Veterans Benefits Administration
Process for Preventing Improper Payments to Deceased Veterans Can Be Improved Gao ID: GAO-03-906 July 24, 2003In 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.
We found a vulnerability in VBA's interagency database matching process that results in improper payments to deceased veterans. Specifically, VBA' 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' 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.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-03-906, Veterans Benefits Administration: Process for Preventing Improper Payments to Deceased Veterans Can Be Improved
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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:
VBA Payments to Decreased Beneficiaries:
GAO-03-906:
Contents:
Letter:
Results in Brief:
Background:
VBA's Death Match Process Does Not Identify All Veterans Receiving
Improper Disability Payments:
Conclusions:
Recommendations for Executive Action:
Agency Comments:
Abbreviations:
C&P: Compensation and Pension:
SSA: Social Security Administration:
VBA: Veterans Benefits Administration:
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.[Footnote 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[Footnote 2] with the entire SSA Death Master
File, which contains information dating back to 1980 on deceased
individuals.[Footnote 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.[Footnote 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 payments made to deceased
beneficiaries.[Footnote 5] We conducted this review from January 2003
to May 2003 in accordance with generally accepted government auditing
standards.
Results in Brief:
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.
Background:
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.[Footnote 6]
VBA's Death Match Process Does Not Identify All Veterans Receiving
Improper Disability Payments:
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.[Footnote 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.[Footnote 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 these funds.[Footnote 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.
Conclusions:
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.
Recommendations for Executive Action:
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.
Agency Comments:
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:
FOOTNOTES
[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.
[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.
[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.
[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.
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