Mr. Chairman and Members of the Subcommittee, thank you for the opportunity to review the Department of Veterans Affairs (VA) fiduciary program. I am accompanied by Ms. Diana Rubens, Deputy Under Secretary for Field Operations.
The fiduciary program appoints and oversees fiduciaries for Veterans and other beneficiaries who, because of injury, disease, or the infirmities of age, are unable to manage their financial affairs. VA currently oversees approximately 95,000 fiduciaries who provide services to more than 121,000 beneficiaries with cumulative VA estates exceeding $3.3 billion.
Secretary Shinseki has consistently noted the need for heightened awareness with regard to many of the Department’s most vulnerable beneficiaries, who rely on the services of VA-appointed fiduciaries to properly manage their VA benefits. Last year, he authorized a reorganization within the Veterans Benefits Administration (VBA) to establish a new office to more directly control and implement the Department’s fiduciary program. In April 2011, VBA established the Pension and Fiduciary Service, led by a VA Senior Executive, to focus on the unique needs of these beneficiaries, more than 50 percent of whom are in VA’s needs-based pension program, and to strengthen oversight of VA-appointed fiduciaries. This reorganization has allowed VBA to increase the staff responsible for fiduciary policy and procedures, and to establish a separate staff responsible for all aspects of fiduciary quality, training, and site visits.
Oversight and Audits
Even prior to the establishment of the Pension and Fiduciary Service, VA was working hard to implement fiduciary program improvements, and continues to do so. These efforts included revising the site survey protocol to ensure proper oversight of field fiduciary activities, providing on-site training to fiduciary activities, deploying special assistance teams to fiduciary activities, and clarifying and strengthening policies and procedures to enhance service delivery and protection of beneficiaries.
In addition to these internal initiatives, VA has recently had the opportunity to participate in several audits of the fiduciary program conducted by the Government Accountability Office (GAO) and the VA Office of Inspector General (OIG). The findings from these audits confirmed that VA is making improvements in its fiduciary program. GAO recommended that VA conduct additional periodic reviews of fiduciaries; and analyze the results of its fiduciary hub pilot project. OIG recommended that VA: require fiduciaries to report additional information regarding their expenditures; include fiduciary information in VBA’s Annual Benefits Report; develop a staffing model for its fiduciary personnel; develop an internet site for fiduciaries, take measures to better protect retroactive benefits paid and enhance its procedures for providing oversight of fiduciaries to prevent the misuse of benefits. Both organizations recommended that VA conduct an operational analysis of its electronic data management system for the fiduciary program and develop standardized training for its fiduciary personnel. VA took these recommendations very seriously and worked hard to fully address each of the recommendations with detailed action plans. Every recommendation made was acted upon and all have been closed.
Fiduciary Hub Consolidation
To improve operational efficiencies, VA consolidated the management of fiduciary activities at 14 of its regional offices into a paperless processing environment at the Western Area Fiduciary Hub in Salt Lake City, Utah. Under this hub concept, fiduciary managers deploy their field examination resources according to the location of beneficiaries within the hub and without regard to state borders or VA regional office jurisdiction, while centralizing all other fiduciary functions at the hub site. An analysis of the pilot’s strengths, weaknesses, and lessons learned found that the reorganization improved the timeliness of initial fiduciary appointments by 36 percent and quality by 13 percent. It also found that field examiners traveled fewer miles per field examination, a 6 percent improvement, and reduced the average days to complete an initial appointment by 26 days. Based upon these significant improvements, VA is planning the deployment of the fiduciary hub concept nationwide at five additional sites.
In connection with the consolidation, VA conducted an in-depth staffing analysis of its fiduciary activities. This analysis examined the location of our beneficiaries and field examiners to develop a staffing model for full hub consolidation. Under the resulting model, VA will hire 58 additional field examiners nationwide and deploy them based upon the needs of the current beneficiary population to further improve efficiency and client services.
In 2011, VA further improved its internal training programs and delivery of fiduciary-related information to external stakeholders. First, VA developed and piloted centralized training for the program’s Legal Instrument Examiners (LIEs), who review fiduciary accountings, investigate misuse of benefits, and maintain follow-up communications with beneficiaries. Under the pilot, VA trained more than 100 new LIEs to full production standards, following which they were deployed to their assigned fiduciary activities in the field. VA plans to expand the delivery of mandatory, centralized training for its fiduciary personnel as part of its continuing efforts to improve client services. Second, VA implemented a training program consisting of monthly telephone calls with key fiduciary personnel to ensure consistent, nationwide dissemination of information regarding policies, procedures, and best practices. Third, VA deployed its first-ever internet site specifically for fiduciaries and beneficiaries in the fiduciary program. This innovative internet site provides valuable information regarding fiduciary duties and responsibilities, and other useful tools such as references and related links.
Prevention of Misuse of Funds
VA has implemented procedures to enhance its prevention and identification of misuse of beneficiary funds. Effective September 1, 2009, fiduciaries must submit more specific financial documents, including bank records, with their annual accountings. Collection of this additional information during the accounting process allows VA to verify reported expenditures and identify potential misuse of funds for further investigation. This requirement also serves as a fraud deterrent for fiduciaries. Additionally, under procedures implemented in April 2010, VA Central Office Fiduciary Staff personnel review the records regarding every misuse determination to ensure that VA has identified and properly responded to potential misuse of benefits by fiduciaries. VA’s efforts to prevent fiduciary misuse of beneficiary funds have been successful. These efforts resulted in a misuse rate of less than one-tenth of one-percent in fiscal year 2011.
Fiduciary Program Outreach
VA continues to conduct extensive outreach regarding its fiduciary program. Over the past three years, VA has participated in meetings hosted by the National Guardianship Association, the National Association of Elder Law Attorneys, the National College of Probate Judges, and the American Association of Retired Persons. These outreach efforts include educational presentations on VA’s program, participating in conference discussions, and recruitment of qualified fiduciaries for VA beneficiaries at industry practice group meetings. In January 2011, VA organized and led a multi-agency roundtable that included representatives from VA, the Social Security Administration, the Office of Personnel Management, and the Defense Finance and Accounting Service. The purpose of these roundtable discussions was to identify Government-wide best practices, establish collaborative relationships, and develop methods to better serve beneficiaries.
Despite VA’s successful implementation of these improvements, challenges remain. VA is working to improve its electronic case management system, the Fiduciary Beneficiary System, as it poses significant limitations. VA created a comprehensive business requirements document and has a workgroup tasked to design and deploy a new case management system that will improve efficiency and fiduciary oversight capabilities.
In April 2011, the U.S. Court of Appeals for Veterans Claims issued an opinion in Freeman v. Shinseki, in which it concluded that a beneficiary may appeal VA’s appointment of a fiduciary to the Board of Veterans’ Appeals and the court under current law. This decision may significantly impact VA’s fiduciary program workload, which conducts more than 30,000 initial fiduciary appointments annually.
VA has initiated a complete review and revision of all regulations and procedure manuals pertaining to fiduciary matters. Among other things, the revised regulations will address appointment procedures and appeals, beneficiary rights, fiduciary qualifications, and fiduciary responsibilities. Upon completion of the regulation rewrite, VA will revise its manual guidance consistent with the new regulations.
Another challenge is the increasing backlog of initial appointment and follow-up visit field examinations. In part, this backlog is attributable to the almost 10 percent increase in VA’s fiduciary program population from 2010 to 2011. VA hopes to implement the efficiencies employed by the Western Area Fiduciary Hub nationwide to continue the successes shown in timeliness and quality.
Consistency is key to improved client service. In addition to the training provided to new legal instruments examiners in 2011, all fiduciary personnel should be trained in a centralized environment using a standardized curriculum. VA is designing a curriculum for the fiduciary program and needs to explore methods for efficient delivery to its field personnel.
In conclusion, I want to affirm VA’s commitment to serve and protect our most vulnerable population of Veterans and other beneficiaries. VA has significantly improved the fiduciary program to ensure that America’s Veterans and their survivors receive the benefits and services they have earned. The interest in our program expressed by GAO, OIG, and this committee reflects the importance of this effort. VA is committed to taking all steps necessary to ensure we fulfill our obligation to protect the beneficiaries in this program.
Mr. Chairman, this concludes my prepared remarks. I would be happy to address any questions or comments regarding my testimony here today.