AFGE Calls For Immediate Criminal Investigation Of Veterans
Affairs Management
The
American Federation of Government Employees (AFGE) is asking the Department of
Justice to open a criminal investigation into the Department of Veterans
Affairs' (VA) efforts to use funds appropriated for the Veterans Health
Administration to pay for the conduct of expensive outsourcing studies that set
the stage for the elimination of federal jobs.
In a letter sent in early December 2005 to U.S. Attorney General Alberto
Gonzales, AFGE National President John Gage asked for "an immediate criminal
investigation of current management at the VA" for violations of 38 U.S.C. 8110
(a)(5) and the Anti-Deficiency Act, 31 U.S.C. 1341(a), laws that prohibit the
diversion of appropriated health care dollars to pay for outsourcing studies.
"For over 20 years, Congress and administrations of both political parties have
honored the law and worked to improve health care delivery in a bi-partisan
fashion," said Gage in the letter to Attorney General Gonzales. "Sadly, this no
longer appears to be the case."
AFGE has made previous attempts to alert the VA of the violations. In July 2003,
AFGE officials sent a formal Cease and Desist letter to Former VA Secretary
Anthony J. Principi informing him that the VA's actions were against the law. In
November 2003, after learning that the VA management was once again using scarce
health care appropriated funds to illegally perform outsourcing studies, AFGE
again contacted VA officials and requested that they cease and desist from their
illegal activities.
The VA's actions have also caught the attention of the United States Government
Accountability Office (GAO). November 2005, GAO issued the results of an
investigation that verified the VA's illegal use of funds appropriated for
veterans' healthcare. Despite these findings, and the AFGE Cease and Desist
letters, the VA has denied any wrongdoing and has indicated it will continue
with its illegal use of appropriated health care dollars to
fund outsourcing studies.
"Since AFGE has previously given notice to the VA about the illegal use of
appropriated funds and now that GAO has investigated and verified the
illegality," said Gage in the AFGE letter to Attorney General Gonzales.
"...We believe that only a proper and thorough criminal investigation and
appropriate prosecution will deter VA management from continuing its violation
of the law."
To protect federal dollars earmarked for healthcare, Congress enacted 38 U.S.C.
8110 (a)(5), a 24-year-old safeguard that protects funds appropriated for
veterans' healthcare from being spent improperly. In addition to violating 38
U.S.C. 8110 (a)(5), the union also says the VA is in violation of the
Anti-Deficiency Act, 31 U.S.C. 1341 (a) a law which makes it illegal for an
"officer or employee of the United States Government" to "make or authorize an
expenditure or obligation exceeding an amount available in an appropriation or
fund for the expenditure of obligation.”
“As a result of chronic understaffing and under funding issues, the VA has to
deny thousands of veterans the healthcare they were promised when they put their
lives on the line for this country," said Gage. "Earlier this summer we learned
that the VA faced a $3 billion shortfall because of inexplicable
miscalculations. To divert health care dollars to pay for outsourcing studies
when the VA faces a budget crisis is criminal at best."
The Veterans Affairs Department has violated a 1981 law that prohibits the
diversion of funds appropriated to medical care accounts to research on the cost
of keeping work in-house versus that of contracting it out, the Government
Accountability Office reported November 30th, 2005. VA officials disagree.
Between fiscal 2001 and fiscal 2004, the department used Veterans Health
Administration appropriations to conduct cost comparisons associated with a
larger effort to determine whether health care services at existing facilities
would be able to meet future needs, GAO said. Language in Title 38 of the U. S.
Code bars VA from using the health administration's appropriations for this
purpose unless Congress provides specific instructions to do so, the auditors
said.
VA also used the accounts to finance research on the costs of keeping medical
center laundry services in-house versus that of outsourcing them, the report
http://www.gao.gov/new.items/d06124r.pdf
GAO-06-124R) stated. At least 16 of the cost comparison studies listed in the
department's fiscal 2002 annual performance report also were illegal, GAO said.
Agencies that spend money that hasn't yet been appropriated, or that exceeds the
appropriated levels for a given activity, are in violation of the Antideficiency
Act and must report the transgression to Congress and the White House unless
they are able to correct the problem, the auditors noted.
VA could avoid the reporting requirement, and punishments for noncompliance, by
rescinding the amounts improperly charged to the health administration accounts
and taking the money from other departmental appropriations accounts with
balances left, GAO said. But the department failed to track how much it spent
on the illegal cost-comparison studies, and would have difficulty determining
how much money would need to be de-obligated from the health accounts, the
auditors said.
It is also unclear whether the balances from previous fiscal years remaining in
accounts that could legally fund the studies--such as those for construction
projects--would be high enough to cover all expenses related to the cost
comparisons, GAO said.
VA officials disagree with GAO's interpretation of the 1981 law and with the
auditors' recommended fixes. In a Nov. 4 letter to McCoy Williams, director of
financial management and assurance at GAO, VA Secretary R. James Nicholson said
the language is intended only to prevent the unsanctioned use of health
administration funds for cost-comparisons related to formal competitive sourcing
studies run using rules in Office of Management and Budget Circular A-76.
Many of the violations cited by GAO did not involve official A-76 studies, the
department argued. For instance, the auditors said cost comparisons conducted
as part of the Capital Asset Realignment for Enhanced Services effort, a broader
restructuring project initiated in 2000, were illegal. With the exception of
contractors used in the initial phases of the CARE project, the employees
conducting those comparisons were paid primarily from health administration
accounts, GAO said.
That would have been OK had appropriators designated money in those accounts for
cost comparisons, the report stated. But for fiscal years 2001 to 2004, the
department sought appropriations--ranging from $16 million to $50 million--to
conduct cost comparison studies, and lawmakers denied the requests.
Nicholson acknowledged that VA cannot use health administration funds for formal
competitive sourcing studies, but argued that "Congress clearly did not intend
to preclude all manner of cost analysis necessary for the day-to-day
administration of our health-care system and, to the contrary, has directed [VA]
. . . to establish and manage our programs in a manner promoting cost-effective
care delivery."
GAO's interpretation of the 1981 law "makes sense only if one ignores its
legislative history and the rest of Title 38," Nicholson wrote.
But in the report, auditors argued that both the legislative history and the
"clear and unambiguous words in the.. cost comparison funding prohibition"
indicate that the law applies to more than traditional A-76 studies.
"At the crux of our disagreement with VA is the meaning of the word 'study,' "
GAO noted. "According to a well-recognized dictionary of the sort that might
have been available to the Congress in 1981, a 'study' is defined broadly as a
careful examination or analysis of a phenomenon, development or questions, or
the publication of a report of such an examination or analysis."
"The other important word in the language of the prohibition is the word 'any,'
which modified the word 'study,' " the auditors noted.
Regardless of how the law is interpreted, VA would benefit from keeping better
track of the costs associated with cost comparisons, the report said. The
department's inability to say how much it spent on such research is "part of a
bigger problem," the report stated.
"VA lacks reliable cost accounting information needed to manage its operations
and budget effectively."
That problem manifested itself over the summer, the report noted, when Congress
had to provide $1.5 billion in emergency fiscal 2005 funding for the
department's health care programs. The shortfall necessitating the supplement
stemmed from "inaccurate data and outdated assumptions," department officials
acknowledged at a congressional hearing.