{"id":28440,"date":"2016-09-20T08:01:26","date_gmt":"2016-09-20T15:01:26","guid":{"rendered":"http:\/\/spijue.wpengine.com\/news\/in-alaskas-new-pfd-fraud-detection-program-winner-is-a-data-superpower\/"},"modified":"2016-09-20T08:01:26","modified_gmt":"2016-09-20T15:01:26","slug":"in-alaskas-new-pfd-fraud-detection-program-winner-is-a-data-superpower","status":"publish","type":"post","link":"https:\/\/www.juneauempire.com\/news\/in-alaskas-new-pfd-fraud-detection-program-winner-is-a-data-superpower\/","title":{"rendered":"In Alaska’s new PFD fraud detection program, winner is a data superpower"},"content":{"rendered":"

ANCHORAGE<\/strong> \u2014 The state will spend $650,000 on a new program to weed out fraudulent Permanent Fund dividend applications under a no-bid purchase last month from international data company LexisNexis.<\/p>\n

LexisNexis won its sole-source deal after hiring a lobbyist who is good friends with the senator who proposed the state budget amendment setting aside the money.<\/p>\n

The senator, Republican Pete Kelly of Fairbanks, specified that the money be used for exactly the kind of service provided by LexisNexis, though he didn\u2019t name the company in the budget.<\/p>\n

LexisNexis will bring new scrutiny to every one of the 675,000 applicants for this year\u2019s Permanent Fund dividend, the annual oil-savings payout. The state will send private and public information from applicants to the company, which will compare it against its massive database of personal records to see whether people claiming to be Alaskans had signs of residency in other states.<\/p>\n

The PFD division, which administers the dividend program, had traditionally done audits on 4,000 to 5,000 applications, like those filed with out-of-state computers or postmarks.<\/p>\n

But using the new system, the division is sending its entire computerized file of applications to LexisNexis to search for \u201crisk factors\u201d like out-of-state voter registrations, drivers licenses or property tax exemptions, before dividends are paid next month.<\/p>\n

Kelly said the LexisNexis purchase could produce \u201csignificant savings\u201d at a time of big deficits by weeding out illegal applicants.<\/p>\n

But even if thousands of applicants are judged fraudulent, it won\u2019t save state any money. Instead, the \u201csavings\u201d will stay in the state\u2019s dividend account and be reallocated to the pool of legitimate applicants next year, said Jerry Burnett, deputy revenue commissioner.<\/p>\n

Officials in Gov. Bill Walker\u2019s administration cited the same assertions as Kelly in their justification for approving the no-bid purchase. And they said LexisNexis could help produce savings at some point in the future if the dividend was capped at a fixed amount.<\/p>\n

LexisNexis is part of multinational corporation RELX, formerly Reed Elsevier, which reported more than $7 billion in revenue last year.<\/p>\n

RELX pays its Juneau lobbyist, Eldon Mulder, $56,000 a year, and lobbied in more than three dozen other states between 2010 and 2014, according to the Center for Public Integrity.<\/p>\n

Both Kelly and Revenue Commissioner Randy Hoffbeck, whose department includes the PFD division, said they first learned of the availability of fraud detection systems from corporate representatives \u2014 though Kelly said it wasn\u2019t Mulder and Hoffbeck said he couldn\u2019t remember which lobbyist he spoke with.<\/p>\n

Mulder didn\u2019t respond to requests for comment.<\/p>\n

LexisNexis was hired by the revenue department in August after Kelly amended the state budget to provide the $650,000 for PFD fraud detection in the current fiscal year, which ends June 30.<\/p>\n

The PFD division\u2019s director, Sara Race, then said there wasn\u2019t enough time to follow standard procurement procedures, which would have required competitive bidding.<\/p>\n

\u201cDue to the current fiscal crisis, it is not in the state\u2019s best interest to put this off,\u201d Race wrote in her request for approval of the no-bid purchase from LexisNexis. \u201cThe state cannot afford to continue to pay out ineligible or fraudulent dividends, nor can it afford to put off identifying and recouping dividends that should not be paid.\u201d<\/p>\n

Race wrote that the PFD division consulted with several other revenue department divisions, including those responsible for overseeing unclaimed property and child support, and \u201cconfirmed that LexisNexis, a vendor widely utilized across the state, could be the solution.\u201d<\/p>\n

Kelly, co-chair of the Senate Finance Committee, declined to be interviewed when reached by phone. But he said in an email that it was still accurate to say the fraud detection system produced savings because \u201cwe will keep money that we would normally pay out to fraudulent applicants.\u201d<\/p>\n

Kelly didn\u2019t directly answer emailed questions about whether he\u2019d discussed his budget amendment with Mulder. But Kelly said that it was another company \u2014 not one represented by Mulder \u2014 that originally brought the fraud detection technology to his attention during discussions about a Medicaid reform bill that was approved this year.<\/p>\n

That legislation, Senate Bill 74, also included a section requiring the state health department to hire a \u201cthird-party vendor\u201d to verify the eligibility of applicants for welfare and other assistance programs.<\/p>\n

\u201cIt sounds like the Republicans may have made a sound business decision to reduce fraud in PFD and Medicaid,\u201d Kelly said.<\/p>\n

\u2022 This article first appeared in the Alaska Dispatch News. It is republished here with permission.<\/p>\n

Revenue Commissioner Randy Hoffbeck said the Walker administration hadn\u2019t pushed to adopt the fraud detection system for dividend applications, but he added that the technology would be useful.<\/p>\n

\u201cThere was some talk in the halls about this particular product,\u201d said Hoffbeck. He was asked about it by a corporate lobbyist \u2014 Hoffbeck couldn\u2019t remember who, but thought it was someone working for LexisNexis \u2014 and recalled that he ultimately ended up in a meeting with the lobbyist in Kelly\u2019s office.<\/p>\n

Kelly \u201casked me what I thought about it,\u201d said Hoffbeck, who responded: \u201cIt\u2019s a tool \u2014 we\u2019d use it if we had it.\u201d<\/p>\n

Asked about Hoffbeck\u2019s recollection, Kelly didn\u2019t dispute it, writing in an email that \u201cI don\u2019t even remember discussing this with Randy, but probably did.\u201d<\/p>\n

Kelly ended up proposing the $650,000 for the dividend fraud detection system as an amendment to the state budget on March 10, when the legislation was being heard in the Senate Finance Committee. Members approved it after two minutes of discussion.<\/p>\n

The purchase of the fraud detection system will be valid through June 2017, which means that the Permanent Fund division will be able to use it for two batches of applications, since this year\u2019s dividends won\u2019t be paid until October and next year\u2019s application deadline is March 31.<\/p>\n

Burnett, the deputy revenue commissioner, wouldn\u2019t say exactly how many applications this year had been flagged by LexisNexis\u2019s program; he said the number was still changing but was \u201cless than 4,000 and more than zero.\u201d<\/p>\n

Applicants with the risk factors identified by the company will be contacted by the Permanent Fund division, and they\u2019ll be given an opportunity to respond before their applications are denied.<\/p>\n

\u2022 This article first appeared in the Alaska Dispatch News. It is republished here with permission.<\/p>\n","protected":false},"excerpt":{"rendered":"

ANCHORAGE \u2014 The state will spend $650,000 on a new program to weed out fraudulent Permanent Fund dividend applications under a no-bid purchase last month from international data company LexisNexis. LexisNexis won its sole-source deal after hiring a lobbyist who is good friends with the senator who proposed the state budget amendment setting aside the […]<\/p>\n","protected":false},"author":107,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_stopmodifiedupdate":false,"_modified_date":"","wds_primary_category":4,"footnotes":""},"categories":[4],"tags":[230],"yst_prominent_words":[],"class_list":["post-28440","post","type-post","status-publish","format-standard","hentry","category-news","tag-state-news"],"_links":{"self":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/posts\/28440","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/users\/107"}],"replies":[{"embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/comments?post=28440"}],"version-history":[{"count":0,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/posts\/28440\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/media?parent=28440"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/categories?post=28440"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/tags?post=28440"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/yst_prominent_words?post=28440"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}