TEXAS WORKFORCE COMMISSION LETTER. ID/No: Regulatory Integrity Date: August 17, 2009

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1 TEXAS WORKFORCE COMMISSION LETTER ID/No: Regulatory Integrity Date: August 17, 2009 TO: FROM: Executive Director Deputy Executive Director Commission Executive Staff Department Heads LWDB Executive Directors John Moore Director, Regulatory Integrity Division SUBJECT: Anti-Fraud Procedure 1. PURPOSE The purpose of this procedure is to establish an effective and efficient communication protocol between the Texas Workforce Commission (TWC) offices, which handle fraud investigations, and TWC staff and Local Workforce Development Board (LWDB) staff. The roles and responsibilities delineated herein are designed to assist agency and LWDB staff in reporting fraud within TWC or any of its agents. 2. REFERENCE Texas Workforce Commission Personnel Manual, Section 1.11 (Ethics); Agency-Board Agreement for An Integrated Workforce System, Section 19; Office of Investigations; Regulatory Integrity Division; Office of General Counsel 3. BACKGROUND Texas government has a sacred trust to guard taxpayers dollars and maintain the highest standard of integrity, impartiality, and conduct. Because of this trust, public employees are held to a higher standard of conduct than private individuals. Texas government is entrusted by the taxpayers of the state to provide responsible stewardship through efficient and honest governance. State employees, therefore, are guardians of public resources and have a responsibility to all citizens of Texas to report any suspected incidents of fraud, theft, waste, or abuse of property to an appropriate law enforcement authority. State employees are specifically protected from retaliation in any form for reporting such incidents in accordance with Texas Government Code

2 All Texas Workforce Commission (TWC) employees are responsible for protecting the Agency from potential criminal, civil, and policy violations. The U.S. Department of Labor s definition of criminal violations includes fraud, theft, malfeasance, (i.e. wrongdoing or misconduct in the handling of public affairs), and misapplication of funds. Civil violations include misapplication of resources and lapses in standards of conduct. Policy violations include gross mismanagement and misconduct or other behavior that would reflect negatively on TWC. TWC has established this anti-fraud procedure to aid in the prevention and detection of fraud, waste, and abuse that may impact Agency operations or the programs it administers. This policy applies to employees, consultants, vendors, contractors, system participants, and other persons/entities doing business with TWC. TWC does not tolerate any type of fraud. The Agency s policy is to promote consistent, legal, and ethical organizational behavior by: Defining expectations and responsibilities; Providing an avenue for TWC employees and others to report fraud, suspected fraud, or other unethical behavior; and Establishing a process to investigate reported fraud, suspected fraud, or unethical behavior. Additionally, TWC will not tolerate any form of retaliation against individuals providing information concerning fraud, suspected fraud, or unethical behavior. Fraud is defined as any deliberate act or failure to act with the purpose of obtaining an unauthorized benefit or gain. Fraud also includes the false representation or concealment of a material fact for the purpose of inducing another to act upon it to his or her injury. Fraudulent conduct includes, but is not limited to: Providing any dishonest information to, or on behalf of, the Agency; Altering a check, bank draft, or any other Agency document without appropriate authorization; Forging any Agency documents or other documents used to conduct business with TWC; Stealing Agency funds, supplies, or other assets; Knowingly misrepresenting financial transactions, data used in measuring performance, or other information (such as time sheet or travel expense data); Obtaining personal benefit (including the personal benefit for family/friends) as a result of insider knowledge of TWC operations or access to data or assets; Disclosing confidential information to unauthorized persons, or misusing confidential information for an unauthorized purpose. Assisting individuals/entities in obtaining payments/benefits to which they are not entitled; Receiving gifts, favors, or other perks from system participants; 2

3 Knowingly authorizing an improper claim or ineligible participation in TWC programs; Knowingly violating applicable rules, regulations, policies, procedures, and laws; or Misusing State-owned property (computers, equipment, telephones, etc.). Questions concerning an employee s ethical conduct should be directed to division management, the Ethics Officer (General Counsel). Section 1.11 (Ethics) of the TWC Personnel Manual specifically addresses this Agency's ethics policy. 4. PROCEDURES Employee / Complainant Responsibilities An employee or complainant who discovers or suspects fraudulent activity related to TWC operations, or the programs it administers, should immediately contact the Office of Investigations. Contact may be made through the Fraud Hotline number ( ). Additional methods for reporting fraud are described on the TWC website, and in section 1.15 (Reporting Fraud, Theft, Waste and Program Abuse) of the TWC Personnel Manual. Information concerning any fraudulent act is held in strict confidence to the extent allowed by law. Anonymous complaints will be coordinated and reviewed by the Office of Investigations, Regulatory Integrity Division and the Office of General Counsel to determine if sufficient probable cause and/or other circumstances exist to warrant further action. An employee or other complainant who suspects fraud should report as much detail as possible, including the names of the individual(s)/entity(ies) involved, the date(s)/location(s) of the alleged activity(ies), and the names of possible witnesses or other individuals who may have relevant information. Employees/complainants reporting suspected fraud should not: Contact the suspected individual in an effort to gain additional information, determine facts, or demand restitution; Attempt to further investigate the allegations; or Discuss the case, facts, suspicions, or allegations with anyone outside the Office of Investigations, unless specifically asked to do so by the Office of Investigations or Office of General Counsel. An employee or other complainant who reports suspected fraudulent activities is not privy to details or other information gathered during the investigation, while it is in progress. Investigation results are not routinely disclosed or discussed with anyone other than those who have a legitimate need to know. If an allegation was not made anonymously, a summary report stating whether or not the allegation was substantiated will be submitted to the employee/complainant. If additional details are desired, the employee/complainant may make such a request by submitting a formal request under the Public Information Act. 3

4 Because of the potential for damaging the reputation of an innocent party if a false allegation is made, a TWC employee who knowingly reports false or misleading information regarding suspected fraud is subject to disciplinary action, up to and including termination. Management / Supervisor Responsibilities In addition to the responsibilities outlined for employees/complainants, TWC management personnel are required to be familiar with the different types of fraud that could occur within their area of responsibility, and must be alert for any indication of irregularity. In addition, managers and supervisors are responsible for maintaining a system of internal controls to help deter and detect fraudulent or dishonest conduct, and are responsible for setting a tone of zero tolerance with regard to fraudulent activities. TWC managers and supervisors should ensure that employees in their line of supervision understand the responsibilities outlined for employees with regard to suspected fraud. A manager or supervisor who fails to establish internal controls, or fails to report misconduct within the scope of this policy, will be subject to disciplinary action, up to and including termination of employment. TWC managers and supervisory personnel are held to a higher standard of conduct than non-supervisory employees, and any fraud committed by a manager or supervisor will warrant more severe disciplinary action than that taken against non-supervisory personnel. Local Workforce Development Board Responsibilities Local Workforce Development Board personnel are responsible for complying with this policy through provisions set forth in Section 19 of the Agency-Board Agreement for An Integrated Workforce System. Office of Investigations Responsibilities The Office of Investigations, a department within the Regulatory Integrity Division, has primary responsibility for administering the investigation of all reports of suspected fraudulent acts and for coordinating investigative activities with Regulatory Integrity Division, Office of General Counsel, Human Resources, local Workforce Boards and, as necessary, appropriate external law enforcement and other oversight agencies. The Office of Investigations will make every effort to protect the rights and the reputations of those involved in an investigation involving allegations of fraud, including the employee/complainant who reports alleged fraud, the individual(s) interviewed during the resultant investigation, and the individual(s)/entity(ies) against whom the allegations were made. In the event an investigation substantiates that fraudulent activities have occurred, the Office of Investigations will prepare and distribute, as appropriate, a report to appropriate 4

5 management personnel, the Executive Director, and the Deputy Executive Director. To avoid any appearance of bias, the Office of Investigations should not be involved in the disciplinary process that results from an investigation it conducted. Any planned disciplinary action must be coordinated with Human Resources, Office of General Counsel, Regulatory Integrity Division, and if necessary, outside counsel. When the Office of Investigations has reasonable cause to believe that money received from the state by the department or entity or by a client or contractor of the department or entity may have been lost, misappropriated, or misused, or that fraudulent or unlawful conduct has occurred in relation to the department or entity, the Office of Investigations shall report the reason and basis to the State Auditor s Office in accordance with Texas Government Code Regulatory Integrity Division Responsibilities The Regulatory Integrity Division enforces all regulatory statutes within the jurisdiction of the agency, including UI, career schools, board sanctions, wage claims and child labor. A priority of the division is the prevention, detection and elimination of fraud and abuse in the UI program as well as all the other programs administered by the Agency. This division directs the Office of Investigations in regards to investigating suspected fraudulent activities. Regulatory Integrity Division works directly with external law enforcement and regulatory enforcement entities in the prosecution of suspected fraudulent activities. In addition, Regulatory Integrity Division directs any administrative enforcement matters related to suspected fraudulent activities, as well as seek recovery of any costs associated with such activities. 5. ACTION REQUIRED Agency and LWDB staffs are required to follow these procedures when seeking direction. This letter replaces TWC Letter, Program Integrity 01-05, dated April 8, INQUIRIES Questions as to what constitutes fraud should be referred to the Office of Investigations, (512) or Regulatory Integrity Division, (512) , or via at Anti- Fraud Procedure. 5