A top official from the Department of Veterans Affairs on Wednesday defended the decision to demote but not fire the director of the Philadelphia VA benefits office, and called it "incomprehensible" that the agency's top watchdog recommended that federal prosecutors consider charges against her.

"As I have reviewed the evidence ... it does not support one violation of law, not one violation of rule, not even one violation of regulation related to relocation expenses," VA Deputy Secretary Sloan Gibson said, testifying before the House Committee on Veterans Affairs.

The hearing was billed as an "end-of-year review" of accountability actions taken by the VA. As it has throughout the year, the committee continued to focus on the embattled Philadelphia office, while questioning what progress has been made in improving service to veterans and restoring confidence shaken by the national scandal over long waiting times.

The VA inspector general in September asked the Department of Justice to investigate whether Philadelphia director Diana Rubens broke the law by orchestrating her 2014 assignment to the job, leading the VA to pay nearly $300,000 in relocation expenses. Investigators said Rubens had been interested in the post, which had fewer responsibilities but the same pay as her position in Washington, because it was closer to her family in Delaware.

In making the criminal referral, VA Deputy Inspector General Linda Halliday said the case could represent a misuse of taxpayer funds.

In a statement to the committee, Gibson said that there were "gaps between the rhetoric" in Halliday's report and the evidence. He stressed that the agency cannot make disciplinary decisions based on "summary, unsworn, hearsay" conclusions.

Amplifying those remarks during his testimony, Gibson also delivered the most adamant defense to date of the agency's handling of Rubens, saying the VA will not discipline "based on [inspector general] opinions, referrals to the Department of Justice, recycled and embellished media accounts or external pressure."

He questioned the inspector general's decision to send the case to the Justice Department. "I've found no basis and our attorneys have found no basis for that referral," he said.

Catherine Gromek, spokeswoman for the inspector general, said that the office respectfully disagreed with Gibson and that "expeditious reporting to the attorney general" is required whenever there are "reasonable grounds to believe there has been a violation of federal criminal law." In a statement to the committee, the office also took exception to the agency's claiming its reports were based on unsworn statements.

"All interviews conducted during the work on this report were sworn and taped interviews conducted by experienced senior OIG staff," the office said.

Last month, the VA announced it would demote Rubens and reassign her as assistant director of the agency's Houston benefits office. Rubens has not spoken publicly about the allegations; at a committee hearing last month, she repeatedly invoked her Fifth Amendment right and refused to answer questions.

Her reassignment garnered immediate pushback from some veterans and from House Republicans, including Florida Rep. Jeff Miller, committee chairman.

Miller on Wednesday again criticized the punishment as too light, and lambasted the agency for a mistake that forced it last week to temporarily rescind the demotion. The VA said last week it had failed to give Rubens one of five binders of evidence used to justify her demotion, to which she is entitled as part of her appeal.

"I'm dumbfounded that with such a high-profile case, which included a criminal referral to the Department of Justice, that the VA still found a way to botch its decision to merely demote them," Miller said. "Frankly, this ineptness clearly illustrates that VA can't even slap a wrist without missing the wrist."

Meghan Flanz, director of the VA's office of accountability review, told Miller the error would have no impact on whether the decision will hold up to scrutiny. The VA reissued the decision; Rubens has appealed.

Gibson said the "easy option" would have been for him to propose firing Rubens and a second official accused of coordinating her own reassignment.

"That's what everybody wanted," Gibson said. "I didn't come to VA to do the easy thing. I came here to do the right thing."

As the hearing came to a close, Miller said that the agency and committee members share the goal of improving service to veterans but that there is still much progress to be made, citing a recent case of a retired pilot with PTSD who was told he needed to wait 60 days for an appointment to get his prescription refilled.

"Little things like that can turn into a huge snowball," Miller said.

"Those are big things," Gibson said, asking Miller for details on that case. "That's not a little thing. That's a big thing. And I know you see it that way."

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