In its decision released yesterday, the General Accounting Office (GAO) said that the Centers for Medicare and Medicaid Services (CMS), the agency that oversaw the production of the videos, had illegally used appropriated funds to make the “video news releases,” or VNRs.

The segment of the releases that violated the law was a short news report, intended to be broadcast by local television stations, and an accompanying script for anchors to use as a lead-in. Nowhere in the report did the narrator disclose that it was written and filmed by CMS.

“Neither the story packages nor scripts identified [the Department of Health and Human Services (HHS)] or CMS as the source … and the content of the news reports was attributed to individuals purporting to be reporters, but actually hired by an HHS subcontractor,” wrote Anthony Gamboa, GAO general counsel.

Democrats on Capitol Hill seized quickly on GAO’s findings, calling the administration dishonest and deceptive.

Bill Pierce, an HHS spokesman, said the administration disagreed with GAO’s report.

“Each of those segments were separated into video and audio tracks. We left it there for producers to decide…” Pierce said. “They could have stripped out sound and put in voiceover, they could have put a voiceover in providing attribution. That’s why we produced it the way we did.”

Forty stations used the videos, Pierce said, but the administration did not have any information about which parts of the tapes they used.

He also pointed out that HHS produced similar videos during the Clinton administration that did not separate audio and video tracks and also did not include the extra footage, known as b-roll. This, Pierce said, forced “producers to either take it or leave it.”

Pierce stressed that the GAO ruling did not prohibit the production of VNRs because it only found fault with one of the three parts of the video. Under Secretary Tommy Thompson, HHS has produced video news releases for its anti-obesity and anti-bullying campaigns.

The other segments of the video—which included footage of the lawmakers with the president as he signed the law, shots of senior citizens in doctors offices and pharmacies, and an explanation of the new law by HHS officials—were deemed acceptable by GAO because they were only intended to be used by news organizations in their own reports.

The news stories were produced by Home Front Communications as a subcontractor to Ketchum, Inc., which had contracted with HHS to help spread information regarding the new law.

Earlier this year, GAO concluded that flyers and advertisements produced by HHS about the Medicare Prescription Drug, Improvement and Modernization Act did not violate the law. Several Democratic members of Congress had complained that the materials were propaganda meant to convince Americans that the changes to Medicare would greatly benefit them.

Lawmakers who were disappointed by the earlier ruling quickly used today’s decision to criticize the administration.

“The new GAO opinion is yet another indictment of the deception and dishonesty that has become business as usual for the Bush Administration,” said Sen. Edward Kennedy (D-Mass.) in a statement. “It was bad enough to conceal the cost of the Medicare drug bill from the Congress and the American people. It is worse to use Medicare funds for illegal propaganda to try to turn this lemon of a bill into lemonade for the Bush campaign.”

Rep. Pete Stark (D-Calif.), ranking Democrat on the House Ways and Means health subcommittee, called on television stations that used the footage to retract their reports.

“TV news stations that aired the VNRs have a journalistic responsibility to set the record straight,” he said in a statement. “If the government is allowed to get away with disseminating this sort of propaganda, the democratic tradition of a free and independent media is threatened.”

In its defense, CMS had argued that the source of the videos had been clearly identified to news organizations who got them from the distributor. But the actual footage did not identify CMS and concluded with the narrator saying “In Washington, I’m Karen Ryan reporting.”

VNRs are standard practice in the public-relations industry and local news reports often rely on them, sometimes merely for background images and other times for full reports. However, GAO said in its decision, “our analysis of the proper use of appropriated funds is not based upon the norms in the public relations and media industry.”

The investigators said they used three general criteria to decide the legality of the materials: whether they are “self aggrandizing, purely partisan in nature, or covert as to source.” The report concluded that the story segments of the VNR were “covert” because they could be misleading to the audience, which might think they were produced by a news organization.