Fraud depleting funds of PhilHealth – Lacson

Senator Panfilo Lacson–PHOTO BY JOAN BONDOC

MANILA, Philippines — Philippine Health Insurance Corp. (PhilHealth) incurred a net operating loss of P29.1 billion in 2013-2017 due to fraudulent benefit claims and other misdeeds by senior health officials, Sen. Panfilo Lacson claimed on Monday.

In a 42-minute privilege speech, Lacson said audit reports from the Commission on Audit (COA) showed that overpayments and similar schemes adopted by corrupt PhilHealth officials might have defrauded the state insurance company of as much as P154 billion, leaving it “bleeding dry.”

He also cited allegedly irregular contracts that the Department of Health (DOH) had entered into, including at least five supply agreements with a pharmaceutical company owned by the family of Health Secretary Francisco Duque III.

The senator reiterated that the supply contracts awarded to Doctors Pharmaceuticals Inc. (DPI) flouted the law prohibiting conflict of interest among public officials as two of these agreements lasted until December 2017, or almost two months after Duque was appointed by President Duterte to head the DOH.

Duque sits as ex-officio chair of PhilHealth.

Former CSC chair

“As a former chairman of the Civil Service Commission (CSC), Secretary Duque, more than many of us, should know by heart the code of conduct and ethical standards for public officials,” Lacson said.

“Is it not incumbent upon Secretary Duque to exercise professionalism and ethical standards by stopping all dealings of his family’s corporation with the very government agency that he heads?” he asked.

“Amid these shenanigans, it behooves public servants, let alone the secretary of health, to rid himself of conflict of interest and put the interest of the people above everybody else. Nothing else will suffice,” he said.

No meddling, impropriety

Duque maintained on Monday that he had “not meddled” in DPI affairs and operations because he had divested himself of his stake in the company 13 years ago.

“I have totally disassociated myself since 2006,” he told the Inquirer.

Because the details raised by Lacson in his privilege speech were “very operational and technical,” Duque said it might be best for the lawmaker to refer these to the company’s officials.

He denied any impropriety in the contracts entered into by DPI with the DOH as these were signed during the term of his predecessor, Paulyn Ubial.

As for the contract package (December 2016 to December 2017) that coincided with his assumption as health chief in November 2017, Duque said he could not just terminate it, as doing so might have “legal implications.”

The Inquirer reported on Monday that official documents showed that DPI had won several multimillion-peso contracts from the DOH for the supply of medicines for public hospitals.

Company board

Records from the Securities and Exchange Commission (SEC) in 2018 listed Duque’s brother, Cesar T. Duque, as chair of DPI, and their sister, Dr. Luz Duque-Hammershaimb, as president.

Also on the DPI board were Joyce Ma. Duque, Leon S. Guerrero and Ma. Theresa SP. Castro. The health secretary himself served as a director of the company in 1996.

“PhilHealth is bleeding dry, and the Commission on Audit has raised red flags to call our attention,” Lacson told the Senate. “It seems to me that year in, year out, its financial deficit spirals out of control.”

He said the fund viability, membership, collections and investments of the agency were not looking good, and PhilHealth’s Actuarial Valuation Report of 2016 showed the public a clear picture.

Lacson said the report mentioned that PhilHealth “will go through difficult times and will encounter crisis if the recommendations will not be implemented.”

Substantiating his accusation of conflict of interest against Duque, Lacson said another company owned by the health secretary and his siblings, Educational and Medical Development Corp. (EMDC), had lease contracts with PhilHealth for its building in Dagupan City.

PhilHealth officials earlier admitted that the company rented the office building for its regional headquarters in January 2018, or three months after Duque assumed office as health secretary.

No divestment

SEC records, Lacson said, showed that Duque was only “on leave” from EMDC and did not divest himself of his business interest in the company when the lease contract was signed.

“Clearly, at the time PhilHealth was paying sums for lease payments to the Duque-owned building, Duque directly held concurrent positions in their family corporation and high-rank government posts, which created an undeniable conflict of interest,” he said.

“If the case of the Duque family-owned EMDC is not a case of conflict of interest, I do not know what else to call it,” Lacson said.

“I say with no reservation: Corrupt public officials have no place on Earth. But corrupt officials stealing health funds deserve an upgraded and super special suite in hell,” he added.

Asked why Lacson appeared to be going after him, Duque surmised that this may be due to the strong words uttered by his brother Gonzalo at the time that the dealings of another family-run firm with PhilHealth was questioned by the senator.

Malacañang named on Monday Gonzalo administrator of the Philippine Coconut Authority. (See story on this page.)

Willing to sit down

The health secretary said he was willing to sit down with Lacson to discuss his concerns, but noted that he already made attempts in the past “to no avail.”

Lacson also assailed former PhilHealth president Roy Ferrer for justifying overpayments as part of the agency’s scheme to help medical centers to “win some and lose some.”

In one such case, the COA reported that PhilHealth released P5 million for Bondoc Peninsula District Hospital despite that fact that it only asked for P200,000 from the health insurance firm.

“Between you and me, this justification is nothing but an afterthought; and it insults our common sense,” he said.