Lawmakers believe Health Secretary Francisco Duque III, former Philippine Health Insurance Corporation president and CEO Ricardo Morales, and other PhilHealth executives are criminally liable for the rampant corruption at the state health insurer. 

On Tuesday, October 27, the House committees on public accounts, and good government and public accountability approved their 65-page report that found basis to recommend the filing of criminal charges against these officials for “illegal” fund releases under the now-suspended Interim Reimbursement Mechanism (IRM).

The controversial IRM is a system of cash advances meant to help medical facilities during “fortuitous events” like the coronavirus pandemic.

But separate months-long probes at the House and the Senate showed officials had abused the implementation of the IRM during the COVID-19 crisis. (READ: CHEAT SHEET: Alleged PhilHealth anomalies uncovered in Congress probes)

The committee report recommends the filing of criminal charges against Duque, Morales, and the following PhilHealth executives for violating Section 3 of Republic Act (RA) No. 3019 or the Anti-Graft and Corrupt Practices Act, and Article 220 of the Revised Penal Code on the illegal use of public funds:

• Arnel de Jesus, executive vice president and chief operating officer
• Israel Pargas, senior vice president for the health finance policy sector
• Rodolfo del Rosario, senior vice president for the legal sector (resigned in August)
• Rogelio Pocallan Jr, senior manager for the Internal Legal Department

As Department of Health (DOH) chief, Duque is an ex-officio board member of PhilHealth. Morales resigned in August after President Rodrigo Duterte asked him to vacate  his post given Morales’ medical condition.

Lawmakers also want the same charges to be filed against the following Duterte Cabinet members since they are also part of the PhilHealth board:

• Just Secretary Silvestre Bello III
• Social Welfare Secretary Rolando Bautista
• Budget Secretary Wendel Avisado
• Finance Secretary Carlos Dominguez III

According to the report, the other PhilHealth board members that should be held criminally liable are Maria Graciela Blas Gonzaga, Susan Mercado, Alejandro Cabading, and Marlene Padua.

Legislators argued that the IRM “encourages large-scale corruption” among PhilHealth officials and healthcare institutions.

They said while the IRM’s legal basis remains unclear, PhilHealth still distributed some P15 billion worth of funds to various healthcare providers nationwide.

“In what is arguably the most notorious instance of corruption to date that is connected to the corporation, PhilHealth officials involved in the illegal disbursement of public funds through this mechanism anchor their defense on blurry interpretations of the law, none of which will hold water in court,” the panel report said. 

The House joint panel also recommended the filing of an administrative complaint against Morales for allowing PhilHealth to hire De Jesus as executive vice presdent and COO despite being unqualified for the post.

The House joint panel’s findings are similar to that of the Senate, with both chambers finding Duque liable for the corruption at PhilHealth. Senators even want Duque to resign from the DOH. 

This is in contrast to the findings of the Department of Justice (DOJ) which conducted an investigation that the President himself had ordered. The DOJ recommended the filing of charges of Morales but simply “admonished” Duque.

Despite the deluge of controversies hounding Duque, Duterte still trusts his health secretary. 

P102-billion overpayments due to case rates

The House’s joint committee probe found there was around P102.5 billion worth of overpayments for PhilHealth’s case rate packages or the fixed rate that the agency shoulders per type and degree of illness.

PhilHealth began implementing case rate packages in 2011, during the presidency of Benigno “Noynoy” Aquino III. Before this, PhilHealth had a fee-for-service system, wherein medical facilities are paid based on the specific service performed for the patient. 

Legislators earlier argued that the caserate system is the root cause of corruption in PhilHealth, as it forces the agency to pay a specific amount even if the patient’s medical expenses are much lower.

Private hospitals allegedly abused the case rate system and used it as an “unjust enrichment” scheme.

The House panels cited past Commission on Audit report which showed that PhilHealth had overpaid hospitals P102.5 billion from 2013 to 2018. This is on top of estimated losses to fraudulent activities amounting to P51.2 billion.

“In summary, while PhilHealth claims it is struggling financially due to the ongoing COVID-19 pandemic and asserts that its remaining actuarial life is down to one year, the joint committees find, based on the data provided in the several submissions of PhilHealth, that PhilHealth has been overspending on COVID-19,” said the joint House panel report. 

Legislators are recommending the filing of administrative charges against former DOH chief and PhilHealth board chairperson Enrique Ona as well as other board members who had approved the implementation of the all-case rate system.

They also recommended that the DOJ file the appropriate charges against officials and board members of healthcare institutions that violated provisions of Republic Act No. 11223 or the Universal Health Care law.

PhiHealth is also asked to remove healthcare providers deemed to be “recidivists” or those who have been found to have committed fraud in the past.

The same House probe uncovered that PhillHealth was operating its payment system without the authorization from the Bangko Sentral ng Pilipinas, a requirement under RA 11127 or the National Payment Systems Act.

Legislators thus want the DOJ to file criminal, civil, and administrative charges against Duque, Morales, former PhilHealth president Roy Ferrer, Duterte Cabinet members who are part of PhilHealth’s board of directors, and other board members and officials. 

In the wake of the latest string of corruption allegations, Duterte named former National Bureau of Investigation director Dante Gierran as next chief of PhilHealth despite the latter’s lack of expertise on public health.

The PhilHealth board unanimously confirmed Gierran’s appointment in September. He then ordered the agency’s senior executives to “immediately submit” their courtesy resignations as part of his efforts to reform PhilHealth.

‘Inept officials who lay down bad policies’

Apart from anomalies hounding the IRM and the case rate packages, the House joint committee report also tackled PhilHealth’s “disadvantageous” settlement of cases in the past. 

Lawmakers recommended the filing of several administrative charges against Duque, former interim PhilHealth president and CEO Celestina Ma Jude dela Serna, and other executives for mishandling the cases faced by the agency against the following:

• Perpetual Succor Hospital Inc in Cebu City, found guilty of overextending patients’ confinement periods
• Cardinal Santos Medical Center and the Hospital Managers Inc, whose settlement case cost PhilHealth millions
• WellMed Dialysis and Laboratory Center Corporation on the dialysis scam
• South Cotabato-based neurologist Mark Dennis Menguita, who allegedly misdiagnosed his patients to get higher PhilHealth claims
• Controversial dialysis chain B. Braun Avitum Philippines Inc and Balanga Rural Bank Incorporated
• Medina General Hospital
• Accenture Incorporated

“To sum up, PhilHealth does not only have to contend with rampant corruption; half of the pressing problems that beleaguer the corporation are caused by inept officials who lay down bad policies and decisions,” said the committee report. – Rappler.com