The Honorable Bill Johnson
Chairman Runyan, Ranking Member Titus and Members of the Subcommittee:
I appreciate the opportunity to testify before you on H.R. 894, important legislation I introduced to reform the Department of Veterans’ Affairs (VA) Fiduciary Program.
As most of you know, last Congress, I served as the Oversight and Investigations Subcommittee Chairman on the House Veterans’ Affairs Committee. An investigation into the VA’s Fiduciary Program by my subcommittee revealed shocking behavior on the part of the VA’s hired fiduciaries, and gross misfeasance on the part of the VA. Some fiduciaries – entrusted to manage the finances of our nation’s heroes who are unable to do so themselves – were caught abusing the system by withholding funds, embezzling veterans’ money and other egregious actions.
Furthermore, an Oversight and Investigations Subcommittee hearing held on February 9 of last year uncovered the fact that many of the VA’s Fiduciary Program policies do not correspond with actual practices. For instance, the VA claims to have a policy stating preference for family members and friends to serve as a veteran’s fiduciary. However, the investigation into the Fiduciary Program revealed instances where this is not the case. In one instance, the VA arbitrarily removed a veteran’s wife, who served as her husband’s fiduciary for ten years, and replaced her with a paid fiduciary. There are also many honest and hardworking fiduciaries that experience difficulty performing their duties due to the bureaucratic nature of the VA’s fiduciary program. We owe it to America’s heroes to provide them with a fiduciary program that is more responsive to the needs of the veterans it is supposed to serve.
For these reasons, I am proud to sponsor H.R. 894, the “Veteran’s Fiduciary Reform Act.” This important legislation, initially introduced last Congress, is based on problems uncovered before, during, and after the hearing, as well as valuable input from veterans’ service organizations and individuals who have experienced difficulties with the program firsthand. It is designed to transform the VA’s Fiduciary Program to better serve the needs of our most vulnerable veterans and their hardworking fiduciaries. And, most importantly, it will protect veterans in the program from falling victim to deceitful and criminal fiduciaries.
Specifically, the Veterans Fiduciary Reform Act would require a credit and criminal background check each time a fiduciary is appointed, and allow veterans to petition to have their fiduciary removed if problems arise. It would also decrease the potential maximum fee a fiduciary can receive to the lesser of 3 percent or $35 per month, similar to Social Security’s fiduciary program. This will help discourage those who enroll as VA fiduciaries with only a profit motive in mind.
Importantly, H.R. 894 would enable veterans to appeal their incompetent status at any time, a right not currently granted to veterans. Additionally, it would allow veterans to name a preferred fiduciary, such as a family member.
Last year, my subcommittee heard numerous complaints about the requirement for fiduciaries to obtain a bond. While proper in some settings, it is inappropriate when it causes unnecessary hardship, such as a mother caring for her veteran son. This legislation would require the VA to consider whether a bond is necessary, and if it will adversely affect the fiduciary and the veterans he or she serves. H.R. 894 would also direct the VA’s Under Secretaries for Health and Benefits to coordinate their efforts to ensure that fiduciaries caring for their loved ones are not overly burdened by redundant requirements.
Lastly, this bill aims to simplify annual reporting requirements. Currently, the VA does not have to review a fiduciary’s annual accounting, and when it does, it places an onerous burden on those fiduciaries who are serving out of love, not for monetary gain. This bill will implement a straight forward annual accounting requirement, and gives VA the opportunity to audit fiduciary’s whose accounting is suspect.
These significant changes would strengthen the VA’s standards for administering the Fiduciary Program, and increase protection for vulnerable veterans. Requiring background checks and lowering the fee a fiduciary can charge would also increase scrutiny of potential fiduciaries, and help root out potential predators. This legislation also adds a layer of protection for veterans with fiduciaries by incorporating the ability for veterans to petition to have their fiduciary removed and replaced.
I am proud that last Congress, the Veterans Fiduciary Act of 2012 passed the House Veterans’ Affairs Committee unopposed, and passed the full House by voice vote on September 19, 2012. Unfortunately, this important legislation was not considered by the Senate, and therefore, the VA’s Fiduciary Program is still in urgent need of reform.
Chairman Ruynan, Ranking Member Titus, thank you again for the opportunity to speak on this important legislation, H.R. 894. I am hopeful that this legislation will again be favorably considered by the Veterans’ Affairs Committee, and this time become law. Our veterans were willing to sacrifice everything to serve our nation, and they deserve to receive the care, benefits, and respect that they have earned.