Instead of Helping, Trustee Program Is Hurting Veterans, Families Say

THe New York Times: Instead of Helping, Trustee Program Is Hurting Veterans, Families Say
LANCASTER, Tex. — During the Korean War, Billy Brown faced enemy bullets, starvation and bitter cold. Now the benefits that he earned for his sacrifice have been tied up by the Department of Veterans Affairs, which in 2009 diverted his payments to trustees who have taken control not only of those funds, but of his life savings of some $100,000 as well.

Richard Wortham, Mr. Brown’s son, gained power of attorney for his father four years before the department stepped in, and found out about his father’s new financial minder only when he tried to withdraw money from the bank. “They said we no longer had access to his money — we could only get it from the fiduciary,” Mr. Wortham said.

What began as a broad effort to safeguard ailing veterans and their families from financial loss and abuse has turned into what lawyers and veterans’ advocates call a mismanaged and poorly regulated bureaucracy that not only fails to respond to veterans’ needs but in some cases creates new problems.

Families of veterans like Mr. Brown, 80, and William E. Freeman, whose sister was denied the ability to manage his benefits, and beneficiaries like Dennis Keyser, whose appointed trustee turned out to be a felon, say the system is badly flawed.

The person the department appointed to handle Mr. Brown’s affairs, Marcus Brown (no relation), listed his occupation as a “cabinet specialist” and has a high school education; the family said he informed them that they would have to petition him for purchases. While the family has not accused Marcus Brown of abusing the funds — and his lawyer, Logan Odeneal, notes that his client has served as a manager of benefits for some 80 veterans and “his accountings always balance to the penny” — the family found him unresponsive and chafed at what they saw as an unnecessary imposition.

When Mr. Wortham fought the appointment in court, the department argued that such decisions were theirs alone to make and beyond appeal or judicial review.

“The process the V.A. has, it’s not working,” Mr. Wortham said, sitting at the foot of his father’s bed in a nursing home here. “It’s not working for Dad, and it’s not working for other veterans.”

The department says it has appointed people to manage 111,407 accounts with a cumulative value of more than $3.2 billion. They earn up to 4 percent commission on the money under their care. The department, in a statement, said that beneficiaries had access to due process before a final decision was reached about appointing a beneficiary, and that the financial managers were carefully vetted. Once appointed, they “may also be required to prepare annual accountings.” In making the choice, the agency said, “priority is given to a family member if qualified and willing to serve.”

The department’s inspector general has warned, however, that the department does not do enough to protect its veterans from the risks of faithless fiduciaries. A report last year said that the program was not “effectively protecting the V.A.-derived income and estates of incompetent beneficiaries” or providing “effective oversight.”

The report stated that 315 fraud investigations from October 1998 to March 2010 had “resulted in 132 arrests and monetary recoveries of $7.4 million in restitution, fines, penalties and administrative judgments.”

Thomas J. Pamperin, deputy under secretary for disability assistance at the department’s Veterans Benefits Administration, declined to discuss individual cases, except to say “there are always two sides to a story.” He said if family members felt an appointment was inappropriate, they could ask the department to review the decision, and the “the program office would consider that,” he said.

He stressed that the number of court cases concerning such matters was small, and that while some family members might feel otherwise, “we are extremely cognizant of the need to look out for the veterans’ best interest, and not to be capricious and arbitrary in our actions.”

Douglas J. Rosinski, a lawyer in Columbia, S.C., who represents Mr. Brown’s family and three other families with complaints about the system, disagreed. “There are many hundreds, if not thousands of potential cases” around the country, he said, and called abuses of the system “a hidden tragedy of the most defenseless of our veterans.”

Jim Strickland, who runs the Web site VAwatchdogtoday.org, said that cases like those of Mr. Brown, Mr. Freeman and Mr. Keyser were “happening all over the country.”

“The law says veterans have the right to due process,” he said, but “when the fiduciary process is initiated, that all goes out the window.”

Mr. Keyser, 40, got a double shock concerning the manager of his benefits. Because he has cerebral palsy, Mr. Keyser had been receiving his late father’s benefits for several years. But last summer, the telephone line for the department’s appointee, James M. Hammonds, was disconnected. Mr. Keyser’s caretaker, Bob Albertson, did some digging and discovered that Mr. Hammonds had been convicted of tax fraud. Then he dug a bit further and discovered that Mr. Hammonds had died in May.

Another veteran in the Dallas area, Mr. Freeman, 56 and schizophrenic, had moved in with his sister, Debora Allen. Ms. Allen, who also takes care of her father, obtained veterans benefits for her older brother and expected to be named his benefits manager since she had obtained power of attorney.

But she said the department had deemed her ineligible because she was unemployed — which she needs to be, she said, so she can care full-time for her family. “They said: ‘This is what we decided. It’s better if we handle it. We have the right people,’ ” she recalled. When she asked the department for some of her brother’s money for a car so she could drive him to doctors’ appointments, she was turned down. “It’s his money!” she said.

When families have sued, the government generally responds with briefs stating that the decision to appoint a fiduciary is solely within the jurisdiction of the Department of Veterans Affairs and not subject to judicial review. The government’s strategy in state cases is to say that only the federal court system established for veterans’ cases can review the claims — but the government has also told the United States Court of Appeals for Veterans Claims that those decisions “are entirely discretionary” under the veterans affairs secretary and so “the court has no jurisdiction” over appointment protests.

Katrina Eagle, a veterans advocate in California, filed a brief in the Freeman case recently, decrying what she called a “cynical litigation strategy” that deprives veterans of due process rights under the Fifth Amendment. “Like many other veterans with V.A.-appointed fiduciaries, Mr. Freeman has been trapped in a legal quagmire because the secretary asserts that whatever tribunal is hearing a challenge does not have jurisdiction to hear that challenge,” Ms. Eagle said.

Mr. Rosinski, Billy Brown’s lawyer, said, “You have more process with a traffic ticket than you do with this.”

The path of Mr. Brown’s case has been particularly tortuous. In January, after a hearing in a Texas court in which a judge stated that he was inclined to assert jurisdiction in the matter, Mr. Wortham received a letter from the veterans department announcing that it had appointed a new manager for his father’s benefits.

A local lawyer for Mr. Brown’s family, Don Uloth, persuaded a judge to issue a temporary restraining order prohibiting any of Mr. Brown’s funds from being transferred or sent to anyone but Mr. Wortham or Mr. Brown.

But the day after receiving the department’s letter, and a day before the judge’s action, the department closed all of Mr. Brown’s bank accounts and sent all of his funds to the new manager of benefits. Then last month, the government got the case transferred to federal court — a move that Mr. Rosinski suggests was intended only to delay matters and to avoid, at least temporarily, an unfriendly decision. Since then, the department has frozen payments of Mr. Brown’s allowance, a move that Mr. Rosinski characterized as retribution.

Meanwhile, Mr. Brown’s life continues to ebb. He suffers from chronic pulmonary obstructive disease and diabetes, and has had at least one stroke.

“There’s nobody beyond the law,” Mr. Wortham said in promising to continue to fight to get his father’s money back under his family’s control. “I’ll be here to my last dying breath, fighting for my dad.”