Stewart v. Collins — SMC is compensation, not service connection; severance procedures do not apply

Richard A. Stewart appealed a Board decision that upheld the discontinuance of special monthly compensation (SMC) at the housebound rate and dismissed as moot a related earlier-effective-date issue. The RO had originally awarded SMC(s) based on a favorable finding that the veteran’s TDIU was based on a single disability and that his remaining disabilities satisfied the 60% requirement. The RO later concluded that the award was clear and unmistakable error (CUE) and discontinued SMC, and the Board affirmed using the severance-of-service-connection framework in 38 C.F.R. § 3.105(d).

The Court held that SMC is a rate of compensation, not a form of service connection, so § 3.105(d) does not apply to discontinuing SMC. The Court also agreed with the parties that the Board erred by analyzing a different CUE theory than the one actually identified by the RO and by failing to address the binding-favorable-finding regulations in 38 C.F.R. §§ 3.104(c) and 20.801(a). Because VA failed to comply with the governing law and did not carry its burden, the Court reversed the discontinuance and ordered reinstatement of SMC(s) as of August 1, 2023. The Court vacated and remanded the dismissed earlier-effective-date issue as inextricably intertwined.

SMC may not be discontinued under the severance-of-service-connection provisions of 38 C.F.R. § 3.105(d); where VA fails to apply the correct discontinuance framework and does not properly rebut favorable findings or support the identified CUE theory, reversal and reinstatement may be required.

When VA tries to terminate SMC, advocates should scrutinize whether VA used the wrong regulatory mechanism, whether the agency actually addressed the same CUE theory it later relies on, and whether favorable findings were properly rebutted. This decision gives strong support for reversal when VA tries to treat SMC like severed service connection.

This decision clarifies a recurring procedural mistake: VA cannot use severance-of-service-connection rules to eliminate SMC because SMC is a compensation rate, not service connection itself. It also underscores that the agency must identify and analyze the correct theory of error and must respect binding favorable findings unless CUE is properly shown.

Improper application of severance-of-service-connection procedures to discontinue SMC

A veteran receives SMC(s) based on TDIU for one disability and additional disabilities combining to 60%. VA later says the award was CUE and attempts to terminate SMC using 38 C.F.R. § 3.105(d) without properly addressing the original favorable findings or the specific CUE theory actually relied on by the RO.

Use this case to argue that SMC termination must be analyzed under the correct compensation-discontinuance framework, not severance, and that any CUE-based discontinuance must match the theory actually adjudicated. It is also useful to challenge Board decisions that ignore § 3.104(c)/§ 20.801(a) favorable findings or that fail to analyze the 100% and 60% SMC(s) elements correctly.

Bradley v. Peake, Buie v. Shinseki, Gazelle v. Shulkin, Read v. Shinseki, Stallworth v. Nicholson, King v. Shinseki, Horn v. Shinseki, Wilson v. West