[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
EXAMINING HOW VBA CAN EFFECTIVELY PREVENT AND MANAGE OVERPAYMENTS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON DISABILITY ASSISTANCE AND MEMORIAL AFFAIRS
of the
COMMITTEE ON VETERANS' AFFAIRS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
WEDNESDAY, OCTOBER 25, 2017
__________
Serial No. 115-36
__________
Printed for the use of the Committee on Veterans' Affairs
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://govinfo.gov
_________
U.S. GOVERNMENT PUBLISHING OFFICE
31-428 WASHINGTON : 2019
COMMITTEE ON VETERANS' AFFAIRS
DAVID P. ROE, Tennessee, Chairman
GUS M. BILIRAKIS, Florida, Vice- TIM WALZ, Minnesota, Ranking
Chairman Member
MIKE COFFMAN, Colorado MARK TAKANO, California
BRAD R. WENSTRUP, Ohio JULIA BROWNLEY, California
AMATA COLEMAN RADEWAGEN, American ANN M. KUSTER, New Hampshire
Samoa BETO O'ROURKE, Texas
MIKE BOST, Illinois KATHLEEN RICE, New York
BRUCE POLIQUIN, Maine J. LUIS CORREA, California
NEAL DUNN, Florida KILILI SABLAN, Northern Mariana
JODEY ARRINGTON, Texas Islands
JOHN RUTHERFORD, Florida ELIZABETH ESTY, Connecticut
CLAY HIGGINS, Louisiana SCOTT PETERS, California
JACK BERGMAN, Michigan
JIM BANKS, Indiana
JENNIFFER GONZALEZ-COLON, Puerto
Rico
Jon Towers, Staff Director
Ray Kelley, Democratic Staff Director
SUBCOMMITTEE ON DISABILITY ASSISTANCE AND MEMORIAL AFFAIRS
MIKE BOST, Illinois, Chairman
MIKE COFFMAN, Colorado ELIZABETH ESTY, Connecticut,
AMATA RADEWAGEN, America Samoa Ranking Member
JACK BERGMAN, Michigan JULIA BROWNLEY, California
JIM BANKS, Indiana KILILI SABLAN, Northern Mariana
Islands
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
hearing records of the Committee on Veterans' Affairs are also
published in electronic form. The printed hearing record remains the
official version. Because electronic submissions are used to prepare
both printed and electronic versions of the hearing record, the process
of converting between various electronic formats may introduce
unintentional errors or omissions. Such occurrences are inherent in the
current publication process and should diminish as the process is
further refined.
C O N T E N T S
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Wednesday, October 25, 2017
Page
Examining How VBA Can Effectively Prevent And Manage Overpayments 1
OPENING STATEMENTS
Honorable Mike Bost, Chairman.................................... 1
Honorable Elizabeth Esty, Ranking Member......................... 2
WITNESSES
Mr. Willie C. Clark, Sr., Deputy Under Secretary for Field
Operations, Veterans Benefits Administration, U. S. Department
of Veterans Affairs............................................ 4
Prepared Statement........................................... 21
Accompanied by:
Ms. Beth Murphy, Director, Compensation Service, Veterans
Benefits Administration, U. S. Department of Veterans
Affairs
Ms. Roberta Lowe, Acting Director, Debt Management Center,
Office of Management, U. S. Department of Veterans
Affairs
Mr. David G. Spivey, Deputy Director, National Veterans Affairs
and Rehabilitation Division, The American Legion............... 5
Prepared Statement........................................... 22'
Mr. Shane L. Liermann, Assistant National Legislative Director,
Disabled American Veterans..................................... 7
Prepared Statement........................................... 28
Mr. John Towles, Deputy Director, National Legislative Service,
Veterans of Foreign Wars....................................... 8
Prepared Statement........................................... 32
QUESTIONS FOR THE RECORD
Letter From Chairman Mike Bost To VA............................. 34
VA Response to Letter From Chairman Mike Bost.................... 36
EXAMINING HOW VBA CAN EFFECTIVELY PREVENT AND MANAGE OVERPAYMENTS
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Wednesday, October 25, 2017
U.S. House of Representatives,
Committee on Veterans' Affairs,
Subcommittee on Disability Assistance
and Memorial Affairs,
Washington, D.C.
The Subcommittee met, pursuant to notice, at 10:30 a.m., in
Room 334, Cannon House Office Building, Hon. Mike Bost,
[Chairman of the Subcommittee] presiding.
Present: Representatives Bost, Coffman, Radewagen, Bergman,
Esty, and Brownley.
OPENING STATEMENT OF HONORABLE MIKE BOST, CHAIRMAN
Mr. Bost. Good morning and welcome. This is the oversight
hearing of the Subcommittee on Disability Assistance and
Memorial Affairs, and we will now come to order.
Today we are looking at the overpayments and how they
impact veterans. An overpayment is when the VA gives a veteran
too much money. For example, some disabled veterans receive
additional compensation to help with expenses of their eligible
dependents, such as their spouse. When a veteran informs the VA
that they are divorced, the VA should immediately process a
change in the dependent's status, which will lower the
veteran's compensation payment. But if the VA doesn't process
the change for several months, the veteran may end up owing VA
thousands of dollars.
Naturally, this can be a big problem for the veteran and
his family, his or her family, especially if they can't afford
to pay it back. On the other hand, if the veteran doesn't repay
the money, the taxpayer has to foot the bill.
This hearing will review the reasons overpayments are
created and how VA can prevent them, such as if the overpayment
is caused by the VA's mistake or a delay in processing a claim.
We will look also at a troubling trend: the growth in the
amount of overpayments over the past 2 years. After all, the
taxpayers, we have invested more than $1 billion for the VBMS
and other technology to improve the efficiency and accuracy in
the last 5 years. All this new technology should reduce the
number of overpayments, yet in fiscal year 2015 VA issued about
$350 million in overpayments; in fiscal year 2016, the amount
increased to more than $600 million. And I think that we may
have the right to ask why overpayments have increased and what
VA is doing to reduce them.
We will also look into the Department's debt collection
process to ensure that the VA is being both fair to the veteran
and a good steward of the taxpayer dollars. An important part
of this process is how VA notifies the veteran of an
overpayment.
During the September 13th Subcommittee legislative hearing,
several VSO witnesses testified that veterans often don't
receive the debt notification notice. This is a problem,
because a veteran who doesn't receive the notice may miss
important deadlines to dispute or mitigate the debt.
I am also concerned that the debt notices don't clearly
explain how veterans can dispute the debt. If a veteran doesn't
agree with the debt, it is also only fair that the veteran has
the chance to prove that he or she doesn't actually owe the
money before the VA starts withholding their payments.
So, we have a lot of ground to cover this morning. I am
looking forward to having this constructive discussion about
how to better prevent overpayments and, if the overpayment is
unavoidable, to ensure that the VA is being fair to the veteran
while still protecting the taxpayers.
Again, I want to thank everyone for being here.
I now want to recognize Ranking Member Ms. Esty for her
opening statements.
OPENING STATEMENT OF HONORABLE ELIZABETH ESTY, RANKING MEMBER
Ms. Esty. Thank you, Mr. Chairman.
Over the past 4 years, the VBA has made significant
progress reducing the backlog in disability benefits claims.
Congress asked the agency to do this, to reduce the backlog,
and we know that you have worked over time to do so.
When non-rating work piled up during that time, VBA
recognized this and whittled down the backlog from more than
100,000 claims to 14,000 in the last 2 years, but now it is
time to make some important changes in VA's management of
overpayments.
In particular, it is time to recognize that most often
overpayments result from a delay in processing changes to a
veteran's status, be it the birth of a child, death, return to
active duty, incarceration, or other reasons.
What I hope to hear today from the VA is how it hopes and
plans to reduce these delays by improving, for example, the
matching agreements that you have with the Social Security
Administration, with the IRS, and the Department of Justice. I
also hope to hear how the VA can improve communication, which
the Chairman has already recognized and we have talked about
several times here in this Committee, communication between the
Veterans Benefits Administration and the Veterans Health
Administration on getting an integrated records system. And,
most importantly, I hope to hear what changes are in the works
in how the VBA and the so-called Debt Management Center
communicates with veterans by letter when an overpayment
occurs.
Elderly veterans on fixed incomes who have just lost a life
partner should not be receiving a letter from the VA that they
owe a debt. I think particularly about the World War II
veterans in my district. And the shame that is associated with
a word like debt when they are grieving the loss of a life
partner of 50, 60, or 70 years. We can and we must do better.
Younger veterans receiving drill pay while they are
continuing to serve in the Guard and Reserve after leaving
active duty should not be owed that they owe a, quote,
``debt,'' which is essentially the result of a lag time between
communication between DoD and VA.
We all recognize that overpayments must be reclaimed from
veterans and their survivors when they occur. The law requires
this and it is our responsibility in Congress as stewards of
the tax dollars to ensure that we have the resources to provide
benefits to the veterans, according to law, who deserve it. And
we do recognize that the VA has taken steps to make it easier
for veterans to notify VA of changes in their status.
But with all of that said, the current recoupment process
needs improvement. We need to make sure that veterans and their
families are respected in this process. They have served this
country. Oftentimes, they have notified some portion of the VA
about this change. It is not unreasonable for them to assume
that the entire agency knows of this. So we have to find a
better way to move forward to integrate those systems.
The notices need to be clear, they need to be respectful,
they need to be timely, and we need to ensure that they
actually are received by the veteran as quickly as possible. As
you know, we had a hearing, recently on a proposal to require
VA to use certified mail to be processed. We understand your
estimate would make that extremely expensive. We would like to
see that money go into benefits, but we want to work with you
in ensuring that our veterans receive timely, clear,
respectful, helpful notice, and that we work to reduce the
number of occasions in which overpayments occur and the speed
with which they are resolved.
So, again, we appreciate you being with us here today, in
the spirit of cooperation and getting this right for the
veterans who have given so much to our country.
Thank you, and I yield back.
Mr. Bost. Thank you, Ms. Esty.
I ask that all other Members waive their opening remarks,
as per the Committee's custom.
And I want to welcome the witnesses that are joining us
here this morning and thank you for taking the time to be here
today.
Joining us from the VA is Mr. Willie Clark, who is the
Deputy Under Secretary for Field Operations. He is accompanied
by Beth Murphy, the Director of Compensation Services, and by
Ms. Roberta Lowe, Acting Director of the Debt Management
Center.
Testifying on behalf of The American Legion is Mr. David
Spivey, who is Deputy Director of the National Veterans Affairs
and Rehabilitation Division.
Also joining us today is Mr. Shane Liermann, the Assistant
National Legislative Director for the DAV.
We also have John Towles, who is the Deputy Director of the
National Legislative Services for the VFW.
Welcome to all of you. I want to remind the witnesses that
your complete written statement will be entered into the
hearing record.
Mr. Clark, you are now recognized for 5 minutes.
STATEMENT OF WILLIE C. CLARK, SR.
Mr. Clark. Good morning, Chairman Bost, Ranking Member
Esty, and Members of the Subcommittee. We appreciate the
opportunity to address the process by which the VA manages
overpayments that are incurred by veterans who are in receipt
of disability compensation and pension benefits.
Joining me today is Beth Murphy, Director of Compensation
Service, and Roberta Lowe, the Acting Director of VA's Debt
Management Center.
Today, I will discuss reasons for overpayments and how to
minimize them, how VA notifies veterans about them, and steps
VA has taken to assist veterans with repayments of subsequent
overpayments. Finally, I will discuss VA's policy regarding
overpayment collection and the processes by which veterans can
arrange repayment or waivers of the established overpayments.
Overpayments are considered improper payments under the
Improper Payment Elimination and Reduction Act of 2010. VA is
required by law to retroactively recover the overpayments to
the extent the veteran or beneficiary was not entitled to
receive these monetary payments.
Overpayments may occur when veterans or beneficiaries fail
to notify VA in a timely manner of certain circumstances or
life events, such as divorce, incarceration, return to active
duty, or other loss of dependent status. They may also occur
when VA gets notified, but is not able to process the claim in
a timely manner. It is important to note, VA does not establish
overpayment when VA employees make processing errors. Such
cases are resolved as administrative errors and are not
required to be recouped.
Before an overpayment is established, VA is required by law
to provide the process notice to the veteran or beneficiary of
the proposed adjustment in benefits. The beneficiary then has
60 days to submit evidence and may also request a hearing.
After the due process period expires, all evidence is reviewed
and a final decision is made, and a notification letter with
applicable appeal rights is sent. If there has been an
overpayment, the beneficiary also receives a letter explaining
the overpayment and repayment options.
VBA beneficiary overpayments are serviced by VA's Debt
Management Center. The DMC contact center counselors work with
veterans and beneficiaries to resolve overpayments through
extended payment plans, benefit offsets, waivers, compromises,
dispute resolution, and hardship refunds.
Veterans can request a waiver of the overpayment within 180
days of receiving the overpayment notice from the DMC. Waivers
received timely are sent to the VBA Committee on Waivers and
Compromises. The COWC considers elements such as fault, unjust
enrichment, and financial hardship when deciding the waiver
request. Completed waiver decisions are then returned to DMC
for processing.
VA has taken several steps to minimize overpayments. VA's
data-matching agreements allow other Federal agencies to
transmit critical feeds timely and efficiently. Automatic
notification was implemented in 2016 to notify Guardsmen and
Reservists they are not entitled to receive drill pay and VA
disability compensation for the same periods of time. VA
includes important reminders in benefits decision letters
regarding the need to inform VA of changes in status or life
events that impact monthly payment amounts.
These measures have improved the management and timeliness
of these adjustments.
As of April 2017, the National Work Queue is distributing
non-rating claims based upon capacity across field offices.
Non-rating claims are worked faster, reducing the time
administrative adjustments wait to be processed.
Additionally, VBA appreciates Congress' support in
providing resources to dedicate staff specifically to the non-
rating workload. VBA has used these resources prudently across
the Nation to lower the non-rating inventory.
These changes have improved performance, dropping overall
non-rating inventory by 23 percent and a 19percent increase in
the average number of days pending, reducing the drill pay
claims inventory by 58 percent and improving the timeliness of
dependency claims by 50 percent.
In closing, we still have much work to do to remain focused
on continuing our work to minimize overpayments. VA is
committed to improving this process and the impact that it has
on veterans.
Mr. Chairman, this concludes my statement. We would be
pleased to respond to questions you or the Ranking Member Esty
or other Members of the Subcommittee may have.
[The prepared statement of Mr. Clark appears in the
Appendix]
Mr. Bost. Thank you, Mr. Clark.
Mr. Spivey, you are recognized for five minutes for your
statement.
STATEMENT OF DAVID G. SPIVEY
Mr. Spivey. Chairman Bost, Ranking Member Esty, and
distinguished Members of the Subcommittee on Disability and
Memorial Affairs, on behalf of National Commander Denise H.
Rohan and The American Legion family, we thank you for the
opportunity to testify on behalf of The American Legion.
VA has 12 non-rating resource teams throughout the country
which handle special cases such as emergency care claims. VA
has in recent months seen a significant drop in number of
pending claims and average days processing time by channeling
dependency work through the non-rating resource teams. The
American Legion recommends that VA continue to assign a high
priority to dependency claims, because we see a substantial
number of preventable overpayments created when VA fails to
process the loss of one or more dependents on a timely basis.
VA employees with whom we have spoken are of the opinion
that, by concentrating dependency claims among these 12 teams,
gains in efficiency have been achieved.
With regard to data integration and overpayments, many of
the complications associated with a veteran incurring a VA-
based debt are caused by the lack of an integrated records
system within VA. The American Legion recommends that VA
implement a system that all VA administrations can access for
the most up-to-date contact information regarding veterans or
other VA claimants.
Mr. Chairman, the Legion thinks that a veteran should only
have to notify one VA facility of an address change.
Additionally, VA and DoD should integrate through data systems
to allow for reported changes in dependency or address
information to be shared seamlessly between the two
departments. A DoD-VA dependency match would prevent
overpayments in cases where a military retiree updates his or
her dependency status with DoD, but does not notify VA.
Although the National Work Queue has been a controversial
topic among the Veterans Service Organizations, we have come to
appreciate some advantages in managing workload to reflect
changing priorities. If used properly, the National Work Queue
can be a valuable tool to help VA reduce overpayments resulting
from delayed processing of dependency claims.
Currently, delays in VA processing of dependency claims
result in overpayments, for example, where a divorced veteran
submits a request to remove the ex-spouse or stepchildren and
VA fails to take timely action, sometimes for months or even
years. This can largely be attributed to dependency claims
being, in our view, under-prioritized vis-a-vis other types of
claims. More recently, however, dependency claim delays have
been exacerbated because they are not assigned a high priority.
In order to prevent these types of overpayments and minimize
the resulting debt, VA should give dependency claims that
involve the removal of a dependent a higher priority in the
National Work Queue.
Our service officers in the field have been told by VA
staff who process claims that they avoid processing dependency
claims due to the low point value assigned by the VA work
credit system, and the current weight assigned for these claims
creates a disincentive when trying to meet the daily production
standard. Therefore, we believe there would be fewer or smaller
overpayments generated if the 57 VA regional offices were
adequately staffed and the VA work credit system for dependency
claims were adjusted to allow for full and proper development.
Overpayments also occur from delays and adjudication errors
for veterans on the Fugitive Felon Program list. Under the
Fugitive Felon Program, VA is required to terminate benefits
for veterans identified as a ``fugitive felon,'' which is
defined by statute as ``an alleged commission of a felony or
issuance of a felony warrant.'' A veteran alleged to have
committed a misdemeanor act that results in the issuance of a
misdemeanor warrant does not meet the definition of a fugitive
felon under this statute.
Improper development by VA, such as failure to obtain the
court records, can lead to incorrect assumptions that the
warrant was issued for a felony and result in improper
termination of benefits and creation of overpayments.
Chairman Bost, Ranking Member Esty, and distinguished
Members, The American Legion appreciates the opportunity to
testify, and I would be happy to answer any questions you might
have.
Thank you.
[The prepared statement of Mr. Spivey appears in the
Appendix]
Mr. Bost. Thank you, Mr. Spivey.
Mr. Liermann, can you please begin your testimony on behalf
of the DAV?
STATEMENT OF SHANE L. LIERMANN
Mr. Liermann. Chairman Bost, Ranking Member Esty, and
Members of the Subcommittee, thank you for inviting DAV to
testify at today's hearing on VA's management of veterans'
overpayments.
Having recently been promoted to DAV's legislative staff,
this is my first congressional testimony, but not the first
time I have advocated for veterans.
While working for DAV at four different VA regional
offices, the Board of Veterans Appeals, as well as the Debt
Management Center, I have spent the last 19 years providing
representation to veterans and their families seeking their
earned benefits.
Mr. Chairman, overpayments by VA and the resultant debts
owed by veterans often cause severe financial hardship for
veterans and their families. In many cases, the burden of
repaying these debts can negatively impact a veteran's quality
of life, put them at risk of homelessness, and affect their
access to VA health care.
We understand that in an imperfect claims processing system
there will be overpayments and that it is a reasonable
expectation that recipients of such overpayments are required
to pay that debt. However, we believe that a significant
portion of overpayments, particularly for dependency changes
and incarcerated veterans, could be reduced or avoided if the
VA had better policies, processes, and oversight of their
workforce.
For example, the OIG report of September 2007 indicated
that between 2004 and 2006 an estimated additional $50 million
in overpayments were created by the VA and were avoidable.
Another example, the June 2016 OIG report determined that
between 2008 and 2015, VA's ineffective actions in processing
incarcerated veteran adjustments resulted in additional
overpayments totaling more than $100 million, and that another
$200 million in additional VA-created overpayments could accrue
from 2016 to 2020 unless VA addresses the root cause.
As the OIG reports concluded, and we agree, one of the
biggest causes of overpayments is that VBA does not place
sufficient priority on processing dependency changes or
incarceration adjustments, as they consider these non-rating
claims to be a lower priority when compared to rating claims
for disability compensation.
In order to help VA prevent overpayments from being made,
we offer the following recommendations:
One, VA must place higher priority or timely controls on
processing dependency changes and incarceration adjustments.
While deciding original claims and veterans' claims is
critical, so is reducing VA's creation of additional debt for
veterans.
Two, apply the principle of constructive knowledge. When
any part of VA has possession of the required evidence to
change the dependency status or to adjust for incarcerated
veterans and fails to act timely, VA must waive the amount of
additional debt created by VA's lack of timely action.
Three, apply the principle of constructive knowledge
throughout the entire Federal Government by accepting
information provided by other Federal agencies such as the IRS,
Federal Bureau of Prisons, and the Department of Defense.
Lastly, we recommend automatically applying apportionments
to veterans' families at the 61st day of incarceration for a
felony. Under current law, the dependent family of incarcerated
veterans can apply for an apportionment of the amount withheld
from the veteran. Making this automatic would lessen hardships
placed on families and would help to prevent large overpayments
being made to incarcerated veterans.
In addition, as we testified to the Subcommittee in
September, enactment of H.R. 3705, the Veterans Fair Debt
Notice Act, would help veterans better understand and address
debts to VA by requiring VA to utilize certified mail and plain
language in debt collection activities.
Finally, Mr. Chairman, while overpayments certainly have a
negative impact on the Federal budget, we are more concerned
that these debts can sometimes result in catastrophic outcomes
for financially stressed veterans and their families. We
believe that the actions outlined by the OIG in our
recommendation can help to eliminate these discrepancies and
lessen the burdens that VA overpayments have placed on too many
veterans and their survivors.
This concludes my testimony. I would be pleased to answer
any questions you or Members of the Subcommittee may have.
[The prepared statement of Mr. Liermann appears in the
Appendix]
Mr. Bost. Thank you, Mr. Liermann.
And, Mr. Towles, you are now recognized for 5 minutes for
the VFW, please.
STATEMENT OF JOHN TOWLES
Mr. Towles. Thank you. Chairman Bost, Ranking Member Esty,
and Members of the Subcommittee, on behalf of the men and women
of the Veterans of Foreign Wars of the United States and its
Auxiliary, thank you for the opportunity to provide our remarks
on how the Veterans Benefits Administration can effectively
prevent and manage overpayment.
The glacial speed at which the VA moves is nothing new to
the VFW or the Members of the Subcommittee. Normally,
bureaucratic redundancies that exist within organizations are
meant to serve as a protective mechanism, as they can promote
proper oversight, accountability, and thoroughness. With
regards to VA, however, especially as it relates to
overpayments and debt recoupment issues, how they are
addressed, these processes only make matters worse for some
veterans due to the time sensitivity of the issue and the
number of other offices within the VA that must be contacted.
In the past year, the VFW's National Veterans Service has
directly assisted more than 200 veterans who have experienced
issues stemming from overpayments. According to our estimates,
60 percent of the cases where NVS has intervened has resulted
in the veteran being granted either partial or full relief from
the debt from the VA's Debt Management Center.
In our experience, we have found that overpayments most
often occur with GI Bill benefits when a veteran's enrollment
status changes at his or her college. If a student decides that
they are having a difficult time meeting their educational
obligations and chooses to switch to part-time, it is the
responsibility of the school, not the veteran, to notify the
VA. In the event that the school fails to notify VA of the
change in status, the veteran will continue to receive full
living stipend and the school will continue to be paid full-
time for the tuition.
Once their error is noticed, VA will send an ambiguously-
worded notification of overpayment to the veteran, which also
provides basic options for repayment. If the veteran is unable
to contact VA to establish that the debt is erroneous, make a
repayment in a timely manner, or enter into a payment agreement
with VA, their debt is then sent to collections and VA will
garnish payments from their disability compensation benefits
until the debt is satisfied.
While the veteran does have the ability to seek relief by
filing for a waiver, VA's inability to provide the veteran
clear and concise information regarding their debt in a timely
manner significantly hinders the veteran's ability to take
action in order to prevent the VA from taking further action,
such as negative credit reporting.
In one recent case, an administrative error by the VA
triggered a $32,000 overpayment for a California National
Guardsman. The veteran did everything that he could do on his
own to rectify the situation, including notifying the VA that
he was being over-payed. The veteran filed a waiver to have the
debt discharged; however, the waiver was denied and his
disability compensation was garnished. It was not until he
contacted the VFW's One Student Veteran Office, which
successfully intervened on his behalf, that the debt was
properly discharged and the monies that were withheld from his
disability were returned.
Another case involved a retired military officer whose
daughter was using his transferred GI Bill benefits. Due to
misinterpretation of its own regulations, the VA sent
notification stating that the veteran now owed $100,000 as a
result of a reduction in rank following his retirement. It was
not until the VFW contacted VA Education Services and the DMC
directly and explained to them that despite the reduction in
rank, he still completed 20 years of qualifying service, and
that he was not obligated to repay any of the monies.
To be blunt, there is absolutely no excuse for VA not to
know its own regulations or how to effectively implement them,
but yet here we are. Had these veterans not have contacted the
VFW, there is a significant chance they would still be fighting
to get this debt cleared. These are just two of the many
situations in which the VFW utilizes our cadre of highly
trained and professional service officers to better serve
veterans, but it is our position that veterans should not be
erroneously overpaid in the first place.
The VFW suggests that VA work to streamline the collections
process by; one, ensuring that the contact information VA is
using for the veteran is current and up to date; two,
clarifying the eligible criteria for a waiver; three, outlining
in easy-to-understand terms the steps needed to request a
payment plan; and, four, repealing the need for a veteran to
submit a financial status report in the event that the debt
cannot be repaid over the course of a year.
Additionally, the VFW feels as though VA should take the
additional steps regarding the notification and recoupment
process: One, VA must ensure that any and all recoupment
actions are suspended once the veteran files an appeal with the
DMC, as per the regulations; two, VA must ensure that if the
overpayment is found to be erroneous, that any damaging
information sent to the credit reporting bureaus be corrected
immediately; three, in the event that a veteran contacts DMC of
an overpayment, the veteran should not be held liable for the
repayment after such notification is made. There is absolutely
no excuse for VA not fixing the problem as soon as it is
notified. Four, VA must ensure that regional office and DMC
staff are trained to conduct proper due diligence, and are
better trained in VA's debt management and collections
procedures and protocols. Finally, if VA is going to set a
timeline for the veteran to prove that his or her overpayment
is erroneous, the VA should send as much pertinent information
as possible regarding the nature of the debt to the veteran,
along with the notification letter.
Chairman Bost, Ranking Member Esty, and Members of the
Subcommittee, this concludes my testimony. I look forward to
answering any questions that you may have.
Thank you.
[The prepared statement of Mr. Towles appears in the
Appendix]
Mr. Bost. Thank you, Mr. Towles. And, once again, thank you
all for being here, and I'm going to go ahead and start opening
with questions.
Mr. Spivey, can you please explain, because when you gave
in your testimony that you recommend that the VA allows
veterans to remove their benefits through e-benefits, can you
expand on that, and why do you think it is that they need to do
that?
Mr. Spivey. Thank you for the question, Chairman Bost.
We, of course, as veterans' advocates, want the world to be
as simple as possible for our Nation's heroes; therefore, the
system should be as user-friendly as we can possibly make it.
Of course, this does play into the topic of overpayments,
because where we make it difficult for veterans to notify VA of
the loss of a dependent, the longer delay that causes, the
greater the overpayment.
So, for these reasons, we think that modifying e-benefits
to allow removal of a dependent would be a very strong step
forward.
Mr. Bost. Mr. Clark, do we currently allow the removal of
benefits through e-benefits?
Mr. Clark. Sir, I will have to--Chairman Bost, I would have
to take that for the record, but we do allow changes to be made
within e-benefits. In fact, over 140 benefit updates were done
through e-benefits and I would have to check to see if the
removal of a dependency, but I know adding a dependent and
several others, divorces, that we can do.
So I would have to specifically take that for the record.
Mr. Bost. Okay, and I will take that answer for the record.
But if the answer is no, I would like to know why not, because
I think in today's world there is no reason why, I mean, almost
everybody gets on the computer and can program and work with
any benefit and/or any bank account that they receive.
And maybe the VSOs, do you know right now, do they have the
opportunity to do that?
Mr. Liermann. Actually, we looked into this prior to the
hearing, Chairman, and the VA does not currently allow you to
remove a dependent in e-benefits. You can make the additions,
but since the e-benefits and adding a dependency is what they
refer to as rules-based, they can add them, however, but in
order to remove a dependent usually requires more information
such as divorce decrees, death certificates, and that is not
part of the rules-based environment. So, currently, they do not
allow them to remove them through e-benefits.
Mr. Bost. So maybe then what we need to do is look into the
possibility of a rules change that would allow that to occur
and, if you need more information, then provide the slots
necessary in the program and/or a follow-up note that those
will be sent. So, just a thought.
Mr. Clark, next question is, the taxpayers have an
interest, an investment of more than $1 billion in the new
technology that I spoke about in my opening statement. Why are
we missing the boat and how is it that we went from $350
million, we put the new system in place, now we have got $700
million in overpayments on 2017, and how is this happening? Do
you have a clue?
Mr. Clark. Chairman Bost, we have completed more non-
rating claims in the last 3 years than we ever have in our
history and it is as a result of the technology that Congress
has given us the resources, IT resources, and employees, over
600 employees to process more claims. And as a result of the
rules-based processing, I mentioned that adding a dependent,
and I will take for the record, whether the removal of a
dependent, if we could do, and how long it would take us to get
an update to the system to get that done, but all of those have
allowed us to run our inventory from which was at over 270,000
3 years ago to less than 80,000.
So, VBMS, the National Work Queue, these are IT systems
that we have used and employed to allow us to produce more
work. And as a result of producing more work, what has happened
is, it has allowed us to get to claims faster and when we do
that, it will create more overpayments. That is one of the
reasons we are doing that.
Mr. Bost. Okay. I am having trouble following that line of
logic, okay. You have got a new system and the new system is so
good that you are having overpayments?
Mr. Clark. Well, what it is allowing us to do is to get to
the back--the inventory of work that we have in our system.
Mr. Bost. So, those overpayments were occurring before;
they just weren't--we were just not catching them?
Mr. Clark. Well, sir, what was happening is because of our
inefficiencies. And we are getting better. We are
getting better. But because it took us a while and these
cases lagged, then it created more overpayments and as a result
of our being able to get to this work quicker, then it has
caused more overpayments.
But here is one of the things that we have done--several of
the things that we have done, and I will turn it over to Ms.
Lowe after this to speak to this, we are certainly empathetic
to the individuals that have received these overpayments, but
we have a responsibility to--Congress mandates that we recoup
these monies--but we need to be sure that we are clear and
concise in our communications with our beneficiaries and make
sure that when we do communicate, we explain the reason for the
overpayment and then we offer up options. And we have a myriad
of options that we can do that when we do contact the
beneficiaries.
So, we are excited about that. We do realize that we still
have a long way to go, but we--thanks to the IT resources and
the employees that you have given us, we have been able to work
more of these claims than we have in our history.
Ms. Lowe, would you like to--
Mr. Bost. I am way over on my time and so I am going to
turn it over to Ms. Esty and see if she wants to go ahead and
go that way.
Ms. Esty. Thank you very much. I will let you finish that
and pick up with my questions. Thank you.
Ms. Lowe. Yes. The Debt Management Center has made several
improvements since August. Now, for a compensation and pension
debt, we automatically put that on a 12-month payment plan. We
do not take the entire benefit check from veterans any longer.
We have extended our hours of our contact center from--we
are now open from 6:30 in the morning to 8:00 p.m. Monday
through Friday; 7:00 a.m. to 3:30 p.m. on Saturday; and we are
open on days like Columbus Day and Veterans Day so our veterans
can reach us.
We have also worked recently to soften our collection
letters and make them clearer and more concise for our
veterans. So, we are very pleased with those improvements.
Ms. Esty. Thank you very much. And I want to thank all of
you for your testimony, again, in the spirit of trying to
reduce the number of overpayments and get them resolved as
quickly as possible. I know everybody at the table and
everybody here on the dais shares that commitment.
I wanted to pick up with the question about, dependencies
and incarceration, the two main issues that we are seeing a lot
of overpayments. According to what I have on record, Social
Security and IRS have standing arrangements, matching
arrangements with VBA, but that is not the case for DOJ or the
Bureau of Prisons. If that is not the case, why not, and how
can we change that?
Mr. Clark. I will defer to Ms. Murphy to speak to that.
Ms. Murphy. Yes, good morning. We do work and have
computer-matching agreements over the years with Bureau of
Prisons and with IRS to get state information about
incarceration, so those efforts have been ongoing and we do use
that information as input so we can go determine whether these
veterans are incarcerated and have been convicted and then we
send the due process notice and take it from there.
In the due process notice, we do remind them that the
families are able to apply for the apportionments, so we do
make those reminders, and also that once they are released from
the facility that they should come back to us, so we can
reinstate their benefits. So we do include reminders along the
way. We do share information with bureau of--with the
Department of Justice to get their Bureau of Prison
information.
Ms. Esty. Well, I think we are hearing, however, some
testimony, suggesting that that perhaps could be better and so
if you need authority from us or resources, you should let us
know what it is--
Ms. Murphy. Certainly.
Ms. Esty [continued]. --that would actually make that even
more effective than that--
Ms. Murphy. Okay.
Ms. Esty [continued]. --and reduce the time lag, which is
part of what we are looking at.
Ms. Murphy. Yes, ma'am.
Ms. Esty. I want to return to, actually, I think it was Mr.
Spivey's point. Several of you raised the point that if you
notify any part of VA about a change in address, the entire
agency should be aware of that.
So, is it the case now and if it is not, why shouldn't it
be the case, that if a veteran calls or has a medical
appointment, VA is required to verify the contact information.
Why do we not, at that time, have the veteran on the phone just
go through and click through every single box, every portion of
the VA that ought to be receive that same notice?
Could we do that? What would be involved in doing that
while you have already got somebody providing notice at that
time?
Ms. Murphy. So, if I could just continue? I agree with you
that that is the most veteran-centric way and that is something
that I think we are all interested in doing. I am not the
technician on the IT side and I am aware that there are efforts
that have been underway over the past couple of years to get to
that point where we could have one central place where the, you
know, official address for the veteran is housed. I am not
aware of what the current status of that effort is. We had have
to check on that, but I know it is something that we think is
the right thing to do for veterans and it would be something
that we would have to continue to get to.
Ms. Esty. We had a discussion, several of us earlier in the
week, about this. Do we have--Ms. Lowe, I think this is for
you. Looking at the letters that are sent out now and I think
about the widow in Waterbury, Connecticut who gets something
from Debt Collection Service; that is a terrifying phrase right
there and it feels offensive and it is not their fault. They--
as far as they knew, they notified and they were not aware of
the overpayment.
Is there a legal reason why it needs to be referred to as
debt? Can we change it to overpayment or payment management
center or something else? Because these terms matter. We are
talking about our veterans, so I would like to find ways for
both, clarity, but respect in these letters that meets the
letter of the law, but also the spirit with which we should be
handling these unintentional overpayments, because that is what
we are talking about, unintentional overpayments.
Ms. Lowe. Yes, we checked with our general counsel and
there is flexibility within the statutes to use terms other
than debt. Claim is an example of what they used. So we will
look into that and see about removing the word debt from our
letters and things like that.
Ms. Esty. Thank you. I see I am over time, but we would
love to, to work with you, because language matters to people
and I think it will feel different if those letters come out in
a way that encourages, reminds them of our service, apologies
that there is this delay and ask for their assistance in
resolving it. Thank you very much.
Mr. Bost. Thank you, Ms. Esty.
General Bergman, you are recognized.
Mr. Bergman. Thank you, Chairman Bost.
I don't care who answers this question; you can all answer
or none. What percentage of the veterans that are applying for
benefits and not reporting changes are trying to game the
system to their advantage? Probably a very small percentage,
right? You are absolutely right. And I agree with you.
The point is, we are putting our veterans and their
families in a situation where our processes and our procedures
don't allow them to be part of the solution. When you think
about the technology that we have today, what percentage of it
we are utilizing and moving forward on, we are behind. We are
way behind.
So, within the VA--and I assume, Mr. Clark, you are the
senior--are you the senior representative from VA here today?
Mr. Clark. Yes, sir, I am.
Mr. Bergman. Okay. Good. I will just direct my questions to
you and you can do like you have done before, defer them if you
don't want to answer them. But the point is, what, with what is
going on within VBA, that actually incentivizes your people
working within VBA to make the change necessary when they see a
need for change; for example, you cannot, when I heard say,
remove, a dependent, right? You can add a dependent through
the, know, the e-system, but you can't remove one.
Have we done anything--in this case, the we is you, in VA
to look at, maybe you can't eliminate every situation where it
is necessary for someone to remove a dependent; you need some
paperwork. Have we spent any time at all looking at those other
things that we could allow a veteran to remove a dependent
that, you know, the paperwork could be as simple as a photo
copy--something? We do everything with our cell phones now. We
could download it, the image right into the system.
Are you doing anything?
Mr. Clark. Yes, sir, we are. Again, I want to reiterate
that we are trying to get better. We are processing--
Mr. Bergman. Do you have a plan to get better? It is not
enough to try. You know, to try to complete an operation or a
mission is not enough. You have to have a plan to where you are
going. You have to have a--you know, you plan it, you execute
it, you adjust in the middle of the operation, if you will, and
then you do an after-action to make sure that you improve from
it.
Is there--you might call it a POA&M, a plan of action and
milestones--does VBA have such a vision, a document, a
strategy, a mission statement, whatever it is, to do that?
Mr. Clark. We have a strategy and when we have suggestions
and we have ideas or--
Mr. Bergman. But is it being updated as you do--as you try
something? Does someone say, Okay, we have tried this now for 6
months. Has it worked? Is there a benefit?
Mr. Clark. Well, sir, again, I am going to take back for
the record, you know, operating on the assumption that we
cannot, at least, our BPS is not--IT is not able to remove a
dependent, but each of our regional offices have employees
dedicated to do this work and Congress has authorized us over
600 FTEs specifically for non-rating claims. So this work is
being done.
Mr. Bergman. So, if we, all of our Members here of the
Committee, if we went back to our districts and wanted to go to
one of these centers where these folks were working--you maybe
not all of us may not have one in our district, but some of us
will--could we walk in there and see how it works and interact
with these people; get an hour with them or half hour,
whatever, to talk about what has been implemented, what has
worked, what hasn't worked, what motivation they have to make
it better tomorrow?
Mr. Clark. Yes, sir. We invite Members of Congress and
staffers to visit our regional offices. We get visits
regularly.
Mr. Bergman. Well, I will tell you what. I see my time is
running out. I would ask for you, VBA, to provide a list to the
Committee of where these physical places are where people are
working to try to do this, because if there is--I don't care if
it is in my district or not, my district is--I go through a lot
of other districts just to get to my district. I would love to
stop in and see one.
I yield back.
Mr. Bost. Thank you, Mr. Bergman.
And from the chair, I am going to ask that if you say the
strategy is in place, could you get us a flowchart of the
strategy of what you have got in place and how it is that you
are going to implement it, so that we know where we are headed
with this, okay.
With that, Ms. Brownley?
Ms. Brownley. Thank you, Mr. Chairman.
I just wanted to go back to the notification letters and I
think it was stated that you have made some adjustments to the
letters that are a little bit more user friendly. I am not
hearing that from the veteran population that that is, indeed,
the case. So, I certainly would like to see, you know, the
previous letter and the improved letter so that I can take a
look at it and make my own assessment of whether it is more
user friendly.
But it does seem to me that the letters kind of come to the
veterans and they are accused and they are guilty. And it
doesn't feel very good to the veteran because the veteran is
looking to the VA for help and assistance, not to be accused
and found guilty by a letter and a letter that I am still
hearing is still very sort of legalese and not very user
friendly so the veteran can really understand what is going on.
In addition to that, wondering whether the letter also
includes what the veteran's rights are and how to adjudicate
and/or appeal to what they may have been accused of. And are
you making that very clear in terms of what their rights are?
Ms. Lowe. Yes, we do send out up to 3 letters notifying
veterans of that and our counselors at the Debt Management
Center provide the due process and when they call in or email
us, we provide them--go over their options on how to file a
waiver, how to file an appeal, how to request an audit, and all
of those different things. So, yes, we do provide that and all
of those different things.
So, yes, we do provide that and we would be happy to
provide you the former and the current letters that--from the
Debt Management Center. And I believe VBA has their
notification letters. There is a two-step process. VBA
establishes the debt and then once it is transferred to the
Debt Management Center, we provide the veteran their due
process.
Ms. Brownley. And what happens when the letter goes to a
wrong address?
Ms. Lowe. The post office returns that letter to the Debt
Management Center and we, then, research to see if there are
any newer addresses in like the VHA system or the post office
has a forwarding address that we can send the letter to. If
that doesn't work and we are unsuccessful, we go to LexisNexis
and request to see whether they have an updated address for the
veteran.
Ms. Brownley. So, Mr. Liermann, you said it was your first
time testifying today. You did a very fine job and gave very
concrete recommendations, I think, in your testimony, so thank
you for that.
One of your recommendations, I think you called it a
principle of constructive knowledge, basically, communicating
internally within the VA. I certainly had an issue in my
district with a veteran who had gotten notice that they had a
debt and it was with regards to the G.I. Bill and it was the
VA's fault. He had gone to school back in the '70s and then
applied for the G.I. Bill in the 2000s and then determined he
went to school, he utilized the benefits and then was
determined that all of that money had to be repaid because he
had gotten it.
So, the VA had authorized these payments to him. And in
trying to resolve this in our casework at home, there was one
department, the Debt Management Center that said, No,
absolutely, you are wrong; you owe us the money. The regional
office said, No, you are right; we did wrong. We need to
rectify the situation.
So, it was clear to me that there wasn't really any clear
communication going on between the two departments. So, I guess
my question is, you know, what are you doing to make
improvements there?
Mr. Clark. We have begun better communication with the Debt
Management Center. To your point, our letters, we have realized
that both, our letters at VBA and the letters from the DMC were
not clear, they weren't concise, and they weren't
compassionate. So, Ms. Lowe has spoken about our efforts to
revise those letters and add additional options so we have a
gentler, kinder approach that when we find overpayments, that
we deal with those overpayments, because we know that they are
traumatic.
Now, Congress expects us to recoup monies and we will do
that, but we have to do a better job. But we are refining those
letters. We continue to do that and we are communicating now
with the DMC. Because the DMC just collects monies that the VBA
has said that are overpaid. So, once our Committee on Waivers
and Compromises does the appropriate investigation and taking a
look, and establishes the proper amount of the overpayment,
then we submit data over to the Debt Management Center and then
they effectuate collection.
So, we--our communication has greatly improved and this is
why we are seeing, you know, we are seeing a lot more
collections go out, or at least overpayments being worked. But
they are working expeditiously.
Ms. Brownley. And when did this improvement start?
Mr. Clark. We started this year. This is current that I am
speaking about.
Ms. Brownley. Thank you. My time is up. I yield back.
Mr. Bost. Thank you, Ms. Brownley.
Ms. Radewagen, you are recognized.
Ms. Radewagen. Thank you, Mr. Chairman.
I, too, want to add my welcome to the panel today. Thank
you very much for being here.
My question is for Secretary Clark. Does the VA have
statistics on where veterans who are receiving these incorrect
payments live and if so, how do the numbers for the U.S.
territories and remote or rural areas compare to the rest of
the country?
Mr. Clark. Yes, we do have numbers, but I don't necessarily
have numbers for that region of the world, but we will
certainly--I will take that for the record and get those
numbers to you.
Ms. Radewagen. Thank you very much.
Mr. Chairman, I yield back.
Mr. Bost. Mr. Coffman?
Mr. Coffman. Thank you, Mr. Chairman, and thank you all for
your testimony today.
What would you say--I am going to go to the VA first and
then go to the VSOs--what is the biggest category in terms of
overpayment?
Mr. Clark. The biggest category, drill pay, then
dependency; those are the top two, sir.
Mr. Coffman. And define drill pay, again.
Mr. Clark. Drill pay is an overpayment developed--the law
does not allow the concurrent receipt of drill pay and
compensation simultaneously. So, once we are alerted about
those concurrent payments, then we go back to the claimant to
recoup these monies.
Mr. Coffman. And how long, in the situation of drill pay,
how long does that usually--how long does--so, if something
retires and then they are drawing disability and they are
drawing their retirement, but they don't reach the threshold in
terms of disability to be able to draw it, how long does that
usually go before you are able to catch it?
Mr. Clark. Okay. And I will turn that over to Ms. Murphy,
please.
Ms. Murphy. Good morning. So, regarding drill pay, these
are folks who are doing weekend drills or their two weeks
during the year. And I think this is one category since it is--
Mr. Coffman. Okay.
Ms. Murphy [continued]. --such a large source of
overpayments, where we have done some of the most and some of
the best work recently. So, what used to happen was we had
focused on the rating claims and we were backed up a bit on the
drill pay estimates, over several years--
Mr. Coffman. Uh-huh.
Ms. Murphy [continued]. --so that when we did get to these,
we were recouping large amounts from folks and we just took it
out of the next check. So, you wouldn't--you just wouldn't get
a check for several months until those monies were recouped.
This year, starting in '16 and now in '17, we are doing a
couple of things that are very different. Number one is we are
using automation so that we send the letters out, the due
process letters up front, and then we give the 60-day due
process period. If we don't hear back or we don't get any
different information, we, then, are using automation to make
those adjustments. So this last time, we did that--and we do
this on an annual basis right now--we had about 100,000
adjustments that needed to happen.
Mr. Coffman. Wow.
Ms. Murphy. We were able to automate 86,000 of those. So
they were very timely and also, that is 86,000 actions that our
employees didn't have to do on drill pay and they could go do
something else.
Mr. Coffman. Okay. So, is it--okay.
Ms. Murphy. So, it is the use of automation and timeliness
improvements and we are working with DoD to aim to be a monthly
process.
Mr. Coffman. Okay. So, if I understand it right, then, it
is not really retirees, so to speak, where it could occur, but
it is so many--
Ms. Murphy. Guard and Reserves.
Mr. Coffman [continued]. --on active duty or they are in
the Guard and Reserve and they are deployed--
Ms. Murphy. Exactly.
Mr. Coffman [continued]. --then they--and then they apply
for disability, right?
Ms. Murphy. Sure.
Mr. Coffman. And then at some latter point, they receive
it, but they are also a drilling guard and reservist--
Ms. Murphy. Exactly.
Mr. Coffman [continued]. --and the issue is that you cannot
do both; am I correct on that point?
Ms. Murphy. You are correct.
Mr. Coffman. But, often is it--I guess you can catch it
early, but if you don't catch it early, given what guard and
reservists are paid in a non-deployed status, it would take a
very long time to make it up and generally they don't have an
obligation to--they have an obligation for the inactive status,
but not an active guard or reservists, if I am correct on that?
Ms. Murphy. So, now, what we are doing is we get,
currently, an annual feed of this information. So we make one
big adjustment annually and then we report that adjustment to
the Debt Management Center. In the past, they would take, as I
said, the whole subsequent checks. Now, they are doing an
automatically doing a 12-month repayment plan to stretch that
out and minimize the impact to the veteran and family.
Mr. Coffman. Are they--I suppose there are probably
instances by virtue of getting a disability assessment,
disqualifies them from being in the Guard and Reserves.
Ms. Murphy. I think that is individualized and it depends
on their, you know, their particular situation.
Mr. Coffman. Sure.
Ms. Murphy. We just look at it from the standpoint of
benefits they are entitled to.
Mr. Coffman. Okay.
Ms. Murphy. Compensation benefits.
Mr. Coffman. Okay. Does VSOs have any quick comment on that
particular issue?
Okay. Thank you, Mr. Chairman, I yield back.
Mr. Bost. All right. First off, thank you once again, for
being here. I am going to turn it over to Ms. Esty for any
closing remarks or any other things that might come up.
Ms. Esty. Thank you very much, Mr. Chairman. I thank all of
you for joining us here today. I think we flagged a number of
issues for better improvement and I hope you will come back to
us with both, suggestions from the VSOs, but also requests from
the VA about what needs to happen to align the incentives
properly. We saw that if you do not get a point system for
resolving these claims, you are right, if you are under
pressure, you are going to go, as a worker, you are going to go
where you get incentivized. So we need to change that.
What needs to happen to move from a yearly adjustment to a
monthly adjustment for this pay? We know that is a big issue,
clearly. I think we would like to, within the next few weeks,
get proposals back on the two big issues: on the pay for Guard
and Reserves and what we are beginning to do about
dependencies. And concrete, you heard from all of us, we can't
concrete action.
And if you need change in regulation, if you need change in
legislation, if you need change in resources, you need to let
us know, and it needs to happen soon because, in fact, it is
wasting time and it is wasting resources. And as Ms. Brownley
pointed out, it is offensive to our veterans who, themselves,
are trying to comply with the law and they think they have. And
so, again, we need further assistance from you in drilling down
on the specifics soon and then charge us with any action that
we need to take to make this happen.
And I know you are committed to this and I think we all do
want to see these letters before they get finalized. We have a
lot of interest in these notice letters and, again, trying to
figure out how we deal with the populations who do not--the
homeless population, we did not talk about that--you are
suggestions, what you do with the homeless population. None of
us actually asked this--I know in my office we discussed this--
how you propose to deal with homeless veterans and what is the
procedure right now? And what can we do about that? Is there--
are there specific issues we could address there?
Again, lots of good work that has been done to improve
things, but we have got a long way to go and I appreciate your
assistance in joining us in those endeavors.
And, again, thank you, Mr. Chairman, and I yield back.
Mr. Bost. And I want to thank you, but I--you know, I want
to make this quick statement. We want to keep working to try to
cure this problem. Now, many of us, when we were enlisted
remember what it was like. I was one of the lucky ones. My
first time being out of boot camp and reporting to 29 Palms was
when they first started paying with paychecks and not out of
the cash box; that was my very first paycheck.
With that system and being with the great bureaucracies
that we deal with, as a PFC with a young wife and a baby on the
way, I got that great wonderful thing whenever I went to
collect my paycheck and it--nope, NPD, no pay due; okay, that
is the way they used to do that.
And experiencing that on the enlisted side, very young in
my time as a marine, and these veterans now, here they are at
their latter part of life and all of a sudden, we are still
doing that to them. We got to try to fix that as fast as
possible, because there is not anything more rude than trying
to make ends meet and all of a sudden realize that there is a
problem and that your own government is coming back saying, we
need some money back.
So, I do want to thank all of you for being here today and
I asked at the beginning of the hearing that the complete
written statements of today's witnesses will be entered into
the record.
I ask unanimous consent that the statements of record for
the National Association of County Veterans Service Officers
plans to submit within 5 legislative days be included in the
record.
Hearing no objection, so ordered.
[The statement of National Association of County Veterans
Service Officers appears on p. ]
Mr. Bost. I also ask unanimous consent that all Members
have 5 legislative days to revise and extend their remarks and
include extensive, extraneous material.
Hearing no objection, so ordered. This hearing is
adjourned.
[Whereupon, at 11:33 a.m., the Subcommittee was adjourned.]
A P P E N D I X
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Prepared Statement of Willie C. Clark, Sr.
Good afternoon, Chairman Bost, Ranking Member Esty, and Members of
the Subcommittee. We appreciate the opportunity to address the process
by which VA manages overpayments that are incurred by Veterans who are
in receipt of disability compensation and pension benefits. Joining me
today is Beth Murphy, Executive Director of Compensation Service, and
Roberta Lowe, Acting Director of VA's Debt Management Center (DMC).
Today, I will discuss reasons for overpayments and how to minimize
them, how VA notifies Veterans about them, and steps VA is taking to
assist Veterans with repayments of subsequent debts. Finally, I will
discuss VA's policy regarding debt collection and the processes by
which Veterans can arrange repayment or waivers of the established
debts.
Reasons for Overpayments
In general, an overpayment of VA benefits is identified when VA
finds a Veteran or other beneficiary has received monetary payment for
benefits to which he or she was not entitled. In 2016, almost 238,000
Veterans received overpayments. Overpayments are considered improper
payments under the Improper Payments Elimination and Recovery Act of
2010. VA is required by law to retroactively recover the overpayments
to the extent the Veteran or beneficiary was not entitled to receive
this money.
Overpayments may occur when Veterans or beneficiaries, receiving
disability compensation or pension benefits, fail to notify VA in a
timely manner of certain circumstances or life events such as divorce,
incarceration, return to active duty, or other loss of dependent
status. They may also occur when Veterans or beneficiaries advise VA of
changes, but we are unable to process the claim in a timely manner. It
is important to note VA does not establish overpayments when
compensation or pension benefits were erroneously awarded due to claims
processing errors by VA employees.
Process of Notifying Beneficiaries of Overpayments
Before VA reduces benefits as a means of recouping overpayments, we
are required by law to provide due process notice to the Veteran or
beneficiary, advising him or her of the proposed adjustment in
benefits. The beneficiary then has 60 days to submit evidence
explaining why VA should not make the proposed adjustment. Veterans or
beneficiaries may also request a predetermination hearing to provide
information pertaining to the proposed action. After the due process
period expires, VA reviews all evidence and makes a final decision,
which may include reducing or terminating an award and/or creating a
debt. VA notifies the Veteran or beneficiary of the decision and the
date of benefit reduction or termination, if applicable, and provides
applicable appeal rights. If VA determines there has been an
overpayment, the beneficiary also receives a letter explaining the debt
owed and repayment options.
Steps VA is Taking to Prevent Overpayments
VA employs a number of measures to minimize overpayments. First,
VBA includes important reminders in benefit decision notification
letters about the need for Veterans and beneficiaries to inform VA
immediately of issues or life events that could impact monthly payment
amounts.
Second, VA has data matching agreements with the Social Security
Administration, Federal Bureau of Prisons, and other Federal agencies
to minimize individuals receiving benefits that are not statutorily
permissible. VA also works with these agencies to ensure critical data
feeds, such as dates of death, incarceration, etc., are transmitted to
VA as timely and efficiently as possible.
Third, VBA is deploying technological solutions and leveraging
automation to reduce overpayments. For example, drill pay from the
Department of Defense (DoD) has been a major contributor to the number
of VA overpayments. By law, Servicemembers are not entitled to receive
both drill pay and VA disability compensation for the same periods of
time. In 2016, VA automated the notification process required when
Guardsmen and Reservists receiving VA compensation actively drill and
receive pay. VA's new automation process, through collaboration with
DoD, improves VA's management of drill pay adjustments.
These administrative adjustments are part of VBA's non-rating
workload. During fiscal year 2017, VBA made several changes to allow
for a more balanced approach to the overall workload. VBA appreciates
Congress' support in providing resources to staff specific teams across
the Nation dedicated to the non-rating workload, and we have prudently
used these additional resources to lower the non-rating claims
inventory. As of April, the National Work Queue is distributing non-
rating claims, which allows this work to be moved efficiently based on
capacity. Additionally, VBA has adapted a strategic approach to how we
use our claims processing overtime resources. We now target specific
claims and steps within the claims process to ensure we direct overtime
where it will produce the most benefit. These enhancements have led to
improvements in performance. Overall non-rating inventory dropped by
approximately 23 percent with a 19 percent decrease in the average
number of days pending for these claims. The inventory of Dependency
claims decreased by approximately 26 percent with a 50 percent
improvement in timeliness, and the inventory of drill pay claims
dropped by 58 percent. We still have work to do and will remain focused
on continuing to implement appropriate preventative measures.
VA's Policy Regarding Debt Collection and Waivers
VA's debt collection guidelines and practices are designed to
balance strong financial management with commitment to compassion and
Veteran advocacy. VA navigates the debt collection process in a manner
that provides the best service to our Veterans and beneficiaries and
complies with Federal debt collection statutes and policy. VBA
beneficiary debts are serviced by VA's DMC. DMC provides a centralized
debt collection program while also offering all Federal collection
tools provided by the Department of the Treasury. Most importantly, DMC
contact center counselors work with Veterans and beneficiaries to
resolve their debts through extended payment plans, benefit offsets,
waivers, compromises, dispute resolution, and hardship refunds.
A Veteran can request a waiver of his/her debt within 180 days of
receiving a debt notice. If the waiver request is not timely, the
debtor receives appeal rights. If received timely, the waiver request
goes to the VBA Committee on Waivers and Compromises (COWC) at the
Regional Offices in St. Paul, MN, or Milwaukee, WI. The COWC considers
elements such as fault, unjust enrichment, and financial hardship when
deciding to grant, partially grant, or deny a waiver request following
the principles of equity and good conscience.
VA will not pursue payment when it would be unfair, unconscionable,
or unjust. However, the COWC will automatically deny a waiver if there
is any indication of fraud, misrepresentation, or bad faith. If the
waiver is not approved, the debtor receives applicable appeal rights.
Completed waiver decisions are returned to the DMC for processing. If
denied, the debt collection process resumes. If the waiver is granted,
collection action is terminated, and any collections received are
refunded.
There is also a process by which a debtor may submit a compromise
offer for acceptance of a partial payment in settlement and full
satisfaction of the offeror's indebtedness.
Conclusion
In closing, VA is committed to refining existing processes and
implementing new ways to minimize overpayments and the impact of the
overall process on Veterans. This includes leveraging technology,
working more collaboratively with other agencies and partners, and
engaging with Veterans and other beneficiaries to remain apprised of
significant events in their lives.
Mr. Chairman, this concludes my statement. We would be pleased to
respond to questions you or other Members may have.
Prepared Statement of David G. Spivey
Chairman Bost, Ranking Member Esty, and distinguished members of
the Subcommittee on Disability and Memorial Affairs, on behalf of
Denise H. Rohan, National Commander of The American Legion, the
country's largest patriotic wartime service organization for veterans,
comprising over 2 million members and serving every man and woman who
has worn the uniform for this country; we thank you for the opportunity
to testify on the topic of ``examining how VBA can effectively prevent
and manage overpayments''.
A benefit debt through the Department of Veteran Affairs (VA) can
be generated through a number of actions, such as a change in income or
net worth, a change in dependency status, receipt of retired pay, a
drop in course load or withdrawal from school while in receipt of
benefits under the GI Bill, failure to obtain the release of home loan
liability, hospitalization, treatment co-payments, and double payments
of drill pay and VA benefits pay to members of the Reserves and
National Guard.
Once an overpayment has been identified, the VA will initiate the
debt collection process. The American Legion has worked extensively on
matters concerning VA debt management and, recognizing the importance
of these issues, has had a dedicated representative at the Debt
Management Center (DMC) in Saint Paul, MN since 1978 for the specific
purpose of assisting veterans and other VA claimants who fall into debt
with VA. With nearly 40 years of collective service, the American
Legion representatives working at the DMC have been instrumental in
assisting thousands of veterans and surviving spouses avoid financial
hardship by filing waiver requests, negotiating the terms of offsets of
ongoing VA benefits, establishing reasonable monthly payment plans to
mitigate financial burdens, and assisting in ending erroneous
collection actions.
Benefit debt is the most common type of debt affecting veterans,
which is why The American Legion's primary focus in our debt collection
management office is assisting veterans affected by overpayments of
benefits and addressing how to best mitigate and/or repay the debt. Of
the millions of dollars in benefits awarded to veterans by the VA every
year, thousands of veterans are paid incorrect amounts. When these
incorrect payments are more than the amount due to a veteran, debt is
incurred and collection actions will ultimately be triggered.
Many of the complications associated with a veteran incurring a VA-
based debt are caused by the lack of an integrated records system
within VA. The American Legion recommends that VA implement a system
that all VA administrations can access for the most up-to-date
information regarding contact information for a veteran or other VA
claimant. Through American Legion Resolution No. 44, we support VA in
creating and implementing an updated and modernized integrated system.
\1\ The following section will address different types of overpayments
and how these overpayments are dealt with inside the VA.
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\1\ The American Legion Resolution No. 44 (2016): Department of
Veterans Affairs Rural Healthcare Program
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OVERPAYMENTS DUE TO DELAYED PROCESSING OF DEPENDENCY CLAIMS
Delays in VA processing EP130 dependency claims result in
overpayments where a divorced veteran submits an updated 21-686c form
to remove the ex-spouse or step-children, and the Regional Office (RO)
doesn't take action for months or even years. This can largely be
attributed to claims being assigned by the National Work Queue (NWQ) to
be worked in order based on date of claim. In order to prevent and
minimize overpayments from accruing, VA should give EP130 claims that
involve the removal of a dependent a higher priority in the NWQ.
Our service officers have frequently seen cases where a surviving
veteran notifies the VA in a timely manner of the loss of a spouse, and
it has taken the RO as long as a year or more to stop the veteran's
dependent pay for the deceased spouse. The RO later comes back and
generates the overpayment and the veteran starts receiving demand
letters from the Debt Management Center (DMC). These types of cases are
typically resolved via a waiver request due to administrative error and
financial hardship, but are all preventable had the RO responded more
quickly to remove these deceased dependents.
Previously, when veterans were seeking to remove a dependent as a
result of a divorce or death, the EP130 had to be submitted on a paper
21-686c and processed manually at the RO, which lead to large
overpayments when the manual processing was significantly delayed due
the large backlog of EP130 claims. In situations where a veteran is
removing a dependent (for any reason), current policy does not allow
the veteran to remove a dependent in eBenefits--the veteran may
initiate the request to remove the dependent via eBenefits, but the
task of removing the dependent still must be done manually by a VA
employee via the NWQ. We recommend processing of dependency claims in
eBenefits be expanded to allow automated processing where the veteran
is seeking to remove a dependent as a result of a divorce, or death.
This would significantly reduce the overpayments attributed to delays
in manually processing of removal of dependency awards for divorced or
deceased dependents.
The American Legion commends VA in addressing this problem by
expanding the automation of dependency claims by providing veterans the
ability to remove a dependent via the assistance of an accredited
representative via the Stakeholders Enterprise Portal (SEP), which
results in their award being processed more quickly, but this is not
the same as enabling veterans to remove the dependent themselves in
eBenefits. Ultimately, veterans should be able to remove a dependent in
eBenefits without the assistance of a third party, whether it be a VSO
or a VA employee.
The American Legion also recommends that VA audit DoD's Defense
Enrollment Eligibility Reporting System (DEERS) as retirees who receive
disability as well as military pension will commonly update DEERS
believing that both databases are connected. Currently, veterans who
update their change of dependents in DEERS, such as a divorce, but do
not notify VA, and later marry a second spouse, and they notify DEERS
of the second marriage, but not VA, may unknowingly create an
overpayment with their VA benefits for the first spouse, and won't get
paid VA benefits for the second. Once this mistake is discovered by VA,
the RO will create the retroactive overpayment, deny the veteran the
retroactive amount for the second spouse, and DOD will not
retroactively refund the reduced retirement pay offset. A VA audit or
match with DOD would prevent this problem from occurring.
OVERPAYMENTS DUE TO RECEIPT OF NATIONAL GUARD AND RESERVE PAY
Another frequent cause of the creation of overpayments are delays
in adjustments in VA compensation awards due to a veteran's receipt of
National Guard or Reserve pay. The American Legion believes that
overpayments to veterans who receive benefit pay and drill pay during
their Reserve, National Guard drill, or Active Duty period can be
remedied if VA and the Department of Defense (DOD) compares drill
records once a month (or at a minimum, quarterly). When a soldier is
activated for Reserve or National Guard training, or even Active Duty,
he or she is not eligible to receive VA disability payments. The
soldier has the option of receiving either drill or VA disability and
the individual typically chooses the higher of the two. If VA does not
stop the payment on a timely basis, then an overpayment is created. It
has been our experience that DOD and VA only compare this information
on an annual basis, sending service members into debt that accumulates
over several years. Errors like this are preventable and put
unnecessary stress on our nation's heroes. We support any legislation
that aims to address this issue using Resolution No. 228: Timely
Processing of Overpayments for Reserve Components and/or Active Duty
Pay, which states that The American Legion supports ``plac[ing] greater
emphasis on processing of these overpayments for the performance of
Reserve Component and/or Active Duty pay so not to have multiple years
processed at the same time.'' \2\
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\2\ American Legion Resolution No. 228 (2016): Timely Processing of
Overpayments for Reserve Components and/or Active Duty Pay
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The American Legion commends DOD and VA for reducing the backlog by
moving towards automated processing of National Guard and Reserve Pay
adjustments. However, further work remains to integrate these systems
seamlessly so that the responsibility does not fall to the veteran to
make notifications to either VA or DoD that should be the
responsibility of the departments and the administration as highlighted
in GAO report 16-42. \3\
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\3\ https://www.gao.gov/products/GAO-16-42
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EDUCATION OVERPAYMENTS
The creation of overpayments of VA education benefits is another
area The American Legion sees an opportunity for improvement. When a
veteran is attending an institution of higher learning, VA pays the
institution the amount owed for the veteran to attend the school.
Sometimes, because of improper reporting, the school is overpaid, and
other times the veteran may reduce his or her course load which often
results in an overpayment of benefits to the school. Many veterans are
unaware their course load adjustments trigger an overpayment because
there is little or no guidance provided to enrolled veterans on VA's
policy.
In a study conducted by the GAO report 16-42 noted that educational
institutions make frequent errors when reporting enrollment information
to VA and that not all schools send their certifying officials to
attend the various training opportunities offered by VA, contributing
to additional improper education claims being filed on behalf of the
veteran. \4\
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\4\ http://www.gao.gov/assets/680/673230.pdf
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The American Legion recommends that educational institutions
authorized to accept GI Bill payments be required to review GAO's
report in order to ensure that they comply with all findings in an
effort to avoid future preventable overpayments. We also recommend
mandatory training of certifying offices.
OVERPAYMENTS FROM DELAYED INCOME MATCHING BETWEEN VA AND THE INTERNAL
REVENUE SERVICE (IRS)
VA has a Computer Matching Agreement (CMA) with IRS where IRS will
disclose to the VA, certain return information. The purpose of this CMA
is to make available to VA certain return information needed to
determine eligibility for and amount of benefits for VA applicants and
beneficiaries of needs-based benefits and to adjust income-dependent
benefit payments as prescribed by law. Per the CMA Section III. (C), VA
will provide IRS the lists of 800,000 names annually for matching. The
CMA estimates this matching program costs $10M, but saves VA $58M, for
a net savings of $48M. \5\
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\5\ https://www.oprm.va.gov/docs/dib/14--IRS--VA--DIFSLA--signed--
9--17--2015.pdf
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When a name appears in the list provided from IRS, VA RO staff must
adjudicate an EP150 action, thereby they must follow the Income
Verification Match (IVM) process in M21-1MR, Section X, Chapter 9(C) to
determine if the income was fully reported by the veteran or the
dependent, look for under and over reporting, and make necessary
benefits adjustments, including retroactive adjustments. Large
overpayments can occur depending on the time between when the income is
received by the veteran, and the date VA adjudicates the action. The
follow-up time by VA can vary depending on the date the IRS runs the
report and sends it to the VA, the volume of names sent to VA, and the
available RO staffing resources to conduct these EP150 investigations
on the matched names.
VA should aggressively pursue potential changes in the matching
agreement with IRS which would enable VA to making more timely
adjustments based on the reported tax return information provided by
IRS.
OVERPAYMENTS FROM MATCHING BETWEEN VA AND SOCIAL SECURITY
VA also has a matching agreement with the Social Security
Administration to help VA determine eligibility for needs-based
pensions under 38 U.S.C. Chapter 15, Dependency and Indemnity
Compensation to parents under 38 U.S.C. Sec. 1315, and programs under
38 U.S.C. Chapter 11 for veterans receiving Total Disability Due to
Individual Unemployability (TDIU) benefits.
Previously, overpayments were created when a veteran, surviving
spouse, or surviving parent was erroneously granted VA needs-based
benefits due to receipt of SSA benefits, and there was a significant
delay-in many cases one to two years-in matching with SSA.
The American Legion commends VA in addressing this problem by
obtaining an on-demand match with SSA, thereby, allowing the Pension
Management Centers (PMCs) to be pro-active in identifying upfront SSA
income that may impact the claimant's eligibility for needs-based
benefits, and preventing erroneous grants from being awarded.
FUGITIVE FELON PROGRAM OVERPAYMENTS
Overpayments also occur from delays and adjudication errors for
veterans on the Fugitive Felon Program list (FFP-3). Under the Fugitive
Felon program, VA is required to terminate benefits for veterans
identified as a ``Fugitive Felon,'' which is defined by 38 C.F.R. Sec.
3.665 (n)(2) as:
``A person who is a fugitive by reason of: (i) Fleeing to avoid
prosecution, or custody or confinement after conviction, for an
offense, or an attempt to commit an offense, which is a felony under
the laws of the place from which the person flees; or (ii) Violating a
condition of probation or parole imposed for commission of a felony
under Federal or State law.''
The FFP-3 report issued by the VA Office of Inspector General uses
codes assigned by the National Crime Information Center (NCIC), and per
M21-1, Part X, Chapter 16, ``.they are an indicator that the individual
with the felony arrest warrant..''(emphasis added).
Offense Code What the Code Denotes
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4901 Escape
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4902 flight to avoid prosecution
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4999 flight-escape
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5011 parole violation
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5012 probation violation
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8101 juvenile offender abscond (escape/
flee) while on parole
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8102 juvenile offender abscond while on
probation
Warrants can be issued for the alleged commission of a misdemeanor
or a felony, and RO staff members have the responsibility to exercise
due diligence in determining correct characterization of the alleged
offense and proper name match that led to the issuance of the warrant.
The process in M21-1MR, Part X, Chapter 16 is lengthy and very
detailed. If the steps are not carefully followed or if there is
inadequate development by not obtaining the full Court records that
lead to the issuance of the warrant, then veterans facing misdemeanor
warrants for a misdemeanor charges can find their VA benefits
improperly terminated with an overpayment generated against them.
Placing a veteran's name in the FFP-3 leads to serious
consequences. Regional Offices will assign an EP 290 code which leads
to the generation of a retroactive termination of the veteran's
compensation award, and an overpayment from the date of the issuance of
the warrant. Once the warrant is cleared, the veteran may be entitled
to a reinstatement of benefits, but only back to the date the warrant
was cleared (if the warrant was issued for a felony charge), or back to
the date the warrant was issued (if the warrant was issued for a
misdemeanor charge). If the warrant was issued in error, then the
veteran must submit to VA a copy of the Court order that vacated it in
order to get the retroactive overpayment canceled back to the warrant
issue date.
Improper development is a violation of due process which can lead
to the mischaracterization or assumptions of misdemeanor warrants as
felony warrants. This results in improper termination of benefits and
the creation of overpayments, which often creates a financial hardship
for the veteran. This situation happened to a veteran who was arrested
on a misdemeanor warrant for being in contempt of court (a misdemeanor
charge) for a parole violation for failure to pay child support. The
veteran is unemployable and his VA compensation, which was his sole
source of income, was retroactively terminated. His local RO didn't
obtain the full Court record, and then stopped his monthly VA
compensation check completely for 3 months and generated a large
overpayment against him. This action put the veteran in severe
financial hardship as he became temporarily homeless until his benefits
were restored retroactively by an RO in a different state, but only to
the date his misdemeanor warrant was cleared.
Unfortunately, he missed the 30-day deadline to request a waiver of
the debt collection action by the DMC-which is an important deadline
frequently missed by veterans-but he did submit a timely debt waiver
request due to administrative error and financial hardship. His
American Legion Service Representative was able to negotiate a
repayment plan with the DMC for the remaining disputed overpayment
amount, thereby, preventing a second total garnishment of his entire
monthly VA benefits payments. The overpayment amount, which is for the
time period from the date the misdemeanor warrant was issued to the
date it was cleared, is currently on appeal. His case awaits further
development.
In 33 of the 50 states the failure to pay child support is a
misdemeanor, while in most of the remaining states it is a felony. \6\
In some states it varies depending on if the commission of the crime is
the first, or a subsequent offense. In some state leaving the state can
raise the misdemeanor charge to a felony. In a minority of states it is
not clear as the failure to pay child support is not categorized either
as a misdemeanor or a felony. This wide inconsistency and variation in
state law can lead to inaccurate RO decisions where the veteran's
benefits are wrongfully terminated and an overpayment is generated,
especially when the EP290 is routed to any of the 57 VA regional
offices via the National Work Queue (NWQ).
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\6\ http://www.ncsl.org/research/human-services/criminal-
nonsupport-and-child-support.aspx
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It is highly unlikely all VA adjudicators at all 57 ROs are
familiar with the child support laws in all 50 states. Therefore,
depending on the state and the facts of the case, it can be fairly
complicated to determine if a veteran who failed to pay child support,
meets the definition of a fugitive felon under 38 C.F.R. Sec. 3.665
(n), especially if the veterans' electronic VBMS file does not contain
the pertaining court documents needed to make such a decision. ROs have
an obligation to obtain such court documents, and not rely solely on
the FFP-3 report. Lack of proper development in these types of cases
can lead to inaccurate adjudications, and financial hardship for the
wrongly affected veterans.
Going forward, whether the determination correctly or erroneously
classifies a veteran as a fugitive felon, the veteran's future claims
are forever tainted with the ``FFP-3 Fugitive Felon'' label in the
electronic VBMS claims file, which can create an unjust negative
impression on future VA decision makers.
The American Legion recommends that VA improve its training for
FFP-3 reduction cases to avoid these types of adjudication errors and
update the M21-1MR Manual by emphasizing that the appearance of a
veteran's name on the FFP-3 list by itself doesn't automatically mean
the warrant was issued for a felony. The RO staff still need to do
their research and proper development to ensure they are not
misclassifying a veteran as a fugitive felon under 38 C.F.R. Sec.
3.665 (n) and erroneously creating an overpayment. Having one RO to
adjudicate all EP290s for FFP-3 match related reductions would help
improve the accuracy of these types of adjudications.
REDUCING MISSED 30-DAY WAIVER REQUESTS FOR WAIVER OF DEBT OLLECTION
ACTION
In the first notice letter sent from the DMC, the veteran is
notified he or she has 30 days to request a waiver of the debt
collection action, along with 180 days to request a debt waiver. These
two deadlines are confusing to veterans, their advocates, and even VA
staff. The American Legion frequently receives calls from veterans who
have missed the 30-day deadline, but still are within the 180-day
deadline-at this point, all our service officers can do is assist the
veteran with negotiating a payment plan with the DMC, and help the
veteran file the debt waiver request. It would be less confusing for
veterans if the two deadlines are standardized. Therefore, we recommend
changing the deadline to request a waiver of the collection of the debt
from 30 days to 180 days.
VA DEBT COLLECTION PROCESS WITHIN VBA
According to VA, in 2014, 88% of all debts owed were related to the
Veteran Health Administration (VHA), whereas only 8% of all debts owed
originated at the Veteran Benefits Administration (VBA). \7\ Once a
debt has been created at the regional office of jurisdiction, VA is
required to send notice in writing to the subject of the alleged debt.
This notice must include the exact amount of the debt, the reason for
the debt, and the individual's rights and remedies in connection with
the debt. Additionally, it must inform the debtor collection may be
made through offset of current or future benefits and interest and
administrative costs may be assessed. Once the debt is generated, it is
referred to the Debt Management Center (DMC) for collection actions.
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\7\ https://drive.google.com/file/d/0B70--mGYT1tJETzZGWUZKYzdGXzg/
view
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Within 30 days the DMC sends a collection due process letter
advising the debtor of the debt amount and provides a notice of their
rights and obligations. If the debtor is actively drawing benefits, the
letter will indicate that failure to respond will result in a full
benefit offset beginning with the first pay period 60 days after the
date of the notification letter. If the debtor is not actively drawing
benefits, a second letter is mailed 30 days later as a reminder to take
action. The letter advises that if the debt is not satisfied, or an
agreeable repayment plan is not established within 60 days, the account
will be reported to credit collection agencies as delinquent. The
letter will further state that the Treasury Department may refer the
account to private collecting agencies and the account may be subject
to garnishment of non-federal wages under the Treasury's Administrative
Wage Garnishment Program. If no action is taken, third and fourth
letters are mailed 30 days apart. If no action is taken 60 days after
the third letter, the account is referred to the Treasury Department
for active collection.
In our experience, the VA makes every attempt to keep these debts
``in-house'' and tries to notify the veteran in numerous ways.
According to the Code of Federal Regulations (C.F.R.) 1.911 (d), VA is
required to send a notice of debt that must include the exact amount of
the debt, the reason for the debt, the individual's rights and remedies
in connection with the debt, and inform the debtor that collection may
be made through offset of current or future benefits and that interest
and administrative costs may be added.
Sometimes, notification letters are sent to wrong addresses due to
updated information not being provided to the VA debt collection team.
Failure to update the system with the correct and current contact
information can lead to a veteran who owes a debt not being properly
informed of their rights. The American Legion calls upon VA to
continually update their contact database to ensure the most up-to-date
information for a veteran is available so the VA may contact the
veteran for a multitude of reasons, including debt collection.
Additionally, a veteran may request copies of the debt and
coinciding information from the original office of jurisdiction where
the overpayment was created. If the veterans feels it is necessary,
they may file an appeal with VA. If the veteran chooses to file an
appeal, then they will need to notify the VA in writing before the 30-
day deadline if they are requesting a hearing to contest the debt. The
debtor's right to inspect the record is also included in the original
debt notification letter.
VA PARTNERSHIP WITH THE TREASURY DEPARTMENT
In most cases, delinquent accounts over 120 days are referred to
the Treasury Department for collection. Once a debt is referred to the
Treasury Department, the debtor is subjected to the Treasury's
collection tools, interest, and any administrative fees. The American
Legion strongly recommends veterans who receive debt notification
letters from DMC immediately contact an advocate like The American
Legion for assistance to prevent the debt from spiraling out of
control. It has been the experience of The American Legion the VA DMC
office is more sensitive to the veteran's particular circumstances and
needs than the Treasury Department, which is why veterans need to act
quickly to avoid garnishment actions and negative credit reporting.
Finally, the DMC does not charge interest or fees when collecting
on compensation and pension debt, a policy that The American Legion
strongly supports. While the DMC does not charge interest on
compensation and pension debt, they do assess interest on Home Loan
Guaranty, Chapter 34 and Chapter 35 education debts where the rate of
interest is 4% for these types of debt.
CONCLUSION
Debt collection within the VA and Treasury Departments is
complicated and multi-faceted. The American Legion still sees room for
improvement, and we have again highlighted some of those suggestions in
this testimony. Overall, The American Legion believes that DMC does a
good job of protecting veterans from added exposure when they are
identified as having been overpaid and want to ensure that veterans are
aware of their rights, resources, and consequences should they neglect
to address these issues right away. However, there would be fewer and
smaller overpayments generated if the 57 ROs were adequately staffed
and the VA work credit system for EP130 and 150 were adequately
adjusted to allow for full and proper development of these types of
claims. EP 130 claims involving removal of a dependent should be given
higher priority in the NWQ. VA should continue to improve its
overpayments-related training, including FFP-3 matching, centralize the
adjudication of the Fugitive Felon Program, and expand dependency claim
automation to allow veterans to remove dependents via eBenefits without
the need for manual processing.
Finally, The American Legion again calls on DoD and VA to integrate
their systems seamlessly so that the responsibility does not fall to
the veteran to make notifications to either VA or DoD that should be
the responsibility of the departments and the Administration as
highlighted in GAO report 16-42.
The American Legion thanks this committee for the opportunity to
elucidate the position of the over 2 million veteran members of this
organization. For additional information regarding this testimony,
please contact Mr. Derek Fronabarger, Deputy Director of The American
Legion Legislative Division at [email protected] or (202) 861-
2700.
Prepared Statement of Shane L. Liermann
Mr. Chairman and Members of the Subcommittee:
Thank you for inviting DAV (Disabled American Veterans) to testify
at this hearing of the Subcommittee on Disability Assistance and
Memorial Affairs concerning how the Veterans Benefits Administration
(VBA) can effectively prevent and manage overpayments of benefits to
veterans, their families and survivors. As you know, DAV is a non-
profit veterans' service organization comprised of 1.3 million wartime
service-disabled veterans that is dedicated to a single purpose:
empowering veterans to lead high-quality lives with respect and
dignity.
DAV represents over one million veterans and their families before
the Department of Veterans Affairs (VA) in their claims for earned
benefits, primarily for disability compensation. Veterans are entitled
to receive compensation based on injuries and illnesses incurred or
aggravated by military service. The amount of compensation a veteran or
beneficiary is entitled to may change due to many factors, to include
changes in dependency, additional service-connected disabilities,
Reserve or National Guard service or change in the severity of the
service-connected condition. Overpayment of benefits can occur when
these changes are not timely recorded and implemented by VA due to
actions or inactions by VA or the veterans themselves. The most common
changes that lead to overpayments are dependency issues and
incarceration. In addition, inadequate information sharing between
federal agencies and departments, as well as with state agencies, due
to limitations of policies, processes and technology, hinders prompt
and proper action on processing overpayments.
Mr. Chairman, overpayments by VA and the resultant debts owed by
veterans often cause severe financial hardships for veterans and their
families. In many cases, the burden of repaying these debts can
negatively impact a veteran's quality of life, put them at risk of
homelessness and affect their access to VA health care. We understand
that in an imperfect claims processing system, there will be
overpayments and that it is a reasonable expectation that recipients of
such overpayments are required to repay that debt. However, we believe
that a significant portion of overpayments could have been reduced or
avoided if the VA had better policies, processes and oversight of their
workforce.
The VA Office of the Inspector General (OIG) report of September
28, 2007, Audit of Veterans Benefits Administration Controls to
Minimize Compensation Benefits Overpayments indicated that between
January 2004 and March 2006, an estimated $50.8 million in overpayments
were avoidable. If VA staff processed compensation benefit adjustments
promptly, many veterans would not have been put in the difficult
position of having a debt to VA.
In June 2016, the OIG issued a report on the Audit of Compensation
and Pension Payments to Incarcerated Veterans. It determined that
between July 2008 and June 2015, VA's ineffective actions in processing
incarceration adjustments resulted in significant improper payments
totaling more than $100 million. If conditions remain the same, it
estimated that VA could make additional inaccurate payments of more
than $200 million over the period of fiscal year (FY) 2016 through FY
2020.
DAV is concerned that many debt amounts could have been lessened or
completely avoided through greater oversight and control by VBA. While
overpayments certainly have a negative impact on the federal budget, we
are more concerned that these debts can sometimes result in
catastrophic outcomes for financially-stressed veterans and their
families. VA must aggressively work to identify ways to correctly
process all evidence, information, and reports to eliminate this
effect. Improvements to processing dependency changes and incarcerated
veterans can minimize the avoidable amounts of debt created by the VA.
In addition, VA and other federal agencies, particularly the Department
of Defense, Centers for Medicare and Medicaid, the Internal Revenue
Service (IRS) and the Bureau of Prisons, must develop seamless and
timely ways to exchange information relevant to determinations of
veterans' benefits.
Dependency Changes
Veterans in receipt of VA compensation at 30 percent disabling or
higher are entitled to additional monthly benefits based on the number
of their dependents. This includes spouses, children, step-children,
adopted children and dependent parents. Veterans are advised by the VA
to notify them when this status changes.
VA criteria require a reduction of benefits for the loss of a
dependent due to marriage, divorce, death or in the case of a child,
attainment of age 18 generally, or 23 if attending school. An OIG
report from September 2007 reviewed 315 cases that had a change in the
dependent status, finding that 81 (26 percent) had avoidable
overpayments totaling $1.3 million. The primary cause for overpayments
was processing delays which ranged between 60 days and 10 years,
averaging two years; in 32 of the 81 overpayments (40 percent), the VA
delayed processing adjustments for over a year.
For example, a widow receiving dependency and indemnity
compensation remarried in 1986 and notified the VA of the marriage in
April 1995, and again in March 2003. However, the VA did not terminate
benefits until January 7, 2004, altogether resulting in an overpayment
of $179,966. Had VA acted promptly on the first notification, $104,866
(58 percent) of the $179,966 overpayment and debt could have been
avoided.
If a dependent is removed, this will create an overpayment and
subsequent debt for the veteran. If VA delays the processing of that
request to remove the dependent, it creates an undue burden and
hardship on the veteran, for which they are ultimately responsible. If
VA had better policies, processes and oversight of their workforce,
these avoidable overpayments caused by the VA could be reduced and even
eliminated.
When a veteran is divorced or the spouse is deceased, it is the
veteran's responsibility to advise the VA of the termination of the
marriage for removal of the former spouse from the veteran's benefits.
In some instances, the veteran will not advise the VA directly but will
make that change in status known to another federal agency. For
example, the veteran may have reported a divorce or death to the IRS,
Defense Finance and Accounting Services, Social Security
Administration, Centers for Medicare and Medicaid, or TRICARE. Because
this information is not currently shared between VA and other federal
agencies, the overpayment will be assessed based upon the date VA is
notified.
There is a legal concept known as ``constructive knowledge'' that
could be relevant to this problem. The Court of Appeals for Veterans
Claims has defined the notice of ``constructive knowledge'' within the
VA. In Bell v. Derwinski, 2 Vet. App. 611 (1992), the Court held that
the VA is deemed to have constructive knowledge of all VA records and
such records are considered evidence of record at the time a decision
is made. This concept applies to dependency change of status issues.
For example, if the veteran advises a VA Medical Center, Outpatient
Clinic, Vocational Rehabilitation and Employment Services, VA Insurance
Center, or other VA program and not the VA Regional Office (VARO) of
his change in dependency, the VA is considered to have ``constructive
knowledge'' of the change in status. Since the veteran identified the
change to the VA, it had knowledge. This can allow veterans to lessen
the amount of the overpayment created by the dependency change by
reverting back to the date any office in VA was notified of the change.
The same logic could be applied to the entire federal government,
thereby deeming notice to any federal agency as providing notice to VA.
The OIG reports also found that the main reason for the delay in
processing dependency status changes is due to its classification as
non-rating claims, which are considered a lower priority compared to
rating claims work.
Through VBA's online program, eBenefits, a veteran can submit
evidence to add a dependent. While this has increased the timeliness of
adding a dependent, this program is still in its infancy. Based on
specific data, the system can reject the addition, refer it for
traditional processing and provide no notification to the veteran. This
program also provides for notification to the VA of removal of a
dependent; however, because this is not part of eBenefits' rule-based
programming, it is referred for traditional processing. Again, these
are not considered rating claims work and have no priority in VBA.
Recommendations
1. Assign dependency changes equal priority to rating claims work.
Within VBA, rating claims work has a higher priority for the
assignment, control, and completion of work. However, as discussed
above, this creates delays in VA adding new dependents and increases
the amount of overpayments caused by delaying the removal of
dependents. To facilitate this reprioritization, there will need to be
enhancements to the VBA online claims system to allow for expedient
processing for adding or removing dependents.
2. Apply the principle of ``constructive knowledge'' to
automatically waive all additional overpayment amounts created by VA.
When any part of VA has possession of the required evidence to change
the dependency status and fails to act timely, VA must waive the amount
of additional debt created by the VA's lack of timely action.
3. Apply the principle of ``constructive knowledge'' throughout the
entire federal government. Just as VA should accept ``constructive
knowledge'' of dependency information received within part the
Department, VA should also accept that concept for information received
by any other federal agency or office.
VA currently receives information and cross matches on income data
with the IRS, incarcerations with the Federal Bureau of Prisons, and
the Department of Defense, and could apply associated dependency
information to more timely make status changes. Further, once a veteran
reports his change in status of dependency with any federal agency,
such as income tax applications, changes with the Defense Enrollment
Eligibility Reporting System (DEERS) program within the Department of
Defense or changes noted with TRICARE, this should be considered
``constructive knowledge'' for VA purposes, thereby lessening any
overpayments and debt created by the veteran's change of dependency. VA
could receive annual data from the IRS specifically on dependency thus
reducing any potential overpayments.
4. Waive the debt after 90 days of no action by the VA. DAV
Resolution No. 213 states that when VA has receipt of the required
information for a dependency status change or notification of the
veteran receiving Reserve or National Guard Drill Pay, and does not
take any action within 90 days, VA should automatically waive the debt.
This change would greatly reduce, and in many situations eliminate, any
improper overpayment amounts caused by VA.
Incarcerated Veterans
Federal law requires VBA to reduce Compensation and Pension (C&P)
benefits for veterans incarcerated in a federal, state, or local penal
institution in excess of 60 days. Effective the 61st day of
incarceration, VBA must reduce compensation benefits for veterans
convicted of a felony and discontinue pension benefits for veterans
convicted of a felony or misdemeanor. VBA reduces compensation benefits
to the 10 percent disability rate for veterans rated 20 percent service
connected or more. For veterans whose service-connected disability
rating is 10 percent, VBA reduces the benefit payment by one-half. VARO
and Pension Management Center (PMC) employees are responsible for
making incarceration adjustments. Once the veteran is released from the
penal institution, VBA will restore C&P benefits.
Based on the June 2016 OIG Report, VARO and PMC staff did not
consistently take action to adjust C&P benefits for veterans
incarcerated in federal penal institutions. Specifically, based on
federal incarceration data ranging from May 2008 through June 2015, VBA
did not adjust veterans' C&P benefits, as required, in an estimated
1,300 of 2,500 cases (53 percent), which resulted in improper payments
totaling approximately $59.9 million. Without improvements, VBA was
projected to make additional improper benefits payments totaling about
$41.8 million for federal incarceration cases from FY 2016 through FY
2020.
VARO and PMC staff also did not take consistent and timely action
to adjust C&P benefits for veterans incarcerated in state and local
penal institutions. Based on incarceration notifications received from
March 2013 to August 2014, VBA did not effectively adjust veterans' C&P
benefits in an estimated 3,800 of 21,600 state and local incarceration
cases (18 percent), which resulted in significant delays and improper
benefits payments totaling about $162 million for state and local
incarceration cases from FY 2016 through FY 2020.
In general, VBA did not place priority on processing incarceration
adjustments because VBA did not consider these non-rating claims to be
part of the disability claims backlog. Both VBA Central Office staff
from Compensation Service and the Office of Field Operations as well as
VARO service center managers and staff consistently reported that
incarceration adjustments were not a high priority.
Incarcerated veterans are not entitled to their full VA
compensation benefits after the 61st day of incarceration; we do not
dispute that this will create overpayments, even when reported timely.
However, the millions of dollars of additional amounts created by VBA's
own delays create an unfair and undue hardship on these veterans and
their families.
In many instances, VBA did not reduce the veteran's benefits while
incarcerated for shorter sentences. After release, the veteran would
notify the VA, the overpayment would be recognized and the debt created
and recouped. For veterans who rely on compensation, having these
benefits cut off for repayment after incarceration puts them and their
families at financial risk. The loss of income relied on by the veteran
and their family could place many in this vulnerable population at a
higher risk for homelessness.
Another negative consequence of VA failing to properly reduce these
benefits affects a veteran's family. While a veteran is incarcerated,
their dependent family can request an apportionment of benefits and
receive the amount of compensation that is withheld from the veteran.
However, if the veteran's benefits are not timely reduced by VBA, the
family would not be aware of their potential entitlement to the
apportionment.
Recommendations
1. Place priority or timely controls on processing incarceration
adjustments. Within VBA, rating claims work has a higher priority for
the assignment, control, and completion of work. However, as discussed
above, this places incarcerated veterans and their families at an
unfair disadvantage.
2. Automatically apply apportionments to veterans' families at the
61st day of incarceration for a felony. The dependent family of
incarcerated veterans can apply for an apportionment of the amount
withheld from the veteran. This would lessen any hardships placed on
the family and would help to prevent large overpayments being made to
the veteran.
3. Apply the principle of constructive knowledge throughout the
entire federal government. The VA currently receives information and
cross matches on income data with the IRS, incarcerations with the
Federal Bureau of Prisons, and the Department of Defense. Once a
veteran is identified as an incarcerated veteran with any federal
agency, such as income tax applications, changes with the DEERS program
within the Department of Defense or changes noted with TRICARE, this
would be considered constructive knowledge with the VA.
H.R. 3705 - Veterans Fair Debt Notice Act of 2017
On September 20, 2017, DAV presented testimony to the Subcommittee
on the Veterans Fair Debt Notice Act of 2017, H.R. 3705. This
legislation would require the Secretary of Veterans Affairs to utilize
certified mail and plain language in certain debt collection
activities.
As we previously testified, consistent with the intent of DAV
Resolution No. 213, which calls for alleviating undue financial
hardship in processing overpayments and notifying veterans of debt, we
support this bill. H.R. 3705 proposes to secure notification to debtors
of debt collection actions with a plain language explanation of the
debt. We recommended clarifying that the debtor is not required to use
certified mail to respond to the VA adding a section to indicate that
the date of notification of the debt is the date of signed receipt of
certified mail by the debtor.
Mr. Chairman, DAV is concerned that many debt amounts could have
been lessened or completely avoided through greater oversight and
control by VBA. As indicated, VBA continues to create additional
improper overpayment and debt amounts that not only impact the federal
budget, but can have horrific consequences for veterans and their
families. These discrepancies must be corrected and eliminated to
remove the burdens that VA has placed on too many veterans and their
survivors.
This concludes DAV's testimony. Thank you for the opportunity to
testify at today's hearing. I would be pleased to answer any questions
you or members of the Subcommittee may have.
Prepared Statement of John Towles
Chairman Bost, Ranking Member Esty and members of the Subcommittee,
on behalf of the men and women of the Veterans of Foreign Wars of the
United States (VFW) and its Auxiliary, thank you for the opportunity to
provide our remarks on how the Veterans Benefits Administration (VBA)
can effectively prevent and manage overpayments.
The glacial speed at which VA moves is nothing new to the VFW, or
the members of this subcommittee. Normally, bureaucratic redundancies
that exist within organizations are meant to serve as a protective
mechanism, as they can promote proper oversight, accountability, and
thoroughness. With regards to VA however, especially as it relates to
how overpayments and debt recoupment issues are addressed, these
processes have only made matters worse for veterans due to the time
sensitivity of certain issues and the number of other offices within VA
that may be involved.
In the past year, the VFW's National Veterans Service (NVS) has
directly assisted more than 200 veterans who have experienced issues
stemming from overpayments. According to our estimates, about 60
percent of the cases where NVS has intervened resulted in the veteran
being granted either partial or full relief from the debt form VA's
Debt Management Center (DMC). However, the onus is on the veteran to
prove that they were not overpaid, so getting relief is often times a
long, arduous process.
In our experience, we have found that legitimate overpayments most
often occur with GI Bill benefits when a veteran's enrollment status
changes at his or her college. If a student decides that they are
having a difficult time meeting their educational obligations and
chooses to switch to part-time, it is the responsibility of the school,
not the student, to notify VA. In the event that the school fails to
notify VA of the change in status, the veteran will continue to receive
the full living stipend and the school will continue to be paid the
full-time rate for tuition.
Once the error is noticed, VA will send an ambiguously worded
notification of overpayment, which also provides options for repayment.
If the veteran is unable to contact VA to establish that the debt is
erroneous, make a repayment in a timely manner, or enter into a payment
agreement with VA, their debt is sent to collections and VA will
garnish payments from their disability compensation benefits until the
debt is satisfied.
While the veteran does have the ability to seek relief by filing a
relief waiver, VA's inability to provide the veteran clear and concise
information regarding their debt in a timely manner significantly
hinders the veterans ability to take action in order to prevent VA from
taking further action, such as having their credit negatively impacted.
In a perfect world, this discrepancy would be noticed immediately;
however, there have been instances where it has taken upwards of five
years for VA to properly and officially notify veterans of the
overpayment, despite in many circumstances, veterans themselves
notifying VA that they are being overpaid.
In one recent case, an administrative error by VA triggered a
$32,000 overpayment notification for a former California National
Guardsman. The veteran did everything that he could do on his own to
rectify the situation, including notifying the VA that he as being
overpaid. Despite this, VA continued to pay him at an incorrect rate.
It was not until sometime later that VA caught the error internally
that an overpayment notice was sent. The veteran filed a waiver to have
the debt discharged; however, the waiver was denied and his disability
compensation was garnished. It was not until he contacted the VFW's 1
Student Veteran office, which successfully intervened on his behalf,
that the debt was properly discharged and the monies that were withheld
from his disability benefits were returned.
Another case involved a retired military officer whose daughter was
using transferred GI Bill benefits. Due to a misinterpretation of its
own regulations, VA sent a notification stating that he owed $100,000
as a result of a reduction in rank following his retirement. It was not
until VFW contacted VA Education Service and the DMC directly and
explained to them that despite the reduction in rank, he still
completed twenty years of qualifying honorable service prior to his
retirement and therefore was obligated to repay nothing. A senior
manager in education services agreed and the debt was eventually
waived. In this instance, the senior decision maker that initiated the
debt process had a number of shortcomings that caused undue worry and
hardship for the veteran. Among them were inexperience and
unfamiliarity in applying VA law and regulations properly.
Had these veterans not contacted the VFW, there is a significant
chance that they would still be fighting to get this debt cleared.
These are just two of many situations in which the VFW utilizes our
cadre of highly trained and professional service officers to better
serve veterans, but it is our position that veterans should not be
erroneously overpaid in the first place.
To be blunt - there is absolutely no excuse for VA not to know its
own regulations or how to effectively implement them; but yet, here we
are.
VA's inconsistent administration of veterans' benefits and
interpretation of rules and regulations, lack of training for program
administrators and lack of effectiveness when communicating with the
veteran are the principal reasons VA continues to overpay veterans and
spends an untold amount of resources collecting overpayments.
With more than 187,000 overpayment notices being sent to veterans
in the past year alone, one would hope that VA would not only be
prepared to share the most precise information that triggered the
notice in the first place, but also be prepared to assist the veteran
in a timely fashion. Sadly, as we have seen via numerous media reports,
and through our own direct contact with countless veterans in similar
situations throughout the past year, this simply is not the case.
VFW understands that overpayments must be recouped in order for
benefit programs to work efficiently, but it is important to state that
debt notices must be clear, and provide concise information regarding
what steps veterans and schools need to take in order to resolve any
outstanding debts as soon as possible.
Collections for a benefit as complicated as the Post-9/11 GI Bill
can cause significant financial hardships for both veterans and their
schools. Organizations representing school certifying officials, like
the National Association of Veterans Program Administrators (NAVPA),
have long reported that VA's assignment of debt collections to schools
and students, as well as erroneous offsets, have been inconsistent
across the board.
Ultimately, veterans should be responsible for repaying the
overpayment, if it is indeed legitimate. Due to the aforementioned
inconsistencies regarding communication from VA, as well as the general
lack of information regarding the nature of the debt, many veterans are
simply unable to meet the deadline imposed on them by VA. To further
complicate things, the VFW's interaction with DMC personnel have made
us acutely aware to the fact that there is an overall lack of knowledge
regarding VA policy and procedures and its appropriate application.
Many veterans, especially those who have a fixed income, have
limited access to the immediate financial resources needed to
immediately repay an overpayment. Astoundingly VA has, and often times
will as a first option, offset a veteran's entire monthly benefit
payment in order to pay down a debt, unless the veteran received the
notification of VA's intent to do so and requested an alternative
method of payment. Without guaranteeing that the veteran is actually
receiving the debt notification letter however, VFW feels that this
action all but denies the veteran due process which is why we have
supported legislation that would require the use of certified mail when
notifying a veteran of debt.
Aside from applying for a waiver to fully discharge a debt, VA
currently has two alternative options - one that utilizes a personal
checking account, but requires a financial status report to be mailed
to DMC; and one that automatically offsets a veterans monthly benefit
payment, but also requires a financial status report to be completed
and mailed, in the event that the debt cannot be repaid in one years'
time. Both options provide the veteran a way to pay down their debt
over the course of several months, but loses its utility once a
financial status report is requires, and is only effective in the event
that VA has the proper contact information and the veteran received the
debt notice in the first place.
The VFW suggests that VA work to streamline the collections process
by:
1.)ensuring that the contact information VA is using for a veteran
is current and up to date;
2.)clarifying the eligibility criteria for a waiver;
3.)outlining in easy-to-understand terms the steps needed to
request a payment plan; and
4.)repealing the need for a veteran to submit a financial status
report in the event that the debt cannot be repaid over the course of a
year.
Additionally, the VFW feels as though VA should take the additional
steps regarding the notification and recoupment process:
1.)VA must ensure that any and all recoupment actions are suspended
once the veteran files an appeal with the DMC, as per the VA
regulations;
2.)VA must ensure that if the overpayment is found to be erroneous,
that any damaging information sent to the credit reporting bureaus be
corrected immediately;
3.)in the event that that a veteran contacts DMC of an overpayment,
the veteran should not be held liable for the repayment after such
notification is made. There is no excuse for VA not fixing the problem
as soon as it is notified.
4.)VA must ensure that Regional Office and DMC staff are trained to
conduct proper due diligence, and are better trained in VA's debt
management and collections procedures and protocols; and finally
5.)if VA is going to set a timeline for the veteran to prove that
his or her overpayment is erroneous, then VA should send as much
pertinent information as possible regarding the nature of the debt to
the veteran, along with the notification letter.
Chairman Bost, Ranking Member Esty, and members of the
Subcommittee, this concludes my testimony. I look forward to answering
any questions that you may have.
Qeustions For The Record
LETTER FROM CHAIRMAN BOST TO VA
January 3, 2018
The Honorable David J. Shulkin, M.D.
Secretary
U.S. Department of Veterans Affairs 810 Vermont Ave, NW
Washington , D.C. 20420
Dear Secretary Shulkin:
Thank you for the testimony provided by the Department of Veterans
Affairs for the October 25, 2017, Subcommittee on Disabil ity
Assistance and Memorial Affairs hearing entitled, ``Examining How VBA
Can Effectivel y Prevent and Manage Overpayments. ``
I would appreciate receiving your answers to the hearing questions
below by 5:00 P.M. on February 1, 2018.
1. Please provide a detailed explanation of the reasons why the
total amount of overpayments increased from $348, 168,093 in FY201 5 to
$698,481 , 130 in FY201 7.
2. Please provide a detailed explanation of the reasons why the
number of drill pay adjustments rose from 3,581 in Fiscal Year 2015 to
106,811 in Fiscal Year 2017.
3. Please provide a detailed description of the steps VA is taking
to expedite processing of adjustments for the reasons listed below.
Please provide each response disaggregated by reason with a timeline of
the anticipated implementation of such steps.
a.Drill pay adjustment,
b.Death of a beneficiary ,
c.Benefit eligibi lity adjustment, and
d.Dependency adjustment.
4.Please provide a detailed description of the steps VA is taking
to prevent overpayments for the reasons listed below. Please provide
each response disaggregated by reason with a timeline of the
anticipated implementation of such steps.
a.Drill pay adjustment,
b.Death of a beneficiary ,
c.Benefit eligibi lity adjustment, and
d.Dependency adjustment.
5.Does VA plan to allow veterans to use eBenefits to remove
dependents?
a.If yes, please provide the timeline for implementing such plan.
b.Ifno, why not?
6.What steps does VA take to avoid overpayments when a veteran's
child turns 18?
7.On average, how long does it take for VA to verify that a veteran
has died after VA receives the monthly death matching data set provided
by the Social Security Administration?
8.On average, how long does it take for VA to terminate benefits
after verifying that a veteran has died?
9.On June 28, 2016, VA OIG released a report entitled, ``Audit of
Compensation and Pension Benefit Payments to Incarcerated Veterans.''
Please describe the steps VA has taken since that report to more timely
process incarceration adjustments.
10.Please describe any additional steps VA will take to more timely
process incarceration adjustments.
11.Please describe VA's efforts to inform veterans of their
responsibility to notify VA of life events, such as divorce or death
that may impact monthly benefits.
a.Does VA have plans to provide additional reminders to veterans?
I. If yes, please describe this plan and provide the timeline for
implementing such plan.
ii. Ifno, why not?
12.Please explain why the deadline to submit a waiver and suspend
the offsetting of benefits is 30 days, when a veteran has 180 days to
submit a request to waive the debt?
13.Does VA have any plans to work with VSOs to improve the content
of its debt notice letters?
a.If yes, please provide the timeline for drafting the new debt
notice letter.
b.Ifno, why not?
14.Ifa veteran does not respond to the debt notification letter,
please describe the steps VA takes to confirm the veteran 's correct
address.
15.Does VBA have any additional plans to ensure that VBA's
databases have the veteran's con-ect address?
a.Ifyes, please describe the plan.
b.If no, why not?
In an effort to reduce printing costs, the Committee on Veterans'
Affairs, in cooperation with the Joint Committee on Printing, would
appreciate your answer provided consecutively and single- spaced. In
addition, please restate the question in its entirety before the
answer.
Due to the delay in receiving mail, please provide your response to
Maria Tripplaar, Staff Director and Counsel of the Subcommittee on
Disability Assistance and Memorial Affairs, at Maria
[email protected]. Please also send a courtesy copy to Ms.
Alissa Strawcutter at [email protected]. Ifyou have any
questions, please call Ms. Tripplaar at (202) 225-9164.
Sincerely,
Mike Bost
Chairman
Subcommittee on Disability Assistance and Memorial Affairs
cc: The Honorable Elizabeth H. Esty, Ranking Member , Subcommittee
on Disability Assistance and Memorial Affairs
MB/ks
VA RESPONSE TO LETTER FROM CHAIRMAN MIKE BOST
Question 1: Please provide a detailed explanation of the reasons
why the total amount of overpayments increased from $348,168,093 in
FY2015 to $698,481,130 in FY2017.
VA Response: Of the $350 million dollar increase in the overall
amount of overpayments, drill pay adjustments grew by $179 million
dollars making up 50% of the increase in the total amount of
overpayments in the disability compensation program. Prior to February
25, 2016, adjustments to Veterans' awards based on receipt of drill pay
were applied to future disability payments. This action did not create
an overpayment on the Veterans' account, but caused future payments to
be reduced or terminated temporarily resulting in financial hardship
for the Veteran. Additionally, the only option for a Veteran to request
relief was to request a hardship waiver.
Effective February 25, 2016, the Veterans Benefits Administration
(VBA) changed its policies and began processing drill payment
adjustments retroactively creating a debt (overpayment) in the system.
While this change in policy increased the total number of overpayments,
it allowed Veterans additional options to repay these funds based on
their financial situation.
The next largest increase in overpayments is attributable to
Dependency adjustments which grew by $65 million dollars and accounts
for 18% of the overall increase in overpayments.
Question 2: Please provide a detailed explanation of the reasons
why the number of drill pay adjustments rose from 3,581 in FY2015 to
106,811 in FY2017.
VA Response: As noted in our response to Question 1, drill pay
adjustments make up a significant portion of VBA's overpayments. By
law, Veterans are not entitled to receive both military drill pay and
VA disability compensation for the same periods. VBA implemented policy
changes in February 2016 to change payment adjustment to a retroactive
process in order to afford Veterans additional options in repaying the
overpayment. Prior to fiscal year (FY) 2016, Veterans' future benefit
payments were adjusted to withhold the duplicate payment amount, which
prevented these adjustments from counting as overpayments.
Question 3: A detailed description of the steps VA is taking to
expedite processing of adjustments for the reasons listed below. Please
provide each response disaggregated by reason with a timeline of the
anticipated implementation of such steps.
a. Drill pay adjustment
b. Death of a beneficiary
c. Benefit eligibility adjustment, and
d. Dependency adjustment
VA Response:
3a. Drill Pay Adjustment. Currently, VBA receives an annual notice
of reservist drill days through an electronic data-sharing agreement
with the Department of Defense (DoD). VBA is working collaboratively
with DoD to receive this information monthly so we can process these
drill pay adjustments more frequently resulting in Veterans receiving
this information in a timelier manner. However, VBA's ability to
process these monthly adjustments is dependent upon a regulation change
that would allow an upfront issuance of due process for military
payment adjustments. The regulation change is currently undergoing
legal review as part of VA's internal concurrence process. We do not
have an anticipated date of publication at this time.
3b. Death of a Beneficiary. Upon notification of a VA beneficiary's
death, VBA immediately suspends or stops VA benefit payments. VBA may
receive notification regarding a beneficiary's death through several
methods including telephone calls to our National Call Center, written
correspondence, claims for death benefits, requests for burial in a
National Cemetery, as well as electronic data-sharing agreements with
other agencies, primarily the Social Security Administration (SSA).
After the beneficiary's award is suspended, VBA sends written
notice to their last known address of record to ensure the information
regarding their death is accurate. Unless VBA receives notice that the
beneficiary is still alive within 30 days of the date of the written
notice, the award is suspended and the adjustment is referred to a
claims processor to take final action to terminate the beneficiary's
award. VBA is currently working with VA's Office of Information and
Technology (OI&T) to develop an automated process that will take steps
to terminate a Veteran's award when notification of his or her death is
received through the electronic data-sharing agreement with SSA and
after applicable notification to the beneficiary has been made with the
opportunity to provide response. The error rate associated with this
data match is extremely low (less than 1/10 of a percent) and will
allow VBA to refocus valuable claims processing resources to more
complex claims. VBA does not have an anticipated date of implementation
at this time.
3c: Beneficiary Eligibility Adjustment. Since the National Work
Queue (NWQ) began managing the workload distribution of End Product
(EP) 600 (due process EPs), the average days pending for these claims
improved by 332 days as of December 31, 2017. In FY 2017, VBA
established Non-Rating Resource Teams (NRRT) at 12 Regional Offices.
NWQ routes special project work to these teams. Currently, the NRRTs
are focused on Drill Pay, Combat-Related Special Compensation (CRSC)/
Concurrent Retirement and Disability Payment (CRDP), Federal Bureau of
Prison (FBOP) matching, and eligibility determinations. If there is no
actionable work available for the special project teams, NWQ then
routes additional non-rating priorities (e.g., dependency) to these
teams. VBA has seen a 197=day improvement in the average days pending
of NRRT special project inventory during FY 2018.
3d. Dependency Adjustments. VBA expedites the processing of
dependency adjustments two ways; the first is using our online portal,
and the second is through the use of contracted services to enter data
into a rules based process system (RBPS) engine. Both methods use the
same rules engine for automation of the decision and notification to
the beneficiary. RBPS is an online tool within the VA's eBenefits
application and can add new dependents to Veterans awards provided the
Veteran has a disability rating of 30 percent or greater. Dependents
may include a Veteran's spouse as well as any minor or school-aged
children. Spouses can also be removed from the award if there are no
children listed on the award. RBPS uses a rules engine for the decision
and notification to the Veteran.
VBA continues to explore additional ways to streamline processes
and to add more automated processes for Veterans to provide
information. We are currently utilizing the power of the NWQ to help
ensure the appropriate priority for, and thereby appropriately route,
dependency claims to those stations which have the capacity to work
them most efficiently. In FY 2017, VBA established NRRTs at 12 regional
offices. NWQ routes primarily special project work to these teams.
Currently, the NRRTs are focused on Drill Pay, CRSC/CRDP, FBOP
matching, and Eligibility Determinations. If there is no actionable
work available for the special project teams, NWQ routes additional
non-rating priorities (e.g., dependency) to those teams.
During FY 2017, the inventory of dependency claims decreased by 26
percent with a 50 percent improvement in timeliness. However, VBA still
has additional work to do regarding these adjustments and remains
focused on implementing measures to efficiently work these claims.
Question 4: A detailed description of the steps VA is taking to
prevent overpayments for the reasons listed below. Please provide each
response disaggregated by reason with a timeline of the anticipated
implementation of such steps.
a. Drill pay adjustment
b. Death of a beneficiary
c. Benefit eligibility adjustment, and
d. Dependency adjustment
VA Response: VA has taken steps to ensure more frequent written
reminders to Veterans of scenarios that may affect their payments.
While these actions will not prevent the overpayment, by nature of the
adjustment, it will potentially lessen the size of the overpayment that
would occur sans frequent notice.
4a. Drill pay adjustment. The nature of the process of VA receiving
notice of Veterans' receiving drill pay after the event will always
cause an overpayment. However, VBA has drafted a regulation which will
allow for more frequent benefit adjustments (Please refer to question
3a above). While this change will not eliminate benefit overpayments,
Veterans will receive faster, more timely adjustments with smaller
overpayment amounts. The regulation change is currently undergoing
legal review as part of VA's internal concurrence process. We do not
have an anticipated date of publication at this time.
4b. Death of a beneficiary. VBA immediately suspends a VA
beneficiary's payment upon notification of his or her death; thereby,
reducing or eliminating an overpayment of benefits. Please refer to
question 3b above.
4c. Benefit Eligibility adjustment. Please refer to question 3c
above. As we continue working through the inventory of these claims, we
expect the amount of overpayments to decrease.
4d. Dependency adjustment. Since April 2017, the NWQ is efficiently
distributing the non-rating workload including dependency adjustments
to stations that have the most capacity to work these claims.
Additionally, VBA has applied a strategic approach in utilizing claims
processing overtime resources. We target specific claims and steps
within the claims process to direct overtime where it will produce the
most benefit. As a result, VBA claims processors are receiving more
non-rating claims to work and adjudicating more benefits eligibility
than in previous years. In processing more non-rating claims, the
amount of overpayments increased because of VBA's efforts in addressing
the benefits adjustments. As we continue working through the inventory
of these claims and are more able to adjudicate benefits in a timely
manner, we expect the amount of overpayments to decrease.
Question 5: Does VA plan to allow Veterans to use eBenefits to
remove dependents? If yes, please provide timeline for implementing
such plan. If no, why not?
VA Response: The function within eBenefits that is used for
managing dependents does allow for dependents to be removed from
disability compensation awards. This functionality has been available
for several years.
Question 6: What steps does VA take to avoid overpayments when a
Veteran's child turns 18?
VA Response: VBA automatically removes the dependent minor child
from the Veteran's award on the child's 18th birthday.
Question 7: On average, how long does it take for VA to verify that
a Veteran has died after VA receives the monthly death matching data
set provided by Social Security Administration?
VA Response: Upon notification of a VA beneficiary's death through
the weekly data-sharing agreement with SSA, VBA takes steps to suspend
or stop VA benefit payments after applicable notification to the
beneficiary has been made with the opportunity to provide response.
Unless VBA receives notice that the beneficiary is still alive within
30 days, the adjustment is referred to a claims processor to take final
action to terminate the beneficiary's award.
VBA is currently working with OI&T to develop an automated process
that will automatically terminate a Veteran's award when verification
of his or her death is recieved after notification via the SSA
electronic data-sharing agreement.
Question 8: On average, how long does it take for VA to terminate
benefits after verifying that a Veteran has died?
VA Response: Please refer to question 7, above.
Question 9: On June 28, 2016, VA OIG released a report entitled,
``Audit of Compensation and Pension Benefit Payments to Incarcerated
Veterans.'' Please describe the steps VA has taken since that report to
more timely process incarceration adjustments.
VBA Response: VBA has taken the following steps to process
incarceration adjustments in a timely manner:
In May 2016, VBA established timeliness standards for
completing incarceration/fugitive felon adjustments.
Oral and written guidance was provided to all claim
processors to ensure timely and accurate processing of incarcerated
Veteran claims. Additionally, VBA provided refresher training on the VA
fugitive felon program.
VBA created the Incarcerated Veteran Tracking Share Point
to assist in the tracking of the identified cases. Each regional office
identified two points-of-contact to serve as subject matter experts
(SMEs). These SMEs are available to address questions at their regional
office related to tracking these claims.
VBA continues to work with FBOP to make any necessary
updates or changes to improve the information exchanged as part of the
data-sharing agreement. This new agreement allows VA to more timely and
efficiently make any necessary adjustments and supports future
automation of the process. VA will continue to work with FBOP and other
Federal agencies to obtain the needed data and identify additional ways
to streamline the process.
Question 10: Please describe any additional steps VA will take to
more timely process incarceration adjustments.
VA Response: Please refer to the response provided for Question 9,
above.
Question 11: Please describe VA's efforts to inform Veterans of
their responsibility to notify VA of life events, such as divorce or
death that may impact monthly benefits. Does VA have plans to provide
additional reminders to Veterans''? If yes, please describe this plan
and provide the timeline for implementing such plan. If no, why not?
VA Response: VA notifies all beneficiaries in decision letters that
they have a responsibility to notify VA of all life events, such as
birth, divorce or death, which can impact VA benefits. In an effort to
ensure clarity of notice, VA has provided additional reminders which
have revised the decision letter to specify conditions that may affect
Veterans rights to continued payment. These additional letters to
describe this plan were released in December 2017. Additionally, VA
works with Veterans Service Officers to ensure that they are informed
of reporting requirements and can better assist VA claimants and
beneficiaries. Currently, there is nothing further planned or scoped to
notify Veterans; however, there are ongoing discussions on how and when
to notify Veterans of changes of this information moving forward.
Question 12: Please explain why the deadline to submit a waiver and
suspend the offsetting of benefits is 30 days, when a Veteran has 180
days to submit a request to waive the debt?
VA Response: In accordance with 38 CFR 1.912a(c)(2), if the debtor,
within 30 days of the date of notification, requests, in writing, a
waiver of collection in accordance with Sec. 1.963 or Sec. 1.964, as
applicable, offset shall not commence until VA has made an initial
decision on waiver. If the debtor requests a waiver more than 30 days,
but within 180 days of notification and the waiver is granted, VA will
refund the withheld amount in accordance with 38 CFR 1.967. This
process is designed to provide for ``the avoidance of unnecessary delay
and expense as well as the means for full protection of these debtors'
statutory rights.'' 48 Fed. Reg. 1052 (Jan. 10, 1983).
Question 13: Does VA have any plans to work with VSOs to improve
the content of its debt notice letters?
a. If yes, please provide the timeline for drafting the new debt
notice letter.
b. If no, why not?
VA Response: Yes, VA will work with the Disabled American Veterans
(DAV), the American Legion and the Veterans of Foreign Wars (VFW) in FY
2018 to improve the content of its debt notification letters. VA will
attend the respective national conventions: DAV: Feb 25-28, Arlington;
VFW: July 21-25 Kansas City; American Legion: Aug 24-30, Minneapolis--
through FY 2018 to gather Veteran Service Organizations' concerns and
draft changes for review in early FY 2019.
Question 14: If a Veteran does not respond to the debt notification
letter, please describe the steps VA takes to confirm the Veteran's
correct address?
VA Response: In accordance with 38 CFR 1.911(e); a debt
notification is sufficient when sent by ordinary mail directed to the
debtor's last-known address and not returned as undeliverable. The VBA
Debt Management Center utilizes inter-government mailing addresses
obtained from the United States Postal Service and commercial vendors
to update addresses when required.
Question 15: Does VBA have any additional plans to ensure that
VBA's databases have the Veteran's correct address?
a. If yes, please describe plan.
b. If no, why not?
VA Response: VBA continues to verify Veteran and other
beneficiary's addresses using information contained in all VA systems,
to include those used by the Veterans Health Administration, in an
effort to make sure we are using the most up-to-date information. We
are working across the agency, to include OI&T, to develop a mechanism
to allow automatic updating of Veteran information across all VA
systems. Due to complexity of this project, VBA does not have an
anticipated date of implementation at this time.