Testimony of:  
Gerald Roy 
Deputy Inspector General for Investigations 
Office of Inspector General  
U.S. Department of Health & Human Services  
________________________________________________________________________ 
 
Good morning Chairman Dorgan, Vice Chairman Barrasso, and other 
distinguished Members of the Committee.  I am Gerald Roy, Deputy 
Inspector General for Investigations at the U.S. Department of Health & 
Human Services (HHS) Office of Inspector General (OIG).  I appreciate the 
opportunity to testify about OIG work relating to the Indian Health Service 
(IHS).  I have the privilege of having with me today OIG Special Agent Curt 
Muller who has served in the Aberdeen area since 2000 and is familiar with 
many of the issues I expect will be raised at this hearing.   
 
OIG is an independent, nonpartisan agency committed to protecting the 
integrity of more than 300 programs administered by HHS.  We are the 
Nations premiere health care fraud law enforcement agency, providing 
oversight to all agencies and programs of our vast Department. 
  
OIG consists of five components:  our offices of Audit Services, Evaluation 
and Inspections, Counsel to the Inspector General, Management and Policy, 
and Investigations, which I oversee.  OIG has a significant body of work on 
IHS issues, which I am happy to submit for the record, but my testimony 
today is focused solely on the work of the Office of Investigations.  
 
The Office of Investigations employs nearly 400 highly skilled special 
agents trained to conduct investigations of fraud and abuse related to HHS 
programs and operations.  Our special agents utilize state of the art 
Senate Committee on Indian Affairs  1
September 28, 2010  technologies and effectuate a wide range of law enforcement actions 
including service of subpoenas and the execution of search and arrest 
warrants.   
   
Our constituents are the American people and we work hard to ensure their 
money is not stolen or misspent.  Thanks to the work of our dedicated 
professionals, over the past fiscal year OIG has opened over 1,700 
investigations and obtained over 570 criminal convictions.  OIG 
investigations also have resulted in over $3 billion in expected criminal and 
civil recoveries.   
 
Over the last 10 years, my office opened nearly 300 investigations related to, 
or affecting IHS.  Many of these cases also involved allegations of Medicare 
or Medicaid fraud.  In the course of these investigations, OIG has identified 
three general areas of vulnerability that threaten IHS.  These areas are:  (1) 
mismanagement, (2) employee misconduct, and (3) drug diversion.  
 
I will now provide examples of investigative findings in each of these three 
areas. 
 
Mismanagement 
Our investigations have uncovered insufficient internal controls, lack of 
documentation relating to employee misconduct, and prohibited personnel 
practices, including hiring excluded individuals to provide items or services 
to Federal program beneficiaries.  OIG protects beneficiaries and the 
integrity of Federal health care programs, including IHS, by excluding 
individuals for fraud and abuse violations, such as drug diversion and patient 
Senate Committee on Indian Affairs  2
September 28, 2010  abuse.  IHS must be vigilant in ensuring that it does not hire excluded 
individuals.  Otherwise, vulnerable patient populations may be put at risk, 
and Federal health care program funds could inappropriately pay for the 
salaries and services of excluded individuals.    
 
In 2008, the Aberdeen Area personnel office identified two employees who 
were excluded by OIG from participation in federally funded health care 
programs.  One of the employees was excluded based on a criminal 
conviction for embezzlement in 2001 that was the result of an investigation 
conducted by our special agents.  While still excluded, this employee was 
subsequently rehired by the same department within the Aberdeen Area 
Office where she committed her illegal acts.  The other employee was a 
nurse convicted of drug diversion charges.   
 
During the course of this investigation, we discovered that IHS had no 
policy in place to verify employees and contractors against the List of 
Excluded Individuals and Entities.  As a result, we recommended that IHS 
immediately review the names of all current employees and contractors 
against the excluded individuals and entities lists and issue exclusions 
guidance to employees.  IHS agreed to implement OIGs recommendations.   
 
Employee Misconduct   
OIG investigations have resulted in numerous criminal convictions relating 
to employee misconduct.  These investigations have focused on a variety of 
criminal violations, including conspiracy, health care fraud, and 
embezzlement.  In 2005, we investigated allegations that an IHS employee 
unlawfully altered government medical records of IHS beneficiaries for 
Senate Committee on Indian Affairs  3
September 28, 2010  personal gain.  The employee and co-conspirators replaced beneficiaries 
names with their own on medical records and filed claims for payment to a 
private insurance company.  Five individuals were indicted, including two 
IHS employees, who were charged with conspiracy and health care fraud.  
One employee was sentenced to 12 months in prison.  The other, an IHS 
supervisor, was sentenced to 18 months in prison.  They are jointly 
responsible for paying the insurance company over $99,000 in restitution.  
 
Drug Diversion    
We have determined that IHS pharmacies are vulnerable to controlled 
substance abuses, including diversion and trafficking by employees, contract 
providers, and patients.  In 2008, we investigated an allegation that a Sioux 
San pharmacy technician in Rapid City, South Dakota, stole large quantities 
of Vicodin and Tramadol.  When questioned by our special agents, the 
employee admitted to stealing large quantities of narcotics from the IHS 
pharmacy, which she then sold on the street for cash.  During a search of her 
home, our special agents found additional evidence of stolen narcotics.  The 
employee pled guilty to a felony count of theft.  During the course of our 
investigation, we discovered that the IHS pharmacy lacked effective security 
controls to prevent and detect drug diversion, such as security cameras and 
two-person inventory counts.  
Conclusion 
The work I have testified about today reflects OIGs serious commitment to 
ensuring the integrity of IHS programs.  Our Sioux Falls office has 
significant expertise with these issues and dedicates over 30 percent of its 
workload to investigating fraud and abuse in IHS.  Additionally, the 
Senate Committee on Indian Affairs  4
September 28, 2010  Inspector General serves on the Secretarys Intradepartmental Council on 
Native American Affairs and has personally toured Indian country.  Through 
the dedicated efforts of OIG professionals, we will continue working to deter 
fraud, waste, and abuse within IHS and the tribal programs.  Thank you for 
your support of this mission.  I welcome any questions you may have.   
 
 
Senate Committee on Indian Affairs  5
September 28, 2010