Veteran Debt Fairness Act of 2018

To amend title 38, United States Code, to improve the processing of veterans benefits by the Department of Veterans Affairs, to limit the authority of the Secretary of Veterans Affairs to recover overpayments made by the Department and other amounts owed by veterans to the United States, to improve the due process accorded veterans with respect to such recovery, and for other purposes. 1. Short title This Act may be cited as the Veteran Debt Fairness Act of 2018 2. Improving processing of veterans benefits by Department of Veterans Affairs (a) Notification of debts incurred The Secretary of Veterans Affairs shall make such changes to such information technology systems of the Department of Veterans Affairs, including the eBenefits system or successor system, as may be necessary so that a person who is entitled to a payment from the Department by virtue of the person's participation in a benefits program administered by the Secretary will receive, at the request of the person, a notice from the Department (by electronic mail or other mechanism) whenever such person incurs a debt to the United States by virtue of such participation. (b) Updating dependent information The Secretary shall make such changes to such information technology systems of the Department, including the eBenefits system or successor system, as may be necessary so that whenever the Secretary records in such systems information about a dependent of a person, the person is able to review and revise such information. (c) Tracking of metrics The Secretary shall make such changes to such information technology systems of the Department as may be necessary to track the following: (1) The number and amount of payments made by the Department to persons as part of a benefits program administered by the Secretary which result in the persons incurring a debt to the United States by virtue of such payments. (2) The average debt to the United States incurred by a person by virtue of a payment described in paragraph (1). (3) The frequency by which applications for relief under section 5302(a) of title 38, United States Code, are approved and denied. (4) Such other metrics as the Secretary considers appropriate. 3. Reforms relating to recovery by Department of Veterans Affairs of amounts owed by veterans to the United States (a) Indebtedness offsets (1) Limitation on scope of authority Subsection (a) of section 5314 of title 38, United States Code, is amended— (A) by striking to subsections (b) and (d) of this section to paragraphs (2) through (6) of this subsection, subsections (b) and (e) of this section, (B) by adding at the end the following new paragraph: (2) The Secretary may only deduct under paragraph (1) an amount of the indebtedness of a veteran, the estate of a veteran, or a spouse or child of a veteran who is deceased if the indebtedness is a result of one or more of the following: (A) An error made by the veteran, estate, spouse, or child, as the case may be. (B) Fraud perpetrated by the veteran, estate, spouse, or child, as the case may be. (C) A misrepresentation made by the veteran, estate, spouse, or child, as the case may be. (3) (A) The Secretary may not deduct under paragraph (1) from any payment made under chapter 11 or 15 of this title more than the lessor of— (i) 25 percent; or (ii) such other percent as the Secretary determines, pursuant to a request made under subparagraph (B), is the greatest percent that would not cause a hardship to the recipient of the payment. (B) A person whose future payments are to be reduced under paragraph (1) may request, via the administrative process prescribed under subsection (c), the Secretary make a determination under subparagraph (A)(ii) of this paragraph. (4) The Secretary may not deduct under paragraph (1) any amount relating to an indebtedness that was incurred by a veteran more than five years previously. (5) The Secretary may not deduct under paragraph (1) any amount relating to an indebtedness while the existence or amount of such indebtedness is being disputed under subsection (c). (6) The Secretary may not deduct under paragraph (1) any amount if the Secretary determines that the cost that would be incurred by the Department to recover such amount would exceed the amount to be recovered. . (2) Due process (A) Minimum period for notice and secondary review Subsection (b) of such section is amended— (i) by amending paragraph (1) to read as follows: (1) has made reasonable efforts to notify such person of such person's right— (A) to dispute through prescribed administrative processes the existence or amount of such indebtedness; (B) to request a waiver of such indebtedness under section 5302 of this title; and (C) to request the Secretary make a determination under subsection (a)(3)(A)(ii). ; (ii) in paragraph (2), by striking ; and (iii) by striking paragraph (3) and inserting the following new paragraphs: (3) has notified such person, not later than 90 days before making any of such deductions— (A) about the proposed deductions; and (B) detailed information about the indebtedness, including, in the case of an overpayment, an itemized list of each overpayment and the specific reason for the overpayment; and (4) in any case in which the Secretary determines the amount of indebtedness of a person exceeds $2,500, the Secretary completes a secondary review to ensure that the determination is accurate and the indebtedness is subject to offset under this section. . (B) Adjudication of disputes (i) In general Such section is amended— (I) by redesignating subsections (c) and (d) as subsections (d) and (e); and (II) by inserting after subsection (b) the following new subsection (c): (c) (1) The Secretary shall prescribe an administrative process for— (A) the dispute of the existence or amount of an indebtedness subject to subsection (a); and (B) making requests under paragraph (3)(B) of such subsection. (2) The Secretary shall ensure that each dispute under paragraph (1)(A) is adjudicated not later than 120 days after the dispute is filed. (3) The Secretary may not submit to any debt collector (as defined in section 803 of the Fair Debt Collection Practices Act ( 15 U.S.C. 1692a (4) Nothing in this subsection shall be construed to prohibit a person from seeking relief from a court of competent jurisdiction. . (ii) Limitations on interest and fees charged during period of dispute Section 5315 of such title is amended— (I) in subsection (b)(1), in the first sentence by striking or (B) (B) for any period during which the existence or amount of the indebtedness is being disputed under section 5314(c) of this title, or (C) (II) in subsection (c)— (aa) by inserting (1) The administrative (bb) by adding at the end the following new paragraph: (2) No administrative costs may be charged under this section with respect to an indebtedness described in subsection (a) while the existence or amount of the indebtedness is being disputed under section 5314(c) of this title. . (3) Effective date This subsection and the amendments made by this subsection shall take effect on the date of the enactment of this Act and shall apply with respect to deductions made under section 5314 of such title on or after such date. (b) Limitation on authority To sue To collect certain debts (1) In general Section 5316(a) of title 38, United States, is amended— (A) in paragraph (1), by striking (2) and (3) (2), (3), and (4) (B) by redesignating paragraph (3) as paragraph (4); and (C) by inserting after paragraph (2) the following new paragraph (3): (3) No suit may be filed under this section to recover any indebtedness incurred more than five years previously. . (2) Effective date This subsection and the amendments made by this subsection shall take effect on the date of the enactment of this Act and shall apply with respect to suits filed under section 5316 of such title on or after such date. (c) Repair of credit (1) In general Chapter 53 of such title is amended by adding at the end the following new section: 5320. Correction of erroneous information submitted to consumer reporting agencies (a) Correcting errors by the Department In any case in which the Secretary finds that the Department has submitted erroneous information to a consumer reporting agency about the indebtedness of any person who has been determined by the Secretary to be indebted to the United States by virtue of such person’s participation in a benefits program administered by the Secretary, the Secretary shall— (1) instruct the consumer reporting agency to remove such erroneous information from the consumer report of such person or take such other action as may be required to ensure that such erroneous information is not included in the report of such person; and (2) transmit to the consumer reporting agency such information as the consumer reporting agency may require to take such appropriate actions. (b) Correcting errors by debt collectors In any case in which the Secretary finds that a debt collector acting on behalf of the Department has submitted erroneous information to a consumer reporting agency about the indebtedness of any person who has been determined by the Secretary to be indebted to the United States by virtue of such person’s participation in a benefits program administered by the Secretary, the Secretary shall instruct the debt collector to request the consumer reporting agency remove such erroneous information from the consumer report of such person or take such other action as may be required to ensure such erroneous information is not included in the report of such person.” (c) Notice Not later than 60 days after the date on which the Secretary issues an instruction under subsection (a)(1) or (b) with respect to a person, the Secretary shall notify the person that the Secretary issued such instruction. (d) Definitions In this section: (1) The terms consumer report consumer reporting agency 15 U.S.C. 1681a (2) The term debt collector 15 U.S.C. 1692a . (2) Clerical amendment The table of sections at the beginning of chapter 53 of such title is amended by adding at the end the following new item: 5320. Correction of erroneous information submitted to consumer reporting agencies. . (d) Audit Not later than 180 days after the date of the enactment of this Act, the Secretary of Veterans Affairs shall complete an audit to determine the following: (1) The frequency by which the Department of Veterans Affairs makes an error that results in a payment to a person by virtue of such person's participation in a benefits program administered by the Secretary that such person is not entitled to or in an amount that exceeds the amount to which the person is entitled. (2) Whether and to what degree vacant positions in the Veterans Benefits Administration affect such errors. (e) Plan Not later than 180 days after the date of the enactment of this Act, the Secretary shall submit to the Committee on Veterans' Affairs of the Senate and the Committee on Veterans' Affairs of the House of Representatives a plan and description of resource requirements necessary to align information technology systems to ensure that errors described in subsection (d)(1) are not the result of communication or absence of communication between information technology systems.

Summary: Veteran Debt Fairness Act of 2018 This bill limits the authority of the Department of Veterans Affairs to recover overpayments of benefits from veterans.