Tuesday, August 31, 2010

VA Wastes Millions Maintaining Vacant Hazardous Buildings

Full Article at: EXCLUSIVE: VA Spends Millions to Maintain Vacant and Hazardous Buildings

By Jana Winter

Published August 31, 2010


"The Department of Veterans Affairs is spending tens of millions of taxpayer dollars every year to maintain hundreds of buildings – most of them vacant – that have fallen into such a state of disrepair that many of them are considered health hazards, an investigation by FoxNews.com reveals.

Exactly how much it costs to maintain the run-down and abandoned buildings is a matter of dispute. The General Accountability Office estimates that the VA has spent $175 million every year since 2007. But the VA disputes that figure, saying it spent $85 million on the buildings in 2007 and only $37 million last year."

Agent Orange Final Rule, Federal Register 31 August 2010

[Federal Register: August 31, 2010 (Volume 75, Number 168)]
[Rules and Regulations]
[Page 53202-53216]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31au10-6]

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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 3

RIN 2900-AN54


Diseases Associated With Exposure to Certain Herbicide Agents
(Hairy Cell Leukemia and Other Chronic B-Cell Leukemias, Parkinson's
Disease and Ischemic Heart Disease)

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

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SUMMARY: This document amends the Department of Veterans Affairs (VA)
adjudication regulations concerning presumptive service connection for
certain diseases based upon the most recent National Academy of
Sciences (NAS) Institute of Medicine committee report, Veterans and
Agent Orange: Update 2008 (Update 2008). This amendment is necessary to
implement the decision of the Secretary of Veterans Affairs that there
is a positive association between exposure to certain herbicides and
the subsequent development of hairy cell leukemia and other chronic B-
cell leukemias, Parkinson's disease, and ischemic heart disease. The
effect of this amendment is to establish presumptive service connection
for these diseases based on herbicide exposure.

DATES: Effective Date: This final rule is effective August 31, 2010.
This final rule is a major rule and the implementation of this rule is
subject to the provisions of the Congressional Review Act (CRA). The
CRA provides for a 60-day waiting period before an agency may implement
a major rule to allow Congress the opportunity to review the
regulation. The impact of the CRA will require at least a 60-day delay
between the issuance of the final regulation and when VA can begin
paying benefits.
Applicability Date: This final rule shall apply to claims received
by VA on or after the date of publication of the final rule in the
Federal Register and to claims pending before VA on that date.
Additionally, VA will apply this rule in readjudicating certain
previously denied claims as required by court orders in Nehmer v.
Department of Veterans Affairs, No. CV-86-6161 TEH (N.D. Cal.)
(Nehmer).

FOR FURTHER INFORMATION CONTACT: Thomas J. Kniffen, Regulations Staff
(211D), Compensation and Pension Service, Veterans Benefits
Administration, Department of Veterans Affairs, 810 Vermont Avenue,
NW., Washington, DC 20420, (202) 461-9725 (This is not a toll-free
number.)

SUPPLEMENTARY INFORMATION: On March 25, 2010, VA published in the
Federal Register (75 FR 14391) a proposal to amend 38 CFR 3.309 to add
hairy cell leukemia and other chronic B-cell leukemias, Parkinson's
disease and ischemic heart disease to the list of diseases subject to
presumptive service connection based on herbicide exposure. Interested
persons were invited to submit written comments on or before April 26,
2010. VA received 670 comments on the proposed rule. Overall, the
comments VA received are

[[Page 53203]]

in favor of the Secretary's decision to establish the new presumption
of service connection for hairy cell leukemia and other chronic B-cell
leukemias, Parkinson's disease and ischemic heart disease.
VA received comments from service organizations, including Vietnam
Veterans of America, Inc. (VVA), The Blue Water Navy Vietnam Veterans
Association (BWNVVA), and other organizations, which include The
Parkinson's Action Network, National Parkinson's Foundation, U.S.
Military Veterans with Parkinson's (USMVP), Team Parkinson, Parkinson's
Focus Today, Middle Tennessee Chapter of the American Parkinson Disease
Association, Froedtert & The Medical College of Wisconsin, and the
National Organization of Veterans' Advocates, as well as from
individuals. Those comments, which have been grouped by category, are
addressed below.
VA also received numerous comments from veterans and surviving
spouses regarding their individual claims for veterans' benefits. We do
not respond to these comments in this notice as they are beyond the
scope of this rulemaking.

A. Comments Concerning the Effective Date

VA received more than 20 comments concerning the effective date of
the regulation. Comments included suggestions that this rule should be
effective on the date the Secretary announced his decision to establish
the new presumptives or on the date an eligible veteran incurred one of
the presumptive diseases. Other commenters stated that the rule should
be effective when an eligible veteran was diagnosed with a presumptive
disease, rather than when the veteran submitted a claim for
compensation.
VA Response: The proposed rule did not state when this regulation
will be effective. The final rule makes clear that the effective date
of this rule is the date of publication in the Federal Register. This
is consistent with the terms of section 1116, title 38, United States
Code (U.S.C.), which provides detailed instructions as to promulgation
of regulations relating to presumptions of service connection for
diseases associated with herbicide agents, including the effective date
for such rules. The statute prescribes that when the Secretary
determines that such a presumption is warranted, the Secretary ``shall
issue proposed regulations setting forth [the] determination.'' 38
U.S.C. 1116(c)(1)(A). The Secretary must then ``issue final
regulations'' which ``shall be effective on the date of issuance.'' 38
U.S.C. 1116(c)(2). Many of the comments received about the effective
date of the regulation encouraged VA to establish an effective date
earlier than the date of issuance of the final rule for equitable
reasons. These comments include statements that it would be more
appropriate to compensate veterans back to when the newly established
presumptive disease was diagnosed or when they became disabled. Other
commenters stated that veterans who filed claims years ago that had
little chance of being granted will now receive large retroactive
awards but those who did not file such claims will be penalized for not
filing such claims. As the governing statute mandates that the
effective date of the new regulation be the date of issuance of the
final rule the Secretary of Veterans Affairs has no discretion to set
an effective date for the new presumptions earlier than the date the
final regulation is issued.
Significantly, however, VA may pay benefits for periods prior to
the rule's effective date in certain circumstances which are set forth
in detail in 38 CFR 3.816(c) and (d). These provisions, which implement
a stipulation and various court orders in the Nehmer class action
litigation, pertain to claims where VA previously denied benefits or VA
received a claim for benefits for a newly added condition between
September 25, 1985, and the date VA publishes the final regulation
adding the new condition to the list of diseases presumptively
associated with exposure to herbicides used in Vietnam.
As set forth in 38 CFR 3.816(c) and (d), the effective date for
such claims is the later of the date VA received the above described
claim or the date the disability arose. As a result, effective dates
for benefits earlier than the date the final regulation is issued may
be assigned in cases governed by the Nehmer litigation. This means that
in many cases veterans and their dependents who filed claims prior to
the issuance of the final rule will be awarded retroactive benefits to
the date the claim was filed. However, even in Nehmer cases there is no
basis for a retroactive award of benefits based solely upon the date a
condition was incurred or diagnosed, or when the veterans became
disabled. Under 38 U.S.C. 5110(a), VA generally may not pay benefits
for any period prior to the date it receives an application for those
benefits.
We recognize the concern stated by some commenters that the
retroactive payments authorized under Nehmer do not extend to persons
who refrained from filing prior claims that they reasonably believed
would not have been granted at that time. As explained above, however,
VA generally cannot pay benefits prior to the date of a claim for
benefits. Ordinarily, when VA establishes a new presumption of service
connection, it cannot pay retroactive benefits for any period before
the new presumption takes effect, due to the operation of 38 U.S.C.
5110(g). The Nehmer court orders create a limited exception to that
statutory rule for cases where a Nehmer class member filed a claim
before the new rule took effect. VA does not have authority to further
expand that judicial exception in a manner that would conflict with the
governing statutes.

B. Comments Regarding the Addition of Parkinson's Disease to VA's List
of Presumptive Diseases

VA received nearly 400 comments in favor of the proposed regulation
from individuals and organizations that, for various reasons, support
the addition of Parkinson's disease to VA's regulation listing diseases
that are presumptively service connected based upon exposure to
herbicides used in Vietnam. Many of these comments also suggest that VA
clarify its definition of Parkinson's disease, to include diseases of
Parkinsonism (primary, atypical, and secondary Parkinson's diseases)
and secondary Parkinsonism syndromes, as well as other Parkinsonian
disorders.
VA Response: Update 2008 only evaluated the correlation between
certain herbicide exposure and Parkinson's disease. Parkinsonism, and
other similar diseases, is not the same disease as Parkinson's disease.
According to Update 2008,

PD [Parkinson's Disease] must be distinguished from a variety of
parkinsonian syndromes, including drug-induced parkinsonism and
neurodegenerative diseases, such as multiple systems atrophy, which
have parkinsonian features combined with other abnormalities * * *
Pathologic findings in other causes of parkinsonism show different
patterns of brain injury [than with PD].

Institute of Medicine of the National Academies, Veterans and Agent
Orange: Update 2008, The National Academies Press (Washington, DC,
2009), pp. 515-16; available online at http://www.nap.edu/
openbook.php?record_id=12662&page=515 (accessed May 19, 2010).
VA greatly appreciates the outpouring of support of the proposed
regulation by individuals affected by Parkinson's disease and
organizations that advocate on behalf of the Parkinson's community. VA
is not, however, able to revise the definition of Parkinson's disease
to include Parkinsonism within this presumptive category. We understand
that there are differing views in the

[[Page 53204]]

medical community concerning the clinical and pathological features of
Parkinson's disease and other diseases that manifest similar symptoms.
In VA's view, medical evidence, as described in Update 2008, simply
does not support the expansion of the definition to include
Parkinsonism and/or Parkinsonian syndromes and/or similar conditions at
this time. If the Institute of Medicine (IOM) provides additional
guidance regarding Parkinsonism, secondary Parkinsonian disorders,
Parkinsonian syndromes or other similar conditions, and/or the
synergistic effects of exposure to a combination of herbicides in
future reports, VA will, of course, consider that guidance in assessing
whether additional presumptive diseases should be added and/or whether
its regulatory definitions should be revised. As acknowledged by the
IOM in Update 2008, ``the preponderance of epidemiologic evidence now
supports an association between herbicide exposure and PD.'' The IOM,
however, also expressed concerns about the ``lack of data relating PD
incidence to exposure in the Vietnam-Veteran population'' and
``recommend[ed] strongly that studies to produce such data be
performed.'' To that end, the IOM stated ``we are also concerned that a
biologic mechanism by which the chemicals of interest may cause PD has
not been demonstrated.''
Institute of Medicine of the National Academies, Veterans and Agent
Orange: Update 2008, The National Academies Press (Washington DC,
2009), pp. 526-27; available online at http://www.nap.edu/
openbook.php?record_id=12662&page=526 (accessed June 15, 2010).
Expansion of VA's definition beyond Parkinson's disease is not
warranted under such circumstances, particularly in light of the IOM's
findings quoted above that ``PD must be distinguished from a variety of
[P]arkinsonian syndromes.'' Accordingly, VA makes no change based on
comments requesting a broader and/or more inclusive regulatory
definition of Parkinson's disease.
Included in the comments received concerning the addition of
Parkinson's disease to VA's list of presumptive conditions were
comments suggesting that VA make various improvements regarding
procedures and services provided to veterans with Parkinson's disease
and their caregivers. These suggestions, which range from conducting
additional research and studies regarding Parkinson's disease and other
similar conditions to revising the VA Schedule for Rating Disabilities,
are beyond the scope of this rulemaking and will not be addressed.

C. Comments Concerning VA's Definition of Ischemic Heart Disease (IHD)

(1) Lack of Reference to ICD-9-CM Medical Terminology and Codes

One commenter expressed concern that VA regulations do not include
any references to The International Classification of Diseases, 9th
Revision, Clinical Modification, Sixth Edition (ICD-9 CM) codes in
addition to the cited definition of IHD from Harrison's Principles of
Internal Medicine (Harrison's Online, Chapter 237, Ischemic Heart
Disease, 2008). The commenter is concerned that a VA employee reviewing
a claim for disability would be ``limited to the narrow and probably
not extensive enough scope of representative criteria provided by the
VA's definition.''
VA Response: VA believes that the definition of IHD in the proposed
rule and the clarifying description in the preamble to the proposed
rule are actually more accommodating to appropriate ratings
determinations than ICD-9-CM because the description of IHD contained
in the proposed rule is not restricted to a finite list of diagnoses as
would be the case if ICD-9-CM codes were employed. To this end, for
purposes of establishing service connection VA interprets IHD, as
referred to in the regulation, as encompassing any atherosclerotic
heart disease resulting in clinically significant ischemia or requiring
coronary revascularization.
VA views ICD-9-CM as a reference tool ``used to code and classify
morbidity data from the inpatient and outpatient records, physician
offices, and most National Center for Health Statistics (NCHS)
surveys.'' Centers for Disease Control and Prevention, ICD--
Classification of Diseases, Functioning, and Disability, available at
http://www.cdc.gov/nchs/icd.htm (accessed May 13, 2010). It serves as a
standardized listing of diseases designed to facilitate effective
communication between medical personnel. It does not contain any
descriptive definition of IHD; therefore, it does not provide any
additional assistance to either VA employees or veterans in
understanding what constitutes IHD or what criteria must be used in
making a medical diagnosis of such.
Consequently, VA chose to base its definition of Ischemic Heart
disease upon the definition contained in a leading medical treatise,
Harrison's Principles of Internal Medicine, and does not believe it is
necessary to revise that definition to include ICD-9-CM references. VA
makes no change based on this comment.

(2) Exclusion of Diseases That Do Not Result in Oxygen Deficiency in
the Heart

Three commenters expressed a desire for VA to expand the definition
of IHD to include diseases (such as hypertension, peripheral arterial
disease, and stroke) that are potentially secondarily connected to IHD.
VA Response: In the preamble to the proposed rule, VA, citing
Harrison's Principles of Internal Medicine--a respected and universally
recognized reference in the medical community, clarified and explained
the definition of IHD as ``an inadequate supply of blood and oxygen to
a portion of the myocardium; it typically occurs when there is an
imbalance between myocardial oxygen supply and demand.'' 75 FR 14393;
See Harrison's Principles of Internal Medicine (Harrison's Online,
Chapter 237, Ischemic Heart Disease, 2008). This definition is limited
to conditions that directly affect the myocardium. ``Myocardium'' is
defined as ``the middle muscular layer of the heart wall.'' Merriam-
Webster Dictionary Online, ``Myocardium'' available at http://
www.merriam-webster.com/dictionary/myocardium (accessed May 13, 2010).
Therefore, based on the definition found in Harrison's, IHD pertains
only to conditions that directly affect the muscles of the heart. The
accepted medical definition of IHD does not extend to other conditions,
such as hypertension, peripheral artery disease, and stroke, that do
not directly affect the muscles of the heart. As a result, VA will not
include these conditions within the definition of IHD contained in this
rulemaking.
Additionally, this definition and limitation are consistent with
the definition of IHD used by the IOM in Update 2008. IOM limited its
consideration of IHD studies to ICD-9-CM codes 410-414. These codes
explicitly exclude such disease as hypertension, which has its own
unique code (402) in ICD-9-CM. The selection of these particular ICD-9-
CM codes shows that IOM chose to limit its consideration of IHD to only
those diseases that affect the muscles of the heart. Hence, the
definition of IHD used by IOM in Update 2008 confirms the medical
soundness of VA's definition, and makes clear that the medical evidence
on which VA based its decision relates only to those conditions
directly affecting the oxygen supply in

[[Page 53205]]

the muscles of the heart and does not encompass such conditions as
hypertension. Therefore, VA makes no change based on these comments.
Two of these commenters would also have VA allow excluded
conditions to be rated as secondarily caused by IHD.
VA Response: The presumptive conditions addressed in this
rulemaking only concern establishment of a primary service-connected
condition. This rulemaking does not affect a claimant's ability to
establish secondary conditions proximately caused by a service-
connected condition, including those conditions for which service
connection is established presumptively. Section 3.310, title 38, Code
of Federal Regulations, states that any disability which is proximately
due to or the result of a service-connected disease or injury shall be
service connected. This principle has not changed and there is no need
to reiterate it in this rule. Therefore, VA makes no change based on
these comments.

(3) Perceived Uncertainty Concerning the Definition of IHD

One commenter queried ``what is ischemic heart disease''?
VA Response: VA's definition of IHD in the proposed rule is based
upon the accepted medical premise that, as stated in the preamble, IHD
is ``an inadequate supply of blood and oxygen to a portion of the
myocardium; it typically occurs when there is an imbalance between
myocardial oxygen supply and demand.'' 75 FR 14393; See Harrison's
Principles of Internal Medicine (Harrison's Online, Chapter 237,
Ischemic Heart Disease, 2008). As previously stated, VA interprets IHD,
for purposes of service connection, to encompass any atherosclerotic
heart disease resulting in clinically significant ischemia or requiring
coronary revascularization. In the notice of proposed rulemaking, we
explained that the term ``ischemic heart disease'' does not encompass
hypertension or peripheral manifestations of arteriosclerotic heart
disease, such as peripheral vascular disease or stroke. To ensure that
lay readers are aware of the distinction between these diseases, we are
adding a Note 3 following 38 CFR 3.309(e) to include the information
stated in the notice of proposed rulemaking.

(4) Inclusion of Angina as a Compensable Disability

One commenter asked whether the rule will include Prinzmetal's
Angina, and Stable and Unstable Angina in the list of compensable
disabilities.
VA Response: Prinzmetal's Angina, and Stable and Unstable Angina
are explicitly included as forms of IHD in the list of illnesses that
may be presumptively service connected due to exposure to certain
herbicides. 75 FR 14393.

D. Comments Concerning the Scope of Applicability of the Presumptions

(1) Expanding the Presumption of Herbicide Exposure Beyond Service in
the Republic of Vietnam

Approximately ten commenters advocated expanding coverage
geographically, to include veterans who did not deploy within the land
borders of the Republic of Vietnam, but may have been exposed to
tactical herbicides in the course of their military service. For
example, one commenter, the Vietnam Veterans of America (VVA), cited
Update 2008 in support of its recommendation that VA adopt a
presumption that veterans who served in the South China Sea during the
Vietnam era were exposed to herbicides. Another commenter encouraged
amending 38 CFR 3.307(a)(6)(iii), to include ``Blue Water Navy
Veterans'' as qualifying for the presumptions listed in 38 CFR
3.309(e).
VA Response: These comments are beyond the scope of this
rulemaking. We proposed to revise 38 CFR 3.309(e) to implement the
requirements of 38 U.S.C. 1116(b) and (c) directing the Secretary of
Veterans Affairs to determine whether there is a positive association
between exposure to the herbicides used in Vietnam and the occurrence
of specific diseases. The issue of which diseases are associated with
herbicide exposure is distinct from the issue of which individuals are
presumed to have been exposed to herbicides in service. The latter
issue is governed by a separate regulation in 38 CFR 3.307(a)(6)(iii),
which we did not propose to revise in this rulemaking. Accordingly, we
make no change based on these comments.
With respect to the issues raised by these comments, we note that,
in a separate rulemaking (RIN 2900-AN27, Herbicide Exposure and
Veterans With Covered Service in Korea), VA has proposed to provide a
presumption of exposure to tactical herbicides for veterans who served
with specific military units stationed at or near the Korean DMZ during
the April 1968--July 1969 time frame. 74 FR 36640. We note further
that, at VA's request, the NAS is undertaking a comprehensive study of
the potential herbicide exposure among veterans who served in the
offshore waters around Vietnam and VA will carefully evaluate the
findings of the NAS resulting from that study. Finally, we wish to make
clear that the presumptions of service connection provided by this rule
will apply to any veteran who was exposed during service to the
herbicides used in Vietnam, even if exposure occurred outside of
Vietnam. A veteran who is not presumed to have been exposed to
herbicides, but who is shown by evidence to have been exposed, is
eligible for the presumption of service connection for the diseases
listed in Sec. 3.309(e), including the three diseases added by this
rule.

(2) Expanding the Presumptions To Include Other Herbicides

Other commenters, including USMVP, seek to persuade VA to presume
service connection for veterans exposed to trichloroethylene (TCE) (a
substance found in organic solvents) and malathion (an insecticide).
USMVP concedes that TCE and malathion are differently formulated
chemical compounds used for pest control and equipment maintenance,
respectively. Nevertheless, USMVP contends that VA's mandate is
sufficiently broad to allow the Secretary to presume diseases to be
service connected upon exposure to TCE and Malathion.
VA Response: These comments are beyond the scope of this
rulemaking. We proposed to revise 38 CFR 3.309(e) to implement the
requirements of 38 U.S.C. 1116(b) and (c) directing the Secretary of
Veterans Affairs to determine whether there is a positive association
between exposure to the herbicides used in Vietnam and the occurrence
of specific diseases. The comments concerning the health effects of
other types of exposures are distinct from the scope and purpose of the
proposed rule.
USMVP notes that section 6 of the Agent Orange Act of 1991 directed
VA to compile data that is likely to be scientifically useful in
determining the association, if any, between disabilities and exposure
to toxic substances including, but not limited to, dioxin. This
rulemaking, however, is based on the distinct provisions in section 2
of the Agent Orange Act, codified in pertinent part at 38 U.S.C. 1116,
requiring VA to determine whether diseases are associated with an
``herbicide agent,'' which is defined to refer to ``a chemical in an
herbicide used in support of the United States and allied military
operations in the Republic of Vietnam during the period beginning on
January 9, 1962, and ending on May 7, 1975.'' 38 U.S.C. 1116(a)(3).
Accordingly, VA's regulation

[[Page 53206]]

that implements 38 U.S.C. 1116(a)(3), 38 CFR 3.307(a)(6)(i), defines
herbicide agents specifically: ``2,4-D; 2,4,5-T and its contaminant
TCDD; cacodylic acid; and picloram.'' Therefore, VA makes no changes
based on these comments.

(3) Secondary Service Connection Explicitly Listed in Regulation

Some commenters suggest that the proposed regulation should include
secondary conditions that result from disabilities presumptively
service connected due to certain herbicide exposure. The commenters
note that VA published a proposed rule establishing presumptive service
connection for nine specific infectious diseases associated with
military service in the Southwest Asia theater of operations and that
the proposed rule listed secondary conditions potentially caused by
those infectious diseases. 75 FR 13051-13058 (March 18, 2010).
Furthermore, the commenters stated that when VA grants service
connection for a primary disease, all secondary conditions proximately
caused by that disease are also service connected. 38 CFR 3.310.
VA Response: VA's proposed rule to establish presumptive service
connection for nine specific infectious diseases associated with
military service in the Southwest Asia theater of operations was based,
in part, on the report issued by the National Academy of Sciences (NAS)
entitled ``Gulf War and Health Volume 5: Infectious Diseases,'' which
reported on the association between primary infectious disease and
secondary health effects as a result of service in the Southwest Asia
theater of operations. This report differed from previous NAS reports
in that it implicated two tiers of possible association between a
hazard and resulting health outcomes. In particular, NAS made
comprehensive findings as to the conditions that may be secondarily
caused by the primary infectious diseases, and VA determined that it
would be helpful to include those findings in its rules. In contrast,
the NAS reports on Agent Orange address only one tier of possible
association between exposure to herbicides and the development of long-
term health effects. In view of the divergent structure of the two
studies and the absence of findings in Update 2008 regarding secondary
health effects, VA did not propose to list secondary health effects in
this rule. Although it may be feasible to identify and list known
secondary effects of the three diseases covered in this rule, doing so
is beyond the scope of this rule and, moreover, is not necessary to
ensure that veterans are properly compensated for such secondary
effects.
As the commenters correctly note, pursuant to 38 CFR 3.310, when VA
grants service connection for a condition, all conditions proximately
caused by that condition may also be service connected. This principle
would apply to conditions where service connection is established by
presumption or by other means, such as a direct link to incurrence
during military service.
Consequently, VA makes no change based on these comments.

E. Negative Comment

Only one comment indicated clear opposition to the final rule. The
commenter asserted that ``[t]he proposed rule for presumptive
conditions to Agent Orange exposure * * * is ridiculous. Just because
gen[e]tic and life style illness are now affecting those of an age that
served in Vietnam, does not mean that their service in Vietnam caused
this.'' The commenter went on to ask ``No medical expert links these
diseases to Agent Orange exposure why should the VA?''
VA Response: First we note that the comment only pertains to the
addition of ischemic heart disease to VA's presumptive list. It does
not express any opposition to the addition of Parkinson's disease or B-
cell Leukemias to VA's presumptive list.
VA's decision to add ischemic heart disease to the list of diseases
that are presumptively service connected based upon exposure to
herbicides used in Vietnam was issued after the Secretary considered
the IOM's Update 2008, concerning the health effects in Vietnam
Veterans of exposure to herbicides. That report states as follows:

After consideration of the relative strengths and weaknesses of
the evidence regarding the chemicals of interest and ischemic heart
disease (ICD 410-414), which includes a number of studies that
showed a strong dose-response relationship and that had good
toxicologic data demonstrating biologic plausibility, the committee
judged that the evidence was adequately informative to advance this
health outcome from the ``inadequate or insufficient'' category into
the ``limited or suggestive'' category, again acknowledging that
bias and confounding could not be ruled out. (Page 631 of Update
2008) \1\
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\1\ Institute of Medicine of the National Academies, Veterans
and Agent Orange: Update 2008. The National Academies Press
(Washington DC, 2009); available online at http://www.nap.edu/
openbook.php?record_id=12662&page=515 (accessed May 25, 2010).

The IOM report's discussion demonstrates that there are medical
studies that show a correlation between exposure to herbicides and
ischemic heart disease. As we explained in the notice of proposed
rulemaking, the IOM committee found that, of the nine most informative
studies on this issue, five showed strong statistically significant
associations between herbicide exposure and IHD. The IOM committee
noted that the evidence for an association was further strengthened by
findings of a dose-response relationship, meaning that the risk of IHD
was found to be highest in populations with the highest levels of
herbicide exposure. As stated in the notice of proposed rulemaking, the
Secretary has determined that this evidence meets the standard in 38
U.S.C. 1116 for finding a ``positive association'' between herbicide
exposure and IHD. The Secretary considers the analysis in the IOM
report to provide sufficient scientific basis to conclude that ischemic
heart disease merited inclusion on VA's list of presumptive diseases.
It is important to note that 38 U.S.C. 1116 directs VA to establish a
presumption if the credible evidence for an association between
herbicide exposure and a disease is equal to or outweighs the credible
evidence against the association. This evidentiary standard does not
require the same level of proof that members of the scientific
community might require before concluding that the disease is
necessarily associated with herbicide exposure. The Secretary has
determined that this decision is consistent with the standard of proof
established by statute, and VA has no authority to change that
statutory standard. Accordingly VA makes no changes based on this
comment.

F. Comments Indicating General Support of the Rulemaking

In addition to the nearly 400 comments received from the
Parkinson's community expressing support for the addition of
Parkinson's disease to VA's presumptive list, VA received just over 100
additional comments that expressed support for the rulemaking in
general. Many of these comments, which were received from individuals
as well as public and private organizations, stated appreciation for
VA's actions in adding one or more of the three diseases to its
regulatory list of conditions that are presumptively service connected
based upon herbicide exposure in Vietnam. VA appreciates the time and
effort expended by these commenters in reviewing the proposed rule and
in submitting comments, as well as their support for this rulemaking.

[[Page 53207]]

G. Additional Comments Outside the Scope of This Rulemaking

(1) Comments Related to VA's Cost Estimate and Assignment of Disability
Ratings.

VA received 25 comments from organizations and members of the
public concerning the assumptions stated in VA's budget estimates that:
(1) The average disability rating for Parkinson's disease will be 100
percent; (2) the average disability rating for IHD will be 60 percent;
and (3) the average disability rating for leukemia will be 100 percent.
Many of these comments construed these cost estimates as an expression
of VA policy concerning the assignment of particular disability
thresholds for each of the new presumptive conditions. Some of the
comments urged VA to assign 100 percent evaluations for each of the
three diseases.
VA Response: The proposed rule contained cost estimate assumptions
based on VA data which indicated that VA assumed the average disability
evaluation for Parkinson's disease and leukemia to be 100 percent and
for IHD to be 60 percent. VA would like to clarify that these
assumptions are merely estimates and were made based on VA program
experience. They are used for cost estimate purposes only, and they
have no binding effect on any particular disability rating actually
assigned. The fact that VA projects, for cost purposes, that particular
disabilities will result in a particular average impairment, does not
indicate the existence of a minimum level of disability compensation
for any of the three new presumptive conditions. The disability rating
assigned will be based on the individual factual situations and, in the
case of Parkinson's disease and hairy cell leukemias, individual
ratings may be less than 100 percent. Similarly, individual ratings for
IHD may be greater, less, or equal to 60 percent. Indeed VA anticipates
that some disabilities which are granted presumptive service connection
will be assigned non-compensable ratings. This would occur, for
example, if an individual was diagnosed with a disease, IHD for
example, but manifested no current disabling symptoms.
The disability ratings to be assigned for any disease or injury are
based upon application of VA's Schedule for Rating Disabilities in 38
CFR Part 4 to the facts of each case. VA did not propose in this
rulemaking to revise any of the provisions in that schedule. As
explained above, the assumptions stated for purposes of VA's cost
estimate did not propose to adopt specific minimum ratings or to make
any change to the rating schedule. To the extent these comments suggest
adoption of minimum disability ratings they are outside the scope of
this rulemaking. Accordingly, VA makes no changes based on these
comments.

(2) Perceived Nehmer Contradiction

One commenter expressed concern that the statement in the preamble
of the proposed rule at 75 FR at 14394 that retroactive benefit costs
are paid in the first year only conflicts with the decision in the
Nehmer case. The stated concern appears to be that paying retroactive
benefits in the first year only may limit retroactive payments
authorized by the Nehmer court orders.
VA Response: The commenter's reference pertains to the Preamble and
cost estimate assumptions, which, as stated above, were used for cost
estimating purposes only and will have no binding effect upon claims
involving retroactive benefits under the proposed rule. Because this
comment relates to a factual assumption in VA's cost analysis, which
does not affect the scope of the final rule, the comment has no bearing
on the final rule.
We want to make clear, however, that nothing in this rule would
contravene or limit the Nehmer court orders. When retroactive benefits
are paid as a result of a claim that qualifies under the Nehmer
litigation, the award is paid from current year appropriations and that
VA's cost estimates for this regulation include first year, five year,
and ten year costs. The statement in VA's cost estimate that
retroactive benefits are paid in the first year only is intended merely
to reflect that VA expects to process all claims involving retroactive
payments for the new presumptions under Nehmer within the first year
after this rule is issued. Accordingly, VA makes no changes based on
these comments.

(3) Statements About Personal Situations and Hypothetical Benefit
Questions

Many commenters made general statements about their own personal
difficulties battling one or more of the presumptive diseases. Another
commenter inquired as to the possible implications of Bradley v. Peake,
22 Vet. App. 280 (2008). The commenters who inquired about Bradley
asked whether, hypothetically, an IHD disability rating in addition to
another disability that meet the statutory criteria under 38 U.S.C.
1114(s), could potentially establish eligibility for special monthly
compensation.
VA Response: Comments regarding hypothetical situations involving
the possible outcome of benefit claims or the medical or claims history
presented by individual veterans are beyond the scope of this
rulemaking. Claimants should contact their VA regional office for
assistance with their individual claims.

(4) Comments Unrelated to the Subject of the Rulemaking

VA received approximately 40 comments dealing with issues not
directly related to the addition of the three new presumptively
service-connected diseases. Such comments covered a wide range of
topics. Examples of such comments appear below.
One commenter opined that spouses of veterans should be
compensated. One commenter stated that more should be done for
caregivers of veterans. Another commenter suggested that VA should
guide the military services on presumptives related to Agent Orange.
Some commenters complained that the rulemaking process is too lengthy.
Two commenters disapproved of the fact that herbicides were allowed to
be used during conflict. Several commenters criticized the benefit
claims system, including the VA's Schedule for Rating Disabilities. One
commenter stated that 38 CFR 3.816 (Nehmer Awards) should be revised to
list the three new presumptions. A commenter recommended that a working
group be created to define needed research and studies on diseases and
Vietnam veterans. One commenter questioned whether there is a
relationship between PTSD or stress and cardiovascular disease. Another
commenter wanted VA to give greater weight to finding of total
disability by the Social Security Administration. A commenter requested
special guidance for compensation and pension examinations to ensure
comprehensive evaluation of cognitive and dementia issues related to
Parkinson's disease; another commenter similarly requested an update in
rating templates for Parkinson's disease. A commenter wanted VA to
provide guidance to the Department of Defense concerning the new
presumptive conditions. Another commenter indicated disagreement with
the findings and conclusion included in Update 2008. Some commenters
expressed dissatisfaction with the note in the current regulation
regarding requirements for peripheral neuropathy.
VA Response: VA does not respond to these comments because they are
either unrelated to this rulemaking or beyond its scope.

[[Page 53208]]

Paperwork Reduction Act

The collection of information under the Paperwork Reduction Act (44
U.S.C. 3501-3521) that is contained in this document is authorized
under OMB Control No. 2900-0001.

Executive Order 12866

Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, when regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety,
and other advantages; distributive impacts; and equity). The Executive
Order classifies a ``significant regulatory action,'' requiring review
by the Office of Management and Budget (OMB), as any regulatory action
that is likely to result in a rule that may: (1) Have an annual effect
on the economy of $100 million or more or adversely affect in a
material way the economy, a sector of the economy, productivity,
competition, jobs, the environment, public health or safety, or State,
local, or Tribal governments or communities; (2) create a serious
inconsistency or otherwise interfere with an action taken or planned by
another agency; (3) materially alter the budgetary impact of
entitlements, grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or (4) raise novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in the Executive Order.
VA has examined the economic, interagency, budgetary, legal, and
policy implications of this rulemaking and determined that it is an
economically significant rule under this Executive Order, because it
will have an annual effect on the economy of $100 million or more.

Regulatory Impact Analysis

VA followed OMB Circular A-4 to the extent feasible in this
Regulatory Impact Analysis. The circular first calls for a discussion
of the Statement of Need for the regulation. The Agent Orange Act of
1991, as codified at 38 U.S.C. 1116 requires the Secretary of Veterans
Affairs to publish regulations establishing a presumption of service
connection for those diseases determined to have a positive association
with herbicide exposure in humans.
Statement of Need: On October 13th, 2009, the Secretary of Veterans
Affairs, Eric K. Shinseki, announced his intent to establish
presumptions of service connection for PD, IHD, and hairy cell/B cell
leukemia for veterans who were exposed to herbicides used in the
Republic of Vietnam during the Vietnam era.
Summary of the Legal Basis: This rulemaking is necessary because
the Agent Orange Act of 1991 requires the Secretary to promulgate
regulations establishing a presumption of service connection once he
finds a positive association between exposure to herbicides used in the
Republic of Vietnam during the Vietnam era and the subsequent
development of any particular disease. This final rulemaking is
required by statute and the result of the Secretary's discharge of his
statutory mandate pursuant to the statute.
Alternatives: There are no feasible alternatives to this
rulemaking, since the Agent Orange Act of 1991 requires the Secretary
to initiate rulemaking once the Secretary finds a positive association
between a disease and herbicide exposure in Vietnam during the Vietnam
era. The rule implements statutorily required provisions to expand
veteran benefits.
Risks: The rule implements statutorily required provisions to
expand veteran benefits. No risk to the public exists.
Anticipated Costs and Benefits: In the proposed rule, we estimated
the total cost for this rulemaking to be $13.6 billion during the first
year (FY2010), $25.3 billion for 5 years, and $42.2 billion over 10
years. These amounts included benefits costs and government operating
expenses for both Veterans Benefits Administration (VBA) and Veterans
Health Administration (VHA). A detailed cost analysis for each
Administration is provided below.
The proposed rule indicated costs beginning in FY2010. At the time
the proposed rule impact analysis was developed, VA anticipated the
final rulemaking would be published more than 60 days before the end of
FY2010, including allowing time for the 60 day requirement under the
CRA, and therefore payments would commence in FY2010. VA now knows that
the timing of the final rulemaking will not allow payments to begin
prior to FY2011. As a result, VA expects FY2010 and FY2011 costs, as
shown in some of the tables below from the proposed rule, will both now
occur in FY2011. We have not recalculated the tables to reflect this
change.

Veterans Benefits Administration (VBA) Costs

We estimated VBA's total cost to be $13.4 billion during the first
year (FY2010), $24.3 billion for five years, and $39.7 billion over ten
years.

----------------------------------------------------------------------------------------------------------------
Benefits costs ($000's) 1st year (FY10) 5-year 10-year
----------------------------------------------------------------------------------------------------------------
Retroactive benefits costs *.............................. $12,286,048 ** $12,286,048 ** $12,286,048
Recurring costs from retroactive processing............... 0 4,388,773 10,300,132
Increased benefits costs for Veterans currently on the 415,927 2,188,784 4,864,755
rolls....................................................
Accessions................................................ 675,214 4,645,609 11,330,294
Administrative Costs...................................... ................ ................ ................
FTE costs................................................. *** 4,554 797,473 894,614
New office space (minor construction)..................... ................ 12,835 12,835
IT equipment.............................................. ................ 30,232 32,805
-----------------------------------------------------
Totals................................................ 13,381,743 24,349,746 39,721,476
----------------------------------------------------------------------------------------------------------------
* Retroactive benefits costs are paid in the first year only.
** Inserted for cumulative totals.
*** FTE costs in FY 2010 represented a level of effort of current FTE that would be used to work claims received
in FY2010. New hiring would begin in 2011.

Of the total VBA benefits costs identified for FY 2010, $12.3
billion accounted for retroactive benefit payments. Ten-year total
costs for ischemic heart disease is $31.9 billion, Parkinson's disease
accounts for $3.5 billion, and hairy cell and B-cell leukemia is the
remaining $3.4 billion.

[[Page 53209]]



Total Obligations by Presumptive Condition
----------------------------------------------------------------------------------------------------------------
Retroactive
($000's) payments 1st year 5-year 10-year
----------------------------------------------------------------------------------------------------------------
Ischemic heart disease.................. $9,877,787 $900,470 $9,307,716 $21,978,301
Parkinson's............................. 692,20 166,300 1,189,143 2,796,852
Hairy cell/B-cell leukemia.............. 1,716,057 24,372 726,306 1,720,028
Sub-total............................... 12,286,048 1,091,142 11,223,165 26,495,181
-----------------------------------------------------------------------
Total............................... 12,286,048 * 13,377,190 * 23,509,213 * 38,781,229
----------------------------------------------------------------------------------------------------------------
* Includes retroactive payments.

Methodology

The cost estimate for the three presumptive conditions considers
retroactive benefit payments for veterans and survivors, increases for
veterans currently on the compensation rolls, and potential accessions
for veterans and survivors. There are numerous assumptions made for the
purposes of this cost estimate. At a minimum, four of those could vary
considerably and the result could be dramatic increases or decreases to
the mandatory benefit numbers provided. The estimate assumes:
A prevalence rate of 5.6% for IHD based upon information
extracted from the CDC's Web site. Even slight variations to this
number will result in significant changes.
An 80% application rate in most instances. We have prior
experiences that have been as low as in the 70% range and as high as in
the 90% range.
New enrollees will, on average, be determined to have
about a 60% degree of disability for IHD. This would mirror the degree
of disability for the current Vietnam Veteran population on VA's rolls.
However, most of the individuals have had the benefit of VHA health
care. We cannot be certain that the new population of Vietnam Veterans
coming into the system will mirror that average.
Only the benefit costs of the presumptive conditions
listed. Secondary conditions, particularly to IHD, may manifest
themselves and result in even higher degrees of disability ultimately
being granted.

Retroactive Veteran and Survivor Payments

Vietnam Veterans Previously Denied

In 2010, approximately, 86,069 Vietnam beneficiaries (as of August
2009 provided by PA&I) are eligible to receive retroactive payments for
the new presumptive conditions under the provisions of 38 CFR 3.816
(Nehmer). Of this total, 69,957 are living Vietnam Veterans, of which
62,206 were denied for IHD, 5,441 were denied for hairy cell or B cell
leukemia, and the remaining 2,310 for Parkinson's disease. Of those
previously denied service connection for the three new presumptive
conditions, 52,918, or nearly 76 percent, are currently on the rolls
for other service-connected disabilities.
Compensation and Pension (C&P) Service assumes the average degree
of disability for both Parkinson's disease and hairy cell/B cell
leukemia will be 100 percent, and IHD will be 60 percent. Based on the
Combined Rating Table, we assume veterans currently not on the rolls
would access at the percentages identified above. For those veterans
currently on the rolls for other service-connected disabilities, we
assume they would receive a retroactive award based on the higher
combined disability rating. For example, a veteran who is on the rolls
and rated 10 percent disabled who establishes presumptive service
connection for Parkinson's disease will result in a higher combined
rating of 100 percent and receive a retroactive award for the
difference. For purposes of this cost estimate, we assumed that
veterans previously denied service connection for one of the three new
conditions who are currently receiving benefits were awarded benefits
for another disability concurrently.
Based on the Nehmer case review in conjunction with the August 2006
Haas Court of Appeals for Veterans Claims (CAVC) decision, C&P Service
identified an average retroactive payment of 11.38 years for veterans
whose claims were previously denied. Obligations for retroactive
payments for veterans not currently on the rolls were calculated by
applying the caseload to the benefit payments by degree of disability,
multiplied by the average number of years for veterans' claims. For
those who are on the rolls, based on a distribution by degree of
disability, obligations were calculated by applying the increased
combined degree of disability for those currently rated zero to ninety
percent. Of the total 52,918 currently on the rolls, 8,348 are
currently rated 100 percent disabled and, therefore, would not likely
receive a retroactive award payment.
Of the total 86,069 Vietnam beneficiaries, a total of 69,957 are
living Vietnam Veterans. Of this total, 52,918 are currently on the
rolls for other service-connected disabilities and 17,039 are off the
compensation rolls (52,918 + 17,039 = 69,957). Of the 52,918 Vietnam
Veterans who are on the rolls, 8,348 are currently rated 100 percent
disabled and would not likely receive a retroactive payment (17,039-
8,348 = 8,691 + 52,918 = 61,609).

Veteran Caseload and Obligations for Retroactive Benefits
------------------------------------------------------------------------
Retroactive
Presumptive conditions Caseload payments
($000's)
------------------------------------------------------------------------
Ischemic Heart Disease.............. 54,926 $7,837,369
Parkinson's Disease................. 2,042 568,920
Hairy Cell/B Cell Leukemia.......... 4,641 1,209,586
-----------------------------------
Total........................... 61,609 9,615,875
------------------------------------------------------------------------


[[Page 53210]]

Vietnam Veteran Survivors Previously Denied

Survivor caseload was determined based on veteran terminations.
Based on data obtained from PA&I, of the 86,069 previous denials,
16,112 of the Vietnam veterans are deceased. Of the deceased
population, 13,420 were veterans previously denied claims for IHD,
2,165 were denied for hairy cell or B cell leukemia, and 527 were
denied for Parkinson's disease. We assumed that 90 percent of the
survivor caseload will be new to the rolls and the remaining ten
percent are currently in receipt of survivor benefits.
The 2001 National Survey of Veterans found that approximately 75
percent of veterans are married. With the marriage rate applied, we
estimate there are 12,084 survivors in 2010. Based on the Nehmer case
review in conjunction with the August 2006 Haas Court of Appeals for
Veterans Claims (CAVC) decision, C&P Service identified an average
retroactive payment of 9.62 years for veterans' survivors. Under
Nehmer, in addition to survivor dependency and indemnity compensation
(DIC) benefits, survivors are also entitled to the veteran's
retroactive benefit payment to the date of the veteran's death.
Obligations for survivors who were denied claims were determined by
applying the survivor caseload for each presumptive condition to the
average survivor compensation benefit payment from the 2010 President's
Budget and the average number of years for the survivor's claim (9.62
years). Veteran benefit payments to which survivors are entitled were
calculated similarly with the exception of applying the survivor
caseload for each presumptive condition to the difference between the
average veteran claim of 11.38 years and the average survivor claim of
9.62 years. The estimated remaining 4,028 deceased veterans who were
not married would have their retroactive benefit payment applied to
their estate.
Of the 86,069 Vietnam beneficiaries, a total of 16,112 are Vietnam
Veterans that are deceased. Of this total, an estimated 12,084 were
married and an estimated 4,028 were not married (12,084 + 4,028 =
16,112).

Survivor Caseload and Obligations for Retroactive Benefits
------------------------------------------------------------------------
Retroactive payments
Presumptive conditions Caseload ($000's)
------------------------------------------------------------------------
Ischemic Heart Disease...... 13,420 $2,040,418
Parkinson's Disease......... 527 123,284
Hairy Cell/B Cell Leukemia.. 2,165 506,470
-------------------------------------------
Total................... 16,112 2,670,173
------------------------------------------------------------------------

Recurring Veteran and Survivor Payments

Retroactive caseload obligations for both veterans and survivors
become a recurring cost and are reflected in out-year estimates.
Mortality rates are applied in the out years to determine caseload.

Recurring Veteran and Survivor Caseload and Obligations From Retroactive Processing
----------------------------------------------------------------------------------------------------------------
FY Veteran caseload Survivor caseload Obligations ($000's)
----------------------------------------------------------------------------------------------------------------
2010.......................................... N/A N/A N/A
2011.......................................... 61,365 10,672 $1,079,310
2012.......................................... 61,243 10,570 1,084,209
2013.......................................... 61,121 10,458 1,102,800
2014.......................................... 61,000 10,336 1,122,454
2015.......................................... 60,879 10,201 1,142,251
2016.......................................... 60,758 10,052 1,162,167
2017.......................................... 60,637 9,891 1,182,189
2018.......................................... 60,517 9,716 1,202,298
2019.......................................... 60,397 9,526 1,222,453
-----------------------------------------------------------------
Total..................................... .................... .................... 10,300,132
----------------------------------------------------------------------------------------------------------------

Vietnam Veterans (Reopened Claims)

We expected veterans who are currently on the compensation rolls
and have any of the three presumptive conditions to file a claim and
receive a higher combined disability rating beginning in 2010. We
anticipate that veterans receiving compensation for other service-
connected conditions will continue to file claims over ten years. Total
costs are expected to be $415.9 million the first year and
approximately $4.9 billion over ten years.
According to the Defense Manpower Data Center (DMDC), there are 2.6
million in-country Vietnam Veterans. With mortality applied, an
estimated 2.1 million will be alive in 2010. C&P Service assumes that
34 percent of this population are service connected for other
conditions and are already in receipt of compensation benefits. In
2010, we anticipated that 725,547 Vietnam Veterans would be receiving
compensation benefits. This number is further reduced by the number of
veterans identified in the previous estimate for retroactive claims
(52,918). C&P Service assumes an average age of 63 for all Vietnam
Veterans. With prevalence and mortality rates applied, and an estimated
80 percent application rate and 100 percent grant rate, we calculate
that 32,606 veterans currently on the rolls would have a presumptive
condition in 2010. Of this total, we anticipated 27,909 cases would
result in increased obligations. Of the 27,909 veterans, 25,859 are
associated with IHD, 1,693 are associated with Parkinson's disease, and
the remaining 357 are associated with hairy cell/B cell leukemia. In
future years, the estimated

[[Page 53211]]

number of veteran reopened claims decreases to almost one thousand
cases and continues at a decreasing rate. The cumulative effect of
additional cases with mortality rates applied is shown in the chart
below.
The Vietnam Era caseload distribution by degree of disability
provided by C&P Service was used to further distribute the total
Vietnam Veterans who will have a presumptive condition in 2010 by
degree of disability for each of the three new presumptive conditions.
We assume 100 percent for the average degree of disability for both
Parkinson's disease and hairy cell/B cell leukemia and 60 percent for
IHD. Based on the Combined Rating Table, veterans that are on the rolls
for other service-connected conditions (with the exception of those
that are currently receiving compensation benefits for 100 percent
disability), would receive a higher combined disability rating if they
have any of the three new presumptive conditions.
September average payments from the 2010 President's Budget were
used to calculate obligations. These average payments are higher than
schedular rates due to adjustments for dependents, Special Monthly
Compensation, and Individual Unemployability. The difference in average
payments due to higher ratings was calculated, annualized, and applied
to the on-rolls caseload to determine increased obligations. Because
this particular veteran population is currently in receipt of
compensation benefits, survivor caseload and obligations would not be
impacted.

Reopened Caseload and Obligations
------------------------------------------------------------------------
Veteran Obligations
FY caseload ($000's)
------------------------------------------------------------------------
2010................................ 27,909 $415,927
2011................................ 28,340 418,928
2012................................ 29,051 431,726
2013................................ 29,746 451,042
2014................................ 30,425 471,161
2015................................ 31,086 491,648
2016................................ 31,746 512,767
2017................................ 32,404 534,529
2018................................ 33,061 556,958
2019................................ 33,716 580,070
-----------------------------------
Total........................... ................ 4,864,755
------------------------------------------------------------------------

Vietnam Veteran and Survivor Accessions

We anticipated accessions for both veterans and survivors beginning
in 2010 and continuing over ten years. Total costs were expected to be
$675.2 million in the first year and total just over $11.3 billion from
the cumulative effect of cases accessing the rolls each year.
To identify the number of veteran accessions in 2010, we applied
prevalence rates to the anticipated living Vietnam Veteran population
of 2,133,962, and reduced the population by those identified in the
previous estimates for retroactive and reopened claims. Based on an
expected application rate of 80 percent and a 100 percent grant rate,
28,934 accessions are expected. Of the 28,934 veteran accessions,
25,505 are associated with IHD, 3,074 are associated with Parkinson's
disease, and the remaining 355 are associated with hairy cell/B cell
leukemia. In the out years, anticipated veteran accessions drop to
approximately 3,400 cases in 2011, and continue at a decreasing rate.
The cumulative effect of additional cases coupled with applying
mortality rates is shown in the chart below.
To calculate obligations, the caseload was multiplied by the
annualized average payment. We assumed those accessing the rolls due to
IHD will be rated 60 percent disabled and those with either Parkinson's
disease or hairy cell/B cell leukemia will be rated 100 percent
disabled. Average payments were based on the 2010 President's Budget
with the Cost of Living Adjustments factored into the out years.
The caseload for survivor compensation is associated with the
number of service-connected veterans' deaths. There are two groups to
consider for survivor accessions: Those survivors associated with
veterans who never filed a claim and died prior to 2010; and survivors
associated with the mortality rate applied to the veteran accessions
noted above.
To calculate the survivor caseload associated with veterans who
never filed a claim and died prior to 2010, general mortality rates
were applied to the estimated total Vietnam Veteran population (2.6
million). We estimate that almost 500,000 Vietnam Veterans were
deceased by 2010. Prevalence rates for each condition were applied to
the total veteran deaths to estimate the number of deaths due to each
condition. With the marriage rate and survivor mortality applied, we
anticipated 20,961 eligible spouses at the end of 2010. We assumed that
half of this population would apply in 2010 and the remaining in 2011.
Obligations were calculated by applying average survivor compensation
payments to the caseload each year.
The second group of survivors associated with veteran accessions
was calculated by applying mortality rates for each of the presumptive
conditions to the estimated eligible veteran population (28,934). In
2010, 57 veteran deaths were anticipated as a result of one of the new
presumptive conditions. With the marriage rate applied and aging the
spouse population (and assuming spouses were the same age as veterans),
we calculated 42 spouses at the end of 2010. Average survivor
compensation payments were applied to the spouse caseload to determine
total obligations.

[[Page 53212]]



Veteran and Survivor Accessions Cumulative Caseload and Total Obligations
----------------------------------------------------------------------------------------------------------------
FY Veteran caseload Survivor caseload Total obligations
----------------------------------------------------------------------------------------------------------------
2010.......................................... 28,934 10,416 $675,214
2011.......................................... 32,270 20,265 882,974
2012.......................................... 35,541 20,693 955,525
2013.......................................... 38,744 20,487 1,028,467
2014.......................................... 41,874 20,283 1,103,429
2015.......................................... 44,928 20,081 1,179,725
2016.......................................... 47,900 19,881 1,257,259
2017.......................................... 50,787 19,682 1,335,922
2018.......................................... 53,583 19,485 1,415,601
2019.......................................... 56,285 19,290 1,496,178
-----------------------------------------------------------------
Total..................................... .................... .................... 11,330,294
----------------------------------------------------------------------------------------------------------------

Estimated Claims From Veterans Not Eligible

Based on program history, we anticipate that we will also receive
claims from veterans who will not be eligible for presumptive service
connection for the three new conditions.
These claims will be received from two primary populations:
Veterans with a presumptive disease who did not serve in
the Republic of Vietnam.
Claims from Vietnam Veterans with hypertension who claim
``heart disease.''
We applied the prevalence rate of IHD, Parkinson's disease and
hairy cell/B cell leukemia to the estimated population of veterans who
served in Southeast Asia during the Vietnam Era (45,304, 32, and 6
respectively), and assumed that 10 percent of that population will
apply for presumptive service connection.
Review of data obtained from PA&I shows that 23 percent of Vietnam
Veterans who have been denied entitlement to service connection for
hypertension also have nonservice-connected heart disease. We applied
the prevalence rate of hypertension to the living Vietnam Veteran
population, and then subtracted 23 percent who are assumed to also have
IHD. We assumed that 10 percent of the remaining population would apply
for presumptive service connection to arrive at an estimated caseload
of 111,256.
We then assumed that 25 percent of the ineligible population would
apply in 2010, 25 percent would apply in 2011, and the remaining
population would apply over the next 8 years. For purposes of claims
processing, anticipated claims are as follows. The chart below reflects
workload, which is not directly comparable to the preceding caseload
charts.

Total Claims
--------------------------------------------------------------------------------------------------------------------------------------------------------
Retroactive Claims not
FY claims Reopened claims Accessions eligible Total claims
--------------------------------------------------------------------------------------------------------------------------------------------------------
2010.......................................................... 86,069 32,606 39,350 27,814 185,839
2011.......................................................... ................ 1,069 13,806 27,814 42,689
2012.......................................................... ................ 1,051 3,386 6,954 11,391
2013.......................................................... ................ 1,032 3,329 6,954 11,314
2014.......................................................... ................ 1,011 3,267 6,954 11,232
2015.......................................................... ................ 989 3,201 6,954 11,143
2016.......................................................... ................ 989 3,129 6,953 11,071
2017.......................................................... ................ 989 3,053 6,953 10,995
2018.......................................................... ................ 989 2,971 6,953 10,913
2019.......................................................... ................ 989 2,885 6,953 10,827
--------------------------------------------------------------------------------------------------------------------------------------------------------

VBA Administrative Costs

Administrative costs, including minor construction and information
technology support were estimated to be $4.6 million during FY2010,
$841 million for five years and $940 million over ten years.
C&P Service, along with the Office of Field Operations, estimated
the FTE that would be required to process the anticipated claims
resulting from the new presumptive conditions using the following
assumptions:
1. 185,839 additional claims in addition to the projected 1,146,508
receipts during FY2010. This includes:
86,069 retroactive readjudications under Nehmer.
89,354 new and reopened claims from veterans.
10,416 new claims from survivors.
2. The average number of days to complete all claims in FY2010
would be 165.
3. Priority will be given to those Agent Orange claims that fall in
the Nehmer class action.
In FY2010, we intended to leverage the existing C&P workforce to
process as many of these new claims as possible, once the regulation
was approved, but especially the Nehmer cases. However, to fully
accommodate this additional claims volume with as little negative
impact as possible on the processing of other claims, we plan to add
1,772 claims processors to be brought on in the FY2011 budget and
timeframe. This approximate level of effort will be sustained through
2012 and into 2013 in order to process these claims without
significantly degrading the processing of the non-presumptive workload.
Net administrative costs for payroll, training, additional
office space, supplies and equipment were estimated to be $4.6 million
in FY2010, $165 million in FY2011, $798 million over five years, and
$895 million over 10 years. Additional support costs for minor
construction are expected to be $12.8 million over the five and ten
year period. Information Technology (computers and support) are assumed
to

[[Page 53213]]

require $30.2 million over five years and $32.8 million over ten years.

Veterans Health Administration (VHA) Costs

We estimated VHA's total cost to be $236 million during the first
year (FY2010), $976 million for five years, and $2.5 billion over ten
years.

FY2010 and FY2011 Summary

FY2010 new enrollee patients are expected to number 8,680.
FY2011 additional new enrollees are expected to number
1,018.
FY2010 costs for C&P examinations are expected to be
$114M.
FY2011 costs for C&P examinations are expected to be $23M.
FY2010 health care costs (inclusive of travel) are
expected to be $236M (using cost per patient of 13,500).
FY2011 health care costs (inclusive of travel) are
expected to be $165M (using cost per patient of 14,100).
Combined costs are as follows:
[cir] FY2010: $236M.
[cir] FY2011: $165M.

Assumptions

30% of veterans newly determined to be service-connected
will enroll and will use VA health care.
Newly enrolled veterans will be Priority Group 1 veterans.
The cost per patient is arrived at using the average cost
per Priority Group 1 patient aged between 45-64.
Every VBA case will require a new exam.
It is assumed that 100% of newly enrolled veterans will
request mileage reimbursement. The average amount of mileage
reimbursement claims per veteran is $511 (this amount reflects to the
FY2009 actual average amount).
We note that many assumptions, which form the foundation for an
agency's cost forecasts, seldom prove to be completely accurate due to
variables over which VA has no control, such as application rates,
veteran Priority Group designation, diagnostic examinations in the
future, or changes in incidence rates. For example, we assumed that all
newly enrolled veterans would be in Priority Group 1. If we were to
assume that a substantial number of these new enrollees would be in
Priority Group 2, the cost estimate could decrease significantly.

Distribution of Disability Claims

VBA has established estimates for claims workload for veterans.
Figure 1 provides breakdown of disability claims.
Overall, VBA anticipates 69,957 claims. Of these, 17,039 will be
for veterans whose previous claims for disability compensation were
denied. Additionally, VBA anticipates reopened claim volume of 32,606
claims in FY2010 with subsequent decreases to 1,069 per year in FY2011.
VBA anticipates 28,934 accessions in FY2010. These are new disability
compensation awards--for veterans who did not previously have an award
for service connected disability compensation. Additionally, in FY2010
VBA anticipates disability claim volume associated with the presumptive
SC determination to be 159,311 and to exceed 270,000 through FY2019.

Figure 1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Retroactive
claims
FY Retroactive representing new Reopened claims Accessions Total disability
claims SC disability claim volume
award
--------------------------------------------------------------------------------------------------------------------------------------------------------
2010.......................................................... 69,957 17,039 32,606 28,934 159,311
2011.......................................................... ................ ................ 1,069 3,393 31,207
2012.......................................................... ................ ................ 1,051 3,335 10,289
2013.......................................................... ................ ................ 1,032 3,273 10,227
2014.......................................................... ................ ................ 1,011 3,207 10,161
-----------------------------------------------------------------------------------------
Subtotals................................................. ................ ................ 36,769 42,142 221,195
2015.......................................................... ................ ................ 989 3,137 10,091
2016.......................................................... ................ ................ 989 3,062 10,016
2017.......................................................... ................ ................ 989 2,983 9,937
2018.......................................................... ................ ................ 989 2,898 9,852
2019.......................................................... ................ ................ 989 2,809 9,763
-----------------------------------------------------------------------------------------
Totals.................................................... 69,957 ................ 41,714 57,031 270,854
--------------------------------------------------------------------------------------------------------------------------------------------------------

New Enrollments and Changed Enrollments

The disability compensation workload, the resulting increases in
service-connected patients, and the increased combined service
connected percents will both add new patients to VA's health care
system and will change the priority levels of veterans currently
enrolled in VA's health care system.
For purposes of estimation, it is assumed that 30% of veterans
``Accessions'' will enroll in the system each year. For FY2010, this
means that 8,680 of the 28,934 veteran ``Accessions''. Figure 2
provides the estimate of new enrollments per year for the ten year
period. In all, it is estimated that 17,109 new veterans will enroll in
VA's health care system.

Figure 2
------------------------------------------------------------------------
New
FY New enrollees enrollees
per year cumulative
------------------------------------------------------------------------
2010.................................... 8,680 8,680
2011.................................... 1,018 9,698
2012.................................... 1,001 10,699
2013.................................... 982 11,681

[[Page 53214]]


2014.................................... 962 12,643
-------------------------------
Subtotals........................... 12,643 ............
2015.................................... 941 13,584
2016.................................... 919 14,502
2017.................................... 895 15,397
2018.................................... 869 16,267
2019.................................... 843 17,109
-------------------------------
Totals.............................. 17,109 17,109
------------------------------------------------------------------------

It is assumed that veterans enrolling will be Priority Group 1
veterans and that they will use VA health care services.
For purposes of estimation, it is assumed that 40% of the veterans
whose claims are reopened will have been enrolled in VA's health care
system and that their Priority Group will move from a copayment
required status to a copayment exempt status. Additionally, it is
assumed that their third party collections will be lost. It is assumed
that 10% of the accessions will result in changes to veterans who are
currently enrolled. These veterans would be enrolled in a copayment
required status and would move to copayment exempt status. In FY2010 it
is estimated that 43,919 veterans would have their enrollment status
changed, and FY 2011 it is estimated that an additional 767 veterans
would have their enrollment status changed. Figure 3 provides these
estimated changes in enrollment status per year and cumulatively.

Figure 3
------------------------------------------------------------------------
Upgraded Upgraded
FY enrollees per enrollees
year cumulative
------------------------------------------------------------------------
2010................................ 43,919 43,919
2011................................ 767 44,686
2012................................ 754 45,439
2013................................ 740 46,180
2014................................ 725 46,905
-----------------------------------
Subtotals....................... 46,905 46,905
2015................................ 709 47,614
2016................................ 702 48,316
2017................................ 694 49,010
2018................................ 685 49,695
2019................................ 677 50,372
-----------------------------------
Totals.......................... 50,372 50,372
------------------------------------------------------------------------

Disability Exams Associated Costs

It is assumed that each VBA case will result in disability
examinations for the veteran. In all, it is estimated that 270,854
disability examinations will need to be performed. An escalation factor
of 4% is applied to cost of disability examinations.

Figure 4
----------------------------------------------------------------------------------------------------------------
Total disability Cost per disability Annual cost per
FY claim volume exam * disability exams
----------------------------------------------------------------------------------------------------------------
2010.......................................... 159,311 $719 $114,544,609
2011.......................................... 31,207 748 23,335,346
2012.......................................... 10,289 778 8,001,451
2013.......................................... 10,227 809 8,271,365
2014.......................................... 10,161 841 8,546,705
-----------------------------------------------------------------
Subtotals................................. 221,195 .................... 162,699,475
2015.......................................... 10,091 875 8,827,339
2016.......................................... 10,016 910 9,112,200
2017.......................................... 9,937 946 9,401,942
2018.......................................... 9,852 984 9,694,379
2019.......................................... 9,763 1,023 9,991,075
-----------------------------------------------------------------
Totals.................................... 270,854 .................... 209,726,410
----------------------------------------------------------------------------------------------------------------
* Source: Allocation Resource Center.


[[Page 53215]]

Health Care and Total Costs

Figure 5 provides extended health care costs per year and includes
costs for C&P disability examinations and travel associated with C&P
examinations. The cost per patient is arrived at using the average cost
per Priority Group 1 patient, ages 45-64. It is assumed that 100% of
newly enrolled veterans will request mileage reimbursement. The average
amount of mileage reimbursement claims per veteran is $511 (this amount
reflects to the FY2009 actual average amount). Total costs over the 10-
year period are estimated to be in excess of $2.4B.

Figure 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Beneficiary
Annual cost per Cost per BT travel costs Health care Extended annual
FY disability exams mileage claim (41.5 cents/ Cost per patient costs per costs
mile) patient
--------------------------------------------------------------------------------------------------------------------------------------------------------
2010........................................ $114,544,609 $511 $4,435,582 $13,500 $117,182,700 $236,162,891
2011........................................ 23,335,346 511 4,955,729 14,100 136,743,210 165,034,285
2012........................................ 8,001,451 511 5,466,985 14,700 157,269,420 170,737,855
2013........................................ 8,271,365 511 5,968,736 15,100 176,375,550 190,615,650
2014........................................ 8,546,705 511 6,460,369 15,700 198,488,820 213,495,893
-----------------------------------------------------------------------------------------------------------
Subtotals............................... 162,699,475 ................ 27,287,400 ................ 786,059,700 976,046,575
2015........................................ 8,827,339 511 6,941,271 16,300 221,414,310 237,182,919
2016........................................ 9,112,200 511 7,410,675 17,100 247,989,330 264,512,205
2017........................................ 9,401,942 511 7,867,969 17,900 275,609,880 292,879,791
2018........................................ 9,694,379 511 8,312,233 18,800 305,812,080 323,818,692
2019........................................ 9,991,075 511 8,742,852 19,800 338,764,140 357,498,068
-----------------------------------------------------------------------------------------------------------
Totals.................................. 209,726,410 ................ 66,562,400 ................ 2,175,649,440 2,451,938,251
--------------------------------------------------------------------------------------------------------------------------------------------------------

Summary

Combined estimated increases in health care costs are presented in
Figure 6.

Figure 6
------------------------------------------------------------------------
Extended annual
FY costs
------------------------------------------------------------------------
2010.................................................. $236,162,891
2011.................................................. 165,034,285
2012.................................................. 170,737,855
2013.................................................. 190,615,650
2014.................................................. 213,495,893
-----------------
Subtotals......................................... 976,046,575
2015.................................................. 237,182,919
2016.................................................. 264,512,205
2017.................................................. 292,879,791
2018.................................................. 323,818,692
2019.................................................. 357,498,068
-----------------
Totals............................................ 2,451,938,251
------------------------------------------------------------------------

Uncertainties: After the comment period had expired, VA received
correspondence from the Chairman of the Senate Committee on Veterans
Affairs which questioned VA's use of the prevalence rate of 5.6 percent
for IHD in the proposed rule. The Chairman mentioned that the 5.6
percent prevalence rate was for the general U.S. population, instead of
a rate more representative of the Vietnam Veteran population, which is
older. He also asked why the prevalence rate for IHD among Vietnam
Veterans was not assumed to increase on a yearly basis as they age over
the next ten years, citing Centers for Disease Control (CDC) findings
that the prevalence rate for IHD increases as an individual ages.
For purposes of costing the three new presumptive conditions in the
proposed rule, VA's assumptions for the prevalence and mortality rates
were identified based on information obtained from the CDC, the
National Institutes of Health (NIH), and the Census Bureau. In FY2000,
15,800,000 people were identified with coronary heart disease. The
total U.S. population according to the Census Population Survey in the
same year was 281,421,906, reflecting the 5.6 percent prevalence rate.
Since veteran-specific prevalence and mortality rates are not commonly
reported, it is standard practice to use general population prevalence
and mortality rates for cost estimating purposes.
After publishing a proposed rule, agencies often receive additional
information, which in turn improves the analysis of agency action. It
is not unusual for an agency to receive new data during or after the
comment period, either submitted by the public with comments or
collected by the agency in a continuing effort to give the agency's
regulations a more complete foundation. An agency may use such data to
address potential deficiencies in the proposed rule's data, so long as
no prejudice is shown.
We have, therefore, conducted a separate analysis based on the
CDC's age-adjusted prevalence rates for coronary heart disease. We
found that CDC's data uses the age categories of 45-54, 55-64, 65-74,
75-84, and 85 and older, for both males and females. These age-adjusted
prevalence rates were applied in a separate analysis, which resulted in
much higher potential costs.
Using age-adjusted prevalence rates, shifting initial costs data
from FY2010 to FY2011, adjusting the assumed degree of disability, and
updating the assumed caseload, the estimated VBA costs in the first
year would decrease by nearly $1.5 billion compared to VA's proposed
rule estimate and the overall ten-year costs would increase by nearly
$19.8 billion. Similarly, VHA developed a methodology based on the data
provided by VBA to evaluate VBA projected claims data from a health
care cost analysis perspective. Making adjustments for priority group
distributions and shifting the FY2010 cost data to FY2011, the
associated VHA costs in the first year would increase by nearly $100
million compared to VA's proposed rule estimate and the overall ten-
year costs would increase by nearly $5.0 billion. The details of this
analysis are available on VA's Web site at: http://vaww1.va.gov/ORPM/
FY_2010_Published_VA_Regulations.asp, and also may be viewed online
through the Federal Docket Management System at http://
www.regulations.gov.
We note that many assumptions, which form the foundation for an
agency's cost forecasts, seldom prove to be completely accurate due to
variables over which VA has no control, such as application rates,
better diagnostic techniques in the future, or changes in incidence
rates. As documented in the Department's analysis, there are various

[[Page 53216]]

assumptions applied in the cost estimate that, if altered, could result
in dramatic increases (e.g. age adjustment of prevalence rates) or
decreases (e.g., lower application rates) in the range of costs
attributed to the rule. We further note that, in addition to being
subject to various sources of uncertainty, the model applied by the
Department for estimating the range of prospective impacts is further
subject to the relative sensitivity of variation in the respective
inputs to the model; for example, the model is highly sensitive to
variation in the prevalence rates, such as that resulting from age
adjustment.
While all three presumptive conditions covered by this rule are
subject to these variations and the resulting impacts on projected
obligations, VA considers the proposed rule's cost estimate to remain a
reasonable baseline projection of the costs associated with this final
rule. However, cost estimates provided and the assumptions used to
develop them have no binding effect, and veterans who qualify for
benefits on the basis of these presumptions will receive their benefits
regardless of cost estimates used at this time. VA's discretionary and
mandatory funding require explicit appropriations on an annual basis.
Mandatory out-year estimates are evaluated for relevant current data as
they become available and budget estimates are adjusted accordingly.

Unfunded Mandates

The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C.
1532, that agencies prepare an assessment of anticipated costs and
benefits before issuing any rule that may result in the expenditure by
State, local, and Tribal governments, in the aggregate, or by the
private sector, of $100 million or more (adjusted annually for
inflation) in any year. This final rule would have no such effect on
State, local, and Tribal governments, or on the private sector.

Regulatory Flexibility Act

The Secretary of Veterans Affairs hereby certifies that this final
rule will not have a significant economic impact on a substantial
number of small entities as they are defined in the Regulatory
Flexibility Act, 5 U.S.C. 601-612. This final rule will not affect any
small entities. Only individuals will be directly affected. Therefore,
pursuant to 5 U.S.C. 605(b), this final rule is exempt from the initial
and final regulatory flexibility analysis requirements of sections 603
and 604.

Catalog of Federal Domestic Assistance Numbers and Titles

The Catalog of Federal Domestic Assistance program numbers and
titles for this rule are 64.109, Veterans Compensation for Service-
Connected Disability and 64.110, Veterans Dependency and Indemnity
Compensation for Service-Connected Death.

Signing Authority

The Secretary of Veterans Affairs, or designee, approved this
document and authorized the undersigned to sign and submit the document
to the Office of the Federal Register for publication electronically as
an official document of the Department of Veterans Affairs. John R.
Gingrich, Chief of Staff, Department of Veterans Affairs, approved this
document on July 7, 2010, for publication.

List of Subjects in 38 CFR Part 3

Administrative practice and procedure, Claims, Disability benefits,
Health care, Pensions, Radioactive materials, Veterans, Vietnam.

Dated: August 25, 2010.
Robert C. McFetridge,
Director, Regulation Policy and Management, Office of the General
Counsel, Department of Veterans Affairs.

0
For the reasons set out in the preamble, VA is amending 38 CFR part 3
as follows:

PART 3--ADJUDICATION

Subpart A-Pension, Compensation, and Dependency and Indemnity
Compensation

0
1. The authority citation for part 3, subpart A continues to read as
follows:

Authority: 38 U.S.C. 501(a), unless otherwise noted.


0
2. Section 3.309 is amended as follows:
0
a. In paragraph (e), by removing ``Chronic lymphocytic leukemia'' and
adding, in its place, ``All chronic B-cell leukemias (including, but
not limited to, hairy-cell leukemia and chronic lymphocytic
leukemia).''
0
b. In paragraph (e), by adding ``Parkinson's disease'' immediately
preceding ``Acute and subacute peripheral neuropathy''.
0
c. In paragraph (e), by adding ``Ischemic heart disease (including, but
not limited to, acute, subacute, and old myocardial infarction;
atherosclerotic cardiovascular disease including coronary artery
disease (including coronary spasm) and coronary bypass surgery; and
stable, unstable and Prinzmetal's angina)'' immediately following
``Hodgkin's disease''.
0
d. At the end of Sec. 3.309, immediately following Note 2, adding a
new Note 3 to reads as follows:


Sec. 3.309 Disease subject to presumptive service connection.

* * * * *

Note 3: For purposes of this section, the term ischemic heart
disease does not include hypertension or peripheral manifestations
of arteriosclerosis such as peripheral vascular disease or stroke,
or any other condition that does not qualify within the generally
accepted medical definition of Ischemic heart disease.

[FR Doc. 2010-21556 Filed 8-30-10; 8:45 am]
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