HEARING ON PENDING LEGISLATIVE PROPOSALS: H.R. 109, 368, 1482, 1483, 1609, 1809, 2155, 2156 AND 2157

THURSDAY, OCTOBER 12, 1995

House of Representatives,

Subcommittee on Compensation, Pension,

Insurance and Memorial Affairs,

Committee on Veterans' Affairs,

Washington, DC.

The subcommittee met, pursuant to call, at 10:02 a.m., in room 334, Cannon House Office Building, Hon. Terry Everett (chairman of the subcommittee) presiding.

Present: Representatives Everett, Evans, and Montgomery.

Also present: Smith of New Jersey and Bilirakis.

OPENING STATEMENT OF CHAIRMAN EVERETT

Mr. Everett. Good morning. We have a pretty lengthy meeting, so we are going to get started. This legislative hearing of the Subcommittee on Compensation, Pension, Insurance and Memorial Affairs will come to order.

Before we proceed, I think it is in order to note the recent retirement announcement of Sonny Montgomery, the former Chairman of this Committee. Sonny has earned lots of titles during his congressional service; "The General," and "Mr. National Guard" are just a couple.

I am convinced the title he cherishes most is simply "Mr. Veteran." As a veteran of two wars, Sonny knows why we have title 38. He knows those who puton the uniform earn something special. He understands balancing the individual rights against the group. And he understands the need to preserve the integrity of the benefits system. As in all political life, there is genuine and honest debate over policy issues. Nobody agrees on anything, not even in our own families. But of this I am sure: Everyone agrees that G.V. "Sonny" Montgomery has been a man of integrity in pursuing and defending the veterans' cause. I want to personally thank him for his leadership, his friendship and the model he has set for the rest of us. We will miss him as will our Nation's veterans.

But one thing we will always remember and we will always know is that this committee is a better committee because Sonny Montgomery served here. The veterans are better off because Sonny Montgomery served here. And this is a better Congress because Sonny Montgomery served here.

Today, we are here to receive testimony on several bills covering a wide array of veteran's benefits. I would like to welcome the witnesses, and I look forward to hearing their views on the bills. We have several panels, so I ask each of the witnesses to summarize their testimony and limit their remarks to no more than 5 minutes. Without objection, the witnesses' entire statements will be included in the hearing record.

We have received draft CBO cost estimates for some of the bills. CBO estimates that H.R. 109 would have a pay-go cost of $10 million in its first year. H.R. 368 has no pay-go implications. H.R. 1482 is undetermined. H.R. 1483 has no expected cost. H.R. 1609 would simply be an asterisk. H.R. 1809 has no pay-go cost. H.R. 2155 would save under $1 million. H.R. 2156 is undetermined. And H.R. 2157 would have no cost impact.

Often, on this committee, we must balance what in some cases are two competing goods. For instance, while I have not made up my mind on the issue, what would be the benefit of authorizing the Court of Veterans Appeals to review nearly any case appealed from the Board of Veterans Appeals on the grounds of clear and unmistakable error? On the plus side, the individual veteran would get yet another opportunity for appeal of an unfavorable decision at the Board. On the other hand, the possible avalanche of appeals noted in the Department's views on H.R. 1483 would make an already difficult situation at the Board and Court nearly untenable.

In its letter commenting on H.R. 1483, which I will include in the record without objection, the Secretary notes that appealing just 5 percent of the 518,000-plus BVA decisions made between 1977 and 1994 would add nearly 26,000 to the Board's workload, an amount nearly equivalent to the Board's output this year.

The Secretary estimates that the Board's average response time would be increased to 1,083 days from the current, already excessive 745 days. The ripple effect of such an increase means that all veterans with a claim in the system would feel the effect. So we must again balance what is right for the individual against what is right for the veterans as a whole.

I am looking forward to a positive and informative discussion on the pros and cons.

Finally, before I recognize the Ranking Member, Mr. Evans, who I am sure will join us in a minute, I would like to digress just a little. As you know, VA is trying to modernize the operations at BVA. It would seem to me that the larger issue before this subcommittee is how VA is organized to adjudicate and deliver benefits and the tools it uses to facilitate that process. As you know, the subcommittee has asked GAO to look into the issue as well as the computer modernization issue. This subcommittee will hold further hearings on that larger process, and I sincerely hope that everyone will come to the table with an open mind.

Today's consideration of H.R. 1483 is a good case in point. The VSOs continue to request yet another right of appeal. I think the real problem is a continuing lack of quality decisions throughout the system and at least some of that lack of quality is structural, as pointed out in the recent GAO study, titled "Effective Interaction Needed Within VA to Address Appeals Backlog."

A major conclusion was that VA's structure does not lend well to producing consistently good decisions. The report states:

"GAO found instances in which BVA officials were unaware of Board interpretations; guidance and practice were inconsistent with Board interpretation; and questions about interpretations had been raised but not yet resolved. Unless consistent interpretations are developed, VARO decisions will continue to be remanded, delaying benefits for some veterans and increasing the workload for the Board, VBA and VHA.

In addition, unless VA clearly defines its adjudication responsibilities, it will not be able to determine whether it has the resources to meet these responsibilities or whether some new solutions are needed, including amending laws defining VA's responsibilities or reconfiguring the agency, end quote.

I think that goes to the core of the challenge facing VA in the way it operates its adjudication system. We cannot expect quality and volume production in a system that is fundamentally flawed in its design, and I want to work with the Department to help fix the system.

One final thing. This is not about cutting VA's budget. It is about making a government agency responsive to the people who pay the bills. The taxpayers have a right to expect excellence from the VA and from this committee in our oversight role. I am concerned not only about the future of VA programs, but also how today's programs operate because if today's operation is not effective, tomorrow's programs will be ineffective.

We don't have Mr. Evans with us. I was ready to recognize him. He will be late. I will say to all Members that your statements will be included in the record without objection, and does anybody have any opening remarks? Mr. Montgomery.

OPENING STATEMENT OF HON. G.V (SONNY) MONTGOMERY

Mr. Montgomery. Mr. Chairman, I would like to comment.

I appreciate very much what you said earlier in your first remarks about my retirement. I still will be around for about 14\1/2\ months more. I plan on spending part of my time in Mississippi and part of my time up here in retirement, and I hope I will be active in trying to work and protect veterans' programs after I have retired.

As you know, one of my first loves is working for veterans; I have served on this committee over 28 years, and the first chairmanship I received as subcommittee chairman was your subcommittee, Compensation, Pension and Insurance. I enjoyed very much working in that area, and I appreciate these hearings this morning.

Thank you again for your very generous remarks.

Mr. Everett. I can assure you they were well earned.

If we can have the first panel. The panel is composed of Congressman Chris Smith, the Vice Chairman of the full committee, and Congressman Mike Bilirakis, a former Ranking Member of this subcommittee. They have asked to address us concerning their bills.

Gentlemen, welcome, and please proceed.

STATEMENT OF HON. CHRISTOPHER H. SMITH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY

Mr. Smith. I want to thank you very much, Mr. Chairman, for this opportunity to appear before your panel and to testify on behalf of H.R. 368. his important legislation would add bronchiolo-aveolar pulmonary carcinoma to the list of cancers that are presumed to be service-connected for veterans who were exposed to radiation in accordance with the provisions of Public Law 100-321. While the number of people who would be affected by this measure issmall, I believe that simple justice and compassion oblige us to provide relief for the victims and for their survivors.

Mr. Chairman, in 1986, almost 10 years ago, I became involved with the case of Joan McCarthy, a constituent from New Jersey. Joan has for many years worked to locate other atomic veterans and their widows and she founded the New Jersey Association of Atomic Veterans. Joan's husband Tom was a participant in Operation Wigwam, a nuclear test in May of 1955, which involved an underwater detonation of a 30-kiloton plutonium bomb in the Pacific Ocean about 500 miles southwest of San Diego.

Tom served as a navigator on board the U.S.S. McKinley , one of the ships assigned to observe the Operation Wigwam test. The detonation of the nuclear weapon broke the surface of the water, creating a giant wave and bathing the area with a radioactive mist. Government reports indicate that the entire test area was awash with the airborne products from the detonation. The spray from the explosion was described in an official government report as a, quote, "insidious hazard which turned into an invisible radioactive aerosol," close quote.

Tom McCarthy spent 4 days in this environment while serving aboard the U.S.S. McKinley . In April of 1991--1981, at the age of 44, Tom McCarthy died and the cause of death was a very rare form of lung cancer, bronchiolo-aveolar pulmonary carcinoma. This illness is a nonsmoking-related cancer, a pulmonary cancer, which is noteworthy given the estimate that about 97 percent of all lung cancers are caused by smoking.

On his deathbed, Tom informed his wife about his involvement in Operation Wigwam and wondered about the fate of other men who were present on board that ship.

Mr. Chairman, smoking is not considered a cause for this ailment, but it is a well-documented fact that exposure to ionizing radiation can cause this lethal cancer. The National Research Council cited Department of Energy studies in their BEIR V reports, stating that "Bronchiolo-Aveolar Carcinoma is the most common cause of delayed death from inhaled plutonium 238." The BEIR V reportnotes that this cancer is caused by the inhalation and deposition of alpha-emitting plutonium particles.

Mr. Chairman, the Department of Veterans Affairs has also acknowledged the clear linkage between this ailment and radiation exposure. In May of last year, Secretary Brown wrote Chairman Montgomery of the Veterans' Affairs Committee, our former Chairman, regarding this issue; and Secretary Brown stated as follows and I quote: The Veterans' Advisory Committee on Environmental Hazards considered the issue of radiogenicity of bronchiolo-alveolar carcinoma and advised me that, in their opinion, this form of lung cancer may be associated with exposure to ionizing radiation. They commented that the association of exposure to ionizing radiation and lung cancer has been strengthened by such recent evidence as a 1988 report of the United Nations Scientific Committee on the Effects of Atomic Radiation, the 1990 report of the National Academy of Sciences Committee on the Biological Effects of Ionizing Radiation, the BEIR V report, and the 1991--1991 report of the International Committee on Radiation Protection. The Advisory Committee went on to state that when it had recommended that lung cancer be accepted as a radiogenic cancer, it was intended to include most forms of lung cancer, including bronchiolo-alveolar carcinoma.

I met with Secretary Brown, Mr. Chairman, last year and he assured me that the VA would not oppose Congress taking action to add this disease to the presumptive list. Notwithstanding this fact, however, the VA has repeatedly denied Joan McCarthy's claims for survivor's benefits. Unfortunately, Joan is not alone in being denied the survivor's benefits that she deserves. Consider the case of Gwen Poitras, who lives in Pasco County, Florida. Gwen's husband Robert Poitras was in command of the U.S. Takelma , one of the ships that observed the nuclear test in Operation Hardtack in the South Pacific.

Just like Thomas McCarthy, Robert died of bronciolo-aveolar pulmonary carcinoma. And just like Joan McCarthy, Robert's widow is denied the dependency and indemnity compensation which she applied for after her husband's death.

The VA claimed in the past--they claimed that adjudication on a case-by-case basis in the appropriate means--is the appropriate means of resolving these claims. Unfortunately, the practical experiences of claimants revealed deep flaws in the process that has been used by the VA.

Mr. Chairman, I hope that this legislation can be acted upon by this Congress, by this subcommittee. I have pushed this many, many years and we thought that we could get an administration fix, but we have been precluded in that; but again, the VA has indicated that they would like to see this included, and I hope that they will so testify.

The estimates by the CBO are that this is a very, very modest amount, that only approximately 12 people would be affected by this as it stands now, so I do think it certainly would not break the budget, but it would be a matter of justice and compassion for the widows and for those who have suffered from this radiation poisoning.

Thank you, Mr. Chairman.

[The prepared statement of Congressman Smith of New Jersey appears on p. 33.]

Mr. Everett. Thank you for your excellent presentation.

The chair now recognizes the former Ranking Member of this Committee and the gentleman from Florida.

STATEMENT OF HON. MICHAEL BILIRAKIS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA

Mr. Bilirakis. Thank you, Mr. Chairman. Good morning to you and to Mr. Montgomery and, of course, the members of the staff. I appreciate the opportunity to testify about this practice which I like to think all of us would consider to be very unfair.

But first I would like to say I have been so buried in Medicaid and Medicare that I really wasn't aware that our dear Sonny was retiring and I always called him "Mr. Chairman." I still call him "Mr. Chairman." I think he will always be Mr. Chairman of the Veterans' Committee.

It has been an honor to work with you. I know other things will be taking place over the next year or so, but still I wanted to say that here this morning.

Well, gentlemen, under current law, as we know, if a veteran dies before the end of the month, even if it is only by a few hours, a surviving spouse will have that month's disability compensation revoked, the entire month's disability compensation revoked, so this creates a huge financial burden for a recent widow, especially if she is not eligible for dependency and indemnity compensation. I think we all would agree that it is really appalling that during her time of grief she is forced to return her husband's monthly compensation, the money that she spent--the money that she spent on his living expenses when he was alive. So I have introduced 109, which would prorate a veteran's last compensation check, providing compensation earned for each day that the veteran lived in that final month; and of course, if a veteran lived, let's say, until the 15th of the month, he would get his compensation--or she would get his compensation from the 1st to the 15th. Still there would be a return of part of that check that has been received, but not, at least, the entire amount.

A new widow certainly should not have to return a check already issued, or at least the entire check already issued because her husband died before the end of the month. I know that that exists in some other retirement area, social security and whatnot; I have always wondered about the unfairness of something like that.

I first became aware of this problem, Mr. Chairman, when, as you indicated, I served as the Ranking Minority Member of this subcommittee. A good friend of mine and former colleague of ours, Tom Lewis from Florida, introduced similar legislation on this issue in the previous Congress.

Tom worked very closely with our committee, and we did approve a modified version of this legislation as part of H.R. 4088, the Veterans Benefits Act. The provision agreed upon in H.R. 4088 grants a full month's benefit to spouses of totally disabled veterans who are not eligible, who are not eligible for DIC, for Dependency and Indemnity Compensation. The Congressional Budget Office estimated that the measure at that point in time would only cost $2 million per year and so we retained that here. However, ultimately it was dropped in conference with the Senate. Tom retired at the end of the last Congress, and I feel it is important to continue his efforts on the issue.

This bill, as you may know, has widespread bipartisan support, and even in these times when the National Taxpayers Union basically penalizes us for even cosponsoring pieces of legislation, we still have 100 cosponsors of this legislation, including six members of the Veterans' Affairs Committee.

You have already indicated that CBO costed this, the entire amount, not the modified version, at approximately $10 million per year. We had received an interim amount, an unofficial amount, $11 a year. I like your figure better than ours and I realize that regardless of what the figure is that in these times of fiscal austerity this is not a small amount of money. It is certainly small compared to the amount of money we spend around here, but certainly not a small amount of money.

But I am certainly willing to work with the committee, as I always have been, to find affordable alternatives, if any are necessary, and I would hope that not too many would be necessary. At the very least, we have a responsibility to assist those widows of totally disabled veterans who do not qualify for Dependency and Indemnity Compensation. What our bill basically does is, for those that do qualify for DIC, rather than kick in at the beginning of the month when the person passes away, it would kick in the day after the person has passed on so that there is no overlap.

So I would hope that the committee, maybe you should always come in with your best plan, but I would hope that at least it would consider something similar to what we did in H.R. 4088. It is really a small sacrifice for the spouse ofa veteran who might be without income for a month because her husband died just a few hours, a 31-day month, if that person died on the 30th, she loses it all. If it were a 29-day month, a February and leap year, and he died the 29th, she would get it for the full month. There is something unfair with all that.

So, Mr. Chairman, as the subcommittee reviews legislation affecting veterans benefit programs--and I commend you for doing that--I urge you to seriously consider how grateful our veterans will be, knowing their spouses will receive some sort of fair treatment, at least in the difficult months following their death.

I pledge to work with you and the entire committee on this issue and all of the others and thank you again for your serious consideration.

[The prepared statement of Congressman Bilirakis appears on p. 35.]

Mr. Everett. Thank you very much. I think it is unfortunate that the first communication to the spouses received from our government is the fact that they owe the government money after the veterans are dead.

Mr. Bilirakis. It is, isn't it, when you stop to think about it?

Mr. Everett. Mr. Montgomery, do you have any questions?

Mr. Montgomery. I will be brief.

I want to welcome my colleagues. I enjoyed working with both of you over the years and want to continue to be around, as I said earlier.

Both of these are interesting bills. I think on your bill, Chris, I am not sure whether the Veterans Department endorsed it or not. I don't think they took a stand against it, I am not sure.

Mr. Bilirakis' bill, I believe the Veterans' Department will testify in favor of it. On the Bilirakis bill, we did pass that last year.

Mr. Bilirakis. The modified version.

Mr. Montgomery. It was a modified, that is correct. As I understand it, you would accept a modification, but you would prefer this one.

Mr. Bilirakis. I hate to admit that because unfortunately we would probably come right down to that. I think $10 million against $2 million--again we are talking about, you know, a large amount of money; and yet in the scheme of things, whatever, I would hope it would not be that. But certainly----

Mr. Montgomery. That probably was not a fair question, but you prefer your bill as introduced?

Mr. Bilirakis. Yes, sir.

Mr. Montgomery. And how much does your bill cost, Chris?

Mr. Smith. When CBO scored it, it didn't even make a cut that they considered to be significant.

What--we are talking about approximately 10 to 12 people, 10,000 per year, so you know, you just factor that out; it is less than $100,000. It is a universeof people that have suffered greatly and were excluded.

You are right, I am not sure if the VA is for or against, but my conversation with Secretary Brown indicates that he would not object to it. I don't know why they don't just do it administratively, which is what we asked them to do. When Chairman Applegate looked at this some years ago, that was the hope, that it would be done by the VA itself, and they didn't do it.

But I don't think they would object to it, and I want to add my voice to what my good friend Mike Bilirakis said about you, Sonny. This is my first opportunity, since hearing the sad news, to say how indebted we all are for your leadership on behalf of veterans.

This has always been a bipartisan committee. Bob Stump continues that; Terry Everett and the other chairmen of the subcommittees continue it, but you laid down the markers early on. I have been on this committee for 15 years, and you have always been an outstanding leader on behalf of all veterans and all Americans, and I am grateful for that.

Mr. Montgomery. Thank you, Chris. This committee has got to stay bipartisan. If it doesn't, the veterans will be the ones that suffer; and both of you gentlemen have been very active. When you were a minority, there was no problem; I really didn't know what party you were in. That is the way we worked it and that is the way it should be continued, and I think Bob Stump will do that. Thank you.

Thank you, Mr. Chairman.

Mr. Everett. Thank you, Mr. Montgomery.

Chris, my appreciation.

Mr. Smith. Thank you, Mr. Chairman. I appreciate it.

Mr. Everett. Will the second panel, please come forward. The second panel is composed of representatives from the Department of Defense, Lieutenant General Samuel Ebbesen and Deputy Assistant Secretary of Defense Al Bemis. Please be seated.

STATEMENTS OF LT. GEN. SAMUEL E. EBBESEN, U.S. ARMY, DEPUTY ASSISTANT SECRETARY OF DEFENSE FOR MILITARY PERSONNEL POLICY, OFFICE OF THE ASSISTANT SECRETARY OF DEFENSE FOR FORCE MANAGEMENT POLICY; AND AL BEMIS, DEPUTY ASSISTANT SECRETARY OF DEFENSE FOR MANPOWER AND PERSONNEL, OFFICE OF THE ASSISTANT SECRETARY OF DEFENSE FOR RESERVE AFFAIRS

Mr. Everett. I will let you all determine the order. Go right ahead.

STATEMENT OF LT. GEN. SAMUEL E. EBBESEN

General Ebbesen. Mr. Chairman, thank you for the opportunity to appear before this distinguished committee today to discuss the Servicemen's Group Life Insurance, a remarkable program with over 30 years of distinction. The Department of Defense is greatly indebted to this committee for its contribution to the success of this program. We are also most appreciative of the excellent management and administration which has kept this program extremely simple and highly effective.

The Department supports the two bills on which we have been asked to comment today. These proposals will help make the program stronger, particularly for Reservists while retaining the program's simplicity and effectiveness. In effect, H.R. 2156 will bring the Reserves in line with the insurance programs for those separating from active duty. Both forces will then have the SGLI program while they are serving, with the continuously renewable convertible VGLI thereafter.

Mr. Al Bemis, in a moment, will address the specifics of the two bills, H.R. 2156 and H.R. 2157. I want to focus on the matter of automatic coverage underSGLI for $100,000 with the option to elect any $10,000 increment up to $200,000. As you know, we would prefer to automatically enroll a member forthe maximum insurance level of $200,000 with the option of reduced coverage by completing the appropriate election. We believe this approach would further enhance the program's simplicity and effectiveness in two ways.

First, any death before completion of the required paperwork would pay the maximum benefit to the surviving beneficiary, such as death in transit to active duty or during the initial day or two of service. Such deaths, of course, are a tragedy and that tragedy need not be compounded by paying less than maximum SGLI.

Secondly, automatic maximum gives the best protection to survivors and they are important. They will receive the maximum benefit unless the member has made a clear and determined election for reduced coverage.

Now, while some junior members might not need this much insurance, those who really want less, we believe, will continue to elect less. Those who are not so inclined won't change the election, and should they die, the survivor will be appreciative of the resulting benefit.

The current program, although workable, would be more effective, we believe, in the long run with an automatic maximum provision; especially, I think the survivors will certainly be most appreciative of that process.

You also asked that we testify about the services' counseling program for SGLI. I will tell you that each service determines how best to inform their members of the options available. I assure you that we in the Department and the Services, are not involved with hard-sell for members to elect a given level of coverage. Each individual elects the level of coverage appropriate for his or her particular circumstance.

Insurance, as you are aware, is a very personal decision. There is no specific counseling requirement, but the services do try to ensure a member understands the implications of declining coverage altogether, underscoring the emphasis of the election form which requires that the declination of coverage be made with the member's own handwriting in the words, and I quote, "I want no insurance," end quote.

Our goal in the Department is to inform members of their options. Nevertheless, the Department requested OSGLI to develop a video to help members in making their election. That product will soon be available for counseling, helping members consider the factors that influence the decision and how much insurance is appropriate. I have recently seen the video, and it is an informative and educational product which I believe will facilitate each member in making the right choice for his or her circumstance.

Mr. Chairman, I thank you for the opportunity to appear before the subcommittee today and for your consideration. Again, we are most appreciative of this committee and those who manage the SGLI and VGLI programs. After Mr. Bemis' remarks, we will be happy to respond to your specific questions.

Mr. Everett. Mr. Bemis, go ahead.

STATEMENT OF AL H. BEMIS

Mr. Bemis. Mr. Chairman, I also thank you for the opportunity to appear before this distinguished committee, and offer my strong support on behalf of all National Guard and Reserve members for the significant improvements to the Servicemen's Group Life Insurance and the Veteran's Group Life Insurance programs as proposed in both H.R. 2156 and H.R. 2157. I fully concur with theremarks made by General Ebbesen, but want to further address the Reserves' specific changes proposed in those two bills that would favorably impact the Reserve Force.

H.R. 2156 would merge the Retired Reserve SGLI program with the recently improved Veteran's Group Life Insurance, VGLI, which has a lifetime renewable provision. This would be a significant improvement by allowing Retired Reservists to retain insurance past age 60 where the Retired Reserve SGLI now ends.

Another plus is that under a combined program, broader participation could result in a more favorable rate structure than we have for either of the current programs.

Secondly, this bill would, for the first time, provide an insurance program for the Reservists who separate short of retirement. We believe that this is appropriate as it will extend to these veterans the same insurance options that are extended to those separated from Active service.

The second bill, H.R. 2157, pertains to persons who are eligible for SGLI coverage as drilling Reservists, but who are in a nonpay status and who, therefore, must remit their SGLI premiums directly to the service concerned. The service is obligated to make a timely payment of this premium to the VA, regardless of the member's timeliness in making the payment to the service. Some members have abused the situation by ignoring their premium obligation for extended periods. Our DOD Inspector General cited this as a management problem. H.R. 2157 would allow us to limit this premium debt problem by terminating the member's insurance.

The proposals before you can make the program strong in that they provide equal treatment for Active Duty and Reserve Forces, which is particularly important from a total force perspective.

Concerning the counseling programs for the Reserve Forces, we believe that the Reserve components do try to ensure that each member understands the importance of this program and the implications of declining coverage altogether. For example, our nonprior servicemembers of the Reserves normally receive their counseling and an enrollment opportunity during their basic training period. Upon return to their unit, members are again counseled and the counseling continues on a periodic basis, usually during the annual records review process which occurs every year.

In closing, I also agree that it is important to raise the automatic coverage level to a 200,000 maximum, as discussed by General Ebbesen. This change is in keeping with the simplicity and effectiveness of the SGLI and VGLI programs. We prefer the maximum to apply, and I think most survivors would also.

I thank you for the opportunity to testify on behalf of our 1.1 million National Guard and Reserve members; and again, we are most appreciative of this committee and those who manage both the SGLI and VGLI programs.

Thank you, Mr. Chairman.

[The prepared joint statement of General Ebbesen and Mr. Bemis appears on p. 39.]

Mr. Everett. Thank you both for your testimony. I served in the military, as I think most folks on this panel did, but I have to tell you, I generally oppose reverse checkoffs. I have not found them--I have been in private industry a lot of years--to be a very effective tool for determining what somebody really likes to do.

I appreciate your remarks about counseling and so forth, but I can recall my first few days in basic training. If somebody had handed me a form to have my throat cut, I probably would have signed the thing.

I would have to ask you a couple of things. Some would raise the GI bill contribution, something which we oppose. Is the automatic $200,000 SGLI coverage a good idea and why do you think it is a good idea? Can't the private sector provide that coverage? And I understand that they feel like they could even do it at a cheaper rate.

General Ebbesen. Well, Mr. Chairman, I will tell you it is not a must-have, but we certainly believe in the Department, that it is a better way to go. We have managed under the present construct of the law, but we believe the differences that will result from an automatic maximum would be absolutely positive.

I think payments for those who die before electing is one of them; also payments where the member is indifferent to his insurance level and is willing to go along with the government default option, whatever it may be. I think those who are not indifferent and desire less than the maximum would make certain that their preferred coverage is established.

And I go back to the basic process again, which says we believe that the survivor is important in all of this, and having that option available to them and to elect down rather than electing up, we don't believe is too difficult a process and would accomplish that same objective.

Again, I say that the current process is working.

Mr. Bemis. Mr. Chairman, if I might add, if you hark back to your early days in the military, yes, the commercial insurance industry can provide the coverage and they probably can do it at a little cheaper rate. But if you are moving from Camp Swampy to somewhere else to go from basic training to your next duty station, then going from your permanent assignment, going overseas, are you really going to--do we really expect these young troops to go and find an insurance agent that they are comfortable with, that they rely on, they trust, and that provides them an opportunity to make a solid decision?

In the meantime, we believe that you ought to have this coverage to provide the protection for him until he can get to that point where he can make that rational decision of what he wants to do with his life insurance program.

Mr. Everett. Point well made. But I don't understand why a reverse checkoff is needed. I have to tell you that I am quite fundamentally opposed to reverse checkoffs. Why can't we just leave it at $100,000, and if they want to go up to $200,000, as they currently have the option to do, just leave it that way? I frankly don't see the case for going to reverse checkoffs.

Do we know how much it would cost to do this?

Mr. Bemis. I don't think there is any cost involved.

Mr. Everett. $5 a year or $10 a year?

General Ebbesen. Mr. Chairman, I have no cost available. We could provide to the committee what the cost would be. I would assume the cost would be negligible, if any at all.

Mr. Everett. To the individual?

General Ebbesen. Well, to the individual, of course, it will have a cost to him because he will now be paying the cost up to $200,000.

Mr. Bemis. It will cost him $18 for $200,000 rather than $9 for $100,000.

Mr. Everett. $9.

Mr. Bemis. Per month. And of course that is taken out of his pay. Administrative cost, there is no difference because he has to fill the form out anyway no matter what level of insurance he has.

Mr. Everett. Mr. Montgomery.

Mr. Montgomery. Thank you, Mr. Chairman.

General, welcome. And I especially want to welcome Al Bemis, Secretary Bemis. He served on our staff for a number of years. He served partially on the Veterans' Committee, and congratulations--he is a very capable person, and I congratulate him, being here testifying before us today.

Mr. Chairman, on these other bills, I will have to take a look at them, but Mr. Stump and I introduced H.R. 2157, termination of SGLI when premiums are not paid by Reservists, and I think Mr. Bemis supported this legislation. That makes sense: If they don't pay the premium, they should be dropped from the rolls and like you, I will have to take a look at these other bills.

Just for the record--and I am kind of getting away from the scope today, but we probably need it on the record on the Montgomery GI Bill, where the Senate Veterans' Affairs Committee, in reconciliation, recommended a monthly payroll deduction of--going up 33 percent, moving it to $133 a month and reducing--reducing the COLA. But I just ask the military to comment on the 33 percent so we would have it in the record.

General Ebbesen. Mr. Montgomery, as you are well aware, we do not support the raising of that rate. We believe the current process works. The youngster, when he comes in today, we think, will end up with a pay cut when you take the $33 out, so we don't think that is a good idea.

Secondly, and probably more importantly, it is going to be tough for someone when he looks at his paycheck and says, gee, I have got to make a decision to add about a third more into a pot for that process and he is going to think twice about signing up for it; and we think that is a bad idea.

We think that over the long term, it is a good program. It contributes to the country as a whole. It contributes to the services in particular, and it contributes to the individual in the long term.

Mr. Montgomery. Thank you.

We must realize, too, that these are our youngest veterans. After 3 months under the law, they become veterans after they have served on Active Duty time, so they don't really have any groups out there helping them. They are coming in just trying to survive for the first year that they are in the service.

And I want to thank the veterans' organizations. They haven't overobjected that we have found other ways to cover the GI bill by the copayment for non-service connected veterans, on their medicines that they get, so we have found a way to pay for this without charging the soldier an extra $33 a month.

My last comment, Mr. Chairman, on the Armed Services Committee authorization bill, the Senate has added the $200,000 for SGLI; and actually, Mr. Stump and I have been looking at that. Under the House rules, this comes under your subcommittee, and we should take a look at it and see what we want to do on it; and I guess this hearing is pretty timely that we are talking about raising from $100,000 to $200,000 and then how do you pay for it?

Of course, the soldier pays for it. Do we get this committee involved? What do we do? Do we get permission from the Armed Services Committee, National Security Committee, to move ahead? So that is pending in the conference report of whether we take that back under jurisdiction of this committee or what we do on the $200,000 SGLI.

Mr. Everett. Thank you Mr. Montgomery.

Mr. Evans.

Mr. Evans. No questions, Mr. Chairman.

Mr. Everett. Alright, Gentlemen, thank you very much. Your points are well made, and I appreciate your appearance here today.

General Ebbesen. Thank you Mr. Chairman.

Mr. Everett. I would like to call the next panel, please. The third panel is Larry Rhea, Deputy Director of National Legislative Affairs, Non Commissioned Officers Association; Russell Mank, National Legislation Director, Paralyzed Veterans of America; James Magill, Director of National Legislative Service, Veterans of Foreign Wars; Lieutenant General (Ret.) John Conaway, President, Conaway Group.

STATEMENTS OF LARRY D. RHEA, DEPUTY DIRECTOR OF LEGISLATIVE AFFAIRS, NON COMMISSIONED OFFICERS ASSOCIATION; RUSSELL W. MANK, NATIONAL LEGISLATIVE DIRECTOR, PARALYZED VETERANS OF AMERICA; JAMES N. MAGILL, DIRECTOR OF NATIONAL LEGISLATIVE SERVICE, VETERANS OF FOREIGN WARS; AND LT. GEN. (RET.) JOHN CONAWAY, PRESIDENT, CONAWAY GROUP

Mr. Everett. Gentlemen, if you will all please take your places at the table, and let's go ahead and proceed.

Mr. Rhea.

STATEMENT OF LARRY D. RHEA

Mr. Rhea. Thank you, Mr. Chairman. The Non Commissioned Officers Association is pleased to be here this morning to offer our comments on the various legislation being considered. The Association also thanks you for including our entire prepared statement in the hearing record. Therefore, in my oral comments, I will address only those bills on which the Association has concerns or on which we have offered suggestions for their improvement. For those bills not specifically mentioned in these brief oral comments, NCOA either supports or has no objections to those measures.

So let me begin then with H.R. 1482, the Veterans Programs Amendments of 1995. NCOA supports these amendments with two exceptions.

First, Mr. Chairman, NCOA prefers the provisions of H.R. 109, which logically provides compensation to the day the veteran dies and survivors' benefits from that day forward. If the subcommittee decides not to advance H.R. 109, then NCOA would prefer the language of 1482 that would allow surviving beneficiaries to retain the veteran's last compensation check since survivor benefit payments are not effective during that same month.

And, second, the provision in H.R. 1482 that would take from 1 year to 2 years the limit on the payment of accrued benefits continues to ignore, in NCOA's opinion, the realities confronting veterans. Plainly and simply stated, NCOA believes that accrued benefits should be paid in full. We do not believe that veterans should be punished or limited for the failure of a claims and appeals system.

In regard to H.R. 1609, NCOA is not necessarily opposed to Representative Waters' proposal, although it is only fair to say, Mr. Chairman, that the Association is not overly excited about it, either. We are concerned about the potential dilution of VA service-connected standards and, unarguably, the standards of VA and social security are different.

And my final comment, Mr. Chairman, deals with H.R. 2157. Again, we are notopposed to the bill, but we do believe that the language in the bill which requires the veteran to justify late payments to the satisfaction of the Secretary prior to reinstatement is overly subjective, and we believe it is unnecessary. Requiring the veteran to justify late payment and then engaging someone else in a review process to determine if reinstatement is warranted is, in NCOA's view, a needless administrative burden on all parties.

That concludes my oral comments, Mr. Chairman. I will be happy to answer any questions, and on behalf of NCOA, I thank you.

Mr. Everett. We thank you.

[The prepared statement of Mr. Rhea appears on p. 44.]

Mr. Everett. Mr. Magill.

STATEMENT OF JAMES N. MAGILL

Mr. Magill. Thank you, sir. What I would like to do before my statement, if I may, is add to your opening remarks in that we also appreciate the great contributions that the former Chairman of this committee has made. We have called on his counsel many times over the years, and I was glad to hear that you will be staying at least part-time in the area; and we look forward to working--continuing to work with you in the future.

As far as--with respect to the bills before us today, I too would just like to comment on one concern we have. We certainly do support enactment of all the bills. However, with respect to H.R. 1609, we do support the exchange of medical information between Social Security and VA. However, we do have concerns with the provision in the bill which allows the Commissioner to make determinations of veterans' eligibility for benefits under laws administered by the Secretary of Veterans' Affairs.

Again, we do support the bills that are before us and I will be happy to respond to any questions you have.

Mr. Everett. Thank you Mr. Magill.

[The prepared statement of Mr. Magill appears on p. 51.]

Mr. Everett. General Conaway, we are going to skip over you and go straight to Mr. Mank.

STATEMENT OF RUSSELL W. MANK

Mr. Mank. Mr. Chairman, I appreciate the opportunity to testify on behalf of the Paralyzed Veterans of America.

I can only echo what Jim Magill just said. Congressman Montgomery, Paralyzed Veterans of America have enjoyed working with you over the years; you certainly have been a strong supporter of our organization. We look forward to working with you in the next 14 months and the years thereafter.

Mr. Chairman, PVA, in its statement, has indicated that we have no objection to the bills--to the nine bills before us. We have offered some suggestions how they could be made stronger, and those are so indicated in my statement.

What I would like to do is take a few moments to address a particular issue in H.R. 1482 that directly affects our members. It is section 5; it is the proposed increase to the automobile grant. It contains only three or four lines in the bill, but it directly affects the service-connected members of our organization. PVA is a very small organization. Those service-connected members who jumped out of an airplane in 1950 when this program was just getting under way--the program started in 1946--would have received an automobile grant of $1,600. That amount would have covered approximately 78percent of the cost of an automobile. In 1994, based upon the National Automobile Dealers Association statistics, the average cost of an automobile in the United States was $19,200. If Congress increased the amount to $6,000today, that will pay for approximately 31 percent of the automobile.

The GI who jumped out of an airplane in 1950 and sustained a spinal cord injury, and the GI who jumped out of an airplane in 1995, and sustained a spinal cord injury, both have received a devastating injury while serving in their Nation's armed forces. Yet what has been done over the years is to reduce the person's benefit by almost two-thirds. I would ask that Congress readdress this issue and increase the grant to $11,000.

That concludes my remarks. Thank you, sir.

Mr. Everett. Thank you very much.

[The prepared statement of Mr. Mank appears on p. 53.]

Mr. Everett. General Conaway.

STATEMENT OF GENERAL (RET.) JOHN B. CONAWAY

General Conaway. Thank you, Mr. Chairman. I appreciate the opportunity to be here.

I retired about a year and a half ago as Chief of the National Guard of the United States, the National Guard Bureau, and had almost 550,000 soldiers and airmen under me and 4,600 units in 3,200 communities. So the benefits that they get and receive obviously are as important in our total force as they are for the Active Duty personnel.

I appreciate these issues that you all are considering. I want to say before I make just a couple of brief verbal remarks that my good, dear friend Chairman/Congressman/General Sonny Montgomery, I have appreciated his service and working with him in my 18 years as a general officer in the National Guard Bureau.

From the time I came in in 1977, we called him our "legend." He is actually a legend in his own time, and Congressman Montgomery has done so much and the Montgomery GI Bill has done wonders for the Guard and Reserve as well as for the Active Duty forces.

I personally got my Master's degree, which helped me to move up and get assigned to the Pentagon, because of the GI bill. So maybe I shouldn't have used the GI bill, Sonny, and I would have got to stay in beautiful Kentucky. But I enjoyed my tour up here.

The only issue that I want to comment on is the issue on SGLI, raising the automatic from $100,000 to $200,000. General Ebbesen brought up a couple ofgood points, as did Secretary Bemis. I think administratively or in some other way that the young troops that are enlisting and coming into the military, on their way to their initial basic training site, or wherever they go, probably administratively should be covered for the $200,000 until they have been sat down and gone through the administrative records that they have to go through to sign up for what they have to sign up for, and then they can declare what insurance they want.

You get into a little bit of a privatization versus "government take care of us" in this issue, as you alluded to. There are private associations, military associations that offer great coverage to all of the servicemembers. They do it at a lesser rate in many cases. I served for 5 years on the board of the Armed Forces Benefit Association while I was Chief of the National Guard. I still do some nonpay advising to them.

I am a life member of the National Guard Association, U.S. I am a member of the Enlisted National Guard Association of the U.S. I am a member of the Reserve Officers Association. I am a member of the Retired Officers Association, as well as AFBA, and I have a lot of insurance with United Services Automobile Association, too.

All of them have life insurance, as well as other forms of insurance. All of them do great support for the military and to this committee, as well as the National Security Committee, in representing the personnel that are out there.

When you look at the comparison with the civil service program, FEGLI, Federal Employees Group Life Insurance, FEGLI is purely a voluntary program. There is nothing mandatory in FEGLI. You sit down with the new employees, 18, 19, 20-year-olds, GS-2s, GS-3s, GS-4s, GS-5s, GS-6s, and you offer them increments of insurance, and this is how much is going to be taken out of your pay, and they can elect what they want and they can go back annually, and they maybe have a better briefing program than we have in the military.

Even that, as it may, that is purely voluntary. They also are aware of what association and other insurance costs are.

I think that the current program works. I don't think it is broken. I think half of the members of the Guard and Reserve take the maximum $200,000, with $100,000 basically automatic and another $100,000 they can opt for. Active Duty, I understand it is well over 60 percent, so they are getting briefed. I think the associations would like to have their chance for their programs to be available and accessible, the military associations would. They can offer it for as low as $7.80 per $100,000 per month.

Now, that is to 82 percent of the military, to be fair about this. The smokers, there is a smoker/nonsmoker rate; within most all of the associations they have a differentiation. SGLI and VGLI do not, and that is a big difference there.

So I don't know whether you need to look at a difference there or the fact that it does cost more for most military association insurance than it does--if you are a smoker, than it does for SGLI. But I think the fact that we have a free enterprise system, we get into fairness and competition, that the military associations and industries should have their fair chance to offer this insurance as well. They do fairly well.

But I think the program is good the way it is, and I would cover the new members before they have a chance to earmark what they want, cover them for their maximum until they fill out that form.

Thank you, sir.

Mr. Everett. Thank you very much.

We will begin with you, Mr. Rhea. Do you think they ought to have $200,000 SGLI coverage; is that a good idea, or how does your organization feel?

Mr. Rhea. Mr. Chairman, in our testimony this spring before the joint session of both the House and the Senate Veterans' Affairs Committees, Non Commissioned Officers Association advocated the automatic enrollment; we believe it is a good thing and should be done.

As far as costs, I think--as General Conaway was speaking there, the thought occurred to me, while the increase goes from $9 to $18 per month for that young individual, we would better serve that individual by taking the additional $9 at that point when they first enlist rather than giving him 2 or 3 months to go down to the MCX, the Navy Exchange or the post exchange with his easily accessible Master Charge and run up a bill there, and then not be able to at some later point take the higher enrollment. So I think we would be doing a service.

As far as administrative cost in relation to the earlier panel, I don't know what additional administrative cost would be incurred in doing that. We would be using the same counseling process.

Mr. Magill. The VFW has no official position on that, but I certainly know that we would have not object to it as long as the option was available to a member at a later date if he wanted to retain it or elect to reduce cost--of the insurance.

Mr. Everett. Mr. Mank.

Mr. Mank. PVA has no official position on this topic, but it is a reasonable proposal.

Mr. Everett. Let me switch directions and ask our veterans' service organizations if something does well for the individual, but harms the group in the process, is that something you advocate? I am specifically talking about the thing I addressed in my opening statement about the clear and unmistakable error.

We have testimony from VA that they feel like that would increase the adjudication up to even 1,000 days.

Mr. Magill. The Veterans of Foreign Wars, in our statement, support that bill.

I would like--the increasing for 1,000 days, I would like more information on that before I commented. It seems like an exceptionally long time.

Mr. Mank. Mr. Chairman, as we indicated in our statement also, we support the bill with just some minor modifications.

We have to fix the system, but to say that the veteran can't file another appeal on something that may be clear and unmistakeable error flies in the face of common sense, so we think the bill is good with minor modifications.

Mr. Rhea. Mr. Chairman, NCOA has indicated our support for the bill in our testimony here this morning, and in previous hearings we have also signaled that same support for this. I would also like to defer a little bit to what Jim Magill said here. I would like to look at that thousand days a little more to see where we would come down on VA's estimates on that, if we think they might be correct. But even then, I think we would have to realize that what we are talking about here is that a clear and unmistakable error was made, and we have had one abiding thing in the 2 or 2\1/2\ years that I have been working these veterans issues now.

You know, we talk about the element of doubt or the benefit of doubt to the veteran, so I don't think I would jump right in immediately with VA's argument. We support the legislation and think it was the right thing to do, sir.

Mr. Everett. Well, thank you very much.

The current 700-plus days we find unacceptable as it is, and I know VA finds that unacceptable as well as the VSOs.

Mr. Montgomery.

Mr. Montgomery. Thank you very much, Mr. Chairman.

I would like to again say thank you to the witnesses for their remarks and their time. Thank you very much.

On the 1482, Mr. Evans and I introduced, I don't think we totally are locked into no changes. I mean, that is why we introduced the bill.

If there are some changes that the gentleman from PVA and others would like to make, certainly, Mr. Chairman, we would consider that. These bills need amending when you bring them up. That is why you have witnesses. Certainly, we would have no problems with that.

On General Conaway's testimony, some of these associations, and as I understand it, the NCOA is not affected that much by raising the insurance, the life insurance, on funding that doesn't run your organization of selling life insurance or group life insurance.

Mr. Rhea. Of course, NCOA is like all other associations, we offer different products and that sort of thing. Quite frankly, Mr. Montgomery, we haven't assessed it in that particular manner, the effect it would have on our association. The basis on which we have come down in supporting the $200,000 and the automatic enrollment feature is what we think is good and right for the young Soldier, Sailor, Airman, Marine, Coast Guardsman or whatever.

Mr. Montgomery. I think, then, General Conaway, I think for the record, if you could maybe submit for the record some of the associations that depend totally on the life insurance program, and then we could work from there.

Mr. Chairman, maybe it doesn't affect but a few, but I appreciate what we are trying to do, and I know the military has testified today that they support it, $200,000, but I still think we need to maybe have some input about what associations that are selling insurance also and the cost differential.

Thank you.

Mr. Everett. Thank you, Mr. Montgomery.

Panel, thank you very much.

General Conaway. May I make one comment?

What Mr. Montgomery said we will check, I don't know that it would totally bankrupt any of the associations, Mr. Montgomery. They all have supported the 100 and the 100 automatic and the 100 optional. I think it gets to be a fairness issue, what is better for the troops and what is better for the taxpayer.

You know, the troops need to be educated on what NCOA has and AFSA has, AFBA and all of these so they can shop around more. We do this with our civilian employees, with FEGLI insurance. Nothing is automatic, they have to go sit down and pick which option they want.

Now we are going to increase this. If we have a war--in Vietnam alone, the government paid an additional $500 million over and above what the insurance companies paid to subsidize wartime claims. That was the insurance at that time. Today, that would cost 5 to 10 billion for the government.

When you get private industry involved, there is no subsidization of that. Private industry covers all of that, including these associations, and if the troops can save hundreds and hundreds of dollars over their lifetime with this insurance, they should be offered this or it should be available to them versus just automatically putting them into government program. That is where we come down on this, is what is better for the troops and better for the taxpayer, and I think the system is working.

Mr. Montgomery. Mr. Chairman, our military witnesses are still here. I was told by staff that sometimes when a person has just the $100,000, that some way the military could pay a little higher premium, or not premium, but the insurance policy than was indicated.

Could Mr. Bemis tell us, is that correct, can you go over the 100,000 or the 50,000, or whatever?

Mr. Bemis. There have been cases where after the deaths have occurred, the survivors have made the claims that the individual intent was to take the higher amount. And I think that by and large what the Department and the services have done is leaned to the benefit of the survivors rather than the letter of the law that says, you signed for 100,000, that is all you get. So we have had several cases where that has occurred, and I think that is what you are alluding to.

Mr. Montgomery. That is exactly what I am alluding to.

How much did you pay?

Mr. Bemis. The maximum amount.

Mr. Montgomery. Okay.

Mr. Everett. Panel, thank you.

As usual, you made your--yes, Mr. Rhea.

Mr. Rhea. Mr. Chairman, I thank your indulgence here for just a moment. I couldn't go back to my office and be the only member of this panel that didn't acknowledge the former Chairman. And I would hope, though, that he knows from our heart and the expressions of our gratitude and the enduring respect that we have for him, not only as a friend of veterans, of the military, and include in that the marvelous work you have done for the National Guard and Reserve, and to publicly state once again, and I am sure, Mr. Montgomery, we will have an occasion in the next 14, 14\1/2\ months to again publicly state it, but our everlasting thanks to you, sir.

Mr. Montgomery. I appreciate that.

And, Mr. Chairman, I have gotten all the noncommissioned officers awards. One I didn't get, and I told them about it, they gave me.

Mr. Everett. Mr. Montgomery, I can assure you they were all well earned.

Thank you, panel. As usual, your testimony has been precise, clear, good reasoning. You made your points well.

Mr. Everett. Let me call the next panel so we can move on, Mary Schoelen, Veterans' Benefits Program, Vietnam Veterans of America; Joe Violante, Legislative Counsel, Disabled American Veterans; Carroll Williams, Director of Veterans Affairs and Rehabilitation, the American Legion.

If the panel would please step up.

Ms. Schoelen, if you don't mind, we will begin with you.

STATEMENTS OF MARY J. SCHOELEN, ESQ., VETERANS' BENEFITS PROGRAM, VIETNAM VETERANS OF AMERICA, INC.; JOE VIOLANTE, LEGISLATIVE COUNSEL, DISABLED AMERICAN VETERANS; AND CARROLL WILLIAMS, DIRECTOR FOR VETERANS' AFFAIRS AND REHABILITATION, THE AMERICAN LEGION

STATEMENT OF MARY J. SCHOELEN, ESQ.

Mr. Schoelen. Thank you, Mr. Chairman.

I would like to thank the Members of the Subcommittee on Compensation Insurance and Memorial Affairs for the opportunity to present VVA's views on the several bills before the subcommittee. We would also like to join in thanking the exiting Mr. Montgomery on his long-time service to veterans.

Due to time constraints, I will limit my remarks to the measures that VVA feels are most important, but I will be happy to answer questions on any of the other bills.

VVA supports H.R. 1483's efforts to reintroduce clear and unmistakable error as an avenue for final veterans' benefits decisions to be reviewed by the Department of Veterans Affairs. Historically, veterans and their dependents have been able to assert that the final decision on their claims by either the agency of original jurisdiction or the Board of Veterans' Appeals contained clear and unmistakable error, allowing them to have their claims readjudicated.

If the prior decision was reversed, the effective date for the award of benefits would be the date of the underlying claim. This is important because it allowed erroneous decisions at any level of VA to be corrected upon discovery of the error.

If an error is made by any VA decision-maker that injures the claimant, it shouldn't matter who made the error, just that the claimant be allowed to receive the benefits to which he or she is entitled to.

However, as you know, two recent decisions by the Court of Veterans Appeals and the Court of Appeals for the Federal Circuit have essentially foreclosed review of any decision that had previously been appealed to the Board of Veterans' Appeals. Currently, the only appellate review available for a clearly and unmistakably erroneous decision that has been reviewed by the board before is a request for reconsideration by the board. However, reconsideration is strictly at the discretion of the Chairman and cannot be reviewed by the court or denial cannot be reviewed by the court.

VVA also strongly supports H.R. 1483's provision that specifically allows for judicial review of clear and unmistakable error. Without this specific provision, many claimants would still not be entitled to judicial review of their erroneous claims if the Notice of Disagreement was filed prior to November 18, 1988.

VVA has always fought for broad access to judicial review of VA determinations. That fight leads us to strongly advocate for measures that would restore judicial review to veterans seeking review of their erroneous decisions.

Now, I would like to turn to H.R. 1609. VVA strongly supports the provisionsthat provide for increased access and sharing of information between VA and the Social Security Administration. Information gathered during the course of an SSA determination is frequently very important to VA disability determinations for eligibility to compensation and pension.

It has often been difficult for individual claimants, their representatives, and even VA to acquire copies of SSA records. Repeated requests have gone unanswered. VA then proceeds to make a determination without these records, and that very case may be remanded by BVA to require the same records.

While we support this provision, we propose that the language in Section 1 be changed to require the shared information to contain the Commissioner's determination of the veteran's eligibility for Supplemental Social Security Income and the basis for that determination, when such a determination has been made.

VVA strongly supports the provisions proposed in H.R. 1482 to increase benefits and access to benefits for veterans. We specifically support the increase in the period for which accrued benefits are payable from 1 year to 2 years, but we reassert our general opposition to the limitation on awarding retroactive benefits, adjudicated after the death of the veteran. The families of the veterans should not be denied benefits that the veterans would have otherwise been entitled to.

VVA also favors H.R. 368. We have supported the "atomic veterans" in theirefforts to gain care and compensation for conditions caused by military exposure to ionizing radiation. We now support the addition of bronchiolo-alveolar carcinoma to the list of presumptively service-connected conditions.

Finally, VVA supports H.R. 2155, restricting the clothing allowance of incarcerated veterans who are otherwise adequately clothed, does not, in our view, contradict VVA's long support for these veterans.

We also support the establishment of a presumption of permanent and total disability for veterans over 65 who are nursing home patients. This will save these veterans and their families a great deal of time and effort to prove such a level of disability to VA and save VA resources to develop these claims.

Mr. Chairman, VVA thanks you again for the opportunity to comment on these bills, and this concludes our testimony.

Mr. Everett. Thank you.

[The prepared statement of Ms. Schoelen appears on p. 57.]

STATEMENT OF JOE VIOLANTE

Mr. Everett. Mr. Violante.

Mr. Violante. Mr. Chairman and Members of the subcommittee, on behalf of the Disabled American Veterans and its auxiliary, I wish to thank you for this opportunity to present our views on legislative proposals affecting our Nation's service-connected disabled veterans and their families.

Before I continue, I also would like to express DAV's deep appreciation to Chairman Montgomery. He is going to be sorely missed both in the House and on this committee. We have certainly appreciated his tireless and dedicated effort on behalf of veterans.

At the outset, Mr. Chairman, I would like to note that DAV's position on these legislative proposals has been set forth in our written testimony. I would be happy to respond to any questions. However, this morning I would like to concentrate our focus on H.R. 1483.

As you will recall, the House, with bipartisan support, passed similar legislation on clear and unmistakable error last year in the 103rd Congress, and that was H.R. 4088. There is no reason whatsoever why H.R. 1483 should notreceive this body's full support.

In the past, the VA has testified that the passage of clear and unmistakable error legislation would increase their workload. Again, I note in their written testimony today they have said the same thing.

However, I do not believe that the facts bear out these statistics. It has been our experience, and we have represented a large number of veterans before the regional office and the BVA, that the correction of clear and unmistakable error in rating board decisions has always been available to claimants, and the VA has not been inundated with claims at the regional office level for clear and unmistakable error.

For the most part, clear and unmistakable error claims are brought by the veterans' representatives and not by individual claimants, because this issue is a technical issue and many veterans don't understand it and therefore these issues are mostly picked up by the representatives. The vast majority of these claims for clear and unmistakable error are meritorious. For years, until the U.S. Court of Appeals for the Federal Circuit overturned the Court of Veterans Appeals decision in Smith, everyone believed that they could obtain a review of prior board decisions on the basis of clear and unmistakable error.

Mr. Chairman, I also would like to note that in the past, we, the DAV, and most of the other veterans' service organizations have supported pay increases for board members at the BVA, the elimination of term limits. We have supported the single-member decisions, and an increase in the Board's FTE in an effort to turn around the backlogs.

I would also like to note that 2 years ago, the VA, and particularly the Board, was predicting that the processing time was going to reach 1,700 days. That has turned around. There has been a decrease in the processing time.

I believe that if this law was passed and even if their predictions were right on the numbers, that we could work with them to turn the processing time around again. I don't think that at this point in time that that should be an obstacle for the passage of this bill. We certainly will do everything that we can to ensure that the processing time doesn't increase to the level predicted by BVA.

Mr. Chairman, there is no legitimate reason not to give favorable consideration to H.R. 1483. There is no reason to prohibit a claimant fromestablishing that his or her benefits have been wrongfully denied and that but for clear or unmistakable error, he would be in receipt of that benefit.

I thank you again for the opportunity to present our views.

Mr. Everett. Thank you again for appearing here.

[The prepared statement of Mr. Violante appears on p. 62.]

STATEMENT OF CARROLL WILLIAMS

Mr. Williams. Thank you, Mr. Chairman and Members of the subcommittee. On behalf of the 3 million members and 1 million auxiliary members of the American Legion, we appreciate the opportunity afforded this morning to present our views on several bills scheduled for consideration by this subcommittee which impact on veteran benefits and programs.

Our written testimony has been submitted, and our perspective on the various legislative measures to amend the statutes to title 38 are now a matter of record. Nonetheless, we would like to take this occasion to verbally comment on a few of these proposed changes to the title.

H.R. 109, which proposes to make certain changes in the effective date of discontinuance of benefit payments of compensation, dependency, indemnity compensation and pension benefits, specifically amending United States Code, title 38, Section 5110 and 5112, based on marriage or remarriage of a payee or death of a payee, we ask that during your period of deliberation you consider the importance of ensuring the economic impact to veterans, to the veteran families represented by monthly compensation and pension payments. This is made available to survivors to help meet expenses in time of the veteran's death.

As you know, claims for survivor benefits to the Department of Veterans Affairs, Social Security Administration or to the military can take months to adjudicate, which can cause extreme financial hardship for the surviving spouse during this period.

H.R. 368 proposes to amend Section 1112 to add bronchiolo-avleolar carcinoma to the presumptive list of diseases related to exposure to ionizing radiation for establishing service connection.

As you know, the American Legion has been at the forefront for a number of years in support of legislation to ensure that the veterans exposed to ionizing radiation during atmospheric nuclear weapons test or who served in the occupational zones of Hiroshima or Nagasaki receive compensation. Therefore, the American Legion favors the addition of bronchiolo-alveolar carcinoma to include a more general diagnosis of lung cancer to the list of presumptive diseases currently set forth in 38 United States Code 1112.

Section 7 of H.R. 1482 proposes a number of changes in veterans' benefit programs, in particular it proposes to increase the period for which accrued benefits may be paid from 1 to 2 years. The American Legion is opposed to the current 1-year limitation on the payment of accrued benefits.

We recognize that this provision was enacted as a cost saving measure. However, it fails to recognize the fact that it could take VA more than one year to process a veteran's claim or 2 to 3 years or more if it requires appellate action, in this regard, the American Legion concedes that this is an improvement.

However, we believe to grant accrued benefits up to 2 years, even though it would only be a partial remedy to this problem, the American Legion recommends that accrued benefits be paid back to the date the deceased veteran's claim was initially filed.

Mr. Chairman, that concludes my remarks this morning, and I am available for any questions.

Thank you.

[The prepared statement of Mr. Williams appears on p. 72.]

Mr. Everett. Thank you, Mr. Williams.

Let me address all of you. Does anyone have any data on the CUE appeals at the board prior to the Smith case? Do we have any information?

Mr. Violante. Mr. Chairman, we don't have any real figures on that. I don't know if any figures are kept, but from our experience there hasn't been many.

Mr. Schoelen. That would reflect our experience as well.

Mr. Williams. We concur as well, Mr. Chairman.

Mr. Everett. Let me thank each of you for your testimony, as we did the last panel. You made your point very clear, and we appreciate your appearance here today.

Let me also add that one of the underlying things we are talking about is the number of days it takes for cases to get somewhere. Obviously, it is going to influence a lot of different things. And I know our next panel, led by Mr. Vogel--we have had conversation on this. We are determined to see it approved. We are getting cooperation from VBA, and frankly, I have no doubt that we are going to whittle that thing down to an acceptable level. I know this: It will not be for the lack of trying. Thank you again.

Mr. Williams. You are welcome.

Mr. Schoelen. Thank you.

Mr. Violante. Thank you.

Mr. Everett. At this time, I would like to call our next panel: Honorable John Vogel, Under Secretary for Benefits for Department of Veterans Affairs; accompanied by Gary Hickman, Director of Compensation and Pension Service; Thomas Lastowka, Director of Philadelphia Regional Office and Insurance Center; and Honorable Charles Cragin, Chairman of the Board of Veterans' Appeals, Department of Veterans Affairs.

STATEMENTS OF HON. R. JOHN VOGEL, UNDER SECRETARY FOR BENEFITS, DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY GARY HICKMAN, DIRECTOR OF COMPENSATION AND PENSION SERVICE; PAUL KOONS, ASSISTANT DIRECTOR FOR INSURANCE, PHILADELPHIA REGIONAL OFFICE; AND JACK THOMPSON, ASSISTANT GENERAL COUNSEL

Mr. Everett. And, before you begin, I want to note that your staff worked very hard at preparing the testimony to meet the submission deadline, of which I am very appreciative. I think it is very unfortunate that the Office of Management and Budget couldn't do its part equally well. I would like to say for the record OMB's delay in the submission of your testimony is not only rude but unprofessional.

Mr. Everett. Good morning to each of you. Mr. Vogel, I will appreciate it if you will proceed

STATEMENT OF HON. R. JOHN VOGEL

Mr. Vogel. Thank you, Mr. Chairman.

Mr. Chairman, with the departure of Mr. Montgomery, I won't be confused by referring to him as Mr. Chairman. I have been calling him that for so many years and clearly----

Mr. Everett. I call him Mr. Chairman.

Mr. Vogel. The Chairman Emeritus at least. Truly the veterans' friend in the United States Congress. We will all miss him. I look forward to continuing to work with him. I submit in retirement he will still be available for counsel.

Mr. Chairman, Mr. Koons is here from Philadelphia with me.

I have a brief statement I would like to read. Chairman Cragin has separate testimony that he will offer as well, and then we will be pleased to answer any questions you or members of the subcommittee may have.

Seven of the eight legislative proposals in this morning's agenda cover a wide range of issues within VA's benefit programs. Two of the bills, H.R. 2155 and H.R. 2156, are VA proposals. The first would restrict the payment of clothing allowance for incarcerated veterans. We create a presumption of permanent and total disability for pensioners in a nursing home who are at least 65 years old.

H.R. 2156, the Veterans' Insurance Reform Act of 1995 includes a number of amendments which in general would improve benefits to veterans and improve the overall financial performance of our insurance programs. We request prompt consideration and enactment of both bills.

H.R. 2157 would authorize VA to terminate the Ready Reservist's SGLI policy when premiums aren't paid. We support that legislation and suggest that the proposal be expanded to include all SGLI insureds.

H.R. 109 would amend title 38 to change the effective dates for terminating certain disability compensation and pension awards due to a veteran's death and for beginning certain death benefit awards. We support the apparent intent of that proposal to provide some financial relief to a veteran's family upon his or her death. The surviving spouse would receive--should receive a pro rata portion of the veteran's compensation award for the month in which he dies. However, we also recognize there is a cost to that proposal which would require offsets, so we pledge to work with the Committee to find the appropriate offsets.

H.R. 368 would add bronchiolo-alveolar carcinoma to the list of diseases presumed to be service-connected for certain radiation-exposed veterans. Under title 38, we currently adjudicate each radiation-exposure compensation claim on its own merits. We recognize that bronchiolo-alveolar carcinoma may result from radiation exposure. Other carcinogenic agents can also cause this type of lung cancer.

In evaluating each lung cancer claim, VA currently considers factors such as estimated radiation dose exposure and smoking history. We believe that this case-by-case approach is preferable to the one creating the blanket presumption.

H.R. 1482 is the most comprehensive of the proposals.

Section 2 would extend certain exemptions from minimum duty requirements to all title 38 benefits rather than just chapters 30 and 37.

Section 3 would establish a pilot program to use contract physicians to conduct disability examination for VA claimants.

Section 5 would increase the allowance for the purchase of an automobile from $5,500 to $6,000.

Section 7 would extend the accrued benefit period from 1 to 2 years.

And section 8 would allow the VA to retain the costs of collection from the amounts collected on debts.

We support all of those proposals.

Section 4 of H.R. 1482 would discontinue compensation benefits on the last day of the month in which certain veterans die. This would apply to the case of a veteran who was rated 100 percent disabled and was receiving compensation at the time of death. In addition, the veteran would have been receiving compensation for a spouse, but the surviving spouse would not be eligible for DIC. Currently, compensation is discontinued in such cases on the last day of the month prior to the veteran's death.

We do not support that proposal. We see no equitable basis for distinguishing between surviving spouses of veterans rated 100 percent to those at slightly lower levels of disability such as 70, 80 or 90 percent.

Section 6 of the bill would extend the ending date of the program under which certain pension recipients may enter a vocational rehabilitation program. Because the participation rate in that program is so low and its costs so high, we do not support the continuation of it.

Under H.R. 1609, the Social Security Administration and VA would be required to share medical--all medical information that relates to the determinations of disability without regard to the need for or benefit of the information. The VA appreciates the intent of this bill to expedite claims processing. However, we already have mechanisms in place to share the information with social security as situations warrant.

Section 1 of the proposal would require us to process and store more than 400,000 sets of records each year that we may very well never use. Section 2 would make SSA's determinations on disabilities controlling on the VA. We cannot support that proposal. Entitlement to VA disability pension is different than entitlement to supplemental security income, and the criteria to make the eligibility determinations is different.

In closing, I would like to extend my appreciation to you, Mr. Chairman, and your staff and the members of the subcommittee for your continuing support for the programs that we proudly administer for America's veterans.

That concludes my remarks. Mr. Hickman and Mr. Koons, Assistant General Counsel Thompson are available to answer any questions you may have, and I would ask now that Chairman Cragin of the board be allowed to make his statement.

Mr. Everett. Without objection.

[The prepared statement of Mr. Vogel appears on p. 77.]

STATEMENT OF HON. CHARLES L. CRAGIN, CHAIRMAN, BOARD OF VETERANS' APPEALS, DEPARTMENT OF VETERANS AFFAIRS

Mr. Cragin. Good morning, Mr. Chairman.

Initially, we would like to take this opportunity to advocate enactment of the draft bill which Secretary Brown recently transmitted to the Speaker, proposing to amend title 38 of the United States Code to revise the procedures for providing claimants and their representatives with copies of BVA decisions and to protect the right of claimants to appoint veterans' service organizations as their representatives in claims before VA.

This legislation would permit the board to provide copies of its appellate decisions to claimants' representatives reasonably and efficiently. It would also permit VA to continue a longstanding method of claimant representation which has proven efficient and beneficial to claimants. As a result of court interpretations of existing statutes, we feel the legislation is vitally necessary to amend those statutes to be able to provide us with the ability to perform these longstanding activities.

I would like to focus the rest of my time on legislative proposal H.R. 1483.

Mr. Chairman, in the background document which you have promulgated, H.R. 1483 is characterized as a bill which would provide the Board of Veterans' Appeals the authority to reverse or revise a decision when it is established that an error was made when authorizing benefits. May I submit, Mr. Chairman, that the Board of Veterans' Appeals already has that statutory authority to reverse or revise when we determine that an error has been made.

The question is whether it will be done through the discretion of the Chairman through a process of reconsideration or whether it will be accorded to a veteran and appellant as a matter of right. It is essentially analogous to an appellant who has already had a trial and there has been a decision on that trial and the appellant then says I want a new trial.

The question is, does the appellant get the right by saying I want a new trial to automatically get a new trial or does he merely request a new trial and make assertions and then there is some discretionary ability on the part of the judge to decide whether that new trial will be accorded? As I have said, under current law, meritorious cases which involve clear and unmistakable error in board decisions are taken care of through a process in the existing law called reconsideration.

It is the Department's position that H.R. 1483 will require the board to consume time and resources on frankly nonmeritorious cases. We should be devoting that time to deciding new cases and reopen claims in a timely manner.

I would suggest that since I have been Chairman in fiscal year 1991 there have been more than 3,600 motions filed for reconsideration. Of those, more than 800 or 22 percent have been granted. That means that I have decided that the case has been asserted to be meritorious and that we would begin the process of reevaluating that case on its merits. And of the cases that we have reconsidered, 77 percent have resulted in allowances or remands, that when we see an error we recognize it and we do something about it.

If H.R. 1483 were the law, the other 2,800 cases in which we decline to reconsider because we did not feel the assertion had merit would automatically be required to be sent to a board member. The board member would have to review that case on the merits and then prepare another decision. So we know at the very least that there would be 2,800 additional cases that would have been adjudicated by the board under a mandatory you get another right to another appeal at the board by alleging clear and unmistakable error that you don't have today.

Secondly, I would suggest that clear and unmistakable error adjudication as a matter of right at the board is not an historic matter. It was only a brief period of time of a couple of years when the Court of Veterans Appeals held that we were required to make decisions on clear and unmistakable error as a matter of right, not as a matter of discretion of the Chairman. That was a jurisprudential aberration. It was a mistake by the Court of Veterans Appeals interpreting a law. And that court was reversed by the Federal Circuit Court of Appeals saying that they misinterpreted the law and the regulations of the Department.

So what this statute is--this proposal is attempting to do is to change the law to put in place a process that was only in place for a brief period of time as a result of the court's actions.

Mr. Chairman, I would be happy to answer any questions which you have with respect to this or any other matters.

[The prepared statement of Mr. Cragin appears on p. 108.]

Mr. Everett. Thank you.

Clearly, the clear and unmistakable error is perhaps the most contentious issue that we have discussed here today. My opening remarks quoted several figures from your statement on the impact on the CUE. What data do you have that supports these figures other than what you just said a moment ago?

Mr. Cragin. Well, it is very difficult, Mr. Chairman, to develop data for a process in which we have never at the board undergone it except for that brief period of time which I indicated, and during that period the Department was appealing the decision of the Court of Veterans Appeals, so we stayed adjudication on those issues.

Clearly, in a process of discretion we have had 3,600 motions filed since fiscal year 1991 when people knew that it was discretionary. If people know that it is a matter of right that all they have to do is assert there was clear and unmistakable error in a previous board final decision and that forces the board to immediately reopen that case and readjudicate it on the merits, I would suggest to you that more people will take advantage of that opportunity. There is no disincentive not to do that.

Secondly, this legislation, as presently drafted, goes all the way back to the first decision of the Board of Veterans' Appeals. If a veteran still living had a decision made by the Board in 1933 and came forward today, he could assert that there was clear and unmistakable error in that Board decision and we would be required to go back and evaluate that decision today based on the evidence of record in 1933 and the laws and regulations in effect in 1933. Every one of those cases will require phenomenal amounts of workbecause of the historical research that will be necessary to ensure that we are applying only the law that was in existence at that point in time.

Mr. Chairman, what I have tried to do is make our best estimate of the numbers. I would submit to you, though, in testimony to this committee in past occasions we have represented to the committee what we consider our best numbers to be on the basis of whatever information we have available; and, generally speaking, we have been correct.

Mr. Everett. You might want to visit with some of the VSOs on those numbers because, obviously, you know they feel much differently about it.

Let me ask this. Is the cost recovery system that would be established under H.R. 1482, section 8, similar to the medical care cost recovery system currently in place in the VA? Is that similar?

Mr. Vogel. Yes, it is, Mr. Chairman, very similar. The Medical Care Cost Recovery, defrays the cost of collection from the amounts collected. And in the case of debts collected by the Veterans Benefits Administration, we pay for that cost out of the appropriation.

We think it would be a good incentive for our people to be able to defray the costs of the collection. We have about 102, 103 people that very effectively do the debt collection and would like to be able to defray the costs out of what they collect.

Mr. Everett. Let me just for a moment recognize the counsel from the Minority for a question that he wanted to ask.

Mr. Ryan. Mr. Vogel, if I understood your written statement, it is that the Department is in favor of section 8 of H.R. 1482, is that correct? That is the debt collection provision that the Chairman just referred to.

Mr. Vogel. No, we are not.

Mr. Ryan. But----

Mr. Vogel. You can see the benefit. You can see the benefit that could accrue to the agency if we were allowed to do similarly to what the Veterans Health Administration does in the collection of third party payee debt attendant to medical care.

Mr. Ryan. So we misheard your statement that you were in favor of that?

Mr. Vogel. Yes.

Mr. Ryan. Thank you.

Mr. Everett. You mentioned this, but H.R. 1609 now requires VA and SSA to share information. Do you need that authority or need authority beyond the current section 5106?

Mr. Vogel. No, we don't, Mr. Chairman.

Mr. Everett. How many Board members do you have today, Mr. Cragin?

Mr. Cragin. Today I have 58, Mr. Chairman.

Mr. Everett. Do you plan to appoint any additional Board members?

Mr. Cragin. We are going to be evaluating that very soon. I have three Board members who have announced their resignation, and they are accepting positions at other locations in the government as administrative law judges.

What--we have just gone into a realignment of the Board on October 1st, and so we are going to take a look at that process and see its immediate results. What we want to make sure, Mr. Chairman is that we have a steady flow of work at each level of this decision preparation process, and I don't want to appoint any more Board members from our attorney ranks until I am absolutely sure that that is where the constriction is and we need additional resources at that level.

Mr. Everett. What is the current backlog at the Board level?

Mr. Cragin. We are currently today actively considering cases which were docketed in December of 1993. We have, between the number of cases physicallyin our possession at the Board and the number of cases that are out in the field at regional offices, having been certified for appeal, approximately 57,000 cases. There are additional cases in which nines have been filed, a notice of appeal, which have been placed on our docket but they are not yet certified as ready for final adjudication.

Mr. Everett. Do the math for me real quick. How many days are we talking about?

Mr. Cragin. We are currently talking about 740 days, Mr. Chairman. We just finished our fiscal year. And while our final figures are not complete, we had indicated 18 months ago that we projected we would be able to decide 28,000 cases in fiscal year 1995; and we are pretty much right on the money at 28,000 cases, which was a 27 percent improvement over the preceding fiscal year.

Mr. Everett. Let me ask you, on H.R. 109, your testimony supports that. Are you looking at ways to find offsets to pay for that change?

Mr. Vogel. Mr. Chairman, we haven't identified anything yet. We would be pleased to work with you and the committee to find it. We had a bit of an about-face on that position. The Secretary decided that when he was being briefed in preparation for this hearing. He was indeed in favor of the bill, he understands the need to find an offset, and we will work with the committee to find it.

Mr. Everett. As usual, I want to thank you for coming in. You have been straightforward, the testimony is well received, and it is certainly good to see you again. I know we will be visiting in the near future.

That does complete our witness list, and I would like to thank all of the witnesses for their time. Over the coming weeks the Members and the staffs will be working through a legislative package to reflect many of the issues brought here today. I certainly look forward to working with the Members to craft legislation that will treat veterans fairly and improve the system.

The hearing is adjourned.

Mr. Vogel. Thank you, Mr. Chairman.

[Whereupon, at 11:45 a.m., the subcommittee was adjourned.]

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