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Hearing Transcript on Board of Veterans' Appeals Adjudication Process and the Appeals Management Center.

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BOARD OF VETERANS' APPEALS ADJUDICATION PROCESS AND THE APPEALS MANAGEMENT CENTER

 



 HEARING

BEFORE  THE

SUBCOMMITTEE ON DISABILITY ASSISTANCE AND MEMORIAL AFFAIRS

OF THE

COMMITTEE ON VETERANS' AFFAIRS

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION


SEPTEMBER 25, 2007


SERIAL No. 110-46


Printed for the use of the Committee on Veterans' Affairs

 

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COMMITTEE ON VETERANS' AFFAIRS

BOB FILNER, California, Chairman

 

CORRINE BROWN, Florida
VIC SNYDER, Arkansas
MICHAEL H. MICHAUD, Maine
STEPHANIE HERSETH SANDLIN, South Dakota
HARRY E. MITCHELL, Arizona
JOHN J. HALL, New York
PHIL HARE, Illinois
MICHAEL F. DOYLE, Pennsylvania
SHELLEY BERKLEY, Nevada
JOHN T. SALAZAR, Colorado
CIRO D. RODRIGUEZ, Texas
JOE DONNELLY, Indiana
JERRY MCNERNEY, California
ZACHARY T. SPACE, Ohio
TIMOTHY J. WALZ, Minnesota

STEVE BUYER,  Indiana, Ranking
CLIFF STEARNS, Florida
JERRY MORAN, Kansas
RICHARD H. BAKER, Louisiana
HENRY E. BROWN, JR., South Carolina
JEFF MILLER, Florida
JOHN BOOZMAN, Arkansas
GINNY BROWN-WAITE, Florida
MICHAEL R. TURNER, Ohio
BRIAN P. BILBRAY, California
DOUG LAMBORN, Colorado
GUS M. BILIRAKIS, Florida
VERN BUCHANAN, Florida

 

 

 

Malcom A. Shorter, Staff Director


SUBCOMMITTEE ON DISABILITY ASSISTANCE AND MEMORIAL AFFAIRS
JOHN J. HALL, New York, Chairman

CIRO D. RODRIGUEZ, Texas
PHIL HARE, Illinois
SHELLEY BERKLEY, Nevada
DOUG LAMBORN, Colorado, Ranking
MICHAEL R. TURNER, Ohio
GUS M. BILIRAKIS, Florida

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records of the Committee on Veterans' Affairs are also published in electronic form. The printed hearing record remains the official version. Because electronic submissions are used to prepare both printed and electronic versions of the hearing record, the process of converting between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process is further refined.

 

       

C O N T E N T S
September 25, 2007


Board of Veterans' Appeals Adjudication Process and the Appeals Management Center

OPENING STATEMENTS

Chairman John J. Hall
    Prepared statement of Chairman Hall
Hon. Doug Lamborn, Ranking Republican Member
    Prepared statement of Congressman Lamborn


WITNESSES

U.S. Department of Veterans Affairs:
    Arnold Russo, Director, Appeals Management Center, Veterans Benefits Administration
        Prepared statement of Mr. Russo
    Hon. James P. Terry, Chairman, Board of Veterans' Appeals
        Prepared statement of Mr. Terry


American Legion, Steve Smithson, Deputy Director, Veterans Affairs and Rehabilitation Commission
    Prepared statement of Mr. Smithson
Disabled American Veterans, Adrian Atizado, Assistant National Legislative Director
    Prepared statement of Mr. Atizado
National Organization of Veterans Advocates, Inc., Richard Paul Cohen, President
    Prepared statement of Mr. Cohen
National Veterans Legal Services Program, Barton F. Stichman, Joint Executive Director
    Prepared statement of Mr. Stichman
Paralyzed Veterans of America, Carl Blake, National Legislative Director
    Prepared statement of Mr. Blake
Veterans of Foreign Wars of the United States, Eric A. Hilleman, Deputy Director, National Legislative Service
    Prepared statement of Mr. Hilleman


MATERIAL SUBMITTED FOR THE RECORD

Post Hearing Questions and Responses for the Record:

Hon. Doug Lamborn, Ranking Republican Member, Subcommittee on Disability Assistance and Memorial Affairs, Committee on Veterans' Affairs, to Robert Chisholm, National Organization of Veterans Advocates, letter dated October 1, 2007 [NO RESPONSE TO THE QUESTION WAS RECEIVED .]

Hon. Doug Lamborn, Ranking Republican Member, Subcommittee on Disability Assistance and Memorial Affairs, Committee on Veterans' Affairs, to Bart Stichman, National Veterans Legal Services Program, letter dated October 1, 2007 [NO RESPONSE TO THE QUESTIONS WAS RECEIVED .]

Hon. Doug Lamborn, Ranking Republican Member, Subcommittee on Disability Assistance and Memorial Affairs, Committee on Veterans' Affairs, to Carl Blake, National Legislative Director, Paralyzed Veterans of America, letter dated October 1, 2007

Hon. Doug Lamborn, Ranking Republican Member, Subcommittee on Disability Assistance and Memorial Affairs, Committee on Veterans' Affairs, to Steve Smithson, Deputy Director, Veterans Affairs and Rehabilitation Commission, American Legion, letter dated October 1, 2007

Hon. Doug Lamborn, Ranking Republican Member, Subcommittee on Disability Assistance and Memorial Affairs, Committee on Veterans' Affairs, to Eric A. Hilleman, Deputy Director, National Legislative Service, Veterans of Foreign Wars of the United States, letter dated October 1, 2007

Hon. Doug Lamborn, Ranking Republican Member, Subcommittee on Disability Assistance and Memorial Affairs, Committee on Veterans' Affairs, to Hon. James P. Terry, Chairman, Board of Veterans' Appeals, U.S. Department of Veterans of Affairs, letter dated October 1, 2007


BOARD OF VETERANS' APPEALS ADJUDICATION PROCESS AND THE APPEALS MANAGEMENT CENTER


Tuesday, September 25, 2007
U. S. House of Representatives,
Subcommittee on Disability Assistance and Memorial Affairs,
Committee on Veterans' Affairs,
Washington, DC.

The Subcommittee met, pursuant to notice, at 2:05 p.m., in Room 334, Cannon House Office Building, Hon. John J. Hall [Chairman of the Subcommittee on Disability Assistance and Memorial Affairs] presiding.

Present: Representatives Hall, Hare, Berkley, and Lamborn.

OPENING STATEMENT OF CHAIRMAN HALL

Mr. HALL. Good afternoon.  I would like to welcome you all here to this hearing of the House Committee on Veterans' Affairs, Subcommittee on Disability Assistance and Memorial Affairs, and ask if we could all rise for the Pledge of Allegiance.  The flags are located at both ends of the room.

[Pledge of Allegiance.]

Mr. HALL. Thank you.  First of all I would like to thank the witnesses for coming today to appear before the Subcommittee for our discussion about the Board of Veterans’ Appeals (BVA) and the Appeals Management Center (AMC).

I know the challenges that are presented by the growing backlog at both the BVA and the AMC are troubling for us all.  Making the administrative appeals process better and quicker for our veterans is a shared priority and I thank you for joining me and the Committee in helping to find workable solutions.

As many of you know, the Board of Veterans’ Appeals was established in 1933 and was designed to provide the veteran with an opportunity to appeal a decision issued by one of the 57 regional offices (RO) at the VA.  No one disputes the importance of this step in the claims process, but unfortunately it has become more foe than friend to some of our veterans who are appealing a regional office decision.

Moreover, it seems to be an unspoken belief held by many veterans and their advocates that given the variances and RO level decisions an appeal to the BVA may almost be a necessity.  However, appealing an RO decision presents many challenges to our veterans.  With a current backlog of over 39,000 cases, the average length of an appeal filed with the BVA is an amazing 761 days.  This is after the 240 days a claim spends at the regional office.  This inefficiency is only exceeded by the outcome of these long waits—a 71 percent denial rate by the BVA.  Also, although the BVA claims a 93 percent accuracy rate, the U.S. Court of Appeals for Veterans Claims (CAVC) sets aside or remands over 70 percent of the cases appealed indicating a much lower accuracy rate in reality.  It is clear from reading the BVA’s fiscal year 2006 Chairman's Report that these percentages may not be based on the same statistics.

There are many reasons for the current 39,000 plus backlog at the Veterans Benefits Administration (VBA).  First, as pointed out by several veterans advocacy organizations in their testimonies, an entity such as the BVA, which employs a system of rewards based on the quantity of work outputs rather than the quality of those work outputs, will soon become an organization that adopts the principle of quantity over quality, consciously or unconsciously. 

The effort by the BVA to avoid remands is also yielding mixed results at best.  Additionally, unless the U.S. Department of Veterans Affairs (VA) standardizes the training process for its raters, this often subjective system will continue to yield inequitable results.  Most claims raters indicate that their major source of learning was on the job training.  As the preliminary findings of the Veterans' Disability Benefits Commission indicate, over 50 percent of the raters believe that they are ill-equipped to perform their jobs.  Over 80 percent of raters, and Veterans Service Organizations (VSO’s), believe that there is too much emphasis placed on speed relative to accuracy.  Also, the Institute for Defense Analysis (IDA), in its recent report of the analysis of variances in VA disability compensation, recommends that VA undoubtedly needs to:  first standardize initial and ongoing training for rating specialist; second, increase oversight of rating decisions; third, develop and implement metrics to monitor consistency and adjudication results; and fourth, increase oversight and review of rating decisions and to improve and expand data collection and retention.

The IDA Report also indicates that the current STAR Program (Systematic Technical Accuracy Review) is insufficient to promote consistency and ratings across regional offices, as very little action has been taken on any trends found at region offices.  Among other things, I would like to hear what the VBA intends to do to improve the STAR program as well as an update on its Expedited Claims Adjudication Initiative.

The increased work load at both the AMC and BVA is not lost on this Committee.  The most recent fiscal year 2007 figures indicate that there are more than 18,300 remands pending at the AMC and over 39,206 appeals waiting for adjudication at the BVA. 

Moreover, the BVA expects to receive up to 48,000 appeals through the course of 2007.  As such, any increase in productivity has not been able to keep pace with the increase of appeals being sent to the BVA.  So we are aware of the tall task that we are facing. 

On a separate but related note,  I am heartened by the fact that the fiscal year 2008 Budget Resolution allowed, and the fiscal year 2008 Military Construction-VA Appropriations Bill will provide, funding for 1,000 full-time equivalents (FTEs) to help with the growing claims backlog.  This fact notwithstanding, I firmly believe that the only way to maximize VBA employees' effectiveness and lessen the backlog is to give them the necessary tools and training to provide accurate ratings.

To be clear, it is not my intention simply to point out the shortcomings of the BVA or the AMC.  I think we should all abide by the underlying and stated principles of the entire VA system, which is to provide a non-adversarial system for awarding our veterans the benefits they have earned.  We need to begin to see ourselves, the VA, Congress, VSO’s and advocacy organizations alike as partners in fulfilling this mission. 

I also firmly believe that with the expected surge in filings by returning Operation Enduring Freedom/Operation Iraqi Freedom (OEF/OIF) veterans, VA as the gateway for, and the creator of, the record that forms the basis for appeal, should amplify its role in improving the benefits claims processing and adjudication system to get our veterans off the appeals hamster wheel, a term that we have heard quite often.

I am looking forward to hearing testimony that sets forth recommendations that are consistent with producing the best outcomes for our veterans who are appealing RO decisions and improving the overall system of claims adjudication.

Thank you.  And now I would like to recognize Ranking Member Lamborn for his opening statement.

[The statement of Chairman Hall appears in the Appendix.]

OPENING STATEMENT OF HON. DOUG LAMBORN

Mr. LAMBORN. Thank you, Mr. Chairman.  I thank you for holding this hearing today on the Board of Veterans’ Appeals and its role in the efficient processing of disability compensation claims.  And I welcome our witnesses, especially Chairman Terry.  And I thank you all for your contributions to the Veterans Affairs system.

As everyone is aware, the VA’s Compensation and Pension backlog has reached an epidemic and disgraceful level.  While I understand that there are numerous challenges facing the Board and the Appeals Management Center, both play a significant role in veterans waiting many months, if not years, for an accurate rating.

I agree with Mr. Smithson of the American Legion that we can’t just look at the Board in a vacuum.  Poor quality work at the regional office level results in much larger problems later in the appeals process.  We must ensure that rating boards strive to achieve thoroughness and accuracy along with efficiency in their work.  Doing so is a key step toward eventual elimination of the backlog.

I do want to commend Chairman Terry for the excellent work the Board is doing.  They are deciding a record number of appeals this fiscal year.  While your output has increased, the number of claims waiting to be reviewed, though, is still too high.  While I agree that Congress needs to adequately staff the Board and the Appeals Management Center, I don’t believe that hiring more people is the only solution. 

I also acknowledge that there is no silver bullet that will make a significant and immediate impact on the backlog.  However, I do believe that the system needs to be fundamentally changed.  That is why I am anxiously awaiting the findings of the Disability Commission that reports next month.  While fundamental change is needs, I believe that we can take immediate, vital action by passing H.R. 3047 which I have introduced, the Veterans Claim Processing Innovation Act of 2007.  H.R. 3047 will bring VA’s compensation and pension system into the 21st century.  By increasing accountability and leveraging technology at the Veterans Benefits Administration, this bill would improve the accuracy and speed of benefits claims and I commend it to the attention of my colleagues.

Several of the provisions of H.R. 3047 are recommendations from our witnesses today and I thank them for their support.  I thank you, Mr. Chairman, for promising to hold a legislative hearing on H.R. 3047 next month and I hope that you will soon join two of our colleagues in co-sponsoring this bipartisan bill.

I want to thank the witnesses for their testimony and yield back.

[The statement of Congressman Lamborn appears in the Appendix.]

Mr. HALL. Thank you, Mr. Lamborn for your thoughtful and insightful comments.  And as you noted, we will be having a legislative hearing on H.R. 3047 next month.  I am looking forward to that and to hearing testimony from some of our expert, our usual expert witnesses on that bill among others that we will be looking at on that day.

I would also like to welcome our panelists who are testifying today.  Joining us on our first panel and if you could come up as you are called.  Mr. Barton Stichman, Joint Executive Director for the National Veterans Legal Services Program; Mr. Richard Cohen, President of National Organization of Veterans Advocates, Inc. (NOVA); Mr. Carl Blake, National Legislative Director for Paralyzed Veterans of America (PVA); Mr. Steve Smithson, Deputy Director of the Veterans Affairs and Rehabilitation Commission for the American Legion; Mr. Adrian Atizado, Assistant National Legislative Director for Disabled American Veterans (DAV); and last but not least, Mr. Eric A. Hilleman, Deputy Director of the National Legislative Service for the Veterans of Foreign Wars (VFW).

It is a large and extremely knowledgeable panel.  As usual your comments are entered into the written record, so you can deviate or shorten them as you wish.  We will recognize each of you for five minutes starting with Mr. Stichman.

STATEMENTS OF BARTON F. STICHMAN, JOINT EXECUTIVE DIRECTOR, NATIONAL VETERANS LEGAL SERVICES PROGRAM; RICHARD PAUL COHEN, PRESIDENT, NATIONAL ORGANIZATION OF VETERANS ADVOCATES, INC.; CARL BLAKE, NATIONAL LEGISLATIVE DIRECTOR, PARALYZED VETERANS OF AMERICA; STEVE SMITHSON, DEPUTY DIRECTOR, VETERANS AFFAIRS AND REHABILITATION COMMISSION, AMERICAN LEGION; ADRIAN ATIZADO, ASSISTANT NATIONAL LEGISLATIVE DIRECTOR, DISABLED AMERICAN VETERANS; AND ERIC A. HILLEMAN, DEPUTY DIRECTOR, NATIONAL LEGISLATIVE SERVICE, VETERANS OF FOREIGN WARS OF THE UNITED STATES

STATEMENT OF BARTON F. STICHMAN

Mr. STICHMAN.  Thank you.  I am very thankful that you invited us to testify this morning.  Before discussing the Board of Veterans' Appeals, I would like to second the comments that I have just heard from both the Chairman and Congressman Lamborn about the fact that the solution to the dysfunctional VA System lies in large part in reforming the way the regional offices decide cases and process cases.  I think if you had to concentrate on one of the three tiers of the adjudicatory process, the regional offices, the Board of Veterans' Appeals, or the Veterans Court, which reviews Board of Veterans' Appeals decisions, the regional offices are the most important.  And they handle the majority of all the claims.  And the problem is they are not deciding them accurately in the first instance.  And part of the reason for the problems is the pressure put on them, on really all levels, to decide cases quickly.  So while we all condemn the backlogs, there is a sliding scale here.  There are two different things one has to weigh.  Speed versus quality.  And I worry a little bit when we concentrate only on the backlog and not on quality, because that is what encourages this hamster wheel system from continuing by great concentration on speed and not enough concentration on quality.

With that said, let me turn to my testimony on the Board of Veterans' Appeals.  The most prominent fact when you look at the Board of Veterans' Appeals to evaluate its performance is the report card that the Court of Appeals for Veterans Claims issues each year on BVA decision making.  They review and make decisions on between 1,000 and 2,800 BVA decisions a year.  And over the last 12 years as the Chairman indicated, the over 77 percent of the decisions the Courts reviewed, it has set aside the Board decision and sent it back the large majority of those the Court found at least one error that was prejudicial to the claimant in processing the claim.  That is a terrible record.  That would be an “F” grade if one were grading from “A” to “F.” 

Now to anticipate what Chairman Terry might say about the 77 percent figure.  The cases that the Court judges are not randomly selected.  They are self selected by the veterans who appeal.  But it is clear to me and I think it is to the other members of this panel that it is not only Board decision—it is not the Board decision that are in error, that the are the only ones that are appealed.  A lot of veterans with erroneous decisions don’t bother to appeal.  They give up.  They have been pursuing their claim for years.

And so while the 77.7 percent figure is not a random sample, it is definitely evidence of something that is majorly wrong with the decision making process.  In reviewing the thousands of decisions we have reviewed and Court decisions analyzing them, there are three significant factors that we believe exist.  One is the Board keeps making the same types of errors over and over again.  The failure to comply with the duty to assist.  The failure to evaluate fairly, the lay evidence in the record.  The failure to explain why positive medical evidence is rejected by the Board.

Second, it is my understanding that Board management does not downgrade the Veterans Law Judges (VLJs) for this—for making these types of errors.  And so, by not downgrading their performance, it actually encourages them to continue in this vein.

And third, the Board campaign over the last few years to eliminate what they call unnecessary remands has actually contributed to the Board’s poor performance by encouraging the Board to make a final decision on a case that should be remanded.  And what happens in that situation is the claimant often appeals to the Court and the Court overturns it a year or two later sending it back to the Board to do what the Board should of done two or three years earlier.

The solutions that we advocate are two-fold.  One, the Congress should require a different selection process for judges at the BVA.  There is a system that most Federal agencies use.  It is the Administrative Law Judge system for selection.  And it is the only system, merit base system of judges in the United States.  And it allows selection of people who may not come from within the agency and, therefore, may not have developed the habits that clearly the Veterans Law Judges have accumulated over the years.

And so I commend to the Committee looking at the Administrative Law Judge (ALJ) system as a method to reform the Board and its decision making process.  I don’t mean to suggest that there are not talented judges on the Board of Veterans' Appeals, they are.  But it is helpful to get a blend of experience as we found out at the Veterans Court when you select judges for that Court to increase the quality of decision making.

And at least, if Congress doesn’t do that, they should require that the evaluative criteria used by the Board management to judge, the Veterans Law Judges be made public so one can see whether they are downgrading the types of errors that the Court is overturning, because you are not going to see an improvement unless there is some consequences or better instruction to the Board members.

Thank you.

[The statement of Mr. Stichman appears in the Appendix.]

Mr. HALL. Thank you, Mr. Stichman.  Mr. Cohen, you are now recognized for five minutes.

STATEMENT OF RICHARD PAUL COHEN

Mr. COHEN. Thank you, Chairman Hall and Members of the Subcommittee.  I will agree with the observations that Mr. Stichman has made and add some of my own in addition. 

I believe that the VA needs to make faster decisions and better decisions.  Part of the problem with the decision making at the regional office and at the Board of Veterans' Appeals is the condition of the file.  I brought a little show and tell today.  This big pile over here is what I would call a small claims file.  If you looked at it you would see that there are no page numbers.  There is no index.  There is no way for a decision review officer at the regional office nor for a Veterans Law Judge at the BVA to be able to select out a piece of important evidence in here unless the representative happens to carry some post-it notes in his or her pocket and gets hold of the file and then puts post-it notes in it.

The file that I am holding in my hand is the file that I presented to the Veterans Law Judge in Washington, D.C., in this case.  These are the only significant papers out of that file, but still because my client selected a video hearing and we were in St. Petersburg, there was no way for me to show the judge where these documents were contained in this file.

If you follow what I am saying the bottom line here is that the VA must go paperless and must have the documents indexed so we can tell the people who are doing the decision making where the important documents are.  The reason why this is so important is as the Committee has recognized, the sheer number of cases that the VA is dealing with.  In the BVA, we have four teams around the country.  Each team has 14 Veterans Law Judges supported by 60 attorneys who are writing the decisions.  These four teams cover the entire country and some teams cover as many as 16 States. 

I know there was an opinion that just throwing more money at the problem will not solve the problem.  Well, I am here to tell you that it is impossible for the VA regional offices the way they are staffed presently and impossible for the BVA the way it is staffed presently to return prompt and accurate decisions.  They just can’t do it.  They are trying to keep up every way they can, but there is a flood of cases coming in.  We know that about five percent of all the claims that are filed in the regional office will end up at the Board of Veterans' Appeals.  We also know that the servicemembers in Iraq and Afghanistan have sustained injuries to the extent that more than 10,000 are already injured and will be filing claims.  So we can expect that there are going to be a lot of claims coming down the line.

And because of that fair share system that the BVA has put into place to try to move cases along, the attorneys are expected to write three to five decisions a week.  Veterans Law Judges are expected to sign 15 to 20 cases a week.  That is impossible.  And they won’t be able to keep up with it.

The Chairman has already said in his 2006 report that it is going to be unrealistic to assume that they are going to be able to keep up. 

In addition, I would call your attention to the fact that not only does the Court remand a lot of the cases that come out of the Board, but on the actual decisions on the merit, on the merits, the Court only affirms 20 percent of the cases, which means 80 percent of the cases are wrong.  And I attribute that to the number of cases that the Board has to deal with.  Part of the speed problem, the difficulty of resolving the cases are what we call unnecessary remands where the Board will remand it when the evidence is sufficient to make a decision just to develop the case in order to deny or remand to get additional information that is not really necessary.  The reason why that is done is there is a production quota.  And a remand counts as much as an actual decision.  So there is a motivation to remand cases unnecessarily.

We could move cases a little faster if the Board would change its policy to encourage conversations between the judges, their staff, and the representatives of the veteran.  Might be able to resolve cases without an actual decision.  The Appeals Management Center is just not helpful to veterans in the opinion of NOVA.  All cases end up going there where they languish for a while and then get bounced out to the regional office.  We would rather see our cases go back to the regional office for development if it is necessary.

Thank you.

[The statement of Richard Paul Cohen appears in the Appendix.

Mr. HALL. Thank you, Mr. Cohen.  And I was saying to Mr. Lamborn that when we have the hearing in October on his bill, his information technology bill, that perhaps you could come back with that stack of paper as a witness.

Moving along, Mr. Blake, you are now recognized for five minutes.

STATEMENT OF CARL BLAKE

Mr. BLAKE. Mr. Chairman, Members of the Subcommittee, on behalf of PVA I would like to thank you for the opportunity to testify today on the Board of Veterans' Appeals and the Appeals Management Center.

PVA appeals representatives play an important role in the appeals process at both the BVA and the AMC.  Our representatives prefer to resolve claims without the need for an appeal by educating our members on the benefits provided to them by law, by obtaining those benefits for those veterans, by avoiding frivolous claims and appeals and by aiding the VA in identifying issues and assembling evidence.

Our goal ultimately is to resolve differences with the VA at the lowest possible level through cooperation with VA’s decision makers.  As Congress attempts to address concerns related to the claims backlog specifically as it relates to what occurs in the appeals process, it is important to understand factors contributing to the current situation at BVA.

The BVA anticipates that by the end of fiscal year 2007, the Board will enter approximately 45,000 decisions.  Currently, the average docket date for decisions entered by the Board is June 2005.  Meanwhile, approximately one-third of appeals are currently remanded.  According to the VA’s own studies, a significant number of BVA remands were required because the agency of original jurisdiction, usually the regional office, failed to fully and or properly develop or decide the claim in accordance with existing instructions and directives of the department.  This factor alone should be examined and addressed sooner rather than later as we believe that no meaningful reduction in the claims backlog can be achieved without paying attention to this problem first.

Realizing that the regional offices were doing a poor job on remands, the BVA began doing its own claims development without regulations permitting it.  The VA then changed the regulations to allow the practice.  The regulations were subsequently found not valid in the court case, DAV versus The Secretary of Veterans Affairs.  In response to this decision, the VA created the Appeals Management Center to handle the remands in Washington, D.C., where they could do the same evidence development but not compete with new claims and hopefully resolve these claims faster and better.

The AMC was then staffed and resourced to handle the historical average number of BVA remands which was about 12,000 per year.  As a result of the unanticipated significant increase in the number of remands well in excess of the 12,000 per year estimate, the AMC was quickly overwhelmed which then led it to form three satellite offices located at St. Petersburg, Florida, Cleveland, Ohio, and Huntington, West Virginia.  With all of these considerations that we have outlined in our written statement, we would like to make a few recommendations and attempt to explain their potential impacts.

We believe that first VBA must accelerate the progress toward an electronic claims records system.  As long as VA continues to use a paper file shipped around the country, the claims and appeals process will be done an expensive and antiquated manner.  As demonstrated by the VHA’s outstanding electronic medical record, similar gains and access to records can be realized in the claims and appeals process.

PVA also believes that centralized training better prepares rating specialists at all levels.  Training of rating specialists was historically conducted at the local level by a more senior staff member.  The VA now provides this centralized training at its Veterans Benefits Academy located in Baltimore, Maryland, and via the VA Intranet. 

Furthermore, as we have called for in the "Independent Budget" (IB), Congress should full fund any VA training initiatives in the VBA side.  Improved and continue centralized training should help reduce inconsistencies and disparities between regional offices and should improve consumer confidence.  Another point that the "Independent Budget" has advocated for is significant increases in staffing levels in the VBA at all levels.  If the fiscal year 2008 Military Construction of Veterans Affairs Appropriations Bill is enacted prior to the start of the new fiscal year on October 1, a prospect that seems to be getting dimmer by the day.

The VA will be provided much needed funding to add more than 1,000 new full-time equivalent employees to VBA. However, it is important to realize that decisions made on appeal require much greater expertise and often involve more complex questions of medicine and law.  As such, it takes years to train a competent rating specialist.  Trainees should simply not be conducting appellate review due to the complexity of these decisions.  Increasing in staffing today should be seen as an investment in the future.

Mr. Chairman, Subcommittee Members, again I would like to thank you for the opportunity to testify and I would be happy to answer any questions that you might have.

[The statement of Mr. Blake appears in the Appendix.]

Mr. HALL. Thank you, Mr. Blake.  Mr. Smithson, you are now recognized.

STATEMENT OF STEVE SMITHSON

Mr. SMITHSON. Good afternoon, Mr. Chairman and Members of the Subcommittee.  The American Legion appreciates the opportunity to appear before you this afternoon to share our views on the Board of Veterans' Appeals Adjudication Process and the Appeals Management Center.

There are more than 31,000 appeals currently pending at the Board of Veterans' Appeals.  Since 2004, the BVA has concentrated much of its efforts on eliminating avoidable remands in order to issue more final decisions to reduce its backlog.  This effort has resulted in a significant reduction in remands, but has also resulted in a significant increase in denials with only a slight increase in allowances. 

It is the opinion of the American Legion, based on our review of American Legion represented appeals denied by the BVA that in its zeal to avoid remands, the BVA has rendered erroneous or premature decisions in cases where benefits should have been granted or the case should have been remanded.  In the past eight years, the National Veterans Legal Services Program consultant to the American Legion has appealed approximately 500 American Legion BVA denials to the U.S. Court of Appeals for Veterans Claims and has won a remand or reversal in over 90 percent of these appeals.

Further, according to the CAVC website, the combined remand plus reversal rate for appeals decided by the Court on the merits was just over 76 percent.  Such a reversal rate—such a remand and a reversal rate is unacceptable for any adjudicative system, but an extraordinarily high rate is especially galling for an adjudicative system that is required by statute to be so veteran friendly that the benefit of the doubt is given to the claimant.  Clearly, such a high remand and reversal rate is a direct reflection of substandard BVA decisions.

The BVA, however, cannot be reviewed in a vacuum.  The Board’s work product is a direct reflection of the adjudications produced by the VA regional offices.  Most of the problems with the BVA can only be corrected if the quality of adjudications in the VA regional offices is improved.  The poor quality of VA regional office adjudications adversely impacts the work of the BVA.  The American Legion has long maintained that such poor quality regional office work is a direct result of VA management placing a higher value on the quantity of adjudications produced by the VA regional officers rather than the quality of the work.

This emphasis on production continues to be a driving force in the VA regional office, often taking priority over such things as training and quality assurance.  Performance standards of adjudicators and rating specialists are focused on productivity as measured by work credits known as “End Products.”  In short, the “End Product” work measurement system as managed by VA does not encourage regional office managers to ensure that adjudicators do the right thing for veterans the first time.

The emphasis on production causes two bad results.  First, because of shoddy regional office work, there are so many cases for the BVA to remand that the Board pressured to reduce its remand rate all too often denies claims that should be remanded.  This is reflected by the very high remand reversal rate at the CAVC.  Second, in many instances, the Board has no choice but to remand prematurely adjudicated claims.  The high BVA remand rate has resulted in a growing backlog at the AMC.  The BVA combined remand rate and reversal rate of 56 percent for fiscal year 2007 through August is arguably a direct reflection of the greater emphasis placed on the production over training and quality assurance by the VA regional offices.

In the view of the American Legion, the need for a substantial change in VBA’s work measurement system is long over due.  A more accurate work measurement system would help to ensure better service to veterans.  Ultimately, this will require the establishment of a work measurement system that does not allow work credit to be taken until the decision and the claim becomes final.  Meaning that no further action is permitted by statute whether because the claimant has failed to initiate a timely appeal or because the BVA rendered a final decision.

We are pleased that recently introduced legislation, H.R. 3047 would mandate such overdue changes to VA’s work-credit system.  We are hopeful that if enacted, this legislation which would change the underlying incentive by rewarding quality of work rather than quantity, will increase the number of accurate decisions as well as claimant satisfaction, and in doing so reduce the overall number of appeals.

Moving to the Appeals Management Center.  While the AMC is an admirable attempt by VBA to improve service to veterans, it does nothing to address the problems underlying the continued rise in the number of appeals and remands by the VBA.  In our view, the very necessity of the AMCs existence begs the question, “Why hasn’t VBA mandated the regional offices to correct their own mistakes?”

Moreover, the AMCs apparent inability to bring its extremely large backlog under control since its creation in 2003 has been a major concern of the American Legion.  The AMC currently has more than 18,000 remands pending development and adjudication.  In August of this year, the BVA remanded 1,710 cases to the AMC while the AMC only returned 639 remands to the BVA, leaving the AMC with a deficit of 1,071 cases for the month.

Moreover, 21 percent of the 13,082 appeals remanded by the BVA in the first 11 months of fiscal year 2007 were prior remands, as were 30 percent of the appeals allowed by the BVA.  This data tends to reflect a large percentage, 51 percent, of cases that were not properly developed or adjudicated by the AMC. 

Additionally, in July of this year the AMC started brokering ready-to-rate cases to designated regional offices with additional brokering expected to take place each month.  Unfortunately, this is another example of the AMC as it is currently structured not being able to properly handle its workload.  It is clear that the AMC is underfunded.  The Congress and the VA should now take prompt action to either eliminate the AMC or to properly fund its work.

In conclusion, the best way to help veterans is to fix the entire VA Claims Adjudication System.  Piecemeal solutions do not work and should be avoided.  The VA work measurement system should be changed so that the VA regional offices are rewarded for good work and suffer a penalty with consistent—when consistent bad decisions are made.  Manager, attorneys and Veterans Law Judges at the BVA should be awarded for prompt careful work and they should also be penalized when they make bad decisions. 

The AMC should be adequately funded or closed.  American veterans seeking VA disability benefits deserve better treatment than what they are currently getting from VA.

This concludes my statement, Mr. Chairman.  I would be happy to answer any questions you or Members of the Subcommittee may have.

[The statement of Mr. Smithson appears in the Appendix.]

Mr. HALL. Thank you, Mr. Smithson.  I am sure we will have some questions.  Now we are going to move to Mr. Atizado for five minutes.

STATEMENT OF ADRIAN ATIZADO

Mr. ATIZADO. Yes, sir.  Thank you.  Mr. Chairman, Ranking Member Lamborn, Members of the Subcommittee, on behalf of the 1.3 million members of the Disabled American Veterans, I do thank you for the opportunity to testify at this important hearing on the Board of Veterans' Appeals and the Adjudication Process as well as the Appeals Management Center.

And the best evidence for the importance of a fair and effective appeals process for veterans is a large number of VA decisions that are overturned on appeal.  Experience has shown that nearly half of these appeals will be resolved by the regional office that made the decision being appealed without the necessity for review by the BVA.  Of the 39,076 cases in which there was a BVA decision last year, 19.3 percent were allowed.  Another 32 percent involve some processing omission that render the claims decision unsustainable, thereby requiring remand from the Board to the agency of original jurisdiction.

Together the allowed and remand cases comprise 51.2 percent of the Board’s total decisions last year.  This demonstrates not only the necessity of the appeals process, but also that VA’s appeals process is fulfilling its purpose to ensure veterans receive the benefits they are due.  In any adjudication system, mistakes are inevitable.  An adjudication system as massive as VA’s that claims wrongly decided will be relatively numerous under the best of circumstances.  However, the unusually large percentage of appeals in which errors are found demonstrates serious problems in the initial decision-making process. 

In addition, repeated errors at the field office level results in multiple remands and multiple Board decisions in far too many cases.  Erroneous or defective decisions results in several adverse consequences.  Erroneous denials deprive large numbers of veterans the benefits they are rightly due and delay the delivery of these benefits for protracted periods.  Because erroneous denials necessitates multiple decisions, they add substantially to the workload at all levels of adjudication.  Greater workloads require greater resources.

If the increased workloads are not matched by increased resources, quality must yield to quantity as my colleagues have mentioned.  Leading to even higher error rates and a vicious cycle of increasing inefficiency these results in claims backlogs that delay the delivery of benefits for all claimants.  In other words, every one suffers.  And though there is room for improvement at BVA and the AMC, their problems are secondary to the more critical problems in the initial decision making process, again a recurring theme on this panel.

To give you an example, VBA management has tolerated for years problems such as that at the New York City Regional Office where on average an appeal languishes for over four years before the regional office transfers it to the Board for a decision.  Or the fact that about 50 percent of all remanded cases last year comes from only 20 percent of VA stations responsible for original decisions.  Many of these appellants are elderly or many of them are very seriously disabled and they need these benefits in a more timely fashion than that.

With recent increases in the appellate case loads and no corresponding increase in staffing, timeliness at BVA and the AMC is likely to suffer even more.  Congress needs to address BVA’s space and staffing more seriously.  The Board’s current location continues to be pressed for space due to the large volume of appeals.  And if the request for additional employees to the Board is provided, space will become critical as representative organizations must likewise increase their staff.

The DAV appreciates the Subcommittee’s interest in these issues and would be glad to work with you and your staff to improve the timeliness and accuracy of claims for veterans benefits and services.

This concludes by statement, Mr. Chairman.  I would be happy to answer any questions you or other Members may have.

[The statement of Mr. Atizado appears in the Appendix.]

Mr. HALL. Thank you, Mr. Atizado.  Mr. Hilleman, now you are recognized for five minutes.

STATEMENT OF ERIC A. HILLEMAN

Mr. HILLEMAN. Thank you, Chairman Hall and Members of the Subcommittee.  On behalf of the 2.4 million members of the Veterans of Foreign Wars and our auxiliaries, it is my pleasure to testify before you today on the Board of Veterans' Appeals Adjudication Process and the Appeals Management Center.

Let me begin by stating that the VFW is committed to an effective and efficient claims process with a just and accessible appeals process.  We hope to be a partner in seeking actionable solutions to the challenges that face the VA.  All veteran service organizations have a similar goal, to ensure America meets her stand and responsibility to the American veteran for the sacrifices endured in her service.

The VFW believes this agreement does not cease when the uniform lies folded in a drawer.  We must view the Department of Veterans Affairs Claims Process through the lens of this social contract.  The VFW has long served at no cost to our fellow veterans to provide benefits counseling, claims development, outreach, claims review at regional offices, the BVA and the AMC.

The VFW adds value to the claims adjudication process as a quality assurance tool and a veterans provider of representation.  The backlog of veterans claims within the VBA or excuse me—the VBA is on the rise.  The nearly 640,000 ratings and authorization cases are pending.  This is 7.4 percent higher than last year and 22.5 percent higher than 2005.  The challenges that VBA faces in addressing the mounting workload are well established.  These include the growth of total claims, every increasing complexity, and the expectations for an accurate and timely decisions.

The contributing factors of the backlog are also well known.  As the backlog of VBA claims swells at every step of the process, the VA weighs the values of quality versus quantity.  The VA has repeatedly testified before the Congress to the ills that plague its claim system.  Congress has responded with a much needed increase in funding, yet additional personnel following decades of inadequate funding and staffing will not be productive in the near term.

VA has sought to address these problems by creating the Appeals Management Center here in Washington.  The driving idea behind the AMC was specialization, thus making the AMC a catch basin at the end of the process to improve its overall quality.  It has yet to realize its original vision despite the committed and dedicated staff, yet the absence of training and high turnover will never allow it to live up to its potential.

VBA employees face a long and complex training regiment and are not easily replaced.  We believe the AMC would be well served by moving its operations to a small or moderate size city with minimal cost of living and a large university.  The greatest strain on the AMC is constant turnover of employees.  In a smaller community with a thriving university population, the AMC would be a premier employer offering job security, high wages, and room for advancement.  Currently the AMC is more like a regional office in a headquarters town.  Imagine, if you will, an office that is losing the top ten percent of its skilled workforce yearly to higher paying offices.  This is the dynamic between the AMC and the VA Central Office.

Such a move in the VA is not without precedent.  In 2001, the technical accuracy review STAR Program relocated from Washington, D.C., to Nashville, Tennessee.  This move allowed the VA to attract greater quality and more qualified employees.  It reduced the cost of living for its employees and in cutting down on commute times, allowed employees to arrive at the office more refreshed and ready to work.

Reform of the system is necessary through a strong VBA leadership, congressional support, and VSO involvement policy reform that keeps the best interest of the veteran at heart are truly possible.

Thank you for the opportunity to present our views today before this Subcommittee and I welcome your questions.

[The statement of Mr. Hilleman appears in the Appendix.]

Mr. HALL. Thank you, Mr. Hilleman.  As you know from the buzzers going off, we have had votes called on the House Floor.  So if you would be so kind as to wait and have some more of our delicious ice water.  We will—I think these are going to be quick votes.

Okay.  I have got another suggestion—okay.  We are going to stay with plan “A.”  We are going to recess the hearing while we go cast these three votes and ask you please to stay with us and we will be back as soon as we can. 

[Recess.]

Mr. HALL. Thank you for your patience.  The hearing is called back to order. I will try to get through my questions as quickly as possible and then depending on who comes back and when they come back we will have more questions.

I wanted to ask Mr. Stichman about the concept that you discussed of a merit-based system to pick judges similar to the ALJ system.  Can you give us some more specifics about that?  You know how that might work or in how that differs from the current method of choosing the adjudicators for the BVA or the CAVC?

Mr. STICHMAN. Certainly.  That is an established system of picking Administrative Law Judges that work at various different agencies.  My testimony talks about the methodology which involves taking a test, written and oral, interview, etcetera.  And it results in a high quality of judiciary among the Federal agencies.  And a major advantage is people from all different walks of life compete.  And to contrast that with the system we have now, most of the Veterans Law Judges come from within the VA system and they develop habits that aren’t always healthy.  Witness the track record at the veterans court.  And so there are plenty of people knowledgeable in veterans law that don’t work for the VA but they don’t become Veterans Law Judges but they would potentially become judges if we had a system that was open to everyone to apply.

I was talking to one of my colleagues about an attorney named Steve Purcell who used to work at the Disabled American Veterans for many years.  An excellent advocate.  And finally he went through the test process to become an Administrative Law Judge and he is a judge in the Social Security Administration now.  But he was—because of the system, he couldn’t really be a judge at the Board of Veterans' Appeals because of their tendency to hire people from within.  So I think that is a basic overview of the difference between the systems.

Mr. HALL. Thank you.  There will be a follow up by minority counsel on that question, but first let me just ask Mr. Cohen, you are suggesting, if I understand you, that we should change the regulation so that a remand does not count as a decision.  So that to meet quotas, one has to actually make a decision of yes or no as to the validity of the particular claim?

Mr. COHEN. Yes, Chairman Hall.

Mr. HALL. Boy, that makes too much sense.  And I think I hear, pretty much across the board, the feeling that there is more staffing needed both at the regional offices and at the BVA, because the numbers are overwhelming and probably only going to get more so.  Does anybody dissent from that viewpoint?  Just checking.  I just, you know, I thought I heard somebody in the executive branch say that we are spending too much money on veterans in the last week or two.  But I didn’t, you know, I think money does, speaking as a former school board president, money doesn’t take care of all problems, but there are some problems you need money to take care of.

Mr. Blake you talked about full funding for training.  How short are we now on that in your view?

Mr. BLAKE. I don’t know that I could necessarily give a dollar figure on that.  One of the things we actually struggled with, with the Independent Budget, is figuring out how toreally quantify a cost for training, something we are actually trying to refine to improve the Independent Budget.  I know ylast ear there was some recommended dollars as it relates to electronics or electronic initiative within VBA that we have also pushed for funding.  I think the priority for us in the current year was to get the funding for the additional VBA staff. 

Kind of to your point about adequate staffing, I would only draw your attention to the point that we made, although we called for more than 1,000 recommended VBA increase in staffing in the IB, the appropriations bills would provide for that if they ever get passed.  But we have also stated that that doesn’t mean that those new trainees should go directly into BVA or that level of claims work because it is too complex to have a trainee stuck in there and the concern that was addressed from when I had this discussion with some of our appeals representatives was that if you are going to at that level of complexity in the claims process you need to have people who have moved up in the system and understand at least how that system works.

But it is to your point again about the training.  You know, I could probably try to put together something to better quantify that but just off the top of my head I don’t know that I could provide a number.

Mr. HALL. Thank you.  Mr. Smithson, would you elaborate briefly on your statement that a more accurate way to measure work accomplished should be developed?

Mr. SMITHSON. Well right now with the end product work measure system, the adjudicators, the rating specialist they get credit each time they rate a case.  So in the current system if I file a claim, they rate the claim, they deny the claim, I submit additional evidence or I file a notice of disagreement or I question it and they come back and they rate it again, they get another credit.  They keep getting credit for that same claim.

So in one case, for example, where they erroneously deny it or prematurely deny it and they have to rate it two or three times they get credit each time whereas if they would of rated it correctly the first time they would of gotten one end product credit.  So the system itself, as it is set up now, there is really an incentive not to do it right the first time because they continue to get credit each time they rate that claim.  And that is why we make a recommendation and we support the recent legislation that has been introduced that would change the work measurement system to only provide the credit when the claim is final either that the veteran does not appeal it within a year or the Board of Veterans' Appeals makes a final decision.

Mr. HALL. Thank you.  Mr. Hilleman, I am struck by the figures that you had in your written testimony and your oral testimony also about the backlog being 7.4 percent higher than 2006 and 22 and a half percent higher than 2005.  It is obvious, with the returning OEF/OIF vets and Vietnam veterans hitting that age when things start to develop that may have been lying in wait, that the challenge is only going to increase.

You made a statement about how the AMC could be the premier employer or a premier employer in a smaller university town making it more effective.  How do you see that happening?

Mr. HILLEMAN. Thank you for the question, Mr. Chairman.  The VFW has an idea that the AMC, if it were moved to a smaller town with a university where you had a high influx of talented young people seeking an education, you would have a ready pool of young applicants.

I can speak from my personal experience having gone to a university in a small town in Northern Utah.  The student body there was about 18,000 students.  Some of the premier employees in that community of about 100,000 people were Best Buy and a cheese factory.  So an organization, such as the VA doing substantive work, offering career advancement and working from a government pay scale would be a very, very competitive employer.

Mr. HALL. That is a good answer.

Mr. HILLEMAN. Okay.

Mr. HALL. Thank you.  And it is complete.  Until Members and Minority counsel return here we will just continue until all questions have been asked.

Mr. Atizado, the erroneous initial decisions that you spoke about causing more and more work down the line, obviously training, better training at the local office level and more staff at the local office level would seem to help that.  Is there a particular flaw or pattern that you have observed that you think contributes to those erroneous decisions?

I mean, we have seen in my district a few cases with individual veterans who have come to our staff and to our office for help, but I just thought you are seeing a bigger picture than we are.  So is there a particular area or two that you would pinpoint?

Mr. ATIZADO. Not really, Mr. Chairman.  The whole idea of getting it right the first time really is varied throughout the Nation—I was actually trying to recall as t