Department of Health and Human Services 
 
 
OFFICE OF 
 
INSPECTOR GENERAL 
 
 
 
 
 
 
 
N C S
ORTH  AROLINA  TATE 
 
 
M F C
EDICAID  RAUD  ONTROL 
 
 
U : 2016 O R  
NIT    NSITE  EVIEW
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
Suzanne Murrin 
Deputy Inspector General  
for Evaluation and Inspections 
 
September 2016 
OEI-07-16-00070   
   
EXECUTIVE SUMMARY:  NORTH CAROLINA STATE MEDICAID FRAUD 
CONTROL UNIT:  2016 ONSITE REVIEW 
OEI-07-16-00070 
 
WHY WE DID THIS STUDY  
The Office of Inspector General (OIG) administers the Medicaid Fraud Control Unit 
(MFCU or Unit) grant awards, annually recertifies the Units, and oversees the Units 
performance in accordance with the requirements of the grant.  As part of this oversight, 
OIG conducts periodic onsite reviews of all Units and prepares public reports based on 
these reviews.  These reviews assess the Units adherence to the 12 MFCU performance 
standards and compliance with applicable Federal statutes and regulations. 
 
HOW WE DID THIS STUDY 
We conducted an onsite review of the North Carolina Unit in March 2016.  We based our 
review on an analysis of data from seven sources:  (1) policies, procedures, and 
documentation related to the Units operations, staffing, and caseload; (2) financial 
documentation for fiscal years (FYs) 2013 through 2015; (3) structured interviews with 
key stakeholders; (4) a survey of Unit staff; (5) structured interviews with the Units 
management; (6) a sample of files for cases that were open in FYs 2013 through 2015; 
and (7) observation of Unit operations. 
 
WHAT WE FOUND 
For FYs 2013 through 2015, the North Carolina Unit reported 57 convictions, 49 civil 
judgments and settlements, and combined criminal and civil recoveries of over 
$134 million.  Our review of the North Carolina Unit found that it was generally in 
compliance with applicable laws, regulations, and policy transmittals.  However, we 
identified three areas where the Unit should improve its operations.  Specifically, 
8 percent of the case files did not contain any periodic supervisory reviews of cases.  In 
addition, the Unit did not report all convictions and adverse actions to Federal partners in 
a timely manner.  Finally, the Units case management system posed challenges to 
retrieving case information.  We noted that the Unit partnered with another State agency 
to design and deliver a specialized training course for new investigators. 
 
WHAT WE RECOMMEND  
We recommend that the North Carolina Unit:  (1) conduct and document supervisory 
reviews of Unit case files according to the Units policies and procedures, (2) implement 
processes to ensure it reports convictions and adverse actions to Federal partners within 
required timeframes, and (3) proceed with plans to replace the Units case management 
system to ensure case information is readily accessible to Unit staff as needed.  The Unit 
concurred with all three recommendations. 
 
   
   
TABLE OF CONTENTS 
Objective ......................................................................................................1 
Background ..................................................................................................1 
Methodology ................................................................................................4 
Findings........................................................................................................6 
For FY 2013 through FY 2015, the Unit reported 
57 convictions, 49 civil judgments and settlements, and 
combined criminal and civil recoveries of over $134 million ...........6 
Eight percent of the case files did not contain documentation of any 
periodic supervisory reviews; however, supervisors 
documented the opening and closing of nearly all cases....................7 
The Unit did not report all convictions and adverse actions to 
Federal partners in a timely manner ...................................................8 
The Units case management system posed challenges for 
retrieving case information ...............................................................10 
Other observation:  The Unit partnered with another State 
agency to create a Financial Investigator Academy ......................... 11 
Conclusion and Recommendations ............................................................12 
Unit Comments and Office of Inspector General Response ..........13 
Appendixes ................................................................................................14 
A:  2012 Performance Standards ......................................................14 
B:  Unit Referrals by Referral Source for FYs 2013 Through 
2015 ..................................................................................................18 
C:  Detailed Methodology ................................................................19 
D:  Point Estimates and 95-Percent Confidence Intervals Based 
on Reviews of Case Files .................................................................23 
E:  Unit Comments ...........................................................................24 
Acknowledgments......................................................................................27
   
OBJECTIVE 
To conduct an onsite review of the North Carolina State Medicaid Fraud 
Control Unit (MFCU or Unit). 
BACKGROUND  
The mission of MFCUs is to investigate and prosecute Medicaid provider 
fraud and patient abuse or neglect under State law.1  The SSA requires 
each State to operate a MFCU, unless the Secretary of Health and Human 
Services (HHS) determines that operation of a Unit would not be 
cost-effective because minimal Medicaid fraud exists in a particular State 
and that the State has other adequate safeguards to protect Medicaid 
beneficiaries from abuse and neglect.2  Currently, 49 States and the 
District of Columbia (States) have MFCUs.3 
Each Unit must employ an interdisciplinary staff that consists of at least an 
investigator, an auditor, and an attorney.4  Unit staff review referrals of 
potential fraud and patient abuse or neglect to determine their potential for 
criminal prosecution and/or civil action.  In fiscal year (FY) 2015, the 
50 Units collectively reported 1,553 convictions, 795 civil settlements or 
judgments, and approximately $745 million in recoveries.5, 6 
Units must meet a number of requirements established by the SSA and 
Federal regulations.  For example, each Unit must: 
  be a single, identifiable entity of State government, distinct from 
the single State Medicaid agency;7   
  develop a formal agreement, such as a memorandum of 
understanding (MOU), which describes the Units relationship with 
the State Medicaid agency;8 and   
______________________________________________________ 
1 Social Security Act (SSA)  1903(q).  Regulations at 42 CFR  1007.11(b)(1) add that 
the Units responsibilities may include reviewing complaints of misappropriation of 
patients private funds in residential health care facilities. 
2 SSA  1902(a)(61).   
3 North Dakota and the territories of American Samoa, Guam, the Northern Mariana 
Islands, Puerto Rico, and the U.S. Virgin Islands have not established Units. 
4 SSA  1903(q)(6); 42 CFR  1007.13. 
5 Office of Inspector General (OIG), MFCU Statistical Data for Fiscal Year 2015.  
Accessed at http://oig.hhs.gov/fraud/medicaid-fraud-control-units-
mfcu/expenditures_statistics/fy2015-statistical-chart.htm on February 17, 2016. 
6 All FY references in this report are based on the Federal FY (October 1 through     
September 30). 
7 SSA  1903(q)(2); 42 CFR  1007.5 and 1007.9(a). 
8 42 CFR  1007.9(d).  
North Carolina State Medicaid Fraud Control Unit:  2016 Onsite Review (OEI-07-16-00070)  1 
   
   
  have either statewide authority to prosecute cases or formal 
procedures to refer suspected criminal violations to an agency with 
such authority.9   
MFCU Funding 
Each MFCU is funded jointly by its State and the Federal government.  
Federal funding for the MFCUs is provided as part of the Federal 
Medicaid appropriation, but it is administered by OIG.10  Each Unit 
receives Federal financial participation equivalent to 75 percent of its total 
expenditures, with State funds contributing the remaining 25 percent.11  In 
FY 2015, combined Federal and State expenditures for the Units totaled 
$251 million, $188 million of which represented Federal funds.12   
Oversight of the MFCU Program 
The Secretary of HHS delegated to OIG the authority to administer the 
MFCU grant program.13  To receive Federal reimbursement, each Unit must 
submit an initial application to OIG for approval and be recertified each year 
thereafter.   
In annually recertifying the Units, OIG evaluates Unit compliance with 
Federal requirements and adherence to performance standards.  The Federal 
requirements for Units are contained in the SSA, regulations, and policy 
guidance.14  In addition, OIG has published 12 performance standards that it 
uses to assess whether a Unit is effectively performing its responsibilities.15  
The standards address topics such as staffing, maintaining adequate referrals, 
and cooperation with Federal authorities.  Appendix A contains the 
performance standards.   
OIG also performs periodic onsite reviews of the Units, such as this review 
of the North Carolina MFCU.  During these onsite reviews, OIG evaluates 
Units compliance with laws, regulations, and policies, as well as adherence 
to the 12 performance standards.  OIG also makes observations about best 
practices, provides recommendations to the Units, and monitors the 
______________________________________________________ 
9 SSA  1903(q)(1). 
10 SSA  1903(a)(6)(B). 
11 Ibid.  
12 OIG, MFCU Statistical Data for Fiscal Year 2015.  Accessed at 
http://oig.hhs.gov/fraud/medicaid-fraud-control-units-
mfcu/expenditures_statistics/fy2015-statistical-chart.htm on February 17, 2016.   
13 The SSA authorizes the Secretary of HHS to award grants to the Units 
(SSA  1903(a)(6)(B)); the Secretary delegated this authority to the OIG. 
14 On occasion, OIG issues policy transmittals to provide guidance and instructions to 
MFCUs.   
15 77 Fed. Reg. 32645 (June 1, 2012).  Accessed at 
http://www.oig.hhs.gov/authorities/docs/2012/PerformanceStandardsFinal060112.pdf on 
April 7, 2016.   
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implementation of the recommendations.  These evaluations differ from 
other OIG evaluations as they support OIGs direct administration of the 
MFCU grant program.  These evaluations are subject to the same internal 
quality controls as other OIG evaluations, including internal peer review. 
OIG provides additional oversight including the collection and dissemination 
of performance data, training, and technical assistance. 
North Carolina Unit 
The Unit, known as the Medicaid Investigations Division of the North 
Carolina Department of Justice, investigates and prosecutes cases of 
Medicaid fraud and patient abuse and neglect.  To investigate and 
prosecute such cases, the Unit employs staff in positions including 
attorneys, criminal justice analysts, sworn and non-sworn investigators, 
and investigative auditors.16  The sworn investigators, also known as 
special agents, work for the Unit through a Memorandum of 
Understanding (MOU) with the North Carolina State Bureau of 
Investigation (SBI).  Additionally, the Unit employs administrative and 
paralegal staff. 
At the time of our review, the Units 55 employees were located in two 
offices.  The Units main office is in the State capital, Raleigh, and its 
branch office is located in Charlotte.  Our onsite review was of the Raleigh 
location.  The North Carolina Unit expended $5,350,038 in combined 
State and Federal funds in FY 2015.17   
Referrals.  The Unit receives referrals from a variety of sources, including 
but not limited to, the State Medicaid agency, local law enforcement, and 
private citizens.  A committee comprised of the Unit director, deputy 
director, chief attorneys, and financial investigation supervisors reviews 
referrals monthly to determine whether referrals should be accepted or 
declined.  Appendix B identifies Unit referrals by referral source for 
FYs 2013 through 2015.  
Investigations and Prosecutions.  If the Unit accepts a referral, it will open a 
case.  An attorney and one or more investigators will be assigned to each 
case.  The North Carolina Department of Justice has no original criminal 
prosecutorial authority; this authority is vested exclusively with the District 
Attorneys located across the State.  However, District Attorneys may 
authorize Unit attorneys to prosecute criminal matters in State courts by 
______________________________________________________ 
16 The Unit refers to its non-sworn investigators as financial investigators. 
17 OIG, MFCU Statistical Data for Fiscal Year 2015.  Accessed at 
http://oig.hhs.gov/fraud/medicaid-fraud-control-units-
mfcu/expenditures_statistics/fy2015-statistical-chart.pdf on February 17, 2016. 
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designating them special prosecutors.  Alternatively, Unit attorneys may be 
appointed as Special Assistant United States Attorneys to prosecute criminal 
cases in Federal court.  Unit attorneys have the authority to prosecute civil 
cases in State court under the North Carolina State False Claims Act.18   
Previous Review 
In 2009, OIG conducted an onsite review of the North Carolina Unit.  OIG 
found that many of the Units case files did not include all required 
documentation of approvals to open and close cases.  OIG also found that 
supervision of the SBIs special agents assigned to the Unit was shared by 
the Unit director and the SBI special agent in charge.  The SBI special agent 
in charge and the special agents were housed in offices on a separate floor of 
the building from the rest of the Unit.  As a result of its review, OIG made 
one suggestion and one recommendation.   
OIG suggested that the Unit include interim investigative memorandums to 
document case openings and closings, as well as the progress of cases.  In 
response, the Unit revised its opening, closing, and quarterly case review 
forms and required that they be included in the case files.  Our 2016 onsite 
review found no evidence of a failure to document the opening and closing 
of cases.   
OIG recommended that the Units MOU with SBI clearly delineate 
supervisory authority over the assigned special agents.  In November 2009, 
the Unit and the SBI entered into an MOU stating that the special agents will 
be supervised by a special agent in charge and the special agent in charge 
will report to the Unit director regarding to duties, responsibilities, and work 
assignments.  In February 2016, the Unit updated its MOU to reflect a 
reorganization of the SBI and reconfirm the Units supervision of the special 
agents and special agent in charge. 
METHODOLOGY 
We conducted the onsite review in March 2016.  We based our review on 
an analysis of data from seven sources:  (1) policies, procedures, and 
documentation related to the Units operations, staffing, and caseload; 
(2) financial documentation for FYs 2013 through 2015; (3) structured 
interviews with key stakeholders; (4) a survey of Unit staff; (5) structured 
interviews with Unit management and selected staff; (6) a sample of files 
for cases that were open at any time in FYs 2013 through 2015; and 
(7) observation of Unit operations.  Appendix C provides details of our 
methodology.   
______________________________________________________ 
18 N.C. Gen. Stat.  1-605 through 1-618. 
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Standards 
These reviews are conducted in accordance with the Quality Standards for 
Inspection and Evaluation issued by the Council of the Inspectors General 
on Integrity and Efficiency. 
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FINDINGS 
For FYs 2013 through 2015, the North Carolina Unit 
reported 57 criminal convictions, 49 civil judgments 
and settlements, and combined criminal and civil 
recoveries of over $134 million 
For FYs 2013 through 2015, the Unit reported 57 criminal convictions and 
49 civil judgments and settlements.  See Table 1 for the Units yearly 
criminal convictions and civil judgments and settlements.  Of the Units 
57 convictions over the 3-year period, 49 involved provider fraud and 
8 involved patient abuse and neglect.   
Table 1:  North Carolina MFCU Criminal Convictions and Civil 
Judgments and Settlements, FYs 20132015 
3-Year 
Outcomes  FY 2013  FY 2014  FY 2015  Total 
Criminal Convictions  30  9  18  57 
Civil Judgments and Settlements  18  15  16  49 
Source:  OIG, MFCU statistical data FYs 2013-2015. 
For the same period, the Unit reported combined criminal and civil 
recoveries of over $134 million.  Forty-two percent of the total recoveries 
during the 3-year review period were derived from cases directly 
investigated by the Unit; 58 percent of recoveries were obtained from 
global cases.19  See Table 2 for the Units yearly recoveries and 
expenditures.   
   
______________________________________________________ 
19 Global cases are civil false claims actions involving the U.S. Department of Justice 
and other State MFCUs.  The National Association of Medicaid Fraud Control Units 
facilitates the settlement of global cases. 
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Table 2:  North Carolina MFCU Recoveries and Expenditures,  
FYs 20132015 
Type of Recovery  FY 2013  FY 2014  FY 2015  3-Year Total 
Global Civil  $31,654,976  $44,661,812  $1,536,510  $77,853,298 
Nonglobal Civil  $1,103,238  $7,408,232  $13,418,973  $21,930,443 
Criminal  $13,481,054  $13,248,842  $7,633,026  $34,362,922 
Total Recoveries*  $46,239,268  $65,318,886  $22,588,509  $134,146,663 
     Total Expenditures  $5,357,886  $5,190,481  $5,350,038  $15,898,405 
*Recovery amounts vary from year to year due to particular settlements.  For example, $39 million of the Units global 
civil recoveries in FY 2014 came from the settlement of one large pharmaceutical case. 
Source:  OIG, MFCU statistical data FYs 2013-2015 and OIG analysis of Unit-submitted documentation, 2016. 
North Carolinas global recoveries declined from more than $44 million in 
FY 2014 to approximately $1.5 million in FY 2015.  This is consistent 
with a national trend of declining civil health care fraud complaints and 
settlements, especially those involving pharmaceutical companies.20 
Eight percent of the case files did not contain 
documentation of any periodic supervisory reviews; 
however, supervisors documented the opening and 
closing of nearly all cases 
Eight percent of the Units case files lacked documentation of any periodic 
supervisory reviews.21  An additional 68 percent of case files either were 
missing documentation of one or more reviews, or contained 
documentation of the dates that reviews took place but did not indicate if a 
supervisor participated in the reviews, for a total of 76 percent of case files 
that did not contain documentation of all periodic supervisory reviews.   
Performance Standard 7(a) states that supervisors should periodically 
review the progress of cases consistent with Unit policies and procedures, 
and note in the case file that the reviews took place.  The Units policy for 
______________________________________________________ 
20 From the 1990s through the early 2000s, a significant number of pharmaceutical 
companies were the subject of large monetary settlements in civil fraud actions.  As a 
condition of those settlements, pharmaceutical companies were required to adopt 
corporate integrity agreements that were designed to prevent future abusive 
practices.  Other corporations have adopted voluntary compliance programs, promoted by 
OIG, which may have further reduced the incidence of fraud allegations.  See OIG 
Compliance Program Guidance for Pharmaceutical Manufacturers, 68 Fed. Reg. 23731 
(May 5, 2003), available at 
http://www.oig.hhs.gov/authorities/docs/03/050503FRCPGPharmac.pdf. 
21 Appendix D contains the point estimates and 95-percent confidence intervals for all 
statistics in this report. 
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supervisory reviews of criminal cases states that the attorney, investigator, 
and supervisor should meet quarterly to review progress of cases.22  The 
policy further states that the date of the case review and participating staff 
should be documented.  The Units policy for supervisory review of civil 
cases stated that such cases should be reviewed every 180 days. 
However, we found that nearly all files contained documentation of 
supervisory approval to open and close cases.  Performance Standard 5(b) 
states that Unit supervisors should approve the opening and closing of 
cases.  The Units policies and procedures require opening and closing 
memorandums to document the opening and closing of cases.  
Ninety-nine percent of the Units case files included documentation of 
supervisory approval to open the cases and all of the Units closed case 
files in our sample included documentation of supervisory approval to 
close the cases.23  Supervisory approval to open cases indicates that Unit 
supervisors are monitoring the intake of cases, thereby facilitating 
progress in the investigation.  Supervisory approval to close cases helps 
ensure the timely completion and resolution of cases. 
The Unit did not report all convictions and adverse 
actions to Federal partners in a timely manner 
The Unit did not report all convictions to OIG for the purpose of program 
exclusion, nor did it report all adverse actions to the National Practitioner 
Data Bank (NPDB), within the required timeframes.  Performance 
Standard 8(f) states that the Unit should transmit to OIG reports of all 
convictions for the purpose of exclusion from Federal health care 
programs within 30 days of sentencing.  Additionally, Federal regulations 
require that Units report any adverse actions, generated as a result of 
______________________________________________________ 
22 From October 1, 2014, through September 30, 2015, the Unit changed its requirements 
to monthly reviews. 
23 All closed case files in our sample included documentation of supervisory approval to 
close the cases.  However, we cannot be certainbecause of sampling errorthat all of 
the Units closed case files in the review period included this documentation.   As a 
statistical matter, we are 95-percent confident that at least 95.6 percent of the closed cases 
in the population had documentation of supervisory approval to close the case. 
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prosecutions of healthcare providers, to the NPDB within 30 calendar days 
of the adverse action.24, 25     
The Unit did not report about half of its convictions to OIG in a 
timely manner 
The Unit obtained 57 convictions in the review period.  The Unit did not 
report 32 of 57 convictions (56 percent) within 30 days of sentencing.  
Table 3 shows how many days after sentencing the Unit reported these 
convictions to OIG. 
Table 3:  Number of Convictions Reported to OIG After Required Timeframe 
Federal Partner  Convictions Reported  Convictions Reported  Convictions Reported  Total Convictions 
Reported To  Within 31 to 60 Days  Within 61 to 90 Days  More Than 90 Days  Reported More Than 
After Sentencing  After Sentencing  After Sentencing  30 Days After Sentencing  
OIG  10  7  15  32 
Source:  OIG analysis of Unit convictions and dates reported to OIG, 2016. 
The Unit reported three reasons for not reporting convictions to OIG 
within the required timeframe.  First, until July 2013, the Units practice 
was to report convictions quarterly rather than within 30 days of 
sentencing per the Performance Standard 8(f).  Second, the Director 
stated that staff delays in submitting the necessary paperwork to OIG 
contributed to some of the late reports.  Third, the Director stated that in 
some instances, the Unit did not obtain sentencing documents from the 
courts in time to meet the 30-day requirement.  The Unit provided 
documentation to us showing that it received sentencing documents for 
five convictions more than 30 days after the sentencing dates.  Late 
reporting of convictions to OIG delays the initiation of the program 
exclusion process, which may result in improper payments to providers by 
Medicare or other Federal health care programs or possible harm to 
beneficiaries.  Our analysis found that no Medicare or Medicaid claims 
were paid to the late-reported providers. 
______________________________________________________ 
24 SSA  1128E(g)(1); 45 CFR  60.3.  Examples of adverse actions include criminal 
convictions; civil judgments (but not civil settlements); exclusions; and other negative 
actions or findings. 
25 45 CFR  60.5.  Both Federal regulations and the performance standards require the 
Unit to report to NPDB.  Performance Standard 8(g) states that the Unit should report 
qualifying cases to the Healthcare Integrity & Protection Databank [HIPDB], the 
National Practitioner Data Bank, or successor data bases.    We reviewed the reporting 
of adverse actions under NPDB requirements because the HIPDB and the NPDB were 
merged during our review period (FYs 2013 through 2015).  78 Fed. Reg. 20473 (April 5, 
2013). 
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The Unit did not report one-third of its adverse actions to the 
NPDB in a timely manner 
The Unit did not report 19 of 57 adverse actions (33 percent) to the NPDB 
within 30 days of the actions.  Table 4 shows how many days after the 
adverse action that the Unit reported the action to NPDB. 
Table 4:  Number of Adverse Actions Reported to NPDB After Required Timeframes 
Federal Partner  Adverse Actions  Adverse Actions   Adverse Actions   Total Adverse Actions  
Reported To  Reported Within 31 to  Reported Within 61 to  Reported More Than  Reported More Than 
60 Days After the  90 Days After the  90 Days After the  30 Days After the Action  
Action  Action  Action 
NPDB  12  5  2  19 
Source:  OIG analysis of Unit convictions and dates reported to NPDB, 2016. 
On average, the Unit reported these adverse actions 60 days after the 
actions.  In contrast to the Units late reporting of convictions to OIG, the 
Unit reported only 2 actions to NPDB more than 90 days late.  The 
Director offered that the Unit received sentencing documents for five 
adverse actions more than 30 days after the dates of sentencing.  The 
NPDB is intended to restrict the ability of physicians, dentists, and other 
health care practitioners to move from State to State without disclosure or 
discovery of previous medical malpractice and adverse actions. 
The Units case management system posed 
challenges for retrieving case information 
Performance Standard 7 states that Units must maintain case files in an 
effective manner and develop a case management system that allows 
efficient access to case information.  In our staff survey, 36 of 43 staff 
responded that they use the Units case management system.  Of the 
36 staff that use the system, 22 expressed concerns about the system, 
including difficulties using the system, slowness, and storage limitations.  
Regarding difficulties using the system, respondents noted (1) differences 
in the way users organize and title documents, making it difficult to search 
and retrieve the same documents at a later date; (2) the lack of a field for 
specifying the source of documents; and (3) the lack of a mechanism to 
link documents within a single case file or among separate case files.   
The OIG investigator also noted that the way in which documents were 
titled and organized in the case management system made it difficult to 
review files.  The Unit director acknowledged certain limitations and 
shortcomings of the case management system and said the Unit plans to 
obtain a new system.  
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Other observation:  The Unit partnered with another 
State agency to create a Financial Investigator 
Academy 
Recognizing the training needs of newly-hired financial investigators, in 
early 2013 the Unit partnered with the North Carolina State Bureau of 
Investigation, Financial Crimes Section, to create the North Carolina 
Financial Investigators Academy.  The Academy consists of six 2-day 
sessions over a 5 to 6 month timeframe.  The content includes over 
100 hours of instruction on topics including elements of criminal law, 
search and seizure, interviewing, and testifying.  As part of the Academy, 
attendees participate in a mock trial.  The Unit requires all of its 
newly-hired financial investigators to attend the course, regardless of years 
of investigative experience.  To date, 22 Unit staff have attended.  
According to the Director, attendees reported that the training gave them 
greater confidence in conducting interviews and interrogations and in 
testifying in court. 
   
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CONCLUSION AND RECOMMENDATIONS 
Our review of the North Carolina Unit found that it was generally in 
compliance with applicable laws, regulations, and policy transmittals.  For 
FYs 2013 through 2015, the North Carolina Unit reported 57 criminal 
convictions and 49 civil judgments and settlements, and combined 
criminal and civil recoveries of over $134 million.  We noted that the Unit 
partnered with another State agency to design and deliver a specialized 
training course for new financial investigators.   
We identified three areas where the Unit should improve its operations.  
Specifically, the Unit should ensure that all case files contain 
documentation of periodic supervisory reviews; report all convictions and 
adverse actions to Federal partners within required timeframes; and 
proceed with plans to replace its case management system. 
We recommend that the North Carolina Unit: 
Conduct and document supervisory reviews of Unit case files 
according to the Units policies and procedures 
The Unit should take steps to ensure that employees adhere to the Units 
written policy for conducting and documenting supervisory reviews of 
cases. 
Implement processes to ensure it reports convictions and 
adverse actions to Federal partners within required timeframes 
The Unit should implement processes to ensure it reports convictions to 
OIG within 30 days of sentencing and adverse actions to NPDB within 
30 days of the action.   
Replace the Units case management system 
The Unit should proceed with plans to replace the Units case management 
system to make case data readily accessible to Unit staff. 
 
   
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UNIT COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
The North Carolina Unit concurred with all three of our recommendations. 
Regarding the first recommendation, the Unit stated that it revised its 
supervisory review form to document the presence of the supervisor and is 
in the process of adding a place on the review form for the supervisors 
signature as additional documentation.  The Unit also stated that its policy 
during the review period did not require documentation of periodic 
supervisory reviews for civil cases.  In October 2015, the Unit 
implemented a new 180-day case review requirement for civil cases.  The 
Unit stated that it has implemented a monitoring procedure that includes 
reviewing samples of case files to ensure that supervisory reviews are 
conducted and documented in accordance with Unit policies.  Further, the 
Unit stated that it met with supervisors in 2015 to emphasize that reviews 
should be conducted and documented for all types of cases in accordance 
with Unit policies.   
Regarding the second recommendation, the Unit stated that by the 
beginning of 2016, it notified staff about the 30-day reporting deadlines, 
implemented additional electronic reminders, and added a 30-day 
reporting field in its case tracking system.  Further, the Unit suggested that 
OIG adopt for Federal cases a definition of the 30 day reporting 
requirement to consider the date that the court clerk enters judgement of 
sentence, rather than the date when the judge announces the sentence.  The 
Unit may wish to offer this suggestion as a formal comment to the OIGs 
notice of proposed rulemaking to revise regulations governing the Units 
contained in 81 FR 64383 (Sept 20, 2016).    
Regarding the third recommendation, the Unit plans to pursue budget and 
funding support for upgrading its case management system.  In the 
interim, the Unit has developed and installed a new Access-based case 
tracking system that allows it to quickly query and retrieve case 
information.  The Unit also standardized its organization and titling of 
documents.  
The Units comments are provided in Appendix E.   
 
   
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APPENDIX A 
2012 Performance Standards26  
1.  A UNIT CONFORMS WITH ALL APPLICABLE STATUTES, REGULATIONS, AND POLICY DIRECTIVES, 
INCLUDING: 
A.  Section 1903(q) of the Social Security Act,  containing the basic requirements for operation of a MFCU; 
B.  Regulations for operation of a MFCU contained in 42 CFR part 1007; 
C.  Grant administration requirements at 45 CFR part 92 and Federal cost principles at 2 CFR part 225; 
D.  OIG policy transmittals as maintained on the OIG Web site; and  
E.  Terms and conditions of the notice of the grant award. 
2.  A UNIT MAINTAINS REASONABLE STAFF LEVELS AND OFFICE LOCATIONS IN RELATION TO THE 
STATES MEDICAID PROGRAM EXPENDITURES AND IN ACCORDANCE WITH STAFFING 
ALLOCATIONS APPROVED IN ITS BUDGET.   
A.  The Unit employs the number of staff that is included in the Units budget estimate as approved by OIG. 
B.  The Unit employs a total number of professional staff that is commensurate with the States total Medicaid 
program expenditures and that enables the Unit to effectively investigate and prosecute (or refer for 
prosecution) an appropriate volume of case referrals and workload for both Medicaid fraud and patient abuse 
and neglect. 
C.  The Unit employs an appropriate mix and number of attorneys, auditors, investigators, and other 
professional staff that is both commensurate with the States total Medicaid program expenditures and that 
allows the Unit to effectively investigate and prosecute (or refer for prosecution) an appropriate volume of case 
referrals and workload for both Medicaid fraud and patient abuse and neglect. 
D.  The Unit employs a number of support staff in relation to its overall size that allows the Unit to operate 
effectively. 
E.  To the extent that a Unit maintains multiple office locations, such locations are distributed throughout the 
State, and are adequately staffed, commensurate with the volume of case referrals and workload for each 
location. 
3. A UNIT ESTABLISHES WRITTEN POLICIES AND PROCEDURES FOR ITS OPERATIONS AND 
ENSURES THAT STAFF ARE FAMILIAR WITH, AND ADHERE TO, POLICIES AND PROCEDURES.   
A.  The Unit has written guidelines or manuals that contain current policies and procedures, consistent with 
these performance standards, for the investigation and (for those Units with prosecutorial authority) prosecution 
of Medicaid fraud and patient abuse and neglect.  
B.  The Unit adheres to current policies and procedures in its operations. 
C.  Procedures include a process for referring cases, when appropriate, to Federal and State agencies.  
Referrals to State agencies, including the State Medicaid agency, should identify whether further investigation 
or other administrative action is warranted, such as the collection of overpayments or suspension of payments. 
D.  Written guidelines and manuals are readily available to all Unit staff, either online or in hard copy. 
E.  Policies and procedures address training standards for Unit employees. 
4. A UNIT TAKES STEPS TO MAINTAIN AN ADEQUATE VOLUME AND QUALITY OF REFERRALS FROM 
THE STATE MEDICAID AGENCY AND OTHER SOURCES.   
A.  The Unit takes steps, such as the development of operational protocols, to ensure that the State Medicaid 
agency, managed care organizations, and other agencies refer to the Unit all suspected provider fraud cases.  
Consistent with 42 CFR 1007.9(g), the Unit provides timely written notice to the State Medicaid agency when 
referred cases are accepted or declined for investigation. 
______________________________________________________ 
26 77 Fed. Reg. 32645 (June 1, 2012). 
North Carolina State Medicaid Fraud Control Unit:  2016 Onsite Review (OEI-07-16-00070)                                   14 
     
   
B.  The Unit provides periodic feedback to the State Medicaid agency and other referral sources on the 
adequacy of both the volume and quality of its referrals. 
C.  The Unit provides timely information to the State Medicaid or other agency when the Medicaid or other 
agency requests information on the status of MFCU investigations, including when the Medicaid agency 
requests quarterly certification pursuant to 42 CFR 455.23(d)(3)(ii). 
D.  For those States in which the Unit has original jurisdiction to investigate or prosecute patient abuse and 
neglect cases, the Unit takes steps, such as the development of operational protocols, to ensure that pertinent 
agencies refer such cases to the Unit, consistent with patient confidentiality and consent.  Pertinent agencies 
vary by State but may include licensing and certification agencies, the State Long Term Care Ombudsman, and 
adult protective services offices.  
E.  The Unit provides timely information, when requested, to those agencies identified in (D) above regarding 
the status of referrals. 
F.  The Unit takes steps, through public outreach or other means, to encourage the public to refer cases to the 
Unit. 
5. A UNIT TAKES STEPS TO MAINTAIN A CONTINUOUS CASE FLOW AND TO COMPLETE CASES IN AN 
APPROPRIATE TIMEFRAME BASED ON THE COMPLEXITY OF THE CASES. 
A.  Each stage of an investigation and prosecution is completed in an appropriate timeframe. 
B.  Supervisors approve the opening and closing of all investigations and review the progress of cases and take 
action as necessary to ensure that each stage of an investigation and prosecution is completed in an 
appropriate timeframe. 
C.  Delays to investigations and prosecutions are limited to situations imposed by resource constraints or other 
exigencies.   
6.  A UNITS CASE MIX, AS PRACTICABLE, COVERS ALL SIGNIFICANT PROVIDER TYPES AND 
INCLUDES A BALANCE OF FRAUD AND, WHERE APPROPRIATE, PATIENT ABUSE AND NEGLECT 
CASES.   
A.  The Unit seeks to have a mix of cases from all significant provider types in the State. 
B.  For those States that rely substantially on managed care entities for the provision of Medicaid services, the 
Unit includes a commensurate number of managed care cases in its mix of cases.  
D.  As part of its case mix, the Unit maintains a balance of fraud and patient abuse and neglect cases for those 
States in which the Unit has original jurisdiction to investigate or prosecute patient abuse and neglect cases. 
C.  The Unit seeks to allocate resources among provider types based on levels of Medicaid expenditures or 
other risk factors.  Special Unit initiatives may focus on specific provider types. 
E.  As part of its case mix, the Unit seeks to maintain, consistent with its legal authorities, a balance of criminal 
and civil fraud cases. 
7.  A UNIT MAINTAINS CASE FILES IN AN EFFECTIVE MANNER AND DEVELOPS A CASE 
MANAGEMENT SYSTEM THAT ALLOWS EFFICIENT ACCESS TO CASE INFORMATION AND OTHER 
PERFORMANCE DATA.   
A.  Reviews by supervisors are conducted periodically, consistent with MFCU policies and procedures, and are 
noted in the case file. 
B.  Case files include all relevant facts and information and justify the opening and closing of the cases. 
C.  Significant documents, such as charging documents and settlement agreements, are included in the file.  
D.  Interview summaries are written promptly, as defined by the Units policies and procedures. 
E.  The Unit has an information management system that manages and tracks case information from initiation to 
resolution. 
F. The Unit has an information management system that allows for the monitoring and reporting of case 
information, including the following:  
1. The number of cases opened and closed and the reason that cases are closed. 
North Carolina State Medicaid Fraud Control Unit:  2016 Onsite Review (OEI-07-16-00070)                                   15 
     
   
2.  The length of time taken to determine whether to open a case referred by the State Medicaid agency or other 
referring source. 
3.  The number, age, and types of cases in the Units inventory/docket 
4.  The number of referrals received by the Unit and the number of referrals by the Unit to other agencies. 
5.  The number of cases criminally prosecuted by the Unit or referred to others for prosecution, the number of 
individuals or entities charged, and the number of pending prosecutions. 
6.  The number of criminal convictions and the number of civil judgments. 
7.  The dollar amount of overpayments identified. 
8.  The dollar amount of fines, penalties, and restitution ordered in a criminal case and the dollar amount of 
recoveries and the types of relief obtained through civil judgments or prefiling settlements. 
8.  A UNIT COOPERATES WITH OIG AND OTHER FEDERAL AGENCIES IN THE INVESTIGATION AND 
PROSECUTION OF MEDICAID AND OTHER HEALTH CARE FRAUD.   
A.  The Unit communicates on a regular basis with OIG and other Federal agencies investigating or prosecuting 
health care fraud in the State. 
B.  The Unit cooperates and, as appropriate, coordinates with OIGs Office of Investigations and other Federal 
agencies on cases being pursued jointly, cases involving the same suspects or allegations, and cases that have 
been referred to the Unit by OIG or another Federal agency.  
C.  The Unit makes available, to the extent authorized by law and upon request by Federal investigators and 
prosecutors, all information in its possession concerning provider fraud or fraud in the administration of the 
Medicaid program. 
D.  For cases that require the granting of extended jurisdiction to investigate Medicare or other Federal health 
care fraud, the Unit seeks permission from OIG or other relevant agencies under procedures as set by those 
agencies.  
E.  For cases that have civil fraud potential, the Unit investigates and prosecutes such cases under State 
authority or refers such cases to OIG or the U.S. Department of Justice. 
F.  The Unit transmits to OIG, for purposes of program exclusions under section 1128 of the Social Security Act, 
all pertinent information on MFCU convictions within 30 days of sentencing, including charging documents, plea 
agreements, and sentencing orders. 
G.  The Unit reports qualifying cases to the Healthcare Integrity & Protection Databank, the National Practitioner 
Data Bank, or successor data bases. 
9. A UNIT MAKES STATUTORY OR PROGRAMMATIC RECOMMENDATIONS, WHEN WARRANTED, TO 
THE STATE GOVERNMENT.   
A.  The Unit, when warranted and appropriate, makes statutory recommendations to the State legislature to 
improve the operation of the Unit, including amendments to the enforcement provisions of the State code. 
B.  The Unit, when warranted and appropriate, makes other regulatory or administrative recommendations 
regarding program integrity issues to the State Medicaid agency and to other agencies responsible for Medicaid 
operations or funding.  The Unit monitors actions taken by the State legislature and the State Medicaid or other 
agencies in response to recommendations.  
10. A UNIT PERIODICALLY REVIEWS ITS MEMORANDUM OF UNDERSTANDING (MOU) WITH THE 
STATE MEDICAID AGENCY TO ENSURE THAT IT REFLECTS CURRENT PRACTICE, POLICY, AND 
LEGAL REQUIREMENTS.   
A.  The MFCU documents that it has reviewed the MOU at least every 5 years, and has renegotiated the MOU 
as necessary, to ensure that it reflects current practice, policy, and legal requirements. 
B.  The MOU meets current Federal legal requirements as contained in law or regulation, including 
42 CFR 455.21, Cooperation with State Medicaid fraud control units, and 42 CFR 455.23, Suspension of 
payments in cases of fraud. 
C.  The MOU is consistent with current Federal and State policy, including any policies issued by OIG or the 
Centers for Medicare & Medicaid Services (CMS). 
D.  Consistent with Performance Standard 4, the MOU establishes a process to ensure the receipt of an 
adequate volume and quality of referrals to the Unit from the State Medicaid agency. 
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E.  The MOU incorporates by reference the CMS Performance Standard for Referrals of Suspected Fraud from 
a State Agency to a Medicaid Fraud Control Unit. 
11. A UNIT EXERCISES PROPER FISCAL CONTROL OVER UNIT RESOURCES.   
A.  The Unit promptly submits to OIG its preliminary budget estimates, proposed budget, and Federal financial 
expenditure reports.   
B.  The Unit maintains an equipment inventory that is updated regularly to reflect all property under the Units 
control. 
C.  The Unit maintains an effective time and attendance system and personnel activity records. 
D.  The Unit applies generally accepted accounting principles in its control of Unit funding. 
E.  The Unit employs a financial system in compliance with the standards for financial management systems 
contained in 45 CFR 92.20. 
12. A UNIT CONDUCTS TRAINING THAT AIDS IN THE MISSION OF THE UNIT.   
A.  The Unit maintains a training plan for each professional discipline that includes an annual minimum number 
of training hours and that is at least as stringent as required for professional certification.  
B.  The Unit ensures that professional staff comply with their training plans and maintain records of their staffs 
compliance. 
C.  Professional certifications are maintained for all staff, including those that fulfill continuing education 
requirements. 
D.  The Unit participates in MFCU-related training, including training offered by OIG and other MFCUs, as such 
training is available and as funding permits. 
E.  The Unit participates in cross-training with the fraud detection staff of the State Medicaid agency.  As part of 
such training, Unit staff provide training on the elements of successful fraud referrals and receive training on the 
role and responsibilities of the State Medicaid agency.  
 
 
 
 
 
   
North Carolina State Medicaid Fraud Control Unit:  2016 Onsite Review (OEI-07-16-00070)                                   17 
     
   
APPENDIX B 
Unit Referrals by Referral Source for FYs 2013 Through 2015 
   
FY 2013  FY 2014  FY 2015 
Abuse &  Abuse &  Abuse & 
Referral Source  Fraud  Fraud  Fraud  Total 
Neglect1  Neglect  Neglect 
State Medicaid agency  
98  1  31  4  50  4  188 
Program Integrity Unit 
State Medicaid agency - 
2  0  0  0  6  0  8 
other 
Managed care 
34  0  108  0   13  0  155 
organizations 
State survey and 
34  5  21  18  14  6  98 
certification agency 
Other State agencies  0  0  1  1  21  8  31 
Licensing board  1  0  0  0  0  0  1 
Law enforcement    18  7  16  2  7  0  50 
Office of Inspector 
4  4  3  4  1  2  18 
General   
Prosecutors  0  0  0  0  0  0  0 
Providers  0  0  0  0  0  2  2 
Provider associations  0  0  0  0  0  0  0 
Private health insurer  0  0  0  0  0  0  0 
Ombudsman  0  0  0  0  0  0  0 
Adult protective services     0  0  0  0  0  0  0 
Private citizens  120  2  137  12  137  14  422 
MFCU hotline2  21  0  17  0  N/A  N/A  38 
Anonymous3  N/A  N/A  N/A  N/A  0  0  0 
Other  5  1  26  3  21  0  56 
   Total  337  20  360  44  270  36  1,067 
 
   Annual Total  357  404  306 
Source:  OIG analysis of Unit Quarterly and Annual Statistical Reports, FYs 20132015, 2016. 
1 The category of abuse & neglect referrals includes patient funds referrals. 
2 The referral source MFCU hotline was not a category reported on the FY 2015 Annual Statistical Report. 
3 The referral source Anonymous was not a category reported on the FY 2013 and FY 2014 Quarterly Statistical Reports.  
   
North Carolina State Medicaid Fraud Control Unit:  2016 Onsite Review (OEI-07-16-00070)                                   18 
     
   
APPENDIX C 
Detailed Methodology 
We used data collected from the seven sources below to describe the 
caseload and assess the performance of the North Carolina Unit.   
Data Collection  
Review of Unit Documentation.  Prior to the onsite visit, we analyzed 
information from several sources regarding the Units investigation of 
Medicaid cases, including information about the number of referrals the 
Unit received, the number of investigations the Unit opened and closed, 
the outcomes of those investigations, and the Units case mix.  We also 
collected and analyzed information about the number of cases that the 
Unit referred for prosecution and the outcomes of those prosecutions.   
We gathered this information from several sources, including the Units 
annual and quarterly status reports; annual reports; recertification 
questionnaire; policy and procedures manuals; and MOU with the State 
Medicaid agency.  We requested any additional data or clarification from 
the Unit as necessary. 
Review of Unit Financial Documentation.  We reviewed the Units control 
over its fiscal resources to identify any internal control issues or other 
issues involving use of resources.  Prior to the onsite review, we reviewed 
the Units financial policies and procedures; its response to an internal 
control questionnaire; and documents (such as financial status reports) 
related to MFCU grants. 
We reviewed three purposive samples to assess the Units internal control 
of fiscal resources.  We limited the samples to the FYs 2013 through 2015 
review period.  The composition of the three samples and purpose of the 
reviews was as follows: 
1.  To assess the Units expenditures, we selected a purposive 
sample of 24 items from the Units 1,953 expenditure 
transactions.  We selected routine and nonroutine transactions 
representing a variety of budget categories and payment 
amounts.   
2.  To assess the Units travel expenditures, we selected a 
purposive sample of 24 items from the Units 1,061 travel 
transactions.  We selected eight travel related transactions for 
each FY.  We selected a variety of travel expenditure 
categories such as hotel stays, airfare, conference expenses, 
rental cars, and meals. 
3.  To assess employees time and effort, we selected a sample of 
three pay periods, one from each FY.  We then requested and 
North Carolina State Medicaid Fraud Control Unit:  2016 Onsite Review (OEI-07-16-00070)                                   19 
     
   
reviewed documentation (e.g., time card records) to support the 
time and effort of Unit staff during the selected pay periods.   
We also reviewed a purposive sample of the Units supply inventory, 
including vehicles.  Specifically, we selected and verified a purposive 
sample of 25 items from the current inventory list of 125 items located in 
the Raleigh MFCU Office.  To ensure variety in our inventory sample, we 
included larger items, such as computers and vehicles, as well as a mix of 
other items, such as printers and monitors. 
Interviews with Key Stakeholders.  In February 2016, we interviewed key 
stakeholders, including officials in the U.S. Attorneys Office (Criminal and 
Civil Divisions), Federal Bureau of Investigation, Internal Revenue Service, 
the State Attorney Generals Office, a District Attorneys Office and State 
agencies that interacted with the Unit (i.e., Division of Adult Services, 
Division of Health Service Regulation, Division of Medical Assistance, 
Long-Term Care Ombudsman, and State Bureau of Investigation).  
Additionally, we interviewed officials at two managed care health plans that 
interact with the Unit.  We also interviewed a supervisor from OIGs 
Region IV Office of Investigations who works regularly with the Unit.  We 
focused these interviews on the Units relationship and interaction with OIG 
and other Federal and State authorities, as well as opportunities for 
improvement.  We used the information collected from these interviews to 
develop subsequent interview questions for Unit management. 
Survey of Unit Staff.  In January 2016, we conducted an online survey of 
Unit staff.27  We requested responses from 45 staff members and received 
43 completed surveys, or 96 percent.  The survey focused on operations of 
the Unit, opportunities for improvement, and practices that contributed to 
the effectiveness and efficiency of Unit operations and/or performance.  
The survey also sought information about the Units compliance with 
applicable laws and regulations.   
Structured Interviews with Unit Management.  We conducted structured 
interviews with the Units director, deputy director, three attorney 
supervisors, and the special agent in charge.  We also conducted a group 
interview of the Units three financial investigations supervisors.  We 
asked these individuals to provide information related to (1) the Units 
operations, (2) Unit practices that contributed to the effectiveness and 
efficiency of Unit operations and/or performance, (3) opportunities for the 
Unit to improve its operations and/or performance, and (4) clarification 
regarding information obtained from other data sources. 
______________________________________________________ 
27 We did not survey the MFCU director, deputy director, or other supervisors whom we 
interviewed remotely or onsite. 
North Carolina State Medicaid Fraud Control Unit:  2016 Onsite Review (OEI-07-16-00070)                                   20 
     
   
Onsite Review of Case Files and Other Documentation.  We requested that 
the Unit provide us with a list of cases that were open at any point during 
FYs 2013 through 2015.  This list of 793 cases included, but was not 
limited to, the current status of the case; whether the case was criminal, 
civil, or global; and the date on which the case was opened.  Because 
global cases are civil false claims actions that typically involve multiple 
agencies, such as the U.S. Department of Justice and a group of State 
MFCUs, we exclude those cases from our review of a Units case files.  
From the list of 793 cases, we excluded 397 cases that were categorized as 
global. 
We then selected a simple random sample of 106 cases from the remaining 
396 cases.  From the initial sample of 106 case files, we selected a further 
simple random sample of 53 files for an OIG investigator to conduct an 
indepth review of selected issues, such as the timeliness of investigations 
and case development. 
One sampled case was not reviewed.  The Unit labeled this case as a civil 
fraud case; however, it was a global case.  After excluding the ineligible 
case, we reviewed 105 total case files, of which 100 were open long 
enough to require supervisory review, and 73 were for closed cases.   
Because we found one ineligible case in the 106 sampled cases, there 
could be other ineligible cases in the population of 396 cases.  Therefore, 
we estimated: (1) the population of eligible case files, (2) the 
subpopulation of eligible case files open long enough to require 
supervisory review, and (3) the subpopulation of eligible closed case files, 
as shown in the table below. 
Estimates of the Population of Eligible Case Files and Selected 
Subpopulations 
Sampled  Population 
95-percent 
Estimate Description  Case  of Eligible 
Confidence Interval 
Files  Case Files 
Total eligible case files  105  392  377395 
Eligible case files open 
long enough to require  100  373  353385 
supervisory review* 
Eligible closed case files  73  273  239302 
*Eligible case files open long enough to require supervisory review are criminal cases open 
at least 90 days and civil cases open at least 6 months. 
Source:  OIG analysis of North Carolina MFCU case files, 2016. 
Using the results of our review of the sampled case files, we reported three 
estimates for the subpopulation of eligible case files open long enough to 
require supervisory review, one estimate for all eligible case files, and one 
estimate for the subpopulation of eligible closed case files.  These five 
North Carolina State Medicaid Fraud Control Unit:  2016 Onsite Review (OEI-07-16-00070)                                   21 
     
   
point estimates and their 95-percent confidence intervals are in 
Appendix D. 
Onsite Review of Unit Operations.  During our March 2016 site visit, we 
observed the Units offices and meeting spaces; the security of data and 
case files; location of select equipment; and the general functioning of the 
Unit.  We also determined whether the Unit referred sentenced individuals 
to OIG for program exclusion and whether the Unit reported adverse 
actions to the NPDB.  
Data Analysis 
We analyzed data to identify any opportunities for improvement and any 
instances in which the Unit did not fully meet the performance standards 
or was not operating in accordance with laws, regulations, or policy 
transmittals.28   
   
______________________________________________________ 
28 All relevant regulations, statutes, and policy transmittals are available online at 
http://oig.hhs.gov/fraud/medicaid-fraud-control-units-mfcu. 
North Carolina State Medicaid Fraud Control Unit:  2016 Onsite Review (OEI-07-16-00070)                                   22 
     
   
APPENDIX D 
Point Estimates and 95-Percent Confidence Intervals Based on 
Reviews of Case Files 
95-Percent Confidence 
Sample  Point  Interval for Percentages 
Estimate Characteristic 
Size   Estimate 
Lower  Upper 
Limit  Limit 
Case files that did not contain documentation of 
100  8.0%  4.0%  14.2% 
any periodic supervisory reviews 
Case files that either did not contain all periodic 
supervisory reviews required for the duration of 
the case, or contained documentation that a  100  68.0%  59.2%  75.9% 
review took place but did not indicate that a 
supervisor was present at the review 
Case files that did not contain documentation of 
100  76.0%  67.6%  83.1% 
all periodic supervisory reviews 
Case files that contained documentation of 
105  99.0%  95.2%  99.7% 
supervisory approval for opening 
Case files that contained documentation of 
73  100.0%  95.6%  100.0% 
supervisory approval for closing 
Source:  OIG analysis of North Carolina MFCU case files, 2016. 
 
   
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APPENDIX E 
Unit Comments 
 
North Carolina State Medicaid Fraud Control Unit:  2016 Onsite Review (OEI-07-16-00070)                                   24 
     
   
 
 
 
   
North Carolina State Medicaid Fraud Control Unit:  2016 Onsite Review (OEI-07-16-00070)                                   25 
     
   
 
   
North Carolina State Medicaid Fraud Control Unit:  2016 Onsite Review (OEI-07-16-00070)                                   26 
     
   
 
ACKNOWLEDGEMENTS 
This report was prepared under the direction of Brian T. Whitley, Regional 
Inspector General for Evaluation and Inspections in the Kansas City 
regional office, and Jennifer King, Deputy Regional Inspector General; 
and in consultation with Richard Stern, Director of the Medicaid Fraud 
Policy and Oversight Division. 
Tricia Fields, of the Kansas City regional office, served as the project 
leader for this study.  Other Office of Evaluation and Inspections staff who 
conducted the study include Cody Johnson and Dana Squires.  Other 
Medicaid Fraud Policy and Oversight Division staff who participated in 
the review include Jordan Clementi.  Office of Investigations staff also 
participated in the review.  Central office staff who contributed include 
Kevin Farber, Lonie Kim, and Joanne Legomsky.   
 
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Office of Inspector General
http://oig.hhs.gov  
 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95452, as  
amended, is  to protect the integrity of the Department of  Health and Human Services  
(HHS) programs, as  well  as the health  and welfare of individuals served by those programs.  
This statutory mission is carried  out through a nationwide network of audits, investigations,  
and inspections conducted by the following operating components: 
Office of Audit Services 
The Office  of  Audit Services  (OAS) provides auditing services  for HHS, either by  conducting  
audits  with its own audit resources or by  overseeing  audit work done by others.  Audits  
examine the performance of HHS programs and/or its grantees and contractors in carrying  
out their respective responsibilities and are intended  to provide independent assessments of 
HHS programs and operations.  These assessments help reduce waste, abuse, and  
mismanagement and promote economy and efficiency  throughout  HHS. 
Office of Evaluation and Inspections 
The Office  of  Evaluation and Inspections (OEI)  conducts national evaluations to  provide 
HHS, Congress, and the public with timely, useful, and reliable information on significant 
issues.  These evaluations focus on preventing fraud,  waste, or abuse  and promoting  
economy, efficiency, and effectiveness of departmental programs.  To promote impact, OEI 
reports also present practical recommendations for improving program operations.  
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations  
of fraud and misconduct  related to HHS programs, operations, and individuals.  With  
investigators working in all 50 States and the District of Columbia, OI  utilizes its resources 
by actively  coordinating with the Department  of Justice  and other Federal, State, and local 
law enforcement authorities.  The investigative efforts of OI often lead to  criminal 
convictions, administrative sanctions,  and/or  civil monetary  penalties.  
Office of Counsel to the Inspector General 
The Office of Counsel to the  Inspector  General (OCIG) provides general legal services to 
OIG, rendering  advice and opinions on HHS programs and operations and  providing all  
legal support for OIGs  internal operations.  OCIG represents  OIG in all civil and 
administrative fraud and  abuse cases involving HHS programs, including False Claims Act, 
program exclusion, and civil monetary penalty cases.  In  connection with these cases, OCIG 
also negotiates and monitors corporate integrity agreements.  OCIG renders advisory 
opinions, issues compliance program  guidance, publishes fraud alerts, and provides other  
guidance  to  the health care industry concerning the anti-kickback statute and other  OIG  
enforcement authorities.