Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
SUBJECT: Maine Medicaid Fraud
DATE: August 2, 1990
Control Unit Docket No. 89-177
Decision No. 1182
DECISION
The Maine Medicaid Fraud Control Unit (MFCU or Maine) appealed a
disallowance by the Office of Inspector General (OIG) of the Department
of Health and Human Services (Department) of $96,030 in federal
financial participation (FFP) claimed under the Medicaid program. The
disallowed amount represented the federal share of the salaries and
associated costs of two investigators employed by the MFCU during
calendar years 1986 and 1987. OIG determined that the two investigators
were not "full- time employees" of the MFCU as required by federal
regulations.
The clear thrust of the regulations and the preamble language explaining
the role of dedicated Medicaid fraud control units is that the states
were required to staff these units with full-time employees. This
appeal concerns the OIG's determination that the two Maine MFCU
investigators were so substantially involved in non- Medicaid fraud
activities that Maine was precluded from receiving any FFP whatsoever in
the costs for these positions. The OIG disallowed Maine's FFP claim for
two MFCU investigators for 1986 and for one of these investigators in
1987. We find that while in 1989 the OIG clearly stated a policy
requiring MFCU full-time personnel to work exclusively on Medicaid fraud
control matters, such a requirement was not clear on the face of the
regulations and cannot reasonably be applied to Maine for 1986 and 1987.
While under its current policy of exclusivity the OIG's disallowance
would be sound, we find that Maine, given its particular circumstances
during the period at issue, is entitled to FFP for costs of the
investigators so long as they met the requirements for "full-time"
staff
as then applied.
As we explain below, we evaluate the status of these investigators as
"full-time employees" of the MFCU in light of the actual language
of the
regulation and the OIG's explanations of how the regulations applied to
Maine. For 1986, we find that the two investigators devoted essentially
a full-time effort to Medicaid fraud activities and were properly
treated as full-time employees. According to established federal cost
principles, however, Maine is required to reduce its expenditures
claimed for FFP to reflect the allocable part of the investigators' time
spent on non-Medicaid fraud activities. For 1987, we find that the
investigator in question, who actually transferred out of the MFCU
during that year, spent an equal or greater part of his time on
non-Medicaid activities and cannot be treated as a full-time employee.
Accordingly, Maine is precluded from claiming any FFP whatsoever in the
costs for this investigator for 1987. Based on our calculations, we
sustain $42,861 and reverse $53,169 of the amount disallowed.
Statutory and Regulatory Background
Section 1903(a)(6) of the Social Security Act (Act) authorizes FFP for
the costs attributable to the establishment and operation of a state
Medicaid fraud control unit, as described in section 1903(q) of the Act.
The function of such a unit is to conduct statewide investigations and
prosecutions of all aspects of fraud in connection with the Medicaid
program, as well as complaints of the abuse and neglect of patients in
medical facilities receiving Medicaid payments. Sections 1903(q)(3) and
(4). The rate of FFP for the costs of such a unit's operations are 90
percent for the first three years of a unit's existence and 75 percent
thereafter. Section 1903(a)(6).
Section 1903(q) further requires that the Secretary of the Department
certify and recertify annually that a unit is meeting certain
requirements. For example, the unit must be separate and distinct from
the state agency that administers the Medicaid program within the state.
Section 1903(q)(2). The unit must also employ "such auditors,
attorneys, investigators, and other necessary personnel and [be]
organized in such a manner as necessary to promote the effective and
efficient conduct of the entity's activities." Section 1903(q)(6).
The regulations implementing section 1903(q) are set forth at 42 C.F.R.
Part 1002, Subpart C. Relevant here is the definition of an "employee"
set forth at section 1002.301:
"Employ" or "employee", as the context requires, means
full-time
duty intended to last at least a year . . . .
The applicable FFP rate is paid for a unit's costs "which are
attributable to carrying out its functions and responsibilities." 42
C.F.R. 1002.319(a). A unit's costs which are eligible for FFP are
listed at section 1002.319(d). That section provides:
. . . Reimbursement shall be limited to costs attributable to the
specific responsibilities and functions set forth in this subpart
in connection with the investigation and prosecution of suspected
fraudulent activities and the review of complaints of alleged abuse
or neglect . . . .
A unit's expenditures which are not eligible for FFP include, at section
1002.319(e)(4):
The performance by a person other than a full-time employee of the
unit of any management function for the unit, any audit or
investigation, any professional legal function, or any criminal,
civil or administrative prosecution of suspected providers.
The Maine Medicaid Fraud Control Unit
The Maine Medicaid Fraud Control Unit was established in 1979. During
1986 and 1987, the period in dispute, its professional staff consisted
of one attorney, one auditor/investigator, and three investigators. The
status of two of these investigators, designated as Investigators C and
F, as full-time employees of the MFCU is the issue in this appeal. The
OIG questioned the status of Investigator C for 1986 and Investigator F
for 1986 and 1987. The 75 percent FFP share of Investigator C's
position in 1986 amounted to $30,948; for Investigator F's position, it
was $32,681 in 1986 and $32,401 in 1987. 1/
It is undisputed that the two investigators worked on some cases
unrelated to MFCU matters. It is also undisputed that the investigators
worked a considerable number of overtime hours. Based on a standard
2080 hour work year (52 weeks x 40 hours) with the addition of overtime
hours, the investigators accounted for the following hours in 1986 and
1987. Investigator C's work year consisted of 2698 hours for 1986, of
which 463 were spent on non-Medicaid activities. This means that
Investigator C worked, on average, a 51.9 hour week, of which 8.9 hours,
or 17.2 percent, were devoted to non- Medicaid matters. Investigator
F's work year consisted of 2449 hours for 1986, of which 374 were spent
on non- Medicaid matters. This averages out to a 47 hour week, with 7
hours, or 15 percent, spent on non-Medicaid matters. For 1987,
Investigator F's work year consisted of 2419 hours, of which 1278 hours
were spent on non- Medicaid activities. This averages out to a 46 hour
week, with 23.4 hours, or 50 percent, spent on non- Medicaid activities.
2/
The OIG Review
A 1988 recertification review of the MFCU by the OIG determined that in
calendar years 1986 and 1987 Investigators C and F were assigned to a
significant number of non-Medicaid cases. Specifically, the OIG review
found that, in 1986, 24 of the 39 cases assigned to the investigators
were unrelated to Medicaid fraud. In 1987, Investigator F was assigned
to 24 cases, of which 22 were unrelated to Medicaid fraud. Furthermore,
Investigator F transferred from the MFCU to the Maine Attorney General's
office, effective October 1, 1987, yet the MFCU claimed his salary for
all of 1987. 3/
The OIG review found that the MFCU was not in compliance with 42 C.F.R.
1002.301 and 1002.319(e)(4) because the investigators were not
"full-time employees" of the MFCU. The OIG review stated that the
OIG
interprets the "full- time employee" rule to require that such employees
perform full-time duties under the supervision of the MFCU and work
exclusively on Medicaid fraud control matters. The review also referred
to Office of Management and Budget Circular A-87. Attachment A of
Circular A-87 states that a cost is allocable to a federal grant program
only to the extent of benefits received by such grant program and that
the cost must be necessary and reasonable for the proper and efficient
administration of the grant program. Paragraphs C(2)(a) and C(1)(a).
The review found that the investigators' activities failed to benefit
the Medicaid program and were not necessary for the administration of
the MFCU.
The OIG review concluded that Maine should be required to refund FFP in
the amount of $96,030 for the salaries of the two investigators in 1986,
the salary of one investigator in 1987, and the associated costs (fringe
benefits, travel expenses, and indirect costs) of the investigators.
Discussion
In 1977 Congress provided for the institution of state Medicaid Fraud
Control Units because it was concerned that insufficient efforts had
been made to identify and prosecute cases of Medicaid fraud in a number
of states. Congress noted that where a state had established a separate
investigative unit, the rate of prosecutions and convictions for
Medicaid fraud substantially increased. Because Congress believed that
the 50 percent matching rate for activities related to the
administration of a state's Medicaid plan, set forth at section
1903(a)(7) of the Act, did not serve as a sufficient incentive for the
establishment or expansion of fraud units, it set a FFP rate of 90
percent for three years to enable states to establish units.
Thereafter, the rate would be 75 percent. Congress hoped that after the
units had been operational for several years, the recoveries the units
made would offset or exceed the cost of their operation. It is evident
from the enhanced rate of FFP authorized that Congress attached great
importance to the establishment of Medicaid fraud control units.
Central to this dispute is the meaning of 42 C.F.R. 1002.319(e)(4),
which states that FFP is unavailable for work performed by other than a
"full-time employee" of a Medicaid fraud control unit. What the parties
specifically contest here is what constitutes a "full- time employee."
According to the OIG, a full-time unit employee works exclusively on
Medicaid fraud matters. Maine, on the other hand, argued that a
full-time employee is someone who works a regular workweek of 35-40
hours on Medicaid matters, but can also work overtime hours on
non-Medicaid related activities. Maine contended that if a unit
employee receives no compensation for the overtime hours, as the MFCU
said was the situation in this appeal, and thus the Federal Government
does not incur any cost from the overtime activities, that employee's
work on non-Medicaid matters should not automatically result in the
denial of FFP for his salary and associated costs.
For the time period at issue, 1986 and three quarters of 1987, these
investigators were employees assigned full- time to the Maine MFCU. The
question presented is at what point will involvement in non-qualifying
activities run afoul of the regulatory provision precluding FFP for
other than "full-time" employees. The regulations are of little
assistance in resolving this dispute. While "employee" is defined
as
meaning "full-time duty," the regulations give no explicit guidance
concerning at what point an employee's work can no longer be considered
as full-time.
The OIG maintained that "full-time" means, essentially, just that--that
an employee devotes all of his or her work time to Medicaid fraud or
patient abuse matters and to nothing else. Such a policy is required,
the OIG reasoned, to prevent abusive situations where Medicaid funds
designated for fraud control units are used to subsidize non-Medicaid
work performed for other state agencies. The OIG pointed to the
preamble of the regulations as support for its position that a unit's
employees should work exclusively on Medicaid matters:
It is clear the Congress intended for these units to bring together
specialized expertise in medicaid fraud by developing a team of
lawyers, investigators, and auditors [citations omitted]. The work
of temporary or part-time staff or the occasional investigation or
prosecution of isolated cases by different investigators and
prosecutors does not contribute to the development of a team with
this specialized expertise. Thus, the unit should not serve as a
channel for the funding of fragments of work by several agencies or
offices or for the funding of a part of the activities of a larger
office through a proration of time to the unit's function or the
rotation through the unit of temporary employees or detailees. In
our view, the statutory purpose can be achieved only if the funding
for these units is limited to the direct efforts of the unit's
full-time, long- term staff.
For these reasons, we have revised [the regulation] to make it
clear that FFP will not be provided to the extent that specified
management, audit, investigative, and legal functions of the unit
are performed by persons who are not full-time employees of the
unit. The purpose is to prohibit both the contracting out of vital
functions and the use of employees whose responsibilities are split
between two agencies.
43 Fed. Reg. 32077, 32078 (July 24, 1978).
The OIG argued that the MFCU's activities clearly presented such an
abusive situation, pointing first to the number of non-Medicaid cases
worked by the two investigators and then to the amount of hours worked
by the investigators on non-Medicaid activities. The case numbers and
hours clearly showed, according to the OIG, that the investigators
devoted more than a significant amount of their time to non-Medicaid
matters. As professionals, the OIG continued, the investigators'
workweek should not be limited to just 35-40 hours, but to whatever time
it takes to accomplish their assigned responsibilities.
The OIG contended that the degree to which the MFCU allocated its
employees to non-Medicaid work was unique, save for one other state, in
the history of the program and was evidence of a continuing practice by
the MFCU of affirmatively assigning its professional staff to
substantial numbers of non-Medicaid cases. According to the OIG,
Maine's actions establish "an obvious and pervasive pattern of a fraud
control unit's ignoring the purposes of its federal grant." Agency's
Reply Brief, p. 6.
Maine responded that this interpretation of "full-time employee"
by the
OIG is of recent vintage. Maine argued that the OIG did not announce
this interpretation of "full-time employee" as meaning an employee
had
to work exclusively on Medicaid matters until 1989. Prior to that time,
according to Maine, the OIG in communications with the MFCU and with
Medicaid fraud control units in other states did not adhere to this
position of exclusivity. The MFCU argued that the OIG's insistence on
exclusivity shows a lack of understanding of how a Medicaid fraud unit
operates in a state like Maine and how it interacts with other state and
federal agencies.
I. During the period at issue there was no announced policy that a
"full-time employee" must work exclusively on Medicaid cases.
Maine asserted that during the period at issue it was unaware of any OIG
interpretation of "full-time employee" requiring exclusive work on
Medicaid-fraud matters. To the contrary, asserted Maine, occasional
work by its "full-time" staff on non-Medicaid fraud matters was accepted
by the OIG as part of the realities of law enforcement in the states,
where cooperation with other law enforcement efforts and officials
ultimately resulted in more effective detection and investigation of
Medicaid matters. Moreover, Maine stated that it had been specifically
advised that the "full-time" employee requirement was satisfied so
long
as an employee devoted essentially a full-time effort of 35 to 40 hours
a week on Medicaid-fraud activities, notwithstanding any time spent on
other activities. 4/
The MFCU supplied an affidavit from the current and then Maine Attorney
General detailing a February 1981 discussion he had with the Chief of
the State Fraud Branch of the OIG. MFCU Ex. 2. According to the
affiant, the OIG official approved the MFCU's professional staff doing
occasional outside work. Additionally, the MFCU produced an affidavit
from the Chief of the State Fraud Branch of the OIG during the period
1983 through 1985. MFCU Ex. 5. 5/ This official stated that during his
tenure, outside activity of a unit's employees, in such areas as
cooperation with other law enforcement entities or training, was
expected and that a "totality of the circumstances" approach was taken
to determine whether FFP should be denied for an infraction of the
"full-time employee" rule. MFCU Ex. 5, para. 8. 6/ There were no
published guidelines or policy announcements concerning the limits on a
"full-time" unit employee's activities. In these circumstances the
MFCU
sought advice from the head of the OIG State Fraud Branch concerning its
options in setting up and staffing its MFCU. (Maine apparently had
severe budget constraints.) That OIG official informed the MFCU that
occasional outside work was acceptable. MFCU Exs. 2 and 3. Also, in a
memorandum recording a March 2, 1981 telephone conversation with the OIG
official, Investigator C noted that "[the official] stated if a
state-funded attorney works 60 hours a week, but spends at least 35
hours a week on Medicaid fraud matters, then he would be considered
'full-time' on Medicaid fraud and would be allowable under the grant."
MFCU Ex. 18. The OIG never contradicted Maine's assertions about the
advice it received from the OIG officials.
The OIG contended that its interpretation of the "'full- time employee'
rule" as precluding any non-Medicaid work is "long-standing."
Yet there
is nothing in the record of this appeal to indicate that the OIG ever
publicly offered this interpretation as its official policy until 1988,
well after the period at issue in this disallowance. The first apparent
issuance of this interpretation occurred with the publication of an OIG
report, "The Oversight of State Medicaid Fraud Control Units"
(OAI-01-87-00015), in August 1988. MFCU Ex. 10. That report, in
commenting on 42 C.F.R. 1002.301 and 1002.319(e)(4), states:
[T]he regulations are unclear as to the requirements of a full-time
employee. In response to individual queries, OI [Office of
Investigations] interprets the regulations to require that a
full-time employee work "exclusively" on Medicaid fraud control
matters and work under the "direct supervision" of the unit.
However, this administrative interpretation is not expressly
reflected in the regulations.
The lack of clarity regarding the requirements of full-time
employees . . . has resulted in confusion in interpreting the
Medicaid fraud control regulations. This confusion is reflected by
the fact that questions concerning these areas have been frequently
raised by various MFCUs in their contacts with OI staff.
p. 17. The report, in recommending that the regulations be amended to
specify that a full-time employee must work exclusively on Medicaid
fraud control matters, continues, "The recommendation would not
implement new policies; it would merely require OI to formally publicize
its current policy in this area by issuing a formal regulation." p. 18
(emphasis added). On January 13, 1989, the OIG subsequently issued
Policy Transmittal No. 89-1, wherein the full-time employee rule was
interpreted to mean that a unit employee must work exclusively on
Medicaid fraud control matters.
The OIG attempted to explain the cited references to the report as
pertaining to limited instances of non-Medicaid cooperation with other
government agencies. We see no basis in the report itself to read it as
narrowly as the OIG suggests. Rather, we view the report as a clear
admission by the OIG that it had not previously announced its
interpretation of "full-time employee" except in response to inquiries
from individual fraud control units. There was no nationwide
dissemination of this interpretation until the issuance of the 1988
report and no official notification to the states until the 1989 policy
transmittal.
Moreover, the preamble to the regulations cited by the OIG does not
mandate as an obvious reading of the regulation the OIG's current policy
interpretation. While the preamble's statements are consistent with a
policy of exclusivity, we find that this is not the only reasonable
reading of the preamble in light of two factors discussed above. First,
there is Maine's uncontradicted assertion that the head of the OIG's
State Fraud Branch told the MFCU that a unit employee qualified as a
full-time employee if he worked 35-40 hours a week on Medicaid fraud
matters. Second, there is the OIG's own report which chronicles the
confusion about the meaning of the regulation. We therefore do not find
that Maine should be held to the OIG's reading of the preamble,
especially since it does not address whether a unit employee who devotes
essentially a full workweek to Medicaid activities is precluded from
engaging in any other activities.
Furthermore, the OIG policy on "full-time" employees is not as clear-cut
as the OIG would have us believe. During the period at issue it is
apparent that the OIG did not have a hard and fast interpretation that a
unit employee could never perform any non-Medicaid work; although we do
not examine the examples at length, the exceptions to the "rule" shown
in the MFCU exhibits do demonstrate that the OIG did approve of outside
work. 7/ Yet the OIG never clearly articulated either what its policy
was or what were the standards for an exception to that policy. There
was never any notice of a standard for the determination of a violation
of the rule.
The Board has previously held that we cannot hold a state accountable
for an agency policy interpretation that is not compelled by the plain
meaning of a statutory or regulatory provision unless the state has
received actual notice. New Mexico Human Services Dept., DAB No. 382
(1983), p. 12; see also Hawaii Dept. of Social Services and Housing, DAB
No. 779 (1986). Here the MFCU had no notice of the OIG interpretation
until the issuance of the Policy Transmittal in 1989. While the OIG
internally might have developed this interpretation prior to that time,
it never announced that interpretation to Maine. In fact, in light of
the affidavits submitted by MFCU, it would appear that some OIG
officials thought the regulations expressly permitted outside work,
given the "totality of the circumstances." In any event, we find that
during the period in question there existed a reasonable doubt as to the
meaning of the regulations and that there was no announced policy on the
question of the extent of work on non-Medicaid matters by unit
employees. Accordingly, we find that the MFCU cannot be held accountable
for violating an unarticulated policy.
While we accept Maine's position it cannot reasonably be held to the
OIG's later interpretation requiring that full-time employees work
exclusively on Medicaid fraud unit matters, it does not necessarily
follow that the MFCU is entitled to all the FFP disallowed by the OIG.
Below we consider both whether the nature and extent of Investigators C
and F's non-Medicaid fraud activities precluded treating these employees
as "full-time" under a reasonable application of the regulations and
whether Maine is required to allocate and not claim FFP in the costs of
the non-Medicaid activities.
II. For 1986, Investigators C and F retained their full-time employee
status, but Maine is required to allocate and not claim FFP for
that part of the investigators' time that was spent on non-Medicaid
activities.
For 1986, Investigators C and F worked essentially a full-time effort on
Medicaid fraud unit matters since their overtime hours more than
accounted for the hours found by the reviewers to have been spent on
non- Medicaid fraud unit matters. These investigators met the 35-40
hour per week standard as required by the OIG's guidance actually
received by Maine. It was undisputed that during 1986 these
investigators were employed as full- time MFCU staff. Under the
particular circumstances faced by Maine, a small state which had
specifically sought guidance from OIG, the regulations, which require
simply that FFP can be claimed only for the efforts of full-time unit
employees, cannot reasonably be applied to totally preclude any FFP for
Maine's only MFCU investigators.
Throughout this appeal, the MFCU steadfastly clung to the position that
it is not the business of the Federal Government what MFCU employees do
with their overtime hours as long as they worked 35-40 hours a week on
Medicaid fraud matters. Maine argued that if MFCU staff come into the
office on weekends to work on non-Medicaid matters, the Federal
Government incurs no extra expense from this outside activity. Maine
expressed bewilderment that such after hours work could result in either
the forfeiture or diminution of its claim for FFP. 8/ However, the
non-Medicaid activities were more than de minimis and Maine did not
provide evidence that this work bore some logical connection to Medicaid
fraud and abuse control efforts. Therefore, for 1986, we find that
Maine's claim for FFP must be adjusted to reflect the amount of time the
investigators spent on Medicaid and non-Medicaid matters.
From its arguments in this appeal it is evident that the MFCU does not
want to accept the cost principles' concept of benefiting costs. In its
review, the OIG referred not only to its interpretation of the
regulations as mandating exclusivity, but also cited Attachment A of
Office of Management and Budget Circular A-87. The provisions of
Circular A-87 are binding upon Maine. 45 C.F.R. 74.171. The cost
principles provide that costs are allowable to the extent of the benefit
to the federal program. Att. A, C.2.a. Here, Maine cannot claim FFP in
the part of the costs associated with the investigators' positions that
are allocable to non-MFCU activities.
The FFP share in 1986 of the costs for Investigators C and F were,
respectively, $30,948 and $32,681. Applying the percentage of time the
investigators spent on non- Medicaid activities, 17.2 percent for
Investigator C and 15 percent for Investigator F, we arrive at the
amounts of $5,320 for Investigator C and $4,860 for Investigator F that
reflect activities that did not benefit the Medicaid program and are not
allocable to it. These amounts are properly disallowed.
A pro rata adjustment of the disallowance is appropriate here for
several reasons. It is uncontested that in 1986 Investigators C and F
spent the far greater part of their time working on Medicaid fraud
activities. There has been no allegation that the MFCU was derelict in
its responsibilities of prosecuting Medicaid fraud. 9/ The
investigators' Medicaid fraud-related activities did benefit the
Medicaid program. The OIG's proposed disallowance of all FFP associated
with the investigators' positions is unduly harsh in light of the
guidance specifically provided to Maine. Moreover, the situation
presented here is distinguishable from other instances where a state is
seeking an enhanced rate of FFP. For example, Medicaid allows a state
to claim an enhanced rate of 75 percent FFP for skilled professional
medical personnel. If a state fails to document that its claim meets
the regulatory standards for skilled medical professionals, the state
can claim FFP at a 50 percent rate. In this case, 42 C.F.R.
1002.319(e), the applicable regulation providing for the payment of FFP,
expressly precludes federal participation at all, even in costs which
benefit the Medicaid program, unless claimed costs are associated with a
unit's "full-time" employees. Consequently, if the MFCU's claim for
FFP
at 75 percent is rejected, it gets 0 percent FFP despite the benefits
the Medicaid program received from the investigators' activities. Here,
this would require Maine to forfeit all FFP in costs associated with the
two investigators in a well-respected unit. Such a result would be
clearly unreasonable under the particular circumstances here.
Furthermore, there is precedent by the OIG for a pro rata adjustment
where personnel from a fraud control unit have worked on non-Medicaid
activities. The record here contains two instances in other states
where the OIG disallowed only that portion of the unit employees' costs
attributable to non-Medicaid matters. MFCU Ex. 11.
The OIG expressed concern that any application of a pro rata adjustment
of the disallowance here would send the wrong signal to other states.
The OIG argued that a pro rata adjustment would lessen a state's
disincentive to undertake significant non-Medicaid activities. We find
the OIG's concerns about any prospective effect of this decision on
other states unwarranted. With the issuance of the January 1989 Policy
Transmittal, state fraud control units now are aware of the OIG's
mandate that their staffs are required to work exclusively on Medicaid
fraud matters. The states have been put notice that failure to comply
with this requirement could jeopardize all the FFP for a non-dedicated
staff member. Thus this decision should have no prospective effect
whatsoever.
III. For 1987, Investigator F was substantially involved in
non-Medicaid fraud matters and did not retain his full-time
employee status so that Maine is precluded from claiming any FFP
at all for his Medicaid fraud unit activities.
Under Maine's understanding of the Medicaid fraud program, as confirmed
in the affidavits that described conversations between MFCU and OIG
officials, a unit employee's position would qualify for FFP even if the
employee worked on outside activities as long as the employee worked
35-40 hours a week on Medicaid fraud matters. Yet under the Board's
calculations, accepted by Maine (Maine's Response to "Surrebuttal,"
p.
3), it is evident that Investigator F in 1987 worked, on the average,
only 23 hours per week on Medicaid activities.
Consequently, even under the criteria actually accepted by Maine, we see
no basis for finding that Investigator F was a full-time employee of the
MFCU in 1987 and that his position was accordingly eligible for FFP.
While we have said that there is nothing explicit in the regulations or
their preamble to support the OIG's requirement for exclusivity during
1987, the amount of time Investigator F spent in 1987 on non-Medicaid
matters clearly negated the congressional purpose behind the institution
of Medicaid fraud control units, the combatting of Medicaid fraud. The
regulations on their face then preclude the payment of FFP for any costs
of Investigator F for 1987. Although a portion of these costs did
benefit the Medicaid program, FFP is unavailable in accordance with the
express language of the regulations. We therefore sustain that portion
of the disallowance, $32,681, attributable to Investigator F's position
in 1987.
Conclusion
For the reasons stated above, for the investigators' positions in 1986,
we sustain that portion of the disallowance allocable to their
non-Medicaid activities, $10,180. We also sustain the disallowance of
the costs associated with Investigator F's position in 1987, $32,681.
We reverse the remaining portion of the disallowance, $53,169.
_____________________________ Judith A.
Ballard
_____________________________ Norval D. (John)
Settle
_____________________________ Cecilia Sparks
Ford Presiding Board Member
1. These amounts are derived from the yearly salary of each
investigator, his fringe benefits and travel expenses, plus the indirect
costs associated with his position, multiplied by the 75 percent FFP
rate. Attachment B to Final Report of Recertification Review.
2. This is by far the most straightforward way to analyze the amount
of time spent on non-Medicaid matters for the years in question. Based
on the exhibits in the record, the Board proposed this analysis to the
parties during a telephone conference. Maine accepted this proposed
analysis. The OIG, however, proposed a different calculation based on
certain exhibits before the Board -- the time records for the
investigators and the reviewer's schedules showing hours spent on non-
Medicaid fraud matters. See OIG Exs. A-1, A-2, A-3, B-1, B-2, and B-3.
Some of the records submitted to the Board did not cover the full year,
so the OIG developed a set of annualized projections based on the
part-year records. The resulting percentages of time which the OIG
attributed to non-Medicaid matters were higher than we state above. We
found the OIG's calculations confusing. Also, as Maine pointed out, the
OIG's first set of annualized figures were based on a misreading of the
exhibits (see State Reply Brief, pp. 2-7) and the OIG's revised
calculation reflected an assumption than there were more non-Medicaid
investigational hours that the reviewer had noted on the schedules in
the record (see Agency's Reply Brief, pp. 1-4). Maine stated that the
OIG reviewers had access to the full-year records; accordingly, we see
no reason to go through the partial year extrapolation the OIG proposes.
Therefore, for purposes of this decision, we follow the analysis we
first suggested to the parties.
We do note, however, that the parties' overtime hour figures differed.
The OIG listed 612 overtime hours, not 618, for Investigator C in 1986
and 274 for a partial- year's total compared to 339 for a full-year
number for Investigator F for 1987. We used Maine's figures. State's
Appeal Brief, p. 9. Also we used the figures recorded on the schedules
in the record for the cases found by the reviewer to be non-Medicaid,
without speculating whether there were other hours not accounted for.
3. The MFCU admitted that it should not have claimed the salary of
this investigator for the last quarter of 1987. The MFCU stated that it
would repay the FFP associated with that investigator's salary for that
quarter.
4. Maine also submitted some evidence of what it termed the OIG's
inconsistent interpretation of these requirements over the years when
dealing with other states' MFCUs. See MFCU Ex. 6. We do not need to
specifically address this evidence here since we do not regard any such
inconsistency as dispositive.
5. The OIG suggested that in its use of these affidavits the MFCU was
asserting a claim of equitable estoppel against the OIG. The OIG
disputed any reasonable reliance on the part of the MFCU on the OIG
officials' statements. The MFCU, however, denied that it was asserting
estoppel, but merely showing that the OIG had not always interpreted the
"full-time employee" requirement to mean exclusive work on MFCU matters.
6. The affidavit from the former head of the OIG's State Fraud Branch
stated that among the factors to be considered in evaluating whether a
unit had violated the regulatory provision requiring "full-time"
employees were:
o the nature of the infraction(s), and how
long it (they) continued; o the harm the infraction(s) caused to the
effectiveness of the Unit, to the state fraud program in general, and to
the law enforcement community and criminal justice system at large; o
the clarity of existing statutory, regulatory
or policy guidelines on the issues; o the effect that any particular
sanction would have: (1) as a deterrent to future repetition; (2) on
the continued viability of the particular Unit; (3)
on the State Medicaid Fraud Control Unit Program in general.
7. Even the OIG sought cooperative assistance from the chief MFCU
investigator, Investigator C, on a non- Medicaid case in 1985 and 1986.
MFCU Ex. 20. It is disingenuous of the OIG to argue that Maine should
have known of the OIG's policy on exclusivity when the OIG itself did
not even follow it.
8. Maine initially presented the argument that the investigators did
all their non-Medicaid work in their overtime hours. During the course
of the appeal, however, it became apparent that the investigators did
not confine their non-Medicaid work to overtime, but also worked on
non-Medicaid cases during their "regular" hours.
9. In fact, there is evidence in the record that during the period in
question the Maine MFCU had an exemplary performance history, ranking
high in several categories among the 38 fraud control units in the
United States. MFCU Ex.