Federal Report Details Corruption at IHS

According to testimony by Roy, the IHS was found to have no policy to verify that employees and contractors were not listed among those individuals and entities excluded from participating in federal health programs.

Roy added that OIG investigation discovered that an IHS employee had "unlawfully altered government medical records of IHS beneficiaries for personal gain."

The employee and co-conspirators had replaced beneficiaries' names with their own on medical records and filed claims for payment to a private insurance company. The investigation resulted in five indictments, two of whom were IHS employees, who were charged with conspiracy and healthcare fraud. "They are jointly responsible for paying the insurance company over $99,000 in restitution," Roy said.

IHS pharmacies also have had problems with controlled substance abuses, including diversion and trafficking by employees, contract providers and patients, Roy said.

"In 2008, we investigated an allegation that a Sioux San pharmacy technician in Rapid City "stole large quantities of Vicodin and Tramadol. When questioned by our special agents, the employee admitted to stealing large quantities of narcotics from the IHS pharmacy, which she then sold on the street for cash."

The investigation revealed that the IHS pharmacy "lacked effective security controls to prevent and detect drug diversion, such as security cameras and two-person inventory counts.

The Aberdeen Area, which serves 122,000 Native Americans living in both rural and urban areas, includes nine hospitals, 15 health centers, two school health stations and several smaller health stations and satellite clinics.