Department of Health and Human Services

OFFICE OF

INSPECTOR GENERAL

VIRGINIA STATE MEDICAID 

FRAUD CONTROL UNIT: 

2015 ONSITE REVIEW

Suzanne Murrin

Deputy Inspector General

for Evaluation and Inspections

August 2016

OEI-07-15-00290
 

EXECUTIVE SUMMARY: VIRGINIA STATE MEDICAID FRAUD CONTROL 

UNIT: 2015 ONSITE REVIEW 

OEI-07-15-00290 

WHY WE DID THIS STUDY 

The Office of Inspector General (OIG) administers the Medicaid Fraud Control Unit 

(MFCU or Unit) grant awards, annually recertifies the Units, and oversees the Units’ 

performance in accordance with the requirements of the grant. As part of this oversight, 

OIG conducts periodic reviews of all Units and prepares public reports based on these 

reviews. These reviews assess the Units’ adherence to the 12 MFCU performance 

standards and compliance with applicable Federal statutes and regulations.

HOW WE DID THIS STUDY 

We conducted an onsite review of the Virginia Unit in September 2015. We based our 

review on an analysis of data from seven sources: (1) policies, procedures, 

and documentation related to the Unit’s operations, staffing, and caseload; (2) financial 

documentation for fiscal years (FYs) 2012 through 2014; (3) structured interviews with 

key stakeholders; (4) a survey of Unit staff; (5) structured interviews with the Unit’s 

management; (6) a sample of files for cases that were open in FYs 2012 through 2014; 

and (7) observation of Unit operations. 

WHAT WE FOUND 

The Unit reported significant results and was in general compliance with applicable laws, 

regulations, and policy transmittals. For FYs 2012 through 2014, the Virginia Unit 

reported 79 criminal convictions, 46 civil judgments and settlements, and combined 

criminal and civil recoveries of $1.1 billion. This amounted to recovery of more than 

$34 for every $1 spent in the review period. The Unit also maintained proper fiscal 

control of its resources. We identified two practices that assisted the Unit in obtaining its 

results. First, the Virginia Unit’s partnerships with a variety of stakeholders led to 

successful Medicaid fraud prosecutions and increased recoveries. Second, the Unit’s use 

of specialty software improved its ability to process and share investigative information. 

However, we identified several areas where the Unit should improve its operations. 

Although the Unit’s active case files generally contained the required supervisory 

reviews, the Unit’s policy did not require supervisory reviews of monitored cases. 

Furthermore, the Unit’s policy did not define what constituted a monitored case. Also, 

the Unit did not report all convictions and adverse actions to Federal partners within 

required timeframes. 

WHAT WE RECOMMEND 

We recommend that the Virginia Unit revise its policy to define what constitutes a 

monitored case and indicate the appropriate level and frequency of supervisory review for 

such cases. Further, the Unit should formalize its processes to ensure that convictions 
 

and adverse actions are consistently reported to Federal partners within required 

timeframes. The Unit concurred with both recommendations. 
 

TABLE OF CONTENTS

Objective ......................................................................................................1

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

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

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

For FYs 2012 through 2014, the Virginia Unit reported 

79 criminal convictions, 46 civil judgments and settlements, 

and combined criminal and civil recoveries of $1.1 billion.............5

Unit policy requires supervisory review of active cases but not 

monitored cases; Unit policy does not define what constitutes a 

monitored case .................................................................................6

The Unit did not report all convictions and adverse actions to 

Federal partners within required timeframes...................................7

The Unit maintained proper fiscal control of its resources..............9

Other observation: The Virginia Unit’s partnerships with a 

variety of stakeholders led to successful Medicaid fraud 

prosecutions and increased recoveries.............................................9

Other observation: The Unit’s use of specialty software 

improved its ability to process and share investigative 

information.....................................................................................11

Conclusion and Recommendations............................................................12

Unit Comments and Office of Inspector General Response ............14

Appendixes ................................................................................................15

A: 2012 Performance Standards ...................................................15

B: Virginia State Medicaid Fraud Control Unit Referrals by 

Referral Source for FYs 2012 Through 2014 ................................19

C: Investigations Opened and Closed By Provider Category for 

FYs 2012 Through 2014 ................................................................20

D: Detailed Methodology .............................................................22

E: Point Estimates and 95-Percent Confidence Intervals Based 

on Reviews of Case Files...............................................................25

F: Unit Comments.........................................................................26

Acknowledgements....................................................................................28
 

Virginia State Medicaid Fraud Control Unit: 2015 Onsite Review (OEI-07-15-00290) 1

OBJECTIVE

To conduct an onsite review of the Virginia Medicaid Fraud Control Unit 

(MFCU or Unit).

BACKGROUND

The mission of MFCUs is to investigate and prosecute Medicaid provider 

fraud and patient abuse or neglect under State law.1 The SSA requires 

each State to operate a MFCU, unless the Secretary of Health and Human 

Services (HHS) determines that operation of a Unit would not be 

cost-effective because minimal Medicaid fraud exists in a particular State 

and the State has other adequate safeguards to protect Medicaid 

beneficiaries from abuse and neglect.2 Currently, 49 States and the 

District of Columbia (States) have MFCUs.3 

Each Unit must employ an interdisciplinary staff that consists of at least an 

investigator, an auditor, and an attorney.4 Unit staff review referrals of 

provider fraud and patient abuse or neglect to determine their potential for 

criminal prosecution and/or civil action. In fiscal year (FY) 2015, the 

50 Units collectively reported 1,553 convictions, 795 civil settlements and 

judgments, and approximately $745 million in recoveries.5, 6

Units must meet a number of requirements established by the SSA and 

Federal regulations. For example, each Unit must: 

 be a single, identifiable entity of State government, distinct from 

the single State Medicaid agency; 7

 develop a formal agreement, such as a memorandum of 

understanding (MOU), which describes the Unit’s relationship 

with the State Medicaid agency;8 and 

 ____________________________________________________________ 

1

 Social Security Act (SSA) § 1903(q). Regulations at 42 CFR § 1007.11(b)(1) add that 

the Unit’s responsibilities may include reviewing complaints of misappropriation of 

patients’ private funds in residential health care facilities.

2

 SSA § 1902(a)(61). 

3

 North Dakota and the territories of American Samoa, Guam, the Northern Mariana 

Islands, Puerto Rico, and the U.S. Virgin Islands have not established Units. 

4

 SSA § 1903(q)(6); 42 CFR § 1007.13. 

5

 Office of Inspector General (OIG), MFCU Statistical Data for Fiscal Year 2015. 

Accessed at http://oig.hhs.gov/fraud/medicaid-fraud-control-unitsmfcu/expenditures_statistics/fy2015-statistical-chart.htm on April 13, 2016. 

6

 All FY references in this report are based on the Federal FY (October 1 through 

September 30). 

7

 SSA § 1903(q)(2); 42 CFR §§ 1007.5 and 1007.9(a). 

8

 42 CFR § 1007.9(d). 
 

Virginia State Medicaid Fraud Control Unit: 2015 Onsite Review (OEI-07-15-00290) 2

 have either statewide authority to prosecute cases or formal 

procedures to refer suspected criminal violations to an agency with 

such authority.9

 

MFCU Funding 

Each MFCU is funded jointly by its State and the Federal government. 

Federal funding for the MFCUs is provided as part of the Federal 

Medicaid appropriation, but it is administered by OIG.10 Each Unit 

receives Federal financial participation equivalent to 75 percent of its total 

expenditures, with State funds contributing the remaining 25 percent.11 In 

FY 2015, combined Federal and State expenditures for the Units totaled 

$251 million, $188 million of which represented Federal funds.12 

Oversight of the MFCU Program 

The Secretary of HHS delegated to OIG the authority to administer the 

MFCU grant program.13

 To receive Federal reimbursement, each Unit must 

submit an initial application to OIG for approval and be recertified each year 

thereafter. 

In annually recertifying the Units, OIG evaluates Unit compliance with 

Federal requirements and adherence to performance standards. The Federal 

requirements for Units are contained in the SSA, regulations, and policy 

guidance.14 In addition, OIG has published 12 performance standards that it 

uses to assess whether a Unit is effectively performing its responsibilities.15 

The standards address topics such as staffing, maintaining adequate referrals, 

and cooperation with Federal authorities. Appendix A contains the 

Performance Standards. 

OIG also performs periodic onsite reviews of the Units, such as this review 

of the Virginia MFCU. During these onsite reviews, OIG evaluates Units’ 

compliance with laws, regulations, and policies, as well as adherence to the 

 ____________________________________________________________ 

9

 SSA § 1903(q)(1). 

10 SSA § 1903(a)(6)(B). 

11 Ibid. 

12 Office of Inspector General (OIG), MFCU Statistical Data for Fiscal Year 2015. 

Accessed at http://oig.hhs.gov/fraud/medicaid-fraud-control-unitsmfcu/expenditures_statistics/fy2015-statistical-chart.htm on April 13, 2016. 

13 The SSA authorizes the Secretary of HHS to award grants to the Units; (SSA § 

1903(a)(6)(B)); the Secretary delegated this authority to the OIG. 

14 On occasion, OIG issues policy transmittals to provide guidance and instructions to 

MFCUs. 

15 59 Fed. Reg. 49080 (Sept. 26, 1994). Accessed at http://oig.hhs.gov/fraud/medicaidfraud-control-units-mfcu/files/Performance%20Standards.pdf on May 22, 2015. On 

June 1, 2012, OIG published a revision of the performance standards at 

77 Fed. Reg. 32645. Because our review covered FYs 2012 through 2014, we applied 

the standards published on June 1, 2012. 
 

Virginia State Medicaid Fraud Control Unit: 2015 Onsite Review (OEI-07-15-00290) 3

12 performance standards. OIG also makes observations about best 

practices, provides recommendations to the Units, and monitors the 

implementation of the recommendations. These evaluations differ from 

other OIG evaluations as they support OIG’s direct administration of the 

MFCU grant program. These evaluations are subject to the same internal 

quality controls as other OIG evaluations, including internal peer review. 

OIG provides additional oversight including the collection and dissemination 

of performance data, training, and technical assistance. 

Virginia MFCU

The Unit, a division of the Virginia Office of the Attorney General, 

investigates and prosecutes cases of Medicaid fraud and patient abuse or 

neglect. The Unit employs 98 staff, including investigators, attorneys, and 

auditors.16 The Virginia Unit has three regional offices and is the 

fifth-largest Unit in the nation, with total expenditures of approximately 

$11.1 million in combined State and Federal funds in FY 2015.

17

 

The Unit is broadly organized into two groups: investigators and 

attorneys. Both the investigators and the attorneys are split further into 

civil and criminal teams. Each team is supervised by a chief investigator 

or chief attorney. The Unit’s two chief investigators report to the Deputy 

Director; the Unit’s two chief attorneys report to the Chief Section 

Counsel. 

Referrals. The Unit receives referrals from a variety of sources, including 

the State Medicaid agency, local law enforcement, and private citizens. 

Once the Unit receives a referral, the Unit’s assigned attorney and 

investigator conduct a case conference that includes a preliminary case 

evaluation and consultation with the lead attorney to decide whether the 

case should be opened. Appendix B depicts Unit referrals by referral 

source for FYs 2012 through 2014. 

Investigations and Prosecutions. Per Unit policy, Unit management 

approves the opening of each case. If the case is opened, the case will be 

routed to one of two tracks: active or monitored. Per Unit policy, 

investigative resources are assigned to active cases; investigative resources 

are available on an ad hoc basis for monitored cases. Legal resources are 

assigned to both active and monitored cases. The assigned investigator(s) 

are responsible for all investigative activity conducted for the case, under the 

 ____________________________________________________________ 

16 The Virginia Unit has some investigators specifically designated as financial 

investigators, who fulfill the auditor function. The Unit also employs administrative and 

paralegal staff. 

17 OIG, MFCU Statistical Data for Fiscal Year 2015. Accessed at 

http://oig.hhs.gov/fraud/medicaid-fraud-control-unitsmfcu/expenditures_statistics/fy2015-statistical-chart.htm on February 18, 2016. 
 

Virginia State Medicaid Fraud Control Unit: 2015 Onsite Review (OEI-07-15-00290) 4

direction of the appropriate supervisor and chief. The assigned attorney 

oversees the investigation, and is responsible for prosecuting the case. 

Appendix C provides detailed statistics on investigations opened and closed.

The Unit conducts quarterly reviews of each active case. During these 

reviews, each case’s progress is discussed, and investigative steps for the 

next 30, 60, and 90 days are planned. The Unit’s policy requires that 

documentation of each quarterly review be maintained in the case file.

Previous Onsite Review 

In 2009, OIG published a report on its onsite review of the Virginia Unit. 

OIG found that the Virginia Unit was in general compliance with all 

applicable Federal rules and regulations that govern the grant and the 

12 performance standards.

METHODOLOGY

Data Collection and Analysis

We conducted the onsite review in September 2015. We based our review 

on an analysis of data from seven sources: (1) policies, procedures, and 

documentation related to the Unit’s operations, staffing, and caseload; 

(2) financial documentation for FYs 2012 through 2014; (3) structured 

interviews with key stakeholders; (4) a survey of Unit staff; (5) structured 

interviews with the Unit’s management; (6) a sample of files for cases that 

were open in FYs 2012 through 2014; and (7) observation of Unit 

operations. We also used these data sources to determine if any issues 

related to findings from the previous OIG onsite review persisted. 

Appendix D provides 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.
 

Virginia State Medicaid Fraud Control Unit: 2015 Onsite Review (OEI-07-15-00290) 5

FINDINGS

Our review of the Virginia Unit found that it reported significant results 

and that it was generally in compliance with applicable laws, regulations,

and policy transmittals. The Unit reported over $1 billion in combined 

criminal and civil recoveries during the review period, with less than 

one-third of its recoveries derived from “global” settlements.18 The Unit 

recovered more than $34 for every $1 spent in the review period.

However, we identified several areas where the Unit should improve its 

operations. Although the Unit’s active case files generally contained the 

required supervisory reviews, the Unit’s policy did not require supervisory 

reviews of “monitored cases”. Furthermore, the Unit’s policy did not 

define what constituted a monitored case. Also, the Unit did not report all 

convictions and adverse actions to Federal partners within required 

timeframes. 

For FYs 2012 through 2014, the Virginia Unit reported 

79 criminal convictions, 46 civil judgments and 

settlements, and combined criminal and civil 

recoveries of $1.1 billion

For FYs 2012 through 2014, the Unit reported 79 criminal convictions and 

46 civil judgments and settlements. Table 1 provides details of the Unit’s

yearly convictions and civil judgments and settlements. Of the Unit’s 

79 convictions over the 3-year period, 71 involved provider fraud, and 

8 involved patient abuse or neglect. 

Table 1: Virginia MFCU Criminal Convictions and Civil Judgments 

and Settlements, FYs 2012–2014

Outcomes FY 2012 FY 2013 FY 2014 3-Year 

Total

Criminal Convictions 24 21 34 79

Civil Judgments and Settlements 12 11 23 46

Source: OIG analysis of Unit-submitted documentation, 2016.

The Unit reported criminal and civil recoveries of $1.1 billion for 

FYs 2012 through 2014—ranging from $28 million to $1 billion over the 

3 years (shown in Table 2). During the 3-year review period, “global 

cases” accounted for less than one-third of the Unit’s recoveries. 

 ____________________________________________________________ 

18 “Global” cases are civil false claims actions involving the U.S. Department of Justice 

and a group of State MFCUs. The National Association of Medicaid Fraud Control Units 

facilitates the settlement of global cases. 
 

Virginia State Medicaid Fraud Control Unit: 2015 Onsite Review (OEI-07-15-00290) 6

The Unit’s recoveries in FY 2013 were particularly high. In FY 2013, the 

Unit’s criminal recoveries constituted nearly three-quarters of national 

MFCU criminal recoveries; the Unit’s civil recoveries constituted nearly 

one-fifth of national MFCU civil recoveries. Most of the Unit’s criminal

and civil recoveries in FY 2013 resulted from the settlement of a single 

case against Abbott Laboratories. 

Table 2: Virginia MFCU Recoveries and Expenditures, 

FYs 2012–2014

Type of Recovery FY 2012 FY 2013 FY 2014 3-Year Total

Global Civil $18,158,785 $304,548,889 $20,557,459 $343,265,133

Nonglobal Civil $6,915,766 $0 $42,439,402 $49,355,168

Criminal $3,587,917 $703,681,818 $1,725,971 $708,995,706

 Total 

Recoveries $28,662,468 $1,008,230,707 $64,722,832 $1,101,616,007

 Total 

Expenditures $9,059,666 $11,249,106 $11,757,418 $32,066,190

Source: OIG analysis of Unit-submitted documentation, 2016. 

Unit policy requires supervisory review of active cases 

but not monitored cases; Unit policy does not define 

what constitutes a monitored case

Unit policy requires periodic supervisory reviews of active cases, but does 

not require supervisory review for monitored cases.19 We found that 

58 percent of the sampled cases were monitored cases, and only 7 percent 

of monitored cases had documented supervisory reviews in their 

respective case files. Supervisory reviews generally occurred for active 

cases. 

For active cases, the Unit’s policy requires a 30, 60, and 90-day 

investigation planning review and a quarterly case review meeting with 

senior staff. Following each quarterly case review meeting, Unit policy 

requires the investigator assigned to the case to complete a case review 

form reflecting the issues discussed and investigative steps assigned. The 

investigator is required to provide copies of this form to the appropriate 

supervisor and chief. Unit policy requires the supervisor to place the form 

in the case file. 

For monitored cases, the Unit’s policy requires periodic and continuous 

assessment to determine whether additional investigative effort is 

warrented. Unit policy does not state what constitutes a monitored case. 

 ____________________________________________________________ 

19 All references to Unit policy may be found in the “Medicaid Fraud Control Unit, 

Virginia Office of the Attorney General Employee Manual,” revised July 14, 2015. The 

Unit has an updated manual effective January 13, 2016. 
 

Virginia State Medicaid Fraud Control Unit: 2015 Onsite Review (OEI-07-15-00290) 7

However, the Unit director stated that the Unit applied the term monitored 

cases tor civil cases forwhich the Unit was not expending resources to 

investigate the underlying allation(s). Further, the Unit director reported 

that all but three of the monitored cases in our review were civil cases that 

were coordinated by the National Association of Medicaid Fraud Control 

Units (NAMFCU). These three cases involved urgent care services not 

rendered, improper lab testing resulting in patient harm, and transportation 

services not rendered. 

Unit management reported to us that, in practice, Unit staff reevaluate the 

status of monitored cases during the life of the case, as more information 

regarding the allegations is identified. Yet, for the two cases the Unit 

changed from an active to monitored status, we could not find 

documentation in the case files indicating how or why the status changed. 

Unlike active cases, the Unit’s policy has no set periodicity schedule of 

supervisory review or formal review forms for monitored cases. The 

Unit’s policy states that the assigned counsel is responsible for making 

these assessments and that investigative resources are available for 

monitored cases on an ad hoc basis. 

The Unit did not report all convictions and adverse 

actions to Federal partners within required timeframes

The Unit did not report all convictions to OIG for the purpose of program 

exclusion or all adverse actions to the National Practitioner Data 

Bank (NPDB) within the required timeframes. The Unit reported delays in 

receiving sentencing documentation from courts and a lack of clarity 

regarding what documentation OIG required as the reasons for the late 

reporting.

The Unit did not report half of all convictions to OIG within 

required timeframes

The Unit did not report 42 of its 79 convictions to OIG within 30 days of 

sentencing, as required by Federal regulations. Table 4 shows how many 

days after sentencing these convictions were reported to OIG. Performance 

Standard 8(f) states that the Unit should transmit to OIG reports of all 

convictions for the purpose of exclusion from Federal health care programs 

within 30 days of sentencing. Late reporting of convictions to OIG delays 

the initiation of the program exclusion process, which may result in 

improper payments to providers by Medicare or other Federal health care 

programs or possible harm to beneficiaries.

The Unit’s management explained that delays in obtaining certified 

sentencing documents made it difficult to report all convictions to OIG 

within the required timeframe. Within the Unit, one administrative staff 
 

Virginia State Medicaid Fraud Control Unit: 2015 Onsite Review (OEI-07-15-00290) 8

person was responsible for reporting convictions to OIG. Her 

understanding was that OIG required certified sentencing documents to 

report convictions for exclusion; however, she had not received formal 

guidance on this issue for several years. Additionally, in 2012 and 2013, the 

Unit reported convictions to OIG quarterly; and in 2014, the Unit reported

convictions to OIG monthly.

In Summer 2015, OIG issued guidance clarifying that sentencing 

documents do not need to be certified to report a conviction to OIG. The 

Unit is now aware of the reporting requirements, and it is reporting 

convictions to OIG as soon as they are received.

Table 4: Number of Convictions Reported to OIG After Required Timeframe

The Unit did not report half of all adverse actions to 

NPDB within required timeframes

The Unit did not report 41 convictions to NPDB within 30 days of the 

adverse action. Table 5 shows how many days after the action these 

convictions were reported to NPDB. Federal regulations require that Units 

report any adverse actions generated as a result of investigations or 

prosecutions of healthcare providers to the NPDB within 30 calendar days 

of the date on which the final adverse action was taken.20

 Performance 

Standard 8(g) also states that the Unit should report qualifying cases to 

NPDB.21 The NPDB is intended to restrict the ability of physicians, 

dentists, and other health care practitioners to move from State to State 

without disclosure or discovery of previous medical malpractice and 

adverse actions. If a Unit fails to ensure that adverse actions are reported to 

the NPDB, individuals may be able to find new healthcare employment 

with an organization that is not aware of their adverse actions. 

 ____________________________________________________________ 

20 45 CFR § 60.5. 

21 Performance Standard 8(g) states that the Unit should report “qualifying cases to the 

Healthcare Integrity & Protection Databank [HIPDB], the National Practitioner Data 

Bank, or successor data bases.” The HIPDB and the NPDB were merged during our 

review period (FYs 2012 through 2014); therefore, we reviewed the reporting of adverse 

actions under NPDB requirements. 78 Fed. Reg. 20473 (April 5, 2013). 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. 

Federal Partner 

Reported To

Convictions Reported 

Within 31 to 60 Days 

After Sentencing

Convictions Reported 

Within 61 to 90 Days 

After Sentencing

Convictions Reported 

More Than 90 Days 

After Sentencing

Total Convictions 

Reported More Than 

30 Days After Sentencing 

OIG 23 9 10 42

Source: OIG analysis of Unit convictions and dates reported to OIG and NPDB, 2016.
 

Virginia State Medicaid Fraud Control Unit: 2015 Onsite Review (OEI-07-15-00290) 9

Table 5: Number of Convictions Reported to NPDB After Required Timeframes

The staff person responsible for reporting the Unit’s convictions and adverse 

actions explained that reports cannot be entered into NPDB without certain 

information found only in the sentencing documents, such as duration of 

probation. The Unit has an informal process for following up with courts to 

obtain sentencing documents. This staff person stated that she requested

preliminary sentencing documents from courts if the 30-day timeframe was 

approaching for a particular conviction. If the court provided a preliminary 

sentencing document, the conviction was reported to NPDB based on that 

preliminary document. However, some courts did not provide such 

documents. 

The Unit maintained proper fiscal control of its 

resources

The Unit maintained proper fiscal control of its resources during the 

review period. According to Performance Standard 11, the Unit should 

exercise proper fiscal control over the Unit’s resources. On the basis of 

the review OIG auditors conducted, the Unit’s financial documentation 

indicated that the Unit’s requests for reimbursement for FYs 2012 through 

2014 represented allowable, allocable, and reasonable costs. In addition, 

the Unit maintained adequate internal controls relating to accounting, 

budgeting, personnel, procurement, property, and equipment. 

Other observation: The Virginia Unit’s partnerships 

with a variety of stakeholders led to successful 

Medicaid fraud prosecutions and increased recoveries

Having effective partnerships with a variety of stakeholders can enhance a 

Unit’s ability to prosecute Medicaid fraud, recover inappropriate 

payments, and achieve increased savings to Federal programs. The 

Virginia Unit leveraged its partnerships with the Food and Drug 

Administration (FDA), the Internal Revenue Service (IRS), and the Social 

Security Administration to achieve significant results.

The Unit’s partnership with FDA enhanced the Unit’s ability to 

successfully prosecute Medicaid fraud 

Unit staff reported that, in its joint investigations with FDA, shared 

technological and investigative resources led to the successful prosecution 

Federal Partner 

Reported To

Convictions Reported 

Within 31 to 60 Days 

After the Action

Convictions Reported 

Within 61 to 90 Days 

After the Action

Convictions Reported 

More Than 90 Days 

After the Action

Total Convictions 

Reported More Than 

30 Days After the Action 

NPDB 22 9 10 41

Source: OIG analysis of Unit convictions and dates reported to OIG and NPDB, 2016.
 

Virginia State Medicaid Fraud Control Unit: 2015 Onsite Review (OEI-07-15-00290) 10

of pharmaceutical manufacturers. Many of these prosecutions were for 

the sale of misbranded drugs to nursing homes, long-term-care facilities, 

and hospitals. The Unit Director stated that this partnership allowed the 

Unit to leverage resources effectively and provided unique insights into 

pharmaceutical investigations. Because the FDA has staff with 

specialized investigative experience throughout the country, it was able to 

conduct interviews with witnesses nationwide. FDA also can expedite 

access to information, such as new drug applications, that the Unit might 

not otherwise be able to access as easily. The Unit Director reported that 

the partnership also allowed the Unit to access the significant forensic 

capabilities of the FDA. This includes imaging electronic information 

onsite and providing significant staff support for execution of search 

warrants. 

The Unit’s partnership with IRS resulted in increased State 

recoveries of inappropriate payments 

The Unit’s largest-ever recoveries resulted from two investigations of 

large pharmaceutical manufacturers conducted jointly with IRS. One of 

these cases resulted in $1.5 billion in total recoveries—the highest total 

recoveries ever from a Medicaid fraud case investigated by a Unit.22 In 

these joint investigations, IRS financial experts helped Unit investigators 

and attorneys by tracing fraud proceeds so that the Unit could freeze 

assets. Unit staff reported that IRS’s expertise was particularly beneficial 

when the Unit’s cases involved international corporations. The IRS has 

the ability to track money to accounts outside of the United States and 

identify related organizations that may hold assets on behalf of target 

corporations. 

The Unit partnered with the Social Security Administration to 

achieve savings for State and Federal programs

The Unit participates in a joint taskforce with the Social Security 

Administration which resulted in combined savings of $40 million, 

including ($10 million in savings to the Medicaid program and 

$30 million in savings to the Social Security program). Some Unit 

investigators are detailed to the taskforce. These investigators conduct 

surveillance on individuals suspected of fraudulently receiving disability 

benefits,23 and may observe these individuals participating in activities 

inconsistent with the disability on which those benefits are based. For 

 ____________________________________________________________ 

22 The $1.5 billion included a criminal fine and forfeiture totaling $700 million, and civil 

settlements totaling $800 million. The Unit did not receive the entire $1.5 billion; rather, 

it was split among the Federal government and States participating in the case. 

23 The investigators detailed to the taskforce are funded by the Social Security 

Administration, not by the MFCU grant. 
 

Virginia State Medicaid Fraud Control Unit: 2015 Onsite Review (OEI-07-15-00290) 11

example, an investigator observed a disability recipient with a prosthetic 

leg coach a high school football team, demonstrating exercises to the 

players and mowing the football field after practice concluded. This 

individual also posted photos to a social networking site showing himself 

engaged in rappelling and hunting. 

When individuals’ disability claims are shown to be false, as in the 

example above, the Social Security Administration disenrolls them from 

the disability program. Since individuals receiving disability benefits are 

automatically eligible for Medicaid, disenrolling these individuals from 

the disability program eliminates their eligibility for Medicaid based on 

their disability status, resulting in savings to Medicaid. 

Other observation: The Unit’s use of specialty 

software improved its ability to process and share 

investigative information

Because of the Unit’s large civil caseload, the Unit invested in specialty 

software (i.e., e-discovery software) to improve its ability to process, 

track, and analyze evidence collected during the Unit’s investigations.24 

Civil cases often involve multiple parties and take years to complete. The 

Unit Director explained that it is not unusual for the Unit to process 

millions of documents during the course of some civil cases. As the Unit 

Director described, “[W]e couldn’t [pursue these large cases] the 

old-fashioned way by going through boxes.” The e-discovery software 

used by the Unit can read the text in a document, analyze it for key words, 

subject matter, or other characteristics, and systematically code it 

according to criteria established by an analyst. 

Unit staff also reported that their e-discovery software allowed them to 

more easily share data with Federal and State partners. The software 

allowed staff from partner agencies secure, offsite access to evidence, 

thereby facilitating the investigation and prosecution of the Unit’s joint 

cases. Unit staff and some stakeholder organizations also stated that the 

software increased the Unit’s ability to work joint cases efficiently. 

 ____________________________________________________________ 

24 E-discovery is short for electronic discovery. Discovery is a phase of litigation in 

which the parties in a dispute must provide each other relevant information and records. 

When discovery is conducted on electronic documents, such as emails, Web sites, and 

databases, or using specialized software, it is referred to as e-discovery. 
 

Virginia State Medicaid Fraud Control Unit: 2015 Onsite Review (OEI-07-15-00290) 12

CONCLUSION AND RECOMMENDATIONS

The Unit reported significant results during the review period, including 

79 criminal convictions and 46 civil judgments and settlements. The Unit 

reported combined criminal and civil recoveries of $1.1 billion, and 

recovered more than $34 for every $1 spent in the review period. We 

identified two practices that assisted the Unit in obtaining these results. 

The Unit partnered with a variety of stakeholders and used specialty 

software to help it successfully prosecute Medicaid fraud, maximize 

recoveries, and process and share investigative information with those 

partners. In addition, our review of the Virginia Unit found that it was 

generally in compliance with applicable laws, regulations and policy 

transmittals and maintained proper fiscal control of its resources. 

However, we identified several areas where the Unit should improve its 

operations. Although the Unit’s active case files generally contained the 

required supervisory reviews, the Unit’s policy did not require supervisory 

reviews of monitored cases. Furthermore, the Unit’s policy did not define 

what constituted a monitored case. Also, the Unit did not report all 

convictions and adverse actions to Federal partners within required 

timeframes. 

We recommend that the Virginia Unit: 

Revise Unit policy to define what constitutes a monitored case 

and the level and frequency of supervisory review appropriate 

for such cases

The Unit should revise its policy to: (1) define what constitutes a 

monitored case, as opposed to an active case, and provide information in 

the case file related to status changes, should they occur; and (2) 

determine the level of supervisory review appropriate for monitored cases, 

including the frequency of such reviews. We recognize that the Unit has a 

large number of monitored cases that are not actively investigated. 

Therefore, the Unit should determine the level of review for monitored 

cases that best fits its need and available resources.

Formalize its processes to ensure that convictions and adverse 

actions are consistently reported to Federal partners within 

required timeframes 

The Unit should formalize its processes to ensure that convictions are 

consistently reported to OIG within 30 days of sentencing and that adverse 

actions are reported to NPDB within 30 days of the action. The Unit 

could accomplish this by documenting its process to contact the various 

courts to request preliminary sentencing documents for all convictions and 
 

Virginia State Medicaid Fraud Control Unit: 2015 Onsite Review (OEI-07-15-00290) 13

adverse actions in its policies and procedures manual. The Unit may also 

want to consider maintaining dated copies of its requests for sentencing 

documents. 
 

Virginia State Medicaid Fraud Control Unit: 2015 Onsite Review (OEI-07-15-00290) 14

UNIT COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE

The Virginia Unit concurred with both of our recommendations.

Regarding the first recommendation, the Unit stated that it has updated its 

Policy Manual to define a monitored case and establish a reasonable 

periodic supervisory review requirement for monitored cases.

Regarding the second recommendation, the Unit stated that it has included 

in its Weekly Report, all individuals convicted and sentenced. This will 

help Unit management monitor reporting to the appropriate agencies.

The Unit’s comments are provided in Appendix F.
 

Virginia State Medicaid Fraud Control Unit: 2015 Onsite Review (OEI-07-15-00290) 15

APPENDIX A

2012 Performance Standards25

1. A UNIT CONFORMS WITH ALL APPLICABLE STATUTES, REGULATIONS, AND POLICY DIRECTIVES, 

INCLUDING:

A. Section 1903(q) of the Social Security Act, containing the basic requirements for operation of a MFCU;

B. Regulations for operation of a MFCU contained in 42 CFR part 1007;

C. Grant administration requirements at 45 CFR part 92 and Federal cost principles at 2 CFR part 225;

D. OIG policy transmittals as maintained on the OIG Web site; and 

E. Terms and conditions of the notice of the grant award.

2. A UNIT MAINTAINS REASONABLE STAFF LEVELS AND OFFICE LOCATIONS IN RELATION TO THE 

STATE’S MEDICAID PROGRAM EXPENDITURES AND IN ACCORDANCE WITH STAFFING 

ALLOCATIONS APPROVED IN ITS BUDGET. 

A. The Unit employs the number of staff that is included in the Unit’s budget estimate as approved by OIG.

B. The Unit employs a total number of professional staff that is commensurate with the State’s total Medicaid 

program expenditures and that enables the Unit to effectively investigate and prosecute (or refer for 

prosecution) an appropriate volume of case referrals and workload for both Medicaid fraud and patient abuse 

and neglect.

C. The Unit employs an appropriate mix and number of attorneys, auditors, investigators, and other 

professional staff that is both commensurate with the State’s total Medicaid program expenditures and that 

allows the Unit to effectively investigate and prosecute (or refer for prosecution) an appropriate volume of case 

referrals and workload for both Medicaid fraud and patient abuse and neglect.

D. The Unit employs a number of support staff in relation to its overall size that allows the Unit to operate 

effectively.

E. To the extent that a Unit maintains multiple office locations, such locations are distributed throughout the 

State, and are adequately staffed, commensurate with the volume of case referrals and workload for each 

location.

3. A UNIT ESTABLISHES WRITTEN POLICIES AND PROCEDURES FOR ITS OPERATIONS AND 

ENSURES THAT STAFF ARE FAMILIAR WITH, AND ADHERE TO, POLICIES AND PROCEDURES. 

A. The Unit has written guidelines or manuals that contain current policies and procedures, consistent with 

these performance standards, for the investigation and (for those Units with prosecutorial authority) prosecution 

of Medicaid fraud and patient abuse and neglect. 

B. The Unit adheres to current policies and procedures in its operations.

C. Procedures include a process for referring cases, when appropriate, to Federal and State agencies. 

Referrals to State agencies, including the State Medicaid agency, should identify whether further investigation 

or other administrative action is warranted, such as the collection of overpayments or suspension of payments.

D. Written guidelines and manuals are readily available to all Unit staff, either online or in hard copy.

E. Policies and procedures address training standards for Unit employees.

4. A UNIT TAKES STEPS TO MAINTAIN AN ADEQUATE VOLUME AND QUALITY OF REFERRALS FROM 

THE STATE MEDICAID AGENCY AND OTHER SOURCES. 

A. The Unit takes steps, such as the development of operational protocols, to ensure that the State Medicaid 

agency, managed care organizations, and other agencies refer to the Unit all suspected provider fraud cases. 

Consistent with 42 CFR 1007.9(g), the Unit provides timely written notice to the State Medicaid agency when 

referred cases are accepted or declined for investigation.

B. The Unit provides periodic feedback to the State Medicaid agency and other referral sources on the 

adequacy of both the volume and quality of its referrals.

 ____________________________________________________________ 

25 77 Fed. Reg. 32645, June 1, 2012. 
 

Virginia State Medicaid Fraud Control Unit: 2015 Onsite Review (OEI-07-15-00290) 16

C. The Unit provides timely information to the State Medicaid or other agency when the Medicaid or other 

agency requests information on the status of MFCU investigations, including when the Medicaid agency 

requests quarterly certification pursuant to 42 CFR 455.23(d)(3)(ii).

D. For those States in which the Unit has original jurisdiction to investigate or prosecute patient abuse and 

neglect cases, the Unit takes steps, such as the development of operational protocols, to ensure that pertinent 

agencies refer such cases to the Unit, consistent with patient confidentiality and consent. Pertinent agencies 

vary by State but may include licensing and certification agencies, the State Long Term Care Ombudsman, and 

adult protective services offices. 

E. The Unit provides timely information, when requested, to those agencies identified in (D) above regarding 

the status of referrals.

F. The Unit takes steps, through public outreach or other means, to encourage the public to refer cases to the 

Unit.

5. A UNIT TAKES STEPS TO MAINTAIN A CONTINUOUS CASE FLOW AND TO COMPLETE CASES IN 

AN APPROPRIATE TIMEFRAME BASED ON THE COMPLEXITY OF THE CASES.

A. Each stage of an investigation and prosecution is completed in an appropriate timeframe.

B. Supervisors approve the opening and closing of all investigations and review the progress of cases and take 

action as necessary to ensure that each stage of an investigation and prosecution is completed in an 

appropriate timeframe.

C. Delays to investigations and prosecutions are limited to situations imposed by resource constraints or other 

exigencies. 

6. A UNIT’S CASE MIX, AS PRACTICABLE, COVERS ALL SIGNIFICANT PROVIDER TYPES AND 

INCLUDES A BALANCE OF FRAUD AND, WHERE APPROPRIATE, PATIENT ABUSE AND NEGLECT 

CASES. 

A. The Unit seeks to have a mix of cases from all significant provider types in the State.

B. For those States that rely substantially on managed care entities for the provision of Medicaid services, the 

Unit includes a commensurate number of managed care cases in its mix of cases.

D. As part of its case mix, the Unit maintains a balance of fraud and patient abuse and neglect cases for those 

States in which the Unit has original jurisdiction to investigate or prosecute patient abuse and neglect cases.

C. The Unit seeks to allocate resources among provider types based on levels of Medicaid expenditures or 

other risk factors. Special Unit initiatives may focus on specific provider types.

E. As part of its case mix, the Unit seeks to maintain, consistent with its legal authorities, a balance of criminal 

and civil fraud cases.

7. A UNIT MAINTAINS CASE FILES IN AN EFFECTIVE MANNER AND DEVELOPS A CASE 

MANAGEMENT SYSTEM THAT ALLOWS EFFICIENT ACCESS TO CASE INFORMATION AND OTHER 

PERFORMANCE DATA. 

A. Reviews by supervisors are conducted periodically, consistent with MFCU policies and procedures, and are 

noted in the case file.

B. Case files include all relevant facts and information and justify the opening and closing of the cases.

C. Significant documents, such as charging documents and settlement agreements, are included in the file. 

D. Interview summaries are written promptly, as defined by the Unit’s policies and procedures.

E. The Unit has an information management system that manages and tracks case information from initiation to 

resolution.

F. The Unit has an information management system that allows for the monitoring and reporting of case 

information, including the following: 

1. The number of cases opened and closed and the reason that cases are closed.

2. The length of time taken to determine whether to open a case referred by the State Medicaid agency or other 

referring source.

3. The number, age, and types of cases in the Unit’s inventory/docket
 

Virginia State Medicaid Fraud Control Unit: 2015 Onsite Review (OEI-07-15-00290) 17

4. The number of referrals received by the Unit and the number of referrals by the Unit to other agencies.

5. The number of cases criminally prosecuted by the Unit or referred to others for prosecution, the number of 

individuals or entities charged, and the number of pending prosecutions.

6. The number of criminal convictions and the number of civil judgments.

7. The dollar amount of overpayments identified.

8. The dollar amount of fines, penalties, and restitution ordered in a criminal case and the dollar amount of 

recoveries and the types of relief obtained through civil judgments or prefiling settlements.

8. A UNIT COOPERATES WITH OIG AND OTHER FEDERAL AGENCIES IN THE INVESTIGATION AND 

PROSECUTION OF MEDICAID AND OTHER HEALTH CARE FRAUD. 

A. The Unit communicates on a regular basis with OIG and other Federal agencies investigating or prosecuting 

health care fraud in the State.

B. The Unit cooperates and, as appropriate, coordinates with OIG’s Office of Investigations and other Federal 

agencies on cases being pursued jointly, cases involving the same suspects or allegations, and cases that have 

been referred to the Unit by OIG or another Federal agency. 

C. The Unit makes available, to the extent authorized by law and upon request by Federal investigators and 

prosecutors, all information in its possession concerning provider fraud or fraud in the administration of the 

Medicaid program.

D. For cases that require the granting of “extended jurisdiction” to investigate Medicare or other Federal health 

care fraud, the Unit seeks permission from OIG or other relevant agencies under procedures as set by those 

agencies. 

E. For cases that have civil fraud potential, the Unit investigates and prosecutes such cases under State 

authority or refers such cases to OIG or the U.S. Department of Justice.

F. The Unit transmits to OIG, for purposes of program exclusions under section 1128 of the Social Security Act, 

all pertinent information on MFCU convictions within 30 days of sentencing, including charging documents, plea 

agreements, and sentencing orders.

G. The Unit reports qualifying cases to the Healthcare Integrity & Protection Databank, the National Practitioner 

Data Bank, or successor data bases.

9. A UNIT MAKES STATUTORY OR PROGRAMMATIC RECOMMENDATIONS, WHEN WARRANTED, TO 

THE STATE GOVERNMENT. 

A. The Unit, when warranted and appropriate, makes statutory recommendations to the State legislature to 

improve the operation of the Unit, including amendments to the enforcement provisions of the State code.

B. The Unit, when warranted and appropriate, makes other regulatory or administrative recommendations 

regarding program integrity issues to the State Medicaid agency and to other agencies responsible for Medicaid 

operations or funding. The Unit monitors actions taken by the State legislature and the State Medicaid or other 

agencies in response to recommendations.

10. A UNIT PERIODICALLY REVIEWS ITS MEMORANDUM OF UNDERSTANDING (MOU) WITH THE 

STATE MEDICAID AGENCY TO ENSURE THAT IT REFLECTS CURRENT PRACTICE, POLICY, AND 

LEGAL REQUIREMENTS. 

A. The MFCU documents that it has reviewed the MOU at least every 5 years, and has renegotiated the MOU 

as necessary, to ensure that it reflects current practice, policy, and legal requirements.

B. The MOU meets current Federal legal requirements as contained in law or regulation, including 42 CFR § 

455.21, “Cooperation with State Medicaid fraud control units,” and 42 CFR § 455.23, “Suspension of payments 

in cases of fraud.”

C. The MOU is consistent with current Federal and State policy, including any policies issued by OIG or the 

Centers for Medicare & Medicaid Services (CMS).

D. Consistent with Performance Standard 4, the MOU establishes a process to ensure the receipt of an 

adequate volume and quality of referrals to the Unit from the State Medicaid agency.

E. The MOU incorporates by reference the CMS Performance Standard for Referrals of Suspected Fraud from 

a State Agency to a Medicaid Fraud Control Unit.
 

Virginia State Medicaid Fraud Control Unit: 2015 Onsite Review (OEI-07-15-00290) 18

11. A UNIT EXERCISES PROPER FISCAL CONTROL OVER UNIT RESOURCES. 

A. The Unit promptly submits to OIG its preliminary budget estimates, proposed budget, and Federal financial 

expenditure reports.

B. The Unit maintains an equipment inventory that is updated regularly to reflect all property under the Unit’s 

control.

C. The Unit maintains an effective time and attendance system and personnel activity records.

D. The Unit applies generally accepted accounting principles in its control of Unit funding.

E. The Unit employs a financial system in compliance with the standards for financial management systems 

contained in 45 CFR 92.20.

12. A UNIT CONDUCTS TRAINING THAT AIDS IN THE MISSION OF THE UNIT. 

A. The Unit maintains a training plan for each professional discipline that includes an annual minimum number 

of training hours and that is at least as stringent as required for professional certification.

B. The Unit ensures that professional staff comply with their training plans and maintain records of their staff’s 

compliance.

C. Professional certifications are maintained for all staff, including those that fulfill continuing education 

requirements.

D. The Unit participates in MFCU-related training, including training offered by OIG and other MFCUs, as such 

training is available and as funding permits.

E. The Unit participates in cross-training with the fraud detection staff of the State Medicaid agency. As part of 

such training, Unit staff provide training on the elements of successful fraud referrals and receive training on the 

role and responsibilities of the State Medicaid agency.
 

Virginia State Medicaid Fraud Control Unit: 2015 Onsite Review (OEI-07-15-00290) 19

APPENDIX B

Virginia State Medicaid Fraud Control Unit Referrals by 

Referral Source for FYs 2012 Through 2014 

FY 2012 FY 2013 FY 2014

Referral Source Fraud Abuse & 

Neglect

Patient 

Funds Fraud Abuse & Neglect

Patient 

Funds Fraud Abuse & Neglect

Patient 

Funds

Medicaid agency –

PI/SURS26 115 0 1 100 0 0 80 0 0

Medicaid agency –

other 0 0 0 0 0 0 0 0 0

Managed care 

organizations 0 0 0 0 0 0 0 0 0

State survey and 

certification agency 0 0 0 0 0 0 0 0 0

Other State 

agencies 1 13 0 8 1 0 7 0 0

Licensing board 0 0 0 0 0 0 0 0 0

Law enforcement 0 6 0 1 2 0 5 1 0

Office of Inspector 

General 2 2 0 0 1 0 5 3 0

Prosecutors 0 2 0 0 0 0 1 1 0

Providers 0 2 0 8 0 0 11 0 0

Provider 

associations 0 0 0 0 0 0 0 0 0

Private health 

insurer 0 0 0 0 0 0 0 0 0

Long-term-care 

ombudsman 0 1 0 0 0 0 0 0 0

Adult protective 

services 0 24 0 1 15 0 5 19 1

Private citizens 20 9 0 37 11 0 67 4 1

MFCU hotline 0 0 0 0 0 0 0 0 0

Self-generated 0 3 0 0 1 0 0 0 0

Other 16 0 0 28 2 0 29 5 0

 Total 154 62 1 183 33 0 210 33 2

 Annual Total 217 216 245

 ____________________________________________________________ 

26 The abbreviation “PI” stands for program integrity; the abbreviation “SURS” stands for 

Surveillance and Utilization Review Subsystem. 
 

Virginia State Medicaid Fraud Control Unit: 2015 Onsite Review (OEI-07-15-00290) 20

APPENDIX C

Investigations Opened and Closed By Provider Category for 

FYs 2012 Through 2014 

Table C-1: Fraud Investigations 

Provider Category FY 2012 FY 2013 FY 2014

Facilities Opened Closed Opened Closed Opened Closed

 Hospitals 2 0 1 1 2 2

 Nursing facilities 1 0 2 0 1 1

 Other long-term-care 

 facilities 0 0 0 1 0 0

 Substance abuse treatment 

 centers 0 0 0 0 0 0

 Other 1 0 3 2 4 4

 Subtotal 4 0 6 4 7 7

Practitioners Opened Closed Opened Closed Opened Closed

 Doctors of medicine or 

 osteopathy 0 0 5 0 4 4

 Dentists 4 2 2 1 1 0

 Podiatrists 0 0 0 0 1 1

 Optometrists/opticians 0 0 0 0 0 0

 Counselors/psychologists 3 2 1 7 4 1

 Chiropractors 0 0 0 0 0 0

 Other 0 3 2 2 3 1

 Subtotal 7 7 10 10 13 7

Medical Support Opened Closed Opened Closed Opened Closed

 Pharmacies 8 0 16 3 12 11

 Pharmaceutical 

 manufacturers 44 40 63 70 38 65

 Suppliers of durable medical

 equipment and/or supplies 12 7 21 13 24 25

 Laboratories 1 3 10 7 12 3

 Transportation services 0 4 1 0 0 1

 Home health care agencies 2 3 4 6 5 1

 Home health care aides 10 8 38 16 42 25

 Nurses, physician assistants, 

 nurse practitioners, certified 

 nurse aides

0 0 0 0 0 0

 Radiologists 0 0 1 1 1 0

 Medical support—other 2 0 2 2 7 2

 Subtotal 79 65 156 118 141 133
 

Virginia State Medicaid Fraud Control Unit: 2015 Onsite Review (OEI-07-15-00290) 21

Table C-1 (Continued): Fraud Investigations

Program Related Opened Closed Opened Closed Opened Closed

 Managed care 1 1 0 0 2 0

 Medicaid program 

 administration 0 0 0 1 0 0

 Billing company 0 0 0 1 0 0

 Other 3 1 6 0 0 4

 Subtotal 4 2 6 2 2 4

 Total Provider Categories 94 74 178 134 163 151

Source: OIG analysis of Unit-submitted documentation, 2016.

Table C-2: Patient Abuse and Neglect Investigations

Provider Category FY 2012 FY 2013 FY 2014

Opened Closed Opened Closed Opened Closed

 Nursing facilities 5 7 3 3 1 2

 Other long-term-care facilities 2 0 0 2 1 1

Nurses, physician’s 

assistants, nurse 

practitioners, certified nurse 

aides

1 0 1 1 4 0

 Home health aides 3 2 0 2 2 1

 Other 0 0 0 0 3 1

 Total 11 9 4 8 11 5

Source: OIG analysis of Unit-submitted documentation, 2016.

Table C-3: Patient Funds Investigations

Provider Category FY 2012 FY 2013 FY 2014

Opened Closed Opened Closed Opened Closed

 Nondirect care 0 2 1 2 0 0

Nurses, physician’s 

assistants, nurse 

practitioners, certified nurse 

aides

0 0 0 0 0 0

 Home health aides 0 0 0 0 0 0

 Other 0 0 0 0 0 0

 Total 0 2 1 2 0 0

Source: OIG analysis of Unit-submitted documentation, 2016.
 

Virginia State Medicaid Fraud Control Unit: 2015 Onsite Review (OEI-07-15-00290) 22

APPENDIX D

Detailed Methodology 

Data collected from the seven sources below was used to describe the 

caseload and assess the performance of the Virginia MFCU. 

Data Collection 

Review of Unit Documentation. Prior to the onsite visit, we analyzed 

information regarding the Unit’s investigation of Medicaid cases, 

including information about the number of referrals the Unit received, the 

number of investigations the Unit opened and closed, the outcomes of 

those investigations, and the Unit’s case mix. We also collected and 

analyzed information about the number of cases that the Unit referred for 

prosecution and the outcomes of those prosecutions. 

We gathered this information from several sources, including the Unit’s 

quarterly statistical reports, its annual reports, its recertification 

questionnaire, its policy and procedures manuals, and its MOU with the 

State Medicaid agency. We requested any additional data or clarification 

from the Unit as necessary.

Review of Unit Financial Documentation. To evaluate internal control of 

fiscal resources, we reviewed policies and procedures related to the Unit’s 

budgeting, accounting systems, cash management, procurement, property, 

and staffing. We reviewed records in the Payment Management 

System (PMS) 27 and revenue accounts to determine the accuracy of the 

Federal Financial Reports (FFRs) for FYs 2012 through 2014. We also 

obtained the Unit’s claimed grant expenditures from its FFRs and the 

supporting schedules. From the supporting schedules, we requested and 

reviewed supporting documentation for the selected items. We noted any 

instances of noncompliance with applicable regulations. 

We selected three purposive samples to assess the Unit’s internal control 

of fiscal resources. The three samples included the following: 

1. To assess the Unit’s expenditures, we selected a purposive sample 

of 89 accounting records. We selected routine and nonroutine 

transactions representing a variety of budget categories and 

payment amounts. 

2. To assess inventory, we selected and verified a purposive sample of 

45 items from the current inventory list of 1,035 items. To ensure 

 ____________________________________________________________ 

27 The PMS is a grant payment system operated and maintained by the Department of 

Health and Human Services, 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. 
 

Virginia State Medicaid Fraud Control Unit: 2015 Onsite Review (OEI-07-15-00290) 23

a variety in our inventory sample, we included items that were 

portable, high value, or unusual in nature (e.g., vehicles, 

communication equipment). 

3. To assess employee time and effort, we selected two purposive 

samples of Unit employees who were paid during the review 

period: for FY 2013, we sampled 29 of 103 employees, and for 

FY 2014, we sampled 35 of 114 employees. We then requested 

and reviewed documentation (e.g., time card records) to support 

the time and effort of that employee in the selected pay period.

Interviews with Key Stakeholders. In July and August 2015, we interviewed 

key stakeholders, including officials in the United States Attorneys’ Offices, 

the State Attorney General’s Office, and other State agencies that interacted 

with the Unit (i.e., the Medicaid Program Integrity Unit, the Office of the 

State Long-Term Care Ombudsman, and the Office of Licensure and 

Certification). We also interviewed supervisors from OIG’s Region IV 

offices who work regularly with the Unit. We focused these interviews on 

the Unit’s 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.

Survey of Unit Staff. In August 2015, we conducted an online survey of all 

77 nonmanagerial Unit staff within each professional discipline 

(i.e., investigators, auditors, attorneys, analysts, and nurse investigators) as 

well as support staff. The response rate was 99 percent.28 Our questions 

focused on Unit operations, 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 Unit’s 

compliance with applicable laws and regulations. 

Onsite Interviews with Unit Management. We conducted structured 

interviews with the Unit’s management during the onsite review in 

September 2015. We interviewed the Unit’s Director, Deputy Director, 

Chief of Fraud and Corporate Neglect Investigations, Chief of 

Investigations and Elder Abuse, Chief Section Counsel, Chief of Civil 

Litigation, Chief Prosecutor, and Administrative Manager. We asked these 

individuals to provide information related to (1) Unit operations, (2) Unit 

practices that contributed to the effectiveness and efficiency of Unit 

operations and/or performance, (3) opportunities for the Unit to improve 

 ____________________________________________________________ 

28 One nonmanagerial staff person was on maternity leave during the period of the staff 

survey and therefore did not respond. 
 

Virginia State Medicaid Fraud Control Unit: 2015 Onsite Review (OEI-07-15-00290) 24

its operations and/or performance, and (4) clarification regarding 

information obtained from other data sources.

Onsite Review of Case Files and Other Documentation. We requested that 

the Unit provide us with a list of cases that were open at any point during 

FYs 2012 through 2014. We requested data on the 777 open cases that

included, but was not limited to, the current status of the case; whether the 

case was criminal, civil, or global; and the date on which the case was 

opened. Because global cases are civil false claims actions that typically 

involve multiple agencies, such as the U.S. Department of Justice and a 

group of State MFCUs, we exclude all of the cases categorized as “global” 

from our review of a Unit’s case files. Therefore, we excluded 82 cases 

that were categorized as “global” from the list of cases. The remaining 

number of case files was 695. 

From the 695 cases, we selected a simple random sample of 100 cases for 

review. From this initial sample of 100 case files, we selected a simple 

random sample of 50 files for a more indepth review of selected issues, 

such as the timeliness of investigations and case development. 

Through our case review, we determined that 58 of the 100 sampled cases 

were monitored cases. Appendix E contains the point estimates and their 

95-percent confidence intervals. 

Onsite Review of Unit Operations. During our September 2015 onsite 

visit, we reviewed the Unit’s workspace and operations. Specifically, we 

visited the Unit headquarters in the State capital. While onsite, we 

observed the Unit’s 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 data to identify any opportunities for improvement and 

instances in which the Unit did not fully meet the performance standards 

or was not operating in accordance with laws, regulations, or policy 

transmittals.29

 ____________________________________________________________ 

29 All relevant regulations, statutes, and policy transmittals are available online at

http://oig.hhs.gov/fraud/medicaid-fraud-control-units-mfcu.
 

Virginia State Medicaid Fraud Control Unit: 2015 Onsite Review (OEI-07-15-00290) 25

APPENDIX E

Point Estimates and 95-Percent Confidence Intervals Based on 

Reviews of Case Files 

Estimate Sample 

Size 

Point 

Estimate

95-Percent Confidence 

Interval 

Lower Upper

Percentage of monitored cases that had 

documented supervisory reviews in their 

respective case files

58 6.9% 2.0% 16.1%

Source: OIG analysis of Virginia MFCU case files, 2016.
 

Virginia State Medicaid Fraud Control Unit: 2015 Onsite Review (OEI-07-15-00290) 26

APPENDIX F

Unit Comments
 

Virginia State Medicaid Fraud Control Unit: 2015 Onsite Review (OEI-07-15-00290) 27
 

Virginia State Medicaid Fraud Control Unit: 2015 Onsite Review (OEI-07-15-00290) 28

ACKNOWLEDGMENTS

This report was prepared under the direction of Brian Whitley, Regional 

Inspector General for Evaluation and Inspections in the Kansas City 

regional office, and Jennifer King, Deputy Regional Inspector General; 

and in consultation with Richard Stern, Director of the Medicaid Fraud 

Policy and Oversight Division. 

Michala Walker, of the Kansas City regional office, served as the project 

leader for this study. Other Office of Evaluation and Inspections staff who 

conducted the study include Michael Barrett and Conswelia McCourt. 

Other Medicaid Fraud Policy and Oversight Division staff who 

participated in the review include Jordan Clementi. Office of 

Investigations staff also participated in the review. Office of Audit 

Services staff who conducted a financial review include Marilyn Carrion, 

Valerie Johnson, and Michael Jones. Other central office staff who 

contributed to this review include Kevin Farber, Lonie Kim, Joanne 

Legomsky, and Jacquelyn Towns. 
Office of Inspector General

http://oig.hhs.gov 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95452, as 

amended, is to protect the integrity of the Department of Health and Human Services 

(HHS) programs, as well as the health and welfare of individuals served by those programs. 

This statutory mission is carried out through a nationwide network of audits, investigations, 

and inspections conducted by the following operating components: 

Office of Audit Services 

The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting 

audits with its own audit resources or by overseeing audit work done by others. Audits 

examine the performance of HHS programs and/or its grantees and contractors in carrying 

out their respective responsibilities and are intended to provide independent assessments of 

HHS programs and operations. These assessments help reduce waste, abuse, and 

mismanagement and promote economy and efficiency throughout HHS. 

Office of Evaluation and Inspections 

The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 

HHS, Congress, and the public with timely, useful, and reliable information on significant 

issues. These evaluations focus on preventing fraud, waste, or abuse and promoting 

economy, efficiency, and effectiveness of departmental programs. To promote impact, OEI 

reports also present practical recommendations for improving program operations. 

Office of Investigations 

The Office of Investigations (OI) conducts criminal, civil, and administrative investigations 

of fraud and misconduct related to HHS programs, operations, and individuals. With 

investigators working in all 50 States and the District of Columbia, OI utilizes its resources 

by actively coordinating with the Department of Justice and other Federal, State, and local 

law enforcement authorities. The investigative efforts of OI often lead to criminal 

convictions, administrative sanctions, and/or civil monetary penalties. 

Office of Counsel to the Inspector General 

The Office of Counsel to the Inspector General (OCIG) provides general legal services to 

OIG, rendering advice and opinions on HHS programs and operations and providing all 

legal support for OIG’s 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.