State Funds Misappropriated for Non-Reimbursable Cases Under State Orders: PVA

The State Oversight Service has summarized the findings from studies conducted at the State Health Agency of the Ministry of Health of Armenia (SHA) and several medical organizations. The total volume of violations recorded in 6 healthcare facilities amounts to around 542 million AMD.

The findings arise from an inspection carried out by the Social Sector Oversight Division at the Ministry of Health, based on the directives issued by the head of the Service. The inspections focused on the execution of contracts from 2020 and 2021 regarding 'Medical assistance and services provided under guaranteed free and subsidized conditions by the state.' Numerous procedural deficiencies and omissions were noted within the SHA, which reflect inefficient management and inadequate performance of certain officials.

It was revealed that under conditions of improper application or lack of application of the coordination and oversight instruments granted to it, several medical organizations operating in Armenia submitted claims for reimbursements concerning medical services that were non-reimbursable or subject to lower reimbursement rates, during the years 2020-2021. As a result, they received funds from the state budget, leading to substantial damage to the state.

The audits conducted by the Social Sector Oversight Division, involving expert monitors from the SHA, identified violations amounting to a total of 541,690,017 AMD across the 6 medical organizations, of which 118,560,379 AMD has been restored to the state budget to date. Additionally, an overall sum of 13,686,480 AMD has been reimbursed to citizens. Furthermore, schedules have been established with 2 medical organizations for the recovery of an additional 96,445,601 AMD in violations back into the state budget.

Based on the reports from the current phase of investigations, the Investigative Committee of Armenia has initiated 2 criminal proceedings:

1. At 'Nairi Medical Center' LLC: Violations totaling 140,529,497 AMD were recorded, with 32,661,600 AMD restored to the state budget and 12,791,380 AMD reimbursed to citizens. Several facts uncovered during the investigation have led to a criminal proceeding initiated at the Investigative Committee.
2. At 'Armenia Republican Medical Center' LLC: Violations totaling 119,343,340 AMD were recorded, prompting the initiation of a criminal case based on the facts reported to the Office of the Prosecutor General.
3. At 'Arabkir Medical Center EDAI' LLC: Violations of 80,828,110 AMD were recorded, of which 79,800,410 AMD has been restored to the state budget, and 895,100 AMD has been reimbursed to citizens.
4. At 'Nork-Marash Medical Center' LLC: Violations amounting to 97,835,100 AMD were recorded. Relevant reports and materials have been forwarded to the Office of the Prosecutor General for legal evaluation and subsequent actions.
5. At 'V.A. Fanarjyan National Oncology Center' LLC: Violations totaling 48,786,750 AMD were noted, with 6,098,369 AMD restored to the state budget, and a schedule has been developed for the full recovery of the remaining amount within 8 months.
6. At 'Shengavit Medical Center' LLC: Violations were recorded amounting to 53,757,220 AMD. A schedule has been established for the complete recovery of the violated amounts back into the state budget within 12 months.

In order to minimize and eliminate the risks of recurrence of the recorded violations at the SHA and in medical institutions, the Service is preparing a comprehensive package of recommendations to present to the Prime Minister. Moreover, based on the new directive from the Service's head, monitoring activities will soon commence at the SHA and in several medical establishments with significant shares of state orders through reciprocal investigation formats.