VA watchdog reports $5.6 million in disability overpayments

A report from the VA Office of Inspector General (OIG) has identified approximately $5.6 million in overpayments to veterans due to errors made by Veterans Benefits Administration staff. The investigation focused on disability decisions regarding service-connected painful scars resulting from injuries such as burns, surgeries, shrapnel, and gunshot wounds.

Reviewing decisions made between June 1, 2024, and May 31, 2025, investigators found errors in at least 17,900 cases, representing roughly 38% of the decisions under review. Of these, 920 decisions directly resulted in millions of dollars in overpayments. The OIG noted that these payments will continue to accumulate without corrective action.

The watchdog attributed the errors to a Disability Benefits Questionnaire that fails to clearly distinguish between objective and subjective evidence. This lack of clarity led claims processors to provide evaluations without sufficient objective support. Additionally, the report found instances of “pyramiding,” where physical manifestations of a disability were evaluated under two separate diagnostic codes, leading to further overpayments.