M21-1 Manual / Part VIII, Subpart iv, Chapter 6, Section C
Authorization of Awards Under 38 U.S.C. 1151
M21-1, Part VIII, Subpart iv, Chapter 6, Section C
Overview
In This Section | | This section contains the following topics:| Topic | Topic Name |
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| 1 | General Information on the Prohibition Against Duplication of Benefits | | 2 | Award Actions Involving the Prohibition Against Duplication of Benefits | | 3 | Determining Offset Effective Dates and Amounts | | 4 | Preparation of Awards | | 5 | Providing Notice of Awards |
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1. General Information on the Prohibition Against Duplication of Benefits
Introduction | | This topic contains general information on the prohibition against duplication of benefits, including- applicability of prohibition against duplication of benefits
- considering the consequences of civil action
- definition of judgment
- considering different types of judgments
- who resolves tort claims, and
- notice of favorable resolutions.
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Change Date | | September 5, 2008 |
VIII.iv.6.C.1.a. Applicability of Prohibition Against Duplication of Benefits | | 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. Reference: For information on the adjudication of death claims involving 38 U.S.C. 1151, see M21-1, Part XII, Subpart i, 1.B.2. |
VIII.iv.6.C.1.b. Considering the Consequences of Civil Action | | 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- a trial, or
- agreeing to a settlement or compromise.
Note: When agreeing to a settlement or compromise, the Veteran signs away the right to sue in court in return for payment of an agreed-upon amount for damages. |
VIII.iv.6.C.1.c. Definition: Judgment | | A judgment includes all of the following:- settlement
- compromise
- administrative award, and
- tort award.
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VIII.iv.6.C.1.d. Considering Different Types of Judgments | | It makes no difference- what the judgment is called, or
- whether the judgment compensates for economic loss, such as the loss of income, or non-economic loss, such as pain and suffering.
Note: Attorney’s fees, contracts, and other expenses incident to the claim are not deductible from the total amount awarded per VAOGCPREC 7-1994. |
VIII.iv.6.C.1.e. Who Resolves Tort Claims | | A tort claim against the government is resolved by the - General Counsel
- U.S. Attorney General, or
- District Counsel.
Note: The circumstances of the individual case determine who is responsible for resolving the tort claim.References: For more information on the functions of |
VIII.iv.6.C.1.f. Notice of Favorable Resolutions | | In any case that is resolved in favor of the Veteran, the District 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. |
2. Award Actions Involving the Prohibition Against Duplication of Benefits
Introduction | | This topic contains general information on handling award actions involving the prohibition against duplication of benefits, including- deferring the award action
- effect of prohibition on pension beneficiaries
- tort claims concluded before December 1, 1962, and
- who has responsibility for determining distribution of monies to other beneficiaries.
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VIII.iv.6.C.2.b. Effect of Prohibition on Pension Beneficiaries | | No offset is required if a tort claim is concluded in favor of a Veteran who is- in receipt of pension, or
- eligible for compensation under 38 U.S.C. 1151, but elects to continue to receive pension in lieu of compensation.
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). 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- is the source of the information, and
- understands that the judgment will affect the amount of pension payable.
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VIII.iv.6.C.2.c. Tort Claims Concluded Before December 1, 1962 | | 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. A court judgment that became final before December 1, 1962, is not- a bar to payment of compensation under 38 U.S.C. 1151, or
- subject to offset, unless a bar or offset is provided for by the terms of the judgment under 38 CFR 3.362.
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 first of the month following the month for which VA last paid the beneficiary under 38 CFR 3.500(b)(2). 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. |
VIII.iv.6.C.2.d. Who Has Responsibility for Determining Distribution of Monies to Other Beneficiaries | | 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. Use the information in the table below to determine who has the responsibility to determine the distribution of monies to other beneficiaries.| If the claims folder is in the… | Then the … |
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| RO when the question of distribution arises | VSCM asks District Counsel to determine the individual distribution of the- judgment award
- settlement, or
- compromise payment.
| | jurisdiction of VA Central Office when the question of distribution arises | Office of General Counsel determines the distribution. |
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3. Determining Offset Effective Dates and Amounts
Introduction | | This topic contains information on determining offset effective dates and amounts, including- principles for determining the offset amount under 38 U.S.C. 1151
- effect of state laws on offset decisions
- damages recovered under the Federal Tort Claims Act (FTCA)
- determining the offset amount under 38 U.S.C. 1151
- determining the final date of a judgment
- handling retroactive adjustments
- example: retroactive adjustment
- example: unchanged combined evaluation
- example 1: situation in which an offset is not required, and
- example 2: situation in which an offset is not required.
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VIII.iv.6.C.3.a. Principles for Determining the Offset Amount Under 38 U.S.C. 1151 | | The amount of offset must not deprive a Veteran of any part of the compensation payable if a claim under 38 U.S.C. 1151 had not been filed. Do not offset any amount if the disability compensable under 38 U.S.C. 1151 does not increase the total amount of compensation. 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. Reference: For an example of a situation in which an offset is not required, see M21-1, Part VIII, Subpart iv, 6.C.3.i. |
VIII.iv.6.C.3.c. Damages Recovered under the FTCA | | The full amount of damages recovered by an individual under the FTCA is subject to offset against benefits payable to that individual under section 38 U.S.C. 1151, regardless of whether those damages compensate for economic or noneconomic loss. Reference: For more information on determining an offset amount, see VAOPGCPREC 52-1991. |
VIII.iv.6.C.3.d. Determining the Offset Amount Under 38 U.S.C. 1151 | | If an increase in the evaluation of a service-connected (SC) disability is awarded, such that the existence of the disability compensable under 38 U.S.C. 1151 no longer increases the total amount of compensation payable, then |
VIII.iv.6.C.3.e. Determining the Final Date of a Judgment | | When a withholding is required, the effective date of the offset is the first of the month after the month during which the judgment becomes final. Use the information in the table below to determine when various judgments are considered final.| If the judgment is … | Then the … |
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| a VA administrative award | judgment is considered final on the date of approval. | | an Attorney General agreement | settlement or compromise entered into by the Attorney General after a suit has been filed is considered final when the agreement is approved by the court, even though a final order of dismissal may not be entered until a later date. |
Note: If, after reviewing the evidence of record, there is any question as to the date the judgment became final, request clarification from District Counsel. |
VIII.iv.6.C.3.f. Handling Retroactive Adjustments | | Do not offset compensation for any period before the month following the date on which the settlement or judgment becomes final. 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 on overpayment and the requirement to offset benefits, see VAOPGCPREC 1-2010. |
VIII.iv.6.C.3.g. Example: Retroactive Adjustment | | Situation: A judgment is final on June 15, 2024. The rating activity later awards entitlement to compensation effective March 16, 2024. Action: Do not offset any portion of the Veteran’s compensation benefits prior to July 1, 2024, the month following the date the judgment became final. |
VIII.iv.6.C.3.h. Example: Unchanged Combined Evaluation | | 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. 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. 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. Note: If the situation were reversed so that the 70-percent evaluation was reduced to 60 percent, the offset would recommence. |
VIII.iv.6.C.3.i. Example 1: Situation in Which an Offset Is Not Required | | Situation: A Veteran- is rated 10-percent disabled because of an SC foot disability, and
- enters a VA medical center for treatment of the disability.
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. Result: No offset is required because the foot disability is SC without regard to 38 U.S.C. 1151. |
VIII.iv.6.C.3.j. Example 2: Situation in Which an Offset Is Not Required | | Situation: A Veteran- is SC for a severe pulmonary condition, which requires the administration of significant doses of steroids
- later develops cataracts and claims that the cataracts are due to the steroid treatments, and
- files a compensation claim under 38 U.S.C. 1151.
Result: The rating activity should consider whether the cataracts are shown to be the result of the SC disability. If the rating activity does award secondary service connection for cataracts under 38 CFR 3.310, no offset is required. |
4. Preparation of Awards
Introduction | | This topic contains information on the preparation of awards, including- location of instructions for the preparation of awards
- instructions for the preparation of awards under 38 U.S.C. 1151 with an offset, and
- entitlement to ancillary benefits if compensation is awarded for a disability under 38 U.S.C. 1151.
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VIII.iv.6.C.4.b. Instructions for the Preparation of Awards Under 38 U.S.C. 1151 With an Offset | | Follow the steps in the table below concerning the preparation of awards under 38 U.S.C. 1151 with an offset.| Step | Action |
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| 1 | On the RECORD DECISIONS page in the AWARD ADJUSTMENTS screen, click the DISABILITY PAY tab. | | 2 | Click the ADD button. | | 3 | Select Tort in the PAYMENT TYPE field. | | 4 | Enter the amount that will be recouped in the ORIGINAL BALANCE field. | | 5 | In the AWARD EFFECTIVE DATE field, enter date the adjustments begin. | | 6 | When finished, click ACCEPT to save the entry to the decision grid. | | 7 | Click the DONE button when finished. |
Reference: For more information on processing awards under 38 U.S.C. 1151 in the Veterans Benefits Management System – Awards (VBMS-A), see the VBMS Awards User Guide. |
VIII.iv.6.C.4.c. Entitlement to Ancillary Benefits if Compensation Is Awarded for a Disability Under 38 U.S.C. 1151 | | If compensation is awarded for a disability under 38 U.S.C. 1151, the Veteran, if otherwise eligible, may receive- the annual clothing allowance administered by the Veterans Health Administration
- automobile or adaptive equipment, per M21-1, Part XIII, Subpart i, 2.A, and
- specially adapted housing benefits, including a special home adaptation grant, per M21-1, Part XIII, Subpart i, 2.B.
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:- Dependents’ Educational Assistance, per M21-1, Part XIII, Subpart i, 1.B.1
- Veteran Readiness and Employment, per M21-1, Part XIII, Subpart i, 5.A, and
- the Civilian Health and Medical Program of VA, per 38 U.S.C. 1781 and M21-1, Part XIII, Subpart i, 3.H.
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5. Providing Notice of Awards
Introduction | | This topic contains information on providing notice of awards, including- preparing a locally-generated letter for claims filed under 38 U.S.C 1151, and
- providing notice of an offset requirement.
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VIII.iv.6.C.5.a. Preparing a Locally-Generated Letter for Claims Filed Under 38 U.S.C. 1151 | | When required, prepare a locally-generated letter, referring to the benefit as “compensation under 38 U.S.C. 1151” and not “service connection.” When using a locally-generated letter to inform a claimant of the formal denial of a claim filed under 38 U.S.C. 1151, include all required notification elements as detailed in M21-1, Part VI, Subpart i, 1.B.1.b.Important: Do not refer to entitlement under 38 U.S.C. 1151 as “service connection.” References: For more information on- the preparation of awards, see M21-1, Part VIII, Subpart iv, 6.C.4, and
- notification requirements, see 38 CFR 3.103(f).
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VIII.iv.6.C.5.b. Providing Notice of an Offset Requirement | | Use the information below to provide the notice of an offset and the related requirements.| If the award … | Then … |
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| includes an offset | include the offset information in the locally-generated letter to the Veteran. Example: Our records indicate that you received payment resulting from a Tort action. As a result, we will withhold all or part of your VA benefits until the Tort payment is offset. After this amount is paid back, you will start receiving your full VA compensation. (38 CFR 3.362) | | does not include an offset | inform the Veteran that VA must be notified of any court judgment or tort award resulting from this disability or injury. Note: Include this information whether or not there is any indication that a tort claim has or will be filed. | | is a zero-rate award, meaning that a total offset is in effect until an amount equal to the judgment has been recouped | advise the Veteran to keep VA informed of any changes of address. |
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Source: VA M21-1 Adjudication Procedures Manual, M21-1, Part VIII, Subpart iv, Chapter 6, Section C (U.S. government work, reproduced for reference). Browse all sections →