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Updated Jan 08, 2024

In This Section
This section contains the following topics:
Topic
Topic Name
1
2
3
4

1.  General Information on the Notice of Proposed Adverse Action

Introduction

 This topic contains general information on the notice of proposed adverse action, including

Change Date

 April 19, 2022

X.ii.3.A.1.a.  Benefit Changes Requiring a Notice of Proposed Adverse Action
Except as otherwise provided in 38 CFR 3.103(b)(3), no award of compensation, pension or Dependency and Indemnity Compensation shall be terminated, reduced, or otherwise adversely affected, unless the beneficiary has been notified of the proposed adverse action and has been provided a period of 60 days in which to submit evidence for the purpose of showing the adverse action should not be taken.
Generally, the Department of Veterans Affairs (VA) must send the beneficiary, fiduciary (if applicable), and the representative (if any) a notice of proposed adverse action prior to taking any unfavorable action affecting benefits, including, but not limited to
  • reductions
  • suspensions
  • terminations, including termination of ancillary benefits
  • severance of benefits
  • apportionments, and
  • competency determinations.
Reference:  For a list of references specific to due process, see M21-1, Part X, Subpart ii, 3.A.4.

X.ii.3.A.1.b.  Requirement of Notice for a Proposed Adverse Action
VA must issue a notice of proposed adverse action before taking action based on third-party information that could adversely affect the payment of benefits.
References:  For more information on

X.ii.3.A.1.c.  Proposed Rating or Administrative Action
A notice of proposed adverse action is required when benefits are being reduced or terminated based on a rating or administrative action.
Examples of cases for which benefits may possibly be reduced based on a rating action or an administrative decision include
  • reduction in evaluation of a service-connected (SC) disability
  • discontinuance of unemployability
  • severance of service connection (SC), or
  • benefits erroneously awarded because of
    • an administrative error, or
    • error in judgment.

X.ii.3.A.1.d.  Exemptions for Temporary and Delimited Ratings
Sometimes a Veteran is temporarily granted an increased payment for a disability following an event, such as a joint replacement or heart attack, for which the rating schedule provides a temporary evaluation for a specified period of time.  In such a circumstance, ensure the award letter specifies the date or conditions under which the increased payment will be reduced.
Important:  A notice of proposed adverse action is not needed in this situation because the Veteran has already been fully informed of the date and reasons for the prospective adjustment.

X.ii.3.A.1.e.  Proposed Incompetency Determinations
When an incompetency determination is proposed, the beneficiary will be notified of the proposed action and of the right to a hearing as provided in 38 CFR 3.103.
Reference:  For more information on hearings during the adverse action proposal period, see M21-1, Part X, Subpart ii, 3.B.3.

2.  Elements of the Notice of Proposed Adverse Action

Introduction

 This topic contains information on the elements of a notice, including the

Change Date

 April 19, 2022

X.ii.3.A.2.a.  Required Elements for Notice of Proposed Adverse Action
Every notice of proposed adverse action must include the following elements:
  • a statement of the proposed decision, including proposed rates of payment for all affected periods of entitlement, including past periods for which an overpayment may or may not be created
  • the proposed effective date of the decision
  • information on the possible creation of an overpayment
  • detailed reasons for the proposed decision, and
  • the right to
    • present evidence
    • request a personal hearing, and
    • have representation.
Note:  The attachment of forms to supplement the notice of proposed adverse action does not substitute for the information that must be included within the letter itself.

X.ii.3.A.2.b.  Description of Elements in Notice of Proposed Adverse Action
The table below describes each of the elements in a notice of proposed adverse action.
Element
Description
Statement of proposed decision
  • Fully and clearly states the proposed decision to
    • reduce
    • suspend, or
    • terminate benefits, and
  • provides proposed rates for each rate change for all affected period of entitlement, including those past periods for which an overpayment may or may not be created..
Exception:  Rate change information is not required in notices of proposed adverse action that are generated as part of a batch process, such as those described in
Important:  This exception does not apply to proposed adverse action notices related to the annual Social Security Administration (SSA) cost-of-living adjustment.  These notices must include the proposed rate change information.
Statement of proposed effective date
  • States the proposed effective date, and
  • informs the beneficiary that
    • a 60 day period is allowed for receipt of a response to the proposed decision, and
    • the payment of benefits will continue through the 60-day period.
Notes:
  • The requirement that payments be continued through the 60-day period does not alter the effective date of the proposed reduction or termination.
  • A description of the effective date for the proposed reduction can satisfy the requirement for statement of proposed effective date.  For example, a proposal may describe the effective date as the first day of the month 60 days following the date of notification, as opposed to stating a specific date.
Reference:  For more information on effective dates for reduced benefits, see 38 CFR 3.500 to 3.505.
Statement advising beneficiary of potential overpayment
  • Advises the beneficiary that if the proposed adverse action is implemented, repayment is required for any overpayment resulting from the
    • proposed adverse action, and/or
    • continuation of payments during the proposed adverse action period, and
  • informs the beneficiary that any potential overpayment can be minimized with submission of a request that the award be adjusted without awaiting expiration of the due process period.
Basis for proposed decision
States the
  • evidence under consideration
  • facts and reasons for the proposal, and
  • proposed rates.
Rights of beneficiary
Informs the beneficiary of the right to
  • present evidence
  • request a personal hearing, and
  • have representation.
Reference:  For more information on procedural due process requirements, see 38 CFR 3.103.

3.  Process for Proposing an Adverse Action

Introduction

 This topic contains information on the process for proposing an adverse action, including

Change Date

 April 19, 2022

X.ii.3.A.3.a.  Process for Notices of Proposed Adverse Action
The table below describes the stages for notices of proposed adverse action.
Stage
Description
Reference
1
VA sends the beneficiary a notice of proposed adverse action.
2
VA allows the beneficiary time to respond to the notice of proposed adverse action.
3
VA considers evidence and arguments submitted by the beneficiary, if any, during the response period.
4
VA responds to hearing requests, if applicable.
5
VA sends final decision notice, advising the beneficiary of
  • the decision (including new rates)
  • the effective date(s)
  • the detailed reasons for the decision
  • overpayment information, and
  • appeal rights

X.ii.3.A.3.b.  Determining Where to Send the Notice of Proposed Adverse Action
Use the table below to determine where to send the notice of proposed adverse action.
If …
Then …
a valid, current address exists
send the notice to the current address of record.
mail is returned as undeliverable
follow guidance provided in M21-1, Part II, Subpart i, 2.C.6.
Reference:  For more information on sending the notice to the Agent Cashier for a homeless beneficiary, see 38 CFR 1.710(d).

X.ii.3.A.3.c.  Special Procedures for Hospitalized Veterans
Hospital adjustments are necessary when a Veteran in receipt of the aid and attendance (A&A) allowance is hospitalized.  The additional compensation or increased pension for A&A must be discontinued.
Follow the steps in the table below to send a notice of proposed adverse action to a hospitalized Veteran to ensure receipt of proper notification before the reduction or termination of benefits.
Note:  If the Veteran has a fiduciary, send the notice of proposed adverse action to the fiduciary only.  A separate notice to the hospitalized Veteran is not required.
Step
Action
1
Prepare two notices of proposed adverse action and address
  • one to the Veteran’s address of record, and
  • another to the Veteran at the hospital or nursing home.
2
Include the following statement:
I was admitted to the [type hospital’s name] on [type admission date]. Please take action without awaiting expiration of the due process period to reduce my payments to the proper rate authorized by law.
Place it either
3
Request the Veteran sign and return the notice or form.
Note:  When a Veteran fails to return the form, no reduction in benefits can be made until the proposed adverse action period expires.
Reference:  For more information on hospital adjustments, see

X.ii.3.A.3.d.  Providing Due Process Under the Correct Regulatory Provision
Notice of proposed adverse action must be provided based on situation-specific facts as directed in 38 CFR 3.103.  Most revisions of decisions, along with the corresponding due process requirements and periods, are directed by 38 CFR 3.105.  Due process must be provided under the correct regulatory provision and by providing the required elements of notice as discussed in 38 CFR 3.103 and M21-1, Part X, Subpart ii, 3.A.2.a.
When due process is provided under the incorrect provision and/or does not include the required elements, as discussed in M21-1, Part X, Subpart ii, 3.A.3.e, send corrected notice and restart the due process period.
Important:
  • When corrected due process is required, maintain the already-pending end product (EP) and date of claim.  Do not cancel and re-establish the EP with a new date of claim.
  • Reductions in compensation due to improvement are governed by 38 CFR 3.105(e).  Reductions in compensation due to failure to report for a scheduled routine future examination associated with a running award are governed by 38 CFR 3.655(c).
    • The procedures for completing the rating decision and providing notice of proposed adverse action, as well as final notice for these scenarios, differ significantly.  Refer to M21-1, Part X, Subpart ii, 3.D.1.e for a comparison between these reductions.
    • Ensure that notice of proposed adverse action is provided under the proper provision and that the proper procedures and due process period are followed.
References:  For more information on procedures for adverse actions

X.ii.3.A.3.e.  Sending Corrected Notice of Proposed Adverse Action
When a claimant is provided insufficient notice of proposed adverse action, provide corrected notice and restart the due process period.  Inaccuracies in the prior notice that will cause it to be considered insufficient include
  • failure to provide
    • proposed rates of payment
    • a date of reduction
    • detailed reasons for the proposed decision, or
    • notice of the right to
      • present evidence
      • request a personal hearing, and/or
      • have representation, and
  • providing
    • a proposed rate of payment that is incorrect and greater than what it should have been, or
    • a date of reduction that is incorrect and later than the date the reduction will actually occur.
Notes:
  • When the final decision is more favorable than that communicated in the notice of proposed adverse action, proceed with the more favorable final decision without resending notice unless notice was provided under the incorrect provision as discussed in M21-1, Part X, Subpart ii, 3.A.3.d.
  • Do not send a corrected notice of proposed adverse action if the proposed rates of payment were correct when VA sent the notice but the final rates are different because of an intervening award action.

X.ii.3.A.3.f.  Examples:  Situations Involving Corrected Notice of Proposed Adverse Action
Example 1:  Notice of proposed adverse action failed to provide the proposed rate of payment.
Result:  A new notice must be sent and the due process period restarted.
Example 2:  Notice of proposed adverse action advised the Veteran that the reduction would be effective November 1 but it will actually be effective December 1.
Result:  Since the final decision is more favorable than the proposed action, there is no need to send another notice of proposed adverse action.
Example 3:  Notice of proposed adverse action proposed a reduction in the Veteran’s combined disability rating to 50 percent.  However, the correct combined disability rating is actually 40 percent.
Result:  A new notice of proposed adverse action must be provided and the due process period restarted since the proposed combined disability rating is less favorable than the correct one.
Example 4:  Notice of proposed adverse action proposed a reduction in a Veteran’s monthly rate of payment to $479.83 due to an improvement in her SC disabilities.  Before due process expired, VA removed the Veteran’s spouse from her award based on notice from the Veteran of their divorce.  When VA finally took the proposed action, the proper monthly rate of payment was $428.83.
Result:  The proposed rate of payment in the notice of proposed adverse action was correct when VA prepared the notice.  It changed because of an intervening award adjustment.  Accordingly, there is no need to send another notice of proposed adverse action.

4.  References for Other Topics Specific to Due Process

Change Date

 September 24, 2018

X.ii.3.A.4.a.  References for Topics Specific to Due Process
The table below lists references for other topics specific to due process.
Topic
Related References
Active service pay
Excessive payment or administrative error
Apportionments and garnishments
CUE or severance of SC
Contemporaneous Notice
Situations warranting a contemporaneous notice in lieu of a notice of proposed adverse action, see M21-1, Part X, Subpart ii, 3.C.1.
Dependency
Hospitalization
Incarceration
Incompetency
Matching program reductions
Pension
Proposed rating decisions
General information on proposed rating decisions, see M21-1, Part X, Subpart ii, 3.D.
Reduction due to improvement
 Proposed reductions or discontinuances under 38 CFR 3.105(e), see M21-1, Part X, Subpart ii, 4.A.