[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
LEGISLATIVE HEARING ON H.R. 2985, H.R. 3730, H.R. 4481, H.R. 5948
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HEARING
before the
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
of the
COMMITTEE ON VETERANS' AFFAIRS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
__________
WEDNESDAY, JUNE 20, 2012
__________
Serial No. 112-68
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Printed for the use of the Committee on Veterans' Affairs
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COMMITTEE ON VETERANS' AFFAIRS
JEFF MILLER, Florida, Chairman
CLIFF STEARNS, Florida BOB FILNER, California, Ranking
DOUG LAMBORN, Colorado CORRINE BROWN, Florida
GUS M. BILIRAKIS, Florida SILVESTRE REYES, Texas
DAVID P. ROE, Tennessee MICHAEL H. MICHAUD, Maine
MARLIN A. STUTZMAN, Indiana LINDA T. SANCHEZ, California
BILL FLORES, Texas BRUCE L. BRALEY, Iowa
BILL JOHNSON, Ohio JERRY McNERNEY, California
JEFF DENHAM, California JOE DONNELLY, Indiana
JON RUNYAN, New Jersey TIMOTHY J. WALZ, Minnesota
DAN BENISHEK, Michigan JOHN BARROW, Georgia
ANN MARIE BUERKLE, New York RUSS CARNAHAN, Missouri
TIM HUELSKAMP, Kansas
MARK E. AMODEI, Nevada
ROBERT L. TURNER, New York
Helen W. Tolar, Staff Director and Chief Counsel
______
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
BILL JOHNSON, Ohio, Chairman
CLIFF STEARNS, Florida JOE DONNELLY, Indiana, Ranking
DOUG LAMBORN, Colorado JERRY McNERNEY, California
DAVID P. ROE, Tennessee JOHN BARROW, Georgia
DAN BENISHEK, Michigan BOB FILNER, California
BILL FLORES, Texas
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
hearing records of the Committee on Veterans' Affairs are also
published in electronic form. The printed hearing record remains the
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of converting between various electronic formats may introduce
unintentional errors or omissions. Such occurrences are inherent in the
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C O N T E N T S
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June 20, 2012
Page
Legislative Hearing on H.R. 2985, H.R. 3730, H.R. 4481, H.R. 5948 1
OPENING STATEMENTS
Chairman Bill Johnson............................................ 1
Prepared Statement of Chairman Johnson....................... 27
Hon. Jerry McNerney.............................................. 3
Prepared Statement of J. McNerney............................ 28
Hon. David P. Roe Prepared Statement only........................ 28
WITNESSES
The Hon. W. Todd Akin, Member, U.S. House of Representatives..... 4
Prepared Statement of Mr. Akin............................... 29
David McLenachen, Director of Pension and Fiduciary Service, U.S.
Department of Veterans Affairs................................. 7
Prepared Statement of Mr. McLenachen......................... 30
Ralph Ibson, National Policy Director, Wounded Warrior Project... 16
Prepared Statement of Mr. Ibson.............................. 37
Lauren Kologe, Deputy Director of Veterans Benefits Program,
Vietnam Veterans of America.................................... 17
Prepared Statement of Ms. Kologe............................. 39
Heather Ansley, J.D., Vice President of Veterans Policy,
VetsFirst...................................................... 19
Prepared Statement of Mrs. Ansley............................ 41
Lori Perkio, Assistant Director, Veterans Affairs and
Rehabilitation Commission, The American Legion................. 20
Prepared Statement of Ms. Perkio............................. 44
LEGISLATIVE HEARING ON H.R. 2985,
H.R. 3730, H.R. 4481, H.R. 5948
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WEDNESDAY, JUNE 20, 2012
U.S. House of Representatives,
Committee on Veterans' Affairs,
Subcommittee on Oversight and Investigations,
Washington, D.C.
The Subcommittee met, pursuant to notice, at 10:02 a.m., in
Room 334, Cannon House Office Building, Hon. Bill Johnson
[Chairman of the Subcommittee] presiding.
Present: Representatives Johnson, McNerney and Barrow.
OPENING STATEMENT OF CHAIRMAN BILL JOHNSON
Mr. Johnson. Good morning. This hearing will come to order.
I want to welcome everyone to today's legislative hearing
on H.R. 2985, the Veterans' I.D. Card Act; H.R. 3730, the
Veterans Data Breach Timely Notification Act; H.R. 4481, The
Veterans Affairs Employee Accountability Act; and H.R. 5948,
the Veterans Fiduciary Reform Act of 2012.
These bills arrived from several different avenues that
fall under the Subcommittee's purview and I want to thank the
bill's sponsors for drafting these proposals for our review
today.
H.R. 2985, The Veterans' I.D. Card Act, was introduced by
Congressman Todd Akin of Missouri. The bill would direct the VA
to issue a veteran's I.D. card upon request to any veteran who
is not entitled to military retired pay or enrolled in the VA
system. We will hear from Congressman Akin on this bill and I
want to thank him for his participation today.
H.R. 3730, the Veterans Data Breach Timely Notification
Act, was introduced by our Subcommittee's Ranking Member,
Congressman Joe Donnelly of Indiana. His bill would require the
VA to notify Congress and directly affected officials,
individuals, within two business days or less of a data breach
and compromises sensitive personal information.
This improved transparency and responsiveness would be a
boost to the VA's efforts at improving its information security
image. As the system currently works today, the lapse of time
between the VA knowing of a data breach and a veteran knowing
his or her information has been compromised and maybe floating
around is entirely too long.
In discussions with staff, Assistant Secretary Baker
acknowledged that the current duration between the VA learning
of a data breach and veteran being notified that his or her
personally identifiable information or P.I.I. may have been
compromised, that that time period could be shortened and this
legislation is a good measure toward that end. I am proud to
cosponsor this bill as well and I urge my colleagues to
consider adding their support and I look forward to Ranking
Member's Donnelly's remarks. I don't know if he is going to be
here today. Well, his remarks can be entered into the record
later.
H.R. 4481, the Veterans Affairs Employee Accountability Act
was introduced by Congressman Roe of Tennessee, another
distinguished member of our Subcommittee. His bill would
prohibit any VA employee from receiving a bonus if that
employee knowingly violated federal acquisition regulations or
VA acquisition regulations. We have seen plenty of evidence of
the VA's lack of controls over its bonus program which has
further been substantiated by the VA's own Office of Inspector
General.
Sometimes bonuses go to employees with documented poor
performance. Sometimes the VA gives retention incentives to an
employee about to retire and sometimes bonuses go to VA
employees for no reason at all. However, it's not just the
bonus program that is running wild. We have also seen many long
term cases of VA employees ignoring acquisition regulations
often because it is simply easier for them to do so.
To veterans, the taxpayers and this Committee, that is not
a good reason for breaking the law. Furthermore, in many of
those cases, the VA has not held many of those employees
accountable after learning of the violations.
Last week I introduced H.R. 5948, The Veterans Fiduciary
Reform Act of 2012. Based on investigations done by this
Subcommittee, as well as a hearing held in February, it is
abundantly clear that VA's fiduciary program requires
significant improvement. The February hearing discussed
fiduciary stealing veterans' benefits, felons being appointed
as fiduciary and even fiduciaries withholding needed funds to
the point where our veterans' utilities are cut off.
In addition, many veterans have been unable to contact
their fiduciaries to get necessary basic funds and family
members are frequently shut out of the program despite VA's
stated intent to include family members as a preferred choice.
While the VA did take an important step in the right
direction after that hearing, when it removed that paragraph
from its standard form requiring a fiduciary to get VA approval
of any use of a veteran's fund, the same types of problems
discussed at that hearing continued to happen today. This
Subcommittee brings them to the VA's attention and sometimes
they are fixed on an individual basis. However, it is
reasonable to expect that the same type of problem will come up
again next week. The VA's fiduciary program suffers systemic
weaknesses.
VA's fiduciary program is intended to help administer VA
benefits for veterans deemed incompetent to handle their
financial affairs. As written, the statute defers greatly to
the Secretary's discretion in the program's administration,
including who can serve as a fiduciary and what obligations
fiduciaries owe veteran beneficiaries. As practiced, the VA
stretched that flexibility in every direction and the result
has been unconscionable treatment of some of our most
vulnerable veterans.
The Veterans Fiduciary Reform Act of 2012 is based on
problems uncovered before, during and after the February
hearing as well as valuable input from Veteran Service
Organizations and individual veterans on the ground who have
experienced difficulties with the program.
The legislation would require a credit and criminal
background check each time a fiduciary is appointed and allow
veterans to petition to have their fiduciary removed if
problems arise. The bill would also decrease the potential
maximum fee a fiduciary can receive to the lesser of 3 percent
or $35, similar to Social Security's fiduciary program.This
will help discourage those who enroll as fiduciaries with the
VA, with only a profit motive in mind.
In addition, the legislation will enable veterans to appeal
their incompetent status at any time, require fiduciaries to
submit annual accounting reports and allow veterans to name a
preferred fiduciary, such as a family member. These significant
changes will heighten VA's standards for administering the
fiduciary program and increased protection for the most
vulnerable veterans.
Through mandating improved scrutiny during the background
investigation process and lowering the fee a fiduciary can
charge, the Veterans Fiduciary Reform Act of 2012 will help
root out potential predators.
Incorporating the ability for veterans to petition to have
their fiduciary removed and replaced will add a layer of
protection to veterans requiring fiduciaries. I encourage my
colleagues to support this bill and would also direct your
attention to several news articles that come out over the last
few days documenting many cases of veterans around the country
who have suffered from the lack of oversight and control within
the fiduciary program.
I want to thank everyone for their participation in today's
hearing, and I now yield to Mr. McNerney, for an opening
statement.
[The prepared statement of Bill Johnson appears in the
Appendix]
OPENING STATEMENT OF HON. JERRY McNERNEY
Mr. McNerney. I want to thank the Chairman for holding this
legislative hearing today. It looks like there are four pretty
good bills that are deserving our consideration. This
Subcommittee is committed to providing transparency and
accountability to veterans and taxpayers. I look forward to
hearing from the bill's sponsors as well as the stakeholders
about the legislation we have before us today.
I am pleased to have Ranking Member Donnelly's bill, H.R.
3730, included in today's hearing. This legislation, the
Veterans Data Breach Timely Notification Act, seeks to protect
veterans in the event that a data breach involving sensitive
information occurs.
In light of VA's monthly IT report detailing data breach
incidents, this Subcommittee became aware that the VA can take
up to 30 days to notify veterans that a data breach has
occurred, potentially exposing a veteran's sensitive personal
information. To address this issue, H.R. 3730 requires that the
VA to notify potentially affected veterans within ten working
days after a data breach has occurred. In an effort to mitigate
the effects of identity fraud, this change would allow
individuals to take decisive action to protect their identity.
I believe this legislation will help veterans protect
personal information, including their social security number,
which can severely affect a veteran's financial stability.
I also want to acknowledge the Chairman's legislation, the
Veterans Fiduciary Reform Act, H.R. 5948. I think the ideas are
very useful and will be helpful. My understanding is that the
legislation could use a little more adjusting so I am going to
hold back on endorsing it just now, but I look forward to
working with the Chairman on that. With that, I yield back.
[The prepared statement of Jerry McNerney appears in the
Appendix]
Mr. Johnson. I thank the gentleman for yielding back and I
now would like to welcome the panel to the witness table on
this panel. We will hear from the Honorable Todd Akin, my
colleague representing Missouri's Second Congressional
District. Congressman Akin will be testifying specifically
about his bill, H.R. 2985, the Veterans' I.D. Card Act. Thank
you for joining us here today. Congressman Akin, your complete
written statement will remain part of the hearing record and
you are now recognized for five minutes, sir.
STATEMENT OF THE HON. W. TODD AKIN
Mr. Akin. Thank you, Mr. Chairman, and thank you, Ranking
Member, is it--I don't know if McNerney is going to be Ranking
or who is going to be Ranking, but whoever is going to be doing
the job. And I am here to present H.R. 2985. It is a Veteran's
I.D. Card Act. And there are a couple of reasons what I am
proposing. This is my DD-214. It is kind of old and ratty
looking. It is hard to read and it has a couple of inherent
disadvantages and the first disadvantage is that it contains a
Social Security Number. Now, who is it that gets currently a
Veteran I.D. Card? Well, it is only two groups of people. They
have to have served twenty years or they have to have a
service-connected disability. Other people cannot get any kind
of military I.D.
Since we are thinking about how do you give just somebody
who has served in the military some form of I.D., the first
thought is, oh, it is going to cost money and so we will never
get a bill through. So we fixed that problem and that is, this
bill doesn't cost any money. The people who want the I.D. card
simply pay for it.
The next thing that happens on this is that the information
on the DD-214, all of this, the Veterans Administration has all
of this information in their computers.
So the first benefit of going with a simple I.D. card for
people who have served if the fact that you protect their
Social Security Number, but just from a convenience point of
view, they can pay a couple of bucks and get something instead
of being like this which is very easy to forge and take and
people use it for illegally getting jobs and misusing the
Social Security Number, they will just have a simple card with
a photo I.D. on it.
Now, the other thing is there may be reasons why it is
helpful for somebody to have that I.D. card. One of them is
maybe employers want to favor hiring veterans. You have an
immediate way of being able to show them, look, I am a veteran.
And at the same time you don't have something sitting in your
wallet where you are about to lose your identification.
And there are also various other kinds of programs and
things that people who are veterans might or might not qualify
for. Now, from a data security point of view, the Veterans
Administration has all of the data that they need. Our bill is
supported by a number of different veterans organizations. It
is just a convenience for people who have served.
The Fleet Reserve Association supports American Veterans
and that's VFW Association of the United States Navy, AUSN; The
Retired Enlisted Association, TREA. All of the people think it
is a convenient benefit to pass it on. It is not costing the
government any. It protects Social Security Numbers. It is a
convenience for people who want to pay for it. And so for all
of those reasons, it seems to make a whole lot of sense.
The VA doesn't like it. They say that various states should
do this. Now, I am a big states' rights guy, but the military
is the job of the Federal Government and for different states
to come up with some sort of, their own different versions of
how to provide some sort of identification for veterans. I
think it is just our side stepping a responsibility that is a
federal responsibility and so, you know, my sons--I served in
the Army. My son served in the Marine Corps. That is not the
State of Missouri. That is the Federal Government. So why would
we want to try to dump this on states, when it isn't really a
state responsibility?
The VA says that the issued cards could pose a potential
for confusion. There is no need for that. It would be a
different color card. You could stamp on the card that this
card does not give you any access to PXes on Army bases or
stuff like that. That was one of their concerns. That is not
complicated. You have a different color card that just says
that you were a veteran in years past, and there are other
kinds of excuses. Nothing seems to be, well, yeah, that we
won't be able to figure out how much it costs to issue an I.D.
card. Obviously, accountants can figure out what it is costing
us. We are already--all of the infrastructure in the veterans
hospitals and stuff, it is all in place, the databases there,
the machines to put ID cards together. We are doing all of
that, the photographs. All of that stuff is already being done.
We are just simply adding that you are going to allow other
people to get a special kind of card, instead of running around
with a ratty old DD-214.
It seems to me, like, just a common sense thing. It is a
service that we could do to people that served in the military.
They are going to pay for it themselves. I can see no reason
really why not to go for it. I appreciate your patience and I
will leave you three seconds.
[The prepared statement of W. Todd Akin appears in the
Appendix]
Mr. Johnson. I thank the gentleman for yielding back that
remaining time. That is precious.
Congressman Akin, how would this bill's implementation
affect veterans' I.D. cards that such states as Virginia and
Connecticut have been issuing?
Mr. Akin. Well, obviously the states could issue a card the
way they wanted to, but it would probably preempt the need for
each state to do it in a different way. And because the data is
like at your veterans' hospitals and things, all of this data
is there, the card making facilities are there, the cameras are
there, why not just allow people to pay an extra couple of
bucks. It would be a break, even from a budget point of view
and just handle it because it is a federal issue. As I said, I
am a huge state's right guy, but the military is a federal
thing and that is why I think it should be there.
Mr. Johnson. You have pretty much answered this question,
but just in case you have some additional information, how do
you see the VA implementing this legislation? Do you think they
have the necessary infrastructure in place? You mentioned the
card makers and databases and those things.
Mr. Akin. Yeah, they do have all infrastructure in place
and I don't see that once they understood, you have to come up
with somebody that is going to do the artwork to design what
the card looks like and what color it is, so that it is not
confused with the various other cards that they generate, but
once you have that down and I think it might make sense to put
on a card this does not entitle bearer of this card to, you
know, get on military bases or use--whatever, to clarify.
But the color and the type of the color, once people get
use to it, I think it won't be any real confusion. And, yeah,
the infrastructure is there, so I don't see that should be any
problem at all.
Mr. Johnson. What about time frame? Do you think the VA
could implement something like this in a timely fashion?
Mr. Akin. Oh, I am not going to pass judgment on how
efficient the VA is. We have some difficulties in St. Louis
where VA hospitals--I won't go there.
Mr. Johnson. And finally, do you have any idea how many
veterans this would possibly affect?
Mr. Akin. I think it could affect quite a few really but I
don't actually have a number on how many people have served,
you know, through the years. Some served--I was discharged
back, I think, the late `70s or something and maybe certain--so
it is hard to say. But I do think that because of the fact that
to some degree we are giving a little more honor to veterans
than we use to and people recognize what it is like to give
your life or potentially risk your life for your country.
I think there is a lot more pride than there was 30 or 40
year ago and I think people might more likely want to get a
card like this, but I think that, you know, you take a good
plasticized card, that thing will last forever and probably the
veteran will wear out before the card will, so I don't know
that it is going to be an overwhelming number.
Mr. Johnson. Sure. Okay. Well, Congressman Akin, thanks to
you for your testimony, for your legislation. You are now
excused.
Mr. Akin. Thank you very much, and thank you for the
attention of the Committee.
Mr. Johnson. I now invite the second panel to the witness
table. And this panel, we will hear from Mr. Dave McLenachen,
Director of the VA's Pension and Fiduciary Service. Mr.
McLenachen, your complete written testimony statement will be
made part of the hearing record and you are now recognized for
five minutes.
STATEMENT OF DAVE MCLENACHEN
Mr. McLenachen. Mr. Chairman and Members of the
Subcommittee, thank you for the opportunity to present the
views of the Department of Veterans Affairs on several bills of
interest to Veterans and VA.
I would first like to apologize to the Committee for the
late submission of my testimony. There are two bills, H.R. 3730
and H.R. 4481 on which we are not able to provide comments or
costs today and will provide later for the record.
Mr. Chairman, at the outset, I want to emphasize that VA
does recognize the need for better oversight of the fiduciary
program and has taken steps to address that need, some of which
reflect the purpose of your bill, H.R. 5948, the Veterans
Fiduciary Reform Act.
Over the past seven months, VA issued new policies and
procedures for the fiduciary program that this bill would
codify. These include appeal procedures, criminal background
checks, limitations on fiduciary fees, providing copies of
accountings to beneficiaries and guidance that ensures
fiduciary independence.
VA also completed its proposed fiduciary regulations and
started building its new information technology system for the
program. Finally, VA completed the consolidation of its
fiduciary activities into six regional hubs which include
adding more than 150 employees to conduct oversight of
fiduciaries. VA would welcome the opportunity to discuss these
improvements and the program as well as the intent behind this
bill with you and your staff.
While there are provisions of the bill that would codify
current VA policy, there are also provisions in the bill that
we find problematic and oppose. In the interest of time, I will
only mention here a few of those provisions and refer you to my
written statement for a detailed account. Section 2A would
require VA to consider the role of financial management and the
rehabilitation of the individual before determining whether a
beneficiary could manage his or her own benefits.
This new requirement would have the effect of complicating
and delaying VA's rating decisions and fiduciary appointments.
Section 2C would require VA to conduct a face-to-face interview
of every fiduciary, which we believe is not necessary in every
instance and would cause delays. It would also require training
for every fiduciary on the use of encrypted, secure internet
connections despite the fact that fiduciaries using online
banking services already have the benefit of a secure systems
that financial institutions maintain. Finally, Section 2G would
require every fiduciary to submit an annual accounting to VA.
As detailed in my testimony, VA requires accountings in many
cases, but a universal requirement would burden volunteer
fiduciaries without, we believe, a real improvement in
oversight.
VA is also concerned that the bill would make it very
difficult for the Department to find volunteer and paid
fiduciaries. Currently, 92 percent of the beneficiaries in the
program receive fiduciary services from an unpaid volunteer
fiduciary who is generally a family member.
VA appoints paid fiduciaries in some of its most difficult
cases, generally when there is no person or entity who is
willing to provide fiduciary services for a beneficiary without
a fee. The bill's requirements for a surety bond purchased with
the fiduciary's own funds, rather than out of the beneficiary's
fund, along with some of the other bill's requirements may
create a disincentive for individuals to serve these vulnerable
veterans and their survivors.
Finally VA's concerned that Section 2D, which would require
VA to give preference and appointment to individuals or
entities that are court appointed guardians of a beneficiary
under State law, would dramatically change the program to what
we think may be the detriment of veterans and their survivors.
Under State law these guardians are generally authorized to
deduct fees and expenses from beneficiary funds that exceed by
far the 4 percent fee authorized under Federal law.
The provision would also promote disparate treatment of
veterans depending upon the state of residence. VA estimates
that implementing this bill would result in GOE costs of
$40,000,000 in the first year, $200,000,000 over five years and
$444,000,000 over ten years.
In addition, VA estimates that the information and
technology costs would be $1,600,000 in the first year,
$5,000,000 over five years and $10,000,000 over ten years.
Mr. Chairman, there are other concerns identified in my
written statement. I want to emphasize again our wish to work
constructively with you and your staff on our common goals to
ensure all of the veterans are protected.
H.R. 2985, the Veterans ID Card Act would establish a
program under which VA would issue a veteran identification
card produced by VA upon request by a veteran. VA understands
and appreciates the purpose of this bill, but VA believes there
are better ways to achieve that purpose. The same benefit can
be best achieved by VA and Department of Defense working with
the states to encourage identification card programs. VA is
already working with states on these efforts.
We also note in our testimony the potential for confusion
because veterans could be led to believe that issuance of the
ID card itself may establish eligibility for VA benefits. There
is potential for confusion as well because the Veterans Health
Administration issues ID cards for the purpose of access to VHA
facilities.
Mr. Chairman, this concludes my statement. I would be happy
to entertain any questions that you or any other member may
have.
[The prepared statement of Dave McLenachen appears in the
Appendix]
Mr. Johnson. Thank you, Mr. McLenachen, for your testimony.
I find it interesting that you used the term ``working
constructively'' together on the fiduciary program because at
our hearing on the VA's fiduciary program in February, you said
you intended to take a look at the statutes governing the
fiduciary program and make recommendations that might improve
it outside of the testimony that you have given today. Four
months later we haven't heard anything from you or your
department.
Currently, our bill addresses a number of issues we brought
to your attention and yet you're against these provisions.
After the issues raised at the February hearing and the recent
media coverage of fiduciary issues, I would think that you
would have some ideas on how to improve the program. Can you
describe for us improvements in the fiduciary program's
oversight that you have made since our February hearing?
Mr. McLenachen. Well, sir, in addition to the policy and
procedures that we have issued even since the February hearing,
as I mentioned that we have completed our proposed fiduciary
regulations. Now, as we were working on those regulations we
determined that there was different authority that we needed
from Congress, we would certainly develop a legislative
proposal for that purpose, but I have to say that having worked
on those regulations and looking at the authority that we have,
we believe we have the authority we need to correct the
program, and all of the things that we do support in the bill
are things that we have implemented ourselves, like I said,
over the last several months. I believe we are making real
progress.
Mr. Johnson. Well, you mentioned that you have completed
the regs and that you have the authority to improve the
program, but you didn't really answer my question. Can you
describe specific improvements that you have made in the
fiduciary programs since February?
Mr. McLenachen. Yes, sir. One of the concerns of the
Committee was the independence of a fiduciary. We had a policy
in place that required a fiduciary to check with VA, as you
mentioned the form, where it wasn't just the form. We had a
policy in place that required a fiduciary to check with VA for
any expenditure over $1,000. I rescinded that policy. That was
since the hearing.
In addition to that, there is concern about transparency in
the program. We have never provided beneficiaries copies of
audited accountings by VA. I changed that policy. Every
fiduciary is instructed to provide a copy of an audited
approved accounting by VA to the beneficiary.
Criminal background checks, we have contracts in place to
do a criminal background check on every fiduciary we appoint.
There's a number of other developments, sir, I could go through
with you, but we are making progress in this program.
Mr. Johnson. That would be great. I mean, we would have
liked to have gotten that information before today, but that is
good. Based on recent articles about nationwide problems in the
fiduciary program, it seems that there has been little
improvement other than the things that you mentioned today. Do
you have any further response to the media reports of the
numerous and horrific stories in those articles?
Mr. McLenachen. Yes, sir. I disagree with the view that the
fiduciary program is plagued with fraud. I am aware of those
articles and it is our position that any misuse of VA benefits
is unacceptable. That's our position. And we work hard to
prevent that type of misuse. That is the reason why we do over
30,000 accounting audits every single year. That is the reason
why we do 70,000 or more field examinations every year.
So we work hard to prevent misuse and we have been very
successful. I testified in February that our misuse rate during
Fiscal Year 2011 was less than one-half of one percent.
Looking at the article, sir, I think in reality the
articles are about a broader problem and that is general abuse
of veterans. We looked at the cases that were mentioned. In the
State of Texas 6.5 percent of our beneficiary population in
this program live in Texas, yet the misuse rate in Texas was
only 4.4 percent compared to all of the cases. So while the
articles may have been reporting the broader problem of misuse,
I don't think that we have been able to confirm that it points
out a specific problem about the fiduciary program and that
said, that doesn't mean that we are going to ease up on misuse
of benefits.
Mr. Johnson. The VA opposes the provision that would
authorize the VA to limit the appointment of a fiduciary to
management of VA funds. The VA contends that the purpose of
this provision was unclear and probably unnecessary because the
VA appoints fiduciaries only for the limited purpose of
receiving VA benefits on behalf of a beneficiary.
However, I have VA emails that direct a VA representative
to take control of non-VA funds. Why the difference between
your actions and your comments on the legislation?
Mr. McLenachen. Mr. Chairman, I would be interested to see
the information you have about that. Congress has authorized us
to appoint fiduciaries for the purpose of VA benefit funds
under management. That is what we have authority to do. Now,
there may be some disconnect about the accounting process. When
we do an accounting, we need to see all incoming expenses in an
account and sometimes in those accounts there is other income,
such as, for example, Social Security benefits.
Mr. Johnson. So you would find it inappropriate for a VA
representative to take control of non-VA funds?
Mr. McLenachen. Yes, sir. Without knowing more about the
facts of the case, I would say, yes, I would.
Mr. Johnson. We will provide you with that information.
Mr. McLenachen. Thank you, sir.
Mr. Johnson. Okay. You discussed the provision concerning
appeals and removal of fiduciaries as limiting a beneficiary's
ability to have his or her competency restored. Can you
describe how a veteran currently has his or her competency
restored and subsequently can get out of the fiduciary program?
Mr. McLenachen. Yes. Thanks for that question because this
is an area that I have really been interested in addressing and
we are doing that in our regulations. Just to let you know,
that is one thing that we are addressing. Currently, if an
individual has been rated as being unable to manage their VA
benefits, they can be taken out of the program by having
medical evidence, such as a doctor's opinion, that they can, in
fact, based upon their disability or regardless of their
disability, manage their own VA funds. In addition to that, if
there was a legal process where a court held that a person was
incompetent to manage their own affairs and a court concludes
otherwise, that would be evidence considered.
The area I want to address, however, is a situation where
we have a beneficiary in the program and they demonstrate
themselves that they are able to manage their own VA funds and
I want a way for them to get out of the program.
Now, we currently have a supervised direct-pay program.
There are about 3,500 beneficiaries that are in that program.
We pay our benefits directly to those individuals even though
they are in the fiduciary program because we have some evidence
that they might be able to manage their own benefits. That
specific program within the fiduciary program, to me, seems to
be a way where we can get individuals out of the program if
they demonstrate that they can actually manage their own
benefits. That is one of the things we are addressing.
Mr. Johnson. How would reporting to Congress hinder
improved transparency of the program?
Mr. McLenachen. Well, sir, I think the message from our
testimony was that it appeared that the requirement to report
information in our annual benefits report and only report it to
Congress would change the transparency. Now, maybe we are
misinterpreting what the bill requires. Certainly we could
still publish information in our annual benefits report, but
that was the intent of that comment was that if the information
was only going to be reported to Congress rather than through
other means.
Mr. Johnson. The fiduciary program stated purpose is to
serve beneficiaries who are unable to manage their financial
affairs. How does developing determinations of ability to
manage financial affairs run contrary to that purpose?
Mr. McLenachen. Mr. Chairman, it is a little bit related to
the question that you just asked me where I mentioned our
supervised direct-pay program. When an individual is rated as
being unable to manage their VA benefits currently, it is when
we do a, what you may know as a compensation and pension exam
or we receive evidence, medical evidence or otherwise,
indicating that somebody cannot manage their affairs.
If we receive that information, we can quickly process the
incompetency determination, give the notice that is required
and get to the point where we appoint a fiduciary.
Our concern regarding that section of the bill is they will
require essentially a rehabilitation determination based on
someone's opinion, a professional's opinion that managing
somebody's funds would help them be rehabilitated despite their
disability.
VA currently doesn't do that, but I think there is a viable
alternative to that and that is our supervised direct pay
program. It would essentially do the same thing. It would show
that somebody is actually managing their own financial affairs
and provide a way for a rating, getting them out of the
program. That was the intent of our comments on that section.
Mr. Johnson. Okay. What is the likelihood that the VA can
tailor the proposed reporting requirements so that when field
examiners perform home visits, fiduciaries already under close
VA supervision are not overly burden or even harassed? For
example, how can the VA take into account those in the VA's
caregiver program?
Mr. McLenachen. Well, Mr. Chairman, my understanding about
the caregiver program is that it is, there are 2,000 or 3,000
beneficiaries in that program. And actually I was just having a
conversation before the hearing started with a representative
of the Wounded Warrior Project and we were discussing how VA
might coordinate better between the caregivers in that program
and match them up and see how many of them are fiduciaries and
how we could coordinate those efforts a little bit better. I
think we could do that.
The beneficiary population in the fiduciary program,
however, is 125,000 beneficiaries, approximately. But certainly
for that subset, there may be ways that we can improve
services.
Mr. Johnson. Okay. Why does the VA oppose letting a
beneficiary know if his or her fiduciary has been convicted of
a crime? How does added transparency harm the veteran and the
fiduciary program as a whole?
Mr. McLenachen. Mr. Chairman, my concern there is not that
we should limit transparency. I think transparency is very
important and we are trying to change that, for example, with
the accountings that we're requiring beneficiaries to receive.
The problem I have though is that many of the individuals in
our program are severely disabled or have mental conditions
that render them severely disabled and the type of information
that they are given may be harmful to them.
So the mere fact that somebody has a, for example, a
misdemeanor conviction that does not impact their ability to
provide fiduciary services. And for example, if it is a family
member, reporting to the beneficiary in ever single case that
this has happened may not be the best thing for our
beneficiaries.
I agree, however, that there should be transparency about
individuals who commit crimes that either disqualify them for
service as a fiduciary or certainly would allow the beneficiary
to request somebody else to be their fiduciary.
Mr. Johnson. In your February testimony you stated that the
VA, first and foremost, attempts to appoint a fiduciary who
will serve without a fee. If this is truly your aim, why can't
the VA access the list of non-profits and government agencies
that Social Security uses in the administration of its
representative payee program.
Mr. McLenachen. We can certainly look into doing that, sir.
Our concern with the bill was it would require us to maintain a
list of state, local and non-profit organizations nationwide
and maintain that list for the purpose of fiduciary
appointments. Our concern is that this program, 95,000
fiduciaries, sir, in this program, the overwhelming majority of
them are family members or close acquaintances. We very rarely
need to appoint an organization that would fall within that
group. That does not happen that we do not appoint them. We
certainly do appoint those type of organizations. So we would
not be opposed to appointing them.
It is just that the cost benefit that we are talking about
as a result of the bill, we think the costs would outweigh the
benefit that we would receive from it.
Mr. Johnson. In your testimony you state that fiduciaries
are more than mere bill payers. For those fiduciaries that do
not live with the beneficiary, what else do they do besides pay
the bills?
Mr. McLenachen. Mr. Chairman, that is a very good question
and I think in my testimony you may have seen that I said our
emerging view is that they are not mere bill payers. That is my
vision for the program. That is the Secretary's vision for the
program. He does not intend that we are appointing mere bill
payers, so in our regulations one of the things we are going to
address is what are the responsibilities of a fiduciary. And if
a fiduciary is of the view that they don't have to have contact
with the beneficiary or they don't need to check on the
beneficiary's well being periodically, they have no business
being a fiduciary. That is our view.
Mr. Johnson. I will be very curious to see how that turns
out and what recommendations the VA has to modify that because
fiduciary by its definition is a financial manager.
Mr. McLenachen. That is correct.
Mr. Johnson. So I don't know what, beyond that, we would
be, number one, wanting them to do or expecting them to do. I
mean, we have got major issues now with just the financial
management part of it. Lord only knows what kind of issues we
will get into if they have control over other areas of a
veteran's life.
Mr. McLenachen. Mr. Chairman, can I explain? Congress gave
us authority to appoint fiduciaries to act in the interest of
beneficiaries and I agree with you completely that the purpose
of the fiduciary appointment is management of VA benefit funds.
However, to act in the interest of a beneficiary where a
fiduciary is dispersing funds, paying bills, essentially doing
financial management, how do they do it in the best interest of
a beneficiary without having contact, without checking on them
and without seeing what their needs are. I am not suggesting
that they take over custody of the individual or act in any
other way, however, I fail to see how somebody can act in the
best interest of a beneficiary without having contact and
monitoring their progress.
Mr. Johnson. That I would agree with you on. I will be
curious--you know, the devil is in the details.
Mr. McLenachen. Yes, sir.
Mr. Johnson. It is what it is in the policy and how it is
interpreted by fiduciaries and those that run the program, but
I generally agree with your comment there.
In your testimony you state that the VA opposes
transmitting evidence of misuse of benefits to the Attorney
General for prosecution because it does not allow for the VA's
internal review. Given numerous examples from our
investigation, as well as those reported by Hearst Publications
recently where little action has been taken by the VA, how does
the VA's internal review aid in the prosecution of someone who
has preyed on a veteran? I mean, you remember the last time you
were here. We had some horror stories.
Mr. McLenachen. Yes, sir. Our position regarding that
section is that--and just for your information, the way that we
investigate misuse--actually, our program does the
investigation regarding misuse of benefits. However, when we
complete that investigation, we are required to turn over that
information to the VA's Office of Inspector General. And that
office has responsibilities under the law to coordinate the
prosecution and, you know, a large part of that is evaluating a
case for prosecution under the law.
Our comments regarding that section was that it appeared to
require us when we determine that there has misuse of benefits,
to simply report to a bunch of agencies that may have a use for
that information or not, without the type of evaluation that
the Office of Inspector General is required to do by law. That
was the basis of that comment in my testimony.
Mr. Johnson. Basically, though, you would agree that those
who criminally and fraudulently abuse the funds, that they are
responsible for manage for our veteran, should be held
accountable to the extent of the law, correct?
Mr. McLenachen. Absolutely. The best deterrent is criminal
prosecution and I absolutely agree with you.
Mr. Johnson. In your testimony you talk about the
additional burden of an annual report would require. This bill
lays out a bare-bones requirement, leaving the VA to determine
how much detail to ask for. Why would you not be able to mold a
requirement so as not to be overly burdensome?
Mr. McLenachen. Mr. Chairman, does your question concern
the report to Congress or the annual accounting requirements?
Mr. Johnson. It would be both.
Mr. McLenachen. Okay. First, with respect to the section in
the bill that would require us to submit an annual report to
Congress, I believe we indicated we would not oppose that,
however, we question the timing which would be one year after
the enactment of the bill. We pointed out that rulemaking might
be required to the extent some of the things in the bills are
not in our current rulemaking package, so we thought that the
one year requirement might be a little soon.
With respect to the accounting requirement, VA currently
does over 30,000 accountings a year. That's how many require
and we audit every single accounting. It is a very detailed
audit too. We require financial documents to be submitted with
each accounting. The bill would require us to do such an
accounting for every beneficiary in our program--I am sorry,
every fiduciary in our program, which means 95,000 accountings.
While it is true that we could do certain things to sample
accountings, not audit every one. I am not sure that that would
really accomplish what the Committee is interested in.
I think our concern, sir, is that requiring every single
fiduciary to submit an accounting doesn't really take into
account who these individuals are. As I said, the majority of
them are family members. Spouses, already spouses, we do not
require accountings from spouses, but other family members
would be required to submit an annual accounting. Many cases
are a very small amount of benefits that are paid. Again,
accounting would be required.
So our real concern is the burden on the individuals who
act as fiduciaries. We, over time, based on our experience,
figured out who we think we need accountings from and that
those 30,000 individuals that have to submit one to us every
year. We are just concerned about the scope of the accounting
requirement.
Mr. Johnson. Well, I want to thank you, Mr. McLenachen, for
your testimony and responding to the questions. You are now
excused.
Mr. McLenachen. Thank you.
Mr. Johnson. Mr. McLenachen, one second. Minority Counsel
would like to ask a question.
Mr. Tucker. Thank you. I will be very brief. You stated as
referring to the removal of the one year period for
convictions, state and federal crimes, that you oppose that
because some of that information might be harmful to the
fiduciaries?
Mr. McLenachen. No. I believe the question concerned, there
is a provision in the bill that requires us to report a
conviction, any conviction to a beneficiary within 14 days of
learning about it. We are opposed to that provision. With
respect to the provision of the bill that would authorize us to
consider all convictions in the qualifications of a
fiduciaries, we are not opposed to that.
Mr. Tucker. Okay. Thank you for the clarity. And second of
all, do you propose a tracking on what your final answer was to
the accounting question. Do foresee, kind of a two-track system
of how you handle fiduciaries in that you have close family
members that you don't think you need a background check all
the time or every time that someone's appointed, that you don't
need an accounting for those folks and then for those who are,
in a sense, professional fiduciaries?
Mr. McLenachen. Yes, actually, our current procedures
essentially do that. One of the provisions of the bill that we
are opposed to would eliminate or rescind the waiver provision
that is in current law, which allows us to waive some of the
investigation requirements for certain individuals such as
parents and spouses. So we are opposed to that provision.
But the way that we run, the program already essentially
does that. There is much more stringent oversight of
individuals who are paid fiduciaries who are corporations or
other individuals who are in the business of providing
fiduciaries services than there are for, for example, spouses
and family members, to include the frequency with which we
visit them on a follow-up field examination. It is our policy
not to intrude into family members and avoid doing that as much
as possible. So for example, with a spouse, we will visit a
spouse on a follow-up field examination much less frequently
than we do an individual who is a paid fiduciary or doing that
type of business.
Mr. Tucker. Thank you for your indulgence, Mr. Chairman.
Mr. Johnson. Absolutely. Thank you. And again, Mr.
McLenachen, you are excused.
I would now like to call the third panel to the witness
table.
On this panel today we will hear from Mr. Ralph Ibson,
National Policy Director for the Wounded Warrior Project; Ms.
Lauren Kologe, Deputy Director of the Veterans Benefits Program
for Vietnam Veterans of America; Ms. Heather Ansley, Vice
President of Veterans Policy for VetsFirst; and Ms. Lori, have
I got it right, Perkio--is that correct--Assistant Director of
the Veterans Affairs and Rehabilitation Commission at the
American Legion.
All of your complete written statements will be made a part
of the hearing record. Mr. Ibson, you are now recognized for
five minutes, sir.
STATEMENTS OF RALPH IBSON, NATIONAL POLICY DIRECTOR, WOUNDED
WARRIOR PROJECT; LAUREN KOLOGE, DEPUTY DIRECTOR OF VETERANS
BENEFITS PROGRAM, VIETNAM VETERANS OF AMERICA; HEATHER ANSLEY,
J.D., VICE PRESIDENT OF VETERANS POLICY, VETSFIRST; LORI
PERKIO, ASSISTANT DIRECTOR, VETERANS AFFAIRS AND REHABILITATION
COMMISSION, THE AMERICAN LEGION
STATEMENT OF RALPH IBSON
Mr. Ibson. Mr. Chairman, Members of the Subcommittee, Thank
you for inviting Wounded Warrior Project to testify today, and
particularly to provide views on H.R. 5948, the Veterans
Fiduciary Reform Act of 2012.
As this Committee's February oversight hearing underscored,
the fiduciary program continues to experience serious problems
and weaknesses. We appreciate the effort to craft legislation
to address those issues.
Our principal concern is the bill falls short of resolving
a longstanding problem we have raised at prior oversight
hearings. The issue arises from the fundamentally inconsistent
manner in which the VA treats family members who are recognized
and supported by the Veterans Health Administration as
caregivers of their loved ones and yet face rigid scrutiny from
the Veterans Benefits Administration in their capacity as
fiduciaries for those loved ones' benefits.
Our organization works closely with family members who are
both full-time caregivers as well as fiduciaries of those
severely wounded warriors. And we note that two years ago
Congress established the Comprehensive Caregiver Assistance
program to provide needed support to those family caregivers in
recognition of their sacrifices and the emotional and financial
toll associated with caregiving.
To qualify and win formal approval for this VA assistance,
family members undergo a detailed psycho-social assessment to
help VA determine that the proposed arrangement is in the
veteran's best interest. They must participate in a training
program and must undergo a home inspection.
Furthermore VHA subsequently conducts regular quarterly in-
home monitoring of the veteran's well being as a condition of
the caregiver's receiving continued assistance.
In administering the fiduciary program, VBA does not take
account of the unique circumstances of those family members who
give up careers, have depleted savings to care for their loved
ones, and who have already been screened and monitored under
the caregiver program. As we see it, that process and its
ongoing oversight truly provide ample evidence that these
individuals are trustworthy, and do not pose a risk of misusing
the veteran's benefits.
Let me be clear, we are not suggesting that caregiver
fiduciaries be exempted from accountability from management of
the beneficiary's funds, but we do see a need to make provision
in law for more balance and less demanding oversight where the
caregiver-fiduciaries have demonstrated that they do not pose
significant risk and have earned VA's trust. Dedicated
caregiving, in our view, as evidenced by unblemished
participation in the caregiver assistance program, should be
recognized in law as establishing that trust.
We have seen all too clearly that VBA's intensely detailed
reporting requirements can be overwhelming to an already
emotionally drained family member who is shouldering a young
veteran's total-care needs and yet is left to feel suspect and
distrusted. As one mother put it, ``we are probed yearly by a
forensic accounting that seemingly investigates for `murderous'
infractions,'' even requiring fiduciaries to ``line-item
Walmart receipts.''
We greatly appreciate the Committee's work and VA's
response in ending the practice of requiring preapproval of
expenditures made in the veteran's best interest. But
caregivers are still subject to what many experience as
inquisitorial audits. And let me offer a few examples:
A caregiver having to explain to a VBA examiner why she
allowed her wounded-warrior son to spend ``too much money on
Christmas gifts;"
An auditor insisting that the caregiver's electric bill was
too high and asserting that during the summer in Florida she
should not run the air-conditioning at night;
A family being questioned about expenditures for gasoline
in transporting the wounded veteran; and
A VBA examiner questioning the caregiver as to why she was
buying movies and music for her son given that he has a brain
injury.
As one caregiver summed it up, VA fiduciary program staff
``don't really help with management of assets but audit every
two years every penny I spend for my son's care. There are not
many guidelines and auditors question expenses when they know
nothing about the care that is needed.''
Family caregivers have also emphasized the burden of just
trying to comply with the demanding expectations of the
program. To quote one, ``When the paperwork arrived at the end
of the year, there were no instructions or assistance. I had to
figure out how to do everything on my own. I asked for software
I could use to make it easier to do the accounting, but I was
told there was none. I had to create an Excel spreadsheet to
enter the amounts in the categories that were requested and
sometimes it takes me up to two weeks to complete all the data
entry.''
In sum, the problems I have outlined are not insoluble and
just as this bill aims to solve other problems in the program,
we urge that it address this one as well. We would be pleased
to offer narrowly crafted language to address the problems we
have identified and would welcome the opportunity to work with
the Committee prior to a workup. Thank you for consideration of
our views.
[The prepared statement of Ralph Ibson appears in the
Appendix]
Mr. Johnson. Thank you, Mr. Ibson.
Ms. Kologe, you are now recognized for five minutes.
STATEMENT OF LAUREN KOLOGE
Ms. Kologe. Thank you. Good morning, Mr. Chairman, and
other distinguished members of this Subcommittee.
Vietnam Veterans of America is pleased to share our views
and concerns regarding the pending legislation. We support all
four pieces of legislation that have been discussed today.
In particular, we would like to share our views on H.R.
5948, the Chairman's legislation, the Veterans Fiduciary Reform
Act of 2012 and how the Veterans Benefits Administration can
improve their Fiduciary program.
I ask that our written testimony be accepted for the
record.
Mr. Johnson. Without objection, so ordered.
Ms. Kologe. Thank you. We have three main points that we
would like to share in the fiduciary program and this pending
legislation. One, we propose that the title of Exception 5511,
``Adjudication of Financial Incompetence,'' and the language
``mentally incapacitated or deemed mentally incompetent'' be
changed to reflect the purpose of the fiduciary program which
is to manage the veteran's financial benefits. There seems to
be cross purposes here, some fiduciary members need enhanced
services and some do not. Some are able to work. They just
cannot manage their financial affairs and I think the role of
the fiduciary has been confused and has led to some problems
that we have been experiencing. We recognize that many veterans
and other beneficiaries in the fiduciary program require
support services and, therefore, we urge a change to the
examination protocol for determining that an individual is
unable to manage his or her benefit payment.
Currently, VA only assesses veterans' ability to manage
their benefit payments in certain disability exams.
Furthermore, these compensation or pension exams frequently
last only 20 minutes. We are unclear as to how VA is able to
determine the capacity of a veteran without protocol for
consistent questions to be asked of the veteran. It is also
unclear how VA assesses a widow's or dependent's ability to
manage benefit payments.
VA has said that there are basically two different types of
fiduciaries, paid fiduciaries and family, or volunteer
fiduciaries who know the veteran well. If the sole purpose of
the VA fiduciary program is to manage the veteran's financial
payments, we believe that many of these veterans should not
even be in the fiduciary program.
There are different protocols that other agencies use for
determining this financial incapacity, and again, that is why
we believe that it should be clearly the financial incapacity,
and then VA does have a duty to care for our veterans that need
further services.
Lastly, we encourage that this Subcommittee provide a
whistle-blower provision or a more definite reporting system
for abuses in the fiduciary program, not only with respect to
mismanaging veteran's funds which we strongly support the
bill's provisions of returning veteran's monies in the cases of
misfeasance, but we also think that a clear chain of command
and expectations goes a long way toward and fixing problems
before they get worse. There should at least be a requirement
in the law for the Secretary to report on the steps that VA
employees, beneficiaries and third parties can take to report
malfeasance and misfeasance, other than reporting to the
Inspector General or clear provisions on how to do so, but so
that the officials in VA most able to fix the system can make
the necessary changes.
So we ask you to consider our comments and we would happy
to provide answers to any questions that you may have. Thank
you very much.
[The prepared statement of Lauren Kologe appears in the
Appendix]
Mr. Johnson. Thank you, Ms. Kologe.
Ms. Ansley, you are now recognized for five minutes.
STATEMENT OF HEATHER ANSLEY
Ms. Ansley. Thank you, Chairman Johnson, and distinguished
members of the Subcommittee. Thank you for inviting VetsFirst
to share our views and recommendations regarding the four bills
that are subject of this morning's hearing. VetsFirst is
pleased to provide our support and recommendations for each of
these important pieces of legislation.
First, we support the Veterans' ID Card Act. We believe
that this legislation will provide an easier way for eligible
veterans to prove their veteran status without having to
present a DD-214. As was stated earlier the DD-214 includes
sensitive personal information that veterans may not wish to
show in certain situations. To minimize any potential for
confusion, the legislation requires that the cards state that
issue does not confer eligibility for benefits and we urge
swift passage of this legislation.
Second, we support the Veterans Data Breach Timely
Notification Act. We believe that this legislation takes
important steps toward ensuring that veterans are properly
notified of data breaches involving their sensitive personal
information. This legislation not only requires VA to make a
notification of a breach of this information but also requires
VA to provide veterans with important details regarding the
breach and how to take precautions to minimize negative
impacts.
Although we support this legislation, we do have two
specific recommendations. One, we believe that it would be
helpful to clarify that VA must notify individuals within five
business days of learning of the breach as opposed to basing
the time frame on the date of the breach.
Number two, we believe that VA should be required to
provide the opportunity to receive notification in large print,
brail, audio or electronic formats. For disabled veterans who
have visual or other impairments, these options are
particularly critical. Otherwise, they will not receive proper
notification and will not be able to take proper action to
address any concerns.
Third, we support The Veterans Affairs Employee
Accountability Act. This legislation will ensure that employees
who knowingly violate any civil law covered by the Federal
Acquisition Regulation or the Veterans' Affairs Acquisition
regulation do not receive bonuses for or during the year of the
violation.
It is our hope that using bonuses to reward only those
employees who follow these laws will ensure that our veterans
receive the highest level of services from VA. Ultimately, VA
must ensure that veterans' needs can be clearly and efficiently
met within the contracting requirements of federal law.
Lastly, we support the Veterans Fiduciary Reform Act of
2012. This legislation takes important steps toward ensuring
that VA's fiduciary program is more transparent and focused on
the needs of beneficiaries. We believe that VA's fiduciary
program must be more veteran-centric or beneficiary-centric and
tailored to address the needs of those beneficiaries who truly
need this type of assistance. It is important to remember that
these VA benefits have been earned by the veteran and that the
funds belong to the veteran, even if he or she needs assistance
with managing them.
The Veterans Fiduciary Reform Act ensures that the
determination of whether or not a beneficiary requires a
fiduciary is based on factors such as a determination by a
court of competent jurisdiction and an evaluation by a medical
professional regarding the role of financial management in the
rehabilitation of the individual.
Importantly, it also states the types of evidence that may
be considered in an appeal of such a determination and provides
a statutory way to terminate any fiduciary relationship.
We support efforts to clarify factors that will be
considered to determine if a beneficiary needs a fiduciary and
the process for appealing related determinations. We believe
that this process will make the fiduciary program more
transparent.
We also believe that efforts to strengthen the inquiry and
investigation into the qualifications for fiduciaries will
ensure a higher level of service for beneficiaries. The hearing
held before this Subcommittee earlier this year presented
several disturbing stories about the benefits faced in
receiving proper service from their beneficiaries. It should be
important to note, however, that to ensure that VA exercises
appropriate discretion to ensure that family member fiduciaries
are not unduly burdened in complying with VA requirements.
This legislation also makes significant changes in the
commissions that fiduciaries are able to receive for their
services. We believe that a commission should only be
authorized where absolutely necessary to ensure that the best
possible fiduciary serves a veteran or other beneficiary.
Regardless of whether the percent authorized is the current
four percent or the proposed lesser of three percent or $35,
our only concern is that a paid fiduciary be available to a
veteran if there are absolutely no other alternatives. As long
as highly qualified fiduciaries are available when needed, we
support the lower commission.
Again, thank you for the opportunity to share our views on
each of these bills before the Subcommittee today. This
concludes my testimony, and I will be pleased to answer any
questions you may have.
[The prepared statement of Heather Ansley appears in the
Appendix]
Mr. Johnson. Thank you, Ms. Ansley.
Ms. Perkio, you are now recognized for five minutes.
STATEMENT OF LORI PERKIO
Ms. Perkio. Thank you, Mr. Chairman and Members of the
Subcommittee for the opportunity to provide The American Legion
views on H.R. Bill 2985, Veteran ID Card.
The American Legion feels a Veteran ID Card may be useful,
but feels more investigation is needed to determine best course
of action. The American Legion has no position on this bill at
this time.
In regard to H.R. 3730, Veterans Data Breach Timely
Notification Act, on May 3rd, 2006, a laptop and external hard
drive containing 26,500,000 veteran and active-duty
servicemembers' names, Social Security numbers and dates of
birth were stolen during a home burglary of VA employee. The
stolen laptop was reported to VA immediately. Three weeks later
the theft became public knowledge. With advance in technology
and criminal ingenuity, checking and savings accounts can be
depleted in a matter of hours.
The ripple effect of identify theft can destroy a veteran's
lifetime of hard work. Veterans expect response that is swift
and comprehensive. This legislation would help ensure that this
is the case. The American Legion supports this legislation.
H.R. 4481, Veterans Affairs Employee Accountability Act:
Bonus pays should be awarded to an employee who goes above and
beyond the basic performance. Bonus pays should never be
considered for anyone who is trying to circumvent the system.
VA needs stronger accountability in the bonus system and the
American Legion supports this legislation.
In regard to H.R. 5948, Veterans Fiduciary Reform Act of
2012: The VA describes the fiduciary program mission as to
protect the benefits paid to veterans and other beneficiaries
who are unable to manage their financial affairs by appointing
and supervising qualified fiduciaries with continued and
diligent oversight as it pertains to VA benefits.
In 2009, VA consolidated 14 western regional office
fiduciary activities to create the Western Fiduciary Hub. Then
in 2011 initiated consolidate of the remaining 39 fiduciary
activities into fiduciary hubs located in Louisville, Columbia,
Milwaukee, Lincoln, and Indianapolis. The purpose was to
improve timeliness, increase quality, consistency and better
utilize resources. The boring of jurisdictional lines would
provide field examiners to work within the hub rather than the
jurisdiction of the regional office. Fifty-eight additional
field examiners were to be added to the fiduciary program, but
will be reassigned from the compensation unit. Due to the VA's
enormous backlog in claims completion dates, the American
Legion recommends VA hiring new employees to staff the
fiduciary program as opposed to moving them from an already
overburdened area of the VA.
In addition to the VA's hiring of 58 new field examiners,
the American Legion recommends hiring an additional VA
fiduciary employee in each of the 57 ROs. To better assist and
coordinate the fiduciary program between field examiner,
beneficiary and fiduciary hubs.
In the 2010 JAO report, the VA fiduciary program stated,
``VA managers and staff indicated that training may not be
sufficient.'' In a recent meeting the American Legion was told
new field examiner training consists of two weeks formal
training with two weeks field training. They are assigned a
mentor for 60 days with 100 percent review for only 90 days.
The VA states timeliness of appointing a fiduciary has improved
to 45 days, yet many beneficiaries wait, in some cases years,
to be assigned a fiduciary while others die before a fiduciary
is appointed.
VA states the beneficiary will be asked first who they wish
to appoint as fiduciary, then look at family members. There are
many cases whereupon notification of incompetency, the
beneficiary is submitting a written request for a spouse or
other family member to be appointed as fiduciary, yet months go
by before a field examiner contacts a requested fiduciary and
worse, appoints a fiduciary other than the requested family
member.
When the beneficiary is in receipt of a non-service
connected pension, the full percent paid to the fiduciary is
money that would otherwise have stayed within the household
budget.
When the beneficiary is a recognized nursing home, the
appointment of a nursing home as fiduciary should be much less
than the average 45 days, yet this is not the case. The
American Legion recommends a 100 percent quality review of
field examiners for at the least the first year following
formal training.
The American Legion supports legislation requiring VA to
notify the beneficiary when a requested fiduciary has been
denied and to also allow the opportunity for an appeal of that
decision. The American Legion has been notified of many
instances where VA denied the beneficiary's requested fiduciary
who had been competently caring for the beneficiary for years
prior to the VA claim. 38 C.F.R. 3.353(A) states, ``A mentally
incompetent person is one who, because of injury or disease,
lacks the mental capacity to contract or manage his or her own
affairs, including disbursement of funds without limitation.''
Beneficiaries face physical or economical limitations. The
situation has been compounds by a diagnosis of mental
incompetency. Our veterans deserve the attention of those
entrusted within the VA fiduciary program. Field examiners are
not required to provide the beneficiary with their contact
information creating added stress to the beneficiary and their
family members while awaiting a fiduciary appointment.
The wheels of progress are in motion, yet our veterans and
their widows and orphans are dying in pain and poverty while
awaiting for the benefits they so rightly deserve. The American
Legion supports this legislation.
If there are any questions, I will be available to answer
them for you.
[The prepared statement of Lori Perkio appears in the
Appendix]
Mr. Johnson. I thank each of you for your testimony. We
will go straight into questions. First of all, Mr. Ibson, do
you know what percentage of those serving as fiduciaries for
veterans are also caregivers?
Mr. Ibson. I am sorry, sir, I do not know. I could
speculate, but I----
Mr. Johnson. The information that we have is that it is
approximately three percent of the entire fiduciary program.
Does that sound about right to you?
Mr. Ibson. That would seem like a reasonable projection.
Mr. Johnson. Also, Mr. Ibson, can you describe for us your
own experiences with the VA in getting them to resolve issues
once you brought them to the VA's attention?
Mr. Ibson. Yes. We have had several meetings. The earliest,
I think, was some three years ago, and in several meetings
followed in which we discussed the general issue that I have
raised today we were given some assurances that those concerns
would be addressed. I am pleased to learn from the testimony
this morning that there are regulations moving forward. It is
not clear to me that those regulations do, in fact, fully
address the issues we have discussed and one could be
frustrated by the length of time that has elapsed since those
earliest conversations.
Mr. Johnson. Mr. Ibson, does VHA's caregiver program
monitor the finances of the veterans and their families in the
program?
Mr. Ibson. No, it does not, sir. I would not want to
represent that that's the case. Our point is simply that the
level of oversight and initial screening is such as to assure a
level of trust that we believe merits consideration in a more
relaxed reporting and auditing standard.
Mr. Johnson. Okay. Do you have any thoughts about what the
VA can do to ease the burden of overly stringent reporting
requirements on fiduciaries?
Mr. Ibson. Well, we would suggest and would be pleased to
provide the Committee with language that could both address the
point that Mr. McLenachen cited, the importance of better
coordination between the two administrations, but also as I
indicated, a more balanced and less rigid level of reporting
akin perhaps to the kind of more user-friendly reporting that
the Social Security Administration requires.
Mr. Johnson. Is there any software provided for reporting
or anything like that that you are aware of?
Mr. Ibson. Well, not that I am aware of, and certainly the
quote that I furnished reflected the frustration of one of the
caregivers who when she asked about that availability, was told
there was none.
Mr. Johnson. Mr. McLenachen, I know you are not at the
table, but in your testimony you talked about the fact that
most fiduciaries have access to online banking, so much of some
of their security issues would be resolved.
It seems to me if fiduciaries are using computers already,
some form of standard reporting software would be beneficial.
It would make life a heck of alot easier at the VA and it would
make it a lot easier for the fiduciaries as well, to the extent
that they have access. Now, not all fiduciaries are going to
use a computer. I understand that, but just a thought.
Mr. McLenachen. Yes, sir.
Mr. Johnson. Mr. Ibson, in the testimony, the VA opposes
the annual reporting requirement to Congress on the grounds
that it hinders transparency. From your experience with VA
programs, are annual reports to congress a good thing or not?
Mr. Ibson. I think very much so. I think they focus
officials' attention, and in the myriad of obligations imposed
on the department, it is easy to lose focus. I think a
reporting requirement provides that focus.
Mr. Johnson. Okay. Let us move to the American Legion. Ms.
Perkio, the VA opposes the provision that mandates the VA to
limit the appointment of a fiduciary to management of VA funds.
Given that the VA can only direct who is in charge of the
benefits it administers, what do you think of this provision?
Ms. Perkio. Would you repeat the question?
Mr. Johnson. Sure. The VA opposes the provision in the
legislation that mandates the VA to limit the appointment of
fiduciary to management of VA funds. Given that the VA can only
direct who is in charge of the benefits it administers, what do
you think of this provision? Good, bad?
Ms. Perkio. I believe that the VA can only, you know, take
care of what they have jurisdiction over.
Mr. Johnson. So basically you support the idea that they
should only be allowed to deal with the VA funds?
Ms. Perkio. Yes.
Mr. Johnson. Ms. Perkio, last year the VA awarded
approximately $400,000,000 in bonuses. Coincidentally, the VA
estimates that costs of implementing the Fiduciary Reform Act
at that similar cost, given what we know about this program, do
you think we should think twice before giving bonuses to those
administering this program?
Ms. Perkio. In light of some of the horror stories that are
out there, I think that the VA is trying very hard to make sure
that they keep track of them but I do believe that more
oversight needs to come into this, but to deny them bonuses
based on--until somebody has been actually proven that they
violated civil law, then I wouldn't recommend that any bonuses
be withheld.
Mr. Johnson. What are your thoughts on the VA strengthening
the chain of contact between veterans and the fiduciary
program, the VA and fiduciaries?
Ms. Perkio. Absolutely. Right now, I think that because
there isn't a continuity of a chain of command, beneficiaries
will go to their Service Organizations and say, we were
approved for pension, we are waiting for a field examiner to
come. Several months will have gone by and they are just left
without any contact, without knowing who to go to, and the
Service Organizations, because of the fiduciary hubs, don't
actually have that continuity of contact. Now, they have
created the 1-800 number and I understand that it is working
very well at this time, but I do believe that communication
does need to be strengthened.
Mr. Johnson. Okay. In the VA's testimony, the Department
argues that the proposed annual accountings would not improve
the VA's oversight of fiduciaries. Do you agree with this?
Ms. Perkio. No, I do not.
Mr. Johnson. Ms. Ansley, why do Veterans' dependency and
indemnity compensation need to be specifically designated in
the proposed redesignation language?
Ms. Ansley. Thank you for the question. We, in looking at
the testimony of the predesignation section, wanted to ensure
that other types of beneficiaries also had the opportunity to
make such a designation. So in looking at the proposed
language, it mentions compensation and pension forms, including
the form that is--that a veteran would file for compensation
pension, but for instance you may have spinal bifida, someone
who is a spina bifida applicant which is VA form 21-03.04 and
they would receive a monetary allowance, and so we just wanted
to make certain that predesignation, the opportunity to assert
a fiduciary would go to any type of beneficiary who may be
receiving those and depending on how the language is
interpreted, that may or may not happen, so we just wanted to
flag that.
Mr. Johnson. Okay. Ms. Ansley, in your testimony you stated
that a commission should only be authorized when absolutely
necessary. The Social Security Administration does not pay
individuals to serve in a fiduciary-like capacity. Do you think
the VA should consider doing away with paying a commission
entirely?
Ms. Ansley. As we stated, our main concern is that a
fiduciary be available when needed, so our hope is that we
would never have to pay a fiduciary, that we would have someone
available, but we just didn't want that one veteran who, for
whatever reason, there wasn't a family member, there wasn't
somebody they were willing to find, you know, just that one
person we didn't want them to fall through the cracks.
So that is the, you know, making sure that that is
available so that we can take care of all needs, but our hope
would be that that would be, like I said, a very last resort.
Mr. Johnson. Okay. Ms. Ansley, also in your testimony you
mentioned areas of concern that still need to be addressed. Do
you think this is best addressed in legislation or through the
promulgation of regulations directly with the VA?
Ms. Ansley. I think that at this point we do need to
continue to see this legislation move forward. That is our
hope, that Congress would continue to address this issue.
Regulations are promulgated in a lot of different areas. I know
of other areas we are watching, that they have been done for
months and months and haven't seen them, so we need to make
sure that this continues to move forward. It is nice when
regulations marry up with what is being required, but there is
nothing quite as forceful as having something in statute that
makes it so.
Mr. Johnson. Ms. Kologe, in your testimony you stated that
the VA is failing to monitor the well being of veterans in its
care. Do you think this is a result of ineffective statutes or
regulations, or just simply not following statutes and
regulations, a combination thereof? What do you think?
Ms. Kologe. Thank you, Mr. Chairman. I believe that it is
the confused role of the fiduciary program in that, as I
mentioned the fiduciary payments versus providing some of the
support services, making sure veterans have their medical care,
that they have a clean home to live in, things like that. I
believe that we do need to move forward with legislation on the
broad strokes and have VA fill in its regulations where it has
the expertise in those areas.
And I think it is a failure of mostly an overburdened
system and if we can take out those veterans who do not need to
be in a fiduciary program or could be into the supervised
direct payment program, it would limit the burdensome reporting
requirements for some of these fiduciaries, and allow VA to
allocate its resources better.
Mr. Johnson. Okay. What would legislation to combat the
VA's tendency to become overly paternalistic in the
administration of benefits, what would it look like?
Ms. Kologe. I believe if there were two separate tracks to
people in the fiduciary program, again it references mental
incompetence right now and so VA in its mental health exams and
other types identifies veterans that may qualify, but there is
not a consistent way to do those exams. It is just in the
opinion of the examiner is the veteran able to manage their
funds. There should be consistent questions that are asked of
the individuals and there are veterans who are not in a
fiduciary program that perhaps would benefit from it, and the
greater oversight of that, so we would be happy to work with
the Committee, Subcommittee and other stakeholders to get the
best legislation and then leave up to VA what could be a
regulation.
Mr. Johnson. Okay. In their testimony, the VA opposes the
consideration of medical evaluations to determine incompetency.
Do you think this is wise?
Ms. Kologe. The proposed legislation that you have offered
offers medical information that is currently considered in
other veterans' benefit claims and VA mentions that a fiduciary
assignment is not a claim. Well, I think that we, nevertheless,
need to use medical information to determine whether a veteran
is financially able to manage their funds and that may not be
from a physical standpoint. This may be--I will look to other
areas, other agencies that already make determinations of
financial incapacity and again make two tracks, one for
veterans who actually require more intensive services to
support their self care. Thank you.
Mr. Johnson. So let me make sure I understood your answer.
So are you in favor of considering medical information in
determining incompetency?
Ms. Kologe. Yes, I believe that some of the people who are
in the fiduciary program, this medical information, I believe,
it should be used and there should be a standard way of
determining which medical information is used, whether it be
from a third party that is provided to VA or whether a VA
examiner, that they are using the same consistent protocols to
identify veterans that need to be in the fiduciary program.
Mr. Johnson. I understand. I would like to see if the
Minority Counsel has any questions?
Well, our thanks to the panel for being here today and you
are now excused. I again want to thank everyone for their
participation today. The input and the feedback provided today
is an important contribution as this Subcommittee crafts
legislation to address the needs of our veterans.
Today's hearing is a step forward, a step toward delivering
needed improvements in those veteran's lives, and I look
forward to our continued cooperation in that effort.
With that, I ask unanimous consent from me, that all
members have five legislative days for revise and extend their
remarks and include extraneous material.
Without objection, so ordered.
This hearing is now adjourned. Thank you all for being
here.
[Whereupon, at 11:27 a.m., the Subcommittee was adjourned.]
A P P E N D I X
----------
Prepared Statement of Hon. Bill Johnson, Chairman
Good morning. This hearing will come to order.
I want to welcome everyone to today's legislative hearing on H.R.
2985, the Veteran's I.D. Card Act; H.R.3730, the Veterans Data Breach
Timely Notification Act; H.R. 4481, the Veterans Affairs Employee
Accountability Act; and H.R. 5948, the Veterans Fiduciary Reform Act of
2012.
These bills arrive from several different avenues that fall under
this Subcommittee's purview, and I want to thank the bill's sponsors
for drafting these proposals for our review.
H.R. 2985, the Veteran's I.D. Card Act, was introduced by
Congressman Akin of Missouri. The bill would direct the VA to issue a
veteran's ID card upon request to any veteran who is not entitled to
military retired pay or enrolled in the VA system. We will hear more
from Congressman Akin on this bill, and I thank him for his
participation.
H.R.3730, the Veterans Data Breach Timely Notification Act, was
introduced by our Subcommittee's Ranking Member, Congressman Donnelly
of Indiana. His bill would require the VA to notify Congress and
directly affected individuals, within 10 business days or less, of a
data breach that compromises sensitive personal information. This
improved transparency and responsiveness would be a boost to the VA's
efforts at improving its information security image.
As the system currently works today, the lapse of time between the
VA knowing of a data breach and a veteran knowing his or her
information has been compromised and may be floating around is entirely
too long. In discussions with staff, Assistant Secretary Baker
acknowledged that the current duration between the VA learning of a
data breach and a veteran being notified that his or her personally
identifiable information, or ``PII'', may have been compromised could
be shortened, and this legislation is a good measure toward that end. I
am proud to co-sponsor this bill. I urge my colleagues to consider
adding their support, and look forward to Ranking Member Donnelly's
further remarks on it.
H.R. 4481, the Veterans Affairs Employee Accountability Act, was
introduced by Congressman Roe of Tennessee, another distinguished
member of our Subcommittee. His bill would prohibit any VA employee
from receiving a bonus if that employee knowingly violated Federal
Acquisition Regulations or VA Acquisition Regulations. We have seen
plenty of evidence of the VA's lack of controls over its bonus program,
which has further been substantiated by the VA's own OIG. Sometimes
bonuses go to employees with documented poor performance, sometimes the
VA gives retention incentives to an employee about to retire, and
sometimes bonuses go to VA employees for no reason at all.
However, it's not just the bonus program that is running wild; we
have also seen many long-term cases of VA employees ignoring
acquisition regulations, often because it's simply easier for them to
do so. To veterans, the taxpayers, and this Committee, that is not a
good reason for breaking the law. Furthermore, in many of those cases,
the VA has not held many of those employees accountable after learning
of the violations.
Last week, I introduced H.R. 5948, the Veterans Fiduciary Reform
Act of 2012. Based on investigations done by this Subcommittee, as well
as a hearing held in February, it is abundantly clear that VA's
Fiduciary Program requires significant improvement. The February
hearing discussed fiduciaries stealing veterans' benefits, felons being
appointed as fiduciaries, and even fiduciaries withholding needed funds
to the point where a veteran's utilities are cut off. In addition, many
veterans have been unable to contact their fiduciaries to get necessary
basic funds, and family members are frequently shut out of the program
despite VA's stated intent to include family members as a preferred
choice.
While the VA did take an important step in the right direction
after that hearing when it removed a paragraph from its standard form--
requiring a fiduciary to get VA approval of any use of a veteran's
funds--the same types of problems discussed at that hearing continue to
happen. This Subcommittee brings them to the VA's attention, and
sometimes they are fixed on an individual basis. However, it is
reasonable to expect that the same type of problem will come up the
next week. The VA's Fiduciary Program suffers systemic weaknesses.
VA's Fiduciary Program is intended to help administer VA benefits
for veterans deemed incompetent to handle their financial affairs. As
written, the statute defers greatly to the Secretary's discretion in
the Program's administration, including who can serve as a fiduciary
and what obligations fiduciaries owe veteran beneficiaries. As
practiced, the VA has stretched that flexibility in every direction,
and the result has been unconscionable treatment of some of our most
vulnerable veterans.
The Veterans Fiduciary Reform Act of 2012 is based on problems
uncovered before, during, and after the February hearing as well as
valuable input from veterans' service organizations and individual
veterans on the ground who have experienced difficulties with the
program. The legislation would require a credit and criminal background
check each time a fiduciary is appointed, and allow veterans to
petition to have their fiduciary removed if problems arise.
The bill would also decrease the potential maximum fee a fiduciary
can receive to the lesser of 3 percent or $35, similar to Social
Security's fiduciary program. This will help discourage those who
enroll as fiduciaries with the VA with only a profit motive in mind. In
addition, the legislation will enable veterans to appeal their
incompetent status at any time, require fiduciaries to submit annual
accounting reports; and allow veterans to name a preferred fiduciary,
such as a family member.
These significant changes will heighten VA's standards for
administering the Fiduciary Program and increase protection for the
most vulnerable veterans. Through mandating improved scrutiny during
background investigations and lowering the fee a fiduciary can charge,
the Veterans Fiduciary Reform Act of 2012 will help root out potential
predators. Incorporating the ability for veterans to petition to have
their fiduciary removed and replaced will add a layer of protection to
veterans with fiduciaries.
I encourage my colleagues to support this bill, and would also
direct your attention to several news articles that came out over the
last few days documenting many cases of veterans around the country who
have suffered from the lack of oversight and control within the
Fiduciary Program.
I want to thank everyone for their participation in today's
hearing, and now yield to Ranking Member Donnelly for an opening
statement.
Prepared Statement of Hon. Jerry McNerney
Thank you Mr. Chairman for holding this legislative hearing today.
This Subcommittee is committed to providing transparency and
accountability to veterans and taxpayers. I look forward to hearing
from the bill's sponsors as well as stakeholders about the legislation
we have before us today.
I am pleased to have Ranking Member Donnelly's bill, H.R. 3730,
included in today's hearing. This legislation, the Veterans Data Breach
Timely Notification Act, seeks to protect veterans in the event that a
data breach involving sensitive information occurs.
In light of VA's Monthly IT report detailing data breach incidents,
this Subcommittee became aware that the VA can take up to 30 days to
notify veterans that a data breach occurred, potentially exposing a
veteran's sensitive personal information. To address this issue, H.R.
3730, requires the VA to notify potentially affected veterans within
five working days after a data breach has occurred.
In an effort to mitigate the effects of identity fraud, this change
would allow individuals to take decisive action to protect their
identity.
I believe this legislation will help veteran's protect personal
identifiable information, including their social security number, which
can severely affect a veteran's financial stability.
I look forward to working with Members of this Subcommittee as we
review this legislation and the other bills before us in the
Subcommittee this morning.
Thank you Mr. Chairman and I yield back
Prepared Statement of Hon. David P. Roe
On February 12, we held our first hearing on the Pharmaceutical
Prime Vendor (PPV), in which this Committee uncovered a serious problem
with the VA's contracting procedures. Several instances were identified
where VA employees went outside the department's Prime Contract to
purchase certain pharmaceuticals, which by the VA's own admission
exceeded these officials' authority and cost taxpayers hundreds of
millions of dollars.
It's bad enough that employees that are knowingly violating civil
contracts have avoided punishment. But it's worse still that some of
them are actually receiving annual bonuses.
VA officials downplayed the illegality of these actions, which were
in direct violation of the Federal Acquisition Regulation (FAR), by
describing them as ``improper'' or ``mistakes.'' Rather than penalizing
or reprimanding these employees, it appears VA senior officials paid
these employees some form of a bonus, further highlighting the lack of
internal contracting oversight at the VA.
This is inexcusable. To address this situation, I introduced H.R.
4481, the Veterans' Affairs Employee Accountability (VAEA) Act. This
bipartisan legislation directs the secretary of Veterans Affairs to
ensure that employees that knowingly break civil law covered by the FAR
cannot receive a bonus for or during that year.
Financial incentives are a valuable tool to retain employees, but
they shouldn't be given to VA employees who break the law. I thank the
Committee and Chairman Johnson for holding this important hearing and
hope we can stand up for taxpayers and hold the VA accountable with
this legislation.
Prepared Statement of Hon. W. Todd Akin
Chairman Johnson, Ranking Member Donnelly, thank you for the
opportunity to testify before you today regarding my bill, H.R. 2985,
the Veteran's I.D. Card Act. As of today, this bill has over sixty-five
bipartisan cosponsors and has been endorsed by a wide range of
veterans' organizations.
Over the last several years, identity theft and the need to protect
personal information have received heightened national attention. The
aggregation of personal information and Social Security numbers (SSN)
in large corporate databases and the display of SSNs in public records
have provided opportunities for identity thieves.
Thus, SSNs are a valuable commodity for persons seeking
to assume another individual's identity or to commit financial crimes.
Fraudulent and stolen SSNs can be used by noncitizens to
work illegally in the United States.
Although Congress and the states have passed a number of
laws to address this issue, the continued reliance on SSNs by private-
and public-sector entities underscores the need to identify additional
protections.
Several federal agencies have begun removing SSNs from individual
identification cards; including the Department of Veterans Affairs (VA)
which replaced VA medical identification cards with ones that no longer
display the SSN, and as of June 2011, SSNs are no longer printed on any
new the Department of Defense ID cards to protect the privacy and
personal identity information of cardholders.
Currently only veterans who served at least 20 years or have a
service connected disability are able to get an ID card signifying
their service from the Veterans Administration. The only option
available for all other veterans is to carry a paper form called a DD-
214 that contains various forms of personal data protected by the
Privacy Act of 1974, including their social security number, date &
place of birth, selective service number, and service details. While
this is appropriate information for the DD214, carrying this
information is clearly an identity theft risk.
All veterans should be provided the opportunity to obtain an
identification card proving their prior military service. The Veteran's
ID Card Act will:
Provide proof of military service for those who currently
have no simple means to do so;
Minimize the potential of identity theft through the
potential loss or theft of a form DD-214;
Provide employers looking to hire veterans a standard way
to verify an employee's military service; and
Provide military veterans the ability to take part in the
goods, services or promotional opportunities that are offered to those
who are able to provide proof of military service.
In order to ensure that this legislation has minimal impact on the
Veterans Administration and can be done in a budget neutral way, this
legislation:
Requires a veteran who seeks to obtain this ID card to
pay for the initial and any subsequent replacement cards;
Requires the VA to determine the cost of such a card and
apply a fee to the card appropriately to cover all costs;
Uses the equipment already in place at VA facilities
across the country to issue the card and collect payment;
Requires the Secretary of the VA to review and assess
costs every 5 years and change the fee structure appropriately to cover
all ID costs under this bill.
The intent of the bill is to create a standard identification card
to designate an individual as a former member of the Armed Services who
was not medically retired or retired after 20 years. Currently,
veterans who receive medical or retirement benefits have veterans ID
cards, but veterans who served honorably for less than 20 years or
didn't get injured do not have a similar proof of service. This bill
aims to correct that. Additionally, as the President and Congress
extend benefits to non-retired veterans, there should be a standard
identification card for those individuals.
Veterans need a form of identification other than the antiquated
form DD-214 issued by the military upon discharge. By providing
veterans this option they will have at their disposal a more rugged and
safer form of identification to prove their military service. This bill
will have no cost to the U.S. government.
Again, thank you for the opportunity to testify today and I look
forward to answering any questions you may have.
Prepared Statement of Mr. McLenachen
Mr. Chairman and Members of the Subcommittee, thank you for the
opportunity to present the views of the Department of Veterans Affairs
(VA) on several bills of interest to Veterans and VA. VA has not had
time to develop a position or estimate costs on H.R. 3730, the
``Veterans Data Breach Timely Notification Act,'' which would impose on
VA various notification requirements in the event of a data breach, or
H.R. 4481, the ``Veterans Affairs Employee Accountability Act,'' which
would deny bonuses to VA employees who knowingly violate the Federal
Acquisition Regulation or the Veterans Affairs Acquisition Regulation.
VA will provide its views and costs on H.R. 3730 and H.R. 4481 in a
letter for the record.
H.R. 2985
H.R. 2985, the ``Veteran's I.D. Card Act,'' would establish a
program under which VA would issue a Veteran identification card,
produced by VA, upon request by a Veteran who was discharged from the
Armed Forces under honorable conditions. The Veteran would have to
present to VA a copy of his or her DD-214 form or other official
document from his or her official military personnel file describing
his or her service, as well as pay a fee set by VA to recoup the cost
of implementing the program.
The bill makes clear that issuance of a card would not serve as
proof of entitlement to any VA benefits, nor would it establish
eligibility for benefits in its own right. The purpose of the card,
made clear in section 2(a)(3) and (4) of the bill, would be for
Veterans to use to secure goods, services, and the benefit of
promotional activities offered by public and private institutions to
Veterans without having to carry official discharge papers to establish
proof of service.
VA understands and appreciates the purpose of this bill, to provide
Veterans a practical way to show their status as Veterans to avail
themselves of the many special programs or advantages civic-minded
businesses and organizations confer upon Veterans. However, VA does not
support this bill. The same benefit to Veterans can best be achieved by
VA and the Department of Defense (DoD) working with the states, the
District of Columbia, and United States territories to encourage
programs for them to issue such identification cards. Those entities
already have the experience and resources to issue reliable forms of
identification.
VA is already working with states on these efforts. For example, VA
and the Commonwealth of Virginia just launched a program to allow
Veterans to get a Virginia Veteran's ID Card from its Department of
Motor Vehicles (DMV). The program will help thousands of Virginia
Veterans identify themselves as Veterans and obtain retail and
restaurant discounts around the state. On May 30, 2012, the program was
launched in Richmond, and a DMV ``2 Go'' mobile office was present to
process Veterans' applications for the cards.
Virginia Veterans may apply for the cards in person at any Virginia
DMV customer service center, at a mobile office, or online. Each
applicant presents an unexpired Virginia driver's license or DMV-issued
ID card, a Veterans ID card application, his or her DoD Form DD-214,
DD-256, or WD AGO document, and $10. The card, which does not expire,
is mailed to the Veteran and should arrive within a week. In the
meantime, the temporary Veterans ID card received at the time of the
in-person application can be used as proof of Veteran status.
Other jurisdictions can use this model to establish similar
programs without creating within VA a new program that may not be cost-
efficient. It is not known whether enough Veterans would request the
card to make necessary initial investments in information technology
and training worthwhile.
Also, a VA-issued card could create confusion about eligibility.
Although the bill's drafters took care to provide that a card would not
by itself establish eligibility, there could nonetheless be
misunderstandings by Veterans that a Government benefit is conferred by
the card. As the Subcommittee knows, entitlement to some VA benefits
depends on criteria other than Veteran status, such as service
connection or level of income. Confusion may also occur because the
Veterans Health Administration issues identification cards for Veterans
who are eligible for VA health care. Having two VA-issued cards would
pose the potential for confusion.
Because it is difficult to predict how many Veterans would apply
for such a card, VA cannot provide a reliable cost estimate for H.R.
2985. Although the bill is intended to allow VA to recoup its costs by
charging Veterans for the cards, in reality VA could be assured of
recouping its costs only if it knew in advance what those costs would
be, and those costs cannot be reliably estimated without knowing how
many Veterans would request the card.
H.R. 5948
H.R. 5948, the ``Veterans Fiduciary Reform Act of 2012,'' would
make several changes to VA's administration of its fiduciary program
for beneficiaries who cannot manage their own VA benefits. VA
appreciates the Committee's oversight and interest in improving VA's
fiduciary program, but finds provisions of the bill problematic, as set
out in detail below. Although VA does not support this bill, VA does
recognize the need for better oversight of the fiduciary program. VA
would welcome the opportunity to discuss its fiduciary program and the
goals of and intent behind this bill with you or your staff.
Section 2(a) of the bill would add to title 38, United States Code,
a new section 5511, which would govern VA adjudications of
incompetence. Section 5511 would require VA, when adjudicating whether
a beneficiary is considered mentally incapacitated or deemed mentally
incompetent, to consider a determination made by a state court or other
court of competent jurisdiction and an evaluation made by a medical
professional, taking into account the role of financial management in
the beneficiary's rehabilitation. Section 5511 would permit a
beneficiary whom VA has determined to be mentally incapacitated or
deemed mentally incompetent to appeal VA's determination and would
require VA to consider in such an appeal court determinations and
medical and lay evidence offered by the appellant. Section 5511 would
also permit certain individuals to file with VA ``a claim'' to
terminate any fiduciary relationship created by VA. Such a claim could
be filed by an individual whom VA has determined to be mentally
incapacitated or mentally incompetent, for whom VA has appointed a
fiduciary, and whom, after such appointment, a State court or other
court of competent jurisdiction or a medical professional has
determined to be competent.
VA opposes the provisions requiring consideration of medical
evaluations because they are unnecessary and would result in delay that
could cause undue hardship for affected beneficiaries, the majority of
whom are elderly or severely disabled and in immediate need of
benefits. VA currently considers determinations made by State courts of
competent jurisdiction and evaluations by medical professionals in
determining a beneficiary's ability to manage his or her financial
affairs. However, new section 5511 would require that a medical
evaluation take into account the ``role of financial management in the
rehabilitation of the individual.'' This requirement could result in VA
having to conduct significant evidentiary development, which is not
currently required, for determinations of ability to manage financial
affairs and thereby delay fiduciary appointments.
Although the provisions concerning appeals and removal of
fiduciaries generally codify current VA policy, VA opposes the removal
provision to the extent that it restricts removal to beneficiaries who
have a court or medical professional determination of competency. Under
current VA policy, VA may also consider a beneficiary's demonstrated
ability to manage his or her own VA benefits. A court or medical
professional determination of competency is not required. This
provision could limit a beneficiary's ability to have his or her
competency restored and could unnecessarily require the expense and
delay of a court proceeding or a medical examination to certify ability
to manage financial affairs.
Section 2(b) of the bill would clarify the statutory definition of
``fiduciary'' in 38 U.S.C. Sec. 5506. It would clarify that the term
``person'' in that definition includes a State or local government
agency whose mission is to carry out income maintenance, social
service, or health care-related activities; any State or local
government agency with fiduciary responsibilities; or any nonprofit
social service agency that VA determines regularly provides fiduciary
services concurrently to five or more individuals and is not a creditor
of any such individual. It would also require VA to maintain a list of
State or local agencies and nonprofit social service agencies that are
qualified to act as a fiduciary.
VA opposes this provision because it is unnecessary and could cause
confusion regarding the applicability of other statutes. Current 38
U.S.C. Sec. 5507 requires VA to conduct an inquiry or investigation of
any ``person'' to be appointed as a fiduciary to determine the person's
fitness to serve as a fiduciary. Defining the term ``person'' to
include State and local government and nonprofit social service
agencies would imply that VA must conduct the inquiry or investigation
required by section 5507 to determine such agency's fitness to serve as
a fiduciary. However, some provisions of section 5507, such as those
requiring VA to obtain a credit report and to request information
concerning criminal convictions, cannot be made applicable to agencies.
VA already appoints such agencies under current law if VA determines
that it is in a beneficiary's interest. However, VA does not consider
such agencies ``persons'' for purposes of completing the inquiry and
investigation requirements of section 5507.
VA also opposes the provision that would require VA to compile and
maintain a list of State or local, and nonprofit agencies qualified to
serve as a fiduciary for beneficiaries because it would be too
burdensome and divert limited resources away from the primary program
mission. There are as many as 3,009 counties, 64 parishes, 16 boroughs,
and 41 independent municipalities in the United States. In addition,
there are over 19,000 municipal governments and more than 30,000
incorporated cities in the Nation. The resources needed to compile and
maintain such a list would exceed by far any benefit for VA
beneficiaries in the fiduciary program. VA currently appoints
fiduciaries according to an order of preference, which begins with the
beneficiary's preference and otherwise seeks to appoint family members,
friends, or other individuals who are willing to serve without a fee.
Rarely does VA need to appoint a state, local, or nonprofit agency as a
fiduciary for a beneficiary.
Section 2(c) of the bill would revise the statute governing VA
qualification of fiduciaries. It would strike the phrase ``to the
extent practicable'' from current statutory language requiring a face-
to-face interview with a person before certifying the person as a
fiduciary; would add to the list of items required to form the basis of
a fiduciary appointment adequate evidence that the person to serve as
fiduciary uses a secure, encrypted Internet connection when conducting
activity on the Internet relating to the beneficiary's financial
information; and would strike from the statutory language requiring an
inquiry into criminal convictions the limitation to offenses under
Federal or State law ``which resulted in imprisonment for more than one
year.''
VA opposes the provision that would require a face-to-face
interview with every proposed fiduciary because it does not account for
the circumstances actually encountered by VA in the administration of
the program, would needlessly delay some initial fiduciary
appointments, and thus could harm affected beneficiaries. In some
cases, a face-to-face interview of a proposed fiduciary is not
practicable and should be waivable. For example, a face-to-face
interview would not be practicable for natural parents of minor
children or certain persons who already manage funds for multiple
beneficiaries. VA also opposes the provision that would require
adequate evidence that a proposed fiduciary uses a secure, encrypted
Internet connection when conducting online activity related to
beneficiary financial information. VA agrees that data security is
important, but the purpose of the provision is unclear and the
provision is unnecessary. VA-appointed fiduciaries provide services for
beneficiaries through use of the banking system. If the bank offers
online banking services, it is the bank that provides the secure portal
for account access, not the customer. This provision would require
significant oversight and staffing to implement and enforce. Further,
it would require VA intrusion into the lives of spouses and other
family members appointed as fiduciaries, which current VA policy
attempts to limit. VA supports the provision that would require inquiry
into any criminal conviction regardless of the length of any resulting
imprisonment.
Section 2(c) of the bill would also remove the current statutory
authority permitting VA to waive any inquiry or investigation
requirement with respect to certain classes of proposed fiduciaries and
would add to that list of proposed fiduciaries a person who is
authorized under to durable power of attorney to act on a beneficiary's
behalf.
VA opposes the waiver provision because it would needlessly delay
certain fiduciary appointments, such as appointments of legal guardians
and certain parents, for whom one or more of the inquiry or
investigation requirements are not needed. In the case of a
beneficiary's immediate family members seeking to provide fiduciary
services, the proposal would result in greater intrusion into family
matters with no real benefit for beneficiaries. VA does not oppose
permitting VA to expedite the inquiry or investigation regarding any
proposed fiduciary.
Section 2(c) would also require VA to conduct the required face-to-
face interview with a proposed fiduciary not later than 30 days after
beginning the inquiry or investigation and to conduct a background
check in accordance with provisions requiring inquiry into criminal
convictions and to determine whether the proposed fiduciary will served
the beneficiary's best interest, including by conducting a credit
check. It would require VA to conduct the criminal history and credit
history background check at no cost to the beneficiary and each time a
person is proposed as a fiduciary, regardless of whether he or she is
serving or has served as a fiduciary; to maintain records of any person
who has previously served as a fiduciary and had the fiduciary status
revoked by VA; to check those records as part of the background check;
and if a VA-appointed fiduciary is convicted of any crime while serving
as a fiduciary ``for any person,'' to notify the beneficiary not later
than 14 days after learning of such conviction. It would also require
each proposed fiduciary to disclose to VA the number of beneficiaries
on whose behalf the fiduciary acts.
VA has not been able to discern a need for a face-to-face interview
to be conducted within 30 days after beginning a fitness inquiry or
investigation. Therefore, VA does not support this provision. To the
extent that this provision could be interpreted to require VA to
appoint a fiduciary within 30 days of receiving a request from a rating
authority, VA opposes this provision. VA's current standard is to
complete all initial appointment field examinations within 45 days. The
face-to-face interview is only one element of the field examination. VA
must also meet with the beneficiary, check the proposed fiduciary's
criminal background and credit history, and develop additional
information as necessary prior to recommending appointment. Other
factors that can affect the timeliness of initial appointment field
examinations include travel, availability of beneficiaries and proposed
fiduciaries, workload, and availability of resources. Mandating the
completion of an appointment within 30 days without VA having
significant additional resources would jeopardize VA's ability to
conduct full and effective examinations. VA also opposes the provision
that would, without exception, require VA to report conviction of any
crime by a fiduciary to a beneficiary within 14 days, regardless of
whether such conviction has any effect on the fiduciary relationship or
disqualifies the fiduciary, or whether disclosure of such information
would harm the beneficiary.
Section 2(c) of the bill would also require VA to ensure that each
fiduciary has adequate training and knowledge to effectively use an
encrypted, secure internet connection when conducting activity related
to the beneficiary's financial information. It would, if VA has reason
to believe that a fiduciary may be misusing all or part of a
beneficiary's benefit, require VA to thoroughly investigate the
veracity of the belief and, if veracity is established, transmit to
certain officials a report of the investigation. The recipient
individuals would be the Attorney General and each head of a Federal
department or agency that pays to a fiduciary or other person benefits
under any law administered by such department of agency for the use and
benefit of a minor, incompetent, or other beneficiary.
VA also opposes the provision that would require VA personnel to
train fiduciaries on the use of encrypted, secure internet connections.
Even if such connections were necessary to conduct the banking and bill
payment business of a fiduciary (and they are not), VA does not have
the resources or expertise to provide such training on a rolling basis
to more than 95,000 individuals and entities who currently act as
fiduciaries. VA does not oppose the investigation-of-misuse provisions
because they codify current VA policy. However, upon a determination of
misuse, VA provides the decision to the VA Office of Inspector General
(OIG) for review and a determination regarding referral to the
Department of Justice for prosecution. The Inspector General Act and
Attorney General Guidelines already require the OIG to notify the
Attorney General if the OIG has reason to believe that a Federal
criminal law has been violated. VA opposes these provisions to the
extent that they mandate dissemination of information to specific
agencies regardless of VA's own internal review.
Section 2(c) would authorize VA to require a proposed fiduciary to
serve as a fiduciary only with respect to VA benefits, except for the
beneficiary's family members and individuals whom the beneficiary has
pre-designated to serve as the beneficiary's fiduciary. It would
require VA, in requiring the furnishing of a bond, to ensure that the
bond is not paid using any beneficiary funds and to consider the care a
proposed fiduciary has taken to protect the beneficiary's interests and
the proposed fiduciary's capacity to meet the financial requirements of
a bond without sustaining hardship. It also would require a VA-
appointed fiduciary to operate independently of VA to determine the
actions that are in the beneficiary's interest. Finally, section 2(c)
would require each VA regional office to maintain a list of the name
and contact information for each fiduciary, the date of each
fiduciary's most recent VA background check and credit check, the date
any bond was paid, the name and contact information of each beneficiary
for whom the fiduciary acts, and the amount that the fiduciary controls
for each beneficiary.
VA opposes the provision that would authorize VA to limit the
appointment of a fiduciary to management of VA funds. The purpose of
this provision is unclear and unnecessary because VA appoints
fiduciaries only for the limited purpose of receiving VA benefits on
behalf of a beneficiary. Finally, VA strongly opposes the provisions
that would require fiduciaries to pay annual surety bond premiums.
Requiring the fiduciary to pay the annual premium would be a
disincentive for both volunteer and paid fiduciaries and would
significantly impair VA's ability to find qualified fiduciaries in some
of its most difficult cases. Most fiduciaries are family members or
friends who may not have the funds needed to meet the cost of the bond
premium. With respect to paid fiduciaries who agree to take some of
VA's most difficult cases, the cost of a bond premium might consume the
entire nominal fee authorized by Congress. It is standard practice in
the guardianship industry to allow for payment of surety bond premiums
out of estate funds. If this provision is enacted, VA anticipates a
dramatic increase in the number of fiduciaries who are also court
appointed. Courts will allow the deduction of the cost of the bond and
a substantial fee, generally between 5 and 15 percent of estate value,
from the beneficiary's funds. VA cannot support the inequitable
treatment of, and significant harm to, beneficiaries that would likely
result from the enactment of this provision.
Section 2(d) of the bill would require VA to include on its
prescribed compensation and pension application forms an opportunity
for the claimant to designate an individual as a fiduciary if needed, a
description of what a fiduciary is and the role served by a fiduciary,
and a description of the actions VA will take if the claimant does not
designate a fiduciary on the application. Section 2(d) would also
require VA, in appointing a fiduciary for a claimant who has not
designated one, to appoint the beneficiary's court-appointed guardian
or a person authorized to act on the beneficiary's behalf under a
durable power of attorney. If VA appoints a fiduciary other than the
one designated by the beneficiary, VA would have to notify the
beneficiary of the reasons for not appointing the designated individual
and of the beneficiary's ability to file a claim to change the
appointed fiduciary. Finally, section 2(d) would permit a beneficiary
for whom VA has appointed a fiduciary to file with VA a claim to remove
the appointed fiduciary and have a new one appointed. VA would have to
ensure that any removal or new appointment of a fiduciary does not
delay or interrupt the beneficiary's receipt of benefits.
VA opposes the provisions that would require modification of the
compensation and pension application to include fiduciary designation
information. The intent appears to be that VA would allow beneficiaries
to designate a proposed fiduciary upon application. This would be
unnecessary and not in the best interest of VA beneficiaries. There are
currently over four million VA compensation or pension beneficiaries
but only approximately 125,000 beneficiaries in VA's fiduciary program.
VA has recently received feedback regarding the length and complexity
of its application forms and has an aggressive plan to address those
concerns. This provision of the bill would require VA to add further
complexity to its application forms for a purpose for which most
beneficiaries will not have an immediate need. Further, as a result of
VA's increased outreach and collaboration with the Department of
Defense, many individuals complete their initial benefit application
early in their lifetime when they have no need for fiduciary services.
Designating a fiduciary decades prior to any actual need for a
fiduciary would likely render the initial designation stale and of no
use to the beneficiary or VA. Also, VA's current appointment policy
gives preference to the beneficiary's choice and family members' or
guardian's desires as expressed at the time of the field examination,
which VA believes is the best available and most relevant information
for purposes of making a best-interest determination. Such
determination should not be based upon stale information.
VA also opposes the provision that would give priority in
appointment consideration to individuals holding a beneficiary's
durable power of attorney (POA). Under current policy, VA first
considers the beneficiary's preference and then considers family
members, friends, and other individuals who are willing to serve, which
may include individuals designated in a POA. However, based upon VA
experience, it would not be good policy to give a person holding a
beneficiary's POA priority over all other candidates based only on the
existence of a POA. Veterans and other beneficiaries in the fiduciary
program can be extremely vulnerable and easily coerced into signing
documents. Additionally, a POA can be executed and revoked by the
beneficiary at any time. If an individual is holding a POA, VA would
have no way of determining whether the POA is still in effect or if the
beneficiary had the capacity to execute a legally enforceable POA under
state law at the time. Implementing policies and procedures related to
the assessment of POAs would needlessly complicate and delay the
fiduciary-appointment process. Also, under current law, VA has a duty
to appoint, based upon a field examination and consideration of the
totality of the circumstances, the individual or entity that is in the
beneficiary's best interest. While such a determination might conclude
that appointment of an individual who holds the beneficiary's POA is in
the beneficiary's interest, VA strongly opposes giving undue preference
to an individual named in a POA. Under current law, VA appoints the
person or entity who will provide the least restrictive fiduciary
relationship. Thus, VA first considers the beneficiary's preference,
followed by a spouse, other family member, or friend or other
individual who is willing to serve as fiduciary without a fee. Such
appointments constitute the overwhelming majority of VA's fiduciary
appointments. Nonetheless, under this provision of the bill, if a
beneficiary has not designated a proposed fiduciary, VA would be
required to consider first the beneficiary's court-appointed guardian
or an individual who holds the beneficiary's durable POA. It would
require priority consideration for more restrictive arrangements,
contrary to current VA policy.
VA also opposes the provision mandating preference for the
beneficiary's court-appointed guardian because it would generally be
bad policy for VA's most vulnerable beneficiaries. Appointment of a
court-appointed guardian often is the most restrictive method of
payment and the most costly. Under current law, a VA-appointed
fiduciary may collect a maximum fee of 4 percent of the VA benefits
paid to the beneficiary each year. Further, under current VA policy
interpreting the law, a fee may not be based upon retroactive, lump-
sum, or other one-time payments or upon accumulated funds under
management. However, under State law, guardians may collect fees in
excess of the 4-percent Federal limit. Although the fee structure
varies from State to State, basic fees range between 5 percent of all
income received by the guardian to as high as 10 to 15 percent of all
income and funds under management by the guardian. Additionally, courts
often allow extraordinary fees in excess of the standard fee. The
appointment of a guardian often results in the guardian incurring the
cost of attorney fees for filing motions and annual court accountings.
These fees and costs can be as much as thousands to tens of thousands
of dollars per year and are paid from the beneficiary's VA benefits.
Also, VA cannot conduct consistent and effective oversight of
guardians, who are appointed by a court, resulting in undesirable
disparate treatment for vulnerable beneficiaries depending upon the
State of residence. VA believes that Congress established the fiduciary
program for the express purpose of ensuring a nation-wide, Federal
standard for beneficiaries who cannot manage their own benefits.
VA does not oppose the provision that would require VA to notify
beneficiaries of the reasons for appointing someone other than the
individual designated by the beneficiary. Under current VA policy, a
beneficiary may at any time for good cause shown request the
appointment of a successor fiduciary. Accordingly, VA does not oppose
the provision that would allow such a request. However, VA opposes the
provision to the extent that it would imply that such a request is a
``claim.'' Characterizing a request for a successor fiduciary as a
claim would likely engender costly and time-consuming litigation over
whether such requests are subject to all the provisions of law
currently applicable to claims, such as VA's duty to notify the
claimant of the information and evidence necessary to substantiate a
claim, VA's duty to assist in obtaining the evidence necessary to
substantiate a claim, and the ability to retroactively reverse or
revise a decision on a claim based on clear and unmistakable error. The
appointment of a fiduciary after VA has awarded benefits to a
beneficiary is not a decision on a claim for benefits.
If a fiduciary is removed and a successor fiduciary is being
appointed, VA's objective is to ensure the continuation of benefits.
However, in some cases beyond VA's control, benefits do get delayed or
interrupted when a fiduciary is being replaced. VA opposes this
provision to the extent that it would prohibit, without exception or
qualification, any delay in the delivery of benefits upon removal of a
fiduciary. Under current law, VA must conduct the inquiry or
investigation prescribed by Congress in 38 U.S.C. Sec. 5507 when it
replaces a fiduciary, and sometimes VA encounters an uncooperative
beneficiary or beneficiary's representative. Some delay may be
unavoidable in these cases.
Section 2(e) of the bill would make several changes with respect to
the commission payable for fiduciary services. It would: (1) authorize
a reasonable monthly commission limited to the lesser of 3 percent of
the monthly monetary benefits paid or $35; (2) prohibit a commission
based on any ``back pay'' or retroactive benefit payment; (3) prohibit
a commission if VA determines that the fiduciary misused a benefit
payment; and (4) permit VA to revoke the appointment if VA determines
that the fiduciary has misused any benefit payment.
VA opposes this provision. Payment of a suitable fee is necessary
if there is no other person who is qualified and willing to serve as a
fiduciary without compensation. In some instances, a beneficiary's
interests can be served only by the appointment of a qualified paid
fiduciary. As of April 30, 2012, VA has identified and appointed
fiduciaries willing to serve without a fee for more than 92 percent of
its beneficiaries.
Under current VA policy, fiduciaries are more than mere bill
payers. VA's emerging view is that fiduciaries should remain in contact
with the beneficiaries they serve and assess those beneficiaries'
needs. Without such an assessment, fiduciaries who serve VA's most
vulnerable beneficiaries would be unable to fulfill their obligation to
determine whether disbursement of funds is in the beneficiary's
interest. As noted above, for the overwhelming majority of
beneficiaries, a relative or close personal friend will perform the
duties without cost to the beneficiary. However, there are difficult
cases in which VA has no alternative but to turn to an individual or
entity that is willing to serve Veterans and their survivors for a
suitable fee. Reducing the allowable fee when VA is attempting to
strengthen the role of fiduciaries in the program would create a
disincentive for serving these vulnerable beneficiaries. VA strongly
opposes such a reduction because it would harm beneficiaries and
needlessly hinder the program, which has a clear preference for
volunteer service but recognizes the need for a pool of paid
fiduciaries who are willing to accept appointment for a suitable fee in
some of VA's most difficult cases. However, VA supports the provisions
that would codify VA's current policy regarding limitations on fees and
has no objection to the remaining fee provisions because they appear to
restate current law.
Current 38 U.S.C. Sec. 6107 requires VA to reissue benefits that a
fiduciary has misused as a result of VA's negligent failure to
investigate or monitor the fiduciary. The law deems certain situations
as such a negligent failure, including any case in which actual
negligence is shown. Section 1(f) of the bill would specify that VA's
failure to conduct, in accordance with governing law, an inquiry or
investigation into an individual's qualifications to serve as a
fiduciary shall constitute such negligent failure.
VA does not oppose this provision, but the proposed amendment may
insert ambiguity where it does not currently exist. The amendment would
be to a statute that requires VA to reissue benefits if actual VA
negligence is shown. The amendment would imply that ``not acting in
accordance with [38 U.S.C. Sec. ] 5507'' constitutes a showing of
actual negligence. Whether that implication is true in a given case
would depend upon the circumstances.
Section 2(g) would mandate that VA require a fiduciary to file an
annual report or accounting and that VA transmit the report or
accounting to the beneficiary and any legal guardian of the
beneficiary. It would also require that a report or accounting include
for each beneficiary the amount of benefits that accrued during the
year, the amount spent, and the amount remaining and an accounting of
all sources of benefits or other income other than VA benefits that are
overseen by the fiduciary.
VA opposes these provisions because they would burden fiduciaries,
most of whom are volunteer family members or friends, but would not
significantly improve VA's oversight of fiduciaries. Under current
policy, which is based upon VA's experience in administering the
program, VA generally requires fiduciaries to submit an annual
accounting in cases in which: the beneficiary's annual VA benefit
amount equals or exceeds the compensation payable to a single Veteran
with service-connected disability rated totally disabling; a
beneficiary's accumulated VA funds under management by the fiduciary is
$10,000 or more; the fiduciary was appointed by a court; or the
fiduciary receives a fee. These accountings are comprehensive and must
be supported by financial documentation that identifies all
transactions during the accounting period. VA audits more than 30,000
accountings each year.
VA currently pays benefits to more than 17,000 spouse fiduciaries,
many of whom are also caring for severely disabled or infirm Veterans.
Countless other beneficiaries receive only $90 each month and reside in
the protected environment of a Medicaid-approved nursing home. Many
other beneficiaries are cared for by family members who, due to the
beneficiaries' recurring needs, expend all available VA benefits each
month for the beneficiaries' care. The additional burden of documenting
income and expenditure annually for the majority of our beneficiaries
would be an undue hardship and would not result in any benefit to the
beneficiary or the program. VA does not otherwise oppose the
provisions, which restate current law or codify current VA policy
regarding the information that must be included in an accounting.
Section 2(h) would require a separate annual report from VA on
information concerning VA-appointed fiduciaries to be submitted to the
House and Senate Committees on Veterans' Affairs by July 1st of each
year. Section 2(i) of the bill would require VA to comprehensively
report, not later than one year after enactment, to the Committees on
the implementation of the amendments made by this bill, including
detailed information on the establishment of new policies and
procedures and training provided on them.
Under current law, VA's publicly-available Annual Benefits Report
includes information regarding VA's oversight of the fiduciary program,
specifically with respect to its misuse-of-benefits determinations and
the Government's prosecution of misuse cases. VA opposes section 2(h)
because providing the information solely to Congress excludes
stakeholders and does not promote program transparency. VA does not
oppose the submission of any report that Congress deems necessary to
track VA's progress in implementing legislation. However, requiring a
report not later than one year following enactment might be
unreasonably soon given that rulemaking would be required to implement
certain provisions.
Enactment of H.R. 5948 would not result in any mandatory benefit
costs. VA estimates that implementing this bill would result in GOE
costs of $40.3 million in the first year, $200.3 million over five
years, and $444.1 million over ten years. In addition, VA estimates
that information technology costs would be $1.6 million in the first
year, $5.3 million over five years, and $9.9 million over ten years.
This concludes my statement, Mr. Chairman. I would be happy to
entertain any questions you or the other Members of the Subcommittee
may have.
Prepared Statement of Mr. Ibson
Chairman Johnson, Ranking Member Donnelly, and Members of the
Subcommittee:
Thank you very much for inviting Wounded Warrior Project (WWP) to
testify today, and particularly to provide views on H.R. 5948, the
Veterans Fiduciary Reform Act of 2012.
As this Committee's February oversight hearing on the VA fiduciary
program underscored, the program continues to experience serious
problems and weaknesses. We concur that legislation is needed. Our
principal concern, however, is that H.R. 5948 falls short of resolving
longstanding problems raised at February's oversight hearing, and prior
to that, issues covered in a WWP statement submitted to an April 2010
hearing before the Subcommittee on Disability and Memorial Affairs. We
welcome the opportunity to explain what we see as an omission, and hope
to work with you prior to markup to develop pertinent language to
address these issues.
As an organization dedicated to honoring and empowering wounded
warriors, we keenly appreciate the importance of assuring responsible
stewardship of veterans' benefits and the protection of vulnerable
beneficiaries. We appreciate many of the steps H.R. 5948 would take to
add safeguards and strengthen the program.
Mr. Chairman, in opening February's hearing, you observed that
numerous honorable fiduciaries serve our veterans and they all too
often find it difficult to navigate the maze of the fiduciary program.
At the same time, you called attention to the existence of ``bad
actors'' in the system. As one of your colleagues observed in citing a
need for balance, abuses are the exception and not the rule.
WWP works closely with family members of severely wounded warriors
who are both full-time caregivers and fiduciaries for those warriors.
Recognizing the sacrifices these family members have made to care for
their loved ones, and the emotional and financial toll associated with
caregiving, Congress two years ago established the Comprehensive
Caregiver Assistance program in Public Law 111-163 to provide them
needed supports. To qualify and win formal approval for this VA
assistance, family members of seriously wounded warriors must undergo
VA review, training, home-inspection, and a determination that the
proposed arrangement is in the veteran's best interest. The caregiver
must also undergo regular quarterly home-inspections and monitoring of
the veteran's well-being to continue to receive VA assistance. Any
``red flags'' that might arise in the course of these home-inspections
can result in revocation of VA support. In short, Veterans Health
Administration (VHA) staff assist and work closely with family
caregivers - who in many instances are also fiduciaries and who have
not only been screened before qualifying for the program, but whose
care of the veteran is closely monitored.
In administering the Fiduciary Program, the Veterans Benefits
Administration (VBA), however, does not take account of the unique
circumstances of family members who have given up careers and depleted
savings to care for their loved ones, and who have already been
screened and monitored under VHA's caregiver program. Surely that
process and ongoing oversight provide ample evidence that these
individuals are trustworthy, and do not pose a risk of misusing the
veteran's benefits.
WWP is not proposing that caregiver-fiduciaries have no
accountability for management of the beneficiary's funds. But we do see
a need to make provision in law for more balanced accountability and
far less intrusive oversight under circumstances where caregiver-
fiduciaries have demonstrated that they do not pose significant risk
and have earned VA's trust. Dedicated caregiving, as evidenced through
unblemished participation in VA's comprehensive caregiver assistance
program, should be recognized as establishing that trust.
WWP has seen all too clearly that VBA's intensely detailed
reporting requirements can be overwhelming to an already emotionally
drained family member who is shouldering a young veteran's total-care
needs. As one mother described it, ``we are probed yearly by a forensic
accounting that seemingly investigates for `murderous' infractions,''
even requiring fiduciaries to ``line-item Walmart receipts.''
We greatly appreciate the Committee's work in getting VA to remove
language from its fiduciary form 21-4703 that had stated, ``VA must
approve any use of a beneficiary's VA funds,'' and we very much welcome
the inclusion of language in H.R. 5948 to make it clear that a
fiduciary has the ability to spend money in the veteran's best
interest. It bears noting, however, that VBA's April 19, 2012
instructions to the field that VA-appointed fiduciaries do not need to
seek prior VA approval for any single expenditure made on behalf of a
beneficiary from the beneficiary's funds, nevertheless advises that
examiners ``must carefully review expenditures in excess of $1,000 when
auditing a fiduciary's annual accounting and may request receipts or
other documentation to verify questionable expenditures.'' \1\
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\1\ Department of Veterans Affairs, Veterans Benefits
Administration, Fast Letter 12-13 (April 19, 2012), accessed at http://
www.vba.va.gov/bln/21/Fiduciary/FL12-013.doc.
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While we applaud the wisdom of eliminating required pre-approval of
significant expenditures, we see nothing in H.R. 5948 that would
eliminate the inquisitorial audits caregivers too often experience.
Consider the following examples:
A mother/caregiver having to explain to a VBA examiner
why she allowed her wounded-warrior son to spend ``too much'' money on
Christmas gifts;
An auditor insisting that the caregiver's electric bill
was too high and asserting that during the summer in Florida she
shouldn't run the air-conditioning at night;
A family's being questioned about expenditures for
gasoline used in transporting the wounded veteran; and
A VBA examiner questioning the caregiver as to why she
was buying movies and music for her son given that he has a brain
injury.
As summed up by one caregiver-fiduciary, VBA fiduciary program
staff ``don't really help with management [of assets] but audit every
two years every penny I spend for my son's care. [There are] not many
guidelines and auditors question expenses when they know nothing about
the care needed.''
We do not foresee in H.R. 5948 any real reversal in the ``guilty
until proven innocent'' framework many caregiver-fiduciaries experience
under VBA's fiduciary-management practices. While this approach may be
prudent regarding unknown potential ``bad actors,'' we think it goes
too far in dealing with proven caregiver-fiduciaries.
Caregivers also emphasize that just trying to comply with the
expectations of the program is not easy. VA's demanding requirements
are not only difficult, fiduciaries report that they are on their own:
``When the paperwork arrived at the end of the year, there were no
instructions or assistance to do it. I had to figure out how to do
everything on my own. I asked for software that I could use to make it
easier to do the accounting but I was told there was none. I had to
create an excel spreadsheet to enter in the amounts in the categories
that were requested, and sometimes it takes me up to 2 weeks to
complete all the data entry.''
We invite the Committee to recall the testimony in February of Pam
Estes, a caregiver-fiduciary for her son Jason. Mrs. Estes--herself an
accountant--related the frustrating and stressful experience of being
threatened with removal as her son's fiduciary over the manner in which
she had documented expenditures when VBA had never provided her
instructions or forms for annual reporting, and ``when we'd been
working so hard to do what's best for Jason, including saving much of
his money for the future when we're not here to care for him.'' As she
related in a recent email (excerpted \2\), she has continued to have
difficulties over the same problem to which she testified in February,
to include having spent two months and four trips to bank branches to
obtain a VBA-required months-old account-balance for a date falling in
the middle of a month (and thus not reflected in any bank statement or
otherwise readily attainable). Mrs. Estes' frustrations are hardly
unique among VA caregiver-fiduciaries.
---------------------------------------------------------------------------
\2\ `` ... you may recall that my issue for the 2011 audit began
when I was playing telephone tag with the Baltimore office of the VBA.
Since we were unable to connect, I had sent my accounting to them in
early December so that I would not be considered delinquent. In spite
of that, I received a letter a month later indicating that I was
delinquent. Following our testimony in February, the Fiduciary Manager
from Baltimore came to our home the next day. He indicated that they
did have the accounting I had submitted (and did indeed bring it with
him), but wanted to re-do it to better meet the process requirements.
You should also keep in mind that this was the third or fourth set of
instructions I've been given. We redid the form and he requested that I
have the banks complete form 21-4718a confirming the account balances
on 9/19/11. Although the original bank statements were submitted, I did
not realize that account balance confirmation was required as of a
specific date (not to be confused with the statement date) and asked
him if banks would even be able to provide that information 5 months
later.
He assured me it would not be a problem. Nothing could have been
further from the truth! It took me 2 months and 4 trips to the banks to
find branches that could get me something even close to what was
requested.
``On May 25, 2012, the hub office in Indianapolis sent me a letter
letting me know that my accounting had been DISAPPROVED! It turns out
that the original form I had submitted in December (the one they
originally said they didn't have) had been forwarded from the Baltimore
office to the Indianapolis hub office. So on June 3, 2012, I sent a
letter to the hub office letting them know that they didn't have the
proper form and submitted copies of the revised information. I also
sent a letter to the Fiduciary Manager in Baltimore alerting him to the
issue. I haven't heard back yet from either office.
``Needless to say, I'm weary! If I'm going through this effort even
with the help of the VBA, I can only imagine what others are subjected
to.'' Email of Pam Estes to Ralph Ibson, June 12, 2012.
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We applaud the efforts in H.R. 5948 to tighten this program (though
we note that the bill would actually add to the reporting burden that
is already problematic for caregiver-fiduciaries with the addition of
requirements in new section 5509(c)). In sum, we urge that further work
be done on the bill to address the caregiver-fiduciaries' concerns that
we have outlined. We would be happy to work with the Committee to
develop language to address those concerns.
Thank you for your consideration of WWP's views.
Prepared Statement of Ms. Kologe
Good morning, Mr. Chairman and other distinguished members of the
Subcommittee. Vietnam Veterans of America (VVA) is pleased to have the
opportunity to appear here today to share our concerns and thoughts
regarding the pending legislation. In particular, we would like to
share our views on H.R. 5948 the Veterans Fiduciary Reform Act of 2012
and how the Veterans Benefits Administration (VBA) can improve their
Fiduciary program.
H.R. 2985, Veteran's ID Card Act, introduced by Representative Todd
Akin [R-MO], provides for VA to issue, upon request, a Veteran's ID
card for certain Veterans who do not already qualify for a VA ID card.
Veterans who are not enrolled in VA health care will be able to obtain
a Veteran's ID Card for a fee.
VVA supports this bill, as ``goods, services, and promotional
activities are often offered by public and private institutions to
veterans who demonstrate proof of service in the military but it is
impractical for a veteran to always carry official DD-214 discharge
papers to demonstrate such proof.'' We strongly suggest that the
application process for this ID card contain written information and/or
verbal advisement on enrollment in VA health care, including the toll-
free number for VA health care enrollment. This would allow a Veteran
who is otherwise eligible for a free ID card and VA health care to more
easily receive that benefit.
H.R.3730, Veterans Data Breach Timely Notification Act, introduced
by Representative Joe Donnelly [D-IN], requires the Department of
Veterans Affairs to notify individuals whose personal information has
been involved in a data breach, as well as notifying the general public
and the appropriate Committees of Congress.
VVA supports this bill. Although we are not information technology
experts, we ask the Subcommittee to consider a provision which would
require much faster notification when deposit or bank account
information is breached. It takes significantly less time than 5 or 10
business days for experienced criminals to wipe out a Veteran's or
dependent's entire savings.
H.R. 4481, Veterans Affairs Employee Accountability Act, introduced
by Representative Phil Roe [R-TN], makes employees of the Department of
Veterans Affairs ineligible for bonus compensation when they knowingly
violate any civil law covered by the Federal Acquisition Regulation
issued under section 1301(a)(1) of title 41 or the Veterans Affairs
Acquisition Regulation.
VVA favors this bill, provided that two changes are made.
First, we urge the Subcommittee to remove the ``knowingly''
element. We believe the incentives must be changed for those in
management and leadership capacities in the Department of Veterans
Affairs. As this bill only provides that those who violate provisions
of the acquisition act not receive bonuses, which are above and beyond
their normal financial compensation, we believe that any employee who
violates these provisions be ineligible to receive a bonus. This will
eliminate any insulation of employees or ``passing the buck''.
Second, we propose that ``for or during that year'' be changed to
``for or during that year or the following fiscal year''. Because of
the length of time of investigations and reporting requirements, we
believe this would further dissuade violation of the Acquisition
Regulations.
We urge for immediate passage of a bill with this revised language,
before the calculation of fiscal year 2012 bonuses.
H.R. 5948, Veteran's Fiduciary Reform Act of 2012, introduced by
Representative Bill Johnson [R-OH], provides additional enhanced
background checks for fiduciaries managing veterans' funds, further
limits the fees VA may pay fiduciaries, authorizes state agencies to be
fiduciaries, allows pre-designation of a preferred fiduciary, and
requires VA to prepare an annual report to Congress on the fiduciary
program separate from the VBA annual report.
VVA strongly favors this bill, providing Congressional guidance for
the Department of Veterans Affairs in reforming the fiduciary program,
and also suggests changes to make it stronger and requiring less
interpretation. We applaud the legislation's sponsors in their courage
to provide a clear reporting requirement for abuses of the system
including misfeasance and malfeasance. The administration of the
fiduciary program has been at cross-purposes with its intent, due to
lack of prioritization and allocation of resources, lack of leadership
at all levels, and confusion about the role of the fiduciary program.
We enthusiastically support the bill's provisions for background
checks of fiduciaries, enhanced reporting requirements to Congress,
pre-selection of fiduciaries, and return of monies to the Veteran in
cases of misfeasance. We offer today some concrete suggestions in
marking up this bill, and in subsequent regulatory proceedings, to
strengthen this legislation and make VA's fiduciary program truly serve
the Veterans it is meant to protect. We recommend the following
additions or changes to the legislation:
1) We propose that the title of Section 5511 ``Adjudication of
financial incompetence'' and the language ``mentally incapacitated or
deemed mentally incompetent'' be changed to reflect the purpose of the
fiduciary program. We would propose language substantially similar to
``Adjudication of financial incapacity'' and ``financially
incapacitated or deemed unable to manage financial affairs''. Current
38 U.S.C. Sec. 5501 allows the VA to commit mentally incompetent
veterans to a Department hospital or domiciliary. Although mental
competency, for VA benefits purposes, refers only to the ability of the
veteran to manage VA benefit payments in his or her own interest, this
is not how a veteran sees a ``rating of incompetency''. Furthermore,
the words mentally incompetent mean much more outside the VA setting.
This term is not only stigmatizing, it can lead to a veteran's rights
being taken away. For this reason, we believe financial incapacity is a
clearer and more effective designation for individuals needing a
fiduciary.
2) We recognize that many veterans and other beneficiaries in the
fiduciary program require support services other than just managing
benefits payments. Therefore, we urge a change to the examination
protocol for determining that an individual is unable to manage his or
her benefit payment. Currently, VA only assesses veterans' ability to
manage their benefit payments in certain disability exams. Furthermore,
these compensation or pension exams frequently last only 20 to 30
minutes. It is unclear how VA is able to determine the capacity of a
veteran without protocol for certain questions to be asked of the
veteran, which are consistent across the board. It is also unclear how
VA assesses a widow's or dependent's ability to manage benefit
payments.
We propose that two determinations be made: one for financial
capacity and one for any requirement of guardianship or incapacity for
self-care. The fiduciary program is failing to monitor the well-being
of the veterans in its care. Many of these veterans require additional
services that fiduciaries are not trained to do and are not paid to do.
A question for the Subcommittee and the new administrator of VA's
fiduciary program is what is the effect of 38 U.S.C. Sec. Sec.
5502(d)-(e) on the administration of payments to beneficiaries in the
fiduciary program? 38 U.S.C. Sec. Sec. 5502(d)-(e) provide for escheat
to the United States that money which is left unpaid to a beneficiary
in the fiduciary program, when there are no survivors that may
traditionally make a claim for accrued benefits. We have heard and have
personally handled several claims where monies were withheld for no
apparent reason. There is some type of incentive, either perceived or
concrete, to build up the trust without making distributions that would
improve the veteran's or beneficiary's quality of life. We urge
legislation, regulation and culture change to combat the tendency to
become overly paternalistic in the administration of VA benefits. We
also advise the use of pre-paid and automated billing, home delivery
services, and other programs that would ensure those in the fiduciary
program have proper shelter, food, utilities, and other needs covered.
3) Section 5507 describes qualifications for fiduciaries. The
proposed bill states that the Secretary shall request information
concerning whether that person has been convicted of any offense under
Federal or State law (and if the answer is yes, the person is subject
to increased scrutiny). We appreciate keeping criminals away from our
most vulnerable veterans and dependents. However, this language seems
to also exclude those convicted of minor offenses including non-moving
violations of traffic laws and other on-the-books laws. While the
current law is under-inclusive, the proposed language is overly
restrictive. We would like Congress to consider exceptions for minor
violations.
4) We very much like the section in the proposed legislation that
requires re-certification/background checks each time a fiduciary is
appointed. However, as the bill adds state agencies as ``persons'',
there should be clarification on how the background checks will be done
for a state agency. Will one person from the agency be assigned as a
fiduciary for each veteran, or will the agency as a whole function as a
fiduciary? This would impact the scope of background checks.
5) We exhort the Subcommittee to provide a whistleblower
provision or a more definite reporting system for abuses in the
fiduciary program. A clear chain of command and expectations goes a
long way toward reporting and fixing problems before they get worse.
There should at least be a requirement in the law for the Secretary to
report on the steps VA employees, beneficiaries, and third parties can
take to report malfeasance and misfeasance, so that the officials most
able to fix the system can make the necessary changes.
Thank you for this opportunity to present our views here today. I
will be happy to answer any questions.
Prepared Statement of Ms. Ansley
VetsFirst is pleased to provide our support and recommendations for
the following legislation.
Veteran's I.D. Card Act (H.R. 2985)
We believe that this legislation will ensure that eligible veterans
are able to fully benefit from services and promotional opportunities
open to them by allowing them to prove their veteran status without
having to present their DD-214s. Protections in the legislation ensure
that there will be no confusion regarding the purpose of the card,
which does not entitle the veteran to any benefits.
Veterans Data Breach Timely Notification Act (H.R. 3730)
We believe that the Veterans Data Breach Timely Notification Act
provides important steps toward ensuring that veterans are properly
informed of data breaches involving their sensitive personal
information. This legislation not only requires the Department of
Veterans Affairs (VA) to make a notification of a breach of this
information but also requires VA to provide veterans with important
information regarding the breach and how to take precautions to
minimize the impact. Although we support this legislation, we believe
that it is important to clarify the timeline for VA notification of a
breach and to ensure accessibility of the notification for all disabled
veterans.
Veterans Affairs Employee Accountability Act (H.R. 4481)
This legislation will ensure that employees who knowingly violate
any civil law covered by the Federal Acquisition Regulation or the
Veterans Affairs Acquisition Regulation do not receive bonuses for or
during the year of the violation. It is our hope that using bonuses to
reward only those employees who follow these laws will ensure that
veterans receive the highest level of services from VA. Ultimately, VA
must ensure that veterans' needs can be clearly and efficiently met
within the contracting requirements of federal law.
Veterans Fiduciary Reform Act of 2012 (H.R. 5948)
The Veterans Fiduciary Reform Act takes important steps toward
ensuring that VA's fiduciary program is more transparent and focused on
the needs of veterans and other beneficiaries. We support efforts to
clarify factors that will be considered to determine if a beneficiary
needs a fiduciary and believe that efforts to strengthen the inquiry
and investigation into and the qualifications for fiduciaries will
ensure a higher level of service. It will be important, however, to
ensure that VA exercises appropriate discretion to ensure that family
member fiduciaries are not unduly burdened and that no fiduciaries
exert authority over non-VA benefits except as properly authorized.
Chairman Johnson, Ranking Member Donnelly, and other distinguished
members of the Subcommittee, thank you for the opportunity to testify
regarding VetsFirst's views on the four bills under consideration
today.
VetsFirst represents the culmination of 60 years of service to
veterans and their families. United Spinal Association, through its
veterans service program, VetsFirst, provides representation for
veterans, their dependents and survivors in their pursuit of Department
of Veterans Affairs (VA) benefits and health care before VA and in the
federal courts. Today, United Spinal Association is not only a VA-
recognized national veterans service organization, but is also a leader
in advocacy for all people with disabilities.
Veteran's I.D. Card Act (H.R. 2985)
Veterans who retire from the military by meeting the time-in-
service requirement or who have a medical-related discharge receive
cards from the Department of Defense identifying their status as
veterans. VA provides identification cards for veterans who use VA
medical care but not for those eligible for other types of benefits.
For veterans who do not meet any of these requirements, a DD-214 is the
only way to prove veteran status.
This legislation will ensure that eligible veterans are able to
fully benefit from services and promotional opportunities open to them
by allowing them to prove their veteran status without having to
present their DD-214s. This is particularly important because DD-214s
include sensitive personal information. To ensure that there is no
confusion regarding the purpose of the identification card, we are
pleased that it must specify that it does not serve as proof of
entitlement to any benefits.
Thus, we urge swift passage of this legislation which will protect
veterans' information by allowing them to prove veteran status at times
when presenting or carrying a DD-214 is not practical.
Veterans Data Breach Timely Notification Act (H.R. 3730)
VA has a legal and moral duty to secure the sensitive personal
information of our Nation's veterans. The dangers of identity theft and
the possible ramifications for a veteran's credit must be carefully
guarded against. Furthermore, the release of health information could
not only be very damaging for a veteran's professional career or
personal life, but it also may cause veterans to avoid VA health care,
including mental health care, because of concerns about
confidentiality.
Veterans must believe they can trust VA with sensitive personal
information. This means that they must be notified if their personal
information is breached. We believe that the Veterans Data Breach
Timely Notification Act takes important steps toward ensuring that
veterans are
properly informed of data breaches. This legislation not only
requires notification of a breach but also requires VA to inform
veterans of a description of the sensitive personal information
breached, to explain how to contact a VA employee to learn more about
the breach, to alert the veteran of credit monitoring protections, and
to provide resources for identify theft and how to contact the major
credit reporting agencies.
Although we support this legislation, we believe that certain areas
could be strengthened. Specifically, we believe that it is important to
clarify the timeline for VA notification of a breach and to ensure
accessibility of the notification for all disabled veterans.
Establishing a timeline for notification in the event of a data
breach is critical to ensuring not only that veterans are able to act
quickly if their data is compromised but also requires VA to be
immediately transparent. We think that it would be helpful to clarify,
however, that VA must notify individuals within five business days of
learning about the breach. This clarification is important because it
may be more than five business days before VA learns that a breach has
occurred. Clear expectations will facilitate compliance.
We also believe that the method and content of notification to
individual veterans should specify that the notices must be compliant
with Section 504 of the Rehabilitation Act of 1973. This means that VA
should be required to ensure that notification will include the
opportunity to receive information in large print, Braille, audio, or
electronic formats. For disabled veterans who have visual or other
impairments, these options are particularly critical. Otherwise, these
disabled veterans will not receive proper notice of the breach and will
be unable to take proper action to address their concerns.
Veterans Affairs Employee Accountability Act (H.R. 4481)
Most VA employees are dedicated public servants who are devoted to
serving the needs of our Nation's veterans. Bonuses play an important
role in ensuring that VA is able to retain skilled employees who fill
critical roles. However, they should be reserved for employees who
truly excel at fulfilling their job functions. Otherwise, bonuses are
viewed as an expectation instead of a reward for superior performance.
This legislation will ensure that employees who knowingly violate
any civil law covered by the Federal Acquisition Regulation or the
Veterans Affairs Acquisition Regulation do not receive bonuses for or
during the year of the violation. It is our hope that using bonuses to
reward only those employees who follow these laws will ensure that
veterans receive the highest level of services from VA. Ultimately, VA
must ensure that veterans' needs can be clearly and efficiently met
within the contracting requirements of federal law.
Veterans Fiduciary Reform Act of 2012 (H.R. 5948)
VA may appointment a fiduciary for a veteran or other beneficiary
when VA determines that it would be in his or her best interest. As
defined by Title 38 United States Code Section 5506, a VA fiduciary is
``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 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.''
In a hearing before this Subcommittee on February 9, 2012,
witnesses testified about numerous problems and concerns involving VA's
fiduciary program. Some of these problems included the inability of
veterans to receive needed medications due to the inaction of a VA
appointed fiduciary and demands that veterans and their families
provide information on all of a veteran's finances, not just his or her
VA benefits. VA has also appointed paid-fiduciaries despite the
availability of competent family members and in disregard of valid
powers of attorney. For other family members who serve as their
veterans' fiduciaries, the specter of the appointment of a paid-
fiduciary is raised in a manner that feels threatening to these
otherwise compliant fiduciaries.
Although VA has recently taken some steps to address concerns about
the VA fiduciary program, much more must be done to ensure that the
program fully meets the needs of veterans and other beneficiaries.
Specifically, we believe that VA's fiduciary program must be more
veteran-centric and tailored to address only those veterans or other
beneficiaries who truly need assistance due to a determination of
financial incompetence. It is important to remember that these VA
benefits have been earned by the veteran and that the funds belong to
the veteran, even if he or she needs assistance with managing them.
Furthermore, the program must provide an appropriate balance between
protecting the needs of veterans and placing undue burden on family
members who serve as fiduciaries.
The Veterans Fiduciary Reform Act takes important steps toward
ensuring that VA's fiduciary program is more transparent and focused on
the needs of veterans. Specifically, this legislation ensures that the
determination of whether or not an individual requires a fiduciary is
based on factors such as a determination by a court of competent
jurisdiction and an evaluation by a medical professional regarding the
role of financial management in the rehabilitation of the individual.
Importantly, it also states the types of evidence that must be
considered in an appeal of such a determination, including court
determinations, medical evidence, and lay evidence offered by the
appellant. Also, an individual can file a claim to terminate any
fiduciary relationship.
In addition to laying out the rights of veterans and other
beneficiaries, this legislation also expands the definition of a
fiduciary to include state or local government agencies and nonprofit
social service agencies. Expanding the statutory definition of a VA
fiduciary will open up avenues for individuals who need fiduciaries but
lack family members or other individuals who can serve in that
capacity. Requiring VA to maintain a list of entities that can serve as
fiduciaries will ensure that this option may be easily exercised.
This legislation also significantly strengthens the inquiry and
investigation into and qualifications required for fiduciaries.
Although removing the ability to waive aspects of the fiduciary review,
we are pleased that the legislation allows for priority in conducting
the inquiry or investigation for parents, spouses, and court appointed
fiduciaries. The legislation also adds to this list any person who is
authorized to act on behalf of the beneficiary under a durable power of
attorney. We hope that adding individuals who hold viable durable
powers of attorney to the expedited list of approval will ensure that
VA will fully consider these individuals when appointing fiduciaries.
We also hope the requirement for VA to conduct the face-to-face
interview within 30 days of the beginning of the inquiry or
investigation will expedite the review process.
We continue to have concerns about whether efforts to tighten the
review of potential fiduciaries will be unduly burdensome on family
members seeking to serve as fiduciaries. Family members must be fully
reviewed prior to appointment, but we hope VA will make every effort to
exercise discretion where appropriate. We are appreciative of the
consideration of the ability of a proposed fiduciary to meet the
financial requirements of acquiring a bond without sustaining hardship,
which could be critically important to family members seeking to be
fiduciaries.
We also appreciate efforts to ensure that veterans have an
opportunity to play a role in determining who may serve as their
fiduciary. The opportunity to designate a fiduciary in the event that
one is later needed is an intriguing effort to provide veterans with
the opportunity to have their preferences considered. We think it is
important to note, however, that the need for a fiduciary may arise
many years after designation and that this individual may no longer
represent the veteran's preference. Furthermore, the legislation does
not appear to provide for predesignation of fiduciaries for other types
of beneficiaries, including those seeking Dependency and Indemnity
Compensation.
This legislation also makes significant changes in the commissions
that fiduciaries are able to receive for their services. We believe
that a commission should only be authorized where absolutely necessary
to ensure that the best possible fiduciary serves a veteran or other
beneficiary. Regardless of whether the percent authorized is the
current four percent or the proposed lesser of three percent or $35,
our only concern is that a paid-fiduciary be available to veterans if
there are no other alternatives. As long as highly qualified
fiduciaries are available when needed, we support the lower commission.
It is important to remember that VA's authority to appoint a
fiduciary only extends to VA benefits. Thus, while we appreciate the
exemption for family members from the requirement that a proposed
fiduciary serve only as a fiduciary for benefits paid by VA, we believe
that the need to address this issue would be met by simply clarifying
the extent of a fiduciary's duty. This duty does not extend, for
instance, to Social Security benefits unless that agency appoints that
fiduciary as a representative payee for those benefits.
We appreciate the efforts of the Subcommittee to address concerns
in the VA's fiduciary program. We also support the intent of this
legislation, which is to ensure more accountability of fiduciaries to
our Nation's veterans and other beneficiaries. We would welcome the
opportunity to continue addressing the areas of recommendation that we
have discussed today.
Thank you for the opportunity to testify concerning VetsFirst's
views on these important pieces of legislation. We remain committed to
working in partnership to ensure that all veterans are able to
reintegrate in to their communities and remain valued, contributing
members of society.
Prepared Statement of Ms. Perkio
Mr. Chairman and Members of the Subcommittee:
Thank you for the opportunity to provide The American Legion's
views on the legislation being considered before this Subcommittee.
H.R. 2985 - Veteran's ID Card Act
This legislation would provide authority to the Department of
Veterans Affairs (VA) to provide a Veteran ID Card. As matters
currently stand, a veteran generally will only have a government issued
photo ID card if they either served an entire period of service greater
than twenty years and have retired, or have certain types of medically
related discharges. With a growing number of goods, service and
promotional activities available to veterans, it is not always easy to
prove veteran status for those who have served, short of carrying
around a copy of the Form DD-214 discharge papers. The intent of the
legislation would be to create cards for veterans which would clarify
that status, in the absence of other ID cards.
The ID card would be a photo ID containing the veteran's name and
an indentifying number separate and distinct from a Social Security
number.
The American Legion has no position on this legislation.
H.R. 3730 - Veterans' Data Breach Timely Notification Act
This legislation directs standard notification procedures for VA in
the event of a data breach where personal information of veterans may
have been compromised. The bill calls for prompt notification of
affected parties within five business days, or an appropriate amount of
time if longer is needed to determine the scope of veterans so
affected. The bill further calls for broad notification of the general
public in addition to specific notification to affected veterans, as
well as for the notification of the appropriate Committees and
Subcommittees of Congress.
With the rising tide of identity theft and other cybercrimes,
veterans have as many concerns about the security of their personal
information as any other citizen. While every measure must be taken to
ensure the security and integrity of personal information entrusted to
the government, equally as important is the need to deal with any
potential breaches when they occur. Often in such cases, the best thing
to do is to proactively reach out to everyone affected and loudly and
publically get the word out so the affected parties can act in their
best interest. Veterans must be able to respond to appropriate credit
authorities or otherwise as soon as is humanly possible.
The American Legion agrees in the need for swift response to such
breaches and potential threats to veterans' personal identifying
information. In the past, such as in the case of the January 2009 data
breach, The American Legion has applauded swift action in dealing with
such incidents.
The American Legion supports this legislation.
H.R. 4481 - Veterans Affairs Employee Accountability Act
This bill bars VA employees from receiving bonuses if ``... during
any year, [the employee] knowingly violates any civil law covered by
the Federal Acquisition Regulation issued under section 1301(a)(1) of
Title 41 or the Veterans Affairs Acquisition Regulation ...''
The American Legion has previously been critical of bonuses given
out by the VA to senior officials who by outward observation failed to
meet basic performance measures, as VA's numbers in the fight against
the backlog slipped further and further beyond reach of recovery.
Certainly employees who are engaging in illegal practices should not be
rewarded with bonuses.
Bonus pay, by its very definition should not be considered
something automatic or guaranteed regardless of the positive or
negative actions of the employee. Bonus pay should be a reward for job
performance superior to the average expectation, and the average
expectation should certainly include operating within the bounds of
laws and regulations.
The American Legion supports this legislation.
H.R. 5948 - Veterans Fiduciary Reform Act of 2012
In February of this year, The American Legion provided testimony
for the record to this Subcommittee addressing several concerns
regarding the state of the VA fiduciary program. Some of the concerns
included the length of time necessary to conduct interviews with
potential fiduciaries, the inability of veterans to offer input into
the selection of their fiduciaries, the lack of redress available to
veterans if unhappy with the performance of their fiduciaries, and
other concerns.
In testimony in February, The American Legion expressed concern
that since the establishment of the Western Fiduciary Hub in Salt Lake
City, UT, the overall wait times for necessary follow up visits had
ballooned to over 151 days. New regulations make clear the shorter
mandatory deadlines which should help reduce these lengthy wait times.
Legion testimony expressed concerns about the lack of redress available
to veterans who have issues with their fiduciaries, and this
legislation has both an appeals process for the initial appointment and
there are guidelines for investigation of those fiduciaries who are
believed to be misusing the funds of the beneficiaries. Our testimony
expressed concerns about the lack of input generally allowed to
veterans to help select a family member who could be an appropriate
financial custodian for them, and finally their input in this matter
should now be addressed with procedures for veteran recommended
fiduciaries.
The American Legion is grateful to this Committee for their
commitment to working with service organizations and the VA and
interested parties to find areas for improvement in this program that
affects some of our most vulnerable veterans. It is hoped that this
legislation, with attentive follow up and oversight, will lead to
improvements in the operation of the fiduciary program for VA. There
are still areas of concern to be addressed, such as the poor chain of
contact through the phone banks, and the sometimes great physical
distances involved with fiduciaries located hundreds of miles from the
beneficiaries they serve, but these are obstacles which can be overcome
with continued work and attention to the process, and The American
Legion is reassured to see the deep commitment of this Committee to
getting the job done right.
The American Legion supports this legislation.
The American Legion thanks this Subcommittee again for the
opportunity to come before you today to offer the views of our 2.4
million members on this slate of legislation affecting veterans.
SUMMARY OF POSITIONS OF THE AMERICAN LEGION ON LEGISLATION
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BILL AMERICAN LEGION POSITION
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HR 2985 - VETERAN ID CARD NO POSITION
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HR 3730 - VETERANS DATA BREACH TIMELY SUPPORTS
NOTIFICATION.........................................
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HR 4481 - VETERANS AFFAIRS EMPLOYEE SUPPORTS
ACCOUNTABILITY ACT...................................
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HR 5948 - VETERANS FIDUCIARY REFORM ACT OF 2012 SUPPORTS
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