[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
LEGISLATIVE HEARING ON H.R. 282; H.R. 1690; H.R. 2631; H.R. 2772; A
Draft Bill Entitled, ``To Amend Title 38, United States Code, To
Authorize The Secretary Of Veterans Affairs To Furnish Assistance For
Adaptations Of Residences Of Veterans In Rehabilitation Programs Under
Chapter 31 Of Such Title, And For Other Purposes;'' And A Draft Bill
Entitled, ``To Amend Title 38, United States Code, To Permit Appraisers
Approved By The Secretary Of Veterans Affairs To Make Appraisals For
Purposes Of Chapter 37 Of Such Title Based On Inspections Performed By
Third Parties``
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ECONOMIC OPPORTUNITY
OF THE
COMMITTEE ON VETERANS' AFFAIRS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
THURSDAY, JUNE 29, 2017
__________
Serial No. 115-21
__________
Printed for the use of the Committee on Veterans' Affairs
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.fdsys.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
30-367 WASHINGTON : 2018
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COMMITTEE ON VETERANS' AFFAIRS
DAVID P. ROE, Tennessee, Chairman
GUS M. BILIRAKIS, Florida, Vice- TIM WALZ, Minnesota, Ranking
Chairman Member
MIKE COFFMAN, Colorado MARK TAKANO, California
BRAD R. WENSTRUP, Ohio JULIA BROWNLEY, California
AMATA COLEMAN RADEWAGEN, American ANN M. KUSTER, New Hampshire
Samoa BETO O'ROURKE, Texas
MIKE BOST, Illinois KATHLEEN RICE, New York
BRUCE POLIQUIN, Maine J. LUIS CORREA, California
NEAL DUNN, Florida KILILI SABLAN, Northern Mariana
JODEY ARRINGTON, Texas Islands
JOHN RUTHERFORD, Florida ELIZABETH ESTY, Connecticut
CLAY HIGGINS, Louisiana SCOTT PETERS, California
JACK BERGMAN, Michigan
JIM BANKS, Indiana
JENNIFFER GONZALEZ-COLON, Puerto
Rico
Jon Towers, Staff Director
Ray Kelley, Democratic Staff Director
SUBCOMMITTEE ON ECONOMIC OPPORTUNITY
JODEY ARRINGTON, Texas, Chairman
GUS BILIRAKIS, Florida BETO O'ROURKE, Texas, Ranking
BRAD WENSTRUP, Ohio Member
JOHN RUTHERFORD, Florida MARK TAKANO, California
JIM BANKS, Indiana LUIS CORREA, California
KATHLEEN RICE, New York
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
official version. Because electronic submissions are used to prepare
both printed and electronic versions of the hearing record, the process
of converting between various electronic formats may introduce
unintentional errors or omissions. Such occurrences are inherent in the
current publication process and should diminish as the process is
further refined.
C O N T E N T S
----------
Thursday, June 29, 2017
Page
Legislative Hearing On H.R. 282; H.R. 1690; H.R. 2631; H.R. 2772;
a draft bill entitled, ``To amend title 38, United States Code,
to authorize the Secretary of Veterans Affairs to furnish
assistance for adaptations of residences of veterans in
rehabilitation programs under chapter 31 of such title, and for
other purposes;'' and a draft bill entitled, ``To amend title
38, United States Code, to permit appraisers approved by the
Secretary of Veterans Affairs to make appraisals for purposes
of chapter 37 of such title based on inspections performed by
third parties''................................................ 1
OPENING STATEMENTS
Honorable Jodey Arrington, Chairman.............................. 1
Honorable Beto O'Rourke, Ranking Member.......................... 3
WITNESSES
Honorable Elise Stefanik, U.S. House of Representatives, (NY-21). 3
Honorable Robert Wittman, U.S. House of Representatives, (VA-01). 4
Honorable Claudia Tenney, U.S. House of Representatives, (NY-22). 6
Honorable David Cicilline, U.S. House of Representatives, (RI-01) 7
Honorable Scott Taylor, U.S. House of Representatives, (VA-02)... 9
Mr. Curtis L. Coy, Deputy Under Secretary for Economic
Opportunity, Veterans Benefits Administration, U.S. Department
of Veterans Affairs............................................ 10
Prepared Statement........................................... 27
Accompanied by:
Ms. Tia Butler ,Executive Director, Corporate Senior
Executive Management Office, Human Resources and
Administration,U.S. Department of Veterans Affairs
Mr. Jeffrey London, Director, Loan Guaranty Service, Veterans
Benefits Administration, U.S. Department of Veterans
Affairs
Maj. Gen. Jeffrey E. Phillips, USAR (Ret.), Executive Director,
Reserve Officers Association................................... 12
Prepared Statement........................................... 29
Mr. Gabriel Stultz, Legislative Counsel, Paralyzed Veterans of
America........................................................ 13
Prepared Statement........................................... 30
STATEMENTS FOR THE RECORD
U.S. Department of Defense....................................... 33
U.S. Chamber Institute for Legal Reform and U.S. Chamber of
Commerce....................................................... 34
Thomas J. Murphy................................................. 37
LEGISLATIVE HEARING ON H.R. 282; H.R. 1690; H.R. 2631; H.R. 2772; A
Draft Bill Entitled, ``To Amend Title 38, United States Code, To
Authorize The Secretary Of Veterans Affairs To Furnish Assistance For
Adaptations Of Residences Of Veterans In Rehabilitation Programs Under
Chapter 31 Of Such Title, And For Other Purposes;'' And A Draft Bill
Entitled, ``To Amend Title 38, United States Code, To Permit Appraisers
Approved By The Secretary Of Veterans Affairs To Make Appraisals For
Purposes Of Chapter 37 Of Such Title Based On Inspections Performed By
Third Parties''
----------
Thursday, June 29, 2017
Committee on Veterans' Affairs,
U. S. House of Representatives,
Washington, D.C.
The Subcommittee met, pursuant to notice, at 2:23 p.m., in
Room 334, Cannon House Office Building, Hon. Jodey Arrington
[Chairman of the Subcommittee] presiding.
Present: Representatives Arrington, Wenstrup, Rutherford,
Banks, O'Rourke, Takano, Correa, and Rice.
OPENING STATEMENT OF JODEY ARRINGTON, CHAIRMAN
Mr. Arrington. All right. Good afternoon, everyone. The
Subcommittee will come to order.
I want to thank you all for joining us here today to
discuss six pieces of legislation pending before the
Subcommittee, with the intentions of benefiting the lives of
our servicemembers, veterans, and their families. The bills
brought forth by our colleagues today would address employment
protections for our Guard and Reserve servicemembers, improve
transparency of the relocation of senior executives within the
VA, as well as any bonuses provided to high-level VA employees.
And it would also provide needed residency protections for the
spouses of our Active Duty servicemembers.
I will let our colleagues who introduce these pieces of
legislation discuss their bills in greater detail, but I do
want to briefly discuss the two draft bills on the agenda today
that have not yet been introduced.
The first would modernize the appraisal process for VA-
backed home loans, something we discussed in great detail a
couple of months ago at a Subcommittee hearing on the appraisal
process, where Chairman Greg Walden also joined us after he had
been faced with an issue, a related issue, in his own district.
This draft bill would allow VA to utilize new technology,
including desktop appraisals. This means that a VA-approved
appraiser could make an appraisal based solely off of the
information gathered by an approved third-party entity. I
believe this change will make this appraisal process quicker
and more efficient for many veteran home buyers, and would also
save money for taxpayers.
Making this appraisal process in the overall home buying
process as seamless as possible for veterans and their families
has been of importance to both the Ranking Member and myself.
And I look forward to today's discussion on the draft bill that
would, hopefully, improve this process.
Now, the last draft bill would improve home adaptations for
qualifying disabled veterans. Currently, if a disabled veteran
in the Voc Rehab Program needs adaptations made to their home,
to make their home more accessible for their day-to-day needs
because of the limitations of their disability, then it is the
Voc Rehab counselor who has no experience or very little
experience in training in home construction, makes arrangements
for those adaptations or finds an individual to do so who they
believe is qualified to make them. While these folks are
masters-level counselors who provide great service to our
veterans, it should not be their job to also understand how to
build a ramp or affix a grab bar to the wall.
This draft bill, therefore, would allow the employees from
the VA Specially Adapted Housing program, who deal with this
kind of construction on a daily basis, to step in and take care
of the veterans' adaptations to their homes. This will help our
disabled veterans immensely by ensuring that they have the
right people on the job so that their homes adequately address
their service-connected disabilities and their needs.
I believe this is a commonsense change for everyone
involved, and the Department has even stated in their written
testimony that it would save the government money.
Before I yield to the Ranking Member, I do want to say
that--a little disappointed that the Department of Defense
declined our invitation to attend today's hearing and provide
their views on H.R. 282, the Military Residency Choice Act,
and, H.R. 2631, the Justice for Servicemembers Act. Just in the
bills' titles, I think it is clear to everyone that these
proposed policy changes would directly affect DoD and the men
and women who serve this country as well as their families.
So I do appreciate the Department submitted comments for
the record for these bills yesterday afternoon. And while I
also understand this week has been hectic with markups, it
would have been valuable, I think, to have them here to answer
questions.
With that being said, I am eager to discuss each of the six
pieces of legislation before us today. I am grateful to my
colleagues who have introduced these bills and to our witnesses
for being here to discuss. And I look forward to a productive
and meaningful discussion.
And now I am going to yield to my friend and fellow Texan,
our Ranking Member, Mr. O'Rourke, for opening comments.
OPENING STATEMENT OF BETO O'ROURKE, RANKING MEMBER
Mr. O'Rourke. Thank you, Mr. Chairman. I want to thank our
colleagues who have come to join us to today to testify on
their bills, two of whom joined Mr. Banks and Dr. Wenstrup and
I on the House Armed Services Committee defense bill markup
last night that finished in a record 14 hours. So I want to
thank the two chairs who are here who worked on that and on
this issue of compelling the Department of Defense to work more
closely with the House Veterans' Affairs Committee, given that
we have a shared interest in what we are doing for our
servicemembers and at the time that they transition into
civilian and veteran life. I look forward to working with our
colleagues to do that, because I think it is critical that
these two Committees work more closely together.
And in anticipation and interest for what our colleagues
have to say, I will limit my opening remarks and yield back to
the chair.
Mr. Arrington. Thank you, Mr. O'Rourke.
And it is an honor to be joined by our colleagues, Ms.
Elise Stefanik and Mr. Robert Wittman of Virginia--Ms. Stefanik
of New York--and the gentlelady from New York, Claudia Tenney,
and Mr. David Cicilline, the gentleman from Rhode Island; and
the gentleman from Virginia, Mr. Scott Taylor, at our witness
table today. Thank you all for being here.
And now I am going to recognize each of you for 5 minutes.
We will start with Ms. Stefanik.
OPENING STATEMENT OF THE HONORABLE ELISE STEFANIK
Ms. Stefanik. Thank you, Chairman Arrington and Ranking
Member O'Rourke, for the opportunity to testify today before
the Veterans Affairs' Subcommittee on Economic Opportunity. I
would like to first commend the work of this Subcommittee in
improving education, employment opportunities, and housing
programs for veterans, as well as assisting servicemembers with
civil relief.
I would also like to thank my colleague to my left, Mr.
Wittman, who joins me today in testifying before the
Subcommittee in support of the Military Residency Choice Act. I
know both he and I have the highest respect for military
families and have focused our legislative efforts on supporting
their cause.
Military families make great sacrifices for the protection
of our Nation and the safeguarding of our freedom. And I feel
it is my duty as a Congresswoman to help ease the burdens that
they face.
I proudly represent two of our Nation's premier military
installations: Fort Drum, Home of the 10th Mountain Division,
the most deployed unit in the U.S. Army since 9/11; and the
Kesselring Site, a Navy nuclear training facility.
In addition, my home district, New York's 21st District, is
home to more veterans than any other congressional district
within the State. This has given me the opportunity to get to
know the many military families within my district and grow
familiar with the unique hardships and challenges they face.
For instance, military families must relocate every few years
due to their spouse's responsibility to meet the requirements
of the military. They sacrifice a great deal during these
relocations, uprooting their lives and disrupting their
families, all while remaining committed to their duty as the
spouse of a servicemember and serving as the critical support
symptom for their loved ones. This is often a very difficult
and challenging time, with the heaviest burden falling upon
military spouses.
I have introduced several bills that target the strain our
military spouses face, especially during times of deployment
and relocation. And today, I would like to highlight H.R. 282,
the Military Residency Choice Act;
Current law allows Active Duty servicemembers to maintain
one State of legal residence for tax and voting purposes, even
when servicemembers receive military orders requiring them to
relocate. Under this law, spouses are only granted the same
benefit if the servicemember and spouse have established the
same tax residence at the time of their marriage. Essentially,
this requires spouses to establish residency every time the
servicemember receives orders with assignment to a new
location, adding undue stress and anxiety to military families
already under the pressure of managing their relocation.
H.R. 282, the Military Residency Choice Act, will give
military spouses the choice to establish the same State of
residency as the servicemember, giving them the benefit of
keeping the same State of residency for voting and tax
purposes. Military spouses serve too. And this piece of
legislation eliminates the daunting task of documenting
multiple tax jurisdictions, which at time causes some spouses
to forego the complication of working altogether.
According to a recent study commissioned by the nonprofit
group Blue Star Families, military spousal unemployment could
cost the United States up to $1 billion a year in the loss of
Federal income tax, the cost of employment benefits, and the
cost of health care issues related to unemployment. This
commonsense legislation will make this easier for military
spouses to work and helps reduce instances of military spousal
unemployment.
Through my constituents, I have listened to the sacrifices
our military families make to keep our Nation safe. We have a
solemn duty to reduce the burden they face while they are
fulfilling their duty to our Nation.
I want to thank Chairman Arrington and Ranking Member
O'Rourke again for their leadership of the Subcommittee and for
the opportunity to speak today.
I would now like to yield to my friend and colleague, Rob
Wittman from Virginia, who also deeply understands the
sacrifices our military families make and has championed this
issue.
Mr. Arrington. Mr. Wittman, you are now recognized.
OPENING STATEMENT OF THE HONORABLE ROBERT WITTMAN
Mr. Wittman. Thank you, Mr. Chairman.
Chairman Arrington, Ranking Member O'Rourke, thank you so
much. Members of the Committee, thanks so much for having us
here today. I want to thank my colleague too, Ms. Stefanik, for
her efforts along these lines.
These, indeed, are extraordinarily important issues for
military families. And Ms. Stefanik lays it out perfectly as to
the bureaucratic maze that spouses have to navigate that their
military members don't. You known, a military member can
declare a State of residency, and it stays there. But that is
not where they stay physically. They have to move around, based
on their assignments. And when they move around, the spouse is
now required, under the Military Spouse Residency Relief Act of
2009, to now redeclare residency. So that means new driver's
license, new voter registration card, new tax filings--all
those things that make it extraordinarily difficult on a
family.
And some families, depending on the spouse's military
occupational specialty, may find themselves relocating several
times, sometimes as much as three times within a single year,
which makes it even more impossible for them to be able to
track this and be able to be eligible for the benefits under
the 2009 Act. This clearly says let's simplify that. Let's make
sure that at any time that they can declare residency in the
same State as their spouse, who is allowed to do that under the
current law, and that way they don't have to worry about
chasing around paperwork in order to continue qualification. It
just makes sense.
As Ms. Stefanik pointed out, there is a number of studies
out there that point to the impact that this has on spouses. It
makes it more difficult for them to be employed. A RAND report
points out that, for military spouses, the unemployment rate is
about 12 percent, compared to 7 percent for comparable civilian
spouses. So we see the difference. This creates a greater level
of difficultly.
Important part of this too is it doesn't create any
additional burdens on States or localities, as far as how they
deal with either administratively driver's licenses or tax
collections, whatever it may be. So the impact on States and
localities is not there. So this should be a simple,
straightforward opportunity for us to correct what I am sure
was an unintended consequence of the 2009 piece of legislation,
and really do what is best for our military families for what
they are doing to sacrifice, and make sure that their spouses,
along with their families, can continue along as a family.
Sometimes, you know, families will stay behind because of
the administrative burdens that this creates. This lets
families' together travel and serve our Nation. And, you know,
we have an obligation in this Nation to make sure that we are
supporting not only our members of the military, but also their
families, because we know, as the saying goes, you recruit
soldiers, sailors, marines, airmen, and coastguardsmen, but you
retain families. If we are going to retain the best and
brightest, we have to make sure we are doing everything we can
for their families. This bill goes in extraordinarily long ways
to do that.
And, again, I want to thank my colleague, Ms. Stefanik, for
the great job that she has done. And she and I both jointly
want to see this legislation pass.
So, again, Mr. Chairman, thank you so much for the time
today. Thank you to the Members of the Committee. Ranking
Member O'Rourke, thank you. And we stand by willing, ready, and
able to do what is necessary to get this legislation through.
Mr. Arrington. Thank you guys so much, Ms. Stefanik, Mr.
Wittman.
I am going to now recognize Ms. Tenney for 5 minutes.
OPENING STATEMENT OF THE HONORABLE CLAUDIA TENNEY
Ms. Tenney. [Off mic] Thank you, Chairman Arrington and
Ranking Member O'Rourke. I want to thank you for the
opportunity to talk about, to this Committee, the Veterans
Economic Opportunities Subcommittee for the invitation also to
speak on my legislation on the Department of Veterans Affairs
Bonus.
This bill would simply require the VA to submit a report to
Congress at the end of each fiscal year listing the bonuses
that were awarded to senior level executives within the
Department.
In 2015, VA employees received more than $177 million in
bonuses, which was 24 percent more than they received in 2014.
The average bonus for a senior executive was $10,000. I have no
doubt that the men and women of the VA serve our veterans
admirably each day. In fact, I know that many of them do, and I
know many of them in my district.
I have spoken with veterans who are grateful for the
compassionate care they received from the VA hospital in
Syracuse as well as local VA clinics now in Binghamton and also
in Rome, New York. VA employees should be fairly compensated
for their work and awarded for their achievements in service to
our veterans. It is also clear to me that there is more work to
be done.
Just recently, an audit of several VA facilities in North
Carolina and Virginia revealed that wait times continue to be
misrepresented and that nearly 14,000 veterans were denied
access to timely care. The audit also found that veterans are
waiting an average of 26 days to see mental health specialists,
while the VA falsely reported average wait times of 6 days.
In light of such news, the American people are right to
wonder who at the VA may be receiving a bonus this year. They
are also right to be concerned about the nature and conditions
of such bonuses.
H.R. 1690 would add a simple reporting requirement to
existing law that will streamline the oversight of bonuses at
the VA. It requires the agency to proactively provide
information to Congress that details the amount of each bonus
awarded to senior executives, as well as the job titles of
individuals and the location of their employment.
Given the patterns of mismanagement at the VA, veterans
must know how bonuses are being awarded at the agency, and
Congress deserves to receive this information in a timely
manner as possible without having to request it each year. This
bills requires--bill increases transparency over the bonus
process without placing an undue burden on the agency. This
bill was previously passed as an amendment to the House-passed
VA Accountability First Act of 2017. And I remain hopeful that,
with the continued support of this Committee and many Members
who are here, we will be able to move this legislation forward
this year.
It is an honor to represent a district that is home to more
than 55,000 veterans in a former Rome Air Force base, known as
Griffiss Air Force Base. We owe it to each of them to make sure
that the VA is accountable and transparent. This is why I voted
for the Veterans Affairs Accountability and Whistleblower
Protection Act, which President Trump signed into law just last
week. And this is why I encourage my colleagues to support the
VA Bonus Transparency Act. And I once again want to thank
Chairman Arrington and Ranking Member O'Rourke for giving me
this opportunity to testify this afternoon and for your ongoing
and bipartisan commitment to our many very worthy veterans
throughout our Nation.
Thank you so much.
Mr. Arrington. Thank you, Ms. Tenney. And thank you for
your support of the VA Accountability Act and for your
testimony.
And now I am going to yield 5 minutes to Mr. Cicilline.
OPENING STATEMENT OF THE HONORABLE DAVID CICILLINE
Mr. Cicilline. Thank you, Chairman Arrington and Ranking
Member O'Rourke and distinguished Members of the Subcommittee,
for the opportunity to testify today on H.R. 2631, the Justice
for Servicemembers Act, bipartisan legislation to protect the
rights of our men and women in uniform.
I would like to begin my testimony by thanking the veterans
and servicemembers who are here today, not only for their
presence, but for the extraordinary service to our country. I
would also like to thank my colleagues who are originally
cosponsors of this bill, including Representatives Joe Wilson,
Jackie Walorski, Walter Jones, and Ranking Member Tim Walz, for
their support.
Our veterans and their families have sacrificed much in the
service to our country and the fundamental idea that we are a
Nation of laws and institutions that guarantee the rights of
every American and ensure their access to justice. We are a
stronger Nation because of these rights, which includes the
Uniformed Services Employment and Reemployment Rights Act, or
USERRA. This law guarantees veterans and servicemembers,
including the Reserves and National Guard, the right to be free
from discrimination in the workplace on the basis of their
military service.
Enacted in 1994 following the Persian Gulf War, Congress
intended USERRA to serve as a bulwark against the exploitation
of veterans and servicemembers in the public and private
workplace. But too often, veterans and servicemembers are
unable to enforce these rights under USERRA in court because of
the increased use of forced arbitration in employment
contracts. Often buried in the fine print of employment
contracts and presented as a condition for employment, these
clauses waive the rights of veterans and servicemembers to a
day in court before a dispute even arises.
As The Military Coalition, a consortium of military service
organizations representing more than 5-1/2 million current and
former servicemembers explains, these clauses block access to
the justice system and funnel servicemembers employment
discrimination or wrongful termination USERRA claims into
private costly arbitration systems set up by the same
employers.
For example, Kevin Ziober was a lieutenant in the U.S. Navy
Reserves who had served since 2008. In the fall of 2002, he was
called into Active Duty for a 1-year deployment in Afghanistan.
Kevin notified his employer of his deployment, while also
conveying his desire to resume work upon his return.
On Kevin's last day of work before his deployment, his
employer and colleagues threw a farewell party, attended by
dozens of his colleagues and the company's CEO. They gave Kevin
a cake decorated with an American flag along with balloons,
cards, and a gift. Just a few hours later, Kevin was fired on
the basis of his deployment.
In April 2014, Kevin returned to civilian life and
attempted to file a suit in Federal court alleging that his
former employer had violated USERRA. But his company forced his
claim into arbitration, setting an arbitration clause in
Kevin's employment contract that he was required to sign for
employment at the company waiving his constitutional right to a
jury trial. Make no mistake, this result was never intended by
Congress.
USERRA includes a robust protection against the waiver of
rights by prohibiting the enforcement of any contract, and I
quote, that reduces, limits, or eliminates in any manner any
right or benefit established by USERRA.
But the judicial aggrandizement of the Federal Arbitration
Act of 1925, a law that was never intended to apply to
employment contracts that violate Federal law, has upended
these protections. Along with several of my Republican
colleagues and Ranking Member Walz, I filed an amicus brief in
support of Kevin's petition in the Supreme Court to review this
case.
The Supreme Court did not grant cert to this petition,
underscoring the need for Congress to act. The ball is now in
our court. For over a decade, under both Democratic and
Republican administrations, the Defense Department has warned
Congress about the effects of forced arbitration in contracts
with servicemembers.
In a 2006 report to Congress, the Department advised
Congress to, and I quote, ``prohibit provisions and loan
contracts that require servicemembers and family members to
waive their rights to take legal action,'' end quote.
Importantly, this report was clear that waiver is not a matter
of choice in take-it-or-leave-it contracts of adhesion, end
quote.
Since then, the Pentagon has prohibited the use of forced
arbitration agreements in certain financial service contracts
recognizing that unscrupulous conduct was undermining military
readiness and servicemembers' access to relief in court. It is
time to follow suit by prohibiting forced arbitration in
veterans' and servicemembers' employment contracts through
passage of the Justice for Servicemembers Act.
There is broad bipartisan support for this legislation.
Over 25 military organizations, including the Military Order of
the Purple Heart, the National Military Family Association,
Veterans of Foreign Wars, and the Reserve Officers Association
support this legislation. The Justice Department servicemember
and veterans affairs initiative stated and supported this bill
last Congress that USERRA gives servicemembers the right to
enforce their rights under USERRA in Federal court and to
request legal representation from the Department of Justice. If
servicemembers are forced into arbitration through one-sided
employment agreements, these rights would be jeopardized, end
quote.
The assistant secretary over Veterans' Employment and
Training at the U.S. Department of Labor has similarly observed
that this legislation is critical, and I quote, to ensuring
that USERRA operates to safeguard both substantive and
procedural rights and benefits from reduction, limitation, or
elimination. Since the Second World War, Congress has expanded
and strengthened the rights and protections for veterans in the
workforce out of a sense of obligation that we must honor and
protect our men and women in uniform. As a Nation devoted to
protecting American servicemembers and their families from
unscrupulous conduct, we must draw upon the strength of our
laws to ensure that their rights are enforceable in courts to
hold unlawful conduct accountable.
In closing, I thank the Subcommittee for its consideration
of the Justice for Servicemembers Act, and I look forward to
working with the Members of the Committee, with each of you, on
protecting the rights of our Nation's veterans. And I thank you
again for the opportunity to appear before the Subcommittee.
Mr. Arrington. Thank you, Mr. Cicilline. I appreciate your
remarks.
And now for my fellow freshman and former Navy SEAL--we
appreciate your service, Scott. Mr. Taylor, you have got 5
minutes.
OPENING STATEMENT OF THE HONORABLE SCOTT TAYLOR
Mr. Taylor. Thank you, Chairman Arrington and Ranking
Member O'Rourke and Members of the Subcommittee. I appreciate
the opportunity to testify today about an important matter. I
proudly represent the fastest growing area in the country for
veterans of the OIF/OEF conflicts, as well as women veterans as
well.
During a recent visit to the Hampton VA Medical Center near
my district, I learned that the Center's end-of-the-year
hospital star rating for fiscal year 2016 was increased from a
1 star to 2 stars out of a 5-star rating. It was also on that
visit that I learned that the director that oversaw the Center
during its 1-star rated period was simply transferred to a
different center, meaning that a poor performer was transferred
to another one without any accountability. Further, taxpayer
dollars paid for the reassignment cost.
We should never defend mediocrity, and our veterans
certainly deserve the best health care and a lot more. We
should expect nothing less than excellence from our VA
administrators. And this bill aims to bring much needed
oversight and accountability to ensure just that.
The VA Senior Executive Accountability, or SEA Act, would
require the VA to submit semiannual reports to Congress
outlining all instances of senior executive transfers within
the Department during the period covered by the report. Each
report will describe the purpose and each reassignment and the
cost associated with such reassignment.
The bill would also require the Secretary of Veteran
Affairs to personally sign off on all transfers of senior
executives. Reports shall be submitted to Congress no later
than June 30 or December 31 of each year.
A version of this language was offered as an amendment to
H.R. 1259, the VA Accountability First Act of 2017. It was well
received in a very bipartisan manner on a voice vote on March
16. And these provisions are in line with Secretary Shulkin's
own calls for increased accountability at the VA.
I thank the Subcommittee for the opportunity to speak to
you today, and I look forward to answering any questions that
you may have.
Mr. Arrington. Thank you, Mr. Taylor.
And I think I can speak on behalf of the Subcommittee when
I say thank you all for your passion and your commitment and
engagement in this process and for service to our veterans. So
very thoughtful pieces of legislation for us to consider. I
look forward to giving strong consideration to each one of your
policy proposals as we move it through the process.
Now, unless there are any questions from my colleagues, I
think I will just excuse you all, and we will have our next set
of panelists.
So thank you very much for your time.
Mr. Taylor. Thank you, Mr. Chairman.
Mr. Arrington. Okay. Now, I want to recognize our second
panel of witnesses today. I want to welcome back Mr. Curt Coy,
Deputy Under Secretary for Economic Opportunity at the
Department of Veterans Affairs, who is accompanied by Ms. Tia
Butler, Executive Director of the Corporate Senior Executive
Management, Office of HR&A; and Mr. Jeff London, Director of
VA's Loan Guaranty Service.
I also want to welcome Major General Jeff Phillips,
executive director of the Reserve Officers Association; and Mr.
Gabriel Stultz, legislative counsel of the Paralyzed Veterans
of America.
Again, thank you all for coming and joining us today. And I
am going to recognize each of you for 5 minutes. We will start
with you, Mr. Coy.
STATEMENT OF CURTIS L. COY
Mr. Coy. Good afternoon, Chairman Arrington, Ranking Member
O'Rourke, and Members of the Committee. Thank you for the
opportunity to be here today to discuss legislation pertaining
to the Department of Veterans Affairs.
As this is my first hearing with you as Chairman of the
Economic Opportunity Subcommittee, I would like to thank you
for your leadership and passionate interest in our Nation's
veterans. And if I may, I would also like to compliment the
Committee staff for their professionalism, hard work, and
complimentary passion to assist veterans.
Accompanying me today is Tia Butler, executive director,
Corporate Senior Executive Management Office; and Jeff London,
director of the VA Loan Guaranty Program.
There are a few bills under discussion today that would
affect programs or laws administered by other agencies. We
respectfully defer to those agencies for comment.
H.R. 1690 would require the VA to submit an annual report
to Congress regarding performance awards and bonuses awarded to
high-level and executive employees at the VA. The VA would be
required to submit this report no later than 30 days after the
end of the fiscal year. The VA supports this requirement, but
would suggest that the report be submitted no later than 120
days after the fiscal year. This timeframe would allow us to
complete the necessary statutory requirements of the SES
performance management.
H.R. 2772 would prohibit the reassignment of VA senior
executive employees to similar positions within the Department
without written approval by the Secretary. It would require the
VA to submit semiannual reports to Congress on the reassignment
of such individuals and include the purpose and cost associated
with any such reassignments. The VA supports the requirement
that the Secretary approve the reassignment of senior executive
personnel. We would recommend some revisions to narrow the
focus of the report to include the cost of incentives rather
than the other more routine costs associated with
reassignments.
An unnumbered draft bill would streamline the provision of
housing modifications currently authorized under Chapter 31,
known as the Vocational Rehabilitation and Employment program,
or VRE, by administering them under Chapter 21, the specially
adapted housing program. You would also cap the amount of such
modifications at the same amount as specially adapted housing--
as to specially adapted housing grant, but allow the Secretary
to waive the cap, if deemed necessary, for rehabilitation
program. VA supports this bill. Beneficiaries who qualify for
benefits under SAH are able to seek out and hire contractors of
their choice, whereas those who qualify for benefits under VRE
are subject to the VA's procurement process and have little or
no control over the contractor's selection process.
Additionally, the VA determine the home adaptation program
of the independent living rehabilitation plan would best be
administered by the professionals of the SAH program who are
well versed in home construction.
Another unnumbered bill would authorize VA-designated
appraisers to rely on information provided by third parties
when valuing properties for the VA home loan program. VA also
supports this bill as it would enable VA-designated appraisers
to expand their coverage to areas, and it would increase the
number of appraisals they could perform in a timely manner. The
bill would better align the VA appraisal policy and procedures,
industry standards, address recent industry concerns regarding
timely delivery of VA appraisal product and likely encourage
more use of the VA home loan program by making VA financing
more attractive within the mortgage industry.
Mr. Chairman, this concludes my statement. Thank you for
the opportunity to appear before you today. We would be pleased
to respond to any questions you or the other Members may have.
[The prepared statement of Curtis L. Coy appears in the
Appendix]
Mr. Arrington. Thank you, Mr. Coy.
Now, Major General Phillips, you are now recognized for 5
minutes.
STATEMENT OF MAJOR GENERAL JEFFREY E. PHILLIPS
General Phillips. Thank you for the opportunity to testify
today on proposed legislation. My written testimony addresses
the bills that affect National Guard and Reserve servicemembers
and their families. Today, I will focus on binding or
predispute arbitration and servicemember claims in connection
with the Uniformed Services Employment and Reemployment Rights
Act. This issue directly affects members of the reserve
components who tend to have civilian jobs when they return from
war.
H.R. 2631 decisively addresses this issue and has ROA
support. Former Congressman Michael Michaud, who was a Member
of this Committee and the Assistant Secretary of Labor for
Veterans Employment and Training said, ``USERRA prohibits
discrimination in employment based on an individual's prior
service in the uniformed services, current service in the
uniformed services, or intent to join the uniformed services.''
USERRA also guarantees that civilian employees who take
military leave can return to their jobs without penalty. The
Supreme Court has called this law critical to manning the Armed
Forces. When Congress enacted USERRA, it adopted protections
intended to ensure that servicemembers would not waive any of
their rights under USERRA. Congress wanted to ensure the
integrity of the law's provisions. Specifically, section
4302(b) of Title 38 voids any agreement, `` that reduces,
limits, or eliminates in any manner any right or benefit
provided by USERRA.'' This section codifies anti-waiver
principles that the Supreme Court established in the 1940s and
1950s to protect servicemembers' rights.
Additionally, the House report that enacted this section
explained an arbitration is not required and that arbitration
awards involving USERRA can't be enforced. But abuses have,
indeed, occurred and shows us that the intent of USERRA is
being thwarted. We just heard about the case of Navy reservist
Kevin Ziober. We think that such decisions by the Court are
contrary to the intent of Congress, that servicemembers can't
be forced to arbitrate their USERRA claims, that they can't be
forced to weaken their USERRA rights.
You may not know about Rodney Bodine, an Army reservist.
Rodney was told by his supervisor that military folks don't
work out at that particular place of business. His supervisor
ridiculed him for performing his military duty instead of
working on the weekend and pressured him to choose between the
military and his civilian job. Bodine was fired for extending
his contract with the military. He was fired without the
employer showing cause of substandard performance. The Court,
in 2015, enforced the arbitration agreement he had made and his
USERRA rights were sacrificed.
ROA does not, per se, oppose arbitration. It is when a
person is compelled under the pressure of getting hired to
forfeit his or her rights, contrary to the spirit of the law,
to submit to involuntary consent that we find cause for alarm.
Further, arbitration agreements silence the servicemember's
voice by requiring confidentiality. Thus, we can't fully gauge
the extent of the issue. For every Ziober, how many others
never go to court, never go to the media, never go to their
Members of Congress?
We do know that even after nearly 20 years of war and flag
waving, some employers are still firing servicemembers for
serving their Nation. We can only imagine the effect of these
abuses on rates of depression, suicide, and other destructive
behaviors within the veteran community. Without strong USERRA
rights, many Guard and Reserve members literally cannot afford
to serve in the military.
Congress invoked its war powers when it enacted USERRA,
because USERRA and the associated issues are matters of
national security, as opposed to commerce or the workplace.
Congress is clear that servicemembers cannot be required to
arbitrate their USERRA claims, but the Federal courts need
unequivocal language. Federal judges apparently sympathize with
servicemembers and their families but believe the statute, as
written, is not clear enough for them to bar forced
arbitration.
When the Ninth Circuit ruled against Kevin Ziober, it
concluded the opinion by stating: ``Congress can fix this
problem to make clear that it does not render predispute
agreements to arbitrate USERRA claims unenforceable.'' In this
sentiment, the Ninth Circuit has been joined by other courts
which have ruled similarly. Judges are stymied by unclear
language. The Supreme Court has not yet stepped in, even though
a group of 20 Representatives and Senators filed a brief in May
asking the Court to hear the case and rule in favor of our
servicemembers.
ROA asked Congress to amend the statute to eliminate
binding arbitration and protect servicemembers from waiving
their rights under USERRA. The passage into law of H.R. 2631
would help ensure that servicemembers can serve their country
and their employers without penalty. ROA urges Congress to pass
this bipartisan legislation for all those patriots who serve
and have served us so well and so faithfully.
I thank the Economic Opportunity Subcommittee for holding
this hearing and for your leadership on such key issues, and I
welcome your questions. Thank you.
[The prepared statement of Major General Jeffrey E.
Phillips appears in the Appendix]
Mr. Arrington. Thank you, General Phillips.
Now, I recognize for 5 minutes Mr. Stultz.
STATEMENT OF GABRIEL STULTZ
Mr. Stultz. Thank you, sir.
Chairman Arrington, Ranking Member O'Rourke, Members of the
Subcommittee, Paralyzed Veterans of America appreciates the
opportunity to present our views on pending legislation.
Forced moves between States, sometimes more than once in a
given year, lead to complicated and burdensome tax situations
for military personnel. The Servicemembers Civil Relief Act
alleviated this burden by allowing them to keep one tax
domicile, or State of residence, throughout their career.
While the same benefit was eventually afforded to spouses,
there is a caveat in the law that requires them to share the
same domicile or residency as the servicemember. This
requirement has led to unintended consequences in some
circumstances, specifically for couples who marry after the
servicemember has established residency elsewhere. If the
spouse is unable to independently establish residency in the
servicemember's home State or if the servicemember doesn't
wanted to change their State, perhaps because it has no income
tax, the spouse is effectively precluded from this benefit. The
Military Residency Choice Act would cure this issue by allowing
the spouse to adopt the domicile of the servicemember. Given
the sacrifices these families make, this is appropriate.
We also support H.R. 1690 and H.R. 2772, both of which
would dovetail nicely with the recent enactment of the VA
Accountability and Whistleblower Protection Act. These bills
help address two issues that have caused people across the
country to scratch their heads in frustration and ask how
employees who find themselves in hot water end up getting
transferred or getting a bonus instead of getting fired.
Greater transparency through reporting on the VA's utilization
of bonuses and employee transfers will help answer these
questions.
With regard to H.R. 2631, the Justice for Servicemembers
Act, Congress should be aware that, last week, the Supreme
Court sent a clear signal that veterans and servicemembers
subjected to arbitration as part of an employment contract will
not find relief in the courts when they end up not liking the
forum. By deciding not to hear the case, the Court is leaving
in place the lower court's interpretation that USERRA does not
extend protections to procedural rights. This means that if
Congress intends to preclude forced arbitration of disputes
arising under USERRA, it must do so in unmistakable language.
Two circuit judges in separate cases went so far as to write
concurring opinions expressing the importance of clearly
articulating congressional intent to preclude forced
arbitration in light of strong policies favoring arbitration.
We support this legislation because it does just that.
To be clear, this bill permits veterans and their employers
to continue to utilize arbitral instead of judicial forum to
resolve disputes if they so choose. We find, though, that
veterans seeking protections under USERRA are doing so
precisely because of the significant risk of discrimination
placed upon them when forced to leave their job for months or
even over a year in order to serve their country.
Growing numbers of employers are turning to mandatory
predispute arbitration agreements. And in light of the
sacrifices veterans make, it is consistent with the intent of
USERRA to afford them every advantage in ensuring their rights
remain protected.
I will close by addressing the draft bill that deals with a
very important issue for paralyzed veterans: home modifications
and adaptations. Having an accessible home is critical for
service-connected, catastrophically disabled veterans seeking
to reintegrate in society in a meaningful way. Currently, the
VA administers a number of programs designed to meet this need.
This draft bill would consolidate certain redundant
administrative functions within the VA by shifting authority
from the Voc Rehab Program to the loan guaranty office to carry
out home adaptations veterans are entitled to under Chapter 31.
It is important the VA explore ways to better utilize
resources instead of simply throwing more money at problems.
Our biggest concern with this draft bill is that the expected
gains in efficiency might fail to be realized if the loan
guaranty office isn't able to scale up in a way that
corresponds with the increased workload as a result of changes.
Just a year ago, our organization testified before this
Subcommittee calling for greater investment in staffing and
expedited processing for terminally ill veterans, including
those with ALS. Some of the specially adapted housing programs
are operating smoothly. I just checked in with our--many of our
service officers across the country, and they have had
favorable things to say, but others still suffer from delays.
Spreading staff too thin in this Department could exacerbate
these kind of issues. So if this bill moves forward, we would
expect strong oversight.
Thank you, Mr. Chairman. This concludes my statement. I
would be happy to answer any questions the Subcommittee may
have.
[The prepared statement of Gabriel Stultz appears in the
Appendix]
Mr. Arrington. Thank you, Mr. Stultz.
I now yield myself 5 minutes for questions.
Let me just follow on what Mr. Stultz raised with respect
to concerns, resources. It seems to me to make way too much
sense to allow the specially adapted housing agents, as opposed
to the Voc Rehab counselors, to work on these Voc Rehab cases.
But to your point, without resources and the fact that they
have been flat in their budget over the last several years, Mr.
Coy, could you address those concerns? Are you also concerned?
Do you think you all have the capacity to manage that and serve
our veterans in this respect?
Mr. Coy. Thank you, Mr. Chairman. I would suggest we are
always concerned to make sure that we have the resources
necessary to serve veterans in the way that they deserve. This
particular bill would increase our workload within the SAH
folks about 10 percent. And so we looked at that very
vigorously, and we have about 173 current SAH agents across the
country, and we believe that we can absorb this additional
workload and not cause any delays in the housing projects that
we have now.
Mr. Arrington. Thank you, Mr. Coy.
We had a hearing in April where, in the Ranking Member's
experience and wisdom, directed the panelists to go back and
solve the problem for us and not look to the government,
believe it or not, to solve the problem. I really appreciated
him making that recommendation to the Committee. This had to do
with the appraisal process.
And, Mr. London, I think you were there. And so maybe Mr.
London could address this, but I am happy for you to address it
as well, Mr. Coy.
What have we--what solutions have come out of that? We ask
that the stakeholders come together, Department of Defense, we
had folks from industry. What solutions have come from those
discussions since April?
Mr. Coy. We did follow up. I know Mr. London got all the
people on the panel together--
Mr. Arrington. Great.
Mr. Coy [continued].--in the beginning of May. We discussed
all of the issues. There are some pending assignments from each
of the Members of the panel. But I will turn it over to Mr.
London, and he can give a little bit more explicit, detailed
report on some of the things that he did with the panel.
Mr. London. Yes. Thank you, Mr. Coy.
Good afternoon. We had a very productive meeting at the
beginning of May with the other panelists from the appraisal
hearing that we held in April. And it was about a 3-1/2 hour
meeting where all of the stakeholders were very much engaged.
And one of the key things that we discussed at the very
beginning of the meeting is we wanted to come to a common
understanding of what our goals are. And we came to three
points that we believed that we needed to focus on, and that
really shaped the conversation.
First, we wanted to make sure that any changes or
enhancements or opportunities for improvement that we came up
with, that first and foremost needed to protect the veteran. We
also decided that whatever solutions we come up with, it also
has to, obviously, take into account the taxpayer burden and
make sure that we are not adding additional cost. And also the
integrity of the program. And, thirdly, we wanted to make sure
that any changes that we decided to implement, we would still
be in compliance with the Uniform Standards of Professional
Appraisal Practice. So, again, that shaped the conversation.
And so each entity had an opportunity to address concerns
and also pose different ideas. And the bottom line of the
discussion is, one of the key things that we wanted to do and
we are currently working through this process, is, as we talked
about in the appraisal hearing, we wanted to make sure that, in
rural areas, that we had adequate coverage to make sure that we
had the right number of appraisers. But, of course, in rural
areas, there is a lot of travel time that is needed for the
appraiser.
So one of the things that, obviously, came out of that is
the desktop appraisal. So we are going to test the various
desktop appraisal products against appraisals that are being
done today to ensure that the integrity of that process is
still there. And that will be a part of our market research as
we are about to let a new appraisal contract in about a year or
so.
The other thing that--
Mr. Arrington. Mr. London, just in the interest of time,
and you can finish it, but let me ask on that desktop, since
that is the draft legislation, on the desktop appraisal
initiative.
Mr. London. Yes, sir.
Mr. Arrington. It is, I think, intuitive that it will
streamline the process not having somebody travel. But will it
also reduce costs, given that the VA pays for that travel? Do
you anticipate cost savings in this?
Mr. London. Well, the appraisal fee that is given to the
appraiser, in most cases, does not take into account travel
time. Really, what we are paying for is that appraiser's
professional evaluation opinion based on his or her market
knowledge of the subject property and the comparables.
So looking at it at first glance, I don't think that it
would have an immediate cost savings, because we don't
currently include mileage in the appraisal fee. If there is
mileage, that is an additional cost. So in that sense, it would
reduce some but not the appraisal fee itself.
Mr. Arrington. With the permission of the Ranking Member,
would you mind if he finished the--
Mr. O'Rourke. Not at all.
Mr. Arrington. So we had desktop appraisals. Could you just
finish? You said you had three. Then I am going to defer to the
Ranking Member for any questions and comments.
Mr. London. Absolutely. And I will be succinct for the sake
of time.
The second action item that came out of the meeting was
about making sure that the VA work together with industry to
come up with uniform training on the VA appraisal process to
ensure that new and current appraisers understand the VA
requirements. Because a lot of times, there is--as we discussed
in April, there are misnomers about the process, and people
think that the VA process is more complicated than FHA or
conventional appraisals. So we want to make sure that we have
uniform training out there so that stakeholders know what the
expectations are.
And the last outcome was centered around continuing
education credits. We wanted to make sure that, as we work to
recruit new appraisers, that--one incentive that we potentially
could provide is to offer continuing education credits for
those appraisers who currently work in the program or who are
thinking about working in the VA program.
And I know I said there were three things, but there
actually was a fourth thing that is somewhat tied to the
training aspects. Both the Appraisal Institute and NAR made the
commitment that they will work with the VA to work with their
members to educate them about the VA process and to, hopefully,
recruit more appraisers.
Mr. Arrington. Well, Mr. London, I just want to say thank
you for taking our request seriously and for being so diligent
about it. And I am encouraged to hear some of the outcomes of
your stakeholder meeting.
And with that, I want to recognize Ranking Member O'Rourke
for any comments he has.
Mr. O'Rourke. I would just like to add to the Chairman's
thanks to you, Mr. London, for working with those other Members
of that panel following the hearing in April, and look forward
to some formal presentation of the solution that comes from all
the stakeholders. And, ultimately, is up for us to assist in
whether it is authorizations that are necessary or working with
the VA where they can implement these things administratively.
So really grateful for the work that you are doing. I am
looking forward to the final product on that.
For Mr. Coy, I wanted to follow up on Mr. Taylor's
testimony regarding the Senior Executive Accountability bill.
And I begin by saying, I really am grateful for what he is
trying to do, which is--if I had to boil it down and if I were
sharing this with my constituents, I would say it is to make
sure that we don't just shuffle around mediocre senior
executives where, after they fail in one place, they are moved
to another. And he gave some pretty compelling examples of the
consequences of doing that.
I would also add, and I do not think this is contained in
Mr. Taylor's bill, this Committee and the VA needs to find a
better way of attracting the very best talent we can for these
positions. And if that involves increasing pay or flexibility
or, as we found in El Paso where we waited 2 years to fill a
vacant directorship, the candidate who was interested had to
spend a year in the hiring process, fill out endless paperwork,
write essays that were then graded and returned to him for
improvement when we were desperate for leadership. And we had
decided--I say we, the government--that this was our man for
the position. He had decided he was willing to work for us, and
we made it just about as hard as we could on him.
So, yes, let us get rid of unproductive mediocre senior
executives that are in the way of excellence at the VA. Let us
also attract and retain the very best. Those two need to go
hand-in-hand.
Your testimony suggested that you wanted to narrow the cost
language to only the cost of incentives associated with
reassignment. Can you expand on that and perhaps answer what I
think Mr. Taylor's interest was, and I think mine is as well? I
want to know what the full cost is of shuffling people around
just in terms of what we pay out. So, our all-in costs on doing
this.
Mr. Coy. Well, for that question, I will turn it to my
colleague, Ms. Butler, and she has been working this issue 24/
7. So it is probably more appropriate that she answer that
question.
Mr. O'Rourke. Thank you. Ms. Butler.
Ms. Butler. Thank you. So to answer the first question
about relocation incentives as opposed to relocation costs, the
costs are no different than any other permanent change of
station cost that would be incurred in any other Federal agency
when an employee is moved on the request of the government. So
those costs are really predetermined, if you will, under the
GSA contract where moves are concerned.
Where we have flexibility within the VA--or where we have
an option as to how we decide whether or not there would be an
incentive involved is based on whether or not the position is
otherwise likely hard it be filled absent the incentive. So
that is why we were asking to make that distinction. We can
certainly work with our colleagues in the financial management
side of the house to find out how much we spend in entirety on
relocation expenses. But with respect to incentives, it is a
much smaller number, and that was why we were asking to make
that distinction.
Mr. O'Rourke. Great. And I wonder if we can't--it sounds
like that distinction might be important, if we can make that
distinction the presentation of costs and still present the
entirety of those costs, the incentive costs and what you say
is a standardized set of costs when you are relocating any
Federal senior executive service employees. Is that--maybe to
bring it back to Mr. Coy, who is presenting the VA's official
response on this legislation? Is that amenable to you? And
could we then--if the bill were changed to reflect that, could
we then get the VA's support for this?
Mr. Coy. The bill does have our support, and so we will be
happy to work with the Committee to make sure that any concerns
that we have and/or you have or the Committee does, that we
will get them resolved.
Mr. O'Rourke. Okay. That answers my questions.
I will yield back to the chair. Thank you.
Mr. Arrington. Thank you, Mr. O'Rourke.
And now I want to recognize the gentleman from Ohio, our
Chairman, Brad Wenstrup, for 5 minutes of comments and
questions.
Mr. Wenstrup. Thank you. Thank you.
Mr. Coy, General Phillips had talked about, in the 1690,
the possibility of report on bonuses and talked about possibly
a report on those that did not receive a bonus.
What would be the Department's feeling on that?
Mr. Coy. On--I am not clear. What is the Department's
feeling on not giving out bonuses?
Mr. Wenstrup. No, no, no, on having in the report those
that did not receive a bonus.
Mr. Coy. I don't think the Department has an issue with
that. And I think--I am looking at my colleague over here, and
she went no. We officially don't have a problem with that, and
we will be happy to do that, sir.
Mr. Wenstrup. Yeah, I am just thinking if there are any
pros and cons to it. I think that, speaking for myself, that I
look at a bonus as something exceptional and retaining your job
is the norm, so I just--I wouldn't want necessarily it to be
viewed as because you didn't get a bonus that you weren't doing
your job when you were doing your job, but bonuses are for
going above and beyond. At least I think that is the approach
we should maybe take going forward, and so I just wanted some
input on that.
Mr. Coy. I have been a senior executive for close to 20
years, and the way we do it at the VA essentially is, is that
if your rating is fully successful--in other words, you are
doing your job--you don't qualify for a bonus. The people that
qualify for bonuses are those folks that are rated outstanding
and exceptional. At least I know that is the way we do it in
VBA. And I think that is the way we do it across the
Department. My colleague here is nodding her head again. So
those people that are fully successful do not get a bonus.
Mr. Wenstrup. General Phillips, what was your intent with
that?
General Phillips. Dr. Wenstrup, it was to achieve a
totality of information so that we could see--we are not
necessarily disagreeing with how bonuses are given out or not
given out, but we wanted to see if there are trends, there are
indicators of problems in various geographic areas or specialty
areas.
Mr. Wenstrup. When senior executives are reassigned what,
as far as the Secretary goes, what is the level of awareness?
Do these things happen off the Secretary's radar? Does the
Secretary sign off on that? How does that work.
Mr. Coy. I am not intimately familiar. Most of the issues
that we have heard of and that has been talked about are in the
world of VHA and moving hospital directors as shown by the
examples, so I will let Tia answer that very quickly.
Ms. Butler. That is correct. Most of the examples are
typically with respect to reassigning executives within VHA,
but in terms of approval level, currently in the Department
under this Secretary and under prior Secretaries, the authority
to approve personnel actions where executives are concerned has
been delegated to the chief of staff.
I would say that the Secretary is typically involved where
the medical center director positions have been the primary
case, if you will. And then, in the previous administration,
the Deputy Secretary was very much involved because we were
looking to make certain that we had many of those positions
filled and were looking at the timeliness within which we could
get them filled, as well.
Mr. Wenstrup. So it is not necessarily signed off by the
Secretary or Deputy Secretary, but they sometimes want to be
involved. Would you recommend that they be involved at some
level when those--made aware or sign off on those moves?
Ms. Butler. I would say that we certainly would want our
Secretary to have the flexibility to, you know, to be able to
be aware but then also to be able to delegate where he sees
fit. But I do believe that, especially with many of our high-
profile cases, the Secretary is very much aware of what the
selection is as well as the timing of things like that.
Mr. Wenstrup. Anyway because--
Ms. Butler. Yes.
Mr. Wenstrup [continued].--he obviously has a keen interest
in those particular moves.
Ms. Butler. Yes.
Mr. Wenstrup. General Phillips--and thank you for that
answer--you mentioned there is no such thing as voluntary
consent for arbitration. I am not sure I understand that, if
you could explain that.
General Phillips. I was thinking that--I was referring to
the fact that when we include an arbitration clause in a hiring
document, we are essentially involuntarily causing that person
to opt into arbitration because they want the job, and they are
not at the hiring table going to say: Well, I am not going to--
Mr. Wenstrup. Right.
General Phillips [continued].--can we take this out? So
does that answer your question?
Mr. Wenstrup. It certainly does. Thank you.
And I yield back.
Mr. Arrington. Thank you, Mr. Chairman, and I now recognize
the gentlelady from New York, Miss Rice, for 5 minutes of
questions and comments.
Miss Rice. Thank you, Mr. Chairman.
So I just want to talk about the Accountability Act that we
are discussing here. We had a Committee hearing in the last
Congress, and after that hearing, Representative Mike Coffman
and I requested that the VA OIG review allegations that a
supervisor at a VA facility in the Bronx, my home State, made
unauthorized contract purchases for prosthetics totaling more
than $50 million. It obviously gave the appearance of maybe
there was some kind of a fraud going on.
After the investigation, they showed that one of the
purchase card program managers had knowingly entered inaccurate
data related to the purchases which resulted in about a half a
million dollars' worth of unauthorized purchases that could not
be accounted for.
So the supervising manager was at fault. He was found to be
at fault for not providing adequate and required oversight, and
that supervisor was removed from that particular role at the VA
and then subsequently transferred to a different role at
another VA facility.
Now, I mean, OIG obviously acknowledged that the actions
such as these obviously harm the public trust, that the VA is
actually properly executing their duties. Shuffling people
around does not do any good. Obviously, this is one of the
reasons why we are here talking about this today. I guess just
my question to you, Mr. Coy would be in addition to what--the
language that is in the bill, is there any additional
information that you believe should be reported by the VA
regarding reassignments of senior executives?
Mr. Coy. I think--thank you for the question. I think the
legislation is pretty clear that you want the cause of the
particular reason for the reassignment, the cost associated
with it, and that senior management, most certainly the
Secretary, is aware and knows of it.
As Ms. Butler indicated, I have had a number of
interactions with the Secretary, and he is a very hands-on
Secretary. He is aware of these things.
Miss Rice. Okay. Ms. Butler, just to you, in terms of the
cost of reassignment and all that, are there any challenges
that you foresee in the ability to obtain the necessary
information regarding all of the costs, regardless of what the
language of the changes, the costs associated with
reassignments as required for reporting under the bill, any
obstacles that you see?
Ms. Butler. So the relocation expenses are typically
covered by our office of finance and the travel office, so I do
not have complete purview over that. I can say, however,
though, that let's say an employee is scheduled to move and/or
become effective at their new duty station July 1st. They have
so many days to actually execute the move, and in the process
of doing that, you know, there may be some expenses that follow
along after that. So, in terms of knowing, you know, kind of
clean cut points and things like that, there may be some--I
won't say challenges with it, but I think it may not be as
clean cut as we all hope it might be in knowing that, well, the
person is now at this location, but they may or may not have
fulfilled all of their moving requirements, if you will.
Miss Rice. How would you address that?
Ms. Butler. So, again, because this is done by, you know,
the travel office underneath of the office of finance, it is
not something that is under my purview, but we can certainly
work with them to make certain that they articulate what would
be the best way to report it moving forward.
Miss Rice. Okay. Great. Thank you.
I yield, Mr. Chair.
Mr. Arrington. Thank you, Miss Rice.
And I want to recognize the gentleman from Florida, Mr.
John Rutherford, for 5 minutes.
Mr. Rutherford. Thank you, Mr. Chairman.
And thank you, panel, for being here this afternoon, and,
Ms. Butler, I would like to ask a question concerning the
bonuses and other awards that are available to personnel,
senior executives particularly. Is there a list somewhere of
those disqualifiers that would preclude a senior executive from
receiving a bonus?
Ms. Butler. So, because most or, I would say, all of the
awards, bonuses are performance-based in the Department, it
really is potentially a different list every year based on how
the employee actually performed throughout the year.
This past year, as Mr. Coy stated, we actually were able to
give performance awards to those executives who rated
outstanding and/or exceptional. However, due to the CARA
limitations we had across the Department, our funding was
limited. So even some of our exceptional employees were not
given performance awards because our awards dollars were
limited.
Mr. Rutherford. Well, the matrices that are used to award
the bonuses then, are there those that are strictly, you know,
numbers-driven, ``we did X number of these things,'' or are
there also issues of individual performance, working, showing
up at work on time and those sorts of things, or are they all
just performance for the unit, or are there individual
standards as well?
Ms. Butler. All of our executives are on individual
performance plans. All of their results-driven critical
elements are aligned to organizational goals, as well. But the
other elements that are very much specific to the executive are
things like leading people, leading change, their business
acumen, and things like that. So I would say the best way to
describe it is a combination of all of those factors, both
individual as well as--
Mr. Rutherford. Okay. So there is a list of those
somewhere?
Ms. Butler. In terms of the performance standards?
Mr. Rutherford. Yes.
Ms. Butler. Yes.
Mr. Rutherford. Could I get a copy of that?
Ms. Butler. Certainly.
Mr. Rutherford. I would just be interested in seeing what
is actually being measured.
Thank you.
Let me ask Mr. Stultz, I am going to switch over now to the
arbitration process. Can you tell me how many instances you
have observed where you think the member was negatively
impacted by going through arbitration? Is that a high number,
low number? Give me a feel for that.
Mr. Stultz. I honestly couldn't give you an accurate
number, sir.
Mr. Rutherford. Do you have--
Mr. Stultz. Well, given the number of cases that have
reached the circuit and been disposed of, one making it all the
way to the Supreme Court, there is obviously a number of
servicemembers that have been negatively affected to the point
where they have taken it that far.
Mr. Rutherford. Could I ask all the panel just very
briefly, yes or no, do you support the language in 2631 dealing
with the arbitration?
General Phillips. Sir, ROA supports it. The Reserve
Officers Association supports it.
Mr. Rutherford. Thank you. I wasn't here earlier.
Mr. Stultz. We support it, as well.
Mr. Rutherford. Okay. And so you hear those that are
saying: Well, this is just, you know, trial lawyers trying to
get into the system deeper.
Obviously, you don't agree with that?
Mr. Stultz. Quite frankly, sir, this allows the
servicemember to choose. And so arbitration is still available
to be fully employed. These are in the instances where somebody
feels like the cards are really stacked against them, where
they have been treated in a way that arbitration just isn't
going to satisfy them.
So I don't live in fear of trial lawyers taking all the
money away because now they are going to use litigation.
Nothing is forcing you into litigation in this bill.
Mr. Rutherford. I concur.
Thank you, Mr. Chairman. I yield back.
Mr. Arrington. Thank you. Mr. Rutherford. I am going yield
some time for more questions for my colleagues if they have
any, and if not, I would like to follow up with just a few
questions.
Mr. Stultz, just following on Mr. Rutherford's line of
questions regarding H.R. 2631, what is the problem we are
trying to solve? Sometimes I feel like we have got solutions
looking for a problem here. Why does the servicemember need to
have an exception here under USERRA and be precluded from these
arbitration provisions and these employment contracts, and then
I want to talk about maybe some adverse unintended consequences
to that, but what is the problem?
Mr. Stultz. Well, I would say the problem is, like I said,
there are circumstances where a returning servicemember, maybe
I am a private first class, I have a high school education, and
I don't have the resources to go stack up the lawyers and take
on Circuit City. Circuit City is one of the seminal cases on
this issue. They obviously have a wide variety of resources at
their disposal. When you sign the contract of adhesion
essentially is what it is called, when you sign up for
employment, you don't realize that you have just elected to
travel to wherever it is they said they want arbitration to
take place. Sometimes you have those kind of clauses in there
where you essentially say: If I want to fight this, I have got
to figure out a way to get somewhere and live there until this
arbitration is resolved.
So my question is, what is the harm in having a very tiny
population of servicemembers have this choice when it comes to
how they litigate a form of discrimination against them. And if
it is such a pervasive problem, if it is a wider population,
you need to start asking why servicemembers are being
discriminated against at such a large scale.
Mr. Arrington. It seems to me that if it was a problem for
the servicemember it would be a problem for civilians, for all
Americans, right? I mean--
Mr. Stultz. No.
Mr. Arrington. Or is that not the case? I mean, educate me
on it. It is more of a question.
Mr. Stultz. The only distinction that I would offer you is
there is not a lot of civilians out there that say that:
Somebody just made me take a 12-month break, and by the way, I
might need some lead-up time to that, and when I come back, you
are going to give me you're my full job back.
You know, I used to work for a government agency as a
prosecutor in Sarasota, Florida. They can absorb me back in,
but if I am at a mom-and-pop business, that puts them under
serious strain. So there is a much higher propensity for
discrimination against people who are going to interrupt a
business flow to that degree.
Mr. Arrington. I think that is a great point, and one I
haven't thought of. So I am going take that into consideration.
Thank you for that.
Do you think there is a chance--and I guess there is always
a chance, but we have got to weigh the pros and cons here--so
there might be the unintended consequence of veterans not being
hired because they have this exception? So, from the outset, it
might--not veterans, servicemembers rather. Do you think there
is a probability--what level of probability you think that
could happen? It seems realistic to me that it could happen.
Mr. Stultz. I disagree. I think there is such a movement
now to address veterans' unemployment because it is higher. It
already is higher regardless, and there is such a movement to
expose the skills that me and the others that have served bring
to the job environment that I think, you know, like I will use
Circuit City again just because they were one of the cases.
Mr. Arrington. Yes.
Mr. Stultz. The fact that they would forego hiring a select
number of veterans simply because this clause wouldn't apply to
them I think would be a very small thing for them to absorb.
Mr. Arrington. Okay. Your first point I agree with that one
I am not sure I do, but I wouldn't want it to happen, I would
say that. I would not want that, and I don't think anybody
would, so I worry about it, though.
Last comments, last question on the bonuses. You know, I
have no problem with rewarding excellent behavior and
performance, and I think that is the best practice in the best
organizations. But you have got to be able to use the other
tools to hold folks accountable and remove poor performers, and
that is the culture we all want at the VA. I am sure it is the
culture you want at the VA. I am not as interested in seeing
who gets them, who doesn't get them. I am interested in what
Mr. Rutherford talked about, and that is goals, strategic
goals, performance, key performance indicators: Are you
delivering the service, the product? Are you serving the
customer, the taxpayer in managing and stewarding resources?
Are you serving the customer and the veteran and delivering
quality and timely service? To me, that, as a Committee, we
ought to be looking at that level of strategy and policy
making.
And if you are not meeting those goals, then we shouldn't
reward you all. We shouldn't reward the Secretary. And that is
how it ought to be all through the organization because then we
don't have to focus on process all the time. To me, process
takes care of itself if you hold people accountable for the
results, and so I would be really interested at some point in
seeing some of these key performance, these metrics at the
various divisions and departments at the VA. I am going to be
looking at that as we move forward, but to me, that is what we
ought to be thinking about and focusing on. Any comments about
that?
Mr. Coy. I would agree, sir. As I indicated before, I have
lots of gray hair and been around too long, way too long
probably. I will tell you my performance plan right now is
about 15 pages long, and as Tia indicated, there is pretty much
two aspects to it. One are the numbers. For example, I have a
timeliness requirement for contacting veterans for their SAH
grants within 30 days. I have also passed that on to Mr.
London, and so, if he doesn't make his goal, I don't make my
goal.
Mr. Arrington. That is right.
Mr. Coy. And so we have come a long way in VA. It is going
further and further, and so my only comment would be, is, at
some point, are you saturated with--if he doesn't make his
timeliness goals because the phone system went down for 6
months, do I hold him accountable for the same goal? And so
there also needs to be a little bit of mitigating circumstances
there.
Mr. Arrington. Sure.
Mr. Coy. But I would suggest VA is very much on the right
track, and I would suggest that my colleague, Ms. Butler, would
probably indicate that, as well. She does it full-time, 24/7.
Ms. Butler. Yes, that is true. And I would also say that
part of the reason why we asked for more than 30 days to be
able to respond is because part of that--one of the statutory
requirements is the performance review board, where we have a
board of other senior executives who are reviewing the
performance appraisals, the ratings from their supervisor, the
executive's self-assessment against the benchmark criteria to
indeed say or evaluate whether or not they have met the mark
and whether or not they have met the mark across the board. And
those executives that are participating on that panel
participate for about 2 weeks in order to review the nearly 500
performance appraisals for all of the executives across the VA.
So we do indeed have a very rigorous process in terms of
evaluating executive performance at the end of the year, and we
would be more than happy to share the results of that.
Mr. Arrington. Terrific. Well, I appreciate--yes, last call
for comments and questions.
Mr. Rutherford.
Mr. Rutherford. Just very quickly, Mr. Chairman.
I want to follow up on what Mr. Stultz said and highlight
the fact that all the parties have to consent to this
arbitration. So those employers, I think he is probably right,
are not going to be put off by a process that they have to
agree to, right?
Mr. Stultz. My understanding is this would change it so
that parties would agree after the dispute has arisen as
opposed to the beginning of employment, so yes, I agree.
Mr. Rutherford. And I just had--I just remembered I had
this on my phone. Because I know we bring a lot of problems to
you guys, and I just want to mention this. A veteran in
Jacksonville sent me this just this morning. It is a picture of
a valet parking for our handicapped people at the Jefferson
Street VA Clinic in Jacksonville, Florida. He said: This is
what greeted me this morning.
He didn't know that this program started about a month ago,
a couple months ago maybe.
And then it says: 8 a.m. appointment this a.m. They called
me to see the doctor at 7:58.
So things are working well at that clinic. So thank you.
Mr. Coy. Thank you, sir.
Mr. Rutherford. I yield back.
Mr. Arrington. Thank you, Mr. Rutherford. And for that
clarification. I am just getting all kinds of good counsel from
you guys.
This has been a great discussion from my perspective, and I
really appreciate your time.
And, Miss Rice, any further comments or questions?
Miss Rice. No, thank you.
Mr. Arrington. I really appreciate you guys hanging in
there with us, and this is very important. I think some great
proposals for us to consider.
Mr. London, again, thanks for following up and doing what
we asked you to do.
With that, I want to again thank everybody for coming, and
I want to announce that the Subcommittee is tentatively
scheduled to hold a markup on some or all of these bills on
July 12.
I ask unanimous consent that written statements from the
Department of Defense and the U.S. Chamber Institute for Legal
Reform, the U.S. Chamber of Commerce, be included in the
hearing record.
Mr. Arrington. I finally ask unanimous consent that all
Members have 5 legislative days to revise and extend their
remarks and include extraneous material on any bills under
consideration this afternoon.
Without objection--where is my gavel?
Without objection, so ordered.
This hearing is adjourned. Have a great weekend.
[Whereupon, at 3:38 p.m., the Subcommittee was adjourned.]
A P P E N D I X
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Prepared Statement of Curtis L. Coy
Good morning, Chairman Arrington, Ranking Member O'Rourke, and
Members of the Committee. Thank you for inviting me here today to
present VA's views on several bills that would affect VA programs and
services. Accompanying me today is Tia Butler, Executive Director,
Corporate Senior Executive Management Office, Human Resources and
Administration, and Jeff London, Director Loan Guaranty Service, VBA.
H.R. 282 - Military Residency Choice Act
H.R. 282 would amend the Servicemembers Civil Relief Act regarding
various tax and residency matters. Because this bill concerns
responsibilities under the purview of the Department of Defense (DoD),
the Internal Revenue Service, the Department of Justice, and others, VA
defers to the views of those agencies on H.R. 282.
H.R. 1690 - Department of Veterans Affairs Bonus Transparency Act
H.R. 1690 would require VA to submit an annual report to Congress
regarding performance awards and bonuses awarded to high-level and
executive employees at VA in the most recent fiscal year. The report
must include the amount of the award, the title of the recipient, and
the location at which the recipient is stationed. VA would be required
to submit this report no later than 30 days after the end of the fiscal
year.
VA supports the requirement to submit an annual report regarding
performance awards and bonuses to the appropriate committees of
Congress. However, VA does not support providing the report within 30
days of the end of the fiscal year, and recommends that the report be
submitted no later than 120 days after the end of the fiscal year.
Based on the VA's rigorous Performance Appraisal management program for
Senior Executives, submitting a report within 30 days after the end of
the fiscal year is not feasible. Prior to completing the performance-
based awards process, there is a statutory requirement to convene a
Performance Review Board (PRB). The PRB typically meets more than 30
days after the end of the fiscal year (September 30), which is also the
end of the VA's Senior Executive performance cycle. In addition, the
120 day timing results from statutory requirements intended to achieve
accuracy and equity in SES performance management, a process that
focuses on getting the ratings right through several steps.
Before the requested report could be issued to Congress, the
following detailed process needs to occur on/after September 30:
The performance appraisal review process must commence,
which includes executive self-assessment, rating official assessment,
and issuance of an initial summary rating by the rating official;
Administrative review by the performance management team
and an opportunity for higher level review;
The PRB convenes for two weeks to evaluate approximately
500 senior executive appraisals, and prepares its recommendations to
the Secretary; and
The Secretary then reviews recommendations and makes
final decisions on ratings and performance awards only after
considering results of the process.
For these reasons, VA requests 120 days after the end of the fiscal
year to provide the requested report in order to accommodate this
process and account for potential delays associated with three major
holidays in the first quarter of the fiscal year.
H.R. 2631 - Justice for Servicemembers Act of 2017
H.R. 2631 would clarify the scope of procedural rights of
servicemembers with respect to their employment and reemployment rights
under the Uniformed Services Employment and Reemployment Rights Act
(USERRA) of 1994. Because this bill concerns procedures and protections
that largely fall under the purview of the Department of Labor (DOL),
VA defers to the views of DOL and other agencies on H.R. 2631.
DOL has advised that it strongly supports H.R. 2631, which would
guarantee the availability of procedural rights included in USERRA,
particularly enforcement rights.
H.R. 2772 - VA Senior Executive Accountability (SEA) Act
H.R. 2772 would amend title 38 of the U.S. Code to add a new
section 719, which would prohibit the reassignment of VA senior
executive employees to similar position within the Department without
written approval by the Secretary. H.R. 2772 would further require VA
to submit semiannual reports to Congress on the reassignment of such
individuals, and include the purpose and costs associated with any such
reassignments.
VA supports the requirement that the Secretary approve the
reassignment of senior executive personnel. However, we propose two
revisions to this section. First, we recommend revising proposed
section 719(a) to read: ``No individual employed in a senior executive
position at the Department may be reassigned to another such position
at the Department unless such reassignment is approved in writing and
signed by the Secretary or his designee.'' Based on the extremely
demanding schedule of the Secretary, this would clarify that the Deputy
Secretary or Chief of Staff may approve reassignments on the
Secretary's behalf. Second, we recommend editing the last sentence in
proposed section 719(b) to read: ``Each such report shall describe the
purpose of each such reassignment and the cost of incentives associated
with such reassignment.'' This narrows the focus to the cost of
incentives rather than the other more routine or costs associated with
reassignments.
H.R. -- - Home Adaptations for Chapter 31 Beneficiaries
This committee draft bill would amend title 38 of the U.S. Code to
authorize VA to furnish assistance for adaptations of residences of
Veterans and Servicemembers in rehabilitation programs under chapter 31
of such title, and for other purposes. This bill would streamline the
provision of housing modifications currently authorized under chapter
31 by administering them under chapter 21. It would cap the amount of
such modifications at the same amount as Specially Adapted Housing
(SAH) assistance, but allow the Secretary to waive the cap if the
Secretary determines it is necessary for the Veteran's or
Servicemember's rehabilitation program. The current SAH program cap
amount is $77,307 and is typically adjusted annually to match the
Turner cost of construction index.
The Secretary would be required to report biannually to Congress.
Finally, the bill would authorize the Secretary to implement the
changes in advance of regulations and would make conforming amendments
to other provisions of chapters 21 and 31.
VA supports enactment of this bill. Restructuring the chapter 31
housing modifications so that assistance is provided under chapter 21
will encourage more Veteran or Servicemember involvement and enhance
the Veteran or Servicemember experience. Veterans or Servicemembers who
qualify for benefits under chapter 21 are able seek out and hire
contractors of their choice, whereas Veterans who qualify for benefits
under chapter 31 are subject to VA's procurement processes, and have
little or no control over the contractor selection process. VA
determined the home adaptation program portion of an Independent Living
rehabilitation plan would be best administered through the SAH program
due to staff expertise in home renovations and consistent oversight of
the construction process by VA.
The proposed authority would not create eligibility for additional
benefits, and applying the established SAH grant amount limit will
control escalating costs. Savings to the Readjustment Benefits account
are estimated to be $486 thousand in the first year, $2.67 million over
five years, and $6 million over ten years.
H.R. -- - Loan Appraisals
The committee draft bill would amend 38 U.S.C. Sec. 3731 to
authorize VA-designated appraisers to rely solely on information
provided by third parties when valuing properties for VA's home loan
program. VA supports enactment of this bill, as it would enable VA-
designated appraisers to expand their coverage areas and would increase
the number of appraisals they could perform in a timely manner.
The bill would not change the qualifications for VA-designated
appraisers, nor would it make any substantial change to VA oversight
requirements. It would, however, better align VA appraisal policy and
procedures with industry standards, address recent industry concerns
regarding timely delivery of the VA appraisal product, and likely
encourage more use of the VA Home Loan program by making VA financing a
more attractive option within the mortgage industry. VA has not yet
determined costs.
Mr. Chairman, this concludes my statement. Thank you for the
opportunity to appear before you today. We would be pleased to respond
to questions you or other members may have.
Prepared Statement of Maj. Gen. Jeffrey E. Phillips, USAR (Ret.)
The Reserve Officers Association of the United States (ROA) is a
professional association of commissioned, non-commissioned and warrant
officers of our nation's seven uniformed services. ROA was founded in
1922 by General of the Armies John ``Black Jack'' Pershing during the
drawdown years following the end of World War I. It was formed as a
permanent institution dedicated to national defense, with a goal to
inform America regarding the dangers of unpreparedness. Under ROA's
1950 congressional charter, our purpose is to promote the development
and execution of policies that will provide adequate national defense.
We do so by developing and offering expertise on the use and resourcing
of America's Reserve Components.
The association's members include Reserve and Guard Soldiers,
Sailors, Marines, Airmen, and Coast Guardsmen who frequently serve on
active duty to meet critical needs of the uniformed services. ROA's
membership also includes commissioned officers from the United States
Public Health Service and the National Oceanic and Atmospheric
Administration who often are first responders during national disasters
and help prepare for homeland security.
President: Col. James R. Sweeney II, USMC (Ret.) 202-646-7706
Executive Director: Maj. Gen. Jeffrey E. Phillips, USAR (Ret.) 202-
646-7726
Legislative Director: Lt. Col. Susan Lukas, U.S. Air Force Reserve
(Ret.) 202-646-7713
DISCLOSURE OF FEDERAL GRANTS OR CONTRACTS
The Reserve Officers Association is a member-supported
organization. ROA has not received grants, contracts, or subcontracts
from the federal government in the current or previous two fiscal years
by the witness or by ROA. All other activities and services of the
associations are accomplished free of any direct federal funding.
Additionally, ROA has not made payments to or contracted with a foreign
government in the current and preceding two calendar years.
STATEMENT
ROA appreciates the opportunity to provide testimony on several of
the proposed bills.
H.R. 282, Military Residency Choice Act, to authorize spouses of
servicemembers to elect to use the same residences as the
servicemembers.
While this proposed legislation would affect more Active Component
spouses then it would Reserve Component spouses, the proposed
legislation has and should be passed into law.
H.R. 1690, Department of Veterans Affairs Bonus Transparency Act, to
submit an annual report to specified congressional committees on
the performance awards and bonuses presented to Regional Office
Directors of the VA, Directors of Medical Centers of the VA,
Directors of Veterans Integrated Service Networks, and any other
individual employed in a senior executive position.
ROA appreciates that Chairman Roe has provided oversight of the
Department of Veterans Affairs Senior Executive Service since 2007 with
a hearing to ensure VA's process works for SES bonuses.
The proposed legislation supports this oversight by directing an
annual report on performance awards and bonuses. This is important
because bonuses can be as high as 10 percent of the aggregate payroll
for career executives, a significant amount of money. According to
various sources, awards of more than $142 million were given in 2014
and more than $177 million in 2015 were paid to SES and non-executive
employees. There are more than 300 senior executives at VA out of
approximately 7,000 government-wide.
Awarding bonuses is not problematic if they are based on VA's own
guidance from VA HANDBOOK 5027/1, which establishes a program whereby
executives must demonstrate ``. . . a high level of individual and/or
organizational performance.'' ROA is hopeful that an annual report that
reviews who receives SES bonuses will identify trends associated with
the award of bonuses; however we believe the report should also
identify by job title and location those senior executives who did not
receive a bonus. Trend identification in the non-award of bonuses can
be as helpful as examination of winners and the factors influencing
those awards.
H.R. 2631; ``Justice for Servicemembers Act,'' This bill amends the
Uniformed Services Employment Rights Act of 1994 to: (1) consider
procedural protections or provisions under such Act concerning
employment and reemployment rights of members of the uniformed
services to be a right or benefit subject to the protection of such
Act, and (2) make any agreement to arbitrate a claim under such
provisions unenforceable unless all parties consent to arbitration
after a complaint on the specific claim has been filed in court or
with the Merit Systems Protection Board and all parties knowingly
and voluntarily consent to have that particular claim subjected to
arbitration.
Currently, the courts have interpreted that employed uniformed
members are not afforded procedural right protections under USERRA
under binding arbitration clauses. Specifically, the courts' decisions
in separate federal districts, indicate that legislative intent as
determined from the committee reports, cannot establish procedural
right protections in the area of employment and reemployment under
USERRA. The courts' past decisions demonstrate that only substantive
right protections can be interpreted through the language of the Act.
However, the original intent of the legislature was to provide both
substantive and procedural right protections under USERRA. Vague
language contained in the Act caused courts to deprive uniformed
members of the procedural right protections that Congress intended to
grant. Section 4302 makes it clear that USERRA is a floor and not a
ceiling on the rights of servicemembers as a person who is serving or
has served.
It is hard to accept that consent is voluntary when a person agrees
to binding arbitration upon employment: most people take jobs because
they need to pay the rent and put food on the table. It is perhaps
unsurprising that they may overlook the ``future risk'' of arbitration
for the ``present need'' of income. Binding arbitration holds hostage
the ability to provide food and housing for individuals and their
families.
H.R. XXXX, to make appraisals based on inspections performed by third
parties for housing and small businesses.
While this may seem like a minor change to Title 38, Chapter 37, it
has major ramifications to veterans. Recently ROA's legislative
director made an offer on a home, but it was not accepted because the
homeowners wanted a quick closing and they believed a home loan would
take too long to process. That is, in fact, not true because of changes
the Department of Veterans' Affairs has made with appraisals. The
legislative director ultimately made an offer and closed with a VA home
loan in 19 days.
ROA recognizes it can, however, take longer for a VA appraisal in
markets other than the Washington, D.C., metropolitan area due to the
number of inspectors available to serve a large number of individuals
needing an appraisal. This bill would help the department accomplish
appraisals in a timely fashion during high peak periods of home buying
or in smaller markets that have fewer inspectors.
CONCLUSION
The Reserve Components bring essential capabilities to the total
force. Adequately resourced, as they have since the Guard's advent in
the 17th century, Citizen-Soldiers provide our nation a unique and
affordable augmentation of its military capability. We appreciate the
committee considering legislation that positively affects the National
Guard and Reserve, as well as, family members who support their
efforts.
Prepared Statement of Gabriel Stultz
Chairman Arrington, Ranking Member O'Rourke, and members of the
Subcommittee, Paralyzed Veterans of America (PVA) would like to thank
you for the opportunity to provide our views on pending legislation
before the Subcommittee.
H.R. 282, the ``Military Residency Choice Act''
PVA supports the Military Residency Choice Act. Forced moves
between states, sometimes more than once in a given year, lead to
complicated and burdensome tax situations for service members. The
Service Members Civil Relief Act alleviated this burden by allowing
them to keep one tax domicile or state of residence throughout their
career. The Military Spouse Residency Relief Act (MSRRA) later extended
the same benefit to spouses who share the same domicile or residence as
the service member.
The caveat in the law requiring the couple to share the same state
unfortunately excludes from the benefit a number of military spouses
who marry after the service member established domicile or residency
elsewhere. For example, if the service member maintained his home state
domicile of Florida while stationed in Georgia, and then he marries his
spouse who is a resident of Georgia, the spouse is unable to maintain
her Georgia residency for tax purposes when the service member
subsequently gets stationed in Kentucky. While she can feasibly
maintain domicile in Georgia, current law does not protect her from
statutory residency laws in Kentucky. If she was able to independently
establish domicile in Florida, she would be eligible for this benefit
upon moving to Kentucky. Similarly, if the service member changed his
domicile to Georgia, she would be eligible. But it is unlikely the
spouse can meet the requirements for Florida, and because Florida has
no state income tax, few service members would abandon that state as
their domicile.
The language used permitting the spouse's election of the service
member's state ``regardless of the date on which the marriage . . .
occurred'' leaves some ambiguity in the wake of evolving marital laws.
State tax agencies may fail to realize this bill's intent. For clarity,
we suggest the committee include language indicating that the spouse's
inability to independently establish domicile or residency within the
service member's designated state shall not be a bar to such an
election. We would also offer this same suggestion for the language in
the proposal amending 50 U.S.C. Sec. 4025 pertaining to residency and
voting rights.
H.R. 1690, the ``Department of Veterans Affairs Bonus Transparency
Act''
PVA supports greater oversight of Department of Veterans Affairs'
(VA) utilization of bonuses and other incentives. Over the last few
years, numerous instances of gross mismanagement by senior officials
and misconduct among the rank-and-file within VA have been exposed. The
impact on veterans produced a national outrage. But what really
inflamed the issue was the fact that in many of these instances, some
leading to avoidable harm, the employee's job was not only protected,
but he or she collected a bonus. The recent passage of the Department
of Veterans Affairs Accountability and Whistleblower Protection Act of
2017 included provisions allowing VA to claw back bonuses earned
through misconduct. \1\ This is a welcome step forward because it
continues to incentivize hardworking employees while punishing those
who put themselves before the veterans they serve. This proposal
considered here dovetails nicely with this recently enacted provision.
With roughly $230 million allotted for VA bonuses this year alone, it
is important to keep a watchful eye on what type of behavior VA is
rewarding.
---------------------------------------------------------------------------
\1\ Pub. L. No. 115-41 (2017).
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H.R. 2631, the ``Justice for Service Members Act of 2017"
The Supreme Court of the United States recently denied a petition
for certiorari in Ziober v. BLB Resources, Inc. on June 19, 2017. \2\
In doing so, the Court sent a clear signal to Congress that veterans
and service members subjected to arbitration as part of an employment
contract will not find relief in the courts when they end up not liking
the forum. A number of the federal circuit courts took up the question
of whether a provision of the Uniformed Services Employment and
Reemployment Rights Act (USERRA) precludes the enforcement of
individual contracts to arbitrate employment disputes. \3\ Arbitration
is considered a choice of forum, rendering it a procedural, not
substantive, aspect of litigation. Because the language in USERRA does
not suggest that the protections extend to procedural rights, each
circuit concluded that no such prohibition exists in the statute. The
Supreme Court's decision leaves this collective interpretation
undisturbed.
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\2\ Ziober v. BLB Resources, Inc., 839 F.3d 814 (9th Cir. 2016),
cert. denied, No. 16-1269, 2017 WL 1437638 (U.S. June 19, 2017).
\3\ Garrett v. Circuit City Stores, 449 F.3d 672 (5th Cir. 2006);
Landis v. Pinnacle Eye Care, LLC, 537 F.3d 559 (6th Cir. 2008); Ziober
v. BLB Resources, Inc., 839 F.3d 814 (9th Cir. 2016); Bodine v. Cook's
Pest Control Inc., 830 F.3 1320 (11th Cir. 2016).
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It is important to note that the Federal Arbitration Act (FAA)
``was enacted in response to judicial hostility to arbitration.'' \4\
Subsequent jurisprudence has ``established a liberal policy of favoring
arbitration agreements.'' \5\ In fact, the burden is on the veteran
``to show that Congress intended to preclude a waiver of a judicial
forum for the particular claim.'' \6\ This comes from the belief that
arbitration ``allows a plaintiff to vindicate his or her substantive
statutory rights to the same extent as filing a lawsuit in federal
court.'' \7\ Some veterans have unsuccessfully argued that the
legislative history indicated an intent to preclude arbitration, but
even if the history supported their claims, courts as a matter of
practice do not consider legislative history unless the statute is
ambiguous. Legislative history is rarely used in statutory
interpretation, and it should not be relied upon.
---------------------------------------------------------------------------
\4\ CompuCredit Corp. v. Greenwood, 565 U.S. 95, 97 (2012).
\5\ Id. at 98.
\6\ Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26
(1991).
\7\ Ziober, 839 F.3d at 821 (citing Gilmer at 30).
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If Congress intends to preclude forced arbitration of disputes
arising under USERRA, it must do so in unmistakable language. Two
circuit judges in separate cases went so far as to write concurring
opinions to express the importance of clearly articulating
congressional intent to preclude forced arbitration in light of the
strong policies favoring arbitration. \8\ We support this legislation
because it does just that. We appreciate that our laws and
jurisprudence have placed arbitration on equal footing with
legislation. And this bill permits veterans and their employers to
continue to utilize an arbitral, instead of judicial, forum to resolve
disputes if they so choose. We find, though, that veterans seeking
protections under USERRA are doing so precisely because of the
significant risk of discrimination placed upon them when forced to
leave their job for months or even over a year in order to serve their
country. Growing numbers of employers are turning to mandatory pre-
dispute arbitration agreements, and in light of the sacrifices veterans
make, it is consistent with the intent of USERRA to afford them every
advantage in ensuring their rights remain protected.
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\8\ Ziober, 839 F.3d at 821-823 (Watford, concurring); Landis v.
Pinnacle Eye Care, LLC, 537 F.3d 559, 564-565 (6th Cir. 2008) (Cole,
concurring).
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H.R. 2772, the ``SEA Act''
The VA Senior Executive Accountability Act or ``SEA Act'' would
require the VA Secretary to personally approve senior executive
reassignments. It would also require semiannual reporting to Congress
on the reasoning for such reassignments. We will echo some of our
comments above discussing H.R. 1690. Two years ago, seniors executives
were caught gaming the system through beneficial reassignments. This
practice went unchecked due to limited oversight at the highest levels
of VA leadership, and it only exacerbated an already frustrated
population of veterans failing to receive health care as a result of
other misconduct. The Department of Veterans Affairs Accountability and
Whistleblower Protection Act of 2017 included a provision allowing for
recoupment of relocation expenses in such circumstances. But in
addition to reinforcing this recently-enacted provision, this bill
would help address an even bigger problem. VA has long been hamstrung
by burdensome employment laws forcing VA to transfer bad employees
rather than attempting the arduous process of terminating them. Most
would expect this to at least result in burying the employee somewhere
within VA in an inconsequential role, but a surprising number of these
employees end up promoted. This reporting requirement would begin to
shed light not only on how pervasive this practice has become, but how
effective the recently-enacted accountability law ends up being for VA.
Draft bill authorizing VA to furnish adaptations of residences under
chapter 31
VA administers a number of programs designed to help veterans
modify their homes to make them accessible. These include the Specially
Adapted Housing Grant (SAH), the Special Housing Adaptation Grant
(SHA), the Home Improvement and Structural Alterations Grant (HISA),
and the Vocational Rehabilitation and Employment (VR&E) Independent
Living services. This draft bill would shift authority from the VR&E
program to the Loan Guaranty program to carry out home adaptations
veterans are entitled to under chapter 31. Because the Loan Guaranty
office currently administers both the SAH and SHA grants, the effect
would be to consolidate all administrative authorities for home
modifications under one office within VA. The HISA grant would remain
separate and continue to be administered by the Prosthetics and Sensory
Aids department within the Veterans Health Administration (VHA).
Consolidating these legal authorities will likely translate into
administrative efficiency through elimination of redundant efforts and
processes. These gains, however, will fail to be realized if the Loan
Guaranty office is unable to scale up in a way that corresponds with
the increased population it will now be required to serve. Congress
must ensure that this program serving the most catastrophically
disabled veterans is not suddenly disrupted with an unfunded or under-
resourced mandate. Just a year ago, our organization testified before
this subcommittee calling for greater investment in staffing and
expedited processing for terminally ill veterans, including those with
amyotrophic lateral sclerosis (ALS). Veterans with ALS are critical
users of the SAH program, and the disability claims system is not
designed to be responsive to such rapidly changing disorders. Spreading
staff too thin in this department could exacerbate such issues. If not
executed well, this consolidation could produce more harm than good. If
this Committee moves forward with this proposal, we encourage strong
oversight throughout implementation.
Draft bill permitting appraisals based on inspections conducted by
third parties
PVA has no position on this draft bill.
Thank you for the opportunity to submit our views on pending
legislation. We would be happy to answer any questions the Subcommittee
may have.
Statements For The Record
THE DEPARTMENT OF DEFENSE
Chairman Arrington, Ranking Member O'Rourke, and members of the
Subcommittee, the Department of Defense (DoD) appreciates the
opportunity to provide this statement for the record addressing
legislation pending before the Subcommittee. This statement will focus
on only those bills that will affect DoD; we defer to the Department of
Veterans Affairs to provide responses on those bills with no
significant DoD impacts.
H.R. 282, ``Military Residency Choice Act''
This bill amends the Service members Civil Relief Act to authorize
spouses of Service members to elect to use the same residences as the
Service members. The Department has no objection to Section 2 of this
bill which would allow the spouse of a Service member to elect to use
the same residence for tax purposes regardless of the date of marriage.
Section 3 of this bill would provide an opportunity for military
spouses to retain their original voting residence if they are stationed
with their spouse at another location and/or choose to use the same
residence as the Service member, regardless of their marriage date. DoD
does not object to section 3 since it does not negatively impact the
Federal Voting Assistance Program's ability to provide voting
assistance to military spouses.
H.R. 2631, ``Justice for Servicemembers Act of 2017"
This bill would amend title 38, United States Code, to clarify the
scope of procedural rights of Service members with respect to their
employment and reemployment rights under the Uniformed Services
Employment and Reemployment Act of 1994 (USERRA).
USERRA establishes rights and responsibilities for uniformed
Service members and their civilian employers.. The proposed legislation
clarifies that section 4302(b) of USERRA protects both substantive and
procedural rights and benefits from reduction, limitation or
elimination by contract, agreement, policy, plan, practice or other
matter including by arbitration agreement, and prevents the enforcement
of arbitration agreements unless all parties voluntarily consent to
arbitration after a claim is filed in court or with the Merit Systems
Protection Board. DoD does not object to this legislation since it does
not lessen cooperation and understanding between Reserve Component
Service members and their civilian employers. It also does not
adversely impact the Employer Support for Guard and Reserve's ability
to help resolve conflicts arising from an employee's military
commitment.
Closing
The Department of Defense thanks the Subcommittee for its
outstanding and continuing support of our Service members and Veterans.
U.S. CHAMBER INSTITUTE FOR LEGAL REFORM AND U.S. CHAMBER OF COMMERCE
Chairman Arrington, Ranking Member O'Rourke and members of
Subcommittee on Economic Opportunity of the House Veterans' Affairs
Committee, the U.S. Chamber of Commerce (``Chamber'') and the U.S.
Chamber Institute for Legal Reform (``ILR'') submit this statement for
the record regarding H.R. 2631, the ``Justice for Servicemembers Act of
2017,'' and appreciate the opportunity to offer it.
The U.S. Chamber of Commerce is the world's largest business
federation representing the interests of more than three million
companies of all sizes, sectors, and regions, as well as state and
local chambers and industry associations, and is dedicated to
promoting, protecting, and defending America's free enterprise system.
ILR is an affiliate of the Chamber dedicated to making our nation's
civil legal system simpler, faster, and fair for all participants.
The Chamber and ILR deeply value servicemembers and their
contributions both at home and abroad. The Chamber and ILR also
vigorously support the goal of the Uniformed Services Employment and
Reemployment Rights Act (``USERRA'')-to ``encourage noncareer service
in the uniformed services by eliminating or minimizing the
disadvantages to civilian careers and employment which can result from
such service.'' \1\ Employers should never discriminate on the basis of
membership in the uniformed services when making employment,
reemployment, promotion, or benefits decisions; and those who leave
civilian employment to serve our country properly should receive
reemployment protections. \2\ However, the Chamber and ILR oppose H.R.
2631 because the legislation would make it harder for servicemembers to
obtain relief pursuant to USERRA by effectively eliminating arbitration
as an available means of resolving USERRA disputes.
---------------------------------------------------------------------------
\1\ 38 U.S.C. Sec. 4301(a)(1).
\2\ Id. Sec. Sec. 4311(a) & 4312(a).
---------------------------------------------------------------------------
Servicemembers are entitled to a fair, accessible, and speedy means
of vindicating the rights conferred by USERRA. Forcing them into our
overcrowded court system-and requiring them to depend entirely on
plaintiffs' lawyers-will not serve those goals.
First, the vast majority of employment-related claims are
individualized and relatively small-in the USERRA context, for example,
claims that an employer refused to rehire a particular servicemember or
that a particular person was passed over for promotion after applying
to join the uniformed services. But those are the precise category of
cases for which it will be difficult for a servicemember to secure a
lawyer, because most plaintiffs' lawyers seek to handle either
lucrative class actions or high-dollar contingency fee claims. \3\
Without a lawyer, the servicemember will be unable to vindicate his or
her rights in court, because complex court rules, and the requirement
that litigants representing themselves appear in person, effectively
make a lawyer mandatory.
---------------------------------------------------------------------------
\3\ Studies indicate that a claim must exceed $60,000 in order to
attract a contingent-fee lawyer. Elizabeth Hill, Due Process at Low
Cost: An Empirical Study of Employment Arbitration Under the Auspices
of the American Arbitration Association, 18 Ohio St. J. on Disp. Resol.
777, 783 (2003). In some markets, this threshold may be as high as
$200,000. Recommendations of the Minnesota Supreme Court Civil Justice
Reform Task Force 11 (Dec. 23, 2011), https://www.leg.state.mn.us/docs/
2012/other/120214.pdf.
---------------------------------------------------------------------------
To interest a lawyer, moreover, a servicemember likely would be
required to sign an agreement promising the plaintiffs' lawyer a
significant percentage of any settlement or damages award; even if the
court awards attorneys' fees under USERRA's fee-shifting provision, the
servicemember will be obligated to pay the lawyer an additional amount
out of the servicemember's recovery if that is necessary to reach the
payment required under the contract. That is because the Supreme Court
has held that a fee-shifting statute ``controls what the losing
defendant must pay, not what the prevailing plaintiff must pay his
lawyer,'' and that fee-shifting statutes ``do[] not interfere with the
enforceability of a contingent-fee contract.'' \4\ More broadly, the
``trend'' is for courts to require a prevailing plaintiff to pay the
difference between a fee award and a higher contingency fee set by
agreement. \5\
---------------------------------------------------------------------------
\4\ Venegas v. Mitchell, 495 U.S. 82, 90 (1990) (interpreting 42
U.S.C. Sec. 1988's fee-shifting provision).
\5\ See 1 Robert L. Rossi, Attorneys' Fees Sec. 2:13 (3d ed. 2013)
(explaining that ``unless . . . the retainer agreement makes specific
provision for'' a fee-shifting award, ``the trend is to calculate the
contingency fee based on the amount of the judgment exclusive of the
fee award, and then credit the fee award to the client as an offset
against the contingency fee owed'').
---------------------------------------------------------------------------
Arbitration, by contrast, provides servicemembers with a simple,
low-cost mechanism for dispute resolution-with procedures so simple
that servicemembers can represent themselves if they wish:
Studies reveal that individuals fare at least as well in
arbitration as they would have in court, if not better. \6\
---------------------------------------------------------------------------
\6\ Compare Christopher R. Drahozal & Samantha Zyontz, An Empirical
Study of AAA Consumer Arbitrations, 25 Ohio St. J. on Disp. Resol. 843,
897 (2010) (studying claims filed with the American Arbitration
Association and concluding that consumers win relief 53.3% of the
time), with Theodore Eisenberg et al., Litigation Outcomes in State and
Federal Courts: A Statistical Portrait, 19 Seattle U. L. Rev. 433, 437
(1996) (observing that in 1991-92, plaintiffs won 51% of jury trials in
state court and 56% of jury trials in federal court, while in 1979-1993
plaintiffs won 50% of jury trials).
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Arbitration is inexpensive for servicemembers. The
American Arbitration Association (``AAA''), for example, requires the
business to bear most arbitration costs; many companies pay even the
consumer's share, which the AAA caps at $200. \7\ A large percentage of
servicemembers will pay no attorneys' fees, either. \8\
---------------------------------------------------------------------------
\7\ AAA, Employment Arbitration Rules and Mediation Procedures 33,
https://www.adr.org/sites/default/files/Employment%20Rules.pdf (``AAA
Rules'').
\8\ Hill, supra note 3, at 802 (finding that lower-income employees
``paid no forum fees'' in 61% of the cases studies; employees also paid
no attorney's fees in 32% of the cases).
---------------------------------------------------------------------------
Courts invalidate arbitration agreements that include
unfair procedural rules, or unfair processes for selecting arbitrators,
under generally applicable unconscionability principles. \9\
---------------------------------------------------------------------------
\9\ Marmet Health Care Ctr., Inc. v. Brown, 565 U.S. 530, 533-534
(2012); see also, e.g., Chavarria v. Ralphs Grocery Co., 733 F.3d 916,
923 (9th Cir. 2013) (provision requiring employee to pay an
unrecoverable portion of the arbitrator's fees ``regardless of the
merits of the claim''); Alexander v. Anthony Int'l, L.P., 341 F.3d 256,
263 (3d Cir. 2003) (provision barring punitive damages).
---------------------------------------------------------------------------
Arbitration is flexible and can be tailored to
servicemembers' needs. The AAA, for example, offers hearings by
telephone, and participants can file documents and otherwise
communicate with the AAA and arbitrator through email. \10\
Arbitration's simplicity and flexibility mean that servicemembers can
resolve their claims themselves if they wish-without a lawyer.
---------------------------------------------------------------------------
\10\ AAA Rules, supra note 7, at 25.
---------------------------------------------------------------------------
Studies show that arbitration is much quicker than
bringing a lawsuit in the overburdened federal and state court systems.
\11\
---------------------------------------------------------------------------
\11\ See Drahozal & Zyontz, supra note 6, at 845 (average time from
filing to final award in consumer arbitrations studied was 6.9 months);
U.S. District Courts-National Judicial Caseload Profile (2016), http://
www.uscourts.gov/file/19995/download (average civil lawsuit in federal
court took 26.7 months to reach trial).
The proponents of H.R. 2631 have not offered sufficient systemic
evidence to conclude that servicemembers generally face difficulty
pursuing their claims effectively and efficiently through arbitration.
Rather, the evidence of consumer arbitration generally reveals that
those who want to present their claims quickly-without our court
system's delays-are able to do so in arbitration.
The primary effect of eliminating arbitration would be to give
plaintiffs' lawyers a monopoly over litigating these claims and leave
servicemembers' ability to enforce their rights at the mercy of those
lawyers. It therefore is not surprising that the chief proponents-and
the principal beneficiaries-of prohibitions or restrictions on
arbitration are the trial lawyers. One of the ``[t]op lobbying goals''
of the American Association for Justice (formerly the Association of
Trial Lawyers of America or ``ATLA'') has long been to ``outlaw
mandatory binding arbitration in consumer contracts.'' \12\
---------------------------------------------------------------------------
\12\ Sharon Theimer and Pete Yost, THE INFLUENCE GAME: Lobbyists
adapt to power shift, USA Today, Nov. 14, 2008, http://
usatoday30.usatoday.com/news/washington/2008-11-14-567071791--x.htm.
---------------------------------------------------------------------------
Second, private class actions in court will not protect
servicemembers.
To begin with, the vast majority of USERRA claims likely could not
be brought as class actions because they are individualized-turning on
specific facts relating to specific individuals and specific employers.
Class certification would normally be denied in such cases.
Even in the event of a systemic problem that adversely affected a
large number of our servicemembers in similar ways, class actions (and
the huge fees they reap for plaintiffs' attorneys) would not be needed.
USERRA authorizes servicemembers to report suspected USERRA violations
to the Department of Labor's Veterans Employment and Training Service
(``VETS''); VETS, in turn, is required to investigate these complaints
and to ``mak[e] reasonable efforts to ensure that the person or entity
named in the complaint complies with'' the law. \13\ This process
allows for the resolution of most complaints without any need for
further formal processes. The statute also provides that a
servicemember whose complaint is not resolved by VETS can request that
the complaint be referred to the Justice Department; the Justice
Department can choose to sue on behalf of the servicemember and can
obtain injunctive relief requiring the employer to comply with the law.
\14\ And state attorneys general likewise have the ability to enforce
employment nondiscrimination laws. In short, there are ample
enforcement mechanisms for addressing systemic violations of USERRA-
without the need for lawyer-driven class actions.
---------------------------------------------------------------------------
\13\ 38 U.S.C. Sec. 4322(a), (d).
\14\ Id. Sec. Sec. 4323(a), (d)(1).
---------------------------------------------------------------------------
And those class actions provide little in the way of relief-for
anyone other than lawyers. Members of a class typically receive pennies
on the dollar-if they receive anything at all. Even a 2015 study of
arbitration by the Consumer Financial Protection Bureau-which was
clearly seeking to make a case for class actions and against
arbitration-showed that only 13% of putative class actions studied were
finally approved for classwide settlement, with absent class members in
the remaining 87% of class actions receiving nothing. \15\
---------------------------------------------------------------------------
\15\ Consumer Fin. Protection Bureau, Arbitration Study: Report to
Congress, pursuant to Dodd-Frank Wall Street Reform and Consumer
Protection Act Sec. 1028(a) at section 6, page 37 (Mar. 1, 2015)
(``CFPB Study'').
---------------------------------------------------------------------------
When a trial lawyer is negotiating a class action settlement-and
virtually all private class actions that are not dismissed end up in a
settlement, because class actions are almost never decided on the
merits-there is an inherent conflict between the lawyer's desire to
maximize revenue for serving as class counsel and maximizing the
recovery for the class. Although courts are supposed to police this
conflict, the reality is that they are unable to do so when both sides
are urging approval of the settlement and the court has no independent
source of information. The interests of the class members all too often
lose out.
That is why the data show that only a small percentage of class
members are benefited by settlements. Very few bother to collect a
payment, both because the settlement process is complex and the amounts
available small, and because trial lawyers, eager to compromise with
defendants in order to obtain their fee award, may agree to a form of
notice calculated to produce little interest by class members. Although
settlement distribution rates typically are not disclosed, they are
very low. The CFPB study found a ``weighted average claims rate'' by
class members of just 4%. \16\ A declaration filed in court by a
settlement administrator stated that in the absence of direct outreach
to the class members, the median rate at which class members file
claims in consumer cases is 0.023%. \17\
---------------------------------------------------------------------------
\16\ CFPB Study at section 8, page 30.
\17\ Declaration of Deborah McComb at ] 5, Poertner v. The Gillette
Company and The Proctor & Gamble Company, No. 6:12-CV-00803-GAP-DAB
(M.D. Fla., filed Apr. 22, 2014), ECF No. 156.
---------------------------------------------------------------------------
As a practical matter, therefore, counsel for plaintiffs (and for
defendants) are frequently the only real beneficiaries of class
actions. A study of insurance class actions by the RAND Corporation
found that attorney's fees amounted to an average of 47% of total
class-action payouts, taking into account benefits actually claimed and
distributed, rather than theoretical benefits measured by the estimated
size of the class. ``In a quarter of these cases, the effective fee and
cost percentages were 75 percent or higher and, in 14 percent (five
cases), the effective percentages were over 90 percent.'' \18\ The
CFPB's recent study similarly showed that attorneys' fees amounted to
41% of the average class action settlement-working out to more than $1
million per case. \19\
---------------------------------------------------------------------------
\18\ Nicholas M. Pace et al., Insurance Class Actions in the United
States, Rand Inst. for Civil Just., xxiv (2007), http://www.rand.org/
pubs/monographs/MG587-1.html. Another RAND study similarly found that
in three of ten class actions, class counsel received more than the
class. See also Deborah R. Hensler et al., Class Action Dilemmas:
Pursuing Public Goals for Private Gain (Executive Summary), Rand Inst.
for Civil Just., 21 (1999), http://www.rand.org/content/dam/rand/pubs/
monograph--reports/2005/MR969.1.pdf.
\19\ CFPB Study at section 8, page 33.
---------------------------------------------------------------------------
Removing arbitration and forcing class actions on servicemembers'
attempts to resolve USERRA appears intended to profit trial lawyers,
rather than servicemembers. Claims brought as class actions rarely
yield real benefits for class members. Most class actions are settled
without any benefit to the class members, and even when class members
are eligible to receive a settlement payment, they rarely bother to
file a claim. Thus, the primary beneficiaries of class actions are not
class members, but plaintiffs' lawyers-the group that has the most to
gain by banning arbitration. \20\
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\20\ The benefits of arbitration compared to the judicial system
are discussed in detail in the Chamber/ILR's comment filed in
opposition to a proposal by the Consumer Financial Protection Bureau to
promulgate a rule effectively banning arbitration in consumer
contracts. That comment, incorporated by reference, is attached to this
letter.
---------------------------------------------------------------------------
Third, the proponents of the bill will surely claim that it
preserves arbitration by allowing parties to agree to arbitrate after a
dispute arises. But that possibility is entirely illusory.
Employee-friendly arbitration programs are costly to businesses,
which agree to pay or reimburse arbitration fees, filing fees,
attorneys' fees, and other costs. They agree to do so because they gain
certainty that they will not have to incur the transaction costs of
defending class actions. Without that certainty, however, businesses
will not subsidize arbitration, instead relegating all disputes to the
court system-leaving servicemembers to fend for themselves except in
rare cases when they can secure plaintiffs' lawyers.
Less rational factors also prevent parties from agreeing to post-
dispute arbitration: ``parties are loath[] to agree to anything post-
dispute when relationships sour.'' \21\ That is why the evidence
demonstrates that opposing parties virtually never agree to arbitration
after a particular dispute arises. \22\
---------------------------------------------------------------------------
\21\ Amy J. Schmitz, Building Bridges To Remedies For Consumers In
International Econflicts, 34 U. Ark. Little Rock L. Rev. 779, 785
(2012).
\22\ Theodore J. St. Antoine, Mandatory Arbitration: Why It's
Better than It Looks, 41 U. Mich. J.L. Reform 783, 790 (2008)
(addressing employment arbitration).
---------------------------------------------------------------------------
Accordingly, the Chamber and ILR urge the Subcommittee to reject
H.R. 2631.
THOMAS MURPHY LETTER
The Honorable Jodey C. Arrington
Chairman
Subcommittee on Economic Opportunity
Committee on Veterans' Affairs
U.S. House of Representatives
Washington, DC 20515
Dear Mr. Chairman:
The agenda for the House Committee on Veterans' Affairs
Subcommittee on Economic Opportunity legislative hearing on June 29,
2017, included draft legislation to amend title 38 of the United States
Code to authorize the Department of Veterans Affairs to provide
assistance for adaptations of residences of Veterans and Servicemembers
in rehabilitation programs under chapter 31.
After further analysis of the draft legislation, we have determined
that the cost estimate originally provided for the bill was incorrect.
Our testimony initially stated that savings associated with the bill
would be $486,000 in the first year, $2.67 million over
5 years, and $6 million over 10 years. The revised savings
associated with the bill are estimated to be insignificant at $117,000
in the first year, $643,000 over 5 years, and
$1.5 million over 10 years. The new estimated savings reduces the
likely number of affected Veterans because nearly 96 percent of the
current home modifications fell below the proposed maximum payable
amount.
Thank you for your continued support of our Veterans.
Sincerely,
Thomas J. Murphy
Acting
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