Ex-VA hospital director facing corruption charges received bonuses

A former Department of Veterans Affairs hospital director indicted on 36 corruption-related charges received thousands of dollars in bonuses during the same period he is accused of taking bribes and kickbacks from contractors who received lucrative contracts with the agency.  

VA data obtained by The Center for Investigative Reporting reveals that William Montague, head of the Louis Stokes Cleveland VA Medical Center in Ohio, was awarded $73,000 in bonuses between 2007 and his retirement in 2010.  

The following year, when Montague came out of retirement and served as acting director of the Dayton VA Medical Center, he received a bonus of $8,195.

The indictment alleges that Montague received more than $200,000 in bribes both directly and through a financial services firm he founded called the House of Montague, which accepted hefty consulting fees from companies – ranging from developers to alternative energy contractors – that sought to do business with the VA.

Last week, Montague pleaded not guilty to all charges and was released on $100,000 bail. Multiple calls to his attorney, Ralph Cascarilla, were not returned.

Montague’s indictment comes during a period of increasing scrutiny of the VA’s system of executive compensation. In April, CIR revealed that the agency had handed out millions of dollars in bonuses to top officials even as its backlog of veterans waiting for disability compensation ballooned.

CIR reported that the largest bonuses went to officials most responsible for the backlog. For example, in 2011, when the backlog of disability claims grew by nearly 300,000, the agency granted its top performance award, $23,091, to both Lois Mittelstaedt and Diana Rubens – two top deputies of VA Undersecretary for Benefits Allison Hickey.

 

The VA later announced it was suspending bonuses to agency leaders who administer its disability benefits system.

But some observers say that the VA should go further and that Montague’s indictment shows the agency should take a closer look at the bonuses provided to health care administrators as well.

In an email, VA spokeswoman Victoria Dillon said the agency would not comment on Montague’s indictment, but said a review of bonuses to all VA executives already was under way and that “2012 performance awards for some VA Senior Executives, including in the Veterans Health Administration, have been deferred pending further review and are not being paid at this time.”

Darin Selnick, a special assistant to the VA secretary under President George W. Bush, said Montague’s indictment illustrates a long-standing problem that at the VA, “almost everybody gets a bonus regardless of how bad their performance is.”

“The bonuses are part of the good-old-boys system. There needs to be some fundamental reform of the personnel system,” said Selnick, who now works with Concerned Veterans for America, an advocacy organization.

Rep. Jeff Miller, R-Fla., chairman of the House Committee on Veterans’ Affairs, has introduced legislation that would place a five-year moratorium on all bonuses at the department. His measure passed out of committee unanimously May 8.

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