According to new statistics acquired by NBC News, a federal rule has required roughly 122,000 handicapped veterans to return reimbursements—some totaling tens of thousands of dollars—they received when the military needed to downsize in the previous 12 years.

The data come amid fresh efforts to modify a little-known provision that prevents veterans from getting both disability and special separation pay, which are one-time, lump-sum incentives provided to service members when the United States had to decrease its active-duty force.

Vernon Reffitt, who recently received an order to refund the $30,000 he received after leaving the Army more than 30 years ago, said, “Nobody realizes that they are doing this to so many people.”

As a result of clawbacks, many veterans have experienced unexpected hardship. One estimated it would take him nearly 15 years to repay what he owed. Another person stated that he must reduce unnecessary spending because his wife, who works full-time, is considering taking on another job to supplement her income.

In the 2018 fiscal year, the US Department of Veterans Affairs stated that it had to reclaim special separation payments from more than 17,000 veterans, the largest yearly sum to date. That figure increased from around 12,400 the previous year, though it’s not obvious why.

According to VA figures, until the PACT Act, which increased compensation to millions of veterans exposed to burn pits and other harmful compounds while serving, passed into law in August 2022, the number of recoupments declined substantially every year. Recoupments required from veterans in fiscal year 2023 increased to approximately 9,300 from 7,940 in 2022.

VA press secretary Terrence Hayes stated that the department cannot comment on why numbers grow or decline. He stated that the VA is legally required to recover special separation compensation from veterans before they can begin receiving disability payments.

At least two veterans who had previously received both benefits claimed that the VA only realized its error after they submitted PACT Act claims.

Shawn Teller received a one-time gross payment of around $10,700 to leave the Army in 1996, when the United States needed to downsize its active-duty military. The veteran, who had served for nearly eight years, including in operations Desert Storm and Desert Shield, began collecting monthly disability payments in 2012 due to an old knee injury.

He submitted a PACT Act claim for asthma in the summer of 2023, which the VA approved, significantly boosting his disability rating. However, the advantage was short-lived. Months later, the VA issued him a letter stating that he should not have been collecting disability and separation payments without consequence for the previous 12 years.

“It was something somebody overlooked at the time, and then they caught it now,” explained Teller, 55, of Walnut Creek, California.

Beginning in July, the VA stated that it would begin withholding Teller’s monthly disability payment of around $586 unless he repaid the sum of his separation compensation.

“I rely on this pay every month,” Teller explained. “It’s not right.”

Similarly, NBC News previously reported that Reffitt, an Army veteran, began receiving disability payments in 1992, the same year he received special separation benefits.

However, the VA withheld Reffitt’s monthly disability compensation in May until he paid back the $30,000. The 62-year-old would need approximately 15 years to do this.

“This is wrong,” the Twin City, Georgia, citizen stated.

‘No concerted effort.

In fiscal year 2013, the earliest year with accessible statistics, the VA stated that it had to reclaim separation money from around 6,700 veterans, the lowest number in the previous twelve years. Data suggest that the number increased marginally to over 7,500 in fiscal year 2014. It remained around 12,000 for the following three fiscal years until rising to more than 17,000 in fiscal year 2018.

In fiscal year 2020, the VA had to reclaim separation money from 8,130 veterans, with another 8,550 due in 2021.

The number of recoupments decreased even further in fiscal year 2022 before increasing in 2023. As of the end of June, the VA reported that it had already commenced recoupments for over 8,920 veterans this fiscal year.

While Hayes declined to speculate on the causes of dips and surges in yearly totals, the VA press secretary stated that disability claims had increased. In fiscal year 2023, when the VA had to reclaim separation money from roughly 9,300 veterans, Hayes reported that the department received 2.3 million compensation claim applications, a 42% increase over 2022.

“Fiscal year 2023 was a record-breaking year for VA,” the governor remarked. “There is no concentrated attempt to improve recoupment. Instead, it is part of the standard, legally necessary procedure of completing the first claim application, which asks claimants if they got a separation bonus and the amount received.”

Hayes stated that the amount of recoupments completed by the VA in the previous five years has consistently been less than 1% of all disability compensation applicants or beneficiaries. In 2023, more than 5.6 million veterans will get compensation, he said.

According to Hayes, veterans who petition for PACT Act benefits are more likely to obtain an increase than a loss.

Since the PACT Act’s passage, the number of recoupment errors, such as Teller’s and Reffitt’s, has been unknown. The VA stated that it does not track those situations.

In Reffitt’s case, the VA claimed that it incorrectly permitted him to collect both benefits without consequence for more than 30 years because he was “unaware of the amount” of his separation pay when he began receiving disability compensation in 1992.

The VA stated that it discovered the error when Reffitt submitted a PACT Act claim, adding that it should have followed up on attempts to ascertain the separation amount and started recoupment sooner.

Teller’s severance money went unnoticed until 2023, according to the agency, because he failed to identify in VA paperwork that he had received separation pay or submit a claim within a year after registering an intent to file one.

In 2021, the Veterans Benefits Administration began scanning all veterans’ military and medical information into computerized files, “reducing the likelihood of this situation recurring,” Hayes said.

Unique exclusions to the law.

Under the law, veterans can seek a waiver of their recoupment duties for just certain exceptional separation benefits. Nevertheless, the criteria are rigorous and have caused confusion.

To get a waiver for voluntary separation pay, the VA requires the secretary of the pertinent branch of service to declare that “recovery would be against equity and good conscience or would be contrary to the best interests of the United States.”

According to officials, at least six have already received grants.

The Air Force stated that some of its airmen signed “erroneous” agreements of understanding when they left active duty between 2007 and 2014. Lt. Col. Erika Yepsen, the Air Force spokesman, claimed that the application misrepresented the waiver of recoupment if the airmen qualified for disability compensation benefits.

Since fiscal year 2016, when the Air Force changed how it monitored data, it has provided at least five exemptions to veterans harmed by the error.

Yepsen stated that it “determined that waiving recoupment was in keeping with equity and good conscience standards” in five of the 17 additional requests it rejected.

The Air Force also granted a waiver request for a sixth veteran “based upon the individual’s disability precluding them from earning an income,” Yepsen stated.

The Navy, Marine Corps, and Coast Guard stated they were unaware of anybody requesting a waiver for recoupment. According to Navy spokesperson Charlie Spirtos, in 2023, the Navy allowed decreasing the amount of disability pay withheld when voluntary separation pay is recouped.

The Army did not return calls for comment.

Advocates contend that the rule not only ignores veterans but also denies them earned benefits that have no financial connection.

While special separation pay is based on a service member’s military career and calculated by years of active duty, disability pay is solely for illnesses or injuries sustained while serving, according to Marquis Barefield, an assistant national legislative director with DAV, an advocacy group formerly known as Disabled American Veterans.

“The two payments have nothing to do with each other,” Barefield explained. “They are two separate buckets of money.”

From 2013 to 2020, veterans had an average of $19,700 to $53,000 withheld for recoupment, according to a 2022 report released by the RAND Corporation, a nonprofit research organization.

Representative Ruben Gallego, D-Ariz., sponsored a measure in 2022 to amend the recoupment legislation, but congressional action has been slow. “It is costly,” he told me, “and that’s kind of been the biggest hindrance of why I can’t get it through.”