Testimony of 
Joseph E. Vengrin, Deputy Inspector General for Audit Services and 
Michael E. Little, Deputy Inspector General for Investigations 
Department of Health and Human Services 
 
 
Guarding Against Waste, Fraud, and Abuse in Post-Katrina Relief and 
Recovery:  The Plans of Inspectors General 
 
 
Chairman Whitfield and members of the Subcommittee, I am Joseph Vengrin, Deputy 
Inspector General for Audit Services.  Accompanying me is Michael Little, Deputy 
Inspector General for Investigations. 
 
We are appearing before you today to describe the initial activities of the Office of 
Inspector General (OIG) of the U.S. Department of Health and Human Services (HHS) to 
guard against fraud, waste, and abuse in the post-Katrina relief and recovery efforts.   
 
We share your concern, and the concern of all Americans, for the thousands of children 
and families affected by the recent hurricanes.  The loss of life, property, and livelihoods 
is tremendous.  To be responsive, necessary relief services must be provided to victims 
expeditiously and effectively.  It is vital that funds and services be appropriately directed 
to ensure that people in the affected areas have their immediate needs met and recover as 
soon as possible.  At the same time, we must work to ensure that funds spent on this 
endeavor are not mismanaged or used fraudulently, which would deprive people of the 
intended benefit. 
 
HHS has announced a number of steps in response to Katrina.  These steps include a 
relaxation in controls to make needed health and human services accessible under these 
very difficult circumstances.  This flexibility is intended to permit hurricane victims to 
receive benefits and services without the usual documentation requirements.  Services 
with immediate new flexibilities include Medicaid, Temporary Assistance for Needy 
Families (TANF), child care, foster care assistance, mental health services, and substance 
abuse treatment services.  In another announced step, HHS continues to furnish health 
care providers and medical supplies to the Gulf area. 
 
Unfortunately, the difficult circumstances created by Katrina provide an enormous 
opportunity for fraud, waste, and abuse.  The sheer magnitude of these disasters and the 
still-evolving costs of the relief efforts present challenges.  As we continue our work 
planning efforts, we must also consider the current state of flux in waiving certain 
programmatic requirements in the delivery of departmental services, the need for 
increased and expedited contracting activities, and the long-term nature of the Federal 
response.  OIGs work plan will be continuously updated to reflect changes in the 
Departments response.   
 
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House Energy and Commerce Committee 
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  This morning we will describe OIGs oversight planning process, particularly as it relates 
to auditing; some of our initial activities on the investigative oversight and enforcement 
front; and finally, HHS/OIGs coordination with other agencies.        
 
 
OIGS OVERSIGHT PLANNING PROCESS 
 
With the destruction of infrastructures, systems, and communities and the dislocation of 
populations caused by Hurricane Katrina, OIG is particularly committed to ensuring that 
funds are used for valid and authorized transactions that comply with appropriate 
procurement standards, that goods and services are procured and delivered correctly, and 
that problems are prevented rather than identified after the fact.   
 
Immediately following the hurricane, OIG established an OIG-wide Hurricane Relief 
Working Group, which is addressing issues as they arise in the aftermath of Hurricane 
Katrina.  The group comprises senior managers from our Offices of Audit Services, 
Investigations, Evaluation and Inspections, Counsel, and Management and Policy.  This 
group is focusing OIG resources to address both immediate and longer term needs.  
Under the direction of this group, OIG is reviewing proposed program changes to identify 
potential vulnerabilities for fraud, waste, and abuse that require increased scrutiny.  
Detailed below are some of OIGs specific actions to date in response to Katrina. 
 
Risk Assessment 
 
For each major program and activity identified by the Department, OIG is assessing the 
initial risks associated with relaxing internal controls over expedited payments.  The 
assessments are covering such programs as Medicare, Medicaid, and TANF; the activities 
of the Centers for Disease Control and Prevention (CDC); and funds transferred from the 
Federal Emergency Management Agency.  We are considering factors such as the 
complexity and magnitude of the program or activity and the extent of changes in the 
control environment.  As part of this process, we are considering the materiality of funds 
exposed to increased risk and any implemented mitigating controls.   
 
Special Work Plans 
 
Using the results of these risk assessments, we are developing special work plans, 
focusing our audit and inspection efforts on the most vulnerable programs and activities.  
 
In implementing our audit work plan, we will use standard audit procedures to test the 
effectiveness of internal controls both within the Department and at State governments, 
contractors, grantees, and health service providers.  The audits will occur as the relief 
effort continues and will collectively provide ongoing testing and monitoring of the 
programs.  Where appropriate, our audits will determine whether contract and grant 
awards, as well as payments to health service providers, comply with procurement 
 
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  standards, pricing guidelines, and other Federal requirements.  Selectively, we will audit 
costs incurred and determine whether goods and services were delivered to the intended 
recipients.  Using advanced audit techniques as necessary, including data mining 
capabilities, we will search for aberrant patterns of payments to contractors and health 
service providers.  
 
In conducting audits such as these, OIG will examine the organizational structures 
associated with the disaster response to determine whether clear lines of authority and 
communication and appropriate oversight have been established.  We will review recent 
legislation and the status of proposed statutory and regulatory changes for program 
administration and eligibility.  In a high-risk environment such as this, we will 
particularly focus on changes in existing internal controls and the impact of those 
changes on the risk of fraud, waste, and abuse. 
 
If audits identify potentially fraudulent acts, our Offices of Investigations and Counsel 
will consult with the Department of Justice to determine whether and what enforcement 
actions are warranted.  We will also rely on our existing fraud hotline.  We anticipate that 
the hotline is capable of receiving and processing all allegations of fraud, waste, and 
abuse that may be received. 
 
In addition to initiating audit activities and relying on our hotline, we are developing a 
program evaluation and inspection work plan.  A body of work completed subsequent to 
September 11, 2001, which examines preparedness for responding to public health 
disasters, will facilitate OIGs ability to conduct reviews of disaster response relative to 
Katrina.  OIG is identifying issues to gauge the effectiveness of the HHS response.  
Potential areas include evaluating evacuation planning for institutions such as hospitals 
and nursing homes and for children in foster care. 
 
 
INVESTIGATIVE OVERSIGHT AND ENFORCEMENT 
 
In addition to assessing current and future audit and inspection requirements, OIG has 
provided onsite support and investigative oversight and enforcement for the Katrina 
response.  OIGs agents are providing this onsite support in response to the Secretarys 
request.   
 
Following is a brief chronology of OIGs interaction with the Department to provide 
immediate support and investigative oversight and enforcement. 
 
  As Hurricane Katrina approached landfall, the Secretary stressed to departmental 
officials that this was HHSs moment to be truly about health and human services, 
in the humanitarian sense.  During these discussions, the Inspector General was 
asked to provide security to HHSs onsite operations and any other services that 
 
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  he deemed necessary.  Accordingly, OIG assessed the types of assistance it could 
initially provide.   
 
  On September 2, OIG requested volunteers from among its criminal investigators 
nationwide.  Within 24 hours, over 60 special agents had volunteered to go to the 
Gulf States area to assist in the hurricane relief efforts.  For these agents to 
perform onsite security activities in this unusual context, a Special Deputation by 
the U.S. Marshals Service was necessary.  
 
  By September 8, the first 2 teams of 11 OIG agents were deployed to Louisiana 
and Mississippi.  The initial need for OIG agents was to provide security 
assessments for the mobile medical care sites established by the Department and 
staffed by HHS employees.  If the site was not secure, OIG agents secured the 
area and reported to the U.S. Public Health Service (USPHS) Commissioned 
Corps Admiral (the individual the HHS Secretary had placed in charge of a 
consolidated HHS hurricane response), requesting assistance to properly secure 
the facility if necessary before moving on to evaluate the next facility. 
 
  By September 14, the team in Mississippi had performed security assessments at 
several hospital sites being established in Waveland and Meridian.  The team had 
also provided personal security to HHS staff who performed outreach in the 
community to ensure that those in need knew of and took advantage of the health 
care services available to them.  At the request of the USPHS Admiral on site, the 
OIG team also conducted a physical security survey of three hotels where HHS 
staff were lodged. 
 
  To date, OIG has provided protection for three visits to the region by the 
Secretary. 
 
  After securing all HHS operational sites in Louisiana as well, including Kindred 
Hospital in New Orleans, which became an operational center, this team 
performed personal security of CDC personnel who were going into communities 
to collect water and dust samples from the flood-affected areas and perform 
outreach activities.  Several protection operations occurred daily, all of which 
were coordinated with the Admirals staff. 
 
  On September 21, OIG special agents assisted in the safe evacuation of HHS 
medical officials and scientists operating out of New Orleans to avoid danger 
from approaching Hurricane Rita.   
 
The impact of Hurricane Katrina has resulted in a number of allegations relating to deaths 
of patients under questionable circumstances at several health care facilities throughout 
the New Orleans area.  We have been informed of over 20 instances within the past 
weeks in which health care providers abandoned or possibly engaged in activity resulting 
 
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  in the deaths of Medicare/Medicaid beneficiaries.  We have initiated investigations in 
which we are working with appropriate Federal and State partners to determine if Federal 
or State violations have occurred.  This will be no small task, as the individuals who need 
to be interviewed are now scattered across the country.   
 
To date, over 120 of OIGs agents have volunteered to assist with the disaster response. 
This activity is being funded from OIGs discretionary appropriation.   
 
The duration of OIG agents onsite presence is unknown at this point, but we will 
continue to support the relief effort.  We are carefully controlling these deployments of 
agents due to the obvious drain on normal investigative workloads.  Because of the 
massive Federal dollars needed to rebuild the New Orleans health and human services 
infrastructure, we expect a very high potential for waste, fraud, and abuse. 
  
 
OIGS COORDINATION WITH OTHER AGENCIES 
 
Government Accountability Office 
 
OIG has met with the Government Accountability Office to discuss ways to maximize 
our effectiveness by coordinating Katrina-related work projects that may overlap.  Both 
offices are committed to conducting oversight work in a complementary, nonduplicative 
manner. 
 
Department of Justice  
 
OIG will meet within the next week with its Department of Justice colleagues to discuss 
the role OIG can play in civil fraud legal matters relating to Katrina. 
 
Presidents Council on Integrity and Efficiency  
 
As a member of the Presidents Council on Integrity and Efficiency, Homeland Security 
Roundtable, HHS OIG has been actively participating in the coordinated Inspectors 
General response to Hurricane Katrina.  As part of that response, our office provided a 
plan to the Inspector General of the Department of Homeland Security outlining activities 
to ensure the integrity of response dollars spent by HHS.  Our office will continue to play 
an active role in the OIG community-wide response to the hurricane. 
 
State Auditors and Independent Public Accounting Firms 
 
OIG will coordinate its efforts in affected States with the offices of the State auditors and 
with Independent Public Accounting firms, which perform audits of non-Federal 
recipients of HHS funds.  This coordination could increase audit coverage of Katrina 
relief and recovery efforts. 
 
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  CONCLUSION 
 
The approach outlined here forms the basis for a comprehensive program of testing, 
monitoring, and investigative oversight of programs placed at increased risk as a result of 
Hurricane Katrina.  We are focusing the appropriate level of resources on the 
Departments programs with the greatest risk of fraud and abuse.  The approach involves 
continuous evaluation and modification, as required, to ensure that OIG accomplishes its 
mission of protecting the integrity of the Departments programs and the health and 
welfare of the beneficiaries of those programs.  We believe that our results will provide 
the Subcommittee and other decisionmakers with important information on 
accountability for Federal response dollars. 
 
Thank you for this opportunity to testify.  Your questions are welcome. 
 
 
 
 
 
 
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House Energy and Commerce Committee 
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