Many veterans have incurred service-related disabilities while serving their country.  While wounds, injuries, and illnesses incurred while in uniform can be severe enough to lead to the servicemember’s discharge, in many instances, the toll of a service-connected condition may not manifest until years later and may either be the reason for a long-term disability insurance claim or a factor in such a claim.   Assuming the veteran has applied to the Veterans Administration (VA) to receive Veterans disability benefits and received a disability rating, that determination may prove to be valuable evidence that can be used to bolster a long-term disability insurance claim.  But it can also potentially lead to confusion. Unlike Social Security disability, which does not provide for an award of a partial or percentage disability, the VA rates disabilities using percentages; and the veteran’s ultimate rating from the VA may be comprised of a composite rating for a combination of disparate impairments.

It can be very confusing, though; and even courts deciding long-term disability benefit claims do not always thoroughly understand the VA system and can make erroneous findings as a result.  In Scanlon v. Life Insurance Company of North America, which was issued in 2023 by the U.S. Court of Appeals for the Seventh Circuit, although the claimant was successful in overturning a district court’s finding that went against him, the court refused to give significant weight to a VA award. Because part of the veteran’s disability rating included a component for a sleep disorder that was rated as a behavioral health condition, because the long-term disability claim did not assert a psychiatric disability, the court downplayed its significance, finding:

Scanlon criticizes other aspects of the district court’s decision, but his criticisms are unavailing. For example, he argues that the district court erred when it afforded little weight to the VA’s determination that Scanlon is totally and permanently disabled because, in the court’s estimation, the VA’s conclusion was largely grounded in psychiatric issues. But the VA’s disability determination clearly places emphasis on psychiatric conditions, even if it also considers Scanlon’s chronic sleep and pain issues as a contributing factor. And Scanlon did not base his claim with LINA on his psychiatric medical conditions. There was no error in the district court’s approach to the VA evidence.

Had the court better understood the VA rating system, though, it should reached the opposite conclusion and given Scanlon’s VA rating significant weight due to how his non-psychiatric co-morbid conditions were factored into the Veterans Administrations’ ultimate rating.

Understanding the Nuances of the VA Disability Rating System

What is especially confusing about the VA’s rating system is that when the VA determines a percentage impairment for one condition and a percentage impairment for another, it does not simply add up the percentages. Instead, the VA uses percentages of percentages, meaning that if the VA were to find a veteran 40% disabled for a bad back, that means the veteran is deemed 60% healthy, and ratings for other conditions come out of the remainder. Thus, a 30% rating for a foot injury would not be added to the rating for the veteran’s bad back.  Instead, 30% of the remaining 60% would be 18%, although the number is rounded up or down to the nearest decile. Thus, the total rating would be 60% rather than 70% if the percentages were simply added together. Under that system, it is very hard for a veteran to receive a 100% disability rating since, under the example above, if there were two other conditions that each produced a 30% rating, instead of 100%, the veteran would receive an 80% overall rating.

Calculating Combined Disability Ratings: The VA’s Unique Method

In order to determine disability, the VA uses a Schedule for Rating Disabilities found in the Code of Federal Regulations and assigns disabilities based on diagnosis codes.  Not every condition fits neatly into a category, though.  For example, insomnia is rated under the schedule of ratings for mental disorders regardless of cause.  Moreover, if a veteran has both a psychiatric condition such as depression and insomnia, they will receive only one rating for both conditions.  To confuse the issue even further, the VA schedule does not encompass every condition; and conditions that are unlisted, are given an analogous rating to a condition that is listed based on anatomic location and symptoms. Hence, the VA’s assignment of an analogous rating could potentially not capture the veteran’s specific impairment, which may weaken the value of a VA rating in the context of a long-term disability insurance claim.

The veteran is also rated for Total Disability Based on Individual Unemployment (TDIU). If the veteran has a single service-connected disability rating at 60% or above or a combined rating over 70% (so long as any single rating is at 40% or above) and the veteran is unable to perform substantially gainful employment, the VA will issue a TDIU determination.  The veteran may still be able to perform some work, though even with a TDIU finding since the regulation states that “[m]arginal employment shall not be considered substantially gainful employment.”

How to Use the VA Rating System in a Long-Term Disability Insurance Claim

A disability rating from the Veterans Administration provides a veteran seeking long-term disability insurance benefits additional corroboration of the severity of their medical conditions from an objective, independent source.  If the veteran has also received a TDIU rating, while such a finding is not binding on a disability insurer and would not necessarily compel a finding of disabled by the disability insurance company, it is nonetheless relevant and would provide persuasive evidence supporting a claim in the same manner as a favorable Social Security determination.

Clarifying Mental Health Ratings and Insurance Misconceptions

So long as disability insurance policies limit benefits for behavioral health conditions, though, as the Scanlon case discussed above indicates, there is a danger of both an insurance company and a court misunderstanding the VA rating and its significance, especially if the veteran has received a rating by analogy.  Moreover, since the Veterans Administration assesses sleep disorders under its schedule of ratings for mental disorders, a veteran who receives a 70% impairment rating for insomnia and a 10% rating for major depressive disorder, will be deemed 70% disabled due to a mental disorder, which can be problematic.  Thus, it is important to point out to a disability insurer how the rating was determined.  However, if the veteran receives a TDIU rating of 60% or above for a single medical condition or 70% or above based on a combination of physical impairments, the presence of a co-morbid psychiatric condition would be immaterial.

Review Your LTD Insurance Benefits Case With Our Attorneys:
Leverage Your VA Rating for Stronger Claims

Seeking Legal Assistance for a Long-Term Disability Claim Following a VA Disability Award

Veterans who have service-connected disabilities should pursue claiming benefits from the Veterans Administration. America owes a huge debt of gratitude to its veterans for their service and devotion, and no veteran should forgo their right to seek recompense for any injury or illness incurred while in service that causes problems later in their lives.  A veteran who is also seeking long-term disability benefits should likewise seek out legal assistance from a disability insurance attorney who has the experience and expertise to utilize the VA findings to enhance their likelihood of success in a long-term disability benefit claim.  Although the lawyers at DeBofsky Law do not practice in the field of veterans benefits, we can often make appropriate referrals to attorneys who may assist our clients in pursuing such claims; and we stand ready to help our veterans receive the disability insurance benefits they deserve.

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