Diseases Associated With Exposure to Certain Herbicide Agents (Hairy Cell Leukemia and Other Chronic B Cell Leukemias, Parkinson's Disease and Ischemic Heart Disease), 14391-14401 [2010-6549]

Agencies

• DEPARTMENT OF VETERANS AFFAIRS

[Federal Register Volume 75, Number 57 (Thursday, March 25, 2010)]
[Proposed Rules]
[Pages 14391-14401]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-6549]


=======================================================================
-----------------------------------------------------------------------

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: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Department of Veterans Affairs (VA) is proposing to amend 
its 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 proposed amendment is 
necessary to implement a decision of the Secretary of Veterans Affairs 
that there is a positive association between exposure to herbicides and 
the subsequent development of hairy cell leukemia and other chronic B-
cell leukemias, Parkinson's disease, and ischemic heart disease. The 
intended effect of this proposed amendment is to establish presumptive 
service connection for these diseases based on herbicide exposure.

DATES: Comments must be received by VA on or before April 26, 2010.

ADDRESSES: Written comments may be submitted through https://www.Regulations.gov; by mail or hand-delivery to Director, Regulations 
Management (02REG), Department of Veterans Affairs, 810 Vermont Ave., 
NW., Room 1068, Washington, DC 20420; or by fax to (202) 273-9026. 
(This is not a toll free number.) Comments should indicate that they 
are submitted in response to ``RIN 2900-
AN54[m x dash]Diseases Associated With Exposure to Certain 
Herbicide Agents (Hairy Cell Leukemia and other Chronic B Cell 
Leukemias, Parkinson's Disease and Ischemic Heart Disease).'' Copies of 
comments received will be available for public inspection in the Office 
of Regulation Policy and Management, Room 1063B, between the hours of 8 
a.m. and 4:30 p.m., Monday through Friday (except holidays). Please 
call (202) 461-4902 for an appointment. (This is not a toll free 
number.) In addition, during the comment period, comments may be viewed 
online through the Federal Docket Management System at https://www.Regulations.gov.

FOR FURTHER INFORMATION CONTACT: Gerald Johnson, Regulations Staff 
(211D), Compensation and Pension Service, Veterans Benefits 
Administration, Department of Veterans Affairs, 810 Vermont Avenue, 
NW., Washington, DC 20420, (202) 461-9727 (This is not a toll-free 
number.)

SUPPLEMENTARY INFORMATION: Section 3 of the Agent Orange Act of 1991, 
Public Law 102-4, 105 Stat. 11, directed the Secretary to seek to enter 
into an agreement with NAS to review and summarize the scientific 
evidence concerning the association between exposure to herbicides used 
in support of military operations in the Republic of Vietnam during the 
Vietnam era and each disease suspected to be associated with such 
exposure. Congress mandated that NAS determine, to the extent possible: 
(1) Whether there is a statistical association between the suspect 
diseases and herbicide exposure, taking into account the strength of 
the scientific evidence and the appropriateness of the methods used to 
detect the association; (2) the increased risk of disease among 
individuals exposed to herbicides during service in the Republic of 
Vietnam during the Vietnam era; and (3) whether there is a plausible 
biological mechanism or other evidence of a causal relationship between 
herbicide exposure and the suspect disease. Section 3 of Public Law 
102-4 also required that NAS submit reports on its activities every 2 
years (as measured from the date of the first report) for a 10-year 
period. The Veterans Education and Benefits Expansion Act of 2001 
(Benefits Expansion Act), Public Law 107-103, Sec.  201(d), extended 
through October 1, 2014, the period for submission of NAS reports. 
Section 1116(b) of title 38, United States Code, as enacted by the 
Agent Orange Act of 1991, Public Law 102-4, provides that whenever the 
Secretary determines, based on sound medical and scientific evidence, 
that a positive association (i.e., the credible evidence for the 
association is equal to or outweighs the credible evidence against the 
association) exists between exposure of humans to an herbicide agent 
(i.e., a chemical in an herbicide used in support of the United States 
and allied military operations in the Republic of Vietnam during the 
Vietnam era) and a disease, the Secretary will publish regulations 
establishing presumptive service connection for that disease.
    Section 2 of the Agent Orange Act of 1991, Public Law 102-4, 
provided that the congressional mandate that the Secretary establish 
presumptions of service connection under 38 U.S.C. 1116(b) would expire 
10 years after the first day of the fiscal year in which the NAS 
transmitted its first report to VA. The first NAS report was 
transmitted to VA in July 1993, during the fiscal year that began on 
October 1, 1992. Accordingly, under the Agent Orange Act of 1991, 
Public Law 102-4, the mandate for VA to issue regulatory presumptions 
as specified in section 1116(b) expired on September 30, 2002. In 
December 2001, however, Congress enacted the Benefits Expansion Act, 
section 201(d) of which extended the mandate under section 1116(b) 
through September 30, 2015. Pursuant to the Benefits Expansion Act, 
Public Law 107-103, VA must issue new regulations between October 1, 
2002, and September 30, 2015, establishing additional presumptions of 
service connection for diseases that the Secretary finds to be 
associated with exposure to an herbicide agent.
    The Secretary of Veterans Affairs has determined that the available 
scientific and medical evidence discussed in the ``Veterans and Agent 
Orange Update 2008,'' authored by the Committee to Review the Health 
Effects in Vietnam Veterans of Exposure to Herbicides, Institute of 
Medicine (IOM) of the NAS, and other information available to the 
Secretary, are sufficient to establish that

[[Page 14392]]

a positive association exists between exposure of humans to a herbicide 
agent and the occurrence in humans of Hairy Cell Leukemia (HCL) and 
other Chronic B-Cell Leukemias, Parkinson's disease (PD) and Ischemic 
Heart Disease (IHD). Consistent with that determination and as required 
by 38 U.S.C. 1116(b) and the Agent Orange Act of 1991, we propose to 
amend VA's adjudication regulations (38 CFR part 3) by revising section 
3.309(e) to add these diseases to the diseases subject to presumptive 
service connection on the basis of herbicide exposure.

Hairy Cell Leukemia and Other Chronic B-Cell Leukemias

    In delivering the charge to the IOM Committee, the Secretary 
specifically asked the IOM Committee, whether the occurrence of HCL 
should be regarded as associated with exposure to the chemical 
compounds in the herbicides used by the military in Vietnam. HCL is a 
chronic B-cell lymphoproliferative disorder. Because it is so rare, the 
Committee reported that HCL would never be studied epidemiologically on 
its own, and there are no studies of animals that describe HCL in 
animals exposed to the compounds of interest. The IOM Committee stated 
that HCL has been classified as a rare form of CLL and that both derive 
from B-cell neoplasms. Based on its biology, the Committee saw no 
reason to exclude HCL or any other chronic lymphoproliferative disease 
of B-cell origin from the overarching broader groupings for which 
positive epidemiologic evidence is available. Because HCL is related to 
chronic lymphocytic leukemia (CLL) (a disease that is already included 
on VA's regulatory list of diseases that qualify for presumptive 
service connection based upon herbicide exposure), the Committee 
explicitly included HCL and other chronic B-cell leukemias in its 
discussions and conclusions regarding CLL. The Committee explicitly re-
categorized HCL and other chronic B-cell leukemias along with CLL in 
Update 2008, which the Committee lists as a category clarification 
since Update 2006. Based on its review of the available scientific and 
medical literature, the Committee concluded that there is sufficient 
evidence of an association between exposure to herbicide agents and 
CLL, including HCL and all other chronic B-cell hematoproliferative 
leukemias.
    The Secretary has determined that the available scientific and 
medical evidence presented in Update 2008 and other information 
available to the Secretary are sufficient to establish a new 
presumption of service connection for HCL and other chronic B-cell 
leukemias in veterans who were exposed to herbicides used in the 
Republic of Vietnam. The Secretary concludes that the credible evidence 
for an association between exposure to an herbicide agent and the 
occurrence of HCL and other chronic B-cell leukemias in humans 
outweighs the credible evidence against such an association. 
Accordingly, the Secretary has determined that a presumption of service 
connection for HCL and other chronic B-cell leukemias is warranted 
pursuant to 38 U.S.C. 1116(b). Because these leukemias are related to 
CLL and the evidence supporting an association is the same for these 
leukemias, we propose to refer to them as a group in VA's regulatory 
list in 38 CFR 3.309(e) of diseases associated with herbicide exposure. 
Specifically, we propose to establish a presumption of service 
connection for ``All chronic B-cell leukemias (including, but not 
limited to, hairy-cell leukemia and chronic lymphocytic leukemia).''

Parkinson's Disease

    In Update 2008, the Committee placed Parkinson's disease (PD) in 
the category ``limited or suggestive evidence of an association.'' This 
was a category change from IOM's prior report, Veterans and Agent 
Orange: Update 2006 (Update 2006). For Update 2008, the Committee 
selectively reevaluated all past epidemiologic studies that 
specifically assessed herbicide exposures and reviewed in detail those 
studies published since Update 2006. The older studies, taken as a 
group, suggest that there is a relationship between pesticide exposure 
and risk of PD, but generally did not contain sufficient exposure data 
to show an association specifically to the herbicides of interest. 
However, several studies published since Update 2006 now suggest a 
specific relationship between exposure to the herbicides of interest 
and PD. Three of the four studies published since Update 2006 showed a 
statistically significant odds ratio for development of PD and exposure 
to herbicides, most notably to 2, 4-D and 2, 4, 5-T and other 
chlorophenoxy herbicides. Accordingly, the recent studies are 
consistent with the body of epidemiologic and toxicologic data 
suggesting a relationship between exposure to pesticides and PD, but 
provide more specific evidence of an association between PD and the 
herbicides used in the Republic of Vietnam. The Committee noted that, 
to date, no studies have been done on Vietnam veterans to determine if 
an increased relative risk of developing PD exists for this cohort, and 
the Committee recommended that such studies be done. Based upon the 
available scientific and medical evidence, the Committee placed PD in 
the category of ``limited or suggestive evidence of an association.''
    The Secretary requested expert opinion from the Parkinson's and 
Associated Diseases Research and Education Clinical Center (PADRECC) 
network, a network of VA medical professionals designed to focus on 
care, research, and education relating to PD. These experts believe 
that there is an increasing body of evidence indicating exposure to 
herbicides increases the risk of developing PD and developing it at an 
earlier age. These experts also identified a September 2008 report by 
Tanner, et al., in Arch Neurol, 2008; 66(9):1106-1113, which found that 
the risk of Parkinsonism was increased by exposure to a variety of 
chemicals, including dioxin-like chemicals of interest in Update 2008. 
The Tanner study was published after Update 2008 was completed but 
provides additional support for an association between herbicide 
exposure and PD.
    The Secretary has determined that the available scientific and 
medical evidence presented in Update 2008 and other information 
available to the Secretary are sufficient to establish a new 
presumption of service connection for PD in veterans exposed to 
herbicides, as the credible evidence for an association between 
exposure to an herbicide agent and the occurrence of PD in humans 
outweighs the credible evidence against such an association.

Ischemic Heart Disease

    The previous Committee responsible for Update 2006 was divided as 
to whether the evidence related to IHD and exposure to the compounds of 
interest was sufficient to advance IHD from the category of 
``inadequate or insufficient evidence to determine whether an 
association exists'' to the category of ``limited or suggestive 
evidence of an association.'' Due to the lack of consensus, the 2006 
Committee left IHD in the ``inadequate or insufficient evidence'' 
category.
    For Update 2008, the Committee revisited the entire body of 
evidence relating herbicide exposure to heart disease risk and placed 
more emphasis on studies that had been rigorously conducted. These 
studies focused specifically on the chemicals of concern, compared 
Vietnam veterans to non-deployed Vietnam-era veterans, and had 
individual and reliable measures of exposure that permitted the 
evaluation of dose-response, to promote the

[[Page 14393]]

interpretation of epidemiologic data. The Committee identified nine 
studies (including two new studies) that were deemed most informative. 
Of these nine studies, five showed strong statistically significant 
associations between herbicide exposure and ischemic heart disease. The 
studies considered by the Committee also included data from Agent 
Orange sprayers, occupationally exposed populations, and 
environmentally exposed populations that were either prevalence surveys 
or mortality follow-up studies. In situations where several alternative 
analyses were presented, the results with the greatest specificity in 
the dose-response relationship were given more weight.
    The Committee stated that evidence of a dose-response relationship 
is especially helpful in interpretation of the epidemiological data, 
and the Committee was impressed by the fact that those studies with the 
best dose information all showed evidence for risk elevations in the 
highest exposure categories. The Committee noted that some of the study 
findings could be limited by the effect of selection bias or possible 
confounding factors. However, the Committee noted that one of the new 
studies showed an association that persisted after statistical 
adjustments for a large number of potential confounding risk factors, 
which is not generally available in studies of other dioxin exposed 
populations. The Committee also indicated that the major potential 
confounders were likely inadequate to explain away the high relative 
risks and dose-response relationships seen in the data for IHD. 
Further, the Committee noted that toxicologic data supports the 
biologic plausibility of an association between exposure to the 
compounds of interest and IHD.
    After considering the relative strengths and weaknesses of the 
evidence, and emphasizing in particular the numerous studies showing a 
strong dose-response relationship and good toxicology data regarding 
IHD, the Committee concluded that there was adequate information to 
advance IHD from the ``inadequate or insufficient evidence'' category 
to the ``limited or suggestive evidence'' category.
    The Secretary has determined that the available scientific and 
medical evidence presented in Update 2008 and other information 
available to the Secretary are sufficient to establish a new 
presumption of service connection for IHD in veterans exposed to 
herbicides. After considering all of the evidence, the Secretary has 
concluded that the credible evidence for an association between 
exposure to an herbicide agent and the occurrence of IHD in humans 
outweighs the credible evidence against such an association. 
Accordingly, the Secretary has determined that a presumption of service 
connection for IHD is warranted pursuant to 38 U.S.C. 1116(b).
    According to Harrison's Principles of Internal Medicine (Harrison's 
Online, Chapter 237, Ischemic Heart Disease, 2008), IHD is a condition 
in which there 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. Therefore, for purposes of 
this regulation, the term ``IHD'' includes, but is 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. Since the term refers only to heart disease, it 
does not include hypertension or peripheral manifestations of 
arteriosclerosis such as peripheral vascular disease or stroke.

Impact of the Nehmer Class Action Litigation

    Nehmer v. U.S. Department of Veterans Affairs, Civ. Action No. 86-
6160 (N.D. Cal.) (TEH) (Nehmer) is a long-standing class action 
(originated in 1986) on behalf of all veterans and survivors of 
veterans eligible to claim VA disability compensation benefits based on 
exposure to herbicides in the Republic of Vietnam during the Vietnam 
era. In 1989, the U.S. District Court for the Northern District of 
California invalidated a 1985 VA regulation governing claims based on 
herbicide exposure. In 1991, the parties entered into a stipulation to 
provide for re-adjudication of class members' claims and payment of 
retroactive benefits, if warranted. Since that time, the district court 
has issued a series of orders interpreting the 1991 stipulation to 
impose ongoing duties on VA. Consistent with those orders, whenever VA 
identifies a new disease that is associated with herbicide exposure and 
adds a new disease to its regulatory list, it must identify and 
readjudicate any previously-filed claims by the class members involving 
that disease and, if warranted under VA regulations governing Nehmer 
awards, must pay benefits retroactive to the date the prior claim was 
received by VA to the veteran or, if the veteran is deceased, to the 
veteran's surviving spouse, child, or parents. In July 2007, the U.S. 
Court of Appeals for the Ninth Circuit rejected VA's position that its 
duties under the Nehmer stipulation have ended and held that VA's 
duties extend through at least 2015. Nehmer v. U.S. Dept. of Veterans 
Affairs, 494 F.3d 846, 862-63 (9th Cir. 2007). Accordingly, the 
requirements of the Nehmer court orders for review of previously denied 
claims and for retroactive payment will apply to the proposed new 
presumptions, to the extent consistent with the court orders and 38 CFR 
3.816, the VA regulation implementing those orders. The impact of these 
procedures is discussed in the Regulatory Impact Analysis below.

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 regulatory action as a ``significant regulatory 
action,'' requiring review by the Office of Management and Budget 
(OMB), unless OMB waives such review, if it is a 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. A 
Regulatory Impact Analysis (RIA) must be prepared for major rules with 
economically significant effects ($100 million or more in any 1 year).

[[Page 14394]]

Comment Period

    Although under the rulemaking guidelines in Executive Order 12866 
VA ordinarily provides a 60 day comment period, the Secretary has 
determined that there is good cause to limit the public comment period 
on this proposed rule to 30 days. This proposed rule is necessary to 
implement section 1116(c) of title 38 as enacted by the Agent Orange 
Act of 1991, Public Law 102-4, which sets forth time limits for 
rulemaking when the Secretary determines that a new presumption of 
service connection for veterans exposed to herbicides used in the 
Republic of Vietnam is warranted. Those time limits include the 
requirement for issuance of final regulations ``[n]ot later than 90 
days after the date on which the Secretary issues proposed 
regulations.'' 38 U.S.C. 1116(c)(2). The statute thus requires VA to 
act expeditiously to issue final rules, which will allow VA to begin 
providing benefits to veterans and their families based on this rule. A 
30-day notice and comment period is necessary both to facilitate 
expeditious issuance of final regulations and to promote rapid action 
on affected benefits claims.

Regulatory Impact Analysis

    VA followed OMB Circular A-4 to the extent feasible in this 
regulatory analysis. The circular first calls for a discussion of the 
Statement of Need for the regulation. As discussed in the preamble, 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.
    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.
    Risks: The rule implements statutorily required provisions to 
expand veteran benefits. No risk to the public exists.
    Anticipated Costs and Benefits: We estimate 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 
include 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.

Veterans Benefits Administration (VBA) Costs

    We estimate 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 ($000s)                     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 rolls.          415,927        2,188,784        4,864,755
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 represent a level of effort of current FTE that will be used to work claims received in
  FY2010. New hiring will begin in 2011.

    Of the total VBA benefits costs identified for FY 2010, $12.3 
billion accounts 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.

                                   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.................................          692,204          166,300        1,189,143        2,796,852
Hairy Cell/B cell Leukemia..................        1,716,057           24,372          726,306        1,720,028
                                             -------------------------------------------------------------------
    Subtotal................................       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.


[[Page 14395]]

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) will be 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
------------------------------------------------------------------------

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).

[[Page 14396]]



       Survivor Caseload and Obligations for Retroactive Benefits
------------------------------------------------------------------------
                                                             Retroactive
             Presumptive conditions                Caseload    payments
                                                               ($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
------------------------------------------------------------------------
                                        Veteran    Survivor  Obligations
                  FY                    caseload   caseload     ($000s)
------------------------------------------------------------------------
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 expect 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 anticipate that 725,547 Vietnam Veterans will 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 will have a presumptive 
condition in 2010. Of this total, we anticipate 27,909 cases will 
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 number of Veteran reopened claims decreases 
to almost one thousand cases and continue 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     ($000s)
------------------------------------------------------------------------
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 anticipate accessions for both Veterans and survivors beginning 
in 2010 and continuing over ten years. Total costs are 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.

[[Page 14397]]

    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 
anticipate 20,961 eligible spouses at the end of 2010. We assume that 
half of this population will 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 are 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.

      Veteran and Survivor Accessions Cumulative Caseload and Total
                               Obligations
------------------------------------------------------------------------
                                        Veteran    Survivor     Total
                  FY                    caseload   caseload  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      Reopened                       Claims not
               FY                     claims          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

[[Page 14398]]

 
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 are 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 will 
be 165.
    3. Priority will be given to those Agent Orange claims that fall in 
the Nehmer class action.
    In FY2010, we will leverage the existing C&P workforce to process 
as many of these new claims as possible, once the regulation is 
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 are 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 require $30.2 million over five years and $32.8 million over ten 
years.

Veterans Health Administration (VHA) Costs

    We estimate 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).

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
                                    Retroactive    representing      Reopened                          Total
               FY                     claims          new SC          claims        Accessions      disability
                                                    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

[[Page 14399]]

 
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 enrollees   New enrollees
                   FY                        per year       cumulative
------------------------------------------------------------------------
2010....................................           8,680           8,680
2011....................................           1,018           9,698
2012....................................           1,001          10,699
2013....................................             982          11,681
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 copay required 
status to a copay 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 copay required status 
and would move to copay 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       Annual cost per
                           FY                               claim volume    disability 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
                                                        --------------------------------------------------------

[[Page 14400]]

 
    Totals.............................................            270,854  .................        209,726,410
----------------------------------------------------------------------------------------------------------------
* Source: Allocation Resource Center.

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