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113th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    113-130

======================================================================

 
  AMENDING TITLE 38, UNITED STATES CODE, TO REQUIRE THE SECRETARY OF 
 VETERANS AFFAIRS TO INCLUDE AN APPEALS FORM IN ANY NOTICE OF DECISION 
               ISSUED FOR THE DENIAL OF A BENEFIT SOUGHT

                                _______
                                

 June 25, 2013.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

    Mr. Miller of Florida, from the Committee on Veterans' Affairs, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 1405]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Veterans' Affairs, to whom was referred 
the bill (H.R. 1405) to amend title 38, United States Code, to 
require the Secretary of Veterans Affairs to include an appeals 
form in any notice of decision issued for the denial of a 
benefit sought, having considered the same, report favorably 
thereon with amendment and recommend that the bill as amended 
do pass.

                                CONTENTS

                                                                   Page
Amendments.......................................................     2
Purpose and Summary..............................................     9
Background and Need for Legislation..............................     9
Hearings.........................................................    14
Subcommittee Consideration.......................................    15
Committee Consideration..........................................    15
Committee Votes..................................................    15
Committee Oversight Findings.....................................    16
Statement of General Performance Goals and Objectives............    16
New Budget Authority, Entitlement Authority, and Tax Expenditures    16
Earmarks and Tax and Tariff Benefits.............................    16
Committee Cost Estimate..........................................    16
Congressional Budget Office Estimate.............................    16
Federal Mandates Statement.......................................    19
Advisory Committee Statement.....................................    19
Constitutional Authority Statement...............................    19
Applicability to Legislative Branch..............................    19
Statement on Duplication of Federal Programs.....................    19
Disclosure of Directed Rulemaking................................    20
Section-by-Section Analysis of the Legislation...................    20
Changes in Existing Law Made by the Bill as Reported.............    22

                               Amendments

    The amendments are as follows:

  Strike all after the enacting clause and insert the 
following:

SECTION 1. INCLUSION OF NOTICE OF DISAGREEMENT FORMS IN NOTICES OF 
                    DECISIONS OF BENEFITS DENIALS ISSUED BY SECRETARY 
                    OF VETERANS AFFAIRS.

  (a) In General.--Section 5104(b) of title 38, United States Code, is 
amended--
          (1) by striking ``and (2)'' and inserting ``(2)''; and
          (2) by inserting before the period at the end the following: 
        ``, and (3) a form that may be used to file a notice of 
        disagreement to the decision''.
  (b) Effective Date.--The amendments made by subsection (a) shall 
apply with respect to decisions made by the Secretary under section 511 
of title 38, United States Code, on or after the date of the enactment 
of this Act.

SEC. 2. PROVISION OF STATUS UNDER LAW BY HONORING CERTAIN MEMBERS OF 
                    THE RESERVE COMPONENTS AS VETERANS.

  (a) Veteran Status.--
          (1) In general.--Chapter 1 of title 38, United States Code, 
        is amended by inserting after section 107 the following new 
        section:

``Sec. 107A. Honoring as veterans certain persons who performed service 
                    in the reserve components

  ``Any person who is entitled under chapter 1223 of title 10 to 
retired pay for nonregular service or, but for age, would be entitled 
under such chapter to retired pay for nonregular service shall be 
honored as a veteran but shall not be entitled to any benefit by reason 
of this section.''.
          (2) Clerical amendment.--The table of sections at the 
        beginning of such chapter is amended by inserting after the 
        item relating to section 107 the following new item:

``107A. Honoring as veterans certain persons who performed service in 
the reserve components.''.

  (b) Clarification Regarding Benefits.--No person may receive any 
benefit under the laws administered by the Secretary of Veterans 
Affairs solely by reason of section 107A of title 38, United States 
Code, as added by subsection (a).

SEC. 3. PROVISION OF ACCESS TO CASE-TRACKING INFORMATION.

  (a) In General.--Chapter 59 of title 38, United States Code, is 
amended by adding at the end the following:

``Sec. 5906. Provision of access to case-tracking information

  ``(a) In General.--(1) In accordance with subsection (b), the 
Secretary shall provide a covered employee with access to the case-
tracking system to provide a veteran with information regarding the 
status of a claim submitted by such veteran if such employee is acting 
under written permission or a power of attorney executed by such 
veteran.
  ``(2) In providing a covered employee with access to the case-
tracking system under paragraph (1), the Secretary shall ensure--
          ``(A) that such access--
                  ``(i) is provided in a manner that does not allow 
                such employee to modify the data contained in such 
                system; and
                  ``(ii) does not include access to medical records; 
                and
          ``(B) that each time a covered employee accesses such system, 
        the employee must certify that such access is for official 
        purposes only.
  ``(b) Privacy Certification Course.--The Secretary may not provide a 
covered employee with access to the case-tracking system under 
subsection (a)(1) unless the covered employee has successfully 
completed a certification course on privacy issues provided by the 
Secretary.
  ``(c) Treatment of Disclosure.--The access to information by a 
covered employee pursuant to subsection (a)(1) shall be deemed to be--
          ``(1) a covered disclosure under section 552a(b) of title 5; 
        and
          ``(2) a permitted disclosure under regulations promulgated 
        under section 264(c) of the Health Insurance Portability and 
        Accountability Act of 1996 (42 U.S.C. 1320d-2 note).
  ``(d) Definitions.--In this section:
          ``(1) The term `case-tracking system' means the system of the 
        Department of Veterans Affairs that provides information 
        regarding the status of a claim submitted by a veteran.
          ``(2) The term `covered employee' means an employee of a 
        State or local governmental agency (including a veterans 
        service officer) who, in the course of carrying out the 
        responsibilities of such employment, assists veterans with 
        claims for any benefit under the laws administered by the 
        Secretary.''.
  (b) Clerical Amendment.--The table of sections at the beginning of 
such chapter is amended by adding at the end the following new item:

``5906. Provision of access to case-tracking information.''.

SEC. 4. 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) 
if the Secretary determines that the request is made in good faith 
and--
          ``(A) the fiduciary requested to be removed receives a fee 
        from the beneficiary and a suitable volunteer fiduciary is 
        available to assist the beneficiary; or
          ``(B) the beneficiary provides credible information that the 
        fiduciary requested to be removed is--
                  ``(i) not acting in the interest of the beneficiary 
                ;or
                  ``(ii) unable to effectively serve the beneficiary 
                because of an irreconcilable personality conflict or 
                disagreement.
  ``(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.''.

  (b) Supervision.--
          (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.
          ``(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.
  ``(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.
  ``(f) Assistance.--The Secretary shall provide to a fiduciary 
appointed under section 5502 of this title materials and tools to 
assist the fiduciary in carrying out the responsibilities of the 
fiduciary under this chapter, including--
          ``(1) handbooks, brochures, or other written material that 
        explain the responsibilities of a fiduciary under this chapter;
          ``(2) tools located on an Internet website, including forms 
        to submit to the Secretary required information; and
          ``(3) assistance provided by telephone.''.
          (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 determining whether a proposed fiduciary is required 
to furnish a bond under subsection (a)(4), the Secretary shall 
consider--
          ``(1) the existence of any familial or other personal 
        relationship between the proposed fiduciary and the 
        beneficiary; and
          ``(2) the care the proposed fiduciary has taken to protect 
        the interests of the beneficiary.
  ``(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 ``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.--Except as provided by subsection (f), 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 
                provided under any law administered by the Secretary 
                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) Caregivers and Certain Other Fiduciaries.--(1)(A) In carrying 
out this section, the Secretary shall ensure that a caregiver fiduciary 
is required only to file an annual report or accounting under 
subsection (a) with respect to the amount of the benefits of the 
beneficiary provided under any law administered by the Secretary--
          ``(i) spent on--
                  ``(I) food and housing for the beneficiary; and
                  ``(II) clothing, health-related expenses, recreation, 
                and other personal items for the beneficiary; and
          ``(ii) saved for the beneficiary.
  ``(B) The Secretary shall coordinate with the Under Secretary for 
Benefits and the Under Secretary for Health to--
          ``(i) minimize the frequency with which employees of the 
        Department visit the home of a caregiver fiduciary and 
        beneficiary; and
          ``(ii) limit the extent of supervision by such Under 
        Secretaries with respect to such a fiduciary and beneficiary.
  ``(C) In this paragraph, the term `caregiver fiduciary' means a 
fiduciary who--
          ``(i) in addition to acting as a fiduciary for a beneficiary, 
        is approved by the Secretary to be a provider of personal care 
        services for the beneficiary under paragraph (3)(A)(i) of 
        section 1720G(a) of this title;
          ``(ii) in carrying out such care services to such 
        beneficiary, has undergone not less than four home visits under 
        paragraph (9)(A) of such section; and
          ``(iii) has not been required by the Secretary to take 
        corrective action pursuant to paragraph (9)(C) of such section.
  ``(2) In carrying out this section, the Secretary may adjust the 
matters required under an annual report or accounting under subsection 
(a) with respect to a fiduciary whom the Secretary determines to have 
effectively protected the interests of the beneficiary over a sustained 
period.''; 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.

SEC. 5. LIMITATION ON AWARDS AND BONUSES TO EMPLOYEES OF DEPARTMENT OF 
                    VETERANS AFFAIRS.

  For each of fiscal years 2014 through 2018, the Secretary of Veterans 
Affairs may not pay more than $345,000,000 in awards or bonuses under 
chapter 45 or 53 of title 5, United States Code, or any other awards or 
bonuses authorized under such title.

    Amend the title to read:
    A bill to amend title 38, United States Code, to require 
the Secretary of Veterans Affairs to include a notice of 
disagreement form in any notice of decision issued for the 
denial of a benefit sought, to improve the supervision of 
fiduciaries of veterans under the laws administered by the 
Secretary of Veterans Affairs, and for other purposes.

                          Purpose and Summary

    H.R. 1405 was introduced on March 25, 2013, by 
Representative Dina Titus of Nevada. H.R. 1405, as amended, 
incorporates provisions from H.R. 679, introduced by 
Representative Timothy J. Walz of Minnesota, H.R. 733, 
introduced by Representative Jon Runyan of New Jersey; and H.R. 
894, as amended, introduced by Representative Bill Johnson of 
Ohio. Together, these provisions would require the inclusion of 
a Notice of Disagreement Form within notices of decisions of 
benefits denials issued by Department of Veterans Affairs (VA); 
honor America's Guard-Reserve retirees; increase accessibility 
to case-tracking information on pending claims; and improve 
fiduciary services for veterans. H.R. 1405, as amended, also 
makes reasonable modifications to the overall amount of bonuses 
at VA.

                  Background and Need for Legislation


  SECTION 1--INCLUSION OF NOTICE OF DISAGREEMENT FORMS IN NOTICES OF 
 DECISIONS OF BENEFITS DENIALS ISSUED BY SECRETARY OF VETERANS AFFAIRS

    Currently, section 5104 of title 38, United States Code, 
states that the Secretary must notify a claimant of any 
benefits decision made and, in cases where the Secretary denies 
the benefit sought, the claimant must also be notified of the 
reasons for the decision and a summary of the evidence that was 
considered. This provision would amend this section to also 
require the Secretary to provide a specific Notice of 
Disagreement form along with any notice of decision issued for 
the denial of a benefit sought.
    Although VA provides veterans with specific forms for most 
filings related to benefits claims, there is currently no 
specific form provided for filing a Notice of Disagreement, the 
document that initiates the process by which a claimant may 
appeal an adverse benefits decision. Pursuant to section 7105 
of title 38, United States Code, any form may be used to file a 
Notice of Disagreement, so long as it is in writing and 
expresses disagreement with the rating decision that was 
issued. Due to this leniency, it is sometimes unclear to raters 
processing a claim when a veteran is expressing disagreement 
with a decision. This may ultimately lead to unnecessary delays 
in review and resolution of the veteran's claim. Accordingly, 
Section 1 of H.R. 1405, as amended, requires VA to provide a 
specific form that will assist the veteran in clarifying intent 
when it comes to appealing an adverse benefits decision.

SECTION 2--PROVISION OF STATUS UNDER LAW BY HONORING CERTAIN MEMBERS OF 
                   THE RESERVE COMPONENTS AS VETERANS

    Section 2 of H.R. 1405, as amended, is derived from H.R. 
679, introduced by Representative Timothy J. Walz of Minnesota. 
The National Guard and Reserve Component of the United States 
Armed Forces perform an invaluable role and are an important 
part of our overall force structure. They support the active 
duty component of the United States military by responding in 
times of national emergency, ready to be called to active-duty 
service in times of need.
    Section 101(2) of title 38, United States Code, defines a 
``veteran'' as ``a person who served in the active military, 
naval, or air service, and who was discharged or released 
therefrom under conditions other than dishonorable.'' 
Generally, persons not meeting that definition are ineligible 
for the full range of rights and benefits extended under the 
law.
    Speaking on behalf of Section 2 of H.R. 1405, as amended, 
Representative Walz commented that the failure to recognize 
those who have served 20 or more years in the Reserve and 
National Guard as ``veterans'' is not right. National Guard and 
Reserve members who completed 20 or more years of service wore 
the same uniform as active-duty servicemembers, were subject to 
the same code of military justice, received the same training, 
and were available for call-up to active-duty service at any 
time. Representative Walz noted that having someone who served 
in uniform for 20 years feel badly about referring to 
themselves as a veteran is simply wrong.
    Section 2 of H.R. 1405, as amended, would confer honorary 
veteran status on those individuals who are entitled under 
chapter 1223 of title 10, United States Code, to retired pay 
for nonregular service or who would be entitled to retired pay, 
but for age. Further, section 2 of H.R. 1405, as amended, would 
ensure that those who receive the honorary recognition as 
``veteran'' conferred in the bill would not be entitled to any 
benefit under the laws administered by the Secretary of 
Veterans Affairs solely by reason of such recognition.

      SECTION 3--PROVISION OF ACCESS TO CASE-TRACKING INFORMATION

    Section 3 of H.R. 1405, as amended, is derived from H.R. 
733, originally introduced by Representative Jon Runyan of New 
Jersey. This section would allow certain State or local 
government employees to access read-only information regarding 
the status of pending claims. Privacy concerns would be 
addressed through requirement of the veteran's written 
permission or power of attorney, through an employee's 
certification upon each access, and through required VA privacy 
training.
    The need for this legislation has been raised several times 
by County Veteran Service Officers (CVSOs). One of the main 
issues repeatedly presented is the lack of access to claims 
file information, which impedes CVSOs' ability to answer 
veterans' questions about their claims. Although many veterans 
use a nationally chartered veteran service organization (VSO) 
as their Power of Attorney (POA) during the claims process, 
this contact is often unable to timely respond to veterans' 
status requests due to workload constraints. Therefore, this 
legislation aims to provide such access, which should assist in 
preventing veterans from filing duplicate claims and 
overburdening VA.

           SECTION 4--IMPROVEMENT OF FIDUCIARIES FOR VETERANS

    Section 4 of H.R. 1405, as amended, is derived from H.R. 
894, originally introduced by Representative Bill Johnson of 
Ohio, and provides reforms to the VA's fiduciary program. 
Specifically, chapter 55 of title 38, United States Code, 
provides authority for the VA Fiduciary Program, which is 
intended to help veterans and other VA beneficiaries who are 
deemed by the Secretary of Veterans Affairs to be mentally 
incompetent for purposes of handling their financial affairs. 
In such cases, the Secretary appoints a fiduciary who, by 
statute, is only authorized to receive and manage benefits 
administered by the Secretary on behalf of the beneficiary. The 
fiduciary is responsible for ensuring that a beneficiary's 
bills are paid on time and that a beneficiary receives money to 
pay for food, shelter, clothing, medical expenses, and other 
necessities.
    The framework established in chapter 55 allows the 
Department a great deal of latitude in implementing the 
Fiduciary Program. Section 4 of H.R. 1405, as amended, is 
designed to transform the VA's Fiduciary Program to better 
serve the needs of our most vulnerable veterans and their 
hardworking fiduciaries, and to protect veterans in the program 
from falling victim to deceitful and criminal fiduciaries. 
Section 4 of H.R. 1405, as amended, overhauls the VA Fiduciary 
Program, making many necessary reforms to address problems 
identified in recent years and realigns chapter 55 to a 
structure more consistent with other amended sections of title 
38.
    Section 4 of H.R. 1405, as amended, provides the Secretary 
with authority to appoint a temporary fiduciary, if one is 
needed to protect the benefits of a VA beneficiary while a 
determination of incompetency is being made or appealed or a 
fiduciary is appealing a determination of misuse. The Secretary 
would be able to appoint temporary fiduciaries for up to 120 
days. Under current law, a VA beneficiary who is appointed a 
fiduciary has the right to appeal the decision. However, the 
appeals process within VA's Fiduciary Program is difficult, 
slow, and often results in healthy, capable veterans being 
unable to remove themselves from the program. Section 4 of H.R. 
1405, as amended, would require the Secretary to provide a 
written statement to a beneficiary determined to be mentally 
incompetent for purposes of appointing a fiduciary, which would 
detail the reasons for such determination, and would allow a 
veteran to appeal the finding of incompetence at any time. This 
provision not only enables a veteran to remain out of the 
fiduciary program if medical evidence supports such a position, 
it also allows a veteran who has sufficiently recovered at a 
later time to return to managing his or her own financial 
affairs.
    Section 4 of H.R. 1405, as amended, would also allow a 
veteran to request the appointment of a new fiduciary if it is 
perceived that the current fiduciary is not acting in the best 
interest of the veteran or has an irreconcilable personality 
conflict or disagreement. The Secretary may deny the removal of 
an appointed fiduciary if it is determined that the request was 
not made in good faith, and shall ensure that the delivery of 
benefits is not interrupted if a previous fiduciary is removed 
and a new one appointed.
    Section 4 of H.R. 1405, as amended, would enable a veteran 
to designate a preferred fiduciary ahead of time, such as a 
family member or guardian. While the Secretary would not be 
required to appoint the designated fiduciary, the reason for 
not appointing that fiduciary would have to be presented in 
writing to the veteran as would a notice of the veteran's right 
to modify the appointment. In many cases, a veteran may already 
have a family member or court-appointed guardian acting as a 
fiduciary for other benefits, and in cases where the veteran 
was happy with the fiduciary's performance of those duties, a 
sensible approach would be to maintain that relationship.
    Under certain circumstances, the Secretary may decide that 
a paid fiduciary is in a veteran's best interest. Section 
5502(a)(2) of title 38, United States Code, states that a 
fiduciary may receive a commission for his or her efforts, but 
that commission may not exceed four percent of the monetary 
benefits a beneficiary receives in one year. Investigations, 
hearings, and media reports identified many problems in the 
Fiduciary Program arising from paid fiduciaries receiving more 
than the amount authorized under law, including receiving 
commissions from retroactive and lump sum payments to veterans. 
Further, evidence also revealed VA field examiners directing 
fiduciaries to take income from non-VA benefits as well, an 
action explicitly not authorized in law. In many of these 
instances, the veteran beneficiary still did not receive basic 
funding for food, clothing, and shelter that should have been 
administered by the fiduciary.
    Hearings and investigations have indicated that current law 
and policy regarding commissions paid to fiduciaries are 
frequently violated throughout the nation; additionally, the 
commission rate paid to VA-appointed fiduciaries is already 
higher than that paid by the Social Security Administration 
(SSA) under the Representative Payee Program, the SSA's 
equivalent to VA's Fiduciary Program. In comparison to the 
approximately 120,000 beneficiaries under VA's Fiduciary 
Program, the Social Security Representative Payee Program deals 
with approximately 7.8 million beneficiaries.
    Section 4 of H.R. 1405, as amended, reduces the commission 
rate paid to fiduciaries, if the Secretary determines that a 
paid fiduciary is in the best interest of the veteran, to not 
more than 3% of the veteran's monthly benefits, or $35 per 
month, whichever is less. Any desire by VA to increase this 
rate would require congressional authorization. This commission 
rate would give VA's Fiduciary Program a similar structure to 
the SSA's Representative Payee Program and will reduce the 
profit motive of predatory fiduciaries. The section also 
clarifies that commission payments are not to be derived from 
retroactive or lump sum payments; that fiduciaries who are 
determined to misuse a veteran's benefits may not receive 
commissions; that fiduciaries found to be misusing funds may 
have their status as fiduciaries revoked; that the Secretary 
may seek compensation in a court of law from fiduciaries found 
to misuse benefits or fiduciaries who fail to adequately 
account for a veteran's benefits; and that funds remaining with 
a paid fiduciary after a veteran's passing shall escheat to the 
federal government. Reducing the financial incentive for a 
predatory fiduciary to apply to VA's Fiduciary Program provides 
further assurance that participants are working in the best 
interest of vulnerable veterans.
    During past investigations and hearings, concerns arose 
regarding the qualifications of fiduciaries. Documented cases 
existed of convicted felons serving as fiduciaries as well as 
fiduciaries with no knowledge of or training regarding their 
duties to the veteran. Many cases of embezzlement of a 
veteran's funds could have been prevented with a basic 
background check of a fiduciary, but VA frequently used its 
authority to waive the current background check requirement for 
appointment of a fiduciary, and failed to follow up at a later 
point in time to determine the suitability of the appointed 
fiduciary.
    Section 4 of H.R. 1405, as amended, improves the 
qualification process for fiduciaries as well as oversight of 
fiduciaries already appointed by requiring the Secretary to 
perform civil and criminal background investigations and a 
face-to-face interview prior to certifying an individual as a 
fiduciary. To address concerns that performing background 
checks may slow the fiduciary appointment process, authority is 
provided to the Secretary to expedite background checks where 
necessary. This section would also protect veterans' sensitive 
personal information and would require the furnishing of a bond 
when required by the Secretary before certifying an individual 
as a fiduciary. Concerns were raised by veterans service 
organizations that the requirement of a bond for family or 
caregiver fiduciaries causes undue hardship upon those closest 
to the veteran; to address these concerns, Section 4 of H.R. 
1405, as amended, would allow the Secretary to consider the 
existence of a familial or personal relationship between the 
proposed fiduciary and beneficiary, as well as the care the 
proposed fiduciary has taken to protect the interests of the 
beneficiary.
    Many documented cases also exist where a veteran had never 
met nor heard from his or her fiduciary, in addition to cases 
where VA experienced difficulty contacting fiduciaries it had 
appointed. This lack of accountability on the part of 
fiduciaries, coupled with VA's lack of oversight, contributed 
to veterans not receiving the necessary funds to pay basic 
utilities and predatory fiduciaries making a profit at the 
expense of the veteran. To address this, Section 4 of H.R. 
1405, as amended, contains a provision that would require an 
annual accounting by fiduciaries that will consist of benefits 
earned, benefits disbursed, and the remaining balance as well 
as other sources of income for that veteran that the fiduciary 
controls. The fiduciary must also report any events affecting 
his or her ability to serve the veteran including criminal 
convictions, bankruptcy filings, and judgments filed against 
the fiduciary, and any events reported in the annual accounting 
may be considered by the Secretary in determining a fiduciary's 
ability to serve the best interest of the veteran. The annual 
report would be transmitted to the veteran beneficiary or 
guardian.
    Section 4 of H.R. 1405, as amended, also provides for 
specific treatment of caregiver fiduciaries, ensuring that a 
limited annual report is required. The Secretary is given 
discretion to adjust the matters required under an annual 
report or accounting with respect to a caregiver fiduciary whom 
the Secretary determines to have effectively protected the 
interests of the beneficiary over a sustained period, including 
the parameters for the posting of bond as mentioned above. 
Additionally, the Veterans Benefits Administration and the 
Veterans Health Administration are required to coordinate and 
minimize the frequency with which employees of the Department 
visit the home of a caregiver fiduciary and beneficiary and 
limit the extent of supervision by such Under Secretaries with 
respect to such a fiduciary and beneficiary.

SECTION 5--LIMITATION ON AWARDS AND BONUSES TO EMPLOYEES OF DEPARTMENT 
                          OF VETERANS AFFAIRS

    Section 5 of H.R. 1405, as amended, places a limit on total 
funds permitted to be used towards VA performance awards or 
bonuses for the next five fiscal years. VA currently disburses 
an annual average of approximately $400,000,000 in bonuses, 
awards, and other incentives. These incentives include Group 
Cash Awards, Travel Savings Incentives, Individual Cash Awards 
(Not Rating Based), Presidential Rank Awards, SES Performance 
Awards, Individual Cash Awards (Rating Based), Individual 
Suggestion/Invention Awards, Group Suggestion/Invention Awards, 
Foreign Language Awards, Group Awards--Other, Specialty 
Certification Awards, Exemplary Job Performance/Achievement 
Awards, Lump Sum Performance Payments (Rating Based--In Lieu of 
Pay Adjustment), Lump Sum Performance Payments (Rating Based 
Not in Lieu of Pay Adjustment), Lump Sum Performance Payments 
(Not Rating Based), Retention Incentives, Recruitment 
Incentives, and Relocation Incentives. In addition, VA also 
awards Individual Time Off Awards--Hours and Group Time Off 
Awards--Hours, which are not readily quantified into dollar 
amounts.
    The Office of Personnel Management (OPM) issues a guide to 
federal agencies for processing these awards, many of which are 
covered under title 5, United States Code. Further policy for 
awarding bonuses and other incentives is established by VA's 
Office of Human Resources Management. This policy is then 
executed at multiple levels throughout VA all the way down to 
facility directors.
    In a November 14, 2011, report titled ``Audit of Retention 
Incentives for Veterans Health Administration and VA Central 
Office Employees,'' (VAOIG 10-02887-30) VA's Office of 
Inspector General (VAOIG) identified that approving officials 
within both the Department of Veterans Affairs Central Office 
(VACO) and the Veterans Health Administration (VHA) did not 
adequately justify retention incentive awards. In the awards 
reviewed, VAOIG also consistently identified missing support 
documentation to accompany the award. More recently, concerns 
have been raised regarding VA's provision of merit-based 
bonuses to managers and supervisors who have led troubled 
offices, including Veterans Health Administration medical 
centers with demonstrated incidences of gross negligence in 
care, and VBA positions where a growing inventory of claims and 
poor workload management practices abound.
    The VAOIG's findings were consistent with the Committee's 
findings of bonuses being awarded to employees with less than 
satisfactory performance and retention incentives being awarded 
to employees who had stated their intention to retire in the 
very near future. The proposed reduction under section 5 of the 
bill, which does not include additional time off awards, would 
leave sufficient funding for VA to award suitable bonuses and 
other incentives to deserving employees.

                                Hearings

    On April 16, 2013, the Subcommittee on Disability 
Assistance and Memorial Affairs conducted a legislative hearing 
on various bills introduced during the 113th Congress, 
including H.R. 679 (from which section 2 of H.R. 1405, as 
amended, is derived), H.R. 733 (from which section 3 of H.R. 
1405, as amended, is derived), H.R. 894 (from which section 4 
of H.R. 1405, as amended, is derived), and H.R. 1405. The 
following witnesses testified:
    The Honorable Bill Johnson, U.S. House of Representatives; 
The Honorable Chellie Pingree, U.S. House of Representatives; 
The Honorable Timothy J. Walz, U.S. House of Representatives; 
Mr. Jeff Hall, Assistant National Legislative Director, 
Disabled American Veterans; Mr. Raymond Kelley, Director of 
National Legislative Service, Veterans of Foreign Wars; Colonel 
Robert F. Norton, USA (Ret.), Deputy Director of Government 
Relations, Military Officers Association of America; Heather 
Ansley, Esq., MSW, Vice President of Veterans Policy, 
VetsFirst, a program of United Spinal Association; Mr. Michael 
D. Murphy, Executive Director, National Association of County 
Veterans Service Officers; Mr. Richard Hipolit, Assistant 
General Counsel, U.S. Department of Veterans Affairs; Mr. David 
R. McLenachen, Director, Pension and Fiduciary Service, U.S. 
Department of Veterans Affairs, accompanied by Ms. Mary Ann 
Flynn, Deputy Director, Policy and Procedures, Compensation 
Service, U.S. Department of Veterans Affairs. The following 
groups submitted statements for the record: The American 
Legion; Iraq and Afghanistan Veterans of America; National 
Organization of Veterans Advocates; and Wounded Warrior 
Project.

                       Subcommittee Consideration

    On April 25, 2013, the Subcommittee on Disability 
Assistance and Memorial Affairs met in an open markup session, 
a quorum being present, and favorably forwarded to the full 
Committee H.R. 894 and H.R. 1405, as amended, by voice vote.
    During consideration of H.R. 1405, the following amendment 
was considered:
    An amendment in the nature of a substitute offered by Ms. 
Titus of Nevada that modified the original text to clarify that 
the standardized appeal form included in the mailing is to be a 
Notice of Disagreement, and that incorporated amended 
provisions from H.R. 679 and H.R. 733, to limit case-tracking 
information access by requiring written permission or power of 
attorney, as well as limiting access to employees of a State or 
local governmental agency was agreed to by voice vote.

                        Committee Consideration

    On May 8, 2013, the full Committee met in an open markup 
session, a quorum being present, and ordered H.R. 1405 reported 
favorably to the House of Representatives by voice vote.
    During consideration of H.R. 1405 the following amendment 
was considered: An amendment in the nature of a substitute 
offered by Ms. Titus of Nevada that incorporated provisions of 
H.R. 894, originally offered by Representative Bill Johnson of 
Ohio, with amendment to clarify a veteran's ability to request 
the appointment of a new fiduciary, and to provide certain 
considerations to caregiver fiduciaries, was agreed to by voice 
vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the recorded 
votes on the motion to report the legislation and amendments 
thereto. There were no recorded votes taken on amendments or in 
connection with ordering H.R. 1405, as amended, reported to the 
House. A motion by Ranking Member Michael H. Michaud of Maine 
to report H.R. 1405, as amended, favorably to the House of 
Representatives was agreed to by voice vote.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII and clause 
(2)(b)(1) of rule X of the Rules of the House of 
Representatives, the Committee's oversight findings and 
recommendations are reflected in the descriptive portions of 
this report.

         Statement of General Performance Goals and Objectives

    In accordance with clause 3(c)(4) of rule XIII of the Rules 
of the House of Representatives, the Committee's performance 
goals and objectives are reflected in the descriptive portions 
of this report.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                  Earmarks and Tax and Tariff Benefits

    H.R. 1405, as amended, does not contain any congressional 
earmarks, limited tax benefits, or limited tariff benefits as 
defined in clause 9 of rule XXI of the Rules of the House of 
Representatives.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate on H.R. 
1405, as amended, prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

               Congressional Budget Office Cost Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
for H.R. 1405, as amended, provided by the Congressional Budget 
Office pursuant to section 402 of the Congressional Budget Act 
of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 15, 2013.
Hon. Jeff Miller,
Chairman, Committee on Veterans' Affairs,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1405, a bill to 
amend title 38, United States Code, to require the Secretary of 
Veterans Affairs to include a notice of disagreement form in 
any notice of decision issued for the denial of a benefit 
sought, to improve the supervision of fiduciaries of veterans 
under laws administered by the Secretary of Veterans Affairs, 
and for other purposes.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Dwayne M. 
Wright.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

H.R. 1405--A bill to amend title 38, United States Code, to require the 
        Secretary of Veterans Affairs to include a notice of 
        disagreement form in any notice of decision issued for the 
        denial of a benefit sought, to improve the supervision of 
        fiduciaries of veterans under laws administered by the 
        Secretary of Veterans Affairs, and for other purposes

    Summary: H.R. 1405 would make changes to certain 
administrative procedures and programs of the Department of 
Veterans Affairs (VA), including the fiduciary program, access 
to case-tracking information, and limits on bonuses for 
employees. CBO estimates that implementing H.R. 1405 would 
yield net discretionary savings of $108 million over the 2014-
2018 period, assuming appropriation actions consistent with the 
bill.
    Pay-as-you-go procedures do not apply to this legislation 
because it would not affect direct spending or revenues.
    H.R. 1405 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 1405 is shown in the following table. 
The costs of this legislation fall within budget function 700 
(veterans benefits and services).

----------------------------------------------------------------------------------------------------------------
                                                            By fiscal year, in millions of dollars--
                                               -----------------------------------------------------------------
                                                   2014       2015       2016       2017       2018    2014-2018
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Limit on Awards and Bonuses to VA Employees:
    Estimated Authorization Level.............        -54        -58        -62        -66        -70       -310
    Estimated Outlays.........................        -54        -58        -62        -66        -70       -310
Improvement of Fiduciary Program for Veterans:
    Estimated Authorization Level.............         19         38         39         40         40        176
    Estimated Outlays.........................         19         38         39         40         40        176
Provision of Access to Case-Tracking System:
    Estimated Authorization Level.............          6          5          5          5          5         26
    Estimated Outlays.........................          6          5          5          5          5         26
    Total Changes:
        Estimated Authorization Level.........        -29        -15        -18        -21        -25       -108
        Estimated Outlays.....................        -29        -15        -18        -21        -25      -108
----------------------------------------------------------------------------------------------------------------
Note: VA = Department of Veterans Affairs.

    Basis of estimate:

Limit on awards and bonuses to VA employees

    Section 5 would limit the amount that VA could pay in 
awards and bonuses to VA employees to $345 million per year 
over the 2014-2018 period.
    For 2013, the amount of allowable payments was capped at 
$395 million. Assuming such payments will increase from that 
level at historical rates of growth, CBO estimates that 
implementing section 5 would reduce spending for pay and 
performance by $310 million over the 2014-2018 period, assuming 
appropriation actions consistent with the bill.

Improvement of fiduciary program for veterans

    Section 4 would make significant changes to VA's fiduciary 
program. That program provides or approves fiduciaries for 
veterans who cannot manage their financial affairs. The 
fiduciaries receive and manage the veterans' benefits on their 
behalf. The provision would require VA to:
           Determine the competency of individuals 
        appointed as fiduciaries;
           Remove certain fiduciaries deemed 
        incompetent and review the files of fiduciaries 
        appealing such decisions;
           Maintain a list of state, local, or 
        nonprofit agencies that could perform fiduciary duties;
           Update the qualifications and procedures for 
        certifying a fiduciary to include: visits to proposed 
        fiduciaries, Internet training, and criminal background 
        and credit checks;
           Require that all fiduciaries provide 
        pertinent accounting details for VA verification; and
           Notify veterans if a requested fiduciary is 
        unqualified and why, and provide veterans with a notice 
        of certified fiduciaries.
    Section 4 also would require VA to maintain a database of 
all fiduciaries and to submit a report to the Congress on the 
progress of the program.
    Based on information from VA, CBO estimates that about 460 
additional employees would need to be hired to carry out the 
requirements of section 4 at an average annual cost of about 
$80,000 per employee in 2014 and increasing thereafter with 
inflation. We also estimate that the information technology 
systems necessary to maintain the database would cost about $1 
million per year. In total, CBO estimates that implementing 
section 4 would cost $176 million over the 2014-2018 period, 
assuming appropriation of the necessary amounts.

Provision of access to case-tracking system

    Section 3 would require VA to provide certain individuals, 
referred to as covered employees, access to VA's case-tracking 
system in order to provide veterans with information regarding 
the status of claims submitted to VA. Covered employees under 
section 3 would include Members of the Congress and their staff 
and certain employees of state and local agencies who assist 
veterans with claims for benefits.
    This access would be limited so that covered employees 
would not be able to alter any information in the system or 
have access to any medical records. Covered employees also 
would be required to complete a certification course on privacy 
issues that would be provided by VA.
    CBO expects that about 8,000 Congressional, state, and 
local employees would take training courses each year and be 
granted access at a cost of about $600 per employee. VA also 
would need to modify their system to ensure limited access. CBO 
estimates that implementing section 3 would increase spending 
for information technology by $26 million over the 2014-2018 
period, assuming appropriation of the necessary amounts.

Notice of disagreement

    Section 1 would require VA to include a form that could be 
used to file a notice of disagreement when a claimant's 
application for benefits is denied. Under current law, when an 
application for benefits is denied, the claimant is provided 
with a written notice of the decision, a statement of the 
reasons for the denial, and a summary of evidence used to 
support the denial. CBO estimates that including an additional 
form with that notification would have an insignificant cost.
    Intergovernmental and private-sector impact: H.R. 1405 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would not affect the budgets of state, 
local, or tribal governments.
    Estimate prepared by: Federal Costs: Dwayne M. Wright; 
Impact on State, Local, and Tribal Governments: Lisa Ramirez-
Branum; Impact on the Private Sector: Elizabeth Bass.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates regarding H.R. 1405, as amended, prepared by the 
Director of the Congressional Budget Office pursuant to section 
423 of the Unfunded Mandates Reform Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act would be created by H.R. 
1405, as amended.

                 Statement of Constitutional Authority

    Pursuant to Article I, section 8 of the United States 
Constitution, the reported bill is authorized by Congress' 
power to ``provide for the common Defense and general Welfare 
of the United States.''

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

              Statement on Duplication of Federal Programs

    Pursuant to section 3(j) of H. Res. 5, 113th Cong. (2013), 
the Committee finds that no provision of H.R. 1405, as amended, 
establishes or reauthorizes a program of the Federal Government 
known to be duplicative of another Federal program, a program 
that was included in any report from the Government 
Accountability Office to Congress pursuant to section 21 of 
Public Law 111-139, or a program related to a program 
identified in the most recent Catalog of Federal Domestic 
Assistance.

                   Disclosure of Directed Rulemaking

    Pursuant to section 3(k) of H. Res. 5, 113th Cong. (2013), 
the Committee estimates that H.R. 1405, as amended, does not 
require any directed rule makings.

             Section-by-Section Analysis of the Legislation


Section 1--Inclusion of Notice of Disagreement Forms in Notices of 
        Decisions of Benefits Denials Issued by Secretary of Veterans 
        Affairs

    Section 1(a) would require VA to provide claimants with a 
standardized form to appeal adverse benefits decisions in the 
form of a Notice of Disagreement.
    Section 1(b) would set an effective date, which makes this 
section effective to VA decisions on or after date of enactment 
of this Act.

Section 2--Provision of status under law by honoring certain members of 
        the reserve components as veterans

    Section 2(a) would honor as a veteran any person entitled 
to retired pay for nonregular service or who would be entitled 
to retired pay, but for age, would be so entitled.
    Section 2(b) would clarify that no VA benefits attach to 
any individual solely by the individual's recognition as 
``veteran'' under this Act.

Section 3--Provision of access to case-tracking information

    Section 3(a) would add a new section, 5906, to chapter 59 
of title 38, United States Code, to provide certain covered 
employees, to include certain State or local governmental 
agency employees, with access to case-tracking information from 
the Veterans Benefits Administration, and would require covered 
employees certify that each access is for official purposes 
only. The covered employee would not have access to certain 
private records such as medical records and would not be able 
to modify data in the system. This section would require the 
covered employees to complete a required privacy certification 
course, would provide that the case-tracking access is a 
permitted disclosure under the Health Insurance Portability and 
Accountability Act of 1996, and would provide necessary defined 
terms.

Section 4--Improvement of fiduciaries for veterans

    Section 4(a) would amend section 5502 of chapter 55 of 
title 38, United State Code, to revise the process for 
appointment of fiduciaries. Section 4(a) would allow for the 
appointment of a fiduciary, including a temporary fiduciary for 
a period not to exceed 120 days. Section 4(a) would require VA 
to provide a written statement to the veteran detailing the 
reasons for the appointment of a fiduciary and implement an 
appeals process which would allow a veteran to challenge the 
finding of mental incompetence. It would also allow a veteran 
to request the modification of an appointed fiduciary. Section 
4(a) would establish that a fiduciary operates independently of 
VA to act in the best interest of the beneficiary, would allow 
predesignation of a fiduciary, and would require the Secretary 
to provide a veteran notice as to why a different fiduciary, 
rather than the predesignated fiduciary, was appointed for the 
veteran beneficiary, and would require notice of ability to 
modify the appointment. Section 4(a) would also set a priority 
of appointment of fiduciary, to include relatives, court 
appointed guardian, or individual holding a power of attorney.
    Section 4(b) would amend chapter 55 of title 38, United 
States Code, by adding a new section 5502A, which would 
decrease the commission appointed fiduciaries may receive. The 
rate would be set at the lesser of either 3% of monthly 
benefits or $35. It would also allow VA attorneys to appear in 
a court of appropriate jurisdiction against any fiduciary who 
has failed to execute the duties of a VA appointed fiduciary. 
Section 4(b) would permit VA to temporarily make payments to 
the person or institution having custody and control of an 
incompetent or minor beneficiary. Upon the death of a 
beneficiary, section 4(b) would direct fiduciaries to pay all 
remaining funds overseen by fiduciaries to any surviving 
spouse, or in equal parts to any children, or in equal parts to 
any dependent parents. It would also require that if a 
beneficiary did not have a spouse, children, or dependent 
parents, and lived in a state where the beneficiary's assets 
would escheat to the state, any funds derived from VA benefits 
would then escheat to the United States. Section 4(b) would 
also require the Secretary to provide a fiduciary with tools 
such as written materials and Internet materials.
    Section 4(c) would amend section 5506 of chapter 55 of 
title 38, United States Code, to require VA to expand the 
definition of a person eligible to serve as a fiduciary to 
include state and local government agencies and nonprofits, and 
compel VA to maintain a list of state or local agencies and 
nonprofit social agencies who qualify to act as a fiduciary.
    Section 4(d) would amend section 5507 of chapter 55 of 
title 38, United States Code, to mandate that VA investigate 
each fiduciary before an appointment and allow VA to expedite 
the investigation for certain proposed fiduciaries. The 
investigation would include a face-to-face interview no more 
than 30 days after the investigation begins and a background 
check which would include a criminal background check and a 
credit check. The background check would be performed each time 
a person is proposed as a fiduciary. It would also require VA 
to notify the beneficiary if a fiduciary is convicted of 
certain crimes. This part would also require VA to maintain 
records of any person who previously served as a fiduciary and 
any fiduciary whose status was revoked and would require each 
regional office to maintain a list with the name and contact 
information of each fiduciary and include pertinent information 
related to each fiduciary's background investigation, bond 
payment, and the amount the fiduciary controls for each 
beneficiary served. Section 4(d) would require the Secretary to 
consider the fiduciary's relationship to the beneficiary, such 
as familial or personal relationships when determining bond.
    Section 4(d) would also require VA to investigate alleged 
misuse of benefits, and, if substantiated, to transmit the 
results of the investigation to the Attorney General and each 
head of a federal department or agency that pays benefits to 
fiduciaries or beneficiaries. It would also require VA to 
ensure that any bond furnished by a fiduciary was not paid 
using funds from the beneficiary and to consider the care a 
proposed fiduciary has taken to protect the interests of the 
beneficiary while also considering the capacity of the proposed 
fiduciary to meet the financial requirements of the bond.
    Section 4(e) would amend section 5509 of chapter 55 of 
title 38, United States Code, to require fiduciaries to file an 
annual report to include the amount of benefits the beneficiary 
accrued during the year, if the fiduciary serves the 
beneficiary for non-VA benefits, an accounting of all other 
sources of income the fiduciary oversees for the beneficiary, 
and whether the fiduciary was convicted of any crime, filed 
bankruptcy, and any judgments entered against the fiduciary. It 
would require VA to perform random audits of fiduciaries who 
receive a commission. Section 4(e) would also require the Under 
Secretary of Benefits and the Under Secretary for Health to 
promulgate regulations that would not diminish the ability of 
fiduciaries providing care under chapter 17, title 38, United 
States Code, to care for beneficiaries.
    Section 4(f) would amend section 6107 of chapter 61 of 
title 38, United States Code, to amend provision for repayment 
of misused benefits. Specifically, section 4(f) would provide 
that the Secretary's failure to act in accordance with section 
5507 would constitute negligent failure under section 6107.
    Section 4(g) would amend VA annual reporting requirements, 
and would require the Secretary to submit a separate report on 
fiduciaries not later than July 1 of each year to the Committee 
on Veterans' Affairs of the Senate and the Committee on 
Veterans' Affairs of the House of Representatives.
    Section 4(h) would require VA to provide, within one year 
of enactment, a report to the Committee on Veterans' Affairs of 
the Senate and the Committee on Veterans' Affairs of the House 
of Representatives on the implementation of the new policies 
and a discussion on whether VA should offer fiduciaries 
standardized financial software to comply with reporting 
requirements.

Section 5--Limitation on awards and bonuses to employees of Department 
        of Veterans Affairs

    Section 13 would require VA to limit the total amount paid 
in performance awards or bonuses for each of fiscal years 2014 
through 2018 to $345,000,000.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

TITLE 38, UNITED STATES CODE

           *       *       *       *       *       *       *



PART I--GENERAL PROVISIONS

           *       *       *       *       *       *       *


                           CHAPTER 1--GENERAL


Sec.
101. Definitions.
     * * * * * * *
107A. Honoring as veterans certain persons who performed service in the 
          reserve components.

           *       *       *       *       *       *       *


Sec. 107A. Honoring as veterans certain persons who performed service 
                    in the reserve components

  Any person who is entitled under chapter 1223 of title 10 to 
retired pay for nonregular service or, but for age, would be 
entitled under such chapter to retired pay for nonregular 
service shall be honored as a veteran but shall not be entitled 
to any benefit by reason of this section.

           *       *       *       *       *       *       *


PART IV--GENERAL ADMINISTRATIVE PROVISIONS

           *       *       *       *       *       *       *


           CHAPTER 51--CLAIMS, EFFECTIVE DATES, AND PAYMENTS


SUBCHAPTER I--CLAIMS

           *       *       *       *       *       *       *



Sec. 5104. Decisions and notices of decisions

  (a) * * *
  (b) In any case where the Secretary denies a benefit sought, 
the notice required by subsection (a) shall also include (1) a 
statement of the reasons for the decision, [and (2)] (2) a 
summary of the evidence considered by the Secretary, and (3) a 
form that may be used to file a notice of disagreement to the 
decision.

           *       *       *       *       *       *       *


           CHAPTER 55--MINORS, INCOMPETENTS, AND OTHER WARDS


Sec.
5501. Commitment actions.
[5502. Payments to and supervision of fiduciaries.]
5502. Appointment of fiduciaries.
5502A. Supervision of fiduciaries.
     * * * * * * *
[5509. Authority to require fiduciary to receive payments at regional 
          offices of the Department when failing to provide required 
          accounting.]
5509. Annual reports and accountings of fiduciaries.
     * * * * * * *

           *       *       *       *       *       *       *


[Sec. 5502. Payments to and supervision of fiduciaries

  [(a)(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. 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.
  [(2) 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 beneficiary's estate a reasonable commission for 
fiduciary services rendered, but the commission for any year 
may not exceed 4 percent of the monetary benefits under laws 
administered by the Secretary paid on behalf of the beneficiary 
to the fiduciary during such year. 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.
  [(b) 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) 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) 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) 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.]

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) if the Secretary determines that the request is made in 
good faith and--
          (A) the fiduciary requested to be removed receives a 
        fee from the beneficiary and a suitable volunteer 
        fiduciary is available to assist the beneficiary; or
          (B) the beneficiary provides credible information 
        that the fiduciary requested to be removed is--
                  (i) not acting in the interest of the 
                beneficiary;or
                  (ii) unable to effectively serve the 
                beneficiary because of an irreconcilable 
                personality conflict or disagreement.
  (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.

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.
          (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.
  (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.
  (f) Assistance.--The Secretary shall provide to a fiduciary 
appointed under section 5502 of this title materials and tools 
to assist the fiduciary in carrying out the responsibilities of 
the fiduciary under this chapter, including--
          (1) handbooks, brochures, or other written material 
        that explain the responsibilities of a fiduciary under 
        this chapter;
          (2) tools located on an Internet website, including 
        forms to submit to the Secretary required information; 
        and
          (3) assistance provided by telephone.

           *       *       *       *       *       *       *


Sec. 5506. Definition of ``Fiduciary''

  [For purposes] (a) For purposes of this chapter and chapter 
61 of this title, the term ``fiduciary'' means--
          (1) * * *

           *       *       *       *       *       *       *

  (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)).

[Sec. 5507. Inquiry, investigations, and qualification of fiduciaries

  [(a) 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, such inquiry or investigation--
                  [(A) to be conducted in advance of such 
                certification;
                  [(B) to the extent practicable, to include a 
                face-to-face interview with such person; and
                  [(C) to the extent practicable, to include a 
                copy of a credit report for such person issued 
                within one year of the date of the proposed 
                appointment;
          [(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); and
          [(3) the furnishing of any bond that may be required 
        by the Secretary.
  [(b) As part of any inquiry or investigation of any person 
under subsection (a), the Secretary shall request information 
concerning whether that person has been convicted of any 
offense under Federal or State law which resulted in 
imprisonment for more than one year. 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.
  [(c)(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 
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. 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; 
        or
          [(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.
  [(d) Temporary Fiduciaries.--When in the opinion of the 
Secretary, a temporary fiduciary is needed in order to protect 
the assets of the beneficiary 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.]

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 determining whether a proposed fiduciary is 
required to furnish a bond under subsection (a)(4), the 
Secretary shall consider--
          (1) the existence of any familial or other personal 
        relationship between the proposed fiduciary and the 
        beneficiary; and
          (2) the care the proposed fiduciary has taken to 
        protect the interests of the beneficiary.
  (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).

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Sec. 5509. [Authority to require fiduciary to receive payments at 
                    regional offices of the Department when failing to 
                    provide required accounting] Annual reports and 
                    accountings of fiduciaries

  (a) Required Reports and Accountings.--The Secretary [may 
require a fiduciary to file a] shall require a fiduciary to 
file an annual report or accounting pursuant to regulations 
prescribed by the Secretary. The Secretary shall transmit such 
annual report or accounting to the beneficiary and any legal 
guardian of such beneficiary.

           *       *       *       *       *       *       *

  (c) Matters Included.--Except as provided by subsection (f), 
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 provided under any law administered 
                by the Secretary 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) Caregivers and Certain Other Fiduciaries.--(1)(A) In 
carrying out this section, the Secretary shall ensure that a 
caregiver fiduciary is required only to file an annual report 
or accounting under subsection (a) with respect to the amount 
of the benefits of the beneficiary provided under any law 
administered by the Secretary--
          (i) spent on--
                  (I) food and housing for the beneficiary; and
                  (II) clothing, health-related expenses, 
                recreation, and other personal items for the 
                beneficiary; and
          (ii) saved for the beneficiary.
  (B) The Secretary shall coordinate with the Under Secretary 
for Benefits and the Under Secretary for Health to--
          (i) minimize the frequency with which employees of 
        the Department visit the home of a caregiver fiduciary 
        and beneficiary; and
          (ii) limit the extent of supervision by such Under 
        Secretaries with respect to such a fiduciary and 
        beneficiary.
  (C) In this paragraph, the term ``caregiver fiduciary'' means 
a fiduciary who--
          (i) in addition to acting as a fiduciary for a 
        beneficiary, is approved by the Secretary to be a 
        provider of personal care services for the beneficiary 
        under paragraph (3)(A)(i) of section 1720G(a) of this 
        title;
          (ii) in carrying out such care services to such 
        beneficiary, has undergone not less than four home 
        visits under paragraph (9)(A) of such section; and
          (iii) has not been required by the Secretary to take 
        corrective action pursuant to paragraph (9)(C) of such 
        section.
  (2) In carrying out this section, the Secretary may adjust 
the matters required under an annual report or accounting under 
subsection (a) with respect to a fiduciary whom the Secretary 
determines to have effectively protected the interests of the 
beneficiary over a sustained period.

Sec. 5510. Annual report

  [The Secretary shall include in the Annual Benefits Report of 
the Veterans Benefits Administration or the Secretary's Annual 
Performance and Accountability Report] 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 information concerning 
fiduciaries who have been appointed to receive payments for 
beneficiaries of the Department. As part of such information, 
the Secretary shall separately set forth the following:
          (1) * * *

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                    CHAPTER 59--AGENTS AND ATTORNEYS


Sec.
5901. Prohibition against acting as claims agent or attorney.
     * * * * * * *
5906. Provision of access to case-tracking information.

           *       *       *       *       *       *       *


Sec. 5906. Provision of access to case-tracking information

  (a) In General.--(1) In accordance with subsection (b), the 
Secretary shall provide a covered employee with access to the 
case-tracking system to provide a veteran with information 
regarding the status of a claim submitted by such veteran if 
such employee is acting under written permission or a power of 
attorney executed by such veteran.
  (2) In providing a covered employee with access to the case-
tracking system under paragraph (1), the Secretary shall 
ensure--
          (A) that such access--
                  (i) is provided in a manner that does not 
                allow such employee to modify the data 
                contained in such system; and
                  (ii) does not include access to medical 
                records; and
          (B) that each time a covered employee accesses such 
        system, the employee must certify that such access is 
        for official purposes only.
  (b) Privacy Certification Course.--The Secretary may not 
provide a covered employee with access to the case-tracking 
system under subsection (a)(1) unless the covered employee has 
successfully completed a certification course on privacy issues 
provided by the Secretary.
  (c) Treatment of Disclosure.--The access to information by a 
covered employee pursuant to subsection (a)(1) shall be deemed 
to be--
          (1) a covered disclosure under section 552a(b) of 
        title 5; and
          (2) a permitted disclosure under regulations 
        promulgated under section 264(c) of the Health 
        Insurance Portability and Accountability Act of 1996 
        (42 U.S.C. 1320d-2 note).
  (d) Definitions.--In this section:
          (1) The term ``case-tracking system'' means the 
        system of the Department of Veterans Affairs that 
        provides information regarding the status of a claim 
        submitted by a veteran.
          (2) The term ``covered employee'' means an employee 
        of a State or local governmental agency (including a 
        veterans service officer) who, in the course of 
        carrying out the responsibilities of such employment, 
        assists veterans with claims for any benefit under the 
        laws administered by the Secretary.

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CHAPTER 61--PENAL AND FORFEITURE PROVISIONS

           *       *       *       *       *       *       *



Sec. 6107. Reissuance of benefits

  (a) Negligent Failure by Secretary.--(1) * * *
  (2) There shall be considered to have been a negligent 
failure by the Secretary to investigate and monitor a fiduciary 
in the following cases:
          (A) * * *

           *       *       *       *       *       *       *

          (C) In any other case in which actual negligence is 
        shown, including by the Secretary not acting in 
        accordance with section 5507 of this title.

           *       *       *       *       *       *       *