A federal law has forced nearly 122,000 disabled veterans over the past 12 years to pay back the benefits they received to leave the military when it was downsized, according to new data obtained by NBC News.
The statistics come amid renewed calls to change a little-known law that bars veterans from receiving both disability benefits and special severance pay, one-time, one-time financial incentives given to service members as the U.S. cut its active-duty military.
“Nobody realizes they’re doing this to so many people,” said Vernon Reffitt, who was recently told he must pay back the $30,000 he was given to leave the military more than 30 years ago.
The clawbacks have left many veterans in sudden dire straits. One said it would take him nearly 15 years to pay back what he owes. Another said he has to cut out expenses that aren’t essential because his wife, who works full time, is considering taking another job to make ends meet.
The U.S. Department of Veterans Affairs said it had to claw back special separation payments from more than 17,000 veterans in fiscal year 2018 — the highest annual amount so far. That total was up from about 12,400 the year before, though it’s unclear why.
The number of recoveries declined nearly every year until the PACT Act, a measure that expanded benefits to millions of veterans exposed to burn pits and other toxins while serving, was signed in August 2022, VA statistics show. Recoveries claimed from veterans in fiscal year 2023 grew to nearly 9,300 from 7,940 in 2022.
VA spokesman Terrence Hayes said the agency could not speculate on why numbers are up or down. He said the VA is required by law to collect special separation payments from veterans before those who qualify can begin receiving disability benefits.
At least two veterans who had been receiving both benefits for a long time said the VA only discovered its error after they filed their claims under the PACT Act.
Shawn Teller accepted a one-time gross payment of about $10,700 to leave the military in 1996, when the U.S. was forced to reduce its active-duty force. In 2012, the veteran, who served for about eight years, including in Operations Desert Storm and Desert Shield, began receiving monthly disability payments for an old knee injury.
He filed a PACT Act claim for asthma in the summer of 2023, which the VA approved, slightly increasing his disability rating. But the benefits were short-lived. Months later, the VA sent him a letter stating that he had not been allowed to receive disability and separation benefits without penalty for the past 12 years.
“Someone missed it at the time, but now they’ve noticed it,” said Teller, 55, who lives in Walnut Creek, California.
Starting in July, the VA would withhold Teller’s monthly disability benefit of about $586 until he repaid the amount of his severance pay, the VA wrote.
“I count on this salary every month,” Teller said. “It’s not good.”
NBC News previously reported that Reffitt, the war veteran, received disability benefits in 1992, the same year he received the special severance pay.
But after Reffitt filed a PACT Act claim for chronic obstructive pulmonary disease — which was denied — the VA began withholding his monthly disability payments in May until he paid back the $30,000. It would take the 62-year-old nearly 15 years to do so.
“This is wrong,” said the Twin City, Georgia, resident.
‘No joint effort’
In fiscal year 2013, the first year with available data, the VA said it had to claw back separation benefits from about 6,700 veterans — the lowest amount in the past dozen years. The total rose slightly to about 7,500 in fiscal year 2014, the data show. It held steady around 12,000 for the next three fiscal years before rising to more than 17,000 in fiscal year 2018.
The VA had to recover severance pay from 8,130 veterans in budget year 2020, and from 8,550 in 2021.
The number of recoveries fell further in fiscal year 2022, but rose again in 2023. As of late June, the VA said it had initiated recoveries for more than 8,920 veterans this fiscal year.
While Hayes said he can’t speculate on reasons for the dips and spikes in annual counts, the VA spokesman said there has been an increase in disability claims. In fiscal year 2023, when the VA had to claw back separation pay from nearly 9,300 veterans, the agency received a total of 2.3 million applications for compensation claims — a 42% increase from 2022, according to Hayes.
“Fiscal year 2023 was a record year for VA,” he said. “There is no concerted effort to increase compensation. Instead, it is part of the normal, statutorily required process during the initial claim filing process, where claimants are asked if they received a separation bonus and the amount they received.”
Hayes said the number of recoveries the VA has processed over the past five years has consistently been less than 1% of the total number of disability compensation applicants or recipients. More than 5.6 million veterans will receive compensation in 2023, he said.
According to Hayes, veterans who apply for benefits under the PACT Act are much more likely to have their benefits increased rather than decreased.
It’s unclear how many recovery errors like Teller and Reffitt’s have been discovered since the PACT Act was passed. The VA said it doesn’t track those cases.
In Reffitt’s case, the VA said it improperly allowed him to receive both benefits without penalty for more than 30 years because it “was not aware of the amount” of his severance pay when he began receiving disability benefits in 1992.
The VA said it discovered the error when Reffitt filed a claim under the PACT Act and should have taken action sooner to determine the separation amount and begin paying damages sooner.
According to the agency, Teller’s severance payment went undetected until 2023 because he had not previously reported receiving severance on VA forms and had not filed a claim or planned to file a claim within a year of filing.
In 2021, the Veterans Benefits Administration began scanning all veterans’ service and medical records into electronic files, which “reduces the likelihood of this situation happening again,” Hayes said.
Unique exceptions to the law
Veterans have the opportunity to request a waiver of their recovery responsibilities for only certain special separation benefits under the law. Even then, the standards are high and confusing.
To qualify for voluntary severance pay, the VA said the secretary of the applicable branch of service must determine that “reinstatement would be contrary to fairness and good conscience or would be contrary to the best interests of the United States.”
At least six permits have been issued so far, officials said.
The Air Force said some of its service members signed “erroneous” affidavits of compliance when they left active duty between 2007 and 2014. The documentation falsely told them they would not be compensated if they later became eligible for disability benefits, Air Force spokeswoman Lt. Col. Erika Yepsen said.
The Air Force said it has granted at least five waivers to veterans affected by the error since budget year 2016, the year the Air Force said it changed the way it kept its records.
It rejected 17 other requests, but in those five cases, Yepsen said, “it was determined that the waiver of recourse was consistent with the standards of fairness and good conscience.”
The Air Force also approved a waiver request for a sixth veteran, “based on the individual’s disability that prevents him/her from earning an income,” Yepsen said.
The Navy, Marine Corps and Coast Guard said they are not aware of anyone who has filed a waiver for reclamation. In 2023, the Navy authorized a reduction in the amount of disability pay that is withheld while voluntary severance pay is reclaimed, Navy spokesman Charlie Spirtos said.
The military did not respond to requests for comment.
Supporters say the law not only catches veterans by surprise, it also deprives them of earned benefits that should not be tied to finances.
While the special severance pay is based on a service member’s military career and is calculated based on years of active duty, the disability pay covers only illnesses or injuries sustained in the line of duty, said Marquis Barefield, an assistant national legislative director at DAV, an advocacy group formerly known as Disabled American Veterans.
“The two payments have nothing to do with each other,” Barefield said. “They are two separate pots of money.”
According to a 2022 study published by the RAND Corporation, a nonprofit organization, an average of $19,700 to $53,000 was withheld in reimbursements from veterans between 2013 and 2020.
In 2022, Rep. Ruben Gallego, D-Ariz., introduced a bill to change the recoupment law, but legislative progress has been slow. “It’s expensive,” he said, “and that’s really the biggest barrier to me being able to get it through.”
This article was originally published on NBCNews.com
