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GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2011
H D
HOUSE DRH80303-LL-185 (05/01)
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Short Title: Stop Waste, Fraud, and Abuse in Govt. Act. |
(Public) |
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Sponsors: |
Representative Moffitt. |
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Referred to: |
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A BILL TO BE ENTITLED
AN ACT TO MAKE CHANGES TO THE STATUTES GOVERNING THE TEACHERS' AND STATE EMPLOYEES' RETIREMENT SYSTEM, THE LOCAL GOVERNMENTAL EMPLOYEES RETIREMENT SYSTEM, AND THE DISABILITY INCOME PLAN OF NORTH CAROLINA TO ENHANCE THE OPERATION OF THE MEDICAL BOARD; TO ESTABLISH GUIDELINES FOR FRAUD INVESTIGATIONS THAT WILL ENHANCE THE DEPARTMENT OF STATE TREASURER'S CAPABILITY TO PREVENT AND DETECT FRAUD, WASTE, AND ABUSE; TO CREATE A REBUTTABLE PRESUMPTION OF FRAUD IN THE AVERAGE FINAL COMPENSATION CALCULATION; AND TO MAKE IT A CLASS 1 MISDEMEANOR TO FRAUDULENTLY RECEIVE THE RETIREMENT BENEFIT OF A DECEASED DISABILITY RETIREE AT LEAST TWO MONTHS AFTER THE RETIREE'S DEATH.
The General Assembly of North Carolina enacts:
SECTION 1. Article 3 of Chapter 128 of the General Statutes is amended by adding a new section to read:
"§ 128-38.6. Employee protection and remedies against unlawful retaliation for furnishing information to the Retirement Systems Division.
(a) In the absence of fraud or malice, no person who furnishes information to the staff of the Retirement Systems Division relating to the investigation of possible violations of retirement law shall be liable for damages in a civil action for any oral or written statement made or any other action that is necessary to supply such information to the Division.
(b) Any employee of a participating local employer who is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment by the employee's employer because of lawful acts done by the employee in furtherance of the Retirement Systems Division's receipt of information concerning possible violations of retirement law, including cooperation with the Division's investigation of possible violations, shall be entitled to all relief necessary to make the employee whole. Relief shall include reinstatement with the same seniority status as the employee would have had but for the discrimination or retaliation by the employing unit, two times the amount of back pay, interest on the back pay, and compensation for any special damages sustained as a result of the discrimination or retaliation, including litigation costs and reasonable attorneys' fees. An employee may bring an action in superior court for the relief provided in this section."
SECTION 2.(a) G.S. 128-21 reads as rewritten:
"§ 128-21. Definitions.
The following words and phrases as used in this Article, unless a different meaning is plainly required by the context, shall have the following meanings:
…
(11b) "Firefighter" means a person (i) who is a full-time paid employee of an employer that participates in the Local Governmental Employees' Retirement System and maintains a fire department certified by the North Carolina Department of Insurance and (ii) who is actively serving in a position with assigned primary duties and responsibilities for the prevention, detection, and suppression of fire.
(11c) "Fraud investigation" means an independent review or examination by Retirement Systems Division staff or the Division's authorized representatives who are assisting the Retirement Systems Division staff of activities, actions, or decisions by employers or other affiliated or associated entities having an impact on the Retirement System. The purpose of a fraud investigation is to help detect and prevent fraud and to ensure full accountability in the use of pension funds.
(11c)(11d) "Law
Enforcement Officer" means a full-time paid employee of an employer, who
possesses the power of arrest, who has taken the law enforcement oath
administered under the authority of the State as prescribed by G.S. 11-11,
and who is certified as a law enforcement officer under the provisions of
Chapter 17C of the General Statutes or certified as a deputy sheriff under the
provisions of Chapter 17E of the General Statutes. "Law enforcement
officer" also means the sheriff of the county. The number of paid
personnel employed as law enforcement officers by a law enforcement agency may
not exceed the number of law enforcement positions approved by the applicable
local governing board.
…."
SECTION 2.(b) G.S. 135-1 reads as rewritten:
"§ 135-1. Definitions.
The following words and phrases as used in this Chapter, unless a different meaning is plainly required by the context, shall have the following meanings:
…
(11a) "Filing" when used in reference to an application for retirement shall mean the receipt of an acceptable application on a form provided by the Retirement System.
(11b) "Fraud investigation" means an independent review or examination by Retirement Systems Division staff or the Division's authorized representatives who are assisting the Retirement Systems Division staff of activities, actions, or decisions by employers or other affiliated or associated entities having an impact on the Retirement System. The purpose of a fraud investigation is to help detect and prevent fraud and to ensure full accountability in the use of pension funds.
(11b)(11c) "Law-Enforcement
Officer" means a full-time paid employee of an employer who is actively
serving in a position with assigned primary duties and responsibilities for
prevention and detection of crime or the general enforcement of the criminal
laws of the State of North Carolina or serving civil processes, and who
possesses the power of arrest by virtue of an oath administered under the
authority of the State.
…."
SECTION 2.(c) G.S. 128-28 is amended by adding three new subsections to read:
"(r) Fraud Investigations - Access to Persons and Records. - In the course of conducting a fraud investigation, the Retirement Systems Division and the Division's authorized representatives shall:
(1) Have ready access to persons and may examine and copy all books, records, reports, vouchers, correspondence, files, personnel files, investments, and any other documentation of any employer. The review of State tax returns shall be limited to matters of official business, and the Division's report shall not violate the confidentiality provisions of tax laws.
(2) Have such access to persons, records, papers, reports, vouchers, correspondence, books, and any other documentation that is in the possession of any individual, private corporation, institution, association, board, or other organization which pertain to the following:
a. Amounts received pursuant to a grant or contract from the federal government, the State, or its political subdivisions.
b. Amounts received, disbursed, or otherwise handled on behalf of the federal government or the State. In order to determine that payments to providers of social and medical services are legal and proper, the providers of such services will give the Retirement Systems Division, or Retirement Systems Division's authorized representatives, access to the records of recipients who receive such services.
(3) Have the authority, and shall be provided with ready access, to examine and inspect all property, equipment, and facilities in the possession of any employer agency or any individual, private corporation, institution, association, board, or other organization that were furnished or otherwise provided through grant, contract, or any other type of funding by the employer agency.
(s) Fraud Investigative Reports and Work Papers. - The Director of the Retirement Systems Division shall maintain for 10 years a complete file of all fraud investigative reports and reports of other examinations, investigations, surveys, and reviews issued under the Director's authority. Fraud investigation work papers and other evidence or related supportive material directly pertaining to the work of the Retirement Systems Division of the Department of State Treasurer shall be retained according to an agreement between the Director of Retirement and State Archives. To promote intergovernmental cooperation and avoid unnecessary duplication of fraud investigative effort, and nothwithstanding local unit personnel policies to the contrary, pertinent work papers and other supportive material relating to issued fraud investigation reports may be, at the discretion of the Director of Retirement and unless otherwise prohibited by law, made available for inspection by duly authorized representatives of the State and federal government who desire access to and inspection of such records in connection with some matter officially before them, including criminal investigations. Except as provided in this section, or upon an order issued in Wake County Superior Court upon 10 days' notice and hearing finding that access is necessary to a proper administration of justice, fraud investigation work papers and related supportive material shall be kept confidential, including any information developed as a part of the investigation.
(t) Fraud Reports May Be Anonymous. - The identity of any person reporting fraud, waste, and abuse to the Retirement Systems Division shall be kept confidential and shall not be maintained as a public record within the meaning of G.S. 132-1."
SECTION 2.(d) G.S. 135-6 is amended by adding three new subsections to read:
(q) Fraud Investigations - Access to Persons and Records. - In the course of conducting a fraud investigation, the Retirement Systems Division and the Division's authorized representatives shall:
(1) Have ready access to persons and may examine and copy all books, records, reports, vouchers, correspondence, files, personnel files, investments, and any other documentation of any employer. The review of State tax returns shall be limited to matters of official business, and the Division's report shall not violate the confidentiality provisions of tax laws.
(2) Have such access to persons, records, papers, reports, vouchers, correspondence, books, and any other documentation that is in the possession of any individual, private corporation, institution, association, board, or other organization that pertain to the following:
a. Amounts received pursuant to a grant or contract from the federal government, the State, or its political subdivisions.
b. Amounts received, disbursed, or otherwise handled on behalf of the federal government or the State. In order to determine that payments to providers of social and medical services are legal and proper, the providers of such services will give the Retirement Systems Division, or Retirement Systems Division's authorized representatives, access to the records of recipients who receive such services.
(3) Have the authority, and shall be provided with ready access, to examine and inspect all property, equipment, and facilities in the possession of any employer agency or any individual, private corporation, institution, association, board, or other organization that were furnished or otherwise provided through grant, contract, or any other type of funding by the employer agency.
(r) Fraud Investigative Reports and Work Papers. - The Director of the Retirement Systems Division shall maintain for 10 years a complete file of all fraud investigative reports and reports of other examinations, investigations, surveys, and reviews issued under the Director's authority. Fraud investigation work papers and other evidence or related supportive material directly pertaining to the work of the Retirement Systems Division of the Department of State Treasurer shall be retained according to an agreement between the Director of Retirement and State Archives. To promote intergovernmental cooperation and avoid unnecessary duplication of fraud investigative effort, and nothwithstanding local unit personnel policies to the contrary, pertinent work papers and other supportive material relating to issued fraud investigation reports may be, at the discretion of the Director of Retirement and unless otherwise prohibited by law, made available for inspection by duly authorized representatives of the State and federal government who desire access to and inspection of such records in connection with some matter officially before them, including criminal investigations. Except as provided in this section, or upon an order issued in Wake County Superior Court upon 10 days' notice and hearing finding that access is necessary to a proper administration of justice, fraud investigation work papers and related supportive material shall be kept confidential, including any information developed as a part of the investigation.
(s) Fraud Reports May Be Anonymous. - The identity of any person reporting fraud, waste, and abuse to the Retirement Systems Division shall be kept confidential and shall not be maintained as a public record within the meaning of G.S. 132-1."
SECTION 3.(a) G.S. 128-21(7a) reads as rewritten:
"(7a) a. "Compensation" shall mean all salaries and wages prior to any reduction pursuant to sections 125, 401(k), 403(b), 414(h)(2), and 457 of the Internal Revenue Code, not including any terminal payments for unused sick leave, derived from public funds which are earned by a member of the Retirement System for service as an employee in the unit of the Retirement System for which he is performing full-time work. In addition to the foregoing, "compensation" shall include:
1. Performance-based compensation (regardless of whether paid in a lump sum, periodic installments, or on a monthly basis);
2. Conversion of additional benefits to salary (additional benefits such as health, life, or disability plans), so long as the benefits are other than mandated by State law or regulation;
3. Payment of tax consequences for benefits provided by the employer so long as they constitute an adjustment or increase in salary and not a "reimbursement of expenses";
4. Payout of vacation leave so long as such payouts are permitted by applicable law and regulation;
5. Employee contributions to eligible deferred compensation plans; and
6. Effective July 1, 2009, payment of military differential wages.
b. "Compensation" shall not include any payment, as determined by the Board of Trustees, for the reimbursement of expenses or payments for housing or any other allowances whether or not classified as salary and wages. Notwithstanding any other provision of this Chapter, "compensation" shall not include:
1. Supplement/allowance provided to employee to purchase additional benefits such as health, life, or disability plans;
2. Travel supplement/allowance (nonaccountable allowance plans);
3. Employer contributions to eligible deferred compensation plans;
4. Employer-provided fringe benefits (additional benefits such as health, life, or disability plans);
5. Reimbursement of uninsured medical expenses;
6. Reimbursement of business expenses;
7. Reimbursement of moving expenses;
8. Reimbursement/payment of personal expenses;
9. Incentive payments for early retirement;
10. Bonuses paid incident to retirement;
11. Contract buyout/severance payments; and
12. Payouts for unused sick leave.
c. In the event an employer reports as "compensation" payments not specifically included or excluded as "compensation", such payments shall be "compensation" for retirement purposes only if the employer pays the Retirement System the additional actuarial liability created by such payments. However, any salary or other remuneration determined by Retirement Systems Division staff, upon investigation, to have been paid for the principal purpose of enhancing a member's benefits under the plan shall be presumed not to be compensation. A presumption by administrative staff that salary or other remuneration was paid for the principal purpose of enhancing the member's benefits under the plan may be rebutted by the member or by the employer on behalf of the member. Upon receipt of sufficient evidence to the contrary, the presumption that salary or other remuneration was paid for the principal purpose of enhancing the member's benefits under the plan may be reversed. In all such cases, the decision as to whether the presumption by administrative staff has been rebutted by sufficient evidence shall lie solely within the discretion of the Board of Trustees."
SECTION 3.(b) G.S. 135-1(7a) reads as rewritten:
"(7a) a. "Compensation" shall mean all salaries and wages prior to any reduction pursuant to sections 125, 401(k), 403(b), 414(h)(2), and 457 of the Internal Revenue Code, not including any terminal payments for unused sick leave, derived from public funds which are earned by a member of the Retirement System for service as an employee or teacher in the unit of the Retirement System for which he is performing full-time work. In addition to the foregoing, "compensation" shall include:
1. Performance-based compensation (regardless of whether paid in a lump sum, in periodic installments, or on a monthly basis);
2. Conversion of additional benefits to salary (additional benefits such as health, life, or disability plans), so long as the benefits are other than mandated by State law or regulation;
3. Payment of tax consequences for benefits provided by the employer, so long as they constitute an adjustment or increase in salary and not a "reimbursement of expenses";
4. Payout of vacation leave so long as such payouts are permitted by applicable law and regulation;
5. Employee contributions to eligible deferred compensation plans; and
6. Effective July 1, 2009, payment of military differential wages.
b. "Compensation" shall not include any payment, as determined by the Board of Trustees, for the reimbursement of expenses or payments for housing or any other allowances whether or not classified as salary and wages. "Compensation" includes all special pay contribution of annual leave made to a 401(a) Special Pay Plan for the benefit of an employee. Notwithstanding any other provision of this Chapter, "compensation" shall not include:
1. Supplement/allowance provided to employee to purchase additional benefits such as health, life, or disability plans;
2. Travel supplement/allowance (nonaccountable allowance plans);
3. Employer contributions to eligible deferred compensation plans;
4. Employer-provided fringe benefits (additional benefits such as health, life, or disability plans);
5. Reimbursement of uninsured medical expenses;
6. Reimbursement of business expenses;
7. Reimbursement of moving expenses;
8. Reimbursement/payment of personal expenses;
9. Incentive payments for early retirement;
10. Bonuses paid incident to retirement;
10a. Local supplementation as authorized under G.S. 7A-300.1 for Judicial Department employees;
11. Contract buyout/severance payments; and
12. Payouts for unused sick leave.
c. In the event an employer reports as "compensation" payments not specifically included or excluded as "compensation", such payments shall be "compensation" for retirement purposes only if the employer pays the Retirement System the additional actuarial liability created by such payments. However, any salary or other remuneration determined by Retirement Systems Division staff, upon investigation, to have been paid for the principal purpose of enhancing a member's benefits under the plan shall be presumed not to be compensation. A presumption by administrative staff that salary or other remuneration was paid for the principal purpose of enhancing the member's benefits under the plan may be rebutted by the member or by the employer on behalf of the member. Upon receipt of sufficient evidence to the contrary, the presumption that salary or other remuneration was paid for the principal purpose of enhancing the member's benefits under the plan may be reversed. In all such cases, the decision as to whether the presumption by administrative staff has been rebutted by sufficient evidence shall lie solely within the discretion of the Board of Trustees."
SECTION 4. G.S. 135-18.11 reads as rewritten:
"§ 135-18.11. Improper receipt of decedent's retirement allowance.
A person is guilty of a Class 1 misdemeanor if the person,
with the intent to defraud, receives money as a result of cashing, depositing,
or receiving a direct deposit of a decedent's retirement allowance or a
decedent's monthly benefit under the Disability Income Plan of North Carolina
and the person (i) knows that he or she is not entitled to the decedent's
retirement allowance, allowance or the monthly disability benefit,
(ii) receives the benefit at least two months after the date of the retiree's
death, and (iii) does not attempt to inform this Retirement System of the
retiree's death."
SECTION 5.(a) G.S. 128-28(l) reads as rewritten:
"(l) Medical Board. - The Board of Trustees shall designate a Medical Board to be composed of not less than three nor more than five physicians not eligible to participate in the Retirement System. The Board of Trustees may structure appointment requirements and term durations for those medical board members. If required, other physicians may be employed to report on special cases. The Medical Board shall arrange for and pass upon all medical examinations required under the provisions of this Chapter, and shall investigate all essential statements and certificates by or on behalf of a member in connection with an application for disability retirement, and shall report in writing to the Board of Trustees its conclusion and recommendations upon all the matters referred to it."
SECTION 5.(b) G.S. 135-6(k) reads as rewritten:
"(k) Medical Board. - The Board of Trustees shall designate a medical board to be composed of not less than three nor more than five physicians not eligible to participate in the Retirement System. The Board of Trustees may structure appointment requirements and term durations for those medical board members. If required, other physicians may be employed to report on special cases. The medical board shall arrange for and pass upon all medical examinations required under the provisions of this Chapter, and shall investigate all essential statements and certificates by or on behalf of a member in connection with an application for disability retirement, and shall report in writing to the Board of Trustees its conclusion and recommendations upon all the matters referred to it."
SECTION 6. This act becomes effective July 1, 2012.