Establishes an enterprise fraud prevention and detection system

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.