I

103D CONGRESS

2D SESSION H. R. 5258

To improve Federal enforcement against health care fraud and abuse.

IN THE HOUSE OF REPRESENTATIVES

OCTOBER 7, 1994

Mr. CONYERS introduced the following bill; which was referred to the

Committee on Government Operations

A BILL

To improve Federal enforcement against health care fraud

and abuse.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Health Fraud and

5 Abuse Act of 1994’’.

6 SEC. 2. HEALTH CARE FRAUD AND ABUSE.

7 (a) FEDERAL ENFORCEMENT BY INSPECTORS GEN8 ERAL.—

9 (1) AUDITS, INVESTIGATIONS, INSPECTIONS,

10 AND EVALUATIONS.—
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1 (A) IN GENERAL.—Except as provided in

2 subparagraph (B), the Inspector General of

3 each of the Department of Health and Human

4 Services, the Department of Defense, the De5 partment of Labor, the Office of Personnel

6 Management, and the Department of Veterans

7 Affairs shall conduct audits, civil and criminal

8 investigations, inspections, and evaluations re9 lating to the prevention, detection, and control

10 of health care fraud and abuse in violation of

11 any Federal law.

12 (B) LIMITATION.—An Inspector General,

13 other than the Inspector General of the Depart14 ment of Health and Human Services, may not

15 conduct any audit, investigation, inspection, or

16 evaluation under subparagraph (A) with respect

17 to health care fraud or abuse under title V, XI,

18 XVIII, XIX, or XX of the Social Security Act.

19 (2) POWERS.—For purposes of carrying out du20 ties and responsibilities under paragraph (1), each

21 Inspector General referred to in paragraph (1) may

22 exercise powers that are available to the Inspector

23 General for purposes of audits, investigations, and

24 other activities under the Inspector General Act of

25 1978 (5 U.S.C. App.).
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1 (3) COORDINATION AND REVIEW OF ACTIVITIES

2 OF OTHER FEDERAL, STATE, AND LOCAL AGEN3 CIES.—

4 (A) PROGRAM.—The Inspector General

5 shall—

6 (i) jointly establish, on the effective

7 date specified in subsection (j)(1), a pro8 gram to prevent, detect, and control health

9 care fraud and abuse in violation of any

10 Federal law, which considers the activities

11 of Federal, State, and local law enforce12 ment agencies, Federal and State agencies

13 responsible for the licensing and certifi14 cation of health care providers, and State

15 agencies designated under subsection

16 (b)(1)(A); and

17 (ii) publish a description of the pro18 gram in the Federal Register, by not later

19 than June 30, 1995.

20 (B) ANNUAL INVESTIGATIVE PLAN.—Each

21 Inspector General referred to in paragraph (1)

22 shall develop an annual investigative plan for

23 the prevention, detection, and control of health

24 care fraud and abuse in accordance with the

25 program established under subparagraph (A).
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1 (4) CONSULTATIONS.—Each of the Inspectors

2 General referred to in paragraph (1) shall regularly

3 consult with each other, with Federal, State, and

4 local law enforcement agencies, with Federal and

5 State agencies responsible for the licensing and cer6 tification of health care providers, and with Health

7 Care Fraud and Abuse Control Units, in order to

8 assist in coordinating the prevention, detection, and

9 control of health care fraud and abuse in violation

10 of any Federal law.

11 (b) STATE ENFORCEMENT.—

12 (1) DESIGNATION OF STATE AGENCIES AND ES13 TABLISHMENT OF HEALTH CARE FRAUD AND ABUSE

14 CONTROL UNIT.—The Governor of each State—

15 (A) shall, consistent with State law, des16 ignate agencies of the State which conduct, su17 pervise, and coordinate audits, civil and crimi18 nal investigations, inspections, and evaluations

19 relating to the prevention, detection, and con20 trol of health care fraud and abuse in violation

21 of any Federal law in the State; and

22 (B) may establish and maintain in accord23 ance with paragraph (2) a State agency to act

24 as a Health Care Fraud and Abuse Control

25 Unit for purposes of this section.
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1 (2) HEALTH CARE FRAUD AND ABUSE CONTROL

2 UNIT REQUIREMENTS.—A Health Care Fraud and

3 Abuse Control Unit established by a State under

4 paragraph (1)(B) shall be a single identifiable entity

5 of State government which is separate and distinct

6 from any State agency with principal responsibility

7 for the administration of health care programs, and

8 which meets the following requirements:

9 (A) The entity—

10 (i) is a unit of the office of the State

11 Attorney General or of another department

12 of State government that possesses state13 wide authority to prosecute individuals for

14 criminal violations;

15 (ii) is in a State the constitution of

16 which does not provide for the criminal

17 prosecution of individuals by a statewide

18 authority, and has formal procedures, ap19 proved by the Secretary, that assure it will

20 refer suspected criminal violations relating

21 to health care fraud or abuse in violation

22 of any Federal law to the appropriate au23 thority or authorities of the State for pros24 ecution and assure it will assist such au-
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1 thority or authorities in such prosecutions;

2 or

3 (iii) has a formal working relationship

4 with the office of the State Attorney Gen5 eral or the appropriate authority or au6 thorities for prosecution and has formal

7 procedures (including procedures under

8 which it will refer suspected criminal viola9 tions to such office), that provide effective

10 coordination of activities between the

11 Health Care Fraud and Abuse Control

12 Unit and such office with respect to the

13 detection, investigation, and prosecution of

14 suspected health care fraud or abuse in

15 violation of any Federal law.

16 (B) The entity conducts a statewide pro17 gram for the investigation and prosecution of

18 violations of all applicable State laws regarding

19 any and all aspects of health care fraud and

20 abuse in violation of any Federal law.

21 (C) The entity has procedures for—

22 (i) reviewing complaints of the abuse

23 or neglect of patients of health care facili24 ties in the State, and
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1 (ii) where appropriate, investigating

2 and prosecuting such complaints under the

3 criminal laws of the State or for referring

4 the complaints to other State or Federal

5 agencies for action.

6 (D) The entity provides for the collection,

7 or referral for collection to the appropriate

8 agency, of overpayments that—

9 (i) are made under any federally fund10 ed or mandated health care program re11 quired by this Act, and

12 (ii) it discovers in carrying out its ac13 tivities.

14 (E) The entity employs attorneys, auditors,

15 investigators, and other necessary personnel, is

16 organized in such a manner, and provides suffi17 cient resources, as is necessary to promote the

18 effective and efficient conduct of its activities.

19 (3) SUBMISSION OF ANNUAL PLAN.—Each

20 Health Care Fraud and Abuse Control Unit may

21 submit each year to the Inspector General a plan for

22 preventing, detecting, and controlling, consistent

23 with the program established under subsection

24 (a)(3)(A), health care fraud and abuse in violation

25 of any Federal law.
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1 (4) APPROVAL OF ANNUAL PLAN.—The Inspec2 tor General shall approve a plan submitted under

3 paragraph (3) by the Health Care Fraud and Abuse

4 Control Unit of a State, unless the Inspector Gen5 eral establishes that the plan—

6 (A) is inconsistent with the program estab7 lished under subsection (a)(3)(A); or

8 (B) will not enable the agencies of the

9 State designated under paragraph (1)(A) to

10 prevent, detect, and control health care fraud

11 and abuse in violation of any Federal law.

12 (5) REPORTS.—Each Health Care Fraud and

13 Abuse Control Unit shall submit to the Inspector

14 General an annual report containing such informa15 tion as the Inspector General determines to be nec16 essary.

17 (6) SEMIANNUAL REPORTS OF INSPECTOR GEN18 ERAL OF HEALTH AND HUMAN SERVICES.—The In19 spector General shall include in each semiannual re20 port of the Inspector General to the Congress under

21 section 5(a) of the Inspector General Act of 1978 (5

22 U.S.C. App.) an assessment of the Inspector General

23 of how well States are preventing, detecting, and

24 controlling health care fraud and abuse.

25 (c) PAYMENTS TO STATES.—
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1 (1) IN GENERAL.—For each year for which a

2 State has a plan approved under subsection (b)(4),

3 and subject to the availability of appropriations, the

4 Inspector General shall pay to the State for each

5 quarter an amount equal to 75 percent of the sums

6 expended during the quarter by agencies designated

7 by the Governor of the State under subsection

8 (b)(1)(A) in conducting activities described in that

9 subsection.

10 (2) TIME OF PAYMENT.—The Inspector General

11 shall make a payment under paragraph (1) for a

12 quarter by not later than 30 days after the end of

13 the quarter.

14 (3) PAYMENTS ARE ADDITIONAL.—Payments to

15 a State under this subsection shall be in addition to

16 any amounts paid under subsection (g).

17 (d) DATA SHARING.—The Inspector General shall es18 tablish a program for the sharing among Federal agencies,

19 State and local law enforcement agencies, and health care

20 providers and insurers, consistent with data sharing provi21 sions of subtitle B, of data related to possible health care

22 fraud and abuse in violation of any Federal law.

23 (e) HEALTH CARE FRAUD AND ABUSE CONTROL AC24 COUNT.—
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1 (1) ESTABLISHMENT.—There is established on

2 the books of the Treasury of the United States a

3 separate account, which shall be known as the

4 Health Care Fraud and Abuse Control Account. The

5 Account shall consist of—

6 (A) the Health Care Fraud and Abuse Ex7 penses Subaccount; and

8 (B) the Health Care Fraud and Abuse Re9 serve Subaccount.

10 (2) EXPENSES SUBACCOUNT.—

11 (A) CONTENTS.—The Expenses Sub12 account consists of—

13 (i) amounts deposited under subpara14 graph (B); and

15 (ii) amounts transferred from the Re16 serve Subaccount and deposited under

17 paragraph (3)(B).

18 (B) DEPOSITS.—Except as provided in

19 paragraph (3)(A), there shall be deposited in

20 the Expenses Subaccount all amounts received

21 by the United States as—

22 (i) fines for health care fraud and

23 abuse in violation of any Federal law;

24 (ii) civil penalties or damages (other

25 than restitution) in actions under section
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1 3729 or 3730 of title 31, United States

2 Code (commonly referred to as the ‘‘False

3 Claims Act’’), that are based on health

4 care fraud and abuse in violation of any

5 Federal law;

6 (iii) administrative penalties under the

7 Social Security Act;

8 (iv) proceeds of seizures and forfeit9 ures of property for acts or omissions that

10 constitute health care fraud or abuse in

11 violation of any Federal law; and

12 (v) money and proceeds of property

13 that are accepted under subsection (f).

14 (C) USE.—Amounts in the Expenses Sub15 account shall be available to the Inspector Gen16 eral, under such terms and conditions as the

17 Inspector General determines to be appropriate,

18 for—

19 (i) paying expenses incurred by their

20 respective agencies in carrying out activi21 ties under subsection (a); and

22 (ii) making reimbursements to other

23 Inspectors General and Federal, State, and

24 local agencies in accordance with sub25 section (g).
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1 (3) RESERVE SUBACCOUNT.—

2 (A) DEPOSITS.—An amount otherwise re3 quired under paragraph (2)(A) to be deposited

4 in the Expenses Subaccount in a fiscal year

5 shall be deposited in the Reserve Subaccount,

6 if—

7 (i) the amount in the Expenses Sub8 account is greater than $500,000,000; and

9 (ii) the deposit of that amount in the

10 Expenses Subaccount would result in the

11 amount in the Expenses Subaccount ex12 ceeding 110 percent of the total amount

13 deposited in the Expenses Subaccount in

14 the preceding fiscal year.

15 (B) TRANSFERS TO EXPENSES SUB16 ACCOUNT.—

17 (i) ESTIMATION OF SHORTFALL.—Not

18 later than the first day of the last quarter

19 of each fiscal year, the Inspector General

20 shall estimate whether sufficient amounts

21 will be available during such quarter in the

22 Expenses Subaccount for the uses de23 scribed in paragraph (2)(C).

24 (ii) TRANSFER TO COVER SHORT25 FALL.—If the Inspector General estimates
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1 under clause (i) that there will not be

2 available sufficient amounts in the Ex3 penses Subaccount during the last quarter

4 of a fiscal year, there shall be transferred

5 from the Reserve Subaccount and depos6 ited in the Expenses Subaccount such

7 amount as the Inspector General estimates

8 is required to ensure that sufficient

9 amounts are available in the Expenses

10 Subaccount during such quarter.

11 (C) LIMITATION ON AMOUNT CARRIED

12 OVER TO SUCCEEDING FISCAL YEAR.—There

13 shall be transferred to the general fund of the

14 Treasury any amount remaining in the Reserve

15 Subaccount at the end of a fiscal year (after

16 any transfer made under subparagraph (B)) in

17 excess of 10 percent of the total amount au18 thorized to be deposited in the Expenses Sub19 account (consistent with subparagraph (A))

20 during the fiscal year.

21 (f) ACCEPTANCE OF GIFTS, BEQUESTS, AND DE22 VISES.—Any Inspector General referred to in subsection

23 (a)(1) may accept, use, and dispose of gifts, bequests, or

24 devises of services or property (real or personal), for the

25 purpose of aiding or facilitating activities under this sec-
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1 tion regarding health care fraud and abuse. Gifts, be2 quests, or devises of money and proceeds from sales of

3 other property received as gifts, bequests, or devises shall

4 be deposited in the Account and shall be available for use

5 in accordance with subsection (e)(2)(C).

6 (g) REIMBURSEMENTS OF EXPENSES AND OTHER

7 PAYMENTS TO PARTICIPATING AGENCIES.—

8 (1) REIMBURSEMENT OF EXPENSES OF FED9 ERAL AGENCIES.—The Inspector General, subject to

10 the availability of amounts in the Account, shall

11 promptly reimburse Federal agencies for expenses

12 incurred in carrying out subsection (a).

13 (2) PAYMENTS TO STATE AND LOCAL LAW EN14 FORCEMENT AGENCIES.—The Inspector General,

15 subject to the availability of amounts in the Account,

16 shall promptly pay to any State or local law enforce17 ment agency that participated directly in any activ18 ity which led to deposits in the Account, or property

19 the proceeds of which are deposited in the Account,

20 an amount that reflects generally and equitably the

21 participation of the agency in the activity.

22 (3) FUNDS USED TO SUPPLEMENT AGENCY AP23 PROPRIATIONS.—It is intended that disbursements

24 made from the Account to any Federal agency be
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1 used to increase and not supplant the recipient

2 agency’s appropriated operating budget.

3 (h) ACCOUNT PAYMENTS ADVISORY BOARD.—

4 (1) ESTABLISHMENT.—There is established the

5 Account Payments Advisory Board, which shall

6 make recommendations to the Inspector General re7 garding the equitable allocation of payments from

8 the Account.

9 (2) MEMBERSHIP.—The Board shall consist

10 of—

11 (A) each of the Inspectors General referred

12 to in subsection (a)(1), other than the Inspector

13 General of the Department of Health and

14 Human Services; and

15 (B) 10 members appointed by the Inspec16 tor General of the Department of Health and

17 Human Services to represent Health Care

18 Fraud and Abuse Control Units, of whom one

19 shall be appointed—

20 (i) for each of the 10 regions estab21 lished by the Director of the Office of

22 Management and Budget under Office of

23 Management and Budget Circular A–105,

24 to represent Units in that region; and
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1 (ii) from among individuals rec2 ommended by the heads of those agencies

3 in that region.

4 (3) TERMS.—The term of a member of the

5 Board appointed under paragraph (2)(B) shall be 3

6 years, except that of such members first appointed

7 3 members shall serve an initial term of one year

8 and 3 members shall serve an initial term of 2 years,

9 as specified by the Inspector General at the time of

10 appointment.

11 (4) VACANCIES.—A vacancy on the Board shall

12 be filled in the same manner in which the original

13 appointment was made, except that an individual ap14 pointed to fill a vacancy occurring before the expira15 tion of the term for which the individual is ap16 pointed shall be appointed only for the remainder of

17 that term.

18 (5) CHAIRPERSON AND BYLAWS.—The Board

19 shall elect one of its members as chairperson and

20 shall adopt bylaws.

21 (6) COMPENSATION AND EXPENSES.—Members

22 of the Board shall serve without compensation, ex23 cept that the Inspector General may pay the ex24 penses reasonably incurred by the Board in carrying

25 out its functions under this section.
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1 (7) NO TERMINATION.—Section 14(a)(2) of the

2 Federal Advisory Committee Act (5 U.S.C. App.)

3 does not apply to the Board.

4 (i) DEFINITIONS.—In this section:

5 (1) ACCOUNT.—The term ‘‘Account’’ means the

6 Health Care Fraud and Abuse Control Account es7 tablished by subsection (e)(1).

8 (2) EXPENSES SUBACCOUNT.—The term ‘‘Ex9 penses Subaccount’’ means the Health Care Fraud

10 and Abuse Expenses Subaccount of the Account.

11 (3) HEALTH CARE FRAUD AND ABUSE CONTROL

12 UNIT.—The term ‘‘Health Care Fraud and Abuse

13 Control Unit’’ means such a unit established by a

14 State in accordance with subsection (b)(2).

15 (4) INSPECTOR GENERAL.—Except as otherwise

16 provided, the term ‘‘Inspector General’’ means the

17 Inspector General of the Department of Health and

18 Human Services.

19 (5) RESERVE SUBACCOUNT.—The term ‘‘Re20 serve Subaccount’’ means the Health Care Fraud

21 and Abuse Reserve Subaccount of the Account.

22 (j) EFFECTIVE DATE.—

23 (1) IN GENERAL.—Except as provided in para24 graph (2), this section shall take effect on January

25 1, 1996.
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1 (2) DEVELOPMENT AND PUBLICATION OF DE2 SCRIPTION OF PROGRAM.—Subsection (a)(3)(A)

3 shall take effect on the date of the enactment of this

4 Act.

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