House OKs committee report holding Duque, PhilHealth officials liable for corruption

RG Cruz, ABS-CBN News

Posted at Oct 27 2020 04:11 PM | Updated as of Oct 27 2020 08:27 PM

Health Secretary Francisco Duque III attends a House hearing on August 28, 2019. Jonathan Cellona, ABS-CBN News/File

MANILA (UPDATE) — A House joint panel on Tuesday approved a committee report holding some officials of the Philippine Health Insurance Corporation (PhilHealth), its board chairman Health Secretary Francisco Duque III, and several cabinet members liable for alleged corruption in the agency.

The House Committee on Public Accounts and the Committee on Good Government and Public Accountability’s approved report kept the recommendation to also hold PhilHealth’s board members liable for alleged anomalies at the state insurance agency. 

The joint panel will send its report to the Department of Justice for further study. The DOJ, which headed an inter-agency task force that also investigated alleged PhilHealth corruption, had recommended the prosecution of several former and current officials of PhilHealth, but Duque was spared. 

The Senate Committee of the Whole also earlier recommended the filing of graft and malversation charges against Duque, former PhilHealth president and CEO Ricardo Morales, and other executives of the state-run insurance firm after they allegedly authorized the release of COVID-19 funds to health facilities not catering to coronavirus patients.

House panel recommendations

In the report, among recommendations included by Anakalusugan Party-list Rep. Mike Defensor, the committee of public accounts chair, were the possible filing of a plunder case for some P170 million worth of funds lost because of a PhilHealth decision to not collect penalties.

Defensor also said they would recommend the conduct of a third party audit of PhilHealth.

Reached by phone, Defensor said cases to be filed should vary between the board and the members of the PhilHealth executive committee. This means they will face different charges depending on the acts allegedly committed.

Defensor explained that the panels essentially adopted the committee report's recommendations.

IRM controversy 

House lawmakers recommended to the Ombudsman the filing of malversation and graft charges against Morales, executive vice president and chief operating officer Arnel De Jesus, senior vice-presidents Israel Pargas, Renato Limsiaco Jr., and Rodolfo Del Rosario, and senior manager Rogelio Pocallan Jr. for the controversial interim reimbursement mechanism (IRM), a system where advance releases were made to hospitals in case of unforeseen events.

Also among those facing malversation and graft charges for the alleged anomalies in the IRM are those who makeup PhilHealth's board, such as its chairman Duque, Labor Secretary Silvestro Bello III, Budget Secretary Wendel Avisado, Finance Secretary Carlos Dominguez, Rolando Joselito Bautista, Maria Graciela Blas-Gonzaga, Susan Mercado, Alejandro L. Cabading, and Marlene Padua. 

Lawmakers also recommended to the Integrated Bar of the Philippines the initiation of disbarment or disciplinary proceedings against members of the legal profession or officers of the court named in the complaint. 

They also said PhilHealth should draw up guidelines that would require health care institutions to liquidate used funds under the IRM and to return unused amounts "before a definite deadline which must not be later than 30 days from the issuance of such guidelines." 

The joint panel's report said while the intention of the IRM was "commendable," the mechanism itself and its process allowed corruption to flourish in the agency. 

"The mechanism itself is flawed and encourages large scale corruption and collusion between PhilHealth officials and HCIs, and while the program uses the term reimbursement, the IRM is actually a cash program the legal basis of which PhilHealth has failed to provide this investigative body," the report read. 

It added that IRM allocations were excessive compared to the estimated cost of COVID-19 hospitalizations. 

"The Committees estimated that the total PhilHealth benefit payments was approximately P3.3 billion. The P26.8 billion authorized IRM allocation, of which P14.9 billion pesos had been released as of 10 August 2020, is 712% in excess of what is required," lawmakers said in the report. 

The report also emphasized that the flawed IRM scheme led to huge amounts of cash advances made in favor of selected hospitals. 

"In addition to the absence of legal basis as to the implementation of the IRM, PhilHealth, in its implementation of its case-based payment system, has allowed the use of COVID-19 case rates for merely suspected or probable COVID-19 patients. This is tantamount to a legitimized form of upcasing," it said. 

Anomalies in PhilHealth's IT system

House lawmakers also recommended to the DOJ to file administrative sanctions against Dr. Roy Ferrer, Duque, Morales, Bautista, and the board members of PhilHealth for violating RA 11127 or the National Payment Systems Act for "operating without the requisite authority from Bangko Sentral ng Pilipinas." 

"[For the DOJ to] file civil, criminal and administrative cases for misfeasance or nonfeasance of the responsible person/s resulting in PhilHealth’s noncompliance with RA 11127, including revocation of professional licenses of person/s responsible," it read. 

The report also imposed fines up to P1 million against every person accused for each transactional violation or up to P100,000 "a day for each continuing violation, depending on the nature and gravity of the violation or irregularity."

Morales in September said a World Bank report pointed out that PhilHealth’s IT system faced “organizational, structural, financial, technical, political and cultural problems,” which was “ a polite way of saying it’s going to fail." 

Whistleblowers in a Senate hearing had accused the former PhilHealth chief of approving the purchase of overpriced equipment and software amounting to millions of pesos. 

Whistleblowers had earlier told lawmakers that several PhilHealth officials allegedly pocketed P15 billion in state funds, and approved the request of overpriced projects and fund releases to supposedly favored hospitals. 

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Duque earlier denied involvement in corrupt practices at PhilHealth. In an address aired Monday, President Rodrigo Duterte, who earlier rejected calls to fire Duque, again vouched for his health chief saying he has not stolen public funds. 

— Reports from RG Cruz and Job Manahan, ABS-CBN News