AGENCY:

Department of Veterans Affairs.

ACTION:

Final rule.

SUMMARY:

The Department of Veterans Affairs (VA) amends its claims adjudication, appeals, and Rules of Practice of the Board of Veterans' Appeals (Board) regulations. In addition, this rule revises VA's regulations with respect to accreditation of attorneys, agents, and Veterans Service Organization (VSO) representatives; the standards of conduct for persons practicing before VA; and the rules governing fees for representation. This rulemaking implements the Veterans Appeals Improvement and Modernization Act of 2017 (AMA), which amended the procedures applicable to administrative review and appeal of VA decisions on claims for benefits, creating a new, modernized review system. Unless otherwise specified in this final rule, VA amends its regulations applicable to all claims processed under the new review system, which generally applies where an initial VA decision on a claim is provided on or after the effective date or where a claimant has elected to opt into the new review system under established procedures. For the reasons set forth in the proposed rule and in this final rule, VA is adopting the proposed rule as final, with minor changes, as explained below.

DATES:

This final rule is effective February 19, 2019.

FOR FURTHER INFORMATION CONTACT:

Veterans Benefits Administration information, parts 3, 8, and 21: Jennifer Williams, Senior Management and Program Analyst, Appeals Management Office, Department of Veterans Affairs, 810 Vermont Avenue NW, Washington, DC 20420, (202) 530-9124 (this is not a toll-free number). Regulation of legal representatives' information, parts 19 and 20: Rachel Sauter, Counsel for Legislation, Regulations, and Policy, Board of Veterans' Appeals. Department of Veterans Affairs, 810 Vermont Avenue NW, Washington, DC 20420, (202) 632-5555 (this is not a toll-free number).

SUPPLEMENTARY INFORMATION:

On August 10, 2018, VA published in the Federal Register (83 FR 39818) a proposed rule to implement Public Law (Pub. L.) 115-55, the AMA. The AMA and these implementing regulations provide much-needed comprehensive reform for the legacy administrative appeals process, to help ensure that claimants receive a timely decision on review where they disagree with a VA claims adjudication. The AMA review procedures and these regulations replace the current VA appeals process with a new review process that makes sense for veterans, their advocates, VA, and stakeholders.

The statutory requirements, which VA implements in these regulations, provide a claimant who is not fully satisfied with the result of any review lane additional options to seek further review while preserving an effective date for benefits based upon the original filing date of the claim. For example, a claimant could go straight from an initial agency of original jurisdiction decision on a claim to an appeal to the Board. If the Board decision was not favorable, the claimant has two further options. If the Board's decision helped the claimant understand the evidence needed to support the claim, then the claimant would have one year to submit new and relevant evidence to the agency of original jurisdiction in a supplemental claim. A claimant in this situation could instead appeal within 120 days of the Board decision to the Court of Appeals for Veterans Claims (CAVC) in accordance with CAVC rules and deadlines. Alternatively, a claimant could seek review of the initial decision by filing a supplemental claim or requesting a higher-level review in the agency of original jurisdiction, again, without any impact on the potential effective date for payment of benefits.

The differentiated lane framework required by statute and implemented in these regulations has many advantages. It provides a streamlined process that allows for early resolution of a claimant's appeal and the lane options allow claimants to tailor the process to meet their individual needs and control their VA experience. It also enhances claimants' rights by preserving the earliest possible effective date for an award of benefits, regardless of the option(s) they choose, as long as the claimant pursues review of a claim in any of the lanes within the established timeframes. By having a higher-level review lane within the claims process and a lane at the Board, both providing for review on only the record considered by the initial claims adjudicator, the new process provides a feedback mechanism for targeted training and improved quality in the agency of original jurisdiction.

To ensure that as many claimants as possible benefit from the streamlined features of the new process, the AMA and these regulations provide opportunities for claimants and appellants in the legacy system to take advantage of the new system. Some claimants who received a decision prior to the effective date of the law and thus had a legacy appeal pending, were able to participate in the new system by way of VA's Rapid Appeals Modernization Program (RAMP). Claimants who receive a Statement of the Case (SOC) or Supplemental Statement of the Case (SSOC) as part of a legacy appeal after the effective date of the law will also have an opportunity to opt-in to the new system.

Most of the regulatory amendments prescribed in this final rule are mandatory to comply with the law. Through careful collaboration with VA, VSOs, and other stakeholders, in enacting the AMA, Congress provided a highly detailed statutory framework for claims and appeals processing. VA is unable to alter amendments that directly implement mandatory statutory provisions. In addition to implementing mandatory requirements, VA prescribes a few interpretive or gap-filling amendments to the regulations, which are not specifically mandated by the AMA, but that VA believes are in line with the law's goals to streamline and modernize the claims and appeals process. These amendments reduce unnecessary regulations, modernize processes, and improve services for claimants.

Interested persons were invited to submit comments to the proposed rule on or before October 9, 2018, and 29 comments were received. Those comments have been addressed according to topic in the discussion below. This final rule contains amendments to parts 3, 8, 14, 19, 20, and 21, as described in detail below.

Part 3—Adjudication

VA amends the regulations in 38 CFR part 3 as described in the section-by-section supplementary information below. These regulations govern the adjudication of claims for VA monetary benefits (e.g., compensation, pension, dependency and indemnity compensation, and burial benefits), which are administered by the VBA. These amendments apply to claims processed in the modernized review system as described in § 3.2400.

A. Comments Concerning § 3.1—Definitions

Public Law 115-55, section 2(a), defines “supplemental claim” as “a claim for benefits under laws administered by the Secretary filed by a claimant who had previously filed a claim for the same or similar benefits on the same or similar basis.” Although it is possible to read this language as implicating both claims filed as a disagreement with a prior decision, and claims submitted due to a worsening of a condition, this dual interpretation would not be consistent with other sections of the statute. Namely, Public Law 115-55 also revised 38 U.S.C. 5108, which requires the Secretary to “readjudicate” a claim where “new and relevant evidence is presented or secured with respect to a supplemental claim.” When both sections are read together, it becomes clear that the intent of the law was to make supplemental claims only applicable to situations where a claimant disagrees with a previous VA decision and seeks review and readjudication. Accordingly, as noted in VA's proposed regulation, VA proposed to clarify in regulation the definition of supplemental claim. VA added to the definition of “claim” in § 3.1(p) of the proposed rule definitions of “supplemental claim,” “initial claim,” and “claim for increase.”

VA received six comments regarding definitions listed in § 3.1(p). Concerns centered around the definitions of initial claim (§ 3.1(p)(1)), claim for increase (§ 3.1(p)(1)(iii)), claim (§ 3.1(p)(2)), and supplemental claim (§ 3.1(p)(2)). Several comments addressed concerns regarding the use of the term “written communication” in some definitions while other areas of the proposed rule referenced “written or electronic” communication. VA agrees with the need for clarification regarding electronic communication and revises § 3.1(p) to reflect a claim as both a written or electronic communication properly submitted on an application form prescribed by the Secretary.

Several comments raised concerns that a claim for increase was included as a type of initial claim and argued it is more appropriately considered a supplemental claim. VA includes claim for increase in the definition of an initial claim to clarify to claimants that a claim for increase is based on a change or worsening in condition or circumstance since a prior VA decision and not based on disagreement with that decision. Accordingly, VA revises proposed § 3.1(p)(1)(iii) to reflect a claim for increase as a change or worsening in condition or circumstance since a prior VA decision. One comment also expressed concern that “the VA may sometimes be overbroad in requiring supplemental claims where a veteran has not had a decision on a specific issue or disability previously.” VA agrees there may be confusion regarding the definition of a supplemental claim and revised § 3.2501 to clarify that a supplemental claim is based upon a disagreement with a prior VA decision.

VA revises the definition of “initial claim” in § 3.1(p)(1), to provide clarity concerning the term “original claim” in response to comments. Commenters expressed confusion between the terms “original” and “initial” based on dictionary definitions, which treat them interchangeably. VA's revisions to § 3.1(p)(1) explain that an original claim is the first initial claim.

One commenter expressed a belief that the terms “issue” and “claim” are used interchangeably in sections of the proposed rule but defined differently. It is clear from § 3.151(c) that the term “issue” refers to a distinct determination of entitlement to a benefit, such as a determination of entitlement to service-connected disability compensation for a particular disability. A claim is a request for review of one or more issues. If a claim includes only one issue then the terms may appear to be used interchangeably. Accordingly, VA revises § 3.1(p) to include a reference to § 3.151(c), which defines issues within a claim.

B. Comments Concerning § 3.103—Procedural Due Process and Other Rights

VA received eleven comments regarding procedural due process concerns as referenced in § 3.103.

Two commenters expressed concern that the use of the phrase “when applicable” in § 3.103(b)(1) is too broad and open to interpretation. VA agrees that the term is vague and revises § 3.103(b)(1) to refer the reader to subsection (d), which explains the availability of a hearing.

Another commenter expressed concern with the removal of language in § 3.103(c)(2) regarding visual examinations during hearings. These types of visual examinations are obsolete as veterans and VA can now utilize several other methods to add visual examination findings into the record. Claimants may use Disability Benefits Questionnaires (DBQs) that any physician may complete to document visual findings. VA may also assist claimants through the scheduling of contract examinations which support VA's disability evaluation process and make obtaining examinations easier and more efficient by bypassing the requirement to formally schedule one with a VA provider. Accordingly, VA does not make any changes to § 3.103(c)(2) based upon the comment.

Several comments raised concerns regarding § 3.103(c)(2), Treatment of evidence received after notice of a decision. The concerns centered around the desire for VA to notify claimants in writing each time VA does not consider evidence received after notice of a decision, when the record is closed. The commenters are correct that VA does not intend to notify a claimant every time the claimant submits evidence during a period when the record is closed. Rather, the initial notice of decision provided to the claimant will explain the review options, the associated evidentiary rules, and the procedures to follow to obtain VA consideration of new evidence. In addition, VA will, in accordance with the AMA and § 3.103(f), provide information to the claimant in the initial decision as to evidence that was considered, and any subsequent review decision, based on a closed record, will inform the claimant generally if VA received evidence that was not considered. Finally, decision notices will provide to claimants instructions for how to obtain or access the actual evidence used in making the decision (the complete record on which the decision was based).

VA takes seriously its obligation to administer its process in a claimant-friendly way, and accordingly provides multiple means for claimants to obtain information on what evidence VA has received and the date of receipt to determine if it was submitted when the evidentiary record was open or closed. Most fundamentally, claimants are able to request a copy of their own claims files. Additionally, accredited representatives are eligible to receive access to the Veterans Benefits Management System, which enables them to see what is in the file at any time. And a claimant can visit the VBA Regional Office to view their claims file in a reading room.

Accordingly, to the extent a claimant is unsure whether a given piece of evidence was considered the claimant can check the review decision to see whether it indicates whether there was any evidence that was not considered. If so, the claimant can check the summary of evidence in the initial decision notice. VA expects this to resolve the matter in most instances. However, to the extent that the claimant needs access to the entire record on which a decision is based, the decision notice will describe that procedure. Finally, whenever the claimant is uncertain, the claimant can submit the evidence in question again as part of a supplemental claim. If this is done within one year, there will be no loss of effective date. If the evidence was not considered in the prior claim and is relevant, it would be considered in adjudicating the supplemental claim. (As explained in the proposed rule, even if the claimant did not submit with the supplemental claim relevant evidence previously submitted out of time, VA would be obligated to consider it.) The law does not require VA to list evidence not considered because it was received after notice of a decision, or during some other period when the evidentiary record was closed. Before the AMA, 38 U.S.C. 5104 required VA to provide certain information only in cases where VA denied a benefit sought: (1) A statement of reasons for the decision; and (2) a summary of the evidence considered by the Secretary. 38 U.S.C. 5104(b) (2016). In the AMA, Congress directly addressed the information requirements for decision notices in a high level of detail. All decision notices, regardless of whether or not they deny a benefit sought, must now include seven specified data elements. 38 U.S.C. 5104(b)(1)-(7). This includes “a summary of the evidence considered by the Secretary[.]” 38 U.S.C. 5104(b)(2). This extensive list of required data elements does not include identification of evidence not considered. It is clear that Congress directly considered the requirements for decision notices, altered the applicable legal requirements in ways generally favorable to claimants, and declined to add a requirement to identify and discuss evidence not considered.

Beyond the fact that the law does not require VA to provide notice of evidence not considered, VA declines to discretionarily impose such a requirement through regulation. From VA's perspective, the closing of the evidentiary record is one of the foundational features of the AMA, and one of its most valuable in terms of enabling VA, over time, to process claims and appeals more efficiently. Requiring VA to notify claimants each time evidence is submitted out of time or list or summarize such evidence individually in review decisions would dilute much of the administrative value of having a closed record following the initial decision. Providing this notice would require VA personnel to review and identify or summarize (if, for example, the evidence is not dated) late-flowing evidence when preparing the decision notice. Such a procedure would unavoidably require “by hand” review and processing of evidence by VBA adjudicators, similar to the review required for simply considering the evidence for decisional purposes. In this scenario, VA would be spending its limited adjudicative resources reading and processing documents that are not part of the record and cannot be the basis for a decision.

Apart from the work of reading and summarizing extra-record evidence, imposing this requirement would also carry a significant cost in terms of generating procedural complexity. A regulatory requirement that VA identify or summarize certain evidence would, of necessity, need to be enforceable on appeal in order to be meaningful. (Such a notice requirement would technically be distinct from the argument on appeal that certain evidence was excluded from the record in error, which is an appellate argument that is certainly possible under this final rule.) Accordingly, the argument that VA failed to provide legally adequate notice or description of what evidence was not considered would become a feature of the appellate system. This would be problematic for two reasons. First, it invites appellate activity centered on procedure rather than the substance of veterans' claims. Second, and worse, it creates the specter of argument over the proper discussion of non-record evidence. Evidence that is nominally not part of the record of the decision on appeal would necessarily become central to such an appellate argument. At that point, the evidence would, for all intents and purposes, be part of the record, even though the premise of the argument would necessarily be that the evidence was validly excluded.

We acknowledge that proposed § 20.801(b)(3), which we here confirm as final, will require the Board to provide “[a] general statement” that evidence received while the record was closed was not considered. This provision, governing Board practice, is consonant with VA's decision not to impose a requirement on VBA to list or summarize untimely evidence. This provision is necessary to comply with 38 U.S.C. 7104(d)(2), which is specific to Board decisions. That provision only requires a broad statement that untimely evidence was received and not considered, rather than any meaningful engagement with that evidence, such as a listing or summary.

VA recognizes that some individual claimants might prefer that VA either provide notification each time it receives evidence submitted out of time or list such evidence specifically in decision notices. However, in balancing efficiency considerations in line with the expressed goal of Congress to reduce VA backlogs and processing times, VA has chosen the alternative procedures discussed above to provide claimants with information they need to effectively prosecute their claims without prejudice to their ability to have all relevant evidence considered prior to a final adjudication. Accordingly, VA does not make any changes to § 3.103(c)(2) based upon these comments. As the precise procedures for providing such notice may change based on technological systems, as well as other resources, VA will continue to address this matter through internal procedural guidance consistent with the law and regulations.

Multiple commenters recommended that additional information be included in decision notices beyond what is required in § 3.103(f). Suggestions include the compensation rating decision codesheet, information on expected improvement in disability, and full identification of specific evidence not considered (which we discuss above). Current VA procedures require the inclusion of any expected reexaminations due to expected improvement or worsening of a disability consistent with current § 3.327 and, in many instances, allow for the inclusion of the codesheet with compensation rating decision notices. VA has a requirement under § 3.103(f)(7) to explain how to obtain or access evidence used in making the decision. One method authorized representatives may use to access evidence is to request access to the claimant's electronic claims folder. Accordingly, VA does not make any changes to § 3.103(f) based upon these comments.

A commenter noted that the “new § 3.103 does not require VA to describe evidence in its possession that it did not review”, raising a hypothetical situation in which a claimant was treated for conditions at a VA facility the day prior to the decision being rendered on their higher-level review. This is a constructive receipt argument that VA was in possession of the records from the day prior and therefore cannot appropriately adjudicate a higher-level review without those records, while at the same time arguing this is not “new evidence” used in support of a supplemental claim because the records were in general custody of VA at the time.

VA makes minor adjustments to the rule as proposed to clarify the parameters in this area. 38 CFR 3.103(c)(2), Treatment of evidence received after notice of a decision, now clearly explains what may be included in the record for adjudication. It states, “The evidentiary record for a claim before the agency of original jurisdiction closes when VA issues notice of a decision on the claim. The agency of original jurisdiction will not consider, or take any other action on evidence submitted by a claimant, associated with the claims file, or constructively received by VA as described in § 3.103(c)(2)(iii), after notice of decision on a claim, and such evidence will not be considered part of the record at the time of any decision by the agency of original jurisdiction, except” in two specific circumstances relating to the submission of a supplemental or initial claim or identification of a duty to assist error.

Additionally, § 3.103(f)(2) identifies the requirement to provide a summary of the evidence considered in notification of decisions. This provides the claimant a clear understanding of what was considered and is consistent with the definitions of evidence reviewable under a higher-level review or supplemental claim. Under these definitions, the evidence raised in the hypothetical situation would be considered new evidence available to be used by the claimant in a supplemental claim. To the extent the commenter means that evidence created by VA shortly before the record closes but not associated with the claims record or identified to adjudicators in any way should be treated as constructively part of the record pursuant to Bell v. Derwinski, 2 Vet. App. 611 (1992), we note that documents created while the record is closed do not become part of the record by virtue of the doctrine of constructive receipt. At the same time, if a document created while the record was open is identified on direct appeal as having been constructively received at a time when the record was open (e.g., the Board or a higher-level reviewer become aware of a document within the scope of Bell), the record can be corrected, including in similar fashion to a duty to assist error. However, in order for a Bell error to cause the record to be augmented in this way, the document in question must actually satisfy the law of constructive receipt in the VA context. Case law construing Bell makes clear that the mere existence of a record is not sufficient to establish constructive receipt for adjudicative purposes. Rather, VBA adjudicators must have sufficient indication that a given record exists and sufficient information to locate it, even though they do not have actual custody of it, in order to trigger the doctrine of constructive receipt in the VA claims adjudication context. See Turner v. Shulkin, 29 Vet. App. 207, 217-219 (2018). We have explicitly incorporated this concept into the final rule at 38 CFR 3.103(c)(2)(iii). In terms of the level of VBA awareness necessary to trigger Bell in this context, we import a familiar standard from the duty to assist context, which is referenced in Turner. Turner noted that 38 U.S.C. 5103A(c)(1)(B) requires VA to obtain records of relevant medical treatment or examination of the claimant at VA health care facilities or at VA expense, “if the claimant furnishes information sufficient to locate those records.” Turner, 29 Vet. App. at 218. There is no reason why the doctrine of constructive receipt should be broader than VA's duty to obtain records for the claim. While the duty to assist does not apply following the closure of the record, it does apply during the initial claim process when any document that could be the basis of a constructive receipt issue would have to be created. Accordingly, we provide in § 3.103(c)(2)(iii) that VBA must have had knowledge of the document in question “through information furnished by the claimant sufficient to locate those records.” Further, we note that to the extent a document potentially within the scope of that provision is discovered after a claim stream has lapsed, the fact that a document was arguably constructively part of the record before adjudicators in the prior decision would not preclude that document as the basis for a supplemental claim if it was not, in fact, considered. A Bell error on the part of VA is not a basis to deprive the veteran of his or her right to file a supplemental claim. Accordingly, Bell and the ongoing creation of medical treatment records is not a mechanism for preventing the adjudicative record from closing to the extent the law permits and requires it to do so, but at the same time, does not preclude the filing of supplemental claims. These definitions provide a clearer delineation of what is and is not part of the evidentiary record of a particular claim, as compared to the continuous open record of the legacy system. Further, through the decision notice on the initial claim, the claimant is provided a summary of pertinent evidence that was developed as part of VA's duty to assist. When submitting a request for ahigher-level review, the claimant has notice that the evidentiary record will consist of the same information identified in the initial claim decision. Any additional evidence the claimant wishes to be considered would warrant their submission of a supplemental claim request.

C. Comments Concerning § 3.104—Binding Nature of Decisions

VA received eight comments regarding the binding nature of favorable findings. The AMA added a new section, 38 U.S.C. 5104A, providing that any findings favorable to the claimant will be binding on all subsequent adjudicators within VA, unless “clear and convincing evidence” is shown to the contrary to rebut the favorable findings. These comments expressed concern over the lack of definition of “clear and convincing,” as well as the evidentiary standard specified in the law being a lower evidentiary standard than currently exists and less favorable to claimants.

The CAVC in Fagan v. West, 13 Vet. App. 48, 55 (1999), clarified that the “clear and convincing” evidentiary standard of proof is an intermediate standard between preponderance of the evidence and beyond a reasonable doubt. VA notes that the clear and convincing evidence standard is a lesser standard than that required for a Veteran or claimant to correct a VA error that was not in their favor, which requires evidence of a clear and unmistakable error (CUE) (see 38 U.S.C. 5109A(a) and 7111(a)). While 38 U.S.C. 5104A states that VA must meet a “clear and convincing” evidentiary standard prior to overturning a favorable finding, nothing in the statute prohibits VA from administratively adopting a higher evidentiary standard to protect favorable findings on a claimant's behalf.

VA agrees with the commenters, as a matter of policy, regarding the wisdom of setting a higher standard applicable to overturning favorable findings as it is claimant-friendly and will reduce the number of cases where claimants feel VA is adopting an adversarial approach to their claim because VA has overturned a favorable finding. Accordingly, VA revises § 3.104(c) to require clear and unmistakable evidence to rebut a favorable finding. The clear and unmistakable standard applicable to rebuttal is similar to the definition of CUE found in § 3.105(a)(1)(i) and 38 CFR 20.1403(a) that applies to finally adjudicated issues. However, application of the clear and unmistakable standard for rebuttal of a favorable finding is legally distinct because, for instance, it is limited to the scope of the favorable finding itself and does not require a further determination that the outcome of the benefit adjudication would undebatably change. The clear and unmistakable rebuttal standard may be satisfied by a finding that the evidentiary record as a whole completely lacks any plausible support for the favorable finding.

VA discussed in the proposed rule that no changes are necessary to § 3.105(c) through (h), which govern severance of service connection and reduction in evaluations, and that the standards and procedures set forth in those paragraphs will continue to apply without change. VA received no comments on this issue, and VA's position in this regard has not changed as a result of the choice in the final rule to apply the higher CUE standard to rebuttal of favorable findings.

D. Comments Concerning § 3.105—Revision of Decisions

Two comments expressed concern with the language in proposed § 3.105(a)(1)(iv), entitled Change in interpretation, providing that a clear and unmistakable error does not include the otherwise correct application of a statute or regulation where, subsequent to the decision being challenged, there has been a change in the interpretation of the statute or regulation. As explained in the preamble to the proposed rule, this revision to § 3.105(a) is for the purpose of conforming the regulations applicable to CUE in finally adjudicated decisions of the agency of original jurisdiction with existing regulations applicable to CUE in finally adjudicated Board decisions. Accordingly, § 3.105(a)(1)(iv) tracks the language in existing 38 CFR 20.1403(e).

VA does not agree with the commenters' assertion that these provisions are contrary to established caselaw. The Federal Circuit explicitly rejected the premise of retroactive application of judicial interpretations of law in the CUE context in Jordan v. Nicholson, 401 F.3d 1296 (Fed. Cir. 2005), and Disabled Am. Veterans (DAV) v. Gober, 234 F.3d 682, 698 (Fed. Cir. 2000). In DAV, the Federal Circuit specifically upheld 38 CFR 20.1403(e). Id. In Jordan, the court explained that “[t]he Supreme Court has repeatedly denied attempts to reopen final decisions in the face of new judicial pronouncements or decisions.” Jordan, 401 F.3d at 1299; see Reynoldsville Casket Co. v. Hyde, 514 U.S. 749, 758 (1995) (“New legal principles, even when applied retroactively, do not apply to cases already closed.”).

VA does not agree with the argument by commenters that these cases were overruled by Patrick v. Shinseki, 668 F.3d 1325 (Fed. Cir. 2011), which was a decision regarding whether a prior position of the government was substantially justified in assessing whether an award of attorney fees was due. Further, to the extent there is any irreconcilable tension between DAV and Jordan on the one hand and Patrick on the other, it is well-established that the earlier decisions control for precedential purposes. Newell Companies, Inc. v. Kenney Mfg. Co., 864 F.2d 757, 765 (Fed. Cir. 1988) (“Where there is a direct conflict the precedential decision is the first.”). Similarly, it is not possible for one panel of the Federal Circuit Court to have directly overruled a prior panel. Sacco v. Dep't of Justice, 317 F.3d 1384, 1386 (Fed. Cir. 2003) (“[a] panel of [the Federal Circuit] is bound by prior precedential decisions unless and until overturned en banc.”). VA therefore makes no change to the regulation based on the comments.

One of these commenters recommends the creation of a form specifically for use in applying for review of a CUE. VA agrees there is merit in this recommendation, will review possible options, and may decide to implement a form for this specific use, consistent with the Paperwork Reduction Act. However, the current process for claiming and contesting a CUE should be followed in the absence of such a form. Should VA determine such a form is not necessary, the current process will remain in place.

E. Comments Concerning § 3.151—Claims for Disability Benefits

The AMA added 38 U.S.C. 5104C, which outlines the available review options following a decision by the agency of original jurisdiction. VA proposed to add § 3.2500 and revise § 3.151 consistent with the statute to provide that a claimant may request one of the three review options under § 3.2500 (higher-level review, supplemental claim, or appeal to the Board) for each issue decided by VA, consistent with 38 U.S.C. 5104C. A claimant would not be limited to choosing the same review option for each issue for a decision that adjudicated multiple issues.

One commenter believed that the terms “issue” and “claim” are used interchangeably in sections of the proposed rule but defined differently. It is clear from § 3.151(c) that the term “issue” refers to a distinct determination of entitlement to a benefit, such as a determination of entitlement to service-connected disability compensation for a particular disability. A “claim” is a request for review of one or more issues. If a claim includes only one issue then the terms may appear to be used interchangeably. VA agrees with the commenter's suggestion that clarification is necessary and revised § 3.1(p) to include a reference to § 3.151(c), which defines issues within a claim.

F. Comments Concerning § 3.155—How To File a Claim

While the AMA does not specifically address how to file a claim, or the concept of intent to file as it relates to supplemental claims, it is necessary for VA to create a framework for this process. Currently, 38 U.S.C. 501(a) and 5104C(a)(2)(D) place the authority to develop policy in this area on the Secretary.

One comment expressed concern that § 3.155(b), Intent to file, does not apply to supplemental claims and recommends recision of this limitation. However, 38 U.S.C. 5110 of the new statutory framework provides that a claimant can maintain the potential effective date of a potential benefits award by submitting a request for review under any of the three new lanes within one year of the date of the decision with which the claimant disagrees. Consistent with this requirement, the intent to file provisions of § 3.155(b) do not apply to supplemental claims because the statute prescribes a one-year filing period in order to protect the effective date for payment of benefits. The commenters recommendation would allow for the submission of a supplemental claim beyond the one-year period. For these reasons, VA will not make any changes to § 3.155 based on the commenter's recommendation.

G. Comments Concerning § 3.156—New Evidence

One commenter expressed concern with the definition of new evidence meaning evidence not yet “submitted to” VA and recommended clarification that new evidence is evidence not yet “considered by” VA. The commenter suggested this change to ensure that evidence qualifies as “new” for purposes of a supplemental claim, where that evidence was associated with the claims file when the record was closed and therefore was not previously considered by a VA adjudicator. VA agrees that clarification along these lines is necessary but has revised the regulatory language in different manner. Instead of the change recommended by the commentator, VA has replaced “not previously submitted to agency adjudicators” in the definition of new evidence with “not previously part of the actual record before agency adjudicators.” This change will accomplish the same goal, with the additional benefit, through use of the phrase “actual record,” of clarifying that new evidence may include evidence deemed constructively received as of a date falling within a period when the record was open, if that evidence had never been part of the record on which a prior adjudication of the issue in question was based.

Other commenters disagreed with the change in title for § 3.156(b), from “Pending claim” to “Pending legacy claims not under the modernized review system,” resulting in the non-applicability of current § 3.156(b) in the modernized system. The commenter asserted that VA had not provided a sufficient explanation for this choice.

Section 3.156(b) provides generally that new and material evidence received while a claim is pending before VA must be considered as filed in connection with the pending claim, including evidence received after an initial decision is rendered and during the period available to file an appeal. One practical effect of this provision is that qualifying evidence received during the appeal period automatically requires VA to readjudicate the claim and issue a new decision. Such a requirement would be inconsistent with the structure of the new system. First, new 38 U.S.C. 5104B(d) and revised 38 U.S.C. 7113 mandate specific periods when the record is closed to new evidence, including during the period following an initial VA decision. Second, new 38 U.S.C. 5104C and revised 38 U.S.C. 5108 require a claimant who seeks VA readjudication based on new and relevant evidence to either file a supplemental claim with the agency of original jurisdiction or file a Notice of Disagreement and select a Board docket allowing the submission of new evidence. Defining and limiting the avenues available to a claimant for submission of new evidence during the claim stream is a primary feature of the AMA, which was designed, in part, to “streamline VA's appeal process” and “help ensure that the process is both timely and fair.” H. Rep. No. 115-135 at 5 (2017). Third, new 38 U.S.C. 5104C provides claimants with a choice of review options following receipt of an adverse initial VA decision—file for a higher-level review within the Veterans Benefits Administration (VBA), file a supplemental claim with new and relevant evidence for readjudication by the VBA, or file a notice of appeal to the Board. If VA were to automatically place the claim on a track for readjudication by the VBA upon receipt of new evidence, that action would effectively preempt the claimant's choice.

Therefore, because § 3.156(b) requires automatic readjudication upon the receipt of new evidence during the one-year appeal period, it is clearly inconsistent with the statutory design of the new system. Nevertheless, excluding § 3.156(b) from the regulations governing new system claims does not adversely impact a claimant's right to obtain a VA readjudication on new and relevant evidence. It simply means that claimants must submit such evidence though the channels established by the AMA. Furthermore, automatic readjudication of claims is not mandated by 38 U.S.C. 5103, even though the implementing regulation for that provision, § 3.159(b), provides for automatic readjudication of legacy claims upon VA receipt during the appeal period of new evidence substantiating the claim. 38 U.S.C. 5103(a)(1) requires VA to provide claimants, prior to an initial decision, with notice of information and evidence necessary to substantiate a claim. Section 5103(b)(1) requires the claimant to provide such evidence within one year of the date of the notice, but states in paragraph (b)(3) that VA is not prohibited from making the initial decision on a claim prior to the expiration of the one year. Consistent with these provisions, VA's implementing regulations for legacy claims provide that if a claimant does not respond to the notice within 30 days, VA may decide the claim prior to the expiration of the one-year period. See 38 CFR 3.159(b)(1). If VA does so and the claimant subsequently provides information or evidence substantiating the claim before the end of the one-year period, the regulations provide that “VA must readjudicate the claim.” Id.

However, the regulatory procedure of automatically readjudicating the claim in these circumstances was not required by section 5103. Rather, when the key features of current 38 U.S.C. 5103 were enacted in 2000 and 2003 (in the Veterans Claims Assistance Act of 2000 (VCAA) and the Veterans Benefts Improvement Act of 2003 (VBIA of 2003), VA had a long-standing practice, as set forth in § 3.156(b), of automatically readjudicating a claim upon the receipt of additional evidence from a claimant—not just within the year following issuance of the 5103(a) notice, but within the longer one-year period beginning with the issuance of the initial decision. Following enactment of the VCAA, VA indicated that it would simply chose to maintain this practice. 66 FR 45,620, 45623 (Aug. 29, 2001) (final rule). VA viewed the essence of 5103(b) not as requiring automatic readjudication, but as “essentially an effective date provision governing the earliest date from which benefits may be paid if a claimant submits requested information and evidence.” Id.

VA recognized that the longer period for submission of new evidence provided in § 3.156(b) might be in tension with the bar to awarding benefits in section 5103(b)(1) where supporting evidence was not received within a year of the VA notice, id., but that bar was removed in the VBIA of 2003 and Congress substituted the requirement that the substantiating evidence “must be received by the Secretary within one year of the notice date.” 149 Cong Rec H 11,705, (Nov. 20, 2003). At the same time, Congress added section 5103(b)(3), providing that VA is not prohibited from adjudicating a claim prior to the expiration of the one-year period following section 5103 notice. Congress explained, consistent with the view that section 5103(b) was essentially an effective date preservation provision, that the statutory changes were designed to promote the streamlined adjudication of claims, while ensuring that claimants had two essential rights: (1) The opportunity, following an initial decision, to submit substantiating information or evidence for VA readjudication within the one-year period, and (2) in such cases, maintenance of the effective date associated with the filing of the claim. 108 S. Rpt. 169 at 15 (“In such cases, the one-year time period would still enable a claimant to submit the requested information or evidence and if benefits are granted on readjudication, assign an effective date of award as if VA had not made the initial decision.”); see also 149 Cong Rec H 11,705, 11,720 (Nov. 20, 2003) (Explanatory Statement of the House and Senate Committees, indicating that the House accepted the provisions from the Senate Bill in this regard).

The new system under the AMA affords claimants these essential rights, as claimants are entitled to a VA readjudication based on new and relevant evidence submitted within the one-year appeal period, while their effective date is protected. Rather than providing for an automatic readjudication, however, claimants must submit the new evidence in connection with a choice of review options. The claimant may file either a supplemental claim pursuant to § 3.2501 or a Notice of Disagreement with the Board indicating selection of a docket allowing for the submission of additional evidence. If either filing is completed within the one-year period under the AMA to maintain continuous pursuit of the claim (generally one year from the date of issuance of the initial decision), the claimant will not lose the effective date associated with the filing of the claim. The availability of readjudication based on new evidence under the AMA therefore fulfils the essential purpose of section 5103(b) as an effective date provision governing the earliest date from which benefits may be paid if a claimant submits requested information and evidence following an initial adjudication.

Nothing in 38 U.S.C. 5103 or caselaw interpreting it requires VA to automatically readjudicate a claim or precludes orderly procedural requirements for the submission of new evidence following an initial decision. Similarly, there is no indication in the relevant legislative history that Congress understood itself to be creating such a requirement. Therefore, the AMA is not inconsistent with section 5103(b) and section 5103 does not require VA to create a special exception to the claim processing rules set forth in the new law.

To the extent that section 5103(b) could be viewed as potentially conflicting with the AMA by providing an unrestricted right to submit evidence and receive readjudication for up to one year following the VCAA notice, notwithstanding the timing of any intervening VA decision, it would be VA's duty to resolve the conflict for operational purposes. Therefore, regardless of whether one adopts the view that section 5103(b) provides such a right, VA interprets section 5103(b) and the AMA together to provide that evidence may be submitted in the one-year period established by section 5103(b), including following a VA decision, but must be submitted through the channels provided in the AMA when VA has issued an initial decision. VA believes that allowing submission of new evidence only through the channels provided in the AMA gives the maximum possible effect to both statutory provisions bearing on the issue and safeguards a claimant's essential statutory rights. Further, as a matter of policy, creating a year-long exception to the structure of the AMA would introduce complexity and confusion to the new claims processing rules, both for VA adjudicators and claimants, and would substantially undermine the goal of the AMA to streamline the VA appeals system and allow VA to resolve appeals more quickly.

Consistent with this discussion, VA eliminates § 3.156(b) for modernized system claims and makes conforming amendments to § 3.159, as discussed below, to require that new and relevant evidence, to the extent that it is submitted following a VA decision but within the year established in section 5103(b), must be submitted to VA through the channels established by the new law.

H. Comments Concerning § 3.159—Department of Veterans Affairs Assistance in Developing Claims

The definition of a substantially complete application in 3.159 has been amended to add the requirement that a supplemental claim application include or identify potentially new evidence and that a higher-level review request identify the date of the decision for which review is sought. VA's duty to assist is reinstated when a substantially complete initial claim or supplemental claim is filed or when a claim is returned to correct a “duty to assist” error in a prior decision as required by 38 U.S.C 5103A(f), as amended by the AMA.

One commenter is concerned with the term “potentially new evidence” as used in §§ 3.159(a)(3)(vii) and in 3.160(a)(6). In this context, “potentially new evidence” references evidence that may be new and relevant to the claim, thereby providing some potential basis for a supplemental claim. As adjudicated in the supplemental claim process, evidence submitted or identified by a claimant may be found to be duplicative, not relevant, or otherwise not new. If this is the case, the adjudicator then must issue a decision indicating that there is not sufficient evidence to readjudicate the claim. If the evidence is found to be new and relevant, the claim must be readjudicated. This identification of “potentially new evidence” is consistent with § 3.2501. For the above reasons, VA make no changes to § 3.159 based upon the comment.

However, VA is making technical amendments to § 3.159 in the final rule necessary to conform with the procedural requirements of the AMA. Specifically, paragraph (b)(4) is added and paragraph (b)(1) is amended to clarify, consistent with new section 5104C, that submission of new evidence following an initial VA decision must be accomplished either by filing a supplemental claim on a form prescribed by the Secretary or by filing a Notice of Disagreement with the Board on a form prescribed by the Secretary and selecting a review option allowing for the submission of new evidence. As explained above in the prior section, VA views these amendments as consistent with section 5103.

I. Comments Concerning § 3.160—Status of Claims

While the AMA does not specifically address status of claims, the law did, however, replace “a claim for reopening a prior decision on a claim, or a claim for increase of benefits” with “supplemental claim” in section 5103(a). Further, section 5104C(a)(2)(D) places the authority to develop policy in this area on the Secretary.

Claimants may request review of VA's decision by submitting a supplemental claim after a decision by the agency of original jurisdiction, the Board, or the CAVC. VA proposed revising § 3.160(e) to reflect the requirement that as of the applicability date of the new law, VA will no longer accept requests to “reopen” claims and a claimant must file a supplemental claim under § 3.2501 to seek review of a finally adjudicated claim for a previously disallowed benefit.

One commenter contends that those who have filed their claims in the legacy system have the right to have those claims adjudicated in the legacy system and VA cannot force them into the modernized system outside of the statutorily prescribed opt-in periods citing that the courts have held a claimant has the right to demand the benefit of the laws in existence at the time the claim was filed and any new laws that come into existence during that claim's pendency that are more favorable to the claimant, absent a specific indication that the change in law was intended to be retroactive. VA agrees with the commenter in part; however, VA did not propose to apply a new law that is less advantageous to the claimant. By requiring the filing of a supplemental claim, VA will no longer require claimants to identify new and material evidence to reopen a finally adjudicated claim. VA will now allow the submission of evidence that is “new and relevant”, which Congress has indicated is a lesser standard and reduces the claimant's burden. In addition, this change in filing requirement does not change VA's review of the claim and application of the laws in effect at the time the claim was originally decided when readjudicating the claim. What VA intends, by allowing claimants with legacy claims to file under the supplemental claim framework, is to reduce claimants' filing burden while still maintaining all requirements for review of the decision based on all applicable laws and regulations whether in existence at the time of prior decision or now. For these reasons, no changes are made based on this comment.

J. Comments Concerning § 3.328—Independent Medical Opinions

The AMA repealed 38 U.S.C. 7109, which authorized the Board to obtain independent medical opinions (IMOs). This repeal removed the ability for the Board to request IMOs. Under 38 U.S.C. 5103A(f)(2) and 5109(d), as added by the AMA, the Board will, when deemed necessary, direct the agency of original jurisdiction to obtain an IMO. VA proposed to amend § 3.328 to include a requirement that VBA process IMO instructions received from the Board.

One commenter requested clarification on the definition of “director of the Service” in § 3.328(c). Previous language referenced approval to be “granted only upon a determination by the Compensation Service or the Pension and Fiduciary Service”. The change to “director of the Service” in § 3.328(c)(1)(i) is necessary because the modernized system affects all VA administrations and is not limited to the Veterans Benefits Administration's Compensation Service and Pension and Fiduciary Service. To address the commenter's concern, VA is adding language to clarify the meaning of “director of the Service”.

Another commenter requested clarity on the use of the word “obscurity” and the phrase “such controversy in the medical community at large” in proposed § 3.328(c)(1)(i) and recommended a revision to reflect the language of the statute. VA agrees that the regulation should track the language of the statute and revised § 3.328(c)(1)(i) accordingly.

K. Comments Concerning § 3.2400—Applicability of Modernized Review System

The AMA provides direction on the applicability of the modernized review system. Accordingly, § 3.2400 defines which claims are processed under the modernized review system and which clams are processed under the legacy appeals system. § 3.2400 also clarifies that the new review system will generally apply to initial decisions provided on or after the effective date denying requests to revise a decision by the agency of original jurisdiction based on CUE.

One commenter interpreted proposed § 3.2400, specifically the provision proscribing supplemental claims based upon CUE, as somehow limiting CUE claims generally. However, § 3.2400 clarifies that the new review system will generally apply to initial decisions issued on or after the effective date of this final rule, to include decisions denying requests to revise a decision by the agency of original jurisdiction based upon CUE. Although such requests are not “claims” subject to the AMA because the requester is not pursuing a claim for benefits pursuant to part II or III of Title 38 of the U.S. Code, Livesay v. Principi, 15 Vet. App. 165, 178-179 (2001), it is VA's policy to allow the requestor to elect review of such decisions in the higher-level review lane or through an appeal to the Board. Revision of a decision based upon CUE cannot be requested in a supplemental claim because CUE must be based upon the facts and law that existed at the time of the prior decision, not new and relevant evidence. For these reasons, VA does not make any changes based upon the comment.

Another comment expressed concern that character of discharge determinations are not expressly addressed in § 3.2400. While character of discharge determinations could be reviewed under the modernized review process, the AMA does not specifically implicate or change any existing law regarding character of discharge determinations. Accordingly, no changes are made based on this comment.