After a Department of Veterans Affairs (VA) leader was linked to records falsification, abuse of authority, tax evasion and whistleblower retaliation, the agency’s inspector general and an in-house disciplinary board both recommended that the official, Lucy Filipov, be fired.

Instead, the department paid her a financial settlement, promised not to discipline her, and even gave immunity for undiscovered misconduct that might emerge in the future. It addition, it gave her a “fully successful” job recommendation, promised her a positive letter of reference for future employment, allowed her to remain employed, and work from home.

The about-face indicates that the VA not only lacks the ability to discipline misbehaving managers, but shows it doesn’t even want to. It is perhaps the most astounding example of the VA quickly agreeing to “settle” with employees who are targeted for discipline and then threaten to drag the agency through the appeals process, such as the Merit Systems Protection Board (MSPB).

Filipov hired a lawyer, indicating she was prepared to make the firing difficult for the VA, but there is no public record that she even launched an MSPB appeal. Even if she did, only about one percent of people win such appeals. Despite such weak leverage, the VA promptly agreed to pay for her lawyer, drop the firing, compensate her with 137 hours of pay, and give her a positive performance rating and a letter of recommendation that would misleadingly tell any future employers that she was a good employee.

“There was an inspector general report and [administrative investigative board], both said this person should be terminated, and this is what the settlement ended up being,” Rep. Jeff Miller, chairman of the House Veterans Affairs Committee, said, revealing the settlement in a hearing Wednesday.

“This is for a person that was recommended for removal. I just don’t understand how it could go from removal to all of this, and they were charged with retaliating against whistleblowers.”

Miller did not identify Filipov, but The Daily Caller News Foundation has independently confirmed her identity.

Filipov became assistant VA Regional Office Director of the Philadelphia benefits office in 2011 and acting director for many periods in the following years.

An April 2015 inspector general report found that the office “cooked the books” to manipulate wait times to misrepresent how long veterans had to wait to get benefits —  the VA said the delays were because the office was “inefficient” and “disorganized.” The report “evaluated more than 100 allegations and complaints … Allegations of wrongdoing at the Philadelphia VARO included gross mismanagement of VA resources.”

“We substantiated allegations involving data integrity concluding that Veterans Benefits Administration guidance for adjusting dates of claims for unadjudicated claims had been misapplied… management within the [Veterans Service Center] was aware of the situation, but did nothing to stop the actions,” the IG report stated.

Willie Clark, VBA eastern area director, responded to the report that he told Filipov “this type activity will not be condoned or tolerated in this agency.”

The agency then conducted an in-house disciplinary investigation separate from the inspector general, and it, according to Miller, concluded that Filipov should be fired.

“On July 10, 2015, eight Philadelphia VA Regional Office employees received proposed disciplinary actions related to the June 30th AIB, ranging from a 14-day suspension to removal,” a VA statement in January 2016 said.

But by that time, it had already agreed to drop its attempt at firing her, and to grant her the additional concessions, in exchange for her agreeing not to file complaints against the VA and to accept a different job.

Settlements “are not unusual, but it is unusual when you’ve got someone dead to rights to do it,” Cheri L. Cannon, a federal employment lawyer with Tully Rinckey, told TheDCNF. 

Filipov is a now a GS-13 insurance specialist in the insurance service. She works from home three days a week, has no background in insurance qualifying her for the job — the job was created for her as part of the settlement — and employees said they can’t figure out what she does. 

Cannon added that the demotion likely didn’t even mean a pay cut. “If you’re involuntarily downgraded, you [retain] your pay for two years,” she said.

Much of the settlement appears designed to keep her on the payroll for perpetuity without having to go to work. The purpose of the positive evaluation and clean disciplinary record were because she is now covered under union rules, which say an employee can only work from home if they have a good record.

The 137 hours of pay was because she was sitting at home on paid leave for six months — essentially a paid vacation — and thus had no need to use her vacation time, which expired at the end of the year. She wanted to be compensated for that.

Filipov has been involved in numerous confirmed instances of misconduct. For example, she was separately found, according to the IG report, to have “misused her position for the private gain of a subordinate” by steering business to a colleague’s spouse — the VA only needed to get a few of the charges to stick to successfully fire her.

Lawyers pointed out that managers could have fired her even more easily if they had disciplined her for the many infractions in real-time, resulting in “progressive discipline.”

Filipov was also caught spying on congressional investigators. When Congress dispatched investigators to the Philadelphia benefits office to sort out the issues, she steered them a room rigged with live video and audio recording devices.

Then, in the bathroom, a congressional staffer found a yellow notebook with the notes that staff should “ignore” the congressional investigators, and one had a “stick up her ass.” Filipov was later seen with the notebook.

Also written and circled on the page were the names of two employees who had been whistleblowers.

At the congressional hearing Wednesday, the VA’s top lawyer, Leigh Bradley, could not muster a defense of the settlement, implying it must have occurred under different political leadership.

“I don’t know when this case took place, I can tell you that is antithetical to the leadership of Bob McDonald and Sloan Gibson,” she said, referring to the secretary and deputy secretary.

The settlement, however, occurred well into both men’s terms. Then, Bradley indicated that she actually was familiar with the case, but couldn’t discuss it publicly, citing privacy laws. (Ironically, among the violations uncovered in Philadelphia was that the claims office wasn’t at all protective of veterans’ private information.)

“I would very much like to, but I can’t do it in a public hearing,” she said.

Miller then said the committee had already requested and received a behind-the-scenes briefing on the matter, and that the VA’s only “answer was the department had to make a judgment call.”

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