Senate panel wants Duque, Morales, other execs sued over PhilHealth fund mess
MANILA, Philippines — The Senate Committee of the Whole has recommended the filing of charges against Health Secretary Francisco Duque III, recently resigned Philippine Health Insurance Corp. (PhilHealth) chief Ricardo Morales, as well as several top-ranking officials, over the alleged misuse of funds under the state-run agency’s emergency cash advance measure.
Senate President Vicente Sotto III, chair of the committee, reported out the panel’s findings during Tuesday’s plenary session following a series of hearings into fresh allegations of corruption within the agency.
“Any reform in personnel and its organization cannot come from within its ranks when all had been tainted with suspicion, through active participation or inaction, in the conspiracy to bankrupt PhilHealth of its funds and resources,” Sotto said in his speech.
One of the allegations of corruption raised during the Senate hearings involves the supposedly questionable release of funds under the corporation’s Interim Reimbursement Mechanism (IRM).
During one of the hearings, Senator Panfilo Lacson said a review of PhilHealth records showed a “pattern” that some hospitals, particularly private-owned, were favored in the distribution of IRM over state-owned hospitals.
In sponsoring the report on the floor, Sotto said the committee is recommending the filing of malversation and graft and corruption charges against Duque, Morales, resigned PhilHealth executive vice president and COO Arnel de Jesus, PhilHealth senior vice president (SVP) for fund management sector Renato Limsiaco, PhilHealth SVP for health financial policy sector Israel Francis Pargas, and other officials involved in the alleged “improper” and “illegal” implementation of the IRM.
The charges should be filed against them because of “their grave abuse of discretion or gross negligence in ascertaining the IRM beneficiary without valid criteria for distribution,” Sotto also said.
The IRM is an emergency cash advance measure of PhilHealth to provide hospitals with a crisis fund to respond to natural disasters, calamities as well as other unexpected events.
While the implementation of the IRM has earlier been suspended, PhilHealth maintained that the reimbursement mechanism is “legal and necessary” for the country’s COVID-19 response amid controversies and allegations of favoritism.
The Senate committee also found Duque, Morales, De Jesus, Limsiaco, and Pargas liable for the agency’s alleged failure to withhold tax liabilities of health care institutions that received IRM funds.
Because of this, PhilHealth had to temporarily shoulder the tax obligations of these facilities by using the agency’s funds to pay for the withholding taxes, Sotto noted.
P14B IRM funds ‘invalid, illegal’
The committee report noted that PhilHealth released over P14 billion of funds through the IRM from March to June this year.
Sotto, however, said that PhilHealth did not have “any legal justification” when they implemented the IRM as early as March.
This is because the standard operating procedures (SOP) on the release of the IRM funds were disseminated only on April 22, 2020, or a month after the memorandum circular on the IRM was issued on March 21, he pointed out.
Within the gap from the release of the IRM circular to the issuance of the SOP, 279 hospitals already received IRM funds, according to Sotto.
But the committee deemed the release of the funds to these hospitals as irregular since the SOP, which is a requisite document in the implementation of the IRM, was “belatedly enacted.”
“The IRM releases to these 279 hospitals prior to such time (April 22) were irregularly made as they did not have the SOP on how the same will be released and processed at that time,” Sotto said.
Further, he noted that before the IRM circular could take effect, it should first be published in a newspaper of general circulation and that three certified true copies had been furnished the Office of National Administrative Register (ONAR) of the UP Law Center.
But the IRM circular was only filed with ONAR on June 11, 2020, according to Sotto.
“This would mean that the IRM effectivity is deemed valid only on 11 June 2020. Thus, we submit that the total IRM releases amounting to [over P14 billion] from March 25 until 9 June 2020 were deemed illegal and invalid,” Sotto said.
‘Favored’ dialysis firm
Sotto also took note of B. Braun Avitum Philippines, which PhilHealth has allegedly favored in terms of IRM fund releases.
In a span of seven days, the senator said that PhilHealth released almost P15.4 million and P4.2 million to two branches of the dialysis firm.
In total, B. Braun Avitum received over P45 million from April 13 to May 5 this year.
“B. Braun enjoys a fast and express lane in the release of PhilHealth payment,” Sotto said.
The dialysis company has since denied these allegations, saying it holds itself “strictly to the highest standards of integrity in all its business dealings.”
Sotto said one of the recommendations of the committee includes further investigation into B. Braun Avitum.
‘Overpriced’ IT equipment
The Senate committee, meanwhile, recommended the filing of charges against two of PhilHealth’s senior information technology officials for the alleged overpricing of IT supplies and the purported “concealment alteration of documents pertaining” to its proposed procurement.
Aside from the criminal charges, Sotto said the committee is also recommending to the Department of Justice (DOJ) and the Ombudsman the filing of administrative charges against Morales and PhilHealth SVP for management service sector Dennis Mas for not implementing the board resolutions on courtesy resignations, saying it was “clearly a neglect of duty and insubordination.”
During one of the hearings, senators scored Morales for promoting four officials who are currently facing graft complaints about their alleged involvement in the WellMed “ghost” dialysis scam that was uncovered in 2019.
Morales insisted he was unaware that complaints had been filed against the officials he had promoted.
The committee also recommended the filing of administrative cases against Morales and De Jesus over their alleged violation of rules imposed by the Commission on Audit on the period of liquidation in issuing Memorandum Circular 2020-032.
The said memo, dated July 15, 2020, stated that PhilHealth regional offices were given the option on the matter of liquidation of the IRM.
“In other words, there were no concrete guidelines in the matter of liquidation of the IRM,” Sotto said.
The committee also wants administrative cases filed against resigned Philhealth SVP for legal sector Rodolfo Del Rosario and all the other officers and employees of the agency’s Protest and Appeal Review Department “for their failure to act and gross neglect of duties relative to the cases pending in their department.”
Del Rosario recently tendered his irrevocable resignation as PhilHealth faces corruption investigations following fresh claims of the anomalies within the agency.
Sotto earlier said the DOJ, which is also leading a task force investigation into alleged corruption within PhilHealth, will be furnished a copy of the Senate committee’s probe findings.
Aside from the Senate probe and the investigation being conducted by the DOJ-led task force, PhilHealth is also facing separate corruption investigations by the House of Representatives and the Presidential Anti-Corruption Commission.
Other recommendations of the Senate panel include the increased involvement of the Commission on Audit (COA) in every stage of PhilHealth’s operations as it was revealed in one of the hearings that COA was having a “hard time in auditing PhilHealth due to the difficulty of obtaining documents” from its central office.
“COA should be allowed to pursue its mandate to conduct the necessary audits even at the regional level without any hindrance from PhilHealth to ensure that government funds are properly managed and spent,” Sotto said.
Moreover, the committee urged PhilHealth to “simply outsource to a reputable company the provision of its IT services” for reliable electronic health records and analytics systems specifically for membership data information collection and membership services, among others.
The panel also recommended that PhilHealth contract out the processing of its benefits claim to avoid backlogs and massive reimbursement delays.
“This would simplify the reimbursement process, remove the red tape, and address corruption,” Sotto added.
The committee also underscored the need for PhilHealth to “strengthen” its enforcement and legal division in various regional offices in order to expedite and ensure that cases, whether pending in PhilHealth or those filed in regular courts, are acted upon.
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