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Opening Statement of Hon. Bill Johnson, Chairman, Subcommittee on Oversight and Investigations

Good morning. This hearing will come to order.

I want to welcome everyone to today’s legislative hearing on H.R. 2985, the Veteran's I.D. Card Act; H.R.3730, the Veterans Data Breach Timely Notification Act; H.R. 4481, the Veterans Affairs Employee Accountability Act; and H.R. 5948, the Veterans Fiduciary Reform Act of 2012.

These bills arrive from several different avenues that fall under this Subcommittee’s purview, and I want to thank the bill’s sponsors for drafting these proposals for our review.

H.R. 2985, the Veteran's I.D. Card Act, was introduced by Congressman Akin of Missouri.  The bill would direct the VA to issue a veteran's ID card upon request to any veteran who is not entitled to military retired pay or enrolled in the VA system.  We will hear more from Congressman Akin on this bill, and I thank him for his participation. 

H.R.3730, the Veterans Data Breach Timely Notification Act, was introduced by our Subcommittee’s Ranking Member, Congressman Donnelly of Indiana.  His bill would require the VA to notify Congress and directly affected individuals, within 10 business days or less, of a data breach that compromises sensitive personal information. This improved transparency and responsiveness would be a boost to the VA’s efforts at improving its information security image.

As the system currently works today, the lapse of time between the VA knowing of a data breach and a veteran knowing his or her information has been compromised and may be floating around is entirely too long.  In discussions with staff, Assistant Secretary Baker acknowledged that the current duration between the VA learning of a data breach and a veteran being notified that his or her personally identifiable information, or “PII”, may have been compromised could be shortened, and this legislation is a good measure toward that end.  I am proud to co-sponsor this bill.  I urge my colleagues to consider adding their support, and look forward to Ranking Member Donnelly’s further remarks on it.

H.R. 4481, the Veterans Affairs Employee Accountability Act, was introduced by Congressman Roe of Tennessee, another distinguished member of our Subcommittee.  His bill would prohibit any VA employee from receiving a bonus if that employee knowingly violated Federal Acquisition Regulations or VA Acquisition Regulations.  We have seen plenty of evidence of the VA’s lack of controls over its bonus program, which has further been substantiated by the VA’s own OIG.  Sometimes bonuses go to employees with documented poor performance, sometimes the VA gives retention incentives to an employee about to retire, and sometimes bonuses go to VA employees for no reason at all. 

However, it’s not just the bonus program that is running wild; we have also seen many long-term cases of VA employees ignoring acquisition regulations, often because it’s simply easier for them to do so.  To veterans, the taxpayers, and this Committee, that is not a good reason for breaking the law.  Furthermore, in many of those cases, the VA has not held many of those employees accountable after learning of the violations.

Last week, I introduced H.R. 5948, the Veterans Fiduciary Reform Act of 2012.  Based on investigations done by this Subcommittee, as well as a hearing held in February, it is abundantly clear that VA’s Fiduciary Program requires significant improvement.  The February hearing discussed fiduciaries stealing veterans’ benefits, felons being appointed as fiduciaries, and even fiduciaries withholding needed funds to the point where a veteran’s utilities are cut off.  In addition, many veterans have been unable to contact their fiduciaries to get necessary basic funds, and family members are frequently shut out of the program despite VA’s stated intent to include family members as a preferred choice. 

While the VA did take an important step in the right direction after that hearing when it removed a paragraph from its standard form- requiring a fiduciary to get VA approval of any use of a veteran’s funds- the same types of problems discussed at that hearing continue to happen.  This Subcommittee brings them to the VA’s attention, and sometimes they are fixed on an individual basis.  However, it is reasonable to expect that the same type of problem will come up the next week.  The VA’s Fiduciary Program suffers systemic weaknesses.  

VA’s Fiduciary Program is intended to help administer VA benefits for veterans deemed incompetent to handle their financial affairs.  As written, the statute defers greatly to the Secretary’s discretion in the Program’s administration, including who can serve as a fiduciary and what obligations fiduciaries owe veteran beneficiaries.  As practiced, the VA has stretched that flexibility in every direction, and the result has been unconscionable treatment of some of our most vulnerable veterans. 

The Veterans Fiduciary Reform Act of 2012 is based on problems uncovered before, during, and after the February hearing as well as valuable input from veterans’ service organizations and individual veterans on the ground who have experienced difficulties with the program.  The legislation would require a credit and criminal background check each time a fiduciary is appointed, and allow veterans to petition to have their fiduciary removed if problems arise. 

The bill would also decrease the potential maximum fee a fiduciary can receive to the lesser of 3 percent or $35, similar to Social Security’s fiduciary program.  This will help discourage those who enroll as fiduciaries with the VA with only a profit motive in mind.  In addition, the legislation will enable veterans to appeal their incompetent status at any time, require fiduciaries to submit annual accounting reports; and allow veterans to name a preferred fiduciary, such as a family member.

These significant changes will heighten VA’s standards for administering the Fiduciary Program and increase protection for the most vulnerable veterans. Through mandating improved scrutiny during background investigations and lowering the fee a fiduciary can charge, the Veterans Fiduciary Reform Act of 2012 will help root out potential predators.  Incorporating the ability for veterans to petition to have their fiduciary removed and replaced will add a layer of protection to veterans with fiduciaries. 

I encourage my colleagues to support this bill, and would also direct your attention to several news articles that came out over the last few days documenting many cases of veterans around the country who have suffered from the lack of oversight and control within the Fiduciary Program. 

I want to thank everyone for their participation in today’s hearing, and now yield to Ranking Member Donnelly for an opening statement.