[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]


                        VA'S FIDUCIARY PROGRAM:
                        ENSURING VETERANS' BENEFITS.
                          ARE PROPERLY MANAGED

=======================================================================

                                HEARING

                               BEFORE THE

                        SUBCOMMITTEE ON DISABILITY 
                        ASSISTANCE AND MEMORIAL AFFAIRS

                                 OF THE

                     COMMITTEE ON VETERANS' AFFAIRS

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION

                               __________

                      THURSDAY, SEPTEMBER 28, 2023

                               __________

                           Serial No. 118-34

                               __________

       Printed for the use of the Committee on Veterans' Affairs
       
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                    Available via http://govinfo.gov
                    
                               __________

                   U.S. GOVERNMENT PUBLISHING OFFICE                    
54-220                     WASHINGTON : 2024                    
          
-----------------------------------------------------------------------------------                     
                  
                     COMMITTEE ON VETERANS' AFFAIRS

                     MIKE BOST, Illinois, Chairman

AUMUA AMATA COLEMAN RADEWAGEN,       MARK TAKANO, California, Ranking 
    American Samoa, Vice-Chairwoman      Member
JACK BERGMAN, Michigan               JULIA BROWNLEY, California
NANCY MACE, South Carolina           MIKE LEVIN, California
MATTHEW M. ROSENDALE, SR., Montana   CHRIS PAPPAS, New Hampshire
MARIANNETTE MILLER-MEEKS, Iowa       FRANK J. MRVAN, Indiana
GREGORY F. MURPHY, North Carolina    SHEILA CHERFILUS-MCCORMICK, 
C. SCOTT FRANKLIN, Florida               Florida
DERRICK VAN ORDEN, Wisconsin         CHRISTOPHER R. DELUZIO, 
MORGAN LUTTRELL, Texas                   Pennsylvania
JUAN CISCOMANI, Arizona              MORGAN MCGARVEY, Kentucky
ELIJAH CRANE, Arizona                DELIA C. RAMIREZ, Illinois
KEITH SELF, Texas                    GREG LANDSMAN, Ohio
JENNIFER A. KIGGANS, Virginia        NIKKI BUDZINSKI, Illinois

                       Jon Clark, Staff Director
                  Matt Reel, Democratic Staff Director

       SUBCOMMITTEE ON DISABILITY ASSISTANCE AND MEMORIAL AFFAIRS

                    MORGAN LUTTRELL, Texas, Chairman

C. SCOTT FRANKLIN, Florida           CHRIS PAPPAS, New Hampshire, 
JUAN CISCOMANI, Arizona                  Ranking Member
ELIJAH CRANE, Arizona                CHRISTOPHER R. DELUZIO, 
KEITH SELF, Texas                        Pennsylvania
                                     MORGAN MCGARVEY, Kentucky
                                     DELIA C. RAMIREZ, Illinois

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Veterans' Affairs are also 
published in electronic form. The printed hearing record remains the 
official version. Because electronic submissions are used to prepare 
both printed and electronic versions of the hearing record, the process 
of converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.
                         
                         C  O  N  T  E  N  T  S

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                      THURSDAY, SEPTEMBER 28, 2023

                                                                   Page

                           OPENING STATEMENTS

The Honorable Morgan Luttrell, Chairman..........................     1
The Honorable Chris Pappas, Ranking Member.......................     2

                               WITNESSES

Mr. Kevin Friel, Deputy Director, Pension & Fiduciary Service, 
  Veterans Benefits Administration...............................     3

Ms. Lisa Van Haeren, Director, Claims and Fiduciary Division, 
  Office of Audits and Evaluations, Office of Inspector General..     5

                                APPENDIX
                     Prepared Statement Of Witness

Ms. Lisa Van Haeren Prepared Statement...........................    25

                       Statements For The Record

Mr. Kenneth Smith................................................    31
Disabled American Veterans (DAV).................................    36
Paralyzed Veterans of America (PVA)..............................    39

 
                        VA'S FIDUCIARY PROGRAM:
                      ENSURING VETERANS' BENEFITS
                         ARE PROPERLY MANAGED

                              ----------                              


                      THURSDAY, SEPTEMBER 28, 2023

             U.S. House of Representatives,
  Subcommittee on Disability Assistance & Memorial 
                                           Affairs,
                            Committee on Veterans' Affairs,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 10 a.m., in 
room 360, Cannon House Office Building, Hon. Morgan Luttrell 
(chairman of the subcommittee) presiding.
    Present: Representatives Luttrell, Ciscomani, Self, Pappas, 
Deluzio, McGarvey, and Ramirez.

         OPENING STATEMENT OF MORGAN LUTTRELL, CHAIRMAN

    Mr. Luttrell. The subcommittee will come to order. Good 
morning. Welcome back, Mr. Friel. Good to see you again as 
always. Ms. Van Haeren, how are you?
    Ms. Van Haeren. I am doing well.
    Mr. Luttrell. I like to mix things up a little bit.
    Ms. Van Haeren. Great.
    Mr. Luttrell. Today we will be taking a closer look at the 
VA's Fiduciary Program. The Fiduciary Program at VA is 
responsible for appointing and overseeing the men and women who 
assist veterans and other beneficiaries that are unable manage 
their VA benefits on their own. Over 67,000 veterans use 
fiduciaries. The last time the committee looked at the program 
was in 2015. I believe it is time that we take another look at 
this program to ensure it is meeting the needs of today's 
veterans' community.
    In Fiscal Year 2022, the program oversaw $2.6 billion in 
benefits. A program this size requires effective oversight to 
ensure that beneficiaries are being taken care of, especially 
because these beneficiaries are typically our Nation's most 
vulnerable veterans. The subcommittee has also heard directly 
from VA regional offices' employees who are directly 
responsible for the oversight of the fiduciaries and 
beneficiaries about potential instances of fraud and misuse in 
the program.
    A fiduciary should be using a beneficiary's VA funds for 
the beneficiary's care or the care of the dependents. VA should 
be doing a better job of preventing, investigating, and 
remedying these instances of fraud and misuse to protect 
veterans first and foremost. That being said, some of these 
instances are not the result of malicious or on the part of 
fiduciaries, but simply because Veterans Affairs has not 
provided family members acting as fiduciaries proper access to 
support resources they need to properly manage the 
beneficiary's benefits.
    Frankly, the program seems somewhat disorganized and we 
need to hear from the VA about how they are going to fix it. To 
that end, we will be hearing from our Office of Inspector 
General (OIG) on the recommendations on how VA can better 
oversee the Fiduciary Program as well as updates from VA on 
what steps they are taking to do so. Again, I would like to 
thank everyone for being here today. I am looking forward to 
our conversations about what we can do to prevent the misuse of 
veterans' hard-earned benefits, enhance the VA Fiduciary 
Program, and ensure the misused funds are returned to the 
veterans they earned in a timely way. With that, I yield to the 
Ranking Member Pappas for opening statement.

       OPENING STATEMENT OF CHRIS PAPPAS, RANKING MEMBER

    Mr. Pappas. Well, thank you Mr. Chairman, and I appreciate 
you holding this hearing, and thank you to our panelists for 
joining. VA's Fiduciary Program has a long history dating back 
to its establishment in the 1930's. The program provides 
oversight and protection of VA's most vulnerable beneficiaries. 
These are veterans and survivors who are unable to manage their 
VA benefits or their own affairs. The Fiduciary Program is 
incredibly important to our Nation's veterans and their 
families. Fiduciaries are trusted to manage VA benefits in the 
best interests of these beneficiaries. Accordingly, Pension and 
Fiduciary Services' oversight of VA appointed Fiduciaries to 
ensure the beneficiaries' needs are met is absolutely vital.
    However, over the years, the program has faced persistent 
challenges, including instances where fiduciaries entrusted 
with veterans' finances have breached their duty. This has led 
to financial hardship and distress for some beneficiaries, 
highlighting the need for robust oversight and accountability 
within the program. As ranking member of the subcommittee, it 
is my job to ensure that the Fiduciary Program is taking every 
measure and has the support necessary to fully safeguard 
beneficiaries' assets.
    At today's hearing, we will seek to assess whether further 
congressional action is needed to ensure that our most 
vulnerable veterans are afforded the highest level of 
protection possible. Recently, OIG has issued several reports 
on the Fiduciary Program. These underscore the benefits of the 
program, but they also point out deficiencies, wait times and 
misuse of benefits that have hampered effective oversight of 
the program.
    For example, an OIG report published in 2021 brings to 
light issues of timeliness in Veterans Benefits Administrations 
(VBA's) Fiduciary Program operations. Delays in determinations 
and reimbursements of misused funds pose a significant 
challenge. To address this, the OIG recommends that VA 
implements streamlined procedures, enhanced training, and 
advanced tracking mechanisms. These measures are essential for 
bolstering the program efficacy and safeguarding the financial 
interests of veterans.
    A second report published in 2023 highlights a critical 
concern within the program, the timely return of funds 
belonging to deceased beneficiaries. The issue at hand 
underscores the necessity for rigorous verification processes 
and suggests that improved protocols and technology integration 
can also enhance the program's oversight, ensuring a more 
efficient and responsible handling of beneficiaries' finances.
    These two reports are concerning to me. I look forward to 
hearing more about VA's progress toward implementing the OIG's 
recommendations. Further, my staff has heard from numerous 
fiduciary hub employees about insufficient authority to ensure 
beneficiaries are receiving their benefits or are properly 
being taken care of. VA employees also have noted that 
guidelines within the program are too broad and are left up to 
interpretation, making it difficult for these employees to do 
their jobs.
    The program is particularly vulnerable to fraud and abuse. 
It is VA's job to prevent that to the extent possible. It 
should be noted that the problems around fraud and misuse are 
not representative of all fiduciaries. The vast majority of 
fiduciaries are doing an honorable and honest job taking care 
of our veterans who cannot handle their affairs, many of whom 
are family members themselves. The need for robust oversight is 
clear and cannot be overstated.
    I am interested in hearing more from our witnesses about 
the present challenges and concerns facing this program, how we 
might work together to address them, especially how to improve 
the reimbursement of beneficiaries when fiduciaries misuse VA 
funds. We must leave here today with a better understanding of 
where VA currently stands in the management of this program for 
our most vulnerable veterans and what further assistance 
Congress can provide in these efforts. To that end, Mr. 
Chairman, I appreciate you holding this hearing, and I yield 
back my time.
    Mr. Luttrell. Thank you, Mr. Pappas. Our witnesses today, 
Mr. Friel from the Veterans Affairs, the Deputy Director of 
Pensions and Fiduciary Services. Also, we have with us today 
Ms. Van Haeren. Did I say that correctly, ma'am?
    Ms. Van Haeren. Yes.
    Mr. Luttrell. Who is the Director of Claims and Fiduciary 
Division for the Office of Audits and Evaluations from the 
Office of Inspector General. Would you both please rise? I ask 
the witnesses on our first panel to stand physically and raise 
your right hand.
    [Witnesses sworn.]
    Mr. Luttrell. You may be seated. Thank you. Let the record 
reflect that the witnesses have answered in the affirmative. 
Thank you all again for being here today. Mr. Friel, you are 
now recognized for 5 minutes to deliver your opening statement.

                    STATEMENT OF KEVIN FRIEL

    Mr. Friel. Chairman Luttrell, Ranking Member Pappas, and 
distinguished members of the subcommittee, thank you for 
inviting me here today to discuss the Department of Veterans 
Affairs Fiduciary Program and the vital role we serve in 
protecting vulnerable beneficiaries. Mr. Smith sends his 
regrets that he is unable to attend today.
    In August 2023, Legal Instrument Examiner Terry Smith of 
the Salt Lake Regional Office received a call from a veteran in 
our Fiduciary Program. Her mother was her appointed fiduciary 
but was in the hospital with a poor prognosis. The veteran 
requested funds to visit her mother before she passed. Mr. 
Smith spoke to Field Examiner Roland Parrish.
    Mr. Luttrell. I am sorry, Mr. Friel, can you move closer to 
the microphone?
    Mr. Friel. Yes, sorry about that, sir.
    Mr. Luttrell. We can barely hear you. Thank you, sorry.
    Mr. Friel. You are welcome, sir. The veteran requested 
funds to visit her mother before she passed. Mr. Smith spoke to 
Field Examiner Roland Parrish, who personally drove to the bank 
with a fiduciary agreement to withdraw funds so that she could 
be with her mother in her final hour. Concurrently, Salt Lake 
City staff began a successor fiduciary appointment process to 
coordinate uninterrupted benefit payments to the veteran 
through her time of need. Mr. Smith and Mr. Parrish 
demonstrated through action the highest values of VA; veterans 
are at the heart of everything we do.
    These employees' commitment and advocacy helped to offer 
the veteran peace and support in time of need and ensure her 
dignity going forward through prompt appointment of a new 
fiduciary. I am proud to represent them and more than 1,200 VBA 
staff who work every day to protect our most vulnerable 
veterans and survivors.
    With values demonstrated by our Salt Lake City fiduciary 
hub in mind, I would like to describe key tenets of the 
Fiduciary Program, whose mission is to protect the over 104,000 
beneficiaries who are unable to manage their VA benefits 
because of injury, disease, infirmities of age, or being under 
the age of majority. The decision to appoint other person to 
manage a beneficiary's funds is never taken lightly. VA always 
presumes competency, unless clear and convincing evidence 
states otherwise.
    A potential fiduciary must be qualified, willing to serve, 
and the appointment must serve the beneficiary's interest. VA 
thoroughly investigates the proposed fiduciary's criminal 
background and credit history to assess suitability. VA will 
also assess the input and needs of the beneficiary and their 
dependents. There are approximately 83,000 fiduciaries who are 
responsible for ensuring that the beneficiary funds are used 
for the sole purpose of meeting the needs, security, and 
comfort of the beneficiary and their dependents.
    Except in certain circumstances, fiduciaries are required 
to submit either an annual accounting or a biannual fund usage 
report. VA investigates any credible allegation or finding of 
misuse of VA funds swiftly to protect all beneficiaries. VA 
will remove a fiduciary from service and appoint a successor if 
the allegation of misuse is substantiated, if the fiduciary 
refuses to respond to VA's auditing requirements, is unwilling 
to serve, or is found unfit through annual criminal background 
investigations.
    In Fiscal Year 2022, VA conducted more than 2,000 misuse 
investigations and removed 817 fiduciaries. VA referred 25 
cases to the Office of Inspector General for investigation, of 
which 15 resulted in conviction, with more than $1.7 million in 
restitution ordered to the beneficiaries.
    Since the establishment of the Independent Pension and 
Fiduciary Service in 2011, VA consolidated all fiduciary 
activities to six regional fiduciary hubs, revised its 
regulations to align VA policy with current law, clarified the 
rights of beneficiaries, and refined the roles that VA and 
fiduciaries play to ensure that VA monetary benefits are 
managed in the best interest of the beneficiaries.
    In Fiscal Year 2021, the Fiduciary Program implemented a 
comprehensive plan to reduce unnecessary intrusiveness in the 
lives of VA beneficiaries and their families, while also 
improving oversight. For example, VA streamlined the interview 
and investigation process to improve VA's fiduciary appointment 
timeliness and access to benefits. As of August 31, 2023, VA 
reduced the average days awaiting an initial appointment field 
exam from 38 days at the end of Fiscal Year 2020 to 26 days as 
of August 31, 2023. VA also migrated from a legacy IT system to 
the Veterans Benefit Management System, allowing for more 
effective delivery of Fiduciary Program services with more 
improvements planned.
    Mr. Chairman, this concludes my statement. Thank you for 
the opportunity to appear before you today to discuss these 
valuable services to veterans and their survivors. I am 
prepared to respond to any questions you or other members of 
the subcommittee may have.

    [The Prepared Statement Of Kevin Friel Appears In The 
Appendix]

    Mr. Luttrell. Thank you, Mr. Friel. The written statement 
of Mr. Friel will be entered into the hearing record. Ms. Van 
Haeren, you are now recognized for 5 minutes to deliver your 
opening statement.

                  STATEMENT OF LISA VAN HAEREN

    Ms. Van Haeren. Thank you. Good morning, Chairman Luttrell, 
Ranking Member Pappas, and members of the subcommittee. Thank 
you for the opportunity to discuss the OIG's oversight of VBA's 
Fiduciary Program.
    Given VA's commitment to serving vulnerable veterans and 
the large amount of money dispersed by the Fiduciary Program, 
the need for effective oversight is vitally important. Our 
recent reviews have found gaps in VBA's program management and 
internal oversight processes. These gaps have contributed to 
delays in determining whether a fiduciary is warranted, 
reimbursing veterans when their benefits have been misused, and 
issuing deceased veterans' VA derived funds to their heirs or 
back to VA. In addition to this oversight work, the OIG's 
Office of Investigations is involved in criminal cases to help 
deter and investigate fiduciary fraud to reduce its impact on 
victims.
    In a report released last month, we substantiated 
allegations that VA derived funds were not always promptly 
dispersed to the deceased beneficiary's heirs or returned to 
VA. We focused on two fiduciaries who had not released the 
funds, with delays in distribution ranging from 19 months to 12 
years. There is not a statute or VA regulation that sets a 
timeliness standard for disbursement. However, as stewards of 
taxpayer dollars, VA should be promptly reclaiming funds when 
there is no valid will or heir to receive them. Heirs also 
should not have to wait excessive periods to receive funds to 
which they are entitled.
    Although not statutorily required, VBA is not prohibited 
from verifying funds are disbursed due to deceased 
beneficiaries' estates. Such verification would not only ensure 
heirs receive funds to which they are entitled, it would also 
help identify funds that must be returned to VA.
    The OIG made three recommendations to VBA to clarify their 
internal procedures, implement stronger electronic controls, 
and better track workload. These recommendations are not yet 
implemented, and we will monitor VBA's progress through the 
follow-up process. We also recommended VBA consider 
reimplementing the procedure to verify that funds are dispersed 
to veterans' heirs. VBA responded that they did consider the 
recommendation, but do not intend to implement the change since 
there is no legal requirement to do so. We closed this 
recommendation because while we consider it a best practice, 
VBA is ultimately responsible for making this management 
decision.
    Our prior oversight also showed that insufficient 
monitoring and program management not only led to significant 
delays in essential Fiduciary Program processes, but also 
increased the risk that beneficiaries would be vulnerable to 
fraud, theft, or financial loss. In 2020, while assessing the 
merits of a Fiduciary Program hotline allegation, we discovered 
VBA had not finalized a veteran's incompetency proposal despite 
receiving medical evidence that the veteran was not capable of 
managing their VA benefit payments. We expanded our review to 
identify broader process issues and found that over 4 years, 
VBA had not finalized incompetency proposals for over 200 
beneficiaries. We provided VBA with these records so they could 
determine whether further action was needed.
    In a July 2021 report, we examined whether program staff 
properly addressed allegations of benefit payments being 
misused by fiduciaries and if VBA reimbursed beneficiaries as 
required. Our team found instances of significant wait times 
for staff to make determinations and reimbursements. For 
example, one beneficiary waited 19 months for staff to complete 
a negligence determination. VBA then reimbursed the beneficiary 
over $20,000.
    We concluded that VBA should consider whether the average 
number of days taken to complete each type of misuse action is 
acceptable. We also found VBA needed to better monitor all 
follow-up actions on reported misuse as they were unaware of 
many of the unprocessed negligent determinations we identified. 
We made two recommendations to ensure prompt completion of 
determinations and reimbursements. In response, VBA implemented 
new technology that allowed for electronic monitoring of these 
processes. Both recommendations have been closed as 
implemented.
    OIG teams have found that the Pension and Fiduciary Service 
should ensure effective program management and internal 
monitoring processes are in place. This, in turn, will help 
beneficiaries receive the program support to which they are 
entitled. The OIG is committed to continuing its oversight work 
of the Fiduciary Program and criminal investigations into 
potential fiduciary fraud that affects program beneficiaries 
and hinders the most effective use of taxpayer dollars. Mr. 
Chairman, this concludes my statement, and I would be happy to 
answer any questions you or other members of the subcommittee 
may have.

    [The Prepared Statement Of Lisa Van Haeren Appears In The 
Appendix]

    Mr. Luttrell. Thank you, Ms. Haeren. The written statement 
of Ms. Haeren will be entered into the hearing record. We will 
move on to questioning. I recognize myself for 5 minutes.
    Ms. Van Haeren, is it true that VA does not monitor or 
track with any electronic controls whether a fiduciary returns 
the funds of a deceased beneficiary?
    Ms. Van Haeren. Yes. We found monitoring issues when it 
came to specific tracking of the dispersed funds to veterans' 
heirs. This was a best practice that we recommended that they 
implement, or reimplement. This was once a requirement.
    Mr. Luttrell. No longer?
    Ms. Van Haeren. No longer.
    Mr. Luttrell. Mr. Friel, is not the VA supposed to ensure 
that taxpayer dollars are going where they are supposed to go? 
Is not VA a steward of taxpayer dollars? If that is the case, 
why does not the VA make sure that a fiduciary gives a deceased 
beneficiary funds to the veteran's heirs or back to the VA?
    Mr. Friel. Thank you for that question. As it relates to 
back to the VA, we do a notification of death. We will 
institute a requirement for a----
    Mr. Luttrell. If you get a notification of death?
    Mr. Friel. When we get notification of death.
    Mr. Luttrell. What happens if you do not get a 
notification, which----
    Mr. Friel. Well, typically, sir, we have installed several 
different mechanisms within our systems to get the 
notifications of death. We have a direct feed from Social 
Security so that we get their indications of notices of death 
so we can activate them. We also work with Veterans Health 
Administration (VHA) if the veteran happened to die in a VA 
medical facility so we can activate it there. We are constantly 
seeking other opportunities to get notifications of death. We 
are dependent upon third party notification because we do not 
have the mechanism to be, you know, there all the time to see 
what is happening. We also require, you know, look to the 
fiduciary to provide us notice of death when the beneficiary 
passes away.
    Once we have the notice of death, we will determine whether 
or not heirs have been identified or if there is a will for the 
estate. In those circumstances, we have the fiduciary will 
establish a trust so that the funds are available basically on 
the decisions of the estate and whether there is a probate 
court involved and the decisions they made about how the funds 
should be distributed. If the funds need to be returned to VA, 
then we work with the fiduciary to have those funds returned to 
VA. We have----
    Mr. Luttrell. Just so I understand, but you do not track 
the program of work on notice of death. The VA does not----
    Mr. Friel. We do track the program.
    Mr. Luttrell. You do?
    Mr. Friel. Yes, we do.
    Mr. Luttrell. Are you 100 percent sure on that one, sir?
    Mr. Friel. Sir, yes, sir. As I said, we have mechanisms in 
place for notices of death, right? When the first notice of 
death is triggered within our systems, whether it be we receive 
information from Social Security, whether we receive a call 
from a third party letting us know that the beneficiary is 
deceased, whether we receive something from VHA, we have 
numerous avenues. We get notifications of an individual--of a 
potential veteran's death.
    We will then trigger that within our system. Within 
Veterans Benefits Management System (VBMS), what happens now is 
that creates a trigger to the fiduciary hub, and the fiduciary 
hub is given notification. They create a task to then determine 
whether or not an accounting needs to be done and if we have 
information about to determine where the funds will go. If the 
funds are to escheat to the state, then VA will reclaim those 
funds. If the funds are to be distributed to an heir or have to 
go through probate court then we have the fiduciary will 
establish a trust so that the funds will be available.
    Mr. Luttrell. Okay.
    Mr. Friel. I would say in--I am sorry, sir.
    Mr. Luttrell. I am tracking.
    Mr. Friel. Okay.
    Mr. Luttrell. Why are not fiduciary cases in the National 
Work Queue (NWQ) for assignment and tracking? I will give you a 
little grace, the National Work Queue is, I would not say a 
dumpster fire, but it has its issues. The amount of money that 
is going out the door from VA through our fiduciaries is 
substantial. I am curious why it is not a part of the National 
Work Queue.
    Mr. Friel. Sir, with the recent migration into VBMS, we 
have been in VBMS for about 2 years now. Prior to that, we had 
a beneficiary fiduciary field system which did not allow for 
us, it definitely restricted us on the data flow and the data 
sharing. Now that we are in VBMS, all the records are 
available.
    We are working with our NWQ partners as well as Office of 
Information and Technology (OI&T) to see about the potential to 
move the fiduciary workload into an NWQ type environment. 
However----
    Mr. Luttrell. When you say see, what do you mean by that?
    Mr. Friel. Excuse me?
    Mr. Luttrell. You said, we will see if we are able to do 
that. What does that mean?
    Mr. Friel. Well, there are certain restrictions within the 
Fiduciary Program that would limit what we can do within NWQ. 
For example----
    Mr. Luttrell. Is that legislation?
    Mr. Friel. No, it is not, sir. It has to do with the way 
that the work is distributed within the field examiners, right? 
Field examiners are regional or have specific areas that they 
are responsible for. The NWQ workload would not benefit. We 
distribute that workload via----
    Mr. Luttrell. Fiduciaries cannot go in the National Work 
Queue because it is dispersed across the country and it needs 
to stay in one particular spot.
    Mr. Friel. Right. We believe parts of it can, like the 
accounting pieces, we believe there is a potential for putting 
them into a national because we do not have a need to 
particularly go out to a beneficiary from the accounting 
perspective.
    Mr. Luttrell. Okay.
    Mr. Friel. As far as the field exams, we are restricted in 
that, you know, we have people assigned to take care of 
specific areas so that work is distributed that way and cannot 
be distributed nationally.
    Mr. Luttrell. Okay, thank you. I now recognize the ranking 
member for 5 minutes of questioning.
    Mr. Pappas. Thank you, Mr. Chairman. Mr. Friel, I want to 
ask about the process of determining the most appropriate 
fiduciary for a beneficiary. I recently heard from a 
constituent who had a relative pass away, and upon their 
passing, he learned that this family member had been already 
assigned a fiduciary. In this case, there was a power of 
attorney on file for the beneficiary. Yet, when VA proposed to 
appoint a fiduciary for the beneficiary, the person with the 
power of attorney was not contacted or informed about the 
proposal to appoint a fiduciary, nor were they considered for 
this appointment. Instead, a private law firm was appointed 
without any notice to the family.
    My question is, when there is a power of attorney on file 
for a beneficiary, is this considered? To what extent is the 
Pension and Fiduciary Service required to consider a family 
member as a potential fiduciary when there is this power of 
attorney that already exists?
    Mr. Friel. Yes, sir. As it relates to the appointment of a 
fiduciary, upon the final decision of incompetency, we will 
initiate a field examination. Part of that field examination 
will be an individual from VA, a field examiner, going out and 
meeting with the beneficiary. One of the things that we strive 
to do is seek if the beneficiary has anyone that they would 
like appointed as their fiduciary. We try to make that 
relationship happen first. If there is a relationship that 
would work, we would do that.
    In that, we also hold that fiduciary responsible to meeting 
the same requirements. We do a criminal background 
investigation. We do a credit check to ensure that there would 
be nothing that would bar that individual from meeting the 
fiduciary.
    Sometimes, sir, we do not know what the family relationship 
is. If the family is not, you know, they are not connected and 
the beneficiary may not want to appoint one of their family 
members. In that case, where we cannot find somebody that has 
that type of relationship, we will seek to look at a 
professional fiduciary where we will go out and we appoint 
attorneys or some other organization or an individual who does 
multiple fiduciaries who is professional. In that space, when 
we have a professional fiduciary, we do limit them. Their fee 
cannot exceed more than 4 percent of the beneficiary's 
entitlement.
    Mr. Pappas. Just getting back to this specific case and 
maybe we can follow up----
    Mr. Friel. Yes, sir.
    Mr. Pappas [continuing]. on some of the details because I 
know you cannot get specific here for this individual. This was 
a veteran who had a family member as a power of attorney. This 
individual was not even consulted or notified that the veteran 
was appointed a fiduciary. There is no requirement to consider 
a close family member who has power of attorney?
    Mr. Friel. To your point, sir, without knowing the 
specifics, because that power of attorney, if it is not 
designated in our system, we may not be aware of it. It may not 
have been raised by the beneficiary that there was a power of 
attorney appointed outside of the VA space.
    Mr. Pappas. Yes, I believe in this case it was on file, but 
we will follow up----
    Mr. Friel. Yes, sir.
    Mr. Pappas [continuing]. with you on that.
    Mr. Friel. Appreciate it.
    Mr. Pappas. I appreciate it. Mr. Friel, in my opening, I 
mentioned being concerned about the authority that fiduciary 
staff have when it comes to monitoring beneficiaries. The 
question is, how is VA empowering employees to ensure 
beneficiaries' well-being? If they determine that a once yearly 
virtual visit is not enough to protect a beneficiary, what 
other steps are taken?
    Mr. Friel. We have within our purview, as I stated in my 
opening statement, we tried to increase our oversight while 
also reducing our intrusiveness, you know, into the 
beneficiary's life. Previously, if a beneficiary wanted to give 
funds to a grandson or granddaughter for graduation from high 
school, they would have to clear it with VA, and we did not 
think that was appropriate. If the funds are there and they 
have that ability, then we do not see a reason we should be 
that intrusive to say no.
    What we have done is we have streamlined our processes 
somewhat. Now we have the video, the ability to do video, which 
we did not have prior to COVID, but we give the leeway to the 
fiduciary hubs. If they feel that something, you know, is amiss 
and they should go out and do a field exam, they have the right 
to do that. We do not restrict that. It is based off their 
decision. However, we do try to limit how much time we spend, 
you know, intruding into a beneficiary's life.
    Mr. Pappas. For our most vulnerable beneficiaries, those 
with severe mental illness, maybe those who may not be in a 
position to report suspected fraud or misuse, that is taken 
into account?
    Mr. Friel. Yes, it is. We limit the--and, sir, I believe 
you are referring to the annual written contact that we have 
where we send a letter. That letter, though, is restricted, 
right? We do not open it up to the entire population. The only 
individuals who are open to receive that type of contact are 
where we have a spouse fiduciary, who is appointed, and we have 
a good standing relationship. We have a custodial parent of a 
child who is a minor. Or they are in a state or federal 
institution, or they are in a VA institution where the 
government has oversight of that individual in that facility.
    Mr. Pappas. Okay, thank you for that. I yield back.
    Mr. Luttrell. Thank you, Mr. Pappas. Mr. Self, you are now 
recognized for 5 minutes.
    Mr. Self. Thank you, Mr. Chairman. At your hubs, how many 
total employees do you have managing 108,000 beneficiaries?
    Mr. Friel. Total is approximately 1,200.
    Mr. Self. Twelve hundred. You just talked about intrusive. 
Fiduciary is financial, right?
    Mr. Friel. Yes, sir.
    Mr. Self. Is there not some way to audit this, because this 
is elder and disabled, very open to abuse. Let us just face it, 
regardless of who the fiduciary is. This is a system that is 
open to abuse. It looks to me like the audit, without being 
intrusive, I agree you should not be approving every spending 
line, but there has got to be an audit. I am getting to the 
point that almost every hearing we have with VA, we hear a lot 
of process. There is a lot of process here the way I understand 
it.
    There are also people behind every process. Something that 
I did not see in the notes that I was given is it says we were 
supposed to figure out how someone qualifies as a fiduciary, 
whether it be an individual or an entity. How do you qualify 
them?
    Mr. Friel. Sir, thank you for the question. We will first 
go out and as I said, meet with the beneficiary and see if the 
beneficiary has someone they would like, right? Once we have 
that, what we look for qualifications is we do a criminal 
background check on every fiduciary before we appoint them. We 
are looking to see if there is any triggers that would say this 
person should not be a fiduciary. We also do a credit check on 
them to see if they have had any credit history issues that 
would also say that they should not be a fiduciary. That is up 
front.
    Once they are in place, we continue to monitor. If a 
beneficiary receives more than $10,000 a year in VA funds, the 
fiduciary is required to do an annual accounting, which means 
every 12 months they have to submit all the statements from us 
from the bank, as well as any big-ticket receipts. We will do 
an audit of that account.
    For those who do not meet that process, 2 years ago--
several years ago--excuse me--3 years ago, we instituted the 
Funds Under Management Review. In that period, what we do is we 
look at 3-month periods biannually for all fiduciaries to see 
and evaluate to make sure that they are spending the funds 
properly.
    Mr. Self. Okay. Now, it also says that the regional offices 
do not track all work through the National Work Queue. Does 
anyone?
    Mr. Friel. We are able to track the work. We do not use the 
National Work Queue for work distribution because of the way 
that the fiduciary hubs were established to be regional. We 
separate the work by zip code, basically, and the work is 
assigned to the fiduciary hubs based on the zip codes that they 
are responsible for.
    The fiduciary hubs as well as the Office of Field 
Operation, as the Office of Pension and Fiduciary Service now 
have access, since we have moved into VBMS. We have access, 
more sufficient access to the data, we have better oversight of 
the workload and are able to monitor it in a much better way.
    Mr. Self. Is there some way to simplify this process?
    Mr. Friel. Sir, that is a good question. I think we are 
continuing to strive to look for opportunities to improve it. 
What we have done in the last couple of years with the move 
into VBMS, as well as the review and the streamlining of our 
oversight, and looking adding the funds under management review 
which did not exist properly, adding the additional background 
check or the--yes, the background check for sitting 
fiduciaries, which had never happened before, are all things 
that we are looking to do to continue to provide oversight, 
improve our oversight and ensure we are doing the right things.
    Mr. Self. Mr. Chairman, I think we need to--because this is 
a recurring theme, the complexity of the VA. Everything we hear 
is just the complexity. I think we ought to recommend somehow 
trying to figure out how we simplify this whole place. With 
that, I yield back.
    Mr. Luttrell. Thank you, Mr. Self. Mr. Deluzio, you are 
recognized for 5 minutes, sir.
    Mr. Deluzio. Mr. Chairman, thank you and good morning. Ms. 
Van Haeren, start with you. What is your estimate of the 
percentage of fiduciaries who are committing fraud in the 
program?
    Ms. Van Haeren. I work for the Office of Audit and 
Evaluations. That is more of a question for our Office of 
Investigations that do that work and look into more of the 
fraud aspect of it. I can take that question back and get back 
to you.
    Mr. Deluzio. Thank you. Mr. Friel, do you have a sense of 
what that number is?
    Mr. Friel. Sir, there is--we distinguish between fraud and 
misuse.
    Mr. Deluzio. Right.
    Mr. Friel. We, in Pension Fiduciary Service, we determine 
fraud that is an Inspector General (IG) investigation because 
that is more of a legal determination. We look into misuse as 
where a beneficiary--where the funds for the beneficiary are 
not being used specifically for the beneficiary.
    I can tell you so far as of August 30 in 2023, we have had 
1,164 allegations. Of those, we have only found 167 cases where 
misuse actually occurred. We continue to monitor that and the 
misuse allegations can come from anyone as well as from the 
oversight that we provide.
    Mr. Deluzio. So, 167, I mean, we are talking sub-1 percent.
    Mr. Friel. Less than 1 percent, sir.
    Mr. Deluzio. Okay. Do you think that your--actually, I will 
ask Ms. Van Haeren first. Is VA's oversight here whether it can 
be improved or not, I think we suspect here it can be improved. 
Do you think it is part of keeping that number as low as it is 
at the moment?
    Ms. Van Haeren. Sure. Based on what we found in our 
targeted reviews that we have done, we found program 
deficiencies with internal oversight. I think it is a 
continued, theme that we have seen, but I think it is something 
that, can continually be improved with monitoring of programs 
and so forth, and procedures.
    Mr. Deluzio. Mr. Friel, if we head to a government shutdown 
on October 1, how will that impact your ability to conduct 
oversight here?
    Mr. Friel. Sir, if we stay to the same manner that we did 
with the last shutdown, the field individuals, employees 
responsible for claims and that oversight at that level will 
continue to work. They will continue to provide the oversight 
and the claims processing that we have to do, right, to meet 
the needs of the veterans.
    The oversight, as far as, you know, the central office may 
be minimized somewhat due to staffing because we are not 
considered the essential part of actually producing claims and 
providing that level of oversight. We will have the opportunity 
to work with the field and monitor the field as far as what is 
happening and making sure the right things continue to happen 
even during the shutdown.
    Mr. Deluzio. At a minimum, you are expecting some of 
leadership and central oversight to diminish if we are shut 
down?
    Mr. Friel. As a minimum, yes, sir.
    Mr. Deluzio. Do you think that will impact the ability to 
find misuse or fraud allegations?
    Mr. Friel. I do not, sir. Typically that misuse allegations 
and that finding happens at the field level, right? It is our 
1,200 employees who are engaged within the fiduciary hubs who 
are out there doing the work every day, those are typically the 
individuals who identify that. Even in cases where we have the 
IG fraud and the investigation, the majority of those are 
triggered by the field identifying that there was, in fact, 
misuse, and then forwarding that information to OIG so that 
they can take action.
    Mr. Deluzio. I guess walk me through then what the impact 
of the folks you have just described who will be impacted or 
would not be considered essential, what is their role in this 
oversight process and machinery?
    Mr. Friel. Within a central office function, we have the 
responsibility for providing quality oversight. We do quality 
reviews on the work that happens, you know, at a national 
level. We also do special focused reviews to look at specific 
areas within programs to identify if there is any deficiencies 
in there or opportunities for improvements, as well as we do 
site visits. We go out to the field and we will visit the 
offices and when someone----
    Mr. Deluzio. Okay. Let me ask, then--I see. Would the lack 
of quality reviews, do you think, impact the effectiveness of 
your program?
    Mr. Friel. I do not. This year, the fiduciary hubs are 
performing at the exceptional level for their quality, and I do 
not see any reason why that would not be maintained. So, I----
    Mr. Deluzio. Ms. Haeren, do you have the same view?
    Ms. Van Haeren. I cannot----
    Mr. Deluzio. Ms. Van Haeren, excuse me.
    Ms. Van Haeren. That is Okay. I cannot speak to the quality 
review percentage at this time, but I think it is important 
that they continue to monitor this type of work.
    Mr. Deluzio. Would you recommend eliminating the quality 
review and the central office functions that would be impacted 
during a shutdown, in general? Would you ever recommend 
removing those folks?
    Ms. Van Haeren. We have not done any work in that area, and 
I cannot speak to that.
    Mr. Deluzio. Okay. Thank you. Mr. Chairman, I yield back.
    Mr. Luttrell. Thank you, Mr. Deluzio. Mrs. Ramirez, you are 
now recognized for 5 minutes.
    Ms. Ramirez. Thank you, Chairman Luttrell. I want to thank 
the witnesses for joining us today as well. We have been 
talking about fraud and how do we make sure the beneficiaries 
are actually getting their funds. I may have missed this 
question, but I want to just jump into some of the questions I 
have around that, and then I want to move into the dependents 
of the beneficiaries.
    Mr. Friel, how long does it currently take the VA to recoup 
stolen benefits and return them to the veteran who is 
rightfully entitled to them?
    Mr. Friel. Thank you for that question. The recoupment of 
the benefits is not a key factor in making the beneficiary 
whole. We are able to make the beneficiary whole once we have 
finished the misuse determination and determined how much funds 
were misused. We have an internal negligence determination 
requirement that we have to meet.
    Once those two items are in place and we have completed 
them and the review is done, typically we initiate trigger to 
the field to submit to reimburse those funds within 14 days of 
the final.
    Ms. Ramirez. So, about 14 days once that has happened.
    Mr. Friel. Yes.
    Ms. Ramirez. How long on average is it taking?
    Mr. Friel. Currently from misuse allegation to 
determination is about 80 days. The turnaround time for the 
negligence determination is probably another 10 days or more, 
so.
    Ms. Ramirez. It could be up to about 90 days?
    Mr. Friel. It could be, yes.
    Ms. Ramirez. Okay. In the state legislature, I chaired the 
Child Welfare Committee. As we are talking about the 
beneficiaries, one of the things that comes to mind for me is 
also its own dependents. As we are discussing this issue, I 
want to talk about the children impacted by fraud. 
Specifically, I am concerned with foster youth.
    It has come to my attention that this committee asked the 
VA in 2022 how they were tracking vulnerable population. The 
answer was, and I quote, ``the VA does not currently track the 
number of children in foster care, and so it is not aware of 
any data points that would allow for an accurate estimation of 
this number.'' Here is why that is concerning to me. I am 
concerned for children, especially young children, who are 
unlikely to detect and report fraudulent behavior.
    Question, Mr. Friel, can you tell me how the VA tracks 
which dependents of veterans are in foster care? If you do not, 
what are your next steps to ensure that this population is 
being tracked and protected?
    Mr. Friel. Currently, we do not have the ability to 
distinguish what the current status of the child is. We do, 
however, appoint a fiduciary for those individuals in foster 
care that we monitor with all of our--as we would with any 
other fiduciary. I will let you know that we have had internal 
discussions, and we are working toward a requirement for our 
Office of Information and Technology to actually identify an 
opportunity within our system to be able to add that as a field 
where we can track that in a better manner.
    Ms. Ramirez. In my State of Illinois, there are children of 
deceased veterans who are currently in foster care and they are 
receiving benefits. I know this because we checked in with the 
Illinois Department of Children and Family Services, and they 
confirmed that they produce and submit a quarterly report on 
the children to the VA. My question to you is, Mr. Friel, as 
you are discussing internally how you are able to better 
understand and track that information, what are you doing with 
the data from states like Illinois who are providing this 
information? I know that it may not be the case that every 
single state is providing this information, but I am interested 
in knowing what you are actually doing with the information you 
are receiving from states like Illinois.
    Mr. Friel. Yes, ma'am. I do not have that information 
readily available. I believe it is probably a factor that they 
work with the fiduciary hub within their space. I will take 
that back, and we will work to get you an answer.
    Ms. Ramirez. Chairman, I just want to put this on the 
record, and I appreciate that. As we are talking about our 
beneficiaries and the fraudulent behavior that we see from many 
of the fiduciaries, I am concerned by the number of veterans, 
particularly as we talk about veterans who are experiencing 
homelessness or veterans who have passed away and their 
children are in foster care, that the various agencies that are 
supposed to be their fiduciary or manage their benefits or the 
fiduciary person responsible for their benefits, in fact, may 
be engaging in fraudulent behavior, and these children are not 
getting their benefits. I do want to make sure that we continue 
to follow up on this because there are a number of children who 
I am concerned have no process in making sure that these 
allegations are followed up with. With that, I yield back.
    Mr. Luttrell. Thank you, Mrs. Ramirez. Mr. McGarvey, you 
are recognized for 5 minutes, sir.
    Mr. McGarvey. Thank you, Mr. Chairman. Thank you all very 
much for being here. As you know, my district in Louisville, 
Kentucky is home to one of the VBA's seven fiduciary hubs. It 
services six states, along with D.C. and Puerto Rico. The 
Louisville hub, like each of the fiduciary hubs, is responsible 
for handling oversight of the fiduciaries in those states and 
administering the program. The hub's dedicated public servants 
are doing their best to ensure that veterans and their benefits 
are protected. I want to thank them for their service. As you 
know and see in this committee, this is something we all want 
to do and all want to protect to make sure our veterans get 
their benefits they have earned and they deserve.
    I do want to note that they need funding. They need 
resources to carry out their mission and ensure that our 
veterans are not being defrauded and that the Fiduciary Program 
is working as it is intended. Mr. Friel, how does the VBA 
monitor fiduciaries and what does the oversight look like? I 
guess the big question is, is it enough?
    Mr. Friel. Thank you for that. In monitoring, we use 
several mechanisms. We do for a fiduciary, as I stated earlier, 
has a beneficiary that receives over $10,000 a year in benefits 
from VBA or they are rated 100 percent, we will require an 
annual accounting from that fiduciary so that we can audit and 
make sure that the expenditures are being made correctly.
    For those who do not meet that criteria, we also have the 
biannual review where we do an audit of 3 months' worth of 
benefits every 2 years to ensure that those are, in fact,--
their benefits are being used properly. We also have the 
ability to react to any instances where we are provided 
information, someone provides information that there may be an 
allegation of misuse. The field examiners have the ability to 
go out and investigate and to see to ensure that everything is 
happening correctly.
    Additionally, we instituted back in 2020, we instituted a 
standing background check for all sitting fiduciaries. Prior to 
that, once you were appointed, until somebody told us 
something, we did not know. Well, now we run a background check 
on every fiduciary. This year we identified 958 fiduciaries 
that were flagged that had under previous checks or at 
appointment, did not have any indicators. Well, they have been 
flagged and we are working now to replace them because we have 
information that says they should not be sitting in that 
position as a fiduciary.
    Mr. McGarvey. I appreciate that. You talk about 2020, 
though. We do know that in the OIG reports, there were 
deficiencies found in both 2021 and 2023 showing that the 
Fiduciary Program is susceptible to abuse. The steps you have 
outlined, are these some of the steps that you have taken to 
fix some of those specific issues in those reports? If so, what 
more can you do? How can you take the lessons that have been 
learned into the future and do better?
    Mr. Friel. Sir, our goal is to be 100 percent oversight and 
100 percent ensuring the security of our beneficiaries. We know 
there is bad actors out there. We have instituted that. The 
move to VBMS has allowed us to provide better oversight.
    I will call into reference, you know, in particular the IG 
report that indicated the funds sat there. Those funds were all 
prior to our move into VBMS, right? We now have better 
oversight. On top of that, you know, even if we go back how 
long it took us, the fiduciary was aware of the 
responsibilities. Those funds were available when we reached 
out to see where they were at. We were able to recoup or 
distribute those funds as appropriate, you know, when the IG 
brought it to our attention. Our Fiduciary Program as far as 
the appointment and the directions and the understanding of the 
fiduciary responsibilities is evident there that they knew what 
they were supposed to do with the funds.
    Mr. McGarvey. I guess the question is, I mean, because what 
you see is we are all on the same team, right? We want our 
veterans to get the care they deserve. Just tell us in the 
remaining time, are there additional resources or support from 
Congress that are necessary to protect beneficiary funds and 
prevent future misuse? What changes do you recommend? How can 
we be of better help?
    Mr. Friel. Yes, sir. We would appreciate support for 
Representative Connolly's bill, H.R., I think it is H.R. 4108. 
That bill would fix an issue that was created by the Isakson 
and Roe Act. Basically, when they allowed us to make all 
fiduciaries whole, which is something that we wanted--all 
beneficiaries whole, excuse me, which is something that we had 
been wanting to do prior to that act, we could make certain 
beneficiaries whole and other beneficiaries it was dependent on 
the negligence requirement.
    That act allowed us to make all beneficiaries whole. What 
it did, though, is it actually slowed down our process because 
now it mandated that we do a negligence determination for every 
claim or every misuse that occurs, which has no impact on the 
funds that are going to be dispersed to the beneficiary.
    With the proposed bill, it would push the responsibility of 
the negligence determination down to the field, which would 
basically allow them to more quickly get those benefits out. It 
would make the oversight of that, it would make it at the 
pension and fiduciary level, at the national level, it would be 
more of an oversight feature than an actual having us make the 
determination.
    Mr. McGarvey. Thank you, Mr. Chairman. I yield back.
    Mr. Luttrell. Thank you, Mr. McGarvey. We are going to move 
into our second round of questioning at this time.
    Mr. Friel, do you have a rough guesstimate on the dollar 
amount, let is just say the last 2 years that have been lost in 
the Fiduciary Program?
    Mr. Friel. This year, I do have the data for this year. 
This year to date, as I said, we found 167 misuse cases, and 
the funds that have been reissued was just in excess of 618 
million, or excuse me, $618,000.
    Mr. Luttrell. Six hundred 18 thousand, just this year?
    Mr. Friel. Just this year, sir.
    Mr. Luttrell. Okay. Is it true that fiduciaries must only 
account for 3 months of expenses every 2 years?
    Mr. Friel. Not all fiduciaries, sir. It is only fiduciaries 
where they do not meet the threshold for the requirement to 
report annually. If the funds under management, the funds that 
they are being disbursed yearly for the veteran exceed or the 
beneficiary exceed $10,000 or the veteran is rated 100 percent, 
they are required to report annually. Outside of that, 
previously, we had no accounting requirement. One of the things 
that we instituted was the 3-month Funds Under Management 
Review. That happens biannually so that we can continue to 
evaluate those individuals to make sure those funds are being 
spent properly.
    Mr. Luttrell. That is individuals in those particular areas 
going out just to speak directly with the fiduciary? Or is it a 
letter, an email?
    Mr. Friel. So, they----
    Mr. Luttrell. How are we tracking that?
    Mr. Friel [continuing]. they actually are required. We will 
trigger a letter to the fiduciary letting them know they are 
responsible to provide an accounting. Then we let them know 
that accounting needs to include the last, you know, 3 months 
of bank statements, as well as receipts for any big-ticket 
items. We will evaluate those bank statements to see if there 
is anything that we see in there that should not have occurred. 
Then we will work with the fiduciary to figure out how it 
happened and why it happened.
    Mr. Luttrell. Ms. Van Haeren, in your opening statement, 
you had three ideas you wanted to pass off to the VA that might 
help increase the--or the loss of not only money, but 
responsibilities for the fiduciaries. Can you tell me those 
three again?
    Ms. Van Haeren. Sure. The recommendations were to update 
the procedural requirements to help verify funds for 
dispersing, to help staff verify funds for those that are 
dispersed to heirs or back to the regional office, or excuse 
me, yes, back to the regional office. Another one was to 
establish electronic controls to monitor that workload. They 
had a system in place, but they were unable to consistently 
find or be able to track that type of workload and those funds, 
whether they are being dispersed back to VA or to the heirs. 
Last, it was to determine the methodology on how they plan to 
monitor.
    Mr. Luttrell. How long ago was that report given to 
Veterans Affairs?
    Ms. Van Haeren. The report was published in August 2023. We 
have a robust follow-up process. About 90 days from when it is 
published, we will reach back out to VA and----
    Mr. Luttrell. How far along are you, Mr. Friel, on engaging 
those?
    Mr. Friel. We have started to look at those.
    Mr. Luttrell. What does that mean, started to look at?
    Mr. Friel. We are working on, so, some of it is an IT 
solution. We are working on developing the requirements to get 
the system enhancements and get it scoped.
    Mr. Luttrell. I do not know if I am necessarily going to 
allow you to tuck that into the IT space.
    Mr. Friel. I am not pushing it in IT space. For us to do 
there as far as like being able to track the workload today, as 
far as the first notice of death, the way it is triggered to 
the fiduciary hub, we want to create an end product, a work 
item, so that they can actually go do that as opposed to a 
task. We are working with IT to make that happen in the system. 
We would change the system, enhance the system to give us 
better oversight and tracking of those through the end product.
    Mr. Luttrell. The other two?
    Mr. Friel. The other two, I am sorry. The one was the heir, 
which we had spoke about earlier, was distributing to the 
heirs. You know, we have worked with the Office of General 
Counsel (OGC). We have received OGC opinion that it is not 
within our purview to make sure that, you know, the estate and 
the will and whatever decisions are made in the probate court 
are within our purview. They are not part of VA's oversight. 
Our oversight is would the funds be issued to the state? If so, 
then we need to ensure they come back to VA.
    Mr. Luttrell. There is a point of convergence right there 
where VA is going to have to pass it off to the state, and the 
state's going to look to the VA to solve the problems?
    Mr. Friel. It is not so much convergence, it is the laws of 
the state, yes, sir, I guess. Yes, you are correct, sir. The 
laws of the state, as far as if there is an error or if there 
is a will or probate where how that money will be dispersed to 
the family members is not within our purview. However, if there 
are no will or heir, then we look to make sure that the funds 
come back to VA.
    Mr. Luttrell. Okay. Thank you, sir. Mr. Pappas, do you have 
anything?
    Mr. Pappas. Sure. Maybe a quick one for Mr. Friel. You were 
talking about some prospective legislation that could help the 
Department with making determinations out in the field. I just 
want to ask you a bit about deceased beneficiaries. You can 
have a beneficiary who passes away whose funds must be 
distributed to their estate or returned to VA. You can also 
have a veteran who passes away while a claim of fraud or misuse 
is still being adjudicated.
    Just to understand a little bit about how things work now 
for that first population, a beneficiary who passes away while 
part of the Fiduciary Program, how does VA currently determine 
the order of priority for dispersing benefits to the estate of 
a deceased beneficiary?
    Mr. Friel. As it relates to the disbursement to the estate, 
we would go into trust until either the funds--the fiduciary 
would put the money, the funds into trust until either the will 
is determined or the probate court acts to make determination 
on how the funds would be distributed. VA does not have any 
role in that other than the fiduciary putting the funds into 
some type of trust.
    As far as if the funds would go back to the state, right, 
so, if there are no heirs, there is no will, then VA assumes 
those funds, and we have the fiduciary return them to us.
    Mr. Pappas. Just thinking about what steps you can take to 
ensure that sufficient guidance for fiduciary hub staff is in 
place to determine whether VA derived funds of deceased 
beneficiaries need to be returned to VA, any thoughts there?
    Mr. Friel. We do have currently within our requirement with 
the field exam, we try to identify if there is an heir or a 
will during that initial field exam process. We are now working 
on actually in a system enhancement to be able to trigger that 
within the system too, so that we have that identification and 
we can utilize that data to kind of push out, to let them know 
that, hey, we have information on an heir or a potential will. 
That we can utilize our systems to let the fiduciary know that 
there is, in fact, someone out there that exists that the funds 
could be disbursed.
    Mr. Pappas. Okay. If a beneficiary passes away where there 
is suspected fraud or misuse, can you talk about the authority 
that VA has to reimburse the estate of the beneficiary as the 
fraud claim is being processed. Do you have that authority?
    Mr. Friel. Yes.
    Mr. Pappas. If not, what do you need?
    Mr. Friel. Today, we currently, if there is a misuse 
pending at the time of death, we will process that misuse to 
fruition, and we will make the estate whole as part of our 
process.
    Mr. Pappas. Okay. Well, I appreciate that. Thank you very 
much for those comments.
    Mr. Friel. Thank you.
    Mr. Luttrell. Yes, thank you, Mr. Pappas. Mr. Self, you are 
recognized, sir, for 5 minutes.
    Mr. Self. Thank you, Mr. Chairman. I do not have the figure 
in front of me. I am trying to get it, but if I remember right, 
there are like 8,000 Government Accountability Office (GAO) 
recommendations that the VA, across the VA, has not enacted. 
Can you tell me how many GAO recommendations that this program 
has outstanding?
    Mr. Friel. Sir, I do not have that information available, 
and we can take that back and delve into it to see if we can 
identify any.
    Mr. Self. I would like to see it. I understand your current 
yearly you have not had time to close, but I believe that there 
are outstanding GAO recommendations from years past, and I 
would kind of like to know that number.
    Mr. Friel. Yes, sir.
    Mr. Self. With that, Mr. Chairman, I yield back.
    Mr. Luttrell. Thank you, Mr. Self. Mr. Ciscomani, you are 
now recognized for 5 minutes, sir.
    Mr. Ciscomani. Thank you, my friend. Thank you, Chairman 
and friend, for holding this important hearing. Thank you also 
to the witnesses for being here today. One of the issues I have 
heard about facing veterans relates to the Veterans Benefit 
Administration Fiduciary Program. I know we have talked a 
little bit about that and the instances in which an appointed 
fiduciary misuses a veteran's funds.
    While I am sure that many of these VA appointed fiduciaries 
are working hard to manage veterans' benefits, some bad actors 
exist, like in anything else, in this program that allow for 
fraud and misuse. I am proud to have joined Representative 
Trone in introducing the Restoring Benefits and Defrauded 
Veterans Act, which would ensure the families and beneficiaries 
of a deceased veteran in the Fiduciary Program are able to be 
reimbursed for the amount of misused funds as well.
    Also, I co-led a bill with Representative Connolly titled 
the Veteran Fraud Reimbursement Act, which would allow veterans 
who fall victim to fraud to receive their reimbursements before 
the VA's internal negligence determination is finished. I 
believe these commonsense bills can ensure veterans and their 
families are financially made whole, and I look forward to 
working with my colleagues on the issue and continue to support 
the men and women who serve this great country.
    Now, my question is for Ms. Van Haeren here. Is it true 
that the VA has no timeliness standard for determining whether 
a fiduciary misuses, a fiduciary's misuse of funds was actually 
the result of VA negligence?
    Ms. Van Haeren. Yes, at the time of our report, we found 
that there were no timeliness standards.
    Mr. Ciscomani. How has this resulted in delays in removing 
the fiduciaries and reimbursing misused funds? How does that 
impact that?
    Ms. Van Haeren. Sure. Based on the time that we conducted 
our review of the hotline, there was a significant amount of 
time before veterans were made whole from when the misuse 
determination, or the allegation was made, through the entire 
process and the negligence determination was finally made. It 
was over 400 days at the time.
    Mr. Ciscomani. What best practices would you say has the 
OIG recommended for the VA to ensure that we are effectively 
monitoring and tracking the VA's misuses of--determinations of 
the reimbursement of the funds?
    Ms. Van Haeren. We recommended that VBA put in measures 
to--controls again, and also monitoring procedures to follow up 
specifically on negligence determinations and reimbursement.
    Mr. Ciscomani. Would you mind naming a few examples of 
that, of what it can look like and how it can be improved?
    Ms. Van Haeren. At the time we conducted the review, VBA 
was in the process of moving from one system to another that 
was able to actually have reports made that they could actually 
track some of the negligence determinations that were once 
tracked on, let us say, outside of a system. They did not even 
have the information within a system at the time until they 
migrated into VBMS-Fiduciary (VBMS-Fid). When they migrated 
into that system, they were able to then track it 
electronically and then, of course, monitor that work.
    Mr. Ciscomani. Thank you. Mr. Friel, on the same light of 
timeliness of these services, from the 2021 Inspector General 
Report on the Fiduciary Program, it states that, ``staff took 
from about 3 to 23 months to complete the 14 negligence 
determinations with an average of 468 days.'' To your point as 
well. ``Half the cases were pending in excess of 500 days 
before being completed. The remaining two were not completed 
due to active criminal investigations.''
    I have learned that processes have changed, but I believe 
that these negligence determinations are still taking way too 
long to also the previous point here. What is the average wait 
time you would say currently for the negligence determination 
to be made? What steps has the pension, specifically in the 
Pension and Fiduciary Service taken to reform this process? 
Same line of questioning here, but can you speak from your 
perspective on this?
    Mr. Friel. Yes. As far as the negligence determinations, we 
are completing them in an average of like 24 days. I would have 
to get you the exact number.
    Mr. Ciscomani. Okay.
    Mr. Friel. As Ms. Van Haeren's spoke, we moved into VBMS, 
which definitely improved our ability and our oversight to be 
able to track this work and be able to manage it in a much 
better quicker and faster basis. The allegation from misuse to 
the determination completion takes about 79 days. That is the 
investigative part a, to determine whether or not there was 
actually misuse, and then it is working with the fiduciary to 
get the final accountings.
    I can tell you that we do have a standard for replacement 
of a fiduciary once misuse has been determined. If we determine 
that misuse did occur, we replace that fiduciary within 60 days 
of that happening. That is one of our traction pieces.
    Mr. Ciscomani. Thank you. I am out of time. Would you agree 
that moving these determinations to after reimbursements would 
ensure veterans are made financially whole while still allowing 
the VBA to determine if negligence happened?
    Mr. Friel. Yes, I would, because the negligence 
determination has no impact on the amount of funds that are 
going to be distributed.
    Mr. Ciscomani. Excellent. Thank you. I appreciate the 
quick, straightforward responses from both of you. We do not 
always get that, but I appreciated that. Thank you.
    Mr. Luttrell. Thank you, Mr. Ciscomani. Okay. Thank you to 
all our witnesses for testifying before us today about this 
important issue. The Fiduciary Program is responsible for 
ensuring that the veterans who need extra help managing their 
VA benefits are taken care of. It is our responsibility as 
Congress to ensure that the VA effectively oversees fiduciary 
and protects beneficiaries of this program.
    One veteran or beneficiary whose benefits are being misused 
is one too many. I look forward to further conversations about 
improving oversight efforts of this program and about VA's 
efforts to implement the recommendations that we discussed 
today. With that, I yield to the ranking member for closing 
remarks.
    Mr. Pappas. Well, thank you, Mr. Chairman. I look forward 
to working with you to ensure the continued oversight over this 
program, which is incredibly important for veterans and their 
families. I think it is important that our staff works together 
to ensure that OIG's recommendations are fully implemented by 
VA and that we see some areas of improvement that were 
identified in the hearing today. Our veterans deserve the best, 
and I know we can work together to help get it done. I want to 
thank our panel for their comments and their work. I yield 
back.
    Mr. Luttrell. Thank you, Mr. Pappas. Mr. Friel and Ms. Van 
Haeren, thank you for your testimonies today. I do not envy the 
pressures that you are feeling on your shoulders, sir. I can 
only imagine how overwhelming that is. Please understand that 
this committee is absolutely here to assist you in any way that 
we can to make sure the veterans are the beneficiaries of all 
of our acts, everything that we do. Ms. Van Haeren, thank you 
for your report. If you do not mind, I would like to speak to 
you after the committee closes out.
    I ask unanimous consent that all members have 5 legislative 
days to revise and extend their remarks and include extraneous 
material. Without objection, so ordered. This hearing is 
adjourned.
    [Whereupon, at 11:02 a.m., the subcommittee was adjourned.]

?

      
      
      
      
      
      
      
      
      
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                         A  P  P  E  N  D  I  X

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                     Prepared Statement of Witness

                              ----------                              


                 Prepared Statement of Lisa Van Haeren

    Chairman Luttrell, Ranking Member Pappas, and members of the 
Subcommittee, thank you for the opportunity to testify on the Office of 
the Inspector General's (OIG) oversight of the Veterans Benefits 
Administration's (VBA) Fiduciary Program. The OIG is committed to 
conducting independent audits, reviews, and inspections that result in 
clear findings and practical recommendations to help VA promptly 
provide veterans with the quality care, services, and benefits they are 
due. To that end, the OIG works diligently to ensure every report it 
releases--even if focused on a single medical facility or benefits 
office--serves as a road map for VA leaders nationwide and contributes 
to overall program improvements. It also vigorously pursues criminal 
investigations involving potential fraud and other crimes affecting 
veterans and VA operations, programs, and services.
    The purpose of the Fiduciary Program is to protect VA beneficiaries 
who are unable to manage their VA benefits as a result of injury, 
disease, the infirmities of advanced age, or being younger than 18 
years old. VA appoints fiduciaries to receive direct payments on behalf 
of beneficiaries and disburse those funds for beneficiaries' care, 
support, welfare, and other needs.\1\ During fiscal year 2022, the 
Fiduciary Program served more than 108,000 beneficiaries who received 
$2.6 billion in VA-derived funds.\2\
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    \1\ VA beneficiaries rely on their appointed fiduciaries to make 
financial decisions in their best interests. When choosing a fiduciary, 
VA considers factors including a beneficiary's preference (such as a 
spouse or other family member if qualified), the identified 
individual's willingness to serve, and the potential fiduciary's 
ability to act in the beneficiary's interest.
    \2\ VBA, Annual Benefits Report Fiscal Year 2022, p. 142.
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    Given the amount of money at issue and VA's commitment to serving 
vulnerable veterans, the need for strict accountability and effective 
oversight are vitally important to the continuous improvement of the 
program.\3\ The OIG's recent reviews have found weaknesses in program 
governance that have allowed gaps in workflow management and inadequate 
oversight processes to persist. The OIG has identified delays in 
determinations of whether a fiduciary is warranted, veterans' 
reimbursements when their benefits have been misused, and the 
distribution of deceased veterans' fiduciary-controlled funds to their 
heirs or back to VA. The delays often created unnecessary risks to 
veterans' welfare and exposed beneficiaries and their families to 
potential hardships when VA's assistance was critical. In addition to 
this oversight work, the OIG's Office of Investigations is deeply 
involved in criminal cases that identify bad actors to help deter 
fiduciary fraud and reduce its impact on victims.
---------------------------------------------------------------------------
    \3\ The Pension and Fiduciary Service establishes policy and 
procedures, provides training, and generally oversees claims-processing 
accuracy. The program is implemented by six VBA fiduciary hubs--each 
responsible for administering the program in an assigned geographic 
region.
---------------------------------------------------------------------------
    This statement focuses on the OIG's most recent report on the 
Fiduciary Program, which reviewed allegations that deceased 
beneficiaries' VA-derived funds were not being timely and appropriately 
disbursed as required. The report illustrates deficiencies in VBA's 
oversight of the program and describes how the identified weaknesses 
can deprive veterans' heirs (or others named in their wills) of benefit 
funds to which they are entitled. The concerns with lax program 
oversight and inadequate processes are not new; prior oversight of the 
Fiduciary Program reflects similar findings as described in this 
statement.\4\ These weaknesses increase opportunities for bad actors. 
OIG investigators routinely work with their law enforcement partners to 
bring to justice those individuals who have defrauded or stolen 
vulnerable veterans' pensions and VA benefit compensation.
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    \4\ VA OIG, VBA's Fiduciary Program Needs to Improve the Timeliness 
of Determinations and Reimbursements of Misused Funds, July 21, 2021; 
VA OIG, Fiduciary Program: Some Incompetency Decisions Not Completed, 
Putting Those Beneficiaries' Funds at Risk, January 27, 2021.

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RECENT OVERSIGHT OF THE FIDUCIARY PROGRAM

    In a report released last month, the OIG assessed an anonymous 
allegation to its hotline that two fiduciaries under the jurisdiction 
of a VBA hub in Indianapolis, Indiana, had not released the funds of 
four deceased beneficiaries who died in 2010, 2013, 2015, and 2020.\5\ 
During the course of the review, the OIG was made aware of two 
additional cases, for a total of six cases, associated with the two 
fiduciaries.
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    \5\ VA OIG, The Fiduciary Program Needs to Verify the Prompt Return 
of Deceased Beneficiaries' Funds to VA, August 17, 2023.
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    The OIG substantiated allegations that VA-derived funds were not 
always promptly disbursed to the deceased beneficiaries' heirs or 
returned to VA when there was no valid will or heir. Although the OIG's 
review focused only on the two fiduciaries related to the initial 
allegations, the process deficiencies that the review team identified 
could have significant effect across the Fiduciary Program.

Background

    When a beneficiary dies, the fiduciary must disburse the remaining 
VA ``funds under management.'' \6\ If the beneficiary has a valid will 
or heir, the fiduciary must hold the remaining funds under management 
in trust for the deceased beneficiary's estate until the will is 
probated or heirs are ascertained and then disburse the funds according 
to applicable State law. If the beneficiary died without a will and no 
heir has been identified, the funds that would typically revert to the 
veteran's state of residence are returned to VA.\7\
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    \6\ 38 C.F.R. Sec.  13.250 (2018). For the purposes of this report, 
VA-derived ``funds under management'' are beneficiaries' unspent VA 
disability compensation or pension benefits payments. VA has no 
oversight responsibility for other sources of income beneficiaries may 
have, such as social security or retirement income.
    \7\ 38 U.S.C. Sec.  5502; 38 C.F.R. Sec.  13.250.
---------------------------------------------------------------------------
    Although federal regulations require a fiduciary to submit a final 
accounting to VA within 90 days of the beneficiary's death, neither 
statute nor regulation includes a timeliness standard for fiduciaries 
to distribute VA-derived funds of deceased beneficiaries to heirs or 
return them to VA.\8\
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    \8\ 38 U.S.C. Sec.  5502; 38 C.F.R. Sec.  13.250; 38 C.F.R. Sec.  
13.280 (2018). A fiduciary accounting is a written report outlining the 
management of a beneficiary's VA benefits payments and expenses for a 
specified period.
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    Until March 2021, VBA procedures required fiduciary hub staff to 
verify that the fiduciary had indeed disbursed the remaining funds 
under management for deceased beneficiaries to both heirs and VA. The 
Pension & Fiduciary (P&F) Service terminated this procedure with regard 
to a veteran's estate, as no statute requires them to do so, and this 
is consistent with a VA Office of General Counsel opinion that states, 
``VA's responsibilities with regard to protection of estate assets for 
the benefit of others generally cease with the death of the veteran.'' 
\9\
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    \9\ VA Office of General Counsel Precedent Opinion, VAOPGCPREC 5-98 
(April 2, 1998). The General Counsel has the power to designate an 
opinion as precedential, and opinions involving veterans' benefits are 
binding for VA officials and employees in subsequent matters involving 
the legal issue.
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    In contrast, the opinion states that, generally, VA is authorized 
to assure the preservation of assets that must be returned to VA when 
no valid will or heir exists. Although the procedure to verify 
disbursement to an heir was removed, other procedures stated that a 
determination must be made as to the existence of a will or heir to 
determine whether funds must be distributed through the estate or 
returned to VA.\10\ Procedures and any related guidance do not, 
however, outline steps the fiduciary hub staff must take to make such a 
determination, such as actions and evidence needed to verify whether 
the fiduciary identified any valid will or heir.
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    \10\ VA Manual M21-1MR, ``Actions Required to Determine if Escheat 
is in Order,'' part XI, chap. 4, section D.16.d in Adjudication 
Procedures Manual, updated February 2, 2005. The Adjudication 
Procedures Manual serves as a general guide for processing and 
adjudicating claims for compensation, pension, and related benefits for 
veterans and their dependents. VBA's Compensation Service is 
responsible for updating the Adjudication Procedures Manual.
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    In March 2021, VBA updated its procedures to include a requirement 
to establish electronic controls to track the workload only for cases 
in which VA-derived funds of deceased beneficiaries must revert to 
VA.\11\ Because the manual does not designate a unique identifier for 
electronic controls related to the return of deceased beneficiaries' 
VA-derived funds to VA, it is difficult for staff to monitor this 
workload.
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    \11\ VA, Fiduciary Program Manual, ``Actions Required When Escheat 
is in Order,'' part 2, chap. 1, sec. C, topic 3.e, updated March 17, 
2021. The Fiduciary Program Manual serves as a general guide for 
activities and decisions inherent to providing fiduciary assistance to 
VA beneficiaries. The Pension and Fiduciary Service is responsible for 
updating the Fiduciary Program Manual.

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The OIG Found Fiduciaries Were Not Promptly Disbursing VA Funds

    The OIG substantiated that, as of June 2022, two fiduciaries, under 
the jurisdiction of the Indianapolis hub, had not promptly released the 
funds of six deceased beneficiaries. Between August 2022 and November 
2022, both fiduciaries returned the funds to either the VA or an heir. 
The delay, however, ranged from more than 19 months to 12 years from 
the time of death (or the date the final accounting was received by VA, 
if required) to the distribution of the funds.\12\
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    \12\ A delay in probate proceedings could cause a delay in 
disbursement. However, the OIG team found no evidence that any of the 
six cases were involved in probate.
---------------------------------------------------------------------------
    For two of the six cases, VA-derived funds were not promptly 
distributed to the deceased beneficiaries' heirs. In total about 
$800,000 of VA-derived funds were not released for more than 19 months 
in one case and nearly seven years in the other.
    For the remaining four cases, no heirs were identified, and VA-
derived funds were not promptly returned to VA. For these four cases, 
about $9,300 of VA-derived funds were not promptly returned to VA, with 
delays ranging from five to 12 years after the beneficiaries' deaths.
    As stated earlier, neither statute nor regulation includes a 
timeliness standard for disbursement. As stewards of taxpayer dollars, 
however, VA should be promptly reclaiming funds when there is no valid 
will or heir to receive them. Heirs also should not have to wait 
excessive periods to receive funds to which they are entitled. Even 
though it is not a statutory requirement, VBA is not prohibited from 
verifying disbursement of funds due to deceased beneficiaries' estates. 
Such verification would not only ensure heirs received funds to which 
they are entitled, it would also help identify funds that must be 
returned to VA if potential heirs thought to have existed at the time 
that the case was initially reviewed could not be verified. Moreover, a 
fiduciary can dispose of related records after two years from the date 
that VA either removes the fiduciary or the fiduciary withdraws. As a 
result, there is a potential risk of fraud, theft, and loss, if there 
has been no verification within those two years that funds were 
properly distributed.

What the OIG Recommended

    To address identified weaknesses, the OIG made four recommendations 
to the under secretary for benefits to ensure that the P&F Service 
conducts the following actions:

        1. Clarify procedural requirements to fiduciary hub staff on 
        how to verify whether VA-derived funds of deceased 
        beneficiaries must be returned to VA, including whether the 
        fiduciary identified any valid will or heir to whom the funds 
        are otherwise due.

        2. Consider reimplementing the procedural requirement to verify 
        the disbursement of VA-derived funds to deceased beneficiaries' 
        estates when a valid will or heir exists.

        3. Identify existing electronic controls or implement new ones 
        that allow VBA staff to track Fiduciary Program tasks, 
        timelines, and workload related to the return of deceased 
        beneficiaries' VA-derived funds to VA that would otherwise 
        escheat (revert) to a state if not disbursed to heirs.

        4. Collaborate with the Office of Field Operations to establish 
        a methodology and monitor the workload to ensure the prompt 
        return of deceased beneficiaries' VA-derived funds.\13\
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    \13\ The Office of Field Operations sets production goals and 
manages the employees who process veterans' claims.

    The OIG found that VA submitted actions plans generally responsive 
to the recommendations. The review team acknowledged VBA's decision not 
to reimplement the procedural requirement to verify the disbursement of 
VA-derived funds to deceased beneficiaries' estates when a valid will 
or heir exists, as proposed in recommendation 2, but reiterates that 
VBA is not prohibited from doing so to help ensure fiduciaries promptly 
disburse funds to individuals to whom the funds are due.
    The OIG will monitor implementation of all planned actions and will 
close recommendations 1, 3, and 4 when VBA provides enough evidence to 
demonstrate sufficient progress in addressing the intent of the 
recommendations and the issues identified.\14\
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    \14\ The OIG requests updates on the status of all unimplemented 
recommendations every 90 days. This is reflected on the recommendations 
dashboard found on the OIG website. For this report, the OIG will 
request the first update in late November 2023.

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PREVIOUS OIG WORK ON THE VA FIDUCIARY PROGRAM

    As stated earlier, the OIG's prior oversight of the Fiduciary 
Program also showed insufficient monitoring and workflow management, 
leading to significant delays in essential tasks. These delays included 
finalizing incompetency determinations and reimbursing misused funds--
increasing risks of poor outcomes for eligible beneficiaries also more 
vulnerable to fraud, theft, or financial loss.

Some Incompetency Decisions Were Not Timely Completed, Affecting 
Beneficiaries' Receipt of Funds

    In January 2021, the OIG published a management advisory memorandum 
after assessing the merits of a hotline allegation that a deceased 
veteran's VA funds had been misused while he was living at a California 
nursing home.\15\ As part of its assessment, the OIG discovered VBA had 
not finalized the veteran's incompetency proposal, despite VBA staff 
receiving medical evidence that the veteran was incapable of managing 
the VA benefit payments. This proposal, which can result in VA 
appointing a fiduciary, was not completed for three years prior to his 
death. This delay conflicts with VBA guidance that the decision be made 
and a fiduciary appointed within 141 days.\16\
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    \15\ VA OIG, Fiduciary Program: Some Incompetency Decisions Not 
Completed, Putting Those Beneficiaries' Funds at Risk, January 27, 
2021.
    \16\ This includes a 65-day due process period and a 76-day target 
for completing the initial appointment process.
---------------------------------------------------------------------------
    The OIG expanded its review to identify broader process issues and 
found VBA had not finalized incompetency proposals for 221 
beneficiaries from January 1, 2016, through December 31, 2019.\17\ 
Generally, the incomplete decisions occurred because staff did not 
update the workload management tool to show an incompetency proposal 
was pending a decision. Without that update, the case does not appear 
in the inventory of incompetency proposals requiring final action, so 
no decision is made or fiduciary appointed, and vulnerable 
beneficiaries' funds could be mismanaged. VBA agreed that 52 of the 55 
records the OIG reviewed were incomplete (stalled); the others were on 
appeal or had been flagged for a decision. The OIG provided VBA with 
the remaining 166 of the 221 records found to have incomplete decisions 
so that VBA could determine whether further action was needed to ensure 
incompetency proposals were finalized.
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    \17\ VA OIG, Fiduciary Program: Some Incompetency Decisions Not 
Completed, Putting Those Beneficiaries' Funds at Risk, January 27, 
2021.

VBA Needs to Improve the Timeliness of Determinations and 
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Reimbursements of Misused Funds

    In a July 2021 report, an OIG review team examined whether program 
staff properly addressed allegations of benefit payments being misused 
by fiduciaries and then reimbursed beneficiaries as required.\18\ 
Program staff initiated inquiries into approximately 12,000 allegations 
of fiduciary misuse of funds from January 1, 2018, through September 
30, 2019.\19\
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    \18\ VA OIG, VBA's Fiduciary Program Needs to Improve the 
Timeliness of Determinations and Reimbursements of Misused Funds, July 
21, 2021.
    \19\ Misuse occurs when a fiduciary spends a beneficiary's benefit 
payments for something other than the ``use and benefit'' of the 
beneficiary. Use and benefit is any expense reasonably intended for the 
care, support, or maintenance of the beneficiary or the beneficiary's 
dependents.
---------------------------------------------------------------------------
    The team assessed staff actions for a sample of misuse 
determinations and did not find systemic issues. However, there were 
instances of significant wait times for program staff to determine 
misuse and negligence and to reimburse misused funds. For example, one 
beneficiary waited 19 months after an initial determination of misuse 
before staff completed a negligence determination. VA then reimbursed 
the beneficiary over $20,000 in misused funds. Another beneficiary 
waited 14 months after the misuse determination before VA staff 
authorized reimbursement of approximately $5,800. The report concluded 
that VBA should consider whether the average number of days taken to 
complete each type of misuse action is acceptable to meet oversight 
responsibilities and fulfill the stated mission of protecting 
vulnerable veterans and other beneficiaries.
    The OIG also found VBA did not adequately monitor all follow-up 
actions on reported misuse. VBA was unaware of many of the unprocessed 
negligence determinations that the team identified. Additionally, the 
team examined the workload management plans and the systematic analysis 
of operations for the two fiduciary hubs visited but none of the 
related documentation discussed or identified pending reimbursements.
    The OIG made two recommendations to VBA to ensure prompt completion 
of determinations and reimbursements. In response, VBA implemented new 
information technology that allowed for electronic monitoring of 
negligence determinations and reimbursements. Both recommendations have 
been closed as implemented after reviewing VBA's responsive actions.

OIG CRIMINAL INVESTIGATIVE EFFORTS TO COMBAT FIDUCIARY FRAUD

    The OIG's Office of Investigations has a robust approach to 
identifying and holding accountable individuals who have violated the 
law and their duty to protect vulnerable veterans' financial interests. 
The OIG criminal investigators' multi-tiered approach to combating 
fiduciary fraud includes

        1. maintaining a close collaboration with VBA's fiduciary hubs 
        to proactively share concerns, stay apprised of new schemes, 
        and solicit referrals for OIG review;

        2. promoting publicly a fraud toolkit on the OIG website that 
        details key indicators of fiduciary and other types of fraud 
        and additional information on making reports to the OIG 
        hotline; and

        3. investigating potential fiduciary fraud and pursuing the 
        prosecution and conviction of bad actors.

    Together, these efforts have helped increase the awareness of 
fiduciary fraud and led to the successful arrest and prosecution of 
many fraudsters who were stealing benefits and taking advantage of 
veterans.

OIG's Collaborative Efforts with Fiduciary Hubs

    OIG criminal investigators have developed strong working 
relationships and communicate regularly with VBA personnel on cases of 
suspected misuse of benefits committed by VA-appointed fiduciaries. 
This highly effective engagement ensures that fiduciary hub personnel 
send referrals to the OIG for suspected criminal activity. The OIG also 
completes an annual comprehensive summary of all fiduciary-related 
actions taken during the previous fiscal year, to include 
investigations opened, cases prosecuted, indictments obtained, arrests 
made, restitution ordered, and other moneies recovered by VA. This 
report is provided to the P&F Service and incorporated into their 
Annual Benefits Report.\20\ More information on reported investigations 
that flowed from these hubs and other sources is discussed in the 
section on fiduciary fraud criminal cases below.
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    \20\ VBA, Annual Benefits Report Fiscal Year 2022, p. 143.

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OIG Public Outreach

    The Fraud Indicator Toolkit, found on the OIG's website, provides a 
list of key characteristics related to 10 types of fraud.\21\ It alerts 
VA personnel, contractors, and the veteran community when to report 
suspicious activity and alleged wrongdoing to the OIG hotline. The 
following examples from the toolkit relate to fiduciary fraud:
---------------------------------------------------------------------------
    \21\ VA OIG, Fraud Program FAQ.

      The beneficiary has overdue or unpaid bills or medical 
copayments, or needs do not appear to be met (insufficient food, 
---------------------------------------------------------------------------
medication, clothing, heating, or other expected costs).

      The fiduciary is secretive or vague about spending or 
lacks documentation for expenses.

      The beneficiary's VA benefits are deposited into an 
account that is also used for other non-VA deposits (comingled funds).

      VA benefits and other government deposits are distributed 
among various accounts or checks payable to ``cash'' are made from the 
beneficiary's account.

      Large or repeated ATM withdrawals and/or in-person 
withdrawals are made from the beneficiary's account.

      The fiduciary appears to be using or borrowing the 
beneficiary's VA benefits for their own personal use, particularly when 
there have been purchases of high-priced vehicles, property, or other 
goods or services.

Examples of Recent OIG Fiduciary Fraud Investigations

    The OIG receives and reviews referrals of potential cases of 
fiduciary fraud from the VBA hubs and the OIG hotline. Since October 1, 
2019, the Office of Investigations has opened more than 115 criminal 
cases, made 55 arrests, and secured 51 convictions. During this period, 
there was a $15 million dollar financial impact on VA and a $10 million 
dollar impact on veterans.\22\ To appreciate the consequences for 
vulnerable veterans, the following are just a few examples of fiduciary 
fraud cases recently investigated by the OIG and prosecuted by our 
partners at the Department of Justice.
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    \22\ Financial impact includes restitution, civil judgments, 
penalties, fines, forfeitures, and cost savings.
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    An OIG investigation revealed that a former VA-appointed fiduciary 
misappropriated more than $143,000 in VA funds intended for her 
severely disabled veteran husband.\23\ The fiduciary was married to a 
US Army Reservist who suffered a severe traumatic brain injury in a 
military service-connected accident. Because of this injury, her 
husband had many serious physical challenges. As his guardian and VA 
fiduciary, she subsequently received $258,613 in VA disability payments 
and $36,000 in Social Security payments intended for her husband. She 
withdrew $199,649 in cash and accrued about $900 in ATM and overdraft 
fees, and then misappropriated most of the funds by spending the money 
on methamphetamine for herself and others, living expenses for five 
other people, vehicles for numerous individuals, and other nonapproved 
items. In October 2022, she was sentenced in the Eastern District of 
Arkansas to 20 months' imprisonment, three years' supervised release, 
and restitution of $143,000.
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    \23\ US Department of Justice, ``Jonesboro Woman Sentenced to 20 
Months in Prison,'' October 4, 2022, https://www.justice.gov/usao-edar/
pr/jonesboro-woman-sentenced-20-months-prison.
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    Another OIG investigation found that a former VA-appointed 
fiduciary embezzled VA funds intended for his veteran brother, 
including over $130,000 in unauthorized money transfers, over $25,000 
in ATM cash withdrawals, and numerous purchases for his own personal 
use.\24\ The purchases included a diamond ring, a pickup truck, and two 
motorcycles. In November 2021, the fiduciary was sentenced in the 
Western District of Pennsylvania to 1 day of incarceration, three 
years' supervised release, restitution of $75,000, and a fine of $4,000 
after previously pleading guilty to misappropriation.
---------------------------------------------------------------------------
    \24\ US Department of Justice, ``New Kensington Man Sentenced for 
Misappropriating VA Benefits,'' November 1, 2021, https://
www.justice.gov/usao-wdpa/pr/new-kensington-man-sentenced-
misappropriating-va-benefits.
---------------------------------------------------------------------------
    From November 2006 to July 2017, four defendants were found to have 
engaged in a sophisticated financial scheme to defraud victims of their 
VA and Social Security funds.\25\ The investigation was conducted by 
the VA OIG, Social Security Administration OIG, Internal Revenue 
Service Criminal Investigation, and the Federal Bureau of 
Investigation. The defendants used a nonprofit corporation that 
provided guardianship, conservatorship, and financial management to 
hundreds of people with special needs. The organization also served as 
a VA-appointed fiduciary for dozens of veterans. The defendants used 
funds that were unlawfully transferred from their clients' accounts to 
purchase homes, vehicles, luxury recreational vehicles, and cruises. 
Fifty-two veterans were harmed by this scheme. The loss to VA was 
approximately $3.3 million. In July 2021, the nonprofit owner was 
sentenced to 47 years' imprisonment, and her husband was sentenced to 
15 years. The other two defendants were sentenced to 20 years in prison 
and five years and 11 months in prison, respectively. The owner of the 
nonprofit was also ordered to pay approximately $6.8 million in 
restitution to the victims of the fraud scheme. The other defendants 
were ordered to pay the entire amount of the stolen funds as 
restitution to the victims.
---------------------------------------------------------------------------
    \25\ US Department of Justice, ``Albuquerque Couple Sentenced to 
Federal Prison in Ayudando Guardians Case,'' July 15, 2021, https://
www.justice.gov/usao-nm/pr/albuquerque-couple-sentenced-federal-prison-
ayudando-guardians-case.

---------------------------------------------------------------------------
CONCLUSION

    An effective process to detect and resolve deficiencies is a 
fundamental element of accountability for any VA program. The OIG found 
that the P&F Service had deficiencies in both and should strengthen the 
fiduciary program's governance, including its oversight of the 
fiduciary hubs' operations. VBA leaders should ensure effective 
workflow management processes are in place and consistently implemented 
to make certain that there is adequate oversight of fiduciaries. This, 
in turn, will mitigate the risks that beneficiaries do not receive the 
program support to which they are entitled. The OIG is committed to 
continuing its oversight work in this area and investigating potential 
fiduciary fraud that not only affects program beneficiaries, but also 
makes the most effective use of taxpayer dollars.
    Mr. Chairman, this concludes my statement. I would be happy to 
answer any questions you or members of the Subcommittee may have.

                       Statements for the Record

                              ----------                              


                  Prepared Statement of Kenneth Smith

    Chairman Luttrell, Ranking Member Pappas and distinguished members 
of the Subcommittee, thank you for the opportunity to appear before you 
today to discuss the Department of Veterans Affairs (VA) fiduciary 
program and the vital role we serve for our Veterans and beneficiaries. 
Accompanying me today is Kevin Friel, Deputy Director, Pension and 
Fiduciary (P&F) Service. I want to express my appreciation for your 
continued support of the Nation's Veterans, their families and 
survivors. VA takes the protection of our most vulnerable beneficiaries 
very seriously, and we are grateful for the opportunity to share with 
the Committee the significant updates VA has made to the fiduciary 
program.

Fiduciary Program Purpose and Structure

    Since as early as 1924, the mission of VA's fiduciary program is to 
protect Veterans and other VA beneficiaries who are unable to manage 
their own financial VA benefits because of injury, disease, infirmities 
of advanced age or who are dependents under the age of majority. VA 
protects these vulnerable beneficiaries by appointing and overseeing 
fiduciaries who manage their VA benefits. VA provides oversight over 
fiduciaries to ensure that VA monetary benefits are being used to meet 
the care and needs of those beneficiaries adjudged incompetent to 
manage their VA-derived benefits. VA does not take the action to 
appoint a fiduciary lightly and strives to preserve dignity by serving 
these beneficiaries with a high degree of sensitivity in the least 
intrusive way possible.
    The statutory authority for the fiduciary program is 38 U.S.C. Ch. 
55 and 61. VA has established Federal regulations for this program 
under 38 C.F.R. Part 13, Fiduciary Activities. In 2018, P&F Service 
revised its regulations to refine VA policies and procedures, ensuring 
consistency with current law. It also clarified the rights of 
beneficiaries in the fiduciary program and the roles that VA and 
fiduciaries play in ensuring that VA monetary benefits are managed in 
the best interest of impacted beneficiaries.
    In March 2012, VA consolidated all fiduciary activities to six 
regional fiduciary hubs, comprised of over 1,200 Field Examiners, Legal 
Instrument Examiners, Fiduciary Service Representatives and other 
management and support staff. As of August 2023, these hubs 
collectively provide oversight of approximately 104,000 beneficiaries 
and 83,000 fiduciaries. The Office of Field Operations monitors the 
operations of the six fiduciary hubs while P&F Service provides 
policies, procedures, and additional oversight of the fiduciary 
program.

VA Modernization Efforts

    VA has undergone significant modernization and improvement in its 
approach to fiduciary activities. In November 2020, VA implemented a 
comprehensive plan aimed at reducing unnecessary intrusiveness in the 
lives of VA beneficiaries and their families, while also improving 
oversight of fiduciaries. This initiative also allowed VA to re-focus 
efforts on expeditiously conducting interviews and investigations that 
are paramount to enrolling and monitoring beneficiaries and their 
associated fiduciaries in the program. VA focused on the completion of 
initial appointments and investigations, as well as follow-up face-to-
face examinations for situations where an issue or concern in the 
beneficiary-fiduciary relationship was identified.
    These programmatic improvements have also positively impacted the 
time it takes VA to appoint a fiduciary to serve Veterans and other 
beneficiaries, thereby ensuring faster access to benefits. Since 
implementing the procedural modernization efforts which began in 
February 2020, VA reduced the average days pending for an initial 
appointment field examination from 37 days to 26 days, as of August 31, 
2023. Additionally, VA has further enhanced oversight of fiduciaries by 
increasing the completion of financial reviews for beneficiary funds by 
49 percent from 45,204 in fiscal year (FY) 2020 to 67,223 in FY 2022.
    In November 2020, VA also modernized information technology systems 
for fiduciary program activities by migrating from a legacy system to 
VA's central benefits claims processing system, the Veterans Benefits 
Management System. This allowed for the use of VA's modern claims 
processing application to deliver fiduciary services efficiently and 
effectively.
    Accountings are paramount to the oversight of certain fiduciaries. 
In August 2020, VA delivered the Fiduciary Accounting Submission Tool 
(FAST). Prior to implementing FAST, fiduciaries were required to submit 
accountings and financial documents to VA through the mail. The FAST 
system provides an alternative to mail by allowing for the electronic 
submission of accountings reports which streamlines the current process 
for accounting submission and reviews. Fiduciaries may use FAST to 
submit new and existing accountings, fund usage reviews and provide 
accounting revisions in a centralized repository. VA continues to work 
to enhance the FAST system to streamline workload processing of 
accountings and fund usage reviews.
    VA has also leveraged technology to accommodate the fiduciary 
program throughout the global pandemic. The pandemic curtailed in-
person visits with Veterans and other beneficiaries. VA quickly 
researched viable options and leveraged the Veterans Health 
Administration's (VHA) video teleconferencing tools to conduct field 
examinations with beneficiaries. In March 2022, the fiduciary program 
released its own video conferencing tool, P&F Service Video 
Conferencing. This allowed VA employees to see the beneficiary and 
their living situation when circumstances prevented an in-person visit, 
enabling VA to continue its oversight responsibilities.

Referrals to the Fiduciary Program

    VA beneficiaries may be referred to the fiduciary program in 
multiple ways. A referral to the fiduciary program may result from a 
proposal of incompetency from a VA regional office based on medical 
evidence of record or receipt of a court determination finding that a 
beneficiary is unable to manage their financial affairs. VA's 
regulation (in 38 C.F.R. Sec.  3.353(a)) defines a mentally incompetent 
personas ``one who because of injury or disease lacks the mental 
capacity to contract or to manage [their] own affairs, including 
disbursement of funds without limitation.'' Additionally, beneficiaries 
under the age of majority are required to be referred to the fiduciary 
program. VA refers to individuals who have not yet reached the age of 
majority as minor children. The age of majority is determined by the 
laws of each individual State or U.S. territory.
    When the evidence demonstrates that a proposal of incompetency is 
appropriate, VA provides written due process notice of the proposed 
decision to the beneficiary. This notice explains the evidence used to 
make the decision and their rights. The beneficiary is informed of 
their right to provide additional evidence, a hearing and the 
implications of a finding of incompetency by VA. Beneficiaries have the 
right to a minimum due process period of 60 days, unless they waive 
their due process rights. If VA does not receive a waiver of due 
process, VA will review all evidence of record and make a final 
determination on incompetency after the due process period has expired. 
VA cannot determine a beneficiary is incompetent unless there is clear, 
convincing medical evidence which leaves no doubt as to the person's 
incompetency. In the absence of clear and convincing evidence to the 
contrary, VA presumes that a person is competent.
    It is important to note that judicial findings of a court with 
respect to the incompetency of a beneficiary are not binding on VA's 
rating activity. If VA accepts the court's finding of incompetency 
based on a review of the evidence, no additional notices are provided 
to the beneficiary and VA designates the beneficiary as incompetent. 
However, if a Veteran is declared incompetent by a court, VA develops 
for all necessary evidence to complete a rating determination.

Fiduciary Appointment

    In each case where a beneficiary requires a fiduciary, VA strives 
to appoint an individual that can assist VA in meeting the care and 
needs of the beneficiary. VA appoints various individuals and entities 
as a fiduciary, such as a spouse or family member, a court-appointed 
fiduciary, another interested party or a professional fiduciary.
    During the appointment of a fiduciary, VA will assess the well-
being and needs of the beneficiary and their dependents by way of an 
in-person field examination. A VA field examiner will conduct an in-
person visit to assess the beneficiary's living situation and will 
review the beneficiary's personal situation. VA will consider the 
beneficiary's preference of a fiduciary and attempt to appoint the 
preferred individual, provided that the proposed fiduciary is 
qualified, willing to serve, and the appointment would serve the 
beneficiary's interest. As of August 31, 2023, two out of three 
(72,534) fiduciaries appointed are spouses or other family members.
    If the beneficiary is unable to identify a preferred individual to 
serve as their fiduciary, VA will make every effort to appoint an 
individual or entity that is willing to serve without a fee. However, 
in certain circumstances, VA must appoint a professional fiduciary who 
receives a fee for their services. Fees for a professional fiduciary 
are limited by statute to 4 percent of the beneficiary's monthly VA 
payment.
    When appointing any fiduciary, VA thoroughly examines the 
fiduciary's ability to meet their responsibilities as outlined in 
regulation and statute. VA investigates a proposed fiduciary's criminal 
background and credit history and assesses their suitability. To be 
considered suitable, the proposed fiduciary must not possess a bar to 
fiduciary service, such as a recent conviction of a felony offense. VA 
will not appoint a person to serve as a fiduciary if they have misused 
a beneficiary's VA benefits, refuse to comply with VA regulations and/
or are unable to fulfill their fiduciary responsibilities.
    During the fiduciary appointment process, VA instructs the 
fiduciary on their duties and responsibilities and provides information 
about the needs of the beneficiary and any dependents, as applicable. 
VA provides fiduciaries with the training resources available on VA's 
website. VA ensures the fiduciary understands their responsibility to 
know all monthly bills and monetary considerations to meet the care and 
needs of the beneficiary.
    As part of the appointment process, VA considers whether the 
beneficiary has the capacity to manage their own benefits with limited 
VA oversight. If the beneficiary demonstrates the capability to manage 
their funds, VA will place the beneficiary on Supervised Direct Pay. 
When Supervised Direct Pay is utilized and the beneficiary demonstrates 
the sustained ability to manage their funds under this appointment, VA 
will act to make a determination that finds the beneficiary to be 
competent.
    In FY 2023 through August 31, VA has completed 1,600 initial 
appointment field examinations in an average of 42 days.

Fiduciary Oversight

    VA provides robust oversight for all fiduciaries in the fiduciary 
program. Through its modernization efforts, VA has refined and 
strengthened its oversight responsibilities for the fiduciary and 
beneficiary. Fiduciary oversight focuses on a fiduciary's management of 
a beneficiary's benefits. VA reviews each case's individual 
circumstances to determine the level of oversight needed. All 
fiduciaries are subject to regularly scheduled financial oversight 
which is achieved by submitting either an accounting or a fund usage 
report unless the appointment involves either a chief officer of a non-
VA facility where the cost of care for the beneficiary equals or 
exceeds the monthly VA benefit, or a chief officer of a Federal 
institution if the officer is receiving VA benefits in a fiduciary 
capacity.

Annual Accounting

    VA requires an annual accounting when the VA funds under management 
exceed $10,000, the fiduciary is authorized to collect a fee for their 
service or the beneficiary is paid VA disability compensation benefits 
for total disability. VA may also determine that an accounting is 
necessary to ensure that beneficiary funds are properly managed by the 
fiduciary.
    The annual accounting describes, in detail, all activity in the 
fiduciary accounts, regardless of the source of funds, such as Social 
Security payments and interest earned on deposits. The fiduciary is 
required to submit the annual accounting report, along with financial 
documents and statements covering the entire accounting period. VA 
conducts a thorough audit of the accounting and pertinent financial 
documents, examining funds received and expenditures. If the audit 
shows any indication of misuse of funds, VA investigates and removes 
the fiduciary from their appointment if misuse is confirmed.
    In FY 2023 through August 31, VA completed 31,841 accountings, 
completing them in an average of 71 days.

Biennial Fund Usage Report

    If the beneficiary's individual circumstances do not meet the 
criteria for an annual accounting, VA conducts targeted oversight of 
the fiduciary's use and management of VA funds through biennial fund 
usage reports. A fund usage report consists of a review of 3 months of 
all financial statements for the beneficiary. The fund usage report 
must include any supporting documents regarding irregular purchases so 
that VA can confirm the beneficiary's funds are being spent in their 
best interest. As with the accounting audit, if the fund usage review 
shows evidence of misuse of the beneficiary funds, VA investigates and 
removes the fiduciary from their appointment if misuse is 
substantiated.
    In FY 2023 through August 31, VA completed 15,805 fund usage 
reviews, completing them in an average of 70 days.

Follow-Up Contact

    VA completes follow-up field examinations and telephone contact 
oversight when the fiduciary fails to fulfill their responsibilities. 
For example, VA follows up on delinquent accountings and funds usage 
reports and seeks further clarification if the necessary information is 
not submitted. Should the fiduciary refuse to submit the accounting, 
fund usage report or supporting documents when contacted, VA will 
remove the fiduciary.
    In FY 2023 through August 31, VA completed 13,567 follow-up 
contacts in an average of 29 days.

Onsite Reviews

    An onsite review strengthens VA's oversight of fiduciaries. Onsite 
reviews are intended to ensure fiduciaries who serve multiple 
beneficiaries are performing their duties satisfactorily and to protect 
beneficiaries from misuse. VA conducts scheduled periodic onsite 
reviews under 38 U.S.C. Sec.  5508 on fiduciaries who meet all the 
following criteria:

      Are located in the United States;

      Serve more than 20 beneficiaries; and

      Total VA funds under management for beneficiaries is more 
than

      $78,860.76 as of December 1, 2022.

    VA may conduct unscheduled onsite reviews of fiduciaries as 
necessary to ensure the well-being of beneficiaries or prevent 
exploitation of beneficiary funds.

Beneficiary Oversight

    In addition to overseeing the fiduciary's performance, VA conducts 
regular oversight of vulnerable beneficiaries to ensure their well-
being through various means, based on the unique circumstances of each 
case. VA strives to conduct the least intrusive method of oversight to 
maintain a beneficiary's dignity and to minimize any disruption of 
family routine.

Annual Written Contact

    VA contacts every beneficiary in the fiduciary program annually 
through written correspondence to remind them of their rights and 
status in the fiduciary program. This letter also advises the 
beneficiary and their representative to contact VA if there is an issue 
or concern with their fiduciary.
    For some beneficiaries, an added layer of oversight is not deemed 
necessary because their well-being is actively monitored by a trusted 
individual or entity. In these instances, VA leverages annual written 
contact as the least intrusive form of regular contact while continuing 
oversight of the beneficiary. These situations include where the 
fiduciary is:

      The beneficiary's spouse;

      The beneficiary's parent (in cases of minor 
beneficiaries);

      VHA; or

      Another government agency.

    As of August 31, 2023, there are approximately 66,303 beneficiaries 
served through this type of oversight.

Telephone Contact

    If the beneficiary's situation does not meet the criteria for 
annual written contact, the beneficiary may qualify for scheduled 
telephonic contact. Beneficiaries who qualify for telephonic oversight 
are not socially isolated, able to respond to VA requests and oriented 
to person, place, events and time as of the most recent VA contact.
    VA will conduct a telephone call with the beneficiary to assess 
their well-being, and the beneficiary-fiduciary relationship. 
Telephonic oversight allows VA to maintain oversight of beneficiaries 
in a way that is minimally intrusive when the beneficiary's evidence of 
record indicates that they are able to correspond with VA. As of August 
31, 2023, there are approximately 9,722 beneficiaries served through 
this type of oversight.

Biennial Face-to-Face Contact

    For the most vulnerable beneficiaries, such as those who are 
socially isolated, unable to respond to VA requests or are not oriented 
to person, place, events and time during the most recent contact, VA 
will schedule a face-to-face field examination with the beneficiary. 
These examinations occur every 2 years and help ensure the 
beneficiary's well-being and assess the current fiduciary situation. As 
of August 31, 2023, there are approximately 24,935 beneficiaries 
provided this type of oversight.

Fiduciary Removals and Withdrawals

    A fiduciary may withdraw from service by providing a written intent 
to withdraw that includes the reason for withdrawal. However, a 
fiduciary is not relieved of their fiduciary duties until they receive 
written notice in response to their request to withdraw, which includes 
their requirement to transfer the beneficiary's funds to a successor 
fiduciary and receive notice of approval for a final accounting.
    VA will also take action to remove a fiduciary when oversight 
reveals evidence of misuse, if the fiduciary refuses to respond to VA's 
request for accounting or fund usage report documentation or is 
otherwise found unfit or unsuitable to continue performing fiduciary 
responsibilities. For VA to further ensure proper oversight of the 
fiduciary and complete removal actions timely, an annual criminal 
background inquiry is completed on all active individual fiduciaries to 
determine whether any active fiduciary has been convicted of an offense 
which would be a bar to serving as a fiduciary since VA's most recent 
criminal background investigation. VA takes action to remove any 
fiduciary found to have a bar to service because of the annual criminal 
background inquiry.
    VA takes misuse of beneficiary funds very seriously and any 
credible allegation or finding of such is swiftly and comprehensively 
investigated. Misuse of benefits occurs when the fiduciary receives 
payment of VA benefits and uses any part of such payment for a purpose 
that is not for the use and benefit of the beneficiary or their 
dependents. VA fiduciary program personnel investigate and act on 
misuse, which is distinct from fraud. For example, fraud could be the 
continued acceptance of payments after the entitlement to the payment 
ceases to exist, such as when a beneficiary dies, and the fiduciary 
conceals the fact to continue receiving VA payments. Allegations of 
fraud are immediately referred to VA's Office of Inspector General 
(OIG) for criminal investigation.
    VA's oversight is designed to detect and address misuse through 
accountings, funds usage reports, beneficiary interviews and other 
contacts, but it is not foolproof. VA relies on allegations of misuse 
of funds from many sources, such as from the beneficiary themselves, a 
concerned family member or friend or a beneficiary's social worker. 
Every allegation, whether written or verbal, is taken seriously and 
investigated thoroughly, objectively and impartially. If misuse of a 
beneficiary's funds is confirmed, VA issues a formal misuse 
determination which serves as the basis to immediately remove the 
fiduciary if removal has not already occurred. VA simultaneously 
establishes a debt against the fiduciary and refers the case to VA's 
OIG for possible criminal investigation. Any fiduciary found to have 
misused a beneficiary's funds is further barred from serving as a VA 
fiduciary in the future.
    VA's primary obligation is always the beneficiary and their well-
being. If a beneficiary's VA benefits were misused by their VA-
appointed fiduciary, VA will make the beneficiary or the beneficiary's 
successor fiduciary whole, while simultaneously seeking recovery from 
the person who misused the funds.

VA Negligence

    VA does not spare itself from scrutiny and conducts review of its 
own oversight. After VA issues a formal finding of misuse, VA reviews 
the record to determine if VA was negligent, as required by law. VA is 
considered negligent if the misuse would not have occurred but for VA's 
failure to exercise proper oversight. VA is also considered negligent 
when VA fails to:

      Review an accounting within 60 days of receipt;

      Decide to investigate an allegation of misuse within 60 
days of receipt of the allegation; or

      Take action to replace the fiduciary within 60 days of 
the allegation of misuse after deciding to investigate an allegation of 
misuse and finding misuse.

    Thanks to congressional action, P.L. 116-315, the Johnny Isakson 
and David P. Roe, M.D. Veterans Health Care and Benefits Improvement 
Act of 2020, VA was able to improve its ability to make beneficiaries 
whole after a finding of misuse by decoupling a finding of VA 
negligence from reissuance. With the passing of this law, VA is now 
able to reissue the equivalent amount of funds misused by a fiduciary 
to the beneficiary in every instance of misuse.

Conclusion

    The VA fiduciary program has undergone significant modernization in 
recent years and VA remains committed to protecting the most vulnerable 
of its beneficiaries. VA strives to maintain the balance of oversight 
and intrusiveness, while remaining steadfast in our oversight of 
appointed fiduciaries and the funds it has entrusted to them. VA shares 
Congress' goal of continuous improvements to its program and its 
customer service to Veterans and beneficiaries and looks forward to 
continued collaboration. VA expresses its appreciation for your 
continued support of Veterans and their families, caregivers and 
survivors. Chairman Luttrell, Ranking Member Pappas, this concludes my 
statement. I am happy to respond to any questions you or the Committee 
may have.
                                 ______
                                 

            Prepared Statement of Disabled American Veterans

    Chairman Luttrell, Ranking Member Pappas and Members of the 
Subcommittee:
    Thank you for inviting DAV (Disabled American Veterans) to submit 
testimony for the record of your oversight hearing titled, ``VA's 
Fiduciary Program: Ensuring Veterans' Benefits are Properly Managed.''
    DAV is a congressionally chartered and VA-accredited national 
veterans' service organization (VSO) of more than one million wartime 
service-disabled veterans. To fulfill our service mission, DAV directly 
employs a corps of benefits advisors, national service officers (NSOs), 
all of whom are themselves wartime service-connected disabled veterans, 
at every Department of Veterans Affairs (VA) regional office (VARO) as 
well as other VA facilities throughout the Nation, including the Board 
of Veterans' Appeals (Board).
    Mr. Chairman, based on our experience of providing VA-accredited 
claims representation and assistance to veterans, their families, 
survivors and those deemed to warrant a fiduciary, we are enthused to 
provide our concerns about the VA incompetency process, the Fiduciary 
Program, oversight of VA appointed fiduciaries and DAV's 
recommendations.

                       VA'S INCOMPETENCY PROCESS

    Under VA regulation 38 C.F.R. 3.353(a), a mentally incompetent 
person is one who because of injury or disease lacks the mental 
capacity to contract or to manage his or her own affairs, including 
disbursement of funds without limitation. The Veterans Benefits 
Administration (VBA) has sole authority to make official determinations 
of competency and incompetency for purposes of disbursement of 
benefits.
    In general, most VA incompetency decisions, stem from the VA 
Compensation and Pension (C&P) examinations. On the VA Disability 
Benefits Questionnaire (DBQ) for mental health, the examiner must 
address the question, ``Is the veteran capable of managing his or her 
financial affairs? It comes with a note, ``For VA purposes, a mentally 
incompetent person is one who because of injury or disease lacks the 
mental capacity to contract or to manage his or her own affairs, 
including disbursement of funds without limitation.''
    The DBQ, however, does not indicate the questions asked by the 
examiner or how they specifically conclude the veteran not being 
capable of handling financial issues. There is no requirement that this 
information be based on an actual review of the veteran's finances. In 
addition, the September 13, 2023, VA Office of the Inspector General 
(OIG) report found that inconsistent DBQs may lead to inaccurate mental 
competency determinations.
    Unless the medical evidence is clear, convincing and leaves no 
doubt as to the person's incompetency, the rating agency will make no 
determination of incompetency without a definite expression regarding 
the question by the responsible medical authorities. Determinations 
relative to incompetency should be based upon all evidence of record 
and there should be a consistent relationship between the percentage of 
disability, facts relating to commitment or hospitalization and the 
holding of incompetency.
    Where reasonable doubt arises regarding a beneficiary's mental 
capacity to contract or to manage his or her own affairs, including the 
disbursement of funds without limitation, such doubt will be resolved 
in favor of competency.
    Whenever it is proposed to make an incompetency determination, the 
beneficiary will be notified of the proposed action and of the right to 
a pre-determination hearing. If the pre-determination hearing is 
requested within 30 days of the notice, VBA cannot make a final 
determination on the issue of incompetency until the outcome from the 
hearing.
    Once incompetency is proposed, any retroactive benefits owed to the 
beneficiary are withheld until a decision is made regarding competency. 
The beneficiary will still receive their monthly VA disability benefits 
check. To put this into context, if the beneficiary were granted a 100 
percent rating for PTSD, but the issue of incompetency has been raised, 
they will receive monthly checks reflecting the 100 percent rating, but 
will not receive any of the retroactive benefits until a decision has 
been made regarding competency.
    If the beneficiary is deemed incompetent, the retroactive benefits 
will be paid to the fiduciary, once the fiduciary is appointed. Once a 
beneficiary has been determined to be incompetent for VA purposes, 
VBA's Fiduciary Program will then start the process to appoint a 
fiduciary to manage the beneficiary's financial affairs.

                        VBA'S FIDUCIARY PROGRAM

    VBA's Fiduciary Program provides protection to veterans and other 
beneficiaries who are unable to manage their financial affairs. This 
program is managed by Fiduciary Hubs, currently there are six Fiduciary 
Hubs, meaning that multiple states will be assigned to the same 
Fiduciary Hub.
    Once incompetency has been determined, the case is provided to the 
Fiduciary Hub closest to where the veteran resides. The Fiduciary Hub 
will start the process to assign the veteran a fiduciary.
    One of the first steps in the fiduciary process is a home visit 
with a VA field examiner. The field examiner works for VA and is 
responsible for choosing a suitable fiduciary for the veteran, as well 
as supervising the fiduciary once chosen and ensuring that the 
fiduciary acts in compliance with VA. The field examiner will visit 
with the veteran in their home to assess their needs and determine how 
to best proceed with filling the fiduciary role, this is often referred 
to as the Field Examination.
    The Field Examination will give the field examiner insight into the 
veteran's lifestyle, finances, and health care needs. As such, it can 
be helpful for the veteran to have documentation prepared prior to the 
visit, specifically lists of expenditures, bills, and outstanding 
debts. During this examination, the field examiner may make evaluations 
regarding:

      Physical status of the veteran, such as age, appearance, 
and physical disabilities or mobility limitations;

      Mental health of the veteran, including any mental 
conditions, and ability to discern time, place, and events;

      Current medications and specific health concerns;

      Veteran's current capacity to manage finances;

      Inventory of assets;

      Standard of living, with specific regard to the monthly 
finances and funds used;

      Social adjustment, such as social relationships;

      Industrial adjustment, such as work capability;

      Dependents and needs of dependents;

      Information regarding next of kin; and

      Any changes to benefit entitlement.

    Generally, the most common types of fiduciaries are federal 
fiduciaries and court-appointed fiduciaries. Court-appointed 
fiduciaries are rarer and only used in instances where a Federal 
fiduciary may not be found. A federal fiduciary may include spouses, 
family members, or legal custodians.
    The goal is finding the fiduciary who best suits the veteran's 
needs, and, where feasible, preferences. VA has a set of guidelines to 
choose a fiduciary. VA's internal handbook instructs field examiners to 
``determine the most effective, practical, and/or economical type of 
fiduciary appropriate to the situation.'' As well as ``discuss payee 
selection with the beneficiary to the extent possible'' and ``take into 
consideration the beneficiary's request where feasible.''
    Additionally, field examiners investigate the eligibility of a 
potential fiduciary candidate by reviewing:

      Identification information, including name, address, date 
of birth;

      Occupation status;

      Relationship to the veteran;

      Education level;

      Credit report information (this is not necessary if the 
proposed fiduciary is a spouse or parent);

      Response to criminal background check inquiry; and

      Character witness statements

    After the field examiner completes the investigation into potential 
fiduciary candidates, they will appoint a fiduciary and this requires 
the field examiner to notify the veteran through an official 
notification, similar to a VBA rating decision.
    If the fiduciary is a spouse, the spouse will receive a packet of 
paperwork by mail which will need to be filled out. If the fiduciary is 
someone other than a spouse, the veteran will be provided with the 
fiduciary's identification information and a meeting will be scheduled 
for the veteran to meet with the new fiduciary in person. Once this 
meeting has occurred, the fiduciary will take over all financial 
responsibilities and obtain all the financial information necessary to 
do so.
    The fiduciary process is designed to protect the veteran and their 
assets. Veterans have certain rights to ensure that the system is not 
abused and that the fiduciary is best suited for the veteran's needs. 
Veterans have the right to:

      Be notified when VA appoints a fiduciary;

      Appeal the appointment of a fiduciary to the Board;

      Request that VA replace a current fiduciary with a new 
fiduciary; and

      Be assigned a new fiduciary at any time.

    According to VBA's Annual Benefits Report for Fiscal Year (FY) 
2022, updated in February 2023, the Fiduciary Program is serving more 
than 108,000 beneficiaries who receive over $2.6 billion in VA 
compensation or pension. Given this large amount of beneficiaries with 
third-party individuals who have access to billions of benefits, DAV is 
concerned that these veterans and beneficiaries are vulnerable to fraud 
and misuse of VA funds. Oversight must be priority one.

                          FIDUCIARY OVERSIGHT

    VBA states the Fiduciary Program closely monitors fiduciaries for 
compliance with program responsibilities to ensure that VA benefits are 
being used for the sole purpose of meeting the needs, security, and 
comfort of beneficiaries and their dependents.
    Additionally, two offices within VBA share oversight responsibility 
for the Fiduciary Program. The Pension and Fiduciary Service 
establishes policy and procedures, provides training, and generally 
oversees claims processing accuracy. The Office of Field Operations 
sets production goals and manages the employees who process veterans' 
claims. Additionally, as noted above, the field examiner is responsible 
for compliance as well.
    DAV is concerned with the amount and levels of oversight for 
incompetent veterans and beneficiaries, as we feel more oversight is 
needed to actually protect veterans. There are numerous reports on 
fraud and misuse by VA-appointed fiduciaries. For example, the FY 2022 
Annual Report noted above, reported fraud and misuse indicating that 
fiduciary personnel conducted 2,067 misuse investigations, of which 817 
fiduciaries were removed. Of the cases VA referred to the VA OIG, 25 
misuse cases were accepted by OIG for further investigation.
    The number of OIG prosecutorial outcomes during fiscal year 2022, 
so far, resulted in 12 arrests, 16 indictments and 15 convictions. The 
total amount of restitution ordered in cases arising from the misuse of 
benefits by a fiduciary was $1,773,706. The total amount of money 
recovered by the government in misuse cases was $299,865. The total 
amount of benefits reissued to beneficiaries was $1,346,660.
    Examples of these cases can be found in the VA OIG reports, 
specifically, in their March 2023 Highlights report:

        The recent VA OIG report of August 17, 2023, found that, ``VBA 
        Did Not Have Adequate Procedures to Ensure Fiduciaries Promptly 
        Returned Deceased Beneficiaries' Funds to VA.'' The OIG 
        substantiated the allegation that as of June 2022, two 
        fiduciaries under the jurisdiction of the Indianapolis 
        fiduciary hub had not released the funds of four deceased 
        beneficiaries who died in 2010, 2013, 2015 and 2020, 
        respectively. The OIG identified two additional cases in which 
        the fiduciaries had not released funds promptly. Between August 
        2022 and November 2022, both fiduciaries returned the funds for 
        all six cases to either VA or an heir, but the delay ranged 
        from more than 19 months to 12 years before the funds were 
        distributed. Probate proceedings could cause a delay in 
        disbursement; however, the OIG team reviewed VA electronic 
        records and contacted the fiduciaries involved in these cases 
        and found no evidence that any of the six cases were involved 
        in probate. In total, these six cases involved about $810,000 
        of VA-derived funds.

    Additional instances of fiduciary fraud are noted below from the VA 
OIG Highlights Report of May 2022:

        Former VA-Appointed Fiduciary Pleaded Guilty for Stealing 
        Benefits from Veterans. VA OIG investigators determined that a 
        former VA-appointed fiduciary stole over $300,000 that was 
        intended for use by 10 different veterans that he was appointed 
        to represent. He pleaded guilty in the District of South 
        Carolina to theft of government funds.

        Another Former VA Fiduciary Indicted for Fraud. In 
        collaboration with the South Carolina Attorney General's 
        Office, the VA OIG conducted an investigation that resulted in 
        charges alleging that a former VA-appointed fiduciary stole 
        over $65,000 from a veteran she was appointed to represent. The 
        former fiduciary was indicted in the County of Lexington (South 
        Carolina) Court of General Sessions on charges of breach of 
        trust with fraudulent intent and exploitation of a vulnerable 
        adult.

    As a grateful nation honoring service and sacrifice, we provide 
compensation to veterans, their families and survivors; however, if we 
are failing to protect the most vulnerable of them, we are not truly 
honoring them.

                          DAV RECOMMENDATIONS

    Our cumulative experience in providing VA-accredited representation 
to veterans and their families, has provided us with insight in 
assisting incompetent veterans and dealing with their fiduciaries. 
Thus, we make the following recommendations to improve the incompetency 
process and the thoroughness of the Fiduciary Program:

      Improve the DBQ question about ability to manage 
financial affairs. As we noted above, there are no specific questions 
asked by the examiner. We recommend the DBQ question be clarified. 
Additionally, there is no requirement that a finding of incompetency be 
based on a review of the veteran's finances. We recommend that all 
determinations of incompetency be based on an actual review of the 
veteran's finances coupled with their ability to make decisions 
regarding their financial affairs.

      Require annual audits with veterans and the VA appointed 
fiduciary. VA does require reporting from the fiduciary; however, we 
recommend an annual in-person interview with the veteran about the 
fiduciary and then a subsequent in-person audit of the fiduciary. This 
will assist in identifying potential fraud and misuse. This requirement 
would have quickly identified those fiduciaries who were collecting 
veterans' benefits 12 years after their death.

      All claims of fraud and misuse to be investigated within 
72 hours. In our experience, when incompetent veterans make complaints 
about their VA-appointed fiduciary, they are not always taken 
seriously. In some instances, this has had dire results for veterans. 
We recommend that all complaints from incompetent veterans be taken 
seriously and investigated within 72 hours.

    We acknowledge that most of the VA-appointed fiduciaries provide 
protection to veterans and follow all VA-mandated requirements. 
However, when there is this much at stake, we must be vigilant and 
ensure compliance.
    Mr. Chairman, together we must resolve to care for the most 
vulnerable veterans and protect them from life's worst hazards, 
specifically fiduciary fraud. DAV believes that with changes to the 
incompetency process, annual audits with veterans and their 
fiduciaries, as well as immediately investigating complaints of 
fiduciary fraud, we will protect and honor these men and women who 
sacrificed so much for this Nation.
    This concludes my testimony and we thank you for the opportunity to 
provide our comments, concerns and recommendations.
                                 ______
                                 

          Prepared Statement of Paralyzed Veterans of America

    Chairman Luttrell, Ranking Member Pappas, and members of the 
Subcommittee, Paralyzed Veterans of America (PVA), would like to thank 
you for the opportunity to submit our views on the Department of 
Veterans' (VA) Fiduciary Program. Fiduciaries play an important role in 
protecting the interests of veterans who because of disability or age 
are unable to properly manage their financial affairs. Proper 
management of the program is critical, and congressional oversight is 
essential in ensuring its mission is successful.

Assignment of a VA Fiduciary

    VA fiduciaries help veterans manage their VA benefits when they 
lack the mental capacity to do so due to cognitive issues, such as 
dementia. A recent VA Office of Inspector General (OIG) report, 
however, highlighted some troubling findings in the program.\1\ The OIG 
found that two of the four disability benefit questionnaire (DBQ) forms 
addressing mental competency are inconsistent and may lead to 
inaccurate determinations and the unnecessary assignment of a 
fiduciary.
---------------------------------------------------------------------------
    \1\ US Department of Veterans Affairs office of Inspector General, 
Inconsistent Disability Benefits Questionnaires May Lead to Inaccurate 
Mental Competency Determinations, September 13, 2023.
---------------------------------------------------------------------------
    38 C.F.R Sec.  3.353(a) says that ``a mentally incompetent person 
is one who, because of injury or disease, lacks the mental capacity to 
contract or to manage his or her affairs, including disbursement of 
funds without limitation.'' The regulation further states that, 
``unless the medical evidence is clear, convincing and leaves no doubt 
as to the person's incompetency, the rating agency will make no 
determination of incompetency without a definite expression regarding 
the question by the responsible medical authorities.'' \2\ The OIG 
determined, however, that the ``language discrepancies on the 
questionnaires could lead to inaccurate assessments and disparate 
outcomes for veterans.''
---------------------------------------------------------------------------
    \2\ 38 C.F.R Sec.  Annual Benefits Report Archive--Veterans 
Benefits Administration Reports (va.gov) 3.353(a)
---------------------------------------------------------------------------
    All DBQs addressing mental competency should use standardized 
language to limit the potential for inequitable or inconsistent 
decisions. Although not specifically identified by the OIG, a similar 
problem exists with the Amyotrophic Lateral Sclerosis (ALS) DBQ. 
Question 12 of the ALS DBQ asks the medical examiner, ``In your 
judgment, is the veteran able to manage his or her benefit payments in 
his or her own best interest, or able to direct someone else to do 
so?'' This is the same language used in the DBQs that the OIG 
identified as deficient.
    Several years ago, the VA added the caveat to question 12 that a 
veteran can ``direct someone else to do so,'' meaning they could 
communicate their financial need to their caregiver or spouse. This 
clarifying language has reduced the number of improperly assigned 
fiduciaries. However, our National Service Officers continue to see 
some ALS and Multiple Sclerosis (MS) veterans assigned fiduciaries 
despite their being mentally competent to handle their finances.
    Veterans with ALS or MS may be physically unable to write a check 
or manage their online banking due to weakness, loss of use of 
extremities, or other physical limitations; however, a physical barrier 
or limitation is not the same as a cognitive impairment. The ambiguity 
in the phrasing of question 12 on the ALS DBQ leaves room for errors by 
a medical examiner or a rating veterans service representative (RVSR) 
processing the claim. The VA must act to ensure that there is no room 
for misinterpretation on all DBQs that have the potential to result in 
the assignment of a fiduciary.
    If a medical examiner answers ``no'' to question 12, the RVSR may 
lack sufficient context for the veteran's whole situation, which might 
result in the improper assignment of a fiduciary. When the VA proposes 
a determination of incompetency, veterans have 60 days to provide 
evidence to support their competency. If the VA moves ahead and assigns 
the veteran a fiduciary, a higher-level review or supplemental claim 
might be necessary, and there is potential for an appeal to address the 
issue. However, correcting these mistakes often takes weeks or months 
which is time that veterans living with ALS simply do not have.
    Recently, VA has placed a tremendous focus on hiring and training 
new RVSRs as a result of the hiring and retention tools implemented 
with the Sergeant First Class Heath Robinson Honoring our Promise to 
Address Comprehensive Toxics Act of 2022 (PACT) Act (P.L. 117-168).
    Understanding the complexities of disability benefits is no small 
task, and we commend VA on their efforts to ensure a sufficient 
workforce. That said, additional training for the Fiduciary Program's 
workforce would help RVSRs better understand the nuance of complicated 
cases such as those for veterans with complex injuries and illnesses.

Increased Fraud and Misuse Allegations

    According to data from the VA's Annual Benefits Report, there has 
been an increase in fraud and misuse allegations in recent years. 
During fiscal year 2016, there were more than 233,000 fiduciaries 
participating in the program with 1,487 misuse investigations. In 
fiscal year 2022, there were 2,067 misuse investigations despite there 
being 125,000 fewer fiduciaries in the program. \3\
---------------------------------------------------------------------------
    \3\ VBA Annual Benefits Report, FY 2022.
---------------------------------------------------------------------------
    It is evident from the data provided by the VA that the number of 
misuse cases is increasing, while the number of prosecutions has 
remained relatively flat. This raises several questions that must be 
addressed. For example, why is the number of misuse allegations 
increasing if prosecutions are not? Also, have appropriate resources 
been provided to the program to investigate allegations of misuse 
properly? In addition, has the VA done its due diligence in ensuring 
that fiduciaries have been adequately educated about new guidelines and 
expectations?

Caregiver Burden

    When an individual is fulfilling dual roles, such as being a 
veteran's caregiver and fiduciary, the requirements and expectations of 
that individual can be overwhelming. If someone is acting as a 
caregiver for a veteran with a spinal cord injury or disorder, they may 
be the veteran's family caregiver under the Program of Comprehensive 
Assistance for Family Caregivers or they may be the veteran's bowel and 
bladder care provider under VA's Bowel and Bladder Program. These and 
other similar programs have many requirements that a caregiver must 
navigate, which can add to stresses that increase the possibility of 
caregiver burnout.
    VA must look for ways to reduce the burden on these caregivers. 
Unlike the VA's Fiduciary Program, a representative payee for Social 
Security benefits who is also the spouse of a beneficiary is exempt 
from keeping meticulous records as required by the VA. When acting as 
the representative payee, the spouse is expected to use ``good 
judgment'' in approving purchases requested by the beneficiary. The VA 
should consider implementing this requirement for caregivers who are 
also acting as a VA fiduciary for their veteran spouse.
    We must recognize the time, effort, administrative duties, and 
complexities of caring for another individual. Every effort should be 
made to ease the burden caregivers face, and resources must be 
available whenever needed to avoid misuse allegations and unintentional 
errors.
    For example, the VA should consider developing an online portal or 
a frequently asked questions (FAQ) page on the main program website. 
Within the VA Fiduciary Guide, which is available online, there is a 
toll-free number where a fiduciary can connect with one of the hub 
locations. However, the line is only available during regular business 
hours. In addition to expanding the accessibility of this line, VA 
should model its FAQ page after the one on the Social Security website 
for representative payees, where the Social Security Administration 
lists the helpline in several locations.\4\
---------------------------------------------------------------------------
    \4\ Social Security Administration Representative Payee Frequently 
Asked Questions
---------------------------------------------------------------------------
    The VA Fiduciary Program is critical in ensuring our most 
vulnerable veterans are safe, healthy, and can recover or heal free 
from the burden of managing their VA benefits. A fiduciary is a trusted 
and valuable member of the veteran's support system, but with that 
trust comes certain expectations of performance and responsibility. It 
is incumbent on the VA to provide appropriate resources to ensure 
fiduciaries can make sound and proper decisions on behalf of their 
beneficiaries to avoid misuse allegations and other mistakes. However, 
if a veteran's fiduciary abuses the trust given to them, then they must 
be dealt with in a timely and efficient manner to ensure that the 
veteran does not suffer further harm.
    PVA thanks the Subcommittee for the opportunity to submit our views 
on this critical program. We would be happy to answer any questions you 
may have.

  Information Required by Rule XI 2(g) of the House of Representatives

    Pursuant to Rule XI 2(g) of the House of Representatives, the 
following information is provided regarding federal grants and 
contracts.

                            Fiscal Year 2023

    Department of Veterans Affairs, Office of National Veterans Sports 
Programs & Special Events----Grant to support rehabilitation sports 
activities--$479,000.

                            Fiscal Year 2022

    Department of Veterans Affairs, Office of National Veterans Sports 
Programs & Special Events----Grant to support rehabilitation sports 
activities--$ 437,745.

                            Fiscal Year 2021

    Department of Veterans Affairs, Office of National Veterans Sports 
Programs & Special Events----Grant to support rehabilitation sports 
activities--$455,700.

                     Disclosure of Foreign Payments

    Paralyzed Veterans of America is largely supported by donations 
from the general public. However, in some very rare cases we receive 
direct donations from foreign nationals. In addition, we receive 
funding from corporations and foundations which in some cases are U.S. 
subsidiaries of non-U.S. companies.

                                 [all]