Combating Privatization: Modifying the Veterans Administration Fiduciary Program to Protect Incompetent Veterans

Article excerpt


Created to supervise the distribution of Veterans Administration benefits, the Veterans Benefit Administration Fiduciary Program was designed to help thousands of incompetent veterans handle their finances. Rather than directly managing each veteran's funds, the Fiduciary Program employs a privatization model whereby a private individual or institution is appointed to manage a veteran's assets. The Fiduciary Program then monitors these fiduciaries to ensure the veteran's funds are properly expended.

This Note argues that in practice this privatization model is seriously flawed and that it exposes some of the most vulnerable portions of the veteran population's funds to misuse. In support of this conclusion, this Note compares the federal statutes, regulations, and internal directives that govern the Fiduciary Program-paying special attention to the Fiduciary Program Manual-with audits performed by the Veterans Affairs Office of Audits and Evaluations and the U.S. Government Accountability Office. Relying on these audits, this inquiry rejects total reliance on substantive statutory reform in light of legislative and judicial barriers. Instead, this Note advocates for critical internal reforms designed to improve the Program's efficiency and functionality, the adoption of a state enforcement mechanism, and reliance on principles of cooperative federalism and interagency cooperation.


Billy Brown's military service in Korea earned him benefits from the U.S. Department of Veterans Affairs (VA) for life. (1) To help Billy Brown manage those benefits in his old age, the VA appointed Marcus Brown (no relation), a cabinet maker with a high-school diploma and no financial training, to serve as the veteran's mandatory personal-finance manager (fiduciary). (2) Neither Billy Brown nor his family had any input in Marcus Brown's appointment. (3) Once appointed, Marcus Brown controlled all of Billy Brown's income, including his monthly VA checks and his life savings, which totaled more than $100,000. (4) In exchange for this service, the VA required Billy Brown to pay Marcus Brown a portion of his VA check each month. (5)

The methods used to manage Billy Brown's finances and the finances of those similarly situated raise serious concerns about fundamental fairness and functionality; in fact, those methods threaten to undermine the core purpose of the VA--the protection of vulnerable veterans. The VA faces an increasing array of challenges resulting from insufficient resources, an overloaded system, and never-before-seen hurdles. (6) That said, solutions to these problems do not uniformly require an outpouring of financial resources or an army of staff. Indeed, as this Note argues, the VA's Fiduciary Program provides at least one example of a VA program that could instead benefit from reforms focused on increased efficiency and oversight.

The Fiduciary Program is a classic example of agency privatization at work. In a world of limited resources, privatization--the process by which a government agency uses "private means to achieve public ends" (7)--has become a permanent fixture in federal, state, and local government. (8) Federal law requires VA beneficiaries deemed incapable of managing their personal finances due to injury, disease, or infirmities of age to receive help managing their money. (9) To minimize the number of VA employees required to run the Fiduciary Program, the VA instead either finds volunteers or uses the veterans' funds to hire private citizens or organizations to manage the veterans' finances. (10) Government employees working for the VA then monitor these private money managers to make sure they properly handle the veterans' funds. (11) In theory, privatizing this system increases the number of incompetent veterans receiving help while simultaneously empowering the Fiduciary Program to shift from administering the Program to monitoring fiduciaries. …