Imprisoned veterans received more than $100 million in improper benefits payments in recent years because Veterans Affairs officials were too focused on bringing down the first-time claims backlog, according to a new report from the department's inspector general.

And that number could rise to more than $200 million in the next four years if changes aren't made in how VA monitors and handles the problem.

Officials from the Veterans Benefits Administration said the problem lies with incomplete information from the Bureau of Prisons. Beth Murphy, director of VBA's compensation service, said her department is working on fixes.

"We do not get the date of incarceration from (the Bureau of Prisons)," she told members of the House Veterans' Affairs Committee on Tuesday. "We have to follow up on this. There are manual processes and time lags in getting this information."

By law, veterans jailed for more than 60 days are eligible only for compensation benefits equal to a 10 percent disability rating (for those already at 10 percent, it drops to 5 percent). Once veterans are released, they are eligible for their full benefits again.

But investigators estimate almost $60 million in overpayments to veterans in federal prisons from fiscal 2008 to fiscal 2015, and another $44 million to veterans in state and local jails in 2013 and 2014.

"We found that VBA did not process federal incarceration adjustments primarily because they did not place priority on incarceration adjustments, as they do not consider these non-rating claims part of the disability claims backlog," said Mike Missal, the VA inspector general.

Reducing that backlog has been a major focus of the department in recent years, with the number of cases taking four months to process ballooning to around 611,000 in 2013. Today, that number is around 75,000 cases.

Murphy said part of that effort has been automating more VA systems and outside data, and officials hope to use those advances to correct the prison payouts problem moving forward.

Lawmakers called the findings unsettling.

"The veterans who received these overpayments have committed crimes, but the overpayments are not their fault," said Rep. Ralph Abraham, R-La., chairman of the panel’s subcommittee on disability assistance. "Nothing excuses VA for failing to do its job."

Veterans sent to prison are required by law to inform VA of their legal status, but both lawmakers and VA officials acknowledged that is a less-than-reliable system.

VA Inspector General reports have estimated total improper payments for all veterans benefits programs totaled more than $1.3 billion in fiscal 2015, with the prison issue a small segment of that. Murphy said incarcerated veterans make up less than 1 percent of the overall population of individuals receiving VA benefits.

Still, she conceded that the mistakes amount to a significant amount of lost taxpayer funds, and promised her agency will find solutions. Officials are working to recover some of those improper payments.

"We are focused on this now," she said. "Going forward, I will be watching this."

Leo Shane III covers Congress, Veterans Affairs and the White House for Military Times. He can be reached at

Leo covers Congress, Veterans Affairs and the White House for Military Times. He has covered Washington, D.C. since 2004, focusing on military personnel and veterans policies. His work has earned numerous honors, including a 2009 Polk award, a 2010 National Headliner Award, the IAVA Leadership in Journalism award and the VFW News Media award.

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