VA Computer System Paid Out Millions in Improper DIC Benefits, OIG Report Finds

CCK Law: Our Vital Role in Veterans Law

A Department of Veterans Affairs (VA) computer system approved thousands of Dependency and Indemnity Compensation (DIC) claims incorrectly — and, in at least some of those cases, paid out benefits that should not have been granted. That is the finding of a report released in April 2026 by the VA Office of Inspector General (OIG) (OIG Report No. 25-00153-47).

If you receive DIC or VA recently denied your DIC claim, this report may affect you. Here is what you need to know:

• Between September 2023 and August 2024, a VA computer system approved about 8,100 DIC claims, of which 8,000 had at least one legal or procedural deficiency.
• OIG estimates at least 2 percent of those approvals resulted in improper payments, totaling at least $2.7 million.
• These improper payments could result in survivors having to pay VA back for the compensation they were mistakenly given.

Why Were These Payments Issued Improperly?

These improper payments were issued because of mistakes made by a VA computer system used to process certain DIC claims.

In May 2020, VA began using an automated claims processing system for DIC as part of an effort to reduce backlogs and streamline survivor benefits. This system scans documents such as death certificates and claims applications, applies encoded rules, and generates rating decisions automatically. If a claim is approved, the system sends a decision letter to the family.

A few years after this system was implemented, the VA Office of the Inspector General (OIG) reviewed approximately 8,100 claims the system processed between September 2023 and August 2024 to determine the accuracy of the automation.

“The OIG discovered that nearly all of these decisions — about 8,000 — contained at least one legal or procedural deficiency in the rating decision, the notification letter, or both,” says Maura Black, partner at CCK Law. “The OIG also estimated that at least 2 percent of those decisions resulted in improper payments, adding up to at least 2.7 million dollars.”

In the video below, CCK Law Partner Michael Lostritto and VA-Accredited Claims Advocate Dallas Aguiar discuss VA compensation for dependents:

What Mistakes Did the VA Computer System Make?

The most consequential errors the system made involved approving DIC for deaths that were not actually service connected under VA law.

For example, one prominent case mentioned in the report proceeded as follows:

• A veteran died in 2023 of non-service-connected acute respiratory failure and chronic obstructive pulmonary disease. Other significant conditions contributing to their death included non-service-connected congestive heart failure and pulmonary hypertension.
• VBA later received a survivor’s claim for DIC regarding the death. Running the claim through the automated system, the system made a critical mistake: It confused the veteran’s service-connected hypertension with the non-service-connected pulmonary hypertension that contributed to their death. These are actually two separate conditions.
• Because the system mistook the veteran’s pulmonary hypertension for their service-connected hypertension, it incorrectly determined that the DIC claim was valid and approved it.
• By December 2024, this led to the survivor improperly receiving over $22,000 in DIC payments. In reality, the claim should never have been granted in the first place, since the veteran’s death was not proven to be service related.

The OIG also found widespread problems with the notification letters sent to survivors. Under 38 C.F.R. § 3.104(c), favorable findings are factual determinations that VA decision-makers are bound to accept in any future review of a claim, unless overturned based on clear and unmistakable error (CUE).

The OIG estimated that approximately 7,000 letters were missing this information entirely, meaning thousands of survivors may not be aware of legal protections that could apply to their claims.

Did the VA Computer System Reject Any Legitimate Claims?

The OIG raised that possibility. Based on the same systematic deficiencies it identified, the agency acknowledged that the automated system could have incorrectly denied valid claims. However, the OIG was not able to document specific examples of improper denials from the records it reviewed.

What Does This Mean for DIC Recipients?

The OIG’s findings could affect survivors in several important ways, potentially leading to legitimate DIC claims being denied or VA requiring that survivors pay back the compensation they were mistakenly granted.

DIC Notification Letters Could Contain Errors

The favorable findings in a DIC notification letter establish what facts VA has already decided in a survivor’s favor. These findings can provide legal protections if VA ever decides to review a survivor’s claim and can only be overturned if there was a clear and unmistakable error (CUE).

“If you received DIC through this automated process, take a close look at your notification letter,” says Maura Black. “If these findings aren’t spelled out in your letter, you may not know what protections you actually have.”

Survivors Who Received Improper Payments May Have To Pay Them Back

“VA has the authority to recoup improper payments, which can mean reduced future benefits or a debt notice in the mail,” says Maura Black. “If this happens to you, know that you may be able to request a waiver or even an elimination of the debt if it was imposed based on VA administrative error.”

• A waiver for VA debt can relieve survivors of the obligation to repay if repayment would cause financial hardship and they were not at fault. This is an important option for survivors to explore before making any payments or agreeing to a repayment plan.
• Under 38 U.S.C. 5112(b)(10) and 38 C.F.R. 3.500(b), an overpayment created solely by VA administrative error cannot be made retroactive to form a debt — sole administrative error meaning the beneficiary neither knew nor should have been aware of the erroneous award. That is elimination of an invalid debt, not a discretionary waiver of a valid one — a materially better outcome for the survivor.

Legitimate Claims May Have Been Rejected by the System

“The Inspector General noted the same automated system may also be wrongly rejecting legitimate claims,” says Maura Black. “The report did not document specific bad denials, but the underlying issues are reason enough to take a second look at any DIC denial.”

Because of the mistakes this VA computer system has made, it is possible that legitimate DIC claims have been denied. For survivors who believe this to be the case, they have options available to take action via appeal.

In most cases, survivors have one year from the date of a VA decision to file an appeal. Appeal options under the Appeals Modernization Act (AMA) include:

• Supplemental Claim—Submit new and relevant evidence for a fresh review.
• Higher-Level Review—Request that a senior VA reviewer reconsider the decision, without new evidence.
• Board of Veterans’ Appeals (BVA)—Appeal directly to the Board, with or without a hearing.

If more than one year has passed, additional options may still be available depending on your specific situation. In this case, consider consulting a VA-accredited attorney who can help evaluate your circumstances.

Did VA Deny Your DIC Claim? Contact CCK

Frequently Asked Questions

What is the OIG report about?

The VA OIG report released April 30, 2026, found that VA’s automated DIC claims processing system approved roughly 8,100 claims between September 2023 and August 2024. Approximately 8,000 of those decisions had at least one deficiency, and at least $2.7 million in improper payments may have resulted.

Can VA take back benefits it already paid?

Yes, it can. VA has authority to recover improperly paid benefits. However, if you receive an overpayment notice, you may be able to request a waiver based on financial hardship and lack of fault. You generally have one year from the date of a debt notice to request a waiver.

What should I do if my DIC claim was denied?

You generally have one year from the date of the denial to file a Supplemental Claim, request a Higher-Level Review, or appeal to the Board of Veterans’ Appeals.

If that deadline has passed, other options may still be available. See CCK Law’s guide to appealing a denied DIC claim for more information.

What are favorable findings and why do they matter?

Favorable findings are factual determinations VA has made in your favor.

Under 38 C.F.R. § 3.103, VA is bound by those findings in any later review of your claim, unless they are overturned based on clear and unmistakable error. If your notification letter does not list them, your legal protections may be unclear.