[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]




 
EXAMINING HOW VBA CAN EFFECTIVELY PREVENT AND MANAGE OVERPAYMENTS

=======================================================================

                                HEARING

                               before the

       SUBCOMMITTEE ON DISABILITY ASSISTANCE AND MEMORIAL AFFAIRS

                                 of the

                     COMMITTEE ON VETERANS' AFFAIRS
                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                      WEDNESDAY, OCTOBER 25, 2017

                               __________

                           Serial No. 115-36

                               __________

       Printed for the use of the Committee on Veterans' Affairs
       
       
       
       
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          Available via the World Wide Web: http://govinfo.gov
          
          
          
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                U.S. GOVERNMENT PUBLISHING OFFICE
              
31-428                 WASHINGTON : 2019               
          
          
          
                     COMMITTEE ON VETERANS' AFFAIRS

                   DAVID P. ROE, Tennessee, Chairman

GUS M. BILIRAKIS, Florida, Vice-     TIM WALZ, Minnesota, Ranking 
    Chairman                             Member
MIKE COFFMAN, Colorado               MARK TAKANO, California
BRAD R. WENSTRUP, Ohio               JULIA BROWNLEY, California
AMATA COLEMAN RADEWAGEN, American    ANN M. KUSTER, New Hampshire
    Samoa                            BETO O'ROURKE, Texas
MIKE BOST, Illinois                  KATHLEEN RICE, New York
BRUCE POLIQUIN, Maine                J. LUIS CORREA, California
NEAL DUNN, Florida                   KILILI SABLAN, Northern Mariana 
JODEY ARRINGTON, Texas                   Islands
JOHN RUTHERFORD, Florida             ELIZABETH ESTY, Connecticut
CLAY HIGGINS, Louisiana              SCOTT PETERS, California
JACK BERGMAN, Michigan
JIM BANKS, Indiana
JENNIFFER GONZALEZ-COLON, Puerto 
    Rico
                       Jon Towers, Staff Director
                 Ray Kelley, Democratic Staff Director

       SUBCOMMITTEE ON DISABILITY ASSISTANCE AND MEMORIAL AFFAIRS

                     MIKE BOST, Illinois, Chairman

MIKE COFFMAN, Colorado               ELIZABETH ESTY, Connecticut, 
AMATA RADEWAGEN, America Samoa           Ranking Member
JACK BERGMAN, Michigan               JULIA BROWNLEY, California
JIM BANKS, Indiana                   KILILI SABLAN, Northern Mariana 
                                         Islands

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Veterans' Affairs are also 
published in electronic form. The printed hearing record remains the 
official version. Because electronic submissions are used to prepare 
both printed and electronic versions of the hearing record, the process 
of converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.

                            C O N T E N T S

                              ----------                              

                      Wednesday, October 25, 2017

                                                                   Page

Examining How VBA Can Effectively Prevent And Manage Overpayments     1

                           OPENING STATEMENTS

Honorable Mike Bost, Chairman....................................     1
Honorable Elizabeth Esty, Ranking Member.........................     2

                               WITNESSES

Mr. Willie C. Clark, Sr., Deputy Under Secretary for Field 
  Operations, Veterans Benefits Administration, U. S. Department 
  of Veterans Affairs............................................     4
    Prepared Statement...........................................    21

        Accompanied by:

    Ms. Beth Murphy, Director, Compensation Service, Veterans 
        Benefits Administration, U. S. Department of Veterans 
        Affairs

    Ms. Roberta Lowe, Acting Director, Debt Management Center, 
        Office of Management, U. S. Department of Veterans 
        Affairs
Mr. David G. Spivey, Deputy Director, National Veterans Affairs 
  and Rehabilitation Division, The American Legion...............     5
    Prepared Statement...........................................   22'
Mr. Shane L. Liermann, Assistant National Legislative Director, 
  Disabled American Veterans.....................................     7
    Prepared Statement...........................................    28
Mr. John Towles, Deputy Director, National Legislative Service, 
  Veterans of Foreign Wars.......................................     8
    Prepared Statement...........................................    32

                        QUESTIONS FOR THE RECORD

Letter From Chairman Mike Bost To VA.............................    34
VA Response to Letter From Chairman Mike Bost....................    36


   EXAMINING HOW VBA CAN EFFECTIVELY PREVENT AND MANAGE OVERPAYMENTS

                              ----------                              


                      Wednesday, October 25, 2017

             U.S. House of Representatives,
                    Committee on Veterans' Affairs,
                      Subcommittee on Disability Assistance
                                      and Memorial Affairs,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to notice, at 10:30 a.m., in 
Room 334, Cannon House Office Building, Hon. Mike Bost, 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Bost, Coffman, Radewagen, Bergman, 
Esty, and Brownley.

       OPENING STATEMENT OF HONORABLE MIKE BOST, CHAIRMAN

    Mr. Bost. Good morning and welcome. This is the oversight 
hearing of the Subcommittee on Disability Assistance and 
Memorial Affairs, and we will now come to order.
    Today we are looking at the overpayments and how they 
impact veterans. An overpayment is when the VA gives a veteran 
too much money. For example, some disabled veterans receive 
additional compensation to help with expenses of their eligible 
dependents, such as their spouse. When a veteran informs the VA 
that they are divorced, the VA should immediately process a 
change in the dependent's status, which will lower the 
veteran's compensation payment. But if the VA doesn't process 
the change for several months, the veteran may end up owing VA 
thousands of dollars.
    Naturally, this can be a big problem for the veteran and 
his family, his or her family, especially if they can't afford 
to pay it back. On the other hand, if the veteran doesn't repay 
the money, the taxpayer has to foot the bill.
    This hearing will review the reasons overpayments are 
created and how VA can prevent them, such as if the overpayment 
is caused by the VA's mistake or a delay in processing a claim.
    We will look also at a troubling trend: the growth in the 
amount of overpayments over the past 2 years. After all, the 
taxpayers, we have invested more than $1 billion for the VBMS 
and other technology to improve the efficiency and accuracy in 
the last 5 years. All this new technology should reduce the 
number of overpayments, yet in fiscal year 2015 VA issued about 
$350 million in overpayments; in fiscal year 2016, the amount 
increased to more than $600 million. And I think that we may 
have the right to ask why overpayments have increased and what 
VA is doing to reduce them.
    We will also look into the Department's debt collection 
process to ensure that the VA is being both fair to the veteran 
and a good steward of the taxpayer dollars. An important part 
of this process is how VA notifies the veteran of an 
overpayment.
    During the September 13th Subcommittee legislative hearing, 
several VSO witnesses testified that veterans often don't 
receive the debt notification notice. This is a problem, 
because a veteran who doesn't receive the notice may miss 
important deadlines to dispute or mitigate the debt.
    I am also concerned that the debt notices don't clearly 
explain how veterans can dispute the debt. If a veteran doesn't 
agree with the debt, it is also only fair that the veteran has 
the chance to prove that he or she doesn't actually owe the 
money before the VA starts withholding their payments.
    So, we have a lot of ground to cover this morning. I am 
looking forward to having this constructive discussion about 
how to better prevent overpayments and, if the overpayment is 
unavoidable, to ensure that the VA is being fair to the veteran 
while still protecting the taxpayers.
    Again, I want to thank everyone for being here.
    I now want to recognize Ranking Member Ms. Esty for her 
opening statements.

 OPENING STATEMENT OF HONORABLE ELIZABETH ESTY, RANKING MEMBER

    Ms. Esty. Thank you, Mr. Chairman.
    Over the past 4 years, the VBA has made significant 
progress reducing the backlog in disability benefits claims. 
Congress asked the agency to do this, to reduce the backlog, 
and we know that you have worked over time to do so.
    When non-rating work piled up during that time, VBA 
recognized this and whittled down the backlog from more than 
100,000 claims to 14,000 in the last 2 years, but now it is 
time to make some important changes in VA's management of 
overpayments.
    In particular, it is time to recognize that most often 
overpayments result from a delay in processing changes to a 
veteran's status, be it the birth of a child, death, return to 
active duty, incarceration, or other reasons.
    What I hope to hear today from the VA is how it hopes and 
plans to reduce these delays by improving, for example, the 
matching agreements that you have with the Social Security 
Administration, with the IRS, and the Department of Justice. I 
also hope to hear how the VA can improve communication, which 
the Chairman has already recognized and we have talked about 
several times here in this Committee, communication between the 
Veterans Benefits Administration and the Veterans Health 
Administration on getting an integrated records system. And, 
most importantly, I hope to hear what changes are in the works 
in how the VBA and the so-called Debt Management Center 
communicates with veterans by letter when an overpayment 
occurs.
    Elderly veterans on fixed incomes who have just lost a life 
partner should not be receiving a letter from the VA that they 
owe a debt. I think particularly about the World War II 
veterans in my district. And the shame that is associated with 
a word like debt when they are grieving the loss of a life 
partner of 50, 60, or 70 years. We can and we must do better.
    Younger veterans receiving drill pay while they are 
continuing to serve in the Guard and Reserve after leaving 
active duty should not be owed that they owe a, quote, 
``debt,'' which is essentially the result of a lag time between 
communication between DoD and VA.
    We all recognize that overpayments must be reclaimed from 
veterans and their survivors when they occur. The law requires 
this and it is our responsibility in Congress as stewards of 
the tax dollars to ensure that we have the resources to provide 
benefits to the veterans, according to law, who deserve it. And 
we do recognize that the VA has taken steps to make it easier 
for veterans to notify VA of changes in their status.
    But with all of that said, the current recoupment process 
needs improvement. We need to make sure that veterans and their 
families are respected in this process. They have served this 
country. Oftentimes, they have notified some portion of the VA 
about this change. It is not unreasonable for them to assume 
that the entire agency knows of this. So we have to find a 
better way to move forward to integrate those systems.
    The notices need to be clear, they need to be respectful, 
they need to be timely, and we need to ensure that they 
actually are received by the veteran as quickly as possible. As 
you know, we had a hearing, recently on a proposal to require 
VA to use certified mail to be processed. We understand your 
estimate would make that extremely expensive. We would like to 
see that money go into benefits, but we want to work with you 
in ensuring that our veterans receive timely, clear, 
respectful, helpful notice, and that we work to reduce the 
number of occasions in which overpayments occur and the speed 
with which they are resolved.
    So, again, we appreciate you being with us here today, in 
the spirit of cooperation and getting this right for the 
veterans who have given so much to our country.
    Thank you, and I yield back.
    Mr. Bost. Thank you, Ms. Esty.
    I ask that all other Members waive their opening remarks, 
as per the Committee's custom.
    And I want to welcome the witnesses that are joining us 
here this morning and thank you for taking the time to be here 
today.
    Joining us from the VA is Mr. Willie Clark, who is the 
Deputy Under Secretary for Field Operations. He is accompanied 
by Beth Murphy, the Director of Compensation Services, and by 
Ms. Roberta Lowe, Acting Director of the Debt Management 
Center.
    Testifying on behalf of The American Legion is Mr. David 
Spivey, who is Deputy Director of the National Veterans Affairs 
and Rehabilitation Division.
    Also joining us today is Mr. Shane Liermann, the Assistant 
National Legislative Director for the DAV.
    We also have John Towles, who is the Deputy Director of the 
National Legislative Services for the VFW.
    Welcome to all of you. I want to remind the witnesses that 
your complete written statement will be entered into the 
hearing record.
    Mr. Clark, you are now recognized for 5 minutes.

               STATEMENT OF WILLIE C. CLARK, SR.

    Mr. Clark. Good morning, Chairman Bost, Ranking Member 
Esty, and Members of the Subcommittee. We appreciate the 
opportunity to address the process by which the VA manages 
overpayments that are incurred by veterans who are in receipt 
of disability compensation and pension benefits.
    Joining me today is Beth Murphy, Director of Compensation 
Service, and Roberta Lowe, the Acting Director of VA's Debt 
Management Center.
    Today, I will discuss reasons for overpayments and how to 
minimize them, how VA notifies veterans about them, and steps 
VA has taken to assist veterans with repayments of subsequent 
overpayments. Finally, I will discuss VA's policy regarding 
overpayment collection and the processes by which veterans can 
arrange repayment or waivers of the established overpayments.
    Overpayments are considered improper payments under the 
Improper Payment Elimination and Reduction Act of 2010. VA is 
required by law to retroactively recover the overpayments to 
the extent the veteran or beneficiary was not entitled to 
receive these monetary payments.
    Overpayments may occur when veterans or beneficiaries fail 
to notify VA in a timely manner of certain circumstances or 
life events, such as divorce, incarceration, return to active 
duty, or other loss of dependent status. They may also occur 
when VA gets notified, but is not able to process the claim in 
a timely manner. It is important to note, VA does not establish 
overpayment when VA employees make processing errors. Such 
cases are resolved as administrative errors and are not 
required to be recouped.
    Before an overpayment is established, VA is required by law 
to provide the process notice to the veteran or beneficiary of 
the proposed adjustment in benefits. The beneficiary then has 
60 days to submit evidence and may also request a hearing. 
After the due process period expires, all evidence is reviewed 
and a final decision is made, and a notification letter with 
applicable appeal rights is sent. If there has been an 
overpayment, the beneficiary also receives a letter explaining 
the overpayment and repayment options.
    VBA beneficiary overpayments are serviced by VA's Debt 
Management Center. The DMC contact center counselors work with 
veterans and beneficiaries to resolve overpayments through 
extended payment plans, benefit offsets, waivers, compromises, 
dispute resolution, and hardship refunds.
    Veterans can request a waiver of the overpayment within 180 
days of receiving the overpayment notice from the DMC. Waivers 
received timely are sent to the VBA Committee on Waivers and 
Compromises. The COWC considers elements such as fault, unjust 
enrichment, and financial hardship when deciding the waiver 
request. Completed waiver decisions are then returned to DMC 
for processing.
    VA has taken several steps to minimize overpayments. VA's 
data-matching agreements allow other Federal agencies to 
transmit critical feeds timely and efficiently. Automatic 
notification was implemented in 2016 to notify Guardsmen and 
Reservists they are not entitled to receive drill pay and VA 
disability compensation for the same periods of time. VA 
includes important reminders in benefits decision letters 
regarding the need to inform VA of changes in status or life 
events that impact monthly payment amounts.
    These measures have improved the management and timeliness 
of these adjustments.
    As of April 2017, the National Work Queue is distributing 
non-rating claims based upon capacity across field offices. 
Non-rating claims are worked faster, reducing the time 
administrative adjustments wait to be processed.
    Additionally, VBA appreciates Congress' support in 
providing resources to dedicate staff specifically to the non-
rating workload. VBA has used these resources prudently across 
the Nation to lower the non-rating inventory.
    These changes have improved performance, dropping overall 
non-rating inventory by 23 percent and a 19percent increase in 
the average number of days pending, reducing the drill pay 
claims inventory by 58 percent and improving the timeliness of 
dependency claims by 50 percent.
    In closing, we still have much work to do to remain focused 
on continuing our work to minimize overpayments. VA is 
committed to improving this process and the impact that it has 
on veterans.
    Mr. Chairman, this concludes my statement. We would be 
pleased to respond to questions you or the Ranking Member Esty 
or other Members of the Subcommittee may have.

    [The prepared statement of Mr. Clark appears in the 
Appendix]

    Mr. Bost. Thank you, Mr. Clark.
    Mr. Spivey, you are recognized for five minutes for your 
statement.

                  STATEMENT OF DAVID G. SPIVEY

    Mr. Spivey. Chairman Bost, Ranking Member Esty, and 
distinguished Members of the Subcommittee on Disability and 
Memorial Affairs, on behalf of National Commander Denise H. 
Rohan and The American Legion family, we thank you for the 
opportunity to testify on behalf of The American Legion.
    VA has 12 non-rating resource teams throughout the country 
which handle special cases such as emergency care claims. VA 
has in recent months seen a significant drop in number of 
pending claims and average days processing time by channeling 
dependency work through the non-rating resource teams. The 
American Legion recommends that VA continue to assign a high 
priority to dependency claims, because we see a substantial 
number of preventable overpayments created when VA fails to 
process the loss of one or more dependents on a timely basis.
    VA employees with whom we have spoken are of the opinion 
that, by concentrating dependency claims among these 12 teams, 
gains in efficiency have been achieved.
    With regard to data integration and overpayments, many of 
the complications associated with a veteran incurring a VA-
based debt are caused by the lack of an integrated records 
system within VA. The American Legion recommends that VA 
implement a system that all VA administrations can access for 
the most up-to-date contact information regarding veterans or 
other VA claimants.
    Mr. Chairman, the Legion thinks that a veteran should only 
have to notify one VA facility of an address change. 
Additionally, VA and DoD should integrate through data systems 
to allow for reported changes in dependency or address 
information to be shared seamlessly between the two 
departments. A DoD-VA dependency match would prevent 
overpayments in cases where a military retiree updates his or 
her dependency status with DoD, but does not notify VA.
    Although the National Work Queue has been a controversial 
topic among the Veterans Service Organizations, we have come to 
appreciate some advantages in managing workload to reflect 
changing priorities. If used properly, the National Work Queue 
can be a valuable tool to help VA reduce overpayments resulting 
from delayed processing of dependency claims.
    Currently, delays in VA processing of dependency claims 
result in overpayments, for example, where a divorced veteran 
submits a request to remove the ex-spouse or stepchildren and 
VA fails to take timely action, sometimes for months or even 
years. This can largely be attributed to dependency claims 
being, in our view, under-prioritized vis-a-vis other types of 
claims. More recently, however, dependency claim delays have 
been exacerbated because they are not assigned a high priority. 
In order to prevent these types of overpayments and minimize 
the resulting debt, VA should give dependency claims that 
involve the removal of a dependent a higher priority in the 
National Work Queue.
    Our service officers in the field have been told by VA 
staff who process claims that they avoid processing dependency 
claims due to the low point value assigned by the VA work 
credit system, and the current weight assigned for these claims 
creates a disincentive when trying to meet the daily production 
standard. Therefore, we believe there would be fewer or smaller 
overpayments generated if the 57 VA regional offices were 
adequately staffed and the VA work credit system for dependency 
claims were adjusted to allow for full and proper development.
    Overpayments also occur from delays and adjudication errors 
for veterans on the Fugitive Felon Program list. Under the 
Fugitive Felon Program, VA is required to terminate benefits 
for veterans identified as a ``fugitive felon,'' which is 
defined by statute as ``an alleged commission of a felony or 
issuance of a felony warrant.'' A veteran alleged to have 
committed a misdemeanor act that results in the issuance of a 
misdemeanor warrant does not meet the definition of a fugitive 
felon under this statute.
    Improper development by VA, such as failure to obtain the 
court records, can lead to incorrect assumptions that the 
warrant was issued for a felony and result in improper 
termination of benefits and creation of overpayments.
    Chairman Bost, Ranking Member Esty, and distinguished 
Members, The American Legion appreciates the opportunity to 
testify, and I would be happy to answer any questions you might 
have.
    Thank you.

    [The prepared statement of Mr. Spivey appears in the 
Appendix]

    Mr. Bost. Thank you, Mr. Spivey.
    Mr. Liermann, can you please begin your testimony on behalf 
of the DAV?

                 STATEMENT OF SHANE L. LIERMANN

    Mr. Liermann. Chairman Bost, Ranking Member Esty, and 
Members of the Subcommittee, thank you for inviting DAV to 
testify at today's hearing on VA's management of veterans' 
overpayments.
    Having recently been promoted to DAV's legislative staff, 
this is my first congressional testimony, but not the first 
time I have advocated for veterans.
    While working for DAV at four different VA regional 
offices, the Board of Veterans Appeals, as well as the Debt 
Management Center, I have spent the last 19 years providing 
representation to veterans and their families seeking their 
earned benefits.
    Mr. Chairman, overpayments by VA and the resultant debts 
owed by veterans often cause severe financial hardship for 
veterans and their families. In many cases, the burden of 
repaying these debts can negatively impact a veteran's quality 
of life, put them at risk of homelessness, and affect their 
access to VA health care.
    We understand that in an imperfect claims processing system 
there will be overpayments and that it is a reasonable 
expectation that recipients of such overpayments are required 
to pay that debt. However, we believe that a significant 
portion of overpayments, particularly for dependency changes 
and incarcerated veterans, could be reduced or avoided if the 
VA had better policies, processes, and oversight of their 
workforce.
    For example, the OIG report of September 2007 indicated 
that between 2004 and 2006 an estimated additional $50 million 
in overpayments were created by the VA and were avoidable. 
Another example, the June 2016 OIG report determined that 
between 2008 and 2015, VA's ineffective actions in processing 
incarcerated veteran adjustments resulted in additional 
overpayments totaling more than $100 million, and that another 
$200 million in additional VA-created overpayments could accrue 
from 2016 to 2020 unless VA addresses the root cause.
    As the OIG reports concluded, and we agree, one of the 
biggest causes of overpayments is that VBA does not place 
sufficient priority on processing dependency changes or 
incarceration adjustments, as they consider these non-rating 
claims to be a lower priority when compared to rating claims 
for disability compensation.
    In order to help VA prevent overpayments from being made, 
we offer the following recommendations:
    One, VA must place higher priority or timely controls on 
processing dependency changes and incarceration adjustments. 
While deciding original claims and veterans' claims is 
critical, so is reducing VA's creation of additional debt for 
veterans.
    Two, apply the principle of constructive knowledge. When 
any part of VA has possession of the required evidence to 
change the dependency status or to adjust for incarcerated 
veterans and fails to act timely, VA must waive the amount of 
additional debt created by VA's lack of timely action.
    Three, apply the principle of constructive knowledge 
throughout the entire Federal Government by accepting 
information provided by other Federal agencies such as the IRS, 
Federal Bureau of Prisons, and the Department of Defense.
    Lastly, we recommend automatically applying apportionments 
to veterans' families at the 61st day of incarceration for a 
felony. Under current law, the dependent family of incarcerated 
veterans can apply for an apportionment of the amount withheld 
from the veteran. Making this automatic would lessen hardships 
placed on families and would help to prevent large overpayments 
being made to incarcerated veterans.
    In addition, as we testified to the Subcommittee in 
September, enactment of H.R. 3705, the Veterans Fair Debt 
Notice Act, would help veterans better understand and address 
debts to VA by requiring VA to utilize certified mail and plain 
language in debt collection activities.
    Finally, Mr. Chairman, while overpayments certainly have a 
negative impact on the Federal budget, we are more concerned 
that these debts can sometimes result in catastrophic outcomes 
for financially stressed veterans and their families. We 
believe that the actions outlined by the OIG in our 
recommendation can help to eliminate these discrepancies and 
lessen the burdens that VA overpayments have placed on too many 
veterans and their survivors.
    This concludes my testimony. I would be pleased to answer 
any questions you or Members of the Subcommittee may have.

    [The prepared statement of Mr. Liermann appears in the 
Appendix]

    Mr. Bost. Thank you, Mr. Liermann.
    And, Mr. Towles, you are now recognized for 5 minutes for 
the VFW, please.

                    STATEMENT OF JOHN TOWLES

    Mr. Towles. Thank you. Chairman Bost, Ranking Member Esty, 
and Members of the Subcommittee, on behalf of the men and women 
of the Veterans of Foreign Wars of the United States and its 
Auxiliary, thank you for the opportunity to provide our remarks 
on how the Veterans Benefits Administration can effectively 
prevent and manage overpayment.
    The glacial speed at which the VA moves is nothing new to 
the VFW or the Members of the Subcommittee. Normally, 
bureaucratic redundancies that exist within organizations are 
meant to serve as a protective mechanism, as they can promote 
proper oversight, accountability, and thoroughness. With 
regards to VA, however, especially as it relates to 
overpayments and debt recoupment issues, how they are 
addressed, these processes only make matters worse for some 
veterans due to the time sensitivity of the issue and the 
number of other offices within the VA that must be contacted.
    In the past year, the VFW's National Veterans Service has 
directly assisted more than 200 veterans who have experienced 
issues stemming from overpayments. According to our estimates, 
60 percent of the cases where NVS has intervened has resulted 
in the veteran being granted either partial or full relief from 
the debt from the VA's Debt Management Center.
    In our experience, we have found that overpayments most 
often occur with GI Bill benefits when a veteran's enrollment 
status changes at his or her college. If a student decides that 
they are having a difficult time meeting their educational 
obligations and chooses to switch to part-time, it is the 
responsibility of the school, not the veteran, to notify the 
VA. In the event that the school fails to notify VA of the 
change in status, the veteran will continue to receive full 
living stipend and the school will continue to be paid full-
time for the tuition.
    Once their error is noticed, VA will send an ambiguously-
worded notification of overpayment to the veteran, which also 
provides basic options for repayment. If the veteran is unable 
to contact VA to establish that the debt is erroneous, make a 
repayment in a timely manner, or enter into a payment agreement 
with VA, their debt is then sent to collections and VA will 
garnish payments from their disability compensation benefits 
until the debt is satisfied.
    While the veteran does have the ability to seek relief by 
filing for a waiver, VA's inability to provide the veteran 
clear and concise information regarding their debt in a timely 
manner significantly hinders the veteran's ability to take 
action in order to prevent the VA from taking further action, 
such as negative credit reporting.
    In one recent case, an administrative error by the VA 
triggered a $32,000 overpayment for a California National 
Guardsman. The veteran did everything that he could do on his 
own to rectify the situation, including notifying the VA that 
he was being over-payed. The veteran filed a waiver to have the 
debt discharged; however, the waiver was denied and his 
disability compensation was garnished. It was not until he 
contacted the VFW's One Student Veteran Office, which 
successfully intervened on his behalf, that the debt was 
properly discharged and the monies that were withheld from his 
disability were returned.
    Another case involved a retired military officer whose 
daughter was using his transferred GI Bill benefits. Due to 
misinterpretation of its own regulations, the VA sent 
notification stating that the veteran now owed $100,000 as a 
result of a reduction in rank following his retirement. It was 
not until the VFW contacted VA Education Services and the DMC 
directly and explained to them that despite the reduction in 
rank, he still completed 20 years of qualifying service, and 
that he was not obligated to repay any of the monies.
    To be blunt, there is absolutely no excuse for VA not to 
know its own regulations or how to effectively implement them, 
but yet here we are. Had these veterans not have contacted the 
VFW, there is a significant chance they would still be fighting 
to get this debt cleared. These are just two of the many 
situations in which the VFW utilizes our cadre of highly 
trained and professional service officers to better serve 
veterans, but it is our position that veterans should not be 
erroneously overpaid in the first place.
    The VFW suggests that VA work to streamline the collections 
process by; one, ensuring that the contact information VA is 
using for the veteran is current and up to date; two, 
clarifying the eligible criteria for a waiver; three, outlining 
in easy-to-understand terms the steps needed to request a 
payment plan; and, four, repealing the need for a veteran to 
submit a financial status report in the event that the debt 
cannot be repaid over the course of a year.
    Additionally, the VFW feels as though VA should take the 
additional steps regarding the notification and recoupment 
process: One, VA must ensure that any and all recoupment 
actions are suspended once the veteran files an appeal with the 
DMC, as per the regulations; two, VA must ensure that if the 
overpayment is found to be erroneous, that any damaging 
information sent to the credit reporting bureaus be corrected 
immediately; three, in the event that a veteran contacts DMC of 
an overpayment, the veteran should not be held liable for the 
repayment after such notification is made. There is absolutely 
no excuse for VA not fixing the problem as soon as it is 
notified. Four, VA must ensure that regional office and DMC 
staff are trained to conduct proper due diligence, and are 
better trained in VA's debt management and collections 
procedures and protocols. Finally, if VA is going to set a 
timeline for the veteran to prove that his or her overpayment 
is erroneous, the VA should send as much pertinent information 
as possible regarding the nature of the debt to the veteran, 
along with the notification letter.
    Chairman Bost, Ranking Member Esty, and Members of the 
Subcommittee, this concludes my testimony. I look forward to 
answering any questions that you may have.
    Thank you.

    [The prepared statement of Mr. Towles appears in the 
Appendix]

    Mr. Bost. Thank you, Mr. Towles. And, once again, thank you 
all for being here, and I'm going to go ahead and start opening 
with questions.
    Mr. Spivey, can you please explain, because when you gave 
in your testimony that you recommend that the VA allows 
veterans to remove their benefits through e-benefits, can you 
expand on that, and why do you think it is that they need to do 
that?
    Mr. Spivey. Thank you for the question, Chairman Bost.
    We, of course, as veterans' advocates, want the world to be 
as simple as possible for our Nation's heroes; therefore, the 
system should be as user-friendly as we can possibly make it. 
Of course, this does play into the topic of overpayments, 
because where we make it difficult for veterans to notify VA of 
the loss of a dependent, the longer delay that causes, the 
greater the overpayment.
    So, for these reasons, we think that modifying e-benefits 
to allow removal of a dependent would be a very strong step 
forward.
    Mr. Bost. Mr. Clark, do we currently allow the removal of 
benefits through e-benefits?
    Mr. Clark. Sir, I will have to--Chairman Bost, I would have 
to take that for the record, but we do allow changes to be made 
within e-benefits. In fact, over 140 benefit updates were done 
through e-benefits and I would have to check to see if the 
removal of a dependency, but I know adding a dependent and 
several others, divorces, that we can do.
    So I would have to specifically take that for the record.
    Mr. Bost. Okay, and I will take that answer for the record. 
But if the answer is no, I would like to know why not, because 
I think in today's world there is no reason why, I mean, almost 
everybody gets on the computer and can program and work with 
any benefit and/or any bank account that they receive.
    And maybe the VSOs, do you know right now, do they have the 
opportunity to do that?
    Mr. Liermann. Actually, we looked into this prior to the 
hearing, Chairman, and the VA does not currently allow you to 
remove a dependent in e-benefits. You can make the additions, 
but since the e-benefits and adding a dependency is what they 
refer to as rules-based, they can add them, however, but in 
order to remove a dependent usually requires more information 
such as divorce decrees, death certificates, and that is not 
part of the rules-based environment. So, currently, they do not 
allow them to remove them through e-benefits.
    Mr. Bost. So maybe then what we need to do is look into the 
possibility of a rules change that would allow that to occur 
and, if you need more information, then provide the slots 
necessary in the program and/or a follow-up note that those 
will be sent. So, just a thought.
    Mr. Clark, next question is, the taxpayers have an 
interest, an investment of more than $1 billion in the new 
technology that I spoke about in my opening statement. Why are 
we missing the boat and how is it that we went from $350 
million, we put the new system in place, now we have got $700 
million in overpayments on 2017, and how is this happening? Do 
you have a clue?
    Mr. Clark. Chairman Bost, we have completed more non- 
rating claims in the last 3 years than we ever have in our 
history and it is as a result of the technology that Congress 
has given us the resources, IT resources, and employees, over 
600 employees to process more claims. And as a result of the 
rules-based processing, I mentioned that adding a dependent, 
and I will take for the record, whether the removal of a 
dependent, if we could do, and how long it would take us to get 
an update to the system to get that done, but all of those have 
allowed us to run our inventory from which was at over 270,000 
3 years ago to less than 80,000.
    So, VBMS, the National Work Queue, these are IT systems 
that we have used and employed to allow us to produce more 
work. And as a result of producing more work, what has happened 
is, it has allowed us to get to claims faster and when we do 
that, it will create more overpayments. That is one of the 
reasons we are doing that.
    Mr. Bost. Okay. I am having trouble following that line of 
logic, okay. You have got a new system and the new system is so 
good that you are having overpayments?
    Mr. Clark. Well, what it is allowing us to do is to get to 
the back--the inventory of work that we have in our system.
    Mr. Bost. So, those overpayments were occurring before; 
they just weren't--we were just not catching them?
    Mr. Clark. Well, sir, what was happening is because of our 
inefficiencies. And we are getting better. We are
    getting better. But because it took us a while and these 
cases lagged, then it created more overpayments and as a result 
of our being able to get to this work quicker, then it has 
caused more overpayments.
    But here is one of the things that we have done--several of 
the things that we have done, and I will turn it over to Ms. 
Lowe after this to speak to this, we are certainly empathetic 
to the individuals that have received these overpayments, but 
we have a responsibility to--Congress mandates that we recoup 
these monies--but we need to be sure that we are clear and 
concise in our communications with our beneficiaries and make 
sure that when we do communicate, we explain the reason for the 
overpayment and then we offer up options. And we have a myriad 
of options that we can do that when we do contact the 
beneficiaries.
    So, we are excited about that. We do realize that we still 
have a long way to go, but we--thanks to the IT resources and 
the employees that you have given us, we have been able to work 
more of these claims than we have in our history.
    Ms. Lowe, would you like to--
    Mr. Bost. I am way over on my time and so I am going to 
turn it over to Ms. Esty and see if she wants to go ahead and 
go that way.
    Ms. Esty. Thank you very much. I will let you finish that 
and pick up with my questions. Thank you.
    Ms. Lowe. Yes. The Debt Management Center has made several 
improvements since August. Now, for a compensation and pension 
debt, we automatically put that on a 12-month payment plan. We 
do not take the entire benefit check from veterans any longer.
    We have extended our hours of our contact center from--we 
are now open from 6:30 in the morning to 8:00 p.m. Monday 
through Friday; 7:00 a.m. to 3:30 p.m. on Saturday; and we are 
open on days like Columbus Day and Veterans Day so our veterans 
can reach us.
    We have also worked recently to soften our collection 
letters and make them clearer and more concise for our 
veterans. So, we are very pleased with those improvements.
    Ms. Esty. Thank you very much. And I want to thank all of 
you for your testimony, again, in the spirit of trying to 
reduce the number of overpayments and get them resolved as 
quickly as possible. I know everybody at the table and 
everybody here on the dais shares that commitment.
    I wanted to pick up with the question about, dependencies 
and incarceration, the two main issues that we are seeing a lot 
of overpayments. According to what I have on record, Social 
Security and IRS have standing arrangements, matching 
arrangements with VBA, but that is not the case for DOJ or the 
Bureau of Prisons. If that is not the case, why not, and how 
can we change that?
    Mr. Clark. I will defer to Ms. Murphy to speak to that.
    Ms. Murphy. Yes, good morning. We do work and have 
computer-matching agreements over the years with Bureau of 
Prisons and with IRS to get state information about 
incarceration, so those efforts have been ongoing and we do use 
that information as input so we can go determine whether these 
veterans are incarcerated and have been convicted and then we 
send the due process notice and take it from there.
    In the due process notice, we do remind them that the 
families are able to apply for the apportionments, so we do 
make those reminders, and also that once they are released from 
the facility that they should come back to us, so we can 
reinstate their benefits. So we do include reminders along the 
way. We do share information with bureau of--with the 
Department of Justice to get their Bureau of Prison 
information.
    Ms. Esty. Well, I think we are hearing, however, some 
testimony, suggesting that that perhaps could be better and so 
if you need authority from us or resources, you should let us 
know what it is--
    Ms. Murphy. Certainly.
    Ms. Esty [continued]. --that would actually make that even 
more effective than that--
    Ms. Murphy. Okay.
    Ms. Esty [continued]. --and reduce the time lag, which is 
part of what we are looking at.
    Ms. Murphy. Yes, ma'am.
    Ms. Esty. I want to return to, actually, I think it was Mr. 
Spivey's point. Several of you raised the point that if you 
notify any part of VA about a change in address, the entire 
agency should be aware of that.
    So, is it the case now and if it is not, why shouldn't it 
be the case, that if a veteran calls or has a medical 
appointment, VA is required to verify the contact information. 
Why do we not, at that time, have the veteran on the phone just 
go through and click through every single box, every portion of 
the VA that ought to be receive that same notice?
    Could we do that? What would be involved in doing that 
while you have already got somebody providing notice at that 
time?
    Ms. Murphy. So, if I could just continue? I agree with you 
that that is the most veteran-centric way and that is something 
that I think we are all interested in doing. I am not the 
technician on the IT side and I am aware that there are efforts 
that have been underway over the past couple of years to get to 
that point where we could have one central place where the, you 
know, official address for the veteran is housed. I am not 
aware of what the current status of that effort is. We had have 
to check on that, but I know it is something that we think is 
the right thing to do for veterans and it would be something 
that we would have to continue to get to.
    Ms. Esty. We had a discussion, several of us earlier in the 
week, about this. Do we have--Ms. Lowe, I think this is for 
you. Looking at the letters that are sent out now and I think 
about the widow in Waterbury, Connecticut who gets something 
from Debt Collection Service; that is a terrifying phrase right 
there and it feels offensive and it is not their fault. They--
as far as they knew, they notified and they were not aware of 
the overpayment.
    Is there a legal reason why it needs to be referred to as 
debt? Can we change it to overpayment or payment management 
center or something else? Because these terms matter. We are 
talking about our veterans, so I would like to find ways for 
both, clarity, but respect in these letters that meets the 
letter of the law, but also the spirit with which we should be 
handling these unintentional overpayments, because that is what 
we are talking about, unintentional overpayments.
    Ms. Lowe. Yes, we checked with our general counsel and 
there is flexibility within the statutes to use terms other 
than debt. Claim is an example of what they used. So we will 
look into that and see about removing the word debt from our 
letters and things like that.
    Ms. Esty. Thank you. I see I am over time, but we would 
love to, to work with you, because language matters to people 
and I think it will feel different if those letters come out in 
a way that encourages, reminds them of our service, apologies 
that there is this delay and ask for their assistance in 
resolving it. Thank you very much.
    Mr. Bost. Thank you, Ms. Esty.
    General Bergman, you are recognized.
    Mr. Bergman. Thank you, Chairman Bost.
    I don't care who answers this question; you can all answer 
or none. What percentage of the veterans that are applying for 
benefits and not reporting changes are trying to game the 
system to their advantage? Probably a very small percentage, 
right? You are absolutely right. And I agree with you.
    The point is, we are putting our veterans and their 
families in a situation where our processes and our procedures 
don't allow them to be part of the solution. When you think 
about the technology that we have today, what percentage of it 
we are utilizing and moving forward on, we are behind. We are 
way behind.
    So, within the VA--and I assume, Mr. Clark, you are the 
senior--are you the senior representative from VA here today?
    Mr. Clark. Yes, sir, I am.
    Mr. Bergman. Okay. Good. I will just direct my questions to 
you and you can do like you have done before, defer them if you 
don't want to answer them. But the point is, what, with what is 
going on within VBA, that actually incentivizes your people 
working within VBA to make the change necessary when they see a 
need for change; for example, you cannot, when I heard say, 
remove, a dependent, right? You can add a dependent through 
the, know, the e-system, but you can't remove one.
    Have we done anything--in this case, the we is you, in VA 
to look at, maybe you can't eliminate every situation where it 
is necessary for someone to remove a dependent; you need some 
paperwork. Have we spent any time at all looking at those other 
things that we could allow a veteran to remove a dependent 
that, you know, the paperwork could be as simple as a photo 
copy--something? We do everything with our cell phones now. We 
could download it, the image right into the system.
    Are you doing anything?
    Mr. Clark. Yes, sir, we are. Again, I want to reiterate 
that we are trying to get better. We are processing--
    Mr. Bergman. Do you have a plan to get better? It is not 
enough to try. You know, to try to complete an operation or a 
mission is not enough. You have to have a plan to where you are 
going. You have to have a--you know, you plan it, you execute 
it, you adjust in the middle of the operation, if you will, and 
then you do an after-action to make sure that you improve from 
it.
    Is there--you might call it a POA&M, a plan of action and 
milestones--does VBA have such a vision, a document, a 
strategy, a mission statement, whatever it is, to do that?
    Mr. Clark. We have a strategy and when we have suggestions 
and we have ideas or--
    Mr. Bergman. But is it being updated as you do--as you try 
something? Does someone say, Okay, we have tried this now for 6 
months. Has it worked? Is there a benefit?
    Mr. Clark. Well, sir, again, I am going to take back for 
the record, you know, operating on the assumption that we 
cannot, at least, our BPS is not--IT is not able to remove a 
dependent, but each of our regional offices have employees 
dedicated to do this work and Congress has authorized us over 
600 FTEs specifically for non-rating claims. So this work is 
being done.
    Mr. Bergman. So, if we, all of our Members here of the 
Committee, if we went back to our districts and wanted to go to 
one of these centers where these folks were working--you maybe 
not all of us may not have one in our district, but some of us 
will--could we walk in there and see how it works and interact 
with these people; get an hour with them or half hour, 
whatever, to talk about what has been implemented, what has 
worked, what hasn't worked, what motivation they have to make 
it better tomorrow?
    Mr. Clark. Yes, sir. We invite Members of Congress and 
staffers to visit our regional offices. We get visits 
regularly.
    Mr. Bergman. Well, I will tell you what. I see my time is 
running out. I would ask for you, VBA, to provide a list to the 
Committee of where these physical places are where people are 
working to try to do this, because if there is--I don't care if 
it is in my district or not, my district is--I go through a lot 
of other districts just to get to my district. I would love to 
stop in and see one.
    I yield back.
    Mr. Bost. Thank you, Mr. Bergman.
    And from the chair, I am going to ask that if you say the 
strategy is in place, could you get us a flowchart of the 
strategy of what you have got in place and how it is that you 
are going to implement it, so that we know where we are headed 
with this, okay.
    With that, Ms. Brownley?
    Ms. Brownley. Thank you, Mr. Chairman.
    I just wanted to go back to the notification letters and I 
think it was stated that you have made some adjustments to the 
letters that are a little bit more user friendly. I am not 
hearing that from the veteran population that that is, indeed, 
the case. So, I certainly would like to see, you know, the 
previous letter and the improved letter so that I can take a 
look at it and make my own assessment of whether it is more 
user friendly.
    But it does seem to me that the letters kind of come to the 
veterans and they are accused and they are guilty. And it 
doesn't feel very good to the veteran because the veteran is 
looking to the VA for help and assistance, not to be accused 
and found guilty by a letter and a letter that I am still 
hearing is still very sort of legalese and not very user 
friendly so the veteran can really understand what is going on.
    In addition to that, wondering whether the letter also 
includes what the veteran's rights are and how to adjudicate 
and/or appeal to what they may have been accused of. And are 
you making that very clear in terms of what their rights are?
    Ms. Lowe. Yes, we do send out up to 3 letters notifying 
veterans of that and our counselors at the Debt Management 
Center provide the due process and when they call in or email 
us, we provide them--go over their options on how to file a 
waiver, how to file an appeal, how to request an audit, and all 
of those different things. So, yes, we do provide that and all 
of those different things.
    So, yes, we do provide that and we would be happy to 
provide you the former and the current letters that--from the 
Debt Management Center. And I believe VBA has their 
notification letters. There is a two-step process. VBA 
establishes the debt and then once it is transferred to the 
Debt Management Center, we provide the veteran their due 
process.
    Ms. Brownley. And what happens when the letter goes to a 
wrong address?
    Ms. Lowe. The post office returns that letter to the Debt 
Management Center and we, then, research to see if there are 
any newer addresses in like the VHA system or the post office 
has a forwarding address that we can send the letter to. If 
that doesn't work and we are unsuccessful, we go to LexisNexis 
and request to see whether they have an updated address for the 
veteran.
    Ms. Brownley. So, Mr. Liermann, you said it was your first 
time testifying today. You did a very fine job and gave very 
concrete recommendations, I think, in your testimony, so thank 
you for that.
    One of your recommendations, I think you called it a 
principle of constructive knowledge, basically, communicating 
internally within the VA. I certainly had an issue in my 
district with a veteran who had gotten notice that they had a 
debt and it was with regards to the G.I. Bill and it was the 
VA's fault. He had gone to school back in the '70s and then 
applied for the G.I. Bill in the 2000s and then determined he 
went to school, he utilized the benefits and then was 
determined that all of that money had to be repaid because he 
had gotten it.
    So, the VA had authorized these payments to him. And in 
trying to resolve this in our casework at home, there was one 
department, the Debt Management Center that said, No, 
absolutely, you are wrong; you owe us the money. The regional 
office said, No, you are right; we did wrong. We need to 
rectify the situation.
    So, it was clear to me that there wasn't really any clear 
communication going on between the two departments. So, I guess 
my question is, you know, what are you doing to make 
improvements there?
    Mr. Clark. We have begun better communication with the Debt 
Management Center. To your point, our letters, we have realized 
that both, our letters at VBA and the letters from the DMC were 
not clear, they weren't concise, and they weren't 
compassionate. So, Ms. Lowe has spoken about our efforts to 
revise those letters and add additional options so we have a 
gentler, kinder approach that when we find overpayments, that 
we deal with those overpayments, because we know that they are 
traumatic.
    Now, Congress expects us to recoup monies and we will do 
that, but we have to do a better job. But we are refining those 
letters. We continue to do that and we are communicating now 
with the DMC. Because the DMC just collects monies that the VBA 
has said that are overpaid. So, once our Committee on Waivers 
and Compromises does the appropriate investigation and taking a 
look, and establishes the proper amount of the overpayment, 
then we submit data over to the Debt Management Center and then 
they effectuate collection.
    So, we--our communication has greatly improved and this is 
why we are seeing, you know, we are seeing a lot more 
collections go out, or at least overpayments being worked. But 
they are working expeditiously.
    Ms. Brownley. And when did this improvement start?
    Mr. Clark. We started this year. This is current that I am 
speaking about.
    Ms. Brownley. Thank you. My time is up. I yield back.
    Mr. Bost. Thank you, Ms. Brownley.
    Ms. Radewagen, you are recognized.
    Ms. Radewagen. Thank you, Mr. Chairman.
    I, too, want to add my welcome to the panel today. Thank 
you very much for being here.
    My question is for Secretary Clark. Does the VA have 
statistics on where veterans who are receiving these incorrect 
payments live and if so, how do the numbers for the U.S. 
territories and remote or rural areas compare to the rest of 
the country?
    Mr. Clark. Yes, we do have numbers, but I don't necessarily 
have numbers for that region of the world, but we will 
certainly--I will take that for the record and get those 
numbers to you.
    Ms. Radewagen. Thank you very much.
    Mr. Chairman, I yield back.
    Mr. Bost. Mr. Coffman?
    Mr. Coffman. Thank you, Mr. Chairman, and thank you all for 
your testimony today.
    What would you say--I am going to go to the VA first and 
then go to the VSOs--what is the biggest category in terms of 
overpayment?
    Mr. Clark. The biggest category, drill pay, then 
dependency; those are the top two, sir.
    Mr. Coffman. And define drill pay, again.
    Mr. Clark. Drill pay is an overpayment developed--the law 
does not allow the concurrent receipt of drill pay and 
compensation simultaneously. So, once we are alerted about 
those concurrent payments, then we go back to the claimant to 
recoup these monies.
    Mr. Coffman. And how long, in the situation of drill pay, 
how long does that usually--how long does--so, if something 
retires and then they are drawing disability and they are 
drawing their retirement, but they don't reach the threshold in 
terms of disability to be able to draw it, how long does that 
usually go before you are able to catch it?
    Mr. Clark. Okay. And I will turn that over to Ms. Murphy, 
please.
    Ms. Murphy. Good morning. So, regarding drill pay, these 
are folks who are doing weekend drills or their two weeks 
during the year. And I think this is one category since it is--
    Mr. Coffman. Okay.
    Ms. Murphy [continued]. --such a large source of 
overpayments, where we have done some of the most and some of 
the best work recently. So, what used to happen was we had 
focused on the rating claims and we were backed up a bit on the 
drill pay estimates, over several years--
    Mr. Coffman. Uh-huh.
    Ms. Murphy [continued]. --so that when we did get to these, 
we were recouping large amounts from folks and we just took it 
out of the next check. So, you wouldn't--you just wouldn't get 
a check for several months until those monies were recouped.
    This year, starting in '16 and now in '17, we are doing a 
couple of things that are very different. Number one is we are 
using automation so that we send the letters out, the due 
process letters up front, and then we give the 60-day due 
process period. If we don't hear back or we don't get any 
different information, we, then, are using automation to make 
those adjustments. So this last time, we did that--and we do 
this on an annual basis right now--we had about 100,000 
adjustments that needed to happen.
    Mr. Coffman. Wow.
    Ms. Murphy. We were able to automate 86,000 of those. So 
they were very timely and also, that is 86,000 actions that our 
employees didn't have to do on drill pay and they could go do 
something else.
    Mr. Coffman. Okay. So, is it--okay.
    Ms. Murphy. So, it is the use of automation and timeliness 
improvements and we are working with DoD to aim to be a monthly 
process.
    Mr. Coffman. Okay. So, if I understand it right, then, it 
is not really retirees, so to speak, where it could occur, but 
it is so many--
    Ms. Murphy. Guard and Reserves.
    Mr. Coffman [continued]. --on active duty or they are in 
the Guard and Reserve and they are deployed--
    Ms. Murphy. Exactly.
    Mr. Coffman [continued]. --then they--and then they apply 
for disability, right?
    Ms. Murphy. Sure.
    Mr. Coffman. And then at some latter point, they receive 
it, but they are also a drilling guard and reservist--
    Ms. Murphy. Exactly.
    Mr. Coffman [continued]. --and the issue is that you cannot 
do both; am I correct on that point?
    Ms. Murphy. You are correct.
    Mr. Coffman. But, often is it--I guess you can catch it 
early, but if you don't catch it early, given what guard and 
reservists are paid in a non-deployed status, it would take a 
very long time to make it up and generally they don't have an 
obligation to--they have an obligation for the inactive status, 
but not an active guard or reservists, if I am correct on that?
    Ms. Murphy. So, now, what we are doing is we get, 
currently, an annual feed of this information. So we make one 
big adjustment annually and then we report that adjustment to 
the Debt Management Center. In the past, they would take, as I 
said, the whole subsequent checks. Now, they are doing an 
automatically doing a 12-month repayment plan to stretch that 
out and minimize the impact to the veteran and family.
    Mr. Coffman. Are they--I suppose there are probably 
instances by virtue of getting a disability assessment, 
disqualifies them from being in the Guard and Reserves.
    Ms. Murphy. I think that is individualized and it depends 
on their, you know, their particular situation.
    Mr. Coffman. Sure.
    Ms. Murphy. We just look at it from the standpoint of 
benefits they are entitled to.
    Mr. Coffman. Okay.
    Ms. Murphy. Compensation benefits.
    Mr. Coffman. Okay. Does VSOs have any quick comment on that 
particular issue?
    Okay. Thank you, Mr. Chairman, I yield back.
    Mr. Bost. All right. First off, thank you once again, for 
being here. I am going to turn it over to Ms. Esty for any 
closing remarks or any other things that might come up.
    Ms. Esty. Thank you very much, Mr. Chairman. I thank all of 
you for joining us here today. I think we flagged a number of 
issues for better improvement and I hope you will come back to 
us with both, suggestions from the VSOs, but also requests from 
the VA about what needs to happen to align the incentives 
properly. We saw that if you do not get a point system for 
resolving these claims, you are right, if you are under 
pressure, you are going to go, as a worker, you are going to go 
where you get incentivized. So we need to change that.
    What needs to happen to move from a yearly adjustment to a 
monthly adjustment for this pay? We know that is a big issue, 
clearly. I think we would like to, within the next few weeks, 
get proposals back on the two big issues: on the pay for Guard 
and Reserves and what we are beginning to do about 
dependencies. And concrete, you heard from all of us, we can't 
concrete action.
    And if you need change in regulation, if you need change in 
legislation, if you need change in resources, you need to let 
us know, and it needs to happen soon because, in fact, it is 
wasting time and it is wasting resources. And as Ms. Brownley 
pointed out, it is offensive to our veterans who, themselves, 
are trying to comply with the law and they think they have. And 
so, again, we need further assistance from you in drilling down 
on the specifics soon and then charge us with any action that 
we need to take to make this happen.
    And I know you are committed to this and I think we all do 
want to see these letters before they get finalized. We have a 
lot of interest in these notice letters and, again, trying to 
figure out how we deal with the populations who do not--the 
homeless population, we did not talk about that--you are 
suggestions, what you do with the homeless population. None of 
us actually asked this--I know in my office we discussed this--
how you propose to deal with homeless veterans and what is the 
procedure right now? And what can we do about that? Is there--
are there specific issues we could address there?
    Again, lots of good work that has been done to improve 
things, but we have got a long way to go and I appreciate your 
assistance in joining us in those endeavors.
    And, again, thank you, Mr. Chairman, and I yield back.
    Mr. Bost. And I want to thank you, but I--you know, I want 
to make this quick statement. We want to keep working to try to 
cure this problem. Now, many of us, when we were enlisted 
remember what it was like. I was one of the lucky ones. My 
first time being out of boot camp and reporting to 29 Palms was 
when they first started paying with paychecks and not out of 
the cash box; that was my very first paycheck.
    With that system and being with the great bureaucracies 
that we deal with, as a PFC with a young wife and a baby on the 
way, I got that great wonderful thing whenever I went to 
collect my paycheck and it--nope, NPD, no pay due; okay, that 
is the way they used to do that.
    And experiencing that on the enlisted side, very young in 
my time as a marine, and these veterans now, here they are at 
their latter part of life and all of a sudden, we are still 
doing that to them. We got to try to fix that as fast as 
possible, because there is not anything more rude than trying 
to make ends meet and all of a sudden realize that there is a 
problem and that your own government is coming back saying, we 
need some money back.
    So, I do want to thank all of you for being here today and 
I asked at the beginning of the hearing that the complete 
written statements of today's witnesses will be entered into 
the record.
    I ask unanimous consent that the statements of record for 
the National Association of County Veterans Service Officers 
plans to submit within 5 legislative days be included in the 
record.
    Hearing no objection, so ordered.
    [The statement of National Association of County Veterans 
Service Officers appears on p. ]
    Mr. Bost. I also ask unanimous consent that all Members 
have 5 legislative days to revise and extend their remarks and 
include extensive, extraneous material.
    Hearing no objection, so ordered. This hearing is 
adjourned.

    [Whereupon, at 11:33 a.m., the Subcommittee was adjourned.]




                            A P P E N D I X

                              ----------                              

               Prepared Statement of Willie C. Clark, Sr.
    Good afternoon, Chairman Bost, Ranking Member Esty, and Members of 
the Subcommittee. We appreciate the opportunity to address the process 
by which VA manages overpayments that are incurred by Veterans who are 
in receipt of disability compensation and pension benefits. Joining me 
today is Beth Murphy, Executive Director of Compensation Service, and 
Roberta Lowe, Acting Director of VA's Debt Management Center (DMC).
    Today, I will discuss reasons for overpayments and how to minimize 
them, how VA notifies Veterans about them, and steps VA is taking to 
assist Veterans with repayments of subsequent debts. Finally, I will 
discuss VA's policy regarding debt collection and the processes by 
which Veterans can arrange repayment or waivers of the established 
debts.

Reasons for Overpayments

    In general, an overpayment of VA benefits is identified when VA 
finds a Veteran or other beneficiary has received monetary payment for 
benefits to which he or she was not entitled. In 2016, almost 238,000 
Veterans received overpayments. Overpayments are considered improper 
payments under the Improper Payments Elimination and Recovery Act of 
2010. VA is required by law to retroactively recover the overpayments 
to the extent the Veteran or beneficiary was not entitled to receive 
this money.
    Overpayments may occur when Veterans or beneficiaries, receiving 
disability compensation or pension benefits, fail to notify VA in a 
timely manner of certain circumstances or life events such as divorce, 
incarceration, return to active duty, or other loss of dependent 
status. They may also occur when Veterans or beneficiaries advise VA of 
changes, but we are unable to process the claim in a timely manner. It 
is important to note VA does not establish overpayments when 
compensation or pension benefits were erroneously awarded due to claims 
processing errors by VA employees.

Process of Notifying Beneficiaries of Overpayments

    Before VA reduces benefits as a means of recouping overpayments, we 
are required by law to provide due process notice to the Veteran or 
beneficiary, advising him or her of the proposed adjustment in 
benefits. The beneficiary then has 60 days to submit evidence 
explaining why VA should not make the proposed adjustment. Veterans or 
beneficiaries may also request a predetermination hearing to provide 
information pertaining to the proposed action. After the due process 
period expires, VA reviews all evidence and makes a final decision, 
which may include reducing or terminating an award and/or creating a 
debt. VA notifies the Veteran or beneficiary of the decision and the 
date of benefit reduction or termination, if applicable, and provides 
applicable appeal rights. If VA determines there has been an 
overpayment, the beneficiary also receives a letter explaining the debt 
owed and repayment options.

Steps VA is Taking to Prevent Overpayments

    VA employs a number of measures to minimize overpayments. First, 
VBA includes important reminders in benefit decision notification 
letters about the need for Veterans and beneficiaries to inform VA 
immediately of issues or life events that could impact monthly payment 
amounts.
    Second, VA has data matching agreements with the Social Security 
Administration, Federal Bureau of Prisons, and other Federal agencies 
to minimize individuals receiving benefits that are not statutorily 
permissible. VA also works with these agencies to ensure critical data 
feeds, such as dates of death, incarceration, etc., are transmitted to 
VA as timely and efficiently as possible.
    Third, VBA is deploying technological solutions and leveraging 
automation to reduce overpayments. For example, drill pay from the 
Department of Defense (DoD) has been a major contributor to the number 
of VA overpayments. By law, Servicemembers are not entitled to receive 
both drill pay and VA disability compensation for the same periods of 
time. In 2016, VA automated the notification process required when 
Guardsmen and Reservists receiving VA compensation actively drill and 
receive pay. VA's new automation process, through collaboration with 
DoD, improves VA's management of drill pay adjustments.
    These administrative adjustments are part of VBA's non-rating 
workload. During fiscal year 2017, VBA made several changes to allow 
for a more balanced approach to the overall workload. VBA appreciates 
Congress' support in providing resources to staff specific teams across 
the Nation dedicated to the non-rating workload, and we have prudently 
used these additional resources to lower the non-rating claims 
inventory. As of April, the National Work Queue is distributing non-
rating claims, which allows this work to be moved efficiently based on 
capacity. Additionally, VBA has adapted a strategic approach to how we 
use our claims processing overtime resources. We now target specific 
claims and steps within the claims process to ensure we direct overtime 
where it will produce the most benefit. These enhancements have led to 
improvements in performance. Overall non-rating inventory dropped by 
approximately 23 percent with a 19 percent decrease in the average 
number of days pending for these claims. The inventory of Dependency 
claims decreased by approximately 26 percent with a 50 percent 
improvement in timeliness, and the inventory of drill pay claims 
dropped by 58 percent. We still have work to do and will remain focused 
on continuing to implement appropriate preventative measures.

VA's Policy Regarding Debt Collection and Waivers

    VA's debt collection guidelines and practices are designed to 
balance strong financial management with commitment to compassion and 
Veteran advocacy. VA navigates the debt collection process in a manner 
that provides the best service to our Veterans and beneficiaries and 
complies with Federal debt collection statutes and policy. VBA 
beneficiary debts are serviced by VA's DMC. DMC provides a centralized 
debt collection program while also offering all Federal collection 
tools provided by the Department of the Treasury. Most importantly, DMC 
contact center counselors work with Veterans and beneficiaries to 
resolve their debts through extended payment plans, benefit offsets, 
waivers, compromises, dispute resolution, and hardship refunds.
    A Veteran can request a waiver of his/her debt within 180 days of 
receiving a debt notice. If the waiver request is not timely, the 
debtor receives appeal rights. If received timely, the waiver request 
goes to the VBA Committee on Waivers and Compromises (COWC) at the 
Regional Offices in St. Paul, MN, or Milwaukee, WI. The COWC considers 
elements such as fault, unjust enrichment, and financial hardship when 
deciding to grant, partially grant, or deny a waiver request following 
the principles of equity and good conscience.
    VA will not pursue payment when it would be unfair, unconscionable, 
or unjust. However, the COWC will automatically deny a waiver if there 
is any indication of fraud, misrepresentation, or bad faith. If the 
waiver is not approved, the debtor receives applicable appeal rights. 
Completed waiver decisions are returned to the DMC for processing. If 
denied, the debt collection process resumes. If the waiver is granted, 
collection action is terminated, and any collections received are 
refunded.
    There is also a process by which a debtor may submit a compromise 
offer for acceptance of a partial payment in settlement and full 
satisfaction of the offeror's indebtedness.

Conclusion

    In closing, VA is committed to refining existing processes and 
implementing new ways to minimize overpayments and the impact of the 
overall process on Veterans. This includes leveraging technology, 
working more collaboratively with other agencies and partners, and 
engaging with Veterans and other beneficiaries to remain apprised of 
significant events in their lives.
    Mr. Chairman, this concludes my statement. We would be pleased to 
respond to questions you or other Members may have.

                                 
                 Prepared Statement of David G. Spivey
    Chairman Bost, Ranking Member Esty, and distinguished members of 
the Subcommittee on Disability and Memorial Affairs, on behalf of 
Denise H. Rohan, National Commander of The American Legion, the 
country's largest patriotic wartime service organization for veterans, 
comprising over 2 million members and serving every man and woman who 
has worn the uniform for this country; we thank you for the opportunity 
to testify on the topic of ``examining how VBA can effectively prevent 
and manage overpayments''.
    A benefit debt through the Department of Veteran Affairs (VA) can 
be generated through a number of actions, such as a change in income or 
net worth, a change in dependency status, receipt of retired pay, a 
drop in course load or withdrawal from school while in receipt of 
benefits under the GI Bill, failure to obtain the release of home loan 
liability, hospitalization, treatment co-payments, and double payments 
of drill pay and VA benefits pay to members of the Reserves and 
National Guard.
    Once an overpayment has been identified, the VA will initiate the 
debt collection process. The American Legion has worked extensively on 
matters concerning VA debt management and, recognizing the importance 
of these issues, has had a dedicated representative at the Debt 
Management Center (DMC) in Saint Paul, MN since 1978 for the specific 
purpose of assisting veterans and other VA claimants who fall into debt 
with VA. With nearly 40 years of collective service, the American 
Legion representatives working at the DMC have been instrumental in 
assisting thousands of veterans and surviving spouses avoid financial 
hardship by filing waiver requests, negotiating the terms of offsets of 
ongoing VA benefits, establishing reasonable monthly payment plans to 
mitigate financial burdens, and assisting in ending erroneous 
collection actions.
    Benefit debt is the most common type of debt affecting veterans, 
which is why The American Legion's primary focus in our debt collection 
management office is assisting veterans affected by overpayments of 
benefits and addressing how to best mitigate and/or repay the debt. Of 
the millions of dollars in benefits awarded to veterans by the VA every 
year, thousands of veterans are paid incorrect amounts. When these 
incorrect payments are more than the amount due to a veteran, debt is 
incurred and collection actions will ultimately be triggered.
    Many of the complications associated with a veteran incurring a VA-
based debt are caused by the lack of an integrated records system 
within VA. The American Legion recommends that VA implement a system 
that all VA administrations can access for the most up-to-date 
information regarding contact information for a veteran or other VA 
claimant. Through American Legion Resolution No. 44, we support VA in 
creating and implementing an updated and modernized integrated system. 
\1\ The following section will address different types of overpayments 
and how these overpayments are dealt with inside the VA.
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    \1\ The American Legion Resolution No. 44 (2016): Department of 
Veterans Affairs Rural Healthcare Program

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OVERPAYMENTS DUE TO DELAYED PROCESSING OF DEPENDENCY CLAIMS

    Delays in VA processing EP130 dependency claims result in 
overpayments where a divorced veteran submits an updated 21-686c form 
to remove the ex-spouse or step-children, and the Regional Office (RO) 
doesn't take action for months or even years. This can largely be 
attributed to claims being assigned by the National Work Queue (NWQ) to 
be worked in order based on date of claim. In order to prevent and 
minimize overpayments from accruing, VA should give EP130 claims that 
involve the removal of a dependent a higher priority in the NWQ.
    Our service officers have frequently seen cases where a surviving 
veteran notifies the VA in a timely manner of the loss of a spouse, and 
it has taken the RO as long as a year or more to stop the veteran's 
dependent pay for the deceased spouse. The RO later comes back and 
generates the overpayment and the veteran starts receiving demand 
letters from the Debt Management Center (DMC). These types of cases are 
typically resolved via a waiver request due to administrative error and 
financial hardship, but are all preventable had the RO responded more 
quickly to remove these deceased dependents.
    Previously, when veterans were seeking to remove a dependent as a 
result of a divorce or death, the EP130 had to be submitted on a paper 
21-686c and processed manually at the RO, which lead to large 
overpayments when the manual processing was significantly delayed due 
the large backlog of EP130 claims. In situations where a veteran is 
removing a dependent (for any reason), current policy does not allow 
the veteran to remove a dependent in eBenefits--the veteran may 
initiate the request to remove the dependent via eBenefits, but the 
task of removing the dependent still must be done manually by a VA 
employee via the NWQ. We recommend processing of dependency claims in 
eBenefits be expanded to allow automated processing where the veteran 
is seeking to remove a dependent as a result of a divorce, or death. 
This would significantly reduce the overpayments attributed to delays 
in manually processing of removal of dependency awards for divorced or 
deceased dependents.
    The American Legion commends VA in addressing this problem by 
expanding the automation of dependency claims by providing veterans the 
ability to remove a dependent via the assistance of an accredited 
representative via the Stakeholders Enterprise Portal (SEP), which 
results in their award being processed more quickly, but this is not 
the same as enabling veterans to remove the dependent themselves in 
eBenefits. Ultimately, veterans should be able to remove a dependent in 
eBenefits without the assistance of a third party, whether it be a VSO 
or a VA employee.
    The American Legion also recommends that VA audit DoD's Defense 
Enrollment Eligibility Reporting System (DEERS) as retirees who receive 
disability as well as military pension will commonly update DEERS 
believing that both databases are connected. Currently, veterans who 
update their change of dependents in DEERS, such as a divorce, but do 
not notify VA, and later marry a second spouse, and they notify DEERS 
of the second marriage, but not VA, may unknowingly create an 
overpayment with their VA benefits for the first spouse, and won't get 
paid VA benefits for the second. Once this mistake is discovered by VA, 
the RO will create the retroactive overpayment, deny the veteran the 
retroactive amount for the second spouse, and DOD will not 
retroactively refund the reduced retirement pay offset. A VA audit or 
match with DOD would prevent this problem from occurring.

OVERPAYMENTS DUE TO RECEIPT OF NATIONAL GUARD AND RESERVE PAY

    Another frequent cause of the creation of overpayments are delays 
in adjustments in VA compensation awards due to a veteran's receipt of 
National Guard or Reserve pay. The American Legion believes that 
overpayments to veterans who receive benefit pay and drill pay during 
their Reserve, National Guard drill, or Active Duty period can be 
remedied if VA and the Department of Defense (DOD) compares drill 
records once a month (or at a minimum, quarterly). When a soldier is 
activated for Reserve or National Guard training, or even Active Duty, 
he or she is not eligible to receive VA disability payments. The 
soldier has the option of receiving either drill or VA disability and 
the individual typically chooses the higher of the two. If VA does not 
stop the payment on a timely basis, then an overpayment is created. It 
has been our experience that DOD and VA only compare this information 
on an annual basis, sending service members into debt that accumulates 
over several years. Errors like this are preventable and put 
unnecessary stress on our nation's heroes. We support any legislation 
that aims to address this issue using Resolution No. 228: Timely 
Processing of Overpayments for Reserve Components and/or Active Duty 
Pay, which states that The American Legion supports ``plac[ing] greater 
emphasis on processing of these overpayments for the performance of 
Reserve Component and/or Active Duty pay so not to have multiple years 
processed at the same time.'' \2\
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    \2\ American Legion Resolution No. 228 (2016): Timely Processing of 
Overpayments for Reserve Components and/or Active Duty Pay
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    The American Legion commends DOD and VA for reducing the backlog by 
moving towards automated processing of National Guard and Reserve Pay 
adjustments. However, further work remains to integrate these systems 
seamlessly so that the responsibility does not fall to the veteran to 
make notifications to either VA or DoD that should be the 
responsibility of the departments and the administration as highlighted 
in GAO report 16-42. \3\
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    \3\ https://www.gao.gov/products/GAO-16-42

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EDUCATION OVERPAYMENTS

    The creation of overpayments of VA education benefits is another 
area The American Legion sees an opportunity for improvement. When a 
veteran is attending an institution of higher learning, VA pays the 
institution the amount owed for the veteran to attend the school. 
Sometimes, because of improper reporting, the school is overpaid, and 
other times the veteran may reduce his or her course load which often 
results in an overpayment of benefits to the school. Many veterans are 
unaware their course load adjustments trigger an overpayment because 
there is little or no guidance provided to enrolled veterans on VA's 
policy.
    In a study conducted by the GAO report 16-42 noted that educational 
institutions make frequent errors when reporting enrollment information 
to VA and that not all schools send their certifying officials to 
attend the various training opportunities offered by VA, contributing 
to additional improper education claims being filed on behalf of the 
veteran. \4\
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    \4\ http://www.gao.gov/assets/680/673230.pdf
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    The American Legion recommends that educational institutions 
authorized to accept GI Bill payments be required to review GAO's 
report in order to ensure that they comply with all findings in an 
effort to avoid future preventable overpayments. We also recommend 
mandatory training of certifying offices.

OVERPAYMENTS FROM DELAYED INCOME MATCHING BETWEEN VA AND THE INTERNAL 
    REVENUE SERVICE (IRS)

    VA has a Computer Matching Agreement (CMA) with IRS where IRS will 
disclose to the VA, certain return information. The purpose of this CMA 
is to make available to VA certain return information needed to 
determine eligibility for and amount of benefits for VA applicants and 
beneficiaries of needs-based benefits and to adjust income-dependent 
benefit payments as prescribed by law. Per the CMA Section III. (C), VA 
will provide IRS the lists of 800,000 names annually for matching. The 
CMA estimates this matching program costs $10M, but saves VA $58M, for 
a net savings of $48M. \5\
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    \5\ https://www.oprm.va.gov/docs/dib/14--IRS--VA--DIFSLA--signed--
9--17--2015.pdf
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    When a name appears in the list provided from IRS, VA RO staff must 
adjudicate an EP150 action, thereby they must follow the Income 
Verification Match (IVM) process in M21-1MR, Section X, Chapter 9(C) to 
determine if the income was fully reported by the veteran or the 
dependent, look for under and over reporting, and make necessary 
benefits adjustments, including retroactive adjustments. Large 
overpayments can occur depending on the time between when the income is 
received by the veteran, and the date VA adjudicates the action. The 
follow-up time by VA can vary depending on the date the IRS runs the 
report and sends it to the VA, the volume of names sent to VA, and the 
available RO staffing resources to conduct these EP150 investigations 
on the matched names.
    VA should aggressively pursue potential changes in the matching 
agreement with IRS which would enable VA to making more timely 
adjustments based on the reported tax return information provided by 
IRS.

OVERPAYMENTS FROM MATCHING BETWEEN VA AND SOCIAL SECURITY

    VA also has a matching agreement with the Social Security 
Administration to help VA determine eligibility for needs-based 
pensions under 38 U.S.C. Chapter 15, Dependency and Indemnity 
Compensation to parents under 38 U.S.C. Sec.  1315, and programs under 
38 U.S.C. Chapter 11 for veterans receiving Total Disability Due to 
Individual Unemployability (TDIU) benefits.
    Previously, overpayments were created when a veteran, surviving 
spouse, or surviving parent was erroneously granted VA needs-based 
benefits due to receipt of SSA benefits, and there was a significant 
delay-in many cases one to two years-in matching with SSA.
    The American Legion commends VA in addressing this problem by 
obtaining an on-demand match with SSA, thereby, allowing the Pension 
Management Centers (PMCs) to be pro-active in identifying upfront SSA 
income that may impact the claimant's eligibility for needs-based 
benefits, and preventing erroneous grants from being awarded.

FUGITIVE FELON PROGRAM OVERPAYMENTS

    Overpayments also occur from delays and adjudication errors for 
veterans on the Fugitive Felon Program list (FFP-3). Under the Fugitive 
Felon program, VA is required to terminate benefits for veterans 
identified as a ``Fugitive Felon,'' which is defined by 38 C.F.R. Sec.  
3.665 (n)(2) as:
    ``A person who is a fugitive by reason of: (i) Fleeing to avoid 
prosecution, or custody or confinement after conviction, for an 
offense, or an attempt to commit an offense, which is a felony under 
the laws of the place from which the person flees; or (ii) Violating a 
condition of probation or parole imposed for commission of a felony 
under Federal or State law.''
    The FFP-3 report issued by the VA Office of Inspector General uses 
codes assigned by the National Crime Information Center (NCIC), and per 
M21-1, Part X, Chapter 16, ``.they are an indicator that the individual 
with the felony arrest warrant..''(emphasis added).

 
 
 
                 Offense Code                What the Code Denotes
------------------------------------------------------------------------
                         4901                               Escape
------------------------------------------------------------------------
                         4902          flight to avoid prosecution
------------------------------------------------------------------------
                         4999                        flight-escape
------------------------------------------------------------------------
                         5011                     parole violation
------------------------------------------------------------------------
                         5012                  probation violation
------------------------------------------------------------------------
                         8101        juvenile offender abscond (escape/
                                             flee) while on parole
------------------------------------------------------------------------
                         8102        juvenile offender abscond while on
                                                         probation
 


    Warrants can be issued for the alleged commission of a misdemeanor 
or a felony, and RO staff members have the responsibility to exercise 
due diligence in determining correct characterization of the alleged 
offense and proper name match that led to the issuance of the warrant. 
The process in M21-1MR, Part X, Chapter 16 is lengthy and very 
detailed. If the steps are not carefully followed or if there is 
inadequate development by not obtaining the full Court records that 
lead to the issuance of the warrant, then veterans facing misdemeanor 
warrants for a misdemeanor charges can find their VA benefits 
improperly terminated with an overpayment generated against them.
    Placing a veteran's name in the FFP-3 leads to serious 
consequences. Regional Offices will assign an EP 290 code which leads 
to the generation of a retroactive termination of the veteran's 
compensation award, and an overpayment from the date of the issuance of 
the warrant. Once the warrant is cleared, the veteran may be entitled 
to a reinstatement of benefits, but only back to the date the warrant 
was cleared (if the warrant was issued for a felony charge), or back to 
the date the warrant was issued (if the warrant was issued for a 
misdemeanor charge). If the warrant was issued in error, then the 
veteran must submit to VA a copy of the Court order that vacated it in 
order to get the retroactive overpayment canceled back to the warrant 
issue date.
    Improper development is a violation of due process which can lead 
to the mischaracterization or assumptions of misdemeanor warrants as 
felony warrants. This results in improper termination of benefits and 
the creation of overpayments, which often creates a financial hardship 
for the veteran. This situation happened to a veteran who was arrested 
on a misdemeanor warrant for being in contempt of court (a misdemeanor 
charge) for a parole violation for failure to pay child support. The 
veteran is unemployable and his VA compensation, which was his sole 
source of income, was retroactively terminated. His local RO didn't 
obtain the full Court record, and then stopped his monthly VA 
compensation check completely for 3 months and generated a large 
overpayment against him. This action put the veteran in severe 
financial hardship as he became temporarily homeless until his benefits 
were restored retroactively by an RO in a different state, but only to 
the date his misdemeanor warrant was cleared.
    Unfortunately, he missed the 30-day deadline to request a waiver of 
the debt collection action by the DMC-which is an important deadline 
frequently missed by veterans-but he did submit a timely debt waiver 
request due to administrative error and financial hardship. His 
American Legion Service Representative was able to negotiate a 
repayment plan with the DMC for the remaining disputed overpayment 
amount, thereby, preventing a second total garnishment of his entire 
monthly VA benefits payments. The overpayment amount, which is for the 
time period from the date the misdemeanor warrant was issued to the 
date it was cleared, is currently on appeal. His case awaits further 
development.
    In 33 of the 50 states the failure to pay child support is a 
misdemeanor, while in most of the remaining states it is a felony. \6\ 
In some states it varies depending on if the commission of the crime is 
the first, or a subsequent offense. In some state leaving the state can 
raise the misdemeanor charge to a felony. In a minority of states it is 
not clear as the failure to pay child support is not categorized either 
as a misdemeanor or a felony. This wide inconsistency and variation in 
state law can lead to inaccurate RO decisions where the veteran's 
benefits are wrongfully terminated and an overpayment is generated, 
especially when the EP290 is routed to any of the 57 VA regional 
offices via the National Work Queue (NWQ).
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    \6\ http://www.ncsl.org/research/human-services/criminal-
nonsupport-and-child-support.aspx
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    It is highly unlikely all VA adjudicators at all 57 ROs are 
familiar with the child support laws in all 50 states. Therefore, 
depending on the state and the facts of the case, it can be fairly 
complicated to determine if a veteran who failed to pay child support, 
meets the definition of a fugitive felon under 38 C.F.R. Sec.  3.665 
(n), especially if the veterans' electronic VBMS file does not contain 
the pertaining court documents needed to make such a decision. ROs have 
an obligation to obtain such court documents, and not rely solely on 
the FFP-3 report. Lack of proper development in these types of cases 
can lead to inaccurate adjudications, and financial hardship for the 
wrongly affected veterans.
    Going forward, whether the determination correctly or erroneously 
classifies a veteran as a fugitive felon, the veteran's future claims 
are forever tainted with the ``FFP-3 Fugitive Felon'' label in the 
electronic VBMS claims file, which can create an unjust negative 
impression on future VA decision makers.
    The American Legion recommends that VA improve its training for 
FFP-3 reduction cases to avoid these types of adjudication errors and 
update the M21-1MR Manual by emphasizing that the appearance of a 
veteran's name on the FFP-3 list by itself doesn't automatically mean 
the warrant was issued for a felony. The RO staff still need to do 
their research and proper development to ensure they are not 
misclassifying a veteran as a fugitive felon under 38 C.F.R. Sec.  
3.665 (n) and erroneously creating an overpayment. Having one RO to 
adjudicate all EP290s for FFP-3 match related reductions would help 
improve the accuracy of these types of adjudications.

REDUCING MISSED 30-DAY WAIVER REQUESTS FOR WAIVER OF DEBT OLLECTION 
    ACTION

    In the first notice letter sent from the DMC, the veteran is 
notified he or she has 30 days to request a waiver of the debt 
collection action, along with 180 days to request a debt waiver. These 
two deadlines are confusing to veterans, their advocates, and even VA 
staff. The American Legion frequently receives calls from veterans who 
have missed the 30-day deadline, but still are within the 180-day 
deadline-at this point, all our service officers can do is assist the 
veteran with negotiating a payment plan with the DMC, and help the 
veteran file the debt waiver request. It would be less confusing for 
veterans if the two deadlines are standardized. Therefore, we recommend 
changing the deadline to request a waiver of the collection of the debt 
from 30 days to 180 days.

VA DEBT COLLECTION PROCESS WITHIN VBA

    According to VA, in 2014, 88% of all debts owed were related to the 
Veteran Health Administration (VHA), whereas only 8% of all debts owed 
originated at the Veteran Benefits Administration (VBA). \7\ Once a 
debt has been created at the regional office of jurisdiction, VA is 
required to send notice in writing to the subject of the alleged debt. 
This notice must include the exact amount of the debt, the reason for 
the debt, and the individual's rights and remedies in connection with 
the debt. Additionally, it must inform the debtor collection may be 
made through offset of current or future benefits and interest and 
administrative costs may be assessed. Once the debt is generated, it is 
referred to the Debt Management Center (DMC) for collection actions.
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    \7\ https://drive.google.com/file/d/0B70--mGYT1tJETzZGWUZKYzdGXzg/
view
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    Within 30 days the DMC sends a collection due process letter 
advising the debtor of the debt amount and provides a notice of their 
rights and obligations. If the debtor is actively drawing benefits, the 
letter will indicate that failure to respond will result in a full 
benefit offset beginning with the first pay period 60 days after the 
date of the notification letter. If the debtor is not actively drawing 
benefits, a second letter is mailed 30 days later as a reminder to take 
action. The letter advises that if the debt is not satisfied, or an 
agreeable repayment plan is not established within 60 days, the account 
will be reported to credit collection agencies as delinquent. The 
letter will further state that the Treasury Department may refer the 
account to private collecting agencies and the account may be subject 
to garnishment of non-federal wages under the Treasury's Administrative 
Wage Garnishment Program. If no action is taken, third and fourth 
letters are mailed 30 days apart. If no action is taken 60 days after 
the third letter, the account is referred to the Treasury Department 
for active collection.
    In our experience, the VA makes every attempt to keep these debts 
``in-house'' and tries to notify the veteran in numerous ways. 
According to the Code of Federal Regulations (C.F.R.) 1.911 (d), VA is 
required to send a notice of debt that must include the exact amount of 
the debt, the reason for the debt, the individual's rights and remedies 
in connection with the debt, and inform the debtor that collection may 
be made through offset of current or future benefits and that interest 
and administrative costs may be added.
    Sometimes, notification letters are sent to wrong addresses due to 
updated information not being provided to the VA debt collection team. 
Failure to update the system with the correct and current contact 
information can lead to a veteran who owes a debt not being properly 
informed of their rights. The American Legion calls upon VA to 
continually update their contact database to ensure the most up-to-date 
information for a veteran is available so the VA may contact the 
veteran for a multitude of reasons, including debt collection.
    Additionally, a veteran may request copies of the debt and 
coinciding information from the original office of jurisdiction where 
the overpayment was created. If the veterans feels it is necessary, 
they may file an appeal with VA. If the veteran chooses to file an 
appeal, then they will need to notify the VA in writing before the 30-
day deadline if they are requesting a hearing to contest the debt. The 
debtor's right to inspect the record is also included in the original 
debt notification letter.

VA PARTNERSHIP WITH THE TREASURY DEPARTMENT

    In most cases, delinquent accounts over 120 days are referred to 
the Treasury Department for collection. Once a debt is referred to the 
Treasury Department, the debtor is subjected to the Treasury's 
collection tools, interest, and any administrative fees. The American 
Legion strongly recommends veterans who receive debt notification 
letters from DMC immediately contact an advocate like The American 
Legion for assistance to prevent the debt from spiraling out of 
control. It has been the experience of The American Legion the VA DMC 
office is more sensitive to the veteran's particular circumstances and 
needs than the Treasury Department, which is why veterans need to act 
quickly to avoid garnishment actions and negative credit reporting.
    Finally, the DMC does not charge interest or fees when collecting 
on compensation and pension debt, a policy that The American Legion 
strongly supports. While the DMC does not charge interest on 
compensation and pension debt, they do assess interest on Home Loan 
Guaranty, Chapter 34 and Chapter 35 education debts where the rate of 
interest is 4% for these types of debt.

CONCLUSION

    Debt collection within the VA and Treasury Departments is 
complicated and multi-faceted. The American Legion still sees room for 
improvement, and we have again highlighted some of those suggestions in 
this testimony. Overall, The American Legion believes that DMC does a 
good job of protecting veterans from added exposure when they are 
identified as having been overpaid and want to ensure that veterans are 
aware of their rights, resources, and consequences should they neglect 
to address these issues right away. However, there would be fewer and 
smaller overpayments generated if the 57 ROs were adequately staffed 
and the VA work credit system for EP130 and 150 were adequately 
adjusted to allow for full and proper development of these types of 
claims. EP 130 claims involving removal of a dependent should be given 
higher priority in the NWQ. VA should continue to improve its 
overpayments-related training, including FFP-3 matching, centralize the 
adjudication of the Fugitive Felon Program, and expand dependency claim 
automation to allow veterans to remove dependents via eBenefits without 
the need for manual processing.
    Finally, The American Legion again calls on DoD and VA to integrate 
their systems seamlessly so that the responsibility does not fall to 
the veteran to make notifications to either VA or DoD that should be 
the responsibility of the departments and the Administration as 
highlighted in GAO report 16-42.
    The American Legion thanks this committee for the opportunity to 
elucidate the position of the over 2 million veteran members of this 
organization. For additional information regarding this testimony, 
please contact Mr. Derek Fronabarger, Deputy Director of The American 
Legion Legislative Division at [email protected] or (202) 861-
2700.

                                 
                Prepared Statement of Shane L. Liermann
    Mr. Chairman and Members of the Subcommittee:
    Thank you for inviting DAV (Disabled American Veterans) to testify 
at this hearing of the Subcommittee on Disability Assistance and 
Memorial Affairs concerning how the Veterans Benefits Administration 
(VBA) can effectively prevent and manage overpayments of benefits to 
veterans, their families and survivors. As you know, DAV is a non-
profit veterans' service organization comprised of 1.3 million wartime 
service-disabled veterans that is dedicated to a single purpose: 
empowering veterans to lead high-quality lives with respect and 
dignity.
    DAV represents over one million veterans and their families before 
the Department of Veterans Affairs (VA) in their claims for earned 
benefits, primarily for disability compensation. Veterans are entitled 
to receive compensation based on injuries and illnesses incurred or 
aggravated by military service. The amount of compensation a veteran or 
beneficiary is entitled to may change due to many factors, to include 
changes in dependency, additional service-connected disabilities, 
Reserve or National Guard service or change in the severity of the 
service-connected condition. Overpayment of benefits can occur when 
these changes are not timely recorded and implemented by VA due to 
actions or inactions by VA or the veterans themselves. The most common 
changes that lead to overpayments are dependency issues and 
incarceration. In addition, inadequate information sharing between 
federal agencies and departments, as well as with state agencies, due 
to limitations of policies, processes and technology, hinders prompt 
and proper action on processing overpayments.
    Mr. Chairman, overpayments by VA and the resultant debts owed by 
veterans often cause severe financial hardships for veterans and their 
families. In many cases, the burden of repaying these debts can 
negatively impact a veteran's quality of life, put them at risk of 
homelessness and affect their access to VA health care. We understand 
that in an imperfect claims processing system, there will be 
overpayments and that it is a reasonable expectation that recipients of 
such overpayments are required to repay that debt. However, we believe 
that a significant portion of overpayments could have been reduced or 
avoided if the VA had better policies, processes and oversight of their 
workforce.
    The VA Office of the Inspector General (OIG) report of September 
28, 2007, Audit of Veterans Benefits Administration Controls to 
Minimize Compensation Benefits Overpayments indicated that between 
January 2004 and March 2006, an estimated $50.8 million in overpayments 
were avoidable. If VA staff processed compensation benefit adjustments 
promptly, many veterans would not have been put in the difficult 
position of having a debt to VA.
    In June 2016, the OIG issued a report on the Audit of Compensation 
and Pension Payments to Incarcerated Veterans. It determined that 
between July 2008 and June 2015, VA's ineffective actions in processing 
incarceration adjustments resulted in significant improper payments 
totaling more than $100 million. If conditions remain the same, it 
estimated that VA could make additional inaccurate payments of more 
than $200 million over the period of fiscal year (FY) 2016 through FY 
2020.
    DAV is concerned that many debt amounts could have been lessened or 
completely avoided through greater oversight and control by VBA. While 
overpayments certainly have a negative impact on the federal budget, we 
are more concerned that these debts can sometimes result in 
catastrophic outcomes for financially-stressed veterans and their 
families. VA must aggressively work to identify ways to correctly 
process all evidence, information, and reports to eliminate this 
effect. Improvements to processing dependency changes and incarcerated 
veterans can minimize the avoidable amounts of debt created by the VA. 
In addition, VA and other federal agencies, particularly the Department 
of Defense, Centers for Medicare and Medicaid, the Internal Revenue 
Service (IRS) and the Bureau of Prisons, must develop seamless and 
timely ways to exchange information relevant to determinations of 
veterans' benefits.

Dependency Changes

    Veterans in receipt of VA compensation at 30 percent disabling or 
higher are entitled to additional monthly benefits based on the number 
of their dependents. This includes spouses, children, step-children, 
adopted children and dependent parents. Veterans are advised by the VA 
to notify them when this status changes.
    VA criteria require a reduction of benefits for the loss of a 
dependent due to marriage, divorce, death or in the case of a child, 
attainment of age 18 generally, or 23 if attending school. An OIG 
report from September 2007 reviewed 315 cases that had a change in the 
dependent status, finding that 81 (26 percent) had avoidable 
overpayments totaling $1.3 million. The primary cause for overpayments 
was processing delays which ranged between 60 days and 10 years, 
averaging two years; in 32 of the 81 overpayments (40 percent), the VA 
delayed processing adjustments for over a year.
    For example, a widow receiving dependency and indemnity 
compensation remarried in 1986 and notified the VA of the marriage in 
April 1995, and again in March 2003. However, the VA did not terminate 
benefits until January 7, 2004, altogether resulting in an overpayment 
of $179,966. Had VA acted promptly on the first notification, $104,866 
(58 percent) of the $179,966 overpayment and debt could have been 
avoided.
    If a dependent is removed, this will create an overpayment and 
subsequent debt for the veteran. If VA delays the processing of that 
request to remove the dependent, it creates an undue burden and 
hardship on the veteran, for which they are ultimately responsible. If 
VA had better policies, processes and oversight of their workforce, 
these avoidable overpayments caused by the VA could be reduced and even 
eliminated.
    When a veteran is divorced or the spouse is deceased, it is the 
veteran's responsibility to advise the VA of the termination of the 
marriage for removal of the former spouse from the veteran's benefits. 
In some instances, the veteran will not advise the VA directly but will 
make that change in status known to another federal agency. For 
example, the veteran may have reported a divorce or death to the IRS, 
Defense Finance and Accounting Services, Social Security 
Administration, Centers for Medicare and Medicaid, or TRICARE. Because 
this information is not currently shared between VA and other federal 
agencies, the overpayment will be assessed based upon the date VA is 
notified.
    There is a legal concept known as ``constructive knowledge'' that 
could be relevant to this problem. The Court of Appeals for Veterans 
Claims has defined the notice of ``constructive knowledge'' within the 
VA. In Bell v. Derwinski, 2 Vet. App. 611 (1992), the Court held that 
the VA is deemed to have constructive knowledge of all VA records and 
such records are considered evidence of record at the time a decision 
is made. This concept applies to dependency change of status issues.
    For example, if the veteran advises a VA Medical Center, Outpatient 
Clinic, Vocational Rehabilitation and Employment Services, VA Insurance 
Center, or other VA program and not the VA Regional Office (VARO) of 
his change in dependency, the VA is considered to have ``constructive 
knowledge'' of the change in status. Since the veteran identified the 
change to the VA, it had knowledge. This can allow veterans to lessen 
the amount of the overpayment created by the dependency change by 
reverting back to the date any office in VA was notified of the change. 
The same logic could be applied to the entire federal government, 
thereby deeming notice to any federal agency as providing notice to VA.
    The OIG reports also found that the main reason for the delay in 
processing dependency status changes is due to its classification as 
non-rating claims, which are considered a lower priority compared to 
rating claims work.
    Through VBA's online program, eBenefits, a veteran can submit 
evidence to add a dependent. While this has increased the timeliness of 
adding a dependent, this program is still in its infancy. Based on 
specific data, the system can reject the addition, refer it for 
traditional processing and provide no notification to the veteran. This 
program also provides for notification to the VA of removal of a 
dependent; however, because this is not part of eBenefits' rule-based 
programming, it is referred for traditional processing. Again, these 
are not considered rating claims work and have no priority in VBA.

Recommendations

    1. Assign dependency changes equal priority to rating claims work. 
Within VBA, rating claims work has a higher priority for the 
assignment, control, and completion of work. However, as discussed 
above, this creates delays in VA adding new dependents and increases 
the amount of overpayments caused by delaying the removal of 
dependents. To facilitate this reprioritization, there will need to be 
enhancements to the VBA online claims system to allow for expedient 
processing for adding or removing dependents.
    2. Apply the principle of ``constructive knowledge'' to 
automatically waive all additional overpayment amounts created by VA. 
When any part of VA has possession of the required evidence to change 
the dependency status and fails to act timely, VA must waive the amount 
of additional debt created by the VA's lack of timely action.
    3. Apply the principle of ``constructive knowledge'' throughout the 
entire federal government. Just as VA should accept ``constructive 
knowledge'' of dependency information received within part the 
Department, VA should also accept that concept for information received 
by any other federal agency or office.

    VA currently receives information and cross matches on income data 
with the IRS, incarcerations with the Federal Bureau of Prisons, and 
the Department of Defense, and could apply associated dependency 
information to more timely make status changes. Further, once a veteran 
reports his change in status of dependency with any federal agency, 
such as income tax applications, changes with the Defense Enrollment 
Eligibility Reporting System (DEERS) program within the Department of 
Defense or changes noted with TRICARE, this should be considered 
``constructive knowledge'' for VA purposes, thereby lessening any 
overpayments and debt created by the veteran's change of dependency. VA 
could receive annual data from the IRS specifically on dependency thus 
reducing any potential overpayments.
    4. Waive the debt after 90 days of no action by the VA. DAV 
Resolution No. 213 states that when VA has receipt of the required 
information for a dependency status change or notification of the 
veteran receiving Reserve or National Guard Drill Pay, and does not 
take any action within 90 days, VA should automatically waive the debt. 
This change would greatly reduce, and in many situations eliminate, any 
improper overpayment amounts caused by VA.

Incarcerated Veterans

    Federal law requires VBA to reduce Compensation and Pension (C&P) 
benefits for veterans incarcerated in a federal, state, or local penal 
institution in excess of 60 days. Effective the 61st day of 
incarceration, VBA must reduce compensation benefits for veterans 
convicted of a felony and discontinue pension benefits for veterans 
convicted of a felony or misdemeanor. VBA reduces compensation benefits 
to the 10 percent disability rate for veterans rated 20 percent service 
connected or more. For veterans whose service-connected disability 
rating is 10 percent, VBA reduces the benefit payment by one-half. VARO 
and Pension Management Center (PMC) employees are responsible for 
making incarceration adjustments. Once the veteran is released from the 
penal institution, VBA will restore C&P benefits.
    Based on the June 2016 OIG Report, VARO and PMC staff did not 
consistently take action to adjust C&P benefits for veterans 
incarcerated in federal penal institutions. Specifically, based on 
federal incarceration data ranging from May 2008 through June 2015, VBA 
did not adjust veterans' C&P benefits, as required, in an estimated 
1,300 of 2,500 cases (53 percent), which resulted in improper payments 
totaling approximately $59.9 million. Without improvements, VBA was 
projected to make additional improper benefits payments totaling about 
$41.8 million for federal incarceration cases from FY 2016 through FY 
2020.
    VARO and PMC staff also did not take consistent and timely action 
to adjust C&P benefits for veterans incarcerated in state and local 
penal institutions. Based on incarceration notifications received from 
March 2013 to August 2014, VBA did not effectively adjust veterans' C&P 
benefits in an estimated 3,800 of 21,600 state and local incarceration 
cases (18 percent), which resulted in significant delays and improper 
benefits payments totaling about $162 million for state and local 
incarceration cases from FY 2016 through FY 2020.
    In general, VBA did not place priority on processing incarceration 
adjustments because VBA did not consider these non-rating claims to be 
part of the disability claims backlog. Both VBA Central Office staff 
from Compensation Service and the Office of Field Operations as well as 
VARO service center managers and staff consistently reported that 
incarceration adjustments were not a high priority.
    Incarcerated veterans are not entitled to their full VA 
compensation benefits after the 61st day of incarceration; we do not 
dispute that this will create overpayments, even when reported timely. 
However, the millions of dollars of additional amounts created by VBA's 
own delays create an unfair and undue hardship on these veterans and 
their families.
    In many instances, VBA did not reduce the veteran's benefits while 
incarcerated for shorter sentences. After release, the veteran would 
notify the VA, the overpayment would be recognized and the debt created 
and recouped. For veterans who rely on compensation, having these 
benefits cut off for repayment after incarceration puts them and their 
families at financial risk. The loss of income relied on by the veteran 
and their family could place many in this vulnerable population at a 
higher risk for homelessness.
    Another negative consequence of VA failing to properly reduce these 
benefits affects a veteran's family. While a veteran is incarcerated, 
their dependent family can request an apportionment of benefits and 
receive the amount of compensation that is withheld from the veteran. 
However, if the veteran's benefits are not timely reduced by VBA, the 
family would not be aware of their potential entitlement to the 
apportionment.

Recommendations

    1. Place priority or timely controls on processing incarceration 
adjustments. Within VBA, rating claims work has a higher priority for 
the assignment, control, and completion of work. However, as discussed 
above, this places incarcerated veterans and their families at an 
unfair disadvantage.
    2. Automatically apply apportionments to veterans' families at the 
61st day of incarceration for a felony. The dependent family of 
incarcerated veterans can apply for an apportionment of the amount 
withheld from the veteran. This would lessen any hardships placed on 
the family and would help to prevent large overpayments being made to 
the veteran.
    3. Apply the principle of constructive knowledge throughout the 
entire federal government. The VA currently receives information and 
cross matches on income data with the IRS, incarcerations with the 
Federal Bureau of Prisons, and the Department of Defense. Once a 
veteran is identified as an incarcerated veteran with any federal 
agency, such as income tax applications, changes with the DEERS program 
within the Department of Defense or changes noted with TRICARE, this 
would be considered constructive knowledge with the VA.

H.R. 3705 - Veterans Fair Debt Notice Act of 2017

    On September 20, 2017, DAV presented testimony to the Subcommittee 
on the Veterans Fair Debt Notice Act of 2017, H.R. 3705. This 
legislation would require the Secretary of Veterans Affairs to utilize 
certified mail and plain language in certain debt collection 
activities.
    As we previously testified, consistent with the intent of DAV 
Resolution No. 213, which calls for alleviating undue financial 
hardship in processing overpayments and notifying veterans of debt, we 
support this bill. H.R. 3705 proposes to secure notification to debtors 
of debt collection actions with a plain language explanation of the 
debt. We recommended clarifying that the debtor is not required to use 
certified mail to respond to the VA adding a section to indicate that 
the date of notification of the debt is the date of signed receipt of 
certified mail by the debtor.
    Mr. Chairman, DAV is concerned that many debt amounts could have 
been lessened or completely avoided through greater oversight and 
control by VBA. As indicated, VBA continues to create additional 
improper overpayment and debt amounts that not only impact the federal 
budget, but can have horrific consequences for veterans and their 
families. These discrepancies must be corrected and eliminated to 
remove the burdens that VA has placed on too many veterans and their 
survivors.
    This concludes DAV's testimony. Thank you for the opportunity to 
testify at today's hearing. I would be pleased to answer any questions 
you or members of the Subcommittee may have.

                                 
                   Prepared Statement of John Towles
    Chairman Bost, Ranking Member Esty and members of the Subcommittee, 
on behalf of the men and women of the Veterans of Foreign Wars of the 
United States (VFW) and its Auxiliary, thank you for the opportunity to 
provide our remarks on how the Veterans Benefits Administration (VBA) 
can effectively prevent and manage overpayments.
    The glacial speed at which VA moves is nothing new to the VFW, or 
the members of this subcommittee. Normally, bureaucratic redundancies 
that exist within organizations are meant to serve as a protective 
mechanism, as they can promote proper oversight, accountability, and 
thoroughness. With regards to VA however, especially as it relates to 
how overpayments and debt recoupment issues are addressed, these 
processes have only made matters worse for veterans due to the time 
sensitivity of certain issues and the number of other offices within VA 
that may be involved.
    In the past year, the VFW's National Veterans Service (NVS) has 
directly assisted more than 200 veterans who have experienced issues 
stemming from overpayments. According to our estimates, about 60 
percent of the cases where NVS has intervened resulted in the veteran 
being granted either partial or full relief from the debt form VA's 
Debt Management Center (DMC). However, the onus is on the veteran to 
prove that they were not overpaid, so getting relief is often times a 
long, arduous process.
    In our experience, we have found that legitimate overpayments most 
often occur with GI Bill benefits when a veteran's enrollment status 
changes at his or her college. If a student decides that they are 
having a difficult time meeting their educational obligations and 
chooses to switch to part-time, it is the responsibility of the school, 
not the student, to notify VA. In the event that the school fails to 
notify VA of the change in status, the veteran will continue to receive 
the full living stipend and the school will continue to be paid the 
full-time rate for tuition.
    Once the error is noticed, VA will send an ambiguously worded 
notification of overpayment, which also provides options for repayment. 
If the veteran is unable to contact VA to establish that the debt is 
erroneous, make a repayment in a timely manner, or enter into a payment 
agreement with VA, their debt is sent to collections and VA will 
garnish payments from their disability compensation benefits until the 
debt is satisfied.
    While the veteran does have the ability to seek relief by filing a 
relief waiver, VA's inability to provide the veteran clear and concise 
information regarding their debt in a timely manner significantly 
hinders the veterans ability to take action in order to prevent VA from 
taking further action, such as having their credit negatively impacted.
    In a perfect world, this discrepancy would be noticed immediately; 
however, there have been instances where it has taken upwards of five 
years for VA to properly and officially notify veterans of the 
overpayment, despite in many circumstances, veterans themselves 
notifying VA that they are being overpaid.
    In one recent case, an administrative error by VA triggered a 
$32,000 overpayment notification for a former California National 
Guardsman. The veteran did everything that he could do on his own to 
rectify the situation, including notifying the VA that he as being 
overpaid. Despite this, VA continued to pay him at an incorrect rate. 
It was not until sometime later that VA caught the error internally 
that an overpayment notice was sent. The veteran filed a waiver to have 
the debt discharged; however, the waiver was denied and his disability 
compensation was garnished. It was not until he contacted the VFW's 1 
Student Veteran office, which successfully intervened on his behalf, 
that the debt was properly discharged and the monies that were withheld 
from his disability benefits were returned.
    Another case involved a retired military officer whose daughter was 
using transferred GI Bill benefits. Due to a misinterpretation of its 
own regulations, VA sent a notification stating that he owed $100,000 
as a result of a reduction in rank following his retirement. It was not 
until VFW contacted VA Education Service and the DMC directly and 
explained to them that despite the reduction in rank, he still 
completed twenty years of qualifying honorable service prior to his 
retirement and therefore was obligated to repay nothing. A senior 
manager in education services agreed and the debt was eventually 
waived. In this instance, the senior decision maker that initiated the 
debt process had a number of shortcomings that caused undue worry and 
hardship for the veteran. Among them were inexperience and 
unfamiliarity in applying VA law and regulations properly.
    Had these veterans not contacted the VFW, there is a significant 
chance that they would still be fighting to get this debt cleared. 
These are just two of many situations in which the VFW utilizes our 
cadre of highly trained and professional service officers to better 
serve veterans, but it is our position that veterans should not be 
erroneously overpaid in the first place.
    To be blunt - there is absolutely no excuse for VA not to know its 
own regulations or how to effectively implement them; but yet, here we 
are.
    VA's inconsistent administration of veterans' benefits and 
interpretation of rules and regulations, lack of training for program 
administrators and lack of effectiveness when communicating with the 
veteran are the principal reasons VA continues to overpay veterans and 
spends an untold amount of resources collecting overpayments.
    With more than 187,000 overpayment notices being sent to veterans 
in the past year alone, one would hope that VA would not only be 
prepared to share the most precise information that triggered the 
notice in the first place, but also be prepared to assist the veteran 
in a timely fashion. Sadly, as we have seen via numerous media reports, 
and through our own direct contact with countless veterans in similar 
situations throughout the past year, this simply is not the case.
    VFW understands that overpayments must be recouped in order for 
benefit programs to work efficiently, but it is important to state that 
debt notices must be clear, and provide concise information regarding 
what steps veterans and schools need to take in order to resolve any 
outstanding debts as soon as possible.
    Collections for a benefit as complicated as the Post-9/11 GI Bill 
can cause significant financial hardships for both veterans and their 
schools. Organizations representing school certifying officials, like 
the National Association of Veterans Program Administrators (NAVPA), 
have long reported that VA's assignment of debt collections to schools 
and students, as well as erroneous offsets, have been inconsistent 
across the board.
    Ultimately, veterans should be responsible for repaying the 
overpayment, if it is indeed legitimate. Due to the aforementioned 
inconsistencies regarding communication from VA, as well as the general 
lack of information regarding the nature of the debt, many veterans are 
simply unable to meet the deadline imposed on them by VA. To further 
complicate things, the VFW's interaction with DMC personnel have made 
us acutely aware to the fact that there is an overall lack of knowledge 
regarding VA policy and procedures and its appropriate application.
    Many veterans, especially those who have a fixed income, have 
limited access to the immediate financial resources needed to 
immediately repay an overpayment. Astoundingly VA has, and often times 
will as a first option, offset a veteran's entire monthly benefit 
payment in order to pay down a debt, unless the veteran received the 
notification of VA's intent to do so and requested an alternative 
method of payment. Without guaranteeing that the veteran is actually 
receiving the debt notification letter however, VFW feels that this 
action all but denies the veteran due process which is why we have 
supported legislation that would require the use of certified mail when 
notifying a veteran of debt.
    Aside from applying for a waiver to fully discharge a debt, VA 
currently has two alternative options - one that utilizes a personal 
checking account, but requires a financial status report to be mailed 
to DMC; and one that automatically offsets a veterans monthly benefit 
payment, but also requires a financial status report to be completed 
and mailed, in the event that the debt cannot be repaid in one years' 
time. Both options provide the veteran a way to pay down their debt 
over the course of several months, but loses its utility once a 
financial status report is requires, and is only effective in the event 
that VA has the proper contact information and the veteran received the 
debt notice in the first place.

    The VFW suggests that VA work to streamline the collections process 
by:

    1.)ensuring that the contact information VA is using for a veteran 
is current and up to date;

    2.)clarifying the eligibility criteria for a waiver;

    3.)outlining in easy-to-understand terms the steps needed to 
request a payment plan; and

    4.)repealing the need for a veteran to submit a financial status 
report in the event that the debt cannot be repaid over the course of a 
year.

    Additionally, the VFW feels as though VA should take the additional 
steps regarding the notification and recoupment process:

    1.)VA must ensure that any and all recoupment actions are suspended 
once the veteran files an appeal with the DMC, as per the VA 
regulations;

    2.)VA must ensure that if the overpayment is found to be erroneous, 
that any damaging information sent to the credit reporting bureaus be 
corrected immediately;

    3.)in the event that that a veteran contacts DMC of an overpayment, 
the veteran should not be held liable for the repayment after such 
notification is made. There is no excuse for VA not fixing the problem 
as soon as it is notified.

    4.)VA must ensure that Regional Office and DMC staff are trained to 
conduct proper due diligence, and are better trained in VA's debt 
management and collections procedures and protocols; and finally

    5.)if VA is going to set a timeline for the veteran to prove that 
his or her overpayment is erroneous, then VA should send as much 
pertinent information as possible regarding the nature of the debt to 
the veteran, along with the notification letter.

    Chairman Bost, Ranking Member Esty, and members of the 
Subcommittee, this concludes my testimony. I look forward to answering 
any questions that you may have.

                                 
                        Qeustions For The Record

                    LETTER FROM CHAIRMAN BOST TO VA
    January 3, 2018

    The Honorable David J. Shulkin, M.D.
    Secretary
    U.S. Department of Veterans Affairs 810 Vermont Ave, NW
    Washington , D.C. 20420

    Dear Secretary Shulkin:

    Thank you for the testimony provided by the Department of Veterans 
Affairs for the October 25, 2017, Subcommittee on Disabil ity 
Assistance and Memorial Affairs hearing entitled, ``Examining How VBA 
Can Effectivel y Prevent and Manage Overpayments. ``
    I would appreciate receiving your answers to the hearing questions 
below by 5:00 P.M. on February 1, 2018.

    1. Please provide a detailed explanation of the reasons why the 
total amount of overpayments increased from $348, 168,093 in FY201 5 to 
$698,481 , 130 in FY201 7.

    2. Please provide a detailed explanation of the reasons why the 
number of drill pay adjustments rose from 3,581 in Fiscal Year 2015 to 
106,811 in Fiscal Year 2017.

    3. Please provide a detailed description of the steps VA is taking 
to expedite processing of adjustments for the reasons listed below. 
Please provide each response disaggregated by reason with a timeline of 
the anticipated implementation of such steps.

    a.Drill pay adjustment,
    b.Death of a beneficiary ,
    c.Benefit eligibi lity adjustment, and
    d.Dependency adjustment.

    4.Please provide a detailed description of the steps VA is taking 
to prevent overpayments for the reasons listed below. Please provide 
each response disaggregated by reason with a timeline of the 
anticipated implementation of such steps.

    a.Drill pay adjustment,
    b.Death of a beneficiary ,
    c.Benefit eligibi lity adjustment, and
    d.Dependency adjustment.

    5.Does VA plan to allow veterans to use eBenefits to remove 
dependents?

    a.If yes, please provide the timeline for implementing such plan.
    b.Ifno, why not?

    6.What steps does VA take to avoid overpayments when a veteran's 
child turns 18?

    7.On average, how long does it take for VA to verify that a veteran 
has died after VA receives the monthly death matching data set provided 
by the Social Security Administration?

    8.On average, how long does it take for VA to terminate benefits 
after verifying that a veteran has died?

    9.On June 28, 2016, VA OIG released a report entitled, ``Audit of 
Compensation and Pension Benefit Payments to Incarcerated Veterans.'' 
Please describe the steps VA has taken since that report to more timely 
process incarceration adjustments.

    10.Please describe any additional steps VA will take to more timely 
process incarceration adjustments.

    11.Please describe VA's efforts to inform veterans of their 
responsibility to notify VA of life events, such as divorce or death 
that may impact monthly benefits.

    a.Does VA have plans to provide additional reminders to veterans?

    I. If yes, please describe this plan and provide the timeline for 
implementing such plan.

    ii. Ifno, why not?

    12.Please explain why the deadline to submit a waiver and suspend 
the offsetting of benefits is 30 days, when a veteran has 180 days to 
submit a request to waive the debt?

    13.Does VA have any plans to work with VSOs to improve the content 
of its debt notice letters?

    a.If yes, please provide the timeline for drafting the new debt 
notice letter.
    b.Ifno, why not?

    14.Ifa veteran does not respond to the debt notification letter, 
please describe the steps VA takes to confirm the veteran 's correct 
address.

    15.Does VBA have any additional plans to ensure that VBA's 
databases have the veteran's con-ect address?

    a.Ifyes, please describe the plan.
    b.If no, why not?

    In an effort to reduce printing costs, the Committee on Veterans' 
Affairs, in cooperation with the Joint Committee on Printing, would 
appreciate your answer provided consecutively and single- spaced. In 
addition, please restate the question in its entirety before the 
answer.
    Due to the delay in receiving mail, please provide your response to 
Maria Tripplaar, Staff Director and Counsel of the Subcommittee on 
Disability Assistance and Memorial Affairs, at Maria 
[email protected]. Please also send a courtesy copy to Ms. 
Alissa Strawcutter at [email protected]. Ifyou have any 
questions, please call Ms. Tripplaar at (202) 225-9164.

    Sincerely,

    Mike Bost
    Chairman
    Subcommittee on Disability Assistance and Memorial Affairs

    cc: The Honorable Elizabeth H. Esty, Ranking Member , Subcommittee 
on Disability Assistance and Memorial Affairs

    MB/ks


                                 
             VA RESPONSE TO LETTER FROM CHAIRMAN MIKE BOST
    Question 1: Please provide a detailed explanation of the reasons 
why the total amount of overpayments increased from $348,168,093 in 
FY2015 to $698,481,130 in FY2017.

    VA Response: Of the $350 million dollar increase in the overall 
amount of overpayments, drill pay adjustments grew by $179 million 
dollars making up 50% of the increase in the total amount of 
overpayments in the disability compensation program. Prior to February 
25, 2016, adjustments to Veterans' awards based on receipt of drill pay 
were applied to future disability payments. This action did not create 
an overpayment on the Veterans' account, but caused future payments to 
be reduced or terminated temporarily resulting in financial hardship 
for the Veteran. Additionally, the only option for a Veteran to request 
relief was to request a hardship waiver.
    Effective February 25, 2016, the Veterans Benefits Administration 
(VBA) changed its policies and began processing drill payment 
adjustments retroactively creating a debt (overpayment) in the system. 
While this change in policy increased the total number of overpayments, 
it allowed Veterans additional options to repay these funds based on 
their financial situation.
    The next largest increase in overpayments is attributable to 
Dependency adjustments which grew by $65 million dollars and accounts 
for 18% of the overall increase in overpayments.

    Question 2: Please provide a detailed explanation of the reasons 
why the number of drill pay adjustments rose from 3,581 in FY2015 to 
106,811 in FY2017.

    VA Response: As noted in our response to Question 1, drill pay 
adjustments make up a significant portion of VBA's overpayments. By 
law, Veterans are not entitled to receive both military drill pay and 
VA disability compensation for the same periods. VBA implemented policy 
changes in February 2016 to change payment adjustment to a retroactive 
process in order to afford Veterans additional options in repaying the 
overpayment. Prior to fiscal year (FY) 2016, Veterans' future benefit 
payments were adjusted to withhold the duplicate payment amount, which 
prevented these adjustments from counting as overpayments.

    Question 3: A detailed description of the steps VA is taking to 
expedite processing of adjustments for the reasons listed below. Please 
provide each response disaggregated by reason with a timeline of the 
anticipated implementation of such steps.

    a. Drill pay adjustment
    b. Death of a beneficiary
    c. Benefit eligibility adjustment, and
    d. Dependency adjustment

    VA Response:

    3a. Drill Pay Adjustment. Currently, VBA receives an annual notice 
of reservist drill days through an electronic data-sharing agreement 
with the Department of Defense (DoD). VBA is working collaboratively 
with DoD to receive this information monthly so we can process these 
drill pay adjustments more frequently resulting in Veterans receiving 
this information in a timelier manner. However, VBA's ability to 
process these monthly adjustments is dependent upon a regulation change 
that would allow an upfront issuance of due process for military 
payment adjustments. The regulation change is currently undergoing 
legal review as part of VA's internal concurrence process. We do not 
have an anticipated date of publication at this time.

    3b. Death of a Beneficiary. Upon notification of a VA beneficiary's 
death, VBA immediately suspends or stops VA benefit payments. VBA may 
receive notification regarding a beneficiary's death through several 
methods including telephone calls to our National Call Center, written 
correspondence, claims for death benefits, requests for burial in a 
National Cemetery, as well as electronic data-sharing agreements with 
other agencies, primarily the Social Security Administration (SSA).
    After the beneficiary's award is suspended, VBA sends written 
notice to their last known address of record to ensure the information 
regarding their death is accurate. Unless VBA receives notice that the 
beneficiary is still alive within 30 days of the date of the written 
notice, the award is suspended and the adjustment is referred to a 
claims processor to take final action to terminate the beneficiary's 
award. VBA is currently working with VA's Office of Information and 
Technology (OI&T) to develop an automated process that will take steps 
to terminate a Veteran's award when notification of his or her death is 
received through the electronic data-sharing agreement with SSA and 
after applicable notification to the beneficiary has been made with the 
opportunity to provide response. The error rate associated with this 
data match is extremely low (less than 1/10 of a percent) and will 
allow VBA to refocus valuable claims processing resources to more 
complex claims. VBA does not have an anticipated date of implementation 
at this time.

    3c: Beneficiary Eligibility Adjustment. Since the National Work 
Queue (NWQ) began managing the workload distribution of End Product 
(EP) 600 (due process EPs), the average days pending for these claims 
improved by 332 days as of December 31, 2017. In FY 2017, VBA 
established Non-Rating Resource Teams (NRRT) at 12 Regional Offices. 
NWQ routes special project work to these teams. Currently, the NRRTs 
are focused on Drill Pay, Combat-Related Special Compensation (CRSC)/
Concurrent Retirement and Disability Payment (CRDP), Federal Bureau of 
Prison (FBOP) matching, and eligibility determinations. If there is no 
actionable work available for the special project teams, NWQ then 
routes additional non-rating priorities (e.g., dependency) to these 
teams. VBA has seen a 197=day improvement in the average days pending 
of NRRT special project inventory during FY 2018.

    3d. Dependency Adjustments. VBA expedites the processing of 
dependency adjustments two ways; the first is using our online portal, 
and the second is through the use of contracted services to enter data 
into a rules based process system (RBPS) engine. Both methods use the 
same rules engine for automation of the decision and notification to 
the beneficiary. RBPS is an online tool within the VA's eBenefits 
application and can add new dependents to Veterans awards provided the 
Veteran has a disability rating of 30 percent or greater. Dependents 
may include a Veteran's spouse as well as any minor or school-aged 
children. Spouses can also be removed from the award if there are no 
children listed on the award. RBPS uses a rules engine for the decision 
and notification to the Veteran.
    VBA continues to explore additional ways to streamline processes 
and to add more automated processes for Veterans to provide 
information. We are currently utilizing the power of the NWQ to help 
ensure the appropriate priority for, and thereby appropriately route, 
dependency claims to those stations which have the capacity to work 
them most efficiently. In FY 2017, VBA established NRRTs at 12 regional 
offices. NWQ routes primarily special project work to these teams. 
Currently, the NRRTs are focused on Drill Pay, CRSC/CRDP, FBOP 
matching, and Eligibility Determinations. If there is no actionable 
work available for the special project teams, NWQ routes additional 
non-rating priorities (e.g., dependency) to those teams.
    During FY 2017, the inventory of dependency claims decreased by 26 
percent with a 50 percent improvement in timeliness. However, VBA still 
has additional work to do regarding these adjustments and remains 
focused on implementing measures to efficiently work these claims.

    Question 4: A detailed description of the steps VA is taking to 
prevent overpayments for the reasons listed below. Please provide each 
response disaggregated by reason with a timeline of the anticipated 
implementation of such steps.

    a. Drill pay adjustment
    b. Death of a beneficiary
    c. Benefit eligibility adjustment, and
    d. Dependency adjustment

    VA Response: VA has taken steps to ensure more frequent written 
reminders to Veterans of scenarios that may affect their payments. 
While these actions will not prevent the overpayment, by nature of the 
adjustment, it will potentially lessen the size of the overpayment that 
would occur sans frequent notice.

    4a. Drill pay adjustment. The nature of the process of VA receiving 
notice of Veterans' receiving drill pay after the event will always 
cause an overpayment. However, VBA has drafted a regulation which will 
allow for more frequent benefit adjustments (Please refer to question 
3a above). While this change will not eliminate benefit overpayments, 
Veterans will receive faster, more timely adjustments with smaller 
overpayment amounts. The regulation change is currently undergoing 
legal review as part of VA's internal concurrence process. We do not 
have an anticipated date of publication at this time.

    4b. Death of a beneficiary. VBA immediately suspends a VA 
beneficiary's payment upon notification of his or her death; thereby, 
reducing or eliminating an overpayment of benefits. Please refer to 
question 3b above.

    4c. Benefit Eligibility adjustment. Please refer to question 3c 
above. As we continue working through the inventory of these claims, we 
expect the amount of overpayments to decrease.

    4d. Dependency adjustment. Since April 2017, the NWQ is efficiently 
distributing the non-rating workload including dependency adjustments 
to stations that have the most capacity to work these claims. 
Additionally, VBA has applied a strategic approach in utilizing claims 
processing overtime resources. We target specific claims and steps 
within the claims process to direct overtime where it will produce the 
most benefit. As a result, VBA claims processors are receiving more 
non-rating claims to work and adjudicating more benefits eligibility 
than in previous years. In processing more non-rating claims, the 
amount of overpayments increased because of VBA's efforts in addressing 
the benefits adjustments. As we continue working through the inventory 
of these claims and are more able to adjudicate benefits in a timely 
manner, we expect the amount of overpayments to decrease.

    Question 5: Does VA plan to allow Veterans to use eBenefits to 
remove dependents? If yes, please provide timeline for implementing 
such plan. If no, why not?

    VA Response: The function within eBenefits that is used for 
managing dependents does allow for dependents to be removed from 
disability compensation awards. This functionality has been available 
for several years.

    Question 6: What steps does VA take to avoid overpayments when a 
Veteran's child turns 18?

    VA Response: VBA automatically removes the dependent minor child 
from the Veteran's award on the child's 18th birthday.

    Question 7: On average, how long does it take for VA to verify that 
a Veteran has died after VA receives the monthly death matching data 
set provided by Social Security Administration?

    VA Response: Upon notification of a VA beneficiary's death through 
the weekly data-sharing agreement with SSA, VBA takes steps to suspend 
or stop VA benefit payments after applicable notification to the 
beneficiary has been made with the opportunity to provide response. 
Unless VBA receives notice that the beneficiary is still alive within 
30 days, the adjustment is referred to a claims processor to take final 
action to terminate the beneficiary's award.
    VBA is currently working with OI&T to develop an automated process 
that will automatically terminate a Veteran's award when verification 
of his or her death is recieved after notification via the SSA 
electronic data-sharing agreement.

    Question 8: On average, how long does it take for VA to terminate 
benefits after verifying that a Veteran has died?

    VA Response: Please refer to question 7, above.

    Question 9: On June 28, 2016, VA OIG released a report entitled, 
``Audit of Compensation and Pension Benefit Payments to Incarcerated 
Veterans.'' Please describe the steps VA has taken since that report to 
more timely process incarceration adjustments.

    VBA Response: VBA has taken the following steps to process 
incarceration adjustments in a timely manner:

      In May 2016, VBA established timeliness standards for 
completing incarceration/fugitive felon adjustments.
      Oral and written guidance was provided to all claim 
processors to ensure timely and accurate processing of incarcerated 
Veteran claims. Additionally, VBA provided refresher training on the VA 
fugitive felon program.
      VBA created the Incarcerated Veteran Tracking Share Point 
to assist in the tracking of the identified cases. Each regional office 
identified two points-of-contact to serve as subject matter experts 
(SMEs). These SMEs are available to address questions at their regional 
office related to tracking these claims.
      VBA continues to work with FBOP to make any necessary 
updates or changes to improve the information exchanged as part of the 
data-sharing agreement. This new agreement allows VA to more timely and 
efficiently make any necessary adjustments and supports future 
automation of the process. VA will continue to work with FBOP and other 
Federal agencies to obtain the needed data and identify additional ways 
to streamline the process.

    Question 10: Please describe any additional steps VA will take to 
more timely process incarceration adjustments.

    VA Response: Please refer to the response provided for Question 9, 
above.

    Question 11: Please describe VA's efforts to inform Veterans of 
their responsibility to notify VA of life events, such as divorce or 
death that may impact monthly benefits. Does VA have plans to provide 
additional reminders to Veterans''? If yes, please describe this plan 
and provide the timeline for implementing such plan. If no, why not?
    VA Response: VA notifies all beneficiaries in decision letters that 
they have a responsibility to notify VA of all life events, such as 
birth, divorce or death, which can impact VA benefits. In an effort to 
ensure clarity of notice, VA has provided additional reminders which 
have revised the decision letter to specify conditions that may affect 
Veterans rights to continued payment. These additional letters to 
describe this plan were released in December 2017. Additionally, VA 
works with Veterans Service Officers to ensure that they are informed 
of reporting requirements and can better assist VA claimants and 
beneficiaries. Currently, there is nothing further planned or scoped to 
notify Veterans; however, there are ongoing discussions on how and when 
to notify Veterans of changes of this information moving forward.

    Question 12: Please explain why the deadline to submit a waiver and 
suspend the offsetting of benefits is 30 days, when a Veteran has 180 
days to submit a request to waive the debt?

    VA Response: In accordance with 38 CFR 1.912a(c)(2), if the debtor, 
within 30 days of the date of notification, requests, in writing, a 
waiver of collection in accordance with Sec.  1.963 or Sec.  1.964, as 
applicable, offset shall not commence until VA has made an initial 
decision on waiver. If the debtor requests a waiver more than 30 days, 
but within 180 days of notification and the waiver is granted, VA will 
refund the withheld amount in accordance with 38 CFR 1.967. This 
process is designed to provide for ``the avoidance of unnecessary delay 
and expense as well as the means for full protection of these debtors' 
statutory rights.'' 48 Fed. Reg. 1052 (Jan. 10, 1983).

    Question 13: Does VA have any plans to work with VSOs to improve 
the content of its debt notice letters?

    a. If yes, please provide the timeline for drafting the new debt 
notice letter.
    b. If no, why not?

    VA Response: Yes, VA will work with the Disabled American Veterans 
(DAV), the American Legion and the Veterans of Foreign Wars (VFW) in FY 
2018 to improve the content of its debt notification letters. VA will 
attend the respective national conventions: DAV: Feb 25-28, Arlington; 
VFW: July 21-25 Kansas City; American Legion: Aug 24-30, Minneapolis--
through FY 2018 to gather Veteran Service Organizations' concerns and 
draft changes for review in early FY 2019.

    Question 14: If a Veteran does not respond to the debt notification 
letter, please describe the steps VA takes to confirm the Veteran's 
correct address?

    VA Response: In accordance with 38 CFR 1.911(e); a debt 
notification is sufficient when sent by ordinary mail directed to the 
debtor's last-known address and not returned as undeliverable. The VBA 
Debt Management Center utilizes inter-government mailing addresses 
obtained from the United States Postal Service and commercial vendors 
to update addresses when required.

    Question 15: Does VBA have any additional plans to ensure that 
VBA's databases have the Veteran's correct address?

    a. If yes, please describe plan.
    b. If no, why not?

    VA Response: VBA continues to verify Veteran and other 
beneficiary's addresses using information contained in all VA systems, 
to include those used by the Veterans Health Administration, in an 
effort to make sure we are using the most up-to-date information. We 
are working across the agency, to include OI&T, to develop a mechanism 
to allow automatic updating of Veteran information across all VA 
systems. Due to complexity of this project, VBA does not have an 
anticipated date of implementation at this time.