Mr. Chairman and Members of the Committee:

I am pleased to have the opportunity to submit this testimony on behalf of the National Veterans Legal Services Program (NVLSP).  NVLSP is a nonprofit veterans service organization founded in 1980 that has been assisting veterans and their advocates for twenty-seven years. We publish numerous advocacy materials, recruit and train volunteer attorneys, train service officers from such veterans service organizations as The American Legion and Military Order of the Purple Heart in veterans benefits law, and conduct quality reviews of the VA regional offices on behalf of The American Legion. NVLSP also represents veterans and their families on claims for veterans benefits before VA, the U.S. Court of Appeals for Veterans Claims (CAVC), and other federal courts. Since its founding, NVLSP has represented over 1,000 claimants before the Board of Veterans’ Appeals and the Court of Appeals for Veterans Claims (CAVC).  NVLSP is one of the four veterans service organizations that comprise the Veterans Consortium Pro Bono Program, which recruits and trains volunteer lawyers to represent veterans who have appealed a Board of Veterans’ Appeals decision to the CAVC without a representative.  In addition to its activities with the Pro Bono Program, NVLSP has trained thousands of veterans service officers and lawyers in veterans benefits law, and has written educational publications that thousands of veterans advocates regularly use as practice tools to assist them in their representation of VA claimants. 

According to the VA Monday Morning Workload reports, in early January 2006 there were 532,228 total claims pending adjudication at the VA regional offices (VAROs). In early January 2007 there were 603,104 total claims pending adjudication at the VA regional offices (ROs). In early January 2008 there were 647,478 total claims pending adjudication at the VA regional offices (ROs). These VA statistics reveal that there are now 115,250 more claims pending adjudication at the ROs in 2008 than there were in 2006. This is an increase of over 21 percent in just two years. If this trend continues the VA ROs will have over 947,000 backlogged claims in just four years. NVLSP believes that the current size of the backlog is obviously unacceptable and allowing that unacceptable number to grow by 200,000 cases in just four years would be insulting to veterans.

Why Is There Such A Large Backlog 

In the opinion of NVLSP, the major cause of the VA claims adjudication backlog is a VA work credit system that prevents the fair adjudication of many claims for VA benefits generating extra work for the VA and major problem for claimants. Also, the inadequate quality of many VA adjudications and the inadequate number of trained adjudicators contribute to the size of the backlog.

1. The Unfair VA Work Measurement System

The current VA work credit system prevents the fair adjudication of many claims for VA benefits. The current VA work credit system needs to be overhauled because it rewards VA managers and adjudicators who claim multiple and quick work credit without complying with the statutory duties to assist claimants obtain evidence that would substantiate their claims and notify claimants of what evidence would substantiate their claims.

No matter how much the average VA employee wants to help the client population, the VA decision-making culture, fueled by the VA work measurement system, penalizes many VA adjudicators for doing a good job. The VA has created a work measurement system for deciding critically important claims that is driven by weighty incentives to decide claims quickly.  How the VA measures its work and evaluates the performance of its employees has had a major impact on the adjudication of claims for veterans benefits. 

Each year, after a complicated process involving the executive branch and Congress, the VA is given its budget.  The budget can be defined as the resources available to the Secretary of Veterans Affairs to be used to accomplish the mission of the VA.  Managers at different levels within the VA are then given their allocation from the overall VA budget.  This allocation is determined by the workload and performance of the various VA components. For example, the money budgeted to a particular VARO determines how many workers can be hired or fired, how equipment is maintained, and what new equipment can be purchased. 

Claims received in VARO are described as “pending issues.” These claims are assigned an “end product code,” alternatively described by the VA as a unit of work. When final action is taken on a pending claim, or pending issue, the regional office (and eventually the VA) receives a credit.

End products are assigned values based on the average number of work hours it takes an employee or group of employees to complete all action necessary for that type of claim. Each end product code has a different value.  For example, VA managers receive more credit for work completed on an original claim than they do for adjusting the income of a current pension beneficiary.  No matter how much work the VARO does on an individual claim, however, it receives as credit only the value that is provided for the end product code assigned to that particular type of pending claim.  Therefore, VA managers receive the same credit whether or not the claim is granted or denied or whether the particular claim takes the VARO one day or two years to decide.

VA manuals describe the end product system as a “management tool” and indicate that its measure should not be used to evaluate individual performance. As is the case with many management information systems, however, the measurement system tends to drive what and whom it measures, rather than the converse. VA managers are evaluated by how many end products they produce, how quickly they can take credit for end products, how many employees they need to produce these end products, and lastly, the quality of the work in the office they manage.  Because it is in the best interest of the VA managers to complete as many cases as quickly as they can,  the interests of VA managers in many cases stands in opposition to the interests of claimants for VA benefits.

Responsibilities of VA managers that protect the fairness of the adjudicatory process--such as “control” of claims, supervisory review of unnecessarily delayed claims, thorough development of the evidence needed to decide a claim properly, recognition of all of the issues involved, provision of adequate notice, documentation that notice was given, and careful quality review -- all adversely affect the productivity and timeliness statistics (that is, how many decisions on claims are made final within a particular period of time) for the VA manager. Consequently, proper attention by VA managers to their legal obligations very often adversely affects the statistics upon which their performance is rated. 

2. The Impact of Judicial Review

The VA claims processing (or claims adjudication) system has been exposed by judicial review. To say there is a crisis in VA claims adjudication is an understatement. Statistics from the Board of Veterans’ Appeals (BVA) and the U.S. Court of Appeals for Veterans Claims (CAVC) show that nationally, for FY 2007, over 56 percent of all appeals decided by the BVA were reversed or remanded and over 63 percent of CAVC decisions on the merits were reversed, or remanded. Some VAROs are worse than others.   Over 60 percent of the appeals from the New York RO and over 62 percent of the appeals from the St. Petersburg Florida RO were reversed or remanded by the BVA.

Based on the experience of NVLSP (over ten years of quality reviews, in conjunction with The American Legion, of  approximately 40 different VAROs combined with extensive NVLSP representation before the CAVC), most of the most egregious VA errors are a result of premature adjudications. For example, many errors identified by the Legion/NVLSP quality review teams reveal that VA adjudicators failed to even try to satisfy its statutory duty to assist the claimant by obtaining the evidence needed to substantiate the claim, and incorrectly accepted and prematurely denied claims based on inadequate evidence (especially inadequate VA medical examinations).

I want to emphasize that most premature VA adjudications are caused by ROs seeking work credit.  If the claimant should appeal, the RO can earn another work credit for work to process the appeal. The VA manager gets to claim unearned work credits and to show an erroneously low time period to adjudicate these claims. That would help the manager earn a promotion and a bonus for such “productive” work.

I have been told by a variety of VARO officials that because of pressure to produce end products and reduce backlogs, they intentionally encourage the premature adjudication of claims. This statement is based on my experience as a VA employee, and based on my experience as a member of the Legion/NVLSP quality review team.

Fixing the VA work credit system is a topic that is near and dear to my heart. I have been involved in various aspects of veterans law for over 30 years. My experience tells me that unless the system is corrected most attempts to improve VA claims adjudication will not be successful because the driving force in VA adjudication will continue to be claiming quick work credit.  

3. The Inadequate Quality of VA Adjudications Is A Major Influence On the Size Of The Backlog

It is clear that the quality of VA adjudications is not satisfactory and is a major contributor to the size of the backlog. Because many claims are improperly denied, because many VA adjudicators are inadequately trained, because many VA regional offices are improperly managed, because many VA regional offices are inadequately staffed, and because VA Central Office management has not acted to fix these problems in any meaningful way, many veterans and other claimants for VA benefits have to file unnecessary appeals, wait several years for a BVA remand, and wait for the VA to obtain evidence that should have been requested during the original adjudication of the claim. These appeals clog the system and create unneeded work for the VA. Of course, it would have been better for the VARO to do the work correctly the first time.

NVLSP believes that the quality of VARO adjudications is much worse than what is reported by the VA. A relatively independent review of the quality of adjudications performed by the VAROs are the remand and reversal statistics produced by decisions issued by the Board of Veterans’ Appeals (BVA or Board). BVA statistics provided by the Veterans Appeals Control and Locator System (VACOLS) for FY 07 reveal that Board decided over 40,000 appeals. The Board granted additional benefits in 21.12 percent of the appeals and remanded 35.36 percent of these appeals back to the VAROs. Therefore, 56.48 percent of the VARO decisions that were appealed and decided by the BVA were either reversed or remanded. This 56.48 percent statistic could be considered an error rate. Even if we were to assume that the VARO did not err in 20 percent of these cases because the Board granted additional benefits or remanded due to new evidence added at the Board level, an error rate as high as 36 percent (56.48 minus 20) is not acceptable and is flatly inconsistent with the low error rate produced by the VA Star Reports (which claims that the VAROs maintain close to a 90 percent “accuracy rate”).

The news gets worse. The BVA, in its rush to make final decisions and to avoid remands quite often prematurely denies claims that should have been remanded.  Of course, the error was originally committed by the VARO, not the BVA. In September 2007, my fellow Joint Executive Director, Bart Stichman, testified that “[f]or more than a decade, the Court’s [Court of Appeals for Veterans Claims (Court or CAVC)] annual report card of the BVA’s performance has been remarkably consistent. The 12 annual report cards issued over the last 12 years yields the following startling fact: of the 16,550 Board decisions that the Court individually assessed over that period (that is, from FY 1995 to FY 2006), the Court set aside a whopping 77.7% of them (that is, 12,866 individual Board decisions). In each of these 12,866 cases, the Court set aside the Board decision and either remanded the claim to the Board for further proceedings or ordered the Board to award the benefits it had previously denied.  In the overwhelming majority of these 12,866 cases, the Court took this action because it concluded that the Board decision contained one or more specific legal errors that prejudiced the rights of the VA claimant to a proper decision. By any reasonable measure, the Court’s annual report card on the Board’s performance has consistently been an “F.”

How should a veteran seeking VA disability benefits feel? The Board of Veterans’ Appeals reverses or remands over 50 percent of all VARO adjudications and the CAVC sets aside over 77 percent of the Board decisions that deny benefits. These numbers do not inspire confidence in the quality of VA adjudications.

 Overall, the results of the Legion/NVLSP quality reviews have been discomforting. The American Legion/NVLSP team usually spends a week in a VARO reviewing the quality of recently adjudicated claims where The American Legion represented the veteran. The results of these quality reviews reveal that in many instances claims are improperly denied or benefits are not paid at the proper rate because the RO was more concerned about claiming work credit and reducing the VARO backlog than taking the time to develop and analyze the claim properly.

For example, many of the VAROs had problems with claims for service connection for mental conditions (especially Post Traumatic Stress Disorder) and problems evaluating the severity of mental disabilities. In too many instances, claims for total disability based on individual unemployability were improperly denied and in more than a few instances we determined that claims for increase in evaluation to 60% or 70% were hard to obtain because such a rating could require the VARO to consider entitlement to a total disability rating due to individual unemployability (TDIU) and the VARO adjudicator did not want to have to take the time to deal with a claim for TDIU. Also, we have discovered that too many VA examinations are inadequate because the VARO did not explain what facts the VA physician should accept as true in making his or her medical opinion. The team generally reviews between 25 to 40 cases and finds errors in about 20 to 30 percent of these cases.  This is a much higher rate than the “accuracy rate” reported by VA on its Star Report.

Potential Solutions

The VA needs to acknowledge the complexity of its claims adjudication system and hire a reasonable number of adjudicators to work these claims. The grade levels of VA raters and Decision Review Officers should be raised and these federal employees should be held accountable for the quality of their work product. The Congress needs to provide the funding for the additional adjudicators, and the VA would have to be willing to submit to an independent quality review to validate the quality of the work. The additional adjudicators should help the VAROs from brokering cases (send ing cases from one VARO with too much work to another VARO).  In the opinion of NVLSP, brokered cases are less accurately adjudicated than most cases and cause continuing problems for the originating VARO.

The VA work measurement system has to be overhauled. HR 3047 which, in Section 2 would change when VA regional offices (VAROs) can claim work credit, is a good bill that would accomplish this goal.

Finally, the adjudication culture at the VAROs needs to be changed. Many VA managers act like they are producing widgets rather than adjudicating claims filed by real people. Their goal should not be just prompt adjudication; the goal should be a timely, accurate and fair adjudication.

Thank you for permitting NVLSP to testify on such an important issue.