Official Site of The State of New Jersey

(a) This chapter is promulgated pursuant to the authority of the Office of the State Comptroller (OSC), N.J.S.A. 52:15C-1 et seq.

OSC is responsible for audits and performance reviews, public contracting oversight, investigations of the expenditure of public funds, performance assessments, and oversight of the Medicaid program.

(b) The rules in this chapter set forth the organization of the OSC and explain its functions pertaining to: the routine, periodic, and random audits and performance reviews of State agencies and all entities exercising executive branch authority; the oversight of public contracting to guard against fraud, waste, and abuse; the investigation of the management and expenditure of public funds; assessments of the performance and management of programs and the extent to which they are achieving their goals and objectives; and oversight of the Medicaid program.

(c) The provisions of this chapter apply to covered entities and contracting units.

(d) OSC’s powers, functions, and duties are established pursuant to N.J.S.A. 52:15C-1 et seq., 52:15B-1 et seq.; and the Medicaid Program Integrity and Protection Act, N.J.S.A. 30:4D-53 through 64. The Office of the Inspector General created pursuant to N.J.S.A. 52:15B-1 et seq., was abolished and all of its functions, powers, and duties were transferred to, and established within, the OSC, pursuant to N.J.S.A. 52:15C-21. The Office of the Medicaid Inspector General created pursuant to N.J.S.A. 30:4D-53 et seq., was abolished and all of its functions, powers, and duties were transferred to, and established within, the OSC, pursuant to N.J.S.A. 52:15C-23. The OSC carries out its powers, functions, and duties through its divisions and projects.

Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise:

“Audit Division” means the division within the OSC that is responsible for reviewing the performance of covered entities and conducting audits in accordance with Generally Accepted Government Auditing Standards issued by the U.S. Government Accountability Office.

“Bid protest” means any written challenge to a contract specification, to a bid for a contract or to a contract award.

“Contract” means an agreement supported by consideration and enforceable at law and any amendments, extensions, modifications, or change orders thereto, or renewals thereof. Examples include, but are not limited to: grants supported by consideration, purchases of goods or services, leases, concession agreements, agreements for sale, loan agreements, agreements with entities to indemnify or insure, agreements to join certain shared service agreements, including joint insurance funds, brokerage agreements, land transactions (excluding land condemnations), certain memoranda of understanding, purchase orders, and third-party contracts.

“Contract partner” means any contractor, vendor, lessee or lessor, buyer or seller, concessionaire, grantee or other party to a contract.

"Contracting unit" means any entity subject to contract review pursuant to N.J.S.A. 52:15C-10. Contracting units include, but are not limited to: the principal departments in the Executive Branch of State government, any independent State authority, commission, instrumentality and agency and any State or county college or university and any unit of local government including, but not limited to, a county, municipality and board of education. The definition also includes any board, commission, committee, authority or agency that such entities have created or to which the entities have delegated any power to enter into contracts. For example, if any covered entity has created a non-profit corporation that exercises delegated powers to enter into a contract, the non-profit corporation shall comply with these regulations when exercising delegated powers.

“Cooperative contract” means a contract for the use and benefit of other contracting units, such as pursuant to N.J.S.A. 52:34-6.2 or 40A:11-11(6) or N.J.A.C. 5:34-7.

“Covered entity” means any entity subject to audit pursuant to N.J.S.A. 52:15C-8 and includes, but is not limited to: all units in the Executive Branch of State government and any entity exercising executive branch authority, public institution of higher education, independent State authority, unit of local government and board of education.

“Emergency procurement” means a contract entered into pursuant to an emergency condition that is a threat to public health, welfare, or safety and requires the immediate performance of services or delivery of goods.

“Evaluation committee” means those persons appointed to evaluate the merits of a response to a solicitation for bid, request for proposals (RFP), request for qualifications (RFQ), expression of interest (EOI) or other competitive solicitation for a contract when the formation of such a committee is required by the procurement process, by law, regulation, Executive Order or internal operating procedure of the contracting unit.

“Investigations Division” means the division within the OSC that detects and uncovers misconduct, fraud, waste, and abuse at all levels of New Jersey government, including all entities exercising executive branch authority, public institutions of higher education, independent State authorities, units of local government, and boards of education through investigations, evaluations, inspections, and other reviews.

“Medicaid” or “Medicaid program” means the New Jersey Medicaid program established pursuant to the New Jersey Medical Assistance and Health Services Act, N.J.S.A 30:4D-1 et seq., the NJ FamilyCare program established pursuant to the Family Health Care Coverage Act, N.J.S.A. 30:4J-8 et seq., the New Jersey Charity Care program established pursuant to the Health Care Facilities Planning Act, N.J.S.A. 26:2H-18.51 et seq., and other related programs administered by the Department of Human Services and coordinate State agencies.

“Medicaid Fraud Division” (MFD) means the division within the OSC that works to protect the integrity of New Jersey’s Medicaid program. The Medicaid Fraud Division reviews State oversight, as well as contracted vendor oversight, of the Medicaid program to identify vulnerabilities, recover misspent funds, and recommend program integrity enhancements. In addition, the MFD suspends/excludes Medicaid providers, as warranted, and, on its own behalf and through third-party vendors, audits, investigates, and reviews Medicaid health care providers to detect fraud, waste, and abuse in the Medicaid program and recover funds that are improperly paid.

“OSC” means the New Jersey Office of the State Comptroller.

“Performance audit” means an audit conducted in accordance with Generally Accepted Government Auditing Standards issued by the U.S. Government Accountability Office to evaluate the performance and operations of a covered entity, reduce costs and facilitate decision making by parties with the responsibility to oversee or initiate corrective action.

“Post-award review threshold” means the dollar amount, established in consultation with the Department of the Treasury, of contracts that must be submitted to the OSC pursuant to N.J.S.A. 52:15C-10.a. Effective July 1, 2020, the post-award review threshold is $2.5 million or greater, but less than $12.5 million. Review thresholds are adjusted in accordance with N.J.S.A. 52:15C-10.d.

“Pre-advertisement review threshold” means the dollar amount, established in consultation with the Department of the Treasury, of contracts that must be submitted to the OSC pursuant to N.J.S.A. 52:15C-10.b. Effective July 1, 2020, the pre-advertisement review threshold is $12.5 million or greater. Review thresholds are adjusted in accordance with N.J.S.A. 52:15C-10.d.

“Procurement process” means any method used to obtain goods or services, land, leaseholds, or concessions and includes, but is not limited to: bidding, competitive contracting, negotiations, requests for proposals, expressions of interest, requests for qualifications, requests for offerings or quotes, or the waiver of, or other exception to, an advertising process.

“Project” means any special undertaking, unit, or bureau that may be created from time to time as determined by the State Comptroller to serve a distinct purpose by carrying out the duties and functions of the OSC and fulfilling its responsibilities as set forth by law, executive order, directive, or other similar authority.

“Proprietary” means goods or services of a specialized nature that are protected by trademark, patent or copyright or made, produced or distributed by one vendor or manufacturer. Specifications are proprietary if they are restricted to a brand name product.

“Public Contracting Oversight Division” means the division within the OSC responsible for the oversight, review, and monitoring of procurements by contracting units to safeguard public money, deter corruption and favoritism, and encourage competition.

“Shall” denotes the imperative.

“Sole source provider contract” means a contract awarded for goods or services when the provider is the only available source of the goods or services.

“Third-party contract” means a contract between a State entity and a third-party provider pursuant to the Attorney General formal opinion No. 21 (July 22, 1976) to provide services to private individuals, who are eligible for public assistance or are medically indigent, to defray the costs thereof. Examples of services covered by a third-party contract include: payments for hospital and convalescent care centers, foster care, nursing homes, and professionals providing services for clients of State agencies where the agency itself is neither the consumer of the service, nor the receiver of direct benefits associated with such services.

OSC shall provide notices of rulemaking and proposal on its website and through its electronic mailing list.

(a) The OSC shall make available on its website all notices of rulemaking activity and public hearing information, as applicable, pursuant to N.J.S.A. 52:14B-3. The OSC shall distribute such notices through its electronic mailing list in accordance with N.J.S.A. 52:14B-4.

(b) The OSC shall publish all notices of proposal on its website, which shall constitute its “other secondary notice” as required pursuant to N.J.A.C. 1:30-5.2(a)6ii(4)(A).

Notice of proposal; receipt of comments

(a) The OSC shall provide a 60-day period from the publication of a notice of proposal for the receipt of comments related to the proposal. The OSC shall provide an additional 30-day period for the receipt of comments on a notice of proposal if sufficient public interest is demonstrated within the initial comment period. Public interest in the extension of a comment period shall be sufficient if:

1. At least 100 persons submit written requests to extend the comment period; and

2. A majority of the comments submitted pose an objection to the notice of proposal.

(b) The OSC shall conduct a public hearing on a notice of proposal if, within 30 days following publication of the notice of proposal in the New Jersey Register:

1. A public hearing is requested by a committee of the Legislature;

2. A public hearing is requested by a governmental agency or subdivision; or

3. Sufficient public interest in a public hearing is demonstrated, as set forth at (c) below.

Public hearings

(c) The State Comptroller shall determine whether sufficient public interest in holding a public hearing has been demonstrated based on a review of written requests submitted to the address to which comments are to be sent, as stated in the notice of proposal. Public interest in holding a public hearing shall be sufficient if:

1. At least 100 persons submit written requests to hold a public hearing to present data, arguments, or views that raise a substantial issue as to the impact of the notice of proposal on the regulated community or the general public that has not been anticipated by the OSC; and

2. No other public hearing on the notice of proposal has been scheduled or held by the OSC pursuant to this section or other applicable law or rule.

(d) Written comments submitted pursuant to (a) above do not constitute a request for a public hearing, unless a specific request for a hearing is included. A specific request for a hearing shall include the basis for the hearing request. For the purposes of (a)1 and (c)1 above, a professional organization or law firm that submits a request on behalf of a group of interested parties shall be considered one person.

(e) For the purposes of (a)1 and (c)1 above, a professional organization or law firm that submits a request on behalf of a group of interested parties shall be considered one person.

(f) Any public hearing held pursuant to (a) above shall be conducted consistent with the requirements at N.J.A.C. 1:30-5.5. The OSC may, but shall not be required to, hold more than one public hearing on any notice of proposal.

Petitions for new rules

(g) A petition for the OSC to adopt a new rule, or amend or repeal an existing rule, shall be submitted, in writing, addressed to the State Comptroller and, at a minimum, include:

1. Name of the petitioner;

2. Date;

3. The rule to be amended or repealed or, if a new rule, the nature of the proposed new rule;

4. OSC’s statutory authority to amend, repeal, or adopt the proposed rule;

5. A narrative statement explaining the need for the amendment, repeal, or proposed rule.

(h) Within 60 days of the receipt of a petition for rulemaking submitted in accordance with (g) above, the State Comptroller shall consider the merits of the petition and issue a determination that includes one of the following actions:

1. Denial. If a petition for rulemaking is denied, the OSC shall provide the petitioner with the reasoning for the denial and include such explanation in its notice of action;

2. Granting the petition and initiating a rulemaking proceeding within 90 days, unless the petitioner and the OSC agree, in writing, to a longer period of time; or

3. Referral of the petition for further consideration. If a petition for rulemaking is referred, the OSC shall provide the petitioner with the reasoning for the referral and include such explanation in its notice of action. A referral shall conclude within 90 days of the referral, unless the petitioner and the OSC agree, in writing, to a longer period of time, at which time OSC shall deny or grant the petition.

(i) Any notice of action pursuant to (g) above shall be consistent with the filing and publication requirements at N.J.A.C. 1:30-4.2.

Confidentiality of records

(a) In addition to records designated as exempt from disclosure pursuant to the Open Public Records Act, N.J.S.A. 47:1A-1 et seq., the following records shall not be considered government records subject to public access pursuant to N.J.S.A. 47:1A-1 et seq.:

1. Any record, as defined at N.J.S.A. 47:1A-1.1, obtained by, or from, the OSC during the course of:

i. An audit pursuant to N.J.S.A. 52:15C-5, 7, and 8 and 30:4D-57 and 60;

ii. An investigation pursuant to N.J.S.A. 52:15B-7, 8, and 9; 52:15C-9(a); and 30:4D-53, 54, 60, 61, and 62;

iii. An evaluation pursuant to N.J.S.A. 52:15B-8;

iv. An inspection pursuant to N.J.S.A. 52:15B-8 and 30:4D-57.c(10);

v. A request for assistance and cooperation, including surveys, pursuant to N.J.S.A. 52:15C-14;

vi. A request for information pursuant to N.J.S.A. 52:15C-6 and 14 and 30:4D-61;

vii. A performance review pursuant to N.J.S.A. 52:15C-7 and 8 and 30:4D-60;

viii. A contract review pursuant to N.J.S.A. 52:15C-10; or

ix. Other reviews;

2. A complaint or referral to or by the OSC and the identity of the complainant;

3. Information communicated for notice and review by or between covered entities or contracting units and the OSC, except for written determinations designated by the State Comptroller as public records pursuant to N.J.S.A. 52:15C-10.b(5) and N.J.A.C. 19:70-3.9;

4. Any preliminary or draft report or letter issued to a covered entity or contracting unit, the final report of which shall be a public record; and

5. Work papers, memoranda reports, plans, or other records that are made, maintained, or kept as part of any investigation, audit, or contract review by the OSC.

(b) If a person requests access to a government record that the OSC obtained from another public agency during the course of an audit, investigation, performance review, or contract review, and such record was open for public inspection, examination, or copying before the audit, investigation, or review by the OSC, then the public entity from which the OSC obtained the record shall comply with the request if made pursuant to N.J.S.A. 47:1A-1 et seq., and (c) below.

(c) In order to preserve confidentiality in accordance with N.J.S.A. 52:15C-14, the public agency that receives a request which in any way identifies the record sought by means of a reference to the State Comptroller’s audit, review, or investigation, or a subpoena issued pursuant to such investigation, the public agency’s response shall not disclose the existence of the State Comptroller’s request for such document.

OSC has authority to review vendor contract records

(a) Relevant records of private vendors or other persons entering into contracts with covered entities are subject to audit or review by the OSC pursuant to N.J.S.A. 52:15C-14.d.

1. Vendors, contractors, and other persons entering into contracts with covered entities should exercise sound business judgment in preserving documentation and data, which include, at a minimum, contract documents, purchase orders, and change orders.

Required contract language

(b) All covered entities shall insert the following language in any new contract:

“(The contract partner, as that term is defined pursuant to N.J.A.C. 19:70-1.2) shall maintain all documentation related to products, transactions, or services under this contract for a period of five years from the date of final payment. Such records shall be made available to the New Jersey Office of the State Comptroller upon request.”

Office of the State Comptroller (OSC)

(a) The OSC is an independent office that reports directly to the Governor. Allocated in, but not of, the New Jersey Department of the Treasury, the OSC is independent of any supervision or control by the State Treasurer. The OSC promotes the integrity and transparency of government operations by, among other things, reviewing public contracts, investigating allegations of fraud, waste, and abuse at all levels of New Jersey government, including all entities exercising executive branch authority, public institutions of higher education, independent State authorities, units of local government, and boards of education, and conducting audits of covered entities in accordance with Generally Accepted Government Auditing Standards. In addition, the OSC conducts investigations and audits concerning fraud, waste, and abuse in the Medicaid program in accordance with N.J.S.A. 52:15C-23. The OSC’s work is carried out by divisions and projects in accordance with its statutory powers.

(b) The State Comptroller is the administrator of OSC and is appointed by the Governor, with the advice and consent of the Senate.

(c) OSC coordinates audit functions, investigations and performance reviews with the following entities: Department of Law and Public Safety, Department of Education, Department of the Treasury, Department of Transportation, Division of Local Government Services in the Department of Community Affairs, Local Finance Board and Office of the State Auditor.

Audit Division

(a) There is established within the OSC an Audit Division. The Audit Division, among other functions, conducts research and performs preliminary evaluations that may lead to recommendations regarding the need for an audit; conducts performance audits of the Executive Branch of State government, including all entities exercising executive branch authority, public institutions of higher education, and independent State authorities and their vendors; and conducts performance audits of local government units and boards of education. The Audit Division may issue public letters or reports based on its findings.

(b) The Audit Division conducts audits that assess the performance and management of the programs of covered entities. The Audit Division also provides guidance concerning the procurement of auditors by covered entities.

(c) OSC is a recognized sponsor of continuing professional education by the National Registry of Continuing Professional Education Sponsors and provides training through in-house programs and outside conferences in accord with the Generally Accepted Government Auditing Standards promulgated by the U.S. Government Accountability Office. OSC training qualifies toward auditors' bi-annual mandatory 80 hours of continuing professional education credits.

Public Contracting Oversight Division

(a) There is established within the OSC a Public Contracting Oversight Division. The Public Contracting Oversight Division monitors, reviews, and provides guidance on the solicitation and award process for contracts under the OSC's jurisdiction to ensure competition, transparency, public confidence in government, avoidance of favoritism, and that procurement processes comply with applicable public contracting laws, rules, regulations, and policies including, but not limited to, State contracting laws, N.J.S.A. 52:32-1 et seq., 52:33-1 et seq., and 52:34-1 et seq., Local Public Contracts Law, N.J.S.A. 40A:11-1 et seq., Public School Contracts Law, N.J.S.A. 18A:18A-1 et seq., and State College Contracts Law, N.J.S.A. 18A:64-52 et seq. The Public Contracting Oversight Division provides guidance, in the context of its reviews, to contracting units to correct deficiencies in contracts prior to advertisement and to ensure future contracts comply with applicable procurement processes.

(b) In response to complaints, referrals, and contract reviews, the OSC may investigate to gather additional information regarding the procurement process, contract award process, and financial management and performance of contracting units, and may issue public letters or reports based on these findings. Information communicated by or between a contracting unit and the State Comptroller pursuant to N.J.S.A. 52:15C-10.b shall be considered advisory, consultative, or deliberative material for purposes of P.L. 1963, c. 73 (N.J.S.A. 47:1A-1 et seq.), as amended and supplemented, except for written determinations designated by the State Comptroller as public records pursuant to N.J.A.C. 19:70-3.9.

Investigations Division

(a) There is established within the OSC an Investigations Division. The Investigations Division investigates allegations of fraud, waste, and abuse concerning all levels of New Jersey government, including all entities exercising executive branch authority, public institutions of higher education, independent State authorities, units of local government, and boards of education, for the purpose of promoting integrity, efficiency, accountability, and transparency in the administration and operation of New Jersey government.

(b) Among other activities, the Investigations Division monitors the performance and investigates the conduct of elected officials, individual governmental officers, public employees, appointees, and programs; uncovers waste and misconduct involving public funds; assesses the performance and management of programs and the extent to which they are achieving their goals and objectives; and releases reports and letters that contain its findings and recommendations. The Investigations Division conducts investigations, evaluations, inspections, and reviews in accordance with the Principles and Standards for Offices of Inspector General issued by the Association of Inspectors General.

Medicaid Fraud Division

There is established within the OSC a Medicaid Fraud Division. The Medicaid Fraud Division shall continue the functions, powers, and duties that were formerly performed by the Office of the Medicaid Inspector General, created pursuant to the Medicaid Program Integrity and Protection Act, N.J.S.A. 30:4D-53 et seq., and abolished pursuant to N.J.S.A. 52:15C-23. The Medicaid Fraud Division conducts, coordinates, and supervises State government activities relating to Medicaid fraud, waste, and abuse, and issues reports with recommendations and findings. Pursuant to N.J.S.A. 26:2H-18.60d, the Medicaid Fraud Division also may investigate claims related to charity care and recover monies from third-party payers that were paid as Charity Care subsidies.

Notice of periodic financial audits required

(a) Covered entities shall provide OSC with copies of their periodic financial audits upon their receipt.

Notice of local audits revealing significant deficiencies required

(b) State officials, including the Commissioner of Education and the Director of the Division of Local Government Services in the Department of Community Affairs, shall notify OSC of any local audits submitted to their agencies that reveal significant deficiencies as determined in the audits as required by N.J.S.A. 52:15C-9.

Compliance with record retention schedules

Where applicable, all covered entities shall comply with record retention schedules as established by the State Records Committee pursuant to the Public Records Law, N.J.S.A. 47:3-20 et seq. If a covered entity is not subject to N.J.S.A. 47:3-20 et seq., then relevant records shall be maintained for a period of no less than five years after contract completion. When requested, any covered entity shall produce any record for audit or review by OSC.

Audit criteria

OSC determines the frequency with which performance audits shall be conducted of covered entities through the analysis of objective criteria as set forth in N.J.S.A. 52:15C-8(c).

Audit standards

OSC audits are conducted in accordance with Generally Accepted Government Auditing Standards issued by the U.S. Government Accountability Office.

Audit process

The audit process typically includes an opening conference, an audit survey, field work, review of preliminary findings with the covered entity's officials, an exit conference and the issuance of the audit report.

Formal responses to audit reports

(a) The head of the audited covered entity is provided a draft audit report for their formal response. If it chooses to do so, the audited covered entity may respond formally with its official position concerning the audit findings and recommendations. This response is typically included as an appendix to the final audit report.

Final audit reports

(b) Final audit reports are public documents and are posted on OSC's website. Final audit reports are issued to the Governor, the President of the Senate and the Speaker of the General Assembly.

90-day period for corrective action plan after final audit report

(a) Following the distribution of the final audit report, the head of the audited covered entity shall report to OSC within 90 days stating the corrective action taken or underway to implement the recommendations contained in the report and, when not implemented, the reason therefor. The Audit Division may follow up to review the implementation of the corrective action plan.

Report to Governor for failure to comply with corrective action plan

(b) OSC shall report to the Governor if a covered entity refuses to cooperate in proposing corrective action or fails to comply with a recommended corrective action plan. The Governor may withhold State funding to the covered entity or take other appropriate steps pursuant to N.J.S.A. 52:15C-11(d).

Contracting units must provide OSC with post-award notice within 20 business days of award

(a) Contracting units shall notify the Public Contracting Oversight Division of the award of contracts or any amendments, extensions, modifications, or change orders thereto or renewals thereof that meet the post-award review threshold no later than 20 business days after the contract award. Contracting units shall utilize the form for notice provided on the OSC's website.

(b) Contracting units shall notify the Public Contracting Oversight Division of any:

Contracting units must provide OSC with pre-advertisement notice at least 30 days prior to proposed issuance

1. Procurement process or contract that meets the pre-advertisement review threshold not less than 30 days prior to any advertisement of a bid or other solicitation or award of a negotiated contract; and

Contracting units must notify OSC of amendments, extensions, change orders, and renewals

2. Any amendment, extension, change order, or renewal that itself meets the pre-advertisement review threshold not less than 30 days before the amendment, extension, or change order is to be executed.

OSC's 30-day review period for pre-advertisement review commences upon receipt of all required documents

(c) For procurements meeting the pre-advertisement review threshold, the OSC’s 30-day review period commences when the contracting unit provides, or otherwise makes available, all requested documents and information as prescribed at N.J.A.C. 19:70-3.4. Contracting units shall utilize the form for notice provided on OSC’s website.

Contracting units must provide OSC with emergency contract award notice within 30 days of award

(d) Contracting units shall notify the Public Contracting Oversight Division of an emergency procurement meeting the post-award review threshold no later than 30 business days after the contract award. Contracting units shall utilize the form for notice provided on the OSC’s website.

(e) For anticipated procurements in which multiple contracting units are involved, such as joint purchasing agreements or cooperative contracts for goods or services, the contracting unit shall designate an individual to notify the Public Contracting Oversight Division pursuant to this subchapter and provide all necessary documents and information.

Submissions to OSC shall be submitted electronically

(f) Contracting units shall provide the required notice, documents, and information electronically in accordance with the directions provided on the OSC’s website. If documents are too large to send electronically or are not available electronically, please contact the Public Contracting Oversight Division for alternative means of submission.

Exceptions and inclusions to the definition of contract

(g) As used in this subchapter, the term contract:

1. Shall not include collective bargaining agreements, developer(s) agreements entered into in conjunction with an approval granted pursuant to the Municipal Land Use Law, N.J.S.A. 40:55D-1 et seq., redevelopment agreements entered into pursuant to the Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1 et seq., financial agreements entered into pursuant to the Long Term Tax Exemption Law, N.J.S.A. 40A:20-1 et seq., agreements entered into pursuant to the Five-Year Exemption and Abatement Law, N.J.S.A. 40A:21-1 et seq., agreements entered into pursuant to N.J.S.A. 54:4-3.145, agreements entered into pursuant to N.J.S.A. 58:10B-26 through 58:10B-31, and agreements entered into pursuant to the Municipal Landfill Site Closure, Remediation and Redevelopment Act, N.J.S.A. 13:1E-116.1 et seq.;

2. Shall include contracts for the purchase, sale, transfer, or lease of real estate that exceed the post-award and pre-advertisement review thresholds; and

3. Shall include other related activities or contracts that exceed the post-award and pre-advertisement review thresholds.

Good faith necessary to estimate value of contracts when exact value is uncertain

(a) When the exact value of a contract is uncertain, contracting units shall act in good faith to ascertain an estimated value. The individual(s) responsible for the procurement shall use professional judgment based on, but not limited to, prior procurements made by the contracting unit for similar goods, services, or construction work.

Valuation includes all years of contracts but not optional extensions

(b) The contract value is the total estimated value of a contract. For a multiyear contract, the contract value is calculated by multiplying the number of base years (excluding renewal terms) times the yearly amount of the contract. Potential contract extensions, amendments, or change orders are not included in this calculation.

Valuation of extensions, amendments, change orders

(c) If an extension, amendment, or change order itself meets the post-award review threshold, notice is required pursuant to N.J.A.C. 19:70-3.1(a). If an extension, amendment, or change order itself meets the pre-advertisement review threshold, notice is required pursuant to N.J.A.C. 19:70-3.1(b).

Valuation of multiple contracts

(d) If multiple contracts are to be awarded through a single procurement process, the contracting unit shall determine the total estimated contract value by adding together the estimated value of each contract. Notice shall be provided to OSC pursuant to this subchapter.

Valuation of cooperative purchasing system contracts

(e) For cooperative purchasing systems established pursuant to N.J.A.C. 5:34-7, the contract value shall be based on the estimated quantities to be purchased submitted by registered members as provided at N.J.A.C. 5:34-7.9(c) and projected use(s) based on prior purchases.

Valuation of concession agreements

(f) For concession agreements, the contract value shall be based on the estimated revenue to be earned by the concessionaire for the base term of the contract.

Valuation of student transportation contracts

(g) For student transportation contracts, the value shall be based on the estimated value of all routes included in any single procurement process in accordance with N.J.S.A. 18A:39-3.

Post-award review - required documents

(a) For contracts meeting the post-award review threshold and reviewed on a post-award basis, the contracting unit shall provide the OSC with the following documentation and information no later than 20 business days after the contract award, using the form for notice provided on the OSC's website:

1. The name of the contracting unit and the contract number, if applicable;

2. A description of the goods, services or other subject procured;

3. The cost of the goods, services or other subject procured;

4. The source(s) of funding for the contract;

5. A list of all State and Federal grant funds used for the contract and a brief description of any conditions and/or requirements of the grant funds, if applicable;

6. A description of the procurement process utilized to select the contract partner;

7. Citations to all relevant statutory, administrative and other sources of governing law and internal procurement policies;

8. The name and address of the contract partner awarded the contract and a brief justification for the award;

9. The name, phone number, and email address of the employee of the contracting unit capable of responding to questions pertaining to the contract;

10. If other than the contracting unit, the name of an individual or firm that prepared or assisted with the preparation of the solicitation or specifications; and

11. For cooperative purchasing systems established pursuant to N.J.A.C. 5:34-7, all documents that evidence the lead agency’s compliance with the requirements at N.J.A.C. 5:34-7.

(b) The following documents and information should be submitted with the notice at (a) above. If not submitted with the notice, such items shall be submitted within 10 days of an OSC request:

1. A copy of the solicitation document issued by the contracting unit, including, at a minimum, an invitation to bidders, request for proposal, or request for qualifications, along with specifications (blue prints and drawings are not required), terms and conditions, and addenda issued thereto;

2. A complete list of bids or proposals received and the name and address of each bidder, vendor, or competitor;

3. Evidence of publication of required public notices;

4. Attendance sheets from a mandatory pre-bid meeting, if applicable;

5. Bid tabulation sheets, evaluation memorandum, and/or ranking of bidders, as applicable;

6. Recommendation of award and resolution or minutes of the governing body approving the contract award, as applicable;

7. A copy of the successful bid or proposal, including any forms, certifications, and/or affidavits signed by the contract partner;

8. A copy of the fully executed contract;

9. Any documents explaining or approving a waiver of bidding requirements;

10. Any documents explaining or approving the use of proprietary items, as required at N.J.A.C. 19:70-3.8; and/or

11. Copies of any pre-award or post-award bid protests and any relevant documents, including final agency decisions.

(c) If requested by the OSC, contracting units shall provide any additional documents associated with the contract award within 10 days of the request.

Pre-advertisement review - required documents

(a) For contracts meeting the pre-advertisement review threshold and submitted for pre-advertisement review, the contracting unit shall submit to the OSC, at least 30 days prior to any advertisement, negotiation, or solicitation, the following information and documents using the form for notice provided on OSC's website:

1. The name of the contracting unit and contract number, if applicable;

2. A description of the goods, services, or other subject to be procured;

3. The estimated cost of the goods, services, or other subject to be procured and any documents evidencing how the estimated cost was obtained, such as a construction cost estimate or other cost analysis;

4. The estimated date of advertisement, negotiation, or other solicitation;

5. The source(s) of funding for the contract;

6. A list of all State and Federal grant funds to be used for the contract and a brief description of any conditions and/or requirements of the grant funds, if applicable;

7. A description of the procurement process to be utilized to select the contract partner;

8. Citations to all relevant statutory, administrative, and other sources of governing law and internal procurement policies;

9. A copy of the proposed solicitation document, including the advertisement, invitation to bidders, request for proposals, or request for qualifications in final form, along with any specifications (blue prints and drawings are not required), terms and conditions, forms, certifications, or affidavits to be signed by the bidder, and, if applicable, the scoring sheet for the evaluation of proposals;

10. Any documents explaining or approving a waiver of or exception to the bidding requirements;

11. Any documents explaining or approving the use of proprietary items, as required at N.J.A.C. 19:70-3.8;

12. The name, phone number, and email address of the employee of the contracting unit capable of responding to questions pertaining to the contract;

13. If other than the contracting unit, the name of an individual or firm that prepared or assisted with the preparation of the solicitation or specifications; and

14. For cooperative purchasing systems established pursuant to N.J.A.C. 5:34-7, all documents that evidence the lead agency’s compliance with the requirements at N.J.A.C. 5:34-7.

(b) A contracting unit shall have an ongoing duty to notify the OSC of any addendum or clarification that would materially change the procurement process or award process following the OSC review, but before the contracting unit’s receipt of bids, proposals, or quotes.

(c) Upon the award of a contract meeting the pre-advertisement review threshold, contracting units shall provide the following additional documents and information to the Public Contracting Oversight Division within 20 business days of the award. Directions for documents to be included with the notice are provided on the OSC’s website:

1. The name of the contracting unit and the contract number, if applicable;

2. The final cost of the goods, services, or other subject procured;

3. Any addenda to the solicitation;

4. Attendance sheets from a mandatory pre-bid meeting, if applicable;

5. A complete list of the bids or proposals received and the name and address of each bidder, vendor, or competitor;

6. Evidence of publication of required public notices;

7. Bid tabulation sheets, evaluation memorandum or reports, or ranking of bidders, as applicable;

8. A copy of the successful bid or proposal, including any form, certification, or affidavit signed by the contract partner;

9. Recommendation of award and resolution or minutes of the governing body approving the contract award, as applicable;

10. A copy of the fully executed contract;

11. A description of any pre-award or post-award bid protest and any available related documents; and

12. The name, phone number, and email address of the employee of the contracting unit capable of responding to questions pertaining to the contract.

(d) If requested by OSC, contracting units shall provide any additional documents within 10 days of the request.

Emergency procurements - required documents

(a) For emergency procurements meeting the post-award review threshold, contracting units shall provide the OSC with the following information and documents no later than 30 business days after the contract award, using the form provided on the OSC’s website:

1. The name of the contracting unit and contract number, if applicable;

2. If other than the contracting unit, the name of the individual or firm that prepared or assisted with the preparation of the solicitation or specifications, if applicable;

3. A description of the goods, services, or other subject procured;

4. The cost of the goods, services, or other subject procured;

5. The source(s) of funding for the contract;

6. A list of all State and Federal grant funds used for the contract and a brief description of any conditions and/or requirements of the grant funds, if applicable;

7. Citations to, and any documentation required by, statutory, administrative, and other sources of governing law, and internal procurement policies authorizing the award of an emergency procurement and documentation evidencing any required approvals;

8. The name and address of the contract partner awarded the contract;

9. The name, phone number, and email address of the employee of the contracting unit capable of responding to questions pertaining to the contract;

10. A copy of the fully executed contract;

11. Any documents describing the nature of the threat to public health, safety, or welfare and a justification for the immediate need for the goods or services; and

12. Resolution or minutes of the governing body or other documentation approving the contract award, as applicable.

Requests for waiver of OSC's pre-advertisement review period

(a) Contracting units seeking to proceed with an advertisement before the expiration of the 30-day review period shall request a waiver of the time period in writing. Such contracting units shall provide the information required at N.J.A.C. 19:70-3.4(a) at the time the waiver is requested and the reason for the waiver request. Other documents shall be supplied, as requested.

Duty to notify OSC of changes

(b) Contracting units shall have an ongoing duty to notify the OSC of any subsequent addendum or clarification that would change the bid or award process from the process set forth in the documents presented to the OSC in support of any waiver request, even if a waiver has been granted.

(c) The OSC will respond to waiver requests in writing; however, the OSC is not obligated to grant waiver requests.

State third-party contracts - required documents

(a) For proposed State third-party contracts meeting the pre-advertisement review threshold, notice shall be provided by the contracting unit to the Public Contracting Oversight Division no later than 30 days prior to issuance. Notice shall include the following, as applicable:

1. The name of the contracting unit and contract number;

2. The name of the proposed contract partner;

3. The estimated cost of the services and any documents describing how the estimated cost was obtained, such as a cost estimate or other cost analysis;

4. The source(s) of funding;

5. A list of all State and Federal grant funds to be used for the contract and a brief description of any conditions and/or requirements of the grant funds;

6. A description of the services to be provided;

7. The proposed contract in substantially final form; and

8. Any additional information and documentation requested by the OSC.

(b) For renewals of State third-party contracts meeting the pre-advertisement review threshold, notice shall be provided by the contracting unit to the Public Contracting Oversight Division no later than 60 days prior to the annual renewal date. Notice shall include the following:

1. A determination in accord with the contracting unit's guidelines that the vendor has performed in a satisfactory manner;

2. All information supplied by the vendor related to contract renewal;

3. A comparison of the contract terms for the renewal year and the prior year; and

4. A copy of the original contract.

(c) For State third-party contracts meeting the post-award review threshold, notice shall be provided by the contracting unit as set forth at N.J.A.C. 19:70-3.3(a).

Alternative procurement methods - required documents

(a) The additional documents and information set forth below shall be required to be submitted for the following contracts meeting the post-award review threshold or pre-advertisement review threshold, as applicable:

1. A contracting unit that purchases goods or services from a State contract allowing for such purchases shall demonstrate compliance with the procedures established in the State contract, if applicable;

2. A contracting unit shall briefly explain the reasons for using a cooperative contract or joint purchasing agreement and provide documents evidencing any cost analysis conducted;

3. A contracting unit that intends to make purchases or contract for services through the use of a nationally recognized cooperative contract pursuant to N.J.S.A. 52:34-6.2.b shall submit documents supporting anticipated cost savings, a copy of the national cooperative contract, any agreement between the contracting unit and the vendor, and evidence that the national cooperative contract utilized a competitive selection process;

4. For sole source contracts and contracts requiring brand name or proprietary items, contracting units shall provide documents evidencing the justification for the award, or use of a brand name or proprietary item, including documentation demonstrating that no other vendor can provide comparable products or services and any resolution or approval of the governing body authorizing the use of proprietary or sole source goods or services and any completed waiver documentation. When determining if goods or services are sole source, contracting units shall abide by existing laws and rules limiting the use of the sole source exception;

5. In any type of procurement for which an evaluation committee is appointed, a contracting unit shall provide the list of persons participating on the evaluation committee, documents evidencing the scoring by the evaluation committee, the committee’s evaluation of the successful and unsuccessful vendors, and any award recommendation;

6. For insurance contracts, in addition to the documentation required at N.J.A.C. 5:34-2.3, contracting units shall submit the insurance broker contract; and

7. A contracting unit utilizing the competitive contracting process pursuant to N.J.S.A. 40A:11-4.1 et seq., or 18A:18A-4.1 et seq., shall provide the OSC with the following documentation:

i. The governing body resolution authorizing the use of competitive contracting;

ii. The notice of contract award published in the official newspaper of the governing body;

iii. In accordance with N.J.A.C. 5:34-4.3, a certification by evaluation committee members that no conflict of interest related to evaluation of the proposals exists; and

iv. If applicable, approval by the Director of Local Government Services in accordance with N.J.S.A. 40A:11-4.1.k to engage in competitive contracting.

OSC process for designating procurement review documents and information as a public record

(a) Pursuant to N.J.S.A. 52:15C-10.b(5), the State Comptroller may designate information submitted for contract review as a public record and make it public.

(b) The State Comptroller may provide notice to the public and a contracting unit of any violations of procurement or other laws.

(c) Prior to making any written determination public, the contracting unit will be provided with a confidential draft and the opportunity to comment or provide additional documentation or information, which the State Comptroller may take under consideration.

Records retention requirements

Where applicable, all contracting units shall comply with record retention schedules as established by the State Records Committee pursuant to the Destruction of Public Records Law (1953), N.J.S.A. 47:3-15 et seq. If a contracting unit is not subject to N.J.S.A. 47:3-15 et seq., then relevant records shall be maintained for a period of no less than five years after contract completion. When requested, any contracting unit shall produce any record for audit or review by the OSC.

Pre-advertisement review - OSC notification of non-compliance

(a) For contracts meeting the pre-advertisement review threshold, the Public Contracting Oversight Division shall notify the contracting unit, in writing, if the proposed procurement process does not comply with public contracting laws, rules, and regulations, and identify any errors or deficiencies that compromise the purpose of competitive bidding, including, but not limited to, ambiguous and conflicting contract terms, actual or apparent favoritism, or other indications of fraud, waste, and abuse. The contracting unit may not proceed with the procurement process until provided written notice to proceed. Contracting units shall cooperate fully with the Public Contracting Oversight Division during the contract review.

Post-award review - OSC guidance regarding non-compliance

(b) For contracts meeting the post-award review threshold submitted to the OSC for review, the Public Contracting Oversight Division may provide guidance to the contracting unit on ways to improve its procurement process or contract award process, cure any noted deficiencies, or take other appropriate action.

OSC discretionary authority for non-compliance

(c) Based on deficiencies or violations discovered during the contract review, the Public Contracting Oversight Division may conduct further fact-finding, issue a referral to an appropriate entity, or issue a letter or report identifying deficiencies or violations of law in the procurement process. Such information may be made available to the public pursuant to N.J.S.A. 52:15C-10.b and N.J.A.C. 19:70-3.9.

OSC discretion regarding corrective action plans, training, and monitoring programs

(d) Following a determination by the State Comptroller of a deficiency or violation of law, the State Comptroller may direct the contracting unit to submit and comply with a corrective action plan or implement a training and/or monitoring program for such contracting unit. The monitoring program may consist of a defined period of oversight for contracts of significant consideration.

Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise:

“Confidence interval” means the range of values expected to contain the overpayment amount with a reasonable degree of certainty.

“Confidence level” means the percentage of confidence intervals that would be expected to contain the actual overpayment amount if repeated sampling were to occur.

“Confidence limit” means the upper and lower boundaries of a confidence interval that are formed by adding or subtracting the precision to or from the point estimate, respectively.

“Error rate” means the number of sampling units in error divided by the total number of units sampled. It can also refer to the sample dollars in error divided by the total dollars in the sample.

“Extrapolation” means projecting information obtained from a statistical sample, including, but not limited to, payment errors, to the sample universe.

“Fair hearing” means an evidentiary hearing for contested cases as required pursuant to the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq., and 52:14F-1 et seq.

"MFD” means the Medicaid Fraud Division.

“Measurement unit” means the individual item that is reviewed to determine the amount of overpayment for a particular sampling unit.

“Point estimate” means the estimated total overpayment in a universe.

“Precision” means the error caused by selecting a statistical sample as opposed to reviewing the entire universe. Precision may also be referred to as the sampling error or margin of error.

“Sample design” means a method that specifies the manner in which the sampling units are to be selected for the statistical sample.

“Sampling plan” means the plan that specifies the universe and how it was determined, the period of review, the sample design, the sample size, the random number generation, and any other information required to re-create the sample.

“Sampling unit” means the individual item that can be selected from the universe to be a part of the sample.

“Statistical sample” or “statistical sampling” means a probability sample is selected and that the results of the sample are extrapolated. A probability sample means that every unit in the universe has a known, non-zero chance of being selected.

“Waste” means the overutilization or the misuse of Medicaid resources.

“Universe” means the listing of all possible units under review from which the sample is selected.

Statistical sampling and extrapolation are permissible

(a) The MFD may determine the amount of money erroneously paid to a provider by the use of statistical sampling and extrapolation, rather than by an audit, investigation, or other review of 100 percent of the claims during the period of time under review.

(b) If the MFD chooses to use statistical sampling and extrapolation to determine an overpayment, it will select a probability sample (that is, a random sample) for the review period. The MFD will calculate the net overpayment amount, which is comprised of any underpayments and overpayments in the statistical sample. The MFD will then calculate the total overpayment for the review period by extrapolating to the universe from which the sample was drawn.

(c) If, during the course of the audit, investigation, or other review, any new claims are billed or any original claims that are part of the sample or universe are voided, denied, rebilled, readjudicated, or otherwise adjusted, only the original claims shall remain in the sample or universe.

(d) The MFD may use statistical sampling and extrapolation to determine overpayments regardless of the error rate determined during the review of the sample.

(e) The MFD may use statistical sampling and extrapolation to determine overpayments regardless of sample size.

(f) When the MFD performs an extrapolation, it shall calculate the point estimate and precision in order to determine a confidence interval.

Items required in demands for recovery when MFD uses statistical sampling and extrapolation

(g) When the MFD uses statistical sampling and extrapolation to determine overpayments, the demand for recovery shall be accompanied by the following information:

1. A sampling plan;

2. The universe from which the sample was drawn;

3. All sampling and measurement units in the statistical sample with a summarized description of the reason(s) for the overpayment determinations.

i. The formulas and calculation procedures used to determine the amount to be recovered; and

ii. The confidence level used to calculate the precision of the extrapolated overpayment; and

4. An extrapolation based upon a statistical sample will be presumed, in the absence of expert testimony and evidence to the contrary, to be an accurate determination of the overpayments made or penalty to be imposed. In rebuttal, the provider may submit expert testimony challenging the statistical sample and extrapolation by the MFD.

6% interest on overpayments may be imposed

(a) In accordance with N.J.S.A. 30:4D-17.f, the MFD may impose six percent interest on overpayments made to any person, firm, corporation, partnership, or other legal entity.

(b) Interest shall accrue from the date upon which the overpayment was made to said person, firm, corporation, partnership, or other legal entity until the date upon which repayment is made to the State.

1. Where a series of overpayments have been made to any person, firm, corporation, partnership, or other legal entity, the MFD may, in its sole discretion, compute interest from the date of the last overpayment to the date upon which repayment is made to the State.

2. Interest may be tolled in accordance with N.J.S.A. 30:4D-17.f.

Waivers of interest

3. Waiver of interest shall be determined as follows:

i. If the MFD issues a preliminary recovery demand notice or final audit report to a provider, it will automatically waive interest imposed pursuant to (a) above if, within 60 days of the provider's receipt of such preliminary recovery demand or final audit report:

(1) The case is resolved pursuant to a signed settlement agreement between the MFD and the provider; or

(2) The provider repays the recovery demand in full to the Medicaid program;

ii. The waiver period may be extended beyond the 60-day timeframe if, in its discretion, the MFD finds that the parties are engaged in good faith efforts to resolve the case;

iii. If the MFD issues a notice of claim to a provider, interest will not be waived unless one or more of the following mitigating circumstances exist and, in its discretion, the MFD finds that waiver is in the best interest of the Medicaid program:

(1) Timely resolution of the case;

(2) Cooperation by the provider;

(3) Responsiveness of the provider;

(4) Demonstration by the provider that the violation that led to the overpayment is corrected; or

(5) Other mitigating circumstances; and

iv. After a case is transmitted to the Office of Administrative Law for a fair hearing, the assessment of interest will not be waived.

(c) In accordance with N.J.S.A. 30:4D-17.e, the MFD may impose a payment of penalty interest on the amount of the excess benefits or overpayments at the maximum legal rate in effect on the date the payment was made to said person, firm, corporation, partnership, or other legal entity for the period from the date upon which payment was made to the date upon which repayment is made to the State.

1. Assessments of penalty interest pursuant to N.J.S.A. 30:4D-17.e(1) shall not be waived under any circumstances.

Violations that may lead to civil monetary penalties

(a) Pursuant to N.J.S.A. 30:4D-17.e, the MFD may impose civil monetary penalties for violations of the following statutory provisions:

1. Violations of N.J.S.A. 30:4D-17.a, b, c, or d; or

2. Violations of N.J.S.A. 2A:32C-3. Pursuant to N.J.S.A. 2A:32C-3, no proof of specific intent to defraud is required to constitute a violation of the subsection and trigger penalties. Acts occurring by innocent mistake or as a result of mere negligence shall be a defense to an action pursuant to this section. Violations of this paragraph, include:

i. Knowingly presenting, or causing to be presented, to an employee, officer, or agent of the State, or to any contractor, grantee, or other recipient of State funds, a false or fraudulent claim for payment or approval;

ii. Knowingly making, using, or causing to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the State;

iii. Conspiring to defraud the State by getting a false or fraudulent claim allowed or paid by the State;

iv. Having possession, custody, or control of public property or money used, or to be used, by the State and knowingly delivering, or causing to be delivered, less property than the amount for which the person receives a certificate or receipt;

v. Being authorized to make or deliver a document certifying receipt of property used or to be used by the State and, intending to defraud the entity, making or delivering a receipt without completely knowing that the information on the receipt is true;

vi. Knowingly buying, or receiving, as a pledge of an obligation or debt, public property from any person who lawfully may not sell or pledge the property.

(1) “Knowing” and “knowingly” shall have the meaning as set forth at N.J.S.A. 2A:32C-2; or

vii. Knowingly making, using, or causing to be made or used a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the State.

(1) “Knowing” and “knowingly” shall have the meaning as set forth at N.J.S.A. 2A:32C-2.

Actions that may merit civil penalties

(b) Examples of instances that may merit civil penalties pursuant to (a) above include, but are not limited to, the following actions:

1. Repeated violations by a party for the same or similar conduct;

2. A party alters or fabricates documentation; or

3. A party fails to produce one-third or more records for goods and services billed to Medicaid when requested by the MFD to produce same.

(c) Pursuant to N.J.S.A. 30:4D-17.e, any person, firm, corporation, partnership, or other legal entity may be assessed the following penalties:

1. Payment of an amount not to exceed three times the amount of the excess benefits or overpayments as determined by the MFD; and

2. Payment in the sum of not less than and not more than the civil penalty allowed pursuant to the Federal False Claims Act, 31 U.S.C. §§ 3729 et seq., as it may be adjusted for inflation pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990, Pub.L. 101-410 for each excessive claim for assistance, benefits, or overpayments.

Monetary penalty amounts

(d) In accordance with N.J.S.A. 30:4D-17.k, the MFD may impose monetary penalties as follows:

1. A person who violates the provisions at N.J.S.A. 30:4D-17.a, b, or c shall be liable for a penalty of not less than $15,000 and not more than $25,000 for each violation; and

2. A person who violates the provisions at N.J.S.A. 30:4D-17.d shall be liable for a penalty of not less than $10,000 and not more than $25,000 for each violation.

(e) In accordance with N.J.S.A. 30:4D-17.l, the MFD may additionally assess a penalty of not less than $25,000 and not more than $150,000 for each repeat violation when the following conditions are met:

1. A person violates the provisions at N.J.S.A. 30:4D-17.a, b, or c and the aggregate amount obtained or sought to be obtained is $1,000 or more; and

2. The person has previously been convicted of a violation of the provisions at N.J.S.A. 30:4D-17.a, b, or c within 10 years of the current violation, and the aggregate amount obtained or sought to be obtained was $1,000 or more.

(f) Nothing in this section will preclude the MFD from also assessing other monetary civil penalties set forth in this chapter or that otherwise may be imposed by law.

(g) Nothing in this section shall preclude the MFD from seeking administrative sanctions against a Medicaid provider, including, but not limited to, suspension, debarment, disqualification, and/or termination from the Medicaid program.

Suspension, debarment, and disqualification

(a) The MFD may suspend, debar, or disqualify providers, persons, companies, firms, associations, corporations, or other entities from participation in the Medicaid program in accordance with N.J.A.C. 10:49-11.1, incorporated herein by reference.

(b) If good cause exists to exclude a provider from participation in the Medicaid program pursuant to any of the provisions at N.J.A.C. 10:49-11.1(d)1 through 27, incorporated herein by reference, then the MFD may terminate any existing agreement with a provider in accordance with N.J.A.C. 10:49-3.2(f).

Subpoena power

(a) Pursuant to N.J.S.A. 30:4D-57.c(6), the MFD may compel at a specific time and place, by subpoena, the appearance and sworn testimony of any person whom the Director reasonably believes may be able to give information relating to a matter under investigation.

1. For this purpose, the Medicaid Fraud Division is empowered to administer oaths and examine witnesses under oath, and compel any person to produce at a specific time and place, by subpoena, any documents, books, records, papers, objects, or other evidence that the Director reasonably believes may relate to a matter under investigation.

2. If any person to whom a subpoena is issued fails to appear or, having appeared, refuses to give testimony, or fails to produce the books, papers, or other documents required, the MFD, or its representative, may apply to the Superior Court for an order compelling the person to appear and give testimony or produce the books, papers, or other documents, as applicable. Any person failing to obey the court’s order may be punished by the court for contempt.

(b) Pursuant to N.J.S.A. 54:50-9.e, the MFD, as a division of the Office of the State Comptroller, may request and examine tax records and files in the possession of the New Jersey Division of Taxation.

Clarifying information or supplemental documentation due within 30 calendar days after preliminary recovery demand

(a) Within 30 calendar days after the MFD has served, on a provider, its preliminary recovery demand, a provider may submit to the MFD clarifying information or supplemental documentation that the provider had not previously provided. Any such documents the provider submits shall not be altered or created for purposes of the MFD audit, investigation, or review.

Extensions of time

(b) The provider, or the provider’s designee, may request an extension of time beyond the 30-calendar-day timeframe. The request must:

1. Establish good cause for the delay in submitting the records; and

2. Be received by the MFD before the date the records are due to be submitted.

(c) Records not provided to the MFD during the review process, including the timeframes set forth at (a) and (b) above, shall not be admissible in any subsequent contested case proceeding arising out of a finding and order for repayment of any overpayment identified unless the party can demonstrate the following by clear and convincing evidence:

1. The purported records are authentic; and

2. The party had good cause for failing to produce the records within the review timeframe established above.

(d) This section does not preclude providers that have provided records to the MFD during the review process from presenting clarifying information or supplemental documentation in the appeals process in order to defend against any overpayment identified. This section is intended to minimize potential duplication of effort and delay in the audit, investigation, or review process; minimize unnecessary appeals; and otherwise forestall fraud, waste, and abuse in the Medicaid program.

Parties may request fair hearings in response to MFD enforcement actions

(a) If the MFD takes an enforcement action, including, but not limited to, assessing an overpayment, instituting a monetary penalty, suspending payments, terminating a provider agreement, or denying a provider enrollment/reenrollment application, then the named party or parties may request a fair hearing to contest the agency action.

20 day time period for fair hearing requests

1. A request for a fair hearing shall be made, in writing, within 20 days of the receipt of the notice of the agency action.

i. Failure to submit a written request for a fair hearing within the 20-day time period shall result in the party forfeiting the opportunity to request a fair hearing.

2. A request for a fair hearing shall include a written response to the MFD’s action, including any legal objections and shall set forth all material facts the party or parties contend are contested.

i. Failure to include such a written response shall result in the party forfeiting the opportunity to request a hearing.

Parties shall be afforded appeal rights in response to MFD administrative sanctions

(b) If the MFD issues an administrative sanction against a party, including, but not limited to, a suspension, debarment, and/or disqualification action as set forth at N.J.A.C. 10:49-11.1, the named party or parties shall be afforded appeal rights as set forth at N.J.A.C. 10:49-11.1.

(c) If the MFD takes an enforcement action against an individual recipient of medical services from the Division of Medical Assistance and Health Services, the individual shall be afforded appeal rights as set forth at N.J.A.C. 10:49-10.3.

(d) Upon receipt of a request for a fair hearing, the MFD shall inform the Division of Medical Assistance and Health Services of the request.

Final agency decisions

(e) If the MFD determines, in accordance with applicable law, that a matter is not a contested case, the MFD may request that the Division of Medical Assistance and Health Services decline to hold a hearing, decline to transmit the matter to the Office of Administrative Law for a hearing, and enter a final agency decision based on the record prepared during the administrative process conducted by the MFD.

(f) Fair hearings shall be conducted in accordance with the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq., and 52:14F-1 et seq., and the Uniform Administrative Procedure Rules, N.J.A.C. 1:1.

Debarment, suspension, and disqualification

The purpose of this subchapter is to set forth the procedures that apply to debarment, suspension, and disqualification of a person or persons from contracting with the OSC, specifically those contracts awarded pursuant to N.J.S.A. 52:15C-5.c. Hearings arising as a result of this subchapter are contested cases subject to the requirements of the Administrative Procedures Act, N.J.S.A. 52:14B-1 et seq., and the Uniform Administrative Procedure Rules, N.J.A.C. 1:1.

The following words and terms, when used in this subchapter, shall have the following meanings unless the context indicates otherwise.

"Affiliates" means persons having a relationship such that any one of them directly or indirectly controls or has the power to control another.

"Debarment" means an exclusion from OSC contracting, on the basis of a lack of responsibility evidenced by an offense, failure, or inadequacy of performance, for a reasonable period of time commensurate with the seriousness of the offense, failure, or inadequacy of performance.

"Disqualification" means a debarment or a suspension that denies or revokes a qualification to bid or otherwise engage in OSC contracting, which has been granted or applied for pursuant to statute, rules, or regulations.

"OSC contracting" means any arrangement giving rise to an obligation to supply anything to or perform any service through a contract issued by the OSC, other than by virtue of State employment, or to supply anything to or perform any service for a private or public person where the OSC provides financial assistance and retains the right to approve or disapprove the nature or quality of the goods or services or the persons who may supply or perform the same.

"Person" means any natural person, company, firm, association, corporation, or other entity that is engaged in or offers or proposes to be engaged in OSC contracting.

"Suspension" means an exclusion from State contracting for a temporary period of time, pending the completion of an investigation or legal proceedings.

Causes for debarment

(a) In the public interest, the OSC may debar a person for any of the following causes:

1. Commission of a criminal offense as an incident to obtaining or attempting to obtain a public or private contract, or subcontract thereunder, or in the performance of such contract or subcontract;

2. Violation of the Federal Organized Crime Control Act of 1970, or commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, perjury, false swearing, receiving stolen property, obstruction of justice, or any other offense indicating a lack of business integrity or honesty;

3. Violation of the Federal or State antitrust statutes, or of the Federal Anti-Kickback Act or of the Copeland Anti-kickback Act, 18 U.S.C. § 874 and 40 U.S.C. § 3145;

4. Violation of any laws governing the conduct of elections of the Federal Government or the State of New Jersey or of its political subdivision;

5. Violation of the Law Against Discrimination, N.J.S.A. 10:5-1 et seq., or of the act banning discrimination in public works employment, N.J.S.A. 10:2-1 et seq., or of the act prohibiting discrimination by industries engaged in defense work in the employment of persons therein, N.J.S.A. 10:1-10 et seq.;

6. Violation of any laws governing hours of labor, minimum wage standards, prevailing wage standards, discrimination in wages, or child labor;

7. Violation of any laws governing the conduct of occupations or professions or regulated industries;

8. Violation of any laws that may bear upon a lack of responsibility or moral integrity;

9. Willful failure to perform in accordance with contract specifications or within contractual time limits;

10. A record of failure to perform or of unsatisfactory performance in accordance with the terms of one or more contracts, provided that such failure or unsatisfactory performance has occurred within a reasonable time preceding the determination to debar and was caused by acts within the control of the person debarred;

11. Violation of contractual or statutory provisions regulating contingent fees;

12. Any other cause affecting responsibility as an OSC contractor of such serious and compelling nature as may be determined by the OSC to warrant debarment, including, but not limited to, making a material false representation in a bid, even if such conduct has not been or may not be prosecuted as violations of such laws or contracts;

13. Debarment by some other department or agency in the Executive Branch;

14. Any violation of the prohibited activities set forth at N.J.A.C. 19:70-5.9(a) or failure to report violations of prohibited activities as required pursuant to N.J.A.C. 19:70-5.9(b); or

15. Agreeing with any agency of government to refrain from bidding on public contracts for reasons that, in the discretion of the State Comptroller, warrant debarment.

Conditions affecting debarment

(a) The following conditions shall apply concerning debarment:

1. Debarment shall be made only upon approval of the State Comptroller, except as otherwise provided by law;

2. The existence of any of the causes set forth at N.J.A.C. 19:70-5.3 shall not necessarily require that a person be debarred. In each instance, the decision to debar shall be made within the discretion of the State Comptroller, unless otherwise required by law, and shall be rendered in the best interests of the State;

3. All mitigating factors shall be considered in determining the seriousness of the offense, failure, or inadequacy of performance and in deciding whether debarment is warranted;

4. The existence of a cause set forth at N.J.A.C. 19:70-5.3(a)1 through 8 shall be established upon the rendering of a final judgment or conviction, including a guilty plea or a plea of nolo contendere by a court of competent jurisdiction or by an administrative agency empowered to render such judgment. In the event an appeal taken from such judgment or conviction results in reversal thereof, the debarment shall be removed upon the request of the debarred person unless other cause for debarment exists;

5. The existence of a cause set forth at N.J.A.C. 19:70-5.3(a)9, 10, 11, or 12 shall be established by evidence that the State Comptroller determines to be clear and convincing in nature; and

6. Debarment for the cause set forth at N.J.A.C. 19:70-5.3(a)13 shall be proper, provided that one of the causes set forth at N.J.A.C. 19:70-5.3(a)1 through 12 was the basis for debarment by the original debarring agency. Such debarment may be based entirely on the record of facts obtained by the original debarring agency, or upon a combination of such facts and additional facts.

Procedures for debarment

(a) The OSC, in seeking to debar a person or his or her affiliates, shall furnish such party with a written notice:

1. Stating that debarment is being considered;

2. Setting forth the reasons for the proposed debarment; and

3. Indicating that such party will be afforded an opportunity for a hearing if he or she so requests within a stated period of time. All such hearings shall be conducted in accordance with the provisions of the Administrative Procedure Act. However, where another department or agency has imposed debarment upon a party, the OSC may also impose a similar debarment without affording an opportunity for a hearing, provided that the OSC furnishes notice of the proposed similar debarment to that party, and affords that party an opportunity to present information in his or her behalf to explain why the proposed similar debarment should not be imposed in whole or in part.

Period of debarment

(b) Debarment shall be for a reasonable, definitely stated period of time that, as a general rule, shall not exceed five years. Debarment for an additional period shall be permitted, provided that notice thereof is furnished and the party is afforded an opportunity to present information in his or her behalf to explain why the additional period of debarment should not be imposed.

(c) Except as otherwise provided by law, a debarment may be removed or the period thereof may be reduced, in the discretion of the State Comptroller, upon the submission of a good faith application under oath, supported by documentary evidence, setting forth substantial and appropriate grounds for the granting of relief, such as newly discovered material evidence, reversal of a conviction or judgment, actual change of ownership, management, or control, or the elimination of the causes for which the debarment was imposed.

Scope of debarment

(d) A debarment may include all known affiliates of a person, provided that each decision to include an affiliate is made on a case-by-case basis after giving due regard to all relevant facts and circumstances.

(e) The offense, failure, or inadequacy of performance of an individual may be imputed to a person with whom he or she is affiliated, where such conduct was accomplished within the course of his or her official duty or was affected by him or her with the knowledge or approval of such person.

Causes for suspension

In the public interest, the OSC shall suspend a person(s) for any cause specified at N.J.A.C. 19:70-5.3 or upon adequate evidence that such cause exists.

Conditions for suspension

(a) The conditions for suspension shall include the following:

1. Suspension shall be imposed only upon approval of the State Comptroller and upon approval of the Attorney General, except as otherwise provided by law;

2. The existence of any cause for suspension shall not require that a suspension be imposed, and a decision to suspend shall be made at the discretion of the State Comptroller and of the Attorney General and shall be rendered in the best interests of the State;

3. Suspension shall not be based upon unsupported accusation, but upon adequate evidence that cause exists or upon evidence adequate to create a reasonable suspicion that cause exists;

4. In assessing whether adequate evidence exists, consideration shall be given to the amount of credible evidence that is available, to the existence or absence of corroboration as to important allegations, and to inferences that may properly be drawn from the existence or absence of affirmative facts;

5. Reasonable suspicion of the existence of a cause described at N.J.A.C. 19:70-5.3(a)1 through 8 may be established by the rendering of a final judgment or conviction by a court or administrative agency of competent jurisdiction, by grand jury indictment, or by evidence that such violations of civil or criminal law did in fact occur; and

6. A suspension invoked by another agency for any of the causes described at N.J.A.C. 19:70-5.3 may be the basis for the imposition of a concurrent suspension by the OSC, who may impose such suspension without the approval of the Attorney General.

(a) The procedures, period of suspension, and scope of suspension are:

Procedures for suspension

1. Upon approval of the Attorney General, the State Comptroller may suspend a person, or his or her affiliates, provided that within 10 days after the effective date of the suspension, the State Comptroller provides such party with a written notice:

i. Stating that a suspension has been imposed and its effective date;

ii. Setting forth the reasons for the suspension to the extent that the Attorney General determines that such reasons may be properly disclosed;

iii. Stating that the suspension is for a temporary period pending the completion of an investigation and such legal proceedings as may ensue; and

iv. Indicating that, if such legal proceedings are not commenced or the suspension removed within 60 days of the date of such notice, the party will be given either a statement of the reasons for the suspension and an opportunity for a hearing if he or she so requests, or a statement declining to give such reasons and setting forth the State Comptroller’s position regarding the continuation of the suspension. Where a suspension by another agency has been the basis for suspension by the State Comptroller, the State Comptroller shall note the fact as a reason for suspension;

Period of suspension

2. A suspension shall not continue beyond 18 months from its effective date, unless civil or criminal action regarding the alleged violation shall have been initiated within that period, or unless debarment action has been initiated. Whenever prosecution or debarment action has been initiated, the suspension may continue until the legal proceedings are completed; and

Scope of suspension

3. A suspension may include all known affiliates of a person provided that each decision to include an affiliate is made on a case-by-case basis after giving due regard to all relevant facts and circumstances. The offense, failure, or inadequacy of performance of an individual may be imputed to a person with whom he or she is affiliated, where such conduct was accomplished within the course of his or her official duty or was effectuated by him or her with the knowledge or approval of such person.

Prohibited activities

(a) In order to ensure that all persons meet a standard of responsibility that assures the OSC, the State, and its citizens that such persons will both compete and perform honestly in their dealings with the OSC and avoid conflicts of interest, all persons are prohibited from engaging in the following activities:

1. No person shall pay, offer to pay, or agree to pay, either directly or indirectly, any fee, commission, compensation, gift, gratuity, or other thing of value of any kind to any OSC employee or to any member of the immediate family, as defined at N.J.S.A. 52:13D-13.i, of any such member or employee, or to any partnership, firm, or corporation with which such member, employee, or member of their immediate family is employed or associated, or in which such member or employee has an interest within the meaning at N.J.S.A. 52:13D-13.g;

2. No person shall, directly or indirectly, undertake any private business, commercial, or entrepreneurial relationship with, whether or not pursuant to employment, contract or other agreement, express or implied, or sell any interest in such person to, any OSC employee having any duties or responsibilities in connection with the purchase, acquisition, or sale of any property or services by or to the OSC. No person shall, directly or indirectly, undertake any private business, commercial, or entrepreneurial relationship with, whether or not pursuant to employment, contract, or other agreement, express or implied, or sell any interest in such person to any individual, firm, or entity with which such OSC employee is employed or associated or has an interest within the meaning at N.J.S.A. 52:13D-13.g. Any relationships subject to this provision shall be reported, in writing, forthwith to the State Ethics Commission, which may grant a waiver of this restriction upon application of the OSC employee upon a finding that the present or proposed relationship does not present a potential or actual conflict of interest or the appearance of a conflict of interest;

3. No person shall influence, attempt to influence, or cause to be influenced, any OSC employee in an official capacity in any manner that might tend to impair the objectivity or independence of judgment of said employee; and

4. No person shall cause or influence, or attempt to cause or influence, any OSC employee to use, or attempt to use, his or her official position to secure unwarranted privileges or advantages for the person or any other individual or entity.

Reporting to NJ Attorney General and State Ethics Commission required

(b) All persons shall report to the Attorney General of New Jersey and the State Ethics Commission the solicitation of such persons of any fee, commission, compensation, gift, gratuity, or other thing of value by an OSC employee.

(c) The prohibited activities at (a) above shall not be construed to prohibit a person from offering or giving gifts to or contracting with an OSC employee, nor be construed to prohibit an OSC employee from receiving gifts from or contracting with a person, and shall not be grounds for debarment pursuant to N.J.A.C. 19:70-5.3(a)14, provided that such activities are offered or made under the same terms and conditions that are available to members of the general public and are consistent with any rules promulgated by the State Ethics Commission.

(d) The OSC shall include the prohibited activities and reporting requirements at (a) and (b) above in requests for proposals by the OSC and in all contracts with every person.

Extent of debarment, suspension, or disqualification

The exclusion from the OSC contracting by virtue of debarment, suspension, or disqualification shall extend to all OSC contracting and subcontracting within the control or jurisdiction of the OSC. However, when the State Comptroller determines it is essential to the public interest, and upon filing of a finding thereof with the Attorney General, an exception from total exclusion may be made with respect to a particular State contract.

Prior notice to Attorney General and State Treasurer required if practicable

Insofar as practicable, prior notice of any proposed debarment or suspension shall be given by the State Comptroller to the Attorney General and the State Treasurer.

List of debarred, suspended, or disqualified persons shall be supplied to State Treasurer

The State Comptroller shall supply, to the State Treasurer, a list of all persons having been debarred, suspended, or disqualified in accordance with the procedures prescribed in this chapter. Such list shall at all times be available for public inspection.

Comptroller's authority to contract not limited

Nothing in this chapter shall be construed to limit the authority of the State Comptroller to refrain from contracting within the discretion allowed by law.