food-stamp fraud

UCOWF Initiatives for Program Integrity – Top Five Changes We’d Like to See That Require Changes in Law

The United Council on Welfare Fraud has always been an advocate for better stewardship of our public assistance programs.  It comments on pending changes to program rules announced in the federal register, it proposes ideas to Congressional subcommittees, and it even testifies before Congressional hearings on relevant topics surrounding program integrity.

To extend the organization’s effectiveness, UCOWF will set focused priorities to encourage the re-examination of policies and rules that govern our public assistance programs to bring them in line with today’s realities and technology.  To do that, UCOWF has identified five SNAP program changes that are needed and that do not require changes to existing law and five program changes that do require changes in law.

This article will address those changes we’d like to see in the SNAP program that  require changes in law.

Safeguarding the integrity of the Supplemental Nutrition Assistance Program (SNAP, or “food stamps”) requires eliminating waste, fraud, and abuse in the program. A complex solution to a decades old problem.  Here are five solutions that States and FNS should petition lawmakers to change.

  • Eliminate the “Purchase and Prepare” Rules – 7 CFR 273.1 provides the definition of a “household” to include that individuals must purchase food and prepare meals together. However, this is impossible to prove/refute. Married/unmarried family members can obtain more in SNAP benefits by simply saying that they purchase and prepare meals separately.

SOLUTION: Eliminate the purchase and prepare definition.

  • Name, Address, and Signature Minimum Application Requirement – Currently, all that is required for a client to provide is a name, address, and a signature. States then must process the application but can only approve clients after all eligibility and information is collected. This results in complicated and unnecessary administrative burdens for States. Other identifying information should be mandatory to allow States to better identify and prevent waste/fraud/abuse before States expend valuable resources determining eligibility and potentially (likely) allowing benefits to be issued.

SOLUTION: Require minimum information necessary to make a decision on the application, eliminate the “opt-out” mandate of clients from participating in online identity verification checks, and allow States to act on disqualifying information that is provided by the client.

  • Change Funding/Incentives and State Retained Share of Recoveries – FNS provides no incentives for States to stop fraud before it is issued. To move from a “Pay and Chase” model, we must move the funding stream to incentivize front end integrity and provide bonuses for integrity cost avoidance. Currently, no State retention percentage exists when front-end investigative efforts identify and prevent fraud, waste or abuse prior to SNAP authorization. The Farm Bill (7 U.S. Code § 2025) permits each State to retain 35% of the value of all funds or allotments recovered from Intentional Program Violations (fraud) and 20% from all other overpayments (except those resulting from agency error). Historically, the State retention rates have changed several times. Prior to October 1, 1990, IPV retention was 50%. Afterwards and until September 30, 1995, the rate was reduced to 25%. The rate was changed back to 50% until January 1, 2001 when the 35% rate was established. States with fraud reward programs that pay the public for tips relating to public assistance fraud are not compensated by FNS, increasing the financial burden on States. 

SOLUTION: The retention rate for States should be increased back to 50% (original levels) to encourage State benefit recovery initiatives and to help offset non-federally funded State costs. To incentivize States to move to an emphasis of stopping fraud at application/ recertification, FNS should provide a financial compensation for fraud deterred. Rewarding a portion of cost avoidance savings given back to the States as a result of their efforts in stopping and/or reducing fraud, waste, and abuse for reinvestment into their program integrity initiatives is a commonsense solution.

  • Require Client Cooperation in Fraud Investigations – Current federal regulations provide excessive Due Process protections to clients, even in instances of suspected fraud. This protection includes the client being able to refuse to participate in an investigative interview or to respond to questions. 7 CFR 273.16(f)(1)(ii)(B) inexplicably extends criminal Miranda Rights to the administrative process and noncustodial interviews, and current regulations allow clients to refuse to participate in Administrative Disqualification Hearings in 7 CFR 273.16(e)(2)(iii).

SOLUTION: Require clients to participate in administrative investigations and remove those that refuse to cooperate from SNAP rolls.  Clients that refuse to participate in their Due Process Hearings (fail to show and do not provide justification for missing the hearing) should have their hearing decided at preponderance of the evidence instead of the nebulous “clear and convincing” standard.

  • Lower Burden of Proof in Trafficking to Preponderance of the Evidence – Currently, States are required to show “Clear and Convincing Evidence” to disqualify a recipient from SNAP. This is a burden of proof significantly greater than that required for retailer disqualifications which is “preponderance of the evidence”. When a retailer is disqualified for SNAP trafficking (such as exchanging SNAP EBT benefits for cash), the State receives a list of recipients from FNS with transactional data showing the trafficking transactions used to disqualify the retailer. Since trafficking is a “quid-pro-quo” transaction between retailer and recipient, the same standard of evidence should be used to disqualify both parties.Traffickers should not be allowed to remain in the program. If FNS truly wants States to focus on recipient trafficking, this commonsense process improvement would allow States to quickly and efficiently use the same burden of proof to enforce program integrity without impacting due process. Costs associated with meeting the clear and convincing burden of proof often exceed the amount of SNAP benefits trafficked. At 35% retention of trafficked benefits recovered, there is little incentive to pursue investigations of trafficking when other forms of fraud yield a better return on the taxpayers’ investment in program integrity.

SOLUTION: Lower the burden of proof in administrative disqualification hearings for trafficking violations to preponderance of the evidence.

food-stamp fraud

UCOWF Initiatives For Program Integrity – Top Five SNAP Program Changes We’d Like to See That Do Not Require Changes in Law

The United Council on Welfare Fraud has always been an advocate for better stewardship of our public assistance programs.  It comments on pending changes to program rules announced in the federal register, it proposes ideas to Congressional subcommittees, and it even testifies before Congressional hearings on relevant topics surrounding program integrity.

To extend the organization’s effectiveness, UCOWF will set focused priorities to encourage the re-examination of policies and rules that govern our public assistance programs to bring them in line with today’s realities and technology.  To do that, UCOWF has identified five SNAP program changes that are needed and that do not require changes to existing law and five program changes that do require changes in law.

This article will begin with those changes we’d like to see that do not require changes in law.

Safeguarding the integrity of the Supplemental Nutrition Assistance Program (SNAP, or “food stamps”) requires eliminating waste, fraud, and abuse in the program. A complex solution to a decades old problem. Here are five solutions that should NOT require legislative changes to the 2022 Farm Bill (in other words, changes that can be made now by USDA FNS or by Presidential Executive Order).

  • Clear policy guidance that updates/modernizes data sharing in a post 9/11 world – 7 CFR 278.1 and USC 2018(c) provide clear guidance relating to retailer application and transactional data that can be shared with law enforcement:

 

“… with the exception of EINs and SSNs, any information collected from retail food stores and wholesale food concerns, such as ownership information and sales and redemption data, may be disclosed…”; and, “…except that such information may be disclosed to and used by Federal law enforcement and investigative agencies and law enforcement and investigative agencies of a State government for the purposes of administering or enforcing this chapter or any other Federal or State law…”

In April 2019, the US Supreme Court heard arguments in the Food Marketing Institute vs Argus Leader Media that argues retailer information should be available to the public in FOIA requests. Courts have consistently sided with Argus for the release of the information. A SCOTUS decision is imminent in June/July that will settle this issue.

Unfortunately, FNS policy decisions surrounding “applicant provided information” is currently only available to law enforcement in instances in which the client is a “fleeing felon” or they are actively investigating the client for a SNAP crime. (See 7 CFR 272.1(c)) In the instance of exigent circumstances (such as immediate threats to public safety or terrorism – yes, that happens), law enforcement is prohibited from obtaining information on clients enrolled in the federal SNAP program. This decision silently also applies to information regarding clients that have been administratively disqualified from SNAP participation for fraud and those who have an overpayment. (Overpayment claims are established for those that have obtained taxpayer funds and have a federal debt.) This leads a reasonable person to believe that fraud is a “protected activity” and hand-cuffs law enforcement on the belief that sharing this information could lead to embarrassing or shaming a recipient.

SOLUTION: Clear guidance that non-client provided data in SNAP can be shared with both the public and law enforcement is a common-sense solution. Client provided data should be shared with law enforcement upon request to protect public safety/property.

  • Use of Federal or State Client Disqualification Data – FNS has information on all individuals who have been disqualified from the food assistance program in the Electronic Disqualified Recipient System (eDRS), and they share this data with all States; however, FNS does not allow States to act on the information. States are required to double check with the State where the disqualification originated and verify the data to determine that all processes were completed correctly in the originating State. As States are required to upload accurate disqualification data, this is an unnecessary administrative burden for eligibility staff who spend time researching and attempting to communicate with other State staff to re-verify the data – yet FNS accepts this data without question. FNS places a huge burden on States to scrub this data, but they accept it at face value from States. eDRS data should be considered Verified Upon Receipt, and any clients who feel it is not accurate still have Due Process procedures in Fair Hearing requests.

 

 

SOLUTION: Allow States to take immediate action on a data match to deny applicants and eliminate waste in the SNAP program.

  • Establish Minimum Ration of SNAP integrity investigators to SNAP Households – Resources to administer program integrity vary drastically from State to State. This results in inconsistent enforcement efforts and exposes millions/billions of taxpayer funds to waste/fraud/abuse.

 

 

SOLUTION: To ensure adequate resources are provided to address fraud proportionally across the nation, FNS should consider establishing a minimum threshold ratio of investigators to SNAP households. In addition, FNS should share the administrative burden of these resources at more than the current 50-50 match to State expenses.

  • Collaboration with State Input on Retailer Authorizations – True modernization of FNS procedures and rules surrounding retailer authorizations are needed. Relying on retailers to “self-report” relating to citizenship status, criminal backgrounds, and the dependence on them to upload their own (potentially falsified) documents, etc. creates an opportunity for fraud that erodes public confidence and trust in a program with so many other safeguards.

 

 

SOLUTION: Share retailer applications with the States and allow a reasonable time for the State to conduct background investigations and provide feedback prior to authorization.

  • Disqualification of Retailer Owners from SNAP Program Participation – Currently, store owners are not prohibited from being on food stamps and spending those benefits in their own store.

SOLUTION: Upon administrative disqualification of a store, FNS should send the owner through the administrative disqualification hearing process. States can hold the hearing with FNS staff providing the evidence used to disqualify the owner.