AP medical scam puts focus on ₹450cr deals

AP medical scam puts focus on ₹450cr deals

Akin To ESI Med Equipment Scam In Telangana

U.Sudhakarreddy@timesgroup.com

Hyderabad:  01.03.2021 

A medical equipment maintenance fraud, allegedly worth crores, is unfolding in Andhra Pradesh.

Documents of Anti-Corruption Bureau (ACB) and health department, accessed by TOI, reveal alleged irregularities in biomedical equipment (BME) maintenance service contracts akin to Employees’ State Insurance (ESI) fraud in Telangana where hundreds of crores were siphoned off for purchase of medicines and equipment by inflating prices by Insurance Medical Services (IMS) former director Ch Devika Rani. The IMS chief, who had allowed shell companies to supply medicines at higher prices to ESI hospitals by fabricating records, was arrested subsequently.

In Andhra Pradesh, the ACB has now asked CID to register a criminal case against the service provider and public servants. The equipment and assets have an estimated value between Rs 450 crore and Rs 480 crore in hospitals across Andhra Pradesh.

The violations found in BME maintenance scam include price escalation, raising bills for non-existing equipment, issuing invoices for equipment under ‘Beyond Economical Repair and Warranty’, and bills raised on equipment still in the warranty period.

A sample inspection of a few hospitals, including King George Hospital, Visakhapatnam, by ACB had shown Rs 96 lakh excess payments.

Excess payment of ₹62 lakh was made to TBS, says ACB

An official said: “It is just the tip of the iceberg.” AP Crime Investigation Department (CID) was asked to probe further and unearth the scam after registering a first information report (FIR).

TBS India Telematic and Biomedical Services Private Limited was identified as a service provider and the then commissioner of family welfare and health, AP, had entered into an MoU on November 1, 2015, for providing biomedical equipment maintenance services in government health facilities. The successful bidder, TBS, would receive 7.45% of total value of assets for 2015-16 and further, they were supposed to receive 10% escalation over the 7.45% ever year.

The AP high court had ordered an ACB probe based on a PIL filed by activist Indkuri Venkata Rama Raju in 2018 .

ACB, in its inquiry report, said, “Around ₹25.5 lakh was paid to the firm Numbers Only Hospital Supply Chain Solutions though the agency never visited 21 hospitals for inventory mapping of BME.”

A field verification at KGH, Visakhapatnam, had revealed that TBS had claimed that the price of each ventilator was ₹11 lakh and each humidifier ₹45,000, but the price range of ventilators was between ₹6.5 lakh and ₹₹11.5 lakh and humidifier ₹40,000. “TBS has claimed excess amount in the bill submitted for heart lung machine by inflating value to ₹45 lakh of its original value of ₹14.6 lakh. Excess payment of ₹3.8 lakh was made from November 2015 to June 2017. Excess payment of ₹34 lakh was made to TBS from November 2015 to June 2017 by inflating the value of BME,” ACB said.

Excess payment of ₹62.8 lakh was made to TBS for the period of November 2015 to June 2017 on the basis of the bill submitted for maintenance of BME, which were under warranty, and the figures pertained to randomly verified hospitals and health centres.

A penalty of ₹45 lakh was not imposedd on TBS despite the failure of the company to repair BME at KGH, Visakhapatnam, within seven days of complaint for repair of 29 BMEs. Then AP chief secretary LV Subrahmanyam, in his note in 2019, said, “ACB has reported many administrative, and procedural lapses resulting in a huge financial loss to the government. ACB reveals there is wilful financial mismanagement in executing the contract for maintaining BME in government hospitals.”

In reply to a show cause notice, TBS India said, “Those referred instances are some isolated and bona fide mistakes.”

The agreement suspension orders of the AP government said, “TBS India Telematic and Biomedical Services agreed that due to human error incorrect prices were billed. It submitted of five assets mentioned in the notice, two assets tagged incorrectly due to clerical errors, an asset is under PPP mode wrongly tagged due to nonavailability of information, one tagged with wrong name.”