Fiscal Year 2005 Performance and Accountability Report Published November 15, 2005
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VA is a party in various administrative proceedings, legal actions, and tort claims arising from various sources including: disputes with contractors, challenges to compensation and education award decisions, loan guaranty indemnity debt cases, and allegations of medical malpractice. Certain legal matters to which VA may be a named party are administered and, in some instances, litigated by the Department of Justice. Generally, amounts (more than $2.5 thousand for Federal Tort Claims Act cases) to be paid under any decision, settlement, or award are funded from the Judgment Fund, which is maintained by Treasury. Of the amounts paid from the Judgment Fund, malpractice cases claimed 69 percent in FY 2005 and 85 percent in FY 2004. Contract dispute payments for FY 2005 and FY 2004 were $18.8 and $9.4, respectively. The "No Fear" payments for FY 2005 were $1.1 and $1.4 for FY 2004.
VA uses accepted actuarial methods to estimate the liability resulting from medical malpractice and other tort claim exposure. VA discounted future estimated payments using U.S. Treasury spot rates as of September 30, 2005 and 2004. Had these payments not been discounted, the associated liability would have been an additional $62 and $41, respectively.
VA has recorded a liability for pending legal claims that are estimated to be paid by the Judgment Fund. This liability is established for all pending claims whether reimbursement is required or not. This liability was $522 for FY 2005 and $501 for FY 2004. There were 13 contract and personnel law cases with claimed amounts totaling $62.1 where there was at least a reasonable possibility that a loss may occur. VA is also required to record an operating expense and imputed financing source for the Judgment Fund's pending claims and settlements. Judgment Fund accounting is shown below:
Judgment Fund For the Years Ended September 30,
|
2005 |
2004 |
Fiscal Year Settlement Payments |
$ 110 |
$ 108 |
Less Contract Dispute Payments |
(20) |
(11) |
Imputed Financing-Paid by Other Entities |
90 |
97 |
Increase (Decrease) in Liability for Claims |
(21) |
(27) |
Operating Expense (Revenue) |
$ 69 |
$ 70 |
It is the opinion of VA's management that resolution of pending legal actions as of September 30, 2005 will not materially affect VA's operations or financial position when consideration is given to the availability of the Judgment Fund appropriation to pay some court-settled legal cases. Fiscal year 2005 settlement payments were $90.
The amount of unobligated and obligated authority relating to appropriations cancelled on September 30, 2005 and 2004 was $25.1 and $16.9, respectively. Any payments due that may arise relating to cancelled appropriations will be paid out of the current year's appropriations in accordance with the provisions of the Expired Funds Control Act of 1990.
VA provides medical care to veterans on an "as available" basis, subject to the limits of the annual appropriations. In accordance with 38 CFR 17.36 (c), VA's Secretary makes an annual enrollment decision that defines the veterans, by priority, who will be treated for that fiscal year subject to change based on funds appropriated, estimated collections, usage, the severity index of enrolled veterans, and changes in cost. While VA expects to continue to provide medical care to veterans in future years, an estimate of this amount cannot be reasonably made. Accordingly, VA recognizes the medical care expenses in the period the medical care services are provided. For the fiscal years 2001-2005, the average medical care cost per year was $24.1 billion.
The Medical facility in New Orleans was significantly damaged by Hurricane Katrina. The facility was closed pending assessments of damages and operational feasibility. The losses have not yet been determined, but management believes they will not materially impact VA operations.
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