HHS OIG: Allegations of Misspending Were Unsubstantiated	 
(30-APR-04, GAO-04-618R).					 
                                                                 
The Department of Health and Human Service's (HHS) Office of	 
Inspector General (OIG) plays a vital role in auditing and	 
investigating allegations of fraud and abuse in federal health	 
and welfare programs. Because it independently evaluates various 
programs, activities, and functions, the OIG must act with	 
integrity at all times. In the fall of 2003, anonymous		 
allegations charged that certain officials in the HHS OIG's	 
Office of Evaluation and Inspections (OEI) sponsored training and
management meetings for nonwork purposes and improperly renovated
a regional office. The allegations primarily focused on the	 
actions of the Acting OEI Deputy Inspector General in relation to
specific events that took place from July through September 2003.
The allegations charged that she (1) sponsored training at a	 
Florida resort to facilitate vacation time for staff, (2)	 
scheduled several follow-up training meetings as a way of	 
providing staff with leisure time, and (3) held a managers'	 
meeting in New York as a pretext for participants to attend a	 
retirement celebration for one of OEI's managers. A fourth	 
allegation charged that the Acting OEI Deputy Inspector General, 
along with an Acting OEI Regional Inspector General, improperly  
renovated and refurnished office space in one of OEI's regions.  
This report examines these allegations. 			 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-618R					        
    ACCNO:   A09935						        
  TITLE:     HHS OIG: Allegations of Misspending Were Unsubstantiated 
     DATE:   04/30/2004 
  SUBJECT:   Fraud						 
	     Internal controls					 
	     Investigations into federal agencies		 
	     Program abuses					 
	     Inspectors general 				 

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GAO-04-618R

United States General Accounting Office Washington, DC 20548

April 30, 2004

The Honorable Charles E. Grassley
Chairman
The Honorable Max Baucus
Ranking Minority Member
Committee on Finance
United States Senate

Subject: HHS OIG: Allegations of Misspending Were Unsubstantiated

The Department of Health and Human Service's (HHS) Office of Inspector
General (OIG) plays a vital role in auditing and investigating allegations
of fraud and abuse in federal health and welfare programs. Because it
independently evaluates various programs, activities, and functions, the
OIG must act with integrity at all times. In the fall of 2003, anonymous
allegations charged that certain officials in the HHS OIG's Office of
Evaluation and Inspections (OEI) sponsored training and management
meetings for nonwork purposes and improperly renovated a regional office.

The allegations primarily focused on the actions of the Acting OEI Deputy
Inspector General in relation to specific events that took place from July
through September 2003. The allegations charged that she (1) sponsored
training at a Florida resort to facilitate vacation time for staff, (2)
scheduled several follow-up training meetings as a way of providing staff
with leisure time, and (3) held a managers' meeting in New York as a
pretext for participants to attend a retirement celebration for one of
OEI's managers. A fourth allegation charged that the Acting OEI Deputy
Inspector General, along with an Acting OEI Regional Inspector General,
improperly renovated and refurnished office space in one of OEI's regions.
At your request, this report examines these allegations.

To perform our work, we examined documentation-such as meeting agendas,
approval documents, and travel vouchers-related to the allegations;
conducted interviews with OIG officials, including managers and
participants in events related to the allegations; and reviewed relevant
HHS and OIG conference planning and procurement policies and the General
Services Administration (GSA) office renovation guidelines.1 We determined
OEI officials' rationale for their decisions, steps taken to plan or
approve various events, and the extent of involvement by those accused of
wrongdoing. Our work assessed the allegations that meetings were held

1GSA is responsible for managing federal property and procurements and
promulgating guidance and regulations for both activities.

for nonwork purposes and that OEI regional office renovations were
improper. We did not conduct a comprehensive review of OEI's compliance
with laws and regulations applicable to these activities. We performed our
work from November 2003 through April 2004 in accordance with generally
accepted government auditing standards.

In summary, we found no basis for the allegations against the Acting OEI
Deputy Inspector General and an Acting Regional Inspector General
regarding the sponsorship of training and other meetings and the
completion of office renovations. We found that those responsible for
organizing OEI training and management meetings followed HHS and OIG
requirements for planning and approving these activities. Further, we did
not find evidence to support the allegations that the training included
leisure activities during business hours at the Florida training, the
follow-up training meetings, and the New York meeting. According to the
agendas and to OIG officials, the Florida and follow-up training meetings
provided staff with details on organizational goals and evaluation skills,
and served as an exchange of information on analytical approaches.
Likewise, attendees at the New York managers' meeting concentrated on OEI
management-related issues. With respect to allegations of inappropriate
renovations in one of OEI's regional offices, documents that we reviewed
indicated that OEI officials followed applicable GSA and OIG policies to
reconfigure office space and purchase furniture. In commenting on a draft
of this report, the OIG agreed with our findings.

Background

OEI, one of five components within the HHS OIG, conducts short-term
management

2

evaluations of HHS programs. OEI is headed by a Deputy Inspector General
(DIG),
and has staff in Washington, D.C.; Baltimore, Maryland; and eight regional
offices.
Each regional office is headed by a Regional Inspector General (RIG).

Over the past 2 years, the HHS OIG was the subject of concern in regard to
its
leadership and operations. During this time, numerous management changes
occurred. This included the resignation of the then Inspector General on
March 4, 2003, and her subsequent departure from the agency on June 1,
2003. In
addition, in July 2003, a new Acting DIG was assigned to lead OEI.3 It was
in the
midst of this uncertainty and change that OEI initiated the following
events that were
related to the allegations.

Florida training: For about 15 years, OEI has sponsored a national
training event, such as the one held in Florida, on an annual or biennial
basis. OEI management considers this training to be very important in
enhancing

2The other four components are the Office of Audit Services, the Office of
Investigations, the Office of Counsel to the Inspector General, and the
Office of Management and Policy.

3In March 2004, a permanent OEI DIG was selected. At that time the Acting
OEI DIG was expected to return to her prior duties in another OIG
component.

analysts' evaluation skills.4 In 2002, a planning committee was formed to
organize and conduct the July 2003 training. The committee, which
consisted of 12 OEI staff from the Washington, D.C., and Baltimore offices
and each of the eight regions, was cochaired by two analysts. The
committee was responsible for making logistical decisions, such as
selecting a site for the training, and developing the agenda.

Follow-up training meetings: In the spring of 2003, OEI's Career
Development Steering Committee5 recommended holding inter-regional
meetings to improve communication and the exchange of information among
OEI staff. As follow-up to the Florida training, three inter-regional
meetings, which lasted about 2 days each, took place from July through
September 2003, involving OEI staff and RIGs. The Chicago/Dallas meeting
took place in Bridgman, Michigan; the New York/Philadelphia meeting took
place in Long Branch, New Jersey; and the Kansas City/San Francisco
meeting took place in Tucson, Arizona.

New York managers' meeting: In August 2003, OEI held a regional managers'
meeting in its New York regional office. The stated purpose of the meeting
was for the Acting OEI DIG, RIGs, Assistant RIGs, and certain managers
from OEI headquarters to address various issues, including OEI's work
plan, the timeliness of OEI reports, and the way OEI reports should be
written.

Office space renovation: In the spring of 2003, the Acting OEI RIG in
Atlanta ordered the renovation of office space after concluding that the
work environment needed to be improved. A secure storage closet and four
enclosed team leader offices with floor-to-ceiling walls were constructed.
In addition, furniture was purchased for these new offices.

Allegations of Misspending Were Unsubstantiated

We did not find evidence supporting the allegations against either the
Acting OEI DIG or the Acting OEI RIG in Atlanta. According to the agendas,
the 2003 OEI national training and the subsequent training meetings were
not designed to provide OEI staff with leisure time. Our review also
confirmed that the regional managers' meeting held in New York addressed
management issues. We found nothing to support the allegation that this
meeting was a pretext for holding a retirement party for the New York OEI
RIG. Lastly, we did not find any basis for questioning the Atlanta
regional office's renovation; the stated needs of that office supported
the renovation.

4Prior to 2001, only OEI analysts attended this training. In 2001, OEI
expanded the training to include administrative staff.

5OEI's Career Development Steering Committee is tasked with identifying
and enhancing the range of skills required to perform OIG evaluations.

2003 OEI National Training Focused on Enhancing Analysts' Skills

Contrary to allegations that the Acting OEI DIG conducted training in 2003
to offer leisure time to her staff, our review indicated that OEI's July
2003 national training, held in St. Petersburg, Florida, provided staff
with 3 and a half days of instruction on programmatic issues and
evaluation skills. According to OEI documents related to the 2003
training, its objectives were to enhance OEI's methods for gathering and
presenting evidence and to build a sound collaborative foundation within
OEI in order to produce high-quality evaluations. Our review of training
evaluations completed by OEI attendees, as well as our interviews with
several OEI participants, indicated that the training was tightly
scheduled with meetings and classes. According to the agenda, the training
offered nine general meetings and 28 breakout sessions, covering 15
different topics. In addition, three managers' meetings were held to
discuss issues related to OEI's structure, product quality, and overall
performance.

The planning committee responsible for organizing the training selected
the Florida location because, after evaluating 10 candidate sites, it
determined that the Florida location would be the most conducive to
accomplishing the objectives of the 2003 training. For example, the
Florida site offered many amenities, such as a large number of meeting
rooms, soundproof walls, and responsive hotel staff-all necessary to
ensure the effectiveness of the training. According to the two cochairs of
the planning committee, these features were particularly important, given
that the training was a large event with numerous breakout sessions. They
further stated that the Florida location met three other important
criteria. First, the OEI DIG at the time asked that the training be held
in an eastern location, and the planning committee members agreed because
the previous two training events were held in western states. Also, this
hotel was in proximity to the airport and accommodations were offered at
the federal government per diem rate.

We found that some OEI officials were concerned about the perception of
holding the 2003 OEI national training at a Florida resort, even though
the training was scheduled for July, during off-season. One senior OEI
official told us that OEI management is always cautious about holding
training at locations that may give an impression that

6

federal funds are being used to finance leisure activities for employees.
Whereas Thursday afternoon traditionally had been reserved for an off-site
networking event, the committee replaced this time with additional
training sessions at the hotel. In addition, the chairman of OEI's Career
Development Steering Committee, who was responsible for approving certain
key decisions made by the planning committee, discussed his concern with
the OEI DIG at the time and a senior OIG official in the

6According to HHS guidance on domestic travel policies, "meeting sponsors
shall not hold meetings at resort areas to which the general public is
attracted because of recreational facilities, unless that area is the
location best suited for the purpose of the meeting in terms of program
needs and cost factors." (HHS Chapter 1-20, Travel Manual, 1-20-20, part
G.)

Office of Management and Policy.7 They concluded that holding the training
at the chosen location was appropriate-especially in light of the
additional training that replaced the networking session.

Finally, while the allegations contended that the Acting OEI DIG decided
to hold the 2003 OEI national training in Florida, the event was actually
approved by this official's predecessor. After the planning committee
evaluated the candidate sites in the summer of 2002, it presented its
recommendation to the former OEI DIG, who approved the Florida location.
OEI then signed a contract with the hotel in August 2002. Due to budget
uncertainties in the fall and winter of 2002,8 the training was canceled
and later reinstated in April 2003 when the budget issues were resolved.
The entire planning and approval process for the Florida
training-including the initial cancellation and reinstatement-took place
during the former OEI DIG's tenure. The Acting OEI DIG cited in the
allegation did not assume her duties until a week before the Florida
training occurred.

Follow-up Meetings Designed for Skills and Teamwork Training

Our review of the three meeting agendas and interviews with an attendee
from each of the three inter-regional meetings indicated that the meetings
were designed for training, sharing of ideas, and teamwork, as opposed to
providing leisure time. Attendees included RIGs and analysts from the
participating regions. The Chicago/Dallas meeting agenda included
exercises on developing evaluation objectives, an analysis plan, and
appropriate methodology. The New York/Philadelphia meeting agenda
identified topics such as improving communication within OEI, methods of
analyzing data, the process of reviewing OEI draft reports to ensure
accuracy and timeliness of OEI products, and OEI staff skills. The Kansas
City/San Francisco agenda focused on various items, including how the two
regions perform their evaluation work, evidence necessary for their
evaluations, review of OEI products to ensure quality, and presentations
on health policy issues. Each meeting agenda also included a closing
session discussing future inter-regional collaboration among the
participants. According to OEI officials, the need for such meetings was
emphasized at the July 2003 Florida training when staff from several
regions suggested that additional regional coordination and exchange of
information would assist OEI in meeting its goals and objectives. An OEI
RIG reported that the meetings were held outside participating regional
offices to ensure that attendees were able to focus on the established
meeting objectives without interference from their day-to-day office
responsibilities.

7Within OIG, the Office of Management and Policy oversees and assists
various OIG components in policy development and implementation and in
budget formulation and execution.

8At the time, HHS was operating under a continuing resolution, which
restricted its spending to levels equal to or below spending levels in the
previous year.

We found that the Acting OEI DIG's involvement in approving the
inter-regional meetings was limited, contrary to the allegation. Upon
learning about the meetings, she reported that she agreed with the concept
of the regions pairing up to plan follow-up meetings. However, we found
that the OEI RIGs in each of the participating offices approved the
substance and logistics of these meetings, including the travel orders for
regional staff who attended, and the Acting OEI DIG authorized the travel
orders for the RIGs who attended.

New York Regional Managers' Meeting Focused on OEI Work Issues

We found no support for the allegation that the New York meeting was held
as a pretext for participants to attend a retirement celebration. The
Acting OEI DIG initiated and approved this meeting in New York to address
with RIGs and Assistant RIGs, and certain managers from OEI headquarters,
issues raised at the Florida training. In addition, she explained that she
needed to meet with the managers to develop OEI's annual work plan, which
was due approximately 1 month after the New York meeting. While leisure
activities were not incorporated into the workday, a retirement dinner was
held one evening for New York's OEI RIG. Attendees reported using their
own funds for the dinner and contributing their own money to purchase a
gift for the retiring RIG. Our review of participants' travel vouchers and
statements by several OEI managers revealed no evidence that federal funds
were used for these purposes.

Renovation of an OEI Regional Office Followed Applicable Policies

The Acting OEI DIG named in the allegation was not involved in the
planning and approval of renovations in the Atlanta regional office. In
addition, we found nothing to substantiate the allegation that the actions
were inappropriate. Instead, we found that the decision to renovate the
office was supported by office needs. The Acting OEI RIG advised us that
he approved the renovations because the Atlanta office did not provide
secure storage for sensitive documents and because the region needed
additional team meeting rooms. According to documentation we reviewed, the
region's existing storage areas were inadequate and not conducive to
housing documents for an ongoing investigation-materials were stored in
basement space that was susceptible to flooding and was not readily
accessible to OEI.9 Officials also stated that furniture needed to be
purchased for the new offices because the existing cubicle furniture was
not suitable for team meetings. We found that the Acting RIG consulted
with the administrative officer for cost estimates and renovation plans,
and then obtained the necessary approvals and oversight from GSA for the
refurbishing and furniture purchase. All displaced furnishings were
transferred to another federal agency.

9According to a regional memo, several boxes of records had been destroyed
by previous flooding.

Agency Comments

In commenting on a draft of this report, the HHS OIG concurred with our
findings. HHS OIG comments are reprinted in the enclosure.

As agreed with your office, unless you publicly announce its contents
earlier, we plan
no further distribution of this report until 30 days after its date. We
will then send
copies of this report to the Secretary of HHS and the Acting Principal
Deputy
Inspector General of HHS and other interested parties. We will make copies
available
to others upon request. In addition, the report will be available at no
charge on
GAO's Web site at http://www.gao.gov.

If you or your staff have questions about this report, please contact me
at (312) 220
7600. Shirin Hormozi, Pauline Seretakis, Sari B. Shuman, and Behn Kelly
made key
contributions to this report.

Leslie G. Aronovitz
Director, Health Care-Program

Administration and Integrity Issues

Enclosure

                              Enclosure Enclosure

Comments for the Department of Health and Human Services Office of
Inspector General

(290335)

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