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Claims processors received bonuses while backlog more than doubled

Awards handed out in Baltimore, Oakland as problems festered

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While veterans waited longer than ever in recent years for their wartime disability compensation, the Department of Veterans Affairs gave its workers millions of dollars in bonuses for “excellent” performances that effectively encouraged them to avoid claims that needed extra work to document veterans’ injuries, a News21 investigation has found.

In 2011, a year in which the claims backlog ballooned by 155 percent, more than two-thirds of claims processors shared $5.5 million in bonuses, according to salary data from the Office of Personnel Management.

The more complex claims were often set aside by workers so they could keep their jobs, meet performance standards, or, in some cases, collect extra pay, said VA claims processors and union representatives. Those claims now make up much of VA’s widely scrutinized disability claims backlog, defined by the agency as claims pending more than 125 days.

“At the beginning of the month … I’d try to work my really easy stuff so I could get my numbers up,” said Renee Cotter, a union steward for the local Reno, Nev. American Federation of Government Employees.

Now, claims workers said, they fear the VA’s aggressive new push to finish all one-year-old claims by Oct. 1 — and eliminate the entire backlog by 2015 — could continue the emphasis of quantity over quality in claims processing that has often led to mistakes. VA workers have processed 1 million claims a year for three years in a row.

Beth McCoy, the assistant deputy undersecretary for field operations for the Veterans Benefits Administration, said bonuses for claims processors were justified because, even though the number of backlogged claims was rising, workers were processing more claims than ever before.

“There are many, many employees who are exceeding their minimum standards and they deserve to recognized for that,” she said.

She also said the VBA is improving quality even as it processes more claims.

But documents show that a board of veterans judges found in 2012 that almost three out of four appealed claims — which determine how much money veterans receive for their disabilities — were either wrong or based on incomplete information. When veterans choose to appeal a claim decision, it can add several years to their wait, records show.

But the VA’s plan to process the oldest claims did not address the quarter-million veterans in its appeals process as of July. Approximately 14,000 veterans had an appeal pending for more than two years as of November 2012.

The VA has promised to lower wait times and improve accuracy by scanning the piles of paper claims into an electronic system for processing with new software, but the expensive transition has been beset with problems.

The workload for VA claims workers also has doubled in the last five years. This included new claims from a quarter-million Vietnam veterans in 2010, when the VA expanded added B-cell leukemias, Parkinson’s disease and ischemic heart disease to the growing list of health conditions that veterans could claim as a result of the toxic chemical, Agent Orange. In addition, more than 830,000 Iraq and Afghanistan war veterans returning home had filed claims as of March 2013, according to VBA data.

In an attempt to encourage more productivity, the VA changed a claims processor’s performance criteria between 2010 and 2012 to discourage spending time gathering additional documents that could prove complicated claims, according to written performance requirements for claims processors.

McCoy said she heard from employees in the field that they felt performance standards were not fair. “Things are changing very quickly and we’re struggling a little bit to keep up with the pace of change as we update our performance standards,” she said.

A processor must gather medical and military records for each disability and give veterans disability ratings based on the severity of injury, which then determines their monthly check from the government.

Claims for multiple injuries require significant time to gather documentation. Other claims, for post-traumatic stress disorder, military sexual trauma or traumatic brain injury can require just as much effort because they can be more difficult to prove than physical injuries.

In April 2010, the VA stopped giving performance credit for “supplemental development,” which included tasks such as calling and sending follow-up letters to veterans, follow-up requests for military documents and medical records.

The change was meant to encourage processors to finish claims. But a complex disability claim could take all day, while a claim for one or two injuries could be completed much faster, said David Bump, a national representative for the AFGE and former claims processor at the Milwaukee regional office.

“I think after a couple of years of seeing things piling up, they realized that that didn’t work,” said Bump, part of the VBA’s bargaining committee that has met three times in 10 months to discuss changing the performance standards.

Claims workers can be fired or demoted for not meeting standards in Automated Standardized Performance Elements Nationwide, or ASPEN, the VA’s system of awarding a specific number of points daily for each task an employee performs.

Annual performance evaluations for all claims workers include the elements of “productivity,” “quality” and “customer service.” While “quality” is measured by a random sampling of an employee’s claims and “customer service” is measured by the number of complaints against the employee, “productivity” is judged by ASPEN points, the average work credits the employee must earn per day.

ASPEN points could translate into financial awards at the end of each year if a worker earns an “excellent” or “outstanding” performance.

But News21 found that regional office management gave bonuses to some employees even as their claims backlogs grew. During 2012, Office of Personnel Management records show, some of the most troubled offices gave their employees the most extra pay.

The Baltimore office, which has the longest wait times in the country, gave bonuses averaging $1,100 each to 40 percent of its workforce. The Oakland, Calif., office, which shut its doors to retrain underperforming employees, awarded nine of 10 workers a total of about $33,000 — almost enough to pay a full year’s worth of benefits to a veteran who is 100 percent disabled.

In Sioux Falls, S.D., claims workers processed claims four times faster than both Oakland and Baltimore but less than one in 10 there received extra pay last year.

In 2008, Congress ordered the VA to review its work-credit system. A 75-page report produced by the Center for Naval Analysis in 2009 recommended the VA address perceptions that quantity receives more emphasis than quality, by changing the tasks that receive points to better reflect the actual work.

“This is one of the reasons why, as some managers noted, the inventory of old claims consists disproportionately of ‘difficult’ cases,” the report said.

A claims processor in Reno told News21 that this “breeds cheating” and that he has seen employees who aren’t making enough points go into “survival mode” and process only easy claims. Shifting performance points to reward backlog-related work would be more effective, said the worker, who, like others, requested anonymity.

“Your backlog is over here. But your points are in this direction. How stupid is that?” asked the worker.

Damon Wood’s disability claim for PTSD, ringing in the ear and a bad back and knee has been cycling for 21 months through a fortified federal office building in a corporate park on the outskirts of Reno.

He quit checking its status online because it hadn’t changed for more than 11 months. When he tried calling the Reno regional office for more help, he was diverted to one of VA’s eight national call centers.

“Your hands are tied by the people who actually have the claim in their hands,” Wood said. “So you can’t do anything more or anything less. It’s up to them.”

Fran Lynch, a former Seattle claims processor and exam consultant, said the VA built a “wall of separation” between the workers and the veteran.

“People form opinions about veterans based on paperwork and they make decisions based on those opinions without ever really knowing the guys’ circumstance,” he said.

Allison Hickey, undersecretary of the benefits at the VA, promised veterans in April that the more than 65,000 claims two years and older would get a temporary or permanent decision by June 19, while those waiting more than year would be considered by October.

For the third consecutive year, the VA mandated 20 hours per month of overtime for part of this year to meet the deadlines, costing the agency approximately $44 million.

The VBA’s McCoy said mandating overtime was the best way to tackle the backlog because it can take two years to fully train a new employee.

When the VA announced in June that workers finished 97 percent of the two-year-old claims, members of Congress, both Democrats and Republicans, were skeptical that processors had enough time to do the job correctly.

“If two months was all VA needed to adjudicate these claims, why did the department let them sit for two years or longer?” asked Rep. Jeff Miller, R-Fla., the chairman of the House Committee on Veterans’ Affairs.

McCoy said 600 people had been assigned to quality-review teams to ensure correct decisions. She said this is the fourth year in a row the VBA will process over a million claims and it processed a record 110,000 claims in June. Despite record production levels, employees still issued correct decisions for 95.5 percent of individual injuries for the year through the end of June, she said.

Bump, the union representative, said regional office directors sometimes cut corners to meet standards. “As long as we have a system in place that does not acknowledge the amount of work that’s truly there and the limited resources we have to do the work, you’re going to have creative ways to get the work done,” Bump said.

Jonathan Bivens, an Iraq veteran living in California, Md., is one of the 3 percent of veterans whose two-year-old claim was not processed by Hickey’s deadline. On August 8, the VA rated his hernia as a 10 percent disability and denied the other eight injuries he filed 30 months ago. He said he plans to appeal.

“I am sure it was a lot of skim reading and not a whole lot of doing what is right,” Bivens said.

Darin Selnick, a VA political appointee in the Bush administration, called the quickly finished claims an old “sleight-of-hand trick.” Selnick said regional office directors and central office staff misled VA leadership during the last decade with similar numbers games that disguised the problem and kicked the can down the road.

“They knew it was coming, and they knew it was going to get worse,” Selnick said. “ ... I think the current leadership, Allison Hickey, they do the same thing to her.”

Union representatives, claims processors and lawyers predict more veterans will turn to the appeals process because of Hickey’s deadlines.

“When VA over-emphasizes speed to meet artificial deadlines, VA makes additional errors that lead to more appeals further clogging an already overwhelmed agency,” said Joseph Moore, a lawyer who handles appeals.

An appeals worker in the Columbia, S.C., regional office said Hickey’s “go ahead” for claims processors to “make a decision no matter what” has typically resulted in a rating without all of the needed evidence. “Appeals are definitely going to go up.”

At the same time, the Board of Veterans Appeals decreased its staff from 535 in 2011 to 510 in 2012 because of a “constrained fiscal environment affecting the entire federal government,” according to its 2012 annual report.

Appeals were not included in the VA’s plan to take down the high-profile backlog of original old claims. More than 250,000 appeals were pending review as of July — an increase of 65 percent from 2008 — and nearly 14,000 were pending more than two years as of November, according to the VA.

“You can throw them in a closet and shut the door. That’s what an appeal is,” said Roger Moore, the union steward at the Boston office.

Sean Meade was a National Guardsman who deployed with the Army to Iraq for a tour during 2006 and 2007. Claims processors denied his disability claim for PTSD after he filed in 2008, because they couldn’t find documents that showed one event during his service that triggered it.

“I was in combat, I saw (improvised explosive devices) go off, I saw (rocket-propelled grenades) go over my truck,” Meade said. “You know, you see things. You see things on the side of the road that were human at one point and it makes you think, well, that could be me. So whether or not you get attacked directly, or your truck gets blown up or you get shot, it’s still a stressor.”

He appealed in 2009 and is still waiting for a decision, even though in 2010 rules were changed to make PTSD claims easier to prove.

Brett Buchanan, a lawyer in the St. Louis area who helps veterans with their appeals, said he tells his clients “we’re in for a long relationship, and we could very well be together for five to seven years.”

Files he receives are often missing evidence that prove a veteran is disabled because of military service, he said. “They just ran with what they had,” he said. “The VA just can’t find the records, or they don’t know to find them.”

His clients’ files often reach 2,000 pages, and he boxes of evidence are shipped to him every day.

“It’s really 20 sheets of paper that make a difference,” Buchanan said. “So if one of those sheets of paper is missing because it was misplaced or wasn’t transferred correctly for DOD to VA, it goes from slam-dunk case to a very challenging case. And that’s why they probably got denied and are calling me.”

Claims processors struggle with understaffing, an incomplete software system and paper claims that must be shipped around the country in boxes, sorted in mailrooms and are sometimes forgotten in file cabinets.

The VA has for years tried to alleviate the load on overwhelmed offices by shipping backlogged claims around the country to other offices. Hickey ordered this “brokering” of old claims as a way for some offices to meet her deadlines.

According to internal documents, VA has shuffled more than 50,000 claims among regional offices since January, including 16,000 in the month of June. But workers say the practice is unfair to local veterans filing claims when their local office has to shoulder the load for poorly managed offices.

Workers in Milwaukee received more than 5,000 old claims from Houston and Los Angeles beginning June 11. Sioux Falls received 2,600 claims from St. Louis, Houston and Portland, Ore. Meanwhile, Reno completed just more than 1,000 old claims after shipping off 4,500 claims in its inventory to offices in Louisville, Ky., Sioux Falls and others.

“We’re looking like we’re making progress … but in ways that aren’t sustainable,” said one claims processor. “We’re not actually doing anything to fix problems that are actually causing the backlog … At some point, that overtime’s got to end and you can’t continue to broker out work, and what happens at that point? Nothing’s been fixed, and the same problem persists.”

All of these problems come at a critical time for veterans seeking disability compensation.

Stephen Leon served two tours in Afghanistan and won the Army Commendation Medal for valor after a firefight with three suicide bombers outside a gate in Kabul in 2011. The blast from one of their bombs left him with wrist, neck, knee, back and ankle injuries, as well as traumatic brain injury and PTSD.

When he returned home July 2011, he couldn’t get his mind off Afghanistan, the battles and the friends he lost. “You’re used to a life of being at peace, with yourself and your family and … when you go over there, all that breaks up,” he said.

Facing financial difficulties and struggling with PTSD, he was forced to move in with his mom. “I couldn’t get a dime for claims, I couldn’t get in touch with anyone and the ones I could get in touch with, they didn’t want to help me anyway,” he said.

He enlisted the help of an independent advocate, who fought for his claim and connected him with housing and better PTSD treatment. He was rated 70 percent for his disabilities a year ago and now lives in his own apartment in Revere, Mass.

Without the help of an advocate and without the money, Leon said he would be “homeless” or “dead.”

Hannah Winston contributed to this report

Mary Shinn was a Women & Philanthropy Fellow for News21 this summer.