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Virginia, Wisconsin settle False Claims Act allegations arising from use of consultant in nutrition program

April 20th, 2017 | No Comments

On April 10 and April 12, the Department of Justice announced that the Commonwealth of Virginia and the state of Wisconsin, respectively, had agreed to pay multi-million dollar amounts to settle allegations that they had implemented improper quality control measures in their Supplemental Nutrition Assistance Programs (SNAP), following the recommendations of the same consultant, Julie Osnes Consulting. According to DOJ’s press releases, for Virginia:

The Virginia Department of Social Services (VDSS) has agreed to pay the United States $7,150,436 to resolve allegations that it violated the False Claims Act in its administration of the Supplemental Nutrition Assistance Program (SNAP), the Department of Justice announced today. Until 2008, SNAP was known as the Food Stamp Program.

Under SNAP, the U.S. Department of Agriculture (USDA) provides eligible low-income individuals and families with financial assistance to buy nutritious food. Since 2010, SNAP has served on average more than 45 million Americans per month, and provided more than $71 billion annually.

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Although the federal government funds SNAP benefits, it relies on the states to determine whether applicants are eligible for benefits, to administer those benefits, and to perform quality control to ensure that its eligibility decisions are accurate. USDA requires that the quality control processes the states use ensure that benefits are correctly awarded, are free from bias, and accurately report states’ error rates in making eligibility decisions. The USDA reimburses states for a portion of their administrative expenses in administering SNAP, including expenses for providing quality control. The USDA also pays performance bonuses to states that report the lowest and the most improved error rates each year, and can impose monetary sanctions on states with high error rates that do not show improvement.As part of the settlement, VDSS admitted that, beginning in 2010, it retained Julie Osnes Consulting, a quality control consultant, to reduce its SNAP benefits determination error rate by training VDSS quality control workers to “use whatever means necessary” to find a benefits decision “correct” rather than finding an error. VDSS also admitted that if its quality control staff “could not find a way to make a benefits decision correct,” they were instructed to “find a reason to ‘drop’ the case, or eliminate it from the sample.” VDSS acknowledged that this outcome-driven method, as implemented by VDSS between 2010 and 2015, “injected bias into the case review process” because it was designed to lower VDSS’s reported error rate by falsely reporting errors as “correct” or eliminating them from the sample. Through its use of these biased methods, VDSS was improperly awarded USDA performance bonuses for 2011, 2012, and 2013.

VDSS further admitted that VDSS quality control workers did not want to use the methods proposed by Julie Osnes Consulting because they believed the methods lacked integrity, injected bias into the quality control process, and violated USDA requirements, and that they communicated these concerns to their supervisors. VDSS admitted that the former VDSS quality control manager pressured and intimidated these employees to force them to adopt these methods, including, according to these employees, threatening termination, providing negative performance reviews, taking away teleworking and flexible scheduling privileges, and engaging in other forms of harassment and retaliation.

As part of the settlement, VDSS and the United States also agreed that VDSS had taken certain corrective actions beginning in 2015, including terminating its use of the improper quality controls methods devised by Julie Osnes Consulting.

And for Wisconsin:

The Wisconsin Department of Health Services (WDHS) has agreed to pay the United States $6,991,905 to resolve allegations that it violated the False Claims Act in its administration of the Supplemental Nutrition Assistance Program (SNAP), the Department of Justice announced today. Until 2008, SNAP was known as the Food Stamp Program.

Under SNAP, the U.S. Department of Agriculture (USDA) provides eligible low-income individuals and families with financial assistance to buy nutritious food. Since 2010, SNAP has served on average more than 45 million Americans per month, and provided more than $71 billion annually.

*   *   *Although the federal government funds SNAP benefits, it relies on the states to determine whether applicants are eligible for benefits, to administer those benefits, and to perform quality control to ensure that eligibility decisions are accurate. USDA requires that the states’ quality control processes ensure that benefits are correctly awarded, are free from bias, and accurately report states’ error rates in making eligibility decisions. The USDA reimburses states for a portion of their administrative expenses in administering SNAP, including expenses for providing quality control. The USDA also pays performance bonuses to states that report the lowest and the most improved error rates each year, and can impose monetary sanctions on states with high error rates that do not show improvement.

As part of the settlement, WDHS admitted that, beginning in 2008, it utilized the services of Julie Osnes Consulting, a quality control consultant, to review the error cases identified by WDHS quality control workers. WDHS further admitted that based on instructions from Julie Osnes Consulting it implemented several improper and biased quality control practices, including: (1) finding a basis for dropping error cases from the review by discouraging beneficiaries from cooperating with information requests and pursuing unnecessary information; (2) selectively applying requirements and policies to overturn and reduce errors; (3) asking beneficiaries leading questions to obtain desired answers to eliminate error potential; (4) arbitrating any and all differences with USDA; (5) subjecting error cases to additional scrutiny and quality control casework with the goal of overturning an error or dropping a case; and (6) omitting verifying information in documents made available to USDA. These practices improperly decreased WDHS’s reported error rate, and as a result, WDHS earned performance bonuses for 2009, 2010, and 2011 to which it was not entitled.

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The cases arose from investigations by the USDA’s Office of Inspector General.

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