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Committee backs originating PEIA bill to create fraud control unit, adds venue protection for beneficiaries
Summary
An originating PEIA bill to expand investigative authority and penalties for provider fraud — mirroring Medicaid fraud powers — was agreed to and reported to the full Senate as amended. The committee adopted an amendment limiting venue for beneficiary prosecutions to the county of residence or where the conduct occurred.
The Senate Insurance Committee agreed to report an originating Public Employees Insurance Agency (PEIA) bill that would broaden PEIA’s investigative authority, create civil liability with possible treble damages, and impose criminal penalties for fraudulent claims against PEIA plans. The committee adopted a conceptual amendment clarifying venue for beneficiary prosecutions and reported the bill to the full Senate with a favorable recommendation.
Counsel (S3) told the committee the bill ‘‘modifies violations and penalty provisions’’ in chapter 9, article 7 of the code, authorizing PEIA to establish a special investigations unit, issue subpoenas, administer oaths, request search warrants, suspend payments to providers on credible allegations of fraud, and seek civil remedies including treble damages. The bill also would create a five-year statute of limitations for civil actions and permit the Attorney General’s office to prosecute. Counsel said the bill exempts certain investigative documents from the West Virginia Freedom of Information Act and adds criminal penalties including felonies punishable by up to 10 years imprisonment and fines not to exceed $10,000.
Director Brent Wolfenbarger (S7) testified that when he reviewed PEIA’s statute after being appointed he was ‘‘very disappointed’’ in its limited protections compared with the Medicaid fraud statute and that aligning the statutes would give PEIA stronger tools for pursuing provider fraud. Wolfenbarger said PEIA currently conducts only a handful of fraud inquiries and lacks dedicated fraud investigators; he estimated that an in-house team would require about seven employees but that initially PEIA would likely outsource investigative work to private firms. Wolfenbarger cited private-sector estimates that, with pre- and post-pay remedies and potential treble damages, a dedicated unit could expect a roughly 3:1 return on investment in the first year.
Committee members pressed on scope and costs. A senior senator from the thirteenth (S8) asked whether PEIA would need additional legislative funding; Wolfenbarger estimated annual expenditures of roughly $1.0–1.1 million and said PEIA has the funds available. The senator for Marion (S4) raised concern that the bill’s venue provision could force individual defendants who live outside Kanawha County to defend prosecutions in Kanawha; S4 offered a conceptual amendment to limit beneficiary prosecutions to the county of residence or where the violation occurred. Counsel and the director discussed drafting options, and the committee adopted the beneficiary-venue clarification by voice vote.
The committee agreed to the bill as amended and voted to report it to the full Senate with a recommendation that it pass.
What happens next: The PEIA originating bill will be transmitted to the full Senate for further consideration. Finance and other committees may review fiscal and statutory crosswalks cited by counsel.
