Revisions are being made to the claims establishment policy which strengthen the focus on program integrity and maximize agency resources. A small percentage of the total claims owed is collected each year. Of the amount collected, the amount the state retains and the amount that is sent back to USDA is:

The primary impact is realized in intentional program violations. Therefore, to more effectively manage the debt owed, and more efficiently utilize our staff resources, we have developed thresholds for referral and establishment of agency error and inadvertent household error claims.

This memorandum discusses the following changes in the way food stamp claims are determined and processed:

• Two-Tiered Claims Establishment Thresholds,
• Revised over-issuance periods,
• Suspected Program Violation (SPV) determination,
• New and clarified procedures for compromising claims, and
• Obsolete form CARS-7 FOOD STAMP CLAIM CHANGE.

Revised disqualification policy is discussed in Memorandum IM-# 101, dated September 28 , 2004, and is related to this policy. Links are provided to assist staff.

TWO-TIERED CLAIMS ESTABLISHMENT THRESHOLDS

After reviewing the cost of establishing and collecting claims compared to the dollar amount collected, the following thresholds are being set for establishing new claims. The variance in thresholds is due to increased collection activity required for closed cases. These thresholds are effective immediately for any food stamp discovery referral already registered in the discovery system, and for all future claim referrals.

Register and track all possible overpayments in the CARS discovery system. If it is determined the overpayment is under the threshold for establishing a claim, reject the claim referral using reason code 05 (Overpayment less than threshold). This allows another worker or reviewer to see that the claim has already been explored. Refer to CARS user guide REJECTING A FOOD STAMP DISCOVERY CLAIM REFERRAL.

Continue to establish all claims referred as a result of a Quality Control review, and all SPV/IPV referrals. If an overpayment was not discovered as a result of a Quality Control review do not establish a claim if the amount of the overpayment is equal to or less than the stated threshold:

• Agency Error

  Participating EU: If the head of the EU is receiving food stamp benefits at the time the overpayment is calculated, establish a claim for overpayment of $61 or more. If the overpayment is $60 or less, register the possible overpayment, and reject the claim referral using reason code 05.

  Non-Participating EU: If the head of the EU is not receiving food stamp benefits at the time the overpayment is calculated, establish a claim for overpayment of $451 or more. If the overpayment is $450 or less, register the possible overpayment, and reject the claim referral using reason code 05.

• Inadvertent Household Error

  Participating EU: If the head of the EU is receiving food stamp benefits at the time the overpayment is calculated, do not establish a claim for less than $61. If the overpayment is $60 or less, register the possible overpayment, and reject the claim referral using reason code 05.

  Non-Participating EU: If the head of the EU is not receiving food stamp benefits at the time the overpayment is calculated, establish a claim for overpayment of $451 or more. If the overpayment is $450 or less, register the possible overpayment, and reject the claim referral using reason code 05.

• Suspected Program Violation or Intentional Program Violation

  Establish all claims.

REVISED OVER-ISSUANCE PERIODS

Effective immediately the time frames or “look-back” periods for establishing food stamp claims have changed. It is important to register and track all possible overpayments in the CARS Discovery system. If it is determined the overpayment is not within the look-back period, reject the claim referral using reason code 01 (No overpayment). This allows another worker or reviewer to see that the claim has already been explored. Refer to CARS user guide REJECTING A FOOD STAMP DISCOVERY CLAIM REFERRAL.

Use these time frames when determining for what period of time a claim is established:

• Agency Error (AE) claims are calculated back no more than twelve months including the month of discovery.

  Example: A possible overpayment for March 2003 through June 2003 is discovered on May 6, 2004. The 12-month look-back period is June 2003 through May 2004. A claim is established for the month of June 2003 only. Do not establish a claim for March 2003, April 2003, or May 2003. Record on the Note Add (OVNA) screen that these months were outside the look-back period.

• IHE claims are calculated back no more than twenty-four months including the month of discovery.

  Example: A possible overpayment for March 2002 is discovered on May 6, 2004. The 24-month look-back period is June 2002 through May 2004. A claim is not established, and the claim referral is rejected using reason code 01 (No overpayment).

• SPV and IPV claims have a look-back period of thirty-six months, including the month of discovery. If any SPV/IPV overissuance month occurred within the 36-month look back period, the over-issuance may be calculated back for up to seventy-two months including the month of discovery. If there is no month in which an overpayment occurred within the 36-month look back period, a claim amount is not calculated.

  Example: A possible overpayment for March 2000 through May 2000 is discovered on May 6, 2004. The 36-month look-back period is June 2001 through May 2004. A claim is not established and the claim referral is rejected using code 01 (No overpayment).

  Example: A possible overpayment for December 1999 through June 2001 is discovered on May 6, 2004. The 36 month look-back period is June 2001 through May 2004. Because one month of the possible overpayment falls within the thirty-six month look back period, all months within the 72-month look-back period are included in the claim that is established.

SUSPECTED PROGRAM VIOLATION DETERMINATION

Currently all Inadvertent Household Error (IHE) claims are referred to the Welfare Investigation Unit (WIU) for possible investigation of intentional program violation. An overpayment is an Intentional Program Violation (IPV) if a member of the food stamp EU intentionally made a false or misleading statement, or misrepresented, concealed, or withheld facts. IPV can only be determined by a court, administrative hearing, or by the individual signing a Waiver of Administrative Hearing Disqualification Consent Agreement (IM-161).

A Suspected Program Violation (SPV) code is added to notify the Welfare Investigation Unit that the worker feels the claim is an intentional program violation.

Effective with this change, if the case situation indicates a claim may be an intentional program violation, the worker establishes the claim as an Inadvertent Household Error (IHE) and enters an SPV code in CARS. A report is sent to WIU of all SPV claims for investigation of intentional program violation.

The SPV question must be answered for all IHE and AE claims entered on the Add Claim (OVTC) screen. Enter “Y” (Yes) or “N” (No) in the SPV field when entering the information to establish all IHE food stamp claims. Enter “N” (No) in the SPV field when entering the information to establish agency error claims (cause codes 15 and 22).

• Do not code agency error claims as SPV “Y”.
• Do not code claims that are obviously inadvertent or accidental on the EU's part as SPV “Y”.

Example: Mrs. D has been claiming her son as an EU member since her initial application three years ago. The worker discovers this month that Mrs. D's son has never lived with her. The worker enters “Y” in the SPV field on the OVTA screen when adding information to establish the claim. CARS sends a report to WIU, referring the claim for investigation of intentional program violation.

After the claim is established, the SPV indicator displays on the Display Claim Information (OVCI) screen and Claims Summary (OVCS) screens.

• After the claim is established, if it is discovered the claim is an SPV, change the “N” to “Y” on the Change Claim Information (OVCC) screen. The claim is included on the next report to WIU of claims to be reviewed. Record on the Note Add (OVNA) screen why the claim is now an SPV.
• An SPV code of “Y” is not changed to “N”. If it is later determined the claim is not an SPV, record on the OVNA screen why the claim is not an SPV.

NEW AND CLARIFIED PROCEDURES FOR COMPROMISING CLAIMS

The amount/balance of an Administrative Error or Inadvertent Household Error claim may be reduced (compromised). The demand letter advises the EU to contact the county FSD office if circumstances exist that affect the EU's ability to repay the claim amount.

Do not compromise Suspected Program Violation or Intentional Program Violation claims. If it is later determined the SPV claim is not an intentional program violation, the claim may be compromised as an IHE claim if requested by the EU. The SPV indicator will remain Y on the OVCI screen. Record on the Note Add (OVNA) screen that the claim has been determined not to be an intentional program violation and, therefore, is eligible for compromise. Record the amount of the reason for and the amount of the compromise.

Claims are compromised for the following reasons:

A demonstration of need

An EU must prove an inability to repay a claim within a three-year period. An active food stamp EU meets this demonstration of need as the EU income meets Food Stamp Program eligibility. Supervisory approval of County Manager or above is needed to compromise a claim amount based on need. If the EU contacts FSD to request reduction of the claim based on need, and any responsible member of the claim receives food stamp benefits, compromise the claim.

To compromise the claim on need complete the following steps:

• Determine the current monthly food stamp benefit.
• Determine the amount of recoupment based upon the current monthly benefit. Recoupment is $10 or 10% of the allotment, whichever is greater.
• Multiply the amount of the recoupment times 36 months to determine the claim balance that can be repaid through recoupment in a three-year period.
• Subtract the amount than can be repaid through recoupment in a three year period from the current balance. The difference is compromised.
• Submit a CARS-2 using transaction type 21 (compromise method of settling claims), for the difference.
• Record information about the action taken on the OVNA screen.
• Notify the EU using an IM-112 (ACTION TAKEN ON YOUR FOOD STAMP CASE) form. Type the claim ID under Case Number. In the space provided type the decision:

  Because you have a financial need, your request for reduction of claim balance has been approved. The outstanding balance of this claim has been reduced to $$$$$.

• If the request is denied, notify the EU using an IM-112 (ACTION TAKEN ON YOUR FOOD STAMP CASE) form. Type the claim ID under Case Number. In the space provided type the decision:

  Your request for reduction of this claim balance has been rejected. {enter reason for denial of request}.

  A request from an active EU for reduction of claim amount will only be denied if the claim has already been compromised through court order or previous request, or if the balance is already less than can be paid in three years using the above computation.

• Record the request and decision on the Note Add (OVNA) screen, and file a copy of the IM-112 in the claims section.

Example: An AE claim is established for $800. The EU is receiving food stamp benefits of $130 monthly and contacts the FSD office requesting reduction of the claim amount due to need. Recoupment for an AE claim is $10 or 10%, whichever is greater. Ten percent of $130 is $13 recoupment. Multiply the recoupment times 36 months to get the amount of the claim after compromise. $13 a month for 36 months is $468. Subtract $468 from $800 to arrive at the amount to be compromised. Reduce the claim balance to $468 by submitting a CARS-2 for $332 credit, transaction code 21. A County Manager or above must sign the CARS-2 before submitting to Division of Budget and Finance (DBF) for entry.

If a member of a closed food stamp EU requests reduction of a claim balance, follow instructions for a demonstration of hardship.

A demonstration of hardship

To meet a demonstration of hardship, an EU must prove that financial, physical, or mental hardship would exist if forced to pay. Such situation might include medical hardships, loan payments, etc. For situations where a hardship is being claimed, a summary of the information relevant to the compromise request is submitted to the Food Stamp Program and Policy unit. Program and Policy staff will make a decision after considering EU circumstances.

If any responsible member of a claim requests a claim amount be reduced because of a hardship, complete the CARS-8 REQUEST FOR REDUCTION OF CLAIM form and send to the Food Stamp Program and Policy Unit. The electronic CARS-8 will be added to available Word forms. A pdf version is attached to this memorandum.

The Food Stamp Program and Policy Unit reviews the information, makes a determination, and notifies the county office. The county office notifies the EU of the decision using an IM-112 (ACTION TAKEN ON YOUR FOOD STAMP CASE). Type the Claim ID under Case Number. In the space provided type the decision:

Your request for reduction of this claim balance has been approved. The outstanding balance of this claim has been reduced to $$$$, or

Your request for reduction of this claim balance has been rejected. It has been determined a financial, physical or mental hardship does not exist to reduce the claim balance.

Record the request and decision on the Note Add (OVNA) screen, and file a copy of the IM-112 in the claims section.

Court ordered restitution

All claims reduced or compromised by a decision made through the court will be considered a compromised claim. No further compromises (reductions) will be applied against any court restitution claim unless granted by further court action.

OBSOLETE FORM CARS-7 FOOD STAMP CLAIM CHANGE

The CARS-7 FOOD STAMP CLAIM CHANGE form is now obsolete. Destroy all copies of the form and remove form the Forms Manual.

Food Stamp Manual 1142.000.00 FOOD STAMP CLAIMS DETERMINATIONS is being updated to include these changes and will be available upon completion.

• Review this memorandum with appropriate staff.
• Use the new thresholds to establish food stamp claims.
• Use the new time frames to establish food stamp claims.
• Enter an SPV indicator of “Y” or “N” for all food stamp claims entered in the discovery system.
• Compromise food stamp claims for active food stamp EUs, if requested.
• Complete a CARS-8 REQUEST FOR REDUCTION OF CLAIM for EUs not active on food stamp benefits, if compromise is requested.