also not be ordered when there is only a minimum rating in place or when a combined rating would not be affected by reduction of the rating for a particular disability. For example, if a disability was reduced from 10 percent to 0 percent this might not reduce a combined evaluation. The regulations instruct that VA not reexamine veterans over 55 years of age for improvement except in unusual circumstances.

Question 13b. Does VA track the results of these re-examinations?

Answer. VA does not track and analyze the results of re-examinations in any systematic way. VA does generate examination reports, and these would be associated with the claims folder of the person who is re-examined.

Question 13c. How many veterans has VA requested appear for reexamination since fiscal year 2000? Is that a decline over previous periods?

Answer. For the period October 1999 through May 2005, VBA scheduled 95,899 routine future examinations. This represents a decline from the number of re-examinations scheduled in fiscal year (FY) 1997 through fiscal year 1999.

Question 13d. Because of the growing number of original and repeat claims, has VA been reluctant to add to that workload by requesting that veterans appear for re-examination?

Answer. In response to a recommendation by the VA Claims Processing Task Force, VBA temporarily requested that decision makers in the field apply a longer future examination suspense period because of workload considerations. However, VA resumed establishing the normal time periods for re-examinations in fiscal year 2004.

RESPONSES TO WRITTEN QUESTIONS SUBMITTED BY HON. LARRY E. CRAIG

TO ROBERT V. CHISOLM

Question la. Would attorneys be limited to charging fees on a contingent basis? Answer. Contingent fee agreements would seem to be the most practical solution. First, many veterans lack the money to pay either a flat fee or an hourly fee. That is of course why the veteran is usually seeking disability compensation and similar benefits. Second, Congress has already provided for the use of contingent fees in the present version of 38 U.S.C. §5904. Contingent fees have the additional benefit of linking the attorney's fee to success on the veteran's claim. If the veteran does not receive an award of past-due benefits, the attorney will not be paid. This also incentivizes the attorneys to learn this area of the law. Finally, Congress has provided that Social Security applicants can hire attorneys on a contingent-fee basis. However, NOVA recognizes there may be a practical problem of contingent fees in situations where the benefit the veteran is seeking may not be a monetary benefits such as a vocational benefit, an offset issue or a waiver of an overpayment. In these instances, it might be appropriate to permit a fee other than a contingent fee. Question 1b. Would the current authority of the U.S. Court of Appeals for Veterans' Claims and the Board of Veterans' Appeals to review the reasonableness of attorney fees provide adequate protection for veterans against being charged unreasonable fees?

Answer. Under the present system, when an award of past due benefits is made at the Regional Office and there is an attorney fee contract, the Regional Office will make the initial decision regarding entitlement to a fee. If the veteran does not agree with that decision of the Regional Office he can file an appeal to the Board of Veterans' Appeals. In addition, the Veteran can ask the Board at any time to review a fee agreement for reasonableness directly. Thus, there are two separate avenues for the veteran to have a fee agreement reviewed. Finally, for cases filed in Court, the CAVC has the power to review a fee agreement on its own or on the motion of either party. For these reasons, NOVA believes the current system is adequate for reviewing fee agreements.

Question 1c. What other measures could be taken to ensure only reasonable fees would be charged, particularly for services provided to veterans at the regional office?

Answer. Answer not provided.

Question 2. You testified that attorney representation throughout the VA adjudication and appeal process would help ensure that veterans receive all benefits to which they are entitled. On the other side of the coin, particularly considering the increasing number of claims being filed and the trend of an increasing number of claims involving numerous disabilities, would attorney representatives have an ethical obligation to counsel their clients against filing claims that may not be meritorious?

Answer. The American Bar Association's Model Rules 1.1 regarding competence; 1.3 regarding diligence and 3.1 regarding meritorious and the parallel State provisions impose an ethical obligation upon an attorney to examine a claim for its merit and to counsel the client against filing a claim if it is frivolous and without merit. Moreover, as practical matter an attorney working on a contingent basis is going to counsel a veteran against filing a frivolous claim. Thus, the combined effect of the ethical obligation and the practical considerations of working on a contingent basis necessarily would mean a veteran's claim would be screened for merit.

Question 3. You also recommended that Congress amend 38 U.S.C. §7105 to eliminate the requirement that a claimant submit a Substantive Appeal (or Form 9) in addition to filing a Notice of Disagreement (NOD) in order to perfect an appeal to the Board. Under current law, the filing on an NOD triggers certain actions by the regional office. Under the scenario that you have proposed, what means, if any, would VA have to determine if a claimant wishes to continue with an appeal to the Board after the VA has taken action in response to an NOD?

Answer. Once an NOD is filed, the burden should not be on the veteran to show that he wants to continue the appeal. The burden should be on the VA to show that he does not want to appeal. Hence the case should be sent to the Board within some mandatory timeframe once the NOD is filed. If the veteran is satisfied with the action the VA has taken after the filing of the NOD, the VA could implement a procedure allowing the veteran to withdraw his appeal after filing the NOD. But any such procedure should permit the veteran to revoke his withdrawal within 1 year to ensure that any perceived withdrawal is truly voluntary.

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. LARRY E. CRAIG
TO RICK SURRATT

Questions la-1b. In the VA Office of Inspector General's May 19, 2005, report, it was emphasized that the VA Schedule for Rating Disabilities is based on a 60-yearold model that does not reflect modern concepts of disability. If the disability system is not based on "modern concepts of disability," then on what is it based?

If the disability system is outmoded, how do we know whether we are paying veterans enough, or too much, disability compensation?

Answer. The VA Office of Inspector General (OIG) raised several issues in connection with its effort to identify the causes of substantial variations from State to State in the average annual compensation payments of veterans of those States. Although somewhat tangentially linked to the factors underlying the variances, that is, demographic variances and rating practice variances, the OIG raised questions as to whether the VA's Schedule for Rating Disabilities accords with "modern concepts of disability."

Parroting the concerns raised by various other critics, OIG observed that the rating schedule is based on a 1945 model (the 1945 edition of the rating schedule) that itself is founded on a concept of disability measurement that dates back to 1919 (average impairment of earning capacity). According to the view OIG adopted from others, the last major modification to the rating schedule occurred in 1945, when it was revised to reflect advances in medicine, science, and technology and to add new coding and indexing for disabilities. Although OIG acknowledged VA has, in the past few years, systematically revised most of the schedule to incorporate current medical terminology and revise the rating criteria to reflect advances in medicine, OIG stated "these more recent revisions have not changed the basic relationship between disabilities and average earnings impairment established in the 1945 rating schedule." The OIG cited a concern previously raised about the appropriateness of use of average impairment rather than the "individual veteran's specific impairment in earning capacity" or "actual earnings or income" as the basis for rating disabilities. Somewhat different from basing compensation on the individual veteran's actual earnings or income, the OIG repeated a familiar theme from at least one outside critic of the schedule that the ratings should be based on “earnings-based estimates of economic impairment associated with specific service-connected disabilities." However, the OIG also cited a recommendation from another study that the rating schedule "be revised based on factual data to ensure it reflected the average reduction in earning capacity." In short, the OIG cited a common complaint that the schedule needs "major restructuring" based on a variety of different views of what exactly is wrong with the current schedule.

Though admittedly imperfect, the current rating schedule is the product of perhaps the most extensive, longstanding, and enduring experience in disability assessment by any agency or authority. According to statute, the schedule is based on what has proven to be the most practical and equitable standard for gradation of

disability among military veterans with a wide diversity of vocational backgrounds and variations in impairment from diseases and injuries. It has been adjusted according to experience rather than in reaction to untested notions urged from time to time by outside critics who have no in-depth knowledge of the schedule or experience with disability evaluation.

Although historical information indicates various provisions for benefits based on graded, or partial, disability date back to the Civil War period, the basic concept of today's disability rating schedule was established in the War Risk Insurance Act of October 6, 1917. Where prior provisions resulted in lack of uniformity, the new schedule was to employ an average impairments standard. Section 302 of the Act provided:

A schedule of ratings of reductions in earning capacity from specific injuries or combinations of injuries of a permanent nature shall be adopted and applied by the bureau. Ratings may be as high as 100 per centum. The ratings shall be based, as far as practicable, upon the average impairments of earning capacity resulting from such injuries in civil occupations and not upon the impairment in earning capacity in each individual case, so that there shall be no reduction in the rate of compensation for individual success in overcoming the handicap of permanent injury. The bureau shall from time to time re-adjust this schedule of ratings in accordance with actual experience.

This provision was modeled somewhat on the emerging workers' compensation program, which provided payments based on either individual loss of earnings due to disability or loss of earning capacity as a measure of presumptive need. It should be noted that the statute then, at it does today, referred to disability from "injuries" and included no reference to diseases. See 38 U.S.C.A. § 1155 (West 2002). This is perhaps because it was modeled on workers' compensation programs that had at that point not embraced coverage for occupational diseases. However, the Act provided that the term "injury" included disease.

While the "average impairments of earning capacity" standard of the rating schedule authorized under the War Risk Insurance Act was based on medical assessments of disability, a rating schedule authorized by legislation enacted in June 1924 experimented with incorporation of occupational factors into disability ratings. Section 202(4) of the World War Veterans' Act, 1924, provided that the ratings would be based, as far as practicable, upon the average impairments of earning capacity resulting from injuries in civil occupations “similar to the occupation of the injured man at the time of enlistment and not upon the impairment in earning capacity in each individual case." Under this concept, the percentage ratings for the medical or functional impairments were modified by values representing occupational variants so that a disability at a given level would be rated differently for veterans with different pre-service occupational histories. Many veterans had no pre-service occupation, and the scheme proved impractical for a variety of other difficulties concerned with accurately classifying occupational characteristics and assessing the effect of mental and physical disabilities upon persons with these varying factors. Instead of grades of disability in multiples of 10 percent, this schedule provided for ratings in multiples of 1 percent. Rather than improve upon the prior standard, this attempt to add precision added complexity, unforeseen problems, and unintended consequences. With the next version of the rating schedule, the scheme was abandoned, and VA reverted to the average person basis for ratings.

With the first and second editions of the 1933 rating schedule, established under authority of Veterans' Regulation No. 3 and No. 3(a), the ratings were to be based, as far as practicable, upon average impairments in earning capacity. The first edition, issued in accordance with Veterans Regulation No. 3 (March 31, 1933), provided for five grades of disability, 10 percent, 25 percent, 50 percent, 75 percent, and 100 percent. The second edition, issued in accordance with Veterans Regulation No. 3(a) (June 6, 1933), provided for 10 grades of disability, from 10 percent to 100 percent.

Under the authority in Veterans Regulation No. 3(a), the VA Administrator issued in 1945 a readjustment of the 1933 rating schedule to be known as the 1945 edition. Though the ratings from the 1933 schedule were reorganized and given new coding, many of the percentage ratings were the same or only slightly different from those in the 1933 schedule. The authority for the rating schedule in Veterans Regulation No. 3(a) was later codified in statute without substantive change.

In 1957, VA issued a reprint of the 1945 edition with all extensions (changes and additions) through January 16, 1957. With that publication, it was "planned to readjust the schedule, page by page, or section by section, to incorporate the results of medical advances and the experience of the Veterans Administration." In his July 20, 1971, report to Congress entitled Economic Validation of the Rating Schedule,"

the VA Administrator noted there had been 15 revisions since issuance of the 1957 Loose Leaf Edition of the schedule. The Administrator explained:

It was left to the Administrator to determine what is meant by "the average impairments of earning capacity." Its meaning was developed within the Veterans' Administration as a result of studies and conferences undertaken by rating personnel, mostly medical, as well as physicians in the Department of Medicine and Surgery [now the Veterans Health Administration], and other VA offices. It can be said that the rating schedule's description of disability and its evaluation represents a distillate of informed opinion with many compromises among the views of the various consultants. Committee on Veterans' Affairs, VA Report, Economic Validation of the Rating Schedule 16 (Comm. Print No. 109 1971) [hereinafter ECVARS].

Between 1971 and 1988, VA made changes to most of the individual sections dealing with the individual bodily systems. In 1988, the United States General Accounting Office, now the Government Accountability Office (GAO), found that VA needed to undertake a more comprehensive update of the medical criteria in the rating schedule. GAO's recommendations stated:

To better ensure that the rating schedule serves as a practical tool in assigning uniform disability ratings to veterans, GAO recommends that the Administrator:

• Prepare a plan for a comprehensive review of the rating schedule and, using the results of the review, revise medical criteria accordingly.

• Implement a procedure for systematically reviewing the rating schedule to keep it up-to-date in the future.

VA agreed to perform a methodical review and revision of the rating schedule by body system and agreed to establish a procedure for systematic review thereafter on an ongoing basis. As a result, the next major overhaul of the rating schedule began in 1991. VA developed a plan to review and revise the schedule section by section. Since then, VA has completed the laborious process through promulgation of final regulatory changes for most of the 15 body systems and has proposed rules outstanding for visual disabilities, leaving only one complete bodily system and part of two other systems to be addressed.

It should be noted here, incidentally, that scientific advances in treatment do not necessarily call for revision of the rating schedule because scientific advances do not change the pathology and basic characteristics of the diseases. Such advances may improve therapies and simply mean that the symptoms are more responsive to treatment under some or most circumstances, in which case the veteran's disability should be rated lower under the existing criteria. Improved treatments do not change the range of possible degrees of disability or remove the possibility that other cases will still be encountered that meet the criteria for the ratings reflecting poorer responses to treatment. However, improved treatment methods and therapies do often shorten convalescent periods, and VA has adjusted the rating schedule to shorten the time for which it pays post-surgical and convalescent ratings.

With the publication of each revision of sections of the rating schedule in the Federal Register, VA explained that it was updating that portion of the schedule to ensure that it uses current medical terminology, unambiguous criteria, and that it reflects medical advances that have occurred since the last review. Despite the fact that VA followed GAO's recommendation, GAO now urges that VA develop an earnings-based rating schedule, and others who do not understand the issue have readily subscribed to the superficial view and mistaken assumption that “average impairments of earning capacity" means average wage loss attributable to disability.

Contrary to OIG's assertion that today's rating schedule is based on a 60-yearold model, the rating schedule is actually based on a much older standard for disability measure, that is, average impairment of earning capacity, but its longevity does not mean the standard no longer has utility. Indeed, it demonstrates to the contrary. Experience has shown this time-tested standard to be the best available for fair and practical evaluation of disability. Moreover, it seems clear that Congress intended that VA adopt a schedule of ratings based on medical judgments as to the average effect on earnings capacity that can be expected for given injuries or diseases existing at various degrees, and never contemplated that it be based on individual or average loss of earnings. Several points support this view as to Congressional intent, and practicality, fairness, and experience demonstrate that this congressional intent continues to be the best solution to the assessment of veterans' disabilities.

In 1917, when Congress first provided for a rating schedule founded on average impairment in earnings capacity, there was no data then available to base the ratings on actual average wage loss attributable to the numerous diseases and injuries at various grades. There was no such system of gradation under which disabilities in society could be classified and tabulated, and thus there was no means to correlate various disabilities at various degrees of severity with wage levels:

There were few workmen's compensation laws in existence and almost no data based on scientific analysis and factual studies. There was little suitable material for guidance and training of those who were to adjudicate cases. Lists of medical diseases upon which evaluation and standards could be established and incorporated into the schedule were non-existent. There were no sound scientific data available to measure average impairments of earning capacity resulting from injuries in civilian occupations.

ECVARS, at 11.-Because this authority for the rating schedule was based on the "social insurance" principles of early workers' compensation law, Congress was surely aware of the paucity of data of this type, and thus did not intend that the many grades and combinations of disabilities be based on wage loss comparisons between disabled veterans and non-disabled workers.

Perhaps the language Congress adopted or adapted from workers' compensation programs also reveal intent. Congress' choice of average "impairments" of earning capacity may be revealing. "Impairment" is "[t]he fact or state of being damaged, weakened, or diminished." Black's Law Dictionary 754 (7th ed. 1999). When something is "impaired," it is "[d]iminished, damaged, or weakened." The American Heritage Dictionary of the English Language 878 (4th ed. 2000). In workers' compensation law, impairment is often used to refer to an abstract medical measure of disability rather than a concrete wage loss measure of disability: "Unlike disability, impairment usually refers to medical function and not to earning capacity. In some States, impairment is a purely medical condition reflecting any anatomical or functional abnormality or loss, and may be either temporary or permanent, industrial or non-industrial." Mod Work Comp § 200:2.

Workers' compensation benefits are either based on a "medical-loss" or "wage-loss" theory: "Disability benefits are designed to provide compensation for the loss of earnings or earning power, and they are usually determined on the basis of either medical loss or wage loss theories.” Jack B. Hood, Benjamin A. Hardy, Jr. & Harold S. Lewis, Jr., Workers' Compensation and Employee Protection Laws 85 (4th ed. 2005). "A medical loss theory, dictates, for example, that in the case of one who has lost an arm, compensation is required for the loss of that limb regardless of whether there has been an adverse impact upon earning capacity or lost wages. On the other hand, the wage loss theory is based upon the idea that a person should be compensated for loss of wages. . ." Id. 29.

.

Workers' compensation programs that pay benefits under a medical loss theory often do so in accordance with schedules. "[T]he award of scheduled loss is exclusive, payable on the basis of a loss of physical function, and is payable regardless of whether the employee has suffered a loss in earning capacity." Mod Work Comp at §200:11.

A workers' compensation_treatise explains the principle as set forth by the Supreme Court of the United States:

Scheduled benefits are payable without proof of actual wage loss or impairment of earning capacity. In effect, the schedule provides a conclusive presumption that a worker will sustain wage loss that justifies compensation in the prescribed amount. The Supreme Court explained the rationale underlying the use of schedules as follows: "The lump-sum awards for total and permanent disability under [the Alaska] Compensation Act ignore wage losses. Whatever the employee may have made before, whatever his wages may be after the injury, the award is the same. To that extent it is an arbitrary amount. But it is the expression of a legislative judgment, that on the average there has been a degree of impairment, and whatever may be the fact in a particular case, the lump-sum should be paid without more." Alaska Industrial Board v. Chugach Electric Ass'n, Inc., 356 U.S. 320, 323-24 (1958). Joseph W. Little, Thomas A. Eaton & Gary R. Smith, Workers' Compensation (4th ed. 1999).

With VA's rating schedule, there is a legislative judgment of what disability rating should apply, and Congress delegated to VA the authority to make that legislative judgment.

Such rating schedules are a practical solution to disability assessment. With regard to Vermont's scheduled loss basis for compensation, the Supreme Court of Vermont explained the principle thoroughly:

[P]ermanent disability benefits are calculated solely on the basis of physical impairment: "(The permanent disability) statute has arbitrarily fixed the amount of compensation to be paid for scheduled specific injuries regardless of loss of present earning power."

The claimant challenges the validity of these different standards set forth in Vermont case law. He asserts that permanent disability, like temporary disability, should be evaluated by reference to any factor which restricts capacity for work. In support of this position, he advances several arguments. First, he contends that the