John Paul Scott wasn't sure he'd heard correctly.

"It's in the computer system that you're deceased," repeated an official from the Department of Veterans Affairs.

"What are you talking about?" Scott asked.

The 39-year-old Army veteran from Houston had been calling the VA's hotline twice a day for weeks to check the status of his disability claim. This time, on July 12, the VA official who answered the phone informed Scott he would no longer be receiving benefits because, according to VA records, he had passed away in April.

Scott suffers from vision problems traced to his service in the first Gulf War. In 2008, the VA had cut his monthly disability check by $2,000. Scott appealed. On June 25, he had finally won.

Now a bureaucratic blunder meant that Scott faced a Kafkaesque dilemma: As far as the VA was concerned, he was dead. His disability payments instantly halted. His medical prescriptions stopped. Scott, already in dire financial straits after the reduction in his benefits two years ago, feared he would end up on the street.

First thing the next morning, Scott went to the Houston VA Regional Office on Almeda Road and spoke to a woman at the front desk. Scott gave the woman three forms of ID and filled out a form: "I was told by the Department of Veterans Affairs that someone entered in their computer I was deceased," he wrote. "I am not. Please reinstate my benefits immediately. Thanks, John Paul Scott."

The woman took the IDs and paperwork and returned 10 minutes later to inform Scott that his status on the computer had been corrected from dead to alive. But his disability benefits remained at zero.

Scott said VA officials told him they would pass on the corrected information to the finance section so his benefits could be restored.

A few days later, however, a disconcerting letter from the VA arrived at Scott's home. The letter, dated July 14, was addressed to the representative of the estate of John Paul Scott.

"We are sorry to learn of the death of the beneficiary and wish to express our sympathy," the letter stated.

Delay after delay

In the next paragraph, the letter explained that any money received from the VA after the date of death must be returned. Since Scott supposedly had "died" in April, his estate would have to repay two months worth of disability payments sent to him since then, for a total of $2,002.

Scott continued to call the VA hotline twice a day, only to be told the VA was still working on his case.

"They'd say, 'It only needs maybe two more signatures and it'll be finalized,' " he said. "And they were telling me that for like a month and a half."

In desperation, Scott sent the VA a copy of a default statement from his mortgage company.

"Please forward this to the holder of my file and I can only pray that the error is corrected in time before I become a homeless veteran," he wrote.

VA officials contacted by the Houston Chronicle could not explain the mistake .

"A thorough review of Mr. Scott's records indicate that his benefits were erroneously terminated during a batch processing of death claims on July 9, 2010, at our Hines, Illinois, facility," VA spokeswoman Jennifer Heim said in a written statement. "A veteran is added to the batch-processing list when Department of Veterans Affairs receives the First Notice of Death from a family member or their designee. We are unable to determine what initiated Mr. Scott to be on this list."

'Damage control'

The Houston VA Regional Office and the VA "take incidents like this very seriously and took immediate action to rectify the situation," Heim said.

Scott said his benefits were restored only after a Texas Veterans Commission advocate told VA officials in Houston that Scott had scheduled an interview with the Chronicle. Within days, the VA deposited more than $40,000 in retroactive payments in Scott's account, including his regularly scheduled payment for the month of August, newly increased from $981.50 to $3,039.

"They were afraid of what was going to be reported in the article and at least by correcting it, they could minimize the damage," Scott said. "That's all it was. They jumped into damage control."

He's relieved that his ordeal is over, but Scott worries about the untold number of veterans in financial distress because of incorrect records and red tape.

"It's disgusting, and I hate it because when I think about how much I have to do to get this corrected, there's a lot of older veterans out there who may not have the patience or the time or may not be in physical health to do what I did," he said.

lindsay.wise@chron.com