U.S. Department of Health and Human Services 
Office of Inspector General 
 
 
New Jersey 
Medicaid Fraud 
Control Unit:  
2017 Onsite 
Review 
 
OEI-06-17-00520 
September 2018 
Suzanne Murrin 
  Deputy Inspector General 
oig.hhs.gov  for Evaluation and Inspections  Report in Brief  U.S. Department of Health and Human Services 
September 2018 
Office  of Inspector General 
OEI-06-17-00520 
 
 
New Jersey Medicaid Fraud Control Unit: 2017 Onsite Review 
What OIG Found 
During fiscal years (FYs) 20152017, we found that the New Jersey Medicaid 
Fraud Control Unit (the Unit) did not comply with all applicable legal  Unit Case Outcomes 
requirements or adhere to all performance standards.  Specifically, we identified 
FYs 20152017  
six areas in which the Unit should improve its adherence to program 
requirements:     56 indictments 
  56 convictions 
1.  The Unit Director lacked supervisory authority over Unit detectives and 
  42 global civil 
independent decision-making authority over day-to-day Unit 
settlements and 
operations. 
judgments 
2.  The Unit pursued few nonglobal civil fraud cases, and the    $58.6 million in 
memorandum of understanding (MOU) with the Office of the State  recoveries 
Comptrollers Medicaid Fraud Division (MFD) lacked guidance for 
handling such cases.  Unit Snapshot 
The Unit is part of the Office 
3.  Although the Unit and the MFD communicated regularly, fraud 
of the Insurance Fraud 
referrals from the MFD were low and had decreased in recent years. 
Prosecutor in the New 
4.  Low staffing levels affected the Units ability to investigate cases and  Jersey Office of Attorney 
accept referrals.  General. 
5.  The Unit did not always follow its internal control procedures for time  The Unit has a total of 
and attendance.   29 employees, with 
17 people in its Trenton 
6.  Thirty-four percent of case files lacked documentation of supervisory 
headquarters and 12 people 
oversight. 
in its Whippany satellite 
What OIG Recommends and How the Unit Responded  office. 
We recommend that the Unit (1) change the supervisory structure to provide  
the Unit Director with supervision of all Unit staff, oversight of all its caseload,  Why OIG Did This 
and independence to make management decisions; (2) develop and implement  Review 
a plan to pursue more nonglobal fraud cases as civil matters, and revise the  The Office of Inspector 
MOU with MFD to include guidance for handling such cases; (3) take additional  General (OIG) administers 
steps to ensure that the Unit receives an adequate number and quality of fraud  the MFCU grant awards, 
referrals from the MFD; (4) assess the adequacy of existing staffing levels and, if  annually recertifies each 
appropriate, consider a plan to expand the size of the Unit; (5) follow its internal  Unit, and oversees the Units 
controls for time and attendance; and (6) ensure that all case files include  performance in accordance 
documentation of supervisory oversight.  The Unit concurred with all six  with the requirements of the 
recommendations.   grant.  As part of this 
oversight, OIG conducts 
periodic onsite reviews of 
Units and prepares public 
reports. 
Full report can be found at oig.hhs.gov/oei/reports/oei-06-17-00520.asp   
TABLE OF CONTENTS 
BACKGROUND  1 
CASE OUTCOMES  5 
FINDINGS  6 
The Unit Director lacked supervisory authority over Unit detectives and independent  6 
decision-making authority over day-to-day Unit operations 
The Unit pursued few nonglobal civil fraud cases, and the MOU with the Office of the State  8 
Comptrollers Medicaid Fraud Division (MFD) lacked guidance for handling such cases  
Although the Unit and the MFD communicated regularly, fraud referrals from the MFD were  9 
low and had decreased in recent years 
Low staffing levels affected the Units ability to investigate cases and accept referrals   10 
The Unit did not always follow its internal control procedures for time and attendance  11 
Thirty-four percent of case files lacked documentation of supervisory oversight   11 
CONCLUSION AND RECOMMENDATIONS  13 
Change the supervisory structure to provide the Unit Director with supervision of all Unit staff,  13 
oversight of all its caseload, and independence to make management decisions 
Develop and implement a plan to pursue more nonglobal fraud cases as civil matters, and  14 
revise the MOU with the MFD to include guidance for handling such cases 
Take additional steps to ensure that the Unit receives an adequate number and quality of  14 
fraud referrals from the MFD 
Assess the adequacy of existing staffing levels and, if appropriate, consider a plan to expand  14 
the size of the Unit 
Follow its internal controls for time and attendance  14 
Ensure that all case files include documentation of supervisory oversight   14 
UNIT COMMENTS AND OIG RESPONSE  15 
APPENDICES  17 
A.  Performance Assessment  17 
B.  Unit Referrals by Source for Fiscal Years 20152017  22 
C.  Detailed Methodology  23 
D.  Point Estimates and 95-Percent Confidence Intervals of Case File Reviews   26 
E.  Unit Comments  28 
ACKNOWLEDGMENTS  33 
ENDNOTES  34 
   
BACKGROUND 
Objectives 
1.  To examine a previously identified area of concern related to the 
supervisory structure of the New Jersey Medicaid Fraud Control 
Units (MFCU or Unit).   
2.  To examine the performance and operations of the Unit. 
Medicaid Fraud  The function of MFCUs is to investigate Medicaid provider fraud and patient 
Control Units  abuse or neglect, and to prosecute those cases under State law or refer 
them to other prosecuting offices.1  Under the Social Security Act (SSA), 
a MFCU is a single, identifiable entity of State government that must be 
separate and distinct from the State Medicaid agency and employ one or 
more investigators, attorneys, and auditors.2  Each State must operate 
a MFCU or receive a waiver.3  Currently, 49 States and the District of 
Columbia operate MFCUs.4 
Each Unit receives a Federal grant award equivalent to 75 percent of total 
allowable expenditures.5  In fiscal year (FY) 2017, combined Federal and 
State expenditures for the Units totaled approximately $276 million, with a 
Federal share of $207 million.6   
OIG Grant  The Office of Inspector General (OIG) administers the grant award to each 
Unit and provides oversight of Units.7, 8  As part of its oversight, OIG reviews 
Administration and 
and recertifies each Unit annually.  The recertification review consists of 
Oversight of the 
examining the following, which are collectively referred to as recertification 
MFCUs  data: the Units annual report; questionnaire responses from the Units 
director and stakeholders; and annual case statistics.  Through the 
recertification review, OIG assesses a Units performance, as measured by: 
its adherence to published performance standards;9 its compliance with 
applicable laws, regulations, and OIG policy transmittals;10 and its case 
outcomes.  See Appendix A for the 12 performance standards and our 
assessment of the New Jersey MFCUs adherence to those standards.   
OIG further assesses a Units performance by periodically conducting onsite 
reviews of each Unit that may identify findings and make recommendations 
for improvement.  During the onsite review, OIG may also make 
observations of Unit operations and practices, including identifying 
beneficial practices.  In addition, OIG provides training and technical 
assistance to Units, as appropriate, both during onsite reviews and on 
an ongoing basis. 
 
 
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OEI-06-17-00520   
 
As part of its oversight responsibilities, OIG may propose amendments to 
the regulation governing the receipt of Federal funding by the MFCUs.  In 
September 2016, OIG issued a notice of proposed rulemaking to revise the 
set of regulations established at the inception of the program and to better 
align the rules with policy changes and practices that have developed over 
time.11  In the proposed revisions, OIG proposed to clarifiy the 
requirementconsistent with the prevailing practice among the MFCUs
for each MFCU to operate as a single, identifiable entity in State 
government, including a requirement that each Unit be a single 
organization reporting to a single Unit director; operate under its own 
budget that is separate from that of its parent division or agency; and have 
its headquarters office and any field offices each in its own contiguous 
space.  Additionally, the proposed revisions would formalize the expectation 
that all Units employ a director to superviseeither directly or indirectly
all Unit staff.12   
New Jersey MFCU  The New Jersey MFCU is part of the New Jersey Attorney Generals Office.  
The MFCU Director reports to the Insurance Fraud Prosecutor, who reports 
directly to the Attorney General.  The Insurance Fraud Prosecutor, 
appointed by the Governor, is also responsible for investigating and 
prosecuting insurance fraud in the State, such as fraud related to 
automobile accidents, disability benefits, and workers compensation.  The 
Unit has the authority to prosecute Medicaid fraud and patient abuse and 
neglect cases.   
The Unit is headquartered in the State capital of Trenton, with this 
headquarters office covering the southern part of the State, and has 
a satellite office in Whippany covering northern New Jersey.  In March 2018, 
the Unit had 29 employees: 16 detectives, designated as lieutenants 
(managers), sergeants (senior investigators), and detectives (junior 
investigators); 7 attorneys; 2 analysts/auditors; and 4 support staff.  During 
our review period of FYs 20152017, the Unit expended approximately 
$12 million (with a State share of approximately $3 million). 
Referrals.  The Unit receives fraud referrals from private citizens; the Office 
of the State Comptrollers Medicaid Fraud Division (MFD), which serves as 
the program integrity unit for the State Medicaid agency; managed care 
organizations (MCOs); and other sources.  The Unit receives most of its 
patient abuse and neglect referrals from the States Long-Term Care 
Ombudsman program.  When the Unit receives a referral, the Unit Director 
and a lieutenant together determine whether to open an investigation or to 
refer it to another agency for investigation.  See Appendix B for numbers of 
Unit referrals by source for FYs 20152017. 
Investigations and Prosecutions.  Once the Unit opens an investigation, the 
Unit Director assigns a trial team to the case.  A trial team consists of 
an attorney, at least one detective, an auditor, and/or support staff, 
New Jersey Medicaid Fraud Control Unit: 2017 Onsite Review  2 
OEI-06-17-00520   
if necessary.  The trial team completes a joint investigative plan, approved 
by the Unit Director or Assistant Unit Director, and outlines and assigns the 
key investigative tasks to the team members.  The Unit stores all case 
recordsincluding opening documentation, interviews, summaries, case file 
reviews, and closing requestsin the Units case management system.  If 
the Unit Director decides on the basis of the full investigation to prosecute a 
case, the Unit Director must obtain approval from the New Jersey Insurance 
Fraud Prosecutor. 
New Jersey  The New Jersey Department of Human Services Division of Medical 
Assistance and Health Services (DMAHS) administers the State Medicaid 
Medicaid Program 
program, known as New Jersey Family Care.  In FY 2017, the New Jersey 
Medicaid program enrolled approximately 1.8 million beneficiaries and total 
program expenditures were approximately $15.6 billion.13  In the same year, 
nearly all beneficiaries (99 percent) received their primary care through 
an MCO, a 6-percent increase from FY 2015.   
Through a memorandum of understanding (MOU), DMAHS delegates to 
the MFD all program integrity activities, such as detection and prevention of 
Medicaid fraud and abuse and recovery of improperly expended Medicaid 
funds.  The MFD has dedicated staff who generate fraud referrals, based on 
analysis of Medicaid data, and conduct preliminary investigations of 
referrals received from any source.  If these preliminary investigations 
provide reason to believe that an incident of fraud has occurred, the MFD 
refers the case to the MFCU under the terms of the MOU.  If an MCO wants 
to initiate a preliminary investigation of a provider, it must first notify 
the MFD to ensure that the provider is not already under investigation by 
the MFD, another MCO, or the MFCU.  If the MFCU has an ongoing 
investigation, the MCO and the MFD refrain from investigating the provider.  
MCOs may send referrals directly to the Unit and provide a copy to 
the MFD. 
Prior OIG Reports  In 2013, OIG issued a report following its onsite review of the Unit.  
OIG found that (1) the Units recoveries increased but felony charges and 
convictions decreased from FYs 2010 through 2012; (2) the Unit investigated 
fewer cases of patient abuse and neglect in FY 2012 than in FY 2010; 
(3) most case files included opening and closing documents, but half lacked 
documentation of supervisory review; (4) the Unit did not refer 94 percent 
of convictions to OIG appropriately; (5) the Unit did not meet the 
requirements of its training plan in FY 2012; and (6) the Unit Director did not 
supervise the majority of Unit staff and did not oversee part of the Units 
caseload.14   
OIG made five recommendations to the Unit in 2013, of which the Unit 
implemented the following four: (1) the Unit should take steps to ensure that 
its case mix includes more cases of patient abuse and neglect; (2) the Unit 
should ensure that case files contain supervisory reviews; (3) the Unit should 
refer individuals to OIG for program exclusion within the required 
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OEI-06-17-00520   
timeframe; and (4) the Unit should ensure that staff receive at least the 
minimum training required in the Units training plan.  The Unit has not 
implemented one remaining OIG recommendation, for the Unit should 
change its supervisory structure to provide the Unit Director with 
supervision of all Unit staff and oversight of all its caseload.  In 2016, the 
Unit reported plans for adopting a new structure to address this 
recommendation, but the new structure was not put into place. 
Methodology  We conducted our onsite review in November 2017.  We focused our review 
primarily on the unimplemented recommendation from the 2013 OIG 
report.  We also analyzed the Units operations and adherence to the 
12 performance standards and applicable Federal laws, regulations, and 
policy transmittals.  We based our review on an analysis of data from eight 
sources: (1) Unit documentation; (2) financial documentation; (3) structured 
interviews with key stakeholders; (4) survey of Unit staff; (5) structured 
interviews with Unit managers and selected staff; (6) review of a simple 
random sample of case files that were open at some point during  
FYs 20152017; (7) review of all convictions submitted to OIG for program 
exclusion and all adverse actions submitted to the National Practitioner Data 
Bank (NPDB) during the review period; and (8) observation of Unit 
operations.  See Appendix C for a detailed methodology.  In examining the 
Units operations and performance, we applied the published performance 
standards listed in Appendix A, but we did not assess every performance 
indicator for every standard. 
Standards  This study was conducted in accordance with the Quality Standards for 
Inspection and Evaluation issued by the Council of the Inspectors General on 
Integrity and Efficiency.  These inspections differ from other OIG evaluations 
in that they support OIGs direct administration of the MFCU grant program, 
but they are subject to the same internal quality controls as other OIG 
evaluations, including peer review. 
 
 
   
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CASE OUTCOMES 
  The Unit reported 56 indictments, 56 convictions, and 42 global civil 
settlements and judgments for FYs 20152017.  
Of the 56 convictions, 42 involved provider fraud and 14 involved patient 
abuse or neglect.   
  
 
The Unit reported $58.6 million in global civil and criminal recoveries.  
The Unit reported total recoveries of $58.6 million from FYs 20152017, 
with global civil recoveries representing $52.8 million.  Global civil cases 
are False Claims Act cases that are litigated in Federal court by the 
U.S. Department of Justice and typically involve a group of MFCUs.  
The National Association of Medicaid Fraud Control Units facilitates the 
settlement of global cases on behalf of the States.  See Exhibit 1 for the 
source of the recoveries.  
 
Exhibit 1: The Unit reported combined civil and criminal recoveries 
of $58.6 million, FYs 20152017 
 
 
Source: OIG analysis of Unit statistical data from FYs 20152017.   
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FINDINGS 
We reviewed the previously identified area of concern from the 2013 onsite 
inspection related to the Units supervisory structure, and we assessed the 
Units adherence to the MFCU performance standards.  From this review, we 
found that the Unit was not in compliance with all applicable laws, 
regulations, policy transmittals, or MFCU performance standards.  
Specifically, we identified six areas in which the Unit should improve and for 
which we are issuing recommendations.  See Appendix A for our full 
assessment of the Units adherence with all 12 MFCU performance 
standards, including observations of Unit operations and practices. 
The Unit Director  Under the Units reporting structure at the time of our review, the 
Unit Director lacked supervision over the Unit detectives 
lacked supervisory 
As with our previous onsite review in 2013, our current review found that 
authority over Unit 
Unit detectivesincluding the lieutenants, sergeants, and detectivesdid 
detectives and  not report to the Unit Director or to a senior detective under the Unit 
independent  Directors supervision.i  Federal law requires that Units employ personnel
including auditors, attorneys, and detectivesand be organized in 
decision-making 
a manner to promote the effective and efficient conduct of the Units 
authority over day-
activities.15  Units must also employ a senior detective to supervise and 
to-day Unit  direct the Units investigative activities.16  The New Jersey Unit is the only 
operations  MFCU that does not employ its own senior detective to supervise and direct 
the activities of the Unit.   Under the New Jersey Units supervisory structure, 
more than half of Unit staff did not report to the Unit Director, as Unit 
detectives made up 55 percent of all Unit employees (16 of 29 Unit 
employees). 
Although detectives were employed as part of the Unit, the chain of 
command did not include the MFCU Director; instead, the detectives 
reported to two lieutenants (assigned to the Whippany and Trenton 
regions).  These two lieutenants reported to the Deputy Chief of Detectives, 
who was not a part of the Unit.  The Deputy Chief of Detectives reported to 
the Chief of Detectives, who reported directly to the Attorney General.  
See Exhibit 2 for an organizational chart of the Units reporting structure. 
 
 
 
 
 
i Detectives refer to both Unit investigators generally (i.e., lieutenants, sergeants, and 
detectives) and to the junior detectives (detectives). 
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Exhibit 2: Organization and reporting structure of the New Jersey 
MFCU (November 2017)  
 
Source: OIG analysis of New Jersey MFCU data and interview responses, November 2017. 
Note: The Unit provided OIG with an organizational chart that showed the Unit Director as supervising all 
Unit staff, including Unit detectives.  However, our review found that the chart was inaccurate. 
*MFCU employees covered under the grant administered by OIG. 
Although the Unit Director reported working collaboratively with Unit 
detectives, we foundand the Director confirmedthat the lack of his 
supervision prevented him from managing the Unit effectively and 
overseeing its investigative activities.  The Director also said that the current 
structure could result in investigative delays and potentially affect morale.  
The Director stated that the reporting structure could be particularly 
problematic if his investigative strategy or priorities differed from those of 
the detectives or the Insurance Fraud Prosecutor, in which case the work of 
the detectives could be in conflict with the Director or the Units strategy.  
It appeared that to avoid such conflicts, the Unit Director worked 
assiduously to mitigate the effects of the reporting structure.  
Moreover, under the current supervisory structure, the Unit Director lacked 
authority to make staffing decisions (e.g., hiring, promoting), assess 
performance, or issue disciplinary actions regarding Unit detectives.  With 
New Jersey Medicaid Fraud Control Unit: 2017 Onsite Review  7 
OEI-06-17-00520   
regard to hiring decisions, the Unit Director reported that while he typically 
reviewed the resumes of applicants and participated in initial interviews with 
candidates, he had no role in subsequent interviews or in the final selection 
process.  Instead, the Deputy Chief of Detectives and the Acting Insurance 
Fraud Prosecutor ultimately made the hiring decisions for all detectives.  The 
Unit Director reported that the lack of involvement in the hiring decisions 
prevented the Unit from ensuring that selected MFCU candidates 
background, training, and interest in Medicaid fraud enforcement matched 
the Units needs.   
The Unit Director lacked independent decision-making authority 
over day-to-day Unit operations, including grant decisions 
We found that the Acting Insurance Fraud Prosecutor at the time, rather 
than Unit management, made some routine management decisions for the 
Unit.  For example, Unit management reported that the Acting Insurance 
Fraud Prosecutor made decisionswithout the Unit managements 
approval or knowledgeabout how to use the grant.  The Unit Director and 
the Insurance Fraud Prosecutor have concurrent authority over Unit 
operations and can make independent decisions for the Unit.  The Unit 
Director explained that limited information-sharing between the previous 
Acting Insurance Fraud Prosecutor and the Unit regarding the grant had 
prevented the Unit Director from managing Unit administrative activities 
and ensuring full compliance with Federal requirements. 
The Unit pursued  Less than one percent of the Units cases (9 of 1,029) during  
FYs 20152017 were nonglobal civil fraud cases.  Nonglobal cases involve 
few nonglobal civil 
primarily State rather than Federal litigation; are pursued separately by Units 
fraud cases, and the 
or with other law enforcement partners; and are not coordinated by the 
MOU with the MFD  National Association of Medicaid Fraud Control Units.  At the time of our 
lacked guidance for  review, all of the nine cases were still in the investigative stage.  
Performance Standard 6(e) states that Units should seek to maintain, 
handling such cases  
consistent with their legal authority, a balance of criminal and civil fraud 
cases.  New Jersey enacted a False Claims Act in 2008, providing a basis to 
pursue its own nonglobal cases.17  OIG State Fraud Policy Transmittal 99-01 
addresses the ability of MFCUs to pursue State-only, or nonglobal, cases, 
and states that if a Unit decides to not pursue a provider fraud case 
criminally, the Unit should investigate and/or analyze the case for its civil 
potential.18  However, we found that the Unit did not analyze cases that 
were not pursued as criminal matters for civil potential or refer them to 
another State agency.   
During FY 2015, the Unit lost a significant number of staff within its False 
Claims division, which was established in 2008 to pursue nonglobal civil 
fraud cases.  The staffing shortages ultimately led to the Units closing of the 
division, consequently limiting the Units ability to pursue nonglobal civil 
fraud cases.  Most of the staff who left the Unit went to work for the MFD, 
including the lead attorney who was responsible for managing the day-to-
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OEI-06-17-00520   
day operations of the False Claims division.  The Unit Director explained that 
the staff departure left few skilled detectives and attorneys with knowledge 
and expertise in investigating and litigating civil fraud cases.  At the time of 
our review, the Unit had not re-established the False Claims division, but it 
had one full-time attorney (with a newly hired attorney trainee) and one 
detective working the nine nonglobal civil fraud cases.  Unit management 
noted they could give more attention to nonglobal civil fraud cases if they 
were able to hire more attorneys with experience in working civil cases.   
We also found that the Units MOU with the MFD did not contain guidance 
regarding nonglobal civil fraud cases, which may further affect the Units 
ability to pursue such cases.  Specifically, the MOU lacked information about 
the Units and the MFDs respective authorities and responsibilities in 
processing and investigating these types of cases.   
Although the Unit  The Unit Director and MFD officials reported communicating on a regular 
basis regarding potential fraud referrals, yet the Unit only received 6 percent 
and the MFD 
of its fraud referrals (34 of 601) from the MFD during FYs 20152017.  Both 
communicated 
agencies agreed that given the size of the States Medicaid program, 
regularly, fraud  34 fraud referrals was a low number the 3-year period.  The number of 
referrals was particularly low in FYs 2016 and 2017, with only four referrals in 
referrals from the 
each year.  Performance Standard 4 states that Units should take steps to 
MFD were low and 
maintain an adequate volume and quality of referrals from the State 
had decreased in  Medicaid agency and other sources.  We found that the total number of 
recent years  referrals from the MFD and all other sources combined decreased by 
55 percent over a 6-year period, from 324 referrals in FY 2012 to 
145 referrals in FY 2017.  See Exhibit 3 for the total number of fraud referrals 
from the MFD and all sources during FYs 20122017, and Appendix B for the 
number of referrals by source for FYs 20152017.   
Exhibit 3: Fraud referrals from the MFD were low from FY 2015 
through FY 2017 and fraud referrals from all sources decreased from 
FY 2012 through FY 2017 
350 324
s
ral 300
r
e
Ref 250 223 207
aud  200 178 162 145 Fraud referrals 
Fr 150 from allother 
of  sources
r  100
e
mb 50 23 23 21 26 4 4 Fraud 
u referrals from 
N 0 MFD
2012 2013 2014 2015 2016 2017
Fiscal Years
 
Source: OIG analysis of Unit Quarterly and Annual Statistical Reports, FYs 20122017. 
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Although the Unit received fraud referrals from a number of sources, the 
MFD should be a significant source of quality referrals for the Unit.  The 
MFD has dedicated staff responsible for monitoring the Medicaid program 
for instances of fraud, waste, and abuse, and it serves the primary role on 
behalf of the State Medicaid agency for referring suspected provider fraud 
to the MFCU.  However, MFD officials explained that the New Jersey Medical 
Assistance and Health Services Act authorized the MFD to circumvent the 
MOU (which requires the MFD to refer cases of suspected fraud to the 
MFCU) and instead resolve cases administratively.19  This authority allows the 
MFD to impose administrative penaltiesincluding interest and up to triple 
damages on a per-claim basisfor engaging in fraudulent activity.  This law 
provides the MFD with similar authority to what the False Claims Act 
provides the Unit for assessing penalties.     
The Unit Director noted that resolving a case administratively is faster than 
the MFCUs conducting an investigation and pursuing criminal prosecution 
and/or civil action.  Further, the Unit Director explained that the MFD has 
significantly more resources than the Unit.  In addition, the MFDs 
administrative process allows the MFD to collect overpayment recoveries, as 
well as damages and administrative penalties, for the Medicaid program.  
However, this process prevents the Unit from determining whether cases 
have potential for criminal prosecution and/or civil action and whether 
providers should be excluded from the Medicaid program.20  
Low staffing levels  At the time of our review, the Unit employed 29 staff, which was less than its 
OIG-approved staffing level of 36 employees.  According to Performance 
affected the Units 
Standard 2, a Unit should employ the number of staff included in its 
ability to investigate 
OIG-approved budget estimate and commensurate with the States 
cases and accept  Medicaid program expenditures.   
referrals  
Despite increasing State Medicaid expenditures, the Units number of 
employees decreased.  New Jersey Medicaid expenditures increased from 
$10.6 billion in FY 2010 to $15.6 billion in FY 2017.  During the same period, 
the Units staff decreased from 33 employees to 29 employees.  Compared 
to MFCUs in States with Medicaid programs of similar size (as measured by 
expenditures), the New Jersey Unit employed the fewest staff in FY 2017.  
For example, in FY 2017 North Carolinas Medicaid program expenditures 
totaled approximately $14 billion and the North Carolina Unit employed 
49 staff. 
Unit management expressed the need for additional staff, even beyond the 
approved staffing levels, but reported that it was difficult to reach full 
staffing levels because of a lengthy hiring process and retention challenges.  
The entire process from hiringled by the Division of Criminal Justice within 
the Office of the Attorney Generalto the completion of law enforcement 
training (required for new detectives before joining the Unit) can take up to 
10 months.  Once new staff join the Unit, it is not uncommon for detectives 
and attorneys to leave the Unit after only a few months of employment.  
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The Unit Director reflected that the Unit might be able to improve staff 
hiring and retention if Unit management had a larger role in the hiring 
process, given that the Unit managers are most familiar with the Units work 
and are attuned to the skill set and other characteristics important for staff 
success. 
The Unit Director and staff reported that the Units limited staff size reduces 
the effectiveness of investigations and prosecutions, particularly for civil 
fraud cases.  The Unit Director explained that some cases remain stagnant 
because of the insufficient number of detectives on the trial teams, and that 
this sometimes results in the Unit being forced to close cases prematurely 
and refer them to other agencies, if necessary.  Staffing limitations also 
affect the Units ability to work complex cases and develop expertise in 
areas involving nonglobal civil cases.  Further, the Unit Director expressed 
concerns about heavy workloads for Unit staff, particularly detectives, and 
the Units inability to accept more referrals because of the insufficient 
number of staff.   
The Unit did not  We found no significant deficiencies in the Units fiscal control of its 
resources.  The Unit submitted required reports; maintained updated 
always follow its 
equipment inventory; used appropriate accounting principles to account for 
internal control 
funding and expenditures; and employed a financial system that enabled 
procedures for time  appropriate control of resources.  However, we identified an area in which 
the Units internal controls should be strengthened.  Specifically, we found 
and attendance  
that supervisors did not always follow the internal control procedures for 
approving time and attendance records for Unit employees.ii  Of the 
46 timesheets that we reviewed, 5 timesheets did not contain supervisory 
approval, which in OIGs judgment represents an internal-control concern 
regarding the Units ability to follow procedures.  Performance Standard 
11(c) states that Units should maintain an effective time and attendance 
system and personnel activity records.  In addition, Federal cost principles 
require the charges to Federal awards for salaries and wages to be based on 
records that accurately reflect the work performed.21  Unit policy states that 
supervisors are responsible for carefully reviewing employees time-record 
forms for accuracy and completeness, and for approving them in a timely 
manner; however, we found that the Unit did not always follow its 
procedures.22 
 
 
 
 
 
 
 
ii The MFCU Director approves timecards for the attorneys and support staff, and the 
lieutenants approve timecards for the sergeants. 
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Thirty-four percent  Thirty-four percent of case files lacked documentation of supervisory 
oversight for opening cases, closing cases, and/or periodic supervisory 
of case files lacked 
reviews.iii  Eight percent of these case files lacked documentation of more 
documentation of 
than one type of supervisory oversight.  See Appendix D for confidence 
supervisory  intervals for the point estimates derived from our case file review.  
oversight  Twenty percent of case files lacked documentation of supervisory 
approval to open cases, and 10 percent of closed cases lacked 
documentation of supervisory approval to close cases 
Performance Standard 5(b) states that Unit supervisors should approve the 
opening and closing of all cases.  Unit policy further requires the Unit 
Director to approve the opening and closing of cases.  However, we found 
that 20 percent of all case files lacked documentation of the Unit Directors 
approval to open the case.  Supervisory approval to open cases indicates 
that Unit supervisors are monitoring the intake of cases, thereby facilitating 
progress in the investigation.   
An estimated 84 percent of cases were closed at the time of our review.    
Of these closed cases, 10 percent lacked documentation of supervisory 
approval to close the case and 5 percent also lacked supervisory approval to 
open the case.  Supervisory approval to close cases helps ensure timely 
completion and resolution of cases.  
At least 16 percent of case files that had been open longer than  
90 days lacked documentation of periodic supervisory reviews 
Performance Standards 5(b) and 7(a) state that supervisors should 
periodically review the progress of cases to ensure timely completion of 
each stage of the investigation and prosecution, which is also consistent 
with Unit policies and procedures.  Unit policy further requires a supervisory 
review of case files every 90 days, at a minimum.  Unit supervisors should 
note in the case files when conducting such reviews.  At the time of our 
review, 44 percent of the Units cases had been open longer than 90 days.  
Of these open cases, at least 16 percent lacked documentation of periodic 
supervisory review, including initials from a supervisor and/or notes in the 
case files administrative-review forms, such as the joint investigative plan.  
Although this was not reflected in all case files, Unit management and staff 
reported that the Unit Director and the senior detectives reviewed cases at 
least monthly.  
 
   
 
iii The percentages apply to different categories of case files and therefore do not add up to 
the aggregate of 34 percent. 
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CONCLUSION AND RECOMMENDATIONS 
For FYs 20152017, the Unit reported 56 indictments; 56 criminal convictions; 
42 global civil settlements and judgments; and combined criminal and civil 
recoveries of $58.6 million.   
From the data we reviewed, we found that the Unit did not comply with all 
applicable legal requirements or adhere to all performance standards.  
In 2013, OIG issued a recommendation regarding the Units supervisory 
structure, which at the time of this review was still unimplemented.  This 
structure affected the Unit Directors ability to effectively manage the Unit 
and oversee its operations.  Limitations to the Unit Directors supervisory 
role contributed to challenges in hiring and retaining staff, as the Unit 
Director had no role in selecting candidates to ensure that they would be 
a good fit.   
The Unit received few fraud referrals from the MFD during our review 
period, and fraud referrals from all referral sources combined had decreased 
significantly in the last few years.  Although the MFD would be expected to 
be the primary source of fraud referrals for the Unit, as governed by Federal 
regulations and the MOU, State law allows the MFD to circumvent the MOU 
and resolve cases administratively rather than referring them to the Unit.   
Further, the Units limited staff size created challenges for the Unit to accept 
all referrals and effectively investigate cases, particularly nonglobal civil 
fraud cases.  After the False Claims division closed, the Unit pursued few 
nonglobal civil fraud cases, which may have been further affected by the 
lack of guidance in the Units MOU with the MFD for handling such cases.   
We also found that the Unit did not consistently document supervisory 
oversight of case files or employee time and attendance records, all of 
which are important to effective management of Unit operations.   
To address these findings, we recommend that the New Jersey Unit: 
Change the supervisory structure to provide the Unit Director 
with supervision of all Unit staff, oversight of all its caseload, 
and independence to make management decisions 
To ensure that the Unit is organized in such a manner that promotes 
effective and efficient conduct of the Unit activities, the Unit should 
reorganize its supervisory reporting structure.  Changes should include 
making the Unit Director the primary person responsible for hiring, 
terminating, disciplining, and evaluating the performance of all Unit staff 
and overseeing the Units day-to-day activities.  The supervisory structure 
should also provide the Unit Director with independence to make routine 
management decisions that affect Unit operations, including grant 
decisions.  
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Develop and implement a plan to pursue more nonglobal fraud 
cases as civil matters, and revise the MOU with the MFD to 
include guidance for handling such cases  
The Unit should develop and implement a plan to pursue appropriate fraud 
cases as civil matters.  As part of the plan, the Unit could hire additional 
staff, provide training to staff, and/or further develop litigation strategies 
to pursue nonglobal fraud cases as civil matters.  The Unit should also revise 
the MOU with the MFD to include guidance for nonglobal civil fraud cases.  
The MOU could specify the roles and responsibilities for the Unit and the 
MFD in sharing civil fraud referrals and handling civil fraud investigations.    
Take additional steps to ensure that the Unit receives 
an adequate number and quality of fraud referrals from 
the MFD 
Given that the Unit received few fraud referrals from the MFD during our 
3-year review period, the Unit should take additional steps to ensure that it 
receives an adequate number of referrals from the MFD.  The Unit could 
provide education to the MFD about the information needed in a quality 
referral of fraud and the importance of referring any suspected fraud to the 
MFCU, and could clarify the Units mission to investigate both criminal and 
civil provider fraud.    
Assess the adequacy of existing staffing levels and, 
if appropriate, consider a plan to expand the size of the Unit  
The Unit should assess whether staffing levels are sufficient for investigating 
cases of criminal and civil fraud and patient abuse and neglect in a timely 
manner and commensurate with the States total Medicaid program 
expenditures.  The Unit should share its findings with OIG, and based on its 
assessment, the Unit should, if appropriate, consider an expansion plan to 
increase the number of staff to meet the needs of the growing State 
Medicaid program. 
Follow its internal controls for time and attendance 
The Unit should take steps to ensure that supervisors follow its internal 
controls by carefully reviewing employees time records for accuracy and 
completeness and approving them in a timely manner.  This could include 
implementing procedures such as a systems-based reminder function or 
appropriate training for supervisory staff. 
Ensure that all case files include documentation of supervisory 
oversight 
The Unit should include documentation in all case files to demonstrate that 
supervisors approved the opening and closing of cases.  The case files 
should also include documentation that demonstrate that supervisors 
conduct periodic reviews, as required by the performance standards.     
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UNIT COMMENTS AND OIG RESPONSE  
The New Jersey Unit concurred with all six of our recommendations.  
First, the Unit concurred with our recommendation to change its supervisory 
structure to provide the Unit Director with supervision of all Unit staff, 
oversight of all its caseload, and independence to make management 
decisions.  The Unit stated that it will reorganize its supervisory structure 
and create a Deputy Chief of Detectives (DCD) position by March 2019.  
All Unit detectives will report to the DCD, who will report to the MFCU 
Director on all matters except those involving law enforcement training and 
safety. 
Second, the Unit concurred with our recommendation to develop and 
implement a plan to pursue more nonglobal fraud cases as civil matters, 
and to revise the MOU with the MFD to include guidance for handling such 
cases.  The Unit stated that it will develop a process for pursuing more 
nonglobal civil fraud cases.  It is currently working with the MFD on revising 
the MOU to include a provision that the MFD must not take action on any 
civil matters that the Unit chooses to pursue and to make explicit that the 
Unit may pursue as civil matters cases that were initially referred from 
the MFD for criminal investigation.  The Unit anticipates completion of the 
amended MOU in March 2019.  
Third, the Unit concurred with our recommendation to take additional steps 
to ensure that it receives an adequate number and quality of fraud referrals 
from the MFD.  The Unit stated that it will begin holding monthly meetings 
with the MFD to discuss pending MFD fraud cases.  The Unit will also 
provide quarterly presentations regarding fraud referrals to the MFD 
investigative staff and during MCO meetings.  The presentations will include 
information about the elements of common criminal cases and the 
requirement to refer all cases involving credible allegations of fraud to the 
Unit.  The Unit will hold the first monthly meeting and presentation in 
October 2018. 
Fourth, the Unit concurred with our recommendation to assess the 
adequacy of existing staffing levels, and if appropriate, consider a plan 
to expand the size of the Unit.  The Unit stated that it will take steps within 
the next 6 months to fill vacant positions.  The Unit should also conduct an 
assessment of its staffing levels and consider a plan to expand Unit 
resources, if deemed appropriate. 
Fifth, the Unit concurred with our recommendation to follow its internal 
controls for time and attendance.  The Unit stated that all employees will 
transition to a new mandatory time and attendance system, eCATS, which 
will ensure that all time and attendance procedures are followed. 
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Finally, the Unit concurred with our recommendation to ensure that all case 
files include documentation of supervisory oversight.  The Unit stated that 
on August 6, 2018, it changed its supervisory review procedures to require 
documented evidence of supervisory oversight for all case files.   
For the full text of the Units comments, see Appendix E.   
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APPENDIX A: Performance Assessment 
We assessed the New Jersey Units adherence to the 12 MFCU performance 
standards, including its compliance with applicable laws, regulations, and 
policy transmittals.  From this review, we identified six areas in which the 
Unit should improve its adherence to program requirements, and made 
other observations about Unit operations and practices.  
A complete publication of the performance standards, including 
performance indicators, may be found at 77 Fed. Reg. 32645 (June 1, 2012), 
and also on OIGs website at 
https://oig.hhs.gov/authorities/docs/2012/PerformanceStandardsFinal060112
.pdf     
 
STANDARD 1  A Unit conforms with all applicable statutes, regulations, and policy 
  directives. 
 
The Unit Director lacked supervisory authority over Unit detectives and 
Finding 
independent decision-making authority over day-to-day Unit 
operations.  See page 6.  
 
STANDARD 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. 
 
Low staffing levels affected the Units ability to investigate cases and 
Finding  
accept referrals.  See page 10. 
 
STANDARD 3  A Unit establishes written policies and procedures for its operations 
  and ensures that staff are familiar with, and adhere to, policies and 
procedures. 
 
The Unit maintained policies and procedures.  The Unit relies on policies 
Observation 
and procedures for general law enforcement matters from the New Jersey 
Division of Criminal Justice, a component of the Office of the Attorney 
General.  The Unit also has its own MFCU Standard Operating Procedures 
manual with specific guidelines for Unit operations and for investigating 
cases of Medicaid fraud and patient abuse or neglect.  
 
 
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STANDARD 4  A Unit takes steps to maintain an adequate volume and quality of 
  referrals from the State Medicaid agency and other sources. 
 
The Unit conducted outreach to increase Unit visibility and generate 
Observation 
more referrals of patient abuse and neglect allegations.  The Unit 
reported several outreach efforts, implemented in January 2016, which 
collectively increased the number and quality of patient abuse and neglect 
referrals during our review period.  The Unit received 105 referrals during 
FYs 20152017, compared to 35 referrals during FYs 20122014.  One of 
these efforts included an outreach program with local law enforcement 
agencies.  This program allows the Unit to investigate allegations of 
Medicaid patient abuse or neglect concurrently with local law enforcement 
agencies.  If a local law enforcement agency receives an allegation of 
patient abuse or neglect, it immediately notifies one of the two designated 
Unit detectives.  The detective then responds to the allegation on the scene 
(e.g., at a nursing home) and works with local law enforcement to 
investigate the allegation. 
Another outreach effort involved educating State judges who are legal 
surrogatesi.e., who have legal guardianship over eldersabout elder 
abuse and exploitation.  Unit management noted that some judges had 
previously not been aware of the Units authority to investigate and 
prosecute cases of patient abuse and neglect involving elders.  Unit staff 
also reported attending an annual conference for legal surrogates in 
New Jersey, during which the Unit provided education on the Units mission 
and information about when allegations of patient abuse or neglect 
allegations should be referred to the Unit.   
Although the Unit and the MFD communicated regularly, fraud referrals 
Finding  
from the MFD were low and had decreased in recent years.  See page 9. 
 
STANDARD 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. 
 
 
Thirty-four percent of case files lacked documentation of supervisory 
Finding 
oversight.  See page 11. 
 
 
 
 
 
 
 
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STANDARD 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. 
The Units caseload included both fraud and patient abuse or neglect 
Observation 
cases, covering a broad mix of provider types.  At the end of FY 2017, 
the Units cases included 46 provider types.  During our review period, 
81 percent of the Units cases involved fraud and 19 percent involved patient 
abuse or neglect. 
The Unit pursued few nonglobal civil fraud cases, and the MOU with the 
Finding 
MFD lacked guidance for handling such cases.  See page 8. 
 
STANDARD 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. 
 
The Units electronic case management system allowed efficient access 
Observation 
to case information, and the Units case files were adequately 
maintained.  The Unit uses an electronic case management system
InfoSharethat records and tracks all case information.  The system allows 
the Unit to generate Unit performance data, such as statistical reports 
required by OIG.  We judged that the case files were adequate, but we 
provided the Unit with technical assistance to further enhance its system. 
 
STANDARD 8  A Unit cooperates with OIG and other Federal agencies in the 
  investigation and prosecution of Medicaid and other health care fraud. 
 
Although the Unit participated in de-confliction activities with the 
Observation 
U.S. Attorneys Office, the Unit did not communicate regularly with OIG 
or investigate cases jointly with the U.S. Attorneys Office.  Performance 
Standard 8(a) states that a Unit should communicate with OIG and other 
Federal agencies on a regular basis about Medicaid fraud in its State.  
However, we found that the Unit had no regular contact with OIG and that 
some staff were hesitant about collaborating with Federal law enforcement 
agencies. 
Unit staff reported that they routinely de-conflicted cases with the 
U.S. Attorneys Office.  De-confliction is a process to identify and avoid any 
duplicative and overlapping actions by different law enforcement agencies.  
Although we did not identify any de-confliction activities in the case files, 
staff in the U.S. Attorneys Office confirmed that it regularly communicates 
with the Unit to share information and engage in de-confliction of cases. 
New Jersey Medicaid Fraud Control Unit: 2017 Onsite Review  19 
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Performance Standard 8(b) states that Units should cooperate and 
coordinate with OIGs Office of Investigations on joint casesi.e., cases 
involving the same suspects or allegationsand on cases referred to the 
Unit by OIG or another Federal agency.  Although the Unit had a few joint 
cases with OIG, the Unit had no joint cases with the U.S. Attorneys Office 
during our review period.  The lack of communication and coordination 
between the Unit and Federal partners, including OIG, may have limited 
referrals of fraud and patient abuse to the Unit, and consequently, limited 
the Units criminal convictions and civil settlements and judgments.  See 
Appendix B for a list of the number of referrals that the Unit received from 
OIG. 
The Unit reported convictions and adverse actions to Federal partners 
Observation 
within the established timeframes.  The Unit reported all 33 convictions to 
OIG within 30 days after sentencing.  Standard 8(f) states that the Unit 
should transmit information on convictions to OIG within 30 days of 
sentencing for the purpose of exclusion from Federal health care 
programs.iv  OIG had previously found deficiencies with the Units reporting 
of convictions to OIG, but the Unit successfully addressed these deficiencies 
in one of its policies.  According to the policy, the Units recordkeeper is 
responsible for ensuring that the Unit attorneys notify the appropriate staff 
of convictions and for tracking the time from conviction to submission to 
OIG. 
Similarly, the Unit reported all 19 adverse actions to the NPDB.  Federal 
regulations require that Units report any adverse actions resulting from 
investigations or prosecution of health care providers to the NPDB within 
30 calendar days of the date of the final adverse action.v   
 
STANDARD 9  A Unit makes statutory or programmatic recommendations, when 
  warranted, to the State government. 
 
The Unit did not make any programmatic recommendations during our 
Observation 
review period.  Performance Standard 9 states, in part: [T]he Unit, when 
warranted and appropriate, makes statutory recommendations to the State 
legislature [...] or makes regulatory or administrative recommendations 
regarding program integrity issues to the State Medicaid agency.  The Unit 
stated that during our review period, it did not identify any reasons or 
circumstances that warranted its making a programmatic recommendation.   
 
iv Late reporting of convictions to OIG delays the initiation of the program exclusion process, 
which may result in improper payments to providers by Medicaid or other Federal health 
care programs or possible harm to beneficiaries. 
v 45 CFR  60.5.  Examples of final adverse actions include, but are not limited to, convictions, 
civil judgments (but not civil settlements), and program exclusions.  See SSA  1128E(g)(1) and 
45 CFR  60.3. 
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STANDARD 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. 
 
 
The Unit pursued few nonglobal civil fraud cases, and the MOU with 
Finding 
the MFD lacked guidance for handling such cases.  See page 8. 
 
 
STANDARD 11  A Unit exercises proper fiscal control over its resources. 
 
 
The Unit did not always follow its internal control procedures for time 
Finding 
and attendance.  See page 11. 
STANDARD 12  A Unit conducts training that aids in the mission of the Unit. 
 
 
Unit staff met the Units training requirements.  All staff met the 
Observation 
requirements of the Units training plan, and Unit staff and management 
reported good training opportunities.  The Units training plan requires 
each professional discipline to participate in 3 hours of MFCU in-house 
training, which includes training on Medicaid fraud or on the False Claims 
Act.  Each employee must also attend Medicaid fraud training offered by 
the National Association of Medicaid Fraud Control Units, subject to 
availability of funding and supervisory approval.  In addition, each 
professional discipline has its own training requirements.  For example, 
attorneys must attend 24 hours of qualifying legal education over a 2-year 
period, of which 4 hours must be in the areas of ethics and/or 
professionalism.  
 
 
 
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APPENDIX B: Unit Referrals by Source for 
Fiscal Years 20152017 
  FY 2015  FY 2016  FY 2017 
Abuse &  Abuse &  Fraud  Abuse & 
Referral Source  Fraud  Fraud 
Neglect1  Neglect  Neglect 
Adult Protective Services  0  2  0  0  0  1 
Anonymous  19  2  19  1  22  2 
HHSOffice of Inspector 
0  1  0  0  0  0 
General (OIG) 
Long-Term Care Ombudsman  1  13  0  20  1  17 
Managed Care Organization  33  0  8  1  10  0 
Medicaid Agency and 
Medicaid Fraud Division  26  0  4  0  4  1 
(MFD)2 
Other Law Enforcement  3  3  9  3  11  0 
Private Citizens  79  11  111  8  89  3 
Private Health Insurer  0  1  4  0  0  0 
Provider  1  2  1  1  2  0 
State AgencyOther  5  8  2  3  6  12 
Other  11  0  4  0  0  0 
Total  178  43  162  37  145  36 
Annual Total  221  199  181 
Source: OIG analysis of Unit Annual Statistical Reports FYs 20152017. 
1 The category of abuse & neglect referrals includes patient funds referrals. 
2 DMAHS, the States Medicaid agency, delegated to the MFD its authority to detect, prevent, and investigate Medicaid fraud  and abuse; recover 
improperly expended Medicaid funds; and enforce Medicaid rules and regulations. 
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APPENDIX C: Detailed Methodology 
Data Collection  We used data collected from the eight sources below to assess the 
performance of the New Jersey MFCU. 
Review of Recertification Data, Case Outcome Data, and Unit 
Documentation.  Prior to the onsite review, we collected recertification data 
and other documentation, such as the Units annual statistical reports, which 
illustrate and describe the Units case outcomes for FYs 20152017.  This 
included information about indictments, investigations, criminal convictions, 
civil settlements and judgments, and monetary recoveries (criminal, global, 
and nonglobal civil).  We also reviewed data from the previous OIG onsite 
reviews of the Unit.  Further, we obtained the Units MOU with the State 
Medicaid agency and the MFD.  We also obtained the Units policies and 
procedures and held discussions with Unit management during the onsite 
visit to gain understanding of those policies and procedures.  We confirmed 
with the Unit Director that the information we had was current, and we 
requested additional data and clarification as needed. 
Review of Unit Financial Documentation.  To evaluate the Units internal 
control over its fiscal resources, we reviewed policies and procedures and 
analyzed the Units response to a questionnaire about its accounting; 
budgeting; personnel; procurement; and property and equipment.  While 
onsite, we followed up with Unit officials to clarify issues identified in the 
internal controls questionnaire.  We reviewed records from HHSs Payment 
Management System (PMS)23 and revenue accounts to determine the 
accuracy of the Federal Financial Reports (FFRs) for FYs 20142016.  We also 
obtained the Units claimed grant expenditures from its FFRs and the 
supporting schedules.   
We selected three purposive samples to assess the Units internal control of 
fiscal resources. The three samples included the following:   
1.  To assess the Units expenditures, we selected a sample of  
30 transactions totaling $322,507 and reviewed supporting 
documentation to determine whether the costs claimed were allowable, 
allocable, and reasonable, in accordance with Federal regulations.24   
2.  To assess inventory, we selected and verified a sample of 30 fixed assets 
(15 equipment items and 15 vehicles) from a total of 102 items 
(78 equipment items and 24 vehicles) maintained in the Units Trenton 
office. 
3.  To assess employee time and effort, we also selected and verified a 
sample of 50 payroll transactions from the Units salary details and 
reviewed supporting documentation.  These transactions consisted of  
46 timesheets and 4 payroll adjustments.   
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Interviews with Key Stakeholders.  In October and November 2017, we 
interviewed key stakeholders, including officials in DMAHS, the MFD, and 
the U.S. Attorneys Office.  We also interviewed the Special Agent from 
OIGs Office of Investigations Region II office who interacts with the Unit.  
We focused these interviews on the Units relationship and interaction with 
the stakeholders as well as opportunities for improvement.  We used the 
information collected from the interviews to develop subsequent interview 
questions for Unit management. 
Survey of Unit Staff.  We surveyed Unit staff within each professional discipline 
(i.e., detectives, auditors, and attorneys), as well as administrative staff.  We 
asked about the Units adherence to the 12 performance standards, beneficial 
practices, and needs for improvement.  We also asked about the effects of the 
current supervisory structure on the Units operations, and benefits and 
barriers to reorganizing the supervisory structure. 
Onsite Interviews with Unit Management and Selected Staff.  With the 
assistance of OIG Special Agents, we conducted structured onsite interviews 
with Unit management, including the Director and Assistant Director, and 
selected staff, such as the lieutenants (manager-level detectives) and 
attorneys.  The interviews focused on our targeted area of the supervisory 
structure, Unit operations, training, and technical assistance.  We also 
followed up on any issues identified from the staff survey, key stakeholder 
interviews, and our analysis of Unit documentation.   
Onsite Review of Case Files.  We requested a list of cases from the Unit that 
were open at any time during FYs 20152017, and we asked the Unit to 
include the current status of the case; whether the case was criminal, civil, or 
global; and the date on which the case was opened and closed, if 
applicable.  The total number of cases was 1,029.  We then excluded  
525 global cases from our review of the Units case files 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.  From 
the 504 remaining case files, we selected a simple random sample of  
50 cases.  With the assistance of OIG Special Agents, we reviewed the Units 
processes for monitoring the opening, status, and outcomes of these cases.  
We also reviewed the Units approach to investigating and prosecuting 
these cases and reviewed them for adherence to the relevant performance 
standards and compliance with statute, regulation, and policy transmittals.   
Review of Unit Submissions to OIG and the NPDB.  We also reviewed all 
convictions (33) submitted to OIG for program exclusion during the review 
period, and all adverse actions (19) submitted to the NPDB during the 
review period.  We reviewed whether the Unit submitted information on all 
sentenced individuals and entities to OIG for program exclusion and all 
adverse actions to the NPDB for FYs 20152017.  We also assessed the 
timeliness of the submissions to OIG and the NPDB.  While onsite, we 
New Jersey Medicaid Fraud Control Unit: 2017 Onsite Review  24 
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followed up with Unit staff to obtain documentation of submissions when 
needed. 
Onsite Review of Unit Operations.  During the onsite review, we observed 
the Units workspace and operations of the Units Trenton office.  
Specifically, we observed the Units offices and meeting spaces; security of 
data and case files; location of select equipment; and the general 
functioning of the Unit. 
Data Analysis  We analyzed the data to assess the impact of the unimplemented 
recommendation on Unit staff and operations and to explore ways in which 
the Unit could implement the recommendation.  We also analyzed the data 
to assess the Units adherence to the performance standards and applicable 
laws, regulations, or policy transmittals.25  In addition, we used the data to 
 
make observations about the Units case outcomes and practices.   
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APPENDIX D: Point Estimates and 95-Percent 
Confidence Intervals of Case File Reviews 
Exhibit D-1: Estimates for All Case Files 
95-Percent Confidence 
 Estimate Description  Sample Size   Point  Interval 
Estimate 
Lower  Upper 
Percentage of All Cases That Lacked 
Documentation of At Least One Type of 
Supervisory Oversight (i.e., supervisory approval  50  34.0%  21.6%  48.2% 
to open cases/close cases or periodic 
supervisory review) 
Percentage of Cases That Lacked More Than 
One Type of Supervisory Oversight  50  8.0%  2.4%  18.8% 
Documentation 
Percentage of All Cases That Lacked Supervisory 
Approval To Open or Supervisory Approval  50  24.0%  13.5%  37.5% 
To Close 
Percentage of All Cases That Lacked Supervisory 
50  20.0%  10.3%  33.1% 
Approval To Open 
Percentage of All Cases That Were Closed  50  84.0%  71.4%  92.7% 
Percentage of All Cases That Were Open Longer 
50  44.0%  30.6%  58.1% 
Than 90 Days 
Source: OIG analysis of New Jersey MFCU case files, 2017. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Exhibit D-2: Estimates for Closed Case Files  
95-Percent Confidence 
Point 
 Estimate Description  Sample Size   Interval 
Estimate 
Lower  Upper 
Percentage of Closed Cases That Lacked 
42  9.5%  2.8%  22.0% 
Supervisory Approval to Close 
Percentage of Closed Cases That Lacked Both 
Supervisory Approval To Open and Supervisory  42  4.8%  0.5%  15.8% 
Approval To Close 
Source: OIG analysis of New Jersey MFCU case files, 2017. 
 
 
 
Exhibit D-3: Estimates for Case Files Open Longer Than 90 Days  
One-Tailed Lower* 
95-Percent Confidence 
Point 
 Estimate Description  Sample Size  
Interval 
Estimate 
Lower  Upper 
Percentage of Cases Open for Longer Than 
90 Days That Lacked Documentation of Periodic  22  31.8%  16.2%  100% 
Supervisory Review 
Source: OIG analysis of New Jersey MFCU case files, 2017. 
* Because of the small sample size and low precision of this point estimate, we did not project the point estimate of 31.8% in our findings.  
Instead, we used the lower limit of this one-tailed confidence interval to support that this estimate is at least 16%.  A one-tailed lower confidence 
interval allows us to estimate a value that we are 95-percent confident the true percentage exceeds. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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APPENDIX E: UNIT COMMENTS 
 
 
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New Jersey Medicaid Fraud Control Unit: 2017 Onsite Review  30 
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ACKNOWLEDGMENTS 
Anthony Soto McGrath served as the team leader for this study and 
Ben Gaddis served as the lead analyst.  Others in the Office of Evaluation 
and Inspections who conducted the study include Richard Stern, the 
Director of the Medicaid Fraud Policy and Oversight Division.  Office of 
Evaluation and Inspections staff who provided support include Kevin Farber 
and Christine Moritz.   
We would like to acknowledge the contributions of Office of Audit Services 
staff, including Julio Agosto and Rafael Echevarria, and staff from the Office 
of Investigations.  
This report was prepared under the direction of Ruth Ann Dorrill, Regional 
Inspector General for Evaluation and Inspections in the Dallas regional 
office, and Petra Nealy, Deputy Regional Inspector General.  
 
   
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ENDNOTES 
 
 
1 SSA  1903(q)(3).  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  1903(q). 
3 SSA  1902(a)(61). 
4 State refers to the States, the District of Columbia, and the U.S. territories.  The State of 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. 
5 SSA  1903(a)(6).  For a Units first 3 years of operation, the Federal government contributes 90 percent of funding 
and the State contributes 10 percent of Unit funding. 
6 OIG analysis of FY 2017 MFCU annual statistical reporting data. 
7 As part of grant administration, OIG receives and examines financial information from Units, such as budgets and 
quarterly and final Federal Financial Reports, which detail MFCU income and expenditures. 
8The SSA authorizes the Secretary of Health and Human Services to award grants (SSA  1903(a)(6)) and to certify and 
annually recertify the Units (SSA  1903(q)).  The Secretary delegated these authorities to OIG in 1979. 
9 MFCU performance standards are published at 77 Fed. Reg. 32645 (June 1, 2012).  The performance standards were 
developed by OIG, in conjunction with the MFCUs, and were originally published at 59 Fed. Reg. 49080 (Sept. 26, 
1994). 
10 OIG occasionally issues policy transmittals to provide guidance and instruction to MFCUs.  Policy transmittals may 
be found at https://oig.hhs.gov/fraud/medicaid-fraud-control-units-mfcu/index.asp.  
11 81 Fed. Reg. 64383 (Sept. 20, 2016). 
12 81 Fed. Reg. at 64387. 
13 OIG, MFCU Statistical Data for Fiscal Year 2017.  Accessed at https://oig.hhs.gov/fraud/medicaid-fraud-control-
units-mfcu/expenditures_statistics/fy2017-statistical-chart.pdf on March 28, 2018. 
14 OIG, New Jersey State Medicaid Fraud Control Unit: 2013 Onsite Review (OEI-02-13-00020).  Accessed at 
https://www.oig.hhs.gov/oei/reports/oei-02-13-00020.pdf. 
15 SSA  1903(q)(6). 
16 42 CFR  1007.13. 
17 New Jersey Statutes  2A:32C-1 through 2A:32C-17 (2008). 
18 OIG, State Fraud Policy Transmittal 99-01, p.2.  This policy transmittal further states that Units should either try 
meritorious civil cases under State law or refer them to the U.S. Department of Justice or the U.S. Attorneys Office. 
19 New Jersey Statutes  30:4D-17 (2017). 
20 The State Medicaid Director may exclude providers from the Medicaid program.  (See NJ Stat. 30:4D-17.1(a).) 
21 45 CFR  75.430(i).  
22 The Units policy is derived from the Division of Criminal Justice, which is under the Office of the Attorney General 
and oversees the Unit.  Division of Criminal Justice, Policy & Procedure No. 2006-06, Employee Timekeeping.  
23 The PMS is a grant payment system operated and maintained by HHS Program Support Center, Division of 
Payment Management.  The PMS provides disbursement, grant monitoring, reporting, and case management 
services to awarding agencies and grant recipients, such as MFCUs. 
24 The transaction detail included multiple accounting entries related to each of the reported expenditures.  We 
selected 30 transactions from four Federal cost categories.  Transactions varied in amount from $1,037 to $123,540. 
25 All relevant regulations, statutes, and policy transmittals are available online at https://oig.hhs.gov/fraud/medicaid-
fraud-control-units-mfcu/index.asp.  
New Jersey Medicaid Fraud Control Unit: 2017 Onsite Review  34 
OEI-06-17-00520   
ABOUT THE OFFICE OF INSPECTOR GENERAL 
The mission of the Office of Inspector General (OIG), as mandated by Public 
Law 95-452, 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 beneficiaries 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  The Office of Audit Services (OAS) provides auditing services for HHS, either 
by conducting audits with its own audit resources or by overseeing audit 
Services 
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  The Office of Evaluation and Inspections (OEI) conducts national evaluations 
to provide HHS, Congress, and the public with timely, useful, and reliable 
and Inspections 
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  The Office of Investigations (OI) conducts criminal, civil, and administrative 
investigations of fraud and misconduct related to HHS programs, 
Investigations 
operations, and beneficiaries.  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 Office of Counsel to the Inspector General (OCIG) provides general 
legal services to OIG, rendering advice and opinions on HHS programs and 
the Inspector 
operations and providing all legal support for OIGs internal operations.  
General 
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.