Ex-VA Chief Principi Cleared by House Panel

A House inquiry has found no conflict of interest or improper influence in the awarding of multimilliondollar contracts to a California company headed by the former secretary of Veterans Affairs.

In a statement released Friday, the investigations subcommittee of the House Veterans Affairs Committee said that its inquiry -- along with a review by the counsel’s office of the VA’s inspector general -- concluded that the contracts with QTC Management were properly awarded and in the agency’s best interests.

QTC’s board chairman is Anthony J. Principi, who served as the Veterans Affairs secretary from the first day of the Bush administration until early 2005. He was president of the Diamond Bar firm, which conducts physicals on veterans seeking disability assistance, when he was tapped for the Cabinet position in late 2000.

“There is no evidence ... to suggest any involvement or influence by former Secretary Anthony Principi in the award or administration” of the business deals that were reviewed, the inspector general’s report said.

In a written response, Principi said the findings “speak for themselves.”

“I’m proud of my service to our nation’s veterans and grateful to have had the opportunity to serve them,” he said.

The inquiry was initiated late last month after a Times story detailed the relationship between Principi and the company before and after his appointment as Veterans Affairs secretary. Principi has stated that when he was secretary, he recused himself from any involvement with the QTC contracts.

The Times reported that QTC’s annual business with the VA jumped from $8 million in fees in 1998 to $69 million in 2005. Of more than $300 million the firm has collected since its first contract in 1998, $240 million-plus came in while Principi was secretary.

The company became a VA contractor under a pilot program created by Congress authorizing private companies to perform physicals to determine veterans’ eligibility for disability payments.

The original contract, in 1998, limited QTC to 10 locations; the company later won contract amendments to perform exams at dozens more sites on military members at the time of their discharge.

QTC is the only private company performing those exams.

Dr. Philip B. Plattner, the Seattle psychiatrist who first raised questions about the QTC contracts, said Friday that he was one of the 24 people interviewed in the subcommittee inquiry.

Several Washington state physicians who had worked for the VA, including Plattner, were put out of work when QTC took over disability exams in the region last year. Plattner said the cost of disability exams more than doubled after the QTC takeover.

Plattner expressed doubts about the adequacy of the House subcommittee’s inquiry, saying some questions he was asked by the subcommittee staff “appeared to be looking to excuse possible wrongdoing and to dismiss my concerns, instead of being geared toward doing a thorough and proper investigation.”

Plattner said he had expected a second session with the investigative panel but was not called back.

“I don’t think they wanted to hear more,” he said.

After The Times story, seven Democratic members of the House Veterans Affairs Committee called for hearings on the contracts and possible conflicts of interest.

They also questioned whether the VA was paying too much for the QTC exams.

The committee then agreed to the inquiry by the panel’s investigations subcommittee.

The statement released by the subcommittee did not mention the cost issue.

Questions about the QTC contract also have been raised by Rep. Henry A. Waxman of Los Angeles, the ranking Democrat on the Government Reform Committee.

He has asked the VA to provide data on all contacts between QTC and Principi and his top aides.

Waxman said Friday that the subcommittee report appeared to satisfy his concerns but that he would continue his review.