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The VA is spending millions of dollars to collect debts that it created

The U.S. Department of Veterans Affairs is spending millions of dollars a year and using 229 full-time employees to recoup benefits that were overpaid in error — often because of a mistake on the VA’s part.

The VA spent at least $26 million last year to collect overpayment debts, according to agency records obtained through a Freedom of Information Act request. In fact, the VA spent about 2 percent of the money it sought to collect just to keep the debt-collection process moving forward, evidence that the agency continues to struggle with properly providing benefits to veterans.


A VICE News investigation published in March found that overpayment notices from the VA’s Debt Management Center have nearly tripled since 2013. This year, the VA sought at least $1.06 billion in funds it accidentally paid to veterans, new records show, after seeking $1.4 billion last year. Those efforts are costly — the money the VA spent on collection rose nearly 50 percent from $17.5 million in 2013.

Read: The VA overpaid tens of thousands of veterans, and now it says they have to give the money back

At a House committee hearing on the issue Wednesday, veterans advocates testified that the VA’s own inefficiencies are largely causing these overpayments, but the responsibility for clearing the debt falls to the veterans.

The VA, which requested $187 billion for its 2018 budget, is required by law to recover its losses, yet the debt collection process if often painful for veterans. Veterans have only a few months to address overpayment notices — sometimes for debts totaling tens of thousands of dollars — before the agency starts withholding their benefits. For some veterans, monthly benefits checks are their only source of income.

Overpayment debts can arise for a number of reasons — a veteran who gets benefits for her spouse might get divorced and forget to tell the VA, or a veteran receiving G.I. Bill funds might drop out of school without notice. But often the VA makes the mistake, and veterans say the agency’s bureaucratic hurdles make it extremely challenging to dispute a debt, even when it’s not their fault.


Sometimes the overpayment notice literally gets lost in the mail, and a veteran doesn’t find out she owes the VA money until the agency withholds her benefits. A Government Accountability Office report in July found that the VA “lacks key elements of an effective mail management program,” including inconsistent data on mail returned to sender.

William Montgomery, who served in Iraq twice, got a letter last August saying the VA would start collecting $5,856 he owed. A second letter said he owed $9,832. There was no explanation for the increase, and when Montgomery tried to appeal the debt, the VA claimed he was a no-show at his appeal hearing, so a decision had been made in his absence. He got a notice of the hearing, which had been scheduled for Sept. 27, six weeks later on Nov. 7.

Watch: Veterans are frustrated with the VA’s painful debt collection process

Even though the VA says it’s working to reform its debt management systems, advocates and lawmakers say more needs to be done.

In September, Rep. Chellie Pingree, a Maine Democrat, introduced the Veterans Fair Debt Notice Act of 2017, which aims to improve the process for veterans. The bill requires the VA to send debt notifications through certified mail and use “plain language” in its letters that explain why the veteran owes the agency money.

Prioritizing dependency claims to avoid overpayments could also make a difference, David Spivey, deputy director of the National Veterans Affairs and Rehabilitation Division at the American Legion, said during Wednesday’s hearing. Veterans should be allowed to update these statuses through e-benefits, a self-service web portal used by the VA and the Department of Defense, he said.


The VA said it is already moving in this direction. A spokesman said the agency reviews “the reasons and trends for overpayments, adjusts procedural guidance, enhances business systems, and provides training to address payment errors and avoid future overpayments,” in an emailed statement.

Since August, the Debt Management Center has started to implement changes to improve its practices, Beth Murphy, the VA’s director of compensation service, told lawmakers. Rather than withholding a veteran’s entire benefits check, the agency automatically puts the veteran on a payment plan. The VA has also extended customer service hours and worked to make collection letters more clear and concise.

Access to information about debts, confusing language in collection letters, and the hardship veterans faced when benefits were withheld were all issues highlighted in VICE News’ investigation.

But these efforts haven’t always resulted in fewer frustrations for veterans, Democratic Rep. Julia Brownley of California told the committee. She said she still hears from veterans about confusing language in overpayment letters.

John Towles, deputy director of legislative service for Veterans of Foreign Wars, said in an interview that the VA should take more steps to verify debts and provide more information to veterans — like a line-item accounting similar to a credit card statement — before they go into collections. His organization assists about 250 veterans each year with overpayment issues.

Even if better systems are put in place, Towles said, enforcing these changes will be another challenge. “There are all these processes in place that look good on paper, but when it comes time to implement them, that’s where we seem to have the biggest issues,” he said.