THE APPEALS PROCESS BEFORE THE VA

The VA appeals process begins with the filing of the "notice of disagreement." A disappointed claimant has 1 year from the date of the unfavorable decision in which to file the "notice of disagreement." The VA is then required to respond to the "notice of disagreement" with a new decision or with an explanation to the claimant in greater detail why the claim was denied. If the claimant remains dissatisfied with the response from the VA, the claimant is required to file a substantive appeal (in essence a second appeal letter) to bring the case before the Board of Veterans' Appeals. The Board can grant the claim, deny the claim or remand the claim back to the regional office if it determines the regional office erred in deciding the claim. It is not uncommon to see claims remanded from the Board back to the regional office multiple times before a final decision is made on the claim. The Chicago Tribune ran a story on May 16, 2005 illustrating how the repeated remand process harms veterans.1

When the case is denied by the Board, the claimant has a 120-day window to appeal the case to the CAVC. It will ordinarily take another 12 to 18 months for the CAVC to decide the appeal. When the Court acts in the claimant's favor, the result will most likely be a remand back to the Board of Veterans' Appeals. See Swiney v. Gober, 14 Vet. App. 65 (2000) (wherein the CAVC acknowledged "outright reversal on the merits has been very rare" and remands are the norm). The remand from the CAVC provides the claimant with the opportunity to submit additional evidence and arguments in favor of the claim at issue, and it preserves the claimant's favorable effective date if there is an award of benefits. With the average age of a veteran now at 582, the problem is that many claimants do not survive the protracted adjudicatory process. Those claimants who do survive are fatigued and discouraged by interminable delays before the VA. The chart below shows average time periods for each stage of the administrative process (i.e., excluding time at court). 3

203 days

* 1102 days (3.02 years)

Substantive Appeal Receipt to Certification

Receipt of Certified Appeal to Issuance of BVA deci- Board of Veterans' Appeals

sion.

Total

* 3.02 years.

If a claimant appeals a Board decision to the Court of Appeals for Veterans Claims, it may easily take another 12 to 18 months for the Court to decide the appeal.

PROBLEMS IN CURRENT VA CLAIMS ADJUDICATION

1. There are no deadlines imposed on the VA to complete any of the steps in the adjudication of a claim. One famous decision reported that the claim had been contested for more than 7 years at that point. Dambach v. Gober, 223 F.3d 1376, 1381 (Fed. Cir. 2000). One CAVC Judge commented during an oral argument that a 14year delay is not unknown.

2. The multi-step appeals process is redundant and unnecessarily complicated because it imposes upon the veteran a specific pleading requirement; i.e, the veteran must assert an additional affirmative intent to seek appellate review.

3. Too many cases, not enough staff. According to a recent survey of rating specialists and decision review officers at the regional offices, 65 percent stated that they had insufficient staff to "ensure timely and quality service." 4 The same survey reported that 57 percent believed "it was too difficult to meet production standards if they adequately develop claims and thoroughly review the evidence before issuing rating decisions." 5

4. The regional offices are not getting the decisions right the first time and this results in claimants filing appeals to the Board which are then remanded back to the regional office. Many claimants are stuck on this proverbial hamster wheel for

years.

5. The Board of Veterans' Appeals causes delay in the adjudication of claims by: (1) failing to follow judicial precedent and forcing veterans to appeal their claims to Court, and (2) failing to handle claims expeditiously as Congress intended when it enacted the Veterans Benefits Act of 2003.

6. The Appeals Management Center has become a "parking lot" for both Court and BVA remanded cases. As of October 2004, there were about 21,000 claims at the AMC. As the caseload increases at the Appeals Management Center, longer delays are inevitable.

NOVA'S RECOMMENDATIONS TO ALLEVIATE PROBLEMS IN THE VA ADJUDICATION

OF CLAIMS

1. Congress should impose mandatory timeframes for each step in the VA adjudication process. These time limitations should be subjected to limited extension when the delay is clearly not due to any inaction on the part of the VA.

2. Have one appeal from a denial by the regional office and eliminate the requirement that the claimant file two documents to obtain appellate review, the "notice of disagreement" and the "substantive appeal.” The claimant should not be required to appeal the matter twice in order to bring the case before the Board of Veterans' Appeals. This proposal would require an amendment to 38 U.S.C. § 7105.

3. Even though the VA has not asked for it, an increase in staff is necessary at the regional office level. Specifically, NOVA believes that increasing the numbers of decision review officers at the regional offices would be helpful because they can clear cases and have the authority to review the case de novo at the regional office level. The use of decision review officers at the regional office level has been successful. 4. NOVA believes that the Board of Veterans' Appeals should be replaced by independent Administrative Law Judges like those in the Social Security system. This would eliminate the delay inherent in the centralized Board. Alternatively, Congress should consider decentralizing the Board of Veterans' Appeals by placing the Board Members at the regional offices. Instead of having to transfer cases from the regional offices to the Board in Washington, the Board Member would be co-located at the regional office.

5. This Committee should consider legislation_permitting a veteran to hire and compensate an attorney earlier in the process. Presently, a veteran cannot retain counsel until after the Board of Veterans' Appeals issues the first final decision in the case. This is too late in the process for counsel to be truly effective because by the time the Board makes a decision on the claim, the record is effectively closed. As the VA Inspector General's Report has shown, the initial adjudicators do not have enough time and staff to make timely and quality decisions. The same report noted that it is not possible for the adjudicators to fully develop the claims and meet production deadlines. Attorneys would be helpful in obtaining, organizing and presenting records on behalf of the veteran and making sure that the VA processes the claim in a timely and accurate manner. An amendment to 38 U.S.C. §5904 is necessary.

CONCLUSION

On behalf of NOVA, I would like to thank the Committee for the opportunity to present this testimony. Oversight of the VA adjudication process is critical and necessary to ensure that the VA fulfills the intent of Congress that it compensate veterans and their families for all benefits which can be supported in law. NOVA believes that the most effective means is to permit all claimants to hire an attorney from the beginning of the claims process. The current system merely reinforces the adjudicatory errors of the VA and compounds needless delay of these claims. NOVA submits that amendments to 38 U.S.C. §§ 5904 and 5905 to permit legal representation at the initial claim level are necessary.

Chairman CRAIG. Robert, thank you very much.

Rick, we will now hear from you, Rick Surratt, Deputy National Legislative Director, Disabled American Veterans. Welcome.

STATEMENT OF RICK SURRATT, DEPUTY NATIONAL LEGISLATIVE DIRECTOR, DISABLED AMERICAN VETERANS Mr. SURRATT. Good afternoon, Mr. Chairman and Members of the Committee. Today's hearing addresses one of the greatest challenges facing the Department of Veterans' Affairs: overcoming the

persistent claims and appeals backlogs, to allow for more timely resolution of benefit claims.

The numbers demonstrate the problem. Various studies have identified the causes. The causes dictate the solutions. But we either have not applied effective solutions, or have not applied solutions effectively.

The consequences impact most negatively on veterans seeking relief from the economic effects of disability. Of the nearly 502,000 compensation and pension claims pending as of May 21, 2005, nearly 343,000 are the claims that require rating decisions. Of the rating cases, more than 71,000, or 20.9 percent, have been pending for more than 6 months. The average time to process rating cases was 166 days in fiscal year 2004.

Comparing this claims backlog to backlogs of the past few years, the numbers show there has been no maintained reduction in the pending workload. A maintained reduction does not appear likely over the long term, if the causes are not targeted more decisively and effectively with the appropriate solutions.

The various studies have identified several factors that contribute to VA's problems and inability to overcome them. These factors are such things as management weaknesses, lack of accountability within VA, inadequate training, and inexperienced decision makers.

Some of these factors are a consequence of, and others compound the root cause of the inefficiency, which are inadequate resources. The VA does not have adequate staff to train new employees, conduct quality reviews, and decide claims accurately and in a timely fashion.

With ensuing backlogs, management's priority becomes the quantity of cases decided. With the emphasis on production, quality is compromised; requiring rework and adding to the appellate workload, which impacts adversely on VA field offices and the Board of Veterans' Appeals.

To break this escalating cycle of increased inefficiency from higher error rates, more rework, additional demand on limited resources, and even greater focus on quantity at the expense of quality, VA must reorder its priorities.

Quality must be the first priority, even if the backlogs become worse in the short term. But VA cannot achieve quality without adequate resources. If VA could begin to attack two principal deficiencies and break the cycle of failure with added resources, why doesn't it get them?

The simple answer is: Because OMB dictates staffing requests as a political decision, for purposes of budget targets. And that too often becomes what VA gets, rather than the resources necessary to cover VA's real needs.

I don't mean to suggest that added resources would be a panacea; just that they are an essential ingredient. VA management will have to take decisive steps to impose and enforce accountability for the positive reforms indispensable to reversing these stubborn and longstanding problems.

Forming specialized rating teams, continually shifting resources to trouble spots, farming work out from overloaded stations, overtime, and other such stopgap measures only temporarily treat the

symptoms. They do not cure the underlying disease. That will take serious reforms.

Mr. Chairman, that concludes my testimony. I will be happy to answer any questions that the Committee may have.

[The prepared statement of Mr. Surratt follows:]

PREPARED STATEMENT OF RICK SURRATT, DEPUTY NATIONAL LEGISLATIVE DIRECTOR, DISABLED AMERICAN VETERANS

Mr. Chairman and Members of the Committee:

In response to your invitation to testify today, I am pleased to present the views of the Disabled American Veterans (DAV) and its Auxiliary on the functioning and performance of the claims and appeals processes of the United States Department of Veterans' Affairs (VA).

Unlike any other group of beneficiaries seeking government assistance, our_military veterans inherently and justly deserve special status, special benefits, and special treatment by and on behalf of the grateful citizens of the Nation whose interests they served to protect and preserve. We are beholden and duty bound to honor this national debt above all others. This principle resides at the very core of and is inseparable from our patriotic American values.

Congress created VA to serve the interests of this special group of government beneficiaries in a manner consistent with our irrevocable indebtedness to them and our profound moral obligation to bestow upon veterans the benefits and services they so rightfully deserve consequent to and in return for their extraordinary sacrifices and contributions to our society. Because of this special status of the veteran as a claimant, VA has the objective of ensuring the veteran obtains benefits to which he or she is entitled. VA therefore has a higher responsibility to its claimants than the ordinary administrative agency. VA has the responsibility of being supportive and helpful to veterans in their efforts to obtain benefits, rather than leaving it to the veteran to prosecute his or her claim without guidance and without government aid.

With this duty upon VA to assist the veteran in the full development and prosecution of his or her claim and with the obligation upon the government to ensure all avenues of entitlement are entertained and all pertinent legal authorities are considered, the proper outcome should be all but assured in a perfect world. However, a mass adjudication system as large and burdened as VA's that often involves judgments on complex questions, and sometimes conflicting evidence, is unavoidably imperfect. That is why one of the DAV's principal functions as a veterans' service organization is its program of assistance to veterans in benefits counseling and claims representation.

For this purpose, the DAV employs a corps of 260 National Service Offers (NSOs) who are stationed principally in Veterans Benefits Administration (VBA) regional offices nationwide. From our fleet of Mobile Service Office vehicles, our NSOs also provide counseling and claims assistance in rural communities, intercity locations, disaster areas, Native American reservations, NASCAR races, conventions, and other various holiday and community events. To expand the availability of assistance, the DAV instituted a program of training and certification of State and chapter service officers. We certified 889 service officers in 2003 and 1,078 service officers in 2004.

For assistance to service members separating from active duty, the DAV employs 23 Transition Service Officers (TSOs). In conjunction with Transition Assistance Programs and Disabled Transition Assistance Programs, our TSOs provide benefits counseling and claims assistance at more than 80 military installations throughout the Nation.

Our free services include representation before the Board of Veterans' Appeals (BVA) for our clients who elect to appeal unfavorable VA field office decisions. We employ attorneys and a non-attorney practitioner to provide representation to appellants before the United States Court of Appeals for Veterans' Claims (CAVC or the Court). Our attorneys also take appeals to the United States Court of Appeals for the Federal Circuit.

From our involvement in benefits counseling and the claims and appellate processes at all levels, we are in a position to observe the strengths and weaknesses of the VA's system for administering the benefit programs, particularly the compensation and pension program. Benefits for disabled veterans and their dependents and survivors are at the core of the programs VA administers. The effective administration of these programs, including appellate review of claims decisions, is essential to the fulfillment of VA's momentous mission to care for our Nation's veterans.

Historically, VA has struggled in this mission. Problems with claims processing, accurate decisions, and timely benefits delivery have plagued and challenged VA for several years. Many underlying causes acted in concert to bring about this now intractable problem. In the early 1990s, judicial review of BVA decisions began to expose arbitrary and unlawful practices. The Court of Veterans' Appeals, now CAVC, imposed requirements that VA decisions be better reasoned, better explained, and better supported by the record. In turn, BVA began to reverse and remand more field office decisions, requiring more rework. Military downsizing resulted in additional claims. Despite an increasing workload, annual appropriations provided for reduced staffing levels. VA also began to lose many of its experienced adjudicators to retirement, without sufficient remaining proficient adjudicators to both decide the pending claims and train new employees. These factors combined to increase pressure on adjudicators to increase production with an even further compromise of quality. More errors required more rework and resulted in more appeals, leading to even greater backlogs and declines in timeliness with a consequent vicious cycle of increasing inefficiency.

These increasing problems in compensation and pension claims processing triggered various studies to identify the underlying problems and recommend remedial courses of action. In 1993, VA created its Blue Ribbon Panel on Claims Processing. In 1994, Congress established the Veterans' Claims Adjudication Commission to carry out a study of the claims adjudication system. In 1995, Congress commissioned a study by the National Academy of Public Administration (NAPA) of veterans' claims processing. In response to concerns about the quality of its service to claimants, VA created a Business Process Reengineering (BPR) Office in November

1995.

The Blue Ribbon Panel on Claims Processing made more than 40 proposals to improve efficiency in claims processing. These proposals included improved technology, redesigned work processes, and additional training.

The Veterans' Claims Adjudication Commission transmitted its final report to Congress in December 1996. Unfortunately, the Commission's study was poorly focused and strayed away from its charge to evaluate the efficiency of the existing claims adjudication processes and procedures. The recommendations received little serious consideration.

After conducting a study of the claims processing system, the BPR team issued its report in December 1996. The report called for comprehensive changes in the way VA processed compensation and pension claims. The report acknowledged that poor quality and the resulting necessity to rework claims were the primary problems accounting for overload on the system. The BPR team identified several core problems leading to poor quality. The team found that the segmented or compartmentalized claims process left no one accountable for quality in the final product. Because the claims and supporting evidence passed through multiple steps and many hands, errors often occurred. The team found that management placed the emphasis on production and timeliness standards, or "making the numbers," instead of producing quality decisions. This lack of emphasis on quality resulted in high error rates, inconsistent decisions, and the appearance of arbitrariness in VA's decisions, which led to a relatively high number of appeals and necessitated more rework of claims.

The recommended plan adopted process changes designed to remove the conditions responsible for errors and inefficiency. Quality-and thus efficiency-and improved service to claimants were to be the primary goals, supported by training and a certification process for adjudicators, along with better quality review and accountability mechanisms. Implementation plans were compiled in a report issued in June 1997, and the BPR plan was incorporated in the Compensation and Pension Service's (C&P's) business plan and later in VA's first 5-year strategic plan under the Government Performance and Results Act (GPRA), submitted to Congress in September 1997.

În its strategic plan, VA indicated that it planned to attack quality problems in its products by "doing it right the first time." However, if a mistake did occur, it would be candidly acknowledged and corrected as a priority. VA would assess and improve the level of accuracy for all work and correct errors in the shortest possible time as appropriate for each business line. Some of VA's performance goals were to make correct decisions 97 percent of the time; decrease the BVA remand rate from 43.7 percent to 20 percent; and improve the quality of disability examinations so that 99 percent were sufficient to adjudicate claims. The DAV and other veterans' service organizations strongly supported the BPR initiative.

From its comprehensive study of VBA's operations, NAPA issued its report to Congress in August 1997. NAPA was critical of VBA's past and planned staff reductions. NAPA noted that no sound basis existed for VA to conclude fewer employees