Errors by Veterans Benefits Administration staff resulted in approximately $5.6 million in overpayments to veterans, according to a recent VA Office of Inspector General report. The watchdog examined disability decisions involving painful scars.

The review covered decisions made from June 1, 2024, through May 31, 2025. Investigators projected that the VA made at least one error in 17,900 cases, representing roughly 38% of the decisions under review.

The report found that 920 of those decisions produced millions of dollars in overpayments. Those payments will continue accumulating without “corrective action,” according to the watchdog.

Veterans may receive disability benefits for painful scars connected to their military service. The scars can result from burns, surgeries, shrapnel, gunshot wounds and other sources identified in the report.

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The VA requires a physical examination to support a veteran’s claim involving service connected painful scars. However, investigators identified problems with the documentation used by employees to evaluate those claims.

The OIG said 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.”

That lack of clarity created costly problems when claims processors evaluated whether painful scars qualified for disability compensation. The report linked unsupported evaluations directly to overpayments made through the benefits system.

Investigators also found cases in which the physical manifestations of a disability were evaluated under two separate diagnostic codes. The report said that practice often resulted in “pyramiding” and additional overpayment.

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More than 500,000 veterans currently receive VA disability benefits for painful scarring caused or worsened by military service, according to the report. The OIG initially drew a random sample of 70 decisions from a review population of 47,300.

The watchdog presented its findings to the Veterans Benefits Administration in February 2026. The report said a review of 30 additional decisions completed from January 1 through January 31, 2026, identified a 43% error rate.

The Veterans Benefits Administration agreed with many of the watchdog’s recommendations. Those included revising the “Scars/Disfigurement” section of the Disability Benefits Questionnaire and ensuring employees understand how to evaluate painful scars accurately.

The agency also agreed to review and correct processing errors in decisions identified by the OIG team. At the same time, it challenged the statistical sample and how the watchdog placed its estimates into context.

“The OIG examined 130 decisions, representing approximately 0.27% 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% of the sample, and when viewed across the full review population, only about 0.015% of all decisions reviewed. The remaining 53 errors, more than 88% of the sample, were technical or procedural issues that did not result in improper payments.”

The VA response emphasized the distinction between errors that caused improper payments and technical or procedural mistakes that did not. That disagreement did not erase the report’s finding that seven of the 60 identified errors resulted in improper payments.

The agency is working to complete the OIG recommendations by February 2027 at the latest. Those planned actions include revising the questionnaire, improving employee understanding and correcting the processing errors specifically identified by investigators.

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