the suspension and notice that suspension of compensation
payments based on subsequent payments for the same type of service
would be made without additional advance notice. In other words, the
final rule provides greater protection to the individual, in terms of
the suspension of running compensation payments. See Veterans Justice
Grp., LLC v. Sec'y of Veterans Affairs, 818 F.3d 1336, 1344-45 (Fed.
Cir. 2016) (finding a final rule that adopted a different, but more
liberal approach than the proposed rule to be a logical outgrowth of
the proposed rule).
We have updated the language in 38 CFR 3.103(b)(3)(v) to ensure
that a written or electronic statement provided to VA by a veteran is
consistently referred to as a statement. We have also updated the
reference in 38 CFR 3.654(b)(2) to the second period of service,
replacing that term with the most recent period of service, as veterans
may have more than two periods of service. Finally, we made stylistic
changes in 38 CFR 3.654, replacing references to ``1 year'' with ``one
year.'' This document adopts as a final rule the proposed rule
published in the Federal Register on April 19, 2019 with changes as set
forth below.
Executive Orders 12866, 13563 and 14094
Executive Order 12866 (Regulatory Planning and Review) direct
agencies to assess the 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 effects, and other advantages;
distributive impacts; and equity). Executive Order 13563 (Improving
Regulation and Regulatory Review) emphasizes the importance of
quantifying both costs and benefits,
[[Page 86061]]
reducing costs, harmonizing rules, and promoting flexibility. Executive
Order 14094 (Executive Order on Modernizing Regulatory Review)
supplements and reaffirms the principles, structures, and definitions
governing contemporary regulatory review established in Executive Order
12866 of September 30, 1993 (Regulatory Planning and Review), and
Executive Order 13563 of January 18, 2011 (Improving Regulation and
Regulatory Review). The Office of Information and Regulatory Affairs
has determined that this rulemaking is not a significant regulatory
action under Executive Order 12866, as amended by Executive Order
14094. The Regulatory Impact Analysis associated with this rulemaking
can be found as a supporting document at www.regulations.gov.
Regulatory Flexibility Act
The Secretary hereby certifies that this final rule will not have a
significant economic impact on a substantial number of small entities
as they are defined in the Regulatory Flexibility Act (5 U.S.C. 601-
612). The factual basis for this certification is based on based on the
fact that no small entities or businesses make decisions regarding
payments or overpayments of VA service-connected disability
compensation. Therefore, pursuant to 5 U.S.C. 605(b), the initial and
final regulatory flexibility analysis requirements of 5 U.S.C. 603 and
604 do not apply.
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 the expenditure by
State, local, and tribal governments, in the aggregate, or by the
private sector, of $100 million or more (adjusted annually for
inflation) in any one year. This final rule will have no such effect on
State, local, and tribal governments, or on the private sector.
Paperwork Reduction Act
This final rule includes provisions constituting a revised
collection of information under the Paperwork Reduction Act of 1995 (44
U.S.C. 3501-3521) that require approval by the Office of Management and
Budget (OMB). Accordingly, under 44 U.S.C. 3507(d), the collection of
information for OMB is assigned control number 2900-0463, and must be
paired with this rulemaking action for OMB review and approval.
There are no provisions associated with this rulemaking
constituting any new collection of information, but there are
anticipated burden changes to the existing collection of information.
The respondent population for VA Form 21-8951-2 is composed of
individuals filing a waiver of either VA disability benefits or
military pay and allowances. VA currently batch sends pre-populated,
optional forms to those identified as possible dual recipients and
receives back approximately 12.4% for manual processing (71% are
electronically processed without a form after notice and expiration of
the due process period and the remaining 16.6% cannot be processed by
the batch program due to expired addresses, returns to active duty,
death, etc.). VA expects this process to continue unchanged for 1-2
years (with a simultaneous communication plan to spread knowledge of
the new program), then the number of batch forms being mailed will
significantly decrease due to the number of veterans who have responded
(currently 12.4%) and who will no longer receive the initial letter
with the VA Form 21-8951-2, with a concomitant reduction in the burden.
VA estimates the total annual reporting and recordkeeping burden to
be 207 hours. (Estimated 1,240 respondents x (multiplied by) 10 (burden
minutes)/(divided by) 60 = 207 burden hours.) VA estimates the total
information collection burden cost to be $6,160.32 per year (207 burden
hours x $29.76 per hour). The Bureau of Labor Statistics (BLS) gathers
information on full-time wage and salary workers. According to the
latest available BLS data, the mean hourly wage is $29.76 based on the
BLS wage code--``00-0000 All Occupations.'' This information was taken
from the following website: https://www.bls.gov/oes/current/oes_nat.htm.
The currently approved OMB control number 2900-0463 burden costs
are $65,293.44 (2,194 burden hours x $29.76 per hour). The projected
annual burden savings from implementation of this regulation are
$55,655.87.
Congressional Review Act
Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
the Office of Information and Regulatory Affairs designated this rule
as not a major rule, as defined by 5 U.S.C. 804(2).
List of Subjects in 38 CFR Part 3
Administrative practice and procedure, Claims, Disability benefits,
Veterans.
Signing Authority
Denis McDonough, Secretary of Veterans Affairs, approved and signed
this document on December 6, 2023, and authorized the undersigned to
sign and submit the document to the Office of the Federal Register for
publication electronically as an official document of the Department of
Veterans Affairs.
Jeffrey M. Martin,
Assistant Director, Office of Regulation Policy & Management, Office of
General Counsel, Department of Veterans Affairs.
For the reasons stated in the preamble, the Department of Veterans
Affairs amends 38 CFR part 3 as set forth below:
PART 3--ADJUDICATION
Subpart A--Pension, Compensation, and Dependency and Indemnity
Compensation
0
1. The authority citation for part 3, subpart A continues to read as
follows:
Authority: 38 U.S.C. 501(a), unless otherwise noted.
0
2. Amend Sec. 3.103 by revising paragraph (b)(3)(v) and adding a cross
reference paragraph to the end of the section to read as follows:
Sec. 3.103 Procedural due process and other rights.
* * * * *
(b) * * *
(3) * * *
(v) An adverse action based upon a written or electronic statement
provided to VA by a veteran that indicates that the veteran has
received, is in receipt of, or will receive active service pay as
defined by Sec. 3.654(a), or, in the case of compensation, written or
electronic notice from the Department of Defense that indicates that
the veteran has received or is in receipt of active service pay as
defined by Sec. 3.654(a), provided that, in cases involving notice
from the Department of Defense, the veteran has on a previous occasion
of concurrent receipt of compensation and payment for the type of
service at issue received the notice described in paragraph (b)(2), but
with a period of 30 rather than 60 days to respond, as well as notice
that suspension of compensation payments based on subsequent payments
for the same type of service will be made without additional advance
notice. The statement from the veteran or notice from the Department of
Defense must include the date on which the service resulting in receipt
of active service pay began or, in the case of a statement from the
veteran, the date on which the service resulting in receipt of active
service pay is expected to begin, or, in the case of training duty, the
number of training days performed, or, in the case
[[Page 86062]]
of a statement from the veteran, the number of training days expected
to be performed, during a specified period of time (e.g., last month,
last quarter, last year, next month, etc.). In order for this paragraph
to apply, the veteran must have received prior notice that receipt of
active service pay precludes concurrent receipt of VA benefits, or VA
must have received a statement from the veteran that indicates
knowledge of such preclusion. In cases to which Sec. 3.700(a)(1)(iii)
of this part applies, the Veteran must also have waived VA benefits.
When notice provided by the Department of Defense contains information
indicating that the monthly level of disability compensation for a
veteran exceeds the veteran's monthly active service pay rate, the
exception contained in this paragraph will only apply to a written or
electronic statement provided to VA by the veteran.
* * * * *
Cross References: Submission of statements or information affecting
entitlement to benefits. See Sec. 3.217(a). Active Service Pay. See
Sec. 3.654. General. See Sec. 3.700(a)(1).
0
3. Amend Sec. 3.654 by revising paragraphs (b) and (c) and adding an
authority citation to read as follows:
Sec. 3.654 Active service pay.
* * * * *
(b) Active duty or active duty for training. (1) Where the veteran
receives active service pay as a result of returning to active duty
status or active duty for training as described in Sec. 3.6(c), with
the exception of annual active duty for training typically performed 15
days each year by reservists and members of the National Guard and
Active Duty for Special Work to receive training (see paragraph (c) of
this section), the award will be discontinued effective the day
preceding reentrance into active duty or active duty for training
status. If the exact date is not known, payments will be discontinued
effective date of last payment, and the effective date of
discontinuance will be adjusted to the day preceding reentrance when
the date of reentrance has been ascertained from the service
department.
(2) Payments, if otherwise in order, will be resumed effective the
day following release from active duty or active duty for training if
notice from the Department of Defense of such release or a claim for
recommencement of payments is received within one year from the date of
such release; otherwise, payments will be resumed effective one year
prior to the date of receipt of a new claim. Prior determinations of
service connection will not be disturbed except as provided in Sec.
3.105. Compensation will be resumed based on the combined evaluation in
effect at the time payments were discontinued. If a reduction in
evaluation that lowers the combined evaluation is considered warranted,
the provisions of Sec. 3.105(e) will apply. If a disability is
incurred or aggravated, or a service-connected disability worsens in
the most recent period of service, compensation for that disability or
increase in disability cannot be paid unless a claim therefor is filed.
(c) Training duty. Prospective adjustment of awards may be made
where the veteran waives his or her Department of Veterans Affairs
benefit covering anticipated receipt of active service pay because of
expected periods of active duty for training (annual active duty for
training typically performed 15 days each year by reservists and
members of the National Guard or Active Duty for Special Work to
receive training) or inactive duty training. Where readjustment is in
order because service pay was not received for expected training duty,
retroactive payments may be authorized if a claim for readjustment is
received within one year after the end of the fiscal year for which
payments were waived.
Authority: (Authority: 38 U.S.C. 501(a) and 5304(c).)
[FR Doc. 2023-27176 Filed 12-11-23; 8:45 am]
BILLING CODE 8320-01-P