An Unlikely Bonus Structure: VA Senior Executives

For years now, the Veterans Administration (VA) has operated under a system of shoveling out bonuses to senior level executives within the VA.  To be eligible for the annual bonus, VA senior executives, like Sharon Helman—the ousted Director of the scandal-ridden Phoenix VA Hospital—would have to be accomplishing time-sensitive goals resulting in a smoothly ran hospital.  But, these bonuses are now under attack by Congress, and the VA itself.

On March 2nd, Congress put a bill up for vote that would curtail these bonuses by allowing the Secretary of the VA to hold senior executives accountable for employee wrongdoing.  The consequence would be twofold: 1) be denied the bonus for wrongdoing, or; 2) repay the bonus, if a later investigation finds wrongdoing.

In Sharon Helman’s case, she was paid out a bonus in 2013, but then notified of her pending termination in April.  Consequently, in June that same year, the VA informed Ms. Helman of its intent to retrieve the bonus money.  In an attempt to retain her bonus, Sharon requested an appeals hearing.  Ironically, though, the VA gave her the run-around for months; the same arduous run-around experienced by veterans seeking medical care.

Just over a week after Congress took the initiative to curtail VA bonuses, a court handed down a ruling countering the VA’s earlier attempt to garnish wages for bonuses paid to senior executives.  Here, the court correctly said the VA must follow, and allow, an appeals process as required by federal law.  Thus, in Ms. Helman’s case, the court ordered the VA to hand back the money garnished, as the VA didn’t comply with the federally mandated appeals process.  The court did, however, uphold the firing of Ms. Helman.

The court’s move, however, is aligned with current law.  Conversely, the proposed bill will attempt to deflect other federal laws and guidelines from preventing its purpose—holding senior executives accountable.  Additionally, the broad wording of the bill will give the Secretary more leverage to decide on policy that is best suited for the VA.  This broad language by Congress to an agency is a common practice, so as not to hinder what would be required for daily management of an agency by its respective leaders.

The proposed bill has had its opposition, though.  Certain trade groups, like those that represent career executives in government, argue that the bill is worded too broadly, and has the consequential effect of targeting certain employees who have fallen out of favor.  Though a minute worry, this likely won’t be the effect.  The current law has allowed the vast majority to be awarded their bonuses, despite their poor performances.  In 2013 alone, the VA paid upwards of $400,000 in bonuses to senior executives who were managing 38 hospitals now under investigation for falsifying patient log books.  Thus, the current system has had the effect of incentivizing senior executives to cut corners to make performance ratings suitable for a bonus.  Oppositely, the proposed bill will penalize a senior executive found cutting corners, and rigging books.

Meanwhile, the VA saga continues.  Since the beginning of the year, there has been another round of backlash, ripping open the VA’s fresh wound.  In February, the Government Accountability Office (GAO)—a government watchdog—listed the VA as a “high-risk” for “fraud, waste, abuse, and mismanagement.”  The findings by the GAO reiterated the inherent problems of the VA with a tune similar to that of Congress.

Additionally, in March, a study examining the government’s measure to help veterans seeking medical assistance showed that the program has largely been a failure.  Just over six months ago, Congress passed, and the President subsequently signed thereafter, the Veterans Access, Choice, and Accountability Act.  The Act sought to usher money to a failing VA medical system, while allowing Veterans who fell within the two categories to seek private medical assistance, upon VA approval.  Unfortunately, however, the study found that the VA denied approximately 80% of the Veterans who met the requirements of the Act, and applied for the program.

With more than a handful of embarrassing moments over the course of a year, Congress is forced to review the Act once again.  It is unclear if the proposed bill would add to the Veterans Access, Choice, and Accountability Act; but, even if it ends up as a separate segment or an augment to an existing policy, the effect will be the same—holding senior executives accountable for their actions.  Indeed, in a time where the VA handed out nearly two-thirds of their Senior Executives bonuses in 2013 amidst the largest VA scandal in history, an update to the Act providing teeth to the “Accountability” portion is already long overdue.  For an extensive timeline of the events that unfolded at the VA, click here.