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

                                  5056

                       2015-2016 Regular Sessions

                          I N  A S S E M B L Y

                            February 10, 2015
                               ___________

Introduced by M. of A. HEVESI -- read once and referred to the Committee
  on Governmental Operations

AN ACT to amend the state finance law and the public authorities law, in
  relation  to  authorizing  an enterprise approach to the detection and
  prevention of fraud, waste and  abuse  in  state  government  and  the
  detection and prevention of improper payments of public moneys

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

  Section 1. Legislative findings. (a) Fraud, waste, abuse and  improper
payments  are  pervasive,  and  often  on  the  rise, in many government
programs.
  (1) According to the Centers for Medicare and Medicaid Services (CMS),
the 2011 Medicaid improper payment rate was 8.1%;
  (2) According to the Government Accountability Office (GAO), over  $70
billion  in  improper  payments are made each year in Medicaid and Medi-
care;
  (3) According to the U.S. Department of Labor, the  2011  unemployment
insurance  payment  error  rate  was 11.2%, resulting in $5.7 billion of
improper payments;
  (4) According to the Internal Revenue Service (IRS), the tax  gap  for
federal income tax is at least $270 billion per year;
  (5)  In  the  2012 filing season, IRS estimated losses due to identity
theft alone at $5 billion, and detected an additional $12 billion.
  (b) Entities involved in perpetrating fraud and  abuse  of  government
programs  are  becoming increasingly more sophisticated in their schemes
and tactics, and often work in organized and collusive  fraud  rings  or
networks  to  attack  any and all government programs. The fraud schemes
can be massive, as illustrated in the following recent cases:
  (1)   October   2010:   73   defendants,   $163   million   in   false
Medicare/Medicaid billings, Armenian-American fraud ring;

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD04637-02-5

              

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  (2)   February   2011:   20   defendants,   $200   million   in  false
Medicare/Medicaid billings, Florida;
  (3)   February   2011:   111   defendants,   $225   million  in  false
Medicare/Medicaid billings, 7 cities;
  (4) April 2011: 3 defendants, $3.9 million in  food  stamp  47  fraud,
Texas;
  (5)   September   2011:   91   defendants,   $295   million  in  false
Medicare/Medicaid billings, 8 cities;
  (6)   October   2012:   91   defendants,   $430   million   in   false
Medicare/Medicaid billings, 7 cities.
  (c) Fraud, waste, abuse and improper payments can adversely affect the
state budget, impede economic development, and deplete benefits intended
for citizens in need.
  (d)  The  state  constitution requires the state comptroller to, among
other things,  audit  all  vouchers  before  payment  and  all  official
accounts  and,  in such respect, the legislature shall define the powers
and duties of the office and may assign to the state comptroller  admin-
istrative  duties  incidental  to the performance of these functions and
the state comptroller has the constitutional authority to supervise  the
accounts  of public corporations commonly referred to as public authori-
ties. Statutorily, the state comptroller has the duty to superintend the
fiscal concerns of the state.
  (d-1) In the performance of the state comptroller's constitutional and
statutory functions, duties and responsibilities, the  state's  citizens
expect  state  agencies  to  utilize modern techniques and technology to
prevent tax dollars from being spent on fraudulent or improper payments.
  (e) Identifying possible waste, fraud, abuse and the improper payments
of public moneys at the earliest point possible will reduce  losses  and
possibly  prevent  erroneous  payments  from  being made, thus providing
potentially millions of dollars in cost-savings to the state.
  (f) State-supported citizen and employee benefits  programs,  workers'
compensation,  Medicaid,  unemployment  insurance,  tax  compliance, and
discretionary grants to community-based programs are areas where  it  is
important  for the state to identify and prevent waste, fraud, abuse and
improper payments.
  (g) Modern technologies  and  best  practices  exist,  and  have  been
deployed  successfully in the commercial sector for many years, that can
greatly reduce the  losses  associated  with  fraud,  waste,  abuse  and
improper payments.
  (h)  An  enterprise  approach  to  reducing  waste,  fraud, abuse, and
improper payments coordinates efforts with  more  than  one  agency  and
incorporates  data  from  multiple  data  sources  within  an agency and
between two or more agencies. This type of approach allows state govern-
ment to utilize its rich data assets across  agencies  and  programs  to
better  detect improper behaviors, and to leverage economies of scale to
reduce overall costs for fraud detection and prevention across all state
government programs and functions.
  S 2. The state finance law is amended by adding a new section  8-c  to
read as follows:
  S  8-C. ENTERPRISE FRAUD PREVENTION AND DETECTION SYSTEM. 1. IN FURTH-
ERANCE OF THE  COMPTROLLER'S  CONSTITUTIONAL  AND  STATUTORY  FUNCTIONS,
DUTIES  AND  RESPONSIBILITIES,  THE  COMPTROLLER  MAY, WITHIN HIS OR HER
DISCRETION, ESTABLISH, IMPLEMENT AND UPDATE AS NECESSARY  AN  ELECTRONIC
DATA ANALYTICAL ENTERPRISE FRAUD PREVENTION AND DETECTION SYSTEM FOR THE
PREVENTION  OF  FRAUD,  WASTE  AND  ABUSE  IN  STATE  GOVERNMENT AND THE
DETECTION AND PREVENTION OF IMPROPER PAYMENTS OF PUBLIC MONEYS.

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  2. STATE AGENCIES SHALL FULLY SUPPORT AND  COOPERATE  WITH  THE  STATE
COMPTROLLER  BY  PROVIDING  THE  STATE  COMPTROLLER  WITH ACCESS TO DATA
REQUESTED BY THE STATE COMPTROLLER, IN ACCORDANCE WITH APPLICABLE  STATE
AND  FEDERAL LAW, TO ALLOW SUCH DATA TO BE INTEGRATED INTO SUCH ANALYTIC
EFFORTS  AS  THE STATE COMPTROLLER MAY DEEM NECESSARY. FOR THIS PURPOSE,
THE TERM "STATE AGENCY" SHALL MEAN ANY OF  THE  FOLLOWING  PERFORMING  A
GOVERNMENTAL OR PROPRIETARY FUNCTION FOR THE EXECUTIVE DEPARTMENT OF THE
STATE:  A  STATE  DEPARTMENT, THE STATE UNIVERSITY OF NEW YORK, THE CITY
UNIVERSITY OF NEW YORK, AND ANY  BOARD,  BUREAU,  DIVISION,  COMMISSION,
COMMITTEE, COUNCIL, OFFICE OR SIMILAR GOVERNMENTAL ENTITY.
  3. IN SUPPORT OF THE ENTERPRISE FRAUD PREVENTION AND DETECTION SYSTEM,
THE STATE COMPTROLLER SHALL ESTABLISH PROTOCOLS:
  (A)  FOR  DATA  SHARING, SECURE FILE TRANSFERS AND/OR OTHER METHODS TO
OBTAIN REAL-TIME, REGULAR AND/OR  PERIODIC  DATA  FROM  STATE  AGENCIES,
PROVIDED,  HOWEVER,  THAT  ACCESS  TO SUCH DATA BY THE STATE COMPTROLLER
SHALL NOT WAIVE ANY PRIVILEGE OR RIGHT OF CONFIDENTIALITY;
  (B) TO ENSURE THE SAFETY, SECURITY, INTEGRITY AND PRIVACY OF ALL  DATA
SHARED WITH HIS OR HER OFFICE IN ACCORDANCE WITH THE SYSTEM; AND
  (C)  FOR  THE  AUTHORIZED RETENTION AND DELETION OF DATA OBTAINED FROM
STATE AGENCIES.
  4. IN CONNECTION WITH SUCH SYSTEM, THE STATE COMPTROLLER,  IN  HIS  OR
HER DISCRETION, MAY:
  (A)  DEVELOP  A  LONG-RANGE  PLAN FOR PREVENTING OR DETECTING IMPROPER
PAYMENTS OF PUBLIC MONEYS, AND THE PREVENTION AND  DETECTION  OF  WASTE,
FRAUD AND ABUSE IN GOVERNMENT OPERATIONS;
  (B)  ACQUIRE  TECHNOLOGY  INCLUDING, BUT NOT LIMITED TO, SOFTWARE THAT
ENHANCES THE FOLLOWING CAPABILITIES: (I) AUTOMATED DETECTION AND  ALERT-
ING; (II) CONTINUOUS MONITORING OF PROGRAM TRANSACTIONS AND ACTIVITY, TO
DETECT  FRAUD  AND  IMPROPER  PAYMENTS  BOTH  PROSPECTIVELY  (BEFORE THE
PAYMENT IS MADE) AND RETROSPECTIVELY (AFTER PAYMENTS  ARE  MADE);  (III)
DETECTION  OF NON-TRANSACTIONAL FRAUD SUCH AS PROGRAM ELIGIBILITY ISSUES
AND IDENTIFY THEFT; AND
  (C) EVALUATE POTENTIAL SAVINGS RESULTING FROM SUCH EFFORTS.
  5. THE STATE COMPTROLLER SHALL REPORT ANNUALLY TO THE  LEGISLATURE  NO
LATER THAN THE FIRST DAY OF SEPTEMBER, TWO THOUSAND SIXTEEN AND ANNUALLY
THEREAFTER  ON  THE  PROGRESS,  STATUS AND RESULTS OF THE SYSTEM CREATED
PURSUANT TO THIS SECTION AND SUBDIVISION  TWO  OF  SECTION  TWENTY-EIGHT
HUNDRED THREE OF THE PUBLIC AUTHORITIES LAW.
  S  3.  Section 2803 of the public authorities law, as added by chapter
327 of the laws of 1958 and as renumbered by chapter 838 of the laws  of
1983, is amended to read as follows:
  S 2803. Examination of the books and accounts of public authorities by
the  state  comptroller.  1. Notwithstanding any other provision of this
chapter, the state comptroller shall, from time to  time  but  not  less
than  once  in every five years, examine the books and accounts of every
authority or commission heretofore or hereafter continued or created  by
this  chapter, including its receipts, disbursements, contracts, leases,
sinking funds, investments and any other matters relating to its  finan-
cial  standing. In lieu of such an examination, the state comptroller is
hereby authorized to accept from every such authority or  commission  an
external  examination  of  its books and accounts made at the request of
such authority or commission.
  2. (A) THE STATE COMPTROLLER MAY, PURSUANT  TO  SUBDIVISIONS  TWO  AND
THREE  OF  SECTION  EIGHT-C OF THE STATE FINANCE LAW, IN HIS OR HER SOLE
DISCRETION, APPLY TO STATE AUTHORITIES THE  ELECTRONIC  DATA  ANALYTICAL
ENTERPRISE FRAUD PREVENTION AND DETECTION SYSTEM AS PROVIDED FOR IN SUCH

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SECTION EIGHT-C OF THE STATE FINANCE LAW. PUBLIC AUTHORITIES SHALL FULLY
SUPPORT  AND COOPERATE WITH THE STATE COMPTROLLER BY PROVIDING THE STATE
COMPTROLLER WITH ACCESS TO DATA OF THE AUTHORITY REQUESTED BY THE  STATE
COMPTROLLER,  IN  ACCORDANCE  WITH  STATE AND FEDERAL LAW, TO ALLOW SUCH
DATA TO BE INTEGRATED INTO SUCH ANALYTIC  EFFORTS  AS  THE  STATE  COMP-
TROLLER MAY DEEM NECESSARY.
  (B) FOR PURPOSES OF THIS SUBDIVISION, THE TERM "STATE AUTHORITY" SHALL
HAVE THE SAME MEANING AS IN SUBDIVISION ONE OF SECTION TWO OF THIS CHAP-
TER,  PROVIDED  THAT  FOR PURPOSES OF THIS SUBDIVISION, THE TERM "PUBLIC
BENEFIT CORPORATION" AS USED IN SUCH SUBDIVISION ONE OF SECTION  TWO  OF
THIS  CHAPTER  SHALL  HAVE  THE  SAME  MEANING AS IN SUBDIVISION FOUR OF
SECTION SIXTY-SIX OF THE GENERAL CONSTRUCTION LAW.
  S 4. Nothing in this act shall be construed to in  any  way  alter  or
diminish any statutory or constitutional power, duty or authority of the
state comptroller.
  S 5. This act shall take effect on the one hundred twentieth day after
it shall have become a law; provided, however, that effective immediate-
ly,  the  addition,  amendment  and/or  repeal of any rule or regulation
necessary for the implementation of this act on its effective  date  are
authorized to be made and completed on or before such effective date.