[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
PREVENTING HARM TO VETERANS: EXAMINING VA'S OVERPAYMENTS AND DEBT
COLLECTION PRACTICES
=======================================================================
HEARING
before the
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
of the
COMMITTEE ON VETERANS' AFFAIRS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
__________
THURSDAY, SEPTEMBER 19, 2019
__________
Serial No. 116-35
__________
Printed for the use of the Committee on Veterans' Affairs
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.govinfo.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
40-991 WASHINGTON : 2021
COMMITTEE ON VETERANS' AFFAIRS
MARK TAKANO, California, Chairman
JULIA BROWNLEY, California DAVID P. ROE, Tenessee, Ranking
KATHLEEN M. RICE, New York Member
CONOR LAMB, Pennsylvania, Vice- GUS M. BILIRAKIS, Florida
Chairman AUMUA AMATA COLEMAN RADEWAGEN,
MIKE LEVIN, California American Samoa
MAX ROSE, New York MIKE BOST, Illinois
CHRIS PAPPAS, New Hampshire NEAL P. DUNN, Florida
ELAINE G. LURIA, Virginia JACK BERGMAN, Michigan
SUSIE LEE, Nevada JIM BANKS, Indiana
JOE CUNNINGHAM, South Carolina ANDY BARR, Kentucky
GILBERT RAY CISNEROS, JR., DANIEL MEUSER, Pennsylvania
California STEVE WATKINS, Kansas
COLLIN C. PETERSON, Minnesota CHIP ROY, Texas
GREGORIO KILILI CAMACHO SABLAN, W. GREGORY STEUBE, Florida
Northern Mariana Islands
COLIN Z. ALLRED, Texas
LAUREN UNDERWOOD, Illinois
ANTHONY BRINDISI, New York
Ray Kelley, Democratic Staff Director
Jon Towers, Republican Staff Director
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
CHRIS PAPPAS, New Hampshire, Chairman
KATHLEEN M. RICE, New York JACK BERGMAN, Michigan, Ranking
MAX ROSE, New York Member
GILBERT RAY CISNEROS, JR., AUMUA AMATA COLEMAN RADEWAGEN,
California American Samoa
COLLIN C. PETERSON, Minnesota MIKE BOST, Illinois
CHIP ROY, Texas
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
----------
Thursday, September 19, 2019
Page
Preventing Harm To Veterans: Examining VA's Overpayments And Debt
Collection Practices........................................... 1
OPENING STATEMENTS
Honorable Chris Pappas, Chairman................................. 1
Honorable Jack Bergman, Ranking Member........................... 3
WITNESSES
The Honorable Jon J. Rychalski, Assistant Secretary for
Management and Chief Financial Officer, U.S. Department of
Veterans Affairs............................................... 4
Prepared Statement........................................... 31
Accompanied by:
Mr. Joseph Schmitt, Director, Debt Management Center, U.S.
Department of Veterans Affairs
Mr. Charles Tapp, Chief Financial Officer, Veterans Benefits
Administration
Ms. Susan Reed, Executive Director - Revenue Operations,
Office of Community Care, Veterans Health Administration
Mr. Shane Liermann, Deputy National Legislative Director for
Benefits, Disabled American Veterans........................... 18
Prepared Statement........................................... 34
Mr. Carlos Fuentes, Director of National Legislative Service,
Veterans of Foreign Wars....................................... 19
Prepared Statement........................................... 39
Mr. Mike Saunders, Director of Military & Consumer Policy,
Veterans Education Success..................................... 21
Prepared Statement........................................... 41
Mr. Gerardo Avila, Deputy Director, Military Boards and Memorial
Benefits, The American Legion.................................. 23
Prepared Statement........................................... 49
PREVENTING HARM TO VETERANS: EXAMINING VA'S OVERPAYMENTS AND DEBT
COLLECTION PRACTICES
----------
Thursday, September 19, 2019
Committee on Veterans' Affairs,
U. S. House of Representatives,
Washington, D.C.
The Subcommittee met, pursuant to notice, at 2:23 p.m., in
Room 210, House Visitors Center, Hon. Chris Pappas [Chairman of
the Subcommittee] presiding.
Present: Representatives Pappas, Rice, Rose, Cisneros,
Peterson, Bergman, Radewagen, Bost, and Roy.
OPENING STATEMENT OF CHRIS PAPPAS, CHAIRMAN
Mr. Pappas. The hearing will come to order. Without
objection, the chair is authorized to declare a recess at any
time.
This afternoon's hearing of the Oversight and
Investigations Subcommittee is entitled ``Preventing Harm to
Veterans: Examining VA's Overpayments and Debt Collection
Practices.''
The Department of Veterans Affairs provides an array of
important benefits to millions of veterans who have valiantly
served our country. At times, the Department makes overpayments
in administering these programs. Unfortunately, this
Subcommittee has heard of too many cases in which VA's efforts
to recover overpayments result in confusion, frustration, and
significant financial hardship for veterans, and VA makes a lot
of overpayments.
In some cases, overpayments have accumulated over years and
can total thousands of dollars for individuals. The VA
overpayments regularly create debts in excess of $2500. For
example, the Department has over 150,000 cases of such debts in
its disability compensation program alone.
In fiscal year 2018, VA's Debt Management Center sent out
over 600,000 debt notices for veteran benefits overpayments
alone. These notices relate to $1.6 billion of overpayments
that VA is attempting to recover. Let me repeat that: $1.6
billion in a single year.
These numbers clearly show that VA has a lot of work ahead
to reduce the number of overpayments sent to veterans. Of
course, receiving a notice of payment due can prove
particularly burdensome for veterans on fixed incomes,
recovering from a disability, or for those who are supporting
families. For almost all veterans, receiving a surprise letter
saying thousands of dollars are due in 30 days will be quite a
shock to them. Working through a confusing bureaucracy to
figure out why and how to make repayments is just frustrating,
and it is also a major challenge for anyone who is trying to
make ends meet.
The causes of VA's overpayments are many. Life events such
as the death or divorce of a spouse can affect a veteran's
benefit. If the veteran's account is not updated accordingly,
for instance, if VA doesn't process the change on a timely
basis, an overpayment will be made each month until the record
is updated. That's right, VA's own internal delays or mistakes
can cause overpayments to veterans and trigger collections.
When VA identifies an overpayment, its Debt Management
Center is responsible for working with veterans and other
beneficiaries to recover funds. However, two other parts of the
VA, the Veterans Benefits Administration and the Veterans
Health Administration, also play a direct role in identifying
and notifying veterans about overpayments and debts. As with
many issues that the Department faces, the siloed nature of VA
is a challenge in this instance.
Unfortunately, for many veteran's debt collection doesn't
stop with the VA. The Department will ultimately transfer
overpayments that it has not recovered to the Department of the
Treasury, which may pursue more aggressive collection methods,
and charge interest and fees on top of that debt.
All of these many steps and the number of players both in
and outside the VA show why communication with veterans needs
to be clear and effective. Yet veterans who have been overpaid
will generally receive letters from multiple VA offices; these
letters are often confusing and none of these letters give a
complete explanation as to why the overpayment occurred and
what the veteran can do about it.
I have heard this message loud and clear from my own
veteran constituents, and my fellow Subcommittee Members have
heard the same. Veterans themselves must piece together the
full picture.
Veterans service organizations offer free support and help
to veterans who receive overpayment notices from the VA, but
even with this support it can be difficult to navigate the VA's
debt collection processes. I look forward to hearing from many
of these organizations and advocates during the second panel of
this afternoon's hearing.
One point I want to explore is the Department's requirement
in law to waive recovery of overpayments if the collection
would be against, quote, ``equity and good conscience.''
Obviously, if the collection of an overpayment would bring harm
to a veteran on a fixed income receiving disability payments,
something is wrong. The law was intended to ensure that
collections only happen in an appropriate manner; however, as
we will hear, there are many cases where the VA falls short of
this goal. Of course, I think we can all agree that the fewer
veterans that face collection from the Department the better.
But even with efforts that are underway, the level of
overpayment that VA makes and then attempts to recover from
veterans continues to be staggering.
I look forward to a constructive discussion on the steps
the Department will take to stop these overpayments in the
first place, ensuring that no veterans are harmed by confusing
collection processes.
With that, I would like to recognize our Ranking Member,
General Bergman, for 5 minutes for any opening remarks he may
wish to make.
OPENING STATEMENT OF JACK BERGMAN, RANKING MEMBER
Mr. Bergman. Thank you, Mr. Chairman, and thank you for
holding another hearing on this very important topic.
Mr. Chairman, I do not need to tell you the dramatic impact
debt can have on an individual. As a military commander, I saw
troops who were ineligible to deploy because they were deeply
in debt. An unexpected trip to the doctor or an emergency car
repair can be very stressful for many families. Financial
problems can also lead to professional problems and increase a
person's risk of suicide.
To that point, Mr. Chairman, particularly since September
is National Suicide Prevention Month, I want to note that I
have along with Chrissy Houlahan introduced H.R. 3495, the
Improve Act, that would expand the Department of Veterans
Affairs' suicide prevention programs by supporting entities
that provide and coordinate suicide prevention services for
veterans and their families. I appreciate you cosponsoring the
bill with me and hope that this Committee can consider it as
soon as possible.
Today, however, we are here to talk about veteran debt that
is owed to the VA, the agency's methods for collecting on the
debt, and the impact of VA's collection efforts have on
veterans. This is not a new issue for this Committee.
As the chair of this Subcommittee the last Congress, I held
an oversight hearing in May of 2017 to review the VA's
financial management program, including VA's debt collection
practices. In addition, Representative Bost, former chair and
current Ranking Member of the Subcommittee on Disability
Assistance and Memorial Affairs, also held a hearing last
Congress to examine how the Veterans Benefits Administration
could effectively prevent and manage overpayments.
I sat on Mr. Bost's Subcommittee last Congress and what I
learned was that VBA creates benefit debt in excess of $1
billion, much of which is traceable to benefits processing
errors or failure to process changes such as a dependency
change in a timely manner. When processing delays result in a
veteran being overpaid, VA creates a debt to recover the
overpayment. Ensuring the dependency changes are processed
appropriately and quickly seems like a straightforward way to
avoid creating debt. However, when I asked the VA if they had a
plan to get better, the response was that they were trying.
Well, trying is not good enough.
I hope to hear VA has taken ownership of this issue and can
point to concrete steps that it has implemented to reduce
avoidable benefit-related debt.
It is important to recognize that not all veteran debt is
due to VA processing errors. For example, medical debt owed by
veterans is often debt created to collect copays from higher-
priority group veterans who receive medical care and
prescriptions for non-service-connected conditions. VA is also
authorized to recover costs for treatment and prescriptions
from third party insurers related to a non-service-connected
medical condition. In fact, VA anticipates recovering $3.9
billion in fiscal year 2020. Third party debt collected by VA
stays with VA and is used to provide medical care and services.
I assume we agree that VA should continue aggressively
collecting the third-party debt.
Mr. Rychalski, as the Assistant Secretary for Management
and Chief Financial Officer, you oversee the Department's
finances, including its debt-collection activities, it seems
that you have made honest efforts to address the underlying
problems making this process so onerous and burdensome for all
parties involved. For example, I understand the VA is working
on fixing the IT issues that prevent a myriad of VA legacy IT
systems from communicating basic data with each other, such as
changes to a dependency information or benefit eligibility
adjustments, both of which could alter the amount of
compensation the beneficiary is entitled to, and result in
overpayment and subsequently debt.
Mr. Rychalski, I understand that your staff is put in a
difficult place every day. They are charged with striking a
balance between making compassionate consideration of a
veteran's financial circumstances and a policy requirement for
aggressive collection of debt owed to VA. I look forward to
hearing how VA balances those interests. I also look forward to
hearing the efforts your office has taken to identify trends in
creation of veteran debt and to explore the strategies in place
to reduce the amount of veteran debt that is the result of
errors or untimely processing of claims.
Finally, I appreciate the expertise of our VSO partners.
The front-line perspective they bring to this discussion,
gleaned through decades of service to veterans and their
families, is invaluable, and I thank them all for their candid
testimony.
With that, Mr. Chairman, I yield back.
Mr. Pappas. Thank you.
I will now recognize our first panel. This afternoon, we
have Mr. Jon Rychalski, Assistant Secretary for Management and
Chief Financial Officer of the Department of Veterans Affairs.
Mr. Rychalski has served in this role since December of 2017.
Accompanying him this afternoon will be three additional
representatives from offices across the Department. First, we
have Mr. Joseph Schmitt, Executive Director of the Department's
Debt Management Center. We also have Mr. Charles Tapp, Chief
Financial Officer of the Veterans Benefits Administration. We
also have Ms. Susan Reed, Executive Director of Revenue
Operations in the Office of Community Care at the Veterans
Health Administration.
Mr. Rychalski will provide testimony for the Department and
all of the VA witnesses will respond to questions.
The Subcommittee thanks you for appearing today, Mr.
Rychalski, and you have 5 minutes for your opening comments.
STATEMENT OF JON J. RYCHALSKI
Mr. Rychalski. Thank you very much. Chairman Pappas,
Ranking Member Bergman, distinguished Members of the
Subcommittee, thank you for the opportunity to discuss VA's
overpayments and collection processes. Because you have
introduced my colleagues, I will not go through a second round
of introductions; I will get right into my testimony.
Overpayments or debt can have a devastating impact on the
lives of veterans, and this can be exacerbated by poor
management practices that work against rather than for the
veteran. From my oral statement, I am going to give you my
candid assessment of where we are with debt management, the
good and the bad, and what you can expect in the future.
My assessment is that the VA's debt management structure
processes evolved over many years in a fragmented manner that
was designed for VA convenience and to comport with antiquated
VA systems as opposed to minimizing the negative impact on
veterans. At times, debt workload has been set aside while
resources were redeployed to higher priorities like processing
original claims for compensation and pension. No one disagrees
that legitimate overpayments must be collected, but the
mechanics of how that happens make all the difference, and we
are too often fragmented, uncoordinated, and highly variable in
our processes. Frankly, we have a way to go before we can
declare success.
Fortunately, we have a highly motivated Secretary who has
made customer service a top priority, so I have the mandate.
First, I want to highlight where I see our greatest
deficiencies. Debt management is still very fragmented by
administration and even within the administrations. Veterans
cannot get one site-picture of their debt and they still
receive multiple communications, too clunky and too confusing.
Despite computer matching agreements, we are not anywhere near
preventing veteran debt. Processing time lags exacerbate the
situation. Our mission must be to prevent debt creation.
We don't have robust online customer relationship
management capabilities; we have some, but nothing close to the
extent that we need.
Acknowledging our frailties, I would like to highlight
where we have made progress, and I believe that we have made
some good progress.
First, VBA has used the National Work Queue and
establishment of non-rating resource teams to dramatically
reduce and manage debt-related workload inventory. The Office
of Community Care now has special programs to help high-risk
veterans who may be struggling to pay VA medical copayments.
They work with facility suicide prevention coordinators to
offer high-risk veterans financial assistance that best meets
their needs.
We are using computer matching agreements more effectively,
like Social Security death matches weekly, and taking steps to
increase DoD data feeds for Reserve duty drill pay from
annually to monthly by mid-2020. We prospectively notify
veterans from these matches to let them know there is a
potential overpayment, and we take action as soon as possible
to minimize the size of the overpayment.
We have made notable progress on an electronic solution for
dependency changes. Veterans changed their dependency over
400,000 times in fiscal year 2019 and about 80 percent, or
320,000 transactions, were completed via an electronic means
that resulted in an immediate system update.
We worked with industry professionals to overhaul a number
of debt notification letters, so they are more user-friendly
and easy to understand, and we are in the process of working
with VSOs and others to rewrite even more.
The Debt Management Center instituted important changes,
like automatically defaulting to a 12-month repayment plan for
compensation and pension debts, including drill pay-related
debts, rather than the previous practice of offsetting all
overpayment as soon as possible. The response from affected
veterans has been overwhelmingly positive and appreciative.
Most importantly, we are capitalizing on the Secretary's
customer service priority and have partnered with the Veterans
Experience Office to dramatically improve customer service
through their many training initiatives, including Own the
Moment and Veterans Journey Maps.
Going forward, here is what I would like to accomplish in
the next year. First, have the capability for veterans to view
debt online. We expect medical debt to be available in the next
3 to 4 months, and compensation, pension, and education debts
sometime in mid-2020. This is still not where I would like to
be with everything in one place, but it is a big step in that
direction.
I would like to consolidate and standardize debt management
and notification processes within each administration to
decrease the amount of letters and reduce confusion. I would
like to continue to reduce the inventory of debt-related
workload and greatly reduce the processing time for actions
like waivers. I would like to increase our utilization of our
Veterans Experience Office and VSOs to improve the
effectiveness of our engagement with veterans.
Within the next 3 years, I would like to consolidate all
debt into a single portal, giving the veteran the ability to
see all debt in one location, to make payments, and communicate
with VA staff regarding the debt; I would like to have a
single, coordinated point of issuance for all debt letters and
all electronic debt notifications; and, finally, I would like
to better leverage computer matching agreements, and identify
new data sources and methods to prevent the creation of debt.
I look forward to working together and appreciate your
continued collaboration in support of the Department. There is
significant work ahead of us and we look forward to working
with you as we improve our service to America's veterans.
Thank you. We are now ready to take your questions.
[The prepared statement of John Rychalski appears in the
Appendix]
Mr. Pappas. Well, thank you very much, Mr. Rychalski, for
that statement. I know Members have questions, but I would ask
the unanimous consent of the Subcommittee to recognize Miss
Rice for a few minutes to take make an opening statement and
take that out of order.
Seeing no objection, Miss Rice, you are recognized.
Miss Rice. Mr. Chairman and Mr. Ranking Member, thank you
very much for this courtesy.
It is concerning to me the number of the overpayment debt
collection cases that I have seen in my district have involved
elderly veterans. I am just going to give you the example of
one pretty stark example. We had the daughter of one of my
constituents reach out to my office for assistance on behalf of
her father, who was a 94-year-old veteran. He was informed that
he owed VA thousands of dollars for overpayments. This
gentleman was on a fixed income and relied upon his VA
benefits, so this created a real threat of financial hardship
for him at obviously a very vulnerable age.
In 2011, his wife had passed away, and he informed the VA
at that time about the death of his dependent, so his benefits
would be adjusted. It was not until 7 years later, 2018, that
he received a letter from the VA, notifying him that the VA had
made the dependency change then and that his benefits would be
decreased to retroactively account for that entire time period.
Even though the veteran had informed the VA of his dependent's
death and 7 years had passed before VA actually processed that
change, he and his family are now burdened with this debt.
Now, in addition to the processing delay, the information
provided to the veteran and my office once we got involved was
incredibly limited and confusing. There was no explanation for
how the VA had determined the total amount that he owed and the
veteran's request for a waiver was denied because it hadn't
been submitted within the short timeframe veterans have to
dispute a debt.
I mean, I hope that everyone on this panel sees the
ridiculousness of this situation. This 94-year-old veteran, who
served his country and played by the rules and informed the VA
of the passing of his wife, to be hit with this financial
burden when he can't--I mean, he can't pay for his life if they
are going to take this money away from.
So my question is, why would it take 7 years for the VA to
process a dependency change? It is not as if there was a delay
in the reporting; the information was in the possession of the
VA. And why is the financial burden shifted onto the veteran
when they did nothing wrong?
Mr. Rychalski. So the first thing I say is that is so
regrettable, I mean, there is no way I could justify what
happened there. It should never take 7 years, I mean, the whole
thing. And, to be honest, in my current role, you know, I have
come across similar stories. So that is a complete failure on
the part of the VA.
What I would say, though, is that we you know, sort of
strike a balance between being good stewards of the taxpayers'
dollars and following the law, and also trying to protect
veterans. In a situation like that, it shows all the things
that we need to improve with the VA. I mean, where we want to
get is, we, you know, identify the debt early and work with the
veteran if it has to be repaid. We have situations where you
have people making small payments, small monthly payments, the
debt will never be paid off, right? But if we get them to a
point it is something they can afford, we are complying with
the law, that is where we want to be in compassionate debt
counseling.
I mean, I hope those are the exceptions. I know stories
like that myself, but it is absolutely regrettable. There is no
way I could justify what happened there, not at all.
Miss Rice. Well, I appreciate that answer and I would like
to be able to work with you, because there is simply--I mean, I
think this case highlights exactly what you said, which is when
rules are put in place and they are not followed by--I mean,
the veteran is following the rules, doing everything that they
are supposed to by the book, and then 7 years later they are
saying, okay--first of all, how are you even coming up with the
dollar amount that is owed?
Mr. Rychalski. I could tell you, as you were explaining
that story--not to break in, I apologize--
Miss Rice. Yeah.
Mr. Rychalski [continued]. --it made me think of a similar
story that I heard of, you know, in preparation for this, a
similar story with an older veteran, some wacky things that the
VA did that really caused problems for this veteran, this
veteran was about 100 years old, and that is what we are trying
to get away from and that is sort of the challenge we face. I
mean, I think we are making some progress, but there is no way
you can justify situations like that, it just defies logic.
Miss Rice. Well, I appreciate your willingness to at
least--what I would like to do is help work with you to try to
address the situation for this gentleman, because obviously he
depends on his benefits from the VA to support him as a 94-
year-old man.
Mr. Rychalski. And we want to hear about those cases, we
want to work with him. Any case that you have like that, any
questions, if they can come to us, I really feel like we
could--we can work with the veteran and we can get them to a
place that, you know, it is something they can afford, or
whether it is a waiver or compromise or, you know, getting rid
of the debt, it is getting those before they get to that point.
Miss Rice. Yeah.
Mr. Rychalski. Yeah. Preventing them in the first place,
but if they happen, we want to know about it.
Miss Rice. Well, I feel in your hands, obviously, I am
hoping that these issues that are highlighted just in this one
anecdotal story can be fixed--
Mr. Rychalski. Yes.
Miss Rice [continued]. --now that attention is brought to
it.
Thank you very much and I will be in touch with you.
And, Mr. Chairman, again, and Mr. Ranking Member, thank you
very much for taking me out of order. I yield back.
Mr. Pappas. Thank you. I will now recognize myself for
questioning for 5 minutes.
Mr. Rychalski, thanks very much for your opening statement.
As we know, this has been a large and consistent problem for
years. The $1.6 billion figure that I cited here this morning
has been pretty consistent over the last several years. So
preventing overpayments has got to be a focus as part of the
solutions that you outlined today. VA has a long way to go in
many ways, including modernizing its accounting software,
creating that portal that you spoke about, that has not yet
been completed, and there should be some steps that can be
taken to prevent these additional overpayments from occurring.
So I am wondering if you could talk a little bit about the
structure of VA and how it is set up to address such a big
systemic challenge like this. Ultimately, who is responsible
for reducing these overpayments, who is in charge?
Mr. Rychalski. So, ultimately, I am responsible for
reducing the overpayments. And with respect to the structure,
sort of as I described in my opening statement, we are highly
federated, and I think that we have a lot of people with good
intentions working in a somewhat antiquated system in a highly
bureaucratic organization. Where we want to be--and the other
thing I would say about that is, we don't make use of all the
potential sources of data and intelligence that we could to
identify situations like that.
That said, in my own mind, I thought of, you know, areas
how could we eliminate some debt, and I will give you an
example. I at one point was an active Reservist, I had a VA
disability, and so in some cases we are not going to be able
to, I think, prevent the debt, and I will give you an example.
I was an IMA, an Individual Mobilization Augmentee, and there
would be times I would decide fairly soon that I was going to
do my IMA days like maybe tomorrow or the next day or even next
week, there is probably no way the VA is going to know that. So
some of this is going to happen.
The thing we need to do is sort of bring this together to
where we are using all of the intelligence that we have
available to us, whether it is their computer matching
agreements, other information in the VA, to try and anticipate
and prevent, and we are a ways from doing that.
So what we can do now is try and, you know, expedite things
like the drill pay matching, getting dependency notifications
in the system as quickly as possible, I think those are the
near-term things to try and bring this down. Longer term, we
need to become much more sophisticated in how we go after the
information that is available out there and engaging with the
veteran.
Mr. Pappas. Well, I appreciate those comments. One of the
things we need to insist on is a timetable for this. Can you
give us some specific dates on when you will hit those marks?
Mr. Rychalski. I can. As I mentioned in my testimony, so
these are sort of my goals for the year, and I am very
comfortable that we can meet these. There are some stretch
goals we have as well, but in the near term, the online
notification, online availability of statements, I mentioned
that for VHA we expect in the next 3 to 4 months a beneficiary,
a veteran, can go online and see what they owe to VHA for
medical copayments, things like that.
For VBA, electronic notification. This is where you can
sign up and receive things electronically via email, or you can
still get it via mail. But we think by mid-2020--and by that, I
mean mid-fiscal year 2020, so March, April timeframe is what we
are looking at for that.
With respect to drill pay, this is another big area. It
used to be back in the day and when I was in DoD, when I was a
drilling Reservist, they did that annually. They would get a
download from the Defense Manpower DMDC Data Center, they would
do an annual reconciliation, they would do a batch mailing out
to veterans. So, over the course of that year, that
accumulated, right? Well, now they get real-time feeds from
DMDC and they are in the process of working this. They can do
monthly matches and they can take it from a year to the month
that the veteran did their drill pay. I can't give you an
estimate of the magnitude of what that is going to mean, but I
think it is going to be substantial, and so we expect that also
in mid-2020 to be in place.
Those are our big initiatives for the next year.
Mr. Pappas. Well, the clock is running and each day that
these reforms aren't realized is another day that a veteran is
overpaid and potentially put in dire financial straits as a
result.
As you mentioned in your opening statement, processes have
evolved over time in recent years without regard for impact on
individual veterans. And under current law, as you know, you
are not supposed to pursue overpayments if the recovery would
go against equity and good conscience. So can you comment on
that in view of what VSOs and our offices have discovered about
how some individual veterans have been treated?
Mr. Rychalski. You know, I went to--I am going to defer
that question to Mr. Schmitt, because I think he--he works that
day-to-day at the Debt Management Center and I believe he has
got a better perspective on compassionate debt collection and
the things that they do, how they go about this.
Mr. Schmitt. Thank you, sir.
Thank you, Mr. Chairman. One of the things that we are
doing--I will just cover a series of things that the VA's Debt
Management Center really is doing. Let's just talk real quick
about outreach. We work with the VSOs across the United States
to attend all the major conferences to make sure we can get
ahead to prevent debt. So we work with the veteran's service
organizations and school certifying officials. This last year,
DMC reached 10,900 VSO's and SCO's and of those people who
reach millions of veterans individually, we have reached out
with them, we have given them presentations. And thanks for
their partnership, we often get recognition for those efforts
to say, hey, here is what we are doing, here is how you can
avoid becoming indebted to the U.S. Government.
For first thing it is when we think about education, how do
we think about when you change your rate of pursuit or you drop
a class. If you do that before the timeframe, that results in
an overpayment. Well, let's not do that. Or it can also help
school certifying officials when they go in and sign up for
class, much like I did with my Post-9/11 GI Bill, we are able
then to understand that, hey, if you drop a class, this is what
results.
So it is really education on the front end that really
helps us out.
In terms of the compassion piece, when it comes to the VA's
Debt Management Center as delinquent, we've done many things in
the last year--or last 2 years since we reported before this
panel. We no longer take everybody's entire benefit check; we
have an automatic 12-month repayment plan. And in those cases
when a 12-month repayment plan doesn't work, we work with them
individually on a financial plan that works for them. So we do
that in concurrence with them.
Our debt counselors who work with veterans every day go
through a 13-and-a-half-week academy, they are highly trained
in understanding at-risk and veterans in general, and 44
percent of our workforce are veterans.
Those are just to name a quick few, but we are doing a lot
more in terms of compassionate care towards veterans. And we
have debt counselors, they are not out there doing proactive
calling, they are actually listening to their concerns, working
with them, creating payment plans, and then validating. If it
is a waiver or a compromise, let's look at the validity of this
debt, and in many cases, if we find it is not, we can go ahead
and refund that money.
Mr. Pappas. Thank you for those comments.
Mr. Schmitt. Yes, sir.
Mr. Pappas. I want to now turn things over to the Ranking
Member, General Bergman, for 5 minutes.
Mr. Bergman. Well, again, thank you, Mr. Chairman, and this
is an important hearing. In fact, as I sat and I looked with
the chart that was up here before at the 1.7, or whatever it
is, billion dollars, reminded me of my first term on the budget
committee where we were given the stat that every year, so
annually, the U.S. Government pays out roughly 150 billion,
with a B, dollars in improper payments.
So when you think about the overall improper payment
spending of the Federal Government and this is not a very large
percentage of that, but I will tell you what, if you are one of
those veterans, it is a big deal. That $149 billion really
don't--you know, that is not going to affect you, but this is a
big deal.
So, again, thank you for what I have seen already in the
progress that we are trying to make here.
Mr. Rychalski, dependency changes, such as a divorce or a
change in the number of dependent children, are another source
of benefit debt. In your testimony you state that veterans can
go online, send changes through regular mail, or call VA to
initiate a dependency update. These options result in immediate
changes to a veteran's disability compensation award, limiting
the chance for an overpayment. In DAV's written testimony,
however, they suggest that e-Benefits only processes the
addition of dependents and not the removal of dependents.
Could you or somebody, you know, on the panel clarify what
dependency changes e-Benefits can or cannot process?
Mr. Rychalski. Yeah, and I am going to ask Charles Tapp to
take that question. I believe it has to do with the
requirements, the documentation requirements associated with
removing a beneficiary. So it is not a matter of the
functionality of the system, it is more a matter of the
requirements associated with it. But Mr. Tapp, I think, can
help us.
Mr. Tapp. Yes. Thank you for that question.
So I just confirmed again just this morning as far as e-
Benefits, it is true you can add, and add spouses and
dependents, as far as dependent children, and you can also
remove a spouse, but you cannot remove a child. Because of the
due diligence that goes along with it, it requires more of a
manual process to move that forward.
Mr. Bergman. Okay.
Mr. Rychalski. Can I make just one clarifying question? And
this is sort of where we strike the balance with how quickly we
do something and how much due process we give someone, and that
is probably something you are familiar with as well. There are
some things that we could do faster, potentially, but we may
limit the individual's ability to dispute a debt or due
process.
I want to just give you one vignette--and I apologize, I
will do it very quickly--but we had an initiative a while
back--and Joe Schmitt can talk more about it--in areas that
were hit by a natural disaster. We thought, you know what,
those poor people don't need to be worrying about their debt or
paying debt, and so we are going to suspend the debts for
everybody in this area affected by this natural disaster. What
happened was, a lot of people there did not like that. We did
it proactively, we didn't notify them. We said, hey, your debt
is suspended, you don't have to worry about it until everything
is taken care of. We got a lot of negative feedback from people
that said, I am not really affected by it, I want to keep
paying this, don't ever do that again. So now we have to sort
of reach out.
So I only throw that out for your consideration that
sometimes we can do things too quickly or we think we are doing
a good thing and people are like, no, not so much.
I apologize.
Mr. Bergman. No, that's okay. Well, you know, you try to do
the right thing, then the people informed you it wasn't the
right thing for them, but your heart was in the right place.
Mr. Rychalski. Yeah. So we sort of hit and miss, but we
learn from it.
Mr. Bergman. Okay. Mr. Schmitt, VA's regulations provide
that VA will take, quote, ``aggressive action,'' end quote, to
recover debt, but also provide that when a veteran requests a
waiver, VA is to apply an equity-and-good- conscience standard,
that is what you do. Would you please explain the DMC's role in
the waiver process and, if you know, how the equity-and-good-
conscience standard is weighed?
Mr. Schmitt. Yes, sir. Thank you for the question.
I don't own the waiver process. We are initially referred
with from the veteran to pass that over to the Committee on
Waivers and Compromises with Veterans Benefits Administration,
so I will let him talk to the waiver process, but I would like
to talk to you about when a debt comes to the VA's Debt
Management Center and how we really follow through on equity
and good conscience.
And so every time a veteran contact us it is roughly at the
point of 60 days post-initial notification. We work with them
with our VA's Debt Management Center debt counselors to listen
to their stories and to apply whether it be a waiver, a
compromise of the debt, whether it be an automatic repayment
plan of 12 months, there is no further verification of income
needed for those.
But for those people who are even in further dire need who
have a debt that was unbeknownst to them or came to them as
their dependency claim, in those cases we talk with them,
provide a financial status report, and then we give them
extended repayment plans, commensurate with the time that we
had mentioned earlier. I think Miss Rice had mentioned,
Congresswoman Rice had mentioned that there had been some time
in between when it was initially submitted and came to
fruition. In those cases, the VA's Debt Management Center makes
a payment plan commensurate with the time also it took, in many
cases we can have payment plans in excess of 10 years.
Mr. Bergman. Okay.
Mr. Schmitt. Now, for those folks, the American taxpayer
may say that that is a long time, but the veteran, and also
being a veteran who was $1.3 million indebted due to saving my
son's life, I thoroughly understand the weight of what that
requires, and I do my best or our team does our best to really
make sure we are taking care of them.
Mr. Bergman. Thank you.
I see my time has expired, Mr. Chairman. I yield back.
Mr. Pappas. Thank you.
I would now like to recognize Mr. Rose for 5 minutes.
Mr. Rose. Thank you, Mr. Chairman and Ranking Member both
for your leadership on this extraordinarily important issue.
As a veteran, I understand in critical issues like this,
there but for the grace of God go I. So I am really sick and
tired of people thanking soldiers for their service and then
screwing them over, and I know you all agree with me.
So I would like to tell you the story of just one veteran
in my community, Staten Island and South Brooklyn. We really
pride ourselves on being a place that looks out for vets, as I
know many communities in the country do. So I was shocked when
I heard of a case, though, in my district resulting in nearly
$18,000 in debt due overpayment for just one veteran. This
retired military veteran receiving disability benefits notified
the VA of his pending divorce, so that they could make
appropriate changes. And in fact, a short while later, the VA
confirmed--confirmed--that they received an electronic alert
indicating that the divorce was pending.
After doing his due diligence, this veteran, though,
thought he was in the clear, thinking any fluctuation in
benefits was due to a change in COLA, until nearly 10 years
later this veteran finds out that, because the VA did not have
the actual papers received via snail mail to confirm this
divorce, he incurred $18,000 in debt. Now he has had large
deductions to his monthly benefits and now he needs to hire
costly attorneys for an issue that he thought was resolved.
This case is not unique. Can you imagine someone making a
mistake and then you have to hire lawyers to help solve it?
Greatest country on earth and we have to do this to our
veterans.
So my first question to you is that, can you commit today
that you will work with my office and me personally so that we
can resolve this issue, so that this veteran, who served in
uniform so we all could enjoy the freedoms that we enjoy today,
doesn't have to pay high-priced attorneys to fight his own
country.
Mr. Rychalski. Yes, absolutely.
Mr. Rose. Okay. Thank you very much.
What is going on with this snail mail thing? Why, if you
get an electronic alert--have you heard problems like this
before?
Mr. Rychalski. I have heard similar stories, yes. And I
defer to Joe and Charles as well for--I imagine they have heard
of similar situations where a veteran has notified the VA and
we haven't processed it in a timely manner, missed it, and
they--as I mentioned to Congresswoman Rice, it is completely
regrettable and, one of the things that we are looking at, how
can we make this more failsafe.
In my own mind, one of the things to do is to have sort of
multiple venues. We do use snail mail, but having an online
presence--
Mr. Rose. But you admit that it is on you guys? You admit
that you make--
Mr. Rychalski. We are notified and we don't--absolutely,
100 percent, I absolutely agree with that.
Mr. Rose. But he is the one bearing the consequences of the
mistake.
Mr. Rychalski. And, to your point, it sounds to me and this
is a situation, he did get screwed, there is no question.
Mr. Rose. So we are working on this issue, though. That
is--
Mr. Rychalski. We are working on it--
Mr. Rose [continued]. --a positive.
Mr. Rychalski. --yes. The issue that you are describing we
are working on. We are trying to find ways to prevent this from
happening, yes.
Mr. Rose. Okay. Is there any type of forgiveness for legal
fees that veterans have to incur so as to fight the VA
Department?
Mr. Rychalski. I mean, I think I would have to take for the
record. That is probably a legal matter and I don't know it
well enough, but I will take it for the record and get you an
answer.
Mr. Rose. Okay. Anyone else, anything else to add about
this snail mail thing?
Mr. Tapp. Yes, sir. So, based on the timing that you
mentioned as far as snail mail, there have been improvements in
our processes as far as in-taking mail and scanning the mail,
so that it moves through our system much more quickly. Because
you are right, 10 years ago, snail mail and getting to the
right place at the right time was absolutely a problem. But,
again, in the more recent history over the last couple of
years, we are scanning the mail, ingesting the information into
the e-folder for a military member or a veteran, so that we can
process those claims a lot more quickly.
Mr. Rose. Anyone else? All right. So I look forward to
working with each and every one of you, so we can resolve this
case without high-priced New York City attorneys being
involved.
Thank you again.
Mr. Pappas. Thank you, Mr. Rose.
I now would like to recognize Mr. Roy for 5 minutes.
Mr. Roy. Thank you, Mr. Chairman, I appreciate it. I
apologize for being late. As many of my colleagues, we were
voting and then taking meetings off the floor and so forth. So
here we are.
I am glad that I am privileged to serve on this Committee
where at least on a bipartisan basis, I think we tend to
actually try to work forward and get things done together,
because I don't know if there is any place in the world that
has more activity and less productivity than this complex, as
we run around from committee to committee and people wonder
what we are doing. But at least here in the Veterans Committee,
we are at least trying to accomplish some things, so I
appreciate you all being here.
I have missed obviously parts of it and hopefully I am not
being too repetitive, but I do, having read through the
testimony that was provided, have a question for Mr. Rychalski,
if I might.
In your written testimony, it states that the VA's Central
Benefits Communication Management Program processes roughly
40,000 letters a day; does that sound right?
Mr. Rychalski. Yes, that sounds right.
Mr. Roy. And that you are looking to move towards an opt-in
electronic notification system--
Mr. Rychalski. Correct.
Mr. Roy [continued]. --is that right?
Mr. Rychalski. Yes.
Mr. Roy. And so if you just kind of do back-of-the-envelope
on that in terms of cost, you know, 40,000 letters, you
probably get a bulk discount rate on postage, whatever that
rate is, but times 365 days, I mean, you are at 8 million bucks
or something, depending on what the postal rate might be. So an
annual cost of about $8 million or something on postage alone.
Have you estimated what the cost savings of moving to an
electronic notification system could be?
Mr. Rychalski. I have not specifically, and I don't know
that we have done a cost estimate. I also don't know factually
if we could completely--and maybe we could--completely stop the
regular mail if they opt in. So that is actually a very fair
question, good question. I would have to sort of get back to
you--
Mr. Roy. Okay.
Mr. Rychalski [continued]. --what we can do and what cost
savings, but I agree with you, there could be substantial cost
savings.
Mr. Roy. Okay. That would be great, I appreciate it.
And then, Mr. Schmitt, I also serve on the Technology
Modernization Subcommittee, and I have been closely looking at
and reviewing the VA's Electronic Health Record Modernization
effort, that is a thing I hear a lot about in the district. We
have got Audie Murphy in San Antonio and then we have got, you
know, 80,000 veterans who go to the VA in Kerrville. And so,
you know, I hear a lot about as we are moving to MISSION, you
know, and the follow-up to Choice about how getting this right
is critical to those things functioning. And so I think that is
really on the hearts and minds of the veterans that I talk to.
They go, well, we love the idea behind MISSION and what is
happening, at least what we hear, we loved conceptually the
idea of Choice, so we are hoping MISSION will fix some of those
things and move it in the right direction. But this question,
right, about having records and then how that works for them of
bouncing in and out and going to a doctor and then coming back
and all of that.
So my question is, it is my understanding that the new--and
I remember a hearing we had not too long, the new Cerner health
record system includes debt management capabilities in block 2
of the implementation timeline, and what improvements to the
billing and debt management process does the new platform bring
and what challenges does it present?
Mr. Rychalski. I think that would be a question better for
Susan Reed.
Mr. Roy. Sure, great. Yeah, I'm sorry about that, that
would be great.
Mr. Rychalski. Yeah.
Ms. Reed. That's okay. Thank you for that question.
At this point, I think it might be too soon to tell. That
is definitely something that we are looking at as we go through
our planning for the rollout of the EHR.
I think the important thing that we want to keep in mind is
that we want to make sure the veteran is in the center of that
implementation.
Mr. Roy. Okay, thank you. I appreciate it. No more
questions.
Mr. Pappas. Thank you.
I will now recognize Mr. Cisneros for 5 minutes.
Mr. Cisneros. Thank you, Mr. Chairman. Thank you all for
being here today.
You know, it is stated, or I read that the VA will not
charge a veteran for the Veterans Administration's own mistake;
is that true?
Mr. Rychalski. If there is an overpayment, even if it is
the VA's fault, legally, I am obligated to get repayment on it.
So I think it is not--it depends on your definition, but not
100 percent true. If we make a mistake and overpay someone, I
am legally obligated to try and collect that debt.
Mr. Cisneros. Right, but there is a waiver process; is that
correct?
Mr. Rychalski. That is correct. And what I would say about
the waiver process, and my colleagues can correct me, but the
numbers that I saw is about 50 percent of the waivers that are
submitted are approved--is that--yeah, I think so. Yes, there
is a waiver process, about 50 percent are approved.
Mr. Cisneros. So what is the process for waivers and how
does one go about--who reviews these waivers and how do they
get approved?
Mr. Rychalski. So I am going to ask either--maybe Charles
Tapp is probably the best, since they own the waiver process,
to sort of walk you through the life cycle.
Mr. Tapp. Yes. So when we have a situation where a veteran
comes forward and requests the opportunity for a waiver or
compromise, basically we have three centers, two that deal with
compensation and pension and one with education. Basically,
they submit their case, that includes a financial worksheet,
and basically, we go through a checklist to evaluate the
ability for a veteran to actually repay that debt based on
their financial situation or circumstances.
This fiscal year, we have had 27,000 cases that have come
in and 58 percent of those have been approved. But, again, it
is based on their financial ability to make a repayment.
Mr. Cisneros. So, Mr. Schmitt, you talked about a 12-month
repayment plan, is that only for in regard to the GI Bill or is
that regarding all overpayments?
Mr. Schmitt. Yes, sir, it is in regard to compensation and
pension debts alone. And so for those compensation and pension
debts that are out there, we offer an automatic 12-month
repayment plan.
Mr. Cisneros. Okay. So, when I was in the Navy, one of my--
actually, it was my first job that I did, I was a disbursing
officer, so I was in charge of paying everybody. And, kind of
similar, when somebody would get overpaid, the Government
always takes their money, and there are no questions asked, it
doesn't matter, they don't really think, they just take back,
and they would at times take a person's entire paycheck. We
always worked with them in that situation to try and make sure
that they had the funds, and I always had the ability to go and
to do that, to make that happen.
But, you know, with these situations right now, when you
run into someone who has an overpayment and your situation, you
said you are legally obligated to take that back. And even
though it may be in a situation where there is a payment plan,
it has always been my--at least when I was doing it there and I
am sure it is probably still the standard now, that the
Government is always going to go and take their money first.
So, to get into this payment plan, is the money taken away
first and then there is a process to kind of pay it back, or
what is the process to get into this payment plan?
Mr. Rychalski. Yeah, so I think it is automatic. What
happens is, the veteran is notified of the potential existence
of this debt and they are asked to--and they are given some
options, and we can debate whether the letter is clear or not.
I mean, I can tell you, I have read the letters, they are not
that clear, to be honest, and we are going to work on that. But
over a series of letters, we ask them to contact us. If they
contact us within 30 days and they have a dispute or they want
to waive it, or a compromise or something like that, they don't
pursue collections. So they have some time there to sort of
figure out what to do. If we don't hear from them, eventually
what happens is--and they are what we call an active client
where they have, you know, a VA payment going out, eventually
that will be decremented.
And what Joe was saying is, instead of doing it all at once
like, you know, I am used to military pay doing, they will do
that over 12 months. The veteran can contact us and let us know
that even that 12 months isn't going to be enough. The key is
if the veteran sort of gets engaged early. The obligation on us
is to get the veteran notified, if that answers your question.
But it doesn't come out all at once, it comes out over 12
months, unless we work out something.
But there are a lot of options for the veteran, whether it
is not just a waiver, it could be a compromise to pay less, a
dispute to have the debt set aside entirely.
Mr. Cisneros. All right. Thanks for your testimony.
I yield back my time.
Mr. Pappas. Thank you, Mr. Cisneros.
Well, we are hearing bells, which means we have some votes
to tend to. We appreciate the panel for being here today. So,
Mr. Rychalski, Mr. Schmitt, Mr. Tapp, Ms. Reed, thank you for
joining us. We hope to look for ways to continue this
conversation in the coming months and years to stay on top of
this situation. As I mentioned, our offices continue to receive
lots of calls from individual veterans who are experiencing
overpayment and we need to make sure we are addressing this
situation in a way that doesn't put them with a significant
financial burden moving forward. We appreciate your commitment
to that.
And we will pick this up after votes with our second panel.
So, with that, the Subcommittee stands in recess.
Mr. Rychalski. Thank you so much.
Mr. Pappas. Thank you.
[Recess.]
Mr. Pappas. The hearing will come to order. We are back and
we are now joined with our second panel of witnesses. I would
like to introduce them here today and thank them for joining
us.
First, we have Mr. Shane Liermann. Mr. Liermann is the
Deputy National Legislative Director for Benefits at the
Disabled American Veterans. The Subcommittee thanks you for
appearing today.
And, Mr. Liermann, we will turn it over to you for 5
minutes.
STATEMENT OF SHANE LIERMANN
Mr. Liermann. Thank you. Chairman Pappas, Ranking Member
Bergman, and Members of the Subcommittee, on behalf of DAV's
more than 1 million members, we thank you for the opportunity
to present our views at today's hearing. Our full written
testimony addresses our recommendations for debt reforms
regarding drill pay and incarcerated veterans; however, this
afternoon I will focus our recommendations for dependency
status change and debt collections.
Mr. Chairman, we understand that in an imperfect claims
processing system there will be overpayments, and 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 can be reduced or avoided.
VA's lack of timely action causes additional overpayments, and
that places additional financial hardships on veterans and
their beneficiaries.
One of the most common ways that an overpayment is created
is when veterans report a change in their dependency status.
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. Veterans are required to advise
VA of a change that will remove a dependent, which will result
in a reduction in their monthly compensation. But if VA delays
the processing of that request to remove the dependent, it
creates an additional amount of debt that the veteran or the
beneficiary is responsible to repay.
Mr. Chairman, VA's adjudication manual lists all dependency
actions as non-rating work end products, or EPs. Non-rating
work EPs are not considered part of VBA's backlog management
and reporting of days pending for processing. This means that
non-rating work EPs are a low priority. In fact, currently,
there are over 211,000 pending claims to add or remove
dependents within VBA.
The VA OIG report of September 2007 indicated an estimated
$50 million in overpayments were avoidable, and found the main
reason for the delay in processing dependency status changes is
due to its classification as non-rating claims. We have two
recommendations to assist with these delays in processing
dependency claims.
First, assign dependency claims as rating work end
products. This will require VBA to consider all dependency
changes as rating work. While this will increase the number of
pending claims by assigning a rating work end product code, it
will reduce the additional amounts of overpayments that are
created by VA's lack of timely action.
Second, allow veterans and beneficiaries to remove
dependents from their award electronically in realtime. Through
VA's e-Benefits system, veterans can electronically add
dependents, and VA will usually make the additions within 48
hours. However, there is not an immediate way to remove
dependents electronically. To reduce the additional amounts of
debt created by not prioritizing these claims, VA must allow
veterans to remove dependents from their award as easily as
they can be added.
In terms of reforming the overall debt collection process,
I want to highlight two of our recommendations. One, reduce the
amount recouped or offset from monthly compensation checks.
When VA recoups the entire monthly compensation check until the
debt is repaid, or even in 12 months, this creates a serious
financial hardship, and can actually cause more harm to the
veteran and their family by collecting it through their monthly
compensation. We recommend that VA reduce all offsets and
recoupment to 25 percent or less of their monthly payment.
Number two, waive all amounts of debt created by VA's lack
of timely action. As noted, large amounts of additional
overpayments are created by VA's low prioritization and lack of
timely action, as was noted earlier this afternoon. The
veterans should be responsible for the amount of debt they
create only and not being taxed with the additional amounts
created by VA's lack of action.
In closing, additional overpayments created by VA and the
resultant debts often cause severe financial hardships for
veterans and their families. In many cases, the burdens 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 must reform VA's debt policies to
ensure we protect veterans from additional harm.
Mr. Chairman, this concludes my testimony. I would be
pleased to answer any questions you and the Members of the
Committee may have.
[The prepared statement of Shane Liermann appears in the
Appendix]
Mr. Pappas. Thank you very much, Mr. Liermann.
I will now recognize our second witness, Mr. Carlos
Fuentes. Mr. Fuentes is the Director of National Legislative
Service for the Veterans of Foreign Wars. And the Subcommittee
thanks you for appearing here today, Mr. Fuentes, you have 5
minutes.
STATEMENT OF CARLOS FUENTES
Mr. Fuentes. Chairman Pappas and General Bergman, on behalf
of the VFW and our Auxiliary, I would like to thank you for the
opportunity to present our views on how VA can effectively
prevent and manage overpayments. Having to deal with erroneous
forfeiture of benefits or financially-constraining repayment
plans have a detrimental impact on the well-being and
livelihood of those who have worn our Nation's uniform.
The majority of veterans the VFW assists with overpayment
issues results from confusion or errors with education
benefits. Through the VFW's One Student Veteran Program, we
have been notified by countless veterans who have received debt
notifications because VA administrative errors have caused
overpayments. The VFW also hears and addresses overpayment
issues through our network of more than 2,500 highly-trained
VA-accredited service officers around the world. Changes in
dependency claims is the most common reason for overpayments in
VA disability compensation. VA's inability to timely address
concurrent receipt issues also cause overpayments, which VA is
later required to recoup.
For example, a veteran who is still a National Guard or
Reserve component is not eligible to receive VA disability
compensation and drill pay concurrently. VA's delay or errors
in processing such adjustments commonly create overpayments for
veterans. The VFW urges Congress to eliminate the concurrent
receipt issues that often result in veterans or their survivors
having to repay benefits that they should be eligible to
receive, but have to pay back because of misguided laws that
require them to forfeit one earned benefit for another.
Once an overpayment is noticed, VA will send ambiguously-
worded notifications of overpayments, which also provides
options for overpayments. If veterans are unable to contact VA
to contest the debt, provide repayment, or enter into payment
agreements with VA, their debt is sent to collections and VA
will begin garnishment of their disability compensation
benefits until the debt is satisfied.
While veterans have the ability to seek relief by
requesting a waiver, VA's inability to provide them with clear
and concise information regarding their debts in a timely
manner significantly hinders their ability to take action. In a
perfect world, discrepancies will be noticed and addressed
immediately; however, there have been instances where it has
taken upwards of 5 years and 10 years for VA to properly notify
veterans or notice overpayments. In some instances, veterans
themselves have to notify VA before any action is taken.
To its credit, VA has made concerted efforts to eliminate
overpayments and, in some cases, informed veterans that they
will not be held liable for overpayments, but more must be
done. VA's inconsistent administration of veterans' benefits,
misinterpretation of rules and regulations, lack of training
for program administrators, and lack of effective communication
with veterans are the principal reasons VA continues to overpay
veterans.
Many veterans, especially those on fixed incomes, have
limited access to financial resources needed to immediately
repay an overpayment; however, VA will often offset a veteran's
entire monthly disability compensation benefit in order to pay
down a debt, without the veteran knowing about the debt or
being afforded the ability to request an alternative method of
payment or relief.
This is why the VFW has supported legislation that would
require the use of certified mail when notifying a veteran of
debt. And, to address confusing letters, the Veterans Benefits
Transition Act of 2018 required VA to collaborate with
veteran's service organizations to develop a standard and plain
language format for all the debt letters sent to veterans.
The VFW is unaware of the development of such standard
format and urges the Subcommittee to inquire about its status.
Plain language letters which detail debt will have a
significant impact and will be able to provide veterans the
ability to seek relief.
The VFW also urges Congress to pass S.805, the Veteran Debt
Fairness Act of 2019, which would improve VA debt collection
process, limit VA's authority to recover overpayments caused by
administrative errors, and improve the due process afforded to
veterans with respect to such recovery.
Mr. Chairman, that concludes my remarks. Thank you for the
opportunity, and I am happy to answer any questions you may
have.
[The prepared statement of Carlos Fuentes appears in the
Appendix]
Mr. Pappas. Thank you very much, Mr. Fuentes.
I will now recognize our third witness, Mr. Mike Saunders.
Mr. Saunders is the Director of Military & Consumer Policy at
Veterans Education Success.
The Subcommittee thanks you for appearing here today, Mr.
Saunders, and you have 5 minutes.
STATEMENT OF MIKE SAUNDERS
Mr. Saunders. Chairman Pappas, Ranking Member Bergman, and
Members of the Subcommittee, thank you for the opportunity to
provide input on VA overpayments and debt collection
procedures.
Veterans Education Success is a non-profit organization
that provides free counseling and legal assistance to students
using their GI Bill and military education benefits, and works
to advance higher education success for all military-affiliated
students. We greatly appreciate the Subcommittee's attention to
this very important issue, and I would like to thank the VA for
their recognition of the problem, but action is required.
We have helped approximately 5,000 veterans with GI Bill
problems. We have seen a recent uptick in the number of
military-connected students who are experiencing VA clawbacks
of their hard-earned GI Bill, giving us a first-hand view of
how opaque and, frankly, Kafkaesque the process can be.
Veterans' complaints largely fall into two main overpayment
situations: overpayments for a dropped class and retroactive
readjustments of GI Bill benefits awarded to a veteran. GI Bill
overpayments warrant this Subcommittee's attention.
A 2015 GAO report found a startling 1-in-4 Post-9/11 GI
Bill students experience GI Bill overpayment. According to GAO,
90 percent of GI Bill overpayments are caused by veteran
enrollment changes. The problem is that VA disburses the entire
term of Post-9/11 GI Bill benefits after a veteran sits for
just one day of class. If students drop out or drop a class
after the first day, the school still gets the tuition and fees
for the entire term. This incentivizes some unscrupulous
college recruiters to lie to veterans to get them to enroll,
knowing the student will likely drop out quickly.
Worse still, VA comes after the veteran for the overpaid
tuition, even though the tuition never touched the veteran's
hands, but was sent straight to the school. This defies common
sense. Students are being asked to come up with tens of
thousands of dollars that they don't have and never touched. In
contrast, the U.S. Department of Education delays disbursement
until after the typical college add/drop period, and claws back
tuition from the school and not the student.
We thank the Subcommittee on Economic Opportunity and many
Members here today for working with us to solve this through
the bipartisan Forever GI Bill Class Evaluation Act, which
would delay GI Bill disbursement until after the typical add/
drop period; and the bipartisan Student Veteran Empowerment
Act, which would require VA to verify Post-9/11 GI Bill
enrollment on a monthly basis, as it already does for the
Montgomery GI Bill, rather than waiting until the end of the
semester.
Another problem we urge the Subcommittee to address is
retroactive readjustment of education benefits. One case
brought to VES involves a beneficiary who had the Post-9/11 GI
Bill transferred to her by her father, who was assured by his
personnel office that retiring 33 days before the end of the 2-
year service obligation he incurred for transferring his
education benefit would not affect that benefit transfer. VA
approved her GI Bill and she went to college. Nevertheless, 7
years after her father retired and 6 years after she graduated,
VA sent her a debt collection notice stating that she owed up
to $100,000, and that they were also going to restore her
father's education benefit, in clear contravention of the
wishes of the family.
If a veteran lied to VA, then VA should go after the
veteran, but VA administrative errors are not a veteran's
fault. If VA certifies a student's eligibility, it can't ask
for repayment 6 years after the student relied on VA's approval
and graduated.
Now, turning from GI Bill specifics to VA's overall debt
collection practices, we have identified a number of critical
problems we hope the Subcommittee will address.
First, VA's aggressive collection tactics are on their face
in opposition to VA's emphasis on serving those who have
committed to defend us. For example, GAO found that VA collects
nearly all its debts by withholding a veteran's other benefits,
such as withholding entire disability payments. If you take
that much-needed money, veterans have to choose between paying
for food, medicine, or housing. Importantly, VA's regulation
calling for aggressive debt collection goes well beyond what is
called for by statute. We urge the Committee to require VA to
bring its regulations in line with statute, and to also to
forbid VA from taking more than 25 percent of a veteran's
benefits to cover unrelated debts to VA.
Second, VA's aggressive debt collection methods are
particularly unfair given the VA relies on outdated methods of
notifying veterans. VA's letters alerting veterans of a debt
are often confusing and sent to outdated addresses. As one
military-connected student who came to VES for help said I
don't believe a human has looked at any of the letters I have
been sent, they don't add up or make sense. Semesters are
omitted, figures they quote as to what I owe on one document
don't match with figures they quote on a different document.
Dates and explanations don't make sense.
In sum, we firmly believe VA can do better and we request
the Committee's assistance in ensuring this happens.
Thank you for the opportunity to present our views, and I
am happy to answer any questions you may have.
[The prepared statement of Mike Saunders appears in the
Appendix]
Mr. Pappas. Thank you very much, Mr. Saunders.
I will now recognize our fourth witness, Mr. Gerardo Avila.
Mr. Avila is the Deputy Director for Military Boards and
Memorial Benefits at The American Legion.
The Subcommittee thanks you very much for appearing here
today and you have 5 minutes, Mr. Avila.
STATEMENT OF GERARDO AVILA
Mr. Avila. All right, thank you.
Chairman Pappas, Ranking Member Bergman, and distinguished
Members who proudly serve on the Subcommittee, on behalf of our
National Commander, James ``Bill'' Oxford, thank you for the
opportunity to comment on an important issue of the Department
of Veterans Affairs overpayment and debt collection processes.
It is my duty and honor to represent The American Legion and
assist this Committee in better understanding this issue, how
it impacts our veterans, and provide recommendations for
improvement. It is crucial that we address these issues in an
effort to ensure that we are not unduly burdening America's
veterans with debt as the result of bureaucratic inefficiencies
or errors.
Every veteran understood that when they volunteered to
serve their country it would come with sacrifice and hardship,
what they didn't expect is to be placed in a hardship situation
by the very institution who is supposed to be there for them;
it is the Legionnaires' collective experience that the creation
of overpayments are doing just that. Over the years, VA has
made progress in reducing overpayments; however, there is still
significant room for improvement.
The American Legion last testified before this Subcommittee
on the issue of VA overpayments and debt collections on May 24,
2017. During that testimony, we focused on the initial cause of
debt, communication between the VA and the veteran, the
collection process, and the garnishment of an active benefit.
The American Legion has seen improvement in several of these
areas.
First, The American Legion would like to commend VA for
taking a proactive role in reducing the dependent claims
backlog and initiate new methods enabling veterans to
personally update a dependent status via phone, scan, and e-
Benefits. Due to these efforts, we have seen a reduction in the
debt involving dependency claims, and that the improvement has
been the reduction in the amount owed due to simultaneous
receipt of drill pay and disability benefits. While a drill
payment remains a large originator of debt at VA, collaboration
with the Defense Finance and Accounting Service has reduced the
total amount owed.
The American Legion is encouraged by these efforts and
implores these agencies to continue to work together to
eliminate overpayments completely by increasing the frequency
with which they rectify their accounts.
We are also encouraged that VA has instituted a more
forgiving process when garnishing an active benefit as a means
to repay a debt. The old practice of garnishing the entire
amount resulted in many veterans facing financial hardship.
Veterans and their families rely on the monthly VA benefits to
make ends meet.
While these improvements are a step in the right direction,
we have the following recommendations. Internally, VA must fix
the lack of integration between the various information
management systems. The lack of interoperability results in
issues ranging from incorrect addresses to not being able to
provide a clear answer on the initial source of the debt. In a
perfect scenario, all IT systems would generate a veteran's
latest status and most up-to-date information.
Additionally, most accredited representatives do not have
access to the various systems that VA utilizes. This lack of
access makes it nearly impossible for representatives to assist
the veteran in navigating the complex and confusing network. In
a recent pension case we assisted on, we found that the medical
documentation needed had been provided to the VA, but had not
been processed by the pension center. Since there was no
contact with DMC, the amount owed was referred to the Treasury
Department for offset. Thanks to our representatives, we were
able to track down the medical information and provide it to
the pension center to avoid further harm.
As the result of issues like this, The American Legion
calls upon VA to continue to integrate its information
management systems and expand access to accredited
representatives.
The best solution to avoid an overpayment is for VA to
immediately be notified when a veteran's status has changed.
Information like change in net worth, monthly drill, or
incarceration is already being collected by different entities,
who in many cases are the first to become aware of this change.
The goal should be to develop partnerships with key agencies to
ensure critical information is accessible and can be provided
to the veteran.
In an effort to eliminate overpayments, The American Legion
urges VA to aggressively seek out partnerships and collaborate
with as many agencies and organizations as necessary to
correctly reflect a veteran's current status.
The American Legion agrees that if a veteran sees a benefit
they are not entitled to, they should have to pay it back.
Well, we disagreed with--or some of the collection practices
used that have resulted in unnecessary financial harm to our
veterans.
From our recent meetings with VA officials and through our
daily interactions with the DMC, we feel that the employees'
hearts are in the right place. By implementing our
recommendations, the VA will put itself on the path to solving
the overpayment issue.
We would like to thank this Committee once again for the
opportunity to testify on this important, and I will be happy
to answer any questions.
[The prepared statement of Gerardo Avila appears in the
Appendix]
Mr. Pappas. Well, thank you very much for the testimony of
the four Members of this panel here today, and for your
dedication on a daily basis to all those who have served and
are serving our Nation. We really appreciate your advocacy and
your presence here today.
We will begin the questioning portion of this panel and I
will begin by recognizing myself for 5 minutes of questioning.
I want to focus in a little bit on the letters that were talked
about with the VA earlier and were alluded to by some of you
here today as well.
We all know that Congress passed a law that requires the VA
to work with veteran's service organizations to improve these
letters to veterans. We have heard stories about how veterans
can receive multiple communications that are many times quite
confusing and opaque. So I am wondering how the VA has worked
with your organizations to improve these letters, and do you
think the VA has made improvements in recent years in debt
collection notifications and in ensuring that these
notifications are clearer for our veterans?
That's open to the entire panel.
Mr. Liermann. Thank you, Mr. Chairman. The reason it gets
so confusing is they always send two letters.
First, the VA regional office, if it is a debt created by a
dependency issue, they will send a letter to the veteran
notifying them there may be an overpayment and they may owe
money to the VA. Then they will get a separate letter from the
Debt Management Center, sometimes 2 to 3 weeks, sometimes
months later, and then that letter doesn't provide any
information other than here is how much you owe us and, if you
don't take action in 30 days, we will take your monthly
compensation check.
So that is the way the process currently works, and I don't
believe they have reached out to us any time soon to discuss
any of the new letters. I know that recently VA has shown us
letters after they have already drafted them, but I am not
aware of any current ongoing discussions about improving those
with the VSOs' assistance, Mr. Chairman.
Mr. Fuentes. I have seen a report from VA saying that they
are working on the standard plain-language format that is
required by the Veterans Benefits Transition Act 2018. But we
talked to all the folks over at the VFW who would be invited to
these meetings where they would collaborate with us and none of
us are tracking any invitations. So I don't know if they are
forthcoming or not, but so far, we have not been engaged in
that discussion.
Mr. Saunders. No, not on this issue, we have not worked
with the VA at all. And just to echo what Shane said, the case
that I referenced in my opening statement, I actually saw all
the documents that that beneficiary got from the VA. She got
her initial statement from the regional office laying out why
they thought she owed a certain amount of money, and then she
got three different letters from Debt Management Center that
totaled up to $100,000. The first letter said she owed $68,000,
so it wasn't even clear how much she owed. Yeah, just the
process is pretty unclear.
Mr. Avila. I would agree with the letters. The letters that
we have seen were more on the VBA side notifying when a veteran
is service-connected, but not necessarily specific to the debt
management and the collection process.
And I think just to echo on how the--the debt is created,
obviously, everybody knows at the regional office, and they are
the ones that have the detail and they send out the
notification. And if the veteran did not get that, then the
next letter they are going to get is from DMC. DMC might have
limited information. I think this goes to the point about the
integration of the IT systems. So, if every IT system had the
correct information, DMC would not only have a dollar amount,
but they would be able to explain to the veteran when they call
about why do they owe this amount.
And I think nobody likes to pay money back, but if you are
given the reason why you owe, then you say, okay, yes, that is
correct, and I think veterans would be more willing to pay the
debt if they knew the full information.
Mr. Pappas. Well, thank you. And I am just curious if each
of you would be willing to be available to work with the VA on
this problem moving forward. If we could just have a yes or no,
if you will make yourselves available to the VA to be consulted
about the issue around communications.
Mr. Liermann. Absolutely.
Mr. Fuentes. Yes, and we feel it is absolutely necessary.
Mr. Saunders. Yes.
Mr. Avila. Correct, we will be.
Mr. Pappas. Well, thank you for that.
I was struck by many of the examples of real problems that
are caused by these debt collections that we heard in your
testimony here today. Clearly, these show just the nature of
the problem and the frustration that is felt by veterans and
their families causes harm.
Mr. Liermann, I am wondering if I could just ask you a
little bit about drill pay and disability compensation. I
understand that VA is proposing to suspend compensation
benefits when it receives notice that a veteran will receive
drill pay. Can you speak to your concerns about that specific
proposal?
Mr. Liermann. Yes, Mr. Chairman. Thank you.
The way the current process works with drill pay is the VA
will not take any action until they are notified, generally by
DoD. If the veteran notifies the veteran--excuse me, the
veteran notifies the VA in advance of their drill pay, then VA
can start taking actions in collecting that amount. In the
proposal, the proposed legislation that was introduced earlier,
they are suggesting that they stop paying the veteran if the
veteran may receive drill pay. Without him actually--or her--
being on Active duty, getting that drill pay, their proposal is
to stop the payment the minute they find out they may receive
it before they even get it.
So our concern is; one, VA is not going to pay them their
compensation because they believe that they are getting drill
pay; two, if their drill pay status or their drill changes,
which is very common for a lot of people in the Guard and the
Reserves, orders change quite frequently, then they won't get
an Active duty check for that month, nor are they getting their
VA compensation check that month. And the VA is proposing to
take away the due process portion of that as well.
So, while they are trying to correct the problem, we think
they are creating a larger problem by taking away that due
process and essentially the veteran may not receive any pay for
that period from his drill or Guard duty or from the VA, and
that is a big concern for us.
Mr. Pappas. Okay. My time is up. I would like to turn it
over to our Ranking Member, General Bergman, for 5 minutes.
Mr. Bergman. Thank you, Mr. Chairman.
Mr. Liermann, let's just kind of continue down that road
just a second on that question that the Chairman just asked.
So, as you characterized the details of it, of what they would
do, would that be in your mind considered one of those non-
technical barriers to achieving a goal, or is that just a way
of doing--you know, just a way of doing business? Is there a
way to not do that?
Mr. Liermann. I think, as I reported earlier, if they do
more reporting and they do monthly reporting of when drill pay
is being paid for veterans who are also getting compensation, I
think that is a better way to do it. If we start collecting
before they are being paid, I think that is just a horrible way
to go and putting veterans in a more vulnerable position than
we already are. That was a proposed piece of--I'm sorry, that
was a proposed regulation in April, there is no more comment
periods, it is closed, we are just waiting for them to drop the
final rule and address all the comments that were submitted in
April.
Mr. Bergman. Okay. Well, again, there has been a suggestion
that there are non-technical barriers in a different subject to
removing dependents through e-Benefits. Do you know what those
non-technical barriers are, Mr. Liermann?
Mr. Liermann. I am not sure what the VA meant by non-
technical, but here is how we view this as being real simple.
The veteran gets to choose who they receive benefits for, they
report their number of dependents. So, if the veteran says I
want to remove a dependent, I don't see how that becomes a
technical problem or a larger problem on VA, because now they
are paying less money out.
Generally, when you have to add a dependent, they require a
lot of information--birth certificates, marriage certificates--
but they have waived all of that in e-Benefits to allow you to
do that instantaneously. So we don't understand what their
barrier problem is in allowing them to remove them
instantaneously in e-Benefits.
Mr. Bergman. Okay. Mr. Fuentes, have you got any big events
going on this week?
Mr. Fuentes. I do have a personal one, sir.
Mr. Bergman. What would that be?
Mr. Fuentes. Expecting our first child tomorrow, so--
Mr. Bergman. Congratulations.
Mr. Fuentes. Thank you very much.
[Applause.]
Mr. Bergman. That is a big deal. Just remember, you cannot
give a baby too much, it is absolutely impossible. Just try to
remember that when they are 2.
[Laughter.]
Mr. Fuentes. Thank you, sir.
Mr. Bergman. Now, Mr. Fuentes, on a more serious note here,
the situation at hand here, concurrent receipt of drill pay and
VA benefits is one of the VFW's, you know, top priorities. Do
you have any examples of how it affects the average veteran who
chooses to continue serving in the Guard and Reserve after they
separate from Active duty?
Mr. Fuentes. General, I served under you, very, very, very
far under you when I was in the Marine Corps Reserve--
Mr. Bergman. You were the reason I had a job. My job is to
serve you guys.
Mr. Fuentes. Thank you, sir. And I am sure you can relate
as much as I did that, you know, you can't live off of drill
pay. Right? And we are using the Reserve component a lot more
to fight today's wars than we have in previous years. So we
need Reserve component servicemembers. This is one of the
reasons that folks will want to leave. Right? So they are
either required to forfeit their earned benefits, because they
are disabled veterans, or work for free. Those are just not
viable options.
And then on top of that, because of bureaucratic issues,
they are now faced with, you know, this--I have an example
here, $32,000 in debt that they have to pay at once or find a
way to collect the money to pay for it. That is unacceptable
and our view is that we just need to get rid of the issue by
getting rid of the requirement to collect or forfeit VA
disability pay.
Mr. Bergman. Okay. Well, you know, Mr. Chairman--and I see
my time is about up here--I think it would be a good issue for
us to look into to see. As Mr. Fuentes states, we need to
retain good men and women in the Guard and Reserve, especially
with all the experience they have gained, and we need to make
sure that we are not creating a barrier. Again, there is a cost
to everything, but we don't want to create a barrier to long-
term retention of good folks.
So, with that, I yield back.
Mr. Pappas. Well, thank you very much. And if the Ranking
Member would indulge just a couple more questions here before
we conclude, I would like to get a couple more issues out
there.
And, Mr. Avila, just one for you. Your testimony notes that
in the first 30 days of the debt collection process, it is a
crucial timeframe for our veterans to receive protection from
garnishment. Thirty days isn't really a sufficient time to
complete that required action. So what can the VA do to ensure
that veterans are able to receive protection from garnishment?
Mr. Avila. So you are absolutely correct, the first--a
veteran can request a waiver up to 120 days, but that first 30
days I would mention, that is the crucial period to avoid any
garnishment and affecting their benefits. And we already know
from issues that sometimes the veterans did not receive the
notifications, the initial notifications. So we believe and we
support a movement to up to maybe 90 days, and this will give
the veteran ample time to respond back to DMC and to take
appropriate action before any garnishment or possible loss of
benefit can occur.
Mr. Pappas. Well, thank you, sir, for that.
And, Mr. Saunders, one for you as well. I am surprised that
there is such a disparity between how the VA handles this issue
versus other agencies of our Federal Government, including the
Department of Veterans Education, and I am wondering if you can
explain how DoD deals with overpayments and if there is
anything that can be, you know, learned from VA in how to
approach these issues with veterans.
Mr. Saunders. Thank you for the question, Chairman. The
Department of Education pays out their Federal education money
in stages. They certify that a student is enrolled in the
beginning and then they pay it out after the add/drop period,
and then they have another period at the end of the semester
when they pay a final amount of money and they claw back any
overpayments from that final amount that they pay the schools.
So they are taking the money from the schools and it
smooths out the process for the students.
Mr. Pappas. Well, thanks for that. And I guess as it
pertains to our veterans, that sort of, you know, planned-out
process is a lot easier for them, many of whom are living
paycheck-to-paycheck, just like most Americans.
Mr. Saunders. Absolutely. And, you know, the add/drop
period, a lot of people add/drop classes, and communicating to
people the impact that that can have on your benefit, it is
unfair to the veteran to force them to take classes that they
wouldn't take and any other student wouldn't be forced to take.
Mr. Pappas. Well, thank you for that.
General Bergman, I think, had one additional question here.
Mr. Bergman. Yes, thank you, Mr. Chairman. You know, 5
minutes go fast, but we have got a lot of meaty things here to
discuss.
Mr. Saunders, in your written statement you commented that
VA should try to reduce the amount of retroactive adjustments
for GI Bill payments, which amount to VA making a processing
mistake, and then going back to the veterans to make up the
difference once the mistake is found. Why would these veterans
not have a case to ask for equitable relief in these
situations?
Mr. Saunders. That is a great question, General Bergman. So
equitable relief is--it is like a final remedy, it exhausts all
your future appeals with the VA. It is a way to get it done,
but if for whatever reason some situation, it wasn't resolved
completely, you would prefer the process be handled by waiver.
You would want to go to VA's Education Service and have them
tackle the problem. That is the preferred way is to have human
eyes on it.
Mr. Bergman. Okay, good. Well, thank you very much, and I
appreciate the extra time, Mr. Chairman.
Mr. Pappas. Absolutely, any time.
And I think, before we close today's hearing, I just want
to thank once again our folks on the second panel here today
for your responses and your willingness to be a part of the
solution moving forward. And I thank as well the Department of
Veterans Affairs for sticking around and for their input on our
first panel.
Just some concluding observations. I think this afternoon
we heard from VA officials that preventing these overpayments
is an important goal they are working toward. We also heard
from that providing clear guidance, direction, and support for
veterans is another important goal. We also heard from those
working with and advocating for our veterans here today that
too many people continue to suffer confusion, frustration, and
financial harm as a result.
VA's testimony did not lay out for us a clear path toward
preventing hundreds of thousands of veterans receiving debt
notices each year. It seems all too likely that the
Subcommittee could hear testimony a year from now showing that
another billion and a half dollars in debt collections is
outstanding, which was the same level around the time of this
Subcommittee's last hearing.
I wasn't satisfied wholly with the VA testimony that tried
to outline steps for ensuring that the Department communicates
clearly and effectively with veterans even after new
requirements were put into law last year, and I think more work
needs to be done there. I appreciate our veterans service
organizations' commitment to be a part of that.
It is worth repeating that the many different parts of VA
involved with notifying veterans and collecting debts is a
major obstacle getting in the way of reforms. Ultimately,
fixing debt management will mean a VA-wide solution.
General Bergman, I believe that our staffs should work
together with the Department to address these issues and needs,
and I think this should include legislation for any possible
new authority and requirements that would help this situation.
So, Mr. Ranking Member, I would like to give you any time
you would like for any closing remarks.
Mr. Bergman. I have none.
Mr. Pappas. Well, seeing none, I wish to express again my
appreciation to all the witnesses for appearing here today, for
your thoughts and views.
And Members of this Subcommittee will have 5 legislative
days to revise and extend their remarks, and include any
extraneous material.
So, without objection, the Subcommittee stands adjourned.
[Whereupon, at 4:21 p.m., the Subcommittee was adjourned.]
A P P E N D I X
----------
Prepared Statement of Jon J. Rychalski
Good Afternoon Chairman Pappas, Ranking Member Bergman, and Members
of the Subcommittee. I am Jon J. Rychalski, Assistant Secretary for
Management and Chief Financial Officer of the Department of Veterans
Affairs (VA). Joining me today are my colleagues, Joseph Schmitt,
Executive Director of the Debt Management Center (DMC), Charles Tapp,
Chief Financial Officer Veterans Benefit Administration (VBA), and
Susan Reed, Executive Director, Office of Community Care - Revenue
Operations, Veterans Health Administration (VHA).
I want to thank the Subcommittee for this opportunity to discuss
our efforts to address a critical aspect of financial management,
overpayments and collection processes. We are working to address
overpayments as part of a broad effort to transform VA into a world-
class customer service organization and tackle issues affecting
Veterans that have lingered for years. The focus of our efforts is to
improve our processes, communications and awareness to significantly
reduce the occurrence of overpayments - thus eliminating collections.
As part of this transformation, we are working closely with
Congress, Veterans Service Organizations (VSOs) and other stakeholders
to reform delivery of care and service to our Nation's Veterans and
their loved ones. This reform includes improving our debt management
practices. I highlighted the tangible actions VA has taken to eliminate
the opportunities for these overpayments to occur (reducing the
quantity and dollar value of the overpayments), as well as ways VA has
improved the overall Veteran experience to make the repayment of the
debt as simple and easy as possible based on each Veteran's unique
financial situation. This collection is required under ``Collection and
Compromise'' of 31 U.S.C. Sec. 3711, which provides that ``the head of
an executive, judicial, or legislative agency.shall try to collect a
claim of the United States Government for money or property arising out
of the activities of, or referred to, the agency.'' VA's debt recovery
requirement is consistent with what citizens experience when receiving
an overpayment from other Federal Agencies.
Veteran debt commonly occurs when Veterans receive more financial
assistance than they are entitled to by law. For example, VA is
prohibited by 38 U.S.C. Sec. 5304(c) from paying disability
compensation for days in which a Veteran is receiving drill pay as a
member of the Reserves or National Guard. To minimize negative impacts
on Veterans from this situation, VA changed its policies to make
repayment of the debt less burdensome. For example, compensation and
pension debts, including drill pay, now have a 12-month default re-
payment period rather than immediately withholding the full amount of
drill pay from future compensation payments, which could cause
substantial financial harm.
Furthermore, to address the root cause of the debt, VA is currently
working with the Department of Defense to enable us to dramatically
increase the frequency of computer matches of compensation and drill
pay, and we are on track to go from annual to monthly matches by mid-
2020. These actions will continue to significantly reduce the incidence
of overpayments and the amount of accrued overpayment to each Veteran.
VA staff have also worked with the DMC and VSOs, using human-centered-
design techniques, to rewrite several dozen overpayment letters to more
clearly explain what Veterans need to know about their debt and the
full range of options available to resolve the debt. Culturally, we are
improving customer service rather than simply recovering as much of an
overpayment quickly as possible.
We are working on initiatives working to reduce or eliminate
opportunities for overpayments to occur. For example, VA has
implemented numerous data matching agreements with other Federal and
state agencies. VA conducts reconciliations with law enforcement
agencies to prevent overpayments to fugitive felons. Based on this
information, VA automatically terminates the award upon expiration of
the due process period. The Veteran is provided notice, and then
afforded the opportunity to respond and submit evidence that they are
no longer a fugitive during this due process period prior to an award
adjustment. This action assists the Veteran by reducing the amount of
overpayment incurred while in a fugitive status. VA reconciles reported
income information with the Social Security Administration (SSA) to
prevent overpayments of Pension and Parents' Dependency and Indemnity
Compensation payments; VA verifies information with the SSA and the
Bureau of Prisons to identify beneficiaries who may be subject to
reduction or termination of compensation payments; and VA checks weekly
with the SSA to stop payments to deceased Veterans.
We are also actively working on mitigating several other situations
in which a Veteran or beneficiary can be overpaid. Benefits
overpayments may occur when there are changes to a granted benefit such
as payments made to an educational institution. An example of a change
would include if Veterans reduce their course loads after VA has paid
the educational institution. In addition, an overpayment can also
occur, when Veterans have a change to their dependent status. This
typically occurs when there is a death, divorce, remarriage, marriage
of a child, discontinued school attendance, or duplicate school child
entitlement. While not an overpayment, medical copayments are another
reason for VA to initiate debt collection procedures. Certain Veterans
who receive VA medical care must also pay a co-payment to VA, which is
not collected at the time of service; rather it is subsequently billed
to the Veteran. VA notifies Veterans of copayment requirements and
provides instructions for submitting timely payments. In certain cases,
VA must take actions to recover overdue copayments in accordance with
existing law and regulations.
Finally, there are occasions in which a Veteran, through no
personal fault, incurs a debt to a VA community care provider due to
delayed payments from VA to that provider. This can negatively impact a
Veteran's credit rating. To avoid this unnecessary burden, VA is
focusing efforts on and making significant progress in reducing
delinquent claims to community care providers. We are dramatically
improving our claims processing capabilities through several
transformative initiatives. First, the Community Care Network (CCN)
contracts will usher in commercial claims processing capabilities and
strict timelines. These contracts do and will require that network
providers will be paid for clean claims through CCN within 30 days.
Second, we are implementing a new referral management system to more
seamlessly communicate Veteran referral information to the claims
processor. This has been a primary reason for denied or problematic
claims in the past. Finally, for any claims not adjudicated through the
CCN contracts, we are installing a commercial state-of-the-industry
claims processing system called eCAMS that will speed the process of
claims adjudication and timely filing. We expect these initiatives to
result in substantial claims processing improvements in 2020. Let me
state emphatically that VA must do everything in our power to avoid
erroneously creating Veteran debt or adversely affecting a Veteran's
livelihood or credit through no fault of their own.
Due to the complexity of VA's enterprise and the number of systems
involved in delivering healthcare, benefits, and services to Veterans
and beneficiaries, VA currently tracks the amount and the age of
overpayments independently in each Administration. We are working to
improve this situation that we acknowledge is untenable for the
Veteran. It is our plan to have capability for Veterans to view debt
online within the next year.
VHA is developing an electronic option to permit viewing of monthly
Patient Medical Statements via the ``MyHealtheVet'' portal. Veterans
may elect to receive a notice of debt by electronic means as well as
standard mail. In the future, we expect Veterans will be able to view
or print the statements electronically via the portal. These statements
are currently delivered to enrolled co-pay-required Veterans by
standard mail to advise Veteran patients of their medical copayment
debts, provide a description of those debts, and present all payment
options available to them.
VBA operates a Centralized Benefits Communication Management
Program that processes roughly 40,000 letters per day. Letters
processed through CBCM include the range of benefits letters VBA
offers, such as compensation entitlement, that are generated through
the Veterans Benefits Management System (VBMS). Included in this
correspondence are letters notifying Veterans that an event has
occurred that might mean they have been overpaid a VA benefit. By early
to mid-2020, VBA anticipates launching the option for Veterans to opt-
in to receive electronic correspondence. This project will initially
encompass disability compensation and pension overpayments and later
extend to all VBA lines of business. We intend to send electronic
correspondence initially to Veterans who have opted in; however, some
correspondence may remain solely in the hard-copy form to meet
statutory requirements related to certain notifications.
Ultimately, we will bring all debt together in one location and
intend to have that operational by calendar year 2022. We are actively
working with our VSO partners and our Veterans Experience Office (which
is responsible for the Cross-Agency Priority Goal of improving customer
experience) to apply the same human-centered-design principles to
streamline future communications. VA fully supports the intent to
develop a standardized notification letter as well as content which
clearly conveys to Veterans the specific reason(s) why they are
indebted to the United States and what options are available to them to
address their indebtedness (i.e., disputing the debt, requesting a
waiver, reaching a compromise, and/or requesting a payment plan).
This task is not as straightforward as it may seem on the surface,
because there are numerous types of debt letters with numerous back-end
systems that run the operations of the business line for which the
overpayment occurred, and even more systems to create and print these
letters.
VA has increased its self-service offerings to veterans through
eBenefits, by utilizing an electronic rules-based processing system.
Veterans can now go online, send changes through regular mail, or call
VA to initiate an update to dependency information. These options
result in immediate changes to a Veteran's disability compensation
award, limiting the chance for an overpayment to occur. In FY 2019, the
rules-based processing system automatically processed over 130,000
dependency changes for beneficiaries, while Veterans were able to log
into eBenefits to modify their dependency information over 170,000
times.
We understand the challenges of overpayment recovery, and we are
listening to stakeholders and adopting best practices to minimize the
burden on Veterans and their families. If an overpayment occurs, we
notify the Veteran and provide an opportunity for them to submit
evidence stating why the overpayment information is incorrect. It is
very important for Veterans to work with VA in this initial
notification period.
If no response is received, typically within 30-60 days, VA DMC may
initiate the process for recovery. There, a team of specially trained
debt counselors will work with each individual Veteran or beneficiary
to establish a payment plan or provide guidance to process a dispute,
compromise or waiver request. Veterans can also appeal the debt
establishment for up to a year. In cases where an overpayment is not
resolved within 120 days, VA must comply with Public Law 104-134 and
the Debt Collection Improvement Act of 1996 to refer the debt to the
Department of the Treasury. We also report delinquent debt to credit
reporting agencies as required by law.
The DMC sends all overpayment collection notifications via standard
mail; prior to sending, the Center verifies addresses against
information we have in our administrations and the U.S. Postal Service.
When notices are returned as undeliverable, we check with external
systems such as the U.S. Postal Service's Address Management System,
private vendors, and the US Treasury to update addresses. The DMC
averages an undeliverable return mail rate of approximately 4 percent
due to incorrect addresses, which compares with the U.S. Postal
Service's undeliverable rate of 3.7 percent.
We are committed to improving the repayment process based on each
Veteran's unique financial situation and delivering the world-class
customer service that Veterans deserve. We offer multiple options for
Veterans to address overpayments. Our DMC website provides both a toll-
free call number and online information on requesting a waiver,
submitting a compromise offer - which is a lesser amount that satisfies
the full debt, or making an online payment.
We also modified our approach to recovering overpayments. Rather
than automatically recovering as much of an overpayment as possible
from a Veteran's next disability compensation payment, we are now
offering payment plans that automatically deduct a portion of the
overpayment from the Veterans monthly compensation payments to minimize
any financial hardship.
To further help Veterans, we have been working with Credit
Reporting Agencies to find the best way to clear derogatory credit. In
FY 2016, VA created an adverse credit repair hotline and provided the
phone number and web links to vital information to all the credit
reporting agencies to share on their web sites. Since its inception,
that hotline has received over 265,000 calls and fixed over 85,000
billing issues. Although privacy concerns are pervasive in these
medical debts, we continue to work with the Credit Reporting Agencies
to find ways to safely and electronically refute derogatory credit
related to community care billing.
VA is committed to protecting the health and welfare of Veterans
and is focused on delivering world class benefits and services to
Veterans. We have been working with the Subcommittee on this important
issue and we look forward to continuing to work with the Subcommittee
for the benefit of all Veterans. This concludes my testimony; my
colleagues and I are happy to take your questions.
Prepared Statement of Shane L. Liermann
Chairman Pappas, Ranking Member Bergman, and Members of the
Subcommittee:
Thank you for inviting DAV (Disabled American Veterans) to testify
at today's hearing on ``Preventing Harm to Veterans: Examining VA's
Overpayments and Debt Collection Practices.''
DAV is a congressionally chartered national veterans' service
organization of more than one million wartime veterans, all of whom
were injured or made ill while serving on behalf of this Nation.
To fulfill our service mission to America's injured and ill
veterans and the families who care for them, DAV directly employs a
corps of more than 260 National Service Officers (NSOs), all of whom
are themselves wartime service-connected disabled veterans, at every VA
regional office (VARO), as well as other VA facilities throughout the
Nation. Together with our chapter, department, transition and county
veteran service officers, DAV has over 4,000 accredited representatives
on the front lines providing free claims and appeals services to our
Nation's veterans, their families and survivors. We represent over one
million veterans and survivors, making DAV the largest veterans'
service organization (VSO) providing claims assistance. This provides
us with an expert understanding and direct knowledge in navigating the
VA claims and appeals process.
Mr. Chairman, additional overpayment amounts created 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. Our
testimony will discuss the creation of overpayments, VA mitigating
additional overpayment amounts, and debt notification, waiver of
overpayments and debt collection.
VETERAN AND BENEFICIARY OVERPAYMENT CREATION & MITIGATING ADDITIONAL
AMOUNTS
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 reported by the veteran and
implemented by VA, due to actions or inactions by VA or the veterans
themselves.
We believe that a significant portion of overpayments can be
reduced or avoided. VA's lack of timely action causes additional
overpayments and that places the resultant debts and financial
hardships on veterans and beneficiaries. Some of the most frequent
overpayment creations and recommendations the Veterans Benefits
Administration (VBA) can take to mitigate their complicity in
increasing the amounts are addressed below.
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 their dependency
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. 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.
Even timely reporting of a removal of a dependent will create at
least one month of an overpayment. If VA delays the processing of that
request to remove the dependent, it creates an additional amount of
debt that the veteran or beneficiary is responsible to repay.
Through VA's eBenefits system, veterans can electronically add
dependents and VA will usually make the additions within 48 hours. If
the veteran submits the dependency information to add a dependent via
paper application there is no set timeframe for completion of the work.
However to remove a dependent veterans can notify VA through eBenefits
about the removal of a dependent but this will only trigger the VA to
send paperwork to the veteran. There is not an immediate way to remove
dependents electronically.
A review of VA's M21-1 adjudication manual lists all dependency
actions as non- rating work end products (EP). EPs are specific codes
to identify types of claims or actions required, and VBA uses this
system to monitor and manage its workload. However, non-rating work EPs
are not considered part of VBA's backlog management and reporting of
days pending for processing. This means that non-rating work EPs are of
the lowest priority to VBA and receive the least amount of attention.
By failing to place the appropriate attention to dependency claims,
VBA has created additional avoidable amounts of overpayments. 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. The OIG report also found that the main reason for the delay
in processing dependency status changes is due to its classification as
non-rating claims and a low priority for VBA.
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.
The September 2018 OIG report of ``Review of Accuracy of Reported
Pending Disability Claims Backlog Statistics'' stated that the pending
backlog could be significantly understated when compared to some
definitions VA has used because it does not include all the claims that
had been awaiting rating decisions for over 125 days. For example, VBA
only counted rating EPs in its reported backlog; however, other EPs
also requiring adjudicative actions that impact veteran and beneficiary
monthly payments are not counted in the backlog and subsequently not
given any priority or incentive for the completion of dependency
claims.
The September 7, 2019, VBA workload report provides that there are
374,362 pending rating-work EPs/claims. As of September 13, 2019, VBA
noted the current number of pending dependency claims is over 211,000.
As dependency claims are not considered rating work EPs, they are not
counted in the VBA report on September 7, 2019. Therefore they are
considered a very low priority and employees are not provided any
incentive to complete these issues timely, thus creating additional
amounts of overpayments that are avoidable.
Recommendations
1. Assign dependency claims as rating work EPs. Within VBA, rating
claims work has a higher priority for the assignment, control, and
completion of work. Dependency changes are considered non-rating work
EPs and a low priority, which creates delays in VA adding new
dependents and increases the amount of overpayments caused by delaying
the removal of dependents. Assigning dependency claims as rating work
EPs will require VBA to consider all dependency changes as rating work.
While this will increase the number pending claims, by assigning a
rating work EP, it will reduce the amount of additional amounts of
overpayments created by VA's lack of timely action.
2. Allow veterans and beneficiaries to remove dependents from their
award electronically in realtime. As noted, veterans have the ability
to add dependents in real-time via eBenefits. To reduce the amounts of
additional amounts of debt created by not prioritizing these claims,
the VA must allow veterans to remove dependents as easily as they can
be added.
3. Apply the principle of ``constructive knowledge'' to
automatically waive all additional overpayment amounts created by VA.
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
the 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 should be applied to the entire federal government,
thereby deeming notice to any federal agency as providing notice to VA.
Drill Pay
Members of the reserves and the National Guard are eligible to
receive VA compensation for their illnesses and injuries related to
their active military service. Drill pay refers to the monetary amount
received by reservists and members of the National Guard for performing
active or inactive duty for training. Statutes prohibit the concurrent
receipt of drill pay and VA compensation or pension. Thus, veterans who
perform active or inactive for duty training must choose the benefit
they prefer and waive the other. In most cases, veterans choose to
receive drill pay as it is usually the greater benefit. Although
veterans or the Department of Defense (DoD) may notify the VA, in many
instances, the veteran will receive both and creating the overpayment.
At the end of each fiscal year, the Defense Manpower Data Center
(DMDC) sends an electronic file to VA that identifies veterans who
received both drill pay and VA disability compensation or pension
during that fiscal year. This annual audit will identify those in
receipt of both and acknowledge additional overpayments for the
reservist of National Guard Member.
Current 38 C.F.R. 3.103 establishes the procedures for notice of
law in the VA benefits system. In particular, Sec. 3.103(b)(2)
establishes procedures that VA must follow before an ``award of
compensation, pension or dependency and indemnity compensation'' can be
``terminated, reduced or otherwise adversely affected.'' Importantly,
VA must provide a veteran with notice of a proposed adverse action and
60 days to provide evidence showing why the adverse action should not
be taken. VA continues to pay benefits during this 60-day period.
Current regulations provide exceptions for when VA may dispense
with the 60- day notice requirement and terminate or reduce benefits at
the same time it notifies a veteran of such action. One exception is
specific to veterans who inform VA when they return to active duty or
participate in training duty. VA may take immediate action to suspend
payment of VA benefits when the decision is ``based upon a written
statement provided to VA by a veteran indicating that he or she has
returned to active service, the nature of that service, and the date of
reentry into service, with the knowledge or notice that receipt of
active service pay precludes concurrent receipt of VA compensation or
pension.''
VA Proposed Rule Change April 2019
On April 19, 2019, through the Federal Register, VA issued its
proposed rule changes regarding active service pay and active duty for
training pay (drill pay). It is VA's intention to eliminate the burden
of additional debts for those who return to active duty or who receive
drill pay.
When a veteran proactively notifies VA of his or her receipt of
active service pay, VA may suspend benefits without waiting 60 days. VA
proposes to expand this exception to include notice of receipt of
active service pay from DoD. In other words, if VA is notified about
the active duty for training pay from DoD, they will not provide the
veteran with due process and start collecting compensation due to the
debt creation. This may sound like a remedy; however, it will create
confusion for those veterans and will create additional financial
hardships by removing due process. We oppose any attempt to remove the
due process and for VBA to start collecting the debt without any notice
to the veteran.
VA also proposes to amend 38 CFR 3.103 to allow VA to suspend
compensation benefits upon receipt of DoD notice that a veteran has
received, is receiving, or will receive active service pay. We take
exception to this proposal. 38 U.S.C. Sec. 5304(c) states that
``pension, compensation, or retirement pay on account of any such
person's own service shall not be paid to such person for any period
for which such person receives active service pay.'' The statute
clearly states the veteran must receive the active pay. While this
proposal may be well intentioned, it's proposing to suspend VA
compensation without the veteran ever receiving drill or active service
pay. This violates the statue and there will be situations where the
orders may change, thus creating circumstances where the veteran will
not receive active service or drill pay or VA compensation. This will
again place undue financial hardships on veterans and their families.
We stand firm against these proposed rule changes made by the VA.
Recommendation
1.Require Quarterly the Defense Manpower Data Center to provide
Quarterly Reviews. We recommend VA should not institute the proposed
changes, but instead should require Defense Manpower Data Center to
provide quarterly reports on those veterans receiving drill pay or
active service pay at the same time as compensation. This will provide
more current updates rather than doing it at the end of each fiscal
year, which will prevent and minimize overpayments.
Incarcerated Veterans
Federal law requires VBA to reduce compensation and pension
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.
VA Regional Office (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
their full benefits. If the VA does not reduce the incarcerated
veteran's disability benefits after the 61st day, an overpayment will
be created, even when reported timely.
As previously discussed, the importance of timely VA action on
reported changes for veterans' benefits can prevent additional amounts
of debt. VA also considers incarceration adjustments as low priority
and non-rating work EPs.
In June 2016, the OIG issued the report ``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. These improper payments then became
the veteran's responsibility to repay.
According to the OIG, 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.
Recommendations
1.Assign incarceration adjustments as rating work EPs. Within VBA,
rating claims work has a higher priority for the assignment, control,
and completion of work. However, as discussed above, this low priority
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 of
compensation withheld from the veteran. If it was completed on the 61st
day for veterans' families of record, 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 DoD or changes noted with TRICARE, this would be considered
constructive knowledge with the VA and lessen the amounts of additional
debts created by VA's lack of timely action.
Nonservice-connected Pension Recipients
VBA processes and adjudicates a variety of pension programs for
veterans and a death pension program for survivors. Veterans who are
age 65 or older or totally and permanently disabled due to illness and
injuries not related to military service, who served during a period of
war, and who meet the net worth and income requirements are eligible
for nonservice-connected pension. While veterans are not able to
receive both compensation payments and pension payments; they can elect
which to receive.
The maximum rates of pension will be reduced by the amount of the
countable annual income of the veteran; however, veterans can offset
their income with proof of unreimbursed medical expenses. The VA
considers Social Security payments as countable income and in December
2012, the VA started an initiative with the Internal Revenue Service
and the Social Security Administration to electronically verify each
veteran's continued eligibility for pension. When the additional income
or benefits received change the veteran's countable income, an
overpayment for that entire reporting period can be created.
DEBT NOTIFICATION, WAIVER OF OVERPAYMENTS AND COLLECTION
When VBA has identified an overpayment for a veteran or
beneficiary, they provide written notice that an overpayment has
occurred. Once VBA has identified the debt and notify the claimant, it
is sent to a third-party collection agency, the Debt Management Center
(DMC).
The DMC collects debts resulting from individuals' participation in
VA benefit programs and manages VA's benefit debt portfolio. The DMC is
not part of the VA but is overseen by the VA Office of Finance. The DMC
manages the entire collection process for VBA. The Veterans Health
Administration (VHA) uses the DMC's administrative offset services to
refer delinquent first-party medical debts for internal offset against
active VA benefits. VHA also uses DMC services to refer debts to
Treasury for offset under the Treasury Offset Program.
Statutes provide that when VA has determined that a debt exists,
they shall promptly demand, in writing, payment of the debt. VA shall
notify the debtor, veteran or beneficiary, of his or her rights and
remedies and the consequences of failure to cooperate with collection
efforts. As the DMC is the sole collection agency for VBA, the debt is
not considered established until the veteran or beneficiary, receives a
formal notice of debt from the DMC. The debt notice must include exact
amount of the debt, the specific reasons for the debt, in simple and
concise language, and the rights and remedies to include requesting a
waiver, setting up a payment plan, option for a compromise offer, and
that a collection may be made by offsetting their monthly compensation
or pension payments.
If the debtor, within thirty days of the date of the notification
disputes, in writing, the existence or amount of the debt, offset shall
not commence until the dispute is reviewed. If the debtor, within
thirty days of the date of notification requests, in writing, waiver of
collection, offset shall not commence until the VA has made an initial
decision on waiver. If the debtor, within thirty days of the
notification requests, in writing, a hearing on the waiver request, no
decision shall be made on the waiver request until after the hearing
has been held.
VA will pursue collection action once an adverse initial decision
is reached on the debtor's request for waiver and/or the debtor's
informal dispute concerning the existence or amount of the debt, even
if the debtor subsequently pursues appellate relief. The DMC will start
collecting the debt after the conclusion of the 30-day period given to
debtors. The collection of the debt is usually through recoupment of
the entire VA monthly compensation payment.
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, collection of debts via recoupment of the entire monthly
payment, causes 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. Our
recommendations below are based on DAV Resolution No. 108, supporting
reforms to the recovery of debts by the VA.
Recommendations
1. Reduce the amount recouped from monthly compensation payments.
We fully agree that veterans and their families must repay the debts
they created. However, currently VA recoups the entire monthly
compensation payment until the debt is repaid. In many instances, a
veteran's compensation is the majority or sole monthly income.
Collecting the entire amount creates a serious financial hardship and
can actually cause more harm to the veteran and their family by
collecting it via this means. We recommend that VA reduce the
recoupment amount to 25 percent or less of the monthly payment.
2. Waive all amounts of debt created by VA's lack of timely action.
As noted above, large amounts of additional overpayments are created by
VA's low prioritization and lack of timely action. The veteran should
be responsible for the amount of debt they created only, and not the
additional amounts created by the VA.
3. Time limitation on debt discovery. Every state has a statute of
limitations on debt collection to avoid causing financial catastrophe.
VA should not collect debts that have been discovered and found to be
more than five years old. This would not apply in cases of fraud.
In conclusion, 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. Our
recommendations provide avenues to mitigate VA's creation of additional
debt as well as discuss reform the debt notification and debt
collection process.
Mr. Chairman, this concludes my testimony on behalf of DAV. I would
be happy to answer any questions you or other members of the
Subcommittee may have.
Prepared Statement of Carlos Fuentes
Chairman Pappas, Ranking Member Bergman 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 Department of Veterans
Affairs (VA) 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 regard to overpayments and debt recoupment issues,
however, bureaucratic processes and terminology prevent veterans from
seeking the timely relief they need. Having to deal with erroneous
forfeiture of benefits or financially constraining repayment plans have
a detrimental impact on the well-being and livelihood of those who have
worn our Nation's uniform.
The VFW assists veterans who experience issues stemming from
overpayments. According to our estimates, about 60 percent of the cases
where the VFW intervenes results in veterans being granted either
partial or full relief from the debt from VA's Debt Management Center
(DMC). However, the onus is on veterans to prove that they were not
overpaid, so getting relief is often times a long and arduous process.
The majority of overpayments the VFW sees result from confusions or
errors with education benefits. The VFW offers a suite of benefits and
services to student veterans, including more than $6.5 million in
scholarships through the VFW Sport Clips Help A Hero Scholarship,
grants to students facing financial hardship through the VFW Unmet
Needs Program when their education benefits were not provided on time;
a semester-long fellowship to research and advocate to fix issues
facing the veterans community through the VFW-Student Veterans of
America Legislative Fellowship Program; and casework assistance for
veterans facing issues accessing their benefits through the VFW's 1
Student Veteran program. Through our casework assistance, we have been
notified by countless veterans who have received a debt notification
from VA because their enrollment status changed and the school failed
to notify VA, or an VA administrative error caused an overpayment.
The VFW also hears about and addresses overpayment issues through
our network of more than 2,500 highly trained and VA-accredited service
officers around the world. Changes in number of dependents is the most
common reason for overpayment of disability compensation. Often, VA
takes so long to make the change that it creates overpayments. VA's
inability to timely address concurrent receipt issues also cause
overpayments, which VA is later required to recoup. For example, a
veteran who is still in the National Guard or reserve component is not
eligible to receive VA disability compensation and drill pay
concurrently. VA has a process to validate drill pay with the
Department of Defense. Again, VA's delay or error in processing such
adjustments commonly creates overpayments for veterans.
The VFW urges Congress to eliminate the concurrent receipt issues
that often result in veterans or their survivors having to repay
benefits they should be eligible to receive, but have to pay back
because of misguided laws that require them to forfeit one earned
benefit for another. Disabled veterans who are still serving in the
reserve components should not be forced to give up a portion of their
VA disability compensation because they choose to continue serving our
country. Worse, they should not be required to work for free, which
they would be required to do if they choose to receive tax-free VA
disability compensation instead of their drill pay. Military retirees
are also required to forgo their retirement pay unless they have a
service-connected disability rating of 50 percent or higher. The VFW is
grateful that Congress provided relief for highly disabled military
retirees, but those who are rated between 10 percent and 40 percent
service-connected disabled are equally deserving of receiving both of
their earned benefits.
Once an overpayment is noticed, VA will send an ambiguously worded
notification of overpayment, which also provides options for repayment.
If veterans are unable to contact VA to contest the debt, provide
repayment, or enter into a payment agreement with VA, their debt is
sent to collections and VA will begin garnishment of their disability
compensation benefits until the debt is satisfied. While veterans have
the ability to seek relief by filing a relief waiver, VA's inability to
provide them clear and concise information regarding their debts in a
timely manner significantly hinders their ability to take action in
order to prevent VA from taking further action, which could adversely
impact their credit or cause a financial hardship.
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 notify veterans of overpayments. In many
circumstances, veterans themselves have to notify VA that they are
being overpaid.
To its credit, VA has made a concerted effort to eliminate
overpayments and, in some cases, informed veterans that they will not
be held liable for overpayments, but more must be done. VA's
inconsistent administration of veterans' benefits, interpretation of
rules and regulations, lack of training for program administrators, and
lack of effectiveness when communicating with veterans are the
principal reasons VA continues to overpay veterans and spends an untold
amount of resources collecting overpayments.
The 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 need to take in order to resolve any outstanding
debts as soon as possible. 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.
Many veterans, especially those who have a fixed income, have
limited access to the financial resources needed to immediately repay
an overpayment. Astoundingly, VA will often offset a veteran's entire
monthly benefit payment in order to pay down a debt, without the
veteran knowing about the debt or being afforded the opportunity to
request an alternative method of payment or relief. Without
guaranteeing that the veteran is actually receiving the debt
notification letter, however, the 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 veteran's monthly
benefits, but also requires a financial status report to be completed
and mailed in the event that the debt cannot be repaid in one year's
time. Both options provide the veteran a way to pay down the debt over
the course of several months, but loses its utility once a financial
status report is required, 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.
To address the issue of confusing letters, section 504 of the VFW-
supported Veterans Benefits Transition Act of 2018, required VA to
collaborate with veterans service organizations to develop a standard
and plain language format for all debt letters sent to veterans. The
VFW is unaware of the development of such standard format and urges the
Subcommittee to inquire about its status. A plain language letter which
details how debt was accrued and any recourse available would
significantly improve the VA debt collection process.
The VFW also urges Congress to pass S. 805, Veterans Debt Fairness
Act of 2019, which would improve the VA debt collection process, limit
the authority of the Secretary of Veterans Affairs to recover
overpayments caused by VA errors, and improve the due process afforded
veterans with respect to such recovery.
It is important for debt notices to be clear and provide concise
information regarding what steps veterans must take to resolve any
outstanding debts. Ultimately, a veteran should be responsible for
repaying the overpayment, if it is indeed legitimate. Due to the
inconsistencies regarding communication of overpayments from VA, as
well as the general lack of information regarding the nature of such
debt, many veterans are simply unable to meet the deadline imposed on
them by VA. To further complicate things, the VFW's interaction with
VA's DMC personnel has made it very clear that VA employees lack a
proper understanding of VA policy and procedures regarding debt
recoupment. The VFW believes S. 805 would address these concerns, and
strongly urges the Subcommittee to introduce, consider, and advance a
House companion.
Prepared Statement of Mike Saunders
Chairman Pappas, Ranking Member Bergman, and Members of the
Committee:
Thank you for the opportunity to provide insight into the debt
collection practices at the Department of Veterans Affairs (VA).
Veterans Education Success is a non-profit organization that works to
advance higher education success for all military-affiliated students
and provides free counseling and legal assistance to students using
their GI Bill and military benefits.
We are very appreciative of all the hard work this Subcommittee
puts into ensuring that the vital function of oversight is properly
conducted. We are happy to offer the following comments on VA's debt
collection practices and overpayment issues regarding VA educational
benefits.
VA's debt collection practices are a critical issue impacting
hundreds of thousands of veterans each year. Current VA debt collection
practices impact veterans and their families in myriad ways:
withholding disability benefits, negative credit reports, large
unexpected debts, and other consequences that greatly impact veterans'
quality of life.
We have helped approximately 5,000 veterans with GI Bill problems.
We have seen a recent uptick in the number of military-connected
students who are experiencing VA clawbacks of their earned education
benefits, giving us a first-hand view of how opaque and, frankly,
Kafkaesque the process can be.
Recommendations
We urge that the Committee take up the following recommendations:
1. Enact the Forever GI Bill Class Evaluation Act, which would help
solve a major cause of GI Bill overpayments by delaying GI Bill
disbursement until the student has completed 10 days of classes, has
cleared the add/drop period, and is certain about which classes s/he is
taking. This would also help solve GI Bill overpayments by stopping the
``Just 1 Day'' mentality of unscrupulous college recruiters (who
mislead veterans about the college's offerings because they know the
college will receive the full term of GI Bill tuition if a veteran sits
for just one day of class).
2. Enact the Student Veteran Empowerment Act, which would also help
solve GI Bill overpayments by requiring VA to undertake monthly
verification of Post-9/11 GI Bill enrollment, just like VA already does
with the Montgomery GI Bill, in order to catch enrollment changes
earlier and not create overpayments by disbursing too much money.
Monthly verification of Post-9/11 GI Bill enrollment is one of the
Government Accountability Office (GAO)'s recommendations from its 2015
report on GI Bill overpayments.\1\
---------------------------------------------------------------------------
\1\ U.S. Government Accountability Office, ``Post-9/11 GI Bill:
Additional Actions Needed to Help Reduce Overpayments and Increase
Collections'' (Oct. 2015), 10, available at https://www.gao.gov/assets/
680/673230.pdf. GAO made eight recommendations to the VA to address
those issues. These recommendations include: expanding monitoring of
available information on overpayment debts and collections; providing
guidance to student veterans and schools about the consequences of
enrollment changes; providing guidance to schools about the benefits of
using a dual certification process; implementing a way for GI Bill
beneficiaries to verify enrollment status monthly; expanding the
methods by which veterans and schools are notified of overpayment
debts; including both the cause of the debt and how to repay it in debt
letters; revising policy for calculating overpayments to increase
collection; and ensuring full recovery of tuition and fee payments if a
school does not charge a veteran for any tuition or fees after dropping
a class or withdrawing from school. So far, VA has fully addressed only
one recommendation and partially addressed three. VA now provides
additional guidance in GI Bill award letters about the possible
consequences of changes to enrollment. VA reported to GAO that it plans
to implement a monthly enrollment verification system in December 2020,
and it has deferred other actions for a later date, citing IT upgrade
plans for Fiscal Year 2019 as a reason for the delay. There is no
indication on the GAO action tracker that VA has expanded monitoring of
overpayment debts and collections, expanded the methods by which
veterans are notified of overpayment debts, or included both the cause
of overpayment debts and how to repay them in initial debt notification
letters.
3. Align VA's tuition clawbacks with the US Department of
Education. Since both VA and the Department of Education send tuition
directly to the school, it is the school that should pay back any
tuition overpayment. The Department of Education handles this directly
with schools through ``Return to Title IV'' procedures. But VA
currently requires students to repay tuition funds that never touched
the students' hands. It is unfair to ask students to come up with tens
of thousands of dollars, or more, in tuition funds they never touched,
which VA sent directly to the school. VA should be aligned with the
---------------------------------------------------------------------------
Department of Education on tuition clawbacks.
4. Require VA to bring its debt collection practices in line with
federal statutes and lessen its aggressive practices. VA's regulation
calls for, and VA engages in, very ``aggressive'' debt collection
practices. But VA's regulation and practices are not supported by
statute, and are unfair to veterans, especially because most debts are
inadvertent and unwitting. VA should be required to bring its
regulation in line with the statute. VA should also be required to
dramatically change its debt collection practices when the cause of the
debt is VA's own error in accounting or approval of benefits. For
example, ``retroactive adjustments'' to GI Bill benefits are not fair
to a student who has already finished the classes. If VA authorizes a
student to attend classes, but later determines the student received a
GI Bill overpayment, it is VA that should bear the burden of that
mistake, because the student already counted on that GI Bill payment
for the classes.
5. Forbid VA from driving veterans into homelessness or hunger.
Embrace the draft Senate bill that would limit VA from taking more than
25% of a veterans' benefits to cover unrelated debts to VA. GAO
determined that VA collects most debts by withholding a veteran's other
benefits, such as disability compensation for disabled veterans.
Congress should forbid VA from taking a veteran's other VA benefits if
taking those benefits would drive the veteran into hunger or
homelessness. America does not need more homeless veterans, especially
not disabled veterans, who rely on the VA disability compensation for
housing and food. The House could take up the draft Senate legislation
that would limit VA from taking more than 25% of a veteran's benefits
to cover unrelated debts to VA. VA also should slow down the reporting
of debts to credit agencies and the Treasury in situations where VA is
unable to reach a veteran, so that veterans are not unnecessarily
harmed due to a potential administrative issue.
6. Require VA to modernize its letter process and make the
information clearer. As GAO recommended, VA should expand its
notification methods to do a better job of reaching veterans beyond
letters in the regular mail. VA should install a central address
updating system and allow debt collection letters to be sent via email;
update its IT infrastructure so it is not relying on letters sent in
the mail to outdated addresses; and collaborate with Veterans Service
Organizations to create simple, easy to understand letters that clearly
indicate the reason for the overpayment, the amount of the overpayment,
and how to repay it. (GAO made the same recommendation in its 2015
report.) Veterans deserve clear information. Congress could ask GAO to
conduct a review of best practices in debt collection from other
agencies and the private sector to ensure VA's internal structure is
modernized and clear.\2\
---------------------------------------------------------------------------
\2\ 38 USC Sec. 3685(c).
---------------------------------------------------------------------------
Below please find background information and more details on each
of these recommendations. We appreciate the Subcommittee's time and
attention:
I. GI Bill Overpayments are a Key Problem for Veterans
While 88% of VA overpayment debts are related to veterans' health
benefits, there has been an increasing number of students using their
GI Bill benefits who have incurred overpayment debts.\3\
---------------------------------------------------------------------------
\3\ Bureau of Consumer Financial Protection, Office of
Servicemember Affairs, Annual Report (Jan. 2019), 12, available at
https://files.consumerfinance.gov/f/documents/cfpb--osa--annual-
report--2018.pdf.
GI Bill Overpayments Affect 1 in 4 Beneficiaries: A startling one
in four student veteran beneficiaries are affected by an overpayment,
according to GAO. In October 2015, GAO released a report analyzing
Post-9/11 GI Bill overpayments and VA debt collection efforts.\4\ GAO
found that, in Fiscal Year 2014, VA had made $416 million in Post-9/11
GI Bill overpayments, affecting 1 in 4 beneficiaries.\5\ For-profit
institutions received twice as much in overpayments as nonprofit
schools and nearly twice as much as public schools.\6\
---------------------------------------------------------------------------
\4\ Supra note 1 at 35.
\5\ Id. at 10.
\6\ In Fiscal Year 2014, for-profit schools received $70 million in
overpayments, non-profit schools received $32 million, and public
schools received $44 million. Id. at 13 n.20.
GI Bill Overpayments are Caused Partly by VA's Payment of Full
Tuition After ``Just 1 Day'': A major cause of GI Bill overpayments is
the way VA disburses GI Bill tuition to a school for the entire term
after a student sits for just 1 day of class. If a student withdraws or
drops a class after the first day, VA nevertheless disburses to the
school the entire term of tuition and fees for that student.
This incentivizes predatory schools to use deceptive tactics to
convince military-connected students to sit for just 1 day. This ``Just
1 Day'' mentality leads unscrupulous schools to focus primarily on
convincing a veteran to enroll, rather than on the academic success of
their students. Veterans who have come to us for help have told us that
unscrupulous recruiters lied to them about the types of classes and
programs offered, the school's true tuition and how much they would
need to pay out of pocket beyond the GI Bill, the school's
accreditation and their ability to transfer to a public university,
whether the school had real professors, the classroom equipment
available, and more. From a recruiter's viewpoint, they are under
pressure from their college to enroll veterans with the GI Bill
(because the GI Bill is seen as the ``military gravy train'' and
recruiters are told to ``get asses in classes,'' as one recruiter
testified before Congress\7\), and may be less than honest in order to
get the veteran to enroll.
---------------------------------------------------------------------------
\7\ See Testimony of Christopher Neiweem, former recruiter for
DeVry, before the US Senate Appropriations Committee, Subcommittee on
Defense (June 12, 2013), available at https://
www.appropriations.senate.gov/imo/media/doc/hearings/
Neiweem%20Testimony.pdf.
---------------------------------------------------------------------------
This problem is exacerbated by the 90/10 loophole in the Higher
Education Act, which inadvertently incentivizes for-profit colleges to
target veterans with aggressive and deceptive recruiting in order to
get the GI Bill, which the schools use to offset the cap on Title IV
funds they otherwise face.\8\ Many such schools explicitly adopt a
business model called ``churn,'' in which they plan for students to
drop out quickly, so they focus on quick and short enrollments.\9\ This
causes significant waste, fraud, and abuse of a student's hard-earned
education benefits and taxpayer dollars.
---------------------------------------------------------------------------
\8\ For-Profit Colleges, Vulnerable G.I.'s, Hollister K. Petraeus,
The New York Times (Sep. 21, 2011), available at https://
www.nytimes.com/2011/09/22/opinion/for-profit-colleges-vulnerable-
gis.html.
\9\ US Senate Health, Education, Labor and Pensions Committee, For
Profit Higher Education: The Failure to Safeguard the Federal
Investment and Ensure Student Success (Jul. 30, 2012), 77, available at
https://www.help.senate.gov/imo/media/for--profit--report/PartI-
PartIII-SelectedAppendixes.pdf.
---------------------------------------------------------------------------
In contrast to VA's disbursement of a full term of GI Bill after
just 1 day, the US Department of Education delays disbursement for new
students and prorates the amount of tuition the school has ``earned''
during the term, up until 60 percent of the semester has passed (after
the 60 percent cutoff, a school is viewed as having earned 100 percent
of the term of Title IV funds).
``Forever GI Bill Class Evaluation Act'' Can Solve This: The House
Veterans Affairs Committee recently introduced draft legislation titled
the ``Forever GI Bill Class Evaluation Act,'' which would defer
disbursement of GI Bill payments until 10 days after the start of the
academic term.\10\ This bill would greatly benefit both VA and student
veterans. It would address the problem of overpayments to the school by
only paying for classes after the add/drop date has passed.
\10\ US House of Representatives, Committee Repository, available
at https://docs.house.gov/Committee/Calendar/
ByEvent.aspx?EventID=109773.
---------------------------------------------------------------------------
GI Bill Overpayments are Also Partly Caused by VA's Slow Enrollment
Verification: According to the GAO report, the biggest cause of GI Bill
overpayments in 2014 was veteran enrollment changes, which caused 90%
of GI Bill overpayments (VA error constituted 2% and school error
8%).\11\
---------------------------------------------------------------------------
\11\ Supra note 1 at 12.
---------------------------------------------------------------------------
A majority of schools rely on a single-stage certification process
that is prone to creating overpayments.\12\ The problem occurs when a
student drops a class early in the semester, even during the add/drop
period, but VA does not find out until the end of the semester and has
already paid the school for the dropped course, creating an
overpayment. The students followed all normal school procedures during
the add/drop period, so many veterans are surprised by VA's assertions
that they have a GI Bill overpayment.
---------------------------------------------------------------------------
\12\ Id. at 19.
---------------------------------------------------------------------------
GAO recommended VA adopt a two-stage certification process that can
help reduce overpayments due to enrollment changes:
``Schools can initially precertify a veteran's enrollment for $0
tuition and fees before the term begins, which allows VA to start
paying housing benefits without delay. The school can then recertify
the enrollment with the actual tuition and fees amount at a later date
- e.g., after the period to add or drop classes ends when many
enrollment changes have already occurred. Since VA does not send
tuition payments until the school certifies an actual tuition and fee
amount, dual-certification can help prevent tuition overpayments that
occur when a veteran drops a class at the beginning of the term.''\13\
---------------------------------------------------------------------------
\13\ The GAO report identified an issue with school officials
having inadequate training, which contributed to reporting errors.
Congress addressed this issue by granting VA the ability to set
training requirements for school officials. Considering VA's lack of
action on GAO's recommendations from the 2015 report, it would be worth
it to determine whether VA followed Congress's statutory directive to
set these requirements. Id. at 20, 22.
---------------------------------------------------------------------------
VA discussed the benefits of dual-certification in a 2016 webinar
for schools, although it is not clear the extent to which VA has been
informing schools of dual-certification's benefits.\14\
---------------------------------------------------------------------------
\14\ VBA Education Service Quarterly Webinar (Jun. 2, 2016),
available at https://www.benefits.va.gov/GIBILL/docs/presentations/
SCO--Webinar--06-02-2016.pdf.
---------------------------------------------------------------------------
The Student Veteran Empowerment Act (Section 5) would help solve
this: Section 5 of the Student Veteran Empowerment Act requires monthly
verification of Post-9/11 GI Bill enrollment, which VA already does for
the Montgomery GI Bill. This would help solve VA's slow verification of
enrollment.
II. VA Wrongly Claws Back GI Bill Tuition Overpayments from Students,
Rather Than Schools, Even Though Schools Received the Tuition Payments
Directly from VA
When a student drops a class or drops out - after discovering that
the school was not what was promised, which is fairly common with the
aggressive and deceptive recruiting by predatory colleges - an
overpayment is created. Even though schools receive GI Bill tuition
payments directly from VA, VA goes after the student, rather than the
school, when there is a GI Bill overpayment. It does not make sense to
place the burden on student veterans to repay tuition overpayments when
the tuition funds were sent straight to the school from VA and never
touched the student's hands. Students are shocked and overwhelmed when
they receive a letter from VA requesting tens of thousands of dollars,
sometimes even $100,000, for tuition overpayments, when they never had
access to those funds. How are students expected to come up with
thousands of dollars in cash to repay money they never had?
And what happens when a student asks the school to give back the
tuition overpayments? Many bad actor schools laugh in a student's face.
The student is on the hook, but the bad actor school keeps the money.
Agency Alignment with the Education Department Could Solve This:
Instead of clawing back from students tuition payments that went
directly to the schools without touching the students' hands, VA should
work directly with schools to return overpayments. The US Department of
Education currently takes this approach with overpayments of federal
student aid funds.\15\ VA could make a number of changes to its debt
collection process, including its collection methods, how it notifies
students of overpayment debt, how it tracks overpayment debt, and the
information it provides to schools about GI Bill certification methods.
---------------------------------------------------------------------------
\15\ Supra note 1 at 8.
III. VA's Aggressive Debt Collection Practices Harm Veterans, Undermine
Military Readiness, and Are Not Supported by Statute
VA's regulations allow aggressive debt collection from veterans
that can often hurt veterans and their families.\16\
---------------------------------------------------------------------------
\16\ 38 CFR Sec. 1.911, ``Collection of debts owed by reason of
participation in a benefits program,'' governs the debt collection
practices of the VA. It outlines the procedure the VA uses for benefits
programs like the GI Bill and other education benefits: There must be
written demands by the VA once a debt is determined to exist
(1.911(b)), and the debtor has a right to informally dispute the amount
of the debt, request a waiver of collection and a hearing on the waiver
request, and finally appeal the VA's decision underlying the debt
(1.911(c)).
VA's Practices are Not Supported by Statute: VA's aggressive debt
collection practices are not supported by statute. Federal statute
---------------------------------------------------------------------------
provides:
``any overpayment... may be recovered... in the same manner as any
other debt due the United States.''\17\
---------------------------------------------------------------------------
\17\ 38 USC Sec. 3685(c).
VA's regulations instead call for very aggressive debt collection.
Specifically, 38 CFR Sec. 1.910- ``Aggressive collection action,''
---------------------------------------------------------------------------
section (a) states:
``VA will take aggressive collection action on a timely basis, with
effective follow-up, to collect all claims from money or property
arising from its activities.''\18\
---------------------------------------------------------------------------
\18\ 38 CFR Sec. 1.910- ``Aggressive collection action.''
VA's Practices are Traumatic to Veterans: In practice, the impact
on veterans is significant. VA has sent out hundreds of thousands of
overpayment notification letters in the past few years, and annually
recoups around $1.6 billion in debts.\19\ To recoup overpayments, VA is
allowed to withhold up to 100% of a veteran's monthly disability
benefits until the debt is fully repaid.\20\
---------------------------------------------------------------------------
\19\ Veterans shouldn't have to shoulder VA errors: VA debt
collection must be improved, Kayla Williams, The Hill (Mar. 28, 2019),
available at https://thehill.com/opinion/healthcare/436219-va-debt-
collection-must-be-improved.
\20\ Id.
---------------------------------------------------------------------------
One family we helped had this to say about the stress of the
situation:
``VA is charging our son $100,000+ GI Bill/911 saying he doesn't
qualify for the benefit...they paid four years college and now...four
years later they sent a letter asking to pay back that amount of money.
We called them every semester and received letters of the remaining of
months/benefit. We are under a lot of stress with this...my husband is
an 80% Disabled Veteran with 22 years of service/ honorable discharge
and I am a disabled person...I don't stop crying.''\21\
---------------------------------------------------------------------------
\21\ E.R., a mother of a veteran who telephoned Veterans Education
Success to seek help on Aug. 19, 2019.
VA Withholds Much-Needed Living Allowance for Disabled Veterans and
other Benefits: VA's debt collection process for overpayment debts is
too aggressive and puts the livelihood and wellbeing of veterans,
servicemembers, and their families at risk. Most often, overpayments
are collected directly from subsequent GI Bill or other VA payments to
veterans.\22\
---------------------------------------------------------------------------
\22\ Supra note 1 at 15.
---------------------------------------------------------------------------
Veterans\23\ have four options once they receive a letter from the
Debt Management Center (DMC): ``[T]hey can arrange to repay the debt in
full, set up a payment plan, dispute the existence or amount of the
debt, or request a waiver of the debt due to financial hardship or
special circumstances.''\24\ If a veteran does not pursue one of these
four options, VA takes more aggressive steps to collect the debt, such
as offsetting future Post-9/11 GI Bill payments, other VA benefits, or
tax returns, and reporting debts to credit rating agencies.\25\
---------------------------------------------------------------------------
\23\ Schools have similar repayment options and are responsible for
an overpayment if it is made before the start of the semester. Id at 5.
\24\ Id. at 7.
\25\ Id.
---------------------------------------------------------------------------
In its report, GAO found that, at least in Fiscal Year 2014, VA
tapped into veterans' other benefits to cover 84% of debts, and another
12% of payments came from other federal payments, such as a veteran's
tax funds or social security checks.\26\
---------------------------------------------------------------------------
\26\ Id. at 15 n.22 (``In fiscal year 2014, VA collected 61 percent
of veteran overpayments by deducting the debts from subsequent GI Bill
or other VA payments, 23 percent from direct payments, 12 percent from
offsetting other federal payments, and 5 percent from private debt
collection agencies.'')
---------------------------------------------------------------------------
What this means in practice can be horrific. Too often, VA will
withhold a veteran's much-needed benefits like disability compensation.
Pulling the rug out from under veterans' feet like this can prevent
them from finishing their schooling and have devastating effects on
their health and well-being. By going after veterans' much-needed basic
funds for housing and food, VA's debt collection practices could leave
them homeless or hungry. Veterans rely on disability compensation to
make ends meet.\27\ In less dramatic cases, when VA offsets a veteran's
benefits, such as a student's Basic Allowance for Housing, it could
prevent the veteran from covering his or her expenses and continuing
his or her education.\28\
---------------------------------------------------------------------------
\27\ The VA overpaid tens of thousands of veterans, and now it says
they have to give their money back, Sara Jerving, Vice (Mar. 27, 2017),
available at https://www.vice.com/en--ca/article/ywn9xb/va-veterans-
overpayment.
\28\ Id.
---------------------------------------------------------------------------
Worse still, by taking a veterans' much-needed benefits, VA could
push veterans with PTSD and other psychological disorders over the
edge.
For example, MSG Tad Steckler, a recipient of the Soldier's Medal
for heroism who retired after serving for 22 years, was suddenly faced
with a $21,000 disability compensation overpayment. Steckler was unable
to work due to his service-connected disabilities, and the added stress
of this unexpected debt and possible deduction from his benefits
reportedly exacerbated his PTSD symptoms. Loved ones were afraid to
leave him alone due to disturbing comments he made that indicated he
was contemplating suicide. At one point, he told VA representatives,
``How are you going to get the money if I'm dead?'' Steckler's story
highlights the adverse effect VA debt collection practices can have on
veterans.\29\
---------------------------------------------------------------------------
\29\ Id.
---------------------------------------------------------------------------
In another example, LCpl Brian Easley, a Marine Corps veteran who
suffered from PTSD and schizophrenia, attempted to rob a bank after VA
garnished his disability compensation to recover GI Bill
overpayments.\30\ Easley's story ended abruptly after he was killed by
police during crisis negotiation.
---------------------------------------------------------------------------
\30\ Prior to the attempted robbery, Easley repeatedly called the
Veterans Crisis Line, which hung up on him. He also attempted to plead
his case in person at a VA regional office, where he was sent away to
obtain paperwork. ``They Didn't Have to Kill Him'': The Death of Lance
Corporal Brian Easley, Aaron Gell, Task and Purpose (Apr. 9, 2019),
available at https://taskandpurpose.com/didnt-kill-death-lance-
corporal-brian-easley.
---------------------------------------------------------------------------
In March of 2019, a bipartisan group of Senators introduced
legislation that would limit the amount VA can withhold from veterans'
benefits to 25% and limit the recovery period of overpayments to 5
years.\31\ Senator Jon Tester, speaking on VA debt collection practices
and the proposed legislation, said, ``It's wrong to put the debt from
the VA's accounting mistakes on the shoulders of men and women who have
served their country.''\32\
---------------------------------------------------------------------------
\31\ Should veterans have to pay for VA's benefit errors?, Leo
Shane III, Military Times (Mar. 20, 2019), available at https://
www.militarytimes.com/news/pentagon-congress/2019/03/20/should-
veterans-have-to-pay-for-vas-benefits-errors/.
\32\ Id.
VA's Retroactive Readjustments of GI Bill Benefits can be Harmful
to Veterans: Veterans who bring complaints to Veterans Education
Success largely fall into two main overpayment situations: overpayments
for enrollment changes, and retroactive readjustments of GI Bill
benefits awarded to a veteran. We have seen VA retroactively lower the
percentage of GI Bill benefits to which a veteran is entitled after the
veteran has begun using the benefits, and even after the veteran has
left school. This can often occur years later, many times for
substantial amounts, as much as $100,000.
One such case brought to Veterans Education Success involved a
beneficiary who had had the Post-9/11 GI Bill transferred to her by her
father, who was assured by his personnel office that retiring 33 days
before the end of the two-year service obligation he incurred for
transferring his education benefit would not affect that benefit
transfer. Seven years after her father retired, and six years after she
graduated, VA sent the beneficiary a debt collection notice stating
that she owed up to $100,000, and that they were also going to restore
her father's education benefit, in clear contravention of the wishes of
the family.
If the veteran lied or misled VA in some way, then it is
understandable for VA to request reimbursement. Absent that, and with
enrollment certified by VA officials every semester, Congress should
give serious consideration as to whether it is fair to retroactively
change a veteran's GI Bill payments when he or she has already finished
the classes. In these cases, veterans rely on a promise that the GI
Bill would cover their classes, VA comes back to the veteran after the
classes are completed to say it was a mistake, and the veteran needs to
come up with tens of thousands of dollars. This is not a client-
oriented action.
In the case of our client, we were able to obtain assistance from
the VA Education Service, which agreed to waive the debt. This
prevented a young woman's credit from being destroyed and her dreams of
becoming a homeowner from being dashed. But we do not believe that VA
is taking this approach in a proactive manner.
Retroactive adjustment of GI Bill benefits can also take place when
a school moves from a higher-cost BAH ``code'' to a lower-cost one. A
defect in the Long Term Solution (LTS) system, which pays GI BIll
benefits, is that if a school moves it will trigger an overpayment
notice for any student who has ever attended that school, even if they
attended it when it was in the higher-cost area. VA employees must
notice this error and manually correct it. Sometimes they are
successful and, like all humans, sometimes they are not. VA can do
better here.
VA's Notification Process Does Not Adequately Inform Veterans of
their Obligations: VA's aggressive approach to debt collection is
especially troubling because VA often has not adequately informed
veterans of their overpayment debts. At the time of the 2015 GAO
report, veterans received information regarding their debts in two
separate letters. The initial letter included information on the debt
amount and the cause of the overpayment debt, but did not include
information on how to repay it.\33\ Veterans had to wait for a second
letter that explained how to repay overpayment debt. According to GAO,
``[t]his delay in receiving all of the information associated with
their debt could also delay the collection process since veterans may
be less likely to repay their debts until they understand both the
cause of overpayments and have the information they need on how to
repay them.''\34\ VA concurred with GAO's recommendation and said it
would, by January 2016, modify initial debt letters to students and
schools on both the cause of the debt and how to repay it, but there is
no evidence that VA has changed its practices, at least according to
the GAO tracker.
---------------------------------------------------------------------------
\33\ Supra note 1 at 28.
\34\ The VA's rationale for sending two separate letters was prompt
notification to allow veterans to dispute debts. Id. at 28-29.
VA is Still Sending Only Paper Letters, Which May Not Reach the
Veteran: Students often do not receive debt notification letters. As of
January 2019, VA was still sending only paper letters to veterans to
notify them of their debts.\35\ Because student veterans move so often,
debt notification letters can easily be sent to the wrong address.\36\
---------------------------------------------------------------------------
\35\ Supra note 3 at 13.
\36\ Supra note 1 at 26.
---------------------------------------------------------------------------
Not receiving notification letters can set off a harmful chain of
events for veterans. Not knowing of an overpayment debt can cause
veterans to miss key deadlines to request waivers or dispute the debt,
resulting in missing out on the opportunity to suspend collection
actions.\37\
---------------------------------------------------------------------------
\37\ ``Specifically, VA will not suspend collection actions if a
veteran requests a waiver or disputes the amount of a debt more than 30
days after the initial notification letter.'' Id.
---------------------------------------------------------------------------
For example, one military family we helped just barely received the
debt notice because of address changes. In November 2018, our client
was living out of the country. She found out that she had a sizeable
six year old debt to VA only because VA sent letters to a group house
that she lived in before she graduated, and a current resident
miraculously knew how to get in touch with her.
In addition to using shockingly outdated addresses, the letters our
client received from VA and the DMC told her that she owed $82,000, and
then $100,000. These are obviously stunningly high amounts and would
cause enormous stress to anybody. Moreover, if VA cannot effectively
communicate the correct amount of money that is owed, what chance do
veterans have of avoiding crushing hits to their credit reports?
VA could address this issue by expanding methods of debt
notification, as GAO recommended in 2015. Rather than relying only on
mail, VA could use existing infrastructure, such as VA's eBenefits
portal, to notify veterans of their overpayment debt. According to the
2015 GAO report, eBenefits ``provides over 3 million veterans with
access to personalized information about their VA benefits. VA
officials have said this system could be upgraded to provide veterans
with online access to debt notification letters; however, the agency
has not implemented this proposal due to other funding
priorities.''\38\
---------------------------------------------------------------------------
\38\ Id. at 27-28.
---------------------------------------------------------------------------
These issues with notifying veterans of their debt led GAO to
conclude that VA debt collection is hampered by the processes VA uses
to notify and collect debts from veterans and schools.\39\
Additionally, GAO concluded that the lack of a single source of
information on both the cause of debts and repayment options creates
unnecessary confusion for veterans, which can lead to delays in
repayment and administrative burdens for schools.\40\
---------------------------------------------------------------------------
\39\ Id. at 34.
\40\ Id.
---------------------------------------------------------------------------
The House Committee on Veterans' Affairs Economic Opportunity
Subcommittee held a hearing in 2017 which addressed VA debt collection
and overpayment issues. Chairman Jodey Arrington discussed the GAO
report's recommendations and implementation issues, saying:
``The GAO made eight recommendations to the VA to reduce these
overpayments going forward and to increase collections of this money.
However, many of these recommendations still have not been implemented,
and based on the Department's written statement, it is unclear when
they will be implemented, if ever. . .[I]t is clear that in many ways
it is a matter of lack of IT resources and the need for greater
prioritization to be placed on these programs within the VBA. I know
that IT resources are tight, but I believe it's time for the VA to
prioritize resources for projects that provide direct impact to
veterans...''\41\
---------------------------------------------------------------------------
\41\ House Committee on Veterans' Affairs, Improving the Quality
and Timeliness of GI Bill Processing for Student Veterans (Jun. 8,
2017), 26:38, available at https://republicans-veterans.house.gov/
calendar/eventsingle.aspx?EventID=1771.
We understand that there are significant hurdles to updating the
current IT system, but we feel that it is necessary not only to
safeguard veterans and their families from having their lives
negatively impacted by an unexpected debt, but also to cut down on the
money and manpower VA assigns to overpayment issues.\42\
---------------------------------------------------------------------------
\42\ The VA is spending millions of dollars to collect debts that
it created, Sara Jerving, Vice (Oct. 25, 2017), available at https://
www.vice.com/en--us/article/8xmve3/the-va-is-spending-millions-of-
dollars-to-collect-debts-that-it-created.
VA's Letters are Often Confused and Confusing: We have helped
veterans who have received letters that just do not make sense. The
following is an example of the types of complaints we have seen
---------------------------------------------------------------------------
regarding GI Bill overpayments:
``I... don't believe a human has looked at any of the letters I
have been sent. They don't add up or make sense. Semesters are omitted,
figures they quote as what I `owe' on one document don't match with
figures they quote on a different document. Dates and explanations
don't make sense. All in all the letters appear to be form based, built
by bad queries running new protocol on an old file. automatically
[sent] to me without review. A small part of me hopes as soon as a
person does look at the situation to put together a `statement of the
case,' that they will find a waiver on my file and the whole situation
will go away. But I am prepared for the worst.''
In 2017, the Veterans Fair Debt Notice Act was introduced in the
House to address a number of issues with VA debt collection practices,
specifically to have VA work with Veterans Service Organizations to
collaborate on standard language for debt letters, and to allow
veterans to elect to be notified through electronic means.\43\
Providing information to veterans would help clear confusion and make
it easier for them to dispute overpayment debts. One suggestion, from
John Towles, deputy director of legislative service for Veterans of
Foreign Wars, is that the VA should provide ``line item accounting
similar to a credit card statement'' to veterans.\44\
---------------------------------------------------------------------------
\43\ H.R. 3705 - Veterans Fair Debt Notice Act of 2017, available
at https://www.congress.gov/bill/115th-congress/house-bill/3705.
\44\ Supra note 42.
VA's Debt Collection Practices Undermine Military Readiness and the
Pentagon Budget: Reporting debts to credit agencies can put veterans'
and servicemembers' careers at risk. (Active duty servicemembers may
use the GI Bill through the ``Top Up'' program, as a veteran who has
subsequently returned to active service, or as a family member of a
veteran, and as a result may face VA debt collection.)
In 2018, the US Department of Defense (DoD) announced a policy of
``Continuous Evaluation'' (CE) of security clearance eligibility, which
entails real-time tracking of the credit reports of security clearance
holders. According to the CFPB, ``over 187,000 veterans received
overpayment notices from [the DMC].. Approximately one in four veterans
using the Post-9/11 GI Bill received an overpayment.''\45\ Considering
the number of veterans who receive overpayments, VA is putting a large
number of veterans' careers at risk through its aggressive debt
collection practices.
---------------------------------------------------------------------------
\45\ Supra note 3 at 12.
---------------------------------------------------------------------------
Similarly, the CFPB's Office of Servicemembers Affairs recently
documented how VA debt collection practices can harm servicemembers'
security clearances:
``Recently, in preparation for an upcoming periodic reinvestigation
of my security clearance I conducted a review of my credit score and
noted [a VA] reporting action which I was previously unaware of. I
provided [an] on time [payment] to the VA, however internal processing
of that payment caused a delay in crediting the payment to my account.
Additionally, VA DMC (debt management center) continued to receive,
acknowledge, and process payments up to and beyond the date the debt
was transferred to Treasury.. Because VA DMC transferred the debt to
Treasury and submitted a negative report to the credit reporting
agencies, I have been characterized as financially irresponsible. In
more than twenty years of active service to my country and over thirty
total years of military service, including three combat tours, I have
always lived up to my commitments.''
- Active duty servicemember from Louisiana\46\
---------------------------------------------------------------------------
\46\ Id.
The harm also extends to the Pentagon's costs and military
---------------------------------------------------------------------------
readiness. The Defense Department has determined:
``Each separation of a Service member is estimated to cost the
Department $58,250, and the Department estimates that each year
approximately 4,640 to 7,580 Service members are involuntarily
separated where financial distress is a contributing factor.''\47\
---------------------------------------------------------------------------
\47\ Limitations on Terms of Consumer Credit Extended to Service
Members and Dependents, 80 FR 43559 (Jul. 22, 2015), available at
https://www.federalregister.gov/documents/2015/07/22/2015-17480/
limitations-on-terms-of-consumer-credit-extended-to-service-members-
and-dependents.
VA's stated mission is ``to fulfill President Lincoln's promise `To
care for him who shall have borne the battle, and for his widow, and
his orphan' by serving and honoring the men and women who are America's
Veterans.''\48\ VA's aggressive debt collection practices are currently
harming the veterans VA is supposed to care for, serve, and honor.
---------------------------------------------------------------------------
\48\ US Department of Veterans Affairs, About VA, Mission
Statement, available at https://www.va.gov/about--va/mission.asp.
Conclusion
Veterans Education Success sincerely appreciates the opportunity to
share our views on this important topic. Pursuant to Rule X12(g)(4) of
the House of Repres/entatives, Veterans Education Success has received
no federal grants in Fiscal Year 2019, nor in the two previous fiscal
years.
Prepared Statement of Gerardo Avila
Chairman Pappas, Ranking Member Bergman, and distinguished members
who proudly serve on this Subcommittee; on behalf of our National
Commander, James W. ``Bill'' Oxford, thank you for the opportunity to
comment on the important issue of the Department of Veterans Affairs
(VA) overpayment and veteran debt collection practices. It is my duty
and honor to represent The American Legion and assist this Committee in
better understanding this issue, how it impacts our veterans, and
provide recommendations for improvement. It is imperative that we
address these issues in an effort to ensure we are not unduly burdening
America's veterans with debt as a result of bureaucratic inefficiencies
or errors.
The American Legion has worked extensively on matters concerning VA
debt management and has had a dedicated representative at the VA's Debt
Management Center (DMC) in the Saint Paul, MN Regional Office
advocating for veterans for over 40 years.
Update From Previous Hearing
The American Legion last testified before this Subcommittee on the
issue of VA overpayments and debt collection on May 24, 2017.\1\ Before
commenting on further improvements that need to be made, we would like
to provide an update on issues we previously testified on and the
progress made in a variety of areas. The American Legion's previous
testimony focused on four specific areas: ways to prevent overpayments
from happening, methods to improve communication with the veteran,
regional offices and the DMC, the time period allotted to request a
waiver prior to garnishing active benefits, and better options for
recoupment of overpayments in an effort to avoid financial hardship
situations.
---------------------------------------------------------------------------
\1\ https://docs.house.gov/meetings/vr/vr08/20170524/106019/hhrg-
115-vr08-wstate-larsenj-20170524.pdf
---------------------------------------------------------------------------
A large volume of veteran debt was created in 2017 due to lack of
processing dependent status claims, drill pay for National Guard or
Reserve members entitled to VA compensation, and education benefits.
The American Legion would like to commend VA for taking a proactive
role in reducing the dependent claims backlog and initiating new
methods enabling veterans to personally update their dependent status
via phone, scan, and eBenefits. Due to these efforts, we have seen a
reduction of debt involving a dependency claim. While drill pay and
education overpayments still account for the majority of the veteran
debt we assist on, the total amount owed has significantly decreased.
VA's collaboration and communication with the Defense Finance and
Accounting Services (DFAS) has greatly reduced the amount owed by
servicemembers, and has assisted in keeping the debt at a manageable
level. We are encouraged that VA and DFAS are making efforts to improve
processes and encourage them to increase the frequency with which they
reconcile accounts in an attempt to eliminate the overpayments
altogether. We are also encouraged to hear that VA is exploring
possible options with institutions of higher learning who accept
federal funds such as the GI Bill on methods to recoup monies paid if
the students withdrew or had another authorized reason for not
attending or completing the course.
Our second concern involved communication between the veteran,
regional office, and DMC. VA uses written correspondence to notify a
veteran of an overpayment and the collection process. Our concern was,
and still is, that many veterans never receive the notification or
collection letter as a result of incorrect or outdated addresses on
file. While we understand that veterans must take some ownership and
keep their contact information up to date with VA, VA must ensure this
is not a cumbersome process requiring veterans to change their address
repeatedly in an assortment of systems. In accordance with 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. This must be sent to the veteran's ``latest address
of record'' in order to be valid. The courts have held that this means
when a veteran's current address is known to one part of VA, all other
parts are responsible for knowing it as well.\2\
---------------------------------------------------------------------------
\2\ Erickson v. West, 13 Vet.App. 495-501 (2000)
---------------------------------------------------------------------------
It is our understanding that VA has made efforts to ensure
interoperability between information technology (IT) systems, but has
not been successful due to a lack of compatibility between outdated
legacy systems. In addition to inaccurate mailing addresses, we
previously stated issues with the lack of detail contained in the
collection letters. In a recent meeting with VA, we were encouraged to
learn that VA has made it a priority to update its letters to make them
more concise, specific, and easier to understand. The American Legion
stands ready to assist in these efforts.
Our third concern focused on the collection process within DMC.
Once DMC receives a notification of an overpayment from a regional
office, within 30 days a collection due process letter is mailed
advising the veteran of the debt amount and provides a notice of the
veteran's rights and obligations. The first 30 days are crucial for the
veteran to take action to stop any possible garnishment of a current
benefit. Even though an applicant can request a waiver up to 180 days,
requesting it within 30 days is the only way to prevent garnishment.
From our many years of assisting in this arena, it has been our
experience that 30 days is not sufficient time to take action, even
when the veteran has received the demand letter. The American Legion
would support an extension of the 30 day window to request a waiver to
avoid garnishment being extended to 90 days.
The last topic we addressed during our previous testimony was the
recoupment methods used by DMC. If a veteran does not respond within
the first 30 days of the first demand letter and they were actively
receiving a benefit, DMC would recoup the entire amount until the debt
was paid. Needless to say, many veterans and their families depend on
their monthly benefit to maintain fiscal solvency. The American Legion
can attest to the thousands of families who were further put in
financial hardship as a direct result of this practice. We are happy to
report that DMC has discontinued this practice, and currently spreads
the amount owed over a 12-month period and recoups the debt at a
prorated percentage. While this method is not perfect and can still
lead to an entire benefit to be garnished based on the amount owed,
this updated practice has been beneficial to most veterans.
The American Legion's Recommendations to Address VA Debt
Based on our experience assisting veterans facing possible
garnishment of their benefit, financial hardship, and damaged credit
history, we offer the following suggestions to stop or minimize
overpayment and improve the collection process to ensure America's
veterans are not unnecessarily burdened with undue financial burdens.
Internal Repairs
One of the major obstacles we have identified, as previously
mentioned, is the lack of integration of the countless information
management systems currently in use at the VA. Most of VA's systems do
not communicate with each other. Debt management, education, vocational
rehabilitation, appeals, medical care, and home loans all have their
own systems, which do not communicate with the main VA benefits system.
Information that is updated in these systems does not flow to the
others. For example, a debt may be generated by an education office,
where the veteran's current address is noted. However, that system does
not communicate with debt management's systems, or even with Veterans
Benefits Management System (VBMS). Thus, debt management may not be
aware of an address update in another system. This can result in debt
notification letters being sent to the wrong address and if a letter is
not returned, DMC concludes that the notice was valid. If no response
is received from the veteran, it proceeds with collection actions.
The lack of interoperability between IT systems poses a challenge
not just to VA employees, but the veteran service community. The
problem of different systems not communicating is difficult to resolve
for several reasons. The various systems were developed at separate
times, many systems are in different formats, and are still, for the
most part, internal. This means that DMC's internal IT systems are not
accessible to representatives, or even to other departments within VA.
This makes it difficult to avoid mistakes between one part of VA and
another. One example is that the records of the Buffalo, NY Education
Office are not accessible to most employees of the St. Louis Education
Office. Representatives also have difficulty researching a case because
sometimes it is necessary to piece together information from several
systems in order to have a comprehensive view of what a potential issue
may be. At present, representatives must obtain these bits of
information manually, by requesting it from the parts of VA that do
have access to the systems. Fixes for this problem are in progress, but
so far nothing has been able to interface all systems without losing
crucial information.
The American Legion calls upon VA to continue efforts to integrate
its systems, and to expand representative access to all systems. We
also call upon DMC to continually update its contact information, and
to research the latest address on file at the VA office where the debt
originated. Further, if an invalid notice occurs due to one of these
problems, we urge DMC to promptly correct its error, stop the
collection process, and re-notify the veteran correctly.
External Repairs
The American Legion believes that the best solution to solve the
problem of VA debt is to eliminate the creation of overpayments. A VA
benefit debt is generated through a number of actions, to include
change of income or net worth, dependent status, receipt of drill pay,
incarceration, and school attendance. As previously stated, VA has made
significant improvements to minimize overpayment resulting from drill
pay. This was accomplished mostly through outreach and collaboration
with DFAS. The American Legion believes that further partnerships with
additional government agencies and institutions of higher learning will
further reduce the creation of overpayments.
Improved communication with the Department of Treasury can reduce
or eliminate the overpayments when a veteran's net income changes.
Likewise, a similar concept can be applied with the Department of
Justice to ensure a veteran's benefit is stopped or reduced when they
are incarcerated. Additionally, it has been our experience that some
veterans have misconceptions about what income needs to be reported and
how it impacts their benefit levels.
Trying to uncover the best solution to establish partnerships with
colleges and universities poses a greater challenge, as they don't all
fall under one single authority. According to a recent U.S. Government
Accountability Office report, student debt is one of the primary
creators of VA overpayments.\3\ The American Legion believes that
controls should be put in place to mitigate overpayments as a result of
changes in course load and enrollment status.
---------------------------------------------------------------------------
\3\ https://www.gao.gov/products/GAO-16-42
---------------------------------------------------------------------------
In an effort to eliminate the creation of overpayments, The
American Legion urges VA to aggressively seek out partnerships and
collaborate with as many agencies and organizations as possible to
correctly update a veteran's current status.
Conclusion
Debt collection within VA and Treasury Departments are complicated
and nuanced. The American Legion sees room for improvement, and we have
highlighted some of those suggestions in this testimony. Overall, The
American Legion believes that VA does an adequate job in protecting
veterans from added exposure when they are identified as having been
overpaid and works to ensure that veterans are aware of their rights,
resources, and consequences should they neglect to address these issues
right away.
As always, The American Legion thanks this Committee for the
opportunity to elucidate the position of the nearly 2 million veteran
members of this organization. For additional information regarding this
testimony, please contact Mr. Lawrence Montreuil, Legislative
Associate, at [email protected] or (202) 861-2700.