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A new congressional report concludes that at least 28,283 disabled retirees were denied retroactive pay awards during a time when rushed efforts to clear a huge backlog of claims led program administrators to stop doing quality-assurance checks on the claims decisions.
And of the original 133,057 potentially eligible veterans, 8,763 died before their cases could be reviewed for retroactive payments, according to the report by the majority staff of the House Oversight and Government Reform domestic policy subcommittee.
The title of the report, released July 15, sums up what happened: "Die or Give Up Trying: How Poor Contractor Performance, Government Mismanagement and the Erosion of Quality Controls Denied Thousands of Disabled Veterans Timely and Accurate Retroactive Retired Pay Awards."
At a hearing the next day, the subcommittee chairman, Rep. Dennis Kucinich, D-Ohio, called the problems "an intolerable insult to veterans," and vowed to follow up.
"On behalf of all those families who waited and waited ... hoping for financial help which they needed so sorely ... this Congress is going to relentlessly pursue this matter," Kucinich said.
At issue are the Concurrent Retirement and Disability Payments and Combat-Related Special Compensation programs, approved by Congress in 2003 and 2004 to allow large numbers of disabled retirees to receive full concurrent military retirement pay and veterans' disability compensation.
For more than a century before the programs were enacted, disabled retirees had to forfeit a dollar of military retirement pay for every dollar they received in veterans' disability payments.
About 223,180 disabled retirees receive monthly CRDP payments, while another 60,155 receive monthly payments under CRSC.
After the programs launched, many disabled veterans also became eligible for a single retroactive payment because of changes in their disability status.
As of September 2006, the Defense Finance and Accounting Service determined that 133,057 veterans were potentially eligible for these so-called "VA Retro" payments. Over time, another 84,237 newly retired and other veterans were added to the list.
Yet as of March 1, more than 60,000 eligible veterans were still waiting for their cases to be reviewed under the two programs.
The claims backlog was raised during a February defense budget hearing. At the time, the backlog was said to total more than 39,000 claims. Pentagon Comptroller Tina Jonas told the Senate Budget Committee that she had recently asked Zack Gaddy, the director of the Defense Finance and Accounting Service, to triple the number of people working on the backlog. Jonas said she had been assured that the backlog would be cleared by April.
That did not happen, according to the subcommittee report, because Lockheed Martin, the contractor hired in July 2006 to compute the complex retroactive pay awards, had trouble making the computations fast enough to eliminate the backlog quickly.
The complexity of the claims, and the format of the data Lockheed Martin received from the Pentagon and Department of Veterans Affairs, hindered the contractor's ability to develop software to automate the process. As a result, Lockheed Martin had to do its work manually. It did, with workers freshly hired in Cleveland who received only six weeks of training.
Lockheed Martin missed its original November 2007 deadline and every succeeding one, the report stated. The committee said Gaddy personally monitored the program and "frequently complained to Lockheed about low productivity and the high number of errors DFAS quality-control auditors were detecting."
Gaddy also expressed concern that the delays were damaging the reputation of DFAS, the report said.
To ease congressional concerns and speed up the review process, DFAS chose several "questionable approaches" — the most serious being a decision to suspend independent quality checks on Lockheed's computations.
After those measures went into effect March 1, up to 60,051 payments were made to eligible veterans without review. "Serious questions" remain about the accuracy of these payments, the subcommittee report said.
In the dark
"The subcommittee majority staff does not know how many erred payments were sent," the report stated. "We do not believe that DFAS knows, either."
Claims from at least another 28,283 retirees whom Lockheed Martin determined were due no back payments also were decided without review.
"Neither DFAS nor Lockheed knows how many ‘No Pay Due' letters could be in error," the subcommittee report states.
The president of Lockheed Martin Business Process Solutions defended his group's work at the July 16 hearing.
"We did the best we could, given the circumstances in which we were working," Joseph Cipriano said. "We treated this just as importantly as we do our larger ... programs."