Thank you for the opportunity to represent the views of veterans and their families who have had their lives upended by the so-called VA “fiduciary” program. The indignities that our most vulnerable veterans suffer under this flawed, if not failed, program is a national disgrace. Yet, VA officials allow the same harm to occur over and over again while opposing every effort by veterans to even learn who has their money. VA has erected innumerable barriers for veterans seeking benefits earned defending this country. But, with the stroke of a pen, VA can take back every dollar paid in the past and every dollar to be paid in the future. It happens every day. I sincerely believe that you will not find an area more worthy of your attention and fundamental reform than this out-of-control VA program.
I am an attorney based in Columbia, South Carolina, and have been practicing veterans law for over a decade. I have had the honor and pleasure of representing dozens of veterans of conflicts from World War II to the present and those affected by the infamous “lost laptop” in 2006. The views expressed in this statement are based on my personal knowledge of the VA “fiduciary” program’s abuses in cases from California, Indiana, Maine, Tennessee, and several in Texas.
Members of Congress and all citizens should understand how the VA “fiduciary” program really operates, not just how VA officials claim it works.
Today, elderly veterans will do without prescribed medicine, have the power to their homes threatened to be turned off, and be evicted, despite having thousands of dollars in the bank because a VA-appointed “fiduciary” would not provide those veterans with a single dollar more than VA approved for payment months or years ago.
Today, VA will ignore the expressed wishes of a veteran and the pleadings of his or her spouse, children, and caregivers and appoint a “fiduciary” to control the veteran’s finances, a “fiduciary” who has never met or spoken with the veteran or any family member.
Today, VA will demand physical access to an elderly veteran, the veteran’s home, and the entire family’s financial information.
Today, VA will ignore a valid Power of Attorney and disregard a State Court Order of Guardianship to assert authority over a veteran’s finances.
Today, VA will determine that a wife of more than 60 years with her full mental faculties is not qualified to make financial decisions for her veteran husband.
Today, VA will stop the direct deposit of the monthly benefits that a veteran relies upon for daily living expenses and authorize a person who has never spoken with, much less met, the veteran to seize all of the veteran’s bank accounts.
Today, VA will decide a veteran’s financial needs for the next three years based on a single hour-long interrogation by a VA “field examiner” who possesses no discernable expertise in finance, social work, mental health, or any other discipline reasonably viewed as pertaining to such a task.
Today, a VA-appointed “fiduciary” will sign a contract with VA that requires him or her to do only what VA tells him or her to do with a veteran’s money.
Today, VA will instruct that “fiduciary” to avoid meeting or even speaking with “their” veteran and to refuse to provide the veteran or family with any information about the veteran’s money.
Today, VA will withhold a 90 year old veteran’s benefits payments because his family refused to let VA invade his home or rifle through his family’s financial information.
Sadly, every one of the outrages described above has occurred in one or more of the cases in which I am involved – some more than once. Indeed, VA-appointed “fiduciaries” have – under oath – confirmed that these examples are in many ways typical of how the VA “fiduciary” program operates.
Mr. Chairman, VA’s acts would be outrageous if they involved VA money. But, worse still they involve veterans’ money that VA has already paid. Let me be very clear, the VA fiduciary program runs on veterans’ money – well over $3 billion of it. VA takes a veteran’s money and gives it to a stranger who does not know and does not want to know the veteran. VA takes the veteran’s money and pays that stranger a fee that can be over $100 each month, many times for writing a single check of an unvarying amount. VA takes the veteran’s money and pays $1,000 or more for surety bonds to protect against the VA-appointed “fiduciary” steals the veteran’s money. VA takes the veteran’s money and pays legal and other fees to enable the stranger to assert control over other aspects of the veteran’s life, including speaking for the veteran in VA benefits claims and appeals.
Ironically, VA regulations require strict due process protections for a veteran facing a proposal to merely reduce his or her monthly benefit payments. These protections include the right to a hearing, to present evidence, and to appeal the decision. Importantly, VA cannot implement a reduction in payments until the appeal process is complete. Yet, VA asserts that it can take every penny ever paid to a veteran and all future benefits payments by simply announcing the appointment of a “fiduciary.”
Until April 2011, VA did not even recognize a right to appeal a fiduciary appointment. Now, despite vigorous VA opposition, the Veterans Court has held that VA must allow a veteran to appeal a fiduciary appointment. But VA can still take and hold a veterans entire life savings while the VA “hamster wheel” churns on the appeal for years. The Subcommittee should note that since the April 2011 Freeman decision, only a single Statement of the Case (the first step in an appeal) has been issued in any of the fiduciary cases of which I have knowledge. With an appeal cycle to the Board of Veterans’ Appeals and the Veterans Court now taking 5 to 8 years, VA can take an elderly veteran’s money with practical impunity.
Reform of the so-called VA “fiduciary” program will be difficult. The program has run unchecked so long that is not recognizable as the aid to our most vulnerable veterans intended by Congress. Indeed, my personal conclusion is that defense of the program by VA officials is now a reflex action unmoored to any concern for fairness or effectiveness, as illustrated by the following observations.
First, the highest levels of VA management and legal counsel are personally aware of the facts in the cases in which I am involved, but they have uniformly refused to take any action in any case. I know this because I have participated in email exchanges and conference calls with senior VA officials where these and other clear examples of program overreaching. The officials either subsequently did not respond, terminated the exchange, or explicitly stated that they would not take any action.
Further casting doubt on VA’s interest in reforming the fiduciary program is that VA has vigorously opposed – and continues to vigorously oppose – every legal action to assert a veteran’s basic rights in the face of VA fiduciary program abuses. VA has fought every petition for relief to the Veterans Court, every federal district court lawsuit, and every state court action seeking review of VA fiduciary program abuses of which I am aware.
In a Texas state court action which may go to trial next week, VA even went so far as to attempt to intervene in a state case in which it was not a party and tried to remove the case to federal court the day before an expected adverse ruling. The federal district court remanded the case characterizing VA’s arguments as “unsupported” and “absurd.” However, the several month delay caused by VA’s baseless interference did mean that the veteran would not have his day in court: he died three weeks ago. His cause is being taken up by the son that VA accused in an internal email of trying to steal his father’s money.
Just two weeks ago in a case brought in Indiana state court, the defendant VA-appointed fiduciary (a bank) similarly removed that case to federal district court. The affidavit of defense counsel stated that the grounds for removal were “discovered” by the him “through discussions with the Indianapolis regional counsel for the Department of Veterans Affairs.” Only the VA General Counsel can explain why VA attorneys are helping delay an elderly veteran’s lawsuit by providing a legal strategy adverse to a veteran and for which VA was scolded by a federal judge less than a year earlier.
These are not the only times that VA has played fast and loose in court actions involving challenges to its authority to take a veteran’s money under the guise of appointing a “fiduciary.” As detailed in the filings in Freeman v. Shinseki, 24 Vet. App. 404 (2011), VA will argue whatever legal position is required to have a veteran’s case thrown out of a particular court. In federal district court, VA argues that only the Veterans Court has jurisdiction. In the Veterans Court, VA argues that the Veterans Court does not have jurisdiction. And, as described above, in state court VA argues that only federal district court can hear a fiduciary challenge.
Indeed, in the Texas veteran’s case discussed above, VA was caught unabashedly arguing in district court that the Veterans Court had exclusive jurisdiction and, at the same time and against the same veteran, arguing in the Veterans Court that the Veterans Court did not have jurisdiction. When the Veterans Court was alerted to the situation, VA filed an amended argument in the district court removing the conflicting position, which was described as an “error.” Again, only the VA General Counsel can explain a VA legal position that is based on protecting the fiduciary program from veterans asserting their rights.
Whatever else is true, Congress did not establish the VA fiduciary program to operate the way it does today. Indeed, Congress could not have done so because not even Congress can authorize a federal agency to take a citizen’s money without providing for a constitutional minimum of due process. A VA employee authorizing a stranger to surreptitiously seize a veteran’s bank accounts and benefit payments is not legal process of any kind, it is an unconstitutional taking.
To the extent that VA asserts that it has legal bases for its fiduciary program actions, it refuses to provide them. Co-counsel and I have repeatedly asked for the legal bases for VA actions in each and every one of our fiduciary cases. Each and every time the response has been silence. The only basis that I can discern from the entirety of my interactions with VA on this issue is that VA “has always done it this way.” Perhaps VA will be more responsive to the Subcommittee regarding the following issues:
- What is the legal basis for VA to ignore a valid Power of Attorney appointing a specific individual of the veteran’s choice as attorney-in-fact, fiduciary, or guardian of a veteran’s finances?
- What is the legal basis for VA to ignore a state court Order of Guardianship and to appoint a guardian in direct conflict with such an Order?
- What is the basis for directing financial institutions to provide a veteran’s financial accounts under the guise of a “fiduciary” relationship, when the purported “fiduciary” owes a contractual duty to VA and nothing to the veteran-beneficiary?
- What is the legal basis for denying a veteran-beneficiary access to basic information regarding the VA-appointed “fiduciary” and periodic information regarding the amount and location of the funds held in trust?
- Why is there not an actual and direct conflict of interest between a VA-appointed “fiduciary” with a contractual duty to do only what VA authorizes or face financial repercussions and the “highest duty of loyalty” a true fiduciary owes to a beneficiary?
- What conflicts, if any exist, between the duties and obligations of a VA-appointed “fiduciary” and the common law and state law fiduciary duties of loyalty, transparency, fair dealing, accounting, and similar duties of non-VA fiduciaries controlling beneficiary funds?
- What is the legal basis for the position that Congress intended that statutes governing the VA fiduciary program preempt state law or otherwise shield VA-appointed “fiduciaries” from compliance with state laws governing similarly empowered fiduciaries in the same state?
Mr. Chairman, every person to whom I have spoken who knows Secretary Shinseki, including a contemporary who was awarded the Medal of Honor during service in Vietnam, has told me that the Secretary is one of the most honorable and conscientious leaders ever to serve our country. Yet his agency, his command, not only tolerates this flawed fiduciary program, but attacks veterans who try to escape the program’s clutches. I can only conclude that for whatever reason, the VA officials with whom I have interacted have not told the Secretary what is happening on his watch.
After this hearing, the Secretary will no longer be in the dark. If, as his officials claim, the above examples are merely “isolated” cases, it should be a straightforward matter to correct the abuses in these few cases without significant effort or delay. I look forward to the Secretary’s immediate and personal leadership in correcting this national disgrace.
Finally, I offer a few suggestions for actions that the Secretary can immediately implement that will go a long way to repairing the damage done by the failed fiduciary program.
First, the Secretary can and should immediately order that VA take no action to seize a veteran’s finances or authorize a VA-appointed fiduciary to do so until any appeal of the decision to appoint a fiduciary is fully adjudicated and becomes final.
Second, the Secretary can and should immediately order that appeals of fiduciary matters be conducted under the same due process procedures as a reduction or severance of benefits, which provide for notice, an opportunity to present evidence and to be heard, and allow an appeal to the Veterans Court.
Third, the Secretary can and should order that every VA-appointed fiduciary recognize and comply with the duties of persons exercising similar fiduciary powers in the state in which they are located. As a minimum, the Secretary should order VA-appointed fiduciaries to provide fundamental financial information to beneficiaries on a routine basis and when reasonably requested and to provide complete explanations for the denial of any request for funds from the beneficiary.
Fourth, the Secretary can and should order revision of the documents used to appoint VA fiduciaries to make clear that fiduciaries have the independent authority – and the primary duty – to act in the best interest of the veteran, whether or not VA “approves” in advance.
Fifth, the Secretary can and should order that VA officials specifically state in writing the “reasons and bases” for appointment decisions and including how appointment of a VA fiduciary generally, and the selected fiduciary in particular, is in the best interests of veteran-beneficiary and provide that statement to the veteran-beneficiary and his or her legal representative.
I know of no reason why any of these actions require anything more than the Secretary’s mandate for these changes become the “way VA does it” while grander goals and policy changes grind their way through the agency.
Thank you again for this opportunity to speak on behalf of our country’s most vulnerable veterans and their families. I look forward to your questions and, hopefully, substantive changes in this failed program.
Douglas J. Rosinski earned a B.S., with distinction, in Physics & Astronomy from the University of Rochester in 1981 and a J.D., cum laude, from the University of South Carolina School of Law in 1997. He is admitted to practice law in the District of Columbia, Georgia, and South Carolina, numerous federal district and appellate courts, the United States Court of Appeals for Veterans Claims, and the United States Supreme Court. Mr. Rosinski is also accredited to represent veterans before the Department of Veterans Affairs.
Since 1997, Mr. Rosinski has concentrated his practice in administrative law and regulatory compliance. In 2000, he began litigating cases on behalf of veterans and their families before the Department of Veterans Affairs regional offices, the Board of Veterans’ Appeals, the United States Court of Appeals for Veterans Claims, federal district court, the United States Court of Appeals for the Federal Circuit Court, and the United States Supreme Court. In 2006, Mr. Rosinski was co-lead counsel in a class action on behalf of veterans that obtained the largest reported settlement in a case for Privacy Act violations. Mr. Rosinski currently practices veterans law with his own firm in Columbia, South Carolina.
In addition to his veteran’s practice, Mr. Rosinski has represented clients in licensing and enforcement actions before the Nuclear Regulatory Commission and Department of Energy on issues regarding federal regulations on the design, licensing, operation, and maintenance of a broad range of nuclear facilities.
Mr. Rosinski is a veteran of the United States Navy where he was a qualified submariner and nuclear engineering officer.
Mr. Rosinski is appearing before the Subcommittee as a private citizen and has not received any federal grant or contract relevant to the subject matter of his testimony.