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Claims errors cost VA $943M

| Wednesday, Jan. 23, 2013, 8:24 p.m.

Inspectors said the most stubborn, chronic mistake made by Veterans Affairs claims examiners while trying to dig their way out of a growing backlog of cases is overcompensating some veterans.

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

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

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

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

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

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

A common error involves cancer treatment where the disease stabilizes or goes into remission, according to inspector general reports. In one case, a veteran who improved after being treated for non-Hodgkin lymphoma was overpaid $237,000 over 7 12 years until the mistake at a Cleveland VA office was caught by inspectors, according to a September report.

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

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

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

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