[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
       
       
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         Available via the World Wide Web: http://www.fdsys.gov
                     
                     
                     
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                    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

                              ----------                              

                  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).
---------------------------------------------------------------------------
       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.
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
    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).
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
      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.
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    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.
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    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\
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    \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).
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    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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