Mr. Chairman, I am pleased to provide the Department of Veterans Affairs’ (VA) views on pending legislation.  I am accompanied today by Assistant General Counsel Richard J. Hipolit. 

I will not be able to address H.R. 5549, the Rating and Processing Individuals’ Disability Claims Act (RAPID Claims Act), included on today’s agenda, because we did not have sufficient time to develop and coordinate the Administration’s position and cost estimates.  With your permission, we will provide that information in writing for the record.  We also will provide in writing the completed cost estimates for sections 2 and 5 of H.R. 3407, which we are currently completing.

H.R. 3407

H.R. 3407, the “Severely Injured Veterans Benefits Improvement Act of 2009,” includes provisions that would:  (1) increase special monthly compensation rates for severely injured Veterans; (2) provide eligibility for automobiles and adaptive equipment to disabled Veterans and members of the Armed Forces with severe burn injuries; (3) increase nonservice-connected disability pension for certain wartime Veterans; (4) provide eligibility for aid and attendance benefits to Veterans with traumatic brain injuries; (5) authorize the Secretary of Veterans Affairs to increase Medal of Honor Special Pension; and (6) extend current provisions relating to pensions for certain hospitalized Veterans.  The amendments made by this bill would become effective September 30, 2011.

Section 2

Section 2 of the bill would increase the monthly rates of disability compensation specified in 38 U.S.C. § 1114(r)(1) and (r)(2) as payable for aid and attendance, from $1,893 to $2,840, and for higher levels of care, from $2,820 to $4,230. 

VA supports the objective of H.R. 3407, to ensure that severely injured Veterans are provided with the financial means to receive proper care for their service-connected disabilities.  However, we do not support this provision.  VA already has numerous authorities to provide the most severely disabled Veterans with higher levels of care, including the recently passed Caregivers and Veteran Omnibus Health Services Act of 2010.  There is no evidence that the proposed rate is the correct rate.  In addition, Congress would need to identify appropriate cost-saving PAYGO offsets to offset the benefit costs which are estimated to be $30.9 million for the first year, $163.4 million over 5 years, and $351.3 million over 10 years.  VA estimates that there would be no additional administrative costs associated with this provision.

Section 3

Section 3 would expand the category of persons eligible for automobile allowance and adaptive equipment as specified in 38 U.S.C. § 3901(1) to include certain Veterans and members of the Armed Forces serving on active duty who are disabled with a severe burn injury, as determined under regulations prescribed by the Secretary. 
VA recognizes that burn injuries are a likely result of the current conditions of warfare in Iraq and Afghanistan because of the ubiquitous use of improvised explosive devices (IED) by enemy forces.  We also understand the importance of providing Veterans disabled because of severe burn injuries with eligibility for automobiles and adaptive equipment benefits to help better manage their disability.  Therefore, VA does not object to this provision, subject to Congress identifying appropriate cost-saving PAYGO offsets.

We are unable at this time to provide cost estimates associated with enactment of this provision, but will provide that information in writing for the record.

Section 4

Section 4 would increase monthly payments of nonservice-connected disability pension under 38 U.S.C. § 1521(e) to Veterans who, in addition to being permanently and totally disabled, have additional disability rated 60-percent or greater or are permanently housebound.  The rates would increase from $4,340 to $4,774 for unmarried Veterans without dependents and from $5,441 to $5,985 for Veterans with a spouse or dependent.  VA supports the intent of providing for those Veterans who served our country during wartime but who have limited income and are severely disabled or permanently housebound because of nonservice-connected disabilities.  However, VA cannot support this provision without better understanding how the new proposed pension level was developed. 

Under the 2006 precedent of the United States Court of Appeals for Veterans Claims in Hartness v. Nicholson, the increased pension rate under section 1521(e) would also be payable to wartime Veterans who are not totally disabled but who are 65 years of age or older and who are permanently housebound or have a disability rated at least 60-percent disabling.  Because we do not believe Congress intended payment of the heightened pension rate to Veterans who are not totally disabled, Secretary Shinseki on May 26, 2010, submitted to Congress proposed legislation, the Veterans Benefit Programs Improvement Act of 2010, to clarify that the rates payable under section 1521(e) apply only to Veterans who are permanently and totally disabled and are also permanently housebound or have additional disability independently rated at least 60-percent disabling.  That proposal would ensure that the payments to which this legislation pertains are consistently based on the existence of severe disability that includes permanent and total disability.

Benefit costs are estimated to be $14.3 million for the first year, $77.3 million over 5 years, and $160.3 million over 10 years.  VA estimates that there would be no additional administrative costs associated with this provision.

Section 5

Section 5 would amend 38 U.S.C. § 1114(o) to include traumatic brain injury (TBI) among the list of disabilities that qualify for special monthly compensation at the rated specified in section 1114(o).  Under the provision as written, this level of compensation would be payable without regard to the severity of the TBI or the resulting disability.  Further, eligibility for payment under section 1114(o) would also make Veterans with a TBI of any severity who are also in need of aid and attendance eligible for payment of the higher rate payable under 38 U.S.C. § 1114(r) to Veterans in need of aid and attendance.

We support the intent of providing equitable benefits to Veterans suffering from severe traumatic brain injury symptoms.  However, VA cannot support the provision as written.  The proposal would extend eligibility for increased compensation rates currently payable only for severe disabilities to Veterans suffering from any level of severity of TBI disability, including mild TBI characterized by minor symptoms.  The inclusion of all levels of TBI as a basis for the payment rates under section 1114(o) and (r) would be inconsistent with the purpose of those provisions to address the needs of severely disabled Veterans.  VA believes any expansion of eligibility for the rates under section 1114(o) and (r) should be reserved for severe TBI cases with significant physical, cognitive and/or emotional or behavioral impairment.  In addition, VA is implementing several new benefits for Veterans with severe TBI through the recent regulation and legislation, including the Caregivers and Veteran Omnibus Health Services Act of 2010.

We are unable at this time to provide cost estimates associated with enactment of this provision, but will provide that information in writing for the record.

Section 6

Section 6 would authorize the Secretary to increase by no more than $1,000 the monthly rate of Medal of Honor Pension for fiscal years 2012 and 2013.  The proposed increase is subject to the availability of appropriations. 

VA has serious concerns with this provision.  Congress generally prescribes rates of pension, compensation, and related benefits, and it would be appropriate for it to prescribe a specific rate should it choose to effect an increase in rates, dependent upon appropriations.  This proposal does not indicate the purpose of providing only a temporary rate increase and provides no guidelines to determine the extent of the increase.  Further, we have significant concerns with the prospect of using discretionary funds to provide a temporary enhanced benefit on top of an existing mandatory entitlement.  Two equally eligible Veterans could receive different levels of compensation should the discretionary funds appropriated for the purpose be insufficient.  

VA estimates that costs for this provision, if the maximum authorized increase were provided, would be $1.0 million per year and $2.0 million over 2 years.

Section 7

Section 7 would amend 38 U.S.C. § 5503(d)(7) to extend current provisions governing pensions for certain Veterans in Medicaid-approved nursing facilities that will expire on September 30, 2011.  The proposal would extend until September 30, 2021, the provisions in section 5503(d) providing such Veterans a protected pension payment that cannot be used to reduce the amount of Medicaid benefits payable for the Veteran’s care.  VA supports this proposal to extend valuable benefits to deserving wartime Veterans who have limited incomes and require hospitalization for nonservice- connected disabilities.  

VA estimates that enactment of this provision would result in VA cost savings of approximately $560 million during the first year, $2.9 billion for 5 years, and $6.2 billion over 10 years.  There will be Medicaid costs, and VA will provide the net budgetary effect to the Federal Government in writing at a later date.  Also,  States may incur costs as Medicaid will pay a larger share of nursing home care.

H.R. 3787

H.R. 3787 would revise 38 U.S.C. § 106 to deem certain persons (namely, former members of the National Guard or Reserves who are entitled under chapter 1223 of title 10, United States Code, to retired pay for nonregular service or who would be entitled to such retired pay but for their age) who have not otherwise performed “qualifying active duty service” to have been on active duty for purposes of VA benefits. 

Under current law, a National Guard or Reserve member is considered to have served on active duty only if the member was called to active duty under title 10, United States Code, and completed the period of duty for which he or she was called to service.  Eligibility for some VA benefits, such as disability compensation, pension, and dependency and indemnity compensation, requires a period of “active military, naval, or air service,” which may be satisfied by active duty, or by certain periods of active duty for training and inactive duty training during which the servicemember becomes disabled or dies.  Generally, those periods are:  (1) active duty for training during which the member was disabled or died from disease or injury incurred or aggravated in line of duty; and (2) inactive duty training during which the member was disabled or died from an injury incurred or aggravated in line of duty.

H.R. 3787 would eliminate these service requirements for National Guard or Reserve members who served in such a capacity for at least 20 years.  Retirement status alone would make them eligible for all VA benefits, despite not having served on active duty or in active service or, if called to active duty, not having served the minimum active-duty period required for eligibility.

VA does not support this bill.  Current benefits eligibility is based either on active duty or a qualifying period of active service during which a member was physically engaged in serving the Nation in an active military role.  Active service is the foundation for providing VA benefits.  In recent years, the National Guard and Reserves have played an important role in our Nation’s overseas conflicts.  Virtually all those who served in recent conflicts were called to active duty, which qualifies them as Veterans and provides potential eligibility for VA benefits.  This bill, however, would extend the same status to those who were never called to active duty and did not suffer disability or death due to active duty for training or inactive duty training, and hence do not have active service.  VA would be obligated to provide compensation and health-care for disabilities resulting from injuries incurred in civilian activities, as well as from diseases that develop, during the 20 years that count toward retirement, regardless of any relationship to actual active duty or training drills.  Providing compensation and other VA benefits based solely on retirement status would be inconsistent with VA’s mission of providing benefits to Veterans who earned them as a result of active service.

Statutes already authorize memorial benefits (burial in national cemeteries, burial flags, and grave markers) to this group of individuals.  Therefore, H.R. 3787 would not provide any additional benefit related to the National Cemetery Administration (NCA), nor would it present any additional budget concerns related to the benefits NCA provides.

If H.R. 3787 as currently drafted were enacted, VA would incur estimated benefit costs of $957.5 million during the first year, $6.0 billion over 5 years and $15.5 billion over 10 years.  Veterans Benefits Administration administrative costs are estimated to be $50.0 million the first year, $73.2 million over 5 years, and $110.9 million over 10 years.

An alternate version of H.R. 3787 introduced as an amendment would revise the definition of the term “veteran” in 38 U.S.C. § 101(2) to include these individuals.  This broader definition of the term Veteran would not be applicable for purposes of compensation under chapter 11 of title 38, dependency and indemnity compensation under chapter 13 of title 38, and hospital, nursing home, domiciliary and medical care under chapter 17 of title 38.  VA does not support this alternative version of H.R. 3787 because it represents a departure from active service as the foundation for Veteran status.  VA estimates that there would be no additional benefit or administrative costs associated with this alternate version of H.R. 3787.

H.R. 4541

H.R. 4541, the “Veterans Pensions Protection Act of 2010,” would liberalize the existing exemption in section 1503(a)(5) of title 38, United States Code, by excluding from income, for purposes of determining eligibility for improved pension, payments regarding reimbursement for expenses related to:  accident, theft, loss, or casualty loss; medical expenses resulting from such causes; and pain and suffering related to such causes.

The exemption for payments received to reimburse Veterans for medical costs and pain and suffering is an expansion of the current exclusions.  We oppose excluding from countable income payments received for pain and suffering because such payments do not represent a reimbursement for expenses related to daily living.  The proposed treatment of such payments would be inconsistent with a needs-based program.  We believe that payments for pain and suffering are properly considered as available income for purposes of the financial needs test for entitlement under section 1503.

VA does not oppose the remaining provisions of this section exempting reimbursement for accident, theft, loss, casualty loss, and resulting medical expenses, subject to Congress identifying offsets for any additional costs.

Because the current law excludes from pension income calculations reimbursements from any casualty loss, there would be no benefit costs associated with the provisions relating to accident, theft, loss, or casualty loss.  VA estimates there would be no additional administrative or full-time employee costs associated with this bill.

H.R. 5064

H.R. 5064, the “Fair Access to Veterans Benefits Act of 2010,” would require the Court of Appeals for Veterans Claims (Veterans Court) to extend “for such time as justice may require” the 120-day period for appealing a Board of Veterans’ Appeals (Board) decision to the Veterans Court upon a showing of good cause.   It would apply to a notice of appeal filed with respect to a Board decision issued on or after July 24, 2008.  It would require the reinstatement of any “petition for review” that the Veterans Court dismissed as untimely on or after that date if, within 6 months of enactment, an adversely affected person files another petition and shows good cause for filing the first petition on the date it was filed.

Although VA supports the extension of the 120-day appeal period under certain circumstances, VA has several concerns with this bill.  Because the bill would not limit the length of time the appeal period could be extended, appellants would potentially be able to appeal a Board decision at any time after it was issued—even decades later—as long as good cause is shown.  This would create great uncertainty as to the finality of Board decisions, which could burden an already overburdened claim-adjudication system and create confusion as to whether a VA regional office, the Board, or the Veterans Court has jurisdiction over a claim.

Petitions for relief under the “good cause” provision could potentially add hundreds of cases to the Veterans Court’s docket, which could increase the processing time for all cases in the court’s inventory.  The reinstatement of already dismissed untimely appeals could add even more cases.  In view of the open-ended and retroactive nature of the provision, the potential number of new appeals is impossible to quantify, but it might be enormous.

To avoid these and other potential problems resulting from an unlimited appeal period and retroactive application, Secretary Shinseki submitted to Congress the Veterans Benefit Programs Improvement Act of 2010, mentioned earlier in this testimony, which would take a more focused approach.  It would permit the Veterans Court to extend the appeal period for up to an additional 120 days from the expiration of the original 120-day appeal period upon a showing of good cause, provided the appellant files with the Veterans Court, within 120 days of expiration of the original 120-day period, a motion requesting extension.  The proposal would ameliorate harsh results in extreme circumstances, e.g., if a claimant were mentally incapacitated during the entire 120-day appeal period, but by limiting how late an appellant could request extension and how long the period could be extended, would not unduly undermine the finality of Board decisions, which is necessary for efficient administrative functioning.  Placing an outer limit on the appeal period would maintain the purpose of the rule of finality, which is to preclude repetitive and belated adjudication of Veterans’ benefits claims.

In addition, the proposal would be applicable to Board decisions issued on or after the date of enactment and to Board decisions for which the 120-day period following the 120-day appeal period has not expired as of the date of enactment.  It would provide a generous approach but one that is carefully crafted so as not to unduly increase the court’s caseload and delay Veterans’ receipt of timely final decisions on their appeals.

We estimate that enactment of VA’s legislative proposal as contemplated would result in no significant costs or savings.

This concludes my statement, Mr. Chairman.  I would be happy to entertain any questions you or the other members of the Subcommittee may have.