Pending Benefits Legislation analyzed, solutions offered, by the National Academy of Elder Law Attorneys.

In our previous post we discussed the primary areas of concern that the The National Academy of Elder Law Attorneys (NAELA) has provided the Department of Veterans’ Affairs after analyzing S. 747, the Veterans Pension Protection Act.

Now, we will discuss the two remaining areas of testimony that NAELA has offered.

Accreditation for Representation of Veterans and Solutions 

As of June 23, 2008, all persons who engage in the representation of a claimant before the Department of Veterans’ Affairs with the preparation, presentation, and prosecution of a claim for benefits must be accredited by the VA.

To become accredited, the individual must submit VA Form 21a, Application for Accreditation as a Claims Agent or Attorney. The General Counsel will presume an attorney’s character and fitness to practice before VA based on State bar membership in good standing unless the General Counsel receives credible information to the contrary. In the event the the applicant is a non-attorney, the applicant must also take and pass a written examination.

The purpose of accreditation was to ensure that claimants for veterans’ benefits have responsible, qualified representation. The sole purpose of the VA’s accreditation examination for non-lawyers is to determine objectively whether an agent has the qualifications necessary to provide competent representation before the Department. Additionally required for accreditation is no less than three hours of qualifying CLE within the first 12 months of accreditation and then another three hours within every 24 months thereafter.

The problems with accreditation and proposed solutions:

(1) (a) Problem: The VA has stated that it has neither the authority nor jurisdiction to sanction non-accredited agents from assisting claimants with claims before the VA. The standard response is: (i) for non-lawyers, report them to the state bar for unauthorized practice of law (which is not successful if it is a financial advisor selling financial products) and (ii) for lawyers, if they are not accredited “then there is nothing we can do.”

(b) Solution: The VA needs statutory authority to issue (a) injunctive orders and (b) cease and desist orders. The VA can collaborate with other federal agencies to minimize abuse of non-accredited agents from assisting claimants, such as (i) state insurance commissioners, (ii) state bars, and others. In addition, Veteran Service Organizations (VSOs), attorneys, and others should be allowed to file requests for investigation to the VA General Counsel’s office.

Thus, when a person files a complaint to the VA, the VA can enlist the assistance of the other agencies to investigate whether the practices the individual employed were appropriate for the client and situation or if alternative action is necessary.

(2) (a) Problem: The VA does not have the staff or resources to verify attorneys are members in good standing of a state bar upon initial accreditation or upon annual re-certification.

(b) Solution: Hire three full time employees or independent contractors to verify the standing of lawyers on an annual basis. This can be verified by going directly to the state bar websites or calling the bar. Also, the VA can collaborate with the state bars to receive a list each year of attorneys who have been reprimanded, suspended or disbarred. (c) Solution: Enlist one accredited attorney from each state to do a year-end status report of all accredited attorneys in the state.

(3) (a) Problem: The application for VA accreditation is unclear as to whether a member in good standing of a state bar would be stripped of accreditation if the member had a reprimand on his or her record. Specifically, question 20 directly asks about reprimands; however, an attorney may receive a reprimand and still be a member in good standing of his or her bar.

(b) Solution: (i) clarify whether a reprimand would be cause for losing accreditation; (ii) if so, when the annual verification in (1)(b) is implemented, then verify this information as well; (iii) if not, then remove the question as it relates to “reprimand” from the application for accreditation.

(4) (a) Problem: Financial advisors are permitted to take the accreditation exam. Once accredited, they are permitted to assist with the preparation, presentation, and prosecution of claims (for free). Many of the abusers creating harm to veterans are financial advisors, both accredited and non-accredited, who sell the claimant inflexible financial products that then have a probability of making it difficult or impossible for the veteran to afford long-term care in a skilled nursing home. The financial advisor tells the claimant he or she will “do the application for free” but the claimant must invest all their assets with the advisor’s company, wherein the advisor receives commissions or fees from the management of assets.

(d) Solution: Do not allow any financial advisors or insurance sales professionals to become accredited agents.

(5) (a) Problem: Many people “help” claimants with their applications under the guise of “education” about the process, but do not actually assist with the preparation of the application or represent the person before the VA. These “helpers” are not accredited and do not believe they need to be because they are only “educating” the claimant on how to fill out a claim, but are not actually completing the claim.

(b) Solution: Add a question on the VA application forms, such as, “If you are not using a Veteran Service Organization (VSO) or accredited lawyer as your 21-22a Representative, list all persons who gave you information or assisted you in any way with the preparation of your VA application process for benefits.”

(6) (a) Problem: To maintain accreditation, only 3 hours of continuing legal education is required within the first 12 months, and then only 3 hours thereafter every 24 months. Three hours is barely sufficient to learn the basics of complicated VA claims issues regarding applications and appeals.

 (b) Solution: Most state bars require a certain number of continuing legal education credits. Increase the number of hours required on an annual basis to be no less than three hours annually (instead of bi-annually).

Case Scenarios 

It has been questioned why claimants need to seek the advice from an attorney when filing a claim for benefits, specifically, improved pension. Pointedly, can’t the claimants get the assistance they need from available Veteran Service Organizations (VSO’s)? NAELA recognizes that VSOs are helpful and necessary to the veteran population; however, there are more claimants than can be adequately served by VSOs. Moreover, VSOs appear to be trained to assist service connected veterans with claims and appeals, and many are not fully trained in or fully informed about the improved pension program.

Further, elder law attorneys are also knowledgeable about other benefits programs, such as Medicaid, and can advise clients when other programs may be more appropriate for the client, or on the interplay between programs.

Listed below are just a few real situations that show the importance and necessity for accredited, trained lawyers to be available and of assistance to veterans, particularly with regard to the improved pension benefit.

1. Overall, VSOs are great with appealing service-connected disability claims. However, they are widely unaware of the Improved Pension program and often will either tell a possible claimant that benefits do not exist or give information that will actually harm the claimant. In the best case scenario, they are application compilers who then forward the applications to the VA.

2. VSO advised client who was applying for VA Improved Pension with A&A that the spouse’s income did not have to be reported. Result: overpayment by the VA, demand repayment.

3. VSO advised client that the sale of a home place would not jeopardize VA Improved Pension with A&A. Result: Sale of the home place created excess assets and claimant’s benefits were terminated.

4. VSO not being aware of the VA Fast Letter issued October 2012 regarding treatment of unreimbursed medical expenses. Result: Claimant did not provide sufficient medical evidence to verify the need. Claim denied due to excess income (due to the VA not counting permissible medical deductions).

5. VSO advised an elderly veteran (over age 65) who was healthy and independent, but had a spouse living in a nursing home, that there were no benefits available to the veteran. Result: Loss of $1,359 per month ($16,340 per year) of income from the VA to help offset the cost of the veteran’s spouse’s nursing home costs (Improved Pension).

How Gray Areas in Existing Pension Rules Attract “Scammers”

Rather than making it more difficult for veterans or their surviving spouses to qualify (and in addition to the suggestions that we have made regarding accreditation), we suggest changes to the existing VA pension rules that will eliminate “gray areas” that allow scammers to take advantage of veterans.

By eliminating these confusing provisions, you will be addressing the root of the problem. The following are examples within the existing VA pension rules that we consider “gray areas” or “problem areas” that should be corrected.

Problem Area 1: There is currently no limit on the amount of assets a veteran or surviving spouse can own and yet qualify for VA pension. Instead, a subjective test is used to determine whether the claimant has sufficiently few assets to qualify for help from the VA.

The applicable rules defining net worth are as follows: 38 CFR §3.274 which states, “Pension shall be denied or discontinued when the corpus of the estate of the veteran and veteran’s spouse are such that, when considering annual income, it is reasonable that some part of the corpus be consumed for the veteran’s maintenance.”

38 CFR §3.275, which defines corpus of the estate as, “Market value, less mortgages or other encumbrances, of all real and personal property owned by the claimant, except the claimant’s dwelling, including a reasonable lot area, and personal effects consistent with claimant’s reasonable mode of life.”

This type of vague definition of net worth leaves veterans and their surviving spouses with no clue about what level of assets would allow them to be eligible for a VA pension. This, in turn, leaves them vulnerable to unscrupulous scammers wishing to take advantage of unclear rules, perhaps resulting in the veteran purchasing a financial product that may or may not be exempt as an asset, or being convinced to invest more money into a financial product than they can really afford. Moreover, the vague definition of net worth exacerbates the backlog problem because those claimants with excess resources, if they knew what the excess resource limit was, would not prematurely or unnecessarily apply for benefits. The result would be fewer claims being filed and quicker adjudication of eligible claims.

Solution: Set an appropriate limit on assets for an unmarried veteran or surviving spouse, and an appropriate limit on assets for a married veteran. Problem Area 2: Specific assets that may be countable (because they are outside the exemptions mentioned in 38 CFR §3.275) are not defined anywhere in the United States Code or Code of Federal Regulations.

For example, retirement assets are currently treated as income and as an asset by Pension Management Centers, despite no current regulation that supports this position. Annuities that have no principal value but are paying out a set amount of income and principal each month are being treated as an asset, although there is no current rule or regulation to support this position. As a result of this type of ambiguity in the rules, veterans or their surviving spouses cannot readily verify information provided to them by outside sources, thus making them vulnerable to unscrupulous scammers.

Solution 2: Provide clear definitions of countable and non-countable assets within the United States Code and Code of Federal Regulations.

Problem Area 3: Unless a veteran or surviving spouse was aware of and knew how to obtain General Counsel Opinions, he or she would have no knowledge of the fact that a self-settled special needs trust is considered a countable asset by the VA for pension purposes. Likewise, he or she would have no knowledge of the fact that a life estate interest in real property will be ignored for VA pension purposes. A self-settled special needs trust and a life estate interest in property are commonly-used tools in estate planning, but can be very harmful to the unknowing veteran or surviving spouse given the current position of the VA.

Solution 3: Consider a rule that will make a properly drafted self-settled special needs trust for a disabled person an exempt resource for VA purposes. Also, add an additional provision (perhaps as part of Solution 2) that makes it clear in the federal regulations and United States Code that a life estate interest in property will be counted as a fee simple interest.

Christopher J. Berry is an elder law lawyer in Michigan Dedicated to helping seniors, veterans and their families navigate the long-term care maze. To learn more visit http://www.michiganelderlawattorney.com/ or call 248.481.4000