Chief examiner - Recovery audits for overpayments of state funds.

(a) For the purposes of this section, the following words have the following meanings:

(1) CHIEF EXAMINER. The Chief Examiner of Public Accounts.

(2) OVERPAYMENT. Any payment in excess of amounts due and includes failure to meet eligibility requirements, failure to identify third party liability where applicable, any payment for an ineligible good or service, any payment for a good or service not received, duplicate payments, invoice and pricing errors, failure to apply discounts, rebates, or other allowances, failure to comply with contracts or purchasing agreements, or both, failure to provide adequate documentation or necessary signatures, or both, on documents, or any other inadvertent error resulting in overpayment.

(3) RECOVERY AUDIT. A financial management technique used to identify overpayments made by a state agency with respect to individuals, vendors, service providers, and other entities in connection with a payment activity.

(4) RECOVERY AUDITOR. A private contractor with recovery audit expertise.

(5) STATE AGENCY. A department, office, board, authority, commission, bureau, division, institution, state institution of higher education of this state, or any other state entity that makes payments of state funds.

(b) The chief examiner may contract with recovery auditors to conduct and perform recovery audits of payments made by state agencies to individuals, vendors, service providers, and other entities. Any audit conducted pursuant to this subsection of any payment made by a state agency to an electric utility regulated by the Public Service Commission is limited to the three-year period following the date of the payment to be audited. Overpayments between one state agency and another state agency are not subject to recovery under this section. Any contract shall be entered into in accordance with the purchasing provisions of the state. The contracts may provide for reasonable compensation for services provided under the contract, including compensation determined by the application of a specified percentage of the total amount recovered because of the recovery auditor's audit activities. In no event shall the compensation to a recovery auditor exceed 15 percent of the amount recovered because of the recovery auditor's audit activities. A recovery audit of a payment may not be made within 90 days of the date of the payment. No payment shall be due a recovery auditor from any payment identified as an overpayment until the overpayment has been recovered and credited to the special fund established in this section.

(c)(1) A state agency whose payments are being audited under a recovery contract pursuant to this section shall provide a recovery auditor with any payment-related information as determined by the chief examiner, including any confidential information that is necessary for the performance of the audit or the recovery audit of an overpayment, to the extent the agency is not prohibited from sharing the information under an agreement with another state or the federal government.

(2) A recovery audit shall be complementary to any other financial management process and shall not supplant any existing or future state audit or program integrity activity by a state agency.

(3) A recovery auditor acting under a contract authorized by this section, and each employee or agent of the recovery auditor, is subject to all prohibitions against the disclosure of confidential information obtained from the state in connection with the contract that applies to any official or employee of the applicable state agency. A recovery auditor acting under a contract authorized by this section or an employee or agent of the recovery auditor who discloses confidential information in violation of a prohibition made applicable to the recovery auditor under this section is subject to prosecution by the Attorney General in any court within this state.

(d)(1) Recovery audits shall be performed on payments to individuals, vendors, service providers, and other entities made by each state agency as determined by the chief examiner. Notwithstanding the foregoing, the recovery audits provided for in this section shall not be performed on any entity, vendor, or service provider that is subject to audits under the federally mandated Recovery Audit Contractor Program adopted by the Alabama Medicaid Agency under Section 1902(a) (42) of the Social Security Act, as amended.

(2) Recovery audits performed on individuals, vendors, service providers, and other entities are limited to the three-year period following the date of the payment to be audited. A recovery audit must be completed within 12 months after notification to the entity that a recovery audit will be performed.

(3) Based on a request by the recovery auditor, the Legislative Committee on Public Accounts, for good cause shown, may provide one extension of the time to complete a recovery audit not to exceed 60 days. A recovery auditor must make the request for an extension in writing setting forth the circumstances necessitating the extension not less than 30 days prior to the expiration of the 12-month period and shall deliver a copy of the request to the subject of the recovery audit.

(4) Recovery audits that utilize sample analysis shall be performed in accordance with generally accepted industry standards for determining statistically valid sampling techniques and sampling periods. An audit period cannot be reopened after the initial audit is completed. An audit's sample size should be mutually determined by the participating parties before the audit commences.

(e)(1) A special fund is established within the State Treasury for the deposit of all funds generated from recovery audits conducted pursuant to this section after payment to the Department of Examiners of Public Accounts for actual costs of time and effort devoted to the recovery audit as determined by the chief examiner and of any percentages due under the contract to perform the audit. Amounts due a federal agency by a state agency as a result of a recovery audit shall be disbursed from the fund after certification by the agency of the amount due and verification of the amount by the chief examiner. Any amounts recovered that were appropriated for funds constitutionally earmarked shall be appropriated in accordance with law. Any amounts remaining in the fund shall be subject to expenditure for any lawful purpose through appropriation by the Legislature.

(2) A state agency shall compute the amount of federal money due the federal government from any federal money that is recovered through a recovery audit conducted under this section. The state agency shall compute the amount due in accordance with the rules of the federal program through which the agency received the federal money.

(f) Recovery audit reports shall be public records and released by the Department of Examiners of Public Accounts in accordance with normal report release procedures. Copies shall be available in electronic form on the department's website.

(g) If the entity audited by the recovery auditor disagrees with the results or report of the recovery audit, the entity and the state may agree to arbitration of the dispute pursuant to Division 1 of Article 1 of Chapter 6 of Title 6. The compensation of the arbitrators and the cost of the arbitration shall be paid by the entity audited and the recovery auditor in amounts that are in proportion to the ruling of the arbitrators regarding the correctness of the recovery auditor's report on an overpayment. This provision does not limit or restrict the powers of the Department of Public Accounts or the Attorney General to recover any overpayment.

(Act 2018-129, §1.)