oversight

Veterans Benefits Administration: Process for Preventing Improper Payments to Deceased Veterans Can Be Improved

Published by the Government Accountability Office on 2003-07-24.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

             United States General Accounting Office

GAO          Report to the Secretary of Veterans
             Affairs



July 2003
             VETERANS
             BENEFITS
             ADMINISTRATION

             Process for Preventing
             Improper Payments to
             Deceased Veterans
             Can Be Improved




GAO-03-906
Contents


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




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           Page i                               GAO-03-906 VBA Payments to Deceased Beneficiaries
United States General Accounting Office
Washington, DC 20548




                                   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 beneficiaries2 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.



                                   Page 1                                 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
Results in Brief   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
Background         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.




                   Page 2                               GAO-03-906 VBA Payments to Deceased Beneficiaries
                        VBA’s death match process does not identify veterans who died while
VBA’s Death Match       waiting for claims decisions and were improperly paid benefits after their
Process Does Not        deaths. This happens because information on a veteran who dies during
                        the application process and is approved for benefits months later would
Identify All Veterans   not appear in both the VBA and SSA databases at the same time, thus
Receiving Improper      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,
Disability Payments     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-of-
                        kin, guardians, or friends inform VBA of the death of the beneficiary.




                        Page 3                               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
Conclusions            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
Recommendations        payments to deceased veterans, we recommend that you instruct the
for Executive Action   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.




                       Page 4                                GAO-03-906 VBA Payments to Deceased Beneficiaries
                  We received oral comments on a draft of this report. VBA agreed with our
Agency Comments   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




(130271)
                  Page 5                        GAO-03-906 VBA Payments to Deceased Beneficiaries
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