A unit set up in the state Attorney General’s Office to combat Medicaid fraud has failed to communicate with federal authorities about its investigations and worked on cases that were not allowed under a federal grant, according to the Inspector General for the U.S. Department of Health and Human Services.

The Office of the Inspector General said the state should refund money that was spent to work on three ineligible cases, and must put a corrective action plan into effect to resolve other concerns uncovered in an October 2014 review of the Hawaii anti-fraud program. The results of the federal review were published this month.

The Hawaii program received $3.9 million in federal funds from fiscal years 2011 to 2013, and work by the unit resulted in convictions in 18 patient abuse or neglect cases as well as six fraud convictions, according to the federal review.

Investigations by the unit also resulted in $330,000 in criminal fraud recoveries, and $7,000 in civil recoveries, according to the federal review. Three-quarters of the funding for the 13-member Hawaii unit is provided by the federal government, and the rest by the state.

However, federal officials said they are “concerned about the unit’s ability to carry out its statutory functions and meet program requirements” because of shortcomings in the Hawaii Medicaid Fraud Control Unit.

Federal officials faulted the state for failing to hire enough long-term staff to work as investigators as required under the federal grant. According to the report, only two of the seven investigators in the unit were “long-term hires,” while the rest were hired under 89-day contracts.

In a written response to the federal review, Hawaii Medicaid Fraud Control Unit Director Christopher Young replied that the short-term contracts allowed state officials to hire the best-qualified investigators. However, the report by the Inspector General says the state has agreed to work with federal officials to reimburse any costs associated with hiring investigators under 89-day appointments.

The state agreed to work with federal officials to determine how much it will reimburse for work done on cases outside the fraud unit’s grant authority, according to the federal report. A spokesman for the attorney general said the actual amount is still being negotiated.

The report also faulted the state for failing to properly secure case files, and noted the unit’s staff was unable to locate five out of 100 case files that the federal reviewers asked to inspect. The report also found that 22 percent of the case files that were inspected had “unexplained investigation delays of a year or more.”

Young replied that because of staff shortages, investigators were instructed “to work on viable cases rather than those which clearly would not result in prosecution.”

The report also contends the Hawaii staff did not tell the federal Medicaid unit whether it was accepting referrals from the unit, and did not keep agencies — including the U.S. Attorney’s Office — informed of its efforts to investigate Medicaid fraud.

The state replied that the Hawaii unit actually did have regular communications with federal agencies, but failed to document those discussions. Hawaii officials said they will now host quarterly meetings with federal officials to share information about fraud trends and cases.