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Department of Veterans Affairs
Office of General Counsel
Washington, DC 20420
O.G.C. Advisory 1-91
January 28, 1991
VA District Counsel (344/02)
11000 Wilshire Blvd.
Los Angeles, California 90024
SUBJ: Supplementation of Salaries through VA Non-Profit Research
Corporations
1. You have asked whether VA non-profit research corporations
(VANRC) can disburse salary checks to VA employees. More
specifically, you ask (a) whether full-time VA physicians or other
employees may work for a VANRC during off-duty hours and receive
compensation exceeding their total negotiated salaries, and (b)
whether VA physicians may obtain a portion of their total negotiated
salary from NIH or private research grants. You advise that "total
negotiated salary" (TNS) refers to a physician's VA pay plus pay from
the affiliated university.
2. Additional salary from the affiliated university for university
duties lawfully cannot be a part of the physicians VA salary,
although it may be an important aspect of the physician's total
compensation in the context of recruitment and retention. This
additional pay must be for outside employment and, consequently, is
subject to the strictures of 38 U.S.C. 4108(a), 38 C.F.R. 0.735-12,
and MP-5 Part II, Chapter 13, Outside Professional Activities, and
the DM&S Supplement thereto. Those strictures generally prohibit
full-Lime VA physicians from assuming primary responsibility for
non-VA patients' continuing medical care, prohibit outside activities
conflicting with official duties, and permit only limited outside
professional activities for remuneration, e.g., clinical teaching.
These same rules would apply to full-time physicians working for a
VANRC outside their VA employment. There is no dollar limit on lawful
outside employment.
3. Sections 4161-4168 of title 38, United States Code, govern
VANRC's. Sections 4161 and 4162 empower the Secretary to establish
nonprofit corporations at VA medical centers as flexible funding
mechanisms solely to support approved VA research projects. Section
4164(a) authorizes VANRC's to accept gifts and grants, to enter into
contracts, and to hire and pay employees in support of the research
mission. See also, VA Circular 10-89-99, Nonprofit Research
Corporations. VA employees involved with VANRC's and NRC employees
are subject to Federal employee conflict of interest laws and
regulations. 38 U.S.C. 4166(c).
4. As a funding mechanism, the VANRC's administer funds received
from grants and gifts from, and contracts with, for-profit companies,
charitable foundations, other Federal agencies (e.g., PHS, NIH),
professional societies or other nonprofit entities, and individuals,
in support of approved VA research projects. VA circular 10-89-90.
Because VA research support is the sole purpose of VANRC's, they may
not administer funds other than research funds, and they may not
administer funds for any other purpose.
Thus, to the extent the university funds in question support
approved VA research projects, including related educational
purposes, the VANRC's may receive and administer the funds; to the
extent the funds are unrelated to approved VA research projects,
e.g., they constitute faculty stipends only, the VANRC's lack
authority to receive and administer them.
5. With respect, therefore, to your questions, neither VA
standards of conduct nor the research corporation law is inconsistent
with VA physicians' working for the corporation during off-duty
hours, and nothing prevents the corporation from paying them for work
the corporation may lawfully assign its employees. Further, there is
no limit on the dollar amount of any such compensation, and whether
the amount is considered a part of what you refer to as TNS does not
affect the lawfulness of this employment or the compensation.
Further, because NIH and private research grants are both sources
from which research corporations may lawfully accept funds, it would
not be unlawful for the compensation that a VA physician receives for
employment with a VA research corporation to be derived from NIH or
private grants.
6. With respect to protection under the Federal Tort Claims Act
for actions involving patient care and treatment, VA employees
working on approved VA research projects under the auspices of a VANRC, would be covered by the Act, subject to certification by the
Attorney General, because they would be acting within the scope of
their official duties. To the extent, however, they work directly for
a VANRC, they would not be acting within the scope of their official
duties and, thus, would be outside the scope of the Act's
protections. VA Circular 10-89-99, para.4j. See 28 U.S.C. 2679(b); 38 U.S.C. 4116(a).
7. Thus, in response to your specific questions: (a) full time VA
physicians or other employees may work for and be compensated by a
VANRC during off-duty hours, irrespective of their "TNS," subject to
the legal strictures on outside employment; and (b) funds from NIH or
private research grants may be used, through a VANRC, to pay VA
physicians the non-VA portion of TNS for work performed for a VANRC,
but not their faculty salaries.
Raoul L. Carroll
General Counsel
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