Department of Veterans Affairs 

Office of Inspector General 

Healthcare Inspection 

Management of Government Resources 

and Personnel Practices 

VA North Texas Health Care System 

Dallas, Texas 

Report No. 06-01319-156 June 29, 2007

VA Office of Inspector General 

Washington, DC 20420 
To Report Suspected Wrongdoing in VA Programs and Operations 

Call the OIG Hotline – (800) 488-8244 
Management of Government Resources and Personnel Practices, VA North Texas Health Care System 

Executive Summary 

The purpose of the inspection was to determine the validity of allegations concerning 

mismanagement of Government resources, prohibited personnel practices, and contract 

and procurement irregularities between VA North Texas Health Care System (system) 

and its medical school affiliate. 

We concluded eye clinic employees had been supervised and managed by a contractoremployed administrator in conflict with specific acquisition regulations. It states that 

contracts shall not be used for the performance of inherently governmental functions. 

The contract terms did not call for the contractor to provide administrative oversight 

(supervision of clinics or VA staff). Additionally identified contract variances from 

standard practices require resolution. Acquisition planning for ophthalmology services 

offered no support, such as workload analysis, for manpower requirements. The sharing 

agreement between the medical school and the system did not receive a preaward review. 

The Surgical Service Administrative Officer is serving as the Contracting Officer’s 

Technical Representative; however, there is no evidence of this in the contract file. 

Finally, a possible conflict of interest exists between an employee and the medical 

school. This matter was referred for further review. 

We did not substantiate the allegation that the system Director ordered eye clinic 

physicians to perform Lasik surgery that was not medically necessary. Although not part 

of the original allegation, we found that eye clinic management kept a “shadow” system 

of medical records that was in violation of Veterans Health Administration (VHA) and 

local policy regarding the computerized patient record system and patient privacy 

We made recommendations that the system should: 

• Comply with acquisition regulations regarding supervision of VHA employees. 

• Conduct a workload analysis to determine how many staff are required for 

ophthalmology services before renewing any sharing agreement. 

• Obtain a preaward review before awarding ophthalmology service sharing 

agreements or other contracts valued at $500,000 or more. 

• Direct the contract officer to create a Contracting Officer’s Technical 

Representative designation memorandum to be placed in the contract file. 

• Require medical record documentation in the eye clinic comply with VHA and 

local directives, since no shadow record systems may be maintained.

VA Office of Inspector General i 
DEPARTMENT OF VETERANS AFFAIRS

Office of Inspector General 

Washington, DC 20420 

TO: Director, Veterans Integrated Service Network (10N17) 

SUBJECT: Healthcare Inspection – Management of Government Resources and 

Personnel Practices, VA North Texas Health Care System, Dallas, TX 

Purpose 

The purpose of the inspection was to determine the validity of allegations concerning 

mismanagement of Government resources, prohibited personnel practices, and contract 

and procurement irregularities between VA North Texas Health Care System (system), 

and its affiliate, University of Texas Southwestern Medical School (UTSW). 

Background 

The system has a contract with its affiliate, UTSW, to manage the system’s eye clinic at 

the Dallas Division. The complainant contacted the Office of Inspector General (OIG) 

Hotline division with concerns regarding this contract between the system and UTSW. 

The complainant alleged that when the contract was first established, the contractor was 

to provide full onsite ophthalmology services including the services of an 

ophthalmologist, residents, and technical support staff. As the contract evolved, UTSW 

was providing managers under contract to supervise all VA employees within the eye 

clinic. 

The complainant stated that as part of their duties under the contract administrator’s 

direction, VA employees were mandated to attend meetings, teach ophthalmology 

residents, make weekly rounds, present cases, and meet UTSW qualifications for clinical 

appointments. 

The complainant stressed that the administrator was the sole authority over this particular 

group of VA employees, controlling decisions to hire and to determine pay rate, 

discipline or reward personnel, set clinical privileges, and establish work schedules. In 

effect, the complainant noted, this arrangement limited these employees’ rights to usual 

Federal personnel protections. 

VA Office of Inspector General 
Management of Government Resources and Personnel Practices, VA North Texas Health Care System 

According to the complainant, UTSW had control of clinical issues impacting patient 

care. The decision regarding which VA patients have access to care, medical treatment, 

and testing was solely at the discretion of the Director of the Ophthalmology Service. 

Additionally, a “shadow”1

 system of medical records was kept within the clinic; these 

shadow records contained comments not found in the original medical record system. 

The complainant alleged the system Director ordered the eye clinic to perform Lasik 

surgery, which is not considered a medical necessity, for at least one non serviceconnected (NSC) veteran. The complainant noted VA does not typically offer this 

procedure for any patient, service-connected (SC) or otherwise. 

Scope and Methodology 

The VA OIG Office of Healthcare Inspections (OHI) and Office of the Counselor 

reviewed allegations of mismanagement of Government resources, prohibited personnel 

practices, and contract and procurement irregularities between the system and its affiliate, 

UTSW. 

We interviewed the staff and management at Dallas VA Medical Center (VAMC); Sam 

Rayburn Memorial Veterans Center (SRMVC), Bonham, TX; and the Fort Worth, TX, 

Community Based Outpatient Clinic (CBOC). We toured the eye clinics and related 

areas in the three facilities. We reviewed medical records, Veterans Health 

Administration (VHA) and local policies pertaining to eye clinic management and 

surgical treatment authorization, contracts, and prosthetic order processes. We also 

reviewed human resource records, including credentialing and privileging files of eye 

clinic personnel, to assess compliance with VHA Handbook 1100.19, Credentialing and 

Privileging, and applicable local policy. 

The assignment and approval of clinical privileges is a system determination and was not 

addressed in this report. 

We conducted the review in accordance with the Quality Standards for Inspections

published by the President’s Council on Integrity and Efficiency. 

Results 

Issue 1: Management and Supervision of VA Employees 

We substantiated the allegation that eye clinic employees were being supervised and 

managed by an administrator employed by a contractor. Federal Acquisition Regulation 

(FAR) Subpart 7.5 states that contracts shall not be used for the performance of 

inherently governmental functions. The Director of the Ophthalmology Service, who 

 

1

 A duplicate set of records which may contain information not maintained in the VA system of medical records. 

VA Office of Inspector General 2 
Management of Government Resources and Personnel Practices, VA North Texas Health Care System 

was a contract employee at the time, evaluated the performance of VA employees and 

made recommendations for promotions. A few days before our onsite visit, the contract 

employee was converted to a full-time VA employee. Subsequently, the contracting 

officer prepared a modification removing the Director of Ophthalmology Service from 

the contract. 

We did not substantiate the allegation that under the contract administrator’s direction, 

VA employees were mandated to attend meetings at UTSW, teach ophthalmology 

residents, make weekly rounds, present cases, or meet UTSW qualifications for clinical 

appointments. 

We reviewed the sharing agreement contract file and found that the contract was awarded 

properly and contract modifications were appropriate. Prior to the initial award of the 

contract, VA Central Office, Acquisition Program Management Division, conducted a 

business clearance review of the contract, and the statement of work was changed to 

eliminate language implying that the contractor would perform services that are 

inherently governmental or would be appropriate only if VA had personnel service 

contract authority, which VA does not. Thus, the contract terms did not call for the 

contractor to provide administrative oversight (supervision of clinics or VA staff). 

Although we concluded that the contract was properly awarded, we identified the 

following deficiencies: 

Lack of Acquisition Planning. 

Surgical Service requested a contract for ophthalmology services and provided the 

contracting officer with a statement of work and the number of full-time equivalent 

employees (FTE) required. However, there was no supporting documentation, such as 

workload analysis, for the FTE requirement. 

Preaward Review Not Requested. 

VHA Directive 99-056, Negotiating Non-Competitive Clinical Services Contracts, 

requires a preaward review of all sole-source procurements in excess of $500,000 

including option years. The sharing agreement between UTSW and the system was 

approximately $3 million. However, a preaward review was not requested because the 

contracting officer did not realize that one was required. 

Contracting Officer’s Technical Representative Designation Memorandum Not in 

Contract File. 

VA Acquisition Regulation 801.603-70 requires that a Contracting Officer’s Technical 

Representative (COTR) designation memorandum be in writing and define the scope and 

limitation of the representative’s authority. The Surgical Service Administrative Officer 

was serving as the COTR; however, there was no evidence of this in the contract file. 

VA Office of Inspector General 3 
Management of Government Resources and Personnel Practices, VA North Texas Health Care System 

Conflict of Interest. 

According to VHA Handbook 1660.3, Conflict of Interest Aspects of Contracting for 

Scarce Medical Specialist Services, Enhanced Use Leases, Health Care Resource 

Sharing, Fee Basis and Intergovernmental Personnel Act Agreements (IPAS), “No VA 

employee who is an employee, officer, director, or trustee of an affiliated university, or 

who has a financial interest in the contract, may lawfully participate in a VA contract or 

any other Government contract with the university.” We discovered a conflict of interest 

exists between an employee and UTSW. This matter was referred for further review. 

Issue 2: Performance of Lasik Surgeries 

We did not substantiate allegations the system Director ordered the eye clinic to perform 

Lasik surgery that was not medically necessary. 

One fee basis Lasik procedure was performed on a SC veteran in March 2005. Before 

surgery was performed, system managers reviewed the case and determined that Lasik 

surgery was justified due to his “100% SC disability of SCI [spinal cord injury] which 

prevents him from putting in contact lens and or putting on his glasses. Quality of life is 

a major part of this justification since he needs assistance with all ADLs [activities of 

daily living] and is functionally limited in any activities he can do. He watches TV, uses 

an adapted computer, and reads as functional activities.” 

A second Lasik procedure was approved in September 2005 for an NSC veteran who 

requested the procedure due to his dissatisfaction with available prophylactic corrective 

lenses. However, this procedure was never performed. At our suggestion, the procedure 

was reevaluated by system managers to assess medical necessity and compliance with the 

intent of VHA Directive 2004-045, Therapeutic Laser Eye Procedures, and was not 

found to be medically necessary. As a result, the procedure was not done. 

Issue 3: Medical Record Documentation and Security 

We substantiated that Dallas VAMC was not in compliance with VHA Manual M-1, Part 

I, Chapters 5 and 9 and system Memorandum No. MR-1, Medical Records Management 

Committee, regarding a system of records, medical record security, and the use of the 

computerized patient record system (CPRS). 

Eye clinic management kept a “shadow” system of medical records. These files were 

physically located in two file rooms within the eye clinic. One file room opened directly 

into a patient waiting area, and neither room was secure when unattended. The records 

must be maintained in the VA records system. According to the department procedure 

for that system, “all records containing personal information are maintained in secured 

file cabinets or in restricted areas, access to which is limited to authorized personnel.” 

While we did not find any evidence that patient information was improperly accessed or 

compromised, we found the practice of leaving medical records unsecured unacceptable. 

VA Office of Inspector General 4 
Management of Government Resources and Personnel Practices, VA North Texas Health Care System 

We compared documentation in the CPRS medical records with the eye clinic “shadow” 

files for 44 patients. We found additions/deletions in the documented treatment plans or 

expectations of care in 26 (59 percent) of the “shadow” files. The additions/deletions 

included, but were not limited to, changes in patient treatment plans and provider 

diagrams of the patient’s retinal changes. VHA and local directives maintains the 

patient’s right to access his or her records, make copies, and request amendments to 

medical records. CPRS records which are incomplete deny patients these rights and may 

lead to unsafe clinical practice. 

At the time of this review, CPRS in the Dallas VAMC eye clinic had been in use by the 

optometrists for 3 years and by the ophthalmologists for approximately 1 month. 

SRMVC and the Fort Worth CBOC complied with CPRS standards; however, the records 

may not be complete due to the use of “shadow” files used by Dallas VAMC. 

We concluded that the practice of keeping “shadow” medical records in the eye clinic is a 

violation of VHA and local directives, puts a burden on clinic staff, and potentially places 

patients at risk. We further concluded that all patient encounters must be documented in 

CPRS as required by VHA and local policy. 

Issue 4: Patient Care Concerns 

We did not find that patient care was negatively impacted because of contract 

management. We reviewed clinic access, medical records, and patient complaint data. 

There were no indications that patients were made to wait for procedures or not 

scheduled for necessary testing or treatments. Part of the Director of Ophthalmology 

Service’s role is to manage patient activities and system resources. We found no 

indication that patient care was managed inappropriately. 

Conclusion 

We concluded eye clinic employees had been supervised and managed by an 

administrator employed under contract in conflict with FAR Subpart 7.5. This regulation 

states that contracts shall not be used for the performance of inherently governmental 

functions. The contract terms did not call for the contractor to provide administrative 

oversight or supervision of clinics or VA staff. 

Contract variances from standard practices require resolution. Acquisition planning for 

ophthalmology services offered no support, such as workload analysis for the manpower 

requirements. The sharing agreement between UTSW and the system did not receive a 

preaward review. The Surgical Service Administrative Officer is serving as the COTR 

while no evidence of this was found in the contract file. Finally, a possible conflict of 

interest exists between an employee and UTSW. This matter was referred for further 

review. 

VA Office of Inspector General 5 
Management of Government Resources and Personnel Practices, VA North Texas Health Care System 

Compliance with VHA guidance and local policies for documentation is inconsistent. 

The practice of keeping “shadow” medical records in the eye clinic is a violation of VHA 

and local policy and potentially places patients at risk. All patient encounters must be 

documented in CPRS in accordance with VHA and local policy. 

Recommendations 

Recommendation 1. We recommend that the VISN Director ensure the system 

Director takes action to comply with FAR, Subpart 7.5, Inherently Governmental 

Function, regarding supervision of VA employees. 

Recommendation 2. We recommend that the VISN Director ensure the system 

Director takes action to conduct a workload analysis to determine how many FTE are 

required for ophthalmology services before renewing any sharing agreement. 

Recommendation 3. We recommend that the VISN Director ensure the system 

Director takes action to obtain a preaward review before awarding ophthalmology service 

sharing agreements or other contracts valued at $500,000 or more, inclusive of option 

years. 

Recommendation 4. We recommend that the VISN Director ensure the system 

Director takes action to direct the contract officer to create a COTR designation 

memorandum to be placed in the contract file. 

Recommendation 5. We recommend that the VISN Director ensure the system 

Director takes action to require medical record documentation in the eye clinic comply 

with VHA and local directives. No shadow record systems may be maintained. 

Comments 

The VISN and system Directors agreed with the findings and recommendations and 

provided acceptable improvement plans. (See Appendixes A and B, pages 7–11, for the 

full text of the Directors’ comments.) 

The actions planned by the VA North Texas Health Care System met the intent of our 

recommendations. We will follow up on the planned actions pending receipt of 

documentation verifying completion dates have been met. 

 (original signed by:)

JOHN D. DAIGH, JR., M.D. 

Assistant Inspector General for 

Healthcare Inspections

VA Office of Inspector General 6 
Management of Government Resources and Personnel Practices, VA North Texas Health Care System 

Appendix A 

VISN Director Comments 

Department of 

Veterans Affairs Memorandum

Date: February 28, 2007 

From: VISN Director 

Subject: Healthcare Inspection - Management of Government 

Resources and Personnel Practices, VA North Texas Health 

Care System, Dallas, Texas 

 To: Office of Inspector General 

1. Attached is VA North Texas Health Care System's 

response to the Office of Inspector General (OIG) Hotline 

Review Site Visit conducted in 2006. I have reviewed the 

OIG recommendations, which have been individually 

addressed. 

2. I concur with the comments and actions taken by the 

Medical Center Director to improve processes at the VA 

North Texas Health Care System. 

 (original signed by:) 

Thomas Stranova 

VA Office of Inspector General 7 
Management of Government Resources and Personnel Practices, VA North Texas Health Care System

VISN Director’s Comments 

to Office of Inspector General’s Report 

The following VISN Director’s comments are submitted in 

response to the recommendations in the Office of Inspector 

General’s report: 

OIG Recommendations

We recommend the VISN Director ensure the System 

Director take action to: 

Recommendation 1. Comply with FAR, Subpart 7.5, 

Inherently Governmental Function, regarding supervision of 

VHA employees. 

Concur Target Completion Date: March 26, 2006 

Recommendation 2. Conduct a workload analysis to 

determine how many FTE are required for ophthalmology 

services before renewing any sharing agreement. 

Concur Target Completion Date: July 31, 2006 

Recommendation 3. Obtain a preaward review before 

awarding ophthalmology service sharing agreements or other 

contracts valued at $500,000 or more, inclusive of option 

years. 

Concur Target Completion Date: July 16, 2006 

Recommendation 4. Direct the contract officer to 

create a COTR designation memorandum to be placed in the 

contract file. 

Concur Target Completion Date: October 30, 2006 

Recommendation 5. Require medical record 

documentation in the eye clinic comply with VHA and local 

directives. No shadow record systems may be maintained. 

Concur Target Completion Date: October, 2006 

VA Office of Inspector General 8 
Management of Government Resources and Personnel Practices, VA North Texas Health Care System 

Appendix B 

System Director Comments 

Department of 

Veterans Affairs Memorandum

Date: February 23, 2007 

From: System Director 

Subject: Healthcare Inspection - Management of Government 

Resources and Personnel Practices, VA North Texas Health 

Care System, Dallas, Texas 

To: Network Director, VISN 17 (10N17) 

Attached is VA North Texas Health Care System's 

(VANTHCS) response to the recommendations in the subject 

healthcare inspection report. 

 (original signed by:) 

Betty Bolin Brown 

VA Office of Inspector General 9 
Management of Government Resources and Personnel Practices, VA North Texas Health Care System

System Director’s Comments 

to Office of Inspector General’s Report 

The following system Director’s comments are submitted in 

response to the recommendations in the Office of Inspector 

General’s report: 

OIG Recommendations

We recommend the VISN Director ensure the system 

Director take action to: 

Recommendation 1. Comply with FAR, Subpart 7.5, 

Inherently Governmental Function, regarding supervision of 

VHA employees. 

Concur Target Completion Date: March 26, 2006 

As of March 26, 2006, supervision of staff in the eye clinic 

was provided by a physician employed by VA North Texas 

Health Care System. 

Recommendation 2. Conduct a workload analysis to 

determine how many FTE are required for ophthalmology 

services before renewing any sharing agreement. 

Concur Target Completion Date: July 31, 2006 

With the help of OIG staff from VACO, a complete workload 

analysis has been completed to determine the number of FTE 

required for the ophthalmology contact. The analysis is being 

used in the contracting process. 

Recommendation 3. Obtain a preaward review before 

awarding ophthalmology service sharing agreements or other 

contracts valued at $500,000 or more, inclusive of option 

years. 

Concur Target Completion Date: July 16, 2006 

VA Office of Inspector General 10 
Management of Government Resources and Personnel Practices, VA North Texas Health Care System

Pre-award OIG audits price proposals valued at $500,000 or 

more, inclusive of years, have been requested and received 

for the pending long-term ophthalmology contract as well as 

other pending long term contracts with UTSW. 

Recommendation 4. Direct the contract officer to 

create a COTR designation memorandum to be placed in the 

contract file. 

Concur Target Completion Date: October 30, 2006 

There is currently a COTR designation memorandum in the 

file identifying the COTR in the ophthalmology contract file. 

Recommendation 5. Require medical record 

documentation in the eye clinic comply with VHA and local 

directives. No shadow record systems may be maintained. 

Concur Target Completion Date: October, 2007 

The Ophthalmology clinic began utilizing CPRS for eye 

clinic notes as identified by the Office of Inspector General 

staff. The clinic providers make any additions to the CPRS 

eye clinic notes for resident supervision purposes, or 

clarification of information, using an addendum. Hand 

written comments are not utilized. All visual field exams are 

scanned into VistA imaging and appear in the record. Old 

visual field exams are available in the clinic for reference (as 

supplemental information) as a part of continued care for long 

standing patients. It is anticipated that these will no longer be 

necessary for care as of October 2007. 

VA Office of Inspector General 11 
Management of Government Resources and Personnel Practices, VA North Texas Health Care System

Appendix C 

OIG Contact and Staff Acknowledgments 

OIG Contact Karen Moore, Associate Director 

Dallas Regional Office of Healthcare Inspections 

(214) 253-3332 

Acknowledgments Linda DeLong, Director 

Shirley Carlile 

Theresa Cinciripini 

Glen Gowans 

Roxanna Osegueda 

George Wesley, M.D. 

VA Office of Inspector General 12 
Management of Government Resources and Personnel Practices, VA North Texas Health Care System

Appendix D 

Report Distribution 

VA Distribution

Office of the Secretary 

Veterans Health Administration 

Assistant Secretaries 

General Counsel 

Director, Veterans Integrated Service Network (10N17) 

Director, VA North Texas Health Care System (549/00) 

Non-VA Distribution

House Committee on Veterans’ Affairs 

House Appropriations Subcommittee on Military Construction and Veterans Affairs 

House Committee on Oversight and Government Reform 

Senate Committee on Veterans’ Affairs 

Senate Appropriations Subcommittee on Military Construction and Veterans Affairs 

National Veterans Service Organizations 

Government Accountability Office 

Office of Management and Budget 

U.S. Senate: 

John Cornyn 

Kay Bailey Hutchison 

U.S. House of Representatives: 

Michael Burgess 

Eddie Bernice Johnson 

Ralph M. Hall 

This report is available at http://www.va.gov/oig/publications/reports-list.asp. 

VA Office of Inspector General 13