ML20207J830

Ofc of Inspector General Semiannual Rept to Congress for 980401-980930. with Two Oversize Encl

ML20207J830
Person / Time
Site:	05000131
Issue date:	09/30/1998
From:	VETERANS AFFAIRS, DEPT. OF (FORMERLY VETERANS ADMINIS
To:
Shared Package
ML20207J794	List: ML20207J791 ML20207J818 ML20207J830 ML20207J855 ML20207J872
References
NUDOCS 9903160410
Download: ML20207J830 (98)

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Office of Inspector General

Semiannual Report to Congress

!l April 1,1998 - Septem ber 30,1998

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FOREWORD 1

l 1 am pleased to submit the semiannual report on the activities of the Office of Inspector General (OlG) for the period ended September 30,1998. This semiannual report is being issued in accordance with the provisions of the inspector General Act of 1978, as amended.

OlG oversight of major Department of Veterans Affairs'(VA) programs resulted in systemic improvements and increased efficiencies in areas of medical care, procurement, financial management, and facilities management. OlG audits, investigations and other reviews l identified over $406 million in monetary benefits, for an OlG retum on investment of $23 for every dollar expended. A particularly noteworthy accomplishment was an audit of VA's Workers Compensation program, which identified opportunities to reduce long-term program costs by $247 million. Additional OlG accomplishments during the period included 54 criminal convictions and 88 administrative actions, foremost of which were cases involving health care and benefits fraud and employee misconduct.

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V VA, the second largest Department in the Federal govemment, operates the largest health care system in the United States. The OlG Office of Healthcare inspections continues to focus on quality of care issues to include Veterans Health Administration's (VHA's) deployment of Quality Management staff and the implementation of the Patient Safety improvement Policy. Through the Quality Program Assistance review process, our i healthcare inspectors conducted proactive reviews of essential aspects of VHA clinical l operations and patient treatment processes and made recommendations for improvement.

Please note that we changed the format for this semiannual report to make it more user friendly. Accomplishments are discussed by OlG component, i.e., Office of Investigations, Office of Audit, Office of Healthcare Inspections, and Office of Departmental Reviews and Management Support. Within each section, wo present results by VA organizational unit, e.g., Veterans Health Administration, Veterans Benefits Administration, and so forth.

I look forward to continued partnership with the Secretary and the Congress in improving service to our nation's veterans.

(Onyinalstynedby:)

RICHARD J. GRIFFIN Inspector General i

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1 TABLE OF CONTENTS v\ Page HIG H LIG HTS O F 0IG 0 P E R ATIO N S .....------------_..._ ... . . . . . . . . . . . . . . . . . . . . . . l l VA AND OlG MISSION,0RG ANIZATION AND RESOURCES.. . . . . . . . . . . 1 0FFICE OF INVESTIG ATIONS Mission Statem ent .... . . .. . .. . ...... . . . . . . . . . . . . . . . . . . . . . . . ..... . . . 7 Resources: . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Overall Performance....... ..... ... .... . . . . . . . . . . . . . . . . . . . . . . 7 Veterans Health Administration... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Veterans Benefits Administration.. ... . .. . . . . . . . . . . . . . . . ... . . . . . . . . . 14 National Cem etery System .. ........... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Office of Human Resources and Administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 OlG Forensic Documents Laboratory.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 0FFICE OF AUDIT Mission Statement . .. . .... .. . . . . . . . . . . . .. 23 R esources .... .. ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 0ye rail P erform a nce . ....... . ..... ........... . .. . . . . . . . . . . . . . . . . . . . . 23 Veterans Health Administration. . .. . ... . . .-. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Veterans 8enefits Administration... ....... .. . . . . . . . . . . . . . . . . 28 Office of Management - _ . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Office of Human Resources and Administration: . . . . . . . . . . . . . .. .. 30 Office of Information and Technology.. .. . . . . . . .................. . . . . . . . . . . . . 31 Multiple Office Action - --_.__- . . .

_ . . . . . . . . . . . . . . . . ..... ..... 32 0FFICE OF HEALTHC ARE INSPECTIONS Mission Statement . . . . . . . . . . . . . . . . . . . . . . . . . 35 R e s o u rc e s .. . .. . . . ...... .. . . .. .. ... .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Overall Perform ance . ..... . .. . . . . 35 O . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(- Vete ra n s H e alth A dm inistra tio n ..................................................

OFFICE OF DEPARTMENTAL REVIEWS AND M AN AGEMENT SUPPORT Mission Statement . . . . . .

R e s o u rc e s . .. .. .- . . - - _ _ _ _... . .......

35 47 47 Contract Review and Evaluation.. ....... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Office of Managem ent.. .... .. . . ... .. . . . . . . . . . . . . ... . . . . 48 Hotline and Speciallnquiries . . . . ..... . .. ................................ ..... . 50 H otline S ection ........... . ... . . . .. . .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Speciallnquiries Section. - . . . . . . . .. .. . 54  !

Policy, Followup, and Operational Support. .... ..... .. .. . . . . 57 R esources M ana gem ent ................ .. .. .. ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 OTHER SIGNIFICANT OlG ACTIVITIES President's Council on Integrity and Efficiency.- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 OlG Management Presentations. . . . . . . . . . . . . . . . . . . . 61 Congre ssional Testim ony ......... _ __ _ __ . . . . . . . . . . . . . . . . . . . . . . . . 63 Obtaining Required information or Assistance = . . . . . . . . . . . . . . . . . . . . . . 63 APPENDlX A - REVIEWS BY OlG STAFF __ _ _ _ - . - - - - - ._ . . . . . . . . . . . . . . . . . . 65 APPENDIX B - C O NT R ACT R EVIEW S B Y O TH E R AG E N CIE S ........................... ... .. ... .. . . . 71 APPENDIX C - CONTRACT AUDIT REPORTS FOR WHICH A CONTRACTING OFFICER DECISION HAD NOT BEEN M ADE FOR OVER 6 MONTHS AS OF SEPTEMBER 30,1998.... ... .. . . .. ... 73 APPENDIX D FOLLOWUP ON OlG REPORTS- - - - - - - - - - - - 79 APPENDIX E - REPORTING REQUIREMENTS OF THE INSPECTOR GENERAL = 83 APPENDIX F - VA OlG FIELD OPERATIONS PHONE LIST- . 85 O

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p HIGHLIGHTS OP OlG OPERATIONS d

This semiannual report highlights the activities and accomplishments of the Department of Veterans Affairs (V A) Office of Inspector General (OIG) for the 6-month period ended September 30,1998.

Following are the statistical highlights of 010 activities and some of the major accomplishments during the reporting period by 01G component.

Doll. AR IM P ACT Dollars in Millions Funds Put to Better Use.. . . . . . . . .. .. . . . . . . . .. .. . . . $387.6 Dollar Recoveries.. .. .. . . . .. . . . . . . . . . . . . . . . . . $ 15.0 Fines, Penalties, Restitutions, and Civil Judgments.. . ....... .. .. ... .. $4.0 RETURN ON INVESTMENT Dollar Impact ($406.6M) / Cost of 01G Operations ($17.4M).. ... . 23 :1 OTHER IM P ACT In dic t m e n ts ... . ... . . .. . . .............. . . . . . .. 61 Co n vic tion s . .... . . .. .... . .... .. . .. . . .. . . . . . . . . . . . . . . . . . . . . 54 Administrative Sanctions . . .. ..... .. ...... .. . . .. . . .. . . . . 88 ACTIVITIES D Reports issued A udits . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Contract Revie ws . . ... ..... . . . . . . .. . . ... . .. .. 16 Healthcare Inspections . .. .. .. .. ... . .. . . . . . . . 15 Special In quirie s.. .. ...... ..... ..... . .... . .. . . . . . . . . . . . . . . . . . . . . 9 l

Investigative Cases O pe n e d ....... . . .. .. .. . . . . . . . . . . . . . . . . . . . . . . .. . .. .. 128 C l o s e d . . . . . . . . . . . . ... . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . 99 Hotline Activities Contacts... . . .. . ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . 7,609 Cases Opened..... . . . . . . . . . . . . . . . . . . . . . . . ........4 .. 439 Cases Closed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 497 OFFICE OFINVESTIGATIONS During the semiannual period, criminalinvestigative priority was given to cases of patient abuse, instances where incapacitated veterans fall victim to unscrupulous fiduciaries, public corruption, and major thefts. Immediate response to these types of allegations is absolutely essential. To this end, we are able to draw upon the varied skills of the entire 010 staff. As examples, patient abuse investigations were l usually conducted with the assistance of 010 health care professionals and major theft / embezzlement investigations utilized the expenise of OIG audit staff. This combined multidisciplinary approach c resulted in successfuljudicial actions. These cases demonstrate that the OIG will take decisive action I

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l against those who prey on veterans and will hold accountable those V A employees who disregard their (N public trust responsibilities. During the period, the Office ofInvestigations closed 99 investigations

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V) resulting in i15 judicial actions and over $6 million returned or saved.

Veterans Health Administration The following are examples of investigations in which Veterans Health Administration (VH A) employees have been arrested for various illegal activities. (i) An individual employed in a VA pharmacy was convicted of theft after a VA 01G investigation found that he conspired to steal approximately $150,000 l

in pharmaceuticals from the VA Medical Center (VAMC) for shipment to a commercial pharmacy. (ii) '

Two individuals employed at a VAMC were arrested after an investigation found that they were in possession of cocaine and crack cocaine, and sold the drugs to other e ployees and to undercover

, operatives on VAMC property. (iii) A hurband and wife who wo '..o at a VAMC pleaded guilty to charges of bank larceny after an investigation found that they executed a scheme to obtain credit cards in the names of patients at the V AMC. They fraudulently Gtained the cards by using personal patient information and forging patient signatures, and then used the cards to obtain more than $25,000 in cash and merchandise. (iv) An individual employed at a V A Outreach Center pleaded guilty to charges of workers' compensation fraud; mail fraud; and false statements. He allegedly suffered an on-the-job I injury for which he received more than $300,000 in workers' compensation benefits payments. The investigation found that he worked a variety of different jobs during the period he was collecting benefits.

(v) A nurse at a VAMC was found guilty of making a telephone bomb threat to a facility in retaliation against co-workers who reported her as being involved in suspicious deaths there.

Veterans Benefits Administration The following investigations are examples of fraud relating to some of the benefits programs administered (VO) by VA. (i) An individual was convicted after trial on charges of equity skimming; mail fraud; bankruptcy fraud; and money laundering. The investigation found that he had fraudulently assumed more than 50 .

properties whose mortgages were guaranteed by VA or insured by the Department of Housing and Urban {

Development. He rented the homes but retained the rent proceeds rather than paying the lenders, causing l the loans to go into default. (ii) Three VA employees were found guilty of conspiracy to defraud VA after an investigation found that they had participated in a scheme to embezzle over $1 million from VA.

In their capacities of providing assistance to veterans, they submitted false claims for medical expenses and demanded kickbacks from the veterans they supposedly served. (iii) An individual was sentenced to 6 months' home confinement,5 years' probation, and ordered to pay over $100,000 restitution after an .

investigation found that, over a 15-year period, he converted for his own use more than $100,000 in I Dependency and Indemnity Compensation benefits paid to his deceased mother. (iv) The U.S. Attorney's Office is continuing to obtain civil settlements from student veterans who received VA education benefits but did not attend scheduled college classes. Bribes were paid to faculty staff to ensure high grades would be given with no class attendance required. To date,216 students have agreed to pay $2,633,638  ;

in restitution. Negotiations are continuing with additional students. Criminal proceedings against the I college staff are pending.

1 National Cemetery System A Federal grand jury has returned an Il-count indictment against two individuals, the director of a VA national cemetery and a private contractor, who supplied sand from the cemetery to other contractors.

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OFFICE OF AUDIT O We planned audits and evaluations to focus on determining how programs can work better, while emphasizing improved service to veterans. As a consequence, the 20 program and financial audits and evaluation reports issued during this 6-month reporting period have had s significant and positive impact on VA program operations.

l These reports made recommendations to enhance operations or correct deficient areas that contained $370 million in monetary benefits. The Office of Audit had a return on investment ratio of $46 in monetary benefits for e-ery dollar spent.

Veterans Health Administration i

i The following are examples of major health care related audits. (i) A report on the management of Pathology and Laboratory Medicine Service (PLMS) operations concluded that while PLMS was l generally operated in a satisfactory manner, management needed to more closely monitor quality control l testing, staffing, and send-out tests. We estimated that over $2 million could be saved annually by increasing oversight of the cost of quality control testing. In addition, we found that opportunities exist for VH A to increase operational savings by an estimated $32 million annually by taking advantage ofits purchasing power to obtain chemistry tests at a lower cost. (ii) Our review of Medical Care Cost

, Recovery (MCCR) collection and billing practices concluded that VH A can enhance MCCR recoveries l by $83 million by using collection tools developed by the MCCR program office, and obtaining insurance l data from veterans. (iii) As part of an ongoing national audit of VH A's Minor Construction and

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Nonrecurring Maintenance projects, we identified four construction projects that were not needed or could be redaced in scope, resulting in cost savings of approximately $1.6 million.

Office of Manaaement '

The audit of VA's Consolidated Financial Statements for the Fiscal Years 1997 and 1996 included a qualified opinion concerning balances for receivables, liabilities for loan guarantees, and resources payable to Treasury contained in VA's Statement of Financial Position, and the items in the Statements of Operations and Changes in Net Position; Cash Flows; and Budgetary Resources and Actual Expenses. In each of these areas, we were unable to satisfy ourselves as to the recorded balances in these accounts because ofinadequate accounting records. Nor were we able to satisfy ourselves as to the balances by other auditing procedures.

l Multiole Office Action l

l An audit of VA's Workers' Compensation Program (WCP) found that opportunities exist to reduce WCP costs by about $247 million, over the projected 18 year lifetime of claimants on the rolls, by conducting more effective case management to identify employees who can be brought back to work or who should be removed from WCP rolls.

OFFICE OF HEALTHCARE INSPECTIONS i

! The Office of Healthcare Inspections' (OHI) program evaluations, hotline inspections, and quality program assistance reviews, during this reporting period, show that VHA clinicians provide generally good care to an aging, chronically infirm veteran population in a variety of clinical care environments.

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VH A has medical quality assurance procedures in place to detect a wide variety of medical errors, but it needs to consider employing additional statistical procedures that will allow clinical managers to quickly identify and correct subtle changes in clinical practices or behaviors that may result in unwanted clinical outcomes, before the resulting problems become too serious. OHI confirmed that a majority of hotline complaints are based on perceptions that VHA employees treated patients improperly, either personally or clinically, and that VH A managers need to emphasize the need for employees to treat patients and their family members as valued and important people.

Procram Reviews l i

We conducted three health care program reviews. (i) Our analysis of VH A inpatients depicted seriously illindividuals whose health care was complicated by impaired social support systems, and badly compromised nutrition status. These factors should be important to VH A planners and managers as they develop treatment planning and treatment access strategies in a health care system that is evolving to predominantly ambulatory care. (ii) Our analysis of substantiated health care hotline allegations provided VH A managers with information on what areas they need to emphasize for improvement in order to better treat VA patients. (iii) Our proposal of an alternate statistical methodology to track and trend quality management continuous monitoring information provided a way for VH A statisticians and program managers to detect and correct the causes of possibly unwanted behaviors or practices that may result in patient harm, earlier than most commonly used statistical methods.

Quality Proaram Assistance Reviews Our Quality Program Assistance (QPA) reviews at two VAMCs found that managers are working collaboratively to ensure that veterans have access to high quality, low cost health care. Employees g generally support the changes, but the rapid pace and scope of changes are negatively affecting employee y morale. Our review of the QPA process shows that VHA clinical managers and VAMC executive

/ managers are generally supportive of the QPA's and feel that it adds value to their efforts to maintain high quality patient care.

l Patient Care Services A patient care review concluded that attending and resident physicians rotated to other wards and teaching facilities so frequently that nursing employees, patients, and family members did not know who the specific responsible physician was in the event of an urgent medical situation.

OFFICE OF DEPARTMENTAL REVIEWS AND MANAGEMENT SUPPORT Contract Review and Evaluation Since 1993, the Division and 010 Counselor have worked closely with Office of Acquisition and Materiel Management (A&MM) officials and contracting officers, with Office of General Counsel attorneys, and with VH A Pharmacy Benefits Management to provide VA with a unified and coordinated approach to reviewing certain contracts and contracting practices, and recovering contractor overcharges.

As a result of this approach, VA has witnessed a dramatic increase in dollar recoveries as well as a huge increase in companies voluntarily disclosing to VA that they have overcharged the Government. Audits completed by the Division during the period resulted in recoveries of $14.3 million. This represents a

$31 return for every $1 expended. Almost all of these recoveries have been returned to VA to fund O iv m o

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needed VA programs. Recommendations were also made to assist contracting officers in negotiating the q best possible prices that may save VA an additional $14.1 million.

l D] Hotline and Specialinauiries The Hotline and SpecialInquiries program provides an opportunity for employees, veterans, and other concerned citizens to report fraud, waste, abuse, and mismanagement. The identification and reporting of issues such as these are integral to the goal ofimproving the efficiency and effectiveness of the Federal l

Government. We are encouraged to find employees, veterans and other concerned citizens who are I willing to report illegal or wasteful activities they have observed in order to improve Government  !

operations. Because of their efforts during the semiannual period, the Hotline and SpecialInquiries l Division recorded 32 administrative sanctions against employees and 106 corrective actions taken by 1 management to improve VA operations and activities. The reports issued by specialinquiries staff  ;

concerned serious issues of misconduct against high ranking officials and other high profile matters, which received a great deal of interest from the U.S. Congress, V A Secretary, V A managers, media, and the general public. The Inspector General testified in May 1998 before the Subcommittee on Oversight and Investigations, House Veterans' Affairs Committee regarding one specialinquiries report. In another request from the Subcommittee, we responded to numerous allegations of mismanagement, misconduct, poor clinical care practices, criminal activity, and administrative irregularities at one V A medical health ;

care system. The subsequent report resulted in recommendations to take administrative actions against ,

senior officials and supervisors, correct certain personnel violations. and improve patient care procedures, l and administrative operations and activities.

l Followuo on OlG Reports p)

The Followup, Policy, and Operational Support Division is responsible for obtaining implementation actions on audits, inspections, and reviews with over $1 billion of actual or potential monetary benefits as of September 30,1998. Of this amount $795 million is resolved, but not yet realized as VA has agreed to l

l implement the recommendations, but has not yet done so. In addition, $248 million relates to unresolved i reviews awaiting contract resolution by VA contracting officers. During this reporting period, the l Division took action to close 75 reports issued in this and prior periods, with 242 recommendations and a monetary benefit of $133 million, after obtaining information that showed management officials had fully l implemented corrective actions. l i

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qo VA AND OlG MISSION, ORG ANIZATION, AND RESOURCES The Department of organization Veterans Affairs (VA) VA has 3 administrations that operate direct services to veterans:

e Background Veterans Health Administration (VilA) provides health care, e

In one form or another, American governments Veterans Benefits Adminiitration (VB A) have provided veterans benefits since even Provides benefits, and before the Revolutionary War. V A's historic

• National Cemetery System (NCS) provides predecessor agencies demonstrate our Nation's burial and recognition.

long commitment to veterans.

To support these services and benefits, there are The Veterans Administration had been in six Assistant Secretaries, including:

existence since 1930, when Public Law 71536 . M anagement (Budget. Financial consolidated the Veterans' Bureau, the Bureau Management, Acquisition and Materiel of Pensions, and the National Home for Management (A&M M)),

Disabled Volunteer Soldiers.

• Information and Technology, e Policy and Planning, The Department of Veterans Affairs was

• Human Resources and Administration established on March 15,1989, by Public Law (Human Resources Management, Iq d 100-527, which elevated the Veterans Administration, Security and Law Enforcement, Administration, an independent agency, to Equal Opportunity, and Resolution Cabinet-level status. M anagement),

e Public and Intergovernmental Affairs, and Mission e Congressional Affairs.

VA's motto comes from Abraham Lincoln's In addition to VA's Office of Inspector General, second inaugural address, given March 4,1865, other staff offices providing support to the "to care for him who shall have borne the battle Secretary include the Board of Contract and for his widow and his orphan." These words Appeals, the Board of Veterans' Appeals,the are inscribed on large plaques on the front of the Office of General Counsel, the Office of Small VA Central Office building on Vermont Avenue and Disadvantaged Business, and the Centers for in Washington, DC. Minority Veterans and for Women Veterans.

The Department's mission is to serve America's Resources veterans and their families with dignity and compassion and to be their principal advocate in While most Americans know that VA exists, ensuring that they receive the care, support, and few have any idea of the size of this Department, recognition earned in service to this nation. which is the nation's second largest in terms of staffing. For FY 1998, VA had 207,066 employees and a $43 billion budget.

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VA and OlG Mission Organization and Resources

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There are an estimated 25.9 million living VA Office of Inspector veterans and the provision of legislatively r mandated services to them is a massive operation. To serve our nation's veterans, VA General (OlG) ,

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maintains facilities in every state of the union 1 and the District of Columbia, the Background  ;

Commonwealth of Puerto Rico, Guam, and the l Philippines. VA's 01G was administratively established on January 1,1978, to consolidate audit, Approximately 191,000 of V A's employees investigation, and related operations into a work in the health care system. Health care cohesive, independent organization. In 1978, accounts for $18 billion (approximately 42%) of the Inspector General Act (Public Law 995-452)

VA's budget in FY 1998. VH A provides care t, was enacted and established a statutory an average of 63,000 inpatients daily. During Inspector General (IG)in V A.

FY 1998, slightly more than 35 million episodes I of care were provided to outpatients. There are Role and Authority l 172 hospitals,602 outpatient clinics,132 i nursing home units, and 40 domiciliaries. The Inspector General Act of 1978 states that the IG is responsible for: (1) conducting and Veterans benefits were funded at $24 billion supervising audits and investigations,(2)

(almost 56%)in FY 1998. The 11,254 recommending policies designed to promote employees of VB A provide benefits to veterans economy and efficiency in the administration of, and their families. Approximately 2.6 million and to prevent and detect fraud and abuse in, the veterans and their beneficiaries receive programs and operations of V A, and (3) keeping compensation benefits valued at over the Secretary and the Congress fully informed

$17 billion. Also over $3 billion in pension about problems and deficiencies in VA benefits are provided to veterans and survivors, programs and operations and the need for V A life insurance programs have 4.8 million corrective action.

policies in force with a face value of over $469 billion. Almost 369,000 home loans were The Inspector General Act Amendments of 1988 guaranteed, with a value of almost $40 billion. provided the IG with a separate appropriation account anu a revised and expanded procedure The National Cemetery System operates and vor reporting semiannual workload to Congress.

maintains 115 eemeteries and had 1,328 The IG has authority to inquire into all VA employees in FY 1998. Operations of NCS and programs and activities as well as the related all of V A's burial benefits accounted for activities of persons or parties performing under approximately $199 million of VA's $43 billion grants, contracts, or other agreements. The budget. There are almost 77,000 interments in inquiries may be in the form of audits, VA cemeteries each year. Approximately investigations, contract reviews, inspections, or 337,000 headstones and markers are provided other appropriate actions.

for veterans and their eligible dependents in VA cemeteries, state veterans' cemeteries, and private cemeteries.

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VA and OlG Mission, Organization and Resources (O Organization 1

Allocated full time equivalent (FTE) for FY 1998 VHA Fin. Mg mt.

was as follows: ros 1s%

l IRM 4%

OFFICE ALLOCATED FTE ,,,, yg, i

inspector Genvial 4 22% 2ss Counselor 4 Invostigations 80 The following chart indicates percent of OIG Audit 170 resources which have been devoted to mandated, Departmental Reviews reactive, and proactive work.

and Management *45 Support Healthcare inspections 20 Reactive Mandated TOTAL 323 42s 3,s

• Does not include 23 reimbursable FTE.

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FY 1998 funding for 01G operations was

$33.4 million, with $31 million from Proactive 38%

appropriations and $2.4 million through I reimbursable agreements. Approximately 85 percent of the total funding was for personnel salaries and benefits,5 percent for official travel, Mandated work is required by law and the and the remaining 10 percent for all other Office of Management and Budget; examples operating expenses such as contractual services, are our audits of VA's Consolidated Financial rent, supplies, and equipment. Statements, followup activities, and Freedom of i Information Act information releases.

The percent of OIG resources, which have been devoted during this semiannual reporting period Reactive work is generated in response to in V A's major organizational areas, are requests for assistance received from external indicated in the following chart. sources concerning allegations of fraud, waste, abuse, and mismanagement. Most of the work performed by the Offices ofInvestigations and Hotline and Special Inquiries is reactive.

Proactive work is self-initiated and focuses in l areas where the OlG staff determines there are significant issues; healthcare inspections and l

i audits fall into this category.

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VA and OlG Mission, Organization and Resources 4

-O OlG Mission Statement l The OlG is dedicated to helping VA ensure that veterans and theirfamilies receive the

, care, support, and recognition they have

{ received through service to their country.

The OlG strives to help VA achieve its i vision of becoming the best managed l service delivery organization in

! government. The OlG continues to be l responsive to the needs ofits customers by l working with the VA management team to identify and address issues that are

important to them and the veterans served.

i i in performing its mandated oversight

, function, the OlG conducts audits, health i care inspections, in vestigations, special

} inquiries, and contract reviews to promote

! economy, efficiency, and effectiveness in l VA activities, and to detect and deterfraud, i waste, abuse, and mismanagement. The i OIG's oversight efforts emphasize the goals i of the National Performance Review and

! { the Government Performance and Results l Actfor creating a government that works i better and costs less. Inherent in every l OIG effort are the principles of quality l management and a desire to improve the way VA operates by helping it become more i customer driven and results oriented.

i The OlG will keep the Secretary and the

} Congressfully and currently informed about issues affecting VA programs and the opportunitiesforimprovement. In doing so, the staff of the OlG will strive to be leaders and innovators, and perform l their dutiesfairly, honestly, and with the highest professionalintegrity.

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( d b DEPARTMENT OF VETERANS AFFAIRS OFFICE OF INSPECTOR GENERAL inspector General Esecutive Assistant _________,,___ Cesaselor to laspector General Deputy ummmmm I I i l Assistant inspector General Assistant inspector General Assistant laspector Gs. seral estistant inspector General

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Medical Assessment Peticy. F ollowup Hettine and Maelth Care Analysis and 8 ~

and O p n uenal --

Spectat taquiries :-- 7,,,, Oversight ConsnaHu Support i Patlest Care j Health Systems inspections and --

Development 7,,, g i, Evalsetton g

Contract Revies Researces and Evaluation Management Medical Decaments Laboratory I Coerations Divisienn Financial Aedits Central 0ffice and Assistance Bedford Allente Procureir est -

Benefits Fraud Chicago M a ngem ent.

Kansas City Policy and S e attle Professional Development i

Technical Sub Offfcet Field Offices SUPP fl Dalles Northeast Austin $sb- Hines Southeast Office Los Ang,1,s Central P hiladelphia Western Planning and Operational Support Resident Anencies _

Financial Attenta Boston Statement Columble D efla s Houston Kansas City i New Orleans Newark A ustin Phoenix San Francisco S ub-O ffice W a shin 0 ton W. Palm Beach

I VA and OlG Mission, Organization and Resources

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e' OFFICE OF INVESTIG ATIONS (o I Mission Statement Cost Effectiveness

• The average cost of conducting the 99 Conductinvestigations of criminal closed investigations was $11,354. Each activities affecting the programs and investigation averaged a return of $51,683, operations of FA in an independent and resulting in approximately $4.60 returned for objective manner, and assist the every $1 spent.

Department in detecting and preventing fraud and other criminal violations. Timeliness

• Average work days from receipt of Resources allegation to initiation of investigation averages 39 days against a goal of 45 days.

• Average work days from initiation of Office ofInvestigations was allocated 80 FTE for its headquarters and 16 field locations for FY investigation to referral to an Assistant U.S.

1998. These individuals were deployed in the Attorney was 179 days which greatly exceeded following program areas: ur g al of 365 days.

Customer Satisfaction

• Customer satisfaction survey forms were provided to each prosecutor upon referral of an investigation for criminal prosecution. All VHA ratings received exceeded 4.0 and averaged 4.9 out of a possible 5.0 (5.0 means strongly agree p and 1.0 means strongly disagree).

61 %

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Following are summaries of some of the investigations conducted during the reporting period by VA component. We discuss VHA, VB A,NCS, and the Office of Human Resources and Administration. This is followed by the OlG Fonnic Document Laboratory.

Overall Performance Ot:tput

• 99 investigations were closed during the Veterans Health

'ePorting period. Administration Outcome

• Indictments 61 Fraud and other criminal activities committed

• Convictions 54 against VHA encompass patient abuse, theft of

• Monetary Benefits - $6.1 million Government property, drug diversion,

• bribery / kickback activities by employees and Administrative Sanctions - 56 contractors, false billings, inferior products, and soforth.

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[ During the reporting period, we have continued VAMC pharmacist manipulated the VA I

l pharmacy computer to generate fraudulent  ;

our support to VHA in its attempt to remove from the workers' compensation rolls those prescriptions for narcotics in the names of employeesfraudulently accepting benefits. The patients. After execution of search warrants Office ofInvestigations investigates those disclosed diverted drugs and documentation in instances of criminal activity against VHA that support of the crime, the individual confessed to l have the greatest impact and most deterrent possession and diversim oi narcotics from the l value. VAMC and resigned from Government service.  ;

Judicial action is pending. l i

Empioyee integrity

• A VAMC registered nurse was terminated l from Government service based on evidence

. heft / Diversion of Pnarmaceuticals disclosed through a joint VA 010 and VA Police i investigation into diversion of controlled

• A former VAMC pharmacy technician, who substances from the VAMC. The nurse provMed  ;

was also a local union official, over a 3-year a sworn statement wherein he admitted to period stole approximately $150,000 in divening controlled substances to maintain his  ;

pharmaceuticals from the VAMC and shipped drug addiction, and further admitted making false l them to two individuals who co-owned a entries on V AMC logs to cover his theft. He also [

commercial pharmacy service. He was admitted being under the influence of drugs while [

sentenced to 5 months' home confinement,5 on duty. A criminal complaint was filed charging  !

years' probation and ordered to make restitution the nurse with possession of a controlled  ;

substance, alteration of a medical record, and theft to VA of $147,140. A second party in the case, previously employed both as a VAMC of roperty.

P Judicial action is pending.

pharmacist and as president of the commercial pharmacy, was sentenced to 27 months'

• A VAMC pharmacist was arrested after a incarceration,3 years' supervised probation, and joint VA OlG and VA Police investigation orde:-d to prj estitution of $154,000 to V A. revealed that he had diverted drugs from the This individual also agreed to settle his federal Pharmacy's narcotics vault, destruction bins, and t income tax liability for $280,668 and to forfeit outgoing mail. As a result of a search incident  ;

his state pharmacist's licenses in thr;:e states. A to his arrest, and subsequent consent searches,  ;

third individual, who was vice-pmident of the narcotic substances were found, as well as two l commercial pharmacy, was sentenced to 24 concealed knives. Some of the prescription I months' incarceration,3 years' supervised containers found during the searches indicated l probation, ordered to pay $123,974 in restitution that they were drugs that should have been  ;

and $10,000 in fines. The third individual mailed to veteran patients. Other containers settled his federal tax liability by providing a indicated that they were unused medications that check for $343,000 to the Internal Revenue had beer returned to the pharmacy for Service at his sentencing. He is prohibited from destruction. He faces charges of burglary, {

working in the pharmaceutical industry as part Possession of controlled substances, theft of of his future probation. Property, and possession of a concealed deadly w:apon.

• A joint VA 010, Federal Bureau of Investigation (FBI), aM Drug Enforcement Administration investigation disclosed that a 8

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[n') Use/ Sale of lileaal Druas restitution in the amount of $25,905. The V husband stole pre-approved credit card Two individuals, the first formerly employed in applications from mail that was to be delivered the dental service at a VAMC, and the second to hospitalinpatients on his ward. They applied currently employed as a housekeeper at the for 12 cards under the names of VA patients and VAMC, were arrested pursuant to the issuance obtained cash and merchandise totaling of a warrant for knowingly and intentionally approximately $25,905. The victims were all porsessing cocaine. During the arrest, numerous patients hospitalized for treatment of Post  !

crack vials and a crack pipe were found in the Traumatic Stress Disorder resulting from apartment in which the two resided. A joint VA psychological trauma experienced during their 010 and FBlinvestigation revealed that the military service.

individuals sold drugs to other VAMC employees and to undercover operatives on the

• A farmer VAMC practical nurse was grounds of the V AMC. After the arrest, both indicted in U.S. District Court on 29 counts of l were arraigned and released on $10,000 personal bank fraud and 2 counts of forgery. l recognizance bonds. Soon after being released, Investigation disclosed that the nurse stole the former dental clerk was arrested egain for personal checkbooks from inpatients and wrote violating the conditions of her pretrial release. checks to himself, forging the veterans' She was arraigned before a Federal magistrate signatures lie also forged the endorsement of I and incarcerated pending acceptance into a drug two U.S. Treasury checks made payable to one treatment program, of the veterans. Several checks were written after the veterans expired at the V AMC. The Theft and Embezzlement totalloss is approximately $33,350.

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• A former VAMC driver was arrested on an Acceotance of Bribes. Gratuities, h outstanding warrant for theft of Government funds. A VA OlG investigation disclosed the Conflicts of Interest individual had used a Government Fleet Service Five individuals were indicted by a Federal j Credit Card to make more than $4,000 worth of grand jury for mail fraud in connection with a j unauthorized gasoline purchases for use in scheme to submit false claims to a VAMC. One l personally owned vebicles. The individual fled of the individuals, a maintenance supervisor, l and had been a fugitive for 5 months. He was was terminated from the VAMC after he was arraigned in U.S. District Court and released on indicted on nine counts of mail fraud. Other

$100,000 bond. individuals named in the indictment worked for companies that supplied construction materials

• A husband and wife, both of whom were and/or services to the VAMC. A joint VA OIG employed as VAMC medical ward c:erks, each and FBIinvestigation disclosed the maintenance pleaded guilty to one count of bank larceny and supervisor assisted four separate vendors in were subsequently sentenced for executing a using the mail to submit false claims for scheme to obtain credit cards in the names of materials and services in exchange for providing VAMC patients. The husband was sentenced to him gifts and money.

6 months in a halfway house,5 months' home ,

detention,5 years' probation, and restitution in the amount of $25,905. The wife was sentenced  ;

to 6 months' home detention,5 years' probation, i and joint responsibility with her husband for A

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Office of Investigations Workers' Compensation Benefits Fraud work, and began receiving workers' compensation payments which have exceeded

• A former VAMC motor vehicle operator $300,000. A joint VA OIG and DOL -

was ordered to pay the Government $175,000 in investigation revealed that, during the time he restitution after he admitted submitting false was receiving benefits, he was working among statements in order to receive Federal workers' other things as: a counselor at a children's ,

compensation benefits. lie acknowledged that, school, a psychologist at an elementary school, during the same period of time, he owned and an adjunct professor at a university, the owner of ,

operated a restaurant. In addition, he was a transportation company, co-director of a j sentenced to 6 months' home confinement and 5 Psychotherapeutic evaluation program and a years' probation. preschool, and a self-employed psychologist.

Sentencing is pending.

• A former VAMC laborer was sentenced to 12 months' incarceration,36 months' probation, and ordered to make $5,886 in restitution,in Other Emolovee Misconduct response to a guilty plea to workers' l compensation fraud. Investigation disclosed that

• A VAMC engineer resigned employment and he submitted false claims and false statements to paid restitution of $3,800 after a V A OIG ,

the Government indicating he was unable to investigation revealed that he had misused his l work due to an on-the-job injury when,in fact, Government VIS A IMPAC credit card by making he was working at a convenience store. As a personal purchases. A consent search of the result of the successful prosecution of this individual's home by VA 010 agents disclosed matter, the Government will realize future items purchased for personal use using the card. ,

savings of $201,042 in payments that he will not collect.

• A former VAMC nurse was sentenced to 15 i

\ months in prison and 3 years' supervised release,  !

• A former V AMC pharmacy assistant was with the judge recommending referral to a mental  !

sentenced to 4 months' home confinement,4 health program during her incarceration. The years' probation, and ordered to pay $57,870 in nurse had been found guilty of making a restitution for making false statements and using telephone bomb threat to the VAMC o which she a false social security number. A joint VA 010, had worked in retaliation against co-wo rkers who Department of Labor (DOL) OlG, and Social reported her as a suspect in numerous dsaths at the Security Administration (SSA) 010 facility. As a result of the bomb threats.ptients investigation disclosed that, while receiving were evacuated from the building which housed workers' compensation benefits for an injury the intensive care unit.

received at the VAMC, she also worked at a private retail outlet. During this time, she

• A VA physician, conducting research both as continued to report to the DOL that she was a VA employee and under the auspices of a unemployed. Loss to V A was in excess of private firm, failed to account properly for work

$52,000. hours performed by VA employees and to delineate between hours applied to VA projects

• A VA Outreach Center specialist pleaded versus his private research. Investigation revealed j guilty to a nine-count indictment charging h:m poor management practices, coupled with ,

I with workers' compensation fraud, mail fraud, inadequate instruction and lack of oversight, and false statements. He allegedly injured his which enabled the breakdown of accountability.

back in 1984 while lifting a bundle of papers at The individual reimbursed the VAMC-affiliated

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Office of Investigations non-profit research entity $44,705, which food, medical, or pharmaceutical sections of the represented V A's total contribution to the research prison. As a condition of his future supervised efforts. release, he is to undergo mental health counseling and allow unannounced searches of e A joint investigation by VA 010, IRS, and his residence. The individual has been the DOL disclosed that for almost 3 years, three V A subject of numerous television and print media employees participated in a scheme where they stories, regarding allegations that he had prepared false tax returns for other VA poisoned patier.ts under his care both in the employees while working at the VAMC morgue, United States and in Africa.

took kickbacks from funeral home directors, embezzled funds from the union office at the e A former V A Medical and Regional 0ffice V AMC, issued checks to themselves ano others Center employee was indicted on two counts of for personal benefit, used the union's credit card making false statements to the Government. A i to purchase personalitems and services, and VA OlG investigation disclosed the individual made false statements to DOL in annual reports claimed an ineligible person as a dependent on the union submitted in order to conceal the his application for compensation benefits. He embezzlement of funds. One of the employees, consequently received over $3,000 to which he a former VAMC histopathology technician, was not entitled.

pleaded guilty to conspiring to bribe a public official, mail fraud in connection with his

• A VAMC occupational therapy assistant, attempted embezzlement of approximately and his daughter, were both indicted on changes

$190,000 from the union office, and falsely of mail fraud, wire fraud, and conspiracy. A submitting personal tax returns. The second joint VA OIG, Postal Inspection Service, and individual, a former VAMC morgue technician, Secret Service investigation revealed that the who also served as union president, pleaded two offered to sell merchandise on the Internet guilty to embezzlement of union funds, mail but, after receiving money from prospective fraud, and making false statements to the DOL. buyen, failed to provide the merchandise. The .

The third party in the case, a former V AMC daughter advised prospective buyers that the l programmer assistant, who served as union father was the contact person and gave his secretary-treasurer, pleaded guilty to conspiracy VAMC work number for questions about the to commit mail fraud, making false statements to merchandise. The father received phone calls the DOL, conspiracy to embezzle union funds, from prospective buyers during his scheduled 4 filing a false personalincome tax return, and tour of duty, as well as having had payments in possessing a firearm in a Federal facility. excess of $14,000 sent to him at the VAMC, e An individual was sentenced to 42 months' . A former VAMC registered nurse was imprisonment and 3 years' supervised release terminated from employment and pleaded guilty  ;

for having made misrepresentations to officials to making false representations concerning his I at a state university regarding the nature of a education and experience in his VA employment prior criminal conviction. He failed to reveal application. A VA OIG investigation revealed ,

that he had been imprisoned in the 1980s for that he submitted false documents claiming he poisoning several co-workers, and this had an Associate Degree,a Bachelor's Degree, misrepresentation led to his acceptance by the assorted Certificates of Licensure, and a university and subsequent VAMC residency Master's Degree. Based on the falsified position. During his current incarceration, he is documents, he was hired initially as a staff nurse l prohibited from any work assignment in the and was promoted to nursing care coordinator.

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d Loss to the Government due to ir. creased salary payments exceeds $500,000. Sentencing is

• An individual was indicted on charges of fraudulently attempting to obtain controlled l

i pending. substances. A VA OIG investigation determined that, while undergoing treatment as a patient, the l

• A former VAMC psychiatric unit registered individual removed blank VA prescription pads j nurse was indicted on one count of false from two VA hospitals and for3ed prescriptions statements. Investigation disclosed the nurse to obtain Percocet, a Schedule Il narcotic and i

routinely slept during her shifts and made false Darvocet,a Schedule IV narcotic. '

statements to Federal agents when questioned on the subject. For the majority of the nights she worked, she was the only registered nurse Health Care Fraud assigned to the unit and the only staff member able to dispense medications to patients. . An individual was indicted on six counts of Prosecution is pending. making false statements after a VA OIG investigatien disclosed that he misrepresented himself as a veteran, using an identification card Patient Abuse / Death stolen from a veteran's wallet. in order to receive VA medical services to which he was

• A former VAMC physician was found guilty not entitled. Loss to VA is estimated at of involuntary manslaughter and placed under $ 100,000.

house confinement following trial. A joint VA OIG and FBIinvestigation determined the

• Three former officers of a private nursing physician injected an 86-year old patient with a home pleaded guilty to conspiracy charges of lethal dose of potassium chloride against the filing false claims against V A and Medicaid, t 3 advice of other caregivers present. Sentencing violating Federal tax laws, and committing wire (f is pending, following a pre-sentence and mail fraud. A joint VA OIG, FBI, and IRS investigation. investigation revealed the three created false billings for nursing home care of patients who e A practical nurse was terminated from a had been discharged from the home, returned to V AMC for abusing a patient, after a joint VA VAMCs, or were deceased. The false claims OIG and FBIinvestigation revealed that the resulted in a loss to the Government in excess of nurse slapped the patient's face, resulting in $770,000. Sentencing and a related civil suit are i facial cuts. During the course of the pending.

investigation, other patient abuse allegations involving other VA employees have surfaced.

• A telemarketing company employee who Criminal prosecution is pending. had been indicted on 15 counts of mail fraud j pleaded guilty and was sentenced to 4 months' imprisonment,4 months in a community Control of Drugs correctional facility,36 months' supervised probation, and restitution of $5,245. The

• A former VAMC patient was sentenced to 5 individual previously had pleaded guilty to one months' imprisonment and 12 months' count ofinterstate commercial carrier fraud after supervised release on charges of selling diverted ajoint VA OIG and FBIinvestigation revealed VA pharmaceuticals and making threats to a VA that she was 5volved in a telemarketing scheme OIG source. in which she impersonated a VA employee.

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i Office of Investigations Investigation disclosed that the individual, who e An individual was arrested, arraigned, and b claimed to work for a VAMC, sold advertising space in the union newsletters to doctors and released on his own recognizance after a joint VA OIG, Secret Service, and Postal Inspection businesses by falsely representing that the Service investigation disclosed that the

VAMC had initiated a program where individual, a former Postal Service employee employees could choose their physician, pay for who worked part-time at a store, stole payroll services at the time rendered, then receive checks intended for VAMC employees, and reimbursement from the VAMC. She falsely converted some of the checks for personal use.

represented to victim doctors, to obtain The checks were cashed at the supermarket advertising, that they had ranked in the top five where the individual was employed. A trial date in an alleged poll of VAMC employees, when is pending. In a separate incident, the individual no such poll had been conducted. was convicted on state charges for fraudulently negotiating stolen personal bank checks.

• A former VAMC practical nurse, who I operated a home health care service for veterans,  !

was sentenced to 90 days' incarceration,6 Armed Robbery j months' home confinement with electronic monitoring,5 years' probation, and restitution. An individual entered the Federal Credit Union The nurse previously had pleaded gu!!ty to at a V AMC before business hours and charges of grand larceny, engaging in a scheme committed armed robbery. Posing as a ,

to defraud, and offering a false instrument for deliveryman and asking for two credit union filing claims. In ajoint VA OIG and Medicaid employees by name, he requested entry to fraud unit investigation, the nurse admitted filing deliver a package. Once inside, he brandished a over 800 false documents with various entities handgun and tied up the employees. He emptied O including VA, billing for aspects of home health the safe, taking approximately $147,000. VA care she was reportedly providing to a 010 agents at the VAMC located a key witness quadriplegic veteran. She did not provide the to the crime, and set up an ad hoc task force with services for which she billed and illegally the local police, local county sheriff's office, and subcontracted other services to non-licensed the FBI to establish and investigate leads. A individuals who,in turn, cared for the veteran, suspect was arrested and approximately The fraud is estimated to exceed $350,000. $144,000 was recovered. Judicial action is j pending.

i Theft of Government Property Construction Related Fraud

• An individual employed by a VA medical l supplies contractor entered into a pretrial . The owner of a firm used to launder  !

diversion agreement after being charged with fraudulently obtained titles to real property was theft of Government property. The agreement sentenced to 41 months' confinement,36 included 12 months' supervised probation and months' supervised probation, fined $75,000, restitution of $1,754. A VA OIG investigation and ordered to make restitution of $293,189. An revealed the individual, employed by the attorney in the case was sent:nced to 37 months' contractor to supply medical equipment to a incarceration,36 months' probation upon state veterans home, sold equipment which release, and was ordered to inake restitution of should have been returned to the local VAMC $1,531,419, of which approximatdy $100,000 is and kept the money for personal use.

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/) payable to Government agencies. A third Veterans Benents l

\ f individual was sentenced to 24 months, '

probation and 75 hours8.680556e-4 days <br />0.0208 hours <br />1.240079e-4 weeks <br />2.85375e-5 months <br /> of community service for Administration tampering with a witness. All of the individuals were members of a real estate development and N Providn wide-uaching benefits to veterans investment syndicate that used assets as ,

and their dependents including pension and collateral on personal surety bonds issued to Compensation payments, home loan guaranty V A, other government agencies, and contractors.

suvien, and educanonaIopportunines. Each of Collateral consisted of real property on which ,

these benefits programs is subject tofraud. For the conspirators had obtained fraudulent titles examPl e, individuals submitfalse claimsfor and inflated assessments. The owner oithe firm snWu connected disability, third parties steal was instrumentalin the acquisition of fraudulent Pension payments issued after the unreported title to, and false valuation of, property that was cath of he utnan, andMduals providefalu used as collateral for a personal surety bond on a enfonnan{on so that utnans quahfyfor W VAMC construction contract.

guaranteed property loans, equity skimmers dupe utnans out of the# homa, and e Two individuals have been charged in a 23 \

count indictment returned by a Federal grand e ucatonal nefits an obtained undufalu upresentations. The Office ofInvestigations j jury with, among other things, conspiring to Spends considerable resources in investigating make false statements, brnbety oi an oificial, ,

and arresting those who defraud the benefits submitting false payroll reports, perjury, and supplying false information to a Federal grand

,p, , g , ,j g jury. The two individuals are officials of a private construction company. A joint VA OIG, j DOL, and Department of Defense investigation

/ disclosed that, over a 2-year period, the individuals instructed a subcontractor to submit false payroll reports to a DOL investigator Loan Guaranty Program Fraud certifying that they paid a federally-mandated minimum hourly wage rate for renovation at a Loan Oriaination Fraud V AMC. The indictment further alleges these individuals and other construction company

• An individual employed as a property employees conspired to submit false payroll management broker for VA and her spouse reports to the subcontractor. In addition, one of Pl eaded guilty to charges of conspiracy to the individuals allegedly paid $1,000 to the defraud VA. A VA OlG investigation disclosed president of the subcontracting company to that the couple aided an individual in purchasing ,

influence his statement to DOL about the wage several VA portfolio properties, providing false <

payments. False payroll reports also were information to VA to qualify the individual for submitted to the Department of the Army for the the loans. In addition, the couple submitted subcontractor's work at an Army facility, false loan origination documentation using a friend as a " straw" buyer in order to purchase a V A property for themselves in violation of law and V A regulations. All the properties purchased as a result of the conspiracy are currently in foreclosure. Sentencing is pending.

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Cffice of Investigations

[m) e An individual pleaded guilty to charges of allegations that the individual gave false V fraud against the Government and was sentenced to 27 months in prison and 36 months' supervised statements to obtain a VA guaranteed loan.

probation. A joint investigation by VA OlG, FBI and SS A OIG revealed that, over a 3-year period, Eouity Skimmino the individual, who worked as a realtor, and three co-conspirator were involved in a scheme to e A letter was issued by the Director of the defraud VA by submitting false claims and V A Loan Guaranty Service debarring two statements concerning the purchase of 26 VA individuals and their companies for a period of 3 owned properties. The individual falsified years. A joint VA OIG and HUD 01G employment and credit histories on mortgage investigation completed earlier this year qualification documents for individuals not disclosed the two individuals assumed home otherwise financially qualified to purchase the loans on two VA guaranteed properties and eight j properties. Sentencing of the co-conspirators is HUD insured properties, collected rent money '

pending. from tenants placed in the homes, but failed to make payments to the lenders. They then e The owner of a realty firm was sentenced in proceeded to file bankruptcies in fictitious U.S. District Court to 12 months' confinement, names on the 10 properties, stalling foreclosure and 5 years' supervised probation. He had and enabling them to continue collecting rents.

earlier pleaded guilty to one count of wire fraud One of the individuals, a law student, was in connection with the activities of his firm and sentenced to 30 months' incarceration,5 years' signed a forfeiture onder directing him to probation, ordered to pay a fine of $5,000 and relinquish assets totaling $987,785. A joint VA make restitution of $24,220. The second OlG, HUD OIG, and FBIinvestigation disclosed individual was sentenced to 12 months'

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the individual participated in the purchase of low-cost distressed properties, cycled them incarceration,3 years' probation, ordered to pay a fine of $2,500 and restitution of $24,220.

through front companies to inflate their assessed l value, and then sold them to fraudulently

• An individual was convicted in U.S. District qualified applicants. Court on I count of equity skimming,7 counts of mail fraud,8 counts of bankruptcy fraud, and e A VA beneficiary was sentenced to 12 11 counts of money laundering. A joint VA months' incarceration,24 months' supervised OIG and HUD OIG investigation disclosed the probation, and mandatory participation in a individual had fraudulently assumed over 50 substance abuse recovery program for two properties whose mortgages were guaranteed by violations of state health and safety codes for VA or insured by HUD, rented the homes, and possession with intent to distribute dangerous retained the proceeds collected in rent rather drugs and cultivation of controlled substances. than paying the lenders. His actions caused the The individual had pleaded guilty to the charges, loans to go into default and led to subsequent after approximately 10 pounds of marijuana were foreclosure action by the lenders. During the seized at her residence during the execution of a time the properties were being rented, the Federal search warrant by VA OIG agents. The individual stalled foreclosure action by filing controlled substances were discovered during a multiple bankruptcies under fictitious names, search for records and other evidence of fraud and laundered the illegal proceeds through bank against VA. The case was the result of a joint VA accounts. The individual faces a maximum OIG, Postal Inspection Service, and strae sentence of 20 years' imprisonment, a maximum employment department investigation into fine of $500,000, and court mandated restitution.

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, Beneficiary Fraud indicted by a Federal grand jury on one count of

(, theft of Government property. A joint VA OIG Emolovee Misconduct and FBIinvestigation disclosed that, while employed at V A, the individual created a

• After a lengthy jury trial, three individuals fictitious veteran; prepared a bogus VA claims file; and awarded this fictitious veteran benefits formerly employed as VA Regional Office f r service connected disabilities. The (VARO) veterans benefits counselors were found guilty in U.S. District Court of conspiracy individual then opened a savings account in the

! to defraud VA A joint VA 01G and FBI name and social security number of the fictitious l investigation, with the assistance of the V A OIG veteran and had the benefit checks electronically

! Office of Audit, determined that six V ARO deposited into that account. The indictment employees had embezzled over $1 million alleges that every month the individual withdrew dollars from VA. An earlier indictment charged almost the entire amount of the check in cash.

He received over $624,000 in V A benefits in the I that the six individuals, while employed as I

benefits counselors and under the guise of name of this fictitious veteran. He was arrested as he withdrew $10,000 from the account.

providing assistance to veterans, submitted fraudulent claims for medical expenses. They Numerous documents found in his possession then demanded a kickback of a portion of the identified him as the fictitious veteran.

payments from the veterans. Veterans' claims examiners processed and approved the claims l, based on the false information provided in the Comoensation & Pension Benefits Fraud i scheme. Three other employees previously I pleaded guilty to the charges. Sentencing for all

• An individual was indicted in U.S. District six conspirators is pending. This is the second Court for forgery of the endorsement on four major investigation involving fraudulent medical U.S. Treasury checks. The charges were the i

[V-) claims submitted to a VARO to generate payments to poor veterans in which substantial result of a joint V A 01G and SS A 01G investigation which revealed that the individual l

kickbacks were subsequently paid, continued to negotiate VA and SSA benefits checks made payable to her mother after the

• A former V A Medical and Regional Office mother's death in 1987. The loss to the Center rating specialist was sentenced in U.S. Government is approximately $95,000.

District Court to 90 days house arrest,36 ,

months probation, a $5,000 fine, and was

• An individual pleaded guilty in U.S. District  !

required to make restitution of $20,494 to VA. Court to one count of theft and was subsequently The sentence was in response to a previous plea sentenced to 6 months' incarceration with work of guilty to one count of mail fraud. A VA 010 release privileges,3 years' supervised release, and j investigation revealed the individual had devised was ordered to pay $35,702 in restitution. The l

a scheme for obtaining VA benefits to which he guilty plea resulted from a VA 010 investigation

! was not entitled by making false representations which determined that, for trore than 6 years, the as to his unemployability. This scheme caused individual submitted eligibility verification reports numerous V A checks to be delivered to him by to VA which falsely stated she was not married when,in fact, she had re-married,in order to i the U.S. Postal Service.

i continue to collect widows' pension benefits to which she was no longer entitled.

e A former VARO ratings specialist was arrested by VA 010 special agents and later 1

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• An individual employed as a national funds and was sentenced to 3 years' supervised service officer with the Disabled American probation and was ordered to pay $68,122 in Veterans (DAV) was interviewed by V A OIG restitution to VA. A VA 0I0 investigation agents regarding his acceptance of funds from a uncovered that the individual, the daughter of the veteran in exchange for assisting the veteran in widow of a deceased veteran, converted to her submitting a claim for VA benefits. The own use DIC funds electronically deposited into a individual confessed to taking $500 from the joint account she held with her mother who died l veteran and, after the interview, admitted his in May 1986. ,

actions to his supervisor. After receiving the j information, the DAV terminated his

• The daughter of a VA DIC benefits recipient  !

employment. Additional reviews are being pleaded guilty in U.S. District Court to one count

! conducted to determine if other veterans were of theft of Government funds in response to the victims of this scheme. filing of a criminalinformation. A VA OIG

investigation disclosed the daughter failed to e An individual was indicted by a Federal notify V A of her mother's death in November grand jury on two counts of making false 1989 and continued to spend electronically

! statements to the Government. A joint VA OIG deposited funds totaling $54,574. Sentencing is

! and SSA OIG investigation disclosed that, for pending.

approximately 4 years, the individual submitted false claims to VA for service connected

• An individual was sentenced in U.S. District l disability, claiming that he was unemployable Court to 6 months' home confinement with l

when,in fact, using a false name and social electronic monitoring,5 years' probation, and security number, he was employed as a ordered to pay $103,116 restitution to VA. A construction worker. Loss to the Governmentis V A 01G investigation disclosed that, over a 15-l l

)/ in excess of $40,000. year period, the individual converted for his personal use more than $100,000 in DIC v

Dependency & Indemnity Compensation benefits paid to his deceased mother.

(DIC) Benefits Fraud

• An individual employed as a VAMC i e An individual was sentenced in U.S. District housekeeping aide pleaded guilty in U.S. ,

Court to 5 months' imprisonment,5 months. District Court to one count of theft of ,

I home confinement,2 years' probation, and was Government funds and was sentenced to 5 l directed to pay restitution to VA, after pleading months' incarceration,5 months' home guilty to four counts of wire fraud in connection confinement, and 36 months' supervised ,

with the theft of $83,680 in VA compensation Probation. A VA OIG investigation revealed benefits. She admitted during a VA OIG that, for almost 15 years, he had improperly investigation that she made no effort to notify converted VA DIC benefits issued to his l VA of the death of her mother,a VA deceased mother. The total amount of funds beneficiary, and continued to withdraw converted was more than $86,000.

compensation benefits disbursements that were electronically deposited into the mother's bank

• An 'ndividual was indicted in U.S. District account. Court on 21 counts of theft of Government property, I count of forgery, and 8 counts of bank

• An individual pleaded guilty in U.S. District fraud. A VA OIG investigation disclosed that, l over a 6-year period, he fraudulently received and

Court to charges of conversion of Government negotiated his deceased mother's V A DIC b

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Office of Investigations gs (j)

/ benefits. The loss to the Government was approximately $70,000.

$39,162,in response to a guilty plea to one count of theft of Government property. A VA OlG investigation revealed the individual, the e An individual was sentenced in U.S. District widow of a deceased veteran, had improperly Court to 6 months' home confinement,36 collected VA widow's pension benefits after months' probation, and ordered to pay $27,330 failing to notify V A of her remarriage.

in restitution after pleading guilty to charges of theft of Government funds. A VA OIG e An individual was arrested by V A OlG and ,

investigation revealed the individual failed to FBI agents in connection with his fraudulent notify V A of his mother's death and, over a 3- receipt of V A medical and pension benefits year period, continued to access DIC benefits totaling $54,000. The arrest was prompted by funds totaling $27,332 that were electronically his failure to respond to a letter from the U.S.

deposited into her bank account. Attorney's Office requesting that he appear with counsel to address charges pending against him.

• A former recipient of VA DIC benefits and The result of evidence developed in a VA OIG Social Security survivor benefits pleaded guilty investigation revealed that he fraudulently i i

in U.S. District Court to a one-count criminal received veteran's benefits, even though he had information charging her with theft of never served in the U.S. military. l Government property. Subsequently, she was f sentenced to 6 months' home confiriement,5 e An individual pleaded guilty in U.S. District years' probation, and ordered to pay $48,455 in Court to charges that he made false statements to restitution. A joint V A OlG and SSA 01G V A to retain eligibility for V A pension benefits, investigation disclosed the individual, the widow and was subsequently sentenced to 5 years' of a deceased veteran, remarried after the death supervised probation and ordered to pay $22,932 l of the veteran, but intentionally failed to report in restitution to V A. The plea was in response to

[ } the change in marital status to VA or SS A, evidence disclosed during a V A OIG

(/ which would have terminated her benefits. For investigation, which showed the individual, who more than 4 years, she continued to collect was receiving V A benefits for himself and his benefits to which she was not entitled, spouse for a disability unrelated to his military service, had failed to report the receipt of e An individual pleaded guilty in U.S. District significant unearned income by his spouse.

Court to charges of theft of Government funds. Investigation revealed his spouse had received The guilty plea was the result of a joint VA OlG an inheritance in excess of $450,000 and they and FBIinvestigation in which the individual had a net worth exceeding $278,000 during a admitted that, for more than 12 years, she period in which V A contributed pension benefits converted to her own use V A DIC benefits to help defray their living expenses.

checks issued in the name of her deceased mother. Loss to VA exceeds $97,000.

Sentencing is pending. Fiduciary Fraud e An individual, who functioned as legal Pension Benefits Fraud guardian for over 40 individuals and at least 2 disabled veterans, was arrested pursuant to a e An individual was sentenced in U.S. District criminal complaint filed in U.S. District Court Court to 60 months' probation and ordered to charging her with embezzlement, fiduciary make restitution to VA in the amount of fraud, and obstruction of justice. A V A OlG

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._.-_m_ _ . _ _ _ _ _ . _ _ _ _ _ _ _ _ _ _ _ - _ _ ___________.________m .

Office of Investigations

/a ' investigation revealed that, for more than 15 restitution of $2,633,638. Criminal action is years, V A had paid her to provide room and pending against the college staff.

board for a veteran and had allotted up to $2,000 per month,in her role as fiduciary for the veteran. For a 2-year period during that time, however, she did not care for the veteran herself, but rather left the veteran with her daughter, National Cemeterv3 allegedly a drug addict who lived in a crime System  ;

infested area, and paid the daughter $700 a month to watch the veteran, keeping the A Federal grand jury returned an Il-count remainder of the funds for her own use. She indictment against two individuals, the director allegedly siphoned money from the second of a VA national cemetery and a private veteran's bank account by hiring her son to act contractor, who supplied sand and gravel to as cornpanion for the veteran, and then other contractors. Both have been charged with depositing checks made payable to the son into conspiracy to steal public property, conspiracy her own personal bank account. The obstruction to commit mail fraud, theft of Government l of justice charge stems from her attempts to property, making false statements, and attemped have individuals involved in the fraud lie to VA witness tampering. The indictment alleges that .

OIG special agents. the two conspired to remove and sell i approximately 2,900 tons of sand from the l

• An individual serving as fiduciary for his cemetery.

grandmother, a recipient of VA DIC benefits, was sentenced to 5 years' probation, directed to serve 250 hours0.00289 days <br />0.0694 hours <br />4.133598e-4 weeks <br />9.5125e-5 months <br /> community service, and pay g gg

/ )/ fines and restitution totaling $6,300. The Resources and

( sentencing was the result of a guilty plea to charges that he embenled funds paid to him by Adm,m,istrat, ion VA for his grandmother's benefit.

Three former VA warehouse laborers were sentenced in U.S. District Court. The Educational Benefits Fraud individuals had earlier resigned after pleading I guilty to stealing Government property. The The civil division of a U.S. Attorney's Office is first individual was sentenced to 36 months' continuing to obtain civil settlements from probation and ordered to make restitution of ,

student veterans who received VA benefits but $500 to V A for his role in the thefts. The i did not attend regularly scheduled classes at a second individual was sentenced to 6 months' community college. Bribes were paid to faculty home detention,36 months' probation, and was staff, including the chairman of a department at ordered to pay $5,657 in restitution to VA. The the college, to ensure that high grades would be third individual was sentenced to 3 years' given with no class attendance required. Most probation,3 months' work release, and recently, the civil division has obtained restitution of $6,570. These individuals were settlement agreements from 46 additional among several, including current and former VA students who have agreed to pay $379,058 in employees, identified in a joint VA 010, FBI, restitution. The total number of students who and VA Office of Security and Law have negotiated settlement agreements thus far Enforcement long-term undercover investigation with the civil division is 216, with total during which more than $40,000 in stolen

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Office of Investigations

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( Government property was sold to undercover The following are examples of laboratory work V; agents, including items such as computers, that was completed:

printers, and office furniture. Additional sentencing actions are pending. . The Chairman, Board of Veterans' Appeals (BVA) requested examinations of medical records contained in the claims folder of a OlG Forensic Document veteran. A review of the medical records by Laboratory BV A indicated the Possibility of alterations. '

Laboratory examinations of handwriting, typewriter entries, and office copier generated The OlG operates a Forensic Document documents were conducted on 39 medical l Laboratory service for fraud detection. Requests records. The laboratory examinations l routinely submitted to the laboratory include determined that there had been i13 additions handwriting analysis, typewriting, inks, paper, and alterations of the medical records. The l photocopied documents, and suspected veteran was identified as the author of 11 l alterations of official documents. During this handwritten alterations and additions to the l reporting period, the Forensic Document medical records. l Laboratory received 1,214 documents from I various non-OlG sources that required 3,161 . The Federal Emergency Management laboratory examinations. The laboratory Agency (FEM A) requested laborato y I received 521 additional pieces of evidence in 5 examinations of documents that involved l OlG criminal investigations that required 1,362 allegations that laborers of a federally funded <

laboratory examinations. There were a total of public works contract were ordered to kickback I 34 forensic laboratory reports issued during this up to 50 percent of their wages to the contractor.

(' semiannual period. The federally funded project consisted of I

( ])

There were 33 laboratory cases completed for

$1.5 million in FEM A and Federal Highway Administration funds for damage repairs the period as follows: follow ng the 1994 Northridge earthquake.

Laboratory Cases for the Period There were 623 pieces of evidence examined in this joint FEM A 010 and DOL OlG Cases Requester investigation. The laboratory examinations Completed identified the president of the corporation and OlG Office of Investigations 5 two co-defendants as the authors of handwritten Regional Offices 23 entries on 172 pieces of evidence.

VA Top Management 2

• VA OIG investigated a veteran who Secun.ty and Law received payments for home health care through 1

Enforcement the VA fee basis program. On some of the same U.S. Sm all Business j dates the veteran was being paid by V A for Administration OlG home health care, he was hospitalized; the cost Federal Emergency for this was paid by Medicare. Laboratory Management Agency OlG 1 examinations were conducted to determine the and DOL OlG validity of invoices submitted and to establish evidence f the double billing. The examination TOTAL 33 identified the veteran and his daughter as the authors of endorsements or handwritten entries i

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Office of Investigations e on 17 questioned U.S. Treasury checks and invoices for fee basis services. When confronted with the results, the daughter admitted that she had known it was double billing. The case is pending judicial action.

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5 o\/ OFFICE OF AUDIT l V Mission Statement outcome

• Made recommendations to enhance Perations, correct deficient areas and effect Improve the management of VA programs $a70 il1'* * '," * " ' 'Y b ' " ' 'E '

and activities by providing our customers with timely, balanced, credible, and

, Cost Effectiveness undependent financial and perform ance .

e Received a return of $46 in monetary e raluations that address the economy, benefits for every dollar spent.

effectiveness, efficiency, financial, and 1

internal control of VA operations, and that identify constructive solutions and Timenness l opportunitiesfor improvement.

. Completed 16 projects in an average of 392  !

calendar days. J Resources customer satisfaction )

. Achieved a customer satisfaction survey  !

The Office of Audit had 170 FTE assigned in rating of 4.2, on a scale of 5, for reports issued I VACO and 5 field offices throughout the during the period.

country. The following chart shows the percentage of resources utilized in auditing each Audits completed during the period identified of VA's major program areas. opportunities to improve services to veterans, and identified savings that could be used to  !

provid: more and better service. For example, our evaluation of VH A's Medical Care Cost

'(3 Recovery program concluded that VH A can Asuu p in,u g ,,,

enhance program recoveries by over $83 l

19% 34% million, providing additional funds to expand or improve medical seri es to patients. Our audit of the Pathology and Laboratory Medicine VH mM Service found that opportunities exist for VH A 21 % to increase savings by an estimated $32 million VBA 8%

1s% annually by taking advantage ofits purchasing power to obtain chemistry tests at a lower cost.

An audit of VA's Workers Compensation program identified ways VHA could reduce program costs by about $247 million, making these funds available for direct service-to-client Purposes.

Overall Performance l

Following are summaries of some of the audits utput done during the reporting period by VA e Issued 20 program and financist audits and component. We discuss VHA, VB A, Office of evaluations for an output efficiency of one report Management, Office of Human Resources and per 4.2 FTE. Administration, Office of Information and Technology, and multiple office action.

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(mI Nd Veterans Health Some Program areas in which VH A could improve operations.

l Administration We issued three reports which addressed the need to: (i) reduce procurement costs for Resource Utilization chemistry tests by consolidating facility  !

workloads ($32 million annually),(ii) reallocate issue: Management of Pathology and unused laboratory instruments procured for the Laboratory Medicine Service (PLMS). Mobile Laboratory initiative ($10.2 million), and

Conclusion:

VH A is improving (iii) capture unreported workload representing l operations of PLMS. $5 million in resources. The audit also found Impact: Improved quality of care and that PLMS needed to monitor quality control i better use of funds, testing, staffing, and send-out tests more closely. l We estimated that over $2 million annually l We conducted a series of audits of VHA's could be saved by increasing oversight over the laboratory operations during FYs 1996-1998. cost of quality control testing.

The overall objective of these audits was to determine whether pathology and laboratory We recommended the Under Secretary for services were provided in an economical and Health take action to ensure that: (i) the cost of efficient manner. The mission of PLMS is to laboratory quality control testing is more provide medical diagnostic laboratory testing aggressively monitored,(ii) PLMS staffing is and transfusion functions at all VH A medical assessed by Veterans Integrated Service centers and outpatient clinics. Network (VISN) Directors to ensure that all positions are justified, and (iii) the costs of tests

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During FY 1997 PLMS employed approximately 7,200 employees nationwide, had sent out by the laboratory are analyzed to ensure that it is more cost-effective to send out the tests l a budget of over $570 million, and reported than perform them in-house. The Under performing over 105 million diagnostic and Secretary for Health concurred and provided an research related tests. Thus,PLMS represents a acceptable action plan in response to our significant utilization of resources and has an findings, recommendations, and monetary  !

i important role in the provision of medical care benefits. We consider allissues in the report to VH A's veteran population, resolved. (Summary Report: Audits of Pathology and Laboratory Medicine Service, Overall, we concluded that PLMS was generally 8R3-A01-149, 9n0/98) operated in a satisfactory manner. Audit results showed that laboratory tests were performed timely, and that alllaboratories and blood banks were accredited. Quality control tests were "The /n/ormst/on thatyou have shared routinely performed to ensure accurate test w/th us has been very use/u/ss we results, repetitive testing had been reduced, and pr/or///ze opportun///es for /mprovement, laboratory supplies inventories were managed to and we apprec/ste the cooperst/re prevent waste. Additionally, VH A undertook e// orts o/your sud// ors."

several new initiatives to improve PLMS operations, including implementing a new under Secretary forNes/th workload reporting system and developing new procurement strategies. However, we identified O

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1 Office of Audit n\ issue: Cost per test leases and reagent

[& rental contracts.

Conclusion:

VA can reduce laboratory acceptable action plan. (Audit of Cost-Per Test Leases and Reagent Rental Contracts in PLMS, BR3-A01-101,5/13/98)

[

costs by maximizing volume discounts and obtaining lower prices for chemistry tests 90ur obsensuons have been very impact: Better use of $32 million. he/p/u//n / dent //y/np /mprovement l opportunit/es. ,

The audit was conducted to evaluate the cost-

"We apprec/ste the cooperst/ve e// orts of effectiveness of using vendor-owned chemistry your sud/ tors /n /u//y d/scuss/np w//h us analyzers to perform laboratory tests. VISNs s///ssues / dent ///ed by VNA regard /np were using blanket purchase agreements (BPAs) 7,p,7f ,,ygfy,f,y, ,, i to save about $8 milhon annually in acquiring l chemistry analyzers and associated supplies, but Undersecretary forNes/th some V AMCs did not participate in BPAs, and consequently did not lower costs for non-routine tests compared to prior years.

Issue: Medical Care Cost Recovery Among those VAMCs that used BPAs, most did (MCCR) program.

not achieve maximum allowable discounts. In

Conclusion:

VH A can significantly addition, VH A did not monitor contract costs, or increase MCCR recoveries.

survey the Department of Defense (DoD) or impact: Increase MCCR recoveries by non-federal hospital contract costs. As a result,

$83 million.

VH A was paying more than some private hospitals with lower volumes paid for the same The audit was conducted at the request of the Q tests.

Chairman, House Committee on Veterans AUa rs, to dekrmine whemer Ms han Opportunities exist for VH A to increase savings succc8SfuHyi ,mPl emented cost reconry j by an estimated $32 million annually by taking Programs and to identify opportunities to full advantage of its purchasing power to obtain en am rec nr n , th Under i chemistry tests at a lower cost. Similarly, DoD could potentially save over $25 million by "'*I*'Y '. Health established a minimum VH A collection goal of $544.1 milh,on.

improving its procurement practices. We recommended the Under Secretary for Health:

We concluded VHA could enhance MCCR (i) advise VISNs of the benefit of multi facility recoveries by requiring VISN Directors to agreements that include nearby DoD facilities t manage MCCR program activities more maximize volume-based discounts,(ii) instruct actively. We recommended the Under Secretary VISNs to perform cost-studies to determine the for Health require the Chief Network Officer to optimal configuration of equipment necessary t improve program activities by establishing obtain laboratory tests at the lowest cost,(iii)

,, performance standards for staff involved in all ensure contracting officials make vendor phases of MCCR activities, monitoring proposals for cost-per-test agreements more performance results, taking action to improve uniform to allow meaningful price comparisons, performance gaps, and incorporating other and (iv) survey prices charged hospitals t billing and collection improvements. The Under identify the lowest vendor prices. The Under Secretary for Health concurred with our findings Secretary for Health concurred and provided an i ed 25

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} and provided an acceptable implementation We recommended these portions of the project l l

(,,/ plan. (Audit of the Medical Care Cost Recovery be cancelled. The VAMC Director agreed with ,

Program, BRl G01-118,7/10/98) our recommendations and provided acceptable j implementation plans. (Audit ofEnergy l Construction Project at VAMC Ann Arbor, Fndty Management Michigan, 8RS-D02133,8/12/98) l l

Issue: Ensuring that construction " We apprec/ste the e// orts by the rar/ew projects are justified and construction tesm and the/r subsequent funds are used to meet agency goals. l recommendst/ons. " )

Conclusion:

Cost effective alternatives were available for some projects. D/ rector, VAMC Ann Arbor impact: Better use of $1.6 million.

We audited four nonrecurring maintenance Road and Parkine Lot Construction.V A projects as part of an ongoing national audit of Domiciliarv White City Minor Construction and Nonrecurring Maintenance. We conducted the audit to determine if a construction project to build a road and pave a  ;

Enerev Manacement Project - VAMC Ann gravel parking area was necessary or whether Arbor cost-effective alternatives existed that would provide the required service. The project called We conducted the audit to determine whether an for building a new road adjacent to an existing energy construction project was necessary or gravel parking lot adjacent to a baseball field, to 4 whether alternatives existed that would provide create a second entrance to the domiciliary. The b the required services in a more cost-effective new road would be paved and would include curbs and gutters, sidewalks, and lighting. The manner. Results showed that elements of the overall energy management project were project also included plans to repair existing I

unnecessary or not cost effective. roadways and parking lots, including the parking lot serving the baseball field.

Overall project plans included 20 energy-saving measures identified in a Department of Energy We concluded that the portion of the project to study. One element involved installing pave the baseball field parking lot was not occupancy sensors throughout the medical necessary, and the estimated cost of $243,300 center and another involved installing a variable could be better used for other purposes. The air volume system to improve the efficiency of existing gravel parking lot was in good condition the heating, ventilating, and air conditioning and met the needs of the facility. We system in research rooms. We found the cost to recommended the Domiciliary Director install occupancy sensors would not be recouped eliminate the portion of the project to pave the in energy savings and encouraging staff to turn baseball field parking lot. The Domiciliary the lights off was a less costly alternative that Director agreed with our recommendation and could achieve much of the energy savings provided acceptable implementation plans.

anticipated by the project. Also, the cost to (Audit of Nonrecurring Maintenance install the variable air system in research rooms Construction Project at VA Domiciliary White with fume hoods would not be recouped in City, Oregon, 8RS-D02-127, 7/24/98) j energy savings.

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Office of Audit Adult Day Care Center. V AMC Asheville Optifill II automated prescription-filling system.

d We conducted the audit to determine whether a We concluded the cost to renovate the pharmacy, estimated at $936,050, could be construction project to add an Adult Day Health better used for other purposes.

Care (ADHC) was necessary or whether alternatives existed that would provide services Audit results showed the pharmacy workload in a more cost-effective manner. We concluded did not justify the need for automated the project was not necessary and continuing to prescription filling equipment. Implementation contract for ADHC services would be more cost- of 90-day refills and the Consolidated Mail effective. Outpatient Pharmacy program had reduced the pharmacy workload. Current staff was Plans called for a private firm, already under completing prescriptions in a timely manner, and contract to the medical center, to provide off dispensing was not significant.

campus ADHC services and to also operate a campus based ADHC program in renovated We recommended the VAMC Director cancel medical center space. To accommodate the the project and return the Optifill-II equipment ADHC program, management planned to to the manufacturer or make the equipment renovate space and relocate other services within available for use by another VAMC which can the building proposed for the ADHC program. demonstrate a need for the equipment. We also The ADHC contractor would offer the medical recommended the Director, VISN 21 ensure that center a reduced rate for providing ADHC needs are thoroughly addressed when projects services in the renovated space. are submitted for approval.

We concluded that project was not cost effective The Director, VISN 21 agreed that needs because there were only 13 veterans currently assessments are necessary and stated they have (Q/ using this program. In addition, the contractor

- was planning to open ADHC centers in several mechanisms in place to screen high cost purchases for appropriateness. However, he other locations within the city in the next few stated they would consider whether changes to years, making ample resources available should the process are needed based on our comments.

additional veterans become eligible for the program. The VISN Director did not agree to cancel the ,

project, but he proposed an alternative to reduce We recommended canceling the project and that the scope and cost of construction by $115,950.

VISN officials ensure current needs have been He provided additionaljustification for assessed when medical centers submit projects purchases of the equipment and stated ,

for approval. The Director, VISN 6 agreed with alternative action (cancellation of the equipment  !

our recommendations and provided acceptable purchase contract) is not feasible at this late date implementation plans. (Audit ofAdult Day due to an associated monetary penalty.

Care / Clinics Construction Project at VAMC Asheville, North Carolina,8RS-D02107, We reviewed the additionaljustification 5/28/98) provided, and while some of the Director's points are valid, we remain unconvinced there is Pharmacy Renovation. V AMC San Francisco adequate workload to justify purchasing the automated equipment. However, since the The project called for renovation of the contract cannot now be economically cancelled, outpatient pharmacy and installation of an we accepted the reduction in scope as the best

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[ option available. We consider allissues first component. A second report will be issued

() resolved. (Audit of Pharmacy Renovation Project at VAMC San Francisco, California, at a later date to address the second component.

BR5 D02-139,9/10/98) Our analysis of FY 1997 data for the three VB A performance measures found that internal controls did not prevent invalid data from Processing. VARO personnel were able to input Veterans Benefits or change data to show better timeliness than Administration actually achieved, and inclusion of pre-discharge processing times distorted the average  ;

processing times reported under GPRA. Pre-Delivery of Benefits and Services discharge processing refers to a new program to j begin processing claims before a veteran is j issue: Data integrity for veterans claims discharged from active military duty.

processing.

Conclusion:

Increased management Data used to calculate the three performance oversight can improve data integrity measures lacked integrity because input for selected VB A Government commands could be used to show better Performance and Results Act(GPRA) timeliness than actually achieved, and VB A did performance measures. not retain transaction data. The temporary impact: Enhanced customer service. nature of transaction data also makes VB A vulnerable to reporting errors and system At the request of the Assistant Secretary for manipulation. We also concluded that pre-

_ Policy and Planning, we initiated a multi-stage discharge processing time should not be audit to examine the integrity of the data used incorporated into the average processing times

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( for GPRA reports. This is the first in a series of audits to evaluate the validity, reliability, and used for GPR A reports.

integrity of data relating to some of VA's most Since transaction data are routinely deleted, they ,

critical GPRA performance measures. are not available for management review and  !

oversight. We concluded that availability of This audit assessed the accuracy of data transaction data in conjunction with an onsite supporting three VB A GPRA performance inspection program can identify system measures: (i) average days to cornplete original manipulations or errors and help to ensure the disability compensation claims,(ii) average days accuracy of GPRA data.

to complete original disability pension claims, and (iii) average days to complete reopened We recommended that VB A: (i) collect and compensation claims. analyze historical transaction data to identify questionable or suspect transactions,(ii) institute The overall project examined data processing onsite field inspections at V AR0s, and (iii) systems to determine whether data were establish policy for reporting processing time on processed accurately and whether there were pre-discharge processing activities. The Under adequate controls to prevent bad data from Secretary for Benefits concurred with the processing. We also compared source recommendations and provided acceptable documents to data input into the automated implementation plans. (Audit of Data Integrity system to determine if the data had been for VBA Claims Processing Performance i accurately transferred. This report addresses the l

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GPRA,8R%B01 147, 9/22/98)

Office of Management l

l VA's Financial Statements Other Beneficiary issues ,

Issue: Reasonableness and accuracy of Statements (CFS) for FYs 1997 and administrative expenses. 1996.

Conclusion:

Administrative expenses

Conclusion:

Some assets may not be I

reported for FY 1997 were reasonable adequately protected and resources and accurate in all material respects. may not be properly controlled. i 11 pact: Assuring program Integrity. Impact: Improved stewardship of VA ,

assets and resources. l At the request of the VA Insurance Service, we evaluated FY 1997 Life Insurance Program Our audit of VA's CFS for FY 1997 and 1996 neluded a qualified opinion concerning balances administrative expenses. The purpose of the for receivables, liabilities for loan guarantees, evaluation was to assess the reasonableness and and resources payable to U. S. Treasury accuracy of administrative expenses incurred c ntained in VA's Statement of Financial and reported for VA's Life Insurance Programs, Position, and related items in the Statements of and verify the allocation methodology used to Operations and Changes i,n Net Position, Cash assign costs among insurance programs.

Flows,and Budgetary Resources and Actual i We determined that FY 1997 administrative Expenses. In each of these areas, we were )

unable to satisfy ourselves as to the recorded l expenses totaling $37.5 million were reasonable balances i,n these accounts because of inadequate t and accurate in all material respects. Also, the accounting records. Nor were we able to satisfy allocation methodology used to assign costs ,

ourselves as to the balances by other auditing among insurance programs was proper. We did not make recommendations. (Evaluation of the Procedures.

Life Insurance Programs' Administrative .

Our report on internal control structure discusses Expenses,8R1 B12-130,7/31/98) five material weaknesses concerning VA-wide information system security controls, Housing Credit Assistance (HCA) program financial "An exce//ent ersmp/a o/cooperst/on reporting HCA program direct portfolio loans, w/th program sis //. The //ns/ report HCA program loan sales accounting, and pror/ des /mportent /ndependent medical facility receivable balances. We made ver/// cst /on that our expenses and recommendations addressing these weaknesses s//ocat/ons are sppropt/ste and and believe the issues in these five areas should sccurste." be considered for inclusion as material weaknesses in the Department's Federal CustomerSurrey Response Managers FinancialIntegrity Act reporting.

Our report on compliance with laws and regulations discusses three noncompliance issues. One dealt with noncompliance with l Federal Financial M anagement Improvement l

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Office of Audit pT i Act requirements concerning HCA program No conditions were noted that had a material

(,/ financial management information systems and effect on the FY 1997 CFS, but correction of the VA-wide information system security. We also conditions is considered necessary for effective identified noncompliance with two other laws operations. Where needed, appropriate concerning requirements for charging interest adjustments were made to financial statements.

and administrative costs on compensation and (i. Management Letter, Fiscal Year 1997 pension accounts receivable, and requirements Consolidated Financial Statements - Veterans for funding minimum staffing levels in the VA Benefits Administration Finance Center Hines, OlG that, while not material to the financial ll, BR4 G10-128, 7/29/98; li. Management  !

statements, warranted disclosure. Letter, Fiscal Year 1997 Financial Statements, VA Life Insurance Programs and Selected Loan Except for the noncompliance with Federal Guaranty Program Financial Activities,8R1-Financial ManagementImprovement Act G10-106,5/29/98; iii. Accuracy of Property, l requirements, the report concludes that for the Plant, and Equipment FinancialInformation, items tested, VA complied with those laws and 8AF G10102,5/27/98;iv. Management Letter- j regulations materially effecting the financial Expenditure Transactions,8AF-G10-141, statements. 9/10/98); and v. Management Letter- Payroll Transactions, 8A F-G 10-140, 9/10/98)

The Acting Assistant Secretary for Management provided comments indicating the Department was addressing the issues we reported. (Repor' ofAudit of VA Consolidated Financial Office of Human Statem ents for FYs 1997 and 1996, 8AF-G10 ROSou(COS and 103,5/18/98) m Adm.iniS . trat. ion Issue: Financial Management.

Conclusion:

Five management letters issue: Government Travel Card were issued to assist the Department Program, ,

in improving financial management.

Conclusion:

The program was efficiently I impact: Improved financial reporting operated, and VA initiatives will and control. improve minor problems identified.

Impact: Better serve the needs of VA.

As part of the CFS audit, we issued five )

management letters addressing financial The purpose of this audit was to determine reporting and controlissues. The management whether the Program was effectively letters provided Department managers additional implemented, operating eff ' dntly, and meeting observations and advice that, while not material program objectives. The pr igram was in relation to the CFS, will enable the developed to improve the pn: chase of Department to improve day-to-day accounting transportation services, subsistence, and other operations and controls. The management travel expenses, better serve the needs of VA letters contained observations concerning: (i) travelers, and improve cash management and VB A Finance Center operations;(ii) life administrative procedures. As of September insurance program accounting activities:(iii) 1997, VA had over 21,600 active individual accuracy of property, plant, and equipment cardholders and over 300 government travel reporting and controls:(iv) expenditure accounts. Individual and government  !

transactions; and (v) payroll transactions.

V 30 esp -

l l

l l Office of Audit transactions during FY 1995 through 1997

! k totaled over $126 million.

Office of Informat. ion and We found the program better served the needs of VA and improved cash management by:

reducing travel advances, reducing Security Controls administrative workload associated with issuing and administering cash advances and Issue: Security controls for the government transportation requests, and integrated Data Communications l

providing management more information on Utility (IDCU).

how travel funds were being spent.

Conclusion:

Security controls need to be strengthened to ensure that IDCU Audit results showed the need to: provide more operations are adequately protected.

timely processing of travel vouchers and impact: Improved ADP security.

payment of government travel account invoices, make better use of reports provided by the credit The audit evaluated the adequacy and card contractor to monitor the program at brth appropriateness of security controls for the V ACO and individual facilities, and increase use IDCU. The IDCU is a Department-wide data of travel cards to obtain advances. VA program communications network enabling VA users to officials have initiated or plan to take action in connect from one automated system to another each of these areas, and therefore, we made no and to access various V A databases. Over 500 recommendations. (Audit of the Government facilities are currently connected to the IDCU, Travel Card Program,8R3 GOI-123,7/14/98) enabling customers at each of these facilities to communicate with each other, and to access and O " The 0///ce o/Adm/n/strat/on /s p/essed transmit key information and data in support of VA's mission of providing patient care and w/th the results o/th/s report."

delivery of benefits to the nation's veterans.

Deputy Ass /stant Secretary for Adm/n/strst/on Maintaining appropriate network security measures is important given the significance of the financial transactions and data that is transmitted over the IDCU annually associated with VA's $40.4 billion budget. Accordingly, the IDCU needs to be protected from security breaches, interruption of service, unauthorized access, inappropriate disclosures, or destruction of data.

The audit identified key security enhancements that would help make the IDCU more secure and ensure continuity of operations. Some of these enhancements were identified in prior OlG security audits at VA Data Processing Centers.

Improvements were needed in: (i) physical security,(ii) controlling access to the IDCU from remote sites,(iii) establishing employee i

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access clearances for contractors and V A staff, l

l V) and (iv) sacurity controls to protect sensitive information while in transit from site to site.

million. We estimated that in Charge Back Year (CBY) 1996 there were 567 fraudulent WCP cases totaling about $9 million.

l VA should continue to monitor the security of ,

V A Internet gateways as a Management Control We concluded that WCP costs could be reduced l l

Internal High Priority Area. In addition, VA by conducting more effective case management needs to ensure user billings provide sufficient to identify employees who can be brought back I information to allow customers to accurately to work or who should be removed from the {

assess their actualIDCU usage and reconcile rolls. Improved case management could have )

annual customer billings. avoided $17.5 million in WCP costs during l l

CBY 1996 and could avoid future costs of j The Acting Assistant Secretary for Management $246.9 million over the projected 18 year j concurred with the findings and lifetime of claimants on the rolls.

recommendations and provided appropriate l implementation actions. (Audit ofSecurity The audit also identified the following additional Controlsfor the ID CU, 8D2-G07-066, 4/23/98) areas where program management could be l enhanced by: (i) collecting and using i

" Continuation of Pay" cost information as a l "These //nd/ngs and recommendst/ons management tool for monitoring WCP cost and w///sss/st us dur/np our dec/s/on mck/np employee health and safety issues,(ii) process." establishing more comprehensive WCP policies I and procedures that take advantage of best l Deputy Ass /stant Secretary for practices and proven case management methods

/nformst/on Resources Management identified in our review, and (iii) providing all VHA facilities with access to the Workers  ;

Q Compensation Management Information System and completing certain modifications to enhance Multiple Office Action use of the system.

The Assistant Secretary for Human Resources Other Financial Controlissues and Administration and the Acting Assistant Secretary for Management concurred with the issue: Workers' Compensation Program report recommendations and provided (WCP) cost. appropriate implementation actions. (Audit of

Conclusion:

Improved management can yg,s Workers' Compensation Program Cost, lessen VA's risk for abuse, fraud, and 8D2-G01-067, 7/1/98) unnecessary payments.

Impact: Reduction of program costs by

$247 million.

The audit was conducted to identify opportunities to reduce costs associated with WCP claims. During FY 1998,VA payments for WCP costs to the Department of Labor (administrator of the Federal Employees' Compensation Act) will total about $140.8 32 m .m

Office of Audit

=7 Issue: VHA's management of non-

\ medical care cost recovery receivables.

Conclusion:

VHA is acting on

$225 million of receivables.

Impact: Improved collection of receivables.

We reviewed VHA management of receivables other than those r: lated to recovery of medical care costs. Results showed that a significent portion of the $225 million balance in non-medical care receivables may not be collected.

VHA's Chief Financial Officer has set out a plan to have VAMCs review these accounts and determine which remain collectable. Those accounts found to be collectable would be subject to appropriate collection actions, and a proper accounting would be made of the remainder.

The VH A plan is appropriate and our tests showed that implementation is progressing as designed. Recommcodations were made to O support their effort, which will result in collections of almost $4 million at the 8 sites we visited, and collect up to $70 million additional at the 165 remaining sites. The Under Secretary for Health and Acting Assistant Secretary for Management agreed with our recommendations.

(Audit of VHA Actions on Accounts Receivable, 8AN-G01-117,8/6/98)

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OFFICE OF HEALTHCARE INSPECTIONS i

Mission Statement Acutely lillnpatient Demographic Descriptors; and an Oversight Analysis of VHA's I ple entation o(Selected Aspects ofits Promote the principles of continuous Patient Safety improvement Pohey. OHI also quality improvement to provide effecu.re strengtheaed its VH A quality of care oversight inspections, oversight and consultation to by developing a more deliberative process for enhance and strengthen the quality of VA's selecting and assigning Hotline allegations, health care progransfor the well being of which will ultimately improve our ability to referan patients.

complete and report on these reviews more promptly. We also established closer working Resources relationships with Veterans Integrated Service Network (VISN) clinical managers in our The Office of Healthcare inspections (OHI) has ong ing eff rt to strengthen the quality program 20 FTE assigned, all of whom work in 010 assistance (QPA) review process. This headquarters. These individuals are deployed strengthened relationship helped us to use the 100 percent in healthcare inspections and QPA effectively in the context of inspecting evaluation issues, several sensitive Hotline allegations at VAMCs.

Overall Performance Output Veterans Health p)

(

w/

• We published 15 final reports during the reporting period.

Administration Outcome Nationwide Healthcare Program

• We made 33 recommendations, resulting in Reviews improving both clinical care delivery and management efficiency. Report: Demographic Descriptors of VH A's Acute Care Patient Population, Customer Satisfaction 8HI-A28105,5/22/98

• Program managers' satisfaction and acceptance level of our work was an average of Issue: Unique demographic, 4.4 on a 5.0 scale for the year, socioeconomic, and environmental characteristics of the average VA OHIinspectors have continued to emphasize the inpatient.

o ced for VH A to strengthen its quality

Conclusion:

Hospitalized patients have manage.nent infrastructure by developing and problems that complicate their treatment.

pursuing a variety of quality management (QM; Imoact: Enhanced ability to plan patient related projects and reports. These projects accessibility and treatment strategies.

included reviews of VHA's Deployment of QM Staffing and Resources; an Analysis of the Ten A 1995 OHI report showed that a significant Most Frequent Substantiated Hotline Allegations percentage of VH A patients, who were over a 3-year Period; an Analysis of VH A occupying acute care b'ds in 24 randomly selected VAMCs on June 8,1994, did not need t) 35 e m

-. .- -~ -. -- . - . - - - - - . _ _ - . - - . - - . - - .

Office of Healthcare Inspections acute care. Nevertheless, OH1 believed that recommendation and provided positive these patients were extremely chronically ill, and comments as to VH A's contemplated actions to had other impairments that justified their need address these issues.

for some level of care. This factor became more important as VH A began to reduce beds and bed days of care, and aggressively began to evolve A Description and Analysis of OH1's from a hospital-based, specialized care model to Most Common Findings in Hotline one of ambulatory-based care with a primary inspections: Fiscal Years 19931995, care emphasis. 8Hl A28-150,9/28/98 This report summarizes and consolidates OH1's issue: VHA employee behaviors and findings and conclusions. It aimed at prnviding health care practices engender VH A planners and clinicians with information to complaints to OlG's Hotline.

develop strategic plans to enhance patient access

Conclusion:

Stakeholders complain to care and to rationally plan for the extended mostly about how employees treated t care services that an increasing number of VH A them, either clinically or personally.

patients need. The report is an analysis of Imoact: Managers can focus remedial selected demographic, socioeconomic, and efforts to areas and behaviors frequently environmental descriptors of 499 patients whose associated with stakeholder tensions.

care we reviewed in FY 1995. The review analyzed variables that describe important The OIG Hotline opens about 800 cases each characteristics such as patients' mortality, year; these cases raise substantive health care, admission frequency, length-of-stay, managerial, and fiscal concerns. OHI assigns accessibility to VA care, availability and high priority to accepting and inspecting adequacy of social support systems, and congressional requests, cases that have major patients' nutrition risk, medical implications, and serious cases that l VH A managers have not been able to resolve to We found that about 32 percent of the 499 the complainant's satisfaction. In the 3 year patients were so chronically infirm that they period from October 1992 through September succumbed to their illnesses within 18 months of 1995, OHI closed 230 hotline cases,72 of which their June 1994 episodes ofinpatient care. We resulted in formal reports with recommended also found the average patient traveled more corrective actions.

than 46 miles to obtain VA care, that 44 percent of the patients had inadequate social support This report analyzes the 122 substantiated or systems to help them sustain an adequate partially substantiated allegations that we lifestyle when they were not hospitalized, and inspected and discussed ia the 72 formal reports. -

l more than 80 percent were not adequately OHIinspectors substantiate or partially l nourished to sustain good health. We also found substantiate about 25 percent of all of the that VH A cli nicians do not consistently record allegations that they review. This represents j vital information about patients' social support only an extremely small portion of the millions systems or their nutritional status -information of employee / patient interactions that occur in that is important in successfully maintaining VIIA healthcare facilities every year.

these patients in an ambulatory care status. Neveitheless,it is important that VHA and Department managers are aware of what issues The Under Secretary for Health agreed with our create difficulties or c,oncerns for the people report findings and consultative whom we serve - veterans and their families, t

36 m

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! More than 58 percent of all substantiated On October 25,1995, the Deputy Under b allegations stem from patients and their family members.

Secretary for Health testified before the House Veterans Affairs Committee that VHA would develop a strong statistical analysis capability in From our perspective, most complaic ,nts each VISN. The purpose of this statistical express concerns abou* i mannerin which capability was to facilitate early detection of l

l VH A employees treated them, both from a adverse changes in selected clinical monitors l

l clinical and interpersonal standpoint. We found, that may signal the onset of unwanted clinical '

l for example, that 28 percent of the substantiated behaviors or practices that could adversely affect allegations dealt with clinicians' provision of patient care, i inappropriate or incorrect treatment; 8 percent l pertained to delayed diagt.oses or treatment; 5 OHI offered to assist VHA to establish a strong I l percent involved lapses in patient and family statistical capability. In that spirit, this particular l l safety procedures, such as flawed infection report offers VHA a tested statistical l control procedures; 12 percer1 involved verbal methodology that OHI has successfully used to i or physical abuse or sexual harassment of a identify subtle changes in health care quality patient or family member; and 5 percent monitors long before other commonly used  !

identified impersonal or uncaring application of methods can. This statistical method is based on  ;

administrative procedures. The tenor of these an analysis of time-series data, which OHI has j substantiated allegations emphasizes the need found, by experience, to identify changes in l for VH A managers to continue to improve monitors very effectively. This is particularly i patient satisfaction and to resolve problems as true for those monitors that track mortality very they occur at the il level, early, and which far exceed the capability of other commonly used health care monitors f The Under Secretary for Health agreed with our findings and consultative recommendations and which were unsuccessfulin detecting any variations in the monitoring data at all.

provided plans to disperse the findings to VAMC and VISN managers in wr to apprise We believe, that if properly applied to existing them of the improvement areas that they need to VHA automated data bases, this statistical emphasize to strengthen the manner in which method will enhance VH A's ability to have an patients and other stakeholders are treated. early warning system of unwanted changes in selected quality management continuous monitors. We did not make any Suggested Supplementary Statistical recommendations in this particular report, but Options for Monitoring Healthcare,8Hl- commend the statistical methodology to VH A A28151,9/29/98 managers for their use.

Issup: Need for prompt detection of i adverse OM changes to ensure patient  !

safety and care.

Conclusion:

OHI offers an alternative statistical methodology proven to detect changes in quality.

Imoact: The ability to detect adverse OM changes facilitates early detection j and correction.

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OPA Reviews clinicians helped us to properly focus the l reviews to obtain and analyze the most useful issue: VAMCs' ability to provide optimal information. The clinical managers who access to high quality, low cost, and Participated in the QPA development and timely health care, refinement process, and participated in two such

Conclusion:

Managers are working reviews, fully supported the process collaboratively to reorganize the health care process to provide good, responsive Reports: QPA Reviews, VAMCs Lyons, services, but the scope of changes often NJ, and Washington, DC,8Hi F03125, negatively affects employee morale. 7/16/98, and 8HI F03145,9/17/98 Impact: Managers are developing initiatives to provide good, accessible During this reporting period,0HI completed care at an affordable cost. two QPA reviews. One of these reviews was done in the context ofinspecting and resolving a Report: OPA Review Program Oversight variety of allegations about clinical and Review Report and Analysis,8Hl-A28 administrative issues. This process not only 124,7/14/98 allowed OHIinspectors to review critically the events surrounding the allegations,it provided a For more than 3 years, OHI has been developing context in which to view the perceptions that led a workable, credible methodology to review to the allegations.

essential aspects of V AMC clinical operations and patient treatment processes in an effort to In both QPA reviews, OHIinspectors concluded '

provide consultative recommendations to VH A that medical center executive managers were p managers on ways to strengthen the manner in working collaboratively to initiate programmatic I, which they provide cere to their veteran changes that were designed to improve veterans'

( clientele. This process is built on the access to high quality health care and were administration of structured questionnaires to developing and implementing strategies that executive and mid-level managers, and large reduced operating costs, and allowed them to random samples of clinicians, patients, and reprogram funds so that more money would be operating level employees. The questionnaires available for direct patient care, elicit information that measures perceptions about the quality, responsiveness, and In both cases, executive and mid-level managers acceptability of health services that the held positive attitudes about the changes that i particular medical center and its employees were underway. Similarly clinicians were provide to patients, generally very supportive of the organizational i and operational changes that had occurred and OHI actively solicited the assistance ofleaders believed that these changes had improved the in all of the VAMCs in which we conducted quality and accessibility of patient care. Patients QPAs, to provide us with critical comments and also had generally positive impressions about suggestions that would help to make the QPA the improvements in care, accessibility, and process a meaningful and valuable tool for employee attitudes that accurred in association managers to use in improving their patient care with the changes.

services. We also solicited support and suggestions from the VH A's VISN clinical Notwithstanding these positive impressions, as .

I managers in order to ensure that VHA we reported in our previous semiannual report, understood the nrocess and that senior VH A employees who responded anonymously to our 38 ae*

• Office of Healthcare Inspections

,m QPA questionnaires raised concerns that the ill-conceived, poorly designed medication pace and scope of the many organizational and delivery system that depended on the local l operational changes that have occurred have centralized computer system to authorize nurses increased personal tensions and reduced to medicate patients. The complainant charged employee morale. Employees appear to attribute that this system resulted in increased numbers of their concerns to uncertainties about job serious medication errors, was extremely security, and perceived increased workloads or frustrating to work with, required more time insufficient staffing situations in their particular than the previous system to deliver medications, work areas. Executive managers at both and was initiated without nursing input or VAMCs have established intensive consent. I I

communication initiatives to keep employees and other stakeholders fully informed about Our inspection found that the VAMC's ongoing and contemplated organizational and automated medication delivery system had been operational changes, but employees continue to in place for about 1 year and that it was hold negative impressions about the change operating effectively. We did not substantiate process, the allegations that the system resulted in increased numbers of serious medication errors.

OHI continues to be concerned that the issues of To the contrary, the system prevents nurses from degraded employee morale, and increased administering unauthorized medications unless tensions in the workplace, have the potential to the nurse overrides the system and administers lead to diminished qu,lity of care, lowered the drug in spite of electronic warnings.

patient satisfaction, or adverse patient incidents. Incident reports that we reviewed showed that Thus, we believe that VH A managers need to reportable medication errors occurred only when seriously consider ways to alleviate these nurses ignored the system. Thus, the automated employee problems. system had been instrumental in virtually

( eliminating serious medication errors.

The automated system actually does extend the Healthcare Hotline inspections time that nurses previously needed to administer medications, because of the time that nurses Inspection of Alleged Medication System need to check internal control points more Problems, Colmery O'Neil VAMC Topeka, carefully before they administer a drug. The KS,8HI A28-111,6/2/98 increased time is not appreciable, and nurses told us that they easily accommodate the issue: Automated medication dispensing additional time requirement.

system.

Conclusion:

The system did not reduce We found that nurses participated in developing the time required to medicate patients, the automated system from its inception, and i that local lnformation Management Section I but decreased the occurrence of medication errors. (IMS) employees worked closely with all imoact: Patient safety increases as a nursing employees until they were proficient in result of decreased incidence of operating the system. IMS employees provide l

medication errors. virtually round-the-clock support and consultation if nurses encounter problems with We inspected allegations that VAMC managers the system. This intense IMS support has served had forced nursing employees to implement an to reduce nursing frustrations that arose from U

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Office of Healthcare inspections O implementing a new and unfamiliar system. We actions that properly responded to our U did not make any recommendations. recommendation.

Inspection of Alleged Mistreatment of a inspection of Alleged inappropriate PTSD Patient, VAMC lowa City,IA,8HI- Medical Care and Transfer of a Nursing  !

A28-116,7/1/98 Home Patient, VAMC Huntington, WV, 8Hi A28121,7/13/98 ,

issue: Insensitivity to post traumatic stress disorder (PTSD) symptoms and issue: Inadequate surgical cardiology patient's needs. care and unjustified cardiac surgery.

Conclusion:

Clinicians properly treated a

Conclusion:

Patient treated properly, but patient, but did not fully appreciate the transferring him to a private nursing gravity of his psychiatric symptoms which home was probably not in his or his led to him seeking an early discharge. family's best interests.

Impact: Better care for emotionally impact: Improved coordination of care distressed PTSD patients. for complex medical conditions.

We inspected allegations that V AMC clinicians We inspected allegations that clinicians failed to provide adequate care for a PTSD neglected and provided inappropriate care to a patient. We concluded that VAMC clinicians patient, and that the patient's care was so properly managed the patient's medical deficient that it directly resulted in his death. A condition by ordering appropriate diagnostic ciitical aspect of this case was the urgency of evaluations and admitting the patient for performing coronary bypass graft surgery, observation and treatment at a time when he was dtring which, or immediately after which, the at risk of developing tarium aspiration pr tient suffered a stroke from which he never l

Q pneumonia, recovered.

Clinicians did not threaten the patient with loss A senior VHA cardiothoracic surgeon from a of his disability benefits if he refused to accept different VISN reviewed the patient's clinicians'  !

care, as the complainant alleged. However, decisions and assessments regarding surgical ,

clinicians did not apparently fully appreciate the urgency and appropriateness. He concluded that patient's exacerbated psychiatric symptoms that the surgicalintervention was both timely and disrupted his normal sleep patterns, and a nurse appropriate given the patient's precarious did not provide him with an ordered sleeping condition. V AMC surgeons clearly and medication. The patient viewed this refusal of succinctly explained to the patient, the risks, sleep medication as an insensitivity to his needs benefits, and complications associated with the and asked to be discharged against medical surgery. The patient's post-operative care was advice, well managed by clinicians when he was i

transferred back to his home VAMC.

We recommended that the Director order nursing managers to provide in-service training However, Cill concluded that clinicians' on enhanced cominunication about individual decision to t: asfer the patient from the VAMC patients' needs. The Director acknowledged a to a private sector nursing home was probably lack of knowledge in this area, particularly as it not in the patient's or his family's best interests.

applies to PTSD patients' needs, and initiated The patient's deteriorating medical condition led to his return to the VAMC within a short time.

40 m

Office of Healthcare Inspections r

The coordination of the patient's medical care objectively and prescribe corrective treatment.

(-

was complicated by the involvement of many The patient and his family members were often physicians and three VAMCs. This complexity unable to talk to the patient's physicians because resalted in some lapses in effective of frequent teaching rotations.

communications with the family.

Also the patient and his family made clinicians We made two recommendations aimed at aware of the patient's wishes on the level of care improving the coordination of complex patient he was to receive at the end of his life, but care cases after hospitalization and for obtaining responsible clinicians did not properly record 1 patient's and family members' input and consent this information or communicate it to the j for nursing home placement. The Director treatment staff. No clinical employees other agreed with our recommendations and provided than the social worker apparently ever counseled  ;

reasonable implementation plans. the patient or his family about the death process, l inspection of Selected Clinicalissues in We substantiated or partially substantiated all of a Patient's Care, VAMC Atlanta, G A,8Hl- these allegations. We made 12 A28-122,7/13/98 recommendations aimed at correcting the deficiencies that led to these events. The issue: A patient experienced numerous Director agreed with all recommendations but unsatisfactory treatment experiences one, and provided responsive implementation during six episodes of hospital care, plans to reduce the possibility that similar

Conclusion:

Medical errors and incidents would reoccur. The Director did not omissions occurred, but the errors did not concur with our recommendation to revise contribute to the patient's death, resident and attending rotation procedures in impact: Correcting severalissues will order to provide better continuity of patient care, improve the overall care of patients. citing the affiliated medical school's resistance to such a change. However, he agreed to enter We inspected a series of allegations pertaining to into discussions with the medical school to clinical and administrative misadventures that a improve this issue.

patient had during the course of six episodes of inpatient care from 1976 through 1995. A Inspection of Patient Care Allegatior.s physician had not heeded a drug allergy alert and Quality Program Assistance Review, and wrongly prescribed a medication to which VAMC Lyons, NJ,8HI-F03-125,7/16/98 the patient was allergic, but clinicians recognized the error before the patient had a lssue: Unsatisfactory use of sterilizing reaction. Clinicians did not properly follow up equipment, unclean nursing home on out ofline laboratory tests and did not conditions, and inadequate staffing.

promptly treat a kidney condition. The patient

Conclusion:

Unwanted events ecourred, i had to spend excessive time in the Emergency but managers promptly corrected the l conditions.

Room (ER) before he was admitted for an acute illness. Clinicians failed to recognize emerging impact: Improvement in care and safety.

pressure ulcers immediately and did not promptly provide relief for the patient's Several complainants raised concerns that ,

increasing pain. Clinicians recognized that the clinical employees were not properly sterilizing  !

patient's nutrition status was deteriorating, but endoscopy equipment, and that this negligence they did not immediately evaluate the condition put patients at risk ofincurring dangerous O

41 en. -

1 Office of Healthcare Inspections infections; that there was a scabies epidemic maintaining high profiles in all areas of the among Nursing Home Care Unit (NHCU) medical center, they did not fully appreciate the l patients that managers were aware of but did not depth and severity of employee morale l correct; and that the VAMC was in a problems.

dangerously understaffed condition as a result of its consolidation with another VAMC and We made several recommendations aimed at subsequent down-sizing. preventing similar problems that we identified during our inspection visit from reoccurring.  ;

We confirmed that an endoscopy technician had The Director agreed with our recommendations developed a homemade endoscope sterilizing and implemented satisfactory corrective actions.

attachment when the factory made equipment malfunctioned, and employees used the Inspection of Alleged inappropriate unauthorized attachment. However, infection Medical Care, VAMC Tuskegee, AL,8HI-control and labcratory employees conducted A28129,7/28!98 numerous tests on the equipment to ensure that it had been properly sterilized and did not find any issue: Alleged improper treatment of indication of surviving pathogens on'the acute pneumonia.

equipment after sterilization using the

Conclusion:

Clinicians provided unauthorized equipment. They subsequently adequate and timely care to treat a procured a properly authorized, functional patient's acute respiratory failure.

attachment. Imoact: High quality patient care.

The NHCU had three scabies outbreaks in a 3 We inspected allegations that VAMC clinicians year period of time. This pheromer.on occurs improperly inserted an endotracheal tube into a f with relative frequency among elderly, infirm patient's airway, unnecessarily placed her on

( patients. Ilowever, clinicians recognized the condition each time and implemented proper mechanical ventilation, caused her pain when they suctioned her airway, refused to prescribe treatment and prophylaxis to prevent its further opiates to relieve her discomfort, refused to spread to other patients. obtain expert consultation to treat her pulmonary probleins, and refused to allow her sister to The VAMC did experience a staffing reduction administer chest physiotherapy in the intensive in selected patient care areas as a result of rapid care unit.

staffing cutbacks and recruitment lag time.

These conditions were exacerbated by We could not substantiate any of these employees' high level of emergency annual and allegations. The patient had long-term chronic sick leave usage. The Director immediately pulmonary disease and was a heavy smoker.

authorized recruitment of 30 additional nursing She developed pneumonia that rapidly employees which outsing managers distributed progressed into acute respiratory failure. Her according to need, clinician properly intubated her and initiated mechanical ventilation. He is a cardiologist who We conducted this inspection in conjunction is knowledgeable in treating pulmonary with a QPA which showed that rnanagers were problems so he did not need outside working collaboratively in o:Jer to implement consultation, and the patient's rapid recovery of many major organization and operational culmonary function demonstrated his skills. The changes. But even though inanagers were physician properly did not prescribe opiates for meeting regularly with employees, and the patient's discomfort since narcotics are

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l Office of Healthcare Inspections respiratory depressants and this would only have help. We made several recommendations aimed I exacerbated her pulmonary problems. There is at reducing the possibility that similar events no question that suctioning an airway is a very would occur in the future.

uncomfortable procedure; however,it appears that clinicians used proper and accepted The Director agreed with our findings. He procedures in carrying out this procedure, immediately contacted the patient's family, thereby facilitating the patient's ability to communicated our findings and conclusions to breathe. them, and provided them with proper  ;

counseling. He also provided implementation ,

' Since we did not identify any problems with this plans that will properly carry out our patient's care, we did not make any recommendations.

recommendations.

Inspection of Alleged Mistreatment of a inspection of Alleged Inattentive and Respite Care Patient, VAMC Atlanta, G A, Inadequate Care for a Veteran's Chest 8Hi A28136,8/26/98 Pain, VAMCs Birmingham and Montgomery, AL,8Hi A28-132,8/13/98 issue: Home treatment for a hospital incurred condition.

Issuei Inattentive treatment for a

Conclusion:

Clinicians provided proper patient's complaints of chest paln. treatment for a traumatic injury of the

Conclusion:

Nurses and a physician did urethra.

not provide timely treatment. Imoact: Establishment of standard imD.R.qt A patient's death may have been catheter anchoring procedures.

preventable.

We inspected the circumstances r ounding the i We inspected the circumstances surrot ' .ng a alleged improper treatment of a I,.aient whose patient's allegedly preventable death in a catheter anchoring tape had inadvertently VAMC's Ambulatory Care Unit. The family migrated into his urethra. The complainant alleged the patient had complained at length that alleged that clinicians failed te properly treat the he 'vas having severe chest and arm pain, and resultant condition and attempted to cover up that in spite of these complaints, clinicians made their error.  !

him wait an excessive amount of time in the Our inspection found that clinicians had  ;

patient waiting area, without being seen by a anchored the patient's urinary catheter to his leg clinician. When the patient became more with non allergic tape, and that the tape distressed and began asking loudly to be seen, a apparently became dislodged from the ettheter resident physician confronted him and told him and migrated along the tube and into his urethra.

if he was in such distress, he should go to the ER This caused the patient to bleed around the to be seen. A nurse transported the patient to the catheter and created intense discomfort. VAMC ER where he died shortly after arriving. Home Care nurses and a physician immediately examined the patient at home and remedied the The Office of MedicalInspector had reviewed problem. The patient's discomfort continued this case but had not interviewed family and his spouse transported him to the ER late in members. We concurred with the Office of the evening, where a resident physician Medical Inspector that clinicians failed to examined but did not treat the patient and sent l recognize the patient's distress and reacted him home.

l improperly to his anxieties and entreaties for 43 anus

Office of Healthcare Inspections

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We concluded the VAMC did not have a head trauma. Several expert neurological and i standard method for anchoring urinary catheters pathology consultants told us that it was unlikely I and recommended that they standardize that the assault was associated with the pstient's procedures in this regard. We also death, recommended that cliniciaas be reminded about the necessity to clearly communicate with We a!so found clinicians had provided patients and their family members as to what appropriate follow up and treatment for patients they found on examination, and what treatment who had been taken into custody, but the VAMC l is needed,if any. The Director agreed with our did not have an established procedure to ensure recommendations and implemented appropriate that patients had their prescribed medications corrective actions. when they were arrested and taken to jail. We recommended the Director establish such a inspection of Allegations Pertaining to procedure. Ile agreed with this recommendation the Psychiatric Service, VAMC North and established an appropriate policy.

Chicago,IL,8Hi A28-137,9/1/98 Inspection of Alleged Mismanagement of issue Medical treatment for psychiatric Psychiatric Programs, William Jennings patients. Bryan Dorn Y3terans Hospital, Columbia,

Conclusion:

Managers took appropriate SC,8Hi A2ii 152,9/30/98 action.

Impact: Medical procedures established. Issue: Degraded psychiatric treatment associated with outpatient vs. inpatient We inspected the circumstances surrounding treatment.

several allegations that managers did not

Conclusion:

More patients have access appreciate the need to treat psychiatric patients' to care.  ;

Q medical problems and that as a result of this problem, several patients had suffered unwanted

,lm oact: Enhanced access, reduced cost, but effective treatment.

consequences. The complainant also made everal allegations regarding managers' lack of We inspected allegations that the quality of care

" erest and follow up 03 = heident in which in well established psychiatric programs had ne alhges that one pat' as, ?ulted another deteriorated since managers had revised them patient who subsequent) A.% his iajuries; from predominantly inpatient to outpatient and abat patients who suffered ill affects of programs We evaluated the treatment protocols incarceration because V AMC clLJ ians failed to for the Substance Abuse and Geropsychiatry look after their interests at the time authrities Treatment programs and found they appear to be took them into custody. reasonable and consistent with outpatient treatment programs around the Nation.

Our inspectors found that clinical and executive managers had taken appropriate actions to We interviewed senior program clinicians, ensure that medical physicians routinely patients, and family members, all of whom were provided needed treatment to psychiatry patients satisfied with the quality of care that these who need medical assistance. Managers had not outpatient programs afford. Clinicians ignored the incident in which the patient interviewed stated they had been consulted allegedly died after another patient assaulted about the transition to outpatientcare and agreed him. The patient died nearly 1 year after the the outpatient method was probably superior, incident, and he had a long history of severe since there are drugs and procedures for these i O l

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[ patients that were not available several years ago. Also, patients appear to be more satisfied I with their treatment since they do not have to be I

confined to a facility to treat their conditions.

The complainant also provided the names of 48 patients whose psychiatric clinician allegedly mistreated or did not treat adequately. We

reviewed all but two of these patients' medical i

records and found clear evidence that clinicians treated them properly and followed up on their care needs after they were discharged. The two patients whose care we did not review had been trsnsferred to other V AMCs and their records were not available to us.

Since we did not identify any problem areas, and did not substantiate the allegations, we did not make any recommendations.

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OFFICE OF DEPARTMENTAL REVIEWS AND O, M AN AGEMENT SUPPORT Mission Statement includes controlling and referring many cases to impartial V A components having jurisdiction.

Promote OIG organizational effectireness The SpecialInquiries section reviews Hotline and efficiency by providing reliable and cases that involve allegations of misconduct and tim ely management and administratire mismanagement by senior ofincials. j support, andproviding products and l services that promote the overall mission III. Pol.iev. Followup and Operational Suonort j

and goals of the OIG. Strive to ensure that Division - The Division does followup tracking l all allegations communicated to the OlG of OlG rep n recommendations; Freedom of are effectirely monitored and resolved in a Information Act (FOIA) releases; strategic and timely, efficient, and impartial mann er, and Operational planning;IG reporting and policy independently conduct specialinquiries development; and Internet document 1 into allegations concerning senior ranking management.

officials and other high profile matters.

Conduct contract reviews to assist IV. Resources Management Division -The contracting officers in price negotiations; Division is responsible for 01G financial to ensure that contractors submit accurate, Operations, including budget formulation and current, and complete pricing data. execution; OlG personnel management; management information systems development The Office of Departmental Reviews and and maintenance; and all other 01G gs Management Support is a diverse organization administrative support services.

responsible for a wide range of operational and

('v) administrative support functions. The Office Resources consists of the following four Divisions:

The Office of Departmental Reviews and I. Contract Review and Evaluation Division - Management Support has 68 FTE allocated to The Division is responsible for conducting the following areas.

preaward reviews of Federal Supply Schedule (FSS) proposals, postaward reviews of FSF contracts, drug pricing reviews under the Hotilne a provisions of Public Law 102-585, and other special work, such as providing technical assistance to inquiries contracting officers, VA General Counsel, or the I

contract Department of Justice for the preparation of trial Audit or settlement cases. 35%

Res Mgmt II. Hotline and SnecialInquiries Division - The posio up 22%

Division is responsible for determining action to FOIA be taken on allegations received by the 010 15%

l Hotline. The Hotline section receives over i 20,000 contacts annually, mostly from veterans, V A employees, and congressional sources. This O

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Office of Departmental Reviews and Management Support

( 'i 1. CONTRACT REVIEW t taled $ 4.3 milli n. Preaward reviews,

\"/ designed to assist VA contracting officers in AND EVALUATION negotiating the best possible prices made

-d no recommendations that may save VA

$14.1 million.

l l Mission Statement Customer satisfaction Measures

• Customer satisfaction survey forms were used by VA contracting officers to provide Assist VA in its efforts to become a world. feedback on the degree of satisfaction with our class purchasing organi:ation for health reviews. For this period, the average customer care items by providing contracting officers satisfaction rating was 4.9 out of a high o(5.

[ with reliable and timely contract review and evaluation services. Conduct preaward reviews to assist contracting officers in price negotiations by holding Of1lCO Of M8 nag 6 ment contractors accountablefor the bestprices; conductpostaward reviews to ensure that

\

contractors submitted accurate, current, Postaward Audit Activity and complete pricing data in support of issue: Prime vendor overcharges for negotiations and, where warranted, recover pharmaceutical products.

l overcharges; and conduct reviewA to

Conclusion:

Postaward review discloses ensure that contractors adhere to the drug overcharges.

pricing provisions of Public Law 102 585.

Impact: Contractor agrees to refund

,G $9.4 million.

(v ) Resources Our review found that a pharmaceutical prime The Contract Review and Evaluation Division vendor had overcharged FSS customers has 23 FTE. These FTE are provided on a $9.4 million from January 1,1998 through l reimbursable basis from the Office of June 30,1998. When the company converted to Acquisition and Materiel Management a new electronic ordering system in January (A&M M) to perform contract reviews for VA. 1998, V A customers inanediately noticed an unusual number of pricing irregularities and Overall Performance reported their concerns to the National Acquisition Center (NAC). At the request of NAC officials, we reviewed FSS sales data and Output

... . company disclosures and issued an interim The Division issued a total of 16 reports report that confirmed continuing pricing during the period, of which 9 were preaward irregularities and contract overcharges. The contract reviews and 7 were postaward audits.

contractor has agreed to reimburse VA i

$9.4 million. We are continuing to review the 1

Outcome contracts to determine if additional money is e We returned $31 for every $1 expended on owed VA.

l postaward activity and $25 for every $1 l expended on preaward reviews. Dollar j recoveries resulting from postaward audits h

V i 48

Office of Departmental Reviews and Management Support issue: Contractor overcharges for from errors in the computation of Federal wheelchairs. Ceiling Prices, We reviewed the self-audit and

Conclusion:

Postaward review discloses determined that the amount due was computed overcharges. correctly. We also reviewed various commercial Impact: VA recovers $2.6 million. contracts to determine if there was any defective pricing or price reduction impact.

In a previous semiannual report, we reported that a contractor, supplying wheelchairs to VA Preaward Review Activity and other Government entities under an FSS contract, overcharged government customers based or a postaward review. This period the issue: FSS vendors did not always offer I

best prices to VA.

contractor agreed to pay the Government $2.6

Conclusion:

Reviews recommend i million to settle the Government's claim under potential better use of funds.

the False Claims Act.

Impact: VA may save $14.1 million.

The review concluded the contractor failed t Preaward reviews of FSS offers from contractors l provide accurate, complete, and current supplying dental supplies and equipment. X-ray information regarding its sales and market.ing film and equipment, and drug and practices, which resulted in the Government  !

,, pharmaceutical products show that contractors paying higher prices than similarly situated did not always initially offer best prices to VA.

commercial customers This review was especially complex because it involved the

.

• Three preaward reviews of X-ray film and analysis and comparison of wheelchairs with equipment offers resulted in recommendations literally hundreds of different configurations.

of potential savings of $11.5 million.

The Department of Justice and OlG negotiated (s the settlement.

e Five preaward reviews of dental supply and lssue: Contractor overcharges for equipment offers resulted in potential savings of pharmaceuticals. $1.8 million.

Conclusion:

Postaward audits disclosed i contract overcharges.

e One preaward review of a pharmaceutical Impact: VA recovers $2.3 million from c mpany's offer resulted in potential savings of

$800,000.

three contractors.

I

• Potential savings result from recommendations A pharmaceutical company remitted

$2,150,000 to VA for contract overcharges to contracting officers to negotiate lower prices based on our review of the contractor's resulting from not disclosing accurate, complete, and current pricing and discount information to e mmercial sales practices, the contracting officer during negotiations. The , g ,

contractor s failure to disclose their most favored customer discounts denied the reported better use of funds.

Government the opportur.ity to negotiate more

Conclusion:

Significant savings are favorable discounts.

sustained by contracting officers.

Impact: VA will save $21.6 million over a 5-year contract period.

e A pharmaceutical manufacturer voluntarily disclosed overcharges of $140,000 resulting )

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in previous semiannual reports, we have identified significant potential savings to the VA loss if the contract had been completed and therefore the contractor was not entitled to the relating to recommendations made on preaward claimed profit.

reviews of FSS offers. To determine the effect of our recommended potential savings, we compared our original recommendations to the results of negotiations.

We now have received completed negotiation results related to six FY 1998 pharmaceutical preaward reviews containing recommended ll. HOTLINE AND potential savings. The six preaward reviews SPECIAL INQUIRIES contained recommended potential savings of

$23.7 million; V A contracting officers in negotiations were able to achieve savings to the V A of $21.6 million over the projected 5-year contract period.

Mission Statement We will continue to measure the effect of the cther preaward reviews completed in FY 1998 "II"#'# " # "" " ""'"" ." '"' ### .

trasson are usponded to in an efficient with recommendations amounting to $174.8

. . and effective manner using OIG milb.on in potential savings. Upon receipt of the negotiation results, we will be able to determine p ,,,,,,,; ,, g,,,,,;,; y, ,,,;,;,;,, ,,g .

independently review allegations  !

how much of our recommended potential concerning senior officials and other

[ savings was achieved m negotiations.

high profile matters.

\'J' Other Contract Review The nortine Section operates a toll-free telephone service 5 days a week, Monday Issue: Contractor claims overstated. through Friday, from 5 AM to 10 PM Eastern

Conclusion:

Contract review disclosed Time. Phone calls, letters, and E-mail are overstated claims against a VA received from employees, veterans, the general contract. f public, the Congress, G AO, and other Federal impact: Potential better use of $334,000. agencies reporting issues of fraud, waste, and  !

abuse. Due consideration is given to all l A contractor submitted a settlement proposal complaints and allegations received, with each and claims of $573,000 to VA for costs incurred addressed by OIG or other Departmental s'aff.

as a result of termination of a construction project. The contractor's termination settlement The Speciallnquiries Section reviews proposal and claims for equitable adjustment allegations against high-ranking officials and related to an alleged, Government-caused examines other high profile requests. Special performance delay. We questioned $334,000 of inquiries staffindependently conduct the the claimed costs. The questioned costs administrative reviews and make pertained to all areas of claimed costs, but recommendations for corrective actions to the j primarily related to an audit-determined contract Department.

l loss adjustment computation. The review found the contractor would have incurred a monetary 50 I

l Office of Departmental Reviews and Management Support tO Resources outcome s

v/ V A managers took administrative actions The Hotline and SpecialInquiries Division has against 32 employees and 106 corrective actions 19 FTE assigned. In addition to the Division t improve operations and activities as the result Director, there are 7 employees in the Hotline f these reviews, The monetary impact resulting Section and 11 employees in the Special from these cases totaled $540,629.

Inquiries Section. The following chart shows the percentage of resources utilized in reviewing Customer Satisfaction allegations by program area. Customer satisfaction surveys indicated that VA managers found the special inquiry reports to be usefulin addressing allegations at their facilities.

The customer satisfaction survey rating for the I period averaged 4.1 out of a maximum of 5 VBA A&MM points.

20% 9% IRM 1%

Fin VHA 60%

9 "R' A. HOTLINE SECTION The Hotline Section retained oversight on a 1 number of ca>es that we.re referred to other VA OIG elements as well as to independent VH A and VB A program officials for resolution. ]

,m I Overall Performance HotHne staff fonowup on issues such as patient t care, veterans, benefits, employee conduct, Pr Perty and personal gain. The following are During the reporting period the Hotline received 7,609 contacts. Of this number 439 case < were

• * **"m l during isth. P es period.

reporting ope cases eat were closed opened.The 010 reviewed 64 of these and the remaining 375 cases were referred to VA program offices for review.

outpui Veterans Health During the reporting period Hotline staff closed 497 cases of which 103 contained substantiated Administration  !

allegations (21 percent). Of the closures, we responded to 80 Congressionalinquiries Patient Abuse received from Members of the Senate and House of Representatives. Specialinquiries section

• A VH A review initiated by a Hotline inquiry staff closed 21 cases. Staffissued 9 reports and confirmed allegations of misconduct, including completed 12 administrative closures. patient abuse by a VA Domiciliary Director.

The Director was removed from his position, given a 60-day suspension, demoted and reassigned to a staff nurse position.

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Office of Departmental Reviews and Management Support O e A Hotline inquiry to VH A found that a several floors and injured at least one employee.

( health care provider slapped a patient because he The review also found inadequate removed his oxygen mask. The health care documentation to prove regular maintenance provider received a 14-day suspension. was performed. VAMC officials plan to work with the private elevator repair contractor on a Patient Care regular basis until satisfactory performance is achieved and maintained.

• A VH A review initiated by a Hotline inquiry at a facility substantiated the need to improve Lobbying Restrictions and Using health care procedures. The review found that Government Time and Property poor record keeping resulted in a false diagnosis of cancer. Further,the review noted that family

• A Hotline inquiry to VHA substantiated that members were notified of the diagnosis before a VAMC probationary employee was using a the patient. Senior officials apologized to the VA computer to contact and request other VA patient and offered further care.at the same employees to write : heir Congressional facility or on a fee basis with a private representatives to lobby against the President's physician. VH A took action to implement FY 1998 budget. The employee also provided l improvements to several reporting systems as the others with a sample message arguing

, the result of the review. against the budget. The probationary employee I

l was terminated from VA employment.

• A Hotline inquiry sent to VH A found that a Family Nurse Practitioner was prescribing Contracting Activities medications even though she had not fulfilled all of the VHA and State requirements for

• A VH A review initiated by a Hotline inquiry f prescriptive authority. Corrective action was found that a VAMC contracting officer

( taken to remove the prescriptive authority from her previously approved Scope of Practice improperly removed an 8a firm from an awarded contract and gave the contract to a non-Ba firm.

i Statement and to review the credentials of all The contracting officer also failed to act as mid level practitioners currently working with mentor for the 8a firm. A GAO protest l expanded authority to ensure that all met the settlement set aside the second year of the j minimum VHA requirements. contract so the contract could be rebid. The contracting officer's warrant was revoked.

• A VH A review initiated by a Hotline inquiry substantiated that medical center staff e A VH A review initiated by a Hotline inquiry unreasonably delayed paying a veteran's fee substantiated that an administrative officer basis care provider for two years for the improperly used an IMPAC card to purchase treatments he received. The VAMC admitted telephone answering machines at a VAMC. The the error and paid the bills on four authorized administrative officer received a verbal treatments. The Director sent the veteran and counseling. All credit card holders and his fee basis physician letters of apology. approving officials have been notified that this type of activity is prohibited and m :y lead to Public Safety disciplinary action. The VAMC informed us that periodic reminders would be sent to e A VH A review initiated by a Hotline inquiry reinforce this policy.

confirmed there was an ensafe elevator at one facility. The elevator would unexpectedly drop l

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Using and Handling VA Stationary and M anagement officials informed us they would y Postage take the appropriate disciplinary action.

• A Hotline inquiry to VH A substantiated that Personnelirregularities an employee used VA stationary and postage for personal use. The employee was given a written

• A VH A review initiated by a Hotline inquiry l

counseling, informing him of the inappropriate of a kitchen operation substantiated significant action and instructions to refrain from any of personnel policies by the supervisor and the further use of government resources for personal staff. The Board of Investigations recommended matters. A Bill of Collection was issued to the disciplinary actions including the suspension of employee to recoup the expense incurred by the some employees.

l government.

I

• A Hotline inquiry prompted a Human

• A VH A review initiated by a Hotline inquiry Resources M anagement (HRM) evaluation of l found that a VAMC mailroom employee was the personnel operations at one medical center, l inappropriately discarding " junk mail." VAMC which resulted in the identification of serious officials counseled the employee and directed systemic and regulatory problems in the that future decisions to discard mail be made by facility's HRM program. Recommendations for I management. corrective actions were made and were acted on by VAMC management, to include taking action Use of Government Vehicles for Official to correct an inappropriate promotion.

Business

• A Hotline inquiry to a VISN confirmed that  !

a manager at one of their facilities authorized the Appropriateness of Certain Timekeeping use of a VA bus for other than VA business Procedures reasons. The official permitted an Employee Association to transport V A employees for non-

• A VH A review initiated by a Hotline inquiry official purposes. The official was counseled, substantiated that a VAMC surgical service and the Chief Network Officer prepared a letter employee failed to enter a request for two days to all VH A facilities to prevent future of annualleave. It was also found that the occurrences. employee was certifying his own timecard.

Action was taken to correct the employee's

• A Hotline inquiry to the VA canteen service timecard to reflect annualleave taken for the found that a senior official used a Government two days in question and the employee was vehicle to help his son deliver newspapers in counseled for not recording leave for brief their neighborhood. V A issued the official a absences from duty and failure to record other reprimand for using the vehicle for other than annualleave. The service chief was also official purposes. counseled for failing to ensure proper timekeeping procedures.

Misuse of Government Equipment

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• A VHA review initiated by a Hotline inquiry found that a VAMC employee misused a i Government computer and telephone on several occasions during her scheduled duty hours.

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'-) Veterans Benefits the veteran's estate $ ,637. The VARO will continue to monitor this case closely to prevent Administration further improprieties in administering the ,

veteran's VA money. l Falsification of Pension Information l Claiming Dependents for VA Benefits l A VB A review initiated by a Hotline inquiry e A VB A review initiated by a 110tline inquiry found that a pension recipient who ran a homeless shelter falsified information on his found that a widow was reporting that her pension application. The VARO assessed an daughter was in school for countable income overpayment of $11,417 against the veteran. Purposes, even though the daughter had The V ARO also noted that the veteran left the discontinued school attendance and was area after withdrawing $15,528 in monies working. The daughter was removed from the donated to the shelter. Ilotline staff faxed widow's benefits award, creating an ,

l materials to the regional counsel so state overpayment of $735. The VARO has taken warrants could be issued for the veteran's arrest. action to recoup the amount of the overpayment.

Continuing Compensation Payments to

• Another llotline inquiry to VBA found that incarcerated Veterans a veteran failed to notify V A that he was divorced and that he continued to claim his

• A VB A review initiated by a 110tline inquiry stepchildren on his award. An overpayment of i found that a 100 percent service-connected $4,287 was created.

veteran had been incarcerated since late i November 1997 and had not been subjected to a e A VB A review initiated by a 110tline inquiry reduction in benefits as prescribed by law. This confirmed that a veteran's spouse continued to V)

(

created an overpayment in excess of $18,000.

The VARO took action to reduce the veteran's receive an apportionment of his benefits, although they were divorced. The veteran had monthly compensation from $2,110 to $94. provided a copy of the petition for divorce from his spouse but had not provided a copy of the

• Another VB A review initiated by a Hotline final decree issued by the court. The VARO inquiry found that a 100 percent service. created an overpayment to recoup the amount of connected veteran was incarcerated but the apportionment after the divorce was final.

continued to receive payments without a prescribed reduction in benefits as prescribed by law. This created an overpayment of $1,652.

The veteran's compensation benefits were reduced from $2,078 to $95 monthly.

B. SPECIAL INQUIRIES Fiduciary Use of Veteran's Funds and Purchasing items The special inquiry reports discussed below address serious issues of misconduct against A VB A review initiated by a Hotline inquiry high ranking officials and other high profile found that a veteran's fiduciary purchased matters, which received a great amount of computer equipment using the veteran's VA interest from the U.S. Congress, Secretary, VA benefits money. The fiduciary will reimburse managers, media, and the general public.

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Office of Departmental Reviews and Management Support O

G Veterans Health Adm,inistrat, ion The Chief Network Officer concurred, or parually concurred with 68 of the 74 recommendations made in the report. Of the remaining six responses, Vli A deferred Management, Clinical, and comment on two recommendations. We are Administrative lasues following up on these issues until they are resolved. VilA did not concur with three of the The O!G reviewed numerous allegations of five recommendations on behalf of employees mismanagement, misconduct, poor clinical care whom we concluded were retaliated against by practices, criminal activity, and administrative VA management. The employees have filed,or irregularities at the V A Central Alabama have been notified of their right to file, a Veterans llealth Care System. While many of complaint with the Office of Special Counsel.

the allegations were not substantiated, we did Vil A also did not agree to take administrative substantiate that the Director improperly spent action against the Director for engaging in funds, misused his Government credit card, Prohibited personnel practices. We have inappropriately attempted to use appropriated referred this matter to the Deputy Secretary for funds for an employee picnic, and impeded OIG resolution. (Management, Clinical, and efforts to investigate issues. The Director also Administrative issues at the VA Central engaged in questionable personnel practices. Alabama Veterans Health Care System, BPR-G03-144, September 29,1998)

We substantiated that the Associate Director submitted questionable claims for travel Procurement issues and Violation of reimbursements and attempted to pressure Spending Authority subordinates to spend appropriated funds

,O inappropriately. The Associate Director also A review substantiated that 6 of 12 contested violated nepotism laws and engaged in Procurements made at a facility violated Federal prohibited personnel practices by retaliating Acquisition Regulations. The review also found against one or more employees for that facility senior officials and acquisition staff whistleblowing. We substantiated that five did not adequately resolve the procurement former service chiefs were victims of Protests. The procurement staff also harassment and/or retaliation. We also found inappropriately obligated $468,395 in funds that numerous personnel regulatory and after the legal spending authority had expired.

procedural violations occurred at the facility. Vli A took appropriate administrative actions Our healthcare inspectors substantiated some against the responsible officials, and corrected allegations involving instances of inappropriate other identified deficiencies. (Procurement patient care. The inspectors also expressed issues, VAMC Ann Arbor, Michigan,8PR-Ell-concern over staffing nursing units, patients' 134. StPtember 16,1998) nutritional care, and several other patient care '

issues. licalthcare inspectors found that Employees' Right to Report Complaints managers needed to concentrate on improving certain quality management practices. We also The special inquiry review substantiated that a noted administrative controls for monitoring Director issued a memorandum prohibiting time and attendance, Government credit cards, employees from reporting complaints to outside fire and safety, and Government property needed organizations without first reporting them improvement. internally. We found that the memorandum was contrary to the Inspector General Act of 1978 m

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Office of Departmental Reviews and Management Support I

O and the Whistleblower Protection Act of 1998, which preserve Federa1 Government employees' correct the other conditions noted in the report.

(Conduct, Personnel and Contracting issues, l right to bring their concerns to the OlG, the James A Haley VAMC Tampa, Florida,8PR-Office of Special Counsel, and others without A 19-095, May 4,1998) fear of reprisal. Vil A took action to rescind the memorandum and issue one in compliance with Travel and Funds Management by a the Whistleblower Protection Act of 1978. Former Officialin VA Central Office (Employees' Right to Report Complaints, VAMC Albuquerque, New Mexico,8PR-F03-119, July A report responds to allegations that a senior 22,1998) quality management official inappropriately claimed and received reimbursement for Use of Official Position for Personal Gain unauthorized travel. VliA took administrative action and initiated collection procedures.

A specialinquiry review responded to (Travel and Funds Management by a Former allegations that a VA health care provider VHA Officialin VA Central Office,8PR A19-referred a patient to his private business. 096, April 20,1998)

Conduct regulations prohibit employees from using their public office for private gain. The Vli A took administrative action against the physician employee in this matter. (Use of Official Position for Personal Gain, VAMC lowa City, Iowa,8PR-F03115, June 30,1998) ygggyggg ggggggg Employee Conduct Administration A specialinquiry report responded to allegations Relocation Expenses and l that a supervisor and other staff exhibited Reimbursement issues l conduct unbecoming Federal employees by I hiring two female exotic dancers to perform in A review at a VARO substantiated an allegation the nude at the VA facility. VIIA informed us that a supervisor improperly claimed and was they would take administrative action against the reimbursed real estate expenses not incidental to l

responsible employees in this matter. (Employee a transfer to a new duty location. The report i Conduct, VAMC Gainesville, Florida. 8PR G03- recos., mended that a debt be established to 110, June 3,1998) collect the real estate expenses, including all withholding tax and relocation income tax Conduct, Personnel, and Contracting allowances improperly paid to the employee. A issues f nal accounting found that the debt was

$19,352. Action was taken to initiate the A report responds to allegations that a Director appropriate collection procedures. (Relocation misused his position, employees inappropriately Expenses and Reimbursement Issues at VARO received free meals and consumed alcohol at the San Diego, California,8PR-B01-097 April 17, facility, and other staffimproperly contracted for yppgj certain services. The review substantiated the first two allegations. We did not substantiate that staffinappropriately contracted for services.

VII A took appropriate administrative actions to l

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I Office of Departmental Reviews and Management Support

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Ill* POLICY 5 and reviews with over $1 billion of actual or potential monetary benefits as of September 30 I FOLLOWUP AND 1998. Of this amount $795 million is resolved, but not yet realized as VA has agreed to l OPERATIONAL impiemeni the recommendations, but has noi ye,  ;

doae so Ia addition,5248 miiiion rei ies to SUPPORT unresolved reviews awaiting contract resolution by VA contracting officers.

Mission Statement The Division is also responsible for maintaining Prom ole OlG organizational effectireness the Department's centralized, computerized and efficiency by providing reliable and followup system that provides for oversight, timelyfollowup reporting and tracking on monitoring, and tracking of all OlG OIG recommendations, response to recommendations through both resolution and Freedom ofInformation Aet(FOIA) implementation. Resolution and implementation requests, policy review and development, actions are monitored to ensure that disagreements strategic and operationo ':nlanning, between OlG and management are resolved as Inspecto.- Gen eral reporting requirem ents, promptly as possible and that corrective actions and Internet docum ent managem ent and are implemented as agreed upon by management control, officials. Disagreements unable to be resolved between OlG and management are decided by the Deputy Secretary, V A's audit followup official.

Resources

... Management officials are required to provide the

,q

, This Division has 9 FTE w.it h the following OlG with documentation showing the allocation:

('") completion of corrective actions, including reporting of collection actions until the amounts due VA are either collected or written off. 010 staff evaluates information submitted by l N

management officials to assess both the adequacy and timeliness of actions and to

(" *

• request periodic updates on an ongoing basis.

Reports j

%g "

ini.m.:

As of September 30,1998, VA had 116 open OlG reports with 293 unimplemented internal l

7 3 recommendations,4 unresolved internal recommendations, and 57 unresolved contract review recommendations.

During this reporting period, the Division took Overail Performance ,

action to close 75 reports issued in this and prior periods, with 242 recommendations and a Followup on OlG Reports monetary benefit of $133 million, after obtaining information that showed manaFement officials i The Division is responsible for obtaining had fully implemented corrective actions.

l implementation actions on audits, inspections, CT l

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l _ _

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Office of Departmental Reviews and Management Support D During this period,100 percent of followup During this period,96 percent of FOIA cases requests on immediate actions were sent within received written responses within 20 working three months. The previous standard was six days, as compared with 86 percent previously.

months. Also,100 percent of the initial and the Also, the average processing time for workable subsequent followup letters were processed in FOIA requests was reduced from 32 days to 14 less than 3 months, as compared with the former days.

l 7 month average.  !

Internet Technology l FOIA, Privacy Act,and Other Disclosure Activities The Division's OIG Webmasteris responsible ,

for all electronic processing of OIG reports, The Division processes all OIG FOIA and including the maintenance of the 01G web sites Privacy Act requests from Congress (on behalf and the posting of 010 reports on the Internet.

of constituents), veterans, veterans service The OlG's public web pages received 400,000 i organizations, V A employees, news media, law hits from over 26,000 visitors during this period. l firms, contractors, complainants, general public, and subjects / witnesses ofinquiries amt During this period, we successfully responded to investigations. In addition, the Division a blind FOIA requestor by electronically I processes official requests for information and redacting a requested report, then converting it

, documents from other Federal Departments and to the software format that the requestor l l

agencies, such as the Office of Special Counsel, preferred for her screen reader, the Department of Justice, and the FBI. These requests require the review and possible We initiated redesign and recoding of all 010 redacting of OIG hotline, specialinquiry, web pages to ensure that customers can quickly p healthcare inspection, investigation, contract access the information they need r.nd to ensure audit, and internal audit reports and files. It also that vision-irr. paired veterans and other

)

processes OIG reports and documents to assist customers can access our web site. l VA management in establishing evidence files used in taking administrative or disciplinary We electronically redacted and converted 4 actions against VA employees. frequently-requested reports and posted them on the Internet in compliance with the new During this reporting period, we processed 134 Electronic FOIA requirements. We also posted requests under the Freedom of Information and a number of unredacted reports, press releases, Privacy Acts and released 208 audit, and all recurring OlG publications such as the investigative, and other OIG reports. In eight last Semiannual Report to the Congress.

instances we had no records. We totally denied two requests under the appropriate exemptions Review and Impact of Legislation and of the Acts. Information was partially withheld Regulations in 96 requests because release would have constituted an unwarranted invasion of personal The Division coordinated concurrences on privacy, interfered with enforcement legislative and regulatory proposals from the proceedings, disclosed the identity of Congress, Office of Management and Budget confidential sources, disclosed internal and the Department that relate to V A programs Department matters, or was specifically and operations. The 010 commented and made I exempted from disclosure by statute. recommendations concerning the impact of the legislation and regulations on economy and 58 I

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Office of Departmental Reviews and Management Support j \

efficiency in the administration of programs and

\ operations or the prevention and detection of ,g, fraud and abuse. During this period,80 25%

legislative,50 regulatory proposals, and 1I Ad min.

"other" proposals were reviewed and 28 were supt. .

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commented on, as appropriate. cf Budget 21 %

Travel 8%

HRM 25 %

IV. RESOURCES  !

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MANAGEMENT DIVISION Overall Performance )

Mission Statement Automated Data Processing l

A system analysis was performed by a private l Promote OlG organi:ational c ntractor, which indicated that Resources effectireness and efficiency by providing l reliable and timely management and Mapagement must update both its hardware and administrative support services, basic operating system before it can beg,n i to develop a management informs' ion system l The Resources Manegement Division provides integrating operational and functional support services for the entire 010. Our inf rmation (including a Master Case Index). A fm

/ services include personnel advisory services and c ntract will be awarded in the first quarter of

(>) liaison; budget formulation, presentation, and execution; ADP programming and support; FY 1999, travel processing; procurement; space and Budget l

facilities management; and general ,

administrative support. In response to numerous Congressional requests for information concerning how we would

, Resources utilize additional personnel resources, we i provided details on how these positions would  !

The Resources Management Division has 14 be allocated within the organization and the FTE currently assigned to the 010 headquarters. Performance improvements that would accrue as The staff allocation for the five functional areas a direct result.

is as follows.

The staff executed the 1998 budget within .001 percent of our authority.

Human Resources Management During this period, the liRM staff brought on board 36 employees from 13 recruitment actions. Of these selections,44% went to females and 17% to minorities.

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Office of Departmental deviews and Management Support The HRM staff also processed 82 personnel (Q

/ actions,300 performance appraisals,365 special contribution awards,12 time-off awards, and 2 quality step increases.

Travel OlG personnel travel almost continuously. As a result, the Travel section processed 1,551 Vouchers as well as 6 Authorities for Permanent Change of Station.

Administrative Support An increase in the size of the Special Inquiries staff necessitated a relocation of this component.

To accommodate the move, an office renovation was required. This involved substantial coordination between the 01G client and building management to ensure that construction was completed as designed, telephone lines were installed, and furniture and equipment were ordered, delivered, and set-up on schedule.

A)

(O In addition, this section processed 114 procurement actions and reviewed and approved each month the 38 statements received by the OlG's cardholders under the Government's Purchase Card Program.

Customer Satisfaction Measures A C ustomer Satisfaction Survey form was developed and sent to all OIG Employees. The survey asked customers to rank services, ranging from 1 (poor) to 5 (excellent). Resources Management received an overall score of 4.0 in -

its initial survey.

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/m\ OTHER SIGNIFICANT OlG ACTIVITY U President's Council on integrity FAEC is to discuss and coordinate on issues and Efficiency (PCIE) affecting the Federal audit community in general and,in particular, matters affecting audit policy Investigation "Best Practices,, and operations of common interest to FAEC members. In addition, the AIG for Auditing is The Chair, Investigations Committee, requested the Federal audit community representative on that a working group, comprised of Assistant the PCIE audit committee.

Inspectors General for Investigations of those .

agencies represented on the committee, convene inspections and Evaluation Roundtable i to discuss "best practices"in the IG community.

The working group was convened in the wake of The AIG for Healthcare Inspections works recent concerns voiced by several congressional if'tensively with the PCIE Inspection.; and oversight committees about the operations of Evaluations Roundtable and has provided some IG offices. In addition, because 1998 leadership in developing a core skills inventory represents the twentieth anniversary of the IG f r government inspectors and evaluators. The Act, the chair thought that the time was right to Deputy AIG for Healthcare Inspections serves as examine the way in which the IG community co-chair of the Inspection and Evaluation conducts its investigations. The VA Assistant Roundtable's Education and Training Inspector General (AIG) for Investigations was Subcommittee.

asked to chair the working group. The working group examined existing investigative polices, Managernent training issues, a .d the need for investigative Presentations oversight procedures. In addition, equipment for IG investigators was discussed. A report was P b VB A's DMW'

( Conference w submitted to the entire committee. On September 10,1998, the committee concurred .

with the report recommendations and selected The Inspector General provided a presentation staff, from nominations submitted by n OIG activities to VB A's Directors' PCIE/ Executive Council on Integrity and Conference. In his remarks, the Inspector Efficiency member agencies, for a newly General expressed hope that the IG and VB A established investigations advisory w uld continue to work closely to stem fraud against VB A.

subcommittee. The new subcommittee will continue to examine "best practices"in the IG p g community and make recommendations to the investigations committee. The VA AIG for Staffers on Automated Data Processing Invest lgations will chair the new subcommittee, (ADP) Controls which will also work with 10 Academy staff to ensure that the best training possible is available VA OIG audit staff met with the staff of the to investigators m tne community. Senate Committee on Veterans Affairs concerning our review of ADP controls on the FY 1997 CFS audit. General Accounting Office Federal Audit Executive Council (FAEC)

(GAO) ADP auditors also met with the The AIG for Auditing was elected chairperson Committee staff. Our review found significant weaknesses, which made V A assets and of the FAEC for 1998. The purpose of the financial data vulnerable to error or fraud.

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Other Significant OlG Activity N Association for Government Both working groups are important in sharing Accountants (AG A) information on areas of common interest with the objective of improving the Federal financial The AIG for Auditing participated on the AGA statement audit process.

Board to review and award Certificate of Excellence in Accountability Reporting. He is Kansas City Federal Executive Board also a member of VA's Chief Financial Officers Council. The Director, Kansas City Audit Operations Division, conducted a seminar on " Fraud Presentation at PCIE Roundtable Detection" for the Greater Kansas City Federal Executive Board at their annual Best Practices The AIG for Auditing and the Director, Kansas Symposium.

City Audit Operations Division, conducted a seminar on electronic workpapers to the PCIE Presentation at a PCIE Training Roundtable. The presentation discussed an Symposium electronic workpaper system developed by our office. A similar presentation was provided to VA 010 audit staff presented a briefing on the National Association of LocalGovernment Information Technology contracting at a PCIE Auditors at their national professional training symposium.

development conference.

Presentations at International Nursing Presentation at information Security Conference Officers' Conference An Office of Healthcare Inspections Registered Q VA 01G audit staff presented a briefing on OIG operations and information security issues Nurse Health Systems Specialist made several presentations at an International Nursing identified by our audit work. The presentation Symposium in Costa Rica. Her presentations highlighted key areas for VA focus, included such wide-ranging subjects as nursing oncology procedures, cancer prevention, and Participation in VHA's Year 2000 (Y2K) various aspects of breast cancer detection, Conferences prevention, and treatment.

VA OIG audit staff participated in VHA's Y2K Presentation at the National Logistics conference and was on a panel with Management Training Symposium Congressional staff. The project manager also discussed Y2K issues that had been identified as The OIG Counselor and Director, Contract part of an ongoing 010 audit. Review and Evaluation Division, gave a prese' nation on lessons learned from 010 audits.

Participation in Financial Statement The confencace was attended by all Audit Work Groups organinticp!-lements of VA and by represcatat3 :s from other government agencies.

During this reporting period, the 010 financial audit staff continued their participation in the Federal Audit Executive Council subgroup on financial statement audits and in the PCIE financial statement audit manual task force.

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Other Significant OlG Activity O Coalition for Government Procurement OlG CongressionalTestimony Q Health Care Contracting Workshop in May 1998, the Inspector General testified An audit manager, Contract Review and before the House Veterans' Affairs Oversight Evaluation Division, presented a talk on "The and Investigations Subcommittee at a hearing on Ins and Outs of Managing Pharmaceutical and the results of a GAO report," Veterans Affairs i Medical Equipment Schedules." We provided Special Inquiry Report was Misleading," dated information to industry representatives on the May 13,1998. The testimony addressed the changes in the procurement regulations and the findings and conclusions of the GAO report on a i FSS contracting requirements. Specifically, the 1995 SpecialInquiry into a cover up of an changes in disclosure requirements, the common increase in deaths at a VA facility. While the difficulties we have experienced during Inspector General did not agree with the GAO preaward reviews, how we audit a contractor's on several issues, actions were taken to improve compliance with the price reduction clause, and certain processes and procedures.

requirements of the new postaward audit clause.

Obtaining Required information or FSS Training Class, National Acquisition Assistance Center

. Sections 5(a)(5) and 6(b)(2) of the Inspector The Director, Contract Review and Evaluat. ion General Act of 1978 require the Inspector Division gave a presentation on FSS preaward General to report instances where access to t and postaward audits to a group of contracting records or assistance requested was officers and Gener:' Counsel attorneys at the unreasonably refused, thus hindering the ability National Acquisitan Center. Both auditors and to conduct audits or investigations. During this contract,ng i officers benefit from sharing work-6-month period, there were no reportable related experiences in these training sessions.

instances under these sections of the Act.

Presentation at the Johnson & Johnson Under P.L.95-452, the IG has authority "... to  :

Annual Government Contract Seminar require by subpoena the production of all i inf rmation, documents, reports, answers, An audit manager, Contract Review and

. . records, accounts, papers, and other data and Evaluation D. . .ivision, made a presentation at the l documentary evidence necessary . . . ." The use Johnson & Johnson Government Contract ofIG subpoena authority has proven valuable in Seminar. Presentation topics included preaward our efforts, especially in cases dealing with third and postaward audits, commercial selh,ng parties. During this reporting period,37 practices, defective pricing, price reduction, and subpoenas were issued in conjunction with the OIG role in VA FSS contracting, various 010 investigations, audits, and reviews.

Participation in Paperless Auditing Conference 1

We provided information on Electronic FOIA, l electronic redactions, and electronic information management at the Conference on Paperless Auditing sponsored by PCIE's Federal Audit Executive Council. ,

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i Other Significant OlG Activity i

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i APPENDIX A l

hs DEPARTMENT OF VETERANS AFFAIRS i

OFFICE OF INSPECTOR GENERAL REVIEWS BY OlG STAFF Report Funds Recommended  !

Number / for Better Use Questioned {

Issue Date Report Title OlG Management Costs l lNTERNAL AUDITS 8D2007066 Audit of Security Controls for the Integrated Data 4/23/98 Communications Utility 8R3 A01101 Audit of Cost-Per-Test Leases and Reagent Rental $ 32,000,000 $32,000,000 5/13/98 Contracts in Pathology and Laboratory Medicine Service 8 AFG10103 Report of Audit of the Department of Veterans 5/18/98 Affairs Consolidated Financial Statements for Fiscal Years 1997 and 1996

)

8R5D02107 Audit of Adult Day Care / Clinics Construction Project $913,000 $913,000 5/28/98 at Department of Veterans Affairs Medical Center CN Asheville, NC 8D2001067 Audit of V A's Workers' Compensation Program Cost $246,931,574 $246,931,574 7/1/98 BRIG 01118 Audit of the Medical Care Cost Recovery Program $ 83,223,496 $ 83,223,496 7/10/98 SR3G01123 Audit of the Government Travel Card Program 7/14/98 8R5D02127 Audit of Nonrecurring M aiatenance Construction $243,300 * $88,545 7/24/98 Project at Department of Veterans Affairs Domiciliary White City, OR BANG 0lll7 Audit of VHA Actions on Accounts Receivable $3,703,000 $3,703,000 8/6/98  ;

8R5D02133 Audit of Energy Construction Project at Department $238,269 $238,269 l 8/12/98 of Veterans Affairs Medical Center Ann Arbor,MI  !

8R5D02139 Audit of Pharmacy Renovation Project at Department $115,590 $115,590 9/10/98 of Veterans Affairs Medical Center San Francisco, CA

• Management disagreed with OlG estimate.

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Rep:rt Funds Riccmmended Number / for Better Use Questioned g issue Date Report Title OlG Management Costs INTERNAL AUDITS (Con't) 8R5B0ll47 Audit of Data Integrity for Veterans Claims 9/22/98 Processing Performance Measures Used for Reports Required by the Government Performance and Results Act 8R3A0ll49 Summary Report: Audits of Pathology and $2,000,000 $2,000,000 9/30/98 Laboratory Medicine Service OTHER OFFICE OF AUDIT REVIEWS BAFG10:02 Accuracy of Property, Plant, and Equipment Financial 5/27/98 Information 8 RIG 10106 Management Letter, Fiscal Year 1997 Financial 5/29/98 Statements, VA Life Insurance Programs and Selected Loan Guaranty Program Financial Activities 8R8Eli113 Evaluation of V A Freight and Household Goods $1,277,000 * $0 6/29/98 Transportation Programs I 8R4010128 M anagement Letter, Fiscal Year 1997 Consolidated j 7/29/98 Financial Statements - Veterans Benefits 1 l Administration Finance Center Hines,lt d 8 RIB 12130 Evaluation of the Life Insurance Programs' 7/31/98 Administrative Expenses 8AFG10140 Management Letter- PayrollTransactions 9/10/98 8AFG10141 M anagement Letter - Expenditure Transactions 9/10/98 SPECIAL INQUlRY l

8PRB01097 Alleged Improper Reimbursement of Relocation $19,352 l 4/17/98 Expenses, Veterans Benefits Administration Regional Office, San Diego, CA l 8PR A19096 Alleged Travel and Funds Management Irregularities $98 4/20/98 by a Former VH A Quality M anagement Official 8PRA19095 Conduct, Personnel, and Contracting Issues at the $104 5/4/98 James A. Haley VA Medical Center. Tampa, FL 8PRG03110 Alleged Misconduct by Employees at the VA Medical 6/3/98 Center Gainesville, FL

• Management estimate will be provided at a later date.

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l Repsrt Funds Recommended Number / for Better Use Questioned S lasue Date Report Title OlG Management Costs l

SPECIAL INQUIRY (Con't) 8PRF03115 Alleged Use of Official Position for Personal Gain, 6/30/98 V A Medical Center lowa City,IA j

8PRF03119 Alleged Interference With Employees' Right to l 7/22/98 Report Complaints VA Medical Center Albuquerque, NM 8PREl1126 Furniture Purchases by Veterans Integrated Service j 7/27/98 Network 12, Hines,IL '

I 8PRElll34 ProcurementIssues, VA Medical Center Ann Arbor, 9/16/98 MI 8PRG03144 Management, Clinical, and Administrative Issues at $8,828 9/29/98 the VA Central Alabama Veterans Health Care System (CAVHCS) '

HEALTHCARE INSPECTIONS 8HIA28105 Demographic Descriptors of Veterans Health 5/22/98 Admi matration's Acute Care Patient Population 8HIA28111 Inspection of Alleged Medication System Problems 6/2/98 Colmery-O'Neil V A Medical Certer Topeka, KS

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8HIA28116 Inspection of Alleged Mistreatment of a Post-  ;

7/1/98 Traumatic Stress Disorder Patient Department of ,

Veterans Affairs MedicalCenterIowa City,IA ,

8HIA28121 Inspectioc of Alleged inappropriate Medical Care and i 7/13/98 Transfer of a Nursing Home Patient, Department of l Veterans Affairs Medical Center Huntington, WV 8HIA28122 Inspection of Selected ClinicalIssues in a Patient's 7/13/98 Care Department of Veterans Affairs Medical Center Atlanta, G A 8HIA28124 Quality Program Assistance Review Program 7/14/98 Oversight Revicw Report and Analysis BHIF03125 Inspection of Patient Care Allegations and Quality 7/16/98 Program Assistance Review, Department of Veterans A ffairs M edical Center Lyons, NJ l

8HIA28129 Inspection of Alleged Inappropriate Medical Care ,

7/28/98 Department of Veterans Affairs Medical Center l Tuskegee, AL j r

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Rep 3rt Funds Recommended Number / for Better Use Questioned issue Date Report Title o OlG Management Costs HEALTHCARE INSPECTIONS (Con't) 8HIA28132 Inspection of Alleged Inattentive and inadequate Care 8/13/98 for a Patient's Chest Pain, Department of Veterans Affairs Medical Centers Birmingham and Montgomery, AL 8HIA28136 Inspection of Alleged Mistreatrnent of a Respite Care 8/26/98 Patient Department of Veterans Affairs Medical Center Atlanta, G A 8HIA28137 Inspection of Allegations Pertaining to the Psychictric 9/1/98 Service, Departme t of Veterans Affairs Medical Center North Chicago,IL 8HIF03145 Quality Program Assistance Review, Department of 9/17/98 Veterans Affairs Medical Center Washington, DC 8HIA28150 A Description and Analysis of the Office of 9/28/98 Healthcare Inspections' Most Common Findings in Hotline Inspecions: Fiscal Years 1993,1994,and 1995 8HIA28151 Suggested Supplementary Statistical 0ptions for 9/29/98 Monitoring Healthcare

,s SHIA28152 Inspection of Alleged Mismanagement of Psychiatric 9/30/98 Programs William Jennings Bryan Dorn Veterans' Hospital CCumbia, SC CONTRACT REVIEWS

• 8 PEE 02086 Review of Federal Supply Schedule Proposal 4/3/98 (Solicitation Number M 3-Q4 97), Fuji M edical Systems U.S.A.,Inc., Stamford, CT SPEE10094 Postaward Review of Federal Supply Schedule 4/6/98 Contract V797P-3762j Fuji M edical Systems U.S.A.,

Inc., S tamford, CT 8 PEE 02093 Review of Federal Supply Schedule Proposal 4/9/98 (Solicitation Number M3-Q3-97) a Dec,Inc.,

Newberg,0R

• Management estimates are not applicabh to contract reviews. Cost avoidances resulting from these reviews are determined when the 010 receives t', , ntracting officer's decision on the report recommendations.

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Repsrt Funds Recommended Num ber/ for Better Use Questioned c issue Date Report Title OlG Management Costs I

( CONTRACT REVIEWS (Con't) 8 PEE 02099 Review of Federal Supply Schedule Proposal 4/23/98 (Solicitation Number M3-Q3-97) Dentsply Trubyte, York, PA 8 PEE 02098 Review of Federal Supply Sebedule Proposal $2,136,157 5/1/98 (Solicitation Number M3-Q4-97) Bayer Corporation, Agfa Division, Ridgefield Park, NJ 8 PEE 02100 Review of Federal Supply Schedule $784,625 5/15/98 Proposal (Solicitation Number M S-Q50-97) Organon, Inc., West Orange, NJ 8 PEE 02109 Review of Federal Supply Schedule Proposal $ 1,695,678 6/3/98 (Solicitation Number M3-Q3-97) Star De'ntal, Lancaster, PA 8 PED 03112 Audit of Termination Settlement Proposal and Claims $333,886 6/24/98 for Equitable Adjustment Submitted by Bar-Con Corporation Contract V523c-1129 8 PEE 02114 Review of Federal Supply Schedule Proposal 6/24/98 (Solicitation Number M3-Q3 97) Kavo America Corporation, Lake Zurich,IL

( SPEA12104 Audit of Claim for Alleged Damages Under an $318,008 l 7/1/98 Agreement with a VAMC 8 PEE 02108 Review of Federal Supply Schedule Proposal $9,340,040 7/20/98 (Solicitation Number M 3-Q4-97)lmation Enterprises Corporation Oakdale, MN 8PEX20135 Review of a Pharmaceutical Company's $140,524 9/4/98 Implementation of Section 603 Drug Pricing Provisions of Public Law 102-585 8PEX22138 Review of Prime Vendor Contractor Billings $9,392,565 9/10/98 8PEX14153 Federal Supply Schedule (FSS) V797P-3510j, $1,980 9/30/98 Awarded to Diatek Instruments,Inc, San Diego, CA l

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Report Funds Reccmmended Number / for Better Use Questioned issue Date Report Title OlG Management Costs

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CONTRACT REVIEWS (Con't) 8PEX06148 Review of Federal Supply Schedule Proposal $87,425 9/30/98 (Solicitation Number M3-Q3-97) Nobel Biocare US A, Inc., W estmont, IL 8PEX12154 Post Award Audit of FSS Contract V797P-5947), $2,150,000 9/30/98 Boehringer Mannheim Corp., Indianapolis,IN TOTAL: 60 Reports * $385,341,048 $369,213,474 $11,713,451

• The difference between the OIG and Management estimates is $16,127,574. The difference is explained as follows: Pending receipt of contracting officer's decision - $14,695,819; Management disagreed with OlG estimate - $154,755; Management estimate will be provided at a later date $1,277,000.

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APPENDIX B p

DEPARTMENT OF VETERANS AFFAIRS OFFICE OF INSPECTOR GENERAL CONTRACT REVIEWS BY OTHER AGENCIES Funds Report Recommended Num ber/ for Better Unsupported issue Date Report Title Use Costs 8PENO3113 Proposal, RFP No. 626-18-98 Design / Construct Canopies, V AM C 4/14/98 Nashville, Kiddway Corporation, Nashville, TN 8 PEN 03119 Proposal, Contract No. V460c-310, Replace Fire Alarm & Sprinkler, $4,476 7/1/98 VAMC Wilmington, R.1. Williams & Associates, Glenside, PA 8 PEN 03117 Proposal, Contract No. V573p-3990, Transcription Serv., VAM C $ 106,975 7/21/98 Gainesville, Precision Communications, Inc., Derry, NH, b?EN03123 Proposal, RFP No. 527-22 98, Install Sprinkler, V AM C Brooklyn, 7/29/98 A & A Assnciates, Brc,oklyn, NY 8 PEN 03127 Proposal, RFP No. 640 98-114, Roof Repair & Replacement, $29,162 7/30/98 VAMC Palo Alto, Architectural Systems Corp., Sausalito,CA p 8 PEN 02005 Proposal, Project 508-018a, Clinical Addition, V AMC Atlanta, $17,565

l. 8/6/98 Caddell Construction Company, Montgomery, AL U

8 PEN 02006 Proposal, RFP No. D-35, Seismic /Modernation, V AMC Memphis, 8/6/98 Cadde Construction Co., Memphis, TN SPEN 03132 Proposal, RFP No. 584-46-98, Remodel Physical Therapy, VAM C 8/7/98 lowa City, Channel Construction Company,0maha, NE 8 PEN 03001 Proposal, RFP No. 600-0032-48, Payee Services, V AMC West Los 8/12/98 Angeles, St. Joseph Center, Venice, CA 8 PEN 02107 Proposal, Project No. 506-027b, Const. Pedestrian Bridge, VAMC 8/17/98 Ann Arbor, Demaria Building Company,Inc., Novi,MI 7 PEN 03137 Claim, Cont. V554c-755, Remodel Outpatient Clinie, V AM C $99,383 9/1/98 Denver, Charles G. Williams Construction, Inc., Denver, CO 7 PEN 02302 Claim, Project No. 501-051, Clinical Services Addition, VAMC $658,517 9/22/98 Albuquerque, Centex Bateson Construction Co., Dallas,TX TOTALS: 12 Reports $916,078 The Defense Contract Audit Agency (DCAA) completed all the reports issued. This data is also reported in the DoD OIG's Semiannual Report to Congress.

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APPENDIX C

(

CONTRACT AUDIT REPORTS FOR WHICH A CONTRACTING l

OFFICER DECISION HAD NOT BEEN MADE FOR OVER 6 MONTHS AS OF SEPTEMBER 30,1998 Recommended Reason for Delay Questioned Better Use and Planned Date Report Title, Num_ber, and issue Date Costs _ of Funds for a Decision Contract Reviews by OlG 1

l OFFICE OF ACQUISITION AND MATERIEL MANAGEMENT Preaward Review of Feder:1 Supply Schedule $4,570,800 Pending receipt of Proposal Submitted by Johnson and Johnson Contracting Officer Price Healthcare Systems,Inc., Ethicon Inc., Piscataway Negotiation Memorandum NJ,7PE E12-088,5/20/97 (PNM); No planned decision date available.

Preaward Review of Federal Supply Schedule Pending receipt of l Proposal Submitted by Johnson and Johnson Contracting Officer PNM; Healthcare Systems,Inc., Ethicon Endo Surgery Inc., No planned decision date Piscataway,NJ,7PE E02 092,6/6/97 available.

Preaward Review of Federal Supply Schedule Proposal $10,806,808 Pending receipt of Submitted by Johnson and Johnson Healthcare Contracting Officer PNM; g Systems Johnson and Johnson MedicalInc., No planned decision date Piscataw ay, N J, 7PE-E02-094, 7/11/97 available.

Review of Federal Supply : hedule Proposal $5,918,105 Pending receipt of (Solicitation No. M3-Q3-92) Johnson and Johnson Contracting Officer PNM; Healthcare Systems Inc., Cordis Corporation and J&J No planned decision date Interventional Systems, Piscataway, NJ, available.

7PE E12-107,7/24/97 Review of Federal Supply Schedule Proposal $5,484,450 Pending receipt of (Solicitation No.MS-Q50 97) Wyeth Ayerst Contracting Officer PNM; Laboratories, Philadelphia, PA,7PE E02-127,9/4/97 No planned decision date available.

Review of Federal Supply Schedule Proposal $2,718,799 Pending receipt of ,

(Solicitation No. MS-Q50-97), Schein Pharmaceutical Contracting Officer PNM; Inc., Florham Park, NJ,7PE E02-134,9/17/97 No planned decision date available.

Review of Federal Supply Schedule Proposal $3,580,134 Pending receipt of (Solicitation No. M 5-Q50-97), B ayer Corporation Contracting Officer PNM; Pharmaceutical Division, West Haven, CT No planned decision date 7PE E02-130,9/23/97 available.

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Reccmmended Reason for Delay Questioned Better Use and Planned Date Report Title, Number, and issue Date Costs of Funds for a Decision OFFICE OF ACQUISITION AND MATERIEL MANAGEMENT (Con't)

Review of Federal Supply Schedule Proposal $3,684,555 Pending receipt of (Solicitation Number MS-Q50-97), Roxane Contracting Officer PNM; i Laboratories, Inc., Colum bus,0H, No planned decision date 1 8PE-E02-006,10/2/97 availaMe.

l Review of Federal Supply Schedule Proposal Pending receipt of j (Solicitation Narnber MS-Q50-97), Alcon Contracting Officer PNM; Laboratories Inc., Forth Worth,TX, No planned decision date 8PE E02-012,10/8/97 available.

Review of Federal Supply Schedule Proposal $7,893,240 Pendin.g receipt of (Solicitation Number MS-Q50-97), Poehringer Contracting Officer PNM; )

!ngelheim Pharmaceuticals,Inc., Ridgefield, CT,8PE- No planned decision date E02-021,10/16/97 available.

Review of Federal Supply Schedule Proposal $92,037,146 Pending receipt of (Solicitation Number M5-Q50-97), Schering Contracting Officer PNM; Corporation, Union, NJ,8PE E02-024,10/17/97 No planned decision date available.

Review of Federal Supply Schedule Proposal $ 17,084,449 Pending receipt of (Solicitation Number MS-Q50 97),0rtho Contracting Officer PNM; Pharmaceutical Corporation, Raritan, NJ, No planned decision date

] 8PE E02-015,10/20/97 available.

Review of Federal Supply Schedule Proposal $ 1,266,297 Pending receipt of (Solicitation Number M S-Q50-97), Smithkline Contracting Officer PNM; Beecham, Philadelphia, PA, No planned decision date 8PE E02-029,10/21/97 available.

Review of Federal Supply Schedule Proposal Pending receipt of l (Solicitation Number MS-Q50-97), Eli Lilly and Contracting Officer PNM; I Company, Indianapolis,IN, No planned decision date 8PE-E02-016,10/22/97 available.

Review of Federal Supply Schedule Proposal $7,869,022 Pending receipt of (Solicitation Number M S-Q50-97), Novartis Contracting Offic:r PNM; Pharmaceuticals Corporation, East Hanover, NJ, No planned decision date 8PE-E02-026,10/30/97 available.

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Recommended Reason far Delay Questioned Better Use and Planned Date Report Title, Number, and issue Date Costs of Funds for a Decision l

l V OFFICE OF ACQUISITION AND MATERIEL MANAGEMENT (Con't)

Review of Federal Supply Schedule Proposal $5,932,784 Pending receipt of (Solicitation Number MS-Q50 97), Abbott Contracting Officer PNM; l Laboratories Hospital Products Division, Abbott No planned decision date Park, IL,8 PE-E02-038,11/5/97 available.

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Review of Federal Supply Schedule Proposal Pending receipt of (Solicitation Number M 3-Q3-97), Dentsply Caulk Contracting Officer PNM; Milford, DE,8PE E02-055,1/26/98 No planned decision date available.

Review of Federal Supply Schedule Proposal $294,535 Pending receipt of i (Solicitation Number M3-Q3-92), Graphic Controls Contracting Officer PNM; 1

Corporation, B uffalo, N Y, SPE-E02-063,1/26/98 No planned decision date available.

Review of Federal Supply Schedule Proposal $9,207,294 Pending receipt of (Solicitation Number MS-Q50-97), McGaw Contracting PNM; No incorporate d, Irvine, C A, 8PE-E02-064, 2/9/98 planned decision date available.

Review of Federal Supply Schedule Proposal $91,969 Pending receipt of (Solicitation Number M3-Q3-97), Gendex Dental X- Contracting Officer PNM; Ray, Division of Dentsply International,Inc., Des No planned decision date Plaines IL,8PE-E02-074,3/4/98 available.

Review of Federal Supply Schedule Proposal $2.468,847 Pending receipt of (Solicitation Number M 3-Q4-97), Medrad,Inc, Contracting Officer PNM; Indianola, PA, 8 PE-E02-084, 3/19/98 No planned deciticn date available.

Review of Federal Supply Schedule Proposal $3,126,441 Pending receipt of l (Solicitation Number M3-Q3-92, Open Season IV) Contracting Officer PNM, ,

Howmedica,Inc., Pfizer Hospital Products Group No planned decision date Rutherford, NJ,8PE E02-081,3/23/98 available.

Audit of Claims and Requests for Equitable $394,154 Pending receipt of Adjustments Submitted by Bay Construction Contracting Officer PNM; Company, Contr act Number V662C-1439, No planned decision date 8PE E10-082,3/25/98 ayallable.

Review of Federal Suppiy Schedule Proposal Pending receipt of (Solicitation Number M 3-Q3-97), Midwest Dental Contracting Officer PNM; Products Corporation (A Wholly Owned Subsidiary No planned decision date of Dentsply International,Inc.) Des Plaines,IL,8PE- available. ,

E02-089,3/31/98 1 l

75 esse .,.

Reccmmended Reason fcr Delay Better Urs onsupported and Planned Date l Report Title, Number, and issue Date of Funds Costs for a Decision

.m d Contract Reviews by Other Agencies OFFICE OF ACQUISITION AND MATERIEL MANAGEMENT Claim, Contract No. V554C-684, Laundry Chute $450,977 Claim in litigation; no VAMC Denver, CO, Hughes-Groesch Construction planned resolution date Co. Inc., Denver, CO,7PE N03-130,3/31/97 available.

Claim, Contract V 101DC-0048, Expand / Renovate $ 1,469,934 Claim in appeal; planned ,

Bldg-1, VAMC Salt Lake,Interwest Construction resolution date not l

Salt Lake City, UT,7PE N03-ll4,9/30/97 available.

Proposal, RFP 648-23-97, Radiation Oncology $17,850 $127,920 Negotiation not finalized; i Services Oregon Health Sciences University no planned resolution date  !

Portland, OR, 7PE-N03-014,12/1/97 available. I Claim, Contract V554C-749, Enclosure for Patios, $48,502 Negotiation not finalized; V AMC Denver, Charles G. Williams Construction, no planned resolution date l Inc.,7PE N03-136,1/23/98 available.

Proposal, Project No. 543-015, Sprinkler & Fire $503,356 Negotiation not finalized; Alarm Pro. VAMC Columbia Fire Security Systems, no planned resolution date l Inc., B ossier City, LA, available. '

8PE-N03-110,3/19/98

\ .O. FFICE OF FACILITIES MANAGEMENT V i Change OR/FR 10 Contract No V101BC0053 $ 126,130 Negotiation not finalized; V AMC Atlanta, G A Caddell Contraction resolution planned for next  !

M asterclean, Incorporated, Decatur, G A, reporting period.

3PE-N02-111,11/16/93 Adjustment Claim, V101C-1606, Construction $271,599 Negotiation not finalized; Service, V AM C Albany, Bhandari Constructors Inc., no planned resolution date Syracuse, N Y,5PE-N02-007,3/31/95 available.

Claim, Contract No. V 101 C-1651, Environment $7,370,861 Negotiation not finalized; improvement, VAM C North Chicago, Blount Inc. no planned resolution date 4PE-N02 202,2/7/96 available.

Claim, Contract V101C-1532, Asbestos Removal $875,708 $1,898 Negotiation not finalized; l V AMC W. Roxbury, Saturn Construction Co.. Inc., resolution planned for next  ;

Valhalla, NY, SPE N02-006,2/23/96 reporting period. l l

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Rsc::mmanded Reason far Delay Better Use Unsupported and Planned Date Report Title, Number, and issue Date of Funds Costs for a Decision 0%

U OFFICE OF FACILITIES MANAGEMENT (Con't)

Claim, Project No. 632-062,120 Bed Nursing Home $ 1,623,126 Negotiation not finalized:

Care Unit, VAMC Northport, J.F. O'Healy resolution planned for next Construction Corporation. B ayport, NY, reporting period.

3PE-N02-001,3/26/96 Claim, Contract V101BC0036; Defect Drawings $3,363,356 Negotiation not finalized; VAMC Palm Beach County, FL, Clark Construction no planned resolution date G roup, Inc., H olly wood, FL available.

6PE N02-106,11/6/96 Claim, Project No. 553-808, Replacement Hospital, $11,952,726 Negotiation not finalized; V AMC Detroit, MI, B ateson/Dailey, Dallas, TX. no planned resolution date 6PE N02-204,12/11/96 available.

Claim, Contract No. V101C-1603, Install Sprinklers, 51,120,170 Negotiation not finalized; VAMC Boston, L. Addison & Associates,Inc., no planned 1 solution date Wakefield, M A, available.

6PE-N02108,12/19/96 Claim, Project No. 690-035 MFI Addition, V AM C $724,755 Negotiation not finalized; Brockton, Saturn Construction Co.,Inc., Valhalla no planned resolution date NY, 6PE-N02-001,5/19/97 available.

[] Proposal, Project No. 672-045, Change Order Outpatient Clinic Add., VAMC San Juan,J.A. Jones

$284,827 Negotiation not finalized; no planned resolution date Construction Co., San Juan, PR, available.

7PE-N02-007,12/9/97 OFFICE OF THE GENERAL COUNSEL Claim, Contract No. V539C-591, $131,932 Contract in P'igation; no Installincinerator, VAMC Ciicinnati planned resolition date R.E. Schweitzer Construction, Uncinnati, OH available.

4PE-N03-113,6/21/94 Claim, Contract No. V657C-1103: Replace HV AC $90,437 Claim in litigation; no V AMC St. Louis, Gross Mechanical Contractors Inc., planned resolution date S t. Louis, M O, 6PE-N03-119,10/24/96 available.

Proposal, Project No. 549-085, Clinical Addition, $ 14,804,392 Claim in litigation; no VAMC Dallas, Centex Construction Company,Inc., planned resolution date Dallas, TX, 7PE-N02-303, 5/20/97 available.

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l Recommsnded Reason fer Dalay .

Better Use Unsupported and Planned Date  !

Report Title, Number, and issue Date of Funds Costs for a Decision b i OFFICE OF VETERANS HEALTH ADMINISTRATION  !

l A-128. Fiscal Year Ended 6/30/96 State Approving Negotiation not finalized; Agency Contract, State Home Construction & planned completion date Nursing Home Care, State of Idaho, Boise,ID, could not be provided.

8PE-G06-046, in/98 A 128, Fiscal Year Ended 6/30/95, State Appreving Negotiation not finalized; Agency Contract, State Home Construction & planned completion date Nursing Home Care, State ofIdaho,ID, could not be provided.

7PE G06-058,1/8/98 l

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APPENDIX D

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FOLLOWUP / RESOLUTION OF OlG RECOMMENDATIONS The Inspector General Act Amendments of 1988 require identification of all significant management decisions with which the Inspector Generalis in disagreement and all significant and other recommendations unresolved for over 6 months (management decisions not made). We had no Inspector General disagreements on significant management decisions and there were no internal audit recommendations unresolved for over 6 months as of September 30,1998. Contract report recommendations unresolved for over 6 months are included in Appendix C.

Following are tables which provide a summary of the number of OlG reports with potential monetary benefits that were unresolved at the beginning of the period, the number of reports issued and resolved during the period with potential monetary benefits, and the number of reports that remained unresolved at the end of the period.

SUMMARY

OF UNRESOLVED AND RESOLVED OlG AUDITS As required by the IG Act Amendments, Tables I and 3 provide statistical summaries of unresolved and resolved audit reports for the period April 1,1998 - September 30,1998. The dollar figures used throughout this report are based on the definitions included in the IG Act Amendments of 1988. The figures are current as of September 30,1998, and may reflect changes from the data in the individual reports due to 010 validation to ensure compliance with the IG Act Amendments definitions.

n TABLE 1 - SUMM ARY OF UNRESOLVED AUDIT REPORTS Table 1 provides a summary of all unresolved audit reports and the length of time they have been unresolved.

MONTHS TYPE AUDIT NUMBER TO7 a l_

Over Internal Audit 0 6 Months Contract Audit 44 Less Than Internal Audit j 6 Months Contract Audit 15 TOTAL 60 Tables 2 tnd 3 show a total of 49 reports that were unresolved as of September 30,1998. This number differs from the 60 reports shown above because tables 2 and 3 include only reports with monetary benefits as required by the IG Act Amendments. Tables 2 and 3 also provide the reports resolved during the period with the OIG estimates of disallowed costs and funds to be put to better use, including those in which management agreed to implement OIG recommendations and those in which management did not agree to implement OIG recommendations. The Assistant Secretary for Management maintains data on the agreed upon reports and Management estimates of disallowed costs and funds to be put to better use in order to comply with the reporting requirements for the Secretary's Management Report to Congress, required by the IG Act Amendments.

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TABLE 2 - RESOLUTION STATUS OF REPORTS WITH OUESTIONED COSTS Table 2 summarizes reports, the dollar value of questioned costs, and the costs disallowed and allowed.

O NUMBER QUESTIONED RESOLUTION STATUS OF COSTS REPORTS (In Mill'ons)

No management decision by 3/31/98 3 $ 5.5 1ssued during reporting period 8 $ 11.7 TotalInventory This Period 11 $ 17.2' Management decision during reporting period Disallowed costs 11 $ 16.0 Allowed costs 0 $0 Total Management Decisions This Period 11 $ 16.0' Total Carried Over to Next Period 0 $ O'

' The total inventory this period amount ($17.2 million) minus the total management decision this period amount ($16.0 million) does not equal the carryover amount (50) because of a $1.2 million questioned cost decrease during the period on a report issued in a prior period.

Definitions:

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• Questioned Costs For audit reports,it is the amounts paid by VA and unbilled amounts for which the OIG recommends VA pursue collection, including Government property, services or benefits provided to ineligible recipients; recommended collections of money inadvertently or erroneously paid out; and recommended collections or offsets for overcharges or ineligible costs claimed.

For contract review reports,it is contractor or grantee costs OlG recommends be disallowed by l the contracting officer, grant official, or other management official. Costs normally result from a finding that expenditures were not made in accordance with applicable laws, regulations, contracts, grants, or i other agreements; or a finding that the expenditure of funds for the intended purpose was unnecessary or 1 unreasonable.

• Disallowed Costs are costs: that contracting officers, grant officials, or management officials have determined should not be charged to the Government and which will be pursued for recovery; or on ,

which management has agreed that VA should bill for property, services, benefits provided, monies erroneously paid out, overcharges, etc. Disallowed costs do not necessarily represent the actual amount of money that will be recovered by the Government due to unsuccessful collection actions, appeal decisions, or other similar actions.

• Allowed Costs are amounts on which contracting officers, grant officials, or management officials have determined that VA will not pursue recovery of funds.

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TABLE 3 - RESOLUTION STATUS OF REPORTS WITH RECOMMENDED

! , CUNDS TO BE PUT TO BETTER USE BY M ANAGEMENT (x

Table 3 summarizes reports with Recommended Funds to be Put to Better Use by management, and the dollar value of recommendations that were agreed to and not agreed to by management.

NUMBER RECOMMENDED RESOLUTION STATUS OF FUNDS TO BE PUT REPORTS TO BETTER USE (in Millions)

No management decision by 3/31/98 65 $319.8 Issued during reporting period 23 $386.2 TotalInventory This Period 68 $706.0 Management decisions during reporting period Agreed to by management 22 $404.5 Not agreed to by management 17 $30.7 Total Management Decisions This Period 39 $435.2 Total Carried Over to Next Period 49' $245.4 8

8 Of the 49 reports carried over, a management decision had not been made for over 6 months on 37 reports with a dollar value of

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$229.5 million.

2 The total inventory minus the total management decision does not equal the total carried over, due to a net decrease of Funds Put to Better Use amounting to $25.4 million.

I Dcfinitions:

Recommended Better Use of Funds For audit reports,it represents a quantification of funds that could be used more efficiently if management took actions to complete recommendations pertaining to deobligation of funds, costs not incurred by implementing recommended improvements, and other savings identified in audit reports.

For contract review reports,it is the sum of the questioned and unsupported costs identified in preaward contract reviews which the OIG recommends be disallowed in negotiations unless additional evidence supporting the costs is provided. Questioned costs normally result from findings such as a failure to comply with regulatiot.s or contract requirements, mathematical errors, duplication of costs, proposal of excessive rates, or differences in accounting methodology. Unsupported costs result from a finding that inadequate documentation exists to enable the auditor to make a determination concerning allowability of costs proposed.

Dollar Value of Recommendations Agreed to by Management provides the 010 estimate of funds that will be used more efficiently based on management's agreement to implement actions, or the amount contracting officers disallowed in negotiations, including the amount associated with contracts that were not awarded as a result of audits.

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• Dollar Value of Recommendations Not Agreed to by Management is the amount associated with

recommendations that management decided will not be implemented, or the amount of questioned and/or

,.~ unsupported costs that contracting officers decided to allow.

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1 (U) APPENDIX E i l

REPORTING REQUIREMENTS OF THE INSPECTOR GENERAL l The table below cross-references the reporting requirements prescribed by the Inspector General Act of l 1978 (Public Law 95-452), as amended by the Inspector General Act Amendments of 1988 (Public Law  !

100-504), to the specific pages where they are addressed. i l

IG Act References Reportina Reauirement Paae Section 4 (a)(2) Review oflegislation and regulations 58 Section 5 (a)(1) Significant problems, abuses, and deficiencies 1-60 Section 5 (a)(2) Recommendations with respect to significant problems, abuses, and 1-60 deficiencies Section 5 (a)(3) Prior significant recommendations on which corrective action has not been 79 completed Section 5 (a)(4) M atters referred to prosecutive authorities and resulting prosecutions and i convictions g

v) Section 5 (a)(5)

Section 5 (a)(6)

Summary ofinstances where information was refused List of audit reports by subject matter, showing dollar value of questioned 63 65-71 costs and recommendations that funds be put to better use (App. A & B)

Section 5 (a) (7) Summary of each particularly significant report i to v Section 5 (a)(8) Statistical tables showing number of reports and dollar value of questioned 80 costs for unresolved, issued, and resolved reports (Table 2) i Section 5 (a)(9) Statistical tables showing number of reports and dollar value of 81 recommendations that funds be put to better use for unresolved, issued, and (Table 3) resolved reports Section 5 (a)(10) Summary of each audit report issued before this reporting period for which no 73 to 78 management decision was made by end of reporting period (App.C)

Section 5 (a)(11) Significant revised management decisions None l Section 5 (a)(12) Significant management decisions with which the Inspector Generalis in None disagreement l

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APPENDIX F VA FIELD OPERATIONS investigations Northeast Field Office (51 NY) New York, NY........................................................... 212 807-3444 Boston Resident Agency (51 BN) Boston, MA ....................................... ...................... 781 687-3138 l Newark Resident Agency (51 NJ) Newark, NJ...................................................... ..... .. 973 645-3590 l l

l Washington, DC Resident Agency (51WA) Washington, DC...................................... 202 565-8079 Southeast Field Office (51 SP) Bay Pines, FL ......... ....... ............................................. 727 398-9559 l i

l Atlanta Resident Agency (51 AT) Atlanta, GA .......................................... ................... 404 347-7869 l

Columbia Resident Agency (51CS) Columbia, SC .......... ................................. .......... 803 695-6707 New Orleans Resident Agency (5 INO) New Orleans, LA ........................................... 504 619-4340 l

West Palm Beach Resident Agency (51WP) West Palm Beach, FL......-....................... 561 882-7720 Western Field Office (51LA) Los Angeles, CA . .......................................... .............. 310 268-4268 Phoenix Resident Agency (51 PX) Phoenix, AZ......... ...... . ............................. . .... .... 602 640-4684 lO San Francisco Resident Agency (51SF) Oakland, CA................ .................. .......... .... 510 637-1074 i

Central Field Office (51 CH) Chicago, IL............................. ........... ...... ...................... 708 216-2676 j

i Kansas City Resident Agency (51KC) Kansas City, KS ........................................ . .... 913 551-1439 Dallas Resident Agency (51 DA) Dallas, TX ............................................ ................ ... 214 655-6022 Houston Resident Agency (51 HU) Houston, TX ..................................... .................... 713 794-3652 i

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Audit l Operations Division Atlanta (52AT) Atlanta, GA ......................... .......................... .... 404 347-7790 Austin Residence (52AU) Austin, TX........ ...................................................... ............ 512 326-6216 Operations Division Boston (52BN) Boston, MA ......................................................... 781-687-3120

! Operations Division Chicago (52CH) Chicago, IL....................... ................................ 708 216-2667 Dallas Residence (52DA) Dallas, TX ............................................................................ 214 655-6000 Operations Division Kansas City (52KC) Kansas City, KS .......................................... 816 426-7100 l . Ios Angeles Residence (52LA) Los Angeles, CA... ............................................... . ... 310 268-4336 Philadelphia Residence (52PH) Philadelphia, PA.......................................................... 215 381-3052 p Operations Division Seattle (52SE) Seattle, WA......................................................... . 206 220-6654

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Copies of this report are avaitble to the public. Written requests should be sent to

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j Office of the inspector General (538)

Department of Veterans Affairs 810 Vermont Avenue, NW Washington, DC 20420 t

{ The report is also available on our Web Site:

I http://www.va. gov /olg/53/semiann/ reports.htm For further information regarding VA's OlG, you may call 202 565-8620

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