VA watchdog finds automated IT system errors led agency to incorrectly collect debts from veterans

The Department of Veterans Affairs internal watchdog released a report Wednesday which showed several instances in which the agency’s automated business rules within the VA’s electronic systems improperly triggered debt collection from veterans. 

The VA’s Office of Inspector General (OIG) discovered several instances in which the agency collected debts without first providing veterans with legally required notice, and attributed the errors to automated rules followed by a software program. 

The OIG review team identified three scenarios in which VA improperly reduced payments to veterans to collect debts created under the Veterans Benefits Administration’s (VBA) compensation program: debts collected by reducing the retroactive payments created in the same award, debts collected by reducing the retroactive payments created in a later award, and debts collected by reducing monthly benefit payments. 

“VA officials agreed that the veterans in examples 1 through 3 were entitled to notices of indebtedness and due process before their benefit payments were reduced to recoup the debts,” Larry Reinkemeyer, the VA Assistant Inspector General wrote in the report. 

“Additionally, VBA officials agreed that creating the debts in these cases was actually incorrect, making collection actions particularly problematic,” he added. 

The VA provides tax-free monthly compensation benefits to veterans in recognition of the effects of disabilities incurred or aggravated during active military service. Debts are created within this benefits program when a compensation decision retroactively reduces a veteran’s payment rate.

When a veteran owes a debt, the VA can withhold all or part of the veteran’s retroactive or ongoing monthly payments to recoup the money but first generally has to give the veteran due process. 

If a veteran disputes the debt or requests a waiver within 30 days of the notification, the VA typically cannot withhold benefit payments until a decision is made on the dispute or waiver request.

The OIG report requested that the VA inform the OIG what actions it takes to ensure veterans receive notice and due process before debts are collected going forward.