Federal Reports

The Office of Special Reviews substantiated allegations that Peter Shelby, while serving as VA’s Assistant Secretary for Human Resources and Administration (HR&A), improperly steered a $5 million contract for the benefit of individuals with whom he had a personal relationship. The OIG determined that VA could not use the contract services, resulting entirely in waste. In February 2018, VA awarded a one-year contract to a Service-Disabled Veteran-Owned Small Business (SDVOSB) (the Small Business) that provides leadership development training. The contract also included talent assessment services for evaluating whether to hire or promote candidates. When the contract concluded in August 2019, it became evident that VA had purchased services far in excess of what it could use. VA used only 232 of the 17,000 one-year training licenses it purchased for $3.8 million and VA received no value whatsoever for the talent assessment services because required privacy and security certifications were not obtained. The OIG determined that this waste occurred as a direct result of Mr. Shelby’s misuse of his official position by directing his senior staff to arrange for the award of this contract to the Small Business on a sole-source basis (i.e., without competition). The OIG determined that although there was statutory authority to contract with SDVOSBs, use of VA’s sole source authority in this case was not supported by an adequate justification as required by VA policy and regulation. Mr. Shelby resigned from federal service in July 2018 after learning that he had been recommended for possible removal for reasons unrelated to this contract. The OIG makes eight recommendations for process improvements spotlighted by this investigation and for VA to consider whether any administrative action should be taken for certain employees. VA concurred with all eight recommendations.

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John Mckoy previously pleaded guilty in U.S. District Court, Eastern District of Pennsylvania, on June 14, 2019, to multiple health care fraud charges related to a scheme to defraud Amtrak’s health care plan. McKoy was the owner and operator of several neighborhood health carefacilities, including Mt. Pleasant Medical Management, Inc. and Harris Medical Management, Inc. Between November 2004 and October 2007, McKoy submitted, and caused to be submitted, hundreds of false and fraudulent claims to United Health Care Corporation and was paid approximately $291,000 for services purportedly rendered to predominately Amtrak patients who were never seen or treated for those services. On July 8, 2020, McKoy was sentenced to six months imprisonment, three years’ supervised probation, and ordered to pay restitution to Amtrak in the amount of $291,255.In addition to Amtrak OIG, this joint investigation was conducted with the U.S. Postal Inspection Service, Department of Labor OIG, and the Federal Bureau of Investigation.