Tuesday, November 30, 2021

‘Pension Poachers’ Are Targeting America’s Elderly Veterans

Larry Eber’s life was derailed when middlemen pledged to help him get supplemental benefits. Similar tales of alleged manipulation are playing out for thousands of former service members and their families.

By Nick Leiber

During his second inaugural address, President Abraham Lincoln proclaimed that America should serve its soldiers long after they were done serving it. Coming just weeks before final victory in a gruesome civil war that killed at least 750,000, his words would become the motto for the Department of Veterans Affairs.

Today, a metal plaque marking the entrance to the agency’s headquarters recites the VA’s duty to U.S. soldiers. Its mission—as Lincoln said in 1865—is to “care for him who shall have borne the battle, and for his widow and his orphan.”

Larry Eber was one of those soldiers. But today’s VA is having a hard time protecting veterans like him.

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Larry Eber, center, with two unidentified U.S. Army buddies, circa 1969. 
Photographer: Courtesy of Rick Eber

After serving in Vietnam, Eber returned home in 1970 to California. At first he found work stocking supermarket shelves and servicing swimming pools. But re-acclimating was difficult. He developed a drinking problem and began to suffer from schizophrenia. Sometimes he would find himself homeless.

For decades, Eber existed on society’s periphery. But at the age of 73, with his health deteriorating, he decided to make one last try for a better life. With the help of his younger brother Rick, Eber turned to the VA.

In 2016, the agency placed Larry in recovery and found him temporary housing. A staff member suggested he apply for “aid and assistance” benefits—a monthly payment for qualifying veterans in need of help with personal care and chores. To sign up, Larry was instructed to fill out forms that he later learned were from Veterans Care Coordination, a private company based outside St. Louis, Missouri, that touts itself as a go-between that helps veterans access benefits.

That’s when Larry’s plan to fix his life went sideways.

According to his brother, Larry was inundated with a flurry of documents to sign and fine print he didn’t understand. What he didn’t realize at the time was that the money would ultimately be spent on help he didn’t need, and fees for VCC. Even worse, the new benefits would eventually have dire implications for Larry’s existing government aid—leaving him worse off than when he started.

Eber’s story isn’t unique. A small but growing industry has arisen between the VA and elderly veterans—a Wild West of individuals and businesses that take an outsized cut of benefits paid to people like Larry. Initially, one major scam involved persuading veterans who exceeded the benefit’s financial threshold to manipulate their assets. Today, because of a look-back rule the VA implemented in 2018, it has evolved to focus on low-income veterans with promises to assist them with applications and then coordinate their care.

The VA said in a statement that it “actively works to prevent and identify individuals and businesses who take advantage of elderly veterans and their family members.” But when veterans are ensnared in the care coordination industry by operators which advocates label as “pension poachers,” the VA puts the onus on the veterans who signed the agreements.

The key issue raised by the VA, as well as defendants and legal experts, is the concept of undue influence—the idea of whether a company had a fiduciary relationship with an elderly veteran, what the veteran’s mental capacity was when they signed up, and whether they can prove they were manipulated.

Scripps College Psychology Professor Stacey Wood serves as a forensic neuropsychology expert, evaluating capacity and allegations of undue influence in elder abuse cases in California. She’s interviewed more than 600 victims of elder financial exploitation, including dozens of veterans.

Wood said she finds perpetrators tend to target veterans and their families in times of extreme stress. In one case, she said an elderly widow was approached in a hospital. “Someone somehow got in there to pitch one of these veteran schemes,” Wood said. Indeed, in many circumstances the victim isn’t the veteran, but family members they leave behind.

“Pension poaching” is yet another dimly lit corner of a multibillion-dollar industry built on separating America’s most vulnerable citizens from their money. A U.S. Government Accountability Office report released earlier this year shows elder financial exploitation costs run in the billions of dollars, highlighting studies from New York, Pennsylvania and Virginia that tally the abuse at $1 billion or more in each state alone. And the GAO warns the problem is only growing as the U.S. population ages. 

“So much of the abuse happens in the shadows,” said Kathy Larin, director of the GAO’s education, workforce and income security team, which produced the report. “It’s extremely difficult to get victims to report or admit that they have been exploited.”

The oldest of America’s 19 million veterans are especially at risk. Those who never knew they could obtain aid and assistance benefits on their own end up convinced the only way to get them is by paying a middleman. In a 2019 report, the GAO said older veterans are “among the most vulnerable.” Last year, more than 190,000 veterans and their survivors were paid a total of $2.8 billion in aid and assistance benefits. The GAO has urged the VA to do more, but the agency has said that “as long as beneficiaries are competent, they can spend their benefits as they see fit, including on products or services that may not be in their best interests.”

Typically, the trouble begins when veterans using so-called care coordinators are required to provide direct access to their bank account, enabling the company to bypass them when the monthly deposit arrives. The company is supposed to only withdraw what’s needed to pay for necessary home help, and a reasonable fee for its services. 

In the case of VCC—which said on its website that it’s “serviced” more than 795,000 hours of home care—Larry Eber was required to sign a one-year contract that would automatically renew until terminated, according to a copy of the document reviewed by Bloomberg. After Eber signed it, VCC applied to the VA for benefits on his behalf. According to court papers, the VA approved Eber for $1,794 per month. On the day his first payment was deposited, VCC allegedly removed all but $10.

When Larry first filled out the paperwork, the brothers said they believed he was applying to qualify for cleaning and care services covered by the VA. Rick alleged that his brother was pressured to sign blank application and bank authorization forms. They didn’t understand until much later, he said, that the VA was going to send Larry money he could use at his discretion. “We both thought the care was paid for by the VA, not us,” Rick said, explaining that no one told them otherwise.

Larry’s care provider billed for 70 hours of work per month—an average of 18 hours a week—even though Larry didn’t need that much assistance, Rick said. Larry lived in a small room without a bathroom or kitchen, so there wasn’t much to be done.

Soon after the aid and assistance funds began flowing to his account, the payments triggered cuts to other government benefits Larry was receiving—the ones he relied on to survive. He lost all of his California healthcare coverage and supplemental Social Security disability benefits. His monthly U.S. Department of Housing and Urban Development housing voucher dropped from $940 to $636, and his monthly Social Security check dropped from $703 to $523, court papers show.

When Rick Eber, now 76, learned what was going on, he tried to end the contract. By that time, Eber had switched from VCC to another middleman firm, American Veterans Care Connection. 

Rick, a former National Football League player turned business consultant, said he spent years visiting and calling every government agency he could think of to get help. “I couldn’t get anybody to acknowledge what we were experiencing,” said Eber, now retired and living in Laguna Niguel, California. “I remember feeling so stranded.”

In 2019 the brothers decided to sue in California Superior Court in Los Angeles, naming VCC, AVCC  and the home-care providers they paid with Larry’s benefit money as defendants. The two men alleged VCC took advantage of Larry, abusing his “trust and confidence” by having him sign blank documents that were filled in later. They also claimed it breached a fiduciary duty to Larry, who was “particularly vulnerable due to his physical and mental conditions.” 

“It’s important to understand though that this ‘care coordination service’ is completely unnecessary,” said Jim Morgan, the attorney for the brothers. “The vet does not need anyone to ‘coordinate’ his ‘care.’ The vet can call any caregiver he wants and hire them.”

Originally set for last summer, the trial—in which the plaintiffs seek unspecified damages for fraud, conspiracy to defraud, breach of fiduciary duty and financial elder abuse—was delayed until April 2022 due to a backlog of cases related to the pandemic. 

Attorneys for VCC President Kyle Laramie didn’t return several requests for comment and AVCC owner Jeanne Mers-Asher declined to comment. The defendants all denied the allegations in court filings, with VCC contending that Larry Eber “was aware of the services and costs at issue.”

Not long after learning the consequences of his original agreement with VCC, Larry began to despair, Rick said. At one point, he tried to kill himself. My brother didn’t understand the concept of what he had signed up for at all,” Rick said. “Larry was trying to turn his life around.”

On March 31, 2020, Larry Eber died of pancreatic cancer. He was 77. 

Care coordination is a fast-growing, largely unregulated arena where anyone can call themselves a coordinator, said Prescott Cole, an attorney formerly with the nonprofit California Advocates for Nursing Home Reform. He and other advocates contend many businesses that charge veterans to access VA benefits are engaged in predatory behavior. 

Some within the industry acknowledge there are “bad actors” among them, but contend most provide a necessary function in a confusing environment where senior citizens don’t know who to trust. 

Elder law attorney Victoria Collier, co-owner of Hendersonville, Tennessee-based Patriot Angels, said her business assesses veteran eligibility for benefits, but doesn’t coordinate care. She charges roughly $800 for what Collier describes as a “pre-filing consultation” and assessment of benefits and care options. “There wouldn’t be a need for private companies like ours if veterans felt that they could get adequate services elsewhere,” she said.

Patriot Angels cites on its website an endorsement by Mike Huckabee, the right-wing cable TV personality and former Republican governor of Arkansas. “It’s like having treasure buried in your own yard but being unaware it’s there,” Huckabee says. “Patriot Angels does the digging; the veteran does the living.”

Collier said Patriot Angels is “legal and ethical,” but concedes some companies do exploit veterans by charging for help with applications when they shouldn’t, offering home-help that costs more than that for non-veterans—and adding themselves to bank accounts.

“I think that’s elder abuse,” said Collier, who noted she is accredited by the VA. Separate from care coordination, there’s also a “huge practice” of financial advisers and lawyers who sometimes work together to transfer older veterans’ assets into annuities that can harm them if they later need to access the principal, she said.

St. Louis-based Veterans Home Care, which describes itself as a national leader in securing aid and attendance benefits, also condemned predatory behavior within the industry. “We find it deplorable that there are bad actors cold-calling and preying on elderly veterans,” VHC founder Bonnie Laiderman said in a statement. Her business, which says it provides free help with applications and zero-interest loans until benefits arrive, makes money by charging clients what it describes as a market rate for in-home care, adult daycare or medical alert systems.

Chantelle Smith, an Iowa assistant attorney general in Des Moines, said it is true that many veterans don’t know they’re entitled to certain benefits. What they often don’t realize is there are free alternatives for help with paperwork, including organizations with no financial stake in the outcome—such as nonprofit veterans service organizations and state and local agencies. 

But beyond New York State and Washington, few states have laws explicitly aimed at combating veteran elder fraud. Another eight—Alaska, California, Illinois, Iowa, Michigan, Minnesota, Nevada and Utah—require companies disclose the VA’s rules for assisting veterans with benefit applications, but not much more. 

The VA accredits individuals who work for care coordinators, but critics have labeled the certification system as easily manipulated.

Recently, the agency posted a notification on its website about “the large number of complaints that the VA accreditation program is receiving that do not fall succinctly within our jurisdiction to investigate.” Only VA-accredited attorneys and claims agents may charge claimants fees for their services, the agency said, and then only if the claimants are seeking further review or an appeal of a VA claim decision. 

It recommends victims submit complaints about individuals or organizations assisting with VA pension benefits through the Federal Trade Commission’s “complaint assistant.”  

Some of these firms get around regulations, however, by mischaracterizing their services. Anyone is allowed to provide veterans with general information about benefits, and some businesses dodge the rule about charging for more by simply omitting themselves from VA paperwork. Morgan, the Ebers’ lawyer, alleged that imposing fees for handling certain paperwork is illegal, a claim he included in his lawsuit.

The VA said in its defense that it plans to begin a “pension poaching” prevention outreach program “targeted for full implementation by end of calendar year 2021.”

But the goalposts have been moving, and the new targets of “pension poaching” are the most vulnerable of all, according to Neil Granger, chairman of California’s Department of Insurance Curriculum Board and a co-founder of the San Francisco Veterans Benefits Protection Project, which educates the public and assists in elder fraud cases. 

Low-income veterans and their families have become the focus of unscrupulous individuals and companies since 2018, Granger said, when the VA made it harder for them to target wealthier veterans under the guise of helping them obtain aid and assistance benefits.

This is now happening “to tens of thousands of people” in more precarious financial situations, he said. 

Granger, who consults for investigators, prosecutors and attorneys general in different states, said predators who target older veterans often act impervious to prosecution. “The people who are enforcing these laws, who are trying to bring these people to justice, don't understand the mechanism of the scam well enough,” he said.

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Pat Pardue is still dealing with the aftermath of an experience with a veterans’ benefit middleman that she says resulted in her losing about $12,000.
Photographer: Lauren Grabelle for Bloomberg

Pat Pardue is the 90-year-old widow of Jim Pardue, a World War II veteran. Living on her own in Columbia Falls, Montana, a small town near the Canadian border, she’s still dealing with the aftermath of an experience with VCC that she said cost her $12,000 in benefits.

The Pardues were married for 54 years, until Jim died in 2003 at the age of 74. In 2016, Pardue was starting to have trouble doing everyday chores on her own. A friend told her she was eligible for aid and assistance benefits and suggested she use VCC for help applying.

The VA approved Pardue for a $1,175 a month in December 2016. After she gave VCC access to her bank account, it allegedly withdrew the entire amount each month. At the time, Pardue didn’t realize she could have received all of the money directly and coordinated the care herself, according to Bryan Zipp, the western section chief at the Montana Veteran Affairs Division office in Kalispell. Pardue had sought Zipp’s help with the matter.

“They’re basically saying, ‘you pay us to get you the benefits and then you’re going to pay us monthly to maintain the benefits,’” said Zipp, who served in the Army for more than two decades. After about a year, Pardue said she called VCC seeking to end the agreement. When her bank cut off VCC, she started getting “mean, almost hostile” calls from the care agency, VCC and a threatening letter from its law firm, according to Zipp.

But then the VA, having been contacted by her former home-help providers, decided Pardue shouldn’t have been paid so much in the first place. The agency stopped paying her the benefit and demanded she return $12,000.

“Now I can’t afford care because I don’t have the money for it,” she said. Pardue estimates she has about $600 to live on after paying bills every month. VCC didn’t return requests for comment on her claims and the VA declined to comment.

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Pat Pardue was married to Jim Pardue, a World War II veteran, for more than a half century.
Photographer: Lauren Grabelle for Bloomberg

Since his brother died, Rick Eber has been reaching out to other veterans, explaining how aid and assistance benefits and care coordinators can spell disaster for other, crucial benefits. He’s spoken to more than a dozen so far, he said, but all were reluctant to discuss it at length. Eber said he believes it’s because they fear the repercussions. 

His lawyer, Jim Morgan, is cynical about the chances that anything will ever change. The businesses “don’t care what happens to the veterans,” Morgan said. “They just care that they signed another person up and are going to be taking money every month—for doing nothing.”

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