Auditing operation No. 04/27
Metallurgical employee insurance company's management of the funds collected on the basis of the act on insurance for general health insurance
The auditing operation was included in the Annual Audit Plan of the Supreme Audit Office (hereinafter referred to as “SAO”) for the year 2004 under No. 04/27. The auditing operation was managed and audit conclusion drawn up by Mr. Jiří Drábek, the Member of the SAO.
The aim of the audit was to examine the effectiveness and the economy of the funds spent on the operation, the acquisition of long-term tangible and intangible property and the financing of the health care and Metallurgical employee insurance company’s procedure of the insurance premium collection.
The audited period covered the years 2001 to 2003 as well as previous periods in certain cases of relevant connections and the periods up to the conclusion of the audit.
The audited body was the Metallurgical employee insurance company with headquarters in Ostrava (hereinafter referred to as “MEIC”).
The audit of the MEIC financial management found particularly following shortcomings:
The MEIC established an endowment fund of health prevention and provided it with property investment consisting of financial investment in the amount of CZK 5,000,000 and non-financial investment in form of 190,000 shares in value of CZK 34,200,000. By the monetary investment in the amount of CZK 5,000,000 the MEIC breached the Section 13 of the Act No. 280/1992 Coll. This investment did not present any of legitimate and legal expenditures of the employee insurance company. Apart from that, the mentioned monetary investment was made using funds from public health insurance. The SAO assessed the establishment of the endowment fund of health prevention and related property investments and transfers made
by the MEIC as unjustified and useless.
Administrative board of the MEIC approved the establishment of the subsidiary trading company in order to provide contractual health insurance and supplementary insurance and other entrepreneurial activities. The MEIC did not carry out the mentioned plan until the date of the SAO audit conclusion.
Administrative board of the MEIC decided to carry out the expenditure using the funds of the MEIC (acquired by the sale of shares) in amount of CZK 100,000,000 in connection with the establishment of the subsidiary trading company, which is not in compliance with the Section 13 of the Act No. 280/1992 Coll. The expenditure for the purchase of the shares of the established company carried out in order to provide the financial investment for this company does not present any of legitimate and legal expenditures of the employee insurance company.
The proposed subject of the business of the subsidiary trading company included among others the entrepreneurial activities, which do not fall into the scope of activities of the employee insurance company. The MEIC is not entitled to carry out the expenditures in connection with securing the implementation of activities, which do not fall into the scope of its activities.
The MEIC did not proceed in compliance with the provisions of the Section 18 paragraph 1 of the Act No. 280/1992 Coll. Pursuant to the law, the MEIC was obliged to carry out the allocation to the reserve fund in form of an insurance transfer from the primary fund. Instead of legally prescribed allocation, the MEIC carried out an allocation to the reserve fund in form
of a transfer of shares from the investment property fund or the fund of a specific health care.
The value of assets in the reserve fund, taking into account the market price of the shares placed in the fund, amounted CZK 56,543,696 by the end of the year 2001, while the legally prescribed minimum amount of the reserve found was CZK 79,842,000.
The MEIC was drawing the assets of the reserve fund (shares) amounting CZK 23,950,000 in conflict with relevant legal regulations.
The MEIC was drawing the assets of the service fund amounting CZK 1,904,979 in conflict with relevant legal regulations, for the payment of the costs spent on purposes, which were not connected to the general health insurance.
The MEIC acquired from the Czech Consolidation Agency, on the basis of the general contract concerning the assignment of claims, funds amounting CZK 47,501,718, earmarked (pursuant to government resolution no. 1184) for the payment of liabilities toward the providers of the health care in compliance with the laws and implementary regulations of the general health insurance. A benefit for the primary fund of the health insurance presented after all only CZK 25,910,757. The MEIC transferred the amount of CZK 21,590,961 into the prevention fund.
The SAO assessed that the MEIC did not efficiently claim the debts from the payers of the general health insurance premium. The MEIC was making decisions concerning the due general health insurance premium in form of the assessments with significant delay from the moment when the payer became a debtor.
The MEIC spent uneconomically and inefficiently funds from the general health insurance amounting CZK 1,463,000 in connection with projects, which were either not implemented at all or implemented unsuccessfully and terminated. The costs were spent in connection with projects “The plan of directed health care” and “The Association of the independent medicine practices” in the Brno region.