VBA Improperly Created Debts When Reducing Veterans’ Disability Levels

In a March 2021 review, the VA OIG identified several cases in which Veterans Benefits Administration (VBA) employees in Chicago, Illinois, improperly created debts in veterans’ accounts when reducing disability levels. The OIG conducted this review to determine the magnitude of the problem nationwide. The OIG found instances in which VBA employees retroactively reduced disability levels and erroneously created debts without always informing veterans. Based on the review of a statistical sample, the review team estimated errors incorrectly created debts totaling about $13.4 million. Errors included inappropriately reducing disability levels retroactively, creating debts when overpayments should have been eliminated because they were due to VBA’s own administrative errors, and failing to provide veterans with notice and due process for these actions. About $4.6 million of the estimated $13.4 million in erroneous debts had been collected from veterans as of February 2021. Some veterans were not given an opportunity to dispute the debts or request waivers and were likely unaware they did not receive all their benefits. Some veterans were told overpayments for administrative errors would not be collected but the debt was still created. About $6.9 million in debt was pending, and about $1.8 million was corrected before collection. Errors generally occurred because VBA’s electronic system did not show employees each time a debt was created. Consequently, they may not have been aware they had even created the debts. VA management concurred with the four recommendations, including to certify correction of OIG-identified errors. VBA should review all compensation awards completed since January 1, 2020, with debts associated with reduced disability levels and take appropriate action. VBA should also update its electronic system to alert employees to when their actions create a debt, and then assess the effectiveness of recommendation responses and the need for additional measures.