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The VA Improperly Paid Incarcerated Vets $100 Million Because It Didn’t Care Enough To Adjust Benefits

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Veterans in prison aren’t supposed to receive full benefits, but because of Department of Veterans Affairs’ incompetence, the agency paid out $104.1 million to vets who didn’t deserve it.

The VA inspector general released a report showing that from May 2008 to June 2015, the Veterans Benefits Administration (VBA) failed to adjust benefits for 1,300 out of 2,500 cases examined in federal penal institutions, a failure rate of 53 percent.

The cost of not reducing payments to incarcerated vets in federal institutions totaled $59.9 million.

If VBA doesn’t get its act together, the inspector general estimated that the agency could pay out an additional $41.8 million from fiscal year 2016 through fiscal year 2020 to vets in federal prisons.

The VBA also failed to adjust payments to incarcerated vets in local and state prisons, with the total of improper payments amounting to $44.2 million, resulting in an overall amount of $104.1 million lost.

Future estimates place the amount lost in local and state prisons at $162 million. If the VBA refuses to change any of its practices, it could lose an additional $203.8 million on top of the $104.1 million it already blew.

Currently, the VA’s main focus is on lowering the disability backlog, but has elected to ignore readjusting these incarceration benefits claims because it doesn’t consider them part of that backlog. In fact, numerous employees told investigators that they hadn’t worked on a single incarceration adjustment claim in as long as two years.

As a result, the agency has already lost $100 million and could lose up to $300 million by fiscal year 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,” the report states. “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.”

Disability compensation is normally paid to vets who incur injuries as a result of military service, but federal law states that the VA must reduce these payments for vets incarcerated for more than 60 days. That is, on the 61 day of incarceration, the VBA is supposed to decrease benefits.

The report provided an example of a veteran incarcerated in federal prison on felony charges, who continued to receive benefits based on a 100 percent service-connected disability rating. Since the VBA did not readjust benefits, the agency gave the felon an extra $55,000, which the inspector general said should be recouped.

In another case, a veteran was in federal prison receiving benefits, resulting in over-payment of $107,000.

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