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Trump Appointee Implicated In Whistle-Blower Scandal At Dept. Of Veterans Affairs

Veterans Affairs Investigators Fault Whistleblower Office Created By Trump.Trump Appointee Implicated In Whistle-Blower Scandal At Dept. Of Veterans Affairs

Body to protect employees exposing wrongdoing instead retaliated against them, watchdog says.

An office formed by President Trump to protect whistleblowers in the Department of Veterans Affairs was instead used to stifle claims and retaliate against those trying to expose problems at the agency, according to an inspector general report released Thursday.

First created by presidential order in 2017 and later mandated by Congress, the VA’s Office of Accountability and Whistleblower Protection was set up as a clearinghouse for employees exposing wrongdoing at the department and was part of the president’s efforts to carry out campaign pledges to overhaul the VA.

But the office’s first executive director, Peter O’Rourke, instead used his position to stifle claims and retaliate against the employees the new organization had been designed to protect, the IG report found. Mr. O’Rourke, who once directed a conservative political action committee and then consulted for the VA, leveraged his power as head of the whistleblower office to end investigations into allies and failed to provide basic reports to Congress on the office’s operations, investigators said.

Mr. O’Rourke eventually rose to acting secretary of the VA before leaving the department last year. He is now the executive director of the Florida Republican Party.

Mr. O’Rourke declined to comment on the report, referring all questions to the VA, which didn’t respond to a request for comment.

In its official response to the investigation, the VA concurred with all recommendations made by investigators and said office employees are receiving more training, the new head of the office is reviewing disciplinary decisions and the office will do more to protect whistleblower anonymity.

“The report’s findings of failings in all these areas help explain the significant challenges [the office’s] leaders face today in establishing trust and achieving its intended goals,” said Michael Missal, the department’s inspector general, in a statement.

Requests from Congress and multiple complaints made to the inspector general prompted the investigation.

“In its first two years of operation, the [office] acted in ways that were inconsistent with its statutory authority, while it simultaneously floundered in its mission to protect whistleblowers,” the report from the VA’s watchdog said. “The [office] itself engaged in actions that could be considered retaliatory.”

News of whistleblower disregard at the VA comes as the administration wrestles with high-profile whistleblower allegations related to Mr. Trump’s relationship with Ukraine. Mr. Trump, now the subject of a congressional impeachment investigation, has said he would like to see whistleblowers face more scrutiny.

The White House didn’t respond to a request for comment on the investigation or on whether the office is performing in accordance with Mr. Trump’s intent.

Mr. Trump’s efforts at the VA continue a process that began in the wake of a 2014 wait-time scandal, which led to the resignation of then Secretary Eric Shinseki and sweeping, congressionally mandated changes at the department. The Phoenix scandal became public largely through the efforts of VA whistleblowers.

According to the report, the new VA whistleblower office employed investigators to check on whistleblower claims, yet they often lacked adequate training to conduct investigations and “did not have an approach that ensured comprehensive and impartial investigations.”

The office’s investigators often didn’t interview an adequate number of witnesses or spoke only with witnesses who seemed to corroborate practices exposed by whistleblowers, ignoring any exculpatory witnesses, leading to what appeared to be biased investigations, the report says.

One witness quoted in the report said the investigations often began with conclusions about the accused person and were just searches for evidence that would fit. In one case, the office determined the need to discipline an employee without interviewing that employee.

Mr. O’Rourke himself appeared to intervene to tamp down an investigation involving someone he had a personal relationship with, according to investigators. Mr. O’Rourke allegedly sped the investigation to a favorable conclusion while the whistleblower became the subject of an investigation.

On two other occasions, Mr. O’Rourke directly engaged in retaliatory actions against whistleblowers, according to investigators, downgrading their jobs. In one case, Mr. O’Rourke opened an investigation into a whistleblower that ended in disciplinary action in a less-than nine-day investigation, the report said. At the time, an average investigation took 215 days to complete, according to the report.

The office didn’t value protecting the identities of whistleblowers, according to investigators, and routinely closed investigations when whistleblowers requested to remain anonymous out of fear of retribution. The office would also inform other offices in the VA about allegations, exposing whistleblowers to identification and retribution, the report said.

One whistleblower who wanted to remain anonymous told investigators, “I just don’t want my own HR to investigate this and stir up yet more problems when they’ve been involved at every step.”

When the office told the whistleblower that disclosing their identity was a requirement, the person requested the case be closed.

“It effectively closed the [office’s] doors to VA employees who alleged retaliation for whistleblowing and did not want their identities revealed to other VA components,” the report said.

The report also addressed alleged improprieties by Kirk Nicholas, Mr. O’Rourke’s successor in the whistleblower office, finding he awarded a contract to a company associated with someone with whom he had a personal relationship. The contract was later canceled when it was found to be for work beyond the scope of the whistleblower office.

The inspector general said in its report it has referred the Nicholas matter to the Justice Department for possible criminal investigation.

Mr. Nicholas didn’t respond to multiple requests for comment. The Justice Department didn’t respond to a request for comment on the matter.

Despite changes, the office has seen a widespread departure of senior personnel, and legislators are concerned the office isn’t performing well under the leadership of Assistant Secretary Tamara Bonzanto. The House Committee on Veterans Affairs sent a letter to the VA on Sept. 30 raising questions about the office, saying that it hadn’t taken adequate actions on whistleblower cases or provided mandated reports to the secretary.

The office “is simply not performing its required duties,” the letter said.

Ms. Bonzanto, through the VA, didn’t respond to a request for comment.

The House Committee on Veterans Affairs has scheduled a hearing on the whistleblower office for next Tuesday.

Updated: 11-11-2019

CFTC Whistleblower Tips and Awards Fall After Record 2018

The Commodity Futures Trading Commission’s whistleblower program has issued 14 awards, totaling more than $100 million, since 2011.

The number of tips to—and awards given out by—the Commodity Futures Trading Commission’s whistleblower program have fallen from records set last year, according to the regulator’s annual report to Congress.

The U.S. regulator for derivatives and commodities markets issued five whistleblower awards totaling about $15 million during the fiscal year 2019 ending in September, the report said. The total represents a decline from the full-year record total of about $75 million issued by the commission during the previous fiscal year, when five awards went to tipsters, including the largest award of $30 million, according to the commission.

The CFTC, meanwhile, received 455 whistleblower tips in 2019—40% less than during 2018, when tips surged in part because of efforts to increase awareness of virtual currency fraud enforcement through the whistleblower program, according to the regulator.

The decline in the number of tips could be attributable to waning interest in digital currencies from the public in 2019, according to a CFTC spokeswoman.

The 2019 tip total represented the first annual decline since the program started in 2011, but it was still above the annual average of 308 tips between 2012 and 2018, according to a Wall Street Journal analysis of the data.

The CFTC—which has issued 14 awards, totaling more than $100 million, to tipsters since 2011—in recent years has focused more on marketing and outreach efforts to raise awareness of its whistleblower program.

Matthew Stock, director of the whistleblower rewards practice at Zuckerman Law, pointed to regular advisories issued by the agency, warning investors about types of fraud. “These investor alerts are helping people understand certain areas,” he said.

For instance, the regulator recently encouraged people to blow the whistle on suspected foreign bribery practices and potential violations of anti-money-laundering rules in the commodities and derivatives markets, said Erika Kelton, a lawyer representing whistleblowers at Phillips & Cohen LLP.

Under the rules of the CFTC’s whistleblower program, tipsters who voluntarily provide original information or analyses of a potential violation of the commodities and derivatives markets’ regulations are entitled to 10% to 30% of monetary penalties when their information results in a successful enforcement action and when the monetary penalties are more than $1 million.

Updated: 11-18-2019

SEC Whistleblower Tips Decline As Agency Looks To Limit Big Awards

Tips to the U.S. securities regulator about corporate wrongdoing declined in fiscal 2019 for the first time since the program was established.

The U.S. Securities and Exchange Commission reported its first annual decline in tips from corporate whistleblowers as the agency prepares to finalize a proposal that could limit the size of big awards.

The SEC received 5,212 tips during the 2019 fiscal year ended in September, down 1% from a year earlier, the agency said Friday in an annual report to Congress. The largest drop was in tips about potential cases of fraud in securities offerings, which had spiked the previous year.

The overall decline follows years of steady growth since the program was established by Congress after the financial crisis. Tips in 2018 jumped 18% from 2017.

Under the SEC whistleblower program, tipsters are entitled to awards that can reach tens of million dollars if they provide useful information in cases that result in corporate penalties. Awards range between 10% and 30% of the monetary penalties in cases in which companies are fined more than $1 million.

In March, the agency issued its third-largest award, providing $50 million to two whistleblowers who provided information in a case against JPMorgan Chase & Co. It handed out its largest award in 2018, providing $83 million to three tipsters who offered information in a case against Bank of America Corp.

The SEC could begin imposing limits on its largest awards under a proposal introduced last year that would give the agency discretion to scale back awards above $30 million.

Whistleblower advocates and lawyers have criticized the proposal, saying it could discourage people from reporting information about corporate wrongdoing.

SEC Chairman Jay Clayton addressed those concerns in a statement Friday, saying critics have mischaracterized the proposal as imposing a cap on future awards.

“Congress vested in the commission the authority and responsibility to use our good judgment and experience to determine award amounts,” Mr. Clayton said.

Erika Kelton, a whistleblower lawyer at Phillips & Cohen LLP, said the proposal to limit some awards may have been one reason why the number of tips leveled out this year.

“I have many clients who are deeply concerned about this—people who have come forward already and are really concerned that the rules are changing on them midstream,” she said.

“Then there are others who are contacting us at the beginning of the process and they’re raising this issue as a concern also,” she added. “And it’s definitely coloring their decision whether to proceed and become an SEC whistleblower.”

During the 2019 fiscal year, the SEC received the most tips in three major categories: corporate disclosures, offering fraud and manipulation. The agency also said it received 289 tips about cryptocurrencies, after it introduced that category in 2018.

Updated: 11-23-2019

Walter Reed Failed To Examine Almost 2,000 CT Scans

Internal investigation cites mistakes by physicians, technical problems.

Nearly 2,000 radiology scans went unread for several years at Walter Reed National Military Medical Center, leading to at least one documented delay in treatment and one physician fearing hundreds more, according to an internal investigation.

A combination of faulty processes, oversights by physicians, technical snafus and a radiologist’s overwork led to a backlog of 1,300 unread Cone Beam Computed Tomography scans of patients’ faces and jaws from 2011 to 2016 at the Navy’s postgraduate dental school, according to the investigation.

Similar factors later led to a second backlog of 500 scans at Walter Reed in 2018, the same report found.

Investigators found no malicious intent, and no one was punished as a result of the unread scans, Navy officials said.

The Navy said it didn’t tell the patients that their scans hadn’t been read. It said it had rechecked all the scans—intending to reach out to any patient if a scan showed areas of concerns—but found no medical reasons to follow up.

“The investigation determined that the CBCT backlog did not result in adverse outcomes for patients and made several recommendations to improve procedures,” said Ed Gulick, spokesman for Navy Medicine. “The backlog of CBCT scans has been cleared, and the investigation’s recommendations are currently being implemented by the Naval Postgraduate Dental School.”

The Defense Health Agency, which oversees Walter Reed in Bethesda, Md., among the military’s premier medical facilities, referred all requests for comment to the Navy.

CBCT scans allow doctors to see things X-rays can’t, like a three-dimensional image of roots of a tooth in a complex root canal. Scans can also examine lesions or potential tumors in the jaw to determine whether biopsies or further treatment are needed.

Scans are often reviewed immediately by a dentist or physician. Mr. Gulick said that in the civilian sector, such scans might not be subjected to further readings—for example, by a radiologist. But military regulations require that all scans administered by the Navy be read by a radiologist.

The queue of unread scans had gone unnoticed for years until Laura Ike, a former Navy oral pathologist, uncovered the problem in 2016, when she couldn’t find the results of a patient’s CBCT scan, the investigation found. She was told it was likely a “computer glitch.” She worried that other scans might also be missing, however, so she checked the broader system and found 1,300 scans from 2011-2016 had gone unread.

“I kept getting biopsies on patients who had had CT scans but there was no radiology report,” said Dr. Ike, who left the Navy this year for private practice. “Some biopsies were done that might not have been done had there been a scan provided.”

Dr. Ike was chastised by her superiors for accessing data of patients who weren’t hers, according to testimony in the investigation.

The internal probe found a series of problems had led to the backlog. One radiologist, whose name was redacted from the investigation and who was assigned to read the scans, underwent cancer treatment during some of this period. For months, the radiologist was working from home where technical problems and “severe malaise” prevented the individual from keeping up with the workload. Others radiologists, meanwhile, struggled to get credentials and computer resources to read the scans.

The scans were ultimately read, and the backlog was cleared. In 2018, however, another 500 cases were neglected with one documented delay in treatment because of the problem, according to the investigation.

One of Dr. Ike’s colleagues, also a doctor, whose name also was redacted from the report, told investigators the investigation was “a farce” and said hundreds of cases involving potentially dangerous oral lesions weren’t treated due to unread reports.

The Navy said it found no indications any cases had gotten worse and disputes patients were harmed, but acknowledged that one patient’s pathology was missed for seven months, which delayed needed treatment.

After the backlog was discovered and addressed, Dr. Ike’s superior told her the patients would be notified, according to testimony given to investigators, though she said that the Navy didn’t provide a record of the notifications.

An employee, whose name was redacted from the investigation findings, deleted the list of the original 1,300 patients whose scans were delayed, citing privacy concerns for those patients. The list is impossible to recreate, investigators said.

Mr. Gulick, the Navy spokesman, said that the scans “ were properly reviewed later and the backlog cleared with the conclusion that there was no harm to patients.”

Mr. Gulick said the Navy was implementing recommendations made by investigators to ensure lapses won’t again occur.

Updated: 12-13-2019

Slow VA Payments Left Veterans Facing Collection Agencies

Whistleblower spurred a probe that found hundreds of millions in wasted spending, plus veterans being denied care.

A whistleblower at the Department of Veterans Affairs spurred an investigation that found hundreds of millions of dollars in improper travel claims and a deeply flawed system used when veterans seek care outside the VA, according to an internal VA investigation made public Thursday by the Office of Special Counsel.

The top federal whistleblower-protection agency, which ordered the VA to conduct the investigation after reviewing the whistleblower’s allegations, called the hundreds of millions spent on improper travel claims a “gross waste of funds” and expressed concern that the VA has known since 2014 that veterans are being sent to collection agencies because of problems with the system used by the administration to pay private doctors.

The errors highlight persistent issues at the department, including failures to update antiquated computer systems and the confusion and lack of accountability that has come from an increase in the use of private health care among veterans.

VA spokeswoman Christina Mandreucci said the allegations date to the previous administration and said that “since these allegations surfaced several years ago, VA has taken a number of steps to improve its provider reimbursement and beneficiary travel programs.”

The investigation, conducted in 2018, focused on the mid-Atlantic region, one of more than a dozen regions in the VA health-care system and where the unnamed whistleblower was based. The whistleblower can’t receive financial gain from the Office of Special Counsel for alerting them to the improper payments.

“[The region] failed to timely reimburse community health-care providers, which resulted in some of those providers terminating services for veterans and referring veterans to collection agencies for nonpayment,” according to the VA’s internal investigation.

The VA has long used private doctors to treat veterans when the VA determines it can’t provide the care inside the VA system. But the use of private care has accelerated greatly since 2014, when a wait-time scandal at the Phoenix VA led to sweeping changes at the department and more use of private-sector doctors.

When some veterans’ bills went unpaid by the VA, doctors billed the patient directly, cut off treatment or forwarded the account to a collection agency, investigators found.

The VA said it has been aware of payment issues for years and has acted on the problems, but the Office of Special Counsel’s policy is to not demand an investigation unless it thinks problems are ongoing. In February 2016, the VA established a call center to assist veterans with complaints of adverse credit information and collections. In 2017, the center assisted 2,538 veterans.

Payment problems stem from a complicated system where the VA sometimes pays private providers directly and other times uses a third party that deals with billing. Investigators found only 51% of claims submitted for processing to the central VA billing center are considered clean and accepted as valid for payment.

“Despite widespread communication and education strategies,” the investigators said, most parties involved “find it difficult to understand the complexities of health-care billing and payment.”

While the mid-Atlantic region’s leadership is working to reduce the backlog, the processing system receives claims at a greater rate than it can handle, investigators said.

The same whistleblower also pointed investigators to a separate failure of the VA to track travel reimbursement payments to veterans.

When a veteran needs to travel long distances to a VA facility, he or she is often eligible for a travel stipend. But the financial system used in those claims is outdated, having first been launched in 1992.

Investigators found that in 2017 the VA made $224 million in improper travel payments. The VA said it won’t bring its system into compliance with regulations to reduce improper payments until the 2022 fiscal year.

In a letter to President Trump, Special Counsel Henry Kerner said he was “disappointed that it has taken multiple reports, and hundreds of millions of dollars in wasted taxpayer funds, for the VA to address the flaws in its accounting software.”

A spokeswoman for the House Committee on Veterans’ Affairs said Friday afternoon that the committee has been concerned about these issues and aims to address them next year.

“The committee is planning to hold a hearing this spring to examine these issues and the undue financial burdens veterans face when their community care claims are inappropriately rejected or denied,” said spokeswoman Jenni Geurink.

Updated: 5-6-2020

Watchdog Says Trump Fired Him for Fulfilling Legal Obligations

Intelligence community inspector general said he followed a pledge to uphold U.S. whistleblower laws.

The inspector general for the U.S. intelligence community, who played a pivotal role in allowing last year’s Ukraine whistleblower complaint to be shared with Congress, said that President Trump fired him because of his commitment to being an independent watchdog.

“It is hard not to think that the president’s loss of confidence in me derives from my having faithfully discharged my legal obligations as an independent and impartial inspector general, and from my commitment to continue to do so,” Michael Atkinson said in a two-page statement issued late Sunday.

Mr. Trump notified congressional intelligence committees late Friday that he intended to remove Mr. Atkinson from his post within 30 days, citing a loss of confidence but declining to elaborate.

The decision, which came as part of a broader White House move against intelligence leaders by the president, was widely criticized by Democrats and whistleblower advocates as retaliation for Mr. Atkinson’s role in helping ensure the Ukraine whistleblower complaint was transmitted to Congress, as required by law.

The White House didn’t immediately respond to a request for comment on Mr. Atkinson’s statement, which was released to reporters.

On Saturday, during a coronavirus briefing, Mr. Trump remarked that he thought Mr. Atkinson had done a “terrible job, absolutely terrible” and said he possessed an “absolute right” to fire him. Mr. Trump singled out Mr. Atkinson’s role in pushing to share the whistleblower’s complaint with Congress; Mr. Trump has said he considers the complaint unfounded. “That man is a disgrace to IGs,” the president said.

Mr. Atkinson, who was appointed to his post by Mr. Trump in 2018, became a key figure in the impeachment inquiry last year when he shepherded the whistleblower complaint from a Central Intelligence Agency officer about the president’s July call with his Ukrainian counterpart.

That complaint, which Mr. Atkinson determined was both credible and urgent, triggered Mr. Trump’s impeachment in the House, though he was acquitted in the Senate.

Mr. Atkinson ended his statement Sunday with a call to would-be whistleblowers in the intelligence community to not be deterred in speaking up if they see evidence of waste, fraud or abuse.

“The American people deserve an honest and effective government,” Mr. Atkinson said. “They are counting on you to use authorized channels to bravely speak up—there is no disgrace in doing so.”

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