02/06/2014 09:00 AM Senate STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| Overview: Department of Law-medicaid Fraud Control Unit | |
| SB104 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | SB 104 | TELECONFERENCED | |
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 |