(1)    Fraud investigation. From the appropriations under s. 20.435 (4) (bn), (kz), (L), and (nn), the department of health services shall establish a program to investigate suspected fraudulent activity on the part of recipients of medical assistance under subch. IV, food stamp benefits under the food stamp program under 7 U.S. Code § 2011 to 2036, supplemental security income payments under s. 49.77, payments for the support of children of supplemental security income recipients under s. 49.775, and health care benefits under the Badger Care health care program under s. 49.665 and, if the department of children and families contracts with the department of health services under sub. (4), on the part of recipients of aid to families with dependent children under s. 49.19 and participants in the Wisconsin Works program under ss. 49.141 to 49.161. The activities of the department of health services under this subsection may include comparisons of information provided to the department by an applicant and information provided by the applicant to other federal, state, and local agencies, development of an advisory welfare investigation prosecution standard, and provision of funds to county departments under ss. 46.215, 46.22, and 46.23 and to Wisconsin Works agencies to encourage activities to detect fraud. The department of health services shall cooperate with district attorneys regarding fraud prosecutions.

   (2)   State error reduction activities. The department of health services shall conduct activities to reduce payment errors in the Medical Assistance program under subch. IV, the food stamp program under 7 U.S. Code § 2011 to 2036, the supplemental security income payments program under s. 49.77, the program providing payments for the support of children of supplemental security income recipients under s. 49.775, and the Badger Care health care program under s. 49.665 and, if the department of children and families contracts with the department of health services under sub. (4), in Wisconsin Works under ss. 49.141 to 49.161.

   (3)   Wisconsin Works agency error reduction. If the department of children and families contracts with the department of health services under sub. (4), the department of health services shall provide funds from the appropriation under s. 20.435 (4) (kz) to Wisconsin Works agencies to offset the administrative costs of reducing payment errors in Wisconsin Works under ss. 49.141 to 49.161.

   (4)   Contract for Wisconsin Works.

         1.    Notwithstanding s. 49.197 (1m) and (3), the department of children and families may contract with the department of health services to investigate suspected fraudulent activity on the part of recipients of aid to families with dependent children under s. 49.19 and participants in Wisconsin Works under ss. 49.141 to 49.161 and to conduct activities to reduce payment errors in Wisconsin Works under ss. 49.141 to 49.161, as provided in this section. If any employee of the department of health services reasonably suspects that fraudulent activity as described in this subdivision has occurred or is occurring, the employee shall immediately report the facts and circumstances contributing to that suspicion to the employee’s immediate supervisor.

         2.    An immediate supervisor who receives a report under subd. 1. shall immediately evaluate the report to determine whether there is reason to suspect that the fraudulent activity has occurred or is occurring. If the immediate supervisor determines that there is reason to suspect that the fraudulent activity has occurred or is occurring, the immediate supervisor shall immediately report the facts and circumstances contributing to that suspicion to the sheriff and to the unit of the department of health services that is responsible for investigating suspected fraudulent activity as described in subd. 1.

         3.    Except as provided in subd. 2., an immediate supervisor who receives a report under subd. 1. shall keep the identity of the reporter confidential. A sheriff or unit of the department of health services that receives a report under subd. 2. shall keep the identity of the employee reporting under subd. 1. and the immediate supervisor reporting under subd. 2. confidential until the sheriff or unit determines that the report merits further investigation. If the sheriff or unit conducts a full investigation, the sheriff or unit shall keep the identity of that employee and immediate supervisor confidential if it is reasonably possible to do so. Any person who fails to report as required in subd. 1. or 2. may be required to forfeit not more than $1,000.

      (b)    Any person participating in good faith in the making of a report under par. (a) 1. or 2. or in initiating, participating in, or testifying in, any action or proceeding in which fraudulent activity as described in par. (a) 1. is alleged shall have immunity from any liability, civil or criminal, that results by reason of the action. For the purpose of any proceeding, civil or criminal, the good faith of any person reporting under par. (a) 1. or 2. shall be presumed.

      (c)    The department of health services or an employee of that department may not take disciplinary action against, or threaten to take disciplinary action against, any person because the person in good faith reported any information under par. (a) 1. or 2. or initiated, participated in, or testified in, any action or proceeding in which fraudulent activity as described in par. (a) 1. was alleged or because that department or employee believes that the person in good faith reported any information under par. (a) 1. or 2. or initiated, participated in, or testified in, such an action or proceeding.

      (d)    Any person who is subjected to disciplinary action, or who is threatened with disciplinary action, in violation of par. (c) may file a complaint with the department of workforce development under s. 106.54 (9). If that department finds that a violation of par. (c) has been committed, that department may take such action under s. 111.39 as will effectuate the purpose of this section. Section 111.322 (2m) applies to a disciplinary action arising in connection with any proceeding under this paragraph.