Review of Veterans Benefits Administration Large Retroactive Payments

The Office of Inspector General (OIG) conducted a special review of large retroactive Veterans Benefits Administration (VBA) payments at the Department of Veterans Affairs (VA) Regional Offices (VAROs) in response to an ongoing OIG investigation. The objective of this review was to determine whether other such incidents were occurring at other VAROs processing large retroactive payments and to what extent VBA and VAROs have designed and implemented effective policies, procedures, and mechanisms to prevent and detect this type of fraudulent activity. Prior investigations of fraud relating to large retroactive payments heightened the need for more attention to prevention and detection of fraud related to these benefits payments. Our review of 690 large retroactive payments at three VAROs found no similar cases to the alleged fraud under investigation. However, the VAROs we visited did not maintain adequate control over their date stamps, and thus the VAROs were vulnerable to fraud from backdated claim documentation. In general, the VAROs followed the required VBA procedures for reviewing, and approving large retroactive payments. However, the internal controls in place were not designed, and therefore, are not an effective means to uncover large retroactive payments based upon fraudulent documentation. Consequently, opportunities exist to bypass VBA internal controls to generate fraudulent large benefits payments. The Under Secretary for Benefits concurred with the report’s conclusions and recommendations and planned corrective actions are responsive to our concerns. We consider the completed actions for the recommendation 1 responsive to our concerns about the security of VARO date stamps and consider the issue resolved. We consider VBA’s proposed actions for recommendations 2 and 3 to be responsive to our concerns related to the lack of effective validation of medical evidence used to support large retroactive payments. However, until VBA fully implements the SOP for Quality Assurance Medical Evidence Validation Review, the recommendations will remain open. The OIG will assess the effectiveness of these new controls in future reviews of regional office operations.