Legislature(2013 - 2014)BUTROVICH 205

02/06/2014 09:00 AM STATE AFFAIRS


Download Mp3. <- Right click and save file as

Audio Topic
09:02:48 AM Start
09:03:57 AM Overview: Department of Law-medicaid Fraud Control Unit
10:00:26 AM SB104
10:18:49 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Overview: Dept. of Law Medicaid Fraud Control TELECONFERENCED
Unit, Andrew Peterson, Director MFCU
-- Testimony <Invitation Only> --
*+ SB 104 APPROPRIATIONS FROM THE DIVIDEND FUND TELECONFERENCED
Heard & Held
                    ALASKA STATE LEGISLATURE                                                                                  
            SENATE STATE AFFAIRS STANDING COMMITTEE                                                                           
                        February 6, 2014                                                                                        
                           9:02 a.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Fred Dyson, Chair                                                                                                       
Senator Cathy Giessel, Vice Chair                                                                                               
Senator John Coghill                                                                                                            
Senator Bill Wielechowski                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Bert Stedman                                                                                                            
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
OVERVIEW: DEPARTMENT OF LAW-MEDICAID FRAUD CONTROL UNIT                                                                         
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
SENATE BILL NO. 104                                                                                                             
"An Act relating to appropriations from the dividend fund;                                                                      
creating the criminal fund; and providing for an effective                                                                      
date."                                                                                                                          
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 104                                                                                                                  
SHORT TITLE: APPROPRIATIONS FROM THE DIVIDEND FUND                                                                              
SPONSOR(s): SENATOR(s) DYSON                                                                                                    
                                                                                                                                
01/22/14       (S)       PREFILE RELEASED 1/10/14                                                                               
01/22/14       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/22/14       (S)       STA, FIN                                                                                               
02/06/14       (S)       STA AT 9:00 AM BUTROVICH 205                                                                           
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
ANDREW PETERSON, Assistant Attorney General-Director                                                                            
Medicaid Fraud Control Unit                                                                                                     
Alaska Department of Law                                                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Provided an  overview of the  Medicaid Fraud                                                             
Control Unit.                                                                                                                   
                                                                                                                                
JOSHUA BANKS, Staff for Senator Dyson                                                                                           
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Provided a sectional review for SB 104.                                                                   
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
9:02:48 AM                                                                                                                    
CHAIR  FRED  DYSON  called  the  Senate  State  Affairs  Standing                                                             
Committee meeting  to order at 9:02  a.m. Present at the  call to                                                               
order were Senators Giessel, Wielechowski, and Chair Dyson.                                                                     
                                                                                                                                
CHAIR  DYSON announced  that the  committee  calendar entails  an                                                               
overview of  the Medical Fraud Unit's  work and also a  bill that                                                               
his  office   has  been  working   on  that  deals   with  victim                                                               
restoration.  He specified  that  the  Committee Substitute  (CS)                                                               
will be  introduced today for  SB 104 with  the intent to  act on                                                               
the  bill the  following week.  He believed  that SB  104 is  not                                                               
controversial and there is strong support from the Governor.                                                                    
                                                                                                                                
^OVERVIEW: DEPARTMENT OF LAW-MEDICAID FRAUD CONTROL UNIT                                                                        
    OVERVIEW: DEPARTMENT OF LAW-MEDICAID FRAUD CONTROL UNIT                                                                 
                                                                                                                                
9:03:57 AM                                                                                                                    
CHAIR DYSON introduced Andrew Peterson, Assistant Attorney                                                                      
General. He explained that Mr. Peterson has taken over as the                                                                   
Director for the Medicaid Fraud Control Unit 15 months ago. He                                                                  
remarked about his frustration at the profound size of the                                                                      
problem of medical fraud in Alaska and the lack of production                                                                   
and performance from Mr. Peterson's predecessor. He noted that                                                                  
Mr. Peterson has approximately six or eight times as many                                                                       
prosecutions with most of them successful.                                                                                      
                                                                                                                                
9:04:37 AM                                                                                                                    
ANDREW  PETERSON, Assistant  Attorney General-Director,  Medicaid                                                               
Fraud Control Unit, Alaska Department  of Law, Anchorage, Alaska;                                                               
noted   that  the   Medicaid  Fraud   Control  Unit   (MFCU)  was                                                               
specifically within the Office of  Special Prosecutions (OSP). He                                                               
referred to Chair Dyson's comments  that he has been the Director                                                               
of MFCU for  approximately 15 months. He set forth  that he would                                                               
provide an  overview about  MFCU, some  of the  restrictions that                                                               
are placed  upon MFCU  by the federal  funding that  is received,                                                               
give  an idea  of the  type of  cases MFCU  is generating,  where                                                               
MFCU's  comes from,  and some  of the  results MFCU  is currently                                                               
seeing.                                                                                                                         
                                                                                                                                
9:05:42 AM                                                                                                                    
MR. PETERSON  explained that the  MFCUs nation-wide were  part of                                                               
the Omnibus  Budget Reconciliation Act  (OBRA) of 1993.  The OBRA                                                               
requirement  established  that all  of  the  states, unless  they                                                               
applied  for a  specific exemption,  have a  MFCU. He  noted that                                                               
North Dakota  is one  of the  only states  that do  not currently                                                               
have a MFCU.  He said all of  the MFCUs are part  of the National                                                               
Association of Medicaid Fraud Control Units.                                                                                    
                                                                                                                                
He  specified  that Alaska's  MFCU  tries  to collectively  share                                                               
information, training,  and work  collaboratively on  civil class                                                               
action  suits in  which resources  can be  combined to  allow for                                                               
cases  to be  pursued  that may  not be  criminal,  but there  is                                                               
restitution to  be earned  by the  state. The  federal government                                                               
partly funds MFCUs at 75 percent  and the states match 25 percent                                                               
in addition  to imposing a  number of different  requirements. He                                                               
said the  federal government limits  the types of cases  MFCU can                                                               
handle.  MFCU is  tasked to  prosecute medical  assistance fraud,                                                               
allegations of  abuse or neglect,  and financial  exploitation or                                                               
misappropriation  of patient  assets all  within facilities  that                                                               
accept Medicaid funds.                                                                                                          
                                                                                                                                
CHAIR DYSON asked  to clarify that federal  funding dictates that                                                               
MFCU  primarily goes  after provider-fraud  rather than  patient-                                                               
fraud.                                                                                                                          
                                                                                                                                
MR. PETERSON  answered correct. He specified  that MFCU generally                                                               
does  not go  after non-Medicaid  cases and  recipient fraud.  If                                                               
MFCU  identifies  a  case  in  which  there  is  recipient  fraud                                                               
happening and  there is  no collusion with  a provider,  the case                                                               
would be referred to the  prosecutor for the Alaska Department of                                                               
Health and Social Services-Division of Public Assistance (DHSS-                                                                 
DPA) within  the Office of  Special Prosecutions (OPS).  If there                                                               
is  collusion between  a provider  and  a recipient  in order  to                                                               
defraud the Medicaid  system, MFCU would take the  case. If there                                                               
is  a situation  where there  happens  to be  other state  crimes                                                               
happening, theft  crimes, abuse, neglect, anything  that does not                                                               
normally fall within MFCU's general  area of authority, MFCU will                                                               
take those cases as well if there is a Medicaid fraud.                                                                          
                                                                                                                                
9:07:52 AM                                                                                                                    
SENATOR COGHILL joined the committee meeting.                                                                                   
                                                                                                                                
CHAIR  DYSON asked  if  MFCU is  precluded  from expanding  their                                                               
scope due to federal funding.                                                                                                   
                                                                                                                                
MR.  PETERSON  replied  that  due to  federal  funding,  MFCU  is                                                               
precluded from taking cases that  have no Medicaid fraud provider                                                               
allegations.                                                                                                                    
                                                                                                                                
CHAIR DYSON  asked if it would  be possible for MFCU  to create a                                                               
parallel group who  are working on the other things  if there was                                                               
a completely different funding stream for MFCU.                                                                                 
                                                                                                                                
MR. PETERSON  replied that he did  not know if that  is necessary                                                               
because there are 13 prosecutors  within OSP. He noted an example                                                               
where  MFCU  has come  across  Social  Security fraud  in  MFCU's                                                               
medicating investigations with no  Medicaid case to prosecute and                                                               
the fraud  is referred to  OSP. He  summarized that MFCU  has the                                                               
capacity to take on additional cases outside of MFCU's scope.                                                                   
                                                                                                                                
He said one of the other  limitations currently placed on MFCU is                                                               
a prohibition against data-mining.  He explained that data-mining                                                               
is utilizing  the Medicaid resources or  the healthcare resources                                                               
that   MFCU   utilizes   as  part   of   its   ongoing   criminal                                                               
investigations  to simply  look  or troll  for criminal  conduct.                                                               
MFCU takes  cases that are  referred from the  public, providers,                                                               
and mostly the  Department of Health and  Social Services (DHSS).                                                               
Once  MFCU has  a referral  and creditable  allocation of  fraud,                                                               
MFCU is  authorized to use all  of the data that  is available to                                                               
prove  the fraud.  He explained  that  MFCU does  not spend  time                                                               
going out looking for fraud with no allegation.                                                                                 
                                                                                                                                
9:10:23 AM                                                                                                                    
He said  an additional  requirement placed  upon MFCU  by federal                                                               
funding is for  MFCU to be separate and distinct  from DHSS. MFCU                                                               
is  located within  the Attorney  General's department,  separate                                                               
for DHSS to make sure  that MFCU's prosecutions are independently                                                               
analyzed even though  MFCU gets most of its  referrals from DHSS.                                                               
He specified  that MFCU's  independence allows  for MFCU  to have                                                               
the discretion  and authority to  choose what cases  to prosecute                                                               
and how MFCU goes about their cases.                                                                                            
                                                                                                                                
He  said  the final  requirement  placed  upon MFCU  for  federal                                                               
funding is that MFCU has to have  at a minimum of one director or                                                               
attorney  general  that  is  the  prosecutor  for  the  unit,  an                                                               
auditor,  a  Certified  Public  Accountant  (CPA),  and  a  chief                                                               
investigator.  He   added  that   MFCU  currently  has   a  chief                                                               
investigator  along  with  five Investigator  III  personnel.  He                                                               
noted  that MFCU  is  fortunate to  have  some extremely  skilled                                                               
investigators, retired  detectives, and  individuals with  a wide                                                               
background that includes healthcare.  He pointed out an important                                                               
individual within MFCU that includes  a law office assistant that                                                               
has  been with  MFCU  for  20 years  and  possesses an  extensive                                                               
background in Medicaid fraud.                                                                                                   
                                                                                                                                
9:12:01 AM                                                                                                                    
CHAIR  DYSON  announced  that  Mr.  Peterson  had  brought  along                                                               
individuals from MFCU.                                                                                                          
                                                                                                                                
MR. PETERSON introduced Duane  Mayes, Director, Alaska Department                                                               
of Health  and Social  Services-Senior and  Disabilities Services                                                               
(DHSS-SDS); Lynne Keilman-Cruz, Chief  for Quality Assurance with                                                               
DHSS-SDS; and  Stacie Kraly, Assistant Attorney  General with the                                                               
Alaska Department of  Law (DOL) who represents  DHSS. He asserted                                                               
that MFCU's collaboration with the  DHSS has been instrumental in                                                               
increasing the number  of prosecutions, the number  of cases that                                                               
MFCU  is making,  and the  money that  the state  is saving  as a                                                               
result. He  pointed out the  Ms. Keilman-Cruz and  Director Mayes                                                               
have been  instrumental in the  partnership between  DHSS-SDS and                                                               
MFCU.                                                                                                                           
                                                                                                                                
CHAIR DYSON asked if Medicare applies to DHSS-SDS.                                                                              
                                                                                                                                
MR. PETERSON  answered that DHSS-SDS regulates  the Personal Care                                                               
Attendants  (PCA)  and home  healthcare  type  services that  are                                                               
provided to Medicaid recipients.                                                                                                
                                                                                                                                
9:13:31 AM                                                                                                                    
He  addressed  an overview  for  MFCU  funding  and some  of  the                                                               
current  work MFCU  has been  doing. He  noted that  MFCU funding                                                               
from 2011  to 2012 jumped  due to  a legislative increase  in the                                                               
number of  MFCU investigators from  3 to  6. He pointed  out that                                                               
the  number of  convictions  has been  increasing  over the  last                                                               
three years:                                                                                                                    
                                                                                                                                
   · 2010: 4 convictions.                                                                                                       
   · 2011: 1 conviction.                                                                                                        
   · 2012: 1 conviction.                                                                                                        
   · 2013: 19 convictions.                                                                                                      
   · 2014: 25 convictions.                                                                                                      
                                                                                                                                
MR. PETERSON pointed out that  the 2014 convictions were filed in                                                               
2013 and  were now coming to  fruition. He noted that  the number                                                               
of  investigations  being  referred  to  MFCU  is  declining.  He                                                               
revealed that the  decline is intentional due to  the strategy to                                                               
hone the  process that  referrals are provided  by DHSS.  He said                                                               
DOL  generally  receives  referrals   for  prosecution  from  law                                                               
enforcement agencies  that screen out noncriminal  cases that are                                                               
not going to be prosecuted.  Law enforcement agencies refer cases                                                               
to  DOL that  are  believed  to be  criminal.  MFCU is  different                                                               
because  MFCU's investigators  are in  DOL. He  pointed out  that                                                               
MFCU  historically received  every complaint  or allegation.   He                                                               
noted  an  example where  the  Alaska  Department of  Health  and                                                               
Social  Services-Adult   Protective  Services   (DHSS-APS)  would                                                               
automatically send  MFCU every allegation  that came in  and most                                                               
were not  going to  be investigated  or prosecuted.  He explained                                                               
that  allegation screening  had  taken extra  time and  resources                                                               
from MFCU's staff. He noted  that MFCU is limiting screening work                                                               
on  the  front   end  by  getting  better   referrals  with  MFCU                                                               
investigators  spending more  time  actually investigating  cases                                                               
that are  going to  be prosecuted. He  summarized that  while the                                                               
number of referrals  is declining, the number  of prosecutions is                                                               
anticipated to increase over the next few years.                                                                                
                                                                                                                                
9:16:31 AM                                                                                                                    
He  addressed  what  percentage  of  healthcare  expenditures  is                                                               
fraudulent. He noted  that he is unable to  provide the committee                                                               
with fraudulent statistics  for the state of  Alaska and revealed                                                               
national  statistics from  the FBI  Financial Crimes  Report from                                                               
2010 to 2011.  He detailed that the FBI  indicates that somewhere                                                               
between 3 to 10 percent  of all healthcare billing is fraudulent.                                                               
The two most  notable areas are Medicare and  Medicaid. He stated                                                               
that  most people  would agree  that the  majority of  healthcare                                                               
providers are honest, diligent,  hardworking individuals that are                                                               
trying  to provide  quality services.  He said  the fraud  really                                                               
costs American  taxpayers hundreds  of millions of  dollars every                                                               
year.  He said  based on  the FBI's  fraud statistics,  Alaska is                                                               
losing millions of dollars every year.                                                                                          
                                                                                                                                
CHAIR DYSON asked what Alaska's total Medicaid billing is.                                                                      
                                                                                                                                
MR. PETERSON replied  that he believes Alaska's  Medicaid cost is                                                               
about $1.5 billion.                                                                                                             
                                                                                                                                
CHAIR DYSON  calculated that 10  percent of $1.5 billion  is real                                                               
money.                                                                                                                          
                                                                                                                                
MR. PETERSON replied  potentially. He pointed out  that the FBI's                                                               
annual  report indicates  that fraud  schemes  are becoming  more                                                               
sophisticated across  the U.S.  He said based  upon his  own MCFU                                                               
experience,    fraud   schemes    are   indeed    becoming   more                                                               
sophisticated. The FBI  indicated that the best way  to attack or                                                               
address  sophisticated  fraud  schemes is  through  collaboration                                                               
amongst  various agencies  and that  is precisely  what MFCU  has                                                               
done over the last 15 months.                                                                                                   
                                                                                                                                
9:19:00 AM                                                                                                                    
He reviewed  how MFCU  has addressed  fraud schemes.  He asserted                                                               
that MFCU works closely with DHSS  on a daily basis. He said MFCU                                                               
mostly  coordinates with  the  DHSS'  Medicaid Program  Integrity                                                               
System,  and   DHSS-SDS'  Behavioral  Health   Quality  Assurance                                                               
oversight. MFCU  also works closely  with the Department  of Law-                                                               
Civil Division  (DOL-CD) with the  goal to review cases  from the                                                               
meetings with  directors from  the various  groups. He  set forth                                                               
that he  has independent discussion  and judgment of  which cases                                                               
to prosecute. He said he takes  his lead from DHSS. He added that                                                               
DHSS is  the department that  sees the  money going out  the door                                                               
and  deals with  the  idea of  where money  is  being wasted.  He                                                               
explained that  MFCU takes a  look at  cases or areas  of concern                                                               
from DHSS.  He revealed that if  he is concerned that  he may not                                                               
be  able to  prosecute a  specific case  because of  statutory or                                                               
regulatory  limitations, MFCU  works with  the DOL-CD  to see  if                                                               
MFCU can  go after the provider  civilly and deem the  money paid                                                               
in  overpayment. He  added that  if  there is  concern that  MFCU                                                               
cannot do  either of the previously  mentioned prosecutions, MFCU                                                               
works with DOL-CD to propose  regulatory changes or ultimately to                                                               
come back  to the legislature and  ask for a statutory  change to                                                               
plug a loophole.                                                                                                                
                                                                                                                                
CHAIR  DYSON asked  to clarify  when Mr.  Peterson noted  Quality                                                               
Assurance within  DHSS that MFCU  is looking at  the department's                                                               
screening of recipients or providers.                                                                                           
                                                                                                                                
MR.  PETERSON  answered  providers.  He  explained  that  Quality                                                               
Assurance   within  DHSS-SDS   regulates   the  home   healthcare                                                               
attendant  industry and  licenses them.  He added  that DHSS-SDS-                                                               
Quality Assurance  regulates providers  only and  not recipients.                                                               
He specified that the recipient side is within the DHSS-DPA.                                                                    
                                                                                                                                
9:21:42 AM                                                                                                                    
CHAIR DYSON  pointed out ads  where a  provider claims to  fix up                                                               
recipients and  takes care  of their paperwork.  He asked  if Mr.                                                               
Peterson is seeing  any pattern where providers  are trolling for                                                               
patients and pushing the limits on getting them qualified.                                                                      
                                                                                                                                
MR. PETERSON answered  yes. He said MCFU is seeing  a lot where a                                                               
PCA  will bring  their recipient  in to  get them  signed up.  He                                                               
pointed out  that in reality  it is the recipient's  choice where                                                               
to go  and their choice  who to have  as their provider;  it does                                                               
not  always  work  that  way.  He noted  that  MCFU  is  actively                                                               
investigating cases  where referral  fees are  being paid  to the                                                               
PCA  to bring  their recipients  to  agencies and  the amount  of                                                               
referral fees is  often times based upon the number  of hours for                                                               
which the recipient has been authorized services.                                                                               
                                                                                                                                
He revealed  that MCFU  has successfully  prosecuted a  number of                                                               
cases  in which  PCAs have  colluded with  recipients who  do not                                                               
need services. He explained that  recipients showed a significant                                                               
lack of  ability during the  DHSS assessment that resulted  in an                                                               
increased hourly  authorization. He  said the  arrangements ended                                                               
up  with PCAs  splitting the  state's money  with recipients.  He                                                               
noted  that  the prosecutions  have  resulted  in PCAs  receiving                                                               
lifetime  bans  from  providing Medicaid  services,  unless  DHSS                                                               
approves a waiver.                                                                                                              
                                                                                                                                
9:23:48 AM                                                                                                                    
He said  MCFU's recent success  in the number of  prosecutions is                                                               
not simply limited to the  collaboration with DHSS. MCFU has also                                                               
been   collaborating  with   Alaska  State   Troopers  (AST)   in                                                               
situations that  pertain to search  warrant execution  and arrest                                                               
warrants.  MCFU  has  been  working   with  the  Municipality  of                                                               
Anchorage  and  the  Anchorage Police  Department  (APD).  MCFU's                                                               
federal  funding   source  requires  that  MCFU   is  essentially                                                               
supervised or  overseen by  the Office  of the  Inspector General                                                               
(OIG); they have  special agents that are located  in Seattle who                                                               
come up  to Alaska  on a  regular basis to  assist MCFU  with the                                                               
execution   of    search   warrants   or   the    conducting   of                                                               
investigations. He  added that MCFU  also works closely  with the                                                               
FBI. He  revealed that one of  MCFU's best partners has  been the                                                               
U.S. Immigration and  Customs Enforcement (ICE). He  said ICE has                                                               
helped MCFU  in identifying when  home healthcare  attendants and                                                               
or  recipients  are  traveling  internationally  while  allegedly                                                               
receiving services in Alaska.                                                                                                   
                                                                                                                                
CHAIR DYSON asked how ICE's activities assist MCFU.                                                                             
                                                                                                                                
9:25:13 AM                                                                                                                    
MR. PETERSON  explained that a  participant is assessed  for home                                                               
healthcare  services, a  PCA provides  the service,  fills out  a                                                               
timesheet, and the timesheet is  submitted to an agency for state                                                               
billing.                                                                                                                        
                                                                                                                                
MR.  PETERSON noted  that there  are  also waiver-services  which                                                               
involve  chore-respite which  is  PCA  relief and  transportation                                                               
services  for  driving  individuals to  medical  appointments  or                                                               
places recipients  need to go. He  explained that waiver-services                                                               
are also billed to the  state. He specified that simply assessing                                                               
needed services  and reviewing timesheets  do not  indicate fraud                                                               
is being perpetrated. He added  that since services normally take                                                               
place in somebody's home, it is  hard to prove whether or not the                                                               
services  have been  provided unless  somebody comes  forward. He                                                               
detailed that  ICE allows  MCFU to  look at  international travel                                                               
records  and  identify  PCAs  or recipients  who  have  left  the                                                               
country  and continue  to bill  Medicaid for  services. He  noted                                                               
that there  are possible allowances  when a person  is travelling                                                               
domestically if it  is for medical reasons, but not  for going on                                                               
a vacation.  He said  it is more  difficult to  identify domestic                                                               
travel, but  international travel  is easy.  He divulged  that 40                                                               
MCFU prosecutions have been in part initiated by ICE.                                                                           
                                                                                                                                
9:27:17 AM                                                                                                                    
CHAIR DYSON asked  to clarify that the recipient  or provider was                                                               
traveling.                                                                                                                      
                                                                                                                                
MR. PETERSON  replied that sometimes  it is one, sometimes  it is                                                               
the other, and sometimes it is  both. He said all three scenarios                                                               
are not  allowed by state or  federal law. He noted  that DHSS is                                                               
innovative in that all PCAs  are enrolled providers that entail a                                                               
background  check,  billing  number,   and  enrollee  number.  He                                                               
explained that  the billing and  enrollee numbers allows  MCFU to                                                               
identify who is claiming to  be providing service. He pointed out                                                               
that there is only one other  state that has their PCAs enrolled.                                                               
The  majority of  states  have no  idea who  they  are paying  to                                                               
provide services and fraud investigations become more difficult.                                                                
                                                                                                                                
He  said  MCFU  also  works  with the  Department  of  Labor  and                                                               
Workforce Development (DOLWD). He  said DOLWD helps MCFU identify                                                               
what somebody  is potentially earning.  For example, if a  PCA is                                                               
earning a  large amount  of money  in addition  to a  second job,                                                               
there  are only  so  many hours  in a  day  and DOLWD  assistance                                                               
allows  MCFU  to identify  potential  fraud.  He added  that  the                                                               
Department  of   The  Department  of  Commerce,   Community,  and                                                               
Economic Development  (DCCED) and  the Department  of Corrections                                                               
(DOC) have also assisted MCFU in ongoing investigations.                                                                        
                                                                                                                                
CHAIR DYSON asked if many  other police departments have a white-                                                               
collar crime  unit besides Anchorage Police  Department (APD) and                                                               
Alaska State Troopers (AST).                                                                                                    
                                                                                                                                
MR. PETERSON replied that the  two main white-collar crime units,                                                               
the Alaska Bureau of Investigations (ABI) and APD.                                                                              
                                                                                                                                
CHAIR  DYSON   asked  if  the  law   enforcement  departments  in                                                               
Fairbanks, Juneau, Bethel, Kenai,  and Soldotna have white-collar                                                               
units.                                                                                                                          
                                                                                                                                
MR. PETERSON answered that he did not know.                                                                                     
                                                                                                                                
9:29:56 AM                                                                                                                    
He  addressed Medicaid  payment  suspensions.  He explained  that                                                               
when DHSS  refers a case  that MCFU  accepts, then DHSS  makes an                                                               
analysis  of whether  or not  there is  a credible  allegation of                                                               
fraud.  Under federal  law if  DHSS  determines that  there is  a                                                               
credible  allegation  of  fraud,  DHSS is  obligated  to  suspend                                                               
provider  payment   unless  MCFU   asks  for  a   good-cause  law                                                               
enforcement  exception to  not suspend  payment.  He pointed  out                                                               
that payment  suspension "stops the bleeding"  while the criminal                                                               
case is ongoing. He said  DHSS has suspended Medicaid payments to                                                               
62 providers since 2012. He  noted that one suspension included a                                                               
PCA agency that was annually  billing the state approximately $12                                                               
million. He  pointed out a  transportation service  provider that                                                               
went  from zero  state billings  to $150,000  a month  within six                                                               
months. He  said a credible  fraud allegation was  determined and                                                               
the transportation service provider  was suspended. He added that                                                               
two medical practices and 58  individual PCAs were suspended from                                                               
billing   Medicaid.  DHSS   estimates   that   the  62   provider                                                               
suspensions are  going to save  the state of Alaska  $15 million.                                                               
The  practice of  quickly imposing  suspensions  once a  credible                                                               
allegation of  fraud has  been determined  is relatively  new. He                                                               
pointed out  that in the  past, suspensions would not  be imposed                                                               
until a criminal charge was  filed. He added that suspension from                                                               
Medicaid  does come  with  the right  to  have an  administrative                                                               
appeal.                                                                                                                         
                                                                                                                                
9:32:39 AM                                                                                                                    
CHAIR DYSON asked if durable medical  equipment is a huge area of                                                               
fraud.                                                                                                                          
                                                                                                                                
MR. PETERSON  answered yes. He  noted that  MCFU has a  couple of                                                               
ongoing investigations in the area of medical equipment fraud.                                                                  
                                                                                                                                
CHAIR DYSON  noted a conversation  with DHSS  Commissioner Streur                                                               
where Medicaid provided  a $25,000 wheel chair with  fat tires to                                                               
a rural  recipient and several  weeks later the same  wheel chair                                                               
was on sale for $8,000 on the internet.                                                                                         
                                                                                                                                
MR. PETERSON  remarked that MCFU  generally looks at  cases where                                                               
providers  are charging  the  state for  new  equipment and  used                                                               
equipment is being sold to recipients instead.                                                                                  
                                                                                                                                
9:34:01 AM                                                                                                                    
He  addressed  the  number  of prosecutions  MCFU  has  had  from                                                               
October 2012 through present. MCFU  has charged 72 criminal cases                                                               
with  the majority  focusing  on PCAs  billing  for services  not                                                               
provided in addition  to double billing for their  time. He noted                                                               
additional  cases that  pertained to  endangering the  welfare of                                                               
vulnerable adults.                                                                                                              
                                                                                                                                
CHAIR DYSON asked to clarify  that Mr. Peterson investigates when                                                               
there  is inappropriate  care for  a recipient.  He asked  if Mr.                                                               
Peterson is getting into ethical malpractice.                                                                                   
                                                                                                                                
MR. PETERSON  replied that MCFU  looks at criminal  statutes that                                                               
do not  involve issues of  ethics or malpractice. He  pointed out                                                               
that ethical malpractice cases are referred to other agencies.                                                                  
                                                                                                                                
He addressed results  MCFU has seen since October  2014. MCFU has                                                               
secured 44 criminal  convictions with all of  the providers being                                                               
suspended form  providing Medicaid. MCFU has  secured $226,000 in                                                               
restitution  judgments. He  pointed  out that  MCFU  has had  two                                                               
civil resolutions  which are cases  where there was  conduct that                                                               
potentially  should   not  have   happened  but  maybe   a  civil                                                               
resolution was  better than criminal.  MCFU works with  its civil                                                               
counterparts to  draft restrictions and limitations  on the types                                                               
of  services individuals  can  provide in  the  future. He  noted                                                               
MCFU's pending cases for $1.3  million to $3 million in potential                                                               
restitution.                                                                                                                    
                                                                                                                                
9:36:26 AM                                                                                                                    
He addressed notable  MCFU cases and pointed out  State v. Batac.                                                               
He explained that Ms. Batac  worked both as an Anchorage property                                                               
tax assessor  and at Home  Depot. MCFU  found that Ms.  Batac was                                                               
billing the  state for providing  home healthcare  services while                                                               
actually working at Home Depot. He  noted that Ms. Batac was also                                                               
billing for  providing home  healthcare services  while traveling                                                               
internationally and  domestically. He explained that  MCFU worked                                                               
with  the Municipality  of Anchorage  to look  at leave-slips  to                                                               
find proof.  MCFU was  able to  prove that  Ms. Batac  billed the                                                               
state for services not provided  in the amount of $64,665.47. Ms.                                                               
Batac received  a class  B felony conviction,  one year  in jail,                                                               
restitution, and ten years formal probation.                                                                                    
                                                                                                                                
MR. PETERSON  revealed that  MCFU is going  back to  agencies for                                                               
restitution  in  fraudulent  billing   cases  when  the  agencies                                                               
certify PCA's falsified timesheets.  He asserted that having both                                                               
the agency  and PCA have "skin  in the game" has  led to agencies                                                               
better  policing   their  employees.  He  added   that  MCFU  has                                                               
implemented  a creative  way for  the state  to see  money coming                                                               
back  by  incentivizing  restitutions with  the  possibility  for                                                               
probation reduction. He explained that  Ms. Batac will receive an                                                               
early  probation termination  if she  pays the  $65,000, complies                                                               
with  her   probation  conditions,   and  has  no   new  criminal                                                               
convictions over a three year period.                                                                                           
                                                                                                                                
9:39:02 AM                                                                                                                    
CHAIR DYSON asked  to clarify that MCFU can  go after restitution                                                               
from agencies that approve fraudulent PCA billing.                                                                              
                                                                                                                                
MR. PETERSON replied yes.                                                                                                       
                                                                                                                                
He pointed out  another notable case in State v.  Gunes. He noted                                                               
that  the fraud  committed  was  only for  $100  and resulted  in                                                               
dividends far  beyond MCFU's expectation.  As a result,  MCFU has                                                               
collaborated with DHSS  to work on changing  the voucher program.                                                               
He explained  that Medicaid provides  vouchers to  recipients for                                                               
transportation services.  He explained that Mr.  Gunes had broken                                                               
one single  voucher into  multiple parts  and submitted  for four                                                               
different  rides   which  were  not  provided.   Mr.  Gunes  also                                                               
submitted  falsified  pickup  and  drop-off  locations  that  are                                                               
prohibited.  He revealed  that Mr.  Gunes' $100  fraud conviction                                                               
resulted  in  the Municipality  of  Anchorage  banning him  as  a                                                               
chauffeur for  five years and  revoking his taxi cab  permit with                                                               
an  estimated   $39,000  value.  He  asserted   that  Mr.  Gunes'                                                               
conviction  acts   as  a  deterrent   and  sends  a   message  to                                                               
individuals regarding voucher transportation fraud.                                                                             
                                                                                                                                
9:41:56 AM                                                                                                                    
CHAIR DYSON asked how the voucher system works.                                                                                 
                                                                                                                                
MR. PETERSON  replied that vouchers are  multi-paged and entitles                                                               
recipients to  four different  rides. He  explained that  the cab                                                               
driver is supposed to indicate  pickup and drop-off locations. He                                                               
pointed  out  that  MCFU  investigated   if  a  cab  company  was                                                               
promoting  the  taking of  vouchers  for  prohibited reasons  and                                                               
found that the cab company was  doing the right thing by refusing                                                               
to submit vouchers that involved prohibited locations.                                                                          
                                                                                                                                
9:43:07 AM                                                                                                                    
MR. PETERSON  addressed an  allegation and  ongoing investigation                                                               
with  the Anchorage  Transportation Company  (ATC). ATC  provided                                                               
escort-transport   services  for   Medicaid  recipients   and  an                                                               
"escort"  who   provides  assistance.   He  explained   that  the                                                               
allegation  is   ATC  billed  for   an  escort  when   no  escort                                                               
accompanied  the  recipient.  He  said  the  credible  allegation                                                               
resulted in  ATC's suspension to  bill Medicaid while  their case                                                               
is pending with  the U.S. Attorney's Office.  The Municipality of                                                               
Anchorage suspended ATC from providing  services and revoked five                                                               
of their  permits. He  noted that  the Municipality  of Anchorage                                                               
has  revamped   their  regulations   for  escort   companies  and                                                               
prohibited their  acceptance of Medicaid vouchers.  He added that                                                               
there has  been no proof  of collusion between cab  companies and                                                               
escort companies.                                                                                                               
                                                                                                                                
He addressed a final case  that involved an ongoing investigation                                                               
with a  PCA agency in Anchorage.  He pointed out that  DHSS' Lynn                                                               
Curse and Director  Mays brought the PCA agency case  to MCFU. He                                                               
said  the  PCA  agency  case in  an  ongoing  investigation  that                                                               
resulted in  29 criminal charges  being filed in July  2013. MCFU                                                               
was able  to show  $362,000 in  fraudulent billing  with $346,000                                                               
directly attributed to  one company alone. To date,  MCFU has had                                                               
approximately  44  cases filed  against  employees  from the  PCA                                                               
agency in question. He revealed  that the PCA agency is currently                                                               
suspended from providing services.                                                                                              
                                                                                                                                
9:45:35 AM                                                                                                                    
He said  one of the  reasons he was asked  to take over  MCFU was                                                               
attributed to his past experience  collaborating with other state                                                               
and federal  agencies in  prosecutions. He  detailed that  one of                                                               
the first things  MCFU started to do was work  with various state                                                               
and federal partners for assistance.  He noted that MCFU operates                                                               
with  limited  resources,   investigators,  and  caseloads.  MCFU                                                               
utilizes the  expertise of individuals  within various  state and                                                               
federal  law   enforcement  agencies  to  collaborate   for  case                                                               
prosecutions. He  asserted that MCFU's collaborative  strategy is                                                               
working, resulting in  72 criminal charges filed  within the last                                                               
15 months. He indicated that  MCFU anticipates seeing a continued                                                               
large number  of criminal cases  going forward as  MCFU continues                                                               
its collaborative efforts.                                                                                                      
                                                                                                                                
He pointed out DHSS' innovative  practices in trying to find ways                                                               
to  stop fraud.  When  MCFU identifies  system weaknesses  during                                                               
investigations,  DHSS has  been extremely  responsive in  helping                                                               
MCFU  to  limit  fraud.  MCFU  is  going  through  a  process  of                                                               
restructuring time  sheets for PCAs  to make it clear  and easier                                                               
to identify when  fraudulent billing is occurring.  He added that                                                               
the  high level  of cooperation  between  DOL and  DHSS has  been                                                               
productive, resulting in the large number of MCFU prosecutions.                                                                 
                                                                                                                                
9:47:36 AM                                                                                                                    
MR. PETERSON noted that criminal  fraud prosecutions are having a                                                               
significant   effect  in   deterring  other   individuals  within                                                               
communities  in   a  number   of  ways.   MCFU  has   heard  that                                                               
international   travel  is   being   discouraged   due  to   past                                                               
investigations. He noted that one  individual paid back $7,000 of                                                               
$8,000 in  fraudulent billing prior  to MCFU being made  aware of                                                               
the  case.  He asserted  that  MCFU  will  continue to  see  good                                                               
results in  prosecutions. He noted  that historically  there have                                                               
not  been a  lot  of  prosecutions in  Medicare  fraud until  the                                                               
attention  that cases  are saving  money for  the state.  He said                                                               
privately sourced and agency referrals  have increased due to the                                                               
recent success in prosecutions.                                                                                                 
                                                                                                                                
9:49:16 AM                                                                                                                    
CHAIR DYSON addressed ICE and  asked if a disproportionate number                                                               
of the PCAs were non-citizens.                                                                                                  
                                                                                                                                
MR. PETERSON answered  no. He specified that ICE  has the ability                                                               
to check  when people are traveling.  He said he is  not aware of                                                               
the ratio between U.S. citizens and non-citizens.                                                                               
                                                                                                                                
CHAIR  DYSON noted  the use  of a  debit card  system by  welfare                                                               
participants.  He asked  if  Medicaid  jurisdictions would  every                                                               
consider  using  a  debit  care system  to  assist  with  keeping                                                               
records clear. He  added that credit card  companies use software                                                               
to identify unusual transaction patterns.                                                                                       
                                                                                                                                
MR. PETERSON answered that he  was not aware of any jurisdictions                                                               
considering Medicaid  debit cards. He  said MCFU focuses  more on                                                               
provider-type fraud.  He noted that  MCFU have come  across cases                                                               
where people have misused Alaska  Quest Cards. He added that MCFU                                                               
does not have the authority to prosecute.                                                                                       
                                                                                                                                
9:51:55 AM                                                                                                                    
CHAIR DYSON  asked if MCFU  is able  to go after  convicted fraud                                                               
offenders' personal assets for restitution.                                                                                     
                                                                                                                                
MR. PETERSON replied that MCFU  is not allowed. He explained that                                                               
state law is quite restrictive and  noted that there are very few                                                               
areas  exist where  MCFU can  forfeit assets  directly; gambling,                                                               
prostitution,  and  drug  cases  allow  for  the  forfeiture  and                                                               
seizure  of  assets.  He  said generally  when  somebody  has  an                                                               
ongoing criminal enterprise  and they are convicted,  there is no                                                               
provision in state law for MCFU to go in and seize assets.                                                                      
                                                                                                                                
CHAIR DYSON  asked if  there should  be laws  that allow  MCFU to                                                               
seize assets.                                                                                                                   
                                                                                                                                
MR. PETERSON  answered that  Chair Dyson's  question is  a policy                                                               
question for the legislature and  the Governor. He noted concerns                                                               
with asset seizures that involve  families where innocent members                                                               
are left destitute.  He remarked as a prosecutor  that there have                                                               
been cases  where he  would have  liked the  ability to  go after                                                               
funds  directly from  a deterrence  point  of view  to not  allow                                                               
somebody to profit from fraudulent conduct.                                                                                     
                                                                                                                                
CHAIR  DYSON  revealed that  he  was  instrumental in  a  statute                                                               
change on seizing assets from pimps.                                                                                            
                                                                                                                                
SENATOR WIELECHOWSKI  thanked Mr. Peterson for  his comprehensive                                                               
testimony.  He   asked  if  similar  efforts   are  underway  for                                                               
Permanent Dividend  Fund (PFD)  fraud. He  related that  he hears                                                               
from constituents  about people who  have moved out of  state and                                                               
still collect PFD  checks. He asked if Mr. Peterson  was aware if                                                               
there is a similar sort of effort in PFD fraud investigations.                                                                  
                                                                                                                                
9:54:26 AM                                                                                                                    
MR. PETERSON  answered yes.  He explained  that there  are active                                                               
and ongoing areas to prosecute PFD  fraud in a number of ways. He                                                               
said OSP has a prosecutor  specifically dedicated to do PFD fraud                                                               
and the PFD  program has designated investigators.  He noted that                                                               
the Alaska  Department of  Fish and  Game looks  at PFD  fraud to                                                               
verify residency for  big game tags. He added  that DHSS-DPA uses                                                               
PFD fraud as an area  to verify public assistance qualifications.                                                               
He  said any  place MCFU  can find  PFD fraud,  MCFU is  actively                                                               
going  after the  cases for  restitution and  subsequent lifetime                                                               
PFD ban.                                                                                                                        
                                                                                                                                
CHAIR DYSON  asked if there  are any other statutory  things that                                                               
the legislature  could fix or  are there regulations  that should                                                               
or could be changed that would help MCFU.                                                                                       
                                                                                                                                
MR.  PETERSON replied  that when  he  has prosecutorial  concerns                                                               
with regulations,  he goes back  to DHSS to analyze  the specific                                                               
regulations.  He  explained  that regulations  written  for  DHSS                                                               
focus on providing services and  not on violation prosecution. He                                                               
said  regulations  are reviewed  and  submitted  as part  of  the                                                               
normal regulatory  process. He specified  that if  MCFU's concern                                                               
is statutory, MCFU makes a  proposal both to the Attorney General                                                               
and  to  the DHSS  Commissioner  as  part of  MCFU's  legislative                                                               
request. He noted  that MCFU will probably have  requests for the                                                               
next legislative session.                                                                                                       
                                                                                                                                
9:58:28 AM                                                                                                                    
CHAIR  DYSON  asked  if MCFU's  requested  changes  will  address                                                               
statutes or regulations.                                                                                                        
                                                                                                                                
MR.  PETERSON replied  that the  request will  be for  changes to                                                               
statute.                                                                                                                        
                                                                                                                                
CHAIR DYSON noted that he  and the committee appreciates what Mr.                                                               
Peterson is doing. He noted that he  would like to see a lot more                                                               
publicity  so the  message gets  out.  He asked  Mr. Peterson  to                                                               
verify that MCFU has been doing press releases.                                                                                 
                                                                                                                                
MR. PETERSON  revealed that MCFU  has remodeled DOL's  website to                                                               
allow for  anonymous Medicaid fraud reporting.  He explained that                                                               
the anonymous  input provides MCFU  with credible  allegations to                                                               
initiate  investigations.  He  added  that MCFU  posts  on  DOL's                                                               
website public  court documents and  press releases.  He asserted                                                               
that MCFU is  doing what it can  to try and spread  the word that                                                               
the state is actively prosecuting Medicaid fraud.                                                                               
                                                                                                                                
CHAIR DYSON asserted  that he always wanted to  address a welfare                                                               
fraud  deterrent  by  having  welfare   offices  show  photos  of                                                               
recipients who have cheated the system.                                                                                         
                                                                                                                                
          SB 104-APPROPRIATIONS FROM THE DIVIDEND FUND                                                                      
                                                                                                                                
10:00:26 AM                                                                                                                   
CHAIR DYSON announced that the committee  is now going to take up                                                               
SB 104.                                                                                                                         
                                                                                                                                
10:00:39 AM                                                                                                                   
SENATOR GIESSEL  moved to adopt  work draft  Committee Substitute                                                               
(CS) for SB 104, labeled  28-LS0847\Y, as the working document to                                                               
replace Senate Bill 104 labeled 28-LS0847\P.                                                                                    
                                                                                                                                
CHAIR DYSON announced  that without objection, Version  Y was the                                                               
working document before the committee.                                                                                          
                                                                                                                                
CHAIR DYSON, SB 104's sponsor,  commented that a continuing error                                                               
he has made  in the legislature is  to work very hard  on what he                                                               
thought was  good legislation and  finding that the  execution of                                                               
the legislation fell significantly  short of what the intentions.                                                               
He  expressed  that his  fault  has  been  not following  up.  He                                                               
revealed that  he worked with  Representative Berkowitz  a decade                                                               
ago  on  the  whole  western-government  concept  of  restorative                                                               
justice for  victims to  a pre-offence  condition. He  noted that                                                               
when  possible, perpetrators  are restored  to a  useful role  in                                                               
life as well.                                                                                                                   
                                                                                                                                
He revealed  that the legislature  passed legislation in  1988 to                                                               
make felons  and certain misdemeanants  ineligible for  their PFD                                                               
with  the intent  that the  money go  for victim  restitution. He                                                               
remarked that by and large,  the intended PFD restitution has not                                                               
happened.  He  said several  heinous  crimes  lead to  the  state                                                               
instituting  the Violent  Crimes  Compensation  Board (VCCB).  He                                                               
said  he  has  found  out  through  research  that  approximately                                                               
$100,000 out of the approximate  $500,000 in annual court-ordered                                                               
restitution  is  being  collected  from  the  agencies  that  are                                                               
responsible  for  getting  money  to victims.  He  remarked  that                                                               
victims were going a long time with  no help. He set forth a fact                                                               
that he  felt startling  where approximately  $12 million  to $13                                                               
million  in  prisoners'  PFD  funds   have  gone  towards  inmate                                                               
healthcare rather than towards the compensation fund.                                                                           
                                                                                                                                
He said  the intent in  SB 104 is to  fix the system  as intended                                                               
and  to  clear  up  a  couple of  barriers  within  the  existing                                                               
statute. He  asserted that some  of the state's agencies  have an                                                               
agency-centric  view of  what  should happen  with  the funds  as                                                               
opposed  to  legislature's  clear   intent.  He  noted  that  the                                                               
Governor  is quite  enthusiastic  about what  the legislature  is                                                               
doing. He said the involved  agencies are working with his office                                                               
and providing  good feedback to  make the bill better,  hence the                                                               
CS before the committee.                                                                                                        
                                                                                                                                
10:05:26 AM                                                                                                                   
JOSHUA BANKS, Staff for Senator  Dyson, Alaska State Legislature,                                                               
Juneau, Alaska; provided a CS overview for SB 104.                                                                              
                                                                                                                                
MR. BANKS set forth that the  problem SB 104 is trying to address                                                               
is as follows:                                                                                                                  
                                                                                                                                
    · Fulfill the constitutional right of victims to receive                                                                    
     restitution  and   compensation.  There   are  two   basic                                                                 
     vehicles that the  state has historically used to  achieve                                                                 
     victim restitution: DOL Collections Unit (DOL-CU) and  the                                                                 
     Violent Crimes Compensation Board (VCCB).                                                                                  
  · DOL-CU can only help victims after a conviction, if there                                                                   
     is a  conviction. The  end result leaves  many victims  of                                                                 
     horrific crimes  without compensation or any  restitution.                                                                 
     On the  other hand, VCCB is  able to give compensation  as                                                                 
     soon as there  is a police report, sometimes years  before                                                                 
     a conviction is even given.                                                                                                
                                                                                                                                
MR.  BANKS noted  that in  FY2012, VCCB  was awarded  $637,154 in                                                               
court-ordered restitution, but only $47,652 was received.                                                                       
                                                                                                                                
CHAIR DYSON asked to clarify that VCCB's award is court-ordered.                                                                
                                                                                                                                
MR.  BANKS  answered  yes.  He continued  that  the  majority  of                                                               
restitution funds that DOL receives  are through garnishing PFDs.                                                               
He said  currently under  AS 43.23.005,  a number  of restitution                                                               
ordered  offenders are  ineligible for  the PFDs  that the  state                                                               
cannot  garnish. Unfortunately  the majority  of individual  PFDs                                                               
have gone to DOC: 56 percent in FY2006 and 84 percent in FY2014.                                                                
                                                                                                                                
10:08:04 AM                                                                                                                   
He addressed SB 104's four primary goals as follows:                                                                            
                                                                                                                                
   1.  Seeks to restore crime victims to a pre-offense condition.                                                               
   2.  Establishes a reliable funding source for VCCB.                                                                          
   3.  Sets a priority for use of the Criminal Fund.                                                                            
   4.  Uses a restitution vehicle that already exists in law.                                                                   
                                                                                                                                
CHAIR DYSON added  that when he and  Representative Berkowitz did                                                               
the  restitution  legislation  a   decade  ago,  it  was  clearly                                                               
established  that  the first  priority  for  any funds  that  the                                                               
perpetrator  had  was  to  go   to  the  victim.  He  noted  that                                                               
subsequent  legislation added  child  support to  the number  one                                                               
priority. He  stressed that he and  Representative Berkowitz made                                                               
it  very clear  that court  costs were  secondary to  victims and                                                               
children. He  asserted that  SB 104  also emphasizes  victims and                                                               
children.                                                                                                                       
                                                                                                                                
MR. BANKS detailed  that there is no amount of  money that can be                                                               
given to  repair the victim's  emotional and physical  damage. He                                                               
asserted that  the primary goal is  to use the criminal  funds to                                                               
give some form  of relief in compensation for the  victims and to                                                               
establish a reliable  funding source for VCCB. He  noted that the                                                               
current  statute has  no priority  set for  how the  PFD Criminal                                                               
Fund (PFD-CM) is  to be used. The statute that  is primarily used                                                               
is AS 43.23.028(B)  that simply states what  agencies can receive                                                               
money  from  PFD-CM. He  detailed  that  AS 43.23.028(B)  has  no                                                               
priority set to which agency should  receive more of the fund; it                                                               
is up  to Governor  and the  legislature to  decide. He  said the                                                               
intent is  to create a  reliable funding  source for VCCB  and to                                                               
prioritize PFD-CM so that victims  come first. He reiterated that                                                               
the majority of  PFD-CM funds have gone to DOC.  He remarked that                                                               
prisoners are indirectly  receiving their lost PFDs  when the DOC                                                               
obtains  funds  that  should  be   directed  to  the  PFD-CM.  He                                                               
summarized that  SB 104 uses  the current restitution  vehicle by                                                               
making priority changes to PFD-CM.                                                                                              
                                                                                                                                
10:11:38 AM                                                                                                                   
MR. BANKS reviewed  the PFD-CM history. HB 245 passed  in 1988 to                                                               
make  convicted felons  ineligible for  a PFD.  There was  intent                                                               
language in HB  245 that directed the money to  go towards victim                                                               
compensation with VCCB.  He said AS 43.23.005(d)  was expanded to                                                               
also  include incarcerated  felons,  misdemeanants  with a  prior                                                               
felony, and third  time misdemeanants. He added  that since 1988,                                                               
recipients for PFD-CM was expanded  to include DOC. He noted that                                                               
DOC was not originally intended to be a PFD-CM.                                                                                 
                                                                                                                                
He pointed  out that  the primary  difference with  the CS  is to                                                               
change the PFD-CF's primary recipient  to VCCB as opposed to DOL.                                                               
He said  the belief is that  VCCB can better determine  needs and                                                               
provide funds more quickly to victims.                                                                                          
                                                                                                                                
10:14:35 AM                                                                                                                   
He detailed the CS sectional analysis as follows:                                                                               
                                                                                                                                
     Section 1:                                                                                                                 
          (a) Makes language uniform with other Criminal                                                                        
               Fund statutes.                                                                                                   
          (b) Ensures that money goes towards priority                                                                          
               order created in AS 43.23.031.                                                                                   
     Section 3:                                                                                                                 
          (a) Creates priority order for Criminal Fund:                                                                         
               • VCCB for victim compensation,                                                                                  
               • CSSD for child support arrearages,                                                                             
               • State approved rehabilitation programs,                                                                        
               • Other incarceration cost.                                                                                      
          (b) VCCB will send DOR amount of compensable                                                                          
               claims for previous fiscal year.                                                                                 
        (c) CSSD will send amount owed for child support                                                                        
               arrearages.                                                                                                      
          (d) Court system will send amount owed for                                                                            
               court-ordered drug and alcohol treatment.                                                                        
        (e) DOR will use reports to determine the amount                                                                        
               each agency should receive from the PFD-CF.                                                                      
          (f) DOR will submit a report with the Operating                                                                       
               Budget listing the amounts determined under                                                                      
               (e).                                                                                                             
                                                                                                                                
CHAIR DYSON  asked Mr. Banks  to continue his  sectional analysis                                                               
at the  next committee meeting. He  noted that there is  no known                                                               
opposition to  SB 104 and  he believes  the bill is  an important                                                               
piece of legislation.  He expressed his intent to get  SB 104 out                                                               
of committee the following week. He  said he would commend to the                                                               
committee's  attention the  report from  Legislative Research  on                                                               
what has happened historically with  victim compensation. He said                                                               
if the  committee reads the  report carefully, members may  be as                                                               
angry  due to  the disturbing  information.  He said  SB 104  has                                                               
great  support from  the Governor.  He noted  a meeting  with the                                                               
Governor  where  the  Governor  expressed  being  surprised  that                                                               
victims' compensation  was not working  the way it should  be. He                                                               
asked Mr.  Banks what  department goes  after criminal  assets in                                                               
DOL.                                                                                                                            
                                                                                                                                
10:17:26 AM                                                                                                                   
MR. BANKS replied the DOL Collections Unit (DOL-CU).                                                                            
                                                                                                                                
CHAIR DYSON said  DOL-CU is working hard  with limited resources.                                                               
He explained  that he had  a meeting  with DOL-CU and  noted that                                                               
the  DOL-CU  goes  after  financial  assets,  institutions,  real                                                               
property,  but  does  not  have  the time  to  go  after  private                                                               
property.  He disclosed  that DOL-CU  conveyed  that going  after                                                               
somebody's car would cost more money  than the asset is worth. He                                                               
stated that he would argue that  a $100,000 airplane or a $30,000                                                               
pickup could  make a  huge difference to  victims. He  added that                                                               
Governor Parnell  said collections  can be contracted  along with                                                               
using auction  houses to sell  seized assets. He  summarized that                                                               
there is  an ongoing effort to  encourage DOL-CU to do  more with                                                               
private property collections.                                                                                                   
                                                                                                                                
10:18:49 AM                                                                                                                   
There being  no further  business to  come before  the committee,                                                               
Chair  Dyson  adjourned the  Senate  State  Affairs Committee  at                                                               
10:18 a.m.                                                                                                                      

Document Name Date/Time Subjects
MFCU Presentation to Alaska State Legislature 2014 Final (2).pdf SSTA 2/6/2014 9:00:00 AM
Kanehailua Press Release 10-17-13.pdf SSTA 2/6/2014 9:00:00 AM
Press Release (Final) - MFCU Charges 7-9-13.pdf SSTA 2/6/2014 9:00:00 AM
Press Release Batac 1-27-14.pdf SSTA 2/6/2014 9:00:00 AM
State v Gunes Press Release.pdf SSTA 2/6/2014 9:00:00 AM
CSSB 104 (STA).pdf SSTA 2/6/2014 9:00:00 AM
SSTA 2/13/2014 9:00:00 AM
SB 104
SB 104.pdf SSTA 2/6/2014 9:00:00 AM
SB 104
SB 104 Sponsor Statement.pdf SSTA 2/6/2014 9:00:00 AM
SB 104
SB104-DOA-DOF-01-13-14.pdf SSTA 2/6/2014 9:00:00 AM
SB 104
SB104-DOA-VCCB-01-13-14.pdf SSTA 2/6/2014 9:00:00 AM
SB 104
SB104-DOC-OC-01-21-14.pdf SSTA 2/6/2014 9:00:00 AM
SB 104
SB104-LAW-CIV-02-01-14.pdf SSTA 2/6/2014 9:00:00 AM
SB 104
SB104-DOR-CSSD-02-01-14.pdf SSTA 2/6/2014 9:00:00 AM
SB 104
SB 104 Section Analysis.pdf SSTA 2/6/2014 9:00:00 AM
SB 104
Leg. Research - Restitution.pdf SSTA 2/6/2014 9:00:00 AM
SSTA 2/13/2014 9:00:00 AM
SB 104
SB 104 Presentation - 3.pptx SSTA 2/6/2014 9:00:00 AM
SB 104
HB 245 1988.pdf SSTA 2/6/2014 9:00:00 AM
SB 104