- The Washington Times - Wednesday, April 15, 2015

Another veterans scandal hit the Obama administration Wednesday with the emergence of an internal Veterans Affairs memo that allowed bureaucrats to cook their books and assert they were answering diligently President Obama’s call to reduce the backlog of veterans’ benefits claims.

The memo was known inside the VA as “Fast Letter 13-10,” and a government watchdog said Wednesday this “flawed” guidance from VA headquarters in Washington deliberately resulted in making the agency appear it was delivering services and benefits to veterans faster than it really was.

The VA inspector general examined the impact of the memo, issued in May 2013, on the Philadelphia VA office — one of the largest in the nation, serving more than 825,000 veterans and their families in three states. Investigators found that VA managers, using “Fast Letter 13-10” as their justification, ordered workers to put the current date on benefits claims that were sometimes more than a year old, thereby “eliminating” part of the highly publicized backlog with the stroke of a pen or time stamp.

The inspector general said it was just the sort of fiction that VA headquarters sought.

“By design, the guidance contained in Fast Letter 13-10 was flawed, as it required [Philadelphia] staff to adjust the dates of claims for unadjudicated claims found in claims folder to reflect a current date,” the report said. “As such, the reliability of all performance measures related to [agency] timeliness measures for processing claims becomes unreliable.”

An official with a major veterans group said the revelations in Philadelphia are likely to expose the VA’s disability and pension benefits system to the same level of mismanagement and outright fraud as the scandal that erupted in Phoenix last year over phony waiting lists for patients in the VA health care system.

“This has very serious parallels to the VA waitlist scandal at VA hospitals across the country,” said Dan Caldwell of Concerned Veterans for America. “This is almost an identical scam, except with the disability backlog. We do not believe that behaviors like this are just going to be confined to the Philadelphia VA.”

House Committee on Veterans’ Affairs Chairman Jeff Miller, Florida Republican, said the report “is as bleak as it gets, full of systemic malfeasance and deliberate data manipulation.”

His committee will hold a hearing next week on failures in the Veterans Benefits Administration’s Philadelphia and Oakland regional offices and the “massive, unexplained” $288,000 relocation bonus paid to Philadelphia VA Director Diana Rubens.

Reducing the backlog of veterans benefits claims has been one of Mr. Obama’s oft-stated priorities, dating back to his campaign for president in 2008.

At the end of 2008, there were about 389,000 pending pension and compensation claims. But claims shot up as the wars in Iraq and Afghanistan ended, and other veterans became eligible for benefits due to complications from Agent Orange. In 2011 alone, 1.4 million claims were submitted.

The VA says it has reduced the number of pending disability and pension claims from about 883,000 in July 2012 to about 457,000 as of this week. The president has pledged to eliminate the backlog by sometime this year.

But the IG’s new report is calling the VA’s math into question, and Fast Letter 13-10 may have played a central role.

Sent to all VA benefits regional offices on May 20, 2013, the memo’s subject line was “Guidance on Date of Claim Issues.” It was signed by David McLenachen, director of pension and fiduciary service, and Thomas Murphy, director of compensation service.

“This fast letter provides guidance for establishing dates of claim, including guidance for previously unadjudicated claims that are found or ‘discovered’ in the claims folder,” the letter stated.

The three-page memo advised: “Use the date a previously unadjudicated claim is discovered as the date of claim for system control purposes.” It said if benefits are granted, workers should use the date that the claim actually arrived at the VA for calculating benefits.

The IG report said that in Philadelphia, the guidance worked this way:

On July 23, 2013, staff were instructed to apply current dates for claims older than November 1, 2012, thereby limiting the age of the oldest possible discovered claim to 264 days.

On Dec. 30, 2013, VA staff in Philadelphia were ordered to apply current dates for claims older than June 1, 2013, reducing the age of the oldest possible discovered claim to 212 days.

And on March 11, 2014, management told workers not to establish any claims with a date of claim older than Feb. 26, 2014, thereby reducing the age of the oldest possible claim to 13 days.

“Mismanagement of previously unadjudicated claims was prevalent,” the report said. “We also determined the Fast Letter guidance was flawed because it required claims processing staff to apply current dates to older claims that [regional office] staff had previously overlooked. This practice seems to contradict VA core values of integrity. Additionally, by adjusting the dates of older claims to reflect current dates, aging claims may not have received expedited processing actions — ultimately delaying decisions and benefits delivery to veterans.”

During a preliminary probe, the IG recommended last year that the Philadelphia VA office discontinue its use of the Fast Letter 13-10 guidance and instead “have staff use the earliest date claims are received by VA to ensure all claims receive proper attention and timely processing.” The VA responded in June 2014 by issuing a moratorium on Fast Letter 13-10 “while we thoroughly review our implementation and determine the appropriate way to move forward.”

Some lawmakers expressed disappointment that the IG report wasn’t resulting in any VA officials being held accountable.

“The inspector general’s report confirmed our worst fears: that the Philadelphia VA Regional Office is rife with systemic mismanagement, deliberate manipulation of data, and individuals more focused on misleading the nation than serving our veterans,” said Rep. Patrick Meehan, Pennsylvania Republican and a former federal prosecutor. “What the VA needs isn’t an endless loop of bureaucratic reviews and inquiries — it’s competent management that will hold employees accountable and truthfully report its activities to the American public.”

In fact, on the same day the scathing final report was released, Gary Hodge, the official in charge of the VA pension management center in Philadelphia, told colleagues Wednesday that he is beginning an assignment with the VA’s pension and fiduciary service in Washington — the very office where Fast Letter 13-10 originated. Such a move is usually considered a step up.

An employee in the Philadelphia VA office who asked not to be named said the only way to change the agency’s “dysfunctional culture of management corruption” is to fire some of its managers. He said other cosmetic steps such as “retraining” are “a joke, as long as the same pigs feeding at the public trough at the veterans’ expense are still running the office.”

The VA didn’t respond to a request from The Washington Times for comment on Fast Letter 13-10 or for comment by Mr. McLenachen or Mr. Murphy. The VA’s official in charge of benefits, Undersecretary Allison Hickey, told The Associated Press that the VA has moved aggressively to fix problems in Philadelphia with some “90 to 95 percent” of issues in the IG report fully addressed or actively being addressed.

“This is not a new thing, this is a last-year thing,” Ms. Hickey said.

But the IG report said, “We disagree with that assessment,” saying it has continued to receive more allegations of wrongdoing in Philadelphia. In November, the report said, the IG “received an allegation that the deceased spouse of a veteran had been paid burial benefits through VBA’s automated burial benefits system.” In December, a whistleblower told the IG that the mail problems in Philadelphia had grown worse since inspectors left the site. And in March, the IG’s office received a report of “a scheme to credit [Philadelphia] staff for training they did not complete.”

Mr. Caldwell, of the veterans group, said the revelations from the probe call into question how much progress the VA is actually making with veterans waiting for help, saying the agency’s reported caseload reductions don’t make sense.

“This IG report confirms a lot of those suspicions,” Mr. Caldwell said. “For nearly six months, the reduction in backlog was flat. All of a sudden they’re now hitting the number they need to meet their goal to end the backlog by the end of 2015. Mathematically, it doesn’t make sense.”

• Dave Boyer can be reached at dboyer@washingtontimes.com.

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