CRIMINAL charges were recommended against former Philippine Health Insurance Corporation head Ricardo Morales and other PhilHealth officials in the report submitted yesterday by the Department of Justice-led Task Force PhilHealth to the President on its investigation into allegations of corruption in the state insurer.
However, the task force spared Health Secretary Francisco Duque from any charges. Duque chairs the PhilHealth board.
In its 177-page report, the Task Force concluded that “persons who are supposed to set the policies and operational guidelines for the management of PhilHealth – the Board of Directors and the Executive Committee – have not shown the due diligence required of them in the discharge of their duties.”
The Task Force recommended the filing of the following criminal complaints against these officers of PhilHealth:
- President and Chief Executive Officer (PCEO) Ricardo C. Morales, for: violation of Sections 3(e), (g) of RA No. 3019; Malversation of Public Funds or Property and Illegal Use of Public Funds or Property under the Revised Penal Code; and violation of Sections 251, 255 and 272 of the National Internal Revenue Code;
- Executive Vice President and Chief Operating Officer Arnel De Jesus for violation of Section 3(e) of RA No. 3019;
- Senior Vice President Jovita V. Aragona, Chief Information Officer and Head of the Information Management Sector, for: violation of Sections 3(a), (e), (g) of RA No. 3019; Frauds against the public treasury and similar offenses under the Revised Penal Code;
- Senior Vice President Renato Limsiaco, Jr. for: violation of Section 3(e) of RA No. 3019; and Malversation of Public Funds or Property under the Revised Penal Code;
- Senior Vice President Israel Francis A. Pargas of the Health Financial Policy Sector for: violation of Section 3(e) of RA No. 3019;
- Officer in Charge Calixto Gabuya, Jr. for: violation of Sections 3(e), (g) of RA No. 3019; and Frauds against the public treasury and similar offenses under the Revised Penal Code; and
- Division Chief Bobby A. Crisostomo for violation of Section 3(a) of RA No. 3019.
The Task Force also recommended that administrative charges for, among others, dishonesty, gross neglect of duty, grave misconduct, and conduct prejudicial to the best interest of the service, be filed against these individuals.
The Task Force noted that its composite teams are still continuing with their investigations to determine the liability of others involved in similar or other wrongful practices in the PhilHealth.
Its investigation focused on three matters: (1) the approval and implementation of the Interim Reimbursement Mechanism (IRM); (2) the approval of budgets for the purchase of information and communications technology (ICT) equipment; and (3) corporate policies and practices that fail to check, investigate, prosecute and penalize the wrongdoing of PhilHealth personnel as well as health care institutions (HCIs) and professionals.
Negligence in approval and implementation of IRM
The IRM, a component of the National Health Insurance Program that grants financial assistance to health care providers, was originally set-up in 2009 and re-introduced in 2014 and 2017 to help HCIs whose facilities have been damaged by various calamities (i.e. Typhoons Ondoy and Yolanda; the siege of Marawi).
On January 30, 2020, the Board issued a Circular that, among others, made the IRM a ‘special privilege’ (or a special process that deviates from the normal procedures adopted by the corporation) to be made available every time a fortuitous event would arise.
The Task Force found negligence on the part of the Executive Committee and the Board in the implementation of the IRM, pointing out that: (1) IRM Fund releases where rushed even when the circular implementing the scheme was not yet effective; (2) the IRM was implemented without sufficient standards and guidelines, making fund releases susceptible to abuse; and (3) IRM Fund releases were made despite the absence of mechanisms to monitor fund utilization and liquidation, and without taxes due thereon being withheld.
Concealment by members of the Executive Committee of important information or documents to obtain Board approval on ICT procurement
The Task Force found that members of the Executive Committee purposely withheld the presentation of important information or audit documents in order to obtain the Board’s approval on their requested budget allocations to procure certain ICT equipment. In one instance, a request for budget worth over P730M was made which were not included in the corporation’s Information System Strategic Plan as required by law. An Internal Audit Report that detailed major discrepancies or inconsistencies in the inventory of the corporation’s hardware and software, and in the appraisal of certain documents supporting its ICT expenditures was also not presented to the Board.
A proposal to procure network switches for the PhilHealth Regional Office at the National Capital Region was also recommended to, and approved by, the Board notwithstanding the existence of a COA Audit Memorandum on the non-utilization of 24 similar switches.
The Task Force likewise flagged PhilHealth’s policy towards settlement of claims without accountability, and even the grant of wholesale amnesty in favor of HCIs with claims that appear to be no longer enforceable against the corporation.
It looked into the settlement of cases involving fictitious crediting of remittances, where contributions were diverted to a private account, or where payment for an HCI was diverted to an undisclosed account. In both these cases, the Task Force found that PhilHealth did not file a criminal complaint against the perpetrators as it should.
The Task Force also discovered that in at least six (6) occasions, the penalty of suspension against HCIs – already affirmed by final judgment of either the Court of Appeals or the Supreme Court – was changed to mere payment of fines. In at least 20 instances, the Board also withheld the penalty of suspension and dispensed with the filing of appropriate legal action in exchange for the payment of fines by the concerned HCIs.
Liability for negligence
The Task Force concluded that the totality of the evidence “supports the reasonable conclusion that wrongful acts or omissions on the part of certain key corporate officers of PhilHealth have been committed.”
Such negligence, it added, gives rise to both administrative and criminal liability under the following: (1) R.A. No. 3019 for Graft and Corrupt Practices Act; (2) the Revised Penal Code for Malversation of Public Funds or Property and Illegal Use of Public Funds or Property; and Gross Misconduct and Gross Neglect of Duty, among others, under Civil Service Laws. The Task Force further noted that the failure to withhold taxes constitutes a violation of the National Internal Revenue Code.
While it found the Board negligent in some of its decisions, the Task Force nevertheless noted that such negligence was “mitigated by the active concealment of vital documents and the apparent misrepresentation by those who have sought the Board’s approval.” It recommended that the President “strongly admonish and remind the Chairman and Members of the Board of the grave consequences of their action or inaction.”