Louisiana sued for allowing consultants to profit off disabled veterans

A group of U.S. military veterans gathers at the Louisiana State Capitol on May 20, 2024, for an awards ceremony and to oppose a bill by Sen. Stewart Cathey that lawmakers passed. (Wes Muller/Louisiana Illuminator)

An attorney has filed a federal lawsuit against the state over the Louisiana Legislature’s recent passage of a law that lets unregulated consultants profit off disabled veterans.

The plaintiff is John B. Wells, a retired Naval officer turned lawyer who now represents military veterans trying to obtain benefits from the U.S. Department of Veterans Affairs (VA).

Wells, who practices out of Slidell, filed the suit in the U.S. Middle District of Louisiana last week after Gov. Jeff Landry allowed Senate Bill 159 , dubbed the “PLUS Act,” to go into law.

The new law, proposed by Sen. Stewart Cathey, R-Monroe, deals with what can be a confusing process for military veterans to file disability benefits. Loopholes in federal law have created an unregulated industry that is making lucrative profits from “VA claims consulting,” a practice that’s illegal under federal law but difficult to enforce.

When members of the armed forces leave the military, they might be entitled to a monthly cash benefit from the VA for any service-connected disabilities. To receive them, they have to fill out forms and submit medical records and other related information to support their claim.

The VA offers accreditation to people who assist disabled veterans with filing their benefit claims. They include private claims agents, lawyers and members of federally chartered veteran service organizations such as the American Legion and Veterans of Foreign Wars, among others.

Under federal law, it is illegal for anyone without VA accreditation to provide claims assistance to a veteran, and it is illegal to charge veterans for such assistance unless a claim is initially denied and enters the appeals process.

The PLUS Act attempts to legalize both of those things at the state level. It authorizes non-accredited claims consultants and allows them to charge fees for filing initial VA claims, with a $12,500 cap per claim.

Cathey’s proposal was derived from a bill U.S. Sen. John Kennedy, R-Louisiana, sponsored in Congress. It stalled under partisan gridlock, prompting supporters to take versions of it to state legislatures. So far, Louisiana is the only state to have approved one.

Even if other states follow suit, the practice would still be at odds with federal statutes and VA regulations.

Cathey’s law applies to unaccredited consultants and anyone who works on VA claims, including the accredited agents and lawyers who are bound by federal law and other rules.

Lawmakers ponder whether consultants for veteran benefits should see big profits

In his lawsuit, Wells argues that Louisiana’s PLUS Act violates the supremacy and contracts clauses of the U.S. Constitution. Both prevent states from taking action that contradicts federal law.

“Should the Louisiana Legislature wish to adopt a scheme governing only state benefits, they are free to do so but cannot adopt legislation that encroaches on the federal system and actually conflicts with the federal regulations,” Wells wrote in his lawsuit.

His petition also targets the $12,500 cap in Cathey’s law and a number of other provisions regarding contract disclosures, payment plans and other aspects that could conflict with the Louisiana Supreme Court’s regulation and discipline of attorneys.

Wells argues the $12,500 cap would be grossly insufficient for some complex cases that end up in the Court of Appeals for Veterans Claims and its superior courts, often requiring several hundred hours of legal work.

“SB 159 will lead to many attorneys being unable to accept paid representation of veterans at any level in the administrative or judicial system,” he wrote. “ … The cap will discourage attorneys from practicing veterans law, resulting in a denigration of benefits.”

Wells points out that all attorney fee agreements and claims agent contracts are reviewed by the VA’s Office of General Counsel to ensure the contract is reasonable for the amount of work involved on a particular claim.

Among his pleadings, Wells is asking the federal court to declare Senate Bill 159 unconstitutional and prevent Louisiana Attorney General Liz Murrill from enforcing it.

Murrill’s office has not responded to a request for comment.

The first hearing in the case is scheduled for June 18.

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