VA allows guardians to charge too much
State law says guardians may charge 5 percent of just VA benefits. But another reading has cost veterans millions.
By WILLIAM R. LEVESQUE, Times Staff Writer
Published August 19, 2007
Many of Florida's most vulnerable military veterans have been overcharged millions of dollars by guardians entrusted to handle their finances.
The U.S. Department of Veterans Affairs mistakenly has allowed guardians to take a larger cut of an incompetent veteran's income than state law allows, according to the VA manager overseeing veteran guardians in Florida.
The practice has cost veterans at least $24-million in the last decade, said Matthew DesRoches, the St. Petersburg-based manager of the VA's Fiduciary and Field Examination unit.
"There's no debating that a certain percentage of those funds have gone in a direction they shouldn't have," he said. "They should have gone in the veterans' accounts. You can't just let it persist because it's a nuisance or a mess. You have to deal with it. It's not right."
When a doctor or court determines that a veteran is incapable of handling his finances, a licensed guardian is appointed by the court with VA oversight. DesRoches estimates that up to half of Florida's 6,100 incompetent veterans have their income handled by a paid guardian.
Some guardians dispute DesRoches' assessment. They say the state circuit judges and, until recently, the VA have long approved the higher fees.
"It's just typical of a large bureaucracy that somewhere along the line somebody takes a cramped view of state law that makes it more difficult for people down the line to do their job," said lawyer Stephen Margulis, a Plantation guardian who handles the finances of about 25 veterans.
How the error went unnoticed for at least two decades remains a mystery, DesRoches said.
Florida law allows guardians to tap just 5 percent of the VA income of incompetent veterans, according to DesRoches and VA documents.
But the VA long has allowed guardians to keep 5 percent of any income, which might include VA benefits, military pensions, Social Security and private pensions.
For veterans who receive only VA income and Social Security, the higher fee may amount to $400 or $500 a year or less. But for veterans with multiple sources of income, the tally would be significantly higher, DesRoches said.
DesRoches, 46, who has headed the VA fiduciary unit for 2 1/2 years, said he discovered the mistake last year and couldn't believe it.
"I thought: We've been doing this for how long?" DesRoches said. "I mean, all these attorneys out there, all these judges, everyone, didn't anyone notice this? I was just dumbfounded."
The VA's regional counsel soon confirmed the error and, starting in the fall of 2006, began rejecting bids to collect fees from anything but VA funds, documents show.
But the VA worked out a compromise after some outraged guardians threatened to quit if their income was limited, DesRoches said.
The VA decided guardians could file a special petition with courts to get a cut of Social Security income under a part of the law allowing payment for "extraordinary" services rendered. The VA would approve such petitions.
"We do not want to alienate the guardianship bar or reduce the number of good guardians available to our veterans," said regional counsel Cristine Senseman in a June 20 e-mail to DesRoches.
DesRoches said that is morally and legally unjustifiable, since handling such income is part of the normal expectation of the job outlined by law.
"That just opens up Pandora's box," he said.
DesRoches is currently involved in a dispute with the VA. He was granted three months unpaid leave to care for his terminally ill 82-year-old mother. But now, he said, the VA wants him to return to work early. DesRoches has refused because he said he has no one to care for her.
But DesRoches said what moved him to consent to an interview with the St. Petersburg Times was the compromise by the VA regional counsel that allowed guardians to take part of a veteran's Social Security income.
"I won't have any part of that," he said.
Senseman, the regional counsel, said in the June e-mail that guardians were "working to make a legislative change ... to correct the definition of income that is in the statute and fix this whole mess."
Some guardians have started filing petitions for extraordinary services to recoup the lost income, and those petitions are being approved by the VA.
DesRoches said he thinks guardians will seek a cut of all income via this route, not just limiting themselves to Social Security.
The probate court judges who preside over guardianships said they typically rely on the oversight of the VA. And if the VA approves a fee before it comes to the judge, the court will seldom reject it, judges say.
"Technically, I guess we're responsible," said Pinellas-Pasco Judge Lauren Laughlin, chief probate judge in the circuit. "But the VA has made it very clear that it's their money" and the VA has primary oversight.
Susan Sexton, a probate judge in Hillsborough, said she "accepts the VA's representation that the accountings and fees are accurate."
Guardians say it is unreasonable to expect them to do all the work involved in managing a veteran's finances without being adequately paid.
And if guardians handle a source of income, they should get a cut of it for the added work and responsibility, guardians argue.
"I don't think the fees we've been charging are excessive," said Dale Walthouse, a guardian in Altamonte Springs. "It's a 24/7 job. It's something good. You're helping veterans who can't handle their finances. It's good for them."
Veteran advocates say that the guardianship program is a good one and that guardians should be adequately compensated. But some said the VA needs to assure veterans are being financially protected.
"It seems to me even if it's only $25 a month, that may not be much to a bureaucrat or the VA," said Al Linden, executive director of Disabled American Veterans Florida chapter. "It darn sure means a lot to that vulnerable veteran."
William R. Levesque can be reached at 813 226-3436 or levesque@sptimes.com.