HR 894 IH
H. R. 894
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.
IN THE HOUSE OF REPRESENTATIVES
February 28, 2013
February 28, 2013
Mr. JOHNSON of Ohio (for himself, Mr. STIVERS, Ms. TITUS, and Mr. ROE of Tennessee) 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.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. IMPROVEMENT OF FIDUCIARIES FOR VETERANS.
(a) Appointment and Supervision-
(1) Section 5502 of title 38, United States Code, is amended to read as follows:
‘Sec. 5502. Appointment of fiduciaries
‘(a) Appointment- (1) Where it appears to the Secretary that the interest of the beneficiary would be served thereby, payment of benefits under any law administered by the Secretary may be made directly to the beneficiary or to a relative or some other fiduciary for the use and benefit of the beneficiary, regardless of any legal disability on the part of the beneficiary.
‘(2) When in the opinion of the Secretary, a temporary fiduciary is needed in order to protect the benefits provided to the beneficiary under any law administered by the Secretary while a determination of incompetency is being made or appealed or a fiduciary is appealing a determination of misuse, the Secretary may appoint one or more temporary fiduciaries for a period not to exceed 120 days. If a final decision has not been made within 120 days, the Secretary may not continue the appointment of the fiduciary without obtaining a court order for appointment of a guardian, conservator, or other fiduciary under the authority provided in section 5502(b) of this title.
‘(b) Appeals- (1) If the Secretary determines a beneficiary to be mentally incompetent for purposes of appointing a fiduciary under this chapter, the Secretary shall provide such beneficiary with a written statement detailing the reasons for such determination.
‘(2) A beneficiary whom the Secretary has determined to be mentally incompetent for purposes of appointing a fiduciary under this chapter may appeal such determination.
‘(c) Modification- (1) A beneficiary for whom the Secretary appoints a fiduciary under this chapter may, at any time, request the Secretary to--
‘(A) remove the fiduciary so appointed; and
‘(B) have a new fiduciary appointed.
‘(2) The Secretary shall comply with a request under paragraph (1) unless the Secretary determines that the request is not made in good faith.
‘(3) The Secretary shall ensure that any removal or new appointment of a fiduciary under paragraph (1) does not delay or interrupt the beneficiary’s receipt of benefits administered by the Secretary.
‘(d) Independence- A fiduciary appointed by the Secretary shall operate independently of the Department to determine the actions that are in the interest of the beneficiary.
‘(e) Predesignation- A veteran may predesignate a fiduciary by--
‘(1) submitting written notice to the Secretary of the predesignated fiduciary; or
‘(2) submitting a form provided by the Secretary for such purpose.
‘(f) Appointment of Non-Predesignated Fiduciary- If a beneficiary designates an individual to serve as a fiduciary under subsection (e) 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 modify the appointed fiduciary under subsection (c).
‘(g) Priority of Appointment- In appointing a fiduciary under this chapter, if a beneficiary does not designate a fiduciary pursuant to subsection (e), to the extent possible the Secretary shall appoint a person who is--
‘(1) a relative of the beneficiary;
‘(2) appointed as guardian of the beneficiary by a court of competent jurisdiction; or
‘(3) authorized to act on behalf of the beneficiary under a durable power of attorney.’.
(2) CLERICAL AMENDMENT- The table of sections at the beginning of chapter 55 of title 38, United States Code, is amended by striking the item relating to section 5502 and inserting the following:
‘5502. Appointment of fiduciaries.’.
(1) IN GENERAL- Chapter 55 of title 38, United States Code, is amended by inserting after section 5502, as amended by subsection (a)(1), the following new section:
‘Sec. 5502A. Supervision of fiduciaries
‘(a) Commission- (1)(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.
‘(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.
‘(2) Where, in the opinion of the Secretary, any fiduciary receiving funds on behalf of a Department beneficiary is acting in such a number of cases as to make it impracticable to conserve properly the estates or to supervise the persons of the beneficiaries, the Secretary may refuse to make future payments in such cases as the Secretary may deem proper.
‘(b) Court- Whenever it appears that any fiduciary, in the opinion of the Secretary, is not properly executing or has not properly executed the duties of the trust of such fiduciary or has collected or paid, or is attempting to collect or pay, fees, commissions, or allowances that are inequitable or in excess of those allowed by law for the duties performed or expenses incurred, or has failed to make such payments as may be necessary for the benefit of the ward or the dependents of the ward, then the Secretary may appear, by the Secretary’s authorized attorney, in the court which has appointed such fiduciary, or in any court having original, concurrent, or appellate jurisdiction over said cause, and make proper presentation of such matters. The Secretary, in the Secretary’s discretion, may suspend payments to any such fiduciary who shall neglect or refuse, after reasonable notice, to render an account to the Secretary from time to time showing the application of such payments for the benefit of such incompetent or minor beneficiary, or who shall neglect or refuse to administer the estate according to law. The Secretary may require the fiduciary, as part of such account, to disclose any additional financial information concerning the beneficiary (except for information that is not available to the fiduciary). The Secretary may appear or intervene by the Secretary’s duly authorized attorney in any court as an interested party in any litigation instituted by the Secretary or otherwise, directly affecting money paid to such fiduciary under this section.
‘(c) Payment of Certain Expenses- Authority is hereby granted for the payment of any court or other expenses incident to any investigation or court proceeding for the appointment of any fiduciary or other person for the purpose of payment of benefits payable under laws administered by the Secretary or the removal of such fiduciary and appointment of another, and of expenses in connection with the administration of such benefits by such fiduciaries, or in connection with any other court proceeding hereby authorized, when such payment is authorized by the Secretary.
‘(d) Temporary Payment of Benefits- All or any part of any benefits the payment of which is suspended or withheld under this section may, in the discretion of the Secretary, be paid temporarily to the person having custody and control of the incompetent or minor beneficiary, to be used solely for the benefit of such beneficiary, or, in the case of an incompetent veteran, may be apportioned to the dependent or dependents, if any, of such veteran. Any part not so paid and any funds of a mentally incompetent or insane veteran not paid to the chief officer of the institution in which such veteran is a patient nor apportioned to the veteran’s dependent or dependents may be ordered held in the Treasury to the credit of such beneficiary. All funds so held shall be disbursed under the order and in the discretion of the Secretary for the benefit of such beneficiary or the beneficiary’s dependents. Any balance remaining in such fund to the credit of any beneficiary may be paid to the beneficiary if the beneficiary recovers and is found competent, or if a minor, attains majority, or otherwise to the beneficiary’s fiduciary, or, in the event of the beneficiary’s death, to the beneficiary’s personal representative, except as otherwise provided by law; however, payment will not be made to the beneficiary’s personal representative if, under the law of the beneficiary’s last legal residence, the beneficiary’s estate would escheat to the State. In the event of the death of a mentally incompetent or insane veteran, all gratuitous benefits under laws administered by the Secretary deposited before or after August 7, 1959, in the personal funds of patients trust fund on account of such veteran shall not be paid to the personal representative of such veteran, but shall be paid to the following persons living at the time of settlement, and in the order named: The surviving spouse, the children (without regard to age or marital status) in equal parts, and the dependent parents of such veteran, in equal parts. If any balance remains, such balance shall be deposited to the credit of the applicable current appropriation; except that there may be paid only so much of such balance as may be necessary to reimburse a person (other than a political subdivision of the United States) who bore the expenses of last sickness or burial of the veteran for such expenses. No payment shall be made under the two preceding sentences of this subsection unless claim therefor is filed with the Secretary within five years after the death of the veteran, except that, if any person so entitled under said two sentences is under legal disability at the time of death of the veteran, such five-year period of limitation shall run from the termination or removal of the legal disability.
‘(e) Escheatment- Any funds in the hands of a fiduciary appointed by a State court or the Secretary derived from benefits payable under laws administered by the Secretary, which under the law of the State wherein the beneficiary had last legal residence would escheat to the State, shall escheat to the United States and shall be returned by such fiduciary, or by the personal representative of the deceased beneficiary, less legal expenses of any administration necessary to determine that an escheat is in order, to the Department, and shall be deposited to the credit of the applicable revolving fund, trust fund, or appropriation.’.
(2) CLERICAL AMENDMENT- The table of sections at the beginning of chapter 55 of title 38, United States Code, is amended by inserting after the item relating to section 5502 the following new item:
‘5502A. Supervision of fiduciaries.’.
(c) 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. In maintaining such list, the Secretary may consult the lists maintained under section 807(h) of the Social Security Act (42 U.S.C. 1007(h)).’.
(d) Qualifications- Section 5507 of title 38, United States Code, is amended to read as follows:
‘Sec. 5507. Inquiry, investigations, and qualification of fiduciaries
‘(a) Investigation- Any certification of a person for payment of benefits of a beneficiary to that person as such beneficiary’s fiduciary under section 5502 of this title shall be made on the basis of--
‘(1) an inquiry or investigation by the Secretary of the fitness of that person to serve as fiduciary for that beneficiary to be conducted in advance of such certification and in accordance with subsection (b);
‘(2) adequate evidence that certification of that person as fiduciary for that beneficiary is in the interest of such beneficiary (as determined by the Secretary under regulations);
‘(3) adequate evidence that the person to serve as fiduciary protects the private information of a beneficiary in accordance with subsection (d)(1); and
‘(4) the furnishing of any bond that may be required by the Secretary, in accordance with subsection (f).
‘(b) Elements of Investigation- (1) In conducting an inquiry or investigation of a proposed fiduciary under subsection (a)(1), the Secretary shall conduct--
‘(A) a 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 paragraph (2), 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 and checking the records under paragraph (5).
‘(2) The Secretary shall request information concerning whether that person has been convicted of any offense under Federal or State law. If that person has been convicted of such an offense, the Secretary may certify the person as a fiduciary only if the Secretary finds that the person is an appropriate person to act as fiduciary for the beneficiary concerned under the circumstances.
‘(3) 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.
‘(4) Each proposed fiduciary shall disclose to the Secretary the number of beneficiaries that the fiduciary acts on behalf of.
‘(5) The Secretary shall maintain records of any person who has--
‘(A) previously served as a fiduciary; and
‘(B) had such fiduciary status revoked by the Secretary.
‘(6)(A) If a fiduciary appointed by the Secretary is convicted of a crime described in subparagraph (B), the Secretary shall notify the beneficiary of such conviction by not later than 14 days after the date on which the Secretary learns of such conviction.
‘(B) A crime described in this subparagraph is a crime--
‘(i) for which the fiduciary is convicted while serving as a fiduciary for any person;
‘(ii) that is not included in a report submitted by the fiduciary under section 5509(a) of this title; and
‘(iii) that the Secretary determines could affect the ability of the fiduciary to act on behalf of the beneficiary.
‘(c) Investigation of Certain Persons- (1) In the case of a proposed fiduciary described in paragraph (2), the Secretary, in conducting an inquiry or investigation under subsection (a)(1), may carry out such inquiry or investigation on an expedited basis that may include giving priority to conducting such inquiry or investigation. Any such inquiry or investigation 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 stepparent) of a beneficiary who is a minor;
‘(B) the spouse or parent of an incompetent beneficiary;
‘(C) a person who has been appointed a fiduciary of the beneficiary by a court of competent jurisdiction;
‘(D) being appointed to manage an estate where the annual amount of veterans benefits to be managed by the proposed fiduciary does not exceed $3,600, as adjusted pursuant to section 5312 of this title; or
‘(E) a person who is authorized to act on behalf of the beneficiary under a durable power of attorney.
‘(d) Protection of Private Information- (1) A fiduciary shall take all reasonable precautions to--
‘(A) protect the private information of a beneficiary, including personally identifiable information; and
‘(B) securely conducts financial transactions.
‘(2) A fiduciary shall notify the Secretary of any action of the fiduciary that compromises or potentially compromises the private information of a beneficiary.
‘(e) Potential Misuse of Funds- (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 of agency for the use and benefit of a minor, incompetent, or other beneficiary.
‘(f) Bond- 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
‘(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.
‘(g) List of Fiduciaries- 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).’.
(e) Annual Receipt of Payments-
(1) IN GENERAL- Section 5509 of title 38, United States Code, is amended--
(A) in subsection (a)----
(i) by striking ‘may require a fiduciary to file a’ and inserting ‘, subject to regulations prescribed pursuant to subsection (f), shall require a fiduciary to file an annual’; and
(ii) 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.’;
(B) by adding at the end the following new subsections:
‘(c) Matters Included- An annual report or accounting under subsection (a) shall include the following:
‘(1) For each beneficiary that a fiduciary acts on behalf of--
‘(A) the amount of the benefits of the beneficiary accrued during the year, the amount spent, and the amount remaining; and
‘(B) 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.
‘(2) A list of events that occurred during the year covered by the report that could affect the ability of the fiduciary to act on behalf of the beneficiary, including--
‘(A) the fiduciary being convicted of any crime;
‘(B) the fiduciary declaring bankruptcy; and
‘(C) any judgments entered against the fiduciary.
‘(d) Random Audits- The Secretary shall annually conduct random audits of fiduciaries who receive a commission pursuant to subsection 5502A(a)(1) of this title.
‘(e) Status of Fiduciary- If a fiduciary includes in the annual report events described in subsection (c)(2), the Secretary may take appropriate action to adjust the status of the fiduciary as the Secretary determines appropriate, including by revoking the fiduciary status of the fiduciary.
‘(f) Regulations- (1) In prescribing regulations to carry out this section, the Secretary, in consultation with the Under Secretary for Benefits and the Under Secretary for Health, shall ensure that the care provided by a fiduciary described in paragraph (2) to a beneficiary is not diminished or otherwise worsened by the fiduciary complying with this section.
‘(2) A fiduciary described in this paragraph is a fiduciary who, in addition to acting as a fiduciary for a beneficiary, provides care to the beneficiary pursuant to this title (including such care provided under section 1720G of this title).’; and
(C) by striking the section heading and inserting the following: ‘Annual reports and accountings of fiduciaries’.
(2) CLERICAL AMENDMENT- The table of sections at the beginning of chapter 55 of title 38, United States Code, is amended by striking the item relating to section 5509 and inserting the following new item:
‘5509. Annual reports and accountings of fiduciaries.’.
(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 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’.
(h) 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--
(1) detailed information on the establishment of new policies and procedures pursuant to such amendments and training provided on such policies and procedures; and
(2) a discussion of whether the Secretary should provide fiduciaries with standardized financial software to simplify reporting requirements.