senate Bill S1289A

Establishes the recovery audit pilot program for the recovery of state agency expenditure overpayments and lost discounts

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 09 / Jan / 2013
    • REFERRED TO FINANCE
  • 11 / Jun / 2013
    • AMEND (T) AND RECOMMIT TO FINANCE
  • 11 / Jun / 2013
    • PRINT NUMBER 1289A
  • 08 / Jan / 2014
    • REFERRED TO FINANCE

Summary

Establishes the recovery audit pilot program for the recovery of state agency expenditure overpayments and lost discounts.

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Bill Details

Versions:
S1289
S1289A
Legislative Cycle:
2013-2014
Current Committee:
Senate Finance
Law Section:
State Finance Law
Laws Affected:
Add Art 7-B ยงยง124 - 124-d, St Fin L
Versions Introduced in Previous Legislative Cycles:
2011-2012: S2685A
2009-2010: S7384

Sponsor Memo

BILL NUMBER:S1289A

TITLE OF BILL: An act to amend the state finance law, in relation to
establishing the recovery audits pilot program for the recovery of
state agency expenditure overpayments and lost discounts; and
providing for the repeal of such provisions upon expiration thereof

PURPOSE OR GENERAL IDEA OF BILL:

Establishes audits of state agency expenditures to recover
overpayments and lost discounts.

SUMMARY OF SPECIFIC PROVISIONS:

Section 1 - The state finance law is amended by adding a new article
7-B to read as follows: Recovery of Certain. State Agency
Overpayments.

Section 124-A. Contract consultants for recovery audits for certain
overpayments.

Section 124-B. State agencies subject to mandatory recovery audits.

Section 124-C. Payment to contractors.

Section 124-D. Forwarding reports.

JUSTIFICATION:

New York state government agencies, by virtue of their size and
complexity, have the potential of experiencing accounting
irregularities that may result in overpayments to vendors or
potentially allow for criminal mischief. To combat this problem, state
law allows for internal controls or external audits conducted by the
Comptroller's Office. In budget areas that are significantly large,
new state agencies are created, the Office of Medicaid Inspector
General being an example. Devoting staff and resources to these
functions costs taxpayers millions of dollars every year, regardless
of how much fraud or mismanagement is recovered. This legislation
would provide a process by which the Comptroller's Office can recover
improperly distributed funds and also root out corruption and fraud
without incurring costs to the taxpayer. It outlines a procedure for
the Comptroller to follow in hiring private-sector recovery audit
firms as well as a process by which the firms would conduct their
audits. A report is generated that outlines the specific courses of
action the firms would like to follow and requires approval before
attempting recovery. Once approved, the firms would take actions to
recover the funds and retain a previously agreed upon percentage of
the amount recovered as its fee for service. This process allows for
the recovery of funds without having to incur personnel and office
expenses.

The Comptroller would retain control over the process and reports
would be sent to the Governor, Speaker, President of the Senate and
Minority Leadership. The Office of Management and Budget estimated the
federal government, for fiscal year 2009, had improper payments of
$598 billion. President Obama signed an executive order allowing for


Recovery Audits in the divisions of Homeland Security, Transportation,
Commerce and NASA. In addition, Texas and Utah utilize these firms for
Medicaid Prescription Drug audits.

PRIOR LEGISLATIVE HISTORY:

2010 - S.7384/A.10614 FINANCE/Gov't Ops

2011-12 - S.2684-A/A.4029-A FINANCE/Gov't Ops

FISCAL IMPLICATIONS:

To be determined.

EFFECTIVE DATE:

This act shall take effect immediately.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 1289--A

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 9, 2013
                               ___________

Introduced  by  Sens. RANZENHOFER, GOLDEN, LARKIN, MAZIARZ -- read twice
  and ordered printed, and when printed to be committed to the Committee
  on Finance -- committee discharged, bill amended, ordered reprinted as
  amended and recommitted to said committee

AN ACT to amend the state finance law, in relation to  establishing  the
  recovery audits pilot program for the recovery of state agency expend-
  iture overpayments and lost discounts; and providing for the repeal of
  such provisions upon expiration thereof

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The state finance law is amended by adding  a  new  article
7-B to read as follows:

                               ARTICLE 7-B
                      RECOVERY AUDITS PILOT PROGRAM
SECTION 124. DEFINITIONS.
        124-A. CONTRACT  CONSULTANTS  FOR  RECOVERY  AUDITS  FOR CERTAIN
                 OVERPAYMENTS.
        124-B. STATE AGENCIES SUBJECT TO MANDATORY RECOVERY AUDITS.
        124-C. PAYMENT TO CONTRACTORS.
        124-D. FORWARDING REPORTS.
  S 124. DEFINITIONS. AS USED IN THIS ARTICLE:
  1. OVERPAYMENT. "OVERPAYMENT" INCLUDES A DUPLICATE PAYMENT MADE  TO  A
VENDOR FOR A SINGLE INVOICE AND A PAYMENT MADE TO A VENDOR:
  (A) WHEN AN AVAILABLE DISCOUNT FROM THE VENDOR WAS NOT APPLIED;
  (B)  FOR  A  LATE  PAYMENT  PENALTY THAT WAS IMPROPERLY APPLIED BY THE
VENDOR;
  (C) FOR SHIPPING COSTS THAT WERE COMPUTED INCORRECTLY  OR  INCORRECTLY
INCLUDED IN AN INVOICE;
  (D) FOR STATE SALES TAX; OR

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD04840-02-3

S. 1289--A                          2

  (E) FOR A GOOD OR SERVICE THE VENDOR DID NOT PROVIDE.
  2. STATE AGENCY. "STATE AGENCY" MEANS A DEPARTMENT, COMMISSION, BOARD,
OFFICE, OR OTHER AGENCY, INCLUDING A UNIVERSITY SYSTEM OR AN INSTITUTION
OF HIGHER EDUCATION THAT:
  (A) IS IN THE EXECUTIVE BRANCH OF STATE GOVERNMENT; AND
  (B) IS CREATED BY STATUTE.
  S 124-A. CONTRACT CONSULTANTS FOR RECOVERY AUDITS FOR CERTAIN OVERPAY-
MENTS. 1. THE COMPTROLLER SHALL CONTRACT WITH ONE OR MORE CONSULTANTS TO
CONDUCT  RECOVERY  AUDITS  OF PAYMENTS MADE BY STATE AGENCIES TO VENDORS
UNDER THE RECOVERY AUDIT PILOT PROGRAM.  THE AUDITS MUST  BE  DESIGNATED
TO  DETECT  AND  RECOVER  OVERPAYMENT  TO  THE  VENDORS AND TO RECOMMEND
IMPROVED STATE AGENCY ACCOUNTING OPERATIONS.
  2. A CONTRACT UNDER THIS SECTION:
  (A) MAY PROVIDE FOR  REASONABLE  COMPENSATION  FOR  SERVICES  PROVIDED
UNDER THE CONTRACT, INCLUDING COMPENSATION DETERMINED BY THE APPLICATION
OF  A  SPECIFIED PERCENTAGE OF THE TOTAL AMOUNT RECOVERED BECAUSE OF THE
CONSULTANT'S AUDIT ACTIVITIES OR RECOMMENDATIONS AS A FEE FOR SERVICES;
  (B) MAY PERMIT OR REQUIRE THE CONSULTANT TO PURSUE A  JUDICIAL  ACTION
IN  A  COURT INSIDE OR OUTSIDE THIS STATE TO RECOVER AN OVERPAID AMOUNT;
AND
  (C) TO ALLOW TIME FOR THE PERFORMANCE OF EXISTING STATE PAYMENT AUDIT-
ING PROCEDURES, MAY NOT ALLOW A RECOVERY AUDIT OF A PAYMENT  DURING  THE
ONE HUNDRED EIGHTY DAY PERIOD AFTER THE DATE THE PAYMENT WAS MADE.
  3.  THE COMPTROLLER OR A STATE AGENCY WHOSE PAYMENTS ARE BEING AUDITED
MAY PROVIDE A PERSON ACTING UNDER A CONTRACT AUTHORIZED BY THIS  SECTION
WITH  ANY  CONFIDENTIAL INFORMATION IN THE CUSTODY OF THE COMPTROLLER OR
STATE AGENCY THAT IS NECESSARY FOR THE PERFORMANCE OF THE AUDIT  OR  THE
RECOVERY  OF  AN  OVERPAYMENT,  TO  THE EXTENT THE COMPTROLLER AND STATE
AGENCY ARE NOT PROHIBITED FROM SHARING THE INFORMATION UNDER  AN  AGREE-
MENT WITH ANOTHER STATE OR THE FEDERAL GOVERNMENT. A PERSON ACTING UNDER
A CONTRACT AUTHORIZED BY THIS SECTION, AND EACH EMPLOYEE OR AGENT OF THE
PERSON,  IS SUBJECT TO ALL PROHIBITIONS AGAINST THE DISCLOSURE OF CONFI-
DENTIAL INFORMATION OBTAINED FROM  THE  STATE  IN  CONNECTION  WITH  THE
CONTRACT  THAT APPLY TO THE COMPTROLLER OR APPLICABLE STATE AGENCY OR AN
EMPLOYEE OF THE COMPTROLLER OR APPLICABLE STATE AGENCY. A PERSON  ACTING
UNDER  A  CONTRACT AUTHORIZED BY THIS SECTION OR AN EMPLOYEE OR AGENT OF
THE PERSON WHO DISCLOSES CONFIDENTIAL  INFORMATION  IN  VIOLATION  OF  A
PROHIBITION  MADE  APPLICABLE  TO  THE  PERSON UNDER THIS SUBDIVISION IS
SUBJECT TO THE SAME SANCTIONS AND PENALTIES  THAT  WOULD  APPLY  TO  THE
COMPTROLLER OR APPLICABLE STATE AGENCY OR AN EMPLOYEE OF THE COMPTROLLER
OR APPLICABLE STATE AGENCY FOR THAT DISCLOSURE.
  S  124-B.  STATE AGENCIES SUBJECT TO MANDATORY RECOVERY AUDITS. 1. THE
COMPTROLLER SHALL REQUIRE THAT  RECOVERY  AUDITS  BE  PERFORMED  ON  THE
PAYMENTS  TO  VENDORS  MADE BY EACH STATE AGENCY THAT HAS TOTAL EXPENDI-
TURES DURING A STATE FISCAL BIENNIUM  IN  AN  AMOUNT  THAT  EXCEEDS  ONE
HUNDRED  MILLION  DOLLARS.  EACH STATE AGENCY SHALL PROVIDE THE RECOVERY
AUDIT CONSULTANT WITH ALL INFORMATION NECESSARY FOR THE AUDIT.
  2. THE COMPTROLLER MAY EXEMPT FROM THE MANDATORY RECOVERY AUDIT  PROC-
ESS A STATE AGENCY THAT HAS A LOW PROPORTION OF ITS EXPENDITURES MADE TO
VENDORS,  ACCORDING  TO  CRITERIA  THE  COMPTROLLER ADOPTS BY RULE AFTER
CONSIDERATION OF THE LIKELY COSTS AND BENEFITS  OF  PERFORMING  RECOVERY
AUDITS  FOR  AGENCIES  THAT  MAKE  RELATIVELY  FEW  OR SMALL PAYMENTS TO
VENDORS.
  3. EMPLOYEES OF THE COMPTROLLER'S OFFICE MAY, AT  THE  OPTION  OF  THE
COMPTROLLER,  ASSIST  OR  PARTICIPATE  IN THE AUDITS REQUIRED UNDER THIS
ARTICLE TO EXPEDITE REVIEWS AND TO REDUCE COSTS.

S. 1289--A                          3

  S 124-C. PAYMENT TO CONTRACTORS. 1. A STATE  AGENCY  SHALL  PAY,  FROM
RECOVERED  MONEY  APPROPRIATED  FOR  THAT  PURPOSE,  THE  RECOVERY AUDIT
CONSULTANT RESPONSIBLE FOR OBTAINING FOR THE AGENCY A REIMBURSEMENT FROM
A VENDOR.
  2. A STATE AGENCY SHALL EXPEND OR RETURN TO THE FEDERAL GOVERNMENT ANY
FEDERAL MONEY THAT IS RECOVERED THROUGH A RECOVERY AUDIT CONDUCTED UNDER
SECTION  ONE  HUNDRED  TWENTY-FOUR-A  OF  THIS ARTICLE. THE STATE AGENCY
SHALL EXPEND OR RETURN THE FEDERAL MONEY IN ACCORDANCE WITH THE RULES OF
THE FEDERAL PROGRAM THROUGH WHICH THE AGENCY RECEIVED THE FEDERAL MONEY.
  S 124-D. FORWARDING REPORTS. 1. THE COMPTROLLER SHALL PROVIDE  COPIES,
INCLUDING  ELECTRONIC  FORM  COPIES,  OF  ANY  REPORTS  RECEIVED  FROM A
CONSULTANT CONTRACTING PURSUANT TO SECTION ONE HUNDRED TWENTY-FOUR-A  OF
THIS ARTICLE TO:
  (A) THE GOVERNOR;
  (B)  THE  SPEAKER  OF  THE ASSEMBLY AND THE TEMPORARY PRESIDENT OF THE
SENATE; AND
  (C) THE MINORITY LEADERS OF THE SENATE AND THE ASSEMBLY.
  2. THE COMPTROLLER SHALL PROVIDE THE COPIES  REQUIRED  BY  SUBDIVISION
ONE  OF  THIS  SECTION NOT LATER THAN THE SEVENTH DAY AFTER THE DATE THE
COMPTROLLER RECEIVES THE CONSULTANT'S REPORT.
  3. NOT LATER THAN AUGUST FIRST OF EACH ODD NUMBERED  YEAR,  THE  COMP-
TROLLER SHALL ISSUE A REPORT TO THE LEGISLATURE SUMMARIZING THE CONTENTS
OF ALL REPORTS RECEIVED UNDER THIS ARTICLE DURING THE STATE FISCAL BIEN-
NIUM  ENDING MARCH THIRTY-FIRST OF THE PREVIOUS YEAR AND SHALL INCLUDE A
STATEMENT OF MONEY EXPENDED AND RECEIVED.
  S 2. The comptroller shall adopt rules to administer the provisions of
article 7-B of the state finance law as added by section one of this act
not later than August 1, 2013.
  S 3. This act shall take effect immediately and shall  expire  and  be
deemed repealed five years after such effective date.

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