Veterans Benefits Administration: Process for Preventing Improper
Payments to Deceased Veterans Can Be Improved (24-JUL-03,	 
GAO-03-906).							 
                                                                 
In fiscal year 2002, the Veterans Benefits Administration (VBA)  
paid about $22.4 billion in disability compensation to over 2.6  
million veterans and their survivors and about $3.3 billion in	 
pension benefits to about 581,000 veterans and their survivors.  
To ensure that VBA makes proper payments under these programs, we
reviewed the effectiveness of VBA efforts to prevent payments to 
deceased veterans by matching its Compensation and Pension (C&P) 
Master Records database of current beneficiaries with the Social 
Security Administration's (SSA) Death Master File.		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-03-906 					        
    ACCNO:   A07648						        
  TITLE:     Veterans Benefits Administration: Process for Preventing 
Improper Payments to Deceased Veterans Can Be Improved		 
     DATE:   07/24/2003 
  SUBJECT:   Beneficiaries					 
	     Erroneous payments 				 
	     Veterans benefits					 
	     Veterans disability compensation			 
	     Veterans pensions					 
	     VBA Compensation and Pension Master		 
	     Records						 
                                                                 
	     SSA Death Master File				 

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GAO-03-906

Report to the Secretary of Veterans Affairs

United States General Accounting Office

GAO

July 2003 VETERANS BENEFITS ADMINISTRATION

Process for Preventing Improper Payments to Deceased Veterans Can Be
Improved

GAO- 03- 906

Page i GAO- 03- 906 VBA Payments to Deceased Beneficiaries Letter 1
Results in Brief 2 Background 2 VBA*s Death Match Process Does Not
Identify All Veterans

Receiving Improper Disability Payments 3 Conclusions 4 Recommendations for
Executive Action 4 Agency Comments 5 Abbreviations

C& P Compensation and Pension SSA Social Security Administration VBA
Veterans Benefits Administration Contents

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Page 1 GAO- 03- 906 VBA Payments to Deceased Beneficiaries

July 24, 2003 The Honorable Anthony J. Principi Secretary of Veterans
Affairs Dear Mr. Secretary: In fiscal year 2002, the Veterans Benefits
Administration (VBA) paid about $22.4 billion in disability compensation
to over 2.6 million veterans and their survivors and about $3.3 billion in
pension benefits to about 581,000 veterans and their survivors. 1 To
ensure that VBA makes proper payments under these programs, we reviewed
the effectiveness of VBA efforts to prevent payments to deceased veterans
by matching its Compensation and Pension (C& P) Master Records database of
current beneficiaries with the Social Security Administration*s (SSA)
Death Master File.

To conduct our review, we matched VBA*s C& P Master Records database of
current beneficiaries 2 with the entire SSA Death Master File, which
contains information dating back to 1980 on deceased individuals. 3 We
matched name, address, and social security number of deceased persons with
857 veterans* or survivors* records. Of these, we reviewed 28 case files
at four VBA regional offices where we were conducting other ongoing work.
4 We interviewed VBA regional office and headquarters officials regarding
the results of our database match. We also obtained background
information, including a Department of Veterans Affairs, Office of the
Inspector General, report on VBA efforts to discontinue improper

1 Disability compensation is made available to veterans with service-
connected disabilities. Pensions are made available to wartime veterans
who have low incomes and are permanently and totally disabled for reasons
that are not service related.

2 As of January 2003, VBA*s C& P database contained approximately 3.2
million records on veterans and their survivors who receive such benefits.
3 As of January 2003, SSA*s Master Death File database contained about 70
million records.

4 These regional offices are located in Boston, Mass; Houston, Tex.;
Phoenix, Ariz.; and St. Petersburg, Fla.

United States General Accounting Office Washington, DC 20548

Page 2 GAO- 03- 906 VBA Payments to Deceased Beneficiaries

payments made to deceased beneficiaries. 5 We conducted this review from
January 2003 to May 2003 in accordance with generally accepted government
auditing standards.

We found a vulnerability in VBA*s interagency database matching process
that results in improper payments to deceased veterans. Specifically,
VBA*s process does not identify veterans who died during the application
process and were given improper benefit payments after their deaths. In

addition, we found that VBA*s compensation and pension program staff did
not always follow internal control procedures and take action to suspend
benefits and recover improper payments based on evidence that a
beneficiary had died. We are making recommendations to address the

problems we identified. VBA agreed with our findings and commented that it
would undertake a review of the cases we identified to ensure a cost-
effective solution to addressing the vulnerability in the current matching
process.

Each month, VBA conducts a *death match* to compare its C& P Master
Records database of current beneficiaries with individuals on SSA*s Death
Master File. VBA uses a database with information on all active disability
beneficiaries and matches it with SSA data that contains information on
deceased individuals only for the most recent month. In the event there
are matches, VBA forwards the information to the appropriate regional
offices for confirmation, and if the beneficiary is deceased, follow- up

action is taken to stop payments and recover funds improperly paid after
the beneficiary*s death. 6 5 The Department of Veterans Affairs Office of
Inspector General on February 6, 1998,

issued a report, entitled Audit of Veterans Benefits Administration SSA/
VA Death Match Procedures (Report No. 8R4- B01- 069), which found that VBA
had made an estimated $3.96 million in improper payments to deceased
beneficiaries. 6 Depending on when VBA establishes the onset of the
disability, an applicant who dies before VBA rules on eligibility for
benefits may be entitled to retroactive benefits for a period of time
prior to his death. Such a payment would become property of the veteran*s
estate. Results in Brief

Background

Page 3 GAO- 03- 906 VBA Payments to Deceased Beneficiaries

VBA*s death match process does not identify veterans who died while
waiting for claims decisions and were improperly paid benefits after their
deaths. This happens because information on a veteran who dies during the
application process and is approved for benefits months later would not
appear in both the VBA and SSA databases at the same time, thus precluding
the possibility of a match. 7 At the time of death, information on the
applicant would be in the SSA database but not in the VBA database, which
does not contain information on applicants. 8 Should this veteran be
approved for benefits months later, information on this beneficiary would
be placed in the VBA database. However, subsequent death matches would not
identify the veteran because VBA compares its database of beneficiaries
only against the most recent month of information on SSA*s Death Master
File.

We identified two claims for disability compensation benefits that
illustrate our concerns. In one case, processed by the Phoenix Regional
Office, a veteran who applied for benefits in February 1999, died in June
1999, and was approved to receive benefits 9 months after his death, was
not identified in the death match. Moreover, at the time of our review,
VBA was still making payments to the deceased veteran, although he had
died about 3 years earlier and his benefit checks were being returned.
Regional officials could not explain why no action was taken in this case.

In the second case, processed by the Boston Regional Office, a veteran who
applied for benefits in April 2001, died in October 2001, and was approved
for benefits in April 2002, was not identified in the death match.
Moreover, at the time of our review, no action was taken to recover an
improper payment made to this individual. Boston Regional Office officials
informed us that once they have confirmed the death of a beneficiary,
agency policy requires that steps be taken to identify whether any
improper payments were made to the deceased beneficiary and recover

7 A veteran might appear in both databases simultaneously if VBA approves
benefits very soon after death and the information is quickly reported to
SSA. 8 VBA does not rely entirely on the death match procedure to identify
deceased beneficiaries of its disability compensation and pension benefits
programs. Often, next- ofkin, guardians, or friends inform VBA of the
death of the beneficiary. VBA*s Death Match

Process Does Not Identify All Veterans Receiving Improper Disability
Payments

Page 4 GAO- 03- 906 VBA Payments to Deceased Beneficiaries

these funds. 9 Regional officials could not explain why the family was not
contacted to request return of the funds improperly paid after the
beneficiary*s death.

The systemic vulnerability we identified raises concerns about the
potential for VBA to improperly pay benefits to veterans who die during
the application process. The examples we found illustrate that VBA is
currently making improper payments as a result of this vulnerability. We
do not know the full extent of this problem but, at the very least, our
match identified an additional 829 beneficiaries who may be receiving
improper payments that we did not examine. These examples also raise

concerns about the extent to which VBA*s compensation and pension program
staff adhere to internal control procedures and act on evidence that
beneficiaries may have died, such as checks that are returned.

To improve the effectiveness of VBA*s efforts to prevent improper payments
to deceased veterans, we recommend that you instruct the Under Secretary
for Benefits to

 expand VBA*s death match process beyond current disability program
beneficiaries to include comparing its list of claimants against the
individuals listed in SSA*s Master Death File,

 review the 829 matched cases that were not included in our assessment to
(1) determine whether and to what extent these beneficiaries received
improper payments after having died and (2) recover improper payments when
appropriate, and

 issue guidance that restates the importance of following internal
control procedures and acting on evidence that a beneficiary may have died
to ensure that VBA*s compensation and pension program staff are fully
complying with the agency*s internal control procedures.

9 Generally, the Department of Veterans Affairs first seeks to recover the
funds voluntarily. However, if voluntary recovery is not possible, the
agency considers several factors in deciding whether to pursue legal
action to make recovery. These include the total amount of the improper
payments; the extent to which the individuals who received these payments
sought to defraud the government (e. g., forged the deceased veteran*s
signature on official forms); and the age, health, and economic condition
of the individual who received these payments. Conclusions

Recommendations for Executive Action

Page 5 GAO- 03- 906 VBA Payments to Deceased Beneficiaries

We received oral comments on a draft of this report. VBA agreed with our
findings and recommendation that the agency issue guidance restating the
importance of following internal control procedures and acting on

evidence that a beneficiary may have died. VBA also agreed in principle
with our recommendation to reduce improper payments to deceased veterans.
However, VBA stated that, before expanding the death match

process to include claimants, the agency would prefer to review the 829
matched cases that were not included in our assessment in order to obtain
a better understanding of the problem and assure that the agency deals
with this problem in the most cost- effective manner. We support VBA*s
effort to seek a cost- effective process to address this vulnerability but
emphasize that any systemic vulnerability could undermine program
integrity.

We are sending copies of this report to the appropriate congressional
committees and other interested parties. This report is also available on
GAO*s Web site at http:// www. gao. gov. If you have questions, please

contact me at (202) 512- 7101 or Irene Chu at (202) 512- 7102. Also
contributing to this report were Joseph Natalicchio, Martin Scire, and
Gregory Whitney.

Sincerely yours, Cynthia Bascetta, Director Education, Workforce,

and Income Security Issues Agency Comments

(130271)

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