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Department of Veterans Affairs Regional Office in No. LittleRock, Arkansas

THE ISSUE

Whether the veteran’s Department of Veterans Affairs (VA)disability compensation for a psychiatric disorder should bewithheld due to the receipt of payments under the FederalEmployees Compensation Act (FECA) effective September 1,1992.

REPRESENTATION

Appellant represented by: Veterans of Foreign Wars ofthe United States

WITNESSES AT HEARING ON APPEAL

Veteran and his spouse

ATTORNEY FOR THE BOARD

N. W. Fabian, Associate Counsel

REMAND

The veteran had active duty from January 1966 to June 1988.This matter comes to the Board of Veterans’ Appeals (Board)from a November 1995 determination by the VA Regional Office(RO) to withhold all disability compensation to which theveteran was entitled for dysthymia with post-traumatic stressdisorder (PTSD). The RO determined that the compensation forthe psychiatric disorder, which was rated as 100 percentdisabling, should be withheld because the veteran wasreceiving worker’s compensation under the provisions of theFECA for the same disability.

If a veteran is entitled to compensation from the Office ofWorkers’ Compensation Programs (OWCP) in the Department ofLabor, the agency responsible for administering the FECA, andis also entitled to VA compensation for the same disability,he must elect which benefit he will receive. An award cannot be approved for the payment of compensation concurrently withcompensation from OWCP. There is no prohibition against thepayment of benefits under the FECA and from VA when suchbenefits are not based on the same disability. 38 C.F.R. § 3.708(b).

In a March 1989 rating decision service connection wasgranted for dysthymia, with a 10 percent disability rating

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assigned effective July 1, 1988, the day following theveteran’s separation from service. In a January 1993 ratingdecision service connection was also granted for PTSD, andthe disability rating for dysthymia with PTSD was increasedfrom 10 to 30 percent effective January 1, 1993, followingthe grant of a temporary 100 percent rating due to theveteran’s hospitalization for the service-connected disorderfrom August 31 to December 31, 1992. The 30 percentdisability rating was increased to 70 percent in April 1994and to 100 percent in October 1994, all of which wereeffective January 1, 1993. The increased ratings were allbased on evidence of the veteran’s psychiatrichospitalizations and ongoing outpatient treatment in 1992 and1993.

In April 1993 the RO received notice from the Office ofPersonnel Management (OPM) that the veteran’s application fordisability retirement from the U. S. Postal Service had beenapproved. In February 1994 the RO was notified that theveteran was receiving worker’s compensation from the OWCP.The April 1994 rating decision referenced above wasapparently processed without any action having been taken todetermine the disability for which FECA benefits were beingpaid.

In July 1994 the RO received notice from the U. S. PostalService that the veteran had last worked on August 25, 1992,that he had retired on April 3, 1993, and that he had chosento receive FECA benefits in lieu of a disability retirementfrom OPM. The October 1994 rating decision, in which thedisability rating was increased to 100 percent, is annotatedto show that the veteran was in receipt of FECA benefits.When the Compensation and Pension Award resulting from theOctober 1994 rating decision was processed, it was determinedthat the FECA benefits were based on the veteran’s service-connected migraine headache disorder, which at that time wasrated as 50 percent disabling. In December 1994 the veteran was notified that the special monthly compensation that hehad been receiving due to having disabilities rated as60 percent disabling, in addition to the 100 percent ratingfor the psychiatric disorder, was terminated effectiveSeptember 1, 1992, due to the receipt of FECA benefits. It is not clear on what evidence this determination was made.

In January 1995 the RO received a copy of the February 1993decision by the OWCP granting the veteran’s claim forworker’s compensation benefits. The OWCP found that the veteran had an emotional disorder, which had been diagnosedas major depression, that was causally related to the factorsof his employment, and that he was entitled to worker’scompensation for the aggravation of the pre-existingdepression, which was reportedly due to PTSD.

In January 1995 the veteran expressed disagreement with thereduction in his VA disability compensation due to thereceipt of FECA benefits as shown in the December 1994notice. He contends that FECA benefits were paid based onthe aggravation of depression, that his service-connecteddisability is PTSD, and that the two are not related. He claims that his VA compensation should not be withheld due tothe receipt of FECA benefits because the FECA benefits arenot being paid for the same “disability.”

According to the regulation in effect at the time theveteran’s notice of disagreement was filed in January 1995,

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the effective date of a reduction of VA disabilitycompensation due to the receipt of FECA benefits was the endof the month following the month in which notice is receivedfrom OWCP that the veteran has elected to receive benefits under FECA. 38 C.F.R. § 3.500(e) (1994). The regulation wasamended effective February 21, 1995, to provide that theeffective date of the reduction is the day preceding the datethat the award of FECA benefits became effective. Reductions and Discontinuances (Federal Employees’ Compensation), 60Fed. Reg. 9626 (1995) (to be codified at 38 C.F.R. Part 3).Because the change in the regulation became effective afterthe veteran initiated his appeal, he is entitled to theapplication of the version of the regulation that is morefavorable to him. Karnas v. Derwinski, 1 Vet. App. 308(1991).

In May 1995 the RO notified the OWCP that the veteran hadreceived VA disability compensation since August 1988, andasked the OWCP to provide the disability for which FECAbenefits were being paid and the date on which FECA paymentsbegan. Prior to receiving a response to this request, inNovember 1995 the RO notified the veteran that, in theabsence of any evidence showing that he had elected toreceive VA disability compensation in lieu of FECA benefits,action was being taken to withhold all of the VA compensationto which he was entitled for his psychiatric disorder. In addition, the November 1995 Compensation and Pension Awardindicates that the net monthly rate to which the veteran wasentitled did not include any payment based on a disabilityrating for the psychiatric disorder. The November 1995 notice indicates that compensation for the veteran’sremaining service-connected disabilities was not affected bythe receipt of FECA benefits. The notice further indicates that his VA compensation was reduced effective September 1,1992. It is not clear from the evidence of record on what basis the RO determined that the veteran began receiving FECAbenefits effective September 1, 1992.

In a February 1997 substantive appeal the veteran claimedthat the FECA benefits were based on the “aggravation ofdepression,” which he claimed is not the same as his preexisting depressive disorder. According to the VeteransBenefits Administration Manual M21-1, Chapter 20, SubchapterVI, 20.19, the compensation rate based on an election toreceive FECA benefits for a service-connected disorder that has been aggravated by employment includes the compensationrate for the disability that was in effect prior to theemployment-related aggravation. In other words, if FECAbenefits are based on the aggravation of a service-connecteddisorder, the veteran remains entitled to the degree ofdisability that existed prior to the aggravation. In lightof the intercurrent rate increases for dysthymia with PTSD,it is unclear if the veteran remains entitled to a 10, 30,50, 70 or 100 percent disability rating for the service-connected disorder.

The Board notes that in a March 1997 decision the Committee on Waivers and Compromises (Committee) denied the veteran’srequest for waiver of recovery of the $37,631.54 overpaymentthat resulted from the retroactive reduction in his VA compensation. The request for waiver was denied on the basisthat the subject request, which was submitted to the RO inFebruary 1997, was not filed within 180 days of the November1995 notice informing the veteran of the overpayment. In light of the veteran’s pending appeal on the issue of the

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creation of the overpayment, the Committee’s determination onthe issue of waiver of recovery is premature. See Schaper v.Derwinski, 1 Vet. App. 430 (1991) (the issue of the validityof the overpayment must be resolved prior to consideration ofwaiver of recovery).

To ensure that VA has met its duty to assist the veteran indeveloping the facts pertinent to his appeal and to ensurefull compliance with due process requirements, the case isREMANDED to the RO for the following development:

1. The RO should obtain evidence from the OWCP of the effective date for the grant of FECA benefits and on what datethe veteran elected to receive FECA benefits in lieu of VA compensation. The RO should then determine the date on which VA was notified that the veteran had elected to receive FECA benefits in lieu of VA compensation. The RO should also determine, based on the relevantmedical evidence, the degree ofdisability, i. e., 10, 30, 50, 70, or 100percent, to which the veteran wasentitled prior to the aggravation of hisservice-connected psychiatric disorder byhis employment.
2. After undertaking any additionaldevelopment deemed appropriate inaddition to that requested above, the ROshould re-adjudicate the issue ofwithholding of the veteran’s VAdisability compensation due to thereceipt of FECA benefits. The RO should determine the correct effective date for withholding benefits by applying theversion of 38 C.F.R. § 3.500(e) that ismore favorable to the veteran and including the compensation rate for thedisability that was in effect prior tothe employment-related aggravation. The RO should make any necessary adjustmentsin the compensation award, and inform theveteran of those adjustments. If the benefit requested on appeal remainsdenied, the veteran and hisrepresentative should be furnished asupplemental statement of the case and begiven the opportunity to respond.

The case should then be returned to the Board. The Board intimates no opinion as to the ultimate outcome of this case.The veteran need take no action until he is notified.

This claim must be afforded expeditious treatment by the RO.The law requires that all claims that are remanded by theBoard of Veterans’ Appeals or by the United States Court ofVeterans Appeals for additional development or otherappropriate action must be handled in an expeditious manner.See The Veterans’ Benefits Improvements Act of 1994, Pub. L.No. 103-446, § 302, 108 Stat. 4645, 4658 (1994), 38 U.S.C.A.§ 5101 (West Supp. 1998) (Historical and Statutory Notes).In addition, VBA’s ADJUDICATION PROCEDURE MANUAL, M21-1, PartIV, directs the ROs to provide expeditious handling of all

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cases that have been remanded by the Board and the Court.See M21-1, Part IV, paras. 8.44-8.45 and 38.02-38.03.

Mark D. Hindin Member, Board of Veterans' Appeals

Under 38 U.S.C.A. § 7252 (West 1991), only a decision of theBoard of Veterans' Appeals is appealable to the United StatesCourt of Veterans Appeals. This remand is in the nature of a preliminary order and does not constitute a decision of theBoard on the merits of your appeal. 38 C.F.R. § 20.1100(b)(1997).- 2