VA watchdog calls for probe of Phila. director

The top watchdog for the U.S. Department of Veterans Affairs has asked prosecutors to investigate whether the director of the embattled Philadelphia benefits office broke the law by orchestrating her own reassignment to the job - taking on fewer responsibilities but the same pay - so she could be closer to family.

Before joining the office last year, Diana Rubens had been a ranking administrator in the agency's Washington headquarters. In a report Monday, the VA's inspector general claimed Rubens pushed for the transfer of the former Philadelphia director, then volunteered for his job.

Her duties decreased - but her $181,000 salary did not.

"[We] found that Ms. Rubens inappropriately used her position of authority for personal and financial benefit when she participated personally and substantially in creating the Philadelphia . . . vacancy and then volunteering for the vacancy," Deputy Inspector General Linda Halliday wrote in the 40-page report.

Halliday said she had asked the U.S. Attorney's Office in Washington to open a criminal investigation, though her report does not suggest potential charges. A decision on that request is pending, she said.

Rubens deferred comment to a VA spokeswoman. Agency officials said they were reviewing whether any disciplinary action against Rubens was warranted, but did not elaborate or respond to other questions about her employment status.

The inspector general's report reflects the continuing scrutiny of an office that has been in crisis for more than a year - and emerged as the most troubled VA benefits facility in the country. Through the turmoil, Rubens has been a stalwart defender of the office, citing improvements in service to veterans and saying that under her watch, a toxic relationship between management and staff has improved.

The review into her transfer there began in March, after members of Congress questioned the nearly $300,000 spent to relocate Rubens from Virginia to Havertown.

At an April congressional hearing, Rubens said she took the job because she was asked to help an office in crisis. Under questioning, she acknowledged that her mother, sister, and nephews live in Wilmington.

VA officials defended the reimbursement, saying it was aboveboard.

Halliday, in her report, said the agency was correct, technically: The moving expenses were legitimate. But her review found wider problems with both the move and the VA's relocation program as a whole, saying the agency had used relocating senior executives as a "method to justify annual salary increases."

The report said that between 2013 and 2015, the agency paid $1.8 million in relocation expenses and raises for 22 employees, and called that an inappropriate use of the agency's relocation program. Halliday also accused another senior VA official of similarly helping to create a vacancy at the agency's office in St. Paul, Minn., then volunteering for that spot.

Under its policies, the VA can only lower an employee's salary based on performance. But Halliday's report noted that Rubens and the Minnesota director stepped down to take new jobs with far fewer responsibilities - but kept the same pay.

Rubens joined the agency as a claims examiner in 1987, climbing over two decades to a ranking position in Washington. Inspectors concluded that she had wanted to lead the Germantown office for years, first expressing interest in the director spot when it came open in 2011.

The VA hired Robert McKenrick instead. But Rubens didn't lose interest, according to the inspectors. In 2013, when the director position at the Los Angeles office opened, she asked McKenrick if he was interested in that post.

Rubens didn't have the authority to transfer McKenrick. But she reached out to superiors who did - and expressed interest in his job, investigators said.

In a March 2014 email, Rubens allegedly wrote that she had talked with a supervisor "this morning about my desire to take advantage of the Philadelphia director opening. For me."

The position was not yet open.

In another email on the same day, the undersecretary for benefits, Allison Hickey, told Rubens she would help her get the job. "I think the world of you and will support you any way you need," Hickey wrote.

Investigators said that the next day, Hickey sent an email - to whom the report doesn't say - asking when she could "expect to see Philly open."

McKenrick had not wanted the Los Angeles job because it moved him farther from his children, he later told investigators.

Despite his lack of interest, senior VA officials moved forward with plans to relocate him. The report did not say if he protested the transfer.

As the process progressed, Rubens removed herself from the conversations. "Remember - I can't be in the middle of this move," she allegedly wrote to a colleague.

Both reassignments - Rubens' and McKenrick's - were approved in May 2014.

But two days after agreeing to take the job, Rubens signed a letter saying she would not accept unless the VA approved her participation in a benefits program that would provide assistance in selling her house. The program is meant in part to lure applicants for hard-to-fill positions.

Rubens was approved a few days later. The VA ultimately paid $224,500 through the program to the government contractor who bought her home when it would not sell, plus about $50,000 in other relocation expenses.

During the April hearing, Rep. Jeff Miller (R., Fla.), chair of the Committee on Veterans Affairs, grilled Rubens. She said she applied for the benefits to help ease the transition.

"So you did not want to move unless you got a $300,000 . . . relocation package, to be close to your mother and your family?" Miller asked.

"No, sir, that's not the issue," Rubens said. "It was part of a benefit program VA offers to ensure transition is as quick and as smooth as possible to an office that needed leadership."

"And so you would not have moved close to your mother had you not gotten this package?" Miller asked her.

"I don't know that, sir," she responded.

In a statement Monday, Miller said the report was evidence agency officials had misused the relocation program to "enrich themselves" at taxpayers' expense. He also said he would examine whether VA officials misled committee members at the hearing.

Randal Noller, a VA spokesman, in a statement said the agency would take up a 30-day review of its incentive and relocation procedures, weigh whether any disciplinary action is needed, and "fully cooperate with other federal agencies."

tnadolny@phillynews.com

215-854-2730 @TriciaNadolny