EXAMINING THE U.S. DEPARTMENT OF VETERANS AFFAIRS FIDUCIARY PROGRAM: HOW CAN VA BETTER PROTECT VULNERABLE VETERANS AND THEIR FAMILIES?

 


 HEARING

BEFORE  THE

SUBCOMMITTEE ON DISABILITY ASSISTANCE AND MEMORIAL AFFAIRS

OF THE

COMMITTEE ON VETERANS' AFFAIRS

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED ELEVENTH CONGRESS

SECOND SESSION


APRIL 22, 2010


SERIAL No. 111-72


Printed for the use of the Committee on Veterans' Affairs

 

snowflake

 

U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON, DC:  2010


For sale by the Superintendent of Documents,  U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; DC area (202) 512-1800
Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 20402-0001

 


COMMITTEE ON VETERANS' AFFAIRS

BOB FILNER, California, Chairman

 

CORRINE BROWN, Florida
VIC SNYDER, Arkansas
MICHAEL H. MICHAUD, Maine
STEPHANIE HERSETH SANDLIN, South Dakota
HARRY E. MITCHELL, Arizona
JOHN J. HALL, New York
DEBORAH L. HALVORSON, Illinois
THOMAS S.P. PERRIELLO, Virginia
HARRY TEAGUE, New Mexico
CIRO D. RODRIGUEZ, Texas
JOE DONNELLY, Indiana
JERRY MCNERNEY, California
ZACHARY T. SPACE, Ohio
TIMOTHY J. WALZ, Minnesota
JOHN H. ADLER, New Jersey
ANN KIRKPATRICK, Arizona
GLENN C. NYE, Virginia

STEVE BUYER,  Indiana, Ranking
CLIFF STEARNS, Florida
JERRY MORAN, Kansas
HENRY E. BROWN, JR., South Carolina
JEFF MILLER, Florida
JOHN BOOZMAN, Arkansas
BRIAN P. BILBRAY, California
DOUG LAMBORN, Colorado
GUS M. BILIRAKIS, Florida
VERN BUCHANAN, Florida
DAVID P. ROE, Tennessee

 

 

 

Malcom A. Shorter, Staff Director


SUBCOMMITTEE ON DISABILITY ASSISTANCE AND MEMORIAL AFFAIRS
JOHN J. HALL, New York, Chairman

DEBORAH L. HALVORSON, Illinois
JOE DONNELLY, Indiana
CIRO D. RODRIGUEZ, Texas
ANN KIRKPATRICK, Arizona
DOUG LAMBORN, Colorado, Ranking
JEFF MILLER, Florida
BRIAN P. BILBRAY, California

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
April 22, 2010


Examining the U.S. Department of Veterans Affairs Fiduciary Program: How Can VA Better Protect Vulnerable Veterans and Their Families?

OPENING STATEMENTS

Chairman John J. Hall
    Prepared statement of Chairman Hall
Hon. Doug Lamborn, Ranking Republican Member
    Prepared statement of Congressman Lamborn


WITNESSES

U.S. Department of Veterans Affairs:
    Belinda J. Finn, Assistant Inspector General for Audits and Evaluations, Office of Inspector General
            Prepared statement of Ms. Finn
    Bradley G. Mayes, Director, Compensation and Pension Service, Veterans Benefits Administration
            Prepared statement of Mr. Mayes
U.S. Government Accountability Office, Daniel Bertoni, Director, Education, Workforce, and Income Security
            Prepared statement of Mr. Bertoni


American Federation of Government Employees, AFL-CIO and, AFGE National Veterans Affairs Council, Katherine R. Pflanz, Field Examiner, Winston-Salem Veterans Affairs Regional Office
    Prepared statement of Ms. Pflanz
American Legion, Jacob B. Gadd, Assistant Director for Program Management, Veterans Affairs and Rehabilitation Commission
    Prepared statement of Mr. Gadd
Gold Star Wives of America, Inc., Vivianne Cisneros Wersel, Au.D., Chair, Government Relations Committee
    Prepared statement of Dr. Wersel
Vietnam Veterans of America, Richard F. Weidman, Executive Director for Policy and Government Affairs
    Prepared statement of Mr. Weidman
Wounded Warrior Project, Sarah Wade, Coordinator, Family Issues and Traumatic Brain Injury
    Prepared statement of Ms. Wade


MATERIAL SUBMITTED FOR THE RECORD

Post-Hearing Follow-up Letter and Response:

Hon. John J. Hall, Chairman, Subcommittee on Disability Assistance and Memorial Affairs, Committee on Veterans' Affairs, to Hon. Eric K. Shinseki, Secretary, U.S. Department of Veterans Affairs, letter and attachment, dated May 13, 2010, and response letter, dated July 23, 2010


EXAMINING THE U.S. DEPARTMENT OF VETERANS AFFAIRS FIDUCIARY PROGRAM: HOW CAN VA BETTER PROTECT VULNERABLE VETERANS AND THEIR FAMILIES?


Thursday, April 22, 2010
U. S. House of Representatives,
Subcommittee on Disability Assistance and Memorial Affairs,
Committee on Veterans' Affairs,
Washington, DC.

The Subcommittee met, pursuant to notice, at 2:05 p.m., in Room 334, Cannon House Office Building, Hon. John J. Hall [Chairman of the Subcommittee] presiding.

Present:  Representatives Hall, Donnelly, Kirkpatrick, and Lamborn.

OPENING STATEMENT OF CHAIRMAN HALL

Mr. HALL.  Good afternoon and welcome to the House Committee on Veterans' Affairs, Subcommittee on Disability Assistance and Memorial Affairs, hearing on Examining the U.S. Department of Veterans Affairs (VA) Fiduciary Program, How Can VA Better Protect Vulnerable Veterans and Their Families? 

Please rise for the Pledge of Allegiance. 

[Pledge of Allegiance.]

Thank you.  My apologies for being late.  I was on the phone trying to straighten out a problem for an individual in Darrell Issa's district.  A friend of mine called across country to help, and fortunately, Congressman Issa has staff who are capably taking care of the issue at this moment. 

We are here today just a day after we passed another comprehensive veterans' health bill that supports veterans' caregivers and enhances the veterans' physical and mental well‑being of America's veterans. 

I was happy to support Chairman Filner in winning unanimous passage of this bipartisan legislation, S. 1963, the "Caregivers and Veterans Omnibus Health Services Act of 2009."  This bill incorporates the recommendations of nearly 20 Members of Congress, Democrats and Republicans alike. 

Provisions in S. 1963 will provide training, education and counseling for caregivers of veterans of any era.  In addition, the bill allows VA to recruit and retain nurses, home health aides and specialty care providers.  It will help VA to better diagnose and treat those who suffer from the invisible wounds of war, the stigma associated with them, and many other factors that make effective treatment difficult. 

Specifically, the bill expands authority to fund services to treat wounded warriors suffering from post-traumatic stress disorder (PTSD), traumatic brain injury (TBI), and other combat‑related disorders which lead to homelessness and in some cases, suicide and criminal acts in some unfortunate instances by veterans who are suffering from these disorders. 

Our hearing today is entitled, "Examining the VA Fiduciary Program:  How Can VA Better Protect Vulnerable Veterans and Their Families?"  This hearing is intended to examine VA's Fiduciary Program and assess how Congress and VA can work together to better protect veterans and dependents who are in need of fiduciary services. 

Since 1926 when Congress passed the World War Veterans Act, VA has been providing oversight of its benefits paid to those beneficiaries who are incapable of handling their own affairs due to injury, disease, or infirmities of age. 

Today, the Fiduciary Program that VA runs with authority contained in 38 U.S.C. 5502 is administered by VA regional offices (ROs) and their respective offices of regional counsel which interface directly with VA beneficiaries and State courts on guardianship and commitment matters. 

On average, impaired beneficiaries received approximately $14,400 in fiscal year 2008, about $4,200 more per year than the average for all VA compensation and pension beneficiaries.  In fiscal year 2008, fiduciaries managed approximately $1.5 billion in VA benefits for more than 103,000 beneficiaries.  Thus far, for fiscal year 2010, VA reports $396 million in benefits have been paid to more than 102,000 beneficiaries with a cumulative estate value of $3.1 billion. 

Recently, both the VA's Office of Inspector General (OIG) and the U.S. Government Accountability Office (GAO) issued reports on VA's Fiduciary Program.  These reports underscored the benefits of the program, and there are many; but it also pointed to insufficient staffing, training, and other resources that hampered effective oversight of the Fiduciary Program. 

In the absence of adequate oversight and accountability, some fiduciaries have misused millions of dollars belonging to our veterans and their dependents. 

Let me take a moment to highlight some of the concerns about the Fiduciary Program that were raised by the OIG and GAO reports.  From October 1998 to March 2010, the VA OIG's Office of Investigations reports that it conducted 315 fiduciary fraud investigations resulting in 132 arrests and monetary recoveries of $7.2 million in restitution, fines, penalties and administrative judgments.  One of these cases involved the submission of false financial reports by a fiduciary who attempted to conceal her embezzlement of nearly $1 million from 33 disabled veterans whose accounts she managed.  The funds embezzled by the fiduciary were reportedly used to support her gambling habit. 

It should be noted that these problems are not representative of all fiduciaries.  The vast majority are doing an honorable and honest job of taking care of our veterans, who cannot handle their own affairs, many of whom are family members.  However, the program is susceptible to abuse as a result of deficiencies noted by both OIG and GAO reports.  Specifically, they found that first, the Veterans Benefits Administration (VBA) was not taking effective action to obtain seriously delinquent accountings.  Second, VBA was not consistently verifying questionable expenses reported by fiduciaries.  And, third, VBA was not adequately following up and reporting on allegations of misuse of beneficiary funds and estates. 

The VA OIG pointed out that VBA has also not been diligent in replacing problematic fiduciaries.  In one case, a fiduciary was seriously delinquent in submitting multiple reports ranging from 134 days to 215 days late.  In addition, during that period, VBA received numerous complaints concerning that particular fiduciary's performance.  However, the VBA took no action to replace this particular fiduciary. 

On the other end of the spectrum, we will hear from veterans service organizations (VSOs) who complain that family members who serve as fiduciaries are neither supported financially nor through training by VBA to discharge their duties.  Moreover, the VSOs suggest that while some professional fiduciaries are not subjected to enough oversight by the VBA, family member fiduciaries often feel they are viewed with suspicion and mistrust by the VBA, despite the sacrifices they make to care for relatives who are incapacitated veterans and/or beneficiaries. 

For example, the Wounded Warrior Project reports that VBA required a mother who served as a fiduciary for her mentally disabled veteran son to reimburse funds spent on toilet paper for their home. 

This hearing provides a forum to explore concerns across the spectrum regarding the Fiduciary Program, and I look forward to the testimony of our witnesses and insightful comments or questions from my colleagues on the Subcommittee. 

I would now like to recognize Ranking Member Lamborn for his opening statement. 

[The prepared statement of Chairman Hall appears in the Appendix.]

OPENING STATEMENT OF HON. DOUG LAMBORN

Mr. LAMBORN.  Thank you, Mr. Chairman, and welcome everyone to this hearing on the Department of Veterans Affairs Fiduciary Program.  The Fiduciary Program provides oversight of VA benefits to beneficiaries who are incapable of managing their funds as a result of injury or disease.  When the VA or a court determines that a veteran is incompetent to handle his or her finances, the Fiduciary Program establishes an appropriate benefits payment method, appoints a fiduciary to oversee his or her finances, and provides continued oversight services.  Through periodic personal visits to the beneficiary's residence, VA field examiners monitor the welfare and needs of the veteran. 

My Subcommittee colleagues and I want to ensure that VA's Fiduciary Program is taking every measure and has the support necessary to fully safeguard beneficiaries' assets.  During the 108th Congress, Congress passed legislation that President Bush signed into law on December 10, 2004 (P.L. 108-454).  The law included provisions to make improvements to increase fiduciary accountability and strengthen protections for the beneficiary.  This included more thorough investigation of fiduciaries prior to them being appointed, and required VA to reissue benefits that were misused in cases where negligence was found. 

Today the Subcommittee would like to hear about the effectiveness of these provisions and whether further Congressional action is needed to ensure that our most vulnerable veterans are afforded the highest level of protection possible.  I look forward to hearing from our witnesses today, and I want to thank you all for your participation. 

Unfortunately, I have to leave soon for the airport, but you will all be in good hands with our Chairman. 

[The prepared statement of Congressman Lamborn appears in the Appendix.]

Mr. HALL.  Thank you, Mr. Lamborn. 

Votes are done.  The good news is we will not be interrupted by votes as we sometimes are.  Unfortunately, the Ranking Member and other Subcommittee Members may need to leave early. 

There are no other opening statements, so we will move right along to our first panel.  I would like to welcome Belinda J. Finn, Assistant Inspector General For Audits and Evaluations, Office of Inspector General, U.S. Department of Veterans Affairs, and Daniel Bertoni, Director, Education Workforce and Income Security with the Government Accountability Office.  They are accompanied by Timothy Crowe, also with the VA Office of Inspector General.  Welcome and thank you for being here today and for the work you do.

Ms. Finn, and all of the witnesses, your statements, written statements are entered into the record.  I would like to ask you to present a 5‑minute version if you can.  You are now recognized, Ms. Finn.

STATEMENTS OF BELINDA J. FINN, ASSISTANT INSPECTOR GENERAL FOR AUDITS AND EVALUATIONS, OFFICE OF INSPECTOR GENERAL, U.S. DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY TIMOTHY CROWE, DIRECTOR, AUDIT OPERATIONS DIVISION, ST. PETERSBURG, FL, OFFICE OF INSPECTOR GENERAL, U.S. DEPARTMENT OF VETERANS AFFAIRS; AND DANIEL BERTONI, DIRECTOR, EDUCATION, WORKFORCE, AND INCOME SECURITY, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

STATEMENT OF BELINDA J. FINN

Ms. FINN.  Thank you, Chairman Hall and Members of the Subcommittee.  Thank you for the opportunity to talk today about how the Department of Veterans Affairs can better protect vulnerable veterans and their families. 

With me today is Mr. Tim Crowe, Director of the Audit Operations Division in Bay Pines, Florida. 

VA annually provides benefits totaling more than $40 billion to over 3 million veterans and dependents.  When a VA beneficiary cannot handle their own finances because of injury, disease or the infirmities of age, VBA or the courts appoint a fiduciary to receive monies and make necessary payments for the beneficiary's living expenses.  VBA reports that fiduciaries managed the finances of over 100,000 beneficiaries with cumulative estate values of over $3 billion and those beneficiaries receive annual benefit payments of around $700 million. 

VBA employees at regional offices are responsible for overseeing the fiduciaries to ensure that the VA‑derived income and estates are used solely for the care, support, welfare, and other needs of VA beneficiaries. 

From the OIG's perspective as an oversight agency, we know firsthand that a dishonest fiduciary can misuse funds and how they might hide that misuse.  We recently completed a review of the Fiduciary Program's effectiveness in addressing potential misuse.  We concluded that VBA lacks the elements of an effective management infrastructure to support the program.  A previous audit in 2006 had identified some of the same weaknesses. 

VBA's case management system, the Fiduciary Beneficiary System, or FBS, has functional and data limitations that severely limit its usefulness as a tool to support program operations.  For example, FBS stores only 2 months' worth of data at any time and does not interface with other critical VBA systems.  Further, the system cannot receive financial information electronically, and this means that program personnel must deal with manual reports and statements from fiduciaries and financial institutions.  Late last year, however, VBA did start work to compare the current capabilities of the FBS system with their program needs. 

VBA also needs a staffing and workload model to guide resource allocations across the program.  For example, we found that the number of beneficiaries managed by individual VBA staff ranged from under 200 to over 1,500. 

Finally, VBA needs to consistently assess the quality of operations at regional offices, provide more guidance to fiduciaries, and analyze the findings from program evaluations. 

The program management issues lead to oversight lapses that can affect the safety of beneficiary funds.  We found that VBA is not always taking effective action to obtain delinquent reports that detail beneficiary assets, income, and expenses.  It also does not always verify the questionable expenditures that are reported by fiduciaries. 

Veterans and dependents that need the services of a fiduciary depend on VA to oversee their financial well‑being.  We believe that the Fiduciary Program can better monitor the performance of fiduciaries with improved systems, staffing, and information on program operations.  As an OIG, we will continue to work with VBA to improve the oversight of fiduciaries and ensure that vulnerable veterans and their families are protected. 

Mr. Chairman, thank you for the opportunity to be here today and discuss these important issues.  Mr. Crowe and I will be happy to answer any questions that you or the other Subcommittee Members may have. 

[The prepared statement of Ms. Finn appears in the Appendix.]

Mr. HALL.  Thank you, Ms. Finn.

Mr. Bertoni?

STATEMENT OF DANIEL BERTONI

Mr. BERTONI.  Mr. Chairman, Members of the Subcommittee, good afternoon.  I am pleased to discuss the Department of Veterans Affairs Fiduciary Program and how it can be improved to better serve veterans and their families.

As you know, VA appoints fiduciaries to protect the funds of veterans who are unable to manage their own affairs.  The fiduciary may be a spouse, other family member, or a private party that provide such services for a fee.  Last year, fiduciaries served more than 100,000 beneficiaries and managed over 4 percent of all benefits paid by VA. 

For years GAO, VA's inspector general and others have expressed concern that the program is not fully safeguarding beneficiary assets.  You asked us to discuss areas of continuing vulnerability and possible ways the program can be improved.  My statement draws on a recent report assessing VA's policies for safeguarding beneficiary assets, as well as challenges to program oversight and performance. 

In summary, we found that VA did not always take required actions or sufficiently document the records to protect beneficiaries.  First, our analysis of case file data showed that VA did not always conduct initial visits within required time frames to assess a fiduciary's suitability to manage VA benefits. 

Beyond their value as a key screening tool, timely initial visits are important because individuals often cannot begin receiving benefits until they are completed.  Moreover, in 18 percent of the cases we reviewed, the VA was also late in completing required follow‑up visits to monitor beneficiaries and fiduciaries, or lacked sufficient documentation for us to determine whether any action occurred at all. Similarly, while we estimated that about 39 percent of fiduciaries were late in submitting financial reports, program staff did not consistently follow-up to obtain required information or failed to document their actions.  Many cases involved reports that were more than 120 days late and considered seriously delinquent under program rules.  In the most egregious case, we found a fiduciary submitted financial reports almost 2 years late and only after VA initiated action to suspend payment. 

We also identified weaknesses and staff confusion around VA's processes for ensuring that fiduciaries who oversee high‑dollar‑value estates are properly bonded.  Of the cases we reviewed that required a bond, 13 percent lacked documentation that one was purchased or that the requirement was appropriately waived.  Some cases have estate values approaching $100,000 leaving beneficiaries exposed to substantial loss if funds were misused.  We have recommended that VA take additional steps to ensure that staff better understand and execute program policies for file documentation, initial and follow‑up visits, and bond acquisition.  The agency concurred with our recommendations and is moving to revise key policies and enhance its oversight role. 

In addition to program compliance issues, we identified weaknesses in VA's ability to monitor professional fiduciaries who manage substantial funds for multiple beneficiaries.  Although VA is required to conduct on‑site financial reviews of these fiduciaries, the agency did not use a unique identifier such as a Social Security number (SSN) or taxpayer identification number to identify and match them to all beneficiaries they may serve.  Thus, the VA cannot be ensured that all required reviews are being conducted and beneficiary funds appropriately spent.  However, per our recommendation, the VA recently noted that it plans to require staff to begin obtaining SSN or tax ID numbers for all professional fiduciaries. 

Finally, our report identified limitations in VA's electronic fiduciary case management system and the training provided to fiduciary staff as two key challenges to improving program performance going forward.  Specifically, we found that restricted data fields in the current system prohibit staff from systematically recording important case management information such as when multiple financial reports are due or tracking historical information on prior performance problems with fiduciaries.  In so many other areas, this system falls short in terms of helping staff monitor their very complex workloads. 

In regard to training management and staff in the offices we visited, we observed that available training was insufficient to ensure that they had the necessary expertise to carry out their responsibilities. 

In two of the three locations we visited, most fiduciary staff and managers had less than 2 years of programmatic experience.  Managers at these locations told us that staff inexperience and limited training has likely contributed to the problems we identified, including failure to properly monitor fiduciaries or document certain actions in beneficiary case files. 

We have issued recommendations in both of these areas, and VA is moving to address them. 

Mr. Chairman, this concludes my statement.  I am happy to answer any questions that you or other Members of the Subcommittee may have.  Thank you very much. 

[The prepared statement of Mr. Bertoni appears in the Appendix.]

Mr. HALL.  Thank you, Mr. Bertoni.

I will have one question of both of you, and then I will ask Mrs. Kirkpatrick if she would like to go first, and then Mr. Lamborn because they may have travel plans sooner than mine.  Mr. Mayes' prepared testimony on our third panel states that the GAO and OIG reports "confirm the validity of the VA's current efforts." 

Do you believe that VA is complying with the OIG and GAO's recommendations? 

Ms. FINN.  Our current effort found problems with how the Department had implemented our recommendations from 2006.  Several of our recommendations were similar to what we had issued in 2006, and the Department's efforts had not quite fixed the problem. 

For the current audit, though, of course they certainly took action during our audit on issues that we brought up.  They have concurred with all of our recommendations, and the actions we see seem to indicate that they are moving forward on those recommendations. 

Mr. BERTONI.  In the case of our report that we just issued at the end of February, and what we have is essentially concurrence with our recommendations and a litany of things that they have either planned or are underway. 

In some areas, I believe they have already taken action.  I believe they are now requiring that professional fiduciaries are tracked via their Social Security number or tax identification number.  I think that is very important. 

If you have a fiduciary who is perhaps less than honest and wants to game the system, under the old way they could list their name as John Smith.  In another case, John Q. Smith and Johnny Smith.  In that kind of situation they could have multiple beneficiaries and you wouldn't know it.  With a unique identifier like a Social Security number or tax number, you will be able to tie them all together and follow a financial trail. 

In other areas in the on‑site reviews, we were concerned that there was no national quality assurance process.  My understanding is that there is one now in place, or at least beginning. 

In several areas it looks like they have already begun to initiate action per our recommendations.  In others, what they plan to do sounds like sound practice. 

Mr. HALL.  Thank you.  I am sure when Mr. Mayes speaks, he will elaborate. 

Current efforts to move in the direction your reports have suggested is progress, and we like progress.  We are not expecting perfection, but we are after progress here. 

Mrs. Kirkpatrick?

Mrs. KIRKPATRICK.  Thank you, Mr. Chairman, for letting me go first.  I do have to leave for a flight.

I am very concerned about this program.  Before I was elected to office, I did a lot of guardianships and conservatorships in my law practice, and then served for a period as a judge pro tem just reviewing guardianship and conservatorship accountings.  As a judge, we have the power of the court to crack down and apply fairly swift sanctions.  But I will tell you just the mere nature that you are combining resources that aren't really having to be accounted for to me just raises a huge red flag.  So I have a couple of questions for both of you. 

Ms. Finn, first of all, is there training for the fiduciaries?  Are there specific rules and regulations within the VA as to what the money can be spent for and are the fiduciaries trained? 

Ms. FINN.  Mr. Crowe will answer that. 

Mr. CROWE. I would characterize the training that is given when they are appointed as being limited to a listing of their responsibilities.  One of the things we brought up in our report was that a Web portal that lists responsibilities, training aids, frequently asked questions and answers, might be helpful in this regard. 

Mrs. KIRKPATRICK.  That concerns me.  I hope to see some improvement in the training. 

My personal experience in the area led me to believe that a lot of people don't understand the nature of a fiduciary relationship.  They think that money is their money and they can spend it any way they wish, and there really has to be tight control on that. 

Mr. Bertoni, I wanted to ask you, are there limitations on fiduciary fees?  I want to tell you, there is a high‑profile case in Arizona right now where a million dollars went to the fiduciaries and their attorneys leaving the ward almost bankrupt.  Can you tell me, are there limitations on what the fiduciaries can charge themselves? 

Mr. BERTONI.  Yes.  Generally the fee is 4 percent of the annual benefit amount.  There are exceptions to that, as well as exceptions when it is related to the courts.  The courts often mandate higher fees.  I believe VA is required to comply with the court's dictates.  So yes, they can go higher, and oftentimes it is due to a court‑ordered fee. 

Mrs. KIRKPATRICK.  I noticed in some of the statements that were submitted that it appears in the Department of Veterans Affairs, someone can be appointed a fiduciary.  In my county, we have public fiduciaries.  That is one person with a staff, but that person can be appointed the fiduciary.  Do we have something similar in the VA system? 

Ms. FINN.  The VA appoints the fiduciary and many, many times it is a family member, in a lot of cases, not necessarily a professional fiduciary. 

Mrs. KIRKPATRICK.  Are there professional fiduciaries within the VA who can serve in that capacity if the person doesn't have a family member who can serve? 

Ms. FINN.  They are not employed by the VA. They register with VA but are not part of VA. 

Mrs. KIRKPATRICK.  My last question is I am very concerned about the lack of timely reporting and accounting and lack of documentation to support that.  What kind of sanctions are there in the system if someone delays in reporting? 

Mr. BERTONI.  In the financial area? 

Mrs. KIRKPATRICK.  Any kind of sanction.  For instance, I would oftentimes remove a fiduciary who wasn't compliant.  I always took a pretty strict approach because they are really dealing with someone else's money.  So is there a process for removing them or fining them or some kind of sanction? 

Mr. BERTONI.  Sure.  In terms of the annual financial reports, I believe it is sort of a sequential process.  If someone is late in filing, in the first 35 to 65 days, the VBA is are required to reach out and remind them in various ways to submit reports.  Once that gets up to be 90‑plus days, then the VBA is required to reach out again and can in fact suspend benefits at that point.  After 120 days, it becomes what is known "seriously delinquent" and then again the VBAy can take more rigorous actions, which could be suspending the benefits and pursuing the funds. 

Mrs. KIRKPATRICK.  I hope we can do some more work on this.  I do appreciate you appearing here today.  The Chairman and I talked about wanting to do some additional oversight.  I have a concern about the sanction of removing benefits hurts the veteran who needs the care.  But we can keep talking. 

Mr. Chairman, thank you very much. 

Mr. HALL.  Thank you, Congresswoman Kirkpatrick.  I hate to say it because it sounds like a joke, but we may have stumbled upon a fiduciary backlog. 

Mr. Lamborn?

Mr. LAMBORN.  Thank you, Mr. Chairman.  I have a couple of questions to build on the questions that Representative Kirkpatrick already asked. 

As she noted, there is a State process.  In Colorado, it is through the probate courts and the judge will grant someone's application normally, sometimes appoint a guardian ad litem.  Does the VA just accept what the State courts, whoever has been appointed by the State courts, or is there a parallel process?  Just so I understand better. 

Ms. FINN.  I can't give you a specific answer on that right now mainly because our report didn't focus on the appointment process.  At this point in time, we focused more on the misuse of funds. 

Mr. BERTONI.  We have done some work in guardianship in the court systems.  Generally I believe they defer to the court in terms of the arrangement that was made, the fee collection agreement, and the entity that is going to be the guardian and/or the fiduciary. 

I believe their controls allow them to screen at a later point to determine whether that person still meets the bar in terms of being suitable for being a fiduciary.  But I would defer the specifics to VA on that. 

Mr. LAMBORN.  If I am not here to ask questions of the VA panelists, I will possibly use the option of submitting questions in writing. 

Along that line, and I know you may not know the answer to this, if there is a contest as happens occasionally with heirs or other interested parties, does the VA ever take sides and determine between contesting applicants?  Do you ever get into disputes over who is the guardian? 

Mr. BERTONI.  We have not done that level of work to answer that question. 

Ms. FINN.  I think that is a VA question.

Mr. LAMBORN.  So that is not so much GAO matter of review.  Okay, then I have some other technical questions.  I will defer them to the VA.  Thank you for being here and for the information you provided.

I yield back. 

Mr. HALL.  Thank you, Mr. Lamborn. 

Ms. Finn, your OIG report indicates that the program is plagued by VBA's inability to detect the misuse of incompetent beneficiary estates, insufficient staff follow‑up on questionable or incomplete data in fiduciary annual accounting statements, and the failure of VBA to require documentation from fiduciaries to support expenses that are claimed.  These challenges were identified in your 2006 audit, and in your 2010, which audit show that these weaknesses still exist.  What steps does the OIG plan to take to ensure that VA resolves these issues to protect the beneficiaries who are unable to protect themselves? 

Ms. FINN.  We have a multifaceted approach right now.  We are currently conducting a new audit where we are looking at the large, retroactive payments that are made to beneficiaries through a fiduciary.  We are concentrating on those large payments over $10,000. 

We also work with our Office of Investigations on investigations as they take on fiduciary fraud. We are doing some work in our benefit inspections as we go into each regional office and we look at the Fiduciary Program across the board, not just misuse but we look at issues related to appointments and accountings and anything that comes to our attention in those regional offices. 

Finally, we will continue to follow‑up on our recommendations and conduct future work in the program to look at other aspects that we may not have been able to address at this point.  It is a pretty large program and we focused really on one aspect for this period of time. 

Mr. HALL.  Thank you.  From a statistical sample of Fiduciary Program reports, the OIG anticipates that legal instruments examiners may not have adequately verified approximately $2.9 million in expenditures for 551 of 1,906 accountings.  That is 29 percent of the accountings completed between April 1, 2009, and May 22, 2009.  Based on this 29 percent error rate, how many of the Nation's 104,000 incompetent beneficiaries do you predict or estimate are at risk of fiduciary misuse? 

Ms. FINN.  Our statistical sample was somewhat constrained by the fact that the system included only 2 month's worth of data on accountings that were due and that is what we pulled our sample from.  So we didn't have a whole year's worth of accountings, we just had 2 months of data.  In the absence of data, we cannot do an estimate of possible impact to the program. 

Mr. HALL.  Thank you.  That would be welcomed.

OIG contends in the 2010 report that VBA was not taking effective action to obtain the delinquent financial accountings from fiduciaries.  Your report was based upon visits to a number of regional offices.  What in your observation distinguishes a regional office that is properly overseeing a Fiduciary Program from one that is having problems? 

Mr. CROWE.  I think the lack of a strong national management oversight infrastructure of the program, which meant that there were great performance variances from regional office to regional office.  The effectiveness of the program largely fell to the abilities of local staff and management.  We saw great differences. 

Mr. HALL.  That is good for us to know since having consistency, training, and standards that everyone is expected to meet and taught to meet, are goals I am sure we would all support. 

The OIG's recent report notes that from fiscal year 2005 through 2008, VBA has failed to include statistical information pertaining to misuse of funds by fiduciaries in the annual benefits report to Congress as required by title 38 U.S. Code section 5510.  We know that the failure to provide this report to Congress impairs our ability to effectively provide oversight of the Fiduciary Program.  How has this reporting failure in your opinion harmed veterans and other beneficiaries?  And if so, what can we do to address this issue?

Mr. CROWE.  I think investigating allegations of misuse go to the heart of the mission of this program.  I think we were surprised to find that their policies were not being followed largely because it appears that their performance in this area was not being measured by performance standards or any other measurements.  And certainly some staff, I wouldn't characterize everybody, but some staff talked about this as being a lower priority, and we considered it to be a very high priority.  And some of the misuse actions that they had taken in investigating these allegations were either untimely or not documented.  Therefore, if they weren't reported in their system, what was being reported to Congress would be understated by definition. 

When you get allegations of misuse from a beneficiary, from a family member or from a friend, I think these are very important leads that something is going wrong and a great way for them to find out.  We were trying to emphasize to the VBA the importance of making sure that this becomes a higher priority among their staff. 

Mr. HALL.  Mr. Bertoni, in the GAO report to the Subcommittee, you observed that the Fiduciary Program is hindered by its electronic fiduciary case management system or FBS which some VA staff have called antiquated and cumbersome.  I understand that this system prevents VBA from identifying all fiduciaries in the program since it may not be able to connect a Social Security number with a name, or it may have the same person's name entered in different ways and perhaps the VA cannot tell the difference or identify the sameness of John Hall, John J. Hall, John Joseph Hall, et cetera.  Are there better systems that could be used by VA that are being used by other agencies that you oversee that could replace FBS and what recommendations do you have regarding the FBS system?

Mr. BERTONI.  I can't speak to specific systems, but I can speak to other Federal benefit programs, and to my knowledge, as I said, I have disability portfolios that entail the U.S. Department of Defense (DoD), VA, and the Social Security Administration (SSA), 20 other agencies, and within those 20 agencies, 200 Federal programs, and it is a rarity not to capture the full Social Security number as the control number. 

In this situation, you can have a fiduciary in California who runs a afoul of the rules and regulations and pulls up stakes and ends up in Oregon and changes his name slightly and you would never know that.  If you had a unique identifier, you could catch that kind of activity.  That is just one example. 

I don't know what the system is.  I do know that they are not capturing it now.  I don't think it is a matter of capability.  I think we were told that they could capture the Social Security number under the existing system.  But I would say that FBS is problematic. 

In our case, you asked why the Legal Instruments Examiners (LIEs) were missing so many of their accountings.  Well, if the system only holds the most recent account due, then the four prior that the fiduciary didn't submit drop off the radar screen.  When we went out into the field, we found field examiners who had sticky notes on the wall to sort of remind them that this particular fiduciary was late in four accountings.  The system wasn't doing that.  These folks were working in their own paper system outside the electronic system. 

So as far as the apparent lack of attention on the LIE's part, I think much of that can be attributed to, number one, the system is not helping them.  Second, the ratio of wards to staff.  What I heard just a moment ago in terms of how many folks that these LIEs and field examiners are managing, that is alarming.  At some point folks and tasks are going to fall through the cracks.  If you look at the consolidated hub, I think the ratio is 800 wards per LIE and 400 wards per field examiner.  I don't know if that is appropriate, but at least they know what they want to achieve. 

Mr. HALL.  Thank you for that information.  Regarding the site visits that GAO conducted to three of the 43 program units, St. Petersburg, Cleveland and Salt Lake City, which is the location of the western hub, I understand that the western hub is a new initiative and your examination did not yield conclusive findings, but you predicted this consolidation effort has promised to standardize training procedures and implementation.  How long do you think it will take before the western hub shows those results? 

Mr. BERTONI.  GAO, in general, is on record for much of the consolidation of workloads and activities that are happening at VA.  They are consolidating a lot of workloads across a lot of different activities, and conceptually that makes sense to us.  When you can pull together that many States and that many field examiners, give them consistent training, give them an opportunity to specialize in what they do instead of being the generalist, jack of all trades, I think there are real opportunities to increase timeliness and accuracy and consistency of the workload. 

Our concern is that we heard some noise out there in terms of how the hub came about, perhaps it was rolled out when there weren't enough support systems in place.  How some of the cases that came in were not what I would say appropriately worked and they had to be reworked to make sure that the accountings were up to date.  So I think there were some speed bumps in terms of implementation.  We have asked that they do an evaluation to see lessons learned and what they could do different going forward.  I believe that is underway or will be soon. 

As far as when it will be up to maximum productivity, I don't know.  But I am starting to see some data that they are starting to exceed national targets in terms of submissions of the reviews of the financial accountings. 

Mr. HALL.  Thank you.  I have a couple of more questions for you and then we will give you some more in writing next week.  I am going to try to get to our other panels here while we are all still awake and on solid food.  But in your estimation, Ms. Finn or Mr. Bertoni, what misuse of beneficiary funds occurs more, that by fiduciaries who are related to beneficiaries or by professional, nonfamilial fiduciaries? 

Ms. FINN.  It is hard to say what we don't know, but I can tell you that our Office of Investigations has told me that more than half of their investigations are related to a family member.  I find that very sad to speak of, especially on Bring Your Child to Work Day, but that is the case. 

Mr. HALL.  Well, we are talking about a lot of money and human beings here, so I guess we shouldn't be surprised that the temptation certainly exists. 

Mr. BERTONI.  We couldn't answer that specifically either.  We haven't done that work.  But I do believe that when you have this level to date of management inattention, that that invites and can open the door to misuse. 

If you have structured oversight of the program, strong program integrity tools in place, I think that clamps down the temptation for abuse. 

I did get a call this week from a citizen, I get these quite frequently, who was having trouble contacting VA in terms of getting a fiduciary.  I tried to work through various scenarios for that person, and I kept going back to:  Do you have a family member that could take this on?  And that person had family members but did not feel that they could trust their funds with a family member.  But that is all I know. 

Mr. HALL.  Just a couple of more things.  We have some reports from family members who are acting as fiduciaries who have been barred from using VA funds for living expenses.  One question is have you an opinion about that and also do you think that VA should consider paying familial fiduciaries? 

Ms. FINN.  I would hesitate to voice an opinion on that.  I guess if I were in that situation, I would hope my child would do that without a salary.  But I can see where the occasion could arise where it is a large undertaking to take care of someone who needs that level of attention. 

Mr. BERTONI.  Again, I don't have any work to bear any of this out, but I would say expenses should be associated with the care and well‑being of the beneficiary.  There are other programs, aide and attendants that can be sort of rolled into the equation to meet the supplementary needs of the beneficiary.  But I have no opinion on whether living expenses should be part of it. 

Mr. HALL.  My last question is do you have an opinion as to whether we should put a cap on the number of beneficiaries that one fiduciary may handle or whose affairs they may handle? 

Ms. FINN.  It would seem to me to be a prudent undertaking to do because a professional fiduciary who is managing the funds of many beneficiaries has the greatest ability to move funds between fiduciaries and the most funds are at risk.  Certainly that is where we really need the controls to ensure that all of the funds for the many beneficiaries that may be under a fiduciary's management are well accounted for.  I don't have a specific number that I would recommend, however. 

Mr. BERTONI.  Is your question should we place a cap on the number of beneficiaries that professional fiduciaries can serve? 

Mr. HALL.  Right. 

Mr. BERTONI.  I would say, just as the point I made a few moments ago regarding the ratio of LIE to wards and field examiners to wards, I think at a certain point it becomes very difficult to manage the finances of folks when you have many, many beneficiaries to worry about.  I don't know what that is, but I think at some point you have to look at does this person have the capacity or entity have the capacity to serve the needs of the beneficiaries. 

Mr. HALL.  Thank you, sir.  I would assume it would possibly vary depending on the degree of disability and impairment of the veteran beneficiary, but there is probably a limit to what any one person can do competently, even assuming total honestly. 

Mr. BERTONI.  And it also depends on the capacity of the professional fiduciary.  There are probably organizations and entities out there that have support staff in place that can sort of help with that.  You really need to look at it on a case‑by‑case basis as to which entities might be able to handle more. 

Mr. HALL.  Thank you very much, Mr. Bertoni, Ms. Finn, and Mr. Crowe.  Your testimony has been very helpful.  We will submit some more questions to you most likely.  We thank you.  You are excused, and now we welcome the second panel.

Our witnesses are Richard Weidman, Executive Director for Policy and Government Affairs, Vietnam Veterans of America (VVA); Sarah Wade, Coordinator, Family Issues and Traumatic Brain Injury, Wounded Warrior Project (WWP); Jacob Gadd, Assistant Director for Program Management of the American Legion; Vivianne Cisneros Wersel, Gold Star Wives of America; and Katherine Pflanz, Field Examiner from the Winston Salem VA Regional Office and American Federal of Government Employees (AFGE) representative.  Welcome.  Thank you for your patience.  Again, it is good to see those of you who we have seen many times before.  Your written statements are in the record.  You are recognized for 5 minutes each, and then we will have some questions.

We will start with Mr. Weidman.

STATEMENTS OF RICHARD F. WEIDMAN, EXECUTIVE DIRECTOR FOR POLICY AND GOVERNMENT AFFAIRS, VIETNAM VETERANS OF AMERICA; SARAH WADE, COORDINATOR, FAMILY ISSUES AND TRAUMATIC BRAIN INJURY, WOUNDED WARRIOR PROJECT; JACOB B. GADD, ASSISTANT DIRECTOR FOR PROGRAM MANAGEMENT, VETERANS AFFAIRS AND REHABILITATION COMMISSION, AMERICAN LEGION; VIVIANNE CISNEROS WERSEL, AU.D., CHAIR, GOVERNMENT RELATIONS COMMITTEE, GOLD STAR WIVES OF AMERICA, INC.; AND KATHERINE R. PFLANZ, FIELD EXAMINER, WINSTON-SALEM VETERANS AFFAIRS REGIONAL OFFICE, ON BEHALF OF AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO, AND AFGE NATIONAL VETERANS AFFAIRS COUNCIL

STATEMENT OF RICHARD F. WEIDMAN

Mr. WEIDMAN.  Mr. Chairman, thank you for the opportunity for Vietnam Veterans of America to present some thoughts about the fiduciary reports that you all are considering today, one by the OIG and one by GAO and looking at the overall problem. 

One thing is clear from both anecdotal experience that we have as an organization both directly and through our local leadership around the company as well as our service representatives in that things in this program have been not good for a very long period of time, mostly because it hasn't been paid attention to. 

So first and foremost, after reading both of these reports, there is not a good solid program.  The axiom that is always useful to remember is that a unit does well is that which a commander checks well.  And because this thing is not set up well, you can't even check well what is happening with each and every veteran. 

My second concern has to do with standards for the fiduciaries as well as training, and this is something that needs to be done. 

Three, we are very troubled that most of the 2006 recommendations were not followed and implemented or at least a number of them were not. 

And the next observation that we have really has to do with care.  Both of these reports focused on the fiduciary and the financial obligation that VA has to make sure that taxpayer dollars go to the intended recipient for his or her benefit and don't end up elsewhere.  And that is an important function.  But equally important is that these are folks in pretty rough shape, these 103,000 folks.  They need medical care on an ongoing basis.  They need lots of things on an ongoing basis, not the least of which is to make sure that they eat right. 

We, frankly, are not all that concerned where it is a spouse, which is true in a number of cases.  We are concerned with those who have many, or perhaps even hundreds, in their caseload because that element of making sure that people get the medical care that they need when they need it, we believe, is a key part of this program.  And of course, we have the exposure of billions of dollars potentially. 

It is almost akin when you don't have a system to check and follow‑up to the genius idea of sending $10 billion in cash into the war zone into Iraq and then being surprised that more than 70 percent of it couldn't be accounted for.  It is almost that foolhardy that you don't have checks and balances in this system that really make a great deal of sense.  But it is easily done and we would urge Mr. Mayes and his folks that produce information technology (IT) that can give you that capability and start constructing a parallel system virtually immediately. 

We believe that some of the progress that has been made recently on the compensation and pension (C&P) system and a change in attitude on the part of VBA leadership towards those of us who are partners with them, and major stakeholders, is something that means that we can move towards solving the C&P problems within the next year and a half or 2 years.  We need the same sort of attention and the same collegiality, if you will, and the same openness of attitude toward new solutions and working with stakeholders at the State, national as well as at the local level in order to solve the problems of the fiduciaries. 

With that, I will conclude my statement.  I look forward to any questions you may have, sir.

[The prepared statement of Mr. Weidman appears in the Appendix.]

Mr. HALL.  Thank you, Mr. Weidman.  Ms. Wade?

STATEMENT OF SARAH WADE

Ms. WADE.  Chairman Hall, Ranking Member Lamborn and Members of the Subcommittee, thank you for inviting Wounded Warrior Project to testify on VA's Fiduciary Program.  Through our work with severely wounded veterans and their family caregivers, many of whom are fiduciaries, Wounded Warrior Project has a unique perspective on this program.  As a caregiver myself of a severely wounded veteran of both Operation Enduring Freedom (OEF) and Operation Iraqi Freedom (OIF) who sustained a severe traumatic brain injury, and as someone who has worked with many caregivers of severely wounded warriors, I believe I can provide helpful insight. 

WWP appreciates the critical mission and vital work performed by the VA's Fiduciary Program, but we are gravely concerned that in managing the program, VA fails to take account of the unique circumstances of family members who are devoting themselves to the full‑time care of severely wounded warriors and who also serve as their fiduciaries.  Many have given up careers and depleted their own savings to care for these wounded warriors.  Family members who have made these kinds of sacrifices hardly pose a risk of misuing the veterans' benefits. 

WWP recognizes the need for the VA Fiduciary Program and for appropriate oversight, and we appreciate the Government Accountability Office's helpful report on the need to strengthen the program and improve compliance with fiduciary policies.  Importantly, those policies recognize that all fiduciary cases do not require the same degree of attention and supervision and that field examiners should consider the unique circumstances of each individual case.  Unfortunately, we see wide variability in how the judgment is exercised. 

The many caregivers of wounded warriors, who are my friends and with whom I have worked over the years, have put their own lives on hold to be caregivers.  Typically they have chosen to give up or independently suspend their own career plans and made other financial sacrifices.  I can assure you of one thing regarding those who have been appointed fiduciaries:  their dedication to their wounded spouses or children did not change by virtue of taking on responsibilities of a fiduciary, yet VBA's fiduciary oversight seldom recognizes the sacrifice of those who are also caregivers.  Too often these family members encounter a VBA oversight system marked by rigidity, intrusiveness and unreasonable decisionmaking. 

Let me illustrate by way of a few examples.  A VBA field examiner imposing a summer vacation expenditure limit for a profoundly wounded warrior, his wife and two children; a mother caregiver having to explain to a VBA examiner why she allowed her wounded warrior son to spend "too much money" on Christmas gifts; the spouse caregiver of a traumatically brain injured veteran having to get permission from their VBA field officer to purchase a couch for their home. 

As Chairman Hall mentioned in opening remarks, a devoted mother caregiver was required to pay back money for toilet paper purchased for the home.  A family being questioned about expenditures for gasoline that was used in transportation of the wounded veteran; several instances of mothers who are full‑time caregivers being required to pay rent to the wounded veteran rather than residing in their home for "free."  A field examiner denying a mother caregiver's request to place the now‑wheelchair bound veteran's 8‑year old high mileage truck that she uses to transport him in a rural, snowy area; a mother caregiver having to relinquish her role as a fiduciary because she had had to declare bankruptcy after leaving the workforce to care for her wounded warrior son. 

Let me assure you from personal knowledge that these families do not deserve to be treated this way.  Not every case is mishandled, but these aren't isolated problems.  Moreover, caregivers experience stark variability in VA's oversight across the country.  The impression frankly is of a program marked by arbitrary and capricious decision making.  It should be recognized that family caregivers typically reside with the veteran and may no longer have their own income.  We see no reason to preclude such families from applying part of their loved's one benefits to help maintain a household that they share.  VA Fiduciary Program policies should make that abundantly clear. 

But even more fundamentally, a devoted family member who provides daily care for a severely wounded veteran should not be treated as the object of suspicion, either in terms of rigid management of the budget or intrusive home visits simply because the individual serves as the veteran's fiduciaries.  We believe these families are owed a presumption of honesty and should be treated with dignity. 

Over the past year, WWP has discussed these concerns with VBA officials and offered to work with them, even arranging for them to meet a family caregiver fiduciary to appreciate better this family's experience, but we have yet to see any change in policy or practice.  Clearly both are needed. 

In addition, VA must provide more training.  Its own staff needs training, but VA should also better clarify to family members their responsibilities when they agree to serve as a fiduciary. 

Finally, it is noteworthy that caregivers of wounded warriors are well known to VA.  Each has worked closely with a Federal Recovery Coordinator and/or other case manages in connection with the veteran's care.  In the isolated instance in which there is some indication of a problem concerning a caregiver, case workers in the Veterans Health Administration become aware of it.  From the caregiver's perspective, VA is a single entity and they have every reason to believe VA knows they are reliable and have integrity, so imagine how confusing it is for a caregiver who has worked closely and developed relationships of trust with other VA staff to encounter VBA personnel whose fiduciary requirements convey fundamental mistrust.  It doesn't seem too much to expect that VBA and other arms of the Department work more closely to share information relating to caregiver fiduciaries rather than requiring these dedicated individuals to prove themselves yet again. 

Mr. Chairman, we look forward to working with the Subcommittee to address these concerns regarding the VA's Fiduciary Program. 

This concludes our testimony.  I would be pleased to address any questions you may have.

[The prepared statement of Ms. Wade appears in the Appendix.]

Mr. HALL.  Thank you very much. 

Mr. Gadd?

STATEMENT OF JACOB B. GADD

Mr. GADD.  Mr. Chairman and Members of the Subcommittee, thank you for the opportunity to provide the American Legion's views on the Department of Veterans Affairs' Fiduciary Program. 

Without effective oversight, coordination, and management, our Nation's veterans with mental health illnesses or diseases will continue to experience delays and financial hardships in accessing their earned benefits. 

Title 38, Code of Federal Regulations, section 13, provides the guidance for VA to manage the Fiduciary Program.  VA is charged with the point of fiduciary to manage and handle the veterans compensation and pension benefits if a veteran is deemed mentally incompetent. 

A recent OIG report found that Veterans Benefits Administration lacks elements of an effective management infrastructure to monitor program performance, utilize staff, and oversee fiduciary activities.  Furthermore, the Government Accountability Office recommended VA strengthen the Fiduciary Program monitoring policies, improve staff compliance, and consolidate the 14 western Fiduciary Program units. 

While VA is, indeed, moving forward with the fiduciary hub in Salt Lake City and taking actions to rectify the problems as noted by OIG and GAO in their reports and through testimony today, the American Legion still continues to have several concerns.  These concerns include the difficulty and delay in processing the appointed fiduciary, the VA's centralization model, and then, three, feedback from American Legion State service officers and the Pension Management Center (PMC) staff. 

First, in researching the number of forms, accompanying delay in processing, and the stress that it places on veterans and their beneficiaries, that is monumental.  In fact, as noted in my written testimony, there are 21 different VA forms required to appoint a fiduciary. 

Second, the American Legion has been concerned about VA's centralization policies and that VSOs are not being included in these processes.  The American Legion continues to urge VA to provide internal access phone numbers for accredited VSO representatives.  VA commented on this recommendation, stating that, "Providing direct internal telephone access would require the redirection of resources currently dedicated to disability claims processing."  This is the same communication problem that VA and VSOs are experiencing with the Fiduciary Program. 

At the Pension Management Centers, the American Legion has three national staff in Minneapolis, Philadelphia, and Milwaukee that have all shared the same concern, and that is improving the coordination between the regional offices, the pension centers, and the fiduciary hubs. 

For example, a service officer files for benefits for a veteran in August of 2009.  The rating decision is then completed in February 2010, proposing incompetency.  In March, the letter is sent to the veteran in regards to this incompetency and the veteran waives the due process, which enables VA to act on the claim prior to waiting the 65 days.  The award letter then goes back to the veteran, the first payment, in May, but those retroactive benefits are withheld until the guardianship unit can make their visit. 

So, after all this process is complete, the Pension Management Center then sends VA the form to the hub back in Salt Lake City.  The hub then would notify the guardianship unit.  And, once the field exam was completed, it was sent back to the Pension Management Center. 

So, as you can tell from all of this explanation, it is a very cumbersome and lengthy process, and the coordination between these offices can definitely be improved. 

In addition, our service officer in one of the Pension Management Centers helped schedule a fiduciary field exam because the veteran had been waiting for 4 years to access his benefits.  And that field exam agent went out to his home on a Sunday for that particular exam.  And I just want to note that this is unconscionable, that a veteran's claim can be delayed for this period of time, and that our Nation's veterans and their beneficiaries deserve better. 

And the American Legion's focus with our testimony was on the front end of this process and how we need to improve, as we heard today, on the centralization, working with the IT component.  And, in that regard, the American Legion has several recommendations: 

First, that a full‑time employee be funded and authorized within each RO and PMC.  Second, that Congress authorize and fund VBA's IT budget to develop that integrated IT software package that we have heard today. 

Third, the Legion recommends that Congress ensure VSO representatives are given an internal access phone number so we can improve the communication between VSO and VA.  Fourth, that Congress direct VA to create a national fiduciary toll‑free number for their family members and the general public so that they can get that information for that fiduciary. 

Fifth, that Congress direct VA to allow fiduciaries to sign the paperwork in advance so that a temporary fiduciary can be appointed, and it might shorten that delay that they are currently experiencing.  And, lastly, that VA establish a VA voluntary service pilot program which may be able to train volunteers on how to become VA fiduciary volunteers. 

So, Mr. Chairman and Members of the Subcommittee, the American Legion sincerely appreciates the opportunity to submit testimony today.  Thank you.

[The prepared statement of Mr. Gadd appears in the Appendix.]

Mr. HALL.  Thank you, Mr. Gadd. 

Dr. Wersel? 

STATEMENT OF VIVIANNE CISNEROS WERSEL, AU.D.

Dr. WERSEL.  Mr. Chairman and Members of the Subcommittee, I am pleased to be here today and to testify on behalf of Gold Star Wives. 

My name is Vivianne Wersel, Chair of the Government Relations Committee.  I am the widow of Lieutenant Colonel Rich Wersel, Jr., United States Marine Corps, who died suddenly on February 4, 2005, a week after returning from his second tour of duty in Iraq. 

We begin by thanking this Subcommittee and our government for providing essential services necessary to help us through our loss and grief.  Many services are being done well and in a caring and helpful way.  We must stress the importance of staying vigilant so no one grieving the loss of a loved one will endure any indignities or forfeit benefits due to the lack of knowledge.  Therefore, we need consistent and relevant assistance at the time of death and for some period of time thereafter. 

Gold Star Wives was unaware of the VA Fiduciary Program until requested to testify at this hearing.  Even one of our most seasoned government relations members, Mrs. Edith Smith, stated she was unaware of the Fiduciary Program.  And this, in itself, posed a concern about the lack of information for eligible beneficiaries.  "Fiduciaries" is not a word in our vocabulary; yet, it should be. 

We are concerned with the lack of publicity about the program and the information available to eligible beneficiaries.  There is no mention of the Fiduciary Program in the VA Handbook for Veterans, Dependents, and Survivors.  We need prior knowledge in order to obtain specific information on the VA Web site. 

Furthermore, this subject has neither been discussed in prior testimonies that included Gold Star Wives, nor has it been a topic of discussion with the VA/DoD Survivor Forum quarterly meetings.  Lack of information and participation does not promote optimal care for surviving families. 

In preparation for this hearing, we discovered some Gold Star Wives were their spouses' fiduciary before their military spouses died.  Some required an annual bonding fee as the designated fiduciaries.  Why do spouses have to pay significant fees to be bonded? 

In 2002, Petty Officer Second Class Anthony Palmer collapsed while playing basketball.  He was kept alive via medical devices.  When the respirator was removed, he unexpectedly continued living; however, he was totally incapacitated.  He was then medically retired, but when he died 2 years later, his VA disability compensation suddenly stopped.  His wife and two children were suddenly left without support.  What role did the VA Fiduciary Program play for his family? 

When the Servicemembers' Group Life Insurance (SGLI) was assigned by name to Mrs. Palmer's two small children, she had to pay several thousand dollars for civilian court guardianship.  Why is this required when she is the biological parent of two small children?  She is one of the many young widows with children who are experiencing this problem.  Why is the Fiduciary Program not used for SGLI, which is administered by the VA? 

Mrs. Dora Aja married her college sweetheart in 1953.  His heart attack in 1976 eventually left him totally incapacitated.  She had to be bonded to be a fiduciary, at the cost of $250 annually.  When she relocated to be closer to her family, she had to receive permission from the VA and Defense Finance and Accounting Service to purchase a home.  In addition, she must submit, yearly, a spreadsheet of all her expenses. 

Are spouses provided with the tools they need to monitor the administration required of them annually?  Mrs. Aja stated, "I have cared for him and loved him for over 50 years, and the government treats me like a juvenile.  It is a good thing that my husband is not aware of what is happening because he would be angry."  She is neither a widow nor a veteran, nor is she treated as the dedicated military spouse that she is, even though she is soon to be a Gold Star Wife. 

On another note, there are approximately 35,000 surviving spouses and adults who are incapacitated and have fiduciaries.  Who takes the lead when the surviving spouse becomes incapacitated?  If the surviving spouse was not a fiduciary for the veteran spouse, they may not know anything about the program and, by extension, neither would their children. 

Our main concerns with this program is the lack of publicity and available information for our surviving spouses.  It is imperative that pertinent information about the Fiduciary Program be made available to eligible beneficiaries to provide meaningful support for present and future surviving spouses. 

Please refer to our questions and concerns in our written testimony.  We thank you all for all your past support and look forward to working with you to help improve this program.  I will be happy to answer any questions you may have, and I thank you very much.

[The prepared statement of Dr. Wersel appears in the Appendix.]

Mr. HALL.  Thank you very much, Doctor. 

Ms. Pflanz? 

STATEMENT OF KATHERINE R. PFLANZ

Ms. PFLANZ.  Chairman Hall and Members of the Subcommittee, thank you for the opportunity to testify on behalf of AFGE and the National Council in order to share the perspective of the field examiner and other employees of the fiduciary unit. 

The fiduciary unit may be a very small part of the VA, but it involves tremendous responsibilities.  We are the unseen workers who are tasked with ensuring that VA benefits are protected.  Field examiners are in the field 100 percent of the time.  I, for example, live 220 miles from my regional office and over 100 miles from any other field examiners.  We count on the legal instrument examiners for assistance and guidance.  They are our eyes and ears for the protection of beneficiaries but also for our personal safety. 

Field examiners meet the fiduciary, who has been rated incompetent by VA or adjudicated incompetent by the court, face to face.  We often live in the same community.  We see them in the grocery stores.  We meet their families, sit in their homes, and are provided a unique insight into their lives.  We see them at their best, worst, on and off medications, mad at the VA, happy to have a visitor, and usually armed with many questions.  We are tasked with gathering personal information, from finances to incontinence. 

Field examiners are investigators, social workers, auditors, medical personnel, financial advisers, information resource specialists for local, State, and Federal benefits.  We work under very demanding production standards while striving for high quality. 

With a growing number of beneficiaries needing the service and oversight of the fiduciary activity, lack of experience, training, and guidance makes this task difficult to accomplish. 

When I was a VSR, veterans service representative, I got formal training by subject‑matter experts as instructors.  This training gave me the opportunity to ask questions, meet coworkers from other regional offices, work on mock cases, learn to conduct interviews, and work in live cases. 

In the fiduciary unit, formal training is not available.  The only hands‑on training provided is by observing other field examiners for a short time.  Although useful, it does not provide enough exposure to the wide variety of cases and situations.  We really need a comparable challenge course for the field examiners. 

Frontline supervisors, known as coaches, also need more training.  Supervisors throughout the regional office rotate between stations or teams, but the fiduciary station requires a very different skill and knowledge other than these different teams.  Too often, supervisors who do gain experience in the fiduciary unit are rotated. 

We also really need more field examiners.  The workload keeps increasing, and we cannot meet timeliness, and our quality also suffers. 

We also need better tools to do our job.  Often, we have to share cars, which hurts timeliness.  The report generator, which is what we use to write our report, is only for one of the many types of reports that we have to prepare.  The current production expectations are unrealistic. 

The standards make an assumption that every case is alike, even though it varies so much from case to case on how long it takes to gather the data required to properly assess the beneficiary's need, protect funds, assess possible benefits, and answer any questions the family may have.  We are sometimes forced to choose to either not make our production goal or make errors or secretly work longer hours and risk facing the consequences. 

Giving the frontline employees a voice in the design and testing of fiduciary tools would both save time and improve quality.  Me and my colleagues who work in the hub pilot in the West are also very frustrated because they had no say in the design of the pilot project.  This model does not work, and AFGE and VA Council urge you to discontinue it.  The pilot deprives veterans of the personal touch they need.  It is depriving employees out on the road, who are trying to protect the veterans, from full support they need to do their jobs. 

The Salt Lake City hub covers 13 States with 13 different sets of State laws.  There are a lot of morale problems.  Field examiners are not getting the backup they need.  I have been told that the San Diego hub also has big problems.  Again, we urge you to listen to the fiduciary unit employees who do the job on the front lines. 

I want to close by saying:  A bad day as a field examiner still beats a good day in the office any day.  I feel this position is the most rewarding, emotionally and physically challenging, humbling, and enlightening position in the VA. 

Thank you. 

[The prepared statement of Ms. Pflanz appears in the Appendix.]

Mr. HALL.  Thank you very much for your testimony, Ms. Pflanz. 

And thank you all.  I am sorry I had to leave the room for a minute there, but I do have written statements from everyone. 

I wanted to start with Ms. Wade and ask you:  In your testimony, you suggest that VBA staff does not recognize the unique circumstances of family members who are fiduciaries and who have devoted themselves to the care, sometimes full‑time care, of severely wounded veterans, nor does it provide the support needed for these caregivers. 

What specific steps would you recommend that VBA take to better recognize the sacrifices of family members who oversee the financial affairs of our veteran beneficiaries? 

Ms. WADE.  I think, first, it is important to distinguish between what kind of family members we are discussing here.  I know in your previous question you asked about the number of family members that were investigated.  And we are not talking about just any family member that suddenly came out of the woodwork after this veteran started receiving their benefits from the VA.  The people I am talking about are ones that oftentimes handled that individual's money through multiple deployments when they were still on active duty and that is who they entrusted with their money.  A lot of these people were asked to be the power of attorney of that servicemember before they were injured. 

Also, these are family members that have likely been at the bedside since day one of that veterans injury and done this at their own financial sacrifice.  I know, in my own situation, when my husband was injured, I quit school and left my job to do it.  I think these are people that have sorted themselves out, have proven themselves.  Many are also court‑appointed guardians, fiduciaries recognized by Social Security or just a power of attorney. 

But I think what we are talking about here is trusting these people by virtue of the fact that they have already proven themselves.  And sometimes what that means is that—for instance, in the example I used of several moms that live with their veteran and take care of them, I don't think they are living there for free; I think they are earning their living.  I don't think that it is that uncommon for family members to house another family member in a time of need.  I know my own family has done it under numerous circumstances. 

So I think recognizing that these funds that are being used to take care of the household are for the veteran's well‑being, that it allows that person to be there to care for them, it allows that veteran to stay out of institutional care and to have quality of life. 

I also think that it is very intrusive to have a complete stranger who is a government employee decide how that person's budget gets spent when they didn't know that person before they were injured.  I think a good example would be one of the ones I stated, of a familya wife and her husband and two children, who were given a spending limit for what they could use for a vacation. 

I think it is important to include that I went on an alternative ski trip with that very family this winter, and the mother‑in‑law had to come, too, because there was no way the mom could take care of both her husband and the two children.  And, heaven forbid she had gotten injured skiing or something, someone would have to take her place.  So we are talking about quite a few people traveling. 

But my husband loved to travel before he was injured.  And I think that how someone spends their money and chooses their financial priorities are oftentimes based on quality of life.  We have made some financial adjustments in our lives.  We went from a three‑bedroom house to a two‑bedroom house.  We have one car.  We sold the car that I dearly loved before he was injured to get something less expensive with better gas mileage that would require less expensive maintenance.  We don't eat out as much.  But we do still have a special account, actually, that we contribute to monthly to pay for recreation and trips. 

So I think that some leniency needs to be afforded to these families.  But, also, I really think that if these family members are able to pay the bills and they are not putting this veteran into debt, then I think how they spend their money for fun and quality of life shouldn't be a stranger's business. 

Mr. HALL.  Thank you, Ms. Wade. 

I would just like to say—and I am sure the rest of the Subcommittee and full Committee Members would concur—that we thank you and admire you and the other caregivers, fiduciaries or not, who take care of their husbands or wives or sons or daughters who have been injured serving this country and made a sacrifice that affects the entire family so gravely and seriously and requires the changes and the sacrifices that you described. 

Ms. WADE.  We appreciate your support of the bill yesterday, sir.

Mr. HALL.  I thank you for coming here and giving us such moving examples of what I would assume are isolated and misguided actions that can be corrected. I don't believe that the VA staff are intentionally trying to make life harder for you, when it is already difficult. 

The job of this Subcommittee and that of the Congress in general is to perform oversight.  And we are going to do that with this program, to try to improve it in ways that you and others are suggesting. 

Mr. Gadd, in your statement you indicate that the process for approving a fiduciary is long and tedious.  Could you suggest some ways that that process could be improved, please? 

Mr. GADD.  Sure.  And thank you, Mr. Chairman. 

The American Legion's primary concern was the delay in processing the fiduciaries.  We indicate in our written testimony several different reasons why, whether it be the number of forms or the lack of communication between the RO, the Pension Management Center, and the guardianship unit that are actually scheduling these visits. 

And some of the ways that we suggested improving this was a comprehensive approach, such as training, IT software package, and having there be alerts or reminders to make sure that that process keeps continuing, and just more communication with the veterans service organizations.  We walk together with the VA to try to help veterans and their beneficiaries. 

And so, again, we just focus, really, on the delay and on the front end.  And we felt that if we addressed those problems and the length in time that these veterans and their beneficiaries are having to wait, that the program could be improved. 

And we also indicated, that a VA volunteer program—VA has the Department of Veterans Affairs Voluntary Service Program—that they could train and do a better job of standardizing the training for this program. 

Mr. HALL.  Mr. Gadd, you suggest that there is a disconnect between the public and the Fiduciary Program.  If a public contact number was provided and widely publicized, do you think this would help to alleviate some of the commonly asked questions that both veterans and their families need answered? 

Mr. GADD.  Yes, sir, the American Legion feels that way.  Part of our testimony today was a recommendation to have a 1‑800 national call number for this.  As many of the panelists today have indicated, the public doesn't know enough about this program.  Some may have questions on what the program actually does or how to get in touch with someone if you have a question.  So that 1‑800 number, maybe if it was run out of the Salt Lake City hub, will go a long way in improving that communication. 

Mr. HALL.  Mr. Gadd, in your testimony you mentioned that one or more full‑time employees should be dedicated exclusively to this program in each designated regional office.  How many full‑time employees do you think would be necessary to fully staff the Fiduciary Program in each RO? 

Mr. GADD.  Well, the American Legion would contend that we would need one additional full-time equivalent (FTE) in each regional office to improve the Fiduciary Program.  But, as we have heard from the panelists today and from OIG and GAO, we might also need an additional FTE looking at the compliance side, to manage and make sure that those funds are being allocated and used to the intention that they were supposed to be. 

So a number of 200 comes to mind with the regional offices, and then the hub out in Salt Lake City. 

Mr. HALL.  Thank you. 

Mr. Weidman, thank you again for coming before this Subcommittee.  I was wondering what your organization's experience has been in interfacing with the Fiduciary Program field examiners or legal instrument examiners.  Do these VBA staffers demonstrate the level of professionalism and diligence that you believe is necessary for adequate oversight of the program? 

Mr. WEIDMAN.  When I talked earlier about complaints from the field, almost every one of them has to do with the multiples, if you will, those who have many.  And it is usually an attorney in a firm that is ostensibly a law firm but is much more like law firms that are really bill collectors, if you will. 

So that has been our major concern.  And trying to get something done about those, we have not been particularly successful anywhere.  The majority of those have been in the western States, as I think of it now.  But also, here in this area, we have had problems also. 

And the question is, lack of a clear chain of command and who does what.  You can always call the OIG if you know to call the OIG.  The lack of information, which was talked about very eloquently by the Gold Star Wives here today.  People don't know about the Fiduciary Program, but they don't know about any VA program.  VA's outreach is something that this Committee has again and again and again discussed.  The VA lacks public education and public outreach to let veterans and their families know what they have earned by virtue of military service.  And the Fiduciary Program is just another example of that. 

Mr. HALL.  Would you suggest that greater training for fiduciaries would help to curb the cases of misuse of funds that we have heard about today? 

Mr. WEIDMAN.  Well, it is partly that, and it is also the selection of the fiduciaries themselves. 

I mentioned earlier that we are not particularly concerned, because we had never had complaints, that I can recall, about a spouse misusing the moneys and not taking care of the vet.  And all of our complaints have been about the multiples. 

But there clearly has to be some kind of differentiation between the spouse where the marriage was intact prior to the individual becoming disabled and those multiples.  You shouldn't be treating them the same. 

I would say, when people asked about a living allowance separate and above the 4 percent, hopefully a lot of that will be taken care of with the caregivers bill, which passed the House yesterday—and I think almost unanimously on the part of the veterans organizations, will, knock on wood, pass the Senate easily—and that and a much better coordination with the VA chain when it comes to making sure people get their care. 

Mr. HALL.  Thank you, Mr. Weidman.  And may your words go straight to the Senate's ears.  We have 290 bills that we have passed in the House waiting for Senate action.  This one might jump to the head of the line and hopefully pass before Memorial Day. 

Dr. Wersel, in your testimony, you note the lack of information published by the VA about the Fiduciary Program and the fact that your organization was unfamiliar with the Program due in part that the omission of any mention of it in the VA Handbook for Veterans, Dependents, and Survivors. 

How are spouses caring for VA beneficiaries harmed by this scarcity of information?  How much of an impact is that having on the families, that they don't know about the Fiduciary Program? 

Dr. WERSEL.  When you don't have the information—and we are looking at the—say, for instance, I am the surviving spouse.  I have funds coming in to my account automatically.  In the event something should happen to me catastrophically, am I prepared to know what will happen?  I have children that are young, and one is over 18.  It is just protecting—being ablethat the funds are going to be protected to care for my family still. 

My children are not—I still have to have them go through college.  If I was alive and if I was not incapacitated, as a mother I still would be providing a lot of support for my children.  I would hate the fact that my children, who would be my fiduciary, would have to be limited in what they could spend and what they could not spend.  On the other hand, accountability is important. 

But, still, I think the lack of knowledge to any program is compromising to our optimal wellbeing, just knowing, in the event something should catastrophically happen to us. 

Mr. HALL.  Dr. Wersel, you also note that one spouse was required to seek permission from the VBA to purchase a home to be closer to family, that she was also required to be bonded. 

Dr. WERSEL.  Yes.  She is in California.  And they were living in northern California, and her family was in southern California.  And it was really challenging for her to be up at the VA where he was, or at the care facility where he was, and she wanted to be closer to family.  And when she said, okay, to get to California, they had to approve.  She had to ask for permission to move to San Diego. 

I don't know if it is the State requirement that is asking her to be bonded, but we were told that she is required to pay $250 a year to be bonded.  Because, at the time, it was decided that she did not have the correct criteria to not be bonded.  But she does pay $250 a year to be bonded as fiduciary of her husband.  And part of the insult is that, you know, they went through college together; she has been with him all these years, and now she is being monitored carefully. 

Mr. HALL.  I understand that and I sympathize with it.  I think all of us do.  And I think most Americans would feel that this is, on the face of it, illogical, onerous and insulting, particularly for a family member who goes back many years and went to school with a veteran who is now incapacitated, like cases that Ms. Wade mentioned, had a power of attorney, was handling the finances while the spouse was serving overseas before the injury occurred and so on. 

But the question is, do you recommend any level of scrutiny and accountability that would be acceptable to family members to prevent misuse of funds.

Dr. WERSEL.  At what level.

Mr. HALL.  Yes, the question is, what level? 

Dr. WERSEL.  At what level.  I think Ms. Wade said it well.  It is the fact that someone who has a vested relationship with that servicemember or with that survivor is that spouse, someone who has cared for that person unconditionally, that should not be scrutinized in that level.  That is where we have issues with the wife who is still caring for the person who said, "Here is your power of attorney, and I am naming you as the person in my power of attorney."  The servicemember chose, and legally chose, to have this person care for them in the event that there was a traumatic event or a catastrophic event.  So that was chosen. 

To have the government come in and say, we want to monitor where you live, how you live, how you spend—and in our relationship, very much like her husband, we did a vacation every year, every single year.  Now, unfortunately, my husband is not alive, but I would be insulted if someone wanted to know why we chose the vacation we chose this year.  And it is something we tried to keep the tradition going.  If it was something we did in the past, you continue.  It never should be questioned.  It is that close family member that has invested the time with that servicemember. 

So if you are thinking about levels, I think that the next of kin should probably not be scrutinized as much as someone who doesn't have that connection or perhaps wasn't named legally before there was a death—I mean, a catastrophic event that left them incapacitated. 

Am I getting there? 

Mr. HALL.  Oh, you are, yes. 

Dr. WERSEL.  Okay.  Good.

Mr. HALL.  I appreciate your suggestion.  And I want to thank you also. 

Dr. WERSEL.  There is one thing that we talked about, that first question, and I think I didn't touch upon it correctly.  You know, in the event of one of our children, if they became incapacitated and there were special needs, can you all come in and say, we don't want the mother to be the fiduciary?  Can VA pick and choose who they will choose to be the—do we have any control of that? 

Mr. HALL.  I am sure Mr. Mayes can answer that in the next panel when the time comes. 

Dr. WERSEL.  Okay.  That is a concern. 

And those are the questions we have.  The main concern is, when you are a surviving spouse or a survivor, sometimes what you don't know is okay, but then when you discover there are programs out there, you want to be prepared, you want your ducks in a row.  We need to know what would happen in the event of a catastrophic event that would happen to me tomorrow. 

Mr. WEIDMAN.  Mr. Chairman, may I just offer one comment? 

Mr. HALL.  Yes, Mr. Weidman. 

Mr. WEIDMAN.  That comment is, one size clearly does not fit all.  And Brad Mayes and his competent pension staff are bound to act according to the law as interpreted by the General Counsel.  This is the place in statute—and I would encourage and suggest that we encourage the administration to work with this Committee to fashion language so that they have the latitude to treat situations differently—to a distant nephew, who the individual was not close to who may end up being the guardian of an elderly vet, is not the same as a spouse of 50 years.  And right now the law doesn't provide for Brad's people being able to use their discretion to what makes sense.  And that is why it would be my suggestion that you look at, how do you still have accountability yet have the latitude not to insult the people who have become fiduciary who have that kind of relationship? 

Mr. HALL.  Right.  Thank you, Mr. Weidman.  Or a parent would probably fall in the same category of closeness to the individual, in my opinion.  But we will follow up with our next panel with that. 

Ms. Pflanz, in your testimony you stated that field examiners often lack adequate training.  What training would you recommend?  And how often should field examiners receive updated training or refresher training to ensure that they remain current with all Federal Fiduciary Program policy and procedures? 

Ms. PFLANZ.  I think that field examiners, before they go out, should get the same kind of training as the veterans service representatives do in the challenge program that they have.  And I also think that they should—as field examiners, we should be retrained every 2 years, you know, enhance our training.  We deal with so many different levels, different regulations, State laws, Federal laws, and things change.  So I think every 2 years would keep us at the best we can be to provide a service to those who need us the most. 

Mr. HALL.  That is similar to lawyers doing continuing legal education or other professions where there have to be yearly or biyearly updates and education. 

And in your statement, also, you recommend getting rid of the western fiduciary hub, contending that it has adversely affected training, case management, and tracking.  Could you give us any more details on the problems of the hub in your opinion, and indicate any specific examples of how a case was mishandled by staff in the western hub or how the case could have been better handled if it was located in another office? 

Ms. PFLANZ.  Personally, I am a field examiner out of the Winston‑Salem office, and we have—you know, ours are in‑house.  But I know that my coworkers in‑field are having a hard time getting service from a different regional office.  It is totally in a different State.  They don't know the local in‑State benefits that we, as field examiners, are required to also speak about. 

And we have a timeliness issue, which affects our production, on being able to get it to a totally different State, our reports, so that if any actions need to be done, you know, it can be done in a timely manner.  We count on the mail system, and it is just not working. 

With better training and then more tools, be automated, and vehicles—our regional offices, we are there.  Our frontline supervisors are in the State.  With better training, we would be able to provide a much better service, you know.  Just as this lady had said, you know, to get the word out there.  We also talk about State benefits, local benefits.  And one hub handling 13 different States with 13 different rules or different benefits is cumbersome. 

Mr. HALL.  I understand that and appreciate that comment. 

You also have mentioned that you would like Congress to improve the lines of communication between the VA Fiduciary Program and other Federal agencies, and you note in your testimony a joint program between VBA and Social Security Administration. 

Could you elaborate on this program?  And what are the pros and cons of establishing similar joint programs between VBA and other Federal and State agencies? 

Ms. PFLANZ.  As a field examiner, when I go out, there is—and we see misuse.  It is not always just on the VA benefits.  Normally, that person also has control of our beneficiary's Social Security, military retirement, personal retirement.  As field examiners, we can only take so much action.  There is no follow‑up.  We don't send our reports to Social Security, you know, saying, "Hey, there is a problem."  Social Security, if they have somebody that is rated, you know, as incompetent or a fiduciary that is not doing what they are supposed to do, there is no feedback, no warning to me on the road, you know, out there working.  You know, it is trial and error on both parts of a system that could work. 

Mr. HALL.  So interagency communication would help both? 

Ms. PFLANZ.  Tremendously for everybody, especially our beneficiaries. 

Mr. HALL.  From the AFGE point of view, I gather you would like to see a total revamp of the program that would allow field examiners to have more input, better training, better equipment, cell phones, et cetera, improved policies and procedures. 

Which is the most urgent of these changes?  Or how would you have prioritized them?  And what other changes might you recommend based on what you have heard today? 

Ms. PFLANZ.  Our senior field examiners, they have been on the road, they have dealt with several situations, and they should be the voice to writing policies and procedures.  That would be my number‑one thing, would be to get them, who have the experience to change because they have been there, they have gone through it.  And they have met people who don't understand the programs.  And they are more experienced than I on how to make it work, what we can do to make us more productive. 

We need tools.  We need—like, they were talking about with the report generator, it is a great start, but it only provides one report that I as a field examiner am required to write.  Our FBS program only gives our coaches a very limited scope or reports because it is for only 60 days.  That also needs to be addressed.  We need vehicles.  We are where the rubber meets the road. 

Mr. HALL.  Well, I want to thank you, Ms. Pflanz, Dr. Wersel, Mr. Gadd, Ms. Wade, Mr. Weidman.  Thank you all for your testimony.  Thank you for the perspective and the dedication and insight that you have brought us today, and for your patience.  As usual, these hearings can take a long time, and we want to thank you. 

We may have some follow‑up questions for you in writing, which we will send to you.  But, for now, I just want to say thanks, and you are now excused.  And have a great rest of your day.  We will try to do our best to solve some of these problems. 

We will ask panel three to join us:  Gary Chesterton, Chief of VBA's Fiduciary Program staff; Bradley G. Mayes, Director of Compensation and Pension Service for the Veterans Benefits Administration, U.S. Department of Veterans Affairs; with Diana Rubens, Associate Under Secretary for Field Operations of VBA, U.S. Department of Veterans Affairs. 

Mr. Mayes, the floor is yours, sir.

STATEMENTS OF BRADLEY G. MAYES, DIRECTOR, COMPENSATION AND PENSION SERVICE, VETERANS BENEFITS ADMINISTRATION, U.S. DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY DIANA M. RUBENS, ASSOCIATE DEPUTY UNDER SECRETARY FOR FIELD OPERATIONS, VETERANS BENEFITS ADMINISTRATION, U.S. DEPARTMENT OF VETERANS AFFAIRS; AND GARY CHESTERTON, CHIEF, FIDUCIARY STAFF, COMPENSATION AND PENSION SERVICE, VETERANS BENEFITS ADMINISTRATION, U.S. DEPARTMENT OF VETERANS AFFAIRS

Mr. MAYES.  Thank you, Mr. Chairman.  I am pleased to appear before you today to speak of the initiatives under way to enhance the Department of Veterans Affairs' Fiduciary Program. 

I am accompanied by Ms. Diana Rubens, as you mentioned, Associate Deputy Under Secretary for Field Operations, and Mr. Gary Chesterton, Chief Fiduciary Staff for Compensation and Pension Service.  I don't know if I could handle two of him, but he is doing a lot of great stuff for us. 

The Fiduciary Program oversees VA benefits paid to those veterans and beneficiaries who, because of injury, disease, or the infirmities of age, are unable to manage their financial affairs.  VA currently supervises more than 108,000 VA beneficiaries, with cumulative estates exceeding $3 billion.  These veterans and their widows and children are among our most vulnerable clients. 

First, let me say that VA takes very seriously the recommendations made by the Government Accountability Office and VA's Office of Inspector General and is working to implement recommendations made in their recent reports as well as other important measures that we believe will further strengthen our program. 

I would like to briefly highlight some of the strides VA has made within the last 18 months which are contributing to improved service delivery and oversight of benefits to this group of veterans and beneficiaries. 

In September 2008, a new Chief of the Fiduciary Staff, Gary, who is sitting to my left, was recruited to spearhead our reform efforts in this program.  Shortly thereafter, we selected a new Assistant Director for Veterans Services, who has overall responsibility in this program area.  And these individuals bring many years of technical and management experience to bear on our efforts to strengthen the program and the service delivery for these veterans and beneficiaries. 

In addition to these leadership changes, we have doubled the size of the staff responsible for fiduciary policies and procedures and we have reassigned quality assurance case reviews to our national quality assurance staff, located in Nashville, Tennessee. 

We are taking steps to clarify existing procedural guidance.  The operations manual for fiduciary activities is undergoing a complete revision.  Several policy changes are already in place to increase protections, to include changes in bonding requirements and documentation requirements for certain categories of both budgeted and unbudgeted expenses.  And this guidance was contained in Compensation and Pension Service Fast Letters that have been issued to the field within the last year. 

VA has deployed several measures to improve oversight of investigations into allegations of misuse of beneficiary funds.  In cases where a misuse allegation has occurred, policy is now in place that requires regional office fiduciary activities to provide VA's Central Office all documentation pertaining to the investigation of these allegations.

To improve operational efficiencies, VA consolidated the management of 14 fiduciary activities within the western area under the fiduciary hub pilot program located at the regional office in Salt Lake City, Utah.  Analysis of the pilot, along with recommendations, will be completed by September 30th of this year and will address program strengths, weaknesses, and lessons learned, and make recommendations on the feasibility of expansion of the hub concept. 

The hub is the only fiduciary activity operating in a paperless environment, which has served its unique configuration well.  The hub also created a misuse team which specializes in these types of investigations. 

The hub is unique in that it has integrated Microsoft MapPoint software in the scheduling of field exams within the hub's jurisdiction.  Utilizing this technology has reduced overall travel times and increased the effectiveness of our field examiners. 

These are examples of improvements that have been realized with this consolidation. 

We also recognize the need to improve the information technology systems available to our field fiduciary personnel in the administration of this program.  The current electronic case management system, the Fiduciary Beneficiary System, poses some limitations with historical data, as you heard, interfacing with other systems currently employed by VA, and workload management and fiduciary oversight.  We have initiated steps to replace the system.  We are developing a request for information to solicit interest from the private sector in an alternative electronic case management system. 

In conclusion, I want to affirm the commitment of VA to serve and protect our most vulnerable population of veterans and beneficiaries.  The interest expressed in our program by the Office of Inspector General, the GAO, and this Committee is a testament to the very important task we have at hand.  VA is committed to take every step necessary to ensure that we fulfill our obligations to protect this special segment of veterans and beneficiaries whom we serve. 

Mr. Chairman, this concludes my prepared remarks.  And I would be glad to address any questions or comments regarding my testimony here today.

[The prepared statement of Mr. Mayes appears in the Appendix.]

Mr. HALL.  Thank you, Mr. Mayes. 

I know the report isn't due until September on the pilot western hub.  But have you heard anything?  Do you have any response to the earlier critique about 13 different States' differing regulations causing a problem for work being done from that hub? 

Mr. MAYES.  I am going to defer that question to Ms. Rubens, who has management responsibility for the hub. 

[The following was subsequently received from the VA:]

The analysis of the Western Area Fiduciary Hub has been completed, and the draft report is expected to be finalized by the end of the calendar year. VA will share the report with the Subcommittee at that time.

Ms. RUBENS.  Thank you, Mr. Chairman. 

I will tell you that I was the western area director when we decided we needed to look at how we do this better within the constraints that we live with today. 

One of the things we recognized right off was we would be bringing together an amalgam of different States, different court systems, different rules.  We work closely with the folks from General Counsel and the local regional counsels in an effort to develop the training program that we would need to incorporate for the legal instruments examiners that would be living in Salt Lake.  We continue to review that in an effort to ensure we have made that connection the way we need to. 

At the same time, I would say to you that the field examiners all remained out based.  They need to be in the communities where the veterans are.  And so we continue to have that local relationship then with our regional council and the local courts in an effort to ensure we are aware of changes that might come about in individual States and can inform the folks in the hub of any of those changes. 

Mr. HALL.  Thank you, Ms. Rubens. 

Mr. Mayes, given the persistence of the problems OIG identified in the 2006 study and again in the 2010 report, could you elaborate on the steps VBA intends to take to address these issues that have lingered in the Fiduciary Program? 

Mr. MAYES.  Yes, Mr. Chairman.  I will break this along two lines of discussion. 

One has to do with ensuring that funds are appropriately utilized on behalf of a beneficiary who we have determined can't manage their affairs for whatever reason.  We have instituted new bonding requirements.  We are checking to make sure that bonds are in place every time we do an accounting and that they are current. 

We are insisting on pre‑approval for any unbudgeted expenses in excess of $1,000.  We have set a national standard on that.  We have a requirement that  budget expenses that exceed 15 percent more than what we have in the fund usage agreement, require receipts, if we can't determine at the time of the annual accounting what those monies were spent on. 

Another thing that we are doing is, during our annual accountings, we are requiring bank statements that show all transactions during the accounting period.  Previously, the requirement simply required evidence that funds were in the account.  And we were concerned that, in particular, fiduciaries who were managing multiple beneficiaries might have been moving monies around, and then they were appearing at the time of the accounting and there was no evidence, from our point of view, that those monies weren't in that particular fiduciary's account for the entire period. 

So we have done a lot of things along those lines.  Any time there is an allegation of misuse, we are going to review the documentation that either led to a formal misuse determination—in other words, there was some merit to the misuse allegation, we investigated it, and we did a formal determination.  We are going to review that.  But even in cases where we determined that there isn't merit to the allegation, we want to see those.  So there is much more oversight that we are putting in place. 

And the second thing that we are doing is we are focusing on the training.  The previous panels hit this pretty hard, and we agree.  That is one of the things that the Government Accountability Office said, was we really need to focus on the training. 

Gary and his staff have been out to nine stations.  We are scheduled to visit 20 more stations.  They have developed a training program to deliver in person to the field examiners and the legal instruments examiners in these regional offices.  So we are hitting the road, basically.  I have given him more staff, and we are going to hit the road and make sure that everybody is up to speed. 

Mr. HALL.  Well, that is good to hear. 

I am happy to hear you say that FBS is going to be replaced.  Do you have a timeline in mind for that, in terms of the proposals coming back and one being chosen? 

Mr. MAYES.  We have been working with subject‑matter experts to help us identify the requirements, and we are working closely with field representatives, with folks in Ms. Ruben's chain of command, to come in. 

Mr. MAYES.  We need, as I think someone on an earlier panel said, we need those subject matter experts to help us identify the requirements. 

We intend to put a request for information (RFI)  out on the street to solicit interest from the private sector.  This is a workload management tool that we need to build, to replace.  So we would like to engage the private sector community to see if maybe there is something that we can use off the shelf and not rely on in‑house development.  I believe that we can have that RFI on the street within a matter of weeks. 

Mr. HALL.  There might be reason to make sure that it is compatible with VA's new electronic system that will be handling claim, in general, which also is supposed to be compatible with DoD so that there will be a continuous stream of compatibility.  There will be, of course, veterans who move from being self‑sufficient to being incapacitated and perhaps being in the Fiduciary Program, and it might be helpful to have all three of these systems talk to each other. 

I also wanted to you ask regarding FBS, during the interim now while this search for the new system is going on, is it possible to somehow tweak it so it can accept say the last four numbers of the Social Security number?  I just called one of the unions that I belong to because they sent me a letter about something, and they wanted to know which John Hall they were talking to.  It is a fairly common name.  They are a national organization, and the first person I got on the phone asked for the last four digits of my Social, and I gave it and they pulled up the right account.  As the reports mentioned, that would be a quick and easy fix.  Hopefully that is an attainable improvement. 

Mr. MAYES.  Mr. Chairman, we actually have the capability to collect a tax ID number in our system.  We have mandated that at this point, that we collect a tax ID number. 

The key, and Mr. Bertoni made reference to this, the key is to make sure that we can associate every veteran or beneficiary that is in this program with their fiduciary because there are certain requirements that we have with respect to oversight, especially in those cases where you have a fiduciary handling multiple beneficiaries and certain liabilities that incur as a result of legislation. 

So now that is a requirement, whether it be an individual Federal fiduciary or a professional fiduciary who is handling multiple beneficiaries. 

Mr. HALL.  When did that requirement go into effect? 

Mr. MAYES.  That requirement just went into effect this past week in a policy letter that went out. 

Mr. HALL.  That is good.  OIG also noted deficiencies in staffing and workload models for the program.  For example, decisions regarding staffing are left to the judgment of individual RO directors.  As a result, the OIG contends that a wide variation exists in the number of beneficiaries managed by different individual legal instrument examiners.  It is a pretty wide variation, from the hundreds to well over a thousand.  What steps are being taken to remedy this problem, and how long do you think it will take to get to a more uniform level? 

Mr. MAYES.  Mr. Chairman, I would just like to make one point because I heard that from members of the previous panel.  You know, when we are talking about field exams, the circumstances with which we perform these field exams vary across jurisdictions.  If you are located, for example, in Montana, you may have to drive literally hundreds of miles to conduct a single field exam as opposed to maybe Chicago where while you are not traveling so far, you are in rush hour traffic as compared to Topeka, Kansas, where going 10 miles, you are there in 10 minutes.  So I don't think we can say that the requirements in Montana would be exactly the same as they would in Kansas vis-à-vis  a metropolitan area in the east. 

But we have some work to do here.  When we set up the western area, Ms. Rubens was very involved in helping us figure out what is the proper allocation of resources. 

Ms. RUBENS.  I can address that.  One of the challenges, of course, is as we look at the resources we have and how we ensure that they are effectively and efficiently spread across the organization, there is an overarching resource allocation model for the service centers across the country that looks at not only receipts in terms of work, but it looks at qualities and production and timeliness and all of those things as we look at how do we make sure that we distribute resources in a way that allows them to be used effectively. 

When we established the western area hub, one of the things that we started out with was looking at how many incompetent veterans and guardians that we had out there and appointees, as well as each individual office, breaking that down, how many legal instruments examiners did they have.  Quite frankly, part of my concern was I didn't think we were doing the job as well as we needed to.  My hope was to help build a cadre of legal instruments examiners that would not be left behind.  If there were only two and one retired, we have some redundancy built in so we can absorb any of those changes that might come unexpectedly. 

We have worked hard to ensure that initial staffing model which aggregated those legal instruments examiners into Salt Lake, as well as maintain those field examiners out there, to ensure that we can still get out and do all those field exams. 

It is part of an ongoing review that I regularly talk with the now‑western area director about in terms of how are we doing in performance, are we meeting our obligation to appoint those fiduciaries in a timely manner for those initial appointments as well as getting those follow‑ups done. 

Currently we are going to work with the service to conduct that overview of how is it going?  Is the fiduciary hub a concept that we are ready to advocate as an organization and spread across the country?  That is a key.  At the moment I will tell you we continue to evaluate the surges in field exams that need to be accomplished when we lose field examiners. 

We have worked with the service employees.  AFGE was part of a group last year that looked at what are the performance standards for our field examiners, and redesigned those in an effort to address the issues Brad raised when it comes to the different locations that you have.  I believe in Salt Lake we have the right ratio.  As I look at those numbers of 400 per field examiner, and I think the 745 per LIE in Salt Lake are manageable.  We have made some tremendous strides in the accountings and in the work we are doing.  We have made some tremendous strides in ensuring that seriously overdue accountings are acted upon timely, that we are appointing successor fiduciaries when that is required.  But we will have an overarching review to ensure that we have those ratios proper, that we have the right training and the right standards before we make any adjustments about how do we go forward, if that is the decision. 

Mr. HALL.  Thank you.  

We have all heard and know that, thanks to faster, better medical care on the battlefield, that more of our servicemen and women are surviving today in OIF, OEF than previously in Vietnam, for instance.  There is a much higher ratio of injured that survive, but much more serious injuries for many of them, debilitating injuries.  Have you seen an increase percentage‑wise in terms of the recent veterans, post‑2001 veterans relative to the overall veterans' population who need the services of a fiduciary?  Or does it still track with the veterans' populations based on the age groups and conflicts in which veterans served? 

Mr. MAYES.  Mr. Chairman, I am going to ask Mr. Chesterton to go ahead and take that question. 

Mr. CHESTERTON.  Yes, sir.  We have actually recently looked at that and we wanted to see if there was an increase proportionally as to the total population.  What we found is proportionally it is growing exactly the same as the total beneficiaries. 

Mr. HALL.  Thank you.  That is interesting.  I am sure that age probably accounts.

Mr. MAYES.  I was going to say, lots of time that is what happens. 

Mr. HALL.  It is the great leveler.  As a friend of mine wrote, Time, the conqueror. 

Can you tell us or if you don't have the information, supply it to the Subcommittee later, which RO offices experience the highest volume of cases involving the misuse of beneficiary funds? 

Mr. MAYES.  We will have to take that one for the record, Mr. Chairman.

[The VA subsequently provided the following information:]

Since FY 2005, when PL 108-454 put the requirements in for misuse, the following States had the most misuse allegations/determinations: Georgia (Atlanta RO), California (now being processed by Salt Lake City RO), and Alabama (Montgomery RO).

Mr. HALL.  How many cases has the VA discovered on the scale of that one involving the fiduciary who embezzled nearly a million dollars to support her gambling habit as we understand?  Is that an isolated incident or are there other cases of that scale? 

Mr. MAYES.  Mr. Chairman, I would like to give you an accurate answer on that because I think you are asking are there other cases of fraud in excess of a million dollars? 

Mr. HALL.  Or in that ballpark? 

Mr. MAYES.  It is isolated, I will tell you that.  It is certainly isolated, but let me take that question for the record and I will give you an accurate answer. 

[The VA subsequently provided the following information:]

Since enactment of PL 108-454, three cases have involved embezzlement of approximately $1.0 million. The three cases were in California, Minnesota, and Texas.

Mr. HALL.  When does the VA plan to launch the new Internet portal for VA fiduciaries?  What information is currently available on the Web site for families and others who are interested in securing the appointment of a fiduciary to care for their beneficiaries, and what will be up on the new portal when it goes up? 

Mr. MAYES.  Right now we have actually provided, I have seen it, an E‑benefits portal.  The E‑benefits portal is leveraging the authentication that exists already within the Department of Defense.  So as an active duty service person separates, they move into VA.  They can be in the system and access information that is up in this portal.  In its infant stages, what we are deploying up on the portal are parts of our applications that might give an individual for example information on the status of their claim.  Did VA receive a piece of evidence, for example, and that information will be available to an accredited representative. 

In the Fiduciary Program, I suppose that we would provide access to a family member if they can represent the claimant before the VA.  So in that respect, they would be able to access the information to see what is transpiring in the claims process. 

Beyond that, Mr. Chairman, I am not sure what we would put out there.  In other words, when we set up a fiduciary for a veteran or a beneficiary, really the interaction is on a very personal level because we are out there conducting a field exam.  We do follow‑up beneficiary exams, and sometimes there is interaction when we are doing the annual accountings.  We did take a note about a 1‑800 number, I think was the suggestion, some place for someone to go if they have questions about how they can utilize those benefits and that is something that we will also take back.  Maybe we can put that information up and have it be accessible through the Web as well, but I don't know that it would be in that Web portal because that is designed for the individual to access their report. 

Mr. HALL.  Thank you.  Regarding the OIG report which noted that from FY 2005 through 2008, VBA has not included statistical information pertaining to misuse of funds as required by title 38, U.S. Code, section 5510.  When can we expect VBA to provide this information? 

Mr. MAYES.  There is some information on misuse in the 2009 and 2010 annual benefits reports.  I believe the piece we are missing is what we saw in the OIG report.  I believe that the statute also requires that we report in the Annual Benefits Report (ABR) the results of the cases that are referred to the OIG.  So now that we have that, we will include that in the ABR. 

Mr. HALL.  Thank you.  Present company excepted, and not to raise questions about the honesty of family members, but in your experience and the statistics that you have, what is VBA's opinion or view of professional versus familial fiduciaries and the misuse of funds that occurs? 

Mr. MAYES.  For us, we want the most effective, least restrictive fiduciary.  That's what we care about.  We care that the fiduciary is willing to serve in that capacity.  We care that the fiduciary is willing to adhere to our legal requirements.  We care that they have the beneficiary's best interests at heart, and we require that they meet certain credit and criminal history requirements.  That is what is important to us. 

Now, I would suggest that in most cases the most effective, least restrictive avenue for achieving what is best for the beneficiary is appointing a family member who is willing to act in that capacity as a fiduciary.  In fact, that is what we find in most cases.  In a majority of cases, we have family members acting in that capacity. 

Unfortunately, in some cases we have seen that family members misuse those funds.  So it is not about family member versus professional fiduciary, it is about who is going to discharge that responsibility most effectively.  That is what the VA cares about. 

Mr. HALL.  Regarding some of the testimony before that we heard, what is your opinion about the possibility of providing VA funds to pay for living expenses that are shared by the beneficiary and the caregiver fiduciary and should we consider providing compensation to familial fiduciaries? 

Mr. MAYES.  Well, Mr. Chairman, I am glad you asked that question.  When we pay fees, when we authorize fees to a professional fiduciary, those fees come out of the benefits to the beneficiary.  So it is not like there is this extra fee that is paid.  We are authorizing an amount that has a cap on it by law for a professional fiduciary to manage the Federal funds to make sure that the beneficiary is taken care of.  So when we have a family member that is utilizing the veteran's monies, funds, benefits, based on the disability or disabilities they incurred in the service, it is perfectly reasonable for the family fiduciary to use those funds for taking care of their family member. 

I think the question here is the level of oversight. I was listening to the earlier panels.  I know that sometimes it may seem intrusive when we come in and we are trying to find out who is going to be the most effective, least restrictive fiduciary, and we ask to sit down with the family member and go through a fund usage agreement. 

But the reality is we don't require bonds for spouse.  We don't require an annual accounting requirement for a spouse.  That typically is a 3‑year follow‑up followed by another 3‑year follow‑up.  We do require pre‑approval for certain expenses that are expenses over a thousand dollars that aren't part of a fund usage agreement, and we do require that those funds be utilized to take care of the beneficiary. 

So the requirements are a little less restrictive for the spouse.  And I understand how it might be perceived as being onerous, but we have to balance that with the responsibility to ensure that the beneficiary is being taken care of. 

Mr. HALL.  That is sensible.  I am wondering if you think that there is enough consistency from one RO to another in terms of those thing you just talked about, the degree of oversight and the degree of questions asked and standards met and going through records.  What we have heard is that there seems to be some offices that are more zealous or cautious or questioning or challenging, even, to family members in this position than others.  So how can we get everybody on the same page and have the same level of scrutiny? 

Mr. MAYES.  I think we have some work to do here.  No question.  I know Ms. Rubens, that is one thing that she presses me on as program manager.  We have to have clear guidance and clear policy.  I will tell you that we are in the process of revising our procedures.  And we are bringing in some very experienced people from the field to do that.  We are about 90 percent complete.  So we have to have that clear policy out there. 

But I think even more importantly, we have to get out there with these field examiners and these legal instruments examiners, and that is why I brought Gary in and Christine Alford, the Assistant Director over this shop, and added staff.  We have to get out there and train.  We do have legal instruments examiners and field examiners with a couple of years experience.  We have gone to nine stations.  We are on tap to go to 20 more.  We are going to hit every station. 

So clarify the policies and procedures, streamline those where we can, and then we have to train.  I agree that we have some work to do. 

Ms. Rubens, did you want to add anything to that? 

Ms. RUBENS.  Yes, I do want to add one thing, Brad.  The other thing we are going to do, while you all are going to be going out and hitting the road and training, you are also going to be bringing in folks from across the country to do an overarching training program to ensure that as these new policies have come out over the last year, we have a chance to visit them together, make sure that there is a clear understanding, and work towards that consistency that you address. 

Mr. HALL.  Thank you.  I am sure our families and relatives who are acting as fiduciaries will appreciate that.  I think we all agree there needs to be a level of oversight to ensure against abuses.  And if there is sort of the same standard that everyone is expected to meet, then no one will feel picked on. 

Going back to professional fiduciaries, the compensation is capped at 4 percent, as I understand it, and yet there is no fixed limit to the number of beneficiaries that one fiduciary can manage.  In one case, a fiduciary oversees the affairs of over 500 beneficiaries; is this a problem in your opinion?  Do you have concerns with the number of beneficiaries one fiduciary can handle; or would you say that it depends on their staff and the circumstances? 

Mr. MAYES.  I think that certainly some professional organizations are more capable of handling greater volume than others.  I think it behooves the VA, and it was mentioned earlier, it behooves us to get out there and recruit more organizations that perform this type of work, get out there and inform them of the fact that this program exists and encourage them to engage us on behalf of our Nation's veterans. 

In fact, Gary and I were just talking about that, and I would like for him to share with you some of the things that we have done to make some of our professional organizations aware of this program. 

Mr. CHESTERTON.  In the previous year, we have started as a staff to go out to conferences such as National Guardianship Association.  We are visiting and speaking at conference for the National Association of Elderly Law Attorneys.  We are also trying to work with AARP to go to their national convention.  Our general counsel has gone to the national probate court judges conference, all in an effort to provide this outreach, provide this information, and to recruit qualified fiduciaries nationwide. 

Mr. HALL.  Thank you very much.  One more question and then we will submit some more questions for the record.  And I want to thank you for your listening skills and all of you for the work that you are doing because I know we all have the same goal here.  We are simultaneously dealing with, VA is dealing with, and the Congress is trying to help VA deal with a broad spectrum of problems and come up with solutions all at the same time, and it is affecting people in real‑time in their lives as things are happening that matter very much to an individual or their family.  And they matter to us as a country, too. 

But we realize that this is a big agency with a lot of irons in the fire and changes being asked for and developed at the same time the work is going on day to day.  So we are aware of the challenge that you all face.  We want to help in any way we can. 

I would say to the representatives of the service organizations who spoke before, and to the Inspector General and the GAO, we are all in a chain of oversight helping each other hopefully get to the best possible solution. 

With that, my final question to you Mr. Mayes, can fees that are paid to fiduciaries, particularly family members who act at fiduciaries, be bonded, to be deducted from the beneficiary's account, or must a fiduciary pay out of pocket for those fees?  And can fiduciaries seek reimbursement from the VA for fees that are paid to secure bonding? 

Mr. MAYES.  I am going to let Mr. Chesterton answer that question.  He is our expert in that area. 

Mr. CHESTERTON.  Whenever a fiduciary is required to provide a bond, that all comes out of a beneficiary's funds.  Any fees generally associated with the maintenance of the beneficiary's estate comes from the beneficiary's funds.  The fiduciary is not normally required to pay out of pocket at all. 

Mr. HALL.  Thank you, Mr. Chesterton, and Mr. Mayes and Ms. Rubens for your patience, testimony, and the work you are doing.  I will be submitting on behalf of the Subcommittee some further questions.  We will allow 5 days as usual for Members or witnesses to revise and extend their remarks. 

And just as the Gold Star Wives were largely unaware of the existence of this program, I think much of America is probably unaware of it.  But it is very important to those who are in it and who need the services of the Fiduciary Program, and it is part of the contract, part of our honoring our commitment to the men and women who served this country and are in the position of needing this kind of help as a result. 

So we are looking forward to working with you to help improve the program and reduce the opportunities or the instances of misuse or abuse of funds to the lowest level possible and at the same time streamline the process for those families who are either doing it themselves or bringing in a professional, we are here to help as well as to do oversight. 

Once again, I believe I speak for all of the Members of Congress in expressing gratitude first of all to the veterans for their service; and second, to the families and fiduciaries for their continuing sacrifice, and finally to all of the organizations represented here and you from the VA and from the VBA who are working on this day to day.  Thanks for your testimony.  Thank you in advance for answering the questions that we are going to send to you in writing, and you are now excused.  

This hearing is adjourned. 

[Whereupon, at 4:38 p.m., the Subcommittee was adjourned.]


APPENDIX

Prepared Opening Statements:

Prepared statement of Hon. John J. Hall, Chairman, and a Representative in Congress from the State of New York
Prepared statement of Hon. Doug Lamborn, Ranking Republican Member, and a Representative  in Congress from the State of Colorado


Prepared Witness statements:

Prepared statement of Belinda J. Finn, Assistant Inspector General for Audits and Evaluations, Office of Inspector General, U.S. Department of Veterans Affairs
Prepared statement of Daniel Bertoni, Director, Education, Workforce, and Income Security, U.S. Government Accountability Office
Prepared statement of Richard F. Weidman, Executive Director for Policy and Government Affairs, Vietnam Veterans of America
Prepared statement of Sarah Wade, Coordinator, Family Issues and Traumatic Brain Injury, Wounded Warrior Project
Prepared statement of Jacob B. Gadd, Assistant Director for Program Management, Veterans Affairs and Rehabilitation Commission, American Legion
Prepared statement of Vivianne Cisneros Wersel, Au.D., Chair, Government Relations Committee, Gold Star Wives of America, Inc.
Prepared statement of Katherine R. Pflanz, Field Examiner, Winston-Salem Veterans Affairs Regional Office, on behalf of American Federation of Government Employees, AFL-CIO, and AFGE National Veterans Affairs Council
Prepared statement of Bradley G. Mayes, Director, Compensation and Pension Service, Veterans Benefits Administration, U.S. Department of Veterans Affairs


Material Submitted for the Record:

Post-Hearing Follow-up Letter and Response:

Hon. John J. Hall, Chairman, Subcommittee on Disability Assistance and Memorial Affairs, Committee on Veterans' Affairs, to Hon. Eric K. Shinseki, Secretary, U.S. Department of Veterans Affairs, letter and attachment, dated May 13, 2010, and  response letter, dated July 23, 2010