## Facts

- A U.S. Army veteran with multiple service-connected disabilities (combined rating 50%) sought a total disability rating based on individual unemployability (TDIU) on an extraschedular basis under 38 C.F.R. § 4.16(b).
- A VA regional office denied TDIU in March 2012.
- In July 2014, the Board of Veterans’ Appeals referred the claim to the Director, Compensation Service, for extraschedular consideration, noting evidence that sedentary work might be inconsistent with the veteran’s education and occupational background.
- The Director denied extraschedular TDIU.
- In February 2017, the Board denied extraschedular TDIU, concluding the service-connected disabilities did not prevent securing and following substantially gainful employment, without defining that phrase or reconciling its denial with the earlier referral.
- The veteran appealed to the U.S. Court of Appeals for Veterans Claims.

## Issues

1. Whether a Board referral for extraschedular TDIU under 38 C.F.R. § 4.16(b) constrains the Board’s later merits decision after the Director denies extraschedular TDIU.
2. Whether the Board provided adequate reasons or bases when it did not define or meaningfully apply the phrase “unable to secure and follow a substantially gainful occupation,” and whether the Court should interpret that phrase.

## Decision

- The Court held that a § 4.16(b) referral does not bind the Board to award extraschedular TDIU after the Director’s denial.
- The Court held that the referral determination rests on a lower evidentiary threshold than the ultimate award determination: whether there is sufficient evidence to substantiate a reasonable possibility of unemployability due to service-connected disability.
- The Court held that when the Board later denies after having referred, it must address the prior referral finding and explain any change in outcome, especially absent new evidence, to satisfy 38 U.S.C. § 7104(d)(1).
- The Court interpreted “unable to secure and follow a substantially gainful occupation” to include both economic and noneconomic components.
- The Court vacated the Board’s decision and remanded for readjudication consistent with its interpretation and reasons-or-bases requirements.

## Legal Principles

- Extraschedular TDIU referral under 38 C.F.R. § 4.16(b) requires a “reasonable possibility” showing and is a lower threshold than the standard for awarding TDIU.
- A prior Board referral does not predetermine the merits, but the Board must reconcile its earlier referral-related factual findings with any later denial and provide an adequate statement of reasons or bases under 38 U.S.C. § 7104(d)(1).
- “Unable to secure and follow a substantially gainful occupation” has:
  - An economic component: whether the veteran earns more than marginal income (generally measured against the poverty threshold for one person) outside a protected environment.
  - A noneconomic component: whether the veteran can obtain and maintain employment in light of individualized limits and vocational background.
- Noneconomic considerations may include, when raised by the record:
  - History, education, skills, and training;
  - Physical ability (exertional and nonexertional limits) to perform occupational tasks (e.g., sitting, standing, walking, lifting, reaching, grasping, typing; sensory limits);
  - Mental ability to perform occupational tasks (e.g., memory, concentration, adaptability, stress tolerance, interpersonal functioning, reliability, productivity).
- The identified factors are not a mandatory checklist; discussion is required only to the extent the evidence raises them.

## Conclusion

The Court required the Board to (1) explain why it denies extraschedular TDIU after previously referring the claim under the lower “reasonable possibility” standard and (2) evaluate unemployability using a two-part framework distinguishing economic from noneconomic components of substantially gainful employment, vacating and remanding for inadequate reasons or bases.


Ray v. Wilkie, 31 Vet. App. 58 (2019)