38 CFR 21.198 -
(a) Purpose. The purpose of discontinued status is to identify situations in which termination of all services and benefits received under Chapter 31 is necessary.
(b) Placement in “discontinued”. VA will discontinue the veteran's case and assign the case to discontinued status following assignment to interrupted status as provided in § 21.197 for reasons including but not limited to the following:
(1) Veteran declines to initiate or continue rehabilitation process. If a veteran does not initiate or continue the rehabilitation process and does not furnish an acceptable reason for his or her failure to do so following assignment to interrupted status, the veteran's case will be discontinued and assigned to discontinued status. This includes:
(i) A case in applicant status;
(ii) A case in evaluation and planning status;
(iii) A case in extended evaluation status;
(iv) A case in rehabilitation to the point of employability status;
(v) A case in independent living program status;
(vi) A case in employment services status; or
(vii) A case in interrupted status;
(2) Unsatisfactory conduct and cooperation. When a veteran's conduct or cooperation becomes unsatisfactory, services and assistance may be discontinued and assigned to discontinued status as determined under provisions of §§ 21.362 and 21.364.
(3) Eligibility and entitlement. Unless the veteran desires employment assistance, the veteran's case will be discontinued and assigned to discontinued status when:
(i) The veteran reaches the basic twelve-year termination date, and there is no basis for extension; or
(ii) The veteran has used 48 months of entitlement under one or more VA programs, and there is no basis for extension of entitlement.
(4) Medical and related problems. A veteran's case will be discontinued and assigned to discontinued status when:
(i) The veteran will be unable to participate in a rehabilitation program because of a serious physical or emotional problem for an extended period; and
(ii) VA medical staff are unable to estimate an approximate date by which the veteran will be able to begin or return to the program.
(5) Withdrawal. Veteran voluntarily withdraws from the program.
(6) Failure to progress. The veteran's case will be discontinued and assigned to discontinued status if his or her failure to progress in a program is due to:
(i) Continuing lack of application by the veteran unrelated to any personal or other problems; or
(ii) Inability of the veteran to benefit from rehabilitation services despite the best efforts of VA and the veteran.
(7) Special review of proposed discontinuance action. The Vocational Rehabilitation and Employment (VR&E) Officer shall review each case in which discontinuance is being considered for a veteran with a service-connected disability rated 50 percent or more disabling. The VR&E Officer may utilize existing resources to assist in the review, including referral to the Vocational Rehabilitation Panel (VRP).
(c) Termination of “discontinued” status. Except as noted in paragraph (c)(3) of this section assignment of the veteran's case to the same status from which the veteran was discontinued or to a different one requires that VA first find:
(1) The reason for the discontinuance has been removed; and
(2) VA has redetermined his or her eligibility and entitlement under Chapter 31.
(3) In addition to the criteria described in paragraphs (c) (1) and (2) of this section a veteran placed into discontinued status as a result of a finding of unsatisfactory conduct or cooperation under §§ 21.362 and 21.364 must also meet the requirements for reentrance into a rehabilitation program found in § 21.364.
(d) Follow-up of a cases placed in “discontinued” status. VA shall establish appropriate procedures to follow up on cases which have been placed in discontinued status, except in those cases reassigned from applicant status. The purpose of such followup is to determine if:
(1) The reasons for discontinuance may have been removed, and reconsideration of eligibility and entitlement is possible; or
(2) The veteran is employed, and criteria for assignment to rehabilitated status are met.
See § 21.324 Reduction or termination dates of subsistence allowance.