In the early 1900s, the commissioner of the Pension Bureau, the predecessor to the Department of Veterans Affairs, testified to Congress that a substantial portion of veteran’s benefits were awarded based on fraud. At that time, unaccredited “claims agents” would prey upon veterans, committing fraud on their behalf and then poaching their pensions for their efforts.

As a result, Congress reformed veterans benefits and essentially prohibited veterans from hiring lawyers to help them secure their benefits. That changed in 1989, when Congress further reformed veterans benefits and allowed accredited attorneys and highly-trained agents to charge a fee for helping disabled veterans. 

In recent years, however, unaccredited companies – claims sharks – have taken advantage of a loophole in federal law. While the law is clear that charging a fee to assist, prepare, consult or otherwise help a veteran with their benefits requires accreditation, there is currently no criminal penalty for doing so. So while the VA sends cease-and-desist letters to these companies, they ignore them and rake in tens of millions of dollars defrauding veterans and the federal government.

These sharks operate by charging an exorbitant fee to assist veterans with increasing their disability compensation – most commonly a five to seven times increase. For example, a veteran who has never filed before that goes to one of these sharks and gets increased from 0-100% would end up owing that shark approximately $20,000. That same service, from an attorney or veteran service organization would be 100% free of charge – as federal law requires.

A common argument advanced by these claims sharks – who are knowingly violating federal law – is that their service is needed to help veterans get their benefits. And while this refrain certainly tugs at the heart strings, the sentiment rings hollow. The fact remains, if they truly cared about helping veterans, they would do so in accordance with federal law.

Unlike accredited attorneys, who are bound by ethical guidelines and oversight mechanisms to protect their clients’ interests, unaccredited companies operate without accountability. This gap allows these companies to engage in predatory practices without facing repercussions. Veterans can be left high and dry, facing potential sanctions and fines from the VA due to the fraudulent claims submitted on their behalf. In fact, these sharks instruct their clients to not inform the VA of the shark’s involvement. Indeed, one of the largest claims sharks has been sued, with a whistleblower detailing how they were instructed to forge disability examinations to ensure a higher rating for the client. Put another way – these companies reap all the reward and take none of the risks or responsibilities associated with representation. 

Furthermore, these sharks do not have access to the veteran’s claims file and therefore cannot make informed decisions. The complexity of the VA claims process demands expertise and insight into the specific facts of the case in order to chart the best path forward. Something as simple as filing the wrong form can rob a veteran of decades worth of retroactive benefits – again, something these sharks do not care about. And when these sharks mess up a veteran’s disability case, there is no malpractice insurance to pursue for the veteran and no recourse through the VA.

These sharks also misrepresent their status and the law to legislators and the public. A common refrain is their complaint that “the VA won’t accredit companies.” While this is technically true, it is misleading. For example, the VA does not accredit law firms. However, the principal attorney at the law firm must be accredited and every filing must be signed by the principal attorney. Most law firms, however, have several associates that work under the principal attorney – subject, of course, to review by the principal attorney.

The truth is that these companies do not want to be accredited because accreditation means following the rules and following the law. And if these companies followed the law, they would not generate tens of millions of dollars in revenue from the pockets of disabled veterans.

Legislators should stand fast and not allow Arizona’s disabled veterans to be preyed upon by claims sharks. Arizona should pass common sense, simple legislation that protects veterans by requiring anyone seeking to charge a fee for benefits assistance be accredited by the Department of Veterans Affairs. Together, we can protect veterans and put the claims sharks out of business.

Derek Debus is a disabled Marine infantry veteran, director of Military and Veterans Law at Stone Rose Law, and an accredited attorney.