--- title: "Part VIII, Subpart iv, Chapter 7, Section B Awards and Offsets for Paired Organs and Extremities Under 38 CFR 3.383" document: "M-21-1" section: "Part VIII, Subpart iv, Chapter 7, Section B" canonical: "https://veteranai.co/va-regulations/m21-1/viii.iv.7.b-awards-and-offsets-for-paired-organs-and-extremities-under" source: "https://www.knowva.ebenefits.va.gov/system/templates/selfservice/va_ssnew/help/customer/locale/en-US/portal/554400000001018/content/554400000177487/M21-1-Part-VIII-Subpart-iv-Chapter-7-Section-B-Awards-and-Offsets-for-Paired-Organs-and-Extremities-Under-38-CFR-3383" updated: "2026-09-07T14:37:41.103910Z" --- September 23, 2019 ### VIII.iv.7.B.1.a. Offsetting Benefits Under 38 U.S.C. 1160 Due to Damage Recovery If in a case of compensation for paired organs or extremities, the loss or loss of use (L/LOU) of the non-service-connected (NSC) organ or extremity results from circumstances that could give rise to legal liability, the Veteran may seek to recover damages by lawsuit or other means. If the Veteran _does_ successfully recover damages, the amount of damages received (for the NSC disability only) **_must_** be offset against the additional benefit payable under [38 U.S.C. 1160](). **Reference:** For more information on compensation for paired organs or extremities, see [M21-1, Part VIII, Subpart iv, 7.A](). ### VIII.iv.7.B.1.b. When the Offset Provisions Apply Offset provisions involving the paired extremities of the hands or feet only have long been in effect, and continue to be in effect, while the offset provisions concerning the remaining paired organs or extremities listed in [M21-1, Part VIII, Subpart iv, 7.A.1.b]() apply **_only_** to cases in which compensation was awarded or increased _after_ October 27, 1986. ### VIII.iv.7.B.1.c. Damage Recoveries Involving NSC Organs or Extremities Benefits received under Social Security or workers’ compensation are **_not_** subject to recoupment, even though the benefits may have been awarded pursuant to a judicial proceeding. All other recoveries related to the NSC organ or extremity **_are_** subject to offset, regardless of whether the payment to the Veteran is characterized as a * tort award * settlement * compromise, or * administrative award or judgment. **Rationale:** The prohibition against duplication of benefits applies whenever the Veteran receives a sum of money or property to extinguish a legal claim arising from injury to the affected NSC organ or extremity. ### VIII.iv.7.B.1.d. Veteran’s Duty to Notify VA of Damages Recovered If the Veteran is receiving, or files a claim for, compensation for L/LOU of a paired organ due to NSC disability under [38 U.S.C. 1160](), the Veteran is required to notify the Department of Veterans Affairs (VA) of any damages recovered, involving the paired organ or extremity, as the result of a * lawsuit * compromise * settlement, or * other recovery. The Veteran should report to VA the total amount of money received. **Notes:** * If the Veteran refuses to provide the information required, and evidence essential for adjudication of the issue has been placed under a court seal, solicit the assistance of District Counsel in obtaining such evidence. * Expenses incident to recovery, such as an attorney’s fees, may **_not_** be deducted from the amount to be reported. ## 2. Preparation of Awards Under 38 CFR 3.383 This topic contains information on the preparation of awards under 38 CFR 3.383, including * action to take when it appears a tort claim may have been filed * determining the amount to be recouped * monthly withholding amount for NSC paired organs and extremities * effective date of the withholding * how to enter the offset amount * example of offset retroactive compensation * providing notice of the award, and * considering entitlement to Dependents’ Educational Assistance (DEA) for NSC disabilities treated as service-connected (SC) under 38 U.S.C 1160. February 20, 2025 ### VIII.iv.7.B.2.a. Action to Take When It Appears a Tort Claim May Have Been Filed Do **_not_** defer award action because there is reason to believe a tort claim for damages has been filed against any party (VA or otherwise) based on the injury to the NSC paired organ or extremity. **_Do_** defer award action and initiate development action to ascertain the date damages were received by the Veteran if there is reason to believe that a tort claim for damages has been finalized, but the date the Veteran recovered damages is not known. ### VIII.iv.7.B.2.b. Determining the Amount to Be Recouped The total amount to be recouped is the gross amount of the settlement or judgment. Attorney’s fees, court costs, and other expenses incident to the claim are **_not_** deductible from the total amount awarded. ### VIII.iv.7.B.2.c. Monthly Withholding Amount for NSC Paired Organs and Extremities Withhold only the additional compensation, including amounts for dependents, payable for the NSC paired organ or extremity.After withholding the additional compensation mentioned above, **_if_** the total payment is at a rate **_less_** than the combined evaluation of the service-connected (SC) disabilities * withhold the remaining balance, including amounts for dependents, and * exclude withholding for NSC disabilities compensable under [38 U.S.C. 1160](). ### VIII.iv.7.B.2.d. Effective Date of the Withholding Commence withholding compensation effective the first of the month after the month during which the Veteran received damages as a result of injury to the NSC organ or extremity. If the Veteran receives payments in installments, start the withholding the first of the month after the month during which the first installment was received. ### VIII.iv.7.B.2.e. How to Enter the Offset Amount When adjusting benefits in the Veterans Benefits Management System - Awards (VBMS-A), enter the following on the DISABILITY PAY tab of the AWARD ADJUSTMENTS screen: * _Tort_ in the PAYMENT TYPE field * the offset amount in the ORIGINAL BALANCE field, and * the effective date of the award adjustment in the AWARD EFFECTIVE DATE field. **Reference:** For more information on entering offset amounts in VBMS-A, see the _VBMS Awards User Guide._ ### VIII.iv.7.B.2.f. Example of Offset Retroactive Compensation Do not offset compensation payable for any period before the month following the date on which the settlement or judgment becomes final.**Example:** A judgment for an NSC extremity is final on June 15, 2015. The rating activity later awards special monthly compensation effective March 16, 2015, for the paired extremities under [38 U.S.C. 1160](). **Result:** Do **_not_** offset any portion of the compensation benefits prior to July 1, 2015, the month _following_ the date the judgment became final. ### VIII.iv.7.B.2.g. Providing Notice of the Award Send a locally-generated letter, explaining the basis of the award, and * telling the Veteran to inform VA immediately if they recover damages from any source because of injury to the NSC organ or extremity, or * (if offset of the benefit is required) explaining the requirement for recoupment of an amount equal to the gross amount of any damages received. ### VIII.iv.7.B.2.h. Considering Entitlement to DEA for NSC Disabilities Treated as SC Under 38 U.S.C 1160 A Veteran may be entitled to Dependents’ Educational Assistance (DEA), as established under [38 CFR 3.807(c)](), amended effective December 6, 1994, when disabilities are treated as if SC under [38 U.S.C. 1160]().A Veteran is **_not_** entitled to the following ancillary benefits _unless_ entitlement is based on SC disabilities for which compensation is payable without regard to the provisions of [38 U.S.C. 1160](): * automobile or adapted equipment, per [M21-1, Part XIII, Subpart i, 2.A]() * specially adapted housing, per [M21-1, Part XIII, Subpart i, 2.B](), and * the Civilian Health and Medical Program of VA, per [38 U.S.C. 1781]() and [M21-1, Part XIII, Subpart i, 3.H](). **Reference:** For more information on entitlement to DEA under [38 U.S.C. 1160](), see [_Kimberlin v. Brown_](), 5 Vet. App. 174 (1993).