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“Waste & Delays: Examining VA's Improper Payments in its Compensation and Pension Programs”

House Veterans Affairs Committee, Disability Assistance and Memorial Affairs Subcommittee Hearing

May 14, 2025 (recording here)

HEARING INFORMATION

Witness & Written Testimony (linked):

• Ms. Nina Tann: Executive Director, U.S. Department of Veterans Affairs, Veterans Benefits Administration

• Mr. Kevin Friel: Executive Director, U.S. Department of Veterans Affairs, Pension and Fiduciary Service Compensation Service, Veterans Benefits Administration

• Ms. Jeanine Gilson: Acting Chief Financial Officer, U.S. Department of Veterans Affairs, Veterans Benefits Administration

• Mr. Brent E. Arronte: Deputy Assistant Inspector General for Audits and Evaluations, U.S. Department of Veterans Affairs, Office of the Inspector General

Keywords mentioned:

• Overpayment, improper payments, effective dates, claims processing, debt, PACT Act, automation, training, risk assessment, accountability, complexity

IN THEIR WORDS

OPENING STATEMENTS FROM THE SUBCOMMITTEE

• Chairman Morgan Luttrell spoke on the VA’s need to reduce improper payments in its compensation and pension programs. He noted that the department has received over $150 billion annually in recent years and must be held accountable as a steward of taxpayer dollars. He expressed concern over the burden that overpayments place on veterans and their families, particularly when they result in debts through no fault of the beneficiary. The Chairman also cited a total of $5.1 billion in overpayments between FY21 and FY24 and called for improved processing and oversight to prevent such errors.

• Ranking Member Morgan McGarvey stated that he hoped for a productive, solutions-oriented discussion focused on improving VA systems rather than assigning blame. He acknowledged the complexity of the programs and underlined the importance of strong but fair payment controls. He warned against punitive approaches that could harm veterans and stressed the need to keep their experiences at the center of any reforms. Ranking Member McGarvey also shared concern over the emotional toll on veterans who face unexpected debts, calling for systems that protect both beneficiaries and VA employees.

SUMMARY OF KEY POINTS

• Ms. Nina Tann discussed the VA’s commitment to safeguarding both veteran entitlements and taxpayer dollars. She explained that the VA reduced improper payments by $1 billion in FY24 through expanded data-sharing agreements and improved procedural guidance. She talked about the importance of timely and accurate claims processing, particularly with regard to assigning correct effective dates and minimizing unnecessary rework. Ms. Tann also highlighted new training initiatives, better communication with veterans about reporting changes, and collaboration with stakeholders to prevent overpayments.

• Mr. Brent E. Arronte reported that the Office of Inspector General’s (OIG) oversight had revealed deficiencies in VA claims processing, IT systems, training, and internal controls. He stressed the significance of establishing correct effective dates for compensation claims, particularly following the rollout of PACT Act provisions. Mr. Arronte said that 24% of reviewed PACT Act claims had incorrect effective dates, resulting in $6.8 million in improper payments projected to reach $20 million by August 2025. He mentioned that the VA still had a 10% improper payment rate in two major programs and committed to continued OIG oversight to improve VA performance and accountability.

• Chairman Luttrell asked how the VA could fix the systemic problems surrounding improper payments and ensure better communication with veterans, especially those without reliable digital access. Ms. Tann responded that the VA is working to improve outreach and uses data matching with agencies like the Social Security Administration to verify information. She noted that veterans must still report personal changes like divorces or deaths of dependents.

• Chairman Luttrell then asked if the VA tracks how many beneficiaries respond to correspondence and how that impacts payment accuracy. Mr. Kevin Friel stated that while the department was reviewing response rates, he did not have exact numbers but would provide them later.

• Ranking Member McGarvey asked for the FY24 improper payment amounts for compensation and pension services. Ms. Jeanine Gilson responded that the VA established $1.14 billion in overpayment debts for compensation and $227.4 million for pension, totaling $1.366 billion in overpayments.

• The Ranking Member then inquired about the percentage of overpayments versus underpayments. Ms. Gilson said that approximately 80% of the identified improper payments were overpayments.

• Ranking Member McGarvey also asked why compensation services would now fall under stricter Payment Integrity Information Act (PIIA) oversight. Ms. Tann explained that it was due to scale and outlay volume, not a lack of internal controls.

• Rep. Keith Self questioned the logic of scale automatically creating more risk for improper payments, which Ms. Tann defended by citing the large volume of beneficiaries. Rep. Self then asked if the VA had resolved its Social Security matching issues. Mr. Friel confirmed that they had through quarterly validation and testing. Rep. Self pressed on when the VA would show results from these fixes, and Mr. Friel projected that by FY27, they would fall below the 10% improper payment threshold.

• Rep. Self then asked about $200 million in overpayments related to Chapter 35 education benefits. Ms. Tann said that the VA learned of the issue in late 2022 and implemented a monthly matching system in January 2025 to prevent future errors.

• Rep. Self and Chairman Luttrell both asked Mr. Arronte to elaborate on the complexity of PACT Act claims. Mr. Arronte explained that the PACT Act introduced numerous new presumptive conditions and locations for eligibility, complicating effective date decisions. He noted that VA claims processors must juggle multiple potential effective dates for each claim, making the process prone to error. He added that Congress did not need to legislate changes; instead, the VA needed to simplify rules, automate processes, and improve training.

• Following up, Mr. Arronte claimed that OIG first flagged the issue of improper effective dates in August 2022 at a VBA implementation conference. He proposed three solutions: simplifying effective date rules, automating parts of the claims process, and enhancing training and oversight. Ms. Tann responded that the VA had implemented several OIG recommendations, including tool updates and training aids, but admitted that some complexity must remain and requires human oversight.

• Chairman Luttrell asked if the VA had conducted a forensic audit of improper payments over the past 5–10 years. Ms. Gilson said that the Office of Financial Management (OFM) does not perform claim-level reviews but ensures accounting accuracy and relies on business-line controls. The Chairman expressed frustration at the continued trend of high overpayments and urged the VA to adopt fraud prevention technologies like AI and machine learning. Ms. Gilson replied that OFM is working on proactive fraud tools and collaborates closely with OIG on fraud detection.

• Ranking Member McGarvey revisited the issue of scale versus internal controls and asked Mr. Arronte for a second opinion. Mr. Arronte agreed that scale contributes to risk, but he emphasized that the compensation program should remain on the high-risk list due to its history of improper payments. He cited that 7 of his last 9 reports found issues with effective dates and stressed that similar programs saw improvement when kept under scrutiny. The Ranking Member asked whether the VA was voluntarily complying with PIIA and if anything was stopping it. Mr. Arronte said that no barriers existed and encouraged continued oversight.

• Ranking Member McGarvey asked about two 2024 OIG reports: one finding $836.8 million in underpayments to Vietnam veterans and another identifying $33.1 million in survivor underpayments. Ms. Tann committed to following up on the Vietnam veterans report. Mr. Friel reported that the VA had updated its survivor DIC policies so re-opened claims now trigger retroactive reviews, with only about 20 claims remaining for adjustment.

• Rep. Self criticized the “Washington speak” in the hearing and underscored that the veterans represented by campaign streamers on the hearing room flags deserve better. He asked Ms. Tann how many OIG and GAO recommendations remained open. Ms. Tann replied that she did not have the total but acknowledged the need to focus on outputs, not just internal activity.

• Rep. Amata Coleman Radewagen asked when the VA would begin using its authority under the Cleland-Dole Act to cancel overpayments due to administrative delay. Ms. Tann stated that implementation is still underway, with one section completed and another requiring timeliness standards still in progress.

• Rep. Radewagen confirmed that April 2025 PACT Act training was mandatory and asked whether all relevant employees had completed it. Ms. Tann said that she would confirm for compensation employees, while Mr. Friel said that all DIC claims processors had completed it. Rep. Radewagen also asked about automating effective dates. Ms. Tann acknowledged that there were no plans to fully automate due to complexity, but improvements to tools had been made.

• Rep. Radewagen asked whether the VA had the necessary data-sharing agreements for pensions and survivors’ pensions. Mr. Friel confirmed that they do. Rep. Radewagen then asked Mr. Arronte to identify early mistakes made in rolling out PACT Act effective date training. Mr. Arronte reported that training was too rushed, lacked evaluation, and resulted in high error rates. When asked if VA had done enough to fix the issues, he said no, but acknowledged that the department was making progress.

• Lastly, Rep. Radewagen asked if the VA’s quality assurance controls were sufficient to ensure correct effective dates. Mr. Arronte said no, citing persistently high error rates and the need for focused sampling of high-risk areas. He encouraged the VA to go beyond one-time reviews and concentrate efforts on known problem areas.

• Ranking Member McGarvey underscored the need to balance accuracy, compassion, and efficiency in the VA’s payment systems. He expressed support for VA staff and insisted on listening to workers and veterans to improve processes. The Ranking Member advocated for immediate mental health access for veterans facing debt crises and for clarity in communication. He stated that mistakes ultimately harm veterans, caregivers, and survivors and urged bipartisan cooperation to fix the system.

• Chairman Luttrell reiterated that improper payments must be reduced, ideally to zero, although some margin of error is inevitable in large systems. He urged the VA to implement OIG recommendations and voiced frustration over the rising overpayment trends. He echoed that overpaying veterans and then demanding repayment is deeply harmful, especially for those living paycheck to paycheck.

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