## Facts

- Dennis M. Thun, a Vietnam combat veteran, had service-connected PTSD.
- He maintained steady, full-time employment as a senior systems programmer, working at his then-current job since May 1986.
- VA assigned a 70% schedular disability rating for PTSD.
- Thun alleged his PTSD impaired workplace relationships and prevented promotion and higher earnings, claiming less-experienced coworkers advanced ahead of him.
- He sought referral for an extraschedular evaluation under 38 C.F.R. § 3.321(b)(1), arguing the disparity between his actual income (including VA benefits) and the income he believed he would have earned absent PTSD showed the schedule was inadequate.
- The Board of Veterans’ Appeals denied extraschedular referral, finding no marked interference with employment and emphasizing his long-term, gainful employment.

## Issues

1. Whether 38 C.F.R. § 3.321(b)(1) requires treating an individualized “income gap” or alleged loss of earning capacity as sufficient to show the schedular criteria are inadequate.
2. Whether the Board erred in denying referral by concluding that Thun’s asserted inability to advance at work did not constitute “marked interference with employment.”

## Decision

- The Court of Appeals for Veterans Claims affirmed the Board’s denial of referral for extraschedular consideration.
- The court rejected the view that an extraschedular threshold is met by showing individualized unrealized income.
- The court held the Board did not commit reversible error in finding the 70% PTSD schedular criteria adequately addressed the disability picture and that the record did not show marked employment interference warranting referral.
- The court articulated a structured three-step process for extraschedular consideration under § 3.321(b)(1).

## Legal Principles

- Extraschedular consideration under 38 C.F.R. § 3.321(b)(1) proceeds in three steps:
  - Step 1: Determine whether the schedular criteria are inadequate to describe the disability picture.
  - Step 2: If inadequate, determine whether related factors such as marked interference with employment or frequent hospitalization are present.
  - Step 3: If both are met, refer the case to the appropriate VA official; the Board and RO may screen for referral, but only designated VA officials may assign an extraschedular rating.
- The rating schedule compensates for average impairment in earning capacity; § 3.321(b)(1) does not require or contemplate calculating a veteran’s individualized unrealized income as part of the Step 1 adequacy inquiry.
- Evidence of reduced earnings or missed advancement may be relevant to Step 2 (marked interference) or Step 3 (assignment), but it is not the Step 1 test for inadequacy.

## Conclusion

The CAVC affirmed denial of extraschedular referral for a veteran with a 70% PTSD rating, holding that individualized “income gap” calculations do not establish schedular inadequacy and adopting a three-step framework requiring (1) inadequacy of the rating criteria, (2) related factors such as marked employment interference or frequent hospitalization, and (3) referral to designated VA officials to decide whether an extraschedular rating should be assigned.


Thun v. Peake, 22 Vet. App. 111 (2008)