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M21-1, Part III, Subpart iv, Chapter 8, Section A – Evaluating Competency

Overview

In This Section
This section contains the following topics:

1.  Guidelines for Evaluating Competency

Introduction
This topic contains information on the guidelines for evaluating competency, including

Change Date
February 19, 2019

III.iv.8.A.1.a.  Jurisdiction for Competency Determinations
Jurisdiction on competency determinations for Department of Veterans Affairs (VA) purposes is dependent on the stage of the process the decision is in.
Use the table below to determine jurisdiction of the competency
determination.
If …
Then …
  • an initial competency determination is needed, and
  • no court decree of incompetency or court appointment of a fiduciary by reason of incompetency has been received
the rating activity at the station of origination (SOO) has sole authority to make the original competency determination.
  • an initial competency determination is needed, and
  • either a court decree of incompetency or court appointment of a fiduciary by reason of incompetency has been received
a proposal of incompetency/due process is not required per 38 CFR 3.353(e). The SOO completes a final competency determination for a Veteran. The case is then referred directly to the fiduciary hub for appointment of a fiduciary.
 
Reference:  For more information on referral of court documents to the fiduciary hub, see M21-1, Part III, Subpart iv, 8.A.5.
  • a finding of incompetency has been proposed, and
  • no additional medical evidence or request for a hearing has been received
the Fiduciary Service Representative (FSR) has the authority to finalize the competency determination.
 
Important:  The FSR does not have the authority to overturn the proposed competency decision.
  • a finding of incompetency has been proposed, and
  • either additional medical or non-medical evidence has been received and is not a duplicate of evidence previously considered
the rating activity at the regional office (RO) has the authority to make the final competency determination.
Note:  Routine National Work Queue (NWQ) routing rules will apply unless a specific routing rule for a special status, such as homelessness or a special mission, applies.
  • a finding of incompetency has been proposed, and
  • a request for a hearing has been received
the rating activity at the RO associated with the beneficiary’s home address has the authority to conduct the hearing and make the final competency determination.
a legacy appeal is received regarding a final competency determination
the RO associated with the beneficiary’s home address has jurisdiction over the legacy appeal.
a supplemental claim is received after a final competency determination
the rating activity at the RO has the authority to make the competency determination.
Note:  Routine NWQ routing rules will apply unless a specific routing rule for a special status, such as homelessness or a special mission, applies.
a higher-level review (HLR) request is received regarding a final competency determination
a decision review operations center conducts the decision review.
a legacy appeal, supplemental claim, or HLR request is received regarding the appointment of a fiduciary
the fiduciary hub has jurisdiction.
 
Note:  Proposed and final competency determinations are not claims for benefits, although the competency issue may arise in association with a claim for benefits.  A competency request, accompanied by medical or judicial evidence, does not require a prescribed form submission.
References:  For more information on

III.iv.8.A.1.b.  Effect of Judicial Findings on Rating Activity Decisions Related to Competency
Judicial findings of a court with respect to competency of a Veteran are not binding on the rating activity.
However, if a Veteran is declared by a court to be incompetent, develop all necessary evidence for a rating determination.

III.iv.8.A.1.c.  Presuming Competency
In the absence of clear and convincing evidence to the contrary, presume that a person is competent.
 
References:  For more information on

III.iv.8.A.1.d.  Making a Finding of Incompetency
A finding of incompetency cannot be made without a definite expression by a responsible medical authority unless the medical evidence of record is
  • clear
  • convincing, and
  • leaves no doubt as to the beneficiary’s incompetency.
Note:  If competency of a VA beneficiary is raised without relevant medical evidence or statement from a responsible medical authority, development must be undertaken for medical evidence before the case can be forwarded to the rating activity.
References:  For more information on

III.iv.8.A.1.e.  Considering the VSCM’s Opinion Regarding Competency
After development of information with regard to social, economic, and industrial adjustment, the Veterans Service Center Manager (VSCM) may be of the opinion that a beneficiary rated, or proposed to be rated, incompetent is actually capable of handling, without limitation, the funds payable.  In this case, he/she will refer the evidence and finding to the rating activity.
The rating activity should consider the VSCM’s finding as new evidence and, after any necessary additional development, prepare a rating based on the evidence of record.
 
Reference:  For more information on evaluating evidence of incompetency, seeM21-1, Part III, Subpart iv, 8.A.2.

III.iv.8.A.1.f.  Handling Requests for Incompetency Determinations Without Medical or Judicial Evidence
Refer to the table below for proper procedures for handling requests for a finding of incompetency from a Veteran or beneficiary or from a third-party source.
If the request or evidence showing a change in competency status is …
Then follow the steps in the table below to handle the request for a determination concerning competency status …
a request, from a Veteran or other beneficiary to be rated incompetent or have a fiduciary appointed without associated medical or court evidence
Step
Action
1
If a rating EP is
  • not currently pending, establish the appropriate compensation or pension rating EP, or
  • currently pending, control the competency issue under the rating EP.
2
Establish competency as a contention in the Veterans Benefits Management System (VBMS).
3
Complete any necessary development for the competency or other pending issues.
  • Review VA treatment records and associate all relevant treatment records with the Veteran’s claims folder.
  • In developing the claimed issues, assess whether the request for a competency determination may raise other issues, such as entitlement to an increased evaluation for a service-connected mental disability, as within the scope of the request for the competency determination.
    • This is a determination dependent on the facts of the case.
    • Do not routinely consider a request for a competency determination to necessarily be a claim for a related mental disability.
  • Request a VA examination to assess competency status when warranted based on review of the Veteran’s or beneficiary’s statement and/or the other evidence of record.
Reference:  For more information on examinations for non-Veteran claimants and beneficiaries, seeM21-1, Part III, Subpart iv, 3.F.2.a.
4
a request from a third party to have a Veteran or other beneficiary rated incompetent without associated medical or court evidence
Step
Action
1
Establish EP 400.
2
Review VA treatment records for any evidence of incompetency.
3
  • If VA treatment records do include medical evidence showing incompetency,
    • associate the records with the Veteran’s claims folder
    • change EP 400 to EP 020 or 120, as appropriate, and
    • treat the request as receipt of medical records.  Follow the procedures at M21-1, Part III, Subpart iv, 8.A.3.a.
  • If VA treatment records do not include medical evidence pertaining to competency status, go to Step 4.
4
  • If the address for the third party individual who submitted the request is available, send a letter acknowledging receipt of the request using the Competency Request—Third Party Reply letter included under the VSC tab of the Letter Creator tool, as applicable.  The letter to the third-party requestor must not include any personally identifiable information for the Veteran or beneficiary.  Proceed to Step 5.
  • If the address for the third-party individual who submitted the request is not available, go to Step 5.
5
Clear EP 400.
Note:  When unusual circumstances are present, such as an extraordinary situation presented by the third party but without associated medical or legal evidence, the request may be referred to Compensation Service for an advisory opinion in accordance with M21-1, Part III, Subpart vi, 1.Aand B before EP 400 is cleared.
Reference:  For more information on field examinations and other evidence received pertaining to restoration of competency status, see M21-1, Part III, Subpart iv, 8.A.4.

2.  Considering Competency While Evaluating Evidence

Introduction
This topic contains information about considering competency while evaluating the evidence, including

Change Date
February 19, 2019

III.iv.8.A.2.a.  Considering Whether to Address
Competency of a Veteran
If the claimant is a Veteran, address competency in a decision whenever
  • there is
    • entitlement to benefits, or
    • the potential for the competency decision to impact the outcome of a determination about insurance entitlement under 38 U.S.C. 1922, and
  • qualifying evidence raises a question as to the mental capacity to contract or to manage his/her own affairs, including disbursement of funds without limitation.

Address competency as a separate issue in the rating decision when

  • incompetency is proposed, or
  • a previous rating of incompetency is being reconsidered.
Use the table below for guidance on what action, if any, to take within a rating decision on the matter of competency.
If the evidence …
Then …
suggests but does not clearly and convincingly show that the person is incapable of managing the VA benefit payment without limitation
  • do not develop
  • do not propose incompetency, and
  • state in the narrative of the rating decision issue that there was no clear and convincing evidence of incompetency.
clearly and convincingly shows that the person is incapable of managing the VA benefit payment without limitation
propose incompetency.
 
Important:
  • Competency must be addressed in cases where a mental condition is initially evaluated as totally disabling or when the total evaluation is continued in a rating decision. This includes
    • when individual employability is awarded or continued on the basis of a single mental health disability, and
    • when assigning or continuing a temporary total evaluation for a mental disorder under 38 CFR 4.29.
  • The mere existence of a mental condition with a total evaluation does not automatically correlate to a Veteran’s inability to manage his/her benefits, but many of the symptoms warranting a total disability evaluation could render the Veteran unable to manage benefits.
  • Carefully consider the facts in these cases to determine whether the regulatory standard warrants a proposal of incompetency. When the evidence shows the Veteran is competent, address the competency determination as part of the narrative within the mental condition issue.
  • The following text has been added to the glossary as VA_COMPETENTwithin VBMS- Rating for selection in these cases:

There is no evidence of record that shows that you are unable to manage your financial affairs.   (38 CFR 3.353)

 References:  For more information on

III.iv.8.A.2.b.  Considering the Competency of a Child Permanently Incapable of Self-Support
If the claimant is a child over the age of 18 and permanently incapable of self-support, the rating activity must resolve the issue of competency for the child because entitlement depends upon permanent incapacity for self-support due to physical or mental disability.
If incapacity is due to mental disability
  • consider competency a factor in determining whether the child is permanently incapable of self-support
  • determine competency under the same criteria applicable to Veterans, and
  • record the determination in a rating.
Note:  Since the incompetency procedures referred to in M21-1, Part III, Subpart v, 9.B.3 are for payment purposes, do not apply those procedures except in cases where the child would receive direct payment in his/her own right.
 
References:  For more information on

III.iv.8.A.2.c.  Considering the Competency of Other Beneficiaries
If there is evidence of incompetency and the claimant is another beneficiary, such as a surviving spouse, parent, or VA insurance beneficiary
  • consider competency a rating issue under 38 CFR 3.353 except when there has been a judicial determination of incompetency, and
  • propose a rating on the issue or undertake any required development.
References:  For more information on

3.  Process for Making Competency Determinations

Introduction
This topic contains information about the process for making competency determinations, including

Change Date
May 24, 2018

III.iv.8.A.3.a.  Making Initial Competency Determinations Based on Medical Evidence
The RO is responsible for all initial competency determinations based on medical evidence.  The table below describes the actions involved in making initial competency determinations based on receipt of medical evidence.
Step
Responsible Employee
Action
1
rating activity personnel
  • Prepares a rating decision proposing a finding of incompetency after receiving clear and convincing evidence that a payee is incapable of managing his/her own affairs, including disbursement of funds without limitation, and
  • ensures that the facts contained in the proposed rating decision are complete so that they do not need to be repeated in the final rating decision.
Note:  If there is a finding of incompetency by a court, a rating is not necessary for any payee besides a Veteran.  For all payees, however, a court adjudication waives the due process requirement.
2
authorization activity personnel
  • Provides the payee notice of
    • the proposed incompetency rating
    • the opportunity for a hearing, and
    • any concurrently rendered decisions
  • provides the payee oral notification of the Brady Act restrictions
  • closes any tracked items associated with the proposed incompetency rating
  • clears any pending EP that would normally be taken at this point, including release of monthly benefits
  • notifies power of attorney, if applicable, per M21-1, Part I, 3.B.3
  • accomplishes automated (or, in the event of systematic error, manual) establishment of EP 590, Due Process for Incompetency, and
  • ensures associated documentation is available in the claims folder.
Note:  The SOO transfers the EP 590 to the fiduciary hub of jurisdiction.
 
References:  For more information on

III.iv.8.A.3.b.  Jurisdiction of a Final Competency Determination
Use the table below to determine jurisdiction of the final competency determination.
If …
Then the …
no evidence is received during the due process period
FSR at the fiduciary hub has jurisdiction to finalize the previously-proposed competency determination.
 
Important:  The FSR does not have authority to change the previously-proposed competency decision.
a hearing has been requested regarding the competency determination

rating activity at the RO associated with the beneficiary’s home address

  • conducts any hearing requested in connection with the competency determination, and
  • has jurisdiction of the final determination.

Reference:  For more information on processing a beneficiary’s submission of additional evidence or request for a hearing, see M21-1, Part III, Subpart v, 9.B.3.h.
additional medical or non-medical evidence has been received and is not a duplicate of evidence previously considered
rating activity at the RO has the authority to make the final competency determination.
Note:  Routine NWQ routing rules will apply unless a specific routing rule for a special status, such as homelessness or a special mission, applies.
Reference:  For more information on processing a beneficiary’s submission of additional evidence or request for a hearing, see M21-1, Part III, Subpart v, 9.B.3.h.

4.  Changing Competency Status

 

Introduction
This topic contains information about changing competency status, including

Change Date
May 24, 2018

III.iv.8.A.4.a.  Proposing Incompetency
Issue a rating proposing a change in competency status if the evidence of record will result in a change in competency status from competent to incompetent.
This proposal may be included in a rating addressing other issues, such as evaluation of a mental disorder.
 
Reference:  For more information on procedures to follow upon receipt of evidence of incompetency, see M21-1, Part III, Subpart iv, 8.A.1.

III.iv.8.A.4.b.  Determining Restored Competency
The determination with respect to restoration of competency rests solely with the rating activity and not with a medical official.  38 CFR 3.353(c) mandates a presumption in favor of competency when reasonable doubt arises regarding a beneficiary’s mental capacity to manage his or her own affairs.  Competency may be restored based upon credible medical or other evidence.
In any case in which the beneficiary has previously been rated incompetent, take necessary development and rating action to determine whether competency has been regained if so indicated in a
  • hospital summary
  • report of release to or discharge from non-bed care
  • a report of field examination, or
  • report of other material change in condition.
Reference:  For more information on the authority of the rating activity in determinations regarding competency, see Sims v. Nicholson, 19 Vet.App. 453 (2006).

III.iv.8.A.4.c.  Limitations After Competency Is Restored
Restored competency does not in and of itself
  • warrant a reduction in the evaluation of a Veteran’s disability, or
  • establish that a parent or surviving spouse is no longer entitled to aid and attendance.

III.iv.8.A.4.d.  Evidence Required to Restore Competency
Any evidence showing the beneficiary may be capable of handling funds should be referred to the rating activity.  The rating activity will consider this evidence, along with all other evidence of record, to determine whether competency should be restored.
Do not routinely request an examination of the beneficiary when evidence indicates that competency has been regained.  Under 38 CFR 3.353(b)(3), a beneficiary is not required to undergo a psychiatric examination and/or field examination before his/her competency may be restored.  However, a current psychiatric examination and/or field examination may be requested if needed to properly evaluate the beneficiary’s mental capacity to handle his/her own funds.
Note:  When recommendations from a field examiner suggest restoration of competency is warranted, and evidence is otherwise consistent with or does not conflict with the recommendation, no additional evidence is required to restore competency.

References:  For more information on

5.  Evaluating Competency in Special Circumstances

Introduction
This topic contains information about evaluating competency in special circumstances, including

Change Date
May 24, 2018

III.iv.8.A.5.a.  Decree by a Court as Notice and Hearing
A payee may be considered to have had notice and hearing under the laws of the State so that additional notice and hearing are not required when
  • the payee has been found by a court of jurisdiction to be incompetent, or
  • a court having jurisdiction has appointed a guardian by reason of incompetency for a payee.

III.iv.8.A.5.b.  Determining When a Competency Rating Is Needed After a Decree by a Court
Use the table below to decide how to proceed with a competency rating of payees who have been found incompetent by a court decree.
If determining the competency of …
Then …
non-Veteran beneficiaries such as a
  • parent
  • surviving spouse, or
  • child permanently incapable of self-support
a rating (proposed or final) is not required except for children permanently incapable of self-support who are over age 18 and potentially entitled to payment of benefits.
Notes:
  • If a temporary court appointment is received and additional appropriate information is available to propose a rating, but there is no judicial determination of record, then the RO should issue due process proposing a rating of incompetency.
  • If a temporary court appointment is received, but there is not sufficient information to propose a rating, the RO will provide notice to the sender which identifies what additional information would be necessary to do so.
 References:  For more information on
a Veteran
judicial findings of a court with respect to the competency of a Veteran are not binding on the rating activity. In such cases,
  • develop all necessary evidence for a rating activity determination, such as
  • an examination
  • hospital observation, or
  • a field examination
  • give great weight to a
  • court decree ofincompetency, and
  • the inability to managefinancial affairs, and
  • do not make a rating of competency unless there is clear and convincing evidence of that fact.

Notes:

  • Examination, hospital observation, or field examination are not routinely required to evaluate competency where there is a judicial finding already of record.  Conduct additional development only when the evidence of record raises doubt as to the Veteran’s competency status.
  • If the Veteran continues to be rated competent, mention whether the court made a parallel determination or whether the court made a different determination.
 
References:  For more information on

III.iv.8.A.5.c.  Procedures for Payee Found Incompetent by Court Decree or Court Appointment of a Fiduciary by Reason of Incompetency
The table below describes the appropriate action to take for a payee when an RO receives a court decree of incompetency or a court appointment of a fiduciary by reason of incompetency.
Step Responsible Employee Action
1 rating activity personnel at SOO
  • For a Veteran beneficiary, complete a final incompetency rating.
  • For a non-Veteran beneficiary, no rating action is required.

Reference:  For more information on processing court documents pertaining to competency, see

2

 authorization activity personnel

Reference:  For more information on processing a judicial determination of incompetency for a parent, surviving spouse, or adult child incapable of self-support, see  M21-1, Part III, Subpart v, 9.B.2.h.
3
Fiduciary Hub personnel

Follow fiduciary hub procedures to appoint a fiduciary and release retroactive benefits to the fiduciary, if appropriate.

III.iv.8.A.5.d.  Procedures Following Receipt of Court Decree Restoring Competency
Use the table below to determine the appropriate action after receipt of a court decree restoring competency of a Veteran or other payee previously found to be incompetent.
If a court decree …
Then …
declares a Veteran, previously rated incompetent, competent
  • take the necessary development action, and
  • prepare a new rating, prominently entering a notation of the court’s declaration on the rating, if incompetency is confirmed and continued.
applies to a non-Veteran beneficiary for whom a rating of incompetency is not required
request the VSCM to promptly certify the validity of the decree so that direct payments may be made to the beneficiary.
Note:  When processing awards reinstating direct payments to a beneficiary, ensure notice is sent to the fiduciary hub in accordance with M21-1, Part III, Subpart v, 9.C.1.f.

III.iv.8.A.5.e.  Authorization Actions When Reinstating Benefits for a Veteran Previously Rated Incompetent
Use the table below to determine the appropriate actions following receipt of a request to reinstate benefits for a Veteran previously-rated incompetent, whose benefits were terminated due to
If new medical or other evidence …
Then the authorization activity will …
is not received with the request to reinstate benefits
reinstate benefits, as warranted, with continuation of the prior incompetency determination without rating action.
is received with the request to reinstate benefits
refer the newly-received medical evidence to the rating activity for review for competency determination.

III.iv.8.A.5.f.  Rating Actions When Reinstating Benefits for a Veteran Previously Rated Incompetent
Use the table below to determine the appropriate actions after a claims folder is referred to the rating activity for review due to the receipt of new medical or other evidence from a Veteran previously-rated incompetent who is now requesting reinstatement of benefits.
If the medical or other evidence received …
Then …
  • shows the Veteran continues to be incompetent, or
  • does not address the Veteran’s competency
no rating action is necessary.
The rating activity should prepare a deferral, instructing resumption of benefits (as warranted) with the continuation of the prior finding of incompetency.
indicates that the Veteran is now competent
the rating activity should issue a rating decision addressing the issue of competency.
 
Reference:  For more information on determining restored competency, refer to M21-1, Part III, Subpart iv, 8.A.4.b.

III.iv.8.A.5.g.  Referral to Fiduciary Hub After Reinstating Benefits for a Veteran With a Continued Finding of Incompetency
When an incompetent Veteran’s benefits are reinstated with a continued finding of incompetency, as directed in M21-1 Part III, Subpart iv, 8.A.5.d and e, notify the fiduciary hub of jurisdiction via the appropriate fiduciary hub mailbox as shown by selecting the appropriate fiduciary hub location from the list below.
Note:  The fiduciary hub will consider whether the prior failure to submit necessary information for continuance of benefits indicates the need for appointment of a different fiduciary.
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in Chapter 8 Competency, Due Process and Protected Ratings, Part III General Claims Process, Subpart iv General Rating Process
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