A3559

An Act concerning investigations for public pension and benefit fraud and concerning health care benefits for certain elected public officials, amending N.J.S.40A:10-16 and P.L.1995, c.259, and supplementing P.L.1955, c.70 (C.52:18A-95 et seq.).

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. N.J.S.40A:10-16 is amended to read as follows:

40A:10-16. As used in this subarticle:

a. "Dependents" means an employee's spouse and the employee's unmarried children, including stepchildren, legally adopted children, and, at the option of the employer and the carrier, children placed by the Division of Youth and Family Services, under the age of 19 who live with the employee in a regular parent-child relationship, and may also include, at the option of the employer and the carrier, other unmarried children of the employee under the age of 23 who are dependent upon the employee for support and maintenance, but shall not include a spouse or child while serving in the military service. At the option of the employer, "dependent" may include an employee's domestic partner as defined in section 3 of P.L.2003, c.246 (C.26:8A-3);

b. "Employees" may, at the option of the employer, include:

(1) elected officials who have or are eligible for health benefits coverage provided in accordance with P.L.1961, c.49 (C.52:14-17.25 et seq.) immediately prior to the effective date of P.L. c. (pending before the Legislature as this bill) and continuously thereafter, and

(2) commencing on or after that effective date, elected officials whose hours of work are fixed at 35 or more per week, but shall not include persons employed on a short-term, seasonal, intermittent or emergency basis, persons compensated on a fee basis, or persons whose compensation from the employer is limited to reimbursement of necessary expenses actually incurred in the discharge of their duties;

c. "Federal Medicare Program" means the coverage provided under Title XVIII of the Social Security Act as amended in 1965, or its successor plan or plans.

(cf: P.L.2005, c.334, s.2)

2. Section 37 of P.L.1995, c.259 (C.40A:10-17.1) is amended to read as follows:

37. Notwithstanding the provisions of any other law to the contrary, a county, municipality or any contracting unit as defined in section 2 of P.L.1971, c.198 (C.40A:11-2) which enters into a contract providing group health care benefits to its employees pursuant to N.J.S.40A:10-16 et seq., may allow any employee who is eligible for other health care coverage to waive coverage under the county's, municipality's or contracting unit's plan to which the employee is entitled by virtue of employment with the county, municipality or contracting unit. The waiver shall be in such form as the county, municipality or contracting unit shall prescribe and shall be filed with the county, municipality or contracting unit. In consideration of filing such a waiver, a county, municipality or contracting unit may pay to the employee annually an amount, to be established in the sole discretion of the county, municipality or contracting unit, which shall not exceed 50% of the amount saved by the county, municipality or contracting unit because of the employee's waiver of coverage, and, for a waiver filed on or after the effective date of P.L.2010, c.2, which shall not exceed 25%, or $5,000, whichever is less, of the amount saved by the county, municipality or contracting unit because of the employee's waiver of coverage. An employee who waives coverage shall be permitted to resume coverage under the same terms and conditions as apply to initial coverage if the employee ceases to be covered through the employee's spouse for any reason, including, but not limited to, the retirement or death of the spouse or divorce. An employee who resumes coverage shall repay, on a pro rata basis, any amount received which represents an advance payment for a period of time during which coverage is resumed. An employee who wishes to resume coverage shall file a declaration with the county, municipality or contracting unit, in such form as the county, municipality or contracting unit shall prescribe, that the waiver is revoked. The decision of a county, municipality or contracting unit to allow its employees to waive coverage and the amount of consideration to be paid therefor shall not be subject to the collective bargaining process.

Commencing on the effective date of P.L. , c. (pending before the Legislature as this bill), an elected public official shall not be eligible to receive any payment in accordance with this section for waiving coverage under the county’s, municipality’s, or contracting unit’s plan to which the elected public official is entitled by virtue of the office held, including any elected public official who waived coverage prior to the effective date.

(cf: P.L.2010, c.2, s.18)

3. Section 36 of P.L.1995, c.259 (52:14-17.31a) is amended to read as follows:

36. a. Notwithstanding the provisions of any other law to the contrary, an employer other than the State which participates in the State Health Benefits Program, established pursuant to P.L.1961, c.49 (C.52:14-17.25 et seq.), may allow any employee who is eligible for other health care coverage to waive coverage under the State Health Benefits Program to which the employee is entitled by virtue of employment with the employer. The waiver shall be in such form as the Director of the Division of Pensions and Benefits shall prescribe and shall be filed with the division. After such waiver has been filed and for so long as that waiver remains in effect, no premium shall be required to be paid by the employer for the employee or the employee's dependents. Not later than the 180th day after the date on which the waiver is filed, the division shall refund to the employer the amount of any premium previously paid by the employer with respect to any period of coverage which followed the filing date.

b. Notwithstanding the provisions of any other law to the contrary, the State as an employer, or an employer that is an independent authority, commission, board, or instrumentality of the State which participates in the State Health Benefits Program, may allow any employee who is eligible for other health care coverage that is not under the State Health Benefits Program to waive the coverage under the State Health Benefits Program to which the employee is entitled by virtue of employment with the employer. The waiver shall be in such form as the Director of the Division of Pensions and Benefits shall prescribe and shall be filed with the division.

c. In consideration of filing a waiver as permitted in subsections a. and b. of this section, an employer may pay to the employee annually an amount, to be established in the sole discretion of the employer, which shall not exceed 50% of the amount saved by the employer because of the employee's waiver of coverage, and, for a waiver filed on or after the effective date of P.L.2010, c.2, which shall not exceed 25%, or $5,000, whichever is less, of the amount saved by the employer because of the employee's waiver of coverage. An employee who waives coverage shall be permitted to immediately resume coverage if the employee ceases to be eligible for other health care coverage for any reason, including, but not limited to, the retirement or death of the spouse or divorce. An employee who resumes coverage shall repay, on a pro rata basis, any amount received from the employer which represents an advance payment for a period of time during which coverage is resumed. An employee who wishes to resume coverage shall notify the employer in writing and file a declaration with the division, in such form as the director of the division shall prescribe, that the waiver is revoked. The decision of an employer to allow its employees to waive coverage and the amount of consideration to be paid therefor shall not be subject to the collective bargaining process.

d. Commencing on the effective date of P.L. , c. (pending before the Legislature as this bill), an elected public official shall not be eligible to receive any payment in accordance with this section for waiving coverage under the State Health Benefits Program to which the elected public official is entitled by virtue of the office held, including any elected public official who waived coverage prior to the effective date.

(cf: P.L.2010, c.2, s.11)

4. (New section) a. The State Treasurer shall establish a Pension Fraud and Abuse Unit within the Department of the Treasury. The unit shall be dedicated to the prevention and investigation of fraud and abuse of the State’s pension and benefits systems, including the payment of retirement, disability, and other benefits.

b. The Director of the Pension Fraud and Abuse Unit shall report directly to the State Treasurer, and the State Treasurer shall appoint or assign such accountants, investigators, and other employees to the unit as necessary for the efficient and effective operation of the unit.

c. The unit shall:

(1) investigate public pension claims and payments, including, but not limited to, disability pension claims, and claims of improper participation in the retirement systems, as well as potential fraud and abuse of other benefit systems as the State Treasurer may direct;

(2) work closely and coordinate with both the Division of Pensions and Benefits within the department and the Office of the Attorney General and receive referrals from the Office of the State Comptroller on claims of potential fraud and abuse;

(3) work closely with the Division of Pensions and Benefits, the Office of the Attorney General, and the Office of the State Comptroller to identify cases of suspected pension fraud, abuse, and ineligibility, and undertake investigations, share information and resources, develop strategies for curtailing fraud and abuse, and identify cases for civil and criminal prosecution; and

(4) hold regular meetings with the Division of Pensions and Benefits, Office of the Attorney General, and the Office of the State Comptroller to ensure the maximum cooperation between these agencies.

d. The unit may recommend all civil or criminal remedies as may be provided by law to address such pension fraud, abuse, and improper participation, and, in conjunction with the Division of Pensions and Benefits and the Office of the Attorney General, and as provided by law, may pursue such petitioning of the appropriate boards as necessary for denial of an application or revocation of a pension or benefit improperly granted, and may refer matters to the Division of Pensions and Benefits, the Office of the Attorney General, and other State agencies as appropriate for further action.

e. The unit shall encourage the public to report fraudulent pension and benefit claims and payments and shall maintain a website, mailing address, facsimile, electronic mail address, toll-free number, and other methods to receive such reports at the discretion of the director.

f. The requests, investigations, and responses of the unit shall remain confidential until such time as the matter is presented to the respective board of trustees for consideration or any criminal action is completed. Disclosure of existence of an investigation to the subject of the investigation shall be expressly prohibited. Any records, documents, videos, and voice recordings obtained by the unit during an investigation are considered privileged and confidential during the pendency of the investigation.

g. The unit is authorized to call upon the expertise and assistance of all State departments, divisions, offices, or agencies, as well as all political subdivisions of the State, to carry out its mission, duties, and responsibilities, including, but not limited to, the Department of Labor and Workforce Development, the Department of the Treasury, the New Jersey Motor Vehicle Commission, and the Office of the Attorney General.

h. The unit may subpoena witnesses and compel their attendance, and also may require, by subpoena, the production of books, papers, documents, or other evidence in any matter involving the unit’s investigation of fraud and abuse of the State’s pension and benefits systems, including the payment of retirement, disability, and other benefits.

If any person shall refuse to obey any subpoena so issued, or shall refuse to testify or produce any books, papers, documents, or other evidence, the unit may apply ex parte to the Superior Court to compel the person to comply forthwith with the subpoena.

i. All departments, divisions, offices, agencies, and political subdivisions of the State shall, to the extent not inconsistent with law, cooperate with the unit and furnish the unit with information upon request by the unit.

5. This act shall take effect immediately.

STATEMENT

This bill limits eligibility for health care benefits coverage for elected public officials of a municipality or county to those elected public officials whose hours of work are fixed at 35 or more per week. This limitations applies to counties and municipality that do not participate in the New Jersey State Health Benefits Program (SHBP). The limitation is the same as the current eligibility requirement for health care benefits coverage in the SHBP. Elected public officials currently receiving health care benefits coverage may continue to receive such coverage as long as they remain eligible prior to the effective date of the bill and continuously thereafter.

The bill also makes elected public officials who choose to waive health care benefits coverage ineligible for payments for such a waiver. Such payments are currently permitted for certain public employees by public employers that participate and that do not participate in the SHBP.

This bill codifies the Pension Fraud and Abuse Unit (PFAU) within the Department of the Treasury, which was established by executive order in 2013 to prevent and investigate cases of intentional deception or misrepresentation that result in an unauthorized benefit to a member or to some other person from the State-administered retirement systems and benefits programs. This includes, but is not limited to, disability pension claims and improper participation in the retirement systems and other benefit programs.

This bill also provides subpoena power to the PFAU to assist the unit during investigations.

According to an investigative report issued by the State Comptroller, the PFAU has inadequate statutory authority to compel public employers to comply with requests for information during investigations. Codifying the unit will result in more effective investigations.