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Rare disease at hospital raises concerns about VA health care

In July 2011 John Ciarolla died in a Department of Veterans Affairs hospital in Pittsburgh. His daughter, Maureen, was told that the cause of death was septic shock. But two years after he died, and after an extensive Centers for Disease Control and Prevention investigation, it was concluded that he actually died after contracting Legionnaires' disease at the hospital.

Ciarolla wasn't the only one—five other people died as well. And now CNBC has obtained emails that show hospital officials knew about the situation well before Ciarolla's death. One email shows that officials knew there was a 60 percent "positivity" rate of Legionella as far back as 2010.

For its part, the VA said it is "committed to consistently providing the high quality care our veterans have earned and deserve. The VA operates the largest integrated health care delivery system in the country, with over 1,700 sites of care."

But just last month, a Pittsburgh VA hospital employee, who agreed to talk to CNBC on the condition his identity be protected, provided a video that he shot in August in a variety of areas at the hospital that shows open sewage, dead bugs, leaky pipes and crumbling infrastructure right next to radiation therapy.

He said it's been like this for four years. "In the mechanical space adjacent to radiation therapy," he said. "Here we have a sewage pit, the room stinks and we have a water leak that's been leaking for a while."

For the past four years, despite the problems, the individuals running VA hospitals were reaping big rewards and bonuses. Mike Moreland, the regional director overseeing the VA Pittsburgh Healthcare System, accepted the government's highest civil service accolade—the presidential distinguished rank award earlier this year.

That award comes with $60,000 bonus that's on top of his $180,000 salary. And government data show that the VA paid more than $400 million in bonuses last year alone, while hospitals across the country, critics say, were in desperate need of repair and improvements.

After the Legionella outbreak in 2011, lawmakers have confirmed, the Pittsburgh VA said it would spend $10 million on remediation efforts, which the VA says have proven successful. But according to the same employee who showed CNBC the video of open sewage and dead bugs next to patient care areas, the problem still doesn't appear to be fixed.

A patient find his room at the Central Blind Rehabilitation Center at the Edward Hines Jr. VA Hospital.
Getty Images
A patient find his room at the Central Blind Rehabilitation Center at the Edward Hines Jr. VA Hospital.

The employee took the water samples from the public men's restroom faucet in a patient care area known as "23 hour" where veterans recover post operation and gave them to a special pathogens lab, run by two former Pittsburgh VA doctors, one of whom Moreland fired.

The results are stunning; the water samples tested positive for Legionella, the same disease-causing strain that caused the initial outbreak in 2011 that killed Ciarolla.

The VA also said this in a release Monday: "Each year, over 200,000 Veterans Health Administration (VHA) leaders and health care employees provide exceptional care to approximately 6.3 million Veterans and other beneficiaries. The VA health care system is consistently recognized by the joint Commission and numerous other external reviews as a top performer on key health care quality measures. We operate with unmatched transparency in public and private sector healthcare, fostering a culture that reports and evaluates errors in order to avoid repeating them in the future."

—By CNBC's Dina Gusovsky and Jeff Pohlman. Follow her on Twitter @DinaGusovsky.