abcdefghijklm Health Department Directorate of Performance Management and Finance Dear Colleague FINANCIAL CONTROL: PROCEDURE WHERE CRIMINAL OFFENCES ARE SUSPECTED Summary 1. This Circular updates Circular 1989 (GEN)3. It provides guidance on procedures to be followed in instances where there is cause to suspect that a criminal offence has been committed involving public funds or property. Its terms apply to Boards and Trusts, the Common Services Agency, Mental Welfare Commission and all special Health Boards. These bodies are encompassed by the references to health bodies which follow. Background 2. MEL(1999)14 requires all health bodies to have in place a Fraud & Corruption Policy and Response Plan, and the contents of this Circular on the reporting of suspected criminal offences should be encompassed within such Plans. Theft 3. Chief Executives should ensure that an operational manager within their health bodies is delegated specific responsibility for co-ordinating action where there are reasonable grounds for thinking that an item of property, including cash, has been stolen. The designated officer should report the details to the police and notify the circumstances to the Chief Internal Auditor. 5 April 2002 Addresses For action Chief Executives, Boards Chief Executives, Trusts Chief Executives, Special Health Boards Chief Executive, Common Services Agency Director, Mental Welfare Commission For information Directors of Finance, Boards and Trusts Directors of Finance Special Health Boards Director of Finance, Common Services Agency Auditor General Procurator Fiscals Chief Constables Enquiries to: Chris Naldrett Health Department Basement Rear St Andrew s House EDINBURGH EH1 3DG Tel: 0131-244 2363 Fax: 0131-244 2271 e-mail: chris.naldrett@scotland.gov.uk Fraud, Embezzlement, Corruption and Other Financial Irregularities 4. Where any officer of the health body has grounds to suspect that any of the above activities has occurred, his or her local manager should be notified without delay. Local managers should in turn notify the body's Director of Finance who should ensure than an appropriate investigation is carried out, normally 1
by the Chief Internal Auditor. It is essential that preliminary enquiries are carried out in strict confidence and with as much speed as possible. Restitution of funds or property is not a reason for withholding information or failing to report the facts. At the very early stages of a case of suspected fraud, the police should be contacted to seek their advice on steps that might be taken. 5. Where preliminary investigations suggest that prima facie grounds exist for thinking that a criminal offence has been committed, the appropriate Procurator Fiscal must be notified without delay and given all material assistance. At all stages the Chief Executive (and any other relevant Officer as specified in the Fraud Policy and Response Plan) should be kept informed of developments on such cases, particularly those of a sensitive nature. All referrals to the Procurator Fiscal must also be copied to the Appointed Auditor and to the Scottish Executive Health Department (SEHD). Where there is doubt as to whether a prima facie case for prosecution exists, the health authority should contact the appropriate Procurator Fiscal to obtain his/her advice. Criminal Proceedings 6. It is never for an employing authority or its officers to decide whether a suspected person should be prosecuted. The question of whether proceedings should be taken in any particular case is a matter solely for the Crown authorities. It follows that no suspected person should ever be told whether or not he will be prosecuted, except where a decision has already been made by the Crown authorities. Family Health Services (FHS) Suspected Frauds 7. With the establishment of the FHS Fraud Investigation Unit, (FIU) there now exists a central resource for carrying out all patient exemption checks, and a centre of expertise for investigations into potential frauds concerning practitioners. 8. The operations of the FIU are outlined in the Roles and Responsibilities Protocol, issued as an Appendix to Circular MEL(2000)28. FHS Contractor Fraud 9. Where the FIU is involved in the investigation of potential contractor frauds, and where prima facie grounds exist for thinking that a criminal offence has been committed, the responsibility for reporting to the Procurator Fiscal remains with the Accountable Officer of the Primary Care Trust/Island Board. 10. However, during the course of an FIU investigation it may be necessary for the FIU to refer a case to the Crown Office or to a Procurator Fiscal, in order to seek a Search Warrant. In such cases, the decision as to whether or not a criminal investigation of the case will proceed will effectively pass to the Crown Office or the Procurator Fiscal concerned. 2
FHS Patient Fraud 11. The FIU Roles and Responsibilities Protocol stipulates that the FIU will undertake patient exemption checks on behalf of Primary Care Trusts/Island Boards, and that any irregularities will be pursued by them. The FIU will, where appropriate, invoke the (Penalty Charge) (Scotland) Regulations 1999. 12. Given this, there is no need for health authorities to report individual instances of patient fraud to the Procurator Fiscal. Instead, an annual summary will be prepared by the FIU, for submission to the relevant Primary Care Trusts/Island Board, Audit Scotland and the SEHD. 13. Where cases of gross patient fraud are uncovered, e.g. on an organised basis or of patient/contractor collusion, the Accountable Officer of the Primary Care Trust/Island Board must report it to the Procurator Fiscal, in accordance with paragraph 5 above. Internal Management Arrangements 14. Whether or not the Crown authorities determine that there are sufficient grounds on which to institute criminal proceedings, it remains open to health bodies to consider invoking disciplinary and other relevant procedures. Whether or not criminal proceedings are taken, or a criminal conviction is obtained, the public debt incurred is not eliminated and recovery of the debt should be pursued by any means available. Internal management action must not, of course, prejudice any possible criminal proceedings but should continue with reference to disciplinary hearings and systems revision. 15. As with all categories of loss, once the circumstances of a case are known health bodies will require to take immediate steps to ensure that so far as possible these do not recur. It will be necessary to identify any defects in the control systems that may have enabled the initial loss to occur, and to decide on any measures to prevent recurrence. 16. Health bodies should consider very carefully the treatment of any payment claims that arise from organisations or individuals who are under investigation, or against whom proceedings are being taken for suspected fraud. In doing so, it may be appropriate for bodies to seek to distinguish between claims similar to those which may have given rise to the earlier suspicions, and those made by the same person or organisation in totally different circumstances. The existence of contractual obligations will obviously also be important and in cases of doubt health bodies should seek legal advice. Reporting to the Executive 17. In every case where an offence is suspected, the appropriate procedure for communication with the Crown authorities is for health bodies to approach the Procurator Fiscal. While normally there is no requirement to report individual cases to the Executive, there may be occasions where the nature or scale of the alleged offence, or the position of the person or persons involved, could give rise to national or local controversy and publicity. Moreover, there may be cases where the alleged fraud appears 3
to have been of a particularly ingenious nature; or where it concerns an organisation with which other health bodies may also have dealings. In all such cases, the SEHD Director of Finance should be notified of the circumstances of the case at the same time as an approach is made to the Procurator Fiscal. 18. The Executive s attention should also be drawn to any unusual or significant incidents involving patients or endowment funds. Dissemination of Information on Fraud or Other Criminal Offences 19. In light of information supplied to the Executive by individual health bodies (paragraphs 17 and 18 above), and taking account of other information which may be available centrally, the Executive may consider that it would be helpful to bodies generally to be advised of the circumstances involved. As already mentioned, this may be particularly appropriate where an alleged fraud case might have direct implications for other health bodies, or where the nature of a particular case, although not necessarily its scale, warrants alerting all health bodies. Responses to Press Enquiries 20. Where the publicity surrounding a particular case of alleged financial irregularity attracts enquiries from the Press or other media, the Chief Executive should ensure that the relevant officials are fully aware of the importance of avoiding issuing any statements which may be regarded as prejudicial to the outcome of criminal proceedings and the officials concerned should consult the FIU about the wording prior to its issue, any statement in respect of cases involving FHS. Standing Financial Instructions 21. Health bodies should ensure that their Standing Financial Instructions are appropriately framed to take account of the guidance in this Circular. ACTION 22. Health Bodies are asked to: ensure that an operational manager within the health body is delegated specific responsibility for co-ordinating action following an act of theft; where a criminal offence has been committed all referrals to the Procurator Fiscal are copied to the Appointed Auditor and to the Scottish Executive Health Department; where cases of gross patient fraud are uncovered the Accountable Officer of the Primary Care Trust/Island Board must report it to the Procurator Fiscal; take immediate steps to ensure as far as possible similar losses do not recur; 4
report to the Scottish Executive cases where fraud occurs with an organisation which provides services to other health bodies; report to the Scottish Executive any unusual or significant incidents involving patients' or endowment funds; ensure their Standing Financial Instructions take account of this updated guidance. 23. Any enquiries about this Circular should be directed to Chris Naldrett Directorate of Performance Management and Finance, Basement Rear, St Andrew's House, Edinburgh, EH1 3DG. Copies of the Circular have been sent to health bodies Directors of Finance, to Procurator Fiscal, and to Chief Constables. Yours sincerely JOHN ALDRIDGE Director of Performance Management and Finance 5