HF3621

Purpose

• Give state agencies the authority to withhold payments to program participants when fraud is suspected or under investigation, in order to protect public funds and ensure program integrity.
• Establish common definitions for terms like fraud, program, program participant, evidence, and agency.
• Create rules for notice, data handling, appeals or reconsideration, and reporting on withholding actions.
• Set a sunset date for at least part of the provisions and outline data-sharing protections and transparency.

Main Provisions and What They Do

• Definitions:
  • Clarifies terms: fraud, program, program participant, agency, evidence, individual, and entity.
• Administrative withholding of payments (short-term):
  • The head of a state agency may withhold payments to a program participant for up to 60 days if a preponderance of evidence indicates fraud to obtain payments.
  • Requires at least 24 hours’ notice before withholding and must include: effective date, reasons (without jeopardizing an active investigation), end date, right to submit written evidence, and right to appeal.
  • The agency must provide a contact point for those affected.
  • Participants not implicated in fraud should be notified about their rights to continued access to eligible funds/services.
  • A program participant may appeal via contested case proceedings or court relief; this withholding is described as temporary.
• Data handling during withholding:
  • Data related to fraud evidence are classified as confidential or protected nonpublic data while withholding is ongoing; all such data generally become public after the withholding period ends unless law says otherwise.
  • Complainant identity remains private.
  • Agencies may share data with other government or law enforcement agencies if it helps prevent fraud or aids investigations.
• Court authority:
  • Agencies may seek a temporary court order to withhold payments if fraud is shown by a preponderance of the evidence.
• Reporting to the legislature:
  • Agencies must report numbers of withholds, reasons, dollar amounts, program identifiers, whether funds were state or federal, and outcomes of any challenges.
  • The commissioner of management and budget compiles and forwards a consolidated report to legislative chairs and ranking members by a set deadline.
• Sunset and scope:
  • The section includes an expiration date for the original provisions (sunset July 1, 2027), after which different or extended rules may apply.
• Credible allegations (expanded framework in later language):
  • A separate or expanded track allows withholding based on credible allegations of fraud that are under investigation, including actions if another agency head has determined a credible allegation exists.
  • Requires notice to the affected party within five days of withholding.
  • Provides for administrative reconsideration (in writing) and a 60-day review period by the agency head to decide whether the withholding should continue.
  • If the agency head determines insufficient evidence or if legal proceedings conclude, withholding ends unless other law allows further action.
  • The withholding is described as temporary and not subject to standard Chapter 14 appeals, but it may be reconsidered or revisited under the administrative process described.
• Data handling for credible-allegation track:
  • Data related to credible allegations and withholding remain confidential or protected nonpublic during the period, with potential disclosures allowed if they won’t compromise ongoing investigations.
  • After a determination, data generally become public unless otherwise classified by law.

How It Changes Existing Law

• Expands authority to withhold public funds from program participants during fraud investigations, beyond existing due-process or remedy structures.
• Introduces explicit notice requirements and time limits for withholdings, and adds a formal data privacy framework around fraud-related information.
• Creates a formal pathway for administrative reconsideration and (in parts) limits or alters traditional appeal routes under Chapter 14.
• Establishes a standardized reporting mechanism to track and summarize withholdings and outcomes for legislative oversight.
• Introduces a sunset for the original withholding framework, signaling a temporary expansion that may be revisited.

Process and Protections for Participants

• Notice and reasons: Participants receive timely notice and a summary of reasons for withholding, with a stated end date and the right to submit evidence.
• Right to respond: Participants can submit written evidence or request reconsideration; under some tracks, an independent review or court relief may be available.
• Due process balance: The bill aims to balance preventing fraud and protecting individuals not implicated in fraud, with protections around data privacy and controlled disclosure.
• Data privacy: During withholding, fraud-related data are kept confidential or protected; after withholding ends, data may become public unless otherwise restricted.

Data Privacy and Access

• Classification: Fraud evidence data are treated as confidential or protected nonpublic data during withholding.
• Public access: Data generally become public after withholding ends, except where law keeps them private.
• Disclosure: Agencies may share data with other government or law enforcement bodies if it helps prevent fraud or facilitate investigations.
• Complainant privacy: The identity of complainants remains private.

Relevant Terms

• program payments withholding
• fraud
• program participant
• evidence
• credible allegation of fraud
• agency
• notice
• administrative withholding
• preponderance of the evidence
• court order
• data classification
• confidential data on individuals
• protected nonpublic data
• administrative reconsideration
• contested case
• public funds
• reporting requirements
• sunset

Relevant Terms - withholdings - public funds - program - fraud investigation - notice - appeal - reconsideration - data privacy - confidential data - protected nonpublic data - complainant - credible allegation of fraud - agency head - department of management and budget - reporting to legislature - sunset date