Citation Nr: 1008686 Decision Date: 03/08/10 Archive Date: 03/17/10 DOCKET NO. 02-12 696A ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Cleveland, Ohio THE ISSUES 1. Entitlement to an initial disability evaluation in excess of 20 percent for Type II diabetes mellitus from February 20, 2001 to November 13, 2006. 2. Entitlement to an initial disability evaluation in excess of 40 percent for Type II diabetes mellitus from November 14, 2006. 3. Entitlement to a compensable disability evaluation for shell fragment wound residuals of the right side of the head. 4. Entitlement to a compensable disability evaluation for shell fragment wound residuals of the left hand, to include consideration of a separate rating for arthritis of the radio-scaphoid joint. 5. Entitlement to a total rating for compensation purposes based on individual unemployability (TDIU). 6. Entitlement to an initial disability evaluation in excess of 10 percent for a chronic skin disorder manifested by a skin rash affecting the lower extremities, bilaterally. REPRESENTATION Appellant represented by: Veterans of Foreign Wars of the United States WITNESS AT HEARING ON APPEAL The Veteran ATTORNEY FOR THE BOARD Bernard T. DoMinh, Counsel INTRODUCTION The Veteran served on active duty from January 1966 to January 1969. His military records show that he served in the Republic of Vietnam and was awarded the Purple Heart Medal in recognition of wounds sustained in combat against enemy forces. This matter came before the Board of Veterans' Appeals (Board) on appeal from rating decisions dated in September 2001 and January 2002 from the Cleveland, Ohio, Regional Office (RO) of the Department of Veterans Affairs (VA). The September 2001 rating decision established service connection for Type II diabetes mellitus and assigned a 20 percent evaluation for that disability, effective February 20, 2001 (the date of receipt by VA of the Veteran's original claim for VA compensation for this disability). The January 2002 rating decision, in pertinent part, denied compensable evaluations for the Veteran's shell fragment wound residuals of his left hand and the right side of his head, and also denied a TDIU. In December 2003, the Veteran was afforded a videoconference hearing before the undersigned Veterans Law Judge. A transcript of this hearing has been duly associated with the claims file. In May 2004, the Board remanded the issues of entitlement to an initial evaluation in excess of 20 percent for Type II diabetes mellitus, compensable evaluations for shell fragment wound residuals of the left hand and the right side of the head, and a TDIU to the RO for additional evidentiary and procedural development. Following this development, the case was returned to the Board, after which the case was again remanded to the RO for further action in April 2006. Thereafter, in a July 2009 rating decision, the rating for Type II diabetes mellitus was increased to 40 percent, effective November 14, 2006, with the 20 percent rating for the prior period from February 20, 2001 to November 13, 2006 being confirmed and continued. In a November 2009 rating decision/supplemental statement of the case, the claim for a TDIU and compensable evaluation for shell fragment wound residuals of the right side of the head and the left hand was denied. The case was returned to the Board in December 2009 and the Veteran now continues his appeal. The Veteran's claims file includes a February 2006 written statement from his representative that raises the issue of entitlement to service connection for a genitourinary disability claimed as renal dysfunction secondary to service- connected Type II diabetes mellitus. The file also includes a brief from the representative dated in January 2010 that indicates that the Veteran is also seeking service connection for residuals of a traumatic blast injury to his head, manifested by cognitive impairment (claimed as mental retardation). As these issues have been raised by the record, but have not been adjudicated by the Agency of Original Jurisdiction (AOJ), the Board does not have jurisdiction over them and so they are referred to the AOJ for appropriate action. For the reasons that will be discussed in the REMAND portion of this decision, the TIDU claim and the issue of entitlement to an initial disability evaluation in excess of 10 percent for a chronic skin disorder manifested by a skin rash affecting the lower extremities, bilaterally, are REMANDED to the RO via the Appeals Management Center (AMC), in Washington, D.C. VA will notify the Veteran and his representative if further action is required on their part. FINDINGS OF FACT 1. From February 20, 2001, the Veteran's Type II diabetes mellitus required insulin, a restricted diet, and regulation of activities. 2. The shell fragment wound residuals of the right side of the head are manifested by a 0.5 x 0.5-centimeter superficial scar on the right temple, which is darker than the surrounding skin and which displays adherence to the underlying tissue but no loss of subcutaneous tissue. The scar is well-healed, non-tender, with no inflammation, keloid formation, or hypersensitivity to pressure. The scar protrudes slightly above the skin. No subjective complaints from the Veteran are associated with the scar. The scar is located at the Veteran's hairline and is not easily visible, and has been clinically characterized as not productive of any cosmetic disfigurement or functional impairment. 3. The scar associated with shell fragment wound residuals of the left hand is manifested by a 5.0-centimeter transverse scar in the proximal dorsal aspect of the left wrist that is well-healed, non-tender, and non-deforming, with no inflammation, keloid formation, or hypersensitivity to pressure, and no loss of the underlying subcutaneous tissue. The scar is not productive of any neurological deficits or loss of muscle strength or tone. 4. The shell fragment wound residuals of the left hand include arthritis of the radio-scaphoid joint with narrowing of the radio-scaphoid joint and increased distance between the scapho-lunate joint, which produces complaints of joint tenderness but no compensable limitation of wrist movement on dorsiflexion or palmar flexion, and moderate impairment due to functional loss associated with pain and discomfort on repeated use. CONCLUSIONS OF LAW 1. The criteria for 40 percent disability evaluation for Type II diabetes mellitus from February 20, 2001 have been met. 38 U.S.C.A. §§ 1155, 5107(b) (West 2002); 38 C.F.R. §§ 4.3, 4.7, 4.119, Diagnostic Code 7913 (2009). 2. Prior to August 30, 2002, the criteria for a compensable disability evaluation for shell fragment wound residuals of the right side of the head have not been met. 38 U.S.C.A. § 1155 (West 2002); 38 C.F.R. § 4.118, Diagnostic Codes 7800, 7803, 7804, 7805 (2001). 3. For the period beginning August 30, 2002, the criteria for a compensable disability evaluation for shell fragment wound residuals of the right side of the head have not been met. 38 U.S.C.A. § 1155 (West 2002); 38 C.F.R. § 4.118, Diagnostic Codes 7800, 7803, 7804, 7805 (2009). 4. Prior to August 30, 2002, the criteria for a compensable disability evaluation for shell fragment wound residuals of the left hand have not been met. 38 U.S.C.A. § 1155 (West 2002); 38 C.F.R. § 4.118, Diagnostic Codes 7803, 7804, 7805 (2001). 5. For the period beginning August 30, 2002, the criteria for a compensable disability evaluation for shell fragment wound residuals of the left hand have not been met. 38 U.S.C.A. § 1155 (West 2002); 38 C.F.R. § 4.118, Diagnostic Codes 7803, 7804, 7805 (2009). 6. The criteria for a 10 percent evaluation for arthritis of the radio-scaphoid joint with narrowing of the radio-scaphoid joint and increased distance between the scapho-lunate joint, which is a residual of a shell fragment wound of the left hand, have been met. 38 C.F.R. § 4.71a, Diagnostic Codes 5003-5010, 5215 (2009). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS Duty to notify and assist VA is required to advise a claimant of the information and evidence not of record that is necessary to substantiate a claim. VA must inform the claimant of the information and evidence he is expected to provide, as well as the information and evidence VA will seek to obtain on his behalf. See 38 U.S.C.A. § 5103 (West 2002); 38 C.F.R. § 3.159(b)(1) (2009); Quartuccio v. Principi, 16 Vet. App. 183 (2002). Generally, the notice requirements apply to all five elements of a service connection claim: veteran status, existence of a disability, a connection between the veteran's service and the disability, degree of disability, and effective date of the disability. Dingess v. Nicholson, 19 Vet. App. 473 (2006). The notice must be provided to a claimant before the initial unfavorable decision on a claim for VA benefits by the agency of original jurisdiction. Id; see also Pelegrini v. Principi, 18 Vet. App. 112 (2004). However, in Medrano v. Nicholson, 21 Vet. App. 165, 169 (2007), the United States Court of Appeals for Veterans Claims (Court) held that VA may cure timing defects in notice required by the Veterans Claims Assistance Act of 2000 (VCAA) by issuing a fully compliant [section 5103(a)] notification and then readjudicating the claim. The United States Court of Appeals for the Federal Circuit (Federal Circuit) previously held that any VCAA notice errors should be presumed to be prejudicial to the claimant unless VA shows that the error did not affect the essential fairness of the adjudication. See Sanders v. Nicholson, 487 F.3d 881 (Fed. Cir. 2007). Under Sanders, VA bore the burden of proving that such an error did not cause harm. Id. However, in the recent case Shinseki v. Sanders, 129 S.Ct. 1696 (2009), the United States Supreme Court (Supreme Court) held that the Federal Circuit's blanket presumption of prejudicial error in all cases imposed an unreasonable evidentiary burden upon VA. The Supreme Court held that determinations concerning prejudicial error and harmless error should be made on a case-by-case basis. Id. Therefore, the Board must consider, on a case-by-case basis, whether any potential VCAA notice errors are prejudicial to the claimant. In Vazquez-Flores v. Peake, 22 Vet. App. 37, 46 (2008), the Court noted that to overcome the presumption of prejudice associated with a pre-adjudicatory notice error, VA must persuade the reviewing court that the purpose of the notice was not frustrated and that this may be done by demonstrating 1) that the claimant had actual knowledge of what was necessary to substantiate the claim and that the claim was otherwise properly developed, 2) that a reasonable person could be expected to understand from the notice what was needed to substantiate the claim or 3) that the benefit could not be awarded as a matter of law. See also Sanders, 487 F.3d at 889 (reiterating examples noted in Mayfield v. Nicholson, 19 Vet. App. 103 (2005) (Mayfield I). The Court has previously held that VCAA notice for increased ratings claims requires that VA notify the claimant that, to substantiate an increased rating, the claimant must provide, or ask VA to obtain, medical or lay evidence demonstrating a worsening or increase in severity of the disability and the effect that worsening has on the claimant's employment and daily life. Additionally, if the Diagnostic Code under which the claimant is rated contains criteria necessary for entitlement to a higher disability rating that would not be satisfied by the claimant demonstrating a noticeable worsening or increase in severity of the disability and the effect that worsening has on the claimant's employment and daily life (such as a specific measurement or test result), VA must provide at least general notice of that requirement to the claimant. Additionally, the claimant must be notified that, should an increase in disability be found, a disability rating will be determined by applying relevant Diagnostic Codes, which typically provide for a range in severity of a particular disability from noncompensable to as much as 100 percent (depending on the disability involved), based on the nature of the symptoms of the condition for which disability compensation is being sought, their severity and duration, and their impact upon employment and daily life. As with proper notice for an initial disability rating and consistent with the statutory and regulatory history, the notice must also provide examples of the types of medical and lay evidence that the claimant may submit (or ask VA to obtain) that are relevant to establishing entitlement to increased compensation. Vazquez-Flores v. Peake, 22 Vet. App. 37 at 43-44 (2008). However, in the recent case of Vazquez-Flores v. Shinseki, No. 08-7150 (Fed. Cir. Sept. 4, 2009), the Federal Circuit vacated the holding in Vazquez-Flores, 22 Vet. App. 37 (2008) with respect to the required content of VCAA notice in increased ratings claims. Specifically, the Federal Circuit concluded that "the notice described in 38 U.S.C. § 5103(a) need not be veteran specific." Similarly, "while a veteran's 'daily life' evidence might in some cases lead to evidence of impairment in earning capacity, the statutory scheme does not require such evidence for proper claim adjudication." Thus, the Federal Circuit held, "insofar as the notice described by the Veterans Court in Vazquez-Flores requires the VA to notify a veteran of alternative diagnostic codes or potential "daily life" evidence, we vacate the judgment." In the present case, in order to meet the requirements of 38 U.S.C. § 5103(a) and 38 C.F.R. § 3.159(b), VCAA notice must: (1) inform the claimant about the information and evidence necessary to substantiate the claim; (2) inform the claimant about the information and evidence that VA will seek to provide; (3) inform the claimant about the information and evidence the claimant is expected to provide; and (4) request that the claimant provide any evidence in his possession that pertains to the claim. Beverly v. Nicholson, 19 Vet. App. 394, 403 (2005) (outlining VCAA notice requirements). During the course of the appeal, § 3.159(b) was revised and the requirement that VA request that the claimant provide any evidence in his possession that pertains to the claim was removed from the regulation. The claims at issue were filed in February 2001. A VCAA notice letter was dispatched to the Veteran in March 2001, with subsequent notice letters dispatched during the course of the appeal in April 2001, July 2001, June 2004, August 2004, October 2005, May 2006, November 2007, February 2008, and August 2009, which address the issues on appeal and, collectively, satisfy the above-described mandates as well as the requirements that the Veteran be informed of how VA calculates degree of disability and assigns an effective date for the disability, as prescribed in Dingess v. Nicholson, 19 Vet. App. 473 (2006). Although notice letters that were fully compliant with the current notice requirements were not furnished until well after the claim was adjudicated in the first instance, the defect in the timing of the notice was cured by the RO's readjudication of the issues in contention in a subsequent supplemental statements of the case, with November 2009 being the most recent supplemental statement of the case addressing the matters on appeal. See Medrano v. Nicholson, 21 Vet. App. 165, 169 (2007). Although there is no VCAA notice letter that addresses alternative diagnostic codes that may apply to rate the disabilities at issue, or requests that the Veteran provide evidence regarding their impact on his daily life, in view of the Federal Circuit's recent vacatur of the Court's decision in Vazquez-Flores v. Shinseki, No. 08-7150 (Fed. Cir. Sept. 4, 2009) during the pendency of this appeal, there is no prejudice for the Board to subject the current appeal to appellate review. In any case, neither the Veteran nor his representative has made any assertion that there has been any defect in the timing or content of the VCAA notification letters associated with the current appeal. VA also has a duty to assist the Veteran in obtaining evidence necessary to substantiate the claim. 38 U.S.C.A. § 5103A(a) ("The Secretary shall make reasonable efforts to assist a claimant in obtaining evidence necessary to substantiate the . . . claim"). This duty includes assisting the Veteran in obtaining records and providing medical examinations or obtaining medical opinions when such are necessary to make a decision on the claim. 38 U.S.C.A. § 5103A(b), (c), (d) (setting forth Secretary's various duties to claimant). VA informed the Veteran of its duty to assist in obtaining records and supportive evidence. As the current appeal stems from February 2001, when the Veteran filed his claims for service connection for diabetes mellitus (subsequently granted and initially rated 20 percent disabling from February 20, 2001, with a 40 percent rating effective November 14, 2006) and for increased ratings for shell fragment wounds of the right side of his head and his left hand, the relevant time period and evidence that must be addressed in the adjudication of the shell fragment wound residual claims encompasses the period from February 2000 to the present, in order to allow the Board to consider the applicability of staged ratings. See 38 C.F.R. § 3.400(o)(2) (2009); Fenderson v. West, 12 Vet. App. 119 (1999); Hart v. Mansfield, 21 Vet. App. 505 (2007). In this regard, the Board observes that clinical records from VA, Social Security Administration (SSA), and private healthcare providers that pertain to the Veteran's treatment for diabetes mellitus and shell fragment wound residuals of his head and left hand for the period spanning 2000 - 2008 have been obtained and associated with the claims file. Neither the Veteran nor his representative has indicated that there are any outstanding relevant medical records or other pertinent evidence that must be considered in this current appeal. The Veteran was also afforded VA examinations specifically addressing each of these disabilities in January 2005, March 2005, November 2006, and November 2007. The Board has reviewed the examination reports and notes that the Veteran's claims file was reviewed by each examiner who performed an examination. Furthermore, each examiner provided adequate discussion of their clinical observations and a rationale to support their findings and conclusions. Thus, the VA examinations are deemed to be adequate for rating purposes for the disabilities at issue. See Barr v. Nicholson, 21 Vet. App. 303 (2007). Based on the foregoing, the Board finds that the VA fulfilled its VCAA duties to notify and to assist the Veteran in the evidentiary development of his claims decided herein, and thus no additional assistance or notification is required. The Veteran has suffered no prejudice that would warrant a remand, and his procedural rights have not been abridged. See Bernard v. Brown, 4 Vet. App. 384 (1993). The Board will therefore proceed with the adjudication of this appeal. Increased ratings Disability evaluations are determined by the application of a schedule of ratings, which is based on average impairment of earning capacity. 38 U.S.C.A. § 1155; 38 C.F.R. Part 4. Separate diagnostic codes identify the various disabilities. Where there is a reasonable doubt as to the degree of disability, such doubt will be resolved in favor of the claimant. 38 C.F.R. § 3.102 (2009). Where there is a question as to which of two evaluations shall be applied, the higher evaluation will be assigned if the disability picture more nearly approximates the criteria required for that rating. Otherwise, the lower rating will be assigned. 38 C.F.R. § 4.7 (2009). The use of manifestations not resulting from service-connected disease or injury in establishing the service-connected evaluation and the evaluation of the same manifestation under different diagnoses are to be avoided. 38 C.F.R. § 4.14 (2009). When an unlisted condition is encountered it will be permissible to rate under a closely related disease or injury in which not only the functions affected, but the anatomical localization and symptomatology are closely analogous. 38 C.F.R. § 4.20 (2009). In view of the number of atypical instances it is not expected, especially with the more fully described grades of disabilities, that all cases will show all the findings specified. 38 C.F.R. § 4.21 (2009). In addition, the Board will consider the potential application of the various other provisions of 38 C.F.R., Parts 3 and 4, whether or not they were raised by the Veteran, as required by Schafrath v. Derwinski, 1 Vet. App. 589 (1991). While the Veteran's entire history is reviewed when assigning a disability evaluation (see 38 C.F.R. § 4.1), where an award of service connection has already been established and only an increase in the disability rating is at issue, it is the present level of disability that is of primary concern. Francisco v. Brown, 7 Vet. App. 55 (1994). A recent decision of the Court has held that in determining the present level of a disability for any increased evaluation claim, the Board must consider the application of staged ratings. See Fenderson v. West, 12 Vet. App. 119 (1999); Hart v. Mansfield, 21 Vet. App. 505 (2007). In other words, where the evidence contains factual findings that demonstrate distinct time periods in which the service-connected disability exhibited diverse symptoms meeting the criteria for different ratings during the course of the appeal, the assignment of staged ratings would be necessary. An evaluation of the level of disability present also includes consideration of the functional impairment of the Veteran's ability to engage in ordinary activities, including employment. 38 C.F.R. § 4.10 (2009). The Board advises the Veteran at this juncture that it has thoroughly reviewed all the evidence in his claims file. Although the Board has an obligation to provide reasons and bases supporting this decision, there is no need to discuss, in detail, the evidence submitted by the Veteran or on his behalf. See Gonzales v. West, 218 F.3d 1378, 1380 - 81 (Fed. Cir. 2000) (the Board must review the entire record, but does not have to discuss each piece of evidence). The analysis below focuses on the most salient and relevant evidence and on what this evidence shows, or fails to show, on the claims. The Veteran must not assume that the Board has overlooked pieces of evidence that are not explicitly discussed herein. See Timberlake v. Gober, 14 Vet. App. 122 (2000) (the law requires only that the Board address its reasons for rejecting evidence favorable to the Veteran). The Board must assess the credibility and weight of all evidence, including the medical evidence, to determine its probative value, accounting for evidence which it finds to be persuasive or unpersuasive, and providing reasons for rejecting any evidence favorable to the claimant. Equal weight is not accorded to each piece of evidence contained in the record; every item of evidence does not have the same probative value. When all the evidence is assembled, VA is responsible for determining whether the evidence supports the claim or is in relative equipoise, with the appellant prevailing in either event, or whether a preponderance of the evidence is against a claim, in which case, the claim is denied. See Gilbert v. Derwinski, 1 Vet. App. 49 (1990). (a.) Factual background and analysis: Entitlement to an initial evaluation greater than 20 percent from February 20, 2001 - November 13, 2006, and an increased initial evaluation greater than 40 percent from November 14, 2006, for Type II diabetes mellitus. Diabetes mellitus is rated under 38 C.F.R. § 4.119, Diagnostic Code 7913. It is assigned a 20 percent evaluation when treatment requires insulin and a restricted diet, or; oral hypoglycemic agent and restricted diet. Assignment of a 40 percent evaluation is warranted for diabetes mellitus requiring insulin, a restricted diet, and regulation of activities. Diabetes mellitus that requires insulin, restricted diet, and regulation of activities with episodes of ketoacidosis or hypoglycemic reactions requiring one or two hospitalizations per year or twice-a-month visits to a diabetic care provider, plus complications that would not be compensable if separately evaluated, warrants a rating of 60 percent. Where diabetes mellitus requires more than one daily insulin injection, restricted diet, and regulation of activities (avoidance of strenuous occupational and recreational activities) with episodes of ketoacidosis or hypoglycemic reactions requiring at least three hospitalizations per year or weekly visits to a diabetic care provider, plus either progressive loss of weight and strength, or complications that would be compensable if separately evaluated, a 100 percent rating is warranted. The Board notes at this juncture that the Veteran is not currently service connected for any disabilities that are complications of, or secondary to, his diabetes mellitus. Although the Veteran has alleged that he suffers from symptoms of visual impairment that he believes are due to his diabetes mellitus, current VA medical examinations have conclusively demonstrated that he does not have a diagnosis of diabetic retinopathy and that there is no link between his perceived visual impairment and diabetes mellitus. Historically, the clinical evidence shows that the Veteran developed onset of Type II diabetes mellitus in 1996, which was initially treated with an oral medication to control his hypoglycemia. VA, SSA, and private medical records for the period from 2000 to the present clearly demonstrate that the Veteran suffered a major hypoglycemic episode in November 2000, and was thereafter determined to be insulin-dependent as of January 6, 2001. These records show that the Veteran had been employed as a truck driver with the United Parcel Service from 1969 to November 2000, after which he was disallowed by Federal law to pursue his career as a truck driver, as the statute from the United States Department of Transportation restricted all persons who had insulin- dependent diabetes mellitus from operating a tractor-trailer for commercial freight hauling. SSA records show that the Veteran was deemed to be disabled for purposes of receiving SSA disability benefits as of June 2002, due to diabetes mellitus and mental retardation, as well as having only a 6th-grade education. At his videoconference hearing before the Board in December 2003, he testified, in pertinent part, that his only vocation was as a truck driver and that he had no other training or skills in another occupational field and was not likely to be regarded as a viable employment candidate on account of his age, his medical disability, and because he was, by his own admission, illiterate. The Board has considered the foregoing evidence and finds that the clinical record displays a constellation of symptomatology that more closely approximates the criteria for a 40 percent rating for Type II diabetes mellitus as of February 20, 2001. See 38 C.F.R. § 4.7. Specifically, it is clinically established that the Veteran became insulin dependent as of January 2001, and as such he was restricted by Federal statute from pursuing his occupation as a truck driver. A 40 percent evaluation contemplates diabetes mellitus requiring insulin, a restricted diet, and regulation of activities. The facts demonstrate that the Veteran is clearly insulin-dependent by February 20, 2001, and any diabetic who requires insulin must also adhere to a restricted diet to control his blood sugar levels. And the prohibition by law, for reasons of public safety, for the Veteran, as an insulin-dependent person, to operate a tractor-trailer in pursuit of his occupation, is in itself evidence of a substantial regulation of his activities. Therefore, resolving any doubt in favor of the Veteran's claim, the Board will allow an initial rating of 40 percent for his service-connected Type II diabetes mellitus, effective from February 20, 2001. See 38 U.S.C.A. § 5107(b); 38 C.F.R. § 4.3; Gilbert v. Derwinski, 1 Vet. App. 49 (1990). The medical evidence for the pertinent time period shows that the Veteran had been hospitalized for hypoglycemic episodes, but not at a frequency of once per year, and that he visited his physician to have his blood sugar monitored on average once every 3 months, or more if necessary. During his most frequent period of clinical monitoring of his blood sugar, in 2001, he was treated 19 times, which calculates out to be, on average, less than twice per month for that year. Nevertheless, the aforementioned evidence and the current clinical records for the period up to 2008 do not demonstrate that the Veteran experiences episodes of ketoacidosis or hypoglycemic reactions requiring one or two hospitalizations per year, or that he requires twice-a-month visits to his diabetic care provider, as contemplated in the criteria for a 60 percent evaluation. Therefore, a rating higher than 40 percent for Type II diabetes mellitus is not warranted. (b.) Entitlement to a compensable disability evaluation for shell fragment wound residuals of the right side of the head and the left hand. VA changed the rating criteria for skin disabilities during the course of this appeal, effective August 30, 2002. A new law or regulation applies, if at all, only to the period beginning with the effective date of the new law or regulation. Kuzma v. Principi, 341 F.3d 1327 (Fed. Cir. 2003). As the Veteran reopened his claim for a compensable rating for scars, residual of shell fragment wounds of his head and left hand on February 20, 2001, the Board will consider both the former and current criteria for rating scars. In VAOPGCPREC 7-2003, VA's General Counsel held that when a new statute is enacted or a new regulation is issued while a claim is pending, VA must first determine whether the statute or regulation identifies the types of claims to which it applies. If the statute or regulation is silent, VA must determine whether applying the new provision to claims that were pending when it took effect would produce genuinely "retroactive effects." If applying the new provision would produce such "retroactive effects," VA ordinarily should not apply the new provision to the claim. If applying the new provision would not produce "retroactive effects," VA ordinarily must apply the new provision. A new law or regulation has prohibited "retroactive effects" if it is less favorable to a claimant than the old law or regulation, while a liberalizing law or regulation does not have "retroactive effects." VAOPGCPREC 7-2003; 69 Fed. Reg. 25179 (2004). The General Counsel had previously summarized the proper analysis as follows: First, the Board must determine, on a case-by-case basis, whether the amended regulation is more favorable to the claimant than the prior regulation. Second, if it is more favorable, the Board must, subsequent to the effective date of the liberalizing law under 38 U.S.C. § 5110(g), apply the more favorable provision to the facts of the case, unless the claimant would be prejudiced by the Board's actions in addressing the revised regulation in the first instance. Third, the Board must determine whether the appellant would have received a more favorable outcome, i.e., something more than a denial of benefits, under the prior law and regulation, including for the periods both prior to and after the effective date of the change in law. VAOPGCPREC 3- 2000 (2000); 65 Fed. Reg. 33422 (2000). The Federal Circuit has created a three-part test to determine whether a new law has prohibited retroactive effects: (1) "the nature and extent of the change of the law;" (2) "the degree of connection between the operation of the new rule and a relevant past event;" and (3) "familiar considerations of fair notice, reasonable reliance, and settled expectations." Princess Cruises v. United States, 397 F.3d 1358 (Fed. Cir. 2005). If, under this test, a rule or regulation appears to have a retroactive effect, then the rule or regulation cannot be applied to cases pending at the time of its promulgation. Rodriguez v. Peake, No. 2006-7023 (Fed. Cir. Jan. 7, 2008). Under the criteria in effect prior to August 30, 2002, scars of the head, face, or neck that were slightly disfiguring warranted a noncompensable evaluation. Assignment of a 10 percent evaluation was warranted for a moderately disfiguring scar of the head, face, or neck. Assignment of a 30 percent evaluation was warranted for a severely disfiguring scar of the head, face, or neck, especially if producing marked and unsightly deformity of the eyelids, lips, or auricles. A 50 percent evaluation for disfiguring scars of the head, face, or neck was warranted for complete or exceptionally repugnant deformity of one side of the face or marked or repugnant bilateral disfigurement. 38 C.F.R. § 4.118, Diagnostic Code 7800 (2001). A 10 percent disability evaluation was warranted for superficial scars, which are tender and painful on objective demonstration. 38 C.F.R. § 4.118, Diagnostic Code 7804 (2001). The 10 percent evaluation was the maximum schedular rating contemplated under Diagnostic Code 7804. A 10 percent disability evaluation was warranted for superficial scars, which are poorly nourished, and subject to repeated ulceration. 38 C.F.R. § 4.118, Diagnostic Code 7803. Scars may be evaluated on the basis of any associated limitation of function of the body part, which they affect. 38 C.F.R. § 4.118, Diagnostic Code 7805. Under the revised criteria in effect August 30, 2002, Diagnostic Code 7800 provides the following ratings for disfiguring scars of the head, face, and neck: Burn scar(s) of the head, face, or neck; scar(s) of the head, face, or neck due to other causes; or other disfigurement of the head, face, or neck: 80 percent evaluation for scars of the head, face, or neck with visible or palpable tissue loss and either gross distortion or asymmetry of three or more features or paired sets of features (nose, chin, forehead, eyes (including eyelids), ears (auricles), cheeks, lips), or; with six or more characteristics of disfigurement. 50 percent evaluation for scars of the head, face, or neck with visible or palpable tissue loss and either gross distortion or asymmetry of two features or paired sets of features (nose, chin, forehead, eyes (including eyelids), ears (auricles), cheeks, lips), or; with four or five characteristics of disfigurement. 30 percent evaluation for scars of the head, face, or neck with visible or palpable tissue loss and either gross distortion or asymmetry of one feature or paired set of features (nose, chin, forehead, eyes (including eyelids), ears (auricles), cheeks, lips), or; with two or three characteristics of disfigurement. 10 percent evaluation for scars of the head, face, or neck with one characteristic of disfigurement. Note (1): The 8 characteristics of disfigurement, for purposes of evaluation under §4.118, are: 1. Scar 5 or more inches (13 or more cm.) in length. 2. Scar at least one-quarter inch (0.6 cm.) wide at widest part. 3. Surface contour of scar elevated or depressed on palpation. 4. Scar adherent to underlying tissue. 5. Skin hypo-or hyper-pigmented in an area exceeding six square inches (39 sq. cm.). 6. Skin texture abnormal (irregular, atrophic, shiny, scaly, etc.) in an area exceeding six square inches (39 sq. cm.). 7. Underlying soft tissue missing in an area exceeding six square inches (39 sq. cm.). 8. Skin indurated and inflexible in an area exceeding six square inches (39 sq. cm.). Note (2): Rate tissue loss of the auricle under DC 6207 (loss of auricle) and anatomical loss of the eye under DC 6061 (anatomical loss of both eyes) or DC 6063 (anatomical loss of one eye), as appropriate. Note (3): Take into consideration unretouched color photographs when evaluating under these criteria. Note (4): Separately evaluate disabling effects other than disfigurement that are associated with individual scar(s) of the head, face, or neck, such as pain, instability, and residuals of associated muscle or nerve injury, under the appropriate diagnostic code(s) and apply § 4.25 to combine the evaluation(s) with the evaluation assigned under this diagnostic code. Note (5): The characteristic(s) of disfigurement may be caused by one scar or by multiple scars; the characteristic(s) required to assign a particular evaluation need not be caused by a single scar in order to assign that evaluation. Diagnostic Code 7803 provides a 10 percent rating for superficial unstable scars. Note (1) to Diagnostic Code 7803 provides that an unstable scar is one where, for any reason, there is frequent loss of covering of skin over the scar. Note (2) provides that a superficial scar is one not associated with underlying soft tissue damage. 38 C.F.R. § 4.118. Diagnostic Code 7804 provides a 10 percent rating for superficial scars that are painful on examination. Note (1) to Diagnostic Code 7804 provides that a superficial scar is one not associated with underlying soft tissue damage. 38 C.F.R. § 4.118. Diagnostic Code 7805 provides that other scars are to be rated on limitation of function of affected part. 38 C.F.R. § 4.118. The Board notes that the criteria for rating scars were again revised, effective October 23, 2008. See 73 Fed. Reg. 54,708 (Sept. 23, 2008) (to be codified at 38 C.F.R. § 4.118, Diagnostic Codes 7800 to 7805). However, because the Veteran's claim was pending before VA October, 28, 2008, his claim will not be evaluated under the rating criteria made effective from October 28, 2008. See id. With respect to the Veteran's claim for a compensable evaluation for shell fragment wound residuals of the right side of his head, the clinical evidence for the pertinent period at issue, including the reports of VA examinations of his head scar in March 2005 and November 2006, collectively show that the shell fragment wound residuals have been manifested by a 0.5 x 0.5-centimeter superficial scar on the right temple, which is darker than the surrounding skin and which displays adherence to the underlying tissue but no loss of subcutaneous tissue. The scar is well-healed, non-tender, with no inflammation, keloid formation, or hypersensitivity to pressure. The scar protrudes slightly above the skin. No subjective complaints from the Veteran are associated with the scar. The scar is located at the Veteran's hairline and is not easily visible, and has been clinically characterized as not productive of any cosmetic disfigurement or functional impairment. Applying both the pre-August 30, 2002, and post-August, 2002 version of the regulations, the Board finds no basis to assign a compensable evaluation for the shell fragment wound residuals of the right side of the Veteran's head. The scar is clinically demonstrated to not be painful, tender, disfiguring, or productive of any functional impairment. The Board has considered the Veteran's argument that the clinical evidence of adhesion of the scar to the underlying tissue, its protrusion above the skin surface, and its darker color supports the assignment of a compensable evaluation as being representative of three of the 8 characteristics of disfigurement. However, the Board does not find this argument to be meritorious in the present claim. The language of the revised rating schedule states that the criteria are applicable to "Burn scar(s) of the head, face, or neck; scar(s) of the head, face, or neck due to other causes; or other disfigurement of the head, face, or neck" (See 38 C.F.R. § 4.118, Diagnostic Code 7800 (2009)), which the Board interprets as meaning that scars are to be clinically characterized as disfiguring as a prerequisite for the application of the criteria contemplated in this Diagnostic Code. In this regard, the medical evidence shows that the head scar at issue is specifically characterized by the examiners as being not cosmetically disfiguring, as it is located at the Veteran's hairline and is described as not being easily visible. Therefore, notwithstanding the clinical evidence of its adherence and protrusion (which are otherwise shown to be asymptomatically painless and non- tender) and hyperpigmentation relative to the surrounding skin, because this head scar is not easily visible and is not deemed to be cosmetically disfiguring, these characteristics of disfigurement do not provide a basis for assignment of a compensable evaluation by themselves, absent a clinical demonstration of actual disfigurement. With regard to the service-connected left hand scar that is a residual of a shell fragment wound, the clinical evidence for the pertinent period at issue, including the reports of VA examinations of his left hand scar in March 2005 and November 2006, collectively show that the shell fragment wound residuals have been manifested by a 5.0-centimeter transverse scar in the proximal dorsal aspect of the left wrist that is well-healed, non-tender, and non-deforming, with no inflammation, keloid formation, or hypersensitivity to pressure, and no loss of the underlying subcutaneous tissue. The scar is not productive of any neurological deficits or loss of muscle strength or tone. Applying the pre- and post- August 30, 2002, rating criteria to the aforementioned facts, the Board finds no basis to assign a compensable evaluation for this scar as it is clinically asymptomatic in all respects and productive of no functional impairment of the Veteran's left hand and wrist. Although the clinical evidence shows no compensable impairment associated with the left hand scar, there is medical evidence of an arthritic disability attributable to the shell fragment wound of the left hand. The earliest clinical indication of this is the report of a VA examination conducted on March 2, 2005, in which the examining physician diagnosed the Veteran with arthritis of his radio-scaphoid joint with narrowing of his radio-scaphoid joint and increased distance between his scapho-lunate joint, which the examiner attributed to ligament damage caused by the shell fragment wound that the Veteran sustained in service. Although the examiner found the Veteran to have good range of motion of his left wrist, with 65 degrees of dorsiflexion, 65 degrees of palmar flexion, 40 degrees of ulnar deviation, and 30 degrees or radial deviation, his arthritic changes produced complaints of wrist joint tenderness when he bumped his wrist against a solid object. In view of the foregoing discussion, the Board finds that an additional separate rating is warranted for arthritis of the Veteran's left wrist as a residual of his shell fragment wound. The Board notes that 38 C.F.R. § 4.71a, Diagnostic Code 5215, contemplates the assignment of a 10 percent rating for limitation of dorsiflexion of the wrist to less than 15 degrees, or palmar flexion of the wrist limited in line with the forearm (for both the major and minor hand). A higher evaluation is warranted only if the wrist is ankylosed, and there is no clinical evidence demonstrating any ankylosis of the Veteran's left wrist. In the present case, the Veteran's limitation of motion of his left wrist is not to a compensable degree. Nevertheless, a 10 percent evaluation may be assigned on the basis of arthritis of a major joint manifested by characteristic pain on motion, under Diagnostic Code 5003. The Board notes at this point that the issue of functional loss due to pain must be considered. A thorough evaluation of a musculoskeletal or orthopedic disability for rating purposes requires consideration of any functional loss due to pain, incoordination, weakness, or fatigability. 38 C.F.R. §§ 4.40, 4.45 (2009); DeLuca v. Brown, 8 Vet. App. 202 (1995). In this regard, the March 2005 VA examiner reported that the arthritic changes affecting the Veteran's left wrist would produce tiredness of his left wrist joint on repeated use, with associated pain and discomfort, thus limiting the function of the left wrist and hand due to loss of endurance and easy fatigability. The examiner characterized the Veteran's left wrist disability as being moderately impairing, but stated that neither the Veteran's left wrist arthritis nor his scar rendered the Veteran unemployable by themselves. In view of the foregoing discussion, the Board finds that the Veteran's subjective complaints of feeling left wrist joint tenderness when he bumped it against an object, when considered with the March 2005 VA examiner's finding of functional loss of the left wrist due to fatigue, pain, and discomfort with repeated use, adequately approximates the criteria of Diagnostic Code 5003 for a 10 percent rating for arthritis of a major joint manifested by characteristic pain on motion. Therefore, as the Veteran has met this criteria, a 10 percent evaluation will be assigned on this basis. (c.) Extraschedular consideration To the extent that the Veteran contends that a compensable rating for his shell fragment wound scars, the separate 10 percent evaluation assigned for his left wrist arthritis as residual to a shell fragment wound, and a rating above 40 percent for his Type II diabetes mellitus is warranted on an extraschedular basis, generally, evaluating a disability using either the corresponding or analogous diagnostic codes contained in the Rating Schedule is sufficient. See 38 C.F.R. §§ 4.20, 4.27 (2009). Because the ratings are averages, it follows that an assigned rating may not completely account for each individual appellant's circumstance, but nevertheless would still be adequate to address the average impairment in earning capacity caused by disability. However, in exceptional cases where the rating is inadequate, it may be appropriate to assign an extraschedular rating. 38 C.F.R. § 3.321(b) (2009). The threshold factor for extraschedular consideration is a finding that the evidence before VA presents such an exceptional disability picture that the available schedular evaluations for that service-connected disability are inadequate, a task performed either by the RO or the Board. Id.; see Thun v. Peake, 22 Vet. App. 111, 115 (2008); see also Fisher v. Principi, 4 Vet. App. 57, 60 (1993) ("[R]ating [S]chedule will apply unless there are 'exceptional or unusual' factors which render application of the schedule impractical."). In Thun v. Peake, 22 Vet. App. 111 (2008), the Court set forth a three-step analysis which provided additional guidance in determining whether referral for extraschedular consideration is appropriate. According to Thun, the initial step is a comparison between the level of severity and symptomatology of the appellant's service-connected disability with the established criteria found in the Rating Schedule for that disability. Thun, 22 Vet. App. at 115. If the criteria reasonably describe the appellant's disability level and symptomatology, then the appellant's disability picture is contemplated by the Rating Schedule, the assigned schedular evaluation is, therefore, adequate, and no referral is required. See VAOPGCPREC 6-96; 61 Fed. Reg. 66749 (1996) (when service-connected disability affects employment "in ways not contemplated by the rating schedule[,]" § 3.321(b)(1) is applicable). In the second step of the inquiry, however, if the schedular evaluation does not contemplate the claimant's level of disability and symptomatology and is found inadequate, the RO or Board must determine whether the claimant's exceptional disability picture exhibits other related factors such as those provided by the regulation as "governing norms." 38 C.F.R. 3.321(b)(1) (related factors include "marked interference with employment" and "frequent periods of hospitalization"). When the rating schedule is inadequate to evaluate a claimant's disability picture and that picture has related factors such as marked interference with employment or frequent periods of hospitalization, then the case must be referred to the Under Secretary for Benefits or the Director of the Compensation and Pension Service for completion of the third step - a determination of whether, to accord justice, the claimant's disability picture requires the assignment of an extraschedular rating. Id. The Board finds that the Veteran's disability picture is not so unusual or exceptional in nature as to render the noncompensable evaluations assigned for his shell fragment wound scars, the separate 10 percent evaluation assigned for his left wrist arthritis residual to a shell fragment wound, and 40 percent initial rating assigned herein for Type II diabetes mellitus inadequate. The Veteran's diabetes is evaluated as a disability of his endocrine system under 38 C.F.R. § 4.119, Diagnostic Code 7913, the criteria of which are found by the Board to specifically contemplate the level of occupational impairment caused by his disability. Id. As discussed earlier, the criteria for assignment of a 40 percent evaluation for diabetes contemplates insulin dependence, restricted diet, and regulation of activities, which is exactly the state of the Veteran's impairment as a result of this disease and, as such, is congruent with the disability picture represented by the applicable Diagnostic Code. The criteria for a 40 percent rating reasonably describe his disability level and symptomatology and, therefore, a schedular evaluation is adequate and no referral is required. See 38 C.F.R. § 4.119, Diagnostic Code 7913; see also VAOPGCPREC 6-96; 61 Fed. Reg. 66749 (1996). Although the Veteran's inability to pursue his vocation as a commercial truck driver due to Federal statutes prohibiting insulin- dependent persons from operating such vehicles is a factor for his unemployable status, it does not necessarily represent an exceptional or unusual disability picture due to marked interference with employment so as to render impractical the application of the regular schedular standards. The SSA records in this regard note that it is also the Veteran's cognitive impairment and lack of education beyond 6th-grade level, as well as the Veteran's own admission of his illiteracy, that contribute to the Veteran's overall unemployability such that his diabetes mellitus alone cannot be regarded as the sole reason for his inability to maintain employment. The Veteran's shell fragment wound scars of his head and left wrist are clearly shown to produce no marked interference with the Veteran's employability and are not tender, painful, disfiguring, or productive of any functional impairment. As such, the noncompensable evaluations assigned to the scars are adequately contemplated by, and congruent with the criteria contained in the applicable Diagnostic Codes 7800, 7803, 7804, and 7805 of 38 C.F.R. § 4.118. See VAOPGCPREC 6-96; 61 Fed. Reg. 66749 (1996). Finally, the arthritic changes of the Veteran's left wrist which are attributable to his shell fragment wound are productive of characteristic pain on motion of the left wrist, which warrant a minimum 10 percent evaluation under 38 C.F.R. § 4.71a, Diagnostic Code 5003, albeit not to a compensable degree as contemplated by 38 C.F.R. § 4.71a, Diagnostic Code 5215, such that the 10 percent rating assigned is congruent with the criteria contained in the applicable rating schedule. See VAOPGCPREC 6-96; 61 Fed. Reg. 66749 (1996). Thus, based on the evidence of record, the Board finds that the Veteran's disability picture cannot be characterized as an exceptional case, so as to render the schedular evaluations inadequate with respect to his service-connected shell fragment wound scars, left wrist arthritis as residual to a shell fragment wound, and Type II diabetes mellitus. The threshold determination for a referral for extraschedular consideration was not met and, consequently, the Board finds that the Veteran is not entitled to referral for an extraschedular rating. Thun, 22 Vet. App. at 115. ORDER A 40 percent evaluation, effective from February 20, 2001, for Type II diabetes mellitus is granted, subject to controlling regulations applicable to the payment of monetary benefits. A compensable evaluation for shell fragment wound residuals of the right side of the head is denied. A compensable evaluation for shell fragment wound residuals of the left hand is denied. A separate 10 percent evaluation for arthritis of the radio- scaphoid joint with narrowing of the radio-scaphoid joint and increased distance between the scapho-lunate joint, as a residual of a shell fragment wound of the left hand, is granted, subject to controlling regulations applicable to the payment of monetary benefits. REMAND In a July 2009 rating decision, the RO granted the Veteran service connection and a 10 percent evaluation for a chronic skin disorder manifested by a skin rash affecting the lower extremities, bilaterally, effective February 20, 2001. This matter is listed as an issue on appeal in a January 2010 informal hearing presentation from the Veteran's representative, and as such, the Board will construe this as a timely notice of disagreement with the initial 10 percent rating assigned. To date, the RO has not issued a statement of the case (SOC) addressing this issue. Accordingly, the Board is required to remand the issue of entitlement to an initial evaluation in excess of 10 percent for a chronic skin disorder (claimed as skin rash of the lower extremities, bilaterally), for issuance of a SOC that addresses this issue. See Manlincon v. West, 12 Vet. App. 238 (1999). If the Veteran files a timely appeal of the matter, the ultimate outcome regarding the initial rating assigned for the skin disorder will have a material impact on the pending TDIU claim on appeal; as such, the two matters are inextricably intertwined. Therefore, in the interests of judicial economy and to avoid prejudice, the TDIU claim will be held in abeyance pending the issuance of an SOC for the initial rating claim and a timely filed substantive appeal of this matter by the Veteran. See Holland v. Brown, 6 Vet. App. 443 (1994). See also Bernard v. Brown, 4 Vet. App. 384 (1993). (At this juncture, the Board notes that the determinations made thus far in this appellate decision regarding the ratings assigned for the service-connected Type II diabetes mellitus and shell fragment wound residuals of the left hand and right side of the head result in a combined evaluation of only 60 percent (See 38 C.F.R. § 4.25 (2009)), which would not make the Veteran eligible for a TDIU under 38 C.F.R. § 4.16(a). Therefore, holding the TDIU issue in abeyance at the present time is appropriate.) In view of the foregoing discussion, the case is REMANDED to the RO via the AMC for the following action: 1. The RO should provide a SOC to the Veteran and his representative, addressing the issue of entitlement to an initial disability evaluation in excess of 10 percent for a chronic skin disorder manifested by a skin rash affecting the lower extremities, bilaterally. The Veteran and his representative must be advised of the time limit in which he may file a Substantive Appeal. Then, only if an appeal is timely perfected, should the above issue be returned to the Board for further appellate consideration, if otherwise in order. 2. Following final determination as to whether the aforementioned issue is properly perfected for appeal, the claim of entitlement to a TDIU should be readjudicated. In the event that the claim remains denied, the Veteran and his representative should be provided a supplemental statement of the case, which includes a summary of additional evidence submitted, any additional applicable laws and regulations, and the reasons for the decision. After they have been given the applicable time to submit additional argument, the claim should be returned to the Board for further review. The appellant has the right to submit additional evidence and argument on the matter or matters the Board has remanded. Kutscherousky v. West, 12 Vet. App. 369 (1999). This claim must be afforded expeditious treatment. The law requires that all claims that are remanded by the Board of Veterans' Appeals or by the United States Court of Appeals for Veterans Claims for additional development or other appropriate action must be handled in an expeditious manner. See 38 U.S.C.A. §§ 5109B, 7112 (West Supp. 2009). ______________________________________________ BARBARA B. COPELAND Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs