Review of Accuracy of Claims Processors’ Disability Evaluation Decisions for Painful Scars

The VA Office of Inspector General (OIG) examined whether the Veterans Benefits Administration (VBA) accurately decided disability claims involving service-connected painful scars (meaning the scars were a disability incurred or aggravated during active military service). The report highlights deficiencies in claims processing that led to substantial overpayments and inconsistencies in benefit determinations.

The OIG evaluated two sets of statistical samples of painful scar–related decisions completed between June 1, 2024, and May 31, 2025 (decisions that granted service connection and those that increased disability rating evaluations for previously service-connected painful scars). Based on results from these samples, the team estimated that 38 percent of these decisions—about 17,900 cases—contained at least one error. At least 920 of these errors resulted in roughly $5.6 million in overpayments to veterans, costs that will continue to accrue until corrective actions are taken.

The OIG found that claims processors did not consistently follow regulatory requirements when determining whether scars were painful, relying on subjective reports of pain without objective evidence documented during the physical examination. Additionally, VBA systems did not consistently flag “pyramiding,” the improper practice of evaluating the same disability manifestations under multiple diagnostic codes, leading to further inaccuracies and overpayments. Another cause of these errors occurred when previously service-connected scars that later became painful did not receive a separate evaluation under the painful scar diagnostic code.

Following initial briefings with VBA in early 2026, the OIG team analyzed 30 additional decisions completed in January 2026 and identified a 43 percent error rate, confirming VBA continued to have a similar error rate. The OIG made three recommendations to help improve the accuracy of VBA’s decisions for painful scars in compliance with the VA Schedule for Rating Disabilities under 38 C.F.R. § 4.118. VBA concurred with all three recommendations.