Tuesday, March 14, 2006

1 NEW YORK STATE SENATE 2 3 4 THE STENOGRAPHIC RECORD 5 6 7 8 9 ALBANY, NEW YORK 10 March 14, 2006 11 2:05 p.m. 12 13 14 REGULAR SESSION 15 16 17 18 LT. GOVERNOR MARY O. DONOHUE, President 19 STEVEN M. BOGGESS, Secretary 20 21 22 23 24 25

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(518) 371-8910 1 P R O C E E D I N G S 2 THE PRESIDENT: The Senate will 3 please come to order. 4 I ask everyone present to please 5 rise and repeat with me the Pledge of 6 Allegiance. 7 (Whereupon, the assemblage recited 8 the Pledge of Allegiance to the Flag.) 9 THE PRESIDENT: In the absence of 10 clergy, may we bow our heads in a moment of 11 silence, please. 12 (Whereupon, the assemblage 13 respected a moment of silence.) 14 THE PRESIDENT: Reading of the 15 Journal. 16 THE SECRETARY: In Senate, 17 Monday, March 13, the Senate met pursuant to 18 adjournment. The Journal of Sunday, March 12, 19 was read and approved. On motion, Senate 20 adjourned. 21 THE PRESIDENT: Without 22 objection, the Journal stands approved as 23 read. 24 Presentation of petitions. 25 Messages from the Assembly.

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(518) 371-8910 1 Messages from the Governor. 2 Reports of standing committees. 3 Reports of select committees. 4 Communications and reports from 5 state officers. 6 Motions and resolutions. 7 Senator Little. 8 SENATOR LITTLE: Thank you, Madam 9 President. 10 On behalf of Senator Marcellino, on 11 page 7 I offer the following amendments to 12 Calendar Number 93, Senate Print 1485B, and 13 ask that said bill retain its place on the 14 Third Reading Calendar. 15 THE PRESIDENT: The amendments 16 are received, and the bill will retain its 17 place on the Third Reading Calendar. 18 SENATOR LITTLE: Thank you. 19 THE PRESIDENT: Senator 20 Stachowski. 21 SENATOR STACHOWSKI: Madam 22 President, on behalf of Senator Savino, I move 23 that the following bills be discharged from 24 their respective committees and be recommitted 25 with instructions to strike the enacting

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(518) 371-8910 1 clause: Senate 6946. 2 THE PRESIDENT: So ordered. 3 Senator Skelos. 4 SENATOR SKELOS: Madam President, 5 if we could adopt the Resolution Calendar, 6 with the exception of Resolution 3890. 7 THE PRESIDENT: All in favor of 8 so adopting the Resolution Calendar please 9 signify by saying aye. 10 (Response of "Aye.") 11 THE PRESIDENT: Opposed, nay. 12 (No response.) 13 THE PRESIDENT: The Resolution 14 Calendar is so adopted. 15 Senator Skelos. 16 SENATOR SKELOS: Madam President, 17 if we could take up Resolution 3890, have the 18 title read, and move for its immediate 19 adoption. 20 THE PRESIDENT: The Secretary 21 will read. 22 THE SECRETARY: By Senator 23 Hannon, Legislative Resolution Number 3890, 24 memorializing Governor George E. Pataki to 25 proclaim March 2006 as National Kidney Disease

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(518) 371-8910 1 Awareness Month in the State of New York. 2 THE PRESIDENT: Senator Skelos. 3 SENATOR SKELOS: Move we adopt 4 the resolution. 5 THE PRESIDENT: All in favor of 6 adopting the resolution please signify by 7 saying aye. 8 (Response of "Aye.") 9 THE PRESIDENT: Opposed, nay. 10 (No response.) 11 THE PRESIDENT: The resolution is 12 adopted. 13 Any member who does not wish to 14 cosponsor the last resolution please notify 15 the desk. 16 Senator Skelos. 17 SENATOR SKELOS: Thank you. If 18 we could go to the noncontroversial reading of 19 the calendar. 20 THE PRESIDENT: The Secretary 21 will read. 22 THE SECRETARY: Calendar Number 23 92, by Senator Marcellino, Senate Print 632A, 24 an act to amend the Environmental Conservation 25 Law, in relation to management of wildlife

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(518) 371-8910 1 resources. 2 THE PRESIDENT: Read the last 3 section. 4 THE SECRETARY: Section 6. This 5 act shall take effect on the first of January. 6 THE PRESIDENT: Call the roll. 7 (The Secretary called the roll.) 8 THE SECRETARY: Ayes, 40. 9 THE PRESIDENT: The bill is 10 passed. 11 THE SECRETARY: Calendar Number 12 203, by Senator Farley, Senate Print 3110B, an 13 act to amend the Public Authorities Law, in 14 relation to the construction and financing. 15 THE PRESIDENT: Read the last 16 section. 17 THE SECRETARY: Section 5. This 18 act shall take effect immediately. 19 THE PRESIDENT: Call the roll. 20 (The Secretary called the roll.) 21 THE SECRETARY: Ayes, 40. 22 THE PRESIDENT: The bill is 23 passed. 24 THE SECRETARY: Calendar Number 25 279, by Senator Farley, Senate Print 4039, an

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(518) 371-8910 1 act to amend the Banking Law, in relation to 2 facilities. 3 THE PRESIDENT: Read the last 4 section. 5 THE SECRETARY: Section 2. This 6 act shall take effect on the 60th day. 7 THE PRESIDENT: Call the roll. 8 (The Secretary called the roll.) 9 THE SECRETARY: Ayes, 40. 10 THE PRESIDENT: The bill is 11 passed. 12 THE SECRETARY: Calendar Number 13 328, by Senator Golden, Senate Print 6624A, an 14 act to amend the Retirement and Social 15 Security Law, in relation to presumptive 16 eligibility. 17 THE PRESIDENT: Read the last 18 section. 19 THE SECRETARY: Section 2. This 20 act shall take effect immediately. 21 THE PRESIDENT: Call the roll. 22 (The Secretary called the roll.) 23 THE SECRETARY: Ayes, 40. 24 THE PRESIDENT: The bill is 25 passed.

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(518) 371-8910 1 THE SECRETARY: Calendar Number 2 341, by Senator Little, Senate Print 6388B, an 3 act to amend the Tax Law, in relation to 4 authorizing the County of Essex. 5 THE PRESIDENT: Read the last 6 section. 7 THE SECRETARY: Section 3. This 8 act shall take effect immediately. 9 THE PRESIDENT: There is a local 10 fiscal impact note at the desk. 11 Call the roll. 12 (The Secretary called the roll.) 13 THE SECRETARY: Ayes, 39. Nays, 14 1. Senator Valesky recorded in the negative. 15 THE PRESIDENT: The bill is 16 passed. 17 THE SECRETARY: Calendar Number 18 403, by Senator Meier, Senate Print 2487, an 19 act to amend the Domestic Relations Law, in 20 relation to notification. 21 THE PRESIDENT: Read the last 22 section. 23 THE SECRETARY: Section 2. This 24 act shall take effect on the first of January. 25 THE PRESIDENT: Call the roll.

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(518) 371-8910 1 (The Secretary called the roll.) 2 THE SECRETARY: Ayes, 40. 3 THE PRESIDENT: The bill is 4 passed. 5 THE SECRETARY: Calendar Number 6 413, by Senator Alesi, Senate Print 5494, an 7 act authorizing the Town of Chili to 8 discontinue. 9 THE PRESIDENT: There is a 10 home-rule message at the desk. 11 Read the last section. 12 THE SECRETARY: Section 5. This 13 act shall take effect immediately. 14 THE PRESIDENT: Call the roll. 15 (The Secretary called the roll.) 16 THE SECRETARY: Ayes, 40. 17 THE PRESIDENT: The bill is 18 passed. 19 THE SECRETARY: Calendar Number 20 408, by Senator Nozzolio, Senate Print 516, an 21 act to amend the General Municipal Law, in 22 relation to participants. 23 THE PRESIDENT: Read the last 24 section. 25 THE SECRETARY: Section 2. This

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(518) 371-8910 1 act shall take effect immediately. 2 THE PRESIDENT: Call the roll. 3 (The Secretary called the roll.) 4 THE SECRETARY: Ayes, 40. 5 THE PRESIDENT: The bill is 6 passed. 7 THE SECRETARY: Calendar Number 8 416, by Senator Volker, Senate Print 6227, an 9 act to amend the Local Finance Law, in 10 relation to sale of bonds and notes. 11 THE PRESIDENT: There is a 12 home-rule message at the desk. 13 Read the last section. 14 THE SECRETARY: Section 2. This 15 act shall take effect immediately. 16 THE PRESIDENT: Call the roll. 17 (The Secretary called the roll.) 18 THE SECRETARY: Ayes, 40. 19 THE PRESIDENT: The bill is 20 passed. 21 THE SECRETARY: Calendar Number 22 431, by Senator Maltese, Senate Print 6797, an 23 act to amend Chapter 350 of the Laws of 2002 24 amending the Labor Law and others. 25 THE PRESIDENT: Read the last

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(518) 371-8910 1 section. 2 THE SECRETARY: Section 2. This 3 act shall take effect immediately. 4 THE PRESIDENT: Call the roll. 5 (The Secretary called the roll.) 6 THE SECRETARY: Ayes, 40. 7 THE PRESIDENT: The bill is 8 passed. 9 THE SECRETARY: Calendar Number 10 504, by Senator Skelos, Senate Print 6872A, an 11 act to amend the Public Health Law, in 12 relation to establishing. 13 SENATOR SCHNEIDERMAN: Lay it 14 aside. 15 THE PRESIDENT: The bill is laid 16 aside. 17 Senator Skelos, that completes the 18 reading of the noncontroversial calendar. 19 SENATOR SKELOS: Madam President, 20 if we could go to the controversial reading of 21 the calendar. 22 THE PRESIDENT: The Secretary 23 will read. 24 THE SECRETARY: Calendar Number 25 504, by Senator Skelos, Senate Print 6872A, an

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(518) 371-8910 1 act to amend the Public Health Law. 2 SENATOR SCHNEIDERMAN: 3 Explanation. 4 THE PRESIDENT: Senator Skelos, 5 an explanation has been requested. 6 SENATOR SKELOS: Thank you very 7 much, Madam President. 8 This legislation, in my opinion, is 9 the most comprehensive Medicaid -- 10 anti-Medicaid fraud, to-combat-Medicaid-fraud 11 plan ever proposed. It will create a more 12 accountable system and fight fraud at every 13 step of the way. 14 I'd like to first thank my 15 colleagues in the Senate Majority -- Senator 16 Bruno, Senator Meier, Senator Hannon, and 17 Senator Volker -- for their assistance, and 18 certainly people on the Senate staff and those 19 who testified at numerous hearings that were 20 held throughout the state. 21 At this time last year, when we 22 held a public hearing in September, the 23 Department of Health and the Attorney 24 General's office insisted that Medicaid fraud 25 was under control in New York State and that

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(518) 371-8910 1 we were the model for the rest of the nation. 2 After the Senate passed 3 legislation -- and I'm delighted that we've 4 been the driving force behind some of the 5 changes that have occurred, and also more 6 changes that will occur -- the Governor 7 created the office of Medicaid inspector 8 general by Executive order. And in this 9 year's budget resolution by the Assembly, 10 they've included stronger inspector general 11 provisions in their budget bills. 12 The Attorney General has indicated 13 since last year -- and it's amazing what 14 happens in a year -- that we now need sweeping 15 reform of the Medicaid system. Beyond these 16 rhetorical changes, our efforts have forced 17 the Department of Health and the Attorney 18 General, his office, to become more aggressive 19 and get more of the taxpayers' hard-earned 20 money back. 21 Since we began our crusade to 22 reform the Medicaid system, the Attorney 23 General's office has increased annual 24 recoveries by 700 percent. We congratulate 25 him for that. On average, over the years, the

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(518) 371-8910 1 Attorney General's office has been collecting 2 about $35 million. And since our initiative 3 began last year, they have upped it to about 4 $200 million. 5 We also have counties more involved 6 now in fighting Medicaid fraud, and we've 7 looked at this issue from every possible 8 direction. I think one of the main pieces of 9 testimony that occurred -- and I know that 10 Senator Schneiderman was at that hearing on 11 Long Island -- was the testimony of the Texas 12 Medicaid inspector general, who explained to 13 us that when Texas went to a system similar to 14 this legislation -- and in fact, our 15 legislation goes beyond and is stronger than 16 what is occurring in Texas -- Texas is now 17 recovering 5 percent, 5 percent of their total 18 Medicaid expenditures. 19 To put that in perspective, if 20 New York State were to collect 5 percent of 21 our Medicaid budget, we would be saving the 22 taxpayers of New York State $2.3 billion right 23 now, money that could be used on education, 24 money that could be used for tax cuts, money 25 that could be used to protect those who need

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(518) 371-8910 1 healthcare. 2 The Texas Medicaid inspector 3 general has also indicated to us that he will 4 be using this legislation as model legislation 5 when he testifies before the U.S. Senate in 6 Washington. 7 The legislation has been developed 8 working with the Association of Counties, the 9 Hospital Association, and the District 10 Attorneys Association, and really reforms the 11 way we fight fraud at every step in the 12 process. 13 From setting up a corporate 14 compliance program to detecting and 15 investigating and prosecuting fraud and 16 recovering improper payments, this is the most 17 comprehensive Medicaid fraud plan ever 18 proposed anywhere. 19 And as I mentioned before, it's 20 modeled after the successful reforms in Texas. 21 I mentioned the 5 percent. And in fact, in 22 the first year that Texas established an 23 independent Medicaid inspector general, they 24 increased their recoupments by 30 percent with 25 no additional cost to the state. In fact,

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(518) 371-8910 1 that was the directive. 2 The independent office of the 3 Medicaid inspector general really involves 4 program integrity. It consolidates about 550 5 Medicaid audit and fraud staff from seven 6 agencies, and it will deal with compliance, 7 investigation, recoupment, and sanctions. 8 And in fact, it will be the job of 9 the inspector general to basically investigate 10 and, where there is fraud that should be 11 prosecuted, take the file, hand it to the 12 Attorney General and tell him go prosecute or 13 to seek a civil recovery. 14 In this legislation also, if the 15 Attorney General fails to accept the case 16 within 30 days -- and remember, this is a 17 totally prepped case -- the case will be 18 offered to the local district attorney. 19 And what's significant about 20 bringing the local district attorneys into the 21 process is that there would be a partial 22 restoration of local share. As we know, under 23 the Medicaid cap that exists, the counties are 24 not entitled to share in the recoveries. If 25 the local district attorney develops the case,

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(518) 371-8910 1 15 percent would go to the county, half each 2 to the district attorney's office for their 3 expenses and half to the county that they 4 could use for property tax reductions. 5 If the local district attorney 6 investigates and prosecutes the case, the 7 district attorney and the county would share 8 each 10 percent of the recovery. 9 There are also false claim act 10 provisions to protect whistle-blowers, and 11 certain sanctions and civil penalties. There 12 is a very strong corporate compliance 13 requirement which we have developed in 14 partnership with HANYS. There are reporting 15 requirements by the inspector general, by the 16 State Insurance Department, and there is also 17 money in the budget, in the Senate's version 18 of the budget, which would provide a half a 19 million dollars to the New York Prosecutors 20 Training Institute to help train prosecutors 21 to perform their duties if they prosecute 22 these types of Medicaid cases. 23 Is that sufficient? 24 SENATOR SCHNEIDERMAN: It wasn't 25 an O.J. explanation, but it was good.

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(518) 371-8910 1 THE PRESIDENT: Senator Sampson. 2 SENATOR SAMPSON: Madam 3 President, I have an amendment at the desk. I 4 ask that reading be waived and that I be heard 5 on the amendment. 6 THE PRESIDENT: Yes, it is so 7 waived, and you're recognized to speak on the 8 amendment. 9 SENATOR SAMPSON: Thank you very 10 much, Madam President. 11 Senator Skelos, I want to commend 12 you on your leadership and your direction in 13 dealing with the Medicaid atrocities that's 14 going on in our communities, because you're 15 correct, this Medicaid fraud is constantly 16 robbing our communities of valuable resources. 17 And what you have done is you have slammed the 18 door on these individuals who engage in this 19 Medicaid fraud. 20 However, there's just a small 21 crack. You know, being a defense attorney, we 22 always look for those small cracks and those 23 loopholes. And what my amendment does here 24 today, it basically tries to seal that crack. 25 And the amendment, which is called

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(518) 371-8910 1 the Martin Act for Healthcare, it does three 2 things, and three things that I think are very 3 important, especially to the prosecutor's 4 point of view, which one day I hope to be a 5 prosecutor. 6 (Laughter.) 7 SENATOR SAMPSON: First of all -- 8 I was pretty close. 9 First of all, it restores the 10 limitations that hamper prosecutors. Because 11 we know that Medicaid fraud usually is 12 prosecuted under the larceny by false 13 pretenses, which you have to prove not only a 14 person lied but the person relied upon that 15 lie. 16 What we're trying to do here is 17 especially to prosecute individuals who engage 18 in half-truths, deceptions and omissions. We 19 want to go after those individuals. 20 The second thing that it would do 21 is this would provide a new investigative 22 tool, such as testimonies under oath, which we 23 can use that testimony in civil proceedings to 24 recover certain asset or forfeitures. 25 The third thing I think which is

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(518) 371-8910 1 very important, it creates a new crime called 2 "scheme to defraud a health plan." And this 3 is under the enterprise corruption, which 4 allows us to use eavesdropping and 5 surveillance warrants to get the information 6 that we need in order to prosecute these 7 individuals. 8 And what I'm saying is what I want 9 to do is just seal up that small crack that is 10 presented. Because, you know, I commend you 11 once again on what you're doing, because you 12 know what, Medicaid fraud is a huge thing that 13 is robbing our communities of vital, vital 14 resources. 15 So this amendment just seals up 16 that crack. And I hope all my colleagues 17 understand that if we can seal up that crack, 18 we can definitely slam the door shut with 19 cement when dealing with Medicaid fraud. 20 Thank you very much, Senator 21 Skelos. 22 Madam President, thank you. 23 THE PRESIDENT: Senator Skelos. 24 SENATOR SKELOS: Thank you, Madam 25 President. If I could comment.

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(518) 371-8910 1 Number one, Senator Sampson, you 2 are a gentleman, you are a great senator, and 3 you are a great lawyer. 4 And as a great lawyer, you should 5 know that the Martin Act was originally 6 established in 1921, when the securities 7 industry was not really regulated by the 8 state. And at that time, both the federal 9 government and the state were given authority 10 to regulate the securities industry. And 11 certainly we've seen the activity over the 12 last several years of the Attorney General in 13 that area. 14 The difference when it comes to the 15 healthcare industry is the fact that the 16 Health Department regulates this industry and 17 Medicaid. 18 So I know that your intentions are 19 good. However, applying a Martin Act here 20 would be superfluous and unnecessary. And 21 don't ask me how to spell "superfluous." 22 But I appreciate your 23 recommendation. And certainly let me just say 24 this. I'm still hoping that the Attorney 25 General will see fit to join us at some point

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(518) 371-8910 1 and discuss this legislation with the 2 Assembly. As you know, this version was part 3 of our budget, so that now it can become part 4 of conference committee discussions. 5 I mentioned to the Attorney 6 General -- we happened to be passing each 7 other on the way to a reception, I believe it 8 was at the AFL-CIO. I had nothing to eat 9 there, and I stood the entire time. 10 (Laughter.) 11 SENATOR SKELOS: And I said to 12 him, "Let's talk," and he gave me a 13 five-finger wave. So I'm confident that with 14 that wave, at some point he will come forth, 15 discuss it with us. 16 It's a far different version of the 17 legislation than the Senate passed last year. 18 I have no pride in authorship. But we need a 19 solid bill this year, not press releases from 20 the Attorney General saying how great the 21 world is. We need for him to sit with us and 22 develop legislation that really protects the 23 taxpayers of this state. 24 So thank you for your amendment, 25 but I believe there will not be sufficient

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(518) 371-8910 1 people on the petition. 2 SENATOR SAMPSON: Thank you very 3 much, Senator Skelos. 4 THE PRESIDENT: Senator Hannon. 5 SENATOR HANNON: Madam President, 6 I'd like to add, in regard to this amendment, 7 two things. 8 First of all, in the main bill that 9 Senator Skelos has proposed, there is a 10 comprehensive revision of the healthcare 11 offenses, to meet and I think fully comply 12 with the points that have been made that 13 larceny by false pretenses is too complicated 14 and archaic a statute. 15 Second, there needs to be a point 16 that there is not a dynamic here that one 17 agency or one individual has not done a good 18 job. The hearings have pointed out that it's 19 the organization of the current government 20 that has caused the overlap, that has caused 21 the ball to be dropped, that has caused us not 22 to do as good a job as can be. 23 And to the extent that people need 24 to realize, it's the system more than anything 25 else. And I would say therefore your

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(518) 371-8910 1 amendment is unnecessary. We should go 2 forward with the main provisions of changing 3 the system so we can have the system work 4 appropriately. 5 THE PRESIDENT: On the amendment, 6 those Senators in agreement please signify by 7 raising your hands. 8 Senator Schneiderman, first. 9 SENATOR SCHNEIDERMAN: Thank you, 10 Madam President. 11 I just want to speak very briefly 12 and will speak on the main bill after this is 13 over, because I do believe this has been -- 14 being on the task force on Medicaid fraud, 15 I've learned a lot. And I think this is a 16 work in progress. I think we have all learned 17 a great deal. 18 I want to speak in support of the 19 amendment very briefly, just because I do 20 think there is a critical element that still 21 is missing here. 22 The suggestion for a more 23 aggressive approach that would enable the 24 Attorney General's office, Medicaid Fraud 25 Control Unit, to act in cases where it cannot

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(518) 371-8910 1 now act actually came out of our first 2 hearing. It was a discussion with a 3 representative of the Attorney General's 4 office. 5 And while I urge my colleagues that 6 I like the main bill here, I think it takes a 7 big step forward, I appreciate Senator 8 Skelos's statement that, you know, it is a 9 work of progress, no pride of authorship -- 10 let's make it better and better. Let's get 11 the Governor and the Attorney General to 12 collaborate on this. 13 But in addition to what Senator 14 Sampson pointed out, that we do need to change 15 the law relating to how you prosecute the 16 crime, what the elements of the crime are, his 17 amendment would add something else that is 18 missing from the current bill. It would 19 provide the power for the Medicaid Fraud 20 Control Unit to issue written interrogatories, 21 to -- again, based on a lot of other statutes 22 that are active in a lot of other states -- 23 empower them to conduct examinations under 24 oath to get Medicaid providers to the table. 25 And that's been a very effective tool in

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(518) 371-8910 1 securities fraud prosecution. 2 So I do think that it's worth 3 considering the additional elements, not as a 4 criticism but as an addition from Senator 5 Sampson's amendment. I would urge everyone to 6 vote in favor of that, and then we will be 7 speaking about the bill in chief, which I do 8 think has a lot of other good provisions in 9 it. 10 Thank you, Madam President. 11 THE PRESIDENT: On the amendment, 12 all Senators in favor of the amendment please 13 signify by raising your hand. 14 THE SECRETARY: Those recorded in 15 agreement are Senators Andrews, Breslin, 16 Connor, Coppola, Diaz, Dilan, Duane, Gonzalez, 17 Klein, L. Krueger, C. Kruger, Montgomery, 18 Onorato, Oppenheimer, Paterson, Sabini, 19 Sampson, Savino, Schneiderman, A. Smith, 20 M. Smith, Stachowski, Stavisky, and Valesky. 21 THE PRESIDENT: The amendment is 22 not agreed to. 23 Senator Rath, on the bill. 24 SENATOR RATH: Thank you, Madam 25 Chairman.

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(518) 371-8910 1 This house traditionally -- for the 2 last several years, at any rate, if that's 3 tradition -- has been very strong and firm in 4 their interest in seeing Medicaid reform. 5 Several years ago, at the conclusion of the 6 Medicaid task force, which was attended by 7 many of the members in the Democrat Minority, 8 and who really added a great deal to it, the 9 bill went almost unanimously. But it was an 10 omnibus bill, and we knew at that time that 11 there were going to have to be pieces of it 12 that were picked apart and individual kinds of 13 items that had to be addressed. 14 Today is one of those days. And I 15 want to congratulate Senator Skelos on moving 16 forward with the inspector general, because we 17 know that there are issues of fraud and abuse 18 that are taking an awful lot of money out of 19 the system that should be in the system. 20 I might call your attention to 21 today the front page of several of the 22 national newspapers that are pointing out 23 there is a historic growth in federal social 24 programs -- most importantly Medicaid, a 25 17 percent rise in enrollment over the last

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(518) 371-8910 1 five years, when at the same time our 2 population has only grown by 5 percent. So, 3 according to USA Today, the largest growth in 4 the federal safety net system since President 5 Johnson's Great Society. 6 Spending on the social programs 7 totals now $1.3 trillion in 2005, the nation's 8 largest entitlement program, with 18 million 9 beneficiaries nationwide. 10 And I only call these numbers to 11 your attention because every time we quote 12 them, they're higher. Every time we talk 13 about the programs where the need is, the need 14 is greater. 15 And so with a program such as is 16 proposed by Senator Skelos today, and which 17 I'm sure will be passed overwhelmingly here 18 today, we have a chance to recoup some of the 19 money that is being drawn out of the system by 20 people who are less than reputable, less than 21 honest, and who none of us would agree that 22 their intent is for the best for the people of 23 the State of New York. 24 So we need to control the system 25 and take this step today so that we will have

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(518) 371-8910 1 Medicaid here and available for the people in 2 New York State that need Medicaid. 3 Thank you. 4 THE PRESIDENT: Senator Morahan. 5 SENATOR MORAHAN: Thank you, 6 Madam President. 7 I too want to congratulate my 8 colleague Senator Skelos on this bill. It is 9 really time that this state government get a 10 hold of the Medicaid bills in New York. 11 They are budget-busters at the 12 local level. Last year and the year before, 13 we heard continuously from our county 14 executives, those who had to pay their share 15 of the bill. In Rockland County alone, it was 16 $44 million, a substantial amount of money for 17 a county that size. 18 And Rockland County got involved 19 through the Association of the Counties and 20 worked out an arrangement with IBM and 21 perfected a database that would go over all 22 their Medicaid bills, according to the 23 regulations, and match suppliers and 24 providers. And they found a minimum of 25 10 percent, which is over $4 million for that

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(518) 371-8910 1 one county, of fraud, strong indications of 2 fraud. It went on almost up to 30 percent if 3 you talked about billing errors, which may be 4 a big part of this. It may even be bigger 5 than the fraud. 6 But whatever it is, it needs 7 fixing. And we had the hearings, and there 8 was some question where we ever came up with 9 this 10 percent number. Well, I can attest to 10 the Rockland County findings that 10 percent 11 indeed is a minimum. 12 If we can curtail, control the 13 Medicaid bill for the State of New York, we 14 can do one or both of two things. One, we can 15 reduce local property tax, because that's 16 where 25 percent of this bill lands, directly 17 on the property tax, and/or increase services 18 to those who need the services. 19 We're not finding the fraud on 20 behalf of those who make application, we're 21 finding it on the providers, those who would 22 get rich quick. And I know in the Governor's 23 State of the State message he talked about 24 adding people, 500 people. I think it turns 25 out to be like 70. But the effort is to

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(518) 371-8910 1 combine the effort of existing people to bring 2 that sort of attention, that sort of a 3 workforce, that sort of an investigative group 4 together behind this policy and to have this 5 inspector general, if you will, be equipped to 6 do what has to be done, in conjunction with 7 the attorney general and in conjunction with 8 local district attorneys. 9 I congratulate you, Senator Skelos, 10 your other colleagues and us who served on the 11 task force. Members of the Minority also 12 served on that task force, on those public 13 hearings. And I think this is a day that the 14 Senate can stand up and say to our county 15 executives, to our local taxpayers: We're 16 doing our job, we're trying to do the best we 17 can. 18 This is a great effort. It's a 19 great day. Congratulations. I vote yes. 20 THE PRESIDENT: Senator 21 Marcellino, on the bill. 22 SENATOR MARCELLINO: Thank you, 23 Madam President. Thank you. 24 I would like to rise and thank my 25 colleague Senator Skelos and all the members

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(518) 371-8910 1 of the task force who worked tirelessly for 2 many, many months to make this day come to 3 pass. This is a great day in this state. 4 We've worked a long time. This 5 bill is a forward-thinking bill. It is a move 6 in the right direction, it is a step -- it is 7 a giant leap in the right direction, I might 8 add, towards reducing the costs of healthcare 9 to our citizens. 10 Healthcare is the largest growing 11 part of every governmental level's budget. It 12 is increasing exponentially on an annual 13 basis, and one of the prime reasons is fraud, 14 people who are taking advantage of the system, 15 taking advantage of the complexity of the 16 system, and trying to basically rip off the 17 public. 18 If we were to return, just as 19 Senator Skelos indicated, just $2.3 billion, 20 5 percent, that's not a huge amount in the 21 scheme of things, but it is a lot of money if 22 we can put it back into people's pockets. Cut 23 taxes, cut the cost of going to the doctor. 24 How many of you remember when you 25 used to go to the doctor and it was a doctor

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(518) 371-8910 1 and a nurse that were sitting there and that 2 was the only people that were involved? Now 3 you go into a doctor's office and there's a 4 dozen people sitting behind a counter, pushing 5 paper, filing forms, returning documents, 6 making phone calls to try to collect bills. 7 This process has become extremely 8 complicated and extremely costly. We must 9 return some sanity to the system. This bill 10 doesn't take anything away from anybody. It's 11 not pointed at any individual or any level of 12 government. It is designed to consolidate and 13 streamline a very cumbersome system, to reduce 14 the interactivity of different agencies of 15 government that are fighting amongst 16 themselves rather than working together and 17 pulling in opposite directions rather than 18 pulling in the same direction. 19 This is a great idea. I sat at the 20 hearings that Senator Skelos hosted on Long 21 Island to listen to the Texas Medicaid fraud 22 coordinator, and it was phenomenal the way it 23 was done. So the way they're doing it in 24 Texas, if we did it here, it will be great. 25 And I think Senator Skelos again is

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(518) 371-8910 1 to be congratulated. I urge a unanimous vote 2 on this particular piece of legislation. 3 THE PRESIDENT: Senator 4 Schneiderman. 5 SENATOR SCHNEIDERMAN: Thank you, 6 Madam President. 7 As I indicated before, this is -- 8 it has been fascinating to me and actually a 9 real pleasure to watch the evolution of this 10 legislation as we proceeded with the Medicaid 11 task force. Senator Skelos has provided 12 leadership on this since before the task 13 force, and then the task force chaired by 14 Senators Hannon and Meier gave us the 15 opportunity to hear testimony that, quite 16 frankly, changed my view of this situation. 17 I was very skeptical about the 18 Medicaid inspector general's office. I 19 thought it was just creating a new agency 20 where we already have too many conflicting 21 agencies. But hearing the testimony at the 22 hearings made me a convert. 23 I also think that it is -- you 24 know, people working together can produce new 25 ideas. I do think that we all -- there's

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(518) 371-8910 1 enough credit to go around for all the new 2 ideas that are coming here. 3 But I would again like to emphasize 4 the fact that the proposal to clarify the 5 healthcare laws, make it easier to investigate 6 and prosecute Medicaid fraud that was in 7 Senator Sampson's amendment, really came out 8 of a dialogue when we were talking 9 representative of Attorney General Spitzer's 10 office at one of the hearings. 11 So we're moving this process 12 forward. I do think there is further room for 13 improvement. In addition to the issues 14 discussed related to the amendment, the one 15 thing that I think is very, very important as 16 we move forward with this is that I do think 17 the false claims act provision in this draft 18 of the legislation needs some improvement. 19 We need to provide an incentive for 20 whistle-blowers to report Medicaid fraud to 21 the authorities. Such a provision would allow 22 New York to retain an additional 10 percent in 23 Medicaid fraud recoveries, based on federal 24 legislation signed in January. 25 This bill before us now does not

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(518) 371-8910 1 meet that requirement because it does not have 2 the "qui tam" provision in it. It doesn't 3 provide the incentive that is required. And I 4 believe there is a bill in the Assembly that 5 does provide it. 6 Interestingly enough, I don't know 7 that I've ever seen this since I've been in 8 the Senate, the Assembly bill actually has 9 tougher penalties than the Senate bill, so 10 this is -- maybe there was a mistake or 11 something like that. But the civil penalties 12 in the Assembly bill are actually a little 13 higher. 14 So having said that, I do think we 15 want a false claims act that enables us to 16 keep the extra 10 percent provided by federal 17 law. We do want to give an incentive for 18 people to come forward and to recover funds 19 and assist in the recovery of funds. 20 But having said that, I think this 21 bill does go a long way to getting us there. 22 I also was very impressed by the reports 23 coming from Texas. 24 And let me emphasize one other 25 thing. The task force is called the task

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(518) 371-8910 1 force on Medicaid fraud. But we learned in 2 the hearings, what I learned is we're talking 3 about a lot of things that are not just fraud. 4 There's a lot of waste and abuse that also 5 could be prevented under a Medicaid inspector 6 general system. 7 Some of the money that is recovered 8 in Texas, and it's 5 percent, has to do with 9 things as basic as ensuring that third-party 10 insurers who could reimburse the state 11 reimburse the state. I mean, it's sort of -- 12 at some points it can be almost a little 13 embarrassing that we're not taking these basic 14 steps in New York. 15 But I know that this legislation is 16 an effort to, as Senator Sampson said, seal 17 this off, deal with issues of fraud, but also 18 just deal with issues of the neglect and waste 19 and a failure to collect money that is due and 20 owing. 21 So this is a comprehensive 22 approach, and I'm happy to report that I've 23 dropped my earlier objection to this vision of 24 an inspector general's office. I thank my 25 colleagues for educating me -- gently at

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(518) 371-8910 1 times, sometimes not. And I think that -- but 2 at least, you know, we're giving each other 3 five-finger waves, which is better than waves 4 with fewer fingers, which sometimes happens in 5 this house. 6 So I appreciate the leadership of 7 my colleagues on the other side of the aisle 8 on this. I'm proud to vote for this bill. I 9 do think there are some improvements to make, 10 but I think we're moving things along in this 11 critical area very rapidly through this 12 process of the task force. 13 Thank you, Madam President. 14 THE PRESIDENT: Does any other 15 member wish to be heard on this bill? 16 Senator Hannon. 17 SENATOR HANNON: Thank you, Madam 18 President. 19 Conversions are always welcome. 20 And one other gentle piece of 21 education: The task force's name is Medicaid 22 reform, not Medicaid fraud. And we've been 23 doing it since 2003, we've been doing it on a 24 bipartisan basis. Senator Paterson was a 25 member.

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(518) 371-8910 1 To the extent we have fraud today, 2 that's an essential thing to root out. To the 3 extent we've focused before on changing the 4 system, making it more than paying bills, 5 making it deliver healthcare in an efficient 6 way, making it deliver healthcare in an 7 economical way, we've been doing that. There 8 are still provisions for improving on the 9 reform itself in the budget, and we think 10 there's a comprehensive way. 11 Today, it's essential to focus on 12 the fraud that needs to be rooted out. And 13 I'm glad that Senator Skelos has pointed us in 14 that direction and given us the leadership. 15 Thank you, Madam President. 16 THE PRESIDENT: The debate is 17 closed. 18 The Secretary will ring the bell. 19 Read the last section. 20 THE SECRETARY: Section 27. This 21 act shall take effect immediately. 22 THE PRESIDENT: Call the roll. 23 (The Secretary called the roll.) 24 THE PRESIDENT: The Secretary 25 will announce the results.

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(518) 371-8910 1 THE SECRETARY: Ayes, 58. Nays, 2 1. Senator Duane recorded in the negative. 3 THE PRESIDENT: The bill is 4 passed. 5 Senator Wright, that completes the 6 reading of the calendar. 7 SENATOR WRIGHT: Thank you, Madam 8 President. 9 I was absent from the chamber on 10 personal family business when the vote was 11 taken on the following bills yesterday: 12 Calendar Number 496 through Calendar Number 13 503, Senate 6454B through Senate 6463. 14 I would like the record to reflect 15 had I been present, I would have voted in 16 favor of each of the aforementioned bills. 17 THE PRESIDENT: The record will 18 so reflect the votes. 19 Senator Wright. 20 SENATOR WRIGHT: Is there any 21 further business at the desk? 22 THE PRESIDENT: No, Senator. 23 SENATOR WRIGHT: If you would 24 recognize Senator Krueger, please. 25 THE PRESIDENT: Senator Krueger.

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(518) 371-8910 1 SENATOR LIZ KRUEGER: Thank you, 2 Madam President. 3 I believe I have a motion at the 4 desk. I'd like to waive reading and speak on 5 my motion. 6 THE PRESIDENT: The reading is so 7 waived. You may speak on the petition. 8 SENATOR LIZ KRUEGER: Thank you, 9 Madam President. 10 I rise today to speak on Bill 11 S2735, my bill to repeal the Urstadt Law. 12 Last week in New York City I 13 attended a New York City Council hearing, 14 chaired by Councilmember Erik Martin Dilan, 15 the son of our colleague here in the Senate. 16 And this hearing was to involve the City of 17 New York's decision to follow through yet 18 again with a bill that we expect that they 19 will pass on March 22nd, a home-rule bill 20 calling for the State Legislature to repeal a 21 law called the Urstadt Law. 22 The basis for the City Council's 23 decision on this, as I believe they will pass 24 on March 22nd -- that's the City Council has 25 advised me -- is a recognition that New York

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(518) 371-8910 1 City continues to have a housing crisis. And 2 in fact, they've passed a resolution -- 3 THE PRESIDENT: If the members 4 would take their conversations out of the 5 chamber. 6 If you'd wait a minute, please, 7 Senator, for order. 8 SENATOR LIZ KRUEGER: Thank you. 9 THE PRESIDENT: You may proceed. 10 SENATOR LIZ KRUEGER: Thank you 11 so much, Madam President. 12 The City Council has passed a 13 Resolution Number 79 recognizing that an 14 emergency requiring rent control and 15 regulation in the City of New York continues 16 to exist and will continue to exist on and 17 after April 1, 2006. 18 They have followed through acting 19 by the mayor on a Housing and Vacancy Survey 20 Report from the year 2005, with initial 21 results being released to the City Council on 22 March 3rd documenting the continuing and 23 growing crisis of inadequate housing for the 24 people of New York City. 25 Again, I want to emphasize the City

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(518) 371-8910 1 of New York recognizes that it is in a housing 2 crisis requiring the continuation of rent 3 regulation and tenant protections. 4 The findings of the 2005 Housing 5 and Vacancy Survey again prepared with the 6 U.S. Census Bureau and the city's Housing and 7 Preservation Department, at the -- 8 THE PRESIDENT: I'm going to 9 again ask for order so the Senator can be 10 heard. Please, let's wait until the chamber 11 is quiet. I'm asking for order, please, in 12 the chamber so the speaker can be heard. 13 All right. You may proceed, 14 Senator. 15 SENATOR LIZ KRUEGER: Thank you 16 very much, Madam President. 17 Again, the 2005 Housing and Vacancy 18 Survey, which is done in a collaboration 19 between the U.S. Census Bureau and the 20 New York City Housing Preservation and 21 Development Department, has found yet again 22 that the City of New York is in a housing 23 crisis. 24 The initial results from the 2005 25 survey find that rent-controlled units have

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(518) 371-8910 1 dropped by 16,000 since the last survey three 2 years earlier, or by 27 percent. There are 3 only 43,000 rent-controlled units left in the 4 City of New York. That there are 1,044,000 5 rent-stabilized units, comprising 50 percent 6 of the rental stock in 2005 in New York. 7 That the vacancy rate for low-rent 8 units is extremely low. The vacancy rate in 9 2005 for units with monthly rents of less than 10 $500 per month was just 1.38 percent of the 11 units available. 12 Vacancy rates for units with asking 13 rent levels between $500 and $799 per month 14 were just above 2 percent. And the numbers 15 continue to a disturbing rate of less than 16 3 percent vacancy -- excuse me, 3.09 percent 17 vacancy of units in the city of New York. 18 In that same 2005 Housing and 19 Vacancy Survey, we found that the median 20 income of renter households was just $32,000 21 in 2004, a real income decrease of 5.6 percent 22 since three years earlier. In rent-stabilized 23 units, the median income was $32,000, an 24 8.6 decline from 2004 after inflation 25 adjustment. The median monthly contract rent

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(518) 371-8910 1 of rent-stabilized units was $844 in 2005, an 2 8.2 percent increase in the last three years. 3 And the monthly gross rents between $500 and 4 $799 per month and between $800 and $999 per 5 month decreased by 16.2 percent in the last 6 three years. 7 The tenants of New York City do not 8 have alternatives. They do not have 9 additional apartments to go to. They cannot 10 afford the rents that they are living with. 11 And the fact is that until the State of 12 New York repeals this Urstadt Law passed in 13 1971, the City of New York's hands are tied to 14 come up with housing policies that make sense 15 for the City of New York. 16 Prior to 1971, New York City had 17 home rule over our rent and eviction and 18 tenant protections covering these more than 19 1 million rent-regulated and rent-controlled 20 apartments. In 1971, home rule was taken away 21 by the Urstadt Law pushed by Governor Nelson 22 Rockefeller. Since then, this legislative 23 body has repeatedly weakened the rent laws, 24 particularly in 1997 and in 2003. And not 25 surprisingly, the housing crisis in New York

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(518) 371-8910 1 City has worsened since we took those actions 2 starting in '97. 3 Again, our vacancy rate is just 4 3 percent, and just over 1 percent for units 5 at the $500 per month level. I would dare to 6 challenge any of my colleagues from anywhere 7 else in the state to look at the numbers for 8 affordable units in their own districts and 9 see if they were at a 1 percent vacancy rate 10 for affordable housing. 11 This rent hardship is afflicting 12 everyone in the City of New York, regardless 13 of income, because the pressures are so 14 extreme on housing and the ability to hold on 15 to housing. Poor New Yorkers are 16 disproportionately affected, middle-class 17 households alike, and senior citizens, I would 18 argue, disproportionately, because they do not 19 have alternative housing options and they are 20 living on fixed incomes, trying to stay in the 21 homes that they have been in now for 30 and 40 22 and even 50 years. 23 The workers of New York City cannot 24 afford to live in our city. Our firefighters, 25 our nurses, our teachers, our police officers,

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(518) 371-8910 1 our construction workers, our artists, 2 thousands of New Yorkers can no longer live in 3 the community that they serve. And the fact 4 is that the growing crisis of housing at the 5 lowest end of income has directly correlated 6 to the increased number of homeless families 7 in the city of New York. 8 As families are forced out of their 9 homes, rents are frequently increased to 10 exorbitant levels, contributing to an even 11 tighter housing market, reflecting the 12 differences between the 2002 house vacancy 13 survey and the 2005 housing vacancy survey 14 data I just read from. The rent guidelines 15 board has found that we are losing more units 16 than we gain, both in rent-regulated and in 17 other housing, because the City of New York 18 cannot control its own destiny in housing. 19 Yes, there are housing problems 20 throughout the state of New York. There are 21 different solutions in different localities. 22 Home-rule bills come to this house on a 23 regular and continuing basis. I would even 24 argue that it has been a bedrock philosophy of 25 many in the Republican Party to actively

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(518) 371-8910 1 advocate for and recognize home rule, that 2 when a locality comes to the State Legislature 3 and says "We need a change in the laws because 4 we need it at home, at our local level, 5 because we recognize, the local legislative 6 body, what is in the best interests of our 7 county, our town, or our municipality," it is 8 often the Republicans in this Senate who argue 9 in recognition of the importance of home rule. 10 And yet, year after year, the 11 Assembly passes repeal of the Urstadt Law. 12 New York City's local government asks us for 13 home rule, as they will do again on March 22nd 14 of this year, they will ask us to give the 15 City of New York the ability to make its own 16 housing policies, to determine its own future 17 in housing. 18 I urge my colleagues, finally, give 19 New York City home rule over its housing 20 policies. Perhaps the crisis won't go away 21 overnight, but allow local government, 22 affecting the lives of almost 9 million 23 New Yorkers, to have the ability and power to 24 make their own determinations over housing 25 policy and land use policy and tenant

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(518) 371-8910 1 protections in the five boroughs of New York 2 City. 3 I urge my colleagues to support me 4 in moving this motion and ultimately in 5 passing this law in the Senate. 6 Thank you very much, Madam 7 President. 8 THE PRESIDENT: All those 9 Senators in favor of the petition out of 10 committee please signify by raising your hand. 11 The Secretary will announce the 12 results. 13 THE SECRETARY: Those recorded in 14 agreement are Senators Andrews, Breslin, Diaz, 15 Dilan, Duane, Gonzalez, L. Krueger, C. Kruger, 16 Montgomery, Onorato, Oppenheimer, Parker, 17 Paterson, Sabini, Sampson, Savino, 18 Schneiderman, A. Smith, M. Smith, and 19 Stavisky. 20 THE PRESIDENT: The petition is 21 not agreed to. 22 Senator Wright. 23 SENATOR WRIGHT: Thank you, Madam 24 President. 25 There being no further business to

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(518) 371-8910 1 come before the Senate, I move we adjourn 2 until Wednesday, March 15th, at 11:00 a.m. 3 THE PRESIDENT: On motion, the 4 Senate now stands adjourned until Wednesday, 5 March 15th, 11:00 a.m. 6 (Whereupon, at 3:00 p.m., the 7 Senate adjourned.) 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

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