Section D - Disability Compensation Under 38 U.S.C. 1151 - Updated 3/20/11

Chapter 3 - Authorization Issues and Claimant Notification

Overview


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In this Section
This section contains the following topics:   ''' '''
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11.   General Information on the Prohibition Against Duplication of Benefits
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Introduction
This topic contains general information on the prohibition against duplication of benefits, including
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 ·      when the prohibition against duplication of benefits applies

 ·      considering

 -     the consequences of civil action, and

 -     different types of judgments

 ·      what constitutes a judgment, and

<span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      who resolves tort claims, and

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      notice of favorable resolutions. <p class="BlockLine" style="margin-left:0in;mso-border-between:.75pt solid windowtext; mso-padding-between:1.0pt">
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Change Date
<p class="MsoBlockText">September 5, 2008 <p class="BlockLine" style="margin-left:0in;mso-border-between:.75pt solid windowtext; mso-padding-between:1.0pt">
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a.   When the Prohibition Against Duplication of Benefits Applies
<p class="MsoBlockText">The prohibition against duplication of benefits applies whenever a claimant receives a sum of money or property to settle a legal claim arising from the injury or death of a Veteran, and then files a claim for compensation with the Department of Veterans Affairs (VA) for that same injury or death.
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<p class="MsoBlockText">

<p class="MsoBlockText">Reference:   For information on the adjudication of death claims involving 38 U.S.C. 1151, see M21-1MR, Part IV, Subpart iii, 1.6. {| border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse:collapse;mso-table-layout-alt:fixed;mso-padding-alt: 0in 5.4pt 0in 5.4pt"
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b.   Considering the Consequences of Civil Action
<p class="MsoBlockText" style="mso-list:skip">When a Veteran is injured under circumstances that result in possible entitlement to benefits under 38 U.S.C. 1151, the Veteran may also seek a judgment against the U.S. in a civil action, called a tort claim. The Veteran may sue and recover damages after
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<p class="MsoBlockText" style="mso-list:skip">

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      a trial, or

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      agreeing to a settlement or compromise.

<p class="MsoBlockText" style="mso-list:skip">

<p class="MsoBlockText">Note:   When a Veteran agrees to a settlement or compromise, he/she signs away the right to sue in court in return for payment of an agreed-upon amount for damages. <p class="ContinuedOnNextPa" style="margin-left:0in;mso-border-between:.75pt solid windowtext; mso-padding-between:1.0pt">Continued on next page '''<span style="font-size:16.0pt; mso-bidi-font-size:10.0pt;font-family:"Arial","sans-serif";mso-fareast-font-family: "Times New Roman";color:black;mso-ansi-language:EN-US;mso-fareast-language: EN-US;mso-bidi-language:AR-SA"> '''
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<p class="MapTitleContinued"> 11. General Information on the Prohibition Against Duplication of Benefits, Continued <p class="BlockLine" style="margin-left:0in;mso-border-between:.75pt solid windowtext; mso-padding-between:1.0pt">

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c.   Definition:   Judgment
<p class="MsoBlockText" style="mso-list:skip"> A judgment includes all of the following:
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<p class="MsoBlockText">

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      settlement

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      compromise

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      administrative award, and

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      tort award. {| border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse:collapse;mso-table-layout-alt:fixed;mso-padding-alt: 0in 5.4pt 0in 5.4pt"
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d.   Considering Different Types of Judgments
<p class="MsoBlockText">It makes no difference
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<p class="MsoBlockText">

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      what the judgment is called, or

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      whether the judgment compensates for economic loss, such as the loss of income, or non-economic loss, such as pain and suffering.

<p class="MsoBlockText">

<p class="MsoBlockText">Note:   Attorney’s fees, contracts, and other expenses incident to the claim are not deductible from the total amount awarded per VAOGCPREC 07-94. {| border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse:collapse;mso-table-layout-alt:fixed;mso-padding-alt: 0in 5.4pt 0in 5.4pt"
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e.   Who Resolves Tort Claims
<p class="MsoBlockText" style="mso-list:skip">A tort claim against the government is resolved by the
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<p class="MsoBlockText">

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      General Counsel

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      U.S. Attorney General, or

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      Regional Counsel.

<p class="MsoBlockText" style="mso-list:skip">

<p class="MsoBlockText">Note:   The circumstances of the individual case determine who is responsible for resolving the tort claim. {| border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse:collapse;mso-table-layout-alt:fixed;mso-padding-alt: 0in 5.4pt 0in 5.4pt"
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f.   Notice of Favorable Resolutions
<p class="MsoBlockText">In any case that is resolved in favor of the Veteran, the Regional Counsel is responsible for providing the results of the tort claim to the Veterans Service Center Manager (VSCM) of the regional office (RO) having jurisdiction of the claims folder. <p class="BlockLine" style="margin-left:0in;mso-border-between:.75pt solid windowtext; mso-padding-between:1.0pt"> '''<span style="font-size:16.0pt; mso-bidi-font-size:10.0pt;font-family:"Arial","sans-serif";mso-fareast-font-family: "Times New Roman";color:black;mso-ansi-language:EN-US;mso-fareast-language: EN-US;mso-bidi-language:AR-SA"> '''
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12.   Award Actions Involving the Prohibition Against Duplication of Benefits
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Introduction
<p class="MsoBlockText">This topic contains general information on handling award actions involving the prohibition against duplication of benefits, including
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<p class="MsoBlockText">

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      deferring the award action

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      the effect of the prohibition on pension beneficiaries

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      tort claims concluded before December 1, 1962, and

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      who has responsibility for determining distribution of monies to other beneficiaries. <p class="BlockLine" style="margin-left:0in;mso-border-between:.75pt solid windowtext; mso-padding-between:1.0pt">
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Change Date
<p class="MsoBlockText">December 13, 2005 {| border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse:collapse;mso-table-layout-alt:fixed;mso-padding-alt: 0in 5.4pt 0in 5.4pt"
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a.   Deferring Award Action
<p class="MsoBlockText">Disability compensation awards under 38 U.S.C. 1151 are subject to offset effective the first of the month after the month during which the judgment becomes final. Because of this
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<p class="MsoBlockText">

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      defer a compensation award if there is reason to believe a tort claim for damages may have been finalized, but

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      do not defer a compensation award just because a tort claim has been filed, unless there is reason to believe it has been finalized. {| border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse:collapse;mso-table-layout-alt:fixed;mso-padding-alt: 0in 5.4pt 0in 5.4pt"
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b.   Effect of the Prohibition on Pension Beneficiaries
<p class="MsoBlockText">No offset is required if a tort claim is concluded in favor of a Veteran who is
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<p class="MsoBlockText">

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      in receipt of pension, or

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      eligible for compensation under 38 U.S.C. 1151, but elects to continue to receive pension in lieu of compensation.

<p class="MsoBlockText">

<p class="MsoBlockText" style="mso-list:skip">However, the net proceeds of the settlement or judgment are considered countable income for pension purposes under 38 CFR 3.262(i) and 38 CFR 3.271(g).

<p class="MsoBlockText" style="mso-list:skip">

<p class="MsoBlockText">Note:   Do not adjust a pension award to count the proceeds of a settlement or judgment without a notice of proposed adverse action unless the Veteran

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      is the source of the information, and

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      understands that the judgment will affect the amount of pension payable. <p class="ContinuedOnNextPa" style="margin-left:0in;mso-border-between:.75pt solid windowtext; mso-padding-between:1.0pt">Continued on next page '''<span style="font-size:16.0pt; mso-bidi-font-size:10.0pt;font-family:"Arial","sans-serif";mso-fareast-font-family: "Times New Roman";color:black;mso-ansi-language:EN-US;mso-fareast-language: EN-US;mso-bidi-language:AR-SA"> '''
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<p class="MapTitleContinued"> 12. Award Actions Involving the Prohibition Against Duplication of Benefits, Continued <p class="BlockLine" style="margin-left:0in;mso-border-between:.75pt solid windowtext; mso-padding-between:1.0pt">

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c.   Tort Claims Concluded Before December 1, 1962
<p class="MsoBlockText" style="mso-list:skip">An administrative award or settlement that became final before December 1, 1962, is a bar to all further payments of compensation under 38 U.S.C. 1151.
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<p class="MsoBlockText" style="mso-list:skip">

<p class="MsoBlockText" style="mso-list:skip">A court judgment that became final before December 1, 1962, is not

<p class="MsoBlockText" style="mso-list:skip">

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      a bar to payment of compensation under 38 U.S.C. 1151, or

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      subject to offset, unless a bar or offset is provided for by the terms of the judgment under 38 CFR 3.362.

<p class="MsoBlockText" style="mso-list:skip">

<p class="MsoBlockText" style="mso-list:skip">Important:   When a case is encountered in which payments were continued despite an administrative award or settlement that became final before December 1, 1962, stop or reduce the award on the date last paid (DLP) under 38 CFR 3.500(b)(2).

<p class="MsoBlockText" style="mso-list:skip">

<p class="MsoBlockText" style="mso-list:skip">Note:   For claims received before October 1, 1997, the offset of benefits under 38 U.S.C. 1151 was governed by 38 CFR 3.800. {| border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse:collapse;mso-table-layout-alt:fixed;mso-padding-alt: 0in 5.4pt 0in 5.4pt"
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d.   Who Has Responsibility for Determining Distribution of Monies to Other Beneficiaries
<p class="TableText">If a judgment is made to, or for, two or more persons (either in individual capacities or as a personal representative(s) of the estate) and involves a claimant subject to offset, the individual distribution of the monies must be determined.
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<p class="MsoBlockText" style="mso-list:skip">

<p class="MsoBlockText" style="mso-list:skip">Use the information in the table below to determine who has the responsibility to determine the distribution of monies to other beneficiaries. <p class="MsoNormal"> <p class="BlockLine" style="margin-left:0in;mso-border-between:.75pt solid windowtext; mso-padding-between:1.0pt"> '''<span style="font-size:16.0pt; mso-bidi-font-size:10.0pt;font-family:"Arial","sans-serif";mso-fareast-font-family: "Times New Roman";color:black;mso-ansi-language:EN-US;mso-fareast-language: EN-US;mso-bidi-language:AR-SA"> '''
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13.   Determining Offset Effective Dates and Amounts
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Introduction
<p class="MsoBlockText">This topic contains information on determining offset effective dates and amounts, including
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<p class="MsoBlockText">

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      the principles for determining the offset amount under 38 U.S.C. 1151

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      determining the

<p class="BulletText2" style="mso-list:l1 level1 lfo3"> -     offset amount, and

<p class="BulletText2" style="mso-list:l1 level1 lfo3"> -     final date of a judgment

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      handling retroactive adjustments, and

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      examples of

<p class="BulletText2" style="mso-list:l1 level1 lfo3"> -     a retroactive adjustment,

<p class="BulletText2" style="mso-list:l1 level1 lfo3"> -     an unchanged combined evaluation, and

<p class="BulletText2" style="mso-list:l1 level1 lfo3"> -     situations in which an offset is not required. <p class="BlockLine" style="margin-left:0in;mso-border-between:.75pt solid windowtext; mso-padding-between:1.0pt">
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Change Date
<p class="MsoBlockText">March 20, 2011 {| border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse:collapse;mso-table-layout-alt:fixed;mso-padding-alt: 0in 5.4pt 0in 5.4pt"
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a.   Principles for Determining the Offset Amount Under 38 U.S.C. 1151
<p class="MsoBlockText">The amount of offset must not deprive a Veteran of any part of the compensation payable to him/her if a claim under 38 U.S.C. 1151 had not been filed.
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<p class="MsoBlockText">

<p class="MsoBlockText">Do not offset any amount if the disability compensable under 38 U.S.C. 1151 does not increase the total amount of compensation.

<p class="MsoBlockText">

<p class="MsoBlockText">The offset provisions are applicable if compensation for a particular disability is payable solely under 38 U.S.C. 1151. If compensation is otherwise payable for that particular disability, regardless of previous evaluation, then no offset is required.

<p class="MsoBlockText">

<p class="MsoBlockText">Reference:   For an example of a situation in which an offset is not required, see M21-1MR, Part IV, Subpart ii, 3.D.13.g. <p class="ContinuedOnNextPa" style="margin-left:0in;mso-border-between:.75pt solid windowtext; mso-padding-between:1.0pt">Continued on next page '''<span style="font-size:16.0pt; mso-bidi-font-size:10.0pt;font-family:"Arial","sans-serif";mso-fareast-font-family: "Times New Roman";color:black;mso-ansi-language:EN-US;mso-fareast-language: EN-US;mso-bidi-language:AR-SA"> '''
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<p class="MapTitleContinued"> 13. Determining Offset Effective Dates and Amounts, Continued <p class="BlockLine" style="margin-left:0in;mso-border-between:.75pt solid windowtext; mso-padding-between:1.0pt">

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b.   Determining the Offset Amount
<p class="MsoBlockText" style="mso-list:skip">If an increase in the evaluation of a service-connected (SC) disability is granted, such that the existence of the disability compensable under 38 U.S.C. 1151 no longer increases the total amount of compensation payable, then
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<p class="MsoBlockText" style="mso-list:skip">

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      determine the total compensation payable for all disabilities (SC and those compensable under 38 U.S.C. 1151)

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      determine the total compensation payable for SC disabilities only

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      withhold the difference between the two totals, and

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      discontinue the previously established offset. {| border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse:collapse;mso-table-layout-alt:fixed;mso-padding-alt: 0in 5.4pt 0in 5.4pt"
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c.   Determining the Final Date of a Judgment
<p class="MsoBlockText">The effective date of the offset is the first of the month after the month during which the judgment becomes final when a withholding is required.
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<p class="MsoBlockText">

<p class="MsoBlockText">Use the information in the table below to determine when various judgments are considered final. <p class="MsoNormal"> <p class="MsoNormal"> <p class="ContinuedOnNextPa" style="margin-left:0in;mso-border-between:.75pt solid windowtext; mso-padding-between:1.0pt">Continued on next page '''<span style="font-size:16.0pt; mso-bidi-font-size:10.0pt;font-family:"Arial","sans-serif";mso-fareast-font-family: "Times New Roman";color:black;mso-ansi-language:EN-US;mso-fareast-language: EN-US;mso-bidi-language:AR-SA"> '''
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<p class="MapTitleContinued"> 13. Determining Offset Effective Dates and Amounts, Continued <p class="BlockLine" style="margin-left:0in;mso-border-between:.75pt solid windowtext; mso-padding-between:1.0pt">

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d.   Handling Retroactive Adjustments
<p class="MsoBlockText">Do not offset compensation for any period before the month following the date on which the settlement or judgment becomes final.
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<p class="MsoBlockText">

<p class="MsoBlockText">Situation:   Action to adjust an award under 38 U.S.C. 1151 for receipt of a judgment creates a 97K recoupment balance in the Compensation & Pension (C&P) master record.

<p class="MsoBlockText">

<p class="MsoBlockText">Action:   If final notice of a judgment is received and a compensation award is already running, VA must offset compensation retroactive to the first of the month following the month the judgment became final.

<p class="MsoBlockText">

<p class="MsoBlockText">Results:   This retroactive adjustment to prevent duplication of benefits creates a 30B accounts receivable in the C&P master record in addition to the 97K recoupment balance. The 97K recoupment balance is reduced by the amount of the 30B accounts receivable. After processing the retroactive award, the sum of the 97K recoupment balance and the 30B accounts receivable should equal the amount of the judgment.

<p class="MsoBlockText">

<p class="MsoBlockText">Note:   If an accounts receivable amount is declared invalid or waived, do not apply the invalid or waived portion of the debt to reduce the amount required to be offset from future VA benefits. (Reference:   For more information, see VAOPGCPREC 1-2010.) {| border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse:collapse;mso-table-layout-alt:fixed;mso-padding-alt: 0in 5.4pt 0in 5.4pt"
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e.   Example:   Retroactive Adjustment
<p class="MsoBlockText">Situation:   A judgment is final on June 15, 2005. The rating activity later grants entitlement to compensation effective March 16, 2005.
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<p class="MsoBlockText">

<p class="MsoBlockText">Action:   Do not offset any portion of the Veteran’s compensation benefits prior to July 1, 2005, the month following the date the judgment became final. <p class="ContinuedOnNextPa" style="margin-left:0in;mso-border-between:.75pt solid windowtext; mso-padding-between:1.0pt">Continued on next page '''<span style="font-size:16.0pt; mso-bidi-font-size:10.0pt;font-family:"Arial","sans-serif";mso-fareast-font-family: "Times New Roman";color:black;mso-ansi-language:EN-US;mso-fareast-language: EN-US;mso-bidi-language:AR-SA"> '''
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<p class="MapTitleContinued"> 13. Determining Offset Effective Dates and Amounts, Continued <p class="BlockLine" style="margin-left:0in;mso-border-between:.75pt solid windowtext; mso-padding-between:1.0pt">

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f.   Example:   Unchanged Combined Evaluation
<p class="MsoBlockText" style="mso-list:skip">Situation:   A Veteran has two SC disabilities, each evaluated as 60 percent disabling, and disability compensable under 38 U.S.C. 1151 that is evaluated as 30 percent disabling. The combined evaluation of all disabilities is 90 percent. The combined evaluation of the SC disabilities alone is 80 percent.
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<p class="MsoBlockText" style="mso-list:skip">

<p class="MsoBlockText" style="mso-list:skip">Result:   VA offsets the difference between the rate payable for disabilities rated 90 percent disabling and the rate payable for disabilities rated 80 percent disabling.

<p class="MsoBlockText" style="mso-list:skip">

<p class="MsoBlockText" style="mso-list:skip">Effect on offset:   If one of the SC disabilities increases from a 60-percent to 70-percent evaluation, then the combined evaluation for the SC disabilities alone is increased to 90 percent, even though the combined evaluation for all the disabilities still remains 90 percent. In this situation, discontinue the offset.

<p class="MsoBlockText" style="mso-list:skip">

<p class="MsoBlockText" style="mso-list:skip">Note:   If the situation were reversed so that the 70-percent evaluation was reduced to 60 percent, the offset would recommence. {| border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse:collapse;mso-table-layout-alt:fixed;mso-padding-alt: 0in 5.4pt 0in 5.4pt"
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g.   Example 1: Situation in Which an Offset Is Not Required
<p class="MsoBlockText" style="mso-list:skip">Situation:   A Veteran
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<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      is rated 10 percent disabled because of an SC foot disability, and

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      enters a VA medical center (VAMC) for treatment of the disability.

<p class="MsoBlockText">

<p class="MsoBlockText">The evaluation is increased to 30 percent due to an aggravation of the injury as a result of the medical or surgical treatment. The Veteran successfully sues the hospital and recovers damages.

<p class="MsoBlockText" style="mso-list:skip">

<p class="MsoBlockText" style="mso-list:skip">Result:   No offset is required because the foot disability is SC without regard to 38 U.S.C. 1151. <p class="ContinuedOnNextPa" style="margin-left:0in;mso-border-between:.75pt solid windowtext; mso-padding-between:1.0pt">Continued on next page '''<span style="font-size:16.0pt; mso-bidi-font-size:10.0pt;font-family:"Arial","sans-serif";mso-fareast-font-family: "Times New Roman";color:black;mso-ansi-language:EN-US;mso-fareast-language: EN-US;mso-bidi-language:AR-SA"> '''
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<p class="MapTitleContinued"> 13. Determining Offset Effective Dates and Amounts, Continued <p class="BlockLine" style="margin-left:0in;mso-border-between:.75pt solid windowtext; mso-padding-between:1.0pt">

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h.   Example 2:   Situation in Which an Offset Is Not Required
<p class="MsoBlockText" style="mso-list:skip">Situation:   A Veteran
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<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      is SC for a severe pulmonary condition, which requires the administration of significant doses of steroids

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      later develops cataracts and claims that the cataracts are due to the steroid treatments, and

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      files a compensation claim under 38 U.S.C. 1151.

<p class="MsoBlockText">

<p class="MsoBlockText" style="mso-list:skip">Result:   The rating activity should consider whether the cataracts are proximately due to, or the result of, an SC disability. If the rating activity does grant service connection for cataracts under 38 CFR 3.310, no offset is required. <p class="BlockLine" style="margin-left:0in;mso-border-between:.75pt solid windowtext; mso-padding-between:1.0pt"> '''<span style="font-size:16.0pt; mso-bidi-font-size:10.0pt;font-family:"Arial","sans-serif";mso-fareast-font-family: "Times New Roman";color:black;mso-ansi-language:EN-US;mso-fareast-language: EN-US;mso-bidi-language:AR-SA"> '''
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14.   Preparation of Awards
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Introduction
<p class="MsoBlockText">This topic contains information on the preparation of awards, including
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<p class="MsoBlockText">

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      the location of instructions for the preparation of awards

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      entitlement codes

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      when to use special law (SL) code 07

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      how to withhold the offset

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      entering the gross amount of the judgment

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      changes in the recoupment balance, and

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      entitlement to ancillary benefits. <p class="BlockLine" style="margin-left:0in;mso-border-between:.75pt solid windowtext; mso-padding-between:1.0pt">
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Change Date
<p class="MsoBlockText">September 5, 2008 {| border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse:collapse;mso-table-layout-alt:fixed;mso-padding-alt: 0in 5.4pt 0in 5.4pt"
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a.   Location of Instructions for the Preparation of Awards
<p class="MsoBlockText">The instructions in M21-1MR, Part III, Subpart v, 4.B concerning the preparation of awards involving readjustment and disability severance pay, generally apply to the preparation of awards under 38 U.S.C. 1151.
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<p class="MsoBlockText">

<p class="MsoBlockText">The provisions in this topic apply specifically to the preparation of awards under 38 U.S.C. 1151. {| border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse:collapse;mso-table-layout-alt:fixed;mso-padding-alt: 0in 5.4pt 0in 5.4pt"
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b.   Entitlement Codes
<p class="MsoBlockText">When there are SC disabilities for which compensation is payable without regard to 38 U.S.C. 1151, use the appropriate entitlement code for the SC disabilities. If there are none, use the peacetime code.
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<p class="MsoBlockText">

<p class="MsoBlockText">Reference:   For more information on entitlement codes, see M21-1, Part V, 6.07. {| border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse:collapse;mso-table-layout-alt:fixed;mso-padding-alt: 0in 5.4pt 0in 5.4pt"
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c.   When to Use SL Code 07
<p class="MsoBlockText" style="mso-list:skip">When compensation or Dependency and Indemnity Compensation (DIC) is granted or increased, enter special law (SL) code 07 in the SL CODE field on the 401 screen, whether or not offset is required.
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<p class="MsoBlockText" style="mso-list:skip">

<p class="MsoBlockText" style="mso-list:skip">Note:   This includes those cases in which a disability evaluated as 0 percent disabling under 38 U.S.C. 1151 is first assigned a compensable evaluation.

<p class="MsoBlockText">

<p class="MsoBlockText">Reference:   For more information on SL codes, see M21-1, Part V, 6.09. <p class="ContinuedOnNextPa" style="margin-left:0in;mso-border-between:.75pt solid windowtext; mso-padding-between:1.0pt">Continued on next page '''<span style="font-size:16.0pt; mso-bidi-font-size:10.0pt;font-family:"Arial","sans-serif";mso-fareast-font-family: "Times New Roman";color:black;mso-ansi-language:EN-US;mso-fareast-language: EN-US;mso-bidi-language:AR-SA"> '''
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<p class="MapTitleContinued"> 14. Preparation of Awards, Continued <p class="BlockLine" style="margin-left:0in;mso-border-between:.75pt solid windowtext; mso-padding-between:1.0pt">

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d.   How to Withhold the Offset
<p class="MsoBlockText" style="mso-list:skip">Enter the amount of the offset as a type 7 withholding in the DED-OFFST field on the 403 screen.
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<p class="MsoBlockText" style="mso-list:skip">

<p class="MsoBlockText" style="mso-list:skip">Reference:   For more information on withholding and offset-recoupment data, see M21-1, Part V, 6.11. {| border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse:collapse;mso-table-layout-alt:fixed;mso-padding-alt: 0in 5.4pt 0in 5.4pt"
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e.   Entering the   Gross Amount of the Judgment
<p class="MsoBlockText" style="mso-list:skip">Enter the gross amount of the judgment in the TORT AWARDS field on the 401 screen. The maximum amount that can be entered is $999,999.99.
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<p class="MsoBlockText" style="mso-list:skip">

<p class="MsoBlockText" style="mso-list:skip">Important: If the tort award is $1,000,000 or more

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      enter $999,999.99 on the 401 screen

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      refer the folder to the finance activity for entry of the remaining recoupment balance, and

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      maintain close control to ensure that the master record recoupment balance is correct after the finance transaction has been processed. {| border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse:collapse;mso-table-layout-alt:fixed;mso-padding-alt: 0in 5.4pt 0in 5.4pt"
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f.   Changes in the Recoupment Balance
<p class="MsoBlockText" style="mso-list:skip">Once a recoupment balance has been established in the master record, it can not be changed by amended award action. Action by the finance activity is required to change the recoupment balance.
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<p class="MsoBlockText" style="mso-list:skip">

<p class="MsoBlockText" style="mso-list:skip">If the recoupment balance must be changed

<p class="MsoBlockText" style="mso-list:skip">

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      document that fact in the claims folder

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      ask the finance activity to change the balance, and

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      maintain close control of the case to verify that the master record updated. <p class="ContinuedOnNextPa" style="margin-left:0in;mso-border-between:.75pt solid windowtext; mso-padding-between:1.0pt">Continued on next page '''<span style="font-size:16.0pt; mso-bidi-font-size:10.0pt;font-family:"Arial","sans-serif";mso-fareast-font-family: "Times New Roman";color:black;mso-ansi-language:EN-US;mso-fareast-language: EN-US;mso-bidi-language:AR-SA"> '''
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<p class="MapTitleContinued"> 14. Preparation of Awards, Continued <p class="BlockLine" style="margin-left:0in;mso-border-between:.75pt solid windowtext; mso-padding-between:1.0pt">

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g.   Entitlement to Ancillary Benefits
<p class="MsoBlockText" style="mso-list:skip">If compensation is awarded for a disability under 38 U.S.C. 1151, the Veteran, if otherwise eligible, may receive
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<p class="MsoBlockText" style="mso-list:skip">

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      the annual clothing allowance administered by the Veterans Health Administration

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      automobile or adaptive equipment, per M21-1MR, Part IX, Subpart i, 2, and

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      specially adapted housing benefits, including a special housing adaptation grant, per M21-1MR, Part IX, Subpart i, 3.

<p class="MsoBlockText" style="mso-list:skip">

<p class="MsoBlockText" style="mso-list:skip">There is no entitlement to the following ancillary benefits unless the Veteran is entitled based on disabilities for which compensation is payable without regard to the provisions of 38 U.S.C. 1151:

<p class="MsoBlockText">

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      Dependents’ Educational Assistance (DEA), per M21-1MR, Part III, Subpart iii, 6.C.13

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      vocational rehabilitation, per M21-1MR, Part IX, Subpart i, 1.A, and

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      the Civilian Health and Medical Program of VA (CHAMPVA), per

<p class="BulletText2" style="mso-list:l1 level1 lfo3"> -     38 U.S.C. 1781, and

<p class="BulletText2" style="mso-list:l1 level1 lfo3"> -     M21-1MR, Part IX, Subpart i, 4. <p class="BlockLine" style="margin-left:0in;mso-border-between:.75pt solid windowtext; mso-padding-between:1.0pt"> '''<span style="font-size:16.0pt; mso-bidi-font-size:10.0pt;font-family:"Arial","sans-serif";mso-fareast-font-family: "Times New Roman";color:black;mso-ansi-language:EN-US;mso-fareast-language: EN-US;mso-bidi-language:AR-SA"> '''
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15.   Providing Notice of Awards
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Introduction
<p class="MsoBlockText">This topic contains information on providing notice of awards, including
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<p class="MsoBlockText">

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      preparing a locally-generated letter

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      providing notice of an offset requirement, and

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      preparing a denial. <p class="BlockLine" style="margin-left:0in;mso-border-between:.75pt solid windowtext; mso-padding-between:1.0pt">
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Change Date
<p class="MsoBlockText">December 13, 2005 {| border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse:collapse;mso-table-layout-alt:fixed;mso-padding-alt: 0in 5.4pt 0in 5.4pt"
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a.   Preparing a Locally-Generated Letter
<p class="MsoBlockText" style="mso-list:skip">The presence of SL code 07 in the award automatically suppresses the Benefits Delivery Network (BDN)-generated award letter.
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<p class="MsoBlockText" style="mso-list:skip">

<p class="MsoBlockText" style="mso-list:skip">Prepare a locally-generated letter, referring to the benefit as “ compensation under 38 U.S.C. 1151 ” and not “service connection.”

<p class="MsoBlockText" style="mso-list:skip">

<p class="MsoBlockText">Reference:   For more information on the preparation of awards, see M21-1MR, Part IV, Subpart ii, 3.D.14. <p class="ContinuedOnNextPa" style="margin-left:0in;mso-border-between:.75pt solid windowtext; mso-padding-between:1.0pt">Continued on next page '''<span style="font-size:16.0pt; mso-bidi-font-size:10.0pt;font-family:"Arial","sans-serif";mso-fareast-font-family: "Times New Roman";color:black;mso-ansi-language:EN-US;mso-fareast-language: EN-US;mso-bidi-language:AR-SA"> '''
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<p class="MapTitleContinued"> 15. Providing Notice of Awards, Continued <p class="BlockLine" style="margin-left:0in;mso-border-between:.75pt solid windowtext; mso-padding-between:1.0pt">

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b.   Providing Notice of an Offset Requirement
<p class="MsoBlockText">Use the information below to provide the notice of an offset and the related requirements. <p class="MsoNormal"> {| border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse:collapse;mso-table-layout-alt:fixed;mso-padding-alt: 0in 5.4pt 0in 5.4pt"
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c.   Processing a Denial
<p class="MsoBlockText">Process a formal denial of a claim filed under 38 U.S.C. 1151 when required under M21-1, Part V, 10.03 in accordance with M21-1, Part V, 10.04.
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<p class="MsoBlockText">

<p class="MsoBlockText">Use a locally-generated letter to inform the Veteran of the

<p class="MsoBlockText">

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      evidence considered, and

<p class="BulletText1" style="mso-list:l2 level1 lfo2"><span style="font-family:Symbol;mso-fareast-font-family:Symbol;mso-bidi-font-family:  Symbol;color:windowtext"> ·      reasons for the determination.

<p class="MsoBlockText">

<p class="MsoBlockText">Important:   Do not refer to entitlement under 38 U.S.C. 1151 as “service connection.”

<p class="MsoBlockText">

<p class="MsoBlockText">Reference:   For more information on notification requirements, see 38 CFR 3.103.
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