Department of Health and Human Services 
OFFICE OF 
  
INSPECTOR GENERAL 
 
 
 
 
 
 
 
 
A S M
LABAMA  TATE  EDICAID 
 
 
F C U :   
RAUD  ONTROL  NIT   
 
2  014 O R  
  NSITE  EVIEW 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
  Suzanne Murrin                  
  Deputy I nspector General for 
  Evaluation and Inspections 
 
April 2015 
OEI-06-13-00660   
   
EXECUTIVE SUMMARY:  ALABAMA STATE MEDICAID FRAUD CONTROL UNIT:                                
2014 ONSITE REVIEW 
OEI-06-13-00600  
 
WHY WE DID THIS STUDY  
The Office of Inspector General (OIG) oversees the activities of all Medicaid Fraud Control 
Units (MFCUs or Units).  As part of this oversight, OIG conducts periodic reviews of all Units 
and prepares public reports based on these reviews.  The reviews assess Unit performance in 
accordance with the 12 MFCU performance standards and monitor Unit compliance with Federal 
grant requirements. 
 
HOW WE DID THIS STUDY  
We conducted the onsite review in January 2014.  We based our review on an analysis of data 
from seven sources:  (1) a review of policies, procedures, and documentation of the Units 
operations, staffing, and caseload; (2) a review of financial documentation; (3) structured 
interviews with key stakeholders; (4) a survey of Unit staff; (5) structured interviews with the 
Unit management and selected staff; (6) an onsite review of case files; and (7) an onsite 
observation of the Unit operations. 
 
WHAT WE FOUND  
For fiscal years (FYs) 2011 through 2013, the Unit reported 10 criminal convictions, 63 civil 
judgments and settlements, and recoveries of over $63 million.  We identified one issue of 
significant noncompliance with applicable laws, regulations, or policy transmittals  nearly half  
of the Units civil settlements resulted from audits that were outside the MCFUs grant authority.    
We also found multiple opportunities for improvement in the Units performance.  Only a small 
portion of Unit referrals6 percentcame from the State Medicaid agency.  The Unit did not 
have a cooperative working relationship with certain Federal partners and lacked written policies 
for referring cases to Federal and State agencies.  The Unit also did not refer information about 
all convictions to OIG and did not send some information within the appropriate timeframe.  
Unit supervisors did not always conduct periodic case reviews and, when they did conduct such 
reviews, they did not include notations in case files.   
 
WHAT WE RECOMMEND 
We recommend that the Alabama Unit (1) strengthen processes to ensure that investigations 
involve allegations of fraud or patient abuse or neglect; (2) provide training to the State Medicaid 
agency regarding elements of a quality referral of fraud; (3) continue existing efforts, and initiate 
new efforts, to achieve a cooperative working relationship with its Federal partners;  
(4) implement procedures to ensure that it timely transmits information about all convictions to 
OIG for purposes of exclusion; and (5) implement processes to ensure that supervisors conduct 
case reviews periodically, consistent with the Units policies and procedures.  The Unit 
concurred with all five of our recommendations.    
     
   
 
TABLE OF CONTENTS 
Objective..................................................................................................................1 

Background..............................................................................................................1 

Methodology............................................................................................................4 

Findings....................................................................................................................5 

For FYs 2011 through 2013, the Unit reported 10 criminal convictions,  
63 civil judgments and settlements, and recoveries of over $63 million .....5 

Nearly half of the Units civil settlements resulted from audits that  

were outside the MCFUs grant authority ....................................................6 

Only a small portion of Unit referrals6 percentcame from the State 
Medicaid agency ..........................................................................................6 

The Unit did not have a cooperative working relationship with  

certain Federal partners................................................................................6 

The Unit lacked written policies for referring cases to Federal and  
State agencies...............................................................................................7 

The Unit did not refer information about all convictions to OIG and  

did not send some information within the appropriate timeframe  ...............8 

Unit supervisors did not always conduct periodic case reviews and,                

when they did conduct such reviews, they did not include notations in               

case files.......................................................................................................8 

Other observation: OIG case file review suggested a lack of thorough 

investigations ...............................................................................................8 

Conclusion and Recommendations ........................................................................10 

Unit Comments and Office of Inspector General Response  .....................12 

Appendixes ............................................................................................................14 

A: Methodology........................................................................................14 

B: Referrals of Provider Fraud and Patient Abuse and Neglect                      

to the Alabama MFCU by Source, FYs 2011 Through 2013 .....................16 

C: Investigations Opened and Closed by Provider Category and 

Case Type, FYs 2011 Through 2013 ..........................................................17 

D: Unit Comments ....................................................................................19 

Acknowledgments..................................................................................................22 

     
   
OBJECTIVE 
To conduct an onsite review of the Alabama State Medicaid Fraud Control 
Unit (MFCU or Unit). 
BACKGROUND 
The mission of State MFCUs, as established by Federal statute, is to 
investigate and prosecute fraud and patient abuse and neglect by Medicaid 
providers under State law.1  Pursuant to Title XIX of the SSA, each State 
must maintain a certified Unit unless the Secretary of Health and Human 
Services determines that operation of a Unit would not be cost-effective 
because (1) minimal Medicaid fraud exists in that State and (2) the State 
has other, adequate safeguards to protect Medicaid beneficiaries from  
abuse and neglect.2  In fiscal year (FY) 2013, combined Federal and State 
grant expenditures for the Units totaled $230 million. 3     
To carry out its duties in an effective and efficient manner, each Unit must 
employ an interdisciplinary staff that consists of at least an attorney, an 
auditor, and an investigator.4 Unit staff review referrals provided by the 
State Medicaid agency and other sources and determine their potential for 
criminal prosecution and/or civil action.  In FY 2013, the 50 Units 
collectively reported 1,341 convictions, 879 civil settlements or 
judgments, and recoveries of approximately $2.5 billion.5    
Units are required to have either Statewide authority to prosecute cases or 
formal procedures to refer suspected criminal violations to an office with 
such authority.6  Currently, MFCUs operate in 49 States and in the District of 
Columbia.  Forty-four of the MFCUs operate within offices of State 
____________________________________________________________ 
1 Social Security Act (SSA)  1903(q)(3). 
 
2 SSA   1902(a)(61) and  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. 

3  Office of  Inspector General (OIG),  State Medicaid Fraud Control Units  Fiscal Year 

2013  Grant Expenditures and Statistics. Accessed at http://oig.hhs.gov/fraud/medicaid-
fraud-control-units-mfcu/expenditures_statistics/fy2013-statistical-chart.htm on 

April 10, 2014. 

4 SSA  1903(q)(6) and  42 CFR   1007.13.  

5 OIG,  State Medicaid Fraud Control Units  Fiscal Year 2013 Grant Expenditures and 

Statistics. Accessed at http://oig.hhs.gov/fraud/medicaid-fraud-control-units-
mfcu/expenditures_statistics/fy2013-statistical-chart.htm on September 12, 2014. 
  
Recoveries are defined as the amount  of money that defendants are required to pay as a 

result of a settlement, judgment, or pre-filing settlement in criminal and civil cases and 
 
may not reflect actual collections.  Recoveries may involve cases that include 
 
participation by other Federal and State agencies. 

6  SSA  1903(q)(1). 
 
Alabama State Medicaid Fraud Control Unit:  2014 Onsite Review (OEI-06-13-00660)   1   
   
Attorneys General; the remaining six MFCUs operate within other State 
agencies.7  Each Unit must be a single, identifiable entity of State 
government, distinct from the single State Medicaid agency, and must 
develop a formal agreement (i.e., memorandum of understanding) that 
describes its relationship with that agency.8   
In addition to investigating State-based fraud cases, Units may also be 
parties in multi-State global cases.  Global cases are coordinated through 
the National Association of Medicaid Fraud Control Units.  These cases 
typically involve MFCU attorneys from around the Nation who work with 
the Department of Justice and OIG on globali.e., multi-Statecivil false-
claims cases.   
Oversight of the MFCU Program 
The Secretary of Health and Human Services delegated to the OIG the 
authority both to annually certify the Units and to administer grant awards to 
reimburse States for a percentage of their costs of operating certified Units.9   
All Units currently are funded by the Federal Government on a 75-percent 
matching basis, with the States contributing the remaining 25 percent.10   To  
receive Federal reimbursement, each Unit must submit an application to 
OIG.11  OIG reviews the application and notifies the Unit whether it is 
approved and the Unit is certified. Approval and certification are valid for a 
1-year period; the Unit must be recertified each year thereafter.12   The statute 
specifies that, when recertifying a Unit, the OIG should give special 
attention to whether the Unit has used its resources effectively in 
investigating cases of possible fraud, in preparing cases for prosecution, and 
in prosecuting cases or cooperating with the prosecuting authorities.13    
Pursuant to Title XIX of the SSA, States must operate Units that effectively 
carry out their statutory functions and meet program requirements.14 OIG 
developed and issued 12 performance standards to define the criteria it 
applies in assessing whether a Unit is effectively carrying out statutory 
____________________________________________________________ 
7 OIG,  Medicaid Fraud Control Units.  Accessed at http://oig.hhs.gov/fraud/medicaid-
fraud-control-units-mfcu/index.asp  on September 12, 2014. 
 
8 SSA  1903(q)(2);  42 CFR   1007.5 and 1007.9(d). 
  
9 The portion of funds reimbursed to States by the Federal  government for  its share of 
 
expenditures for the Federal  Medicaid program, including  the MFCUs, is  called Federal 
 
Financial Participation  (FFP). 

10 SSA  1903(a)(6)(B).  

11 42  CFR  1007.15(a). 
 
12 42  CFR  1007.15(b) and (c). 
 
13 42 CFR   1007.15(d)(2).  

14 SSA  1902(a)(61). 

Alabama State Medicaid Fraud Control Unit:  2014 Onsite Review (OEI-06-13-00660)   2   
   
functions and meeting program requirements.15  Examples of standards 
include maintaining an adequate caseload through referrals from various 
sources, maintaining an annual training plan for all professional disciplines, 
and establishing policy and procedure manuals to reflect the Units 
operations.  
Alabama Medicaid Program 
The Alabama Medicaid program is a component of the Alabama 
Department of Health.  The program provides services to over  
940,000 beneficiaries.16  Total Alabama Medicaid expenditures for  
FY 2013 were $5.2 billion.17  
Alabama Unit 
The Alabama Unit operates within the Alabama Office of the Attorney 
General. MFCU grant expenditures totaled $3.1 million for FYs  
2011 through 2013.18  At the time of our onsite review in January 2014, 
the Unit employed 8 staff members including 1 director, 1 chief 
investigator, 1 chief auditor, 1 nurse analyst, 3 investigators, and an 
administrative assistant.  The Unit director also serves as the Unit 
attorney. The Unit headquarters is located in Alabamas capital, 
Montgomery.  The Unit attorney has Statewide jurisdiction to prosecute 
MFCU cases, as well as the opportunity to refer or prosecute cases jointly 
with the United States Attorneys Office (USAO) in the Northern and 
Southern Districts of Alabama.  
Previous Review  
In 2008, OIG conducted an onsite review of the Alabama Unit and found 
that the Alabama MFCU was in full compliance with all applicable 
Federal rules and regulations that govern the grant and the 12 performance 
standards.  
____________________________________________________________ 
15 77 Fed. Reg. 32645 (June 1, 2012).  Accessed at http://oig.hhs.gov/authorities/docs/ 
2012/PerformanceStandardsFinal060112.pdf  on  September 12, 2014.  Previous  
performance standards, established in  1994, are found at 59 Fed. Reg.  49080  
(Sept. 26, 1994). Accessed at http://oig.hhs.gov/fraud/medicaid-fraud-control-units-
mfcu/files/Performance%20Standards.pdf  on September  12, 2014.   
16 Alabama Medicaid Agency, Report of the Alabama Medicaid Advisory Commission.   
Accessed at http://www.medicaid.alabama.gov/documents/2.0_Newsroom/ 
2.2_Boards_Committees/2.2.1_Med_Adv_Comission/2.2.1_Final_Commission_Report_ 
1-31-13.pdf on  September 12,  2014.   
17 OIG,  MFCU  Statistical Data  for FY 2013. Accessed at http://oig.hhs.gov/ 
fraud/medicaid fraud control  units mfcu/expenditures_statistics/fy2013-statistical-
chart.htm on September 12, 2014.   
18  OIG analysis of Unit Quarterly Statistical Reports, FY 2013. 
Alabama State Medicaid Fraud Control Unit:  2014 Onsite Review (OEI-06-13-00660)   3   
   
METHODOLOGY 
We conducted the onsite review in January 2014.  We based our review on 
an analysis of data from seven sources:  (1) a review of policies, 
procedures, and documentation related to the Units operations, staffing, 
and caseload including criminal convictions, civil settlements and 
judgments, recoveries, and referrals; (2) a review of financial 
documentation; (3) structured interviews with key stakeholders; 
(4) a survey of Unit staff; (5) structured interviews with the Unit director 
and supervisors; (6) an onsite review of a sample of case files; and 
(7) an onsite observation of Unit operations.  Appendix A contains the 
details of our methodology.   
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. 
   
Alabama State Medicaid Fraud Control Unit:  2014 Onsite Review (OEI-06-13-00660)   4   
   
FINDINGS 
For FYs 2011 through 2013, the Unit reported  
10 criminal convictions, 63 civil judgments and 
settlements, and recoveries of over $63 million 
For FYs 2011 through 2013, the Unit reported 10 criminal convictions and 
63 civil judgments and settlements.  FY 2013 had notably fewer outcomes 
than the prior 2 years, with no criminal convictions and eight civil 
judgments and settlements.  See Table 1. 
Table 1:  Alabama MFCU Criminal Convictions and Civil 
Judgments and Settlements, FYs 2011 Through 2013 
Outcomes  FY 2011  FY 2012  FY 2013   Total 
Criminal Convictions   4  6  0   10 
Civil Judgments and  
30  25  8  63 
Settlements  
Source: OIG analysis of Unit data,, FYs 2011 through 2013.  
For the same time period, the Unit reported combined civil and criminal 
recoveries of over $63 million.19 See Table 2. Recoveries from global 
cases totaled over $60 million and accounted for 95 percent of all 
recoveries during the 3-year review period.  Notably, the Unit reported no 
recoveries from criminal or nonglobal civil cases in FY 2013.  
Table 2:  Alabama MFCU Recoveries, FYs 2011 Through 2013 
Total  
Recovery Type   FY 2011  FY 2012  FY 2013  
Recoveries 
Global Civil     $22,812,037  $21,044,972  $16,206,582   $60,063,591 
Nonglobal Civil    $540,777  $1,187,719  $0   $1,728,496 
Criminal   $1,138,393  $116,350  $0   $1,254,743 
Total Recoveries   $24,491,207  $22,349,041  $16,206,582  $63,046,830 
Source: OIG analysis of Unit data, FYs 2011 through 2013. 
 
 ____________________________________________________________ 
19 Unit-reported  recoveries include funds recovered from global cases, which are civil  
false claims cases that are brought by the U.S. Department of Justice and involve a group  
of State MFCUs. The National Association  of Medicaid  Fraud Control Units facilitates 
the settlement of global cases on  behalf  of the States. 
Alabama State Medicaid Fraud Control Unit:  2014 Onsite Review (OEI-06-13-00660)   5   
   
Nearly half of the Units civil settlements resulted from 
audits that were outside the MCFUs grant authority 
Federal MFCU regulations stipulate that FFP is not available for the 
investigation of cases of program abuse or other failures to comply with 
applicable laws and regulations, if these cases do not involve substantial 
allegations or indications of fraud.20 However, the Unit conducted 
90 audits of nursing homes and therapeutic foster care agencies that did 
not involve allegations of fraud.  These audits resulted in nearly half of the 
Units civil settlements (29 of 63 civil settlements during the review 
period) and nearly half of the Units nonglobal civil recoveries ($800,000 
of $1.7 million in nonglobal civil recoveries during the period).21 The Unit 
consistently reported these audits to OIG in annual reports between 
2005 and 2011.22  In April 2012, OIG determined the audits to be outside 
the MFCUs grant authority. Unit officials did not contest this 
determination and agreed to halt the remaining audits and refer them  
instead to the State Medicaid agency.  During the onsite review, OIG 
confirmed that the Unit had halted this practice.   
Only a small portion of Unit referrals6 percent
came from the State Medicaid agency  
According to Performance Standard 4, the Unit should take steps to 
maintain an adequate volume and quality of referrals from the State 
Medicaid agency and other sources. However, among the 235 referrals 
accepted by the Unit during the 3-year review period, only 15 referrals  
(6 percent) came from the State Medicaid agency.  Officials from both 
entities agreed that 15 was a relatively small number for the 3-year period, 
given the size of the State Medicaid program.  State Medicaid agency staff 
said that they needed more guidance from the Unit regarding what 
constitutes a quality referral.  Officials from both the State Medicaid 
agency and the Unit agreed that training regarding what constitutes a 
quality referral of fraud would be beneficial.  See Appendix B for more 
information on Unit referrals.   
____________________________________________________________ 
20 42 CFR   1007.19(e)(1).  
21 These monies involved in these audits were  estate recoveries.  Section 1917 of the  
SSA mandates that States implement estate recovery  programs to recoup  medical  
assistance payments from the estates of deceased Medicaid beneficiaries.  Estate recovery 
is normally performed by the State Medicaid agencies and is not an activity within the 
MFCU scope of  duties as defined in  SSA    1903(q) and 42  CFR   1007.11.   
22 Although the Unit consistently reported to OIG that it was conducting these audits, it 
was not until 2012 that OIG determined that the audits fell outside the MFCU grant 
authority.  Because OIG did not object to these audits until 2012, OIG is not requesting 
that the Unit repay grant funds spent on these audits.  
Alabama State Medicaid Fraud Control Unit:  2014 Onsite Review (OEI-06-13-00660)   6   
   
The Unit did not have a cooperative working 
relationship with certain Federal partners  
According to Performance Standard 8, the Unit should cooperate with 
OIG and other Federal agencies in the investigation and prosecution of 
Medicaid and other health care fraud.  According to our interviews with 
representatives of these entities, the Unit had a cooperative working 
relationship with the Internal Revenue Service (IRS), the Food and Drug 
Administration (FDA), the Federal Bureau of Investigation (FBI), and the 
USAO for the Middle District of Alabama.23 However, the Unit did not 
have a cooperative working relationship with OIG investigators or the 
USAO for the Southern District of Alabama.  
According to stakeholder interviews, the relationship between the Unit and 
OIG investigators has not been cooperative in recent years and the two 
entities did not regularly work together on investigations.  Documentation 
showed that the Unit and OIG investigators worked only 2 joint cases 
during FYs 2011 through 2013. Despite OIG investigators and the Unit 
director both reporting they intended to improve their relationship, neither 
reported positive progress by the time of publication. 
According to stakeholder interviews, the relationship between the Unit and 
the USAO for the Southern District of Alabama has also not been 
cooperative in recent years. Although the Unit prosecutes cases with the 
USAO for the Northern District of Alabama, there were few Unit cases 
prosecuted with the Southern District.  Neither the Unit nor the USAO for 
the Southern District of Alabama reported efforts to improve their 
relationship. 
The Unit lacked written policies for referring cases to 
Federal and State agencies 
According to Performance Standard 3(c), the Unit should establish written 
policies and procedures for referring cases to Federal and State agencies, 
including the State Medicaid agency.  Written procedures are important to 
ensure the referral of cases that may warrant administrative action, such as 
the collection of overpayments or suspension of Medicaid payments.  Unit 
officials reported that they had a process for making such referrals and 
documentation indicated the Unit referred 14 cases to Federal and State 
agencies during FYs 2011 through 2013. However, the Units referral 
process was not incorporated into the Units written policy and procedures 
manual, as specified by the performance standard.  Subsequent to our 
____________________________________________________________ 
23 The USAO for the Northern District of Alabama could not be reached for comment. 
Alabama State Medicaid Fraud Control Unit:  2014 Onsite Review (OEI-06-13-00660)   7   
   
onsite review, the Unit incorporated into its procedures manual the 
policies for referring cases to outside agencies. 
The Unit did not refer information about all convictions 
to OIG and did not send some information within the 
appropriate timeframe 
According to Performance Standard 8(f), the Unit should transmit all 
pertinent information on MFCU convictions to OIG for the purposes of 
program exclusion.  The Unit did not refer 3 of its 10 convictions obtained 
during FYs 2011 through 2013 to OIG for exclusion. For three of the 
other seven convictions, the Unit took more than 140 days to send 
conviction information.24  Unit officials reported that during  
FYs 2011 through 2013, the Unit did not have a formal process for 
sending and tracking submission of conviction information to OIG.  
Unit supervisors did not always conduct periodic case 
reviews and, when they  did conduct such reviews, 
they did not include notations in cases files 
According to Performance Standard 7(a), reviews by supervisors should 
be conducted periodically, consistent with the Units policies and 
procedures, and noted in the case files.  According to the Units 
procedures during FYs 2011 through 2013, supervisors were expected to 
meet with investigators every 36 months to review their cases.  However, 
we found that Unit supervisors did not conduct any such reviews during  
FY 2011, and conducted many reviews less frequently than every 
6 months during FYs 2012 and 2013.  When reviews did occur, they were 
not noted in the case files, but instead records of the reviews were kept in 
the Chief Investigators office.  
Other observation:  OIG case file review suggested a 
lack of thorough investigation 
OIGs criminal investigator conducted an indepth review of 26 of the 
Units case files.25   This review found that 9 cases (35 percent) were closed 
____________________________________________________________ 
24 The 1994 Performance Standards indicated that information about convictions should  
be transmitted within  30  days after sentencing or other reasonable time period; the 
2012 Performance Standards stipulate that conviction information should  be sent  within  
30 days after sentencing.  
25Although not directly applicable to the MFCUs, the Quality Standards for 
Investigations issued  by the Council of the Inspectors General on Integrity and Efficiency 
describe standards and principles for the conduct  of investigations  by Federal Offices of  
Inspector General, including that investigations  be conducted in a timely, efficient, 
thorough, and objective manner.  Quality Standards for Investigations (November 15, 
2011), p. 11.  Accessed  at https://www.ignet.gov/sites/default/files/files/  
committees/investigation/invprg1211appi.pdf  on March 31, 2015. 
Alabama State Medicaid Fraud Control Unit:  2014 Onsite Review (OEI-06-13-00660)   8   
   
without the Unit first completing a thorough investigation.  While onsite, 
the OIG staff made recommendations on the handling of future cases.  In 
offering their recommendations, OIG staff recognize that each 
investigation is unique and cannot be molded to a single, standard test of 
sufficiency.  In a separate letter, we will send the Unit a list of the cases in 
which we questioned the thoroughness of investigations.   
   
Alabama State Medicaid Fraud Control Unit:  2014 Onsite Review (OEI-06-13-00660)   9   
   
CONCLUSION AND RECOMMENDATIONS 
The Units low criminal and civil case outcomes for the period of our 
review, in conjunction with our findings regarding Unit operations, 
suggest that additional attention to Unit efficiency and effectiveness is 
warranted. For FYs 2011 through 2013, the Alabama Unit reported  
10 criminal convictions, with none during FY 2013, and total nonglobal 
recoveries of $2.9 million.  Further,  nearly half of the Units civil 
settlements resulted from audits that were outside the MFCUs grant 
authority.  Additionally, many of our case file reviews revealed problems 
with the thoroughness of Unit investigations.  We encourage the Unit to 
examine its internal processes and work with the OIG to develop and 
implement improvement strategies.   
Additionally, our review found one issue of significant noncompliance 
with applicable laws, regulations, or policy transmittals.  We found 
multiple areas in which the Unit could improve its operations to more fully 
align with the MFCU Performance Standards.   
Therefore, we specifically recommend that the Alabama Unit: 
Strengthen processes to ensure that investigations involve 
allegations of fraud or patient abuse or neglect 
Contrary to 42 CFR  1007.19(e)(1), nearly half of the Units civil 
settlements during the period of our review resulted from audits that 
focused on compliance with programmatic laws and regulations, rather 
than on allegations of fraud or patient abuse or neglect.  The Unit had 
agreed to halt such audits in April 2012.  To prevent similar situations in 
the future, the Unit should strengthen its processes to screen potential 
cases to ensure that they involve allegations of fraud or patient abuse and 
neglect. The processes should include mechanisms for consulting with 
OIG, as needed, regarding unusual circumstances where it may be unclear 
whether a case would be within or outside the scope of the MFCU grant.   
Provide training to the State Medicaid agency regarding 
elements of a quality referral of fraud 
Only a small portion of Unit referrals6 percentcame from the State 
Medicaid agency. The Unit should work with the State Medicaid agency 
to ensure that it receives an adequate number of referrals.  To this end, the 
Unit should provide training to the State Medicaid agency regarding what 
constitutes a quality referral of fraud.  
   
Alabama State Medicaid Fraud Control Unit:  2014 Onsite Review (OEI-06-13-00660)   10   
   
Continue existing efforts, and initiate new efforts, to achieve a 
cooperative working relationship with its Federal partners 
The Unit director reported convening a meeting in March 2013 to discuss 
how the Unit and OIG investigators could improve their working 
relationship. The Unit should continue to find ways to improve its 
working relationship with OIG investigators.  Additionally, the Unit 
should initiate efforts to improve the working relationship with the USAO 
for the Southern District of Alabama.  
Implement procedures to ensure that the Unit timely transmits 
information about all convictions to OIG for purposes of 
exclusion 
The Unit did not refer information about all convictions to OIG and did 
not send some information timely.  The Unit should implement a tracking 
system or other means to ensure that it promptly transmits all conviction 
information to OIG in accordance with MFCU Performance Standard 8(f). 
Implement processes to ensure that supervisors conduct case 
reviews periodically, consistent with the Units policies and 
procedures 
These processes may include automated reminders or other mechanisms to 
alert Unit staff when cases are due for periodic reviews.  The processes 
should ensure that reviews are documented in case files, consistent with 
Performance Standard 7(a).   
   
Alabama State Medicaid Fraud Control Unit:  2014 Onsite Review (OEI-06-13-00660)   11   
   
UNIT COMMENTS AND OFFICE OF INSPECTOR GENERAL  
RESPONSE 
The Unit concurred with all the recommendations but objected to the 
observation that many reviews of case files revealed problems with the 
thoroughness of Unit investigations. The Unit stated its belief that this 
observation was subjective and outside the scope of the 12 MFCU 
performance standards.  Although the level of thoroughness of 
investigations is a matter of professional judgment, the team performing 
the review found it to be an issue with respect to many of the reviewed 
case files and believe the observation to be appropriate.  OIG uses 
standardized protocols for its reviews of random samples of MFCU case 
files, and these reviews are conducted by a program evaluation team that 
includes an experienced OIG criminal investigator.  Regarding the scope 
of the performance standards, OIG has a general responsibility for the 
effective operation of the MFCUs.  We believe that in addition to making 
specific findings and recommendations regarding a Units adherence to 
standards or program requirements, it is appropriate for us to include 
observations about salient issues that may improve a Units ability to 
investigate or prosecute fraud and patient abuse or neglect.  In response to 
the Units comments about our observation, we made changes to the report 
to give greater context regarding the extent of the problems.  Additionally, 
we removed specific case examples and will instead send a list of cases to 
the Unit in a separate letter.  
Regarding the first recommendation (to strengthen processes to ensure that 
investigations involve allegations of fraud or patient abuse or neglect), the 
Unit reiterated that it suspended the audit activity that led to the 
recommendation.   
Regarding the second recommendation, the Unit reported that it will 
continue to participate in monthly meetings with the Alabama Medicaid 
agency to discuss pending cases and engage in joint training in areas of 
mutual interest, including the development of quality referrals.  However, 
the Unit contends that referrals are not low because the Medicaid agency 
does not understand what constitutes a quality referral of fraud, but rather 
because the agency lacks the technology to conduct modern fraud 
detection. The Unit stated that it will continue to work with the Alabama 
Medicaid agency to improve fraud detection through acquisition of 
modern data-mining technology.   
Regarding the third recommendation, the Unit reported that it will 
continue to work with all State and Federal agencies, and that Unit 
employees have initiated contact with USAO representatives in an effort 
to establish a more cooperative working relationship.  
Alabama State Medicaid Fraud Control Unit:  2014 Onsite Review (OEI-06-13-00660)   12   
   
Regarding the fourth recommendation, the Unit reported that it has 
implemented procedures to ensure that information about all convictions is 
transmitted to OIG for purposes of exclusion.  
Regarding the fifth recommendation, the Unit reported that it has revised 
its policies and procedures to require that Unit supervisors review cases on 
at least a quarterly basis and document these reviews in case files.  
The full text of the Units comments is provided in Appendix D.  
   
Alabama State Medicaid Fraud Control Unit:  2014 Onsite Review (OEI-06-13-00660)   13   
   
APPENDIX A 
Methodology  
We used data collected from the seven sources below to describe the 
caseload and assess the performance of the Unit.  
Data Collection and Analysis 
Review of Unit Documentation. Prior to the onsite visit, we collected the  
Units Quarterly Statistical Reports, annual reports, recertification 
questionnaire, policy and procedures manuals, MOU with the State 
Medicaid Agency, and the 2008 OIG onsite review.  We analyzed 
information about the number of referrals the Unit received, the number of 
investigations the Unit opened and closed, the outcomes of those 
investigations including the number of criminal convictions, civil 
judgments and settlements, recoveries, and the Units case mix.  We also 
analyzed information about the number of cases that the Unit referred for 
prosecution and the outcomes of those prosecutions.  We qualitatively 
analyzed the Units written policy manual to ensure it contained all 
components specified by the performance standards.   Additionally, we 
confirmed with the Unit director that the information we had was current 
as of January 2014, and we requested any additional data or clarification 
as necessary.   
Review of Fiscal Controls. We reviewed the Units controls over its fiscal 
resources to identify potential internal control weaknesses 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. During the onsite review, we reviewed a sample of the 
Units purchase and travel transactions.  In addition, we reviewed vehicle 
records, the equipment inventory, and a sample of time and effort records.  
Interviews With Key Stakeholders. We interviewed key stakeholders, such as 
officials in the Alabama Department of Health, Program Integrity Division; 
the Department of Public Health, Division of Health Care Facilities; USAOs 
from the Northern and Southern Districts of Alabama; four OIG 
investigators; an FDA agent; two Special Agents with the FBI; and two 
Special Agents with the IRS who worked closely with the Unit during the 
review period. We focused these interviews on the Units relationship and  
interaction with OIG and other Federal and State authorities, and we 
identified opportunities for improvement.  We used the information collected 
from these interviews to develop subsequent interview questions for Unit 
management.  We also qualitatively analyzed interviews with key 
stakeholders to assess the Units relationships with partners. 
Alabama State Medicaid Fraud Control Unit:  2014 Onsite Review (OEI-06-13-00660)   14   
   
Survey of Unit Staff.  We conducted an online survey of all nonmanagerial 
Unit staff.  The response rate was 100 percent.  Our questions 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.   
Onsite Interviews with Unit Management.   We conducted structured 
interviews with the Units management in January 2014.  We interviewed 
the Unit director (who also served as the Units lead attorney), the chief  
auditor, the chief investigator, the nurse analyst, and an investigator.   We  
asked these individuals to provide additional information to better 
understand the Units operations and clarify information obtained from  
other data sources. 
Onsite Review of Case Files and Other Documentation. We selected a  
statistically valid, simple random sample of 100 case files from the  
310 nonglobal cases that were open at any point during FYs 2011 through 
2013 for review. From these 100 case files, we selected another simple 
random sample of 50 files for a more  indepth review (24 of these 50 cases 
were determined to be outside of the Units grant authority).  After 
reviewing the 100 case files, we found that 4 case files were outside of the 
scope of our review and 1 case was appended to another case.  We  
reviewed the 95 sampled case files for selected issues, such as the 
appropriateness and timeliness of investigations.    
Onsite Review of Unit Operations. During our January 2014 onsite visit, 
we reviewed the Units workspace and operations.  Specifically, we 
visited the Unit headquarters in the State capital.  While onsite, 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. 
Finally, 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, and 
policy transmittals.26  In addition, we noted practices that appeared to be 
missed opportunities in the investigative and prosecutorial practices of the 
Unit. We based these observations on statements from Unit staff, data 
analysis, and our own judgment.  We did not independently verify the 
effect of these practices, but included the information because it may be 
useful to other Units in their operations.   
____________________________________________________________ 
26 All relevant  regulations, statutes, and  policy transmittals are available online at  
http://oig.hhs.gov/fraud/medicaid-fraud-control-units-mfcu.  
Alabama State Medicaid Fraud Control Unit:  2014 Onsite Review (OEI-06-13-00660)   15   
   
APPENDIX B 
Referrals of Provider Fraud and Patient Abuse and Neglect to the 
Alabama MFCU by Source, FYs 2011 Through 2013 
Table B-1:  Referrals of Fraud and Abuse to MFCU 
Case Type   FY 2011   FY 2012   FY 2013   Total  
Provider Fraud   23  48  19  90 
Patient Abuse and Neglect  61  55  29  145 
Total  84  103  48  235 
 
Source: Alabama MFCU response to OIG data request. 
 
Table B-2:  Referrals to MFCU, by Referral Source 
FY 2011   FY 2012   FY 2013  
Referral Source   Patient  Patient  Patient 
Provider  Provider  Provider 
Abuse and   Abuse and   Abuse and  
Fraud   Fraud   Fraud  
Neglect   Neglect   Neglect  
Medicaid Agency  6  0  6  0  3  0 
State Survey / Certification  0  28  0  22  0  19 
Law  Enforcement  1  0  5  0  2  0 
HHS OIG  0  0  5  0  2  2 
Provider  1  4  2  3  2  2 
Adult Protective Services  0  3  0  6  0  2 
Private Citizen  3  2  10  3  3  3 
Self-Generated Referrals   8  0  15  0  0  0 
Other  4  24  5  21  7  1 
Total  Referrals Received   23  61  48  55  19  29 
 
Source: Alabama MFCU response to OIG data request. 
   
Alabama State Medicaid Fraud Control Unit:  2014 Onsite Review (OEI-06-13-00660)   16   
   
APPENDIX C 
Investigations Opened and Closed by Provider Category and Case 
Type, FYs 2011 Through 2013 
Table C-1:  Annual Opened and Closed Investigations 
FY 2011   FY 2012   FY 2013  
Case Type  
Opened   Closed  Opened   Closed  Opened   Closed 
Provider Fraud   23  25  30  20  12  13 
Patient Abuse and Neglect  61  46  55  53  29  31  
Global Cases  4  16  5  8  7  11 
Total Opened and Closed   88  87  90  81  48  55 
 
Source: Alabama MFCU response to OIG data request. 
Table C-2:  Patient Abuse and Neglect Investigations  
FY 2011   FY 2012   FY 2013  
Provider Category  
Opened  Closed  Opened  Closed  Opened   Closed 
Nursing Facility   0  0  0  0  0  0 
Other Long-Term  Care   0  0  0  0  0  0 
Nurses/Physicians 
34  18  33  20  24  29 
Assistants/Nurse  
Practitioner/Certified Nurse Aide  
Home Health Aide   0  0  0  0  0  0 
Nondirect Care   25  28  22  31  5  2 
Other  2  0  0  2  0  0 
Total   61  46  55  53  29  31 
 
Source: Alabama MFCU response to OIG data request. 
   
Alabama State Medicaid Fraud Control Unit:  2014 Onsite Review (OEI-06-13-00660)  17   
   
Table C-3:  Provider Fraud Investigations  
Provider Fraud Investigations  FY 2011   FY 2012   FY 2013  
Opened and Closed, by  Provider  
Category  
Facilities   Opened   Closed   Opened  Closed   Opened  Closed  
Hospitals  0  0  0  0  0  0 
Nursing Facilities   0  0  0  9  0  0 
Other Long-Term  Care Facilities   0  0  0  0  0  0 
Substance Abuse Treatment Centers  0  0  0  0  0  0 
Other  Facilities   12  16  10  6  0  4 
Practitioners   Opened   Closed  Opened  Closed  Opened  Closed 
Doctors of Medicine or Osteopathy   3  0  6  1  3  1 
Dentists  1  1  2  1  1  0 
Podiatrists  0  0  0  0  0  0 
Optometrist/Opticians  1  0  2  0  0  1 
Counselors/Psychologists  1  0  4  1  2  0 
Chiropractors  0  0  0  0  0  0 
Other Practitioners  0  0  0  0  2  1 
Medical Support  Opened   Closed   Opened  Closed   Opened  Closed  
Pharmacies  1  0  1  1  0  0 
Pharmaceutical Manufacturers  0  0  1  0  1  1 
Durable Medical Equipment  2  2  2  1  0  2 
Laboratories  0  3  0  0  2  1 
Transportation Services  0  0  1  0  0  1 
Home Health Care Agencies  2  2  0  0  0  1 
Home Health Care Aides   0  0  0  0  0  0 
Nurses/Physicians Assistants/Nurse 
0  0  0  0  0  0 
Practitioner/Certified Nurse Aide  
Radiologists  0  0  0  0  0  0 
Other Medical Support   0  1  0  0  0  0 
Program  Related   Opened   Closed  Opened  Closed  Opened  Closed 
Managed Care   0  0  0  0  0  0 
Medicaid Program Administration  0  0  1  0  1  0 
All Fraud Investigations   Opened   Closed   Opened  Closed   Opened  Closed  
Total   23  25  30  20  12  13 
 
Source: Alabama Unit response to OIG data request. 
Alabama State Medicaid Fraud Control Unit:  2014 Onsite Review (OEI-06-13-00660)   18   
   
APPENDIX D 
    Unit Comments  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alabama State Medicaid Fraud Control Unit:  2014 Onsite Review (OEI-06-13-00660)   19   
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alabama State Medicaid Fraud Control Unit:  2014 Onsite Review (OEI-06-13-00660)   20   
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alabama State Medicaid Fraud Control Unit:  2014 Onsite Review (OEI-06-13-00660)   21   
   
ACKNOWLEDGMENTS 
This report was prepared under the direction of Kevin K. Golladay, Regional 
Inspector General for Evaluation and Inspections in the Dallas regional office; 
Blaine Collins, Deputy Regional Inspector General; and Ruth Ann Dorrill, Deputy 
Regional Inspector General. 
Lyndsay Patty served as the Team Leader for this study and Ben Gaddis served as 
the Lead Analyst.  Other Office of Evaluation and Inspections staff who 
contributed include Maria Balderas.  Office of Investigations staff provided 
support. Central office staff who provided support include Thomas Brannon, 
Michael J. Brown, Kevin Farber, Christine Moritz, and Richard Stern.   
Alabama State Medicaid Fraud Control Unit:  2014 Onsite Review (OEI-06-13-00660)   22   
Office of Inspector General
http://oig.hhs.gov  
 
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 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 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 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.