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Thomas Murphy, Director, Compensation Service, Veterans Benefits Administration, VA

Thomas J. Pamperin, Deputy Under Secretary for Disability Assistance, Veterans Benefits Administration, U.S. Department of Veterans Affairs

Mr. Chairman and Members of the Subcommittee, thank you for the opportunity to testify and present the views of the Department of Veterans Affairs (VA) on several legislative items of great interest to Veterans.  Joining me today is Richard Hipolit, Assistant General Counsel.

H.R. 923

H.R. 923, the “Veterans Pensions Protection Act of 2011,” would expand the existing exemption in 38 U.S.C. § 1503(a)(5) by excluding from determinations of annual income, for purposes of determining eligibility for improved pension, two types of payments:  (1) payments regarding reimbursements for expenses related to accident, theft, loss, or casualty loss and reimbursements for medical expenses resulting from such causes; and (2) payments regarding pain and suffering related to such causes.  This bill is identical to S. 780, on which we provided testimony before the Senate Committee on Veterans’ Affairs on June 8, 2011.

The exemption for payments received to reimburse Veterans for medical costs and payments regarding pain and suffering is an expansion of the current exclusions.  VA opposes excluding from countable income payments received for pain and suffering because such payments do not constitute a reimbursement for expenses related to daily living.  This provision of the bill would be inconsistent with a needs-based program.  Payments for pain and suffering are properly considered as available income for purposes of the financial needs test for entitlement to improved pension.

VA does not oppose the remaining provisions of this bill, which would exempt payments for reimbursement for accident, theft, loss, casualty loss, and resulting medical expenses, subject to Congress identifying offsets for any additional costs.  Current law exempts from income determinations reimbursements for any kind of “casualty loss,” which is defined in VA regulation as “the complete or partial destruction of property resulting from an identifiable event of a sudden, unexpected or unusual nature.”  H.R. 923 would broaden the scope of this exemption by including reimbursements for expenses resulting from accident, theft, and ordinary loss.

VA cannot determine the potential benefit costs related to the exemption for payments for pain and suffering related to accident, theft, loss, or casualty loss because insufficient data are available regarding the frequency or amounts of such payments to the population of pension beneficiaries.

H.R. 1025

H.R. 1025 would add to chapter 1, title 38, United States Code, a provision to honor as Veterans, based on retirement status, certain persons who performed service in reserve components of the Armed Forces but who do not have qualifying service for Veteran status under 38 U.S.C. § 101(2).  The bill provides that such persons would be “honored” as Veterans, but would not be entitled to any benefit by reason of the amendment. 

Under 38 U.S.C. § 101(2), Veteran status is conditioned on the performance of “active military, naval, or air service.”  Under current law, a National Guard or Reserve member is considered to have had such service only if he or she served on active duty, was disabled or died from a disease or injury incurred or aggravated in line of duty during active duty for training, or was disabled or died from an injury incurred or aggravated in line of duty or from an acute myocardial infarction, a cardiac arrest, or a cerebrovascular accident during inactive duty training.  H.R. 1025 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 Veteran status.

VA recognizes that the National Guard and Reserves have admirably served this country and in recent years have played an important role in our Nation’s overseas conflicts.  Nevertheless, VA does not support this bill because it represents a departure from active service as the foundation for Veteran status.  This bill would extend Veteran status to those who never performed active military, naval, or air service, the very circumstance which qualifies an individual as a Veteran.  Thus, this bill would equate longevity of reserve service with the active service long ago established as the hallmark for Veteran status.

VA estimates that there would be no additional benefit or administrative costs associated with this bill if enacted.

H.R. 1826

H.R. 1826 would amend 38 U.S.C. § 5905 to reinstate in modified form an earlier provision that had provided criminal penalties for charging improper fees in connection with representation in a claim for benefits before VA.  In particular, it would impose such penalties for anyone who, in connection with a proceeding before VA, solicits, contracts for, charges, or receives, or attempts to solicit, contract for, charge, or receive, any fee or compensation in connection with either the provision of advice on how to file a claim for VA benefits or the preparation, presentation, or prosecution of such a claim before the date on which a notice of disagreement is filed.

In 2006, Congress enacted Public Law 109-461, which amended VA’s statutory scheme relating to attorney or agent representation in Veterans benefit cases before VA.  Among other things, Public Law 109-461 authorized attorneys and agents to charge fees for services provided to claimants after the filing of a notice of disagreement with respect to a case.  The law also amended 38 U.S.C. § 5905 by deleting a provision imposing criminal penalties for soliciting, contracting for, charging, or receiving improper fees for representation in a benefit claim.

In the past few years, VA has received complaints from various sources about individuals and companies charging, or attempting to charge, fees for providing advice or assistance concerning the VA claims process before the filing of a notice of disagreement.  VA is also aware that certain individuals or firms may have charged Veterans for financial services, which later proved to be ineffective, designed to assist them in qualifying for VA benefits by transferring or shielding assets that would otherwise disqualify them.

The bill would subject to criminal penalty the solicitation or receipt of any fee or compensation for providing “advice on how to file a claim for benefits.”  Because this bill involves criminal penalties, courts are likely to interpret the phrase “advice on how to file a claim for benefits” narrowly as referring to advice on how to complete an application for VA benefits or where to submit such an application.  Consequently, the bill would be unlikely to deter the solicitation or receipt of any fee or compensation for the provision of advice on how to transfer or shield financial assets in order to become eligible for certain VA benefits.  Further, the proposed penalty provision could seemingly be easily circumvented by charging for services other than those specified in the bill, while also providing services that the bill is intended to cover.  The criminal penalties contemplated by H.R. 1826 may provide some deterrent to persons who would take advantage of claimants for VA benefits, and VA supports in principle the protection of claimants from unscrupulous fee practices, but we doubt that this bill would effectively address the entire scope of the problem.  In addition, we defer to the Department of Justice (DoJ) on whether the new provision imposing criminal penalties would be enforceable as a practical matter, and whether DoJ would devote scarce resources to its enforcement.

H.R. 1898

H.R. 1898, the “Veterans 2nd Amendment Protection Act,” would provide that a person who is mentally incapacitated, deemed mentally incompetent, or unconscious for an extended period will not be considered adjudicated as a “mental defective” for purposes of the Brady Handgun Violence Prevention Act in the absence of an order or finding by a judge, magistrate, or other judicial authority that such person is a danger to himself, herself, or others. The bill would have the effect of excluding VA determinations of incompetency from the coverage of the Brady Handgun Violence Prevention Act.

We understand and appreciate the objective of this legislation to protect the firearms rights of veterans determined by VA to be unable manage their own financial affairs.  VA determinations of mental incompetency are based generally on whether a person because of injury or disease lacks the mental capacity to manage his or her own financial affairs. We believe adequate protections can be provided to these veterans under current statutory authority.  Under the NICS Improvement Amendments Act of 2007 (NIAA), there are two ways that individuals subject to an incompetency determination by VA can have their firearms rights restored:  First, a person who has been adjudicated by VA as unable to manage his or her own affairs can reopen the issue based on new evidence and have the determination reversed.  When this occurs, VA is obligated to notify the Department of Justice to remove the individual's name from the roster of those barred from possessing and purchasing firearms.  Second, even if a person remains adjudicated incompetent by VA for purposes of handling his or her own finances, he or she is entitled to petition VA to have firearms rights restored on the basis that the individual poses no threat to public safety.  Although VA has admittedly been slow in implementing this relief program, we now have relief procedures in place, and we are fully committed going forward to implement this program in a timely and effective manner in order to fully protect the rights of our beneficiaries.

We also note that the reliance on an administrative incompetency determination as a basis for prohibiting an individual from possessing or obtaining firearms under Federal law is not unique to VA or veterans.  Under the applicable Federal regulations implementing the Brady Handgun Violence Prevention Act, any person determined by a lawful authority to lack the mental capacity to manage his or her own affairs is subject to the same prohibition.  By exempting certain VA mental health determinations that would otherwise prohibit a person from possessing or obtaining firearms under Federal law, the legislation would create a different standard for veterans and their survivors than that applicable to the rest of the population and could raise public safety issues.

VA estimates that there would be no additional benefit or administrative costs associated with this bill if enacted.

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