This story has been updated.

The Merit Systems Protection Board has overturned the Veterans Affairs Department’s decision to demote Kimberly Graves, a former senior executive accused of using her position for personal gain.

The reversal means that Graves, the former director of the Veterans Benefits Administration’s St. Paul, Minn., regional office, will be reinstated to the Senior Executive Service. An MSPB administrative judge issued the oral decision on Wednesday after a hearing in Chicago; the court transcript of the ruling should be available on MSPB’s website by Friday. A decision on whether to uphold or overturn the demotion of Diana Rubens, former director of VBA’s Philadelphia office, is still pending, but will be announced by Feb. 1.

It’s not yet clear what the MSPB judge’s rationale was for reversing the department’s decision.

“Ms. Graves is happy the action was reversed, and she looks forward to continuing her life’s work serving veterans,” said Graves’ attorney Julia Perkins, a partner at law firm Shaw Bransford & Roth.

VA officials demoted Graves and Rubens formally on Jan. 6 from the SES to General Schedule jobs, and reassigned them to assistant director positions at the VBA’s Houston and Phoenix regional offices, respectively. Those demotions came with pay cuts of more than $50,000 each: Rubens’ annual salary decreased from $181,497 to $123,775, Graves’ annual salary fell from $176,558 to $122,932. They appealed that decision to MSPB earlier this month.

Under the 2014 Veterans Access, Choice and Accountability Act, the VA can fire or demote SES employees immediately, with paychecks getting cut off the day of termination. The affected executive has seven days to issue an appeal to MSPB, which in turn has 21 days for an expedited adjudication. That deadline is Monday.

The law says that MSPB is the final word in such cases, but it’s possible that Rubens could decide to take the matter further if she isn’t happy with the board’s decision. Sharon Helman, the former career senior executive who ran VA’s Phoenix health care system when the scandal over falsifying wait lists erupted in 2014, is challenging her removal under the 2014 Choice Act in the U.S. Court of Appeals for the Federal Circuit.

The MSPB in December 2014 upheld VA’s decision to fire Helman because she improperly accepted more than $13,000 in gifts from a lobbyist and failed to report them -- not because she engaged in misconduct related to manipulating data to conceal excessive wait times for vets seeking health care. The board said the VA failed to adequately prove its case in the latter matter. Helman is arguing that the 2014 Choice Act, the law the VA used to fire her, violated her due process rights.

The outcome of the Helman case, which is awaiting a trial date, could determine how future disciplinary actions against VA senior executives are handled under the 2014 Choice Act. And the reversal on Graves’ demotion likely will make waves among lawmakers, senior executives, and the veteran community.

In September, the VA inspector general concluded the two improperly helped create vacancies at their respective offices and volunteered to fill them. The two employees occupying the Philadelphia and St. Paul director jobs at the time were relocated to jobs they did not volunteer for to make room for Rubens and Graves, who were working elsewhere at the time in positions with more responsibility, according to the watchdog. VA paid roughly $274,000 in relocation expenses for Rubens, and about $129,000 for Graves, for a total of more than $400,000.

VA’s decision to demote and not fire Rubens and Graves added more tension to an already hot debate over firing in the federal government. Many lawmakers of both parties and other observers are frustrated with the department’s inability to quickly shed poor performers or those engaged in misconduct. The 2014 Choice Act makes it easier for the department to fire and demote senior executives, but some believe VA isn’t using the new authority adequately. (Department officials used that authority to demote Rubens and Graves.) Critics of the expedited firing authority say it violates career employees’ due process rights.

VA Deputy Secretary Sloan Gibson has been emphatic about the importance of following due process and evidence in disciplinary actions against employees. During a Dec. 9 hearing before the House Veterans' Affairs Committee, he defended his decision to demote and reassign rather than fire Rubens and Graves. The evidence against the two did not warrant firing, or the IG’s criminal referral to the Justice Department, Gibson argued.

“I’m not going to recommend, I’m not going to propose a disciplinary action that is based upon media coverage, or an opinion that is expressed in the IG report, if it is not supported by the evidence,” he said, adding that he knew his decision not to fire Rubens and Graves wasn’t going to “sit well, with virtually everybody.”