Karnas v Kuzma(re DC 7354)

Something dramatic happened in 2003 that affects all Veterans who applied for Hep. before July 2, 2001. I speak of the effect of the VCAA enacted that year. It changed the way we are remunerated for hep inasmuch as some of us filed before 2001 and were granted SC. The Fed. Circuit decision in Kuzma v. Principi in 2003 overturned 12 years of CAVC precedence set in the Karnas v. Derwinski decision of 1991.


By way of history, Mr. Karnas came before the Court with a problem in 1989. He had been rated 100% for Schizoprenia and it was reduced to 70%. He appealed and it was returned to 100%. Then Va axed him again down to 70%. This time the BVA affirmed the decision. Fortunately for Martin this was the dawn of the new COVA Court. Here he prevailed and got his Andy Warhol fame for a lot longer than the 15 minutes Andy had forecast.

Which brings us up to 1991. The Karnas decision held that your rating was protected in that if you were rated for bent brain in 1972, and the laws and Diagnostic Codes changed in 1978, that your 1972 rating was preserved intact and couldn’t be “upgraded” to the 1978 standards. The import of this was to protect old ratings from being reduced by newer laws. It made good sense and was supported by Supreme Court precedence.

On July 2, 2001, the VA promulgated new Diagnostic Codes for hepatitis. Prior to this, the “new” hepatitis C, also known as Non-A, Non-B Hep., had been rated on the only hepatitis diagnostic code then in existence-DC 7345. Seeing a whole new field of claimants at the gates, VA had decided to divide the codes. HAV, HBV, steatohepatitis and Autoimmune hepatitis were kept in the old DC 7345. HCV was given its own code of DC 7354. The law also changed the DC 7345 ratings % from a 0%, 10%, 30%, 50%, 70%, and 100% to the 0%, 10%, 20%, 40%, 60%, 100% format found in the new HCV code. Of more import, VA tightened up the rules in 7345 for ratings and made them virtually identical to the criteria echoed in 7354. Because of the Karnas holding, if a Vet had been granted SC under 7345 for HCV, he could elect to continue on that rating code if conversion to 7354 might cause him a reduced rating. Imagine being rated 70% on 7345 and converting to 60% on 7354. Karnas prevented this and it was really the only equitable way to accomplish it. Enter Mr. Kuzma in 2003.

Mr. Kuzma got caught in this retroactive triangle in 1997 through 1999 and finally found his way to the Federal Circuit. They threw out Karnas and Holliday upon which Mr. Kuzma had hung his hopes.


Now, let’s look at how this affected hepatitis claimants such as us.Prior to the VAOPGCPREC 7-2003 holding that was issued on November 19th, 2003, if you crossed over into July 3rd, 2001 with a rating for hepatitis C based on 7345, you continued to enjoy that Diagnostic Code unless it was more advantageous to convert to the new DC 7354 and get a higher ratings percentage. Once the Kuzma precedent was issued, VA proceeded to enact the precepts of  the General Counsel precedent (see link below). The law now read that you had to be rated after 2001 on the kind of hepatitis you actually had regardless of when you were awarded your claim.

Purely as an example,  let’s pretend Joe Vet got 30% in 1994 for HCV under 7345. In 1998, VA increased his rating to 50%. In 2000, they increased it again to 70%. In 2003, without any ado, they dropped it to 60% based on his symptoms, existing medical records, DC 7354 and the holding in VAOPGCPREC 7-2003.


All the appeals in the world would fall on deaf ears. Joe Vet was screwed. Mr. Kuzma found himself in the same boat.

Thus, you can see that the VA giveth and the VA taketh away. An interesting example of this which was enumerated in the Karnas decision of 1991, was the concept of a stabilized rating being protected to a certain degree after five years (see 38 CFR § 3.344). Do not confuse this with the twenty year protected rating which is immune to revision absent fraud ( see 38 CFR §3.951). Mr. Karnas ably argued that his rating fell into the stabilized category and was protected from revisionist diagnostic codes gerrymandered to reduce his rating. His argument was flawless in that regard and thus he won without much ado. That wouldn’t happen today. Fortunately for Mr. Karnas, his rating became protected this year, assuming the VA grinch didn’t intervene in 2003.

In summary, we as litigants are faced with a bifurcated rating that changed on July 2, 2001. If you floated to a higher rating by virtue of the change, you were decidedly in the minority. Most discovered they received a demotion from 70% down to 60 or from 50% down to 30%. What concerns me today about this is the current pickle the government finds itself in financially.

Could it be the VA will once again use this technique to trim ratings of their assigned percentages in hopes of lowering the amount paid out as compensation to us? This would not be the first time. Veterans might not remember the Tinnitus brouhaha in the late 90s when the Court held that it was suddenly permissible to pay 10% for both ears (bilateral Tinnitus) in lieu of the previous policy of 10% for each ear. This has saved the VA untold amounts of money and allowed them to institute the practice of paying year-end “Santa Claus” bonuses to all those employees so richly deserving of special attention and accolades.

I propose a bonus for Veterans who reach the 20 year mark of compensation. Assuming you actually win while you are alive (and young), a twenty year high water mark truly would be a stupendous accomplishment. The bonus would honor the few who accomplished this against all odds and had the intelligence to file when they did. No one told me to march smartly down to the VA and apply for residuals of Agent Orange or the upcoming HCV in 1973 when I was handed my walking papers. What I wouldn’t give for a DeLorean with a Mr. Fusion and a flux capacitor in the backseat…


About asknod

VA claims blogger
This entry was posted in Fed. Cir. & Supreme Ct., General Messages, Important CAVC/COVA Ruling and tagged , , , , . Bookmark the permalink.

2 Responses to Karnas v Kuzma(re DC 7354)

  1. peter says:

    Several of the people runing for president have in one case argued for vochers going foward in lieu of hospital benifits for Veterans and another to reduce benifits by the amount of SS recieved for people on compensation. Seems no one hears though or listens other then to what they want to hear or listen to…peter

  2. Randy Nesbitt says:

    First diagnosed with HCV in 1998 through a routine blood test during a yearly physical. Did not start connecting the dots back to the 70’s when I got tired of doctors asking me how I might have contracted the disease. While searching the internet on the disease I came across the site which involved the governments use of airguns for innoculations. I did not receive VA acknowledgement of SC until 2011. As the old addage goes ….. deny, deny, deny.

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