“It’s the best kept secret in Ulster County,” said Rodriguez of his resource recovery operation, which pulled back about $3.5 million of taxpayers’ money from aid recipients in 2009.
The recovered funds include overpayments due to fraud uncovered by the department’s special investigation unit, legally mandated reimbursement by DSS clients whose economic circumstances have improved and child support payments to parents who receive aid through the agency.
The recovery process begins as soon as clients step through the door at DSS headquarters on Albany Avenue. As part of their application for benefits, clients must sign a waiver agreeing to cooperate in “any and all” investigations into their financial status. The agreement gives DSS staff the right to access a wide range of data, including personal bank accounts and tax records. Investigators also enter clients’ names and Social Security numbers into a system which provides “intercepts” whenever the number appears in an enormous range of databases — from state lottery records to payroll taxes to welfare rolls from other counties and states.
Upon their application for benefits, clients may be subject to what Special Investigation Unit Supervisor Jane Smeads calls “front-end investigation.” The vetting process is mandatory for applicants to the Temporary Aid to Needy Families program and food stamp recipients. Those applying for Medicaid, day care vouchers or heating assistance face investigation if they show any of a number of “indicators” — red flags such as being self-employed or showing monthly expenses which appear to exceed their income. In 2009, front-end investigations of 246 benefits applications found evidence of fraud in 25 percent of them. In those cases, the benefits were denied, resulting in $500,000 in “cost avoidance.”
Once a client begins receiving benefits, Smeads and her three-member investigative team continually monitor intercepts which will show changes economic circumstances, including whether a client has taken on-the-books employment, hit the lottery or claimed benefits in another jurisdiction. Social workers may also refer cases for investigation if clients show “indicators” during periodic face-to-face interviews. Other investigations, however, are kicked off by old-fashioned, low-tech dime-dropping.
“We gain a lot of information based on your Social Security number,” said Smead, who has worked in the SIU since 1982. “But a lot of the back-end investigations come from agency workers or anonymous tips.”
Anonymous complaints trigger a file check by investigators. Sometimes they prove to be unfounded or based on erroneous assumptions. Others, however, lead to full-scale investigations which may include unannounced home visits, undercover surveillance and closer scrutiny of finances and other personal information. In 2009, the SIU investigated 343 referrals and found fraud in half the cases. 53 cases were closed based on investigators findings and the unit turned up $359,000 in overpayments.
“It is very hard to game the system the way people used to,” said Rodriguez. “We have too many tools. You may get in the front door, but you’re not going to leave the back door before you pay back what you owe.”
What happens next
When investigators turn up evidence of fraud, DSS officials have three options: They can simply demand repayment of the misbegotten funds, they can impose an administrative sanction which forces clients to give back the overpayment, closes their case and bars them from reapplying for aid for six months or longer, or they can refer the case to the Ulster County District Attorney’s office for criminal prosecution.
Rodriguez said the decision was based on the extent of the fraud, the amount of money involved and whether the fraud was intentional — like the woman who printed up bogus paychecks to receive day care vouchers reserved for working parents — or an honest mistake. In 2009, six people were prosecuted for fraud uncovered by DSS, including a day care provider and a motel owner. All six eventually pleaded guilty to felony or misdemeanor charges.
Andrew Alter is an attorney with Legal Services of the Hudson Valley, a not-for-profit law firm which provides legal assistance to low-income people. Alter said that Ulster County DSS officials were zealous in recovering over-payments, but added that, in most cases, his clients were simply tripped up by a red tape-intensive bureaucracy.
“Most of my clients have no intent to get any money that they’re not entitled to,” said Alter, who has handled public benefit cases in the Hudson Valley for 20 years. “In most cases, they got confused on an application and maybe checked the box that said ‘yes’ instead of ‘no’ due to low literacy skills.”
Alter added that based on the cases he has seen, Ulster County welfare investigators operate above board and within the law, avoiding the worst excesses of counterparts elsewhere who may use threats of criminal prosecution to force people who make inadvertent mistakes to voluntarily give up their benefits. Still, Alter said, he found it philosophically troubling that DSS clients are forced to give up so much of their privacy in exchange for benefits.
“You do give up a lot of your privacy, you give up a lot more privacy than you do when you apply for Social Security or fill out your taxes,” said Alter. “Your chances of being audited on your taxes are one in 100. If you apply for public benefits, it’s 100 percent.”
Many ways to get repaid
Most of the money recovered by DSS does not come from overpayments uncovered by fraud investigations; rather it comes from routine billing of clients who receive money from outside sources.
A four-member resource unit headed by Sheileen Palladino serves as the agency’s collections department. In 2009, the resource unit pulled in nearly $2.3 million. In addition to collecting overpayments due to fraud, the unit collects money from a wide range of sources, based on an agreement by DSS clients to pay back benefits if they receive added income from a number of sources.
The single largest source of income for the recovery unit is repayment of cash assistance from recipients of Safety Net funds or TANF benefits who later become eligible for Supplemental Security Income, the federal benefits program for the disabled and elderly. Applying for SSI typically takes a year or longer, during which applicants may not work and often subsist on DSS benefits. Once the application is accepted, SSI will issue a check which includes retroactive payments to the date when the claim was filed. DSS is then entitled to recover money for benefits paid out of the retroactive funds. SSI payments accounted for $736,000 of resource unit’s total take in 2009. Other major sources of repayment are proceeds from personal injury lawsuits of clients who received cash assistance and Medicaid, collections on the estates of deceased clients and mortgages attached to the property of cash assistance clients or Medicaid recipients who enter a nursing home.
Money recovered by the Resource Unit goes back to the state and federal government or, in the case of the Safety Net program for childless adults and those who have exceeded the 60 month cap on TANF, half of the recovered funds go to the municipalities which pay 50 percent of all safety net costs for residents.
The third arm of Ulster County’s DSS recovery operation is by far the largest in terms of money. In 2009, the Child Support Enforcement unit collected a total of $18.4 million from non-custodial parents. In most cases, the unit simply facilitates the transfer of child support payments to custodial parents. But, in instances where the child or the custodial parent receives DSS benefits, the enforcement unit ensures that a portion of any new child support payments goes towards reimbursing the agency. Child Support Enforcement Unit Supervisor Maria Finger said that the unit serves any custodial parent who requests help, whether or not they are DSS clients.
“We serve people from all strata of society, it doesn’t matter if you get benefits or not,” said Finger. “We serve parents.”
Enforcing court orders, the unit uses the same system of intercepts as the fraud division and is empowered to garnish wages, seize tax returns and force non-custodial parents with access to health insurance to place children who currently receive Medicaid on their health plan. In 2009, the Child Support Unit recovered more than $1.2 million in taxpayer money in the form of reimbursement for public benefits from non-custodial parents.