## Facts

- Martin Karnas, a Vietnam-era Army veteran, was service-connected for schizophrenia.
- A severe schizophrenia diagnosis led to a 70% disability rating effective July 19, 1972, later increased to 100% in 1978.
- VA reexaminations in 1982 and 1984 continued the 100% rating for chronic schizophrenia.
- In July 1986, a VA psychiatrist reported Karnas had not worked for years, avoided social situations, and showed significant psychiatric symptoms (including depressed mood and paranoid ideation).
- The VA Regional Office reduced the rating from 100% to 70%, stating the condition had improved.
- In March 1987, the same psychiatrist reexamined Karnas, maintained the schizophrenia diagnosis, and explicitly stated Karnas’s mental condition had not improved since 1986.
- The Board of Veterans’ Appeals nonetheless upheld the reduction, relying in part on the absence of recent psychiatric hospitalization and treatment.

## Issues

1. Whether the Board lawfully upheld a reduction of a long-standing 100% psychiatric disability rating without demonstrating material improvement under governing rating-reduction safeguards.
2. Whether the Board provided an adequate statement of reasons or bases for its decision as required by 38 U.S.C. § 4004(d)(1) (now § 7104(d)(1).
3. When a law or regulation changes during the pendency of a claim or appeal, whether the version more favorable to the veteran applies absent contrary congressional or regulatory direction.

## Decision

- The court reversed the Board’s decision denying restoration of the 100% rating and remanded for action consistent with its opinion.
- The court held the Board committed reversible errors of fact and law in treating the record as showing improvement despite VA medical evidence expressly stating there was no improvement.
- The court faulted the Board for inadequate reasons or bases, including failure to reconcile the “no improvement” medical finding with the reduction.
- The court stated that when law or regulation changes during the pendency of a claim, the version more favorable to the veteran applies unless Congress or the regulation provides otherwise.

## Legal Principles

- A stabilized, long-standing disability rating may not be reduced without evidence of actual, sustained material improvement under ordinary conditions of life, consistent with applicable rating-reduction safeguards.
- The Board must provide an adequate statement of reasons or bases that accounts for materially favorable evidence and explains how conflicting evidence is weighed.
- When a statute or regulation changes while a claim or appeal is pending, the adjudicator applies the version more favorable to the claimant absent clear direction to the contrary.

## Conclusion

The court reversed a VA rating reduction because the Board failed to identify material improvement and failed to explain its decision in light of medical evidence stating there had been no improvement; it also articulated the rule that, during a pending claim, the more favorable version of a changed law or regulation governs unless expressly limited.


Karnas v. Derwinski, 1 Vet. App. 308 (1991)