2 1 pursuant to this section or prior provisions of law, on or 2 before September 1, 1959. In any such case in which he 3 determines that the forfeiture would not have been imposed 4 under the provisions of this section in effect after September 5 1, 1959, he shall remit the forfeiture, effective the date of 6 enactment of this amendatory Act. Benefits to which the 7 individual concerned becomes eligible by virtue of any such 8 remission may be awarded, upon application therefor, and 9 the effective date of any award of compensation, dependency 10 and indemnity compensation, or pension made in such a case 11 shall be fixed in accordance with the provisions of section 12 3010 (g) of this title." [No. 22] COMMITTEE ON VETERANS' AFFAIRS, UNITED STATES SENATE VETERANS ADMINISTRATION, OFFICE OF THE ADMINISTRATOR OF VETERANS AFFAIRS. Hon. SPIRO T. AGNEW, Washington. D.C.. August 4, 1971. DEAR MR. PRESIDENT: There is transmitted herewith a draft of a bill "To amend title 38, United States Code, to provide for the review of certain veterans' benefit cases forfeited for fraud on or before September 1, 1959, and for remission of forfeitures." with the request that it be introduced in order that it may be considered for enactment. The bill proposes to authorize the Administrator of Veterans' Affairs to review certain forfeitures of all gratuitous veterans' benefits imposed prior to September 2, 1959, because of a false or fraudulent statement, and to grant a remission of such forfeiture if, under the provisions of law in effect on and after that date, a forfeiture would not have been imposed. Commencing in 1921 and until 1959, the law authorized an administrative forfeiture by the Veterans Administration (and the Veterans' Bureau, a predecessor agency) of the rights of veterans, widows, children, and dependent parents to all gratuitous benefits provided under laws administered by the Veterans' Administration because of a false or fraudulent statement made concerning any claim for gratuitous benefits. The provisions in effect in 1959 now appear as 38 U.S.C. 3503 (a)-(c). The forfeiture for fraud was in addition to the penalties imposed by Federal criminal statutes for the making of false and fraudulent statements to a Federal agency. As far as we are aware, no other agency of the Government has had broad enough authority to administratively forfeit the right to gratuitous benefits because of a false statement made in connection with another benefit. In 1959, following extensive studies in the forfeiture field conducted by the Veterans' Administration and the Committee on Veterans' Affairs, House of Representatives, Public Law 86-222 was enacted. This amendatory law continued the existing authority to forfeit gratuitous benefits under 38 U.S.C. 3503 where the guilty person at the time of the commission of the offense resided, or was domiciled, outside of a State, territory, or possession of the United States, the District of Columbia, or the Commonwealth of Puerto Rico, and with one exception, discontinued, effective September 2, 1959, the authority to impose administrative forfeiture of gratuitous benefits under 38 U.S.C. 3503 with respect to persons who resided, or were domiciled, within the areas mentioned at the time of the commission of the offense. The exception referred to continued the authority to impose forfeiture in such domestic cases where the person concerned ceased to reside within the areas mentioned before the expiration of the period during which 66-966-71-No. 22 criminal prosecution could be instituted. In addition, the 1959 law specifically that it would not affect any forfeiture declared prior to the date of enactment or any cases where the acts occurred in the Philippine Islands prior to July 4, 1946. It is apparent that the Congress, through the enactment of Public Law 86-222, intended to limit the punishment for fraud committed in connection with claims for our gratuitous benefits to that imposed by the Federal criminal statutes, in those instances where criminal prosecution could be instituted. In other words, the Congress sought to permit the Veterans' Administration to adjudicate claims for benefits on the basis of untainted evidence and to require that any instances of fraud be referred to the Department of Justice for their consideration of criminal prosecution. If that philosophy is valid with respect to instances of fraud after September 1, 1959 (and the Veterans' Administration believes that it is), it would seem equally valid with respect to fraudulent statements made on or prior to that date, based on which the Veterans' Administration invoked forfeiture. In these cases of fraud, the person concerned was subject to criminal prosecution in addition to forfeiting all gratuitous benefits. In addition, whether or not he was so prosecuted, he has been deprived for more than 11 years of all veterans' benefits that he might otherwise have been entitled to. In addition to the foregoing philosophical arguments, we have become aware of individual cases in which, at least in retrospect, the forfeiture penalty seems much too servere. In one instance, for example, a veteran being paid disability compensation for a combat-incurred 40-percent disability forfeited all gratuitous benefits as the result of certifying to the Veterans' Administration that he was enrolled for 2 credit hours of educational instruction more than he was, in fact, enrolled for. Since the forfeiture was declared, he has lost more than $15,000 in monthly disability compensation payments alone. Another example involved loan guaranty benefits. At the time, the law provided that the price to be paid by a veteran for a home under a guaranteed loan could not exceed its reasonable value, as determined by the Administrator of Veterans' Affairs. A particular veteran certified to the Veterans' Administration that $8,400 was the total cost of the home. It was later shown that he had made a side payment to the contractor of $808 (allegedly because the contractor persuaded him to authorize the use of a better quality of building material). As the result of this, he forfeited all gratuitous veterans' benefits. Cases of this latter type are particularly troublesome since (1) the Government's liability under the guaranty was not increased because of the false statement by the veteran, and (2) the law has since been changed to require only that the loan on the property (rather than the price of the property) cannot exceed the appraised value. Nevertheless, all of these forfeitures, when imposed, were valid and the Veterans' Administration has no authority to set them aside. The enclosed draft bill proposes to authorize the Veterans' Administration to review forfeitures that were imposed on or before September 1, 1959, under the legislative and regulatory rules that have been applicable to similar situations since that date, and to grant a remission of the forfeiture if that penalty would not now be imposed. The bill will not apply to (1) claimants who were not residents Vet. Letters 92-22 of a state, etc., at the time of the offense, (2) claimants who ceased to be resident of, or domiciled in, a state, etc., before the expiration of the period in which criminal prosecution could have been instituted, or (3) acts which occurred in the Philippine Islands prior to July 4, 1946. It should be noted that in many cases in which a forfeiture of gratuitous benefits was imposed, the forfeiture created an overpayment of benefits to the person concerned. A remission of the forfeiture, pursuant to the bill if enacted, could not cancel this debt, which would be deductible from future payment of benefits to the person concerned. In those cases in which the forfeiture is remitted, the bill provides that the effective date of any award of compensation, dependency and indemnity compensation, or pension to which the individual concerned may be eligible shall be subject to the provisions of 38 U.S.C. 3010 (g), i.e., the effective date of benefits granted shall not be earlier than the effective date of the amendatory act and, in no event, shall benefits be retroactive for more than 1 year from the date of application therefor. In determining such claimant's entitlement to benefits, the fraudulent material will, of course, not be considered. An application would be required for any benefits to which an individual, whose forfeiture is remitted, may thereafter be entitled. Until an application for disability compensation is received from a veteran and he is found entitled to that benefit, we will continue any existing apportionments of compensation that are currently being paid, in accordance with 38 U.S.C. 3503(b), to his wife, children or parents. According to our records, there were approximately 4,100 forfeitures for fraud during the period 1921-59. Since we are able to identify these cases, we propose, if the bill is enacted, to review them and to grant a remission of the forfeiture to all of those individuals (the large majority) whose benefits, because of residence in the United States, etc., would not have been forfeited under the rules in effect since 1959. While we do not propose to require an application for the mentioned review, as previously noted, applications would be required for any benefits which may be granted to those individuals whose forfeiture is remitted. Since we do not know the benefits to which these individuals would be entitled, we are unable to furnish any estimate of the cost of the measure, if enacted. The Veterans' Administration recommends favorable consideration of the enclosed draft bill. We are advised by the Office of Management and Budget that there is no objection, from the standpoint of the Administration's objectives, to the submission of this draft legislation to the Congress. Sincerely, DONALD E. JOHNSON, O Administrator. Vet. Letters 92-22 [No. 90] COMMITTEE ON VETERANS' AFFAIRS, U.S. SENATE OFFICE OF THE ADMINISTRATOR OF VETERANS' AFFAIRS, Hon. VANCE HARTKE, Chairman, Committee on Veterans' Affairs, U.S. Senate, Washington, D.C. DEAR MR. CHAIRMAN: This responds to your request for a report by the Veterans' Administration on S. 3074, 92d Congress, a bill to amend title 38, United States Code, to provide for the review of certain veterans' benefit cases forfeited for fraud on or before September 1, 1959, and for remission of forfeitures. This measure is identical to a draft bill which I requested the President of the Senate and the Speaker of the House of Representatives to introduce. A report, dated August 2, 1971, was submitted with my request, and a copy of that report is enclosed. S. 3074 is also identical to H.R. 10505 of the current Congress. The Office of Management and Budget advised the Veterans' Administration in connection with the draft legislation that there was no objection from the standpoint of the Administration's objectives to the presentation of that legislation to the Congress. Sincerely, |