DFAS: Error left thousands of military retirees out of Retro Pay


By Tom Philpott

As many as 39,000 disabled military retirees have been left out of the VA Retro Pay program by mistake, say officials at the Defense Finance and Accounting Service who are calculating the amount of money owed.

This latest and perhaps most serious gaffe in the problem-plagued VA Retro Pay project was uncovered after DFAS received a rising number of complaints from retirees. None had been screened for retroactive payment, but follow-up calculations confirmed that each had been underpaid.

VA Retro payments have ranged from a few hundred dollars to many thousands, depending on individual circumstance. All recipients have served in the military for 20 or more years and all have disabilities that qualified them for one of two relatively new disabled retiree
entitlements: Combat-Related Special Compensation, which began in 2003, or Concurrent Retirement and Disability Pay, which started in 2004.


The VA Retro Pay project began to identify retirees for lump-sum back payments in September 2006. The project became necessary because of difficulties in calculating initial payments to retirees under CRSC and CRDP, complex plans voted by Congress to begin to lift the ban on concurrent receipt of both military retirement and disability compensation. First up were to be full career retirees with combat-related injuries or severe disabilities.

Last July, DFAS officials announced they finally had eliminated a backlog of retroactive payments owed to an original pool of 133,000.
That was months past the initial deadline of December 2007, but it had taken DFAS and the Department of Veterans Affairs longer than expected to calculate payments. Many of them had to be done by hand, not computer.

Chet Boutelle, deputy site director for DFAS operations in Cleveland, said in a phone interview Tuesday that the original group of Retro Pay recipients should have numbered 172,000.

So how were 39,000 retirees left out of that original pool?

“When you write computer scripts and ask them to search for certain criteria, if you don’t get all the criteria, it won’t pick certain people. So that’s what happened here,” said Boutelle. “It didn’t pick all of the original people that it should have.”

Boutelle said that by last December the pay files of about 20 retirees not in the original pool were reviewed at their request. All were found to be eligible for retroactive payment just as they claimed.

“That’s what started us going back to VA to have them re-check what was going on. We actually had more than 20, a couple hundred … But the first 20 were the ones that made us stand up and say ‘Something is wrong.’ ”

DFAS officials said the Department of Veterans Affairs, which jointly administers VA Retro Pay, did the computer runs that identified only 133,000 retirees as likely to be eligible for back pay. By April this year, Boutelle said, VA had identified the criteria left out of the computer program back in 2006.

“The cases most likely to be affected are veterans who have had little or no interaction with VBA [the Veterans Benefits Administration] in the last five years,” said Lois Mittelstaedt, a senior VBA official. “The coding on these cases was not set in the same manner as cases processed in recent years.”

Mittelstaedt said the pattern of missed retirees first was detected late last year.

“Over the last few months, DFAS and VA have worked to analyze … and correct the logic for selecting retired veterans. After many testing exchanges, DFAS confirmed in March 2009 that the new file layout and content were valid. These changes, implemented in April, were made in a collaborative effort with the DFAS team.”

She added, “VA has worked diligently to identify all retired veterans so that DFAS can determine their entitlement to retroactive payments under CRSC and CRDP. We continue to work closely with the DFAS team to meet the needs of veterans entitled to CRSC and CRDP.”

Like the original batch, some of these 39,000 are owed money from DFAS, some are owed money from the VA and some are owed money from both departments. Boutelle said it could be several more weeks before he can estimate the average amount to be repaid.

“But worst case, by the 15th of July, everybody will actually have a check in hand,” he said.

DFAS officials said they had briefed Rep. Dennis Kucinich, D-Ohio, a few weeks ago on the mistake. Kucinich, as chairman of the subcommittee on domestic policy of the House Oversight and Government Reform, had held a hearing on VA Retro Pay last July where he skewered DFAS and its contractor, Lockheed Martin, for sending “no pay due” letters to some CRSC and CRDP retirees who, it turned out, actually were owed money.

DFAS agreed at the time to conduct a new review of about 25,000 pay files from the original 133,000. Last fall, Kucinich announced that the review found about 1900 “no pay due” letter recipients were owed on average about $1,800. More than 2500 others had received overpayments in excess of $2,500, Kucinich complained in a letter to DFAS.

“Errors of that magnitude are disgraceful,” he wrote.

Kucinich has not commented publicly yet on the 39,000 retirees mistakenly missed for VA Retro Pay since 2006.

More information on these retirees will be posted soon at www.dfas.mil.
The VA Retro Pay help line is (877) 327-4457.

To comment, e-mail [email protected], write to Military Update, P.O. Box 231111, Centreville, VA 20120-1111 or visit: www.militaryupdate.com



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