WASHINGTON, D.C. – U.S. Sen. Sherrod Brown (D-OH), along with U.S. Sens. Richard Blumenthal (D-CT) and Joe Manchin (D-WV), today called on U.S. Department of Veterans Affairs (VA) Secretary Robert McDonald to address significant inadequacies in the Veterans Benefits Administration (VBA) Fiduciary Program identified in two recent reports conducted by the VA’s Office of Inspector General. The VBA’s Fiduciary Program appoints and oversees individuals or entities (fiduciaries) to manage VA benefits for VA beneficiaries who are unable to do so themselves because of injury, disease, or age.
“By failing to fulfill its legally required oversight responsibilities, VBA is placing the health and financial well-being of our most vulnerable veterans – and their hard earned benefits – at intolerable risk,” the senators wrote. “It is unconscionable that VBA has been repeatedly warned of these risks and has yet to effectively implement oversight measures to prevent unscrupulous actors from exploiting veterans.”
In two audits, the VA’s Office of the Inspector General found that the VBA failed to complete field examinations in a timely manner, contributing to fiduciary fraud, the wrongful appointment of fiduciaries, and temporary termination of benefit payments. The audits also revealed that the VBA did not adequately respond to allegations and indications that beneficiaries’ funds were being misused and, in cases where misuses of funds were proven to have occurred, did not take action in a timely manner. Brown’s letter urged Secretary McDonald to clarify VBA policies regarding collection of misused funds and to ensure that all funds misused by abusive fiduciaries are recouped.
Brown continues to work to protect veterans from predatory practices. In June, Brown announced his cosponsorship of the Military and Veterans Education Protection Act, legislation to help stop for-profit education companies from targeting servicemembers and veterans. Thanks to the Post-9/11 GI Bill, military servicemembers and veterans receive educational benefits they can use to attend college—but because of a loophole in federal law, for-profit education companies have been incentivized to take advantage of men and women in uniform by aggressively targeting them with deceptive and misleading marketing and recruitment pitches.
That same month, Brown joined a letter to the VA, asking it to investigate ITT Educational Services and take action to protect veterans attending the school. ITT was the third largest recipient of Post-9/11 GI Bill benefits in 2012-13 despite scrutiny by various state and federal agencies for misconduct surrounding marketing and recruiting practices, job placement rates, and other misleading and deceptive practices.
Brown’s letter can be found below.
September 17, 2015
The Honorable Robert A. McDonald
Secretary of the Department of Veterans Affairs
810 Vermont Avenue, Northwest
Washington, D.C. 20420
Dear Secretary McDonald:
Two recent Department of Veterans Affairs Office of the Inspector General (VAOIG) Reports on the Veterans Benefits Administration (VBA) Fiduciary Program reveal troubling audit results. Findings published in the June 1, 2015 report, Audit of Fiduciary Program’s Management of Field Examinations, demonstrate that VBA is consistently failing both to meet timeliness standards for field examinations and to comply with all relevant performance measures. The Audit of Fiduciary Program Controls Addressing Beneficiary Fund Misuse, published on August 27, 2015, demonstrate that misuse actions associated with beneficiary management were also not performed in a timely manner or according to VBA policy. We urge VBA to swiftly comply with VAOIG recommendations, submit a plan to enhance Fiduciary Program oversight to Congress, and aggressively pursue the recoupment of VA benefits from predatory fiduciaries.
Despite attempts at reform, the timeliness for field examinations has regrettably worsened, which contributes to fiduciary fraud, the wrongful appointment of fiduciaries, and temporary termination of benefit payments. Specifically, the VAOIG Audit of Fiduciary Program’s Management of Field Examinations determined that VBA did not meet timeliness standards for 42 percent of pending and completed field examinations during Calendar Year (CY) 2013 and data from CY 2013 and CY 2014 represents a 15 percent increase in the number of field examinations exceeding timeliness standards due to inadequate management oversight.
Additionally, the Audit of Fiduciary Program Controls Address Beneficiary Fund Misuse demonstrates that VBA did not complete required actions in response to allegations and indications of beneficiary fund misuse to determine whether misuse of funds occurred. From January 1, 2013 to December 31, 2013, VBA did not process 48 percent of required actions associated with 122 beneficiaries in a timely manner or according to policy. Furthermore, the report found that VBA did not timely complete actions after concluding that the misuse of funds did, in fact, occur, such as reissuing misused funds, performing effective collection actions, and completing internal negligence determinations.
Field examinations and fund misuse response are crucial components of VBA oversight of the Fiduciary Program, and it is essential that these actions are conducted in a timely manner. In both VAOIG reports, management attributed lack of timeliness to an increase in Fiduciary Program workload. We request additional information regarding the distribution of employees at nationwide hubs and an assessment of whether the VA FY 2016 funding request for an additional 85 fiduciary employees will be able to adequately address timeliness concerns.
Though we were pleased to see that VBA implemented formal procedures in November 2013 to create policies for dealing with abusive fiduciaries, we are concerned that the amount of misused VA benefits increased from FY 2012 to FY 2015 and that VBA staff did not effectively perform actions to initiate collection of misused funds due to confusion regarding policy changes as well as limited data and tracking mechanisms. We urge VBA to continue efforts to clarify these policies and ensure that debts are established to recoup all misused funds by abusive fiduciaries.
By failing to fulfill its legally required oversight responsibilities, VBA is placing the health and financial well-being of our most vulnerable veterans – and their hard earned benefits – at intolerable risk. It is unconscionable that VBA has been repeatedly warned of these risks and has yet to effectively implement oversight measures to prevent unscrupulous actors from exploiting veterans. We welcome any suggestions that you may share to strengthen protections for veteran beneficiaries. Thank you for your immediate attention to this urgent matter.