Family and Children's Medicaid MA-3535 RECIPIENT FRAUD AND ABUSE POLICY AND PROCEDURES

III. NORTH CAROLINA GENERAL STATUTES

Following are the General Statutes Applicable to Medical Assistance Fraud/Abuse:

A. NCGS 108A-64, Medical Assistance Recipient Fraud. This statute should be used when prosecuting fraud in the Medicaid program. It shall be unlawful for any person to knowingly and willfully and with intent to defraud make or cause to be made a false statement or representation of a material fact in an application for assistance under this part, or intended for use in determining entitlement to such assistance.

It shall be unlawful for any applicant, recipient or person acting on behalf of such applicant or recipient to knowingly and willfully and with intent to defraud, conceal or fail to disclose any condition, fact or event affecting such applicant's or recipient's initial or continued entitlement to receive assistance under this part.

It is unlawful for any person knowingly, willingly, and with intent to defraud, to obtain or attempt to obtain, or to assist, aid, or abet another person, either directly or indirectly, to obtain money, services, or any other thing of value to which the person is not entitled as a recipient under this Part, or otherwise to deliberately misuse a Medicaid identification card. This misuse includes the sale, alteration, or lending of the Medicaid identification card to others for services and the use of the card by someone other than the recipient to receive or attempt to receive Medicaid program coverage for services rendered to that individual.

Proof of intent to defraud does not require proof of intent to defraud any particular person.

1. Felony: A person who violates a provision of this section shall be guilty of a Class I felony if the value of the assistance wrongfully obtained is more than four hundred dollars ($400.00).

2. Misdemeanor: A person who violates a provision of this section shall be guilty of a misdemeanor if the value of the assistance wrongfully obtained is four hundred dollars ($400.00) or less.

For the purposes of this section the word "person" includes any natural person, association, consortium, corporation, body politic, partnership, or the group, entity or organization.

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(III.B.)

B. NCGS 108A-70.28, Fraudulent Misrepresentation, can be used when prosecuting fraud cases for the North Carolina Health Choice (NCHC) program. It shall be unlawful for any person to knowingly and willfully, and with intent to defraud, make or cause to be made a false statement or representation of a material fact in an application for coverage under this Part or intended for use in determining eligibility for coverage. It should be noted that prosecution under this statute are felonies regardless of the amount involved.

It shall be unlawful for any applicant, recipient, or person acting on behalf of the applicant or recipient to knowingly and willfully, and with intent to defraud, conceal, or fail to disclose any condition, fact, or event affecting the applicant's or recipient's initial or continued eligibility to receive coverage or benefits under this part.

It is unlawful for any person knowingly, willingly, and with intent to defraud, to obtain or attempt to obtain, or to assist, aid, or abet another person, either directly or indirectly, to obtain money, services, or any other thing of value to which the person is not entitled as a recipient under this part, or otherwise to deliberately misuse a NCHC identification card. This misuse includes the sale, alteration, or lending of the NCHC identification card to others for services and the use of the card by someone other than the recipient to receive or attempt to receive NCHC program coverage for services rendered to that individual.

Proof of intent to defraud does not require proof of intent to defraud any particular person. A person who violates a provision of this section shall be guilty of a Class I felony.

For purposes of this section the word "person" includes any natural person, association, consortium, corporation, body politic, partnership, or other group, entity, or organization.

C. NCGS.14-100 Obtaining Property by False Pretense can be used when prosecuting fraud cases in all social services programs. It should be noted that cases prosecuted under this statute are felonies regardless of the amount involved.

If any person shall knowingly and designedly by means of any kind of false pretense whatsoever, whether the false pretenses of a past or subsisting fact or of a future fulfillment or event, obtains or attempts to obtain from any person within this state any money, goods, property, services, chose in action, or any thing of value with intent to cheat or defraud any person of such money, goods property, services, chose in action or other thing of value,

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(III.C.)

Provided, that if, on the trial of anyone indicted for such crime, it shall be provided that he obtained the property in such manner as to amount to larceny or embezzlement, the jury shall have submitted to them such other felony proved; and no person tried for such felony shall be liable to be afterwards prosecuted for larceny or embezzlement upon the same facts:

Provided further that it shall be sufficient in any indictment for obtaining or attempting to obtain any such money, goods, property, services, chose in action, or other thing of value by false pretenses to allege that the party accused did the act with intent to defraud, without alleging an intent to defraud any particular person, and without alleging an intent to defraud any particular person, and without alleging any ownership of the money, goods, property, services, chose in action or other thing of value; and upon the trial of any such indictment, it shall not be necessary to prove either an intent to defraud any particular person or that the person to whom the false pretense was made was the person defrauded, but it shall be sufficient to allege and prove that the party accused made the false pretense charged with an intent to defraud. If the value of the money, goods, property, services, chose in action, or other thing of value is one hundred thousand dollars ($100,000) or more, a violation of this section is a Class C felony. If the value of the money, goods, property, services, chose in action, or other thing of value is less than one hundred thousand dollars ($100,000), a violation of this section is a Class H felony.

Evidence of non-fulfillment of a contract obligation standing alone shall not establish the essential element of intent to defraud.

D. Statutes of Limitations

When referring cases for prosecution in either criminal or civil court, the county dss must be aware of the statutes of limitations that apply to these cases. These statutes affect the amount of overpayment presented in court and the specific charges brought against the recipient.

1. Criminal Statute - NCGS 15-1 is the statute of limitations for criminal misdemeanors. This statute allows prosecution action of misdemeanors to be taken no later than two years after the fraudulent act occurred.

A misdemeanor under the current NCGS 108A-64, are cases involving $400.00 or less.

2. There is no statute of limitations for felonies, that is, cases involving over $400.00. However, prior to July 1, 1977, all fraud cases against the Medical Assistance program were misdemeanors. Therefore, for cases in which a fraudulent act was committed prior to July 1, 1977, the criminal statute of limitations has expired regardless of the amount of the overpayment for that

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(III.D.2.)

act. The North Carolina Attorney General's Office has rendered the opinion that an act is determined as the initial false statement, misrepresentation,

and/or omission of fact, running to the next recertification or contact with the client at which time false statement, misrepresentation, and/or omission of fact could have been corrected. Each certification period or period between contacts, thereafter, during which time the recertification, misrepresentation, and/or omission of fact is perpetuated, is considered a separate offense.

Therefore, in cases involving overpayments made prior to July 1, 1977, if a recertification period began prior to July 1, 1977, and continued after that date, that specific recertification period would not be prosecutable in criminal court regardless of the amount as the statute of limitations has expired.

3. Civil Statute - The civil statute of limitations, NCGS 1-52, runs for three years from the date the act is discovered, or should have been discovered through the exercise of reasonable care.

NOTE: If the recipient has signed a repayment agreement containing the word "Seal" next to the signature, the civil statute of limitations for enforcement of collection is ten years from the date the document was signed. However, the client must circle the word “Seal.” The investigator should contact the county attorney for further information regarding this point.

E. Statutes Governing Confidentiality

1. General Statute 108A-80, 143B-153. Each county dss is responsible for developing a confidentiality policy that is consistent with state law. (See MA-3500, Confidentiality.) According to the Attorney General's office, investigators are bound by the same rules of confidentiality as are other staff members of the county dss. Therefore, it is necessary for each investigator to have discussed these statutes with their county or agency legal counsel.

2. Section 1902(a)(7) of the Social Security Act requires a State plan that provides safeguards to restrict the use or disclosure of information concerning recipients to purposes directly connected with the administration of the plan. This subpart specifies State plan requirements, the type of information to be

safeguarded, the conditions for the release of safeguarded information and restrictions of the distribution of other information.

3. Section 1137, 4359.40 ff of the Act, which requires agencies to exchange information in order to verify income and eligibility of recipients, also requires State agencies to have adequate safeguards to assure that:

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(III.E.3.a.)

a. Information exchanged by the State agencies is made available only to the extent necessary to assist in the valid administrative needs of the program receiving the information, and information received under section 6103(l) of the Internal Revenue Code of 1954 is exchanged only with agencies authorized to receive that information under that section of the Code, and

b. The information is adequately stored and processed so that it is protected against unauthorized disclosure for other purposes.

Source: As re-designated, 44 FR 17926 (March 23, 1979) and amended at 51 FR 7178 (February 28, 1986, effective May 29, 1986)

4. 42 CFR 431.301 State Plan Requirements

A State Plan must provide, under a State statute that imposes legal sanctions, safeguards meeting the requirements of this subpart that restrict the use or disclosure of information concerning recipients to purposes directly connected with the administration of the plan.

Source: As re-designated, 44 FR 17926 (March 23, 1979)

5. 42 CFR 431.302 Purposes directly related to State Plan administration include:

a. Establishing eligibility

b. Determining the amount of medical assistance

c. Providing services for recipients

d. Conducting or assisting an investigation, prosecution or civil or criminal proceeding related to the administration of the plan.

Source: As re-designated, 44 FR 17926 (March 23, 1979)

6. 42 CFR 431.303 State Authority for Safeguarding Information

The Medicaid agency must have authority to implement and enforce the provisions specified in this subpart for safeguarding information about recipients.

Source: As re-designated, 44 FR 17926 (March 23, 1979)

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(III.E.7.)

7. 42 CFR 431.304 Publicizing Safeguarding Requirements

The agency must publicize provisions governing the confidential nature of information about recipients, including legal sanctions imposed for improper disclosure and use.

The agency must provide copies of these provisions to recipients and to other persons and agencies to which information is disclosed.

Source: As re-designated, 44 FR 17926 (March 23, 1979)

8. 42 CFR 431.305 Types of Information to Be Safeguarded

The agency must have criteria that govern the types of information about recipients that are safeguarded. This information must include at least:

a. Names and addresses

b. Medical services provided

c. Social and economic conditions or circumstances

d. Agency evaluation of personal information

e. Any information received for verifying income eligibility and amount of medical assistance payments (see 435.940 ff). Income information received from SSA or IRS must be safeguarded according to the requirements of the agency that furnished the data.

9. Legal Restrictions

The Privacy Act permits an individual to have some control over the accuracy and disclosures of records maintained by Federal Agencies. However the Privacy Act of 1947 (P.L. 93-579) Section 552b (7) allows a fraud investigator to obtain information necessary to conduct a civil or criminal investigation.

The recipient and legal counsel have the legal right to view and have a copy of the information in the eligibility or services record at anytime with the exception of:

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(III.E.9.a.)

a. Information that the county dss is required to keep confidential by state or federal statute or regulation.

b. Confidential information originating from another source.

c. Information that would breach another third party’s right to confidentiality. (Reference: 10 NCAC.24B .0306 and 20 NCAC.32S .0306)

d. Investigative records.