NY State Senate Bill 2013-S4815A

Archive: Last Bill Status - In Senate Committee Finance Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
May 27, 2014	print number 4815a
May 27, 2014	amend (t) and recommit to finance
Jan 08, 2014	referred to finance
Apr 24, 2013	referred to finance

Bill Amendments

Original

A (Active)

2013-S4815 - Details

See Assembly Version of this Bill:: A6988
Current Committee:: Senate Finance
Law Section:: State Finance Law
Laws Affected:: Add §8-c, St Fin L; amd §2803, Pub Auth L
Versions Introduced in 2015-2016 Legislative Session:: S3757, A5056

2013-S4815 - Summary

Authorizes 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.

2013-S4815 - Sponsor Memo

                                BILL NUMBER:S4815

TITLE OF BILL:  An act to amend the executive law, in relation to
establishing the enterprise fraud program office to provide for the
detection and prevention of fraud, waste, abuse and improper payments
in state government

PURPOSE: To reduce costs by streamlining the fraud detection and
prevention efforts of various state agencies into a single office that
would more efficiently utilize data across multiple agencies to better
detect and prevent fraud, waste, abuse, and improper payments in state
government.

SUMMARY OF PROVISIONS: Section one of this legislation details
legislative findings.

Section two of this legislation adds a new section 56 to the executive
law, creating an enterprise fraud program office ("EFPO") within the
office of the state inspector general. The enterprise fraud program
office would provide fraud, waste, abuse, and improper payments
detection and prevention capability across state agencies and
programs. State agencies would provide access to state databases,
allowing their data to be integrated and to permit fraud detection
analytics software to analyze the resultant pool of data. EFPO would
be required to develop a detailed long-range plan to implement an
automated fraud detection system across state agencies and determine

costs for the effort for five years. EFPO would evaluate, along with
the costs, the potential savings to the State resulting from the
reduced fraud and waste and provide recommendations to the State
legislature on potential future initiatives and the costs and savings
associated with each.

EFPO would also establish a pilot program within 90 days of the
effective date of this Act so that savings and recoveries may be
realized within the current budget cycle. This pilot project would
implement state-of-the-art enterprise fraud detection technology to
identify fraud and improper payment both prospectively and
retrospectively; detect non-transactional fraud such as identity
theft; have automated detection and alerting; use latest advanced
analytics techniques including predictive modeling, complex pattern
analysis, social network analysis, text mining, and geospatial
analysis; have feedback and self-learning capability to adapt to
changing schemes and trends; have advanced entity resolution
capabilities to create a holistic view of entities across government
agencies, programs, and databases; and have the ability to extend and
adapt to all areas of state government. EFPO would be authorized to
enter into a vendor license agreement for the pilot project in an
amount that would not exceed the potential cost savings the program
would yield.

Within 120 days EFPO shall report to the legislature on the progress
and status of the pilot project and such reports shall continue
quarterly. They will provide details of the fraud and waste detected
and prevented by EFPO and will provide recommendations for changes to
state and federal operations, law, and regulations to better prevent
improper behavior and improve the State's ability to detect such
fraud. The reports shall also include state costs and payments to


vendor for the previous quarter, as well as anticipated costs and
vendor payments for the next two years from the date of the report.

JUSTIFICATION: The prevalence of fraud, waste, abuse, and improper
payments is pervasive and growing in many government programs, and the
public is footing the bill. To give just a small sampling:  according
to the Government Accountability Office over $70 billion in improper
payments are made each year in Medicaid and Medicare; according to the
U.S. Department of Labor, the 2011 Unemployment Insurance Payment
Error Rate was 11.2% and resulted in $5.7 billion in improper
payments; and in the 2012 filing season, the IRS estimated losses due
to identity theft a $5 billion. These debilitating costs to the State
are found in a wide of variety of agencies and programs, and are
created by a variety of different problems and inefficiencies.

The collective cost of the fraud, waste, abuse, and improper payments
adversely affects the State budget, impedes economic development, and
depletes benefits intended for citizens in need. Agencies may attempt
to combat these improper behaviors on their own, but they are out of
their depth and severely outmatched in their attempts. Entities
involved in committing fraud and abusing government programs are
becoming increasingly sophisticated in their schemes and tactics, and
often work in organized and collusive rings or networks to attack any
and all government programs Detecting the methods of these
organizations requires state-of-the-art technology and constant
vigilance that is beyond the capabilities of agencies and programs
tasked with other important full time responsibilities.

Identifying possible waste, fraud, abuse, and improper payments at the
earliest possible point would reduce losses and prevent erroneous
payments from being made, potentially providing millions of dollars in
cost-savings to the State. Modern technologies and practices exist and
have been successfully deployed in the commercial sector for many
years and have been found to greatly reduce the losses associated with
fraud, waste, and improper payments. Integrating into State government
this state-of-the-art fraud detection and prevention technology would
greatly help agencies reduces their losses to fraudulent behaviors.
For this modern technology to most efficiently be deployed, a
government office should be created that can devote its undivided
attention to effectively combating waste, fraud, abuse, and improper
payments across various government offices and programs.

An enterprise approach to combating fraud, waste, abuse, and improper
payments coordinates the efforts of many agencies and incorporates
data from multiple sources to maximize the efficacy of data analytics
in combating this fraud and waste. This type of approach allows the
State 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. The Enterprise Fraud Program
Office created by this legislation would effectively and
cost-efficiently accomplish these goals.

LEGISLATIVE HISTORY: None

FISCAL IMPLICATIONS: Based on results in others states, the costs of
implementing this Act and operating the Enterprise Fraud Program


Office are anticipated to be recouped plus additional revenue in
cost-savings to the State that the EFPO's efforts will achieve.

EFFECTIVE DATE: This act shall take effect immediately.

2013-S4815 - Bill Text download pdf

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

                                  4815

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                             April 24, 2013
                               ___________

Introduced  by  Sen.  GOLDEN -- 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  establishing  the
  enterprise  fraud  program  office  to  provide  for the detection and
  prevention of fraud, waste,  abuse  and  improper  payments  in  state
  government

  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 the 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.
                                                           LBD10412-01-3

S. 4815                             2

  (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's citizens expect state agencies to utilize modern tech-
niques and technology to prevent tax dollars from being spent on fraudu-
lent or improper payments.
  (e)  Identifying possible waste, fraud, abuse and improper payments 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 executive law is amended by adding a new section 56  to  read
as follows:
  S 56. ENTERPRISE FRAUD PROGRAM OFFICE.  1. THERE IS ESTABLISHED WITHIN
THE  OFFICE  OF THE STATE INSPECTOR GENERAL, AN ENTERPRISE FRAUD PROGRAM
OFFICE  TO  IMPLEMENT  A  FRAUD,  WASTE,  ABUSE  AND  IMPROPER  PAYMENTS
DETECTION AND PREVENTION CAPABILITY ACROSS STATE AGENCIES AND PROGRAMS.
  2.  STATE  AGENCIES  SHALL FULLY SUPPORT AND PARTICIPATE IN THE ENTER-
PRISE FRAUD PROGRAM'S EFFORTS TO DEVELOP AN  AUTOMATED  FRAUD  DETECTION
SYSTEM.    STATE  AGENCIES  SHALL  PROVIDE  ACCESS TO STATE DATABASES AS
DIRECTED BY THE ENTERPRISE FRAUD PROGRAM OFFICE TO ALLOW THE DATA TO  BE
INTEGRATED WITH VARIOUS STATE DATA AND TO PERMIT FRAUD DETECTION ANALYT-
ICS SOFTWARE TO ANALYZE THE DATA.
  3.  IN SUPPORT OF THE AUTOMATED FRAUD DETECTION EFFORT, THE ENTERPRISE
FRAUD PROGRAM OFFICE SHALL:
  (A) DEVELOP A DETAILED LONG-RANGE PLAN TO IMPLEMENT AN AUTOMATED FRAUD
DETECTION SYSTEM ACROSS STATE AGENCIES;
  (B) DETERMINE COSTS, TO INCLUDE VENDOR COSTS, FOR THE EFFORT FOR  FIVE
YEARS;

S. 4815                             3

  (C)  COORDINATE  WITH IMPACTED STATE AGENCIES TO DEFINE THEIR INVOLVE-
MENT IN THE PROJECT AND TO IDENTIFY POTENTIAL DATA ASSETS  AND  APPLICA-
TIONS THAT CAN BE INCLUDED IN AN INITIAL REQUEST FOR PROPOSAL;
  (D)  ESTABLISH  PRIORITIES  FOR  DEVELOPING AND IMPLEMENTING POTENTIAL
APPLICATIONS;
  (E) WORK WITH THE PROPER STATE AGENCIES TO EVALUATE POTENTIAL  SAVINGS
RESULTING  FROM  FRAUD, WASTE, ABUSE AND IMPROPER PAYMENTS REDUCTIONS IN
THE IMPACTED AGENCIES AND PROGRAMS;
  (F) ESTABLISH A PILOT PROJECT AS SET FORTH IN SUBDIVISION FOUR OF THIS
SECTION TO BEGIN THE IMPLEMENTATION PROCESS AND TO IDENTIFY AND  RESOLVE
ISSUES ASSOCIATED WITH EXPANSION OF THE INITIATIVE;
  (G) COORDINATE WITH PARTICIPATING AGENCIES TO ENSURE THAT EACH HAS THE
RESOURCES AND PROCESSES NECESSARY TO FOLLOW UP ON INCIDENTS OF POTENTIAL
FRAUD, WASTE OR ABUSE IDENTIFIED; AND
  (H)  PROVIDE  RECOMMENDATIONS  TO  THE LEGISLATURE ON POTENTIAL FUTURE
INITIATIVES AND THE COST AND SAVINGS ASSOCIATED WITH EACH.
  4. (A) THE ENTERPRISE FRAUD PROGRAM  OFFICE  SHALL  INITIATE  A  PILOT
PROJECT  WITHIN  NINETY  DAYS  OF  THE EFFECTIVE DATE OF THIS SECTION TO
IMPLEMENT STATE-OF-THE-ART ENTERPRISE FRAUD  DETECTION  TECHNOLOGY  THAT
CAN  SUPPORT  FRAUD,  WASTE,  ABUSE  AND  IMPROPER PAYMENT DETECTION AND
PREVENTION ACROSS STATE AGENCIES, PROGRAMS AND FUNCTIONS.
  (B) THE TECHNOLOGY MUST PROVIDE THE FOLLOWING CAPABILITIES:
  (1) AUTOMATED DETECTION AND ALERTING;
  (2) CONTINUOUS MONITORING OF PROGRAM TRANSACTIONS AND  ACTIVITY,  WITH
ABILITY  TO  IDENTIFY  FRAUD  AND  IMPROPER  PAYMENTS BOTH PROSPECTIVELY
(BEFORE THE PAYMENT IS MADE) AND  RETROSPECTIVELY  (AFTER  PAYMENTS  ARE
MADE);
  (3)  ABILITY  TO DETECT NON-TRANSACTIONAL FRAUD SUCH AS PROGRAM ELIGI-
BILITY ISSUES AND IDENTITY THEFT;
  (4) USE OF THE LATEST ADVANCED ANALYTICAL TECHNIQUES INCLUDING PREDIC-
TIVE MODELING, COMPLEX PATTERN ANALYSIS, SOCIAL NETWORK  ANALYSIS,  TEXT
MINING AND GEOSPATIAL ANALYSIS;
  (5) FEEDBACK AND SELF-LEARNING CAPABILITY TO ADAPT TO CHANGING SCHEMES
AND TRENDS;
  (6)  ADVANCED ENTITY RESOLUTION CAPABILITIES TO CREATE A HOLISTIC VIEW
OF ENTITIES ACROSS GOVERNMENT AGENCIES, PROGRAMS AND DATABASES; AND
  (7) THE ABILITY TO EXTEND AND ADAPT TO ALL AREAS OF STATE GOVERNMENT.
  (C) THE ENTERPRISE FRAUD PROGRAM OFFICE IS AUTHORIZED TO ENTER INTO  A
VENDOR  LICENSE  AGREEMENT  FOR  THE  PILOT  PROJECT IN AN AMOUNT NOT TO
EXCEED THE POTENTIAL COST SAVINGS AS ESTIMATED BY THE  ENTERPRISE  FRAUD
PROGRAM OFFICE IN COOPERATION WITH IMPACTED STATE AGENCIES.
  (1)  PAYMENTS SHALL BE STRUCTURED TO COINCIDE WITH EXPECTED SAVINGS OR
BENEFIT REALIZATION.
  (2) TO MAXIMIZE COST REDUCTIONS  AND  SAVINGS,  THE  ENTERPRISE  FRAUD
PROGRAM OFFICE SHALL SELECT A VENDOR AND ENTER INTO THE AGREEMENT WITHIN
ONE HUNDRED TWENTY DAYS OF THE EFFECTIVE DATE OF THIS SECTION.
  5. (A) WITHIN NINETY DAYS FROM THE EFFECTIVE DATE OF THIS SECTION, THE
ENTERPRISE  FRAUD  PROGRAM OFFICE SHALL REPORT TO THE LEGISLATURE ON THE
IDENTIFICATION AND PROGRESS ON AT LEAST FIVE STATE AGENCIES  PARTICIPAT-
ING IN THIS EFFORT.
  (B)  WITHIN  ONE  HUNDRED  TWENTY DAYS FROM THE EFFECTIVE DATE OF THIS
SECTION, THE ENTERPRISE FRAUD PROGRAM OFFICE SHALL REPORT TO THE  LEGIS-
LATURE  ON THE PROGRESS AND THE STATUS OF THE PILOT PROJECT AS SET FORTH
IN SUBDIVISION FOUR OF THIS SECTION.
  (C) THESE REPORTS SHALL CONTINUE QUARTERLY UNLESS  OTHERWISE  DIRECTED
BY THE LEGISLATURE.

S. 4815                             4

  (D)  THESE  REPORTS SHALL BE DEVELOPED AND PRESENTED BY THE ENTERPRISE
FRAUD PROGRAM OFFICE.
  (E) THESE REPORTS SHALL INCLUDE THE FOLLOWING:
  (1) INCIDENTS, TYPES, AND AMOUNTS OF FRAUD IDENTIFIED, BY AGENCY;
  (2) THE AMOUNT ACTUALLY RECOVERED AS A RESULT OF FRAUD IDENTIFICATION,
BY AGENCY;
  (3)  AGENCY PROCEDURAL CHANGES RESULTING FROM FRAUD IDENTIFICATION AND
THE TIMELINE FOR IMPLEMENTING EACH;
  (4) RECOMMENDATIONS FOR CHANGES IN STATE STATUTE, AGENCY  REGULATIONS,
AND  AGENCY  OPERATING PROCEDURES THAT WOULD IMPROVE THE STATE'S ABILITY
TO IDENTIFY AND PREVENT FRAUD AND/OR INCREASE THE PROBABILITY THAT FUNDS
LOST TO FRAUDULENT ACTIVITY ARE RECOVERED BY THE STATE;
  (5) RECOMMENDATIONS FOR CHANGES IN THE  U.S.  CODE,  CODE  OF  FEDERAL
REGULATIONS,  AND  OPERATING PROCEDURES BY U.S. DEPARTMENTS AND AGENCIES
THAT WOULD IMPROVE THE STATE'S ABILITY TO  IDENTIFY  AND  PREVENT  FRAUD
AND/OR  INCREASE  THE PROBABILITY THAT FUNDS LOST TO FRAUDULENT ACTIVITY
ARE RECOVERED BY THE STATE;
  (6) STATE COSTS FOR FRAUD DETECTION FOR THE PREVIOUS QUARTER;
  (7) PAYMENTS TO THE VENDOR FOR THE PREVIOUS QUARTER; AND
  (8) ANTICIPATED COSTS AND VENDOR PAYMENTS FOR EACH  OF  THE  NEXT  TWO
YEARS FROM THE DATE OF THE REPORT.
  6.  RECOVERIES  REALIZED  FROM  PROJECTS  UNDER  THIS SECTION SHALL BE
PLACED IN A NONREVERTING RESERVE FUND TO OPERATE  THE  ENTERPRISE  FRAUD
PROGRAM OFFICE OR ANOTHER APPROPRIATE SAVINGS MECHANISM AND SHALL NOT BE
UTILIZED  EXCEPT  BY AN APPROPRIATION OF THE LEGISLATURE. OTHER BENEFITS
SUCH AS COST AVOIDANCE SHALL BE IDENTIFIED AND REPORTED QUARTERLY TO THE
LEGISLATURE.
  S 3. This act shall take effect immediately.

co-Sponsors

2013-S4815A (ACTIVE) - Details

See Assembly Version of this Bill:: A6988
Current Committee:: Senate Finance
Law Section:: State Finance Law
Laws Affected:: Add §8-c, St Fin L; amd §2803, Pub Auth L
Versions Introduced in 2015-2016 Legislative Session:: S3757, A5056

2013-S4815A (ACTIVE) - Summary

Authorizes 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.

2013-S4815A (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S4815A

TITLE OF BILL:  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

PURPOSE:  To reduce costs by streamlining the fraud detection and
prevention efforts of various state agencies into a single office that
would more efficiently utilize data across multiple agencies to better
detect and prevent fraud, waste, abuse, and improper payments in state
government.

SUMMARY OF PROVISIONS:

Section one of this bill details legislative findings.

Section two of this bill adds a new section 8-c to the State Finance
Law, creating an enterprise providing that the Comptroller may
implement and update an electronic data analytical enterprise fraud
prevention and detection program for the purpose of preventing
improper payments, fraud, waste and abuse in the State. This program
would require the State agencies, including the State University of
New York, the City University of New York, public boards to support
the program by providing the Comptroller with access to electronic

data. Such access shall comply with any applicable Federal and State
laws.

The Comptroller is authorized to establish protocols for data sharing
that ensure the safety and security of the shared data. These
protocols will also include protocols for data retention. The shared
data will be analyzed by the Comptroller in an effort to discover
improper payments, fraud, waste and abuse within the programs
administered by the State agencies.

The Comptroller will provide a report to the Legislature and the
Governor detailing his or her efforts, progress, status and results no
later than September 1, 2015. After the initial report, the
Comptroller shall issue annual reports to the Legislature and
Governor.

Section three of the bill amends section 2803 of the Public
Authorities Law to provide that the Comptroller may request electronic
data from the State authorities so that the data can be analyzed to
detect any improper payments, fraud, waste or abuse. This bill also
provides that the State authorities shall support the Comptroller's
efforts in this area.

Section four of the bill provides that this act shall take effect
immediately.

JUSTIFICATION:  The prevalence of fraud, waste, abuse, and improper
payments is pervasive and growing in many government programs, and the
public is footing the bill. To give just a small sampling:  according
to the Government Accountability Office over $70 billion in improper
payments are made each year in Medicaid and Medicare; according to the


U.S. Department of Labor, the 2011 Unemployment Insurance Payment
Error Rate was 11.2% and resulted in $5.7 billion in improper
payments; and in the 2012 filing season, the IRS estimated losses due
to identity theft a $5 billion. These debilitating costs to the State
are found in a wide of variety of agencies and programs, and are
created by a variety of different problems and inefficiencies.

The collective cost of the fraud, waste, abuse, and improper payments
adversely affects the State budget, impedes economic development, and
depletes benefits intended for citizens in need. Agencies may attempt
to combat these improper behaviors on their own, but they are out of
their depth and severely outmatched in their attempts. Entities
involved in committing fraud and abusing government programs are
becoming increasingly sophisticated in their schemes and tactics, and
often work in organized and collusive rings or networks to attack any
and all government programs Detecting the methods of these
organizations requires state-of-the-art technology and constant
vigilance that is beyond the capabilities of agencies and programs
tasked with other important full time responsibilities.

Identifying possible waste, fraud, abuse, and improper payments at the
earliest possible point would reduce losses and prevent erroneous
payments from being made, potentially providing millions of dollars in
cost-savings to the State. Modern technologies and practices exist and
have been successfully deployed in the commercial sector for many
years and have been found to greatly reduce the losses associated with
fraud, waste, and improper payments. Integrating into State government
this state-of-the-art fraud detection and prevention technology would
greatly help agencies reduces their losses to fraudulent behaviors.
For this modern technology to most efficiently be deployed, a
government office should be created that can devote its undivided
attention to effectively combating waste, fraud, abuse, and improper
payments across various government offices and programs.

An enterprise approach to combating fraud, waste, abuse, and improper
payments coordinates the efforts of many agencies and incorporates
data from multiple sources to maximize the efficacy of data analytics
in combating this fraud and waste. This type of approach allows the
State 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. The Enterprise Fraud Program
Office created by this legislation would effectively and
cost-efficiently accomplish these goals.

LEGISLATIVE HISTORY: New Bill

FISCAL IMPLICATIONS:  Based on results in others states, it is
anticipated that the State's revenues will increase due to the
recoupment of improper payments and the chilling effect that this
program will have on those who may consider defrauding the State.

EFFECTIVE DATE:  This act shall take effect immediately.

2013-S4815A (ACTIVE) - Bill Text download pdf

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

                                 4815--A

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                             April 24, 2013
                               ___________

Introduced  by  Sen.  GOLDEN -- read twice and ordered printed, and when
  printed to be committed to the Committee on Finance -- recommitted  to
  the  Committee  on Finance in accordance with Senate Rule 6, sec. 8 --
  committee discharged, bill amended, ordered reprinted as  amended  and
  recommitted to said committee

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 the 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:

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD10412-04-4

S. 4815--A                          2

  (1)   October   2010:   73   defendants,   $163   million   in   false
Medicare/Medicaid billings, Armenian-American fraud ring;
  (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

S. 4815--A                          3

PREVENTION  OF  FRAUD,  WASTE  AND  ABUSE  IN  STATE  GOVERNMENT AND THE
DETECTION AND PREVENTION OF IMPROPER PAYMENTS OF PUBLIC MONEYS.
  2. IN ACCORDANCE WITH APPLICABLE STATE AND FEDERAL LAW, STATE AGENCIES
SHALL  FULLY  SUPPORT  AND  COOPERATE BY PROVIDING THE STATE COMPTROLLER
WITH ACCESS TO DATA AS REQUESTED BY THE STATE COMPTROLLER TO ALLOW  SUCH
DATA  TO  BE  INTEGRATED  INTO  SUCH ANALYTIC EFFORTS AS THE STATE COMP-
TROLLER MAY DEEM NECESSARY. FOR THIS PURPOSE, THE  TERM  "STATE  AGENCY"
SHALL  MEAN  ANY  STATE  DEPARTMENT,  STATE UNIVERSITY OF NEW YORK, CITY
UNIVERSITY OF NEW YORK, BOARD, BUREAU, DIVISION, COMMISSION,  COMMITTEE,
COUNCIL, OR OFFICE PERFORMING A GOVERNMENTAL OR PROPRIETARY FUNCTION FOR
THE STATE.
  3. IN SUPPORT OF THE ENTERPRISE FRAUD PREVENTION AND DETECTION SYSTEM,
THE STATE COMPTROLLER SHALL:
  (A)  ESTABLISH  PROTOCOLS  FOR  DATA SHARING, SECURE FILE TRANSFERS OR
OTHER METHODS TO OBTAIN REAL-TIME, REGULAR  AND/OR  PERIODIC  DATA  FROM
STATE AGENCIES;
  (B)  ESTABLISH PROTOCOLS TO ENSURE THE SAFETY, SECURITY, INTEGRITY AND
PRIVACY OF ALL DATA SHARED WITH HIS OR HER OFFICE IN ACCORDANCE WITH THE
SYSTEM; AND
  (C) ESTABLISH  PROTOCOLS  FOR  THE  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 FIFTEEN AND ANNUALLY
THEREAFTER ON THE PROGRESS, STATUS AND RESULTS  OF  THE  SYSTEM  CREATED
PURSUANT TO THIS SECTION.
  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. THE STATE COMPTROLLER MAY, IN HIS OR HER SOLE DISCRETION, APPLY  TO
STATE  AUTHORITIES  THE  ELECTRONIC  DATA  ANALYTICAL  ENTERPRISE  FRAUD
PREVENTION AND DETECTION SYSTEM AS PROVIDED FOR IN  SECTION  EIGHT-C  OF
THE  STATE FINANCE LAW. TO THE EXTENT THE STATE COMPTROLLER APPLIES SUCH

S. 4815--A                          4

SYSTEM TO STATE AUTHORITIES, SUCH AUTHORITIES SHALL  FULLY  SUPPORT  AND
COOPERATE  BY PROVIDING THE STATE COMPTROLLER WITH ACCESS TO DATA OF THE
AUTHORITY AS REQUESTED BY THE STATE COMPTROLLER TO ALLOW SUCH DATA TO BE
INTEGRATED  INTO SUCH ANALYTIC EFFORTS AS THE STATE COMPTROLLER MAY DEEM
NECESSARY. FOR PURPOSES OF THIS  SECTION,  THE  TERM  "STATE  AUTHORITY"
SHALL HAVE THE SAME MEANING AS IN SECTION TWO OF THIS CHAPTER.
  S 4. This act shall take effect immediately.

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Senate Bill S4815A

Sponsored By

Archive: Last Bill Status - In Senate Committee Finance Committee

Bill Amendments

2013-S4815 - Details

2013-S4815 - Summary

2013-S4815 - Sponsor Memo

2013-S4815 - Bill Text download pdf

co-Sponsors

2013-S4815A (ACTIVE) - Details

2013-S4815A (ACTIVE) - Summary

2013-S4815A (ACTIVE) - Sponsor Memo

2013-S4815A (ACTIVE) - Bill Text download pdf

Comments

Senate Bill S4815A

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Sponsored By

Martin J. Golden

Archive: Last Bill Status - In Senate Committee Finance Committee

Bill Amendments

2013-S4815 - Details

2013-S4815 - Summary

2013-S4815 - Sponsor Memo

2013-S4815 - Bill Text download pdf

co-Sponsors

Mark Grisanti

2013-S4815A (ACTIVE) - Details

2013-S4815A (ACTIVE) - Summary

2013-S4815A (ACTIVE) - Sponsor Memo

2013-S4815A (ACTIVE) - Bill Text download pdf

Comments