[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4032 Introduced in House (IH)]







108th CONGRESS
  2d Session
                                H. R. 4032

To amend title 38, United States Code, to provide additional safeguards 
    for Department of Veterans Affairs benefit recipients who have 
  fiduciaries for receipt and management of benefit payments, and for 
                            other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 25, 2004

  Mrs. Davis of California (for herself, Mr. Michaud, Mr. Evans, Mr. 
  Filner, Ms. Corrine Brown of Florida, Mr. Rodriguez, Ms. Hooley of 
 Oregon, Mr. Strickland, Mr. Grijalva, Mr. Frank of Massachusetts, Mr. 
    Bishop of Georgia, Mr. Holden, Mr. Brady of Pennsylvania, Mrs. 
Napolitano, and Mr. Chandler) introduced the following bill; which was 
             referred to the Committee on Veterans' Affairs

_______________________________________________________________________

                                 A BILL


 
To amend title 38, United States Code, to provide additional safeguards 
    for Department of Veterans Affairs benefit recipients who have 
  fiduciaries for receipt and management of benefit payments, and for 
                            other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Veterans Fiduciary Act of 2004''.

SEC. 2. DEFINITION OF FIDUCIARY.

    (a) In General.--(1) Chapter 55 of title 38, United States Code, is 
amended by adding at the end the following new section:
``Sec. 5506. Definition of `fiduciary'
    ``For purposes of this chapter and chapter 61 of this title, the 
term `fiduciary' means--
            ``(1) a person who is a guardian, curator, conservator, 
        committee, or person legally vested with the responsibility or 
        care of a claimant (or a claimant's estate) or of a beneficiary 
        (or a beneficiary's estate); or
            ``(2) any other person having been appointed in a 
        representative capacity to receive money paid under any of the 
        laws administered by the Secretary for the use and benefit of a 
        minor, incompetent, or other beneficiary.''.
    (2) The table of sections at the beginning of such chapter is 
amended by adding at the end the following new item:

``5506. Definition of `fiduciary'.''.
    (b) Conforming Amendments to Section 5502.--Section 5502 of such 
title is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1), by striking ``other person'' 
                and inserting ``other fiduciary''; and
                    (B) in the second sentence of paragraph (2), by 
                inserting ``for benefits under this title'' after ``in 
                connection with rendering fiduciary services'';
            (2) in subsection (b), by striking ``guardian, curator, 
        conservator, or other person'' each place it appears and 
        inserting ``fiduciary''; and
            (3) in subsection (d), by striking ``guardian, curator, or 
        conservator'' and inserting ``fiduciary''.
    (c) Conforming Amendment to Section 6101.--Section 6101(a) of such 
title is amended by striking ``guardian, curator,'' and all that 
follows through ``beneficiary,'' and inserting ``fiduciary (as defined 
in section 5506 of this title) for the benefit of a minor, incompetent, 
or other beneficiary under laws administered by the Secretary,''.

SEC. 3. INVESTIGATION AND QUALIFICATION OF FIDUCIARIES.

    (a) In General.--Chapter 55 of title 38, United States Code, as 
amended by section 2, is further amended by adding at the end the 
following new section:
``Sec. 5507. Investigation and qualification of fiduciaries
    ``(a) Any certification of a person for payment of benefits of a 
beneficiary to that person as such beneficiary's fiduciary under 
section 5502 of this title shall be made on the basis of--
            ``(1) an investigation by the Secretary of the fitness of 
        that person to serve as fiduciary for that beneficiary, such 
        investigation--
                    ``(A) to be conducted in advance of such 
                certification; and
                    ``(B) to the extent practicable, to include a face-
                to-face interview with such person;
            ``(2) adequate evidence that certification of that person 
        as fiduciary for that beneficiary is in the interest of such 
        beneficiary (as determined by the Secretary under regulations); 
        and
            ``(3) the furnishing of any bond that may be required by 
        the Secretary.
    ``(b) As part of any investigation of any person under subsection 
(a), the Secretary shall request information concerning whether that 
person has been convicted of any offense under Federal or State law 
which resulted in imprisonment for more than one year. If that person 
has been convicted of such an offense, the Secretary may certify the 
person as a fiduciary only if the Secretary makes a specific finding 
that the person has been rehabilitated and is the most appropriate 
person to act as fiduciary for the beneficiary concerned under the 
circumstances.
    ``(c)(1) In the case of a proposed fiduciary described in paragraph 
(2), the Secretary, in conducting an investigation under subsection 
(a)(1), may carry out such investigation on an expedited basis that may 
include waiver of any specific requirement relating to such 
investigation, including the otherwise applicable provisions of 
subparagraphs (A) and (B) of such subsection. Any such investigation 
carried out on such an expedited basis shall be carried out under 
regulations prescribed for purposes of this section.
    ``(2) Paragraph (1) applies with respect to a proposed fiduciary 
who is--
            ``(A) the parent (natural, adopted, or stepparent) of a 
        beneficiary who is a minor;
            ``(B) the spouse or parent of an incompetent beneficiary; 
        or
            ``(C) a person who has been appointed a fiduciary of the 
        beneficiary by a court of competent jurisdiction.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
such chapter is amended by adding after the item added by the amendment 
made by section 2(a)(2) the following new item:

``5507. Investigation and qualification of fiduciaries.''.

SEC. 4. MISUSE OF BENEFITS BY FIDUCIARIES.

    (a) Protection of Veterans Benefits When Administered by 
Fiduciaries.--(1) Chapter 61 of title 38, United States Code, is 
amended by adding at the end the following new sections:
``Sec. 6106. Misuse of benefits by fiduciaries
    ``(a) Fee Forfeiture in Case of Benefit Misuse by Fiduciaries.--A 
fiduciary may not collect a fee from a beneficiary for any month with 
respect to which the Secretary or a court of competent jurisdiction has 
determined that fiduciary misused all or part of the individual's 
benefit, and any amount so collected by the fiduciary as a fee for such 
month shall be treated as a misused part of the individual's benefit.
    ``(b) Liability of Fiduciaries for Misused Benefits.--(1) If the 
Secretary or a court of competent jurisdiction determines that a 
fiduciary that is not a Federal, State, or local government agency has 
misused all or part of a beneficiary's benefit that was paid to such 
fiduciary, the fiduciary shall be liable for the amount misused, and 
such amount (to the extent not repaid by the fiduciary) shall be 
treated as an erroneous payment of benefits under this title to the 
fiduciary for purposes of laws pertaining to the recovery of 
overpayments. The amount of such overpayment shall constitute a 
liability of such fiduciary to the United States and may be recovered 
in the same manner as any other debt due the United States. Subject to 
paragraph (2), upon recovering all or any part of such amount, the 
Secretary shall pay an amount equal to the recovered amount to such 
beneficiary or such beneficiary's alternative fiduciary.
    ``(2) The total of the amounts paid to a beneficiary (or a 
beneficiary's alternative fiduciary) under paragraph (1) and under 
section 6107 of this title may not exceed the total benefit amount 
misused by the fiduciary with respect to that beneficiary.
    ``(c) Misuse of Benefits Defined.--For purposes of this chapter, 
misuse of benefits by a fiduciary occurs in any case in which the 
fiduciary receives payment, under any of laws administered by the 
Secretary, for the use and benefit of a beneficiary and converts such 
payment, or any part thereof, to a use other than for the use and 
benefit of such beneficiary or that beneficiary's dependents. Retention 
by a fiduciary of an amount of a benefit payment as a fiduciary fee or 
commission, or as attorney's fees (including expenses) and court costs, 
if authorized by the Secretary or a court of competent jurisdiction, 
shall be considered to be for the use or benefit of such beneficiary.
    ``(d) Regulations.--The Secretary may prescribe by regulation the 
meaning of the term `use and benefit' for purposes of this section.
    ``(e) Finality of Determinations.--A determination by the Secretary 
that a fiduciary has misused benefits shall be considered to be a 
decision of the Secretary under section 511(a) of this title.
``Sec. 6107. Reissuance of benefits
    ``(a) Negligent Failure by Secretary.--(1) In any case in which the 
negligent failure of the Secretary to investigate or monitor a 
fiduciary results in misuse of benefits by the fiduciary, the Secretary 
shall pay to the beneficiary or the beneficiary's alternate fiduciary 
an amount equal to the amount of benefits that were so misused.
    ``(2) There shall be considered to have been a negligent failure by 
the Secretary to investigate and monitor a fiduciary in the following 
cases:
            ``(A) A case in which the Secretary failed to timely review 
        a fiduciary's accounting.
            ``(B) A case in which the Secretary was notified of 
        allegations of misuse, but failed to act in a timely manner to 
        terminate the fiduciary.
            ``(C) In any other case in which actual negligence is 
        shown.
    ``(b) Reissuance of Misused Benefits.--(1) In any case in which a 
fiduciary described in paragraph (2) misuses all or part of an 
individual's benefit paid to such fiduciary, the Secretary shall pay to 
the beneficiary or the beneficiary's alternative fiduciary an amount 
equal to the amount of such benefit so misused.
    ``(2) Paragraph (1) applies to a fiduciary that--
            ``(A) is not an individual; or
            ``(B) is an individual who, for any month during a period 
        when misuse occurs, serves 15 or more individuals who are 
        beneficiaries under this title.
    ``(c) Recoupment of Amounts Reissued.--In any case in which the 
Secretary reissues a benefit payment (in whole or in part) under 
subsection (a) or (b), the Secretary shall make a good faith effort to 
obtain recoupment from the fiduciary to whom the payment was originally 
made.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
such chapter is amended by adding at the end the following new items:

``6106. Misuse of benefits by fiduciaries.
``6107. Reissuance of benefits.''.

SEC. 5. ADDITIONAL PROTECTIONS FOR BENEFICIARIES WITH FIDUCIARIES.

    (a) Onsite Reviews and Required Accountings.--(1) Chapter 55 of 
title 38, United States Code, as amended by section 3, is further 
amended by adding at the end the following new sections:
``Sec. 5508. Periodic onsite reviews of institutional fiduciaries
    ``(a) Inspections Required.--In addition to such other reviews of 
fiduciaries as the Secretary may otherwise conduct, the Secretary shall 
provide for the periodic onsite review of any person or agency located 
in the United States that receives the benefits payable under laws 
administered by the Secretary to another individual pursuant to the 
appointment of such person or agency as a fiduciary under section 5502 
of this title in any case in which--
            ``(1) the fiduciary is a person who serves in that capacity 
        with respect to 15 or more such individuals;
            ``(2) the fiduciary is a certified community-based 
        nonprofit social service agency; or
            ``(3) the fiduciary is an agency (other than an agency 
        described in paragraph (2)) that serves in that capacity with 
        respect to 50 or more such individuals.
    ``(b) Certified Community-Based Nonprofit Social Service Agency 
Defined.--For purposes of this section, the term `certified community-
based nonprofit social service agency' means a community-based 
nonprofit social service agency that is in compliance with 
requirements, under regulations which shall be prescribed by the 
Secretary, for annual certification to the Secretary that it is bonded 
in accordance with requirements specified by the Secretary and that it 
is licensed in each State in which it serves as a fiduciary (if 
licensing is available in such State) in accordance with requirements 
specified by the Secretary. Any such annual certification shall include 
a copy of any independent audit on such agency which may have been 
performed since the previous certification.
    ``(c) Biennial Report.--(1) Within 120 days after the end of each 
even-numbered fiscal year, the Secretary shall submit to the Committees 
on Veterans' Affairs of the Senate and House of Representatives a 
report on the results of periodic onsite reviews conducted during the 
two preceding fiscal years pursuant to subsection (a) and of any other 
reviews of fiduciaries conducted during those fiscal years in 
connection with benefits under this title (such as summaries of 
findings of reports of the Office of the Inspector General) that the 
Secretary determines to be pertinent for purposes of this subsection.
    ``(2) Each report under paragraph (1) shall describe in detail all 
problems identified in such reviews and any corrective action taken or 
planned to be taken to correct such problems, and shall include the 
following:
            ``(A) The number of such reviews.
            ``(B) The results of such reviews.
            ``(C) The number of cases in which the fiduciary was 
        changed and why.
            ``(D) The number of cases involving the exercise of 
        expedited, targeted oversight of the fiduciary by the Secretary 
        conducted upon receipt of an allegation of misuse of benefits, 
        failure to pay a vendor, or a similar irregularity.
            ``(E) The number of cases discovered in which there was a 
        misuse of benefits.
            ``(F) How any such case of misuse of benefits was addressed 
        by the Secretary.
            ``(G) The final disposition of such cases of misuse of 
        benefits, including any civil or criminal penalties imposed.
            ``(H) Such other information as the Secretary considers 
        appropriate.
``Sec. 5509. Authority to redirect delivery of benefit payments when a 
              fiduciary fails to provide required accounting
    ``(a) Required Reports and Accountings.--The Secretary may require 
a fiduciary to file a report or accounting pursuant to regulations 
prescribed by the Secretary.
    ``(b) Actions Upon Failure To File.--In any case in which a 
fiduciary fails to submit a report or accounting required by the 
Secretary under subsection (a), the Secretary may, after furnishing 
notice to such fiduciary and the beneficiary entitled to such payment 
of benefits, require that such fiduciary appear in person at a regional 
office of the Department serving the area in which the beneficiary 
resides in order to receive such payments.''.
    (2) The table of sections at the beginning of such chapter is 
amended by adding after the item added by the amendment made by section 
3(b) the following new items:

``5508. Periodic onsite reviews of institutional fiduciaries.
``5509. Authority to redirect delivery of benefit payments when a 
                            fiduciary fails to provide required 
                            accounting.''.
    (b) Civil Monetary Penalties; Judicial Orders of Restitution.--(1) 
Chapter 61 of title 38, United States Code, as amended by section 4(a), 
is further amended by adding at the end the following new sections:
``Sec. 6108. Civil monetary penalties
    ``(a) Penalty for Conversion.--Any person (including an 
organization, agency, or other entity) who, having received, while 
acting in the capacity of a fiduciary pursuant to section 5502 of this 
title, a payment under a law administered by the Secretary for the use 
and benefit of another individual, converts such payment, or any part 
thereof, to a use that such person knows or should know is other than 
for the use and benefit of such other individual shall be subject to, 
in addition to any other penalty that may be prescribed by law, a civil 
monetary penalty of not more than $5,000 for each such conversion.
    ``(b) Penalty In Lieu of Damages.--Any person who makes a 
conversion of a payment described in subsection (a) and is subject to a 
civil monetary penalty under that subsection by reason of such 
conversion shall also be subject to an assessment, in lieu of damages 
sustained by the United States resulting from the conversion, of not 
more than twice the amount of any payments so converted.
    ``(c) Costs of Recovery.--From amounts collected under this 
section, the amount necessary to recoup the Department's costs of such 
collection shall be credited to applicable appropriations, to remain 
available until expended.
``Sec. 6109. Authority for judicial orders of restitution
    ``(a) Any Federal court, when sentencing a defendant convicted of 
an offense involving the misuse of benefits under this title, may 
order, in addition to or in lieu of any other penalty authorized by 
law, that the defendant make restitution to the Department.
    ``(b) Sections 3612, 3663, and 3664 of title 18 shall apply with 
respect to the issuance and enforcement of orders of restitution under 
subsection (a). In so applying those sections, the Department shall be 
considered the victim.
    ``(c) If the court does not order restitution, or orders only 
partial restitution, under subsection (a), the court shall state on the 
record the reasons therefor.
    ``(d)(1) Except as provided in paragraph (2), amounts received or 
recovered by the Secretary pursuant to an order of restitution under 
subsection (a), to the extent and in the amounts provided in advance in 
appropriations Acts, shall be available to defray expenses incurred in 
the supervision and investigation of fiduciaries under this title.
    ``(2) Paragraph (1) shall not apply with respect to amounts 
received in connection with misuse by a fiduciary of funds paid as 
benefits under laws administered by the Secretary. Such amounts shall 
be paid to the individual whose benefits were misused unless the 
Secretary has previously reissued the misused benefits, in which case 
the amounts shall be treated in the same manner as overpayments 
recouped by the Secretary and shall be deposited to the credit of the 
applicable revolving fund, trust fund, or appropriation.''.
    (2) The table of sections at the beginning of such chapter is 
amended by adding after the item added by the amendment made by section 
4(b) the following new items:

``6108. Civil monetary penalties.
``6109. Authority for judicial orders of restitution.''.

SEC. 6. EFFECTIVE DATES.

    (a) In General.-- Except as otherwise provided, this Act and the 
amendments made by this Act shall take effect on the first day of the 
seventh month beginning after the date of the enactment of this Act.
    (b) Special Rules.--Sections 6106 and 6107 of title 38, United 
States Code, as added by section 4(a), shall apply with respect to any 
determinations by the Secretary of Veterans Affairs made after the date 
of the enactment of this Act of misuse of funds by a fiduciary.

SEC. 7. REPORT TO CONGRESS.

    The Secretary of Veterans Affairs shall prepare a report evaluating 
whether the existing procedures and reviews for the qualification 
(including disqualification) of fiduciaries are sufficient to enable 
the Secretary to protect benefits from being misused by fiduciaries. 
The Secretary shall submit the report to the Committee on Veterans' 
Affairs of the Senate and House of Representatives no later than 270 
days after the date of the enactment of this Act. The Secretary shall 
include in such report any recommendations that the Secretary considers 
appropriate.
                                 <all>