Facts:

The case involves the Quezon City Eye Center (petitioner) and the Philippine Health Insurance Corporation (PhilHealth) along with its various departments, including the Arbitration Office, Prosecution Department, and Fact Finding Investigation and Enforcement Department. The events leading to the case began with reports of irregularities in the recruitment of patients for cataract surgeries, prompting PhilHealth to issue Circular No. 17 in 2007, which suspended claims for cataract operations performed during medical missions or through recruitment schemes. Following a complaint received on September 4, 2009, PhilHealth initiated an investigation into several ophthalmologists, including Dr. Allan M. Valdez and Dr. Rhoumel A. Yadao, who were associated with the petitioner.

The investigation revealed that Dr. Valdez performed 1,179 cataract surgeries from July 2009 to June 2010, leading to multiple administrative cases against the petitioner for Breach of the Warranties of Ac...

Facts:

Background of the Case
The case involves Quezon City Eye Center (QCEC) and the Philippine Health Insurance Corporation (PhilHealth). QCEC was accused of multiple counts of Breach of the Warranties of Accreditation under PhilHealth rules. The allegations stemmed from cataract surgeries performed by QCEC’s visiting doctors, Dr. Allan Valdez and Dr. Rhoumel Yadao, who were allegedly involved in "cataract sweeping" or recruitment schemes in violation of PhilHealth Circular Nos. 17 and 19, series of 2007.

Circulars and Allegations
PhilHealth issued Circular No. 17, series of 2007, suspending claims for cataract operations performed during medical missions or through recruitment schemes. Circular No. 19, series of 2007, provided guidelines prohibiting recruitment schemes for cataract surgeries. QCEC was accused of violating these circulars by allowing its facilities to be used for such surgeries, which were allegedly part of organized recruitment schemes.

Procedural History
PhilHealth’s Fact Finding Investigation and Enforcement Department (FFIED) investigated QCEC and its doctors. Multiple administrative cases were filed against QCEC, alleging it had breached the warranties of accreditation. The PhilHealth Arbitration Office found QCEC guilty and imposed fines and suspension of accreditation. QCEC appealed to the PhilHealth Board, which modified the penalties but upheld the findings. QCEC then went to the Court of Appeals, which affirmed the PhilHealth Board’s decisions in consolidated cases.

Issue:

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Ruling:

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Ratio:

1. Due Process Violation: PhilHealth failed to furnish QCEC with a copy of the resolution finding a prima facie case against it, violating QCEC’s right to due process. The Court emphasized that due process requires an opportunity to know the case one has to meet.
2. Lack of Substantial Evidence: There was no substantial evidence to prove QCEC’s liability for Breach of the Warranties of Accreditation. The Court found no nexus between QCEC and the alleged recruitment schemes carried out by its visiting doctors. QCEC merely lent its facilities and processed PhilHealth claims for the doctors, and there was no evidence it actively participated in or knew of the recruitment schemes.
3. Misapplication of the Doctrine of Apparent Authority: PhilHealth’s invocation of the doctrine of apparent authority was misplaced, as it applies to medical malpractice cases, not breaches of PhilHealth regulations.
4. Contractual Obligations: The contractual agreement between QCEC and Heidelberg Ventures Corporation (HVC) did not implicate QCEC in any fraudulent schemes. The agreement’s stipulation on the number of surgeries did not establish that QCEC conspired with the doctors in their alleged recruitment activities.

The Court emphasized that penalizing QCEC without substantial evidence would undermine the purpose of PhilHealth, which is to provide health services to all Filipinos.
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