Fiduciary Program: Some Incompetency Decisions Not Completed, Putting Those Beneficiaries’ Funds at Risk

The VA Office of Inspector General (OIG) assessed the merits of an August 2019 hotline allegation that a deceased veteran’s VA funds had been misused while he was living at a California nursing home. As part of its assessment, which is the subject of an upcoming report, the OIG discovered the Veterans Benefits Administration (VBA) had not finalized the veteran’s incompetency proposal. VBA staff had received medical evidence that he was incapable of managing his VA benefits payments and had prepared an incompetency proposal, which when finalized results in VA appointing a fiduciary to manage the beneficiary’s funds. However, the proposal had been initiated three years before his death but not completed. This delay conflicts with VBA guidance that the decision be made and a fiduciary—a person or legal entity charged with managing the incompetent beneficiary’s estate—appointed within 141 days. The OIG expanded its review and found VBA had not finalized incompetency proposals for 221 beneficiaries from January 1, 2016, through December 31, 2019. Of the 221 beneficiaries, the OIG statistically selected 55 records and determined that all were without incompetency decisions. Generally, the incomplete decisions occurred because staff did not update the workload management tool to show an incompetency proposal was pending a decision. Without that update, the case does not appear in the inventory of incompetency proposals requiring final action, no decision is made or fiduciary appointed, and vulnerable beneficiaries’ funds could be mismanaged. VBA agreed 52 of the 55 were incomplete (stalled); the others were on appeal or had been flagged for a decision. This management advisory memo provides VBA with the remaining 166 of the 221 records found to have incomplete decisions so that VBA can determine whether further action is needed to ensure incompetency proposals are finalized.