GAO: FBI misued money pegged for fraud

Thursday, June 30, 2005

WASHINGTON -- Money intended for investigating health care fraud may have been misdirected by the FBI to other efforts, according to a report released in May by the General Accountability Office. The report said that the FBI was not capable of tracking the overall costs of its health care fraud investigations, and therefore could not determine where the funds were spent. The FBI apparently shifted money from the Health Care Fraud and Abuse Control Program to fund counterterrorism activities after Sept. 11, 2001. However, the poor accounting practices make it impossible to determine how much money was actually transferred from the health care fraud accounts.
The Health Insurance Portability and Accountability Act (HIPAA) established the separate program for investigating health care fraud in 1996.
"The FBI did not have a system in place to capture its overall health care fraud investigation costs, and therefore, was not in a position to determine whether or not all transferred HIPAA funds were properly expended," the report stated.
The GAO's study was requested by Sen. Charles Grassley, R-Iowa, chairman of the Senate Finance Committee based on concerns that the FBI was shifting resources earmarked for healthcare to counterterrorism activities.
The GAO recommended that the bureau establish formal policies and procedures specifying how costs are to be reported.