- WWP COMMENTS ON VA PROPOSED FIDUCIARY REGULATIONS
In one of its first actions of the new year, VA published proposed new rules for its Fiduciary program. Unfortunately, despite longstanding criticism of its approach, VA is not easing its rigid, onerous requirements on non-spousal family members who are both fiduciaries and caregivers. Wounded Warrior Project is fighting this proposed regulation and submitted written comments in response to these proposed regulations. The VA will be accepting comments until March 4, 2014. We would encourage interested family members of wounded veterans to submit comments, as well.
Written comments may be submitted by mail, FAX, or online; but you must indicate that the comments are in response to “RIN 2900-AO53, Fiduciary Activities”.
1. By mail, send comments to:
Director, Office of Regulation Policy and Management (02REG)
Department of Veterans Affairs
810 Vermont Ave., NW, Room 1068
Washington, DC 20420
2. By FAX to 202-273-9026
3. Online through www.regulations.gov (In using that website, enter “RIN 2900-AO53, Fiduciary Activities” in the “Search” box to get to the page where you enter your comments.)
WOUNDED WARRIOR PROJECT COMMENTS (Download a full copy of WWP comments)
Wounded Warrior Project (WWP) is pleased to submit these comments in response to the above-referenced notice of proposed rulemaking (NPRM).
The proposal would amend regulations governing the VA fiduciary program and, as described by the Department, would update and reorganize regulations, as well as clarify the rights of beneficiaries and the roles of VA and fiduciaries.
The Need to Update Policy
As an organization that works closely with wounded warriors and their family members, WWP would welcome a thorough updating of regulations governing VA’s fiduciary program. In our view, however, the NPRM fails to realize fully the stated intention of updating policy. Instead, it cites and holds to “current policy” on important issues where compelling evidence would support a revision of those policies. Our particular concern is that the NPRM cements in place rigid policies with respect to fiduciaries whom the Department has vetted, oversees, and directly knows in their role as caregivers of wounded warrior beneficiaries under the Department’s caregiver-assistance program. We urge the Department to revisit and revise key aspects of its fiduciary program policies (and provisions of its proposed regulations) with regard to those fiduciary-caregivers, as discussed more fully below.
In describing its program, the Department states that approximately 90,000 of its 95,000 fiduciaries have a personal relationship with the beneficiary and most are family members and friends who serve without charge. The Department also expresses an interest in avoiding undue intrusiveness in administration of the Fiduciary Program where there is very little risk of exploitation of funds. It also states that, based on experience, VA recognizes that the burden of preparing, submitting and auditing accountings outweighs any oversight benefit for many beneficiaries and the VA.
Notwithstanding its recognition of the burden on family-member fiduciaries and its acknowledgement that it is important to avoid undue intrusiveness where there is very little risk of exploitation of funds, the Department has made no apparent effort to examine or reassess its policies or to conduct a risk analysis. Instead, it simply cites “current” or “longstanding policy” as a basis to restate old rules.
VA-Approved/Monitored Family Caregiver-fiduciaries Do Not Pose a Risk of Exploiting Funds
VA certainly has a statutory responsibility to determine the fitness of individuals to serve as fiduciaries and to oversee fiduciaries’ management of VA benefits. We recognize too that, under law, VA must be cognizant of potential vulnerability of misappropriation of funds and misuse of benefits. But as the Department itself acknowledges in the NPRM’s description of the program, VA scrutiny is neither needed nor appropriate where “VA knows that there is very little risk of exploitation of funds.” As the Department has acknowledged, its experience enables it to make knowing judgments of situations where there is very little risk of exploitation of funds. But it has failed, in our view, to tap fully that knowledge and experience in the course of its “updating” of these regulations.
The Department acknowledges that most fiduciaries are family members of the beneficiary. In its NPRM, the Department cites its “long-standing policy of requiring less intrusive oversight of spouse fiduciaries,” and provides exceptions for the beneficiary’s spouse from the requirement for submitting an annual accounting and the general rule requiring a surety bond. Those exceptions do not go far enough, in our view, particularly in terms of situations where “VA knows that there is very little risk of exploitation of funds.” In fact, the Department has extensive knowledge about categories of fiduciaries who are not recognized in the NPRM, but whose involvement with the Department would demonstrate that they pose no risk of exploiting beneficiary funds.
More than three and a half years ago, Congress enacted legislation directing the Department to establish a program to support qualified caregivers of veterans who had sustained serious injury in service on or after 9/11. Title I of that law, the Caregivers and Veterans Omnibus Health Services Act of 2010, (hereinafter, “the Caregiver Law”) recognizes the sacrifices that caregivers of wounded warriors make and the toll caregiving takes; it provides for an array of needed supports to help sustain that caregiving, with the goal of enabling wounded warriors to live at home, wherever possible. To qualify and win formal approval for VA assistance under this law, a caregiver of an eligible veteran must undergo VA review, training, home-inspection, and a determination that the proposed arrangement is in the veteran’s best interest. The caregiver must also undergo periodic home-inspections and monitoring of the veteran’s well-being to continue to receive VA assistance. Any “red flags” that might arise in the course of these home-inspections can result in revocation of VA support. In short, Veterans Health Administration staff assist and work closely with family caregivers – who in many instances are also fiduciaries and who have not only been screened before qualifying for the program, but whose care of the veteran is closely monitored.
Where VA staff have already screened and approved a family member as a caregiver, and have carried out home visits that confirm the veteran’s well-being and that the veteran’s personal care is being well maintained, a level of trustworthiness has surely been established. Given a policy that recognizes that there exist situations where a family member poses minimal risk of exploitation, it is difficult to understand the Department’s failure to recognize and acknowledge the unique circumstances of a fiduciary who is also the veteran’s caregiver under a program administered by the Veterans Health Administration. Consider, for example, a parent whose son or daughter requires extensive personal home-care as a result of a severe traumatic brain injury incurred during an overseas deployment as well as assistance in managing his/her finances because of the residuals of that injury. Why would a mother or father who takes a son or daughter back into the home to provide daily care; who has been screened, approved, and repeatedly home-visited by VHA; and whom the Veterans Benefits Administration has deemed qualified under 38 USC section 5507 to serve as the fiduciary of the veteran, be considered, under the NPRM, to pose a risk of exploiting that child’s funds?
The proposition is not only insulting, it is at odds with both common sense and with policies reflected in law. The Caregiver Law is aimed at sustaining home care-giving of seriously injured veterans, given that “the extraordinary demands of caregiving invariably take a toll on family caregivers--physically, psychologically, emotionally, and financially.” Given the enactment of a law aimed at diminishing the strains and pressures inherent in caregiving, other VA programs that work with those caregivers care should certainly be managed to avoid unwittingly and unnecessarily adding to the strains those caregivers already bear. Unfortunately, the NPRM is wholly insensitive to that principle, particularly as it relates to requirements for financial accountings.
Requiring the Caregiver-Fiduciary to Submit Detailed Accountings is Unreasonable
As is typical for warriors who suffered severe brain injury, where the veteran is receiving compensation at a total disability rating or the amount of VA funds under management exceeds $10,000, the NPRM would require a non-spousal fiduciary to submit detailed annual accountings, to include accounting for non-VA funds. Such accounting must not only itemize expenses but the fiduciary may also be required to submit receipts. The Caregiver Law recognizes that many caregivers must devote full-time to providing personal care to their loved ones, but the proposed regulations appear insensitive to that burden. The NPRM appears to assume that the unpaid family member-fiduciary has more than abundant time to satisfy its requirements – from filing detailed accountings “on the appropriate form” within 30 days after the end of the accounting period, to submitting any need for correction or supplemental filings within 14 days, to a requirement to “install [computer privacy] software updates immediately upon release.” (Emphasis added.)
Given the concern for sustaining caregiving reflected in the Caregiver Law and the very substantial oversight maintained under the caregiver-assistance program, the NPRM accounting requirements certainly raises serious questions: why, for example, would the Department assume a family member whose care for a loved one it continues to oversee under the auspices of the Caregiver Law poses a risk of exploiting that veteran’s funds? And why would VA fail to draw any distinction, for purposes of accounting requirements, between a caregiver-fiduciary and a fiduciary of whom it had no other knowledge and no other means of overseeing?
Requiring Trust-Proven Family Members to Furnish Bonds Unreasonably Depletes Assets
Current law provides that “the furnishing of a bond may be required by the Secretary” in order to certify a person as a fiduciary. The NPRM sets a general rule that a fiduciary must furnish a surety bond if VA benefits due and to be paid will exceed $25,000. In providing only very limited exceptions to that general rule, the NPRM states that “consistent with VA’s longstanding policy of requiring less intrusive oversight of spouse fiduciaries, we would not require spouses to obtain a surety bond.” The implicit distinction drawn here between a spouse and a parent, for example, is simply arbitrary. “Longstanding policy” must give way to common sense, experience, and needed revision, particularly since the cost of a surety bond is to be taken from VA benefit funds that are to be managed for the veteran. Our concern with the Department’s position is aptly captured in remarks shared by a mother who is both the caregiver and fiduciary for her severely brain-injured son and whose deep concern reflects views many others have expressed:
VA made me buy a bond that cost my son close to $800 a year and it’s insulting to me and my family. I understand it’s for the protection of the vet but after taking care of him for almost 8 years 24/7 without a vacation it’s insulting to think I would run away with his money.
Another mother who reported bonding expenses of $600 annually underscored why bonding is excessive in the case of family members with whom VA works as caregivers of the veteran:
Severely injured TBI veterans’ caregivers are subject to in-home "visits" on a regular basis. Any misuse or abuse of the veteran should be easily seen and reported by these individuals. We have the most "oversight" and regulations within the entire fiduciary system.
As discussed above, family caregivers whom VA has vetted, approved, and monitored, and who have not been the subject of any adverse findings that would raise an issue of fund-exploitation can safely be deemed not to pose a risk of exploiting the veteran’s funds and should not be required to maintain surety bonding. We urge that the regulation be amended accordingly.
Duplicative, Intrusive Oversight into Non-Financial Issues
As it is, the policy reflected in the proposed regulation would not only require non-spousal caregiver-fiduciaries of seriously wounded warriors to submit detailed accountings – which are not required by law -- but could subject them to duplicative, intrusive oversight. Under the Caregiver Law, the “Secretary shall monitor the well-being of each eligible veteran receiving personal care services under the [caregiver-assistance] program,” including “[v]isiting an eligible veteran in the eligible veteran’s home to review directly the quality of personal care services provided to the eligible veteran.” Under the proposed rule, a caregiver who is a fiduciary may also be subject to home visits by Fiduciary Program staff to “assess a beneficiary’s and the beneficiary’s dependents’ welfare and physical and mental well-being, environmental and social conditions, and overall financial situation.”
The Secretary’s principal responsibility in appointing a fiduciary is to determine the person’s fitness to serve as fiduciary for the beneficiary. Title 38 clearly defines the role of a VA-appointed fiduciary as a “person…appointed in a representative capacity to receive money paid under any of the laws administered by the Secretary for the use and benefit of a minor, incompetent, or other beneficiary.” Notwithstanding that these laws describe the fiduciary’s responsibility as being to receive and manage VA benefits, the NPRM sets out non-financial responsibilities in addition to financial ones. Specifically, proposed section 13.140(a) states that in addition to managing the VA funds of a beneficiary, fiduciaries appointed by VA “are also responsible for monitoring the beneficiary’s well-being.” Further, proposed section 13.140(c) states that the fiduciary has non-financial responsibilities that “include, but are not limited to” seven specified responsibilities. Illustrative of the breadth of these proposed responsibilities is the notion in proposed section 13.140(c)(3) that the fiduciary is responsible for “correcting any discord or uncomfortable living or other situation when possible.” Indeed, these responsibilities are not only broad, one cannot know their outer limits, since the proposed regulation clearly states that the fiduciary’s non-financial responsibilities “are not limited” to those specified in the regulations. In short, we have deep concerns about the proposed imposition of non-financial responsibilities that are both sweeping and vague on an individual who is serving as a volunteer to manage a loved one’s VA benefits. Those concerns are heightened by the implications of another provision stating that a fiduciary who “does not adequately perform the responsibilities of a fiduciary prescribed in section 13.140” is at risk of VA removal.
Consider again, in this connection, the example cited above -- a parent whose son or daughter requires both extensive personal home-care as a result of a severe traumatic brain injury incurred during an overseas deployment and assistance in managing his/her finances because of the residuals of that injury. Under the proposed regulations, a parent who seeks to do only the best for that son or daughter nevertheless remains subject to the scrutiny of two arms of a single Department, both now claiming responsibility for monitoring the well-being of the veteran, with the potential that both will make home visits. That parent is already subject under law to the threat of having caregiver-assistance, including a monthly stipend, suspended or revoked based on findings of a VA home visit. With VA having ample safeguards as to the veteran’s well-being through VHA oversight and home visits, we see no rationale for subjecting the caregiver-fiduciary to the additional intrusive level of oversight proposed in the NPRM. Such overlapping, duplicative oversight by two arms of a single Department is overbearing and unwarranted. But it is also wasteful of governmental resources and at odds with fundamental expectations that Departments will work to promote economy and efficiency and to eliminate duplication, waste and inefficiency in in the administration of federal programs.
We assume the Department deemed the establishment of non-financial responsibilities on fiduciaries to be a well-intentioned policy. But the imposition of such responsibilities on fiduciaries who are also caregivers under the Caregiver Law could well have pernicious consequences. In that regard, it is well understood that many who were injured in deployments to Iraq and Afghanistan survived injuries that would have been mortal in prior conflicts. In our experience, most wounded warriors who have required the appointment of a fiduciary have suffered severe traumatic brain injury (TBI). Among the many possible residuals of a TBI, it is not uncommon for the injured individual to manifest neurobehavioral effects, including (as recognized in VA regulations) impulsivity, irritability, verbal aggression, lack of cooperation, and inflexibility. Yet under the proposed regulation, a caregiver-fiduciary of a veteran with any of those neurobehavioral issues could conceivably be at risk of removal. Where, for example, proposed regulations would hold a fiduciary of such a veteran responsible for such vague requirements as “being responsive to the beneficiary,” “correcting any discord or uncomfortable living situation,” or “addressing any complaints or concerns of the beneficiary,” there is a real risk that Fiduciary Program staff (who surely do not have neurobehavioral expertise) could misconstrue and overreact to a situation where “discord” or “complaints” are manifestations of the veteran’s brain injury, not maltreatment. Family caregivers who are fiduciaries should not be subjected to – or have to fear the possibility of – Fiduciary staff oversight into issues beyond their scope of professional expertise and under a corresponding threat of having their loved one’s financial management placed in the hands of a stranger.
Assisting the Fiduciary
The NPRM does acknowledge that certain fiduciary responsibilities are burdensome. Indeed a fiduciary’s financial responsibilities and newly established responsibilities for information-privacy-protection are not only burdensome, but quite technical. For example, not every parent or spouse has the technical understanding or experience to meet the requirement to “keep reasonably up-to-date firewall and virus protection and operating system security patches to maintain the integrity of the beneficiary’s private information” and the related requirements to “install[ ] software updates immediately upon release,” “use[ ] internet browser security settings suitable for transmission of private information, and maintain[ ] password-protected wireless connections or other networks.” Nor have Department requirements for fiduciary accountings necessarily been crystal clear or free of questions in circumstances where even an innocent error places the fiduciary at risk of a threatening letter warning of removal or, potentially, a field examination. Indeed the Department does not ask the Fiduciary simply to manage the veteran’s benefits to maintain his or her well-being. Under the NPRM, a family member serving as a fiduciary for the veteran must also be a fiscal manager, a prudent investor and a financial planner. In carrying out those challenging roles the Department would now impose competing duties. On the one hand, it directs the fiduciary to conserve or invest funds that are not immediately needed in order “to address unforeseen circumstances or plan for future care needs in light of the beneficiary’s circumstances and disabilities.” But it also warns that the fiduciary must not “accumulate an extraordinary amount of funds in a beneficiary’s account which the beneficiary is not able to use in his or her lifetime.” It is one thing for the Department to assert that the fiduciary must carry out these twin duties. But earnest family members striving to do the right thing will not necessarily find the path between fund-conservation and spending so straightforward. How are these family members to foresee the unforeseeable and set aside enough money, but not too much? How are they to foresee future care needs when health conditions may change markedly?
Given the extensive body of burdensome, demanding, and even complex requirements that the NPRM would impose on family members who are not professional financial managers, financial planners, or information-technology specialists, we urge that the proposed regulations include a section on “Responsibilities of VA to fiduciaries.” (Such a section would complement section 13.140, “Responsibilities of fiduciaries?”) We ask that such provisions articulate the principle that the Department will provide the fiduciary with basic tools, resources and technical assistance to carry out the fiduciary’s responsibilities. We see that family members who are caregivers and fiduciaries work very hard and in the best interest of the veteran to carry out their responsibilities, but many have reported difficulty in meeting Fiduciary Program requirements and even encountered harsh warnings and rebukes when their efforts have been deemed to miss the mark. The NPRM cites an intention “to change the culture in the fiduciary program.” Providing the fiduciary with technical support and software that is needed to carry out reasonable financial and information-privacy protection responsibilities would be a helpful step in achieving such a culture change. Articulating that program responsibility in regulation would offer recognition that the Department asks a great deal of these family members and that the goals of the Fiduciary Program would be aptly served if the Department provides helpful tools to meet its expectations.
We look forward to your careful consideration of these comments.
Background: In instances where a veteran is unable to manage his or her VA benefits, VA may appoint an individual or entity to manage the veteran’s benefits. VA has an oversight responsibility under law to assure that those VA benefits are managed in the best interest of the beneficiaries. VA reports that about 90,000 of the 95,000 fiduciaries in its program have one-on-one relationships with the veteran whose funds they are managing, and many are family members and friends. In meetings with VA officials as well as in testimony before Congress, WWP has urged that VA relax its demanding reporting requirements and scrutiny of family-member fiduciaries who have already demonstrated their trustworthiness under the VA caregiver-assistance program.
VA’s Proposed Regulations: VA oversight of the management of the funds of veterans who are unable to manage their VA benefits is important. But VA has wide latitude in how strictly it carries out that responsibility. Regrettably, it has opted both to maintain rigid, outdated policies and to add more. For example, while VA acknowledges in the proposed regulation that its oversight of fiduciaries who are family members can be “unduly intrusive” if it knows there is very little risk of exploitation of funds, it makes no change in policy to reduce that intrusiveness.
Among the many provisions of the proposed regulations, the following subject areas raise particular concerns:
Accountings: VA has not eased its requirements on annual fiduciary accountings. In describing its proposal, VA acknowledges that most fiduciaries are volunteer family members who have a one-on-one relationship with the beneficiary and that “the submission and auditing of accountings in every case in which a family member fiduciary would be unduly intrusive if VA knows that there is very little risk of exploitation of funds.” But no special provision is made for caregivers, parents or other nonspousal fiduciaries. The proposal would still require annual accountings from non-spousal fiduciaries when funds under management exceed $10,000 or the veteran beneficiary is receiving VA compensation at a total disability rating. The required accounting would cover all activity in the veteran’s accounts, not just income and expenditures from VA benefits. VA would also require submission of the accounting report not later than 30 days after the end of an accounting period; where VA requests a corrected or supplemental accounting, a fiduciary would have only 14 days to submit the requested material. (Failure to file a timely accounting can be a basis for removal as a fiduciary.)
Field Examinations: Current VA regulations authorize VA to perform field examinations involving the well-being of the veteran. But the proposed regulations broaden widely the scope of permissible field examinations and extend far beyond financial matters to include assessing the veteran’s (and veterans’ dependents) welfare and physical, and mental well-being, environmental and social conditions.
Fiduciary Responsibilities: Similarly, the regulations would “clarify” the scope of a fiduciary’s responsibilities – with failure to meet those responsibilities being grounds for removal. The proposed regulation sets out not only financial responsibilities but non-financial responsibilities as well (including “addressing any complaints or concerns of the beneficiary to the best of the fiduciary’s ability” and “correcting any…uncomfortable living or other situations when possible”). In addition, the proposed regulations establish demanding new requirements for maintaining the privacy of electronic records containing the beneficiary’s private information, to include keeping up-to-date firewall and virus protection and operating system security (the fiduciary must “install software updates immediately upon their release by the manufacturer”).
Bonding Requirement: The proposed regulations provide some greater clarity with regard to circumstances under which VA would require purchase of a surety bond (of varying values) as a method of protecting a beneficiary’s funds. Under the proposed regulations, VA would require non-spousal fiduciaries to furnish a security bond if the benefits that are due and to be paid will exceed $25,000. The fiduciary would be required to adjust the bond amount to account for any increase or decrease of more than 20% in the VA benefit funds and furnish proof of adequate bonding with each annual accounting, and at any other time proof is requested. The new regulations would allow fiduciaries to deduct the cost of the bond from the VA benefit funds the fiduciary is managing.
To read the new rules in its entirety: http://www.regulations.gov/#!documentDetail;D=VA-2014-VBA-0003-0001