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RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. LARRY E. CRAIG

TO KENNETH B. KRAMER

Question 1a. At the hearing, you suggested that Congress should consider eliminating the role of the United States Court of Appeals for the Federal Circuit in reviewing appeals involving veterans' benefits claims. Would you please comment further on what problems you perceive with the current judicial review structure?

Answer. The optimal structure for the judicial appeal process should achieve the best possible balance between having as many layers of appeal as required for the best possible decision and the need for reaching finality of result as quickly as possible.

There can be no true dispute that the present structure, insofar as it allows appeals to both the U.S. Court of Appeals for Veterans' Claims (Court) and the U.S. Court of Appeals for the Federal Circuit (FC), delays finality from a matter of months to a matter of years. As to the latter, in some cases, such as where the Court affirms, but the FC overturns the Court and mandates a return of the case to the VA administrative process, the number of additional years involved could extend to a decade. Clearly, if the sole consideration is expeditious review, one layer of Federal Court review, rather than two, short of the Supreme Court, will provide that result 100 percent of the time.

The question then becomes whether there is sufficient value added as to accuracy of decisionmaking, to justify the inherent additional time needed for review in both the Court and the FC. Judicial accuracy, unfortunately, is really an art-form, rather than a science, and like beauty, is in the eye of the beholder. In most situations, the winning party believes that the decision is accurate and the loosing party takes a contrary view.

Moreover, because accuracy is an art-form, its presence is not usually the readily apparent clear-cut, black or white kind of stuff, but rather is dependent on the kind of analysis involving subtle shades of gray. And it is these subtle shades of gray which form the basis for an "accurate" result to be "distinguished" in future cases. Whether such a distinction justifies a different result in a different case again rests in the eye of the beholder, whether the beholder be litigant, judge, or academic.

As such a beholder, it is my view that judicial decisions, sometimes under the rubric of being "distinguished" and sometimes because judges are fallible, are at times not only inconsistent between appellate courts, but inconsistent within the same court. Accordingly, other than for perceptual purposes to the outside world and for loosing litigants to obtain one more bite at the apple, I see little value added in having both the Court and the FC involved in review of veterans' cases. Even assuming that the FC is always more accurate than the Court, a review of the FC website shows that the FC reverses the Court in approximately 11 percent of the cases it reviews. It is debatable whether a better result in about 1 of every 10 cases can justify the additional delay and confusion inherent in multiple layers of appellate review. But this debate need not be waged. Recognizing that I am speaking as a beholder and one indeed who might be viewed as nonobjective, it is my view, after 15 years of fulltime participation in veterans' law, that because of the exclusive nature of its work, many times the Court will have a greater understanding of the subject matter and awareness of the systemic impact of its decisions on the adjudication system than the FC. Accordingly, I would conclude that a significant number of reversed cases should not have been reversed so that the value-added accuracy of FC review is a much lower percentage than that reflected on the website. The old axiom about too many cooks spoiling the broth rings true. Here the presence of cooks in different kitchens creates not only delay, but confusion as to the state of the law.

Question 1b. Do you believe the current judicial review structure affects the ability of the VA system to provide prompt, accurate, or consistent decisions?

Answer. Yes and for the worse. Given the situation described in my answer to Part A, the VA is often euphemistically caught between what its supervisor, the Court, and its big boss, the FC, tells it to do. Anyone or anything trapped in such an environment reacts with delay, indecision and inconsistency. The VA is never sure whether the big boss will back the supervisor or scold him. And even where the matter under consideration is not brought to the attention of the big boss, the VA still must contend with prior edicts of the boss that seem inconsistent with what the supervisor is now telling it to do.

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. JOHN D. ROCKEFELLER IV TO DANIEL L. COOPER

Question 1. I am intrigued by the recommendations in former Chief Judge Kenneth Kramer's testimony, including his suggestion to improve the claims process at the regional office level by having an Administrative Law Judge or a Veteran's Law Judge working at the regional office on the disputed cases. What do you think of this proposal?

Answer. Judge Kramer made a number of recommendations at the hearing; including placing Veterans' Law Judges (VLJs) of the Board of Veterans' Appeals (Board) in VA regional offices. Neither the Veterans Benefits Administration (VBA) nor the Board supports this recommendation. The existing appeals process with layers of review was established, in part, to ensure fairness and integrity and promote claimant confidence in the decisions. Decentralization or regionalization of the Board by placing VLJs at the regional offices could affect the appearance of Board independence by creating a perception in the minds of appellants and their representatives that the Board is an extension of the regional office and not a separate and independent body that exists to fairly arid impartially consider their appeals of regional office decisions.

Decentralization or regionalization would also pose substantial challenges to the Board in maintaining the efficiency of its operations. Given the rapid changes in veterans law and the complexity of the VA disability system, it is advantageous for VLJs to work in a single location where they have the opportunity for a quick and free exchange of ideas and information and can quickly adapt to changes in the law. This kind of environment fosters consistency in understanding and application of the law. Additionally, regionalization of the Board would create logistical problems, increase expenditures for support services and legal research resources, and make management of the case flow and the conduct of quality reviews more difficult.

Question 2. Has VA reviewed the costs of the large numbers of remanded decisions, and can you provide me with estimates?

Answer. VBA created the Appeals Management Center (AMC) in July 2003 to serve as a centralized processing site for appeals remanded from the Board for further development. AMC has 87 employees and receives approximately 18,000 remands per year. VBA currently has a total of 26,000 remands pending, approximately 19,000 of which are at AMC. Because of the large inventory of pending remands, an additional 46 employees now assist AMC in processing remands.

The fiscal 2005 operating budget for AMC totals $6.9 million. The salary cost for the additional 46 employees currently assisting AMC is estimated at $2.2 million annually.

Question 3. What is VA doing to respond to the GAO report earlier this month raising questions about the consistency of decisionmaking in various regional offices across the country?

Answer. On May 5, 2005, the General Accountability Office (GAO) issued report GAO-05-655T, "Board of Veterans' Appeals Has Made Improvements in Quality Assurance but Challenges Remain for VA in Assuring Consistency." The report concluded that VA still lacks a systematic method for ensuring the consistency of decisionmaking within VA as a whole. GAO did find that VA has begun efforts to understand why average compensation payments per veteran vary from State to State. The report also noted that in response to inquiries from the media and members of Congress about rating variation, the Secretary of Veterans' Affairs asked the Office of Inspector General (IG) to determine why there are differences in VA's average monthly disability compensation payments made to veterans living in different States. The IG made a number of recommendations. VBA actions undertaken or planned in response to the recommendations are summarized below:

Recommendation 1: Conduct a scientifically sound study using statistical models of the major influences on compensation payments to develop baseline data and metrics for monitoring and managing variances, and use this information to develop and implement procedures for detecting, correcting, and preventing unacceptable payment patterns.

Actions Taken/Planned: VBA worked closely with the Office of Policy, Planning and Preparedness to award a contract to the Institute for Defense nalyses (IDA) in May 2005 to conduct the recommended study. IDA has initiated work on the contract. It is estimated that the study will take at least 18 months to complete.

Recommendation 2: Coordinate with the Veterans' Disability Benefits Commission to ensure all potential issues concerning the need to clarify and revise VA's Schedule for Rating Disabilities are reviewed, analyzed, and addressed.

Actions Taken/Planned: VBA is prepared to provide the Veterans' Disability Benefits Commission whatever information or assistance is needed to fulfill its statutory

charge. The Under Secretary for Benefits addressed the Commission on July 22, 2005, on disability compensation trends and developments, and on May 9, 2005, the Director of the Compensation and Pension (C&P) Service briefed the Commission about VA compensation and related benefits. VBA will work with the Office of Policy, Planning and Preparedness to ensure that the Commission has the required information and support to review, analyze, and address all potential issues concerning the need to clarify and revise the Schedule for Rating Disabilities.

Recommendation 3: Conduct reviews of rating practices for certain disabilities, such as PTSD, individual unemployability (IU), and other 100 percent ratings, to ensure consistency and accuracy nationwide. At a minimum, these reviews should consist of data analysis, claims file reviews, and on-site evaluation of rating and management practices.

Actions Taken/Planned: VBA will review post traumatic stress disorder (PTSD) cases adjudicated between 1999 and 2004 in which the veteran was awarded disability compensation for PTSD at the 100 percent rate; or was awarded 100 percent disability compensation based on a determination of individual unemployability (IU), with PTSD as the veteran's primary disability. These are the specific areas where the IG found problems in VBA's processing of PTSD claims. The initial stage of this review is underway.

Additionally, during its regularly scheduled oversight visits to VBA regional offices, the C&P Service will review cases involving other disabilities that received a 100 percent scheduler or IU rating. This review will focus on whether evidence to substantiate the claim was sufficiently developed and whether the disability evaluation assigned was appropriate, as well as on relevant management practices.

Recommendation 4: Expand the national quality assurance program by including evaluations of PTSD rating decisions for consistency by regional office, and to ensure sufficient evidence to support the rating is fully developed and documented, such as verifying the stressor event.

Actions Taken/Planned: Using the findings from the review of the PTSD cases, VBA will develop additional procedural guidance and training for our decisionmakers and make appropriate systemic and regulatory changes to improve the consistency and accuracy of our decisions. We will also analyze rating and claims data from VBA claims-processing systems on an ongoing basis to identify any unusual patterns or variance by regional office or diagnostic code for further consistency review. To support these consistency reviews, the C&P Service is developing new review protocols to monitor and review rating variations with regard to particular diagnostic codes.

Recommendation 5: Coordinate with the Veterans' Health Administration (VHA) to improve the quality of medical examinations provided by VA and contract clinicians, and to ensure medical and rating staff are familiar with approved medical examination report templates and that the templates are consistently used.

Actions Taken/Planned: VBA continues to work with VHA to improve the quality of medical examinations performed to support disability compensation evaluations. VBA is working with the Compensation and Pension Examination Program (CPEP) Office to ensure that all automated examination report templates thoroughly and accurately solicit the medical evidence needed to consistently evaluate the disability that is the basis of a claim. VBA is also working with VHA to establish a formal approval process for the templates and to obtain agreement on the mandatory use of approved templates.

Recommendation 6: In view of growing demand, the need for quality and timely decisions, and the ongoing training requirements, re-evaluate human resources and ensure the VBA field organization is adequately staffed and equipped to meet mission requirements.

Actions Taken/Planned: VBA is carefully reviewing its budget formulation and resource allocation methodologies. VBA will refine and make appropriate changes to the methodologies to ensure the resource needs are accurately projected and the field organization is appropriately staffed and funded. While it is critically important that the field organization be staffed and equipped to meet our high expectations for service delivery, VBA will also work to ensure the adequacy of the resources devoted to investment in information technology, training, and oversight— all essential components for achievement of our quality and consistency goals.

Recommendation 7: Consider establishing a lump-sum payment option in lieu of recurring monthly payments for veterans with disability ratings of 20 percent or less.

Actions Taken/Planned: It is expected that the Veterans' Disability Benefits Commission will consider this public policy issue. The Veterans' Disability Benefits Commission report is expected 15 months following its initial public meetings, which were held on May 9 and 10, 2005.

Recommendation 8: Undertake a more detailed analysis to identify differences in claims submission patterns to determine if certain veteran sub-populations, such as World War II, Korean Conflict, or veterans living in specific locales, have been underserved, and perform outreach based on the results of the analysis to ensure all veterans have equal access to VA benefits.

Actions Taken Planned: The Veterans' Benefits Improvement Act of 2004 requires VA to submit a report to Congress on servicemembers' and veterans' awareness of benefits and services available under VA laws. The VA Office of Policy, Planning and Preparedness is conducting a 1-year research study to determine servicemember and veteran awareness of VA benefits and services and how they can be obtained. The study will include recommendations for improving VA outreach and awareness for servicemembers and veterans of benefits available to them.

VBA will use the results of this study and other information and data related to claims submission patterns by period of service and specific locales to identify any significant differences. VBA will then initiate outreach and focused campaigns specifically directed at any population of veterans potentially underserved.

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. JOHN D. ROCKEFELLER IV TO KENNETH B. KRAMER

Question 1. As to your suggestion to place an Administrative Law Judge or a Veterans' Law Judge working at the Regional Office on the disputed cases, can you explain in further detail how you believe this will help the system?

Answer. The help will not come in the form of ultimately better decisionmaking; but rather, in faster decisionmaking that will maintain the quality of the existing system. In other words, the purpose of using an Administrative Law Judge (ALJ) or Veterans Law Judge (VLJ) is to finalize the maximum possible number of decisions at the local level in order to minimize the number of appeals.

The present appellate process frequently results in a case being caught in a cycle of remands that causes tremendous delay before a final decision results. Each time a case changes its level of adjudication-from the Regional Office (RO) to the Board of Veterans Appeals (BVA) or the reverse-from the Board of Veterans' Appeals to the U.S. Court of Appeals for Veterans' Claims (Veterans Court) or the reverseor from the Veterans Court to the U.S. Court of Appeals for the Federal Circuit (FC) or the reverse-there is inherent delay which can range from months to years. Each level has its own rules, procedures, and way of doing business that translates into backlog producing delay.

What am suggesting, in essence, is to produce as the last step at the RO, where there is disagreement, an ALJ or VLJ decision of at least the same quality as a decision presently produced at the Board. After that kind of decision is rendered, and it still results in disagreement, an appeal to the Board will require the same specificity as is presently required for an appeal from the Board to the Veterans Court. Such a change will put substantial down the chain, rather than up the chain, momentum on final administrative (VA) decisionmaking. This kind of momentum is highly beneficial in two regards: first, it provides for an expert decision much earlier in the process; and second, it permits for a second level of expert decisionmaking in those cases in which there is a significant legal question.

With such a change, another derivative benefit is also potentially available. Under the existing system, there are three levels of expert decisionmaking-one at the administrative level and two at the judicial level. Once two levels of expert administrative decisionmaking are implemented, there is no basis on which to continue two levels of judicial decisionmaking, unless one believes that four, rather than three, levels of experts are now necessary. Assuming that adding another layer is counterproductive if the goal is reducing backlog and delay, either the FC, as I recommended during the hearing, or the Veterans Court, can be eliminated from the judicial review process.

PREPARED STATEMENT OF QUENTIN KINDERMAN, DEPUTY DIRECTOR, NATIONAL LEGISLATIVE SERVICE, VETERANS OF FOREIGN WARS OF THE UNITED STATES

On behalf of the 2.7 million members of the Veterans of Foreign Wars of the United States (VFW) and our Ladies Auxiliary, I appreciate the opportunity to submit a statement for the record on this important topic. I congratulate the Committee for the decision to devote the time and effort to focus attention on what has been a chronic problem for the Veterans' Benefits Administration (VBA) and for America's veterans. The backlogs of case work and the resultant delays have been, for a decade or more, resistant to efforts to solve the problem, and most veterans and

their survivors have to wait longer than a reasonable period of time for a decision on their claims for disability or death benefits.

I will not dwell on the statistics regarding the VA's performance, or the number of cases pending, other than to clarify an apparent conflict between numbers that the VFW provided in previous testimony, and numbers provided by the VA.

VBA often provides the rating workload number. As of May 20, 2005, this was 342,811 cases. It is only part of what the 7,336 employees have to face in workload. What concerns the Veterans of Foreign Wars is that the same employees also have 122,882 pending cases not involving ratings, 153,456 pending appeals, which quite frankly, each takes much more time and effort than an original or reopened claim, and 79,335 education claims, in the rapidly growing GI bill program. This adds up to over 700,000 claims for the same 7,336 employees.

The VFW has long supported providing adequate resources to the VBA to provide highly accurate and timely benefit decisions. We realize that VBA is often forced to suffer problems that are directly related to the austerity of their funding. This includes the consequences of addressing in the short run, critical situations that are a consequence of the inability to assume that the proper long term resources will be available. However, we also believe that the current situation of persistent backlogs and delays in claims processing are not entirely related to resource levels.

The recent IG report, styled as State Variances in VA Disability Compensation Payments, but including material far from that topic, documents as part of a VBA decisionmaker survey, the growing discomfort in VBA with the workload, and the imbalance to the staffing available to work on it, especially at the decisionmaker level. These dedicated employees have our sympathy and support. From their point of view, there is truly a never-ending supply of already old work to do. However, this has been the situation for many years. The emphasis from the top of the organization has persistently been on moving the cases along, to reduce the overall count, to bring down the backlog. VFW believes that an unintended price has been paid for this emphasis, both in the quality or accuracy of the decisions, and in VBA's institutional ability to address these chronically high caseloads. The growing frustration and stress of workload pressure have inspired some dedicated VBA employees to find early retirement attractive. The cumulative effect of subordinating training and guidance to production has taken its toll.

Compared to the compensation program of a decade or more ago, the work is much more complicated. It is now a complex thicket of court decisions, and statutory requirements that occasionally require the readjudication of thousands of cases. Veterans' claims adjudication is no longer a business that can be managed simply by the numbers. Our impression of management by the numbers is, in essence, a balancing of the numbers to even out workload, nationwide. Old work is "brokered" from one office to another office that is relatively advantaged in the age and volume of casework. The reward for work done is more work from another office. Perhaps this is effective in the short term, but after a decade or so, we think that it is possible that the office people may have figured out how to stay in the middle of the pack, low enough not to need to broker out work, but high enough not to be a broker in station as well.

We also believe that, in the difficult situation of constant workload pressure, some confounding factors may have established themselves in the claims processing_system. VBA operates a rather imposing quality monitoring system, acronym "STAR" which finds, on a sampling basis, that about 15 percent of the cases have a significant error. There is little actual constructive feedback to the decisionmakers. The VFW thinks that, for a claims process that profoundly affects the lives of the veteran claimants, 15 percent is a very high error rate. It suggests that for 15 out of every 100 veterans or their survivors, after waiting many months, or even years, for a decision from VA, they receive a decision that is significantly flawed.

The IG, in its recent study, found an association between a higher average compensation payments, and representation by veteran's service organizations (VSO). We believe that this may in part reflect the VSOs success in identifying rating decisionmaker's errors, and insisting on their correction, either locally, or on appeal. While we are proud of the efforts that VSOs make to assist veterans and their survivors, we have serious reservations about VA's tolerance for a level of errors that most people would not accept in most of life's other transactions, like one's bank account or virtually any consumer product or service.

Furthermore, we do not believe that this deficiency in the ability to produce consistently accurate decisions can be divorced from the more public issue of the claims backlog. Clearly, a significant and cumulative portion of the work must be adjudicated more than once, often in an adversarial and inefficient situation leading to even more burdensome appeals. As pointed out in the VSO's Independent Budget,

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