Salute to the Past

Proposed Legislation for Look Back and Penalty for VA Veterans Pension - The Rise and Fall of the Pension Poachers

April 10, 2015 | by Thomas Day | Photo - Senior Master Sgt. Sandi Michon

A note from the author:

We provide an addendum discussing in detail the proposed rule changes from VA. This is available to those who have purchased our veterans book How to Apply for VA Benefits for Senior Veterans and Their Survivors in the past or it is currently available as an addition to our current veterans books that we offer. The addendum goes into much greater detail on the following subjects:

1. An analysis and comparison of VA’s look back and penalty with Senator Wyden’s proposed legislation along with recommended revisions that would make the rules more palatable

2. A summary of each of the proposed rule changes to include the actual rule as well as a discussion of the more pertinent comments that have been submitted pertaining to that rule

3. A summary of the more substantial comments submitted to VA over the proposed rules changes

4. An outline of the future steps VA must complete and the time it might take before publishing the final rules in the Federal Register after which the effective date would likely be 60 days thereafter.

Led by Senator Ron Wyden from Oregon, a handful of concerned US Senators have submitted legislation at least 7 times over the past 3 years to shut down a group of practitioners they call "Pension Poachers."  So far, the proposed legislation has gone nowhere.  But, the Senators – particularly Senator Wyden – are not giving up and will continue to pursue this legislation.

The concern by the Senators is that unscrupulous operators – whom they have given the specific label of Pension Poachers – are taking advantage of unwary and vulnerable senior veterans by charging large fees or transferring assets into commission-generated financial products in return for application assistance with a little-known veterans benefit called "Pension."

In a joint hearing on June 6, 2012 between the Senate Special Committee on Aging and the Senate Veterans Affairs Committee, and conducted by Senator Ron Wyden, attention was brought to bear on this problem.  The solution was an announcement of a first of many bills sponsored by Senator Wyden to punish veterans by imposing a penalty period and a look back waiting period of 36 months for those who would transfer assets to qualify for this means tested program.  Senator Wyden believes that by discouraging applicants from transferring assets, Pension Poachers would eventually disappear as there would be no financial incentive for them to assist senior veterans with claims for benefits.

A key witness during this hearing – Ms. Kris Schaffer from Billings Montana – was claimed to be a victim of an alleged Pension Poacher – an attorney who would charge planning fees in conjunction with an application for veterans benefits. Ms. Shaffer claimed she and her father met with the attorney who wanted to charge her $4,000 for his assistance. She claims the attorney and the director of an independent living facility in Billings Montana guaranteed her father he would receive a benefit of approximately $2,000 a month which, along with her father's Social Security and that of his wife, would allow them to afford to live in the facility.

In testimony before the committee, she states her father refused the payment and so she decided to submit the application herself and at the same time to sell her parents' home in order to generate additional funds to pay for the facility. She did not use the attorney for this assistance or for advice in this matter. She states that she saw no particular challenge in completing the application. Her mother was very ill at the time and her father was in good health at 86 years old. Five days after moving into the facility, her mother died leaving her father with an obligation for maintaining his residence in the facility. In addition, Mr. Shaffer had no home to move back into. Her bad judgment in selling the home out from under her father led Ms. Shaffer to go ahead with the application after the death of her mother.

It would be obvious to those of us who are familiar with Pension claims that she had no clue as to what she was doing or what qualification for the benefit entailed. Naturally, VA denied the benefit because her father was in good health and because he had no offsetting allowable medical expenses to reduce his income to qualify. She blames the attorney for the denial and holds him up as an example of what the committee called a Pension Poacher. She also blames the attorney for her decision to sell the house, although apparently he never gave her any advice on this matter. All members of the committee expressed outrage at what this attorney had supposedly done to Ms. Shaffer.

In preparation for this article, I interviewed this attorney over the phone and asked him about the allegations from Ms. Shaffer. He replied that he indeed had made an educational presentation on how to obtain Pension at the independent living facility in Billings, wearing a Hawaiian shirt, but he didn't know a Kris Shaffer and had never met with her and her father.

An article published in the New York Times on August 24, 2013 by an investigative reporter a year later corroborates his story.  Here is a quote from the article.

New York Times, By JESSICA SILVER-GREENBERG, DEC. 23, 2013

With every slip and fall, every bruise and ache, the reality set in: Henry Schaffer, 86, could no longer live on his own. So his daughter, Kristi, began searching for a retirement home — and the money to pay for it.

At Aspen View, a senior living complex in Billings, Mont., a lawyer accredited by the Department of Veterans Affairs delivered what seemed like good news: Mr. Schaffer, a World War II veteran, could probably qualify for a generous V.A. benefit. For a few thousand dollars, the man would help veterans like Mr. Schaffer get one.

"My dad kept on asking me, ‘Don't you think this is too good to be true?' " Ms. Schaffer recalled. To assure him, she pointed to the lawyer's V.A. credentials.

It was only after Mr. Schaffer had moved in that they learned the truth: He did not qualify at all. Ms. Schaffer says her father now worries that he will be evicted. He can afford only about half of his monthly bill.

The benefit, known as the Veterans Pension program, can be worth more than $20,000 a year to war veterans who are disabled or over age 65. But it is open only to those with an annual income of less than $12,465 for a veteran with no dependents — and Mr. Schaffer collects more than that in Social Security….

At Aspen View, rent runs about $2,800 a month, excluding extras. That put Aspen View out of reach for Mr. Schaffer, who receives about $1,600 a month in Social Security, his daughter, Kristi, said.

But in early 2011, Douglas Ocker stood in the facility's airy dining room wearing a Hawaiian shirt and explained to the Schaffers and other prospective residents how they might afford a place like Aspen View: the V.A. benefit. Mr. Ocker, a lawyer in Corpus Christi, Tex., often charges nearly $4,000 for his services, according to a review of client contracts.

While Ms. Schaffer acknowledges that Mr. Ocker gave no assurances that her father would qualify, she said his accreditation by the V.A. swayed the family to let her father move in. She said her father blamed her for his financial straits; the two are not on speaking terms. Mr. Schaffer declined to comment for this article.

"I don't fall for this kind of thing," Ms. Schaffer said. But of Mr. Ocker she said: "he was blessed by the department," meaning the V.A.

Mr. Ocker did not return telephone calls and emails seeking comment…

There is no mention in this article of Ms. Shaffer meeting with the attorney and it appears that she acted solely on the information she heard in the seminar. She also admits to the reporter that the attorney did not guarantee any benefit to anyone in the room including the Shaffers. It appears that in Ms. Shaffer's eyes the attorney was responsible for her denial from VA solely because he was "accredited." It also appears that Mr Shaffer is angry at his daughter for getting him into his untenable financial situation in the first place. This is a joke to hold out this case as an example of Pension poaching.

There is also another unspoken issue with this case. What happened to the proceeds from the sale of the home? If the amount was more than about $60,000, VA would have denied the claim out of hand due to too much in assets. Did Ms. Shaffer inadvertently game the system to gain benefits, by leaving the proceeds of the sale of the home off of the initial application? I'm certainly not accusing her of any wrongdoing, but it would be nice to know if the proceeds of the sale were disclosed or not.

This case actually illustrates the positive aspects of those practitioners who are reaching out to seniors in the community to make them aware of the Pension benefit.  Those senior veterans at Aspen View would have never known about this valuable benefit without the information provided by the attorney.  These concerned Senators and VA appear not to accept this argument.  Written testimony from David McClenachen, a VA official at the hearing, illustrates the supposed effect of Pension Poachers on increasing the number of beneficiaries on claim for Pension.

"Between FY 2007 and FY 2011, grants for Pension at the A&A rate increased from 22,513 and 19,593, for Veterans and survivors, respectively, to over 38,000 in each category. VA believes several factors contributed to this increase and that grants for Pension at the A&A rate will continue to increase.

Changes in the laws governing representation of claimants before VA may have increased the number of claimants seeking Pension. In December 2006, Congress enacted Public Law 109-461, which, among other things, permitted VA-accredited attorneys and agents to charge claimants fees for representation earlier in the claim process. The law also eliminated misdemeanor criminal penalties for unlawfully charging fees for representation of claimants before the Department. Since the enactment of that law and the publication of VA's implementing regulations in May 2008, VA has accredited over 8,900 attorneys and almost 190 claims agents. We also note that the biggest increase in grants of Pension at the A&A rate occurred between 2009 and 2011, a period of economic difficulty for many Americans."

Disclosure of this information by Mr. McClenachen is apparently intended to have us believe that the huge increase in accredited individuals who are not associated or affiliated with veterans service organizations is directly related to the significantly larger increase in Pensions granted with aid and attendance benefits.  I believe we are supposed to assume from the statistics that most of these Pension beneficiaries are a result of accredited Pension Poachers who are gaming the system by transferring assets.

I know from my own experience that very few applicants for Pension have assets that would disqualify them.  So-called Pension Poachers help these people – at no cost – just as readily as those people who do have assets.  Accredited attorneys and accredited agents are providing a valuable service by conducting outreach programs and educating veterans about Pension so that they can receive this valuable benefit.  VA has no such outreach program and as a result is depriving many worthy applicants of their hard-earned benefits.  Veterans service organizations likewise have no outreach programs for educating about Pension.

VA's own assessment of the impact of the imposition of a look back and penalty associated with applications for the benefit verifies my assertion that very few applicants have disqualifying amounts of assets.  In its recently released "Regulatory Impact Analysis for RIN 2900-AO73" VA states the following:

"Pension and Fiduciary (P&F) Service estimates based on program knowledge that 1 percent of Pension applicants dispose of assets before claiming Pension.  This 1 percent assumption was applied to Veteran and survivor Pension accession estimates (47,740 and 43,736, respectively in FY 2016) from the FY 2015 MSR budget to estimate the new Pension applicants that would be affected each year." 

The report goes on to further assess the actual number of claims that this represents.  According to the impact analysis, in fiscal year 2016, this would represent a tiny number of only 914 claims out of an estimated 180,000 claims submitted for Pension benefits.  As stated in the report, approximately 91,000 of these claims will likely be awarded a benefit in fiscal year 2016.  It is ludicrous and reprehensible that VA admits that so-called Pension Poachers, who are supposedly gaming the system, would have virtually no effect at all on the number of Pension claims that are awarded benefits.

Senator Wyden is not giving up on his proposed legislation. He will continue to insert his provisions into larger veterans bills that have a chance of passing and where most Congressmen will have no clue of what is actually in the bill and more importantly what it means.

In the next article I will discuss in more detail the 7 bill filings of Senator Wyden's provisions as well as what those provisions contain and their potential impact.  I will also discuss the parallel attempt by VA to impose look back and penalty provisions on its own without authority from Congress.

A complete analysis of the proposed legislation and its impact as well as a complete analysis of VA's proposed rule changes – including a look back and penalty – are presented in great detail as an addendum to our book (How to Apply for VA Benefits for Recent and Senior Veterans and Their Survivors). I have also read most of of the more profound comments that were submitted in response to VA's proposed rule changes published in January 2015 in the Federal Register. I provide an analysis of those comments in our published addendum as well. I urge you to purchase our upgraded books and will continue to provide you with ongoing coverage of the proposed rules changes in proposed legislation as well as my estimate time needed for the various steps that VA must complete before it can publish final rule changes in the Federal Register and establish an effective date of 60 days thereafter.

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