Watch the Deep Dive of this post
Is the VA Hiding Your Back Pay? The $500,000 “Vholes” Glitch Explained
For decades, thousands of veterans have been screaming into a bureaucratic void. They followed the rules, filed their substantive appeals, and then encountered a wall of silence. No decision from the Board of Veterans Appeals, no formal denial—just years of life passing by while they assumed they were “waiting in line.”
The truth is far more scandalous. A massive technical glitch has been uncovered that effectively “froze” and discarded these claims without notifying the veterans. This discovery has fueled the Freund v. Collins class-action lawsuit (often cited as Floyd or Frey v. Collins), a legal battle that advocates are calling the most significant turning point since the landmark Nehmer litigation. With a critical Final Fairness Hearing arriving this August 13th, the window is opening to reclaim what was lost in the “Vholes.”
The 43-Day Lag That Erased Thousands of Claims
The VA’s transition into the modern digital era left a trail of “ghost claims” in its wake. Central to this failure was an automated tracking system known as “Vholes.” Designed to manage the legacy appeals process, Vholes was programmed to perform “automated sweeps,” instantly closing any appeal that did not show a timely VA Form 9 (Substantive Appeal) in the system’s database.
The disaster wasn’t caused by veterans missing deadlines, but by the VA’s own inability to keep pace with its automation.
“The problem was that the VA often took an average of 43 days to log incoming documents. Because of this delay, the Vholes system would ‘sweep’ the records and close cases where the veteran had mailed their Form 9 on time, but the VA staff hadn’t entered it into the system yet.”
This created a systemic trap: a veteran could mail their Form 9 well within the legal limit, but because the manual data entry was backlogged by over a month, the automated “sweep” would delete the claim before the VA ever acknowledged receiving the paperwork. It was a clash of 21st-century automation and 20th-century bureaucracy where the veteran always lost.
The “Frozen” Illusion: 1 in 6 Closures Were Errors
The sheer scale of this failure is staggering. An investigation by the VA Inspector General confirmed that 1 in 6 of these automated closures were erroneous. Thousands of veterans were effectively discarded by a computer script despite having perfect compliance.
To know if you were caught in this glitch, you must look at your “Legacy Appeal” timeline. If your initial decision was issued before February 19, 2019, you were in the legacy system. The process required a Notice of Disagreement (NOD), followed by a Statement of the Case (SOC). Once you received the SOC, you had to file the VA Form 9.
If you filed that Form 9 and your case simply disappeared—no Board decision, no closure letter, no phone calls—you were likely a victim of the Vholes sweep. The psychological toll of this “frozen” illusion cannot be overstated; veterans spent decades believing their service-connected disabilities were being evaluated, unaware that the VA had already moved on without telling them.
The $500,000 Math: A 35-Year Window for Retroactive Benefits
The Freund v. Collins lawsuit covers an expansive window of impact from 1990 to 2025. Because the court has ordered the VA to reestablish these erroneously closed appeals while preserving the “earliest effective date,” the potential back pay is astronomical.
Let’s look at the investigative math that explains the $500,000 headline. If a veteran was entitled to a $2,000 monthly increase but their file was “frozen” by Vholes, that represents $24,000 in lost benefits every year.
- Over 20 years, that is $480,000.
- Over the full 35-year window of the glitch, that back pay reaches $840,000.
Even conservative estimates for many veterans mirror the $500,000 awards seen in the Nehmer litigation. For the attorneys and claims agents involved, these massive retroactive checks are a reason to “do backflips,” but for the veteran, it is finally getting the compensation they earned decades ago.
The Inheritance of Justice for Survivors
Because this glitch spans three and a half decades, many veterans passed away while waiting for decisions that the VA had already secretly deleted. This lawsuit provides an “Inheritance of Justice” for their families.
The settlement explicitly includes survivors and estates. If a deceased veteran had a legacy appeal that sat “frozen” or “disappeared” without explanation, their family members may be eligible for the retroactive benefits. The VA is now tasked with auditing these records and directing notices to survivors who may have given up hope years ago.
The “Double Dip” Loophole: Claiming Your Gap Pay
A critical nuance of this case involves veterans who eventually grew tired of the silence, gave up on their original appeal, and filed a brand-new claim for the same condition years later. If you eventually “won” that second claim, you might think you’re in the clear—but you are likely still owed “gap pay.”
If your original 1995 appeal was erroneously closed by Vholes, and you didn’t win your new claim until 2015, you are potentially owed 20 years of retroactive benefits to cover that gap. However, the VA will not just hand this over; they must conduct an “Audit of the Original Appeal” to determine a “hypothetical outcome.” Essentially, the VA must evaluate if the original appeal would have resulted in a win if it hadn’t been closed.
Advocacy Tip: If you are in this “gap” category, start gathering your medical evidence from that specific period now. To win a “hypothetical outcome” determination, you will need to prove the severity of your condition during the years the claim was frozen.
Immediate Action: The August 13th Milestone
The “Final Fairness Hearing” for Freund v. Collins is scheduled for August 13th. This is the “final check mark” in the legal process. Following this hearing, the VA will be authorized to move forward with the court-ordered mandate to audit 28,258 files flagged as having timely appeals and send notices to an additional 64,599 individuals whose files contain documents that may qualify.
If you believe your legacy appeal was caught in the Vholes glitch, do not wait for a letter that may never arrive.
- Audit vs. Possible: Distinguish your status. Are you among the 28k already flagged, or the 65k whose files require closer inspection?
- Verify Your Documents: Locate your Statement of the Case (SOC) and any proof of your Form 9 filing from before February 19, 2019.
- Contact Class Counsel: If you have questions about your involvement, contact the official legal representatives immediately.
Contact Information:
- Class Counsel: John D. Niles of Carpenter Chartered
- Contact Email: fedclass@carpchartered.com
Conclusion: A Legacy of Accountability
The Freund v. Collins settlement is more than a legal victory; it is a forced audit of a system that prioritized automated efficiency over human lives. Auditing 28,258 files is a massive undertaking, but it is the only way to restore a legacy of accountability. This case proves that when “automated sweeps” replace human oversight, the result isn’t just a glitch—it’s a betrayal of the promise made to those who served. Your persistence in the legacy appeal system is finally being met with the justice it deserves.
Metadata & Tags Michael Price, MarketUS, VA Lawsuit, Freund v Collins, Veteran Back Pay, Vholes Glitch, Legacy Appeals, Disability Benefits