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Substitute Senate Bill No. 212

PUBLIC ACT NO. 96-169

AN ACT CONCERNING VENDOR FRAUD IN PUBLIC ASSISTANCE PROGRAMS.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 17b-102 of the general statutes is repealed and the following is substituted in lieu thereof:

The Commissioner of Social Services shall adopt regulations in accordance with the provisions of chapter 54m ON OR BEFORE SEPTEMBER 1, 1996, to provide a financial incentive for the reporting of vendor fraud in [the medical assistance program] ANY PROGRAM UNDER THE JURISDICTION OF THE DEPARTMENT OF SOCIAL SERVICES by offering a person up to [ten] FIFTEEN per cent of any amounts recovered by the state as a result of such person's report.

Sec. 2. Section 17b-99 of the general statutes, as amended by sections 12 and 21 of public act 95-257, is repealed and the following is substituted in lieu thereof:

[(a) No vendor of goods or services performed for or sold to any beneficiary under sections 17b-22, 17b-75 to 17b-77, inclusive, 17b-79 to 17b-103, inclusive, 17b-114, 17b-180 to 17b-183, inclusive, 17b-260 to 17b-262, inclusive, 17b-264 to 17b-285, inclusive, 17b-357 to 17b-362, inclusive, 17b-600 to 17b-604, inclusive, 17b-807 and 17b-808 nor any vendor who provides services to recipients under Title XIX of the Social Security Act, as amended, shall, (1) with intent to defraud, present for payment any false claim for goods or services performed; (2) accept payment for goods or services performed, which exceeds either the amounts due for goods or services performed, or the amounts authorized by law for the cost of such goods or services; (3) solicit to perform services for or sell goods to any such beneficiary, knowing that such beneficiary is not in need of such goods or services; (4) sell goods to or perform services for any such beneficiary without prior authorization by the Department of Social Services, when prior authorization is required by said department for the buying of such goods or the performance of any service; or (5) accept from any person or source other than the state an additional compensation in excess of the amount authorized by law. For the purposes of this section "vendor" means any person acting on his own behalf or on behalf of an entity and any entity furnishing goods or services.]

[(b) Any vendor found in violation of subsection (a) of this section shall be subject to the penalties for larceny under sections 53a-121 to 53a-125, inclusive, which penalty shall depend upon the amount of money involved. Any such vendor shall also]

(a) ANY VENDOR FOUND GUILTY OF VENDOR FRAUD UNDER SECTIONS 3 TO 9, INCLUSIVE, OF THIS ACT, SHALL be subject to forfeiture or suspension of any franchise or license held by him from the state in accordance with this subsection, after hearing in the manner provided for in sections 4-176e to 4-180a, inclusive, AS AMENDED and 4-181a. Any vendor convicted of [larceny resulting from a violation of subsection (a) of this section] VENDOR FRAUD UNDER SECTIONS 3 TO 9, INCLUSIVE, OF THIS ACT shall have such license or franchise [suspended for one month for the first such conviction, six months for the second such conviction, and one year for the third such conviction. The vendor shall have such license or franchise revoked for a fourth conviction] REVOKED. Nothing in this subsection shall preclude any board or commission established under chapters 369 to 376, inclusive, 378 to 381, inclusive, and 383 to 388, inclusive, and the Department of Public Health with respect to professions under its jurisdiction which have no board or commission from taking any action authorized in section 19a-17 AS AMENDED. Any vendor who is convicted in any state or federal court of a crime involving fraud in the Medicare program or Medicaid program or aid to families with dependent children program or state supplement to the federal Supplemental Security Income Program or any federal or state energy assistance program or general assistance program or the refugee program shall be terminated from such programs, effective upon conviction, except that the Commissioner of Social Services may delay termination for a period he deems sufficient to protect the health and well-being of beneficiaries receiving services from such vendor. A vendor who is ineligible for federal financial participation shall be ineligible for participation in such programs. No vendor shall be eligible for reimbursement for any goods provided or services performed by a person convicted of a crime involving fraud in such programs. The convicted person may request a hearing concerning such ineligibility for reimbursement pursuant to sections 4-176e to 4-180a, inclusive, AS AMENDED and 4-181a provided such request is filed in writing with the Commissioner of Social Services within ten days of the date of written notice by the commissioner to the person of such ineligibility. The commissioner shall give notice of such ineligibility to such vendors by means of publication in the Connecticut Law Journal following the expiration of said ten-day hearing request period, if no timely request has been filed, or following the decision on the hearing. The Commissioner of Social Services may take such steps as he considers necessary to inform the public of the conviction and ineligibility for reimbursement. No vendor or person so terminated or denied reimbursement shall be readmitted to or be eligible for reimbursement in such programs [for at least one year from the date of termination or conviction. Any such application for readmission to the programs and eligibility for reimbursement shall be subject to the provisions of sections 4-176e to 4-180a, inclusive, and 4-181a. In any such proceeding the burden of proof shall be on the vendor or person seeking such readmission.] Any sums paid [in violation of subsection (a) of this section] AS A RESULT OF VENDOR FRAUD UNDER SECTIONS 3 TO 9, INCLUSIVE, OF THIS ACT may be recovered in an action brought by the state against such person.

[(c)] (b) For the purpose of determining compliance with subsection [(b)] (a) all vendors shall notify the commissioner within thirty days after the date of employment or conviction, whichever is later, of the identity, interest and extent of services performed by any person convicted of a crime involving fraud in the Medicare program or Medicaid program or aid to families with dependent children program or state supplement to the federal Supplemental Security Income Program or any federal or state energy assistance program or general assistance program or the refugee program. Prior to the commissioner's acceptance of a provider agreement or at any time upon written request by the commissioner, the vendor shall furnish the commissioner with the identity of any person convicted of a crime involving fraud in such programs who has an ownership or control interest in the vendor or who is an agent or managing employee. The commissioner shall terminate, refuse to enter into or renew an agreement with a vendor, except a vendor providing room and board and services pursuant to section 17b-340, AS AMENDED if such convicted person has such interest or is such agent or employee. In the case of a vendor providing room and board and services pursuant to section 17b-340, AS AMENDED the commissioner may terminate, refuse to enter into or renew an agreement after consideration of any adverse impact on beneficiaries of such termination or refusal.

[(d)] (c) The Department of Social Services shall distribute to all vendors who are providers in the medical assistance program a copy of the rules, regulations, standards and laws governing the program. The Commissioner of Social Services shall adopt by regulation in the manner provided for in sections 4-166 to 4-176, inclusive, AS AMENDED administrative sanctions against providers in the Medicare program or Medicaid program or aid to families with dependent children program or state supplement to the federal Supplemental Security Income Program including suspension from the program, for any violations of the rules, regulations, standards or law. The commissioner may adopt regulations in accordance with the provisions of chapter 54 to provide for the withholding of payments currently due in order to offset money previously obtained as the result of error or fraud. The department shall notify the proper professional society and licensing agency of any violations of this section.

[(e) Notwithstanding the provisions of section 54-193, no person shall be prosecuted under the provisions of this section, except within five years next after the offense has been committed.]

Sec. 3. (NEW) A person commits vendor fraud when, with intent to defraud and acting on his own or on behalf of an entity, he provides goods or services to a beneficiary under sections 17b-22, 17b-75 to 17b-77, inclusive, 17b-79 to 17b-103, inclusive, as amended, 17b-114, 17b-180 to 17b-183, inclusive, 17b-260 to 17b-262, inclusive, as amended, 17b-264 to 17b-285, inclusive, as amended, 17b-357 to 17b-362, inclusive, 17b-600 to 17b-604, inclusive, 17b-807 and 17b-808 of the general statutes, as amended, or provides services to a recipient under Title XIX of the Social Security Act, as amended, and, (1) presents for payment any false claim for goods or services performed; (2) accepts payment for goods or services performed, which exceeds either the amounts due for goods or services performed, or the amounts authorized by law for the cost of such goods or services; (3) solicits to perform services for or sell goods to any such beneficiary, knowing that such beneficiary is not in need of such goods or services; (4) sells goods to or performs services for any such beneficiary without prior authorization by the Department of Social Services, when prior authorization is required by said department for the buying of such goods or the performance of any service; or (5) accepts from any person or source other than the state an additional compensation in excess of the amount authorized by law.

Sec. 4. (NEW) (a) A person is guilty of vendor fraud in the first degree, when he commits vendor fraud, as defined in section 3 of this act, and receives payment for goods or services fraudulently provided in excess of ten thousand dollars.

(b) Vendor fraud in the first degree is a class B felony.

Sec. 5. (NEW) (a) A person is guilty of vendor fraud in the second degree when he commits vendor fraud, as defined in section 3 of this act, and receives payment for goods or services fraudulently provided in excess of five thousand dollars.

(b) Vendor fraud in the second degree is a class C felony.

Sec. 6. (NEW) (a) A person is guilty of vendor fraud in the third degree when he commits vendor fraud, as defined in section 3 of this act, and receives payment for goods or services fraudulently provided in excess of one thousand dollars.

(b) Vendor fraud in the third degree is a class D felony.

Sec. 7. (NEW) (a) A person is guilty of vendor fraud in the fourth degree when he commits vendor fraud, as defined in section 3 of this act, and receives payment for goods or services fraudulently provided in excess of five hundred dollars.

(b) Vendor fraud in the fourth degree is a class A misdemeanor.

Sec. 8. (NEW) (a) A person is guilty of vendor fraud in the fifth degree when he commits vendor fraud, as defined in section 3 of this act, and receives payment for goods or services fraudulently provided in excess of two hundred fifty dollars.

(b) Vendor fraud in the fifth degree is a class B misdemeanor.

Sec. 9. (NEW) (a) A person is guilty of vendor fraud in the sixth degree when he commits vendor fraud, as defined in section 3 of this act, and receives payment for goods or services fraudulently provided in an amount of two hundred fifty dollars or less.

(b) Vendor fraud in the sixth degree is a class C misdemeanor.

Sec. 10. Section 17b-127 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) No vendor of goods or services sold to or performed for any beneficiary of assistance under sections 17b-19, 17b-115 to 17b-133, inclusive, AS AMENDED 17b-259, AS AMENDED 17b-263 and 17b-689 to 17b-693, inclusive, AS AMENDED shall, with intent to defraud, present for payment any false claim for goods or services performed, or accept payment for goods or services performed, which exceeds the amounts due for goods or services performed.

(b) Any person or vendor who defrauds or assists in defrauding any town as to the support of its paupers, or deceives the selectmen thereof in obtaining support for any person not entitled to the same, or is found in violation of subsection (a) of this section, shall be subject to (1) the penalties for larceny under sections 53a-122 to 53a-125b, inclusive, depending on the amount involved and (2) repayment to a town for the defrauded amount. In addition, any such person or vendor shall be subject to forfeiture of privileges of participation in the program provided under sections 17b-19, 17b-115 to 17b-133, inclusive, AS AMENDED 17b-259, AS AMENDED 17b-263 and 17b-689 to 17b-693, inclusive AS AMENDED. Any person or vendor who is convicted of violating this section shall be terminated from participation in such program, effective upon conviction. No vendor so terminated shall be readmitted to such program [for at least three years from the date of termination.]

(c) Any person who defrauds the town to obtain any monetary award to which he is not entitled, assists another person in so defrauding the town or with intent to defraud, or violates any other provision of sections 17b-19, 17b-63 to 17b-65, inclusive, AS AMENDED 17b-115 to 17b-138, inclusive, AS AMENDED 17b-220 to 17b-250, inclusive, AS AMENDED 17b-256, 17b-259, AS AMENDED 17b-263, 17b-287, 17b-340 to 17b-350, inclusive, AS AMENDED 17b-689 to 17b-693, inclusive, AS AMENDED and 17b-743 to 17b-747, inclusive, AS AMENDED shall be subject to the penalties for larceny under sections 53a-122 and 53a-123, depending on the amount involved. Any person convicted of violating this section shall be terminated from participation in the program for a period of at least one year.

Sec. 11. Section 53a-161c of the general statutes is repealed and the following is substituted in lieu thereof:

(a) A person is guilty of receiving kickbacks [whenever he by] WHEN HE: (1) BY force, intimidation or threat of procuring dismissal from employment induces any person who is employed in the construction, completion or repair of any public building, public work, or building or work financed in whole or in part by loans or grants from the state, or who has a contract with the state, to give up any part of the compensation to which he is entitled (2) KNOWINGLY SOLICITS, ACCEPTS OR AGREES TO ACCEPT ANY BENEFIT, IN CASH OR IN KIND, FROM ANOTHER PERSON UPON AN AGREEMENT OR UNDERSTANDING THAT SUCH BENEFIT WILL INFLUENCE SUCH PERSON'S CONDUCT IN RELATION TO REFERRING AN INDIVIDUAL OR ARRANGING FOR THE REFERRAL OF AN INDIVIDUAL FOR THE FURNISHING OF ANY GOODS, FACILITIES OR SERVICES TO SUCH OTHER PERSON UNDER CONTRACT TO PROVIDE GOODS, FACILITIES OR SERVICES TO A LOCAL, STATE OR FEDERAL AGENCY; OR (3) BY FORCE, INTIMIDATION OR THREAT, SUCH PERSON INDUCES ANOTHER PERSON WHO HAS A CONTRACT WITH THE STATE TO GIVE UP ANY PART OF THE COMPENSATION TO WHICH SUCH OTHER PERSON IS ENTITLED. FOR THE PURPOSES OF THIS SECTION AND SECTION 12 OF THIS ACT, "REFER" MEANS TO SEND, DIRECT OR RECOMMEND AND "REFERRAL" MEANS THE ACT OF SENDING, DIRECTING OR RECOMMENDING. FOR PURPOSES OF THIS SUBSECTION, "BENEFIT" SHALL NOT INCLUDE FORMS OF REMUNERATION LISTED IN 42 CFR SECTION 1001.952.

(b) Receiving kickbacks is a class D felony.

Sec. 12. (NEW) (a) A person is guilty of paying a kickback when he knowingly offers or pays any benefit, in cash or kind, to any person with intent to influence such person: (1) To refer an individual, or to arrange for the referral of an individual, for the furnishing of any good, facilities or services for which a claim for benefits or reimbursement has been filed with a local, state or federal agency; or (2) to purchase, lease, order or arrange for or recommend the purchasing, leasing or ordering of any goods, facilities or services for which a claim of benefits or reimbursement has been filed with a local, state or federal agency.

(b) Paying a kickback is a class D felony. Sec. 13. Section 17b-274 of the general statutes, as amended by section 46 of public act 95-264, is repealed and the following is substituted in lieu thereof:

(a) The Commissioner of Social Services shall pay a pharmacist a professional dispensing fee of fifty cents per prescription, in addition to any other dispensing fee, for substituting a generically equivalent drug product, in accordance with section 20-185a, AS AMENDED for the drug prescribed by the licensed practitioner for a Medicaid recipient, provided the substitution is not required by federal law or regulation.

(b) The Division of Criminal Justice shall periodically investigate pharmacies to ensure that the state is not billed for a brand name drug product when a less expensive generic substitute drug product is dispensed to a Medicaid recipient. THE COMMISSIONER OF SOCIAL SERVICES SHALL COOPERATE AND PROVIDE INFORMATION AS REQUESTED BY SUCH DIVISION.

(c) A licensed medical practitioner may specify in writing or by a telephonic communication that there shall be no substitution for the specified brand name drug product in any prescription for a Medicaid recipient, provided the phrase "brand medically necessary" shall be in the practitioner's handwriting on the prescription form or, if the prohibition was communicated by telephonic communication, in the pharmacist's handwriting on such form, and shall not be preprinted or stamped or initialed on such form. If the practitioner specifies by telephonic communication that there shall be no substitution for the specified brand name drug product in any prescription for a Medicaid recipient, written certification in the practitioner's handwriting bearing the phrase "brand medically necessary" shall be sent to the dispensing pharmacy within ten days. A pharmacist shall dispense a generically equivalent drug product for any drug listed in accordance with the Code of Federal Regulations Title 42 Part 447.332 for a drug prescribed for a Medicaid recipient unless the phrase "brand medically necessary" is ordered in accordance with this subsection.

Sec. 14. Section 17b-497 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Any person acting for a pharmacy who submits a false or fraudulent claim under sections 17b-490 to 17b-498, inclusive, AS AMENDED or the regulations adopted pursuant to section 17b-494, or who aids or abets another in the submission of a false or fraudulent claim, or otherwise violates any provision of sections 17b-490 to 17b-498, inclusive, AS AMENDED or said regulations, shall be subject to a fine of not less than [five hundred] ONE THOUSAND dollars or imprisonment for a term of not more than one year, or both.

(b) Any person who wilfully misrepresents any fact in connection with obtaining an identification number or card, or misuses such identification number or card to obtain prescription drugs shall be subject to suspension of eligibility for a period of not more than one year for a first offense and a permanent revocation of eligibility for a second offense.

(c) Any pharmacy found guilty of a violation under subsection (a) shall be [subject to immediate termination of] IMMEDIATELY TERMINATED FROM participation in the program, and shall be liable to the state for [three] FIVE times the value of any material gain received.

(d) Any person found guilty of a violation under subsection (b) of this section shall be liable to the state for [three] FIVE times the value of any material gain received.

Sec. 15. (NEW) (a) The Commissioner of Social Services shall provide toll-free telephone access for a person to report vendor fraud in any program operated by the Department of Social Services.

(b) The commissioner shall include a reference to its toll-free vendor fraud telephone line established pursuant to subsection (a) of this section in any advertisement of its programs or services.

(c) The commissioner shall establish a public relations campaign, within available appropriations, to announce the creation of the toll-free telephone line established pursuant to subsection (a) of this section.

Sec. 16. Section 17b-26 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) The Department of Social Services shall act as the single state agency to coordinate, plan and publish annually the state social services plan for the implementation of social services block grants and community services block grants as required by federal law and regulation. Said department shall furnish copies of said plan to the joint standing committees of the General Assembly having cognizance of matters relating to appropriations and the budgets of state agencies and human services, at least sixty days prior to publication, for their review and recommendations, and shall consult with and furnish to said committees any additional information on such plan which they may request.

(b) The Department of Social Services shall provide for the development of all mandated outreach programs in accordance with any mandate of the federal government as required by federal law and regulation for the implementation of social services block grants and community services block grants.

(c) The Department of Social Services shall, on or before December fifteenth, annually, report to the Governor and said joint standing committees with regard to the activity of the department in the implementation of social services block grants and community services block grants, including but not limited to, fiscal data on expenditures of state and federal funds thereunder, and any recommendations for needed program legislation to insure the receipt of all federal funds available to the state from such grants.

(d) ANY ORGANIZATION RECEIVING BLOCK GRANTS PURSUANT TO THIS SECTION SHALL BE SUBJECT TO THE PROVISIONS OF SECTION 17b-99, AS AMENDED BY SECTION 2 OF THIS ACT.

Sec. 17. Section 17b-97 of the general statutes, as amended by section 1 of public act 95-356, is repealed and the following is substituted in lieu thereof:

(a) Any food stamps furnished or any sums paid to or on behalf of any person under the provisions of sections 17b-22, 17b-75 to 17b-77, inclusive, 17b-79 to 17b-103, inclusive, AS AMENDED, 17b-114, 17b-180 to 17b-183, inclusive, 17b-260 to 17b-262, inclusive, AS AMENDED 17b-264 to 17b-285, inclusive, AS AMENDED 17b-357 to 17b-362, inclusive, AS AMENDED 17b-600 to 17b-604, inclusive, 17b-807 and 17b-808 AS AMENDED as a result of any false statement, misrepresentation or concealment of or failure to disclose assets by him, or by any person legally liable for his support, may be recovered in an action brought by the state against such person or persons.

(b) Any person who, by means of an intentionally false statement or misrepresentation or by impersonation or other fraudulent act or device, obtains, or attempts to obtain, or aids or abets any person to obtain, any monetary award under sections 17b-22, 17b-75 to 17b-77, inclusive, 17b-79 to 17b-103, inclusive, AS AMENDED 17b-114, 17b-180 to 17b-183, inclusive, 17b-260 to 17b-262, inclusive, AS AMENDED 17b-264 to 17b-285, inclusive, AS AMENDED 17b-357 to 17b-362, inclusive, AS AMENDED 17b-600 to 17b-604, inclusive, 17b-807 and 17b-808 AS AMENDED to which he is not entitled; and any person who, with intent to defraud, buys or aids or abets in buying or in any way disposing of the property of a person receiving an award, and any person who, with intent to defraud, violates the provisions of section 17b-85 or any other provision of sections 17b-22, 17b-75 to 17b-77, inclusive, 17b-79 to 17b-103, inclusive, AS AMENDED 17b-114, 17b-180 to 17b-183, inclusive, 17b-260 to 17b-262, inclusive, AS AMENDED 17b-264 to 17b-285, inclusive, AS AMENDED 17b-357 to 17b-362, inclusive, AS AMENDED 17b-600 to 17b-604, inclusive, 17b-807 and 17b-808 AS AMENDED shall be subject to the penalties for larceny under sections 53a-122 and 53a-123, depending on the amount involved. When a person receiving assistance is convicted of an offense involving an overpayment of public assistance under said sections, the Commissioner of Social Services may discontinue his award or take such other action as conforms to federal regulations.

(c) Repealed by P.A. 74-140, S. 3.

(d) Any person who, by means of an intentionally false statement or misrepresentation or by impersonation or other fraudulent act or device, obtains, or attempts to obtain, or aids or abets any person to obtain, or who knowingly uses, transfers, acquires, alters, or attempts to use, traffic in, forge or possess, any United States Department of Agriculture food coupon, food stamp coupon authorization to participate card, or Department of Social Services public assistance photographic identification card or electronically coded identification and debit card, shall be subject to the penalties for larceny under sections 53a-122 and 53a-123, depending on the amount involved.

(e) Any person having duties in the administration of a state or federally funded public assistance program who fraudulently misappropriates, attempts to misappropriate, or aids and abets in the misappropriation of any United States Department of Agriculture food coupon, food stamp coupon authorization to participate card, or Department of Social Services public assistance photographic identification card or electronically coded identification and debit card, shall be subject to the penalties for larceny under sections 53a-122 and 53a-123, depending on the amount involved AND SHALL BE SUBJECT TO DISCIPLINE OR DISCHARGE BY THE COMMISSIONER.

(f) Any person having duties in the administration of a state or federally funded public assistance program who, directly or indirectly, by himself or by another, solicits, accepts or agrees to accept from another, any benefit for, because of or as consideration for, taking, or promising to take, action which results, or is intended to result, in the unlawful award, transfer or receipt of public assistance benefits or United States Department of Agriculture food stamp benefits shall be subject to the penalty provided for bribe receiving under section 53a-148 AND SHALL BE SUBJECT TO DISCIPLINE OR DISCHARGE BY THE COMMISSIONER.

Sec. 18. Subsection (d) of section 51-279b of the general statutes is repealed and the following is substituted in lieu thereof:

(d) One-third of all funds collected as forfeited bonds shall be allocated to the budget of the Division of Criminal Justice for purposes of providing staff for the collection of forfeited bonds THE INVESTIGATION AND PROSECUTION OF VENDOR FRAUD IN PROGRAMS OPERATED BY THE DEPARTMENT OF SOCIAL SERVICES and for the investigation and apprehension of persons charged with a violation of section 53a-172 or 53a-173.

Approved May 31, 1996. Effective October 1, 1996.

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