HomeMy WebLinkAbout2017-03-28 Policy & Services Committee Agenda PacketPolicy and Services Committee
1
MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA
PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE.
DURING NORMAL BUSINESS HOURS.
March 28, 2017
Special Meeting
Community Meeting Room
6:00 PM
Agenda posted according to PAMC Section 2.04.070. Supporting materials are available in
the Council Chambers on the Thursday 10 days preceding the meeting.
PUBLIC COMMENT
Members of the public may speak to agendized items. If you wish to address the Committee on any issue that is on this agenda, please complete a speaker request card located on the table at the entrance to the Council Chambers/Community Meeting Room, and deliver it to the Clerk prior to discussion of the item. You are not
required to give your name on the speaker card in order to speak to the Committee, but it is very helpful.
Call to Order
Oral Communications
Members of the public may speak to any item NOT on the agenda.
Action Items
1. Discussion of the Fraud, Waste, and Abuse Hotline
Future Meetings and Agendas
Adjournment
AMERICANS WITH DISABILITY ACT (ADA) Persons with disabilities who require auxiliary aids or services in using City facilities, services or programs or who
would like information on the City’s compliance with the Americans with Disabilities Act (ADA) of 1990, may
contact (650) 329-2550 (Voice) 24 hours in advance.
CITY OF PALO ALTO OFFICE OF THE CITY AUDITOR
March 28, 2017
The Honorable City Council
Palo Alto, California
Discussion of the Fraud, Waste, and Abuse Hotline
Recommendation
The Office of the City Auditor recommends that the Policy and Services Committee review and
recommend to the City Council acceptance of the:
1. Proposed changes to the City Employee Fraud, Waste, and Abuse Hotline Administration
Policy.
2. Provide direction to the City Auditor regarding methods for advertising the hotline to
City employees, including providing information regarding what is an appropriate use of
the hotline and the type of questions or concerns that should be addressed through
another means.
Background
Fraud, waste, and abuse hotlines are a mechanism through which employees or others can
report suspected misuse or mismanagement of an organization’s resources. In July 2012, the
City Council approved an 18-month pilot program to establish an employee-only fraud, waste,
and abuse hotline, to be administered by the City Auditor’s Office. In May 2013, the City Council
adopted the “City Employee Fraud, Waste, and Abuse Hotline Administration Policy” (“Hotline
Policy”) and approved continuing the program beyond the pilot phase.
A third-party vendor administers the City’s hotline. It receives calls, creates a case file for each
call, and forwards the case to the Hotline Review Committee (City Auditor, City Manager, and
City Attorney) for review. Callers can access the hotline 24/7/365, and can provide their name
or choose to remain anonymous. The committee reviews the general case information for each
call and determines whether it falls within the purview of the hotline. If it does, the committee
makes a decision, based on the information provided in the case file, about whether to
investigate the case. The committee may refer cases that do not fall within the purview of the
hotline to the appropriate department or the Human Resources Department for review and
action.
The City Manager’s Office issued the Palo Alto Employee Ethics Policy in 2016 and provided
training to all City employees regarding the policy. The policy, available to employees on both
the City’s intranet and internet pages, was developed in response to a recommendation in the
Page 2
audit of Employee Ethics Policies, published in 2008. It states that employees who have
questions about the Code of Ethics or the appropriateness of an action should consult with
their supervisor, department head, City Manager, or City Attorney’s Office, or that they may
use the City’s confidential Employee Ethics Hotline if anonymity is necessary.
Discussion
Since its inception, the fraud, waste, and abuse hotline has received 34 calls: 11 were various
versions of a single issue, and 2 were related to another single issue, meaning that we received
calls regarding 23 separate issues. The City investigated 14 of the 23 issues, and two were
substantiated. In one of the substantiated cases, corrective action was taken by providing
relevant training to employees, and in the other substantiated case, the employee resigned.
Survey of Other Jurisdictions and Best Practices
Because of the number of repeat calls for a single issue and because many of the calls received
do not relate to fraud, waste, or abuse, the Office of the City Auditor conducted a survey of
other local governments that have a hotline to identify what others do to minimize the time
spent on frivolous or malicious calls, or calls received simply because callers do not know where
else to call. We received 39 responses to our survey, and several of the respondents gave us
copies of their hotline policies. We also did other research to identify best practices. Key
indicators from the survey respondents were:
Most organizations do not receive a large number of calls each year – 2 of the
organizations did not say how many calls they received; 9 received less than 10 calls, 14
received 11-50 calls, 8 received 51-100 calls, and 6 received more than 100 calls.
34 of the jurisdictions, including all 6 that received more than 100 calls, accept calls
from both employees and others outside of the organization (e.g., residents and
contractors). Although the investigation and substantiation rates varied, accepting calls
from people other than employees generally led to both a higher number of
investigations and more complaints being substantiated.
The jurisdictions that had the highest substantiation rates routinely communicated the
purpose of the hotline to their employees and their citizenry. Common practices
included:
o Providing information at new employee orientations
o Hanging posters at key points in their facilities, and updating the posters at least
annually
o Providing information on employee pay stubs, generally two times per year
o Conducting annual training and presentations for employees
o Providing information in an all-employee email
o Providing information on dedicated internet or intranet pages
o Publishing articles in newsletters
Page 3
o Informing citizenry through notices on utility bills, booths at community events, and
advertisements on the city/county television channel
o Publishing reports of the number of cases received, the number investigated and
their outcomes, and providing descriptions of the cases that were substantiated
Several of the hotline policies we received from other jurisdictions also included examples of
the types of activities that constitute fraud, waste, or abuse and gave examples of the types of
activities that should be referred elsewhere.
The Office of Inspector General for the Department of Homeland Security published a report in
2010, “Recommended Practices for Office of Inspector General Hotlines,” which acknowledges
the importance of educating employees and contractors about hotlines. It recommends, in
addition to the types of communications listed above, giving presentations at agency meetings
and developing informational brochures to reduce the number of misdirected complaints.
Some agencies also develop wallet cards to give to employees and others.
The California State Auditor developed a Frequently Asked Questions document, posted on its
website, that provides information about who and what the State Auditor can and cannot
investigate and provides examples of improper conduct that falls within the State Auditor’s
authority for investigation. It also provides tips for filing a complaint to ensure that the State
Auditor has sufficient information to make a determination about whether a complaint
warrants investigation.
Proposed Changes to the Fraud, Waste, and Abuse Hotline Administration Policy
The changes that the Office of the City Auditor has proposed for the Fraud, Waste, and Abuse
Hotline Administration Policy include:
Clarified that although the hotline only receives calls from employees, employees
should report activities that directly relate to the City of Palo Alto (e.g., if a contractor
committed fraud as part of its contract with the City).
Clarified that the hotline is not only for anonymous reporting.
Added language that the Hotline Review Committee may recommend using an external
investigator in some cases.
Changed the language in the Case Management and Case Dissemination sections to
reflect that only the Hotline Review Committee has access to the case management
system and that it will review completed investigation reports before closing out a case
in the case management system. In the past, some department directors closed out a
case that was referred to them but did not put sufficient information in the case notes
to determine the adequacy of the investigative process and whether the designated
outcome was appropriate. Because the Office of the City Auditor is responsible for
reporting to Council the number of cases received, their status, and the outcome, it is
important that the City Auditor have a reasonable level of assurance regarding the
adequacy of the investigative process and its outcome.
Page 4
Updated who the alternate members of the Hotline Review Committee would be in the
event that a complaint is made against one of the primary members.
Clarified the language regarding the investigative process.
Added language for the Office of the City Auditor and Human Resources Department to
coordinate to identify the types of cases that are appropriate for the hotline vs. the
Human Resources Department’s new employee advice line.
Changed the language regarding how the Office of the City Auditor reports on hotline
cases received to clarify that the reporting is done through the Office of the City
Auditor’s regular quarterly reports rather than as an Information Item. Reporting
through the quarterly reports provides Council the opportunity to have discussion
regarding the case summaries.
Added a section to inform employees that disciplinary action may be taken when a case
is substantiated. This was a common provision in other organizations’ hotline policies.
Added a section on advertising the hotline.
Advertising the Hotline
Based on the survey input and research, it is clear that it is important to advertise the hotline to
educate potential complainants on the purpose of the hotline and to thereby reduce the
number of misdirected complaints. Although the Office of the City Auditor has not established
an education program regarding the hotline, the City Auditor gave a presentation to a City
department last year regarding the Office of the City Auditor’s functions and activities, which
included a discussion of the hotline. About two weeks later, the hotline received a call that was
investigated and substantiated, which may be an indicator of the effectiveness of educating
employees about the hotline.
In a 2016 article, the Association of Certified Fraud Examiners listed several factors that lead to
an ineffective hotline reporting process, which included employees not understanding the
system. The article also listed some tips for building a trusted hotline reporting program and
culture, including training and awareness and ongoing communication. The factors that lead to
hotline ineffectiveness and those that lead to hotline effectiveness both support the
importance of outreach and communication to those who are expected to potentially use the
hotline.
Conclusion
Tips continue to be the most common way that organizations become aware of fraud, waste, or
abuse. Hotlines provide a mechanism through which employees or others can report fraud,
waste, or abuse that they are aware of, particularly if they wish to remain anonymous. Two
critical factors for hotline success are having effective policies and procedures for administering
the hotline and creating awareness of the hotline for those who would potentially use it. The
proposed changes to the Fraud, Waste, and Abuse Hotline Administration Policy and
Page 5
developing awareness of the hotline are both expected to improve the effectiveness of the City
of Palo Alto’s hotline.
Respectfully submitted,
Harriet Richardson
City Auditor
ATTACHMENTS:
Attachment A: Ethics Hotline Administration Policy - Revised March 2017 (PDF)
Attachment B: City Employee Fraud, Waste, and Abuse Administration Policy - March 2013
(PDF)
Department Head: Harriet Richardson, City Auditor
Page 6
CITY OF PALO ALTO
Fraud, Waste, and Abuse Administration Policy
Page 1 of 8
Updated: March 2017
City Employee
Fraud, Waste, and Abuse Hotline Administration
Policy
Attachment A
CITY OF PALO ALTO
Fraud, Waste, and Abuse Administration Policy
Page 2 of 8
Updated: March 2017
Table of Contents
1.Objective ...................................................................................................................... 3
2.Structure ....................................................................................................................... 3
3.Hotline Review Committee .......................................................................................... 3
4.Case Management ........................................................................................................ 3
5.Case Dissemination ...................................................................................................... 4
6.Coordination With Human Resources Regarding Its Advice Line ................................. 5
7.Escalation...................................................................................................................... 5
8.Reporting ...................................................................................................................... 5
9.Discipline ...................................................................................................................... 5
10. Prohibition Against Retaliation .................................................................................... 6
11. Terms and Definitions .................................................................................................. 6
12.Security of Incident Reports and Associated Reports, Working Papers, and Other
Related Documents ...................................................................................................... 6
13. Custody of Investigation Documents ........................................................................... 7
14. Public Requests for Information Regarding All Incident Reports ................................. 7
15. Filing of Malicious Complaints ...................................................................................... 7
16. Advertising the Hotline ................................................................................................. 7
Attachment A
CITY OF PALO ALTO
Fraud, Waste, and Abuse Administration Policy
Page 3 of 8
Updated: March 2017
1.Objective
The primary objective of the City of Palo Alto Fraud, Waste, or Abuse Hotline (“hotline”) is to provide an
anonymous mechanism for employees to report fraud, waste, or abuse by City employeesthat directly
relates to the City of Palo Alto.
City employees who have specific information that other City employees have engaged in fraud, waste,
or abuse are encouraged to report such information through the normal chain of command, which
includes their immediate supervisor, manager, department head, Human Resources, and the City
Manager’s Office (CMO); or to the Office of the City Auditor. However, there may be certain
circumstances where an employee believes it is necessary to remain anonymous or prefers for other
reasons to report directly through the hotline. The hotline provides an anonymous method whereby
employees can choose to remain anonymous ofwhen reporting such incidents over the phone to a third-
party interviewer or via an anonymous web form. The City believes that anonymity is a last resort and
should only be used after other reporting methods have been attempted or when the employee has a
reasonable good faith belief that it is necessary. Frivolous anonymous calls can undermine the
effectiveness of the hotline. All reports made regarding fraud, waste, or abuse should be made seriously
and with due professional care.
2.Structure
The hotline is hosted by an independent, third-party provider (vendor) contracted by the City. The
vendor provides the option for callers to provide information over the hotline anonymously. The vendor
issues an incident report for each call and submits the incident reports for review and referral. The
vendor provides offsite hotline coverage 24/7/365 and live interviewers who obtain the information
deemed necessary to verify and process the complaints. This information is then transcribed into an
incident report that is housed in a the vendor-hosted case management system.
3.Hotline Review Committee
The Hotline Review Committee (“Committee”) is composed of the following members or their
designees: the City Auditor, the City Manager, and the City Attorney. The Committee meets as needed
to review all activity related to the hotline. The objectives of the Committee are to review all incident
reports, determine whether an incident report should be investigated, assign incident reports to the
appropriate department, or unit, or external investigator for investigation, ensure that incident reports
that are assigned for investigation are adequately investigated, and address any trends in activity or
weaknesses in City policies that require corrective action to be taken. Duplicate reports or reports that
do not suggest fraud, waste, or abuse may be closed without further investigation.
4.Case Management
The vendor’s online case management system allows for all hotline reports to be recorded, updated and
tracked in one centralized system to ensure that all reports are addressed appropriately and that the
outcomes are consistent. All incident reports are maintained in the secured case management system.
and are periodically updated with the status of the investigation by tThe specified department case
managerment users and should periodically update the Office of the City Auditor regarding the status of
Attachment A
CITY OF PALO ALTO
Fraud, Waste, and Abuse Administration Policy
Page 4 of 8
Updated: March 2017
the investigation. Case management users include staff of tThe Office of the City Auditor who act as
administersrators of the case management system, and updates it to reflect the investigation status and
outcomes.one or more members of management from each department who will be assigned to
respond to incidents within their departments. User access is limited to cases assigned to themthe
Hotline Review Committee members and the hotline administrator in the Office of the City Auditor.
Additionally, the CMO will be provided certain administrative functions in the case management system
in order to create a check-and-balances system to ensure that the OCA is not investigating reports that
could be a conflict of interest for OCA employees.
5. Case Dissemination
Within 24 hours after entering a call as an incident report and logging it into the case management
system, the vendor sends the report electronically to the appropriate contacts at the Office of the City
Auditor for preliminary review. The Office of the City Auditor will triage the report to determine if
immediate action may be necessary. If immediate action appears necessary, the Office of the City
Auditor will contact the Hotline Review Committee, which will decide whether to initiate an
investigation. Incident reports requiring immediate action include those involving possible fraud, waste,
or abuse by City executives, or other incidents based on the judgment of the Hotline Review Committee.
All other cases will be referred to the Hotline Review Committee in their scheduled meetingsto review.
These reviews should occur within five business days.
If an incident report involves one or more members of the Hotline Review Committee, those individuals
shall be excluded from any decisions or activities related to the review and/or investigation of that
incident report. If this occurs, an Senior Performance Auditor, Assistant City Manager, and/or Senior the
Assistant CityPrincipal Attorney, if needed, will act as the third members of the Hotline Review
Committee to ensure there are a minimum of two officials providingis appropriate oversight of the
review and investigation of the incident report.
Because the members of the Hotline Review Committee are appointed by the City Council, the hotline
will not accept incidents involving members of the City Council. Employees reporting these types of
complaints will be referred to the California Fair Political Practices Commission, the District Attorney’s
Office, or other appropriate outside agency, depending upon the nature of the complaint.
Each department will have one or more dedicated contacts who will receive the incident report from the
Hotline Review Committee, disseminate it to the appropriate staff within their department, and access
the report in the case management system to either assign it to another user in their department to
manage the case or make updates as to the case disposition themselves. The dedicated department
contact will complete the preliminary case closure beforeThe Hotline Review Committee will determine
the best approach for investigating an incident report and an appropriate timeline for completing the
investigation. When the Hotline Review Committee determines that an incident report should be
forwarded to a department for investigation, it will be forwarded to the department director, who may
investigate it himself or herself, or assign it to another person in the department for investigation.
Hotline complaints that allege criminal activity will be forwarded to the Palo Alto Police Department for
consideration for investigation in consultation with the Hotline Review Committee. Investigations should
include techniques appropriate for the alleged fraud, waste, or abuse, such as interviews with witnesses,
Attachment A
CITY OF PALO ALTO
Fraud, Waste, and Abuse Administration Policy
Page 5 of 8
Updated: March 2017
technical experts, and the subjects of the investigation; and examination of documents such as files, e-
mails, contracts, vouchers, payroll records, and reports.
The director is responsible for keeping the Hotline Review Committee updated regarding the status of
the investigation. When the investigation is completed, the director will forward a copy of the
completed report to the Hotline Review Committee, which will reviews the report to determine that the
investigative steps were appropriate and that the recommended outcome is sufficiently supported and
formally closes an the incident report. The Hotline Review Committee may decline to investigate
complaints that do not fall within the definition of fraud, waste, or abuse, but may refer them to a
department for other follow up.
As the hotline administrator, the Office of the City Auditor will be responsible for:
• Disseminating incident reports to the appropriate department or external investigator for
investigation, as determined by the Hotline Review Committee, and providing the timeline for
completing the investigation.
• Monitoring the status of all incident reports referred to other departments, or units, or an
external investigator for investigation and their outcomes.
• Conducting an independent investigation of reported incidents when appropriate.
• Monitoring the timeliness of department responses based on timeframes established by the
Hotline Review Committee.
• Closing incident reports in the case management system after the Hotline Review Committee’s
final review.
6. Coordination With Human Resources
The Hotline Review Committee will coordinate with the Human Resources Department to identify the
types of issues that are more appropriately categorized as “personnel” issues and should be referred to
the Human Resources Department for resolution rather than investigated through the hotline process.
67. Escalation
An incident is designated for escalation if there is an imminent or significant threat of actual harm to
employees, customers, or operations. When a report is designated for escalation by the vendor, they
shall immediately call the appropriate designated contact(s) provided by the City. Escalation contacts
include the members of the Hotline Review Committee and their designees.
78. Reporting
The case management system allows for customized reporting of incidents reported to the hotline.
Users may sort information and run reports on cases assigned to them, and administrators may create
reports on case dispositions, status, corrective action taken, and other trends. The Office of the City
Auditor will provide a quarterly summary report of complaints received by the hotline to the City Council
as an Information Itemin the Office of the City Auditor’s quarterly reports. The form and content of the
quarterly report shall be at the discretion of the City Auditor, will be presented to and reviewed by the
Hotline Review Committee, and The summaries will generally include:
• The number of reports made to the hotline and their status (i.e., open or closed).
Attachment A
CITY OF PALO ALTO
Fraud, Waste, and Abuse Administration Policy
Page 6 of 8
Updated: March 2017
• The general types of complaints received.
• Any trends in the types of complaints received.
• Any general description of corrective action taken by City management as a result of a
complaint received.
9. Discipline
If an investigation concludes that fraud, waste, or abuse occurred, the City Manager, or designee, shall
take appropriate corrective action to resolve the issue and prevent recurrence. Corrective action could
include, for example, disciplinary action, training, new or revised procedures, reorganization or
reassignments, referrals to outside agencies (such as the District Attorney, Fair Political Practices
Commission, or other enforcement agency),or amendment or termination of contracts.
108. Prohibition Against Retaliation
No department or employee shall take any adverse action or retaliate against any employee for making
a report to the hotline (except as provided in “Filing of Malicious Complaints,” below). Additionally, no
reprisal shall be taken against any employee who participates in any manner in the investigation and
disposition of a hotline incident report.
This Prohibition Against Retaliation is a statement of City policy. It is not intended to and shall not
create a private right of action enforceable in state or federal court on behalf of any person, against the
City or any employee, for equitable relief or damages.
119. Terms and Definitions
Under California law, the term "fraud, waste, or abuse" means any activity by a local agency or
employee that is undertaken in the performance of the employee's official duties, including activities
deemed to be outside the scope of his or her employment, that:
• Is in violation of any local, state, or federal law or regulation relating to:
o Corruption
o Malfeasance
o Bribery
o Theft of government property
o Fraudulent claims
o Fraud
o Coercion
o Conversion
o Malicious prosecution
o Misuse of government property
o Willful omission to perform duty
• Is economically wasteful
• Involves gross misconduct
Attachment A
CITY OF PALO ALTO
Fraud, Waste, and Abuse Administration Policy
Page 7 of 8
Updated: March 2017
120.Security of Incident Reports and Associated Reports, Working Papers, and
Other Related Documents
•Incident reports, associated reports, working papers, and other documents referring to or
describing incident reports, which are received either through the hotline, by mail, or e-mail
shall remain confidential to the extent allowed by law.
•Incident reports and associated case numbers shall only be provided to individuals who are
responsible and essential for conducting the investigation or reviewing of the incident report.
These individuals are required to hold such information in confidence, to the extent allowed by
law.
•The confidentiality of all incident reports, associated reports, working papers, and other
documents shall be maintained at all times by the City Auditor and investigating/reviewing
departments, who shall take such measures as they determine are reasonable and necessary to
maintain the confidentiality of such information and documents, to the extent allowed by law.
•City Staff responsible for reviewing/investigating incident reports can make investigative
disclosures of information contained in an incident report to the extent necessary for obtaining
additional information relevant to the investigation.
•The Hotline Review Committee is authorized to determine the distribution or release of any
incident reports, associated reports, working papers, other documents and correspondence
associated thereto, in accordance with the California Public Records Act and other applicable
law.
•The City Council may, at their discretion, authorize the release of information relative to
substantiated incident reports.
131.Custody of Investigation Documents
The City Auditor shall maintain custody of incident reports, associated reports, working papers, emails,
and all other pertinent information regarding any investigations of incident reports. Other parties
involved in the investigation shall also retain their own documentation. All such documents shall be
retained and or disposed of in accordance with applicable document retention policies of the City.
142.Public Requests for Information Regarding All Incident Reports
All requests for information concerning any incident report shall be directed to the City Auditor for a
response. The City Auditor, with the guidance of the Hotline Review Committee, shall respond to such
requests as permissible and in accordance with applicable state law and City policy, rules and
regulations.
Departments shall notify the City Auditor of any Public Records Act or other requests for information or
documents regarding incident reports received through the City Auditor or the hotline.
153.Filing of Malicious Complaints
The City will not tolerate malicious complaints. The processing of a complaint/concern requires staff
time and attention regardless of its appropriateness. Complaints/concerns will not be considered
malicious merely because they are determined to be unsubstantiated. A malicious complaint/concern is
one that is made in bad faith or with knowledge that the complaint entirely lacks any factual basis.
Attachment A
CITY OF PALO ALTO
Fraud, Waste, and Abuse Administration Policy
Page 8 of 8
Updated: March 2017
Malicious complaints may result in disciplinary action in accordance with applicable City policies and
procedures, up to and including termination from employment.
16. Advertising the Hotline
The Office of the City Auditor will periodically communicate to City staff information regarding the
hotline. The communication may be in the form of printed materials, including posters, flyers, and/or
wallet cards, or via a citywide email to employees. The Office of the City Auditor should educate
employees regarding the types of issues that are appropriate for the hotline and those that should be
addressed in another manner, such as through the Human Resources Department.
Attachment A
CITY OF PALO ALTO
Fraud, Waste, and Abuse Hotline Administration Policy
Page 1 of 7
City Employee
Fraud, Waste, and Abuse Hotline Administration
Policy
Attachment B
CITY OF PALO ALTO
Fraud, Waste, and Abuse Hotline Administration Policy
Page 2 of 7
Table of Contents
1. Objective ......................................................................................................................... 3
2. Structure ......................................................................................................................... 3
3. Hotline Review Committee ............................................................................................. 3
4. Case Management .......................................................................................................... 3
5. Case Dissemination ......................................................................................................... 4
6. Escalation ........................................................................................................................ 5
7. Reporting......................................................................................................................... 5
8. Prohibition Against Retaliation ....................................................................................... 5
9. Terms and Definitions ..................................................................................................... 5
10. Security of Incident Reports and Associated Reports, Working Papers, and Other Related
Documents .......................................................................................................................... 6
11. Custody of Investigation Documents ................................................................... 6
12. Public Requests for Information Regarding All Incident Reports ............................. 6
13. Filing of Malicious Complaints ............................................................................ 7
Attachment B
CITY OF PALO ALTO
Fraud, Waste, and Abuse Hotline Administration Policy
Page 3 of 7
1. Objective
The primary objective of the City of Palo Alto Fraud, Waste, or Abuse Hotline (“Hotline”) is to provide an
anonymous mechanism for employees to report fraud, waste, or abuse by City employees.
City employees who have specific information that other City employees have engaged in fraud, waste,
or abuse are encouraged to report such information through the normal chain of command which
includes their immediate supervisor, manager, department head, Human Resources, and the City
Manager’s Office (CMO). However, there may be certain circumstances where an employee believes it is
necessary to remain anonymous. The Hotline provides an anonymous method of reporting such
incidents over the phone to a third-party interviewer or via an anonymous web form. The City believes
that anonymity is a last resort and should only be used after other reporting methods have been
attempted or when the employee has a reasonable good faith belief that it is necessary. All reports
made regarding fraud, waste, or abuse should be made seriously and with due professional care.
2. Structure
The Hotline is hosted by an independent, third-party provider (vendor) contracted by the City. The
vendor provides the option for callers to provide information over the Hotline anonymously. The vendor
issues an Incident Report for each call and submits the Incident Reports for review and referral. The
vendor provides offsite hotline coverage 24/7/365 and live interviewers who obtain the information
deemed necessary to verify and process the complaints. This information is then transcribed into an
Incident Report, housed in a case management system.
3. Hotline Review Committee
The Hotline Review Committee (“Committee”) is composed of the following members or their
designees: the City Auditor, the City Manager, and the City Attorney. The Committee meets as needed
to review all activity related to the Hotline. The objectives of the Committee are to review all Incident
Reports, determine whether an Incident Report should be investigated, assign Incident Reports to the
appropriate department or unit for investigation, ensure that Incident Reports that are assigned for
investigation are adequately investigated, and address any trends in activity or weaknesses in City
policies requiring corrective action to be taken. Duplicate reports or reports that do not suggest fraud,
waste, or abuse may be closed without further investigation.
4. Case Management
The online case management system allows for all Hotline reports to be recorded, updated and tracked
in one centralized system to ensure that all reports are addressed appropriately and that the outcomes
are consistent. All Incident Reports are maintained in the secured case management system and are
periodically updated with the status of the investigation by the specified department case management
users and the OCA. Case management users include staff of the OCA who act as administrators of the
case management system, and one or more members of management from each department who will
Attachment B
CITY OF PALO ALTO
Fraud, Waste, and Abuse Hotline Administration Policy
Page 4 of 7
be assigned to respond to incidents within their departments. User access is limited to cases assigned to
them.
Additionally, the CMO will be provided certain administrative functions in the case management system
in order to create a check-and-balances system to ensure that the OCA is not investigating reports that
could be a conflict of interest for OCA employees.
5. Case Dissemination
After a call has been entered as an Incident Report and logged into the case management system by the
vendor, the report is sent electronically to the appropriate contacts at the OCA for preliminary review
within 24 hours. The OCA will triage the report to determine if immediate action may be necessary. If
immediate action appears necessary, the OCA will contact the Hotline Review Committee who will
decide whether to initiate an investigation. Incident Reports requiring immediate action include those
involving possible fraud, waste, or abuse by City executives, or other incidents based on the judgment of
the Hotline Review Committee. All other cases will be referred to the Hotline Review Committee in their
scheduled meetings.
If an Incident Report involves one or more members of the Hotline Review Committee, those individuals
shall be excluded from any decisions or activities related to the review and/or investigation of that
Incident Report. If this occurs, a Senior Performance Auditor, Assistant City Manager, and/or Senior
Assistant City Attorney, if needed, will act as members of the Hotline Review Committee to ensure there
are a minimum of two officials providing oversight of the review and investigation of the Incident
Report.
Because the members of the Hotline Review Committee are appointed by the City Council, the Hotline
will not accept incidents involving members of the City Council. Employees reporting these types of
complaints will be referred to the California Fair Political Practices Commission, the District Attorney’s
Office, or other appropriate outside agency, depending upon the nature of the complaint.
Each department will have one or more dedicated contacts who will receive the Incident Report from
the Hotline Review Committee, disseminate it to the appropriate staff within their department, and
access the Report in the case management system to either assign it to another user in their department
to manage the case or make updates as to the case disposition themselves. The dedicated department
contact will complete the preliminary case closure before the Hotline Review Committee reviews and
formally closes an Incident Report.
As the Hotline Administrator, the OCA will be responsible for:
Monitoring of all Incident Reports referred to other departments or units for investigation, and
their outcomes,
Conducting an independent investigation of reported incidents when appropriate,
Monitoring the timeliness of department responses based on timeframes established by the
Hotline Review Committee, and
Closing Incident Reports after the final review of the Hotline Review Committee.
Attachment B
CITY OF PALO ALTO
Fraud, Waste, and Abuse Hotline Administration Policy
Page 5 of 7
6. Escalation
An incident is designated for escalation if there is an imminent or significant threat of actual harm to
employees, customers, or operations. When a report is designated for escalation by the vendor, they
shall immediately call the appropriate designated contact(s) provided by the City. Escalation contacts
include the members of the Hotline Review Committee and their designees.
7. Reporting
The case management system allows for customized reporting of incidents reported to the Hotline.
Users may sort information and run reports on cases assigned to them, and administrators may create
reports on case dispositions, status, corrective action taken, and other trends. The OCA will provide a
quarterly summary report of complaints received by the Hotline to the City Council as an Information
Item. The form and content of the quarterly report shall be at the discretion of the City Auditor, will be
presented to and reviewed by the Hotline Review Committee, and will generally include the following:
The number of reports made to the Hotline,
The general types of complaints received,
Any trends in the types of complaints received, and
Any corrective action taken by City management as a result of a complaint received.
8. Prohibition Against Retaliation
No department or employee shall take any adverse action or retaliate against any employee for making
a report to the Hotline (except as provided in “Filing of Malicious Complaints,” below). Additionally, no
reprisal shall be taken against any employee who participates in any manner in the investigation and
disposition of a Hotline Incident Report.
This Prohibition Against Retaliation is a statement of City policy. It is not intended to and shall not
create a private right of action enforceable in state or federal court on behalf of any person, against the
City or any employee, for equitable relief or damages.
9. Terms and Definitions
Under California law, the term, "fraud, waste, or abuse" means:
Any activity by a local agency or employee that is undertaken in the performance of the employee's
official duties, including activities deemed to be outside the scope of his or her employment, that:
Is in violation of any local, state, or federal law or regulation relating to:
o Corruption,
o Malfeasance,
o Bribery,
o Theft of government property,
o Fraudulent claims,
Attachment B
CITY OF PALO ALTO
Fraud, Waste, and Abuse Hotline Administration Policy
Page 6 of 7
o Fraud,
o Coercion,
o Conversion,
o Malicious prosecution,
o Misuse of government property, or
o Willful omission to perform duty,
Is economically wasteful, or
Involves gross misconduct.
10. Security of Incident Reports and Associated Reports, Working Papers, and
Other Related Documents
Incident Reports, associated reports, working papers, and other documents referring to or
describing Incident Reports, which are received either through the Hotline, by mail, or e-mail shall
remain confidential to the extent allowed by law.
Incident Reports and associated case numbers shall only be provided to individuals who are
responsible and essential for conducting the investigation or reviewing of the Incident Report. These
individuals are required to hold such information in confidence, to the extent allowed by law.
The confidentiality of all Incident Reports, associated reports, working papers, and other documents
shall be maintained at all times by the City Auditor and investigating/reviewing departments, who
shall take such measures as they determine are reasonable and necessary to maintain the
confidentiality of such information and documents, to the extent allowed by law.
City Staff responsible for reviewing/investigating Incident Reports can make investigative disclosures
of information contained in an Incident Report to the extent necessary for obtaining additional
information relevant to the investigation.
The Hotline Review Committee is authorized to determine the distribution or release of any Incident
Reports, associated reports, working papers, other documents and correspondence associated
thereto, in accordance with the California Public Records Act and other applicable law.
The City Council may, at their discretion, authorize the release of information relative to
substantiated incident reports.
11. Custody of Investigation Documents
The City Auditor shall maintain custody of Incident Reports, associated reports, working papers, emails,
and all other pertinent information regarding any investigations of Incident Reports. Other parties
involved in the investigation shall also retain their own documentation. All such documents shall be
retained and or disposed of in accordance with applicable document retention policies of the City.
12. Public Requests for Information Regarding All Incident Reports
All requests for information concerning any Incident Report shall be directed to the City Auditor for a
response. The City Auditor, with the guidance of the Hotline Review Committee, shall respond to such
Attachment B
CITY OF PALO ALTO
Fraud, Waste, and Abuse Hotline Administration Policy
Page 7 of 7
requests as permissible and in accordance with applicable state law and City policy, rules and
regulations.
Departments shall notify the City Auditor of any Public Records Act or other requests for information or
documents regarding Incident Reports received through the City Auditor or the Hotline.
13. Filing of Malicious Complaints
The City will not tolerate malicious complaints. The processing of a complaint/concern requires staff
time and attention regardless of its appropriateness. Complaints/concerns will not be considered
malicious merely because they are determined to be unsubstantiated. A malicious complaint/concern is
one that is made in bad faith or with knowledge that the complaint entirely lacks any factual basis.
Malicious complaints may result in disciplinary action in accordance with applicable City policies and
procedures, up to and including termination from employment.
Attachment B