H.R. 5948 (112th): Veterans Fiduciary Reform and Honoring Noble Service Act

HR 5948 IH

To amend title 38, United States Code, to improve the supervision of fiduciaries of veterans under the laws administered by the Secretary of Veterans Affairs, and for other purposes.

June 12, 2012

Mr. JOHNSON of Ohio introduced the following bill; which was referred to the Committee on Veterans’ Affairs

To amend title 38, United States Code, to improve the supervision of fiduciaries of veterans under the laws administered by the Secretary of Veterans Affairs, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘Veterans Fiduciary Reform Act of 2012’.

SEC. 2. IMPROVEMENT OF FIDUCIARIES FOR VETERANS.

(a) Incompetency-

(1) IN GENERAL- Chapter 55 of title 38, United States Code, is amended by adding at the end the following new section:

‘Sec. 5511. Adjudication of financial incompetence

‘(a) Determination- In any case arising out of the administration by the Secretary of laws and benefits under this title in which the Secretary must determine whether an individual requires a fiduciary, the Secretary shall consider the following factors when adjudicating whether an individual is considered mentally incapacitated or deemed mentally incompetent:

‘(1) A determination made by a State court or other court of competent jurisdiction.

‘(2) An evaluation made by a medical professional, taking into account the role of financial management in the rehabilitation of the individual.

‘(b) Appeals- (1) An individual whom the Secretary has determined to be mentally incapacitated or deemed mentally incompetent may appeal such determination.

‘(2) In hearing an appeal under paragraph (1), the Secretary shall consider court determinations, medical evidence, and lay evidence offered by the appellant.

‘(c) Removal of Fiduciary- (1) An individual described in paragraph (2) may file a claim with the Secretary to terminate any fiduciary relationship established under this chapter.

‘(2) An individual described in this paragraph is an individual--

‘(A) whom the Secretary determined to be mentally incapacitated or mentally incompetent under subsection (a);

‘(B) for whom the Secretary appointed a fiduciary under this chapter; and

‘(C) whom, after such appointment, a State court or other court of competent jurisdiction or a medical professional has determined to be competent.’.

(2) CLERICAL AMENDMENT- The table of sections at the beginning of such chapter 55 is amended by adding at the end the following new item:

‘5511. Adjudication of financial incompetence.’.

(b) Definition of Fiduciary- Section 5506 of title 38, United States Code is amended--

(1) by striking ‘For purposes’ and inserting ‘(a) For purposes’; and

(2) by adding at the end the following new subsection:

‘(b)(1) For purposes of subsection (a), the term ‘person’ includes any--

‘(A) State or local government agency whose mission is to carry out income maintenance, social service, or health care-related activities;

‘(B) any State or local government agency with fiduciary responsibilities; or

‘(C) any nonprofit social service agency that the Secretary determines--

‘(i) regularly provides services as a fiduciary concurrently to five or more individuals; and

‘(ii) is not a creditor of any such individual.

‘(2) The Secretary shall maintain a list of State or local agencies and nonprofit social service agencies under paragraph (1) that are qualified to act as a fiduciary under this chapter.’.

(c) Qualification- Section 5507 of title 38, United States Code, is amended--

(1) in subsection (a)--

(A) in paragraph (1)(B), by striking ‘to the extent practicable, to include’ and inserting ‘including, in accordance with subsection (e)(1)(A),’;

(B) in paragraph (2), by striking ‘and’;

(C) by redesignating paragraph (3) as paragraph (4);

(D) by adding after paragraph (2) the following new paragraph (3):

‘(3) adequate evidence that the person to serve as fiduciary uses a secure, encrypted Internet connection when conducting activity on the Internet relating to the financial information of the beneficiary in accordance with subsection (f); and’; and

(E) in paragraph (4), as so redesignated, by inserting ‘, in accordance with subsection (i)’ before the period at the end;

(2) in subsection (b), by striking ‘which resulted in imprisonment for more than one year’;

(3) in subsection (c)--

(A) in paragraph (1), by striking ‘waiver of any specific requirement relating to such inquiry or investigation, including the otherwise applicable provisions of subparagraphs (A), (B), and (C) of such subsection.’ and inserting ‘giving priority to conducting such inquiry or investigation.’; and

(B) in paragraph (2)--

(i) in subparagraph (C), by striking ‘or’;

(ii) in subparagraph (D), by striking the period and inserting ‘; or’; and

(iii) by adding at the end the following new subparagraph:

‘(E) a person who is authorized to act on behalf of the beneficiary under a durable power of attorney.’; and

(4) by adding at the end the following new subsections:

‘(e)(1) In conducting an inquiry or investigation of a proposed fiduciary under subsection (a)(1), the Secretary shall conduct--

‘(A) the face-to-face interview with the proposed fiduciary by not later than 30 days after the date on which such inquiry or investigation begins; and

‘(B) a background check of the proposed fiduciary to--

‘(i) in accordance with subsection (b), determine whether the proposed fiduciary has been convicted of a crime; and

‘(ii) determine whether the proposed fiduciary will serve the best interest of the beneficiary, including by conducting a credit check of the proposed fiduciary.

‘(2) The Secretary shall conduct the background check described in paragraph (1)(B)--

‘(A) each time a person is proposed to be a fiduciary, regardless of whether the person is serving or has served as a fiduciary; and

‘(B) at no expense to the beneficiary.

‘(3) Each proposed fiduciary shall disclose to the Secretary the number of beneficiaries that the fiduciary acts on behalf of.

‘(4)(A) The Secretary shall maintain records of any person who has--

‘(i) previously served as a fiduciary; and

‘(ii) had such fiduciary status revoked by the Secretary.

‘(B) In conducting the background check described in paragraph (1)(B), the Secretary shall check the records maintained under subparagraph (A).

‘(C) If a fiduciary appointed by the Secretary is convicted of any crime while serving as a fiduciary for any person, the Secretary shall notify the beneficiary by not later than 14 days after the date on which the Secretary learns of such conviction.

‘(f) The Secretary shall ensure that each fiduciary has adequate training and knowledge to effectively use an encrypted, secure Internet connection when conducting activity relating to the financial information of the beneficiary.

‘(g)(1) If the Secretary has reason to believe that a fiduciary may be misusing all or part of the benefit of a beneficiary, the Secretary shall--

‘(A) conduct a thorough investigation to determine the veracity of such belief; and

‘(B) if such veracity is established, transmit to the officials described in paragraph (2) a report of such investigation.

‘(2) The officials described in this paragraph are the following:

‘(A) The Attorney General.

‘(B) Each head of a Federal department or agency that pays to a fiduciary or other person benefits under any law administered by such department or agency for the use and benefit of a minor, incompetent, or other beneficiary.

‘(h)(1) Except as provided by paragraph (2), the Secretary may require that a proposed fiduciary only serve as a fiduciary for a beneficiary with respect to benefits paid under laws administered by the Secretary.

‘(2) Paragraph (1) shall not apply to a proposed fiduciary who is--

‘(A) a family member of the beneficiary; or

‘(B) the individual predesignated by the beneficiary to serve as the fiduciary pursuant to section 5506A of this title.

‘(i) In requiring the furnishing of a bond under subsection (a)(4), the Secretary shall--

‘(1) ensure that any such bond is not paid using any funds of the beneficiary; and

‘(2) consider--

‘(A) the care a proposed fiduciary has taken to protect the interests of the beneficiary; and

‘(B) the capacity of the proposed fiduciary to meet the financial requirements of the bond without sustaining hardship.

‘(j) A fiduciary appointed by the Secretary shall operate independently of the Department to determine the actions that are in the interest of the beneficiary.

‘(k) Each regional office of the Veterans Benefits Administration shall maintain a list of the following:

‘(1) The name and contact information of each fiduciary, including address, telephone number, and email address.

‘(2) With respect to each fiduciary described in paragraph (1)--

‘(A) the date of the most recent background check and credit check performed by the Secretary under this section;

‘(B) the date that any bond was paid under this section;

‘(C) the name, address, and telephone number of each beneficiary the fiduciary acts on behalf of; and

‘(D) the amount that the fiduciary controls with respect to each beneficiary described in subparagraph (C).’.

(d) Designation of Fiduciary-

(1) IN GENERAL- Chapter 55 of title 38, United States Code, is amended by inserting after section 5506 the following new sections:

‘Sec. 5506A. Predesignation of fiduciary

‘(a) Application for Compensation- (1) The Secretary shall include in the form described in paragraph (2) the following:

‘(A) An opportunity for the individual submitting the form to designate an individual, including a spouse or other family member of the individual, to serve as a fiduciary in the event a fiduciary is needed.

‘(B) A description of what a fiduciary is and the role served by the fiduciary.

‘(C) A description of the actions to be taken by the Secretary in the event a fiduciary is not designated by the individual.

‘(2) The form described in this paragraph is a form that the Secretary requires an individual to submit for a claim for compensation or a pension administered under this title, including Form 21-526 or any successor form.

‘(3) The information included under paragraph (1) shall be provided in a manner that is conspicuous, easy to read, and without the use of technical or legal terms, other than the term ‘fiduciary’.

‘(b) Priority of Appointment- In appointing a fiduciary under this chapter, if a beneficiary does not designate a fiduciary pursuant to subsection (a), to the extent possible the Secretary shall appoint a person who is--

‘(1) appointed as guardian of the beneficiary by a court of competent jurisdiction; or

‘(2) authorized to act on behalf of the beneficiary under a durable power of attorney.

‘(c) Appointment of Non-Predesignated Fiduciary- If a beneficiary designates an individual to serve as a fiduciary under subsection (a)(1)(A) and the Secretary appoints an individual not so designated as the fiduciary for such beneficiary, the Secretary shall notify such beneficiary of--

‘(1) the reason why such designated individual was not appointed; and

‘(2) the ability of the beneficiary to file a claim under section 5506B of this title to modify the appointed fiduciary.

‘Sec. 5506B. Modification of appointed fiduciary

‘(a) In General- A beneficiary for whom the Secretary appoints a fiduciary under this chapter may, at any time, file a claim with the Secretary to--

‘(1) remove the fiduciary so appointed; and

‘(2) have a new fiduciary appointed.

‘(b) Continuation of Benefits- The Secretary shall ensure that any removal or new appointment of a fiduciary under subsection (a) does not delay or interrupt the beneficiary’s receipt of benefits administered by the Secretary.’.

(2) CLERICAL AMENDMENT- The table of sections at the beginning of such chapter is amended by inserting after the item relating to section 5506 the following new items:

‘5506A. Predesignation of fiduciary.

‘5506B. Modification of appointed fiduciary.’.

(e) Fee- Subsection (a)(2) of section 5502 of title 38, United States Code, is amended to read as follows:

‘(2)(A) In a case in which the Secretary determines that a commission is necessary in order to obtain the services of a fiduciary in the best interests of a beneficiary, the Secretary may authorize a fiduciary appointed by the Secretary to obtain from the monthly benefits provided to the beneficiary a reasonable commission for fiduciary services rendered, but the commission for any month may not exceed the lesser of the following amounts:

‘(i) The amount that equals three percent of the monthly monetary benefits under laws administered by the Secretary paid on behalf of the beneficiary to the fiduciary.

‘(ii) $35.

‘(B) A commission paid under this paragraph may not be derived from any award to a beneficiary regarding back pay or retroactive benefits payments.

‘(C) A commission may not be authorized for a fiduciary who receives any other form of remuneration or payment in connection with rendering fiduciary services for benefits under this title on behalf of the beneficiary.

‘(D) In accordance with section 6106 of this title, a commission may not be paid to a fiduciary if the Secretary determines that the fiduciary misused any benefit payments of a beneficiary.

‘(E) If the Secretary determines that the fiduciary has misused any benefit or payments of a beneficiary, the Secretary may revoke the fiduciary status of the fiduciary.’.

(f) Repayment of Misused Benefits- Section 6107(a)(2)(C) of title 38, United States Code, is amended by inserting before the period the following: ‘, including by the Secretary not acting in accordance with section 5507 of this title’.

(g) Annual Receipt of Payments- Section 5509 of title 38, United States Code, is amended--

(1) in subsection (a)--

(A) by striking ‘may require a fiduciary to file a’ and inserting ‘shall require a fiduciary to file an annual’; and

(B) by adding at the end the following new sentence: ‘The Secretary shall transmit such annual report or accounting to the beneficiary and any legal guardian of such beneficiary.’; and

(2) by adding at the end the following new subsection:

‘(c) Matters Included- An annual report or accounting under subsection (a) shall include, for each beneficiary that a fiduciary acts on behalf of--

‘(1) the amount of the benefits of the beneficiary accrued during the year, the amount spent, and the amount remaining; and

‘(2) if the fiduciary serves the beneficiary with respect to benefits not administered by the Secretary, an accounting of all sources of benefits or other income the fiduciary oversees for the beneficiary.’.

(h) Annual Reports- Section 5510 of title 38, United States Code, is amended by striking ‘The Secretary shall include in the Annual Benefits Report of the Veterans Benefits Administration or the Secretary’s Annual Performance and Accountability Report’ and inserting ‘Not later than July 1 of each year, the Secretary shall submit to the Committees on Veterans’ Affairs of the House of Representatives and the Senate a separate report containing’.

(i) Report- Not later than one year after the date of the enactment of this Act, the Secretary of Veterans Affairs shall submit to the Committee on Veterans’ Affairs of the Senate and the Committee on Veterans’ Affairs of the House of Representatives a comprehensive report on the implementation of the amendments made by this Act, including detailed information on the establishment of new policies and procedures pursuant to such amendments and training provided on such policies and procedures.

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