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Hon. Bill Johnson, Chairman, Subcommittee on Oversight and Investigations

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 hearing on the VA’s Fiduciary Program.

I would like to ask unanimous consent of the Subcommittee that Chairman Runyan of the Disability Assistance and Memorial Affairs Subcommittee be allowed to join us today in our meeting.  

Hearing no objection, so ordered.  

His Subcommittee’s Ranking Member, Congressman McNerney, is also a member of this Subcommittee, and we welcome him in both capacities today.

We are here today to have a frank and honest discussion about the problems festering in the VA’s Fiduciary Program.  The VA’s approximately 95,000 appointed fiduciaries manage over three billion dollars in payments made to more than 100,000 of our nation’s veterans and their dependents.  

In the last several years, the VA has created and implemented its fiduciary hub program.  This program aims to streamline the system and improve processing in fiduciary accountings, but I fear that these recent changes have only addressed a fraction of the problem.

This subcommittee’s investigation into the VA’s Fiduciary Program revealed that fiduciaries who are doing the right thing are all too often finding it difficult to navigate the maze that makes up the Fiduciary Program. While numerous honorable fiduciaries serve our veterans, many bad actors exist in the system.    

We found an instance where the VA arbitrarily removed a veteran’s wife from her duties as his fiduciary after what the VA characterized as ten years of excellent service.  She was replaced by a paid fiduciary.  VA policy is that they prefer family members and friends to serve as fiduciaries.  It is obvious to me that this policy is just lip service and that needs to change.  

Our investigation also uncovered that the Fiduciary Program has been plagued by failures in oversight and unwillingness to listen to the veteran.    

Last week, in a hearing before the Full Committee, VA Deputy Secretary Scott Gould stated that “the wrong way became the way we’ve always done it.”  This mindset seems to have permeated the VA’s Fiduciary Program.

This past December, a VA fiduciary and a VA Field Examiner were convicted in Tennessee for embezzling almost $900,000 from ten veterans’ accounts which they oversaw.  These felons used some of the stolen funds to pay their own cable and utility bills.  Holding its fiduciaries accountable through proper oversight is just one way the VA can take modest steps to improve the system.   

One of the VA’s core values is responsible stewardship of the human and financial resources entrusted to it.  The VA needs to work more efficiently and effectively to properly serve those veterans who have fiduciaries.

I have seen evidence of veterans, their friends and family repeatedly notifying the VA of fiduciary misfeasance.  And time after time, their appeals have been ignored.  This needs to stop.  Identifying and correcting situations like these is certainly not rocket science.

The VA has testified in the past that they are working through the backlog of fiduciary claims.  To successfully manage the Fiduciary Program, the VA must focus not only on those waiting to be assigned a fiduciary, but also on those veterans in the program already.  

In our first panel, Mr. Dave McLenachen, Director of the VA’s Pension and Fiduciary Service, and Miss (or Ms. If unsure) Diana Rubens, Associate Deputy Undersecretary for Field Operations at the VA will share their thoughts on the state of the Fiduciary Program.

As we will hear from our second panel, the VA is aware of the problems facing those in the fiduciary system. As much as the VA focuses on the positive steps they are taking in the Fiduciary Program, we are all aware of the other problems they refuse to address. This hearing provides a positive step forward in addressing and resolving these issues.  

I appreciate everyone’s attendance at this hearing, and I now yield to Ranking Member Donnelly for an opening statement.