U.S. OFFICE OF SPECIAL COUNSEL ANNOUNCES SIGNIFICANT SETTLEMENT OF WHISTLEBLOWER COMPLAINTS FILED AGAINST VETERANS AFFAIRS HOSPITAL

FOR IMMEDIATE RELEASE - 9/27/01
CONTACT: JANE MCFARLAND
(202) 653-7984               

    Today, the U.S. Office of Special Counsel (OSC) announced a significant settlement has been reached in two whistleblower complaints filed jointly by Randy Jiron and Rita Pidcoe-Jiron, former employees of the Department of Veterans Affairs New Mexico (VA) Health Care System, a VA hospital. 

    Both Mr. Jiron and his wife worked in the Acquisition and Materiel Management Service of the hospital. The OSC investigation showed that they blew the whistle on what they reasonably believed to be gross waste of government funds in the execution of a five-year prime vendor contract for medical supplies. Under the terms of the contract, a local medical supplier bought the hospital’s inventory of materiel and then sold supplies back to the hospital on an as needed basis with a 12.5 percent markup. As alleged by the whistleblowers, and confirmed by a Department of Veterans Affairs Office of Inspector General (OIG) audit, this contractual arrangement resulted in the hospital paying the markup even for the materiel it repurchased from the vendor. The hospital’s own Cost Reduction Subcommittee estimated that the additional financial burden to the hospital under the contract exceeded a million dollars per year. When an independent OIG review also confirmed the substantial cost impact to the hospital, the contract was cancelled.

    The complainants alleged that after their whistleblowing, the hospital subjected them to a series of retaliatory actions, including reassignment to other positions, removal from hospital committees, reprimands, denial of awards, denial of a promotion, and removal or coerced resignation from service. While Mr. Jiron was ultimately fired, his wife resigned from service under the stress of these personnel actions.

    The OSC and an internal agency Board of Investigation found reasonable grounds to believe that these actions were taken because of whistleblowing. With the cooperation of all the parties, OSC has facilitated a six-figure monetary settlement for the complainants as well as early retirement benefits for Mr. Jiron. Both employees have resumed work in the private sector. 

    In a series of related complaints, OSC also obtained corrective action for four senior managers of the hospital who also filed whistleblower reprisal complaints over the same vendor contract. These employees served on the hospital’s Cost Reduction Subcommittee. Their troubles began when they urged the chief of acquisition and materiel management and the hospital director to cancel the contract. The hospital director withdrew funding for these employees to receive cash awards for their subcommittee service. The Department has agreed to pay these employees $4,000 each in awards that previously had been denied to them. The Department, on its own initiative, also paid awards to two other employees who had not filed OSC complaints, but who had provided administrative support to the OSC complainants in this case.

    Finally, the Department requested and received permission from OSC to take disciplinary action against two hospital officials, including the hospital director, for their conduct in this case. The agency reprimanded the director and reassigned him to a nonsupervisory position and he then retired. The complainants’ immediate supervisor retired under threat of removal from service. 
Special Counsel Elaine Kaplan said that this was a “significant whistleblower case” and that she was “very pleased that OSC was able to facilitate favorable settlements for the OSC complainants.” She also expressed her appreciation to the Department for its cooperation with OSC in the investigation and for its willingness to address and correct these matters.

    The U.S. Office of Special Counsel receives, investigates, and prosecutes before the U.S. Merit Systems Protection Board charges concerning the commission of prohibited personnel practices. OSC investigations frequently result in the favorable resolution of complaints without litigation.

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