Suit Alleges Paperwork Mistakes Cost Vets Millions

WASHINGTON -- Some combat injured sailors and Marines may have been cheated out of millions in veterans disability payments because of paperwork mistakes made by the services, according to a class-action complaint brought against the military this week.

Officials from the National Veterans Legal Services Program filed the lawsuit Wednesday on behalf of three combat veterans, but said they believe more than 1,000 may have been affected.

Bart Stichman, joint executive director of NVLSP, said the men lost about $20,000 in disability benefits each because service officials failed to note their injuries were combat related. Without that designation, Department of Veterans Affairs officials were forced to withhold disability payouts from the men for several years.

Navy and Marine Corps officials directed requests for comment to the Department of Justice, which would defend the services in the suit. Department of Justice officials said they are reviewing the case, but did not offer any rebuttal to or explanation for the alleged errors.

Stichman estimates the mistakes cost veterans a combined $20 million in lost disability payments.

“Someone was asleep at the wheel on this,” he said. “We’re not seeing this problem with the Army or the Air Force. But the Navy and Marine Corps didn’t do what they were supposed to.”

The problem stems from a 2008 change in how veterans disability benefits were awarded.

Marine Corps veteran Randy Howard, one of the plaintiffs named in the lawsuit, received more than $24,000 in a payout from the service in 2008 after officials determined his traumatic brain injuries and post-traumatic stress disorder -- the result of two combat tours in Iraq -- made him unable to stay on active duty.

Under the old rules, any servicemember separated for serious injuries would receive a lump-sum payout from the military, but their veterans disability checks would be delayed until the VA “recouped” that same amount.

But Congress passed new legislation starting in 2008 updating that rule, allowing combat-injured veterans to immediately receive their veterans benefits payments. Stichman said that should have meant several hundred dollars more in Howard’s pocket every month, to help deal with the costs of his debilitating wounds.

But Marine Corps officials never included the combat-injury distinction on Howard’s personnel paperwork, leaving the VA no way to determine whether he should be eligible for immediate disability payments.

Instead, they delayed checks until the $24,000 reserve was recouped, then resumed normal payouts.

Stichman said the paperwork problem appears to have been fixed sometime in 2009, but not before potentially hundreds of wounded veterans were denied their money.

A 2008 Defense Department directive ordered all services to make the personnel file changes immediately, to ensure those VA paperwork problems did not occur. Stichman said the Army and Air Force appear to have made the fix right away, but NVLSP’s review of Navy and Marine Corps veterans’ files have shown those services did not.

Veterans medically separated from the Navy or Marine Corps after January 2008 who believe they might have lost out on disability payments because of similar problems can inquire about joining the lawsuit by calling NVLSP at 1-877-345-8387.