Senate recommends filing of criminal charges against Duque, Morales, other Philhealth officials

The Senate Committee of the Whole has recommended the filing of malversation and other criminal charges against Health Secretary Francisco Duque III, resigned Philippine Health Insurance Corporation (PhilHealth) president and chief executive officer Ricardo Morales, and other senior officials over the alleged irregularities and corruption within the state health insurance firm. Duque is chairman of Philhealth.


After three, 10-hour long hearings, Senate President Vicente Sotto III reported the contents of the committee's findings on the claims of "rampant" corruption and anomalous transactions in the government-run corporation.

Sotto said the committee uncovered the agency's "shoddy or shady" payments under its the Interim Reimbursement Mechanism (IRM), its allegedly overpriced information and communication technology (ICT) procurement plan, the supposed manipulation of the PhilHealth's financial status, as well as irregularities in its legal sector.

At least nine other senators contributed to the committee recommendations. Meanwhile, 22 of the Senate's members signed the report prior to Sotto's sponsorship. Sen. Aquilino Pimentel III was not able to sign but submitted some recommendations, as well as Sen. Leila de Lima, who is detained.

IRM releases

In his 57-page sponsorship speech on the committee's findings, Sotto said Duque, as chairman of the Philhealth's Board of Directors, and Morales should be charged for their "improper and illegal" implementation of the IRM and for their "grave abuse of discretion or gross negligence in ascertaining the IRM beneficiary without valid criteria for distribution".

Sotto said IRM releases from March 25 to June 9, 2020  totalling to P14,038,393,329.14 were "illegal and invalid", citing the admission of Philhealth senior vice president (SVP) for Legal Sector Atty. Rodolfo Del Rosario, who said that the amount released did not comply with the prerequisites for publication of department circulars and orders.

The committee also questioned the health insurer's "hasty" payments to B. Braun Avitum Dialysis Center, which received some P45.18 billion from the Philhealth from April 23 to May 5 this year, within  a span of at least seven days. It was discovered this dialysis center does cater to COVID-19 patients.

Sotto also recalled Duque conceding in their August 18 hearing that the IRM funds released to B. Braun Avitum were "illegal" and they will "rectify" it. 

For this, he said the officials specifically violated the following:

• Article 217 of the Revised Penal Code for malversation of public funds or property
• Article 220 of the Revised Penal Code for Illegal use of public funds or property; and the
• Republic Act 3019 or the Anti-Graft and Corrupt Practices Act

Aside from Duque and Morales, Sotto said equally liable for these offense were: Philhealth executive vice president and Chief Operating Officer Arnel de Jesus, SVP for Health Finance Policy Sector Israel Pargas, and "all other PhilHealth 
officials and employees who connived with and participated in the consummation of the punishable or illegal act."

The Committee of the Whole also found Duque, Morales, De Jesus, Pargas as well as SVP for Fund Management Sector Renato Limsiaco Jr. for their failure to collect withholding taxes
from health care institutions given the IRM funds; and charging the Corporate Operating Budget for failure to withhold the taxes in the advanced payments.

Limsiaco, during the hearing, said he was not aware that they must withhold taxes from their payments to health care institutions.

Sotto said the officials must be sued for malversation of public funds and property, violation of the National Internal Revenue Code, the Republic Act No. 1051, which requires government agencies to deduct and withhold taxes in the payments made to private institutions and individuals, as well as the Anti-Graft and Corrupt Practices Act.

Legal sector's 'neglect' 

Meanwhile, the Senate panel recommended the filing of charges against Del Rosario for graft and possibly violating Article 208 of the Revised Penal Code, which prohibits public officers from "instituting prosecution for the punishment of violators of the law, or the commission of offenses."

Del Rosario, he said, committed neglect of duty for failing to act or cause the prosecution of cases before the state insurer.

"Based on the submissions of Philhealth to the Committee, for the period of 2000-2019, there are 7,452 pending cases against healthcare institutions – which involved both fraudulent and non-fraudulent offenses. However, for the same period, only 5,327 was decided on by the agency," Sotto said.

"This means that for a span of 19 years, only 71.48 percent of cases was acted upon relative to cases against healthcare institutions," he pointed out.

With regards to cases against healthcare professionals, Sotto said that for the period of 2000-2019, there are 4,792 pending cases in the agency – which comprises of 1,968 fraudulent offenses and 2,824 non-fraudulent offenses. 

"However, based on the same documents submitted by Philhealth to the Committee, only 45.97 percent of the pending cases against healthcare professionals was disposed by the agency in a span of 19 years," he lamented.

For the non-fraudulent offenses against healthcare professionals, out of the 2,824 pending cases only 1,458 cases were decided upon by the agency, which translates to 51.62 percent case disposal rate for a period of 19 years, he said.

Sotto also noted the Philhealth's failure to implement court rulings, including those from the Supreme Court and the Court of Appeals, as well as the "diluted" cases that it filed against erring employees.

"Such failure to act and gross neglect of duty have resulted to the financial prejudice of Philhealth and the health care providers," Sotto said.

'Overpriced' ICT project

Sotto said the committee was also recommending that charges be filed against Jovita Aragona,  SVP for Information Management Sector, and Calixto Gabuya Jr., acting senior manager for IT and Management Department for the alleged overpricing of its ICT project and "doctoring and even forging documents to make the Senate President and the members of the Committee of the Whole believe their story."

During the hearing, Aragona and Gabuya admitted that they "did not tell the truth" about the specifications of the IT procurement plan.

Administrative charges

Aside from the criminal charges, the Senate Committee of the Whole also pushed for the filing of administrative charges against Philhealth officials and employees:

• Morales and SVP for Management Service Sector Dennis S. Mas, for not implementing the Board Resolutions on courtesy resignations, "which is clearly a neglect of duty and insubordination."

• Morales and De Jesus for "violating the COA Rules on the period of liquidation in issuing Memorandum Circular 2020-032"

• Del Rosario and all other officers and employees of the Protest and Appeal Review Department of PhilHealth "for their failure to act and gross neglect of duties relative to the cases pending in their department."

Sotto said the government should make sure that administrative and criminal cases are "timely filed" against the responsible individuals, health care institutions and corporations. 

"Filing charges against responsible individuals, health care institutions, and corporations will prove Philhealth’s and the government’s commitment to ensure that government funds are not mismanaged and that corruption is not tolerated," he said.

"Further, cases and subsequent convictions will serve as a deterrence for others with corrupt intentions," he added.

Sotto also said that evidence for ghost patients must be sought after following their discoveries on B. Braun Avitum.

"The report recommended that this can be done by retroactively matching the latest death data from the Philippine Statistics Authority," he continued.

In closing, Sotto said: "The pressure on government finances becomes even greater as we try to implement the Universal Health Care Act, which aims to cover all of us."

"PhilHealth is in a deep hole as well. How deep we are not certain, yet. Unless we discover the real state of Philhealth finances, we will never know. And that lack of knowledge is something all of us can ill-afford to have," he pointed out.