I

104TH CONGRESS

1ST SESSION H. R. 1850

To improve Federal enforcement against health care fraud and abuse.

IN THE HOUSE OF REPRESENTATIVES

JUNE 14, 1995

Mr. TOWNS introduced the following bill; which was referred to the Committee

on Government Reform and Oversight

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 1995’’.

6 SEC. 2. HEALTH CARE FRAUD AND ABUSE.

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

9 (1) AUDITS, INVESTIGATIONS, INSPECTIONS,

10 AND EVALUATIONS.—The Inspector General of each

11 of the Department of Health and Human Services,
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1 the Department of Defense, the Department of

2 Labor, the Office of Personnel Management, and the

3 Department of Veterans Affairs shall conduct au4 dits, civil and criminal investigations, inspections,

5 and evaluations relating to the prevention, detection,

6 and control of health care fraud and abuse in viola7 tion of any Federal law.

8 (2) POWERS.—For purposes of carrying out du9 ties and responsibilities under paragraph (1), each

10 Inspector General referred to in paragraph (1) may

11 exercise powers that are available to the Inspector

12 General for purposes of audits, investigations, and

13 other activities under the Inspector General Act of

14 1978 (5 U.S.C. App.).

15 (3) COORDINATION AND REVIEW OF ACTIVITIES

16 OF OTHER FEDERAL, STATE, AND LOCAL AGEN17 CIES.—

18 (A) PROGRAM.—The Inspector General

19 shall—

20 (i) jointly establish, on the effective

21 date specified in subsection (j)(1), a pro22 gram to prevent, detect, and control health

23 care fraud and abuse in violation of any

24 Federal law, which considers the activities

25 of Federal, State, and local law enforce-
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1 ment agencies, Federal and State agencies

2 responsible for the licensing and certifi3 cation of health care providers, and State

4 agencies designated under subsection

5 (b)(1)(A); and

6 (ii) publish a description of the pro7 gram in the Federal Register, by not later

8 than June 30, 1996.

9 (B) ANNUAL INVESTIGATIVE PLAN.—Each

10 Inspector General referred to in paragraph (1)

11 shall develop an annual investigative plan for

12 the prevention, detection, and control of health

13 care fraud and abuse in accordance with the

14 program established under subparagraph (A).

15 (4) CONSULTATIONS.—Each of the Inspectors

16 General referred to in paragraph (1) shall regularly

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

18 local law enforcement agencies, with Federal and

19 State agencies responsible for the licensing and cer20 tification of health care providers, and with Health

21 Care Fraud and Abuse Control Units, in order to

22 assist in coordinating the prevention, detection, and

23 control of health care fraud and abuse in violation

24 of any Federal law.

25 (b) STATE ENFORCEMENT.—
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1 (1) DESIGNATION OF STATE AGENCIES AND ES2 TABLISHMENT OF HEALTH CARE FRAUD AND ABUSE

3 CONTROL UNIT.—The Governor of each State—

4 (A) shall, consistent with State law, des5 ignate agencies of the State which conduct, su6 pervise, and coordinate audits, civil and crimi7 nal investigations, inspections, and evaluations

8 relating to the prevention, detection, and con9 trol of health care fraud and abuse in violation

10 of any Federal law in the State; and

11 (B) may establish and maintain in accord12 ance with paragraph (2) a State agency to act

13 as a Health Care Fraud and Abuse Control

14 Unit for purposes of this section.

15 (2) HEALTH CARE FRAUD AND ABUSE CONTROL

16 UNIT REQUIREMENTS.—A Health Care Fraud and

17 Abuse Control Unit established by a State under

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

19 of State government which is separate and distinct

20 from any State agency with principal responsibility

21 for the administration of health care programs, and

22 which meets the following requirements:

23 (A) The entity—

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

25 Attorney General or of another department
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1 of State government that possesses state2 wide authority to prosecute individuals for

3 criminal violations;

4 (ii) is in a State the constitution of

5 which does not provide for the criminal

6 prosecution of individuals by a statewide

7 authority, and has formal procedures, ap8 proved by the Secretary, that assure it will

9 refer suspected criminal violations relating

10 to health care fraud or abuse in violation

11 of any Federal law to the appropriate au12 thority or authorities of the State for pros13 ecution and assure it will assist such au14 thority or authorities in such prosecutions;

15 or

16 (iii) has a formal working relationship

17 with the office of the State Attorney Gen18 eral or the appropriate authority or au19 thorities for prosecution and has formal

20 procedures (including procedures under

21 which it will refer suspected criminal viola22 tions to such office), that provide effective

23 coordination of activities between the

24 Health Care Fraud and Abuse Control

25 Unit and such office with respect to the
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1 detection, investigation, and prosecution of

2 suspected health care fraud or abuse in

3 violation of any Federal law.

4 (B) The entity conducts a statewide pro5 gram for the investigation and prosecution of

6 violations of all applicable State laws regarding

7 any and all aspects of health care fraud and

8 abuse in violation of any Federal law.

9 (C) The entity has procedures for—

10 (i) reviewing complaints of the abuse

11 or neglect of patients of health care facili12 ties in the State; and

13 (ii) where appropriate, investigating

14 and prosecuting such complaints under the

15 criminal laws of the State or for referring

16 the complaints to other State or Federal

17 agencies for action.

18 (D) The entity provides for the collection,

19 or referral for collection to the appropriate

20 agency, of overpayments that—

21 (i) are made under any federally fund22 ed or mandated health care program re23 quired by this Act; and

24 (ii) it discovers in carrying out its ac25 tivities.
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1 (E) The entity employs attorneys, auditors,

2 investigators, and other necessary personnel, is

3 organized in such a manner, and provides suffi4 cient resources, as is necessary to promote the

5 effective and efficient conduct of its activities.

6 (3) SUBMISSION OF ANNUAL PLAN.—Each

7 Health Care Fraud and Abuse Control Unit may

8 submit each year to the Inspector General a plan for

9 preventing, detecting, and controlling, consistent

10 with the program established under subsection

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

12 of any Federal law.

13 (4) APPROVAL OF ANNUAL PLAN.—The Inspec14 tor General shall approve a plan submitted under

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

16 Control Unit of a State, unless the Inspector Gen17 eral establishes that the plan—

18 (A) is inconsistent with the program estab19 lished under subsection (a)(3)(A); or

20 (B) will not enable the agencies of the

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

22 prevent, detect, and control health care fraud

23 and abuse in violation of any Federal law.

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

25 Abuse Control Unit shall submit to the Inspector
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1 General an annual report containing such informa2 tion as the Inspector General determines to be nec3 essary.

4 (6) SEMIANNUAL REPORTS OF INSPECTOR GEN5 ERAL OF HEALTH AND HUMAN SERVICES.—The In6 spector General shall include in each semiannual re7 port of the Inspector General to the Congress under

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

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

10 of how well States are preventing, detecting, and

11 controlling health care fraud and abuse.

12 (c) PAYMENTS TO STATES.—

13 (1) IN GENERAL.—For each year for which a

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

15 and subject to the availability of appropriations, the

16 Inspector General shall pay to the State for each

17 quarter an amount equal to 75 percent of the sums

18 expended during the quarter by agencies designated

19 by the Governor of the State under subsection

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

21 subsection.

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

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

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

25 the quarter.
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1 (3) PAYMENTS ARE ADDITIONAL.—Payments to

2 a State under this subsection shall be in addition to

3 any amounts paid under subsection (g).

4 (d) DATA SHARING.—The Inspector General shall es5 tablish a program for the sharing among Federal agencies,

6 State and local law enforcement agencies, and health care

7 providers and insurers, consistent with data sharing provi8 sions of subtitle B, of data related to possible health care

9 fraud and abuse in violation of any Federal law.

10 (e) HEALTH CARE FRAUD AND ABUSE CONTROL AC11 COUNT.—

12 (1) ESTABLISHMENT.—There is established on

13 the books of the Treasury of the United States a

14 separate account, which shall be known as the

15 Health Care Fraud and Abuse Control Account. The

16 Account shall consist of—

17 (A) the Health Care Fraud and Abuse Ex18 penses Subaccount; and

19 (B) the Health Care Fraud and Abuse Re20 serve Subaccount.

21 (2) EXPENSES SUBACCOUNT.—

22 (A) CONTENTS.—The Expenses Sub23 account consists of—

24 (i) amounts deposited under subpara25 graph (B); and
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1 (ii) amounts transferred from the Re2 serve Subaccount and deposited under

3 paragraph (3)(B).

4 (B) DEPOSITS.—Except as provided in

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

6 the Expenses Subaccount all amounts received

7 by the United States as—

8 (i) fines for health care fraud and

9 abuse in violation of any Federal law;

10 (ii) civil penalties or damages (other

11 than restitution) in actions under section

12 3729 or 3730 of title 31, United States

13 Code (commonly referred to as the ‘‘False

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

15 care fraud and abuse in violation of any

16 Federal law;

17 (iii) administrative penalties under the

18 Social Security Act;

19 (iv) proceeds of seizures and forfeit20 ures of property for acts or omissions that

21 constitute health care fraud or abuse in

22 violation of any Federal law; and

23 (v) money and proceeds of property

24 that are accepted under subsection (f).
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1 (C) USE.—Amounts in the Expenses Sub2 account shall be available to the Inspector Gen3 eral, under such terms and conditions as the

4 Inspector General determines to be appropriate,

5 for—

6 (i) paying expenses incurred by their

7 respective agencies in carrying out activi8 ties under subsection (a); and

9 (ii) making reimbursements to other

10 Inspectors General and Federal, State, and

11 local agencies in accordance with sub12 section (g).

13 (3) RESERVE SUBACCOUNT.—

14 (A) DEPOSITS.—An amount otherwise re15 quired under paragraph (2)(A) to be deposited

16 in the Expenses Subaccount in a fiscal year

17 shall be deposited in the Reserve Subaccount,

18 if—

19 (i) the amount in the Expenses Sub20 account is greater than $500,000,000; and

21 (ii) the deposit of that amount in the

22 Expenses Subaccount would result in the

23 amount in the Expenses Subaccount ex24 ceeding 110 percent of the total amount
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1 deposited in the Expenses Subaccount in

2 the preceding fiscal year.

3 (B) TRANSFERS TO EXPENSES SUB4 ACCOUNT.—

5 (i) ESTIMATION OF SHORTFALL.—Not

6 later than the first day of the last quarter

7 of each fiscal year, the Inspector General

8 shall estimate whether sufficient amounts

9 will be available during such quarter in the

10 Expenses Subaccount for the uses de11 scribed in paragraph (2)(C).

12 (ii) TRANSFER TO COVER SHORT13 FALL.—If the Inspector General estimates

14 under clause (i) that there will not be

15 available sufficient amounts in the Ex16 penses Subaccount during the last quarter

17 of a fiscal year, there shall be transferred

18 from the Reserve Subaccount and depos19 ited in the Expenses Subaccount such

20 amount as the Inspector General estimates

21 is required to ensure that sufficient

22 amounts are available in the Expenses

23 Subaccount during such quarter.

24 (C) LIMITATION ON AMOUNT CARRIED

25 OVER TO SUCCEEDING FISCAL YEAR.—There
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1 shall be transferred to the general fund of the

2 Treasury any amount remaining in the Reserve

3 Subaccount at the end of a fiscal year (after

4 any transfer made under subparagraph (B)) in

5 excess of 10 percent of the total amount au6 thorized to be deposited in the Expenses Sub7 account (consistent with subparagraph (A))

8 during the fiscal year.

9 (f) ACCEPTANCE OF GIFTS, BEQUESTS, AND DE10 VISES.—Any Inspector General referred to in subsection

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

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

13 purpose of aiding or facilitating activities under this sec14 tion regarding health care fraud and abuse. Gifts, be15 quests, or devises of money and proceeds from sales of

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

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

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

19 (g) REIMBURSEMENTS OF EXPENSES AND OTHER

20 PAYMENTS TO PARTICIPATING AGENCIES.—

21 (1) REIMBURSEMENT OF EXPENSES OF FED22 ERAL AGENCIES.—The Inspector General, subject to

23 the availability of amounts in the Account, shall

24 promptly reimburse Federal agencies for expenses

25 incurred in carrying out subsection (a).
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1 (2) PAYMENTS TO STATE AND LOCAL LAW EN2 FORCEMENT AGENCIES.—The Inspector General,

3 subject to the availability of amounts in the Account,

4 shall promptly pay to any State or local law enforce5 ment agency that participated directly in any activ6 ity which led to deposits in the Account, or property

7 the proceeds of which are deposited in the Account,

8 an amount that reflects generally and equitably the

9 participation of the agency in the activity.

10 (3) FUNDS USED TO SUPPLEMENT AGENCY AP11 PROPRIATIONS.—It is intended that disbursements

12 made from the Account to any Federal agency be

13 used to increase and not supplant the recipient

14 agency’s appropriated operating budget.

15 (h) ACCOUNT PAYMENTS ADVISORY BOARD.—

16 (1) ESTABLISHMENT.—There is established the

17 Account Payments Advisory Board, which shall

18 make recommendations to the Inspector General re19 garding the equitable allocation of payments from

20 the Account.

21 (2) MEMBERSHIP.—The Board shall consist

22 of—

23 (A) each of the Inspectors General referred

24 to in subsection (a)(1), other than the Inspector
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1 General of the Department of Health and

2 Human Services; and

3 (B) 10 members appointed by the Inspec4 tor General of the Department of Health and

5 Human Services to represent Health Care

6 Fraud and Abuse Control Units, of whom one

7 shall be appointed—

8 (i) for each of the 10 regions estab9 lished by the Director of the Office of

10 Management and Budget under Office of

11 Management and Budget Circular A–105,

12 to represent Units in that region; and

13 (ii) from among individuals rec14 ommended by the heads of those agencies

15 in that region.

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

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

18 years, except that of such members first appointed

19 3 members shall serve an initial term of one year

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

21 as specified by the Inspector General at the time of

22 appointment.

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

24 be filled in the same manner in which the original

25 appointment was made, except that an individual ap-
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1 pointed to fill a vacancy occurring before the expira2 tion of the term for which the individual is ap3 pointed shall be appointed only for the remainder of

4 that term.

5 (5) CHAIRPERSON AND BYLAWS.—The Board

6 shall elect one of its members as chairperson and

7 shall adopt bylaws.

8 (6) COMPENSATION AND EXPENSES.—Members

9 of the Board shall serve without compensation, ex10 cept that the Inspector General may pay the ex11 penses reasonably incurred by the Board in carrying

12 out its functions under this section.

13 (7) NO TERMINATION.—Section 14(a)(2) of the

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

15 does not apply to the Board.

16 (i) DEFINITIONS.—In this section:

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

18 Health Care Fraud and Abuse Control Account es19 tablished by subsection (e)(1).

20 (2) EXPENSES SUBACCOUNT.—The term ‘‘Ex21 penses Subaccount’’ means the Health Care Fraud

22 and Abuse Expenses Subaccount of the Account.

23 (3) HEALTH CARE FRAUD AND ABUSE CONTROL

24 UNIT.—The term ‘‘Health Care Fraud and Abuse
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1 Control Unit’’ means such a unit established by a

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

3 (4) INSPECTOR GENERAL.—Except as otherwise

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

5 Inspector General of the Department of Health and

6 Human Services.

7 (5) RESERVE SUBACCOUNT.—The term ‘‘Re8 serve Subaccount’’ means the Health Care Fraud

9 and Abuse Reserve Subaccount of the Account.

10 (j) EFFECTIVE DATE.—

11 (1) IN GENERAL.—Except as provided in para12 graph (2), this section shall take effect on January

13 1, 1997.

14 (2) DEVELOPMENT AND PUBLICATION OF DE15 SCRIPTION OF PROGRAM.—Subsection (a)(3)(A)

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

17 Act.

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