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Legislative Audit Commission


August 20, 2003

The Legislative Audit Commission meeting was called to order by Representative Tim Wilkin, Chair, at 1:45 P.M. in Room 200, State Office Building.

Members present:

Representative Sondra Erickson Senator David Hann
Representative Dan Larson Senator Sheila Kiscaden
Representative Jeff Johnson Senator Thomas Neuville
Representative Paul Thissen Senator Ann H. Rest
Representative Tim Wilkin Senator Claire Robling

Members excused:

Representative Lyndon Carlson Senator Jim Vickerman
Representative Connie Ruth Senator Yvonne Prettner Solon
Representative Aaron Peterson

Members absent:

Senator Richard Cohen

Representative Wilkin recognized James Nobles, Legislative Auditor. Mr. Nobles indicated that the purpose of the meeting was to review the program evaluation report on controlling improper payments in the Medical Assistance program, and to discuss a request from the Department of Transportation (MnDOT) concerning an evaluation of the department’s land acquisition practices. He noted that in addition to the items on the agenda, he would like the commission to discuss a request from the Speaker of the House that the Office of the Legislative Auditor (OLA) investigate the actions of the Attorney General in the state’s negotiation and settlement with Qwest Communications. He also noted that if time permitted, staff would be available to answer questions concerning the financial audit of the Department of Commerce released earlier in the day. Mr. Nobles indicated there would be a meeting later in September for the purpose of releasing the evaluation on tuition reciprocity.

Mr. Nobles introduced John Patterson, project manager for the evaluation report, Valerie Bombach and Dan Jacobson, program evaluation specialists. Mr. Patterson reviewed the evaluation questions addressed in the report, research methods, background of the medical assistance program and payment methods, and types of improper payments. He reviewed the department’s efforts to detect fraud, reviewed recommendations for improvements and answered questions from members.

Representative Wilkin recognized Vicki Kunerth, Director of Performance Measurement and Quality Improvement in the Department of Human Services. Ms. Kunerth reviewed the agency’s response to the evaluation report and answered questions from members. In response to a question from Representative Thissen, Ms. Kunerth called on Ron Nail, Manager of Performance Measure and Quality Improvement. Mr. Nail indicated that explanation of benefits letters are available in alternative languages. In response to a question from Senator Kiscaden, Ms. Kunerth indicated the department would be developing an action plan for addressing concerns raised in the report.

Representative Wilkin recognized Deborah Peterson, attorney in the Medicaid Fraud Unit of the Attorney General’s Office. Ms. Peterson indicated they prosecute approximately twenty cases a year and conduct investigations of fifty to 58 cases a year. She noted that most referrals come directly from the Department of Human Services.

Representative Wilkin recognized Mr. Nobles. Mr. Nobles reviewed a request from MnDOT for OLA to conduct an evaluation of the department’s land acquisition process, including its use of private consultants for the conduct of appraisals. Representative Wilkin recognized Bob McFarlin, Assistant to the Commissioner for Policy, MnDOT. Mr. McFarlin indicated that MnDOT is under increased pressure to obtain land and expand highway rights of way, and officials at the department want to be sure the department has the appropriate policies and procedures in place. Mr. Nobles indicated that when Mr. McFarlin first contacted him about the MnDOT request, he told Mr. Farlin that OLA’s evaluation work agenda was already full for 2004, but Mr. McFarlin was still interested in pursuing alternative ways OLA might be involved with a review, including hiring a consultant to do the evaluation. Mr. Nobles noted three possibilities: 1) the commission could put the MnDOT request on hold until the ’04 topic selection cycle, when the commission could consider approving a traditional evaluation by OLA; 2) MnDOT could give OLA the funds needed to hire a consultant for the purpose of conducting the evaluation; or 3) MnDOT could hire a consultant to do the evaluation and OLA could review and comment on the consultant’s work. Mr. Nobles said he thinks OLA is too committed to work on other projects to properly manage a consultant contract, so if OLA is going to be involved at all, it would have to be with MnDOT hiring and managing the consultant and OLA having an oversight or “review and comment” role. However, Mr. Nobles said he is not making a formal proposal at this time, he only wanted to have the commission review the request and hear from MnDOT officials. Mr. Nobles said he simply wants to know whether commission members are comfortable with him talking further with MnDOT and trying to work out an acceptable arrangement for some level of OLA involvement in a MnDOT study.

In response to a question from Senator Rest, Mr. McFarlin indicated the number of parcels being acquired has increased, but there has been no sizeable increase in the number of complaints. Mr. McFarlin called on Al Pint, Director of the Office of Land Management, Department of Transportation to respond to a question concerning qualifications of contractors conducting appraisals. Mr. Pint indicated they must meet the qualifications set by the Department of Commerce and be licensed appraisers in accordance with national standards. He noted the need for appraisers has doubled in the last fiscal year.

Senator Rest indicated she was concerned that if OLA gets involved with a MnDOT evaluation OLA’s independence might be questioned. Mr. Nobles said he shares Senator Rest’s concern and would not go forward with any involvement that did not clearly maintain OLA’s independence. In response to a question from Representative Erickson as to whether or not any previously approved evaluations could be put on hold and resources diverted to the MnDOT request, Mr. Nobles indicated that was not possible at this time as evaluation work had already begun on the CriMNet and No Child Left Behind studies.

Senator Rest moved that Mr. Nobles continue discussions with MnDOT to see if an acceptable arrangement can be worked out, with special attention to ensuring that it would not jeopardize OLA’s independence. Motion passed.

Representative Wilkin recognized Mr. Nobles. Mr. Nobles reviewed the request from Speaker of the House, Steve Sviggum, which called for the OLA to conduct an investigation into the actions of Attorney General Hatch in the state’s negotiations and settlement with Qwest Communications. In response to a question from Chair Wilkin, Mr. Nobles reviewed the authority of his office to conduct such investigations and noted that while the office has broad legal authority, he does not have jurisdiction over Qwest and, therefore, it might not be possible for him to obtain cooperation from Qwest officials (although he noted that officials at American Bankers Insurance did voluntarily cooperate with a recent OLA investigation of their settlement with the state). Mr. Nobles also expressed concern about going forward with the Qwest investigation given the current political atmosphere. He noted that OLA’s function is to do objective fact-finding, but in some situations that is not enough to settle issues and questions. He noted that OLA’s investigation of the American Bankers settlement apparently did not resolve some issues for some members since Speaker Sviggum has now established a special House committee to conduct another investigate the settlement. Mr. Nobles said the main question for the commission is whether a review by OLA would be worth the time and money it would cost if it is unlikely to settle the issues that have been raised.

Representative Johnson indicated he will be chairing the special House committee charged with investigating the American Bankers case and the Qwest allegations. He said he recognizes OLA must remain non-partisan, and that is why he felt it would be appropriate for the OLA to conduct an investigation of the Qwest allegations. Senator Rest voiced opposition to such a review by the Legislative Auditor, indicating she thinks the request from Speaker Sviggum is politically motivated. She noted that the request for an investigation by the Legislative Auditor of the American Bankers settlement was signed by all four legislative leaders and Governor Pawlenty. She said Speaker Sviggum’s request would make an investigation of the Qwest settlement by the Legislative Auditor tainted.

After some further discussion, Representative Erickson moved that the commission direct the Office of the Legislative Auditor to conduct an investigation into the actions of the Attorney General’s Office in the settlement with Qwest Communications.

Senator Neuville indicated he was opposed to the motion because no one has accused the Attorney General of breaking the law and that he felt such an investigation was politically motivated and was concerned about the independence of the OLA. Senator Hann indicated that he agreed with Senator Neuville. He noted that partisan conflicts were okay, but since the request did not come from all four legislative leaders, it was not appropriate for the OLA to conduct such an investigation at this time. When asked about what information the OLA would have access to, Mr. Nobles indicated his subpoena power is limited to those entities that receive state funds.

Representative Erickson withdrew her motion, and asked that this topic be on the agenda at a future meeting.

The meeting adjourned at 3:45 PM.

Representative Tim Wilkin, Chair

Jean Barnhill, Recording Secretary


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