```

[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

   LEGISLATIVE HEARING ON H.R. 2985, H.R. 3730, H.R. 4481, H.R. 5948

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

                                HEARING

                               before the

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                 of the

                     COMMITTEE ON VETERANS' AFFAIRS
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                        WEDNESDAY, JUNE 20, 2012

                               __________

                           Serial No. 112-68

                               __________

       Printed for the use of the Committee on Veterans' Affairs

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                _____

                  U.S. GOVERNMENT PRINTING OFFICE

75-612                    WASHINGTON : 2013
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC 
area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 
20402-0001

                     COMMITTEE ON VETERANS' AFFAIRS

                     JEFF MILLER, Florida, Chairman

CLIFF STEARNS, Florida               BOB FILNER, California, Ranking
DOUG LAMBORN, Colorado               CORRINE BROWN, Florida
GUS M. BILIRAKIS, Florida            SILVESTRE REYES, Texas
DAVID P. ROE, Tennessee              MICHAEL H. MICHAUD, Maine
MARLIN A. STUTZMAN, Indiana          LINDA T. SANCHEZ, California
BILL FLORES, Texas                   BRUCE L. BRALEY, Iowa
BILL JOHNSON, Ohio                   JERRY McNERNEY, California
JEFF DENHAM, California              JOE DONNELLY, Indiana
JON RUNYAN, New Jersey               TIMOTHY J. WALZ, Minnesota
DAN BENISHEK, Michigan               JOHN BARROW, Georgia
ANN MARIE BUERKLE, New York          RUSS CARNAHAN, Missouri
TIM HUELSKAMP, Kansas
MARK E. AMODEI, Nevada
ROBERT L. TURNER, New York

            Helen W. Tolar, Staff Director and Chief Counsel

                                 ______

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                      BILL JOHNSON, Ohio, Chairman

CLIFF STEARNS, Florida               JOE DONNELLY, Indiana, Ranking
DOUG LAMBORN, Colorado               JERRY McNERNEY, California
DAVID P. ROE, Tennessee              JOHN BARROW, Georgia
DAN BENISHEK, Michigan               BOB FILNER, California
BILL FLORES, Texas

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

                               __________

                             June 20, 2012

                                                                   Page

Legislative Hearing on H.R. 2985, H.R. 3730, H.R. 4481, H.R. 5948     1

                           OPENING STATEMENTS

Chairman Bill Johnson............................................     1
    Prepared Statement of Chairman Johnson.......................    27
Hon. Jerry McNerney..............................................     3
    Prepared Statement of J. McNerney............................    28
Hon. David P. Roe Prepared Statement only........................    28

                               WITNESSES

The Hon. W. Todd Akin, Member, U.S. House of Representatives.....     4
    Prepared Statement of Mr. Akin...............................    29
David McLenachen, Director of Pension and Fiduciary Service, U.S. 
  Department of Veterans Affairs.................................     7
    Prepared Statement of Mr. McLenachen.........................    30
Ralph Ibson, National Policy Director, Wounded Warrior Project...    16
    Prepared Statement of Mr. Ibson..............................    37
Lauren Kologe, Deputy Director of Veterans Benefits Program, 
  Vietnam Veterans of America....................................    17
    Prepared Statement of Ms. Kologe.............................    39
Heather Ansley, J.D., Vice President of Veterans Policy, 
  VetsFirst......................................................    19
    Prepared Statement of Mrs. Ansley............................    41
Lori Perkio, Assistant Director, Veterans Affairs and 
  Rehabilitation Commission, The American Legion.................    20
    Prepared Statement of Ms. Perkio.............................    44

 
                   LEGISLATIVE HEARING ON H.R. 2985, 
                    H.R. 3730, H.R. 4481, H.R. 5948

                              ----------                              

                        WEDNESDAY, JUNE 20, 2012

             U.S. House of Representatives,
                    Committee on Veterans' Affairs,
              Subcommittee on Oversight and Investigations,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to notice, at 10:02 a.m., in 
Room 334, Cannon House Office Building, Hon. Bill Johnson 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Johnson, McNerney and Barrow.

           OPENING STATEMENT OF CHAIRMAN BILL JOHNSON

    Mr. Johnson. Good morning. This hearing will come to order.
    I want to welcome everyone to today's legislative hearing 
on H.R. 2985, the Veterans' I.D. Card Act; H.R. 3730, the 
Veterans Data Breach Timely Notification Act; H.R. 4481, The 
Veterans Affairs Employee Accountability Act; and H.R. 5948, 
the Veterans Fiduciary Reform Act of 2012.
    These bills arrived from several different avenues that 
fall under the Subcommittee's purview and I want to thank the 
bill's sponsors for drafting these proposals for our review 
today.
    H.R. 2985, The Veterans' I.D. Card Act, was introduced by 
Congressman Todd Akin of Missouri. The bill would direct the VA 
to issue a veteran's I.D. card upon request to any veteran who 
is not entitled to military retired pay or enrolled in the VA 
system. We will hear from Congressman Akin on this bill and I 
want to thank him for his participation today.
    H.R. 3730, the Veterans Data Breach Timely Notification 
Act, was introduced by our Subcommittee's Ranking Member, 
Congressman Joe Donnelly of Indiana. His bill would require the 
VA to notify Congress and directly affected officials, 
individuals, within two business days or less of a data breach 
and compromises sensitive personal information.
    This improved transparency and responsiveness would be a 
boost to the VA's efforts at improving its information security 
image. As the system currently works today, the lapse of time 
between the VA knowing of a data breach and a veteran knowing 
his or her information has been compromised and maybe floating 
around is entirely too long.
    In discussions with staff, Assistant Secretary Baker 
acknowledged that the current duration between the VA learning 
of a data breach and veteran being notified that his or her 
personally identifiable information or P.I.I. may have been 
compromised, that that time period could be shortened and this 
legislation is a good measure toward that end. I am proud to 
cosponsor this bill as well and I urge my colleagues to 
consider adding their support and I look forward to Ranking 
Member's Donnelly's remarks. I don't know if he is going to be 
here today. Well, his remarks can be entered into the record 
later.
    H.R. 4481, the Veterans Affairs Employee Accountability Act 
was introduced by Congressman Roe of Tennessee, another 
distinguished member of our Subcommittee. His bill would 
prohibit any VA employee from receiving a bonus if that 
employee knowingly violated federal acquisition regulations or 
VA acquisition regulations. We have seen plenty of evidence of 
the VA's lack of controls over its bonus program which has 
further been substantiated by the VA's own Office of Inspector 
General.
    Sometimes bonuses go to employees with documented poor 
performance. Sometimes the VA gives retention incentives to an 
employee about to retire and sometimes bonuses go to VA 
employees for no reason at all. However, it's not just the 
bonus program that is running wild. We have also seen many long 
term cases of VA employees ignoring acquisition regulations 
often because it is simply easier for them to do so.
    To veterans, the taxpayers and this Committee, that is not 
a good reason for breaking the law. Furthermore, in many of 
those cases, the VA has not held many of those employees 
accountable after learning of the violations.
    Last week I introduced H.R. 5948, The Veterans Fiduciary 
Reform Act of 2012. Based on investigations done by this 
Subcommittee, as well as a hearing held in February, it is 
abundantly clear that VA's fiduciary program requires 
significant improvement. The February hearing discussed 
fiduciary stealing veterans' benefits, felons being appointed 
as fiduciary and even fiduciaries withholding needed funds to 
the point where our veterans' utilities are cut off.
    In addition, many veterans have been unable to contact 
their fiduciaries to get necessary basic funds and family 
members are frequently shut out of the program despite VA's 
stated intent to include family members as a preferred choice.
    While the VA did take an important step in the right 
direction after that hearing, when it removed that paragraph 
from its standard form requiring a fiduciary to get VA approval 
of any use of a veteran's fund, the same types of problems 
discussed at that hearing continued to happen today. This 
Subcommittee brings them to the VA's attention and sometimes 
they are fixed on an individual basis. However, it is 
reasonable to expect that the same type of problem will come up 
again next week. The VA's fiduciary program suffers systemic 
weaknesses.
    VA's fiduciary program is intended to help administer VA 
benefits for veterans deemed incompetent to handle their 
financial affairs. As written, the statute defers greatly to 
the Secretary's discretion in the program's administration, 
including who can serve as a fiduciary and what obligations 
fiduciaries owe veteran beneficiaries. As practiced, the VA 
stretched that flexibility in every direction and the result 
has been unconscionable treatment of some of our most 
vulnerable veterans.
    The Veterans Fiduciary Reform Act of 2012 is based on 
problems uncovered before, during and after the February 
hearing as well as valuable input from Veteran Service 
Organizations and individual veterans on the ground who have 
experienced difficulties with the program.
    The legislation would require a credit and criminal 
background check each time a fiduciary is appointed and allow 
veterans to petition to have their fiduciary removed if 
problems arise. The bill would also decrease the potential 
maximum fee a fiduciary can receive to the lesser of 3 percent 
or $35, similar to Social Security's fiduciary program.This 
will help discourage those who enroll as fiduciaries with the 
VA, with only a profit motive in mind.
    In addition, the legislation will enable veterans to appeal 
their incompetent status at any time, require fiduciaries to 
submit annual accounting reports and allow veterans to name a 
preferred fiduciary, such as a family member. These significant 
changes will heighten VA's standards for administering the 
fiduciary program and increased protection for the most 
vulnerable veterans.
    Through mandating improved scrutiny during the background 
investigation process and lowering the fee a fiduciary can 
charge, the Veterans Fiduciary Reform Act of 2012 will help 
root out potential predators.
    Incorporating the ability for veterans to petition to have 
their fiduciary removed and replaced will add a layer of 
protection to veterans requiring fiduciaries. I encourage my 
colleagues to support this bill and would also direct your 
attention to several news articles that come out over the last 
few days documenting many cases of veterans around the country 
who have suffered from the lack of oversight and control within 
the fiduciary program.
    I want to thank everyone for their participation in today's 
hearing, and I now yield to Mr. McNerney, for an opening 
statement.

    [The prepared statement of Bill Johnson appears in the 
Appendix]

            OPENING STATEMENT OF HON. JERRY McNERNEY

    Mr. McNerney. I want to thank the Chairman for holding this 
legislative hearing today. It looks like there are four pretty 
good bills that are deserving our consideration. This 
Subcommittee is committed to providing transparency and 
accountability to veterans and taxpayers. I look forward to 
hearing from the bill's sponsors as well as the stakeholders 
about the legislation we have before us today.
    I am pleased to have Ranking Member Donnelly's bill, H.R. 
3730, included in today's hearing. This legislation, the 
Veterans Data Breach Timely Notification Act, seeks to protect 
veterans in the event that a data breach involving sensitive 
information occurs.
    In light of VA's monthly IT report detailing data breach 
incidents, this Subcommittee became aware that the VA can take 
up to 30 days to notify veterans that a data breach has 
occurred, potentially exposing a veteran's sensitive personal 
information. To address this issue, H.R. 3730 requires that the 
VA to notify potentially affected veterans within ten working 
days after a data breach has occurred. In an effort to mitigate 
the effects of identity fraud, this change would allow 
individuals to take decisive action to protect their identity.
    I believe this legislation will help veterans protect 
personal information, including their social security number, 
which can severely affect a veteran's financial stability.
    I also want to acknowledge the Chairman's legislation, the 
Veterans Fiduciary Reform Act, H.R. 5948. I think the ideas are 
very useful and will be helpful. My understanding is that the 
legislation could use a little more adjusting so I am going to 
hold back on endorsing it just now, but I look forward to 
working with the Chairman on that. With that, I yield back.

    [The prepared statement of Jerry McNerney appears in the 
Appendix]
    Mr. Johnson. I thank the gentleman for yielding back and I 
now would like to welcome the panel to the witness table on 
this panel. We will hear from the Honorable Todd Akin, my 
colleague representing Missouri's Second Congressional 
District. Congressman Akin will be testifying specifically 
about his bill, H.R. 2985, the Veterans' I.D. Card Act. Thank 
you for joining us here today. Congressman Akin, your complete 
written statement will remain part of the hearing record and 
you are now recognized for five minutes, sir.

               STATEMENT OF THE HON. W. TODD AKIN

    Mr. Akin. Thank you, Mr. Chairman, and thank you, Ranking 
Member, is it--I don't know if McNerney is going to be Ranking 
or who is going to be Ranking, but whoever is going to be doing 
the job. And I am here to present H.R. 2985. It is a Veteran's 
I.D. Card Act. And there are a couple of reasons what I am 
proposing. This is my DD-214. It is kind of old and ratty 
looking. It is hard to read and it has a couple of inherent 
disadvantages and the first disadvantage is that it contains a 
Social Security Number. Now, who is it that gets currently a 
Veteran I.D. Card? Well, it is only two groups of people. They 
have to have served twenty years or they have to have a 
service-connected disability. Other people cannot get any kind 
of military I.D.
    Since we are thinking about how do you give just somebody 
who has served in the military some form of I.D., the first 
thought is, oh, it is going to cost money and so we will never 
get a bill through. So we fixed that problem and that is, this 
bill doesn't cost any money. The people who want the I.D. card 
simply pay for it.
    The next thing that happens on this is that the information 
on the DD-214, all of this, the Veterans Administration has all 
of this information in their computers.
    So the first benefit of going with a simple I.D. card for 
people who have served if the fact that you protect their 
Social Security Number, but just from a convenience point of 
view, they can pay a couple of bucks and get something instead 
of being like this which is very easy to forge and take and 
people use it for illegally getting jobs and misusing the 
Social Security Number, they will just have a simple card with 
a photo I.D. on it.
    Now, the other thing is there may be reasons why it is 
helpful for somebody to have that I.D. card. One of them is 
maybe employers want to favor hiring veterans. You have an 
immediate way of being able to show them, look, I am a veteran. 
And at the same time you don't have something sitting in your 
wallet where you are about to lose your identification.
    And there are also various other kinds of programs and 
things that people who are veterans might or might not qualify 
for. Now, from a data security point of view, the Veterans 
Administration has all of the data that they need. Our bill is 
supported by a number of different veterans organizations. It 
is just a convenience for people who have served.
    The Fleet Reserve Association supports American Veterans 
and that's VFW Association of the United States Navy, AUSN; The 
Retired Enlisted Association, TREA. All of the people think it 
is a convenient benefit to pass it on. It is not costing the 
government any. It protects Social Security Numbers. It is a 
convenience for people who want to pay for it. And so for all 
of those reasons, it seems to make a whole lot of sense.
    The VA doesn't like it. They say that various states should 
do this. Now, I am a big states' rights guy, but the military 
is the job of the Federal Government and for different states 
to come up with some sort of, their own different versions of 
how to provide some sort of identification for veterans. I 
think it is just our side stepping a responsibility that is a 
federal responsibility and so, you know, my sons--I served in 
the Army. My son served in the Marine Corps. That is not the 
State of Missouri. That is the Federal Government. So why would 
we want to try to dump this on states, when it isn't really a 
state responsibility?
    The VA says that the issued cards could pose a potential 
for confusion. There is no need for that. It would be a 
different color card. You could stamp on the card that this 
card does not give you any access to PXes on Army bases or 
stuff like that. That was one of their concerns. That is not 
complicated. You have a different color card that just says 
that you were a veteran in years past, and there are other 
kinds of excuses. Nothing seems to be, well, yeah, that we 
won't be able to figure out how much it costs to issue an I.D. 
card. Obviously, accountants can figure out what it is costing 
us. We are already--all of the infrastructure in the veterans 
hospitals and stuff, it is all in place, the databases there, 
the machines to put ID cards together. We are doing all of 
that, the photographs. All of that stuff is already being done. 
We are just simply adding that you are going to allow other 
people to get a special kind of card, instead of running around 
with a ratty old DD-214.
    It seems to me, like, just a common sense thing. It is a 
service that we could do to people that served in the military. 
They are going to pay for it themselves. I can see no reason 
really why not to go for it. I appreciate your patience and I 
will leave you three seconds.

    [The prepared statement of W. Todd Akin appears in the 
Appendix]

    Mr. Johnson. I thank the gentleman for yielding back that 
remaining time. That is precious.
    Congressman Akin, how would this bill's implementation 
affect veterans' I.D. cards that such states as Virginia and 
Connecticut have been issuing?
    Mr. Akin. Well, obviously the states could issue a card the 
way they wanted to, but it would probably preempt the need for 
each state to do it in a different way. And because the data is 
like at your veterans' hospitals and things, all of this data 
is there, the card making facilities are there, the cameras are 
there, why not just allow people to pay an extra couple of 
bucks. It would be a break, even from a budget point of view 
and just handle it because it is a federal issue. As I said, I 
am a huge state's right guy, but the military is a federal 
thing and that is why I think it should be there.
    Mr. Johnson. You have pretty much answered this question, 
but just in case you have some additional information, how do 
you see the VA implementing this legislation? Do you think they 
have the necessary infrastructure in place? You mentioned the 
card makers and databases and those things.
    Mr. Akin. Yeah, they do have all infrastructure in place 
and I don't see that once they understood, you have to come up 
with somebody that is going to do the artwork to design what 
the card looks like and what color it is, so that it is not 
confused with the various other cards that they generate, but 
once you have that down and I think it might make sense to put 
on a card this does not entitle bearer of this card to, you 
know, get on military bases or use--whatever, to clarify.
    But the color and the type of the color, once people get 
use to it, I think it won't be any real confusion. And, yeah, 
the infrastructure is there, so I don't see that should be any 
problem at all.
    Mr. Johnson. What about time frame? Do you think the VA 
could implement something like this in a timely fashion?
    Mr. Akin. Oh, I am not going to pass judgment on how 
efficient the VA is. We have some difficulties in St. Louis 
where VA hospitals--I won't go there.
    Mr. Johnson. And finally, do you have any idea how many 
veterans this would possibly affect?
    Mr. Akin. I think it could affect quite a few really but I 
don't actually have a number on how many people have served, 
you know, through the years. Some served--I was discharged 
back, I think, the late `70s or something and maybe certain--so 
it is hard to say. But I do think that because of the fact that 
to some degree we are giving a little more honor to veterans 
than we use to and people recognize what it is like to give 
your life or potentially risk your life for your country.
    I think there is a lot more pride than there was 30 or 40 
year ago and I think people might more likely want to get a 
card like this, but I think that, you know, you take a good 
plasticized card, that thing will last forever and probably the 
veteran will wear out before the card will, so I don't know 
that it is going to be an overwhelming number.
    Mr. Johnson. Sure. Okay. Well, Congressman Akin, thanks to 
you for your testimony, for your legislation. You are now 
excused.
    Mr. Akin. Thank you very much, and thank you for the 
attention of the Committee.
    Mr. Johnson. I now invite the second panel to the witness 
table. And this panel, we will hear from Mr. Dave McLenachen, 
Director of the VA's Pension and Fiduciary Service. Mr. 
McLenachen, your complete written testimony statement will be 
made part of the hearing record and you are now recognized for 
five minutes.

                  STATEMENT OF DAVE MCLENACHEN

    Mr. McLenachen. Mr. Chairman and Members of the 
Subcommittee, thank you for the opportunity to present the 
views of the Department of Veterans Affairs on several bills of 
interest to Veterans and VA.
    I would first like to apologize to the Committee for the 
late submission of my testimony. There are two bills, H.R. 3730 
and H.R. 4481 on which we are not able to provide comments or 
costs today and will provide later for the record.
    Mr. Chairman, at the outset, I want to emphasize that VA 
does recognize the need for better oversight of the fiduciary 
program and has taken steps to address that need, some of which 
reflect the purpose of your bill, H.R. 5948, the Veterans 
Fiduciary Reform Act.
    Over the past seven months, VA issued new policies and 
procedures for the fiduciary program that this bill would 
codify. These include appeal procedures, criminal background 
checks, limitations on fiduciary fees, providing copies of 
accountings to beneficiaries and guidance that ensures 
fiduciary independence.
    VA also completed its proposed fiduciary regulations and 
started building its new information technology system for the 
program. Finally, VA completed the consolidation of its 
fiduciary activities into six regional hubs which include 
adding more than 150 employees to conduct oversight of 
fiduciaries. VA would welcome the opportunity to discuss these 
improvements and the program as well as the intent behind this 
bill with you and your staff.
    While there are provisions of the bill that would codify 
current VA policy, there are also provisions in the bill that 
we find problematic and oppose. In the interest of time, I will 
only mention here a few of those provisions and refer you to my 
written statement for a detailed account. Section 2A would 
require VA to consider the role of financial management and the 
rehabilitation of the individual before determining whether a 
beneficiary could manage his or her own benefits.
    This new requirement would have the effect of complicating 
and delaying VA's rating decisions and fiduciary appointments. 
Section 2C would require VA to conduct a face-to-face interview 
of every fiduciary, which we believe is not necessary in every 
instance and would cause delays. It would also require training 
for every fiduciary on the use of encrypted, secure internet 
connections despite the fact that fiduciaries using online 
banking services already have the benefit of a secure systems 
that financial institutions maintain. Finally, Section 2G would 
require every fiduciary to submit an annual accounting to VA. 
As detailed in my testimony, VA requires accountings in many 
cases, but a universal requirement would burden volunteer 
fiduciaries without, we believe, a real improvement in 
oversight.
    VA is also concerned that the bill would make it very 
difficult for the Department to find volunteer and paid 
fiduciaries. Currently, 92 percent of the beneficiaries in the 
program receive fiduciary services from an unpaid volunteer 
fiduciary who is generally a family member.
    VA appoints paid fiduciaries in some of its most difficult 
cases, generally when there is no person or entity who is 
willing to provide fiduciary services for a beneficiary without 
a fee. The bill's requirements for a surety bond purchased with 
the fiduciary's own funds, rather than out of the beneficiary's 
fund, along with some of the other bill's requirements may 
create a disincentive for individuals to serve these vulnerable 
veterans and their survivors.
    Finally VA's concerned that Section 2D, which would require 
VA to give preference and appointment to individuals or 
entities that are court appointed guardians of a beneficiary 
under State law, would dramatically change the program to what 
we think may be the detriment of veterans and their survivors. 
Under State law these guardians are generally authorized to 
deduct fees and expenses from beneficiary funds that exceed by 
far the 4 percent fee authorized under Federal law.
    The provision would also promote disparate treatment of 
veterans depending upon the state of residence. VA estimates 
that implementing this bill would result in GOE costs of 
$40,000,000 in the first year, $200,000,000 over five years and 
$444,000,000 over ten years.
    In addition, VA estimates that the information and 
technology costs would be $1,600,000 in the first year, 
$5,000,000 over five years and $10,000,000 over ten years.
    Mr. Chairman, there are other concerns identified in my 
written statement. I want to emphasize again our wish to work 
constructively with you and your staff on our common goals to 
ensure all of the veterans are protected.
    H.R. 2985, the Veterans ID Card Act would establish a 
program under which VA would issue a veteran identification 
card produced by VA upon request by a veteran. VA understands 
and appreciates the purpose of this bill, but VA believes there 
are better ways to achieve that purpose. The same benefit can 
be best achieved by VA and Department of Defense working with 
the states to encourage identification card programs. VA is 
already working with states on these efforts.
    We also note in our testimony the potential for confusion 
because veterans could be led to believe that issuance of the 
ID card itself may establish eligibility for VA benefits. There 
is potential for confusion as well because the Veterans Health 
Administration issues ID cards for the purpose of access to VHA 
facilities.
    Mr. Chairman, this concludes my statement. I would be happy 
to entertain any questions that you or any other member may 
have.

    [The prepared statement of Dave McLenachen appears in the 
Appendix]

    Mr. Johnson. Thank you, Mr. McLenachen, for your testimony. 
I find it interesting that you used the term ``working 
constructively'' together on the fiduciary program because at 
our hearing on the VA's fiduciary program in February, you said 
you intended to take a look at the statutes governing the 
fiduciary program and make recommendations that might improve 
it outside of the testimony that you have given today. Four 
months later we haven't heard anything from you or your 
department.
    Currently, our bill addresses a number of issues we brought 
to your attention and yet you're against these provisions. 
After the issues raised at the February hearing and the recent 
media coverage of fiduciary issues, I would think that you 
would have some ideas on how to improve the program. Can you 
describe for us improvements in the fiduciary program's 
oversight that you have made since our February hearing?
    Mr. McLenachen. Well, sir, in addition to the policy and 
procedures that we have issued even since the February hearing, 
as I mentioned that we have completed our proposed fiduciary 
regulations. Now, as we were working on those regulations we 
determined that there was different authority that we needed 
from Congress, we would certainly develop a legislative 
proposal for that purpose, but I have to say that having worked 
on those regulations and looking at the authority that we have, 
we believe we have the authority we need to correct the 
program, and all of the things that we do support in the bill 
are things that we have implemented ourselves, like I said, 
over the last several months. I believe we are making real 
progress.
    Mr. Johnson. Well, you mentioned that you have completed 
the regs and that you have the authority to improve the 
program, but you didn't really answer my question. Can you 
describe specific improvements that you have made in the 
fiduciary programs since February?
    Mr. McLenachen. Yes, sir. One of the concerns of the 
Committee was the independence of a fiduciary. We had a policy 
in place that required a fiduciary to check with VA, as you 
mentioned the form, where it wasn't just the form. We had a 
policy in place that required a fiduciary to check with VA for 
any expenditure over $1,000. I rescinded that policy. That was 
since the hearing.
    In addition to that, there is concern about transparency in 
the program. We have never provided beneficiaries copies of 
audited accountings by VA. I changed that policy. Every 
fiduciary is instructed to provide a copy of an audited 
approved accounting by VA to the beneficiary.
    Criminal background checks, we have contracts in place to 
do a criminal background check on every fiduciary we appoint. 
There's a number of other developments, sir, I could go through 
with you, but we are making progress in this program.
    Mr. Johnson. That would be great. I mean, we would have 
liked to have gotten that information before today, but that is 
good. Based on recent articles about nationwide problems in the 
fiduciary program, it seems that there has been little 
improvement other than the things that you mentioned today. Do 
you have any further response to the media reports of the 
numerous and horrific stories in those articles?
    Mr. McLenachen. Yes, sir. I disagree with the view that the 
fiduciary program is plagued with fraud. I am aware of those 
articles and it is our position that any misuse of VA benefits 
is unacceptable. That's our position. And we work hard to 
prevent that type of misuse. That is the reason why we do over 
30,000 accounting audits every single year. That is the reason 
why we do 70,000 or more field examinations every year.
    So we work hard to prevent misuse and we have been very 
successful. I testified in February that our misuse rate during 
Fiscal Year 2011 was less than one-half of one percent.
    Looking at the article, sir, I think in reality the 
articles are about a broader problem and that is general abuse 
of veterans. We looked at the cases that were mentioned. In the 
State of Texas 6.5 percent of our beneficiary population in 
this program live in Texas, yet the misuse rate in Texas was 
only 4.4 percent compared to all of the cases. So while the 
articles may have been reporting the broader problem of misuse, 
I don't think that we have been able to confirm that it points 
out a specific problem about the fiduciary program and that 
said, that doesn't mean that we are going to ease up on misuse 
of benefits.
    Mr. Johnson. The VA opposes the provision that would 
authorize the VA to limit the appointment of a fiduciary to 
management of VA funds. The VA contends that the purpose of 
this provision was unclear and probably unnecessary because the 
VA appoints fiduciaries only for the limited purpose of 
receiving VA benefits on behalf of a beneficiary.
    However, I have VA emails that direct a VA representative 
to take control of non-VA funds. Why the difference between 
your actions and your comments on the legislation?
    Mr. McLenachen. Mr. Chairman, I would be interested to see 
the information you have about that. Congress has authorized us 
to appoint fiduciaries for the purpose of VA benefit funds 
under management. That is what we have authority to do. Now, 
there may be some disconnect about the accounting process. When 
we do an accounting, we need to see all incoming expenses in an 
account and sometimes in those accounts there is other income, 
such as, for example, Social Security benefits.
    Mr. Johnson. So you would find it inappropriate for a VA 
representative to take control of non-VA funds?
    Mr. McLenachen. Yes, sir. Without knowing more about the 
facts of the case, I would say, yes, I would.
    Mr. Johnson. We will provide you with that information.
    Mr. McLenachen. Thank you, sir.
    Mr. Johnson. Okay. You discussed the provision concerning 
appeals and removal of fiduciaries as limiting a beneficiary's 
ability to have his or her competency restored. Can you 
describe how a veteran currently has his or her competency 
restored and subsequently can get out of the fiduciary program?
    Mr. McLenachen. Yes. Thanks for that question because this 
is an area that I have really been interested in addressing and 
we are doing that in our regulations. Just to let you know, 
that is one thing that we are addressing. Currently, if an 
individual has been rated as being unable to manage their VA 
benefits, they can be taken out of the program by having 
medical evidence, such as a doctor's opinion, that they can, in 
fact, based upon their disability or regardless of their 
disability, manage their own VA funds. In addition to that, if 
there was a legal process where a court held that a person was 
incompetent to manage their own affairs and a court concludes 
otherwise, that would be evidence considered.
    The area I want to address, however, is a situation where 
we have a beneficiary in the program and they demonstrate 
themselves that they are able to manage their own VA funds and 
I want a way for them to get out of the program.
    Now, we currently have a supervised direct-pay program. 
There are about 3,500 beneficiaries that are in that program. 
We pay our benefits directly to those individuals even though 
they are in the fiduciary program because we have some evidence 
that they might be able to manage their own benefits. That 
specific program within the fiduciary program, to me, seems to 
be a way where we can get individuals out of the program if 
they demonstrate that they can actually manage their own 
benefits. That is one of the things we are addressing.
    Mr. Johnson. How would reporting to Congress hinder 
improved transparency of the program?
    Mr. McLenachen. Well, sir, I think the message from our 
testimony was that it appeared that the requirement to report 
information in our annual benefits report and only report it to 
Congress would change the transparency. Now, maybe we are 
misinterpreting what the bill requires. Certainly we could 
still publish information in our annual benefits report, but 
that was the intent of that comment was that if the information 
was only going to be reported to Congress rather than through 
other means.
    Mr. Johnson. The fiduciary program stated purpose is to 
serve beneficiaries who are unable to manage their financial 
affairs. How does developing determinations of ability to 
manage financial affairs run contrary to that purpose?
    Mr. McLenachen. Mr. Chairman, it is a little bit related to 
the question that you just asked me where I mentioned our 
supervised direct-pay program. When an individual is rated as 
being unable to manage their VA benefits currently, it is when 
we do a, what you may know as a compensation and pension exam 
or we receive evidence, medical evidence or otherwise, 
indicating that somebody cannot manage their affairs.
    If we receive that information, we can quickly process the 
incompetency determination, give the notice that is required 
and get to the point where we appoint a fiduciary.
    Our concern regarding that section of the bill is they will 
require essentially a rehabilitation determination based on 
someone's opinion, a professional's opinion that managing 
somebody's funds would help them be rehabilitated despite their 
disability.
    VA currently doesn't do that, but I think there is a viable 
alternative to that and that is our supervised direct pay 
program. It would essentially do the same thing. It would show 
that somebody is actually managing their own financial affairs 
and provide a way for a rating, getting them out of the 
program. That was the intent of our comments on that section.
    Mr. Johnson. Okay. What is the likelihood that the VA can 
tailor the proposed reporting requirements so that when field 
examiners perform home visits, fiduciaries already under close 
VA supervision are not overly burden or even harassed? For 
example, how can the VA take into account those in the VA's 
caregiver program?
    Mr. McLenachen. Well, Mr. Chairman, my understanding about 
the caregiver program is that it is, there are 2,000 or 3,000 
beneficiaries in that program. And actually I was just having a 
conversation before the hearing started with a representative 
of the Wounded Warrior Project and we were discussing how VA 
might coordinate better between the caregivers in that program 
and match them up and see how many of them are fiduciaries and 
how we could coordinate those efforts a little bit better. I 
think we could do that.
    The beneficiary population in the fiduciary program, 
however, is 125,000 beneficiaries, approximately. But certainly 
for that subset, there may be ways that we can improve 
services.
    Mr. Johnson. Okay. Why does the VA oppose letting a 
beneficiary know if his or her fiduciary has been convicted of 
a crime? How does added transparency harm the veteran and the 
fiduciary program as a whole?
    Mr. McLenachen. Mr. Chairman, my concern there is not that 
we should limit transparency. I think transparency is very 
important and we are trying to change that, for example, with 
the accountings that we're requiring beneficiaries to receive. 
The problem I have though is that many of the individuals in 
our program are severely disabled or have mental conditions 
that render them severely disabled and the type of information 
that they are given may be harmful to them.
    So the mere fact that somebody has a, for example, a 
misdemeanor conviction that does not impact their ability to 
provide fiduciary services. And for example, if it is a family 
member, reporting to the beneficiary in ever single case that 
this has happened may not be the best thing for our 
beneficiaries.
    I agree, however, that there should be transparency about 
individuals who commit crimes that either disqualify them for 
service as a fiduciary or certainly would allow the beneficiary 
to request somebody else to be their fiduciary.
    Mr. Johnson. In your February testimony you stated that the 
VA, first and foremost, attempts to appoint a fiduciary who 
will serve without a fee. If this is truly your aim, why can't 
the VA access the list of non-profits and government agencies 
that Social Security uses in the administration of its 
representative payee program.
    Mr. McLenachen. We can certainly look into doing that, sir. 
Our concern with the bill was it would require us to maintain a 
list of state, local and non-profit organizations nationwide 
and maintain that list for the purpose of fiduciary 
appointments. Our concern is that this program, 95,000 
fiduciaries, sir, in this program, the overwhelming majority of 
them are family members or close acquaintances. We very rarely 
need to appoint an organization that would fall within that 
group. That does not happen that we do not appoint them. We 
certainly do appoint those type of organizations. So we would 
not be opposed to appointing them.
    It is just that the cost benefit that we are talking about 
as a result of the bill, we think the costs would outweigh the 
benefit that we would receive from it.
    Mr. Johnson. In your testimony you state that fiduciaries 
are more than mere bill payers. For those fiduciaries that do 
not live with the beneficiary, what else do they do besides pay 
the bills?
    Mr. McLenachen. Mr. Chairman, that is a very good question 
and I think in my testimony you may have seen that I said our 
emerging view is that they are not mere bill payers. That is my 
vision for the program. That is the Secretary's vision for the 
program. He does not intend that we are appointing mere bill 
payers, so in our regulations one of the things we are going to 
address is what are the responsibilities of a fiduciary. And if 
a fiduciary is of the view that they don't have to have contact 
with the beneficiary or they don't need to check on the 
beneficiary's well being periodically, they have no business 
being a fiduciary. That is our view.
    Mr. Johnson. I will be very curious to see how that turns 
out and what recommendations the VA has to modify that because 
fiduciary by its definition is a financial manager.
    Mr. McLenachen. That is correct.
    Mr. Johnson. So I don't know what, beyond that, we would 
be, number one, wanting them to do or expecting them to do. I 
mean, we have got major issues now with just the financial 
management part of it. Lord only knows what kind of issues we 
will get into if they have control over other areas of a 
veteran's life.
    Mr. McLenachen. Mr. Chairman, can I explain? Congress gave 
us authority to appoint fiduciaries to act in the interest of 
beneficiaries and I agree with you completely that the purpose 
of the fiduciary appointment is management of VA benefit funds.
    However, to act in the interest of a beneficiary where a 
fiduciary is dispersing funds, paying bills, essentially doing 
financial management, how do they do it in the best interest of 
a beneficiary without having contact, without checking on them 
and without seeing what their needs are. I am not suggesting 
that they take over custody of the individual or act in any 
other way, however, I fail to see how somebody can act in the 
best interest of a beneficiary without having contact and 
monitoring their progress.
    Mr. Johnson. That I would agree with you on. I will be 
curious--you know, the devil is in the details.
    Mr. McLenachen. Yes, sir.
    Mr. Johnson. It is what it is in the policy and how it is 
interpreted by fiduciaries and those that run the program, but 
I generally agree with your comment there.
    In your testimony you state that the VA opposes 
transmitting evidence of misuse of benefits to the Attorney 
General for prosecution because it does not allow for the VA's 
internal review. Given numerous examples from our 
investigation, as well as those reported by Hearst Publications 
recently where little action has been taken by the VA, how does 
the VA's internal review aid in the prosecution of someone who 
has preyed on a veteran? I mean, you remember the last time you 
were here. We had some horror stories.
    Mr. McLenachen. Yes, sir. Our position regarding that 
section is that--and just for your information, the way that we 
investigate misuse--actually, our program does the 
investigation regarding misuse of benefits. However, when we 
complete that investigation, we are required to turn over that 
information to the VA's Office of Inspector General. And that 
office has responsibilities under the law to coordinate the 
prosecution and, you know, a large part of that is evaluating a 
case for prosecution under the law.
    Our comments regarding that section was that it appeared to 
require us when we determine that there has misuse of benefits, 
to simply report to a bunch of agencies that may have a use for 
that information or not, without the type of evaluation that 
the Office of Inspector General is required to do by law. That 
was the basis of that comment in my testimony.
    Mr. Johnson. Basically, though, you would agree that those 
who criminally and fraudulently abuse the funds, that they are 
responsible for manage for our veteran, should be held 
accountable to the extent of the law, correct?
    Mr. McLenachen. Absolutely. The best deterrent is criminal 
prosecution and I absolutely agree with you.
    Mr. Johnson. In your testimony you talk about the 
additional burden of an annual report would require. This bill 
lays out a bare-bones requirement, leaving the VA to determine 
how much detail to ask for. Why would you not be able to mold a 
requirement so as not to be overly burdensome?
    Mr. McLenachen. Mr. Chairman, does your question concern 
the report to Congress or the annual accounting requirements?
    Mr. Johnson. It would be both.
    Mr. McLenachen. Okay. First, with respect to the section in 
the bill that would require us to submit an annual report to 
Congress, I believe we indicated we would not oppose that, 
however, we question the timing which would be one year after 
the enactment of the bill. We pointed out that rulemaking might 
be required to the extent some of the things in the bills are 
not in our current rulemaking package, so we thought that the 
one year requirement might be a little soon.
    With respect to the accounting requirement, VA currently 
does over 30,000 accountings a year. That's how many require 
and we audit every single accounting. It is a very detailed 
audit too. We require financial documents to be submitted with 
each accounting. The bill would require us to do such an 
accounting for every beneficiary in our program--I am sorry, 
every fiduciary in our program, which means 95,000 accountings. 
While it is true that we could do certain things to sample 
accountings, not audit every one. I am not sure that that would 
really accomplish what the Committee is interested in.
    I think our concern, sir, is that requiring every single 
fiduciary to submit an accounting doesn't really take into 
account who these individuals are. As I said, the majority of 
them are family members. Spouses, already spouses, we do not 
require accountings from spouses, but other family members 
would be required to submit an annual accounting. Many cases 
are a very small amount of benefits that are paid. Again, 
accounting would be required.
    So our real concern is the burden on the individuals who 
act as fiduciaries. We, over time, based on our experience, 
figured out who we think we need accountings from and that 
those 30,000 individuals that have to submit one to us every 
year. We are just concerned about the scope of the accounting 
requirement.
    Mr. Johnson. Well, I want to thank you, Mr. McLenachen, for 
your testimony and responding to the questions. You are now 
excused.
    Mr. McLenachen. Thank you.
    Mr. Johnson. Mr. McLenachen, one second. Minority Counsel 
would like to ask a question.
    Mr. Tucker. Thank you. I will be very brief. You stated as 
referring to the removal of the one year period for 
convictions, state and federal crimes, that you oppose that 
because some of that information might be harmful to the 
fiduciaries?
    Mr. McLenachen. No. I believe the question concerned, there 
is a provision in the bill that requires us to report a 
conviction, any conviction to a beneficiary within 14 days of 
learning about it. We are opposed to that provision. With 
respect to the provision of the bill that would authorize us to 
consider all convictions in the qualifications of a 
fiduciaries, we are not opposed to that.
    Mr. Tucker. Okay. Thank you for the clarity. And second of 
all, do you propose a tracking on what your final answer was to 
the accounting question. Do foresee, kind of a two-track system 
of how you handle fiduciaries in that you have close family 
members that you don't think you need a background check all 
the time or every time that someone's appointed, that you don't 
need an accounting for those folks and then for those who are, 
in a sense, professional fiduciaries?
    Mr. McLenachen. Yes, actually, our current procedures 
essentially do that. One of the provisions of the bill that we 
are opposed to would eliminate or rescind the waiver provision 
that is in current law, which allows us to waive some of the 
investigation requirements for certain individuals such as 
parents and spouses. So we are opposed to that provision.
    But the way that we run, the program already essentially 
does that. There is much more stringent oversight of 
individuals who are paid fiduciaries who are corporations or 
other individuals who are in the business of providing 
fiduciaries services than there are for, for example, spouses 
and family members, to include the frequency with which we 
visit them on a follow-up field examination. It is our policy 
not to intrude into family members and avoid doing that as much 
as possible. So for example, with a spouse, we will visit a 
spouse on a follow-up field examination much less frequently 
than we do an individual who is a paid fiduciary or doing that 
type of business.
    Mr. Tucker. Thank you for your indulgence, Mr. Chairman.
    Mr. Johnson. Absolutely. Thank you. And again, Mr. 
McLenachen, you are excused.
    I would now like to call the third panel to the witness 
table.
    On this panel today we will hear from Mr. Ralph Ibson, 
National Policy Director for the Wounded Warrior Project; Ms. 
Lauren Kologe, Deputy Director of the Veterans Benefits Program 
for Vietnam Veterans of America; Ms. Heather Ansley, Vice 
President of Veterans Policy for VetsFirst; and Ms. Lori, have 
I got it right, Perkio--is that correct--Assistant Director of 
the Veterans Affairs and Rehabilitation Commission at the 
American Legion.
    All of your complete written statements will be made a part 
of the hearing record. Mr. Ibson, you are now recognized for 
five minutes, sir.

 STATEMENTS OF RALPH IBSON, NATIONAL POLICY DIRECTOR, WOUNDED 
  WARRIOR PROJECT; LAUREN KOLOGE, DEPUTY DIRECTOR OF VETERANS 
BENEFITS PROGRAM, VIETNAM VETERANS OF AMERICA; HEATHER ANSLEY, 
   J.D., VICE PRESIDENT OF VETERANS POLICY, VETSFIRST; LORI 
PERKIO, ASSISTANT DIRECTOR, VETERANS AFFAIRS AND REHABILITATION 
                COMMISSION, THE AMERICAN LEGION

                    STATEMENT OF RALPH IBSON

    Mr. Ibson. Mr. Chairman, Members of the Subcommittee, Thank 
you for inviting Wounded Warrior Project to testify today, and 
particularly to provide views on H.R. 5948, the Veterans 
Fiduciary Reform Act of 2012.
    As this Committee's February oversight hearing underscored, 
the fiduciary program continues to experience serious problems 
and weaknesses. We appreciate the effort to craft legislation 
to address those issues.
    Our principal concern is the bill falls short of resolving 
a longstanding problem we have raised at prior oversight 
hearings. The issue arises from the fundamentally inconsistent 
manner in which the VA treats family members who are recognized 
and supported by the Veterans Health Administration as 
caregivers of their loved ones and yet face rigid scrutiny from 
the Veterans Benefits Administration in their capacity as 
fiduciaries for those loved ones' benefits.
    Our organization works closely with family members who are 
both full-time caregivers as well as fiduciaries of those 
severely wounded warriors. And we note that two years ago 
Congress established the Comprehensive Caregiver Assistance 
program to provide needed support to those family caregivers in 
recognition of their sacrifices and the emotional and financial 
toll associated with caregiving.
    To qualify and win formal approval for this VA assistance, 
family members undergo a detailed psycho-social assessment to 
help VA determine that the proposed arrangement is in the 
veteran's best interest. They must participate in a training 
program and must undergo a home inspection.
    Furthermore VHA subsequently conducts regular quarterly in-
home monitoring of the veteran's well being as a condition of 
the caregiver's receiving continued assistance.
    In administering the fiduciary program, VBA does not take 
account of the unique circumstances of those family members who 
give up careers, have depleted savings to care for their loved 
ones, and who have already been screened and monitored under 
the caregiver program. As we see it, that process and its 
ongoing oversight truly provide ample evidence that these 
individuals are trustworthy, and do not pose a risk of misusing 
the veteran's benefits.
    Let me be clear, we are not suggesting that caregiver 
fiduciaries be exempted from accountability from management of 
the beneficiary's funds, but we do see a need to make provision 
in law for more balance and less demanding oversight where the 
caregiver-fiduciaries have demonstrated that they do not pose 
significant risk and have earned VA's trust. Dedicated 
caregiving, in our view, as evidenced by unblemished 
participation in the caregiver assistance program, should be 
recognized in law as establishing that trust.
    We have seen all too clearly that VBA's intensely detailed 
reporting requirements can be overwhelming to an already 
emotionally drained family member who is shouldering a young 
veteran's total-care needs and yet is left to feel suspect and 
distrusted. As one mother put it, ``we are probed yearly by a 
forensic accounting that seemingly investigates for `murderous' 
infractions,'' even requiring fiduciaries to ``line-item 
Walmart receipts.''
    We greatly appreciate the Committee's work and VA's 
response in ending the practice of requiring preapproval of 
expenditures made in the veteran's best interest. But 
caregivers are still subject to what many experience as 
inquisitorial audits. And let me offer a few examples:
    A caregiver having to explain to a VBA examiner why she 
allowed her wounded-warrior son to spend ``too much money on 
Christmas gifts;"
    An auditor insisting that the caregiver's electric bill was 
too high and asserting that during the summer in Florida she 
should not run the air-conditioning at night;
    A family being questioned about expenditures for gasoline 
in transporting the wounded veteran; and
    A VBA examiner questioning the caregiver as to why she was 
buying movies and music for her son given that he has a brain 
injury.
    As one caregiver summed it up, VA fiduciary program staff 
``don't really help with management of assets but audit every 
two years every penny I spend for my son's care. There are not 
many guidelines and auditors question expenses when they know 
nothing about the care that is needed.''
    Family caregivers have also emphasized the burden of just 
trying to comply with the demanding expectations of the 
program. To quote one, ``When the paperwork arrived at the end 
of the year, there were no instructions or assistance. I had to 
figure out how to do everything on my own. I asked for software 
I could use to make it easier to do the accounting, but I was 
told there was none. I had to create an Excel spreadsheet to 
enter the amounts in the categories that were requested and 
sometimes it takes me up to two weeks to complete all the data 
entry.''
    In sum, the problems I have outlined are not insoluble and 
just as this bill aims to solve other problems in the program, 
we urge that it address this one as well. We would be pleased 
to offer narrowly crafted language to address the problems we 
have identified and would welcome the opportunity to work with 
the Committee prior to a workup. Thank you for consideration of 
our views.

    [The prepared statement of Ralph Ibson appears in the 
Appendix]

    Mr. Johnson. Thank you, Mr. Ibson.
    Ms. Kologe, you are now recognized for five minutes.

                   STATEMENT OF LAUREN KOLOGE

    Ms. Kologe. Thank you. Good morning, Mr. Chairman, and 
other distinguished members of this Subcommittee.
    Vietnam Veterans of America is pleased to share our views 
and concerns regarding the pending legislation. We support all 
four pieces of legislation that have been discussed today.
    In particular, we would like to share our views on H.R. 
5948, the Chairman's legislation, the Veterans Fiduciary Reform 
Act of 2012 and how the Veterans Benefits Administration can 
improve their Fiduciary program.
    I ask that our written testimony be accepted for the 
record.
    Mr. Johnson. Without objection, so ordered.
    Ms. Kologe. Thank you. We have three main points that we 
would like to share in the fiduciary program and this pending 
legislation. One, we propose that the title of Exception 5511, 
``Adjudication of Financial Incompetence,'' and the language 
``mentally incapacitated or deemed mentally incompetent'' be 
changed to reflect the purpose of the fiduciary program which 
is to manage the veteran's financial benefits. There seems to 
be cross purposes here, some fiduciary members need enhanced 
services and some do not. Some are able to work. They just 
cannot manage their financial affairs and I think the role of 
the fiduciary has been confused and has led to some problems 
that we have been experiencing. We recognize that many veterans 
and other beneficiaries in the fiduciary program require 
support services and, therefore, we urge a change to the 
examination protocol for determining that an individual is 
unable to manage his or her benefit payment.
    Currently, VA only assesses veterans' ability to manage 
their benefit payments in certain disability exams. 
Furthermore, these compensation or pension exams frequently 
last only 20 minutes. We are unclear as to how VA is able to 
determine the capacity of a veteran without protocol for 
consistent questions to be asked of the veteran. It is also 
unclear how VA assesses a widow's or dependent's ability to 
manage benefit payments.
    VA has said that there are basically two different types of 
fiduciaries, paid fiduciaries and family, or volunteer 
fiduciaries who know the veteran well. If the sole purpose of 
the VA fiduciary program is to manage the veteran's financial 
payments, we believe that many of these veterans should not 
even be in the fiduciary program.
    There are different protocols that other agencies use for 
determining this financial incapacity, and again, that is why 
we believe that it should be clearly the financial incapacity, 
and then VA does have a duty to care for our veterans that need 
further services.
    Lastly, we encourage that this Subcommittee provide a 
whistle-blower provision or a more definite reporting system 
for abuses in the fiduciary program, not only with respect to 
mismanaging veteran's funds which we strongly support the 
bill's provisions of returning veteran's monies in the cases of 
misfeasance, but we also think that a clear chain of command 
and expectations goes a long way toward and fixing problems 
before they get worse. There should at least be a requirement 
in the law for the Secretary to report on the steps that VA 
employees, beneficiaries and third parties can take to report 
malfeasance and misfeasance, other than reporting to the 
Inspector General or clear provisions on how to do so, but so 
that the officials in VA most able to fix the system can make 
the necessary changes.
    So we ask you to consider our comments and we would happy 
to provide answers to any questions that you may have. Thank 
you very much.

    [The prepared statement of Lauren Kologe appears in the 
Appendix]

    Mr. Johnson. Thank you, Ms. Kologe.
    Ms. Ansley, you are now recognized for five minutes.

                  STATEMENT OF HEATHER ANSLEY

    Ms. Ansley. Thank you, Chairman Johnson, and distinguished 
members of the Subcommittee. Thank you for inviting VetsFirst 
to share our views and recommendations regarding the four bills 
that are subject of this morning's hearing. VetsFirst is 
pleased to provide our support and recommendations for each of 
these important pieces of legislation.
    First, we support the Veterans' ID Card Act. We believe 
that this legislation will provide an easier way for eligible 
veterans to prove their veteran status without having to 
present a DD-214. As was stated earlier the DD-214 includes 
sensitive personal information that veterans may not wish to 
show in certain situations. To minimize any potential for 
confusion, the legislation requires that the cards state that 
issue does not confer eligibility for benefits and we urge 
swift passage of this legislation.
    Second, we support the Veterans Data Breach Timely 
Notification Act. We believe that this legislation takes 
important steps toward ensuring that veterans are properly 
notified of data breaches involving their sensitive personal 
information. This legislation not only requires VA to make a 
notification of a breach of this information but also requires 
VA to provide veterans with important details regarding the 
breach and how to take precautions to minimize negative 
impacts.
    Although we support this legislation, we do have two 
specific recommendations. One, we believe that it would be 
helpful to clarify that VA must notify individuals within five 
business days of learning of the breach as opposed to basing 
the time frame on the date of the breach.
    Number two, we believe that VA should be required to 
provide the opportunity to receive notification in large print, 
brail, audio or electronic formats. For disabled veterans who 
have visual or other impairments, these options are 
particularly critical. Otherwise, they will not receive proper 
notification and will not be able to take proper action to 
address any concerns.
    Third, we support The Veterans Affairs Employee 
Accountability Act. This legislation will ensure that employees 
who knowingly violate any civil law covered by the Federal 
Acquisition Regulation or the Veterans' Affairs Acquisition 
regulation do not receive bonuses for or during the year of the 
violation.
    It is our hope that using bonuses to reward only those 
employees who follow these laws will ensure that our veterans 
receive the highest level of services from VA. Ultimately, VA 
must ensure that veterans' needs can be clearly and efficiently 
met within the contracting requirements of federal law.
    Lastly, we support the Veterans Fiduciary Reform Act of 
2012. This legislation takes important steps toward ensuring 
that VA's fiduciary program is more transparent and focused on 
the needs of beneficiaries. We believe that VA's fiduciary 
program must be more veteran-centric or beneficiary-centric and 
tailored to address the needs of those beneficiaries who truly 
need this type of assistance. It is important to remember that 
these VA benefits have been earned by the veteran and that the 
funds belong to the veteran, even if he or she needs assistance 
with managing them.
    The Veterans Fiduciary Reform Act ensures that the 
determination of whether or not a beneficiary requires a 
fiduciary is based on factors such as a determination by a 
court of competent jurisdiction and an evaluation by a medical 
professional regarding the role of financial management in the 
rehabilitation of the individual.
    Importantly, it also states the types of evidence that may 
be considered in an appeal of such a determination and provides 
a statutory way to terminate any fiduciary relationship.
    We support efforts to clarify factors that will be 
considered to determine if a beneficiary needs a fiduciary and 
the process for appealing related determinations. We believe 
that this process will make the fiduciary program more 
transparent.
    We also believe that efforts to strengthen the inquiry and 
investigation into the qualifications for fiduciaries will 
ensure a higher level of service for beneficiaries. The hearing 
held before this Subcommittee earlier this year presented 
several disturbing stories about the benefits faced in 
receiving proper service from their beneficiaries. It should be 
important to note, however, that to ensure that VA exercises 
appropriate discretion to ensure that family member fiduciaries 
are not unduly burdened in complying with VA requirements.
    This legislation also makes significant changes in the 
commissions that fiduciaries are able to receive for their 
services. We believe that a commission should only be 
authorized where absolutely necessary to ensure that the best 
possible fiduciary serves a veteran or other beneficiary.
    Regardless of whether the percent authorized is the current 
four percent or the proposed lesser of three percent or $35, 
our only concern is that a paid fiduciary be available to a 
veteran if there are absolutely no other alternatives. As long 
as highly qualified fiduciaries are available when needed, we 
support the lower commission.
    Again, thank you for the opportunity to share our views on 
each of these bills before the Subcommittee today. This 
concludes my testimony, and I will be pleased to answer any 
questions you may have.

    [The prepared statement of Heather Ansley appears in the 
Appendix]

    Mr. Johnson. Thank you, Ms. Ansley.
    Ms. Perkio, you are now recognized for five minutes.

                    STATEMENT OF LORI PERKIO

    Ms. Perkio. Thank you, Mr. Chairman and Members of the 
Subcommittee for the opportunity to provide The American Legion 
views on H.R. Bill 2985, Veteran ID Card.
    The American Legion feels a Veteran ID Card may be useful, 
but feels more investigation is needed to determine best course 
of action. The American Legion has no position on this bill at 
this time.
    In regard to H.R. 3730, Veterans Data Breach Timely 
Notification Act, on May 3rd, 2006, a laptop and external hard 
drive containing 26,500,000 veteran and active-duty 
servicemembers' names, Social Security numbers and dates of 
birth were stolen during a home burglary of VA employee. The 
stolen laptop was reported to VA immediately. Three weeks later 
the theft became public knowledge. With advance in technology 
and criminal ingenuity, checking and savings accounts can be 
depleted in a matter of hours.
    The ripple effect of identify theft can destroy a veteran's 
lifetime of hard work. Veterans expect response that is swift 
and comprehensive. This legislation would help ensure that this 
is the case. The American Legion supports this legislation.
    H.R. 4481, Veterans Affairs Employee Accountability Act: 
Bonus pays should be awarded to an employee who goes above and 
beyond the basic performance. Bonus pays should never be 
considered for anyone who is trying to circumvent the system. 
VA needs stronger accountability in the bonus system and the 
American Legion supports this legislation.
    In regard to H.R. 5948, Veterans Fiduciary Reform Act of 
2012: The VA describes the fiduciary program mission as to 
protect the benefits paid to veterans and other beneficiaries 
who are unable to manage their financial affairs by appointing 
and supervising qualified fiduciaries with continued and 
diligent oversight as it pertains to VA benefits.
    In 2009, VA consolidated 14 western regional office 
fiduciary activities to create the Western Fiduciary Hub. Then 
in 2011 initiated consolidate of the remaining 39 fiduciary 
activities into fiduciary hubs located in Louisville, Columbia, 
Milwaukee, Lincoln, and Indianapolis. The purpose was to 
improve timeliness, increase quality, consistency and better 
utilize resources. The boring of jurisdictional lines would 
provide field examiners to work within the hub rather than the 
jurisdiction of the regional office. Fifty-eight additional 
field examiners were to be added to the fiduciary program, but 
will be reassigned from the compensation unit. Due to the VA's 
enormous backlog in claims completion dates, the American 
Legion recommends VA hiring new employees to staff the 
fiduciary program as opposed to moving them from an already 
overburdened area of the VA.
    In addition to the VA's hiring of 58 new field examiners, 
the American Legion recommends hiring an additional VA 
fiduciary employee in each of the 57 ROs. To better assist and 
coordinate the fiduciary program between field examiner, 
beneficiary and fiduciary hubs.
    In the 2010 JAO report, the VA fiduciary program stated, 
``VA managers and staff indicated that training may not be 
sufficient.'' In a recent meeting the American Legion was told 
new field examiner training consists of two weeks formal 
training with two weeks field training. They are assigned a 
mentor for 60 days with 100 percent review for only 90 days. 
The VA states timeliness of appointing a fiduciary has improved 
to 45 days, yet many beneficiaries wait, in some cases years, 
to be assigned a fiduciary while others die before a fiduciary 
is appointed.
    VA states the beneficiary will be asked first who they wish 
to appoint as fiduciary, then look at family members. There are 
many cases whereupon notification of incompetency, the 
beneficiary is submitting a written request for a spouse or 
other family member to be appointed as fiduciary, yet months go 
by before a field examiner contacts a requested fiduciary and 
worse, appoints a fiduciary other than the requested family 
member.
    When the beneficiary is in receipt of a non-service 
connected pension, the full percent paid to the fiduciary is 
money that would otherwise have stayed within the household 
budget.
    When the beneficiary is a recognized nursing home, the 
appointment of a nursing home as fiduciary should be much less 
than the average 45 days, yet this is not the case. The 
American Legion recommends a 100 percent quality review of 
field examiners for at the least the first year following 
formal training.
    The American Legion supports legislation requiring VA to 
notify the beneficiary when a requested fiduciary has been 
denied and to also allow the opportunity for an appeal of that 
decision. The American Legion has been notified of many 
instances where VA denied the beneficiary's requested fiduciary 
who had been competently caring for the beneficiary for years 
prior to the VA claim. 38 C.F.R. 3.353(A) states, ``A mentally 
incompetent person is one who, because of injury or disease, 
lacks the mental capacity to contract or manage his or her own 
affairs, including disbursement of funds without limitation.''
    Beneficiaries face physical or economical limitations. The 
situation has been compounds by a diagnosis of mental 
incompetency. Our veterans deserve the attention of those 
entrusted within the VA fiduciary program. Field examiners are 
not required to provide the beneficiary with their contact 
information creating added stress to the beneficiary and their 
family members while awaiting a fiduciary appointment.
    The wheels of progress are in motion, yet our veterans and 
their widows and orphans are dying in pain and poverty while 
awaiting for the benefits they so rightly deserve. The American 
Legion supports this legislation.
    If there are any questions, I will be available to answer 
them for you.

    [The prepared statement of Lori Perkio appears in the 
Appendix]

    Mr. Johnson. I thank each of you for your testimony. We 
will go straight into questions. First of all, Mr. Ibson, do 
you know what percentage of those serving as fiduciaries for 
veterans are also caregivers?
    Mr. Ibson. I am sorry, sir, I do not know. I could 
speculate, but I----
    Mr. Johnson. The information that we have is that it is 
approximately three percent of the entire fiduciary program. 
Does that sound about right to you?
    Mr. Ibson. That would seem like a reasonable projection.
    Mr. Johnson. Also, Mr. Ibson, can you describe for us your 
own experiences with the VA in getting them to resolve issues 
once you brought them to the VA's attention?
    Mr. Ibson. Yes. We have had several meetings. The earliest, 
I think, was some three years ago, and in several meetings 
followed in which we discussed the general issue that I have 
raised today we were given some assurances that those concerns 
would be addressed. I am pleased to learn from the testimony 
this morning that there are regulations moving forward. It is 
not clear to me that those regulations do, in fact, fully 
address the issues we have discussed and one could be 
frustrated by the length of time that has elapsed since those 
earliest conversations.
    Mr. Johnson. Mr. Ibson, does VHA's caregiver program 
monitor the finances of the veterans and their families in the 
program?
    Mr. Ibson. No, it does not, sir. I would not want to 
represent that that's the case. Our point is simply that the 
level of oversight and initial screening is such as to assure a 
level of trust that we believe merits consideration in a more 
relaxed reporting and auditing standard.
    Mr. Johnson. Okay. Do you have any thoughts about what the 
VA can do to ease the burden of overly stringent reporting 
requirements on fiduciaries?
    Mr. Ibson.  Well, we would suggest and would be pleased to 
provide the Committee with language that could both address the 
point that Mr. McLenachen cited, the importance of better 
coordination between the two administrations, but also as I 
indicated, a more balanced and less rigid level of reporting 
akin perhaps to the kind of more user-friendly reporting that 
the Social Security Administration requires.
    Mr. Johnson. Is there any software provided for reporting 
or anything like that that you are aware of?
    Mr. Ibson. Well, not that I am aware of, and certainly the 
quote that I furnished reflected the frustration of one of the 
caregivers who when she asked about that availability, was told 
there was none.
    Mr. Johnson. Mr. McLenachen, I know you are not at the 
table, but in your testimony you talked about the fact that 
most fiduciaries have access to online banking, so much of some 
of their security issues would be resolved.
    It seems to me if fiduciaries are using computers already, 
some form of standard reporting software would be beneficial. 
It would make life a heck of alot easier at the VA and it would 
make it a lot easier for the fiduciaries as well, to the extent 
that they have access. Now, not all fiduciaries are going to 
use a computer. I understand that, but just a thought.
    Mr. McLenachen. Yes, sir.
    Mr. Johnson. Mr. Ibson, in the testimony, the VA opposes 
the annual reporting requirement to Congress on the grounds 
that it hinders transparency. From your experience with VA 
programs, are annual reports to congress a good thing or not?
    Mr. Ibson. I think very much so. I think they focus 
officials' attention, and in the myriad of obligations imposed 
on the department, it is easy to lose focus. I think a 
reporting requirement provides that focus.
    Mr. Johnson. Okay. Let us move to the American Legion. Ms. 
Perkio, the VA opposes the provision that mandates the VA to 
limit the appointment of a fiduciary to management of VA funds. 
Given that the VA can only direct who is in charge of the 
benefits it administers, what do you think of this provision?
    Ms. Perkio. Would you repeat the question?
    Mr. Johnson. Sure. The VA opposes the provision in the 
legislation that mandates the VA to limit the appointment of 
fiduciary to management of VA funds. Given that the VA can only 
direct who is in charge of the benefits it administers, what do 
you think of this provision? Good, bad?
    Ms. Perkio. I believe that the VA can only, you know, take 
care of what they have jurisdiction over.
    Mr. Johnson. So basically you support the idea that they 
should only be allowed to deal with the VA funds?
    Ms. Perkio. Yes.
    Mr. Johnson. Ms. Perkio, last year the VA awarded 
approximately $400,000,000 in bonuses. Coincidentally, the VA 
estimates that costs of implementing the Fiduciary Reform Act 
at that similar cost, given what we know about this program, do 
you think we should think twice before giving bonuses to those 
administering this program?
    Ms. Perkio. In light of some of the horror stories that are 
out there, I think that the VA is trying very hard to make sure 
that they keep track of them but I do believe that more 
oversight needs to come into this, but to deny them bonuses 
based on--until somebody has been actually proven that they 
violated civil law, then I wouldn't recommend that any bonuses 
be withheld.
    Mr. Johnson. What are your thoughts on the VA strengthening 
the chain of contact between veterans and the fiduciary 
program, the VA and fiduciaries?
    Ms. Perkio. Absolutely. Right now, I think that because 
there isn't a continuity of a chain of command, beneficiaries 
will go to their Service Organizations and say, we were 
approved for pension, we are waiting for a field examiner to 
come. Several months will have gone by and they are just left 
without any contact, without knowing who to go to, and the 
Service Organizations, because of the fiduciary hubs, don't 
actually have that continuity of contact. Now, they have 
created the 1-800 number and I understand that it is working 
very well at this time, but I do believe that communication 
does need to be strengthened.
    Mr. Johnson. Okay. In the VA's testimony, the Department 
argues that the proposed annual accountings would not improve 
the VA's oversight of fiduciaries. Do you agree with this?
    Ms. Perkio. No, I do not.
    Mr. Johnson. Ms. Ansley, why do Veterans' dependency and 
indemnity compensation need to be specifically designated in 
the proposed redesignation language?
    Ms. Ansley. Thank you for the question. We, in looking at 
the testimony of the predesignation section, wanted to ensure 
that other types of beneficiaries also had the opportunity to 
make such a designation. So in looking at the proposed 
language, it mentions compensation and pension forms, including 
the form that is--that a veteran would file for compensation 
pension, but for instance you may have spinal bifida, someone 
who is a spina bifida applicant which is VA form 21-03.04 and 
they would receive a monetary allowance, and so we just wanted 
to make certain that predesignation, the opportunity to assert 
a fiduciary would go to any type of beneficiary who may be 
receiving those and depending on how the language is 
interpreted, that may or may not happen, so we just wanted to 
flag that.
    Mr. Johnson. Okay. Ms. Ansley, in your testimony you stated 
that a commission should only be authorized when absolutely 
necessary. The Social Security Administration does not pay 
individuals to serve in a fiduciary-like capacity. Do you think 
the VA should consider doing away with paying a commission 
entirely?
    Ms. Ansley. As we stated, our main concern is that a 
fiduciary be available when needed, so our hope is that we 
would never have to pay a fiduciary, that we would have someone 
available, but we just didn't want that one veteran who, for 
whatever reason, there wasn't a family member, there wasn't 
somebody they were willing to find, you know, just that one 
person we didn't want them to fall through the cracks.
    So that is the, you know, making sure that that is 
available so that we can take care of all needs, but our hope 
would be that that would be, like I said, a very last resort.
    Mr. Johnson. Okay. Ms. Ansley, also in your testimony you 
mentioned areas of concern that still need to be addressed. Do 
you think this is best addressed in legislation or through the 
promulgation of regulations directly with the VA?
    Ms. Ansley. I think that at this point we do need to 
continue to see this legislation move forward. That is our 
hope, that Congress would continue to address this issue. 
Regulations are promulgated in a lot of different areas. I know 
of other areas we are watching, that they have been done for 
months and months and haven't seen them, so we need to make 
sure that this continues to move forward. It is nice when 
regulations marry up with what is being required, but there is 
nothing quite as forceful as having something in statute that 
makes it so.
    Mr. Johnson. Ms. Kologe, in your testimony you stated that 
the VA is failing to monitor the well being of veterans in its 
care. Do you think this is a result of ineffective statutes or 
regulations, or just simply not following statutes and 
regulations, a combination thereof? What do you think?
    Ms. Kologe. Thank you, Mr. Chairman. I believe that it is 
the confused role of the fiduciary program in that, as I 
mentioned the fiduciary payments versus providing some of the 
support services, making sure veterans have their medical care, 
that they have a clean home to live in, things like that. I 
believe that we do need to move forward with legislation on the 
broad strokes and have VA fill in its regulations where it has 
the expertise in those areas.
    And I think it is a failure of mostly an overburdened 
system and if we can take out those veterans who do not need to 
be in a fiduciary program or could be into the supervised 
direct payment program, it would limit the burdensome reporting 
requirements for some of these fiduciaries, and allow VA to 
allocate its resources better.
    Mr. Johnson. Okay. What would legislation to combat the 
VA's tendency to become overly paternalistic in the 
administration of benefits, what would it look like?
    Ms. Kologe. I believe if there were two separate tracks to 
people in the fiduciary program, again it references mental 
incompetence right now and so VA in its mental health exams and 
other types identifies veterans that may qualify, but there is 
not a consistent way to do those exams. It is just in the 
opinion of the examiner is the veteran able to manage their 
funds. There should be consistent questions that are asked of 
the individuals and there are veterans who are not in a 
fiduciary program that perhaps would benefit from it, and the 
greater oversight of that, so we would be happy to work with 
the Committee, Subcommittee and other stakeholders to get the 
best legislation and then leave up to VA what could be a 
regulation.
    Mr. Johnson. Okay. In their testimony, the VA opposes the 
consideration of medical evaluations to determine incompetency. 
Do you think this is wise?
    Ms. Kologe. The proposed legislation that you have offered 
offers medical information that is currently considered in 
other veterans' benefit claims and VA mentions that a fiduciary 
assignment is not a claim. Well, I think that we, nevertheless, 
need to use medical information to determine whether a veteran 
is financially able to manage their funds and that may not be 
from a physical standpoint. This may be--I will look to other 
areas, other agencies that already make determinations of 
financial incapacity and again make two tracks, one for 
veterans who actually require more intensive services to 
support their self care. Thank you.
    Mr. Johnson. So let me make sure I understood your answer. 
So are you in favor of considering medical information in 
determining incompetency?
    Ms. Kologe. Yes, I believe that some of the people who are 
in the fiduciary program, this medical information, I believe, 
it should be used and there should be a standard way of 
determining which medical information is used, whether it be 
from a third party that is provided to VA or whether a VA 
examiner, that they are using the same consistent protocols to 
identify veterans that need to be in the fiduciary program.
    Mr. Johnson. I understand. I would like to see if the 
Minority Counsel has any questions?
    Well, our thanks to the panel for being here today and you 
are now excused. I again want to thank everyone for their 
participation today. The input and the feedback provided today 
is an important contribution as this Subcommittee crafts 
legislation to address the needs of our veterans.
    Today's hearing is a step forward, a step toward delivering 
needed improvements in those veteran's lives, and I look 
forward to our continued cooperation in that effort.
    With that, I ask unanimous consent from me, that all 
members have five legislative days for revise and extend their 
remarks and include extraneous material.
    Without objection, so ordered.
    This hearing is now adjourned. Thank you all for being 
here.

    [Whereupon, at 11:27 a.m., the Subcommittee was adjourned.]

                            A P P E N D I X

                              ----------                              

           Prepared Statement of Hon. Bill Johnson, Chairman
    Good morning. This hearing will come to order.
    I want to welcome everyone to today's legislative hearing on H.R. 
2985, the Veteran's I.D. Card Act; H.R.3730, the Veterans Data Breach 
Timely Notification Act; H.R. 4481, the Veterans Affairs Employee 
Accountability Act; and H.R. 5948, the Veterans Fiduciary Reform Act of 
2012.
    These bills arrive from several different avenues that fall under 
this Subcommittee's purview, and I want to thank the bill's sponsors 
for drafting these proposals for our review.
    H.R. 2985, the Veteran's I.D. Card Act, was introduced by 
Congressman Akin of Missouri. The bill would direct the VA to issue a 
veteran's ID card upon request to any veteran who is not entitled to 
military retired pay or enrolled in the VA system. We will hear more 
from Congressman Akin on this bill, and I thank him for his 
participation.
    H.R.3730, the Veterans Data Breach Timely Notification Act, was 
introduced by our Subcommittee's Ranking Member, Congressman Donnelly 
of Indiana. His bill would require the VA to notify Congress and 
directly affected individuals, within 10 business days or less, of a 
data breach that compromises sensitive personal information. This 
improved transparency and responsiveness would be a boost to the VA's 
efforts at improving its information security image.
    As the system currently works today, the lapse of time between the 
VA knowing of a data breach and a veteran knowing his or her 
information has been compromised and may be floating around is entirely 
too long. In discussions with staff, Assistant Secretary Baker 
acknowledged that the current duration between the VA learning of a 
data breach and a veteran being notified that his or her personally 
identifiable information, or ``PII'', may have been compromised could 
be shortened, and this legislation is a good measure toward that end. I 
am proud to co-sponsor this bill. I urge my colleagues to consider 
adding their support, and look forward to Ranking Member Donnelly's 
further remarks on it.
    H.R. 4481, the Veterans Affairs Employee Accountability Act, was 
introduced by Congressman Roe of Tennessee, another distinguished 
member of our Subcommittee. His bill would prohibit any VA employee 
from receiving a bonus if that employee knowingly violated Federal 
Acquisition Regulations or VA Acquisition Regulations. We have seen 
plenty of evidence of the VA's lack of controls over its bonus program, 
which has further been substantiated by the VA's own OIG. Sometimes 
bonuses go to employees with documented poor performance, sometimes the 
VA gives retention incentives to an employee about to retire, and 
sometimes bonuses go to VA employees for no reason at all.
    However, it's not just the bonus program that is running wild; we 
have also seen many long-term cases of VA employees ignoring 
acquisition regulations, often because it's simply easier for them to 
do so. To veterans, the taxpayers, and this Committee, that is not a 
good reason for breaking the law. Furthermore, in many of those cases, 
the VA has not held many of those employees accountable after learning 
of the violations.
    Last week, I introduced H.R. 5948, the Veterans Fiduciary Reform 
Act of 2012. Based on investigations done by this Subcommittee, as well 
as a hearing held in February, it is abundantly clear that VA's 
Fiduciary Program requires significant improvement. The February 
hearing discussed fiduciaries stealing veterans' benefits, felons being 
appointed as fiduciaries, and even fiduciaries withholding needed funds 
to the point where a veteran's utilities are cut off. In addition, many 
veterans have been unable to contact their fiduciaries to get necessary 
basic funds, and family members are frequently shut out of the program 
despite VA's stated intent to include family members as a preferred 
choice.
    While the VA did take an important step in the right direction 
after that hearing when it removed a paragraph from its standard form--
requiring a fiduciary to get VA approval of any use of a veteran's 
funds--the same types of problems discussed at that hearing continue to 
happen. This Subcommittee brings them to the VA's attention, and 
sometimes they are fixed on an individual basis. However, it is 
reasonable to expect that the same type of problem will come up the 
next week. The VA's Fiduciary Program suffers systemic weaknesses.
    VA's Fiduciary Program is intended to help administer VA benefits 
for veterans deemed incompetent to handle their financial affairs. As 
written, the statute defers greatly to the Secretary's discretion in 
the Program's administration, including who can serve as a fiduciary 
and what obligations fiduciaries owe veteran beneficiaries. As 
practiced, the VA has stretched that flexibility in every direction, 
and the result has been unconscionable treatment of some of our most 
vulnerable veterans.
    The Veterans Fiduciary Reform Act of 2012 is based on problems 
uncovered before, during, and after the February hearing as well as 
valuable input from veterans' service organizations and individual 
veterans on the ground who have experienced difficulties with the 
program. The legislation would require a credit and criminal background 
check each time a fiduciary is appointed, and allow veterans to 
petition to have their fiduciary removed if problems arise.
    The bill would also decrease the potential maximum fee a fiduciary 
can receive to the lesser of 3 percent or $35, similar to Social 
Security's fiduciary program. This will help discourage those who 
enroll as fiduciaries with the VA with only a profit motive in mind. In 
addition, the legislation will enable veterans to appeal their 
incompetent status at any time, require fiduciaries to submit annual 
accounting reports; and allow veterans to name a preferred fiduciary, 
such as a family member.
    These significant changes will heighten VA's standards for 
administering the Fiduciary Program and increase protection for the 
most vulnerable veterans. Through mandating improved scrutiny during 
background investigations and lowering the fee a fiduciary can charge, 
the Veterans Fiduciary Reform Act of 2012 will help root out potential 
predators. Incorporating the ability for veterans to petition to have 
their fiduciary removed and replaced will add a layer of protection to 
veterans with fiduciaries.
    I encourage my colleagues to support this bill, and would also 
direct your attention to several news articles that came out over the 
last few days documenting many cases of veterans around the country who 
have suffered from the lack of oversight and control within the 
Fiduciary Program.
    I want to thank everyone for their participation in today's 
hearing, and now yield to Ranking Member Donnelly for an opening 
statement.

                                 
               Prepared Statement of Hon. Jerry McNerney
    Thank you Mr. Chairman for holding this legislative hearing today.
    This Subcommittee is committed to providing transparency and 
accountability to veterans and taxpayers. I look forward to hearing 
from the bill's sponsors as well as stakeholders about the legislation 
we have before us today.
    I am pleased to have Ranking Member Donnelly's bill, H.R. 3730, 
included in today's hearing. This legislation, the Veterans Data Breach 
Timely Notification Act, seeks to protect veterans in the event that a 
data breach involving sensitive information occurs.
    In light of VA's Monthly IT report detailing data breach incidents, 
this Subcommittee became aware that the VA can take up to 30 days to 
notify veterans that a data breach occurred, potentially exposing a 
veteran's sensitive personal information. To address this issue, H.R. 
3730, requires the VA to notify potentially affected veterans within 
five working days after a data breach has occurred.
    In an effort to mitigate the effects of identity fraud, this change 
would allow individuals to take decisive action to protect their 
identity.
    I believe this legislation will help veteran's protect personal 
identifiable information, including their social security number, which 
can severely affect a veteran's financial stability.
    I look forward to working with Members of this Subcommittee as we 
review this legislation and the other bills before us in the 
Subcommittee this morning.
    Thank you Mr. Chairman and I yield back

                                 
                Prepared Statement of Hon. David P. Roe
    On February 12, we held our first hearing on the Pharmaceutical 
Prime Vendor (PPV), in which this Committee uncovered a serious problem 
with the VA's contracting procedures. Several instances were identified 
where VA employees went outside the department's Prime Contract to 
purchase certain pharmaceuticals, which by the VA's own admission 
exceeded these officials' authority and cost taxpayers hundreds of 
millions of dollars.
    It's bad enough that employees that are knowingly violating civil 
contracts have avoided punishment. But it's worse still that some of 
them are actually receiving annual bonuses.
    VA officials downplayed the illegality of these actions, which were 
in direct violation of the Federal Acquisition Regulation (FAR), by 
describing them as ``improper'' or ``mistakes.'' Rather than penalizing 
or reprimanding these employees, it appears VA senior officials paid 
these employees some form of a bonus, further highlighting the lack of 
internal contracting oversight at the VA.
    This is inexcusable. To address this situation, I introduced H.R. 
4481, the Veterans' Affairs Employee Accountability (VAEA) Act. This 
bipartisan legislation directs the secretary of Veterans Affairs to 
ensure that employees that knowingly break civil law covered by the FAR 
cannot receive a bonus for or during that year.
    Financial incentives are a valuable tool to retain employees, but 
they shouldn't be given to VA employees who break the law. I thank the 
Committee and Chairman Johnson for holding this important hearing and 
hope we can stand up for taxpayers and hold the VA accountable with 
this legislation.

                                 
                Prepared Statement of Hon. W. Todd Akin
    Chairman Johnson, Ranking Member Donnelly, thank you for the 
opportunity to testify before you today regarding my bill, H.R. 2985, 
the Veteran's I.D. Card Act. As of today, this bill has over sixty-five 
bipartisan cosponsors and has been endorsed by a wide range of 
veterans' organizations.
    Over the last several years, identity theft and the need to protect 
personal information have received heightened national attention. The 
aggregation of personal information and Social Security numbers (SSN) 
in large corporate databases and the display of SSNs in public records 
have provided opportunities for identity thieves.
      Thus, SSNs are a valuable commodity for persons seeking 
to assume another individual's identity or to commit financial crimes.
      Fraudulent and stolen SSNs can be used by noncitizens to 
work illegally in the United States.
      Although Congress and the states have passed a number of 
laws to address this issue, the continued reliance on SSNs by private- 
and public-sector entities underscores the need to identify additional 
protections.
    Several federal agencies have begun removing SSNs from individual 
identification cards; including the Department of Veterans Affairs (VA) 
which replaced VA medical identification cards with ones that no longer 
display the SSN, and as of June 2011, SSNs are no longer printed on any 
new the Department of Defense ID cards to protect the privacy and 
personal identity information of cardholders.
    Currently only veterans who served at least 20 years or have a 
service connected disability are able to get an ID card signifying 
their service from the Veterans Administration. The only option 
available for all other veterans is to carry a paper form called a DD-
214 that contains various forms of personal data protected by the 
Privacy Act of 1974, including their social security number, date & 
place of birth, selective service number, and service details. While 
this is appropriate information for the DD214, carrying this 
information is clearly an identity theft risk.
    All veterans should be provided the opportunity to obtain an 
identification card proving their prior military service. The Veteran's 
ID Card Act will:
      Provide proof of military service for those who currently 
have no simple means to do so;
      Minimize the potential of identity theft through the 
potential loss or theft of a form DD-214;
      Provide employers looking to hire veterans a standard way 
to verify an employee's military service; and
      Provide military veterans the ability to take part in the 
goods, services or promotional opportunities that are offered to those 
who are able to provide proof of military service.
    In order to ensure that this legislation has minimal impact on the 
Veterans Administration and can be done in a budget neutral way, this 
legislation:
      Requires a veteran who seeks to obtain this ID card to 
pay for the initial and any subsequent replacement cards;
      Requires the VA to determine the cost of such a card and 
apply a fee to the card appropriately to cover all costs;
      Uses the equipment already in place at VA facilities 
across the country to issue the card and collect payment;
      Requires the Secretary of the VA to review and assess 
costs every 5 years and change the fee structure appropriately to cover 
all ID costs under this bill.
    The intent of the bill is to create a standard identification card 
to designate an individual as a former member of the Armed Services who 
was not medically retired or retired after 20 years. Currently, 
veterans who receive medical or retirement benefits have veterans ID 
cards, but veterans who served honorably for less than 20 years or 
didn't get injured do not have a similar proof of service. This bill 
aims to correct that. Additionally, as the President and Congress 
extend benefits to non-retired veterans, there should be a standard 
identification card for those individuals.
    Veterans need a form of identification other than the antiquated 
form DD-214 issued by the military upon discharge. By providing 
veterans this option they will have at their disposal a more rugged and 
safer form of identification to prove their military service. This bill 
will have no cost to the U.S. government.
    Again, thank you for the opportunity to testify today and I look 
forward to answering any questions you may have.

                                 
                  Prepared Statement of Mr. McLenachen
    Mr. Chairman and Members of the Subcommittee, thank you for the 
opportunity to present the views of the Department of Veterans Affairs 
(VA) on several bills of interest to Veterans and VA. VA has not had 
time to develop a position or estimate costs on H.R. 3730, the 
``Veterans Data Breach Timely Notification Act,'' which would impose on 
VA various notification requirements in the event of a data breach, or 
H.R. 4481, the ``Veterans Affairs Employee Accountability Act,'' which 
would deny bonuses to VA employees who knowingly violate the Federal 
Acquisition Regulation or the Veterans Affairs Acquisition Regulation. 
VA will provide its views and costs on H.R. 3730 and H.R. 4481 in a 
letter for the record.
                               H.R. 2985
    H.R. 2985, the ``Veteran's I.D. Card Act,'' would establish a 
program under which VA would issue a Veteran identification card, 
produced by VA, upon request by a Veteran who was discharged from the 
Armed Forces under honorable conditions. The Veteran would have to 
present to VA a copy of his or her DD-214 form or other official 
document from his or her official military personnel file describing 
his or her service, as well as pay a fee set by VA to recoup the cost 
of implementing the program.
    The bill makes clear that issuance of a card would not serve as 
proof of entitlement to any VA benefits, nor would it establish 
eligibility for benefits in its own right. The purpose of the card, 
made clear in section 2(a)(3) and (4) of the bill, would be for 
Veterans to use to secure goods, services, and the benefit of 
promotional activities offered by public and private institutions to 
Veterans without having to carry official discharge papers to establish 
proof of service.
    VA understands and appreciates the purpose of this bill, to provide 
Veterans a practical way to show their status as Veterans to avail 
themselves of the many special programs or advantages civic-minded 
businesses and organizations confer upon Veterans. However, VA does not 
support this bill. The same benefit to Veterans can best be achieved by 
VA and the Department of Defense (DoD) working with the states, the 
District of Columbia, and United States territories to encourage 
programs for them to issue such identification cards. Those entities 
already have the experience and resources to issue reliable forms of 
identification.
    VA is already working with states on these efforts. For example, VA 
and the Commonwealth of Virginia just launched a program to allow 
Veterans to get a Virginia Veteran's ID Card from its Department of 
Motor Vehicles (DMV). The program will help thousands of Virginia 
Veterans identify themselves as Veterans and obtain retail and 
restaurant discounts around the state. On May 30, 2012, the program was 
launched in Richmond, and a DMV ``2 Go'' mobile office was present to 
process Veterans' applications for the cards.
    Virginia Veterans may apply for the cards in person at any Virginia 
DMV customer service center, at a mobile office, or online. Each 
applicant presents an unexpired Virginia driver's license or DMV-issued 
ID card, a Veterans ID card application, his or her DoD Form DD-214, 
DD-256, or WD AGO document, and $10. The card, which does not expire, 
is mailed to the Veteran and should arrive within a week. In the 
meantime, the temporary Veterans ID card received at the time of the 
in-person application can be used as proof of Veteran status.
    Other jurisdictions can use this model to establish similar 
programs without creating within VA a new program that may not be cost-
efficient. It is not known whether enough Veterans would request the 
card to make necessary initial investments in information technology 
and training worthwhile.
    Also, a VA-issued card could create confusion about eligibility. 
Although the bill's drafters took care to provide that a card would not 
by itself establish eligibility, there could nonetheless be 
misunderstandings by Veterans that a Government benefit is conferred by 
the card. As the Subcommittee knows, entitlement to some VA benefits 
depends on criteria other than Veteran status, such as service 
connection or level of income. Confusion may also occur because the 
Veterans Health Administration issues identification cards for Veterans 
who are eligible for VA health care. Having two VA-issued cards would 
pose the potential for confusion.
    Because it is difficult to predict how many Veterans would apply 
for such a card, VA cannot provide a reliable cost estimate for H.R. 
2985. Although the bill is intended to allow VA to recoup its costs by 
charging Veterans for the cards, in reality VA could be assured of 
recouping its costs only if it knew in advance what those costs would 
be, and those costs cannot be reliably estimated without knowing how 
many Veterans would request the card.
                               H.R. 5948
    H.R. 5948, the ``Veterans Fiduciary Reform Act of 2012,'' would 
make several changes to VA's administration of its fiduciary program 
for beneficiaries who cannot manage their own VA benefits. VA 
appreciates the Committee's oversight and interest in improving VA's 
fiduciary program, but finds provisions of the bill problematic, as set 
out in detail below. Although VA does not support this bill, VA does 
recognize the need for better oversight of the fiduciary program. VA 
would welcome the opportunity to discuss its fiduciary program and the 
goals of and intent behind this bill with you or your staff.
    Section 2(a) of the bill would add to title 38, United States Code, 
a new section 5511, which would govern VA adjudications of 
incompetence. Section 5511 would require VA, when adjudicating whether 
a beneficiary is considered mentally incapacitated or deemed mentally 
incompetent, to consider a determination made by a state court or other 
court of competent jurisdiction and an evaluation made by a medical 
professional, taking into account the role of financial management in 
the beneficiary's rehabilitation. Section 5511 would permit a 
beneficiary whom VA has determined to be mentally incapacitated or 
deemed mentally incompetent to appeal VA's determination and would 
require VA to consider in such an appeal court determinations and 
medical and lay evidence offered by the appellant. Section 5511 would 
also permit certain individuals to file with VA ``a claim'' to 
terminate any fiduciary relationship created by VA. Such a claim could 
be filed by an individual whom VA has determined to be mentally 
incapacitated or mentally incompetent, for whom VA has appointed a 
fiduciary, and whom, after such appointment, a State court or other 
court of competent jurisdiction or a medical professional has 
determined to be competent.
    VA opposes the provisions requiring consideration of medical 
evaluations because they are unnecessary and would result in delay that 
could cause undue hardship for affected beneficiaries, the majority of 
whom are elderly or severely disabled and in immediate need of 
benefits. VA currently considers determinations made by State courts of 
competent jurisdiction and evaluations by medical professionals in 
determining a beneficiary's ability to manage his or her financial 
affairs. However, new section 5511 would require that a medical 
evaluation take into account the ``role of financial management in the 
rehabilitation of the individual.'' This requirement could result in VA 
having to conduct significant evidentiary development, which is not 
currently required, for determinations of ability to manage financial 
affairs and thereby delay fiduciary appointments.
    Although the provisions concerning appeals and removal of 
fiduciaries generally codify current VA policy, VA opposes the removal 
provision to the extent that it restricts removal to beneficiaries who 
have a court or medical professional determination of competency. Under 
current VA policy, VA may also consider a beneficiary's demonstrated 
ability to manage his or her own VA benefits. A court or medical 
professional determination of competency is not required. This 
provision could limit a beneficiary's ability to have his or her 
competency restored and could unnecessarily require the expense and 
delay of a court proceeding or a medical examination to certify ability 
to manage financial affairs.
    Section 2(b) of the bill would clarify the statutory definition of 
``fiduciary'' in 38 U.S.C. Sec.  5506. It would clarify that the term 
``person'' in that definition includes a State or local government 
agency whose mission is to carry out income maintenance, social 
service, or health care-related activities; any State or local 
government agency with fiduciary responsibilities; or any nonprofit 
social service agency that VA determines regularly provides fiduciary 
services concurrently to five or more individuals and is not a creditor 
of any such individual. It would also require VA to maintain a list of 
State or local agencies and nonprofit social service agencies that are 
qualified to act as a fiduciary.
    VA opposes this provision because it is unnecessary and could cause 
confusion regarding the applicability of other statutes. Current 38 
U.S.C. Sec.  5507 requires VA to conduct an inquiry or investigation of 
any ``person'' to be appointed as a fiduciary to determine the person's 
fitness to serve as a fiduciary. Defining the term ``person'' to 
include State and local government and nonprofit social service 
agencies would imply that VA must conduct the inquiry or investigation 
required by section 5507 to determine such agency's fitness to serve as 
a fiduciary. However, some provisions of section 5507, such as those 
requiring VA to obtain a credit report and to request information 
concerning criminal convictions, cannot be made applicable to agencies. 
VA already appoints such agencies under current law if VA determines 
that it is in a beneficiary's interest. However, VA does not consider 
such agencies ``persons'' for purposes of completing the inquiry and 
investigation requirements of section 5507.
    VA also opposes the provision that would require VA to compile and 
maintain a list of State or local, and nonprofit agencies qualified to 
serve as a fiduciary for beneficiaries because it would be too 
burdensome and divert limited resources away from the primary program 
mission. There are as many as 3,009 counties, 64 parishes, 16 boroughs, 
and 41 independent municipalities in the United States. In addition, 
there are over 19,000 municipal governments and more than 30,000 
incorporated cities in the Nation. The resources needed to compile and 
maintain such a list would exceed by far any benefit for VA 
beneficiaries in the fiduciary program. VA currently appoints 
fiduciaries according to an order of preference, which begins with the 
beneficiary's preference and otherwise seeks to appoint family members, 
friends, or other individuals who are willing to serve without a fee. 
Rarely does VA need to appoint a state, local, or nonprofit agency as a 
fiduciary for a beneficiary.
    Section 2(c) of the bill would revise the statute governing VA 
qualification of fiduciaries. It would strike the phrase ``to the 
extent practicable'' from current statutory language requiring a face-
to-face interview with a person before certifying the person as a 
fiduciary; would add to the list of items required to form the basis of 
a fiduciary appointment adequate evidence that the person to serve as 
fiduciary uses a secure, encrypted Internet connection when conducting 
activity on the Internet relating to the beneficiary's financial 
information; and would strike from the statutory language requiring an 
inquiry into criminal convictions the limitation to offenses under 
Federal or State law ``which resulted in imprisonment for more than one 
year.''
    VA opposes the provision that would require a face-to-face 
interview with every proposed fiduciary because it does not account for 
the circumstances actually encountered by VA in the administration of 
the program, would needlessly delay some initial fiduciary 
appointments, and thus could harm affected beneficiaries. In some 
cases, a face-to-face interview of a proposed fiduciary is not 
practicable and should be waivable. For example, a face-to-face 
interview would not be practicable for natural parents of minor 
children or certain persons who already manage funds for multiple 
beneficiaries. VA also opposes the provision that would require 
adequate evidence that a proposed fiduciary uses a secure, encrypted 
Internet connection when conducting online activity related to 
beneficiary financial information. VA agrees that data security is 
important, but the purpose of the provision is unclear and the 
provision is unnecessary. VA-appointed fiduciaries provide services for 
beneficiaries through use of the banking system. If the bank offers 
online banking services, it is the bank that provides the secure portal 
for account access, not the customer. This provision would require 
significant oversight and staffing to implement and enforce. Further, 
it would require VA intrusion into the lives of spouses and other 
family members appointed as fiduciaries, which current VA policy 
attempts to limit. VA supports the provision that would require inquiry 
into any criminal conviction regardless of the length of any resulting 
imprisonment.
    Section 2(c) of the bill would also remove the current statutory 
authority permitting VA to waive any inquiry or investigation 
requirement with respect to certain classes of proposed fiduciaries and 
would add to that list of proposed fiduciaries a person who is 
authorized under to durable power of attorney to act on a beneficiary's 
behalf.
    VA opposes the waiver provision because it would needlessly delay 
certain fiduciary appointments, such as appointments of legal guardians 
and certain parents, for whom one or more of the inquiry or 
investigation requirements are not needed. In the case of a 
beneficiary's immediate family members seeking to provide fiduciary 
services, the proposal would result in greater intrusion into family 
matters with no real benefit for beneficiaries. VA does not oppose 
permitting VA to expedite the inquiry or investigation regarding any 
proposed fiduciary.
    Section 2(c) would also require VA to conduct the required face-to-
face interview with a proposed fiduciary not later than 30 days after 
beginning the inquiry or investigation and to conduct a background 
check in accordance with provisions requiring inquiry into criminal 
convictions and to determine whether the proposed fiduciary will served 
the beneficiary's best interest, including by conducting a credit 
check. It would require VA to conduct the criminal history and credit 
history background check at no cost to the beneficiary and each time a 
person is proposed as a fiduciary, regardless of whether he or she is 
serving or has served as a fiduciary; to maintain records of any person 
who has previously served as a fiduciary and had the fiduciary status 
revoked by VA; to check those records as part of the background check; 
and if a VA-appointed fiduciary is convicted of any crime while serving 
as a fiduciary ``for any person,'' to notify the beneficiary not later 
than 14 days after learning of such conviction. It would also require 
each proposed fiduciary to disclose to VA the number of beneficiaries 
on whose behalf the fiduciary acts.
    VA has not been able to discern a need for a face-to-face interview 
to be conducted within 30 days after beginning a fitness inquiry or 
investigation. Therefore, VA does not support this provision. To the 
extent that this provision could be interpreted to require VA to 
appoint a fiduciary within 30 days of receiving a request from a rating 
authority, VA opposes this provision. VA's current standard is to 
complete all initial appointment field examinations within 45 days. The 
face-to-face interview is only one element of the field examination. VA 
must also meet with the beneficiary, check the proposed fiduciary's 
criminal background and credit history, and develop additional 
information as necessary prior to recommending appointment. Other 
factors that can affect the timeliness of initial appointment field 
examinations include travel, availability of beneficiaries and proposed 
fiduciaries, workload, and availability of resources. Mandating the 
completion of an appointment within 30 days without VA having 
significant additional resources would jeopardize VA's ability to 
conduct full and effective examinations. VA also opposes the provision 
that would, without exception, require VA to report conviction of any 
crime by a fiduciary to a beneficiary within 14 days, regardless of 
whether such conviction has any effect on the fiduciary relationship or 
disqualifies the fiduciary, or whether disclosure of such information 
would harm the beneficiary.
    Section 2(c) of the bill would also require VA to ensure that each 
fiduciary has adequate training and knowledge to effectively use an 
encrypted, secure internet connection when conducting activity related 
to the beneficiary's financial information. It would, if VA has reason 
to believe that a fiduciary may be misusing all or part of a 
beneficiary's benefit, require VA to thoroughly investigate the 
veracity of the belief and, if veracity is established, transmit to 
certain officials a report of the investigation. The recipient 
individuals would be the Attorney General and each head of a Federal 
department or agency that pays to a fiduciary or other person benefits 
under any law administered by such department of agency for the use and 
benefit of a minor, incompetent, or other beneficiary.
    VA also opposes the provision that would require VA personnel to 
train fiduciaries on the use of encrypted, secure internet connections. 
Even if such connections were necessary to conduct the banking and bill 
payment business of a fiduciary (and they are not), VA does not have 
the resources or expertise to provide such training on a rolling basis 
to more than 95,000 individuals and entities who currently act as 
fiduciaries. VA does not oppose the investigation-of-misuse provisions 
because they codify current VA policy. However, upon a determination of 
misuse, VA provides the decision to the VA Office of Inspector General 
(OIG) for review and a determination regarding referral to the 
Department of Justice for prosecution. The Inspector General Act and 
Attorney General Guidelines already require the OIG to notify the 
Attorney General if the OIG has reason to believe that a Federal 
criminal law has been violated. VA opposes these provisions to the 
extent that they mandate dissemination of information to specific 
agencies regardless of VA's own internal review.
    Section 2(c) would authorize VA to require a proposed fiduciary to 
serve as a fiduciary only with respect to VA benefits, except for the 
beneficiary's family members and individuals whom the beneficiary has 
pre-designated to serve as the beneficiary's fiduciary. It would 
require VA, in requiring the furnishing of a bond, to ensure that the 
bond is not paid using any beneficiary funds and to consider the care a 
proposed fiduciary has taken to protect the beneficiary's interests and 
the proposed fiduciary's capacity to meet the financial requirements of 
a bond without sustaining hardship. It also would require a VA-
appointed fiduciary to operate independently of VA to determine the 
actions that are in the beneficiary's interest. Finally, section 2(c) 
would require each VA regional office to maintain a list of the name 
and contact information for each fiduciary, the date of each 
fiduciary's most recent VA background check and credit check, the date 
any bond was paid, the name and contact information of each beneficiary 
for whom the fiduciary acts, and the amount that the fiduciary controls 
for each beneficiary.
    VA opposes the provision that would authorize VA to limit the 
appointment of a fiduciary to management of VA funds. The purpose of 
this provision is unclear and unnecessary because VA appoints 
fiduciaries only for the limited purpose of receiving VA benefits on 
behalf of a beneficiary. Finally, VA strongly opposes the provisions 
that would require fiduciaries to pay annual surety bond premiums. 
Requiring the fiduciary to pay the annual premium would be a 
disincentive for both volunteer and paid fiduciaries and would 
significantly impair VA's ability to find qualified fiduciaries in some 
of its most difficult cases. Most fiduciaries are family members or 
friends who may not have the funds needed to meet the cost of the bond 
premium. With respect to paid fiduciaries who agree to take some of 
VA's most difficult cases, the cost of a bond premium might consume the 
entire nominal fee authorized by Congress. It is standard practice in 
the guardianship industry to allow for payment of surety bond premiums 
out of estate funds. If this provision is enacted, VA anticipates a 
dramatic increase in the number of fiduciaries who are also court 
appointed. Courts will allow the deduction of the cost of the bond and 
a substantial fee, generally between 5 and 15 percent of estate value, 
from the beneficiary's funds. VA cannot support the inequitable 
treatment of, and significant harm to, beneficiaries that would likely 
result from the enactment of this provision.
    Section 2(d) of the bill would require VA to include on its 
prescribed compensation and pension application forms an opportunity 
for the claimant to designate an individual as a fiduciary if needed, a 
description of what a fiduciary is and the role served by a fiduciary, 
and a description of the actions VA will take if the claimant does not 
designate a fiduciary on the application. Section 2(d) would also 
require VA, in appointing a fiduciary for a claimant who has not 
designated one, to appoint the beneficiary's court-appointed guardian 
or a person authorized to act on the beneficiary's behalf under a 
durable power of attorney. If VA appoints a fiduciary other than the 
one designated by the beneficiary, VA would have to notify the 
beneficiary of the reasons for not appointing the designated individual 
and of the beneficiary's ability to file a claim to change the 
appointed fiduciary. Finally, section 2(d) would permit a beneficiary 
for whom VA has appointed a fiduciary to file with VA a claim to remove 
the appointed fiduciary and have a new one appointed. VA would have to 
ensure that any removal or new appointment of a fiduciary does not 
delay or interrupt the beneficiary's receipt of benefits.
    VA opposes the provisions that would require modification of the 
compensation and pension application to include fiduciary designation 
information. The intent appears to be that VA would allow beneficiaries 
to designate a proposed fiduciary upon application. This would be 
unnecessary and not in the best interest of VA beneficiaries. There are 
currently over four million VA compensation or pension beneficiaries 
but only approximately 125,000 beneficiaries in VA's fiduciary program. 
VA has recently received feedback regarding the length and complexity 
of its application forms and has an aggressive plan to address those 
concerns. This provision of the bill would require VA to add further 
complexity to its application forms for a purpose for which most 
beneficiaries will not have an immediate need. Further, as a result of 
VA's increased outreach and collaboration with the Department of 
Defense, many individuals complete their initial benefit application 
early in their lifetime when they have no need for fiduciary services. 
Designating a fiduciary decades prior to any actual need for a 
fiduciary would likely render the initial designation stale and of no 
use to the beneficiary or VA. Also, VA's current appointment policy 
gives preference to the beneficiary's choice and family members' or 
guardian's desires as expressed at the time of the field examination, 
which VA believes is the best available and most relevant information 
for purposes of making a best-interest determination. Such 
determination should not be based upon stale information.
    VA also opposes the provision that would give priority in 
appointment consideration to individuals holding a beneficiary's 
durable power of attorney (POA). Under current policy, VA first 
considers the beneficiary's preference and then considers family 
members, friends, and other individuals who are willing to serve, which 
may include individuals designated in a POA. However, based upon VA 
experience, it would not be good policy to give a person holding a 
beneficiary's POA priority over all other candidates based only on the 
existence of a POA. Veterans and other beneficiaries in the fiduciary 
program can be extremely vulnerable and easily coerced into signing 
documents. Additionally, a POA can be executed and revoked by the 
beneficiary at any time. If an individual is holding a POA, VA would 
have no way of determining whether the POA is still in effect or if the 
beneficiary had the capacity to execute a legally enforceable POA under 
state law at the time. Implementing policies and procedures related to 
the assessment of POAs would needlessly complicate and delay the 
fiduciary-appointment process. Also, under current law, VA has a duty 
to appoint, based upon a field examination and consideration of the 
totality of the circumstances, the individual or entity that is in the 
beneficiary's best interest. While such a determination might conclude 
that appointment of an individual who holds the beneficiary's POA is in 
the beneficiary's interest, VA strongly opposes giving undue preference 
to an individual named in a POA. Under current law, VA appoints the 
person or entity who will provide the least restrictive fiduciary 
relationship. Thus, VA first considers the beneficiary's preference, 
followed by a spouse, other family member, or friend or other 
individual who is willing to serve as fiduciary without a fee. Such 
appointments constitute the overwhelming majority of VA's fiduciary 
appointments. Nonetheless, under this provision of the bill, if a 
beneficiary has not designated a proposed fiduciary, VA would be 
required to consider first the beneficiary's court-appointed guardian 
or an individual who holds the beneficiary's durable POA. It would 
require priority consideration for more restrictive arrangements, 
contrary to current VA policy.
    VA also opposes the provision mandating preference for the 
beneficiary's court-appointed guardian because it would generally be 
bad policy for VA's most vulnerable beneficiaries. Appointment of a 
court-appointed guardian often is the most restrictive method of 
payment and the most costly. Under current law, a VA-appointed 
fiduciary may collect a maximum fee of 4 percent of the VA benefits 
paid to the beneficiary each year. Further, under current VA policy 
interpreting the law, a fee may not be based upon retroactive, lump-
sum, or other one-time payments or upon accumulated funds under 
management. However, under State law, guardians may collect fees in 
excess of the 4-percent Federal limit. Although the fee structure 
varies from State to State, basic fees range between 5 percent of all 
income received by the guardian to as high as 10 to 15 percent of all 
income and funds under management by the guardian. Additionally, courts 
often allow extraordinary fees in excess of the standard fee. The 
appointment of a guardian often results in the guardian incurring the 
cost of attorney fees for filing motions and annual court accountings. 
These fees and costs can be as much as thousands to tens of thousands 
of dollars per year and are paid from the beneficiary's VA benefits. 
Also, VA cannot conduct consistent and effective oversight of 
guardians, who are appointed by a court, resulting in undesirable 
disparate treatment for vulnerable beneficiaries depending upon the 
State of residence. VA believes that Congress established the fiduciary 
program for the express purpose of ensuring a nation-wide, Federal 
standard for beneficiaries who cannot manage their own benefits.
    VA does not oppose the provision that would require VA to notify 
beneficiaries of the reasons for appointing someone other than the 
individual designated by the beneficiary. Under current VA policy, a 
beneficiary may at any time for good cause shown request the 
appointment of a successor fiduciary. Accordingly, VA does not oppose 
the provision that would allow such a request. However, VA opposes the 
provision to the extent that it would imply that such a request is a 
``claim.'' Characterizing a request for a successor fiduciary as a 
claim would likely engender costly and time-consuming litigation over 
whether such requests are subject to all the provisions of law 
currently applicable to claims, such as VA's duty to notify the 
claimant of the information and evidence necessary to substantiate a 
claim, VA's duty to assist in obtaining the evidence necessary to 
substantiate a claim, and the ability to retroactively reverse or 
revise a decision on a claim based on clear and unmistakable error. The 
appointment of a fiduciary after VA has awarded benefits to a 
beneficiary is not a decision on a claim for benefits.
    If a fiduciary is removed and a successor fiduciary is being 
appointed, VA's objective is to ensure the continuation of benefits. 
However, in some cases beyond VA's control, benefits do get delayed or 
interrupted when a fiduciary is being replaced. VA opposes this 
provision to the extent that it would prohibit, without exception or 
qualification, any delay in the delivery of benefits upon removal of a 
fiduciary. Under current law, VA must conduct the inquiry or 
investigation prescribed by Congress in 38 U.S.C. Sec.  5507 when it 
replaces a fiduciary, and sometimes VA encounters an uncooperative 
beneficiary or beneficiary's representative. Some delay may be 
unavoidable in these cases.
    Section 2(e) of the bill would make several changes with respect to 
the commission payable for fiduciary services. It would: (1) authorize 
a reasonable monthly commission limited to the lesser of 3 percent of 
the monthly monetary benefits paid or $35; (2) prohibit a commission 
based on any ``back pay'' or retroactive benefit payment; (3) prohibit 
a commission if VA determines that the fiduciary misused a benefit 
payment; and (4) permit VA to revoke the appointment if VA determines 
that the fiduciary has misused any benefit payment.
    VA opposes this provision. Payment of a suitable fee is necessary 
if there is no other person who is qualified and willing to serve as a 
fiduciary without compensation. In some instances, a beneficiary's 
interests can be served only by the appointment of a qualified paid 
fiduciary. As of April 30, 2012, VA has identified and appointed 
fiduciaries willing to serve without a fee for more than 92 percent of 
its beneficiaries.
    Under current VA policy, fiduciaries are more than mere bill 
payers. VA's emerging view is that fiduciaries should remain in contact 
with the beneficiaries they serve and assess those beneficiaries' 
needs. Without such an assessment, fiduciaries who serve VA's most 
vulnerable beneficiaries would be unable to fulfill their obligation to 
determine whether disbursement of funds is in the beneficiary's 
interest. As noted above, for the overwhelming majority of 
beneficiaries, a relative or close personal friend will perform the 
duties without cost to the beneficiary. However, there are difficult 
cases in which VA has no alternative but to turn to an individual or 
entity that is willing to serve Veterans and their survivors for a 
suitable fee. Reducing the allowable fee when VA is attempting to 
strengthen the role of fiduciaries in the program would create a 
disincentive for serving these vulnerable beneficiaries. VA strongly 
opposes such a reduction because it would harm beneficiaries and 
needlessly hinder the program, which has a clear preference for 
volunteer service but recognizes the need for a pool of paid 
fiduciaries who are willing to accept appointment for a suitable fee in 
some of VA's most difficult cases. However, VA supports the provisions 
that would codify VA's current policy regarding limitations on fees and 
has no objection to the remaining fee provisions because they appear to 
restate current law.
    Current 38 U.S.C. Sec.  6107 requires VA to reissue benefits that a 
fiduciary has misused as a result of VA's negligent failure to 
investigate or monitor the fiduciary. The law deems certain situations 
as such a negligent failure, including any case in which actual 
negligence is shown. Section 1(f) of the bill would specify that VA's 
failure to conduct, in accordance with governing law, an inquiry or 
investigation into an individual's qualifications to serve as a 
fiduciary shall constitute such negligent failure.
    VA does not oppose this provision, but the proposed amendment may 
insert ambiguity where it does not currently exist. The amendment would 
be to a statute that requires VA to reissue benefits if actual VA 
negligence is shown. The amendment would imply that ``not acting in 
accordance with [38 U.S.C. Sec. ] 5507'' constitutes a showing of 
actual negligence. Whether that implication is true in a given case 
would depend upon the circumstances.
    Section 2(g) would mandate that VA require a fiduciary to file an 
annual report or accounting and that VA transmit the report or 
accounting to the beneficiary and any legal guardian of the 
beneficiary. It would also require that a report or accounting include 
for each beneficiary the amount of benefits that accrued during the 
year, the amount spent, and the amount remaining and an accounting of 
all sources of benefits or other income other than VA benefits that are 
overseen by the fiduciary.
    VA opposes these provisions because they would burden fiduciaries, 
most of whom are volunteer family members or friends, but would not 
significantly improve VA's oversight of fiduciaries. Under current 
policy, which is based upon VA's experience in administering the 
program, VA generally requires fiduciaries to submit an annual 
accounting in cases in which: the beneficiary's annual VA benefit 
amount equals or exceeds the compensation payable to a single Veteran 
with service-connected disability rated totally disabling; a 
beneficiary's accumulated VA funds under management by the fiduciary is 
$10,000 or more; the fiduciary was appointed by a court; or the 
fiduciary receives a fee. These accountings are comprehensive and must 
be supported by financial documentation that identifies all 
transactions during the accounting period. VA audits more than 30,000 
accountings each year.
    VA currently pays benefits to more than 17,000 spouse fiduciaries, 
many of whom are also caring for severely disabled or infirm Veterans. 
Countless other beneficiaries receive only $90 each month and reside in 
the protected environment of a Medicaid-approved nursing home. Many 
other beneficiaries are cared for by family members who, due to the 
beneficiaries' recurring needs, expend all available VA benefits each 
month for the beneficiaries' care. The additional burden of documenting 
income and expenditure annually for the majority of our beneficiaries 
would be an undue hardship and would not result in any benefit to the 
beneficiary or the program. VA does not otherwise oppose the 
provisions, which restate current law or codify current VA policy 
regarding the information that must be included in an accounting.
    Section 2(h) would require a separate annual report from VA on 
information concerning VA-appointed fiduciaries to be submitted to the 
House and Senate Committees on Veterans' Affairs by July 1st of each 
year. Section 2(i) of the bill would require VA to comprehensively 
report, not later than one year after enactment, to the Committees on 
the implementation of the amendments made by this bill, including 
detailed information on the establishment of new policies and 
procedures and training provided on them.
    Under current law, VA's publicly-available Annual Benefits Report 
includes information regarding VA's oversight of the fiduciary program, 
specifically with respect to its misuse-of-benefits determinations and 
the Government's prosecution of misuse cases. VA opposes section 2(h) 
because providing the information solely to Congress excludes 
stakeholders and does not promote program transparency. VA does not 
oppose the submission of any report that Congress deems necessary to 
track VA's progress in implementing legislation. However, requiring a 
report not later than one year following enactment might be 
unreasonably soon given that rulemaking would be required to implement 
certain provisions.
    Enactment of H.R. 5948 would not result in any mandatory benefit 
costs. VA estimates that implementing this bill would result in GOE 
costs of $40.3 million in the first year, $200.3 million over five 
years, and $444.1 million over ten years. In addition, VA estimates 
that information technology costs would be $1.6 million in the first 
year, $5.3 million over five years, and $9.9 million over ten years.
    This concludes my statement, Mr. Chairman. I would be happy to 
entertain any questions you or the other Members of the Subcommittee 
may have.

                                 
                    Prepared Statement of Mr. Ibson
    Chairman Johnson, Ranking Member Donnelly, and Members of the 
Subcommittee:
    Thank you very much for inviting Wounded Warrior Project (WWP) to 
testify today, and particularly to provide views on H.R. 5948, the 
Veterans Fiduciary Reform Act of 2012.
    As this Committee's February oversight hearing on the VA fiduciary 
program underscored, the program continues to experience serious 
problems and weaknesses. We concur that legislation is needed. Our 
principal concern, however, is that H.R. 5948 falls short of resolving 
longstanding problems raised at February's oversight hearing, and prior 
to that, issues covered in a WWP statement submitted to an April 2010 
hearing before the Subcommittee on Disability and Memorial Affairs. We 
welcome the opportunity to explain what we see as an omission, and hope 
to work with you prior to markup to develop pertinent language to 
address these issues.
    As an organization dedicated to honoring and empowering wounded 
warriors, we keenly appreciate the importance of assuring responsible 
stewardship of veterans' benefits and the protection of vulnerable 
beneficiaries. We appreciate many of the steps H.R. 5948 would take to 
add safeguards and strengthen the program.
    Mr. Chairman, in opening February's hearing, you observed that 
numerous honorable fiduciaries serve our veterans and they all too 
often find it difficult to navigate the maze of the fiduciary program. 
At the same time, you called attention to the existence of ``bad 
actors'' in the system. As one of your colleagues observed in citing a 
need for balance, abuses are the exception and not the rule.
    WWP works closely with family members of severely wounded warriors 
who are both full-time caregivers and fiduciaries for those warriors. 
Recognizing the sacrifices these family members have made to care for 
their loved ones, and the emotional and financial toll associated with 
caregiving, Congress two years ago established the Comprehensive 
Caregiver Assistance program in Public Law 111-163 to provide them 
needed supports. To qualify and win formal approval for this VA 
assistance, family members of seriously wounded warriors must undergo 
VA review, training, home-inspection, and a determination that the 
proposed arrangement is in the veteran's best interest. The caregiver 
must also undergo regular quarterly home-inspections and monitoring of 
the veteran's well-being to continue to receive VA assistance. Any 
``red flags'' that might arise in the course of these home-inspections 
can result in revocation of VA support. In short, Veterans Health 
Administration (VHA) staff assist and work closely with family 
caregivers - who in many instances are also fiduciaries and who have 
not only been screened before qualifying for the program, but whose 
care of the veteran is closely monitored.
    In administering the Fiduciary Program, the Veterans Benefits 
Administration (VBA), however, does not take account of the unique 
circumstances of family members who have given up careers and depleted 
savings to care for their loved ones, and who have already been 
screened and monitored under VHA's caregiver program. Surely that 
process and ongoing oversight provide ample evidence that these 
individuals are trustworthy, and do not pose a risk of misusing the 
veteran's benefits.
    WWP is not proposing that caregiver-fiduciaries have no 
accountability for management of the beneficiary's funds. But we do see 
a need to make provision in law for more balanced accountability and 
far less intrusive oversight under circumstances where caregiver-
fiduciaries have demonstrated that they do not pose significant risk 
and have earned VA's trust. Dedicated caregiving, as evidenced through 
unblemished participation in VA's comprehensive caregiver assistance 
program, should be recognized as establishing that trust.
    WWP has seen all too clearly that VBA's intensely detailed 
reporting requirements can be overwhelming to an already emotionally 
drained family member who is shouldering a young veteran's total-care 
needs. As one mother described it, ``we are probed yearly by a forensic 
accounting that seemingly investigates for `murderous' infractions,'' 
even requiring fiduciaries to ``line-item Walmart receipts.''
    We greatly appreciate the Committee's work in getting VA to remove 
language from its fiduciary form 21-4703 that had stated, ``VA must 
approve any use of a beneficiary's VA funds,'' and we very much welcome 
the inclusion of language in H.R. 5948 to make it clear that a 
fiduciary has the ability to spend money in the veteran's best 
interest. It bears noting, however, that VBA's April 19, 2012 
instructions to the field that VA-appointed fiduciaries do not need to 
seek prior VA approval for any single expenditure made on behalf of a 
beneficiary from the beneficiary's funds, nevertheless advises that 
examiners ``must carefully review expenditures in excess of $1,000 when 
auditing a fiduciary's annual accounting and may request receipts or 
other documentation to verify questionable expenditures.'' \1\
---------------------------------------------------------------------------
    \1\ Department of Veterans Affairs, Veterans Benefits 
Administration, Fast Letter 12-13 (April 19, 2012), accessed at http://
www.vba.va.gov/bln/21/Fiduciary/FL12-013.doc.
---------------------------------------------------------------------------
    While we applaud the wisdom of eliminating required pre-approval of 
significant expenditures, we see nothing in H.R. 5948 that would 
eliminate the inquisitorial audits caregivers too often experience. 
Consider the following examples:
      A mother/caregiver having to explain to a VBA examiner 
why she allowed her wounded-warrior son to spend ``too much'' money on 
Christmas gifts;
      An auditor insisting that the caregiver's electric bill 
was too high and asserting that during the summer in Florida she 
shouldn't run the air-conditioning at night;
      A family's being questioned about expenditures for 
gasoline used in transporting the wounded veteran; and
      A VBA examiner questioning the caregiver as to why she 
was buying movies and music for her son given that he has a brain 
injury.
    As summed up by one caregiver-fiduciary, VBA fiduciary program 
staff ``don't really help with management [of assets] but audit every 
two years every penny I spend for my son's care. [There are] not many 
guidelines and auditors question expenses when they know nothing about 
the care needed.''
    We do not foresee in H.R. 5948 any real reversal in the ``guilty 
until proven innocent'' framework many caregiver-fiduciaries experience 
under VBA's fiduciary-management practices. While this approach may be 
prudent regarding unknown potential ``bad actors,'' we think it goes 
too far in dealing with proven caregiver-fiduciaries.
    Caregivers also emphasize that just trying to comply with the 
expectations of the program is not easy. VA's demanding requirements 
are not only difficult, fiduciaries report that they are on their own:
    ``When the paperwork arrived at the end of the year, there were no 
instructions or assistance to do it. I had to figure out how to do 
everything on my own. I asked for software that I could use to make it 
easier to do the accounting but I was told there was none. I had to 
create an excel spreadsheet to enter in the amounts in the categories 
that were requested, and sometimes it takes me up to 2 weeks to 
complete all the data entry.''
    We invite the Committee to recall the testimony in February of Pam 
Estes, a caregiver-fiduciary for her son Jason. Mrs. Estes--herself an 
accountant--related the frustrating and stressful experience of being 
threatened with removal as her son's fiduciary over the manner in which 
she had documented expenditures when VBA had never provided her 
instructions or forms for annual reporting, and ``when we'd been 
working so hard to do what's best for Jason, including saving much of 
his money for the future when we're not here to care for him.'' As she 
related in a recent email (excerpted \2\), she has continued to have 
difficulties over the same problem to which she testified in February, 
to include having spent two months and four trips to bank branches to 
obtain a VBA-required months-old account-balance for a date falling in 
the middle of a month (and thus not reflected in any bank statement or 
otherwise readily attainable). Mrs. Estes' frustrations are hardly 
unique among VA caregiver-fiduciaries.
---------------------------------------------------------------------------
    \2\ `` ... you may recall that my issue for the 2011 audit began 
when I was playing telephone tag with the Baltimore office of the VBA. 
Since we were unable to connect, I had sent my accounting to them in 
early December so that I would not be considered delinquent. In spite 
of that, I received a letter a month later indicating that I was 
delinquent. Following our testimony in February, the Fiduciary Manager 
from Baltimore came to our home the next day. He indicated that they 
did have the accounting I had submitted (and did indeed bring it with 
him), but wanted to re-do it to better meet the process requirements. 
You should also keep in mind that this was the third or fourth set of 
instructions I've been given. We redid the form and he requested that I 
have the banks complete form 21-4718a confirming the account balances 
on 9/19/11. Although the original bank statements were submitted, I did 
not realize that account balance confirmation was required as of a 
specific date (not to be confused with the statement date) and asked 
him if banks would even be able to provide that information 5 months 
later.
    He assured me it would not be a problem. Nothing could have been 
further from the truth! It took me 2 months and 4 trips to the banks to 
find branches that could get me something even close to what was 
requested.
    ``On May 25, 2012, the hub office in Indianapolis sent me a letter 
letting me know that my accounting had been DISAPPROVED! It turns out 
that the original form I had submitted in December (the one they 
originally said they didn't have) had been forwarded from the Baltimore 
office to the Indianapolis hub office. So on June 3, 2012, I sent a 
letter to the hub office letting them know that they didn't have the 
proper form and submitted copies of the revised information. I also 
sent a letter to the Fiduciary Manager in Baltimore alerting him to the 
issue. I haven't heard back yet from either office.
    ``Needless to say, I'm weary! If I'm going through this effort even 
with the help of the VBA, I can only imagine what others are subjected 
to.'' Email of Pam Estes to Ralph Ibson, June 12, 2012.
---------------------------------------------------------------------------
    We applaud the efforts in H.R. 5948 to tighten this program (though 
we note that the bill would actually add to the reporting burden that 
is already problematic for caregiver-fiduciaries with the addition of 
requirements in new section 5509(c)). In sum, we urge that further work 
be done on the bill to address the caregiver-fiduciaries' concerns that 
we have outlined. We would be happy to work with the Committee to 
develop language to address those concerns.
    Thank you for your consideration of WWP's views.

                                 
                    Prepared Statement of Ms. Kologe
    Good morning, Mr. Chairman and other distinguished members of the 
Subcommittee. Vietnam Veterans of America (VVA) is pleased to have the 
opportunity to appear here today to share our concerns and thoughts 
regarding the pending legislation. In particular, we would like to 
share our views on H.R. 5948 the Veterans Fiduciary Reform Act of 2012 
and how the Veterans Benefits Administration (VBA) can improve their 
Fiduciary program.
    H.R. 2985, Veteran's ID Card Act, introduced by Representative Todd 
Akin [R-MO], provides for VA to issue, upon request, a Veteran's ID 
card for certain Veterans who do not already qualify for a VA ID card. 
Veterans who are not enrolled in VA health care will be able to obtain 
a Veteran's ID Card for a fee.
    VVA supports this bill, as ``goods, services, and promotional 
activities are often offered by public and private institutions to 
veterans who demonstrate proof of service in the military but it is 
impractical for a veteran to always carry official DD-214 discharge 
papers to demonstrate such proof.'' We strongly suggest that the 
application process for this ID card contain written information and/or 
verbal advisement on enrollment in VA health care, including the toll-
free number for VA health care enrollment. This would allow a Veteran 
who is otherwise eligible for a free ID card and VA health care to more 
easily receive that benefit.
    H.R.3730, Veterans Data Breach Timely Notification Act, introduced 
by Representative Joe Donnelly [D-IN], requires the Department of 
Veterans Affairs to notify individuals whose personal information has 
been involved in a data breach, as well as notifying the general public 
and the appropriate Committees of Congress.
    VVA supports this bill. Although we are not information technology 
experts, we ask the Subcommittee to consider a provision which would 
require much faster notification when deposit or bank account 
information is breached. It takes significantly less time than 5 or 10 
business days for experienced criminals to wipe out a Veteran's or 
dependent's entire savings.
    H.R. 4481, Veterans Affairs Employee Accountability Act, introduced 
by Representative Phil Roe [R-TN], makes employees of the Department of 
Veterans Affairs ineligible for bonus compensation when they knowingly 
violate any civil law covered by the Federal Acquisition Regulation 
issued under section 1301(a)(1) of title 41 or the Veterans Affairs 
Acquisition Regulation.
    VVA favors this bill, provided that two changes are made.
    First, we urge the Subcommittee to remove the ``knowingly'' 
element. We believe the incentives must be changed for those in 
management and leadership capacities in the Department of Veterans 
Affairs. As this bill only provides that those who violate provisions 
of the acquisition act not receive bonuses, which are above and beyond 
their normal financial compensation, we believe that any employee who 
violates these provisions be ineligible to receive a bonus. This will 
eliminate any insulation of employees or ``passing the buck''.
    Second, we propose that ``for or during that year'' be changed to 
``for or during that year or the following fiscal year''. Because of 
the length of time of investigations and reporting requirements, we 
believe this would further dissuade violation of the Acquisition 
Regulations.
    We urge for immediate passage of a bill with this revised language, 
before the calculation of fiscal year 2012 bonuses.
    H.R. 5948, Veteran's Fiduciary Reform Act of 2012, introduced by 
Representative Bill Johnson [R-OH], provides additional enhanced 
background checks for fiduciaries managing veterans' funds, further 
limits the fees VA may pay fiduciaries, authorizes state agencies to be 
fiduciaries, allows pre-designation of a preferred fiduciary, and 
requires VA to prepare an annual report to Congress on the fiduciary 
program separate from the VBA annual report.
    VVA strongly favors this bill, providing Congressional guidance for 
the Department of Veterans Affairs in reforming the fiduciary program, 
and also suggests changes to make it stronger and requiring less 
interpretation. We applaud the legislation's sponsors in their courage 
to provide a clear reporting requirement for abuses of the system 
including misfeasance and malfeasance. The administration of the 
fiduciary program has been at cross-purposes with its intent, due to 
lack of prioritization and allocation of resources, lack of leadership 
at all levels, and confusion about the role of the fiduciary program.
    We enthusiastically support the bill's provisions for background 
checks of fiduciaries, enhanced reporting requirements to Congress, 
pre-selection of fiduciaries, and return of monies to the Veteran in 
cases of misfeasance. We offer today some concrete suggestions in 
marking up this bill, and in subsequent regulatory proceedings, to 
strengthen this legislation and make VA's fiduciary program truly serve 
the Veterans it is meant to protect. We recommend the following 
additions or changes to the legislation:
      1) We propose that the title of Section 5511 ``Adjudication of 
financial incompetence'' and the language ``mentally incapacitated or 
deemed mentally incompetent'' be changed to reflect the purpose of the 
fiduciary program. We would propose language substantially similar to 
``Adjudication of financial incapacity'' and ``financially 
incapacitated or deemed unable to manage financial affairs''. Current 
38 U.S.C. Sec.  5501 allows the VA to commit mentally incompetent 
veterans to a Department hospital or domiciliary. Although mental 
competency, for VA benefits purposes, refers only to the ability of the 
veteran to manage VA benefit payments in his or her own interest, this 
is not how a veteran sees a ``rating of incompetency''. Furthermore, 
the words mentally incompetent mean much more outside the VA setting. 
This term is not only stigmatizing, it can lead to a veteran's rights 
being taken away. For this reason, we believe financial incapacity is a 
clearer and more effective designation for individuals needing a 
fiduciary.
      2) We recognize that many veterans and other beneficiaries in the 
fiduciary program require support services other than just managing 
benefits payments. Therefore, we urge a change to the examination 
protocol for determining that an individual is unable to manage his or 
her benefit payment. Currently, VA only assesses veterans' ability to 
manage their benefit payments in certain disability exams. Furthermore, 
these compensation or pension exams frequently last only 20 to 30 
minutes. It is unclear how VA is able to determine the capacity of a 
veteran without protocol for certain questions to be asked of the 
veteran, which are consistent across the board. It is also unclear how 
VA assesses a widow's or dependent's ability to manage benefit 
payments.
      We propose that two determinations be made: one for financial 
capacity and one for any requirement of guardianship or incapacity for 
self-care. The fiduciary program is failing to monitor the well-being 
of the veterans in its care. Many of these veterans require additional 
services that fiduciaries are not trained to do and are not paid to do. 
A question for the Subcommittee and the new administrator of VA's 
fiduciary program is what is the effect of 38 U.S.C. Sec. Sec.  
5502(d)-(e) on the administration of payments to beneficiaries in the 
fiduciary program? 38 U.S.C. Sec. Sec.  5502(d)-(e) provide for escheat 
to the United States that money which is left unpaid to a beneficiary 
in the fiduciary program, when there are no survivors that may 
traditionally make a claim for accrued benefits. We have heard and have 
personally handled several claims where monies were withheld for no 
apparent reason. There is some type of incentive, either perceived or 
concrete, to build up the trust without making distributions that would 
improve the veteran's or beneficiary's quality of life. We urge 
legislation, regulation and culture change to combat the tendency to 
become overly paternalistic in the administration of VA benefits. We 
also advise the use of pre-paid and automated billing, home delivery 
services, and other programs that would ensure those in the fiduciary 
program have proper shelter, food, utilities, and other needs covered.
      3) Section 5507 describes qualifications for fiduciaries. The 
proposed bill states that the Secretary shall request information 
concerning whether that person has been convicted of any offense under 
Federal or State law (and if the answer is yes, the person is subject 
to increased scrutiny). We appreciate keeping criminals away from our 
most vulnerable veterans and dependents. However, this language seems 
to also exclude those convicted of minor offenses including non-moving 
violations of traffic laws and other on-the-books laws. While the 
current law is under-inclusive, the proposed language is overly 
restrictive. We would like Congress to consider exceptions for minor 
violations.
      4) We very much like the section in the proposed legislation that 
requires re-certification/background checks each time a fiduciary is 
appointed. However, as the bill adds state agencies as ``persons'', 
there should be clarification on how the background checks will be done 
for a state agency. Will one person from the agency be assigned as a 
fiduciary for each veteran, or will the agency as a whole function as a 
fiduciary? This would impact the scope of background checks.
      5) We exhort the Subcommittee to provide a whistleblower 
provision or a more definite reporting system for abuses in the 
fiduciary program. A clear chain of command and expectations goes a 
long way toward reporting and fixing problems before they get worse. 
There should at least be a requirement in the law for the Secretary to 
report on the steps VA employees, beneficiaries, and third parties can 
take to report malfeasance and misfeasance, so that the officials most 
able to fix the system can make the necessary changes.
    Thank you for this opportunity to present our views here today. I 
will be happy to answer any questions.

                                 
                    Prepared Statement of Ms. Ansley
    VetsFirst is pleased to provide our support and recommendations for 
the following legislation.
Veteran's I.D. Card Act (H.R. 2985)
    We believe that this legislation will ensure that eligible veterans 
are able to fully benefit from services and promotional opportunities 
open to them by allowing them to prove their veteran status without 
having to present their DD-214s. Protections in the legislation ensure 
that there will be no confusion regarding the purpose of the card, 
which does not entitle the veteran to any benefits.
Veterans Data Breach Timely Notification Act (H.R. 3730)
    We believe that the Veterans Data Breach Timely Notification Act 
provides important steps toward ensuring that veterans are properly 
informed of data breaches involving their sensitive personal 
information. This legislation not only requires the Department of 
Veterans Affairs (VA) to make a notification of a breach of this 
information but also requires VA to provide veterans with important 
information regarding the breach and how to take precautions to 
minimize the impact. Although we support this legislation, we believe 
that it is important to clarify the timeline for VA notification of a 
breach and to ensure accessibility of the notification for all disabled 
veterans.
Veterans Affairs Employee Accountability Act (H.R. 4481)
    This legislation will ensure that employees who knowingly violate 
any civil law covered by the Federal Acquisition Regulation or the 
Veterans Affairs Acquisition Regulation do not receive bonuses for or 
during the year of the violation. It is our hope that using bonuses to 
reward only those employees who follow these laws will ensure that 
veterans receive the highest level of services from VA. Ultimately, VA 
must ensure that veterans' needs can be clearly and efficiently met 
within the contracting requirements of federal law.
Veterans Fiduciary Reform Act of 2012 (H.R. 5948)
    The Veterans Fiduciary Reform Act takes important steps toward 
ensuring that VA's fiduciary program is more transparent and focused on 
the needs of veterans and other beneficiaries. We support efforts to 
clarify factors that will be considered to determine if a beneficiary 
needs a fiduciary and believe that efforts to strengthen the inquiry 
and investigation into and the qualifications for fiduciaries will 
ensure a higher level of service. It will be important, however, to 
ensure that VA exercises appropriate discretion to ensure that family 
member fiduciaries are not unduly burdened and that no fiduciaries 
exert authority over non-VA benefits except as properly authorized.
    Chairman Johnson, Ranking Member Donnelly, and other distinguished 
members of the Subcommittee, thank you for the opportunity to testify 
regarding VetsFirst's views on the four bills under consideration 
today.
    VetsFirst represents the culmination of 60 years of service to 
veterans and their families. United Spinal Association, through its 
veterans service program, VetsFirst, provides representation for 
veterans, their dependents and survivors in their pursuit of Department 
of Veterans Affairs (VA) benefits and health care before VA and in the 
federal courts. Today, United Spinal Association is not only a VA-
recognized national veterans service organization, but is also a leader 
in advocacy for all people with disabilities.
Veteran's I.D. Card Act (H.R. 2985)
    Veterans who retire from the military by meeting the time-in-
service requirement or who have a medical-related discharge receive 
cards from the Department of Defense identifying their status as 
veterans. VA provides identification cards for veterans who use VA 
medical care but not for those eligible for other types of benefits. 
For veterans who do not meet any of these requirements, a DD-214 is the 
only way to prove veteran status.
    This legislation will ensure that eligible veterans are able to 
fully benefit from services and promotional opportunities open to them 
by allowing them to prove their veteran status without having to 
present their DD-214s. This is particularly important because DD-214s 
include sensitive personal information. To ensure that there is no 
confusion regarding the purpose of the identification card, we are 
pleased that it must specify that it does not serve as proof of 
entitlement to any benefits.
    Thus, we urge swift passage of this legislation which will protect 
veterans' information by allowing them to prove veteran status at times 
when presenting or carrying a DD-214 is not practical.
Veterans Data Breach Timely Notification Act (H.R. 3730)
    VA has a legal and moral duty to secure the sensitive personal 
information of our Nation's veterans. The dangers of identity theft and 
the possible ramifications for a veteran's credit must be carefully 
guarded against. Furthermore, the release of health information could 
not only be very damaging for a veteran's professional career or 
personal life, but it also may cause veterans to avoid VA health care, 
including mental health care, because of concerns about 
confidentiality.
    Veterans must believe they can trust VA with sensitive personal 
information. This means that they must be notified if their personal 
information is breached. We believe that the Veterans Data Breach 
Timely Notification Act takes important steps toward ensuring that 
veterans are
    properly informed of data breaches. This legislation not only 
requires notification of a breach but also requires VA to inform 
veterans of a description of the sensitive personal information 
breached, to explain how to contact a VA employee to learn more about 
the breach, to alert the veteran of credit monitoring protections, and 
to provide resources for identify theft and how to contact the major 
credit reporting agencies.
    Although we support this legislation, we believe that certain areas 
could be strengthened. Specifically, we believe that it is important to 
clarify the timeline for VA notification of a breach and to ensure 
accessibility of the notification for all disabled veterans.
    Establishing a timeline for notification in the event of a data 
breach is critical to ensuring not only that veterans are able to act 
quickly if their data is compromised but also requires VA to be 
immediately transparent. We think that it would be helpful to clarify, 
however, that VA must notify individuals within five business days of 
learning about the breach. This clarification is important because it 
may be more than five business days before VA learns that a breach has 
occurred. Clear expectations will facilitate compliance.
    We also believe that the method and content of notification to 
individual veterans should specify that the notices must be compliant 
with Section 504 of the Rehabilitation Act of 1973. This means that VA 
should be required to ensure that notification will include the 
opportunity to receive information in large print, Braille, audio, or 
electronic formats. For disabled veterans who have visual or other 
impairments, these options are particularly critical. Otherwise, these 
disabled veterans will not receive proper notice of the breach and will 
be unable to take proper action to address their concerns.
Veterans Affairs Employee Accountability Act (H.R. 4481)
    Most VA employees are dedicated public servants who are devoted to 
serving the needs of our Nation's veterans. Bonuses play an important 
role in ensuring that VA is able to retain skilled employees who fill 
critical roles. However, they should be reserved for employees who 
truly excel at fulfilling their job functions. Otherwise, bonuses are 
viewed as an expectation instead of a reward for superior performance.
    This legislation will ensure that employees who knowingly violate 
any civil law covered by the Federal Acquisition Regulation or the 
Veterans Affairs Acquisition Regulation do not receive bonuses for or 
during the year of the violation. It is our hope that using bonuses to 
reward only those employees who follow these laws will ensure that 
veterans receive the highest level of services from VA. Ultimately, VA 
must ensure that veterans' needs can be clearly and efficiently met 
within the contracting requirements of federal law.
Veterans Fiduciary Reform Act of 2012 (H.R. 5948)
    VA may appointment a fiduciary for a veteran or other beneficiary 
when VA determines that it would be in his or her best interest. As 
defined by Title 38 United States Code Section 5506, a VA fiduciary is 
``a person who is a guardian, curator, conservator, Committee, or 
person legally vested with the responsibility or care of a claimant (or 
a claimant's estate) or of a beneficiary (or a beneficiary's estate); 
or any other person having been appointed in a representative capacity 
to receive money paid under any of the laws administered by the 
Secretary for the use and benefit of a minor, incompetent, or other 
beneficiary.''
    In a hearing before this Subcommittee on February 9, 2012, 
witnesses testified about numerous problems and concerns involving VA's 
fiduciary program. Some of these problems included the inability of 
veterans to receive needed medications due to the inaction of a VA 
appointed fiduciary and demands that veterans and their families 
provide information on all of a veteran's finances, not just his or her 
VA benefits. VA has also appointed paid-fiduciaries despite the 
availability of competent family members and in disregard of valid 
powers of attorney. For other family members who serve as their 
veterans' fiduciaries, the specter of the appointment of a paid-
fiduciary is raised in a manner that feels threatening to these 
otherwise compliant fiduciaries.
    Although VA has recently taken some steps to address concerns about 
the VA fiduciary program, much more must be done to ensure that the 
program fully meets the needs of veterans and other beneficiaries. 
Specifically, we believe that VA's fiduciary program must be more 
veteran-centric and tailored to address only those veterans or other 
beneficiaries who truly need assistance due to a determination of 
financial incompetence. It is important to remember that these VA 
benefits have been earned by the veteran and that the funds belong to 
the veteran, even if he or she needs assistance with managing them. 
Furthermore, the program must provide an appropriate balance between 
protecting the needs of veterans and placing undue burden on family 
members who serve as fiduciaries.
    The Veterans Fiduciary Reform Act takes important steps toward 
ensuring that VA's fiduciary program is more transparent and focused on 
the needs of veterans. Specifically, this legislation ensures that the 
determination of whether or not an individual requires a fiduciary is 
based on factors such as a determination by a court of competent 
jurisdiction and an evaluation by a medical professional regarding the 
role of financial management in the rehabilitation of the individual. 
Importantly, it also states the types of evidence that must be 
considered in an appeal of such a determination, including court 
determinations, medical evidence, and lay evidence offered by the 
appellant. Also, an individual can file a claim to terminate any 
fiduciary relationship.
    In addition to laying out the rights of veterans and other 
beneficiaries, this legislation also expands the definition of a 
fiduciary to include state or local government agencies and nonprofit 
social service agencies. Expanding the statutory definition of a VA 
fiduciary will open up avenues for individuals who need fiduciaries but 
lack family members or other individuals who can serve in that 
capacity. Requiring VA to maintain a list of entities that can serve as 
fiduciaries will ensure that this option may be easily exercised.
    This legislation also significantly strengthens the inquiry and 
investigation into and qualifications required for fiduciaries. 
Although removing the ability to waive aspects of the fiduciary review, 
we are pleased that the legislation allows for priority in conducting 
the inquiry or investigation for parents, spouses, and court appointed 
fiduciaries. The legislation also adds to this list any person who is 
authorized to act on behalf of the beneficiary under a durable power of 
attorney. We hope that adding individuals who hold viable durable 
powers of attorney to the expedited list of approval will ensure that 
VA will fully consider these individuals when appointing fiduciaries. 
We also hope the requirement for VA to conduct the face-to-face 
interview within 30 days of the beginning of the inquiry or 
investigation will expedite the review process.
    We continue to have concerns about whether efforts to tighten the 
review of potential fiduciaries will be unduly burdensome on family 
members seeking to serve as fiduciaries. Family members must be fully 
reviewed prior to appointment, but we hope VA will make every effort to 
exercise discretion where appropriate. We are appreciative of the 
consideration of the ability of a proposed fiduciary to meet the 
financial requirements of acquiring a bond without sustaining hardship, 
which could be critically important to family members seeking to be 
fiduciaries.
    We also appreciate efforts to ensure that veterans have an 
opportunity to play a role in determining who may serve as their 
fiduciary. The opportunity to designate a fiduciary in the event that 
one is later needed is an intriguing effort to provide veterans with 
the opportunity to have their preferences considered. We think it is 
important to note, however, that the need for a fiduciary may arise 
many years after designation and that this individual may no longer 
represent the veteran's preference. Furthermore, the legislation does 
not appear to provide for predesignation of fiduciaries for other types 
of beneficiaries, including those seeking Dependency and Indemnity 
Compensation.
    This legislation also makes significant changes in the commissions 
that fiduciaries are able to receive for their services. We believe 
that a commission should only be authorized where absolutely necessary 
to ensure that the best possible fiduciary serves a veteran or other 
beneficiary. Regardless of whether the percent authorized is the 
current four percent or the proposed lesser of three percent or $35, 
our only concern is that a paid-fiduciary be available to veterans if 
there are no other alternatives. As long as highly qualified 
fiduciaries are available when needed, we support the lower commission.
    It is important to remember that VA's authority to appoint a 
fiduciary only extends to VA benefits. Thus, while we appreciate the 
exemption for family members from the requirement that a proposed 
fiduciary serve only as a fiduciary for benefits paid by VA, we believe 
that the need to address this issue would be met by simply clarifying 
the extent of a fiduciary's duty. This duty does not extend, for 
instance, to Social Security benefits unless that agency appoints that 
fiduciary as a representative payee for those benefits.
    We appreciate the efforts of the Subcommittee to address concerns 
in the VA's fiduciary program. We also support the intent of this 
legislation, which is to ensure more accountability of fiduciaries to 
our Nation's veterans and other beneficiaries. We would welcome the 
opportunity to continue addressing the areas of recommendation that we 
have discussed today.
    Thank you for the opportunity to testify concerning VetsFirst's 
views on these important pieces of legislation. We remain committed to 
working in partnership to ensure that all veterans are able to 
reintegrate in to their communities and remain valued, contributing 
members of society.

                                 
                    Prepared Statement of Ms. Perkio
    Mr. Chairman and Members of the Subcommittee:
    Thank you for the opportunity to provide The American Legion's 
views on the legislation being considered before this Subcommittee.
                   H.R. 2985 - Veteran's ID Card Act
    This legislation would provide authority to the Department of 
Veterans Affairs (VA) to provide a Veteran ID Card. As matters 
currently stand, a veteran generally will only have a government issued 
photo ID card if they either served an entire period of service greater 
than twenty years and have retired, or have certain types of medically 
related discharges. With a growing number of goods, service and 
promotional activities available to veterans, it is not always easy to 
prove veteran status for those who have served, short of carrying 
around a copy of the Form DD-214 discharge papers. The intent of the 
legislation would be to create cards for veterans which would clarify 
that status, in the absence of other ID cards.
    The ID card would be a photo ID containing the veteran's name and 
an indentifying number separate and distinct from a Social Security 
number.
    The American Legion has no position on this legislation.
       H.R. 3730 - Veterans' Data Breach Timely Notification Act
    This legislation directs standard notification procedures for VA in 
the event of a data breach where personal information of veterans may 
have been compromised. The bill calls for prompt notification of 
affected parties within five business days, or an appropriate amount of 
time if longer is needed to determine the scope of veterans so 
affected. The bill further calls for broad notification of the general 
public in addition to specific notification to affected veterans, as 
well as for the notification of the appropriate Committees and 
Subcommittees of Congress.
    With the rising tide of identity theft and other cybercrimes, 
veterans have as many concerns about the security of their personal 
information as any other citizen. While every measure must be taken to 
ensure the security and integrity of personal information entrusted to 
the government, equally as important is the need to deal with any 
potential breaches when they occur. Often in such cases, the best thing 
to do is to proactively reach out to everyone affected and loudly and 
publically get the word out so the affected parties can act in their 
best interest. Veterans must be able to respond to appropriate credit 
authorities or otherwise as soon as is humanly possible.
    The American Legion agrees in the need for swift response to such 
breaches and potential threats to veterans' personal identifying 
information. In the past, such as in the case of the January 2009 data 
breach, The American Legion has applauded swift action in dealing with 
such incidents.
    The American Legion supports this legislation.
        H.R. 4481 - Veterans Affairs Employee Accountability Act
    This bill bars VA employees from receiving bonuses if ``... during 
any year, [the employee] knowingly violates any civil law covered by 
the Federal Acquisition Regulation issued under section 1301(a)(1) of 
Title 41 or the Veterans Affairs Acquisition Regulation ...''
    The American Legion has previously been critical of bonuses given 
out by the VA to senior officials who by outward observation failed to 
meet basic performance measures, as VA's numbers in the fight against 
the backlog slipped further and further beyond reach of recovery. 
Certainly employees who are engaging in illegal practices should not be 
rewarded with bonuses.
    Bonus pay, by its very definition should not be considered 
something automatic or guaranteed regardless of the positive or 
negative actions of the employee. Bonus pay should be a reward for job 
performance superior to the average expectation, and the average 
expectation should certainly include operating within the bounds of 
laws and regulations.
    The American Legion supports this legislation.
           H.R. 5948 - Veterans Fiduciary Reform Act of 2012
    In February of this year, The American Legion provided testimony 
for the record to this Subcommittee addressing several concerns 
regarding the state of the VA fiduciary program. Some of the concerns 
included the length of time necessary to conduct interviews with 
potential fiduciaries, the inability of veterans to offer input into 
the selection of their fiduciaries, the lack of redress available to 
veterans if unhappy with the performance of their fiduciaries, and 
other concerns.
    In testimony in February, The American Legion expressed concern 
that since the establishment of the Western Fiduciary Hub in Salt Lake 
City, UT, the overall wait times for necessary follow up visits had 
ballooned to over 151 days. New regulations make clear the shorter 
mandatory deadlines which should help reduce these lengthy wait times. 
Legion testimony expressed concerns about the lack of redress available 
to veterans who have issues with their fiduciaries, and this 
legislation has both an appeals process for the initial appointment and 
there are guidelines for investigation of those fiduciaries who are 
believed to be misusing the funds of the beneficiaries. Our testimony 
expressed concerns about the lack of input generally allowed to 
veterans to help select a family member who could be an appropriate 
financial custodian for them, and finally their input in this matter 
should now be addressed with procedures for veteran recommended 
fiduciaries.
    The American Legion is grateful to this Committee for their 
commitment to working with service organizations and the VA and 
interested parties to find areas for improvement in this program that 
affects some of our most vulnerable veterans. It is hoped that this 
legislation, with attentive follow up and oversight, will lead to 
improvements in the operation of the fiduciary program for VA. There 
are still areas of concern to be addressed, such as the poor chain of 
contact through the phone banks, and the sometimes great physical 
distances involved with fiduciaries located hundreds of miles from the 
beneficiaries they serve, but these are obstacles which can be overcome 
with continued work and attention to the process, and The American 
Legion is reassured to see the deep commitment of this Committee to 
getting the job done right.
The American Legion supports this legislation.
    The American Legion thanks this Subcommittee again for the 
opportunity to come before you today to offer the views of our 2.4 
million members on this slate of legislation affecting veterans.

                           SUMMARY OF POSITIONS OF THE AMERICAN LEGION ON LEGISLATION
----------------------------------------------------------------------------------------------------------------
                          BILL                                           AMERICAN LEGION POSITION
----------------------------------------------------------------------------------------------------------------
HR 2985 - VETERAN ID CARD                                                                           NO POSITION
----------------------------------------------------------------------------------------------------------------
HR 3730 - VETERANS DATA BREACH TIMELY                                                                  SUPPORTS
NOTIFICATION.........................................
----------------------------------------------------------------------------------------------------------------
HR 4481 - VETERANS AFFAIRS EMPLOYEE                                                                    SUPPORTS
ACCOUNTABILITY ACT...................................
----------------------------------------------------------------------------------------------------------------
HR 5948 - VETERANS FIDUCIARY REFORM ACT OF 2012                                                        SUPPORTS
----------------------------------------------------------------------------------------------------------------


```