Inspection of the
 

VA Regional Office
 

Louisville, Kentucky
 

OFFICE OF AUDITS AND EVALUATIONS

May 24, 2011 

11-00520-174 
i

ACRONYMS AND ABBREVIATIONS
 

C&C Confirmed and Continued 

COVERS Control of Veterans Records System 

NOD Notice of Disagreement 

OIG Office of Inspector General 

PTI Permanent Transfer In 

PTSD Post-Traumatic Stress Disorder 

RVSR Rating Veterans Service Representative 

SAO Systematic Analysis of Operations 

STAR Systematic Technical Accuracy Review 

TBI Traumatic Brain Injury 

TTO Temporary Transferred Out 

VACOLS Veterans Appeals Control and Locator System 

VARO Veterans Affairs Regional Office 

VBA Veterans Benefits Administration 

VSC Veterans Service Center 

To Report Suspected Wrongdoing in VA Programs and Operations:
 

Telephone: 1-800-488-8244
 

E-Mail: vaoighotline@va.gov
 

(Hotline Information: http://www.va.gov/oig/contacts/hotline.asp)
 
Report Highlights: Inspection of the VA 

Regional Office, Louisville, Kentucky 

Why We Did This Review 

The Benefits Inspection Division conducts 

onsite inspections at VA Regional Offices 

(VAROs) to review disability compensation 

claims processing and Veterans Service 

Center operations. 

What We Found 

Louisville VARO management ensured staff 

followed Veterans Benefits Administration’s 

policy for correctly establishing dates of 

claims and processing incoming mail. 

Further, the average time for the VARO to 

complete claims was 114.8 days, 60.2 days 

better than the national target of 175 days. 

VARO performance was generally effective 

in processing post-traumatic stress disorder 

and herbicide exposure-related disability 

claims, establishing correct effective dates, 

timely completing Systematic Analyses of 

Operations, and correcting errors identified 

by the Systematic Technical Accuracy 

Review program. 

VARO management lacked effective 

controls and accuracy in processing 

temporary 100 percent disability evaluations 

and traumatic brain injury claims. Overall, 

VARO staff did not accurately process 

34 (31 percent) of the 110 disability claims 

reviewed. Further, in the Triage Team mail 

management was not fully effective. 

Although VARO staff were not timely in 

recording Notices of Disagreement for 

appealed claims, they were better than the 

national average for appeals processing 

timeliness. Further, processing of 

competency determinations was not always 

accurate; however, VARO management’s 

recent training of Veterans Service Center 

staff is a positive step toward addressing this 

deficiency. 

What We Recommended 

We recommended Louisville VARO 

management implement controls to ensure 

the Veterans Service Center staff establishes 

suspense diaries to request the medical 

reexaminations for temporary 100 percent 

disability reevaluations as required. 

Management should provide refresher 

training and implement a plan to improve 

quality review of traumatic brain injury 

claims. 

VARO management needs to implement a 

plan to ensure oversight and control of mail 

handling. Finally, VARO management also 

needs to implement a plan to monitor 

effectiveness and adequacy of the training 

on proper processing of competency 

determinations. 

Agency Comments 

The Louisville VARO Director concurred 

with all recommendations. Management’s 

planned actions are responsive and we will 

follow up as required on all actions. 

BELINDA J. FINN
 

Assistant Inspector General
 

for Audits and Evaluations
 

ii 
TABLE OF CONTENTS
 

Introduction......................................................................................................................................1
 

Results and Recommendations ........................................................................................................2
 

1. Disability Claims Processing ..................................................................................................2
 

2. Data Integrity ..........................................................................................................................7
 

3. Management Controls .............................................................................................................8
 

4. Workload Management...........................................................................................................8
 

5. Eligibility Determinations.....................................................................................................10
 

Appendix A VARO Profile and Scope of Inspection ............................................................13 

Appendix B VARO Director’s Comments............................................................................15 

Appendix C Inspection Summary..........................................................................................16 

Appendix D OIG Contact and Staff Acknowledgments........................................................19 

Appendix E Report Distribution ...........................................................................................20 

iii 
Inspection of the VA Regional Office, Louisville, Kentucky 

Objective
 

Scope of
 

Inspection
 

INTRODUCTION 

The Benefits Inspection Program is part of the efforts of the Office of 

Inspector General (OIG) to ensure our Nation’s veterans receive timely and 

accurate benefits and services. The Benefits Inspection Division contributes 

to improved management of benefits processing activities and veterans’ 

services by conducting onsite inspections at VA Regional Offices (VAROs). 

These independent inspections provide recurring oversight focused on 

disability compensation claims processing and performance of Veterans 

Service Center (VSC) operations. The objectives of the inspections are to: 

	 Evaluate how well VAROs are accomplishing their mission of providing 

veterans with access to high quality benefits and services. 

	 Determine if management controls ensure compliance with VA 

regulations and policies; assist management in achieving program goals; 

and minimize the risk of fraud, waste, and other abuses. 

	 Identify and report systemic trends in VARO operations. 

In addition to this standard coverage, inspections may examine issues or 

allegations referred by VA employees, members of Congress, or other 

stakeholders. 

In February 2011, the OIG conducted an inspection of the Louisville VARO. 

The inspection focused on 5 protocol areas examining 10 operational 

activities. The five protocol areas were disability claims processing, data 

integrity, management controls, workload management, and eligibility 

determinations. 

We reviewed 80 (15 percent) of 548 disability claims related to 

post-traumatic stress disorder (PTSD), traumatic brain injury (TBI), and 

herbicide exposure that the VARO completed from October through 

December 2010. In addition, we reviewed 30 (13 percent) of 231 rating 

decisions where VARO staff granted temporary 100 percent disability 

evaluations for at least 18 months, generally the longest period a temporary 

100 percent disability evaluation may be assigned under VA policy without 

review. 

Appendix A provides details on the VARO and the scope of the inspection. 

Appendix B provides the VARO Director’s comments on a draft of this 

report. Appendix C provides criteria we used to evaluate each operational 

activity and a summary of our inspection results. 

VA Office of Inspector General 1 
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Inspection of the VA Regional Office, Louisville, Kentucky 

RESULTS AND RECOMMENDATIONS 

1. Disability Claims Processing 

The OIG inspection team focused on disability claims processing related to 

temporary 100 percent disability evaluations, PTSD, TBI, and herbicide 

exposure. We evaluated claims processing accuracy and its impact on 

veterans’ benefits. 

Finding 1	 VARO Staff Need to Improve Disability Claims 

Processing Accuracy 

The Louisville VARO needs to improve the accuracy of disability claims 

processing. VARO staff incorrectly processed 34 (31 percent) of the total 

110 disability claims reviewed. VARO management agreed with our 

findings and initiated action to correct the inaccuracies identified. 

The following table reflects the errors affecting, and those with the potential 

to affect, veterans’ benefits processed at the Louisville VARO. 

Table Disability Claims Processing Results 

Type Reviewed 

Claims Incorrectly Processed 

Total Affecting 

Veterans’ 

Benefits 

Potential To 

Affect 

Veterans’ 

Benefits 

Temporary 100 Percent 

Disability Evaluations 30 25 9 16 

PTSD 30 2 1 1 

TBI 20 6 0 6 

Herbicide 

Exposure-Related Disabilities 30 1 1 0 

Total 110 34 11 23 

Source: VA OIG 

Temporary VARO staff incorrectly processed 25 (83 percent) of 30 temporary 

100 Percent 100 percent disability evaluations we reviewed. Veterans Benefits Disability Administration (VBA) policy requires a temporary 100 percent disability Evaluations 

evaluation for a service-connected disability following surgery or when 

specific treatment is needed. At the end of a mandated period of 

VA Office of Inspector General 2 
Inspection of the VA Regional Office, Louisville, Kentucky 

convalescence or cessation of treatment, VARO staff may request a 

follow-up medical examination to help determine whether to continue a 

veteran’s 100 percent disability evaluations. 

For temporary 100 percent disability evaluations, including those where 

rating decisions do not change a veteran’s payment amount (confirmed and 

continued evaluations), VSC staff must input suspense diaries to VBA’s 

electronic system. A suspense diary is a processing command that 

establishes a date when VSC staff must schedule a reexamination. As a 

suspense diary matures, the electronic system generates a reminder 

notification to alert VSC staff to schedule the reexamination. 

Based on analysis of available medical evidence, 9 of the 25 processing 

inaccuracies affected veterans’ benefits—all 9 involved overpayments 

totaling $596,484. Two examples of the most significant overpayments 

follow. 

	 VARO staff did not schedule a follow-up examination to evaluate a 

veteran’s prostate cancer. Treatment reports from the Lexington VA 

Medical Center warranted a reduction in benefits as of 

January 1, 2005. As a result, VA overpaid the veteran $152,884 over 

a period of 6 years and 2 months. 

	 VARO staff did not schedule a follow-up examination to evaluate a 

veteran’s prostate cancer. Medical evidence in the claims folder 

warranted a reduction in benefits as of March 1, 2007. As a result, 

VA overpaid the veteran $114,480 over a period of 4 years and 

4 months. 

The remaining 16 inaccuracies had the potential to affect veterans’ benefits. 

Following are summaries of these inaccuracies. 

	 In ten cases, VSC staff did not schedule the follow-up medical 

examinations needed to determine whether the temporary 100 percent 

disability evaluations should continue. 

	 In four cases, VSC staff correctly established suspense diaries to 

request reexaminations. However, at the time of our inspection the 

staff had taken no action to schedule the follow-up medical 

examinations. 

	 In one case, an RVSR continued a temporary 100 percent disability 

evaluation and annotated the need for future reexamination. 

However, VSC staff did not establish a suspense diary to schedule the 

follow-up medical examination. 

	 In one case, an RVSR continued a temporary 100 percent disability 

evaluation and annotated an incorrect reexamination date. 

VA Office of Inspector General 3 
Inspection of the VA Regional Office, Louisville, Kentucky 

PTSD Claims 

TBI Claims 

An average of approximately 2 years and 4 months elapsed from the time 

staff should have scheduled these medical examinations until the date of our 

inspection—the date staff ultimately ordered the examinations to obtain the 

necessary medical evidence. The delays ranged from approximately 1 month 

to 6 years and 2 months. 

Twenty of the 25 errors resulted from staff not establishing suspense diaries 

when processing rating decisions requiring temporary 100 percent disability 

reexaminations. Thirteen of these errors involved confirmed and continued 

(C&C) rating decisions. When processing these types of ratings, the staff 

does not always create an electronic award for benefits. In November 2009, 

VBA provided guidance reminding VAROs about the need to add a suspense 

diary in the electronic record for C&C rating decisions. VARO management 

had no procedure in place requiring that VSC staff review the C&C rating 

decisions to ensure VSR’s properly established suspense diaries in VBA’s 

electronic system to generate reminder notifications to schedule 

reexaminations. 

VARO staff incorrectly processed 2 (7 percent) of 30 PTSD claims we 

reviewed. One of the errors affected a veteran’s benefits. Following are 

summaries of these inaccuracies. 

	 An RVSR continued the evaluation of a veteran’s service-connected 

PTSD and granted entitlement to special monthly compensation based on 

multiple disabilities. However, according to VBA policy the veteran was 

not entitled to special monthly compensation. As a result, VA overpaid 

the veteran $9,546 over a period of 2 years and 6 months. 

	 An RVSR did not grant service connection for an associated mental 

disorder diagnosed through a veteran’s examination for PTSD. Granting 

service connection for an additional mental disorder would not change 

the overall assigned evaluation but may affect future evaluations for 

additional benefits. 

Because we did not consider the frequency of errors significant, we 

determined the VARO generally followed VBA policy related to PTSD 

claims. Therefore, we made no recommendations for improvement in this 

area. 

The Department of Defense and VBA commonly define a TBI as 

traumatically induced structural injury or physiological disruption of brain 

function caused by an external force. The major residual disabilities of TBI 

fall into three main categories—physical, cognitive, and behavioral. VBA 

policy requires staff to evaluate these residual disabilities. 

VA Office of Inspector General 4 
Inspection of the VA Regional Office, Louisville, Kentucky 

Herbicide 

Exposure-Related 

Claims 

Recommendations 

Management 

Comments 

OIG Response 

VARO staff incorrectly processed 6 (30 percent) of 20 TBI claims. All of 

these processing inaccuracies had the potential to affect veterans’ benefits. 

For all six claims, RVSRs prematurely granted service connection for 

TBI-related residuals based on inadequate VA medical examinations. 

According to VBA policy, when a medical examination report does not 

address all required elements, VSC staff should return it to the issuing clinic 

or healthcare facility as insufficient for rating purposes. Neither VARO staff 

nor we can ascertain all of the residual disabilities related to a TBI without 

adequate or complete medical evidence. 

Generally, errors associated with TBI claims processing occurred because 

VSC staff incorrectly interpreted VBA policy. In addition, insufficient TBI 

examination reports and inadequate training negatively affected accuracy in 

rating TBI disability claims. As a result, RVSRs did not properly evaluate 

TBI-related residuals. 

VARO staff incorrectly processed 1 (3 percent) of 30 herbicide 

exposure-related claims we reviewed. In this case, an RVSR incorrectly 

evaluated residuals of prostate cancer as 20 percent disabling. Medical 

evidence showed residuals warranting a 40 percent evaluation. As a result, 

VA underpaid the veteran $1,888 over a period of 7 months. 

Because we found only one inaccuracy, we determined the VARO generally 

followed VBA policy related to herbicide exposure-related claims. 

Therefore, we made no recommendations for improvement in this area. 

1.	 We recommend the Louisville VA Regional Office Director conduct 

refresher training and implement controls to ensure staff establish 

suspense diaries for temporary 100 percent disability reevaluations. 

2.	 We recommend the Louisville VA Regional Office Director conduct 

refresher training and develop and implement a plan to improve the 

quality review process for traumatic brain injury claims. 

The VARO Director concurred with our recommendations. The Director 

stated in May 2011 the VARO will provide training to Veterans Service 

Representatives on establishing suspense diaries and will conduct monthly 

reviews to ensure compliance. Additionally, the VARO provided refresher 

training to RVSRs on proper processing of temporary 100 percent disability 

evaluations and TBI-related claims. The Director stated the VSC Exam 

Coordinator will work closely with the VA Medical Centers to ensure TBI 

medical examinations are sufficient for rating purposes. 

Management’s actions are responsive to the recommendations. We will 

follow up as required on all actions. 

VA Office of Inspector General 5 
Inspection of the VA Regional Office, Louisville, Kentucky 

A draft of this inspection report included an additional recommendation that 

the VA Regional Office Director review the remaining temporary 

100 percent disability evaluations identified but not included in our 

inspection sample to determine if reevaluations are required and take 

appropriate action. We have removed the recommendation from this 

individual VARO inspection report since the Acting Under Secretary for 

Benefits has already concurred with a corresponding recommendation in our 

national report, “Veterans Benefits Administration: Audit of 100 Percent 

Disability Evaluations,” (Report Number 09-03359-71, January 24, 2011). 

The Acting Under Secretary for Benefits has agreed to review all temporary 

100 percent disability evaluations and ensure each evaluation has a future 

exam date entered in the electronic record. The Acting Under Secretary 

explained that VBA’s national review plan entails use of three medical 

diagnostic codes to comprise a sample for testing whether future examination 

dates are established in the electronic record. Those diagnostic codes relate 

to Non-Hodgkin’s Lymphoma, Malignant Neoplasms of the Genitourinary 

System, and Post-traumatic Stress Disorder. Further, the Acting Under 

Secretary stated, “the remainder of the cases will be identified through a 

batch process, and VBA will establish the appropriate future diary controls 

electronically.” 

While the Acting Under Secretary for Benefits’ national review plan differs 

from the approach we previously recommended in a draft of this VARO 

inspection report, we believe the intent is the same. Removing the 

recommendation from our draft inspection report will allow VBA time to 

implement its national plan for reviewing all temporary 100 percent 

disability evaluations to correct processing errors. The target completion 

date is September 30, 2011, as the Acting Under Secretary for Benefits 

previously indicated. 

We have requested from VBA’s Office of Field Operations a copy of both 

VBA’s national review plan for sample testing using the diagnostic codes 

specified above, as well as a documented explanation of its batch process for 

identifying the remaining cases and establishing appropriate future diary 

controls electronically. We will use such information to monitor 

implementation progress and gauge effectiveness of VBA’s national review 

plan approach as we move forward in conducting our individual VARO 

inspections. Based on the magnitude of errors and associated financial risks 

we have identified in temporary 100 percent disability evaluation processing 

to date, we have an ongoing responsibility to exercise continued oversight in 

this area. 

VA Office of Inspector General 6 
Inspection of the VA Regional Office, Louisville, Kentucky 

Effective Dates 

Dates of Claim 

Notices of 

Disagreement 

2. Data Integrity 

We analyzed claims folders to determine if the VARO was following VBA 

policy to establish correct effective dates in the electronic record. Generally, 

an effective date indicates when entitlement to a specific benefit arose. 

VARO staff incorrectly established an effective date for 1 (1 percent) of 

110 disability claims we reviewed. The incorrect effective date did not affect 

the veteran’s benefits. 

Because we found only one inaccuracy, we determined the VARO is 

generally following VBA policy regarding effective dates. Therefore, we 

made no recommendations for improvement in this area. 

We analyzed claims folders to determine if the VARO was following VBA 

policy to establish correct dates of claim in the electronic record. In addition 

to establishing a timeframe for benefits entitlement, VBA generally uses a 

date of claim to indicate when a document arrives at a VA facility. VBA 

relies on accurate dates of claim to establish and track key performance 

measures, including the average days to complete a claim. 

VARO staff established the correct dates of claim in the electronic record for 

all 30 claims we reviewed. As a result, we determined the VARO is 

following VBA policy and we made no recommendations for improvement 

in this area. 

We analyzed claims folders to determine if the VARO is following VBA 

policy to timely record Notices of Disagreement (NODs) in the Veterans 

Appeals Control and Locator System (VACOLS). An NOD is a written 

communication from a claimant expressing dissatisfaction or disagreement 

with a benefits decision and a desire to contest the decision. An NOD is the 

first step in the appeals process. VACOLS is a computer application that 

allows VARO staff to control and track a veteran’s appeal and manage the 

pending appeals workload. VBA policy states staff must create a VACOLS 

record within 7 days of receiving an NOD. Accurate and timely recording of 

NODs is required to ensure appeals move through the appellate process 

expeditiously. 

VARO staff did not meet this standard for 5 (17 percent) of the 30 NODs we 

reviewed. Staff took an average of 12 days to record these five 

disagreements in VACOLS. However, as of January 31, 2011, the VARO’s 

NODs have been pending completion an average of 123 days, which is 

126 days below the national average of 249 days. Therefore, we made no 

recommendations for improvement in this area. 

VA Office of Inspector General 7 
Inspection of the VA Regional Office, Louisville, Kentucky 

Systematic 

Technical 

Accuracy 

Review 

Systematic 

Analysis of 

Operations 

Mailroom 

Operations 

3. Management Controls 

We assessed management controls to determine if VARO management 

adhered to VBA policy regarding correction of errors identified by VBA’s 

Systematic Technical Accuracy Review (STAR) staff. The STAR program 

is VBA’s multi-faceted quality assurance program to ensure veterans and 

other beneficiaries receive accurate and consistent compensation and pension 

benefits. VBA policy requires the VARO take corrective action on errors 

that STAR identifies. 

VARO staff did not correct 1 (5 percent) of 19 errors identified by VBA’s 

STAR program from July through September 2010. VARO management 

reported to STAR staff it had completed the corrective action needed. 

However, our review of the claims folder showed VSC staff had done 

nothing to address the error. The error had no impact on the claimant’s 

benefit. Because Louisville VARO management generally followed VBA 

policy regarding correction of STAR errors, we made no recommendations 

for improvement in this area. 

We assessed controls to determine whether VARO management had controls 

in place to ensure complete and timely submission of Systematic Analyses of 

Operations (SAOs). An SAO is a formal analysis of a VSC organizational 

element or operational function. SAOs provide an organized means of 

reviewing VSC operations to identify existing or potential problems and 

propose corrective actions. VARO management must publish annual SAO 

schedules designating the staff required to complete the SAOs by specific 

dates. 

One (8 percent) of the 12 SAOs was incomplete at the time of our inspection. 

The Appeals SAO was incomplete because VSC management did not review 

all required areas. VARO management generally followed VBA policy 

regarding SAOs so we made no recommendations for improvement in this 

area. 

4. Workload Management 

We assessed controls over VARO mailroom operations to ensure staff timely 

and accurately processed incoming mail. VBA policy states staff will open, 

date stamp, and route all mail to the appropriate locations within 4–6 hours 

of receipt at the VARO. The Louisville VARO assigns responsibility for 

mailroom activities, including processing of incoming mail, to the VSC’s 

Triage Team. The mailroom staff was timely and accurate in processing, 

date stamping, and delivering VSC mail to the Triage Team control point 

daily. As a result, we determined the mailroom is following VBA policy and 

made no recommendations for improvement in this area. 

VA Office of Inspector General 8 
Inspection of the VA Regional Office, Louisville, Kentucky 

Triage Mail 

Processing 

Procedures 

Finding 2 

Recommendation 

Management 

Comments 

We assessed the VSC’s Triage Team mail processing procedures to ensure 

staff reviewed, controlled, and processed all claims-related mail in 

accordance with VBA policy. The VARO staff is required to use VBA’s 

tracking system, Control of Veterans Records System (COVERS), to 

electronically track veterans’ claims folders and control search mail. VBA 

defines search mail as active claims-related mail waiting to be associated 

with a veteran’s claims folder. Conversely, drop mail requires no processing 

action upon receipt. VBA policy allows the use of a storage area, known as 

the Military File, to hold mail temporarily when the staff is not able to 

identify an associated claims folder in the system. 

VBA policy defines permanent transfer in (PTI) mail as search mail received 

in Triage for claims folders located in other regional offices or Federal 

records storage centers. Additionally, temporary transferred out (TTO) mail 

is search mail for claims folders provided by the VARO to another VA 

facility for a limited length of time. VARO staff must control the mail using 

a specific function in COVERS. 

Triage Team Mail Management Procedures Need 

Strengthening 

The Triage Team staff did not properly manage 24 (19 percent) of 129 pieces 

of mail, we reviewed. The most significant errors occurred when staff did 

not control through COVERS 23 (77 percent) of 30 pieces of PTI/TTO mail 

reviewed. At the time of our inspection, approximately 1,000 pieces of 

PTI/TTO mail were pending. The most egregious error occurred when the 

VARO received a claim on August 6, 2010. Although the Triage Team staff 

requested the claims folder from a Federal records storage facility, they did 

not control the mail in COVERS. Additionally, the Triage Team staff did 

not set-up a control mechanism, known as an end product in the electronic 

record, which would track the claim as required. 

The above errors occurred because VARO management misinterpreted the 

definition of search mail. VARO management also did not incorporate 

procedures for the proper processing of PTI/TTO mail in its local mail plan. 

As a result, untimely association of mail with veterans’ claims folders can 

cause delays in processing benefits claims and beneficiaries may not receive 

accurate and timely benefits payments. 

3.	 We recommend the Louisville VA Regional Office Director develop and 

implement a plan to ensure control of Triage Team permanent transfer in 

and temporary transfer out mail. 

The VARO Director concurred with our recommendation. The Director 

stated the VSC has a distinct location for storing mail that needs to be 

associated with claims folders that have been temporarily transferred off 

VA Office of Inspector General 9 
Inspection of the VA Regional Office, Louisville, Kentucky 

OIG Response 

Competency 

Determinations 

Finding 3 

station. The VSC staff checks this location for mail when the corresponding 

claims folders are returned to the VARO. The Director stated that based on 

our findings, the VSC tightened controls over this mail to ensure it is timely 

associated with related claims folders upon receipt at the VARO. 

Management’s actions are responsive to the recommendation. We will 

follow up as required on all action. 

5. Eligibility Determinations 

VA must consider beneficiary competency in every case involving a mental 

health condition that is totally disabling or when evidence raises questions as 

to a beneficiary’s mental capacity to manage his or her affairs. The 

Fiduciary Unit supports implementation of competency determinations by 

appointing a fiduciary, which is a third party that assists in managing funds 

for an incompetent beneficiary. We reviewed competency determinations 

made at the VARO to ensure staff completed them accurately and timely. 

Delays in making these determinations ultimately affect the Fiduciary Unit’s 

ability to be timely in appointing fiduciaries. 

VBA policy requires staff to obtain clear and convincing medical evidence 

that a beneficiary is incapable of managing his or her affairs prior to making 

a final competency decision. The policy allows the beneficiary a 65-day due 

process period to submit evidence showing an ability to manage funds and 

other personal affairs. At the end of the due process period, VARO staff 

must take immediate action to determine if the beneficiary is competent. 

In the absence of a definition of “immediate,” we allowed 14 calendar days 

after the due process period to determine if staff were timely in completing a 

competency decision. We considered this a reasonable period to control, 

prioritize, and finalize these types of cases. 

Controls over Competency Determinations Need 

Strengthening 

VARO staff unnecessarily delayed final decisions in 11 (37 percent) of 

30 competency determinations completed from October through 

December 2010. The delays ranged from 15 to 188 days, with an average 

completion time of 53 days. Delays occurred because the VSC workload 

management plan did not contain procedures emphasizing immediate 

completion of competency determinations and managers were not aware of 

timeliness standards regarding these cases. The risk of incompetent 

beneficiaries receiving benefits without fiduciaries assigned to manage those 

funds increases when the staff does not complete competency determinations 

immediately. 

VA Office of Inspector General 10 
Inspection of the VA Regional Office, Louisville, Kentucky 

Using our interpretation of immediate, the most significant delay we 

identified occurred when VARO staff unnecessarily delayed a final 

incompetency decision for a veteran for approximately 6 months. During 

this period, the veteran received $861 in disability payments. While the 

veteran was entitled to these payments, fiduciary stewardship was not in 

place to ensure effective funds management and the welfare of the veteran. 

The workload management plan lacked procedures to ensure timeliness and 

ensure oversight of the competency determination process. VARO staff 

responsible for overseeing and processing final competency determinations 

stated they were unaware of VBA’s policy requiring immediate action; 

however, they did know these cases were to be prioritized and acknowledged 

14 days was a sufficient definition of “immediate.” VSC management 

defined “immediate” as “once the case arrives at your desk, you work it.” As 

a result of this unclear guidance, incompetent beneficiaries received benefit 

payments for extended periods despite being incapable of managing these 

funds effectively. 

Until recently, VBA did not have a clear, measurable definition of 

“immediate” and this timeframe varied from office-to-office. In response to 

our summary report for FY 2010, Systemic Issues Reported During 

Inspections at VA Regional Offices, (Report Number 11-00510-167, 

May 18, 2011), the Acting Under Secretary for Benefits defined “immediate” 

as 21 days following the expiration of the due process period. VBA plans to 

implement this new policy nationwide in June 2011. Therefore, we made no 

recommendation to the Director of the VARO regarding this issue. The 

VARO processed 23 of 30 determinations in 21 days. 

Further, VSC staff incorrectly processed 3 (10 percent) of 30 competency 

determinations reviewed. According to VBA policy, VARO staff should pay 

all current monthly benefits for existing disabilities, but should not release 

any retroactive benefits for these disabilities until they make a final 

determination on the issue of competency. In the most egregious case, on 

March 15, 2010, the RVSR increased the veteran’s disability evaluation 

effective July 18, 2008, and proposed incompetency. VSC staff correctly 

paid the veteran’s monthly benefit of $6,928 beginning April 1, 2010. 

However, staff incorrectly released a retroactive payment of $66,228 to the 

veteran, the amount due him for the period August 1, 2008 through March 

31, 2010, before finalization of the incompetency determination. 

These errors were a result of a lack of understanding of VBA policy. The 

VARO provided training in December 2009, shortly after the policy changed 

and in January 2011, just prior to our site inspection. VARO management’s 

training of VSC staff on this issue is a positive step towards addressing these 

errors. 

VA Office of Inspector General 11 
Inspection of the VA Regional Office, Louisville, Kentucky 

Recommendation 

Management 

Comments 

OIG Response 

4.	 We recommend the Louisville VA Regional Office Director develop and 

implement a plan to monitor the effectiveness and adequacy of the 

training provided in January 2011, regarding proper processing of 

competency determination decisions and take appropriate action as 

needed. 

The VARO Director concurred with our recommendation. The Director 

stated the VARO conducted refresher training for RVSRs on the proper 

processing of competency determinations. Further, effective May 2011, 

VSC will conduct monthly reviews to ensure accuracy and timeliness of 

competency determinations. 

Management’s actions are responsive to the recommendation. We will 

follow up as required on all actions. 

VA Office of Inspector General 12 
Inspection of the VA Regional Office, Louisville, Kentucky 

Resources 

Workload 

Scope 

Appendix A VARO Profile and Scope of Inspection 

The Louisville VARO is responsible for delivering nonmedical VA benefits 

and services to veterans and their families. The VARO fulfills these 

responsibilities by administering compensation and pension benefits, 

vocational rehabilitation and employment assistance, and outreach activities. 

As of November 2010, the Louisville VARO had a staffing level of 

207 employees. As of January 2011, the VSC had 177 employees assigned. 

As of December 2010, the VARO reported 5,887 pending compensation 

claims. The average time to complete claims was 114.8 days—60.2 days 

better than the national target of 175 days. As reported by STAR staff, the 

accuracy of compensation rating-related decisions was 88.5 percent, which 

was 1.5 percent below the 90 percent VBA target. The accuracy of 

compensation authorization-related processing was 95.6 percent, which was 

0.4 percent below the 96 percent VBA target. 

We reviewed selected management controls, benefits claims processing, and 

administrative activities to evaluate compliance with VBA policies regarding 

benefits and nonmedical services provided to veterans and other 

beneficiaries. We interviewed managers and employees and reviewed 

veterans’ claims folders. 

Our review included 80 (15 percent) of 548 claims related to PTSD, TBI, and 

herbicide exposure-related disabilities that the VARO completed from 

October through December 2010. For temporary 100 percent disability 

evaluations, we selected 30 (13 percent) of 231 existing claims from VBA’s 

Corporate Database. We provided the VARO with the 201 claims remaining 

from the universe of 231. These claims represented all instances in which 

VARO staff granted temporary 100 percent disability determinations for at 

least 18 months. 

We also reviewed a sample of 30 (54 percent) of 56 competency 

determinations completed by the Louisville VARO during the 3-month 

period from October through December 2010. We reviewed 19 errors 

identified by VBA’s STAR Program during the 3-month period from July 

through September 2010. VBA measures the accuracy of compensation and 

pension claims processing through its STAR Program. STAR’s 

measurements include a review of work associated with claims that require 

rating decisions. The STAR staff reviews original claims, reopened claims, 

and claims for increased evaluations. Further, they review appellate issues 

that involve a myriad of veterans’ disabilities claims. 

Our process differs from STAR as we review specific types of claims issues 

such as PTSD, TBI, and herbicide exposure-related disabilities that require 

VA Office of Inspector General 13 
Inspection of the VA Regional Office, Louisville, Kentucky 

rating decisions. In addition, we review rating decisions and awards 

processing involving temporary 100 percent disability evaluations. 

For our review, we selected dates of claim, NODs, and Triage Team mail 

pending at the VARO during the time of our inspection. We completed our 

review in accordance with the Council of the Inspectors General on Integrity 

and Efficiency’s Quality Standards for Inspections. We planned and 

performed the review to obtain sufficient, appropriate evidence to provide a 

reasonable basis for our findings and conclusions based on our review 

objectives. We believe that the evidence obtained provides a reasonable 

basis for our findings and conclusions based on our review objectives. 

VA Office of Inspector General 14 
Inspection of the VA Regional Office, Louisville, Kentucky 

Appendix B VARO Director’s Comments 

Department of Memorandum Veterans Affairs 

Date: April 22, 2011 

From: Director, VA Regional Office (327/00) 

Subj: Inspection of the VARO Louisville, KY 

To: Director, Benefits Inspection Division, San Diego 

1.	 Attached are the Louisville VARO’s comments on the OIG Draft Repot: 

Inspection of VARO Louisville. 

2. Questions may be referred to Mr. David J. Davis, Director, at 502.566.4500, or 

Mrs. Laura Kuerzi-Rodgers, Veterans Service Center Manager, at 502.566.4301. 

(original signed by:) 

DAVID J. DAVIS 

Director 

Attachment 

VA Office of Inspector General 15 
Inspection of the VA Regional Office, Louisville, Kentucky 

VARO LOUISVILLE
 

Benefits Inspection Division Visit
 

Recommendation 1. We recommend the Louisville VA Regional Office Director review the 

201 temporary 100 percent disability evaluations remaining from our universe of 231 to 

determine if medical reevaluations are required and take appropriate action. 

VARO Response: Non-Concur. 

We do not believe this recommendation is necessary or appropriate. In response to OIG report 

"Audit of 100 Percent Evaluations" dated January 24, 2011, VBA developed a national plan to 

review temporary 100 percent evaluation cases, which was accepted by OIG. Therefore, the 

Regional Office will follow the national review plan. 

Recommendation 2. We recommend the Louisville VA Regional Office Director conduct 

refresher training and implement controls to ensure staff establish suspense diaries for 

temporary 100 percent disability reevaluations. 

VARO Response: Concur. 

The Louisville Regional Office (RO) conducted refresher training with the Rating Activity on 

April 11, 2011. Louisville will also conduct refresher training with employees that promulgate 

rating decisions. The training will be completed no later than May 31, 2011. The Veterans 

Service Center (VSC) Management Analyst currently conducts workload management 

compliance reviews. Effective May 1, 2011, the VSC will add a monthly review of five 

completed EP 310s to the compliance review to ensure diaries are properly set. 

Recommendation 3. We recommend the Louisville VA Regional Office Director conduct 

refresher training and develop and implement a plan to improve the quality review process for 

traumatic brain injury claims. 

VARO Response: Concur. 

The Louisville RO conducted refresher training on traumatic brain injury (TBI) with the Rating 

Activity on March 7 and March 9, 2011. Additionally, the VSC Exam Coordinator will 

continue to work closely with the VA Medical Centers to ensure TBI examinations are 

complete and sufficient for rating purposes. 

Recommendation 4. We recommend the Louisville VA Regional Office Director develop and 

implement a plan to ensure control of Triage Team permanent transfer in and temporary 

transfer out mail. 

VARO Response: Concur. 

We believe it is necessary for a station to have a plan to control Triage Team permanent transfer 

in and temporary transfer out mail. The Louisville RO contends M23-1 and the COVERS 

Users Guide allow the VSC Manager the discretion to develop local procedures for handling 

individual pieces of miscellaneous mail for files located off station. 

VA Office of Inspector General 16 
Inspection of the VA Regional Office, Louisville, Kentucky 

The Louisville RO maintains a separate and distinct location for miscellaneous mail associated 

with folders located physically offstation. As the claims folders are returned, a physical check 

for mail is conducted. Additionally, each Claims Assistant conducts reviews of the mail to 

ensure all mail is timely associated with claims folders. 

This process complies with M21-1MR, which defines search mail as, controlled active mail that 

has been attempted to be associated with a claims folder, but there is an indication the claims 

folder is charged out of files. Designated individuals are responsible for locating folders 

charged out of the file bank within the RO. 

The findings did disclose a few instances in which folders returned to the RO and miscellaneous 

mail was not timely associated with the folder. Therefore, the RO has tightened controls in this 

area to ensure miscellaneous mail is timely associated with incoming folders. 

Recommendation 5. We recommend the Louisville VA Regional Office Director develop and 

implement a plan to monitor the effectiveness and adequacy of the training provided in January 

2011, regarding proper processing of competency determination decisions and take appropriate 

action as needed. 

VARO Response: Concur. 

The Louisville RO conducted refresher competency training for the Rating Activity on 

February 10, 2011. Effective May 2011, the Fiduciary Coach will review five completed EP 

600s involving competency determinations to ensure accuracy and timeliness of the 

determination. Additionally, the Post-Determination Coach will review five completed EP 290s 

to ensure timeliness in the release of funds. The findings will be included in the monthly VSC 

Compliance Review. 

VA Office of Inspector General 17 
Inspection of the VA Regional Office, Louisville, Kentucky 

Appendix C Inspection Summary
 

10 Operational 

Activities Inspected Criteria 

Reasonable 

Assurance of 

Compliance 

Yes No 

Disability Claims Processing 

1. Temporary 

100 Percent 

Disability 

Evaluations 

Determine whether VARO staff properly reviewed temporary 100 percent 

disability evaluations. (38 Code of Federal Regulations (CFR) 3.103(b)) 

(38 CFR 3.105(e)) (38 CFR 3.327) (Manual (M)21-1Manual Rewrite (MR), 

Part IV, Subpart ii, Chapter 2, Section J) (M21-1MR, Part III, Subpart iv, 

Chapter 3, Section C.17.e) 

X 

2. Post-Traumatic 

Stress Disorder 

Determine whether VARO staff properly processed claims for PTSD. 

(38 CFR 3.304(f)) X 

3. Traumatic Brain 

Injury 

Determine whether VARO staff properly processed service connection for 

all residual disabilities related to in-service TBI. (Fast Letter (FL) 08-34 and 

FL 08-36, Training Letter 09-01) 

X 

4. Herbicide 

Exposure-Related 

Disabilities 

Determine whether VARO staff properly processed claims for service 

connection for herbicide exposure-related disabilities (Agent Orange). 

(38 CFR 3.309) (FL 02-33) (M21-1MR, Part IV, Subpart ii, Chapter 2, 

Section C.10) 

X 

Data Integrity 

5. Date of Claim Determine whether VARO staff properly recorded the correct dates of 

claim in the electronic record. (M21-1MR, Part III, Subpart ii, Chapter 1, 

Section C) 

X 

6. Notice of 

Disagreement 

Determine whether VARO staff properly entered NODs into VACOLS. 

(M21-1MR, Part I, Chapter 5) X 

Management Controls 

7. Systematic 

Technical Accuracy 

Review 

Determine whether VARO staff properly corrected STAR errors in 

accordance with VBA policy. (M21-4, Chapter 3, Subchapter II, 3.03) X 

8. Systematic Analysis 

of Operations 

Determine whether VARO staff properly performed formal analyses of 

their operations through completion of SAOs. (M21-4, Chapter 5) X 

Workload Management 

9. Mail Handling 

Procedures 

Determine whether VARO staff properly followed VBA mail handling 

procedures. (M23-1) (M21-4, Chapter 4) (M21-1MR, Part III, Subpart ii, 

Chapters 1 and 4) 

X 

Eligibility Determinations 

10. Competency 

Determinations 

Determine whether VAROs properly assessed beneficiaries’ mental capacity 

to handle VA benefit payments. (M21-1MR, Part III, Subpart v, Chapter 9, 

Section A) (M21-1MR, Part III, Subpart v, Chapter 9, Section B) 

(FL 09-08) 

X 

Source: VA OIG 

VA Office of Inspector General 18 
Inspection of the VA Regional Office, Louisville, Kentucky 

Appendix D OIG Contact and Staff Acknowledgments
 

OIG Contact For more information about this report, please contact the 

Office of Inspector General at (202) 461-4720. 

Acknowledgments	 Dawn Provost, Director 

Ed Akitomo 

Orlan Braman 

Madeline Cantu 

Michelle Elliott 

Lee Giesbrecht 

Ambreen Husain 

Rachel Stroup 

Diane Wilson 

VA Office of Inspector General 19 
Inspection of the VA Regional Office, Louisville, Kentucky 

Appendix E Report Distribution 

VA Distribution 

Office of the Secretary
 

Veterans Benefits Administration
 

Assistant Secretaries
 

Office of General Counsel
 

VBA Southern Area Director
 

VARO Louisville Director
 

Non-VA Distribution 

House Committee on Veterans’ Affairs 

House Appropriations Subcommittee on Military Construction, Veterans 

Affairs, and Related Agencies 

House Committee on Oversight and Government Reform 

Senate Committee on Veterans’ Affairs 

Senate Appropriations Subcommittee on Military Construction, Veterans 

Affairs, and Related Agencies 

Senate Committee on Homeland Security and Governmental Affairs 

National Veterans Service Organizations 

Government Accountability Office 

Office of Management and Budget 

U.S. Senate: Mitch McConnell, Rand Paul 

U.S. House of Representatives: Ben Chandler, Geoff Davis, Brett Guthrie, 

Harold Rogers, Ed Whitfield, John A. Yarmuth 

This report will be available in the near future on the OIG’s Web site at 

http://www.va.gov/oig/publications/reports-list.asp. This report will remain 

on the OIG Web site for at least 2 fiscal years. 

VA Office of Inspector General 20