Former VA director Michael Moreland received another bonus before resigning in 2013
May 31, 2015 12:00 AMIn the year before he announced his resignation on Oct. 4, 2013, Veterans Affairs regional director Michael Moreland was under scrutiny. Congressional leaders and families of veterans blamed him for failing to take action as a Legionnaires’ outbreak spread through the Pittsburgh Veterans Affairs Healthcare System in 2011 and 2012, leading to the deaths of six veterans and sickening at least another 16.
He became the national poster child for the VA leadership’s bad decision-making when he accepted a $63,000 bonus and a Presidential Distinguished Rank Award at a black-tie dinner in Washington, D.C., in April 2013 — just three days after the VA’s Office of Inspector General issued a scathing report finding that systemic failures led to the Legionnaires’ outbreak.
But VA documents recently obtained by the Pittsburgh Post-Gazette through the Freedom of Information Act show that yet another bonus payment was in the pipeline. On Oct. 5, 2013, he was paid one final bonus by the VA: $37,195 for a “retention” bonus that was negotiated a year earlier on top of his $179,700 salary.
In addition, a series of internal VA emails also obtained by the newspaper showed that Mr. Moreland was allowed to receive that full payment despite concern raised repeatedly by a high-level VA employee that it might be wise to end Mr. Moreland’s retention bonus early because it might be hard to justify giving him the full bonus if the public found out about it.
But no action was taken to stop his bonus from going through. And the timing of Mr. Moreland’s resignation allowed him to receive the full, 12 months of the retention bonus, which otherwise would have been prorated for the time he put in if he had resigned earlier in the year or been fired.
Reached at his home on Thursday, Mr. Moreland said he had no comment.
On Friday, the VA would only say in an emailed response to questions: “After reviewing this situation, it is clear that the process did not serve the Department of Veterans Affairs or veterans well.
“Over the past two years, there have been significant leadership changes in Pittsburgh, in the service network as well as the Veterans Health Administration (VHA) overall. Further, no VHA Senior Executive Service employee received a performance award for the FY 2014 appraisal period.”
Members of Congress from both parties, and family of the victims of the outbreak, were all distressed to learn last week from the Post-Gazette about the bonus payment and the VA’s failure to stop it.
“All those people [at the VA] on those emails need to be called on the carpet to explain what they did,” said U.S. Rep. Tim Murphy, R-Upper St. Clair. “I’m at a loss for words. The level of callousness is incredible, particularly since the emails show they were aware of it but did nothing.”
The four emails obtained via the Freedom of Information Act show that in 2013, a member of the central VA office, Christine Kluh, repeatedly reached out to high-level members of the staff reminding them that Mr. Moreland’s retention bonus could be ended for any reason.
“VA can terminate this incentive at any time. When terminated, we would prorate the incentive based on the amount of time he actually worked,” Ms. Kluh, then the deputy assistant secretary for corporate senior executive management office, wrote to Hughes Turner, the VA’s deputy chief of staff in her first email.
Ms. Kluh sent that email to Mr. Turner on May 3, 2013, the day after the Post-Gazette story first appeared revealing the prior $63,000 bonus award.
She apparently did not see any action being taken, so three days later, May 6, Ms. Kluh sent another email to Mr. Turner and Lisa Thomas, then the Veterans Health Administration deputy chief of staff.
“Per my previous email, I’m concerned about the retention incentive that Moreland is receiving,” Ms. Kluh wrote. “If we cannot absolutely defend the incentive we may put our ability to pay any incentives at risk, given the scrutiny our program was under last year.”
Ms. Kluh had overseen a reworking of the retention incentive program — designed to retain employees who may leave for another job — over the prior year after a VA Office of Inspector General report in 2011 found widespread misuse, abuse and poor implementation of the program.
In a sample review of just 158 of the 16,487 employees who received a total of $111 million in incentives in 2010, the OIG said it “questioned the appropriateness” of about 80 percent of them.
The VA ended routine annual approval of retention incentives and became more rigorous about documenting the need for them. As a result, use of the program has fallen to about one-quarter of what it was in 2010. A total of 4,043 employees received a total of about $34 million in retention incentives in 2014, according to data provided to the Post-Gazette by the VA.
Mr. Moreland had been one of those who seemingly got routine, annual retention incentive — getting a 10 percent incentive, worth about $18,000, every year from 2008 to 2011.
His last retention incentive was well documented. Records provided by the VA show he was in line to get a high-level executive job at the Medical University of South Carolina in 2012.
The memorandum dated May 17, 2012, from William Schoenhard, then the VA’s deputy under secretary for health for operations and management, and Robert Petzel, then the VA’s under secretary for health, to then-VA secretary Eric Shinseki, who approved the bonus, said Mr. Moreland deserved the 20 percent bonus this time because “he has a unique mix of administrative, clinical, and financial skills which make him an extremely attractive candidate for a private sector position.” (It is not clear from the records why Mr. Moreland received slightly more than 20 percent of his pay in his payout.)
Despite knowing that the retention program had been under scrutiny in the prior year, Mr. Turner — who directly reported to Dr. Petzel — and Ms. Thomas — who directly reported to the VA’s then-chief of staff, Jose Riojas — apparently took no action on Ms. Kluh’s emails in May 2013.
About a month later, having heard nothing about her concerns, and seeing still more stories about Mr. Moreland’s $63,000 award in the news, Ms. Kluh wrote another email to Mr. Turner on June 12, 2013.
“There is extensive coverage of Mike Moreland today in daily clips,” Ms. Kluh wrote. “As a reminder he is on a retention incentive. I pointed this out to Lisa Thomas previously. My concern is that this could jeopardize our entire program. We were under intense review last year and cleaned this up.”
With still no action two weeks later, on June 24, Ms. Kluh branched out and sent her concerns to a different official, Christopher O’Connor, then the associate deputy assistant secretary of the Office of Congressional & Legislative Affairs at the VA.
Ms. Kluh wrote to Mr. O’Connor: “If we terminate the incentive early (management prerogative) we would prorate the incentive.”
But Mr. O’Connor, who recently got a major promotion to interim assistant secretary for Congressional & Legislative Affairs at the VA, apparently also took no action.
Calls and messages left for Ms. Kluh, Mr. Turner, Ms. Hughes and Mr. O’Connor were not returned. Mr. Riojas and Mr. Shinseki could not be reached.
Dr. Petzel, who retired from his post a year ago, said he did not recall any discussion or email about Mr. Moreland’s bonus, but said he still thought highly of him.
“I think Michael Moreland had a very distinguished career in the VA over 30 years,” he said in a phone interview. “The fuss over his Presidential Rank Award was a shame. He earned it. He was one of our best.”
When told what was written in the emails to Ms. Thomas, he said he did not “want to speculate what he would have done” if he had seen them. “The decision to stop [the retention bonus] would have been” Mr. Shinseki’s.
Members of congress and victims’ families, however, said they knew what Dr. Petzel and others should have done.
“They should have pulled the whole [retention bonus] contract,” said Maureen Ciarolla, whose father, John Ciarolla, 83, of North Versailles, who was the first fatality during the Legionnaires’ outbreak at the Pittsburgh VA. “And they should have pulled back the $63,000 bonus, too.”
Judy Nicklas, whose father-in-law, William Nicklas, 87, of Hampton, was the last fatality during the outbreak, said for her the retention bonus just demonstrates Mr. Moreland’s questionable character again “because he continued to accept awards and bonuses when veterans were dying at his hospital” because of the outbreak.
U.S. Rep. Jeff Miller, R-Fla., chairman of the House Committee on Veterans’ Affairs, said in an emailed statement: “Instead of viewing taxpayer dollars as a precious resource only to be expended when absolutely necessary, some VA leaders are content to recklessly waste the money Americans generously provide the department. The nearly $100,000 VA awarded to Michael Moreland [between the two 2013 bonuses] as his tenure at the department wound down is proof of that.”
A spokesman for U.S. Sen. Bob Casey, D-Pa., said in an emailed statement: “Sen. Casey believes these reports raise new and deeply troubling questions about what occurred during the Legionnaires’ outbreak and the steps taken to hold responsible employees accountable after serious problems were uncovered.”
A spokesman for U.S. Rep. Mike Doyle, D-Forest Hills, who represents the area that includes the Pittsburgh VA, wrote in an email that Mr. Doyle was also concerned about the chain of events, and “intends to pursue that line of inquiry with the VA — specifically, whether anyone ever addressed those concerns [about Mr. Moreland’s retention bonus] and, if so, the rationale for their decision.”
Sean D. Hamill: shamill@post-gazette.com or 412-263-2579