Why are Veterans Compensation Claims Handled so Poorly?

Even though the number of veterans in this country has been declining each year, the number of compensation claims from these veterans has skyrocketed. VA has not done an adequate job in attempting to handle this ever-increasing number of claims.

The veteran population from 2010 through 2020 is projected to go down by about 4 million from about 22.7 million veterans to about 18.8 million veterans whereas claims submitted will have gone up from about 1.2 million a year to about 1.5 million a year.

The graph below shows the consequences of this trend. Fewer veterans are submitting more claims. In addition, VA is awarding more compensation benefits to fewer veterans. In 2010 approximately 13.9% of all living veterans were receiving compensation benefits. By 2020 approximately 26.8% of all veterans will be receiving compensation benefits. This is well over a quarter of all living veterans.

Population of Living Veterans vs Veterans Receiving Compensation - 2010-20


The table below also reveals another important trend. Not only will the number of veterans on claim go up each year from 2010 through 2020, but also the average payout per claim will increase significantly. The yearly increase in payout is over 2 times the projected inflation rate for the period from 2010 through 2020. Because of the political popularity of supporting veterans, it appears that Congress will continue to pump an inordinate amount of money into veterans benefits over the years.

The complexity of claims is also changing. A growing percentage of current returning war veterans are applying for 12 are more different disabilities per claim. It is unlikely anyone has that many service-connected disabilities at one time but it appears the veterans are trying to get as much as they can by throwing everything against the wall to see what will stick. This may be a simple task for the veterans but VA has to expend more effort for all of these claimed disabilities whether they are valid or not.

Applications for secondary disability and requests for increases in rating are also going up. In 2019 VA expects 74% of claims to be from veterans already on benefit and the other 26% to be original claims. Many of the applications for veterans already on claim are for secondary disability or for increase in rating. In 2000 the average number of disabilities per veteran receiving compensation was 3.2 and by 2017 was almost double to 5.11 disabilities per veteran.

As a final note VA's budget for paying compensation claims over this period of time will go from $38 billion to $92 billion even though the number of living veterans will have gone down by 4 million.

Veterans on Claim for Compensation


VAs Dilemma of Ever Increasing Claims Submissions

Years ago, VA did not anticipate this ever-increasing number of claims and could not keep up. As a result you see a large red hump on the graph below in 2012 that represents about 700,000 claims in the system that had been there longer than a year. This backlog created a congressional and public backlash against VA and a demand to solve the problem. The table that was used to generate this graph is also included here.

Claims Submitted vs Processed vs Year End vs Awarded

DOTTED BLUE LINE is claims submissions, GREEN LINE is claims processed during the year, RED LINE is claims backlog (claims pending at year end) and DASHED BLACK LINE is claims awarded.

Totals are of Compensation, Pension and DIC claims combined.


The claims backlog started to accumulate during fiscal year 2008. By fiscal year 2010 VA knew that it had to do something about this growing problem.

A variety of solutions were put forward. One of the biggest problems facing the regional offices claims processors was a cumbersome paper-based claim system where some individual claims files for one veteran could number more than 2,000 pages. You see here an actual photo of the old paper-based system. The claims adjudicator's desk pictured here is piled high with claims folders that need to be processed. Under this old system, claims folders were often misplaced and in some cases actually went missing and lost.


At this time VA used an assembly-line process with 5 or 6 different decision stations and only one person could access the claims file at any one time.

In 2010, VA decided to go to a paperless system where all documents are scanned into PDF format and stored in a database that is accessible to all regional office employees on their computers. Now any number of employees can work on the same claim at the same time. Now employees work in clutter-free cubicles on individual computers. Gone are the days where the stacks and stacks of paper folders as you see in the picture above were found on every desk for every claims adjudicator.

VA also designed a streamlined application process called a Fully Developed Claim and lately has further refined this process for certain claims called a Decision Ready Claim. The concept here is that the applicant can submit all necessary paperwork upfront so the Regional Office does not have to develop the claim for a decision. In this case, the claimant waves his or her right to the duty to assist in order to save considerable time and expedite a decision.

In order to accommodate the new paperless system, the department decided initially in 2010 to design a one-dimensional database to accommodate all of the documents. This database has now evolved into a relational database management system where the entire claims process can be managed through Internet technology on the cloud and employees can work from home.

What was supposed to be a simple database has turned out to cost the government $1.3 billion and growing as new capabilities are being added each year. This database is called the Veterans Benefits Management System or VBMS for short. All accredited agents and accredited attorneys can now apply for and receive access to VBMS on their home or office computers through a vetting and training program.

Submitting Claims under the New Paperless Claim System

Application for benefits is now accomplished in two different ways. The first is an online portal called eBenefits which currently only accommodates disability compensation claims. VA is also in the process of migrating eBenefits to another more user-friendly system called vets.gov. Veterans who are not computer savvy and who do not have scanners to upload documents into the national work load queue are challenged by these online systems. From eBenefits or vets.gov the national work load queue puts the claim into VBMS and assigns it to a regional office for processing.

The second method is the one we prefer to use. All applications are submitted as paper and sent to the evidence intake center in Janesville Wisconsin where they are scanned into the national work load queue and into VBMS and then assigned to a regional office. This is currently the only option for submitting pension or DIC claims, but we also prefer paper claims for disability compensation as well.

VA has redesigned all of its forms so that vital information on the form such as names addresses, Social Security numbers and so forth is scanned directly into the database through optical character recognition. You see below a sample where the OCR portion of a typical VA form requires putting a letter or number in an individual box. The purpose is to bypass human intervention and input, and feed the vital information directly into the computer system for more efficient handling.

0966 - Intent to File


Fully Developed Claims Versus Standard Claims

The next 2 graphics illustrate the difference between fully developed claims and standard claims. The standard claim process is shown first and the fully developed claim process is below.

The RO Veterans Service Center Production Line Approach - Duty to Assist


The RO Veterans Service Center Production Line Approach - Fully Developed Claim


You see from these two graphics that if you submit fully developed claims, you bypass VA's duty to assist and eliminate up to 7 different duty to assist activities that not only slow down the decision process, but also allow the regional office to control all the evidence for your claim. In many cases letting the regional office totally control your claim, with little input from you, will result in an unfavorable decision. A fully developed claim allows you to be in charge of the process.

Regional Office Claims Processing Model As of 2019

Below is a graphic of the newest version of the department's claims processing model. This shows the entire process from submission through unfavorable decisions and also illustrates the new review process for unfavorable decisions that became effective February 19, 2019. We will discuss the new review process in another section of this website. (the table of contents in the right column above).

Regional Office Claims Processing Model


This processing system is very complicated and overly complex. You probably can't make out all the details, but from all of the various options in the system, it is evident that the complexity of this process is one of the reasons claims take so long.

Compensation Claims outnumber Pension and DIC Claims


Only about 10% of all applications per year are for pension and DIC and the other 90% are for compensation. Pension and DIC recipients appear to remain on benefits longer as about 16% of all individuals on claim are receiving pension and DIC.

The Claims Processing Model Does Not Work Well for Compensation

Pension and DIC are also easier to adjudicate as they do not involve a lot of different actions in order to make an award. Compensation claims on the other hand can involve all kinds of different actionable responses such as initial claims, claims for reconsideration, secondary disability, reevaluation, accrued benefits, scheduling exams for DBQ's and medical opinions, preparing appeals, adjusting benefits for hospitalization or incarceration, determining waivers and fiduciary issues and a whole bunch more. You see below a chart of about 30 different outcomes that are identified by what VA calls end product codes. Each development and rating team in the regional office has to adapt to each of these different end product outcomes and have an understanding of how to complete them.

More importantly, this chart illustrates the most pernicious part of the claims model which is that each of these end product actions is timed by the VBMS relational database. For example, you see here that an EP code of 10 is allowed 11.24 hours to complete. If the development and rating team exceeds this allocated time they are punished. We will discuss this destructive issue further on.

End Product Codes


But that's not all of the challenges. The system is based on an antiquated idea that every veteran in every state should have access to a local state regional office. With modern technology, this is no longer necessary. But the Department continues to fund some offices such as the one in in Manila that is a tiny concrete building that probably only holds one person.

Some of the regional offices in North Dakota, Montana, South Dakota or Wyoming employee only a handful of people. Other regional offices are huge and house perhaps thousands of people. Yet VA must support the smaller locations with building maintenance, IT support, maintenance staff and a whole lot more unnecessary administrative resources. It is also evident that communicating with 56 different regional office directors to coordinate activities is a pretty inefficient way to run an organization.

The regional office structure is a poor way for VA to manage its resources and the department should consolidate claims processing into a smaller number of centralized processing centers. There are approximately 15,800 employees who work on compensation, pension and DIC claims.

But there's more. The new database process has flaws and employee input is not appreciated. Employees are treated merely as robots feeding the system. VBMS rigidly times each end product action. This whole process is antagonistic to employees and we suspect that leads to discontent and inefficiency. As a result of all of this, we believe the entire decision process with compensation claims is compromised.

The Primary Culprit – Employee Workload Deadlines

In order to understand what we think is the primary culprit for the flawed claims process, we must address the structure of disability benefits claims processing which is illustrated in a graphic above.

Disability benefits are the responsibility of the Veterans Benefits Administration or VBA which is one of three divisions of the Department of Veterans Affairs. Currently about 15,800 employees directly or indirectly work with disability applications. A number of these people belong to rating teams who are responsible for developing evidence for a rating. These employees are called veterans service representatives or VSRs. Team members who make rating decisions are called rating veteran service representatives or RVSRs.

VA is obsessed with completing applications in 125 days or less. In 2019, the department will complete a projected 1.3 million disability compensation rating claims, with an average of 107 days for completion, well under the 125 day limit. They anticipate an inventory of claims pending more than 125 days at 59,000. Claims completed in less than 125 days represents about 95.5% of submissions in 2019. That's pretty good success. There are numerous issues associated with that 4.5% claims going over 125 days that the regional offices can't control.

All of this comes with a price. There is tremendous pressure on employees to meet the 125 day Workload goal. VSRs and RVSRs have a point system for their performance evaluations. If they fail to meet the processing workload goals they lose points and this affects their bonuses, wage increases and promotions and can also result in reprimands.

Employees are rigidly timed by VBMS on various actions taken on a given claim. For example, the most common compensation application with less than 7 issues is assigned an EP code of 110. The EP chart above allows 5.64 hours for completion of EP code 110. If the rating team exceeds this limit and they can't make up this overage with other claims that go shorter than 5.64 hours they are docked performance points. Complex claims with a lot of evidence could easily disrupt the average processing allocation limits.

What we are finding is the rating team figures out a way to process these complex applications without reading all of the evidence. This is not allowed under regulations, but it appears to be happening. Failure to read all of the evidence can often lead to the wrong decision or a denial.

Finally, employees are not valued for their efforts. For example, in one regional office, a VSR is given 37 minutes to complete an order for a C&P exam. If it takes longer, the VSR must abandon the task or risk losing performance points. Someone else has to take up the action later on which not only wastes time but also does not give credit to the original VSR. This multiple handling of the same action happens more frequently than not and the important incentive of giving the team ownership of the claim is lost. This ownership incentive in the past has been important to employee morale.

Understanding the Deficiencies in the Claims Process

Having this understanding of why compensation claims are handled so poorly allows a potential claimant for Compensation benefits to maximize his or her chances of a favorable decision. We will list here what we have learned from these deficiencies and discuss in the next section entitled "what can be done for improving decisions with Compensation claims" in another section. See the table of contents in the right-hand column above.

Here are some of the things we have learned to improve Compensation claims decisions which we will discuss in the next section.

Please refer to the table of contents in the top right column of this page for more topics on VA Disability Compensation.