Former VA head under scrutiny
WASHINGTON – A Diamond Bar, Calif., company headed by former Veterans Affairs Secretary Anthony J. Principi could get fees exceeding $1 billion from the Veterans Administration, much of it on contracts approved and amended while he ran the government agency, records show.
Principi was president of the medical services company QTC Management Inc. before joining the Bush Cabinet in 2001. He ran the VA for four years, then returned to the company as chairman of the board.
During his tenure as VA secretary, Principi’s past and future corporate home in Diamond Bar collected about $246 million in fees, according to VA records. And Congressional Budget Office projections show the VA contracts could be worth as much as $1.2 billion to QTC if fully funded by Congress through 2008.
Principi said he had no role in awarding, amending or administering VA contracts with QTC.
“While at the VA, I had no contact with QTC on any business matter and recused myself entirely from any issues or business that QTC might have had with the VA,” Principi said in e-mail responses to written questions. He said he fully complied with federal ethics statutes barring contact with the VA following his departure from the agency.
Citing the recent combat service of his two sons, Principi also said, “Caring for these young men and women we send to war is the only thing that motivates me whether I’m in public service or in any aspect of business, where their interests are at stake.”
Whether or to what extent Principi stands to benefit financially from QTC’s success could not be determined. The former VA secretary said he holds nonvested stock options in the company, but he did not specify the numbers of shares.
As a VA contractor, Principi’s company administers medical exams to veterans applying for disability assistance. It also examines soldiers before their discharge from military service. The results of the QTC exams play a substantial role in subsequent disability benefit determination decisions by the VA.
While the VA is QTC’s biggest customer, the company also does similar exams for other government agencies and private insurers.
According to its Web site, QTC owns and operates 31 medical evaluation facilities around the country and has produced “more than 2.5 million” medical exams and reports.
Principi, who was deputy VA secretary and acting secretary under former President Bush, also served as Republican chief counsel and staff director of the Senate Armed Services Committee a decade ago.
Principi graduated from the U.S. Naval Academy at Annapolis, Md., and is a veteran of the Vietnam War. He was a partner in the San Diego law firm of Luce, Forward, Hamilton and Scripps, according to his White House biography.
In 1996 he was named chairman of a congressional task force to investigate veterans’ problems. His panel produced recommendations that included a standardized, comprehensive physical exam for outgoing military personnel.
That recommendation by Principi’s task force eventually would lead to exams conducted outside the VA by private contractor QTC.
The Southern California company began its relationship with the VA in 1998, conducting disability medical exams under a congressionally authorized pilot program. Principi joined the company in 1999.