SF 2351

as introduced - 90th Legislature (2017 - 2018) Posted on 02/22/2018 03:02pm

A bill for an act
relating to human services; modifying child care program integrity provisions;
amending Minnesota Statutes 2016, sections 119B.011, by adding subdivisions;
119B.02, subdivision 5; 119B.09, subdivision 9a; 119B.125, subdivisions 4, 6;
119B.13, subdivisions 1, 6; 119B.16, subdivisions 1, 1a, 1b, by adding subdivisions;
245E.01, by adding a subdivision; 245E.02, subdivisions 1, 3, 4; 245E.03,
subdivisions 2, 4; 245E.04; 245E.05, subdivision 1; 245E.06, subdivisions 1, 2,
3; 245E.07, subdivision 1; 256.98, subdivision 8; proposing coding for new law
in Minnesota Statutes, chapter 119B; repealing Minnesota Statutes 2016, sections
119B.16, subdivision 2; 245E.03, subdivision 3; 245E.06, subdivisions 4, 5;
Minnesota Rules, part 3400.0185, subpart 5.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2016, section 119B.011, is amended by adding a subdivision
to read:

new text begin Subd. 15a. new text end

new text begin Law enforcement authority. new text end

new text begin "Law enforcement authority" means a
government agency or department within or outside Minnesota with jurisdiction to investigate
or bring a civil or criminal action against a child care provider, including a county, city, or
district attorney's office, the Attorney General's Office, a human services agency, a United
States attorney's office, or a law enforcement agency.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2017.
new text end

Sec. 2.

Minnesota Statutes 2016, section 119B.011, is amended by adding a subdivision
to read:

new text begin Subd. 19c. new text end

new text begin Stop payment. new text end

new text begin "Stop payment" means canceling a payment that was already
issued to a provider.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2017.
new text end

Sec. 3.

Minnesota Statutes 2016, section 119B.02, subdivision 5, is amended to read:

Subd. 5.

Program integrity.

For child care assistance programs under this chapter, the
commissioner shall enforce the requirements for program integrity and fraud prevention
investigations under sections 256.046, 256.98, and 256.983 new text begin and chapter 245E new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2017.
new text end

Sec. 4.

Minnesota Statutes 2016, section 119B.09, subdivision 9a, is amended to read:

Subd. 9a.

Child care centers; assistance.

(a) deleted text begin For the purposes of this subdivision,
"qualifying child" means a child who is not a child or dependent of an employee of the child
care provider. deleted text end new text begin A child care center may receive authorizations for 25 or fewer children who
are dependents of the center's employees. If a child care center is authorized for more than
25 children who are dependents of center employees, the county cannot authorize additional
dependents of an employee until the number of children falls below 25.
new text end

deleted text begin (b) Funds distributed under this chapter must not be paid for child care services that are
provided for a child or dependent of an employee under paragraph (a) unless at all times at
least 50 percent of the children for whom the child care provider is providing care are
qualifying children under paragraph (a).
deleted text end

deleted text begin (c) If a child care provider satisfies the requirements for payment under paragraph (b),
but the percentage of qualifying children under paragraph (a) for whom the provider is
providing care falls below 50 percent, the provider shall have four weeks to raise the
percentage of qualifying children for whom the provider is providing care to at least 50
percent before payments to the provider are discontinued for child care services provided
for a child who is not a qualifying child.
deleted text end

deleted text begin (d) This subdivision shall be implemented as follows:
deleted text end

deleted text begin (1) no later than August 1, 2014, the commissioner shall issue a notice to providers who
have been identified as ineligible for funds distributed under this chapter as described in
paragraph (b); and
deleted text end

deleted text begin (2) no later than January 5, 2015, payments to providers who do not comply with
paragraph (c) will be discontinued for child care services provided for children who are not
qualifying children.
deleted text end

deleted text begin (e) If a child's authorization for child care assistance is terminated under this subdivision,
the county shall send a notice of adverse action to the provider and to the child's parent or
guardian, including information on the right to appeal, under Minnesota Rules, part
3400.0185.
deleted text end

deleted text begin (f) deleted text end new text begin (b) new text end Funds paid to providers during the period of time deleted text begin between the issuance of a notice
under paragraph (d), clause (1), and discontinuation of payments under paragraph (d), clause
(2), deleted text end new text begin when a center is authorized for more than 25 children who are dependents of center
employees new text end must not be treated as overpayments under section 119B.11, subdivision 2a, due
to noncompliance with this subdivision.

deleted text begin (g) deleted text end new text begin (c) new text end Nothing in this subdivision precludes the commissioner from conducting fraud
investigations relating to child care assistance, imposing sanctions, and obtaining monetary
recovery as otherwise provided by law.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective April 23, 2018.
new text end

Sec. 5.

new text begin [119B.097] AUTHORIZATION WITH A SECONDARY PROVIDER.
new text end

new text begin (a) If a child uses any combination of the following providers paid by child care
assistance, a parent must choose one primary provider and one secondary provider per child
that can be paid by child care assistance:
new text end

new text begin (1) an individual or child care center licensed under chapter 245A;
new text end

new text begin (2) an individual or child care center or facility holding a valid child care license issued
by another state or tribe; or
new text end

new text begin (3) a child care center exempt from licensing under section 245A.03.
new text end

new text begin (b) The amount of child care authorized with the secondary provider cannot exceed 20
hours per two-week service period, per child, and the amount of care paid to a child's
secondary provider is limited under section 119B.13, subdivision 1. The total amount of
child care authorized with both the primary and secondary provider cannot exceed the
amount of child care allowed based on the parents' eligible activity schedule, the child's
school schedule, and any other factors relevant to the family's child care needs.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective April 23, 2018.
new text end

Sec. 6.

Minnesota Statutes 2016, section 119B.125, subdivision 4, is amended to read:

Subd. 4.

Unsafe care.

A county may deny authorization as a child care provider to any
applicant or deleted text begin rescind deleted text end new text begin revoke the new text end authorization of any provider when the county knows or has
reason to believe that the provider is unsafe or that the circumstances of the chosen child
care arrangement are unsafe. The county must include the conditions under which a provider
or care arrangement will be determined to be unsafe in the county's child care fund plan
under section 119B.08, subdivision 3.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective April 23, 2018.
new text end

Sec. 7.

Minnesota Statutes 2016, section 119B.125, subdivision 6, is amended to read:

Subd. 6.

Record-keeping requirement.

new text begin (a) As a condition of payment, new text end all providers
receiving child care assistance payments must keep new text begin accurate and legible new text end daily attendance
records at the site where services are delivered for children receiving child care assistance
and must make those records available immediately to the county or the commissioner upon
request. The attendance records must be completed daily and include the date, the first and
last name of each child in attendance, and the times when each child is dropped off and
picked up. To the extent possible, the times that the child was dropped off to and picked up
from the child care provider must be entered by the person dropping off or picking up the
child. The daily attendance records must be retained at the site where services are delivered
for six years after the date of service.

new text begin (b) new text end A county or the commissioner may deny new text begin or revoke a provider's new text end authorization deleted text begin as a
child care provider to any applicant, rescind authorization of any provider, deleted text end new text begin to receive child
care assistance payments under section 119B.13, subdivision 6, paragraph (d), pursue a
fraud disqualification under section 256.98, take an action against the provider under chapter
245E, new text end or establish an new text begin attendance record new text end overpayment deleted text begin claim in the system deleted text end new text begin under paragraph
(c) new text end against a current or former provider, when the county or the commissioner knows or
has reason to believe that the provider has not complied with the record-keeping requirement
in this subdivision. deleted text begin A provider's failure to produce attendance records as requested on more
than one occasion constitutes grounds for disqualification as a provider.
deleted text end

new text begin (c) To calculate an attendance record overpayment under this subdivision, the
commissioner or county agency subtracts the maximum daily rate from the total amount
paid to a provider for each day that a child's attendance record is missing, unavailable,
incomplete, illegible, inaccurate, or otherwise inadequate.
new text end

new text begin (d) The commissioner shall develop criteria to direct a county when the county must
establish an attendance overpayment under this subdivision.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective April 23, 2018.
new text end

Sec. 8.

Minnesota Statutes 2016, section 119B.13, subdivision 1, is amended to read:

Subdivision 1.

Subsidy restrictions.

(a) Beginning February 3, 2014, the maximum
rate paid for child care assistance in any county or county price cluster under the child care
fund shall be the greater of the 25th percentile of the 2011 child care provider rate survey
or the maximum rate effective November 28, 2011. The commissioner may: (1) assign a
county with no reported provider prices to a similar price cluster; and (2) consider county
level access when determining final price clusters.

(b) A rate which includes a special needs rate paid under subdivision 3 may be in excess
of the maximum rate allowed under this subdivision.

(c) The department shall monitor the effect of this paragraph on provider rates. The
county shall pay the provider's full charges for every child in care up to the maximum
established. The commissioner shall determine the maximum rate for each type of care on
an hourly, full-day, and weekly basis, including special needs and disability care.

new text begin (d) If a child uses one provider, new text end the maximum payment deleted text begin to a provider deleted text end for one day of care
must not exceed the daily rate. The maximum payment deleted text begin to a provider deleted text end for one week of care
must not exceed the weekly rate.

new text begin (e) If a child uses two providers under section 119B.097, the maximum payment must
not exceed:
new text end

new text begin (1) the daily rate for one day of care;
new text end

new text begin (2) the weekly rate for one week of care by the child's primary provider; and
new text end

new text begin (3) two daily rates during two weeks of care by a child's secondary provider.
new text end

deleted text begin (d) deleted text end new text begin (f) new text end Child care providers receiving reimbursement under this chapter must not be paid
activity fees or an additional amount above the maximum rates for care provided during
nonstandard hours for families receiving assistance.

deleted text begin (e) When deleted text end new text begin (g) If new text end the provider charge is greater than the maximum provider rate allowed,
the parent is responsible for payment of the difference in the rates in addition to any family
co-payment fee.

deleted text begin (f) deleted text end new text begin (h) new text end All maximum provider rates changes shall be implemented on the Monday
following the effective date of the maximum provider rate.

deleted text begin (g) deleted text end new text begin (i) new text end Notwithstanding Minnesota Rules, part 3400.0130, subpart 7, maximum
registration fees in effect on January 1, 2013, shall remain in effect.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective April 23, 2018.
new text end

Sec. 9.

Minnesota Statutes 2016, section 119B.13, subdivision 6, is amended to read:

Subd. 6.

Provider payments.

(a) new text begin A provider must bill only for services documented
according to section 119B.125, subdivision 6. new text end The provider shall bill for services provided
within ten days of the end of the service period. deleted text begin If bills are submitted within ten days of the
end of the service period, deleted text end Payments under the child care fund shall be made within deleted text begin 30 deleted text end new text begin 21
new text end days of receiving a new text begin complete new text end bill from the provider. Counties or the state may establish
policies that make payments on a more frequent basis.

(b) If a provider has received an authorization of care and been issued a billing form for
an eligible family, the bill must be submitted within 60 days of the last date of service on
the bill. A bill submitted more than 60 days after the last date of service must be paid if the
county determines that the provider has shown good cause why the bill was not submitted
within 60 days. Good cause must be defined in the county's child care fund plan under
section 119B.08, subdivision 3, and the definition of good cause must include county error.
Any bill submitted more than a year after the last date of service on the bill must not be
paid.

(c) If a provider provided care for a time period without receiving an authorization of
care and a billing form for an eligible family, payment of child care assistance may only be
made retroactively for a maximum of six months from the date the provider is issued an
authorization of care and billing form.

(d) A county or the commissioner may refuse to issue a child care authorization to a
licensed or legal nonlicensed provider, revoke an existing child care authorization to a
licensed or legal nonlicensed provider, stop payment issued to a licensed or legal nonlicensed
provider, or refuse to pay a bill submitted by a licensed or legal nonlicensed provider if:

(1) the provider admits to intentionally giving the county materially false information
on the provider's billing forms;

(2) a county or the commissioner finds by a preponderance of the evidence that the
provider intentionally gave the county materially false information on the provider's billing
forms, or provided false attendance records to a county or the commissioner;

(3) the provider is in violation of child care assistance program rules, until the agency
determines those violations have been corrected;

(4) the provider is operating after:

(i) an order of suspension of the provider's license issued by the commissioner; new text begin or
new text end

(ii) an order of revocation of the provider's license; deleted text begin or
deleted text end

deleted text begin (iii) a final order of conditional license issued by the commissioner for as long as the
conditional license is in effect;
deleted text end

(5) the provider submits deleted text begin false deleted text end new text begin an inaccurate new text end attendance deleted text begin reports or refuses to provide
documentation of the child's attendance upon request; or deleted text end new text begin record;
new text end

(6) the provider gives false child care price information deleted text begin . deleted text end new text begin ; or
new text end

new text begin (7) the provider fails to grant access to a county or the commissioner during regular
business hours to examine all records necessary to determine the extent of services provided
to a child care assistance recipient and the appropriateness of a claim for payment.
new text end

new text begin (e) If a county or the commissioner finds that a provider violated paragraph (d), clause
(1) or (2), a county or the commissioner must deny or revoke the provider's authorization
and either pursue a fraud disqualification under section 256.98, subdivision 8, paragraph
(c) or refer the case to a law enforcement authority. A provider's rights related to an
authorization denial or revocation under this paragraph are established in section 119B.161.
If a provider's authorization is revoked or denied under this paragraph, the denial or
revocation lasts until either:
new text end

new text begin (1) all criminal, civil, and administrative proceedings related to the provider's alleged
misconduct conclude and any appeal rights are exhausted; or
new text end

new text begin (2) the commissioner decides, based on written evidence or argument submitted under
section 119B.161, to authorize the provider.
new text end

new text begin (f) If a county or the commissioner denies or revokes a provider's authorization under
paragraph (d), clause (4), the provider shall not be authorized until the order of suspension
or order of revocation against the provider is lifted.
new text end

deleted text begin (e) For purposes of deleted text end new text begin (g) If a county or the commissioner finds that a provider violated new text end
paragraph (d), deleted text begin clauses deleted text end new text begin clause new text end (3), (5), deleted text begin and deleted text end new text begin or new text end (6), the county or the commissioner may
deleted text begin withhold deleted text end new text begin revoke or deny new text end the provider's authorization deleted text begin or payment for a period of time not to
exceed three months beyond the time the condition has been corrected deleted text end . new text begin If a provider's
authorization is revoked or denied under this paragraph, the denial or revocation may last
up to 90 days from the date a county or the commissioner denies or revokes the provider's
authorization.
new text end

new text begin (h) If a county or the commissioner determines a provider violated paragraph (d), clause
(7), a county or the commissioner must deny or revoke the provider's authorization until a
county or the commissioner determines whether the records sought comply with this chapter
and chapter 245E. The provider's rights related to an authorization denial or revocation
under this paragraph are established in section 119B.161.
new text end

deleted text begin (f) deleted text end new text begin (i) new text end A county's payment policies must be included in the county's child care plan under
section 119B.08, subdivision 3. If payments are made by the state, in addition to being in
compliance with this subdivision, the payments must be made in compliance with section
16A.124.

new text begin EFFECTIVE DATE. new text end

new text begin Paragraph (a) is effective September 25, 2017. Paragraphs (d) to
(i) are effective April 23, 2018.
new text end

Sec. 10.

Minnesota Statutes 2016, section 119B.16, subdivision 1, is amended to read:

Subdivision 1.

Fair hearing allowed new text begin for applicants and recipients new text end .

new text begin (a) new text end An applicant
or recipient adversely affected by new text begin an action of new text end a county agency deleted text begin action deleted text end new text begin or the commissioner new text end
may request new text begin and receive new text end a fair hearing in accordance with new text begin this subdivision and new text end section
256.045.

new text begin (b) A county agency must offer an informal conference to an applicant or recipient who
is entitled to a fair hearing under this section. A county agency shall advise an adversely
affected applicant or recipient that a request for a conference is optional and does not delay
or replace the right to a fair hearing.
new text end

new text begin (c) An applicant or recipient does not have a right to a fair hearing if a county agency
or the commissioner takes action against a provider.
new text end

new text begin (d) If a provider's authorization is suspended, denied, or revoked, a county agency or
the commissioner must mail notice to a child care assistance program recipient receiving
care from the provider.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective April 23, 2018.
new text end

Sec. 11.

Minnesota Statutes 2016, section 119B.16, subdivision 1a, is amended to read:

Subd. 1a.

Fair hearing allowed for providers.

(a) This subdivision applies to providers
caring for children receiving child care assistance.

deleted text begin (b) A provider to whom a county agency has assigned responsibility for an overpayment
may request a fair hearing in accordance with section 256.045 for the limited purpose of
challenging the assignment of responsibility for the overpayment and the amount of the
overpayment. The scope of the fair hearing does not include the issues of whether the
provider wrongfully obtained public assistance in violation of section 256.98 or was properly
disqualified under section 256.98, subdivision 8, paragraph (c), unless the fair hearing has
been combined with an administrative disqualification hearing brought against the provider
under section 256.046.
deleted text end

new text begin (b) A provider may request a fair hearing only as specified in this subdivision.
new text end

new text begin (c) A provider may request a fair hearing according to sections 256.045 and 256.046 if
a county agency or the commissioner:
new text end

new text begin (1) denies or revokes a provider's authorization, unless the action entitles the provider
to a consolidated contested case hearing under section 119B.16, subdivision 3, or an
administrative review under section 119B.161;
new text end

new text begin (2) assigns responsibility for an overpayment to a provider under section 119B.11,
subdivision 2a;
new text end

new text begin (3) establishes an overpayment for failure to comply with section 119B.125, subdivision
6;
new text end

new text begin (4) seeks monetary recovery or recoupment under section 245E.02, subdivision 4,
paragraph (c), clause (2);
new text end

new text begin (5) initiates an administrative fraud disqualification hearing; or
new text end

new text begin (6) issues a payment and the provider disagrees with the amount of the payment.
new text end

new text begin (d) A provider may request a fair hearing by submitting a written request to the
Department of Human Services, Appeals Division. A provider's request must be received
by the appeals division no later than 30 days after the date a county or the commissioner
mails the notice. The provider's appeal request must contain the following:
new text end

new text begin (1) each disputed item, the reason for the dispute, and, if appropriate, an estimate of the
dollar amount involved for each disputed item;
new text end

new text begin (2) the computation the provider believes to be correct, if appropriate;
new text end

new text begin (3) the statute or rule relied on for each disputed item; and
new text end

new text begin (4) the name, address, and telephone number of the person at the provider's place of
business with whom contact may be made regarding the appeal.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective April 23, 2018.
new text end

Sec. 12.

Minnesota Statutes 2016, section 119B.16, subdivision 1b, is amended to read:

Subd. 1b.

Joint fair hearings.

deleted text begin When a provider requests a fair hearing under subdivision
1a, the family in whose case the overpayment was created must be made a party to the fair
hearing. All other issues raised by the family must be resolved in the same proceeding.
When a family requests a fair hearing and claims that the county should have assigned
responsibility for an overpayment to a provider, the provider must be made a party to the
fair hearing. deleted text end The human services judge assigned to a fair hearing may join a family or a
provider as a party to the fair hearing whenever joinder of that party is necessary to fully
and fairly resolve deleted text begin overpayment deleted text end issues raised in the appeal.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective April 23, 2018.
new text end

Sec. 13.

Minnesota Statutes 2016, section 119B.16, is amended by adding a subdivision
to read:

new text begin Subd. 1c. new text end

new text begin Notice to providers. new text end

new text begin (a) Before taking an action appealable under subdivision
1a, paragraph (c), a county agency or the commissioner must mail written notice to the
provider against whom the action is being taken.
new text end

new text begin (b) The notice shall state:
new text end

new text begin (1) the factual basis for the department's determination;
new text end

new text begin (2) the action the department intends to take;
new text end

new text begin (3) the dollar amount of the monetary recovery or recoupment, if known; and
new text end

new text begin (4) the right to appeal the department's proposed action.
new text end

new text begin (c) A county agency or the commissioner must mail the written notice at least 15 calendar
days before the adverse action's effective date.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective April 23, 2018.
new text end

Sec. 14.

Minnesota Statutes 2016, section 119B.16, is amended by adding a subdivision
to read:

new text begin Subd. 3. new text end

new text begin Consolidated contested case hearing. new text end

new text begin If a county agency or the commissioner
denies or revokes a provider's authorization based on a licensing action, the provider may
only appeal the denial or revocation in the same contested case proceeding that the provider
appeals the licensing action.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective April 23, 2018.
new text end

Sec. 15.

Minnesota Statutes 2016, section 119B.16, is amended by adding a subdivision
to read:

new text begin Subd. 4. new text end

new text begin Final department action. new text end

new text begin Unless the commissioner receives a timely and
proper request for an appeal, a county agency's or the commissioner's action shall be
considered a final department action.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective April 23, 2018.
new text end

Sec. 16.

new text begin [119B.161] ADMINISTRATIVE REVIEW.
new text end

new text begin Subdivision 1. new text end

new text begin Temporary denial or revocation of authorization. new text end

new text begin (a) A provider has
the rights listed under this section if:
new text end

new text begin (1) the provider's authorization was denied or revoked under section 119B.13, subdivision
6, paragraph (d), clause (1), (2), or (7);
new text end

new text begin (2) the provider's authorization was temporarily suspended under paragraph (b); or
new text end

new text begin (3) a payment was suspended under chapter 245E.
new text end

new text begin (b) Unless the commissioner receives a timely and proper request for an appeal, a county's
or the commissioner's action is a final department action.
new text end

new text begin (c) The commissioner may temporarily suspend a provider's authorization without prior
notice and opportunity for hearing if the commissioner determines either that there is a
credible allegation of fraud for which an investigation is pending under the child care
assistance program, or that the suspension is necessary for public safety and the best interests
of the child care assistance program. An allegation is considered credible if the allegation
has indications of reliability. The commissioner may determine that an allegation is credible,
if the commissioner reviewed all allegations, facts, and evidence carefully and acts judiciously
on a case-by-case basis.
new text end

new text begin Subd. 2. new text end

new text begin Notice. new text end

new text begin (a) A county or the commissioner must mail a provider notice within
five days of suspending, revoking, or denying a provider's authorization under subdivision
1.
new text end

new text begin (b) The notice must:
new text end

new text begin (1) state the provision under which a county or the commissioner is denying, revoking,
or suspending a provider's authorization or suspending payment to the provider;
new text end

new text begin (2) set forth the general allegations leading to the revocation, denial, or suspension of a
provider's authorization. The notice need not disclose any specific information concerning
an ongoing investigation;
new text end

new text begin (3) state that the suspension, revocation, or denial of a provider's authorization is for a
temporary period and explain the circumstances under which the action expires; and
new text end

new text begin (4) inform the provider of the right to submit written evidence and argument for
consideration by the commissioner.
new text end

new text begin (c) Notwithstanding Minnesota Rules, part 3400.0185, if a county or the commissioner
denies or revokes a provider's authorization under section 119B.13, subdivision 6, paragraph
(d), clause (1), (2), or (7); suspends a payment to a provider under chapter 245E; or
temporarily suspends a payment to a provider under subdivision 1, a county or the
commissioner must send notice of termination to an affected family. The termination sent
to an affected family is effective on the date the notice is created.
new text end

new text begin Subd. 3. new text end

new text begin Duration. new text end

new text begin If a provider's authorization is denied or revoked under section
119B.13, subdivision 6, paragraph (d), clause (1), (2), or (7); authorization is temporarily
suspended under this section; or payment is suspended under chapter 245E, the provider's
denial, revocation, temporary suspension, or payment suspension remains in effect until:
new text end

new text begin (1) the commissioner or a law enforcement authority determines that there is insufficient
evidence warranting the action and a county or the commissioner does not pursue an
additional administrative remedy under chapter 245E or section 256.98; or
new text end

new text begin (2) all criminal, civil, and administrative proceedings related to the provider's alleged
misconduct conclude and any appeal rights are exhausted.
new text end

new text begin Subd. 4. new text end

new text begin Good cause exception. new text end

new text begin A county or the commissioner may find that good cause
exists not to deny, revoke, or suspend a provider's authorization, or not to continue a denial,
revocation, or suspension of a provider's authorization if any of the following are applicable:
new text end

new text begin (1) a law enforcement authority specifically requested that a provider's authorization
not be denied, revoked, or suspended because it may compromise an ongoing investigation;
new text end

new text begin (2) a county or the commissioner determines that the denial, revocation, or suspension
should be removed based on the provider's written submission; or
new text end

new text begin (3) the commissioner determines that the denial, revocation, or suspension is not in the
best interests of the program.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective April 23, 2018.
new text end

Sec. 17.

Minnesota Statutes 2016, section 245E.01, is amended by adding a subdivision
to read:

new text begin Subd. 6a. new text end

new text begin Credible allegation of fraud. new text end

new text begin "Credible allegation of fraud" has the meaning
given in section 256B.064, subdivision 2, paragraph (b), clause (2).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2017.
new text end

Sec. 18.

Minnesota Statutes 2016, section 245E.02, subdivision 1, is amended to read:

Subdivision 1.

Investigating provider or recipient financial misconduct.

The
department shall investigate alleged or suspected financial misconduct by providers and
errors related to payments issued by the child care assistance program under this chapter.
Recipients, employees, new text begin agents and consultants, new text end and staff may be investigated when the
evidence shows that their conduct is related to the financial misconduct of a provider, license
holder, or controlling individual. When the alleged or suspected financial misconduct relates
to acting as a recruiter offering conditional employment on behalf of a provider that has
received funds from the child care assistance program, the department may investigate the
provider, center owner, director, manager, license holder, or other controlling individual or
agent, who is alleged to have acted as a recruiter offering conditional employment.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective April 23, 2018.
new text end

Sec. 19.

Minnesota Statutes 2016, section 245E.02, subdivision 3, is amended to read:

Subd. 3.

Determination of investigation.

After completing its investigation, the
department shall deleted text begin issue one of the following determinations deleted text end new text begin determine that new text end :

(1) no violation of child care assistance requirements occurred;

(2) there is insufficient evidence to show that a violation of child care assistance
requirements occurred;

(3) a preponderance of evidence shows a violation of child care assistance program law,
rule, or policy; or

(4) there exists a credible allegation of fraud new text begin involving the child care assistance program new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective April 23, 2018.
new text end

Sec. 20.

Minnesota Statutes 2016, section 245E.02, subdivision 4, is amended to read:

Subd. 4.

deleted text begin Actions deleted text end new text begin Referrals new text end or administrative deleted text begin sanctions deleted text end new text begin actions new text end .

(a) After completing
the determination under subdivision 3, the department may take one or more of the actions
or sanctions specified in this subdivision.

(b) The department may take new text begin any of new text end the following actions:

(1) refer the investigation to law enforcement or a county attorney for possible criminal
prosecution;

(2) refer relevant information to the department's licensing division, new text begin the background
studies division, new text end the child care assistance program, the Department of Education, the federal
child and adult care food program, or appropriate child or adult protection agency;

(3) enter into a settlement agreement with a provider, license holder, new text begin owner, agent,
new text end controlling individual, or recipient; or

(4) refer the matter for review by a prosecutorial agency with appropriate jurisdiction
for possible civil action under the Minnesota False Claims Act, chapter 15C.

(c) In addition to section 256.98, the department may impose sanctions by:

(1) pursuing administrative disqualification through hearings or waivers;

(2) establishing and seeking monetary recovery or recoupment;

(3) issuing an order of corrective action that states the practices that are violations of
child care assistance program policies, laws, or regulations, and that they must be corrected;
deleted text begin or
deleted text end

(4) suspending deleted text begin , denying, or terminating deleted text end payments to a provider deleted text begin . deleted text end new text begin ; or
new text end

new text begin (5) taking an action under section 119B.13, subdivision 6, paragraph (d).
new text end

(d) deleted text begin Upon a finding by deleted text end new text begin If new text end the commissioner new text begin determines new text end that any child care provider, center
owner, director, manager, license holder, or other controlling individual of a child care
center has employed, used, or acted as a recruiter offering conditional employment for a
child care center that has received child care assistance program funding, the commissioner
shall:

(1) immediately suspend all program payments to all child care centers in which the
person employing, using, or acting as a recruiter offering conditional employment is an
owner, director, manager, license holder, or other controlling individual. The commissioner
shall suspend program payments under this clause even if services have already been
provided; and

(2) immediately and permanently revoke the licenses of all child care centers of which
the person employing, using, or acting as a recruiter offering conditional employment is an
owner, director, manager, license holder, or other controlling individual.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective April 23, 2018.
new text end

Sec. 21.

Minnesota Statutes 2016, section 245E.03, subdivision 2, is amended to read:

Subd. 2.

Failure to provide access.

deleted text begin Failure to provide access may result in denial or
termination of authorizations for or payments to a recipient, provider, license holder, or
controlling individual in the child care assistance program. deleted text end new text begin If a provider fails to grant the
department immediate access to records, the department may immediately suspend payments
under section 119B.161, or the department may deny or revoke the provider's authorization.
A provider, license holder, controlling individual, employee, or staff member must grant
the department access during any hours that the program is open to examine the provider's
program or the records listed in section 245E.05. A provider shall make records immediately
available at the provider's place of business at the time the department requests access,
unless the provider and the department both agree otherwise.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective April 23, 2018.
new text end

Sec. 22.

Minnesota Statutes 2016, section 245E.03, subdivision 4, is amended to read:

Subd. 4.

Continued or repeated failure to provide access.

If the provider continues
to fail to provide access at the expiration of the 15-day notice period, child care assistance
program payments to the provider must be deleted text begin denied deleted text end new text begin suspended new text end beginning the 16th day
following notice of the initial failure or refusal to provide access. deleted text begin The department may
rescind the denial based upon good cause if the provider submits in writing a good cause
basis for having failed or refused to provide access. The writing must be postmarked no
later than the 15th day following the provider's notice of initial failure to provide access. deleted text end new text begin A
provider's, license holder's, controlling individual's, employee's, staff member's, or recipient's
duty to provide access in this section continues after the provider's authorization is denied,
revoked, or suspended. new text end Additionally, the provider, license holder, or controlling individual
must immediately provide complete, ongoing access to the department. Repeated failures
to provide access must, after the initial failure or for any subsequent failure, result in
termination from participation in the child care assistance program.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective April 23, 2018.
new text end

Sec. 23.

Minnesota Statutes 2016, section 245E.04, is amended to read:

245E.04 HONEST AND TRUTHFUL STATEMENTS.

It shall be unlawful for a provider, license holder, controlling individual, or recipient to:

(1) falsify, conceal, or cover up by any deleted text begin trick, scheme, or device a material fact deleted text end new text begin means new text end ;

(2) make any materially false, fictitious, or fraudulent statement or representation; or

(3) make or use any false writing or document knowing the same to contain any materially
false, fictitious, or fraudulent statement or entry related to any child care assistance program
services that the provider, license holder, or controlling individual supplies or in relation to
any child care assistance payments received by a provider, license holder, or controlling
individual or to any fraud investigator or law enforcement officer conducting a financial
misconduct investigation.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective April 23, 2018.
new text end

Sec. 24.

Minnesota Statutes 2016, section 245E.05, subdivision 1, is amended to read:

Subdivision 1.

Records required to be retained.

The following records must be
maintained, controlled, and made immediately accessible to license holders, providers, and
controlling individuals. The records must be organized and labeled to correspond to categories
that make them easy to identify so that they can be made available immediately upon request
to an investigator acting on behalf of the commissioner at the provider's place of business:

(1) payroll ledgers, canceled checks, bank deposit slips, and any other accounting records;

(2) daily attendance records required by and that comply with section 119B.125,
subdivision 6;

(3) billing transmittal forms requesting payments from the child care assistance program
and billing adjustments related to child care assistance program payments;

(4) records identifying all persons, corporations, partnerships, and entities with an
ownership or controlling interest in the provider's child care business;

(5) employee new text begin or contractor new text end records identifying those persons currently employed by the
provider's child care business or who have been employed by the business at any time within
the previous five years. The records must include each employee's name, hourly and annual
salary, qualifications, position description, job title, and dates of employment. In addition,
employee records that must be made available include the employee's time sheets, current
home address of the employee or last known address of any former employee, and
documentation of background studies required under chapter 119B or 245C;

(6) records related to transportation of children in care, including but not limited to:

(i) the dates and times that transportation is provided to children for transportation to
and from the provider's business location for any purpose. For transportation related to field
trips or locations away from the provider's business location, the names and addresses of
those field trips and locations must also be provided;

(ii) the name, business address, phone number, and Web site address, if any, of the
transportation service utilized; and

(iii) all billing or transportation records related to the transportation.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective April 23, 2018.
new text end

Sec. 25.

Minnesota Statutes 2016, section 245E.06, subdivision 1, is amended to read:

Subdivision 1.

Factors regarding imposition of administrative deleted text begin sanctions deleted text end new text begin actions new text end .

(a)
The department shall consider the following factors in determining the administrative
deleted text begin sanctions deleted text end new text begin actions new text end to be imposed:

(1) nature and extent of financial misconduct;

(2) history of financial misconduct;

(3) actions taken or recommended by other state agencies, other divisions of the
department, and court and administrative decisions;

(4) prior deleted text begin imposition of sanctions deleted text end new text begin actions new text end ;

(5) size and type of provider;

(6) information obtained through an investigation from any source;

(7) convictions or pending criminal charges; and

(8) any other information relevant to the acts or omissions related to the financial
misconduct.

(b) Any single factor under paragraph (a) may be determinative of the department's
decision of whether and what deleted text begin sanctions are imposed deleted text end new text begin actions to take new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective April 23, 2018.
new text end

Sec. 26.

Minnesota Statutes 2016, section 245E.06, subdivision 2, is amended to read:

Subd. 2.

Written notice of department deleted text begin sanction deleted text end new text begin action new text end ; deleted text begin sanction deleted text end new text begin action new text end effective
date deleted text begin ; informal meeting deleted text end .

deleted text begin (a) The department shall give notice in writing to a person of an
administrative sanction that is to be imposed. The notice shall be sent by mail as defined in
section 245E.01, subdivision 11.
deleted text end

deleted text begin (b) The notice shall state:
deleted text end

deleted text begin (1) the factual basis for the department's determination;
deleted text end

deleted text begin (2) the sanction the department intends to take;
deleted text end

deleted text begin (3) the dollar amount of the monetary recovery or recoupment, if any;
deleted text end

deleted text begin (4) how the dollar amount was computed;
deleted text end

deleted text begin (5) the right to dispute the department's determination and to provide evidence;
deleted text end

deleted text begin (6) the right to appeal the department's proposed sanction; and
deleted text end

deleted text begin (7) the option to meet informally with department staff, and to bring additional
documentation or information, to resolve the issues.
deleted text end

deleted text begin (c) In cases of determinations resulting in denial or termination of payments, in addition
to the requirements of paragraph (b), the notice must state:
deleted text end

deleted text begin (1) the length of the denial or termination;
deleted text end

deleted text begin (2) the requirements and procedures for reinstatement; and
deleted text end

deleted text begin (3) the provider's right to submit documents and written arguments against the denial
or termination of payments for review by the department before the effective date of denial
or termination.
deleted text end

deleted text begin (d) The submission of documents and written argument for review by the department
under paragraph (b), clause (5) or (7), or paragraph (c), clause (3), does not stay the deadline
for filing an appeal.
deleted text end

new text begin (a) When taking an action against a provider, the department must give notice to:
new text end

new text begin (1) the provider as specified in section 119B.16 or 119B.161; and
new text end

new text begin (2) a family as specified under Minnesota Rules, part 3400.0185, or section 119B.161.
new text end

deleted text begin (e) deleted text end new text begin (b) new text end Notwithstanding section 245E.03, subdivision 4, new text begin and except for a payment
suspension or action under section 119B.161, subdivision 1, new text end the effective date of the proposed
deleted text begin sanction deleted text end new text begin action under this chapter new text end shall be 30 days after the license holder's, provider's,
controlling individual's, or recipient's receipt of the notice, unless timely appealed. If a
timely appeal is made, the proposed deleted text begin sanction deleted text end new text begin action new text end shall be delayed pending the final
outcome of the appeal. Implementation of a proposed deleted text begin sanction deleted text end new text begin action new text end following the resolution
of a timely appeal may be postponed if, in the opinion of the department, the delay of
deleted text begin sanction deleted text end new text begin action new text end is necessary to protect the health or safety of children in care. deleted text begin The department
may consider the economic hardship of a person in implementing the proposed sanction,
but economic hardship shall not be a determinative factor in implementing the proposed
sanction.
deleted text end

deleted text begin (f) Requests for an informal meeting to attempt to resolve issues and requests for appeals
must be sent or delivered to the department's Office of Inspector General, Financial Fraud
and Abuse Division.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective April 23, 2018.
new text end

Sec. 27.

Minnesota Statutes 2016, section 245E.06, subdivision 3, is amended to read:

Subd. 3.

Appeal of department deleted text begin sanction deleted text end new text begin action new text end .

deleted text begin (a) If the department does not pursue
a criminal action against a provider, license holder, controlling individual, or recipient for
financial misconduct, but the department imposes an administrative sanction under section
245E.02, subdivision 4, paragraph (c), any individual or entity against whom the sanction
was imposed may appeal the department's administrative sanction under this section pursuant
to section 119B.16 or 256.045 with the additional requirements in clauses (1) to (4). An
appeal must specify:
deleted text end

deleted text begin (1) each disputed item, the reason for the dispute, and an estimate of the dollar amount
involved for each disputed item, if appropriate;
deleted text end

deleted text begin (2) the computation that is believed to be correct, if appropriate;
deleted text end

deleted text begin (3) the authority in the statute or rule relied upon for each disputed item; and
deleted text end

deleted text begin (4) the name, address, and phone number of the person at the provider's place of business
with whom contact may be made regarding the appeal.
deleted text end

deleted text begin (b) Notwithstanding section 245E.03, subdivision 4, an appeal is considered timely only
if postmarked or received by the department's Appeals Division within 30 days after receiving
a notice of department sanction.
deleted text end

deleted text begin (c) Before the appeal hearing, the department may deny or terminate authorizations or
payment to the entity or individual if the department determines that the action is necessary
to protect the public welfare or the interests of the child care assistance program.
deleted text end

new text begin A provider's rights related to an action taken under this chapter are established in sections
119B.16 and 119B.161.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective April 23, 2018.
new text end

Sec. 28.

Minnesota Statutes 2016, section 245E.07, subdivision 1, is amended to read:

Subdivision 1.

Grounds for and methods of monetary recovery.

(a) The department
may obtain monetary recovery from a provider who has been improperly paid by the child
care assistance program, regardless of whether the error new text begin was on the part of the provider, the
department, or the county and regardless of whether the error new text end was intentional deleted text begin or county
error deleted text end . The department does not need to establish a pattern deleted text begin as a precondition of monetary
recovery deleted text end of erroneous or false billing claims, duplicate billing claims, or billing claims
based on false statements or financial misconduct.

(b) The department shall obtain monetary recovery from providers by the following
means:

(1) permitting voluntary repayment of money, either in lump-sum payment or installment
payments;

(2) using any legal collection process;

(3) deducting or withholding program payments; or

(4) utilizing the means set forth in chapter 16D.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective April 23, 2018.
new text end

Sec. 29.

Minnesota Statutes 2016, section 256.98, subdivision 8, is amended to read:

Subd. 8.

Disqualification from program.

(a) Any person found to be guilty of
wrongfully obtaining assistance by a federal or state court or by an administrative hearing
determination, or waiver thereof, through a disqualification consent agreement, or as part
of any approved diversion plan under section 401.065, or any court-ordered stay which
carries with it any probationary or other conditions, in the Minnesota family investment
program and any affiliated program to include the diversionary work program and the work
participation cash benefit program, the food stamp or food support program, the general
assistance program, the group residential housing program, or the Minnesota supplemental
aid program shall be disqualified from that program. In addition, any person disqualified
from the Minnesota family investment program shall also be disqualified from the food
stamp or food support program. The needs of that individual shall not be taken into
consideration in determining the grant level for that assistance unit:

(1) for one year after the first offense;

(2) for two years after the second offense; and

(3) permanently after the third or subsequent offense.

The period of program disqualification shall begin on the date stipulated on the advance
notice of disqualification without possibility of postponement for administrative stay or
administrative hearing and shall continue through completion unless and until the findings
upon which the sanctions were imposed are reversed by a court of competent jurisdiction.
The period for which sanctions are imposed is not subject to review. The sanctions provided
under this subdivision are in addition to, and not in substitution for, any other sanctions that
may be provided for by law for the offense involved. A disqualification established through
hearing or waiver shall result in the disqualification period beginning immediately unless
the person has become otherwise ineligible for assistance. If the person is ineligible for
assistance, the disqualification period begins when the person again meets the eligibility
criteria of the program from which they were disqualified and makes application for that
program.

(b) A family receiving assistance through child care assistance programs under chapter
119B with a family member who is found to be guilty of wrongfully obtaining child care
assistance by a federal court, state court, or an administrative hearing determination or
waiver, through a disqualification consent agreement, as part of an approved diversion plan
under section 401.065, or a court-ordered stay with probationary or other conditions, is
disqualified from child care assistance programs. The disqualifications must be for periods
of one year and two years for the first and second offenses, respectively. Subsequent
violations must result in permanent disqualification. During the disqualification period,
disqualification from any child care program must extend to all child care programs and
must be immediately applied.

(c) A provider caring for children receiving assistance through child care assistance
programs under chapter 119B is disqualified from receiving payment for child care services
from the child care assistance program under chapter 119B when the provider is found to
have wrongfully obtained child care assistance by a federal court, state court, or an
administrative hearing determination or waiver under section 256.046, through a
disqualification consent agreement, as part of an approved diversion plan under section
401.065, or a court-ordered stay with probationary or other conditions. The disqualification
must be for a period of deleted text begin one year deleted text end new text begin two years new text end for the first offense deleted text begin and two years for the second
offense deleted text end . Any subsequent violation must result in permanent disqualification. The
disqualification period must be imposed immediately after a determination is made under
this paragraph. During the disqualification period, the provider is disqualified from receiving
payment from any child care program under chapter 119B.

(d) Any person found to be guilty of wrongfully obtaining MinnesotaCare for adults
without children and upon federal approval, all categories of medical assistance and
remaining categories of MinnesotaCare, except for children through age 18, by a federal or
state court or by an administrative hearing determination, or waiver thereof, through a
disqualification consent agreement, or as part of any approved diversion plan under section
401.065, or any court-ordered stay which carries with it any probationary or other conditions,
is disqualified from that program. The period of disqualification is one year after the first
offense, two years after the second offense, and permanently after the third or subsequent
offense. The period of program disqualification shall begin on the date stipulated on the
advance notice of disqualification without possibility of postponement for administrative
stay or administrative hearing and shall continue through completion unless and until the
findings upon which the sanctions were imposed are reversed by a court of competent
jurisdiction. The period for which sanctions are imposed is not subject to review. The
sanctions provided under this subdivision are in addition to, and not in substitution for, any
other sanctions that may be provided for by law for the offense involved.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective April 23, 2018.
new text end

Sec. 30. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2016, sections 119B.16, subdivision 2; 245E.03, subdivision 3; and
245E.06, subdivisions 4 and 5, new text end new text begin and new text end new text begin Minnesota Rules, part 3400.0185, subpart 5, new text end new text begin are repealed
effective April 23, 2018.
new text end

APPENDIX

Repealed Minnesota Statutes: SF2351-0

119B.16 FAIR HEARING PROCESS.

Subd. 2.

Informal conference.

The county agency shall offer an informal conference to applicants and recipients adversely affected by an agency action to attempt to resolve the dispute. The county agency shall offer an informal conference to providers to whom the county agency has assigned responsibility for an overpayment in an attempt to resolve the dispute. The county agency or the provider may ask the family in whose case the overpayment arose to participate in the informal conference, but the family may refuse to do so. The county agency shall advise adversely affected applicants, recipients, and providers that a request for a conference with the agency is optional and does not delay or replace the right to a fair hearing.

245E.03 DUTY TO PROVIDE ACCESS.

Subd. 3.

Notice of denial or termination.

When a provider fails to provide access, a 15-day notice of denial or termination must be issued to the provider, which prohibits the provider from participating in the child care assistance program. Notice must be sent to recipients whose children are under the provider's care pursuant to Minnesota Rules, part 3400.0185.

245E.06 ADMINISTRATIVE SANCTIONS.

Subd. 4.

Consolidated hearings with licensing sanction.

If a financial misconduct sanction has an appeal hearing right and it is timely appealed, and a licensing sanction exists for which there is an appeal hearing right and the sanction is timely appealed, and the overpayment recovery action and licensing sanction involve the same set of facts, the overpayment recovery action and licensing sanction must be consolidated in the contested case hearing related to the licensing sanction.

Subd. 5.

Effect of department's administrative determination or sanction.

Unless a timely and proper appeal is received by the department, the department's administrative determination or sanction shall be considered a final department determination.

Repealed Minnesota Rule: SF2351-0

3400.0185 TERMINATION AND ADVERSE ACTIONS; NOTICE REQUIRED.

Subp. 5.

Notice to providers of actions adverse to the provider.

The county must give a provider written notice of the following actions adverse to the provider: a denial of authorization, a termination of authorization, a reduction in the number of hours of care with that provider, and a determination that the provider has an overpayment. The notice must include the following information:

A.

a description of the adverse action;

B.

the effective date of the adverse action; and

C.

a statement that unless a family appeals the adverse action before the effective date or the provider appeals the overpayment determination, the adverse action will occur on the effective date. The notice must be mailed to the provider at least 15 calendar days before the effective date of the adverse action.