SPECIAL TESTS AND PROVISIONS – FRAUD DETECTION AND REPAYMENT
West Virginia Department of Health and Human Resources (DHHR)
Assistance Listing Number 93.575, 93.596, COVID-19 93.575
Per 45 CFR 98.68(b)(2), there is no requirement for lead agencies to recoup Child Care and Development Fund overpaym...
SPECIAL TESTS AND PROVISIONS – FRAUD DETECTION AND REPAYMENT
West Virginia Department of Health and Human Resources (DHHR)
Assistance Listing Number 93.575, 93.596, COVID-19 93.575
Per 45 CFR 98.68(b)(2), there is no requirement for lead agencies to recoup Child Care and Development Fund overpayments, except in instances of fraud as defined by the lead agency. Within the State of West Virginia, the lead agency is the DHHR. As indicated in Section 8.1.6 of the CCDF [State] Plan for West Virginia for Federal fiscal years 2022-2024, the DHHR Office of Inspector General (OIG) is responsible for pursuing fraud and overpayments. As indicated in Section 1.1.2 of the CCDF [State] Plan, the Division of Early Care and Education within the DHHR Bureau for Family Assistance (BFA) administers the CCDF program. Accordingly, the OIG and BFA strive to work as a unified team within the DHHR and State as a whole to identify and prevent fraud or intentional program violations; to identify and recover misspent funds as a result of fraud; and to otherwise fight fraud and ensure program integrity.
As the lead agency, and as necessary to ensure program integrity, the DHHR has policies and procedures in place to define fraud and to identify and recover payments resulting from fraud, as the auditors indicated within the condition and recommendation sections of this finding and to track referrals and determinations from beginning to end (i.e., beginning in the year of identification and continuing through resolution or the establishment and enforcement of repayment agreements). The policies and procedures are specifically referenced in Chapter 8 of the BFA’s “Child Care Subsidy Policy and Procedures Manual.” Chapter 8 of the manual is titled, “Improper Payments: Prevention, Identification, Measurement and Recoupment.”
Improper Payments
Per Chapter 8 of the manual, an improper payment occurs when the funds go to the wrong recipient, the recipient receives the incorrect amount of funds, or the recipient obtains or uses the funds in an improper manner. Improper payments include 1) worker error in determining eligibility, authorizing care, or paying for care; 2) misrepresentation on the part of the parent or provider; and 3) programmatic infractions by parents or providers.
1. Worker Error – Improper payments due to worker error are defined as payments that should not have been made or that were made in an incorrect amount due to an error in determining and verifying eligibility, calculating the benefit, or entering the data into the eligibility system. Repayment of an improper payment due to worker error is not mandatory regardless of the amount.
2. Misrepresentation – Misrepresentation (i.e., fraud) occurs when a specific section of the child care policy is violated as a result of the information not having been reported by the client or provider or reported falsely. Improper payments made as a result of mis-interpretation must be referred to the OIG when the amount exceeds $1,000.00. If the amount does not exceed $1,000.00, the BFA must initiate repayment procedures. A willfully false statement is one that is deliberately given, with the intent that it be accepted as true, with the knowledge that it is false. It is an essential element in a misrepresentation charge that the client or provider knew the statement was false.
3. Programmatic Infraction – There are times when it is difficult to discern whether an improper payment occurred due to willful misrepresentation or is simply the result of a client or provider’s genuine confusion over subsidy program rules and responsibilities. When the case manager believes that improper payments were the result of the client or provider’s failure to understand, it is considered to be a programmatic infraction; it is the BFA’s responsibility to collect the improper payment in this instance, regardless of the amount. If the case manager is in doubt as to whether an improper payment is a programmatic infraction or is the result of misrepresentation by the client or provider, and the improper payment is less than $1,000.00, the case manager discusses the case with the supervisor and the supervisor subsequently consults with the program director; together, they make the decision whether to pursue repayment.
Referrals from the Bureau for Family Assistance to the Office of Inspector General
If the overpayment is $1,000.00 or greater and is due to misrepresentation by the client or provider, the case manager prepares a memo explaining the circumstances, the time period, and an estimate of the amount involved; indicates the person(s) who can verify the information within the memo; attaches a copy of all applicable documentation including, but not limited to, the payment form and attendance sheets that help support the complaint; states what corrective actions the case manager has taken on the case; and sends a copy of the memo and supporting documents to the Office of Inspector General, Division of Investigations and Fraud Management.
Recovery of Improper Payments Resulting from Misrepresentation (i.e., Fraud)
The supervisors within the BFA are responsible for negotiating repayment schedules with providers and clients and completing a Child Care Benefit Repayment Agreement to include the amount to be recovered, the period of recovery, the monthly recovery amount, and the procedure for repayment. If the provider or client is active, the case manager attempts to collect the payment in full; if this is not feasible, the case manager requests that the client or provider be asked to repay the amount in monthly installment payments of approximately 10% of the amount due. If a payment is more than 45 days late (15 days past the due date), the entire unpaid balance becomes due and must be paid in full. Failure to repay the requested amount results in case closure for clients or denial of participation in the certificate system for child care providers. Client services will not be reinstated until full payment is received. There are no policies or procedures to pursue repayments or collection beyond that point. There is no method to recoup overpayments from ongoing benefits, and the CCDF is not subject to the Treasury Offset Program, as other Federal programs are.
Corrective Action Plan
As previously stated, the OIG and BFA strive to work as a unified team within the DHHR to identify and prevent fraud or intentional program violations; to identify and recover misspent funds as a result of fraud; and to otherwise fight fraud and ensure program integrity. In response to the auditor’s recommendation for this finding, the OIG and BFA will revisit existing policies and procedures over fraud detection and repayment and will attempt to enhance the controls related thereto, particularly in relation to ensuring that all efforts concerning fraud detection and repayment are sufficiently documented, thus demonstrating full compliance with 45 CFR 98.60. Maintaining documentation of the decision-making process, the activities performed, and the results of those activities is of paramount importance in achieving that objective. A high level of documentation is necessary to support that the DHHR has policies and procedures in place and is following those policies and procedures. Maintaining adequate records and other documentary evidence will resolve this audit finding, prevent the occurrence of future audit findings, and provide a means to corroborate statements and assurances provided to regulatory agencies and other authorized individuals with regards to the DHHR’s overall compliance with 45 CFR 98.60. It is not enough to perform the activities; there must be an adequate audit trail to show the “who, what, when, where, and how” of the activities performed. As such, the OIG and BFA will also develop and maintain an appropriate system for categorizing their files and organizing their records, reports, and documents in a systematic and orderly manner to ensure, among other purposes, that they can substantiate their efforts when audited, reviewed, or evaluated by internal staff or authorized external organizations.