OLR Research Report


August 16, 2013

 

2013-R-0315

STATE INSPECTORS GENERAL

By: Terrance Adams, Legislative Analyst II

You asked us to identify states with inspectors general (IG) and describe the scope of their authority. You also asked for examples of their accomplishments.

SUMMARY

We identified 11 states that have an IG with statewide authority and 26 that have one or more agencies with an IG (five of the states have both types). Agency IGs are most common in health and human services agencies.

In general, IGs are responsible for preventing and detecting fraud, waste, and abuse in state agencies, either upon a filed complaint or their own initiative. IGs' investigatory powers typically include authority to, among other things, (1) issue subpoenas to compel the attendance of witnesses and the production of books, records, and papers; (2) administer oaths; and (3) enter state agency premises without advance notice. They also assist in the development of processes to reduce the risk of fraud, waste, and abuse.

IG accomplishments include (1) identifying opportunities for cost avoidances and recoveries of improper payments and (2) making recommendations for disciplinary actions against employees. They also frequently refer their recommendations to other entities (e.g., prosecutors, ethics commissions, and licensing boards) for further action.

STATES WITH INSPECTORS GENERAL

Table 1 shows states that we identified as having IGs and specifies whether the IGs are statewide, agency-specific, or both. It includes states that have offices with the specific title of inspector general. In some of the excluded states, one or more offices may perform certain functions that parallel an IG's functions. For example, in Connecticut, such offices include the Auditors of Public Accounts, Office of State Ethics, Office of the Attorney General, Office of the Chief's State's Attorney, and the Department of Social Services' Office of Quality Assurance, among others.

Table 1: States with Inspector General Offices

State

Statewide

Agency-Specific

Agency IG Offices

Arizona

 

X

Arizona Health Care Cost Containment System (i.e., the state's Medicaid agency)

Department of Transportation

Arkansas

 

X

Medicaid Inspector General

California

 

X

California Highway Patrol

Department of Corrections

Colorado

 

X

Department of Corrections

Florida

X

X

In addition to a statewide IG, each executive branch agency has an IG

Georgia

X

X

Department of Community Health

Department of Human Services

Department of Public Health

Illinois

X

X

Department of Children and Family Services

Department of Healthcare and Family Services

Department of Human Services

Legislative Inspector General

Office of the Attorney General

Secretary of State

State Treasurer

Indiana

X

   

Kansas

 

X

Department of Health and Environment, Division of Health Care Finance

Department of Transportation

Kentucky

 

X

Cabinet for Health and Family Services

Energy and Environment Cabinet

Transportation Cabinet

Louisiana

X

   

Maryland

 

X

Department of Health and Mental Hygiene

Department of Human Resources

Department of Public Safety and Correctional Services

Massachusetts

X

   

Michigan

 

X

Department of Human Services

Minnesota

 

X

Department of Human Services

Missouri

 

X

Department of Corrections

Nebraska

 

X

Inspector General of Child Welfare

Nevada

 

X

Department of Corrections

New Mexico

 

X

Human Services Department

New York

X

X

Medicaid Inspector General

Unified Court System

Welfare Inspector General

North Carolina

 

X

Department of Transportation

Ohio

X

   

Oklahoma

 

X

Department of Human Services

Oregon

 

X

Department of Corrections

Pennsylvania

X

 

South Carolina

X

X

Department of Juvenile Justice

Tennessee

 

X

TennCare program (located within Department of Finance and Administration)

Department of Human Services

Texas

 

X

Department of Criminal Justice

Health and Human Services Commission

Juvenile Justice Department

Utah

 

X

Medicaid (located within Department of Health)

Virginia

X

   

West Virginia

 

X

Department of Health and Human Resources

Wisconsin

 

X

Department of Health Services

INSPECTORS' GENERAL AUTHORITY

Statewide IGs are typically appointed by the governor and have authority over most executive branch agencies. Agency IGs are typically appointed by either the governor or the agency head and have authority over all or some of the agency's activities. Most IG offices are established by statute, but some are created through an executive order.

In general, IGs are responsible for preventing and detecting fraud, waste, and abuse in state agencies. (The Massachusetts IG also has authority over municipal agencies.) They also (1) assist agencies in developing policies and procedures to reduce the risk of such activities and (2) recommend legislation for this purpose.

Activities Investigated

Most IG offices are charged with investigating fraud, waste, and abuse in state agencies or by agency contractors and clients (e.g., Medicaid recipients and providers), but the laws and executive orders that establish IG offices generally do not define these activities. However, in its 2012 annual report, Ohio's Office of the Inspector General (OIG) provided descriptions of these activities and others, as well as examples of each, as shown in Table 2.

Table 2: Examples of Activities Investigated by IGs

Activity

Description

Examples

Fraud

An intentional or reckless act designed to mislead or deceive

Fraudulent travel reimbursement

Falsifying financial records to cover up a theft

Intentionally misrepresenting the cost of goods and services

Falsifying payroll information or other government records

Waste

A reckless or grossly negligent act that causes state funds to be spent in a manner that was not authorized or which represents significant inefficiency and needless expense

Purchasing unneeded supplies or equipment

Purchasing goods at inflated prices

Failing to reuse major resources or reduce waste generation

Abuse

The intentional, wrongful, or improper use or destruction of state resources, or a seriously improper practice that does not involve prosecutable fraud

Failing to report damage to state equipment or property

Improper hiring practices

Significant unauthorized time away from work

Misuse of overtime or compensatory time

Misuse of state money, equipment, or supplies

Corruption

An intentional act of fraud, waste, or abuse, or the use of public office for personal, pecuniary gain for oneself or another

Accepting kickbacks or other gifts or gratuities

Bid rigging

Contract steering

Conflict of Interest

A situation in which a person is in a position to exploit his or her professional capacity in some way for personal benefit

Purchasing state goods from vendors who are controlled by or employ relatives

Outside employment with vendors

Using confidential information for personal profit or to assist outside organizations

Source: Ohio OIG, 2012 Annual Report

Investigations

IGs investigate fraud, waste, and abuse either upon a filed complaint or their own initiative. Their investigatory powers typically include the authority to, among other things, (1) issue subpoenas to compel the attendance of witnesses and the production of books, records, and papers; (2) administer oaths; and (3) enter state agency premises without advance notice.

State laws often require agencies under investigation to cooperate with IG investigators, such as by making their premises, equipment, personnel, books, records, and papers readily available to them. Such laws typically allow IG investigators to (1) question any officer or employee of the agency or any person transacting business with it and (2) inspect or copy books, records, or papers the agency possesses.

Subsequent Actions

Once an investigation is complete, the IG typically publishes a report with recommendations for follow-up action by the agency (e.g., seek to recover improper payments or discipline an employee). With respect to agency clients and contractors, recommendations may include disqualifying the client from participation or barring the contractor from entering into future contracts. IGs also frequently refer their recommendations to other entities (e.g., prosecutors, ethics commissions, and licensing boards) for further action.

In general, IGs themselves do not have the authority to enforce or implement the recommendations they make. Exceptions include Massachusetts and South Carolina, where the law allows the IG, with the attorney general's approval, to institute civil recovery actions. Additionally, Pennsylvania's IG can prosecute welfare fraud by filing criminal complaints.

EXAMPLES OF ACCOMPLISHMENTS

As described above, while some IGs have the authority to seek cost recoveries, in most cases their accomplishments consist of making recommendations for action by agencies or other entities. These recommendations include (1) identifying opportunities for cost avoidances and recoveries of improper payments and (2) making recommendations for disciplinary actions against employees.

Table 3 lists examples of cost-related accomplishments by IG offices.

Table 3: Examples of IGs' Cost-Related Accomplishments

State

Office

Report Year

Accomplishments

Massachusetts

State

2012

$12.6 million in fines, repayments, and penalties

Identified $233.5 million in potential cost savings ($225 million of which were classified as annual savings)

Michigan

Department of Human Services

FY 2012

Identified:

$69.5 million in cost avoidance from front-end eligibility investigations

$22.6 million in recipient fraud

$14.4 million in cost savings from disqualifying program violators

$5.6 million in provider, contractor, and employee fraud

$2.2 million in benefit trafficking fraud

New York

Medicaid Inspector General

2011

$2.5 billion in cost avoidance

Identified $220.5 million in improper payments

Ended Medicaid participation for 766 providers

Pennsylvania

State

FY 2012

$75.5 million in welfare fraud prevention

$42 million in reimbursement and restitution

$2.19 million through the disqualification of future benefits

$3.3 million in restitution through filing criminal complaints

Source: Agencies' annual reports

IG investigations may also result in disciplinary actions against employees, including reprimands, counseling, suspensions, or terminations. In some cases, employees choose to resign rather than face disciplinary measures. Additionally, some investigations lead to referrals for criminal prosecutions.

Table 4 lists specific examples of employee activities that IGs investigated and that resulted either in disciplinary action or the employee choosing to resign.

Table 4: Examples of Employee Misconduct Investigated by IGs

State

Office

Report Year

Misconduct

Illinois

State

FY 2012*

Prohibited political activity

Cheating on a promotional exam

Conducting personal business on state time with state resources

Using an official position for personal gain

Soliciting gifts from a regulated entity

Storing pornographic images on a state computer

Improper expenditure approvals

Sexual harassment

Knowingly submitting false inspection reports

Improperly accessing and releasing confidential data

Ohio

State

2012

Personal use of a state park cabin

Requiring administrative staff to work on official's personal matters

Testifying before the legislature, in an official capacity, in support of a bill that would benefit the official's private employer

Recreational hunting on state time

Liquor control agent accepting campaign contributions from liquor permit holders

Using a state credit card to purchase gasoline for personal use

Altering money orders from taxpayers and depositing them into a personal account

Fraudulently issuing General Educational Development (GED) certificates

Bid rigging

Source: Agencies' annual reports

* Includes investigations from prior years with findings made public in FY 2012.

ADDITIONAL RESOURCES

Association of Inspectors General: http://inspectorsgeneral.org/

Annual reports from selected inspector general offices:

Illinois: http://www2.illinois.gov/oeig/Documents/OEIG_FY_2012_Annual_Report.pdf

Massachusetts: http://www.mass.gov/ig/about-us/annual-reports/annrpt2012.pdf

Michigan (Department of Human Services): http://www.michigan.gov/documents/dhs/OIG_2012Annual_Report_426162_7.pdf

New York (Medicaid): http://www.omig.ny.gov/images/stories/annual_report/2011_annual_report.pdf

Ohio: http://watchdog.ohio.gov/Portals/0/pdf/annualreport/2012AnnualReport.pdf

Pennsylvania: http://www.oig.state.pa.us/portal/server.pt/gateway/PTARGS_0_2_131797_19548_766095_43/http%3B/pubcontent.state.pa.us/publishedcontent/publish/cop_hhs/oig/oig_annual_report/annual_report_2012.pdf

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