Authorizes enterprise fraud prevention and detection system by comptroller to develop and implement techniques and technologies to detect and prevent fraud

Summary of provisions

Section One of this legislation details Legislative Findings.

Section Two of this legislation adds a new section 8-c to the State Finance Law, creating an enterprise fraud program, providing that the Comptroller may implement and update an electronic data analytical enterprise fraud prevention and protection 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, and public boards, to support the program by providing the Comptroller with access to pertinent 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 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, 2016. 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 nothing in this act shall alter or diminish any authority of the state comptroller.

Section 5 provides the effective date of this bill.

Justification

The prevalence of fraud. waste, abuse, and improper payments is perva- sive 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 at $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 (A-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 this state-of-the-art fraud detection and prevention technology into State government would greatly help agencies reduces their losses to fraudulent behaviors. For this modern technology to be most efficiently deployed, a government office should assume the responsibility of devoting 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 economics of scale to reduce overall costs for fraud detection and prevention across all state government programs and functions.

Legislative history

2013-2014: S.4815-A - Referred to Finance

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.

Effective date

This act shall take effect on the one hundred twentieth day after it shall have become a law; provided, however, that effective immediately, the addition, amendment and/or repeal of any rule or regulation necessary for the implementation of this act on its effective date are authorized to be made and completed on or before such effective date.