The error of Veterans Benefits Administration staff has resulted in approximately $5.6 million in overpayments to veterans, a VA watchdog found.
During a review period from June 1, 2024, through May 31, 2025, the VA made at least one error in 17,900 cases, roughly 38%, regarding disability decisions for painful scars, according to a recent VA Office of Inspector General report.
920 of those decisions, per the report, led to millions in overpayment and will continue to accrue without “corrective action.”
For service-connected painful scars, as a result of burns, surgeries, shrapnel and gunshot wounds, among other sources, the VA requires a physical examination to support a veteran’s claim.
However, the OIG found that the Disability Benefits Questionnaire “does not clearly define objective versus subjective evidence.
Therefore, claims processors sometimes provided evaluations for painful scars without objective evidence to support the evaluations, which led to overpayments in disability compensation.”
In addition, the report found that physical manifestations of the disability were often evaluated under two separate diagnostic codes, often resulting in “pyramiding” and overpayment.
The report notes that more than a half-million veterans currently receive VA disability benefits for painful scarring caused or worsened by military service, but it took a random sample of 70 decisions from a review population of 47,300.
It further notes that the OIG took the findings to the VBA in February 2026 and following the briefing, “30 additional decisions completed from January 1 through January 31, 2026… identified a 43 percent error rate.”
The VBA, while agreeing with many of the OIG’s recommendations, including revising the “Scars/Disfigurement” section of the DBQ; ensuring employees understand how to accurately evaluate painful scars; and reviewing and correcting the processing errors on decisions the Office of Inspector General team identified, took issue with the statistical sample and the contextualization of those estimates.
“The OIG examined 130 decisions, representing approximately 0.27 percent of the total review population of about 47,300 decisions, and identified 60 errors, which form the basis for the projected 17,900 errors referenced throughout the report,” per VA comments in the report.
“Importantly, only seven of the 60 errors OIG found resulted in improper payments, which represents about 5.4 percent of the sample, and when viewed across the full review population, only about 0.015 percent of all decisions reviewed. The remaining 53 errors, more than 88 percent of the sample, were technical or procedural issues that did not result in improper payments.”
The VA is working to complete the OIG’s suggestions by February 2027 at the latest.
