How Are Overpayments and Welfare Fraud Treated?
From CalWORKs | Welfare Resources
Contents |
Overpayments
The county will attempt to recovery any benefits which were incorrectly paid to a family, even if county error was the cause of the overpayment. WIC § 11004(d) and (f).
:: The Amount of the Overpayment
- Resource Based
- Under quarterly reporting, a recipient is not required to report if the family's resources go over the resource limit during a quarter. Even if the recipient voluntarily reports the increase during the quarter (before the quarterly report is due), the county will have no authority to assess an overpayment, or to discontinue or decrease benefits on the ground of excess resources. ACL 03-18 at 17, MPP 44-316.31. MPP 44-352.111 further provides that an excess property overpayment will not be assessed so long as the resource is spent down under the limit before the first day of the next quarter.
- The amount of an excess resource based overpayment, the amount overpaid will be the sum of benefits received in each month in which the assistance unit=s resources were over the resource limit. An important exception to this rule is where the caretaker in good faith believed that the family was eligible for benefits. In this situation, the amount of the overpayment will be reduced to the amount by which the highest value of the resource exceeded the resource limit. WIC § 11020.
- If, for example, the assistance unit owned a $3000 bank account for six months, it will have been overpaid benefits for six months. If the AU received $3000 in benefits during these months, that would be the amount of the overpayment. On the other hand, if the AU could show to the satisfaction of the county or an administrative law judge that the AU had a good faith belief that it was eligible for benefits during these six months, the overpayment would be reduced to $1000, the difference between the bank balance and the $2000 resource limit.
- Income Based
- Similarly, a recipient has no duty to report any increase in income occurring during a quarter unless that income exceeds the assistance unit's Income Reporting Threshold (IRT), e.g., the greater of the amount which would render the AU ineligible for benefits or 130% of the federal poverty level. MPP 44-316.324(c); ACL 03-18 at 32. (Note 24) If the recipient failed to report an increase in income which met the IRT, the AU would probably be ineligible for benefits in any months of the quarter during which the IRT was exceeded. Unlike in the AFDC program, all income disregards will be applied even if the excess income was not timely reported. ACL 97-67.
:: Recovery of Overpayments and Possible Defense of "Estoppel"
Overpayments will be collected from future CalWORKs benefits at different rates, depending on the degree of fault of the recipient in causing the overpayment. If the overpayment was caused by county error, 5% of the maximum amount payable to the recipient will be withheld to repay the overpayment. In all other cases, 10% of the maximum amount payable to the recipient will be withheld. WIC § 11004(c); ACL 97-66.
In some cases, a recipient can argue that the county is "estopped" from collecting the overpayment. See Lentz v. McMahon, 49 Cal. 3d 393, 399 (1989). The recipient must show:
- That the county was apprised of the facts,
- That the county intended that its conduct or action was to be acted upon, or it acted in such a way that the recipient had a right to believe it was so intended,
- That the recipient was ignorant of the true state of the facts, and
- That the recipient relied on the county=s conduct, to his or her detriment.
Since the recipient in most overpayment cases will not have been entitled to the benefits received, the hardest to prove of these elements has been the detriment to the recipient. The county will generally not be estopped from collecting the overpayment unless the recipient can show that had s/he been forewarned, something could have affirmatively been done to make her or him eligible for the benefits ultimately received.
Welfare Fraud Investigation and Penalties
:: FRED (Fraud Early Detection) Program
The Fraud Early Detection program is used when questions arise during the initial eligibility evaluation, when a client is first applying for CalWORKs, or at recertification. It is distinct from the investigations by the Special Investigative Unit (SIU). WIC § 11055.5 sets forth the criteria which must exist to trigger a FRED investigation. (Note 25)
:: Fraud Investigation and Penalties
Each month, CalWORKs recipients are required to report their open bank accounts and any income they receive in order to calculate the family=s grant level. If income is not reported and is discovered, for example, through information received from the Internal Revenue Service or Social Security, the client=s worker may refer the case to the Special Investigative Unit (SIU) for investigation and possible fraud prosecution. It is imperative that clients accused of fraud receive expert advice prior to meeting with the District Attorney's office or the SIU. Not only does the client face the potential for a civil case, but a criminal prosecution as well.
In addition, families who are found by a court or administrative law judge to have fraudulently received benefits may be discontinued from the program for at least six months, and even permanently, depending on the nature of the recipient=s actions and the amount of benefits wrongfully obtained. WIC § 11486; ACL 97-69, 98-72. These sanctions will remain in effect until the fraud finding has been reversed by a court.
:: Fraud in the Context of Childcare
Child care fraud exists when there is evidence of intent on the part of the recipient or the child care provider to obtain services, or payment for services, to which they are not entitled. See ACL 00-53 for examples of what qualifies as child care fraud. In the case of an overpayment due to suspected fraud, the county cannot force recipients to repay overpayments by discontinuing their child care services. Furthermore, the county cannot offset a recipient's grant or child care without the recipient's agreement. See MPP 47-440.1 through MPP 47-440.17 for the regulations governing child care overpayments.
Notes
24. 130% of FPL is the income maximum for the Food Stamp Program (7 CFR § 273.9(a)(1)(i)). Each year, the state publishes this amount for families of a particular size. The most recent figures are set forth in ACL 05-27 (November 1, 2005). The maximum earned income limits for CalWORKs recipient families of a given size are set forth in the Monthly Needs Standard, Maximum Benefit Rates, and Earned Income Eligibility Limits table. The amount stated, plus $2, will make the client ineligible for CalWORKs.
25. The criteria set forth in WIC § 11055.5 are that the county believes that, in the applicant's case: (A) an overpayment could result from her/his failure to report pertinent information; (B) a "questionable situation" exists and s/he will not cooperate in providing verification of pertinent information; (C) conflicting information exists affecting his/her eligibility or the amount of benefits; (D) a situation exists which could involve "embezzlement, collusion, conspiracy, trafficking, black marketing, or any other program violations"; (E) s/he may have forged, or is involved in the forgery of, a benefits warrant; (F) s/he is alleged by any government agency to be involved in fraud; or (G) s/he is reported to be involved in a crime involving a social services program.
