By Josh Rogin, CQ Staff

The Veterans Affairs Department has been wrongfully recovering money from widows of deceased veterans over the last 12 years by demanding reimbursement for final benefits checks in violation of federal law.

Sen. Daniel K. Akaka , D-Hawaii, the chairman of the Senate Veterans' Affairs Committee, confronted the department last week about the problem, which has resulted in hundreds of thousands of senior citizens losing pension and disability money received during the month of their spouse's death.

"This flawed practice has caused serious hardship for many widows," Akaka said. "I suspect that the improper procedures have harmed thousands of widows and widowers over the last 12 years."

Congress granted veterans' spouses the right to keep their partner's last month's worth of benefits when it passed the Veterans' Benefits Improvements Act of 1996 (PL 104-275). The law instructed the department to treat disability and pension checks issued during the month of a veteran's death "as being payable to a surviving spouse."

But the department never adjusted its systems to follow the law. As a result, the department has routinely either refused to send checks or taken active measures to retrieve money already sent, including collection actions.

Akaka brought up the issue in a Dec. 5 letter to Secretary James B. Peake, asking him to immediately take steps to identify all the spouses affected, pay them their missing benefits, and fix the system.

Akaka's press secretary, Jesse Broder Van Dyke, said there was no evidence officials intentionally withheld any money. "It was something that slipped through the cracks," he said. "They're using an automated system, so they needed to go and change the program, but they never did."

Peake responded Thursday with a tentative action plan to fix the benefits problem over the coming months, saying "I agree that this problem must be fixed."

A department spokesman did not immediately respond to requests for comment, but a committee aide said solving the problem likely would take some time, partly because the department does not keep track of all spouses.

The aide estimated that up to 50,000 spouses could have been affected each year since the law was passed. Each spouse could be entitled to anywhere from a few hundred to a few thousand dollars, depending on their situation.

Repayments could cost the government hundreds of millions dollars, the aide said. The department should have enough money in its budget to cover the costs, but "they might have to come back to Congress for some additional money," the staffer said.

Akaka became aware of the problem last month when contacted by Ruby Maile Sasaoka, a Hawaii resident whose veteran husband died in 2007.

After using her husband's final benefit check for funeral expenses, the Treasury department took an equal amount of money directly from her bank account without her knowledge. As a result, she unwittingly bounced checks and now faces credit issues.

ORIGINAL STORY: http://www.cqpolitics.com/wmspage.cfm?parm1=5&docID=news-000002997367

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