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BILL NUMBER:S1950

TITLE OF BILL: An act to amend the executive law, in relation to the appointment of a special prosecutor for criminal medical care fraud and providing for such prosecutor's functions, powers and duties

PURPOSE OR GENERAL IDEA OF BILL: To combat criminal fraud, abuse and waste in the health care industry which contributes to the high costs of medical care.

SUMMARY OF SPECIFIC PROVISIONS: The bill provides for the appointment of a special prosecutor for criminal medical care fraud by the Governor with the advice and consent of the Senate. The special prosecutor would serve for a term of ten years unless removed for cause.

The special prosecutor shall have the authority to receive, investigate and prosecute complaints from the public or any other source concerning alleged abuses, suspected criminal frauds and other violations committed by a medical care provider, a recipient, third party payors or any other entity connected to such care or system. The prosecutor would have the power to receive, investigate and prosecute complaints of alleged failures to enforce state laws and regulations regarding the medical care provider and reimbursement system. Additionally, among the duties, the prosecutor is granted the authority to receive, investigate and prosecute complaints concerning pricing of medical supplies and materials, the provision of unnecessary tests and services including false diagnosis which may involve patient complicity, false billings and claims and allegations of solicitation or kickbacks for steering patients and for the utilization of products and/or services.

To facilitate reporting of criminal fraud and abuse, the special prosecutor would establish a statewide toll free telephone number and reporters would be immune from lawsuits and their communication would, in most cases, remain confidential.

The special prosecutor would be required to make an annual report to the Governor, Attorney General and the Legislature describing the work performed and outlining future goals.

The prosecutor would work in concert with the insurance, health and education departments and the special prosecutor for Medicaid Fraud to effectuate the provisions of this act.

Finally the special prosecutor is granted the authority to seek and recover damages

equal to three times the amount fraudulently obtained. Amounts collected shall be deposited in the general fund to the credit of the office to offset the expenses of the office.

EFFECTS OF PRESENT LAW WHICH THIS BILL WOULD ALTER: The Executive Law is amended by adding a new section 62-a.

JUSTIFICATION: Criminal fraud, abuse and waste in the health care industry cost the government, citizens, and insurers billions of dollars each year and cause incalculable damage to the quality of our health care system. Estimates of fraud, scams and abuse in the health care industry and reimbursement system indicate that the cost could reach between 50 and 80 billion dollars a year. As the GAO concluded, the size of the health care sector and the volume of " money involved make it an "attractive and relatively easy target for fraudulent and abusive providers."

Additionally, fraudulent practices contribute to the skyrocketing cost of health care which remains the obstacle to accessible health care and affordable insurance. For every dollar wasted and defrauded, beneficiaries risk potential reductions in coverage, increased out-of-pocket expenses and increased premiums.

Health care frauds, abuses and crimes committed by health care professionals and others strike at those least able to protect themselves. The sick, especially the terminally ill, elderly and the disabled seeking medical treatment are the unwitting victims of unnecessary tests, surgeries, x-rays, prescriptions, supplies and other services which not only defraud government and insurance carriers but also expose these patients to unwarranted dangers.

In the current system, only a fraction of the fraud and abuse committed against the health care system is identified and prosecuted. The success of the Special Prosecutor for Medicaid Fraud in combating criminal fraud and white collar crimes justifies application of the strategy to the entire health care spectrum and reimbursement system in order to enhance our efforts in developing and instituting cost containment measures.

PRIOR LEGISLATIVE HISTORY:

2003-2004 A.2820 - referred to governmental operations 2001-2002 A.517 - referred to governmental operations 1999-2000 A.508 - referred to governmental operations

FISCAL IMPLICATIONS FOR STATE & LOCAL GOVERNMENTS: It is projected that restitution and damages secured by the Special Prosecutor will offset the expenses of the office. Moreover, the presence of the unit

will deter outbreaks of large-scale provider fraud thereby contributing to systemic reform.

EFFECTIVE DATE: The act shall take effect on the sixtieth day after it shall become law.

Text

STATE OF NEW YORK
________________________________________________________________________

1950

2011-2012 Regular Sessions

IN SENATE

January 14, 2011
___________

Introduced  by  Sen.  KRUGER -- read twice and ordered printed, and when
  printed to be committed to the Committee on Finance

AN ACT to amend the executive law, in relation to the appointment  of  a
  special  prosecutor  for criminal medical care fraud and providing for
  such prosecutor's functions, powers and duties

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

  Section  1.  Legislative  intent.  The  legislature  hereby  finds and
declares that criminal fraud, waste and abuse in the health care  indus-
try in this state costs the government, taxpayers, and insurers billions
of  dollars  each  year and causes incalculable damage to the quality of
our health care system.  Estimates of criminal fraud, scams and abuse in
the health-care industry indicate the cost to  this  state  alone  could
reach between fifty and eighty billion dollars a year.
  Such  criminal  frauds,  waste,  abuses and crimes committed by health
care professionals and others strike at  those  least  able  to  protect
themselves.  The  sick,  especially  the terminally ill, elderly and the
infirmed seeking medical treatment are the unwitting victims of unneces-
sary  tests,  surgeries,  x-rays,  prescriptions,  supplies  and   other
services  which  not  only defraud government and insurance carriers but
also expose these patients to unwarranted dangers.
  For every dollar wasted, beneficiaries risk  potential  reductions  in
program  coverage, increased out-of-pocket expenses and increased health
insurance premiums.
  The need to control health care  costs  which  have  spiraled  out  of
control  and to develop a system that facilitates the detection of fraud
is of paramount importance and necessitates the enactment of this act.
  S 2. The executive law is amended by adding a new section 62-a to read
as follows:
  S 62-A. SPECIAL PROSECUTOR FOR CRIMINAL MEDICAL  CARE  FRAUD.  1.  THE
GOVERNOR, BY AND WITH THE ADVICE AND CONSENT OF THE SENATE AND ASSEMBLY,

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD06661-01-1
S. 1950                             2

SHALL WITHIN THIRTY DAYS OF THE EFFECTIVE DATE OF THIS SECTION APPOINT A
SPECIAL PROSECUTOR FOR CRIMINAL MEDICAL CARE FRAUD. THE SPECIAL PROSECU-
TOR  SHALL SERVE FOR A TERM OF TEN YEARS UNLESS REMOVED BY THE GOVERNOR,
AFTER  NOTICE AND AN OPPORTUNITY FOR A HEARING, AND THEN ONLY FOR ONE OR
MORE OF THE FOLLOWING REASONS:  PERMANENT DISABILITY WHICH  RENDERS  THE
SPECIAL PROSECUTOR INCAPABLE OF PERFORMING THE DUTIES OF HIS/HER OFFICE;
GROSS  INEFFICIENCY,  TYPIFIED  BY A LACK OF ABILITY TO PROPERLY CONDUCT
INVESTIGATIONS AND PROSECUTIONS; NEGLECT OF DUTY, INCLUDING  AN  UNWILL-
INGNESS TO PURSUE CLAIMS OF CRIMINAL FRAUD, ABUSE OR CORRUPTION; MALFEA-
SANCE;  CONVICTION  OF A FELONY; OR CONDUCT INVOLVING MORAL TURPITUDE. A
SPECIAL PROSECUTOR REMOVED FROM OFFICE UNDER THIS SUBDIVISION MAY NOT BE
REAPPOINTED. SUCH SPECIAL PROSECUTOR SHALL RECEIVE AN ANNUAL  SALARY  TO
BE  FIXED  BY  LAW  FROM  WITHIN THE AMOUNTS APPROPRIATED THEREFOR. SUCH
SPECIAL PROSECUTOR SHALL POSSESS ALL  OF  THE  POWERS  OF  AN  ASSISTANT
ATTORNEY  GENERAL OTHERWISE AUTHORIZED BY THIS ARTICLE PROVIDED, HOWEVER
THAT SUCH SPECIAL PROSECUTOR SHALL DEVOTE  HIS  OR  HER  FULL  TIME  AND
EFFORT  EXCLUSIVELY  TO  INVESTIGATIONS  AND PROSECUTIONS OF ACTIONS AND
PROCEEDINGS RELATING TO CRIMINAL MEDICAL CARE FRAUD AND  CRIMINAL  FRAUD
INVOLVING THE STATE'S MEDICAL CARE PROVIDER AND REIMBURSEMENT SYSTEM.
  2.  THE SPECIAL PROSECUTOR MAY APPOINT SUCH OTHER DEPUTIES, DIRECTORS,
ASSISTANTS, AND OTHER EMPLOYEES TO SERVE  AT  THE  SPECIAL  PROSECUTOR'S
PLEASURE  AND  DISCRETION AS MAY BE NEEDED FOR THE PERFORMANCE OF DUTIES
AND MAY PRESCRIBE THEIR POWERS AND FIX  THEIR  COMPENSATION  WITHIN  THE
AMOUNTS APPROPRIATED THEREFOR.
  3.  THE SPECIAL PROSECUTOR SHALL HAVE THE FOLLOWING SPECIAL FUNCTIONS,
POWERS AND DUTIES:
  (A) TO RECEIVE, INVESTIGATE AND PROSECUTE COMPLAINTS AS  MORE  PARTIC-
ULARLY  ENUMERATED  IN  PARAGRAPHS  (B)  THROUGH (N) OF THIS SUBDIVISION
WHENEVER SUCH SPECIAL PROSECUTOR REASONABLY CONCLUDES THAT THE  ACTIVITY
ALLEGED MAY CONSTITUTE A CRIME.
  (B)  TO  RECEIVE, INVESTIGATE AND PROSECUTE COMPLAINTS FROM THE PUBLIC
OR ANY  OTHER  SOURCE  CONCERNING  ALLEGED  ABUSES,  SUSPECTED  CRIMINAL
FRAUDS, AND OTHER VIOLATIONS OF THE MEDICAL CARE PROVIDER AND REIMBURSE-
MENT  SYSTEM WHICH SHALL BE DEEMED TO INCLUDE CRIMINAL FRAUD OR ABUSE BY
A MEDICAL CARE PROVIDER, A MEDICAL CARE RECIPIENT, THIRD PARTY PAYORS OR
ANY OTHER PERSON OR BUSINESS ENTITY CONNECTED THEREWITH.
  (C)  TO RECEIVE, INVESTIGATE AND PROSECUTE COMPLAINTS OF ALLEGED FAIL-
URES TO ENFORCE THE STATE'S LAWS AND  PERTINENT  RULES  AND  REGULATIONS
REGARDING  THE  MEDICAL  CARE  PROVIDER AND REIMBURSEMENT SYSTEM, AND TO
INVESTIGATE AND PROSECUTE THE SAME.
  (D)  TO RECEIVE, INVESTIGATE AND PROSECUTE COMPLAINTS OF ALLEGED FAIL-
URES OF LOCAL OFFICIALS AND EMPLOYEES AND PRIVATE INDIVIDUALS TO  COMPLY
WITH  STATE  LAWS  AND  RULES AND REGULATIONS REGARDING THE MEDICAL CARE
PROVIDER AND REIMBURSEMENT SYSTEM AND TO INVESTIGATE AND  PROSECUTE  THE
SAME.
  (E)  TO  RECEIVE, INVESTIGATE AND PROSECUTE COMPLAINTS FROM THE PUBLIC
OR ANY OTHER SOURCE CONCERNING PRICING OF MEDICAL SUPPLIES  AND  MATERI-
ALS.
  (F)  TO  RECEIVE, INVESTIGATE AND PROSECUTE COMPLAINTS FROM THE PUBLIC
OR ANY OTHER SOURCE CONCERNING  THE  PROVISION  OF  UNNECESSARY  MEDICAL
TESTS  AND  SERVICES INCLUDING FALSE DIAGNOSIS WHICH MAY INVOLVE PATIENT
COMPLICITY.
  (G) TO RECEIVE, INVESTIGATE AND PROSECUTE COMPLAINTS FROM  THE  PUBLIC
OR ANY OTHER SOURCE CONCERNING ALLEGED FALSE BILLINGS AND CLAIMS.
  (H)  TO  RECEIVE, INVESTIGATE AND PROSECUTE COMPLAINTS FROM THE PUBLIC
OR ANY OTHER SOURCE CONCERNING  ALLEGED  SOLICITATION  FOR  REMUNERATION
S. 1950                             3

DIRECTLY  OR  INDIRECTLY,  OVERTLY  OR  COVERTLY, IN CASH OR IN KIND, IN
RETURN FOR REFERRING AN INDIVIDUAL TO A HEALTH  CARE  PROVIDER  FOR  THE
FURNISHING OR ARRANGING FOR THE FURNISHING OF ANY TEST, SERVICE, ITEM OR
CARE  OR IN RETURN FOR PURCHASING, LEASING, ORDERING OR ARRANGING FOR OR
RECOMMENDING, PURCHASING, LEASING OR ORDERING ANY TEST, SERVICE, ITEM OR
CARE.
  (I) TO RECEIVE, INVESTIGATE AND PROSECUTE COMPLAINTS FROM  THE  PUBLIC
OR  ANY  OTHER  SOURCE  CONCERNING  ALLEGED  OFFERS  OF  REMUNERATION OR
PAYMENTS DIRECTLY OR INDIRECTLY, OVERTLY OR COVERTLY, IN CASH OR IN KIND
TO ANY PERSON TO INDUCE SUCH PERSON TO REFER AN INDIVIDUAL TO  A  HEALTH
CARE  PROVIDER FOR THE FURNISHING OR ARRANGING FOR THE FURNISHING OF ANY
TEST, SERVICE, ITEM OR CARE OR TO PURCHASE, LEASE, ORDER OR ARRANGE  FOR
OR  RECOMMEND PURCHASING, LEASING OR ORDERING ANY TEST, SERVICE, ITEM OR
CARE.
  (J) TO CONDUCT ANY INQUIRY PERTINENT OR MATERIAL TO THE  DISCHARGE  OF
THE  FUNCTIONS, POWERS AND DUTIES IMPOSED BY LAW; AND THROUGH DESIGNATED
MEMBERS OF  THE  STAFF,  TO  SUBPOENA  AND  ENFORCE  THE  ATTENDANCE  OF
WITNESSES, ADMINISTER OATHS, TAKE TESTIMONY AND COMPEL THE PRODUCTION OF
SUCH BOOKS, PAPERS, RECORDS AND DOCUMENTS AS MAY BE RELEVANT TO ANY SUCH
INQUIRY AND INVESTIGATION.
  (K) TO ESTABLISH A STATEWIDE TOLL FREE TELEPHONE HOTLINE FOR REPORTING
OF ALLEGED CRIMINAL FRAUD AND ABUSE.
  (L) TO REQUEST FROM ANY DEPARTMENT, BOARD, BUREAU, COMMISSION OR OTHER
AGENCY  OF  THE  STATE  AND ITS POLITICAL SUBDIVISIONS, AND THE SAME ARE
AUTHORIZED AND DIRECTED TO PROVIDE,  SUCH  COOPERATION  AND  ASSISTANCE,
SERVICES AND DATA AS WILL ENABLE HIM OR HER PROPERLY TO CARRY OUT HIS OR
HER  FUNCTIONS,  POWERS  AND DUTIES AND IN PARTICULAR TO WORK IN CONCERT
WITH THE INSURANCE DEPARTMENT, THE HEALTH DEPARTMENT AND  THE  EDUCATION
DEPARTMENT TO EFFECTUATE THE PROVISIONS OF THIS SECTION.
  (M)    TO MAKE AN ANNUAL REPORT TO THE GOVERNOR, THE ATTORNEY GENERAL,
THE TEMPORARY PRESIDENT OF THE SENATE AND THE SPEAKER  OF  THE  ASSEMBLY
CONCERNING SUCH WORK DURING THE PRECEDING YEAR, AND TO MAKE SUCH FURTHER
INTERIM  REPORTS  TO THEM AS THEY OR ANY OF THEM SHALL DEEM ADVISABLE OR
REQUIRE.
  (N) TO DEVELOP AND IMPLEMENT GUIDELINES AND PROCEDURES FOR THE CONDUCT
OF INVESTIGATIONS AND TO DEVELOP TRAINING PROGRAMS FOR INVESTIGATORS AND
OTHER MEMBERS OF THE STAFF.
  (O) TO DO ALL THINGS NECESSARY OR CONVENIENT TO CARRY  OUT  THE  FUNC-
TIONS, POWERS AND DUTIES SET FORTH IN THIS SECTION.
  4.  ANY  ORGANIZATION,  INSTITUTION, INSURANCE COMPANY OR OTHER PERSON
WHO REPORTS OR PROVIDES INFORMATION TO THE SPECIAL  PROSECUTOR  IN  GOOD
FAITH,  AND  WITHOUT MALICE, SHALL NOT BE SUBJECT TO AN ACTION FOR CIVIL
DAMAGES OR OTHER RELIEF AS THE RESULT OF SUCH  COMMUNICATION.  ANY  SUCH
COMMUNICATION  SHALL  REMAIN  CONFIDENTIAL  AND  SHALL  NOT BE DISCLOSED
UNLESS CONSENTED TO OR UNLESS ORDERED BY THE COURT.
  5. FOR ANY VIOLATION INVOLVING CRIMINAL MEDICAL CARE FRAUD,  IN  ADDI-
TION  TO CRIMINALLY PROSECUTING ANY PERSON SO CHARGED THE SPECIAL PROSE-
CUTOR SHALL HAVE A CIVIL RIGHT OF ACTION TO  RECOVER  DAMAGES  EQUAL  TO
THREE TIMES THE AMOUNT FRAUDULENTLY OBTAINED. AMOUNTS COLLECTED PURSUANT
TO  THE  AUTHORITY OF THIS SUBDIVISION SHALL BE DEPOSITED IN THE GENERAL
FUND TO THE CREDIT OF THE SPECIAL PROSECUTOR TO OFFSET THE  EXPENSES  OF
THE OFFICE HEREIN CREATED.
  S  3.  This  act  shall take effect on the sixtieth day after it shall
have become a law.