Fraud

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Fraud

Revised December 5, 2011

Purpose: This chapter is about fraud or unlawful practices in obtaining cash, food, or medical assistance. Additionally the chapter addresses Intentional Program Violations, Administrative Disqualification Hearings, and disqualification periods for persons who have broken a food assistance rule on purpose.

WAC 388-446-0001	When does the department refer a cash, food assistance or medical case for prosecution for fraud?
WAC 388-446-0005	Disqualification period for cash assistance
WAC 388-446-0010	TANF disqualification period for fraud convictions of misrepresenting interstate residence
WAC 388-446-0015	What is an Intentional program violation (IPV) and administrative disqualification hearings (ADH) for food assistance.
WAC 388-446-0020	What penalties will I receive if I break a food assistance rule on purpose?

WAC 388-446-0001

Effective October 14, 2011

WAC 388-446-0001 When does the department refer a cash, food assistance or medical case for prosecution for fraud?

1. We consider it fraud if you misrepresent your circumstances in order to be eligible for or to receive more benefits than you would receive based on your actual circumstances. This includes misrepresenting:

a. Who is in the household;

b. The income of people in your assistance unit;

c. Your living expenses; or

d. Other circumstances that impact your eligibility and monthly benefits.

2. We suspect fraud if it appears that you received more benefits than you should have and it appears that you:

a. Made an intentional misstatement about your circumstances that caused the incorrect benefits; or

b. Intentionally failed to reveal information that impacts your eligibility.

3. If we receive a report of fraud, we actively investigate the circumstances to determine if there is substantial evidence to support a finding of fraud. This includes referring the case for investigation by the office of fraud and accountability.

4. If we have substantial evidence to support a finding of fraud for cash, food assistance or medical, we refer the case for prosecution. The prosecuting attorney's office decides which cases they will pursue for prosecution.

This is a reprint of the official rule as published by the Office of the Code Reviser. If there are previous versions of this rule, they can be found using the Legislative Search page.

CLARIFYING INFORMATION

The FRAUD chapter is related to the BENEFIT ERRORS and the FAIR HEARINGS chapters. An overpayment of benefits often comes before a referral to the court system or to an Administrative Disqualification Hearing for a determination of fraud.

Staff may make a referral for fraud investigation when they become aware of facts that indicate an overpayment has occurred as a result of a client's intent to conceal or misrepresent facts to the department. Potential fraud may also be discovered outside of the process of determining what caused the household to receive incorrect benefits.

1. Discovering Potential Fraud / Unlawful Activity:

Discovery of possible fraudulent or unlawful practices may result from complaints or information received by the local office in a variety of ways. Examples include:

a.   Direct calls to the local office or customer service center;

b.   Welfare Fraud Hot Line Complaint (1-800-562-6906);

c.   Client change of circumstance report;

d.   ESD Quarterly Earnings Alert or Comparison Report;

e.   Fraud Early Detection Program (FRED) investigations.

f.   FRED investigations may be requested for active cases to establish ongoing eligibility.

g.   A Quality Assurance Review (QA).

2. Establishing an intentional overpayment:

The Financial Service Specialist (FSS) can establish an Intentional overpayment if the client received incorrect cash benefits and there is evidence in the case record showing intent. Intent means that the client knows what facts or changes to report, when to report those changes, had the opportunity to report, and chose not to report. Intent also implies that the client didn't report a change or a fact because they knew that reporting it would probably have a negative effect on their benefits.

3. The Office of Fraud and Accountability (OFA) Fraud Early Detection program (FRED):

The Fraud Early Detection program (FRED) is under the direction of the Office of Fraud and Accountability and provides criminal investigators when activities are required that go beyond the scope of the Financial Service Specialist's authority. The purpose of FRED is to:

Provide a cost-effective measure for reduction of errors;

Save benefit funds for families requiring assistance;

Reduce the need to investigate and prosecute recipients by resolving questionable circumstances prior to the authorization of benefits.

4. How FRED improves program integrity:

FRED investigators help support program integrity in the following ways:

Obtain information requested by the FSS;

Use interviews with clients and third parties (called collateral contacts) to resolve questions or inconsistencies;

Report findings to the FSS;

Make recommendations regarding criminal prosecution;

Participate in Fair Hearings, as needed.

5. Referrals to OFA based on overpayments:

After establishing an intentional cash overpayment, the case is referred to the Office of Fraud and Accountability (OFA) for possible prosecution. The client has the right to a Fair Hearing over the establishment of the overpayment and the intentional designation. See BENEFIT ERRORS and FAIR HEARINGS.

6. Establishing Intentional Program Violations for Food Assistance:

When the overpayment involves food assistance, current policy states that only a court of law or an Administrative Disqualification Hearing can determine an Intentional Program Violation (IPV). The FSS establishes an unintentional overpayment, called Inadvertent Household Error, and refers, with any cash overpayment, to OFA for investigation and potential prosecution.

7. Threshold for Administrative Disqualification Hearing:

If the food assistance overpayment, or separate instances of suspected IPV total $450.00, we refer the case for an Administrative Disqualification Hearing, according to local office procedures. See FAIR HEARINGS.

WORKER RESPONSIBILITIES

Assistance from Fraud Early Detection Program (FRED)

1. When to initiate a Fred referral:

Initiate a FRED referral though the Client's Electronic Case Record (ECR) when:

A collateral contact does not respond with requested information;
The information received from the client or contact raises inconsistencies, or is unclear, unconvincing, or questionable;
Verification documents cannot be obtained through normal methods available to an FSS;
According to established procedures on initial applications;
The application interview raises questions or concerns about the reported facts.

2. Appropriate Fred referrals:

Some examples of situations where a FRED referral is in order:

The client's household expenses are within $25.00 of the income available, and shelter and utilities are paid up to date;
The physical record indicates previous ownership of real property, but the client states no ownership on a new application. The client does not provide adequate or convincing verification on the status of the property.
Numerous complaints have been received of a client having multiple vehicles on the property and it appears that the client is restoring and selling the vehicles. The client denies any such thing and states that the cars are there temporarily and belong to a relative.
Client reports living alone and the landlord statement reflects the same information; but a complaint received shows others are in the home and supporting the client.
Client has a history of working for cash and not reporting. There is currently no source of income being reported for the household and the client does not have a reasonable explanation of how expenses are being met.
Client states that the non-custodial parent (NCP) has left the home but cannot say where the NCP is located. The landlord states that to his knowledge, both parents reside in the home. The client states that the NCP only comes to visit the children.

3. Taking action on FRED findings:

Take action on a FRED response as follows:

If the referral contains facts which adversely affect current or future eligibility or payment, follow procedures found in CHANGE OF CIRCUMSTANCES;
If an overpayment is identified, follow procedures in BENEFIT ERRORS;
Complete the return response to FRED, indicating a summary of actions taken.

Referral to the Office of Fraud and Accountability (OFA)

Initiate an Intentional Overpayment Investigation Referral (OFA referral) through the client's ECR when:

· An intentional cash assistance overpayment has been identified and processed;

· A food assistance overpayment has been completed which appears to be intentional; or

· Documents in the case record appear to give clear evidence of the client's willful concealment of information or intentional failure to reveal information, which caused the overpayment.

List the documents in the case file that demonstrate intent on the referral. Documents to examine for that time period include:

· Rights and Responsibilities signed by client;

· Application showing facts omitted or false information declared;

· Eligibility Review reflecting circumstances found later to be untrue;

· Mid Certification Review (MCR) completed and signed but does not report the change;

· Change of Circumstance reporting one change but not another.

· Any other document presented by the client or a collateral contact which demonstrates the intent of the client to give misleading or incorrect information in order to receive benefits.

Set a tickler for a 60-day response from DFI. If no response is received, request a response date. DFI will respond with their decision on forwarding the case for prosecution and instructions to the worker on whether to proceed with the Administrative Disqualification Hearing (ADH) for food assistance.
Follow the CSO policy regarding the preparation of cases for prosecution. In some CSOs, the FSS is responsible for the copying of documents to be used in the prosecution's case.

Disqualification period for cash assistance.

WAC 388-446-0005

Effective November 1, 2011

WAC 388-446-0005 Disqualification period for cash assistance

An applicant or recipient who has been convicted of unlawful practices in obtaining cash assistance is disqualified from receiving further cash benefits if:
1. For TANF/SFA, the conviction was based on actions which occurred on or after May 1, 1997; or
2. For aged, blind, or disabled (ABD) assistance, the conviction was based on actions which occurred on or after July 23, 1995.
The disqualification period must be determined by the court and will be:
1. For a first conviction, no less than six months; and
2. For a second or subsequent conviction, no less than twelve months.
The disqualification applies only to the person convicted and begins on the date of conviction.
A recipient's cash benefits are terminated following advance or adequate notice requirements as specified in WAC 388-458-0030.

This is a reprint of the official rule as published by the Office of the Code Reviser. If there are previous versions of this rule, they can be found using the Legislative Search page.

TANF disqualification period for fraud convictions of misrepresenting interstate residence.

WAC 388-446-0010

Effective September 1, 1998

WAC 388-446-0010 TANF disqualification period for fraud convictions of misrepresenting interstate residence

An applicant or recipient is disqualified from receiving cash benefits under TANF if convicted of fraud by misrepresentation of residence in order to receive assistance from two or more states at the same time from any assistance program funded by the following:
1. TANF and any other benefit authorized by Title IV-A of the Social Security Act; or
2. Any benefit authorized by The Food Stamp Act of 1997; or
3. Any benefit authorized by Title XIX, Medicaid; or
4. SSI benefits authorized by Title XVI.
The disqualification penalty is applied as follows:
1. Only to convictions based on actions which occurred on or after May 1, 1997; and
2. Only to the person convicted of fraud in federal or state court; and
3. For a disqualification period of ten years or a period determined by the court, whichever is longer.
The disqualification period begins the date the person is convicted of fraud by misrepresentation of residence in order to receive assistance from two or more states at the same time.
The provisions of subsections (1) through (3) of this section do not apply when the President of the United States has granted a pardon for the conduct resulting in the conviction of fraud by misrepresentation of residence. The disregard of the provisions because of a pardon is effective the date the pardon is granted and continues for each month thereafter.

This is a reprint of the official rule as published by the Office of the Code Reviser. If there are previous versions of this rule, they can be found using the Legislative Search page.

WAC 388-446-0015

Effective October 14, 2011

WAC 388-446-0015 What is an Intentional program violation (IPV) and administrative disqualification hearings (ADH) for food assistance.

a. Who is in the household;

b. The income of people in your assistance unit;

c. Your living expenses; or

d. Other circumstances that impact your eligibility and monthly benefits.

2. We suspect fraud if it appears that you received more benefits than you should have and it appears that you:

a. Made an intentional misstatement about your circumstances that caused the incorrect benefits; or

b. Intentionally failed to reveal information that impacts your eligibility.

1. An intentional program violation (IPV) is an act in which someone intentionally:

a. Misrepresents, conceals or withholds facts in order to be found eligible for benefits or to receive more benefits than their actual circumstances would allow. This includes making a false statement regarding household circumstances.

b. Acts in violation of the Food Nutrition Act of 2008, regulations for the supplemental nutrition assistance program (SNAP) under Title 7 of the Code of Federal Regulations or any state statute relating to the use, presentation, transfer, acquisition, receipt, trafficking, or possession of food assistance benefits.

2. If we suspect someone has committed an IPV we refer their case for an administrative disqualification hearing (ADH), if:

a. The suspected IPV causes an over issuance of four hundred fifty dollars or more; or

b. The suspected IPV is due to the trafficking of food benefits; and

c. The person has not been referred for criminal proceedings.

3. An administrative disqualification hearing (ADH) is a formal hearing to determine if a person committed an IPV. ADHs are governed by the rules found in chapter 388-02 WAC. However, rules in this section are the overriding authority if there is a conflict.

4. A person suspected of an IPV can choose to waive their right to an ADH by signing a disqualification consent agreement that waives their right to the hearing and accepts the IPV penalty under WAC 388-446-0020 .

5. If someone commits one or more IPVs and is suspected of committing another, we refer them for an ADH when the act of suspected violation occurred:

a. After we mailed the disqualification notice to the client for the most recent IPV; or

b. After criminal proceedings for the most recent IPV are concluded.

6. When we suspect someone has committed an IPV, we refer their case for an administrative disqualification hearing (ADH). The office of administrative hearings (OAH) sends them notice of an ADH at least thirty days in advance of the hearing date. OAH sends the notice by certified mail, or personal service. The notice will contain the following information:

a. The date, time, and place of the hearing;

b. The charges against the person;

c. A summary of the evidence, and how and where they may examine the evidence

d. A warning that a decision will be based entirely on the evidence the department provides if they fail to appear at the hearing;

e. A statement that the person has ten days from the date of the scheduled hearing to show good cause for failing to attend the hearing and to ask for a new hearing date;

f. A warning that a determination of IPV will result in a disqualification period; and

g. A statement that if we schedule a telephone hearing they can request an in‑person hearing by filing a request with the administrative law judge one week or more prior to the date of the hearing.

7. The department may combine an ADH and a regular hearing when the reason for both hearings is related.

8. The person or a representative shall have the right to one continuance of up to thirty days if a request is filed ten days or more prior to the hearing date.

9. The administrative law judge (ALJ) will conduct the ADH and render a decision even if the person or representative fails to appear, unless within ten days from the date of the scheduled hearing:

a. The person can show good cause for failing to appear, and

b. The person or representative requests the hearing be re‑instated.

10. We may change a scheduled telephone hearing to an in‑person hearing if this is requested by the person or department representative at least a week in advance. The person requesting a change less than one week in advance must show good cause for the requested change.

11. The ALJ issues a final decision as specified in WAC 388-02-0215 through WAC 388-02-0525. The decision determines whether the department had established with clear and convincing evidence that the person committed and intended to commit an IPV.

12. The department and the client each have the right to request a reconsideration of the decision as specified in WAC 388-02-0610 through WAC 388-02-0635 . The final order or the reconsideration decision is the final agency decision.

13. We will not implement a disqualification and continue benefits at the current amount if:

a. The client can show good cause for not attending the hearing within thirty days from the date the disqualification notice was mailed; and

b. An administrative law judge determines the client had good cause; or

c. The client requests reconsideration or files a petition for judicial review to appeal the disqualification as specified in WAC 388-02-530 1.or 4.

This is a reprint of the official rule as published by the Office of the Code Reviser. If there are previous versions of this rule, they can be found using the Legislative Search page.

CLARIFYING INFORMATION

We can combine separate instances of suspected Intentional Program Violation (IPV) for food assistance into one complaint that totals $450.00 or more and can then to present for an Administrative Disqualification Hearing (ADH). (See FAIR HEARINGS for ADH Worker Responsibilities)
Trafficking is when someone attempts to sell, exchange food benefits for anything of value such as cash, drugs, weapons, or anything other than food from an authorized retailer.
The department must prove an IPV with clear and convincing evidence. This means that the evidence must establish that it is highly probable the actions that resulted in the overpayment were intentional.
An IPV can be determined either by a court decision in a criminal prosecution or by decision in an ADH.
We must choose whether to refer an IPV instance for prosecution or for an ADH; we do not pursue both procedures at the same time. Upon completion of an ADH, we may choose to refer the case for prosecution.

Food assistance disqualification penalties.

WAC 388-446-0020

Effective July 15, 2012

WAC 388-446-0020 What penalties will I receive if I break a food assistance rule on purpose?

1. Breaking a rule on purpose for food assistance is known as an intentional program violation (IPV) under WAC 388-446-0015. These rules apply to all DSHS food assistance programs including:

a. Washington Basic Food program or Basic Food;

b. The Washington combined application project (WASHCAP) under chapter 388-492 WAC;

c. Transitional food assistance (TFA) under chapter 388-489 WAC; and

d. The state‑funded food assistance program (FAP) for legal immigrants.

2. You will have a disqualification period if we have shown that you have committed an IPV in any of the following three ways:

a. We establish that you committed an IPV through an administrative disqualification hearing (ADH) under WAC 388-446-0015;

b. You signed a disqualification consent agreement that waives your right to an administrative disqualification hearing and states you accept the IPV penalty; or

c. A federal, state or local court found that you committed an IPV or found you guilty of a crime that breaks food assistance rules.

3. Special penalties for certain crimes ‑ If you are convicted in a court of law for crimes that are an intentional program violation, we disqualify you for the period of time set in the court order. If the court order does not state a disqualification period, we set a disqualification period based on the crime you were convicted of committing:

a. Drugs ‑ If you are convicted in a federal, state, or local court of trading or receiving food benefits for a controlled substance, we disqualify you:

i. For a period of twenty‑four months for a first offense; and

ii. Permanently for a second offense.

b. Weapons ‑ If you are convicted in a federal, state or local court of trading your food assistance benefits for firearms, ammunition, or explosives, we permanently disqualify you from receiving food assistance on the first offense.

c. Trafficking ‑ If you are a federal, state, or local court of knowingly buying, selling, trading, or presenting for redemption food assistance benefits totaling five hundred dollars or more, we permanently disqualify you from receiving food assistance on the first offense.

d. False identification ‑ If you are found to have provided false identification to receive benefits in more than one assistance unit, we disqualify you from receiving food assistance:

i. For ten years on the first offense.

ii. Permanently for the third offense .

e. Receiving benefits in more than one state ‑ If you are found to have provided false residency information to receive benefits in more than one household or state, we disqualify you from receiving food assistance for ten years on the first offense.

i. For ten years on the first offense.

ii. Permanently for the third offense

4. In addition to penalties for crimes described in subsection (3), if you commit and IPV you will not be eligible for food assistance:

a. For a period of twelve months for any first intentional program violation;

b. For a period of twenty-four months for any second intentional program violation.

c. Permanently for any third intentional program violation.

5. We only apply a disqualification penalty to the person or persons who have committed an intentional program violation.

6. Start date of a disqualification. The date of a disqualification depends on how a person was disqualified. We will send you a letter telling you when your disqualification period will start:

a. ADH or consent agreement ‑ If you were found to have committed an IPV in an administrative disqualification hearing or you signed a consent agreement waiving this hearing and accepting the disqualification, we start the disqualification period by the second month after we sent you a letter informing you of the disqualification.

b. Conviction in court ‑ If you are convicted in court of a crime that is an intentional program violation, your disqualification period in subsection (4) is in addition to any civil or criminal penalties. We disqualify you from food assistance within forty‑five days of the court order unless this timing conflicts with the court order.

7. Disqualifications apply in all states ‑ If you have an IPV disqualification this stays with you until the penalty period is over, even if you move to another state:

a. If we disqualify you from food assistance, you are also disqualified from receiving supplemental nutrition assistance program (SNAP) benefits in another state during the disqualification period.

b. If you are disqualified from receiving SNAP benefits for an IPV from another state, you can't receive food assistance in Washington during the disqualification period.

8. Even though we only disqualify the persons who have committed an IPV from receiving food assistance benefits, all adults in the assistance unit are responsible to repay any benefits you were overpaid as described under WAC 388-410-0020 and WAC 388-410-0025.

This is a reprint of the official rule as published by the Office of the Code Reviser. If there are previous versions of this rule, they can be found using the Legislative Search page.

CLARIFYING INFORMATION

The Disqualified Recipient System (DRS) is a nationwide exchange of information between the Federal government and the States regarding IPV decisions. DRS interfaces with ACES on a monthly basis and notifies the worker of record of a discrepancy using a two-tiered alert.

The second tier displays the disqualification details including:

The effective date;
The length of the disqualification;
Type of disqualification;
A five-digit code. The first two digits represent the state; and the last three represent the county.

WORKER RESPONSIBILITIES

We must provide 10-day advance notice to any client who is being disqualified from food assistance.

Timely Disqualifications

For an ADH decision, disqualify the person who has committed the IPV effective the first of the month following the date the person and the department are notified in writing of the ADH decision.
For a court decision, a timely disqualification is within 45 days of the date of the written order unless the court specifically sets a different time frame.
If a disqualification is not processed timely, disqualify the person for the remaining time of the penalty period. Do not disqualify a person once the disqualification period that should have been applied has expired. Establish an Administrative Error overpayment for the time period from the first day of the intended month of disqualification until the effective date of action.
Once the disqualification period has been implemented, it continues uninterrupted regardless of the eligibility of the assistance unit.

EXAMPLE

A food assistance client is found to have committed an IPV and is disqualified under a court order dated January 20, 2011. The penalty time is from March 1, 2011 to February 28, 2012. The disqualification must be established by March 1, 2011 to be timely.

The decision was delayed in the mail and not received by the department until February 28, 2011. Because of the ten day advance notice rule, we cannot implement the disqualification until April 1, 2011. The worker will need to set up an administrative overpayment for the month of March.

ACES PROCEDURES

See Disqualified / Sanctioned Assistance Unit / Individual - Misrepresenting Interstate Residence - Ineligible

Also see Disqualified / Sanctioned Assistance Unit / Individual - Unlawful Practice Causing Ineligibility