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Hon. John J. Hall, Chairman, Subcommittee on Disability Assistance and Memorial Affairs

Good Afternoon.

Would everyone please rise for the Pledge of Allegiance?

Flags are located at the front and back of the room.

I welcome you all here today, just a day after we passed another comprehensive veterans’ health bill aimed at supporting veterans’ caregivers as well as enhancing veterans’ physical and mental wellbeing.  I was honored to support this bill, S. 1963, The Caregivers and Veterans Omnibus Health Services Act of 2009.  This legislation combines the recommendations of nearly 20 Members of Congress---Democrats and Republicans alike.  Provisions in S. 1963 will provide training, education, and counseling for caregivers of veterans of any era.  In addition, the bill allows VA to recruit and retain nurses, home health aides, and specialty care providers.  Finally, this measure will help VA better diagnose and treat those who suffer from the invisible wounds of war, the stigma associated with them, and many other factors that make effective treatment difficult. Specifically, S. 1963 expands authority to fund services to treat wounded warriors suffering from post-traumatic stress disorder (PTSD), traumatic brain injury (TBI), and other combat-related disorders, which lead to homelessness and, in some cases, suicides and criminal acts by veterans.

Our hearing today is entitled “Examining the VA Fiduciary Program: How Can VA Better Protect Vulnerable Veterans and their Families?”  This hearing is intended to examine VA’s fiduciary program and assess how Congress and VA can work together to better protect veterans and dependents that are in need of fiduciary services. 

Since 1926 when Congress passed the World War Veterans Act, VA has been providing oversight of its benefits paid to those beneficiaries who were incapable of handling their own affairs due to injury, disease, or infirmities of age. Today, the VA Fiduciary Program operates under authority contained in 38 U.S.C. § 5502(a)(1).  The program is administered by VA Regional Offices and their respective Offices of Regional Counsel, which interface directly with VA beneficiaries and State courts in guardianship and commitment matters.

On average, impaired beneficiaries received approximately $14,400 in fiscal year 2008, about $4,200 more per year than the average for all VA compensation and pension beneficiaries.  In fiscal year 2008, fiduciaries managed approximately $1.5 billion in VA benefits for more than 103,000 beneficiaries.  Thus far, for FY 2010, VA reports $696 million in benefits have been paid to more than 102,000 beneficiaries with a cumulative estate value of $3.1 billion.

Recently, both VA’s Office of Inspector General (OIG) and the GAO issued reports on VA’s fiduciary program.  These reports underscored the benefits of this program, but pointed to insufficient staffing, training, and other resources that hamper the effective oversight of the fiduciary program.  In the absence of adequate oversight and accountability, some fiduciaries have misused millions of dollars belonging to our veterans and their dependents. 

Let me take a moment to highlight some of the concerns about the Fiduciary Program raised by the VA OIG and GAO reports.  From October 1998 to March 2010, the VA OIG’s Office of Investigations reports that it conducted 315 fiduciary fraud investigations, resulting in 132 arrests and monetary recoveries of $7.4 million in restitution, fines, penalties, and administrative judgments.  One of these cases involved the submission of false financial reports by a fiduciary who attempted to conceal her embezzlement of nearly $1 million from 33 disabled veterans whose accounts she managed.  The funds embezzled by the fiduciary were reportedly used to support her gambling habit.

It should be noted that these problems are not representative of all fiduciaries.  However, the fiduciary program is susceptible to abuse as a result of deficiencies noted by both the VA OIG and GAO reports.  Specifically, both the VA OIG and GAO found: (1) VBA was not taking effective action to obtain seriously delinquent accountings; (2) VBA was not consistently verifying questionable expenses reported by fiduciaries; and (3) VBA was not adequately following up and reporting on allegations of misuse of beneficiary funds and estates.  The VA OIG pointed out that VBA has also not been diligent in replacing problematic fiduciaries.  In one case, a fiduciary was seriously delinquent in submitting multiple reports, ranging from 134 to 215 days late.  In addition, during that period, VBA had received numerous complaints concerning that fiduciary’s performance.  However, the VBA took no action to replace this fiduciary.

On the other end of the spectrum, we will hear from VSOs who complain that family-members who serve as fiduciaries are neither supported financially nor through training by VBA to discharge their duties.  Moreover, the VSOs suggest that while it appears that some professional fiduciaries are not subjected to as much VBA oversight, family-member fiduciaries are viewed with suspicion and mistrust by VBA, despite the sacrifices that they make to care for incapacitated veterans and/or beneficiaries.  For example, the Wounded Warrior Project reports that VBA required a mother who served as a fiduciary for her mentally disabled veteran son to reimburse funds spent on toilet paper for the home.   

This hearing provides a forum to explore these concerns with the VA Fiduciary Program.  With that, I look forward to the testimony of our witnesses and insightful comments and questions from my colleagues on the Subcommittee.