Dr. Everett R. Rhoades, the first Indian to head the Indian Health Service, has been removed from that post pending the outcome of an investigation of how his daughter was awarded an IHS scholarship to Harvard University three years ago.
Until the investigation is finished, Rhoades has been reassigned as a special assistant in the office of Dr. Robert Graham, director of the Health and Human Services Department's Health Resources and Services Administration, which includes the IHS.
HHS Inspector General Richard P. Kusserow is investigating whether Rhoades acted improperly in permitting the scholarship to be awarded to his daughter Dorothy. The IHS administers a scholarship program for Indians pursuing health careers that will distribute about $6.5 million in the coming academic year. Rhoades' daughter received $16,055 in 1982 and $17,199 in 1983 from the competitive program.
According to the IG's preliminary findings, Rhoades was warned that his daughter had initially failed to achieve the required rating from the IHS examiners, and that she achieved it only when an additional examiner, who was called in 10 days later, gave her a higher score.
At the request of the Office of Government Ethics, the IG is also now investigating whether Rhoades improperly transferred Dr. James Felson, the IHS's chief medical officer, out of the agency after Felson raised objections to the scholarship award.
Rhoades had no comment yesterday, but his attorney, Eugene R. Fidell, said, "Dr. Rhoades has committed no wrongdoing. He took no steps to obtain favoritism for his daughter, and any special treatment of her scholarship application by IHS personnel would have been contrary to his instructions."
He said the allegation that Rhoades had taken action against Felson "is false."
Fidell said that Rhoades would not have any comment on the details until he received a copy of the IG's final report, which has not been completed yet, and of a letter that the ethics office sent HHS at Kusserow's request.
The ethics office's letter said that, based on its reading of Kusserow's preliminary findings, Rhoades had acted in a manner that brought "into question his judgment and management abilities."
In 1982, according to the IG's preliminary report, Rhoades' daughter sought an IHS scholarship for pre-medical studies at Harvard. On June 2 and 8, two IHS doctors reviewed her application. One gave her a score of 83 out of 100, while the other gave her an 85. The average, 84, was one point below the cutoff grade for scholarship recipients that year.
According to the IG's preliminary findings, a week later, Pierre Columbel, head of the IHS's human resources management branch, approached those handling the program and asked that the cutoff score be lowered because Rhoades' daughter had just missed it.
Several days later, Columbel told Felson and other IHS officials that he had called in a third examiner, who had given Rhoades' daughter a score of 88, which raised her average score above the cutoff level. According to the IG's preliminary report, the third rating sheet was initially dated June 18, 1982, but was altered to read June 8.
The report said Columbel had told the IG's staff that a third examiner was always used when children of headquarters staff had applied for scholarships. But the preliminary report said the IG's office could not substantiate the statement.
According to the preliminary findings, Felson and others told Rhoades of the developments and warned that they appeared to be preferential treatment. But, according to the findings, Rhoades took no steps to block the scholarship.
Rhoades, 53, became director of the IHS in 1982; he had served as a professor of medicine at the University of Oklahoma medical center.