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Auditors: VA overpaid some disabled veterans

Jan. 24, 2013 - 08:46AM   |   Last Updated: Jan. 24, 2013 - 08:46AM  |  
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Inspectors say the most stubborn, chronic mistake made by Veterans Affairs claims examiners while trying to dig their way out of a growing backlog of cases is overcompensating some veterans.

The Department of Veterans Affairs overpaid 12,800 veterans $943 million from 1993 to 2009, according to projections by the VA's Office of Inspector General. And if the error isn't corrected, inspector general auditors said another $1.1 billion could be wasted by 2016.

The VA says the projections are significantly overstated, but it is fixing the problem. The House Veterans Affairs Committee plans to hold a hearing on the issue in February.

The mistakes occur in a narrow batch of cases where veterans temporarily receive a 100 percent disability rating while undergoing surgery or debilitating treatments and convalescing.

Claims examiners have repeatedly failed often in two out of three sampled cases to seek a follow-up medical exam to determine if the veteran's condition has improved and the temporary 100 percent disability rating should be reduced accordingly, inspectors said. The results are veterans who improve or recover but receive hundreds of thousands of dollars in compensation over years for a level of disability they no longer have, inspectors said.

"That (rating) will run forever until somebody like us stumbles upon it," said Brent Arronte, a director of inspections.

The 100 percent rating legally bars the VA from recouping overpayments that inspectors say have occurred, the department said.

A common error involves cancer treatment where the disease stabilizes or goes into remission, according to inspector general reports. In one case, a veteran who improved after being treated for non-Hodgkin lymphoma was overpaid $237,000 over 7 1/2 years until the mistake at a Cleveland VA office was caught by inspectors, according to a September report.

Inspectors said that claims examiners either fail to schedule follow-up exams when the disability rating is put in place, or fail to act when alerted that one is necessary.

"We're a little frustrated," Sondra McCauley, deputy assistant inspector general for audits and evaluations, said of the overpayments. "It's a human error thing."

Inspectors say one challenge is growing workloads for claims examiners. "People have told us there is some pressure for them to meet their production goals," Arronte said.

The VA said fixes were put in place last July to help ensure follow-up exams are scheduled. In addition, the claims process is to become fully automated this year, and claims examiners will automatically be alerted that exams may be necessary, said Lois Mittelstaedt, VA benefits administration chief of staff.

"We don't want any more (payments) slipping through the cracks that we find 10 years later we should have stopped," said Thomas Murphy, VA compensation service director. "There's a lot of taxpayer dollars at risk here, and we want to make sure we get the process right."

A January 2011 inspector general audit first projected more than $1 billion would be lost over five years if the temporary disability problem was not fixed, and all 42 regional office inspections since then still show errors.

VA claims examiners handled 1.1 million compensation requests last year and took an average of 260 days to complete cases. The VA pays out about $40 billion a year in compensation to veterans for service-connected disabilities.

"When you're projecting $1.1 billion over the next five years could be spent on inaccurate benefits," said Linda Halliday, assistant inspector general for audits and evaluations, "that's a lot of money ... (that) could potentially be used to serve other veterans' benefits."

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