[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5948 Introduced in House (IH)]

112th CONGRESS
  2d Session
                                H. R. 5948

 To amend title 38, United States Code, to improve the supervision of 
fiduciaries of veterans under the laws administered by the Secretary of 
               Veterans Affairs, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 12, 2012

 Mr. Johnson of Ohio introduced the following bill; which was referred 
                 to the Committee on Veterans' Affairs

_______________________________________________________________________

                                 A BILL


 
 To amend title 38, United States Code, to improve the supervision of 
fiduciaries of veterans under the laws administered by the Secretary of 
               Veterans Affairs, 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 Reform Act of 
2012''.

SEC. 2. IMPROVEMENT OF FIDUCIARIES FOR VETERANS.

    (a) Incompetency.--
            (1) In general.--Chapter 55 of title 38, United States 
        Code, is amended by adding at the end the following new 
        section:
``Sec. 5511. Adjudication of financial incompetence
    ``(a) Determination.--In any case arising out of the administration 
by the Secretary of laws and benefits under this title in which the 
Secretary must determine whether an individual requires a fiduciary, 
the Secretary shall consider the following factors when adjudicating 
whether an individual is considered mentally incapacitated or deemed 
mentally incompetent:
            ``(1) A determination made by a State court or other court 
        of competent jurisdiction.
            ``(2) An evaluation made by a medical professional, taking 
        into account the role of financial management in the 
        rehabilitation of the individual.
    ``(b) Appeals.--(1) An individual whom the Secretary has determined 
to be mentally incapacitated or deemed mentally incompetent may appeal 
such determination.
    ``(2) In hearing an appeal under paragraph (1), the Secretary shall 
consider court determinations, medical evidence, and lay evidence 
offered by the appellant.
    ``(c) Removal of Fiduciary.--(1) An individual described in 
paragraph (2) may file a claim with the Secretary to terminate any 
fiduciary relationship established under this chapter.
    ``(2) An individual described in this paragraph is an individual--
            ``(A) whom the Secretary determined to be mentally 
        incapacitated or mentally incompetent under subsection (a);
            ``(B) for whom the Secretary appointed a fiduciary under 
        this chapter; and
            ``(C) whom, after such appointment, a State court or other 
        court of competent jurisdiction or a medical professional has 
        determined to be competent.''.
            (2) Clerical amendment.--The table of sections at the 
        beginning of such chapter 55 is amended by adding at the end 
        the following new item:

``5511. Adjudication of financial incompetence.''.
    (b) Definition of Fiduciary.--Section 5506 of title 38, United 
States Code is amended--
            (1) by striking ``For purposes'' and inserting ``(a) For 
        purposes''; and
            (2) by adding at the end the following new subsection:
    ``(b)(1) For purposes of subsection (a), the term `person' includes 
any--
            ``(A) State or local government agency whose mission is to 
        carry out income maintenance, social service, or health care-
        related activities;
            ``(B) any State or local government agency with fiduciary 
        responsibilities; or
            ``(C) any nonprofit social service agency that the 
        Secretary determines--
                    ``(i) regularly provides services as a fiduciary 
                concurrently to five or more individuals; and
                    ``(ii) is not a creditor of any such individual.
    ``(2) The Secretary shall maintain a list of State or local 
agencies and nonprofit social service agencies under paragraph (1) that 
are qualified to act as a fiduciary under this chapter.''.
    (c) Qualification.--Section 5507 of title 38, United States Code, 
is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1)(B), by striking ``to the 
                extent practicable, to include'' and inserting 
                ``including, in accordance with subsection 
                (e)(1)(A),'';
                    (B) in paragraph (2), by striking ``and'';
                    (C) by redesignating paragraph (3) as paragraph 
                (4);
                    (D) by adding after paragraph (2) the following new 
                paragraph (3):
            ``(3) adequate evidence that the person to serve as 
        fiduciary uses a secure, encrypted Internet connection when 
        conducting activity on the Internet relating to the financial 
        information of the beneficiary in accordance with subsection 
        (f); and''; and
                    (E) in paragraph (4), as so redesignated, by 
                inserting ``, in accordance with subsection (i)'' 
                before the period at the end;
            (2) in subsection (b), by striking ``which resulted in 
        imprisonment for more than one year'';
            (3) in subsection (c)--
                    (A) in paragraph (1), by striking ``waiver of any 
                specific requirement relating to such inquiry or 
                investigation, including the otherwise applicable 
                provisions of subparagraphs (A), (B), and (C) of such 
                subsection.'' and inserting ``giving priority to 
                conducting such inquiry or investigation.''; and
                    (B) in paragraph (2)--
                            (i) in subparagraph (C), by striking 
                        ``or'';
                            (ii) in subparagraph (D), by striking the 
                        period and inserting ``; or''; and
                            (iii) by adding at the end the following 
                        new subparagraph:
            ``(E) a person who is authorized to act on behalf of the 
        beneficiary under a durable power of attorney.''; and
            (4) by adding at the end the following new subsections:
    ``(e)(1) In conducting an inquiry or investigation of a proposed 
fiduciary under subsection (a)(1), the Secretary shall conduct--
            ``(A) the face-to-face interview with the proposed 
        fiduciary by not later than 30 days after the date on which 
        such inquiry or investigation begins; and
            ``(B) a background check of the proposed fiduciary to--
                    ``(i) in accordance with subsection (b), determine 
                whether the proposed fiduciary has been convicted of a 
                crime; and
                    ``(ii) determine whether the proposed fiduciary 
                will serve the best interest of the beneficiary, 
                including by conducting a credit check of the proposed 
                fiduciary.
    ``(2) The Secretary shall conduct the background check described in 
paragraph (1)(B)--
            ``(A) each time a person is proposed to be a fiduciary, 
        regardless of whether the person is serving or has served as a 
        fiduciary; and
            ``(B) at no expense to the beneficiary.
    ``(3) Each proposed fiduciary shall disclose to the Secretary the 
number of beneficiaries that the fiduciary acts on behalf of.
    ``(4)(A) The Secretary shall maintain records of any person who 
has--
            ``(i) previously served as a fiduciary; and
            ``(ii) had such fiduciary status revoked by the Secretary.
    ``(B) In conducting the background check described in paragraph 
(1)(B), the Secretary shall check the records maintained under 
subparagraph (A).
    ``(C) If a fiduciary appointed by the Secretary is convicted of any 
crime while serving as a fiduciary for any person, the Secretary shall 
notify the beneficiary by not later than 14 days after the date on 
which the Secretary learns of such conviction.
    ``(f) The Secretary shall ensure that each fiduciary has adequate 
training and knowledge to effectively use an encrypted, secure Internet 
connection when conducting activity relating to the financial 
information of the beneficiary.
    ``(g)(1) If the Secretary has reason to believe that a fiduciary 
may be misusing all or part of the benefit of a beneficiary, the 
Secretary shall--
            ``(A) conduct a thorough investigation to determine the 
        veracity of such belief; and
            ``(B) if such veracity is established, transmit to the 
        officials described in paragraph (2) a report of such 
        investigation.
    ``(2) The officials described in this paragraph are the following:
            ``(A) The Attorney General.
            ``(B) Each head of a Federal department or agency that pays 
        to a fiduciary or other person benefits under any law 
        administered by such department or agency for the use and 
        benefit of a minor, incompetent, or other beneficiary.
    ``(h)(1) Except as provided by paragraph (2), the Secretary may 
require that a proposed fiduciary only serve as a fiduciary for a 
beneficiary with respect to benefits paid under laws administered by 
the Secretary.
    ``(2) Paragraph (1) shall not apply to a proposed fiduciary who 
is--
            ``(A) a family member of the beneficiary; or
            ``(B) the individual predesignated by the beneficiary to 
        serve as the fiduciary pursuant to section 5506A of this title.
    ``(i) In requiring the furnishing of a bond under subsection 
(a)(4), the Secretary shall--
            ``(1) ensure that any such bond is not paid using any funds 
        of the beneficiary; and
            ``(2) consider--
                    ``(A) the care a proposed fiduciary has taken to 
                protect the interests of the beneficiary; and
                    ``(B) the capacity of the proposed fiduciary to 
                meet the financial requirements of the bond without 
                sustaining hardship.
    ``(j) A fiduciary appointed by the Secretary shall operate 
independently of the Department to determine the actions that are in 
the interest of the beneficiary.
    ``(k) Each regional office of the Veterans Benefits Administration 
shall maintain a list of the following:
            ``(1) The name and contact information of each fiduciary, 
        including address, telephone number, and email address.
            ``(2) With respect to each fiduciary described in paragraph 
        (1)--
                    ``(A) the date of the most recent background check 
                and credit check performed by the Secretary under this 
                section;
                    ``(B) the date that any bond was paid under this 
                section;
                    ``(C) the name, address, and telephone number of 
                each beneficiary the fiduciary acts on behalf of; and
                    ``(D) the amount that the fiduciary controls with 
                respect to each beneficiary described in subparagraph 
                (C).''.
    (d) Designation of Fiduciary.--
            (1) In general.--Chapter 55 of title 38, United States 
        Code, is amended by inserting after section 5506 the following 
        new sections:
``Sec. 5506A. Predesignation of fiduciary
    ``(a) Application for Compensation.--(1) The Secretary shall 
include in the form described in paragraph (2) the following:
            ``(A) An opportunity for the individual submitting the form 
        to designate an individual, including a spouse or other family 
        member of the individual, to serve as a fiduciary in the event 
        a fiduciary is needed.
            ``(B) A description of what a fiduciary is and the role 
        served by the fiduciary.
            ``(C) A description of the actions to be taken by the 
        Secretary in the event a fiduciary is not designated by the 
        individual.
    ``(2) The form described in this paragraph is a form that the 
Secretary requires an individual to submit for a claim for compensation 
or a pension administered under this title, including Form 21-526 or 
any successor form.
    ``(3) The information included under paragraph (1) shall be 
provided in a manner that is conspicuous, easy to read, and without the 
use of technical or legal terms, other than the term `fiduciary'.
    ``(b) Priority of Appointment.--In appointing a fiduciary under 
this chapter, if a beneficiary does not designate a fiduciary pursuant 
to subsection (a), to the extent possible the Secretary shall appoint a 
person who is--
            ``(1) appointed as guardian of the beneficiary by a court 
        of competent jurisdiction; or
            ``(2) authorized to act on behalf of the beneficiary under 
        a durable power of attorney.
    ``(c) Appointment of Non-Predesignated Fiduciary.--If a beneficiary 
designates an individual to serve as a fiduciary under subsection 
(a)(1)(A) and the Secretary appoints an individual not so designated as 
the fiduciary for such beneficiary, the Secretary shall notify such 
beneficiary of--
            ``(1) the reason why such designated individual was not 
        appointed; and
            ``(2) the ability of the beneficiary to file a claim under 
        section 5506B of this title to modify the appointed fiduciary.
``Sec. 5506B. Modification of appointed fiduciary
    ``(a) In General.--A beneficiary for whom the Secretary appoints a 
fiduciary under this chapter may, at any time, file a claim with the 
Secretary to--
            ``(1) remove the fiduciary so appointed; and
            ``(2) have a new fiduciary appointed.
    ``(b) Continuation of Benefits.--The Secretary shall ensure that 
any removal or new appointment of a fiduciary under subsection (a) does 
not delay or interrupt the beneficiary's receipt of benefits 
administered by the Secretary.''.
            (2) Clerical amendment.--The table of sections at the 
        beginning of such chapter is amended by inserting after the 
        item relating to section 5506 the following new items:

``5506A. Predesignation of fiduciary.
``5506B. Modification of appointed fiduciary.''.
    (e) Fee.--Subsection (a)(2) of section 5502 of title 38, United 
States Code, is amended to read as follows:
    ``(2)(A) In a case in which the Secretary determines that a 
commission is necessary in order to obtain the services of a fiduciary 
in the best interests of a beneficiary, the Secretary may authorize a 
fiduciary appointed by the Secretary to obtain from the monthly 
benefits provided to the beneficiary a reasonable commission for 
fiduciary services rendered, but the commission for any month may not 
exceed the lesser of the following amounts:
            ``(i) The amount that equals three percent of the monthly 
        monetary benefits under laws administered by the Secretary paid 
        on behalf of the beneficiary to the fiduciary.
            ``(ii) $35.
    ``(B) A commission paid under this paragraph may not be derived 
from any award to a beneficiary regarding back pay or retroactive 
benefits payments.
    ``(C) A commission may not be authorized for a fiduciary who 
receives any other form of remuneration or payment in connection with 
rendering fiduciary services for benefits under this title on behalf of 
the beneficiary.
    ``(D) In accordance with section 6106 of this title, a commission 
may not be paid to a fiduciary if the Secretary determines that the 
fiduciary misused any benefit payments of a beneficiary.
    ``(E) If the Secretary determines that the fiduciary has misused 
any benefit or payments of a beneficiary, the Secretary may revoke the 
fiduciary status of the fiduciary.''.
    (f) Repayment of Misused Benefits.--Section 6107(a)(2)(C) of title 
38, United States Code, is amended by inserting before the period the 
following: ``, including by the Secretary not acting in accordance with 
section 5507 of this title''.
    (g) Annual Receipt of Payments.--Section 5509 of title 38, United 
States Code, is amended--
            (1) in subsection (a)--
                    (A) by striking ``may require a fiduciary to file 
                a'' and inserting ``shall require a fiduciary to file 
                an annual''; and
                    (B) by adding at the end the following new 
                sentence: ``The Secretary shall transmit such annual 
                report or accounting to the beneficiary and any legal 
                guardian of such beneficiary.''; and
            (2) by adding at the end the following new subsection:
    ``(c) Matters Included.--An annual report or accounting under 
subsection (a) shall include, for each beneficiary that a fiduciary 
acts on behalf of--
            ``(1) the amount of the benefits of the beneficiary accrued 
        during the year, the amount spent, and the amount remaining; 
        and
            ``(2) if the fiduciary serves the beneficiary with respect 
        to benefits not administered by the Secretary, an accounting of 
        all sources of benefits or other income the fiduciary oversees 
        for the beneficiary.''.
    (h) Annual Reports.--Section 5510 of title 38, United States Code, 
is amended by striking ``The Secretary shall include in the Annual 
Benefits Report of the Veterans Benefits Administration or the 
Secretary's Annual Performance and Accountability Report'' and 
inserting ``Not later than July 1 of each year, the Secretary shall 
submit to the Committees on Veterans' Affairs of the House of 
Representatives and the Senate a separate report containing''.
    (i) Report.--Not later than one year after the date of the 
enactment of this Act, the Secretary of Veterans Affairs shall submit 
to the Committee on Veterans' Affairs of the Senate and the Committee 
on Veterans' Affairs of the House of Representatives a comprehensive 
report on the implementation of the amendments made by this Act, 
including detailed information on the establishment of new policies and 
procedures pursuant to such amendments and training provided on such 
policies and procedures.
                                 <all>