Legion testifies on the prevention, management of VA overpayments

American Legion National Veterans Affairs & Rehabilitation Claims Deputy Director David Spivey testified before Congress on Oct. 25 about how the Veterans Benefits Administration (VBA) can effectively prevent and manage the Department of Veterans Affairs (VA) overpayments to veterans.

According to Spivey, the Legion has worked extensively on matters concerning VA's management of debt. With nearly 40 years of collective service, American Legion representatives working at the Debt Management Center (DMC) have been instrumental in helping 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.

Spivey said many of the complications associated with a VA-based debt are caused by the lack of an integrated records system within the VA. The Legion recommends that VA implement a system in which all of its administrations can access the most up-to-date contact information for a veteran or other VA claimant.

“The American Legion recommends that VA continue to assign high priority to the dependency claims,” Spivey said. “We see a substantial number of overpayments created when VA fails to process the loss of one or more dependents on a timely basis.”

According to a VA report, 88 percent of all debts owed in 2014 were related to the Veteran Health Administration, whereas only 8 percent of all debts originated at VBA. Once a debt has been created at the regional office of jurisdiction, Spivey said the 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 it, and the individual’s rights and remedies in connection with the debt. Additionally, it must inform the debtor collection may be made through an offset of current or future benefits, and interest and administrative costs may be assessed.

The DMC sends a collection due process letter advising the debtor of the debt amount and provides a notice of their rights and obligations within 30 days, according to Spivey. 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.

Spivey said that 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 as delinquent to credit collection agencies.

Spivey said debt notification letters are sometimes sent to wrong addresses because the VA debt collection team are not provided with updated information. In most cases, delinquent accounts over 120 days old are referred to the Department of the Treasury for collection.

In order to avoid garnishment actions and negative credit reporting, Spivey said The American Legion strongly recommends that veterans immediately seek assistance from advocates who are sensitive to their particular circumstances. He further stressed that the veteran only has 30 days from the first debt notification letter to request a waiver of the collection action, and concurrently, 180 days to request a debt waiver due to administrative error and/or financial hardship. In his testimony, Spivey recommends VA standardize the these two deadlines to prevent confusion that is causing a large number of veterans to miss the 30-day deadline.

In addition, Spivey raised the issue of the need for the Department of Defense (DoD) and VA data match to prevent overpayments. “VA and the DoD should integrate their data systems to allow for reported changes in dependency or address information to be shared seamlessly between the two departments,” he said. “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.”

Spivey also warned that VA adjudicators are disincentivized from professing dependency claims. “Our service officers in the field have been told by VA staff that they avoid processing dependency claims due to the low-point value assigned by the VA work credit system,” Spivey said. “Therefore, we believe there would be fewer and 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.”

Overall, Spivey said the Legion believes that DMC does a good job of protecting veterans from added exposure. VA should continue to improve its training for overpayments, 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.

Click here to read Spivey’s full written testimony.