Congress is investigating Rehnquist's work as internal watchdog of the agency, including her decision to delay an audit of Florida's pension fund at the request of Gov. Jeb Bush's office. Investigators also are looking at whether she forced out several top career staff members.
Her management also is under review by the Integrity Committee of the President's Council on Integrity and Efficiency, a peer group of inspectors general. Rehnquist's job is to investigate fraud, waste and abuse at HHS, including Medicare fraud.
She reportedly said in her resignation letter that she wanted to spend more time with her family.
Rehnquist was appointed by President Bush in August 2001. The position is considered nonpartisan.
Investigators on the Senate Finance Committee have said they have heard about questionable practices from dozens of people who work for the HHS inspector general's office.
Specifically, congressional aides said they have heard from credible sources that Rehnquist had an unloaded, service-issued 9 mm handgun in her office, even though she is not licensed to carry it, as well as a poster of a target in her office.
Sens. Chuck Grassley, R-Iowa, and Max Baucus, D-Mont., leaders of the Finance Committee, requested that the GAO do a complete management review. Grassley said he had heard "numerous allegations" from whistle-blowers in the inspector general's office.
In a letter to the GAO last October, Rehnquist said she welcomed the review. "I am confident that your findings will further illustrate our many successes," she wrote.
Insiders have also complained about 19 senior-level staff changes since Rehnquist took over, including the departure of all six deputy inspectors general. All were due to involuntary retirement and reassignments, Grassley said, adding that five of the six former deputies had 30 years or more of experience apiece.
The GAO has also been investigating Rehnquist's decision to delay an audit into Florida's pension fund. That move assured that the audit wouldn't be released before election day last fall, when Bush was facing a tight race for re-election.
Internal HHS documents show that a draft audit would have been completed before Bush's re-election if the work had started on time. It was first scheduled to begin last April, but the governor's chief of staff called Rehnquist on April 15 to request a delay. Several postponements did delay the start for five months.
Rehnquist has said her decision to grant the delays "was based on the merits and not motivated by political reasons." A spokesman for the inspector general also argued that the audit would not have been completed by Election Day even if it had begun on time, though some documents suggest otherwise.
The issue may have been politically perilous for Bush, the president's brother. The Florida Board of Administration, which runs the pension fund, has been under scrutiny because it invested and lost $300 million in the bankrupt energy company Enron. The federal audit focused on whether the state properly accounted for U.S. contributions to the pension program.