Speeches - January 2005

Public Accounts Committee - Poor Company Procedures Beaumont Hospital
Deputy Boyle: If we go back to the chronology of what was known and what action was taken, I am finding it difficult to understand the previous responses. Am I correct in thinking Mr. Duffy's concern as hospital manager was expressed for the first time by way of a caution to the technical services manager in May 1999 and that at that stage there was no involvement on the part of the internal auditor?

A second caution was expressed to the technical service manager in July 2000 and again there was no involvement by the internal audit department. A third caution was expressed to the technical service manager in October 2000 yet the internal auditor did not get involved until January 2001, close on a two year period from the time the initial concerns were identified and adequately audited and reported on. Why the delay? Why the use of cautions? What is the procedure for involving the internal audit department? Does it have an independent role in that it can ask questions of its own accord or must such questions be asked by the hospital manager or senior management?

Mr. Duffy: I will take the last question first. The internal auditor is free to pose any question to the organisation as governed by the terms of reference of the audit committee and audit department. It has carte blanche to evaluate any issue in the organisation.

Deputy Boyle: Is that compromised by something we deal with quite often in the Dáil in that if one does not know the right question to ask one does not get the opportunity to ask a question?

Mr. Duffy: The auditors have a programme of work which they undertake during the year. They have a formal programme and an informal programme and they rotate their programmes to different departments in the organisation.

Deputy Boyle: That process, namely when a caution is issued - I presume it is a fairly strong sanction - does not involve the internal auditor.

Mr. Duffy: The internal audit department was involved. As I explained earlier, two separate issues occurred. One related to the issuing of urgent orders, what are known as service requisition orders, for work to the value of €5,000. If four such orders were issued the project is then valued at €20,000. It was around that issue that the first difficulty arose. The problem did not relate to irregularities but with avoidance of going to tender. We then worked on putting the tender procedures in place. That is what happened. While it appeared the tender procedures had been put in place and were being adhered to, other companies which did not exist were in fact being selected to tender.

Deputy Boyle: The first caution was made in May 1999. What was the reason for the delay between the issuing of the first caution and the second in July 2000? What is the reason for the short period between the making of the second and third caution in October?

Mr. Duffy: I am trying to recall what happened at that stage. The issue had not gone away. The cautions made were formal ones. Informal meetings were also held. The internal audit department was actively involved in the process. An issue of bullying which also arose during that period meant some things had to be put on hold pending investigation. A number of different things were happening. The first issue related to using orders to have work done without using a tendering process. We then put procedures in place and monitored them. They appeared to be working but eventually it was discovered that in one particular case quotations were being received from one area with a particular postmark. That put a different perception on the situation because everything else appeared normal. The internal audit discovered that tenders for a particular project came from the same franking machine. That highlighted that there was more to the situation than appeared initially to be the case.

Deputy Boyle: Mr. Duffy has stated the internal auditor was involved during the period in which the cautions were made. However, we have heard formal involvement of the auditor dates from January 2001. I am not sure what was the situation at that time.

Mr. Rogan: The senior internal auditor would be involved in particular issues. We would have compiled some information on the misuse of the service request authorisations. As was pointed out, a programme was put in place for the technical service in terms of how service request authorisations were used in the past and should now be used. We have compiled information about the abuse of service request authorisations and put forward recommendations to prevent such abuse. That is the reason for the initial involvement of the technical service department.

Deputy Boyle: We still have a chronology of it taking almost two years between identification of a problem and that problem being addressed.

Mr. Duffy: There were two different problems. The first problem was dealt with and resolved. The second problem was a separate issue.

Deputy Boyle: Were they not related and were the systemic flaws that existed in the particular department or the people responsible for that department not ongoing?

Mr. Duffy: The evidence only came to light in the second incident.

Deputy Boyle: So the matter was dealt with on a problem by problem basis rather than by examining whether systemic flaws existed in the department?

Mr. Duffy: There was a major review of the department at the time. We have two reports on the department but they did not highlight this issue. The process had been reviewed but it did not highlight the fact that tenders were being received from companies that did not exist. The paper trail existed which showed these companies had tendered for work.

Deputy Boyle: There was no background check.

Mr. Duffy: Exactly. It was not until the audit department did a background check that we discovered what was going on. Although we are discussing the issue in terms of the three year period the same people were involved but on different issues.

Deputy Boyle: That situation is still unsatisfactory. I understand issues must be dealt with as and when they happen but a series of incidents would seem to indicate there were bigger problems which should have been tackled at an earlier stage.

Mr. Duffy: In retrospect, I accept that. However, at the time the documentation available at source indicated a great deal of work was being done on an ongoing basis. The Comptroller and Auditor General has identified that the hospital was trying to manage the issue.

Deputy Boyle: I will deal briefly now with the carpark issue. I share the Chairman's reservations that the subsidiary company remains in place. On the last occasion we were given an account of proceedings in Beaumont Hospital we received an undertaking it would be wound down as soon as possible. Another issue which arose at the time was that the subsidiary company was skating on very thin ice in terms of its compliance with company legislation because the directors of the company were not meeting. I am wondering whether that situation has been overcome.

I must place on record again that the cost overrun allied with the tax relief gained for the carpark cost €50,000 per additional carpark space provided. It was a serious matter. I would also like to know if the hospital availed of other tax relief and whether particular lessons have been learned from the fiasco that has been the carpark in terms of how one creates such infrastructure, seeks to fund it and how it is subsequently paid for.

Mr. Mulligan: On the question of compliance with company law, the carpark company is up to date with its returns and is being compliant. The directors' meetings have been held and we have no doubts in that regard. On the question of whether the hospital has availed of other tax reliefs, we have not. The carpark was the only such scheme.

January 26th

Speech on Vote of Condolence on death of Eileen Desmond

Mr. Boyle: I thank the Ceann Comhairle for giving me the opportunity to join in the votes of condolence. As a Member representing Cork South-Central, I, too, would like to be associated with the many words that have been said in honour of Eileen Desmond. On my first opportunity to vote as a citizen, which was in the election of June 1981, and before the foundation of the Green Party, I voted for her. She was a candidate in what was then the new constituency of Cork South-Central. It should also be noted that not only did she have personal difficulties as a widow bringing up a young family but she also had to cope with the fact that the constituency she represented, Mid-Cork, was quite a sprawling constituency when she was first elected. It stretched all the way from Rockchapel on the Kerry border to Crosshaven at the mouth of Cork Harbour. Although her health was not always as good as it could have been, even after her retirement from active public life she was regarded as a solid rock of support for the Labour Party and particularly for her daughter Paula, who remains very actively involved in Cork politics and who had the honour of being the first woman elected as chair of Cork County Council. Given the role Eileen Desmond played as a Deputy and Minister and her consistent support of politics at local and national levels, this House and all involved in politics and public life owe her a great debt. May she rest in peace.

January 27th

Public Accounts Committee - Questioning of Secretary General of the Department of Social and Family Affairs

Deputy Boyle: I believe the 2003 figure was €5.5 billion and the rest came from the social insurance fund. I do not have any other figures apart from that. As regards the criticism over the delay in review dates for the short-term schemes, will Mr. Hynes say what immediate work has been done within the Department towards speeding up the time gap? I refer to the short-term schemes in particular when people are actually given a review date - and more particularly as to when that review date is followed up on.

Mr. Hynes: A review programme is in place for all the schemes, depending on the length of time a person is in receipt of a benefit and the type of illness he or she is certified for. In certain cases we try to refer people more quickly than in others. That is the general policy. We refer a number of cases after four weeks, depending on the type of illness, in other cases after eight weeks. The extent to which reviews can take place depends on a number of factors. Obviously we have claims from all over the country and a medical review system must be arranged so that our medical assessors, when they visit a given area, have sufficient cases to review to make the system efficient and effective. Depending on the area of the country a person lives in the review may take longer for a review to happen. In practice it is found that when people are called for review many of them submit a final certificate in any event. They do not actually turn up for the review because they have recovered and are able to return to work.

Deputy Boyle: Is it not a central part of the Comptroller and Auditor General's report that when the announcement is made this assists the review process itself and the final decision as to whether or not people have recovered sufficiently becomes apparent?

Mr. Hynes: I suppose the longer the time period the greater the chance that someone has recovered if he or she is suffering from short-term illness.

Deputy Boyle: Is the delay to help people recover?

Mr. Hynes: As the Comptroller and Auditor General explained in his report there are a number of medical assessors. We have set up circuits and put in place arrangements for them to carry out their reviews around the country. Obviously this takes time and cannot be done instantaneously. Basically, we depend on the certificates we get from the doctors. That is the initial proof we have that people are incapable of work.

Deputy Boyle: There are two types of review, when they are eventually organised, the desk review and the physical examination. The Comptroller and Auditor General does not go into details as to what the breakdown is for the different types of review. Does Mr. Hynes have that information?

Mr. Hynes: Generally speaking, desk interviews assess whether a physical examination is required in particular cases. In some cases the medical assessor will be able to decide this on the basis of the papers whether in his or her view-----

Deputy Boyle: That is the type of information I am looking for. How many decisions were made on the basis of a desk review and how many were referred for a full physical examination.

Mr. Hynes: I will get that detail for the Deputy.

Mr. Purcell: On page 120 we there is a total of 118,000 between reviews, desk assessments and examinations. Basically it breaks down 50-50. Some 59,737 cases were desk reviewed while 58,625 were called for physical examination.

Deputy Boyle: That clears up matters. The analysis of the claimants made by the Comptroller and Auditor General highlights the particular categories people are placed in by the Department in terms of the various payments it makes. Almost 40% are in a category known as 'Do not refer again' and there is no subsequent review. I presume this because the nature of the invalidity or disablement is quite chronic and severe. Then there is another category which accounts for close to 50% of people who have either had a review date assigned or their assessments have passed without any action being taken. When those two figures are combined the people whose invalidity is such that they should not re-enter the system and those which have not been correctly dealt with administratively, one is talking of approximately 90% of the cases under review. That is very high figure. Does Mr. Hynes find that acceptable?

Mr. Hynes: Is the Deputy referring to the long-term disability cases?

Deputy Boyle: I am.

Mr. Hynes: We accept we have not been carrying out sufficient medical reviews on the disability allowance scheme, over a number of years. As I said in my opening statement, this is partly due to the fact that when these reviews were being carried out a very small number of people were found to be incapable of work. There is also the issues of the resources available to us for carrying out these reviews and the fact the numbers of claims under these schemes has been increasing significantly in recent years. That obviously affects the capacity to carry out such reviews. I would agree with the Deputy, however, that more reviews need to be carried out, and more frequently, in the future. We are trying to do that. A special review unit has been set up within the Longford office which will focus on control and review of the disability related schemes.

Deputy Boyle: Some of the delays are chronic. There are 240 cases that go back as far as 1997. These relate to people who have not been put into the 'Do not refer again' category. It would appear a decision was taken not to put them in that category. In fact 16% of the cases outstanding relate to a period prior to the year 2000, which has a high number in its own right. Will Mr. Hynes explain why that type of delay is occurring in those cases?

Mr. Hynes: When an examination was carried out on those people a review date was arranged. Because of the resource issues involved we were not able to actually carry on with these reviews, so the people stayed on payment. An assessment has to be made, I suppose, of the risk involved here. If only a very small number of people are actually found capable of work and there are pressures on other areas of the Department, we have to take a decision as to whether resources are better employed on other aspects of control rather than on delivering services. I agree that ideally all cases with a review date should be reviewed. We try to take a risk-related approach. If we believe the resources could be better used elsewhere, we will take that decision.

Deputy Boyle: The resources argument is a telling one but it brings us to the fact that in 2003 only 16 cases were reviewed. Though it is a small sample, all 16 were found not to qualify for disability allowance. Why was it that such a small number were reviewed? What steps have been taken since to remedy this?

Mr. Hynes: If information is made available to the Department by our inspectors in the field on particular cases, they will be referred to the relevant section. There is a greater likelihood that people will be found to be capable if they have been identified in the course of inspection. In practice, while people are found to be capable of work and are often disqualified from receiving disability allowance, they have the option of appealing in which they can be successful. In other cases, the persons concerned apply for other benefits under the social welfare system. Therefore, in the majority of cases, those involved will continue on some payment.

Deputy Boyle: Are some approaching this category of social welfare payment to get the highest possible rate that might be available to them? On failing, do they look at other payments?

Mr. Hynes: I am sure that is a factor in applying for payments. To qualify for the payment one has to prove one is permanently incapable of work. If one is incapable, this is the appropriate scheme. In practice, there is much movement from unemployment to disability payments. Some people are unemployed for a long time and are able to satisfy the conditions for entitlement to a disability payment. They tend to move because in the case of unemployment payments, one is subject to a different regime and has to prove one is capable of work, seeking work and available for work on a continuous basis. If one is not available for work, the appropriate scheme is the disability allowance scheme.

Deputy Boyle: Such movement would be understandable in the case of short-term benefits. It would be less so in the case of long-term benefits. I wonder whether the Department undertakes any analysis of the crossover where those who have applied for long-term benefits end up in receipt of unemployment benefits.

Mr. Hynes: As a general rule, where people apply for and fail to qualify for disability allowance, the majority will apply for an unemployment payment as they have been found capable of work by the medical assessor. The only other avenue of support open to them is through the unemployment payment schemes. There is much movement from one scheme to another. People apply under one scheme, fail to qualify and then apply either for an unemployment payment or perhaps supplementary welfare allowance if they do not have resources.

Deputy Boyle: I want to move on to deal with the actual medical assessment, particularly the physical assessment. The total cost is around €3.6 million but there is one telling figure. There are 60 nurse attendants available for such assessments, only six of whom are full-time. What are the factors behind this?

Mr. Hynes: In many parts of the country the medical assessor only appears infrequently. It would not be economic to have full-time nurse attendants based in those locations. In the circumstances we tend to employ nurse attendants on a part-time basis and pay them by reference to the number of sessions attended. In larger areas such as Dublin and Cork there is continuous medical assessment. Therefore, we tend to employ full-time staff. Being able to recruit them on a full-time basis is sometimes an issue.

Deputy Boyle: Is there a danger in this for the Department? Lack of continuity might be a factor in delaying reviews. If people are known to staff of long-standing, familiarity with their previous history should help.

Mr. Hynes: The nurse attendant does not have any input into the decision on whether a person is found capable. They are there to provide assistance for the medical assessor. They do not carry out any other functions. They are essential to the process because we cannot organise medical review sessions without them.

Deputy Boyle: There was an 8% reduction in the number of assessments in 2003, which was strange. There was a reduction at a time when the Department would have been anxious to find out whether there were more or fewer people claiming improper benefits. The actual number with insurable benefits for which the Department is catering has almost doubled since 1994. Why is it that the Department has found itself undertaking fewer assessments given that the number in the system has grown?

Mr. Hynes: It comes back to the number of assessors available to carry out reviews. This can fluctuate from time to time. It is difficult to recruit people as medical assessors. We have found that it is not easy to get people with the right qualifications who are prepared to do this work. This is a constraint in the number of reviews we can carry out. As the Comptroller and Auditor General has pointed out, we are planning to carry out a full review of the medical assessment system to see whether there are other ways by which we can have more effective reviews carried out. We are planning to issue an RFT to enable this review to be done.

Deputy Boyle: There is so much in the three paragraphs and even the Vote that I am not sure the committee can get through them today. I have one question on the paragraph dealing with overpayments. The Department operates seven criteria in determining whether overcharging has taken place and there is an element of fraud, one of which is that wrong information has been given in making a claim. Given the low levels of recorded fraud by the Department, this seems to be a peculiar criterion. If someone has knowingly given wrong information, it is dealt with under the heading of overcharging rather than in the consideration of fraud by the Department.

Mr. Hynes: On fraud, the main category consists of people who are working and claiming at the same time. However, deliberately and knowingly providing incorrect or misleading information to the Department is also regarded as fraud. While a decision must be made as to whether the incorrect information is provided knowingly and with the intent to defraud the Department, deliberately not disclosing means or information relevant to the claim with the intention of receiving a benefit to which a person is not entitled is regarded as fraud.

Deputy Boyle: Given that payments are structured as they are, particularly in this chapter, the benefit of doubt may be given to people. Is the Department taking a cautionary approach or a first-offence approach in that some people are not being considered in terms of making an incorrect claim and it is put in into this category of over-payments?

Mr. Hynes: In any case where we identify that somebody received a payment to which they were not entitled, we try to recover it. In terms of whether we deem it to be fraud, we consider the circumstances to find whether the information was deliberately withheld. We do not apply any sort of condition along the lines the Deputy suggests, namely, that for a first offence we would take a different view. It is an objective look at the circumstances of the case to find whether, in the Department's view, the person deliberately tried to defraud the system.

Deputy Boyle: Does Mr. Hynes know how much of the overcharging can be attributed to wrong information being provided?

Mr. Hynes: I will have to look for that information.

Deputy Boyle: If the information is uncovered, it can be dealt with by the next questioner. I apologise but I must leave to attend the House.