Veterans Administration Secretly Settled 1,000 Wrongful Death Claims

With the Veterans Administration (VA) about to face hearings on Capitol Hill regarding preventable deaths in their system, the Center for Investigative Reporting (CIR) released a report exposing the VA ha secretly paid $200 million to settle nearly 1,000 wrongful deaths over the decade following 9/11. The VA settlements were broadly based with agreements signed in every state in America except Alaska. 

The VA officials on April 9th will give sworn testimony regarding preventable deaths to the U.S. House of Representative Committee on VA Affairs. In response to Freedom of Information Act requests, the Center for Investigative Reporting (CIR) uncovered VA cash payments averaging $150,000 were made for wrongful death claims to “nearly 1,000 grieving families, ranging from decorated Iraq War veterans who shot or hanged themselves after being turned away from mental health treatment, to Vietnam veterans whose cancerous tumors were identified but allowed to grow, to missed diagnoses, botched surgeries and fatal neglect of elderly veterans.”

As I detailed in my 2013 report “VA DANGEROUS TO VETERANS,” Americans have always prioritized caring for the needs of military veterans since our founding as a nation. The Continental Congress of 1776 promised pensions for any disabled veteran of the Revolutionary War. Despite criticism about deficit spending over the last five years, there was universal bipartisan support in Congress for a 41% departmental-wide VA annual budget increase to $140 billion in 2013. 

That is why it seems depressing that the backlog doubled to over 900,000 for claims pending applications for disability, and the number delayed over a year skyrocketed by 2,000%. But regardless of their abysmal performance, senior VA executives were still eligible to collect bonuses of 35% on top of what was deemed lavish pay and benefits.

With 300,000 employees to provide service-related benefits, congressional revelations confirmed last year that over the last four years delays for processing disability compensation and benefits were far longer than the 273 days the agency acknowledged. Inspection of VA internal data revealed to investigators that the wait period for first-time claims was between 316 and 327 days.

Despite huge funding increases, staffing levels at the 58 regional VA offices increased by less than 300 since September 2010, even as the volume of new claims dramatically increased. The average increase in delay for veterans filing first-time claims in America’s major population centers was twice the national average. Delays equaled 642 days in New York; 619 days in Los Angeles; and 542 days in Chicago. Veterans waiting more than a year for qualification to receive benefits grew from 11,000 in 2009 to 245,000 in December. The error rate for claims processing average 14%, and an average of 53 veterans died each day while waiting to qualify.

The Veterans’ Administration blamed the 455,000 claim backlog on an uptick in the number of returning Iraq and Afghanistan veterans and veterans requesting compensation for PTSD and Gulf War illness. In comparison, the average veteran wait time for determining eligibility for disability fell by more than a third under President George W. Bush, despite more than 320,000 Iraq and Afghanistan veteran disability filings.

The VA’s disability claims crisis was compounded by the department’s in-house effort to develop a high-tech “Veterans Benefits Management System” that promised to streamline claims processing by up to 65%. The project was supposedly designed around the twelve “Agile Manifesto principles for “Sustainable Development” software. 

But according to a report from the VA Inspector General, after spending $537 million on the Web-based system, 97% of all veterans’ claims remain on hard-copy paper. The IG also warned the weight of paper files at their Winston-Salem, NC office had compromised the structural integrity of the building. Since the report’s release in January 2013, the two top VA technology officers retired, stating they “accomplished their goals.”

The VA faced intensive grilling in September at House VA Affairs hearings to examine patient deaths at VA hospitals in Pittsburgh, Atlanta, Dallas, and Jackson, Mississippi. Lawmakers accused the agency of failing to discipline executives responsible for unnecessary deaths and instead paying them performance bonuses.

For example, after an outbreak of Legionnaires’ disease at the agency’s hospital in Pittsburgh left six veterans dead and at least 21 ill, the VA regional director, Michael Moreland, received a nearly $63,000 bonus. His five-page performance evaluation to justify the bonus, made no mention of the outbreak. After receiving the award, Moreland retired and used the bonus level to spike his life-time pension payments.

At House budget hearing on March 13, legislators pressed VA Secretary Eric Shinseki to provide examples of agency staff who had been disciplined after medical errors caused the death of veterans. Shinseki responded “that 6,000 VA employees had been 'involuntarily removed' over the past two years, including six senior managers."

The VA has stated that wrongful death payments to 1,000 veterans over a decade represent a small percentage of malpractice claims for a large system. But according to CIR: “unlike the private sector, where survivors can file cases in state and federal court and often win large punitive damages, families of patients who die under VA care must exhaust a months-long administrative review process before filing a lawsuit.”

CIR also found that the congressional grant of VA immunity from paying punitive damages claims makes lawyers reluctant to take cases on contingency of a VA cash award. “The VA fights every case tooth and nail and so cases drag on for years,” said Cristobal Bonifaz, a Massachusetts attorney who won $350,000 in a 2009 settlement for the parents of Marine Lance Cpl. Jeffrey Lucey. The Marine was 23 when he hanged himself with a garden hose in his parents’ basement after being turned away from psychiatric care at the veterans’ hospital in Northampton, MA. Lucey’s VA disability payout was not adjudicated until five years after his death.

Among Bonifaz’s current clients is Tracy Eiswert, who was forced to live in her car with her two young children after her husband, 31-year old Iraq War veteran Scott Eiswert, shot himself in the head in 2008. The VA in Nashville, TN denied Eiswert’s disability claim for post-traumatic stress disorder, but three months after death, the VA reversed itself, saying it was “clearly and unmistakably in error” in failing to grant Eiswert’s disability and began sending Ms. Eiswert $1,195 a month in survivor benefits. She is pressing ahead with a wrongful death lawsuit against the VA because of the impact of her husband’s suicide on their children. “We’re still living with it today,” she said.

The CIR expose on the wrongful death settlements is sure to provide plenty of fireworks at the April 9th Congressional Hearings. Hopefully, the strong public support for veterans’ needs will encourage focusing of the federal government’s resources on reducing disability claim delays and improving the speed of delivering medical services.

The author welcomes feedback @ chriss@chrissstreetandcompany.com. Chriss Street teaches microeconomics at University of California, Irvine.


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