Veteran’s Affairs Watchdog Finds Millions in Improper Payments as Automated Survivor Benefits System Fails Legal Standards

By Stacy M. Brown

Senior Global Correspondent

The Department of Veterans Affairs’ own watchdog has found that an automated system used to approve service-connected death benefits for survivors of veterans produced widespread legal and procedural failures, including at least $2.7 million in improper payments over a one-year period. The findings, detailed in a 36-page report from the VA Office of Inspector General, paint a troubling picture of a benefits system increasingly dependent on automation that investigators said repeatedly failed to meet federal legal standards.

Investigators determined that nearly all of the roughly 8,100 automated Dependency and Indemnity Compensation decisions reviewed between September 2023 and August 2024 contained at least one legal or procedural deficiency. The monthly tax-free payments are intended for surviving spouses, children, or parents of veterans whose deaths are connected to military service. The OIG concluded that the deficiencies “reduce transparency, increase the risk of improper payments, and also risk VA not complying with the Secretary’s legal duty to notify claimants.”

“If VBA does not correct the deficiencies identified in this report, it risks continued improper payments and legally flawed notifications resulting from defects in its automation process,” investigators wrote.

The report found that at least 2 percent of the automated decisions resulted in improper payments. Those errors included approving benefits without sufficient medical evidence linking a veteran’s death to military service, failing to verify survivor eligibility, and assigning incorrect effective dates for compensation. The OIG estimated those mistakes resulted in at least $2.7 million in improper payments during the review period.

One case highlighted in the report involved a veteran whose death certificate listed acute respiratory failure and chronic obstructive pulmonary disease as the primary causes of death, while congestive heart failure and pulmonary hypertension were listed as contributing conditions. The automated system nevertheless approved Dependency and Indemnity Compensation based on service-connected hypertension, despite no evidence establishing a connection between the veteran’s hypertension and pulmonary hypertension. By December 2024, the survivor had already received $22,692 in improper payments, according to investigators.

The watchdog also found that automated notices routinely failed to provide survivors with legally required explanations about how decisions were made. Federal law requires the VA to summarize the evidence used in claims decisions and identify favorable findings supporting the claimant. Instead, investigators found many automated decisions listing only death certificates while omitting other documents used to approve benefits, including records verifying survivor eligibility.

The report stated that automated notification letters frequently used vague descriptions such as “Proof of the Veteran’s death” and “The application” without identifying the required form numbers or dates received. Investigators warned that the lack of detail leaves survivors unable to fully understand how decisions were reached or challenge them when necessary.

Investigators also found that automated claims did not receive the same level of oversight as traditionally processed claims because quality review checklists for automation focused primarily on whether the system extracted data correctly rather than whether the decisions complied with law and policy.

The automation system was introduced in May 2020 as part of VA’s push to speed up claims processing and reduce manual workloads. In May 2025, VA Secretary Doug Collins announced additional reforms intended to reduce what the department described as “red tape” for grieving families seeking benefits. According to the report, VA officials said the automation enhancements enabled staff to process more than 1,000 Dependency and Indemnity Compensation payments or adjustments per day.

But the OIG found the department failed to fully disclose to Congress that some claims were being processed “end-to-end” without human involvement, despite provisions in the PACT Act of 2022 calling for safeguards to ensure automation does not replace human claims processors or undermine due process protections.

“As a result, Congress lacks true visibility into how VBA is incorporating automation principles into its claims process,” the report stated.

The OIG reviewed another 20 automated claims completed between September and October 2025 and found similar errors were still occurring as recently as November 2025.

Investigators issued three recommendations directing VBA to strengthen the automation process, revising quality review standards so automated decisions receive the same scrutiny as manually processed claims and consulting with VA’s Office of General Counsel to determine whether the agency’s modernization plan complies with the PACT Act.

VA officials said the department is transitioning to a new “Smart Pension Automation” platform that was scheduled for launch in April 2026 and said the updated system would address many of the concerns raised by investigators.

“While VA has since revised its procedures manual to remove one directive that contributed to procedural errors, the automation process will continue to incorrectly process claims and approve improper payments unless the identified deficiencies are corrected and oversight is strengthened,” the report concluded.