Texas attorney general sues company accused of preying on veterans

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Texas Attorney General Ken Paxton has filed a lawsuit seeking damages and, ultimately, a permanent injunction against the Austin-based company VA Claims Insider, alleging it engages in “false, misleading, and deceptive acts and practices” that have ensnared thousands of veterans in the Lone Star state, and beyond.

Paxton’s complaint, filed in district court in Bexar County, specifically charges that VA Claims Insider inaccurately promotes certain services as “free” before locking veterans into contracts that demand exorbitant sums – including for potentially illegal services, or assistance it doesn’t provide. The company requires that veterans pay six times the amount of any disability increase they receive after signing up with VACI, the suit said.

“While veterans can terminate the contract at any time with a 30-day written notice, VACI still demands payment for any subsequent increases in disability benefits or $5,000 in damages if the customer fails to notify it of an increase within one week,” the attorney general’s office said in a statement. “Further, consumer complaints reflect that the company specifically requested veterans to turn over their private information and VA account logins. Additionally, the company’s advertisements failed to disclose to potential customers that VACI is not accredited by the VA, cannot provide claim preparation services, and that the VA previously sent a cease-and-desist letter to VACI for potentially violating the law.”

The attorney general’s charges echo allegations surfaced in an investigation The Texas Tribune published in July.

“It is deeply disappointing that this business took advantage of men and women who have given so much to our country,” Paxton said in a press release announcing his suit. “I’m proud to advocate for justice for our Texas veterans at every opportunity.”

The company denied wrongdoing.

“We respectfully disagree with the basis of the lawsuit filed by the Texas attorney general’s office,” said Jeff Eller, a VA Claims Insider spokesperson. “Founded by a veteran to serve veterans, VA Claims Insider is a mission-driven organization and stands behind that mission. We welcome the opportunity to present our case in court.”

Founded in 2017, VA Claims Insider has become a particularly prominent and profitable firm in a burgeoning industry of companies that have sidestepped government accreditation and regulation as they seek to assist military veterans with the onerous work of preparing and filing benefits claims.

Days after Paxton’s case was filed, a group of accredited claims agents filed their own class-action suit against VA Claims Insider, seeking damages for perpetrating an allegedly “unfair and illegal scheme, which not only harms the business interests of properly accredited attorneys and agents but also hurts our veterans.” (In response to the class-action case, Eller provided a statement that was nearly identical to the one issued in response to Paxton’s suit.)

Federal law mandates that claims assistance is undertaken by accredited agents, who are trained, tested, overseen, and, when appropriate, punished by the U.S. Department of Veterans Affairs’ Office of General Counsel. Traditionally, the federal office offers accreditation to three types of claims representatives: agents, lawyers and veteran service organizations like the Veterans of Foreign Wars and the American Legion. The lawyers and agents charge fees on a tightly regulated scale. The service organizations provide their services for free, as does the Texas Veterans Commission, which also employs accredited agents.

Unaccredited representatives are explicitly banned from “preparing, presenting or prosecuting” claims, but all penalties for breaking this law were removed in 2006, setting the stage for unaccredited actors to flourish. While VA Claims Insider’s website and written materials include disclaimers that the company doesn’t engage in this work, Paxton’s suit deems such statements “inconsistent” with the services the company advertises.

Over the last year or so, unaccredited actors have proliferated thanks to the Honoring Our PACT Act, passed by Congress to expand benefits for millions of veterans disabled by military burn pits and other toxic exposures dating back to the Vietnam War. Since the law was signed last August, more than one million veterans have filed a claim. As of late July, Texas led the nation in number of PACT Act claims.

The Tribune’s investigation into VA Claims Insider detailed a slew of consumer complaints against the company, alleging everything from “slimy car sales tactics” to benefits fraud. The story also revealed that veterans and government officials had complained to Paxton’s office about VA Claims Insider dating as far as 2019. It also showed that company founder Brian Reese, an Air Force veteran, contacted the attorney general’s office for guidance, after which he publicly asserted online that he had spoken with lawyers there to “make sure that everything we’re doing is above board.”

Major veterans groups, the U.S. Department of Veterans Affairs, and 44 state attorneys general are now lobbying in Congress for passage of the GUARD VA Benefits Act, which would reimpose fines and criminal penalties for unaccredited claims companies. Leading this charge is the Veterans of Foreign War, which recently derided some of the biggest unaccredited companies, including VA Claims Insider, as “claims sharks.”

Reese rejected this characterization in a YouTube video, insisting that unaccredited and accredited actors share the same mission of helping veterans.

“I think this infighting — this ‘us versus them’ mentality — is hurting everybody,” he said. “It’s hurting the veterans and it’s unproductive.”

Jasper Craven, an independent investigative reporter covering military and veterans’ issues for outlets including The New York Times Magazine, the Intercept, the Atlantic and the New Republic, is a co-author of “Our Veterans: Winners, Losers, Friends, and Enemies on the New Terrain of Veterans Affairs.” This year he was a finalist for a Livingston Award for national reporting for an investigation he wrote for Mother Jones.

Disclosure: Jeff Eller, a former Texas Tribune board member, and the Texas Veterans Commission have been financial supporters of the Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find a complete list of them here.