NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS NOV 17 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
ROBERT MCLAFFERTY, No. 22-35068
Petitioner-Appellant, D.C. No. 3:20-cv-01487-MO
v. MEMORANDUM* DEPARTMENT OF VETERANS AFFAIRS; et al.,
Respondents-Appellees.
Appeal from the United States District Court for the District of Oregon Michael W. Mosman, District Judge, Presiding
Argued and Submitted October 18, 2023 Portland, Oregon
Before: KOH and SUNG, Circuit Judges, and EZRA,** District Judge.
Dr. Robert McLafferty appeals the district court’s grant of summary
judgment in favor of the Department of Veterans Affairs (“the VA”) and the denial
of Dr. McLafferty’s motion for summary judgment. This court reviews the district
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable David A. Ezra, United States District Judge for the District of Hawaii, sitting by designation. court’s summary judgment rulings de novo. See Native Ecosystems Council v.
Dombeck, 304 F.3d 886, 891 (9th Cir. 2002). We have jurisdiction under 28
U.S.C. § 1291. The district court properly granted summary judgment for the VA,
so we affirm.
1. Procedural Irregularities. “[A] covered individual” who is removed
from a senior executive position is entitled to “a file containing all evidence in
support of the proposed action.” 38 U.S.C. § 713. The VA provided to Dr.
McLafferty the VA’s complete evidence file in support of Dr. McLafferty’s
termination and did not rely on evidence outside that file. A VA doctor stated that
the VA only possessed the final determination from the Equal Employment
Opportunity Commission, which the VA provided to Dr. McLafferty.
Additionally, the Chief of Employee Relations/Labor Relations stated that the VA
provided all the documents it received from the Office of the Special Counsel
(“OSC”) to Dr. McLafferty. The VA had even requested the entire evidence file
from OSC, but OSC rejected that request. Thus, the VA provided Dr. McLafferty
with all the evidence it relied on in support of the action.
Additionally, the VA did not violate the termination and grievance
procedures outlined in the VA Handbook. This court may “set aside” the
termination if the termination was “obtained without procedures required by a
provision of law having been followed.” 38 U.S.C. § 713(b)(6)(B). VA
2 employees who are subject to termination are entitled to “grieve the action in
accordance with an internal grievance process,” and the VA established the
internal grievance process in the VA Handbook. 38 U.S.C. § 713(b)(1)(C).
Dr. McLafferty alleges the VA disregarded several provisions of the VA
Handbook. First, Dr. McLafferty alleges that the VA violated Section 7(e), which
states that grievances will be referred to an examiner for inquiry within ten days of
the decision official’s receipt of the formal grievance. Dr. McLafferty states that
he was notified later than ten days after the official’s receipt of his grievance. But
Section 7(e) only speaks to the timeline for referral, not notification to the grievant.
Therefore, the VA did not violate Section 7(e) by taking longer than ten days to
notify Dr. McLafferty.
Dr. McLafferty also misinterprets the language of Section 12(e), which
states that the grievance examiner will prepare a report, submit that report to the
decision official, and furnish a copy of the report to the employee and the
employee's representative. The examiner did furnish the copy of the report to Dr.
McLafferty. Dr. McLafferty only complains that it was not delivered at the same
time that it was delivered to the decision official. Yet nothing in the language of
Section 12(e) requires that the furnishment be simultaneous. The VA therefore did
not violate Section 12(e).
Dr. McLafferty next complains that the examiner and deciding official’s
3 delays in issuing reports violated Sections 12(f) and 13(b), respectively. These
delays were permissible. Under Section 5(c) of the VA Handbook, delays are
allowed if they are explained to the employee. The VA explained the delays to Dr.
McLafferty. Dr. McLafferty also approved extensions at various points.
Lastly, McLafferty’s notification of the appointment of an examiner via
email, rather than a copy of the request letter, as required by Section 12(a)(2)(d),
was harmless. Nat. Res. Def. Council v. U.S. Forest Serv., 421 F.3d 797, 807 (9th
Cir. 2005) (stating that an administrative body’s error is harmless when the mistake
“clearly had no bearing on the procedure used or the substance of [the] decision
reached”).
2. Conflict of Interest Finding. A court may set aside a VA action that is
unsupported by substantial evidence. 38 U.S.C. § 713(b)(6)(C). This review is
deferential and requires only “such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion.” Magallanes v. Bowen, 881 F.2d 747,
750 (9th Cir. 1989) (internal quotation marks omitted). A prohibited conflict of
interest for a government employee occurs when the employee participates
“personally and substantially in an official capacity in any particular matter in
which, to his knowledge, he . . . has a financial interest, if the particular matter will
have a direct and predictable effect on that interest.” 5 C.F.R. § 2635.402(a). An
employee of an organization has an imputed financial interest in that organization.
4 5 C.F.R. § 2635.402(b)(2)(iv). Section 8 of the VA Handbook’s chapter on
conflicts of interest also specifically states that “if the physician or clinician has a
faculty appointment and receives any compensation, or is under the direction of the
school, the physician or clinic has at least an imputed financial interest in VA
contracts with the school.” Therefore, Dr. McLafferty had a financial interest in a
VA contract with Oregon Health Sciences University (“OHSU”).
Substantial evidence supports the finding that Dr. McLafferty personally and
substantially participated in the recommendation and negotiation of the OHSU
contract. “Personal and substantial participation may occur when . . . an employee
participates through . . . recommendation, investigation, or the rendering of advice
in a particular matter.” 5 C.F.R. § 2635.402(b)(4). Dr. McLafferty encouraged
another Portland VA doctor, Dr. Thomas Anderson, to contract with OHSU,
stating that he believed a contract with OHSU would be preferable. Additionally,
Dr. Wheatley testified that Dr.
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NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS NOV 17 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
ROBERT MCLAFFERTY, No. 22-35068
Petitioner-Appellant, D.C. No. 3:20-cv-01487-MO
v. MEMORANDUM* DEPARTMENT OF VETERANS AFFAIRS; et al.,
Respondents-Appellees.
Appeal from the United States District Court for the District of Oregon Michael W. Mosman, District Judge, Presiding
Argued and Submitted October 18, 2023 Portland, Oregon
Before: KOH and SUNG, Circuit Judges, and EZRA,** District Judge.
Dr. Robert McLafferty appeals the district court’s grant of summary
judgment in favor of the Department of Veterans Affairs (“the VA”) and the denial
of Dr. McLafferty’s motion for summary judgment. This court reviews the district
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable David A. Ezra, United States District Judge for the District of Hawaii, sitting by designation. court’s summary judgment rulings de novo. See Native Ecosystems Council v.
Dombeck, 304 F.3d 886, 891 (9th Cir. 2002). We have jurisdiction under 28
U.S.C. § 1291. The district court properly granted summary judgment for the VA,
so we affirm.
1. Procedural Irregularities. “[A] covered individual” who is removed
from a senior executive position is entitled to “a file containing all evidence in
support of the proposed action.” 38 U.S.C. § 713. The VA provided to Dr.
McLafferty the VA’s complete evidence file in support of Dr. McLafferty’s
termination and did not rely on evidence outside that file. A VA doctor stated that
the VA only possessed the final determination from the Equal Employment
Opportunity Commission, which the VA provided to Dr. McLafferty.
Additionally, the Chief of Employee Relations/Labor Relations stated that the VA
provided all the documents it received from the Office of the Special Counsel
(“OSC”) to Dr. McLafferty. The VA had even requested the entire evidence file
from OSC, but OSC rejected that request. Thus, the VA provided Dr. McLafferty
with all the evidence it relied on in support of the action.
Additionally, the VA did not violate the termination and grievance
procedures outlined in the VA Handbook. This court may “set aside” the
termination if the termination was “obtained without procedures required by a
provision of law having been followed.” 38 U.S.C. § 713(b)(6)(B). VA
2 employees who are subject to termination are entitled to “grieve the action in
accordance with an internal grievance process,” and the VA established the
internal grievance process in the VA Handbook. 38 U.S.C. § 713(b)(1)(C).
Dr. McLafferty alleges the VA disregarded several provisions of the VA
Handbook. First, Dr. McLafferty alleges that the VA violated Section 7(e), which
states that grievances will be referred to an examiner for inquiry within ten days of
the decision official’s receipt of the formal grievance. Dr. McLafferty states that
he was notified later than ten days after the official’s receipt of his grievance. But
Section 7(e) only speaks to the timeline for referral, not notification to the grievant.
Therefore, the VA did not violate Section 7(e) by taking longer than ten days to
notify Dr. McLafferty.
Dr. McLafferty also misinterprets the language of Section 12(e), which
states that the grievance examiner will prepare a report, submit that report to the
decision official, and furnish a copy of the report to the employee and the
employee's representative. The examiner did furnish the copy of the report to Dr.
McLafferty. Dr. McLafferty only complains that it was not delivered at the same
time that it was delivered to the decision official. Yet nothing in the language of
Section 12(e) requires that the furnishment be simultaneous. The VA therefore did
not violate Section 12(e).
Dr. McLafferty next complains that the examiner and deciding official’s
3 delays in issuing reports violated Sections 12(f) and 13(b), respectively. These
delays were permissible. Under Section 5(c) of the VA Handbook, delays are
allowed if they are explained to the employee. The VA explained the delays to Dr.
McLafferty. Dr. McLafferty also approved extensions at various points.
Lastly, McLafferty’s notification of the appointment of an examiner via
email, rather than a copy of the request letter, as required by Section 12(a)(2)(d),
was harmless. Nat. Res. Def. Council v. U.S. Forest Serv., 421 F.3d 797, 807 (9th
Cir. 2005) (stating that an administrative body’s error is harmless when the mistake
“clearly had no bearing on the procedure used or the substance of [the] decision
reached”).
2. Conflict of Interest Finding. A court may set aside a VA action that is
unsupported by substantial evidence. 38 U.S.C. § 713(b)(6)(C). This review is
deferential and requires only “such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion.” Magallanes v. Bowen, 881 F.2d 747,
750 (9th Cir. 1989) (internal quotation marks omitted). A prohibited conflict of
interest for a government employee occurs when the employee participates
“personally and substantially in an official capacity in any particular matter in
which, to his knowledge, he . . . has a financial interest, if the particular matter will
have a direct and predictable effect on that interest.” 5 C.F.R. § 2635.402(a). An
employee of an organization has an imputed financial interest in that organization.
4 5 C.F.R. § 2635.402(b)(2)(iv). Section 8 of the VA Handbook’s chapter on
conflicts of interest also specifically states that “if the physician or clinician has a
faculty appointment and receives any compensation, or is under the direction of the
school, the physician or clinic has at least an imputed financial interest in VA
contracts with the school.” Therefore, Dr. McLafferty had a financial interest in a
VA contract with Oregon Health Sciences University (“OHSU”).
Substantial evidence supports the finding that Dr. McLafferty personally and
substantially participated in the recommendation and negotiation of the OHSU
contract. “Personal and substantial participation may occur when . . . an employee
participates through . . . recommendation, investigation, or the rendering of advice
in a particular matter.” 5 C.F.R. § 2635.402(b)(4). Dr. McLafferty encouraged
another Portland VA doctor, Dr. Thomas Anderson, to contract with OHSU,
stating that he believed a contract with OHSU would be preferable. Additionally,
Dr. Wheatley testified that Dr. McLafferty thwarted Dr. Wheatley’s efforts to
maintain a call contract with anyone other than OHSU. In his expectations memo
to Dr. Wheatley, and in Dr. Wheatley’s review, Dr. McLafferty specifically
outlined the need for Dr. Wheatley to secure a call contract with OHSU. A
reasonable mind could accept these facts as adequate to establish that Dr.
McLafferty recommended OHSU to the VA, a prohibited practice.
Substantial evidence also supports the finding that Dr. McLafferty
5 negotiated with OHSU, a practice prohibited by the VA Handbook. Dr.
McLafferty conversed directly with OHSU personnel about the call contract,
telling one OHSU employee that he was “disappointed” that he could not “finagle”
a preferable contract option for OHSU. He discussed specific terms in this email
exchange. He also told OHSU that the contract could provide OHSU “some
income that is pretty low maintenance.”
Even if Dr. McLafferty’s supervisors directed him to negotiate with OHSU,
as he alleges, the VA Handbook is clear that employees with an imputed financial
interest are prohibited from negotiating contracts. Dr. McLafferty could have
negotiated if he had waived his disqualification by following the procedures
outlined in 5 C.F.R. § 2635.402(d). However, Dr. McLafferty did not assert that
he followed any of the listed procedures to obtain an exemption. The Handbook
also states that the VA “requires a written opinion from Regional Counsel that an
‘affiliated’ physician or clinician may lawfully participate in the contract before
participation occurs.” Dr. McLafferty obtained no such opinion. As a result, there
is substantial evidence that Dr. McLafferty engaged in a prohibited conflict of
interest when he recommended and negotiated a contract in which he had an
imputed financial interest.
3. Retaliation Finding. Substantial evidence also supports the VA’s finding
that Dr. McLafferty retaliated against Dr. Wheatley in a June 2014 Service Chief
6 Evaluation. Section 2302 prohibits “any employee who has authority” from taking
any personnel action against an employee for exercising a grievance. 5 U.S.C. §
2302(b)(9). The June 2014 Service Chief Evaluation could qualify as a personnel
action. Mangano v. United States, 529 F.3d 1243, 1247 (9th Cir. 2008) (stating
that the “definition of ‘personnel action’ is, necessarily, broad.”); see also Babb v.
Wilkie, 140 S. Ct. 1168, 1173 (2020) (stating that Section 2302 covers
“performance reviews”).
In Dr. McLafferty’s Service Chief Evaluation of Dr. Wheatley, Dr.
McLafferty reported Dr. Wheatley’s March 2014 suspension, despite knowing that
the suspension was not reportable for any purpose. Dr. McLafferty also issued the
evaluation one month after he found out that Dr. Wheatley had filed an EEO
complaint against him, an event that Dr. McLafferty said upset or bothered him.
These facts allow a reasonable mind to conclude that the June 2014 evaluation was
a prohibited, retaliatory action against Dr. Wheatley.
4. Termination as a sanction. This court’s review of the choice of
sanction in an agency personnel decision is “extremely limited.” McClaskey v.
U.S. Dep’t of Energy, 720 F.2d 583, 586 (9th Cir. 1983). The court should defer to
the agency’s judgment unless the penalty is “so harsh or disproportionate to the
offense as to constitute an abuse of discretion.” Id. (citing Debose v. U.S. Dep’t of
Agric., 700 F.2d 1262, 1269 (9th Cir. 1983)). The penalty of dismissal should be
7 disregarded only when the violation is “extremely minor.” Id. Dr. McLafferty’s
violations are not extremely minor, as termination is within the range of suggested
remedies in the VA Handbook for these violations. Therefore, the VA did not
abuse its discretion by terminating Dr. McLafferty.
AFFIRMED.