PhilHealth probe cites ‘clear case of malversation’

A lawmaker on Thursday said Philippine Health Insurance Corp. (PhilHealth) officials should be charged with malversation for using corporate funds to pay for withholding taxes on cash advances to private hospitals.

During a joint hearing called by the committees on good government and public accountability of the House of Representatives, Surigao del Norte Rep. Robert Ace Barbers expressed disgust over the admission of Renato Limsiaco Jr., PhilHealth senior vice president for fund management sector, that the state-run health insurer failed to deduct P156 million in withholding taxes from payments released to private hospitals under the company’s controversial interim reimbursement mechanism (IRM).

Limsiaco said PhilHealth used its corporate funds to cover the obligation and remitted the taxes to the Bureau of Internal Revenue.

‘Clear case of malversation’

“So this is another clear case of malversation. [PhilHealth members] are being fried in their own fat,” Barbers said.

Top PhilHealth officials have gone on leave and the Ombudsman has suspended 15 others while the government is investigating alleged corruption that has cost the public health insurer billions of pesos since 2013.

A resigned graft buster told Senate investigators recently that PhilHealth lost P15 billion last year alone in fraudulent operations involving key company officials.

The Department of Justice (DOJ) is leading an interagency investigation into the allegations, including fraudulent claims and alleged favoritism in the payment of advances to hospitals.

The scandal has compelled PhilHealth to suspend payments from the P30-billion special fund.

On Thursday, Health Secretary Francisco Duque III, ex-officio chair of PhilHealth, ordered the company’s management to review the payments program in light of issues raised by Senate and House investigators.

“Confusion has arisen from the circulars issued in the haste to readily provide the needed financial support to health-care institutions during the pandemic,” Duque said in a statement. “Let us look into any loopholes and clarify procedures to ensure that the issues raised are responded to.”

He also reminded the PhilHealth management to make sure that the payments of advances to hospitals are “systematic, clear and meritorious” in the light of the allegation of favoritism raised in the congressional inquiries.

Duque also assured the public that despite the suspension of the program, people can still receive PhilHealth benefits, including COVID-19 coverage.

Faraway banks

In the House of Representatives, Limsiaco, under questioning by Barbers, said PhilHealth should deduct a 2-percent withholding tax from the payments to private hospitals handling COVID-19 cases. The payments began in March, Limsiaco said.

PhilHealth has released P14.9 billion in payments to hospitals, P7.8 million of which was paid to private hospitals, he said.

Barbers pointed out an alleged “pattern” in PhilHealth where payments to the agency were “mysteriously” deposited in banks located far from receiving PhilHealth branch offices.

He cited a case in 2010 where P100 million in remittances from Accenture Philippines was recorded to have been remitted to PhilHealth, but the deposit was traced to a private account in a Metrobank branch in Batangas province.

“There are stories that after this incident, two of the [bank’s employees] were killed. I don’t know if these are connected, but these are also worth looking into,” Barbers said.

In a recent case, he said, money supposedly paid to B. Braun Avitum Philippines Inc. was traced to a bank account in Balanga City, Bataan province.

In both cases, Barbers linked Rodolfo del Rosario Jr., PhilHealth senior vice president for legal affairs.

“There seems to be a pattern here, and lo and behold, the person involved is still Attorney Del Rosario,” Barbers said.

Del Rosario’s denial

Del Rosario, who appeared in the joint hearing by video conferencing after the lawmakers threatened to cite PhilHealth officials in contempt over unjustified absence, denied involvement in the irregularity.

He said the Accenture “mess” was discovered in December 2011, nearly a month after he was designated as head of the PhilHealth legal department.

“So I was barely one month in my position when this scam came about,” Del Rosario said, adding: “This modus [operandi] has been [going on] for the past two years before I was designated as [officer in charge].”

Del Rosario said he was not part of the investigation but served as one of the witnesses.

At the DOJ investigation, three senior PhilHealth officials faced probers on Thursday.

Undersecretary Markk Perete, spokesperson for the DOJ, said Senior Vice President and Chief Information Officer Jovita Aragona, Corporate Secretary Jonathan Mangaoang, and acting Senior Manager of the Fact-Finding Investigation and Enforcement Division Ernesto Barbado answered questions about alleged irregularities at PhilHealth.

Perete said Aragona admitted to the inability of the information technology systems of PhilHealth to detect fraudulent claims. She identified the segments of the company’s validation processes that are still done manually.

Aragona, Perete said, clarified that an allegedly overpriced purchase of switches for an IT project was a transaction of PhilHealth’s regional office in Metro Manila. She called for an investigation of that office, Perete said.

Board approved fund

Perete said Mangaoang, who was earlier tagged by PhilHealth board member Alejandro Cabading as part of the “mafia” in the company, told the investigators that the special fund for reimbursements was proposed in January to ensure that hospitals remained financially viable during emergencies and fortuitous events. The fund was approved by the PhilHealth board following an opinion submitted by the company’s legal department, Mangaoang said.

Perete said Barbado asked the investigators to look into fictitious claims that had been investigated by his division. —WITH REPORTS FROM TINA G. SANTOS AND JEROME ANING