(Source: By Rob Perez, The Honolulu Star-Advertiser (MCT) – The number of food stamp recipients in Hawaii who have been yanked from the program because of fraud has dropped dramatically since 2007 despite a huge expansion in the population getting such public assistance.
The state obtained disqualifications in about 275 administrative and criminal cases last fiscal year, a 50 percent decrease compared with the same period five years earlier, according to state data.
In the past five years, however, the number of Hawaii residents receiving food stamps surged 78 percent, totaling nearly 160,000, according to federal data.
State officials attributed the decline in fraud-related cases to staff cutbacks — six of 13 investigator positions were lost in 2009, leading to fewer investigations — and changes in the national program that streamlined reporting requirements for welfare recipients but created fewer checkpoints for fraud. The state Department of Human Services, which administers the $400 million-plus federal program locally, is restoring the six positions.
Food stamp fraud is believed to affect a tiny portion of the program, with the bulk of the wrongdoing stemming from recipients intentionally misreporting information to get more benefits than they are entitled to, according to DHS.
Although department officials don’t have hard numbers on how much food stamp fraud costs Hawaii taxpayers, they suspect the local figures would not differ greatly from U.S. numbers.
Nationally, fraud costs taxpayers about $750 million a year, or 1 percent of the $75 billion that represents the bulk of the budget for what is formally called the Supplemental Nutrition Assistance Program, according to federal officials.
If those same ratios applied here, food stamp fraud would total roughly $4 million in Hawaii.
But some of that would be recovered. When DHS uncovers fraud, it seeks restitution — as in the cases of Shirley Justo and Holly Cortes.
Justo last year pleaded no contest to theft and medical assistance fraud and was ordered to repay the agency more than $76,000, including about $40,000 in excess food stamp benefits. For a five-year period through September 2008, Justo failed to report that her children’s father was living with them and was working for most of that time, according to the attorney general’s office, which prosecuted her.
His income would have lessened the amount of assistance Justo received for her family.
The fraud was uncovered when a DHS worker noticed that Justo’s children had the same last name as the father and, after doing a database search, discovered that they were all living at the same address and that the father was employed.
If Justo stays out of trouble for five years, the charges against her will be removed from her record, according to court documents. As part of her sentence, Justo was ordered to perform 150 hours of community service.
She could not be reached for comment.
In CORTES’S case a credible witness told DHS investigators that Cortes had been living with the father of her children and had failed to report his presence and income, according to the attorney general’s office, which prosecuted her. Because of that failure, Cortes from 2008 to 2011 wrongfully received more than $45,000 in public benefits, including nearly $25,000 in food stamps, the office said.
A judge in May granted Cortes a deferred acceptance of a guilty plea, and the theft and medical assistance fraud charges will be expunged from her record if she stays out of trouble for five years, court records show. She was ordered to repay DHS about $51,000 and perform 100 hours of community service.
Cortes could not be reached for comment.
DHS officials say they aggressively pursue fraud investigations.
“We go after every bit of money we determine is overpaid,” said Linda Tsark, who recently retired as the department’s food stamp administrator.
In fiscal year 2010, Hawaii collected about $1.9 million in food stamp overpayments, including $547,000 stemming from fraud, according to federal data.
At both the federal and state levels, anti-fraud efforts are receiving more attention, especially with the widespread use of electronic benefit cards, the digital version of the old-fashioned food stamps.
The U.S. Department of Agriculture, which oversees the program nationally, recently proposed new rules allowing states to demand formal explanations from recipients who seek replacement cards more than three times within six months. Hawaii will start that in the fall.
“We’re trying to be proactive,” Tsark said.
Although recipients legitimately lose cards and seek replacements, investigators consider frequent replacement requests a possible sign that the person may be illegally selling the cards for cash.
Unscrupulous recipients have sold their cards, which are linked electronically to their benefit accounts, on the black market, including websites. In some cases the recipient will sell the card and almost immediately request a replacement, prompting DHS to disable the old one, which leaves the unsuspecting purchaser in the lurch. But because selling and buying benefit cards is illegal, the buyer can’t pursue a case against the seller.
On the retail front, unscrupulous store owners have allowed customers to turn in their cards for cash. Program rules do not allow recipients to get cash from their accounts, so some will sell the cards for less than their value if they need quick cash. The retailers, in turn, record card purchases for the full amount and are reimbursed, profiting from the difference.
Federal officials say such trafficking happens infrequently.
In fiscal year 2011, five of roughly 900 Hawaii retailers were permanently disqualified from the program, a less than 1 percent rate that is on par with the national average, according to U.S. Department of Agriculture data.
“Hawaii’s investigators and prosecutors are instituting more aggressive policies to pursue SNAP recipient fraud,” Julie Yee, a USDA spokeswoman, said in a statement. “They continue to actively pursue retailer fraud.”
The stepped-up enforcement comes as DHS is dealing with a federal court order to improve the timeliness of its processing of food stamp applications, even as the population served by the program has swelled.
Officials attribute the 78 percent increase in food stamp clients to the sluggish economy and rule changes a few years ago that expanded eligibility, adding thousands to the program.
The Hawaii Appleseed Center for Law and Economic Justice, with the assistance of several other parties, filed in late 2010 what became a class-action lawsuit against DHS for failing to meet federal requirements for processing applications. At the time, the state was meeting those requirements with less than 70 percent of the applications.
On the neighbor islands in particular, case managers had workloads roughly double or triple what is considered normal, and processing applications often took up to several months — instead of the 30-day maximum mandated by federal regulations for non-emergency cases.
But the timeliness rate since then has improved and in the past several months almost reached 90 percent, according to DHS officials, who said the department started changing the processing system even before the lawsuit was filed.
“I really want the community to take heart in the fact that we are committed to providing food for Hawaii’s most vulnerable, and we had an acute awareness that we needed to improve our timeliness and that it wasn’t right for them to go unserved,” said Patricia McManaman, DHS director.
Yee said USDA is pleased with the changes DHS has made, noting the dramatic increases in timeliness.
Victor Geminiani, executive director of the Appleseed Center, acknowledged that DHS has made significant strides in that area. But because the department is switching to a system in which an applicant is assigned to a team instead of a case manager, people whose applications fall through the cracks can have problems because no specific person within DHS is their advocate, he said.
Applicants who have limited command of English or who are elderly, disabled or mentally ill are especially vulnerable, Geminiani said. His nonprofit center proposed that DHS establish a toll-free number to deal with this problem, but the suggestion was rejected, he said.
“I’m not going to argue it’s an easy job,” he said.
» Food stamp applicants having problems can call the Appleseed Center at 587-7605.
» To report suspected food stamp or welfare fraud, call 587-8444.
©2012 The Honolulu Star-Advertiser
Visit The Honolulu Star-Advertiser at www.staradvertiser.com
Distributed by MCT Information Services