In the Spotlight

First, during the Spring of 2002, Rehnquist delayed an audit scheduled to be performed on the Florida Retirement System to determine if the federal government had been inappropriately charged for pension expenses of state employees who help administer federal programs. As the GAO noted, criticisms were lodged that this delay prevented the audit from uncovering such excessive payments until after the contested governor's race in Florida, which were later suggested to be around $517 million in a draft report. Report, at 8-9.

Second, shortly after she took office in February 2000, Rehnquist received a letter from three members of Congress requesting that she settle a case involving a hospital in York, PA, in which the OIG was recommending the imposition of civil monetary penalties (CMPs). 'According to the former Chief Counsel, the Inspector General told him, 'I hate this case; get rid of it.” Report, at 9. The Chief Counsel and others quickly settled the case for far less than they felt it could have settled as a result of this incident.

Third, a partner in a law firm that represented two medical societies ' and who was also a friend of the Inspector General ' contacted her for assistance in helping to expedite a case that was before the Centers for Medicare and Medicaid Services (CMS), a sister agency in which the OIG did not have jurisdiction. Nevertheless, the Inspector General told her former Chief Counsel to contact the attorney and begin negotiations immediately. Her former Chief Counsel, however, felt ethically obliged to try to contact his counterpart with CMS, and because that individual was not in town, he waited until that attorney returned. Upon learning about this, the Inspector General reportedly admonished the former Chief Counsel severely. The GAO agreed with the former Chief Counsel's actions as being ethically correct, and pointed out that the Inspector General's actions 'created the appearance that she was more interested in helping a friend than offering advice to CMS, which called her independence into question.' Report, at 10-11.

In its report, the GAO also described how the disturbing circumstances that surrounded the departures of eight senior OIG managers ' four of whom were Senior Executive Service (SES) employees who left the agency or were detailed elsewhere ' and the other four who claimed that they were not ever told about any specific deficiencies in their performance, given a chance to improve their performance, or provided with an appropriate rationale for their removal from positions they had enjoyed for years.

Not surprisingly, the former Inspector General took issue with the findings in the GAO's report. Interested readers can obtain a copy of this report from the GAO's Web site: http://www.gao.gov/

Michael E. Clark, Editor-in-Chief of this publication, represents clients in a variety of business and white collar matters.

On June 10, 2003, the United States General Accounting Office (GAO) issued its report responding to an October 21, 2002 request from Senator Charles E. Grassley, Chairman of the Senate Finance Committee, for the agency to review the Department of Health and Human Services (HHS) Office of the Inspector General (OIG). In performing its review of the OIG (from October 2002 through May 2003), the GAO interviewed over 200 current and former OIG employees, examined thousands of pages of documents, replicated a web-based employee survey conducted by the OIG in January 2003, spoke to representatives from the Department of Justice (DOJ) and various Medicaid Fraud Control Units (MFUCUs), and interviewed three current or former inspectors general from other federal agencies.

As generally noted in the report, '[d]uring her tenure, the Inspector General [Janet Rehn- quist] took a number of actions that damaged her credibility and ultimately created an atmosphere of anxiety and distrust within certain segments of the OIG.' More specifically, the GAO pointed out, '[c]oncerns about her independence ' including those arising from her decision to delay a politically sensitive audit and her intervention in ongoing cases in response to external requests ' and personnel changes she initiated among senior management, disillusioned members of her senior staff, headquarters employees, and employees working in two OIG units.' Report, at 2.

The GAO report discussed four specific matters that led it to reach these conclusions. The three most critical are summarized below:

First, during the Spring of 2002, Rehnquist delayed an audit scheduled to be performed on the Florida Retirement System to determine if the federal government had been inappropriately charged for pension expenses of state employees who help administer federal programs. As the GAO noted, criticisms were lodged that this delay prevented the audit from uncovering such excessive payments until after the contested governor's race in Florida, which were later suggested to be around $517 million in a draft report. Report, at 8-9.

Second, shortly after she took office in February 2000, Rehnquist received a letter from three members of Congress requesting that she settle a case involving a hospital in York, PA, in which the OIG was recommending the imposition of civil monetary penalties (CMPs). 'According to the former Chief Counsel, the Inspector General told him, 'I hate this case; get rid of it.” Report, at 9. The Chief Counsel and others quickly settled the case for far less than they felt it could have settled as a result of this incident.

Third, a partner in a law firm that represented two medical societies ' and who was also a friend of the Inspector General ' contacted her for assistance in helping to expedite a case that was before the Centers for Medicare and Medicaid Services (CMS), a sister agency in which the OIG did not have jurisdiction. Nevertheless, the Inspector General told her former Chief Counsel to contact the attorney and begin negotiations immediately. Her former Chief Counsel, however, felt ethically obliged to try to contact his counterpart with CMS, and because that individual was not in town, he waited until that attorney returned. Upon learning about this, the Inspector General reportedly admonished the former Chief Counsel severely. The GAO agreed with the former Chief Counsel's actions as being ethically correct, and pointed out that the Inspector General's actions 'created the appearance that she was more interested in helping a friend than offering advice to CMS, which called her independence into question.' Report, at 10-11.

In its report, the GAO also described how the disturbing circumstances that surrounded the departures of eight senior OIG managers ' four of whom were Senior Executive Service (SES) employees who left the agency or were detailed elsewhere ' and the other four who claimed that they were not ever told about any specific deficiencies in their performance, given a chance to improve their performance, or provided with an appropriate rationale for their removal from positions they had enjoyed for years.

Not surprisingly, the former Inspector General took issue with the findings in the GAO's report. Interested readers can obtain a copy of this report from the GAO's Web site: http://www.gao.gov/

Michael E. Clark, Editor-in-Chief of this publication, represents clients in a variety of business and white collar matters.