‘‘(c)(1) In the case of a proposed fiduciary described 
in paragraph (2), the Secretary, in conducting an inves-
tigation under subsection (a)(1), may carry out such in-
vestigation on an expedited basis that may include waiver 
of any specific requirement relating to such investigation, 
including the otherwise applicable provisions of subpara-
graphs (A) and (B) of such subsection. Any such inves-
tigation carried out on such an expedited basis shall be 
carried out under regulations prescribed for purposes of 
this section. 
‘‘(2) Paragraph (1) applies with respect to a proposed 
fiduciary who is—
‘‘(A) the parent (natural, adopted, or step-
parent) of a beneficiary who is a minor; 
‘‘(B) the spouse or parent of an incompetent 
beneficiary; or 
‘‘(C) a person who has been appointed a fidu-
ciary of the beneficiary by a court of competent ju-
risdiction.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
at the beginning of such chapter is amended by adding 
after the item added by the amendment made by section 
2(a)(2) the following new item:
‘‘5507. Investigation and qualification of fiduciaries.’’.
SEC. 4. MISUSE OF BENEFITS BY FIDUCIARIES. 
(a) PROTECTION OF VETERANS BENEFITS WHEN 
ADMINISTERED BY FIDUCIARIES.—(1) Chapter 61 of title 
38, United States Code, is amended by adding at the end 
the following new sections: 
‘‘§ 6106. Misuse of benefits by fiduciaries 
‘‘(a) FEE FORFEITURE IN CASE OF BENEFIT MIS-
USE BY FIDUCIARIES.—A fiduciary may not collect a fee 
from a beneficiary for any month with respect to which 
the Secretary or a court of competent jurisdiction has de-
termined that fiduciary misused all or part of the individ-
ual’s benefit, and any amount so collected by the fiduciary 
as a fee for such month shall be treated as a misused part 
of the individual’s benefit. 
‘‘(b) LIABILITY OF FIDUCIARIES FOR MISUSED BEN-
EFITS.—(1) If the Secretary or a court of competent juris-
diction determines that a fiduciary that is not a Federal, 
State, or local government agency has misused all or part 
of a beneficiary’s benefit that was paid to such fiduciary, 
the fiduciary shall be liable for the amount misused, and 
such amount (to the extent not repaid by the fiduciary) 
shall be treated as an erroneous payment of benefits under 
this title to the fiduciary for purposes of laws pertaining 
to the recovery of overpayments. The amount of such over-
payment shall constitute a liability of such fiduciary to the 
United States and may be recovered in the same manner
as any other debt due the United States. Subject to para-
graph (2), upon recovering all or any part of such amount, 
the Secretary shall pay an amount equal to the recovered 
amount to such beneficiary or such beneficiary’s alter-
native fiduciary. 
‘‘(2) The total of the amounts paid to a beneficiary 
(or a beneficiary’s alternative fiduciary) under paragraph 
(1) and under section 6107 of this title may not exceed 
the total benefit amount misused by the fiduciary with re-
spect to that beneficiary. 
‘‘(c) MISUSE OF BENEFITS DEFINED.—For purposes 
of this chapter, misuse of benefits by a fiduciary occurs 
in any case in which the fiduciary receives payment, under 
any of laws administered by the Secretary, for the use and 
benefit of a beneficiary and converts such payment, or any 
part thereof, to a use other than for the use and benefit 
of such beneficiary or that beneficiary’s dependents. Re-
tention by a fiduciary of an amount of a benefit payment 
as a fiduciary fee or commission, or as attorney’s fees (in-
cluding expenses) and court costs, if authorized by the 
Secretary or a court of competent jurisdiction, shall be 
considered to be for the use or benefit of such beneficiary. 
‘‘(d) REGULATIONS.—The Secretary may prescribe 
by regulation the meaning of the term ‘use and benefit’ 
for purposes of this section.
‘‘(e) FINALITY OF DETERMINATIONS.—A determina-
tion by the Secretary that a fiduciary has misused benefits 
shall be considered to be a decision of the Secretary under 
section 511(a) of this title. 
‘‘§ 6107. Reissuance of benefits 
‘‘(a) NEGLIGENT FAILURE BY SECRETARY.—(1) In 
any case in which the negligent failure of the Secretary 
to investigate or monitor a fiduciary results in misuse of 
benefits by the fiduciary, the Secretary shall pay to the 
beneficiary or the beneficiary’s alternate fiduciary an 
amount equal to the amount of benefits that were so mis-
used. 
‘‘(2) There shall be considered to have been a neg-
ligent failure by the Secretary to investigate and monitor 
a fiduciary in the following cases: 
‘‘(A) A case in which the Secretary failed to 
timely review a fiduciary’s accounting. 
‘‘(B) A case in which the Secretary was notified 
of allegations of misuse, but failed to act in a timely 
manner to terminate the fiduciary. 
‘‘(C) In any other case in which actual neg-
ligence is shown. 
‘‘(b) REISSUANCE OF MISUSED BENEFITS.—(1) In 
any case in which a fiduciary described in paragraph (2) 
misuses all or part of an individual’s benefit paid to such
fiduciary, the Secretary shall pay to the beneficiary or the 
beneficiary’s alternative fiduciary an amount equal to the 
amount of such benefit so misused. 
‘‘(2) Paragraph (1) applies to a fiduciary that—
‘‘(A) is not an individual; or 
‘‘(B) is an individual who, for any month dur-
ing a period when misuse occurs, serves 15 or more 
individuals who are beneficiaries under this title. 
‘‘(c) RECOUPMENT OF AMOUNTS REISSUED.—In any 
case in which the Secretary reissues a benefit payment (in 
whole or in part) under subsection (a) or (b), the Sec-
retary shall make a good faith effort to obtain recoupment 
from the fiduciary to whom the payment was originally 
made.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
at the beginning of such chapter is amended by adding 
at the end the following new items:
‘‘6106. Misuse of benefits by fiduciaries. 
‘‘6107. Reissuance of benefits.’’.
SEC. 5. ADDITIONAL PROTECTIONS FOR BENEFICIARIES 
WITH FIDUCIARIES. 
(a) ONSITE REVIEWS
AND REQUIRED ACCOUNT-
INGS.—(1) Chapter 55 of title 38, United States Code, 
as amended by section 3, is further amended by adding 
at the end the following new sections:
‘‘§ 5508. Periodic onsite reviews of institutional fidu-
ciaries 
‘‘(a) INSPECTIONS REQUIRED.—In addition to such 
other reviews of fiduciaries as the Secretary may otherwise 
conduct, the Secretary shall provide for the periodic onsite 
review of any person or agency located in the United 
States that receives the benefits payable under laws ad-
ministered by the Secretary to another individual pursuant 
to the appointment of such person or agency as a fiduciary 
under section 5502 of this title in any case in which—
‘‘(1) the fiduciary is a person who serves in that 
capacity with respect to 15 or more such individuals; 
‘‘(2) the fiduciary is a certified community-
based nonprofit social service agency; or 
‘‘(3) the fiduciary is an agency (other than an 
agency described in paragraph (2)) that serves in 
that capacity with respect to 50 or more such indi-
viduals. 
‘‘(b) CERTIFIED COMMUNITY-BASED NONPROFIT SO-
CIAL SERVICE AGENCY DEFINED.—For purposes of this 
section, the term ‘certified community-based nonprofit so-
cial service agency’ means a community-based nonprofit 
social service agency that is in compliance with require-
ments, under regulations which shall be prescribed by the 
Secretary, for annual certification to the Secretary that 
it is bonded in accordance with requirements specified by
the Secretary and that it is licensed in each State in which 
it serves as a fiduciary (if licensing is available in such 
State) in accordance with requirements specified by the 
Secretary. Any such annual certification shall include a 
copy of any independent audit on such agency which may 
have been performed since the previous certification. 
‘‘(c) BIENNIAL REPORT.—(1) Within 120 days after 
the end of each even-numbered fiscal year, the Secretary 
shall submit to the Committees on Veterans’ Affairs of 
the Senate and House of Representatives a report on the 
results of periodic onsite reviews conducted during the two 
preceding fiscal years pursuant to subsection (a) and of 
any other reviews of fiduciaries conducted during those fis-
cal years in connection with benefits under this title (such 
as summaries of findings of reports of the Office of the 
Inspector General) that the Secretary determines to be 
pertinent for purposes of this subsection. 
‘‘(2) Each report under paragraph (1) shall describe 
in detail all problems identified in such reviews and any 
corrective action taken or planned to be taken to correct 
such problems, and shall include the following: 
‘‘(A) The number of such reviews. 
‘‘(B) The results of such reviews. 
‘‘(C) The number of cases in which the fidu-
ciary was changed and why.
ciary and the beneficiary entitled to such payment of bene-
fits, require that such fiduciary appear in person at a re-
gional office of the Department serving the area in which 
the beneficiary resides in order to receive such pay-
ments.’’. 
(2) The table of sections at the beginning of such 
chapter is amended by adding after the item added by the 
amendment made by section 3(b) the following new items:
‘‘5508. Periodic onsite reviews of institutional fiduciaries. 
‘‘5509. Authority to redirect delivery of benefit payments when a fiduciary fails 
to provide required accounting.’’.
(b) CIVIL MONETARY PENALTIES; JUDICIAL ORDERS 
OF RESTITUTION.—(1) Chapter 61 of title 38, United 
States Code, as amended by section 4(a), is further 
amended by adding at the end the following new sections: 
‘‘§ 6108. Civil monetary penalties 
‘‘(a) PENALTY FOR CONVERSION.—Any person (in-
cluding an organization, agency, or other entity) who, hav-
ing received, while acting in the capacity of a fiduciary 
pursuant to section 5502 of this title, a payment under 
a law administered by the Secretary for the use and ben-
efit of another individual, converts such payment, or any 
part thereof, to a use that such person knows or should 
know is other than for the use and benefit of such other 
individual shall be subject to, in addition to any other pen-
alty that may be prescribed by law, a civil monetary pen-
alty of not more than $5,000 for each such conversion.
‘‘(b) PENALTY IN LIEU OF DAMAGES.—Any person 
who makes a conversion of a payment described in sub-
section (a) and is subject to a civil monetary penalty under 
that subsection by reason of such conversion shall also be 
subject to an assessment, in lieu of damages sustained by 
the United States resulting from the conversion, of not 
more than twice the amount of any payments so converted. 
‘‘(c) COSTS OF RECOVERY.—From amounts collected 
under this section, the amount necessary to recoup the De-
partment’s costs of such collection shall be credited to ap-
plicable appropriations, to remain available until ex-
pended. 
‘‘§ 6109. Authority for judicial orders of restitution 
‘‘(a) Any Federal court, when sentencing a defendant 
convicted of an offense involving the misuse of benefits 
under this title, may order, in addition to or in lieu of 
any other penalty authorized by law, that the defendant 
make restitution to the Department. 
‘‘(b) Sections 3612, 3663, and 3664 of title 18 shall 
apply with respect to the issuance and enforcement of or-
ders of restitution under subsection (a). In so applying 
those sections, the Department shall be considered the vic-
tim.
‘‘(c) If the court does not order restitution, or orders 
only partial restitution, under subsection (a), the court 
shall state on the record the reasons therefor. 
‘‘(d)(1) Except as provided in paragraph (2), 
amounts received or recovered by the Secretary pursuant 
to an order of restitution under subsection (a), to the ex-
tent and in the amounts provided in advance in appropria-
tions Acts, shall be available to defray expenses incurred 
in the supervision and investigation of fiduciaries under 
this title. 
‘‘(2) Paragraph (1) shall not apply with respect to 
amounts received in connection with misuse by a fiduciary 
of funds paid as benefits under laws administered by the 
Secretary. Such amounts shall be paid to the individual 
whose benefits were misused unless the Secretary has pre-
viously reissued the misused benefits, in which case the 
amounts shall be treated in the same manner as overpay-
ments recouped by the Secretary and shall be deposited 
to the credit of the applicable revolving fund, trust fund, 
or appropriation.’’. 
(2) The table of sections at the beginning of such 
chapter is amended by adding after the item added by the 
amendment made by section 4(b) the following new items:
‘‘6108. Civil monetary penalties. 
‘‘6109. Authority for judicial orders of restitution.’’.
SEC. 6. EFFECTIVE DATES. 
(a) IN GENERAL.— Except as otherwise provided, 
this Act and the amendments made by this Act shall take 
effect on the first day of the seventh month beginning 
after the date of the enactment of this Act. 
(b) SPECIAL RULES.—Sections 6106 and 6107 of 
title 38, United States Code, as added by section 4(a), 
shall apply with respect to any determinations by the Sec-
retary of Veterans Affairs made after the date of the en-
actment of this Act of misuse of funds by a fiduciary. 
SEC. 7. REPORT TO CONGRESS. 
The Secretary of Veterans Affairs shall prepare a re-
port evaluating whether the existing procedures and re-
views for the qualification (including disqualification) of 
fiduciaries are sufficient to enable the Secretary to protect 
benefits from being misused by fiduciaries. The Secretary 
shall submit the report to the Committee on Veterans’ Af-
fairs of the Senate and House of Representatives no later 
than 270 days after the date of the enactment of this Act. 
The Secretary shall include in such report any rec-
ommendations that the Secretary considers appropriate.
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