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Witness Testimony of Bradley G. Mayes, Veterans Benefits Administration, U.S. Department of Veterans Affairs, Director, Compensation and Pension Service

Mr. Chairman and Members of the Subcommittee, I am pleased to appear before you today to speak of the initiatives underway to enhance the Department of Veterans Affairs (VA) Fiduciary Program.  I am accompanied by Ms. Diana Rubens, Associate Deputy Under Secretary for Field Operations; and Mr. Gary Chesterton, Chief, Fiduciary Staff, Compensation and Pension (C&P) Service. 

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

VA takes very seriously the recommendations made by the Government Accountability Office (GAO) and VA’s Office of Inspector General (VAOIG) and is working to implement recommendations made in those reports as well as other important measures we believe will further strengthen the program. 

I would like to highlight some of the strides VA has made within the last eighteen months, which are contributing to improved service delivery and oversight of benefits to this group of Veterans and beneficiaries.  In September 2008, a new Chief of the Fiduciary Staff was recruited to spearhead reform efforts for our Fiduciary Program.  Shortly thereafter, we selected a new Assistant Compensation and Pension Service Director for Veterans Services, who has responsibility for this Program area.  These individuals bring many years of technical and management experience to bear on our efforts to strengthen the Fiduciary Program.  In addition to these leadership changes, we have increased the staff responsible for fiduciary policies and procedures and reassigned a portion of the work previously assigned to this staff to VA's National Quality Assurance Staff in Nashville, Tennessee.   The result is significantly more resources dedicated to oversight and policy changes aimed at strengthening protections for these Veterans and beneficiaries.  

VA is taking steps to clarify existing procedural guidance.  The operations manual for fiduciary activities, M21-1 MR, Part XI, is undergoing a complete revision.  Several policy changes are already in place to increase protections.  Guidance was disseminated to all VA regional offices implementing new requirements to obtain documentation of any unbudgeted expenses in excess of thresholds agreed to between VA and an approved fiduciary in their fund usage agreement.  Fund usage agreements document recurring expenses that are allowed to be paid out of VA benefits to support an incompetent Veteran, beneficiary or dependent.  Additional requirements are in place for documentation of budgeted expenses that exceed pre-approved limits by more than fifteen percent and cannot be verified by bank statements submitted as part of the annual accounting requirement.  This guidance was issued in C&P Service Fast Letter 10-12 dated April 19, 2010.    

Periodic or onsite reviews at a fiduciary’s place of business are required for those fiduciaries that manage the benefits of twenty or more beneficiaries.  Increased oversight was established in October 2009 to review compliance with this policy.  VA's site survey protocol related to fiduciary activities now includes an assessment of these onsite reviews.  Further, policy guidance was released in Fast Letter 10-12, which requires the collection of a taxpayer identification number or Social Security number for every corporate and individual fiduciary.  This will assist in identifying those fiduciaries subject to the onsite review requirement.  The fast letter also requires all onsite review reports be submitted to VA Central Office Fiduciary Staff for review and analysis.  Finally, VA is considering a third-party audit process, which could potentially assist with conducting onsite reviews and investigations relating to misuse, as well as provide independent audits of local fiduciary activities nationwide.  

VA has deployed several measures to improve oversight of investigations into allegations of misuse of beneficiary funds.  Beginning in fiscal year (FY) 2010, the Fiduciary Staff will complete a systematic analysis of operations related to VA's misuse determination process.  This annual review will be incorporated as a standard business process for continuous process improvement.  The goal of the analysis will be to identify areas in which VA fiduciary activities could improve in compliance and oversight, and areas in which VA’s Fiduciary Program could be enhanced to eliminate the potential for misuse of Veterans’ and beneficiaries’ benefits. 

In October 2009, VA's site survey protocol for reviewing fiduciary activities at VA regional offices was amended to include a review of all documentation pertaining to any misuse allegation.  Additionally, in cases where a misuse allegation has occurred, policy is now in place that requires VA regional office fiduciary activities to forward all documentation pertaining to the investigation of these allegations.  Previously, VA fiduciary activities were required to forward only the final misuse determination; however, some allegations had been determined to be without merit at the local level and did not warrant a formal misuse determination.  This policy allows for centralized oversight of all allegations, regardless of whether a formal misuse determination is determined necessary.  

A major initiative is also underway to develop and deploy standardized training for all VA fiduciary activities.  The training, which is being deployed this month, is an intense, forty-hour session for all fiduciary employees nationwide.  The training focuses on the specific responsibilities of fiduciary managers, field examiners, and legal instruments examiners.  The prepared course material includes instruction on vulnerabilities of the Fiduciary Program, file documentation, account audits, estate protection, and fiduciary appointments.  Additionally, the Fiduciary Staff will conduct a National Fiduciary Managers Training Conference in June 2010, to provide in-depth training on a myriad of fiduciary matters.

To improve operational efficiencies, VA consolidated the management of fourteen fiduciary activities within the Western Area under the Fiduciary Hub Pilot Program.  The Western Area Fiduciary Hub, located at the VA Regional Office in Salt Lake City, Utah, is responsible for all fiduciary work including field examinations, account audits, fiduciary appointments and oversight, and related program responsibilities.  VA is conducting a full analysis of the Western Area Fiduciary Hub Pilot.  The analysis with recommendations will be completed by September 30, 2010.  The analysis will address program strengths, weaknesses, and lessons learned, and make recommendations on the feasibility of expansion of the hub concept.

To date, the Western Area Hub has demonstrated improvement in processing fiduciary accountings.  The standard requires account audits to be completed within fourteen days of receipt.   The Hub has processed ninety-four percent of its accountings within the prescribed timeliness standard, which is higher than the national average of ninety-three percent.  

The Hub is the only fiduciary activity operating in a paperless environment, which has served its unique configuration well.  Electronic forms, field examination packets, and other important information are available to every employee of the Hub regardless of the employee’s location.  The Hub also created a Misuse Team, which specializes in misuse investigations.  The Hub is unique in that it has integrated Microsoft MapPoint software in the scheduling of field exams within the Western Area Hub's jurisdiction.  Utilizing this technology has reduced overall travel times and increased the effectiveness of field examiners.  These are examples of improvements realized with the consolidation.  

VA also recognizes the need to improve the information technology systems available to its field fiduciary personnel in the administration of this program.  The current fiduciary electronic case management system, the Fiduciary Beneficiary System (FBS), poses some limitations with historical data, interfacing with other systems currently employed by VA, workload management, and fiduciary oversight.  We have initiated steps to replace FBS.  A project team was established in October 2009, to assess the functional requirements for a replacement fiduciary case management system.  The project team will present its findings and recommendations in June 2010.  Concurrently, we are preparing a request for information to solicit interest from the private sector in an alternative electronic case management system.  

Recently, VA had the opportunity to participate in audits of the Fiduciary Program conducted by GAO and VAOIG.  These audits confirmed the validity of our current efforts to eliminate vulnerabilities in this important program.  

Finally, VA is taking steps to collaborate with other agencies that perform similar functions.  We intend to host a round table forum with other Federal agencies to share best practices and explore ways to strengthen our program.  

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

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