Establishes the recovery audit pilot program for the recovery of state agency expenditure overpayments and lost discounts.
TITLE OF BILL: An act to amend the state finance law, in relation to establishing audits of state agency expenditures to recover overpayments and lost discounts
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 -- F1NANCE/Gov't Ops
FISCAL IMPLICATIONS: To be determined.
EFFECTIVE DATE: This act shall take effect immediately.
STATE OF NEW YORK ________________________________________________________________________ 1289 2013-2014 Regular Sessions IN SENATE (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 AN ACT to amend the state finance law, in relation to establishing audits of state agency expenditures to recover overpayments and lost discounts 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 OF CERTAIN STATE AGENCY OVERPAYMENTS 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 (E) FOR A GOOD OR SERVICE THE VENDOR DID NOT PROVIDE.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD04840-01-3 S. 1289 2
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. 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. 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.S. 1289 3
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. 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.