Sick Pay: How War Vets Who Land in Texas State Hospitals Risk Losing Everything

click to enlarge After joining the U.S. Marine Corps, Castañeda was deployed to Iraq in 2007 with the 2nd Battalion 5th Marines Scout Sniper Platoon. - Courtesy Maria Esparza
Courtesy Maria Esparza
After joining the U.S. Marine Corps, Castañeda was deployed to Iraq in 2007 with the 2nd Battalion 5th Marines Scout Sniper Platoon.

On May 27, 2011, Adan Castañeda took a taxi from San Antonio to his parents’ Hill Country home. Once the cab drove off, Castañeda pulled out a pistol. 

Since returning from war three years earlier, Castañeda had cycled in an out of the Audie L. Murphy Memorial VA Hospital’s psychiatric ward, stuck in a pattern of emergency treatment and release. Weeks prior, his mother had once again tried to commit him to the psych ward after his delusions took on a darker tone – only this time doctors said they couldn’t take him (medical records indicate Castañeda “knew how to answer [doctors’] questions so that he wouldn’t be committed”).

Just before 4 o’clock that morning, Castañeda raised his gun, emptied a clip into his parents’ two-story home, reloaded and then kept shooting. Minutes later, he was sluggish, near catatonic when police found him wandering the side of a nearby country road.

Charged with aggravated assault with a deadly weapon, deadly conduct and two counts of attempted murder, Castañeda’s legal case stalled for three years as he bounced back and forth between solitary confinement at the Comal County jail and the North Texas State Hospital in Vernon, where doctors worked to make Castañeda competent to stand trial. Last year a judge declared Castañeda not guilty by reason of insanity. Instead of prison, the judge sent Castañeda to a state hospital for treatment and recovery.

For most people committed to a state psychiatric hospital, the Texas Department of State Health Services determines how much you have to pay for your treatment based on a sliding scale that takes into account your annual income. The idea, mental health advocates say, is so that patients can keep at least some of their money, creating, when possible, a cushion so they can land on their feet upon discharge from an institution.

Those rules, however, apparently do not apply for veterans who, like Castañeda, are pulling VA benefits. Months after he was transferred from jail to the Kerrville State Hospital, the VA, without explanation, changed the fiduciary on Castañeda’s VA benefits from his aunt to hospital officials. Under his previous arrangement, Castañeda was allowed to keep some $1,500 a month in personal expenses, much of it going toward paying experts and other legal costs associated with his criminal case. If he were most anybody else, going by the state hospital’s sliding scale for what patients should pay for treatment, Castañeda should only be paying around $500 a month to the state hospital, his attorney argues.

Yet last year the VA determined Castañeda will have to pay nearly all of his monthly $2,900 in VA benefits to the hospital for so-called “maintenance, service and treatment.” He’ll get to keep $90 a month.

Beth Mitchell, an attorney with Disability Rights Texas who is representing Castañeda in his appeal to both the VA and the state health department, calls the situation a conflict of interest, essentially allowing the state to drain the benefits of a veteran committed to psychiatric treatment, even though federal rules and regulations are supposed to prevent that from happening.

“This appears to be routine,” Mitchell told the San Antonio Current. Occasionally, she says, someone like Castañeda or their family will realize what’s happening and appeal in time. But Mitchell fears that in most cases, veterans don’t find out until it’s too late. “By the time many people end up in a state hospital, their friends and family have disowned them,” Mitchell said. “This is happening to people who don’t understand what’s going on, who are vulnerable, who are sick, so they might never complain. And often this is done when they’re first in the state hospital, and at that point they’re at their most decompensated state.”

Julio Harros, a regional supervisor with the Texas Veterans Commission, said he was familiar with Castañeda’s case but declined to comment on it. On the phone, however, he did acknowledge that Castañeda’s case represents a problem – “they’re charging vets at a different cost than others, which doesn’t seem right” – but wouldn’t discuss the matter any further.

It’s unclear exactly why the state health department would treat VA benefits different from other patient income. As Mitchell sees it, Castañeda’s VA benefits “should be viewed as income from his years of military service, including him going to war.” A DSHS spokeswoman did not respond to many of our questions, but said that ultimately the VA is responsible for how much a veteran gets to keep once committed to a psych hospital (VA officials didn’t respond to our calls for comment).

Maria Esparza, Castañeda’s mother, fears that her son’s psychosis, which medical records say was at least in part caused by “exposure to trauma during military service,” will have cost him everything – not just his young adult years, but also the government’s compensation for him going to war in the first place. She also worries the conflict over her son’s benefits is harming his recovery. “He now sees the hospital as trying to take all of his money, that they’re going to leave him penniless,” she told the Current. “It’s become hard for him to trust people and accept treatment because of it.”

Mitchell, Castañeda’s attorney, says it's absurd that a veteran would end up in a state hospital because of his wartime service, only to lose virtually all the money the government has paid him for that service. “It’s a bizarre, unfortunate circle.”

Castañeda was arrested after firing 23 bullets into his parents’ Hill Country home on May 27, 2011.
Castañeda was arrested after firing 23 bullets into his parents’ Hill Country home on May 27, 2011.
When the bullets stopped whizzing through the house that night in 2011, Roy Esparza called 911. He quickly thought of his stepson, telling the dispatcher, “He’s paranoid schizophrenic. He’s been diagnosed. He came from Iraq.” When Maria got on the phone, she sounded more tired than startled.

After the shooting, Castañeda’s mother explained to authorities how her son’s mental state began to deteriorate not long after he returned from war. After joining the 2nd Battalion 5th Marines Scout Sniper Platoon, Castañeda deployed to Iraq in March 2007 as part of the surge of American troops onto the battlefield. In a letter he later sent the VA contesting a lower disability rating, he gave a frenzied account of the violence he witnessed – stories of firefights, explosions and a series of other grisly events that are at times difficult to make sense of.

It’s clear Castañeda’s wartime service bothered him. Shortly after he returned from Iraq in 2008, while stationed at California’s Marine Corps Base Camp Pendleton, he attempted suicide by cutting his wrist with a razor. He apparently had second thoughts and drove himself to a nearby hospital. Medical records show that doctors there said Castañeda suffered from suicidal ideation and paranoia, and that they told base officials about the suicide attempt when they discharged Castañeda into the military’s custody.

After Castañeda’s honorable discharge in late 2008, he returned home to live in San Antonio. His mother started to notice him acting strange. She’d come to his apartment only to find him sitting in the dark. When she brought him a cake on his birthday, he threw it in the trash. Eventually he couldn’t keep a job or sleep throughout the night. After a family tragedy, the death of his brother, he started to drink a lot of cough syrup, his mother says. When a doctor prescribed him Valium, he went through the whole bottle in days.

Castañeda’s first trip to the VA psych ward followed another suicide scare. Maria says she and her husband took all the guns out of the house after Castañeda raised a pistol to his head during an argument. He rampaged through the house when he discovered his guns were missing; after a standoff with police, Castañeda was committed. The VA doctors called him stable when whey released him two months later; Maria disagreed.

By July 2010, Castañeda had started to isolate himself from family. A mental health team with the San Antonio Police Department took him into custody after a bizarre confrontation in which he locked himself inside his apartment and started to punch the walls. Later that year, when he was again hospitalized, Castañeda tried no less than three times to escape, once punching through a glass window and badly mangling his hand. Maria says that each time he was released, there was little to no follow up care. Eventually, he started to text his mother that he was seeing dead bodies inside his apartment. The month before he shot up his parents’ house, Maria tried unsuccessfully to commit him after his messages got darker and more violent.

After the shooting, Castaneda sat in solitary confinement at the Comal County jail for more than six months, even though a judge had already ordered him into treatment at the North Texas State State Hospital for competency restoration. The hospital stabilized him, but Castañeda’s case sat in limbo for so long that he eventually decompensated and had to be sent back to what people pejoratively call “competency camp” for a second time. 


Early on in Castañeda's case, Maria says that mental health advocates warned her that veterans who go through the state hospital system risk having all or most of their benefits seized. At the time she was more focused on criminal charges that could have put Castañeda behind bars for decades.

Eventually the family set up a trust where they could transfer some of his money. Castañeda’s aunt volunteered to be fiduciary since Maria, technically the victim of her son’s crime, couldn’t. Still, with much of Castañeda’s money going toward legal expenses, they were hesitant to tie up his assets in a trust.

Last February, the judge in Castañeda’s criminal case sent him to the North Texas State Hospital, the state’s maximum security mental institution. By November, state health officials determined he was no longer “manifestly dangerous” and sent him to the Kerrville hospital for long-term treatment. The week he arrived at Kerrville, his mother started to talk with an attorney about how to protect some of his assets in that trust. 

Then, in early December, a field examiner with the VA’s regional office visited Castañeda at the Kerrville hospital. “Adan says the guy talked to him for like 5 minutes, asking, ‘Do you want to change fiduciaries?’” Mitchell says. “Adan said no. They did it anyway.”

It’s unclear whether Kerrville petitioned for control of Castañeda’s money because hospital officials felt they weren’t being paid enough, or if it was a unilateral decision by the VA. Records show Castañeda’s aunt transferred what was left of his money, some $25,000, into his trust three days after the VA sent out a letter saying Kerrville was now in charge of his money – Maria says it was at the advice of an attorney (not Mitchell) who was helping the family with the trust. Soon enough, they got word that the VA had opened a “misuse investigation” into how Castañeda’s aunt had used his money, which carries the threat of possible criminal charges.

At first, Maria desperately tried to appeal to VA officials, assuming the matter must be a mistake. In fact, the VA’s own rules and regulations state that when determining payment for a veteran’s institutionalization, officials should agree on an amount “to be accumulated to provide for the veteran’s rehabilitation upon release from the institution.”

Maria says multiple phone calls to the VA’s regional office got her nowhere. In April, she and her sister even made the three-plus hour drive to Houston. “I figured if we could just explain this to someone in person, they’d understand how absurd this was … We weren’t saying he shouldn’t pay for his care, we just don’t think he should lose everything,” Maria said. They were eventually allowed to briefly speak with a VA attorney at the office, who said he’d discuss the matter with higher-ups and get back to them. Maria later called and left a voicemail seeking an update. The guy never called back. 

Meanwhile, Maria worried about how the entire ordeal was impacting her son. “He called the VA repeatedly, it must have been 20 or 30 times,” she said. “Nobody could explain how or why this was happening, and that really frustrated him. He was just constantly calling.” 

Mitchell says that she has a hearing later this week with state health officials in which she’ll argue that Castañeda should be put on the department’s sliding scale for payment, which would apply to almost anyone else with monthly income. The one problem with that: under state statute, health officials aren’t required to apply that sliding scale for veterans. Mitchell has also petitioned the VA, saying they didn’t adequately consider what Castañeda actually needs in personal expenses – nor, she says, did they abide by the VA’s own rules allowing for vets to keep enough money to help with their rehabilitation once they’re de-institutionalized. 

Maria says that after Castañeda was sent back to treatment after his criminal case, once treatment started to get rid of his delusions, he began making plans for college, to pay off debt, and to set up a trust fund for his nieces. Castañeda declined to speak with the Current, but answered some questions through his mother in a recent visit with her. Sometimes he thinks about becoming a paralegal or a mechanic. Online, he’d started to look at houses in Austin; he even contacted some real estate agents to ask about getting cleared for a VA loan. 

“All that activity has stopped now,” Maria says. “He was thinking about his future, which was helpful for his recovery… He thought he’d be able to start a new life when this is all over. I’m not sure he believes that anymore.” 


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